PT Adaro Energy Tbk : Financial Press Release 1Q21

NEWS RELEASE

Jakarta, April 29, 2021

For further information please contact:

Mahardika Putranto, Head of Corporate Secretary & Investor Relations Division [e-mail]

Febriati Nadira, Head of Corporate Communication Division [e-mail]

PT Adaro Energy Tbk Maintains Quality of Earnings and Achieves Operational EBITDA of

US$244 Million despite Challenging Weather Condition

Jakarta, April 29, 2021 - PT Adaro Energy Tbk (IDX: ADRO) (AE) today released its financial performance for the three months period ended March 31, 2021, alongside its operational performance for the period. We booked operational EBITDA of US$244 million, 8% lower y-o-y and maintained solid operational EBITDA margin of 35%. Coal production in 1Q21 was 11% lower y-o-y to 12.87 Mt, and coal sales was 13% lower y-o-y to 12.59 Mt. The La Nina weather condition in 1Q21 caused heavy rains and high swell which affected logistics activities in the quarter. Despite challenging industry landscape, we were able to refinance our loan and strengthen our balance sheet. We remain focus on efficiency and operational excellence to ensure that we continue to be a reliable partner for our customers and other stakeholders.

Our President Director and Chief Executive Officer, Mr. Garibaldi Thohir, said:

"Our resilient, integrated business model continues to deliver. We generated operational EBITDA of US$244 million and core earnings of US$110 million, which show the quality of our earnings and reflect the strength of our operations. Despite the optimism from recent positive development in coal prices, we remain careful and will continue to focus on operational excellence and be disciplined in cost and spending. We choose to be conservative and maintain our operational and financial guidance for 2021. We continue to strengthen our balance sheet and has recently signed a US$400 million facility agreement to repay one of our outstanding loans early. We extend our gratitude to our relationship banks for their continuous support to the Adaro Group."

Highlights of 1Q21 performance:

• We recorded an operational EBITDA of US$244 million, Operational EBITDA excludes non- operational items and reflects our true performance.
• We generated US$104 million of free cash flow in 1Q21, 8% increase y-o-y. Our balance sheet remained healthy with net debt to last 12 months operational EBITDA of 0.14x and net debt to equity of 0.03x.
• Our underlying core earnings for the period was US$110 million, 19% lower y-o-y. Core earnings exclude non-operational items net of tax and reflect our performance without the effect of accounting.

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Financial Performance

(US$ Million, except otherwise stated)		1Q21			1Q20			% Change
Net Revenue	692		750		-8%
Cost of Revenue		(502)		(552)		-9%
Gross Profit	190		198		-4%
Operating Income		134		128		5%
Core Earnings1	110		136		-19%
Operational EBITDA2		244		265		-8%
Total Assets	6,485		6,924		-6%
Total Liabilities		2,385		2,946		-19%
Stockholders' Equity	4,100		3,978		3%
Interest Bearing Debt		1,445		1,904		-24%
Cash	1,190		1,251		-5%
Net Debt3		119		550		-78%
Capital Expenditure4	41		56		-27%
Free Cash Flow5		104		96		8%
Basic Earnings Per Share (EPS) in US$	0.00224		0.00307		-27%
Financial Ratios
		1Q21			1Q20			Change
Gross Profit Margin (%)	27.5%	26.4%	1%
Operating Margin (%)	19.4%			17.1%			2%
Operational EBITDA Margin (%)	35.3%	35.3%	0%
Net Debt to Equity (x)	0.03			0.14			-11%
Net Debt to last 12 months Operational EBITDA (x)	0.14		0.48		-34%
Cash from Operations to Capex (x)	3.16			2.56			60%

1. Profit for the period, excluding non-operational items net of tax (amortization of mining properties, prior year tax assessment, and recovered allowance for receivable).
2. EBITDA excluding prior year tax assessment and recovered allowance for receivables.
3. Cash including the current portion of other investments.
4. Capex spending defined as: purchase of fixed assets - proceed from disposal of fixed assets + payment for addition of mining properties + addition of lease liabilities.
5. Operational EBITDA - taxes - change in net working capital - capital expenditure excluding lease liabilities.

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		Operating Segment
		Revenue		Profit for the period
(US$ Million)	1Q21	1Q20	% Change	1Q21	1Q20	% Change
Coal mining & trading	660	694	-5%	68	45	-51%
Mining services	22	40	-45%	1	(14)	107%
Others	10	16	-38%	12	41	-71%
Elimination	-	-	-	(6)	33	-118%
Adaro Energy Group	692	750	-8%	75	106	-29%

FINANCIAL PERFORMANCE ANALYSIS FOR THE FIRST THREE MONTHS OF 2021 (1Q21)

Revenue, Average Selling Price and Production

We booked revenue of US$692 million in 1Q21, a decline of 8% compared to 1Q20, mainly due to 13% lower y-o-y sales volume of 12.59 million tonnes (Mt). Our coal production in 1Q21 was

12.87 Mt, 11% lower y-o-y. The wet season in 1Q21 affected our coal operations. Our average selling price (ASP) in1Q21 was 9% higher y-o-y, reflecting the improvement in coal prices during the winter period from the end of 2020 to early 2021.

