TBS Company Presentation 1H 2017 (2)
1
PT Toba Bara Sejahtra Tbk (
䇾
Toba
䇿
)
Company Presentation
April 2017
PT Toba Bara Sejahtra Tbk (
䇾
Toba
䇿
)
Company Presentation
August 2017
(2)
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
Performance Highlights
3
1
Strategy to Venture into Power
3
i
Sulbagut-1 Project
(4)
4
Performance Highlights
Performance Highlights
(5)
Location: Kutai, Kalimantan Timur
Hak Guna Usaha (“HGU”) covers 8,633 ha, where 2,701 ha has been planted
CPO mill with capacity of 30 tons Fresh Fruit Bunch (“FFB”)per hour
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
TBE established in December 2016 for investment in power generation business
5
Toba Bara Sejahtra In Brief
Location: Kutai Kartanegara, Kalimantan Timur
Total Concession: 7,087 ha
JORC-compliant proved and probable reserves of 147 MM tons and measured, indicated and inferred resources of 236 MM tons
Coal brands with mid to upper range calorific values ranging from 4,700-5,900 Kcal/kg GAR
Prime location provides operational cost edge to grow as a logistical & operational center for the area
Coal Mining
Palm Oil Plantation & Mill
Toba Bara Sejahtra(Toba) has 5 (“five”) subsidiaries engaged in:
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Note:
1. PLN: PT Perusahaan Listrik Negara (Persero)
Ownership Structure
License
Area
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% 80.00% Highland Strategic Holdings Pte. Ltd.
0.75%
• On 25thJanuary 2017, PT Toba Sejahtra(“TS”), the majority shareholder of PT Toba Bara Sejahtra Tbk(“Company”) with 71.79%
divested majority 61.79% share ownership to new shareholder, Highland Strategic Holdings Pte. Ltd. (“HSH”) • HSH is a Singapore-based investment company, mainly focused in the energy sector
• With HSH and TS sharing the same business alignment, HSH is expected to add further value to the future development of the Company 6
*) Incl. Baring Private Equity as anchor investor
90.00%
20-year Production Operation Mining Permit (䇾IUP-OP䇿) 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
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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 one ~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
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TMU
IMABN
TMU
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
8 Note:PT Adimitra Baratama Nusantara (ABN)
PT Indomining (IM)
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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 1H17
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 receivedGold PROPER Enviromental Award from
Provincial Govt for 3 consecutive years
IMand TMU receivedGreen
PROPER Enviromental Award for 2 consecutive years
IMreceivedcertificates forISO 14001, OHSAS 18001 and ISO 9001
ABN received Award from
Customs Officeof East Kalimantan as “Ideal”
Company
TMU received Pratama Award
from Ministry of Energy, Mines, & Resoucres (MEMR)
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Performance Highlights
(11)
4.1 Mt
5.2 Mt 5.6 Mt
6.5 Mt
8.1 Mt
6.1 Mt
5.5 Mt 5.0-6.0 Mt
$99 $121 $97
$85 $71 $59 $66 $65-70 0 20 40 60 80 100 120 140 0 1 2 3 4 5 6 7 8 9 10
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
Amidst coal price volatility over the past several years and to sustain the Company’s survival mode, Toba
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Operational Performance
