This printed article is located at http://investor.wika.co.id/report_of_the_board_of_directors.html
We herewith convey the Company’s Management Report for the fiscal year 2017. Thanks to the support and effective cooperation of various parties, the achievement of the Company’s performance in 2017 is very good. The Company has been able to make the economic challenge a well-captured opportunity through effective strategy execution.
2017 is the year of global economic recovery with stronger growth compared to 2016,both from developed countries and developing countries. Going forward, world economic growth is predicted will remain high accompanied by commodity prices and trading volume remains strong. However, a number of risks to the global economy remain necessary watch out for, among other things, normalization of monetary policy in some developed countries and geopolitical factors. Indonesia’s economic condition in 2017 improved in line with improving global economic conditions. Gross Domestic Product Growth (GDP) nationally increased from 5.03% in 2016 to 5.07% in 2017, supported by its stability household consumption, increased growth investment, improved Government spending contribution, as well as the surplus of international trade balance continue to increase.
The improving global and national economic conditions and the commitment of the Government, the construction sector also experienced significant growth. To meet the strategic objectives of infrastructure development, the Government has provided support to accelerate the provision of infrastructure. Some public financial institutions have been established, such as Infrastructure Guarantee Fund (IIGF), PT Sarana Multi Infrastructure (SMI) and PT Indonesia Infrastructure Finance (IIF) to accelerate development infrastructure through debt and equity. Support for infrastructure projects can also come from the BPJS Fund Employment, which plans to increase the allocation its assets to infrastructure led by SOEs. In addition to funding support, the Government also strives to reduce the burden of bureaucracy and smoothen the process administration in infrastructure projects. Coordinating Agency for Investment or BKPM, now grant centralized licensing points for specific sectors,which can improve the efficiency of the approval process investation. The Ministry of Finance established a scheme Public Private Partnership (PPP), in the scheme, the provision of infrastructure can provide space for government to cooperate with private parties based on the principle of proportional risk allocation as regulated in Presidential Regulation no. 38 2015.
In order to facilitate investment, the Institute Management of State Asset (LMAN) is formed by government to manage state assets and accelerate the financing process of land acquisition for the execution of National Strategic Projects. The support in planning the national strategic projects, the Government established the Committee for the Acceleration of Infrastructure Provision Priority (KPPIP) is tasked to perform capacity building and ensuring capability Project Responsible in providing project and coordinate the issuance of regulations and infrastructure related policies.
Regulatory and policy reform gradually has been done to create an environment more conducive for SOEs and the private sector.
Regulation of the President of the Republic of Indonesia Number 67 Year 2005 has been replaced by Presidential Regulation no. 38 2015 to stimulate investment in the project PPP by expanding the eligible sector and offer a better legal framework. Law Number 2 Year 2012 and Regulations President Number 71 Year 2012 on Exemption Land for Public Interest, which applies by 2015, now limits the exemption procedure land up to 583 days and allow removal rights to land for public interest, so effectively minimizing land acquisition costs for Government infrastructure developers also have to issue Decree of the Minister of Finance Number 190 / PMK.08 / 2015 regarding payment contract availability (also known as Annuity Scheme Performance-Based or SABK); that should be basis of the Government in providing fiscal support to increase the attractiveness of infrastructure projects.
To allocate state resources with better, the Government also identifies the projects which has strategic value for the economy Indonesia. The Indonesian National Strategic Project is composed of 245 projects in various sectors and 2 programs in electric and aerospace industries with estimates investment cost of Rp4,197 trillion.
In connection with the urbanization trend and focus continuously of the Government in development infrastructure that encourages development and investments, state-owned enterprises engaged in construction, such as the Company, are in the right position to play a role in growth of infrastructure development.
Challenges and opportunities that occur in the economy, particularly the construction sector, has been well anticipated through the execution of the right strategy in 2017. Some the strategies undertaken in 2017 are as follows.
These strategies have been implemented on a continuous basis effectively supported by the commitment of the Board of Directors and the whole employees of WIKA. Going forward, the Company will continue make improvements to the performance of the Company can be maintained and encourage development future efforts.
Operational and Financial Performance Analysis
The Company has been able to capture the opportunities in the economy, especially do the construction industry. Through the execution of the right business strategy, the Company managed to record a very good performance. In general, the Company managed to improve its operational and financial performance significantly.
Sales in 2017 stood at Rp26.18 trillion, an increase of 67.06% when compared with sales in 2016 amounted to Rp15.67 trillion. The biggest Increase selling rate is the increase sales in infrastructure and building segments of Rp9.91 trillion in 2017 or up 132.44% from year 2016. Increased sales have resulted increase in net income. In 2017, the Company posted earnings attributable to owners of the parent entity of the Current Year amounted to Rp1.20 trillion, an increase of 13.52% over the year 2016 of Rp1.06 trillion.
