November 2010
PT Delta Dunia Makmur Tbk
Investor Presentation
2
Delta Overview
Delta is the largest pure play mining contractor listed in Indonesia.
Northstar Pacific, a leading Indonesian focused private equity fund, and its consortium own 40% of
Delta. The remaining shares are public float.
(1) Less one share as required by Indonesian regulations (2) Using FX US$/Rp of 8,900
Source: BUMA Company Data
Delta
BUMA
100% (1)
Northstar
40%
Shareholding structure
Public Shareholders
60%
Share Data
Bloomberg Ticker
DOID.IJ
Reuters Ticker
DOID.JK
Shares Outstanding
6,790,411,860
Free Float
60%
Current Share Price (As of 19 Nov 2010)
Rp 1,200
Market Capitalization (2)
Rp 8.15 trillion
US$ 916 million
152
132
53
42
32
168
134
7062
4742
177
140
7366
4943
66
Indonesia Australia Colombia South
Africa
Russia China
2009
2010E
2011E
47 5268 71
95 102120
188
217229
252
281
316
365
391406
132
166
56
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
Indonesia is the world’s largest exporter of thermal coal, with a market share of ~25% in 2009 and is rising
Import demand growth is driven by India and China where thermal coal remains the principal (and most times
the only) source of power
Indonesia thermal coal production is forecasted to grow by ~10% per annum from 2010 until 2014
mt
c.25%+ of international traded coal supply
World Thermal Coal Exporters
Positive Coal Outlook
Sources: AME, EIA, Press articles, various companies’ reports
Indonesia Coal Production
1996 – 2009
CAGR 13.8%
2010 - 2014
CAGR 9.6%
mt
Source: Wood Mackenzie. Excludes shipping costs.
Illustrative Production Prices
Supply Transshipment Customer Customer
$7/t
$7/t
$19/t
$16/t
$19/t
$14/t
$11/t
Northern
China
SOUTHERN
CHINA
INDIA
South
Africa Australia
Indonesia
$18/t
Source: AME
0
10
20
30
40
50
60
70
80
0
50
100
150
200
250
300
350
400
450
500
550
600
Primarily
Indonesia
Global Cost Curve Shipping Costs for Key Coal Producer
Indonesia Competitiveness
Indonesia has strong competitive advantages in coal exports because its production cost is the lowest in the
world and it benefits from lower freight costs and delivery lead times due to close proximity to major importing
countries in Asia
Coal mining contractors provide overburden removal, coal mining and coal transportation
services
– The contractors hire their own labor force and own and operate fleets of heavy equipment such as bulldozers,
excavators, cranes, drilling machines, prime movers and dump trucks
Contractors are responsible for the planning and scheduling of mining operations within
parameters set by the mine owners
– The mine owners advise contractors, in advance on a yearly basis, of the required coal and overburden production
volumes according to the overall mine plan. The contractors then perform short-to-medium term planning and scheduling
of mining operations
Coal mining contractors play a critical role in the Indonesian coal industry, producing ~90% of
coal output
BUMA is the second largest mining contractor in Indonesia with scale advantages
Coal Mining Contracting
Overburden Removal / Coal Mining Load & Haul
6
Favorable Industry Dynamics
has High Bargaining Power
Strong Coal Demand
Continued strong coal demand
Fixed coal volumes as specified in the long-term sales contracts
Less impacted than other coal producing countries due to cost competitiveness
Indonesia as Lowest Marginal Cost Producer, Formula-Based Pricing and Term Contracts
Rising
Coal
Prices
Falling
Coal
Prices
Mine owners may accelerate production to capitalize on high prices, subject to fleet constraints
Marginal coal deposits become profitable
Increase in Coal Price
High Barriers to Entry High Cost of Contractor Switching
Proven track record and strong reputation
Term contracts
High capital investment
Strong ties with local communities
Long transition downtime
High opportunity cost
