Farewell Letter from the President Director Please see page 50 www.antam.com Annual Report ASX:ATM • IDX:ANTM For the Year 2007 10 Reasons Generating to Invest in Antam 2007 Annual Report Higher Returns for aBetter Future Net Profit Surges 231% Please see Review of Operations, page 69 Nickel Exports Increase Significantly Please see page 71 PT ANTAM Tbk Head Office Gedung Aneka Tambang Jl. Letjen TB Simatupang No. 1 Lingkar Selatan, Tanjung Barat Jakarta 12530, Indonesia Cash Soars 317%; Antam is Poised Tel : (62-21) 789-1234 (62-21) 781-2635 to Invest and Grow Please see Fax. : (62-21) 789-1224 pages 63, 80 E-mail: [email protected] I N V E S T O R A L E R T ! You need to look here. It’ll only take three minutes... Why Diversified. 1Vertically- 2 Gold. Nickel. Integrated. Bauxite. A great mix. Indonesian. For more information please see Our Products and How We Make Them, page 105. Experienced. For more information please see Detailed Description of Antam, page 103. 4 Low cost operations 5 Unique position to (current cash costs lower ferronickel for ferronickel are costs through fuel average). conversion. For more information please see Cost of Sales, page 74. For more information please see Cash Costs and Cost Reduction Program, page 77. Exciting project 8 pipeline, to move 9 Targeted gold downstream into acquisition more value-added program. For more information please see processing activities. Acquisitive Growth Projects, page 83. For more information please see Organic Growth Projects, page 81. Why Antam? Gold. Nickel. 3 Large high quality reserves Bauxite. and resources of nickel A great mix. and bauxite. For more information please see Exploration and Reserves, page 96. 6 Industry-beating 7 Possible margins and ferronickel returns. production For more information please see Our Competitors, page 109. increase over For more information please see Cash Costs and next few years. Cost Reduction Program, page 77. For more information please see Production Volume Targets, page 45. 10 Big dividends, lots of cash and strong financial position to make investments. For more information please see For more information please see Financial Review, page 61. Acquisitive Growth Projects, page 83. 2 0 0 7 A NT A M A n n u a l R e p o r t www.antam.com 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 ([email protected], [email protected], [email protected], [email protected]). We actually prefer to have an ongoing dialogue with you and hopefully this report is only the beginning... 2007 Antam Annual Report www.antam.com Table of Contents THE INVESTMENT CASE FOR ANTAM IRON, NICKEL Contained IN PIG IRON 83 10 YEAR FINANCIAL HIGHLIGHTS 4 ACQUISITIVE GROWTH PROJECTS 83 WHY WE DO WHAT WE DO: OUR MISSION AND VISION 7 Capital EXPENDITURE PLANS 84 WHO WE ARE: ANTAM DESCRIBED 8 BLUE SKY: EXIStiNG MiNORitY- AN AMAZING YEAR OF GROWTH 10 StAKE JOINT VENTURES OUTPERFORMING OUR PEERS 12 PT NUSA HALMAHERA MINERALS 92 DELIVERING SIGNIFICANT SHAREHOLDER RETURNS 13 PT GALUH Cempaka 93 2007: A GREAT YEAR (CALENDAR OF SIGNIFICANT EVENTS) 14 PT CIBALIUNG Sumberdaya 93 OUR STRATEGY 16 PT DAIRI PRIMA MINERAL 94 OUR RESERVES 17 PT WEDA Bay NICKEL 94 A WELL GOVERNED STATE-OWNED ENTERPRISE 18 EXPLORAtiON AND RESERVES EXTERNAL RECOGNITION AND CERTIFICATION 19 Summary TABLES OF Reserves AND RESOURCES 96 EXCITING PROJECTS 20 NICKEL 97 OUR RISKS AND CHALLENGES 22 Detailed NICKEL Reserves AND RESOURCES TABLE 98 THE OUTLOOK 23 GOLD Detailed GOLD