Cemex Enters Indonesia

Assumption:
In year 1 to year 3 Indonesian inflation remained at position 30%, the next year that is year 4
and year 5 start gradually improved at the level of 20%. Along with the improving economy
and the inflation rate of Indonesia, cement production began to increase. This is due to the
increasing demand for cement products. The production increased gradually that is 30, 40,
50, 60, up to 70%. However, even so, the results of calculations project shows the project is
not feasible because the NPV is still negative.

Investment
Average forex rate, RP/$
Cost installed capacity ( per ton)
Installed capacity (tons)
Investment in US$
Investment in RP
PPE (in RP)
Annual depreciation (RP)

10.000
$110
20.000
2.200.000
22.000.000.000
17.600.000.000
1.760.000.000

Cost of Capital: CEMEX (Mexico)

Risk-free rate
Credit spread
Cost of debt
Cost of debt, after-tax
% debt

6%
2%
8%
5,20%
40%

Financing
Equity (in
RP)
Debt
RP debt
US$ debt
Total

11.000.000.000
2.750.000.000
8.250.000.000
11.000.000.000

Cemex Beta
Equity
premium
Cost of equity
% equity
WACC

1,5
7%
16,500%
60%
11,9800%

Cost of Capital: CEMEX INDONESIA

Risk-free rate
Credit Premium
Cost of debt in Rupiah
Cost of debt, after-tax
Cost of US$ debt
Cost of US$ debt, after-tax
% debt

33%
2%
35%
24,50%
39%
27,18%
50%

Cemex
Indonesia
Equity
premium
Cost of equity
% equity

WACC

1
7%
40%
50%
13%
33,257%

Semen Indonesia Debt Service Schedule

Project Year
Spot Rate (Rp/$)

Year 0
10.000

Year 1
12.621

Year 2
15.930

Year 3
20.106

Year 4
25.376

Year 5
32.028

Indonesian Loan @ 35% for 8 years (million Rp)

2.750.000
Loan Principal
Interest Payment
Principal Payment
Total Payment

2.654.061
(962.500)
(95.939)
(1.058.439)

2.524.543
(928.921)
(129.518)
(1.058.439)

2.349.694
(883.590)
(174.849)
(1.058.439)

2.113.648
(822.393)
(236.046)
(1.058.439)

1.794.985
(739.777)
(318.662)
(1.058.439)

Cemex Loan @ 10% for 5 years (million US$)

825
Loan Principal
Interest Payment
Principal Payment
Total Payment

689,9
(82,5)
(135,1)
(217,6)

541,2
(69,0)
(148,6)
(217,6)

377,7
(54,1)
(163,5)
(217,6)

197,8
(37,8)
(179,9)
(217,6)

0,0
(19,8)
(197,8)
(217,6)

Cemex loan converted to Rp (million Rp)

Scheduled @ Rp10,000/$
Interest Payment
Principal Payment
Total Payment

(825.000)
(1.351.329)
(2.176.329)

(689.867)
(1.486.462)
(2.176.329)

(541.221)
(1.635.108)
(2.176.329)

(377.710)
(1.798.619)
(2.176.329)

(197.848)
(1.978.481)
(2.176.329)

Actual (@ current spot rate)

Interest Payment
Principal Payment
Total Payment

(1.041.262)
(1.705.561)
(2.746.823)

(1.098.949)
(2.367.915)
(3.466.864)

(1.088.160)
(3.287.494)
(4.375.654)

(958.480)
(4.564.190)
(5.522.670)

(633.669)
(6.336.691)
(6.970.360)

(2.746.823)

(3.466.864)

(4.375.654)

(5.522.670)

(6.970.360)

Foreign Exchange Losses on Cemex Loan (million RP)

Forex Loss on Interest:
(216.262)
Forex Loss on Principal:
(354.232)
Total Forex Loss on Debt:
(570.494)

(409.082)
(881.453)
(1.290.535)

(546.940)
(1.652.385)
(2.199.325)

(580.770)
(2.765.571)
(3.346.341)

(435.821)
(4.358.210)
(4.794.031)

Cash flow in RP on Cemex Loan (million RP)

Total Actual Cash Flow
8.250.000
39%
IRR of cash flow:

Semen Indonesia Pro Forma Income Statement

Project Year
Spot Rate (Rp/$)
Sales Volume
Sales Price ($)
Sales Price (RP)
Total Revenue ('000)

Year 1
12.621
6.000
58
732.039
4.392.233

Year 2
15.930
8.000
58
923.933
7.391.460

Year 3
20.106
10.000
58
1.166.128
11.661.284

Year 4
23.424
12.000
58
1.358.596
16.303.154

Year 5
27.290
14.000
58
1.582.831
22.159.627

(690.000)
(120.000)
(151.456)
(757.282)
(1.718.738)

