Company Presentation 2013 (Full Year)
PT Toba Bara Sejahtra Tbk ( Toba )
Company Presentation
March 2014
1
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
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
Content
1
Corporate Profile
2
Investment Highlights & Growth Strategies
3
Business Overview
4
Performance
5
2014 General Guidance
6
CSR & Environmental Highlights
3
1
Corporate Profile
4
Toba in Brief
Toba specializes in thermal coal production and comprises three operating subsidiaries: Adimitra
Baratama Nusantara (ABN), Indomining (IM) and Trisensa Mineral Utama (TMU), which hold adjacent
concession areas located in East Kalimantan, Indonesia
Substantial and diversified thermal coal
reserves and resources
o JORC-compliant proved and probable reserves of
147 MM tons and measured, indicated and inferred
resources of 236 MM tons
o Coal brands with calorific values ranging from
4,700 - 5,800 Kcal / kg GAR
Strong growth profile & upside potential
o Produced 5.6 MM tons of coal in 2012 and grew to
produce around 6.5 MM tons of coal in 2013
o Prime location provides operational cost edge to
grow as a logistical & operational center for the area
o Continued exploration effort to increase our Reserves
and Resources. Current reserves only account for 52%
of total area, hence vast area remains unexplored
Revenue (1)
EBITDA(1)
Reserves
Resources
%
%
%
%
TMU
5%
TMU
6%
IM
14%
IM
22%
ABN
74%
Total: US$ 422 Million
Note: (1) Revenue and EBITDA as per 2013 results
TMU
6%
TMU
18%
IM
15%
ABN
78%
Total: US$ 59 Million
ABN
80%
Total: 147 MM Tons
IM
16%
ABN
66%
Total: 236 MM Tons
5
Ownership Structure
PT Toba Sejahtra ( TS )
Davit Togar Pandjaitan (1)
71.8%
0.8%
PT Bara Makmur Abadi
PT Sinergi Sukses Utama
6.2%
Roby Budi Prakoso
Public
3.6%
5.1%
12.5%
ABN Minorities
49.0%
99.99% (2)
PT Toba Bumi Energi ( TBE )
51.00%
License
Area
• 20-year Production
Operation Mining Permit
( IUPOP ) expiring in
December 2029
• IUPOP was converted from
Kuasa Pertambangan
( KP ) in 2009
• 2,990 ha
Reserve • Reserves: 117MT- JORC
• Resources: 156MT- JORC
Notes:
1. Son of TS founder, Luhut B. Pandjaitan
2. Figures are rounded off
99.99% (2)
• IUPOP expires in June 2013
• IUPOP was converted from KP in
2010
• IUPOP extension was completed
in March 2013 (First out of 2
extensions: in 2023, with tenor of
10 years each)
99.99% (2)
• 13-year IUPOP expires in December
2023
• IUPOP was converted from a KP in
2010
• 683 ha
• 3,414 ha
• Reserve: 22 MT- JORC
• Resources: 37MT- JORC
• Reserves : 8 MT - JORC and
additional 7 MT of internal estimate
• Resources: 43 MT- JORC
90.00%
• Plantation permit expires in 2036
• 8,633 ha (Right to Use Land)
• Planted Area: 2,896 ha
6
Majority Shareholder
Toba believes it benefits from Toba Sejahtra’s experience in the Indonesian coal sector as well as its
leadership and experience
Controlling Shareholder with Established Track
Record… Helmed by an Experienced Leader
• General (Ret.) Luhut B. Pandjaitan is the key
shareholder and founder of Toba Sejahtra
Group. He is currently the chairman of TS
Coal Mining
Power
•
•
PT Pusaka
Jaya Palu
Power
PT
Kartanegara
Energi
Perkasa
Other Industry
•
PT Toba Bara
Sejahtra Tbk
•
•
PT Kutai
Energi
•
•
PT Tritunggal
Sentra Buana
(Palm Oil)
PT Toba
Pengembang
Sejahtra
(Property)
Others
• Mr. Luhut had a long and illustrious career in the
civic service before turning to the commercial
sector. Over the course of thirty years in the
Army Special Forces, Mr. Luhut rose to become
a four-star general
– In 1999, Mr. Luhut retired from the military service to serve as
Ambassador for the Republic of Indonesia to Singapore
– In 2000, he was appointed Minister of Industry and Trade of the
Republic of Indonesia
• Thereafter, Mr. Luhut applied his knowledge and leadership skills
to establish TS in 2004, building it from the ground up into a
major business group with interests in energy oil and gas, power
and agribusiness
Established in 2004, PT Toba Sejahtra is a fast growing Indonesian enterprise with industries, ranging
from Energy Sector such as Natural Resources, Power, and Agriculture (Palm Oil) to Property
7
Key Milestones since Inception
Strong track record of acquisitions, development of greenfield mines, rapid production ramp-up and
experience to adjust operation in a down-market
2007
2009
2011
2013
• IM commenced
production at
200k tons
• ABN & IM production
reached 2m tons
• TMU commenced production
• IM successfully
extended IUPOP
until 2023
2007
2008
2009
• Toba production hit 5m tons
2010
2011
2012
2013
2008
2010
2012
• ABN commenced
production at 100k tons
• TS acquired the remaining share for IM
from minority shareholder
• Toba acquired the minorities’
shares in TBE and TMU
• Toba underwent
operational adjustment due
to drop in coal market
• Toba acquired 51.0% of ABN, 52.5% of
TBE (IM’s shareholding company) and
51.0% of TMU
• IPO/Listed on IDX, 6th July 2012
• Eliminated overlapping issues with
plantation company (PKU)
• Toba production hit 4m tons
Initial Public Offering
Listed on IDX
Number of Shares Offered
IPO Proceed
Anchor Investor
Ticker Code
06 July 2012
210,681,000 shares or 10.47%
IDR 400,293,900,000
Baring Private Equity Asia (8% at IPO)
TOBA
8
2
Investment Highlights and Growth Strategies
9
Prime Location Gives Significant Cost Advantage (i)
Major City
Jetty
Transhipment Point
TMU - IM Hauling Road
Major city is
less than 50
km
Muara
Berau
Furthest pit to
jetty 25km | with
closest one ~5km
Samarinda
~55 Km
(total ~120 Km)
Sungai Mahakam
17km
IM
ABN
TMU
ABN
~ 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
Toba owns all infrastructures (coal processing plants, overland conveyors, and jetties), giving
significant operating leverage vs other concessions in surrounding areas
10
Prime Location Gives Significant Cost Advantage (ii)
Coal Chain Distance (a)
In km
90
(b)
Notes :
(a) Weighted average distance based on respective production usage of each transportation facility (from pit to vessel)
(b) Represent ABN & IM only
Source : Broker Reports
Toba’s transportation costs are low due to its close proximity to the Transshipment Point
11
Vast Unexplored Areas and
Relatively Long Reserve Life
Toba’s Concessions
Reserve life ~ Industry Comparison
IM
ABN
TMU
TMU
Note:
Areas already explored
• Explored 3,704 of 7,087 hectares of concession areas
(52% of total concession area) and drilled 3,512
boreholes as of 31 December 2011
Source : Broker report
Toba’s reserve life of over 20 years compares
favorably with other listed peers
• Additional JORC coal reserves and resources
