2Q12 results and comments

Transcription

1 INVESTOR & ANALYST UPDATE 14 th August Q12 results and comments 1

2 DISCLAIMER The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Banpu Public Company Limited. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction. 2

3 1. Focus: weathering the storm 2. Coal operations 3. Coal marketing 4. Power business 5. Financial summary Appendices 3

4 1. Focus: weathering the storm 4

5 Banpu has been through difficult times before LONG TERM PERSPECTIVE STRATEGIC PERSPECTIVE 1980s BANPU Coal Thailand SET listing COAL SALES 1 Mt EXTERNAL Low coal prices Banpu has three decades of experience and has faced difficult macroeconomic conditions many times before 1990s Mae Moh contract Indonesia Power business 4 Mt Low coal prices Asian economic crisis! Despite many short term setbacks, over the long term Banpu has delivered strong shareholder returns 2000s 2010s Indocoal acquisition Non-core divestment China coal Australia coal Mongolia coal 20 Mt 44 Mt Coal price growth Lehman crisis! European debt crisis! Banpu has focused on growth but also on sustainability Emphasis on pro-active risk management, contingency planning, strategic flexibility 5

6 Checklist for weathering the current storm FUNDAMENTALS ACTION PLAN Domestic coal sales less impacted by benchmark prices Cut costs and reduce strip ratios in Indonesia Export sales mainly to strong credit large corporate buyers Productivity improvements in Indonesia and Australia Power earnings a hedge against lower coal prices Geographic diversity of assets mitigates regulatory risks and gives strategic flexibility Reduce and delay capex plans: target 30% reduction Limited impact to medium term output targets Financial discipline and risk management systems Maintain strong EBITDA to net debt ratio and dividend yield 6

7 Structure of adjusted operating earnings* Bt 13.8 bn* Export coal Australia and Indonesia Bt 9.3 bn Coal exports mainly to large creditworthy customers in NE Asia Diverse high CV coal portfolio with integrated logistics and blending: resilient to weak coal prices Domestic coal Australia, Indonesia, China Power BLCP and China power Bt 1.9 bn Bt 2.5 bn Mainly long term contracts with large power companies Note: Hongsa earnings will grow as BLCP earnings decline H * Figures shown above are based on EBITDA results multiplied by Banpu s percentage ownership in each business (for example, taking only 65% of ITM s EBITDA) 7

8 Banpu: high quality coal portfolio* Calorific value (adb, Kcal/kg) 7,200 7,000 7,100 Indonesia peer 1 5,700 5,300 5,400 5,200 5,000 ITM Centennial Indonesia peer 2 5,417 4,309 Indonesia peer 3 5,900 5,500 Indonesia peer 4 5,230 Indonesia peer 5 7,000 Indonesia peer 6 6,400 5,215 5,300 5,400 Indonesia peer 7 7,250 6,950 Australia peer 1 6,850 6,700 Australia peer 2 6,500 5,850 Avg Chinese peers Ash (adb, %) ITM Centennial Indonesia peer 2 Indonesia peer Indonesia peer 3 Indonesia peer Indonesia peer 5 Indonesia peer 6 Indonesia peer 7 Australia peer Australia peer Avg Chinese peers Sulphur (adb, %) ITM Centennial Indonesia peer 1 Indonesia peer 2 Indonesia peer 3 Indonesia peer 4 Indonesia peer 5 Indonesia peer 6 Indonesia peer 7 Australia peer 1 Australia peer 2 Avg Chinese peers * Peer figures are from company sources 8

9 Banpu s main customers ITM: TOP 5 CUSTOMERS Customer Country China Indonesia Taiwan Italy Japan Credit rating BB+ (Fitch) na BBB+ (S&P) Baa1 (Moody s) / A- (Fitch) / BBB+ (S&P) A3 (Moody s)/ A (S&P) Business relationship (years) Current contract duration Evergreen Evergreen Evergreen End Dec 12 End Dec 14 CENTENNIAL: TOP 5 CUSTOMERS Customer Pen Country Australia Australia Taiwan Taiwan Japan Credit rating AA- (Fitch) / AA- (S&P) na A+ (S&P) na A1 (Moody s) / A+ (S&P) Business relationship (years) Current contract duration End Jun 22 End Jun 22 End Dec 19 End Jan 13 End Mar 13 9

10 Focus: reducing costs in Indonesia in 2012 INDICATIVE FOB CASH PRODUCTION COSTS PER TONNE $/t Target reduction -$3/t Logistics and overheads Reduce management overheads Processing, haulage and port Other pit-operation activities Waste mining cost Overburden removal costs Cut Indominco SR:13.2 to 12.9 (and potentially to 12.6) Cut Trubaindo SR: 13.5 to 12.5 ROM OUTPUT: 27.0 Mt 27.0 Mt ILLUSTRATIVE AND INDICATIVE ONLY 10

11 Focus: Centennial outlook KEY STRENGTHS DOMESTIC CONTRACT OUTLOOK Full production rates expected at three main longwall operations in 2H12 Increased productivity should enable 10-15% unit operating cost reductions in 2H12 compared to 2Q12 Indexed-linked domestic contracts with expiring contracts renewable at longterm export parity pricing Export business with long standing customers to premium markets Flexibility to build both domestic and export business in accordance with market opportunities Mt High percentage of domestic contracts next two years 11

