PT Toba Bara Sejahtra Tbk ( Toba ) Company Presentation CLSA Conference September 2012, Hong Kong

Transcription

1 PT Toba Bara Sejahtra Tbk ( Toba ) Company Presentation CLSA Conference September 2012, Hong Kong 1

2 Disclaimer These materials have been prepared by PT Toba Bara Sejahtra (the Company ) and have not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained in these materials. The Company or any of its affiliates, advisers or representatives accepts no liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. These materials 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

3 Content 1 Corporate Profile & Updates 2 Industry Updates 3 Operational Highlights & Planning 4 Marketing & Financial Highlights 5 CSR & Environmental Highlights 3

4 1 Corporate Profile & Updates 4

5 Toba in Brief Toba comprises three coal companies, 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 tonnes and measured, indicated and inferred resources of 236 MM tonnes o 4 coal brands with calorific values ranging from 4,700-5,800 Kcal / kg GAR Strong growth profile o Produced 5.2 MM tonnes of coal in 2011 and is forecasted to produce around 5.7 MM tonnes of coal in 2012 o Prime location provides the 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 our total area has been explored June 2012 Revenue % June 2012 Net Income % Reserves % Resources % TMU 2% IM 27% IM 33% TMU 5.4% IM 15.0% IM 15.7% TMU 18.2% ABN 71% ABN 67% ABN 79.6% ABN 66.1% Total: US$ MM Total: US$ 20 MM Total: 147 MM Tonnes Total: 236 MM Tonnes 5

6 Toba s Ownership Structure PT Toba Sejahtra ( TS ) Davit Togar Panjaitan (1) PT Bara Makmur Abadi PT Sinergi Sukses Utama Roby Budi Prakoso Public 73.8% 0.8% 6.2% 5.1% 3.6% 10.5% ABN Minorities 49.0% 99.99% (2) PT Toba Bumi Energi ( TBE ) 51.0% 99.99% (2) 99.92% (2) License 20-year Production Operation Mining Permit ( IUPOP ) expiring in December 2029 IUPOP was converted from a Kuasa Pertambangan ( KP ) in 2009 IUPOP expiring in June 2013 IUPOP was converted from a KP in 2010 In the process of renewing its IUPOP Expects to receive renewal of 10-year IUPOP by end year IUPOP expiring in December 2023 IUPOP was converted from a KP in 2010 Area 2,990 ha 683 ha 3,414 ha 6 Notes: 1. Son of TS founder, Luhut B. Pandjaitan 2. Figures are rounded

7 Toba s 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 A privately owned group founded in 2004 with interests in energy and plantations Its business segments are as follow: Energy: Owns 5 coal mining concessions through Toba and PT Kutai Energi. All of TS' mines are characterized by low production costs and favorable proximity to ports Oil & Gas: In the exploration phase of the 4,567 sq miles South East Madura Block through subsidiary E&P company PT Energi Mineral Langgeng Power Plant: Operates a 30 MW coal-fired power plant in Palu, Central Sulawesi and is developing a 120 MW greenfield power plant in Senipah, East Kalimantan Agribusiness: A 25% stake in a 12,000 ha palm oil plantation in East Kalimantan General (Ret.) Luhut B. Pandjaitan is the key shareholder and founder of Toba Sejahtra group. He is currently the chairman of TS 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 fourstar 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 7

8 Toba s Business Strategies Further integrate ABN, Indomining and TMU to maximize efficiency and cost competitiveness Organically increase coal production levels Increase coal reserve and resource base through additional exploration and potential acquisitions Strengthen existing and develop new customer relationships Continue to focus on health and safety, environmental track record and commitment to CSR Recent restructuring will align IM and TMU shareholders interests and facilitate further integration of operations across the three concessions Benchmarking and sharing of best practices between departments and functions Expand coal production through increased production and mine development activities 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% of total concession area of 7,087 hectares has been explored to JORC standard Consider opportunities to acquire coal concessions with significant reserves Supply a higher proportion of sales volume to end users, while maintaining relationships with existing coal traders Target customers in Japan, Taiwan, South Korea, China and Hong Kong, South East Asia and India 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 Optimize and coordinate mine planning and logistics Centrally coordinate and streamline corporate finance, legal, human resource and CSR functions 8

9 Toba s Initial Public Offering Listed on IDX 06 July 2012 Number of shares offered shares or 10.47% IPO Proceed IDR 400,293,900,000 Anchor Investor Ticker Code Barings Private Equity (8% at IPO) TOBA 9

10 Why Invest in Toba Solid operating track record and visible earnings growth Competitive cost producer of coal in Indonesia Substantial reserves and resources to support significant production expansion Well-positioned to capture growth opportunities in thermal coal markets Wide range of coal quality grades to meet customers requirements Strong relationships with multinational customers Strong sponsorship from established major shareholder 10

