20140725 toba mdna 1h 2014 english version 1
Management Discussion & Analysis Semester I 2014
Toba Bara Sejahtra Tbk and Subsidiaries
th
30 June 2014
1
SUMMARY
Over quarter-on-quarter (q-o-q) period from 1Q14 to 2Q14, the bearish sentiment on the global coal
prices continued to deteriorate as reflected by Newcastle (NEWC) Index price falling by 6.5% from US$
78.1/ton to US$ 73.1/ton. Meanwhile on year-on-year (y-o-y) basis, the price corrected 14,2% from US$
85.9/ton in 2Q13 to US$ 73.1/ton in 2Q14. The major causes of this included, among others, the
combination of China’s slowing demand growth and its relatively high inventory level resulting in domestic
coal price cuts, as well as lack of supply discipline from major producers such as Indonesia and Australia.
Given the current global coal price condition, Toba Bara Sejahtra (The Company) continues to be well
positioned to keep its costs structure relatively stable for the year post a series of cost efficiency initiatives
conducted over 2013 period, hence enabling it to focus on profitable production growth. As a case in
point, 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$ 7-10/ton.
Taking into account the Company’s three concessions are located next to each other, the Company was
able to maximize cost efficiency initiatives through joint mine plan and infrastructure sharing. As a
tangible result of this set of initiatives, the Company successfully boosted production volume and sales
volume by 45.9% to 4.07 million tons and 37.5% to 3.85 million tons y-o-y in 1H14 respectively. On
quarterly basis, the total production volume of 2.16 million tons in 2Q14 was in line with those of previous
quarters of 1Q14 and 4Q13. The 2Q14 production volume was also the highest in its corporate history.
Financially, the Company increased its sales by 31.2% y-o-y from 1H13 to 1H14. Despite a 15.6%
correction in the NEWC Index price, the Company only posted a decline of 4.9% in its average selling
price (ASP) over the same period. On the cost side, the Company lowered its FOB (Free On Board)
vessel cash cost by 5.0% 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 74.7% y-o-y higher
EBITDA at US$ 38.3 million. This, in turn, translated to a more favorable income of US$ 20.72 million for
1H14, or up by 63.8% 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 June 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 45.9% y-o-y from 2.79 million tons in 1H13 to 4.07
million tons in 1H14 on the back of significantly higher volume contributions from TMU and IM. The
production volume of 4.07 million tons in 1H14 resulted from operations of all three operating subsidiaries
with the following respective contributions: around 2.22 million tons from ABN, around 1.12 million tons
from IM, and around 0.74 million tons from TMU. The Company’s y-o-y production growth of 45.9%
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 1H14, ABN remains to be the
Company’s main volume contributor of all three subsidiaries accounting for 54.5% of total production, its
contribution has, in fact, fallen from 68.8% as of 1H13. On the other hand, the contribution of TMU to total
production has surged significantly from 8.2% in 1H13 to 18.2% in 1H14. On stand alone basis, the
contributions of IM and TMU were crucial as they posted y-o-y production volume growth of around
75.0% % and 221.7% in 1H14 respectively.
Changes in Production and SR at ABN, IM and TMU
ABN
2.500
15,4x
IM
16,0
14,5x
TMU
1.300
16,0
13,2x
14,0
1.100
11,9x
12,0
2.000
900
8,0
8,0
500
2.216
300
640
1H13
1.116
100
1H13
Stripping Ratio (SR)
4,0
300
2,0
-
1H14
Coal Production ('000)
8,0
6,0
4,0
2,0
230
740
1H13
1H14
100
Stripping Ratio (SR)
2,0
-
1H14
Coal Production ('000)
12,0
10,0
500
6,0
4,0
1.920
11,6x
700
10,0
700
6,0
1.000
14,0
12,1x
12,0
10,0
1.500
16,0
900
14,0
Coal Production ('000)
Stripping Ratio (SR)
As compared to 1H13, SR in 1H14 declined 4.7% from 14.3x to 13.6x reflecting the Company’s continued
efforts in improving its operational performance amidst the low coal price environment. On q-o-q though,
SR slightly rose by 2.1% from 13.5x in 1Q14 to 13.8x in 2Q14 due to pre-stripping activities across the
board at all subsidiaries. SR is expected to normalize in the subsequent quarters 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 low as possible, given that these
two cost components typically account for around 65%-70% of cash cost.
