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President Messages

Dear Honorable Stakeholders,

Thanks to God for everlasting blessing and also the continuous support from all Stakeholders to the Company and the Management till we past 2016 in a better results compare than the year before.

In 2016, the Company managed to grow in double digit, both at the top line and bottom line, regardless the downturn of global economic trend and also the National politic turbulences with influencing all schedules of tender in Oil & Gas by the State-Owned Company.

PERFORMANCE 2016

The Company sales increase 16% mostly due to the contribution from LNG sector managed by PT Bhaskara Inti Samudera (PT BIS) a company subsidiary joint with PTT Tokyo and MOL Japan also LNG Japan won the first contract in providing mini LNG carrier for the first mini LNG of IPP project located at Benoa, Bali. In this project, the Company employing the new acquire mini LNG carrier called LNG Triputra (originally was Surya Satsuma).

The Company managed to attain improvement of 64% current profit and comprehensive profit of 191%. Mainly due to ability of Company to hold persistence of minimum 14% IRR for all business segments and SBU, also maintaining IRR level of minimum 18% for LNG business.

By these 82% of 2016 RKAP (Work Plan and Corporate Budget) fulfilled, in case all tenders were materializing by government in 2016 for sure the Company will achieve more than 100%.

In 2016, the Company had acquired 3 vessels to exploit the opportunity in the market, namely LNG Triputra as mention above, MT Griya Cirebon medium range Oil Tanker to employed in PT Pertamina (Persero) and MT Griya Melayu, Petrochemical Tanker to serve methanol business. All three vessels are employed to meet a medium contract, which enable Company to pay back the entire bank loan.

In funding side, the Company obtained US$52,37 million long-term loan from PT BNI ‘46 for mainly to support LNG business. By end of 2016, the Company only utilized 45% of its facility. In equity side, the appreciation of market express by the improvement to average Rp790,00 by the end 2016.

The Shareholder in 2016 approved the Quasi- Reorganization its enable the Company in strengthening its equity. Beside that, the level of shares price in the market upsurge the Company capitalization Rp5.2 trillion or increasing 4% higher than last year.

Today, the Company is the largest capitalization, beside the eldest Public Listed Company in shipping business.

REALIZATION OF FINANCIAL TARGET

Even though the performance of the Company improving tremendously in all aspects are revenue, profit, investment and funding then equity side. But it only meets 82% of RKAP 2016. The main points of this are to internally the Company didn’t apply yet the flexible budget approach. With this going to be adopted 2017.

Secondly, most of the project in offshore also LNG related to IPP conduct it to government were delayed.

ACHIEVEMENT OF STRATEGIC INITIATIVES

Strategic achievement as mention above at performance section related to 4 major points are:

1. Steady growth in investment for tankers.

2. Sustainable financing for medium term project financing.

3. Restructure of equity side.

4. Organization development to support the sustainable growth through upgrading education of staffs, implementing risk management system and applying knowledge sharing practice.

CHALLENGES

The challenges face the Company is mainly due the external factors. Firstly, is the downturn of global economic which affecting the regional economic and the National economic growth. Secondly, the delay of execution of project related to government in the area of Oil, Gas, and Offshore and Port improvement.

STRATEGY IN 2016

The key success factor of passing 2016 profitably and sustainable by adopting to main strategies.

Strategy one is focus on profitable and growing business segments, such as petrochemical and LNG, second strategy is organizing the Company resources included the capital structure via Quasi-Reorganization and strategic alliances with international major and credible partners.

HUMAN RESOURCES

The Company is very concern in not only developing the staffs but also transforming the paradigm of all organization members from pro active becoming more reactive. In practice the Company upgrade all key members from Manager level till Chairman by following as executive program and certification beside regularly monthly sharing knowledge.

As mention above of regular monthly knowledge sharing and short education program of certification, the Company also sponsored one manager level for each subsidiary to study post-graduate degree.

BUSINESS PROSPECT

Entering 2017 the Company anticipating volatile the regional economic and domestic political circumstances. The Company will continuously adopting the strategy for focus on the profitable, sustainable and calculated risk business segment. Also set-upping strategic alliances not only Japanese partners but also with European, ASEAN and Chinese to diversified the strategic business.

