20141029 toba mdna 9m14 english 1
Management Discussion & Analysis – Third Quarter (3Q) 2014
Toba Bara Sejahtra Tbk and Mining Subsidiaries
th
30 September 2014
1
SUMMARY
Over quarter-on-quarter (q-o-q) period from 2Q14 to 3Q14, the bearish sentiment on the global coal
prices continued to deteriorate as reflected by Newcastle (NEWC) Index price falling by 6.4% from US$
73.1/ton to US$ 68.4/ton. Meanwhile on year-on-year (y-o-y) basis, the price corrected 14.6% from US$
85.7/ton in 3Q13 to US$ 73.2/ton in 9M14. This was attributable to among others, the combination of
China’s slowing demand growth and lack of supply discipline from major producers such as Indonesia
and Australia.
Given that the global coal market has been under pressure for the past two years, PT Toba Bara Sejahtra
Tbk (The Company) continues to be well positioned to maintain its costs structure relatively stable for the
year post a series of cost efficiency initiatives conducted over 2013 period. This has enabled the
Company to focus on profitable production growth. Over the last three quarters since 4Q13, the Company
has continued on the positive momentum of its operational performance by successfully maintaining a
quarterly production run-rate of 1.90-2.15 million tons, while generating EBITDA/ton of around US$ 810/ton.
As the Company’s three concessions are located adjacent to each other, for the past year, the Company
has been able to maximize cost efficiency initiatives through joint mine plan and infrastructure sharing.
This has allowed the Company to successfully boost production volume and sales volume by 39.4% to
6.40 million tons and by 37.9% to 6.08 million tons y-o-y in 9M14 respectively. On quarterly basis, the
total production volume of 2.33 million tons in 3Q14 surpassed those of previous quarters of 1Q14 and
2Q14 at 1.91 million tons and 2.16 million tons respectively. The 3Q14 production volume proved to be
the highest in its corporate history.
Financially, the Company increased its top line sales by 31.0% y-o-y from 9M13 to 9M14. Despite a
14.6% correction in the NEWC Index price, the Company posted a decline of 5.0% in its average selling
price (ASP) over the same period. On the cost side, the Company lowered its FOB (Free on Board) cash
cost by 5.4% over the same period. A combination of stronger sales efforts through higher sales volume
backed by higher quality buyers and lower overall costs resulted in a 44.0% y-o-y higher EBITDA in 9M14
at US$ 57.80 million. This, in turn, translated to a more favorable income of US$ 30.91 million for 9M14,
or up by 59.8% from the previous year.
Special Note: The following discussion on the Company’s performance is based on the Consolidated Financial
th
Statements as per 30 September 2014 (unaudited), which mainly focuses on the operational and financial
performances of all three of its coal mining subsidiaries: PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM),
dan PT Trisensa Mineral Utama (TMU).
2
PRODUCTION & OPERATION
The Company’s coal production volume expanded 39.4% y-o-y from 4.59 million tons in 9M13 to 6.40
million tons in 9M14 on the back of significantly higher volume contributions from TMU and IM. The
production volume of 6.40 million tons in 9M14 resulted from operations of all three operating subsidiaries
with the following respective contributions: ~3.49 million tons from ABN, ~1.77 million tons from IM, and
~1.14 million tons from TMU. The Company’s y-o-y production growth of 39.4% mainly derived from
TMU’s substantial production ramp up post the earlier-than-expected completion of its hauling road in
2Q13 connecting TMU and IM via ABN. While as of 9M14, ABN remains to be the Company’s main
volume contributor of all three subsidiaries accounting for 54.5% of total Company production, its
contribution has fallen from 67.7% as of 9M13. On the other hand, the contribution of TMU to total
Company production has surged significantly from 11.0% in 9M13 to 17.9% in 9M14. On stand alone
basis, the contributions of IM and TMU were crucial as they posted y-o-y production volume growth of
around 81.3% and 125.9% in 9M14 respectively.
