Acquisition of PT Semen Grobogan

P T I n d o c e m e n t Tu n g g a l P r a k a r s a T b k .
5 December 2023

Slide 1
 INDOCEMENT PLANTS & TERMINALS

Kuala Tanjung

3
Region: 1
Samarinda
1. Sumatera Pontianak
2. Java 4
3. Kalimantan 6
4. Sulawesi Palembang
Barru
5. Bali & Nusa Tenggara
6. East Indonesia
Lampung
Makassar

2 Surabaya

Banyuwangi Lombok 5
Grobogan Integrated Plant 1 Integrated Plant
Kiln: 1.8 MT, Cement; 2.5 MT

SBM Integrated Plant PT SEMEN GROBOGAN:

1 Integrated Plant, 1 Grinding • A private company with one integrated CEM plant – existing of 2.5 mt
SBM Terminal Unit, 3 Terminals SIG - Rembang cement capacity & holds limestone reserve & resources for >50 years
Kiln: 3.5 MT, Cement: 5.3 MT STAR • Started its commercial production in January 2022
SBM Grinding Mill
INTP - Cirebon
(4.3 MT) • More than 90% of target sales are in Central Java region
Semen Grobogan • The plant is strategically located close to key markets in Central Java
ITP Integrated plant 3 Integrated Plants, 9 Terminals (2.5 MT)
with the lowest weighted average logistics cost to the other players
ITP Terminal Kiln: 18.0 MT. Cement: 25.5 MT SIG - Cilacap
• Active limestone quarry is located next and very close to the plant

Slide 2
 Key Transaction Term

Acquisition of 100% shares followed Implied Equity Value of USD 97mio

by repayment of outstanding loans
with own cash and loan restructuring

• Refinancing existing debts with own Enterprise Value of USD 357mio

cash and IDR 2tr loan in IDR term
• Increasing cement production
capacity p.a. to 2.9 mt after the take
over from existing capacity of 2.5mt Implied EV/EBITDA multiple 6-8x
• Additional sales volume: take over
existing sales volume about 1.5mt p.a.
under existing Semen Grobogan brand
Valuation of Cement Capacity ~USD 123/t
and network
(capacity of 2.9mio ton p.a.)

Slide 3
 Entity Structure & Timeline
Heidelberg
Materials

INTP Buying entity DAP

99.997% 0.003% 100% shares of SGB are fully owned by Indocement
starting 30 November 2023:
• Indocement holds 99.997% of PT Semen Grobogan
(SGB)
PT. Semen Grobogan
• Indocement fully-owned subsidiary, PT. Dian Abadi
To distribute:
Perkasa (DAP) holds 0.003% shares at SGB, to fulfill
• Tiga Roda (TR) brands bag & bulk
• Non-TR brands owned by INTP
the regulation
• Grobogan brand bag & bulk

Disclosure information under OJK Regulation INTP effectively takes over Mandatory post completion
(max. 2 working days) - 18 Oct 2023 operation - 1 Dec 2023 notification to KPPU
(max. 30 days - 02 Jan 2024)

CSPA (PPJB) SPA (AJB)

Agreement Completion Loan Repayment &
Transition Period Post Completion
Restructuring
16 October 2023 30 November 2023
CSPA: Conditional Sale & Purchase Agreement SPA: Sale & Purchase Agreement
PPJB: Perjanjian Pengikatan Jual Beli AJB: Akta Jual Beli

Slide 4
 Cement Volume Development
Quarterly Market Volume (K ton) • 9M2023: total domestic market contracted -0.6% vs.
2021 INTP domestic volume growth of +7.5%
• 10M2023: domestic market grew +1.4% vs INTP +8.4%
2022
-0.6% 0.0%
17,914 14,555 -9.5% 2023
28% 23% 4.9%
16,217 15,261
26% 25% 6.8% Q1
17,881, 14,269 -6.5%
63,936 39% 32% Q2
-3.4% 61,794
2.3% 13,911
Q3
22% 16,738 13,577 Q4
17,557 13,151
27% 22%
27% 11.6% 29%
-2.4%
0.6% -4.7% -3.1%
Source: Ministry of Industry

Volume 2021 Volume 2022 Volume 2023

Monthly Market Volume (k ton) 2023 YoY Change % 2022 YoY Change %
24.9%
• YoY monthly performance improves
10.3% 12.6%
18.3% after the first 4 months of 2023
1.7% 2.6% -1.1% 4.1% 4.4%
-6.8% -3.6%
-10.3%
7.6% 2023 H1 ? 2023 H2
-2.6% -2.1% -4.3% -2.5%
-7.0% -7.0% 27,420 ?
-9.4% -17.1%

