Company Presentation 1H 2014

(1)

1 PT Toba Bara Sejahtra Tbk ( Toba )

Company Presentation

(2)

Disclaimer

These materials have been prepared by PT Toba Bara Sejahtra (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.

(3)

Marketing Highlights

Corporate Events

Operational Highlights

Financial Highlights

Appendix

3

5

1

2

(4)

(5)

Annual General Meeting of

Shareholders

Revolving Loan Facility

Signing

Events in 1H 2014

ISO for ABN

19

th

_{March 2014: Company}

signed

US$

75 million

revolving

loan

facility

agreement with BNP Paribas

Singapore Branch, Citigroup

Global

Markets

Singapore

Pte.

Ltd.,

and

Standard

Chartered Bank

Singapore

Branch

June

2014:

Meeting

analysis

OHSAS 18001: 2007 and ISO

14001: 2004. ABN received ISO

14001 certification : 2004 for

Environmental

Management

System and OHSAS 18001: 2007

for

Safety

System.

Assessment/Audit was done by

Lloyd’s

Register Quality Assurance

(LRQA) and accreditation given by

UKAS (UK)

21

st

_{May 2014: Company held 2013}

Shareholders’

Annual

General

Meeting at Bursa Efek Indonesia.

Main

agenda: Approval of 2013

(6)

(7)

Prime Location Gives Significant Cost Advantage

locations for all

3 mines

Close proximity transhipment

point & jetty Furthest pit to jetty 25 km, with closest

one ~5 km

~5 km IM jetty

ABN jetty

(8)

TMU

IM

ABN

TMU

Toba’s Concessions

Underpass Infrastructure

Loading Speed of 1,800 TPH High Built CPP Cap

10 Mn TPA Hauling Road to IM

Mine Ops Commenced at Block 4

Short Coal Hauling Distance < 5km

CPP Ramp Up to 6Mn Tons/Annum (TPA)

Conveyor for TMU & Others

Short Coal Hauling Distance 4km

ABN

TMU

Infrastructure & Operational Capabilities

INDOMINING

(9)

2008 2009 2010 2011 2012 2013 2014e

TMU

IM

ABN

Yearly Coal Production

Mt : In Million Tons

Operational Data

2008 2009 2010 2011 2012 2013

Production Volume (Mt) 0,8 2,0 4,0 5,2 5,6 6,5

ABN 0,1 1,1 3,1 3,8 4,4 4,2 IM 0,7 0,9 1,0 1,4 1,0 1,4 TMU - - - 0,0 0,2 0,9

Stripping Ratio (x) 11,9 10,5 9,9 12,7 14,9 13,4

Cumulative Production

achievement >10 million

tons

Cumulative Production

Achievement >20

million tons

Solid Operating Track Record

5.6

Note: 2014e: Toba’s Production target in 2014

• Production

volume

rose

significantly from only ~800,000

tons in 2008 to ~6.5 mn tons in

2013, booking CAGR growth of

52.2%

over relatively

short

period of 5 years

• IM and TMU both contributed to

Company’s

2013

total

production’s

higher

volume

growth of ~40% and ~260%

respectively

• Stripping Ratio (SR) decreased

from 14.9x in 2012 to 13.4x in

2013

resulting

in

lowered

mining costs

• TMU’s

production

solidly

increased from quarterly

run-rate of ~84,000 tons in 1Q13 to

high of ~420,000 tons in 4Q13

post

earlier-than-expected

(10)

Company Operational Performance in 1H14

Quarterly Production & Stripping Ratio (SR)

Production in Thousand Tons

Production Summary

MT: Million Ton

1H13

1H14

Change

Comment

Sales Volume

Sales volume grew significantly

in line with

production volume growth

SR continued to fall

resulting in lower mining cost

• Quarterly production run-rate of 1.9

mt has been maintained for last 3

consecutive quarters due to more

streamlined mining operations

• 2Q14 volume reached 2.2 mt, up

from 1.9 mt in 1Q14

• Pre-stripping caused SR to rise

q-o-q from 1Q14 to 2Q14

• SR is expected to normalize in

4Q14

2.79

4.07 Production volume grew significantly by 45.9%

_y-o-y

_{from 1H13 to 1H14 mainly driven by border}

mining at IM and production ramp-up at TMU

45.9%

Production

Volume

(Mt)

1,298 1,501 1,802 1,950 1,911 2,160

15,1x _13,6x

12,7x 12,7x 13,5x 13,8x

5x

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(11)

