CHAPTER 9

FINANCIAL STATEMENT ANALYSIS

In this chapter, we will analyze the financial statement data of PT Timah (Persero)
Tbk. These financial statements, which consist of Balance Sheet, Income Statement, and
Cash Flow Statement, help us in evaluating the companys past performance and forecasting
its future performance. We will analyze it using two methods, which are vertical analysis and
horizontal analysis. We will also do financial ratio analysis to get a deeper understanding
about performance of the company so thatin the end, we will be able to make
forecastedfinancial statements. Following are the financial statements of PT Timah (Persero)
Tbk and its subsidiaries from the year 2004 to 2010.








ASSETS 2004 2005 2006 2007 2008 2009 2010
CURRENT ASSETS


Cash and cash equivalents 182,686 324,213 178,158 1,734,159 460,588 501,949 844,218
Short Term investments 2,888 2,199 663 1,148 861 67,014 1,691
Trade Receivables
Third parties 219,190 180,225 221,075 318,621 423,338 470,402 865,844
Other Receivables
Third parties 13,532 13,726 11,348 23,034 23,994 25,088 75,240
Inventories 810,356 996,290 1,697,490 1,730,097 3,173,453 1,909,219 1,802,707
Prepaid Taxes 55,512 106,502 109,000 76,889 172,102 175,089 470,562
Other current assets 18,898 15,528 9,394 39,003 51,570 24,398 48,628
Total Current Assets 1,303,062 1,638,683 2,227,128 3,922,951 4,305,906 3,173,159 4,108,890
NON-CURRENT ASSETS
Inventories, net of current portion 345,661 292,749 464,462 392,042 283,021 - -
Receivables from related parties, net 33,001 7,824 1,050 3,500 2,906 844 672
Other receivables, net 163 17,323 11,830 7,177 14,345 77,138 2,729
Investments in shares of stock 118,400 105,604 92,772 65,860 131,524 125,270 134,184
Deferred tax assets, net 8,734 10,378 10,561 21,154 23,194 33,492 50,758
Fixed Asset, net 433,702 488,640 479,744 474,391 879,597 1,269,801 1,361,918
Other Non-Current Assets
Investment properties - - - - - 30,079 30,079
Non-operational assets, net 56,928 50,791 43,335 40,245 30,079 - -
Deferred costs, net 42,347 50,803 44,656 21,683 14,854 10,019 5,042
Deferred exploration and evaluation costs, net 67,324 79,074 86,684 83,709 99,577 120,129 124,253
Refundable Deposit 6,967 6,288 - - - - -
Others - - - - - 15,781 62,583
Total Non-Current Assets 1,113,227 1,109,474 1,235,094 1,109,761 1,479,097 1,682,553 1,772,218


TOTAL ASSETS 2,416,289 2,748,157 3,462,222 5,032,712 5,785,003 4,855,712 5,881,108
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
CONSOLIDATED BALANCED SHEETS
For the Years Ended December 31, 2004 - 2010
(Expressed in million Rupiah)

LIABILITIES & EQUITY 2004 2005 2006 2007 2008 2009 2010
CURRENT LIABILITIES
Short-term loans 235,571 508,352 692,377 - 365,700 364,318 431,748
Trade Payables
Related parties 387 308 13,371 2,340 253 5,041 4,566
Third parties 36,191 48,153 328,463 188,183 357,028 346,159 216,168
Royalty Payable 31,414 43,297 41,127 21,193 59,287 16,185 14,060
Taxes Payable 93,732 72,006 110,144 745,138 274,679 65,607 95,613
Dividends Payable 1,034 170 191 210 286 934 939
Accrued Payable 118,706 152,970 198,715 303,472 496,264 226,083 430,677
Current portion of long-term liabilities
Sea sand contribution payable 3,256 - - - - - -
Payable for acquisition of subsidiary 8,144 9,875 10,974 2,865 - - -
Provision for environmental rehabilitation 4,579 4,579 6,669 51,600 85,400 75,601 68,867
Other Payables 13,346 56,443 86,785 35,229 2,009 3,146 6,844
Total Current Liabilities 546,360 896,153 1,488,816 1,350,230 1,640,906 1,103,074 1,269,482

NON-CURRENT LIABILITIES
Deferred Tax Liability, net 335 - 137 469 548 1,811 2,548
Pensions and other post retirement obligations 308,013 275,310 255,540 271,196 281,003 275,424 274,945
Long-term liabilities, net
Payable for acquisition of subsidiary 20,250 10,378 - - - - -
Provision for environmental rehabilitation 32,025 32,025 40,829 51,498 41,699 45,052 131,058
Total Non-Current Liabilities 360,623 317,713 296,506 323,163 323,250 322,287 408,551

Total Liabilities 906,983 1,213,866 1,785,322 1,673,393 1,964,156 1,425,361 1,678,033

MINORITY INTEREST 50 258 271 273 266 287 309

EQUITY
Share Capital
Issued and paid-up capital 251,651 251,651 251,651 251,651 251,651 251,651 251,651
Share Premium reserve 120,792 120,792 120,792 120,792 120,792 120,792 120,792
Foreign currency translation adjustment 1,286 7,267 6,209 11,145 32,282 16,840 8,608
Unrealized gain (loss) on available for-sale securities (895) (1,584) (1,120) (635) (473) (120) 357
Difference arising from changes in equity in an associate co. 13,427 8,684 (3,105) (725) 2,629 (1,947) -
Retained Earnings
Appropriated 986,314 1,039,724 1,094,055 1,192,226 2,071,342 2,729,097 2,873,422
Un-appropriated 136,681 107,499 208,147 1,784,592 1,342,358 313,751 947,936
Total Equity 1,509,256 1,534,033 1,676,629 3,359,046 3,820,581 3,430,064 4,202,766

TOTAL LIABILITIES & EQUITY 2,416,289 2,748,157 3,462,222 5,032,712 5,785,003 4,855,712 5,881,108






Table 9-2:Consolidated Income Statement of PT Timah (Persero) Tbk and Its Subsidiaries
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2004 - 2010
(Expressed in million Rupiah)

