Company Presentation Full Year 2016

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

Company Profile

Performance Highlights

3

1

Strategy to Venture into Power

4

Performance Highlights

_{Performance Highlights}

 Location: Kutai, Kalimantan Timur

 Hak Guna Usaha (“HGU”) covers 8,633 ha, where 2,701 ha has been planted

 CPO mill ready for operation in 2016, with capacity of 30 tons FFB per hour

 GLP established in February 2016 for development of

steam (coal) fired power plant project (“CFPP") with capacity of 2x50 MW and TBE in December 2016 for investment in Power Business

 25 year Power Purchase Agreement (“PPA”) through

Independent Power Producer (“IPP”) scheme with PLN as single offtaker

5

Toba Bara Sejahtra In Brief

 Location: Kutai Kartanegara, Kalimantan Timur

 Total Concession: 7,087 ha

 JORC-compliant proved and probable reserves of

147 MM tons and measured, indicated and inferred resources of 236 MM tons

 Coal brands with mid to upper range calorific values ranging from 4,700-5,800 Kcal/kg GAR

 Prime location provides operational cost edge to

grow as a logistical & operational center for the area

Coal Mining

Plantation

Toba Bara Sejahtra(Toba) has 5 (“five”) subsidiaries engaged in:

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 Roby Budi Prakoso

Utama

61.79% 10.00% 6.25% 5.10%

PT Toba Bumi Energi (䇾TBE䇿)

Highland Strategic Holdings Pte. Ltd.

0.75%

• On 25th_{January 2017, PT Toba Sejahtra}(“TS”), the majority shareholder of PT Toba Bara _{Sejahtra Tbk}(“Company”) with 71.79%

divested majority 61.79% share ownership to new shareholder, Highland Strategic Holdings Pte. Ltd. (“HSH”) • HSH is a Singapore-based investment company, mainly focused in the energy sector

• With HSH and TS sharing the same business alignment, HSH is expected to add further value to the future development of the Company

6

*) Incl. Baring Private Equity as anchor investor

99.60%

20-year Production Operation Mining Permit (䇾IUP-OP䇿) expiring in December 2029

2,990 ha

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

683 ha

13-year IUP-OP expires in December 2023

3,414 ha

Plantation permit of PT Perkebunan Kaltim Utama I (PKU) expires in 2036

IUP-P for downstream processing

Investment in Power Business

N/A

N/A Planted Area: 2,701 ha Off-take (“take or pay”)

by PLN for 25 years Reserve

Reserves: 117 MT - JORC Resources: 156 MT - JORC

Reserve: 22 MT - JORC Resources: 37 MT - JORC

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

IM

ABN

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)

9

2016 Performance

Operational 2015 2016 Δ_%

Production Vol 6.1 5.5 (9.8)%

Sales Vol 6.4 5.7 (10.9)%

Stripping Ratio x 12.3 12.9 4.9%

Sales 348.7 258.3 (25.9)%

EBITDA(2) _{53.7 39.2 (27.0)%}

Net Profit 25.7 14.6 (43.2)%

Financial 2015 2016

54.8

NEWC Index 59.2 66.0 11.5%

ASP 45.4 (17.2)%

mn ton

EBITDA/Ton 8.5 7.1

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

EBITDA Margin 15.4% 15.2%

US$/ton (16.5)%

FOB Cash Cost US$ mn 42.2 34.5 (18.2)%

4,1 Mt

2010 2011 2012 2013 2014 2015 2016 2017 est.

Toba Consolidated NEWC Price

30,1% 32,9%

5,7% 13,9% 13,5%

15,4% 15,2% _marginStable

EBITDA Margin

Production Profile

11

Hauling road completed in May 2013 facilitated 2014

production ramp-up

Source: Coal price from GlobalCoal

Case study: Project

Execution

at TMU

Situation

Solution

 Seize dependence on 3rd _{party facility and}

look to internal integration via hauling road construction to connect ABN and utilize IM’s CPP and Jetty

 Construction initiated end-2012 and targeted for completion June 2013

Achievement

 Hauling road was completed in May 2013, ahead of schedule in June 2013

 Logistics cost fell translating to lower cash cost

 Production ramp up became viable

2012-2013 Case Study: TMU

Ramp-Up in 2014

 TMU was unable to boost output due to logistical disadvantage of dependence on 3rd

party facility and subject to high tariff

Production

Hauling road completed in May 2013

2012 2013 2014

TOBA 5.6 6.5 8.1

ABN 4.4 4.2 4.4

IM 1 1.4 2.3

TMU 0.2 0.9 1.4

Quarterly Operational Performance

Quarterly Production & SR

Production in Thousand Tons

Production Summary

MT: Million Ton

2015 2016 Change Comment

Sales Volume

2016 sales volume tracked its 2016 production volume

SR edged up due to pre-stripping at ABN, but in line with mine plan

6.1 5.5

Production volume in 2016 stabilized at 5.5 mn tons in line with mine plan, while ensuring certain margin and optimizing reserve preservation

