INDIKA ENERGY GROUP COMPANY UPDATE FY 2019 PT Indika Energy Tbk. March 2020
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. Neither PT Indika Energy Tbk., its affiliates nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements in this communication. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
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-Coal Diversification 19 – 22 ESG Highlights 23 – 26 Appendix 28 - 49 3
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 on coal import, with tighter custom declara tion at certain ports exacerbate pressure on coal price. Newcastle, ICI-4 & ASP US$/ton 140 120 117.5 103.4 106.6 102.4 100 97.2 95.7 95.2 92.4 80.9 80 80.1 75.6 67.1 65.9 63.9 60 56.4 54.0 52.8 53.3 52.5 52.1 51.3 51.8 42.7 37.3 49.6 49.3 48.0 47.1 45.4 45.7 44.8 44.4 42.8 43.1 43.2 41.6 40 40.1 37.9 37.6 36.0 35.5 34.2 42.0 33.5 33.0 32.2 27.2 26.6 20 0 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 2Q19 4Q19 Newcastle ICI-4 ASP 4
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 by China, India and SE Asia ( Vietnam, Indonesia) 5
Indonesia Coal Sector National Coal Production China Coal Import Million Ton Million Ton Indonesia Other Countries 700.0 350.0 600.0 300.0 138.0 500.0 250.0 115.0 138.0 160.8 96.0 76.0 86.0 97.0 400.0 156.2 128.0 200.0 162.1 151.8 79.0 82.0 300.0 150.0 130.2 65.0 210.0 272.0 304.0 356.0 381.0 365.0 331.0 364.0 434.0 472.0 412.5 200.0 100.0 138.6 125.7 109.0 103.8 100.0 50.0 73.8 0.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020F 2015 2016 2017 2018 2019 2020F Indonesia LT Plan - Additional Power Generation 2019 – 2038 • Government aims to control coal output in 2020, limiting at 550MT, as a GW step to boost coal price Coal Hydro Gas Geothermal Other renewable • No significant change on DMO policy with benchmark price at USD70/ton and minimum allocation of 25% • Indonesia coal export to China has been consistently increasing since 2015 to date. • Pending regulation for renewal of CCOW expiring in the upcoming years. • Coal still play as major contributor to additional domestic power generation in the LT 6
Latest Development of New Mining Law Key CCOW IUP IUP-K Latest Differences 1 st Generation Discussion ** Keep existing size of Max 15,000 ha 49,000 ha * Max 5,000 ha Concession concession *** % Government 15% 4.0 – 7.0% To be determined 13.5% Royalty % Corporate 25% To be determined 25% 45% Income Tax 10% N/A 10% None VAT 10% N/A Tax on Net Profit/ None None (Profit Sharing) *) Kideco’s size of concession **) from various sources 7 ***) Omnibus law draft
Indika Energy – An Integrated Energy Player in Indonesia Revenue FY19: US$2,782.7 million Cover end-to-end energy business value chain, with current holdings mostly in coal-related sector Others MBSS 3% Solid operation, with strong focus on cost control, 3% 4) operational improvement and synergy within the group Tripatra 15% Prudent management, with experiences through commodity cycles Strong reputation in debt and equity markets, providing Kideco Petrosea flexible funding options 52% 16% Growing through inorganic and organic expansions Growth opportunities beyond coal sector Indika Resources 11% CAPITALIZE Subsidiary FY19 Revenues (US$ mn) FY18 Revenues (US$ mn) 1,574.2 1,802.2 Kideco DIVERSIFY INTEGRATE Petrosea 476.4 441.4 Tripatra 462.3 278.3 Indika Resources 325.9 398.8 MBSS 77.8 75.4 Others 91.8 102.3 LEVERAGE OPTIMIZE Elimination (225.7) (135.5) Total 2,782.7 2,962.9 8
