1. Focus: weathering the storm…
4
Banpu has been through difficult times before…
LONG TERM PERSPECTIVE STRATEGIC PERSPECTIVE
1980s
• Banpu has three decades of experience and has faced difficult macroeconomic conditions many times before
• Coal Thailand
SET li ti
BANPU EXTERNAL
1 Mt
COAL SALES
1990s
conditions many times before
• Despite many short term setbacks, over the long term
• SET listing • Low coal prices
• Low coal prices• Mae Moh contract
I d i
1 Mt
1990s Banpu has delivered strong shareholder returns
• Banpu has focused on growth
• Asian economic crisis !
• Indonesia
• Power business
• Indocoal acquisition
4 Mt
2000s• Banpu has focused on growth
– but also on sustainability
• Emphasis on pro-active risk
Indocoal acquisition
• Non-core divestment
• China coal
• Coal price growth
• Lehman crisis !20 Mt
2010s
Emphasis on pro active risk management, contingency planning, strategic flexibility
• Australia coal
• Mongolia coal• European debt
crisis !44 Mt
5
44 Mt
Checklist for weathering the current ‘storm’
FUNDAMENTALS ACTION PLAN 2012-13
Domestic coal sales less impacted by benchmark prices Cut costs and reduce strip
ratios in Indonesia 2012-13
Export sales mainly to strong credit large corporate buyers
Productivity improvements in Indonesia and Australia
Power earnings a hedge against lower coal prices
Reduce and delay capexplans: target 30% reduction 2011-15
Geographic diversity of assets mitigates regulatory risks and gives strategic flexibility
Limited impact to medium term output targets
Financial discipline and risk management systems
Maintain strong EBITDA to net debt ratio and dividend yield
6
Structure of adjusted operating earnings*
Bt 13.8 bn*
Bt 9.3 bnExport coalAustralia and Indonesia
• Coal exports mainly to large creditworthy customers in NE Asia
• Diverse high CV coal portfolio with integrated logistics and blending: resilient to weak coal prices
Bt 1.9 bnDomestic coal • Mainly long term contracts with large power companies
Bt 2.5 bn
Australia, Indonesia, China
PowerBLCP and China power
power companies
• Note: Hongsa earnings will grow as BLCP earnings decline
H1 2012
7* Figures shown above are based on EBITDA results multiplied by Banpu’s percentage ownership in each business (for example, taking only 65% of ITM’s EBITDA)
Banpu: high quality coal portfolio*
Calorific value (adb, Kcal/kg)
7 1007 0007 200 7 000 7 250
Indonesia peer 1
Indonesia peer 2
Indonesia peer 3
Indonesia peer 4
Indonesia peer 5
Indonesia peer 6
Indonesia peer 7
Australia peer 1
Australia peer 2
Avg Chinese peers
7,1007,0007,200
5,700 5,4175,900
5,230
7,0006,400
7,2506,850
5,0005,4005,300 5,200
4,3095,500 5,215 5,300 5,400
6,950 6,7006,500
5,850
ITM Centennial
Ash (adb, %)
peer 1 peer 2 peer 3 peer 4 peer 5 peer 6 peer 7 peer 1 peer 2 peers
27.0
18 0 19 0
Indonesia peer 1
Indonesia peer 2
Indonesia peer 3
Indonesia peer 4
Indonesia peer 5
Indonesia peer 6
Indonesia peer 7
Australia peer 1
Australia peer 2
Avg Chinese peers
ITM Centennial
6.012.0
2.0 2.5 5.1
18.0
8.0 9.0 10.0
19.0
4.09.0
2.5 1.0 2.0 4.5 4.0 5.0 4.0 6.5 8.510.09.0
Sulphur (adb, %)
2.00.6
1.40.1 0.1
1.0
2.5
0.7 1.0 0.5 0.7 1.0
* Peer figures are from company sources
Indonesia peer 1
Indonesia peer 2
Indonesia peer 3
Indonesia peer 4
Indonesia peer 5
Indonesia peer 6
Indonesia peer 7
Australia peer 1
Australia peer 2
Avg Chinese peers
ITM Centennial
0.1 0.10.2 0.3 0.2 0.1 0.1 0.7 0.4 0.5 0.3 0.5 0.5 0.5
8
Banpu’s main customers
C t
ITM: TOP 5 CUSTOMERS
Customer
Country China Indonesia Taiwan Italy Japan
Credit rating BB+ (Fitch) na BBB+ (S&P) Baa1 (Moody’s) / A- (Fitch) / BBB+ (S&P) A3 (Moody’s)/ A (S&P)
Business relationship (years) 6 6 7 6 14
Current contract duration Evergreen Evergreen Evergreen End Dec’ 12 End Dec’14
Customer Pen
CENTENNIAL: TOP 5 CUSTOMERS
Customer Pen Country Australia Australia Taiwan Taiwan Japan
Credit rating AA- (Fitch) / AA- (S&P) na A+ (S&P) na A1 (Moody’s) / A+ (S&P)
