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INCREASING THE EFFECTIVENESSOF BUSINESS PROCESSES AND EFFICIENCY FOR GROWTH Annual Report

PT Semen Padang2017

Increasing the Effectiveness of Business Processes and Efficiency for GrowthWith enthusiasm to give the best results to the stakeholders, PT Semen Padang has increased the effectiveness of business processes and efficiency aimed at improving performance and reducing cost burdens in order to maintain company growth amid conditions of intense competition, low consumption, and over-supply of national cement supply.

PT SEMEN PADANG • LAPORAN TAHUNAN 2017

Photo title:The Action of Dump Truck

Photo location:Limestone quarry - Bukit Karang Putih

Photo Caption:Semen Padang conducts mining limestone in the Karang Putih hill. Process limestone mining begins with blasting limestone hills,

then with using a limestone dump truck brought towards the crusher to be crushed

and sent to limestone storage with a belt conveyor

Introduction Report from the Board ofCommissioners and Directors

Company Profile Business SupportOverview

Management Discussionand Analysis

Good CorporateGovernance

Corporate SocialResponsibility

Audited FinancialReport


PRELIMINARY2017 was a year that full of challenges. PT Semen Padang began the year with an enhancement in effectiveness and efficiency of business process for growth. Company always constantly observes every change in the business environment in order to achieve business and company’s goal. Various deployments strategic policy throughout 2017 which was supported by the implementation of good governance and the competent human resources, resulted to business growth for the company.







Photo title:Lime Stone Supply Line

Photo location:Factory of PT Semen Padang

Photo caption:PT Semen Padang sends limestonefrom the White Reef mine throughbelt conveyor along 6 Km


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PT SEMEN PADANG • ANNUAL REPORT 2017







CONTINUITY

2014 2015STRENGTHENING FOR SUSTAINABLE GROWTH

MOVING FORWARD TO WIN COMPETITION WITH TRANSPARENCY

The growth performance of PT Semen Padang provides value added to the economy of West Sumatra in particular and Indonesia in general.

PT Semen Padang is committed to upgrading and optimizing all its resources and applying the disclosure of information disclosure in order to win the tough competition.

2016ADVANCING TOWARD PERFORMANCE

PT Semen Padang is committed to creating the excellent operational and efficincy through cost transformastion program in order to achieve the company’s vision

THEME

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2017

IMPROVING THE EFFECTIVENESS OF BUSINESS PROCESSESS AND EFFFICIENCY FOR GROWTH

In the spirit of delivering the best results to the stakeholders, PT Semen Padang did improving the effectiveness of business processes and efficiency aimed at improving performance and reducing cost burden in order to maintain the company’s growth amidst tight competition, low consumption, and national cement over supply.

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2002 20061992 2003

Siak Bridge-Riau

Barelang Bridge-Riau Islands

Kelok Sembilan-West Sumatera

Kualanamu Airport-North Sumatera

INFRASTRUCTURE BUILTED FROM PT SEMEN PADANG PRODUCTS

The bridge was built with the aim of facilitating the flow of transportation

between Siak regency and Pekanbaru city so that it is an alternative paths by

land alongside the river

This airport is the second largest airport in Indonesia and can serve nine million

passengers per year

Barelang Bridge is a high-tech pilot project involving hundreds of Indonesian engineers without interference from foreign experts

It is the road that connects West Sumatra with Riau, which traverses nearly 10 thousand vehicles every day

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2009 20152007 2012

Masjid Raya-West Sumatera

Gentala Arasy Bridge- Jambi

Semen Padang Hospital-West Sumatera

Medan Binjai Highway-North Sumatera

The Great Mosque of West Sumatra features modern architecture that is not synonymous with the dome and can accommodate 6000 worshipers

This bridge is an icon of Jambi city. The bridge is similar to the letter S streching along 530 meters

International standard hospital located in Padang city, West Sumatera province. This hospital belongs to PT Semen Padang

This toll road stretches for 10 kilometers and can serve 17 thousand vehicles every day

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SEMEN PADANG’S EXCELLENCE

A Strong Distribution Network and Spread Across Major CitiesWith production capability reaching more than 8.9 million tons, PT Semen Padang has the highest marketshare in Sumatra. All of this is supported by a strong distribution network and spread across major cities.

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03

04

01

05

07

Long Experience in Indonesian Cement IndustryPT Semen Padang was established on March 18, 1910 under the name NV Nederlandsch Indische Portland Cement Maatschppij (NV NIPCM). Currently, some buildings that use PT Semen Padang products such as Barelang bridge - Riau Islands, tsunami museum - Aceh, your kualanamu airport - North Sumatra, jalan kelok sembilan - West Sumatera, West Sumatra - West Sumatera mosque and so forth.

Financial Capabilities and AssetsAs a cement company that controls the marketing area on the island of Sumatra and has 5 factories and 7 packing plants and 1 cement mill in Dumai with total assets of more than Rp10,141 billion.

High Synergy through Semen Indonesia Group in Cement Production and MarketingThe joining of PT Semen Padang in Semen Indonesia Group provides significant benefits, in terms of finance, production, distribution and sales.

Raw Material Reserves Expected Over 50 YearsWith the expansion of limestone quarry site of PT Semen Padang covering 412 hectares, the Company’s raw material reserves are estimated to be more than 50 years.

Geographical Location that Supports Export ActivitiesThe geographical location of PT Semen Padang located on the West coast of Sumatra makes it easier for the Company to export cement and slag abroad.

Renewable energyWaste Heat Recovery Power Generation (WHRPG) is a power plant that uses exhaust gas from the cement making process to be processed and generates electrical energy. PT Semen Padang is the first company in Southeast Asia to have WHRPG. WHRPG electricity production up to December 2017 of 50 MWh was equivalent to Rp 50 billion.

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ACCOUNTABILITY ON THE 2017 ANNUAL REPORTThe undersigned, the Board of Commissioners and the Board of Directors of PT Semen Padang appointed based on the decision of the Shareholders of PT Semen Padang dated January 26, 2018, states that the Board of Directors and Board of Commissioners’ performance report during the fiscal year 2017 is the result of the Performance Period of 2017. All information in this Annual Report of PT Semen Padang has been fully contained, and the accuracy of the contents of the Company’s Annual Report can be accounted for.

This statement is made with actual.Padang, Februari 15 th, 2018

Board of Commissioner

Board of Directors

Drs. Ahyanizzaman, AkPresident commissioner

Ir. Yosviandri President Director

Prof. Dr. H. Werry Darta Taifur, SE, MA Commissioner

Tri Hartono Rianto, SE, M.Bus, Akt, CAFinancial Director

Drs. Khairul Jasmi, MM Commissioner

Ir. Firdaus, MM Production Director

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Theme Continuity 4Infrastructure Build from PT Semen Padang Products 6Semen Padang’s Excellence 8Accountability on the 2017 Annual Report 9Table of contents 10Highlight 2017 12Financial Highlights 14Operational Highlight 16Stock Information 18Bond Information, Subscriptions or Conversion Bonds 182017 Event Highlights 19Awards and Certificates in 2017 22

PRELIMINARY

MANAGEMENT REPORTReport of the Board of Directors 28Profile of Board of Directors 35Report of the Board of Commissioners 38Profile of Commissioners 47Information on Concurrent Position s of The Board of Commissioners

50

Statement of Independence of Independent Commissioner

50

Information on Concurrent Positions of The Director 50

Table of

CONTENTS

COMPANY PROFILECorporate Identity 54Company Objectives and Strategies 56History of PT Semen Padang 58The Development of PT Semen Padang’s Logo 59Brief Information on The Change of Company’s Name

60

Company’s Vision, Mission and Structure 60Structure and Composition of Stock Ownership 63Share Ownership Composition 64Stock Listing Chronology 64Chronology of Other Securities Listing 64List of Subsidiaries and Affiliated 65Subsidary Performance at a Glance 66Line of Business 68

Flow of Production Quality Control Process 70Semen Padang Products 72Semen Padang Services 73Organizational structure 74Profile of Company’s Senior Leader 75Address of Semen Padang Head Office and Representative Offices

80

List of Distributor Networks 82Information On The Company’s Website 92

BUSINESS SUPPORT OVERVIEW

Overview of Business Support 96Human resource Management 98

Information and communication technology 116

MANAGEMENT DISCUSSION AND ANALYSIS

Highlight Management Discussion and Analysis 130Industry Overview 132Networks and Business Partners Inside and Outside The Country

150

CORPORATE GOVERNANCEOverview of Corporate Governance 168

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CORPORATE SOCIAL RESPONSIBILITY

The Overview of Corporate Social Responsibility

218

Preliminary 220Vision and Mission of CSR 220Methodology and Roadmap of CSR 220CSR Policy 220Organizational Structure of CSR Management

222

Profile of CSR Management 224CSR Strategy 224Plans and Realization of CSR Semen Padang Activities

225

CSR budget 226Corporate Social Responsibility to Environment

226

Corporate Responsibility of Occupational Health and Safety (K3)

228

Corporate Social Responsibility Towards Social and Social Development

230

Corporate Responsibility to The Products and Customers

232

Qualitative Impact Upon CSR Activities Implementation for Stakeholders and Companies

234

CSR Milestone Plan of 2018 234

Good Corporate governance 170Principles, Commitments and Objectives of Good Corporate Governance Implementation

170

GCG Framework and Roadmap 171Strengthening the Foundation of Corporate Governance 172Assessment of Corporate Governance 172State Aparatus Wealth Report (LHKPN) 173Gratification Management Program 173GCG Implementation Plan and Strategy In 2018 173Corporate Governance Structure and Mechanism 174General Meeting of Shareholders (GMS) 174Board of Commissioner (BoC) 177Independent Commissioner 187Audit Committee 188Legal and Environmental Development Committee 192Nomination and Remuneration Committees 196BOC Secretary 196Board of Directors 197Procurement of Goods and Services 200Corporate Secretary 201Internal audit 203Risk Management Report 207Access to Corporate Information and Data 210Corporate Code of Conduct 211Reporting System of Violation 216

Good Corporate Governance and Bad Corporate Governance in Annual Report

217








RP 6.652 billion

4.502 Trees 251 Ha 241.349 Ton CO2

RP 161 billion 50 billion

RP 1.178 billion RP 499 billion

RP 986 billion

INCOME

TREE PLANTING INVESTMENTLAND

EMISSION REDUCTION THROUGH GREEN BELT PROGRAM (since 2013)

COST TRANSFORMATION

ELECTRICAL SAVINGS WITH THE USAGE OF WHRPG TECHNOLOGY

EBITDA PROFIT OF THE YEAR

INVESTATION

42,33%

1,39%

9,84%NASIONAL

SUMATERA

JAWA

Production (million tonnes)

Sales (million tonnes)

Slag

6,53

Cement

7,44

OPC

2,70

Non OPC

4,75

Sales

7,71

InCountry

6,60

OutsideCountry

1,11

12

Production of Clinker-Cement and Sales

Market share

Financial Performance

Management of the environment

HIGHLIGHT 2017








83,70 87,02 615 4,18GCG Score was

“GOOD” predicatescale of 100

SPIP Score was“Very Effective” predicate

scale of 100

RML Indeks was“MANAGED”

scale of 5

IQA Score“EMERGING INDUSTRY

LEADER”scale of 1.000

RP 8,22billion

PARTNERSHIP PROGRAM FUND

Green PROPER

SILVERGlobal Communication Competition-League of American Communication Profesional (LACP)

3 STARAsia Pacific Quality Conference

Emerging Industry Leader

Grand Platinum for Indonesia CSR Award

Green Industry

333 ukm

FOSTER PARTNER

940 people

SCHOLARSHIP GRANTEE

90,77 %

PERCENTAGE OF FUNDS DISTRIBUTED

13

GCG, SPIP, IQA, and RML Index scores

Social Responsibility

International Awards

National Award

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FINANCIAL HIGHLIGHT

Table of Financial Highlights in the last 5 YearsDescription 2013 2014 2015 2016 2017

FINANCE (billion Rupiah)Income 6.200 6.409 6.528 6.221 6.652Gross profit 1.873 1.709 1.690 1.891 1.951Operating expenses 522 521 675 852 1.125Operating profit 1.351 1.187 1.015 1.039 826Current year profit 1.044 928 723 724 499Profit Attributable 1.041 925 722 724 499EBITDA 1.550 1.410 1.261 1.284 1.178Earnings per Share (Rupiah) 3.137 2.786 2.175 2.181 1.502

FINANCIAL POSITION (million Rupiah)Current asset 2.416 2.686 2.297 2.127 2.461Fixed assets 2.462 2.771 4.673 6.800 7.437Other Assets 249 451 333 284 243Total Assets 5.127 5.908 7.393 9.211 10.141Current Liabilities 1.164 1.421 2.244 1.884 2.114Long-term obligation 301 321 687 2.438 3.076Total Liability 1.465 1.741 2.933 4.321 5.190Non-controlling interests 11 13 13 12 13Equity 3.650 4.154 4.448 4.877 4.938Working capital 1.252 1.265 53 244 347Investments in associates 1 2 2 2 2Amount of Liabilities and Equity 5.126 5.908 7.393 9.211 10.141

FINANCIAL RATIORatio of Repaying Short-term Liabilities (%)Cash Ratio 88,4 72,3 33,1 34,4 22,2Current Asset Ratio To Current Debt 134,2 124,3 68,1 73,9 65,3Current Rate 207,5 189,1 102,4 112,9 116,4

Profit Ratio (%)Profit Margin 21,8 18,5 15,5 16,7 12,4Net Profit Margin 16,8 14,4 11,1 11,6 7,5EBITDA Margin 25,0 22,0 19,3 20,6 17,7Return on Equity 28,6 22,3 16,3 14,8 10,1Return on Assets 20,4 15,7 9,8 7,9 4,9Return on Profit 16,8 14,5 11,1 11,6 7,5Return on Investment 20,4 15,7 9,8 7,9 4,9

Ratio of Repaying Liability (%)Debt Comparison Ratio To Assets 28,6 29,5 39,7 46,9 51,2Debt Comparison Ratio To Equity 40,0 41,8 65,7 88,4 104,8

Activity Ratio (day)Inventory Turnover 63 52 45 44 48 Days of Accounts Turnover 26 36 42 44 45 Total Asset Turnover 121,0 108,5 88,3 67,5 65,6 Total Equity Against Assets 71,2 70,3 60,2 52,9 48,7

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Operating Expenses(Billion Rupiah)CAGR 20,39% ; YOY 19,21%

2013 2014 2015 2016 2017

852

675

521522

Cost of Goods Sold(Billion Rupiah)

CAGR 2,10% ; YOY 8,57%

2013 2014 2015 2016 2017

4.3304.8394.700

4.3276.2216.5286.4096.2006.652

4.701

1.125

2013 2014 2015 2016 2017

Profit for The Year(Billion Rupiah)

CAGR -16,87% ; YOY -31,09%

2013 2014 2015 2016 2017

724723

9281.044

499

Profit Per Share(Rupiah)CAGR -16,82% ; YOY -31,13%

2013 2014 2015 2016 2017

2.1812.175

2.7863.137

Total Assets(Billion Rupiah)

CAGR 18,59% ; YOY 10,09%

2013 2014 2015 2016 2017

9.211

7.3935.908

5.1271.502

10.141

Revenue(Billion Rupiah)CAGR 1,77% ; YOY 6,93%

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FINANCIAL HIGHLIGHT

Ebitda Margin(%)

CAGR -8,06% ; YOY -7,57%

2013 2014 2015 2016 2017

20,619,322,0

25,0

Ebitda(Billion Rupiah)CAGR -6,43% ; YOY -1,17%

2013 2014 2015 2016 2017

1.2841.2611.410

1.550

1.17817,7

Operational Highlight

Cement Production Volume(Thousand Tons)

CAGR 3,01% ; YOY 15,30%

2013 2014 2015 2016 2017

6.4566.8896.6716.613

Clinker Production Volume (Thousand Tons)CAGR 5,75% ; YOY 31,13%

2013 2014 2015 2016 2017

4.9815.2775.3575.223

6.532 7.444

Table of Operational Highlight in the Last 5 Years

Description 2013 2014 2015 2016 2017

PRODUCTION VOLUME (Thousand Tons)Slag 5.223 5.357 5.277 4.981 6.532Cement 6.613 6.671 6.889 6.456 7.444SALES VOLUME (Thousand Tons)Domestic Sales 7.226 7.087 6.855 6.496 6.601Exported Cement 56 116 397 396 806Exported Clinker 21 - - 90 300Total Sales 7.304 7.203 7.253 6.981 7.707

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Domestic Sales Volume(Thousand Tons)CAGR -2,18% ; YOY 1,87%

2013 2014 2015 2016 2017

6.4966.8557.0877.226

Export Sales Volume(Thousand Tons)

CAGR 94,25% ; YOY 127,99%

2013 2014 2015 2016 2017

485397

11678

Total Sales Volume(Thousand Tons) CAGR 1,40% ; YOY 10,63%

2013 2014 2015 2016 2017

6.9817.2537.2037.304

6.601

1.106

7.707

National Market Share(%)

CAGR -4,73% ; YOY -3,10%

Sumatera Market Share(%)CAGR -1,60% ; YOY -0,48%

2013 2014 2015 2016 2017

2013 2014 2015 2016 2017

10,2

42,5

10,5

43,6

11,3

42,9

11,9

45,2

9,8

42,3

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STOCK INFORMATION

Until the end of 2017, PT Semen Padang has not listed any stock in any securities, so stock information in the form of tables and graphs can not be displayed in this annual report.

BOND INFORMATION, SUBSCRIPTIONS OR CONVERSION BONDSUntil the end of 2017, PT Semen Padang does not record bonds, sukuk or convertible bonds in any securities exchange, therefore bond information, sukuk or convertible bonds in the form of tables and graphs can not be shown in this annual report.

Photo Title:Plant At Dusky day

Photo Location:Plant of Indarung V Semen Padang

Photo Caption:One of the factories in Semen Padang isIndarung V factory which has capacityproduction of 3,000,000 tons per year

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2017 EVENT HIGHLIGHT

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04

January

March

The Ceremony of National Safety and Health Quality Month.Commemorated by holding some activities that were followed by internal and external companies, including the convention of quality, safety and health. In addition, social activities include planting trees in the new way area of Jto the mine by planting 1000 trees.

General Meeting of Shareholders (30 March) Shareholders approved the Annual Report of PT Semen Padang on the course of the Company of 2016, including the report report on the implementation of supervisory duties during 2016 fiscal year and also approved the Annual Report of Partnership and Community Development Program of 2016. The approval of shareholders was submitted at the Annual General Meeting of Shareholders AGMS) of PT Semen Padang for The Book Year of 2016 in Jakarta.

February

April

The Minister of SOEs Rini Soemarno Reviewed The Revitalization of Sianok Canyon Bukittinggi

(February 26)SOE Minister Rini Soemarno reviewed The Revitalization of the

Sianok Bukittinggi Canyon area by PT Semen Padang. This is one of the SOE programs present for the State which is

expected to increase the potential of Tourism which impact on improving the economy of the community.

The Signing of MOU PT Semen Padang with PT Perkapalan (4 April)

Memorandum of understanding signed with PT Dok & Shipping Kodja Bahari (Persero) at West Sumatra Provincial

Governor’s Office, in Padang. It was expected to assist th edistribution of PT Semen Padang products to archipelago areas

such as Mentawai Island, Nias and Riau Islands. The signing of MoU witnessed by the Governor of West Sumatera Irwan Prayitno

was a form of state-owned synergy by considering the business field owned.

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05

07

06

08

May

July

The Visit of Deputy Ministry of SOE (10 May) Assistant Deputy Minister of Strategic Industries Business and media Ministry of SOEs visited the PT Semen Padang.

The President Director of PT Semen Padang was awarded the Bhakti Koperasi Reward by the Minister of Cooperatives and SMEs (12 July)President Director of PT Semen Padang Benny Wendry was awarded the Bhakti Cooperative Reward by the Minister of Cooperatives and SMEs for their work in developing the Cooperatives, Small and Medium Enterprises in Indonesia, especially in West Sumatera Province.

June

August

The cheap market of PT Semen Padang Peduli (June 15)To ease the burden of people living around PT Semen Padang, the

Company again held a Cheap Market. It was held at six locations in Padang City. The Cheap Market Activity was part of BUMN

program Present for this Country, Company provided package of 1,200 package consisting of rice 5 kg, cooking oil 2 kg, instant

noodle and sugar 2 kg.

Visit of the Minister of Industry (29 August) The Republic Indonesian Industry Minister, Airlangga

Hartarto, praised the topography and green environment of PT Semen Padang. This praise, he delivered during his working visit to

the Company

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09

11

10

12

September

November

PT Semen Padang achieved the Popular Brand Award of Indonesian Digital for Cement Product Category Cement Product category (September 29)This award was given to the brands in Indonesia who managed to get their brand popularity in the digital realm based on 3 parameters approach, namely Search Engine Based, Social Media Based and Website Based.

PT Semen Padang Achieved Indonesia CSR Awards 2017 (November 30)The commitment of PT Semen Padang in the management of Corporate Social Responsibility (CSR) program was again given appreciation in the event of Indonesia CSR Award (ICA) 2017. The Company achieved Grand Platinum Degree in Industrial and Manufacturing by earning 5 Platinum, 5 Gold and 1 Silver.

October

December

PT Semen Padang Innovation Team was awarded three stars in APQC event (Asia Pacific Quality Conference)

XXIII 2017 (October 22-25) Two innovation teams of PT Semen Padang have won

three stars in the Asia Pacific XXIII 2017 APQC event in the Philippines. The two teams were GEKIM and PACKAR teams. The

three-star award was the highest award in the event that took place in the Philippines

Green PROPER Award from the Ministry of Environment (18 December)

PT Semen Padang again managed to achieve Green PROPER from the Ministry of Environment and Forestry. This

award proved the hard work of all human beings to commit to environmental management. Green PROPER awarding at PROPER 2017 Award was conducted by the Minister of

Environment and Forestry Siti Nurbaya Bakar to the Production Director of PT Semen Padang, attended by Jusuf Kalla at the Vice

Presidential Palace.

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Awarding Institution

League of American Communication Profesional (LACP)

Month February 2017

Global Communication Competition


Tras N Co Research

Month September 2017

Indonesia Digital Popular Brand Award


International Quality & Producttivity Convention (IQPC)

Month November 2017

Gathering of Work of Quality and National Productivity


Komite Nasional Kebijakan Governansi (KNKG)


Semen Padang Participation Award in Annual Report Award


Indonesia Quality Award

Month November 2017

Emerging Industry Leader


Komisi Informasi Sumatera Barat

Month December 2017

Public Information Openness


Asia Pacific Quality Organization (APQO)

Month October 2017

Asia Pacific Quality Conference XIII


Ministry of Environment and Forestry

Month December 2017

Green PROPER


Kementerian PPN / Bappenas


Indonesian Sustainable Development Goals Awards


Badan Standarisasi Nasional

Month November 2017

Grand Platinum Indonesia CSR Award


Kementerian Perindustrian

Month December 2017

Green Industry Level 5

Awards

AWARDS AND

CERTIFICATES IN 2017

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AWARDS AND

CERTIFICATES IN 2017CERTIFICATIONS

Scope Integrated Management System

Issued by Sucofindo International Certification Services

Effective date 6 January 2015–24 January 2018

Integrated Management System Certificate• Certificate ISO 14001:2004/SNI 19

– 14001:2005• SNI ISO 9001:2008• OHSAS 18001:2007

Scope Quality Management Systems – Requirements


Effective date 11 August 2015–10 August 2018

Certificate SNI ISO 9001:2008

Scope Environmental Management Systems – Requirements with guidance for use


Effective date 01 January 2018–14 September 2018

Certificate ISO 14001:2004/SNI 19 – 14001:2005

Scope Occupational Health and Safety Management System - Requirements


Effective date 11 August 2014–10 August 2017

Certificate OHSAS 18001:2007

Scope Legitimate Certificate of the achievement at the Domestic Component Level

Issued by The Ministry of Industry

Effective date 27 August 2015 -27 August 2018

The Achievement at the Domestic Component Level Legitimate Certificate

Scope Has implemented theSpontaneous Security system based on the regulation of the Chief of the Police Force of the Republic of Indonesia No.24 of 2007 with Gold Reward achievement

Issued by The Police Force of theRepublic of Indonesia

Effective date 04 August 2017 - 04 August 2020

Security Management System Audit Certificate

Scope API Well Cement Class G, Type HSR

Issued by API (American Petroleum Institute)

Effective date 4 May 2015–6 March 2018

Certification of Authority to Use the Official API Monogram API Spec. Q1 and API Spec. 10A

Scope Occupational Health andSafety Management System

Issued by Minister of Manpower and Transmigration

Effective date 14 July 2017–14 July 2020

Occupational Health and Safety Management System Audit Certificate

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Scope Dumai Composite Portland Cement

Issued by Product Certification Institution, The Ministry of Industry

Effective date 13 September 2017 - 12 September 2021

SNI Logo Branding Product Certificate

Scope International Code for The Security of Ships and Port Facilities (ISPS Code)

Issued by Director of Marine and Coast Guard Unit, Deputy Director of Patrol & Security

Effective date 22 December 2014–21 December 2019

Scope Type II & V Portland Cement

Issued by Product Certification Institution, The Ministry of Industry


Statement of Port Facility Security Compliance Certificate


Scope Semen Portland Pozolan

Issued by Product CertificationInstitution, The Ministry of Industry



Scope Law No. 43 of 2009 onArchiving & GovernmentRegulation No. 28 of 2012 on the Implementation of Law No. 43 of 2009 on Archiving

Issued by National Archive of theRepublic of Indonesia

Effective date 17 June 2015–17 June 2020

Archiving Accreditation A Certificate

Scope OHSAS 18001:2007 Occupational Health and Safety Management System-Requirements

Issued by PT Sucofindo ICS

Effective date

11 August 2017 -10 August 2020

Sertifikat OHSAS 18001:2007

Scope Mixed Portland Cement




Scope Composite Portland Cement




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Photo title:A Strong Distribution Network

Photo location:Teluk Bayur Packing Plant

Photo caption:Through a strong distribution line, PT Semen Padang is able to pass through the intense competition




MANAGEMENT REPORT

Throughout the year 2017, the Board of Commissioners and the Board of Directors were synergistic in carrying out surveillance and implementing various strategic policies in achieving the vision of becoming a reliable, superior and environmentally sound cementing company in western and southeastern of Indonesia. With the increasing of effectiveness and efficiency of business process, PT Semen Padang successfully faced the competition 2017.