Changes in Production and SR at ABN, IM and TMU
ABN
4,000
IM
TMU
15.0x
2,000
15.0x
14.0x
1,500
14.0x
3,000
13.0x
1,000
2,500
12.0x
500
11.0x
0
14.4x
1,400
15.0x
1,143
1,200
13.8x
3,500
13.2x
12.8x
13.0x
14.0x
1,000
800
3,108
3,489
976
2,000
9M13
9M14
Production Volume ('000 ton)
11.0x
9M13
Stripping Ratio (x)
400
12.7x
200
1,769
11.0x
9M13
Stripping Ratio (x)
12.0x
11.2x
0
9M14
Production Volume ('000 ton)
13.0x
506
600
12.0x
9M14
Production Volume ('000 ton)
Stripping Ratio (x)
As compared to 9M13, SR in 9M14 declined 3.5% from 13.7x to 13.2x reflecting the Company’s
continued efforts in improving its operational performance amidst the low coal price environment. On q-oq though, SR fell much more by 9.4% from 13.8x in 2Q14 to 12.5x in 3Q14 due to SR normalization post
pre-stripping activities during the earlier quarters. SR is expected to stabilize going into the subsequent
quarter of this year. In line with the strategy to continually lower overall costs towards maintaining
profitability margin, the Company strives to always keep its SR and overburden (OB) dump distance as
stable as possible, given that these two cost components typically account for around 65%-70% of cash
cost.
Average Production, SR, and Dump Distance
Dump Distance (meters)
Production Volume & SR
2,000
1,500
15.1x
13.6x
12.7x
12.7x
13.5x
13.8x
12.5
1,000
500
1,298
1,501
1,802
1,950
1,911
2,160
2,330
1Q 2013
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2,500
2,400
2,300
2,200
2,100
2,000
1,900
1,899
1,800
1,700
1,600
1,741
1,681
1,890
1,816
1,785
1,675
1,500
Production Volume ('000 ton)
Stripping Ratio (x)
1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014
The Company’s ASP only contracted by 5.0% y-o-y from US$ 67.47/ton in 9M13 to US$ 64.10/ton in
9M4, which compared favorably with NEWC Index price that fell 14.6% over the same period. The ASP
outperformance over that of NEWC Index was due to the Company’s ability to capitalize on securing its
coal sales based more on fixed pricing rather than index-linked during the latter part of 2013. (When
entering into a fixed-priced contract with a buyer, the Company typically would secure it in the very early
part of the year or the latter part of the preceeding year during a relatively higher NEWC Index price). In
the case of 2014 sales volume, the Company sold in advance the majority of its 2014 sales volume to its
3
quality buyers by entering into fixed-priced contracts over the end periods of 2013. The terms of payment
were favorable to the Company such that the typical buyers, notably international traders, would prepay
certain percentage of the contract values. In doing so, this enabled the Company to maximize its pricing
structure relative to any adverse coal market condition. By the end of 9M14, the Company has sold
~90%-95% of its 2014 sales volume at fixed price.
Financial and Operational Highlights
All figures are in million US$
unless otherwise stated
2Q14
3Q14
Changes
9M13
9M14
Changes
Operation
Sales Volume
Mn ton
1.92
2.23
16.1%
4.41
6.08
37.9%
Production Volume
Mn ton
2.16
2.33
7.9%
4.59
6.40
39.4%
Stripping Ratio (SR)
x
13.79
12.50
(9.4%)
13.69
3.21
(3.5%)
FOB Cash Cost*
US$/ton
52.32
52.55
0.4%
54.40
51.46
(5.4%)
NEWC Index Price
US$/ton
73.05
68.35
(6.4%)
85.70
73.20
(14.6%)
Average Selling Price (ASP)
US$/ton
64.81
64.09
(1.1%)
67.47
64.10
(5.0%)
2Q14
3Q14
Changes
9M13
9M14
Changes
Financial Performance
Profit (Loss)
Sales
US$ Mn
124.83
142.90
14.5%
297.50
389.73
31.0%
Cost of Goods Sold
US$ Mn
103.77
121.10
16.7%
244.70
323.27
32.1%
Gross Profit
US$ Mn
21.06
21.81
3.6%
52.80
66.47
25.9%
Operating Profit
US$ Mn
14.75
15.41
4.5%
29.28
47.83
63.4%
EBITDA**
US$ Mn
17.20
19.51
13.4%
40.15
57.80
44.0%
Profit for the Period
US$ Mn
7.92
10.19
28.7%
19.34
30.91
59.8%
EBITDA/ton
US$/ton
8.96
8.75
(2.3%)
9.11
9.51
4.4%
Capex
US$ Mn
2.27
2.46
8.4%
15.39
10.23
(33.5%)
FY13
9M14
Changes
Balance Sheet
Interest Bearing Debt
US$ Mn
57.83
57.83
55.86
57.83
3.5%
Cash and Cash Equivalents
US$ Mn
53.30
64.31
63.30
64.31
1.6%
Net Debt***
US$ Mn
4.53
Net Cash
Net Cash
Net Cash
N/A
Total Assets
US$ Mn
331.31
329.62
311.65
329.62
5.8%
Total Liabilities
US$ Mn
191.61
185.47
181.17
185.47
2.4%
Total Equity
US$ Mn
139.70
144.15
130.48
144.15
10.5%
Gross Profit Margin
%
16.9%
15.3%
17.7%
17.1%
EBITDA Margin
%
13.8%
13.7%
13.5%
14.8%
Operating Profit Margin
%
11.8%
10.8%
9.8%
12.3%
Financial Ratios
Notes:
*FOB Cash Cost = COGS including royalty and selling expense – depreciation and amortization
**EBITDA = Gross Profit – selling expenses – G&A + depreciation and amortization
*** Net Debt = Interest bearing debt – cash and cash equivalents
4
PROFIT (LOSS)
SALES
Although the weaker NEWC Index price impacted the Company’s overall ASP by 5.0% from US$
67.47/ton in 9M13 to US$ 64.10/ton in 9M14, the Company booked a 31.0% rise in sales from US$
297.50 million in 9M13 to US$ 389.73 million in 9M14 on the back of a solid 37.9% increase in sales
volume over the same period.
