Okay. Good afternoon, everyone. Welcome to CLSA conference call today with Bumi Resources for its second Q 2023 earnings call. I am Wirandi from Research, and I will be the moderator for the session today. From the company, we have Pak Andrew Beckham as the CFO of Bumi, and then there is Pak Ashok Mitra, the Director. Also, we are joined with Pak Achmad Reza Widjaja as the Vice President of Investor Relations and the Chief Economist. Without further ado, I will pass on to Pak Reza to start with the presentation, and then we can move on to the Q&A session afterwards.
Sure. Thank you, Pak Wirandi. I am starting with welcoming all the participants here. Thank you for joining our conference call for the first semester 2023 earnings call by Bumi Resources. With me here, Pak Andrew Beckham as the Director and CFO of the company, and also Pak Ashok Mitra as the CEO of the company. So we are thanking CLSA Indonesia for hosting this event also. Okay. Then I am going to start with the presentation, and then Pak Andrew Beckham will continue with the financial results in the middle of the presentation. Okay. The next slide, please. Next. Okay. This is the general information for our company, PT. Bumi Resources. KPC is still the largest export coal mine in the world, and both KPC and Arutmin, representing Bumi Resources, are still sharing the dominion of 25% of Indonesian coal production.
Then we produced 71 or less than 72 million metric tons in 2022. Then we also want to share with you later our production targets in this year. Okay. Then, the resources and reserves and resources, 2.5 billion metric tons for reserves and 8.5 billion metric tons for resources. Then I am going to show you also in the table later. Then high potential for expansion, and KPC is only partially explored. Then we are now divided into two business segments, Bumi for the thermal coal production, and then we have also BRMS for the metal industry. Next. Okay. This is the structure of Bumi ownership, and as I mentioned to you, we have been divided into two segments, coal and non-coal.
Coal is dominated by KPC and Arutmin, and also we have Pendopo Energi Batubara in active, and then also Darma Henwa for the mining contractor. In the minerals, we have Bumi Resources Minerals, CPM, Citra Palu Minerals for gold mining, and then exploration stage, and also gold and copper for Bumi Resources Minerals. Then the last one is Dairi Prima Mineral in North Sumatra. It is a mix of tin and lead mining. Next. Okay. This is what I mentioned before in the beginning, the reserves and resources for both KPC and Arutmin for an active one, and then also the Pendopo Energi non-active. KPC and Arutmin both only reserve about 1.1 billion, then resources with about 6.1 billion resources for both. So we still have a long way to go to produce in both KPC and Arutmin. Then next. Okay.
I jump into the ESG and CSR for you, and we want to share and show off what we have done so far. We have the award from PRISMA. It is about the business and human rights assessment. We earned the green predicate for the award from the Ministry of Law and Human Rights. We have also the Gold Champion category award for the BISRA. It is from Bisnis Indonesia Corporate Social Responsibility Award. Both we earned in this year, 2023. Next slide, please. Next. Yeah, okay. We have also in ESG, Bumi launched the Human Rights Progress Report. We are the pioneer in the mining company. The way we do it is for demonstrate the communication to the public about Bumi commitment to human rights.
We believe that this is important for public to know what we have done in the human rights report in the company. Next. This is ESG, and if we get the score from Bloomberg, the ESG disclosure scored by Bloomberg, what we can see in Bumi is, Bumi overall is increasing rate by 17%. It is quite a significant progress for Bumi from 2021 to 2022. From 66.72 became 65.92, so increasing about 17%. We are separately increasing in social rating indicator in the Bloomberg scores, ESG disclosure scores. Okay. Next. This is the last one. Also, we get in the 2023. What we have here is for the several times, Bumi received A+ Top Sustainability Report Award for the third consecutive year, and for the sustainability reporting or government, environment, and social ESG reporting in 2021.
This done by PERC and United Nations Development Programme. Okay, next. Okay, this is the data for our safety report. If you see here, what we can see in KPC and Arutmin, safety report is downward trending from 2000 to 2023. In the beginning of Bumi Resources acquire Arutmin until now, we can see the progress of the best in class in the safety record for both KPC and Arutmin. Okay, next. Okay, I will hand over to Andrew Beckham for the financial update.
