Together We Build a Better Future 0

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1 Together We Build a Better Future 0

2 INDONESIA S CEMENT INDUSTRY: NOW and THE FUTURE FEBRUARY 2014 SMGR Corporate Presentation Together We Build a Better Future 1

3 CEMENT INDUSTRY AT A GLANCE 2 1 Kuala Lumpur Singapore 3 4 SMGR 1 Design Capacity : 68.0 mio tons 71.5 mio tons 82.2 mio tons Production Capacity : 55.2 mio tons 60.0 mio tons 69.8 mio tons Domestic Growth : 5.5% 6.0% 6.0% Domestic Utilization : 99% 99% 95% Supply Domestic : 58.0 mio tons 61.0 mio tons 65.8 mio tons Export : 0.5 mio tons 0.5 mio tons 0.5 mio tons Import : 3.3 mio tons 2) 3.0 mio tons 3) 3.0 mio tons 3) 1) Based on the Company s forecast 2) Imported cement by PT Semen Andalas (1.0 mio ton) and clinker by Bosawa and Kupang 3) Imported cement & clinker 5 CEMENT INDUSTRY F 1) 2015F 1) DOMESTIC CAPACITY (2014) 1. SEMEN INDONESIA 29.5 mn ton - Semen Padang : 7.3 mn ton - Semen Gresik : 14.4 mn ton - Semen Tonasa : 7.8 mn ton 2. Semen Andalas 2) 1.6 mn ton 3. Semen Baturaja 1.3 mn ton 4. Indocement TP 20.5 mn ton 5. Holcim Indonesia 12.1 mn ton 6. Semen Bosowa 6.0 mn ton 7. Semen Kupang 0.5 mn ton 2 TOTAL 71.5 mn ton Together We Build a Better Future 2

4 DOMESTIC DEMAND VS NATIONAL CAPACITY ( ) 000 tons Design Capacity Real Production Consumption Cement F 2015F 2016F 2017F ton( 000) F 2015F 2016F 2017F Installed Capacity 68,000 71,500 82,200 97, ,800 Real Production 55,200 62,205 69,870 78,240 85,680 Consumption 58,580 62,095 65,820 69,770 73,956 Surplus/(deficit) -3, ,050 8,470 11,724 Domestic Utilization 100% 100% 94% 89% 86% Export Domestic Consumption Growth 5.5% 6% 6% 6% 6% Together We Build a Better Future 3

5 COMPARISON: CEMENT CONSUMPTION PER CAPITA 2013 kg 2,000 kg/capita 1,800 1,600 1,400 1,200 1, China Singapore Vietnam Thailand Indonesia Philippines India Source: Deutsche, Indonesia Cement Association Together We Build a Better Future 4

6 INDONESIA S SOLID ECONOMIC AND DOMESTIC CEMENT CONSUMPTION GROWTH (mio tons) Domestic consumption (LHS) Cement growth % (RHS) 17.7% GDP growth % (RHS) % % % Growth : 4.7% 4.4% 5.8% 9.7% % 5.6% Growth : % 4.2% 5.4% Growth6.6% : 9.7% % 11.5% 38.1 Growth 6.1% : 4.2% % % 6.50% 6.00% Growth Growth 6.80% Growth 6.0% : : 5.5% 5.70% : 1.8% 6.6% 19.4% 10.0% (A) % 1.8% 2.5% % 0.0% M2014 Source: Indonesian Cement Association & BPS Statistic Together We Build a Better Future 5

7 SO FAR INFRASTRUCTURE EXPANSION RELATIVELY SLOW 45 Bag and Bulk cement consumption (million tons) Source: Indonesia Cement Association and the Company s data Bagged Cement Bulk Cement Together We Build a Better Future 6

8 DOMESTIC MARKET CONSUMPTION (2013) ± Bulk 21% Ready-mix (infrastructure): ± 60% Fabricator (pre-cast, fiber cement, cement based industry): ± 35% Projects (mortar, render): ± 5% ± Bag 79% Housing: ± 90% Cement based industry: ± 10% Source: Internal Research Retail (residential) sector is the largest consumer of cement in Indonesia Key Drivers of Domestic cement demand: National Economic Growth Favorable Interest Rate Environment Infrastructure Expansion Per Capita Consumption increase from current low levels Together We Build a Better Future 7

