“Economic growth in 2011 gained momentum and boosted Company performance in achieving targets. This performance growth generated positive responses from investors, as seen in the Company’s share price increasing by 77.9% during 2011.”
Dear Shareholders,
We would like to thank the Almighty God that we could sail through 2011 with much better performance than in the previous year. The global economic turmoils and issues did not have negative impact on the Indonesian economy. According to Statistics Indonesia (BPS), GDP grew 6.5% in 2011 compared to 2010 at 6.2%. Other macroeconomic indicators, such as inflation and the, benchmark interest rate, also tended to be better than in the previous year.
Performance
Following the evaluation of business plans, investments, and Company performance during 2011, the Board of Commissioners considers that the Board of Directors and all levels of PT AKR Corporindo Tbk utilized the momentum of national economic growth as a basis for the improvement in the Company’s performance during 2011. The Board of Commissioners believes that the policies and work programs were successfully implemented during 2011 by management and all personnel within the Company and its subsidiaries in accordance with predetermined targets.
As part of the Company’s strategy to focus on its core business of energy distribution and basic chemical trading and distribution, the Company conducted corporate action for divestment of its investment in manufacturing subsidiary PT Sorini Agro Asia Corporindo Tbk, to PT Cargill Foods Indonesia, a subsidiary of Cargill International Luxembourg 6 S.A.R.L. This divestment as completed in early 2011 and the Company realized Rp 2.2 trillion in cash and recorded as gain of Rp 1,689.9 billion, approximately Rp 442 per share as income from discontinued operations. After evaluating the cash position and requirements, the Board of Directors distributed interim dividends twice for 2011, in the amounts of Rp 135 per share and Rp 200 per share. The interim dividends were distributed to shareholders on March 29, 2011 and September 8, 2011.
The Company improved the capacity of its distribution and logistics business by completing the construction of a number of distribution and logistic infrastructure facilities in 2011. One of these was the adding of capacity at the storage tank terminal at Stagen, increasing the capacity to 80,000 KL. In order to strengthen the logistics network, in early 2011 the Company commenced expansion of infrastructure facilities for Petroleum and basic chemicals distribution.
In 2011, the Company distributed 2,039,612 KL of petroleum, increasing 50.4% from the 1,355,677 KL in 2010. The sales volume of Petroleum was far above the target in 2011. In addition, the volume of trading and distribution of basic chemicals, logistics, manufacturing and continued to grow throughout 2011. This volume growth contributed positively to the Company’s consolidated sales and revenues from continuing operations in 2011, increasing to Rp 18,805.9 billion, 82.2% higher than Rp 10,320.7 billion in 2010.
The Company recorded income from operations of Rp 715.5 billion in 2011, increasing 108.3% from Rp 343.5 billion in 2010. The Company’s 2011 net income attributable to the equity holders of the parent reached Rp 2,293.4 billion, 637.6% higher than Rp 310.9 billion in 2010. This net income includes the income from discontinued operations of Rp 1,689.9 billion.
As appreciation for the Board of Directors and all employees, we would also like to acknowledge that the Company’s strong performance growth was well-received by investors in the capital market. This was reflected by he Company’s share price increasing by 77.9% during 2011, from Rp 1,700 per share at the beginning of the year to Rp 3,025 per share by year end. This increase in the share price contributed to higher shareholder value.
Growth Strategy
We fully support the Board of Directors’ strategy of continued focus on the Company’s core strengths in distribution and logistics. These businesses have considerable growth potential, in line with Indonesia’s economic growth, particularly in consumer, mining and energy sectors. The Company’s strategy to synergize logistics and distribution with energy and coal mining sectors is in the right direction. Not only will it benefit the Company, but also benefit customers and all stakeholders.
Demand for Petroleum in Indonesia will continue to increase in line with economic growth. The growth of national Petroleum consumption generally follows the growth of Gross Domestic Product (GDP). However, for some sectors like mining, Petroleum consumption growth might exceed the GDP growth rate as mining follows global demand for commodities, and particularly for coal, which has seen significant demand increases as the second largest energy source after petroleum. Meanwhile, growth in the manufacturing industry also spurs the demand growth for basic chemicals, which are important raw materials. Such increases will have a positive effect on the growth of the Company’s basic chemical distribution business.
The Company has sufficient capital for investment, to increase of current business capacity and also to begin new ventures. We fully support the strategic plan of management to use proceeds from the divestment to strengthen the Company’s core business in the long run. The funds will be used, among other purposes, to increase distribution capacity, strengthen and expand the logistic infrastructure network and develop energy businesses related to the Company’s logistic network.
Implementation of GCG
The policies to operate the Company based on Good Corporate Governance (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 into the future.
To support the implementation of GCG, the Board of Commissioners has appointed a new Audit Committee to replace the previous Audit Committee, whose work period had ended. The new Audit Committee has been constituted as of January 28, 2011. I Nyoman Mastra has been nominated as head of the Audit Committee with Ngurah Gede and Subarto Zaini as members, all highly competent professionals in corporate audit and governance. Therefore, the Audit Committee is expected to guide GCG implementation and ensure that GCG implementation is in accordance with Government regulations, good governance principles and internationally accepted GCG practices.
The Audit Committee has reviewed the internal controls, systems and audit procedures conducted by the Company according to the annual audit plan. The Audit Committee also evaluated the the financial statements periodically as well as the business strategies and risk management practices implemented by Company 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 improvement prepared by the Audit Committee are being implemented by all levels of the Company.
Changes in the Board of Commissioners
Based on the results of the Extraordinary General Meeting of Shareholders on January 26, 2011 at Jakarta, the shareholders approved the composition change in the the Board of Commissioners. I Nyoman Mastra, who previously served as a Commissioner, was appointed as Independent Commissioner, replacing Sabirin Saiman who was later appointed as Commissioner, a position formerly held by I Nyoman Mastra.
Appreciation
On this occasion, we would like to congratulate and give appreciation to the Board of Directors and to personnel at all levels of the Company for the numerous awards gained throughout 2011, such as Asiamoney, Best Practitioners of Good Governance in Asia by Corporate Governance Asia. In addition, Forbes Magazine awarded the Company as one of the 10 Best Companies in Indonesia with sales over U.S. $ 1 billion.
On behalf of the Board of Commissioners, I would like to express my sincere appreciation to the Board of Directors and employees of the Company and its subsidiaries for their hard work, dedication, commitment and support, enabling the Company to achieve the excellent performance mentioned above. We believe that such support as well as the experience and capabilities of the Board of Directors and employees will provide the Company with sustainable growth in the coming years.
For and on behalf of the Board of Commissioners,
Soegiarto Adikoesoemo
President Commissioner
