PT Indika Energy Tbk · IDX:INDY
PT Indika Energy Tbk — FY2019 Earnings Presentation
49 slides from PT Indika Energy Tbk's earnings presentation, March 2020
Slide 1: Indika Energy Group Company Update FY 2019
INDIKA ENERGY GROUP COMPANY UPDATE FY 2019 PT Indika Energy Tbk. March 2020
Slide 2: Disclaimers
Disclaimers Investors and security holders are cautioned that this communication contains forward-looking statements and that forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict and are generally beyond the control of PT Indika Energy Tbk
Slide 3: Table of Contents
Table of Contents Page # Coal Price Outlook and Recent Development in Domestic Coal Sector 4-7 Indika Energy - Overview 8 Highlights – Latest Cash and Debt Position 9 - 10 Income Statement Analysis 11 Corporate Guidance 12 – 13 Our View and Strategy 14 – 18 New Growth Projects, Non-Coa
Slide 4: Coal Outlook 2020 – Price looks stabilising
Coal Outlook 2020 – Price looks stabilising • Price for Newcastle 6000 has slightly recovered in 1Q20, hovering at the level USD65-75 since Sept 2019. • Demand for thermal coal remains driven by China, India and SEA • China’s policy on coal remains key factor for price movement. China’s restriction
Slide 5: Coal Outlook – LT demand remains solid
Coal Outlook – LT demand remains solid Source: BP Energy Outlook 2019 • In the LT basis, International Energy Agency forecasts higher global coal consumption by 2030 and only marginally lower consumption by 2040 • Thermal coal remains the largest power generator in the world • Growing demand driven
Slide 6: Indonesia Coal Sector
Indonesia Coal Sector National Coal Production China Coal Import Million Ton Million Ton 700.0 Indonesia Other Countries 350.0 600.0 300.0 138.0 500.0 115.0 138.0 250.0 160.8 400.0 96.0 76.0 86.0 128.0 97.0 200.0 156.2 151.8 162.1 82.0 300.0 79.0 150.0 130.2 65.0 200.0 434.0 472.0 412.5 100.0 356.0
Slide 7: Latest Development of New Mining Law
Latest Development of New Mining Law Key CCOW Differences IUP IUP-K Latest 1st Generation Discussion ** Concession 49,000 ha * Max 5,000 ha Max 15,000 ha Keep existing size of concession *** % Government 13.5% 4.0 – 7.0% To be determined 15% Royalty % Corporate 45% 25% To be determined 25% Income Ta
Slide 8: Indika Energy – An Integrated Energy Player in Indonesia
Indika Energy – An Integrated Energy Player in Indonesia Cover end-to-end energy business value chain, with Revenue FY19: US$2,782.7 million current holdings mostly in coal-related sector MBSS Others Solid operation, with strong focus on cost control, 3% 3% 4) operational improvement and synergy
Slide 9: Indika Energy's Consolidated Income Statement Highlights
Indika Energy’s Consolidated Income Statement Highlights Quarter Data Yearly Data Summary P&L (US$mn) 4Q19 4Q18 YoY 3Q19 QoQ FY19 FY18 YTD YoY Revenues 702.8 782.4 -10.2% 699.4 0.5% 2,782.7 2,962.9 -6.1% COGS (604.0) (693.1) -12.9% (607.0) -0.5% (2,356.0) (2,321.6) 1.5% Gross Profit 98.8 89.3 10.7%
Slide 10: Indika Energy – Strong Cash Position
Indika Energy – Strong Cash Position Cash and Debt Breakdown as of 31 December 2019 US$ million 4) 1600.0 1,523.0 1400.0 361.1 1200.0 36.9 1000.0 800.0 703.01) 77.5 600.0 56.8 1,125.0 400.0 568.6 200.0 0.0 CASH DEBT Cash Fin. Assets Rest. Cash Bonds 2) Leases 4) Bank Loan 3) 1) PTRO: $84.7mn, MBSS:
Slide 11: Indika Energy – Sound Balance Sheet