Thank you, Pak Reza. Production-wise, we are up from last year. Naturally, the weather has been a lot better than the previous year, where we had floods. Our production and sales are up. Realized coal prices, unfortunately, are down due to the downward trend in global coal prices. I think we are just following that trend. Production costs increased from $45.7 a ton to $52.8 per ton because of higher oil prices in this year and slightly higher strip ratio, especially in Arutmin, where we have done a lot of pre-development or pre-stripping in the area. Royalty update. The royalty was revised again, I think for the second time this year, on 11th of August. It is quite complicated. It is not complicated, but it sounds complicated in the wording I have used there.
What we are really saying is that it is reflecting the second and third weeks on previously, 70%, and then the fourth and fifth weeks of the backwards of the previous month for the 30% of the calculated HBA. Originally, the HBA, for those that do not know, was calculated off the indices, until the globalCOAL new indices became slightly out of kilter with the Indonesian realized prices. Those indices were changed to a two-month calculation used in the second quarter. Unfortunately, the prices used seemed to be a bit. It was unknown where they came from, but they made the disparity even worse. It ended up with now, up to June, our royalty rates, although it should be 28% of FOB royalty revenue, is currently running at about 32% on a consolidated basis, which I will come onto the financial impact later.
Hopefully, this adjustment has made it better and we should get back to a normal, at least paying just 28% royalty on our revenues. Next slide, please. Guidance-wise, from a production point of view, we have not changed. We are still at 75 million-80 million tons and expect to still hit that. However, we have brought down our price realization to between $80 and $90 a ton overall. Similarly, though costs, we have also reduced from the original outlook as although oil prices increased, they have not stayed higher than where we expected them to go. So the actual outlook on costs and prices have come down. Next slide, please. From the international coal price, naturally, as we have talked about, they have been trending down.
Although if you look at the globalCOAL news, it has turned slightly back up and there is talk that there is higher demand coming in September, October months as everyone comes back to, it has a normal seasonality and we see China recovering slowly. Hopefully, that should be positive in the last quarter. Next slide, please. The price and the forward curves are still in Contango slightly and have still remained quite strong. I think it is a good indication that demand is still there and still positive at the moment. It does not look like recession is going to hit the U.S. too badly, if at all, at the moment. So we expect these prices to be maintained over the coming 6-12 months. Next slide, please. Here is our operational highlights. Overall, our overburden was up 16% of coal mines and coal sales were up 2%.
Naturally, prices were down slightly at 16%, but as I said, strip ratio-wise, it is slightly higher because of the, we have done a lot of pre-stripping at Arutmin. You should see Arutmin's strip ratio over the coming four to six months come down from that 8.1 to more like 7 to 1. Prices, as we said, are down for both parties, but we are still at good prices at KPC of $100 and at Arutmin at $77.40.
If it were not for the royalty, I think we would see a lot more, a much better profit. Inventory is also high. At the moment, we are full at most places. The reason for that is we are trying to let this royalty new rate come in and come so that we are not selling coal at such a heavy discount or heavy penalty on the royalties. Hopefully, by September we should see improvements. Next slide, please.
As I mentioned earlier, the rain has been a bit better, especially in the second quarter. It is slightly higher up in May and June in KPC, but they have maintained production at a good rate and so has Arutmin. So for once, we have had quite a positive position on rain in the first half of the year. Typically, we do not see more rain until about November, December. Next slide, please.
As I mentioned, overburden removal. Our coal mining is all about moving earth. On an average of a 9 to 10 to 1 strip ratio, 90%, 95% of your cost is on moving the earth. Therefore, this is important in terms of our progression and our mining for how much coal we will get out. So it is good that we are up in both KPC and Arutmin. On coal mine, we are slightly up on last year. Next slide, please.