In terms of financial position, the Company has managed to increase total assets and equity. As of December 31, 2017, the total assets of the Company increased to Rp45.68 trillion from Rp31.36 trillion as of December 31, 2016. The total increase of total assets reached Rp14.32 trillion or 45.70%. While the total equity of the Company as of December 31, 2017, an increase of Rp1.89 trillion or 14.87% from Rp12.74 trillion as at 31 December 2016 to Rp14.63 trillion as of December 31, 2017.
Achieving 2017 Targets and Constraints Faced
Achieving targets in 2017 shows good results. Although the achievement of the new contract target is slightly below the target of 98.05%, however the achievement of the target contract faced has exceeded the targeted of 103.29%. The company also exceeded its sales target in 2017, which amounted to 101.67%. While the profit that can be attributed to the owner of the parent entity has approached the targeted that is equal to 98.65%.
Some components have not exceeded the target due to some constraints faced by the Company.
Going forward, the Company will continue to evaluate the implementation of the established strategy, so that the Company’s performance in the future will be constantly improving continuously.
The Company’s business prospects cannot be separated from the opportunities available in the economy, particularly in the construction sector. Economic development in 2018 directed to achieve the 5.2% to 5.6% economic growth goals thematically, holistically and integrated with spur investment and consolidate infrastructure development for the acceleration of quality economic growth.
The construction sector is targeted to grow by 6.7% with 7.1% supported by: (i) realization of infrastructure development of 90.0% of government program target achieved, such as tender at the beginning of the current year, (ii) the construction of rail and road lines, has had an impact on its use with increased budgets connectivity, (iii) provision of mobile power plant and construction of steam power plants (PLTU), and (iv) macroprudential monetary and policy policies which maintains economic stability and accommodates economic growth so as to encourage the development of the private construction sector.
Looking at the opportunities in the construction industry and the strengths of the company, PT Wijaya Karya (Perseroan) Tbk is optimistic that the prospects of the Company in the future will be very good. The Company considers that the prospects for construction business in 2018 will grow steadily in line with the government’s target. Indonesia’s economic growth target that focuses on infrastructure development will have a positive economic growth impact on the future. The Company continues to synergize to improve the quality and quantity of the business generated is expected to support the Company’s plan to grow better in 2018.
The Company realizes that the implementation of Good Corporate Governance (GCG) is a key factor in achieving the success of a company. Therefore the Company is always committed to improving the quality of GCG implementation in a sustainable manner. As an open company, the Company has implemented GCG in accordance with the Regulation of the Minister of State Owned Enterprise. PER / 01 / MBU / 2011 on the Implementation of Good Corporate Governance in State-Owned Enterprises as amended by Regulation of the Minister of State Owned Enterprises. PER-09 / MBU / 2012 concerning Amendment to the Minister of State-Owned Enterprises Minister No. PER-01 / MBU / 2011 on the Implementation of Good Corporate Governance in State-Owned Enterprises and Circular of the Finance Service Authority. 32 / SEOJK.04 / 2015 on Open Corporate Governance. Also the Company committed in preventing Insider Trading, Fraud, Money Laundrying, Anti Bribery Corruption (ABC) discrimination, and other deviation.
Company Relationships with Shareholders In Ensuring Shareholder Rights
In organizing, modifying and applying best practice of GCG The Company’s relationships with shareholders are regulated by accommodating the rights of Shareholders applying fairly. Shareholders who have stock/share with the same classification will receive equal treatment and may exercise their rights in accordance with the Budget Basis of the Company and the prevailing laws and regulations.
Each Shareholder in the General Meeting of Shareholders (GMS) will be entitled to vote in accordance with the classification and the number / percentage of shares held. Every shareholder is entitled to information complete and accurate material concerning the Company. According to the Articles of Association of Article 5 paragraph 4 letter a; which states that “the Shareholders have the same rights as every 1 share gives 1 voting right. “On that basis, the Company will decrease it in the voting procedure in the decision making of an event contained in The GMS (RUPS) Code of Conduct, in which previously has been granted to the Shareholders present and reiterated by the GMS Chairman at the opening of the GMS. The Company has appointed independent parties, namely the Share Administration Bureau of PT Datindo Entrycom and Notary Ashoya Ratam, S.H., M.Kn. in the process of counting the votes and / or performing the validation.
The Company has made a summary of the minutes of the GMS in Bahasa Indonesia and English, and announced 1 (one) working day after the 2 (two) day General Meeting required by the regulation, to meet the information to stakeholders one of which was announced through the Company website (www.wika. co.id), on the Shareholders Information menu section of the General Meeting of Shareholders.
