for a
Generating
Higher Returns
Better Future
Fo r t h e Ye a r 2 0 0 7
10
Reas
ons
to In
vest
in A
ntam
Nickel Exports
Increase
Significantly
Please see
Review of Operations,
page 69
Please see
page 71
Please see
Cash Soars 317%;
Antam is Poised
to Invest and Grow
A S X : AT M • I D X : A N T M
1
Diversified.
Vertically-Integrated.
Indonesian.
Experienced.
You
nee
d to
loo
k he
It’ll
onl
y ta
ke t
hree
min
utes
I N v
E S t
Why
For more information please see Detailed Description of Antam, page 103.
2
Gold. Nickel.
Bauxite.
A great mix.
For more information please see Our Products and How We Make Them, page 105.
4
Low cost operations
(current cash costs
for ferronickel are
average).
For more information please see Cost of Sales, page 74.
5
Unique position to
lower ferronickel
costs through fuel
conversion.
For more information please see Cash Costs and Cost Reduction Program, page 77.
8
For more information please see Organic Growth Projects, page 81.
9
Targeted gold
acquisition
program.
For more information please see Acquisitive Growth Projects, page 83.
3
Large high quality reserves
and resources of nickel
and bauxite.
For more information please see Exploration and Reserves, page 96.
6
Industry-beating
margins and
returns.
For more information please see Our Competitors, page 109.
7
Possible
ferronickel
production
increase over
next few years.
For more information please see Production Volume Targets, page 45.
10
For more information please see Financial Review, page 61.
It is the mission of this annual report to create a clear and
positive picture of the company without distorting the truth,
to keep our stakeholders informed.
If there is ANY part of this report that requires further
clarification, please do not hesitate to send our IR team an
email (cameron@antam.com, eko.endriawan@antam.com,
ftriadi@antam.com, yudi.nurhadi@antam.com). We actually
2007: A GREAT YEAR (CALENDAR OF SIGNIFICANT EVENTS) 14
OUR STRATEGY 16
OUR RESERVES 17
A WELL GOVERNED STATE-OWNED ENTERPRISE 18 EXTERNAL RECOGNITION AND CERTIFICATION 19
EXCITING PROJECTS 20
OUR RISKS AND CHALLENGES 22
THE OUTLOOK 23
MAP OF OPERATIONS AND PROJECTS 24
ANTAM SHARES AND SHAREHOLDERS
MARKET OVERVIEW 28
SHAREHOLDERS INFORMATION 28
TOTAL SHAREHOLDER RETURNS 30
DIVIDEND POLICY 31
INVESTOR RELATIONS 32
INVESTOR PERCEPTION SURVEY 34
DIRECT FEEDBACK FROM YOU 35
Q&A WITH OUR LARGEST SHAREHOLDER 36 DEAR SHAREHOLDER
LETTER FROM THE BOARD OF COMMISSIONERS 38
COMMISSIONERS’ STATEMENT 41
LETTER FROM THE BOARD OF DIRECTORS 42
DIRECTORS’ STATEMENT 49
FAREWELL LETTER FROM CEO 50
ANTAM’S PEOPLE
THE MANAGEMENT 52
BOARD OF COMMISSIONERS’ BIOGRAPHIES 53
BOARD OF DIRECTORS’ BIOGRAPHIES 55
Q&A WITH THE BOARD OF DIRECTORS 56
OUR HUMAN RESOURCES 58
FINANCIAL REVIEW: HIGHER PROFITS
ABRIDGED FINANCIAL STATEMENTS 62
TOTAL CONSOLIDATED ASSETS 63
TOTAL CONSOLIDATED LIABILITIES 64
CAPITAL STRUCTURE AND ACCESS TO CAPITAL 65
CASH FLOWS 66
HEDGING ACTIVITIES 67
REVIEW OF OPERATIONS: GENERATING HIGHER OUTPUT
DETAILED PRODUCTION AND SALES TABLE 70
SALES AND SEGMENT INFORMATION 71
PRODUCTION AND SALES 71
COST OF SALES 74
NET INCOME 76
CASH COSTS AND COST REDUCTION PROGRAM 77
LICENSING 78
PERFORMANCE MEASUREMENT AND OUTLOOK 78
INVESTING FOR A BETTER FUTURE
OUR FUTURE TARGETS 80
ORGANIC GROWTH PROJECTS 81
ALUMINA 81
NICKEL 82
PT CIBALIUNG SUMBERDAYA 93
PT DAIRI PRIMA MINERAL 94
PT WEDA BAY NICKEL 94
EXPLORATION AND RESER VES
SUMMARY TABLES OF RESERVES AND RESOURCES 96
NICKEL 97
DETAILED NICKEL RESERVES AND RESOURCES TABLE 98 GOLD
DETAILED GOLD RESERVES TABLE 100
BAUXITE
DETAILED BAUXITE RESERVES AND RESOURCES TABLE 101 NOTES TO RESERVES AND RESOURCES ESTIMATIONS 102 DETAILED DESCRIPTION OF ANTAM
HOW WE MAKE OUR MONEY 104
OUR STRATEGY TO GROW 104
OUR STRUCTURE 105
OUR PRODUCTS AND HOW WE MAKE THEM 105
OUR CUSTOMERS AND MARKET SHARE 108
OUR COMPETITORS 109
OUR COUNTRY AND GOVERNMENT 110
OUR INDUSTRY 110
SWOT ANALYSIS 112
RISK MANAGEMENT
HOW WE MANAGE RISK 114
RISK STATEMENT 115
CORPORATE GOVERNANCE OF ANTAM
ASSESSMENT OF ANTAM’S CORPORATE GOVERNANCE REPORT 118 STATEMENT ON THE STATUS OF CORPORATE GOVERNANCE
PRACTICES 120
REPORTS FROM THE COMMISSIONER-LEVEL BOARD
COMMITTEES 125
ADOPTION OF THE ASX CORPORATE GOVERNANCE PRINCIPLES
AND RECOMMENDATIONS 140
ADOPTION OF THE INDONESIAN CODE OF GOOD CORPORATE
GOVERNANCE 143
SUSTAINABILITY REPORT
STAKEHOLDERS’ INVOLVEMENT 146
ENVIRONMENTAL PERFORMANCE 146
SOCIAL PERFORMANCE 147
ANTAM FUNDS A LOCAL CRAFTSMAN 148
ANTAM TO PURCHASE GREEN ENERGY 149
AUDITING ANTAM
SIGNED LETTER ATTESTING TO VERITY OF FINANCIAL
STATEMENTS 152
OPINION LETTER FROM ERNST & YOUNG 153 CONSOLIDATED FINANCIAL STATEMENTS 154 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 159
CONTACT US
KEY PERSONNEL AND BUSINESS UNITS 197 INSTITUTIONS AND SUPPORTING PROFESSIONALS 198
GLOSSARY 199
CORPORATE IDENTITY 202
Financial Highlights
Billion Rupiah
Our performance for the last 10 years
has been consistent and robust.
The Compound Annual Growth Rate (CAGR) of Net Sales from 1998 to 2007 is 31%, while Cost Sales CAGR
during the same period is 30%.
As our Net Sales CAGR exceeded our costs CAGR, we posted Net Income CAGR of 37% from 1998-2007.
We pay generous dividends. The CAGR of our dividend payment per
share increased by 49% from 1998
to 2006.
*Calculations of Net Income per Share and Dividend per Share from 1998 to 2006 are adjusted using 2007’s post stock-split outstanding shares of 9,538,459,750.