12 Dec10 Apr11 Aug11 Dec11 Apr12 Aug12 Dec12 Apr13 Aug13 Dec13 Apr14 Aug14 Dec14 Apr15 Aug15 Dec15 CONSTRUCTION PLAN Focus: Hongsa PROJECT SUMMARY PROJECT VALUE DEVELOPMENT CURVE Project progress at end 2Q is slightly ahead of schedule 100% 80% COD Unit 2 90% COD of first unit targeted for June % 40% 20% 0% Main road completion COD Unit 1 COD Unit 3 NPV 40-60% Hongsa project is targeted to contribute around Bt 3 6 bn per annum to Banpu EBITDA (from 40% shares of holding) from 2016 % Project NPV* 100% 40-60% Growing contribution from Hongsa will gradually offset the decline in earnings from BLCP over the long term 30-40% 20-30% 10-20% *Source: AWR Lloyd Site Identification & Studies PFS completed FS completed Financing Secured Construction Commissioning Commercial Operation 12

13 Capex plan changes $Million 1,748 c.30% reduction POWER 1,248 MONGOLIA Maintain Hongsa equity injection and China power expansions as planned AUSTRALIA Deferred development of Tsant Uul and Altai Nuur; focus on exploration Capex adjustment mainly postponement to ramp-up of Newstan INDONESIA Postponement of some developments BoCT urgent improvement only DISCLAIMER: ALL CAPEX FIGURES ARE INDICATIVE ONLY AND ARE SUBJECT TO CHANGE. 13

14 Financial discipline and risk management Example 1: Gearing management Example 2: Dividend payments 3x Net debt / adjusted EBITDA* Dividend per share 2x 2.1X 1.5X Bt 12.0 Bt 16.0 Bt 21.0 Bt x Bt Banpu maintains conservative Net debt/ebitda ratio as contingency for volatile coal prices and macro-economic conditions (and for new growth opportunities) Banpu has a track record of strong and growing dividend payments * Adjusted EBITDA: includes interest in JVs; excludes net gains from disposal from investments in 2010 and

15 2. Coal operations 15

16 2. Coal Coal operations divisions (a) (b) (c) (d) Australia Coal Indonesia Coal China Coal Mongolia Coal 16

17 Australia Coal: operational and financial summary Inglenook 2012 OUTPUT TARGETS (EQUITY BASIS) Neubeck Charbon Airly Angus Place Newstan Extension Mandalong Newcastle NCIG PWCS Myuna Mannering Production Equity ROM output 2.9 Mt, 23% down YoY Extended longwall changeover at Mandalong Springvale encountered an area of poor geological conditions during 2Q12 KEY UPDATES: Q Q12 ASP A$82/t (up from A$78/t in 1Q12), Australian GAAP basis Benefited from improved export sales mix, with exports at 54% (up from 41% in 1Q12) of total sales Clarence Open-cut mine Underground mine Project Power station Port Road Rail Springvale WESTERN OPERATIONS: 7.3 Mt Wollongong PKCT NORTHERN OPERATIONS: 8.0 Mt Sydney FINANCIAL SUMMARY: Q Sales revenue A$269m 1% YoY EBITDA A$43m 39% NPAT A$7m 22% CAPEX A$64m 75% Gearing: ND / ND + Equity (Net debt to Net debt + book value of equity) 28.6% Note: NCIG = Newcastle Coal Infrastructure Group; PWCS = Port Waratah Coal Services; PKCT = Port Kembla Coal Terminal 17

18 Australia Coal: Northern Operations quarterly output MANDALONG OTHER OPERATIONS NEWSTAN EXTENSION COAL OUTPUT (Mt)* COAL OUTPUT (Mt)* COAL OUTPUT (Mt)* CV: 6,700 kcal/kg** CV: 6,700 kcal/kg** CV: 6,700 kcal/kg** Under construction 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e Mth 1 Mth 2 Mth 3 2 wks LW MOVE SCHEDULE 3 wks 6 wks 1 wk 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 4Q12e Mandalong development on budget, but longwall significantly outperformed: resulted in extended longwall changeover of c. 6 weeks (normally c. 3 weeks) Myuna improved during 2Q12, with further improvement expected 2H12 as it moves to extraction Mannering restructured at end 2Q12, with two of three units (equipment and crew) moved to Newstan Mth 1 Mth 2 Mth 3 LW MOVE SCHEDULE 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e Note: *Output figures are ROM output (equity basis) **CV figures are air-dried basis 18

19 Mandalong: extended longwall changeover TYPICAL PLAN VIEW OF A SERIES OF LONGWALL PANELS LONGWALL EXTRACTION OUTPERFORMANCE 1 Direction of mining Direction of mining 1 2 Completed LW ahead of plan Roadway development on plan, but lagged longwall outperformance 2 Adjacent roadway development for the new longwall panel occurs simultaneously with longwall extraction 19

