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  • ASIA PACIFIC FIBERS

    1 | ANNUAL REPORT 2015

    Contents

    3 Company Description

    4 Financial Highlights

    5 Message from the President Commissioner

    8 Message to Shareholders

    12 Management Report

    18 Management Discussion and Analysis

    20 Good Corporate Governance

    27 Organisation Structure

    28 Corporate Information

    34 Independent Auditor Report

  • ASIA PACIFIC FIBERS

    2 | ANNUAL REPORT 2015

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  • ASIA PACIFIC FIBERS

    3 | ANNUAL REPORT 2015

    Company

    Description

    PT Asia Pacific Fibers Tbk (formerly PT Polysindo Eka Perkasa Tbk), established in 1984, is a

    leading polyester manufacturer in Indonesia. Its manufacturing operations span the entire

    polyester production chain, from raw materials to end products, ensuring quality and

    consistency. PT Asia Pacific Fibers is the only integrated producer of polyester in Indonesia.

    The manufacturing facility for PTA, continuous polymer, and staple fiber is located in

    Karawang, West Jawa. Filament yarn, produced at the largest yarn facility in Indonesia, is

    located in Kendal, Central Jawa.

    PT Asia Pacific Fibers‟ current products include Purified Terephthalic Acid (PTA), polyester

    chips, polyester staple fiber, polyester filament yarn, and performance fabrics. The Company´s

    products are marketed and sold both in domestic and international markets.

    The following is the report on the business performance of PT Asia Pacific Fibers Tbk in 2015.

    The term “Company” used throughout the report refers to PT Asia Pacific Fibers Tbk and all its

    subsidiaries. The term “APF” refers to PT Asia Pacific Fibers Tbk as a stand-alone entity, while

    the term “Texmaco Jaya” refers exclusively to PT Texmaco Jaya Tbk.

  • ASIA PACIFIC FIBERS

    4 | ANNUAL REPORT 2015

    Financial

    Highlights

    The following table sets forth the financial highlights of the Company for the years ended

    31st December 2011 to 2015.

    The Company‟s current auditors are Drs. Hendrawinata Eddy Siddhartha & Tanzil (Indonesian

    Member firm of Kreston International)

    31st December

    2015

    US$ 000

    2014(2)

    US$ 000

    2013

    US$ 000

    2012

    US$ 000

    2011(2)

    US$ 000

    Current Assets

    Fixed Assets-Net

    Total Assets

    Liabilities

    Equity

    Net Sales

    Gross Profit

    Operating Profit

    Net Income

    Net Working Capital (1)

    Profit per Share-Net

    Gross Profit Margin %

    Net Profit Margin %

    Return on Investment %

    Return on Equity %

    Current Ratio

    Debt to Total Assets

    Debt to Equity

    143,251

    61,876

    232,495

    1,157,902

    (925,407)

    387,054

    8,153

    (11,647)

    (17,787)

    (958,570)

    (0.01)

    (0.01)

    (0.05)

    NA

    NA

    0.2

    4,98

    (1.25)

    177,420

    61,366

    275,372

    1,184,396

    (909,024)

    493,567

    (13,827)

    (81,490)

    (79,800)

    (949,426)

    (0.03)

    (0.03)

    (0.16)

    NA

    NA

    0.2

    4,30

    (1.30)

    235,769

    82,225

    353,491

    1,181,392

    (827,901)

    565,142

    (20,571)

    (36,466)

    (30,062)

    (896,001)

    (0.01)

    (0.04)

    (0.05)

    NA

    NA

    0.2

    3.34

    (1.43)

    237,040

    129.394

    403.252

    1,201,091

    (797,838)

    599,331

    (5,982)

    (23,515)

    (32,119)

    (931,551)

    (0.01)

    (0.07)

    (0.11)

    NA

    NA

    0.2

    2.98

    (1.51)

    231,660

    184.837

    452.635

    1,218,898

    (766,263)

    635,535

    13,879

    (19.863)

    (8,840)

    (936,758)

