PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — Adaro Energy — Morgan Stanley 8th Annual Asia Pacific Summit 2009
61 slides from PT Alamtri Resources Indonesia Tbk's conference presentation, Nov 18, 2009
Slide 1: Adaro Energy
Adaro Energy Morgan Stanley 8th Annual Asia Pacific Summit 18-20 November, 2009 Singapore 0
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PT Adaro Energy (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
Slide 3: Quick Update, Company Overview, Key Investment Highlights
Quick Update Company Overview Key Investment Highlights 2
Slide 4: Quick Update
Quick Update 9 3Q09/9M09 results were good and we are on track to achieve consensus 9 We expect to produce around 41mt in 2009 9 US$800M bonds issued in October 2009 with semi-annual coupon of 7.625% 9 First ever 10-year corporate bond from Indonesia after the Asian Financial Crisis 9 Largest 10-yea
Slide 5: FY 2008 and 9M09 Operational Results
Quick Update FY 2008 and 9M09 Operational Results Consolidated Production Volume and Sales Units 9M08 9M09 % change Production MT 28.75 28.47 -1% Sales MT 30.94 28.98 -6% Units FY07 FY08 % change Production MT 36.08 38.52 7% Sales MT 37.55 41.1 9% Soft demand in 1H09 kept 9M09 results flat, however
Slide 6: Adaro Energy's Financial Performance
Quick Update Adaro Energy’s Financial Performance FY08 FY07 % Change 9M09 9M08 % Change Net Revenue (Rp bn) 18,093 11,593 56% 20,014 12,386 62% Cost of Revenue (Rp bn) 13,149 9,089 45% 11,598 9,237 26% Operating Income (Rp bn) 4,212 2,253 87% 7,576 2,719 179% Net Income (Rp bn) 887 89 897% 3,515 686
Slide 7: Quick Update, Company Overview, Key Investment Highlights
Quick Update Company Overview Key Investment Highlights 6
Slide 8: Adaro Energy Overview
Company Adaro Energy Overview 9Adaro Indonesia: Operationally strong and large 9 Unparalleled track record of annual growth every year since 1992 9Second largest Indonesian exporter, large reserves, large mine 9Largest supplier to domestic market 9 Amongst the lowest cost producers 9 Arguably create
Slide 9: Adaro Energy Overview: Growth Plans
Company Adaro Energy Overview 9Realistic growth plans, 80mt in 5 years 9 Growth not constrained by infrastructure 9 Outlook for power/coal demand, especially in emerging markets of Asia is good 9Better access to capital 9 US$800m bond was priced at near-investment grade levels 9 US$500m bank financi
Slide 10: Adaro Energy's Vision
Company Adaro Energy’s Vision Overview To be the largest and most efficient integrated coal mining and energy company in South East Asia 9
Slide 11: Adaro Energy at a Glance
Company Adaro Energy at a Glance Overview Production/Sales 45mt capacity 38.5mt production in 2008 (28.5mt in 9M09) 10 Years CAGR of 13.4% Envirocoal Sub bituminous, moderate CV, high moisture coal, ultra-low sulfur, ash and NoX emissions Customers More than 40 customers in 17 countries Substantiall
Slide 12: Milestones: From pre-LBO, LBO, to Growth
Company Milestones: From pre-LBO, LBO, to Growth Overview Pre-LBO LBO Growth 1982 - …2002 2005 2006 2007 2008 2009 1982: Coal Cooperation Infrastructure First ratings upgrade by Moody’s Agreement signed developments post to Ba2 LBO 1989-1996: change in Adaro Energy IPO on IDX, raising shar
Slide 13: Vertical Integration for Better Efficiency
Company Vertical Integration for Better Efficiency Overview PIT TO PORT INTEGRATION Listed on IDX Market cap: Rp 54.7trn (US$5.8 bn) PT Adaro Energy Tbk as at 13 November 09 Adaro Energy 9M09: Revenue: Rp20,014 billion 100% EBITDA: Rp8,495 billion Alam Tri Abadi Adaro Indonesia 9M09: Reven
Slide 14: Adaro Energy's Integrated Subsidiaries