Description 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2007/2006
%
Net Sales 1,021.91 966.15 1,566.15 1,735.22 1,711.40 2,138.81 2,858.54 3,251.24 5,629.40 12,008.20 113
Cost of Sales 450.75 547.73 860.28 1,122.93 1,280.48 1,471.91 1,497.70 1,827.14 2,887.94 4,794.96 66
Gross Profit 571.16 418.42 706.03 612.29 430.92 666.90 1,360.83 1,424.10 2,741.47 7,213.24 163
Earnings Before Interest, Tax,
Depreciation and Amortization 386.54 392.47 661.63 262.81 364.96 466.18 1,317.77 1,394.60 2,778.43 7,724.80 178
Income from Operations 475.33 318.02 537.28 126.29 247.42 447.98 1,096.57 1,099.77 2,403.69 6,796.09 183
Interest Expense 54.56 29.04 25.42 19.00 13.20 16.73 2.20 25.56 141.96 74,315 (48)
Net Income 299.36 234.34 383.16 118.91 177.40 226.55 810.25 841.94 1,552.78 5,132.12 231
Outstanding Shares (‘000) 1,230,769 1,230,769 1,230,769 1,230,769 1,907,692 1,907,692 1,907,692 1,907,692 1,907,692 9,538,460 400
Adjusted Net Income per Share (Rp)* 31.38 24.57 40.17 12.47 18.60 23.75 84.95 88.27 162.79 538.04 231
Adjusted Dividend per Share (Rp)* 13.40 9.44 20.09 6.23 6.88 7.72 29.62 30.01 65.12 -
-Total Assets 1,976.84 2,055.25 2,516.34 2,577.32 2,525.03 4,326.85 6,042.64 6,402.71 7,290.91 12,037.92 65
Total Liabilities 589.85 598.01 757.00 890.63 843.86 2,543.33 3,600.18 3,373.07 3,009.30 3,273.12 9
Total Long Term Debt 367.03 251.61 236.88 171.86 80.90 1,664.64 2,072.45 2,593.66 1,829.78 1,474.30 19
Total Stockholder’s Equity 1,376.35 1,447.65 1,750.31 1,680.48 1,675.48 1,783.51 2,442.47 3,029.64 4,281.60 8,763.58 105
In line with our consistent performance,
we posted Return on Average Equity CAGR of 14% from 1998 to 2007.
Our Total Liabilities to Assets jumped
significantly in 2003 due to the
bond issuance to finance FeNi III.
In 2005 we started to buy back the
bonds in the open market. In 2006,
we fully redeemed the bond before
maturity due to the cancellation of
Indonesia-Mauritius Avoidance of Double Taxation Agreement.
Our free cash flow turned negative in 2003 as we constructed FeNi III, our latest expansion mode. In 2006, our free cash flow turned positive again as FeNi III construction came to an end. **Annual Average of Daily Spot Price.
Description 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2007/2006
%
Return on Average Investment 23.51% 19.94% 27.10% 5.70% 9.55% 11.17% 31.70% 32.33% 45.41% 81.99% 81
Return on Average Equity 23.95% 16.60% 23.96% 6.93% 10.57% 13.10% 38.35% 30.77% 42.48% 78.69% 85
Return on Average Assets 16.73% 11.62% 16.76% 4.67% 6.95% 6.61% 15.63% 13.53% 22.68% 53.11% 134
Current Ratio 298.58% 254.96% 253.93% 292.69% 293.09% 568.03% 326.33% 267.83% 281.27% 447.41% 59
Total Liabilities to Equity 42.86% 41.31% 43.25% 53.00% 50.37% 142.60% 147.40% 111.34% 70.28% 37.35% (47)
Total Liabilities to Assets 30.17% 29.10% 30.08% 34.56% 33.42% 58.78% 59.58% 52.68% 41.47% 27.19% (34)
Gross Margin 55.89% 43.31% 45.08% 35.29% 25.18% 31.18% 47.61% 43.80% 48.70% 60.07% 23
Operating Margin 46.51% 32.92% 34.30% 7.28% 14.46% 20.95% 38.36% 33.83% 42.70% 56.60% 33
Net Margin 29.29% 24.26% 24.46% 6.85% 10.37% 10.59% 28.34% 25.90% 27.58% 42.74% 55
Operating Cashflow 539.65 218.86 825.48 385.51 250.16 481.18 768.95 742.34 1,711.30 4,835.91 180
Capital Expenditure 398.61 142.57 98.82 90.11 103.30 635.99 1,364.36 1,436.16 85.61 197.16 130
Free Cashflow 141.04 76.29 726.66 295.41 146.86 (154.80) (595.41) (693.82) 1,625.69 4,638.74 189
Exchange Rate (Rp/US$)** 10,224 7,848 8,405 10,256 9,316 8,570 8,935 9,712 9,167 9,136 0
Gold Price (US$/t.oz)** 294.26 278.87 279.18 271.35 310.57 364.06 409.87 446.14 604.65 697.09 15
Nickel Price (US$/Lb)** 2.09 2.74 3.92 2.71 3.08 4.37 6.27 6.45 10.96 16.85 54
OPERATING CASH FLOW
(Billion Rupiah)03 04 05 06 07 1,690
4,835
742 769 481
DEBT TO EQUITY
(%) 07 10 06 31 05 65 04 85 03 93REVENUE PER SEGMENT
(Billion Rupiah)Nickel Gold Others Nickel Gold Others
4,734 690 205 03 1,473 554 112 06 589 190 05 2,472 04 166 526 2,167 07 1,163 10,687 158 EARNINGS BEFORE INTEREST,
TAX, DEPRECIATION AND AMORTIZATION
(Billion Rupiah)
03 04 05 06 07
2,778 7,725 1,395 1,318 466
OPERATING INCOME
PER SEGMENT
(Billion Rupiah) 04 -10 1,118 169 1,221 80 05 -12 06 -21 188 2,524 154 415 03 -25 07 -102 6,968 303RETURN ON AVERAGE
EQUITY
(%) 13 03 04 38 05 31 06 42 07 79Antam’s EBITDA soared as cash
gushed from the operations.
Higher prices and higher volumes caused revenue from
nickel to soar.
Nickel is the main income earner. Never seen before nickel prices caused income to reach new heights.
The main measurement of value creation, our 2007 ROE beat most
other peers.
The operations were producing
substantial free cash and prepared
Antam for the next phase of growth.
•
To provide high quality products of nickel,
gold and industrial minerals with the utmost
concern for work safety and health as well
as environmental conservation.
•
To operate in the most efficient manner (low
cost operations).
•
To maximize shareholder and stakeholder
value.
•
To enhance employees’ welfare.
•
To participate in efforts to improve the social
welfare of communities in the vicinity of the
mining areas.
Mission
To be a mining company of international
standards with a competitive advantage
in the global market.
We are a diversified, Indonesian, state-owned, vertically integrated, mining and metals company. Our main strengths are our low cost operations, our vast high quality reserves of nickel and bauxite, our strong financial structure, our nearly forty years of experience, our location in mineral-rich Indonesia, our vast acreage of licensed exploration territories, and our loyal and dedicated staff. Our main commodities are nickel, gold and bauxite. With a recent nickel expansion and due to price increases, most of our revenues are now related to nickel. Our main goal is to create shareholder value by getting bigger and better and doing it in a sustainable and correct way. Our main strategy is to extract as much value as possible from our existing reserves by moving downstream from exporting ore into processing
activities. We are also keen to diversify away into other commodities as long as there is a good return and a match with our business. In general we are only interested in Indonesian assets as the returns
are higher and we can benefit from our domestic knowledge and experience.
We currently produce and export around 5.5 – 7 million wet metric tons of nickel ore, around 17,000 – 18,000 tonnes of nickel contained in ferronickel, 100,000 – 115,000 troy ounces of gold, 700,000 – 800,000 ounces of silver and 1.2 – 1.5 million wmt of bauxite. As our strategy is implemented in the upcoming years we expect to see ore exports come to a halt, with our ferronickel production increasing and the commencement of alumina production, which uses bauxite as ore feed. In general we have amongst the lowest operating costs in the business, except for our ferronickel operations. Ferronickel costs have come up due to the removal of national fuel subsidies and rising international prices. However, we will convert to a lower cost fuel and regain our low cost position. Our customers are mostly long term and bluechip international companies, located in North Asia
and Europe. About half of our gold and silver is sold domestically.
We are financially prudent and like to have very little debt and large cash holdings. Only when the time
is right will we leverage the balance sheet to invest and grow.
We are 65% held by the Indonesian government, with the other 35% held by the public. Most of the
public investors are long term large, foreign institutional investors. Although recently the amount of domestic institutional, as well as retail investors, has been increasing.