20 Newstan: plan 20

21 Australia Coal: Western Operations quarterly output ANGUS PLACE SPRINGVALE OTHER OPERATIONS COAL OUTPUT (Mt)* COAL OUTPUT (Mt)* COAL OUTPUT (Mt)* CV: 6,700 kcal/kg** CV: 6,700 kcal/kg** CV: 6,700 kcal/kg** 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e Mth 1 Mth 2 LW MOVE SCHEDULE 7 wks 5 wks Mth 1 Mth 2 LW MOVE SCHEDULE 10 wks Angus Place continues to outperform, with weekly and monthly production records achieved in 2Q12 Springvale 2Q12 impacted by an area of poor geology. Production now approaching normal levels Mth 3 Mth 3 4 wks 2H12 - Clarence and Charbon moving to a more productive extraction phase 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 4Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 4Q12e Airly continues to improve, with recent process improvements and the arrival of some delayed equipment Note: *Output figures are ROM output (equity basis) **CV figures are air-dried basis 21

22 Australia Coal: indicative operating costs and ASP A$/t* $52 INDICATIVE AVERAGE MINING COSTS $ PLAN * These figures do not include selling, distribution and royalties costs Indicative average mining costs* Planned cost reduction by 10-15% Depreciation Open-cut contractor cost Cash overhead Coal handling & preparation General expenses Repairs & maintenance Stores & supplies Labor COMMENTS 2Q12 mining costs were higher due to Longwall changeover at Mandalong Area of poor geology at Springvale. For 2012, mining costs expected to fall by 10-15% from 2Q12 s due to: Angus Place, Mandalong and Springvale longwalls operating at full production Charbon, Clarence and Myuna benefit from extraction activities Continued improvements at Airly Mannering restructured, with 2 of 3 units moved to Newstan selling, distribution and royalties expected to average ~A$16/t. Q2 ASP is A$82/t, with overall 2012 ASP expected lower 22

23 Australia Coal: key development projects DEVELOPMENTS ORGANIC GROWTH LOGISTICS PORTS Banpu Board Approval for development of Newstan Extension obtained. Timing of capital expenditure under review. Own locomotives and wagons now delivered providing logistical flexibility, reducing distribution costs and enabling greater control of exports. NCIG Stage 2AA completed 3 months ahead of schedule and budget - providing additional port capacity to boost export sales. CAPEX TIMELINES (INDICATIVE ONLY) PROJECT NAME PROGRESS Total CAPEX only (c.a$m) Western infrastructure Feasibility Study [20] Newstan extension and Northern washery upgrade Construction stage [385] CAPEX PLANS CURRENTLY UNDER REVIEW 2016 Angus Place extension Pre-Feasibility Study [20] 2016 DISCLAIMER: ALL CAPEX FIGURES ARE INDICATIVE ONLY AND ARE SUBJECT TO CHANGE. 23

24 2. Coal Coal operations divisions (a) (b) (c) (d) Australia Coal Indonesia Coal China Coal Mongolia Coal 24

25 Indonesia Coal: operational and financial summary Central Kalimantan 2012 OUTPUT TARGETS (100% BASIS) KEY UPDATES: Q Palangkaraya TRUBAINDO 7.0 Mt East Kalimantan INDOMINCO 15.0 Mt Bunyut Port BHARINTO 0.7 Mt South Kalimantan Balikpapan KITADIN TANDUNG MAYANG 2.7 Mt Samarinda Bontang Coal Terminal Captive coalfired power project KITADIN- EMBALUT 0.7 Mt Production: Bharinto commenced operation since early April 12 2Q12 output achieved according to plan ITM production 2Q12 : 6.8mt, up 17% YoY 2Q12 ASP: $94.6/t (down 3% from $97.4/t in 2Q11 and down 6% from $101.1/t in 1Q12) FINANCIAL SUMMARY: Q Sales revenue $626m 25% YoY EBITDA $168m 2% POWER COAL Operation Project Operation Project Banjarmasin JORONG 1.0 Mt Jorong Port NPAT $119m 5% CAPEX $12m 1% Gearing: ND / Equity (Net debt to book value of equity) -52% from -44% 25

26 E BLOCK W BLOCK TDMY TRUBAINDO BHARINTO Indonesia Coal: quarterly output E BLOCK W BLOCK TRUBAINDO JORONG KITADIN INDOMINCO - BONTANG COAL OUTPUT (Mt)* CV: kcal/kg** TRUBAINDO - BHARINTO COAL OUTPUT (Mt)* CV: kcal/kg** EMBALUT - JORONG COAL OUTPUT (Mt)* CV: 5750 kcal/kg** 2.3 JORONG EMBALUT 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e CV: 5300 kcal/kg** 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e STRIP RATIOS (bcm/t) STRIP RATIOS (bcm/t) STRIP RATIOS (bcm/t) Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12e Note: *Output figures are 100% basis **CV figures are air-dried basis 26

