• GOOD CORPORATE GOVERNANCE

GOOD CORPORATE GOVERNANCE

Good Corporate Governance (GCG) is a commitment , structure and procedure or system created in order to manage the organization or company professionally in order to provide economic value to stakeholders.


Based on the Financial Services Authority Circular Number 32/SEOJK.04/2015, the company is committed to implementing Good Governance Governance (GCG). As an institution that must be responsible to many stakeholders, the company is obliged to have and apply GCG according to the applicable rules.


Goals of applying GCG are as follows:


  1. Managing the company professionally in order to develop it.

  2. Maintaining good relationships among stakeholders.

  3. Managing and developing the resources within the company.

  4. Improving internal control and managing all the risks.

  5. Creating a healthy work environment.

  6. Creating the company’s value and culture..

  7. Improving the welfare of all employees.


Basic principle to prepare GCG is based on: The Law Constitution of the Republic of Indonesia Number 40, 2007, about the Limited Liability Company; Republic of Indonesia Law No.8 Year 1995 on Capital Market; Capital Market and Financial Institutions Supervisory Agency (Bopepam-LK).


The company believes that GCG is the pillar that manages the company’s operational activities as well as the value and the culture which become the company’s image. Through applying the pillars, the company hopes that it will be imperishable and developing, and giving additional values for the stakeholders.


In applying GCG, the Company believes in several principles. They are:

Transparency and Openness

The company issues regular reports: they are Quarterly Financial Report, Semester Financial Report, and Audited Annual Financial Report, Annual Report and hold public exposure and give the information through printed and electronic media, in order to give transparent and open information to the stockholders.

The company has a website www.alkindo.co.id as a media to provide information and connect with shareholders or the public.


Accountability

As an institution, the company has structures, systems and responsibilities that must be carried out in the context of managing operational or business activities in a professional and accountable manner in accordance with applicable standards.

The structures, systems and responsibilities that are determined must be evaluated through performance reports, third party audit and shareholder approval at the General Meeting of Shareholders.

An important example in implementing the principle is: every year directors give the annual budget plan to the commissioners board. At the same moment, there is a performance evaluation of the preceding year; submission of the financial report and Internal Audit Report in the General Meeting of Shareholders; appointment of external audit to audit the financial statements.


Responsibility

The company promotes the principle of accountability to stakeholders, employees, the environment, and the community. In line with this principle, the Company always studies first the impact of all decisions that will be taken.

In the General Meeting of Shareholders, the Directors explain all operational performances achieved. The company undergoes the corporate social responsibility as a responsibility to the public. The company believes that the public has a great role in the company’s operational existence. Thus, the company also gives some contributions for the public through periodical programs such as blood donor, planting, religious donation, etc.


Independence

The independence principle is always along with professionalism. The commissioners and board of directors always put forward the independence principle in making decisions in order to lead the productivity and efficiency increase in running the company’s operational activities.

Everyone in the company is demanded to be professional and given chances to suggest their ideas in supporting the productivity and efficiency increase in every function or unit in the company.

Fairness

The company treats all stakeholders; the commissioners board, directors, employees, laborers, stockholders, and public with a genuine fairness.

The company signs an award for the rights and obligations of all the human resources in the company.

COMPANY REGULATIONS
Generally, the company regulations regulate rights and obligations of the employees in order to create a harmonious relationship and to support the company’s effort in increasing productivity and efficiency.
CORPORATE SECRETARY
Based on the Bapepam-LK regulation No. IX.1.4 about the Company Secretary Formation, the company has appointed Kuswara as corporate secretary based on Letter No. 18/SKD/2011 dated July 18, 2011. The duties and functions of the secretary are to ascertain the company obeys to the capital market regulations in running the business, to deliver relevant and material information to the investors, and become a connection with the capital market authority. The secretary represents the management in every external meeting associating with the investors, capital market community, and the stockholders.

Kuswara, 45 year old, born in Bogor on July 1, 1974; lives in Bandung, has the experience of being an auditor in a public accountant office, Prasetio Utomo & Rekan. After working at several companies in the finance and accounting department, in 2010, Kuswara joined the company and was appointed as the corporate’s secretary.

Educational background:
2000 - 2002 De La Salle University, Philippines, Master of Business of Administration
1993 - 1997 Trisakti University, Faculty of Economics, Department of Accounting
1990 - 1993 SMA Regina Pacis Bogor

Training:
Workshop of Information disclosure for public issues dated November 17, 2016.

