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“The Board of Commissioners purposely supervised the execution of the Company’s management policies and process, including the implementation of the Company's long-term plans, as well as the decisions of the General Meeting of the Shareholders and the regulations set forth.”
Dear Shareholders,
In accordance with the Company’s vision of being a leading bulk chemicals and energy distribution company, the Board of Commissioners supervised the Board of Directors in 2012 and the investment strategies undertaken during the year in order to lay the foundations for the Company’s on-going improvement in performance.
The Board of Commissioners introduced a number of measures to support the Board of Directors. The Board of Commissioners have consistently supervised the Company’s management policies, including the implementation of the Company's long-term plans, and decisions at the General Meeting of the Shareholders and regulations.
Review of Financial Performance During 2012
The Board of Commissioners are more than pleased with the impressive financial results of the Company for 2012. We hope that this fine performance will lay the foundations for continuous effort and improvement in the years ahead.
The Board of Directors Report provides the details of the financial results for the year 2012 compared to 2011. The Board of Commissioners provides a brief review of the financial performance as stated below:
- The financial statements as of December 31, 2012 show the total assets amounting to Rp11,787.5 billion, reflecting an increase of Rp3,369.7 billion or 40% higher compared to Rp8,417.9 billion as per the financial position at the end of the year 2011.
- As per the profit and loss account during the year 2012, The profit for the year attributable to equity holders of the parent entity amounted to Rp 649.3 billion, an increase of 4.9% compared to core net income for the year 2011 which was Rp 619.0 billion.
- Net cash used in operating activitiesin 2012was Rp 168.6 billion, net cash used in investment activities was Rp 1,204.0 billion, whereas net cash provided by financing activities was Rp 1,882.4 billion.
The consolidated financial statements for the financial year 2012, was audited by the Public Accountant Purwantono, Suherman & Surja and issued with unqualified opinion, and highlights that the Company has implemented adequate internal control measures to comply with regulatory requirements.
The Board of Commissioners have provided the following guidelines to the Board of Directors:
- Continuously improve cooperation relationships with principals, partners and stakeholders.
- Continue to improve the Standard Operating Procedures (SOP’s) and management of the Company.
- Optimally manage the cash flows of the Company’s operations.
- Optimize the roles and functions of risk management and internal controls.
- Raise the capabilities and skills of employees through formal and non-formal education and training.
- Develop the entire divisions within the Company in order to acquire competence and skills to implement the Company’s expansion plans.
As an appreciation to the Board of Directors and all employees, we would like to acknowledge that the Company’s growth was well-received by investors in the capital market, the Company’s share price increased by 37% during 2012.
Dividend Distribution
The Company declared a dividend of Rp 360 per share as approved by the Annual General Meeting of Shareholders held on May 15, 2012 the final dividend of Rp 25 per share was paid in June after deducting the interim dividend payment during 2011. After evaluating the net profit for 2012, cash position and disbursement plan, the Board of Directors declared the interim cash dividend for fiscal year 2012 at Rp 40 per share to be distributed on January 16, 2013.
Strategic Investment in Jiipe
The Company is currently investing in an integrated industrial port project, named Java Integrated Industrial and Ports Estate (JIIPE), which is planned to be one of the largest integrated port and industrial estate in Indonesia. This is moving us to the next level. The business approach is also more multifaceted and will ccelerate our revenue. Number one focus is on our core business. As a logistics company, an integrated industrial port estate is a catalyst for logistics, bringing added value to our customers and revenue curve.
The project is being jointly developed with Pelindo III. Located in Gresik - East Java, which has a vibrant economy, home to heavy industries and large labor force, the port would serve as a large fully-integrated industrial zone with a sustainable industrial complex with deep water port and fully-supported with infrastructure and utilities. The Board of Commissioners believes that this strategic investment would bring significant value to the Company in the future.
Business Outlook
The distinguishing element of the Indonesian story is the strength of domestic demand. Indonesian economic growth and Gross Domestic Product (GDP) growth is on an upward trend. In the midst of the debt crisis in the US and the European countries, the country recovered impressively with economic growth now calibrated at more than 6% annually. Indonesia has become a promising investment prospect in the view of many economists.
Along with the national economic growth, the Company’s business performance has developed well. Business outlook has been set and executed by the Board of Directors as provisioned with the Company’s long-term plan. The Board of Commissioners considers that the Board of Directors have executed the business outlook in an exemplary manner, to meet the vision and mission, supported by appealing national economic conditions.
The Board of Commissioners fully supports the Company’s business operations with supervision and direction in pursuance to the vision and mission. In the future, the Board of Commissioners believe that the Company’s business, petroleum and basic chemicals trading and distribution, logistics services, manufacturing, and coal mining and trading, will continue to on the path of growth.
The trading and distribution business of petroleum and basic chemicals has considerable growth potential, in line with Indonesia’s economic growth, particularly in the consumer, mining and the energy sectors. The demand for petroleum products in Indonesia continue to increase with the country’s economic growth. The growth of national petroleum consumption generally followed the growth of GDP. However, for particular sectors such as mining, petroleum consumption may exceed GDP growth. Besides, increases in manufacturing industries also increase the demand for basic chemicals, as one of the raw materials for manufacturing.
The Company acknowledges the trust placed by BPH Migas, Indonesian downstream deregulation body, to increase the allocation of subsidized fuel to be distributed by the Company during 2013. To implement better control on distribution of petroleum products, the Company has implemented innovative information technology which has improved efficiency in business process.
The Company believes that other business segments, which consist of logistic services, manufacturing and coal mining and trading, will have brighter outlook and would produce additional value for the Company in the future.
Implementation if Good Corporate Governance
The Board of Commissioners are aware that the main key to conduct sustainable growth depends not only on the Company’s ability to provide high quality products and services, but also the ability to perform an effective financial management and basic principles of Good Corporate Governance (GCG), which are Transparency, Accountability, Responsibility, Equality and Independence.
Therefore, the policies to operate the Company based on GCG and to continuously improve GCG quality over the years should be supported. The Company needs to implement these policies consistently in order to maintain sustainable growth and increase value for the Company.
The Company is committed to implement GCG in every business activity. The Board of Commissioners believe that the existing GCG practice is already in line with the Company’s standard of GCG.
As part of GCG implementation, the Company’s Audit Committee has conducted review of internal controls, systems and audit procedures according to the annual audit plan. The Audit Committee also evaluated the financial statements periodically as well as the business strategies and risk management practices enforced by the Company’s management.
The results of these audits and evaluations have been reported to the Board of Commissioners and discussed with the Board of Directors. Suggestions for improvements are prepared by the Audit Committee and are being implemented at all levels of the Company.
Corporate Social Responsibility
To create a balance between the Company’s economic interest and social awareness, the Company has consistently conducted various activities of Corporate Social Responsibility (CSR) which serve as the Company’s commitment to support local communities and preserve the environment.
The Company’s CSR is implemented through the environment; employment, health and safety; social and community development; and product liability. The Company’s CSR activities include scholarships, clean water facilities, development of road infrastructures and donations to local schools.
Changes In The Composition Of The Board Of Commissioners
In 2012, the Company did not make any changes to the composition to the members of the Board of Commissioners.
Appreciation
With this Annual Report, the Board of Commissioners welcomes all awards received by the Company during 2012, such as The Best of Asia by Corporate Governance Asia. The Board of Commissioners also express gratitude and appreciation to all members of the Board of Directors and all the employees for their contribution, commitment, support and dedication to the Company and also thank the principals, partners, bankers and bondholders for their continued support.
For and on behalf of the Board of Commissioners,
Soegiarto Adikoesoemo
President Commissioner