Dear Shareholders and Stakeholders,

Praise the Lord for His blessings that the Company still achieved positive performance in the year 2022 amidst the challenging economic conditions due to geopolitical tensions.

In 2022, the economy starts to recover in line with the ease of mobility restriction. However, there is geopolitical tension from Russia-Ukraine war which triggered an energy crisis, especially oil and gas, driven up very high global inflation. With these economic conditions, the Indonesian economy continued to record a mild growth at 5.3%, which was mainly supported by domestic demand and maintained purchasing power. 

During difficult time and challenges after Covid-19 pandemic, there are also positive impacts, namely increasing of people awareness toward cleanliness and hygiene. These indirectly provide positive effects to the Company who dealt with cleaning products.

With sincere gratitude we humbly report that in 2022 the Company achieved a good financial result compared to target, with consolidated revenue of USD 412.08 million, an increase of 11.05% from 2021 which was USD 371.08 million. The Company net profit in 2022 was USD 37.90 million a decrease of 37.41% from 2021 which was USD 58.05 million, but still above the Company’s target for 2022. 

Such achievement pushed us to maintain positive working attitude, to be vigilant and to continue pursuing sustainable growth.

The Company committed to sustainable growth which is necessary to meet present and future demand. We are aware and obliged to align the operation with Environment, Social and Economic aspects which is the key to a successful business growth.

Strategy and Policy of Strategy 

The increase of awareness for clean and hygienic lifestyle resulted an increase of demand for the Company’s product. Therefore, the Company will expand its production capacity, whereas this capacity expansion is expected to start in 2023 and to be completed in 2025.

In the meantime, the Company will maximize its production output and maintain stable distribution of product to ensure raw material availability for continuous production of loyal customers, both domestic and overseas. The Company will also continue explore new market.

To ensure the Company ran smoothly also employees’ health and safety were well protected, the Company set regulations based on government Covid-19 health protocols and enforced them to all employees at the plant and at the office. The Company has also implemented a COVID-19 vaccination program for employees and their families, so that the Company’s activities can continue to run smoothly and effectively.

The Company always carry out and professionally managed sustainable and environmentally friendly operations in accordance with prevailing laws and regulations. The Company has obtained ISO 14001:2015 certificate by SGS Systems & Services Certification since 2004. 

Directors’ Role in Formulating Strategy and Policy 

The Company directors had important roles in formulating the Company Strategy and Policy to achieve The Company’s goal and to present the best result to the stakeholders.

The strategy and policy had been evaluated and discussed in depth. The Company directors were assisted by the Company management in analyzing risks for finance, nonfinance and business prospects. The end results were delivered to the Company Commissioners for consideration and feedback.

The directors, assisted by the management team, Internal Audit unit, and the Corporate Secretary, continuously monitor the implementation of the approved Company strategy and policy and when made adjustments and revisions when needed adapting to the changes of economic situation and condition. 

Comparison between Result and Target 

In 2022 the crude oil price experienced an extraordinary soaring price, especially in the first to second quarters due to the impact from Russia-Ukraine war, but then decreased until the end of year. The fluctuation of crude oil price greatly affected the raw material costs and the Company product selling price, where the downtrend effect caused to stress the Company’s margin.

With these adverse conditions, the Company is still able to achieve consolidated revenue of USD 412.08 million which exceeds the 2022 target of USD 387.79 million. This gave the Company higher margin in 2022 and recorded gross profit of USD 73.47 million exceeding the 2022 target of USD 63.88 million. 

Obstacles 

The drastic changes of crude oil prices caused by Russian-Ukraine war Covid-19 would affect the Company’s margin. Even though the Covid-19 pandemic has become endemic, but the still presence of active cases could potentially delayed the Company’s operations.

Covid-19 health protocols restricted direct meetings with contractors and related parties which was replaced by virtual meetings. In addition to that border closures and isolation quarantines for visitors, especially in the first half of 2022 affect the project progress. Therefore, the expansion project experienced delay from the original plan. 

Overview of Business Prospects 

In 2023 it is predicted that global economic condition will slow down at 2.3%, and of course this will have an impact to Indonesian economic conditions. The Indonesian economic growth in 2023 is predicted by Indonesia Central Bank (BI) to be in the range of 4.5% to 5.3%. This prediction is based on 2022 economic growth indicators which continue to recover.