Indika Energy – Sound Balance Sheet Cash Breakdown by Subsidiaries LTM Free Cash Flow US$ million US$ million HoldCo & Others Kideco Petrosea Tripatra MBSS 350 323.0 300 34.6 40 133.6 40.3 250 152.5 211.0 198.4 154.3 81.3 200 59.6 84.7 136.9 144.4 171.3 150 122.9 42 114.1 118.7 39.9 37.5 100 55 60.3
Slide 12: Operational Highlights Vs 2019 Corporate Guidance
Indika Energy’s Operational Highlights Vs 2019 Corporate Guidance 2019 CAPEX 2019 Budget FY19 % Operational Data Guidance Budget FY 2019 % KIDECO (US$M) (US$M) Production (MT) 34 34.3 100.9% Kideco 7.7 6.7 87.0% Strip Ratio (x) 6.3 6.3 100.0% Petrosea 177.2 58.3 32.9% Newcastle Benchmark ($/ton) 85
Slide 13: Indika Energy's 2020 Corporate Guidance
Indika Energy’s 2020 Corporate Guidance 2020 CAPEX 2020 Budget Operational Data Guidance Budget KIDECO (US$ million) Production (MT) 35.3 / 29.7* Kideco 10.0 Strip Ratio (x) 5.9x Petrosea 80.3 Newcastle Benchmark ($/ton) 73 Cash Cost x Royalty ($/ton) 30.5 MBSS 14.6 Overburden Volume (mBCM) 208.6 Tr
Slide 14: Our View and Strategy
Our View and Strategy Financial Operation Growth Focus Optimizing capital structure to Continued cost optimization across Increase exposure to non-coal obtain lower funding cost the organization business as diversification, including to explore any potential renewable energy Selective capita
Slide 15: Strengthen Balance Sheet with active liability management
Strengthen Balance Sheet with active liability management Lowering interest cost by buying back bonds / early debt repayment partially refinanced by bank loans with lower interest rate (Fixed 3.4% vs coupon of 6.375%) Net debt to EBITDA has declined from high 3.2x in 2016 to 1.9x as of Dec 2019
Slide 16: Group-wide cost saving and operational improvement initiatives
Group-wide cost saving and operational improvement initiatives Oil Brent Price US$/bbl Minerva Project - a technology based initiative, 80 using digitalization and data analysis. The initiative 74 70 69 69 is aimed to reduce cost (e.g fuel consumption), 63 improve efficiency and increase assets ut
Slide 17: Minerva Project: performance impact through digital mining adoption
Minerva Project: performance impact through innovative digital mining adoption ▪ Reduce number of trucks by ~10% Digital dispatch (brain of the – 61% reduction in hanging time mine) – 49% reduction in queueing time ▪ ~50% increase in daily production Real-time crew management ▪ Production increase o
Slide 18: Petrosea inducted into WEF's Global Lighthouse Network
Petrosea has been inducted into WEF's Global Lighthouse Network Industrial lighthouses are diversifying and digitizing beyond the four walls of the factory Petrosea is the only local company in Indonesia and Southeast Asia with this status 18
Slide 19: Indika Energy – Diversifying Beyond Coal
Indika Energy – Diversifying Beyond Coal • Transforming into an investment company with more diversified Indika Energy Revenue Breakdown holdings. • Less reliance on coal business, developing recurring business Non Coal : 24% Others and defensive commodity. Tripatra 3% • To explore any potential in
Slide 20: Diversification Investments – Fuel Storage Project
Diversification Investments – Fuel Storage Project Build and operate fuel storages exclusively for ExxonMobil Phase 1 Location : Balikpapan, Kariangau, East Kalimantan Project Company : PT Karingau Gapura Terminal Energy Total Project Cost : US$115million Funding Structure : US$75 million - bank loa