Company Adaro Energy’s Integrated Subsidiaries Overview PT Adaro Indonesia (“Adaro”) – Mining 9Adaro’s main coal mining subsidiary 9Largest single-mine coal producer in the southern hemisphere by production volume 9One of the top five thermal coal exporters globally based on tonnes shipped 9One of t
Slide 15: Adaro Energy's Integrated Subsidiaries
Company Adaro Energy’s Integrated Subsidiaries Overview PT Maritime Barito Perkasa (“MBP”) – Barging/Ship Loading 9MBP, as well as PT Harapan Bahtera Internusa (“HBI”) and Orchard Maritime Logistics Pte. Ltd (“OML”) are all majority owned by Adaro Energy 9Together operate 24 barges and 25 tugboats t
Slide 16: Adaro Energy's Integrated Subsidiaries
Company Adaro Energy’s Integrated Subsidiaries Overview PT Indonesia Bulk Terminal (“IBT”) – Coal Terminal Services 9Established in 1990 to develop, operate and manage a public port with dry and liquid bulk terminal facilities at Pulau Laut 9Designed and built to provide premium coal blending and ha
Slide 17: Operations map
Balikpapan Company Overview East Kalimantan Central Kalimantan Tanjung Kelanis Barge River Terminal PT Adaro Indonesia River Barito Banjarmasin South Kalimantan Taboneo Anchorage Domestic and Direct Barging South Pulau Laut Coal Terminal Coal and Fuel Storage Handling Port 16 16
Slide 18: PT Adaro Indonesia - Mining
Company PT Adaro Indonesia - Mining Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Production 2008: 38.5 Mt Capacity 45 Mt per annum Coal type: Envirocoal, sub-bituminous, medium calorific value, ultra-low pollutants Customers: More than 40 customer
Slide 19: Largest single site coal mine in the southern hemisphere
Company Largest single site coal mine in the Overview southern hemisphere Heavy Equipment Capacity: 45 million tonnes Operators: PAMA 42% SIS 27% BUMA 19% RAJ 11% 18
Slide 20: PT Saptaindra Sejati (SIS)
Company PT Saptaindra Sejati (“SIS”) Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Production 2008: 11.4 Mt of coal mining and 85.8 Mbcm of OB removal Capacity 15.5 Mt coal mining and 110.9 Mbcm of OB removal Customers 6 customers including PT Adar
Slide 21: Coal is loaded on the trailer from run-of-mine stockpiles
Company Coal is loaded on the trailer by backhoes Overview or wheel-loaders from run-of-mine stockpiles 20
Slide 22: Dedicated Coal Hauling Road
Company Dedicated Coal Hauling Road Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Hauling Equipment Capacity: 45 million tonnes Hauling Road Capacity: 80 million tonnes Hauling Road Distance: 80 km Hauling Road Vehicles: 200 road trains Operators:
Slide 23: Kelanis: One of World's Largest Inland Bulk Terminals
Kelanis: One of World’s Largest Inland Company Overview Bulk Terminals Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Crushing Capacity: •6 crushers with total capacity of 7,500 tph •Recent installation of additional crushing system increased capacity to 55
Slide 24: PT Maritime Barito Perkasa (MBP)
Company PT Maritime Barito Perkasa (“MBP”) Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port MBP/HPI Fleet: Together they operate 24 barges and 25 tugboats, as well as 4 floating cranes In 9M09 MBP and HBI transported 19% of Adaro’s coal production dow
Slide 25: PT Sarana Daya Mandiri (SDM)
Company PT Sarana Daya Mandiri (“SDM”) Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Adaro’s Innovative Solution to River Bottleneck: - Adaro formed a joint venture, SDM, with central government port authority and South Kalimantan government - SDM
Slide 26: Capacity of the Barito River has increased to 200mt per year
Capacity of the Barito River has increased Company Overview to 200mt per year Barges waiting at crossing from old channel Five barges towing Adaro Indonesia’s coal passing through new channel Capacity : 200 Mt per annum (old 60 Mt) Length : 15,000 m (old channel:14,000 m) Base width : 60 m (old: 138
Slide 27: PT Maritime Barito Perkasa (MBP)
