PT Toba Bara Sejahtra Tbk (
䇾
Toba
䇿
)
Company Presentation
Disclaimer
These materials have been prepared by PT Toba Bara Sejahtra Tbk (the “Company”).
These materials may contain statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plan,” “will,” “estimates,” “projects,” “intends,” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. The Company has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances.
These materials are for information purposes only and do not constitute or form part of an offer, solicitation or invitation of any offer to buy or subscribe for any securities of the Company, in any jurisdiction, nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract, commitment or investment decision whatsoever. Any decision to purchase or subscribe for any securities of the Company should be made after seeking appropriate professional advice.
Table of Contents
2
5
Company Profile
4
9M16 Operational Highlights
3
9M16 Marketing Highlights
Guidance for 2016
1
9M16 Financial Highlights
3
4
Performance Highlights
Performance Highlights
PT Adimitra Baratama Nusantara (“ABN”) PT Indomining(“IM”)
PT Trisensa Mineral Utama (“TMU”)
Location: Kutai Kartanegara, East Kalimantan
Total Concession Area (3 mines) : 7,087 ha
3 mines located adjacent to one another, prime location near Capital of East Kalimantan, and proximity to waterways provides operational cost edge to grow as logistical & operational center for the area
JORC-compliant proved and probable reserves of 147 Mn tons and measured, indicated and inferred resources of 236 Mn tons (as per last JORC in 2012)
Coal brands with mid to upper range calorific values
(CV) of 4,700-5,900 kcal/kg GAR 5
PT Perkebunan KaltimUtama I (“PKU”)
Location: Kutai Kartanegara, East Kalimantan
Plantation Area : 8,633 ha, (2,701 ha planted)
To optimize downstream opportunity, palm oil mill operates in 2016 at capacity of 30 fresh fruit bunch
(“FFB”)tons per hour
PT Gorontalo Listrik Perdana(“GLP”)
Location: Gorontalo Province, Sulawesi
Established in February 2016 to develop coal-fired power plant (“CFPP”) project with capacity of 2x50 MW
Obtained Power Purchase Agreement (“PPA”) with contract tenor of 25 years through Independent Power Producer(“IPP”)scheme
Coal Mining
Plantation and Power Generation
Note:
1. PLN: PT Perusahaan Listrik Negara (Persero)
Ownership Structure
License
Area
Davit Togar Pandjaitan PT Bara Makmur Abadi
PT Toba Sejahtra PT Sinergi Sukses Utama Roby Budi Prakoso
71.8% 0.8% 6.2% 5.1%
20-year Production Operation Mining Permit (䇾IUP-OP䇿) expiring in
December 2029
IUP-OP was converted from Kuasa Pertambangan
(䇾KP䇿) in 2009
IUP-OP expires in June 2013
IUP-OP was converted from KP in 2010
IUP-OP extension was completed in March 2013 (First out of 2 extensions: in 2023, with tenor of 10 years each)
13-year IUP-OP expires in December 2023
IUP-OP was converted from a KP in 2010
Plantation permit of PT Perkebunan Kaltim Utama I (PKU) expires in 2036
IUP-P for downstream processing
PPA with PLN(1)for 25-year contract
2,990 ha 683 ha 3,414 ha 8,633 ha (Right to Use Land) ~60 ha
Reserves: 117 MT- JORC
Resources: 156 MT- JORC
Reserve: 22 MT- JORC
Resources: 37 MT- JORC
Reserves : 8 MT - JORC
Resources: 43 MT- JORC Planted Area: 2,701 ha
Offtake(“take or pay”) by PLN for 25 years
Strategic Mine Locations
Muara Berau
Muara Jawa Makassar Strait
~55 km (total ~120 km)
Balikpapan
Major city to north is less than 50 km
Adjacent locations for all
3 mines
Close proximity to jetty and transhipment point
of Muara Jawa Distance from pit to jetty, with closest one ~5 km and furthest ~25
km ~5 km
IM jetty
ABN jetty
Toba owns all infrastructures (coal processing plant, overland conveyors, and jetties), giving significant operating leverage vs other concessions in surrounding areas
25 km
TMU
IMABN
TMU
Overland & Barge Loading Jetty: Speed
of 1,800 TPH High Built CPP Cap
up to 10 Mn TPA Short Coal Hauling
Distance < 5km
Hauling Road to Connect with ABN
CPP Capacity : 6 Mn
Tons/Annum (TPA) Conveyor to Jetty
Short Coal Hauling Distance ~4km
Infrastructure & Operational Capabilities