expected to be discovered, especially at TMU where
only 680 hectares out of 3,414 hectares of
concession (20% of TMU concession area) have
only been explored
12
Solid Operating Track Record
Yearly Coal Production
Mt : In Million Tons
TMU
IM
ABN
7.2 – 7.8
6.5
5.6
5.2
• Production
volume
rose
significantly
from
only
800,000 tons in 2008 to 6.5 m
tons in 2013, booking CAGR
growth
of
41.5%
over
relatively short period of 5 yrs
4.0
• IM and TMU both contributed
to total production’s higher
volume growth of 40% and
200% respectively
2.0
0.8
2008
2009
2010
2011
2012
Cumulative Production
achievement >10 million
tons
Production Volume ('mn ton)
ABN
IM
TMU
Stripping Ratio (x)
0.8
0.1
0.7
11.9
2009
2.0
1.1
0.9
10.5
2014e
Cumulative Production
Achievement >20
million tons
Operational Data
2008
2013
2010
4.0
3.1
1.0
9.9
2011
5.2
3.8
1.4
0.0
12.7
2012
5.6
4.4
1.0
0.2
14.9
2013
6.5
4.2
1.4
0.9
13.4
• Stripping Ratio (SR) fell from
14.9x in 2012 to 13.4x in 2013
due to lowered mining costs
• TMU’s production increased
from only 88,000 tons in 1Q13
to high of 414,000 tons in
4Q13
post
earlier-thanexpected
completion
of
hauling road from TMU-IM via
ABN in 2Q13
Note: 2014e: Toba’s Production target in 2014
13
Evolution of Quarterly FOB Cash Cost from 2012-2013
Quarterly FOB Vessel Cash Cost
In US$/ton
100
FOB Vessel Cash Cost
17.7x
18x
16.6x
80
15.1x
14.2x
13.6x
15x
12.7x
12.7x
12.0x
60
12x
9x
40
73
77
63
52
59
20
67
69
60
57
55
6x
56
55
51
53
51
49
-
3x
0x
Q1 2012
Q2 2012
Q3 2012
FOB Vessel cash cost
Q4 2012
Q1 2013
Q2 2013
Adj. FOB Vessel cash cost
Q3 2013
Q4 2013
SR
Significant decrease in FOB vessel cash cost from US$ 57 in 4Q12 to US$ 49.0/ton in 4Q13 stemmed
from lower mining cost (overburden removal and dump distance account for two of Toba’s major cost
components)
Notes:
Quarterly cash costs figures are audited
(1) FOB Vessel Cash Cost = COGS including royalty and selling expense – depreciation and amortization
(2) Adj. FOB vessel cash costs = COGS, including selling & marketing expense and royalty – depreciation & amortization of exploration & development and
excluding deferred stripping cost
14
3
Business Overview
15
Key Message during 2013
Maximizing productivity and
coal sales amid weak coal
industry
Proven production achievement
where in end of 2013 posted 6.5
million tons above from 2013
production target of 5.8 – 6.4
million tons
Undergoing continuous
efficiency program to
improve profitability and
competitiveness
A series of projects were
completed throughout 2013 to
facilitate
efficiency
program, including “hauling road”
and “underpass”
Increasing financial
capability to foster corporate
growth
Good financial standings where
cash rose to US$ 63.3 million at
end-2013, up by 74.3% from
December 2012, while supported
by available loan facilities from
internationally reputable banks
Supporting and actively
being involved in Corporate
Social Responsibility (CSR)
Actively
participating
in
the
development in CSR, and receiving
several mining proper awards in
2013
16
Key Milestones in 2013
• IM entered into
new Mining
Contract with
RPP for 5 years
Jan’13
• Hauling Road TMU – IM
completed ahead of
schedule
• TMU Production ready
for ramp up to 80 - 100 K
tons/month
May’13 ……….. Sep’13
Apr’13
2007
2008
• TMU set up mine
operations in new
pit (block 4)
• Border-mining at
ABN & IM
commenced
2009
• ABN Workshop
completed
Oct’13
2010
• New CPP at IM nearing
completion
• IM’s capacity expected
to increase from 3 to 6
million TPA
Nov’13
Dec’13
2011
2012
• 2nd underpass
at ABN
completed
Toba is on track to integrate its operation and infrastructure capabilities
17
Toba has Developed Infrastructure & Exploration
Capabilities
Short Coal Hauling
Distance < 5km
CPP Ramp Up to 6MM
TPY
Conveyor for TMU
& Others
ABN
INDOMINING
TMU
IM
TMU
Short Coal Hauling
Distance 4km
ABN
Hauling Road to IM
TMU
High Built CPP Cap
10 MM TPY
Loading Speed of
1,800 TPH
Toba’s Concessions
Mine Ops Commenced
at Block 4
Integrate CPP Ops with
IM
Underpass
Infrastructure
18
4
Performance
19
Toba’s Operational Performance in 4Q 2013
Quarterly Production & Stripping Ratio (SR)
Production in Million Tons
Production volume
Stripping Ratio (SR)
20x
2,000
1,500
12.7x
12.0x
15.1x
13.6x
15x
12.7x
10x
1,000
1,587
1,302
1,501
1,802
• Production volume of 1.8
MT in 3Q13 and 1.9 MT in
4Q13 was attributable to
TMU’s
contribution
in
boosting overall growth via
on-going ramp up
1,950
5x
500
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
2012
2013
Production
Volume
(MT)
5.6
6.5
16.1%
Production volume grew significantly by 17.0% y-o-y
from 2012 to 2013 mainly driven by border mining at
IM and production ramp-up at TMU
Sales Volume
(MT)
5.5
6.4
16.4%
Sales volume grew significantly in line with production
volume growth
SR (x)
14.9
13.4
-10.1%
Production Summary
MT: Million Ton
Change
Comment
SR continued to fall resulting from lower mining cost
20
ABN Operational Performance
Quarterly Production & Stripping Ratio
Production in Thousand Tons
IM
ABN
TMU
Production volume (mt)
1,500
12.6x
Stripping ratio
20x
16.6x
14.2x
12.7x
13.1x
15x
1,000
10x
1,225
936
995
1,188
1,101
4Q12
1Q13
2Q13
3Q13
4Q13
1,719
1,864
1,843
500
PT Kutai Energi
Dump
distance (m)
5x
1,723
1,779
Key Highlights
Completed Infrastructure projects (underpass and workshop) to increase production and improve
cost efficiency
Dump distance was lowered gradually in 2013
3 Consecutive Years East Kalimantan Green Proper Mining Award
21
IM Operational Performance
Quarterly Production & Stripping Ratio
Production in Thousand Tons
Production volume (mt)
500
ABN
TMU
12.9x
9.7x
Stripping ratio
14.7x
20x
12.8x
15x
11.2x
10x
250
5x
272
270
360
339
425
0x
0
PT Kutai Energi
4Q12
Dump
distance (m)
2,284
1Q13
1,698
2Q13
3Q13
1,662
1,728
4Q13
1,570
Key Highlights
Built new CPP, increasing additional 3 millions tpa to become total 6 millions tpa of capacity
Dump distance fell by 31.2% from 4Q12 to 4Q13
2 Consecutive Years East Kalimantan Blue Proper Mining Award
22
TMU Operational Performance
Quarterly Production & Stripping Ratio
IM
ABN
PT Kutai Energi
Production in Thousand Tons
Production Volume
500
400
300
200
100
0
10.8x
11.3x
Stripping Ratio
11.1x
12.7x
10.3x
15
10
5
85
88
147
4Q12
1Q13
2Q13
275
420
3Q13
4Q13
0
Key Highlights
Note:
---
Hauling road
TMU Significant Production Ramp-Up
Production in Thousand Tons
500
420
May
400
275
300
200
100
After hauling
road completion
147
88
0
1Q13
2Q13
3Q13
TMU completed 17 km hauling road in May 2013
ahead of schedule to connect with ABN’s road
and IM’s infrastructure facilities (CPP and Jetty).
