PT Indika Energy Tbk · IDX:INDY
PT Indika Energy Tbk — 6M 2020 Earnings Presentation
48 slides from PT Indika Energy Tbk's earnings presentation, September 2020
Slide 1: Indika Energy Group Company Update 6M 2020
INDIKA ENERGY GROUP COMPANY UPDATE 6M 2020 PT Indika Energy Tbk. September 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 – Challenging environment
Coal Outlook 2020 – Challenging environment • Demand for thermal coal remains driven by China, India and SEA • Indonesia government plans to cut supply from 610 million tons in 2019 to 550 million tons in 2020. • Covid-19 pandemic has caused lower demand in commodity sector, including for coal. • Lo
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: Revised Mining Law No. 3 – 2020
Revised Mining Law No. 3 – 2020 Key points • Authority to issue licenses and production approval now is at central government/ minister (previously governor and head of regency had also) • CCOW holders are guaranteed to extend their license, in the form of IUP-K, 2 x 10 years. For those already got
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 6M20: US$1,128.9 million current holdings mostly in coal-related sector MBSS Others ✓ Solid operation, with strong focus on cost control, 2% 2% 4) Tripatra operational improvement an
Slide 9: Indika Energy's Consolidated Income Statement Highlights
Indika Energy’s Consolidated Income Statement Highlights Summary P&L Quarter Data Year To Date 2Q20 2Q19 YoY 1Q20 QoQ 6M20 6M19 YTD YoY Revenues 487.4 679.7 -28.3% 641.5 -24.0% 1,128.9 1,380.4 -18.2% COGS (418.0) (561.9) -25.6% (536.6) -22.1% (954.6) (1,145.1) -16.6% Gross Profit 69.4 117.8 -41.1% 1
Slide 10: Indika Energy – Strong Cash Position
Indika Energy – Strong Cash Position Cash and Debt Breakdown as of 30 June 2020 US$ million 4) 1,538.6 1800.0 1600.0 59.8 1400.0 353.8 1200.0 1000.0 622.11) 800.0 600.0 80.8 1,125.0 52.8 400.0 200.0 488.5 0.0 CASH DEBT Cash Fin. Assets Rest. Cash Bonds 2) Bank Loans 3) Leases 4) 1) PTRO: $107.1mn, M
Slide 11: Indika Energy – Sound Balance Sheet
Indika Energy – Sound Balance Sheet Cash Breakdown by Subsidiaries LTM Free Cash Flow US$ million US$ million HoldCo & Others Kideco Petrosea Tripatra MBSS 350 323.0 300 34.6 40 133.6 40.3 250 152.5 45.2 211.0 198.4 154.3 191.7 81.3 64.3 200 59.6 84.7 107.1 144.4 171.3 150 122.9 114.1 37.5 177.2 60.
Slide 12: Operational Highlights Vs 2020 Corporate Guidance
Indika Energy’s Operational Highlights Vs 2020 Corporate Guidance 2020 2020 Revised Revised Operational Data Guidance Budget 6M20 6M19 % CAPEX Budget 6M20 % KIDECO (US$M) (US$M) Production (MT) 33.1 16.9 16.5 2.4% Kideco 3.4 1.1 32.1% Strip Ratio (x) 5.8 5.6 5.9 -5.1% Petrosea 38.2 12.7 33.2% Newcas
Slide 13: 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 14: 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 2.6x as of Jun 2020
Slide 15: 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 70 is aimed to reduce cost (e.g fuel consumption), 60 improve efficiency and increase assets utilisation
Slide 16: Minerva Project: 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 17: 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 17
Slide 18: Indika Energy – Diversifying Beyond Coal
Indika Energy – Diversifying Beyond Coal • Transforming into an investment company with more diversified Indika Energy Revenue Breakdown holdings. 6M20 • Less reliance on coal business, developing recurring business and defensive commodity. Non Coal : 24% Others • To explore any potential in renewab
