Delivering Positive Energy October 2013
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 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
Agenda I. Corporate Information Adaro’s Strategy II. III. Industry Outlook 3
I. Corporate Information 4
Adaro Energy Snapshot • Largest single-location coal 2010A: 42.2 Mt 2011A: 47.7 Mt producer in southern hemisphere Production 2012A: 47.2 Mt (5 year CAGR 6%) • Top 5 thermal coal exporter globally Sub-bituminous, medium calorific • Largest supplier to domestic market value, ultra-low pollutants Envirocoal Trademark registered in many • One of the world ’ s lowest cost coal jurisdictions producers 53 customers in 15 countries Customers Blue-chip power generation utilities • Envirocoal among world ’ s most environmentally friendly coal Fixed price and index-linked Pricing Adjustment for heat content • Vertically integrated business model • Strong credit profile Reserves: 1.1 Bt as of YE2012 JORC reserves Resources: 12.3 Bt (includes option to / resources • High visibility of future earnings control 7 Bt) as of YE2012 South, East, Central Kalimantan, • Reputable and experienced Location South Sumatra management and controlling First generation Coal Cooperation License shareholders Agreement valid until 2022 (AI) 5
Key Messages • On track to deliver on our long-term strategy to create maximum value from Indonesian coal. • Focus on core business, operational excellence, risk reduction and customers. • Monitor and reduce expenses and capital expenditures to preserve cash. • Continue to improve efficiency and create reliable, safe, long-term growth. • Maintain strong capital structure and margins. • Continue to maintain diversified customer base with long-term contracts mostly with sovereign backed power companies. Our exposure to China was only 5% in 1H13. 6
Recent Performance: On Track • EBITDA US$413 million for 1H13 with • We achieved record quarterly an EBITDA margin of 26.2%, production volume in 2Q13 of amongst the best in the industry. 13.52 Mt, bringing 1H13 total to 24.94 Mt. On track to achieve 2013 production guidance of 50 to 53 Mt. • Adaro Energy coal cash cost of • Production volume of E5000 from US$35.51 per tonne in 1H13 was in- Paringin increased more than four line with guidance of US$35 to US$38 times y-o-y in 1H13 to 2.52 Mt. per tonne and 7% lower y-o-y. • Liquidity and our Balance Sheet • Overburden removal was 142.07 remain strong with access to cash of million bank cubic meters (Mbcm) in nearly US$1 billion and net debt to 1H13, 9% lower y-o-y. EBITDA of 2.14x at the end of 1H13. 7
Adaro’s Operational and Financial Highlights OPERATIONAL 1H 2013 1H 2012 % Change Production (Mt) 24.94 23.01 8.4% Sales (Mt) 25.00 23.69 5.5% OB removal (Mbcm) 142.07 156.83 -9.4% FINANCIAL (US$ millions, unless indicated) 1H2013 1H 2012 % Change Net revenue 1,579 1,931 -18.2% Cost of revenue (1,228) (1,298) -5.4% Gross Profit 351 634 -44.6% Net income 116 260 -55.4% EBITDA 413 668 -38.2% EBITDA margin 26.2% 34.6% -8.4% Interest bearing debt 2,346 2,525 -7.1% Cash and cash equivalents 559 574 -2.6% Net debt 1,787 1,951 -8.4% Net debt to equity (x) 0.58 0.64 - Net debt to last twelve months EBITDA (x) 2.14 1.30 - Free cash flow (EBITDA - capex) 307 397 -22.5% Cash from operations to capex (x) 3.4 0.7 - Earnings per share (EPS) in US$ 0.00360 0.00813 --55.7% 8