27 Indonesia Coal: key development projects DEVELOPMENTS IPCC ILLUSTRATION IPCC Systems* Bontang Port Expansion Bunyut Port Expansion SPREADER STOCK PILE PIT BENCHES IN-PIT 100 m CONVEYORS 100 m BACKHOE EXCAVATOR TRUCK 50 m IN-PIT CRUSHER 50 m On process of importing the crusher and conveyer unit and expected to be completed by end of the year Conducted an external study to expand existing port capacity and mine-stock capacity at Bontang Prospective consultants submitted Expression of Interest for the study phase CAPEX TIMELINES (INDICATIVE ONLY) PROJECT NAME PROGRESS Total CAPEX only (c.us$m) Bharinto Production stage [100] IMM - East block IPCC System BoCT expansion to 30 Mtpa Feasibility Study Feasibility Study [85] [40] CAPEX PLANS CURRENTLY UNDER REVIEW Bunyut port expansion Feasibility Study [20] Note: IPCC System = In Pit Coal Crusher and Conveyor System DISCLAIMER: ALL CAPEX FIGURES ARE INDICATIVE ONLY AND ARE SUBJECT TO CHANGE. 27

28 2. Coal Coal operations divisions (a) (b) (c) (d) Australia Coal Indonesia Coal China Coal Mongolia Coal 28

29 China Coal: operational and financial summary CHINA COAL 2012 PRODUCTION TARGETS* GAOHE OPERATIONAL UPDATES All eight required inspections passed at Gaohe in 2Q. POWER COAL Pre-production stage Operation Project Operation Project COAL OUTPUT (Mt ROM) Gaohe (45%), Shanxi 3.8 Mt Hebi (40%), Henan 1.2 Mt 0.3 BEIJING Opening Ceremony was held on the morning of June 28 th following the Final Acceptance Inspection on June 27 th. The Official Approval Document for the Final Acceptance from the NDRC was received and submitted to Changzhi Coal Mine Safety Administration in order to apply for the Safety and Production Licenses. Gaohe has finished the preliminary design of railway spur about 8 km and worked on land acquisition. Gaohe began to build another 6 raw coal silos (Phase 2), capacity of 10,000 tonnes each. Summary 1Q12 2Q12 Sales (Mt) ASP (RMB/t) Revenue (US$ M) COGS (RMB/t) EBITDA (US$ M) Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Gaohe CV: Kcal/kg** 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Hebi CV: Kcal/kg** HEBI Continue to drill 10 exploration drill holes in a new mining area, to check geology and coal quality. Note: *Output figures are ROM output (equity basis) **CV figures are air-dried basis 29

30 2. Coal Coal operations divisions (a) (b) (c) (d) Australia Coal Indonesia Coal China Coal Mongolia Coal 30

31 Mongolia Coal: project development MONGOLIA COAL TSANT UUL PROJECT UPDATE Resources (JORC as of August 2011) for Tsant Uul only: Measured: 40.9 Mt Indicated: 52.9 Mt Inferred: 73.3 Mt Total: Mt Exploration area: 69,000 hectares Location: South Gobi (approximately 200 km from Gants Mod border checkpoint) Status: Mining license granted until 2041 Coal type: Thermal coal, CV 6,000-6,500 kcal/kg** CAPEX TIMELINE PROJECT NAME PROGRESS CAPEX only (US$m) Tsant Uul CV: 6,000-6,500 kcal/kg ** Tsant Uul Altai Nuurs Production stage Exploration and early stage dev. [100] [100] CAPEX PLANS CURRENTLY UNDER REVIEW (INDICATIVE ONLY) Note: * Output figures are ROM output (100% basis) ** CV figures are NAR basis, from latest samples *** Capex for mine development and necessary infrastructure, with own equipment 31

32 Banpu group indicative five-year plan output targets* INDONESIA COAL (ITM): SALEABLE COAL 100% BASIS AUSTRALIA COAL (CENTENNIAL): ROM EQUITY BASIS Bharinto Jorong Tandung Mayan Embalut Trubaindo Indominco Others - West Springvale (50%) Angus Place (50%) Others - North Newstan Ext (100%) Mandalong (100%) CHINA COAL: ROM EQUITY BASIS MONGOLIA COAL (HUNNU): ROM 100% BASIS Gaohe (45%) Hebi (40%) *Disclaimer: These output targets are indicative only and are subject to change. 32

33 2. 3. Coal Coal marketing divisions (a) (b) Coal market Banpu coal sales 33

34 2Q 2012 update - seaborne thermal coal market drivers WEATHER CHINESE DEMAND OTHER DRIVERS Indonesia normal. Stocks built up. Chinese winter/summer normal. Good rains increase hydro. Australia nothing significant. USA mild 1H, reduces demand. GDP growth declining possibly below announced levels. Coal production increased beyond demand increase. Imports in 1H 2012, double 1H Policy uncertainty and level of planned stimulation affecting confidence. Overall impact high stock and low domestic price. Uncertainty of rate/timing of Chinese import increase. Downward trend in sentiment, despite global coal trade expanding. Uncertainty impacting forecasts due to European debt concerns, and GDP and employment levels generally. US exports high until end 2012, then unhedged prices vs. cost will impact. Gas prices support coal demand in Europe but opposite in USA which diverted coal to export world growth forecast 2.1%* (Prev. 2.2%**) ; Asian growth forecast 6.0%* (Prev. 6.5%**) *Country Forecast August 2012 from The Economist Intelligence Unit Limited 2012 as of 16 July,2012 **Banpu Macroeconomic Assumptions as of April