Who We Are:
Antam Described
Ferro
nickel
Sa
p
ro
lit
e
Bau
xi
te
Go
ld
l
im
o
n
it
e
Ferro
nickel
Rp5,793
billionEurope Taiwan Korea India Japan
Rp4,769
billion JapanEastern Europe
Rp130
billion Japan ChinaRp1,034
billionSingapore Indonesia Jewelers
Rp125
billionChina EXPORT ORIENTED*
DIVERSE PRODUCT MIX
Ferronickel Nickel Ore Gold Bauxite Silver
48%
41%
9% 1%
1%
Our upcoming investments will diversify our
revenue away from the current dominance of nickel.
*The graphic depicts sales revenues by
3
4
5
Nickel is a metallic element which is sold in many forms such as cathode, granules, shots and ingots. About 85% of metallic
nickel is used in combination with other metals to make what are known as alloys. Nickel-containing alloys are highly regarded
for their superior combinations of toughness, strength, and corrosion resistance, and their ability to retain these properties at
extremes of temperature. About 65% of nickel is used to make stainless steel which is the ideal base material for commercial applications. Stainless steel is used in cutlery, industrial equipment, structural alloys in automotive and aerospace assembly
and building material in skyscrapers and other large buildings.
Gold is a precious metal which, for many centuries, has been used as money, as a store of value and in jewelry. Modern
industrial uses of gold include dentistry and electronics.
Reference: Wikipedia
1. Jet engines rely on the sturdiness and
non corrosive characteristics of nickel plated stainless steel material.
2. The Chrysler Building was made using 316L stainless steel and is a testament to the anti-corrosive properties of high
quality 300 series stainless steel.
3. The second most important usage of
nickel is batteries, a key growth area.
4. Antam’s .9999 fine gold is internationally
accredited.
5. The heat resistant nature of nickel protects
and strengthens the engine block.
An Amazing Year of Growth
PRODUCTION AND SALES
Unit 2006 2007 2007/2006 (%)
Production Volume
Ferronickel metric ton Ni 14,474 18,532 28
Saprolite Nickel Ore wmt 3,493,961 6,744,383 93
Gold kg
t.oz
2,873 92,367
2,791 89,733
(3) (3) Sales Volume
Ferronickel metric ton Ni 13,389 17,723 32
Saprolite Nickel Ore wmt 3,375,466 6,463,977 91
Gold kg
t.oz
1,458 46,876
5,000 160,754
157 157
Soaring Chinese nickel demand pushed Antam’s nickel ore sales up by 91% year
on year.
By all accounts 2007 was an amazing year. Due to a substantial
increase in our output of nickel contained in ferronickel (despite a leak
at FeNi III smelter) and almost doubling our nickel ore exports in
combination with record breaking nickel prices, we produced more
cash, made more profit, created the largest margins, than we ever have
before. We will look back at 2007 as the year that laid the foundation
for the next expansion. As well as increasing profits, 2007 was also an
amazing year in terms of breaking into the Chinese nickel ore market
and in terms of forging new alliances and partnerships with China.
We signed many agreements, some of which we acknowledge will
come to nothing, but offer the best way to ensure we are finding the
best partners and executing the best development plans for our large
reserves and resources.
While we do not expect 2008 will be as profitable as 2007, it will be
equally as important in terms of executing our growth plans and make
important investments to grow, such that in three to five years time
the profit levels of 2007 will not be considered amazing, they will be
considered normal. We generated amazing returns in 2007 so we can
REVENUES AND PROFITS SOAR
Net Income Cost of Sales Net Sales
0 0 0 0 0 0 0 0 0 0
50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 6,000 6,500 7,000 8,000 8,500 9,000 9,500 10,000 10,500 11,000 11,500 12,000
7,500
5,500
0
REVENUES AND PROFITS HIGHLIGHT
4,795 5,132
R
p
B
il
li
o
n
2003 2004 2005 2006 2007
Often we are unfairly assumed to be an underperformer. Perhaps
this is due to the sometimes poor image of Indonesian state-owned
enterprises as being sluggish, lacking competence and perhaps
corrupt. As well, the ramp up of our FeNi III smelter has experienced a
couple of setbacks with a leak in 2006 and a leak in 2007. Every new
furnace leaks, and ramp ups to optimal capacity will take many years,
but the expectations were high and many assumed FeNi III would
quickly reach full capacity. As well, as we find the best partners and
plans for developing our vast reserves into the most value creating
operations, we have signed many agreements, some of which expired,
leaving some to suggest all we do is sign non-binding agreements
and we need to speed up our development projects.
Some have said our excellent profit growth over the past couple of
years is simply due to the unexpectedly high nickel prices; that we
had gotten lucky.
The reality is that over the past number of years, well before the
commodity boom began and during the construction period of
FeNi III, we have consistently outperformed our peers, who also
were beneficiaries of high commodity prices. The numbers, as you
can see below, speak for themselves. Our plan is to continue to
deliver industry beating performance.
Key Ratios Top 40 Global
Companies
Indonesian
Mining Companies
Antam
2005 2006 2005 2006 2005 2006 2007
Ebitda Margin 37% 44% 43% 41% 41% 49% 64%
Net Profit Margin 23% 27% 23% 23% 26% 28% 43%
Return on Equity* 26% 33% 37% 39% 31% 42% 79%
Debt to Equity 32% 36% 49% 47% 40% 31% 10%
*Antam calculates RoE as net income divided by the average equity, whereas PwC may use equity at the end of the period. Source: PricewaterhouseCoopers, Antam
Key Ratios Australian Miners Indonesian
Miners
Antam
Average 10 years
(1997-2006) Average 10 years (1997-2006)
Average 10 years (1997-2006)
Ebitda Margin NA 39% 35%
Net Profit Margin 12% 16% 20%
Return on Equity* 12% 19% 22%
Debt to Equity NA 115% 37%
*Antam calculates RoE as net income divided by the average equity, whereas PwC may use equity at the end of the period. Source: PricewaterhouseCoopers, Antam
PER SHARE DATA
2006 2007 Change %
Earnings Per Share* 162.79 538.08 231
Dividend Per Share* 65.116 To be decided in AGM
-Average Price Earning Ratio 11.7 9.0 -23
5 YEAR QUARTERLY SHARE PRICE AND TRADING VOLUME
Share Price Volume
ANALYST AND MEDIA COVERAGE (2006 in parenthesis)
Reports Analysts Press
Releases FillingsASX Bloomberg Articles
Bloomberg Terminal “Entries” Buy 35(27) Hold 15(33) Sell 15(17)
19(20) 23(16) 61(43) 275(229) 577(541)
*Retroactive effect after stock split.
Shares in Issue 9,538,459,750
Market Capitalization Rp42.7tn (US$4.54 billion) Share Price Range Rp1,400-5,050 Average Share Price Rp2,742
Trading Volume 21.17 billion
Average Daily Volume 86 million
Major Shareholder:
Government of Indonesia (65%)
Substantial Shareholders:
MS + Co Inc CA (3%)
Final Dividend Payment Date:
July 6th, 2007
Final Dividend Amount:
Rp325.58/share (Rp65.116/share after stock split) A$0.215428/CDI (A$0.0430856/CDI after stock split)
Trading Volume
Share Price
SOME OF OUR ANALYSTS:
Adam Worthington Macquarie Daisy Suryo Merrill Lynch Andreas Bokkenheuser UBS Cherie Khoeng Deutsche Bank Ahmad Solihin CLSA
Isnaputra Iskandar Danareksa Jerome Jovellana Mandiri Achmad Syafriel Bahana Stefanus Darmagiri UOB
Yusuf Ade Winoto DBS
Ricardo Silaen Kim Eng David Fergusson Citigroup Ami Tantri JP Morgan Haider Ali Credit Suisse Rania Rahmundita CIMB Christine Salim Samuel Norico Gaman BNI Felix Sindhunata Mega Capital Adrian Rusmana HD Capital Triwira Juniarta NISP
We had a record year in terms of generating total shareholder returns, which increased to 180%
or Rp2,920.12. Our shareprice rose 176% to end the year at Rp4,475. This compares with total shareholder returns of 126% or Rp910.01 in 2006. As in the preceding two years, our share price outperformed the Indonesian Stock Exchange, every major international index and all major mining
indices.