Loss of mine site knowledge
Unique Positioning
Lack of Well Capitalized,
Reputable and Technically
Proficient Contractors
New Contracts from Existing and New Customers
Source: BUMA Company Data
DEWA
No Customers & Locations Contract Period
1 Berau Coal – Lati Coal mining 1998-2018
2 Berau Coal – Binungan Coal mining 2003-2018
3 Berau Coal – Suaran Port Coal hauling 2003-2018
4 Kideco Coal mining 2004-2019
5 Adaro Coal mining 2009-2013
6 Bayan – Gunung Bayan OB Removal 2007-2013
7 Bayan – Perkasa Inakakerta Coal mining 2007-2012
8 Marunda Graha Mineral Coal mining 2003-2012
9 Lanna Harita Indonesia Coal mining 2001-2013
10 Arutmin Coal mining 2008-2014
11 Bukit Baiduri Energi – Merandai Coal mining 2001-2010
12 Darma Henwa Coal mining 2010-2013
Robust Contract Backlog
Contract Underwriting Criteria Coal Marketability
– Coal Quality must meet minimum requirements
Customer Requirements
– Shareholder reliability / sufficient risk mitigates
– Significant reserves
– Low operating costs
Profitability of Contract
– Specified minimum return
– Contract duration
New Contract Announcement
Arutmin Contract Extension, signed Nov 2010
Contract Term: three years until 2014
Overburden 80.9 mm bcm, Coal 6.7 mm tonnes
Total Backlog Contract Equivalent to (1)
Coal Mining (mm tonnes) 328 9.9 years
Overburden Removal (mm bcm) 2,538 9.1 years
(1) Estimated outstanding contracted volume as of 31 Dec 2009, plus the new DH and
Arutmin contracts
BUMA’s Exisiting Contracts
Track Record of Growth
Source: BUMA Company Data
Implied Stripping Ratio
Coal Production Volume Overburden Removal Volume
mm bcm mm tons
140191 207
262 278207 211
2005 2006 2007 2008 2009 9M09 9M10
5.9x 5.9x
7.2x
8.5x 8.6x 8.3x
6.3x
2005 2006 2007 2008 2009 9M09 9M10
2432 33 36 33
24 25
2005 2006 2007 2008 2009 9M09 9M10
Financial Performance
Notes: 1) Revenues net of fuel costs Source: BUMA Company Data
EBITDA Sustainable Net Revenue Growth 1)
349
487418
358
504
2007 2008 2009 9M 09 9M 10
US$ mm
Capital Expenditure
149
199166
142
202
2007 2008 2009 9M 09 9M 10
US$ mm
Healthy EBITDA margin
83 95
153
75
2007 2008 2009 9M 10
US$ mm
42.6% 40.9% 39.7%39.6%40.0%
2007 2008 2009 9M 09 9M 10
Key Developments
Organizational transformation in place from a family run business to become a
professional run company
Established key function and responsibilities for Delta and BUMA management
Successfully hired 4 professionals from prominent companies to expand the functions and roles within the Board of Directors
2009 Organizational Structure 2010 Organizational Structure
President Director
Budikwanto K.
Plant (Maint.)
Director
J. Hurst(*)
Corp. Service
Director
D. Lee(*)
Finance &
Acc. Director
S. Martin(*)
Operations
Director
S. Josal(*)
President Director
Budikwanto K.
Ops & Biz. Dev.
Director
A. Kharis
Fin. & Acc.
Director
Wiliam S.
Biz. Dev.
Director
A. Kharis
Management Background
Name Short CV Description
Budikwanto Kuesar
Has served as the President Director of BUMA since 2009. He was the Managing Director of BUMA from 2001-2009. He began his career at PT United Tractors
Tbk as Administration Department Head in 1974 and held several positions within United Tractors until becoming the Deputy General Manager for the Plant Hire
Mining Division in 1991
Achmad Kharis Has served as a Director of BUMA since 2009. Prior to joining BUMA in 1998, he worked at PT Pamapersada Nusantara (Pama), a subsidiary of PT United
Tractors Tbk as an operational manager
Darmadi Lee
Has 18+ years of experience in various companies, in which he has extensive experience in HR issues, Change Management, Material Management and
Logistics. Prior to joining BUMA in May 2010, he worked as Corporate HR Director and Head of Business Improvements in APRIL Group, Singapore. He is
currently focused on a number of continuous improvement programs to support BUMA’s growth