Toba’s Concessions
ROM Stockpile 8
Note:PT Adimitra Baratama Nusantara (ABN) PT Indomining (IM)
2012
2013
2014
2015
Forbes Indonesia’s Top 50
Companies
ABN: East Kalimantan
PROPER Green Mining Award
IM:East Kalimantan PROPER
Blue Mining Award
ABN: East Kalimantan
PROPER Blue Mining Award
IM: East Kalimantan PROPER
Blue Mining Award
PT Adimitra Baratama Nusantara
ABN received OHSAS
18001:2007 Certification
ABN received ISO 14001:2004
Certification
Finance Asia’s 7th Company Most Committed
to Paying Good Dividends
Awards and Accolades
ABN: East Kalimantan PROPER Gold
Mining Award
ABN: KUKAR CSR Award
IM and TMU: East Kalimantan PROPER Blue Mining Awards
ABN: ISO 9001 forQuality Management Certification
TMU: ISO 14001, OHSAS 18001 and ISO 9001 Certification
ABN: East
IM and PT Cipta Kridatama
(“CK”) signed 5-year mining
contract
Toba, through GLP, signed PPA with PLN to develop 2x50 MW CFPP
project, Sulbagut-1 in Gorontalo Province, Sulawesi
Material Contracts Secured in 2016
1 April 14 July 1 September
TMU and CK signed 3-year mining contract
Listing Date 6 July 2012
No of Shares Listed 210,681,000 shares or 10.47%
IPO Proceeds IDR 400,293,900,000
Stock Code TOBA
Anchor Investor Baring Private Equity Asia (8% at IPO)
Initial Public Offering (IPO)
Milestones
In May 2015, ABN already entered into mining contract with
CK
Cooperation between Toba Group and CK is expected to
improve further operational efficiency through better
economy of scale
Realization
9M 2016
Operational 9M15 9M16 Δ%
Production Vol 4.5 4.2 (6.7)%
Sales Vol 4.8 4.3 (10.4)%
Stripping Ratio x 12.3 13.0 5.7%
Sales 268.6 192.1 (28.4)%
EBITDA(2) 42.0 27.3 (35.0)%
Net Profit 20.3 9.7 (52.2)%
Financial 9M15 9M16
55.9
NEWC Index 61.4 56.4 (8.1)%
ASP 44.8 (19.9)%
mn ton
EBITDA Margin 15.6% 14.2%
Focused onprofitable production output based on mine plan through optimizationof :
Infrastructure and connectivity sharing
(hauling road, coal processing plants (CPP), & jetties) among Group mines
Joint mine plan between three adjacent mines
and contractors(1)
Competitive coal pricing driven by strong coal
branding from consistency in scheduled delivery/product quality and securing term contracts using mostly fixed price
Diversified customer base and export
market base through suitable mix between
end-users and traders, and more evenly spread stable demand markets respectively
Note:
(1) As per September 2016, all three Group mines of ABN, IM, and TMU have mining contracting cooperation with Cipta Kridatama (CK) to improve further cost efficiency through economies of scale and better mine planning (2) EBITDA = Gross Profit –selling expenses –G&A + depreciation and amortization
2008 2009 2010 2011 2012 2013 2014 2015 9M16
ABN IM TMU
Annual Coal Production
Mt : In Million Tons
5.6
6.5
5.0 - 6.0
8.1
Production volume rose from only
800K tons in 2008 to 6.1 mn tons in
2015, booking CAGR growth of
33.6% over 8 years
9M16 production results from mining subsidiaries came in line with guidance
With strategy to sustain certain margin, while preserving life-of-mine (LoM) reserves, 2016 production guidance is estimated at 5.0-6.0 mn tons (from 5.0-7.0 mn tons previously)
2016 Stripping Ratio (SR) is expected to stabilize at 12.5x-13.5xfrom11x-12x previously Cumulative production
achievement >10 Mt
Cumulative production achievement >20 Mt 5.2
4.1
0.8
2.0
2016 Production Guidance
2008 2009
9M16 Operational Performance
Quarterly Production & SR
Production in Thousand Tons
Production Summary
MT: Million Ton
9M15 9M16 Change Comment
Sales Volume
9M16 sales volume tracked its 9M16 production volume
SR edged up due to pre-stripping at ABN, and in line with mine plan
4.5 4.2
Production volume in 9M16 stabilized at 4.2 mn tons in line with mine plan, while ensuring certain margin and optimizing reserve preservation
(6.7)%
Production Volume
Production Summary
MT: Million Tons
Q-o-q production volume of 1.39 mn tons in 3Q16 came in line with 2016 quarterly guidance of 1.25 -1.50 mn tons
3Q16 SR fell to 12.8x from 13.8x in 2Q16 due primarily to normalization after pre-stripping activity at ABN new pit in 2Q16
