Company Presentation First Semester 2016 1 Disclaimer These - - PowerPoint PPT Presentation

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PT Toba Bara Sejahtra Tbk (“Toba”)

Company Presentation

First Semester 2016

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. These materials are for information purposes only and do not constitute or form part of an offer, solicitation

• r 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

• f the Company should be made after seeking appropriate professional advice.

Table of Contents

2 5 Company Profile 4 1H16 Operational Highlights 3 1H16 Marketing Highlights Guidance for 2016 1 1H16 Financial Highlights

4

Company Profile

1

• JORC-compliant proved and probable reserves
• f 147 MM tons and measured, indicated and

inferred resources of 236 MM tons

• Coal brands with mid to upper range calorific

values (CV) of 4,700-5,800 kcal/kg GAR

• Strong production growth profile, registering

~34% CAGR between 2008 and 2015. Produced 6.5 MM tons in 2013 and grew ~25% to 8.1 MM tons in 2014

• Prime location near Capital of East Kalimantan

and proximity to waterways provides

• perational cost edge to grow as logistical &
• perational center for the area

Strong Growth Profile Toba specializes in thermal coal production and comprises of three mining subsidiaries: Adimitra Baratama Nusantara (ABN), Indomining (IM) and Trisensa Mineral Utama (TMU)

Toba Bara Sejahtra in Brief

Diversified Thermal Coal Reserves and Resources

Strategic Mine Locations

Muara Berau Muara Jawa Makassar Strait

~55 km (total ~120 km)

Balikpapan Samarinda

~65 km Major City Jetty Transhipment Point TMU – IM Hauling Road

Kutai Energi

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

• ne ~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

Underpass Infrastructure Loading Speed of 1,800 TPH High Built CPP Cap up to 10 Mn TPA Short Coal Hauling Distance < 5km ~16 km Hauling Road to Connect with ABN Mine Ops Commenced at Block 4 CPP Capacity (cap) Ramped Up to 6 Mn Tons/Annum (TPA) IM Conveyor for TMU usage & Others Short Coal Hauling Distance ~4km

Infrastructure & Operational Capabilities

Toba’s Concessions

Integrated CPP and Jetty Ops with IM Note: PT Adimitra Baratama Nusantara (ABN) PT Indomining (IM) PT Trisensa Mineral Utama (TMU)

Note: 1. Figures are rounded off 2. CFPP: Coal-Fired Power Plant 3. PLN: PT Perusahaan Listrik Negara (Persero) 4. IPP: Independent Power Producer 5. PPA: Power Purchase Agreement

Ownership Structure

License Area

Davit Togar Pandjaitan PT Bara Makmur Abadi PT Toba Sejahtra Roby Budi Prakoso PT Sinergi Sukses Utama 71.8% 0.8% 6.2% 5.1%

PT Toba Bumi Energi (“TBE”)

99.99% (1) 99.99% (1) 3.6% ABN Minorities 49.0% 51.00% 99.99% (1) Public 12.5%

Reserve

90.00%

• 20-year Production

Operation Mining Permit (“IUP-OP”) expiring in December 2029

• IUP-OP was converted

from Kuasa Pertambangan (“KP”) 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

• PT Gorontalo Listrik

Perdana (GLP) was established in Feb 2016 to undertake coal-fired power plant project in Gorontalo, Sulawesi

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

Land)

• Gorontalo, Sulawesi
• 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: 2,896 ha
• N/A

60.00%

1H16 Milestones

• 1st April 2016: IM and PT Cipta Kridatama (subsidiary of PT ABM Investama Tbk) entered into a five-

year mining contract valued at US$ 82 million over the contract period

• 29th May 2016: ABN was awarded the PROPER Gold Mining Award for Environmental Management

(2015 – 2016) from the Governor of East Kalimantan

• 29th May 2016: IM was awarded the PROPER Green Mining Award for Environmental Management

(2015 – 2016) from the Governor of East Kalimantan

• 29th May 2016: TMU was awarded the PROPER Green Mining Award for Environmental Management

(2015 – 2016) from the Governor of East Kalimantan

10

1H16 Operational Highlights

2

Realization

1H 2016

Operational 1H15 1H16

Δ%

Production Vol 3.0 2.8 (6.7)% Sales Vol 3.3 2.8 (6.1)% Stripping Ratio x 12.5 13.1 4.8% Sales 190.8 139.0 (27.1)% EBITDA 29.8 22.0 (26.2)% Net Profit 15.3 9.3 (39.2)% Financial 1H15 1H16 57.3 NEWC Index 50.9 (18.8)% 62.7 ASP 45.4 (20.8)%

mn ton mn ton US$/ton US$/ton US$ mn US$ mn US$ mn

Δ%

EBITDA/ton 9.0 7.2 (20.0)%

US$/ton

Focused on profitable production output through optimization of :