11 Key Milestones Strong track record of acquisitions, development of greenfield mines, rapid production ramp-up and experience to adjust operation in a downmarket 2007 IM commenced production 2009 ABN & IM production reached 2m tons 2011 TMU commenced production Toba production hits 5m tons ABN commenced production Operational adjustment due to a drop in coal market 2010 TS acquired the remaining share for IM from minority shareholder Toba acquired 51.0% of ABN, 52.5% of TBE (IM s shareholding company) and 51.0% of TMU Toba production hits 4m tons 2012 Toba acquired the minorities shares in TBE and TMU IPO/Listed on IDX, 6 th July

12 2 Industry Updates 12

13 Impact of Global Economy Coal Industry Price of Newcastle Index Price dropped in Q2 140 due to the concerns over global economic slowdown IMF GDP Forecast for 2012 Sep 2011 (Updated) Apr 2012 (Updated) 1.8% 2.1% $/ton % 0.0% 9.0% 8.2% 80 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Source: World Bank The Newcastle Thermal Coal Price Index went from US$ in April 2012 to US$ in May Then to US$91.73 in June The Index Price are typically used as a basis for Spot and Index Linked Long Term contract sales, before discounts Source: IMF 2.3% 2.0% 7.5% 6.9% Concerns regarding the instability over Greece, Spain, and the EU were highlighted given the surprise of Greece election result European countries are the biggest trading partner for China The US economy, even though improving, used cheap shale gas for electricity 13

14 Response by the Coal Industry However, thermal seaborne coal price may have seen the floor 140 as the price of imported coal became cheaper than domestic coal in China (US$/tonne) Spread (Domestic - Import $/ton Export -75 Source:Globalcoal 80 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 and coal producers limits production growth.. ITMG lowers coal production target in 2012 Kontan, Aug 24, 2012 Indonesia Adaro cuts 2012 Thermal coal output target to million mt Platts, Aug 1, 2012 Output cuts help steady China s coal prices, outlook Reuters & Mining Weekly, Aug 29, Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Source: CLSA Asia-Pacific Market, CEIC, CCTD, globalcoal Toba remains profitable and set to grow given the price support in the market, despite the subdued global economic condition 14

15 3 Operational Highlights & Planning 15

16 Consolidated Production Performance Muara Berau kilometers Production Historical MM Tonnes TMU Samarinda NDM Jetty 17km Kutai 17km Energy Mahakam River IM 4km ABN 5km IM Jetty ABN Jetty Makassar Strait ~55 Km (total ~120 Km) Kutai Energi Jetty ~65 Km Muara Jawa Major City Jetty Transshipment Point Result of H Despite challenging condition, we maintained our profitability because our prime location gives us our operational cost advantage This advantage provides an investment margin of safety to our investors Prior experience from 2007 in a similarly difficult market gives us the experience to adjust our operations Actual Operation Focus for Integrate the operation of all 3 assets that are adjacent to each other to maximize profitability Update mineplans to focus on profitability growth over volume growth given the current price of coal Est 16

17 ABN Operational Update Production & Stripping Ratio Thousand Tonnes ABN 1,200 1, ,138 1, , Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Major Quarterly Updates 1. The production level is higher compared to H but is behind the expected target due to higher SR, and higher rainfall delay compared to plan 20.0x 15.0x 10.0x 11.1x 16.8x 13.9x 14.3x 17.6x 17.1x 2. ABN have been making adjustment to its mineplan to lower its SR 5.0x - F 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 17

18 ABN Operational Advantages and Focus Short coal hauling distance 4km High Built Cap 10 MM TPY Coal Hauling Crusher Capacity Loading Speed of 1,800 TPH Capitalizing on Infra Strength 18 Barge Loading Jetty Under Pass

19 IM Operational Update Production & Stripping Ratio Thousand Tonnes Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Major Quarterly Updates 1. IM Operations was impacted from higher mining SR and lower level of equipment productivity from contractor 2. IM have worked on reducing the SR and began negotiation with the contractor to improve equipment productivity 20.0x 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 10.1x 8.6x 8.8x 8.1x 16.4x 14.5x - F 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 19

20 IM Operational Advantage and Focus Short coal hauling distance < 5km CPP Ramp up to 6MM TPY Coal Hauling Crusher Capacity Conveyor for TMU & Others Integrate Mining with ABN 20 Overland Conveyor Joint Operation

21 TMU Operational Update Production & Stripping Ratio Thousand Tonnes Q11 1Q12 2Q12 Major Quarterly Updates 50.0x 45.0x 45.5x 40.0x 1. Mining performance was lower as the slippery road condition due to high level of rainfall and higher stripping ratio 2. Adjustment to the mineplan was made that would lower the mining SR 35.0x 30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 24.5x 14.4x 0.0x 4Q11 1Q12 2Q12 21

22 TMU Operational Advantage and Focus Build 16km Road to ABN Integrate CPP Ops with IM Hauling Road Exploration Develop clients for Infrastructure Muara Berau kilometers Exploration in ha Samarinda Mahakam River IM ABN T M Kutai U Energi Jetty ~65 Km ~55 Km (total ~120 Km) Makassar Strait Major City Muara Jawa Jetty Transshipment Point Exploration 22

