Board of Director's Report

This year net profit has not reached the expected level, nevertheless the strategic policy applied by management commenced showing result. The optimal utilization of the Company’s land value through the development of office and apartment building complex start giving the contribution in sale and margin. The low-rise apartment development located in Jakarta Central Business District is a brave breakthrough from management. The development of office building will be implemented in line with the strategy decided by the management.

Various challenges in 2006 kept stimulating us to find solution for the Company’s progress. The high crude oil price and the influence of supply-demand resulted the price of material became high. The business competition in region and high US Dollar loan interest rate are also quite a concern to the Company’s business.

Nevertheless, we stay focus in bringing value to our shareholders. This year, we have applied the cheaper alternative fuel to substitute the diesel fuel without reducing any product quality. The research activity is being developed to find the most efficient production formula. We also plan to increase the integrated business by widening the business into upstream, that is one of raw material of Alkylbenzene.

The participation of the Company in capital investment at Fang Cheng Tian-Mu Chemical Co., Ltd., China, smoothen the supply of Phosphoric Acid, material for Phosphate. But, China Phosphate product is the competitor to be alerted.

As a public company, the Company fully committed to develop and apply the policy and the principle of Good Corporate Governance. We realize the important of Good Corporate Governance as a means to increase the Company performance and accountability to the public. These principles cover accountability, justice, transparancy, independency and fulfill the responsibility to the stakeholder.

The tenure of previous Board of Directors has ended in 2006. In Annual General Meeting Shareholder executed on July 19, 2006 in Jakarta, the Shareholders have appointed a new Board of Directors as follows :

Mr. Yani Alifen - President Director
Mr. Andi Solaiman - Vice President Director
Mr. Jimmy Masrin - Director
Mr. Handoyo Sutanto - Director
Mr. Lioe Seng Tjin - Director
Mr. Koesbandi - Non-Affiliated Director

Kindly let us convey our great gratitude to the Shareholders and Board of Commissioners who keep granting us their support and guidance. We never forget to convey our recognition and thankfulness to all employee for their dedication, hard working and never give up spirit in giving the best to the Company, as well as to other various parties for the co-operations and support. We believe that full support from stakeholder, the Company could grant more value for all of us.