1
PT Toba Bara Sejahtra Tbk (
䇾
Toba
䇿
)
Company Presentation
April 2017
PT Toba Bara Sejahtra Tbk (TOBA)
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.
Table of Contents
2
Company Profile
Performance Highlights
3
1
Strategy to Venture into Power
3
i
Sulbagut-1 Project
4
Performance Highlights
Performance Highlights
Kalimanta
n
East Kalimantan
PT Toba Bara Sejahtra Tbk in Brief
Location: Kutai Kartanegara, Kalimantan Timur
Total Concession: 7.087 ha Coal Mining
Location: Kutai Kartanegara, Kalimantan Timur
Hak Guna Usaha (HGU) covers 8.633 ha. where 2.701 ha has been planted
Palm Oil Plantation & Mill
5
Power Generation
GLP and MCL established in February 2016 and March 2017 respectively for development of steam (coal) fired power plant project (CFPP) with capacity of 2x50 MW each
25 year Power Purchase Agreement (PPA) through Independent Power Producer (IPP) scheme with PLN as single offtaker
Gorontalo
Note:
1. PLN: PT Perusahaan Listrik Negara (Persero)
Ownership Structure
License
Area
20-year Production Operation Mining Permit (IUP-OP) 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
8.633 ha (Right to Use Land)
GLP’s PPA with PLN(1)
for 25- year contract
~60 ha
MCL’s PPA with PLN(1
for 25- year contract
~30 - 40 ha
Off-take (take or pay) by PLN for 25 years 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
Reserves : 8 MT - JORC Resources: 43 MT - JORC
Davit Togar Pandjaitan
PT Bara Makmur Abadi
PT Toba Sejahtra PT Sinergi Sukses Roby Budi Prakoso
Utama
61.91% 10.00% 6.25% 5.10%
PT Toba Bumi Energi (䇾TBE䇿)
99.99% 99.99%
3.64%
51.00% 99.99%
Public *) 12.35%
90.00% 60.00%
Highland Strategic Holdings Pte. Ltd.
0.75%
*) Incl. Baring Private Equity as anchor investor
Strategic Mine Locations
Toba owns all infrastructures (coal processing plant, overland conveyors, and jetties) giving significant operating leverage vs other concessions in surrounding areas
Muara Berau
Muara Jawa Makassar Strait
~55 km (total ~120 km)
Balikpapan Samarinda
~65 km
Major City
Jetty Transhipment Point
TMU –IM Hauling Road
TMU
ABN IM
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 25 km
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
Note: PT Adimitra Baratama Nusantara (ABN) PT Indomining (IM)
PPA signing with PLN for Sulut-3
Power Project
Engineering Procurement Contract (EPC) signing with SEPC* for
Sulbagut-1 Power Project
Contracts and Awards Earned in 9M17
7 April 2 May 7 July 11 July 14 July
Project Financing Signing with Bank Mandiri worth US$ 171.8 mn
for Sulbagut-1 Power Project
Material Information
9
Financing Date with PLN for Sulbagut-1
Power Project
Special Transaction Loan Facility and Non-Cash Loan of US$ 50
mn with Bank Mandiri
* Shanghai Electric Power Construction Co. Ltd.
ABN received Gold PROPER
Enviromental Award from Provincial Govt for 3 consecutive years
IM and TMU received Green PROPER Enviromental Award for 2 consecutive years
IM received certificates for ISO 14001. OHSAS 18001 and ISO 9001
ABN received Award from Customs Office of East Kalimantan as “Ideal” Company
TMU received Pratama Award from
10
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
Source: Coal price from GlobalCoal
Operational Performance
Quarterly Production & SR Production in Thousand Tons
Production Summary MT: Million Ton
3Q16 3Q17 Change Comment
Sales Volume
SR (x)
1.2 1.3
12.8 12.6
9.8%
(1.4)%
Sales volume tracked its 3Q17 production volume
SR in 3Q17 was still in line with target
1.4 1.4 (0.0)% Production volume in 3Q17 was still in line with target
Production Volume
Production Summary MT: Million Tons
Q-o-q production volume has remained stable and in line with 2017 quarterly guidance of 1.25 -1.50 mn tons
3Q17 SR stabilized at 12.6x, on track of achieving annual SR guidance of 12x - 13x
Higher SR in 2Q17 impacted by wet weather
12.8x 12.6x 13.7x 14.3x 12.6x 12.0x - 13.0x
3Q16 4Q16 1Q17 2Q17 3Q17 Quarterly Guidance
TMU IM ABN SR (Consolidated) 1.4
1.2 1.4
1.25 - 1.50 1.4
Realization
Consolidated 9M 2017
“Sustainability & Resilience”
Focused on profitable production output through optimization of :
• Infrastructure and connectivity sharing
(hauling road and coal processing plant)
• Joint mine plan
• Coal sale pricing driven by relationship.
