COMPANY ACTIVITY & FINANCIAL POSITION

Consolidated Income Statements

In 2007, the Company recorded a consolidated net sales value of USD 318.72 million and gross profit margin of 10.91%. The consolidated net sales value experienced a reduction of 1.41% from the previous year’s figure which was USD 323.26 million, with gross profit margin 11.07%.

Reduction in net sales value was due to the decrease in sales volume of Branched Alkylbenzene (BAB), as a result of high selling price caused by the increase in the price of BAB raw materials, and also due to reduction in net sales from property sector.

UIC and Albright & Wilson (Australia) Limited are still the biggest contributors for the net sales of the Company, respectively 57.89% and 22.73% in the year 2007.

Net income in 2007 increased by 182.05% from USD 1.25 million in the year 2006 to USD 3.53 million. This was primarily due to reduction in operational expense as much as 11.01% from USD 24.88 million in 2006 to USD 22.14 million which was resulted from the reduction in transportation and freight costs and salary expenses. Other factor influencing the increase in net income was income tax expense reduction which stood at USD 1.39 million in 2007 compared to USD 2.20 million in previous year.

EBITDA in 2007 was recorded in amount of USD 26.13 million, or an increase of USD 746 thousand from USD 25.39 million in 2006.

Consolidated Balance Sheets

The consolidated current assets as of December 31, 2007 was USD 132.40 million, which showed a decrease of 11.97% from previous year’s figure of USD 150.39 million, primarily resulted from reduction in the value of inventory. Whereas the consolidated non-current assets in 2007 stood at USD 146.14 million, or a decrease by 5.10% from USD 153.99 million in 2006, due to the decline in book value of non-current assets as a result of depreciation during the year, and also the declining value of assets from real estate. Consolidated total assets as of December 31, 2007 was recorded at USD 278.53 million, reduced by USD 25.85 million from USD 304.38 million in 2006.

The consolidated total liabilities in the year 2007 was recorded at USD 144.88 million or decreased by USD 30.53 million from USD 175.41 million of previous year.

The consolidated current liabilities at end of 2007 was USD 122.15 million, increased by 38.81% or USD 34.15 million from USD 87.99 million in 2006. This was mainly due to bonds payable and other derivative instruments were posted as non-current liabilities in 2006, meanwhile in 2007, they were reclassified as current liabilities due to their maturity within one year period, that is October 2008, amounting to USD 57.81 million and USD 3.12 million respectively. These also explained the reduction in noncurrent liabilities which was recorded at USD 22.73 million in 2007 from USD 87.41 million in the year 2006.

Up to December 31, 2007, the Company has executed bonds buy back in the amount of Rp 54 billion, as such the value of bonds payable as of that date was Rp 546 billion (equivalent to USD 57.81 million).

Dividends and Market Capitalization

After reviewing cash flow condition of Company’s, the shareholders, in General Shareholder Meeting held on May 23, 2007, had agreed not to distribute dividend in 2007. Last year, on September 6, 2006, the Company distributed USD 1 million cash dividend or equivalent to Rp 24 per share, as resolved by the General Shareholders Meeting held on July 19, 2006.

Dividend Policy: to provide an attractive return of which the amount of cash dividend will be adjusted according to the Company’s profit without neglecting the financial health of the Company and without lessening the authorities of the General Shareholders Meeting to determine otherwise in accordance with the Company’s Articles of Association.

Since the year 2001, the maximum cash dividend distributed to the shareholders is 30% from the net profit of the related year. Based on closing price of Rp 2,800 at end of 2007 and Rp 2,725 at the end of 2006, the market capitalization of the Company’s shares stood at Rp 1.07 trillion and Rp 1.05 trillion at end of 2007 and 2006 respectively.

Loan Payment and Collectible Receivable

The Company always maintains its commitment in fulfilling loan payment and requirement as regulated in the credit agreements and bond’s prospectus. PT Pemeringkat Efek Indonesia has granted Single A- (stable outlook) rating for the Company and its bonds. The rating is effective from October 26, 2007 until October 28,
2008 (the maturity of Bond).

94% of the Company’s trade receivables were not yet due and those overdue more than 60 days were about less than 1%. Based on the analysis on each receivable account, the Company was confident that the reserve made for the doubtful receivable
account in the amount USD 15,925 at the end of 2007 should be sufficient to cover the possible loss that may arise from noncollectible account receivable.