Joseph Hurst
An Australian National with 24+ years of experience in mining and heavy equipment with various companies in Australia and Indonesia, including Leighton
Contractors Indonesia, Thiess Contractors (Australia and Indonesia) and Roche Bros. & Roche Mining (Australia). Prior to joining BUMA in July 2010, he was the
Plant Manager at Leighton Contractor Indonesia. His primary responsibility at BUMA is to maintain and monitor the mining fleet to maximize equipment availability
at optimum cost
Sujoko Martin He has 18+ years in the field of accounting in various companies within Astra Group. His last position was as PT Bina Pertiwi, a subsidiary of PT United Tractors
Tbk, as a Finance and Accounting Director. He plans to join BUMA in October 2010 as Finance and Accounting Director
Sjamsi Josal He has spent 6+ years as a Project Manager for PT Thiess Contractors Indonesia and is responsible to provide total mining solution to PT Kaltim Prima Coal
(KPC). He joined BUMA in November 2010
(*) denotes Delta appointees
Key Developments (2)
Successful execution of business plan through contract wins / renewals
Successful renewal of Kideco contract for an additional 10 years signed in October 2009
New contract with Darma Henwa (KPC) signed in June 2010
Signed Arutmin extension contract early this month for an additional three years until 2014
6 new contracts in the pipeline, with high probability of winning
Orders for larger equipment to meet expansion plans on track
Firm orders totaling c. US$280MM for delivery up to 2012 with Caterpillar, Komatsu and Hitachi
Big equipment to ensure that traffic congestion in the mines will be reduced and to lower some of the cost compared to
smaller size trucks (like fuel consumption and man power requirement)
Financing for growth
Opportunity to reduce capital cost on existing indebtedness (loan + bond) with improved market sentiment which created
sufficient market liquidity and demand
Successfully raised ~US$ 230 million of capex financing for equipment purchase, per YTD 2010 the available commitment is
~US$ 107 million
SAP implementation for operational excellence
Phase 1: Finance, Accounting and Enterprise Resource Management (fleet management, spare parts procurement) to be
launched in 1Q 2011
Phase 2: Human Resources Management to be launched in 2H11
Staffing growth to meet expansion
2000+ employees have been hired in 9M 2010 to fuel growth in 2011.
No major labor issues experienced to date
Appendix
13
Overview of BUMA
PT Bukit Makmur Mandiri Utama
One of the Largest Mining Contractors in Indonesia (1)
Long Term Mine
Planning
Drilling and
Blasting
Stripping
Excavation
Haulage
Road Building and
Maintenance
Reclamation
High Value-add to the Coal Mining Value Chain
Mine Owners’ Scope of Work
(1) BUMA estimate based on public information relating to production volume of mining contractors, as of 2009
Source: BUMA Company Data
Barging
Processing
Hauling
Overburden Removal
Geology &Planning
Coal Mining
BUMA’s Scope of Work
BUMA provides open-cut mining services to the largest coal producers in the country
– Its customers include key coal producers, such as Adaro, Arutmin, Bayan, Berau, Kideco and Lanna
Resources
– Its operations are located in Central, East and South Kalimantan
– It operates under long-term mining contracts with coal mine owners for periods ranging from 3 to 10 years
BUMA has more than 10,000 employees and operates more than 2,900 units of heavy equipment
PAMA 32.2%
BUMA 16.7% Thiess 13.2%
SIS 8.8%
Cipta Kridatama
5.3%
Leighton 3.1%
Darma Henwa 3.1%
Others 17.6%
14
BUMA: Dominant Market Position
Market
Share
No. of Key
Customers
Fleet Flexibility
Low Cost
Diversified
Customer
Base
Local
Relationships Suppliers
Allocate
Between
Mines
17%
10
Big Local
Company 32% 7 ?
Foreign
Company 16% 3
? ? ? ?
Others
(15+ Companies) 35% ? ? ? ?
