Dear Distinguished Shareholders and Stakeholders,
On this good occasion, please allow us to deliver the Board of Commissioners’ Supervisory Report for the 2018 Fiscal Year. The Board of Commissioners has carried out our supervisory duties and responsibilities and provided directives to the Board of Directors to ensure that PT AKR Corporindo Tbk is managed according to the predetermined business plan and applicable laws and regulations.
In carrying out our duties and responsibilities, the Board of Commissioners always maintains our objectivity and independence in accordance with stipulations of the Articles of Association and Legislation. The Board of Commissioners is assisted by the Audit Committee and the Nomination and Remuneration Committee to support the supervisory role of the Board of Commissioners.
ASSESSMENT OF THE BOARD OF DIRECTORS PERFORMANCE
In the midst of global and domestic economic condition that was filled with uncertainty, the Board of Commissioners considers that the Board of Directors was able to surmount challenges and observant in seizing every opportunity by implementing the right strategy to optimize the Company’s performance throughout 2018. The Board of Commissioners hopes the Company can continuously enhance its performance to grow sustainably.
In assessing the Board of Directors’ performance, the Board of Commissioners reviews the Company’s operational and financial performance throughout 2018 as one of the assessment aspects. The Company’s Board of Directors has implemented recommendations, directives and advice provided by the Board of Commissioners by focusing on strategies to accelerate business development and improve the Company’s performance with a focus on the Company’s core business. The Board of Commissioners considers such measures are acumen and effective to address the economic conditions and uneven competition.
The Company achieved higher revenues by 28.8% to Rp23,548 billion in 2018. The majority of the revenues were contributed from trading and distribution of petroleum products which accounted for 73% and trading and distribution of basic chemical products which accounted for 22%. Meanwhile, net profit grew by 36.9% to Rp1,645 bn in 2018.
The Board of Commissioners fully supports the measures taken by the Board of Directors to improve the Company’s performance in 2018, including the process of divesting assets located in China and coal assets under PT Bumi Karunia Pertiwi in Indonesia. The Board of Commissioners considers, this measure is not only inline with the Company’s vision, but also will enable the Company to achieve bigger opportunities in Indonesia. Similarly, we also welcome the expansion steps in 2018, including the Phase 2A storage tanks development project to add another 100,000 storage capacity in Jakarta Tank Terminal and the opening of non-subsidized gas stations under the joint-venture BP-AKR retail.
However, the Board of Commissioners continues to remind the Board of Directors to carry out business development by prioritizing the principle of prudence and complying with all applicable laws and regulations.
Supervision of Strategic Policy Implementation
The Board of Commissioners views that the Board of Directors has implemented a number of strategic policies appropriately and effectively during 2018. The Board of Commissioners provides directives to the Board of Directors on established strategic policies and monitors their implementation. Based on the directives, recommendations and inputs provided by the Board of Commissioners, the Board of Directors established strategic policies in 2018 focusing on accelerating business development and improving the Company’s performance.
The transformation process carried out by the Company is also one of the Board of Commissioners’ attention, considering that the process will greatly determine the Company’s direction in the future. As part of this transformation, the Company has carried out a digitalization program which, according to the Board of Commissioners, is the right step to take in a competition that currently is getting more stringent. The Board of Commissioners positively welcomes the strategic policies implemented by the Board of Directors in 2018.
Frequency and method of giving advice to the Board of Directors’ members
In carrying out its duties and responsibilities, the Board of Directors continuously obtains recommendations, inputs and advices from the Board of Commissioners. These recommendations, inputs and advices are provided through routine joint meetings held by the Board of Commissioners together with the Board of Directors. In 2018, there were 6 (six) Joint Meetings between the Board of Commissioners and Board of Directors.
The Board of Commissioners also optimizes the role of the Audit Committee and the Nomination and Remuneration Committee to evaluate and / or review the policies implemented by the Board of Directors and on matters deemed necessary by the Board of Commissioners. Based on results of the evaluation/ review, the Board of Commissioners may provide advice and directives to the Board of Directors.
Throughout 2018, the Board of Commissioners also provided advice and recommendations to the Board of Directors, including the effectiveness of GCG, Whistle Blowing System, and QSHE Implementation, as well as Human Capital Management and internal control system activities. The Board of Directors received directives and advices from the Board of Commissioners as part of the synergy between the Company’s organs to realize sustainable business growth.
