Establishment and General Information

122 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 123 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk See accompanying notes to consolidated financial statements which form an integral part of these consolidated financial statements CONTINUED OPERATION CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 442,378,937 232,149,910 45,748 25,601 Cash paid to suppliers 289,036,003 150,655,458 29,890 16,614 Cash paid to employees 130,796,329 70,044,915 13,526 7,724 Cash paid for operating expenses 24,513,029 37,156,997 2,535 4,098 Cash generated used for operating 1,966,424 25,707,460 203 2,835 Income tax received payment 1,352,050 44,832 140 5 Cash received from paid to others 925,611 642,684 96 71 Net cash used for operating activities 2,392,863 26,305,312 247 2,901 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of fixed assets 22,607,578 4,864,769 2,338 536 Interest received 13,182 103,482 1 11 Proceeds from sale of fixed assets 285,050 37,500 29 4 Net cash used for investing activities 22,309,346 4,723,787 2,307 521 CASH FLOWS FROM FINANCING ACTIVITIES: Proceed from short-term and long-term bank loans 22,172,745 33,675,202 2,293 3,714 Interest paid 2,806,103 7,705,113 290 850 Proceed from payable to related parties 448,325 4,862,361 46 536 Net cash provided by financing activities 18,918,317 30,832,450 1,956 3,400 NET DECREASE IN CASH AND CASH EQUIVALENTS CONTINUING OPERATION 5,783,892 196,649 598 22 DISCONTINUING OPERATION Net cash used in operating activities - 205,429 - 23 NET DECREASE IN CASH AND CASH EQUIVALENTS FROM DISCONTINUING OPERATION - 205,429 - 23 NET DECREASE IN CASH AND CASH EQUIVALENTS FROM ALL OPERATION 5,783,892 402,077 598 44 Effect of foreign exchange rate changes 1,602,158 2,530,192 166 279 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5 3,644,519 5,772,634 377 637 CASH AND CASH EQUIVALENTS AT END OF YEAR 5 7,826,253 3,644,519 809 402 Cash and cash equivalents consist of: Cash and cash equivalents 826,918 2,347,063 86 259 Short-term loans, working capital 8,653,171 5,991,582 895 661 Total 7,826,253 3,644,519 809 402 ACTIVITIES NOT AFFECTING CASH FLOWS: Loan waiver 21,214,872 86,647,597 2,252 9,877 Issuance new shares - 24,038,237 - 2,486 Effect of implementation PSAK 5055 Revised 2006 - 8,623,666 - 983 Notes 2012 2011 2012 2011 Rp Rp US US Restated Restated 01 GENERAL

a. Establishment and General Information

PT ERATEX DJAJA Tbk the Entity was established in the framework of Foreign Capital Investment Law No.1, 1967 by Notarial Deed No.7 dated October 12, 1972 based on Deed prepared by Koerniatini Karim, Public Notary in Jakarta. The Entitys Articles of Association have been amended several times, made on June 15, 2004 by Notarial Deed No. 79 prepared by Aulia Taufani, S.H. formerly substitute of Sutjipto, S.H., Public Notary in Jakarta concerning the change of the Entitys name from PT Eratex Djaja Ltd Tbk to PT Eratex Djaja Tbk and an increase in the authorized capital to Rp 196,472,000. This amendment was approved by the Minister of Justice and Human Rights of the Republic of Indonesia under decision letter No. C-21010 HT.01.04.TH.2004 dated August 20, 2004; and the latest amendment was made on April 23, 2012, by Notarial Deed No.105 prepared by Aryanti Artisari, S.H., M.Kn., Notary in Administration City of South Jakarta concerning the change of Entity domicile also reconstitute Entity Article of Association and changes in the composition of Board of Commissioners and Board of Directors. On July 16, 2012, the notarial deed has been approved by the Minister of Justice and Human Rights with decision letter number AHU-38149.AH.01.02.Tahun 2012 and notice to the Minister of Justice and Human Rights has been received and recorded in decision letter No. AHU-AH.01.10-27716 and No. AHU-AH.01.10-27717, both letters dated July 27, 2012. The activities of the Entity are integrated textile manufacturing, including spinning, weaving, coloring, finishing, printing motifs, garment making, falsetwisting and knitting, also sells and markets its products in both local and export markets. The Entity commenced its commercial operations in 1974. The Entitys factory is located at Jl. Soekarno-Hatta No. 23, Probolinggo, East Java. As of December 31, 2012 and 2011, the Entity had 2,629 employees and 2,404 employees, respectively. The Entitys registered office is in Jakarta with an executive office in Surabaya, and a branch in Hongkong which was established in 1990. On August 21, 1990, the Entity registered its shares on the Stock Exchange of Indonesia in accordance with approval of the Minister of Finance of the Republic of Indonesia no. SI-125SHMMK.101990 dated July 14, 1990. Since 2000, all shares have been registered on the Indonesia Stock Exchange.

b. Board of Commissioners, Board of Directors and Independent Audit Committee