Photo title:The Photo of Commissioners and Directors

Photo location:Head Office of PT Semen Padang

Photo caption:Togetherness between the BoC and BoD after the company’s

performance meeting to strategize ahead in order to win the tight competition of the cement industry.


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REPORT OF THE BOARD OF DIRECTORS

Ir. YosviandriPresident Director

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When the cement industry is faced with difficult conditions, it is characterized by tight competition conditions, low consumption, and national cement over supply. PT Semen Padang was still performing relatively well in 2017.

The Board of Directors expressed gratitude and appreciation to all employees who have worked with dedication and love in carrying out their respective duties and responsibilities and support the efforts to realize the Company’s Vision, Mission and Goals.

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MACRO ECONOMIC AND DOMESTIC CEMENT INDUSTRY IN 2017Praise be to Allah SWT for His Grace and Blessings, enabling the Company, after 106 years in existence, to survive yet again through difficult times. When the cement industry was faced with difficult conditions, it was characterized by tight competition conditions, low consumption, and national cement over supply. PT Semen Padang was still performing relatively well in 2017. Carrying the spirit of Operational Excellence to Win Competition, the Company successfully faced the competition in 2017 with a relatively good profit performance.

In 2017, the national cement industry faced a very challenging reality. The relatively favorable macroeconomic conditions, the rapid growth of the construction sector and the development of infrastructure projects, have not brought significant increases in demand for cement.

In fact, in 2017 cement consumption increased compared to 2016. The national cement demand in 2017 was 66.3 million tons, an increase of 4.7 million tons compared to 2016, amounting to 61.6 million tons. The national cement consumption growth was supported by property growth and government-enhanced strategic / infrastructure projects that contribute greatly to the demand for cement.

At the same time, the additional capacity comes from six producers, which were Semen Merah Putih, Semen Jawa, Semen Bima, Conch Semen, Semen Tiga Roda, Semen Bosowa, Semen Padang and Semen Gresik

As a result, on the island of Java there was an over supply which then spread to outside Java, namely the market of Sumatra, Kalimantan, and East Indonesia. The increasingly competitive condition when the cement from China helped to enliven the domestic market caused the oversupply of domestic supply.

Over supply then encouraged price competition and penetration of competitors to outside Java. Competitors from West Java are more competitive penetrating into eastern Sumatra market due to relatively closer factory distance.

While China’s cement production implemented a low-price strategy to hit and damage markets from long-established competitors. As a result of the competition, it has an impact on the sales performance of the Company in Java and Sumatera. However, the condition can still be faced by applying a qualified strategy, so that tight competition can be passed by the performance of good profit.

ANALYSIS OF COMPANY PERFORMANCE

Strategic PolicyIn a company, strategic policy plays an important role in the implementation of decision-making process to determine the goals and the best way to achieve goals. Therefore, PT Semen Padang always keep an eye on every change of business environment that occurs, both external and internal, in order to achieve the business goals and objectives of the Company.

Some of the strategic policies undertaken by the Company to create sustainable growth in 2017 were as follows:• Cost management (cost transformation), through Cost

Reduction Program (CRP) and Cost Saving Program (CSP);• Maintained product quality;• Increased speed of response to product demand; and• Strengthened network and distribution.

The 2017 Achievement of Performance and Comparison with The Target Of The work plan and Budget 2017In general, the Work Plan and Budget of PT Semen Padang (RKAP) 2017 was not achieved, however, the overall performance of the Company in 2017 was relatively good. Slag production in 2017 amounted to 6.53 million tons or realized 97.5% of RKAP of 6.70 million tons. The slag production target is not met due to the unavailable capacity of kiln capacity.

Production during the year 2017 experienced a shortage so that the purchase of good slag from intercompany, domestic and import purchases of 256,154 tons, mainly due to the maintenance activities of production machinery. Cement production in 2017 reached 7.44 million tons or reached 100.14% of RKAP of 7.43 million tons.

Sales volume was recorded at 7.71 million tons. Achievement was realized 92.20% of RKAP amounted of 8.36 million tons. Net sales during 2017 reached Rp6.65 trillion or 94.89% achieved from RKAP of Rp7.01 trillion. Non-achievement of sales performance in accordance with RKAP due to limitations of cement inventories experienced by the Company in the second half of 2017, and tight competition in the markets of Sumatra and Java. However, for Sumatra region, sales of PT Semen Padang reached 6.04 million tons or 95.5% of RKAP of 6.32 million tons. This achievement was 5.01% higher than sales in 2016 of 5.75 million tons. Meanwhile, sales volume of PT Semen Padang in Java during 2017 was 579,508 tons from RKAP target of 798,000 tons. Not achieving these targets due to competitive price competition.

In terms of profit achievement, EBITDA margin and net income of the Company in 2017 reached Rp499 billion or reached 68.5% of RKAP’s target of Rp728 billion.

Esteemed Shareholder and Stakeholder,

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Increased Production CapacityIndarung VI has been completed in 2017 to increase production capacity of PT Semen Padang to 8.9 million tons per year. Other investments by the Company in increasing production capacity include the addition of another Packing Plant Company in Bengkulu area.

Corporate Business Challenges and SolutionsThroughout the year 2017, PT Semen Padang faced a business challenge that was not light, among them, intense competition in Java. In order to face the existing competition, the Company implemented several policies and programs, such as cooperating with several partners. The company also launched marketing communication strategy (marcom), including customer gathering, plant visit, joint test / trial mix, promotion media installation at strategic locations (airport, main road), marcom synergy between public relations and CSR involving brand PT Semen Padang in every activity such as folklore, leisure walk, and “Semen Padang Lecture”.

Related to the shortage of cement supply, the Company also made a purchase of cement and slag. With product limitations, supply was prioritized to major markets with better margins, namely Sumatra. Meanwhile, the Company developed export markets in 2017 through mapping export destination countries to see potential markets, exploring potential buyer buyers in cooperation with Cement Indonesia International Trading (SII Trading), as well as capturing export opportunities of slag and cement bag.

In 2017, the operational of company faced the problem of inconsistent raw material quality and unplanned repairs. Mitigation carried out was the optimization of factory equipment related to feeding of production raw materials, increasing the reliability of factory tools and security of potential and repetitive problems.

In addition, the Company also faced up the limitations and constrained supply of fuel and electrical energy. by engaging in long-term contracts for procurement of coal with suppliers, the realization of mining contracts and utilization of PT Bukit Asam’s wharf in Teluk Bayur, ensuring the availability of coal in accordance with the quality and quantity required, and the plan for the establishment of the steam power plant (Rp / KwH). cheaper.

In terms of distribution and transportation, there were low product availability constraints on demand, as well as the high cost of port congestion. To that end, the Company was taking mitigation measures including increasing the capacity & transportation reliability of Packing Plant Indarung to Teluk Bayur Packing Plant, scheduling ship synchronization with the needs of cement

sales in each representative as well as improving coordination with port managers to accelerate the process of leasing.

ANALYSIS OF BUSINESS PROSPECTSIn 2018, Bank Indonesia predicts that global economic growth will reach 3.1% after only growing by 3.0% in 2017. Meanwhile, national economic growth in 2018 is estimated at 5.3% after growing by 5.1% in 2017.

In the cement industry, the growth prospects for cement consumption in 2018 are expected to be quite good. Conducive economic conditions in Indonesia encouraged the government to increase the availability of national infrastructure. This is in line with the government’s program in improving infrastructure development in accordance with the Masterplan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) and the National Medium-Term Development Plan (RPJMN) for the period 2015-2019 that will impact on the increase of national cement consumption.

The Indonesian Cement Association (ASI) estimates that domestic cement consumption in 2018 will grow about 7.6% or higher from 2017 by 17%. This increase is attributed to increased government-led infrastructure development such as the Trans Sumatra toll road infrastructure project, the construction of the Kuala Tanjung International port, the construction of Light Rail Transit (LRT) in South Sumatra as well as the development of the port followed by an increase in the national cement production capacity supported by the addition capacity by existing cement producers as well as new cement producers.

The Ministry of Industry estimates that the total national cement capacity in 2018 is expected to reach 102 million tons in line with the high realization of investment in the domestic cement industry. Associated with the oversupply that will occur in 2018, the remaining more production is expected to meet the demand of the export market.

In the future, national cement demand is expected to continue to increase, supported by property growth, as well as government-driven infrastructure development programs over the next few years. Government projects are also predicted to require a large supply of cement and will continue to increase every year, especially with the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), the Papua and West Papua Development Acceleration Unit (UP4B), and the People’s House Building and the Thousand Tower by Kemenpera.

Responding to such conditions, the Company will establish several strategic policies that can foster performance in the future. These policies, among others, always try to improve

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competitiveness by managing the cost, quality and availability of products in the market. On an ongoing basis, the Company establishes a cost management program with a cost transformation approach through CRP and CSP programs. Production chain control is the key to maintain product quality. While an effective and efficient marketing program followed by reliable and efficient distribution and transportation management is a key step in achieving the success of product availability. On the other hand, in accordance with the direction of the Board of Commissioners, the Company will continue to cooperate with BUMN Karya. This cooperation is important so that the Company can become a major cement supplier for Government infrastructure projects especially in Sumatra and parts of Java.

DEVELOPMENT OF CORPORATE GOVERNANCE IMPLEMENTATION The Board of Directors believes that the achievement of good performance can be maintained sustainably in the long term and the prospects of business will be achieved if PT Semen Padang can implement GCG principles consistently. Therefore, for the Company, the implementation of GCG is not merely an abortion of obligations, but a necessity to maintain transparency and accountability of the Company’s management.

GCG development in harmony with best practices on an ongoing and consistent basis can not only provide adequate protection and fair treatment to Shareholders and other Stakeholders, but more than that, encourages to create shareholder value maximally. Commissioners, Directors, and all employees are committed to implementing high standards in the application of GCG principles. These principles serve as a reference for responsible decision-making, avoiding conflicts of interest, performance optimization, and increased accountability.

As a manifestation of this commitment, in 2017, the Company has conducted GCG Assessment with a score of 83.70 (Good Predicate). Slightly decreased from the previous year with a score of 86.40. But still at the same level of good predicate. In addition, PT Semen Padang also assessed the implementation of risk management a very important matter, risk management can support the achievement of targets and objectives Company. In 2017, the Company also conducts risk management assessment with achievement score of 4.18 (managed category) achievement is better than 2016 of 3.95.

In 2017 the Company commissioned a national anti-corruption day warning with key speakers from the Corruption Eradication Commission (KPK). This as one of the milestones in implementing anti fraud culture to all stakeholders of the company. In 2017 the Company participated in the League of American Communications Professionals (LACP) with a Silver award.

CORPORATE SOCIAL RESPONSIBILITYImplementation of Corporate Social Responsibility (CSR) program is an awareness that the success of the business world is not only determined by good performance and operational performance, but also because of support by the community, the environment, and all other stakeholders. Therefore, with reference to GCG principles, PT Semen Padang develops CSR programs as increasing awareness of the Company’s environment, empowerment of surrounding communities and enhancing the Company’s relationship with stakeholders.

The company has developed Strategic Flagship CSR, Basinergi Mambangun Nagari, with four pillars, consisting of Semen Padang Campin Nagari, Semen Padang Pandai Nagari, Semen Padang Paduli Nagari, and Semen Padang Elok Nagari. CSR programs and activities implemented include Partnership Program, Community Development Program, and Non-PKBL CSR. The Partnership Program is aimed at improving the capability of micro small and / or small businesses and cooperatives to become strong and independent. Partnership Program in the form of revolving fund lending, monitoring, and mentoring as well as coaching through training, promotion, and marketing. Through the partnership program, the Company takes an important role as a business entity in assisting the Government to realize the welfare of the community by developing and empowering the potential of the community.

The Community Development Program aims to improve the empowerment of community (community) environmental conditions. The scope of this Community Development Program, which is education and / or training assistance, assistance for the development of public facilities and facilities, religious facilities, nature conservation, social assistance for poverty eradication, and disaster victims.

HUMAN RESOURCE MANAGEMENT Human Resource development efforts (HR) focused in line with the needs and demands of business development. The management of human resources in PT Semen Padang starts from the recruitment process so that the Company’s human resources can have higher integrity in accordance with the spirit of CHAMPS.

In order to prepare superior and competitive human resources, the Company has implemented Human Capital Master Plan (HCMP), optimizing Human Capital (HC) management in developing competence, character, and integrity. All three refer to one goal, namely the availability of highly competent HC, strong character, and integrity to support the achievement of the vision and mission of the Company.

The Company believes that the development of human resources is a necessity for the Company’s sustainability in order to develop more dynamically.

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Human resource development strategy is done by developing employees to develop in a better direction, improve competence, and employee engagement so as to produce maximum performance. By 2017, we see the ability of human resources and their management to increase significantly.

ACHIEVEMENTThroughout the year 2017, the Company achieved many achievements from leading institutions from home and abroad. These achievements, among them are :• Top 50 reports worldwide at the League of American

Communications Professionals (IACP) Award • Best of BUMN Indonesia’s Best Enterprise Award 2017 in

Basic & Chemical Industry sector• Three Stars at APEC (Asia Pacific Quality Conference) XXIII

2017• Platinum, and 1 Gold in the Indonesian Sustainable

Development Goals Award (ISDA) 2017• 2017 Indonesian Digital Popular Brand Award Cement

Product category• Proper Green from the Ministry of Environment and Forestry

RI• Green Industry Level 5 from the Ministry of Industry RI• The 1st Best of Public Information Openness (KIP)• ICA 2017 “Grand Platinum Industry & Manufacturing (total of

15 Awards)• 2017 Emerging Industry Leader in Indonesia Quality Award

(IQA)• 15 National Quality & Productivity Assemblies Award

(TKMPN) & International Quality and Productivity Conventions (IQPC)

CHANGE COMPOSITION OF DIRECTORSIn accordance with the resolution of the Shareholders outside the Company’s General Meeting of Shareholders dated July 24, 2017, the Company’s Board of Directors is stipulated. The composition of the Board of Directors is as follows:- Ir. Benny Wendry. MM. as the President Director.- Tri Hartono Rianto, SE, M.Bus, Akt, CA. as the Director of Finance- Ir. Firdaus, MM. as the Director of Operations

And in accordance with the resolutions of the Shareholders outside the General Meeting of the Company’s Shareholders dated January 26, 2018, a new Board of Directors is stipulated as follows:- Ir. Yosviandri. as the President Director.- Tri Hartono Rianto, SE, M.Bus, Akt, CA. as the Director of Finance- Ir. Firdaus, MM. as the Director of Operations

It is expected that this amendment will strengthen the good cooperation between the Board of Directors and the Board of Commissioners along with the Company’s line of business to encourage continuous improvement of the Company’s performance and future development.

APPRECIATIONAs a closing series, the Board of Directors expresses our gratitude and high appreciation to the Commissioners for all directions, advice and advice given to the Board of Directors. The same rewards are also communicated to the Shareholders, customers and business partners, for their support, trust and cooperation that have been well established so far. The Board of Directors also expressed our gratitude and appreciation to all employees who have worked with dedication and love in performing their respective duties and responsibilities and support the effort to realize the Company’s Vision, Mission and Target.

We would like to extend our gratitude to all stakeholders and other parties that we can not mention one by one, who always have the best cooperation so that PT Semen Padang can achieve the target and maintain the Company’s continuous performance growth. Hopefully in the coming years, the Company will grow and expand, and can get through the challenges and obstacles faced. Amen

Padang, 15 February 2018On behalf of theBoard of Directors of PT Semen Padang


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From left to right:Ir. Firdaus., MMOperation Director


Tri Hartono Rianto, SE, M.Bus, Akt, CA Financial Director

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CAREER PATH

Education

Ir. Yosviandri President Director

Started his career in PT Perusahaan Gas Negara (Persero) Tbk, in 1997 placed in the Construction Engineering Department, until in 2012 he was trusted as Head of

Engineering Division at PGN. In 2014, he was believed to be the third regional GM, covering Medan and Batam. In 2016 he was placed in a Subsidiary, PGAS Solution

as Director of Operations, in 2017 as President Director of PT PGAS Solution and in 2018 appointed as President Director of PT Semen Padang

Indonesia

January 26, 2018A decision outside the General Meeting of Shareholders dated January 26, 2018

50 Tahun

Padang, 30 January 1968

PadangUniversitas Andalas, PadangBachelor of Mechanical Engineering

Citizenship

Appointment

Age

Date of birth

Domicile

PROFILE OF THE BOARD OF DIRECTORS

36




CAREER PATH

Education

Tri Hartono Rianto, SE, M.Bus, Akt, CA Financial Director

He started his career at PT Semen Gresik as a Candidate for Training in Personnel Division (1995-1996), Head of Administration Team of Database Information

Communication & Technology (1996-1998), Expert Staff Accounting Section Head Section (1998-2006), Head of Section Business Development (2006-2011), General Manager of Team of Office of The CEO (2011-2013), Team Leader of Due Diligence

Thang Long Cement JSC Vietnam / TLCC (2012), Deputy II of Post Merger Integration Team Leader TLCC (2013 ), Director of Strategic Planning & Procurement of TLCC (2013-2014), Director of Marketing of TLCC (2014), Director of Ho Chi Minh Branch

of TLCC (2014), CEO of An Phu Cement JSC (2014) and appointed as the Financial Director of PT Semen Padang (2014-present).

Indonesia


46 Tahun

Jayapura, 4 September 1971

Padang

Universitas SurabayaBachelor of Accounting Economic (‘Cum Laude’)

University of Technology SydneyMaster of Accounting & Finance

(‘Academic Excellent UTS AusAid Master Degree Student’)

Universitas Andalas PadangAccounting Professional Education (‘Cum Laude’)

Ikatan Akuntan IndonesiaChartered Accountant

Citizenship

Appointment

Age

Date of birth

Domicile

37






CAREER PATH

Education

Ir. Firdaus, MM Operational Director

Maintenance Instrument III Department of Production III (1992 to 31-12-1996), Staff of Electricity Bureau Construction Project Indarung V (1997 to 1998), Bureau of

Electrical Maintenance & Instrument V (1998 to 1999), Head of Planning Department Engineering Factory (2010), Corporate Secretary (2011 to 2014) and Head of

Production Department V (2015-2016), Directors in Thang Long Cement Company (Vietnam), Production Director of PT Semen Padang (2017 - present)

Indonesia

53 Tahun

Bukittinggi, 8 Agustus 1964

Institut Teknologi Bandung, BandungBachelor of Engineering Physics

Universitas Andalas, PadangMagister of Management

Citizenship

Age

Date of birth


Padang

Appointment

Domicile

38




REPORT OF THE BOARD OF COMMISSIONER

Drs. Ahyanizzaman,AkThe President Commissioner

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The year of 2017 was marked by increasing competition in the national cement industry. On the one hand, national cement consumption grew compared to growth in 2016. This shows that physical development activities that impact on the use of cement were also better. Nevertheless, the increase in national cement production capacity was growing faster than the increase of cement consumption. This condition caused competition among cement producers in Indonesia increasingly sharp, especially price competition.

The Board of Commissioners expresses our gratitude and high appreciation to the Board of Directors and employees for their strong cooperation in realizing the common vision and the steps and seriousness in managing the Company.

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The year 2017 was marked by increasing competition in the national cement industry. On one hand, national cement consumption grew compared to growth in 2016. This shows that physical development activities that impact on the use of cement were also better. Nevertheless, the increase in national cement production capacity was growing faster than the increase of cement consumption. This condition resulted in competition among national cement producers increasingly sharp, especially price competition.

In 2017, PT Semen Padang has increased its production capacity following the operation of Indarung VI starting August 2017. The commissioner focuses on supervising the management of the company conducted by the Board of Directors on the marketing aspect of the production, in line with the effort to increase the efficiency / cost transformation. These activities are considered to be the key to the company’s success in achieving its performance targets by 2017, as in 2016 the plant operational problems have generally been well addressed.

The Commissioner also observes that competitors are very aggressive in seizing the market, especially newcomer competitors. Competitors are not only trying to penetrate the Java market as the largest cement consumer, but also have penetrated into the market of Sumatra which is the main market of the Company. According to the Commissioner’s opinion, the Company is under heavy pressure not only in expanding market but also in maintaining the existing market position, so that all production in 2017 can be sold.

In early 2017, the Board of Commissioners has requested the management to develop an appropriate initiative / action plan strategy to cope with competition, in an effort to achieve the Company’s performance targets. However, the strategic initiative / action plan has not fully provided optimal results in 2017. The cause is the heavy selling price pressure in Java market areas and some of the main market areas of companies in Sumatra.

MACRO CONDITION OF ECONOMIC AND DOMESTIC CEMENT INDUSTRY 2017On the other hand, the national economic growth of 2017 reached 5.07%, slightly better than the achievement of the year 2016 of 5.02%, but still below the target of 5.2% APBN growth and infrastructure spending budget is estimated at Rp 410.7 trillion or an increase of Rp23.7 trillion from 2017 of Rp387 trillion. Similarly, some of the construction business grew 6.79% from 5.22% in 2016, but real estate decreased from 4.69% in 2016 to 3.68% in 2017. In addition, investment growth rate (Formation Gross Fixed Capital) also showed improvement from 4.47% in 2016 to 6.15% in 2017.

The improvement in some of the economic business fields has a positive impact on the growth of national cement consumption in 2017 which reached 7.64%, an increase compared to 2014 growth of 1.04%. The increase in consumption also occurred in the area of Sumatra which is the main market of Semen Padang by 4.92%, lower than the increase in national consumption. Nevertheless, in terms of volume, the additional volume of consumption is still far below the additional volume of production capacity, resulting in excess production capacity in 2017 is large enough to reach about 40 million tons. In the condition of the over supply, the competition is increasingly sharp and price wars can not be avoided.

The Commissioner at the beginning of the year has submitted to the Board of Directors to observe the smooth operation of the plant that is capable of promoting the effectiveness of the operation. In addition, the Board of Directors is also required to strictly regulate the distribution, so that the delivery cycle is faster and the availability of cement for the customers is guaranteed. Equally important is to explore sources of efficiency in an effort to increase cost transformation, as well as strengthen synergies with Semen Indonesia Group and maintain good cooperation with suppliers, distributors and shops.

ASSESSMENT ON THE PERFORMANCE OF THE BOARD OF DIRECTORS 2017In the midst of intense competition, the Board of Commissioners sees the Board of Directors taking strategic steps in its action plan to deal with tight competition conditions. The action plan formulated at the beginning of the year is expected to reach the 2017 marketing target optimally, especially in the main market areas of Sumatra. The Commissioner realizes that with the strategic action / action plan compiled, PT Semen Padang has not been able to strengthen its position in the Java market as the largest cement user area, as this region becomes the center of the battle of national cement producers. Even the position of the Company in this region tends to continue to weaken since last few years and in 2017 sales fell 4.68% compared to 2016.

Nevertheless, the Board of Directors has sought to optimally follow up the shareholder’s mandate to improve marketshare in key market areas of Sumatra and increase exports. In 2017 sales in Sumatera reached 6.01 million tons, grew 4.73% compared to sales in 2016, but marketshare Semen Padang in Sumatra slightly decreased from 42.51% to 42.33%. This was mainly due to the increasing incentive of newcomers to break through the Sumatran market by offering competitive prices. With the pricing strategy, newcomer producers are not only able to grab market from old producers, but also increase market share. Several producers of newcomers who were able to improve marketshare in Sumatera market are Semen Merah Putih, Juisin, Conch Semen, and Siam Cement Group.

Esteemed Shareholder and Stakeholder,

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To compensate the pressures of competitors in the domestic market, the Board of Directors has sought to develop export markets in accordance with the mandate of Shareholders. In 2017 exports of cement and clinker reached 1.11 million tons, growing 127.99% compared to 2016, but still 10.74% below the target of RKAP. This is due to the low level of clinker exports, because clinker is preferred to be ground into cement. The increase in exports reached in 2017 has not been able to compensate for the decline in the domestic market, resulting in total sales in 2017 reached only 7.70 million tons, 7.80% below the RKAP, but could grow 10.40% compared to 2016. In this position, the Company’s national marketshare decreased from 10.21% in 2016 to 9.84% in 2017. Special cement sales totaled 7.71 million tons, slightly below the 7.44 million tons . The achievement of cement production in 2017 was 0.14% above the RKAP and grew 15.30% compared to the achievements in 2016.

In view of the Commissioners, the strength of price pressure from competitors will have a further impact on the achievement of financial performance, especially in decreasing revenue and bottom line. Therefore, the Board of Commissioners encourages Directors to quickly seek a breakthrough for efficiency improvement. The Board of Directors has conducted a rigorous evaluation by combing all potential costs that can be saved through the cost transformation program including in this effort the Board of Directors to renegotiate the tariff / rental of both sea and land transportation and renegotiate the price of materials from the suppliers / vendors. This cost transformation program becomes the fundamental and strategic choice of the Board of Directors, although the choice is quite heavy in its implementation.