(1.196.000)
(208.000)
(262.524)
(1.312.621)
(2.979.146)

(1.943.500)
(338.000)
(426.602)
(2.133.010)
(4.841.112)

(2.384.640)
(414.720)
(614.307)
(2.982.938)
(6.396.604)

(3.338.496)
(799.708)
(827.114)
(4.135.568)
(9.100.885)

Gross Profit

2.673.495

4.412.314

6.820.172

9.906.550

13.058.742

License Fees
General & Admin Expenses
EBITDA

(87.845)
(351.379)
2.234.272

(147.829)
(665.231)
3.599.254

(233.226)
(1.166.128)
5.420.818

(326.063)
(1.793.347)
7.787.140

(443.193)
(2.659.155)
9.956.394

Depreciation & Amortization

EBIT

(1.760.000)
474.272

(1.760.000)
1.839.254

(1.760.000)
3.660.818

(1.760.000)
6.027.140

(1.760.000)
8.196.394

Interest on Cemex Debt

Forex Losses on Debt
Interest on Local Debt
EBT

(825.000)
(570.494)
(962.500)
(1.883.722)

(689.867)
(1.290.535)
(928.921)
(1.070.070)

(541.221)
(2.199.325)
(883.590)
36.683

(377.710)
(3.346.341)
(822.393)
1.480.696

(197.848)
(4.794.031)
(739.777)
2.464.738

Income taxes (30%)

Net Income (RP)
Net Income ($ million)

0
(1.883.722)
(149)

0
(1.070.070)
(67)

0
36.683
2

(430.924)
1.911.620
75

739.421
1.725.317
54

Cash costs ('000)

Additional production costs ('000)
Loading costs ('000)
Shipping costs ('000)
Total

Year 0
10.000

Capital Budget: Cemex Indonesia (million RP)

Project Year
Spot Rate (Rp/$)
EBITDA
Recalculated taxes (@30%)
Net Operating cashflow

Year 0
10.000

Additions to NWC
Initial Investment
Terminal Value

(22.000.000)

Free Cash Flow (FCF)

(22.000.000)

NPV @ 33.257%
IRR

Year 1
12.621
2.234.272
(670.282)
1.563.990

Year 2
15.930
3.599.254
(1.079.776)
2.519.478

Year 3
20.106
5.420.818
(1.626.246)
3.794.573

Year 4
23.424
7.787.140
(2.336.142)
5.450.998

Year 5
27.290
9.956.394
(2.986.918)
6.969.476

(240.670)

(139.028)

(436.049)

(289.776)

(625.314)
20.956.418

($10.113.055)
14,6%

1.323.320

2.380.450

3.358.524

5.161.222

27.300.580

Capital Budget: Cemex Indonesia (million RP & million US$)

Project Year
Spot Rate (Rp/$)

Year 0
10.000

Year 1
12.621

Year 2
15.930

Year 3
20.106

Year 4
23.424

Year 5
27.290

0
0
0
0

0
0
0
0

18.341
(2.751)
15.590
1

955.810
(143.372)
812.439
35

862.658
(129.399)
733.260
27

Fees remitted
Withholding tax @ 5%
Net dividend remitted (RP)
Net license fees remitted ($)

87.845
(4.392)
83.452
6,6

147.829
(7.391)
140.438
8,8

233.226
(11.661)
221.564
11,0

326.063
(16.303)
309.760
13,2

443.193
(22.160)
421.033
15,4

Debt Service Remittance

Promised interest paid ($)
Withholding tax @ 10%
Net interest remitted ($)
Principal payments remitted ($)

82,5
(8,25)
74,3
135,1

69,0
(6,90)
62,1
148,6

54,1
(5,41)
48,7
163,5

37,8
(3,78)
34,0
179,9

19,8
(1,98)
17,8
197,8

0,0
6,6
209,4
216,0

0,0
8,8
210,7
219,6

0,8
11,0
212,2
224,0

34,7
13,2
213,9
261,8

26,9
15,4
215,7
258,0

Dividend Remittance
Dividends paid (RP)
Withholding tax @ 15%
Net dividend remitted (RP)
Net dividend remitted ($)
License Fees Remittance

Capital Budget: Parent Viewpoint (US$ million)

Dividends
License fees
Debt service
Total
Initial Investment
Terminal Value

(1.925)

Free Cash Flow (FCF)

(1.925)

NPV @ 17.98%

767,91

(863,88)
0%

216,0

219,6

224,0

261,8

1.025,9