Me and my colleague decide to choose the motto of Optimization is the key of passing 2017 by optimizing the balance of three factors are business opportunity, external barrier and the Company resources. So, 2017 for us is not a question of maximum profit or minimum risks but optimum achievement.

CORPORATE GOVERNANCE

The Board of Directors believes that the improvement of the Company’s performance cannot be separated from the Company’s overall efforts to apply the principles of Good Corporate Governance consistently and continuously. The Company will be able to run its business in accordance with the prevailing regulations based on business ethics that have been agreed and respected together.

To that end, the Company demonstrates a high commitment to improve the quality of GCG best practices by completing all soft structures and infrastructure for the implementation of good governance. The Company has also been preparing for the improvement of various governance rules to adapt to the changes. Some programs that have been implemented to improve the quality of GCG implementation by 2016 include adjustments to the governance rules and the Financial Services Authority Regulations on the governance within the Public Company. The adjustment of these rules and policies are together with the implementation of other relevant work programs.

CORPORATE SOCIAL RESPONSIBILITY

The Company is aware of the impact of its operations on the environment. This awareness has been translated into environmental policies, goals and programs. One example is that the Company is constantly seeking to minimize the level of pollution sourced by the Company’s operations.

Another focus of the Company’s CSR activities is Community Development which is intended to provide the best benefits to the community. The goal is to improve the quality of life through programs that can encourage and help society to be more self-sufficient in addition to meet the interests of all Stakeholders.

CHANGE OF THE BOARD OF DIRECTORS

In 2016, there was no change in the composition of the Board of Directors.

APPRECIATION

In closing, on behalf of the Board of Directors of the Company, we extend our gratitude and appreciation to the Shareholders for the trust and support given to us, to the Board of Commissioners who always provide guidance and guidance, and to our business partners for their cooperation and support.

We also express our gratitude and appreciation to all employees for their hard work, dedication and contribution to the Company so that in 2016 it can achieve a proud performance. We are increasingly optimistic that the various efforts we have undertaken together will enhance the Company’s ability to welcome promising growth opportunities and deliver sustainable best performance in the future.

Dear Honorable Stakeholders,

Thanks to God for everlasting blessing and also the continuous support from all Stakeholders to the Company and the Management till we past 2016 in a better results compare than the year before.

In 2016, the Company managed to grow in double digit, both at the top line and bottom line, regardless the downturn of global economic trend and also the National politic turbulences with influencing all schedules of tender in Oil & Gas by the State-Owned Company.

PERFORMANCE 2016

The Company sales increase 16% mostly due to the contribution from LNG sector managed by PT Bhaskara Inti Samudera (PT BIS) a company subsidiary joint with PTT Tokyo and MOL Japan also LNG Japan won the first contract in providing mini LNG carrier for the first mini LNG of IPP project located at Benoa, Bali. In this project, the Company employing the new acquire mini LNG carrier called LNG Triputra (originally was Surya Satsuma).

The Company managed to attain improvement of 64% current profit and comprehensive profit of 191%. Mainly due to ability of Company to hold persistence of minimum 14% IRR for all business segments and SBU, also maintaining IRR level of minimum 18% for LNG business.

By these 82% of 2016 RKAP (Work Plan and Corporate Budget) fulfilled, in case all tenders were materializing by government in 2016 for sure the Company will achieve more than 100%.

In 2016, the Company had acquired 3 vessels to exploit the opportunity in the market, namely LNG Triputra as mention above, MT Griya Cirebon medium range Oil Tanker to employed in PT Pertamina (Persero) and MT Griya Melayu, Petrochemical Tanker to serve methanol business. All three vessels are employed to meet a medium contract, which enable Company to pay back the entire bank loan.

In funding side, the Company obtained US$52,37 million long-term loan from PT BNI ‘46 for mainly to support LNG business. By end of 2016, the Company only utilized 45% of its facility. In equity side, the appreciation of market express by the improvement to average Rp790,00 by the end 2016.

The Shareholder in 2016 approved the Quasi- Reorganization its enable the Company in strengthening its equity. Beside that, the level of shares price in the market upsurge the Company capitalization Rp5.2 trillion or increasing 4% higher than last year.

