The year 2010 was a year of global economic recovery which had started in the second semester of 2009. Though not as high as had been predicted by the economists, global economic growth saw a positive trend, with Asia Pacific region being the major contributor to such growth rate. A number of countries, including China, India, and South Korea, were the prime movers, recording an average GDP growth rate above 5%.

Influenced by the rising trend, Indonesia’s economy also had a positive growth. Economic improvement in Asia Pacific region increased demand for primary commodity in Indonesia particularly from mining and plantation sectors. As business activities in related sectors picked up, commodity
prices also improved due to high demand.

Growth in domestic consumption, investment and export activities resulted  in a 6.1% increase in the country’s GDP in 2010, higher than 2009 of 4.5%. Inflation was relatively under control at 6.94%, Bank Indonesia benchmark reference rate was maintained at 6.5%, foreign currency reserve rose to
US$96.21 billion and Rupiah strengthened 4.4% to stand at Rp8,991/US$ by end of 2010. Indonesia’s capital market was named the best performer in Asia Pacific, with Composite Price Index closed at 3,703.51 or increased 46.13% from 2,534.36 at end 2009.

The Company’s Performance

The Company reaped a benefit from the nation’s economic upward trend and closed the year 2010 with outstanding results. Consolidated sales rose 27.6% to Rp37.32 trillion. However, net profit increase was not significant, only 1.5% from the preceding year, which was posted at Rp3.87 trillion. This was attributable to stronger Rupiah conversion rate and excessive rainfall, causing the surge of production costs at Mining Contracting unit. Consequently, net earning per share only went up 1.5% to Rp1,164 from Rp1.147 the preceding year.

Higher sales value was accompanied by record high sales volume of Komatsu heavy equipment that reached 5,404 units, a surge of 73.7% from 2009 totalling 3,111 units. This record of success was followed by the Company’s heavy equipment market share of 46% when competition was getting keener with the entry of newcomers and the increasingly aggresive old players. Total sales volume of heavy equipment in Indonesia increased to 11,781 units from 6,644 units in 2009 (source: internal research).

This rate of increase reflected a conducive economic conditions, prompting customers to realize the purchase of heavy equipment to support business expansion. The Company also took advantage of growing sales of heavy equipment spareparts and maintenance service at a growth rate of 19% from Rp3.63 trillion to Rp4.32 trillion. Total sales of Construction Machinery unit rose 57.3% to book a figure of Rp17.27 trillion from Rp10.98 trillion in 2009.

Higher demand and price of coal as one of domestic and global energy sources enlivened mining sector activities. Though impaired by heavy rainfall throughout the year, Mining Contracting business segment, through PT Pamapersada Nusantara, responded well to higher demand for coal mining service and showed its best performance by producing 77.9 million tons of coal and removed 651.5 million bcm of overburden. The result that ensued was an increase of 9.8% in the revenue of Mining Contracting segment in 2010, to stand at Rp16.93 trillion from Rp15.42 trillion in the previous year.

Mining business segment succeeded to take advantage the opportunity and managed to increase its production capacity with a bigger sales volume of coal of 3.1 million tons, reflecting a rise of 29.2% compared to the previous year’s sales volume. Increase in coal sales volume augmented the revenue of Mining segment by 9.8% to Rp3.12 trillion. Production raise included the contribution of PT Tuah Turangga Agung mine that started commercial production in 2010 and expected to continue increasing its production capacity with the infrastructure and auxiliary facilities already in place.

During the year of reporting, Board of Commissioners and Board of Directors regularly evaluated the execution of work program and restructured the Company’s strategic plans in anticipation of the dynamic evolvement of business condition. The Company set in place a series of targets, program and strategy to reach them. Satisfactory operating performance and these efforts were appreciated by the investors and capital market players, causing 2010 year end share price to close at Rp23,800/share, up 53.6% over the closing price of Rp15,500/share by 2009 year end.