Quarterly Production & SRProduction in Thousand Tons
Production Summary
MT: Million Ton
2Q16 2Q17 Change Comment
Sales Volume SR (x) 1.7 1.1 13.8 14.3 (35.3)% 10.5%
Sales volume tracked its 2Q17 production volume
SR edged up due to impact from mining operations during prolonged wet weather conditions
1.3 1.2 (17.9)% Production volume in 2Q17 was below guidance due to prolonged rainfall during the period
Production Volume
Production Summary
MT: Million Tons
Quarterly production volume of 1.2 mn tons in 2Q17 came in below 2017 quarterly guidance of 1.25 -1.50 mn tons
2Q17 SR rose to 14.3x from 13.7x in 1Q17 due primarily to heavier than expected rainfall, which impacted production
Production should normalize in subsequent quarters
2017 guidance for SR is estimated at 12x - 13x in line with mine plan
12 13.8x
12.8x 12.6x 13.7x 14.3x 12.0x - 13.0x
0.0 0.1 0.1 0.2 0.2 0.3
2Q16 3Q16 4Q16 1Q17 2Q17 Quarterly
Guidance
TMU IM ABN SR (Consolidated)
1.3 1.4 1.2
1.1
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Consolidated Performance
Operational 1H16 1H17 Change
Production Volume 2.8 2.3 -17.9%
Sales Volume 3.1 2.2 -29.0%
Stripping Ratio (SR) 13.1 14.0 6.9%
Sales 139.0 127.9 -8.0%
EBITDA* 22.0 28.4 29.1%
Profit for the Period 9.3 14.6 57.0%
Financial 1H16 1H17 Change
Note: Based on unaudited financial statements
(*) EBITDA = Gross profit –selling expenses –G&A + depreciation and amortization + other non-cash items
45.4
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NEWC Index 50.9 80.6 58.3%
Average Selling Price (ASP) 57.3 26.2%
Mn ton Mn ton
x US$/ton US$/ton
US$ mn US$ mn US$ mn
FOB Cash Cost US$/ton 34.9 38.8 11.2%
15.8%
EBITDA Margin 22.2%
Gross Profit Margin
Financial Ratios 1H16 1H17
28.6% 20.2%
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Sales Volume, NEWC Index & ASP
(million tons and US$/ton)
Sales, Cost of Goods Sold and Gross Profit
Margin (US$ million and %)
EBITDA/ton and EBITDA Margin
(US$/ton and %)
Increase in ASP per ton directly filters to higher
gross profit margin and EBITDA margin
ASP Positively Impacts Margins
3.3 3.1 2.2 62.7 50.9 80.6 57.3 45.4 57.3
1H15 1H16 1H17
Sales Volume NEWC Index ASP 190.8 139.0 127.9 154.7 110.9 91.2
18.9% 20.2%
28.6%
1H15 1H16 1H17
Sales
Cost of Goods Sold Gross Profit Margin 9.0 7.2 12.9
15.6% 15.8%
22.2%
1H15 1H16 1H17
EBITDA/ton EBITDA Margin
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Balance Sheet
Consolidated Balance Sheet In Million US$
Net Debt to EBITDA2) In Million US$
Total assets and total liabilities rose similarly due to rise in interest bearing debt from Bank Mandiri’s US$ 50 mn loan facility. This was for refinancing syndicated loan, investment, and corporate purposes where US$ 40 mn of proceeds was used by June 2017
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
Note:
(1) Interest Bearing Debt: Bank loans + Financing lease
(2) EBITDA : Based on last 12 months 15
276.3
Total Assets 261.6 5.6%
Interest Bearing Debt1) 51.3 61.3 19.5% Total Liabilities 113.8 120.8 6.1% Shareholders Equity 147.7 154.8 5.2%
Balance Sheet Dec’ 16 Jun’ 17 Change Cash and Cash Equivalent 37.6 49.5 31.6%
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Capital Expenditure
CAPEX Realization until June 2017
16
Realized CAPEX as of 1H17 :
US$ 5.3 mn in mining-related
activity and power project from
2017 target : US$ 60
–
65 mn (inc.