2004 2005 2006 2007 2008 2009 2010
Net Revenue 2.812.416 3.396.150 4.076.434 8.542.393 9.053.082 7.709.856 8.339.254

Cost of Revenue -2.234.561 -2.916.885 -3.411.361 -5.366.348 -6.334.452 6.556.869 6.415.112

Gross Profit 577.855 479.265 665.073 3.176.045 2.718.630 1.152.987 1.924.142


Operating Expenses

Selling -36.548 -32.886 -48.665 -73.070 -79.478 66.429 60.567
General and administration -250.744 -230.032 -233.200 -353.046 -552.715 393.689 550.714
Exploration -5.553 -4.626 -1.985 -17.288 -16.233 4.325 2.081
Total Operating Expenses -292.845 -267.544 -283.850 -443.404 -648.426 464.443 613.362


Income From Operations 285.010 211.721 381.223 2.732.641 2.070.204 688.544 1.310.780


Other Income (Charges)

Interest income 3.417 3.786 6.485 17.394 41.896 10.357 20.594
(Loss) or Gain on foreign exchange, net -17.017 1.250 9.377 29.341 55.205 -120.178 -23.294
Interest and finance charges -16.912 -27.174 -53.733 -43.400 -40.484 -52.901 -15.609
Others, net -15.347 -4.503 -6.632 -108.394 -25.844 39.641 -165.278
Total Other Income (Charges) -45.859 -26.641 -44.503 -105.059 30.773 -123.081 -183.587


Equity in Net Income (Loss) of an Associate 67.995 19.532 10.752 26.340 7.952 -16.300 134


Income Before Tax 307.146 204.612 347.472 2.653.922 2.108.929 549.163 1.127.327


Tax Expense -129.186 -96.905 -139.312 -869.328 -766.578 235.391 179.369


Income Before Minority Interest 177.960 107.707 208.160 1.784.594 1.342.351 313.772 947.958


Minority Interest in (Net Income) Loss of Subsidiaries -53 -208 -13 -2 7 -21 -22


Net Income 177.907 107.499 208.147 1.784.592 1.342.358 313.751 947.936


Basic Earnings per Share (Full Amounts) 353 214 414 3.546 267 62 188


Basic Earning per Global Depository Receipt (GDR) 3.530 2.140 - - - - -

Table 9-3:Consolidated Cash Flow Statement of PT Timah (Persero) Tbk and Its Subsidiaries
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended December 31, 2007 - 2010
(Expressed in million Rupiah)

2007 2008 2009 2010
CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 8,386,947 9,476,801 7,584,987 8,020,063
Cash paid to:

Suppliers (4,771,776) (6,778,248) (4,390,118) (5,376,287)
Employees (555,132) (704,841) (797,030) (770,372)
Cash generated from operation 3,060,039 1,993,712 2,397,839 1,873,404
Tax refund 64,877 26,369 79,572 102,985
Interest Received 17,394 35,802 9,695 18,239
Partnership program and environment development - - (13,424) (12,550)
Pension contribution paid (42,401) (53,171) (88,946) (46,537)
Taxes and royalties paid (650,728) (2,135,858) (911,916) (1,151,777)
Net Cash Provided by Operating Activities 2,449,181 (133,146) 1,472,820 783,764

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (104,987) (575,676) (631,024) (293,292)
Additional investment in an associate - (60,000) (30,000) (15,000)
Proceeds from sale of non-operational assets 9,695 24,622 - -
Acquisition of a subsidiary (8,109) - - -
Payment of guarantee deposits (283) - - -
Net Cash Used in Investing Activities (103,684) (611,054) (661,024) (308,292)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans (692,376) 365,700 264,390 354,574
Payment of bank loans - - (265,772) (309,893)
Interest paid (43,400) (49,989) (55,799) (15,028)
Dividends paid (104,055) (892,220) (670,531) (156,871)
Net Cash Used in Financing Activities (839,831) (576,509) (727,712) (127,218)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,505,666 (1,320,709) 84,084 348,254

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 178,158 1,734,159 460,588 501,949

Effect of foreign exchange rate fluctuation on cash and cash equivalents 50,335 47,138 (42,723) (5,985)

CASH AND CASH EQUIVALENTS AT END OF YEAR 1,734,159 460,588 501,949 844,218
Note : Statements of Cash Flow for the years 2004 to 2006 are not presented

9.1 Common Size or Vertical Analysis
Common size ratios are used to compare financial statements of different-size companies or of the same company over different
periods.Common size analysis also called vertical analysis, where in we compute the proportion of all the account in the Balance Sheet divide it
by the total Assets or total Liability plus Stockholders Equity. For the Income Statement, we divide all of the account by the total Sales.
9.1.1 Balance Sheet (Common Size/ Vertical Analysis)
Table 9-4:Vertical Analysis of Balance Sheet
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMMON SIZE CONSOLIDATED BALANCE SHEETS
As of December 31, 2004 - 2010

ASSETS 2004 2005 2006 2007 2008 2009 2010
CURRENT ASSETS
Cash and cash equivalents 7.561% 11.797% 5.146% 34.458% 7.962% 10.337% 14.355%
Short Term investments 0.120% 0.080% 0.019% 0.023% 0.015% 1.380% 0.029%
Trade Receivables
Third parties 9.071% 6.558% 6.385% 6.331% 7.318% 9.688% 14.722%
Other Receivables
Third parties 0.560% 0.499% 0.328% 0.458% 0.415% 0.517% 1.279%
Inventories 33.537% 36.253% 49.029% 34.377% 54.857% 39.319% 30.653%
Prepaid Taxes -2.297% -3.875% -3.148% -1.528% -2.975% -3.606% -8.001%
Other current assets 0.782% 0.565% 0.271% 0.775% 0.891% 0.502% 0.827%
Total Current Assets 53.928% 59.628% 64.327% 77.949% 74.432% 65.349% 69.866%