Company PT Maritime Barito Perkasa (“MBP”) Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port MBP Capacity: 60,000 tonnes per day Floating crane: 4 units MBP handled 10.6mt and 4.6mt of coal in 2008 and 1H09 respectively OML Floating Cranes 26
Slide 28: Vessels with their own gear at the Taboneo anchorage
Company Vessels with their own gear and grabs at the Taboneo Overview anchorage Total Taboneo Loading Capacity: •100,000 tonnes per day •Floating crane: 5 units •FLF: 1 unit Offshore Loading Operators: 2005 2009 MBP 100% 55% IMC - 26% MBSS - 19% 27
Slide 29: PT Indonesia Bulk Terminal (IBT)
Company PT Indonesia Bulk Terminal (“IBT”) Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Throughput: 2008: 8.1 Mt Capacity: 12 Mt coal per annum, fuel tank capacity of 78,000 kilolitres Facilities: • 2 large berths for 2 barges of up to 15,000 tonn
Slide 30: Vertically Integrated from Pit to Port
Company Vertically Integrated from Pit to Port Overview Strategy is centred on improving control and efficiency of the supply chain Kelanis Hauling Road 80 km, 60 Mt Strong control Crushing Plant, 55 Mt Medium control Controlling stake held by the Group PT Adaro Indonesia Coal Concession Owner OML C
Slide 31: Quick Update, Company Overview, Key Investment Highlights
Quick Update Company Overview Key Investment Highlights 30
Slide 32: Key Investment Highlights
Key Investment Highlights 1 Robust industry prospects 2 Good track record of growth, large reserves to support continued growth 3 Among the world’s largest and lowest cost, vertically integrated producers 4 Highly differentiated product – EnvirocoalTM 5 Diversified & loyal customer base and high ear
Slide 33: Robust Industry Prospects
Key Investment 1 Robust Industry Prospects Highlights Seaborne thermal coal demand expected to grow by 16% from 2008 to 2014, with over 65% of growth expected to come from China and India China: Seaborne thermal coal India: Seaborne thermal coal Indonesia: Production growth demand demand (Mt) (Mt) (
Slide 34: Demonstrated Track Record of Growth
Key Investment 2 Demonstrated Track Record of Growth Highlights CAGR of 13.4% LBO of Adaro from 1998-2008 Adaro begins Start of Asian Law 41 on Bali Bomb Tsunami Start of US commercial Financial Crisis Forestry Passed Financial Crisis operations 45 41 40 38.5 36.1 34.4 35 30 26.7 24.3 25 22.5 MT 20.
Slide 35: Large Reserve Base
Key Investment 2 Large Reserve Base Highlights Reserves and resources evolution Adaro Indonesia’s reserves growth (Mt) (Mt) 3,483 2,841 2,803 930 +618 2,368 2,553 1,865 2,427 (136) 1,920 448 938 930 448 414 2005 2006 2007 2008 2005 2005-08 Addition 2008 Production Reserves (in situ) Resources Throug
Slide 36: Among the World's Largest Producers
Key Investment 3 Among the World’s Largest Producers… Highlights Global top 5 thermal coal exporters (2008) (% market share) 7.7% 5.4% 4.8% 4.5% 4.4% Xstrata KPC Anglo American BHP Adaro Indonesia Source: Company filings Indonesian top 5 domestic suppliers (2008) (% market share) 20.1% 16.5% 11.7% 1
Slide 37: Among Lowest Cost Integrated Producers
Key Investment 3 Among Lowest Cost Integrated Producers Highlights Low Cost Producer Mine characteristics, operating strategy and location enable Adaro to produce coal at attractive cash cost levels. 2005 2006 2007 2008 Stripping Ratio 3.3 3.57 4.25 4.25 Adaro Cash Cost (incl. Royalty) Increase du
Slide 38: Cost Reduction Initiatives
Key Investment 3 Cost Reduction Initiatives Highlights 9 Control of a part of each critical part of the coal supply chain 9 Control of barging and ship loading company will help manage shipments better and minimize demurrage costs 9 Centralized fuel procurement and selective fuel price hedging to he
Slide 39: Highly Differentiated Product – Envirocoal