Average Production, SR, and Dump Distance
Average Production and SR
Dump Distance (in meters)
2.000
20x
15,1x
1.500
13,6x
12,7x
12,7x
13,5x
13,8x
3.000
15x
2.000
1.681
1.000
1.741
1.785
1.899
1.816
1.675
10x
1.298
1.501
1.802
1.950
1.911
2.160
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
500
5x
Production volume ('000)
Stripping Ratio (SR)
1.000
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
Dump distance (m)
The Company’s ASP only contracted by 4.9% y-o-y from US$ 67.20/ton in 1H13 to US$ 63.88/ton in
1H14, which compared favorably with NEWC Index price that fell 15.6% 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
3
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
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, who are notably international traders, would
prepay around 30% of contract value upfront. In doing so, this enabled the Company to maximize its
pricing structure relative to any adverse coal market condition. By the end of 1H14, the Company has
sold ~80%-90% of its 2014 sales volume at fixed price.
FINANCIALS
Financial and Operational Highlights
All figures are in million US$
unless otherwise stated
Operation
Sales Volume
Production Volume
Stripping Ratio (SR)
FOB Vessel Cash Cost*
NEWC Index Price
Average Selling Price (ASP)
Financial Performance
Profit (Loss)
Sales
Cost of Goods Sold
Gross Profit
Operating Profit
EBITDA**
Profit for the Period
Capex
Balance Sheet
Interest Bearing Debt
Cash and Cash Equivalents
Net Debt***
Total Assets
Total Liabilities
Total Equity
Financial Ratios
Gross Profit Margin
EBITDA Margin
Operating Profit Margin
1Q14
2Q14 Changes
Mn ton
Mn ton
x
US$/ton
US$/ton
US$/ton
1.93
1.91
13.50
48.90
78.10
62.90
1.92
2.16
13.79
52.32
73.05
64.81
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
1Q14
122.00
98.40
23.60
17.67
21.10
12.80
5.50
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
%
%
%
1H13
1H14 Changes
(0.5%)
13.1%
2.1%
7.0%
(6.5%)
3.0%
2.80
2.79
14.30
55.00
89.54
67.20
2Q14 Changes
124.83
2.3%
103.77
5.5%
21.06 (10.8%)
14.75 (16.5%)
17.20 (18.5%)
7.92 (38.1%)
2.27 (58.7%)
1H13
188.10
156.99
31.10
17.82
21.92
12.65
9.62
1H14 Changes
246.83
31.2%
202.17
28.8%
44.66
43.6%
32.42
81.9%
38.30
74.7%
20.72
63.8%
7.77 (19.2%)
1H14 Changes
57.83
3.5%
53.30 (15.8%)
4.53
N/A
331.31
6.3%
191.61
5.7%
139.70
7.0%
49.90
47.40
2.50
300.00
162.20
137.90
57.83
53.30
4.53
331.31
191.61
139.70
FY13
55.90
63.30
Net Cash
311.60
181.20
130.50
19.4%
17.3%
14.5%
16.9%
13.8%
11.8%
16.5%
11.7%
9.5%
3.85
4.07
13.63
52.26
75.55
63.88
18.1%
15.5%
13.1%
Notes:
*FOB Vessel 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
37.5%
45.9%
(4.7%)
(5.0%)
(15.6%)
(4.9%)
4
PROFIT (LOSS)
SALES
Although the weaker NEWC Index price impacted the Company’s overall ASP by 4.9% from US$
67.20/ton in 1H13 to US$ 63.88/ton in 1H14, the Company booked a 31.2% rise in sales from US$
188.10 million in 1H13 to US$ 246.83 million in 1H14 on the back of a solid 37.5% increase in sales
volume over the same period.
COST OF GOODS SOLD
A 28.8% y-o-y rise in cost of goods sold from US$ 156.99 million in 1H13 to US$ 202.17 million in 1H14
reflected the Company’s significant increase in production volume by 45.9% despite lower cash cost from
favourable 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 74.7% y-o-y from US$ 21.92 million in 1H13 to US$ 38.30 million in 1H14, 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 boosted EBITDA margin
from 11.7% in 1H13 to 15.5% in 1H14.