This newly streamlined logistics flow maximizes
infrastructure sharing between ABN, IM, and
TMU, resulting in TMU production ramp up and
much improved overall cost efficiency
In 2013, Toba booked the highest 4Q production
volume against previous 4Q volumes throughout
its corporate history at 1.9 mn tons, mainly
contributed by TMU’s drastic production ramp up
4Q13
23
2013 Financial Highlights
Revenue
EBITDA
Net Income (a)
US$ million
US$ million
US$ million
422
36
59
397
2012
23
2013
2012
12
2013
2012
2013
Note: (a) Net Income before minority interest
(b) Figures are audited
Although the weak global coal prices affected the Company’s overall ASP by 7.8% from US$ 72.2/ton in 2012 to
US$ 66.6/ton in 2013, Toba nevertheless demonstrated resilience by posting a stable 6.3% rise in revenue from
US$ 396.7 million in 2012 to US$ 421.8 million in 2013
EBITDA surged by a hefty 160.7% y-o-y from US$ 22.5 million in 2012 to US$ 58.6 million in 2013, resulting
from predominantly Toba’s successful strategy in expanding its sales volume, in addition to a combination of the
Company’s on-going cost efficiency initiatives and improvement in sales and marketing
Toba booked total comprehensive income (after minority interest) of US$ 36.1 million, up by a stellar 201.1%
from US$ 12.0 million in 2012
2013 Financial Performance – Higher EBITDA Margin
2012
Operation
Sales Volume
Coal production
Stripping Ratio
NEWC Index
Per Ton Basis
ASP
FOB Vessel Cash Cost
(a) Adj. FOB Vessel Cash Cost
EBITDA
Financial
Sales
COGS
Gross Profit
Operating Profit
EBITDA
Net Income before Minority
Interest
Free Cash Flow
Capex
Ratio
Gross Profit Margin
EBITDA Margin
Operating Profit Margin
mton
mton
x
US$/ton
5.5
5.6
14.9
96.9
2013
6.4
6.5
13.4
85.2
Change %
15.9%
16.6%
-10.1%
-12.1%
US$/ton
US$/ton
US$/ton
US$/ton
72.2
62.5
65.5
4.1
66.2
52.5
53.7
9.2
-8.4%
-16.0%
-18.0%
125.0%
US$'M
US$'M
US$'M
US$'M
US$'M
396.7
348.5
48.2
21.1
22.5
421.8
342.3
79.6
50.0
58.6
6.3%
-1.8%
65.0%
137.0%
160.7%
US$'M
12.0
36.1
201.1%
US$'M
US$'M
(47.3)
15.4
40.9
23.0
186.5%
49.0%
%
%
%
12.2%
5.7%
5.3%
18.9%
13.9%
11.9%
55.2%
145.1%
122.9%
Adj. FOB vessel cash costs: COGS, Royalty, Selling Expenses excluding depreciation
and amortization
(b) Figures are audited
Coal production grew 16.6% yoy
driven by TMU production rampup
FOB vessel cash cost slashed by
16.0% yoy mainly due to lower
mining costs (lowered SR and
shortened dump distance)
Hence, EBITDA increased by
160.7% attributable to lower cash
cost and increased production by
-16.0% and 16.6% respectively
Note (a)
25
Strong Balance Sheet – More Room to Grow
Consolidated Balance Sheet
Net Debt Position
In Thousand US$
In Million US$
Dec-12
Dec-13
% Changes
Cash and cash equivalents
Fixed Assets
Others
Total Assets
36,307
34,053
191,166
261,526
63,302
49,033
199,314
311,648
74%
44%
4%
19%
Trade Payables
Interest Bearing debt
Advances from Customers
Others
Total Liabilities
58,362
49,035
11,625
31,560
150,582
62,217
55,858
27,906
35,187
181,167
7%
14%
140%
11%
20%
Shareholders Equity
110,944
130,481
18%
Cash and cash equivalents
Interest Bearing Debt
63
60
56
49
43
36
Net Debt
to Equity
40
42
Q4 2012
Q1 2013
Q2 2013
11%
Net
Cash
2%
45
47
Q3 2013
2%
Q4 2013
Net
Cash
The Company’s assets stood at US$ 311.7 million in 2013 or up 19.2% from US$ 261.5 as per end-December
2012
Total Liabilities rose by 20.3% y-o-y to US$ 181.2 million in 2013 from US$ 150.6 million as per 31st December
2012 and interest bearing debt expanded by 13.9% to US$ 55.9 million in 2013 from US$ 49.0 million as per
end of 2012
Total Equity in 2013 increased 17.6% to US$ 130.4 million from US$ 110.94 million as per end-2012, and this
was attributable to additional income for the period
Note: Figures are audited
26
Toba’s Capex Realization in 2013
30,000
Potential Savings
US$ 4 mn
In US$’000
25,000
27,100
2,236
1,807
20,000
528
3,456
4,319
15,000
5,230
22,970
10,000
5,394
5,000
0
CPP
Land
Vehicles,
comp.machineries andHauling
heavy eq
road Underpass
Exploration
Others CAPEX YTD 2013
CAPEX PLAN 2013
In 2013, targeted Capex was US$ 27,1 million, and Toba managed to only spend US$ 22,9
million to meet required investment. This resulted in potential savings and carry-forward of
US$ 4.2 million in Capex
In 2013, Toba spent Capex of US$ 22,9 million, allocated mainly for:
• Land compensation,
• Construction of new CPP at Indomining,
• Additional vehicles, machineries and heavy equipment,
• Completion of coal hauling road from TMU to IM through ABN, and
• Second underpass construction at ABN
Note:
In-house Capex figures for the year ended 2013
27
2013 Sales and Marketing – Quality & Diversified Buyers
South Korea
10%
Japan
China
43%
Sales (million tons)
ABN
IM
TMU
2011
2012
3.7
1.8
-
4.2
1.1
0.2
2013*)
4.7
1.4
0.7
Note: * )This includes inter–subsidiaries sales
Sales by Product
Hong Kong
Taiwan
19%
Others
18%
GAR 52 ABN
18%
Vietnam
Thailand
India
14%
GAR 47 TMU
10%
GAR 56HS ABN
22%
Malaysia
GAR 58LS IM
8%
GAR 56RS ABN
24%
Note: Sales to export destinations ie. Vietnam, Thailand , Hong
Kong, Malaysia and Japan each below 3%
Initiatives Undertaken:
Commenced building well-diversified customer base and export market coverage
Generated good quality sales backed by quality buyers and favorable terms of payment
Achieved tighter discount rate to reference market price with ASP of US$ 65-68/ton
28
Average Selling Price
(US$)
200
Newcastle Index
Average Selling Price
180
160
140
120
100
80
US$ 91.3/t
US$ 72.2/t
60
US$ 66.2/t
US$ 65.5/t
US$ 62.5/t
40
US$ 50.1/t
20
0
2008
2009
2010
2011
2012
2013
Newcastle Index yearly average declined by 12.0% from US$ 96.9/ton in 2012 to US$ 85.3/ton in
2013
Comparatively, Toba’s ASP corrected 7.8% from US$ 72.2/ton in 2012 to US$ 66.6/ton in 2013
Source : Global Coal
29
Strong Relationships with Multinational Customers
Major customers provide the stable
business support for Toba’s
marketing…
Major Customers
… minimum marketing fees because
Toba handles our own marketing
internally
Toba’s Marketing Operations
Central Marketing Operations of all 3
subsidiaries
Internally developed customer base
that allows Toba to have low marketing
costs
Balance mix of long term contracts,
short term and spot
DRAGON ENERGY GROUP
Active participation in reputable
conference and trade shows to promote
Toba brand
Enhance marketing strategy to sell
directly to end-users
30
5
2014 Guidance
31
Toba’s Performance Guidance
Operation
2012
2013
Changes
2014E
Changes
Production Volume (million tons)
5.6
6.5
17.0%
7.2 – 7.8
10.0 – 20.0%
Stripping Ratio (x)
14.9
13.4
(10.0%)
12.9 – 13.3
(0.7%) – (3.7%)
Average Selling Price (ASP) (US$/ton)
72.5
66.6
(7.8%)
63.0 – 67.0
(4.3%) – (6.0%)
Notes: - All figures are rounded up to one decimal point
Highest 4Q production
volume throughout
corporate history
Coal Production 2008 – 2014
In Million Tons
TMU
IM
ABN
Above 2013
internal guidance
of 5.8-6.4m
5.2
7.2 – 7.8
1.9
2
In million tons
1.5
6.5
1.6
1.5
5.6
1.2
1
4.0
0.9
0.5
2.0
0.8
0
2008
2009
2010
2011 2014E 2012
4Q2009
2013
4Q2010
4Q2011
4Q2012
4Q2013
2014e
32
CAPEX in 2014
Allocates US$
US$ ~9million
Others
4%
Palm Oil Mills
38%
Land clearance
31%
Exploration
5%
In 2014, Toba targets Capex at US$ 24,9
million with the following allocations:
• Construction of Palm Oil Mills in PKU
• Land compensation at TMU,
• Conveyor at ABN,
• Additional heavy equipment at ABN and
IM,
• Exploration activities in 3 mines
Conveyor
9%
Equipments
8%
Buildings
5%
Capex - ABN
Capex- IM
4,678
In US$’000
Capex - TMU
1,809
In US$’000
93
In US$’000
9,058
148
589
639
429
348
556
740
1,078
7,863
828
2,235
Conveyor
Heavy Exploration
Equipment
Port
Others
Capex
Heavy
equipment
Note:
Capex figures based on RKAP 2014 (TOBA, ABN, IM ,TMU and PKU)
Building
Exploration
Others
Capex
Land
Exploration
Clearance
Others
Capex
33
6
CSR & Environmental Highlights
34
Toba is Committed to Being Responsible
Corporate Citizen
Toba is continuously developing and implementing its corporate social responsibility programs
Creating Educational and Employment Opportunities
Creating educational opportunities for local
communities
including
renovating
schools, training teachers, providing postgraduate educational assistance and
creating a literacy program for adults and a
scholarship program for school-aged
children
Providing Health Services
Creating local employment opportunities by
sourcing some of the Company’s site
workforce from the neighboring areas
Providing health services to the local
communities
Toba is
Committed to
CSR, contributin
g ~US$ 300k
annually for
Community
Development
Supporting Farm Productivity
Helping groups of farmers plant crops of
vegetables and bamboo and assisting with
land rehabilitation
35
Local Media Publication on ABN’s CSR
“Kaltim Post, 15th April 2013”
ABN Awards Scholarships to Hundreds of
Elementary and High School Students
“Kaltim Post, 20th June 2013”
PT ABN Gives Free Medical Facilities, Milk, and
Fruits to 1,460 Children
“Kaltim Post, 31st July 2013”
PT ABN Builds Training Center for Local
Community
“Kaltim Post, 10th October 2013”
ABN’s CSR Successfully Develops Local
Women in Home Industry of Cassava Crackers
Production
36
Award and Recognition
ABN
East Kalimantan PROPER Green
Mining Award
2011
2007
Ernst and Young
Social
Entrepreneur of
the Year 2011
2012
2008
PT Toba Bara Sejahtra Tbk
Ranks as one of Indonesia’s Top
50 companies
2014
2013
2009
Indomining
East Kalimantan PROPER Blue
Mining Award
2010
!
