An established Indonesia-based financial services group
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Full year ended 31 December 2013 ("FY2013") vs Full year ended 31 December 2012 ("FY2012")
Net Interest Income
Total interest income increased by IDR39.6 billion from IDR121.1 billion in FY2012 to IDR160.8 billion in FY2013. The increase was mainly attributable to the increase in consumer financing and finance lease income from PT Batavia Prosperindo Finance Tbk ("BPF") which amounted to IDR40.5 billion due to an increase in the number of customer bookings in FY2013.
Interest expense increased by IDR25.9 billion from IDR37.2 billion in FY2012 to IDR63.1 billion in FY2013. The increase was mainly due to the increase in bank borrowings for its consumer financing business in line with the increase in the number of customer bookings as well as the interest expense incurred on the BPF's New Bond (as defined below) of IDR15.7billion to fund its consumer financing business. The net interest income margin decreased from 69.3% for FY2012 to 60.7% for FY2013 mainly attributable to the interest expense incurred for the New Bond (as defined below).
Net premiums income
Net premiums income was contributed by PT Malacca Trust Wuwungan Insurance ("MTI") and increased by IDR11.8 billion in FY2013 as compared to FY2012 due to the growth in the average number of customers and transaction volume in FY2013.
Fee and commission income
Fee and commission income increased by IDR4.2 billion from IDR130.9 billion in FY2012 to IDR135.1 billion in FY2013.
The increase in fee and commission income was due to the increase in management fees attributable to PT Batavia Prosperindo Aset Manajemen ("BPAM") of IDR2.1 billion, brokerage commissions attributable to PT Batavia Prosperindo Sekuritas ("BPS") of IDR1.9 billion and income from administration fees and penalties from BPF of IDR7.0 billion. The increase was partially offset by a decrease of IDR6.8 billion in underwriting and selling fees attributable to BPS.
Gain on trading of equity and debt securities
Gain on trading of equity and debt securities increased by IDR0.6 billion in FY2013 as compared to FY2012 mainly due to the trading fees earned by BPS from the purchasers of BPF's New Bond (as defined below), which amounted to IDR0.8 billion in FY2013, as BPS is acted as one of BPF's selling agents for the New Bond (as defined below).
General and administrative expenses
The decrease in general and administrative expenses of IDR5.6 billion was mainly due to the expenses incurred for the operation of BPF's new branches and the higher operating expenses for MTI due to the growth in the insurance business.
The increase in professional fees of IDR 3.7 billion was mainly attributable to professional fees paid in relation to the issuance of BPF's New Bond (as defined below).
Allowance for impairment of receivables
The increase in allowance for impairment of receivables of IDR4.7 billion from FY2012 to FY2013 was mainly due to an increase in the provision made for trade and other receivables based on the management's assessment that the collectability of trade and other receivables is to deteriorate.
The decrease in marketing expenses of IDR3.4 billion was mainly due to a decrease in commission paid to selling agent in BPAM in FY2103 due to the changes on sales commission scheme for the mutual funds managed by BPAM in FY2013.
Other income - net
The decrease in net other income of IDR1.4 billion from FY2012 to FY2013 was mainly due to the loss on foreign exchange as compared to a gain on foreign exchange in FY2012. This was partially offset by the increase in gain on disposal of plant and equipment of IDR0.5 billion.
Review of financial position (Group):
Total assets increased by 23.6% from IDR1,007.4 billion as at 31 December 2012 to IDR1,244.2 billion as at 31 December 2013.
Financial assets at fair value through profit or loss increased by IDR18.0 billion mainly due to new bonds acquired by PT Batavia Prosperindo Sekuritas ("BPS") for short term investment.
Trade and other receivables increased by IDR252.7 billion as a result of the growth in the consumer financing business for BPF.
Prepayments and property, plant and equipment increased by IDR1.7 billion and IDR4.7 billion, respectively, mainly due to additional prepayment for office rental and purchase of property, plant and equipment for BPF's new branches during the financial year.
Total liabilities increased by 34.2% from IDR558.4 billion as at 31 December 2012 to IDR749.1 billion as at 31 December 2013.
Trade and other payables decreased by IDR40.9 billion from IDR137.6 billion as at 31 December 2012 to IDR96.7 billion as at 31 December 2013 mainly due to a decrease in payables to BPS's client deposit accounts as a result of a decrease in customer selling transaction volume during the last three days before 31 December 2013. This was partly offset by an increase of MTI's claim reserves as a result of an increased amount of vehicle's insurance claims reported.