The first graph below depicts the EBITDA evolution on q-o-q basis from US$ 9.40 million in 1Q13 right
through to US$ 17.20 million in 2Q14 and the NEWC Index price from US$ 93.0/ton to US$ 73.05/ton
over the same period. Over the past six quarters, the company has successfully booked stronger and
stable EBITDA and cash margin during continued weaker coal price environment.
Quaterly EBITDA vs NEWC Index
1Q13 – 2Q14
40
93,0
35
86,0
30
84,0
78,0
100
80
90
70
60
78,0
73,0
25
ASP vs FOB Vessel Cash Cost
1Q13 – 2Q14
15
9,0
12,0
18,0
18,0
21,0
17,2
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
54,9
67,8
53,4
50
63,3
49,2
62,9
48,9
64,8
52,3
40
60
30
50
20
10
05
55,1
68,1
80
70
20
66,2
10
40
00
00
1Q13
EBITDA (US$ Mn)
2Q13
3Q13
4Q13
1Q14
2Q14
NEWC (US$/ton)
FOB Vessel Cash Cost (US$/ton)
ASP (US$/ton)
PROFIT FOR THE PERIOD
The Company booked total profit for the period (before minority interest) of US$ 20.72 million in 1H14, up
by a 63.8% from US$ 12.65 million in 1H13. The US$ 20.72 million figure already factored in a series of
one-off expenses consisting mainly of tax expense resulting from tax audit, totaling US$ 2.24 million out
of US$ 2.96 million.
BALANCE SHEET
ASSETS
th
The Company’s assets as at 30 June 2014 stood at US$ 331.31 million, or up by 6.3% from US$ 311.6
st
million as per 31 December 2013.
5
LIABILITIES
th
Total liabilities as at 30 June 2014 rose by 5.7% to US$ 191.61 million from US$ 181.2 million as per
end-December 2013 and interest bearing debt increased by 3.5% to US$ 57.83 million from US$ 55.90
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
18,2
20
12,5
15
10
EBITDA to Interest Expense
25,00
21,1
18,0
21,1
17,2
18,2
20,00
13,4
18,0
17,2
9,4
2,5
5
2,5
4,5
0
15,00
10,00
12,5
9,4
-5
-10
5,00
-7,4
0,7
-15
-20
Ratio (x)
1,3
0,9
0,8
0,8
1,6
-
-17,0
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
(1,8)
0,2
0,7
(0,4)
0,1
0,3
Net Debt (Cash) (US$ Mn)
EBITDA (US$ Mn)
1Q13
Ratio (x)
13,4
2Q13
3Q13
4Q13
1Q14
2Q14
9,6
20,2
22,5
26,4
10,8
EBITDA (US$ Mn)
Interest Expenses (US$ Mn)
EQUITY
st
Total equity in 1H14 slightly increased 7.0% to US$ 139.70 million from US$ 130.50 million as of 31
December 2013, and this was attributable to additional profit for the period.
CAPITAL EXPENDITURE (CAPEX)
Until 1H14, the Company has realized total CAPEX of around US$ 7.77 million, which is mainly allocated
for the land compensation at IM and TMU.
MARKETING
During 1H14, the Company sold its coal to mainly Asian countries, which included China, Korea, Taiwan,
India, and the Philippines. 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 1H14, the Company has
secured ~80-90% of its 2014 total sales volume.
6
Sales Destinations by Country
0,5%
0,5%
0,5%
3,4%
China
1,9%
Taiwan
6,7%
Korea
India
40,2%
13,4%
Philippines
Thailand
Malaysia
19,3%
Japan
Domestic
13,6%
Others
OPERATIONAL UPDATE
Initiative
IM
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.
Achievement
Construction of CPP
is in finalization stage
PT TOBA BARA SEJAHTRA TBK at a Glance
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.