-31.0% 6,120 6,305 +14%

5,805 5,956 2022 H1 2022 H2 FY 2022
4,908
5,291 28,839 32,956 61,794k ton
4,872 4,876
4,489
5,376 2,984 5,350 5,722 5,861 5,328 5,433 5,456
5,279 5,155 +25%
4,606 4,323 2021 H1 2021 H2 FY 2021
3,905
4,785 4,528 5,242 4,819 3,629 5,463 5,387 5,868 6,302 6,424 5,827 5,662 28,466 35,470 63,936k ton

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 5
 Cement Market Portion & Growth
• Kalimantan experienced significant growth in bulk demand +90.9% (10M2023) from 10M2023
YoY Area Growth: Area
new capital city (IKN) development especially around East and North Kalimantan areas Volume
<=0% Java -1.6%
>0% <=5%
Sumatra +3.4%
>5% <=10%
Kalimantan +18.9%
>10% <=15%
Sulawesi -5.7%
>15%
Bali & NT +14.1%
East Indonesia +1.7%

21.4%
22.0%
21.8% 6.7% 3.5%
9.2% 2.5%
7.8% 10.5% 3.5%
7.0%
9.8%
2022 GDP Cement Market
Portion: Portion:
52.4%
10M2022 56.5%
50.9% 5.5%
10M2023 2.7%
6.2%
Slide 6
 Central & East Java Market
CENTRAL JAVA EAST JAVA INTP delivery from
Tarjun plant

INTP delivery from: Pati

• Citeureup plant Tuban (SBI) Tuban
• Cirebon plant
Rembang
Semarang

Surabaya
Ajibarang Grobogan Kediri Malang
2.5mt
INTP delivery from: Jember
Cilacap • Citeureup plant Bosowa FM
• Cirebon plant
1.5mt
CEM Capacity Surplus (2022A): +1.3mt Jogjakarta
~15.0% of Total Domestic Volume Hongshi
CEM consumption per capita (2022A): 255.7kg CEM Capacity Surplus (2022A): +15.8mt
~13.2% of Total Domestic Volume INTP CEM Terminal
CEM consumption per capita (2022A): 203.2kg INTP Grinding Unit (SBM)
Central Java 2019 2020 2021 2022 9M2023
Market Total Market Demand 10.5 9.3 10.0 9.4 7.0 East Java 2019 2020 2021 2022 9M2023
Condition* Total Capacity 8.2 8.2 8.2 10.7 8.0** Total Market Demand 9.4 8.3 7.8 8.3 6.0
Market
(mt) Surplus/Deficit -2.3 -1.1 -1.8 +1.3 +1.0** Condition Total Capacity 21.9 22.7 24.1 24.1 18.1**
INTP (0mt p.a.) 32.9% 35.2% 34.1% 27.4% 24.3% (mt)* Surplus/Deficit +12.5 +14.4 +16.3 +15.8 +12.1**
Market Share in
Central Java Semen Grobogan (2.5mt p.a.) - - - 11.9% 17.1% Market Share in
INTP (1.5mt p.a.) 11.4% 11.8% 11.0% 10.2% 10.3%
* Cement association (ASI) data + Semen Grobogan (since 2022) ** Prorated to 9-month East Java
* Cement association (ASI) data ** Prorated to 9-month
• Central Java has been a surplus Capacity over Demand, since • East Java has been surplus market and a home market to SIG
Semen Grobogan entered the market in 2022,
• Additional pressure in the market came from Hongshi with in 2021 and introduction
• Moratorium of new cement plant until 2028 and the higher project of fighting brand from SIG
cost of greenfield project resulting INTP’s planned greenfield project • Historical East Java market CAGR 2012-22 is 1.85% and it is also expected East
in Pati for Central Java market is economically less attractive Java market CAGR keep growing higher than national growth
• INTP signed a 5-year lease in 2022 for use of Bosowa grinding unit in Banyuwangi
Slide 7
 Strategic Rationale

• Central Java has strong retail market, it is the 3rd most populated region (~41 mio) after Western and East Java
• Synergy and Network Optimization: It is a key strategic step for INTP to secure future Central Java and East
Java supply which will not be economically feasible to supply from distant West Java plants with the anticipation
for Zero ODOL policy implementation in-stages in near future
• High quality assets with excellent geographical fit: Good combination of European & Chinese-made equipment
with operation efficiency and limestone deposit is very close to the plant
• Technical and Operational Advantage: new built plant with the potential value creation through synergies with
possibility to reduce further clinker ratio and energy cost with high availability sources of alternative materials and
alternative fuels from surrounding location; CO2 reduction is expected to bring to Indocement plant standard!
• Major infrastructure projects categorized as the National Strategic Projects are located in Central Java i.e.
Solo -Yogyakarta Toll Road, Batang Industrial Estate, and Kendal Special Economic Zone
• Many Industries relocated their factories from Western Java to Central Java after significant infrastructure
improvement in the last few years, as well as attracted by lower level of minimum Labor wages and living expenses

SUMMARY: perfect strategic fit with logistics synergy and Cirebon reserves limited lifetime,
INTP would be the most proficient ‘know-how’ entity from technical and sustainability point of view