(1)
Industry Competitive Landscape
(1) Excludes mines owned by parent company
Source: 2008 BUMA Company Data
Unique Positioning
15
BUMA: High Quality and Diversified Customers
Coal
Production
in 2009
(mm tonnes)
BUMA’s
Share
Relationship
Since
14.3 77% 1994(2)
19.3 5.5% 2008
40.6 19.5% 2002
24.7 26% 2004
12.0 16.5% 2007 Bayan Group
BUMA Revenue by Customer 9M10 (9M08) (1)
(1) Based on IDR (2) Started as a subcontractor through PT Bukitmakmur Widya (BMW) Source: BUMA Company Data
Berau 30% (32%)
Adaro 16% (17%)
Kideco 15% (14%)
Bayan 7% (9%)
Arutmin 6% (5%)
MGM 6% (5%)
BBE 4% (5%)
Lanna 4% (3%)
PIK 8% (5%)
Dewa & Others 4% (5%)
All contracts are either paid in US$ or in Rupiah pegged to the prevailing exchange rate
Naturally hedged and no requirement for derivatives
BUMA reports in Rupiah due to local regulations – creates non realized FX gains and losses
16
Formula-Based Pricing That Allow Fuel Cost Pass-Through
BUMA’s Cost Structure for 9M2010 (9M2009)
Non-fuel Costs
Some contracts
contain pre-
determined cost
escalation
payments
One off payments
under extraordinary
circumstances
US$ Based Company
Fuel Costs
All contracts have a
cost pass through
mechanism for fuel
As of 2010, 60% of
customers are now
securing their own
fuel. Positive for
working capital
Source: BUMA Company Data
Cost Structure
Fuel, 12% (24%)
Spare parts, 27% (22%) Other
consumables, 12% (12%)
Salary, 13% (10%)
Depreciation, 21% (17%)
Others, 15% (16%)
17
Mining Law
New Mining Law and Its Implications on Coal Mining
Key points of the new regulation
(PerMen 28/2009)
Possible Impacts on existing and future mining activities
of BUMA
.
Positive - In 2008, foreign-owned mining contractors
(Thiess and Leighton) account for ~15% market share
Slightly negative – coal extraction and loading activities
account for 3% of BUMA’s revenue. May be partially
mitigated by leasing the relevant equipment to mining
companies which will be used for coal extraction and
loading activities. Manpower is excluded.
Local and national mining contractors are now given
preferential treatment in securing mining service contracts
vis-à-vis foreign-owned mining contractors
Mining companies have to undertake coal extraction and
loading activities
18
Contacts
PT Delta Dunia Makmur Tbk. Cyber 2 Tower, 28th Floor
HR Rasuna Said Blok X-5 No.13
Jakarta 12950 – Indonesia
Phone: +6221 2902 1352 | Fax: +6221 2902 1353
www.deltadunia.com | [email protected]
Thomas Husted (CFO) [email protected]
Rani Sofjan (Investor Relations) [email protected]
Andre Soelistyo (Corporate Secretary) [email protected]
19
Disclaimer
These presentation materials have been prepared by PT Delta Dunia Makmur Tbk (“Delta”) (the “Company”), solely for the use at this presentation and have not been
independently verified. Information relating to PT Bukit Makmur Mandiri Utama (“BUMA”) has been included with its content, and has not been independently verified.
This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons to whom it may be lawful to
communicate it to (all such persons being referred to as relevant persons). This presentation is only directed at relevant persons and any investment or investment activity
to which the presentation relates is only available to relevant persons or will be engaged in only with relevant persons. Solicitations resulting from this presentation will only
be responded to if the person concerned is a relevant person. Other persons should not rely or act upon this presentation or any of its contents.
You agree to keep the contents of this presentation strictly confidential. This presentation material is highly confidential, is being presented solely for your information and
may not be copied, reproduced or redistributed to any other person in any manner. In particular, this presentation may not be taken or transmitted into Canada or Japan or
distributed, directly or indirectly, in the Canada or Japan. Further, this presentation should not be distributed to U.S. persons except to (1) qualified institutional buyers in
reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A and (2) to non-U.S. persons outside the United States in an
“offshore transaction” as defined in Regulation S of the U.S. Securities Act of 1933, as amended.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information
presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or
damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date
hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any
undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice.
In addition, certain information and statements made in this presentation contain “forward-looking statements.” Such forward-looking statements can be identified by the
use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,” “planned,” “project,” “trend,”
and similar expressions. All forward-looking statements are the Company's current expectation of future events and are subject to a number of factors that could cause
actual results to differ materially from those described in the forward-looking statements. Caution should be taken with respect to such statements and you should not
place undue reliance on any such forward-looking statements.
Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the
Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on
various factors.
This presentation does not constitute an offer or invitation to purchase or subscribe for any shares or other securities of the Company or BUMA and neither any part of this
presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any
decision to purchase securities in any offering of securities of the Company or BUMA should be made solely on the basis of the information contained in the offering
document which may be published or distributed in due course in connection with any offering of securities of the Company or BUMA, if any.
By participating in this presentation, you agree to be bound by the foregoing limitations.