COST OF GOODS SOLD
A 32.1% y-o-y rise in cost of goods sold from US$ 244.70 million in 9M13 to US$ 323.27 million in 9M14
reflected the Company’s significant increase in production volume by 39.4% despite lower cash cost from
favorable SR over the same period. Higher production volume typically increases such mining costs as
OB removal and OB dump distance as well as fuel, while accounting for the largest components of
production cost.
EBITDA
EBITDA surged by 44.0% y-o-y from US$ 40.15 million in 9M13 to US$ 57.80 million in 9M14, resulting
from predominantly higher sales volume and better mine plan execution amidst the weaker ASP, while
lowering mining costs in the process. Such a combination between the Company’s on-going cost
efficiency initiatives and improvement in sales and marketing activity positively improved EBITDA margin
from 13.5% in 9M13 to 14.8% in 9M14.
The first graph below depicts the EBITDA evolution on q-o-q basis from US$ 9.0 million in 1Q13 right
through to US$ 19.51 million in 3Q14 and the NEWC Index price from US$ 93.0/ton to US$ 68.4/ton over
the same period. Over the past seven quarters, the company has successfully booked stronger EBITDA
and stable cash margin during continued weaker coal price environment.
Quaterly EBITDA vs NEWC Index
1Q13 – 3Q14
40.0
100.0
93.0
35.0
ASP vs FOB Cash Cost
1Q13 – 3Q14
86.0
90.0
84.0
30.0
78.0
70.0
60.0
78.0
73.0
25.0
80.0
80.0
68.4
20.0
70.0
15.0
60.0
10.0
66.2
55.1
68.1
54.9
67.8
53.4
50.0
63.3
49.2
62.9
48.9
64.8
52.3
64.1
52.6
40.0
30.0
20.0
50.0
5.0
9.0
12.0
18.0
18.0
21.0
17.2
40.0
1Q13
2Q13
3Q13
4Q13
EBITDA (US$ Mn)
1Q14
2Q14
NEWC (US$/ton)
10.0
19.5
0.0
3Q14
0.0
1Q13
2Q13
3Q13
4Q13
FOB Vessel Cash Cost (US$/ton)
1Q14
2Q14
3Q14
ASP (US$/ton)
PROFIT FOR THE PERIOD
The Company booked total profit for the period (before minority interest) of US$ 30.91 million in 9M14, up
by 59.8% from US$ 19.34 million in 9M13.
BALANCE SHEET
ASSETS
th
The Company’s assets as at 30 September 2014 stood at US$ 329.62 million, or up by 5.8% from US$
st
311.65 million as per 31 December 2013.
LIABILITIES
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Total liabilities as at 30 September 2014 rose by 2.4% to US$ 185.47 million from US$ 181.17 million as
per end-December 2013 and interest bearing debt increased by 3.5% to US$ 57.83 million from US$
5
55.86 million over the same period. Meanwhile, leverage metrics such as Net Debt to EBITDA ratios have
constantly recorded stability from quarter to quarter at way below 2x.
Net Debt to EBITDA
25
21.1
18.2
20
18.0
17.2
19.5
12.5 13.4
15
9.4
10
2.5
5
2.5
4.5
0
-5
-10
-6.5
-7.4
-15
-20
-17.0
Ratio (x)
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
(1,8)
0,2
0,7
(0,4)
0,1
0,3
Net Debt (Cash) (US$ Mn)
3Q14
(0,3)
EBITDA (US$ Mn)
EQUITY
st
Total equity in 9M14 slightly increased 10.5% to US$ 144.15 million from US$ 130.48 million as of 31
December 2013, and this was attributable to additional profit for the period.