7
Locations of Toba Bara’s Concessions
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
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
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: corsec@tobabara.com
Email: iwan.sanyoto@tobabara.com
Priambodo
Corporate Communication
(Komunikasi Perusahaan)
Email: priambodo@tobabara.com
Toba Bara Sejahtra Tbk and Subsidiaries
th
30 June 2014
1
SUMMARY
Over quarter-on-quarter (q-o-q) period from 1Q14 to 2Q14, the bearish sentiment on the global coal
prices continued to deteriorate as reflected by Newcastle (NEWC) Index price falling by 6.5% from US$
78.1/ton to US$ 73.1/ton. Meanwhile on year-on-year (y-o-y) basis, the price corrected 14,2% from US$
85.9/ton in 2Q13 to US$ 73.1/ton in 2Q14. The major causes of this included, among others, the
combination of China’s slowing demand growth and its relatively high inventory level resulting in domestic
coal price cuts, as well as lack of supply discipline from major producers such as Indonesia and Australia.
Given the current global coal price condition, Toba Bara Sejahtra (The Company) continues to be well
positioned to keep its costs structure relatively stable for the year post a series of cost efficiency initiatives
conducted over 2013 period, hence enabling it to focus on profitable production growth. As a case in
point, 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$ 7-10/ton.
Taking into account the Company’s three concessions are located next to each other, the Company was
able to maximize cost efficiency initiatives through joint mine plan and infrastructure sharing. As a
tangible result of this set of initiatives, the Company successfully boosted production volume and sales
volume by 45.9% to 4.07 million tons and 37.5% to 3.85 million tons y-o-y in 1H14 respectively. On
quarterly basis, the total production volume of 2.16 million tons in 2Q14 was in line with those of previous
quarters of 1Q14 and 4Q13. The 2Q14 production volume was also the highest in its corporate history.
Financially, the Company increased its sales by 31.2% y-o-y from 1H13 to 1H14. Despite a 15.6%
correction in the NEWC Index price, the Company only posted a decline of 4.9% in its average selling
price (ASP) over the same period. On the cost side, the Company lowered its FOB (Free On Board)
vessel cash cost by 5.0% 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 74.7% y-o-y higher
EBITDA at US$ 38.3 million. This, in turn, translated to a more favorable income of US$ 20.72 million for
1H14, or up by 63.8% 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 June 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 45.9% y-o-y from 2.79 million tons in 1H13 to 4.07
million tons in 1H14 on the back of significantly higher volume contributions from TMU and IM. The
production volume of 4.07 million tons in 1H14 resulted from operations of all three operating subsidiaries
with the following respective contributions: around 2.22 million tons from ABN, around 1.12 million tons
from IM, and around 0.74 million tons from TMU. The Company’s y-o-y production growth of 45.9%
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 1H14, ABN remains to be the
Company’s main volume contributor of all three subsidiaries accounting for 54.5% of total production, its
contribution has, in fact, fallen from 68.8% as of 1H13. On the other hand, the contribution of TMU to total
production has surged significantly from 8.2% in 1H13 to 18.2% in 1H14. On stand alone basis, the
contributions of IM and TMU were crucial as they posted y-o-y production volume growth of around
75.0% % and 221.7% in 1H14 respectively.
Changes in Production and SR at ABN, IM and TMU
ABN
2.500
15,4x
IM
16,0
14,5x
TMU
1.300
16,0
13,2x
14,0
1.100
11,9x
12,0
2.000
900
8,0
8,0
500
2.216
300
640
1H13
1.116
100
1H13
Stripping Ratio (SR)
4,0
300
2,0
-
1H14
Coal Production ('000)
8,0
6,0
4,0
2,0
230
740
1H13
1H14
100
Stripping Ratio (SR)
2,0
-
1H14
Coal Production ('000)
12,0
10,0
500
6,0
4,0
1.920
11,6x
700
10,0
700
6,0
1.000
14,0
12,1x
12,0
10,0
1.500
16,0
900
14,0
Coal Production ('000)
Stripping Ratio (SR)
As compared to 1H13, SR in 1H14 declined 4.7% from 14.3x to 13.6x reflecting the Company’s continued
efforts in improving its operational performance amidst the low coal price environment. On q-o-q though,
SR slightly rose by 2.1% from 13.5x in 1Q14 to 13.8x in 2Q14 due to pre-stripping activities across the
board at all subsidiaries. SR is expected to normalize in the subsequent quarters 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 low as possible, given that these
two cost components typically account for around 65%-70% of cash cost.