Coal sales again are up and as I mentioned, the strip ratio, but you can see that Arutmin is at 8.36. We expect that 8 to come back to closer to 7 by the end of the year. Next slide, please. Production costs are up because of the fuel rates have increased from last year. Not as much as we expected in the budget, but certainly it has increased. As we see and of course, the strip ratio. FOB prices following the global trends have come down about 16% so far for the first half. Next slide, please. If you see the prices, actual eco-coal or 4,100 CV coal has remained pretty stable from last year as quite a lot of it is sold domestically. But the high grade coal prices have dropped down quite a lot.
So you see that 134.50 down to about 109 overall for Bumi. Next slide, please. As we mentioned, with the cost. Costs have increased, mainly due to the fuel increasing from 2022 to 2023 first half. But as you can see, the global trend is slightly down up until June, as the market has softened, all energy product, oil, gas, and coal, into August at the moment. Next slide, please. We are actually seeing now the Indonesian benchmark falling as well, as it is catching up, which apparently lags about two months behind where the market is. So it is catching up with that trend. So it is getting pricey. The costs should come down a little bit because of that, depending on how the production goes. Next slide, please. On our financials, as you can see, the revenue is down because of our coal prices.
Also, you will see that the interest expense is way down because of the no debt, as we have mentioned before. Arutmin's profit is at operating income of 68 versus 167 in last year. That is all due to the price realization, of course, and the royalty. Royalty for Arutmin is running at about 29.8% and takes up a big cost of the revenue, the cost of revenue in there. You can see by other income, it is way down from about 58. That is mainly KPC's reduction, again, due to the drop in prices and the high royalty. You will see, I will show you on the next slide, the sort of impact that will have. If you look at the 81.8 million that we have had, net profit in this half year. If royalty was just at 28% of FOB revenue, we would be back at 171, 172.
About $90 million of additional royalty has been paid in the first half. That has been pretty much the whole effect of the reduction in our net profit. On the balance sheet side, you see the current assets and current liabilities are both down. That is because of the material movements, because of the settlement of the MCP interest in February, when we settled. There still remains some outstanding, and we are still working with lawyers and asking lawyers for if there is any change in the law to allow us to convert the outstanding interest into equity. But at the moment, it is legally not allowed to be done, and no change is expected to happen until at least after the election, if at all. Next slide, please. This is our consolidated, where if we took the 100% of both KPC and Arutmin.
As you can see, our cost of revenue there is $2.9 billion. Over $1 billion of that is royalty. In the first half of the year, based on about 32% royalty rate, we have paid about $1 billion to the government in royalties. If you look at the actual net income on 100% prices of $150 million, that would be double that number if it was not for the royalty being at 32% versus the royalty rate that we should pay, which is 28%. That would be another $153 million net income after all taxes and adjustments were paid. Next slide, please. This just gives you the comparison against our reporting numbers, so you get a clear picture. Bottom line, we are still at $81.8 million, but the effect has been due to the lower coal prices and the royalty rates being higher than planned. Next slide, please.
In summary, revenues are down 13%. The cost of revenues are up 8% because of the unfortunate royalty realization, shall we call it. The gross profit is down 67%. Operating expenses are down 29%, and operating income is decreased by 73%. Margins are down 7.6% because of this royalty cost. Next slide, please. At Bumi's level, our EBITDA is pretty much, I am sorry, our equity has remained slightly up. As the profit is slightly higher, $2.8 billion overall. And our last 12 months adjusted EBITDA naturally has come down as prices have fallen. If you look on the next slide, please. Our consolidated on our last 12 months is $1.5 billion EBITDA, and our proportionate, that is attributable to Bumi is $880 million, $881 million overall. So still healthy, but slightly down on where it was. Next slide, please.
Cash balances are still healthy at $412 in total, KPC $277 and Arutmin $120. But I point out that the royalty and other allocation deposits at KPC and Arutmin is $152 and $22.25 respectively. So there is a lot of money that has to be put down to keep the operations going and allow shipments to go out. Note we pay royalty in advance of sales, and therefore, we are paying the royalty before we have even received the revenues. On top of that, as you may have heard, the government is now requiring 30% of your export revenues to be held in deposit for three months. That will affect us. It is not a major effect. The banks are allowing to borrow the money back, but it is costing us about 0.5% on the fee or the cost of borrowing that money back.