2
0
Target
1
1
PROPER Mining Award for
ABN, IM, & TMU
37
THANK YOU
Appendix
39
Coal Specifications
Calorific Value
GAR
4,200
6,700
4,100
4,200
4,900
6,700
4,500
5,100
5,000
6,500
4,900
4,200
7,200
6,000
5,300
5,900
5,200
TOBA
4,700
5,800
Ash
Sulphur
1,5%
0,1%
2,0%
2,5%
5,0%
5,5%
5,5%
0,1%
13,0%
4,5%
7,0%
2,0%
1,9%
2,0%
0,6%
8,0%
4,0%
0,2%
0,1% 0,1%
0,2%
3,3%
4,0%
1,4%
0,2%
12,0%
2,5%
TOBA
Toba’s coal quality
is in mid-upper
range
5,100
11,5%
0,2%
10,9%
0,7%
0,5%
1,5%
0,7%
9,0%
TOBA
0,2%
1,0%
1,0%
0,5%
1,0%
Source: Broker Reports
40
Solid Operating Track Record
Production Growth Comparison 2009 - 2012
CAGR %
Toba’s production growth is among the highest in the industry over the last 4 years
41
Executions and Achievements so far… (I)
OPERATION
Initiative
Manage Cash Cost: lower SR &
dump distance
Construct Hauling Road from
TMU to IM
Share Existing Infrastructure
Conduct Joint Mine Plan
Execution
Achievement
Adjusted mine plan in 3Q12 and
lowered dump distance despite prestripping in 1Q13 at ABN
Cash cost is on track to be
lowered ~US$8/t by FY13
Construction commenced end-2012
and was scheduled for completion in
2Q13
TMU commenced infrastructure-sharing
using ABN’s road and IM’s CPP & Jetty
Hauling road was completed in
May 2013, ahead of schedule
ABN & IM commenced jointborder mining end-2012
TMU’s underwent significant
production ramp-up from 88K tons
in 1Q13 to 414K in 4Q13
Maximizing extraction of ~2 MT of
high quality coal reserve with low SR
In
Progress
In
Progress
FINANCIAL
Initiative
Execution
Achievement
Provide Financing to IM
Maximized current ideal capital structure
by using loan to finance new CPP
construction and land compensation
Secured 3-year US$ 15 mm term loan
from SCB at competitive lending rate
of LIBOR + applicable rate
Optimize Sales through Hedging
Made available hedging line with
notable financial institutions
Centralize Fuel Supply
Sourced constant bulk supply from
major fuel supplier to allow for good
monitoring of effective fuel usage
No hedging has been utilized. Sold
~72% of 2013 sales volume using fixed
pricing, and securing cash
prepayments
In
Sourced supply at competitive
Progress
price, while continuing to seek
other sources with better pricing
42
Executions and Achievements so far… (II)
COMMERCIAL
Initiative
Achievement
Execution
Secure Sales Volume and
Maintain this Activity
continuously
TOBA successfully sold and secured
~ 50-90% of targeted sales volume for
2013
• ABN secured ~ 80-90% of 2013
targeted sales
• IM secured one-year contract
with one of its major customers
at competitive price
• TMU secured ~50%
prepayment from one of buyers
Enhance Marketing Expertise
Internal marketing team currently
handles sales activities
TOBA does not depend on third
party marketing agent
Maximize Cost Efficiency
TOBA negotiates directly with
logistics providers
Lower logistics cost (barging
costs) by 18% from 1Q13 to 2Q13
In
Progress
CORPORATE SOCIAL RESPONSIBILITY / ENVIRONMENT
Initiative
Develop and Implement Corporate
Social Responsibility
Execution
• Created Educational Program for
local Communities
• Provided health services to local
communities
Achievement
Proper Mining award in East
Kalimantan for ABN and IM
• Created local employment
43
Toba’s Business Strategies
1
2
3
4
5
Integration of three
(3) mines
Organically increase
coal production levels
Increase coal reserve
and resource
Strengthen existing
and develop new
customer
relationships
Continue to focus on
health and safety,
environmental track
record and
commitment to CSR
• Benchmarking and
sharing between
departments and
functions
• Expand coal production
through increased
production and mine
development activities
• Optimize and
coordinate mine
planning and logistics
• Strengthen
relationships with third
party mining
contractors and work
closely with them to
improve their
productivity
• Continue exploration
activities to increase
proven and probable
reserves as only 52%
has been explored to
JORC standard
• Supply a higher
proportion of sales
volume to end users,
while maintaining
relationships with
existing coal traders
• Consider opportunities
to acquire coal
concessions with
significant reserves
• Target customers in
Japan, Taiwan, South
Korea, China, Vietnam
and Hong Kong, South
East Asia and India
• Centrally coordinate
and streamline
corporate finance,
legal, human resource
and CSR functions
• Maintain and enhance
high international
operating standards,
utilize automated
mining methods to
minimize accidents and
enhance safety
• Foster community ties
through development
programs as well as job
creation
• Joint mine plan and
infrastructure sharing
Growing Reserves and Maintain Profitability at Different Cycles
44
ABN: Coal Concession Overview
Overview
• Area: 2,990 ha
• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan
IM
• Type of license: IUPOP
• Expiry date: 1 December 2029
• Commencement of production: September 2008
• 2012 production: 4.4 MM tonnes
ABN
• Mining consultant: PT Runge Indonesia
ABN
Jetty
Operations
TMU
• Current production capacity (31 December 2012):
– Crusher: 10 MM tonnes p.a.
– Conveyor: 10 MM tonnes p.a.
• Produces two varieties of blended thermal coal
– ABN 52: Marketed CV(1) of 5,200 kcal / kg GAR
– ABN 55: Marketed CV of 5,500 kcal / kg GAR
– ABN 58 : Marketed CV of 5,800 kcal / kg GAR
• Substantially all of the owners of the land within ABN’s
concession area have been compensated and ABN has been
granted the exclusive right to mine those areas
Note:
1. Calorific value
Marketing
• Historically sold between 50%-100% of its annual production through
long-term (longer than 1 year) with coal trading companies
– The remainder were sold on the spot market
•
Currently, IM sells coal to buyers based on fixed priced contracts up
to one year, backed with pre-determined cash prepayments
45
IM: Coal Concession Overview
Overview
IM
Jetty
• Area: 683 ha
• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan
IM
• Type of license: IUPOP
• Expiry date: IUPOP effective until 2023 and can be renewed for
another 10 years
• Production commencement: August 2007
• 2012 production: 1 MM tonnes
ABN
• Mining consultant: PT SMG Consultants
TMU
Operations
• Current production capacity (31 December 2012):
– Crusher: 3.0 MM tonnes p.a.
– Conveyor: 4.5 MM tonnes p.a.
• Produced one variety of blended thermal coal “Indomining”
with marketed CV(1) of 5,700 kcal / kg GAR in 2012
– May produce additional varieties of blended thermal coal in
the future
• Has compensated the majority all of the owners of the land
within its concession area for their land and has been granted
the exclusive right to mine those areas
Note:
1. Calorific value
Marketing
• Historically sold approximately 50% of its annual production through
short-term (one year or shorter) contracts with coal trading companies
– Clients include Glencore, Flame, Peabody, Dragon, Aempire
• The remainder are sold on the spot market
• Currently, IM sells coal to buyers based on fixed priced contracts up to
one year, backed with pre-determined cash prepayments
46
TMU: Coal Concession Overview
Overview
• Area: 3,414 ha
• Location: Loa Janan, Muara Jawa and Sanga-Sanga,
Kutai Kartanegara, East Kalimantan
• Type of license: IUPOP
• Expiry date: 14 December 2023
• Commencement of production: October 2011
• 2012 coal production: ~257,000 tons
IM
Sungai Sangasanga
• Mining consultant: Marston & Marston
ABN
Operations & Marketing
• Current production capacity (31 December 2012):
Completed haul road
to ABN and IM (25 km)
TMU
– Crusher: 1.4 MM tons p.a.