In conducting the relationship with the shareholders of the Company will treat the Shareholders fairly. In accordance with the Code of Conduct Company (which can be accessed on the web www.wika.co.id). The Company’s Articles of Association and prevailing laws and regulations. Each shareholder is entitled to obtain complete and accurate material information about the Company.
Functions and Roles of the Board of Commissioners
Determination of the composition of members of the Board of Commissioners will be determined by the GMS taking into account the composition of Independent Commissioners in accordance with the POJK No. 34 of 2014 and Circular of the Financial Services Authority Number 32 / SEOJK.04 / 2015 which has taken into account the diversity of expertise, knowledge, and experience required on the basis of the proposed Dwiwarna A Series Shareholder, has a fairly diverse composition, whether by age, educational background, skills and experience needed in the implementation of its duties and responsibilities.
The composition of the members of the Board of Commissioners is the right of the Series A Dwiwarna Shareholder. During the Year 2017, the Board of Commissioners of WIKA has a background of expertise covering construction engineering, electrical engineering, industrial plan, powerplan and energy, finance, legal, governance, human resources, investment, marketing and economy.
The performance of the Board of Commissioners and members of the Board of Commissioners will be evaluated annually by the Shareholders at the General Meeting of Shareholders. In general, the performance of the Board of Commissioners is determined on the basis of the task the obligations contained in the prevailing laws and regulations and the Articles of Association of PT Wijaya Karya (Persero) Tbk. or shareholders’ mandate.
Formal evaluation criteria are presented openly to the Board of Commissioners since their appointment. The results of the evaluation on the performance of the Board of Commissioners as a whole and the performance of each member of the Board of Commissioners individual will be an integral part of the compensation scheme and incentives for the Board of Commissioners. The results of each performance evaluation individual members of the Board of Commissioners is one of considerations for the Shareholders to dismiss and / or re-appoint the members of the Board of Commissioners. Performance evaluation results of The Board Commissioners, both as the Council and the individual, as a means of assessing and improving the effectiveness of the Board of Commissioners. The General Meeting of Shareholders determines the performance criteria for the Board of Commissioners and individual members of the Board of Commissioners.
Functions and Roles of the Board of Directors
Determination of the number and appointment of the Board of Directors will be determined by the GMS and has taken into account the conditions of the Company, which refers to the Rules applicable and Circular of the Financial Services Authority Number 32 / SEOJK.04 / 2015, Articles of Association and Board Manual. The determination of the composition of the members of the Board of Directors will be determined by the GMS in accordance with the prevailing laws and regulations and the POJK Number 34 of 2014 and the Circular Letter of Authority Financial Services No. 32 / SEOJK.04 / 2015 which has taken into account the diversity of skills, knowledge, and experience required under the proposal Series A Dwiwarna shareholders who have composition are quite diverse, based on age, educational background, expertise and experience required in the execution of duties and responsibilities individually or collegial.
In addition to the assessment through the GMS media and using the Superior Performance Appraisal Criteria (KPKU), the Company has also set a Key Performance Indicator (KPI) of each Directorate during 2017. The results of the assessment have been reported in the Company’s Annual Report.
The Company continues to improve the implementation of GCG through Stakeholder Participation. One that has been implemented is to prevent the occurrence insider trading. The policy to prevent the occurrence of insider trading is found in the code of conduct in which it regulates also the acquisition of information through legitimate means and stores and uses it in accordance with applicable business ethics principles. Also the Company committed in preventing insider trading.
With regard to the Company’s compliance with applicable law, the Company adopts anti-corruption and anti-fraud policies that are breakdown on the Code of Conduct, Procedures and Appeals to all Company Persons not to commit any such Fraud and Deviation.While related to the fulfillment of the interests of the vendor, the Company has a policy related to the selection and upgrading of suppliers or vendors has been set forth in the Company Code of Conduct or Procedure of the Company which may be accessed through the Company’s website which is publicly disseminated to ensure the Company obtains the necessary goods or services at competitive prices, good quality, efficient, effective and ensures continuous supply.
Related to the policy on the fulfillment of rights of creditor, the Company is committed to utilize working capital and loan facilities in an accountable, transparent and efficient manner. Company always deliver material information relating to the relationship with the Creditor, to investors / potential investors fairly, correctly and accurately.
The Company also has a high commitment to perform its obligations to the Creditors in a timely manner as outlined in the Company Code of Conduct. The fulfillment of such obligations includes interest payments, principal redemption and other rights of the Creditors in accordance with the terms of the agreements agreed between the Company and the Creditor as well as related regulations.
