Delivering Positive Energy March 2014
Disclaimer These materials have been prepared by PT Adaro Energy (the “Company”) and have not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained in these materials. The Company or any of its affiliates, advisers or representatives accepts no liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. These materials 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. 2
Agenda I. Corporate Information Adaro’s Strategy II. III. Industry Outlook 3
I. Corporate Information 4
Adaro Energy Snapshot • Largest single-concession coal 2011A: 47.7 Mt 2012A: 47.2 Mt producer in southern hemisphere Production 2013A: 52.3 Mt • Top 5 thermal coal exporter globally Sub-bituminous, medium calorific • Major supplier to domestic market value, ultra-low pollutants Envirocoal Trademark registered in many • One of the world ’ s lowest cost coal jurisdictions More than 50 customers in 12 producers Customers countries • Envirocoal among the most Blue-chip power generation utilities environmentally friendly coal Fixed price and about 1/3 index-linked Pricing Adjustment for heat content • Vertically integrated business model • Strong credit profile Reserves: 1.1 Bt as of YE2012 JORC reserves Resources: 12.3 Bt (includes option to / resources • High visibility of future earnings control 7 Bt) as of YE2012 South, East, Central Kalimantan, • Reputable and experienced Location South Sumatra management and controlling First generation Coal Cooperation License shareholders Agreement valid until 2022 (AI) 5
Adaro’s Operational and Financial Highlights OPERATIONAL FY 2013 FY 2012 % Change Production (Mt) 52.27 47.19 11% Sales (Mt) 48.62 10% 53.47 OB removal (Mbcm) 294.86 331.48 -11% FINANCIAL (US$ millions, unless indicated) FY 2013 FY 2012 % Change Net revenue 3,285 3,722 -12% Cost of revenue (2,546) (2,680) -5% Gross Profit 739 1,043 -29% Net Income 229 383 -40% Core Earnings 284 440 -36% EBITDA 822 1,101 -25% Operational EBITDA 860 1,111 -23% Cash 681 500 36% Net Debt 1,540 1,945 -21% Net Debt to Equity (x) 0.48 0.65 - Net Debt to EBITDA (x) 1.87 1.77 - Free Cash Flow 568 235 141% Cash from Operations to Capex (x) 4.01 0.88 - Basic Earnings Per Share (EPS) in US$ 0.00723 0.01205 -40% 6
Key Messages • On track to deliver on our long-term strategy to create sustainable value from Indonesian coal. • Delivered on production guidance for 2013 and produced a record of 52.3 Mt of Envirocoal. • Resilient business focused on core assets, operational excellence, risk reduction and customers. • Maintain strong capital structure and margins • Monitor and reduce expenses and capital expenditures to preserve cash. • Continue to improve efficiency and create reliable, safe, long-term growth. • Diversified customer base with long-term contracts mostly with sovereign backed power companies. 7
Recent Performance: We Delivered • We achieved record production volume in • Liquidity and our Balance Sheet remain FY13 of 52.3 Mt. We delivered on our 2013 strong with access to cash and undrawn production guidance of 50 to 53 Mt. long term fully committed credit facilities of more than US$1.1 billion. • Overburden removal was 294.86 million • We delivered, posting EBITDA of US$822 bank cubic meters (Mbcm) in FY13, 11% lower y-o-y. million in line with our guidance of US$750 million to US$900 million. • AI obtained BBB- rating from Japan Credit • Our FY13 coal cash cost at US$34.86 Rating Agency, Ltd . Fitch and Moody’s affirmed rating on Adaro Indonesia at BB+ beating our FY13 guidance of US$35 to and Ba1, respectively. US$38 per tonne. • Free Cash Flow surged by 141% to US$568 million. 8