NON-CURRENT ASSETS
Inventories, net of current portion 14.305% 10.653% 13.415% 7.790% 4.892% - -
Receivables from related parties, net 1.366% 0.285% 0.030% 0.070% 0.050% 0.017% 0.011%
Other receivables, net 0.007% 0.630% 0.342% 0.143% 0.248% 1.589% 0.046%
Investments in shares of stock 4.900% 3.843% 2.680% 1.309% 2.274% 2.580% 2.282%
Deferred tax assets, net 0.361% 0.378% 0.305% 0.420% 0.401% 0.690% 0.863%
Fixed Asset, net 17.949% 17.781% 13.857% 9.426% 15.205% 26.151% 23.158%
Other Non-Current Assets
Investment properties - - - - - 0.619% 0.511%
Non-operational assets, net 2.356% 1.848% 1.252% 0.800% 0.520% - -
Deferred costs, net 1.753% 1.849% 1.290% 0.431% 0.257% 0.206% 0.086%
Deferred exploration and evaluation costs, net 2.786% 2.877% 2.504% 1.663% 1.721% 2.474% 2.113%
Refundable Deposit 0.288% 0.229% - - - - -
Others - - - - - 0.325% 1.064%
Total Non-Current Assets 46.072% 40.372% 35.673% 22.051% 25.568% 34.651% 30.134%

TOTAL ASSETS 100% 100% 100% 100% 100% 100% 100%
LIABILITIES & EQUITY 2004 2005 2006 2007 2008 2009 2010
CURRENT LIABILITIES
Short-term loans 9.749% 18.498% 19.998% - 6.322% 7.503% 7.341%
Trade Payables
Related parties 0.016% 0.011% 0.386% 0.046% 0.004% 0.104% 0.078%
Third parties 1.498% 1.752% 9.487% 3.739% 6.172% 7.129% 3.676%
Royalty Payable 1.300% 1.575% 1.188% 0.421% 1.025% 0.333% 0.239%
Taxes Payable 3.879% 2.620% 3.181% 14.806% 4.748% 1.351% 1.626%
Dividends Payable 0.043% 0.006% 0.006% 0.004% 0.005% 0.019% 0.016%
Accrued Payable 4.913% 5.566% 5.740% 6.030% 8.578% 4.656% 7.323%
Current portion of long-term liabilities
Sea sand contribution payable 0.135% - - - - - -
Payable for acquisition of subsidiary 0.337% 0.359% 0.317% 0.057% - - -
Provision for environmental rehabilitation 0.190% 0.167% 0.193% 1.025% 1.476% 1.557% 1.171%
Other Payables 0.552% 2.054% 2.507% 0.700% 0.035% 0.065% 0.116%
Total Current Liabilities 22.612% 32.609% 43.002% 26.829% 28.365% 22.717% 21.586%

NON-CURRENT LIABILITIES
Deferred Tax Liability, net 0.014% - 0.004% 0.009% 0.009% 0.037% 0.043%
Pensions and other post retirement obligations 12.747% 10.018% 7.381% 5.389% 4.857% 5.672% 4.675%
Long-term liabilities, net
Payable for acquisition of subsidiary 0.838% 0.378% - - - - -
Provision for environmental rehabilitation 1.325% 1.165% 1.179% 1.023% 0.721% 0.928% 2.228%
Total Non-Current Liabilities 14.925% 11.561% 8.564% 6.421% 5.588% 6.637% 6.947%

Total Liabilities 37.536% 44.170% 51.566% 33.250% 33.953% 29.354% 28.533%

MINORITY INTEREST 0.002% 0.009% 0.008% 0.005% 0.005% 0.006% 0.005%

EQUITY
Share Capital
Issued and paid-up capital 10.415% 9.157% 7.268% 5.000% 4.350% 5.183% 4.279%
Share Premium reserve 4.999% 4.395% 3.489% 2.400% 2.088% 2.488% 2.054%
Foreign currency translation adjustment 0.053% 0.264% 0.179% 0.221% 0.558% 0.347% 0.146%
Unrealized gain (loss) on available for-sale securities -0.037% -0.058% -0.032% -0.013% -0.008% -0.002% 0.006%
Difference arising from changes in equity in an associate co. 0.556% 0.316% -0.090% -0.014% 0.045% -0.040% -
Retained Earnings
Appropriated 40.819% 37.834% 31.600% 23.690% 35.805% 56.204% 48.859%
Un-appropriated 5.657% 3.912% 6.012% 35.460% 23.204% 6.461% 16.118%
Total Equity 62.462% 55.820% 48.426% 66.744% 66.043% 70.640% 71.462%

TOTAL LIABILITIES & EQUITY 100% 100% 100% 100% 100% 100% 100%

ASSETS
Accountants define assets as probable future economic benefits obtained by a firm as
a result of past transactions or events. From the table above, we can see that current assets of
PT Timah (Persero) Tbk has been increasing over time, especially in year 2007 as good
growth of global economic. The most contributed accounts are inventories and cash. Though,
inventories have increased significantly in year 2008 as a result of the sharp decline in world
consumption caused by the global economic crisis. But after a year, the inventories have been
decreasing. It is caused by the decrease in production volume, which the company adjusted
its production capacity based on the sales needs.
Non-current assets are negatively correlated with current assets since increase in
current assets means decrease in non-current assets. Non-current assets of the company are
mainly contributed by fixed assets and inventories. Non-current assets had been declining
from year 2004 to 2007. However, since 2008, it has been increased, which caused by
increase in fixed assets.
LIABILITIES
Liabilities are defined as probable future sacrifices of economic benefits arising from
present obligations as a result of past transactions or events.The total liabilities of the
company have been moving fluctuate since 2004. It is contributed more by non-current
liabilities accounts rather than the current liabilities accounts.
MINORITY INTEREST
Minority interest represents the claim on the income of the consolidated firm of the
shareholder in subsidiaries, which isPT TimahInvestasi Mineral. It takes only a very small
portion in the balance sheet. However, we cannot ignore this line item because it can lead to
big mistakes. Since last 4 years, the minority interest is quite stable in the point 0.005%.
EQUITY
Equity is equal to the difference between assets and liabilities. There is an increasing
percentage of the equity since last four years, which mostly contributed by retained earnings.
Rising tin price is one important factor of the increase income of the company.
9.1.2 Income Statement (Common Size/ Vertical Analysis)
Table 9-5:Vertical Analysis of Income Statement
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMMON SIZE CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2004 - 2010