Today, the Company is the largest capitalization, beside the eldest Public Listed Company in shipping business.

REALIZATION OF FINANCIAL TARGET

Even though the performance of the Company improving tremendously in all aspects are revenue, profit, investment and funding then equity side. But it only meets 82% of RKAP 2016. The main points of this are to internally the Company didn’t apply yet the flexible budget approach. With this going to be adopted 2017.

Secondly, most of the project in offshore also LNG related to IPP conduct it to government were delayed.

ACHIEVEMENT OF STRATEGIC INITIATIVES

Strategic achievement as mention above at performance section related to 4 major points are:

1. Steady growth in investment for tankers.

2. Sustainable financing for medium term project financing.

3. Restructure of equity side.

4. Organization development to support the sustainable growth through upgrading education of staffs, implementing risk management system and applying knowledge sharing practice.

CHALLENGES

The challenges face the Company is mainly due the external factors. Firstly, is the downturn of global economic which affecting the regional economic and the National economic growth. Secondly, the delay of execution of project related to government in the area of Oil, Gas, and Offshore and Port improvement.

STRATEGY IN 2016

The key success factor of passing 2016 profitably and sustainable by adopting to main strategies.

Strategy one is focus on profitable and growing business segments, such as petrochemical and LNG, second strategy is organizing the Company resources included the capital structure via Quasi-Reorganization and strategic alliances with international major and credible partners.

HUMAN RESOURCES

The Company is very concern in not only developing the staffs but also transforming the paradigm of all organization members from pro active becoming more reactive. In practice the Company upgrade all key members from Manager level till Chairman by following as executive program and certification beside regularly monthly sharing knowledge.

As mention above of regular monthly knowledge sharing and short education program of certification, the Company also sponsored one manager level for each subsidiary to study post-graduate degree.

BUSINESS PROSPECT

Entering 2017 the Company anticipating volatile the regional economic and domestic political circumstances. The Company will continuously adopting the strategy for focus on the profitable, sustainable and calculated risk business segment. Also set-upping strategic alliances not only Japanese partners but also with European, ASEAN and Chinese to diversified the strategic business.

Me and my colleague decide to choose the motto of Optimization is the key of passing 2017 by optimizing the balance of three factors are business opportunity, external barrier and the Company resources. So, 2017 for us is not a question of maximum profit or minimum risks but optimum achievement.

CORPORATE GOVERNANCE

The Board of Directors believes that the improvement of the Company’s performance cannot be separated from the Company’s overall efforts to apply the principles of Good Corporate Governance consistently and continuously. The Company will be able to run its business in accordance with the prevailing regulations based on business ethics that have been agreed and respected together.

To that end, the Company demonstrates a high commitment to improve the quality of GCG best practices by completing all soft structures and infrastructure for the implementation of good governance. The Company has also been preparing for the improvement of various governance rules to adapt to the changes. Some programs that have been implemented to improve the quality of GCG implementation by 2016 include adjustments to the governance rules and the Financial Services Authority Regulations on the governance within the Public Company. The adjustment of these rules and policies are together with the implementation of other relevant work programs.

CORPORATE SOCIAL RESPONSIBILITY

The Company is aware of the impact of its operations on the environment. This awareness has been translated into environmental policies, goals and programs. One example is that the Company is constantly seeking to minimize the level of pollution sourced by the Company’s operations.

Another focus of the Company’s CSR activities is Community Development which is intended to provide the best benefits to the community. The goal is to improve the quality of life through programs that can encourage and help society to be more self-sufficient in addition to meet the interests of all Stakeholders.

CHANGE OF THE BOARD OF DIRECTORS

In 2016, there was no change in the composition of the Board of Directors.

APPRECIATION

In closing, on behalf of the Board of Directors of the Company, we extend our gratitude and appreciation to the Shareholders for the trust and support given to us, to the Board of Commissioners who always provide guidance and guidance, and to our business partners for their cooperation and support.

We also express our gratitude and appreciation to all employees for their hard work, dedication and contribution to the Company so that in 2016 it can achieve a proud performance. We are increasingly optimistic that the various efforts we have undertaken together will enhance the Company’s ability to welcome promising growth opportunities and deliver sustainable best performance in the future.

President Messages