Cost of Revenue

Our cost of revenue in 1Q21 declined by 9% y-o-y to US$502 million, as a result of lower fuel cost y-o-y. Total fuel cost declined by 28% in-line with lower fuel cost per liter and lower fuel consumption in the period. We recorded strip ratio of 4.08x in 1Q21, 18% higher y-o-y, in line with our guidance to increase strip ratio this year as we follow our mining plan and mining sequence which require more overburden removal. Coal cash cost per tonne (excluding royalty) decreased by 4% y-o-y.

Royalties to Government and Corporate Income Taxes

The royalties to the Government of Indonesia in 1Q21 increased slightly by 1% y-o-y to US$81 million due to higher proportion of hard coking coal, which generated higher ASP, in our sales volume in the period. Corporate income tax in 1Q21 increased by 57% y-o-y to US$42 million, as in 1Q20, we had to adjust our tax rate down due to implementation of new tax rate policy in 2020, which resulted in higher deferred income tax.

Operating Expenses

Our operating expenses in 1Q21 declined by 26% y-o-y to US$46 million, as we recorded 23% lower selling and marketing expenses and 26% lower G&A expenses.

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Operational EBITDA

Our operational EBITDA declined by 8% y-o-y to US$244 million in 1Q21. Our operational EBITDA margin remains healthy at 35% as we continued to improve operational efficiency and cost control.

Core Earnings

Our underlying core earnings in 1Q21 was US$110 million, 19% lower y-o-y due to lower profitability. Core earnings excludes non-operational accounting items net of tax, which consisted of, among others, amortization of mining properties, and prior year tax assessment.

Total Assets

Our total assets decreased by 6% to US$6,485 million. Current assets at US$1,832 million, was relatively flat y-o-y.Non-current assets decreased by 9% to US$4,653 million. At the end of 1Q21, our cash balance stood at US$1,190 million.

Fixed Assets

Fixed assets as at the end of 1Q21 declined by 13% y-o-y to US$1,499 million, and accounted for 23% of total assets.

Mining Properties

At the end of 1Q21, our mining properties declined by 11% y-o-y to US$1,343 million.

Total Liabilities

Total liabilities of US$2,385 million was 19% lower compared to the same period last year as we paid the majority of our bank loans and booked lower royalty payable due to royalty payment throughout the year. Current liabilities increased by 12% y-o-y to US$1,141 million, while non- current liabilities decreased by 35% y-o-y to US$1,244 million.

Current Maturity of Long-Term Borrowings

The current portion of long-term borrowings in 1Q21 increased by 17% compared to the same period last year to US$617 million as some of our bank loans are maturing, most of which relates to AI's syndicated bank loan due in August 2021.

Long-term Borrowings, net of Current Maturity

The non-current portion of long-term borrowings decreased 40% y-o-y to US$828 million as some portions of our bank loans are maturing and we booked lower lease liabilities.

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Debt Management and Liquidity

Our cash balance at the end of 1Q21 was US$1,190 million. We also had access to US$135 million in other investments and a total of US$400 million in undrawn committed loan facilities from various outstanding loans as at the end of March 2021, which brought our total liquidity to US$1,725 million at the end of 1Q21.

Our interest bearing debts at the end of 1Q21 were US$1,445 million, 24% lower y-o-y, as we continued to make regular loan payments. We continue to strengthen and maintain healthy balance sheet with net debt of US$119 million, net debt to last 12 months operational EBITDA of 0.14x and net debt to equity of 0.03x.

PT Adaro Indonesia US$400 Million Facility Agreement

In April 2021, our subsidiary PT Adaro Indonesia (AI) secured a US$400 million facility agreement. The proceeds from the new US$400 million facility will be used for early repayment of all of AI's outstanding loans from the US$1,000 million seven year facility signed in August 2014. The new US$400 million facility agreement will extend AI's loan maturity profile as it is due in April 2026, and will further strengthen our capital structure.

Equity

At the end of 1Q21, our equity level increased by 3% y-o-y to US$4,100 million compared to US$3,978 million in 1Q20.

Cash Flows from Operating Activities

During 1Q21, cash flows from operating activities decreased 10% to US$128 million, mainly driven by 19% lower receipts from customer.

Cash Flows from Investing Activities

We booked US$54 million in net cash flows used in investing activities, 76% lower y-o-y mainly for capital expenditure.

Capital Expenditure and Free Cash Flow

Our net capital expenditure in 1Q21 was US$41 million, 27% lower y-o-y. The capital expenditure spending in the period was mainly for purchase and replacement of heavy equipment. We also generated a solid free cash flow of US$104 million in 1Q21, 8% higher y- o-y as a result of lower capex and lower working capital changes.

Cash Flows from Financing Activities

Net cash flow used in financing activities in 1Q21 was US$54 million, which was mainly to pay for a portion of our bank loans.

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