CAPITAL EXPENDITURE (CAPEX)
Until 9M14, the Company has realized total CAPEX of around US$ 10.23 million, which is mainly
allocated for land compensation and operational facilities and equipment.
MARKETING
During 9M14, the Company sold its coal mainly to Asian countries, such as China, Korea, Taiwan, and
India. Some of the large reputable international traders and end-users such as power generation
companies make up the Company’s main customers. 2013 was a marketing milestone for the Company
as it successfully garnered a more diversified and higher quality customer base, expanded export market
coverage, while maximizing its pricing mechanism through various hedging strategies. The Company
also utilized its own in-house marketing team to tap into high quality end users such as in Japan without
incurring any significant marketing costs. From 4Q13 until 9M14, the Company has secured ~90-95% of
its 2014 total sales volume.
Sales Destinations by Country
9M13
Total Sales Volume: 4.41 Mt
9M14
Total Sales Volume: 6.08 Mt
11,9%
26,5%
China
31,7%
36,2%
15,1%
Taiwan
Korea
9,2%
India
18,3%
9,9%
22,7%
18,5%
Others
6
OPERATIONAL UPDATE
Initiative
IM
Achievement
Construction of Coal Processing Plant (CPP) is expected
to boost coal production capacity at IM from 3 million tons
per annum (tpa) to 6 million tpa. This new CPP not only will
process TMU’s coal, but also will create more cost
efficiency and increase coal stockpile capacity. Overall, the
Company’s total production/infrastructure capacity is
expected to expand significantly from currently 13 million
tpa to 16 million tpa.
Construction of CPP
is in finalization stage
SNAPSHOT OF PT TOBA BARA SEJAHTRA TBK
PT Toba Bara Sejahtra Tbk (“The Company”) is one of the major competitive producers of thermal coal in
Indonesia. The Company has grown into a major coal producer operating 3 (three) coal mine
concessions in East Kalimantan. These adjacent coal mining concessions, which are held through
various operating companies, all enjoy highly favorable mine locations, with close proximity to local river
ports. The Company’s concession areas total approximately 7,087 hectares.
The Company currently has four operating subsidiaries, three in coal mining namely PT Adimitra
Baratama Nusantara (ABN), PT Indomining (IM), PT Trisensa Mineral Utama (TMU) and one in palm oil
namely PT Perkebunan Kaltim Utama I (PKU). The Company’s ownerships in ABN, IM, TMU and PKU
are 51.00%, 99.99%, 99.99% and 90.00% respectively.
th
On 6 July, 2012, the Company listed its shares at the Indonesia Stock Exchange (IDX) under the ticker
‘TOBA’ and released as many as 210,681,000 shares or 10.5% of its paid up capital with an IPO proceed
of IDR 400.3 billion.
Locations of Toba Bara’s Concessions
Major City
Jetty
Transhipment Point
TMU - IM Hauling Road
Major city is
less than 50
km
Furthest pit to
jetty 25km | with
closest one ~5km
Samarinda
~55 Km
(total ~120 Km)
Sungai Mahakam
17km
IM
ABN
TMU
ABN
Muara
Berau
~ 5 km
IM Jetty
Close proximity
transhipment
Makassar Strait
point & jetty
ABN Jetty
Kutai
Energy
~ 120 km
Balikpapan
Adjacent
locations for
all 3 mines
~65 Km
Muara Jawa
ABN is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan and is operated under the IUPOP
permit. It started operations in September 2008. ABN covers an area reaching 2,990 hectares, and has
estimated coal resources of around 156 million tons.
IM is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan and is operated under the IUPOP
7
permit. It started operations in August 2007. IM covers 683 hectares of land, and has estimated coal
resources of 37 million tons.
Meanwhile, TMU is located in Loa Janan, Muara Jawa and Sanga-Sanga, Kutai Kartanegara, East
Kalimantan. With IUPOP permit, TMU started operations in October 2011. TMU covers 3,414
hectares of land, and has estimated coal resources of 43 million tons.
Altogether, the total coal resources of the Company are currently estimated at 236 million tons.