ABN Operational Performance

ABN

TMU

IM

PT Kutai Energi

Quarterly Production & Stripping Ratio



Quarterly production rose

from 1 mn mt to 1.2 mn mt in 2Q14, while quarterly run-rate has stabilized at

1.0 –

1.1 mn mt



Higher q-o-q SR

from 14.1x to 14.9x in 2Q14 resulted from pre-stripping activity



SR is expected to normalize in 3-4Q14

Key Highlights

Dump Distance (m)

1.723 1.719 1.864 1.843 1.779 1.894 1.842

1,225 925 995 1,188 1,101 1,003 1,213

12,6x

16,6x

14,2x

12,7x 13,1x

14,1x

14,9x

5x 10x 15x 20x

500 1,000 1,500

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(12)

TMU Operational Performance

ABN

IM

PT Kutai Energi

Note:

- - -

Hauling road



Post completion of hauling road at TMU

to ABN in 2Q13, production run-rate significantly rose from

low of 80-90K per quarter up to average 380K per quarter over last 3 quarters of 4Q13, 1Q14, and 2Q14



SR slightly increased 2.8% q-o-q

from 11.4x to 11.7x due to pre-stripping activity. SR dropped y-o-y

from 12.7x in 2Q13 to 11.7x in 2Q14 due to better mining operations

Key Highlights

Quarterly Production & Stripping Ratio

85 84 146 275 420 362 379

10,8x 11,2x 12,7x

10,3x 11,1x 11,4x 11,7x

5x 15x 25x 35x 45x

0 50 100 150 200 250 300 350 400 450

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(13)

IM Operational Performance

TMU

ABN

PT Kutai Energi

Quarterly Production & Stripping Ratio



Quarterly production run-rate stabilized at 550K in 1Q14 and 2Q14

respectively, up from quarterly

run-rate of c.300-350K in 1Q and 2Q13. hence on y-o-y, production volume rose 74.9% from 638K to 1.1

million mt in 1H14



SR fell 6.6% q-o-q

to 12.8x in 2Q14 but SR rose on y-o-y basis from 1H13 to 1H14 factoring in higher

pre-stripping activity. Pre-stripping is expected to continue in 3Q14 prior to normalizing in 4Q14

Key Highlights

Dump Distance (m)

2.284 1.698 1.662 1.728 1.570 1.904 1.751

272 278 360 339 425 547 570

9,7x

11,2x

12,7x

14,7x

12,8x 13,7x 12,8x

0x

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

(14)

(15)

Evolution of Quarterly FOB Cash Cost from 2012-2014

Constant convergence between FOB vessel cash cost and adjusted FOB vessel cash cost underline

normalization of SR over quarterly period resulting from more efficient mine operations

Quarterly FOB Vessel Cash Cost

In US$/ton

Notes:

(1) FOB Vessel Cash Cost = COGS including royalty and selling &marketing expense –depreciation and amortization

(2) Adj. FOB vessel cash costs = COGS, including selling & marketing expense and royalty –depreciation & amortization of exploration & development and excluding deferred stripping cost

67 69 60 57 55 55 53 49 49 52

12,7x 12,7x 13,5x 13,8x

0x

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

FOB Vessel Cash Cost

(16)

18.9

1H 2014 Highlights

EBITDA

surged by 74.7% y-o-y

from US$ 21.9 mn in 1H13 to US$

38.3 mn in 1H14

FOB

vessel

cash

cost

was

lowered by 5.0% y-o-y,

resulting

from lowered overall SR by 4.7%

y-o-y from 14.3x in 1H13 to 13.6x in

1H14

Production

volume

expanded

45.9% y-o-y from 2.79 mn tons in

1H13 to 4.07 mn tons in 1H14 on

the back of significantly higher

volume

contributions

from

ABN, TMU and IM

16 Production (in Mt)

Total

2,790 4,070

45.9%

Cash Cost (in US$/ton)

Average

55.0 52.3

5.0%

EBITDA (US$ Mn)

(17)

12.7

20.7

1H13 1H14

21.9

38.3

1H13 1H14

188.1

246.8

1H13 1H14

1H 2014 Financial Performance

Sales

US$ million

EBITDA

US$ million

Net Income

(a)

US$ million

Note: (a) Net Income before minority interest (b) Figures are unaudited



Weaker NEWC Index price impacted ASP by 4.9% from US$ 67.20/ton in 1H13 to US$ 63.88/ton in