So it is very good for the banks who have increased deposits and increased loans which are performing, but it just costs all the industry about 0.5% or whatever they can negotiate with the banks. That is the current situation with that adjustment. Next slide, please. With that, I will pass it over back to Reza to finish up on this presentation.
Okay. Thanks, Andrew. Next slide, we will show you our ESG data for you to see the comparison of the total CSR plan, for example, and then how much the reclamation we have done so far and how many trees planted including the gas emission and SPI or safety performance. This table shows the comparison between the year to date and half year of 2023, and also the last 12 months. We can see here the difference between the two periods of time. Next slide, please. This is showing the in-house calculation for you to know the price earning ratio. We try to calculate in the last 12 months until 30th June 2023, and our PE is about 6.4. It is still far below the mining sector PE in coal companies in Indonesia is about 21 or 22.
Next slide, please. This is the way we show the performance of Bumi shares so far, from April to June 2023. We are going to show you we have the upward trending in the coal sector, and also we follow the share price of Bumi according to the coal sector. We are dominant in the sector trade, in coal mining trading and, of course, in API. The global price situation also always affects the Bumi share price. Next slide, please. This is only the brief summary of Bumi shares from 2021, 2022 and 2023. If we can see here, the total full volume of trading comparison between 2021 and 2022 is quite large. It is about four times from 2021. Year to date, it is about 62 billion total trading.
The Bumi share price growth year to date is - 24.8%. So it is about the same in general in mining sector. Next slide, please. Also, this is the strong governance for the improving the finance position and improving the governance. What we have here is the RSM advisory. They are conducting independent review of GCG practice in Bumi 2019. Including the standard ASEAN Corporate Governance Scorecard, OJK, International GCG Standard, and then also the independent ESG ranking. Also our energy transition, the framework, the decarbonization strategy framework, also under preparation to implement this in the medium term. The last slide, next, is about our management. Pretty the same as last year, except for the new BOC member, Panin, and also the new BOC, Mr. Anggawira, in the BOC member. He is one of the businessmen and is very prominent in Indonesian businessman association.
The company members, four directors. We have Pak Agoes Projosasmito, Adrian Wicaksono, Pak Fionn Brangan, and Pak Eddy Sanusi. They are four representing the new major shareholder, Panin Group, in Bumi Resources. There is also Pak Himawan Setiadi as the director of IT, and he is an expert in business and digital technology. I think that is all for our presentation today. We move to the session of Q&A, and we can start with the Q&A from the participants.
Yeah. Thank you, Pak Andrew and Pak Reza, for the presentation. Now we can move on to the Q&A session. For those who would like to ask questions, you can either press the raise hand button or you can also type your questions in the Q&A box. Maybe I can start first with my question, Pak. We know that Bumi is one of Indonesia's largest coal exporters, and now that it is in a much healthier position, especially after the corporate action last year, what is the long-term direction of the company and is there any expansion, especially in the coal business segment in the pipeline?
No. From a coal point of view, we have sufficient reserves and resources to go through till 2040 quite comfortably. I think that is probably where you see the reserves currently getting closer to running out. We have to go downstream as part of the requirement of the government for the extension of the license. We are actively pursuing a coal to ammonia industry we are looking at at the moment and hope to have some news on that for the rest of the year. Into other non-coal developments, and we will announce them as and when we are ready to do that. So definitely with coal, we can maintain definitely at these sort of levels, where the current coal prices are. But as I said, it will probably by 2040 pretty much will be finished.
Yeah. I think it is very interesting that you mentioned about the coal downstream industry because obviously it is one of the main agenda being pushed by the government. But what do you think of the feasibility of this project at this point of time, and what do you think are the main risks associated with it?
Look, with any industry, it's a heavy investment that needs to be done. The numbers are working. They seem to be reasonable. Unfortunately, the power-wise is the important thing, and power seems to be the big cost in any of these industries. If you have to use a lot more green power, it's just not available in where we are in East Kalimantan, for example. You haven't got the thing. You can reduce the carbon, but you can't do 100% reduction. Therefore, that's the key thing is as long as we're allowed to bring on this industry with coal-fired power, then it should be not a problem.