For further information, please contact:
PT Toba Bara Sejahtra Tbk
Pandu P. Syahrir
Iwan Sanyoto
Corporate Secretary
Head of Investor Relations
(Sekretaris Perusahaan)
(Kepala Hubungan Investor)
Email: [email protected]
Email: [email protected]
Priambodo
Corporate Communication
(Komunikasi Perusahaan)
Email: [email protected]
Toba Bara Sejahtra Tbk and Mining Subsidiaries
th
30 September 2014
1
SUMMARY
Over quarter-on-quarter (q-o-q) period from 2Q14 to 3Q14, the bearish sentiment on the global coal
prices continued to deteriorate as reflected by Newcastle (NEWC) Index price falling by 6.4% from US$
73.1/ton to US$ 68.4/ton. Meanwhile on year-on-year (y-o-y) basis, the price corrected 14.6% from US$
85.7/ton in 3Q13 to US$ 73.2/ton in 9M14. This was attributable to among others, the combination of
China’s slowing demand growth and lack of supply discipline from major producers such as Indonesia
and Australia.
Given that the global coal market has been under pressure for the past two years, PT Toba Bara Sejahtra
Tbk (The Company) continues to be well positioned to maintain its costs structure relatively stable for the
year post a series of cost efficiency initiatives conducted over 2013 period. This has enabled the
Company to focus on profitable production growth. Over the last three quarters since 4Q13, the Company
has continued on the positive momentum of its operational performance by successfully maintaining a
quarterly production run-rate of 1.90-2.15 million tons, while generating EBITDA/ton of around US$ 810/ton.
As the Company’s three concessions are located adjacent to each other, for the past year, the Company
has been able to maximize cost efficiency initiatives through joint mine plan and infrastructure sharing.
This has allowed the Company to successfully boost production volume and sales volume by 39.4% to
6.40 million tons and by 37.9% to 6.08 million tons y-o-y in 9M14 respectively. On quarterly basis, the
total production volume of 2.33 million tons in 3Q14 surpassed those of previous quarters of 1Q14 and
2Q14 at 1.91 million tons and 2.16 million tons respectively. The 3Q14 production volume proved to be
the highest in its corporate history.
Financially, the Company increased its top line sales by 31.0% y-o-y from 9M13 to 9M14. Despite a
14.6% correction in the NEWC Index price, the Company posted a decline of 5.0% in its average selling
price (ASP) over the same period. On the cost side, the Company lowered its FOB (Free on Board) cash
cost by 5.4% over the same period. A combination of stronger sales efforts through higher sales volume
backed by higher quality buyers and lower overall costs resulted in a 44.0% y-o-y higher EBITDA in 9M14
at US$ 57.80 million. This, in turn, translated to a more favorable income of US$ 30.91 million for 9M14,
or up by 59.8% from the previous year.
Special Note: The following discussion on the Company’s performance is based on the Consolidated Financial
th
Statements as per 30 September 2014 (unaudited), which mainly focuses on the operational and financial
performances of all three of its coal mining subsidiaries: PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM),
dan PT Trisensa Mineral Utama (TMU).
2
PRODUCTION & OPERATION
The Company’s coal production volume expanded 39.4% y-o-y from 4.59 million tons in 9M13 to 6.40
million tons in 9M14 on the back of significantly higher volume contributions from TMU and IM. The
production volume of 6.40 million tons in 9M14 resulted from operations of all three operating subsidiaries
with the following respective contributions: ~3.49 million tons from ABN, ~1.77 million tons from IM, and
~1.14 million tons from TMU. The Company’s y-o-y production growth of 39.4% mainly derived from
TMU’s substantial production ramp up post the earlier-than-expected completion of its hauling road in
2Q13 connecting TMU and IM via ABN. While as of 9M14, ABN remains to be the Company’s main
volume contributor of all three subsidiaries accounting for 54.5% of total Company production, its
contribution has fallen from 67.7% as of 9M13. On the other hand, the contribution of TMU to total
Company production has surged significantly from 11.0% in 9M13 to 17.9% in 9M14. On stand alone
basis, the contributions of IM and TMU were crucial as they posted y-o-y production volume growth of
around 81.3% and 125.9% in 9M14 respectively.