• Produces one variety of blended thermal coal “Trisensa47”, with marketed CV(1) of 4,700 kcal / kg GAR
– May produce additional varieties of blended thermal
coal in the future
Kutai Energi haul
road and jetty
(17 km)
Pulau Seribu
Jetty KE
Sungai Dondang
Note:
1. Calorific value
47
Company Presentation
March 2014
1
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
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
Content
1
Corporate Profile
2
Investment Highlights & Growth Strategies
3
Business Overview
4
Performance
5
2014 General Guidance
6
CSR & Environmental Highlights
3
1
Corporate Profile
4
Toba in Brief
Toba specializes in thermal coal production and comprises three operating subsidiaries: Adimitra
Baratama Nusantara (ABN), Indomining (IM) and Trisensa Mineral Utama (TMU), which hold adjacent
concession areas located in East Kalimantan, Indonesia
Substantial and diversified thermal coal
reserves and resources
o JORC-compliant proved and probable reserves of
147 MM tons and measured, indicated and inferred
resources of 236 MM tons
o Coal brands with calorific values ranging from
4,700 - 5,800 Kcal / kg GAR
Strong growth profile & upside potential
o Produced 5.6 MM tons of coal in 2012 and grew to
produce around 6.5 MM tons of coal in 2013
o Prime location provides operational cost edge to
grow as a logistical & operational center for the area
o Continued exploration effort to increase our Reserves
and Resources. Current reserves only account for 52%
of total area, hence vast area remains unexplored
Revenue (1)
EBITDA(1)
Reserves
Resources
%
%
%
%
TMU
5%
TMU
6%
IM
14%
IM
22%
ABN
74%
Total: US$ 422 Million
Note: (1) Revenue and EBITDA as per 2013 results
TMU
6%
TMU
18%
IM
15%
ABN
78%
Total: US$ 59 Million
ABN
80%
Total: 147 MM Tons
IM
16%
ABN
66%
Total: 236 MM Tons
5
Ownership Structure
PT Toba Sejahtra ( TS )
Davit Togar Pandjaitan (1)
71.8%
0.8%
PT Bara Makmur Abadi
PT Sinergi Sukses Utama
6.2%
Roby Budi Prakoso
Public
3.6%
5.1%
12.5%
ABN Minorities
49.0%
99.99% (2)
PT Toba Bumi Energi ( TBE )
51.00%
License
Area
• 20-year Production
Operation Mining Permit
( IUPOP ) expiring in
December 2029
• IUPOP was converted from
Kuasa Pertambangan
( KP ) in 2009
• 2,990 ha
Reserve • Reserves: 117MT- JORC
• Resources: 156MT- JORC
Notes:
1. Son of TS founder, Luhut B. Pandjaitan
2. Figures are rounded off
99.99% (2)
• IUPOP expires in June 2013
• IUPOP was converted from KP in
2010
• IUPOP extension was completed
in March 2013 (First out of 2
extensions: in 2023, with tenor of
10 years each)
99.99% (2)
• 13-year IUPOP expires in December
2023
• IUPOP was converted from a KP in
2010
• 683 ha
• 3,414 ha
• Reserve: 22 MT- JORC
• Resources: 37MT- JORC
• Reserves : 8 MT - JORC and
additional 7 MT of internal estimate
• Resources: 43 MT- JORC
90.00%
• Plantation permit expires in 2036
• 8,633 ha (Right to Use Land)
• Planted Area: 2,896 ha
6
Majority Shareholder
Toba believes it benefits from Toba Sejahtra’s experience in the Indonesian coal sector as well as its
leadership and experience
Controlling Shareholder with Established Track
Record… Helmed by an Experienced Leader
• General (Ret.) Luhut B. Pandjaitan is the key
shareholder and founder of Toba Sejahtra
Group. He is currently the chairman of TS
Coal Mining
Power
•
•
PT Pusaka
Jaya Palu
Power
PT
Kartanegara
Energi
Perkasa
Other Industry
•
PT Toba Bara
Sejahtra Tbk
•
•
PT Kutai
Energi
•
•
PT Tritunggal
Sentra Buana
(Palm Oil)
PT Toba
Pengembang
Sejahtra
(Property)
Others
• Mr. Luhut had a long and illustrious career in the
civic service before turning to the commercial
sector. Over the course of thirty years in the
Army Special Forces, Mr. Luhut rose to become
a four-star general
– In 1999, Mr. Luhut retired from the military service to serve as
Ambassador for the Republic of Indonesia to Singapore
– In 2000, he was appointed Minister of Industry and Trade of the
Republic of Indonesia
• Thereafter, Mr. Luhut applied his knowledge and leadership skills
to establish TS in 2004, building it from the ground up into a
major business group with interests in energy oil and gas, power
and agribusiness
Established in 2004, PT Toba Sejahtra is a fast growing Indonesian enterprise with industries, ranging
from Energy Sector such as Natural Resources, Power, and Agriculture (Palm Oil) to Property
7
Key Milestones since Inception
Strong track record of acquisitions, development of greenfield mines, rapid production ramp-up and
experience to adjust operation in a down-market
2007
2009
2011
2013
• IM commenced
production at
200k tons
• ABN & IM production
reached 2m tons
• TMU commenced production
• IM successfully
extended IUPOP
until 2023
2007
2008
2009
• Toba production hit 5m tons
2010
2011
2012
2013
2008
2010
2012
• ABN commenced
production at 100k tons
• TS acquired the remaining share for IM
from minority shareholder
• Toba acquired the minorities’
shares in TBE and TMU
• Toba underwent
operational adjustment due
to drop in coal market
• Toba acquired 51.0% of ABN, 52.5% of
TBE (IM’s shareholding company) and
51.0% of TMU
• IPO/Listed on IDX, 6th July 2012
• Eliminated overlapping issues with
plantation company (PKU)
• Toba production hit 4m tons
Initial Public Offering
Listed on IDX
Number of Shares Offered
IPO Proceed
Anchor Investor
Ticker Code
06 July 2012
210,681,000 shares or 10.47%
IDR 400,293,900,000
Baring Private Equity Asia (8% at IPO)
TOBA
8
2
Investment Highlights and Growth Strategies
9
Prime Location Gives Significant Cost Advantage (i)
Major City
Jetty
Transhipment Point
TMU - IM Hauling Road
Major city is
less than 50
km
Muara
Berau
Furthest pit to
jetty 25km | with
closest one ~5km
Samarinda
~55 Km
(total ~120 Km)
Sungai Mahakam
17km
IM
ABN
TMU
ABN
~ 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
Toba owns all infrastructures (coal processing plants, overland conveyors, and jetties), giving
significant operating leverage vs other concessions in surrounding areas
10
Prime Location Gives Significant Cost Advantage (ii)
Coal Chain Distance (a)
In km
90
(b)
Notes :
(a) Weighted average distance based on respective production usage of each transportation facility (from pit to vessel)
(b) Represent ABN & IM only
Source : Broker Reports
Toba’s transportation costs are low due to its close proximity to the Transshipment Point
11
Vast Unexplored Areas and
Relatively Long Reserve Life
Toba’s Concessions
Reserve life ~ Industry Comparison
IM
ABN
TMU
TMU
Note:
Areas already explored
• Explored 3,704 of 7,087 hectares of concession areas
(52% of total concession area) and drilled 3,512
boreholes as of 31 December 2011
Source : Broker report
Toba’s reserve life of over 20 years compares
