Chairman Message

Dear Shareholders,

The full year ended 31 December 2016 (“FY16”) was a watershed year for PT Samudera Indonesia Tbk (“The Company”). Amid a mix of bright spots in our terminal and logistics business and overcapacity challenges in the container shipping business, it was our first full year of operation following our organizational and leadership restructuring exercise to position ourselves for our next phase of growth.

Under our business structure, the Company now operates in five key segments, namely, Samudera Shipping, Samudera Terminal, Samudera Logistics, Samudera Agencies, and Samudera Property. At the heart of this restructuring effort lies our firm belief that people are our most important asset. We believe in investing in our employees and providing them with opportunities to realise their potential within the organisation. Riding on the restructuring, we are further able to fine-tune our talent deployment to effectively optimize our capabilities.

Financial Highlights

Overall, we ended the year with a 51% increase in net profit attributable to owners of parent entity to USD12.3 million, compared to USD8.1 million recorded in the full year that ended 31 December 2015 (“FY15”). This takes into account an insurance claim received by Samudera Shipping, a smaller asset impairment cost and a tax credit for FY16, along with a bad debt provision. Company revenue, on the other hand, decreased by 9.9% year-on-year, from USD451.1 million to USD406.4 million, largely due to a tumultuous year faced by Samudera Shipping, our largest revenue contributor at 64%. Revenue from Samudera Shipping in FY16 was USD264.3 million, compared to USD317.5 million in FY15.

The decrease was nevertheless partially mitigated by higher revenue of USD65.6 million, or an increase of 12.3%, from Samudera Terminal versus USD58.4 million in FY15. Our growth in this segment bodes well for our overall strategy of consolidating all our five existing terminal subsidiaries under PT Samudera Terminal Indonesia (“STI”).

On the Logistics front, revenue grew 16.2% year-onyear, from USD68.5 million in FY15 to USD70.2 million in FY16. The revenue from Samudera Agencies dipped slightly from USD19.3 million in FY15 to USD18.8 in FY16.

Operations Update

To manage the challenges posed by weakened container freight rates and dry-bulk charter rates, we continued our focus on improving our operational efficiency and asset utilisation while adopting a prudent approach in the management of our fleet. To that end, we have also strengthened our partnerships with other industry players through slot exchanges in the region. Concurrently, Samudera Shipping has been developing various joint ventures to grow alternative revenue streams for the Company.

We have been recalibrating our Indonesia domestic container shipping strategy since the enforcement of cabotage laws. As demand for domestic shipping continues to thrive, we have recently acquired two container vessels for deployment in Indonesian waters. These vessels complement our existing Indonesianflagged fleet which are currently enjoying healthy utilisation.

With the recent regulatory change by the Indonesian government allowing for the award of shipping agency licenses to non-ship owners, the cost of setting up shipping agencies has now been lowered. Consequently, our formation of PT Samudera Agencies Indonesia (“SAI”) in FY16 will enable us to consolidate our resources in response to the opportunities brought about by this new regulation.

The Company has been in agency business since its beginning. Over the years, we have established for ourselves an excellent track record, reputation and extensive network in the industry. By enhancing the structure through a focused management team and continuous service improvement and expanding our agency network, we are well-positioned to represent the foreign shipping lines that have an interest in calling at the smaller ports in various parts of Indonesia.

Our terminal business enjoyed another year of robust performance with sustained domestic trade growth propelling shipping activity. Nevertheless, we had to contend with bottleneck situations resulting from the limited infrastructure at some ports. We are however, hopeful that the commitment by the Indonesian government to invest in and upgrade our port infrastructure will help alleviate, if not eliminate, the problem in the near future. This bodes well for STI as it continues to seek opportunities to expand its terminal reach in the years ahead.

Our logistics business continued to contribute positively in FY16. In line with our mission to provide seamless support for our customers beyond shipping, terminal and ship agency services, we expect further investments in Samudera Logistics to take the form of hard assets such as container service centers, warehouses, trucks and heavy-lifting equipment. More importantly, the recent streamlining of operations and management should help us achieve a more strategic growth for this business going forward.

Following our reorganization, the management of the Company’s properties now falls under PT Samudera Properti Indonesia (“SPI”). This is a relatively new business line for us and contribution from SPI is presently insignificant. However, we look forward to building upon our existing portfolio and growing this unit into one that provides a sustainable income stream for the Company over time.

Changes in Board and Management Composition

FY 2016 saw several changes in the Board of Directors. Mr Asmari Herry Prayitno, Mr Prabowo Budhy Santoso, Mr Rudolf Saut Pardomuan and Mr Hastanto Sri Margi Widodo have stepped down from the Board in order that they may be able to accord undivided attention to the development of our businesses. This is in line with our objective of building highly dedicated and capable teams for each business unit following the organizational restructuring. On behalf of the Board of Commissioners (“BoC”), I would like to express my appreciation to each of them for their valuable contribution as directors of the Board. I also welcome Mr. Bani M. Mulia, who has stepped down from the BoC to serve as a Director of the Board; and Mr Ken Narotama Hidayatullah who was appointed as member of the BoC.

Tribute

In March 2017, the Company mourned the demise of Mr. Wisnoentoro Martokoesoemo, a long-term and treasured member of our BoC. Mr. Martokoesoemo was appointed to the Board in 2005, and the Company has benefitted greatly from his priceless counsel during this period. I would like to place on record, our deepest gratitude for his 11 years of faithful service. Mr Martokoesoemo will be greatly missed and we extend our most heartfelt condolences to his family for their loss.

Appreciation

On behalf of the BoC, I would like to thank our Board of Directors, management, and staff for their unstinting commitment and dedication to the Company. I also extend my appreciation to our shareholders, business partners and associates for their unwavering support over the years. Thank you for placing your confidence in the Company. We are committed to doing our best and we look forward to sharing with you the fruits of our labor in the years ahead.

 

Shanti L. Poesposoetjipto

Chairman