Okay. But from the government side, do you see any incentives provided, if there's any, for this kind of development? Aside from the—
Yeah. But we get a 10-year extension on the license automatically. That's the incentive as far as you would say. But Indonesia needs it. The coal mines are big employee. We have 23,000, 24,000 KPC people, and we have a population in Sangatta of about 100,000. In 15, 20 years, what are you going to do if the mine shuts down? You have to build more industry. You have to be responsible for that. We are very sensitive to that requirement. So putting in new industry is what we want to do. Hopefully, the government will support us in that way.
Okay. Thank you, Pak. That's very insightful. Maybe we can go to the question from the boss, from Lynn Er. Thanks for sharing, but what do you expect the effective royalty rates for both mines going forward?
Yes. Going forward to the new regulation, the calculation has just been published last month, and hopefully we can see that the effective royalty should come down from 32% to around 28%, between 28%-29%. That could be from a 3% reduction in overall royalty percentage.
Okay. Next question is from Novita. Is there any plan to enter the renewable segment?
Not at the moment, no. We are not planning to diversify into renewables at the moment.
Okay. For the participants, if there is any more questions, you can feel free to raise hand, or you can also type your question in the Q&A box. Maybe I can continue with my questions. Obviously, Bumi still has a lot of potential in your current coal mines, and there is still one that is in exploration stage that you mentioned, the Pendopo Coal Mine in Sumatra. Do you have any sort of timeline for this to start operation? Or is there any key challenges for that?
No. Pendopo, when we acquired, was bought when the plan in Sumatra was to expand a number of the power stations in Sumatra with the idea of creating mine mouth power at the Pendopo. That, unfortunately, was shelved in the existing government because they believe that they have enough power in Indonesia. We therefore are looking at coal briquetting and even we're selling a little bit at the moment because of the high prices, but only about 15,000-20,000 tons a month. If prices remain at this sort of level, it's possible that it becomes a bit larger, but it's a long distance to bring the coal from the mine to the port. And so therefore, we'll look at other ways to develop that with, I think, mine mouth industry that would use Pendopo coal as part of the power source.
Okay. That would be quite interesting to see the development. Then I think just now you mentioned that you have slightly lowered your guidance for coal price and also production cost this year. Can you share more color on this, and would the recent surge in the coal price bring a more optimistic view on the outlook?
So just based on our sales and our plan for the rest of the year and the forward curve, the prices are naturally going to be down on our original plan. But when we had high prices, reasonable prices at the beginning of the year, we had oil prices also quite high as well. You can't have one without the other for long term. Naturally, our prices have come down, but therefore our cost have also come down. And that's really the essence of it. If we see prices recover over the next three or four months, in terms of our realized prices, then we probably expect oil to come back up along with gas as well. Because they always follow in trend at the moment.
Okay.
I think, Andy, if you don't mind, this is Dileep here. I'll just add to what Andy has said. Almost every winter, we see a spike in demand for coal. And we are seeing evidence of that in India, who've already announced a policy that 4% of coastal power plants in India through February should import coal. And we are seeing China picking up activity, and we are seeing China and India growth at 6%-7%. That is being forecast. And we expect the demand to grow, we expect the supply to become less as winter approaches. So as usual, every winter, there is usually a spike in the price. And we are seeing evidence of that in the forward prices, which from a level of 180, 170, dropped to 130, currently are between 150, 160. And the forecast of some security houses is 160-180.
It is very difficult to see forward, but it is also very difficult to see them come below 150, 160. No new capacities are coming up, but new power plants are coming up in China, India and Indonesia. That should also spike up demand. We would view the prospects of the sector as growing. The challenges really would be growth, would be economic growth, would be recession, and where the fuel prices are.
Yeah. Thank you, Dileep. That is very interesting to hear. Next, we have a question from the folks from Malaysia. Bumi's production sales volume picked up in second Q. How is the weather condition entering into third Q? If there are any challenges experienced on the ground to achieve the full year target?