With the full support and understanding of the entire range of the Company, the cost transformation program in 2017 is able to reach Rp. 161 billion, 42% exceeded the target commitment of Rp. 107.54 billion. Although the Board of Directors has made every effort to achieve efficiency and breakthrough export markets, the Company has not been able to achieve its profit target in 2017.

Net income (consolidated) in 2017 was recorded at Rp.498.76 billion, 31.50% below the target of RKAP of Rp. 728.08 billion and decreased 31.09% from the achievement in 2016 amounting to Rp723.81 billion. In line with that, Absolut EBITDA 2017 reached Rp. 1,177.91 billion, 18.64% below the RKAP of Rp. 1.448.73 billion and decreased 8.26% compared to the year 2016 amounted to Rp. 1,283.91 billion. So EBITDA Margin was only achieved 17.71% below the target of RKAP 22.10% and decreased from the year 2016 by 20.64%.

SUPERVISION OF IMPLEMENTATION OF STRATEGIC POLICYThe Board of Commissioners continuously evaluates and conducts supervision, advises and advises the Directors on the preparation of strategic policies in preparing the position of PT Semen Padang to face fundamental changes in the cement business in the future. The Commissioner from the beginning asked the Board of Directors to make strategic policy not only give short-term impact, but rather to policies that have long-term impact for the Company. Since 2016 the Board of Commissioners has requested the Board of Directors to develop Blue Print Marketing, integrated with other Company’s business activity development plans in the future. Blue print not only examines and designs strategic aspects related to marketing and distribution, but also conducts comprehensive reviews and planning on strategic aspects.

Since the arrangement of the blue print will be related to the Holding policy, the Board of Commissioners encourages the Board of Directors to always communicate and coordinate with Holding in the preparation of the blueprint in line with Holding’s long-term strategic policy.

Specifically related to the strategic policies of the Board of Directors in the construction of the new Indarung VI plant, which started from 2014 until commercial operation in August 2017, is closely watched by the Commissioners. Supervision, recommendation, opinion and appeals are not only conducted by the Board of Commissioners through regular meetings with the Board of Directors and Project Team, but also often the Board of Commissioners conducts field reviews to provide advice, opinions and directions directly to those responsible for field work, breakthrough in order to accelerate the completion of the project. Although the project completion was delayed from its schedule, the Commissioner still appreciated that since its commercial operation until December 2017, Indarung VI’s factory can produce well and able to exceed its target. However, during commercial operation from August to December 2017, there were technical problems in base frame / mill stand in raw mill area. The technical problems have been fixed by the contractor, so that the Indarung VI plant can operate again. Since all such problems are due to vendor / manufacturing errors during manufacturing, all repairs and replacements with new equipment are the full responsibility of the contractor / vendor. It is expected that by 2018 new replacement equipment will reach Indarung.

The Board of Commissioners has also encouraged the Board of Directors to implement preparatory steps related to technical, financial, administrative and legal documents, so that the closing process of Indarung VI Project can run smoothly. Meanwhile, the Board of Commissioners has recommended to the Board of Directors to prepare human capital seriously, so that Indarung VI

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Plant can become the center of excellence in the management of factory in the environment of Semen Indonesia Group in the future.

AVAILABILITY OF RAW MATERIALS AND FUELCommissioners pay particular attention to the availability of raw materials and coal as long as 2017, because it is an important component in the production process. The problems that occur in the production chain in 2017 were the low quality coal and high TM, rawmix limitations and low quality gypsum. The Board of Commissioners had advised the Board of Directors to re-evaluate SOPs related to the procurement of materials for plant purposes, especially coal.

The Commissioner also asks the Board of Directors to evaluate the performance of coal vendors, particularly those with mines and / or vendors who work with the mine owners and are able to supply the coal as required by the plant.

The Board of Commissioners considers that the Board of Directors has made the best effort to obtain coal as per the requirements of the factory, by seeking additional sources of coal both in Sumatra and outside of Sumatra. Meanwhile, to overcome the limitations of rawmix, the Board of Directors has also done the leasing and addition of dump trucks as well as the operator’s personnel in the mine.

RELATIONSHIP WITH SUBSIDIARIES AND SUPPORTING INSTITUTIONSSubsidiaries and Supporting Institutions (APLP) have an important contribution in supporting PT Semen Padang’s business activities. If not supervised and managed properly and professionally APLP activities, it is possible that the APLP is expected to contribute positively, can be a new burden for the Company.

In 2017 Commissioners had suggested to the Board of Directors to conduct a review / evaluation of business conditions APLP. The review was intended to find out the true APLP and APLP business prospects in the future. The Board of Directors has taken a rapid step by reviewing the two APLPs by 2017. The Commissioner hopes that the results of the review / evaluation can be a reference / guidance for the Board of Directors in giving advice to APLP business development efforts in the future, thus APLP can make a better contribution to the Company.

BUSINESS PROSPECTS AND CHALLENGES 2018In the year 2018 there is a fundamental change in the activities of PT Semen Padang. With the consolidation of marketing and distribution activities at Holding level, the Board of Directors’ concentration on company management in 2018 is more directed to production control and cost management as well as supporting Holding marketing.

The Board of Commissioners believes that the Board of Directors has developed a strategic action plan to anticipate the policy changes and business development of the future cement by always coordinating with Holding. The thing that the Commissioner still needs to get attention is the security of raw material supply and coal supply. Because this is directly related to the stability of the operation that led to the optimal level of efficiency.

The more entrenched the new players, making the competition tighter in the national cement market. Price competition will continue throughout 2018, as producers will continue to increase domestic market share. On the other hand the paradigm of domestic consumers has also changed and no longer survive with loyalty and emotional connection. Consumers are already leading to manufacturers with more competitive price offerings.

Recognizing that competition will become more intense, the main challenge of the Board of Directors is to maintain a smooth operation, an increasingly effective production process, and maintain product quality stability. If this can be achieved, it will be able to encourage increased effectiveness and efficiency as well as will help accelerate Cement Indonesia in making sales decisions on marketing areas allocated to Company / Opco products. The Commissioner has suggested to the Board of Directors that the action plan in cost transformation is not a situational action plan but an action plan that leads to the achievement of a permanent Company’s efficiency over the long term.

Commissioners always remind the Board of Directors that cooperation with SOE Works that has been running well since 2016, needs to be improved, not only in 2018 but also in the future. The new cooperation focused on the supply of cement for infrastructure projects especially in Sumatra needs to be developed on the supply for non-infrastructure projects such as other construction projects undertaken by BUMN Karya.On the other hand, the struggle for export market will also be tighter, due to the excessive amount of domestic production that will be pushed into the foreign market. While the potential of overseas market is not only a target of domestic producers but also foreign cement producers. The Commissioner believes that a strong synergy between the Company and Cement Indonesia International will provide maximum results in the benefit of every overseas market opportunity.

ORGANIzATIONAL STRUCTUREThrough the policy of Semen Indonesia Holding, at the end of 2017, a revision of the Company’s organizational structure would be implemented effective January 1, 2018. The enhancement is to attract marketing and distribution activities to the organization of Semen Indonesia Holding. Thus all marketing and distribution activities of the company / Opco are centralized to the organization of Cement Indonesia Holding.

The Commissioner believes that the centralization of marketing

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and distribution organizations under one Holding command is expected to strengthen synergies, accelerate integrated decision-making processes and strengthen Holding’s position in cement business battles in the face of competitors in both domestic and export markets. The marketing and distribution synergies are ultimately expected to provide better benefits not only to the Company / Opco but also to Holding. With the new organizational structure is expected also the management and HR Company / Opco able to focus more and move more agile again in managing the Company’s business activities in a situation of increasingly keen competition. On the internal side of the company itself, in line with changes in the various business processes must be immediately accompanied by alignment on the company’s internal procedures in accordance with the principles of good corporate governance

APPLICATION OF CORPORATE GOVERNANCEIn the management of the company, PT Semen Padang has implemented the principles of Good Corporate Governance (GCG). The impact of GCG implementation will be felt in the long run in terms of increasing value and image as a well-managed company.

To ensure the quality of GCG implementation, PT Sinergi Daya Prima is an External Auditor who has conducted an assessment of GCG implementation. By 2017 the GCG Index reached a score of 83.70 (scale 100). This means that the implementation of GCG in the Company’s governance shows good results. The Board of Commissioners acknowledges the efforts of the Board of Directors who continuously strive to improve the implementation of GCG principles.

IMPLEMENTATION OF SUBSEQUENT TASK AND GIVING ADVICE TO THE BOARD OF DIRECTORSIn accordance with the Company’s Articles of Association, the procedures for giving direction, advice and advice to the Board of Directors are conducted in the Meeting of Commissioners, Joint Meeting of Commissioners with the Board of Directors, and through the holding of the General Meeting of Shareholders. In 2017, the Company has convened an Annual General Meeting of Shareholders (AGMS) which endorsed / approved the Company’s Annual Report for the fiscal year 2016, the 2016 Fiscal Year Financial Report, the 2016 book of PKBL report including, Report on the Implementation of Commissioners Oversight Task in 2016.

The Commissioners have also conducted 42 meetings consisting of 13 internal meetings of the Board of Commissioners and 29 meetings of Commissioners and Directors of the respective 12-

year plan by 2017. Providing guidance, advice and advice to the Board of Directors in the meetings is not only related to the development of operational conditions and financial condition of the company, but also discussed the things that affect the smooth operation, such as procurement, training of human resources, especially factory operators, the development of strategic projects such as Indarung VI project. The Board of Commissioners also provides recommendation / advisement to solve the problems faced by the Company as long as it remains under the authority of the Commissioner and advises the Board of Directors to submit to Shareholders if included in the territory under the authority of Shareholders.

DEVELOPMENT OF HUMAN RESOURCE COMPETENCY With regard to the development of the Human Resources Competency, the Commissioner sees this as an important matter. This HR competence must be built in accordance with the tasks carried, the level and development for the future. Commissioners provide direction and advice to the Board of Directors regarding the placement or determination of the management staff in accordance with the needs.

Commissioners also provide direction at the time of HR recruitment planning PT Semen Padang both about the quantity and quality. Commissioners provide specific direction for the process of regenerating human resources in key areas of the company’s business processes so that the transition process between generations goes well. The Board of Commissioners supports the Board of Directors to develop human resource competencies by utilizing the internal resources of the company, from fellow OPCO in the SMI group as well as from external parties. Hope Commissioners, through competent human resources in the field, the company’s sustainability for the future can be more secure amid the increasingly heavy and dynamic challenges. PERFORMANCE EVALUATION OF COMMITTEES COMMITTEESIn performing its supervisory and advisory duties and ensuring that the Company has adopted the principles of good governance, the Commissioner is assisted by the Audit Committee, the Legal and Environment Development Committee. Meanwhile, the remuneration committee function is carried out by the organ of Commissioner of PT Semen Indonesia (Persero) Tbk. These committees have performed their respective roles and responsibilities well in accordance with their respective charter so as to have been able to provide positive support to the execution of duties, roles and responsibilities of the Commissioner.

AUDIT COMMITTEEThe Audit Committee is the organ of supervision of the Commissioner with the primary duty of assisting the Commissioner in ensuring that financial reporting meets the

44




requirements according to the applicable standards. The Audit Committee also oversees and ensures that internal auditors have conducted oversight of effective internal controls and monitored follow-up on significant findings. The Committee also exercises supervision to allow external auditors to conduct audits of financial statements in accordance with audit standards established by the Indonesian Institute of Public Accountants so that the integrity of financial reporting is well maintained. In addition, the Audit Committee also assists the Commissioner in supervising the operations of PT Semen Padang.

In 2017, the Audit Committee has supervised related matters, inter alia, with (a) financial and performance reporting, (b) internal control systems (c) plant operations, distribution and transportation, (d) implementation of capex, (e) ) implementation of cost transformation, CRP and CSP, (f) monitoring of GCG principles implementation and risk management, (g) management of bulk goods, especially coal, and (h) monitoring the progress of the construction of Indarung VI Plant.

In accordance with the assignment to him, the Audit Committee has also conducted a selection process and made recommendations for the assignment of the Public Accounting Firm (KAP) to the Commissioners to conduct a general audit of the Company’s Consolidated Financial Statements and PKBL and the implementation of the audit agree procedures (AUP) against PKBL year 2017 and audit of Indarung VI project. The Audit Committee has supervised the audit to ensure that the auditor has carried out its work independently and is in compliance with the applicable audit standards. THE LEGAL AND COMMUNITY DEVELOPMENT COMMITTEEThe Legal and Community Development Committee is responsible for assisting the Commissioner in the field of legal and environmental aspects supervision, among others: (a) monitoring the compliance of PT Semen Padang’s ranks to other laws and regulations internally in the Company, (b) fostering good relations with the surrounding community , Local Government, community leaders and other external stakeholders, (c) conducting monitoring, review / assessment and recommendations from legal aspects of coal procurement, strategic projects of the company such as Indarung VI Project, Lampung PP, PP Bengkulu, the subsidiary of PT Semen Padang and PT Pelindo I, the use of chevron waste, environmental problems at CM Dumai, the purchase of cement, (d) reviewing the policies and implementation of risk management in coordination with the Audit Committee and (e) monitoring, reviewing and providing recommendations legal aspects of the company’s asset issues land in relation to indigenous peoples within the enterprise; (f) carry out a special assignment from the Commissioner to evaluate the problems of PT Igasar in relation to the legal aspects.

IMPLEMENTATION OF RISK MANAGEMENTPT Semen Padang has been implementing risk management consistently since it was first developed in 2014. The Commissioner appreciates these efforts and is expected to have an impact on increasing the value of the company in the long term. Directors need to continuously monitor potential risks and formulate and implement risk mitigation as an integral part of risk management.

To monitor the implementation of this risk management, the Company has conducted an evaluation by the supervision of the BPKP team of West Sumatra. In the evaluation, the team used a score card issued by BPKP that refers to Enterprise Risk Management - ISO 31000. From the results of this evaluation it is known that the Risk Maturity Level Company got a score of 4.18, is in level 4 (‘MANAGED’) from 5 levels. This achievement increased from 2016 to 3.95. The Commissioner appreciates this achievement. In the future, this effort should be improved so that it can reach a higher level that is level 5 (Optimized).

CORPORATE SOCIAL RESPONSIBILITYCorporate Social Responsibility (CSR) program through CSR program and Partnership and Community Development Program (PKBL). The Company has sought to demonstrate its active role in realizing its commitment to the implementation of the mandate of Law no. 40 of 2007 on Limited Liability Company. The Company has also utilized the services of an independent auditor to audit the financial reporting of the Collective Labor Agreement (PKBL) as well as to review the Manager’s compliance with applicable laws and regulations. Meanwhile, financial reporting audits of expenditures for CSR are integrated into the annual audit of the Company’s financial statements.

Commissioners always give attention and advice to the Board of Directors to run the CSR and PKBL programs more targeted so that people feel the benefits optimally. The Commissioner also commissioned the Audit Committee and the Legal and Community Development Committee to monitor the implementation of the CSR and PKBL programs. In 2017, the Company has disbursed loan funds for the Partnership program disbursement of Rp.8.22 billion, 85.6% of RKA 2017 amounting to Rp.9.6 billion and 89.64% compared to the realization in 2017 amounting to Rp.9 , 17 billion. Meanwhile, the distribution of Bina Lingkungan funds in 2017 amounting to Rp.12.96 billion increased compared to the realization in 2016 of Rp.12 billion.

COMPANY ENVIRONMENTAL MANAGEMENTSome programs aimed at reducing factory dust emissions from 2015 to 2017 have been able to reduce the average factory dust emission rate by 2017 to 23.21 mg / Nm3. The dust emission levels of all plants from Indarung II to VI were well below the standard of Air Quality Standard based on LHK No. 19 Year 2017 on Standard Quality of Emissions for Business and or

45






APPRECIATIONFinally, the Board of Commissioners would like to express their gratitude and high appreciation to the Board of Directors and employees for their strong cooperation in realizing the common vision and the steps and seriousness in managing PT Semen Padang. with good and professional throughout 2017. Similarly, to Shareholders and stakeholders such as Central Government, Local Government, public figures and other parties who have contributed and supported significantly in the effort to achieve performance in 2017.

Commissioners expect the good and harmonious relationship with all stakeholders that have been running for this, need to be continued even improved again, so that the company’s position stronger / stronger in the face of increasingly keen competition. Thus the implementation of the Company’s performance targets of 2018 can be realized properly. Hopefully PT Semen Padang grows and grows better and is in a stronger and stronger position in the national and global cement industryPadang, 15 Februari 2018

Atas Nama KomisarisPT Semen Padang

Drs. Ahyanizzaman, Ak The President Commissioner

Cement Industry Activities Appendix I (For Cement Industries operating before December 31, 1990 ie Indarung II, III, IVB and IVC, particle total emission standard = 75 mg / Nm3. January 1, 1990 until December 31, 2013 is Indarung V, the total particle emission standard of 70 mg / Nm3.For the Cement Industry began operation January 1, 2014 that is Indarung VI, particle total emissions standard = 60 mg / Nm3.

The Board of Commissioners appreciates the Board of Directors who has continuously implemented upgrading and recovery of machine tools to meet internal PT Semen Padang’s standard of dust emission level below 50 mg / Nm3.

By 2017 the Company has obtained green PROPER status from the Government. The Board of Commissioners appreciated the Board of Directors and its staff for this achievement and it is expected that this achievement should continue to be a concern even at a time when this achievement can be upgraded to the highest level of gold PROPER. The Board of Commissioners also encourages the Board of Directors to seek appropriate new technologies to control factory dust and exhaust, continuously manage the green environment well in factories and strict control of machinery and equipment operations.

CHANGES IN BOARD OF COMMISSIONERS MEMBERSHIP COMPOSITION In 2017 there has been a General Meeting of Shareholders outside the Meeting to determine the Company’s management. In April 2017, Prof. Dr. Saldi Isra, SH, MPA shall serve as the President Commissioner because he was appointed as a Constitutional Court Judge.In accordance with the resolutions of the Shareholders outside the Company’s General Meeting of Shareholders dated July 24, 2017, a new composition of the Company’s Commissioners was established. These Commissioners were changed :- Ir Suharto, MM as Plt. The President Commissioner.- Prof. Eddy R. Rasyid, PhD, CA, as Commissioner.- Wiztian Yutri, SH as Commissioner.

And in accordance with the resolutions of the Shareholders outside the General Meeting of the Company’s Shareholders dated January 26, 2018, the Company’s new Board of Commissioners was stipulated.Commissioners changed to the following:- Drs. Ahyanizzaman, AK. as the President Commissioner.- Prof. Dr. H. Werry Darta Taifur SE, MA as Commissioner.- Drs. Khairul Jasmi, MM as Commissioner

It is expected that this amendment will strengthen the good cooperation between the Board of Commissioners and the Board of Directors, as well as the Company’s line of business to encourage sustainable enterprise performance improvement and development efforts in the future.

46




From left to right:Drs. Khairul Jasmi, MMMember of the Board of Commissioners

Drs. Ahyanizzaman, AkThe main commissioner

Prof. Dr. H. Werry Darta Taifur, SE, MA Member of the Board of Commissioners

47






CAREER PATH

Education

Drs. Ahyanizzaman, Ak President Commissioner

He started his career in PT Semen Gresik and has served as Head of Accounting Department (2002), Head of Accounting Division (2004-2006), Head of Finance

Division (2006-2010), Head of Financial Accounting Division (2006-2007), Head of Finance and Accounting Division (2010-2011)

Indonesia


52 Tahun

Gresik, 6 Juli 1966

JakartaUniversitas Airlangga, Surabaya Economic Accounting

Citizenship

Appointment

Age

Date of birth

Domicile

PROFILE OF COMMISSIONER

48




CAREER PATH

Education

Prof. Dr. H. Werry Darta Taifur SE, Commissioner

Indonesian Economist and Chairman of the Association of Indonesian Economic Bachelor (ISEI) West Sumatra. He was inaugurated as Rector of Unand on November

21, 2011 Before becoming rector, he was the Vice Rector II of Unand and had been The Secretary of the Center for Population Studies Unand. After graduating from

Unand Faculty of Economics in 1985, he went to Flinders University, Adelaide, Australia for an undergraduate program until graduation in 1991. In 2005, he obtained

his PhD from Malaya University, Kuala Lumpur, Malaysia.

Indonesia


58 Tahun

Lima Puluh Kota, 19 November 1960

PadangUniversitas AndalasBachelor of Economics and Development Studies

Flinders University Human Resource Development

Universitas MalayaFaculty of Economics and Administration

Citizenship

Appointment

Age

Date of birth

Domicile

Drs. Khairul Jasmi, MMCommissioner

49






CAREER PATH

Education

Drs. Khairul Jasmi, MMCommissioner

Indonesian writers and journalists. He is known as the West Sumatra press figure, who is also the Chief Editor of the Singgalang Daily, a newspaper published in Padang,

West Sumatra, and is the largest newspaper in the region. On July 18, 2012, Khairul was appointed Vice Chairman of the Pemred Forum (Indonesian Editor’s Forum).

Indonesia


55 Tahun

Tanah Datar, 15 Februari 1963

PadangUniversitas Negeri Padang Bachelor of Economic

Citizenship

Appointment

Age

Date of birth

Domicile

50




INFORMATION ON CONCURRENT POSITIONS OF THE BOARD OF COMMISSIONERSThere are multiple positions held by several members of the Board of Commissioners with the following information:

Prof. Eddy R Rasyid, PhD, CA, served as Professor of Accounting Studies at Andalas University.

STATEMENT OF INDEPENDENCE OF

INDEPENDENT COMMISSIONERIn line with the implementation of good GCG practice, the Commissioner has signed an integrity pact and submitted the State Administration’s Liabilities Report (LHKPN) as well as the Personal Taxes (LP2P) Report as a commitment to avoid conflict of interest transactions. All Independent Commissioners act independently and freely intervene from any party.

INFORMATION ON CONCURRENT POSITIONS OF THE DIRECTORAll members of the Board of Directors do not have dual positions of Directors and Commissioners of similar companies. Members of the Board of Directors are also committed to not concurrently occupying positions prohibited by the applicable laws and regulations concerning the implementation of GCG.

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Photo title: Upright Pillar Production

Photo location:Indarung VI

Photo caption:Vertical mill Indarung VI is one of the main tool that serves to grind cement raw materials ie limestone, silica and clay into

raw mix. This tool comes from FL Smidth.








COMPANYPROFILE

In achieving superior performance, PT Semen Padang always run its mission to continue to produce and trade cement and other related products oriented to customer satisfaction. The company believes Semen Padang can be one of the best national cement companies.







Photo title:This is us

Photo location:Headquarter Office

Photo caption:We are based in the village of Indarung, The District of Lubuk

Kilangan, the city of Padang, West Sumatra. HighwayIndarung Padang 25237.

Having 1625 employees and operated the headquarters, factory, packing plant, to representative offices.


54








Company NamePT Semen Padang

Line BusinessManufacturers and Trading of Cement

Company StatusSubsidiaries of State-Owned Enterprises (SOEs)

Legal Basis of EstablishmentDeed of Establishment no. 5 dated July 4, 1972, drawn up before Notary Julian Nimrod Siregar, SH Notary in Jakarta and amended by Deed of Amendment no. 117 dated December 28, 2012, drawn up before Notary Kharina, SH Notary in Jakarta and obtained the approval of Minister of Justice of the Republic of Indonesia No. AHU-AH.01.10-10399 dated March 21, 2013 and has been published in the State Gazette of the Republic of Indonesia No. 24 dated March 25, 2014

SHAREHOLDING• PT Semen Indonesia (Persero) Tbk amounted to 99.99% • Koperasi Keluarga Besar Semen Padang amounted 0,01%

Date of Establishment• Establishment of Factory March 18, 1910• Nationalization of the Dutch Government July 5, 1958• Establishment of Legal Entity - Limited Liability Company

February 10, 1973

Authorized CapitalRp500.000.000.000 (Five hundred billion Rupiah)

PLACED AND FULLY PAID-UP CAPITALRp332.000.001.000 (Three hundred thirty two billion one thousand Rupiah)

CORPORATE IDENTITY

Photo title:Us and the Environment

Photo location:3rd floor Head Office

Photo caption:We are committed to being an

environmentally sound company.

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Production Capacity8.900.000 ton / yearPabrik Indarung II : 720.000 ton / yearPabrik Indarung III : 860.000 ton / yearPabrik Indarung IV : 1.920.000 ton / yearPabrik Indarung V : 3.000.000 ton/yearPabrik Indarung VI : 1.500.000 ton/yearCement Mill Dumai : 900.000 ton/year

Production TypeI. Ordinary Portland Cement (OPC), terdiri dari: Portland

Cement Type I, Portland Cement Type II, Portland Cement Type III, Portland Cement Type V, dan Oil Well Cement (OWC)

II. Non Ordinary Portland Cement (Non OPC), terdiri dari: Portland Pozzolan Cement (PPC) & Portland Composite Cement (PCC).

Number of Employees1.625 person

Head OfficeJl. Raya Indarung, Padang 25237, Sumatera BaratTel. : (0751) 815 250Fax. : (0751) 815 590

Websitewww.semenpadang.co.id

Customer MerviceTel. 0 800 1888 222

Social MediaEmail : [email protected] : PT SEMEN PADANGInstagram : @semenpadangTwitter : @semenpadang1910

Total Assets 2017Rp.10,14 triliun

1

2

3

4

1. Circle Circle Symbols = World Balls, the institutional

identity is the main element of the symbol that must be maintained and can be interpreted as: “The ideals of PT Semen Padang contribute to Building the World”

2. Gonjong Is the roof of the Adat Minang Gonjong House, can

also be interpreted as a crown.