Changes in Production and SR at ABN, IM and TMU
ABN
4,000
IM
TMU
15.0x
2,000
15.0x
14.0x
1,500
14.0x
3,000
13.0x
1,000
2,500
12.0x
500
11.0x
0
14.4x
1,400
15.0x
1,143
1,200
13.8x
3,500
13.2x
12.8x
13.0x
14.0x
1,000
800
3,108
3,489
976
2,000
9M13
9M14
Production Volume ('000 ton)
11.0x
9M13
Stripping Ratio (x)
400
12.7x
200
1,769
11.0x
9M13
Stripping Ratio (x)
12.0x
11.2x
0
9M14
Production Volume ('000 ton)
13.0x
506
600
12.0x
9M14
Production Volume ('000 ton)
Stripping Ratio (x)
As compared to 9M13, SR in 9M14 declined 3.5% from 13.7x to 13.2x reflecting the Company’s
continued efforts in improving its operational performance amidst the low coal price environment. On q-oq though, SR fell much more by 9.4% from 13.8x in 2Q14 to 12.5x in 3Q14 due to SR normalization post
pre-stripping activities during the earlier quarters. SR is expected to stabilize going into the subsequent
quarter of this year. In line with the strategy to continually lower overall costs towards maintaining
profitability margin, the Company strives to always keep its SR and overburden (OB) dump distance as
stable as possible, given that these two cost components typically account for around 65%-70% of cash
cost.
Average Production, SR, and Dump Distance
Dump Distance (meters)
Production Volume & SR
2,000
1,500
15.1x
13.6x
12.7x
12.7x
13.5x
13.8x
12.5
1,000
500
1,298
1,501
1,802
1,950
1,911
2,160
2,330
1Q 2013
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2,500
2,400
2,300
2,200
2,100
2,000
1,900
1,899
1,800
1,700
1,600
1,741
1,681
1,890
1,816
1,785
1,675
1,500
Production Volume ('000 ton)
Stripping Ratio (x)
1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014
The Company’s ASP only contracted by 5.0% y-o-y from US$ 67.47/ton in 9M13 to US$ 64.10/ton in
9M4, which compared favorably with NEWC Index price that fell 14.6% over the same period. The ASP
outperformance over that of NEWC Index was due to the Company’s ability to capitalize on securing its
coal sales based more on fixed pricing rather than index-linked during the latter part of 2013. (When
entering into a fixed-priced contract with a buyer, the Company typically would secure it in the very early
part of the year or the latter part of the preceeding year during a relatively higher NEWC Index price). In
the case of 2014 sales volume, the Company sold in advance the majority of its 2014 sales volume to its
3
quality buyers by entering into fixed-priced contracts over the end periods of 2013. The terms of payment
were favorable to the Company such that the typical buyers, notably international traders, would prepay
certain percentage of the contract values. In doing so, this enabled the Company to maximize its pricing
structure relative to any adverse coal market condition. By the end of 9M14, the Company has sold
~90%-95% of its 2014 sales volume at fixed price.
Financial and Operational Highlights
All figures are in million US$
unless otherwise stated
2Q14
3Q14
Changes
9M13
9M14
Changes
Operation
Sales Volume
Mn ton
1.92
2.23
16.1%
4.41
6.08
37.9%
Production Volume
Mn ton
2.16
2.33
7.9%
4.59
6.40
39.4%
Stripping Ratio (SR)
x
13.79
12.50
(9.4%)
13.69
3.21
(3.5%)
FOB Cash Cost*
US$/ton
52.32
52.55
0.4%
54.40
51.46
(5.4%)
NEWC Index Price
US$/ton
73.05
68.35
(6.4%)
85.70
73.20
(14.6%)
Average Selling Price (ASP)
US$/ton
64.81
64.09
(1.1%)
67.47
64.10
(5.0%)
2Q14
3Q14
Changes
9M13
9M14
Changes
Financial Performance
Profit (Loss)
Sales
US$ Mn
124.83
142.90
14.5%
297.50
389.73
31.0%
Cost of Goods Sold
US$ Mn
103.77
121.10
16.7%
244.70
323.27
32.1%
Gross Profit
US$ Mn
21.06
21.81
3.6%
52.80
66.47
25.9%
Operating Profit
US$ Mn
14.75
15.41
4.5%
29.28
47.83
63.4%
EBITDA**
US$ Mn
17.20
19.51
13.4%
40.15
57.80
44.0%
Profit for the Period
US$ Mn
7.92
10.19
28.7%
19.34
30.91
59.8%
EBITDA/ton
US$/ton
8.96
8.75
(2.3%)
9.11
9.51
4.4%
Capex
US$ Mn
2.27
2.46
8.4%
15.39
10.23
(33.5%)
FY13
9M14
Changes
Balance Sheet
Interest Bearing Debt
US$ Mn
57.83
57.83
55.86
57.83
3.5%
Cash and Cash Equivalents
US$ Mn
53.30
64.31
63.30
64.31
1.6%
Net Debt***
US$ Mn
4.53
Net Cash
Net Cash
Net Cash
N/A
Total Assets
US$ Mn
331.31
329.62
311.65
329.62
5.8%
Total Liabilities
US$ Mn
191.61
185.47
181.17
185.47
2.4%
Total Equity
US$ Mn
139.70
144.15
130.48
144.15
10.5%
Gross Profit Margin
%
16.9%
15.3%
17.7%
17.1%
EBITDA Margin
%
13.8%
13.7%
13.5%
14.8%
Operating Profit Margin
%
11.8%
10.8%
9.8%
12.3%
Financial Ratios
Notes:
*FOB Cash Cost = COGS including royalty and selling expense – depreciation and amortization
**EBITDA = Gross Profit – selling expenses – G&A + depreciation and amortization
*** Net Debt = Interest bearing debt – cash and cash equivalents
4
PROFIT (LOSS)
SALES
Although the weaker NEWC Index price impacted the Company’s overall ASP by 5.0% from US$
67.47/ton in 9M13 to US$ 64.10/ton in 9M14, the Company booked a 31.0% rise in sales from US$
297.50 million in 9M13 to US$ 389.73 million in 9M14 on the back of a solid 37.9% increase in sales
volume over the same period.
