VIII. COMPANY INFORMATION
12. Information on Subsidiaries
The Company has 2 (two) Subsidiaries with ownership of 50% or more as follows:
A. PT MULTI SARANA INDOTANI ESTABLISHMENT
PT Multi Sarana Indotani (“MSI”) is a limited liability company established under the Laws of the Republic of Indonesia. Its Articles of Association was notarized by Deed No. 13 dated September 18, 2001, as witnessed by Rachmad Umar, S.H., Notary in Jakarta, which was later amended under Notarial Deed No. 9 dated December 20, 2001, as witnessed by Rachmad Umar, S.H., Notary in Jakarta. The amendment of Article 4 of the Articles of Association of MSI was related to share capital. Both Deeds were approved by the Ministry of Justice of the Republic of Indonesia in its Decision Letter No. C-11416.HT.01.01.TH.2002 dated June 22, 2002, entered in the List Companies Register under No. 1005/BH 09.01/VII/2002 dated June 25, 2002 at the Companies Registry of North Jakarta Municipality, and announced in Supplement No. 10823 to the State Gazette of the Republic of Indonesia No. 74 dated September 13, 2002.
The latest amendment to the Articles of Association of MSI through Notarial Deed No. 21 dated December 13, 2006, as witnessed by Siti Pertiwi Henny Singgih, S.H., Notary in Jakarta, was based on the minutes of the Shareholders’ General Meeting of MSI whereby the shareholders agreed to change the company’s status to become a Foreign Capital Investment, and to change Article 2 of the Article of Association of MSI concerning in period of establishment, clause 2 of Article 5 concerning shares, clause 2 Article 10 concerning directors, and clause 2 Article 13 concerning commissioners. These amendments were approved by the Ministry of Justice of the Republic of Indonesia in its Decision Letter No W7-02361 HT.01.04-TH.2007 dated March 9, 2007, received by the Ministry of Justice and Human Rights of the Republic of
99.99% 54.20%
The Company
PT Multi Sarana Indotani PT Tanindo Subur Prima
Companies Register at the Companies Registry Secretariat Office of Sidoarjo Municipality dated December 26, 2006 under No. 001D/BH 13-19/XII/2006. pending the announcement in the State Gazette of the Republic of Indonesia.
MSI is domiciled at Jl. Raya Lengkong, Desa Lengkong, Kecamatan Mojoanyar, Kabupaten Mojokerto. In accordance with Article 3 of the Articles of Association of MSI, MSI is engaged in agriculture, trading, industry, services, and ground transportation services.
EQUITY STRUCTURE AND SHAREHOLDING
In the Extraordinary Shareholders’ General Meeting No. 21 held on December 13, 2006 as witnessed by Siti Pertiwi Henny Singgih S.H., Notary in Jakarta, the shareholders agreed on the sale of the following shares of:
a) 11,499,855 (eleven million four hundred ninety nine thousand eight hundred fifty five) shares owned by PT Central Pertiwi to PT BISI International Tbk. as supported by a Share Sale and Purchase Agreement dated December 13, 2006.
b) 144 (one hundred forty four) shares owned by Jialipto Jiaravanon to PT BISI International Tbk., as supported by a Share Sale and Purchase Agreement dated December 1, 2006.