35 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Banpu Indonesia Banpu ASPs average vs selling thermal prices coal benchmark in 3Q10 prices BANPU ASP VS BENCHMARK PRICES COMMENTS Unit: $/t Monthly BJI Quarterly Banpu Indonesia ASP ASP held up well in 1Q 2012, but 2Q market starts to cap and reduce prospects. Continuing pressure from weaker market prices and product mix, impacts ASP and tonnage but not significantly Banpu remains protected by relatively high sold with price status (+81%) and negligible reliance of traders as buyers ASP 2Q12 $94.05 (-6% QoQ) BJI* August 9, 2012 $91.85 Also protected by hedge status (+6%), and Centennial s domestic contract stability with linkage of sales usually to JPU, or GC Newcastle. * Barlow Jonker Index: benchmark NSW FOB thermal coal index 35

36 China thermal China coal market thermal review coal market review CHINA DOMESTIC COAL PRICES CHINA THERMAL COAL IMPORTS/EXPORTS ANNUALIZED ACTUAL IMPORT 2Q11-2Q12 & 3Q12 ESTIMATE Unit: RMB Unit: Mt Unit: Mt > 5,800 kcal/kg > 5,500 kcal/kg > 5,000 kcal/kg? 1, Net import 96 Mt Net import c.121 Mt? Source: 30 July 2012 Sources: China Coal Report July 2012, Banpu MS&L Estimates 36

37 US shale gas: medium and long term trends MEDIUM TERM TREND 2012: year of coinciding extremes Cheap shale gas creates excess coal stocks in the US High coal prices and very low freight rates allow US to export its coal Most exports hedged to end : year of adjustment Atlantic Re-adjust and cutback traditional US exports of high quality, high cost products More demand for Russia, Colombia, South Africa to balance sulfur Pacific Significantly reduced Atlantic coal supply Supply reduced due output cuts LONG TERM TREND USA Increasing share of natural gas consumption in the local markets Higher USA growth prospects due to lower energy costs Coal industry adjusts by rationalization Exports have higher share of high sulfur products China / Australia More difficult to extract shale gas reservoirs. Early days. Consumption and delivery of pipeline is likely to be delayed Wood Mackenzie expects shale gas in China not significant before

38 US shale gas: limited threats from US coal exports to Asia LOW US GAS PRICE IS UNSUSTAINABLE Domestic gas demand is likely to rise from additional US petchem expansions and NGV vehicles 2011 winter was unusually warm Avg. breakeven price for shale gas at $3.8 per mmbtu vs. 1Q low point of $1.9 per mmbtu Powder River Basin coal remains 4 competitive to gas and less impacted 3 by cheap gas. Delivered CV-adjusted 2 cost to Asia above discounted 1 Indonesian sub bituminous product. 0 US COAL AND NATURAL GAS PRICES US$/mmbtu Source: Wood Mackenzie, EIA, Bloomberg, AWR Lloyd estimates Henry Hub natural gas 2012 Central Appalachian coal 2013 Woodmac > US$4/mmbtu by 2013 Powder River Basin coal (PRB)

39 2. 3. Coal Coal marketing divisions (a) (b) Coal market Banpu coal sales 39

40 Banpu group coal sales outlook analysis: 2012e COAL SALES* BREAKDOWN BY DESTINATION 2012e (Mt) BANPU GROUP TOTAL GLOBAL COAL SALES* 2012e Others Italy ITALY 1.4 Mt INDIA 2.4 Mt Indonesia Coal Australia Coal China Coal CHINA 9.5 Mt THAILAND 1.9 Mt HK 0.6 Mt INDONESIA 2.7 Mt 1.5 S KOREA 2.8 Mt TAIWAN 3.9 Mt PHILIPPINES 1.7 Mt JAPAN 6.5 Mt AUSTRALIA 8.5Mt OTHERS 2.1 Mt Australia India Philippines Thailand Indonesia Taiwan Hong Kong China S Korea Total: 44.0Mt* (Sales from Indonesia are included on 100% basis, sales from Australia and China are included on equity basis ) Japan * Excluding Mongolia coal 40

41 Indicative 2012 Banpu coal sales pricing status AUSTRALIA COAL INDONESIA COAL Indexed Unsold Unsold Indexed Fixed Export Fixed Domestic Fixed TARGET SALES 2012 (equity basis): c.15 Mt As at 31 July 2012 TARGET SALES 2012: c. 26 Mt As at 31 July 2012 Limited exposure to prevailing market prices New export parity domestic contracts commenced 1 July, increasing sales certainty and improving domestic (and total sales) ASP Mostly insulated from market weakness (including hedged tonnes, 87% of sales) * Contracted tonnage 41