(9.8)%

Production Volume

Production Summary

MT: Million Tons

 Quarterly production volume of 1.35 mn tons in 4Q16 came in line with 2016 quarterly guidance of 1.25 -1.50 mn tons

 4Q16 SR fell to 12.6x from 13.8x in 2Q16 due primarily to normalization after pre-stripping activity at ABN new pit in 2Q16

 SR for full year 2016 reached 12.9x, in line with guidance of 12x - 13x

13

1.653 1.505 1.469 1.565 1.529 1.503 1.269 1.387 1.353 13,8x

12,4x 12,5x _12,0x 12,1x 12,4x

13,8x

4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

TOBA

Evolution of Quarterly FOB Cash Cost from 4Q12-4Q16

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

14

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

13,8x

12,5x

13,8x

12,4x 12,5x _{12,0x 12,1x} 12,4x

13,9x

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

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

Although ASP decreased 17.2% y-o-y in 2016, FOB cash cost declined faster by 18.2%

Balance sheet position remains positive

despite lower cash holdings in 2016, while debt exposure fell due to partial loan repayment

SR edged up slightly in 2016 due to pre-stripping activity in 2Q16 as ABN opened new pit

15

Gross profit margin, and EBITDA margin stabilized y-o-y resulting from better operational performance, and disciplined cost management initiatives

Financial and Operational Highlights

All figures are in million US$ unless otherwise stated

Balance Sheet Dec'15 Dec'16 Changes

Balance Sheet

Consolidated Balance Sheet

In Million US$

Net Debt to EBITDA2)

In Million US$

 Total assets fell 7.4% to US$ 261.6 mn at end-Dec 2016 from US$ 282.4 mn as per end 2015, while total liabilities dropped much more by 10.6% to US$ 113.8 mn over the same period due mainly to loan repayment  Total equity value edged down slightly by 4.8%to US$ 147.7 mn from US$ 155.1 mn over the same period  Net Debt to EBITDA ratio has constantly recorded stabilityfrom quarter to quarter at < 1x

Note:

(1) Restated due to compliance on PSAK 24R implementation

(2) EBITDA = Gross Profit –selling expenses –G&A + depreciation and amortization ₁₆ 261.6

Total Assets 282.4 -7.4%

Interest Bearing Debt 64.0 51.3 19.8%

Total Liabilities 127.3 113.8 -10.6%

Shareholders Equity 155.1 147.7 -4.8%

Balance Sheet Dec’151) _Dec’_{16 Changes}

Optimizing Selling Price & Product Quality

30 40 50 60 70 80 90 100 110 120

2012 2013 2014 2015 2016

NEWC ASP HBA

99% _{97% 96%}

63% 71%

1% 3% 4%

37% _29%

Traders End-users

 In 2013-2015, the spread between NEWC Index and ASP narrowed due to consistent product quality, on-time product delivery, as well as marketing initiative of selling forward to premium traders/end-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 3Q16 and 4Q16 beyond market prediction was not reflected in the 2016 ASP

17

Notes:

HSis High Sulphur, max 2.0%, RSis Regular Sulphur, max 1.0%, LSis Low Sulphur, max 0.6%

US$/ton

Spread between NEWC and HBA price widened significantly in last two

Diversified Export Market Base and Product Composition

Initiatives Undertaken:

Export Market Focus 2014-2016

 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

 Since 2014 until 2016, the 5600 GAR products have consistently accounted for the largest product contribution at 50% - 70% of total sales volume

18 Product Composition (GAR) 2014-2016

33%

2014 2015 2016

China Korea India Taiwan

29%

2014 2015 2016

Snapshot of 2017F

Operation

Prod Vol (mn ton)

SR (x) 12x - 13x

5 - 6

2015

12.3x 6.1

NEWC Coal Price (US$/ton) 59.2 66.1

Mine Plan Execution and Cost Management Discipline

2017 production and SR are targeted similar to those in 2016 of 5 - 6 million tons and 12x - 13x respectively. The Company will also maintain cash cost level similar to that achieved over the last few years through cost management initiatives

Marketing Strategy

The Company plans to continue building well-diversified market destinations and customer base, maintaining product quality and timely delivery, as well as optimizing the current favorable coal price into the Company’s ASP

Capital Expenditure

Total CAPEX for 2017 is estimated at US$ 60 - 65 million, of which 85% - 90% will be allocated for EPC phase of the power project (Sulbagut-1), with the balance for the mining business, i.e. land acquisition, and infrastructure/heavy equipment

Sourcing of Other Power Projects

In translating the Company’s vision, the Company will continuously seek for opportunities in sourcing new power projects (fossil fuel and non fossil fuel based sources) through

participation in IPP tenders as well as through acquisition of existing power assets 19