Key Investment 4 Highly Differentiated Product – EnvirocoalTM Highlights Coal 25 brands within global export trade Lowest ash content among coals produced for global export trade, providing consumers with significant cost savings 20 ASH % (adb) Ash 15 Content Blending Envirocoal with higher ash
Slide 40: Global Leader in Growing Market of Environmental Coal
5 Global Leader in Growing International Key Investment Highlights Market of ‘Environmental Coal’ Around 84% of customers by volume in 1H 2009 were power generation companies Spain United Kingdom Japan Puentes and Meirama power Sales to power plants switching to Allows power stations to save station
Slide 41: Diversified and Loyal Customer Base and High Earnings Visibility
5 Diversified and Loyal Customer Base and Key Investment Highlights High Earnings Visibility Customer type by volume (9M09) Approximately 40 customers in 17 13% Pow er generation countries 6% Cement – Substantially all have relationship of > 5 years Other – ~50% have relationship of > 9 years 81%
Slide 42: Strong Financial Performance
Key Investment 6 Strong Financial Performance Highlights Net Sales (Rp bn) Net debt / equity (x) (FYE 31 December) (As at end) .2% G R: 36 A CA 006A-08 3.0x 2 18,093 20,014 9,748 11,593 12,386 0.6x 0.3x n.m. (1) 2006 2007 2008 9M09 2006 2007 2008 9M08 9M09 (1) In 2006, Adaro Energy had negative equi
Slide 43: Consistently Improving Financial Profile since LBO
6 Consistently Improving Financial Key Investment Highlights Profile since LBO Adaro Indonesia has a track record of no default, rescheduling of debts nor breaching its financial covenants LBO: June 2005 December 2005 23 March 2007 December 2007 December 2008 US$570 million US$200 million US$1
Slide 44: Good Access To Capital
Key Investment 6 Good Access To Capital Highlights 9 US$800 million 10 year, non call 5, Reg S/144A, Guaranteed Senior Notes • 7.625% coupon, semi-annual (431bp over 10 year Treasury) • No restriction on dividends • Quasi-investment-grade covenants • If one notch rating upgrade to investment grade,
Slide 45: Strong Capital Structure
Key Investment 6 Strong Capital Structure Highlights Facility Security Outstanding Maturity (US$ MIlion) PT Adaro Indonesia Facilities Guaranteed Senior Notes Unsecured, Guaranteed by Company 800.0 October 2019 US$500 Million Amortizing Unsecured, Guaranteed by Company Undrawn October 2014 Revolving
Slide 46: Committed to Corporate Social Responsibility
Key Investment 7 Committed to Corporate Social Responsibility Highlights Corporate Social Responsibility commenced with operations in 1992. Currently Adaro Indonesia and its sub-contractors employ over 15,000 personnel, in excess of 70% are of Kalimantan origin Mobile cataract project which commence
Slide 47: CSR Commitment has been Recognised
Key Investment 7 CSR Commitment has been Recognised Highlights Indonesian Corporate Social Responsibility Award 2008 First rank for Social and Environment and third rank for Economic Presented by Minister of Social Affairs Proper Award for the year 2006-2008 Adaro Indonesia received the green level
Slide 48: Better than Average Safety Record
Key Investment 7 Better than Average Safety Record Highlights 45 1.6 40 1.39 1.33 1.4 1.32 35 38.5 1.2 34.4 36.1 30 Production (mt) 1 25 Injury 26.7 0.8 20 24.3 0.69 0.50 0.6 15 0.4 10 5 0.2 5 2 1 2 0 0 0 2004 2005 2006 2007 2008 Production Fatal LTIFR Since 2007, Adaro and its contractors have work
Slide 49: Reputable and Supportive Shareholders, Experienced Management Team
8 Reputable and Supportive Shareholders, Key Investment Highlights Experienced Management Team Controlling Shareholders • Edwin Soeryadjaya • Teddy Rachmat • Boy Garibaldi Thohir together hold 65% • Benny Subianto • Sandiaga Uno Strength of senior management team More than 120 years of Combined 60 y