3. Head of Buffalo Minangkabau / West Sumatra symbol. PT Semen Padang based on the Minang

Philosophy which is consistently in the forefront to evolve globally.

4. Sejak 1910 Adapted to the year of 1910, handwritten letters

were chosen.








COMPANY OBJECTIVES AND STRATEGIES

Finance& Markets

Customer Focus

Focuson Power

Work

Effectiveness of Products

and Processes

Leadership andGovernance

EBITDA

Gross Income

External Customer

Satisfaction Index

Knowledge Management

Point

GCG Index

Environmental PROPER

% Physical Project

Progress

Production Growth

% Talent Box

Sales VolumeCement

National Market Share

Rp1.439 miliar 10,71%

7,01 Triliun

8.359.000 ton

89%

20%

1.080 poin

88

GREEN PROPER

100%

15,5%

OBJECTIVES

Company’s Goals








01

02

03 05

06

07

0804

Increased capacity, quality, efficiency, production effectiveness and marketing of raw material, fuel, and energy supply security

Optimization of CAPEX Management

Cost optimization Increased revenue growth

Improved environmental performance, SICC implementation, human capital readiness, high performing human capital system, corporate transformation and downstream business empowerment by empowering APLP

Optimization of capital structure, optimization of liquidity management

Continuous management of GRC & ICT

Mastering & securing distribution channels, increasing synergies with SMIG, increasing customer loyalty, expanding product distribution network, guaranteeing product availability in the market to keep existing market share

Manajemen KapasitasCapacity Management

STRATEGI

0102

03

0405

06

07

08

Capacity and Quality Man-agement

Management ofCapex

Managementof Cost

ManagementBrand

Increased Competitive Advantage

Management ofcash

ManagementIncome

ManagementIntegrated GRC

Corporate Strategy

58








HISTORY OF PT SEMEN PADANG

1910PT Semen Padang was established on March 18, 1910 under the name NV Nederlandsch Indische Portland Cement Maatschappij (NV NIPCM) which is the first cement factory in Indonesia and Southeast Asia.

On July 5, 1958 the Company was nationalized by the Government of the Republic of Indonesia from

the Dutch Government. Furthermore, the factory transformed the plant capacity development from

wet process technology into a dry process with the construction of Indarung II, III, and IV factories.

1958

1973On 10 February

1973 Establishment of Legal Entity - Limited Liability

Company.

1995The government transferred its share ownership in PT Semen Padang to PT Semen Gresik (Persero) Tbk together with the development of Indarung V factory.

This year PT Semen Gresik (Persero) Tbk was renamed PT Semen Indonesia Tbk based on the EGM decision dated December 20, 2012 in Jakarta, with 99.99% share ownership and Koperasi Keluarga Besar Semen Padang with a share of 0 , 01%. PT Semen Indonesia (Persero), Tbk owns majority shares by the Government of the Republic of Indonesia of 51.01% and public shareholders of 48.99%.

2012In 2017, the new factory of Indarung VI has been operating with a capacity of 1.5 million

tons.

2017

59








THE DEVELOPMENT OF PT SEMEN PADANG’S LOGO

60








BRIEF INFORMATION ON THE CHANGE

OF COMPANY’S NAME

COMPANY’S VISION, MISSION AND STRUCTURE

Company's Name Change of Name Effective Data

NV Nederlandsch Indische Portland Cement Maatschappij (NV NIPCM)

Asano Cement August 1942

Asano Cement Kilang Semen Indarung September 1945

Kilang Semen Indarung Padang Portland Cement Maatschappij (PPCM)

April 8, 1948

Padang Portland Cement Maatschappij (PPCM)

Perusahaan Negara Semen Padang 1961

Perusahaan Negara Semen Padang PT Semen Padang 1971

In order to support the synergy and achievement of the vision and mission of Semen Indonesia Group as well as to realize the determination to become a powerful national cement company and able to answer global competition, PT Semen Padang formulates Vision, Mission and commitment to implement The CHAMPS Corporate Culture in every point of way and step of all personnel in the company.

PT Semen Padang sets out the company’s vision, mission and values and ensures that the company has been professionally managed by applying the principles of good corporate governance. The company’s Vision and Mission determination has been studied in depth in line with the Company’s increasingly competitive Business Development.

Approval of Vision and Mission of the Company are stipulated in Directors Decree No. 292 / SKD / PUSMJ / 07.2012 on Legalization of Vision, Mission, Meaning, Motto, Culture, and Company Logo.

Vision established by the company as a guide for Company Insan in achieving company goals. The company vision describes the company’s focus to continuously improve the company’s performance in order to become a company engaged in the production and trade of cement with reliable, superior and highly competitive performance and managed in accordance with good governance practices. The company’s vision also shows the company’s commitment to environmental conservation in which the Company carries out its business activities.

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“BECOMING A RELIABLE AND SUPERIOR CEMENT COMPANY WITH ENVIRONMENTAL INSIGHT IN WESTERN INDONESIA AND SOUTHEAST ASIA”

FIRST COMPANY The company’s business scope covers the production and sale of cement and other products and services related to the cement industry, namely: Engineering, cement equipment, manufacturing of cement equipment, cement raw materials, fuels, downstream cement products.

ANDAL Able to meet customer needs consistently both in terms of quantity and quality.

SUPERIOR Dominating the main market of Sumatra Island.

ENVIRONMENTAL ENVIRONMENT Environmentally and socially-friendly and complying with applicable laws and regulations.

IN WESTERN INDONESIA AND SOUTHEAST ASIA Market development areas and Company business forward.

VISION

1. Producing and trading cement as well as other related products oriented to customer satisfaction.

Meeting the needs and providing satisfaction which exceeds customer expectation through cement and other relevant products and service s manufacturing and trading.

2. Developing competent, professional and high integrity human resources. Developing the human capital capability of the company to master high competency act and

conduct professionally and has high integrity .

3. Improve the engineering capability to develop the national cement industry. The company develops the engineering capabilities to actively participate in National cement

industry development.

4. Empowering, developing and synergizing company resources with environmental insight.

The company is committed to preserving the environment and promoting the social environment by empowering and synergizing the company’s resources.

5. Improving the value of the company in a sustainable manner and providing the best to the stakeholders.

The Company always innovates to improve productivity and operational efficiency and develop its business in order to give optimal contribution to stakeholders.

MISION

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1. Compete with a clear & Synergized Vision

Each individual of PT Semen Padang understands and fully supports the company’s vision that is in line with the vision of Semen Indonesia Group (SMIG) to enhance the competitiveness of the company.

2. Having High Spirit for Continuous Learning

Each individual of PT Semen Padang has a high spirit to continuously improve the competency competence, as an effort in adapting occuring changes.

3. Act with high accountability Each individual of PT Semen Padang always

implements the mandated duties properly and dares to be responsible for all the actions taken.

4. Meet customer expectations Each individual of PT Semen Padang Each

Semen Padang individual has the commitment to implement his duties with orientation to complying with requirements and exceeding customer expectation.

5. Perform business ethics with high integrity

Every individual of PT Semen Padang always ensure the actions taken do not violate applicable ethics and norms and high integrity.

6. Strengthen the Teamwork Each individual of PT Semen Padang always

strengthens teamwork with colleagues and other related parties in order to achieve the best results for the Company.

CULTURE MOTTOWe have done before others think about Which means that Semen Padang has a passion in innovating and quickly to seize the opportunity to be the best.

MeAnInGgiving the best Every individual in Semen Padang always works with the best ability and high motivation in accordance with each task assigned by the Company.

to build Employees of Semen Padang collaboratively provide solutions exceeding “Customers expectations” and contribute to the development of civilization on earth.

a better life For the sake of a better human life from time to time.

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STRUCTURE AND COMPOSITION OF STOCK OWNERSHIP

51,01% 48,99%

99,99%0,01%

Goverment RI Public

PT Semen Indonesia

(Persero), Tbk

Koperasi Karyawan PT Semen

Padang

Semen Padang as part of Semen Indonesia Group (SMIG). Where PT Semen Indonesia (Persero) Tbk as the majority shareholder, while the composition of share ownership as follows:

PT Semen Gresik PT Semen Tonasa Thang Long Cement Company

85% 80%PT Sepatim Batamtama

PT Bima Sepaja Abadi

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SHARE OWNERSHIP COMPOSITION

Name and percentage of shareholdersShareeholder

Share

Shares Nominal (in Rupiah) Percentage

PT Semen Indonesia (Persero) Tbk 332.000.000 332.000.000.000 99,99%

Koperasi Keluarga Besar Semen Padang 1 1.000 0,01%

Total 332.000.001 332.000.001.000 100,00%

Stock Ownership of Commissioners and DirectorsUntil the end of 2017, Commissioners and Directors do not own shares in Semen Padang.

Number of shareholders and percentage of ownership by classificationClassification Shares Nominal (in Rupiah) Percentage

Ownership of Local Institutions 332.000.001 332.000.001.000 100,00%

Ownership of Foreign Institutions – – –

Ownership of Local Individuals – – –

Ownership of Foreign Individuals – – –

STOCK LISTING CHRONOLOGYUntil 2017, PT Semen Padang did not register shares on the Stock Exchange, because the Company is a subsidiary of PT Semen Indonesia (Persero) Tbk. So there is no information related to chronological record, the type of corporate action (corporate action), changes in the number of shares, or the name of the exchange.

CHRONOLOGY OF OTHER SECURITIES LISTINGUntil 2017, PT Semen Padang has not listed other securities on the Stock Exchange, so there is no information related to the chronological record, the type of corporate action, the change in the amount of securities, the name of the stock or the securities rating.

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LIST OF

SUBSIDIARIES AND

AFFILIATEDName and Address

CompanyOperation StatusCompany Entity Work Unit

ShareholdingSemen Padang Business Fields

Nominal (Rp) %

PT Sepatim Batamtama November 2, 1991 Operate 5.950.000.000 85% • Semen Cementing Services• Cement Sales• General trading

PT Bima Sepaja Abadi September 17, 1993

Operate 1.600.000.000 80% • Cement service• Cement Sales• General trading• Transportation• Forwarding

PT Igasar September 12, 1974

Operate 300.000.000 12% • Distribution of cement• Transportation and heavy equipment• General trading• Construction• Building Materials Industry

PT Sumatera Utara Perkasa Semen

April 30, 1982 Operate 402.000.000 10% • Semen Cementing Services

PROFESSIONAL INSTITUTION SUPPORTING THE COMPANY

Professional Institution Name Address

Public Accounting Office

KAP Osman Bing Satrio & Eny(Deloitte)

The Plaza Office Tower, Lt 32 Jl. MH. Thamrin Kav 28 - 30 Jakarta 10350, Indonesia, Tel: +62 21 29923100,Fax: +62 21 29928200, 29928300, www.deloitte.com

Law Consultant Handra Darwin & Rekan Dwima Plaza - I, 4th Floor Room 407 Jl. Jend. A. Yani Kav.67 Jakarta - 10510, Telp. 021 - 4206542, Up. Bpk. HandraDeddy Hasan, SH

Nanda Oetama, SH, MH Komplek Rindang Alam No.11 RT 02/RW 03, Koto Luar, Pauh Padang

Ilhamdi Taufik, SH, MH Jl. Fisiko IV, Blok B II No. 06, Komplek Universitas Andalas, Ulu Gadut, Padang

Prof. Dr. Ismansyah, SH, MH Komp. Perumahan Dosen Blok D1/04/02, Ulu Gadut,Padang

DR. Sukanda Husin, SH, LLM Komp. Pola Mas I Blok J No.1 Padang

DR. Ferdi, SH, MH Jl. Jati Adabiah Komplek DPRD No.15 Padang

Notary/Land Deed Officer

Dasrizal, SH Jl. Padang Pasir X No.1, Kel. Padang Pasir, PadangTelp.0751 - 31011

Harti Virgo Putri, SH Jl. Proklamasi No. 24 Padang Telp.0751 - 22883

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SUBSIDIARY PERFORMANCE AT A GLANCE

PT Sepatim Batamtama

PT Sepatim Batamtama (hereinafter abbreviated to Sepatim) was established on November 2, 1991 by notarial deed of Ny. Siti Marjami Supangat SH based in Jakarta. Sepatim is basically a joint venture between PT Semen Padang and PT Timsco Development Corporation (TDC) with a total capital participation of Rp 7 billion, with the following proportion of ownership; PT Semen Padang by 85% (Rp5.95 billion) and the remaining 15% is PT TDC (Rp1.05 billion). The establishment of the Company has been obtained approval by the Minister of Justice of the Republic of Indonesia through its Decision Letter no. C2-7377.HT.01.01 of 1992 dated September 5, 1992.

In further developments, on October 31, 2002, there was a transfer of ownership from TDC to PT Semen Padang Pension Fund (through the deed of share sale No. 186) before Notary Arry Supratno SH. based in Jakarta. Based on the agreement between PT Semen Padang and PT TDC (as authorized by notarial deed No. 28 dated February 12, 2002 by notary Arry Supratno SH), it was agreed that the Company’s share / transfer of 15% of total shares issued by The Company (1,050,000 shares) owned by PT TDC to PT Semen Padang.

Furthermore, based on the deed of decision statement of the meeting no. 189 dated October 31, 2002 (Notary Arry Supratno SH) has amended the Company’s authorized capital from Rp35,000,000,000 (thirty five billion Rupiah) to Rp28,000,000,000 (twenty eight billion Rupiah). Finally, on November 24, 2012, the Semen Padang Pension Fund released 1,050,000 shares to PT Bima Sepaja Abadi

(BSA) through the Shareholders’ Decision without going through the General Meeting of Shareholders (RUPS) of PT Sepatim Batamtama.

The Company’s share ownership becomes as follows:PT Semen Padang : Rp5.950.000.000 (85%)PT Bima Sepaja Abadi : Rp1.050.000.000 (15%)

COMPANY’S ADDRESSJl. Lumba-lumba No.1 Batam, Kepulauan Riau, Indonesia 29432

BUSINESS FIELDS • Bagging Cement• Cement Trading • General Trading COMPOSITION OF COMMISSIONERS AND DIRECTORS Commissioner Komisaris Utama : Pudjo Suseno, SE. Komisaris : Admartin, ST., MM. Sekretaris Dekom : Ruky Hendra, SE, MM, Ak Directors Direktur : Mustamir, SE, MM

PERFORMANCE 2016 AND 2017In 2017, total assets owned by PT Sepatim Batamtama was recorded at Rp37 billion, growing 13.11 percent or Rp4 billion compared to 2016 amounting to Rp33 billion. PT Sepatim Batamtama booked revenues in 2017 of Rp108 billion, up 25 percent or Rp22 billion compared to 2016 Rp86 billion. Meanwhile, net profit obtained by PT Sepatim Batamtama amounted to Rp788 million fell 18% or Rp168 million compared to the year 2016 Rp956 million.

In 2017, total assets owned by PT Sepatim Batamtama stood at Rp37 billion, grew

13.11% or Rp4 billion compared to 2016 amounting to Rp33

billion

67









PT Bima Sepaja Abadi (PT BSA) was established on 17 September 1993. It was originally a joint venture company owned by PT Bima Siti Wisesa (PT BSW) and PT Semen Padang. PT BSW is the majority shareholder with 60% shares. PT BSW transferred its shares to PT Bima Intan Kencana (PT BIK).

Since August 7, 2006, PT Semen Padang increased its ownership in PT BSA to 80% and PT BIK owns 20% of the shares. On October 8, 2010 PT BIK released 200 shares to Mr. Tn. Krisman Bahar by virtue of notarial amendment No.16 dated May 28, 2015 and notary Firdhonal, SH approved the change of share ownership due to share grant, PT Intan Kencana to Tn. Hikmayudi Mahmoed.

Initially PT BSA was established as a company engaged in the service of PT Semen Padang bagging in Java Island and commenced commercial operation in 1996. PT BSA diversified its business by entering into distribution business as an effort to expedite distribution of PT Semen Padang for Jakarta area and surrounding. To support this cement distribution business PT BSA also carries out transportation efforts through investments in vehicles carrying this cement to buyers or customers, both to distributors and to retailers. To improve the business capabilities of PT BSA’s portfolio also conducts business expedition (Forwarding).

The Company’s share ownership becomes as follows:PT Semen Padang : Rp1.600.000.000 (80%)Hikmayudi Mahmoed : Rp200.000.000 (10%)Krisman Bahar : Rp200.000.000 (10%) COMPANY’S ADDRESSKomplek Perkantoran Enggano Megah Blok A No.5Q Jalan Enggano Raya Tanjung Priok Jakarta Utara 14310.

BUSINESS FIELDS1. Semen Cementing Services2. Cement Trading3. General Trading 4. General Transportation (Transportation)5. Forwarding

COMPOSITION OF COMMISSIONERS AND DIRECTORS The composition of the Board of Commissioners and Board of Directors in 2017 is in accordance with Notarial Deed No. Varinia, SH. 03 dated March 30, 2017 and the amendment of such arrangement becomes as follows:

CommissionerKomisaris Utama : Ir. Benny Wendry, MMKomisaris : Drs. H. Hikmayudi MahmoedKomisaris : Krisman BaharSekretaris Dekom : Hasfi Rafiq, ST.

DirectorsPresident Directors : Slamet Suyanto, SEDirectors : Ahlen Alfian, SE., MM

PERFORMANCE 2016 AND 2017In 2017, total assets owned by PT Bima Sepaja Abadi stood at Rp169 billion, up 3.5% or Rp5 billion compared to 2016 of Rp163 billion. PT Bima Sepaja Abadi posted revenues in 2017 of Rp219 billion, up 10% or Rp20 billion compared to 2016 Rp199 billion. the net lab obtained by PT Bima Sepaja Abadi amounting to Rp801 million increased by 178% or Rp1.8 billion compared to 2016, which lost Rp1 billion

In 2017, total assets owned by PT Bima Sepaja

Abadi stood at Rp169 billion, up 3.5% or Rp5 billion

compared to 2016 of Rp163 billion

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LINE OF BUSSINESSPursuant to the Company’s Articles of Association, which was amended in Article 3 (three), Semen Padang has a business as a manufacturer of cement and carries out trading associated with the cement industry. The operation run by Semen Padang today is the same as that written in the last amendment to the Company’s Articles of Association.

BUSINESS ACTIVITIESIn general, the Company’s core business process is to produce and trade cement. This process starts from the mining of raw materials (limestone, silica and clay), energy processing, followed by the

production process in four (4) main factory units.

The products are then packaged in Indarung and Teluk Bayur Packing Facility and distributed to several packing facilities in the destination market to be distributed to consumers through the Company’s distribution channel..

The entire process is supported by the trading activities, engineering/ manufacturing and other services. Business Processes of the Company can be viewed in the following figure:

Energy

Mining

Cement Producer and Trader

ServiceGeneral Trading

Manufacture

Transporter DistributorPackaging

Business Process of Semen Padang

The mechanism of product delivery to consumers is conducted through the distribution network consisting of distributors, agents and shops. Cement delivery is carried by road and sea either in bulkor bags/box, with a variety of delivery terms as follows:

1. FOT (Free on Truck)The seller is responsible for removing the goods in the truck that is ready to depart.

2. FOB (Free on Board)The seller is responsible from taking care of the export license to load the goods on board ready to depart. Only applicable for water transportation.

3. Franco WarehouseThe seller bears the cost of shipping the goods to the buyer’s warehouse.

4. CIF (Cost Insurance Freight)The seller must pay insurance for the goods shipped.

5. CnF (Cost and Freight)The seller shall bear the cost until the ship containing the goods docked at the port of destination, but the responsibility only until the moment the ship departs from the port of departure.

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Cement is a hydraulic binder. In principle, the process experienced by the cement material to be cement is a process of physics and chemical processes. Physical process in the form of milling, either milling of raw materials, or slag milling. For the chemical process is combustion in kiln with temperature> 1,450ºC.

There is a quality control in each stage of the cement manufacturing. Quality control is conducted in real-time via the Central Control Room (CCR) and chemical testing directly in Process Laboratory. Of these processes there are obtained high-quality products. Cement manufacturing processes can be viewed in the following figure.

There are four (4) types of cement raw materials namely limestone, silica sand, clay and iron sand. All those four raw materials are milled in the raw mill. There are two kinds of raw mills: tube mill and vertical mill. The result of milled materials in the raw mill is called raw-mix, and after it is fine (escaped from separator), the four raw materials that have been fused were homogenized in the homogenizing silo.

Then, the raw mix powder is sucked into the suspension preheater. This pre-heater helps preheating of the raw mix. In a series of suspension preheater there is calciner in which there is a calcination process. There are two kinds of calciner, Separated Line calciner (SLC) and In-line calciner (ILC). SLC is a calciner that utilizes hot gas from cooler and ILC is a calciner utilizing kiln hot gas. Once separated from the Suspension Preheater circuit, the material will go to Kiln and will be burned into Clinker.

Pabrik

Kantor Perwakilan

Distributor

Proyek

Toko Rumah Tangga

Cement Distribution Flow

The clinker is cooled to the cooler. There are two (2) kinds of cooler, namely planetary cooler and grate cooler. From this cooler the clinker will go to Silo Clinker. Silo clinker can be tubular and can be dome silo. From silo clinker will be brought to a cement mill with a belt conveyor. In the cement mill, clinker will be grounded and added gypsum for type I.

For PCC cement there are added gypsum, limestone, and pozzolan to the milling. After it is smooth (filtered by separator), then cement is formed. This cement will be collected in a cement silo. Furthermore, it can be distributed to the market. In the process of distribution, there are packing in the form of sacks, in bulk form with wagons and bulk carriers.

At the time of producing cement, the production process is critical in determining the quality of the cement produced. This is a series that should be controlled in real-time from the Central Control Room for the composition, and the Quality Assurance Laboratory for quality control also controls the result of this composition.

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1 Boring

Blasting

Quarry

23

4

18

20

17

DUMPING

Crusher

Crusher

Silica Stone

1

43

1619

19

20 16

1718

2

5

Quality Control (1 x 24 hours)X-Ray (SiO2; AI203; Fe203; Cao2; MgO; SO3)

Quality Assurance (1 x 1 week)• X-Ray (SiO2; AI203; Fe203;

Cao2; MgO; SO3)• Chemical Analyze• Complete Physical Analyzes

Quality Assurance (composite 24 hours)• X-Ray (SiO2; AI203; Fe203; Cao2;

MgO; SO3)• Chemical Analyze• Complete Physical Analyzes• Application

Quality Assurance (1 x 1 week)• X-Ray (SiO2;

AI203; Fe203; Cao2; MgO; SO3)

• Chemical Analyze

• Complete Physical Analyzes

• Application

Quality Assurance (every supplier)• X-Ray (SiO2; AI203;

Fe203; Cao2; MgO; SO3)

• H2O

Quality Assurance (every arrival)•Free water•Combined water

Quality Control (1 x 1 hour)• X-Ray (SiO2;


• Temperature• Liter/Weight

Quality Control (1 x 1 hour)• X-Ray (SiO2; AI203; Fe203; Cao2;

MgO; SO3)• LOI•Blaine• Sieve on 45•False set

Quality Control (1 x 24 hours)X-Ray (SiO2; AI203; Fe203; Cao2; MgO; SO3) Quality Control

(1 x 24 hours)Size

Silica Stone Silo

Gypsum Storage

Pozzolan Storage

Carry

16Rotary Kiln

Grate Cooler

Klinker

Dome Silo

Intermediate Silo

Cement Silo

Packer

Cement Mill19

Semen

FLOW OF PRODUCTION QUALITY CONTROL PROCESS

5

Limestone

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8 109 11

8

21

9

14

6 7

12

14

15 15

21

14

13

Quality Assurance (every arrival)• X-Ray (SiO2;


• H20

Quality Control (1 x per shift)• X-Ray (SiO2;


• H20

Quality Control (1 x 24 hour)• X-Ray (SiO2; AI203; Fe203;

Cao2; MgO; SO3)• H20

Quality Control (1 x per shift)• H20• Size

Quality Control (1 x 24 hour)• Sieve• Ash Content

Quality Assurance (1 x 2 day)•Free Water•Total Moisture• Inherent Moisture•Ash Content•Volatile Matter•Fixed Carbon• CalorificValue•Total Sulphur

Quality Assurance (1 x 2 day)•Sieve• Inherent Moisture•Ash Content•Volatile Matter•Fixed Carbon• CalorificValue•Total Sulphur

Quality Control • X-Ray (SiO2; AI203; Fe203;

Cao2; MgO; SO3)• Sieve on 90• Sieve on 180Quality Control (1 x 24 hour)• X-Ray (SiO2; AI203; Fe203;

Cao2; MgO; SO3)• Sieve on 90• Sieve on 180• H20

Quality Assurance (1 x 1 month)• X-Ray (SiO2; AI203; Fe203; Cao2;

MgO; SO3)• Analisis Kimia• Analisis Fisika lengkap• Aplikasi

Quality Assurance (every supplier)• X-Ray (SiO2; AI203;

Fe203; Cao2; MgO; SO3)

• H20

Copper Slag Storage Clay Storage

Lime Stone / Silica StoneStorage

11

12

13

10

Kiln Feed

Hom

ogen

izin

g S

ilo

Fine Coal

Coal StorageCoal Mill

Raw Mill

Pasar

6 7

15

Quality Control

Quality Assurance

72








SEMEN PADANG PRODUCTS1. Semen Portland Tipe I (Ordinary Portland Cement) This product meets the quality requirements of SNI 2049: 2015.