As in every year since listing on the Indonesian Stock Exchange in 1997, we returned value to
our shareholders by way of a generous cash dividend. We paid a cash dividend in the amount of
Rp621 billion, or 40% of our net profits after tax for the year ended December 31st, 2006.
2003 2004 2005 2006 2007 2008 Rp million Rp 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 1,000 0 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
EPS hiked more than double in line with
0
Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Jul 07
1,000
2,000
3,000
4,000
5,000
January 29th
FeNi III commercial
operations begins.
February 5th
Antam sends aids to
flood victims in Jakarta.
March 12th
Antam and partners form
joint venture company for the Tayan chemical grade alumina project.
February 23rd
Antam and BHP Billiton
establish alliance to develop
Halmahera nickel deposit.
2007
: A Great Year
February 12th
Over twenty companies
participate and there are 3 winners. Antam holds tender to sell 2 million wmt of nickel ore
to China.
June 5th
Antam raises saprolite nickel ore reserves and resources by 61% to 180 million wmt.
1
4
2 3
Share Price Rp
June 18th
Antam lowers power
load of FeNi III smelter
due to small metal leak.
May 30th
Antam pays cash
0
200
400
600
800
1,000
1,200
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08
August 1st
Mining activities at Pongkor gold mine
continue to run at normal level after mining accident.
September 21th
Antam to lower its nickel
power cost by up to
8-10% through the use of
15MW low impact hydro
power plant.
September 6th
Antam and UC Rusal sign
a heads of agreement to
develop bauxite deposit in
Indonesia.
September 11th
Antam appoints
Macquarie as financial
advisor to advise and assist in relation to
Antam’s project pipeline
as well as in relation to acquisition advisory.
August 26th
Antam switches on FeNi
III smelter following the completion of partial repairs.
MOST READ BLOOMBERG NEWS
June 4, Antam Studies Plan to Triple Nickel Output by 2012
June 5, Indonesia May Take Back Parts of Coal, Metal Areas
June 19, Aneka Tambang Smelter Has Second Leak; Keeps Target
June 21, Indonesia May Change Mining Law to Suit Investors
July 17, Indonesia Rules Out Ore Export Ban, Consider Taxes
1
2
3
4
5
5
Volume Rp million
July 12th
Antam stock split at a
ratio of 5:1.
October 31st
Antam signs an agreement
with Tsingshan of China to
conduct a feasibility study
of jointly developing a
stainless steel facility.
September 21st
Antam sends aids to earthquake victims in
Our strategy is as effective as it is simple. We will create maximum
shareholder value by continuing to diversify horizontally into other
commodities where suitable, while also continuing to focus on
those commodities we know best, which are nickel, gold and
bauxite. We will diversify through an active exploration program
and through strategic acquisitions.
We will also maintain a diversity of customers so as to not be overly reliant on any one market.
We will also continue to diversify vertically by moving downstream in order to increase the
value-added of our operations. While some of the bigger international mining companies have claimed
they will now start to move upstream, they are moving from now lower margin refining back into smelting, or from packaging to refining. We are moving downstream to the first level of processing where the increased value is substantial. Later on, if it makes good business sense, we will move
further downstream, such as from ferronickel to stainless steel. We have focused on nickel, gold
and bauxite in the past and this has proven to be a winning combination. Our results in 2007 are
largely due to the increased value that came from moving more downstream by building additional ferronickel capacity.
We will focus on mines and deposits in Indonesia as not only do we benefit from our knowledge of Indonesia, but the industry in general has higher returns than elsewhere. However we will
actively seek international partnerships with world class mining companies to best develop our
vast reserves in the most efficient, profitable and correct way. We will engage the rise of China and increasingly India by seeking to form partnerships with Chinese companies, viewing China as an
opportunity not a threat.
We will continue to be a low cost operator and holder of large reserves and resources and continually strive to improve in these areas. We will also continue to not overly burden our balance sheet and take a prudent approach to making investments, which must generate a return of at least 15%.
Our Strategy:
How We’re Growing Value
CASH COST, PRODUCTION COST AND AVERAGE SELLING PRICE
Unit 2006 2007 2007/2006(%)
Cash Cost
Ferronickel US$/lb 4.40 5.55 26
Saprolite Nickel Ore US$/wmt 20.15 20.32 1
Gold US$/t.oz 283.93 383.10 35
Production Cost
Ferronickel US$/lb 6.00 6.99 17
Saprolite Nickel Ore US$/wmt 20.32 20.48 1
Gold US$/t.oz 375.36 481.74 28
Average Selling Price
Ferronickel US$/lb 10.12 16.16 60
Saprolite Nickel Ore US$/wmt 55.36 82.43 49
Gold US$/t.oz 611.59 702.63 15 Our ferronickel cash cost rose due to
MINERAL RESOURCES AND ORE RESERVES (‘000 wmt)*
Commodity Quantity Change (%)
2006 2007
Saprolite Nickel 179,850 180,900 1
Limonite Nickel 185,150 214,200 16
Gold 3,863 3,973 3
Bauxite 84,400 81,600 (3)
PROVED AND PROBABLE RESERVES (‘000 wmt)*
Commodity Quantity Change (%)
2006 2007
Saprolite Nickel 63,900 55,100 (14)
Limonite Nickel 51,450 50,150 (3)
Gold 2,882 3,026 5
Bauxite 84,400 73,100 (13)
Without reserves, a mining company is nothing. Unlike other businesses, the life of a mining company can be very easily determined, based solely on the size and quality of its reserves. Our reserves are the basis of our strategy. All the other strategies stem from the decisions we make about how we can create the most value from our existing large reserves and resources. The reserves of our gold, one of our three core commodities, are dwindling and so we are actively
seeking to discover or acquire more gold. Without having good knowledge of your reserves,
subsequent planning will be misguided. For this reason, and also to fulfill a listing requirement of the ASX, every year we estimate our reserves according to the JORC Code, which is determined by the Australasian Institute of Mining and Metallurgy.
The 14% decrease of nickel reserves is largely due to production. The 13% decrease of bauxite reserves is due to a portion being reclassified as indicated resources.
A Well Governed
State-Owned Enterprise
We take corporate governance extremely seriously.
Firstly, because we believe good corporate
governance is a good business decision. Especially
for a mining company in Indonesia, behaving in a
clear, consistent, fair, accountable, responsible way
will yield the highest and most durable profits. As well,
important aspects of the business, such as raising
capital, to finding partners, to securing favourable
terms with our suppliers can all benefit from being a
well governed company.
Secondly, it’s simply about operating ethically; about doing the right thing, about making good
profits, but also about giving back to the communities we operate, in ways other than just
generating economic development. We want to be a partner with the communities we are in and
• Ranked 1st Overall
• Ranked 1st SOE Non Finance Category
League of American Communication Professionals (LACP) 2006 Vision Awards Annual Report Competition
• Platinum Winner (Materials Category)
• Gold Winner (Best In-House Report Category)
• Ranked 11th from over 2,500 international entries
Asia’s Best Companies 2007 – FinanceAsia
• Best Managed Company (rank 6th)
• Best Corporate Governance (rank 5th)
• Best Investor Relations (rank 2nd)
• Most Committed to a Strong Dividend Policy (rank 6th)
Ranked in the 50 Top Reports from around the world as compiled in the Annual Report on Annual Reports, the international contest run by Europe’s E.Com, the only Indonesian firm to do so.