consistency in scheduled delivery and product quality
• Well-diversified market destinations and customer base
Note:
(1) EBITDA = Gross Profit –selling expenses –G&A + depreciation and amortization 13
Operational 9M16 9M17 Δ%
Production Vol 4.2 3.7 (11.9)%
Sales Vol 4.3 3.5 (18.6)%
Stripping Ratio 13.0 13.5 3.8 %
Sales 192.1 211.3 10.0 %
EBITDA 27.0 51.9 92.2 %
Net Profit 9.7 29.0 199.0 %
Financial 9M16 9M17
44.8
EBITDA/Ton US$/ton 6.3 14.7 133.3 %
14.1%
EBITDA Margin 24.6% Gross Profit Margin 19.2% 29.9%
Evolution of FOB Cash Cost
Quarterly FOB Cash Cost
In US$/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 exploration & development and excluding
Despite fluctuation in NEWC price, TOBA has maintained relatively stable SR and cash cost through proper mine planning and cost management initiatives
Although cash cost rose 17.1% from 2Q16 to 3Q17, coal price increased much higher by 83.3% over same period. This reflects much higher ASP expansion than cash cost rise itself
14
12.4x 12.5x
12.0x 12.1x 12.5x
13.8x
12.8x 12.6x
13.7x 14.3x
12.6x
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
15
Sales Volume, NEWC Index & ASP
(million tons and US$/ton)
Sales, Cost of Goods Sold and Gross Profit Margin (US$ million and %)
EBITDA/ton and EBITDA Margin
(US$/ton and %)
Increase in ASP per ton directly filters through higher gross profit margin and EBITDA margin
ASP Positively Impacts Margins
4.8
9M15 9M16 9M17
Sales Volume NEWC Index
ASP
19.2% 19.2%
29.9%
9M15 9M16 9M17
Sales
Cost of Goods Sold
Gross Profit Margin
9M15 9M16 9M17
EBITDA/ton
Balance Sheet
Consolidated Balance Sheet In Thousand US$
Net Debt to EBITDA In Million US$
Total assets and total liabilities rose similarly mostly due to rise in interest bearing debt from :
Bank Mandiri, for refinancing syndicated loan, investment and corporate purposes where US$ 40 mn of total proceeds was used by June 2017
Citibank, amounting to US$ 4 mn, used forABN’s working capital and general corporate purposes
Total equity value improved due to current earnings over the period
Net Debt to EBITDA ratio has constantly recorded stability from quarter to quarter at < 0.5x
23.3
13.7
10.8 11.8
21.6
38.8 39.2
45.1 45.8
64.1
3Q16 4Q16 1Q17 2Q17 3Q17
Net Debt (Cash) (US$ Mn) Last 12 Month EBITDA
Ratio (x) 0.6 0.4 0.2 0.3 0.3
297.1
Total Assets 261.6 13.6 %
Interest Bearing Debt 51.3 64.2 25.1 %
Total Liabilities 113.8 135.5 19.1 %
Shareholders Equity 147.7 161.6 9.4 %
Balance Sheet Dec’ 16 Sep’ 17 Change
NEWC - Adj. 5,600 GAR ASP
HBA - Adj. 5,600 GAR 63%
71% 75%
37%
29%
25%
2015 2016 9M17
Traders End-users
Marketing Performance
Prior to 2016, spread between NEWC and ASP narrowed due to optimizing marketing initiative at mainly fixed price to premium customers in Japan, Korea, Taiwan, and Malaysia
Majority of 2016 sales volume was fixed at price during 1H16 period. Sudden coal price surge in 2H16 beyond market prediction was not reflected in the 2016 ASP, causing widened spread between NEWC and ASP
Throughout 9M17, spread between NEWC and ASP narrowed due to large portion of sales volume being fixed during price uptrend in 3Q17 and not capturing the high of 4Q16
Diversified Export Market Base
Export Market Focus 9M15 – 9M17 9M17 Export Market - More ASEAN Driven
Given China’s economic situation in 2015, focus shifted towards export markets whose economies showed stable demand prospects ie. Korea, Taiwan, India. ASEAN markets ie. Thailand, Malaysia, and Vietnam have shown positive traction
Diversification towards countries ex.China remained highlight for 2017
In 9M17 and going forward, ASEAN markets will play more important role in sourcing coal from its proximate supplier ie. Indonesia
10%
9M15 9M16 9M17
China Korea Thailand Taiwan Malaysia
28.7%
South Korea Thailand Hong Kong Philippines Others
19
From 9M15 to 9M17, sales constribution consistently derived from mainly 5600 GAR products
A mixture of mid-upper quality of 5600 - 5900 GAR still account for TOBA’s largest product composition
Product Composition (GAR) by % - 9M17 Product Composition (GAR) : 9M15 – 9M17
Product Composition by Quality
24.9%
5600 HS
4800 & 5000
5200
5600 RS
5800
5900 LS
Others