9 MARKET UPDATE FEBRUARY 2014 SMGR Corporate Presentation Together We Build a Better Future 8

10 MARKET BY GEOGRAPHY Cement Distribution (1M2014) Population Distribution (2012) SP 2 1 SG 4 ST % % 8.1% Sumatera 22.0% Java 54.9% Papua Bali & N T Sulawesi Kalimantan 8.4% 5.8% Sumatera 21.3% 5.5% 1.5% Java 57.5.% Domestic Market Share (1M2014) REGION MARKET SHARE (%) SMGR INTP SMCB BSWA ANDLS BTRJA KPG 1. JAVA SUMATERA KALIMANTAN SULAWESI NUSA TENGGR EASTERN IND TOTAL INDONESIA Together We Build a Better Future 9

11 MARKET UPDATE - Cement Consumption 1M2014 1M SMGR Sales Volume (million tons) DESCRIPTION 1M-14 1M-13 CHANGE (%) DOMESTIC 2,045,347 2,040, Semen Indonesia 1,092,575 1,068, Semen Padang 568, ,252 (6.8) Semen Tonasa 384, , EXPORT 3,755 6,189 (39.3) GRAND TOTAL 2,049,102 2,047, SMGR Sales Type (mio tons) 1M-14 1M-13 YoY Change Bag 1.54 (75.5%) 1.59 (78.2%) (3.2%) Bulk 0.50 (24.5%) 0.44 (21.8%) 12.6% Industry Sales Type (mio tons) 1M 2014 Domestic Consumption (mio tons) AREA 1M M 2013 CHANGE (%) Jakarta Banten West Java Central Java Yogyakarta East Java Total Java Sumatera Kalimantan Sulawesi Nusa Tenggara 410, ,150 (3.0) 233, ,383 (22.2) 706, , , ,375 (8.6) 82,713 83,223 (0.6) 616, , ,548,976 2,600,429 (2.0) 1,021,724 1,031,750 (1.0) 374, , , , , ,774 (5.2) Maluku & Papua 88, ,321 (19.1) TOTAL INDONESIA 4,639,049 4,648,607 (0.2) 1M-14 1M-13 YoY Change Export Cement 3,755 6,189 (39.3) Bag 3.69 (79.3%) 3.70 (79.7%) (0.4%) Export Clinker Total Export Bulk 0.96 (20.7%) 0.94 (20.3%) 2.5% 3,755 6,189 (39.3) Together We Build a Better Future *) Source: Indonesia Cement Association, un-audited figures GRAND TOTAL 10 4,642,804 4,654,796 (0.3)

12 FEBRUARY 2014 SMGR Corporate Presentation COMPANY PROFILE Together We Build a Better Future 11

13 SMGR IS THE #1 CEMENT COMPANY IN INDONESIA BRIEF HISTORY 1957 : Inauguration of Gresik I, installed capacity of 250,000 ton cement per annum 1991 : Initial Public Offering, Market Cap.: IDR0.63tn, resulting shareholding structure post IPO: Government of Republic of Indonesia: 73% Public: 27% 1995 : Acquisition of PT Semen Padang (Persero) and PT Semen Tonasa (Persero) 1998 : Cemex became a strategic partner, Market Cap.: IDR4.9tn 2006 : Blue Valley Holdings bought Cemex s 24.9% stake in SMGR, Market Cap.: IDR21.5tn 2010 : In March 31, Blue Valley Holdings sold all of its stake ownership in SMGR, Market Cap per April 30, 2010: IDR72.1tn 2011 : Total installed capacity of 20.00mm tons, Market Cap per June 29, 2012: IDR67.0tn 2012 : Acquisition of Thang Long Cement Vietnam, Total installed capacity of 2.3mm tons, Market Cap Dec 19 th, 2012: IDR91.9tn SMGR CAPACITY BUILD-OUT (MM TONS) Post-consolidated capacity Installed capacity: 25.3 mio tons (2012) including TLCC Pre-consolidated capacity Together We Build a Better Future 12

14 FOCUSES IN CORE BUSINESS OWNERSHIP STRUCTURE 1 The Government of the Republic of Indonesia Public 51.01% 48.99% PT Semen Indonesia (Persero) Tbk % 99.99% 70.00% PT Semen Padang PT Semen Tonasa Thang Long Cement, VN Name Activities % Ownership 1. Igasar Cement distribution & Trading 12.00% 2. Sepatim B General trading, cement packaging 85.00% 3. Bima SA General trading, cement packaging 80.00% 4. SUPS Cement Packaging 10.00% Name Activities Activities % Ownership % Ownership 1. UTSG Limestone Limestone & Clay & Clay Mining Mining 55.00% 55.00% 2. IKSG Cement Packaging Packaging Paper 60.00% 60.00% 3. KIG Industrial Industrial Estate Estate 65.00% 4. Swadaya Graha 65.00% Contractor & Machine Fabricator 25.00% Swadaya Varia Usaha Gra Steel Transport fabrication, and contractor general trading 25.00% 24.90% Varia Eternit Usaha Gresik Transport Building and materials general trading 24.90% 17.60% Eternit SGG Energy Gresik Prima Building Coal materials Mining and Trading 17.60% 97.00% SGG SGG Prima Prima Coal Beton Trading Ready Coal Mix Concrete 99.99% 99.99% 8. SGG Prima Beton Ready Mix Concrete 99.99% ¹ As of Dec 18, 2012 Together We Build a Better Future 13