Average Production, SR, and Dump Distance
Average Production and SR
Dump Distance (in meters)
2.000
20x
15,1x
1.500
13,6x
12,7x
12,7x
13,5x
13,8x
3.000
15x
2.000
1.681
1.000
1.741
1.785
1.899
1.816
1.675
10x
1.298
1.501
1.802
1.950
1.911
2.160
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
500
5x
Production volume ('000)
Stripping Ratio (SR)
1.000
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
Dump distance (m)
The Company’s ASP only contracted by 4.9% y-o-y from US$ 67.20/ton in 1H13 to US$ 63.88/ton in
1H14, which compared favorably with NEWC Index price that fell 15.6% 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
3
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
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, who are notably international traders, would
prepay around 30% of contract value upfront. In doing so, this enabled the Company to maximize its
pricing structure relative to any adverse coal market condition. By the end of 1H14, the Company has
sold ~80%-90% of its 2014 sales volume at fixed price.
FINANCIALS
Financial and Operational Highlights
All figures are in million US$
unless otherwise stated
Operation
Sales Volume
Production Volume
Stripping Ratio (SR)
FOB Vessel Cash Cost*
NEWC Index Price
Average Selling Price (ASP)
Financial Performance
Profit (Loss)
Sales
Cost of Goods Sold
Gross Profit
Operating Profit
EBITDA**
Profit for the Period
Capex
Balance Sheet
Interest Bearing Debt
Cash and Cash Equivalents
Net Debt***
Total Assets
Total Liabilities
Total Equity
Financial Ratios
Gross Profit Margin
EBITDA Margin
Operating Profit Margin
1Q14
2Q14 Changes
Mn ton
Mn ton
x
US$/ton
US$/ton
US$/ton
1.93
1.91
13.50
48.90
78.10
62.90
1.92
2.16
13.79
52.32
73.05
64.81
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
1Q14
122.00
98.40
23.60
17.67
21.10
12.80
5.50
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
US$ Mn
%
%
%
1H13
1H14 Changes
(0.5%)
13.1%
2.1%
7.0%
(6.5%)
3.0%
2.80
2.79
14.30
55.00
89.54
67.20
2Q14 Changes
124.83
2.3%
103.77
5.5%
21.06 (10.8%)
14.75 (16.5%)
17.20 (18.5%)
7.92 (38.1%)
2.27 (58.7%)
1H13
188.10
156.99
31.10
17.82
21.92
12.65
9.62
1H14 Changes
246.83
31.2%
202.17
28.8%
44.66
43.6%
32.42
81.9%
38.30
74.7%
20.72
63.8%
7.77 (19.2%)
1H14 Changes
57.83
3.5%
53.30 (15.8%)
4.53
N/A
331.31
6.3%
191.61
5.7%
139.70
7.0%
49.90
47.40
2.50
300.00
162.20
137.90
57.83
53.30
4.53
331.31
191.61
139.70
FY13
55.90
63.30
Net Cash
311.60
181.20
130.50
19.4%
17.3%
14.5%
16.9%
13.8%
11.8%
16.5%
11.7%
9.5%
3.85
4.07
13.63
52.26
75.55
63.88
18.1%
15.5%
13.1%
Notes:
*FOB Vessel 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
37.5%
45.9%
(4.7%)
(5.0%)
(15.6%)
(4.9%)
4
PROFIT (LOSS)
SALES
Although the weaker NEWC Index price impacted the Company’s overall ASP by 4.9% from US$
67.20/ton in 1H13 to US$ 63.88/ton in 1H14, the Company booked a 31.2% rise in sales from US$
188.10 million in 1H13 to US$ 246.83 million in 1H14 on the back of a solid 37.5% increase in sales
volume over the same period.
COST OF GOODS SOLD
A 28.8% y-o-y rise in cost of goods sold from US$ 156.99 million in 1H13 to US$ 202.17 million in 1H14
reflected the Company’s significant increase in production volume by 45.9% despite lower cash cost from
favourable 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 74.7% y-o-y from US$ 21.92 million in 1H13 to US$ 38.30 million in 1H14, 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 boosted EBITDA margin
from 11.7% in 1H13 to 15.5% in 1H14.