favorably with other listed peers
• Additional JORC coal reserves and resources
expected to be discovered, especially at TMU where
only 680 hectares out of 3,414 hectares of
concession (20% of TMU concession area) have
only been explored
12
Solid Operating Track Record
Yearly Coal Production
Mt : In Million Tons
TMU
IM
ABN
7.2 – 7.8
6.5
5.6
5.2
• Production
volume
rose
significantly
from
only
800,000 tons in 2008 to 6.5 m
tons in 2013, booking CAGR
growth
of
41.5%
over
relatively short period of 5 yrs
4.0
• IM and TMU both contributed
to total production’s higher
volume growth of 40% and
200% respectively
2.0
0.8
2008
2009
2010
2011
2012
Cumulative Production
achievement >10 million
tons
Production Volume ('mn ton)
ABN
IM
TMU
Stripping Ratio (x)
0.8
0.1
0.7
11.9
2009
2.0
1.1
0.9
10.5
2014e
Cumulative Production
Achievement >20
million tons
Operational Data
2008
2013
2010
4.0
3.1
1.0
9.9
2011
5.2
3.8
1.4
0.0
12.7
2012
5.6
4.4
1.0
0.2
14.9
2013
6.5
4.2
1.4
0.9
13.4
• Stripping Ratio (SR) fell from
14.9x in 2012 to 13.4x in 2013
due to lowered mining costs
• TMU’s production increased
from only 88,000 tons in 1Q13
to high of 414,000 tons in
4Q13
post
earlier-thanexpected
completion
of
hauling road from TMU-IM via
ABN in 2Q13
Note: 2014e: Toba’s Production target in 2014
13
Evolution of Quarterly FOB Cash Cost from 2012-2013
Quarterly FOB Vessel Cash Cost
In US$/ton
100
FOB Vessel Cash Cost
17.7x
18x
16.6x
80
15.1x
14.2x
13.6x
15x
12.7x
12.7x
12.0x
60
12x
9x
40
73
77
63
52
59
20
67
69
60
57
55
6x
56
55
51
53
51
49
-
3x
0x
Q1 2012
Q2 2012
Q3 2012
FOB Vessel cash cost
Q4 2012
Q1 2013
Q2 2013
Adj. FOB Vessel cash cost
Q3 2013
Q4 2013
SR
Significant decrease in FOB vessel cash cost from US$ 57 in 4Q12 to US$ 49.0/ton in 4Q13 stemmed
from lower mining cost (overburden removal and dump distance account for two of Toba’s major cost
components)
Notes:
Quarterly cash costs figures are audited
(1) FOB Vessel Cash Cost = COGS including royalty and selling expense – depreciation and amortization
(2) Adj. FOB vessel cash costs = COGS, including selling & marketing expense and royalty – depreciation & amortization of exploration & development and
excluding deferred stripping cost
14
3
Business Overview
15
Key Message during 2013
Maximizing productivity and
coal sales amid weak coal
industry
Proven production achievement
where in end of 2013 posted 6.5
million tons above from 2013
production target of 5.8 – 6.4
million tons
Undergoing continuous
efficiency program to
improve profitability and
competitiveness
A series of projects were
completed throughout 2013 to
facilitate
efficiency
program, including “hauling road”
and “underpass”
Increasing financial
capability to foster corporate
growth
Good financial standings where
cash rose to US$ 63.3 million at
end-2013, up by 74.3% from
December 2012, while supported
by available loan facilities from
internationally reputable banks
Supporting and actively
being involved in Corporate
Social Responsibility (CSR)
Actively
participating
in
the
development in CSR, and receiving
several mining proper awards in
2013
16
Key Milestones in 2013
• IM entered into
new Mining
Contract with
RPP for 5 years
Jan’13
• Hauling Road TMU – IM
completed ahead of
schedule
• TMU Production ready
for ramp up to 80 - 100 K
tons/month
May’13 ……….. Sep’13
Apr’13
2007
2008
• TMU set up mine
operations in new
pit (block 4)
• Border-mining at
ABN & IM
commenced
2009
• ABN Workshop
completed
Oct’13
2010
• New CPP at IM nearing
completion
• IM’s capacity expected
to increase from 3 to 6
million TPA
Nov’13
Dec’13
2011
2012
• 2nd underpass
at ABN
completed
Toba is on track to integrate its operation and infrastructure capabilities
17
Toba has Developed Infrastructure & Exploration
Capabilities
Short Coal Hauling
Distance < 5km
CPP Ramp Up to 6MM
TPY
Conveyor for TMU
& Others
ABN
INDOMINING
TMU
IM
TMU
Short Coal Hauling
Distance 4km
ABN
Hauling Road to IM
TMU
High Built CPP Cap
10 MM TPY
Loading Speed of
1,800 TPH
Toba’s Concessions
Mine Ops Commenced
at Block 4
Integrate CPP Ops with
IM
Underpass
Infrastructure
18
4
Performance
19
Toba’s Operational Performance in 4Q 2013
Quarterly Production & Stripping Ratio (SR)
Production in Million Tons
Production volume
Stripping Ratio (SR)
20x
2,000
1,500
12.7x
12.0x
15.1x
13.6x
15x
12.7x
10x
1,000
1,587
1,302
1,501
1,802
• Production volume of 1.8
MT in 3Q13 and 1.9 MT in
4Q13 was attributable to
TMU’s
contribution
in
boosting overall growth via
on-going ramp up
1,950
5x
500
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
2012
2013
Production
Volume
(MT)
5.6
6.5
16.1%
Production volume grew significantly by 17.0% y-o-y
from 2012 to 2013 mainly driven by border mining at
IM and production ramp-up at TMU
Sales Volume
(MT)
5.5
6.4
16.4%
Sales volume grew significantly in line with production
volume growth
SR (x)
14.9
13.4
-10.1%
Production Summary
MT: Million Ton
Change
Comment
SR continued to fall resulting from lower mining cost
20
ABN Operational Performance
Quarterly Production & Stripping Ratio
Production in Thousand Tons
IM
ABN
TMU
Production volume (mt)
1,500
12.6x
Stripping ratio
20x
16.6x
14.2x
12.7x
13.1x
15x
1,000
10x
1,225
936
995
1,188
1,101
4Q12
1Q13
2Q13
3Q13
4Q13
1,719
1,864
1,843
500
PT Kutai Energi
Dump
distance (m)
5x
1,723
1,779
Key Highlights
Completed Infrastructure projects (underpass and workshop) to increase production and improve
cost efficiency
Dump distance was lowered gradually in 2013
3 Consecutive Years East Kalimantan Green Proper Mining Award
21
IM Operational Performance
Quarterly Production & Stripping Ratio
Production in Thousand Tons
Production volume (mt)
500
ABN
TMU
12.9x
9.7x
Stripping ratio
14.7x
20x
12.8x
15x
11.2x
10x
250
5x
272
270
360
339
425
0x
0
PT Kutai Energi
4Q12
Dump
distance (m)
2,284
1Q13
1,698
2Q13
3Q13
1,662
1,728
4Q13
1,570
Key Highlights
Built new CPP, increasing additional 3 millions tpa to become total 6 millions tpa of capacity
Dump distance fell by 31.2% from 4Q12 to 4Q13
2 Consecutive Years East Kalimantan Blue Proper Mining Award
22
TMU Operational Performance
Quarterly Production & Stripping Ratio
IM
ABN
PT Kutai Energi
Production in Thousand Tons
Production Volume
500
400
300
200
100
0
10.8x
11.3x
Stripping Ratio
11.1x
12.7x
10.3x
15
10
5
85
88
147
4Q12
1Q13
2Q13
275
420
3Q13
4Q13
0
Key Highlights
Note:
---
Hauling road
TMU Significant Production Ramp-Up
Production in Thousand Tons
500
420
May
400
275
300
200
100
After hauling
road completion
147
88
0
1Q13
2Q13
3Q13
TMU completed 17 km hauling road in May 2013
ahead of schedule to connect with ABN’s road
and IM’s infrastructure facilities (CPP and Jetty).