Used for general construction purposes that do not require special requirements for hydration heat and initial compressive strength. More precisely used on soil and water containing sulfate 0.0% - 0.10%, can also be used for residential houses, high rise buildings, airport runways and others.

2. Semen Portland Tipe II (Moderate Sulphate Resistance) It is more appropriately used

for the construction of buildings made of mass concrete that requires sulphate resistance between 0.08%-0.17% and the medium heat of hydration, for example, building on the shore, building on marshland, irrigation canals, mass concrete for the dam and the bridge foundation.

This product meets SNI 2049: 2015.

3. Semen Portland Tipe V (High Sulphate Resistance) This product is suitable for construction of soil / water containing

sulfate 0.17% - 1.67% and is suitable for plant waste treatment plants, water constructions, bridges, tunnels, ports and nuclear plants. This product meets SNI 2049: 2015

4. OWC Drilling Cement (Kelas G-HSR) This product meets the quality requirements of SNI ISO 10426-1-

2008 and API Specification 10A. Is a special cement that is more appropriately used used for the manufacture of oil and natural gas wells with the construction of oil wells under the sea and earth. For now the OWC type that has been produced is class

G, HSR (High Sulfat Resistance) also called “BASIC OWC”. Additive / additive materials can be added / mixed to produce a combination of OWC products for use at various depths and temperatures.

5. Portland Composite Cement PCC) This product meets the quality requirements of Portland

Composite Cement SNI 7064: 2004. It is a versatile cement with excellent strength and durability for use in a variety of concrete applications, such as: tiered building structures, bridge structures, concrete road structures, construction materials, pre-press concrete and pre-print, masonry, plaster and acian, concrete panels, block, hollow brick, brick, tile, tile pieces. Other advantages of this product are easier to work with, lower concrete temperatures that are not easily cracked, are more resistant to medium acid and sulfate, are more impermeable and the surface is more smooth.

6. Portland Pozzolan Cement (PPC) Is a hydraulic cement made with grinding slag, gypsum and

pozzolan material, meet SNI 0302: 2014. This product is more suitable for public buildings and buildings requiring medium sulfate and heat resistance, such as bridges, highways, housing, piers, mass concrete, dams, irrigation buildings and full plate foundations.

For houses and high rise

buildings

For seaside and marshland

buildings

For sewage treatment,

bridges, tunnels

For the construction

of oil and gas wells

For multi-storey buildings, bridges

and concrete roads

For public buildings

73








SEMEN PADANG SERVICES1. Concrete Testing Services Laboratory of PT Semen Padang has been certified by The

National Accreditation Committee for the testing of concrete and is one point of ISO 17025 as the standard of quality management. Therefore, for accurate and reliable results, many outsiders (projects) have entrusted their testing to the Semen Padang Concrete Laboratory, since the certificate has been accredited by the National Accreditation Committee (KAN) and this certificate may be a valid proof of liability if it is required.

2. Mortar Testing Services Mortar testing is required for samples that require high precision.

Usually this sample on the project is taken at the time of grouting, or for the determination of the compressive strength of the cement prior to taking the decision on the use of cement. This certainly requires certification for the validity of the test result data issued. Semen Padang also received mortar testing service.

3. Preparation of Concrete Mix Design Services For the manufacture of concrete Mix Design, Semen Padang

can perform the services directly to the field for sampling the material to mix design. Concrete Mix Design is conducted in 2 methods, namely Indonesian National Standard (SNI) and American Concrete Institute Standard (ACI). This Mix Design covers all material sampling, concrete material testing, Mixed Design, Trial Mix and Compressive Strenght test of Trial Mix.

4. Material Testing Services In general, the materials for testing of building materials and

other materials can be done at PT Semen Padang. From this material testing, a certificate will be issued this test can be a sample of Aggregate Concrete (sand, gravel / split, coal, gypsum and other materials.This material testing for the material tested.This certificate contained the logo of National Accreditation Committee (KAN) which means KAN has accredited the laboratory of Semen Padang.

5. Free Service by Request Should anything occur when dealing with the use of Semen

Padang Product on your project, please contact to Toll Free PT Semen Padang +62 800 1888 222. We will come to take a survey and will try to give solution to the problem on the project. For the implementation of the Free Service it serves the entire marketing area of the Company.

Here are the companies that use the services of PT Semen Padang:

No Supplier Test Material1 PT Koto Alam Sejahtera Test Stone Mountain

2 PT PLN (Persero) Silica Sand Test

3 PT PLN (Persero) Sand Test

4 PT Kamboja Mas Sand Test

5 PT Prada Karya Utama Test Sieve & Sand Analysis

6 CV Mangindo Alam Lestari Coal Test

7 CV Beton Block Padang Pozzoland & Sand

8 PT Falahindo Cooper Bag

9 PT Sepatim Cooper Bag

10 PT Sepatim Fly Ash

11 PT Solusi Beton Indonesia Equipment Rental Fees

12 PT Surya Pratama Mandiri Strong Pressure Concrete Test

13 PT Waskita Raya Strong Pressure Concrete Test

14 PT Adhi Karya Strong Pressure Concrete Test

15 PT Solaris Mitra Jaya Strong Pressure Concrete Test(Conbextra UW + Gravel / Underwater Grounting)

16 PT Agera Harapan Mandiri Paving Block TestSize 21 x 10.5 x 10.5 cm

17 PT Kamboja Mas Dolomite

74








ORGANIZATIONAL STRUCTURE

The existence of the organizational structure of PT Semen Padang is a container to achieve the goals and objectives of the Company. The preparation of the Company’s organizational structure has been studied in depth by harmonizing with the Company’s vision and mission and taking into account some current needs. The organizational structure presented on December 31, 2017 based on Directors Decision No. SM.02.02 / 056 / KD / DESDM / 05.17 Date June 1, 2017, regarding the Improvement of Organizational Structure and Transfer of Staff of PT Semen Padang, Structure and Organizational Structure of the Company:

COMMERCIAL DIRECtORPudjo Suseno

SalesBenas Azhari

Distribution & Transportation

Sumarsono

ProcurementPri Gustari Akbar

Human ResourcesEndang Persitarini

Staff of DirectorDesri Ayunda

Yuzri Boy

Counterpart TeamStrategic Projects

Amral AhmadPri Gustari AkbarAhmad Firdaus

production director

Firdaus

Finance DirectorTri Hartono Rianto

Internal AuditOktoweri

Legal & GRC/MRAsri Mukhtar

Communication & Public Facilities

Iskandar Z. Lubis

MiningR Trisandi Hendrawan

Production VHari Utama

Production II/IIIAndria Delfa

Factory EngineeringMuhammad Syafitri

Production IVAdmartin

Quality Assurance & SHE

Juke Ismara

Financial AccountingDedi Zaherdi

Director

Echelon I

President directorBenny Wendry

Production VIAmral Ahmad

75








PROFILE OF COMPANY’S SENIOR LEADER

OKTOWERIHead of Internal Audit

Starting joined PT Semen Padang in 1995 as an orientation staff in the HR Department.

Training attended, among others:Internal Quality Audit (IQA), Strategic Human Resources Management, Introduction, Documentation & Internal Audit of OSHMS, Performance Management System for Executives, Chief Financial Officer, CFO Portfolio Management, CFO of Tax Management.

ASRI MUKHTARDepartment of Legal & GRC / MR

Starting joined PT Semen Padang in 1991 as an orientation staff at the HR Department.

Training attended, among others:Transformation Summit SGG, Leadership Learning, From Service to Care, Strategic Cost Reduction, Coaching GLDP, Workshop Global Leadership Development Program, Launching Semen Padang Improvement Event, Performance Management System for Executives, Bimtek LHKPN, On Going Improvement for Marketing.

ISKANDAR z LUBISDepartment of Communications & Public Facilities

Starting joined PT Semen Padang starting in 2001 with position as an orientation staff in the HR Department. Training attended, among others:Kick Off & Socialization of Anti Fraud, Online Approval PR & PO, Sharing Knowledge Explosive Industry, Behavioral Based Interview, Project HSE Management Plan, Workshop of Long Term Corporate Plan (RJPP), Congress V of Semen Padang Labor Union (SPSP) Preparation of Long Term Corporate Plan (RJPP), Transformational Leadership Development Program (TLDP) Batch 6 Workshop 1 st, National Conference IV CFCD & Sponshorship.

76








BENAS AzHARISales Department

Starting joined PT Semen Padang starting in 1988 with the first position as an orientation staff in the HR Department

Training attended, among othersBuilding the Aligment and Engagement on MVVM, Transformation Summit SGG, Growing the Charisma Based on Prophetic Intelligency, From Service to Care, Performance Management System, Global Leadership Development Program Workshop Batch 2, Limited Liability Company Law, Approval PR & PO Online, BBI, GLDP Coaching.

SUMARSONODepartment of Distribution & Transportation

Starting joined PT Semen Padang starting in 1995 with the first position as an orientation staff in the HR Department

Training attended, among others:Focus Group Discussion Knowledge Management, Workshop Update Marketing Knowledge to Survive Dynamic Market, Supply Chain Management, Corporate Law & GCG Implementation for APLP, Performance Management System for Executives, Vertical / Horizontal KPI Alignment for APLP, Bimtek LHKPN, Preparation of Long Term Plan ) APLP, Congress V Workers Union Semen Padang (SPSP), Global Leadership Development Program.

PRI GUSTARI AKBARDepartment of Procurement

Starting joined PT Semen Padang starting in 1995 with the first position as an orientation staff in the HR Department.

Training attended, among others:Global Leadership Development Program, Archieve Management, Supply Chain Management, Coaching TLDP Batch 1 to Batch 6, Transformational Leadership Development Program (TLDP) Batch 3 Workshop II, Vertical / Horizontal KPI Aligment for APLP, Transformational Leadership Development Program (TLDP) Batch III Workshop 1, International Trade, Training & Surgical Certification SAP Cost PT Semen Padang, In-depth Training Criteria & Assessment Method Criteria Malcom Baldrige

77








ANDRIA DELFADepartment of Production II/III

Starting joined PT Semen Padang starting in 2001 with position first as an orientation staff in the HR Department.

Training attended, among others:Socialization of Fire Internal Audit, Performance Management System, Focus Group Discussion (FGD) Knowledge Management, Approval PR & PO Online, Supply Chain Management, Transformational Leadership Development Program (TLDP) Batch I, Energy Auditor, Performance Management System for Executives, , Air Pollution Control For PPU Competencies.

ADMARTINDepartment of Production IV


Training attended, among others:BBI, Transformation Summit SGG, Sharing Knowledge Production Directorate, Lean Six Sigma, Sharing Knowledge Production Cost Efficiency Cement Making, Performance Management System, GLDP Coaching, Semen Padang Improvement Event Launching, Performance Management System for Executives, Bimtek LHKPN

R. TRISANDI HENDRAWANDepartment of Mining


Training attended, among others:Transformational Leadership Development Program (TLDP) Batch I, Knowledge Management, Warehouse & Inventory Management, Coaching TLDP Batch 1-Batch 6, TLDP Presentation / Coaching, Management System Training ISO 19011: 2011, Training Assessor, Workshop COP Influencer CHAMPS, Konsinyir Learning Partner , Strengthening SMTP LSP Assessor Competencies.

78








HARI UTAMADepartment of Production V


Training attended, among others:Approval PR & PO Online, Refresh Improvement of Prestative Works Akt. 1, Launching Semen Padang Improvement Event, Corporate Law & GCG Implementation for APLP, Quality Manager Training & ISO / IEC Engineering Manager, Performance Management System for Executives, Bimtek LHKPN, Seminar of Heart Attack as the cause of death how to prevent & suspend it, Opportunity for Improvement (OFI) IQA 2014 Assessment Results, DRPKL Workshop Making PROPER 2015.

MUHAMMAD SYAFITRIDepartment of Plant Engineering


Training attended, among others:Approval PR & PO Online, Limited Liability Company Law, BBI, GLDP Coaching, Cement Improvement Event Launching, Performance Management for Executives, Vertical / Horizontal KPI Alignment for APLP, Bimtek LHKPN, Leading Change With Values & Accountability, Strengthening LSP SMC Assessors Competencies.

JUKE ISMARADepartment of QA & SHE


Training attended, among others:Assessment Continous Improvement, IQA Workshop, Semen Padang Improvement Event Launching, Workshop on Long Term Corporate Planning, TLDP Batch II, V SPSP Congress, Workshop on Consignment of Slow Moving & Capex Supplies, Launching & Workshop of Indonesian Cement Center of CHAMPS, TLDP Coaching, Asian Workshop Cement Trade Summit.

79








DEDI zAHERDIDepartment of Accounting & Finance

Starting joined PT Semen Padang in 1995 with the first position as an orientation staff in the HR Department.

Training attended, among others:Supply correction control in Warehouse, Launching of Semen Padang Improvement Event, Corporate Law & GCG Implementation for APLP, UCP 600 Implementation in LC Transactions, Workshop on PSAK Revision of 2013, Performance Management System for Executives, Report Counselling of LHKPN, Transformational Leadership Development Program, CFO Preparation Program.

ENDANG PERSITARINIDepartment of Human Resource

Starting joined PT Semen Padang in 1998 with the first position as an orientation staff in the HR Department.

Training attended, among others:Supply Chain Management, Corporate Law & GCG Implementation for APLP, Performance Management System for Executives, Bimtek LHKPN, Management of State Enterprise Pension Funds in the Age of National Social Security System, V SPSP Congress, Global Leadership Development Program, Pension Fund Supervisory Management, National Seminar on Retirement Guarantee National, Business Judgment Rule.

AMRAL AHMADDepartment of Indarung VI


Training attended, among others:ESQ National Executive, Workshop on Job Evaluation Committee, Building the Alignment and Engagement on MVVM, In-depth Training Criteria & Assessment Methods Criteria Malcolm Baldrige, SGG Transformation Summit, SGG Corporate Culture Program Workshop, International Trade Ledership Development Program (GLDP) International Trade, Performance Management for Executives, Coaching GLDP.








ADDRESS OF SEMEN PADANG’S HEAD OFFICE AND REPRESENTATIVE OFFICES

1. Head OfficeIndarung, Padang 25237, Sumatera BaratT: (0751) 815 250F: (0751) 815 590 H: www.semenpadang.co.id

2. Representative officeGraha Irama Lt. 11Jl. HR Rasuna Said Blok X-1, Kav. 1 & 2 Jakarta 12950 T: (021) 5261272 - 74 F: (021) 526 1414 H:www.semenpadang.co.id

3. West Sumatera Marketing Office Jl. Raya Indarung, Padang 25237

T: (0751) 202011F: (0751) 28973

4. Aceh Representative Office Jl. Teuku Hasan Dek Beurawa - Banda Aceh

T/F: (0651) 635505

5. Sumut Medan Representative Office Jl. Sultan Iskandar Muda No. 39 I, Medan

T: (061) 4156760, 4155642 F: (061) 4535516

6. Bengkulu Representative Office Jl. Kapuas Raya No. 11

Kelurahan Padang Harapan Baru Bengkulu T/F: (0736) 22797

7. Jambi Representative OfficeJl. Kapten A. Bakarudin No. 19 Simpang IV Sipin Telanai Pura, JambiT/F: (0741) 669865

8. Rikep Representative OfficeJl. Lumba-Lumba No.1 Batu Ampar, Pelita Batam T: (0778) 413121F: (0778) 413889

9. Ridar Representative OfficeKompleks Sudirman Raya Jl. Jend. Sudirman Blok C No. 8, PekanbaruT: (0761) 21406F: (0761) 856054

13

2

13

12

4

5

7

11 14 15

10

6

8







ADDRESS OF SEMEN PADANG’S HEAD OFFICE AND REPRESENTATIVE OFFICES


10. Sumsel Representative HP 081283879164

11. Lampung Representative OfficeJl. Ikhwan Ridwan Rais No. 45 Tanjung BaruT: (0721) 262558F: (0721) 261551

12. Jakarta Marketing Representative OfficeJl. Enggano Blok C 4 No. 15, Tanjung Priok, Jakarta Utara 14310T: (021) 43936112, 43904390F: (021) 43938770

13. Banten Representative OfficeKomplek PT Pelindo II Cabang Banten Jl Raya Anyer CilegonCiwandan, BantenT/F: (0254) 4605476

14. Jabar Representative OfficeJl. Cijagra No. 47, BandungT/F: (022) 7331525

15. Jateng Representative OfficeKomplek Permata Puri, Jl. Permata Classica BG 3A, Ngaliyan, SemarangT/F: 024-76671896

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LIST OF DISTRIBUTOR NETWORK

Nangroe Aceh Darussalam

Kota Banda AcehPT LAMDINGIN PRIMAJl. Tgk. Dihaji Lorong 1 Gampong Lamdingin, Banda Aceh Telp : 0651-638005 Fax : 0651-638003email : [email protected]

Kabupaten Aceh BesarPT BENSI SAKATAMAJl. Sei Batang Serangan No. 20 A Kec. Medan Baru Kota MedanTelp.: (061) 888 13007 Fax.: (061) 451 1049 Email: [email protected]

PT LAMDINGIN PRIMAJl. Tgk. Dihaji Lorong 1 Gampong Lamdingin, Banda Aceh Telp.: (0651) 712 1550Fax.: (0651) 742 1160Email: [email protected]

Kota LhokseumawePT ALFATA NIAGA PERKASAJl. Merdeka Dusun IV Gampong Kuta Blang LhokseumaweTelp.: (0645) 630 997 Fax.: (0645) 630 067Email: [email protected]

PT DARMA PEMBANGUNAN SUMATERAJl. Kenari No. 88 Kel. Kuta Blang, Kec. Banda Sakti LhokseumaweTelp.: (0645) 58660 Fax.: (0645) 40100Email: darma [email protected]

Kabupaten Aceh BaratPT TENAGA MURNIJl. A. Yani No. 10. Tapaktuan Aceh SelatanTelp.: 0656-21149/323503Fax.: 0656-21149Email: [email protected]

PT ADE LESTARI SEJATIJl. Arau No. 88, Blok I/4, Lt. II Telp.: (0751) 21561 Fax.: (0751) 25197 HP. : 0812 66 23207Email: [email protected]

Kabupaten Aceh PidiePT BENSI SAKATAMAJl. Sei Batang Serangan No. 20 A Kec. Medan Baru Kota MedanTelp.: (061) 888 13007 Fax.: (061) 451 1049 Email: [email protected]

PT WADAH SUCIJl T Hamzah Bendahara no 8 Bireuen Telp.: 0644-323722Fax.: 0644-22088Email: [email protected]

Kabupaten Aceh TengahPT WADAH SUCIJl T Hamzah Bendahara no 8 Bireuen Telp.: 0644-323722Fax.: 0644-22088Email: [email protected]

Kabupaten Aceh TimurPT BENSI SAKATAMAJl. Sei Batang Serangan No. 20 A Kec. Medan Baru Kota MedanTelp.: (061) 888 13007 Fax.: (061) 451 1049 Email: [email protected]


Kabupaten Aceh UtaraPT WADAH SUCIJl T Hamzah Bendahara no 8 Bireuen Telp.: 0644-323722Fax.: 0644-22088Email: [email protected]

Kabupaten Nagan RayaJl T Hamzah Bendahara no 8 Bireuen Telp.: 0644-323722Fax.: 0644-22088Email: [email protected]

Kabupaten Pidie JayaPT BENSI SAKATAMAJl. Sei Batang Serangan No. 20 A Kec. Medan Baru Kota MedanTelp.: (061) 888 13007 Fax.: (061) 451 1049 Email: [email protected]


North SumatraKota MedanPT CITRAMULIA DWIPRAKARSAJl. Makmur No.40. Kel. Silalas, MedanTelp./Fax.: (061) 662 3622Email: [email protected]

PT MEGA ELTRAKomp. Multatuli Indah Blok AA No. 52, Medan Telp.: (061) 451 0980; 414 4378Email: [email protected]

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PT MULIA SAKTI PERKASAJl. Mangkubumi No.10, Medan 20151Telp.: (061) 4519 995 Fax.: (061) 4510 946Email: [email protected]

Kota Tebing TinggiPT MULIA SAKTI PERKASAJl. Mangkubumi No.10, Medan 20151Telp.: (061) 4519 995 Fax.: (061) 4510 946Email: [email protected]

Kota SibolgaPT ADE LESTARI SEJATIJl. Horas No. 162, Sibolga Telp.: (0631) 21638Email: [email protected]

PT KEMBAR PUTRI BERSAUDARAJl. Kejaksaan No. 180 P-1 Kel. Petisah Tengah, Medan Telp.: 061-80513479Fax.: 061-80513479Email: [email protected]

Kabupaten NiasPT ADE LESTARI SEJATIJl. Arau No. 88, Blok I/4, Lt. II Telp.: (0751) 21561 Fax.: (0751) 25197 HP. : 0812 66 23207Email: [email protected]

PT IGASARKomp. PT Semen Padang, Padang 25237Telp.: (0751) 25190 Fax.: (0751) 72501/74854Email: [email protected]

Kabupaten Tapanuli SelatanPT BENAL ICHSAN PERSADAJl. Raya Padang By Pass Km. 7 No. 47 A, PadangTelp.: (0751) 74446Fax.: (0751) 74454Email: [email protected]

PT CIPTO SADAR PRATAMAJl. R. A. Salim No. 1 Padang SidempuanTelp.: (0634) 21367email : [email protected]

PT IGASARKomp. PT Semen Padang, Padang 25237Telp.: (0751) 25190 Fax.: (0751) 72501/74854Email: [email protected]

Kabupaten Tapanuli UtaraPT BENAL ICHSAN PERSADAJl. Raya Padang By Pass Km. 7 No. 47 A, PadangTelp.: (0751) 74446Fax.: (0751) 74454Email: [email protected]

PT RESTU BUNDA ANDALASJl. Sudirman Km. 6, Tanjung Balai, Asahan Telp.: 0812 66 23943email : [email protected]

PT UNI GLOBAL LESTARIJl. H. Misbah Blok G, No. 18 Komp. Multatuli Indah, Medan Telp.: (061) 663 5168Fax.: (061) 451 5418

Kabupaten Labuhan BatuPT UNI GLOBAL LESTARIJl. H. Misbah Blok G, No. 18 Komp. Multatuli Indah, Medan Telp.: (061) 663 5168Fax.: (061) 451 5418

PT NOVHYNDO JACKWIS PRATAMASakura Shopping Center By Pass Km. 6 No. 2-3, Padang Telp.: (0751) 778631Fax.: (0751) 775222Email: [email protected]

PT RIS INVESTINDO SARANAJl. Raya By Pass Baru No. 3, Padang 25224 Telp.: (0751) 72580-81 Fax.: (0751) 72582Email: [email protected]

PT DUNIA USAHAJl. Lintas Aeknabara, Rantau PrapatHP.: 0812 6439 7689Email: [email protected]

Kota Tanjung BalaiPT DUNIA USAHAJl. Sudirman Batu 4, Kota Tanjung Balai Asahan HP.: 081264574041Email: [email protected]

PT RESTU BUNDA ANDALASJl. Sudirman Km. 6 Tanjung Balai, Asahan Telp.: 0812 66 23943

PT RIS INVESTINDO SARANAJl. Raya By Pass Baru No. 3, Padang 25224Telp.: (0751) 72580-81Fax.: (0751) 72582Email: [email protected]

Kabupaten Mandailing NatalPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252 Fax.: (0751) 72252Email: [email protected]

Kabupaten Padang LawasPT AMPALU INDAH LESTARIJl. By Pass Km. 6, Tanjung Saba, PadangTelp.: (0751) 733 312Fax.: (0751) 73818Email: [email protected]

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PT BENAL ICHSAN PERSADAJl. Jend. Sudirman No. 999, Pasar Sibuhuan,Padang LawasEmail: [email protected]


Kabupaten Toba SamosirPT RIS INVESTINDO SARANAJl. Raya By Pass Baru No. 3, Padang 25224Telp.: (0751) 72580-81Fax.: (0751) 72582Email: [email protected]

West SumatraKota PadangPT ANDALAS JAYA BERSAMAJl. By Pass Km. 10, Balai Baru, PadangTelp.: (0751) 495 046Fax.: (0751) 71574Email: [email protected]

PT CENDANA SEMBILANKomp. Cendana Andalas Blok CC No. 5 Kel. Andalas, PadangTelp./Fax.: (0751) 891 299; 810602Email: [email protected]

PT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252 Fax.: (0751) 72252Email: [email protected]

PT DEFNI SEJAHTERA MANDIRIJl. Raya Padang Besi No. 27 RT I/II Kel. Padang Besi 25231Telp.: (0751) 71032; 72025 Fax.: (0751) 71032Email: [email protected]

PT IGASARKomp. PT Semen Padang, Padang 25237Telp.: (0751) 25190 Fax.: (0751) 72501Email: [email protected]

PT PERUSAHAAN PERDAGANGAN INDONESIAJl. Jend. Sudirman No. 37, PadangTelp.: (0751) 23491Email: [email protected] / [email protected]

PUSKUD SUMATERA BARATJl. Jakarta No. 34 Ulak Karang, Padang 25135Telp.: (0751) 7055 026; 7055 076Fax.: (0751) 7054 745Email: [email protected]


PT SUMBER NIAGA INTERINDOJl. Bandung No. 15 Asratek Ulak Karang, Padang Telp.: (0751) 40061Fax.: (0751) 40461Email: [email protected]

PT YATAMA MULTI SEJAHTERAJl. Tanah Sirah No. 35 Padang 25224Telp.: (0751) 778 107Fax.: (0751) 778 106Email: [email protected]

