PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — Adaro Energy — Non-Deal Roadshow (March 2010)
64 slides from PT Alamtri Resources Indonesia Tbk's roadshow presentation, Mar 9, 2010
Slide 1: On Track to Build a Bigger and Better Adaro Energy
Adaro Energy On Track to Build a Bigger and Better Adaro Energy UBS NDR ADRO USA - London 4 – 9 March 2010 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 Adaro Energy’s production volume increased 5.5% to 40.6 Mt in FY09. 9 Adaro Energy’s sales volume increased 0.8% to 41.4 Mt in FY09. 9 Demand for Envirocoal showed steady recovery from the low in 1H09, signaling a robust outlook for the year ahead especially from key growth markets. 9
Slide 5: FY09 and 4Q09 Operational Results
Quick Update FY09 and 4Q09 Operational Results Consolidated Production Volume and Sales Units 4Q08 4Q09 % change Production MT 9.76 12.13 24.3% Sales MT 10.16 12.45 22.6% Units FY08 FY09 % change Production MT 38.5 40.6 5.5% Sales MT 41.1 41.4 0.8% Adaro finished the year strongly despite the start
Slide 6: Strong Financial Performance
Quick Update Strong 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% 3,515 686 412% EB
Slide 7: Quick Update; Company Overview; Key Investment Highlights
Quick Update Company Overview Key Investment Highlights 6
Slide 8: Key Messages
Company Key Messages Overview 9In 2010 we will focus on building our base for a more competitive future 9 We will continue to execute our long term strategy of annual organic growth, increased integration and efficiency improvements 9 We will focus on project execution, specifically the construction
Slide 9: 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 8
Slide 10: Adaro Energy at a Glance
Company Adaro Energy at a Glance Overview Production/Sales 48Mt capacity 40.6Mt production in 2009 (38.5mt in 2008) 10 Years CAGR of 11.6% Envirocoal Sub bituminous, moderate CV, high moisture coal, ultra-low sulfur, ash and NoX emissions Customers Substantially all blue-chip power utilities Pricing
Slide 11: Operating Subsidiaries to Increase Value Creation
Company Operating Subsidiaries to Increase Value Creation Overview PIT TO PORT INTEGRATION Listed on IDX in July 2008 PT Adaro Energy Tbk Adaro Energy 9M09: Revenue: Rp20,014 billion EBITDA: Rp8,495 billion 100% Alam Tri Abadi Adaro Indonesia 9M09: Revenue: Rp18,620 billion EBITDA: Rp6,995
Slide 12: Location of Operations
Balikpapan Company Overview East Kalimantan Central Kalimantan Location of Operations 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
Slide 13: PT Adaro Indonesia - Mining
Company PT Adaro Indonesia - Mining Overview 9Adaro’s main coal mining subsidiary 9Largest single-mine coal producer in the southern hemisphere by production volume - Coal type : Envirocoal, sub-bituminous, medium calorific value, ultra-low pollutants - Resources: 3,484 Mt (JORC Compliant) - Locatio
Slide 14: PT Adaro Indonesia - Mining
Company PT Adaro Indonesia - Mining Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port Tutupan Deposit Wara Deposit Reserves (Mt) Proven Probable Total Deposit: Tutupan 418 167 585 Wara 212 92 304 Total 630 259 889 13
Slide 15: PT Saptaindra Sejati (SIS) – Mining Contracting
Company PT Saptaindra Sejati (“SIS”) – Mining Contracting Overview 9Adaro’s mining operations are conducted by four mining contractors including SIS a member of Adaro Energy 9SIS is subject to a multi-year contract with Adaro Indonesia to undertake overburden removal and transportation, coal extract
Slide 16: PT Saptaindra Sejati (SIS) – Mining Contracting
Company PT Saptaindra Sejati (“SIS”) – Mining Contracting Overview Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port 15
Slide 17: Coal is loaded on the trailer by backhoes or wheel-loaders
Company Coal is loaded on the trailer by backhoes Overview or wheel-loaders from run-of-mine stockpiles FY09 Contractors: PAMA 43% SIS 26% BUMA 19% RAJ 12% 16
Slide 18: 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: 60 million tonnes Hauling Road Capacity: 80 million tonnes Hauling Road Distance: 75 km Hauling Road Vehicles: 200 road trains FY09 Contra
Slide 19: 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 5