The first graph below depicts the EBITDA evolution on q-o-q basis from US$ 9.40 million in 1Q13 right
through to US$ 17.20 million in 2Q14 and the NEWC Index price from US$ 93.0/ton to US$ 73.05/ton
over the same period. Over the past six quarters, the company has successfully booked stronger and
stable EBITDA and cash margin during continued weaker coal price environment.
Quaterly EBITDA vs NEWC Index
1Q13 – 2Q14
40
93,0
35
86,0
30
84,0
78,0
100
80
90
70
60
78,0
73,0
25
ASP vs FOB Vessel Cash Cost
1Q13 – 2Q14
15
9,0
12,0
18,0
18,0
21,0
17,2
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
54,9
67,8
53,4
50
63,3
49,2
62,9
48,9
64,8
52,3
40
60
30
50
20
10
05
55,1
68,1
80
70
20
66,2
10
40
00
00
1Q13
EBITDA (US$ Mn)
2Q13
3Q13
4Q13
1Q14
2Q14
NEWC (US$/ton)
FOB Vessel Cash Cost (US$/ton)
ASP (US$/ton)
PROFIT FOR THE PERIOD
The Company booked total profit for the period (before minority interest) of US$ 20.72 million in 1H14, up
by a 63.8% from US$ 12.65 million in 1H13. The US$ 20.72 million figure already factored in a series of
one-off expenses consisting mainly of tax expense resulting from tax audit, totaling US$ 2.24 million out
of US$ 2.96 million.
BALANCE SHEET
ASSETS
th
The Company’s assets as at 30 June 2014 stood at US$ 331.31 million, or up by 6.3% from US$ 311.6
st
million as per 31 December 2013.
5
LIABILITIES
th
Total liabilities as at 30 June 2014 rose by 5.7% to US$ 191.61 million from US$ 181.2 million as per
end-December 2013 and interest bearing debt increased by 3.5% to US$ 57.83 million from US$ 55.90
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
18,2
20
12,5
15
10
EBITDA to Interest Expense
25,00
21,1
18,0
21,1
17,2
18,2
20,00
13,4
18,0
17,2
9,4
2,5
5
2,5
4,5
0
15,00
10,00
12,5
9,4
-5
-10
5,00
-7,4
0,7
-15
-20
Ratio (x)
1,3
0,9
0,8
0,8
1,6
-
-17,0
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
(1,8)
0,2
0,7
(0,4)
0,1
0,3
Net Debt (Cash) (US$ Mn)
EBITDA (US$ Mn)
1Q13
Ratio (x)
13,4
2Q13
3Q13
4Q13
1Q14
2Q14
9,6
20,2
22,5
26,4
10,8
EBITDA (US$ Mn)
Interest Expenses (US$ Mn)
EQUITY
st
Total equity in 1H14 slightly increased 7.0% to US$ 139.70 million from US$ 130.50 million as of 31
December 2013, and this was attributable to additional profit for the period.
CAPITAL EXPENDITURE (CAPEX)
Until 1H14, the Company has realized total CAPEX of around US$ 7.77 million, which is mainly allocated
for the land compensation at IM and TMU.
MARKETING
During 1H14, the Company sold its coal to mainly Asian countries, which included China, Korea, Taiwan,
India, and the Philippines. 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 1H14, the Company has
secured ~80-90% of its 2014 total sales volume.
6
Sales Destinations by Country
0,5%
0,5%
0,5%
3,4%
China
1,9%
Taiwan
6,7%
Korea
India
40,2%
13,4%
Philippines
Thailand
Malaysia
19,3%
Japan
Domestic
13,6%
Others
OPERATIONAL UPDATE
Initiative
IM
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.
Achievement
Construction of CPP
is in finalization stage
PT TOBA BARA SEJAHTRA TBK at a Glance
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.
7
Locations of Toba Bara’s Concessions
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
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
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: corsec@tobabara.com
Email: iwan.sanyoto@tobabara.com
Priambodo
Corporate Communication
(Komunikasi Perusahaan)
Email: priambodo@tobabara.com