The structure of shareholders after the sale of shares was as follows:
Description Par Value - Rp1,000 per Share
Total Shares Total Par Value Percentage (shares) (Rp) of Ownership (%)
Authorized Shares 20,000,000 20,000,000,000
Issued and Fully Paid Shares
PT BISI International 11,499,999 11,499,999,000 99.99
PT Central Pertiwi 1 1,000 0.01
Total Issued and Fully Paid Shares 11,500,000 11,500,000,000 100.00
Portfolio Shares 8,500,000 8,500,000,000
MANAGEMENT AND SUPERVISION
In accordance with Notarial Deed No. 7 dated December 29, 2006, as witnessed by Rachmad Umar, S.H., Notary in Jakarta. Which was based on the minutes of the Extraordinary Shareholders’ General Meeting of MSI held on December 28, 2006, the shareholders agreed to change the composition of the Boards of Commissioners and Directors effective on the meeting date. This deed was reported and registered to the Ministry of Justice of the Republic of Indonesia accompanying No.W7-01.10-2297 dated February 23, 2007, and entered in the List of Companies Register under No. 001D/BH13-19/III/2007 dated March 12, 2007 at the Companies Registry of Sidoarjo Municipality. The new composition of the Boards of Commissioners and Directors was as follows:
Commissioners
President Commissioner : Eddy Susanto Zaoputra Commissioner : Jialipto Jiaravanon
Commissioner : Thomas Effendy
Directors
SUMMARY OF SIGNIFICANT FINANCIAL DATA
The following table describes the summary of financial data of MSI as of December 31, 2006, which was based on the financial statement that were audited by Public Accounting Firm Purwantono, Sarwoko & Sandjaja that expressed an unqualified opinion on their statements, and as of December 31, 2005 and 2004 which was based on the financial statement that were audited by Public Accounting Firm Johan Malonda Astika & Partners that expressed an unqualified opinion on their statements.
BALANCE SHEETS
(In million Rupiah) December 31,
2006 2005 2004 ASSETS
Current Assets 33,790 16,265 318
Non-Current Assets 12,496 10,648 7,784
TOTAL ASSETS 46,286 26,913 8,102
LIABILITIES
Current Liabilities 23,044 6,051 74
Non-Current Liabilities 10,358 11,697 196
Total Liabilities 33,402 17,748 270
EQUITY 12,884 9,165 7,832
TOTAL LIABILITIES AND EQUITY 46,286 26,913 8,102 STATEMENTS OF INCOME
(In million Rupiah) For the years ended December 31,
2006 2005 2004
Net sales 87,621 39,282 -
Cost of goods sold 77,577 35,599 -
Gross profit 10,044 3,683 -
Operating expenses 2,893 1,965 160
Income (loss) from Operation 7,151 1,718 (160) Others income (charges) - net (1,864) 90 1 Income (loss) before income tax 5,287 1,808 (159)
Income tax expenses - net 1,568 475 -
Net Income (Loss) 3,719 1,333 (159) The net sales of MSI increased significantly due to an increase in using hybrid seeds by farmers, resulted to an increase in consumption of pesticides products of MSI. In addition, the change in plant pattern caused leisurely of rainy season in 2006 impact in an increase of receivable balance. Consequently, the necessity of fund from bank loan and trade payable is increased.
B. PT TANINDO SUBUR PRIMA ESTABLISHMENT
PT Tanindo Subur Prima (“TSP”) is a limited liability company established under the Laws of
April 1987, as witnessed by Esther Riawati Gunawan, S.H., Notary in Cirebon, has been amended by:
a. Deed of Articles of Association Amendment No. 8 dated April 30, 1987, as witnessed by Esther Riawati Gunawan, S.H., Notary in Cirebon. The amendment was related to Article 2 of the Articles of Association concerning the purpose and objectives of TSP.
b. Deed of Articles of Association Amendment No. 1 dated January 6, 1988, as witnessed by Esther Riawati Gunawan, S.H., Notary in Cirebon. The amendment was related to Article 4 of the Articles of Association of TSP.
c. Deed of Amendment No. 15 dated July 22, 1988, as witnessed by Esther Riawati Gunawan, S.H., Notary in Cirebon. The amendment was related to 1 of the Articles of Association concerning the change in the domicile of TSP from Surabaya to Kabupaten Sidoarjo.
The fourth deed was approved by the Ministry of Justice of the Republic of Indonesia in its Decision Letter No.C-11518.HT.01.01-Th.88 dated December 19, 1988, entered in the Companies Registry of Sidoarjo Courthouse under No. W.10.Um.07.10.2-26/PT-1989 dated March 10, 1989, and announced in Supplement No.645 to the State Gazette of the Republic of Indonesia No. 29 dated April 11, 1989.