SR for full year is expected to stabilize at 12.5x –13.5x
14
2.330 1.653 1.505 1.469 1.565 1.529 1.503 1.269 1.387 12,5x
13,8x
12,4x 12,5x 12,0x 12,1x 12,4x
13,8x
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
TOBA
ABN Operational Performance
ABN
TMU
IM
PT Kutai Energi
Quarterly Production & SR
Production in Thousand Tons
Key Highlights
3Q16 quarterly production rose y-o-y and q-o-q from 2Q16 and 3Q15 respectively due to normalization of mining activity post pre-stripping activity in 2Q16
SR in 3Q16 fell from 15.0x in 2Q16 post pre-stripping activity at ABN’s opening of new pit
15
987 994 1.071 876 1.018
13,0x 12,6x 12,9x
15,0x
3Q15 4Q15 1Q16 2Q16 3Q16
ABN
IM Operational Performance
TMU
ABN
PT Kutai Energi
Quarterly Production & SR
Production in Thousand Tons
Key Highlights
Production rise to 186K tons in 3Q16 came in line with 2016 internal quarterly guidance of 125K - 150K tons SR in 3Q16 stabilized y-o-y as well as q-o-q at 11.9x
3Q15 4Q15 1Q16 2Q16 3Q16
IM
TMU Operational Performance
ABN IM
Note:
- - -
Hauling roadKey Highlights
Quarterly Production & SR
Production in Thousand Tons
3Q16 production volume came in at 182K tons, slightly below 2016 internal quarterly production guidance of 225K-275K tons
3Q16 SR on q-o-q stabilized but edged up on y-o-y basis
17
3Q15 4Q15 1Q16 2Q16 3Q16
TMU
Evolution of Quarterly FOB Cash Cost from 3Q12-3Q16
Quarterly FOB Cash Cost
In US$/ton
Notes:
(1) FOB Cash Cost = COGS including royalty and selling & marketing expense –depreciation and amortization
(2) Adj. FOB cash costs = COGS, including selling & marketing expense and royalty –depreciation & amortization of deferred exploration & development costs and excluding deferred stripping cost
Divergence between SR averaging at 12x-13x and falling FOB cash cost reflect Toba operating within mine plan and more efficiently over time
19
12,7x 12,7x 13,5x
13,8x 12,5x
13,8x
12,4x 12,4x 12,0x 12,1x 12,4x
13,9x
3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Financial Performance
Notes: (1) FOB Cash Cost = COGS including royalty and selling expense –depreciation and amortization (2) EBITDA = Gross Profit –selling expenses –G&A + depreciation and amortization
NEWC index price decreased 8.1% y-o-y in 9M16, while it gained ground q-o-q in 3Q16 from 2Q16. ASP fell higher y-o-y in 9M16 by 19.9% as most sales volume were contracted at fixed price in 1H16, hence not capturing NEWC price uptick in 3Q16
Balance sheet position remains positive
despite lower cash holdings in 9M16, while debt exposure fell due to partial loan repayment
SR edged up y-o-y in 9M16 due to pre-stripping activity in 2Q16 as ABN opened new pit
21 Gross profit margin, and EBITDA margin each stabilized and slightly fell y-o-y to 9M16 resulting from better operational
performance, disciplined cost
management initiatives Financial and Ope rational Highlights
All figures are in million US$
unless otherwise stated 9M15 9M16 Cha nges
Ope ration
Financial Pe rform ance
Profi t (Loss) 9M15 9M16 Cha nges
Sales US$ mn 268.6 192.1 (28.5)%
Interest Bearing Debt US$ mn 64.0 54.4 (15.0)%
Cash and Cash Equivalents US$ mn 45.5 31.1 (31.6)%
Net Debt*** US$ mn 18.5 23.3 25.9 %
Total Assets US$ mn 282.4 261.8 (7.3)%
Total Liabilities US$ mn 127.3 110.6 (13.1)%
Total Equity US$ mn 155.1 151.2 (2.5)%
Fi na nci a l Ra ti os
Gross Prof it Margin % 19.2% 19.2%
EBITDA Margin % 15.6% 14.2%
Balance Sheet
Consolidated Balance Sheet In Million US$
Net Debt to EBITDA2) In Million US$
Total assets fell 7.3% to US$ 261.8 mn at end-Sept 2016 from US$ 282.4 mn as per end 2015, while total liabilities dropped much more by 13.1% to US$ 110.6 mn over the same period due mainly to loan repayment
Total equity value edged down slightly by 2.6%to US$ 151.1 mn from US$ 155.1 mn over the same period
Net Debt to EBITDA ratio has constantly recorded stabilityfrom quarter to quarter at below 2x Note:
(1) Restated due to compliance on PSAK 24R implementation
(2) EBITDA = Gross Profit –selling expenses –G&A + depreciation and amortization
22
261.8
