Company Presentation Company Presentation April 2017 1 First - - PowerPoint PPT Presentation

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PT Toba Bara Sejahtra Tbk (“Toba”)

Company Presentation

April 2017 PT Toba Bara Sejahtra Tbk (TOBA)

Company Presentation

First Quarter 2018

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.

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Table of Contents

2 Company Profile 1Q 2018 Performance Highlights 3 1 Strategy to Venture into Power

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i Sulbagut-1 Project ii Sulut-3 Project

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Performance Highlights Performance Highlights

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Company Profile

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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

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Power Generation

• GLP and MCL established in January 2016 and March

2017 respectively for development of steam (coal) fired steam power plant project (CFSPP) with capacity of 2x50 MW each

• 25 year Power Purchase Agreement (PPA) through

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

Gorontalo North Sulawesi

Ownership Structure

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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

• f 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 for 25-year contract ~65 ha MCL’s PPA with PLN for 25-year contract ~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: 45 MT – JORC (2018) Resources: 78 MT – JORC (2018) Reserve: 13.1 MT – JORC (2018) Resources: 54.6 MT – JORC (2018) Reserves : 5.8 MT – JORC (2018) Resources: 20.3 MT – JORC (2018)

Davit Togar Pandjaitan PT Bara Makmur Abadi PT Toba Sejahtra Roby Budi Prakoso PT Sinergi Sukses Utama 61.91% 10.00% 6.25% 5.10% 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 90.00% 99.60% Note: On 4th February 2016, the Company entered into sales and purchase agreement with Toba Sejahtra to acquire Toba Sejahtra’s 20% ownership in GLP (Subject to approval from PLN) ) PT Toba Bumi Energi (“TBE”) Adimitra Resources Pte Ltd PT Adimitra Baratama Niaga

Strategic Mine Locations

Toba owns all infrastructures (coal processing plant, overland conveyors, and jetties) giving significant operating leverage vs other concessions in surrounding areas

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Overland & Barge Loading Jetty: Speed

• f 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) PT Trisensa Mineral Utama (TMU)

Achievement and Certification (1 of 2)

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Environment

PT Adimitra Baratama Nusantara Gold PROPER Award (2015-2017) PT Trisensa Mineral Utama Green PROPER Award (2016-2017) PT Indomining Green PROPER Award (2016-2017)

Health and Safety

PT Adimitra Baratama Nusantara BS OHSAS 18001:2007 from Lloyd’s Register Quality Assurance (25th September 2017) PT Indomining BS OHSAS 18001:2007 from DQS (29th March 2017) PT Indomining ISO 14001:2015 Certificate from DQS (29th March 2017) PT Adimitra Baratama Nusantara ISO 14001:2015 from Lloyd’s Register Quality Assurance (25th September 2017)

Quality Management System

PT Indomining ISO 9001:2015 from DQS (29th March 2017) PT Trisensa Mineral Utama ISO 9001:2008 from DQS (23rd August 2015) PT Adimitra Baratama Nusantara ISO 9001:2008 from DQS (5th June 2015) PT Trisensa Mineral Utama ISO 14001:2015 Certificate from DQS (23rd August 2015) PT Trisensa Mineral Utama BS OHSAS 18001:2007 from DQS (23rd August 2015)

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Achievement and Certification (2 of 2)

Corporate Social Responsibility Zero Lost Time Injury

PT Adimitra Baratama Nusantara Since September 2015 with total working hours of 2.758.317 hours up to December 2017 PT Indomining Since September 2007 with total working hours of 5,203,894 hours up to December 2017 PT Adimitra Baratama Nusantara Gold KUKAR CSR Award 2017 PT Indomining Silver KUKAR CSR Award 2017 PT Trisensa Mineral Utama Participant KUKAR CSR Award 2017 PT Trisensa Mineral Utama Since December 2014 with total working hours of 790,093 hours up to December 2017 Top 50 of Mid Market Capitalization Public Listed Companies Indonesia Institute for Corporate Directorship Energy & Resources In-House Team of the Year The Company received award from Asian Legal Business on the ALB Indonesia Law Awards 2017

Achievements at Corporate Level

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1Q 2018 Performance Highlights

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Production Profile

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Source: Coal price from GlobalCoal

Amidst coal price volatility over the past several years and to sustain the Company’s survival mode, Toba has undergone cost efficiency initiatives as shown by stable EBITDA margin 5.2 Mt 5.6 Mt 6.5 Mt 8.1 Mt 6.1 Mt 5.5 Mt 5.0 Mt 5.0 Mt - 6.0 Mt $121 $97 $85 $71 $59 $66 $89 $75 - 80 1 2 3 4 5 6 7 8 9 10 2011 2012 2013 2014 2015 2016 2017 2018 est. Toba Consolidated Production NEWC Price 32.9% 5.7% 13.9% 13.5% 15.4% 15.2% 24.1% Stable margin EBITDA Margin