Slide 21: Diversification Investments – Gold Asset Project
Diversification Investments – Gold Asset Project A Strategic investment in Nusantara Resources Limited (ASX: NUS). Nusantara owned 100% PT Masmindo Dwi Area which has sole rights to exploit in Awak Mas Gold Project Location : South Sulawesi, 220 km from Makasar Potential Resources : 2 million onz Po
Slide 22: Awak Mas Gold Project – Investment Structure
Awak Mas Gold Project – Investment Structure Indika Energy Direct Ownership : 25% (1st) + 15% (2nd ) = 40% Indirect to Nusantara : 12.6% Total Ownership up to 52.6% 21% Project Activities 2 stage Stage 1 : during 2020 to reach Final Investment Decision Complete: FEED Detailed Design, permit for Tail
Slide 23: Our Green Initiatives
Our Green Initiatives To diversify investment with target 25% of core profit derived from non coal industry in the next 5 years Continue to explore renewable project in Indonesia Implementing a Good Mining Practice Recognition of Environment Management from Reg & Central Govt. Conducting nat
Slide 24: Our Sustainability
Our Sustainability Our sustainability programs and partnership efforts focus on education, health, and community empowerment and environment , conducted by Group and Subsidiaries level Educating Indonesia to make a real difference • Provide education for dropouts and economically challenged people.
Slide 25: Building national character and the spirit of national tolerance
Building national character and the spirit of national tolerance based on the values of Pancasila Indika Energy established Indika Foundation (Yayasan Indika Untuk Indonesia) in 2017 with two main focuses, namely to build national character and spread the spirit of tolerance, so that we can jointly
Slide 26: Governance
Governance Continuously implementing and improving good corporate governance Running businesses in a sound manner High Commitment on Commitment on Highly Ethical Implementing risk management, and internal Business Practice GCG Principles Complying with prevailing laws and regulations Prote
Slide 27: Thank You
INDIKA ENERAY THANK YOU 27
Slide 28: Appendix
INDIKA ENE 28
Slide 29: Indika Energy, Indonesia's leading fully integrated energy company
Indika Energy, Indonesia’s leading fully integrated energy company PT Indika Energy Tbk. 1 Energy Resources 2 Energy Services 3 Energy Infrastructure 4 Other Portfolios - Established since 1991 - Established since 1994 - Established since 2011 - 3rd largest coal producer - Integrated water c
Slide 30: Energy infrastructure
As a Group, Indika Energy creates synergy and offers comprehensive set of multi-sector expertise and competencies Synergy across the Group Example: IEG end-to-end competencies in coal value chain Identification / • Operational synergy from intra-Group cross-selling acquisition of assets resources op
Slide 31: Improving Subsidiary Results
Improving Subsidiary Results Petrosea MBSS Tripatra Cirebon Electric Power Total Backlog Total Backlog Total Backlog 660MW Power Plant $654.6M $75.4M $273.1M FY19 Net Income FY19 Net Income FY19 Net Income FY19 Net Income $31.2M $1.6M $16.9M $34.4M (20% Indika) FY19 EBITDA Margin FY19 EBITDA Margin
Slide 32: Indika Energy's Subsidiaries Backlog