The Best Corporate Governance Practices in the Small/Mid Cap Category in Asia/ Pacific by Technical Criteria - IR Global Rankings
Top Performing Listed Company – Investor Award 2007
Overall Third Best Company in Indonesia – Corporate Governance Poll 2006 – Asiamoney
Exciting Projects
ORGANIC GROWTH PROJECTS
Project Product Location Volume Status Operational Year
PT Indonesia Chemical Alumina Chemical Grade Alumina Tayan, West Kalimantan - ICA formed in March 2007
- Updating BFS, EPC selection and financing
SGA Bintan Project Smelter Grade Alumina Bintan Island, Riau 400,000 – 600,000 tpa Not Feasible Terminated
SGA Mempawah Project Smelter Grade Alumina Mempawah, West Kalimantan - JVA negotiations, Feasibility studies
SGA Munggu Pasir Project Smelter Grade Alumina Munggu Pasir, West Kalimantan - Agreement signed in September 2007
- JVA negotiations, Feasibility studies –
Mandiodo NCPI Project Phase 1: NCPI
Phase 2: Stainless Steel Mandiodo, Southeast Sulawesi - JVA negotiations, Feasibility studies
Obi NCPI Project Phase 1: NCPI
Phase 2: Stainless Steel Obi Island, North Maluku Contained in Pig Iron - Agreement signed in October 2007- JVA negotiations, Feasibility studies
Krakatau Iron Project Sponge Iron South Kalimantan - JVA negotiations, Feasibility studies
Pearl Nickel Project 1) Ferronickel
2) Nickel Cobalt Halmahera Island, North Maluku 1) 30,000 tpa - 50,000 tpa of FeNi - Agreement signed in February 2007- JVA negotiations, Feasibility studies 2) BFS by 2012
• Note: this table is for illustrative purposes only as the feasibility studies are still being conducted for many of these projects and as such many aspects were not final
• NCPI = Nickel Contained in Pig Iron
• EPC = Engineering Procurement and Construction • BFS = Bankable Feasibility Study
• JVA = Joint Venture Agreement • TPA = Tons per annum
With large cash reserves following a recent expansion of our nickel volumes and thanks to a strong nickel price, we are ready to make new investments for our next phase of growth. With average annual nickel prices likely softening in the next couple of years and with little production growth if any in 2008, we feel it is imperative for our shareholders to also look carefully at our growth in the next three to five years.
With large reserves of nickel and bauxite we are investing, often together with experienced international partners, for a better future. This means moving downstream to create more value from our reserves. We want to squeeze as much value as possible from our reserves, which means careful planning and execution. Currently we have smelter and chemical grade alumina projects building on our bauxite reserves, with Chinese, Japanese, Russian and European mining and metal companies. We have a massive nickel project with BHP Billiton, which will likely use both phyrometallurgy and more advanced hydrometallurgy, to best process our largest nickel deposit, at Buli, North Maluku. We have two Nickel Contained in Pig Iron projects, with Tsingshan and Jindal which would use simple blast furnaces to process our low grade nickel ore into NCPI and then if feasible, move further downstream into stainless steel. We have a sponge iron project with PT Krakatau Steel. We will also invest in cost reduction, to convert from high cost diesel, to either coal, hydro or natural gas,
and create a substantial cash cost reduction.
On the acquisition side, we are looking to acquire gold assets in Indonesia to replenish our dwindling gold reserves and as part of the strategy to maintain diversity, we have made a joint takeover bid for Herald Resources Ltd of Australia, which owns 80% of a lead/zinc project called PT Dairi Prima Mineral.
ORGANIC GROWTH PROJECTS
Project Product Location Volume Status Operational Year
PT Indonesia Chemical Alumina Chemical Grade Alumina Tayan, West Kalimantan 300,000 tpa - ICA formed in March 2007
- Updating BFS, EPC selection and financing 2010 or 2011
SGA Bintan Project Smelter Grade Alumina Bintan Island, Riau 400,000 – 600,000 tpa Not Feasible Terminated
SGA Mempawah Project Smelter Grade Alumina Mempawah, West Kalimantan 1.0 million tpa - JVA negotiations, Feasibility studies 2011
SGA Munggu Pasir Project Smelter Grade Alumina Munggu Pasir, West Kalimantan 1.2 million tpa - Agreement signed in September 2007
- JVA negotiations, Feasibility studies –
Mandiodo NCPI Project Phase 1: NCPI
Phase 2: Stainless Steel Mandiodo, Southeast Sulawesi _ - JVA negotiations, Feasibility studies 2010
Obi NCPI Project Phase 1: NCPI
Phase 2: Stainless Steel Obi Island, North Maluku 7,500 tpa of Nickel Contained in Pig Iron - Agreement signed in October 2007- JVA negotiations, Feasibility studies 2012
Krakatau Iron Project Sponge Iron South Kalimantan 300,000 tpa - JVA negotiations, Feasibility studies 2010
Pearl Nickel Project 1) Ferronickel
2) Nickel Cobalt Halmahera Island, North Maluku 1) 30,000 tpa - 50,000 tpa of FeNi2) 60,000 tpa of nickel cobalt
- Agreement signed in February 2007
- JVA negotiations, Feasibility studies 1) 20122) BFS by 2012
ACQUISITIVE GROWTH PROJECTS
Company Product Project Name/
Location Volume Status
Herald Resources Ltd Lead/Zinc PT Dairi Prima
Mineral, North Sumatra
At full rate: 1m tonnes of throughput for 7 years (320,000 tonnes of concentrate and, 175,000 tonnes of metal)
As of April 2008, takeover bid was in process
Various Targets Gold Various, Indonesia – Identify target
in 2008
PT Borneo Edo International
Bauxite West Kalimantan – –
Our Risks and
Challenges
The mining business is inherently risky. This is even more so when operating in a country like Indonesia which is going through many fundamental economic and political changes. Risks that we are constantly aware of include price volatility of our main products, higher international oil prices, currency rate fluctuations, operational disruptions and regulatory risks associated with licensing and permits as well as the revision of the mining law.
The mining business also has many challenges. It is a capital intensive, slow yielding business and many different moving parts must be controlled to make a viable mining and metals project come to profitable operation. One of our main challenges right now is regaining our position as a low cost producer of ferronickel. Although we produce our other products at low cost, because of the removal of national fuel subsidies we have seen the cash cost of ferronickel climb consistently higher. As at the end of 2007, we were still in the top quarter of the industry cost curve. We therefore plan to soon convert to a lower cost fuel, such as coal, hydro or natural gas.
2006 (%)* 2007 (%)*
Materials 19 27
Ore Mining 15 17
Fuel 17 12
Labor 14 9
Depreciation 14 9
Royalty 4 5
*Of total production costs
Materials were the largest cost component
inline with higher nickel output and increased ore feed costs.
2007 NICKEL INDUSTRY COST CURVE (2007$)
PT Aneka - Pomalaa
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000
Production (kt Ni)
C1 Cash Cost ($/lb Ni)
Copyright Brook Hunt 2008 0
our pursuit of creating maximum shareholder value, we are
constantly striving to become bigger, better, more diversified
and sustainable. We feel it is slightly reckless to give anything
more than our volume targets beyond the year ahead. We make
forecasts for commodities and fuel prices. Therefore, while we
forecast expected revenues, profits and margins for the year
ahead, we do not have specific targets. We take this approach
as the mining business is a complicated one, with many moving
and sometimes uncontrollable parts.
LME PRICE (US $/lb)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
13.20 10.96 7.50 4.75 4.35 5.00 5.80 8.00 7.50 8.20 8.80 9.50
great in terms of r
growth, will be an important year for investing in significant long term
growth
PRODUCTION VOLUME TARGETS
Product 2007 Actual 2007 Target 2008 Target % Change
Nickel contained in
Ferronickel 18,532 tonnes 20,000 tonnes 17,000 tonnes
- 8%
Nickel Ore 7,112,870 wmt 5.5 – 5.8 million wmt 5.8 million wmt - 18%
Gold 2,791 kg 3,000 kg 2,980 kg + 7%
Bauxite 1,251,247 wmt 1.5 million wmt 1.5 million wmt +20%
• January 29th - We announce our AUD$2.50 joint takeover bid with Zhongjin, for Australian miner, Herald Resources Ltd (HER).
• January 31st – We announce that the Ministry of SOEs, as well as the management of HER, support our takeover bid for HER.
• February 14th – We clarify rumours that we were going to buy a minority stake in PT Freeport Indonesia. The Minister of SOEs had only commented he supported our buying into PTFI. • March 7th – We lodge the Bidders Statement related to the HER takeover.