Operational Performance

Quarterly Production & SR

Production in Million Tons

1Q17 1Q18 Change Comment Sales Volume 1.1 1.4 27.3% Sales volume tracked its 1Q18 production volume SR (x) 13.7 12.8 (6.6)% SR in 1Q18 was still in line with target 1.1 1.2 Production volume in 1Q18 stabilized at 1.2 mn tons in line with mine plan 9.1% Production Volume

Production Summary

MT: Million Tons 12

• 1Q18 production volume of 1.23

mn tons in line with 2018 quarterly guidance of 1.25–1.50 mn tons

• 1Q18 SR stabilized at 12.8x, on

track of achieving annual SR guidance of 12.0x – 13.0x

• 1Q18

performance was just slightly lower than that 4Q17 impacted by wet weather

13.7x 14.3x 12.6x 12.0x 12.8x 12.0x - 13.0x 1Q17 2Q17 3Q17 4Q17 1Q18 Quarterly Guidance TMU IM ABN SR (Consolidated) 1.37 1.34 1.25 - 1.50 1.23 1.09 1.20

Realization

“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: (a) FOB Cash Cost = COGS including royalty and selling expense – depreciation and amortization (b) Includes profit from construction of Sulbagut-1 power project (based on accounting treatment PSAK 34 and ISAK 16) in 1Q18 (c) EBITDA = Gross profit – selling expenses G&A + depreciation and amortization (d) EBITDA/ton = Coal mining business only

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Operational 1Q17 1Q18 Δ% Production Vol 1.1 1.2 9.1 % Sales Vol 1.1 1.4 27.3 % Stripping Ratio 13.7 12.8 (6.6) % Sales(b) 62.7 108.4 72.9 % EBITDA(b) & (c) 17.1 38.2 123.4 % Net Profit 147.1 % Financial 1Q17 1Q18 57.2 NEWC Index 102.9 26.3 % 81.5 ASP 74.5 30.2% mn ton mn ton x US$/ton US$/ton US$ mn US$ mn US$ mn Δ% EBITDA/Ton(d) 16.0 26.8 67.5% US$/ton 27.3% EBITDA Margin 35.2% Gross Profit Margin 39.2% 32.1% Financial Ratios 1Q17 1Q18 FOB Cash Cost(a) 36.9 43.2 17.1 % US$/ton 10.2 25.2

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 deferred stripping cost

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• Despite fluctuation in NEWC price, TOBA has maintained relatively stable SR and cash cost

through proper mine planning and cost management initiative

• Although cash cost rose 17.1% from 1Q17 to 1Q18, coal price increased much higher by 30.2%
• ver same period, hence reflecting the still higher ASP expansion over cash cost rise itself

47 43 41 38 35 35 35 34 37 40 41 42 43 46 42 41 38 34 35 35 34 37 41 41 41 44 65.8 59.6 59.0 52.6 50.3 51.5 67.3 94.7 81.5 79.7 94.5 98.2 102.9 12.4x 12.5x 12.0x 12.1x 12.4x 13.8x 12.8x 12.6x 13.7x 14.3x 12.6x 12.0x 12.8x 0x 3x 6x 9x 12x 15x 20 40 60 80 100 120 140 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 FOB cash cost

• Adj. FOB cash cost

NEWC SR

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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 flows through higher gross profit margin and EBITDA margin

ASP Positively Impacts Margins

1.4 1.1 1.4 50.3 81.5 102.9 46.8 57.2 74.5 1Q16 1Q17 1Q18

Sales Volume NEWC Index ASP

63.6 62.7 108.4 49.3 42.6 65.9 22.5% 32.1% 39.2% 1Q16 1Q17 1Q18

Sales Cost of Goods Sold Gross Profit Margin

8.3 16.0 26.8 17.8% 27.3% 35.2%

1Q16 1Q17 1Q18

EBITDA/ton EBITDA Margin

Balance Sheet

Consolidated Balance Sheet

In Million US$

Net Debt to EBITDA

In Million US$

• Total assets rose by 9.0% to US$ 379.6 million as at 31 March 2018 compared to as at 31 December 2017,

mainly due to higher sales performance in 1Q18, which translated into 29.9% higher cash and cash equivalent position and 93.2% higher trade receivables