• Infrastructure and connectivity sharing

(hauling road, coal processing plants (CPP), & jetties)

• Joint mine plan between three adjacent
• perating mines
• Competitive & premium coal pricing

driven by strong coal branding from consistency in scheduled delivery/product quality and established customer relationship with diversified customer base

• Average Selling Price (ASP)
• utperformance relative to benchmark

Newcastle due to sale executions based

• n well-timed predictions in market trends

Note: (1) EBITDA = Gross Profit – selling expenses – G&A + depreciation and amortization

2008 2009 2010 2011 2012 2013 2014 2015 2016

ABN IM TMU

Guidance Annual Coal Production

Mt : In Million Tons

5.6 6.5 5.0 - 7.0 8.1

• Production volume rose from
• nly 800K tons in 2008 to 6.1

mn tons in 2015, booking CAGR growth of 33.6% over 8 years

• 2015
• verall

results from subsidiaries came in line with 2015 annual guidance

• With

strategy to sustain certain margin, while preserving life-of-mine (LoM) reserves, 2016 production guidance is estimated at 5.0-7.0 mn tons

• 2016 Stripping Ratio (SR) is

expected to stabilize at 11x- 12x, as per the mine plan

Cumulative production achievement >10 Mt Cumulative production achievement >20 Mt 5.2 4.1 0.8 2.0

2016 Production Guidance

2008 2009

ABN (Mt) IM (Mt)

0.1 1.1 0.7 0.9 0.8 2.0

Production Vol. (Mt)

2010 2011 3.1 3.8 1.0 1.4 4.1 5.2 2012 4.4 1.0 5.6 2013 2014 4.2 4.4 1.4 2.3 6.5 8.1

TMU (Mt) SR (x)

• 11.9x

10.5x

• 9.9x

12.7x 0.2 14.9x 0.9 1.4 13.4x 13.3x 2016E 3.6-5.0 0.5-0.7 5.0-7.0 0.9-1.3 11x-12x 2015 6.1 3.9 1.2 1.0 12.3x

6.1

1H16 Operational Performance

Quarterly Production & SR

Production in Thousand Tons

Production Summary

MT: Million Ton

1H15 1H16 Change Comment Sales Volume SR (x) 3.3 3.1 12.5 13.1 (6.1)% 4.8% 1H16 sales volume tracked its 1H16 production volume SR edged up due to pre-stripping at ABN, and in line with mine plan 3.0 2.8 Production volume in 1H16 stabilized at 2.8 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 1.3

mn tons in 2Q16 came in line with 2016 quarterly guidance of 1.25 - 1.75 mn tons

• 2Q16 SR rose to 13.9x from

12.4x in 1Q16 due primarily to pre-stripping activity at ABN new pit

• SR in subsequent quarter is

expected to remain at similar level before normalizing in 4Q16

2,160 2,330 1,653 1,505 1,469 1,565 1,529 1,503 1,269 13.8x 12.5x 13.8x 12.4x 12.5x 12.0x 12.1x 12.4x 13.9x 0.0x 5.0x 10.0x 15.0x 20.0x 500 1,000 1,500 2,000 2,500 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

TOBA

Production Volume (000) Stripping Ratio

ABN Operational Performance

ABN

TMU IM

PT Kutai Energi

Quarterly Production & SR

Production in Thousand Tons

Key Highlights  2Q16 quarterly production decreased y-o-y and q-o-q from 1Q16 and 2Q15 respectively due to pre- stripping activity  SR in 2Q16 rose to 15.0x due to pre-stripping activity at ABN’s opening of new pit

969 987 994 1,071 876 13.3x 13.0x 12.6x 12.9x 15.0x 0x 5x 10x 15x 20x 200 400 600 800 1,000 1,200 2Q15 3Q15 4Q15 1Q16 2Q16

ABN

Production Volume (000) Stripping Ratio

IM Operational Performance

TMU ABN

PT Kutai Energi

Quarterly Production & SR

Production in Thousand Tons

Key Highlights  Production increase to 173K tons in 1H16 came in line with 2016 internal quarterly guidance of 125K - 175K tons  SR in 1Q16 stabilized y-o-y and q-o-q at 12.0x

231 319 288 140 173 12.7x 12.2x 13.6x 12.0x 12.0x 0x 5x 10x 15x 50 100 150 200 250 300 350 2Q15 3Q15 4Q15 1Q16 2Q16

IM

Production Volume (000) Stripping Ratio

TMU Operational Performance

ABN IM

PT Kutai Energi

Note: - - - Hauling road

Key Highlights Quarterly Production & SR

Production in Thousand Tons

 2Q16 production volume came in at 220K tons, slightly below 2016 internal quarterly production guidance