The latest amendment on the Articles of Association of TSP was based on the Deed Statement of Shareholders’ Resolution No. 20 dated December 13, 2006, as witnessed by Siti Pertiwi Henny Singgih, S.H., Notary in Jakarta, which was based on the minutes of the Extraordinary Shareholders’ General Meeting of TSP of which the shareholders agreed to change the company’s status to become a Foreign Capital Investment, to Article 2 of the Articles of Association concerning the term of establishment, section 2 of Article 5 concerning equity, section 2 of Article 10 concerning directors, and section 2 of Article 13 concerning commissioners. These amendments were approved by the Ministry of Justice and Human Rights of the Republic of Indonesia on its Decision Letter No. W7-02500.HT.01.04-TH.2007 dated March 13, 2007, the announcement on the changes of shareholders’ was received by the Ministry of Justice and human Rights of the Republic of Indonesia on its Decision Letter No.W7-HT.01.10-5055 dated December 15, 2006, entered in the List of Companies Register at the Companies Registry Office in Sidoarjo Municipality dated December 27, 2006, pending the announcement in the State Gazette of the Republic of Indonesia.
TSP is domiciled in Jl. Raya Surabaya, Mojokerto KM 19 and in accordance with Article 3 of the Articles of Association the purpose and objectives of TSP are to engage in general trading, industry, agriculture, transportation, agent and services.
EQUITY STRUCTURE AND SHAREHOLDING
In accordance with Notarial Deed No. 20 dated December 13, 2006, as witnessed Siti Pertiwi Henny Singgih, S.H., Notary in Jakarta, which was based on the minutes of the Shareholders General Meeting, the shareholders agreed on the sale of following shares:
a) 42,136,000 (forty two million one hundred thirty six thousand) shares owned by PT Surya Hidup Satwa to Chia Tai Co. Ltd as supported by a Share Sale and Purchase Agreement dated December 13, 2006.
b) 49,860,102 (forty nine million eight hundred sixty thousand one hundred two) shares owned by PT Surya Hidup Satwa to PT BISI International as supported by a Share Sale and Purchase Agreement dated December 13, 2006.
The structure of shareholders after the sale of shares is as follows:
Description Par Value - Rp1,000 per Share
Total Shares Total Par Value Percentage (shares) (Rp) of Ownership (%)
Authorized Shares 200,000,000 200,000,000,000
Issued and Fully Paid Shares
PT BISI International 49,864,000 49,864,000,000 54.20
Chia Tai Co. Ltd.* 42,136,000 42,136,000,000 45.80
Total Issued and Fully Paid Shares 92,000,000 92,000,000,000 100.00
Portfolio Shares 108,000,000 108,000,000,000
* An affiliated party with the Company due to indirectly under control of Jiaravanon family.
MANAGEMENT AND SUPERVISION
In accordance with Notarial Deed No. 6 dated December 29, 2006, as witnessed by Rachmad Umar, S.H., Notary in Jakarta, which was reported and recorded in the Ministry of Justice and Human Right of the Republic of Indonesia under No. W7-HT.01.10-2710 dated March 6, 2007 and in the process registering in the List of Companies Register at the Companies Registry of Sidoarjo, the composition of the Boards of Commissioners and Directors of TSP as of December 28, 2006 is as follows:
Commissioners
President Commissioner : Eddy Susanto Zaoputra Commissioner : Jialipto Jiaravanon
Commissioner : Thomas Effendy
Directors
President Director : Jemmy Eka Putra
Director : Junaidi Sungkono
Director : Syahnovi Manius
Director : Nasib Wignjo Wibowo
Director : Setiadi Setiokusumo
SUMMARY OF IMPORTANT FINANCIAL DATA
The following table describes the summary of the financial data of TSP as of December 31, 2006, which were based on the financial statements as audited by Public Accounting Firm Purwantono, Sarwoko & Sandjaja that expressed on unqualified opinion on those statements, and on the financial statements as of December 31, 2005 and 2004 as audited by Public Accounting Firm Prasetio, Sarwoko & Sandjaja that expressed unqualified opinions on those statemets with an explanatory paragraph concerning the implementation of PSAK No.24 (Revised 2004) regarding “Employee Benefits”.