PT ZETKA NIAGATAMA Jl. Rimbo Datar No. 16-18, Padang 25231Telp.: (0751) 71323-24Fax.: (0751) 72578Email: [email protected]

Kota PayakumbuhPT ANDRICO TAMA PRIMA LESTARIJl. Jend. A Yani No. 159, Kel. Labuh, Basilang Payakumbuh Telp.: (0752) 91615; 91614Fax.: (0752) 91615Email: [email protected]

Kabupaten Kepulauan MentawaiPT IGASARKomp. PT Semen Padang, Padang 25237Telp.: (0751) 74856Fax.: (0751) 72501Email: [email protected]

Riau MainlandKota PekanbaruPT AQEELA PUTERI PRATAMAJl. Muslimin No. 24, PekanbaruTelp.: (0761) 23032Fax.: (0761) 62253Email: [email protected]

PT CIPTO SADAR PRATAMAJl. Harapan Raya No. 19 Tangkerang, PekanbaruTelp.: (0761) 25901Fax.: (0761) 43976Email: [email protected]

PT DUNIA USAHAJl. Riau No. 128 C/D, Pekanbaru Telp.: (0761) 23305; 20412Fax.: (0761) 856 128Email: [email protected]

PT IGASARJl. Raya Pekanbaru Km. 11,5, Pekanbaru 28294Telp.: (0761) 7056 614

PT MITRA USAHA Jl. Raya By Pass Km 6, Lubuk Begalung, Padang Telp.: 0751-7877999/7897999Email : [email protected]

PUSKOPKAR Jl. Puskopkar Raya Blok A No.01, Pandau Permai, PekanbaruHp: HP 08126822092/081365082209email : [email protected]

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PT RIS INVESTINDO SARANAJl. Arengka Raya No. 94, PekanbaruTelp.: (0761) 65607Email: [email protected]

PT WAJA PERDANAJl. Ir. H.Juanda No. 65 Senapelan, PekanbaruTelp. : 0761-7060111 Fax :0761-848332Email: [email protected]

PT WAJAH BARU PERKASAJl. Teuku Umar No. 295/ F BengkalisTelp.: 0766-21758Fax,: 0766-21141Email: [email protected]

PT YATAMA MULTI SEJAHTERAJl. HR Soebrantas No. 239, PekanbaruTelp.: (0761) 61049; 61048Email: [email protected]

Kota DumaiPT DUMAI INDAH SEJATIJl. Sultan Hasanudin No. 12 H Simp. Pangkalan Sena, Dumai Telp.: (0765) 7004 220; 7050 804Fax.: (0765) 32113Email: [email protected]

PT IGASARJl. Raya Pekanbaru Km. 11,5, Pekanbaru 28294Telp.: (0761) 7056 614

PT RIS INVESTINDO SARANAJl. Raya Bukit Kapur Km. 21, DumaiEmail: [email protected]

PT WAJA PERDANAJl. Ir. H. Juanda No. 65 Senapelan, PekanbaruTelp.: (0761) 7060 111Fax.: (0761) 848332Email: [email protected]

PT WILIZKA FORTUNINDOJl. Tuanku Tambusai No. 18, PekanbaruEmail: [email protected]

Kabupaten BengkalisPT DUNIA USAHAJl. Riau No. 128 C/D, Pekanbaru Telp.: (0761) 23305; 20412Fax.: (0761) 856 128Email: [email protected]

PT WAJAH BARU PERKASAJl. Teuku Umar No. 295/F, Bengkalis Telp./Fax.: (0766) 21758; 21141Email: [email protected]

Kabupaten Rokan HuluPT DUMAI INDAH SEJATIJl. Sultan Hasanudin No. 12 H Simp.Pangkalan Sena, Dumai Telp.: 0765-7004220/7050804 Fax.: 0765-32113Email: [email protected]

Kabupaten Rokan HilirPT RIS INVESTINDO SARANAJl. Arengka Raya No. 94, PekanbaruTelp.: (0761) 65607Email: [email protected]

Kabupaten SiakPT BENAL ICHSAN PERSADAJl. Raya Siak-Pekanbaru Benteng Hulu, No. 57Telp.: 0812 6814 1259Email: [email protected]

PT CITRAMESTIKA ANDALASJl. Prof. H.M. Yamin SH No. 32 -K, MedanTelp.: (061) 414 3085; 414 3086Fax.: (061) 456 0948Email: [email protected]

PT MITRA USAHA Jl. Raya By Pass Km 6, Lubuk Begalung, Padang Telp.: 0751-7877999/7897999Email: [email protected]

Kabupaten Indragiri HilirPT BENAL ICHSAN PERSADAJl. H. Sadri Tembilahan Kec. TembilahanTelp.: 0812 6814 1259Fax.: (0751) 74454Email: [email protected]

PT RODA USAHAJl. Lintas Timur Pangkalan Kerinci (Tk Hidup Baru) Telp.: (0761) 494461; 95015Email: [email protected]

Kabupaten Indragiri HuluPT RODA USAHAJl. Jend. Sudirman No. 70, RengatTelp.: (0769) 21194Email: [email protected]

Kabupaten PelalawanPT BENAL ICHSAN PERSADAJl. Raya Siak-Pekanbaru Benteng Hulu, No. 57Telp.: 0812 6814 1259Email: [email protected]

PT RODA USAHAJl. Lintas Timur Pangkalan Kerinci (Tk Hidup Baru) Telp.: (0761) 494461; 95015Email: [email protected]

Kabupaten Kuantan SingingPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9, Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]


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Riau IslandsKota BatamPT BATAM INDO BANGUNANKomp. Graha Permata Indah Blok A No. 2, Sungai Jodoh Batu Ampar, BatamTelp.: (0778) 426 362Fax.: (0778) 425 098Email: [email protected]

PT CITRA MESTIKA ANDALASJl. Yos Sudarso No 2 A, BatamTelp.: (0778) 453 852Email: cmamedanhotmail.com

PT SEPATIM BATAMTAMAJl. Lumba-lumba No. 1 Pulau BatamTelp.: (0778) 412 980; 412 978; 412 979Fax.: (0778) 412 978Email: [email protected]

Tanjung Pinang & Riau KepulauanPT BATAM INDO BANGUNANKomp. Graha Permata Indah Blok A No. 2, Sungai Jodoh Batu Ampar, BatamTelp.: (0778) 426 362Fax.: (0778) 425 098Email: [email protected]

PT CITRA MESTIKA ANDALASJl. Yos Sudarso No 2 A, BatamTelp.: (0778) 453 852Email: cmamedanhotmail.com

PT SEPATIM BATAMTAMAJl. Lumba-lumba No. 1 Pulau Batam 29432Telp.: (0778) 412 980; 412 978; 412 979Fax.: (0778) 412 978Email: [email protected]

PT BABEL INDO BANGUNANJl. Yos Sudarso Komp Graha Permata Blok A No.2 Batu AmparTelp.: 0778-426362Fax.: 0778-4084744Email: [email protected]

Kabupaten KarimunPT CITRA MESTIKA ANDALASJl. Yos Sudarso No 2 A, BatamTelp.: (0778) 453 852Email: cmamedanhotmail.com

Kabupaten BintanPT CITRA MESTIKA ANDALASJl. Yos Sudarso No 2 A, BatamTelp.: (0778) 453 852Email: cmamedanhotmail.com

JambiKota JambiPT AISA MUTIARA TERNAMAJl. Raya Gurun Laweh No. 9 RT 001/005, Padang Telp.: (0751) 7890064 / 7810177Fax.: (0751) 71064Email: [email protected]

PT ANDALAS JAYA BERSAMAJl. Sunan Giri No. 35, JambiEmail: andalas jaya [email protected]

PT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9, Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

PT DEFNI SEJAHTERA MANDIRIJl. Kapten Pattimura RT 02, JambiTelp.: (0741) 581 042Email: [email protected]

PT IGASARJl. Lingkar Selatan 1 Palmerah JambiTelp.: (0741) 443 922Email: [email protected]

PT JAMBI INDOGUNA INTERNASIONALJl. Prof. Dr. Sri Soedewi MS, SH No. 2, Telanai Pura, Jambi Telp.: (0741) 669 777; 60809 Fax.: (0741) 669 789Email: [email protected]

KOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel.Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]

PT NAN RIANGJl. KH Hasyim Asyari No. 86 JambiTelp.: (0741) 31617; 33492Fax.: (0741) 755 2155Email: [email protected]

PT ONODA JAMBIJl. DR. Cipto Mangunkusumo No. 6, Jambi 36111 Telp.: (0741) 22766; 26380Fax.: (0741) 31874Email: [email protected]

PT RIS INVESTINDO SARANAJl. Patimura No. 40, Jambi 25224Telp.: (0741) 60745Email: [email protected]

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PT YATAMA MULTI SEJAHTERAJl. Patimura No. 67 Kel. Kenali Besar Kec. Koto Baru, JambiTelp.: (0741) 581 042; 443 922Email: [email protected]

Kabupaten Batanghari (Muara Bulian) PT AMPALU INDAH LESTARIJl. By Pass Km. 6, Tanjung SabarTelp.: (0751) 73312Fax.: (0751) 73818Email: [email protected]

Kabupaten SarolangunPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

PT RIS INVESTINDO SARANAJl. Patimura No. 40, Jambi 25224Telp.: (0741) 60745Email: [email protected]

Kabupaten Tanjung Jabung BaratPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

Kabupaten Tanjung Jabung TimurPT IGASARKomp. PT Semen Padang, Padang 25237Telp.: (0751) 25190 Fax.: (0751) 72501/74854Email: [email protected]

KOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel.Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]

Kabupaten MeranginPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

South SumatraKota PalembangPT PERUSAHAAN PERDAGANGAN INDONESIAJl. Kapt. Rivai No. 41 Palembang Telp.: (0711) 351 164Email: [email protected]

PT SUMATERA INVESTINDO NIAGAJl. Tanjung No. 3 A Komp. Dangau Teduh, PadangTelp./Fax.: (0751) 775 219Email: [email protected]

PT SUKSES BANGUN SRIWIJAYAJl. RE Martadinata No. 5-6 RT 002 RW 001, Kel.Kalidoni, PalembangTelp./Fax.: 0711-367351Email: [email protected]

PT JANTI SARANA MATERIAL BETONJl. Sunandar Priyo Sudarmo 45 Blok L Blimbing kotamadya Malang, Jawa TimurTelp.: 0341-403407/403424/4034253Fax.: 0341-4034253Email: [email protected]

Kota Lubuk LinggauPT CIPTO SADAR PRATAMAJl. Salak No. 91 Panorama Lingkar Timur, BengkuluTelp.: (0736) 25080Email: [email protected]

PT RIS INVESTINDO SARANAJl. Ahmad Yani No. 08, Lubuk Linggau Telp.: 0811 6600 544Email: [email protected]

Kota Pagar AlamPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

Kabupaten LahatPT CIPTO SADAR PRATAMAJl. Rimbo Datar No. 9 Bandar Buat, PadangTelp.: (0751) 72252Fax.: (0751) 72252Email: [email protected]

BengkuluKota BengkuluPT CIPTO SADAR PRATAMAJl. Salak No. 91 Panorama Lingkar Timur, BengkuluTelp.: (0736) 25080Email: [email protected]

PT KARYA CITRA TANINDANGJl. Depati Payung Negara 31Telp.: (0736) 51455; 51170Fax.: (0736) 52216; 52934Email: [email protected]

PT PERUSAHAAN PERDAGANGAN INDONESIAJl. A. Yani No. 28 Bengkulu Telp.: (0736) 21024Email: [email protected]

PT SEKOTONG MULTI SARANAJl. Semangka Raya No. 63 Kel. Panorama Kec. Gading Cempaka, Bengkulu 38226 Telp.: (0736) 21130Email: [email protected]

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PT WIRA JAYA ADI KARYAJl. RE Martadinata RT 04/08 Kel. Kandang Kec. Kampung Melayu, Bengkulu Telp./Fax.: (0736) 51717Email: [email protected]

Kabupaten Bengkulu UtaraPT AMPALU INDAH LESTARIJl. By Pass Km. 6 Tanjung Saba, PadangTelp.: (0751) 73312Fax.: (0751) 73818Email: [email protected]

PT NAGARI NAN DUO PULAHJl. Dahlia II/111 RT 003/005 Kel. Indarung Kec. Lubuk Kilangan, PadangTelp.: 0751-72536/73116 ; Fax.: 0751-73116Email: [email protected]

Kabupaten MukomukoPT AMPALU INDAH LESTARIJl. By Pass Km. 6 Tanjung Saba, PadangTelp.: (0751) 73312Fax.: (0751) 73818Email: [email protected]

Kabupaten Rejang LebongPT CIPTO SADAR PRATAMAJl. Salak No. 91 Panorama Lingkar Timur, BengkuluTelp.: (0736) 25080Email: [email protected]


Kabupaten LebongPT WIRA JAYA ADI KARYAJl. RE Martadinata RT 04/08 Kel. Kandang Kec. Kampung Melayu, Bengkulu Telp./Fax.: (0736) 51717Email: [email protected]

Kabupaten Bengkulu SelatanPT CIPTO SADAR PRATAMAJl. Salak No. 91 Panorama Lingkar Timur, BengkuluTelp.: (0736) 25080Email: [email protected]

PT MUTIA BERSAUDARAJl. H. Agus Salim No.19, PadangTelp.: (0751) 811 150Fax.: (0751) 840 550

LampungKota Bandar LampungPT LAMPUNG MANUNGGAL GEMILANGJl. Pangeran Antasari Blok F 9 No. 15, Bandar LampungTelp./Fax.: (0721) 5600 280-81

PT PERUSAHAAN PERDAGANGAN INDONESIAJl. Sudirman No. 22 Bandar Lampung.Telp.: (0721) 266 555Email: [email protected]

PT MAJUMAKMUR MULIAKomp. Villa Citra Blok C No. 3, Bandar LampungTelp.: (0721) 267 525; 269 828Fax.: (0721) 269 805Email: [email protected]

KOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel. Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]

Kabupaten PesawaranKOPERASI WARGA SEMEN GRESIK Jl. Tauchid Perum PT Semen Gresik Tubanan, GresikTelp.: (031) 398 576; 3989 018Fax.: (031) 398 3262Email: [email protected]


PT LAMPUNG MANUNGGAL GEMILANGJl. Pangeran Antasari Blok F 9 No. 15, Bandar LampungTelp./Fax.: (0721) 5600 280-81Email: [email protected]


Kabupaten PringsewuKOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel. Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]

KOPERASI WARGA SEMEN GRESIK Jl. Tauchid Perum PT Semen Gresik Tubanan, GresikTelp.: (031) 398 576; 3989 018Fax.: (031) 398 3262Email: [email protected]



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Kabupaten TanggamusKOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel. Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]




Kabupaten Lampung TimurKOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel. Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]



PT MAJUMAKMUR MULIAKomp. Villa Citra Blok C No. 3, Bandar LampungTelp.: (0721) 267 525; 269 828Fax.: (0721) 269 805Email: [email protected] [email protected]

Kota MetroKOPERASI KELUARGA BESAR SEMEN PADANGKomp. PT Semen Padang Kel. Indarung, PadangTelp.: (0751) 777 987; 202 532; 202 766Email: [email protected]




Kabupaten Lampung SelatanPT LAMPUNG MANUNGGAL GEMILANGJl. Pangeran Antasari Blok F 9 No. 15, Bandar LampungTelp./Fax.: (0721) 5600 280-81Email: [email protected]




Kabupaten Lampung Tengah





DKI JakartaDKI JakartaPT BENSTONE CIPTA KREASIJl. Pesanggrahan 35 F, Kel. Meruya Utara, Jakarta Telp.: (021) 5853 590; 585 3612Fax.: (021) 5847 846Email: [email protected]

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PT BIMA SEPAJA ABADIKomp. Pertokoan Enggano Megah Blok A No. 5 QJl. Enggano Raya Tj.Priok, Jakarta 14310Telp.: (021) 4392 5331-33 Fax.: (021) 4390 7674Email: [email protected]

PT BUMIAGUNG KIRANASENTOSAJl. Pondok Betung Raya No. 88 Bintaro Jaya Sektor 4, Tangerang Telp.: (021) 7340 346Fax.: (021) 7376 705Email: [email protected]

PT DASA NIAGA NUSANTARAJl. Letjend Suprapto Rukan Graha Cempaka Mas Blok A/15, JakartaTelp.: (021) 4213 888Fax.: (021) 4287 2693Email: [email protected]

PT MULIA SAKTIPERKASAJl. Mangga Besar Raya No 12 B, JakartaTelp.: (021) 6297 242; 6007 770; 6298 841Fax.: (021) 6298 843Email: [email protected]

PT PENTA PIRAMIDA KENCANAJl. Pangeran Jayakarta 141 Blok B No. 25 Jakarta 10730Telp.: (021) 6283 077-78Fax.: (021) 6285 523Email: [email protected]

PT INTISUMBER BAJASAKTIJl. Pluit Utara Raya No. 61 RT 005/004 Kel. Pluit Kec. Penjaringan, Jakarta UtaraTelp.: (021) 6667 5999Fax.: (021) 6667 5800Email: [email protected]

PT SINAR BINTANG ASIAPRIMAJl. Duren Tiga Raya No.31 Pancoran, Jakarta SelatanTelp.: 021-79187391/92/93/79187380/88Fax.: 021-79187368Email: [email protected]

PT KIAT MAJU BERSAMAJl. Karang Anyar No. 55 Blok A No. 40, JakartaTelp.: (021) 6260 116 Email: [email protected]

PT SEMEN INDONESIA LOGISTIKJl. Veteran 129 GresikTelp.: 031-3981463Fax.: 031-3982304Email: [email protected]

BantenSerangPT BENSTONE CIPTA KREASIJl. Pesanggrahan 35 F Kel. Meruya Utara, Jakarta Telp.: (021) 5853 590; 5853 612Fax.: (021) 5847 846Email: [email protected]

PT BIMA SEPAJA ABADIKomp. Pertokoan Enggano Megah Blok A No. 5 QJl. Enggano Raya Tj.Priok, Jakarta 14310Telp.: (021) 4392 5331-33 Fax.: (021) 4390 7674Email: [email protected]

PT DASA NIAGA NUSANTARAJl. Letjend Suprapto Rukan Graha Cempaka Mas Blok A/15, Jakarta PusatTelp.: (021) 4213 888Fax.: (021) 4287 2693Email: [email protected]

PT PENTA PIRAMIDA KENCANAJl. Pangeran Jayakarta 141 Blok B No. 25 JakartaTelp.: (021) 6283077-078 Fax.: (021) 6285 522Email: [email protected]

PT INTISUMBER BAJASAKTIJl. Pluit Utara Raya No. 61 RT 005/004 Kel. Pluit Kec. Penjaringan, Jakarta UtaraTelp.: (021) 6667 5999Fax.: (021) 6667 5800Email: [email protected]

PT SINAR BINTANG ASIAPRIMAJl. Duren Tiga Raya No. 31 Pancoran, Jakarta SelatanTelp.: (021) 7918 7391-93; 7918 7380; 7918 7380Fax.: (021) 7918 7368Email: [email protected]

PT SEMEN INDONESIA LOGISTIKJl. Veteran 129 GresikTelp.: 031-3981463Fax.: 031-3982304Email: [email protected]

PT SINAR DINAMIKA BETONJl. Raya Bojonegara Kubang Jeruk Terate, Kramat Watu,SerangTelp./Fax.: (0254) 5750 970Email: [email protected]

TangerangPT BUMIAGUNG KIRANASENTOSAJl. Pondok Betung Raya No. 88Bintaro Jaya Sektor 4, Tangerang SelatanTelp.: (021) 7340 346Fax.: (021) 7376 705Email: [email protected] [email protected]

PT PENTA PIRAMIDA KENCANAJl. Pangeran Jayakarta 141 Blok B No. 25 Jakarta 10730Telp.: (021) 6283077-078 Fax.: (021) 6285 522Email: [email protected]

PT INTI SUMBER BAJASAKTIJl. Pluit Utara Raya No. 61 RT 005/004 Kel. Pluit Kec. Penjaringan, Jakarta UtaraTelp.: (021) 6667 5999Fax.: (021) 6667 5800Email: [email protected]

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Kota CilegonPT SEMEN INDONESIA LOGISTIKJl. Veteran 129 GresikTelp.: 031-3981463Fax.: 031-3982304Email: [email protected]

Kabupaten LebakPT SEMEN INDONESIA LOGISTIKJl. Veteran 129 GresikTelp.: 031-3981463Fax.: 031-3982304Email: [email protected]

West JavaBandungPT BIMA SEPAJA ABADIKomp. Pertokoan Enggano MegahBlok A No. 5 Q. Jl. Enggano Raya Tj. Priok Jakarta 14310Telp. 021-43925333/43907674 Fax.: 021-43907674Email: [email protected]

Kota CirebonPT SEMEN INDONESIA LOGISTIKJl. Veteran 129 GresikTelp.: 031-3981463Fax.: 031-3982304Email: [email protected]

Kabupaten GarutPT INTISUMBER BAJASAKTIJl. Pluit Utara Raya No. 61 RT 005/004 Kel. Pluit Kec. Penjaringan, Jakarta UtaraTelp.: (021) 6667 5999Fax.: (021) 6667 5800Email: [email protected]

Bekasi/CibitungPT JANTI SARANA MATERIAL BETON Jl. Sunandar Priyo Sudarmo 45 Blok L Blimbing Kotamadya Malang Jawa TimurTelp.: 0341-403407/403424/4034253Fax.: 0341-4034253Email: [email protected]

Kabupaten TasikmalayaPT INTISUMBER BAJASAKTIJl. Pluit Utara Raya No. 61 RT 005/004 Kel. Pluit Kec. Penjaringan, Jakarta UtaraTelp.: (021) 6667 5999Fax.: (021) 6667 5800Email: [email protected]

CianjurPT BIMA SEPAJA ABADIKomp. Pertokoan Enggano Megah Blok A No. 5 Q. Jl. Enggano Raya Tj. Priok Jakarta 14310Telp. 021-43925333/43907674 Fax.: 021-43907674Email: [email protected]

Central JavaSemarangPT BIMA SEPAJA ABADIKomp. Pertokoan Enggano Megah Blok A No. 5 QJl. Enggano Raya Tj.Priok, Jakarta 14310Telp.: (021) 4392 5331-33 Fax.: (021) 4390 7674Email: [email protected]

PT PERUSAHAAN PERDAGANGAN INDONESIAJl. Letjend. Suprapto No. 30, Semarang Telp.: (024) 3545 481Email: [email protected]

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INFORMATION ON THE COMPANY’S WEBSITE

The technology and information development grow fastly, giving public the freedom access the information needed. In order to improve transparency while increasing stakeholder access to the actual and up to date Company performance information, Semen Padang provides official website at www.semenpadang.co.id. In order to facilitate understanding of the information presented, the site provides two language options, namely Indonesian and English.

The Company’s website is designed with due regard to the applicable legislation, reflecting the identity of Semen Padang. In the site, Semen Padang provides all information needed for stakeholders, including:• General information about company profile covers the Company’s

brief history of establishment, vision and mission, policies, profiles of all members of the Board of Commissioners and Board of Directors, organizational structure, shareholder information, and achievements.

• Information on business and production activities covering the production process of cement consists of several stages, types of cement and the usage, to the current production capacity of Semen Padang.

•. Information on all Semen Padang products .• Clear and complete Information of representative and distributor

offices.• Employee recruitment information.• Information regarding guidelines on the implementation of good

corporate governance that includes GCG Guidelines, Whistle Blowing System Guidelines, Code Guidelines, and Implementation of the Board Manual as well as other GCG related matters.

• Detailed Information on General Meeting of Shareholders (RUPS) covering the agenda, summary of minutes of the GMS, date of announcement, date of invitation, date of GMS and date of summary of minutes of the GMS announced.

• Information on the Annual Report and Sustainability Report in the last six years and other digital information covering the 2017 Semen Padang News, Information Service Flow, Warta Semen Padang 2016 and Sportalympic 2016.

• PPID profile is part of Semen Padang’s commitment to provide public information services as mandated by Law no. 14 Year 2008 on Public Information Openness. PPID PT Semen Padang opens access to public to know and obtain information about the Company through information provided or upon request

• Information on the implementation of programs and activities of corporate social responsibility as well as other information in the form of complete news and reports.

Although it has not yet become a public company, Semen Padang continues to strive to increase transparency to stakeholders as a form of good corporate governance. Semen Padang sites are regularly managed and supervised to ensure there are no technical constraints. In addition, Semen Padang site has also complied with OJK regulation no. 8 / POJK.04 / 2015, except those that are specific to a public company.

PT Semen Padang provides official site accessible at

www.semenpadang.co.id

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Photo title:Quality from the source

Photo location:PT Semen Padang Pouch Factory

Photo caption:PT Semen Padang Always maintains the quality of its

Products before being marketed.



Photo title:We are with Semen Padang

Photo Location:Indarung VI

Photo Caption:Semen Padang provides the equal chance for all employee to continoue growing together with Semen Padang






Business supportOVERVIEW

Human resources and information technology are the key in managing the company in order to meet the Semen Padang need in the future. Human resources management in Semen Padang has been systemized, known as Human Capital Master Plan (HCMP). One of the Company’s efforts to survive in the future is by reinforcing the security of corporate information systems by participating in ISO 27001 certification.