Views on the Business Prospects Prepared By the Board of Directors
The Company’s Board of Directors has prepared the 2019 business prospects which the Board of Commissioners considers right-on-target and realistic. The global and national economic conditions in 2019 are predicted to grow positively albeit no significant changes compared to 2018. Nevertheless, the Company shall optimize all its potentials by relying on the Company’s core business strength.
The Board of Commissioners considers there are ample opportunities the Company can optimize in the petroleum and chemicals distribution and trading business segments. The petroleum terminal capacity improvement carried out in 2018 shall be optimized to increase sales in 2019. The large capacity is also an opportunity for the Company to play a greater role in the distribution of biodiesel B20.
The Board of Commissioners will encourage the Board of Directors to increase industrial land sales and infrastructure development in JIIPE. The Board of Commissioners considers JIIPE has ample opportunity to become a large industrial area estates because it has been supported by various facilities that will greatly help its tenants. To that end, the Board of Commissioners asks the Board of Directors to be more active in approaching
Potential investors to invest in JIIPE.
The Board of Commissioners is optimistic that the Company’s business prospects in 2019 are better than those in 2018 and the Company will be able to capture every opportunity ahead and increase its market share and strengthen its position in the petroleum trading, logistics and supply chain business segments in Indonesia. The BP-AKR joint ventures both in non-subsidized gasoline business and with Air BP that plans to enter into aviation fuel market are also expected to grow in 2019. aSSeSSment of corPorate governance imPlementation
The Board of Commissioners has a role to actively and consistently supervise and provide direction and advice to the Board of Directors. The Board of Commissioners views that in 2018 the Board of Directors has implemented Corporate Governance (CG) effectively and met the compliance aspects. The Company has complete tools such as code of conduct, Code of GCG, whistleblowing system guideline, Internal Audit Charter, Board Charter, and others to support a transparent, accountable, responsible, independent and fair implementation of corporate governance. The Company has also evaluated its Corporate Governance implementation pursuant to the Financial Services Authority Circular No. 32 / SEOJK.04/2015 concerning Code of Corporate Governance for Public Companies as a standard for GCG implementation. Results of this evaluation have been followed up for improvement.
Performance assessment of committees under the Board of commissioners
The Board of Commissioners is assisted by the Audit Committee and the Nomination and Remuneration Committee in carrying out their duties and responsibilities. Throughout 2018, the Board of Commissioners considered that the committees had worked effectively in contributing recommendations as well as supported the Board of Commissioners to provide direction to the Board of Directors.
The Audit Committee has carried out the supervisory function on the effectiveness of the internal control system and risk management in all operational activities, carried out reviews of Internal Audit findings, reviewed the Company’s Financial Statements and risk management, evaluated the planning and implementation of audits and monitored follow-up audit findings, and recommended the appointment of a Public Accountant Firm to audit the Company’s and Subsidiaries’ Financial Statements.
The Nomination and Remuneration Committee has assisted the implementation of Board of Commissioners’ functions and duties related to the Nomination and Remuneration of the Board of Directors and Board of Commissioners’ members. This is done by providing recommendations to the Board of Commissioners regarding the Board of Commissioners and Board of Directors composition, Nomination policies and criteria, policies of the Board of Commissioners and Board of Directors performance assessment, assisting the Board of Commissioners to assess performance based on predetermined benchmarks and conformity with the remuneration received, provide recommendations on the competency development program for members of the Board of Commissioners and Board of Directors, and recommendations on the qualified candidates for the Board of Commissioners and Board of Directors, and provide recommendations on remuneration structure, policies and amount.
Changes to the Board of commissioners’ composition
In 2018 there was no change to Company’s Board of Commissioners’ composition. The Board of Commissioners composition in 2018 is still in accordance with the Annual General Meeting of Shareholders’ resolutions dated May 5, 2015, namely: President Commissioner : Mr. Soegiarto Adikoesoemo Commissioner : Mr. Mahendra Siregar Independent Commissioner : Mr. I Nyoman Mastra
Appreciation
On behalf of the Board of Commissioners, we would like to extend our heartfelt gratitude and appreciation to the Board of Directors and all employees for their hard work, commitment and dedication so that the Company was able to achieve quite a proud performance. We would also like to extend our gratitude to all Shareholders and stakeholders for their support.
We have presented this Report on the Board of Commissioners’ supervisory duties on the Company’s performance and business operations in 2018. The Board of Commissioners is always committed to continuously increase our supervisory role and providing constructive directives for the Board of Directors to sustain performance growth.