Indika Energy’s Consolidated Income Statement Highlights Quarter Data Yearly Data Summary P&L (US$mn) 4Q19 4Q18 YoY 3Q19 QoQ FY19 FY18 YTD YoY Revenues 702.8 782.4 -10.2% 699.4 0.5% 2,782.7 2,962.9 -6.1% COGS (604.0) (693.1) -12.9% (607.0) -0.5% (2,356.0) (2,321.6) 1.5% Gross Profit 98.8 89.3 10.7% 92.5 6.9% 426.7 641.2 -33.5% SG&A Expenses (36.8) (35.6) 3.2% (28.8) 27.9% (137.2) (133.2) 3.0% Operating Profit 62.1 53.7 15.6% 63.7 -2.6% 289.5 508.1 -43.0% Pre tax Profit 0.7 (13.1) -105.1% (6.5) -110.2% 54.1 265.1 -79.6% Adjusted EBITDA *) 89.9 100.5 -10.5% 92.8 -3.2% 436.0 652.5 -33.2% Income Tax (5.1) (19.2) -73.3% (8.0) -36.2% (49.1) (167.2) -70.6% Core Profit 14.3 4.9 192.1% 4.8 195.2% 75.5 168.4 -55.1% Net Profit (9.5) (32.1) -70.3% (21.3) -55.1% (18.2) 80.1 -122.7% Gross Margin (%) 14.1% 11.4% 23.2% 13.2% 6.4% 15% 21.6% -29.1% EBIT Margin (%) 8.8% 6.9% 28.7% 9.1% -3.1% 10% 17.1% -39.3% Core Profit Margin (%) 2.0% 0.6% 225.2% 0.7% 193.8% 2.7% 5.7% -52.2% Net Profit Margin (%) -1.4% -4.1% -66.9% -3.0% -55.4% -0.7% 2.7% -124.1% *) Consolidated EBITDA plus dividends received from associates **) Core Profit refers to the current year’s profit attributable to the owner of the company, excluding non -operating gains / losses and related taxes (amortization of intangible assets, impairment of assets, fair value changes on contingent consideration obligation, and gain on revaluation). 9
Indika Energy – Strong Cash Position Cash and Debt Breakdown as of 31 December 2019 US$ million 4) 1600.0 1,523.0 1400.0 361.1 1200.0 36.9 1000.0 703.0 1) 800.0 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: $40.2mn, Tripatra: $149.5mn, Kideco: $114.3mn, Indika Resources: $29.3mn, ILSS-Interport: $3.1mn, HoldCo: $281.8mn. 2) $265mn due 2022 (Senior Notes V), $285mn due 2023 (Senior Notes IV), and $575mn due 2024 (Senior Notes VI). 3) PTRO: $126.7mn, MBSS: $25.6mn, Indika Resources: US$10.0mn; HoldCo: $198.8mn 4). PTRO $36.9mn. 10
Indika Energy – Sound Balance Sheet Cash Breakdown by Subsidiaries LTM Free Cash Flow US$ million US$ million HoldCo & Others Kideco Petrosea Tripatra MBSS 350 323.0 300 40 34.6 40.3 250 133.6 211.0 152.5 198.4 154.3 81.3 200 59.6 84.7 136.9 171.3 144.4 150 122.9 118.7 114.1 42 37.5 39.9 100 60.3 55 67.8 337.9 336.9 310.4 50 202.5 146.3 0 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Long Dated Debt Maturity Profile Net Debt Ratio US$ million US$ million Net debt Net debt to EBITDA Net debt to Equity 700 620.0 900.0 3.5 600 3.2 800.0 3.0 500 700.0 2.5 2.4 2.4 600.0 367.6 1.9 400 349.5 2.0 500.0 300 400.0 1.1 1.5 300.0 200 1.0 0.6 0.7 200.0 0.6 95.5 94.0 0.5 0.6 100 0.8 100.0 - - 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 11
Indika Energy’s Operational Highlights Vs 2019 Corporate Guidance 2019 CAPEX 2019 Budget FY19 % Operational Data Guidance Budget FY 2019 % (US$M) (US$M) KIDECO 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 ($/ton) 85 74.5 87.6% MBSS 11.7 8.5 72.6% Average Selling Price ($/ton) 50.9 45.1 88.6% Cash Cost xRoyalty ($/ton) 32.7 31.2 95.4% Tripatra 10.0 - N/A Overburden Volume (BCM) 214.0 214.6 100.3% Indika Resources 12.1 1.7 14.0% PETROSEA Overburden Volume (mBCM) 129.1 123.5 95.7% KGTE (Fuel Storage) 94.6 81.0 85.6% Coal Getting (MT) 35.1 31.0 88.3% Indika Holding MBSS 2.2 0.7 31.8% Company Barging Volume (MT) 22.3 25.0 112.1% Floating Crane Volume (MT) 15.1 10.1 66.9% Total Capex 315.5 156.9 49.7% INDIKA RESOURCES Coal Traded Volume (MT) 8.1 6.5 80.2% MUTU Production Volume (MT) 1.5 1.6 106.7% 12
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