Slide 50: Growth to Continue
Key Investment 9 Growth to Continue Highlights Key infrastructure 2005 2009 2014 Mine production capacity 27 Mt 45 Mt 80 Mt Coal haulage – trucks 30 Mt 60 Mt 60 Mt Overland conveyor – – 40 Mt Transhipment capacity – Taboneo 15 Mt 30 Mt 55 Mt Direct barging to domestic customers 8 Mt 13 Mt 25 Mt Barg
Slide 51: Not Just talk….Current Project Status
Key Investment 9 Not Just talk….Current Project Status Highlights Target Background Current status Project costs completion Mine mouth power plants planned to be set up by MSW to EPC & Equipment supplier 2011-2012 US$160m Lower Costs: support future power requirement for overland conveyor has be
Slide 52: Key Investment Highlights
Key Investment Highlights 1 Robust industry prospects 2 Good track record of growth, large reserves to support continued growth 3 Among the world’s largest and lowest cost, vertically integrated producers 4 Highly differentiated product – EnvirocoalTM 5 Diversified & loyal customer base and high ear
Slide 53: Building a Trusting Relationship
Building a Trusting Relationship We hope you will contact our IR department after this meeting to begin an ongoing dialogue towards building an understanding of how we will achieve our vision of becoming the largest and most efficient integrated mining and energy company in Southeast Asia For more i
Slide 54: Thank you
Thank you adaro ey 52 envirocoal
Slide 55: Appendices
Appendices adaro ey ss envirocoal
Slide 56: Board of Directors: Complimentary, Experienced, Competent
Board of Directors: Complimentary, Experienced, Competent Boy Garibaldi Thohir • President Director of PT Adaro Energy Tbk, and related companies. President Director • Owner and operator of coal mines in Sumatra since 1992 • Held past positions as a business analyst at A.T. Kearney (1995-1996) Ario
Slide 57: Adaro Indonesia: Pricing likely tomorrow; book 6x oversubscribed
14-Oct-09 Adaro Indonesia: Pricing likely tomorrow; guidance around 8%, +/- 25bps, with book 6x oversubscribed during Wednesday Asia session Bookbuilding for Adaro Indoesia’s 10-year non-call five, unsecured bond offering is expected to close Thursday [15 October] during the Hong Kong session, with
Slide 58: Adaro Indonesia: Pricing likely tomorrow (continued)
14-Oct-09 Adaro Indonesia: Pricing likely tomorrow; guidance around 8%, +/- 25bps, with book 6x oversubscribed during Wednesday Asia session (continued) While many investors are keen to pick up emerging market credits they are loath to buy into bonds from companies whose controlling shareholders hav
Slide 59: Strong international demand for Adaro's $800 million high-yield bond
Strong international demand for Adaro's $800 million high-yield bond By Rupert Walker | 19 October 2009 PT Adaro, Indonesia's second biggest coal miner, raises $800 million through the sale of 10-year notes and pays just 7.75% thanks to strong support from global high-yield funds. PT Adaro, Indonesi
Slide 60: Strong international demand for Adaro's $800 million bond (continued)
Strong international demand for Adaro's $800 million high-yield bond By Rupert Walker | 19 October 2009 [CONTINUED] One Hong Kong-based credit analyst said Adaro's deal was "not especially cheap by rating", but that, "the market seems to be pricing for perfection and the search for yield continues,
Slide 61: Strong international demand for Adaro's $800 million bond (continued)
Strong international demand for Adaro's $800 million high-yield bond By Rupert Walker | 19 October 2009 [CONTINUED] The Hong Kong analyst conceded the price was fair on the basis of a near 250bp yield premium over the Indonesia 2019 sovereign issue, which compares with spread pick-up of just 150bp p
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