2014 Guidance Production Volumes (Mt ) Consolidated Planned Strip Ratio (bcm/t) 54-56* 52.3 47.7 47.2 42.2 40.6 6.4 5.9 5.78 5.5 5.75 5.0 2009A 2010A 2011A 2012A 2013A 2014F 2009A 2010A 2011A 2012A 2013A 2014F * Pending government approval EBITDA (US$ billions) Operational EBITDA 1.5 1.1 (US$ billions) 1.1 .75 - 1.0 0.82 0.9 2009A 2010A 2011A 2012A 2013A 2014 F Coal Cash Cost (ex-royalty, US$/t) Capital Expenditure (US$ millions) 39 35-38 625 36 34.86 32 490 27 287 200-250 165 135 2009A 2010A 2011A 2012A 2013A 2014F 2009A 2010A 2011A 2012A 2013A 2014 F 9
Resilient Business Model Creating Sustainable Value Pit to Power Integration PT Adaro Energy Adaro Mining Adaro Mining Adaro Adaro Power Assets (ATA) Services Logistics Adaro Indonesia (AI) 100% Saptaindra 100% Maritim Barito 100% Makmur Sejahtera 100% Coal mining, S Kalimantan Sejati (SIS) Perkasa (MBP) Wisesa (MSW) Coal mining and Coal barging and 2x30MW mine- Balangan 75% hauling contractor shiploading operator mouth power plant Coal mining, S Kalimantan operation in Harapan Bahtera 100% S Kalimantan Mustika Indah Permai (MIP) Internusa (HBI) Coal mining, S Sumatra 75% Third-party barging Jasapower 100% Bhimasena Power 34% and shiploading Bukit Enim Energi (BEE) Indonesia (JPI) 2x1000MW power 61% Coal mining, S Sumatra Overburden crusher Sarana Daya 51.2% plant operator in IndoMet Coal and conveyor Mandiri (SDM) Central Java 25% Project (IMC), BHP JV operator Channel dredging Coal mining, C Kalimantan contractor South Kalimantan 65% Power Project Indonesia Bulk 100% Bhakti Energi 10.2% 2x100MW power Terminal (IBT) Persada (BEP) plant operator in Coal and fuel terminal Coal mining, E Kalimantan S Kalimantan *Simplified Corporate Structure 10
Adaro Indonesia Core Operations Coal Cooperation Agreement – Adaro Indonesia Shiploading at Taboneo offshore Indonesia Bulk anchorage Terminal, Pulau Laut Barging to Indonesia Bulk Terminal Barging to domestic customers 11
Supply Chain Vertical Integration Coal Mining Coal Hauling • Adaro Indonesia (AI) produced 52.3 Mt • 80km private paved haul road in 2013 from a single Coal Cooperation improved operational efficiency. Agreement (CCA) area in S Kalimantan. • 921 Mt of Reserves and 4.7 Bt of • More than 350 units of 130 tonnes Resources in S Kalimantan. capacity truck trailers in operation. • Saptaindra Sejati (SIS) provides ~35% of AI mining and overburden removal. 12
Supply Chain Vertical Integration Coal Processing & Barge Loading Barging • Supported by our subsidiary, At Kelanis river terminal : • Expanding to reach 70 Mt PT Maritim Barito Perkasa (MBP). • 55 sets of tugs and barges used by coal-handling capacity per year. • 450,000 tonne stockpile + 80,000 tonnes Adaro with an average capacity of ROM capacity. 11,750dwt, including three sets of • 2 barge loading jetties with a loading 18,000dwt units. rate of 5,000 tonnes/hr each. 13
Supply Chain Vertical Integration Shiploading and Port Barito River Channel • Sarana Daya Mandiri (SDM), dredged • Offshore loading at Taboneo: capacity the river channel in 2008, increasing up to 165,000 tonnes/day: floating capacity to 200 Mt per year and now cranes (15,000-20,000t/day), FTU manages and maintains the channel. (60,000t/day) and self-loading geared • Adaro owns 51.2% of SDM with the local vessels. • IBT port and fuel terminal JV with port authority and local government owning the remaining interest. Shell: coal loading capacity 12 Mt/year, fuel storage capacity 60,000 kiloliters. 14
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