15 Competitiveness of Semen Indonesia Kiln Cement Mill Grinding Plant 1 unit 1 unit 1 unit Cement Mill Integrated Cement Plant Grinding Plant Warehouse Packing Plant Sea Port Kiln Cement Mill Cement Mill 4 location 13 Unit 22 Unit 2 location 4 Unit 30 location 21 location 11 location Kiln Cement Mill 4 unit 6 unit Kiln Cement Mill 4 unit 9 unit Grinding Plant 3 unit Cement Mill Kiln Cement Mill 4 unit 6 unit

16 FEBRUARY 2014 SMGR Corporate Presentation FINANCIAL UPDATE Together We Build a Better Future 15

17 FINANCIAL SUMMARY: FY2012 RESULTS Description (Rp bn) FY 2011 FY 2012 Change (%) Net Revenue 16,379 19, Cost of Revenue 8,892 10, Gross Profit 7,487 9, Operating Expenses 2,595 3, Operating Income 4,892 6, EBITDA 2) 5,402 6, Net Income 3,925 4, EBITDA (Rp billion) 7,000 6,000 5,000 4,000 3,000 2,000 1, ,849 EBITDA Margin (%) 3,867 FY07 FY08 FY09 FY10 FY11 FY NET INCOME (Rp billion) 4,773 4,970 5,402 6, EPS (Rp) ,000 4,000 3,000 2,000 1,775 2,524 3,326 3,633 3, , NET INCOME Margin (%) FY07 FY08 FY09 FY10 FY11 FY Together We Build a Better Future 16

18 Description (Rpbn) 9M M-2013 Change (%) Revenue 13,677 17, % Cost of revenue 7,260 9, % Gross profit 6,407 7, % Operating expenses Operating income 2,188 2, % 4,275 5, % Ebitda 4,728 5, % Net Income 3,389 3, % EPS (full amount) Ratio (%) FINANCIAL SUMMARY: 9M-2013 RESULTS EBITDA (Rp billion) EBITDA Margin (%) 9M-09 9M-10 9M-11 9M-12 9M % 34.5% 32.8% 34.6% 33.6% NET INCOME (Rp billion) ,3% 4,500 3,906 Formula 4,000 3,389 9M M 2013 Ebitda margin Ebitda / Revenue Interest coverage (x) Cost ratio Total debt to equity *) Total debt to asset *) Ebitda / Interest expense [COGS + Opex] / Revenue Total debt / Total equity Total debt / Total asset *) Total debt calculated from interest bearing debt ,000 6,000 5,000 4,000 3,000 2,000 1, ,000 3,500 3,000 2,500 2,000 1,500 1, ,379 3,546 2,408 2,522 3,805 2,761 4,728 5,838 9M09 9M10 9M11 9M12 9M13 9M09 9M10 9M11 9M2012 9M2013 NET INCOME Margin (%) 9M-09 9M-10 9M-11 9M-12 9M % 24.5% 23.8% 24.8% 22.5% Together We Build a Better Future

19 STRONG BALANCE SHEET AND RETURNS Cash balance (IDR bn) * Include short term investment Total debt (IDR bn) 3,850 4,012 3,846 5,283 3,905 3,682 3,317 2, , M M2013 Debt/EBITDA Return on Assets 2.00x 0.06x 0.04x 0.14x 0.35x 0.56x 24.0% 25.8% 23.5% 20.1% 18.2% The projected adjusted debt/ebitda of 2.0x to maintain rating level from Moody s Investors Service. Together We Build a Better Future 18

20 REGULAR DIVIDEND PAYMENTS WITH ATTRACTIVE YIELD 2500,0 2000,0 Total Dividen Pay Out 1829,5 1816,7 1962,7 2181,3 1500,0 1261,7 1000,0 887,7 500,0 0, total dividen (IDR billion) SMGR DIVIDEND PAY OUT RATIO IN THE LAST 6 YEARS Average: 50% REGULAR DIVIDENDS Key determinants of dividend policy: Historical dividend payout trends Comparison with peers Projected cash-flows available for dividends (after taking into account potential expansionary capex etc) Analyst and investor expectations 50% 50% 55% 50% 50% 45% Together We Build a Better Future 19