Human Resources

Information Technology and Communication

12,79 8,41 7,16

TRAINING COSTS 3 LAST YEARS

ICT FUNCTION• Support business growth

• ICT Strategy (ICT MP)

• Supports Corporate Action

• Adopting Relevant Technology

• Increase SMIG business growth

• Business process reengineering

• Demand management

• Development of IT services

• Supports SMIG’s business operations

• Management of IT services is effective

and efficient

• IT Governance

DEVELOPMENT OPERATIONAL

1.625Employees of

Semen Padang

2015 2016 2017billion billion billion

54 478 286 793

EMPLOYEE GROUP BASED ON EDUCATIONAL LEVEL

MasterDegree

Bachelor Degree

Diploma 3rd

Senior High School

Employees Employees Employees Employees

01 02 03

Business supportOVERVIEW






PT Semen Padang incorporated inPT Semen Indonesia (Persero) Tbk, has one backbone group network to facilitate data communications, Voice and video capable of providing easy access to every SMIG branch end point.

THE COMPOSITION OF EMPLOYEE BASED ON

EMPLOYEE STATUS

COMPOSITION OF EMPLOYEE BASED ON GENDER

COMPOSITION OF EMPLOYEE BASED ON POSITION

1.619 1.4593206 166300 1.005Permanent Employees

MaleExecutivesNon-Permanent Employees

FemaleManagerial Staffs

Staffs

COMPOSITION OF EMPLOYEES BY AGE

727 338539 21≥40

Years31-39 Years

25-30 Years

<25 Years

COMPOSITION OF EMPLOYEES BY EMPLOYMENT PERIOD

30 40136 697 7715≥35

Years25-34 Years

20-24 Years

10-19 Years

>1-9 Years

≤1 Years

Data Centre

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Human resourcesMANAGEMENT Through the Human Capital Master Plan (HCMP), PT Semen Padang has optimized human resource management focused on developing competence, character and integrity to create high competence, strong character and integrity to support the achievement of the Company’s vision and mission.

HUMAN RESOURCE MANAGEMENT GOVERNANCEIn 2017, PT Semen Padang carried out HR management in line with the needs and demands of business development. The Company developed and maintained qualified human resources by applying appropriate remuneration policies and formulations to suit the employee’s needs and ability. The company sees, overall in terms of quality and ability of human resources in 2017 had increased significantly.

These achievement were obtained by applying human resource governance which uphold the principles of openness, fairness and freedom from discrimination of race, ethnicity, ethnicity, religion, gender, age, limitations possessed by a person or other special circumstances protected by legislation . The whole principles are supported by an objective recruitment system, the determination of remuneration, the organization of education and training, career paths, and other related matters without distinction in accordance with the ability of each individual. Employee performance appraisal systems are established and implemented fairly and transparently. The Company also ensures the availability of information that employees need to know in accordance with the provisions through a good and timely communication system.

Harmonious relationships with employees are organized on the basis of mutual respect and respect for their respective rights and obligations. The Company is committed to put forward the Joint Working Agreement as the main foundation in fostering relationships with employees. Human resource management policies and procedures such as promotion, demotion, mutation, and reward and punishment procedures are developed based on the principles agreed in the Joint Working Agreement. The implementation of policies and human resources management are consistently implemented to support the achievement of the Company’s performance.

In order to prepare competent and competitive human resources, PT Semen Padang has implemented HCMP to optimize Human Capital (HC) management in developing competence, character and integrity. All three refer to one purpose, the availability of highly competent HC, strong character, and integrity to support the achievement of the Company’s vision and mission.

On an ongoing basis, PT Semen Padang continually strives to form strong, professional, and capable human resources to accomplish the Company’s vision and mission. Semen Padang constantly evaluates the Company’s performance and operational processes toward a better direction, so that each part synergizes in supporting the Company’s strategy and goals both in the long term and short term.

ARCHITECTURE OF HR MANAGEMENTHCMP is a human resource management system that encompasses the entire HR management process, from human resource acquisition process, human resource competency development process, to the binding and maintaining human resources process. HCMP is implemented through the Human Resource Information System (HRIS) which includes reward management (Payroll and Enterprise Compensation Management), training management (Learning Solution), People Development and Talent Management, Employee Performance Management System and Corporate Performance Management System).

To create employees with character and integrity in support of the Company’s vision and mission, the Company actively internalizes the Corporate Culture called CHAMPS. CHAMPS is an acronym of Corporate Culture with the basic values of Compete with a Clear & Synergized Vision, Have a High Spirit for Continuous Learning, Act with High Accountability, Meet Customer Expectation, Perform Ethically with High Integrity, and Strengthening Teamwork.

HUMAN RESOURCESSemen Padang believes that HR is the most important and strategic asset for the Company. HR becomes an important focus for business development of Semen Padang. The Company believes that HR is the key driver of performance so it is necessary to get special attention in the development of its requirement and competencies to support the achievement of the Company’s vision, mission and strategic objectives.Sustainably, Semen Padang

continues trying to form a tough, professional HR which is able to realize the vision and mission of

the Company

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Corporate Vission, Mission, Strategy & Policy

Business Unit Strategy(OPSCO)

Business Initiative

Business Unit Budget and Plan

Organizational Design– Organizational Structure– Job Description

ResultMeasurement

Business Result

Achievement

Job Competency– Core– Leadership– Manufacturer– Non-Manufacturer

Competency Standard Model

Workload Analysis

Recruitment & Selection

Outsourcing

Outplacement/Placement

Special Development

LeadershipDevelopment

KnowledgeManagement Program

Corporate PerformanceManagement

Employee PerformanceManagement

Performance-basedRemuneration System

Individual PerformanceJob Evaluation

Job Grade

Succession Plan

Career Development

Plan & Control

Policy, CompetencySystem

Talent Development

Corporate Culture

Corporate Strategic Plan HC Acquisition Process HR Information System (HRIS)

Business Work Plan

HC Development Process

HC Binding & Maintaining Process

Corporate PerformanceBusiness UnitPerformance

CompetencyAssessment HC Development

Remuneration Structure

Plan & Control

Throught the commitment of management to strengthen the work culture excellence, human resources management focused on various programs to increase capability, leadership, and quality of life and work. On the whole work area implanted professionalism, integrity, and passion to contribute the best for the company.

ORGANIZATIONAL STRUCTURE OF HUMAN RESOUCES MANAGEMENT

Human Resources DepartmenEndang Persitarini

Education & TrainingPuspha Sari

PersonnelM. Irwan Prasetyo

HR Planning & DevelopmentApriati Indrianti

Eselon I

Eselon II

Human resource management is part of a advanced corporate planning. Human Resource Management is under the responsibility of the Finance Director, and is managed by the HR Department assisted by three Bureaus, the HR Planning and Development Bureau, the Personnel Bureau, and the Education and Training Bureau (Bindiklat).

100




PROFILE OF SEMEN PADANG’S HR MANAGER 2017

Head of Department of Human Resources

Endang PersitariniIndonesian citizen, domiciled in Padang. Born in Padang, 3 April 1964, 53 years old. A graduate of Master of Human Resource Management (MHRM) University of Wakaito New Zealand. Her employment history includes Head of Bureau of Human Resource Management and Development (2004-2014), Head of Human Resources Department (2014-present).

Head of Bureau HR Planning and Development

Aprita IndriantiIndonesian citizen, domiciled in Padang. Born in Tanjung Karang, April 14, 1963, 54 years old. A graduate of Management S1 Sriwijaya University. her employment history includes Expert Staff II / Supervisory and Compliance Staff (2008-2009), Expert Madya II / Staff Planning and Monitoring (2009-2011), Head of Compliance Supervisory Bureau (2011-2012), Head of Commercial Audit and Management System Bureau (2013-2014), Head of Bureau of HR Planning and Development (2014-present).

Head of Personnel Bureau

alia

M. Irwan Prasetyo

Indonesian citizen, domiciled in Padang. Born in Palangkaraya, December 7, 1982 was 35 years old. Is a graduate of Physics Engineering S1 University of Gadjah Mada. His occupation history, among others, as a Young Expert II Electrical Maintenance & Instrument IV (2010), Head of Safety Division (2010-2011), Young Expert II HR Planning and Development Staff (2011-2014), Head of Personnel Division (2014-2016), Head of Personnel Bureau (2016-present).

Head of Bureau of Guidance, Education and Training

Puspha SariIndonesian citizen, domiciled in Padang. Born in Padang On 28 March 1985, aged 32 years. Graduate of Psychology S1 University of Gajah Mada. Employment history include: Young Experts II Staff HR Planning and Development (March 1, 2010 to February 28, 2011) Ka. Field Planning and Evaluation Training (01 March 2014-31 December 2014) Planning and Evaluation Training Bureau (January 1, 2015-present).

PLAN, STRATEGY AND POLICY OF HUMAN RESOURCES MANAGEMENTIn achieving the vision and mission realization, Semen Padang has developed strategic planning in human resource management through Human Capital Master Plan (HCMP) with Indonesia Center of the CHAMPS (SICC), Human Capital Readiness, High Performing Human Capital System and Corporate Transformation .

PT Semen Padang forms an organization supported by human resources with knowledge, skills and expertise in its field, and is able to see future prospects by exploiting opportunities. HR PT Semen Padang is always proactive towards the needs of the Company and the business environment so that every employee is responsive and dynamic to change.

To improve the competitive advantage, efficiency, and effectiveness of operational management, the Company has refined the establishment of an organizational structure with the following objectives:1. Optimizing all organizational functions and distribution of

work unit responsibilities.2. Accelerating the completion of strategic corporate projects.3. Improving the coordination and smooth operation of sales

organizations in the face of market situation and business competition and have competitiveness.

4. Aligning and supporting the consolidation and synergy policies of Semen Indonesia group

101






The Implementation of human resources management is refers to the Company’s policies set by the Board of Directors and described in the form of Directors’ Decisions, guidelines, procedures, and work instructions that will improve the performance of more effective management.

HUMAN RESOURCE PERFORMANCEACHIEVEMENT IN 2016The target of learning and growth achievement in corporate KPI comprised of Incompetent Employee, Working Climate Index (WCI), KM Implementation, and Information Capital Readiness (ICR). To ensure the fulfillment of targets in all three aspects, the targets were assigned to all work units proportionately.

Incompetent Employee is a measure of the readiness of human resources based on the percentage aspect of incompetent employees. The formulation used to measure the Incompetent Employee is by appraising through direct superior using competency, discipline, initiative, and dexterity parameters.

By 2017, the Incompetent Employee target was 15% and the realization of HCR was 8.83% or 141% of the target set. In order to improve employee competence, also carried out the process of coaching in the form of socialization to the management of human resources, by way of monitoring and monthly feedback.

Employee competency readiness in executing the Company’s strategy is done through process size and resultsl:

Table of Process and Assessment ResultsAspek Proses Hasil KPI

Competence enhancement

• Employee Training Program

• Leadership Program• Career

Management Program

• Program Performance Management System

• Trained Employee• Certificate of

Competence• The value of KPI

and Competency

The Working Climate Index (WCI) is a measure of organizational readiness and work climate based on aspects assessed through the Company Commitment parameters, WCI is measured through employee surveys using scale formulations 1-5 as a measure. By 2017 the WCI target is 3 of scale 5 and the realization of WCI is 4.13 or 137.6% of the target set. Organizational readiness to achieve company goals is done through:

Table of Organization Readiness to Achieve Company GoalsAspect Process KPI’s Results

Organizational Development • Improved Organizational Structure Especially Sales and Production• Cement Transformation Indonesia group

OrganizationalEffectiveness

Performance Management • Performance Management System Perfection• Habituation of Corporate Performance Management System (CPMS) and

Employee Performance Management System (EPMS)• Improvement of the Inaugural Parameter Rating Assessment

Incompetent Employee

Employee Development • Improved Promotional Systems and Procedures and Employee Transfers Associated with Grading System

• Selection of Exemplary Employees• Development of Center of Dynamic Learning implementation and

Strengthening Knowledge

• UnderTrainedEmployee• UnderPromoted• Employee• KMInfrastructure• EffectivenessofTraining

Leadership • Periodic Direct Performance Performance Evaluation and Periodic Direction By Each Top in All Units

• GLDP for Echelon I, TLDP for Echelon II, and OLDP for Echelon III• Assessment Center for Leadership Staff for Succession Planning and

Talent Management

• WorkingClimateIndex• IncompetentEmployee• SuccessionPlan• CompetencyCertificate

JobCharacteristic • Job Description Improvement• Completion of the Transfer of Knowledge Process


WorkEnvironment • Safety Induction Program• Exemplary Workplace Program• Inspection of Violation of Use of PPE & Regulation K3

• WorkingClimateIndex

• HouseKeepingRate

Teamwork • Corporate Events Program• Outbound and Family Gathering Programs

• Employeerelationship• WorkingClimateIndex

JobCharacteristic • Improving Job Description• Process Improvement• Transfer of Knowledge


Compensation & Benefit • Grading System Implementation• Improved Promotion System, Mutation, and Remuneration System

• Under Paid Employee• Working Climate Index• Internal Customer Satisfaction

Index

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Implementation of Knowledge Management

KNOWLEDGE LEADERSHIP

TECHNOLOGY ENABLE

KNOWLEDGE CULTURE

Piloting

• EstablishmentofKnowledgeManagement(KM)StructureandAgentofChange

• TopManagementasarolemodel• BuildingKnowledgeLeadership

• Socializing and Promoting KM• Formation of Knowledge Mindset

through the Learn and Share Program• Implementation of Shared Learning

(SL) & COI

• CollaborationofTechnologyandmangementcontenttoSupportCOI&SL

• PlatformintegrationofKMTechnology• DevelopmentofExpertLocatorSystem

• CommunityofPractice• PeerAssist• RetrospectiveProject

KM Implementation is the process of Knowledge Management culture in PT Semen Padang by building the foundation / foundation for KM process. Meanwhile, Information Capital Readiness (ICR) is a measure of the maturity of the information technology process and measurement of the level of infrastructure readiness and business applications. ICR aims to know how to improve the quality of information systems management in order to improve business process continuity.

ICR measurements are carried out using the Maturity Level method of applying information technology governance using percentages, where each level indicates the quality of implementation of each control within the organization / work unit.

HUMAN RESOURCE PROFILEAs of December 31, 2017, the number of employees of PT Semen Padang reached 1,625 employees, down 5% compared to the year 2016 which amounted to 1719 people. The number of employees of PT Semen Padang in 2017 has been in accordance with the Company’s business needs both in terms of quality and quantity.

Employee Composition by StatusThe number of non-permanent employees in the year 2017 was 6 people or decreased 65% compared to the year 2016 as many as 17 people.

Table of employees composition Based on Employee Status 2016-2017

Profile CategoryYear

Change %2016 2017

Employee status Permanent employees

1.702 1.619 -5

Non Permanent Employee

17 6 -65

Total 1.719 1.625 5

Graph of Composition of Non-Permanent Employees based on Employment Status in 2016-2017

Non-Permanent Employee

2016

2017

Permanent employee

1.619

6

1.702

17

Employee Composition based on Position LevelPT Semen Padang has prepared a suitable composition between the needs and ideal functions in order to create effectiveness and efficiency of work implementation. Employees of PT Semen Padang are divided into several levels of positions, starting from Executives, Young Leaders Staff, to Staff Leaders.

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By 2017, the total composition of employees for staff positions amounted to 320 people decreased 6% compared to 342 people. The position of the young leaders in 2017 numbered 300 employees, this record decreased by 1% compared to the year 2016 as many as 303 people. The number of executing employees in 2017 amounted to 1.005 people, decreased by 6% compared to 2016 as many as 1,074 people.

Table Number of Employees by Position 2016-2017

Profil JenisTahun Perubahan

%2016 2017

Employee status Leadership Staff 342 320 -6

Young Leaders Staff

303 300 -1

Executor 1.074 1.005 -6

Total 1.719 1.625 -5

Graph Number of Employees by Position in 2016-2017

2016

2017

Staf Pimpinan Muda

PelaksanaStaf Pimpinan

320

300

1.005

342

303

1.074

Table of Composition of Employees by Status and Position Per Department In 2017

No. Work UnitStatus Jabatan

Permanent HonoraryManagerial Staff Non Staf

Dept. Bureau Section Junior Assc 1 Assc 2 Assc 31. InternalAudit 23 0 1 3 7 4 5 3 02. Department of Communication & Public

Facility74 3 1 5 13 12 22 15 9

3. Department of Legal & GRC/MR 33 0 1 8 11 0 7 4 24. Staff Directors 2 0 2 0 0 0 0 0 05. Department of Sales 70 0 1 7 24 10 17 8 36. Department of Distrans 81 1 1 4 11 13 25 20 87. Department of Procurement 89 1 1 5 14 24 24 17 58. Department of Mines 161 0 1 5 12 24 52 47 209. Department of Production 231 0 1 4 11 39 88 54 34

10. Department of Production 178 0 1 5 13 30 63 44 2211. Department of Production 161 0 1 4 9 25 59 38 2512. Department of Engineering Factory 84 0 1 3 6 15 26 21 1213. Department of Quality Assurance &

Innovation227 1 1 16 38 70 68 20 14

14. Indarung VI Project 76 0 1 10 9 14 23 15 515. Department of Accounting & Finance 57 0 1 5 12 11 13 10 516 Department of HRM 48 0 1 4 5 8 15 9 617. APLP 24 0 7 10 3 1 1 2 0

Sub Total 1619 6 24 98 198 300 508 327 170Total 1.625

Employee Composition by GenderPT Semen Padang upholds the principle of equality in the process of acceptance, management, development, training, certification, placement and promotion for all employees. The Company provides equal opportunities for all employees to continue growing and growing with the Company. The total composition of male employees in 2017 amounted to 1,459 people decreased by 6% compared to the year 2016 of 1,548

people. The number of female employees in 2017 as many as 166 people also decreased by 3% compared to the year 2016 of 171 people.

The majority of the composition of employees is dominated by men, given the type of work in the cement industry is in dire need of many men. However, the Company provides equal treatment to all employees regardless of gender.

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Table of Employee Composition by Gender in 2016-2017


Change %2016 2017

Gender Man 1.548 1.459 -6

Women 171 166 -3

Total 1.719 1.625 -5

Graph of Employee Composition Based on Gender 2016-2017

2016

2017

FemaleMale

1.459

166

1.548

171

Composition of Employee Based on Educational Level PT Semen Padang as a growing company, is supported by human resources that have the capacity and capability as per the needs of the Company. In 2017 with the level of education for graduation S2 amounted to 54 employees. S1 amounted to 478 employees. While the total composition of D3 employees in 2017 amounted to 286 people, and high school numbered 793 people and junior as many as 14 people.

Table Number of Employees by Education Level 2016-2017


Change %2016 2017

Educational level

Master degree 50 54 8

Bachelor degree 412 478 16

Diploma 3 380 286 -25

Senior High School 850 793 -7

Junior High School 27 14 -48

Total 1.719 1.625 -5

Graph Composition of Employees Based on Educational Level in 2016-2017

2016

2017

Master Degree Bachelor Degree

Diploma D3 Senior High School

Junior High School

54

478

286

793

1450

412 380

850

27

Composition oe Employee by AgePT Semen Padang has a policy of granting employees the right to work until the age of 56 years. By 2017, the composition of employees by age ≥40 years of 727 employees was decreased by 5% compared to 766 employees in 2016. Meanwhile The 31-39 year age of 539 employees was increased by 3% compared to 521 employees in 2016. The age of 25-30 years 2017 of 338 employees decreased by 13% compared to the year 2016 of 390 employees, and the age <25 years of 21 employees decreased by 50% compared 42 employees in 2016.

Table of composition of Employees by Age 2016-2017


Change %2016 2017

Age ≥40 Years 766 727 -5

31-39 Years 521 539 3

25-30 Years 390 338 -13

<25 Years 42 21 -50

Total 1.719 1.625 -5

Graph Number of Employees by Age 2016-2017

2016

2017

≥ 40 years 31-39 years 25-30 years ≤ 25 years

727

539

338

21

766

521 390

42PT Semen Padang has prepared a suitable composition

between the needs and ideal functions in order to create

effectiveness and efficiency of work implementation

105






Composition of Employee based on Employment PeriodBy 2017, the number of employees based on employment ≥35 years of 30 employees, increased by 76% compared to 17 employees in 2016. Working period of 25-34 years number of 136 employees, decreased by 38% compared to 218 employees in 2016. The employment period of 20-24 years totals 40 employees, decreasing by 13% compared 46 employees in 2016. The employment period of 10-19 years totals 697 employees, an increase of 49% compared to 467 employees in 2016. The employment period of 1-9 years was 715 employees, decreased by 26% compared to 962 employees in 2016, and the working period of ≤1 year of 7 employees decreased by 22% compared to 9 employees in 2016.

Table of Composition of Employees by Age 2016-2017


Change %2016 2017

Years of service ≥ 35 17 30 76

25-34 218 136 -38

20-24 46 40 -13

10-19 467 697 49

>1-9 962 715 -26

≤ 1 9 7 -22

Total 1.719 1.625 -5

Graph of Composition of Employee Based on Employment Period 2016-2017

2016

2017

≥ 35 years 25-34 years 20-24 years 10-19 years >1-9 years ≤1 years

30136

40

697

715

717

218

46

467

962

9

EMPLOYEE RECRUITMENTThe principles of transparancy, fairness, and equality in the selection of professional human resources are always upheld by the company, providing equal opportunities to prospective employees regardless of race, religion, race and class. To meet the needs of PT Semen Padang in accordance with changing business conditions, the Company implemented several programs including the following:1. Recruit fresh graduate through job fair, scholarship bonding,

cooperative education, collection of applicant candidate database in Company website.

2. Professional Recruitment.3. Preparing cadres and talents through an intensive

competence development program.

Recruitment is an effort of searching and acquiring of a number of eligible employee candidates in order to select the right people to fill the required functions, ranging from search and selection process applicants, the process of coaching candidates who pass the selection to trainees, to inauguration into permanent employees.

Semen Padang is optimistic that the recruitment process can produce competent employees, who willbe able to grow, and have a high commitment to the company. Semen Padang also puts the right people on the right function to create quality human resources that will continue to grow in the long term.

HR DEVELOPMENTPT Semen Padang believes that human resource development is a necessity for the Company’s sustainability in order to develop more dynamically. The company also recognizes that as an important factor in business growth, HR requires the development of quality, insight, and good competence in achieving competitive advantage. The Company’s human resource development strategy is to develop employees towards better, improve employee engagement, and provide education and training with materials that are translated from business needs in the field. Thus, the development of PT Semen Padang human resources capable of producing quality human resources that generate maximum performance.

COMPETENCE ASSESSMENT The competence structure used by PT Semen Padang is as follows:1. Core competence (core), competence that must be owned

by all employees in carrying out duties and responsibilities in the Company.

2. Leadership competencies (leadership), competencies that must be owned by employees to be able to carry out managerial and leadership functions properly.

3. Technical competence (technical), special competence in the form of knowledge and technical skills needed to carry out certain work well. Technical competence is divided into two major groups, namely technical competence based on 16 job families and general technical competencies that must be owned for all processes both core and non core processes.

Based on the structure of competence, a job profile that contains of competency profile that must be owned by an official who occupies a position, both in terms of type and level of competence. The next process is the creation of an individual profile, that is, the competence profile of the individual / official. Assessment of this individual profile can be done through external parties or superiors.The match up profile is performed to compare the job profile and individual profile so that it will get a gap analysis. The Gap analysis will result in training needs analysis (TNA) and the development plan required for a position. This gap analysis will be related to the learning framework of Semen Indonesia Group used.

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All competencies will be tied to the training so that competence and training are grouped as follows.1. Core competence (core) is related to training that is controlling

behavior in carrying out the work.

STAGE OF LEADERSHIP TRAINING IMPLEMENTATION

1 32 4

Emerging Development Program

LeadingPeopleforExcellence

Level 1EMERGINGLEADER

TransformationalLeaderDevelopment Program

LeadingBusinessforExcellence

Level 3TRANSFORMATIONLEADER

OperationalLeaderDevelopment Program

Managing Operation Excellence

Level 2OPERATIONALLEADER

GlobalLeaderDevelopment Program

LeadingtheCorporateforHighPerformanceOrganization

Level 4GLOBALLEADER

Focus Implementation

CompetencyModel LeadershipV-MValue JobResponsibility

PROGRAM FOR LEADER STAFF DEVELOPMENTTechnical competence is the ability of employees in carrying out all responsibilities. Technical competence will support the employee to achieve the target work unit. The training to be developed relates to the business mastery in which the individual is developed to organize, develop, and people (subordinates and co-workers) to achieve goals.

Stages and Leadership Development

Job Profiling

Penilaian KPI

Hasil Kinerja Individu 9BoxesTalent

Learning Framework

People Development (PD)

CorporatePerformanceManagementSystem (CPMS)

(LSO)

TalentManagement

SuccessionPlanningPenyesuaian

KPI

IndividualProfil

ProfileMatchup

GapAnalysis

2. Leadership Competence (leadership) is used to form leadership model in Semen Indonesia Group, among others:• GlobalLeader,TransformationalLeader,Operational• Leader,danEmergingLeader.

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TalentBox

HighlyContributor

LOW

HIGH

GoodPerformance

MODERATE

MODERAT

E

Perfo

rman

ce K

PI

LOW

GREAT

HIGH

HighlyContributor ACHIEVER Good

Performance

QuestionMatch

Potential

ModerateLearner HighlyLearner

PERFORMANCE ASSESSMENTEmployee performance appraisal is done through Employee Performance Management System (ePMS) system. The system is related to the system of Corporate Performance Management System (CPMS) which became the basis of data for the process of assessment of ePMS.

The purpose of the ePMS system is as follows:1. Supporting the achievement of the Company’s vision and

mission.2. Strengthening the culture of PT Semen Padang through

the establishment of behaviors based on superior values contained in core competency.