• Total liabilities rose by 2.1% during the same period mainly due to 82.7% higher taxes payable
• 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

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379.6 Total Assets 348.3 9.0 % Interest Bearing Debt 96.8 98.8 (2.0) % Total Liabilities 177.1 173.5 2.1 % Shareholders Equity 202.6 174.8 15.9 % Balance Sheet Dec’ 17 Change Mar’ 18 Cash and Cash Equivalents 1) 74.7 29.9 % 97.0

Note: (1) Cash and cash equivalents include restricted cash in bank

10.8 11.8 8.2 24.1

• 0.2

45.1 45.8 64.1 74.8 95.9 1Q17 2Q17 3Q17 4Q17 1Q18 Net Debt (Cash) (US$ Mn) Last 12 Month EBITDA Ratio (x) 0.2 0.3 0.1 0.3

• 0.0

71% 73% 52% 29% 27% 48% 2016 2017 1Q18

Traders End-users NEWC - Adj. 5,600 GAR ASP HBA - Adj. 5,600 GAR

Marketing Performance

• Prior to 2016, spread between NEWC and ASP narrowed due to optimizing marketing initiative to

premium customers in Japan, Korea, Taiwan, and Malaysia at mainly fixed price

• 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 1Q18, spread between NEWC and ASP narrowed due to large portion of index-linked sales

volume and sales volume being fixed during price uptrend in 4Q17

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Diversified Export Market Base

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Export Market Focus 1Q16 – 1Q18 1Q18 Export Market – More ASEAN Driven

• Given China’s economic situation in 2015, focus shifted towards export markets whose economies

showed stable demand prospects such as Korea, Taiwan, India. ASEAN markets ie. Thailand, Malaysia, Philippines, and Vietnam have shown positive traction

• Diversification towards countries ex. China remained the highlight for 1Q18
• Since 2017 and going forward, ASEAN markets will play more important role in sourcing coal from its

proximate supplier such as Indonesia

24.4% 19.0%

17.3%

11.3% 9.8% 6.8%

5.6%

2.5% 1.1% 2.2% 0.0 0.1 0.2 0.3 0.4 Taiwan South Korea Malaysia India China Thailand Japan Vietnam Philippines Others Million Tons

12% 0% 10% 27% 33% 19% 6% 27% 7% 7% 0% 24% 6% 15% 17% 1Q16 1Q17 1Q18 China Korea Thailand Taiwan Malaysia

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• From 1Q16 to 1Q18, 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 % – 1Q18 Product Composition (GAR) : 1Q16 – 1Q18

Product Composition by Quality

32% 21% 24% 33% 8% 23%

21% 18% 7% 0% 25% 28%

14% 28% 18% 1Q16 1Q17 1Q18 5600 HS 5600 RS 5800 & 5900 LS 5200 Others 28.1% 24.3% 23.2% 9.8% 7.8% 5.6% 1.1% 0.0 0.1 0.2 0.3 0.4 0.5 5200 5600 HS 5600 RS 4900 4800 & 5000 5900 LS 5800 Million Tons

Sulbagut-1 & Sulut-3 power projects 90% Mining Business 10%

Snapshot of 2018

Mine Plan Execution 2018 production and SR are projected at similar numbers as in 2017 of 5 – 6 million tons and 12x – 13x respectively. The Company will also maintain its cash cost at stable level 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 2018 is estimated at US$ 90 – 100 million, of which 80% – 90% will be allocated for the Sulbagut-1 and Sulut-3 power projects, with the balance for the mining business, i.e. land acquisition, and infrastructure/heavy equipment Sourcing of Other Power and Coal Mining Asset In translating the Company’s vision, the Company will continuously seek for

• pportunities in sourcing potential projects and brownfield assets both for power and

coal mining

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Operation Prod Vol (mn ton) SR (x) 13.1x 5.0

2016

12.9x 5.5 NEWC Coal Price (US$/ton) 88.5 66.0 12x – 13x 5.0 – 6.0

2018 F

80.0

2017

Forecast CAPEX 2018

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Performance Highlights Performance Highlights

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Strategy to Venture into Power

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Integrated Energy Company

Business Growth and Sustainability

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(s) 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

Fossil Fuel and Renewables Power

Present Future Company Initiatives

Coal Mining Company

* Independent Power Producer

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Downstream Integration Provides Transformational Balance