2013 Guidance Production Volumes (Mt ) Consolidated Strip Ratio (x) 50 - 53 6.4 47.7 47.2 5.9 5.75 5.5 42.2 40.6 5.0 38.5 4.25 2008A 2009A 2010A 2011A 2012A 2013F 2008A 2009A 2010A 2011A 2012A 2013F Coal Cash Cost (ex-royalty, US$/t) 39 35-38 36 31 27 27 2008A 2009A 2010A 2011A 2012A 2013F EBITDA (US$ billions) Capital Expenditure (US$ millions) 625 1.5 490 1.1 1.1 .85-1.0 0.9 287 228 0.5 150-200 135 2008A 2009A 2010A 2011A 2012A 2013F 2008A 2009A 2010A 2011A 2012A 2013F 9
Creating Sustainable Value from Indonesian Coal Pit to Power Integration PT Adaro Energy Adaro Mining Adaro Mining Adaro Adaro Power Assets (ATA) Services Logistics Adaro Indonesia (AI) 100% Saptaindra 100% Maritim Barito 100% Makmur Sejahtera 100% Coal mining, S Kalimantan Sejati (SIS) Perkasa (MBP) Wisesa (MSW) Coal mining and Coal barging and 2x30MW mine- Balangan 75% hauling contractor shiploading operator mouth power plant Coal mining, S Kalimantan operation in Harapan Bahtera Jasapower 100% 100% S Kalimantan Mustika Indah Permai (MIP) Internusa (HBI) Indonesia (JPI) Coal mining, S Sumatra 75% Third-party barging Overburden crusher Bhimasena Power 34% and shiploading Bukit Enim Energi (BEE) and conveyor 2x1000MW power 61% Coal mining, S Sumatra operator Sarana Daya 51.2% plant operator in IndoMet Coal Mandiri (SDM) Central Java 25% Project (IMC), BHP JV Servo Meda 35% Channel dredging Coal mining, C Kalimantan Sejahtera (SMS) contractor South Kalimantan 65% Coal hauling road Power Project Indonesia Bulk 100% Bhakti Energi 10.2% and port operator 2x100MW power Terminal (IBT) Persada (BEP) plant operator in Coal and fuel terminal Coal mining, E Kalimantan S Kalimantan *Simplified Corporate Structure 10
5 Adaro Energy Mining Assets 6 12 billion tonnes of coal resources are attributable to Adaro across 6 locations and 20 mining concessions, eight of which are CCA and CCoWs and the remaining IUPs. 1 2 3 4 1 3 4 5 6 2 Adaro Indonesia: BEE: 61.04% Balangan: MIP: 75% stake BEP: 10.22% IMC: 25% joint stake South Existing, South stake with option venture with BHP South Kalimantan South Sumatra Kalimantan Sumatra to acquire 90% sub-bituminous sub-bituminous Central Kalimantan sub-bituminous sub-bituminous East Kalimantan coking coal Resources 172 Mt Resources 282 Mt, Resources 4.7 Bt, Geological study sub-bituminous Resources 774 Mt Reserves 273 Mt Reserves 921 Mt phase Resources 7.9 Bt Indonesian Coal: Resources 160.65 Bt Reserves 28.02 Bt Sumatra: Resources 75.03 Bt Reserves 13.22 Bt Kalimantan: Resources: 85.25 Bt Reserves: 14.80 Bt Source: Ministry of Energy and Mineral Resources 11
Adaro Indonesia Core Operations Coal Cooperation Agreement – Adaro Indonesia Shiploading at Taboneo offshore Indonesia Bulk anchorage Terminal, Pulau Laut Barging to Indonesia Bulk Terminal Barging to domestic customers 12
Supply Chain Vertical Integration Coal Mining Coal Hauling • Adaro Indonesia (AI) produced 47.2 Mt • 80km private paved haul road using in 2012 from a single Coal Cooperation chipseal, which improves the operational Agreement (CCA) area in S Kalimantan. efficiency. • 921 Mt of Reserves and 4.7 Bt of • More than 350 units of 130 tonnes Resources in S Kalimantan. capacity truck trailers in operation. • Saptaindra Sejati (SIS) provides ~35% of AI mining and overburden removal. 13
Supply Chain Vertical Integration Coal Processing & Barge Loading Barging • Supported by our subsidiary, At Kelanis river terminal : • Expanding to reach 70 Mt PT Maritim Barito Perkasa (MBP). • 55 sets of tugs and barges used by coal-handling capacity per year. • 450,000 tonne stockpile + 80,000 tonnes Adaro with an average capacity of ROM capacity. 11,750dwt, including three sets of • 2 barge loading jetties with a loading 18,000dwt units. rate of 5,000 tonnes/hr each. 14
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