This newly streamlined logistics flow maximizes
infrastructure sharing between ABN, IM, and
TMU, resulting in TMU production ramp up and
much improved overall cost efficiency
In 2013, Toba booked the highest 4Q production
volume against previous 4Q volumes throughout
its corporate history at 1.9 mn tons, mainly
contributed by TMU’s drastic production ramp up
4Q13
23
2013 Financial Highlights
Revenue
EBITDA
Net Income (a)
US$ million
US$ million
US$ million
422
36
59
397
2012
23
2013
2012
12
2013
2012
2013
Note: (a) Net Income before minority interest
(b) Figures are audited
Although the weak global coal prices affected the Company’s overall ASP by 7.8% from US$ 72.2/ton in 2012 to
US$ 66.6/ton in 2013, Toba nevertheless demonstrated resilience by posting a stable 6.3% rise in revenue from
US$ 396.7 million in 2012 to US$ 421.8 million in 2013
EBITDA surged by a hefty 160.7% y-o-y from US$ 22.5 million in 2012 to US$ 58.6 million in 2013, resulting
from predominantly Toba’s successful strategy in expanding its sales volume, in addition to a combination of the
Company’s on-going cost efficiency initiatives and improvement in sales and marketing
Toba booked total comprehensive income (after minority interest) of US$ 36.1 million, up by a stellar 201.1%
from US$ 12.0 million in 2012
2013 Financial Performance – Higher EBITDA Margin
2012
Operation
Sales Volume
Coal production
Stripping Ratio
NEWC Index
Per Ton Basis
ASP
FOB Vessel Cash Cost
(a) Adj. FOB Vessel Cash Cost
EBITDA
Financial
Sales
COGS
Gross Profit
Operating Profit
EBITDA
Net Income before Minority
Interest
Free Cash Flow
Capex
Ratio
Gross Profit Margin
EBITDA Margin
Operating Profit Margin
mton
mton
x
US$/ton
5.5
5.6
14.9
96.9
2013
6.4
6.5
13.4
85.2
Change %
15.9%
16.6%
-10.1%
-12.1%
US$/ton
US$/ton
US$/ton
US$/ton
72.2
62.5
65.5
4.1
66.2
52.5
53.7
9.2
-8.4%
-16.0%
-18.0%
125.0%
US$'M
US$'M
US$'M
US$'M
US$'M
396.7
348.5
48.2
21.1
22.5
421.8
342.3
79.6
50.0
58.6
6.3%
-1.8%
65.0%
137.0%
160.7%
US$'M
12.0
36.1
201.1%
US$'M
US$'M
(47.3)
15.4
40.9
23.0
186.5%
49.0%
%
%
%
12.2%
5.7%
5.3%
18.9%
13.9%
11.9%
55.2%
145.1%
122.9%
Adj. FOB vessel cash costs: COGS, Royalty, Selling Expenses excluding depreciation
and amortization
(b) Figures are audited
Coal production grew 16.6% yoy
driven by TMU production rampup
FOB vessel cash cost slashed by
16.0% yoy mainly due to lower
mining costs (lowered SR and
shortened dump distance)
Hence, EBITDA increased by
160.7% attributable to lower cash
cost and increased production by
-16.0% and 16.6% respectively
Note (a)
25
Strong Balance Sheet – More Room to Grow
Consolidated Balance Sheet
Net Debt Position
In Thousand US$
In Million US$
Dec-12
Dec-13
% Changes
Cash and cash equivalents
Fixed Assets
Others
Total Assets
36,307
34,053
191,166
261,526
63,302
49,033
199,314
311,648
74%
44%
4%
19%
Trade Payables
Interest Bearing debt
Advances from Customers
Others
Total Liabilities
58,362
49,035
11,625
31,560
150,582
62,217
55,858
27,906
35,187
181,167
7%
14%
140%
11%
20%
Shareholders Equity
110,944
130,481
18%
Cash and cash equivalents
Interest Bearing Debt
63
60
56
49
43
36
Net Debt
to Equity
40
42
Q4 2012
Q1 2013
Q2 2013
11%
Net
Cash
2%
45
47
Q3 2013
2%
Q4 2013
Net
Cash
The Company’s assets stood at US$ 311.7 million in 2013 or up 19.2% from US$ 261.5 as per end-December
2012
Total Liabilities rose by 20.3% y-o-y to US$ 181.2 million in 2013 from US$ 150.6 million as per 31st December
2012 and interest bearing debt expanded by 13.9% to US$ 55.9 million in 2013 from US$ 49.0 million as per
end of 2012
Total Equity in 2013 increased 17.6% to US$ 130.4 million from US$ 110.94 million as per end-2012, and this
was attributable to additional income for the period
Note: Figures are audited
26
Toba’s Capex Realization in 2013
30,000
Potential Savings
US$ 4 mn
In US$’000
25,000
27,100
2,236
1,807
20,000
528
3,456
4,319
15,000
5,230
22,970
10,000
5,394
5,000
0
CPP
Land
Vehicles,
comp.machineries andHauling
heavy eq
road Underpass
Exploration
Others CAPEX YTD 2013
CAPEX PLAN 2013
In 2013, targeted Capex was US$ 27,1 million, and Toba managed to only spend US$ 22,9
million to meet required investment. This resulted in potential savings and carry-forward of
US$ 4.2 million in Capex
In 2013, Toba spent Capex of US$ 22,9 million, allocated mainly for:
• Land compensation,
• Construction of new CPP at Indomining,
• Additional vehicles, machineries and heavy equipment,
• Completion of coal hauling road from TMU to IM through ABN, and
• Second underpass construction at ABN
Note:
In-house Capex figures for the year ended 2013
27
2013 Sales and Marketing – Quality & Diversified Buyers
South Korea
10%
Japan
China
43%
Sales (million tons)
ABN
IM
TMU
2011
2012
3.7
1.8
-
4.2
1.1
0.2
2013*)
4.7
1.4
0.7
Note: * )This includes inter–subsidiaries sales
Sales by Product
Hong Kong
Taiwan
19%
Others
18%
GAR 52 ABN
18%
Vietnam
Thailand
India
14%
GAR 47 TMU
10%
GAR 56HS ABN
22%
Malaysia
GAR 58LS IM
8%
GAR 56RS ABN
24%
Note: Sales to export destinations ie. Vietnam, Thailand , Hong
Kong, Malaysia and Japan each below 3%
Initiatives Undertaken:
Commenced building well-diversified customer base and export market coverage
Generated good quality sales backed by quality buyers and favorable terms of payment
Achieved tighter discount rate to reference market price with ASP of US$ 65-68/ton
28
Average Selling Price
(US$)
200
Newcastle Index
Average Selling Price
180
160
140
120
100
80
US$ 91.3/t
US$ 72.2/t
60
US$ 66.2/t
US$ 65.5/t
US$ 62.5/t
40
US$ 50.1/t
20
0
2008
2009
2010
2011
2012
2013
Newcastle Index yearly average declined by 12.0% from US$ 96.9/ton in 2012 to US$ 85.3/ton in
2013
Comparatively, Toba’s ASP corrected 7.8% from US$ 72.2/ton in 2012 to US$ 66.6/ton in 2013
Source : Global Coal
29
Strong Relationships with Multinational Customers
Major customers provide the stable
business support for Toba’s
marketing…
Major Customers
… minimum marketing fees because
Toba handles our own marketing
internally
Toba’s Marketing Operations
Central Marketing Operations of all 3
subsidiaries
Internally developed customer base
that allows Toba to have low marketing
costs
Balance mix of long term contracts,
short term and spot
DRAGON ENERGY GROUP
Active participation in reputable
conference and trade shows to promote
Toba brand
Enhance marketing strategy to sell
directly to end-users
30
5
2014 Guidance
31
Toba’s Performance Guidance
Operation
2012
2013
Changes
2014E
Changes
Production Volume (million tons)
5.6
6.5
17.0%
7.2 – 7.8
10.0 – 20.0%
Stripping Ratio (x)
14.9
13.4
(10.0%)
12.9 – 13.3
(0.7%) – (3.7%)
Average Selling Price (ASP) (US$/ton)
72.5
66.6
(7.8%)
63.0 – 67.0
(4.3%) – (6.0%)
Notes: - All figures are rounded up to one decimal point
Highest 4Q production
volume throughout
corporate history
Coal Production 2008 – 2014
In Million Tons
TMU
IM
ABN
Above 2013
internal guidance
of 5.8-6.4m
5.2
7.2 – 7.8
1.9
2
In million tons
1.5
6.5
1.6
1.5
5.6
1.2
1
4.0
0.9
0.5
2.0
0.8
0
2008
2009
2010
2011 2014E 2012
4Q2009
2013
4Q2010
4Q2011
4Q2012
4Q2013
2014e
32
CAPEX in 2014
Allocates US$
US$ ~9million
Others
4%
Palm Oil Mills
38%
Land clearance
31%
Exploration
5%
In 2014, Toba targets Capex at US$ 24,9
million with the following allocations:
• Construction of Palm Oil Mills in PKU
• Land compensation at TMU,
• Conveyor at ABN,
• Additional heavy equipment at ABN and
IM,
• Exploration activities in 3 mines
Conveyor
9%
Equipments
8%
Buildings
5%
Capex - ABN
Capex- IM
4,678
In US$’000
Capex - TMU
1,809
In US$’000
93
In US$’000
9,058
148
589
639
429
348
556
740
1,078
7,863
828
2,235
Conveyor
Heavy Exploration
Equipment
Port
Others
Capex
Heavy
equipment
Note:
Capex figures based on RKAP 2014 (TOBA, ABN, IM ,TMU and PKU)
Building
Exploration
Others
Capex
Land
Exploration
Clearance
Others
Capex
33
6
CSR & Environmental Highlights
34
Toba is Committed to Being Responsible
Corporate Citizen
Toba is continuously developing and implementing its corporate social responsibility programs
Creating Educational and Employment Opportunities
Creating educational opportunities for local
communities
including
renovating
schools, training teachers, providing postgraduate educational assistance and
creating a literacy program for adults and a
scholarship program for school-aged
children
Providing Health Services
Creating local employment opportunities by
sourcing some of the Company’s site
workforce from the neighboring areas
Providing health services to the local
communities
Toba is
Committed to
CSR, contributin
g ~US$ 300k
annually for
Community
Development
Supporting Farm Productivity
Helping groups of farmers plant crops of
vegetables and bamboo and assisting with
land rehabilitation
35
Local Media Publication on ABN’s CSR
“Kaltim Post, 15th April 2013”
ABN Awards Scholarships to Hundreds of
Elementary and High School Students
“Kaltim Post, 20th June 2013”
PT ABN Gives Free Medical Facilities, Milk, and
Fruits to 1,460 Children
“Kaltim Post, 31st July 2013”
PT ABN Builds Training Center for Local
Community
“Kaltim Post, 10th October 2013”
ABN’s CSR Successfully Develops Local
Women in Home Industry of Cassava Crackers
Production
36
Award and Recognition
ABN
East Kalimantan PROPER Green
Mining Award
2011
2007
Ernst and Young
Social
Entrepreneur of
the Year 2011
2012
2008
PT Toba Bara Sejahtra Tbk
Ranks as one of Indonesia’s Top
50 companies
2014
2013
2009
Indomining
East Kalimantan PROPER Blue
Mining Award
2010
!