42 4. Power business 42

43 Thailand Power: BLCP in 2Q12 (100% basis) Bt. million Q-Q: 20% Y-Y: 2% 2,334 1,988 2,382 Q-Q: 8% Y-Y: 3% 4,858 4,672 5,026 Q-Q: 18% Y-Y: 1% Q11 1Q12 2Q12 Availability Payment (AP) Q-Q: -0.1% Y-Y: 8% 2,245 2,420 2,418 2Q11 1Q12 2Q12 Q-Q: 62% Y-Y: 9% 1,688 Total revenue 1,137 1, FX gain Q11 1Q12 2Q12 Energy Payment (EP) 96% 97% 98% 2Q11 1Q12 2Q12 Q-Q: 42% Y-Y: 6% 2,218 EBIT 2, Q11 1Q12 2Q12 FX (loss) 1,659 Equity income Based on Banpu s 50% interest 2Q11 1Q12 2Q12 Dispatch (%) 2Q11 1Q12 2Q12 EBITDA 43

44 Thailand Power: Hongsa Project in Laos HONGSA PROJECT PROJECT PROGRESS UPDATES 2Q12 MAIN ROAD FROM THAI BORDER POWER PLANT STACK CONSTRUCTION POWER PLANT BOILER STRUCTURE PIPELINE FROM WATER RESERVIORS TO POWER PLANT Construction progress at end 2Q was approx. 20% (slightly ahead of the schedule) Main road from Thai border to the project site was completed since May Activities in Power Plant area are focusing on boiler structure and stack construction Resettlement houses completed Pipeline from water reservoirs to power plant is in progress and will be completed in 2013 COD of first unit will be on June CAPEX TIMELINE PROJECT NAME CONSTRUCTION PROGRESS CAPEX ($m) CAPEX TIMELINE Hongsa Power 19.7% 340* Note: *Banpu s equity injection 44

45 China Power: BIC* in 2Q12 (100% basis) BIC* 2Q11 1Q12 2Q12 Sales** (USD m) EBITDA (USD m) Utilization (hours) Power tariff (RMB/kwh) Coal price*** (RMB/t) Luannan Hebei Province Power 100MW; Steam 128tph (Banpu 100% ) Lower sales and EBITDA due to decrease in residential heating revenue in non heating season ,758 1,500 1, Zhengding Hebei Province Power 48MW; Steam 180tph (Banpu 100%) Lower sales and EBITDA due to decrease in residential heating revenue in non heating season ,655 1,981 1, Zouping Shandong Province Power 100MW; Steam 430tph (Banpu 70%) Reduction in sales due to lower steam demand has been offset by the lower coal cost due to drop in coal price, that led the growth in EBITDA ,834 1,726 1, Note: *BIC = Banpu Investment China (formerly BPIC), **Unaudited figures, *** Including transportation 45

46 5. Financial summary 46

47 CORPORATE EVENTS EXTERNAL EVENTS DIRECT INDIRECT Key external and corporate events Downgrade 9 euro zone nations BoT cuts interest rate to 3% Greece passes austerity plan China s disappointing Q1 GDP growth European elections shockwave Moody s downgrades of German bank credit ratings China s inflation eases, room for stimulus Fears of Greek exit from Euro recede EU Summit held in Brussel ECB president supportive comments for Euro Indonesia foreign ownership limit Indonesia export tax on minerals Request for contract review Australian MRRT and carbon tax commenced 1Q12 2Q12 Jul 12 Aug Jan Announcement of special Bt 3 dividend to be paid on 10 Feb 24 Feb Banpu 2011 results 2H11 Bt 9 dividend to be paid on 30 Apr R&R upgrades 5 Apr Banpu AGM May Banpu 1Q12 results Approved Annual Dividend of 21 Baht/share (incl. special dividend 3 Baht/share) Approved bond issue Bt20 billion 24 Jul Banpu announced cost and capex reduction plan 10 Aug Banpu 2Q12 results 47

48 ASP NEX* ASP NEX* ASP NEX* Banpu group revenue analysis: coal operations Indonesia Coal (ITM) Australia Coal (Centennial) China Coal Domestic Export SALES (Mt) 100% basis Domestic Export SALES (Mt) Equity basis Domestic Export SALES (Mt) Equity basis AVERAGE SELLING PRICE (US$/t) AVERAGE SELLING PRICE (A$/t)** AVERAGE SELLING PRICE (US$/t) excl. VAT REVENUE ($M) 100% basis REVENUE (A$M) Equity basis REVENUE ($M) 100% basis Note: ITM revenue is consolidated in Banpu income statement. Note: Hebi and Gaohe revenues are not consolidated in Banpu income statement. Note: $ in this presentation denotes US dollar only, otherwise stated *NEX = Newcastle Export Index (formerly Barlow Jonker Index or BJI) It is relevant but not linked to China Coal s ASP **Australian GAAP 48

49 Banpu consolidated sales revenues Bt. million USD 822 m USD 913 m Bt 28,310 M USD 947 m Bt 29,644 M Bt 24,888 M Australian GAAP (AUD Million) * Power -19% Q Q +3% Y - Y Coal Australia +5% Q Q +19% Y Y 18 * Gain 8 from forward % Q- Q +4% Y - Y Coal Indonesia Power 1Q12 2Q12 +9% Q Q +28% Y - Y Coal Australia Coal Indonesia Note: USD exchange rate is the average exchange rate of the corresponding period, Revenue from other is included in Coal. * Under Thai GAAP, this is not included in the revenue. 49