    0.00

    2.18

    1.39

    NA

    NA

    0.2

    2.69

    (1.59)

    Notes: (1) Current Assets minus Current Liabilities (2) and (3) As Restated

  • ASIA PACIFIC FIBERS

    5 | ANNUAL REPORT 2015

    Message

    from the

    President

    Commissioner

    Dear Shareholders,

    Amid an unfavourable investment climate, weakened consumer sentiment and low prices for

    key export commodities, such as coal, metal minerals, rubber and crude palm oil, Indonesia

    has become more dependent on government spending to drive economic growth. Indonesian

    GDP in 2015 showed year-on-year (YoY) growth of 4.8%, marking a continuation of the

    downtrend seen in recent years.

    The petrochemicals industry has had to sail through turbulent weathers in 2015 due to the

    volatility in the crude oil price, which has dropped up to 70% since mid-2014, much more

    than the market expected. This steep fall in crude prices has caused cascading effect on the

    Polyester chain prices and margins leading to significant write-down in inventory valuation.

    PTA witnessed a huge capacity addition, disproportionate to demand during 2013-15, brought

    down the operating rates to 72%. The TPT sector in Indonesia suffered a contraction with a

    negative growth of over 5% during 2015 year due to the economic slowdown leading to

    decline in purchasing power causing lower demand for textile products. The domestic market

    remained sluggish throughout the year.

    Assessment of Performance of Board of Directors

    The Board of commissioners continue to supervise the functions of the Board of Directors and

    give them necessary policy guidelines in effectively handling the tough challenges faced by

    the Company and manage the business affairs prudently. The foregoing adverse market

    factors and continuous drop in material prices affected the performance of PT Asia Pacific

    Fibers Tbk (the “Company”) significantly during the year 2015 in terms of decline in Sales

    revenue and EBITDA losses. Sales revenue for the year 2015 has dropped to US$387 as

    compared to US$494 million for the last year. Falling trend in commodity prices and

    consequent plunge in polyester prices have also led to significant write-down in inventory

    valuation during the third and fourth quarter of the year.

    In view of the unsustainability of the PTA operations under the current trading conditions, your

    Board of Directors, after careful evaluation of the pros and cons, recommended the strategic

    option to temporarily suspend the PTA operations and take up total revamp of the plant in

    order to improve its cost efficiency and productivity at par with the latest technology. It was

    also decided to outsource PTA from market and mothball the PTA plant till revamp is taken

    up. The Board of Commissioners strongly feel that the strategic decision to shut down the PTA

    plant temporarily and outsource its PTA requirement externally, is an imperative step in the

    right direction to turn around the performance of the Company, especially in the background

  • ASIA PACIFIC FIBERS

    6 | ANNUAL REPORT 2015

    of the global PTA trade and the on going capacity rationalization in China and elsewhere

    across Asia.

    The Board of Commissioners acknowledges the strategiic efforts taken by the Board of

    Directors and values their contribution in the following areas:

    a) Continued to retain its dominant position in catering to the raw material needs of the downstream textile sector in Indonesia, despite the depressed market conditions and

    stiff competition.

    b) Continous engagement in diversyfying into specialty/distintive products for growing segments of Automotive, Home textiles and Performance applications, despite the

    financial contraints faced by the Company.

    c) Cost saving measures in the areas of energy, efficiency improvement and waste reduction to improve overall operational efficiency.

    Review of Business Prospects

    The Commissioners have reviewed the strategic plan of the Company for the year 2016 in the

    backdrop of the projected recovery in the domestic TPT sector consequent to various stimulus

    packages and fiscal support announced by the Government. Soft outlook for crude and the

    drop in the polyester prices augurs well for the polyester fibers to be more competitive than

    cotton and other fibers, which would improve polyester‟s share in blended textile products.

    The key areas of action focussed in the business strategy implemented by the Board of

    Directors are expected to significantly improve the performance of the Company in the coming

    years.

     Cost advantage on the bought out PTA as compared to captive production in the background of falling PTA spreads.

     Continuous optimization of plant utilization

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