Business relationship (years) +20 +20 +10 3 3p (y )
Current contract duration End Jun 22 End Jun 22 End Dec 19 End Jan 13 End Mar 13
9
Focus: reducing costs in Indonesia in 2012
$/t
INDICATIVE FOB CASH PRODUCTION COSTS PER TONNE
Target reduction
50.0
60.0
Logistics and overheads
Reduce management overheads
-$3/t
40.0Other pit-operation activities
W t i i t
Reduce management overheads
Processing, haulage and port
20.0
30.0Overburden removal costs
Cut Indominco SR:13.2 to 12.9 (and potentially to 12 6)
Waste mining cost
10.0
(and potentially to 12.6)
Cut Trubaindo SR: 13.5 to 12.5
0.02012 original plan 2012 revised plan
ROM OUTPUT: 27.0 Mt 27.0 Mt
10ILLUSTRATIVE AND INDICATIVE ONLY
Focus: Centennial outlook
KEY STRENGTHS DOMESTIC CONTRACT OUTLOOK
• Full production rates expected at three main longwall operations in 2H12
• Increased productivity should enable 20
MtHigh percentage of domestic contracts• Increased productivity should enable
10-15% unit operating cost reductions in 2H12 compared to 2Q12
14
16
18domestic contracts next two years
• Indexed-linked domestic contracts with expiring contracts renewable at long-term export parity pricing 8
10
12
• Export business with long standing customers to premium markets
• Flexibility to build both domestic and 0
2
4
6
Flexibility to build both domestic and export business in accordance with market opportunities
011A 12F 13F 14F 15F
Domestic Domestic potential Export
11
Focus: Hongsa
PROJECT SUMMARY PROJECT VALUE DEVELOPMENT CURVE
• Project progress at end 2Q is slightly ahead of schedule
• COD f fi t it t t d f40%
60%
80%
100%
Main road completion
COD Unit 1
COD Unit 3
COD Unit 2
RU
CTI
ON
PLA
N
NP
V
90%
• COD of first unit targeted for June 2015
• Hongsa project is targeted to % Project NPV*
0%
20%
Dec
10
Apr
11A
ug11
Dec
11A
pr12
Aug
12D
ec12
Apr
13A
ug13
Dec
13A
pr14
Aug
14
Dec
14A
pr15
Aug
15D
ec15
CO
NS
TR
40-60%
Hongsa project is targeted to contribute around Bt 3 – 6 bnper annum to Banpu EBITDA (from 40% shares of holding)
% Project NPV
100%
from 2016
• Growing contribution from Hongsa will gradually offset 10 ‐ 20%
40 ‐ 60%
20 ‐ 30%30 ‐ 40%
Hongsa will gradually offset the decline in earnings from BLCP over the long term
Commercial Operation
CommissioningFinancingSecured
Site Identification & Studies
PFS completed
FS completed Construction
*Source: AWR Lloyd
12
Source: AWR Lloyd
Capex plan changes 2011-2015
1800
$Millionc.30% reduction1,748
3781600
1800
POWER
1,748
4001200
1400
MONGOLIA
1,248
200
378
800
1000 Maintain Hongsa equity injection and China power expansions as planned
Deferred development of Tsant Uul and
625
425400
600AUSTRALIA Altai Nuur; focus on exploration
Capex adjustment – mainly postponement to ramp-up of Newstan
345245
0
200 INDONESIA
to ramp up of Newstan
Postponement of some developments BoCT urgent improvement only
13
0Original plan Revised plan
DISCLAIMER: ALL CAPEX FIGURES ARE INDICATIVE ONLY AND ARE SUBJECT TO CHANGE.
Financial discipline and risk management
Example 1: Gearing management Example 2: Dividend payments
2.1X2x
3xNet debt / adjusted EBITDA*
Bt 21.0Bt 21.0
Dividend per share
1.5X
1x
2xBt 16.0
Bt 12.0Bt 8.5
201220112010 20112010200920082007
• Banpu has a track record of strong and growing dividend payments
• Banpu maintains conservative Net debt/EBITDA ratio as contingency for volatile coal prices and macro-economic
diti ( d f thconditions (and for new growth opportunities)
14* Adjusted EBITDA: includes interest in JVs; excludes net gains from disposal from investments in 2010 and 2011
Hongsa: target revenue and EBITDA structure
6%Viable O&M
13 yrs 25 yrsREVENUE
STRUCTURE
I di ti t t d
Energy Payment
38%Fuel payment
O&M Indicative targeted revenue range (nominal)
Indicative targeted EBITDA range (nominal)
Availability Payment 56%
NOTE: FIGURES SHOWN ARE ON 100% BASIS
66ILLUSTRATIVE & INDICATIVE ONLY