BLOOMBERG CONSENSUS ESTIMATES (in Rupiah unless otherwise noted)
12/2008 12/2009
EPS 399.032 308.681
Cash Flow Per
Share 444.684 436.702
Dividends Per
Share 189.693 140.060
Sales 9.4 trillion 8.4 trillion
Net Income 3.8 trillion 3.2 trillion
Return on Equity 42% 30%
Net Debt - 5.8 trillion - 7.9 trillion
Price/EPS 7.7 10
Price/Cash Flow 6.9 7.0
Dividend Yield 6.2 4.6
Source: Bloomberg, as at April 8, 2008, based on number of estimate ranging from 11 to 16.
2008: The Year To Date
HEAD OFFICE
Sales Assets
Employees
Rp5,618 billion -282
GOLD AND REFINING
Sales
Assets
Employees
Rp707 billion Rp1,163 billion 740
BAUXITE AND IRON SANDS
Sales Assets
Employees
Rp212 billion Rp158 billion 175
I N D O N
2 3 7 6
4
5 10
11
E D 14
15 5
7
8 2
1 6
BATU HIJAU (Newmont-owned mine
that Antam considered investing in) MARTABE
(Gold Deposit owned by Oxiana that Antam considered investing in)
Malaysia
F
Head Office and Geology Unit Gold
Nickel Iron Sands Bauxite
Diamond and Base Metal
NICKEL AND REFINING
Assets Sales Employees Rp5,501 billion Rp10,687 billion 1,504 Prospect LocationNickel Bahubulu, Tapunopaka, Mandiodo
Nickel Morowali
Nickel Buli, Gee
Gold Gunung Patah Tiga
Gold Seblat
Gold Papandayan
Antam’s Promising Exploration Areas
E S I A
A B C D E F 8 A B C 5 3 13 12 9 4 GRASBERG (PT Freeport Indonesia owned mine that Antam considered investing in) POSO LAKE (Potential Hydro Power Plant) 450 Km 1.200 Km SONORO (Gas field owned by
Medco)
SENGKANG (Gas field owned by
Energy Equity Epic (Sengkang))
Note : Antam had other active exploration areas not indicated on this map.
POMALAA TIMUR (PT Inco-owned property and Antam
source of 1 million wmt of nickel ore
per year)
Irons Sands Mine Lumajang
Precious Metal Refinery Jakarta
Gold Mine and Factory Pongkor
Nickel Mine and Smelters Pomalaa
Nickel Mines Tanjung Buli, Mornopo, Gee
4 5 6 7 8 9 9 10 11 12 13 14 15 *currently operational
Certain Minority Stake Joint Venture Projects
PT Nusa Halmahera Minerals* Antam 17.5%
PT Cibaliung Sumberdaya Antam 10.25%
PT Sorikmas Mining Antam 25%
PT Gag Nickel Antam 10%
PT Weda Bay Nickel Antam 10%
PT Dairi Prima Mineral Antam 20%
PT Galuh Cempaka* Antam 20%
4
5 PT Borneo Edo International Antam 60%
PT Mega Citra Utama Antam 80%
6
7 SGA Mempawah Antam 55%
8 Sponge Iron with Krakatau Steel Antam 34%
Antam Shares and
Shareholders
Market Overview
28
Shareholders Information
28
Total Shareholder Returns
30
Dividend Policy
31
Investor Relations
32
Investor Perception Survey
34
Direct Feedback from You
35
28
Market Overview
The year 2007 was a strong yet volatile year for participants in the global capital markets driven by continuing and seemingly unstoppable growth of China, ever higher commodity prices and a fast acting, accommodating Federal Reserve, combined with rising oil prices increasingly global fears over the subprime mortgage crisis in US, the subsequent credit crisis and fears
of recession in the West. Although turbulent, most bourses around the world performed well, especially in emerging markets.
The Indonesian Stock Exchange (IDX) also posted a significant increase of 52% to 2,746, only beaten by China’s bourses and was the region’s third best performer. The IDX had a market capitalization of Rp1,995 trillion with an average daily value to Rp4.3 trillion in 2007. The top three sector performances were mining, agriculture and property. One important factor in the strong performance of the IDX, and a new phenomenon in 2007, was the huge increase in domestic institutional and domestic retail investors. Local investors caused daily trading volumes to soar, significantly improving liquidity and higher valuations.
Antam’s Shares
Since 1997, Antam’s shares have traded on the Indonesian Stock Exchange (IDX - formed by the merger of the Jakarta Stock Exchange and Surabaya Stock Exchange in 2007). Besides a Main Board member, the company is also a member of the Jakarta Mining Index, LQ 45 (45 most liquid shares of the exchange) and the Jakarta Islamic Index.
Antam is also listed on the Australian Securities Exchange (ASX - resulting from the merger of the Australian Stock Exchange and the Sydney Futures Exchange in December 2006). Antam’s shares were listed with exemptions on the ASX in 1999 and the listing was augmented to a full ASX Listing in 2002. The purpose of Antam’s listing is to subject the company to more stringent standards of
transparency and disclosure, in particular for reporting the annual estimation of mineral resources.
Antam’s securities are traded as Chess Depository Interests (CDI) where one CDI represents five underlying common shares, with each fully convertible into the other. In 2007, 120,250 CDIs were
traded with modest trading activities.
Corporate Action: Stock Split
At an Extraordinary General Meeting on May 30th, 2007, Antam’s shareholders approved management’s proposal of a stock split at ratio of 1 share with a nominal value of Rp500.00 per share to 5 new shares with a nominal value of Rp100.00 per share.
The purpose of the stock split was as follows:
1. to increase trading liquidity.
2. to improve distribution of share ownership by creating a less expensive unit price that is more
appealing to small and retail domestic investors.
3. to help create market capitalization growth.
SHARE CHRONOLOGY OVERVIEW
Description Number of preferred
stocks (A Series) Number of common stocks (B Series) common stocks Number of
(B Series)
Total Shares
The Government of RI The Government of RI Public
Nominal Value Rp500 per share
1. Initial Public Offering (IPO) in 1997 1 799,999,999 430,769,000 1,230,769,000
2. Bonus Shares* in 2002 1 1,239,999,999 667,691,950 1,907,691,950
Nominal Value Rp100 per share
3. Stock split** in 2007 1 6,199,999,999 3,338,459,750 9,538,459,750
* During Extraordinary General Meeting of Shareholders on June 19,2002 it was resolved to issue a bonus share from the capitalization of additional paid-in capital using a ratio wherby ownership of 100 shares warrants receipt of 55 new shares. On July 30, 2002, Antam approved the issuance of 676,922,950 new B Series in the amount of Rp338 billion from 1997 IPO.
1 Government of the Republic of Indonesia 6,200,000,000 65.00
2 MS + CO INC CA 244,212,136 2.56
3 JPMorgan Chase Bank Na Re Norbax Inc 219,222,500 2.30
4 Investor Bank and Trust Company (West) 157,556,000 1.65
5 The Northern Trust S/A AVFC 97,197,000 1.02
6 PT Jamsostek (Persero) - JHT 61,000,000 0.64
7 Pertamina Pension Fund 58,173,125 0.61
8 SSB2D09SSGA Emerging Markets Fund-2144 43,707,500 0.46
9 Liu Siauw Kie 40,500,000 0.42
10 PT Taspen 40,387,500 0.42
11 Rennier Latief 38,500,000 0.40
12 SSB S/AZV96 Daily Active Emer. Mkts Sec 38,480,000 0.40
13 RD Fortis Infrastruktur Plus 36,380,000 0.38
14 SSBPS1O Pacific Select Fund Emerging Ma 36,082,950 0.38 15 CB London S/A Hauck and Aufhaeuser Banqu 32,519,500 0.34
16 PT Jamsostek (Persero) - Non JHT 32,500,000 0.34
17 Fortis Ekuitas -89763.4000 32,344,500 0.34
18 Bank of New York 32,316,275 0.34
19 Kim Eng Securities, PT 30,000,000 0.31
20 SSB 2R26 Sanford C. Bernstein Fund, Inc. 29,168,000 0.31
0 1,000 2,000 3,000 4,000 5,000 6,000
0 500 1,000 1,500 2,000 2,500 3,000
Jan Jun Dec
SHARE PRICE PERFORMANCE VS JAKARTA COMPOSITE INDEX IN 2007
Index
SHAREHOLDER COMPOSITION OF HOLDERS OWNING LESS THAN 5% OF ANTAM’S SHARES AS PER DECEMBER 31, 2007
Type of Investor Domestic Foreign
Number of Shares Number of Holders Number of Shares Number of Holders
Retail 872,770,195 19,934 11,835,750 180
Institutional 884,981,381 695 1,568,872,424 217
TOTAL 1,757,751,576 20,629 1,580,708,174 397
Public Government
65 %
35 % 2007
%
Share Price Rp
IDX
30
Stock began trading with the new nominal value at the continuous auction market on July 12th, 2007. Please see the Share Chronology Overview Table for more details.
