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