Indika Energy’s Subsidiaries Backlog New Contract/ Remaining Adjustment Value Revenue Remaining Descriptions Contract Value Recognition Contract Value in 2019 Per 31 Dec 2018 Per 31 Dec 2019 Per 31 Dec 2019 Petrosea Contract mining 696.4 73.7 287.0 483.1 E&C 169.5 49.5 98.9 120.1 POSB 53.6 43.7 45.9
Slide 33: Indika Energy's Financial Highlights
Indika Energy’s Financial Highlights Revenues (USD mn) Gross Profit (USD mn) Operating Profit (USD mn) 3,500.0 641.2 600.0 2962.9 650 508.1 3,000.0 500.0 2,500.0 520 2079.9 426.7 400.0 2,000.0 390 289.5 300.0 1,500.0 1,097.3 1,098.8 260 200.0 1,000.0 775.2 122.9 100.0 130 88.3 88.7 34.1 500.0 (15.4)
Slide 34: Key Business and Credit Ratios
Indika Energy’s Key Business and Credit Ratios Adj EBITDA* (USD mn) & Adj EBITDA Margin (%) Gross Debt & Net Debt / Adj. EBITDA (x) Debt / Capital (%) EBITDA EBITDA Margin 6.0 65.0% 5.14.9 5.2 652.5 4.9 700.0 30.0% 5.0 59.9% 600.0 26.6% 60.0% 25.0% 4.0 3.5 56.7% 500.0 3.2 56.4% 20.1% 436.0 20.0% 400
Slide 35: Kideco – Leading Coal Producer in Indonesia
Kideco – Leading Coal Producer in Indonesia • Third largest coal producer in Indonesia • Environmental friendly thermal coal with ultra-low sulphur of 0.1% and low ash of (2.1% to 4.9%) • Attractive location with well-built infrastructure, and integrated value chain within the group, allowing for st
Slide 36: Kideco's Financial Highlights
Kideco’s Financial Highlights Revenues (USD mn) Gross Profit (USD mn) Operating Profit (USD mn) 600 500 469.4 527.8 450.3 2,000 1,802.2 492.1 1,658.2 1,633.0 500 1,574.2 400 1,600 400 1,247.8 300 1,200 253.8 300 281.3 248.5 208.2 200 155.4 800 200 180.0 400 100 100 0 0 0 2015 2016 2017 2018 2019 201
Slide 37: Kideco's Operational Highlights
Kideco’s Operational Highlights Cash Cost Breakdown Coal Production (mn ton) Coal Sales (mn ton) Labor Others 45 45 Freight 0.9% 1.3% 39.0 38.6 4.8% O/H 34.0 34.3 34.1 34.9 32.1 32.0 32.5 31.5 7.1% Material 30 30 8.2% Gov. 15 15 Royalty Contract Mining + 16.3% Rental 61.3% 0 0 2015 2016 2017 2018 20
Slide 38: Kideco's Operational Highlights
Kideco’s Operational Highlights Quarter Data Yearly Data Summary P&L (US$mn) 4Q19 4Q18 YoY 3Q19 QoQ FY19 FY18 YoY Sales 379.8 393.6 -3.5% 384.3 -1.2% 1574.2 1802.2 -12.7% Gross profit 48.2 62.0 -22.2% 39.9 21.0% 248.3 492.1 -49.5% Operating profit 39.2 52.8 -25.8% 33.1 18.3% 211.1 450.3 -53.1% Net i
Slide 39: Peer Comparison (9M19 Data)
Peer Comparison (9M19 Data) PRODUCTION ANNUAL (MT) STRIP RATIO (x) CASH COSTS ex Royalty (US$/t) 12.0 11.3 50.0 46.6 60 55 45.0 10.0 50 40.0 36.5 8.0 35.0 31.2 40 29.8 34 6.4 30.0 28.4 6.0 25.0 30 24.3 4.8 4.6 20.0 20 4.0 15.0 10.0 10 2.0 5.0 0 0.0 0.0 ADRO INDY * PTBA ITMG ADRO INDY * PTBA ITMG ADR
Slide 40: Petrosea's Financial Highlights (1)
Petrosea’s Financial Highlights (1) * Revenues (USD mn) Gross Profit (USD mn) Overburden Removal (mbcm) 600 100 140 121.1 123.5 476.4 81.1 500 465.7 80 73.1 105 97.6 400 313.5 60 300 45.7 66.0 70 57.3 206.8 209.4 40 34.9 200 29.1 20 35 100 0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015
Slide 41: Petrosea's Financial Highlights (2)
Petrosea’s Financial Highlights (2) * Revenues Breakdown by Value FY19: USD476.4 mn FY18: USD441.5 mn POSB Other Other 5.0% 9.4% 7.3% POSB 9.6% E&C E&C 27.8% Contract Contract 20.8% Mining Mining 60.2% 60.0% * Cost Structure FY19: USD395.3 mn FY18: USD370.3 mn Rental Material Other Material Other 8.