COST OF GOODS SOLD
A 32.1% y-o-y rise in cost of goods sold from US$ 244.70 million in 9M13 to US$ 323.27 million in 9M14
reflected the Company’s significant increase in production volume by 39.4% despite lower cash cost from
favorable SR over the same period. Higher production volume typically increases such mining costs as
OB removal and OB dump distance as well as fuel, while accounting for the largest components of
production cost.
EBITDA
EBITDA surged by 44.0% y-o-y from US$ 40.15 million in 9M13 to US$ 57.80 million in 9M14, resulting
from predominantly higher sales volume and better mine plan execution amidst the weaker ASP, while
lowering mining costs in the process. Such a combination between the Company’s on-going cost
efficiency initiatives and improvement in sales and marketing activity positively improved EBITDA margin
from 13.5% in 9M13 to 14.8% in 9M14.
The first graph below depicts the EBITDA evolution on q-o-q basis from US$ 9.0 million in 1Q13 right
through to US$ 19.51 million in 3Q14 and the NEWC Index price from US$ 93.0/ton to US$ 68.4/ton over
the same period. Over the past seven quarters, the company has successfully booked stronger EBITDA
and stable cash margin during continued weaker coal price environment.
Quaterly EBITDA vs NEWC Index
1Q13 – 3Q14
40.0
100.0
93.0
35.0
ASP vs FOB Cash Cost
1Q13 – 3Q14
86.0
90.0
84.0
30.0
78.0
70.0
60.0
78.0
73.0
25.0
80.0
80.0
68.4
20.0
70.0
15.0
60.0
10.0
66.2
55.1
68.1
54.9
67.8
53.4
50.0
63.3
49.2
62.9
48.9
64.8
52.3
64.1
52.6
40.0
30.0
20.0
50.0
5.0
9.0
12.0
18.0
18.0
21.0
17.2
40.0
1Q13
2Q13
3Q13
4Q13
EBITDA (US$ Mn)
1Q14
2Q14
NEWC (US$/ton)
10.0
19.5
0.0
3Q14
0.0
1Q13
2Q13
3Q13
4Q13
FOB Vessel Cash Cost (US$/ton)
1Q14
2Q14
3Q14
ASP (US$/ton)
PROFIT FOR THE PERIOD
The Company booked total profit for the period (before minority interest) of US$ 30.91 million in 9M14, up
by 59.8% from US$ 19.34 million in 9M13.
BALANCE SHEET
ASSETS
th
The Company’s assets as at 30 September 2014 stood at US$ 329.62 million, or up by 5.8% from US$
st
311.65 million as per 31 December 2013.
LIABILITIES
th
Total liabilities as at 30 September 2014 rose by 2.4% to US$ 185.47 million from US$ 181.17 million as
per end-December 2013 and interest bearing debt increased by 3.5% to US$ 57.83 million from US$
5
55.86 million over the same period. Meanwhile, leverage metrics such as Net Debt to EBITDA ratios have
constantly recorded stability from quarter to quarter at way below 2x.
Net Debt to EBITDA
25
21.1
18.2
20
18.0
17.2
19.5
12.5 13.4
15
9.4
10
2.5
5
2.5
4.5
0
-5
-10
-6.5
-7.4
-15
-20
-17.0
Ratio (x)
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
(1,8)
0,2
0,7
(0,4)
0,1
0,3
Net Debt (Cash) (US$ Mn)
3Q14
(0,3)
EBITDA (US$ Mn)
EQUITY
st
Total equity in 9M14 slightly increased 10.5% to US$ 144.15 million from US$ 130.48 million as of 31
December 2013, and this was attributable to additional profit for the period.