Bank borrowings decreased by IDR50.4 billion from IDR398.2 billion as at 31 December 2012 to IDR347.8 billion as at 31 December 2013 mainly due to repayment of bank borrowings by BPF for its consumer financing business. Bond payables of IDR284.0 billion as at 31 December 2013 related to new bonds issued to third parties by BPF during 3rd quarter of FY2013 to fund its consumer financing business (“New Bond”). The New Bond which aggregated to IDR300 billion was issued on 3 July 2013 in three (3) tranches with maturity periods of up to three (3) years. The first tranche of the New Bond with a principal of IDR20 billion and an interest rate of 9.25% per annum has a maturity period of one year; the second tranche of the New Bond with a principal of IDR50 billion and an interest rate of 9.50% per annum has a maturity period of two years; and the third tranche of the New Bond with a principal of IDR230 billion and interest rate of 10.75% per annum has a maturity of three years. The interest for the New Bond will be payable on a quarterly basis.
Provision for employee benefits increased by IDR0.1 billion from IDR16.6 billion as at 31 December 2012 to IDR16.7 billion as at 31 December 2013 due to an increase in the number of employees as a result of the increase in the number of branches by BPF during FY2013.
Cash flows statements
FY2013 vs FY2012
Net cash used in operating activities was IDR246.8 billion in FY2013. In FY2013, the operating cash outflows before working capital changes were IDR3.4 billion. The net cash outflows from changes in working capital were mainly due to an increase in trade and other receivables of IDR264.6 billion, a decrease in trade and other payables of IDR48.3 billion and an increase in prepayments of IDR1.7 billion.
Net cash flow used in investing activities was IDR26.8 billion in FY2013 was mainly due to net additions of financial assets at fair value through profit and loss which amounted to IDR14.7 billion, the acquisitions of plant and equipment which amounted to IDR14.6 billion. This was partly offset by proceeds from disposal of plant and equipment of IDR3.2 billion.
Net cash flow from financing activities amounted to IDR275.6 billion in FY2013. This was mainly due to proceeds from the issuance of the New Bond to third parties of IDR 284.0 billion and proceeds from restricted time deposits which amounted to IDR50.0 billion, which was partially offset by net payment of bank borrowings of IDR50.2 billion and the payment of dividend of IDR8.2 billion.
Cash and cash equivalents of the Group was IDR189.2 billion as at 31 December 2013.
In 2013, the Indonesian economy grew by 5.7% (yoy). Although lower than the previous year, but the figure is an achievement. The lower growth was due to the increasing pressure on Indonesia's Balance of Payments ("BOP"), coupled with the weakening of the Indonesian rupiah. Inflation was also above the inflation target set by Bank Indonesia at the beginning of 2013. The inflation rate was recorded at 8.38% (yoy) for 2013. However, the current conditions indicate that the stability of the economy is under control. The BOP in the fourth quarter of 2013 improved with the decline in current account deficit. Monthly inflation had decreased and was within the normal pattern. In 2014, the BOP is expected to improve with the decline in the current account deficit. Inflation in 2014 and 2015 are expected to be under control within the range of 4.5 ± 1% and 4.0 ± 1%. The economic growth in 2014 is estimated at the lower limit range of 5.8% to 6.2% which will be in line with the consolidation process of the domestic economy toward a more balanced conditions.
The Bank Indonesia's policy is focused and divided into three areas, which is to maintain the stability of the financial system, manage inflation and to reduce the current-account deficit. In 2014, the Bank Indonesia's policy also seeks to strengthen the policy mix of monetary, macro prudential, and payment systems.
The Group expects the macroeconomic situation in Indonesia to be more challenging in FY2014 which is an election year. On 23 December 2013, the Company and Beacon Peak Capital Pte. Ltd. (the "Offeror") made a joint announcement in relation to the exit offer by the Offeror and the proposed voluntary delisting from Catalist of the Singapore Exchange Securities Trading Limited. The Company will be issuing a circular to provide shareholders with the advice of the IFA to the Independent Directors and the recommendations of the Independent Directors with regards to the exit offer and the delisting proposal. Shareholders and investors are advised to refer to the circular which will be dispatched in due course.