1H14, while sales still grew 31.7% from US$ 188.10 mn in 1H13 to US$ 246.83 mn in 1H14 due to 37.5%

increase in sales volume over same period



EBITDA surged 74.7% y-o-y resulting from higher sales volume and better mine plan execution, hence

lowering mining costs in process. Combination of

Company’s

on-going cost efficiency initiatives and

improvement in sales and marketing activity positively boosted EBITDA margin from 11.7% in 1H13 to

15.5% in 1H14



Total comprehensive income (before minority interest) stood at US$ 20.61 million in 1H14, up by 62.7% from

(18)

All figures are in million US$

unless otherwise stated

1Q14

2Q14

Changes

1H13

1H14

Changes

Operation

Profit (Loss)

1Q14

2Q14

Changes

1H13

1H14

Changes

Sales

US$ Mn

122,00

124,83

2,3%

188,10

246,83

31,2%

Gross Profit Margin

%

19,4%

16,9%

16,5%

18,1%

EBITDA Margin

%

17,3%

13,8%

11,7%

15,5%

Operating Profit Margin

%

14,5%

11,8%

9,5%

13,1%

Financial and Operational Highlights

EBITDA increased 74.7% y-o-y to

US$ 38.3 mn in 1H14 attributable

to increased production and lower

cash cost by 45.9% and -5.0%

respectively

Financial Performance

Note Figures are unaudited

Despite weaker ASP, Sales rose

31.2% y-o-y to US$ 246.83 mn in

1H14 due to 37.5% sales volume

growth

On q-o-q, EBITDA dropped 18.5%

to US$ 17.20 mn in 2Q14

stemming from US$ 2.9 mn worth

of one-off items booked in 1H14

(19)

Balance Sheet

Consolidated Balance Sheet

In Thousand US$

Net Debt to EBITDA & EBITDA to Interest Expense

In Million US$



Total assets rose 6.3% to US$ 331.31 mn in 1H14

from US$ 311.65 mn as per end-June 2014



Over same period, total liabilities increased 5.8% to

US$ 191.61 mn as interest bearing debt rose by 3.5%

to US$ 57.83 mn



Total equity in 1H14 increased 1.3% to US$ 139.70

mn from US$ 130.48 mn, attributable to additional

income for the period

Dec-13

Jun-14

Changes (%)

Cash and Cash Equivalents

63.302

53.300 (15,8)

Fixed Assets

49.033

47.713 (2,7)

Others

199.314

230.294 15,5

Total Assets

311.649

331.307 6,3

Trade Payable

62.217

84.825 36,3

Interest Bearing Debt

55.858

57.830 3,5

Advances from Customers

27.906

15.723 (43,7)

Others

35.187

33.230 (5,6)

Total Liabilities

181.168

191.608 5,8

(20)

(21)

2.0 2.5

Contracted Sales

_{Sales Volume, Y-o-Y (in Mn Tons)}

Product Contribution (GAR)

Marketing Highlights

29%



Average NEWC Index declined by 15.5% from

US$ 89.5/ton in 1H13 to US$ 75.6/ton in 1H14



Sales volume increased by 37.5%, y-o-y from

2.80 mn tons in 1H13 to 3.85 mn tons in 1H14



~80-90%

of 2014 sales volume has been secured



Total sales are mainly contributed from 5200 GAR

and 5600 GAR products

Majority of 2014 sales volume has been contracted

with buyers at fixed price

80 - 90%

10 - 20%

Contracted

(22)

1H14 Marketing & Sales

–

Quality & Diversified Buyers

Note: Total Sales 1H14: 3,85 Mt

Initiatives Undertaken:



Maintaining well-diversified customer base consisting of mainly reputable international traders, while also

growing the no of end-users



Generating good quality sales backed by quality buyers and favorable terms of payment



Achieved tighter discount rate to reference market price with ASP of US$ 65-68/ton

Major customers provide the stable

business support for

Toba’s marketing…

Major Customers

Export Destination by Country

(23)

(24)

(25)

Growth - Industry Comparables

Production 20 mn>

Production 10

–

20 mn

Production < 10 mn

39% 35% 36% 31% 42% 65% 32% 160% 41% 40% 16%

EBITDA Growth (2013 vs 2012 YoY )

In million US$

2013 2012

TOBA posted highest EBITDA growth in 2013 amongst publicly listed coal producers...