50 Banpu consolidated coal gross margin 2Q12 : 39% AUSTRALIA COAL INDONESIA COAL Indonesia Coal gross margin: 44% Bt million 20,000 Thai GAAP Australian GAAP 18,268 Bt million AUD million 15,662 Australia gross margin: 28% Australia gross margin: 30% 7,918 8,352 8, % 49% 44% 28% 33% 28% 33% 37% 30% Coal sales Gross margin Note: AUD exchange rate Bt32.87/A$ (as of 30 June 2012) 50

51 Banpu consolidated EBITDA and NPAT Unit: Bt. million EBITDA NET PROFIT AFTER TAX 7,227 Power +78% Q-Q +29% Y-Y Coal - Australia -25% Q-Q -17% Y-Y Coal - Indonesia +2% Q-Q +2% Y-Y +1% Q Q +2% Y Y Coal - China +28% Q-Q +64% Y-Y Coal - China 2,734-2% Q - Q -14% Y - Y Power +116% Q-Q -30% Y-Y Coal - China +28% Q-Q +63% Y-Y Coal - Indonesia +34% Q-Q +1% Y-Y Coal - Australia Power Coal - Australia Coal - China Coal - Indonesia 51

52 Banpu gearing and foreign exchange structure DEBT FX STRUCTURE GEARING RATIOS Net debt / Equity 1 (x) Net market gearing 2 (%) Net debt / EBITDA (x) TOTAL DEBT: $3 Billion As of 7 July Q12 Note: 1 Net debt to book value of shareholders' equity 2 Net debt to enterprise value (enterprise value = net debt + market capitalization as at 30 June 2012) 52

53 Appendices 53

54 Indonesia Coal gross margin 2Q12 : 44% 18,268 20,000 15,662 8,890 8,661 9,792 6,400 6,621 5,356 50% 49% 44% 50% 46% 39% 50% 52% 45% % % % 39% 36% 43% 668 1,250 53% % 53% 52% 46% 44% 1,380 2,121 65% 61% Indominco Trubaindo Jorong Kitadin Tandung Mayang Indonesia Coal Coal sales Gross margin 54

55 Banpu group EBITDA breakdown Unit: $M & holding companies 3Q11 4Q11 1Q12 2Q12 100% Unit: AUD Mil 65% AACI OVERHEAD Power & New energy 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 All figures are 100% basis except for Centennial which is equity basis Indominco 3Q11 4Q11 1Q12 2Q12 45% Gaohe 3Q11 4Q11 1Q12 2Q12 Began consolidated in 4Q11 50% BLCP 3Q11 4Q11 1Q12 2Q12 HONGSA Trubaindo Hebi 40% 40% 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 Kitadin 3Q11 4Q11 1Q12 2Q12 BIC* 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 70% Jorong Luannan Zhengding Zouping 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 Note: all ownership 100% unless otherwise shown. *BIC = Banpu Investment China (formerly BPIC) Consolidated NOT consolidated 55

56 Banpu group net debt breakdown Unit: $M & holding companies 3Q11 4Q11 1Q12 2Q12 100% AUSTRALIA COAL 65% INDONESIA COAL 45% CHINA COAL 40% 100% MONGOLIA COAL Unit: AUD Mil Gaohe Hebi 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 50% THAILAND POWER 40% LAOS POWER 100% CHINA POWER BLCP HONGSA BIC* Consolidated NOT consolidated Net debt 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 3Q11 4Q11 1Q12 2Q12 Net cash Note: all ownership 100% unless otherwise shown. *BIC = Banpu Investment China (formerly BPIC) 56

57 Banpu consolidated : operating profit Units: Bt. million 2Q12 1Q12 2Q11 QoQ% YoY% Total sales revenues* 29,644 28,310 24,888 5% 19% Sales revenues Coal Sales revenues Power (BIC) Cost of sales 28,256 1,281 (18,359) 26,623 1,573 (16,314) 23,587 1,239 (14,735) 6% 20% -19% 3% Gross profit* 11,285 11,996 10,152-6% 11% Gross profit - Coal Gross profit Power (BIC) 11, , , % 11% -33% 45% GPM 38% 42% 41% GPM - Coal GPM Power (BIC) 39% 14% 44% 18% 42% 10% Note: * Including other business 57

58 Banpu consolidated: operating profit Units: Bt. million 2Q12 1Q12 2Q11 QoQ% YoY% Gross profit GPM SG&A Royalty Income from associates Other income Other expenses - Operations EBIT EBIT - Coal EBIT - Power 11,285 38% (3,539) (2,964) 1, (406) 5,724 4, ,996 42% (3,421) (2,753) (898) 5,764 5, ,152 41% (2,769) (2,428) (421) 5,614 5, % 11% -1% 2% -8% -2% 111% 39% EBITDA 7,227 7,174 7,109 1% 2% EBITDA - Coal 6,379 6,697 6,452-5% -1% EBITDA - Power % 29% 58