This is Ashok, Karim. To answer your questions, since August, we are much higher compared to last year, both for KPC and Arutmin, and hopefully we can continue for the rest of the year. The projection between 75 to 80 should not be as difficult to achieve for us at this moment.
Okay.
For your information, compared to last year again, the weather has been much better. Hopefully for the rest of the year, the weather will remain the same.
All right. For the logistics side of things, is there any challenges that you see on the ground?
At this moment, we are not seeing. We have been fortunate enough to see that whatever we are committing are getting dispatched. Yes, the demand is, as Dileep was saying, the demand from China, basically from India is going up. Most of our coal started moving to India now. With the government announcing that all the coal-fired power plants are supposed to import 2% of the requirements, that demand has really helped us to push our tonnage forward.
I see. The main drivers are still both from China and India.
Well, that's nothing new.
More so from India now.
You see, if you look at it this way, of the world seaborne demand of 8 billion tons, almost 70%, 75% is from Asia. Asia will be the driver of the growth.
Okay. That's very clear. Thank you. We know that Bumi is one of the most experienced in the coal industry. How do the management think of the current industry situation? What do you think would be the main factor for the industry to normalize or even pick up again like last year?
Personally speaking, if you ask me, last year was an aberration. If you are looking at 2016, the coal price was $48. Even after all the excitement of last year and whatever is happening this year, the coal prices are still over three times higher than what they were in 2016. If you have levels of $150- $200 per ton, and you have a more benign regulatory policy, as Ashok said, on royalties. If fuel prices remain at levels which are affordable and don't go the way as natural gas went last year, I think the prospects are quite rosy because we don't see any contraction in demand in Asia. I've not seen evidence of any new coal plants either being stopped or seen any coal plants being retired in Asia, except for the ones which, in any case, have reached the end of their useful life.
Just to add to that, to Dileep's comments, all the banks are refusing to sign now coal products, coal related, the international banks. So the supply of actual coal coming on is not going to be increased significantly, other than probably maybe the Carmichael project in Australia. I do not think there is much else planned or coming. So even though you have very good prices internationally of $150, you are not going to see much more supply reach that until banks are either allowed to go back to lending to these or there is a change in the whole fundamental dynamics. So things are positive. There is a strong demand and there is not really much flexibility in supply.
I agree with that, Andy, fully. Basically, in the absence of any increase in capacity, there will obviously be an upward pressure on price as the demand for coal increases, with renewables unable to step in over the medium term.
Yeah. Thank you. I think you mentioned just now that you are currently not looking to expand to renewables. What are the main pushbacks that you see for renewables? If not renewables, are you interested to expand to the green mineral sector that are currently trending?
Yeah. Look, certainly, there has to be an energy. We are planning looking at energy transition. As our coal production over the next 15, 20 years reduces, we will see the BRMS' gold and copper and lead zinc come on and increase. But also we are looking at other areas in the minerals business about potential projects, and we will come out with those as soon as anything is firm and concrete. The renewables, again, it is that. You have got to have 100%. Where are you going to put them? If you are looking at solar, you are looking at wind. It does not really work in Indonesia, and the Perusahaan Listrik Negara support for solar is not there. You can put solar panels on your mine, but Perusahaan Listrik Negara will not take the power, unless you sell it at the same price as coal-fired power.
So it is no incentive to do it, to build solar panels, and wind does not really work in this area, where we are in the world. So you are only looking at things like geothermal and carbon capture. Geothermal is very heavy capital and needs to be very carefully done. And, what is it called? Carbon capture is still a very early stage. We have had discussions with Shell about looking at such things, but now Shell has pulled out completely of the renewable sector, and they said they are going to focus on gas and oil. So, currently the trend is that way from the international, the big international guys who can afford it.
And at the present, I think we will focus on the transition, the minerals that we have already in our portfolio with BRMS and potentially a couple of other items once we have done the full work and we have a clear picture.