Assignment period:
2011 - 2015 Period of 1st
2016 - 2020 Period of 2nd

Up to this point in time Kuswara still serves as the corporate’s secretary. In 2018, he did not take any training.
INTERNAL AUDIT UNIT
The company assigned Ms. Diana Tristianti, 40 year old, born in Indramayu on September 28, 1979; live in Bandung, not related party, to be the head of the Internal Audit Unit based on appointment letter No. 12/HR/SKM/2010 dated January 6, 2010 and updated by the Circular Resolution of Directors No. 02-2018/Dir.

Here is a career history of Ms. Diana Kristianti:
2001 - 2003 Administration Staff at PT Alkindo Naratama
2004 - 2006 Accounting Staff at PT Alkindo Naratama
2007 - 2009 Accounting Manager at PT Alkindo Naratama
2010 - now Internal Audit Manager at PT Alkindo Naratama Tbk

The duties and authorities of the internal audit unit are to monitor, and give recommendations upon the system, process, and operational activities which are applied by the company.

In performing their duties, the internal audit unit holds a meeting every month to discuss the findings in the field which will be reported to the directors. Internal audit reports used by management to conduct an improvement and to find an alternative that is needed in assessing the implementation of the overall internal control process by taking into account the risks that might arise. In performing their duties, the Internal Audit Unit conducted a study to examine some procedures/operational systems and then compare with the document that records the performance of the procedures/systems. From the results of this comparison are prepared reports differences/variants. Report difference/variant is used as a basis for recommendations to management to create solutions. Solution prepared in the form of remedial measures that are distributed and disseminated to the departments concerned. As the next step, the Internal Audit Unitre-inspects and measures the implementation of the solution to generate reports the efficiency and effectiveness of a procedure/system.

In 2018, she did not take any training.
INTERNAL CONTROL SYSTEM
Internal control is a control process made in order to supervise the implementation of business activities. Internal control helps management in variety of fields, such as:
Effectiveness and efficiency of business activities conducted.
Financial statements that reflect the business activities in financial terms.
Introduction of the risk incurred in running a business.
Compliance with applicable laws and regulations.

As a series of processes, internal control begins with identifying potential risks occurring in the achievement of a goal. After the formulation of the potential risks, ten compiled control measures in the form of procedures established by management. Monitoring of control measures undertaken to measure performance of implementation. The measurement results are used as input in the determination of the future framework.

Monitoring of control/ activities undertaken by Internal Audit. Internal Audit may consult with the Board of Commissioners and the Audit Committee to assist in formulating findings in the field and recommend proposals for alternative solutions to the findings.

During 2018, the Internal Audit Unit has done its job in terms of internal control. Through the implementation of the overall management procedures, professionalism and priority consideration in the determination of risk, internal audit has done its job and all findings are reported to the Board of Commissioners. These findings also communicated to management and the Audit Committee to be followed up.
RISK MANAGEMENT
In order to minimize the risks, The Company has the risk management as follows:

  1. Raw materials and energy supplies.
    The company buys most of the raw materials from the local market and small portions from foreign countries/import The company maintains good relationship with the suppliers and has a long-term transaction with them. The Company uses gas and electricity for the operation. Some of the energy needs comes from the usage of coals. The company uses genset as an alternative electricity supply.


  2. Business competition
    The company treats the consumers as their partners in order to anticipate the rivalry risks. The company also keeps up with the consumers' needs for mutation of the products. Thus, the company is able to fulfill the consumers' daily needs which finally consumers will feel happy in running their operational system. This creates the consumers' loyalty towards the company.

    Furthermore, the company has the commitment to give the best quality products in order to create loyalty by focusing on technology development that is more efficient. The best quality products create consumers loyalty to keep using the company's products.


  3. Manpower risks
    The company realizes that manpower is one of the factors that support business success. The company always cares about their employees' needs. The company has fulfilled the government regulations about manpower. Furthermore, the company gives employees fair facilities in order to avoid any strikes. The company cooperates with several education institutes to give opportunities for the students to join an internship program in the company. The company also always joins the job fairs held by either the private or public education institutes to get the best graduates to work in the company.


  4. Natural disasters and fire risks
    In order to lessen the loss caused by the natural disasters, the company insures their assets and applies the strict regulations in the company such as no smoking in the work field, no bringing flammable materials, etc. Furthermore, the company also provides firere extinguishers which are spreaded in several reachable spots.