23 4 Marketing & Financial Highlights 23

24 Marketing Highlight Toba s has a wide range of coal products that continue to be in demand in the major export markets in the region Coal Products Location of End Users TM Ash TS Calorific Value (kcal/kg) (% GAR) (% GAD) (% GAD) GAR GAD ABN ABN ,200 5,800 CHINA SOUTH KOREA JAPAN ABN ,800 6,250 IM INDIA THAILAND TAIWAN HONG KONG Indomining ,700 6,200 TMU Trisensa ,700 5,400 MALAYSIA SINGAPORE INDONESIA 24

25 Marketing Highlight Major customers provide the stable business support for Toba s marketing at zero external cost because Toba handles our marketing internally Major Customers Toba s Marketing Operations DRAGON ENERGY GROUP Central Marketing Operations of all 3 subsidiaries Internally developed customer based that allows Toba to have low marketing cost Balance mix of long term contract, short term and spot Active participation in reputable conference and trade shows to promote the Toba brand Marketing development to sell directly to end users 25

26 Toba Financial Summary Key Financials The Company's audited financial statements are presented in Indonesian Rupiah. The Company has not historically prepared U.S. dollar financial statements but has begin to prepare U. S. Dollar financial statements in The Company is currently considering and may transition to using the U.S. dollar as its reporting currency. Solely for the convenience of the reader, this presentation contains translations of certain Indonesian Rupiah amounts into U.S. dollars at the following rates as of and for the periods specified, being the middle exchange rate announced by Bank Indonesian of 1:9,400 with respect to financial information as of and for the year ended December 31, 2009; 1:8,991 with respect to financial information as of and for the year ended December 31, 2010; 1:9,068 with respect to financial information as of and for the year ended December 31, 2011; and 1:9,180 with respect to financial information as of and for the quarter ended March 31, Such translations should not be construed as representations that the Indonesian Rupiah or U.S. dollar amounts referred to could have been, or could be converted into Rupiah or U.S. dollars, as the case may be at that or any other rate or at all. The reader should not place undue reliance on these translated amounts, which are unaudited. TBS has achieved significant revenue and earnings growth driven by strong growth in production and ASP combined with its competitive cost position Revenue (1) US$ MM EBITDA (1)(2) and Margin US$ MM Net Income (1)(4) and Margin US$ MM % % 33% 10% % 24% Notes: 1. USD/IDR exchange rate of 1:9,400, 8,991 and 9,068 as of December 31, 2009, 2010 and 2011, respectively (Source: Bank Indonesia) 2. EBITDA equals gross profit less general and administrative expenses and selling expenses plus depreciation and amortization 3. CAGRs calculated based on financials which are reported in IDR 4. Includes net income attributable to minority interest

27 Toba Financial Summary Key Financials (June) Revenue US$ MM EBITDA US$ MM Net Income US$ MM H H H H H H Toba s strengths in operation was proven as revenue continue to grow. This is further highlighted given the subdued market condition Improvement and adjustments actions are being taken to return future EBITDA and Net Income to the similar previous level 27

28 Revenue Drivers Historical ASPs US$ / Tonne ASP Drivers Toba 93,9 95,0 Pricing Mechanism: Index-linked vs. Spot 65,5 82,0 Contract Type: Long-term vs. Short-term vs. Spot 50,1 Coal Quality Export vs. Domestic Mix H12011 H12012 Premium vs. High-growth Markets Benefit from lower discount to Newcastle Thermal Coal Index compared to other similar quality coal Customer Type: End-users vs. Coal-traders 28

29 Historical Cash Margin Cash Margins (1) US$ / Tonne TBS ABN Indomining FOB Cash Cost Margin ASP 29 Note: 1. Cash margin equals ASP minus FOB cash cost including royalties

30 Cash Cost Analysis and Drivers Toba FOB Vessel Cash Cost (1) % Toba FOB Vessel Cash Cost per Tonne US$ / Tonne Sold Fuel Coal 4% Extraction & Hauling 4% Royalty 7% Other 11% H H OB Removal Barging & Floating Crane (1.7) Royalty Coal Extraction & Hauling Fuel Other Barging & Floating Crane 9% OB Removal 65% Total Cost Management Lower Production SR & Contractor rate Increase Integration to lower Hauling, Crushing, and Barging Lower Marketing cost through centralize marketing 30

31 5 CSR & Environmental Highlights 31

32 Toba is Committed to Being a Responsible Corporate Citizen Toba is continuously developing and implementing its corporate social responsibility programs Creating educational opportunities for local communities including renovating schools, training teachers, providing post-graduate educational assistance and creating a literacy program for adults and a scholarship program for school-aged children Providing health services to the local communities Helping groups of farmers plant crops of vegetables and bamboo and assisting with land rehabilitation Creating local employment opportunities by sourcing some of the Company s site workforce from the neighboring areas Providing Health Services Creating Educational Opportunities Helping Farmers Plant Crops 32

33 Awards Ernst & Young Social Entrepreneur of the Year 2011 East Kalimantan Green Proper Mining Award ABN East Kalimantan Blue Proper Mining Award Indomining 33