2004 2005 2006 2007 2008 2009 2010
Net sales 100% 100% 100% 100% 100% 100% 100%
Cost of sales -79.453% -85.888% -83.685% -62.820% -69.970% 85.045% 76.927%
Gross Profit 20.547% 14.112% 16.315% 37.180% 30.030% 14.955% 23.073%

Operating Expenses
Selling and marketing -1.300% -0.968% -1.194% -0.855% -0.878% 0.862% 0.726%
General and administration -8.916% -6.773% -5.721% -4.133% -6.105% 5.106% 6.604%
Exploration -0.197% -0.136% -0.049% -0.202% -0.179% 0.056% 0.025%
Total Operating Expenses -10.413% -7.878% -6.963% -5.191% -7.162% 6.024% 7.355%

Operating Profit 10.134% 6.234% 9.352% 31.989% 22.867% 8.931% 15.718%

Other income/expenses
Interest and finance charges -0.601% -0.800% -1.318% -0.508% -0.447% -0.686% -0.187%
Interest income 0.121% 0.111% 0.159% 0.204% 0.463% 0.134% 0.247%
Foreign exchange loss, net -0.605% 0.037% 0.230% 0.343% 0.610% -1.559% -0.279%
Others, net -0.546% -0.133% -0.163% -1.269% -0.285% 0.514% -1.982%
Total other income/(expenses) -1.631% -0.784% -1.092% -1.230% 0.340% -1.596% -2.201%

Equity in net profit and associates 2.418% 0.575% 0.264% 0.308% 0.088% -0.211% 0.002%

Profit before income tax 10.921% 6.025% 8.524% 31.068% 23.295% 7.123% 13.518%
Income tax expenses -4.593% -2.853% -3.417% -10.177% -8.468% 3.053% 2.151%
Profit before minority interest 6.328% 3.171% 5.106% 20.891% 14.828% 4.070% 11.367%
Minority interest -0.002% -0.006% 0.000% 0.000% 0.000% 0.000% 0.000%
Net Profit 6.326% 3.165% 5.106% 20.891% 14.828% 4.069% 11.367%
Gross profit from 2008 to 2009 decrease drastically from 30,030% to 14,955%. It is
caused by the crisis economic of the world . it make a big impact in many sector industries in
the world. But PT. Timah still can manage it well and make the profit increase to 23,073% in
2010. As we can see that,in 2009 net profit is 4,069%. It is in small amount but In 2010, PT.
Timah have a big amount increase in the net profit become 11,367%. It shows us that PT.
Timah have a strong profitability condition.
9.1.3 Cash Flow (Common Size/ Vertical Analysis)
Table 9-6:Vertical Analysis of Statement of Cash Flow
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMMON SIZE CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended December 31, 2007 - 2010

Net cash provided by (used in): 2007 2008 2009 2010
Operating Activities 163% 10% 1752% 225%
Investing Activities -7% 46% -786% -89%
Financing Activities -56% 44% -865% -37%
Net cash Increase or (decrease) 100% 100% 100% 100%

Dividends Distributed/Paid -7% 68% -797% -45%

9.2Growth or Horizontal Analysis
Growth analysis or also called as horizontal analysis. On this analysis, we are
computing the growth of each account in current year with previous year. From growth
analysis we can see how big the growth of each account and we can observed the trend of the
account from year to year.



9.2.1 Balance Sheet (Growth/Horizontal Analysis)
Table 9-7:Horizontal Analysis of Balance Sheet
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMPARATIVE CONSOLIDATED BALANCE SHEETS
As of December 31, 2004 2010

ASSETS 2005 2006 2007 2008 2009 2010
CURRENT ASSETS

Cash and cash equivalents 77.470% -45.049% 873.383% -73.440% 8.980% 68.188%
Short Term investments -23.857% -69.850% 73.152% -25.000% 7683.275% -97.477%
Trade Receivables
Third parties -17.777% 22.666% 44.123% 32.866% 11.117% 84.065%
Other Receivables
Third parties 1.434% -17.325% 102.978% 4.168% 4.559% 199.904%
Inventories 22.945% 70.381% 1.921% 83.426% -39.838% -5.579%
Prepaid Taxes 91.854% 2.345% -29.460% 123.832% 1.736% 168.756%
Other current assets -17.833% -39.503% 315.191% 32.221% -52.690% 99.311%
Total Current Assets 25.756% 35.910% 76.144% 9.762% -26.307% 29.489%

NON-CURRENT ASSETS
Inventories, net of current portion -15.307% 58.655% -15.592% -27.809% -100.000% -
Receivables from related parties, net -76.292% -86.580% 233.333% -16.971% -70.957% -20.379%
Other receivables, net 10527.607% -31.709% -39.332% 99.875% 437.734% -96.462%
Investments in shares of stock -10.807% -12.151% -29.009% 99.702% -4.755% 7.116%
Deferred tax assets, net 18.823% 1.763% 100.303% 9.644% 44.399% 51.553%
Fixed Asset, net 12.667% -1.821% -1.116% 85.416% 44.362% 7.254%
Other Non-Current Assets
Investment properties - - - - #DIV/0! 0.000%
Non-operational assets, net -10.780% -14.680% -7.130% -25.260% -100.000% -
Deferred costs, net 19.968% -12.100% -51.444% -31.495% -32.550% -49.676%
Deferred exploration and evaluation costs, net 17.453% 9.624% -3.432% 18.956% 20.639% 3.433%
Refundable Deposit -9.746% -100.000% - - - -
Others #DIV/0! 296.572%
Total Non-Current Assets -0.337% 11.322% -10.148% 33.281% 13.755% 5.329%