Slide 19: 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 20: 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 21: Awak Mas/Masmindo Gold Project – Investment Structure
Awak Mas/Masmindo Gold Project – Investment Structure Indika Energy Project Activities 2 stage Stage 1 : during 2020 to reach Final Investment Decision Complete: FEED Detailed Design, permit for Tailings Storage Facility (TSF) Land Access and compensation 23.2% Early Civil works Conclude Debt and eq
Slide 22: 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 23: 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 24: 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 25: 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 26: Thank You
INDIKA ENERAY THANK YOU 26
Slide 27: Appendix
INDIKA ENE 27
Slide 28: 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 29: Synergy across the Group
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 30: Indika Energy Subsidiary Results
Indika Energy Subsidiary Results Petrosea MBSS Tripatra Cirebon Electric Power Total Backlog Total Backlog Total Backlog 660MW Power Plant $540.9M $108.9M $107.1M 6M20 Net Income 6M20 Net Income 6M20 Net Income 6M20 Net Income $9.2M - $4.4M $5.2M $2.0 (20% Indika) 6M20 EBITDA Margin 6M20 EBITDA Marg
Slide 31: Indika Energy's Subsidiaries Backlog
Indika Energy’s Subsidiaries Backlog New Contract/ Remaining Adjustment Revenue Remaining Descriptions Contract Value Value Recognition Contract Value in 2020 Per 31 Dec 2019 Per 30 Jun 2020 Per 30 Jun 2020 Petrosea Contract mining 483.1 31.5 104.0 410.6 E&C 120.1 (12.1) 33.5 74.5 POSB 51.4 6.8 14.9
Slide 32: Indika Energy's Financial Highlights
Indika Energy’s Financial Highlights Revenues (USD mn) Gross Profit (USD mn) Operating Profit (USD mn) 3,500.0 800 780 2,962.9 3,000.0 641.2 700 650 2,500.0 600 508.1 2,079.9 520 500 2,000.0 426.7 390 400 1,500.0 289.5 1,098.8 1,128.9 300 260 1,000.0 775.2 174.3 200 122.9 97.6 500.0 130 88.7 100 34.
Slide 33: Indika Energy's Key Business and Credit Ratios
Indika Energy’s Key Business and Credit Ratios LTM Adj EBITDA* (USD mn) & LTM Adj EBITDA Margin (%) Gross Debt & Net Debt / LTM Adj. EBITDA (x) Debt / Capital (%) 700.0 652.5 30.0% 6.0 62.0% 26.6% 5.2 59.9% 60.2% 600.0 25.0% 4.9 5.0 60.0% 500.0 436.0 4.1 20.1% 20.0% 58.0% 358.9 4.0 56.4% 56.7% 400.0
Slide 34: 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 35: Kideco's Financial Highlights
Kideco’s Financial Highlights Revenues (USD mn) Gross Profit (USD mn) Operating Profit (USD mn) 600.0 500 469.4 527.8 450.3 2,000 1,802.2 492.1 1,633.0 500.0 1,574.2 400 1,600 400.0 1,247.8 300 1,200 300.0 248.5 208.2 200 155.4 800 663.2 200.0 180.0 113.6 91.8 400 100 100.0 0 0.0 0 2016 2017 2018 20
Slide 36: Kideco's Operational Highlights
Kideco’s Operational Highlights Cash Cost Breakdown Coal Production (mn ton) Coal Sales (mn ton) Labor Others 45.0 45 Freight 1% 0% 5% O/H 34.0 34.3 34.1 34.9 32.1 32.0 32.5 31.5 8% Material 30.0 30 9% 16.9 16.6 Gov. Contract Royalty 15.0 15 Mining + 16% Rental 61% 0.0 0 2016 2017 2018 2019 6M20 201
Slide 37: Kideco's Operational Highlights
Kideco’s Operational Highlights Quarter Data Yearly Data Summary P&L (US$mn) 2Q20 2Q19 YoY 1Q20 QoQ 6M20 6M19 YoY Sales 286.9 400.1 -28.3% 376.4 -23.8% 663.2 810.0 -18.1% Gross profit 46.1 81.7 -43.7% 67.6 -31.9% 113.6 162.2 -29.9% Operating profit 34.9 67.5 -48.3% 56.9 -38.5% 91.8 138.7 -33.8% Net
Slide 38: Peer Comparison (3M20 Data)