12x - 13x 5 - 6

2017 F

65 - 70

2016 E

Building, Infra, Heavy Equip

20

Performance Highlights

_{Performance Highlights}

2

Strategy to Venture into Power

Expansion Strategy for Sustainable Growth & Value

21

2. Forward-Looking Expansion

Upstream Expansion

INTEGRATED MINING AND ENERGY COMPANY

Participate in PLN Open Tender Projects

1

Identify opportunity to develop captive Power Plant in Industrial Estate

2

Evaluate opportunity to enter Renewable-based

Power Business

3

Continuous

Operational

Efficiency

Improvement to

Sustain Margins

1. Existing Mines

Sustainability

Midstream Business

Diversification

Target coal mining company that can create synergy with TOBA coal mining assets

1

Target coal mining company with prospects to supply coal-fired

mine-mouth power plant

Rationale of Diversifying to Power Business

Mitigate Dependency on Commodity Price

Opportunity to Enter Midstream Industry in Power Generation

Capitalize on Toba Sejahtra Group’s Experience in Energy

Sector

 Current coal price has decreased by ~60% since January 2011

 TOBA decided to minimize

dependency on coal price volatility by entering into power sector backed by stable revenue over 25 years

 35 GW Power Plant Program over next 5 years opens up opportunity for private sector to enter into power sector

 25 GW allocated for IPP translates to >50 tender project opportunities

 This is a rare window of opportunity to tap into IPP tender projects

 Toba Sejahtra group has two

operating power plant

companies

 Power industry is believed to be resilient to economic crisis

48GW

Global Coal NEWC - US$/ton

23

Why Toba Can Realize this Goal?

 Extensive experience in executing project from greenfield to brownfield in coal mining, CFPP and gas-fired power plant development and operation

 Sulbagut-1 (2x50MW) - Power Purchase Agreement (PPA) with PLN was secured in July 2016 for the next 25 years after COD (in 2020). ~97% of land area required has been secured upfront

 Second 2x50MW power project expected to be secured in semester 1 2017

 Our partner (Shanghai Electric Power Construction) in Sulbagut-1 Project is well established and vastly experienced partner with proven track records in construction and operation of power plants in many countries

 Having strong partners enable us to de-risk the construction phase of the projects

Partners with

Proven Track

Record

 Currently, Toba Sejahtra (Toba’s Shareholder) has one operating power plant asset: 2 x 41 MW Senipah Gas Power Plant, COD in Q1-2015; and previously 2 x 15 MW Palu Coal-fired Power Plant, COD in 2007 (sold in 4Q16)

 Possessing vast learning curve of knowing what to and not to do in planning to execution of project management. This enables us to mitigate and minimize project risk

Leveraging

Toba Sejahtra

Toba Participation Process in IPP Tenders

IPP Tender Participation 2014-2015

• Toba has actively participated in PLN tenders including 6 IPP bidding projects initiated in 2014-2015. For gas-fired projects, Toba decided not to continue with the bidding process due to IRR calculation

• Going forward, Toba is targeting non-coal projects, including gas and renewables-based projects

24

Project Name Company Name Capacity

Toba

Stake (%) Status

Sulbagut -1 PT Gorontalo Listrik Perdana 2 x 50 80% Signed PPA in July 2016

Sulut-3 PT Minahasa Cahaya Lestari 2 x 50 90% Signed PPA in April 2017

Gas-fired Power Plant 1 x 500 5% Refrained from bidding process

Gas-fired Power Plant 1 x 250 5% Refrained from bidding process

Gas-fired Power Plant 1 x 100 24% Refrained from bidding process



PT Gorontalo Listrik Perdana (

“

GLP

”

) was established in February 2016 for the

purpose of Sulbagut-1 project



GLP is owned by consortium: PT Toba Bara Sejahtra Tbk (

“

80%

”

), and 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$ 210 - 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

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)

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

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

32

Our Project Selection Process

Targeting return of equity IRR and Project IRR

Ability to identify, assess, and manage completion risk, technical and non-technical risk such as social assessment for land acquisition to ensure the project can be completed within specified time schedule

Financial capability to participate in targeted tender projects where PLN sets specific requirements to meet

Majority control for certain size of IPP projects

Appetite to have minority portion with good and credible partner in larger size projects

• Credible partner with vast experience and proven technology

• Can bring long-term value-add to organization and local people including transfer knowledge

• Have good networking capability with PLN and power stakeholders

Parameters for Project Selection

Leveraging Toba Sejahtra Group

’

s

Experience in Power Plant Development

Sumatra

Senipah Power Plant

Central Sulawesi

Palu Power Plant

PLTG Senipah

 Combined Cycle System is under PPA finalization for additional 35 MW

 Total potential supply: 115 MW

 In operation, COD in 2007

 Expansion 2x18 MW is COD 2016

 Total potential supply: 66 MW

33

SULBAGUT-1 2 x 50 MW

PPA in place, in process for Financial

Close

EXITGING PROJECT (Expected COD in 2020)