• f 225K-325K tons

 2Q16 SR on q-o-q stabilized but edged slightly on y-o-y basis

269 259 247 292 220 9.4x 8.3x 8.3x 10.8x 10.6x 0x 5x 10x 15x 50 100 150 200 250 300 350 2Q15 3Q15 4Q15 1Q16 2Q16

TMU

Production Volume (000) Stripping Ratio

17

3

1H16 Financial Highlights

Evolution of Quarterly FOB Cash Cost from 3Q12-2Q16

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

60 57 55 55 53 49 49 53 51 50 47 43 41 38 35 35 63 52 59 56 51 52 51 54 50 51 46 42 41 38 34 35 14.2x 12.1x 15.1x 13.6x 12.7x 12.7x 13.5x 13.8x 12.5x 13.8x 12.4x 12.5x 12.0x 12.1x 12.4x 13.9x 0x 3x 6x 9x 12x 15x 18x 21x 20 40 60 80 100 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

FOB cash cost

• Adj. FOB cash cost

SR

Notes: (1) FOB Cash Cost = COGS inc. royalty and selling & marketing expense – depreciation & amortization (2) EBITDA = Gross Profit – selling expenses – G&A + depreciation & amortization + other non- cash items

23.9 20.2 5.5 (0.6) 1.6 2.8 1H15 1H16

TMU IM ABN

1.9 1.9 0.6 0.3 0.5 0.5 1H15 1H16

TMU IM ABN

47.7 35.7 40.1 42.0 38.1 29.4 1H15 1H16

TMU IM ABN

Operational & Financial Highlights

Production (mn tons)

3.0 6.7%

FOB Cash Cost (US$/ton)

44.8 34.9 22.1%

EBITDA (US$ mn)

29.8 22.0 26.2%

1 2 3

Production volume slipped y-o-y in 1H16 due to pre-stripping in 2Q16 at ABN’s new mine pit FOB cash cost fell by 22.1% y-o-y

• n continuous cost management

initiatives, better mine plan execution EBITDA declined by 26.2% y-o-y to US$ 22.0 mn in 1H16, yet EBITDA margin rose slightly 15.6% to 15.8% over the same period due to same reasons above

2.8

Financial and Operational Highlights All figures are in million US$ unless otherwise stated 1Q16 2Q16 Changes 1H15 1H16 Changes Operation Sales Volume mn ton 1.4 1.7 21.4 % 3.3 3.1 (6.1)% Production Volume mn ton 1.5 1.3 (13.3)% 3.0 2.8 (6.7)% Stripping Ratio (SR) x 12.4 13.9 12.1 % 12.5 13.1 4.8 % FOB Cash Cost* US$/ton 34.8 35.0 0.6 % 44.8 34.9 (22.1)% NEWC Index Price US$/ton 50.3 51.5 2.4 % 62.7 50.9 (18.8)% Average Selling Price (ASP) US$/ton 46.8 44.3 (5.3)% 57.3 45.4 (20.8)% Financial Performance Profit (Loss) 1Q16 2Q16 Changes 1H15 1H16 Changes Sales US$ mn 63.6 75.4 18.6 % 190.8 139.0 (27.1)% Cost of Goods Sold US$ mn 49.3 61.6 24.9 % 154.7 110.9 (28.3)% Gross Profit US$ mn 14.3 13.9 (2.8)% 36.1 28.1 (22.2)% Operating Profit US$ mn 8.3 7.6 (8.4)% 23.8 16.0 (32.8)% EBITDA** US$ mn 11.3 10.7 (5.3)% 29.8 22.0 (26.2)% Profit for the Period US$ mn 5.2 4.1 (21.2)% 15.3 9.3 (39.2)% EBITDA/ton US$/ton 8.3 6.3 (24.1)% 9.0 7.2 (20.0)% Operating Cash Flow US$/ton 10.7 6.2 (42.1)% 10.7 16.9 57.9 % CAPEX US$ mn 3.4 3.9 14.7 % 4.9 7.3 49.0 % Balance Sheet 1Q16 2Q16 Changes Dec'15 Jun'16 Changes Interest Bearing Debt US$ mn 61.3 58.0 (5.4)% 64.0 58.0 (9.4)% Cash and Cash Equivalents US$ mn 49.1 40.7 (17.1)% 45.5 40.7 (10.5)% Net Debt*** US$ mn 12.2 17.3 41.8 % 18.5 17.3 (6.5)% Total Assets US$ mn 282.3 268.6 (4.9)% 282.4 268.6 (4.9)% Total Liabilities US$ mn 122.2 111.8 (8.5)% 127.3 111.8 (12.2)% Total Equity US$ mn 160.2 156.8 (2.1)% 155.1 156.8 1.1 % Financial Ratios Gross Profit Margin % 22.5% 18.4% 18.9% 20.2% EBITDA Margin % 17.8% 14.2% 15.6% 15.8% Operating Profit Margin % 13.1% 10.1% 12.5% 11.5%

