Eng - Indocement Tunggal Prakarsa, PT.

Dear Shareholders,Improving macroeconomic conditionsand the relatively steady course of theIndonesian economy in 2007 were beneficialto the construction sector, the singlelargest consumer of cement products.Lower mortgage rates have increasedhousing construction. While, risingglobal commodities prices have spurredconstruction activities related to mining andplantation operations in several regionsoutside Java, thereby in-turn creating moredemand for cement.These developments led to a 7.0% growthof cement consumption in Indonesia in2007, better than our highest estimate.More encouragingly, growth was recordedthroughout most of the Indonesian market.Our sales to the Greater Jakarta area marketwere below expectations due to severecompetition. On the other hand, we recordedgood progress in other markets such asWest and Central Java and Kalimantan,which in aggregate provided us with highersales volume and market share in 2007compared to those of the previous year. Withthe increase of the demand for cement,Indocement had the capacity to increase itsproduction and capture a larger share of thatgrowth, while increasing its export volumesat the same time.Indocement posted a net income of Rp984billion on total net revenues of Rp7,324billion in 2007, compared to Rp593 billionand Rp6,325 billion, respectively, in 2006. Ourdomestic sales grew by 7.9% year-on-year,increasing our total share of the domesticcement market from 30.6% to 30.9% between2006 and 2007. We also achieved recordlevel in export sales volume, which hadgrown further from 3.2 million tons in 2006to 3.8 million tons in 2007. If anything, ourrobust export growth over the past two yearsunderlined the equally robust productioncapacity of Indocement to supply growingmarkets both at home and abroad.The combined growth of our domestic andexport sales in 2007 brought an increasein total sales volume of 10.6% during theyear, compared to 9.1% in 2006. In additionto that, our profit margin improved in 2007as a result of better pricing. A marked shifttowards margin-oriented pricing during theyear – as opposed to volume-driven priceundercutting – meant that we were able toincrease our average selling price in 2007.This compensates for our price reductionin 2006, easing the pressure on our profitmargin considerably.Indocement2007 Annual Report13