59 Banpu consolidated : net profit Units: Bt. million 2Q12 1Q12 2Q11 QoQ% YoY% EBIT 5,724 5,764 5,614-1% 2% Interest expenses Financial expenses Income tax (core business) Minorities (860) (85) (1,649) (1,688) (824) (88) (1,724) (1,193) (770) (82) (1,216) (1,180) Net profit before extra items 1,442 1,934 2,365-25% -39% Non-recurring items* 1, (110) Net profit before FX 2,545 2,216 2,255 15% 13% FX translations Net profit 2,734 2,785 3,161-2% -14% EPS (Bt/share) Note: * Income from non-core assets and other non-operating expenses 59

60 Centennial : Income Statement Units: Bt million (THAI GAAP) 2Q12 1Q12 2Q11 QoQ% Sales volume (k tonnes) Sales revenue Cost of sales Gross profit 2,336 2,759 2,225-15% GPM SG&A 28% (1,518) 33% (1,439) 28% (1,223) 5% Royalty (576) (577) (542) 0% Other income % EBIT Interest expenses Financial expenses Gain (loss) on exchange rate Gain (loss) on derivative Corporate income tax Net profit 3,274 8,235 (5,899) 323 (188) (38) (111) ,496 8,352 (5,593) 810 (202) (39) ,264 3,660 7,918 (5,693) 529 (171) (34) (38) 992-6% -1% -60% -82% YoY% -11% 4% 5% 24% 6% 17% -39% -77% 60

61 Banpu group coal sales 2Q12 COAL SALES BREAKDOWN BY DESTINATION 2Q12 (Mt) BANPU GROUP TOTAL GLOBAL COAL SALES 2Q12 Italy Others ITALY 0.3 Mt INDIA 0.9 Mt Indonesia Coal Australia Coal China Coal CHINA 2.2 Mt THAILAND 0.5 Mt TAIWAN HK 0.8 Mt 0.2 Mt INDONESIA 0.8 Mt S KOREA 1.1 Mt PHILIPPINES 0.5 Mt JAPAN 1.6 Mt AUSTRALIA 1.5 Mt OTHERS 0.2 Mt India Philippines Australia Thailand Indonesia Hong Kong Taiwan China S Korea Total: 10.4Mt (Sales from Indonesia are included on 100% basis, sales from Australia and China are included on equity basis ) Japan 61

62 WESTERN NORTHERN Centennial: quarterly equity ROM output Total equity ROM (Mt) ACTUAL PLANNED (INDICATIVE ONLY) 6 wks 7 wks wks 10 wks Normal production Bolt-up/commissioning LW relocation Note: Bar width is indicative of the equity production contributions to Centennial 62

63 US shale gas: limited threats from US coal exports to Asia US COAL EXPORTS TO ASIA IS LIMITED US COAL EXPORT BREAKDOWN (Mt) Majority of additional export went to Europe and North America. In 1Q12, YoY growth for coal exports to Asia actually declined Challenging economics for export to Asia over LT Others Q12 YoY -0.3 Mt (-1.2 Mt)** QoQ +0.5 Mt (+2.0 Mt)** ** annualised High FOB cost c.u$70/t for Powder River Basin coal (5,000 kcal/kg with low sulfur) But some Illinois Basin + Pittsburg 8 seam coals competitive, depending on freight and options in Atlantic Africa 2 Asia Europe Source: Wood Mackenzie, EIA, Bloomberg, AWR Lloyd estimates 26 1Q12 annualised 63

64 US shale gas: limited threats from US coal exports to Asia TOTAL US COAL PORT CAPACITY(Mt) Port capacity Future expansions need to also address political and permit issues WEST COAST (Mt) Port capacity Potential coal export route to Asia Northern Lignite Low sulfur North PRB 3,333 3,889 kcal/kg Low sulfur 4,833 5,278 kcal/kg South PRB Very low sulfur 4,333 4,889 kcal/kg S. Wyoming Low-Mid sulfur 5,000 6,667 kcal/kg Rocky mountain region Low sulfur 4,444 6,667 kcal/kg Four corners Low to mid sulfur 4,722 6,667 kcal/kg Illinois basin High sulfur 6,111+ kcal/kg Gulf lignite Low to mid sulfur 3,333 4,444 kcal/kg Central Appalachian Low to Mid 6,667+ kcal/kg EAST COAST(Mt) Baltimore Hamton Road Operating Operating w/ planned expansion Planned US GULF (Mt) Mobile Others Source: Platts, AWR Lloyd estimates

65 Focus: reducing costs in Indonesia in 2012 (cont d) ILLUSTRATIVE MINE PLAN CHANGE (INDOMINCO) At Indominco mine plan can be changed to reduce strip ratio without affecting output target and coal quality ORIGINAL PLAN SR 13.2 NEW PLAN SR 12.6 Tonnage can be made up from mining other sections of existing pits with lower strip ratios Limited reserves impact within next two years OVERBURDEN OVERBURDEN COAL SEAM COAL SEAM 65

66 Hongsa: target revenue and EBITDA structure REVENUE STRUCTURE 13 yrs 25 yrs Viable O&M 6% Indicative targeted revenue range (nominal) Energy Payment Fuel payment 38% Indicative targeted EBITDA range (nominal) Availability Payment 56% NOTE: FIGURES SHOWN ARE ON 100% BASIS ILLUSTRATIVE & INDICATIVE ONLY 66