Total Assets 282.4 -7.3%
Interest Bearing Debt 64.0 54.4 15.0%
Total Liabilities 127.3 110.6 -13.1%
Shareholders Equity 155.1 151.1 -2.6%
Balance Sheet Dec’151) Sept‘16 Changes
Cash and Cash Equivalent 45.5 31.1 31.6% 63 64 61 58
54
49 46 49
41
31
3Q15 4Q15 1Q16 2Q16 3Q16
Net Debt (Cash) (US$ Mn) EBITDA (US$ Mn)
22
Optimizing Selling Price & Product Quality
In 2013-2015, the spread between NEWC Index and ASP has narrowed through marketing initiative of selling forward to premium customers in Japan, Korea, Taiwan, and Malaysia at predominantly fixed price
Using the same strategy in 2016 and having secured sales volume in 1H16 at fixed price, sudden jump in coal price in the last 2 months beyond market prediction was not reflected in the YTD ASP
24 Notes:
- HSis High Sulphur, max 2.0%, RSis Regular Sulphur, max 1.0%, LSis Low Sulphur, max 0.6%
Diversified Export Market Base
Initiatives Undertaken:
Export Market Focus 2014-9M16 Sales Destinations by Country 9M16
Given China’s economic situation in 2015, focus shifted towards export markets whose economies showed stable demand prospects ie. Korea, India, and Taiwan
Diversification towards countries ex.China remains a highlight for 2016
25
2014 2015 9M16
China Korea India Taiwan
Product Contribution by Calorific Value
Initiatives Undertaken:
Product Composition (GAR) 2014-9M16 Product Composition (GAR) 9M16
Since 2014 until September 2016, the 5600 GAR products have consistently accounted for the largest product contribution at 55%-65% of total sales volume
26
9M14 9M15 9M16
Snapshot of 2016F
Operation
Prod Vol (mn ton)
SR (x) 12.3x
6.1 2014
13.3x 8.1
NEWC Coal Price (US$/ton) 70.8 59.2
Objective is to execute disciplined mine plan that generates certain margin without compromising long term reserves
Post 17.6% and 20.1% y-o-y FOB cash cost reductions in 2015 and 9M16 respectively, joint mine plan and infrastructure sharing are to be better streamlined among 3 operating subsidiaries, with initiatives to lower costs throughout value chain from mining to logistics costs
Marketing is to focus on better diversification of export destination base and customer base (ideal mix between traders and end-users) and maintaining product branding
2016 CAPEX is estimated at US$ 5 - 8 mn to support mainly mining facilities and equipment, and plantation operation of PKU (palm oil mill). The palm oil mill has installed capacity of 30 fresh fruit bunch (FFB) / hour with potential capacity upgrade to become 60 FFB tons / hour. To date, Toba has realized CAPEX worth US$ 8.6 mn, which includes among others, preliminary investment in the power plant project of Sulbagut-1
Toba aspires to become an integrated energy company in the long run through sustainable growth. To
maximize existing assets and ensure future sustainable growth backed by more stable revenue stream, it is engaging in downstream integration in the power sector
28
12.5x–13.5x 5 - 6 2016 F
5.5% 7.1%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
839
186 196 200
0
2011 2012 2013 2014 2015
646
702
746 779 784
Indonesian Economy & Energy Demand
Source: PLN Business Plan (RUPTL) 2016 –2025; Central Bureau of Statistics (BPS); Note: PLN is State Electricity Utility
Energy plays fundamental part in economic growth process. Economic growth needs to be supported by sufficient Electrification Ratio (ER)
Power consumption is related to productivity level of its population. As countries switch to manufacturing-based economies, power consumption per capita increases
GDP Growth (%)
Electricity Consumption (TWh)
Electricity Consumption per Capita (KWh)
FORECAST
Growing Power Demand
As government pushes for infrastructure & industrial development, low electricity consumption and installed capacity levels create significant upside potentials in electricity demand
Indonesia is behind its ASEAN peers in Electrification Ratio (ER)
Developed countries tend to have larger electricity consumption per capita
ASEAN Electrification Ratio Comparables
Target 2019: >95%
Energy Consumption per Capita (KWh)