BALANCE SHEETS
(In million Rupiah) December 31,
2006 2005 2004 ASSETS
Current Assets 191,488 97,025 102,701
Non-Current Assets 47,777 46,671 51,328
TOTAL ASSETS 239,265 143,696 154,028
LIABILITIES
Current Liabilities 115,052 47,726 79,342
Non-Current Liabilities 19,681 12,348 10,824 TOTAL LIABILITIES 134,733 60,074 90,166
TOTAL EQUITY 104,532 83,622 63,862
TOTAL LIABILITIES AND EQUITY 239,265 143,696 154,028 STATEMENTS OF INCOME
(In million Rupiah) December 31,
2006 2005 2004
Net sales 565,780 486,910 362,821
Cost of goods sold 443,146 386,591 278,455
Gross profit 122,634 100,319 84,366
Operating expenses 87,198 71,062 63,446
Income from operations 35,436 29,257 20,920 Other charges - net (4,158) ( 1,019) ( 807) Income before income tax 31,278 28,238 20,113 Income tax expenses - net 10,375 8,478 5,982
Net Income 20,903 19,760 14,131
The net sales of TSP increased significantly due to an increase in used of the hybrid seeds by farmers, that resulted to an increase in consumption in agriculture products of TSP. The trade receivable balance increased consistent with the increase in sales; consequently, the necessity of fund from bank loan and trade payable is increased.
IX. BUSINESS ACTIVITIES AND PROSPECTS OF THE COMPANY AND SUBSIDIARIES
1. GENERAL
The Company was established in 1983 and its business includes seeding and manufacturing of corn, vegetable and paddy seeds. The head office of the Company is located at Jl. Raya Surabaya- Mojokerto Km. 19, Desa Bringin Bendo, Kecamatan Taman-Sidoarjo with its plant located in Desa Sumber Agung, Kecamatan Ploso Klaten, Kabupaten Kediri, Jawa Timur.
The Company and Subsidiaries focus their operations in several business activities as follows:
(i) Production of primary plant seeds that includes hybrid-field corn and paddy seeds that comes from the superior varieties of cross-breeding.
(ii) Production of vegetable seeds that includes vegetable and fruit seeds such as: chili, cucumber, eggplant, tomato, pumpkin, cabbage, china-cabbage, "paria", water spinach, long bean, spinach, honeydew, watermelon, and others.
(iii) Production of pesticides as well as sales of plant fertilizers.
Hybrid-field corn seed is well-known for its high productivity and quality of the harvested crops.
The type of corn seeds considered as the Company’s superior and pride seed is type F1 BISI-2, which is a corn variety with two corncobs in one plant as introduced by the government in 1995.
The Company has introduced its various superior vegetable seeds in the market, either by own production or by Chia Tai Seeds Co. Ltd., Thailand, a member of Charoen Pokphand Group. All these superior varieties are having approval for sale to the market based on the decision letter from the Ministry of Agriculture of the Republic of Indonesia.
The Company is one of the major plant and vegetable seed producers that is well-known for its research and development facilities. The Company has several domestic and international research facilities with high-technology and bio-technology departments. For developing seeds locally, the Company was awarded by a Satya Lencana Award from the President of the Republic of Indonesia on August 20, 1997. The Company became the first national seed company that received an accreditation from the government for self-labeling on its seeds as awarded by the Institute of Certification on Quality System on March 20, 2000.
In December 2006, in order to strengthen its position in agricultural business, the Company acquired 54.20% equity ownership in TSP and 99.99% equity ownership in MSI. TSP is engaged in the distribution and marketing of the Company’s products and other agriculture production materials, such as fertilizers and pesticides. MSI is engaged in the production of pesticide products, which are distributed by TSP.
The Company and Subsidiaries have produced superior varieties, corn seeds under the trademarks of BISI-2 and BISI-9, vegetable seeds under the trademarks of Timun Hercules and Melon Action, and paddy seeds under the trademark of Intani-2.