21 FEBRUARY 2014 SMGR Corporate Presentation STRATEGIC PROJECTS Together We Build a Better Future 20

22 SMGR LONG TERM STRATEGIC FOCUS THE OVERALL STRATEGY COMBINES 6 CRITICAL ELEMENTS 1. Undertake Capacity Growth 2. Manage Energy Security 3. Enhance Company Image 4. Move Closer To The Customer 5. Enable Corporate Growth 6. Manage Key Risks SMGR Together We Build a Better Future 21

23 CEMENT PLANTS PROJECTS New Plants Location Capacity (mn tons) Investment (US$ mn) Start Construction Completed Indarung VI-SumBar Q Rembang-Java Q TOTAL CAPEX Preheater Tuban IV Pyroprocessing Tonasa V Tuban Tonasa Tonasa Tuban s view Raw Mill Dept. Tonasa V These strategic projects will ensure sustainability of the Company s market leadership ESP Power Plant Jetty Extension Area Together We Build a Better Future 22

24 INSTALLED CAPACITY (Mio Ton) Installed Capacity F 2015F 2016F 2017F Together We Build a Better Future 23

25 FEBRUARY 2014 CONCLUSION: WHY SMGR? SMGR Corporate Presentation Together We Build a Better Future 24

26 SMGR s COMPARATIVE & COMPETITIVE ADVANTAGE DRIVES SMGR TO BE THE MARKET LEADER IN INDONESIA Strengths of SMGR Experienced management team Conservative capital structure and financial policies Outstanding business performance Robust cash flow generation Favorable industry outlook Outstanding performance Outstanding business performance Leading cement player in Indonesia with over 44% market share based on sales volume for 1M2014 and approximately 42% share of total installed cement capacity (Source: Indonesia Cement Association ( ASI )) Strategically plants location is close to key markets throughout the country As of Dec 2012, acquired Thang Long Cement Company, Vietnam by 70% share with installed capacity 2.3 mio tons per annum Substantial growth opportunities through expansion and optimization Superior distribution network and strong brands recognition Long-term access to raw materials for cement production and coal for fuel consumption Concerns on environmental and Corporate Social Responsibility programs to ensure sustainable growth. Favourable industry outlook Cement consumption pretty much in-line with Indonesian economic growth Real estate and infrastructure projects and declining interest rates key demand drivers High barriers to entry (plant, distribution and brand investment costs) Disciplined investment on supply side Robust cash flow generation Historically strong revenue, margin and price trends High plant utilization and strong focus on cost and revenue management Conservative capital structure and financial policies [Investment grade-like credit metrics] Conservative capital structure policy; low use of leverage Access to capital markets for expansion initiatives Experienced management team Experienced and successful management team Together We Build a Better Future 25

27 THANK YOU IMPORTANT NOTICE THIS PRESENTATION IS NOT AND DOES NOT CONSTITUTE OR FORM PART OF, AND IS NOT MADE IN CONNECTION WITH, ANY OFFER FOR SALE OR SUBSCRIPTION OF OR SOLICITATION, RECOMMENDATION OR INVITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION WHATSOEVER. THE SLIDES USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND HAVE BEEN PREPARED AS A SUPPORT FOR ORAL DISCUSSIONS ONLY. THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART. This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertainties and other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others: economic, social and political conditions in Indonesia, and the impact such conditions have on construction and infrastructure spending in Indonesia; the effects of competition; the effects of changes in laws, regulations, taxation or accounting standards or practices; acquisitions, divestitures and various business opportunities that we may pursue; changes or volatility in inflation, interest rates and foreign exchange rates; accidents, natural disasters or outbreaks of infectious diseases, such as avian influenza, in our markets; labor unrest or other similar situations; and the outcome of pending or threatened litigation. We can give no assurance that our expectations will be attained. DISCLAIMER The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Indonesia (Persero) Tbk and/or its affiliated companies and/or their respective employees and/or agents make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof. We expressly disclaim any responsibility or liability (express or implied) of PT Semen Indonesia (Persero) Tbk, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neither PT Semen Indonesia (Persero) Tbk, its affiliated companies or their respective employees or agents accepts liability for any errors, omission or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed. Main Office: Jakarta Office: Semen Gresik Tower The East Building, 18 th Floor, Jln. Veteran Jln. DR. Ide Anak Agung Gde Agung Kav. E3.2 No.1, Gresik Indonesia Mega Kuningan, Jakarta Indonesia Phone: (62-31) , Phone : (62-21) Fax: (62-31) , Fax : (62-21) Together We Build a Better Future 26