TOTAL ASSETS 14% 26% 45% 15% -16% 21%


LIABILITIES & EQUITY 2005 2006 2007 2008 2009 2010
CURRENT LIABILITIES
Short-term loans 115.796% 36.200% -100.000% #DIV/0! -0.378% 18.509%
Trade Payables
Third parties 33.052% 582.124% -42.708% 89.724% -3.044% -37.552%
Related parties -20.413% 4241.234% -82.499% -89.188% 1892.490% -9.423%
Royalty Payable 37.827% -5.012% -48.469% 179.748% -72.701% -13.129%
Taxes Payable -23.179% 52.965% 576.513% -63.137% -76.115% 45.736%
Dividends Payable -83.559% 12.353% 9.948% 36.190% 226.573% 0.535%
Accrued Payable 28.865% 29.905% 52.717% 63.529% -54.443% 90.495%
Current portion of long-term liabilities
Sea sand contribution payable -100.000% - - - - -
Payable for acquisition of subsidiary 21.255% 11.129% -73.893% -100.000% - -
Provision for environmental rehabilitation 0.000% 45.643% 673.729% 65.504% -11.474% -8.907%
Other Payables 322.921% 53.757% -59.407% -94.297% 56.595% 117.546%
Total Current Liabilities 64.022% 66.134% -9.308% 21.528% -32.777% 15.086%
NON-CURRENT LIABILITIES
Deferred Tax Liability, net -100.000% #DIV/0! 242.336% 16.844% 230.474% 40.696%
Pensions and other post retirement obligations -10.617% -7.181% 6.127% 3.616% -1.985% -0.174%
Long-term liabilities, net
Payable for acquisition of subsidiary -48.751% -100.000% - - - -
Provision for environmental rehabilitation 0.000% 27.491% 26.131% -19.028% 8.041% 190.904%
Total Non-Current Liabilities -11.899% -6.675% 8.990% 0.027% -0.298% 26.766%

Total Liabilities 33.836% 47.077% -6.269% 17.376% -27.431% 17.727%

MINORITY INTEREST 416.000% 5.039% 0.738% -2.564% 7.895% 7.666%

EQUITY
Share Capital
Issued and paid-up capital 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
Share Premium reserve 0.000% 0.000% 0.000% 0.000% 0.000% 0.000%
Foreign currency translation adjustment 465.086% -14.559% 79.498% 189.655% -47.835% -48.884%
Unrealized gain (loss) on available for-sale securities 76.983% -29.293% -43.304% -25.512% -74.630% -397.500%
Difference arising from changes in equity in an associate co. -35.324% -135.755% -76.651% -462.621% -174.059% -100.000%
Retained Earnings
Appropriated 5.415% 5.226% 8.973% 73.737% 31.755% 5.288%
Un-appropriated -21.350% 93.627% 757.371% -24.781% -76.627% 202.130%
Total Equity 1.642% 9.295% 100.345% 13.740% -10.221% 22.527%

TOTAL LIABILITIES & EQUITY 13.735% 25.983% 45.361% 14.948% -16.064% 21.117%

ASSETS
Total assets of PT Timah (Persero) Tbk have been changing year by year. In 2007,
there is a significant increase in the companys assets as the positive global economic growth.
While in 2008 and 2009, the company got affected by the global crisis signified by the
decrease in assets.
The decrease of current assets were mostly caused by the significant decrease of
inventories and advance payment of purchasing compare to the increase of cash and cash
equivalent, trade receivables and other receivables. The currentproducts inventory of the
company at the end of 2009 was valued at Rp 1,909 billion, decreasing 39% from 2008
caused by the decrease in production volume, which the company adjusted its production
capacity based on the sales needs.
While non-current inventories decreased 100% from the prior year balance due to the
adjustment of production volume with sales demand.Besides, fixed assets of the companyat
the end of 2009 was increase by 44%, which is resulting from purchases of additional
machineries, equipment and tools for exploration, mining and production.
LIABILITIES
The liabilities of PT Timah (Persero) Tbk was very high during 2005 to 2006 and
since 2007, the company was able to maintain its liabilities. Then, in 2009 there is a decrease
in accrued liabilities that was affected from the decrease of purchasing activities of the
company, in relation with the operational efficiency that decreases the accrued liabilities to
the suppliers and contractors, and the employees.
MINORITY INTEREST
Minority interest takes only a insignificant amount in the balance sheet and since last
two years, this account has grown slowly.
EQUITY
Total equity of the company increased significantly in year 2007, which is amounted
to 100% growth. Then in 2009, as the effect of global crisis, the equity was drop by 10%. It
was mostly caused by the decrease of net income by 76% or Rp1,028 billion lower than the
previous year profit and cash dividend paid for 2008 which was paid in 2009 was at the
amount ofRp 671 billion. Though in 2010, the company shows a positive sign.
9.2.2 Income Statement (Growth/ Horizontal Analysis)
Table 9-8: Horizontal Analysis of Income Statement
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMPARATIVE CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2004 - 2010


2005 2006 2007 2008 2009 2010
Net sales 21% 20% 110% 6% -15% 8%
Cost of sales 31% 17% 57% 18% -204% -2%
Gross Profit -17% 39% 378% -14% -58% 67%

Operating Expenses
Selling -10% 48% 50% 9% -184% -9%
General and administration -8% 1% 51% 57% -171% 40%
Exploration -17% -57% 771% -6% -127% -52%
Total Operating Expenses -9% 6% 56% 46% -172% 32%

Operating Profit -26% 80% 617% -24% -67% 90%

Other income
Interest and finance charges 61% 98% -19% -7% 31% -70%
Interest income 11% 71% 168% 141% -75% 99%
Foreign exchange loss, net -107% 650% 213% 88% -318% -81%
Others, net -71% 47% 1534% -76% -253% -517%
Total other income/(expenses) -42% 67% 136% -129% -500% 49%