 Successfully built TMU from greenfield stage in 2011 to fully operating coal mine at run-rate of > 1mmtpa  Sulbagut-1 CFPP project (2x50 MW) – successfully achieved financial close on schedule, one of very few companies able to do so. Expected COD in mid 2020  Second 2x50 MW Sulut-3 CFPP project was signed on 7th April 2017 with expected COD in 2021  Experienced partners and EPC in both projects, who are one of the largest power equipment manufacturing and construction conglomerates in China: (1) Shanghai Electric Power Construction in Sulbagut-1; (2) Sinohydro in Sulut-3  Measures in place to ensure on-budget project cost and on-time delivery

In-house Management Experience Strong Partnership

 Toba Sejahtra (one of Toba’s shareholders) have successfully built and operated 2 power plants: (1) 117 MW Senipah, gas-fired power plant, COD in 2015; (2) PJPP Palu, 66 MW CFPP, COD in 2007  Some members of Toba’s Management were involved in above power plant development and operation, allowing Toba to leverage on their strong experience in development of existing and potential power projects

Shareholder Experience Toba is diversifying into power generation sector. Given its extensive experience in project execution and key shareholder’s familiarity with power business, it is geared to completing the transformation on schedule

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Project Selection Process

 Targeting attractive 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 of knowledge  Have good networking capability with PLN and power stakeholders

Parameters for Project Selection Parameters for Partner Selection

Toba Group IPP Experiences

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Sumatra Kalimantan Java Sulawesi Malaysia

East Kalimantan

Senipah Power Plant

Central Sulawesi

Palu Power Plant

PLTG Senipah 2x41 MW PJPP *) 2x15 + 2x18 MW

• In operation, COD in 1Q

2015

• Combined Cycle System

is under PPA finalization for additional 35 MW

• Total potential supply:

115 MW

• 2x15 MW, COD in 2007
• Expansion of 2x18 MW

reached COD in 2016

• Total supply: 66 MW

SULBAGUT-1 2x50 MW

• Financial Close: 14th

July 2017

• Expected COD: mid

2020 *) Divested to private buyer in 4Q 2016

SULUT-3 2x50 MW

• In process for

Commencement of Work

• Expected COD: 2021

Sulbagut-1 Project

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Project Location North Gorontalo Regency, Province of Gorontalo, Sulawesi Developer PT Gorontalo Listrik Perdana (80% Toba Group, 20% Shanghai Electric Power Construction Co. Ltd) Capacity 2x50 MW (Net); 2x60 MW (Gross) EPC Joint Operation Shanghai Electric Power Construction Co., Ltd. And PT Bagus Karya Total Investment US$ 220-225 mn Total Required Land ~65 Ha (100% secured) Estimated COD Mid 2020 PPA Contract PPA was signed on 14th July 2016 for period of 25 years Project Financing Financing agreement was secured on 11th July 2017

Sulbagut-1 Project Summary

Sulbagut-1 has achieved financial close in July 2017 and is currently under construction

Kalimantan Sulawesi

TBS Concessions Sulbagut-1

Project Overview

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Snapshot of Sulbagut-1 Project (1 of 2)

Financal Close Reception with BOD of PT PLN (Persero), 31st July, 2017 Achivement of Financing Date with PT PLN (Persero) on 14th July, 2017 Signing EPC contract with SEPC on 7th July, 2017 Signing Financing Agreement with PT Bank Mandiri (Persero) Tbk with total facility of US$172 mn for period of 12 years, 11th July, 2017 Kick Off Meeting with SEPC and Poyry, 5th-7th September, 2017, in Shanghai-China

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Snapshot of Sulbagut-1 Project (2 of 2)

Access Road Main Plant Area Ash Yard Area Soil investigation for jetty Project Signboard at Site

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Site Preparation Construction

Next after Financial Close...

Commercial Operation Date (COD) Commissioning 2017 2018 2019 2020

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Performance Highlights Performance Highlights

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Sulut-3 Project

ii

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Project Location North Minahasa Regency, Province of North Sulawesi, Sulawesi Developer PT Minahasa Cahaya Lestari (90% Toba Group, 10% Sinohydro Corporation Limited) Capacity 2x50 MW (Net); 2x60 MW (Gross) EPC Sinohydro Corporation Limited Total Investment US$ 205-210 mn Total Required Land 45 Ha Estimated COD Early 2021 PPA Contract PPA was signed on 7th April 2017 for period of 25 years (effective on January 2018) Project Financing Financing agreement expected to be secured by 1Q 2019

Sulut-3 Project Summary

Sulut-3 is expected to complete EPC contract by July 2018 and achieve financial close by 1Q19

Project Overview

Kalimantan Sulawesi

TBS Concessions Sulut-3

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Snapshot of Sulut-3 Project

Land Survey and Topography Investigation for Main Plant Area Secured Land Signing of PPA on 7th April 2017

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THANK YOU