Source: PLN Investor Presentation May 2015, RUPTL 2016-2025, MEMR, World Bank, Indexmundi
23 GW
Installed Capacity* 46 GW
Electricity Development Progress
Coal and gas are largest sources of energy for electricity generation with highest total installed capacity and at most economical price
* Per 2015, excluding rental from 3rdparty sources ~4 GW
Installed capacity of power plants increased slowly at 6% CAGR over 2010-2015
PLN installed capacity increased at 5% CAGR, while IPP increased at 11% CAGR
Installed Capacity 2010 - 2015
Installed Capacity excluding Rental Power as
of December 2015
Source: RUPTL 2016 –2025; Note: IPP is Independent Power Producer
31GW 34GW
37GW
41GW 43GW
46GW
2010 2011 2012 2013 2014 2015
PLN IPP Total
Government 35 GW Program
35 GW Power Projects
Coal Fired Power
Plant (CFPP) Gas & Steam Power Others
~20 GW ~7.5 GW ~6.5 GW
PLN
2 GW
IPP
18 GW
Project Costs US$ 27 –36 bln
60% 21% 19%
DEBT (Proj. Financing)
US$ 19 –25 bln
EQUITY US$ 8 – 11 bln
President Jokowi ‘s Administration committed to adding 35 GW new capacity to current installed capacity of 46 GW to increase ER from currently ~88% to >95% by after 2019
~60% of total 35 GW power projects will come from CFPP & this 35 GW require significant participation from private (IPP) at ~53% of project costs vs PLN’s portion of ~47% (inc. transmission)
IPPs (inc. CFPP) secure power purchase agreement (PPA) from PLN with typical tenor of 25-30 years
27 GW 28 GW 31 GW 48 GW 53 GW 55 GW 55 GW 56 GW 56 GW 58 GW 50 GW 54 GW
67 GW
88 GW 94 GW 97 GW
100 GW104 GW
113 GW
126 GW
0 20 40 60 80 100 120 140
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
CFPP Others Total
CFPP Will Drive National Electricity
Planned Year-End Capacity
2025 Installed Capacity Composition
Total installed capacity will grow by 10% CAGR in next 10 years.
CFPP installed capacity will grow by 11 % in same period By 2025, CFPP will make up 46% of all power plants in Indonesia
Source: RUPTL 2016-2025
13%
30%
46%
11%
Renewables Gas Coal Others
35 GW Electricity Program Future Electricity Programs
34 45 53
55 70
88
2010 2011 2012 2013 2014 2015
93 95 109
166 168 170 171 173 175 177
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
11 GW
15 GW 16 GW
20 GW 22 GW 23 GW
26 GW 27 GW
31 GW
48 GW
53 GW 54 GW 55 GW 55 GW 56 GW
58 GW
Coal Requirement for CFPP
Coal requirements for power (million tons)
Installed coal-fired power plants (GW)
CAGR: 21% CAGR: 21%
Coal consumption has increased by 21% CAGR in past five years
It is expected to continue to increase by another 21% CAGR from 2016 until 2019, if 20 GW of new CFPP capacity from 35 GW program is installed according to plan
This assumes each MW requires 3500 - 4000 tons of coal p.a.
35 GW Electricity Program
Source: PWC Report - Supplying and Financing Coal-Fired Power Plants in the 35 GW Program, RUPTL 2016 - 2025
Forecast
Expansion Strategy for Sustainable Growth & Value
Forward-Looking Expansion
Upstream
INTEGRATED MINING AND ENERGY COMPANY
Target participation in power generation business through IPP
scheme, while evaluating prospects in captive power and
renewables
Continuous
Operational
Efficiency
Improvement to
Sustain Margins
Existing Mines
Sustainability
Downstream (Diversification)
Target coal mining company that can create synergy with existing
coal mining assets
PT Gorontalo Listrik Perdana (
“
GLP
”
) was established in February 2016 to
engage in power plant development and operation
GLP is owned by consorsium: PT Toba Bara Sejahtra Tbk (
“
60%
”
), PT Toba
Sejahtra (
“
20%
”
) dan Shanghai Electric Power Construction Co. Ltd (
“
20%
”
)
Sulbagut-1 Coal-Fired Power Project
Developer
Contract Type
Power Purchase Agreement (PPA) with PLN, signed on 14 July 2016
Independent Power Producer (
“
IPP
”
) scheme
25-year Contract Period
Project Cost
US$ 180 - US$ 220 Mn
Commitment
GLP will undergo the
process of meeting
Financial Date and
Commercial Operation Date
as stipulated in the PPA
Project Profile
Coal-Fired Power Plant (
Location: Gorontalo Province, Sulawesi
“
CFPP
”
), 2 x 50 MW capacity
Kalimantan
Sulawesi
Sulbagut-1
Toba Concessions