Total Shareholder Returns
Antam’s share price (adjusted) increased 176% from Rp1,620 to Rp4,475 while total shareholder returns in 2007 increased to a once again hefty 180% compared to the 126% of 2006. The average trading value reached Rp264.1 billion while trading volume booked 21.17 billion shares. Antam’s market capitalization increased 187% to Rp43 trillion (US$4.6 billion) or 2.2% of total IDX market capitalization and was the 12th largest listed company.
DISTRIBUTION SCHEDULE (including holders of CDIs)
Number of Shares Held Total Shares Number of Holders
1 - 1,000 1,306,050 1,644
1,001 - 5,000 21,648,050 6,403
5,001 - 10,000 29,597,875 3,501
10,001 - 100,000 276,857,623 7,665
100,001 - 1,000,000 439,937,475 1,516
> 1,000,000 8,769,112,677 298
TOTAL 9,538,459,750 21,027
In 2007, Antam’s share price performed better than the indices of most international stock exchanges, such as the Dow Jones, S&P 500, FTSE 100 and ASX All Share Mine which Antam outperformed by 158%, 165%, 169% and 86%, respectively. However, due to the strong cumulative performance of the mining sector in Indonesia, Antam underperformed the Jakarta Mining Index by 19%. Antam still beat the IDX Jakarta Composite Index by 85%. Furthermore, based on a Bisnis Indonesia list published on March 31st 2008, Antam created the largest sales growth and net profit increase amongst the largest 10 non-bank public companies listed on the IDX, beating
mining and other companies.
Total Shares and Composition of Shareholders
The authorized capital of the company (after stock split action) was Rp3.8 trillion comprising 1 Dwiwarna (Golden) series A preferred share and 37,999,999,999 common shares with a nominal value of Rp100 per share. The issued and fully paid-up capital was Rp954 billion consisting of 1 Dwiwarna (Golden) series A preferred share owned by the Government of the Republic of Indonesia
and 9,538,459,749 ordinary shares. 65% of the issued capital or 6,200,000,000 shares were owned by the government, while 35% of the issued capital or 3,338,459,750 shares were publicly traded.
At the end of 2007, the largest public shareholder was MS + CO INC CA with a 2.56% ownership. Unlike prior years in which most of the free floating shares were traditionally owned by foreign institutional
QUARTERLY SHARE PRICE MOVEMENT*
2006 2007
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Highest (Rp) 935 1,210 1,180 1,690 2,370 3,250 2,875 5,050
Lowest (Rp) 705 730 860 1,090 1,400 2,390 1,875 2,600
Closing (Rp) 870 925 1,100 1,600 2,370 2,510 27,75 4,475
Volume (Billion) 1.97 2.38 1.64 1.06 3.69 5.16 4.09 8.23
Average Value Traded (Billion) 27.3 37.3 26.8 25.0 112.4 247.8 158.9 562.2
PUBLIC SHAREHOLDERS COMPOSITION
(%)
03 04 05 06
Government Institutional Investors Retail Investors Foreign 65 3.4 4.4 27.2 65 5.0 6.9 23.1 65 28.7 3.3 3.0 65 30.4 1.9 2.7 07 65 16.6 9.3 9.1
Preferred Stock
(A Dwiwarna Share) 1 • Can request EGM• Appoints candidates and approves of
Commissioners and Directors elected at AGM/EGM
• Cannot transfer preferred stock to another
holder
• Can only be owned by the Republic of
Indonesia
• Must approve decision to issue equity
Common Stock
(B Shares) 9,538,459,749
• Each share equals one vote at AGM/EGM • Holders of more than 10% can request
AGM/EGM, and request agenda items AGM = Annual General Meeting of Shareholders
EGM = Extraordinary Annual General Meeting of Shareholders
investors, local investors accounted for 18.4% of Antam’s free float while foreign investors held 16.6%. Based on shareholder composition, the top 5 biggest shareholders were long-term foreign institutional investors. Foreign institutional investors collectively held 16.4% of Antam’s total shares, while local
individual investors held 9.15%, local limited companies held 4.95%, local mutual funds held 1.82% and local pension funds held 1.55%.
Dividend Policy
The company’s dividend policy is to distribute a cash dividend to the shareholders at least once a year. Since 1997, the dividend policy has been to use a minimum payout ratio of 30% of net profit after tax, unless the Annual General Meeting of Shareholders (AGM) determines otherwise. The company’s average dividend payout ratio for the past 5 years is 34.8% and since 1997 IPO the
average dividend payout is 39.4%.
The AGM held in May 30th, 2007 decided Antam must pay a 40% dividend payment of the net profit (payout ratio) of 2006, amounting to Rp621.11 billion or Rp65.116 per share (adjusted for stock split), a significant increase compared to the dividend on earnings of 2005 of Rp286.26 billion or Rp150.05 per share (equivalent to Rp30.01 post stock split). The ex dividend date was June 22nd, 2007 for the continuous auction market, the recording date for dividend payment was June 26th, 2007 and the dividend payment occurred on July 6th, 2007.
Realization of the Utilization of Funds Obtained from the Initial Public Offering as per December 31, 2007
In 2004, Antam had fully utilized the Rp556 billion raised from the 1997 IPO. Please see table below for more details on the utilization of funds obtained from the Initial Public Offering.
UTILIZATION OF NET PROCEEDS FROM THE INITIAL PUBLIC OFFERING (as of December 31, 2007)
Utilization Amount (%) Amount
(Million Rp) (Million Rp)Realized
FeNi III Expansion 73 406,152 381,646
Construction of Coal-fired Power Plant 9 50,074
-Replacement and Modernization of FeNi I 8 44,510 127,998
Repayment of Certain Indebtedness to Bank BDN 5 29,243 29,243
Development of the Logam Mulia Refinery 5 26,394 17,486
32
The main objective of the IR department is financial: to help lower the company’s cost of capital. Essentially two thirds finance and one third communications, Antam’s IR attempts to achieve this goal by creating understanding about Antam in the capital market and by raising the profile and recognition of Antam amongst the investment community. By creating ongoing dialogues with targeted shareholders we strive to boost Antam’s credibility and to successfully bridge
management and investors.
Antam endeavors to constantly improve transparency and disclosure to attract investors in the competition for capital. We are dedicated to providing information that can be compared to peers and delivered in a timely and balanced manner. While we may feel we are well known,
we recognize for the vast majority of the international capital market we are unknown. Through proactive targeted campaigns we hope to become amongst the world’s best known and most
credible mining companies.
Similar to 2006, the Investor Relations department is under the Corporate Secretary, which reports directly to the President Director. IR works with all the Directors, all departments and business units. The synergies between IR and all the different levels and divisions of Antam
are vital in order to understand the facts of the company and to communicate feedback from the capital market to management. Without good internal disclosure we cannot have good
external disclosure.