(26)

Toba’s coal quality

is in mid-upper

range

(27)

Toba specializes in thermal coal production and comprises three operating subsidiaries:

Adimitra

Baratama Nusantara (ABN), Indomining (IM) and Trisensa Mineral Utama (TMU

), which hold adjacent

concession areas located in East Kalimantan, Indonesia

Toba in Brief

Substantial and diversified thermal coal

reserves and resources

o

_{JORC-compliant proved and probable reserves of}

147 Mn tons and measured, indicated and inferred

resources of 236 MM tons

o

_{Coal brands with calorific values ranging from}

4,700 - 5,800 Kcal / kg GAR

Reserves

%

Strong growth profile & upside potential

o

Produced 5.6 Mn tons of coal in 2012 and grew to

produce around 6.5 Mn tons of coal in 2013

o

_{Prime location provides operational cost edge to}

grow as a logistical & operational center for the area

o

Continued exploration effort to increase our Reserves

and Resources. Current reserves only account for 52%

of total area, hence vast area remains unexplored

Revenue

(1)

Total: 147 MnTons

(28)

Notes:

1. Son of TS founder, Luhut B. Pandjaitan 2. Figures are rounded off

Ownership Structure

•20-year Production Operation Mining Permit ( IUPOP ) expiring in December 2029

•IUPOP was converted from Kuasa Pertambangan ( KP ) in 2009

• IUPOP expires in June 2013

• IUPOP was converted from KP in 2010

• IUPOP extension was completed in March 2013 (First out of 2 extensions: in 2023, with tenor of 10 years each)

• 13-year IUPOP expires in December 2023

• IUPOP was converted from a KP in 2010

• Plantation permit expires in 2036

• 2,990 ha • 683 ha • 3,414 ha • 8,633 ha (Right to Use Land)

• Reserves: 117 MT- JORC

• Resources: 156 MT- JORC

• Reserve: 22 MT- JORC

• Resources: 37MT- JORC

• Reserves : 8 MT - JORC and additional 7 MT of internal estimate

• Resources: 43 MT- JORC

• Planted Area: 2,896 ha

License

Area

Davit Togar Pandjaitan(1) _{PT Bara Makmur Abadi}

PT Toba Sejahtra ( TS ) PT Sinergi Sukses Utama Roby Budi Prakoso

71.8% 0.8% 6.2% 5.1%

51.00% 99.99%(2)

Public

12.5%

Reserve

(29)

Majority Shareholder

Toba believes it benefits from Toba

Sejahtra’

s experience in the Indonesian coal sector as well as its

leadership and experience

Controlling Shareholder with Established Track

Record

… Helmed by an Experienced Leader

• General (Ret.) Luhut B. Pandjaitan is the key shareholder and f ounder of Toba Sejahtra Group. He is currently the chairman of TS

• Mr. Luhut had a long and illustrious career in the civic service bef ore turning to the commercial sector. Over the course of thirty years in the Army Special Forces, Mr. Luhut rose to become a f our-star general

–In 1999, Mr. Luhut retired f rom the military service to serve as Ambassador f or the Republic of Indonesia to Singapore

–In 2000, he was appointed Minister of Industry and Trade of the Republic of Indonesia

• Thereaf ter, Mr. Luhut applied his knowledge and leadership skills to establish TS in 2004, building it f rom the ground up into a major business group with interests in energy oil and gas, power and agribusiness

• PT Tritunggal Sentra Buana (Palm Oil)

Established in 2004, PT Toba Sejahtra (TS) is a fast growing Indonesian enterprise with

(30)

2007

• IM commenced

production at

200k tons

2011

• TMU commenced production

• Toba production hit 5m tons

2008

• ABN commenced

production at 100k tons

• Toba underwent

operational adjustment due

to drop in coal market

2010

• TS acquired the remaining share for IM

from minority shareholder

• Toba acquired 51.0% of ABN, 52.5% of

TBE (IM

’

s shareholding company) and

51.0% of TMU

• Toba production hit 4m tons

Key Milestones since Inception

Strong track record of acquisitions, development of greenfield mines, rapid production ramp-up and

experience to adjust operation in a down-market

2007

2008

2009

2010

2011

2012

2013

2012

• Toba acquired the minorities

’

shares in TBE and TMU

• IPO/Listed on IDX, 6

th

_{July 2012}

• Eliminated overlapping issues with

plantation company (PKU)