Slide 20: PT Maritime Barito Perkasa (MBP) – Barging
PT Maritime Barito Perkasa (“MBP”) – Company Overview Barging 9 MBP, PT Harapan Bahtera Internusa (“HBI”), and Orchard Maritime Logistics Pte. Ltd (“OML”), all majority owned by Adaro Energy 9 MBP focuses on services for Adaro Indonesia 9 HBI handles non Adaro business 9 OML provides barging service
Slide 21: PT Maritime Barito Perkasa (MBP) – Barging
PT Maritime Barito Perkasa (“MBP”) – Company Overview Barging Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port 20
Slide 22: PT Sarana Daya Mandiri (SDM) – Dredging/Water Tolling
PT Sarana Daya Mandiri (“SDM”) – Company Overview Dredging/Water Tolling 9 SDM is based in Banjarmasin, South Kalimantan 9 Silt was dredged from the river to create a wider and deeper access channel that allows for 24-hour navigation as well as two-way traffic 9 The de-bottlenecking provided by the
Slide 23: PT Sarana Daya Mandiri (SDM) – Dredging/Water Tolling
PT Sarana Daya Mandiri (“SDM”) – Company Overview Dredging/Water Tolling 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 Kal
Slide 24: 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 : 100 m (old: 60
Slide 25: PT Maritime Barito Perkasa (MBP) – Shiploading
PT Maritime Barito Perkasa (“MBP”) – Company Overview Shiploading Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port FY09: Total Coal Loaded: 11.4 Mt - 7.6% increase YoY - 99% of MBP’s volume was Adaro’s MBP Floating coal - MBP handled 51% Cranes of Adaro’s open
Slide 26: PT Indonesia Bulk Terminal (IBT) – Coal Terminal Services
PT Indonesia Bulk Terminal (“IBT”) – Company Overview Coal Terminal Services 9 Established in 1990 to develop, operate and manage a public port with dry and liquid bulk terminal facilities at Pulau Laut 9 Designed and built to provide premium coal blending and handling terminal services, and now, wi
Slide 27: PT Indonesia Bulk Terminal (IBT) – Coal Terminal Services
PT Indonesia Bulk Terminal (“IBT”) – Company Overview Coal Terminal Services Coal Reserves Coal Mining Coal Hauling Coal Crushing Coal Barging Coal Loading Coal Port 26
Slide 28: Coaltrade Services International Pte Ltd – Marketing
Coaltrade Services International Pte Ltd – Company Overview Marketing 9 Coaltrade was established in 2000 in Singapore to participate in the global trade of thermal coal 9 Principal activities are trading of thermal coal, acting as agents for both coal producers and potentially consumers 9 Provides
Slide 29: 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 30: Quick Update; Company Overview; Key Investment Highlights
Quick Update Company Overview Key Investment Highlights 29
Slide 31: 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 32: Robust Industry Prospects – 2010 General Outlook
1 Robust Industry Prospects Key Investment Highlights 2010 General Outlook 9 Surging thermal coal imports into China, strong Indian demand, forecast power generating capacity increases in Vietnam, Indonesia and other parts of Asia paint strong demand for thermal coal in foreseeable future 9 Strong l
Slide 33: 2010 General Outlook (Cont'd): Coal Prices
1 Robust Industry Prospects Key Investment Highlights 2010 General Outlook (Cont’d) 2002 2003 2004 2005 2006 2007 2008 2009 2010 Richards Bay FOB Average 25.59 30.73 54.34 46.21 50.85 62.77 120.63 64.38 85.61 Newcastle FOB Average 25.27 26.30 53.90 47.35 49.03 65.98 128.83 71.89 94.75 US$/tonne Sour
Slide 34: 2010 General Outlook (Cont'd): Coal vs Oil
1 Robust Industry Prospects Key Investment Highlights 2010 General Outlook (Cont’d) In US$ Source: Bloomberg, Global Coal Coal prices have rebounded from its lows a year ago, tracking the increase in Oil prices. Coal prices still remain in the territory of 20-25% 33 of oil on energy equivalent basis
Slide 35: Track Record of Production Growth Continues
2 Track Record of Production Growth Continues… Key Investment Highlights CAGR of 11% since LBO Another Record Breaking Year – Adaro’s production crosses 40 million ton mark 2005 - 09 CAGR: 11% Bali Bomb Tsunami Start of US Sales in Sales in Increase/ Financial Crisis Period FY08 FY09 Decrease LBO of
Slide 36: Large Reserve Base