Equity in net profit and associates -71% -45% 145% -70% -305% -101%


Profit before income tax -33% 70% 664% -21% -74% 105%
Income tax expenses -25% 44% 524% -12% -131% -24%
Profit before minority interest -39% 93% 757% -25% -77% 202%
Minority interest 292% -94% -85% 0% -400% 5%
Net profit -40% 94% 757% -25% -77% 202%
The high sales of timah was at 2007 at 110%. In the next year, it was slope down to
6%. And still decrease in 2009 to -15%. But the strategy of selling timah in 2010 is
increasing to 8%. That make the gross profit in 2008 to 2009 was decreasing.
9.2.3 Cash Flow (Growth/ Horizontal Analysis)
Table 9-9: Horizontal Analysis of Statement of Cash Flow
PT TIMAH (PERSERO) Tbk AND ITS SUBSIDIARIES
COMPARATIVE CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended December 31, 2008 - 2010

Net cash provided by (used in): 2008 2009 2010
Operating Activities -105% -1206% -47%
Investing Activities 489% 8% -53%
Financing Activities -31% 26% -83%
Net cash Increase or (decrease) -188% -106% 314%

Dividends Distributed/Paid 757% -25% -77%

9.3 Financial Ratio Analysis
Table 9-10: Summary of Financial Ratios

2004 2005 2006 2007 2008 2009 2010
Efficient Translation into Profit
Gross Margin Percentage 20.547% 14.112% 16.315% 37.180% 30.030% 14.955% 23.073%
Operating Margin 6.326% 3.165% 5.106% 20.891% 14.828% 4.069% 11.367%
Efficiency Ratio 69.041% 78.010% 76.722% 57.630% 62.808% 91.069% 84.282%
Operating Leverage 144.842% 128.188% 130.341% 173.522% 159.216% 109.806% 118.650%

Efficient Translation into Profit
Return on Assets 7.36% 3.91% 6.01% 35.46% 23.20% 6.46% 16.12%
Return on Equity 11.79% 7.01% 12.41% 53.13% 35.13% 9.15% 22.56%
Inventory Turnover 347.06% 340.88% 240.14% 493.75% 285.28% 403.82% 462.60%
Total Assets Turnover 116.39% 123.58% 117.74% 169.74% 156.49% 158.78% 141.80%
Fixed Assets Turnover 648.47% 695.02% 849.71% 1800.71% 1029.23% 607.17% 612.32%
Leverage
Debt asset ratio 37,53% 44,17% 51,56% 33,25% 33,95% 29,35% 28,53%
Debt Equity Ratio 60,09% 79,13% 106,48% 49,82% 51,41% 41,55% 39,93%
Capitalization Ratio 19,29% 17,16% 15,03% 8,78% 7,80% 8,59% 8,86%

Liquidity
Current Ratio 2,38 1,82 1,49 2,90 2,62 2,87 3,2
Quick Ratio

0,902 0,717 0,356 1,624 0,690 1,146 1,817
Net Working Capital 756.702 742.530 738.312 2.572.438 2.665.000 2.070.085 2.839.408

9.3.1 Efficient Translation of Sales Into Profit
Gross Margin Percentage




Gross margin percentage reflects efficiency in turning raw materials into finish
goods to generate net income. Higher gross margin ratio will reflect a greater
efficiency in turning raw materials into income.
PT. Timahs gross margin percentage has an average of 22.316% for the last
six years, but this was heavily caused by the booming of tin price which in turn
increasing the company sales very significantly in 2007 and 2008. This means that
every Rp 1,000,- of sales revenue, the gross profit will be averagely Rp 223.16.
Operating Margin




Operating margin is the ratio of net income divided by net sales. Higher net
margin ratio is truly good for the company because it measures the profitability.
PTTimahs operating margin has an average of 9.39%, which means that
every Rp1,000,- of the company revenue, the company will get Rp 93.9,-.

EfficiencyRatio




Efficiency ratio is expenses as a percentage of net sales. Lower percentage is
better because it means that the expenses of the company are low.
PT Timahs average efficiency ratio from year 2003-2009 is 74,22%. This
means that the total expense to generate Rp 1,000,- in sales revenue is Rp 742.2.
Operating Leverage




Operating leverage ratio is a measure of how net sales growth is translated into
growth in operating income. Higher operating leverage means better for the company.
PT.Timah has an average operating leverage of 137.80% or 1.37x, which
means that every 1% growth in sales revenue will be impacting a 1.37% growth in
operating income/profit.

9.3.2 Efficient Use of Assets to Generate Profits
Return on Assets (ROA)
Return on assetsor ROA expresses what earnings were generated from
invested capital (assets). ROA for public companies can vary substantially and will be
highly dependent on the industry. This is why when using ROA as a comparative
measure, it is best to compare it against a company's previous ROA numbers or the
ROA of a similar company. The assets of the company are comprised of both debt and
equity. Both of these types of financing are used to fund the operations of the
company. The ROA figure gives investors an idea of how effectively the company is
converting the money it has to invest into net income. The higher the ROA number,
the better, because the company is earning more money on less investment.




ROA of PT Timah (Persero) Tbk is changing over time. In the year 2007,
ROA of the company was increase significantly to 35.46%, which means that the
company was using its assets effectively to generate more profits. Then, in 2009, the
companys ROA was falling down to 6.46% due to the effect of global crisis. After
year, the company has been able to recover from the crisis and it was succeed in
generating the higher ROA.
Return on Equity (ROE)
Another important profitability measurement is return on equity or ROE.
Return on equity reveals how much profit a company earned in comparison to the
total amount of shareholder equity found on the balance sheet. As we all know,
shareholder equity is equal to total assets minus total liabilities, which is what the
shareholders "own". A business that has a high return on equity is more likely to be
one that is capable of generating cash internally. For the most part, the higher a
company's return on equity compared to its industry, the better.