2009

• ABN & IM production

reached 2m tons

2013

• IM successfully

extended IUPOP

until 2023

30 Listed on IDX

06 July 2012

Number of Shares Offered

210,681,000 shares or 10.47%

IPO Proceed

IDR 400,293,900,000

Anchor Investor

Baring Private Equity Asia (8% at IPO)

Ticker Code

TOBA

(31)

Key Message during 2013



Maximizing productivity and

coal sales amid weak coal

industry

Proven production achievement

where

at

end-2013

posted

volume of 6.5 million tons, above

2013 production target of 5.8

–

6.4 million tons



Undergoing continuous

efficiency program to

improve profitability and

competitiveness

A

series

of

projects

were

completed

throughout 2013

to

facilitate

efficiency

program, including

“hauling road”

and

“underpass”



Increasing financial

capability to foster corporate

growth

Good financial standings where

cash rose to US$ 63.3 million at

end-2013, up

by

74.3% from

December 2012, while supported

by available loan facilities from

internationally reputable banks



Supporting and actively

being involved in Corporate

Social Responsibility (CSR)

(32)

Integration of three

(3) mines

• Benchmarking and sharing between departments and f unctions

• Optimize and coordinate mine planning and logistics

• Centrally coordinate and streamline corporate f inance, legal, human resource and CSR f unctions

• Joint mine plan and inf rastructure sharing

1 Increase coal reserve

and resource

• Continue exploration activities to increase proven and probable reserves as only 52%

has been explored to JORC standard

• Consider opportunities to acquire coal

concessions with signif icant reserves

3 Strengthen existing

and develop new

customer

relationships

• Supply a higher proportion of sales volume to end users, while maintaining relationships with existing coal traders

• Target customers in Japan, Taiwan, South Korea, China, Vietnam and Hong Kong, South East Asia and India

4 Continue to focus on

health and safety,

environmental track

record and

commitment to CSR

• Maintain and enhance high international operating standards, utilize automated mining methods to minimize accidents and enhance saf ety

• Foster community ties through development programs as well as job creation

5 Organically increase

coal production levels

• Expand coal production through increased production and mine development activities

• Strengthen

relationships with third party mining

contractors and work closely with them to improve their productivity

2 Toba’s

Business Strategies

(33)

• Current production capacity (31 December 2012):

– Crusher: 10 MM tonnes p.a.

– Conveyor: 10 MM tonnes p.a.

• Produces two varieties of blended thermal coal

– ABN 52: Marketed CV(1)_{of 5,200 kcal / kg GAR}

– ABN 55: Marketed CV of 5,500 kcal / kg GAR

– ABN 58 : Marketed CV of 5,800 kcal / kg GAR

• Substantially all of the owners of the land within ABN’s

concession area have been compensated and ABN has been granted the exclusive right to mine those areas

• Area: 2,990 ha

• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan

• Type of license: IUPOP

• Expiry date: 1 December 2029

• Commencement of production: September 2008

• 2012 production: 4.4 MM tonnes

• Mining consultant: PT Runge Indonesia

ABN: Coal Concession Overview

IM

• Historically sold between 50%-100% of its annual production through long-term (longer than 1 year) with coal trading companies

– The remainder were sold on the spot market

• Currently, IM sells coal to buyers based on f ixed priced contracts up to one year, backed with pre-determined cash prepayments

Note:

(34)

• Current production capacity (31 December 2012):

– Crusher: 3.0 MM tonnes p.a.

– Conveyor: 4.5 MM tonnes p.a.

• Produced one variety of blended thermal coal “Indomining” with marketed CV(1)_{of 5,700 kcal / kg GAR in 2012}

– May produce additional varieties of blended thermal coal in the f uture

• Has compensated the majority all of the owners of the land within its concession area f or their land and has been granted the exclusive right to mine those areas

• Area: 683 ha

• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan

• Type of license: IUPOP

• Expiry date: IUPOP ef f ective until 2023 and can be renewed f or another 10 years

• Production commencement: August 2007

• 2012 production: 1 MM tonnes

• Mining consultant: PT SMG Consultants

IM: Coal Concession Overview

IM

TMU

Overview

Operations

Marketing

• Historically sold approximately 50% of its annual production through short-term (one year or shorter) contracts with coal trading companies

– Clients include Glencore, Flame, Peabody, Dragon, Aempire

• The remainder are sold on the spot market

• Currently, IM sells coal to buyers based on f ixed priced contracts up to one year, backed with pre-determined cash prepayments

Company Presentation 1H 2014

1

PT Toba Bara Sejahtra Tbk ( Toba )