Indonesia detergent consumption per capita is still relatively low compared to those in developed countries. With good economic growth, population size and population growth will give good prospect to the detergent and cleaning industries in Indonesia. The increase of people awareness for clean and hygienic way of life also increases the detergent and other cleaning products. Therefore, we are confident and optimistic for the Company future.

In 2023 the Company will start the expansion project to increase the production capacity by 120,000 MT of Linear Alkylbenzene per year. This capacity increase is expected to strengthen the Company position domestically and internationally to provide sustainable on time supply to the customers. 

Governance Implementation 

The Company always value the importance of sustainable growth and concern for Environment, Social and Governance (ESG) where  ESG is a main pillar toward achieving sustainable growth.

The Company always believes that Good Corporate Governance (GCG) is an important aspect in managing the Company to protect the interest of stakeholders also to enhance the trusts and values of the shareholders toward sustainable business growth.

Therefore, the Company continues to ensure that the basic principles of the GCG, which consists of Transparency, Accountability, Responsibility, Independence and Fairness - are applied to all aspects of the business operations and at all levels of management and implemented in accordance with prevailing laws and regulations. The Company always ensures that the Company’s organs such as the General Shareholders Meeting (GSM), the Board of Commissioners, the Directors as well as other GCG supporting organs such as the Audit Committee, the Internal Audit Unit and the Corporate Secretary function properly so that the Company’s GCS can be fully enforced.

In 2022 the Company has fulfilled all obligations on reporting and disclosure of information to all stakeholders punctually in accordance with prevailing laws and regulations.

On 28 June 2022, the Company’s Directors held Annual GSM for the 2021 financial year, in which the Company’s Shareholders received and ratified the 2021 Annual Report which includes the Company’s Activity Report, the Board of Commissioners’ Supervisory Report, and the Company’s Financial Statements for the 2021 financial year.

In the same Annual GSM. the Company’s Shareholders have also decided to distribute cash dividends on 2021 net income, amounting to USD 14.60 million, of which USD 12.02 million has been distributed as interim cash dividend on 27 January 2022 and the balance USD2.58 million as final cash dividend has been distributed on 18 July 2022. 

As part of the Company commitment to be active in establishing sustainable environment, the Company has created special task force who specifically deal with health, safety and environment (HSE). The Company will continually improve the HSE by providing trainings. The Company was awarded ISO 14001:2015 Certificate by SGS System & Services Certification since 2004 as prove of the Company active involvement on environment. In the end of 2022, the Company is in the process to obtain international quality standard certification ISO 45001:2018 for Occupational Health and Safety Management System from AMTIVO accreditation agency, which subsequently has been received in March 2023.

The Company maintains good working relationships and communication with the employees, facilitates a union without discrimination of ethnic, religions, race, and gender. The Company also carry out an equal and fair performance evaluation and fulfilling the normative rights of employees as stipulated in the Manpower Law. The Company also maintains good Occupational Health and Safety (K3) for the employees and creates a comfortable working environment, beautiful and environmentally friendly.

The Company’s commitment to provide quality products for its customers, the Company’s credibility to maintain the quality of its products have been recognized through the ISO 9001:2015 international quality standard certification which has been obtained by the Company since 2003 from SGS Systems & Services Certification.

The Company actively participates in Corporate Social Responsibility within the company and also the surrounding community. During Covid-19 prevention effort, the Company enforced strict rules in line with government health protocols and facilitated Covid-19 vaccination programme for the employees and family also to the surrounding community.

As a form of the Company’s concern for the surrounding community, the Company also provides work to the surrounding community (Pemuda Karang Taruna) as part of human resources programme and participate in social activities and scholarship in the surrounding environment.

Appreciation

Finally, we would like to appreciate all employees who have worked with full dedication so that the Company could overcame 2022 challenges with positive achievements. We are also very thankful for all our customers, suppliers, creditors and business partners for the supports, cooperation and trusts provided to us. We will continue to put our best efforts to strengthen our cooperation based on mutually beneficial partnership.

We also expressed our respects and gratitude to the Board of Commissioners for their guidance and to the Shareholders for their trusts. We are optimistic that the Company will continue to advance and achieve optimum results.

-j23-