The changing in ROE of PT Timah (Persero) Tbk over year is more or less the
same compare to ROA. In 2007, the global economy was doing well that we can see
there is a high increase of ROE, which means more earnings with less investment.
Nonetheless, as the global economic crisis, ROE was drop to 9.15% in year 2008.
After a year, there is a positive sign with an increase in ROE, which represents the
company was perform well recovering from the crisis.
Inventory Turnover
Inventory turnover is a ratio that shows how many times a company's
inventory is sold and replaced over a certain period of time. There are two ways to
compute inventory turnover that shown below the paragraph. The first calculation is
used more frequently, though cost of goods sold may be substituted because sales are
recorded at market value, whereas inventories usually are recorded at cost. Also,
average inventory may be used instead of ending inventory to minimize seasonal
factors. A low turnover ratio implies poor sales and therefore excess inventory. A
high ratio implies either strong sales or ineffective buying. Inventory turnover can
help a company or potential investor to determine how well the company manages its
inventory.

PT Timah (Persero) Tbk has a quite high inventory turnover that stays in the
level 240% to 500%, which means that its inventory might be sold and replaced in 2.4
to 5 times a year. There is a significant decrease in the inventory turnover in year
2008, which signifies an excess inventory. Though, in last two years, the company has
managed its inventory in more efficient way.
Turnover of Total Assets
Turnover of total assets indicates the relationship between assets and revenue.
This ratio is useful to determine the amount of sales that are generated from each
dollar of assets. Calculated by dividing its net sales by average total net assets, the
resulting number shows how often assets turn over, which can indicate how
effectively a company in managing all of its assets. The number by itself is not
informative.It must be compared to other companies in the industry, as well as to the
companys historical data. If the asset turnover is high relative to other companies in
the industry, it may indicate that too few assets for potential sales are being used or
suggest that the company is using too many old and fully depreciated assets. A low
asset turnover can indicate that capital is tied up in too many assets relative to what is
needed.

Turnover of total assets of the company is quite stable. Last year, total assets
turnover is amounted by 141.80%, which means that for every Rp 1,000,- the
company invested on their assets, it will generate Rp 1,418,- in sales revenue.
Turnover of Fixed Assets
Fixed assets turnover is similar to asset turnover. It is a narrower measure and
measures the productivity of a firm, which indicates the amount of sales generated by
each dollar spent on fixed assets, and the amount of fixed assets required to generate a
specific level of revenue. Changes in this ratio over time reflect whether or not the
firm is becoming more efficient in the use of its fixed assets. The formula is shown
below.

PT Timah (Persero) Tbkhas managed the use of its fixed assets very efficiently
in 2007 signified by 1800.71% of fixed assets turnover. From 2008 to 2010, there was
adeclining ratioof fixed assets turnover, which might indicate the company was over-
invested in fixed assets.



9.3.3 Leverage
Debt to Asset Ratio
Debt to Asset Ratio is a financial ratio that indicates the percentage of a
company's assets that are provided via debt. It is the ratio of total debt(the sum
of current liabilities and long-term liabilities) and total assets (the sum of current
assets, fixed assets, and other assets such as 'goodwill').







If the ratio is less than one, most of the company's assets are financed
throughequity. If the ratio is greater than one, most of the company's assets are
financed through debt. Companies with high debt/asset ratios are said to be
"highlyleveraged," and could be indangerifcreditorstarttodemandrepayment of debt.
Through the years from 2004-2006, the Debt to Asset Ratio is lower than 1,
most of the assets are financed through equity. From year 2007-2010, the Debt to
asset Ratio decreases over time.
Debt to Equity Ratio
It is a measure of a company's financial leverage calculated by dividing its
total liability by stockholders' equity. It indicates what proportion of equity and debt
the company is using to finance its assets







PT Timah has progressively increased Debt Equity Ratio from the year during
2004 2006, its because the company has been aggressive in financing its growth
with debt, But from the year 2007 2010, its been decreasing.

Capitalization Ratio
A company's debt-to-capital ratio or D/C ratio is the ratio of its total debt to
its total capital, its debt and equity combined. The ratio measures a company's capital
structure, financial solvency, and degree of leverage, at a particular point in time.





9.3.4 Liquidity
Current Ratio
The current ratio is a financial ratio that measures whether or not a firm has
enough resources to pay its debts over the next 12 months. It compares a
firm's current assets to its current liabilities. It is expressed as follows:




From the year 2004-2006, the current ratio of the company drops,due to the
high amount of borrowings, but fromt the year 2007-2010, the current ratio stabilize
and reach 3,2 in 2010, which shows the company that is has control its debt carefully.
If a company's current ratio is in this range, then it is generally considered to have
good short-term financial strength. If current liabilities exceed current assets (the
current ratio is below 1), then the company may have problems meeting its short-term
obligations. If the current ratio is too high, then the company may not be efficiently
using its current assets or its short-term financing facilities. This may also indicate
problems in working capital management.


Quick Ratio




It is an indicator of a company's short-term liquidity. The quick
ratio measures a company's ability to meet its short-term obligations with its most
liquid assets. The higher the quick ratio, the better the position of the company. The
quick ratio is more conservative than the current ratio, a more well-known liquidity
measure, because it excludes inventory from current assets. Inventory
is excluded because some companies have difficulty turning their inventory into cash.
In the event that short-term obligations need to be paid off immediately, there are
situations in which the current ratio would overestimate a company's short-term
financial strength.
During the year 2004-2006 the quick ratio for PT Timah is lower than 1, it
might have troubles for them to pay short-term obligations. But during the 2007,
quick ratio rises to 1,6 but gets lower again next year.In 2010, the quick ratio turns
into 1,8 which signifies that PT Timah has a strong control over their liabilities.
Net Working Capital
It measure of both a company's efficiency and its short-term financial health.
The working capital ratio is calculated as:
Woiking Capial Cuiin Asss Cuiin Liabiliis
Positive working capital means that the company is able to pay off its short-
term liabilities. Negative working capital means that a company currently is unable
to meet its short-term liabilities with its current assets (cash, accounts receivable
and inventory). The net working capital for PT Timah increases over time, it has
Rp2.839.408 ( In Million).