  5. Interest rate risk
    Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This risk exposure mainly arises from bank loans which bear floating interest rates. Any changes in market interest rates would directly influence the future contractual cash flows of the company. The company's policy is to minimize interest rate exposure while obtaining sufficient funds for business expansion and working capital needs. To achieve this, the company regularly assesses and monitors their cash with reference to its business plans and day-to-day operations.


  6. Foreign Currency risks
    The company conducts part of businesses in the United States Dollar and therefore is exposed to foreign exchange risk. The company does not have a foreign currency hedging policy. However, management monitors foreign exchange exposure and will consider hedging significant foreign exchange risk should the need arise.


  7. Credit risks
    Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company's objective is to seek continual revenue growth while minimizing losses incurred due to increased credit risk exposure. The company trades only with recognised and creditworthy third parties. It is the company's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the objective that the company's exposure to bad debts is not significant.

    The maximum exposure to credit risk is represented by the carrying amount of each class of financial assets in the consolidated statements of financial position. The company does not hold any collateral as security.


  8. Liquidity risks
    Liquidity risk is the risk that the company will encounter difficulty in meeting financial obligations due to shortage of funds. The company's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The risk management implemented by the company is as follows:

    1. The company periodically presses their claim to the clients so that they want to pay their credit on time.

    2. The Company uses the flexibility of using the bank payment facility to manage the liquidity risks.



The risk management system is based on empirical data to be compared with the present situation. So far the application of this system can help management in decision making according to the empirical data and projections. In a meeting of directors, the risk management system has always been an important point to be discussed in connection with the implementation of the strategy or business plan both for short and long term.
INDEPENDENT AUDITOR
In order to present fairly financial statements and accordance with applicable regulations to all stakeholders, the Directors appointed a Public Accounting Firm to audit the financial statements.

Based on the AGMS dated May 22, 2018, the Board of Commissioners on the recommendation of the Audit Committee is authorized to appoint an Independent Auditor to audit the company's financial statements. To audit the financial statements of 2018, it is agreed to appoint the Public Accountant Office of Hendrik & Rekan.

Honorarium approved to audit the financial statements of 2018 is Rp 260,000,000. It includes the audit of financial statements of subsidiaries.
CODE OF ETHICS & CULTURAL PRINCIPLES
Code of Ethics
It contains relationship principles between internal parties, employees and management, and external parties, customers, suppliers, stockholders, public, and government.

Code of Ethics includes the following principles:

  1. Obedience
    Based on the compliance with applicable laws.

  2. Conflict of interest
    Works performed by the employees and management should always be based on professionalism and avoid conflicts of interest.

  3. Insider Trading
    Every employee and management are not allowed:

    • Divulge confidential information

    • Provide information for stock trading purposes

    • Use assets, information, position for personal enrichment



  4. Competition and Fair Employment
    The company upholds fair competition in the business world in order to maintain the value and reputation of the company.

  5. Discrimination and Harassment
    The company uphold the provision of equal employment opportunity, to always pay attention to anti-discrimination and anti-harassment.

  6. Health and Safety
    The company always pays attention to the health of workers and the environment. In accordance with government regulations, the Company insured their employees with the social security program. The company also has a big intention to ensure a safe working environment by providing job security tools used by workers. For security purposes, the company outsourced security labor from a third party.

  7. Correct Accounting Practice
    The company records all transactions in their activities based on the correct use of accounting practices that will create reasonable financial statements and can be used for decision-making and relevant information to stakeholders.

  8. Trade Secret
    All employees and management are not allowed to divulge, duplicate, store, use for the personal benefit the secret, work plan, design, process, research and others owned by the company without the company's permission.


The company has to disseminate the Code Of Ethics Principles, both for old and new employees. Especially for new employees, the socialization of the Code Of Ethics Principles was made during the introduction of the field and job orientation.

In 2018, the company has issued 30 warning letters related to violations of the Code Of Ethics Principles. The warning letters were issued in connection with violations of the Code Of Ethics Principles on regulatory compliance in the company. The consequences were several employees received written notice letters and received monthly incentives cut off.

Cultural Principles
The Cultural Principles of the Company have been determined to be the principles of value by the founders. The main points are:

  1. Creativity
    Prioritize creativity in order to create products that have additional value to customers.

  2. Innovative
    Wide open spaces of innovation in order to preserve business of The company.

  3. Orientation on quality
    As a supplier to other industries, quality becomes the backbone for the survival of a good relationship with customers.