Yeah. And just to add to that, Andy, I think there are small projects that we could be looking at as a possibility, would be solar on our reclaimed areas. The possibility of solar rooftops. We are already doing hybrid fuels, where now the government has specified B35, and of course, we are doing CCUS, whatever looks feasible and economic. And we have been examining the feasibility of electrification of our mobile equipment. Those are the kinds of areas as a coal unit that we would be exploring. We have been doing that for some time.
Mm-hmm. Thank you. But it will be interesting to hear more on the development part on this side. And, we all know that recently the Indonesia government just issued the new regulation on the HBA or coal reference price. So just want to get a view or some kind of Yeah, view from the Bumi management. What do you think of that?
Yeah. So again, just like to add from what has been. If you look at the API which was announced in August for the 5,300-GAR coal, which is the medium 5,000 to 6,000-GAR coal, it has dropped from 109 to 77. So straightaway you see that it has dropped by $72. And for the lower rank coal between 4,200 and 5,000, it dropped from as high as 77, it dropped to 56. So there's a drop. The API has been coming down, and for the high grade is not much from 191 to 179, almost $12. But the trend is, yes, with the new calculation, with the new API formula the Ministry of Energy and Mineral Resources has come up with, we could see a downward trend in future.
According to you, do you see how can the regulation be further improved to benefit our coal players like Bumi?
As we see, this new formula was announced last month. They won't be making a revision almost every month, but the way the calculation is being done, we hope that the price going forward, the new HBA price every month should come down.
In our, what's called it? The ideal thing is that we pay our 28% on the actual realized prices that we get. All our prices are audited, checked, and confirmed. We hope that the more they come back to the actual realized prices instead of any other calculation or formula, the better it will be.
Okay, Ba. Thank you. Just one interesting question that I have. Is there any possibility for the company to start distributing dividends again to shareholders now that you are in a much healthier position and debt is much lower compared to previous times?
Unfortunately, we're currently still at negative retained earnings. The regulations state that while your retained earnings are negative, you are not allowed to pay dividends. We would have loved to pay dividends last year. We would have liked to pay dividends this year. We just can't do it. We tried to look at restructuring the equity in what they call a quasi-reorganization. Unfortunately, OJK has said that's not possible with the structure that we have. We'd love to find a way to pay dividends. We'd love to be able to do it, and it would be much fairer on all the shareholders if we could. Unfortunately, the regulation and the authority won't allow us to do it. We're stuck at the moment. Over the next, hopefully, two to three years, our profits will be up.
Hopefully we'll reduce that number down as quick as we can and get that retained earnings back to positive. That's all we can do at the moment.
Yeah. Let us just say that it is the highest management priority to accelerate dividends to the extent we can within regulation and acceptable accounting practices.
Okay. Yeah. Thank you. I think we are approaching the one-hour mark, and I do not think we have any more questions from the participants. Before we conclude the call, do you have any closing statement?
Well, what I can say basically is that Bumi has turned the corner. It has made a profit of 594. It is doing well this year. It could have done far better, actually, if the gold prices had behaved. So one would say it has turned the corner. It has become debt-free. We have got strong shareholders. Our shareholder numbers have gone up. The share price from a flat of 50 is now running between 140 and 150. We entered the MSCI Indonesia Index. We have entered the IDX SMC Composite. There is an announcement from FTSE Global Equity Index that Bumi is part of two of their indices. One is the Global Equity and the other is the Shariah. So we would actually be reaching out to institutional investors who are earlier not investing in Bumi, that it might be a good time for them to get in.
Here we call upon CLSA, and we thank them for doing the analysis for us. We would like them to use their pens and their computers and write a little more about us. We have potential. We do not see a reduction in coal demand over the next five years to 10 years. So it is a potential area to look at. So we would be happy if CLSA can consider covering Bumi kindly rather than just talk about it in forums like these.
Okay. Yeah. Thank you, Pak Dileep, Pak Andrew, Pak Ashok, and also Pak Reza for joining us. We will be glad to do this again sometime. Yeah, thank you as well for the participants for joining in, and we will see you guys again next time.
Thank you very much.
Thank you.
Thank you, Pak.