CAPITAL EXPENDITURE (CAPEX)
Until 9M14, the Company has realized total CAPEX of around US$ 10.23 million, which is mainly
allocated for land compensation and operational facilities and equipment.
MARKETING
During 9M14, the Company sold its coal mainly to Asian countries, such as China, Korea, Taiwan, and
India. Some of the large reputable international traders and end-users such as power generation
companies make up the Company’s main customers. 2013 was a marketing milestone for the Company
as it successfully garnered a more diversified and higher quality customer base, expanded export market
coverage, while maximizing its pricing mechanism through various hedging strategies. The Company
also utilized its own in-house marketing team to tap into high quality end users such as in Japan without
incurring any significant marketing costs. From 4Q13 until 9M14, the Company has secured ~90-95% of
its 2014 total sales volume.
Sales Destinations by Country
9M13
Total Sales Volume: 4.41 Mt
9M14
Total Sales Volume: 6.08 Mt
11,9%
26,5%
China
31,7%
36,2%
15,1%
Taiwan
Korea
9,2%
India
18,3%
9,9%
22,7%
18,5%
Others
6
OPERATIONAL UPDATE
Initiative
IM
Achievement
Construction of Coal Processing Plant (CPP) is expected
to boost coal production capacity at IM from 3 million tons
per annum (tpa) to 6 million tpa. This new CPP not only will
process TMU’s coal, but also will create more cost
efficiency and increase coal stockpile capacity. Overall, the
Company’s total production/infrastructure capacity is
expected to expand significantly from currently 13 million
tpa to 16 million tpa.
Construction of CPP
is in finalization stage
SNAPSHOT OF PT TOBA BARA SEJAHTRA TBK
PT Toba Bara Sejahtra Tbk (“The Company”) is one of the major competitive producers of thermal coal in
Indonesia. The Company has grown into a major coal producer operating 3 (three) coal mine
concessions in East Kalimantan. These adjacent coal mining concessions, which are held through
various operating companies, all enjoy highly favorable mine locations, with close proximity to local river
ports. The Company’s concession areas total approximately 7,087 hectares.
The Company currently has four operating subsidiaries, three in coal mining namely PT Adimitra
Baratama Nusantara (ABN), PT Indomining (IM), PT Trisensa Mineral Utama (TMU) and one in palm oil
namely PT Perkebunan Kaltim Utama I (PKU). The Company’s ownerships in ABN, IM, TMU and PKU
are 51.00%, 99.99%, 99.99% and 90.00% respectively.
th
On 6 July, 2012, the Company listed its shares at the Indonesia Stock Exchange (IDX) under the ticker
‘TOBA’ and released as many as 210,681,000 shares or 10.5% of its paid up capital with an IPO proceed
of IDR 400.3 billion.
Locations of Toba Bara’s Concessions
Major City
Jetty
Transhipment Point
TMU - IM Hauling Road
Major city is
less than 50
km
Furthest pit to
jetty 25km | with
closest one ~5km
Samarinda
~55 Km
(total ~120 Km)
Sungai Mahakam
17km
IM
ABN
TMU
ABN
Muara
Berau
~ 5 km
IM Jetty
Close proximity
transhipment
Makassar Strait
point & jetty
ABN Jetty
Kutai
Energy
~ 120 km
Balikpapan
Adjacent
locations for
all 3 mines
~65 Km
Muara Jawa
ABN is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan and is operated under the IUPOP
permit. It started operations in September 2008. ABN covers an area reaching 2,990 hectares, and has
estimated coal resources of around 156 million tons.
IM is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan and is operated under the IUPOP
7
permit. It started operations in August 2007. IM covers 683 hectares of land, and has estimated coal
resources of 37 million tons.
Meanwhile, TMU is located in Loa Janan, Muara Jawa and Sanga-Sanga, Kutai Kartanegara, East
Kalimantan. With IUPOP permit, TMU started operations in October 2011. TMU covers 3,414
hectares of land, and has estimated coal resources of 43 million tons.
Altogether, the total coal resources of the Company are currently estimated at 236 million tons.
For further information, please contact:
PT Toba Bara Sejahtra Tbk
Pandu P. Syahrir
Iwan Sanyoto
Corporate Secretary
Head of Investor Relations
(Sekretaris Perusahaan)
(Kepala Hubungan Investor)
Email: [email protected]
Email: [email protected]
Priambodo
Corporate Communication
(Komunikasi Perusahaan)
Email: [email protected]