2
0
Target
1
1
PROPER Mining Award for
ABN, IM, & TMU
37
THANK YOU
Appendix
39
Coal Specifications
Calorific Value
GAR
4,200
6,700
4,100
4,200
4,900
6,700
4,500
5,100
5,000
6,500
4,900
4,200
7,200
6,000
5,300
5,900
5,200
TOBA
4,700
5,800
Ash
Sulphur
1,5%
0,1%
2,0%
2,5%
5,0%
5,5%
5,5%
0,1%
13,0%
4,5%
7,0%
2,0%
1,9%
2,0%
0,6%
8,0%
4,0%
0,2%
0,1% 0,1%
0,2%
3,3%
4,0%
1,4%
0,2%
12,0%
2,5%
TOBA
Toba’s coal quality
is in mid-upper
range
5,100
11,5%
0,2%
10,9%
0,7%
0,5%
1,5%
0,7%
9,0%
TOBA
0,2%
1,0%
1,0%
0,5%
1,0%
Source: Broker Reports
40
Solid Operating Track Record
Production Growth Comparison 2009 - 2012
CAGR %
Toba’s production growth is among the highest in the industry over the last 4 years
41
Executions and Achievements so far… (I)
OPERATION
Initiative
Manage Cash Cost: lower SR &
dump distance
Construct Hauling Road from
TMU to IM
Share Existing Infrastructure
Conduct Joint Mine Plan
Execution
Achievement
Adjusted mine plan in 3Q12 and
lowered dump distance despite prestripping in 1Q13 at ABN
Cash cost is on track to be
lowered ~US$8/t by FY13
Construction commenced end-2012
and was scheduled for completion in
2Q13
TMU commenced infrastructure-sharing
using ABN’s road and IM’s CPP & Jetty
Hauling road was completed in
May 2013, ahead of schedule
ABN & IM commenced jointborder mining end-2012
TMU’s underwent significant
production ramp-up from 88K tons
in 1Q13 to 414K in 4Q13
Maximizing extraction of ~2 MT of
high quality coal reserve with low SR
In
Progress
In
Progress
FINANCIAL
Initiative
Execution
Achievement
Provide Financing to IM
Maximized current ideal capital structure
by using loan to finance new CPP
construction and land compensation
Secured 3-year US$ 15 mm term loan
from SCB at competitive lending rate
of LIBOR + applicable rate
Optimize Sales through Hedging
Made available hedging line with
notable financial institutions
Centralize Fuel Supply
Sourced constant bulk supply from
major fuel supplier to allow for good
monitoring of effective fuel usage
No hedging has been utilized. Sold
~72% of 2013 sales volume using fixed
pricing, and securing cash
prepayments
In
Sourced supply at competitive
Progress
price, while continuing to seek
other sources with better pricing
42
Executions and Achievements so far… (II)
COMMERCIAL
Initiative
Achievement
Execution
Secure Sales Volume and
Maintain this Activity
continuously
TOBA successfully sold and secured
~ 50-90% of targeted sales volume for
2013
• ABN secured ~ 80-90% of 2013
targeted sales
• IM secured one-year contract
with one of its major customers
at competitive price
• TMU secured ~50%
prepayment from one of buyers
Enhance Marketing Expertise
Internal marketing team currently
handles sales activities
TOBA does not depend on third
party marketing agent
Maximize Cost Efficiency
TOBA negotiates directly with
logistics providers
Lower logistics cost (barging
costs) by 18% from 1Q13 to 2Q13
In
Progress
CORPORATE SOCIAL RESPONSIBILITY / ENVIRONMENT
Initiative
Develop and Implement Corporate
Social Responsibility
Execution
• Created Educational Program for
local Communities
• Provided health services to local
communities
Achievement
Proper Mining award in East
Kalimantan for ABN and IM
• Created local employment
43
Toba’s Business Strategies
1
2
3
4
5
Integration of three
(3) mines
Organically increase
coal production levels
Increase coal reserve
and resource
Strengthen existing
and develop new
customer
relationships
Continue to focus on
health and safety,
environmental track
record and
commitment to CSR
• Benchmarking and
sharing between
departments and
functions
• Expand coal production
through increased
production and mine
development activities
• Optimize and
coordinate mine
planning and logistics
• Strengthen
relationships with third
party mining
contractors and work
closely with them to
improve their
productivity
• Continue exploration
activities to increase
proven and probable
reserves as only 52%
has been explored to
JORC standard
• Supply a higher
proportion of sales
volume to end users,
while maintaining
relationships with
existing coal traders
• Consider opportunities
to acquire coal
concessions with
significant reserves
• Target customers in
Japan, Taiwan, South
Korea, China, Vietnam
and Hong Kong, South
East Asia and India
• Centrally coordinate
and streamline
corporate finance,
legal, human resource
and CSR functions
• Maintain and enhance
high international
operating standards,
utilize automated
mining methods to
minimize accidents and
enhance safety
• Foster community ties
through development
programs as well as job
creation
• Joint mine plan and
infrastructure sharing
Growing Reserves and Maintain Profitability at Different Cycles
44
ABN: Coal Concession Overview
Overview
• Area: 2,990 ha
• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan
IM
• Type of license: IUPOP
• Expiry date: 1 December 2029
• Commencement of production: September 2008
• 2012 production: 4.4 MM tonnes
ABN
• Mining consultant: PT Runge Indonesia
ABN
Jetty
Operations
TMU
• Current production capacity (31 December 2012):
– Crusher: 10 MM tonnes p.a.
– Conveyor: 10 MM tonnes p.a.
• Produces two varieties of blended thermal coal
– ABN 52: Marketed CV(1) of 5,200 kcal / kg GAR
– ABN 55: Marketed CV of 5,500 kcal / kg GAR
– ABN 58 : Marketed CV of 5,800 kcal / kg GAR
• Substantially all of the owners of the land within ABN’s
concession area have been compensated and ABN has been
granted the exclusive right to mine those areas
Note:
1. Calorific value
Marketing
• Historically sold between 50%-100% of its annual production through
long-term (longer than 1 year) with coal trading companies
– The remainder were sold on the spot market
•
Currently, IM sells coal to buyers based on fixed priced contracts up
to one year, backed with pre-determined cash prepayments
45
IM: Coal Concession Overview
Overview
IM
Jetty
• Area: 683 ha
• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan
IM
• Type of license: IUPOP
• Expiry date: IUPOP effective until 2023 and can be renewed for
another 10 years
• Production commencement: August 2007
• 2012 production: 1 MM tonnes
ABN
• Mining consultant: PT SMG Consultants
TMU
Operations
• Current production capacity (31 December 2012):
– Crusher: 3.0 MM tonnes p.a.
– Conveyor: 4.5 MM tonnes p.a.
• Produced one variety of blended thermal coal “Indomining”
with marketed CV(1) of 5,700 kcal / kg GAR in 2012
– May produce additional varieties of blended thermal coal in
the future
• Has compensated the majority all of the owners of the land
within its concession area for their land and has been granted
the exclusive right to mine those areas
Note:
1. Calorific value
Marketing
• Historically sold approximately 50% of its annual production through
short-term (one year or shorter) contracts with coal trading companies
– Clients include Glencore, Flame, Peabody, Dragon, Aempire
• The remainder are sold on the spot market
• Currently, IM sells coal to buyers based on fixed priced contracts up to
one year, backed with pre-determined cash prepayments
46
TMU: Coal Concession Overview
Overview
• Area: 3,414 ha
• Location: Loa Janan, Muara Jawa and Sanga-Sanga,
Kutai Kartanegara, East Kalimantan
• Type of license: IUPOP
• Expiry date: 14 December 2023
• Commencement of production: October 2011
• 2012 coal production: ~257,000 tons
IM
Sungai Sangasanga
• Mining consultant: Marston & Marston
ABN
Operations & Marketing
• Current production capacity (31 December 2012):
Completed haul road
to ABN and IM (25 km)
TMU
– Crusher: 1.4 MM tons p.a.
• Produces one variety of blended thermal coal “Trisensa47”, with marketed CV(1) of 4,700 kcal / kg GAR
– May produce additional varieties of blended thermal
coal in the future
Kutai Energi haul
road and jetty
(17 km)
Pulau Seribu
Jetty KE
Sungai Dondang
Note:
1. Calorific value
47