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 18.8% y-

• -y in 1H16, while it gained ground q-
• -q in 2Q16 due to global catalyst

from China’s supply cut Balance sheet position remains positive despite lower cash holdings in 1H16, while debt exposure fell due to partial loan repayment SR edged up in 1H16 due to pre- stripping activity in 2Q16 as ABN

• pened new pit

Gross profit margin, and EBITDA margin each rose y-o-y to 1H16 resulting from better

• perational

performance, disciplined cost management initiatives, and well- timed marketing strategy

8.9 13.3 18.5 12.2 17.3 12.1 12.2 11.7 11.3 10.3

2 4 6 8 10 12 14 16 18 20

2Q15 3Q15 4Q15 1Q16 2Q16

Net Debt (Cash) (US$ Mn) EBITDA (US$ Mn)

Balance Sheet

Consolidated Balance Sheet

In Million US$

Net Debt to EBITDA2)

In Million US$

• Total assets fell 4.9% to US$ 268.6 mn at end-June 2016 from US$ 282.4 mn as per end 2015, while

total liabilities dropped much more by 12.2% to US$ 111.8 mn over the same period due mainly to loan repayment

• Total equity value rose slightly 1.1% to US$ 160.2 mn from US$ 155.1 mn, due to additional profit

for the period

• Net Debt to EBITDA ratio has constantly recorded stability from 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

282.3 Total Assets 282.4 0.0% Interest Bearing Debt 61.3 64.0 (4.2)% Total Liabilities 122.2 127.3 (4.0)% Shareholders Equity 160.2 155.1 3.3% Balance Sheet Dec ’151) Changes Mar ‘16 Cash and Cash Equivalent 45.5 7.9% 49.1

Ratio (x) 0.7 1.1 1.6 1.1 1.7

22

4

1H16 Marketing Highlights

98.5 121.1 96.9 85.3 70.8 59.2 50.3 51.5 65.5 91.3 72.2 66.6 63.7 54.8 46.8 44.3 20 40 60 80 100 120 140 2010 2011 2012 2013 2014 2015 1Q16 2Q16

NEWC ASP

12.1% 35.5% 30.0% 10.1% 8.2% 4.0% 0.0 0.1 0.2 0.3 0.4 0.5

4800 5600 HS 5600 RS 5800 5900 LS Others

Million Tons

Optimizing Selling Price & Product Quality

Covergence of NEWC Index & ASP (in US$/ton) Sales by Product Mainly Contributed by 5600 (GAR)

• Average NEWC Index declined by 18.8% from US$ 62.7/ton in 1H15 to US$ 50.9/ton in 1H16, while

ASP contracted by 20.8% from US$ 57.3/ton to US$ 45.4/ton over the same period

• at ~65.5%, the 5600 GAR products account for the largest portion of 1H16 total sales volume
• As of 1H16, 83.0% of 2016 sales volume target has been secured mostly at fixed price

Notes:

• HS is High Sulphur, max 2.0%
• RS is Regular Sulphur, max 1.0%
• LS is Low Sulphur, max 0.6%

US$/ton

Diversified Market Base & Customer Base

Initiatives Undertaken: Total Sales by Customer Type Sales Destinations by Country

• Building well-diversified export destination base and customer base backed by positive demand

prospects and quality customers respectively: In 2015, South Korea replaced China as main export destination, while the customer base consisted of mainly reputable international traders with growing composition of notable regional end-users, increasing from 3.6% in 2014 to 36.8% in 2015

• In 1H16, end-users composition stabilized at 28.6% level as compared to 33.6% in 1H15
• Maintaining product brand with customers by making good on delivery with specifications ensured
• Achieving tighter discount to even premium to Newcastle adjusted reference price

26.4% 6.0% 8.7% 23.6% 7.1% 6.2% 2.1% 10.0% 2.3% 2.3% 5.5% 0.0 0.2 0.4 0.6 0.8 South Korea Taiwan Malaysia India China Japan Vietnam Thailand Bangladesh Hong Kong Others Million Tons

71.4% 28.6% Traders End-Users

25

Guidance for 2016

5

Snapshot of 2016F

Operation

Prod Vol (mn ton) SR (x)

12.3x 6.1

2014

13.3x 8.1

NEWC Coal Price (US$/ton)

59.2 70.8

• Objective is to execute disciplined mine plan that generates certain margin without compromising long

term reserves

• Post 17.6% and 22.1% y-o-y FOB cash cost reductions in 2015 and 1H16 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. Currently, PKU is in final stage of constructing palm oil mill with capacity

• f 30 fresh fruit bunch (FFB) / hour to be completed by first semester 2016
• 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 11x - 12x 5 - 7

2016 F

50 - 55

2015

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