Key Investment 2 Large Reserve Base Highlights Reserves and resources evolution Adaro Indonesia’s reserves growth (Mt) (Mt) 3,483 3,483 2,803 +618 889 2,841 3,483 3,483 448 (177) 2,368 2,803 2,841 1,920 2005 2005-09 Addition 2009 Production 938 930 889 448 414 2005 2006 2007 2008 2009 Reserves Resou
Slide 37: 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 38: 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 2009 Stripping Ratio 3.3 3.57 4.25 4.25 5 Adaro Cash Cost (incl. Royalty) Incr
Slide 39: 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 40: 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 41: Global Leader in Growing International Market of 'Environmental Coal'
5 Global Leader in Growing International Key Investment Highlights Market of ‘Environmental Coal’ Around 81% of customers by volume in 9M09 were power generation companies Spain United Kingdom Japan Puentes and Meirama power Sales to power plants switching to Allows power stations to save stations b
Slide 42: 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) Loyal long term customers 13% Pow er generation – Substantially all have relationship of 6% Cement > 5 years – ~50% have relationship of > 9 years Other Average length of c
Slide 43: 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 44: 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 December 2009 US$570 US$200 US$190
Slide 45: Good Access To Capital
Key Investment 6 Good Access To Capital Highlights 9 US$800 million 10 year, non call 5, Reg S/144A, Guaranteed Senior Notes • 7.625% coupon, semi-annual (431bp over 10 year Treasury) • No restriction on dividends • Quasi-investment-grade covenants • If one notch rating upgrade to investment grade,
Slide 46: Strong Capital Structure
Key Investment 6 Strong Capital Structure Highlights Facility Security Outstanding Maturity (US$ Million) 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 Revolvin
Slide 47: 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 48: 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 49: Better than Average Safety Record
Key Investment 7 Better than Average Safety Record Highlights 45 1.4 40.6 40 38.5 36.1 1.2 34.4 35 1 30 Production (Mt) 26.7 25 0.8 LTIFR 20 0.6 15 0.4 10 0.2 Production 5 2 2 1 0 0 Fatal 0 0 LTIFR 2005 2006 2007 2008 2009 48
Slide 50: 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 51: Growth to Continue
Key Investment 9 Growth to Continue Highlights Key infrastructure 2005 2009 2014 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 Barging to transhipment / IBT 19 Mt 32 Mt 55 Mt
Slide 52: 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 Construction work in progress. 2011-2012 US$160m MSW to support future power requirement for Appx 15% of work completed over
Slide 53: Projects Focus
Key Investment 9 Projects Focus Highlights Overland Conveyor (OLC) OVERVIEW: 9 Total investment is around US$ 240 million which will be financed entirely by the proceeds of Adaro’s US$800Mn 10-year bonds issued in October 2009 9 The distance of the OLC will be 37.8 km which covers approximately half
Slide 54: Projects Focus
Key Investment 9 Projects Focus Highlights Completed Projects in FY09 Some of the Ongoing Projects New Crushing Plant at Kelanis Ongoing fuel jetty project at IBT The new 4 Fuel Storage Facilities with total Ongoing 2X30MW mine- mouth power plant capacity of 80 kilolitres at IBT project by MSW 53
Slide 55: 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 56: 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 57: Thank you
Thank you adaro ey ss envirocoal
Slide 58: Appendices
Appendices adaro ey 57 envirocoal
Slide 59: 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 60: Adaro Indonesia: Pricing likely tomorrow; guidance around 8%
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 61: 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 62: 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 63: Strong international demand for Adaro's $800 million high-yield 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 64: Strong international demand for Adaro's $800 million high-yield 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