During 2007, Antam’s work included investment conferences run by international brokers in Jakarta, Singapore, Hong Kong, Bangkok and New York. Antam also conducted non-deal road shows to Singapore, Hong Kong, London, Edinburgh, Boston, Washington, New York and San Franscisco. Antam participated in two Indonesian Stock Exchange investor day
Investor Relations
BETTER
ACCOUNTABILITY
INCREASED
BETTER
PERFORMANCE
INCREASED
COVERAGE
INCREASED
SHAREHOLDER
VALUE
events, conducted numerous one-on-one meetings with local and foreign analysts, a site visit for international conference participants in Jakarta to see Logam Mulia, advertising in print and television, and daily IR emails and phone calls. It was noticeable how many more international investors came to Jakarta, and also how international brokers opted to organize conferences in Jakarta rather than, or in addition to, taking Indonesian corporates
in traveling conferences abroad.
Unlike past years when we set numerous goals, Antam’s IR goal for 2008 is simply to improve
the volume and quality of contact with new investors. We want to become more proactive and to target more investors. In order to achieve this we are revamping the website, maintaining our
level of advertising but building multi-pronged campaigns around specific events, improving our
email Newsalerts, conducting more meetings, roadshows and conferences and improving the
quality of reporting by better addressing specific financials. By choosing and focusing on this
simple goal for 2008, we hope to more effectively improve various other areas, and achieve other
sub-goals, of our investor relations.
For us the annual report is not a regulatory requirement, but is the most important investor communication tool. However, there is always more information required. So we kindly ask you
contact us. We want to hear from you!
From left to right:
Participation at an Investor Day.
Extraordinary General Meeting of Shareholders, Jakarta, 2007.
Antam won the Top Performing listed Company during Investor Awards 2007. President Director Dedi Aditya Sumanagara
(on right) collects an award from Investor
34
Results of our March 2008
Investor Perception Survey
WHAT ARE YOUR TWO MOST IMPORTANT CONSIDERATIONS IN MAKING A DECISION TO INVEST?
Response Percent
Dividend Yield 29.9%
Earnings Per Share 32.6%
Free Cash Flow 15.6%
Revenue projections 22.6%
Competitive advantage and
sector trends
32.9%
Capital Appreciation 12.3%
Management and Planning 32.6%
Outlook 17.3%
Fundamentals 45.8%
Other (please specify) 2.3%
SELECT TWO TO DESCRIBE WHY ONE WOULD INVEST IN ANTAM
Response Percent
Emerging Market 17.0%
Mining 40.8%
Long-term 27.3%
Indonesian/Asian 13.8%
Dividend/Value 16.6%
Capital Appreciation/Growth 28.0%
Commodity 31.6%
Solid fundamentals 32.6%
Management and Planning 13.8%
Other (please specify) 0.4%
SELECT ONE TO DESCRIBE ANTAM’S
Very Good Good Average Needs
Improvement
Poor
Management Team 23.4% (65) 54.0% (150) 18.3% (51) 3.6% (10) 0.7% (2)
Strategic Plans 24.3% (68) 48.3% (138) 20.0% (56) 5.7% (16) 0.7% (2)
Corporate Governance 20.1% (56) 52.5% (146) 19.8% (55) 6.1% (17) 1.4% (4)
We held an online survey at the beginning of 2008, called the Antam Investor Perception Survey.
Please do not say “we will acquire A/B/C mining company” without realization
since many people do not believe the management anymore. Sorry once
again I do not mean to put the management down, just a recommendation.
In maintaining Antam’s stock price in 2008, as nickel prices will be relatively
lower compared to 2007, it would be effective if Antam could give a dividend
of at least 75% from year 2007 net profit. This strategy would also be good
for the government as the main owner of Antam to meet their cash inflow
requirements for 2008.
Seek other resources of gold by acquisition and quickly implement
your plans.
Antam’s quarterly report that it files to the Australian Stock Exchange is
usually filed on the last day of the following month. How about targetting for
3 days before the end of the month?
Do not ever issue quarterly earnings guidance, the self-imposed benchmarks
that drive executives to sacrifice long-term strategy for a short-term payoff.
Disregard the speculator’s interest.
Your company’s must be more efficient in production related to the high price
of fuel (energy). Antam must improve its performance to survive in this highly
competitive sector.
Look for new revenue sources and increase diversification. Maintaining free
cashflow is a higher priority than profit.
Engage more with the press.
Need to be more proactive on executing some of the many deals under
consideration. Antam sometimes seems very slow at bringing new businesses
to fruition and may miss opportunities.
On the outlook side, Antam is diversified. But on the revenue side, nickel is
still the key catalyst. To ensure investor faith, management must continue
to deliver promises that convince public investors about its development in
metal markets, especially to diversify the lines of business (eg. gold & bauxite).
The glitches with FeNi lll, however, will leave a scratch on the perception of
Antam’s ability to sustain performance.
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36
Q&A with Our Largest
Shareholder
Interview with Mr. Roes Aryawijaya, Deputy State Minister of State-Owned Enterprises in Mining, Strategic Industry, Energy and Telecommunications.
How do you see Antam and the current Indonesian mining industry?
Antam posted significant results in 2007 with record breaking sales and profit figures. Antam was able to capitalise on the positive momentum from the commodity boom by expanding its output. We admit the
Indonesian mining industry still faces huge challenges in the middle of the euphoria of the global mining industry. I believe, however, Antam was able to utilise the available opportunities well.
What are your concerns regarding Antam?
I think management should pay extra attention to the trend of increased production costs. Cost reduction will keep the competitiveness of the company in the midst of the M&A trend in the global mining industry. As well, Antam needs to increase the competencies of its human resources as well as its processing abilities. This will
ensure fast adoption of the current mining technology and trends.
In 2008, the term of Antam’s Board of Directors as well as several members of the Board of Commissioners comes to an end. As a majority shareholder, how does the government see this?
A change in management is normal. The government is concerned with the future and
development of Antam and hope the change of management can take Antam in an even
better direction. The current management was able to create Antam as one of the largest contributors to the state budget from the company’s dividends. On behalf of the government as the majority shareholder, we would like to thank management for its contribution during
its term of service.
The government always strives to select the best people for top management positions based on existing laws and regulations. We conduct fit and proper tests as part of the selection process. The
process comprises several stages such as formulation of a long list
and a short list, psychological tests and interviews. Several factors that we view include work experience, competency, dedication
and integrity.
Thank you very much for the interview. Lastly, what are your expectations of Antam?
I would like to remind management that all efforts must focus on
how to increase the corporate and shareholders’ value which in turn will improve the welfare of the Indonesian people. Management needs to accelerate growth projects, both organically and
inorganically, not only with a prudent and professional approach but also based on good corporate governance principles. I hope
that inline with the realisation of these projects, the fundamentals of
Dear Shareholder
Letter from the Board of Commissioners
3 8
Commissioners’ Statement
4 1
Letter from the Board of Directors
4 2
Directors’ Statement
4 9
Farewell Letter from the CEO
38
Letter from
the Board of Commissioners
“Antam’s fundamentals are now stronger
to face any challenges and Antam is more
In 2007, Antam maximized profit from high commodities prices by increasing the output of its upstream and downstream products of nickel ore and ferronickel.
Inline with increased production and sales, Antam posted a Rp5.13 trillion net profit, a record breaking figure in the 39 year history of Antam. To maintain the continuity of the corporate development, we encourage the Board of Directors to start new projects which are built on the vast reserves of nickel ore and bauxite, both high grade and low grade. As well, we continue to support management’s efforts to increase and find new reserves and resources to support continuous corporate development.
We urge the Board of Directors to concentrate on moving downstream to more value added products, which incorporate the smelting and refining process, as the company is currently supported by a strong cash position. Such developments can be realized by working with more experienced partners so as to create more added value and more jobs.
The recent trend in the mining industry is of increased acquisition activities. Acquisition opportunities might also be feasible for Antam with its solid cash position as well as strong support from external parties.
Given the numerous development projects Antam currently has, management must prioritize and decide which project should go ahead first.
Although the company performed well financially, the Board of Commissioners realises Antam still faces challenges in terms of the implementation of corporate governance, human resources competencies, increasing production costs and environmental management.
As such, we continue to encourage the implementation of good corporate governance at Antam. The Corporate Policy Manual (CPM) serves as a guideline and reference for the implementation of corporate governance at Antam, which can help to ensure better corporate performance and business