Investment in power project)
Advance for purchase of fixed
asset 75%
Exploration and land acquisition
15%
Vehicles 4%
Machinery and heavy equipment
3% Conveyor
2% Others
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96%
63%
71% 77%
4%
37%
29%
23%
Traders End-users
30 40 50 60 70 80 90 100 110 120
2014 2015 2016 1H17
NEWC ASP HBA
Rise in 1H17 ASP vs full year 2016 ASP > rise in NEWC over same period due to better contracted prices mainly secured in 2H16
ASP Performance vs Benchmark
17 US$/ton
In 2014-2015, 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
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Diversified Export Market Base
18 10% 7% 5% 30% 26% 31% 4% 10% 24% 18% 6% 11%6% 6% 7%
1H15 1H16 1H17
China Korea Thailand Taiwan Japan
30.8% 23.6% 11.4% 7.9% 7.0% 5.5% 3.8% 3.4% 2.9% 2.0% 1.7%
0.0 0.2 0.4 0.6
Korea Thailand Taiwan Malaysia Japan China India Vietnam Hong Kong Bangladesh Others Million tons
Export Market Focus 1H15 - 1H17
1H17 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, Japan, Taiwan, India, and at later stages ASEAN ie. Thailand, Malaysia, and Vietnam (showing positive traction)
Diversification towards countries ex.China remained a highlight for 2016
In 1H17 and going forward, ASEAN markets will play more important role in sourcing coal from its proximate
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In 1H15 and 1H16, sales constribution consistently derived from mainly 5600 GAR products
Rescheduling of partial sales delivery of 5600 GAR products to 2H17 period has contributed to decline in the 5600 GAR in 1H17 product composition as compared to previous periods
Product Composition (GAR) by % - 1H17
Product Composition (GAR) : 1H15 - 1H17
Product Composition by Quality
24.8% 23.4% 22.3% 11.4%
10.0% 7.0% 1.1%
0.0 0.2 0.4 0.6
4800 & 5000 5600 HS 5200 5600 RS 5800 5900 LS Others
Million Tons
32% 36%
23% 39%
30%
11% 0%
10% 10%
29%
24%
56%
1H15 1H16 1H17
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Snapshot of 2017F
Operation
Prod Vol (mn ton)
SR (x) 12x - 13x
5 - 6
2015
12.3x 6.1
NEWC Coal Price (US$/ton) 59.2 66.1
Mine Plan Execution
2017 production and SR are targeted similar to those in 2016 of 5 - 6 million tons and 12x - 13x 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’sASP
Capital Expenditure
Total CAPEX for 2017 is estimated at US$ 60 - 65 million, of which 85% - 90% 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 the Company’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 20
12x - 13x 5 - 6
2017 F
65 - 70
2016 Building, Infra, Heavy Equip ~5% Land Acquisition ~6% Exploration ~1% Power ~88%
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Performance Highlights
Performance Highlights
2
Strategy to Venture into Power
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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
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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
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Toba Participation Process in IPP Tenders
IPP Tender Participation 2014-2015
• Toba has actively participated in PLN tenders including 6 IPP bidding projects initiated in 2014-2015. For
gas-fired projects, Toba decided not to continue with the bidding process due to IRR calculation
• Going forward, Toba is targeting non-coal projects, including gas and renewables-based projects
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Project Name Company Name Capacity
Toba
Stake (%) Status
Sulbagut -1 PT Gorontalo Listrik Perdana 2 x 50 80% Signed PPA in July 2016
Sulut-3 PT Minahasa Cahaya Lestari 2 x 50 90% Signed PPA in April 2017
Gas-fired Power Plant 1 x 500 5% Refrained from bidding process
Gas-fired Power Plant 1 x 250 5% Refrained from bidding process
Gas-fired Power Plant 1 x 100 24% Refrained from bidding process
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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
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Leveraging Toba Sejahtra
Group’s
Experience in Power Plant Development
Sumatra
Kalimantan
Java
Sulawesi
Malaysia
East KalimantanSenipah 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
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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
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Sulbagut-1 Project
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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
Project
Value
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Financial Close of Sulbagut-1 Project
Principle License
Land Acquisition Tariff Approval
EPC Contract Financing Agreement
Financal Close Reception attended by BoD of PLN Achievement of Financing Date with PLN, 14 July 2017
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30
2017
2020
Site Preparation
2018
2019
Construction
Next after Financial Close...
Commercial Operation Date (COD) Commissioning
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Sulut-3 Project
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32
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
(33)
33
Signing of PPA for Sulut-3 Project
Handing of Token of Appreciation to PLN, 7 April 2017
PPA signing for Sulut -3 Project 7 April 2017
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(1)
Financial Close of Sulbagut-1 Project
Principle License
Land Acquisition Tariff Approval
EPC Contract Financing Agreement
Financal Close Reception attended by BoD of PLN Achievement of Financing Date with PLN, 14 July 2017
(2)
30
2017 2020
Site Preparation
2018 2019
Construction
Next after Financial Close...
Commercial Operation Date (COD) Commissioning
(3)
(4)
32 Project Location : North Minahasa Regency, Sulawesi
Sulut-3 Coal-Fired Power Project is part of 35 GW 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
(5)
Signing of PPA for Sulut-3 Project
Handing of Token of Appreciation to PLN, 7 April 2017
PPA signing for Sulut -3 Project 7 April 2017
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