In order to fulfill the rights of employees, the award to the Board of Directors and Employees is based on the Procedure of the Company Number: WIKA-HCEPM- 08.02 related to Production Service Procedure, which in the Production Service Budget is determined based on the company’s health rating based on the applicable Regulation, SOE Regulation Number PER- 04 / MBU / 2014 concerning Guidelines for the Income of Directors, Board of Commissioners and Board of Supervisors of State-Owned Enterprises and Minister of State-Owned Enterprises Decree Number: KEP-100 / MBU / 2002 on Rating of BUMN Health Rating on June 4, 2002.
In order to improve the implementation of information disclosure, the Company has utilized the use of information technology more widely than the website as a medium. In addition to the website, the Company utilizes information technology and other social media applications such as through internal Portals, Email, Twitter, Facebook, Instagram, Youtube and Call Center.
Various information required by stakeholders has been disclosed in the Annual Report and the Company website. Thus, information can be accessed easily by all stakeholders.
The Company regularly measures GCG implementation. This is done to obtain an objective assessment of GCG implementation in the Company. The implementation of the GCG assessment is based on the Decree of the Secretary of the Ministry of State-Owned Enterprises No. SK-16 / S.MBU / 2012 dated June 6, 2012 on the Indicators / Parameters of Evaluation and Evaluation on the Implementation of Good Corporate Governance in SOEs. The results of the assessment showed a score of 94.925 which means the implementation of GCG in The company is very good. Some of the weaknesses in the implementation of Good Corporate Governance that have been identified in the assessment process have been followed up by refining the gratuity guidelines and implementing policy dissemination activities and implementation of whistle blowing system to employees and stakeholders of the company to provide an understanding of the whistle blowing system policy, include it in the annual report, and publish it in a magazine.
In executing its stewardship duties, the Board of Directors is assisted by a Committee under the Board of Directors, namely the Risk Committee. During 2017, the Risk Committee has granted recommendations for the preparation of risk analysis of mega project, strategic projects and investment projects. The Board of Directors assesses that during 2017, the Risk Committee has performed its duties and responsibilities well.
In the year 2017, the number and composition of WIKA Board of Directors changes as explained below.
Period January 1, 2017 - March 17, 2017
Period 1 January 2017 - March 17, 2017, the Board of Directors number is 6 (six) persons , consist of 1 (one) President Director and 5 (five) Directors. All members of the Board of Directors live in the working area of WIKA’s Head Office.
|Bintang Perbowo||President Director|
|Gandira Gutawa Sumapraja||Director of Operations I|
|Bambang Pramujo||Director of Operations II|
|Destiawan Soewardjono||Director of Operations III|
|A. N. S Kosasih||Director of Finance|
|IG. N. Ashkhara Danadiputras||Director of Human Capital and System Development|
Period March 17, 2017 - December 31, 2017
Period March 17, 2017 - December 31, 2017, there are 6 (six) Directors, consisting of 1 (one) President Director and 5 (five) Directors. All members of the Board of Directors live in the work area of the Office WIKA Center.
|Bintang Perbowo||President Director|
|Chandra Dwiputra||Director of Operations I|
|Bambang Pramujo||Director of Operations II|
|Destiawan Soewardjono||Director of Operations III|
|A. N. S Kosasih||Director of Finance|
|Novel Arsyad||Director of Human Capital and System Development|
Thus, the Board of Directors’ report on the implementation of the Company’s business during 2017. The Board of Directors provides the highest appreciation of the trust, commitment and cooperation of all stakeholders, especially to the ranks of the management team and all employees who have worked hard for achieving the objectives of the Company. For the hard work of the management team and all employees, the Company is able to improve its performance in 2017.
Upon the direction given by the Board of Commissioners, the Board of Directors gave the highest award. The Board of Commissioners’ directives contributed greatly to the Company’s performance, thereby enhancing the Company’s performance in 2017.
The Board of Directors also expressed the highest respect to shareholders, and the Company’s partners. For the support given so far, The Company is able to survive and even always show excellent performance achievement. In the future, we remain committed to always provide the best for continuous improvement of performance achievement. The Board of Directors hopes that the Company will be an important and contribute part in improving economic growth in Indonesia.
Jakarta, April 2, 2018
On behalf of the Directors
Composition of the BOD in 2018 was amended by Decision of the Annual General Meeting on April 24, 2018. The composition of the BOD in 2018 was as follows:
|Tumiyana||President Director||Annual GMS, April 24, 2018|
|Agung Budi Waskito||Director Operation I||Annual GMS, April 24, 2018|
|Bambang Pramujo||Director Operation II||Annual GMS, April 24, 2018|
|Destiawan Soewardjono||Director Operation III||Annual GMS, April 24, 2018|
|A.N.S Kosasih||Director of Finance||Annual GMS, April 28, 2016|
|Novel Arsyad||Director of Human Capital & Business Development||Annual GMS, March 17, 2017|
|Danu Prijambodo||Director of Quality, Health, Safety and Environment||Annual GMS, April 24, 2018|