Peer Comparison (3M20 Data) PRODUCTION ANNUAL (MT) STRIP RATIO (x) CASH COSTS ex Royalty (US$/t) 70 12 50 46 10.9 58 45 60 10 40 38 50 35 33 8 31 40 6.3 30 34 29 6 25 30 4.6 4.7 23 20 4 15 20 10 10 2 5 0 0 - ADRO INDY * PTBA ITMG PTBA ADRO INDY * ITMG ADRO PTBA INDY * ITMG EBITDA MARGIN Domestic Sal
Slide 39: Petrosea's Financial Highlights (1)
Petrosea’s Financial Highlights (1) * Revenues (USD mn) Gross Profit (USD mn) Overburden Removal (mbcm) 600 100 140 81.1 121.1 123.5 500 465.7 476.4 80 73.1 105 97.6 400 313.5 60 300 45.7 70 57.3 209.4 40 34.9 31.9 45.8 200 175.9 35 20 100 0 0 0 2016 2017 2018 2019 6M20 2016 2017 2018 2019 6M20 2016
Slide 40: Petrosea's Financial Highlights (2)
Petrosea’s Financial Highlights (2) * Revenues Breakdown by Value 6M20: USD175.9 mn 6M19: USD238.1 mn Others Other 2.0% 0.6% KPI KPI 8.8% POSB 11.3% POSB 8.5% 13.4% E&C Contract Contract E&C 19.0% Mining Mining 21.5% 55.7% 59.1% * Cost Structure 6M20: USD144.0 mn 6M19: USD208.4 mn Amortization Mater
Slide 41: Tripatra's Financial Highlights (1)
Tripatra’s Financial Highlights (1) Revenue (USD mn) Gross Profit (USD mn) Net Profit* (USD mn) 500 462.3 60 40 45.0 375 45 41.7 37.5 30 28.4 274.8 278.3 34.2 25.8 22.8 250 217.5 30 195.8 20 16.9 125 15 12.0 10 5.2 0 0 0 2016 2017 2018 2019 6M20 2016 2017 2018 2019 6M20 2016 2017 2018 2019 6M20 Inco
Slide 42: Tripatra's Financial Highlights (2)
Tripatra’s Financial Highlights (2) * Revenues Breakdown by Value 6M20: USD100.3mn 6M19: USD96.5mn TPE TPE 7.9% 8.0% TPEC TPEC 92.1% 92.0% Cost Structure 6M20 USD161.1 mn 6M19: USD159.2 mn Others 12.7% Rental Others Material 6.7% 17.5% 20.4% Rental Material Handling 4.9% 31.9% 6.5% Handling Salary 8
Slide 43: MBSS' Financial Highlights (1)
MBSS’ Financial Highlights (1) * Revenues (USD mn) Gross Profit (USD mn) EBITDA (USD mn) 100.0 20 30 27.7 18.4 25 24.0 75.4 77.8 16 75.0 65.8 68.5 20 18.4 12 14.8 50.0 15 8 29.0 10 7.7 4.9 25.0 4 2.5 5 0.9 1.5 - 0 0 2016 2017 2018 2019 6M20 2016 2017 2018 2019 6M20 2016 2017 2018 2019 6M20 Net Profi
Slide 44: MBSS' Financial Highlights (2)
MBSS’ Financial Highlights (2) * Revenues Breakdown 6M20 USD29.0mn 6M19: USD40.2mn FC FC 27% 27% Barging Barging 73% 73% *Cost Structure 6M20: USD27.5 mn 6M19: USD32.5mn Charter 0% Others Charter Others 14% 4.6% 13.4% Spareparts Spareparts 13% 5.4% Depreciation Depreciation 40% 36.5% Port charges 7.
Slide 45: Indika Resources' Financial Highlights
Indika Resources’ Financial Highlights Revenues (USD mn) Cost of Good Sold (USD mn) Gross Profit (USD mn) 450.0 400.0 395.6 359.4 40.0 36.2 400.0 350.0 306.5 300.8 35.0 350.0 319.8 322.1 300.0 30.0 300.0 250.0 25.0 250.0 209.3 21.3 216.7 200.0 20.0 200.0 132.3 150.0 120.8 15.0 13.3 150.0 11.5 100.0
Slide 46: Indika Resources' Financial Highlights (2)
Indika Resources’ Financial Highlights (2) * Revenues Breakdown 6M20: USD132.3 mn 6M19: USD164.4 mn MUTU 30.3% MUTU 37.3% Coal Coal Trading Trading 62.7% 69.7% MUTU ASP (USD/ton) * MUTU Cash Cost ex Royalty (USD/ton) 100 120 87.6 110.5 78.3 76.3 100 80 66.5 63.1 80 60 62.2 65.3 57.2 60 50.0 40 40 20
Slide 47: 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 48: Notes Outstanding
Notes Outstanding Ba 3 Negative Outlook (as of May. 2020) The Senior BB - / Negative Outlook Notes are rated: International Ratings (as of Mar 2020) A + / Negative Outlook National Ratings (as of Mar 2020) Indo Energy Finance II B.V. Indika Energy Capital II Pte. Ltd. Indo Energy Capital III Pte. Lt