  4. Partnership with customers
    The mutualistic relationship in order to provide solutions to customers so that the relationship can be maintained in the long term.

  5. Cooperation
    Emphasis on cooperation between units to support the business activities of a solid and sustainable.


Through plenty of experiences has formed a cultural principal that characterizes the company. This order is the cultural principles that must be maintained and applied in daily activities. In the annual meeting, the management constantly reminded us of the importance of the cultural principles of the company. Especially for new employees, management asked the old employees to provide an introduction to the cultural principles of the company to new employees so that they can recognize and implement them in their daily activities. In particular, the Human Resources Department (HRD) in collaboration with other units performs an adequate evaluation of the implementation of the cultural principles of the company.

Code of Ethics and cultural principles are applied to all employees, Directors and Commissioners of the Company and its Subsidiaries. The application is not excluded to anyone in order to maintain the credibility and values of the company.

Insider trading is a term for trading stock or securities of companies by people within the company. Insider trading generally refers to stock or securities trading activities for profit which is done by utilizing internal information, such unpublished plans or decisions of the company that are done by insiders.

Insiders are:

  1. The Board of Commissioners and Directors.

  2. Employees of the company.

  3. Majority Shareholders of the company.

  4. Personal due to its position in the business relationship with the Company therefore he/she is enabled to obtain insider information.

  5. Party in the last 6 months is no longer serving as the Board of Commissioners or the Director or employee of the company.


The company is formulating a policy of prevention of insider trading. The purpose of the formulation of this policy are:

  1. Conflicts of interest

  2. Avoid illegal transactions which regulates the sale of securities of the company based on material information that has not been disclosed to the public.

PREVENTION OF INSIDER TRADING
Insider trading is a term for trading stock or securities of companies by people within the company. Insider trading generally refers to stock or securities trading activities for profit which is done by utilizing internal information, such as unpublished plans or decisions of the company that are done by insiders.

Insiders are:

  1. The Board of Commissioners and Directors.

  2. Employees of the company.

  3. Majority Shareholders of the company.

  4. Personal due to its position in the business relationship with the company therefore he/she is enabled to obtain insider information.

  5. Party in the last 6 months is no longer serving as the Board of Commissioners or the Director or employee of the Company.


The company is formulating a policy of prevention of insider trading. The purpose of the formulation of this policy are:

  1. Conflicts of interest

  2. Avoid illegal transactions which regulates the sale of securities of the company based on material information that has not been disclosed to the public.

ANTI-CORRUPTION & ANTI-FRAUD
Implementation of anti-corruption and anti fraud in line with the Principles of the Code of Conduct which is the principle of compliance with applicable laws.

Anti-corruption and anti fraud is a collective agreement which has always been instilled in every employee in the Company. Supervision of corruption and fraud is a shared responsibility. The monitoring carried out by the Internal Audit, Audit Committee, and also through the mechanism of whistle blowing.

Anti-corruption and anti-fraud applies to all employees, the Board of Commissioners and Directors.
PRODUCT QUALITY CONTROL
The company has a team of product quality control. The team is tasked to ensure that the finished goods shipped to the customer are products that have good quality.

The tasks of team of quality control products are:

  1. To check and measure the quality of raw materials and to make a report regarding the result of the check and measurements. Complaint to suppliers is based on the report.

  2. To check the feasibility of machinery and production equipment.

  3. To check the quality of the results of each step of the production process prior to further processing into finished goods.

  4. To check the quality of finished goods before shipment.

  5. To make reports of product quality control which can be accessed by management at any time.

SUPPLIERS SELECTION
Suppliers selection becomes an important part that must be conducted by the company in order to obtain quality and affordable raw materials.

The company purchases raw materials from more than one supplier in order to prevent inventory shortages. The company makes the purchase schedule of raw materials by taking into account the specifications, price, delivery schedule, and payment schedule. The company set up this schedule so that the raw material is always available at an affordable price.

The company carries out the selection of suppliers by inviting suppliers to discuss the specifications of the raw materials required. Suppliers will provide samples that come with the product specification. Then the company will do some tests on the samples. Those tests are testing the thickness, strength, and
moisture.

The company produces a variety of products that need different raw material specifications for each product. Suppliers also produce different specifications of raw materials. The Company carries out supplier selection by considering specification of raw material offered, price, delivery schedule and payment schedule.