Million Tons
37%
9M15 9M16 9M17
Power 32%
Building, Infrastructure,
Heavy Equip 56% Exploration
12%
Snapshot of 2017F
Mine Plan Execution
2017 production and SR are targeted similar to those in 2016 of 5 - 6 million tons and 12.0x –13.0x respectively
Marketing Strategy
The Company continues managing well-diversified market destinations and customer base, maintaining product quality and timely delivery, as well as optimizing the current favorable coal price into theCompany’s ASP
Capital Expenditure
Total consolidated CAPEX for 2017 is estimated at US$ 55 60 million, of which 75% -80% 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 theCompany’s vision, the Company will continuously seek for opportunities in sourcing new power projects (fossil fuel and non fossil fuel based such as renewables) through participation in IPP tenders as well as through acquisition of existing power assets
Operation
Prod Vol (mn ton)
SR (x) 12.9x
5.5 2015
12.3x 6.1
NEWC Coal Price (US$/ton) 59.2 66.0
12.0x - 13.0x 5.0 - 6.0
2017 F
65 - 70 2016
21
Performance Highlights
Performance Highlights
2
Strategy to Venture into Power
Business Growth and Sustainabiity
Transformation
• Acquisition of mine(s) around existing mining concessions
• Acquisition of mine(s) to support coal-related power projects
• Active participation as IPP* in PLN tenders
• Assessment of
developing renewables
• Identification of
strategic partner with vast track record
• Expansion of power project capacity (MW)
Coal Mine
• Optimization of existing mine plan
• Optimization of infrastructure sharing
• Cost management
• Diversification of markets and customer base
• Active participation in CSR
Company Strategy
Integrated
Energy
Company
Fossil Fuel andRenewables Power
Present
Future
Company Initiatives
Coal
Mining
Company
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 CFPP project (2x50 MW) – Financial close was reached on 14 July 2017, the first reached on schedule this year by any IPP. Expected COD in mid 2020
Second 2x50 MW Sulut-3 CFPP project was signed on 7 April 2017 with expected COD in 2020
Our partners for the projects are well established and vastly experienced in construction and operation of power plants in many countries
Having strong partners enable us to de-risk the construction phase of the projects
Substantial
Power-Related
Milestones
Have Been
Achieved
Experienced
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 1Q-2015; and previously 2 x 15 MW Palu CFPP; reached COD in 2007 (already divested in 4Q16)
Possessing vast learning curve of knowing what to and not to do in planning to execution of project management. This enables Toba to mitigate and minimize project risk
Leveraging
Toba Sejahtra
Group’s
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
Kalimantan
Java
Sulawesi
Malaysia
East Kalimantan
Senipah Power Plant
Central Sulawesi
Palu Power Plant
PLTG Senipah 2 x 41 MW
PJPP *) 2x15 + 2x18 MW In operation, COD in Q1
2015
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
25 SULBAGUT-1
2 x 50 MW
Financial Close: 14 July 2017, the first reached on schedule
this year by any IPP
NEW PROJECTS (Expected COD in 2020)
* Dviested to private buyer in 4Q 2016
SULUT-3 2 x 50 MW
PPA in place, in process for Commencement of
27
General Description of Sulbagut-1 Project
Project Location : North Gorontalo Regency,
Sulawesi
Sulbagut-1 Coal-Fired Power Project is part of 35
G
W Program
• 2 x 50 MW
Capacity
(Nett)
• Build-Own-Operate-Transfer
(BOOT)
Contract
Scheme
• 25 Years
Contract
Period
• MiD 2020
COD
Target
• SEPC
EPC
• US$ 210-220 million
Financial Close of Sulbagut-1 Project
Principle License
Land Acquisition Tariff Approval
EPC Contract
Financing Agreement
29
2017
2020
Site Preparation
2018
2019
Construction
Next after Financial Close...
31 Project Location : North
Minahasa Regency, Sulawesi
Sulut-3 Coal-Fired Power Project is part of 35
G
W Program
• 2 x 50 MW
Net
Capacity
• Build-Own-Operate-Transfer
(BOOT)
Contract
Scheme
• 25 Years
Contract
Period
• 33 months post Commencement
of Work
COD
Target
• US$ 205-215 million
Project
Value
Signing of PPA for Sulut-3 Project
Handing of Token of Appreciation to PLN, 7 April 2017