Reserves TABLE 100 MAP OF OPERATIONS AND PROJECTS 24 BAUXITE ANTAM SHARES AND SHAREHOLDERS Detailed BAUXITE Reserves AND RESOURCES TABLE 101 MARKET Overview 28 NOTES TO RESERVES AND RESOURCES estimations 102 SHAREHOLDERS Information 28 DETAILED DESCRiptiON OF ANTAM Total SHAREHOLDER RETURNS 30 HOW WE MAKE OUR MONEY 104 DIVIDEND POLICY 31 OUR STRATEGY TO GROW 104 INVESTOR Relations 32 OUR STRUCTURE 105 INVESTOR PERCEPTION Survey 34 OUR PRODUCTS AND HOW WE MAKE THEM 105 DIRECT FEEDBACK FROM YOU 35 OUR CUSTOMERS AND MARKET SHARE 108 Q&A WITH OUR LARGEST SHAREHOLDER 36 OUR COMPETITORS 109 DEAR SHAREHOLDER OUR COUNTRY AND GOVERNMENT 110 LETTER FROM THE BOARD OF COMMISSIONERS 38 OUR INDUSTRY 110 COMMISSIONERS’ STATEMENT 41 SWOT analysis 112 LETTER FROM THE BOARD OF DIRECTORS 42 RiSK MANAGEMENT DIRECTORS’ STATEMENT 49 HOW WE MANAGE RISK 114 FAREWELL LETTER FROM CEO 50 RISK Statement 115 ANTAM’S PEOPLE CORPORATE GOVERNANCE OF ANTAM THE MANAGEMENT 52 ASSESSMENT OF Antam’S Corporate GOVERNANCE Report 118 BOARD OF COMMISSIONERS’ BIOGRAPHIES 53 Statement ON THE Status OF Corporate GOVERNANCE 120 BOARD OF DIRECTORS’ BIOGRAPHIES 55 PRACTICES Q&A WITH THE BOARD OF DIRECTORS 56 Reports FROM THE COMMISSIONER-LEVEL BOARD 125 OUR HUMAN RESOURCES 58 COMMITTEES ADOPTION OF THE ASX Corporate GOVERNANCE PRINCIPLES FiNANciAL REVIEW: HiGHER PROFitS 140 ABRIDGED FINANCIAL STATEMENTS 62 AND Recommendations ADOPTION OF THE INDONESIAN CODE OF GOOD Corporate Total Consolidated ASSETS 63 143 GOVERNANCE Total Consolidated LIABILITIES 64 SUSTAINAbiLitY REPORT Capital STRUCTURE AND ACCESS TO Capital 65 STAKEHOLDERS’ Involvement 146 CASH FLOWS 66 Environmental PERFORMANCE 146 HEDGING ACTIVITIES 67 SOCIAL PERFORMANCE 147 REVIEW OF OpERAtiONS: Antam FUNDS A LOCAL CRAFTSMAN 148 GENERAtiNG HiGHER OUtpUT Antam TO PURCHASE GREEN ENERGY 149 DETAILED PRODUCTION AND SALES TABLE 70 SALES AND SEGMENT Information 71 AUDitiNG ANTAM SIGNED LETTER ATTESTING TO VERITY OF FINANCIAL PRODUCTION AND SALES 71 152 STATEMENTS COST OF SALES 74 OPINION LETTER FROM ERNST & YOUNG 153 NET INCOME 76 CONSOLIDATED FINANCIAL STATEMENTS CASH COSTS AND COST REDUCTION PROGRAM 77 154 LICENSING 78 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 159 PERFORMANCE MEASUREMENT AND OUTLOOK 78 CONTAct US INVEStiNG FOR A BEttER FUTURE KEY PERSONNEL AND BUSINESS UNITS 197 INSTITUTIONS AND supporting PROFESSIONALS 198 OUR FUTURE TARGETS 80 glossary 199 ORGANIC GROWTH PROJECTS 81 corporate IDENTITY 202 ALUMINA 81 IR CONTACT INFO AND CALENDAR 203 NICKEL 82 www.antam.com 2007 Antam Annual Report The Investment Antam Shares Financial Review: Review of Operations: Investing Blue Sky: Existing Minority- Case for Antam and Shareholders Dear Shareholder Antam’s People Higher Profits Generating Higher Output for a Better Future Stake Joint Ventures 4 Financial Highlights Billion Rupiah 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 Net Working Capital 472.13 452.50 763.04 874.30 827.99 2,100.12 2,064.93 1,308.11 2,138.09 6,249.28 192 *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. Our performance for the last 10 years As our Net Sales CAGR exceeded our We pay generous dividends. The has been consistent and robust. costs CAGR, we posted Net Income CAGR of our dividend payment per The Compound Annual Growth Rate CAGR of 37% from 1998-2007. share increased by 49% from 1998 (CAGR) of Net Sales from 1998 to to 2006. 2007 is 31%, while Cost Sales CAGR during the same period is 30%.