During 2018, the company has fulfilled the supplier right well by upholding the principles of openness and fairness. The company made payments to suppliers based on payment schedule and suppliers make deliveries in a timely manner as well and receive all the complaints and all return of raw materials that do not match the specifications and damages.
PROTECTION OF THE CUSTOMERS
The company is committed to being a professional partner who upholds the principles to meet all the sales contracts that have been agreed. As a partner, the company aims to provide and improve customer satisfaction through the supply of products and professional services to customers.

The company's commitment to the protection of the consumer ore as follows:

  1. The company is committed to producing high quality products that provide solutions to customer needs.

  2. The company is committed to provide professional services to provide comfort and satisfaction to customers.

  3. The company committed to always providing the answer to the needs of customers and continuously enhancing and improving products through research and the use of appropriate technologies.

  4. The company is committed to respecting and undergoing a contractual agreement with the customer.

  5. The company is committed to maintaining good relations with customers and continuously carrying out discussion, meetings, and evaluation to improve the shortcomings in order to create harmonious and professional cooperation.


The company has a customer service team that handles complaints, claims, and returns from consumers on products purchased from the company. The team also received opinions or feedback from consumers about products and services provided by the company. The team made the customer service report that can be accessed by management at any time. This report is stuff to be discussed in monthly meetings.
FULFILLMENT OF CREDITOR’S RIGHTS
The company emphasises on the principles of Competition and Fair Employment Relationship. This is reflected in the code of conduct owned by the company.

The company provides information that can be accessed by all stakeholders to use as information or data for decision making. Disclosure of this information is based on the principle of justice for stakeholders, including creditors.

In 2018, the company has fulfilled its creditor rights by upholding the principles of justice. Creditors of the company consist of Banks and Non-Bank Financial Institutions.
WHISTLE BLOWER SYSTEM
All stakeholders have a right to report findings/fraud that occur through the following facilities:
Email : aldo_pengaduan@alkindo.co.id
Fax : 022-6004508

For stakeholders who report findings/fraud, the company guarantees and provides protection against disclosure of the identity of the complainant to prevent bad things that could happen to the Whistle Blower. Whistle Blower is given the right to testify freely. All information provided by the Whistle Blower is learned using the principles of prudence and justice in order to produce fair results.

On the other hand, the Company also provides equal treatment to the Perpetrator. The Company entitles the Perpetrator to provide information, evidence and pleadings that are written in the minutes.

During 2018, there are no reports ofWhistle Blower received by the team. The company continues to socialise existing facilities to be used in making complaints.
IMPORTANT CASE
During 2018, there are no important cases faced by the company.
SANCTIONS
There is no sanction given to the company.
LONG TERM INCENTIVE POLICY
The company has not had a policy of long-term incentives for employees.
RECOMMENDATION
During 2018, the company has implemented Corporate Governance professionally in accordance with applicable regulations.

Some of the recommendations generated in the framework of implementing Corporate Governance are as follows:
Hold a weekly morning briefing to office staff and factories at the level of the Section Head and above to run systems and procedures strictly related to the internal supervision system.
Implementation : is being implemented.

Establishment of a Change Agent consisting of competent employees from each department that function as an extension of the audit committee.
Implementation : is being implemented.

Improving the billing row system and documentation - aims to speed up collection of billing documents that will be sent to customers.
Implementation : is being implemented.

Provide a number of suggestions regarding the row and timing of more efficient procurement of raw materials.
Implementation : is being implemented.

Strengthen supervision through the implementation of internal audits.
Implementation : is being implemented.
MEASUREMENT
Application of GCG in the Company becomes a continuous process. This process is measured in order to obtain a clear picture of the progress result in the implementation of the GCG, provide recommendations for improvement, maintaining consistency in the application, and implement GCG in the spirit of professionalism, transparent, efficient, effective in achieving the objectives of the company.

The reports submitted by the Directors to the Board of Commissioners consists of the results that have been realized in a series of operational activities to uphold the principles of Good Corporate Governance and improvement programs and also plans for the future action.

The emphasis of GCG measurement is on the application of it. The measurements were performed in each process occurring in each and inter departments.

In 2018, in a meeting between the Board of Commissioner with Directors, Directors reported that the implementation of GCG within the company has been properly performed. Given the application of the scene is a continuous process, then in the report, Directors added notes of improvements that will be made in the future. BOC received the report and gave some feedback to provide a thorough overview in order to supervise the implementation of GCG in the Company. So that the measurement is more valid and easier to understand during the implementation of GCG.