Slide 8
 Logistics & Market Share Benefits
➢ Logistics Synergy. Strategic advantageous location of
Semen Grobogan allows significant logistics synergies in
existing markets due to network optimization for Central
& East Java markets
➢ Semen Grobogan plant is strategically located close to
key markets in Central Java, with the lowest weighted
average logistics cost compared to all players
➢ Logistic cost benefit Palimanan vs. Grobogan to bring
to Central Java market:
1) IDR 70k/ton (bag cement)
2) IDR 120k/ton (bulk cement)
Focus markets for logistic synergies
currently supplied from 3 INTP Market Share in Central Java
plants to Central & East Java
42.7% 41.2%
38.9%
CEMENT Market in Central Java: 34.6%
32.6% 32.9%
35.2% 34.1%
30.8% 31.3%
✓ By acquiring Semen Grobogan, Indocement could 27.4%
24.3%
regain market share in Central Java by getting benefit
of Grobogan existing shares in the market between Market CAGR (%)
17.1%
11.9%
12-17% in Central Java 2012A-2022A 2022A-2027F

✓ In the future, it is expected that Central Java Market 1.8% 2.4%

INTP Semen Grobogan
CAGR keep growing higher than national growth 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 9M2023
Based on Cement association (ASI) data + Semen Grobogan (since 2022)
Slide 9
 Improvement to AF Rate & Clinker Ratio
INDOCEMENT Fuel Consumption Rate % INDOCEMENT Scope 1
(Specific NET - kg CO2/t cement equivalent)
100%

2.3 3.4 3.2 5.8 7.4 9.3

100 100

700

652 (2023E)
12.2
90%
18.1 17.4 90

25 693
650

42
80% 80

650 to be aligned INTP overall

70% 70

600
2025 target & on

60% 60

585
97.7 96.6 96.8 94.2 92.6
550
573
50%
90.7 87.8
50

558
81.9 82.6 545
40%
75 40 500
535
58
30% 30

490
450
8% 12% 35% 45% 69% 80% 88% 92% 90% ~90% ~90%
20% 20
2010 … 2015 … 2020 2021 2022 9M2023 … 2025E … 2030E

10% 10
INDOCEMENT overall Grobogan
2015 2016 2017 2018 2019 2020 2021 2022 9M2023 … 2025E … 2030E Green House Gas (GHG) emission is calculated based on the international reporting standards defined by
World Business Council Sustainable Development (WBCSD) Cement Sustainability Initiative
Overall Fossil Fuel (FF) Overall Alternative Fuel (AF) Grobogan FF LCV Content ➢ Scope 1: Emissions from operations that are owned or controlled by the reporting company

• Incorporate alternative fuel (AF) for kiln energy source which currently the source is still 100% coal. Type of
biomass AF from surrounding areas includes corncob and rice husk
• Incorporate more alternative materials (AM) for cement mix with potential fly ash supply from Batang and Tanjung
Jati power plants. Other AM that can be obtained from surrounding area is slag and trass
• Currently the clinker ratio is ~75% as ~55% of the sales is bulk cement. Hydraulic cement is to be introduced
gradually replacing OPC and by 2030, clinker ratio is targeted at ~65%
• CO2 emission to be reduced following Indocement standard and aligned with our overall 2025/30 target
• Further integration with Indocement digitalization and automation programs
Slide 10
 Synergies and Value Creation Summation
Production • Additional cement production capacity and release some capacity from Cirebon plant running at full capacity
Capacity • Limestone deposits that is proven for >50 years

• More effective volume allocation to Central Java and East Java market
Sales & • Gain new brand ‘Semen Grobogan’ that is already well accepted in Central Java market
Marketing • Improved average selling price by bringing premium Tiga Roda brand produced at Grobogan plant
• More effective promotional activities

• Opportunity for product recipe optimization from reducing the clinker content and introducing hydraulic cement
Technical & • Specific heat and power consumption improvement
Sustainability • Increase usage of Alternative Fuels and Alternative Materials (fly ash, slag, and trass)
• Bringing INTP expertise in technical (production, repairs, and maintenance), sustainability and R&D aspects

• Logistics saving by producing cement from Grobogan plant and delivering closer to the market
Supply Chain • Improvement of logistics tariff from INTP logistics expertise
• Supply Chain optimization with existing INTP distribution network

• Streamlining the procurement process with the existing INTP procurement

Procurement
• Bundling strategy and economies of scale

IT • Centralized and streamlined IT process and procurement

HR & GA • Best practices and human capital management know-how sharing from INTP human capital & GA
Slide 11
 Thank You
PT Indocement Tunggal Prakarsa Tbk

Wisma Indocement
13th floor Jalan Jenderal Sudirman Kav. 70-71
Jakarta 12910, Indonesia
Telephone : +6221 8754343 ext. 3808
Facsimile : +6221 87941166

www.indocement.co.id

Citeureup Plant