Slide 42: Tripatra's Financial Highlights (1)
Tripatra’s Financial Highlights (1) Revenue (USD mn) Gross Profit (USD mn) Net Profit* (USD mn) 500 475.9 462.3 60 40 45.0 28.4 375 45 41.7 25.8 37.5 22.8 274.8 278.3 34.2 24 16.9 250 217.5 30 18.9 125 15 8 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 -8 -5.5 Income
Slide 43: Tripatra's Financial Highlights (2)
Tripatra’s Financial Highlights (2) * Revenues Breakdown by Value FY19: USD462.3 mn FY18: USD184.8 mn TPE 7.4% TPE 12.2% TPEC TPEC 92.6% 87.8% Cost Structure FY19: USD424.8 mn FY18: USD148.0 mn Others Rental Others 6.0% Rental 7.7% 3.7% 5.5% Handling 5.7% Handling Material 7.7% Salary Material 36.6%
Slide 44: MBSS' Financial Highlights (1)
MBSS’ Financial Highlights (1) * Revenues (USD mn) Gross Profit (USD mn) EBITDA (USD mn) 100 20 18.4 35 89.8 29.5 77.8 30 27.7 75.4 16 15.1 75 65.8 68.5 25 23.7 12 20 18.4 50 14.8 15 8 4.9 10 25 4 2.5 5 0.9 0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Net Profit (
Slide 45: MBSS' Financial Highlights (2)
MBSS’ Financial Highlights (2) * Revenues Breakdown FY19: USD77.8mn FY18: USD75.4mn FC FC 29% 26% Barging Barging 71% 74% *Cost Structure FY19: USD59.3 mn FY18: USD70.4 mn Charter Charter 0.0% 3% Others Others 14% Spareparts 13.0% Spareparts 7.2% 8% Depreciation Port charges Depreciation 34% 5.9% 39
Slide 46: Indika Resources' Financial Highlights
Indika Resources’ Financial Highlights Revenues (USD mn) Cost of Good Sold (USD mn) Gross Profit (USD mn) 450.0 400.0 40.0 395.6 359.4 36.2 400.0 350.0 35.0 306.5 300.8 350.0 319.8 322.1 300.0 30.0 300.0 250.0 221.5 25.0 21.3 239.0 209.3 250.0 216.7 200.0 20.0 17.5 200.0 150.0 15.0 13.3 150.0 100.0
Slide 47: Indika Resources' Financial Highlights (2)
Indika Resources’ Financial Highlights (2) * Revenues Breakdown FY19: USD322.1 mn FY18: USD395.6 mn MUTU MUTU 26.6% 38.8% Coal Trading 61.2% Coal Trading 73.4% MUTU ASP (USD/ton) * MUTU Cash Cost (USD/ton) 100 120.0 87.6 108.3 78.3 76.3 100.0 94.3 80 66.5 80.0 73.9 60 63.5 60.0 40 40.0 20 20.0 0 - 2
Slide 48: Awards / Recognition in 2019
Awards / Recognition in 2019 Kideco Assessment of Environment Management by Government • Ranked 1st Most Honored Company (in basic material sector) – from Institutional Investor o Ranked 1st for Fixed Income Executive Team – High Yield o Ranked 1st in Best Use of Debt – High Yield o Ranked 3rd in Be
Slide 49: Notes Outstanding
Notes Outstanding Ba 3 Outlook Stable (as of Feb. 2020) The Senior BB - / Stable Outlook Notes are rated: International Ratings (as of Dec. 2018) A + / Stable Outlook National Ratings (as of Dec. 2018) Indo Energy Finance II B.V. Indo Energy Capital II Pte. Ltd. Indo Energy Capital III Pte. Ltd. USD