9.4 Financial Projection
Regression Definition:
A regression is a statistical analysis assessing the association between two variables. It is
used to find the relationship between two variables.
Regression Formula:
Regression Equation: y = a + bx
Slope(b) = (NXY - (X)(Y)) / (NX
2
- (X)
2
)
Intercept(a) = (Y - b(X)) / N
where:
x and y are the variables.
(x is estimated GDP Growth in 2011; y is the estimated sales growth)
b = The slope of the regression line
a = The intercept point of the regression line and the y axis.
N = Number of values or elements
X = First Score (we use the GDP Growth or Increase)
Y = Second Score (we use the Firms Sales Growth or Increase)
XY = Sum of the product of first and Second Scores
X = Sum of First Scores
Y = Sum of Second Scores
X
2
= Sum of square First Scores

Table 9-11: Financial Statement Projection
Year GDP Growth (x) Sales Growth (y) XY X
2
Y
2

2004 4,10% 33,65% 1,38% 0,17% 11,32%
2005 4,90% 20,76% 1,02% 0,24% 4,31%
2006 5,60% 20,03% 1,12% 0,31% 4,01%
2007 5,50% 109,55% 6,03% 0,30% 120,01%
2008 6,30% 59,78% 3,77% 0,40% 35,74%
2009 6,10% -14,84% -0,91% 0,37% 2,20%
2010 6,00% 8,16% 0,49% 0,36% 0,67%
Total 38,50% 237,09% 12,89% 2,15% 178,26%
mean 5,50% 33,87%
beta () 0,07028784
alpha () 0,334836665
2011 GDP Growth 6,40%
2011 Sales Growth 33,93%

Table 9-12: Projection of Balance Sheet
CURRENT ASSETS 2010 Factor 2011*
Cash and cash equivalents 844.218 1,3393351 1.130.691
Short Term investments 1.691 1,3393351 2.265
Trade Receivables
Third parties 865.844 1,3393351 1.159.655
Other Receivables
Third parties 75.240 1,3393351 100.772
Inventories 1.802.707 1,3393351 2.414.429
Prepaid Taxes 470.562 1,3393351 630.240
Other current assets 48.628 1,3393351 65.129

Total Current Assets 4.108.890 1,3393351 5.503.181


NON-CURRENT ASSETS
Inventories, net of current portion
Receivables from related parties, net 672 1,3393351 900
Other receivables, net 2.729 1,3393351 3.655
Investments in shares of stock 134.184 1,3393351 179.717
Deferred tax assets, net 50.758 1,3393351 67.982
Fixed Asset, net 1.361.918 1,3393351 1.824.065
Other Non-Current Assets
Investment properties 30.079 30.079
Non-operational assets, net
Deferred costs, net 5.042 1,3393351 6.753
Deferred exploration and evaluation costs,
net
124.253 1,3393351 166.416
Refundable Deposit
Others 62.583 1,3393351 83.820


Total Non-Current Assets 1.772.218 1,3393351 2.373.594

Total assets 5.881.108 1,3393351 7.876.774

CURRENT LIABILITIES 2.010 factor 2.011
Short-term loans 431.748 1,3393351 578.255
Trade Payables
Third parties 216.168 1,3393351 289.521
Related parties 4.566 1,3393351 6.115
Royalty Payable 14.060 1,3393351 18.831
Taxes Payable 95.613 1,3393351 128.058
Dividends Payable 939 1,3393351 1.258
Accrued Payable 430.677 1,3393351 576.821
Current portion of long-term liabilities
Sea sand contribution payable
Consumer financing loan
Payable for acquisition of subsidiary
Provision for environmental
rehabilitation
68.867 1,3393351 92.236
Other Payables 6.844 1,3393351 9.166

Total Current Liabilities 1.269.482 1,3393351 1.700.262

NON-CURRENT LIABILITIES
Deferred Tax Liability, net 2.548 1,3393351 3.413
Pensions and other post retirement obligations 274.945 1,3393351 368.243
Long-term liabilities, net
Sea sand contribution payable
Payable for acquisition of subsidiary
Provision for environmental
rehabilitation
131.058 1,3393351 175.531

Total Non-Current Liabilities 408.551 1,3393351 547.187

Total Liabilities 1.678.033 1,3393351 2.247.448


MINORITY INTEREST 309 1,3393351 414

EQUITY
Share Capital
Issued and paid-up capital 251.651 251.651
Share Premium reserve 120.792 1,3393351 161.781
Foreign currency translation adjustment 8.608 1,3393351 11.529
Unrealized gain (loss) on available for-sale securities 357 1,3393351 478
Difference arising from changes in equity in an associate
co.

Retained Earnings
Appropriated 2.873.422 1,3393351 3.848.475
Un-appropriated 947.936 1,3393351 1.269.604
Total Retained Earnings 3.821.358 1,3393351 5.118.079

Total Equity 4.202.766 5.543.518

TOTAL LIABILITIES & EQUITY 5.881.108 7.790.966

Table 9-13 : Projection of Net Income
Income Statement 2010 factor 2011
Net sales 8.339.254 1,3393351 11.169.055,48
Cost of sales 6.415.112 1,3393351 8.591.984,59
Gross Profit 1.924.142 1,3393351 2.577.070,89

Operating Expenses
Selling 60.567 1,3393351 81.120
General and administration 550.714 1,3393351 737.591
Exploration 2.081 1,3393351 2.787
Total Operating Expenses 613.362 1,3393351 821.497

Operating Profit 1.310.780 1,3393351 1.755.574

Other income
Interest and finance charges -15.609 1,3393351 (20.906)
Interest income 20.594 1,3393351 27.582
Foreign exchange loss, net -23.294 1,3393351 (31.198)
Others, net -165.278 1,3393351 (221.363)
Total other income/(expenses) -183.587 1,3393351 (245.885)

Equity in net profit and associates 134 1,3393351 179

Profit before income tax 1.127.327 1,3393351 1.509.869

Income tax expenses 179.369 1,3393351 240.235

Profit before minority interest 947.958 1,3393351 1.269.633

Minority interest -22 1,3393351 (29)

Net Profit 947.936 1,3393351 1.269.604