Supervision and Assessment on Management Performance

In view of the operating results achieved during the reporting period, Board of Commissioners appreciates Board of Directors for its accomplishments in the management of the Company’s operations and combining the proficiency of all personnel to seize every business opportunity unfurled in the favorable economic climate in 2010.

We as members of Board of Commissioners carry out our supervisory duty over the management of the Company by Board of Directors and make recommendations where necessary to ensure the achievement of corporate goal. With the support of functional committees, i.e. Executive Committee, Nomination and Remuneration Committee, and Audit Committee, we always work in coordination with all members of Board of Directors, either in supervision or guidance.

Environmental Prot ection and Corporate Responsibility

Not only does Board of Commissioners give counsel in terms of business condition and operating target, but we also advise Board of Directors to maintain an equilibrium between economic achievement and environmental conservation, in addition to fulfilling corporate social responsibility. For this purpose, Board of Commissioners continued to closely monitor the implementation of Astra Green Company and Astra Friendly Company management system as Board of Directors’ operating system guide.

Board of Commissioners fully supported the decision to integrate the entire system of work safety and accredited environmental management in day-to-day operations. Accredited Integrated Environmental Management System SMK3, OHSAS 18001:2007, ISO 14001:2004 and ISO 9001:2008 are the answer to market and customer demand for quality improvement. With the increasingly integrated operating system, the Company did more than just complying with regulations, by giving proof of its commitment towards securing environmental conservation and work safety for employees, community and future generations.

Board of Commissioners lent its full support to the realization of  corporate social responsibility program in economic empowerment, education, health, environment and social aid. A wider scope of training courses and development of UT School made up a program deserving to be expanded, creating a synergy in doing corporate social responsibility activities and preparing qualified heavy equipment operators and mechanics as the industry demands.

Changes in Board of Commissioners Composition

During the year there were a few changes in the composition of Board of Commissioners. On 20 January 2010, Mr. Michael D. Ruslim – Vice President Commissioner, passed away. The Company did not replace him to fill the position vacated by his death. We offer our deepest sympathy and condolence on his passing, and express our highest respect and appreciation for his contribution to the Company during his term with other members of Board of Commissioners. His humble and warm personality is a disposition we always look up to.

Effective 23 February 2010, Mr. Simon J. Mawson resigned from his post as Commissioner of the Company and Mr. Simon Collier Dixon took his place on 21 May 2010. The Company thanks Mr. Simon J. Mawson for his supervision and leadership and welcomes Mr. Simon Collier Dixon aboard.

Closing

The Board of Commissioners and Board of Directors have finalized the 2011 annual work program outlining a series of target and action plan. Against a backdrop of constantly improving economy, we are confident that the Board of Directors is able to reach those targets as proven by its past achievements. .

Approaching the year 2011, the Board of Commissioners advises the Board of Directors to continue emphasizing human resource proficiency development. We also expect the Board of Directors to be prepared and watchful for increasingly tough competition, despite the fact that more business opportunities are opening up along with global and national economic revival. Besides mining and plantation sectors, construction sector should be observed closely considering that this sector has growth and competition potentials.

The Board of Commissioners also urges every person in the Company to make the most of every opportunity arising in 2011 with the spirit of cooperativeness and unity with all subsidiaries to jointly realize Company’s strategy, Value Chain Solution For Growth towards Long Term
Target 2020.

In closing, on behalf of the Board of Commissioners I would like to convey our sincere gratitude and appreciation to all shareholders, customers, business partners and employees of the Company for their support and cooperation that enabled the Company to achieve good operating results. The same appreciation goes to members of Functional Committees who stood by the Board of Commissioners in supervising the Company throughout the year.

Endowed with solid financial and operational foundation, accompanied by competent workforce and management, and backed by the support of all stakeholders, we are confident the Company will manage to realize its vision of becoming a well-respected Solution Driven Company and to reach its long-term goals.