3. The alignment of individual targets to the work unit objectives and corporate objectives with the elaboration of the Key Performance Indicator (KPI) of the Corporation into the KPI of the work unit and downgraded to individual KPIs.

4. Creating mutual understanding among employees about what should be achieved or the end result in the form of KPI.

Through the ePMS, the performance score of each individualwill be assessed through KPI and core competence of employees. The results of the performance appraisal are part of the career and compensation system developed by Semen Padang.

SUCCESSION PLANSuccession Plan is a process in preparing personnel who will fill certain positions. PT Semen Padang must prepare the required

competencies through training, development, mutation, and rotation so that candidates are ready to hold a position.

The result of competency and performance assessment will be input in Talent Management system which then used for succession plan. In 2012-2015, Core Assessment and Competence Leadership have been completed for Echelon 1, Echelon 2, Echelon 3, along with feedback from assessment result. Based on the assessment, an Echelon 1 Mapping was made in 9 Talent Pool boxes.

CAREER PATHThe career path is a lateral and vertical career movement of the individual in a job family and / or between the family of office. Each employee is given equal opportunity to reach a certain level or position within the organizational structure. PT Semen Padang prepares a systematic career development program based on the performance assessment of each individual employee.

The basic principle of career path is balancing future demand and supply. Career path is a common pattern that regulates the career path of office. PT Semen Padang together with Semen Indonesia Group (SMIG) established a new Career Pattern Management using the principles of Hay Group Consultant.

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There are several definitions in the career pattern system, among others:1. Family Position A group of positions that have a relatively similar work nature.2. Tribe Position Grouped positions have a relatively similar work nature.3. Structural Position

A Position that leads a work unit listed on the organizational structure of PT Semen Padang. Positions that organizational hierarchically lead the work unit and have subordinates.

4. Functional PositionOffices that do not lead a work unit, and do not have subordinates.

5. Job MapThe results of mapping (grouping) positions in the Company to each family of positions, based on the similarity nature of the work

The career path of PT Semen Padang is structured using the family position approach so that employee career options can be wider than the work unit and employee career approaches can be more focused on specific areas of expertise. The Nature of Family Position Concept is as follows:

• Has the same nature of work.• Have similar technical know-how requirements.• Have the same competence to produce good performance.• Describe a natural career path from lower positions to higher

positions.• The family of office does not describe the reporting line.• In one family the office may consist of several different grades

or levels.

The unit position focuses on the similarity of characteristics, the responsibility of the role of a group of positions. Career and position movement in PT Semen Padang is arranged vertically and horizontally. Vertical Movement is a career movement from

the lower positions to the higher rpositions within a unit position, whereas Horizontal Movement is a Career Movement from one Position to another Position between the unit of Position, either in the same or different positions.

Horizontal Career Movement of Executive PositionThe horizontal movement of employee’s career is governed by grouping of unit position level, with the majority of positions in the executive positions are able to to move from a unit position to another in the company. This is because the nature of job positions at this level does not require a specific and / or deep expertise. Thus, an employee can still do any work in any unit of positions, with a relatively brief briefing of knowledge and skills.

Horizontal Career Movement of Head of AffairsIn the group of heads of affairs, the movement of positions from one unit to another only focuses ona a group of the similar position. At this level, the employees are expected to prepare any specialization where the employees already understand about the general knowledge and skills on several similar working units

Horizontal Careers Movement of Head of DivisionIn this group of head of divisions, the transfer of a person from one position in a certain unit to another is focused only on the similar unit position. At this level range, the employees are expected to specialize by deepening a particular field in order to become an expert in at least one particular field of work.

Horizontal Career Movement of Head of BureauAt the head of the bureau level, it is expected that employees can play a role as Business Leaders, where their business insights and leadership competencies are more important than their technical capabilities in certain areas. At this level, one’s career movements are designed to become more flexible after a period of time only becomes a specialist. In order to ensure a smooth transition or transfer of knowledge, at this level the transfer of positions between family positions is still focused only in one tribe of the same position.

Horizontal Career Movement Head of Department DepartmentAt level 1, department heads are expected to become Strategic Leaders, where leadership qualities and strategic thinking are far more highlighted than their technical expertise in a particular field. The movement of positions at this level can occur very freely from one family position to any other family of positions.

Human Resource Development is a requirement for the Company’s continuation

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Career Movement

Mapping

Job

Pers

on

PlacementCareer path application

Office Analysis

Job Evaluation

Job Value Job Grade

Officer Family

Career Path Concept Arrangement

Arrangement/ Personal Methof of Value Concept

Evaluation/ People Assessment

Personal Value

Personal Value

Role Profile

Office Map

Job Description

Competency Requirement

Skill, Knowledge, Requirement

2

34

1

Special Career Movement

Special career movement is interposition movement with the pattern of general movement. Special movements are also arranged separately for unique positions (positions whose work nature is not covered properly in one of the family of office). Nevertheless, the two specific movements above hold to the common nature of the work between Target Jobs and Feeder Jobs. The career path system requires several conditions to be met to ensure maximum positive impact in its implementation, among others:1. Placement of employees in the most appropriate position,

where to do so, the first step employee mapping must be done, the management of Semen Padang must have sufficient information about the portfolio of knowledge, skills and experience of each employee so that information this may be used to map employees to positions in the Company, in accordance with the requirements set for each position.

2. In other words, to be able to mapping, the management of Semen Padang should have information about:• Workload and job characteristics, where the management

must have specific information about the duties and responsibilities of each position and its requirements.

• The workload and characteristics of workers, where management must have information about the knowledge, and skills of each individual.

EMPLOYEE PLACEMENTThe basic principle in employee placement is “Job Person Match”. Job Person Match is a condition of conformity between the characteristics of employees with a particular position. To find out whether an employee is / will be appropriate to occupy a position, then management needs to know the two job values (Job Value / Characteristic) and the value of the person (Person Value / Characteristic).

If both values are appropriate, then between the positions and the position holders are already match. Conversely, if the two values differ significantly, then the position with the position holders has not match. The degree of conformity or nonconformance of a position with a holder of office is expressed in a percentage value called the Job Person Match Index (JPM Index). The closer to the 100%, the more appropriate between the position and the pemangkunya. In other words, employee placements should adhere to the highest level of conformity between the knowledge characteristics and skills of the employees, their competencies, interests, preferences and aspirations, as well as the requirements of the job, as well as other criteria established by management. Placement of employees not only consider the conditions of job person match, but also pay attention to the availability of information and aspects of the organization.

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EMPLOYEE MAPPINGEmployee mapping is an effort of the Company to obtain information about both the person (employee), and the job (position) so that management will get a map on:1. In any office someone has a suitability level that meets

the requirements, in accordance with the weight and characteristics possessed by that person.

2. For a position, whoever the appropriate person is placed in the position, based on the grade / class of office.

THE SIZE AND CHARACTERISTICS OF POSITIONTo be able to do the mapping in step two above, the Company must have information about each position, which consists of the characteristics of duties, authority, and responsibilities as outlined in the job description format as well as the competency requirements.

The competency profile (Competency Requirement) of the Company consists of 3 groups, as follows :1. Core competency is a set of skills that every employee

should possess.2. Leadership competency is the knowledge that every

structural poster should possess.3. Specific competency is the specific skill required in each

particular position.

The competency requirement will be stated in the job description, for each job / position in the Company, such as the level of knowledge, skills and knowledge required based on the scope of duty, authority and responsibility of the position. The basic assumption in applying the requirements of the job is that the required knowledge and skills must be measurable, the required

knowledge and skills are the minimum requirements for an employee to do the job well, and there is a program or method to develop it. This knowledge and skill requirement will be applied as a requirement to be able to occupy an office. The workload of the position, obtained through the process of job evaluation that has been done by the Company, which is reflected in the class of job (job grade).

THE SIZE AND CHARACTERISTICS OF PEOPLE / EMPLOYEESSemen Padang also has information on the weight and characteristics of employees as follows:1. the workload of each employee reflects the person’s capacity

to do the work at a certain level, taking into account the level of knowledge and skills, experience, possessed by the person (which will be reflected from the personal grade or rank).

2. Characteristics of areas of expertise, competence, interests, preferences and other characteristics possessed by each employee.

The company must have a valid and reliable method, as well as accurate inventory data on the characteristics of each employee to determine personal grade.

HUMAN RESOURCES INFORMATION SYSTEM (HRIS)In 2016, PT Semen Padang has implemented HRIS in line with human resource synergy with holding PT Semen Indonesia (Persero) Tbk using SAP Enterprise Resource Planning (ERP) system.

ERP SAP application Applied to PT Semen PadangOrganization Management

An application managing structure of organization of the company.

Travel ManagementApps that manage employee travel

Personal Administration

An application that stores all employees’ personal data and

historical positions.

Learning SolutionApps that manage about employee

education and development.

Employment Performance Management

SystemApps that manage employee

performance appraisals.

PayrollApps that manage and perform

payroll calculations and employee incentives and tax-related

calculations.

Time ManagementApps that manage and record schedules and working times.

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Employee Training Cost TablePT Semen Padang Year 2015-2017

Year Total EmployeeTotal Training Period (Hours)

Training Costs (Rp Billion)

2015 1.849 77.682 12,79

2016 1.819 93.107 8,412

2017 1.625 50.869 7,16

In order to meet the training objectives, besides using external instructors (training institutions), the Company also empowers internal instructors for transfer knowledge. First through the Leader as Teacher program, where the leadership staff becomes the instructor or coach for the trainees. The Company also manages the experienced retirees who have the skills and knowledge required by the company through the Retired Faculty program. Members of this Retired Faculty will provide training materials in the classroom or provide coaching for employees as needed.

PROFESSIONAL CERTIFICATION INSTITUTIONS (LSP) CEMENT INDONESIA GROUPIn addition to implementing the learning program, Semen Padang also carries out professional certification for specialized skilled workers in the field of factory operations through Profession Certification Institute (LSP) Cement Indonesia. In 2017, LSP Semen Indonesia already has assessors of 19 (nineteen) people with the following competencies:

LSP Asset Competency TableNo. Training categories Number of assessor

1. Machine Maintenance 6 orang

2. Operation / Process 5 orang

3. Electrical Maintenance 4 orang

4. Process Evaluation 2 orang

5. Mine 1 orang

6. Finance 1 orang

Until 2017, LSP Semen Indonesia has conducted a competency test for a total of 22 (twenty two) employees of the Company with scheme (expertise) as follows:

Table Number of Participants Competency Test Based on Scheme (Expertise)No. Training categories Number of assessor

1. Cement Mill Field Operations Supervision 2 orang

2. Supervision of Kiln & Coal Mill Field Operations

1 orang

3. Supervision for Kiln & Coal Mill Maintenance

9 orang

4. Supervision of Electrical Maintenance 10 orang

Other applications that are immediately applied include:1. People Development, an application that manages

competencydataandemployeedevelopmentneeds.2. Enterprise Compensation Management, an application that

manages remuneration of employees.3. Personnel Cost Planning, an application that manages

individuallaborcostplanning.

The system that has been implemented since 2015 is a refinement of grading system, remuneration pattern based on grading system, and improvement of CPMS & ePMS. This system is used to improve the Performance of employee. Each position has a value called job grade, according to the standard evaluation criteria of Hay Reference Level (HRL) standardization. The value of job grade and appraisal can be seen by every employee on HRIS Portal.

TRAINING AND EMPLOYEE DEVELOPMENT

Training and developmentPT Semen Padang develops its employees’ competence based on the concept of Dynamic Learning (Corporate University). With this concept, the learning process is focused on increasing the competency based on business issues or challenges faced by the Company. The Company’s Policy provides development and training programs in order to improve the hard competency and non-technical skills of the employees. Each employee is given the opportunity to attend training that suits to their needs in work. The company’s policy on the training and development programs is organized according to the procedures of the management of learning. PR / HR / 012 in 2017, the total hours of employee learning amounted to 50,869 hours or an average of 30.50 hours for each employee in a year.

Lessons learned to address the company’s challenges are grouped for mastery of core competencies (personal mastery), enhanced leadership mastery and technical mastery with details as follows:

Table of Training Groups Based on CompetenciesNo. Training categories

Training duration (hour)

2015 2016 2017

1. Personal Mastery 12.384 552 1.753

2. LeadershipMastery 3.899 4.174 2.232

3. Business Mastery 61.243 84.868 44.846

4. Others 156 3.513 2.038

Total 77.682 93.107 50.869

Cost of Employee Training and DevelopmentThe total learning hours accomplished are a form of the Company’s commitment to support the organization of training in 2017. The company allocates Rp7.16 billion in training budget.

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KNOWLEDGE MANAGEMENTIn 2017, PT Semen Padang developed the Company’s strategy of sharing knowledge, establisihing an organization that specifically manages and encourages the flow of knowledge. Various methods of sharing and flowing knowledge were packaged in various forms of activities, among them:1. Leader Cafe

• A knowledge-sharing activity delivered by the Board of Directors, about the individual values, culture and vision of the company.

• This activity was followed by all echelon I, II and III.2. Inspiring Day A knowledge-sharing activity of innovators or employees

who had the idea of innovation to provide new ideas for other employees and encourage the acceleration of the implementation of new ideas.

3. Semen Padang Discussion Club (SPDC) An activity that was structured to express and discuss topics

that need to be discussed openly to support the achievement of company performance.

4. Community of Practice (CoP) Knowledge Management facilitated the solving of critical

issues in the Company by conducting workshops involving experts, experts and practitioners on the issue

In addition to meetings and discussions, knowledge sharing was also managed through a media portal called Knowledge Management Center (KM Center). Through the Knowledge Management portal and Knowledge Management Center, they are expected to encourage employees to share ideas, information and thoughts through blogs, upload knowledge and video documents, online discussion forums.

To encourage the above knowledge culture, the Company provided reinforcement by awarding reusable points with prizes for employees participating in all of these activities. In 2017, it was targeted at 1080 points and reached 1198 points (111%).

JOB PROMOTION PROGRAMSJob performance is a result achieved by employees in performing tasks based on skills, experience, and sincerity and timeliness. Work performance is influenced by three factors, namely the ability / interest of an employee, the ability to accept the explanation of task and role delegation, and the level of employee’s motivation.

The Company believes that rby giving rewards, the employees will be motivated and worked hard to pursue the higher position through the promotion procedure. The level of promotion in the Company takes into account the needs of employee position and achievement. This proves the Company’s commitment to creating opportunities for every employee with the potential to improve skills and integrity. The promotion system of Semen Padang was stipulated in Promotion Procedure and Employee Grade Increase No. PR / HR / 042. In 2017, the number of employment increases as many as 131 employees.

Graph number of Employee who were Promoted in 2016-2017

2016

2017

445

131

EMPLOYEE PERFORMANCE PRODUCTIVITYEmployee performance management is focused on increasing productivity and employee contribution to the achievement of target set by Semen Padang. The Company continues to improve employee productivity and organizational effectiveness, by enhancing employee capabilities through competency-based training programs and special assignments in team task force and development projects, as well as optimizing the use of information systems and development of Semen Padang Management System. As a result, the productivity trend of Semen Padang in 2017 is increased compared to 2016.

Graph of Employee Productivity In 2016-2017

2016

2017

3.756

4.581

EMPLOYMENT SURVEYIn 2017, the Human Resources Department conducted Working Climate Index surveys, employee closeness, cultural understanding of Semen Padang, and the Internal Customer Satisfaction Index. This project aimed to improve the performance of the Company, especially on employees. Some of these surveys were as follows:1. TheWorkingClimate Index (WCI)wasa2017adjustment

of the satisfaction survey in 2017 tomeasure theworkingclimate of eachwork unit and is conducted in conjunctionwithSemenIndonesiaGroup(SMIG).

2. Employee skill surveys showed how much employee attachment to the Company and the work environment.

3. The Company’s cultural understanding survey measured how much employees’ understanding of the CHAMPS culture is done in conjunction with the Semen Indonesia Group (SMIG) through the Value Measurement System (VMS).

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4. The Internal Customer Satisfaction Index showed the employees’ satisfaction level employees to the HR Department service.

JOB AWARDPT Semen Padang rewarded many works appreciations for employee loyalty and dedication. Ceremonially, the award is manifested in the form of a work loyalty charter for employees who have contributed their time, energy and thought to the Company. The award is divided into loyalty awards for 10, 20, 25 and 35 years. In addition to the charter, the company also provides souvenirs to employees in the form of 24 kart gold jewelry in the form of a ring bearing the logo of PT Semen Padang with the distribution of 10 years working period for 12,5 grams, 20 years for 25 grams, and 25 years for 37,5 grams, of gold rings for employees and pendants for employees’ wife and 35 years of service work are awarded vouchers of Rp 5 Million.

Composition of Employees Loyalty Awards 2016 and 2017

10 years 20 years 25 years 35 years

37

69

37

19

7

18

26

2016

2017

OCCUPATIONAL SAFETY AND HEALTH

Occupational Safety and Health EquipmentPT Semen Padang is committed to ensuring that safety and health is an integral part of the development of production systems and long-term strategies. The Company continues to comply with occupational safety and health standards (K3) and strives to achieve zero value for workplace accidents in each work unit. To that end, the Company is committed to implement K3 in the work environment by conducting activities that can support the OSH performance.

Workplace AccidentIn 2017, There was no fatal accidents taking place during the work process. PT Semen Padang has conducted the planning, controlling, review and feedback, improvements and prevention in the effort to achieve safety and health.

Every year, the Company conducts medical checks for all employees in accordance with Law no. 1 of 1970 on Occupational Safety and Permenakertrans No. Per.02/MEN/1980 concerning. With the consistent implementation of K3, the accidents can

be reduced or even eliminated so that workers feel safe from the threat of occupational accidents and diseases arising from workthat ultimately increase the spirit and productivity of work.Industrial relationsIn establishing harmonious industrial relations, PT Semen Padang adheres and implements Law no. 13 of 2003 on employment in order to build harmonious, effective, and mutually beneficial industrial relations between the company and employees and accommodate the interests of employees in accordance with applicable legislation. The company also participates in implementing industrial relations with trade unions which aims to deliver the aspirations of employees to the management of PT Semen Padang. The Company provides a guarantee of freedom to all employees to form a professionally managed union organization.

Labor Union is an organization formed from, by and for employees, both in Semen Padang and outside the Company, to fight for, defend and protect the rights and interests of employers and improve the welfare of workers and their families. Furthermore, the union creates a Collective Labor Agreement (PKB) which is the result of negotiations between the union and the employer which contains the terms of employment, rights and obligations of both parties.

In establishing good relationships between employees and management, the union formed at PT Semen Padang is named Padang Semen Padang Workers Union (SPSP) domiciled in Padang and registered with the Manpower Office No. 03 / Sosnaker / 2013 dated December 2, 2013. SPSP’s vision and mission as follows:

VissionBeing a self-contained employee, democracy, upholding togetherness, professionalism, and being a reliable partner of Semen Padang.

Mission1. Improve the welfare of members and families.2. Provide protection to its members.3. Distributing and championing the interests and aspirations of

its members.4. Participate actively and proactively in the success of Semen

Padang programs.5. As a proactive industrial relations partner in decision-making

processes / policy pimipinan associated with employment matters.

6. The facilities educate members to understand the rights and responsibilities of promoting healthy Semen Padang.

The signing of the Joint Working Agreement book has been taken between the representatives of management, employees and the ministry of labor and transmigration on January 16, 2016.

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COMPANY CORPORATE VALUES DEVELOPMENT

Curent

Organization Assessment

Formulation/Revalidation

Internalization

Embledding Mechanism

Post Implementation

Assessment

Expected Culture

FASE I FASE II FASE III

CORPORATE CULTURE

1.COMPLETE WITH CLEAR AND SYNERGIZED VISION

Each individual to understand and fully support the Company’s vision.

2.HAVE A HIGH SPIRIT FOR CONTINUOUS LEARNING

Highly motivated towards continuous competences improvement.

3.ACT WITH HIGH ACCOUNTABILITY

Undertake duties with the best efforts.

4.MEET CUSTOMER EXPECTATIONS

Commitment to deliver beyond the expectation of customers.

5.PERFORM ETHICALLY WITH HIGH INTEGRITY

To act with high standards of ethics, norms and integrity.

6.STRENGTHEN TEAMWORK

Strengthening cooperation with all stakeholders.

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employment has complied with applicable laws and regulations and the operational needs of the Company’s business.

HR ROADMAPIn the future, PT Semen Padang expects to implement maximum human resource management as follows:

EMPLOYMENT COSTThroughout the year 2017, the Company has already born employment-related costs which included the cost of education and employee training, salaries, wages, and employee benefits amounting to Rp689 billion. As for outsourced employees, the Company paid a fee of Rp 4 billion. The entire fund related to

HUMAN CAPITAL ROADMAP

STRATEGIC INITIATIVES IN HUMAN CAPITAL SYSTEM & PROCESS

HC STRATEGY

2016

2017

2018

2019

2020

Organization & HCM Alignment

Optimizing Human Capital

Building High Performance

Culture

Leadership Capability

Enhancement

People Competence Development

Strenghten Talent Management Impl.

• Build Career Management & Dev. System• Improve Dynamic Learning System Impl.• Dev. Professional Certification System• Strenghten Knowledge Mngt Impl.

• BusinessStrategy&OrganizationAlignment• EstablishStrategicHCPlanning• EstablishOutsourcingManagement&Policy

• OvercomeCriticalSkills&Competencies• AlleviateTalentScarcity• EstablishKnowledgeManagementSystem

Develop Engagement Drivers

(Recognition&Empowerment)

HIGHPERFORMANCEHCMANAGEMENTSYSTEMOperationExcellence,Performance-basedCulture,Competency-basedHCM,ExcellentKnowledge

ManagementSystem,ReliableHCManagementInformationSystem

BusinessProcess&FundationAlignment

HumanCapitalReadiness

HCPlanning&PlanningIntegration

Set-upOutsourcingManagementFoundation

CompetencybasedRecruitment&Selection

Improve Leadership Dev. Program Impl.CHAMPSInternalizatioin

DevelopmentBenefitPlan Management

StrengthenCPMS&EPMSImplementation

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inFormation AND

communication tecHnoLoGY“Developing Information Technology and Communication Implementation more comprehensively to customer service and business processes to win the competition and competitive advantage of the company with the culture of continuous innovation”

PT Semen Padang realizes that Information and Communication Technology plays a major role in the Company’s business activities, both operational and non-operational. During 2017, the Company continually increased its utilization information and communication technology systems so that it can continue to support business developments that can enhance competitiveness. Information and communication technologies

are implemented by focusing on improving the effectiveness and efficiency of work, as well as being oriented to the Company’s business operations.

PT Semen Padang has implemented reliable information and communication technology meets the bussiness needs of the company. The role of information and communication technology is crucial for the Company in supporting its expansion strategy and business development, ranging from providing systems and data for market research, forecasting and market simulation, simulation and portfolio of raw materials reserves, project management, operations of new production facilities, production, and monitoring, evaluation and consolidation of Company performance reports.

MILESTONEICT

• Infrastruktur of PP Lampung & CM Dumai

• Implementation of Attendance Machine

• Transformation Sentralisasi ICT

• Implement Trunsteel (Portal Gate)

• Mobile Approval• Auto Billing PABX

• Evaluation of ICT Infrastructure in all Semen Padang’s Branch office

• The Preparation ofISO 27001 Certification

• E-Insurance Implementation

• HRIS: TvM & ePMS-cPMS• Roll Out Sisdepen• PIS–SAP Integration• E-Slip

• Indarung VI Plant Infrastructure

• Implementation of CCTV throughout Warehouse & Representative Office2013

2014

2015

2016

2017

Year of 2011• Implementation of HR module - SAP => Development and

application of HR module (SDM) using SAP

Year of 2012• RFIDTruckingTruck=>Implementationoftruckverification

systemtodestinationarea,RantauBerangin,Duri,RantauParapat,MuaroBungoandMukomuko.

• VOIP Implementation of all Representatives => Replacement of the entire Representative Office phone to VOIP phones

Year of 2013• Infrastructure (PP) Lampung & CM Dumai => Development

and development of ICT infrastructure to support the operation of Lampung and Lamp Cement Mill (CM) Dumai

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• Implementation of Attendance Machine of All Representative Offices => Development and application of Attendance System in each representative office to accommodate employee personnel data requirement of representative office.

• Centralized Transformation ICT => Effective as of October 1, 2013, the ICT organization of Cement Indonesia Group is officially incorporated into the Strategic Shared Service function at Holding PT Semen Indonesia.

Year of 2014• HRIS: TvM & ePMS-cPMS => Development and

implementation of the Travel Management (TvM) module and Performance Performance Rating (ePMS & cPMS) using SAP

• RollOutSisdepen=>Developmentand implementationofsystem for distribution and sale ofPadangarea (Region IandII)

• PIS - SAP Integration => Integration Plant Information System with SAP

• E-Slip => Implementation of electronic Salary Slip, ie sending salary slip via email to all employees (paperless).

Year of 2015• Implementation of Trunsteeel (Portal Gate) =>

Implementation of the system for controlling in and out ofpeopleinthefactoryenvironment

• Mobile Approval => Development and implementation ofonlineapprovalapplicationviamobilephone

• AutoBillingPABX=>Developmentand implementationofautomaticphonecallcostbillingsystem

Year of 2016• Indarung Factory Infrastructure VI => Development and

development of ICT infrastructure to support the project and operation of Indarung VI Plant

• Implementation of CCTV throughout Warehouse & Representative Office => Installation of CCTV throughout Warehouse and Representative Offices throughout Indonesia

Year of 2017• Evaluasi Infrastruktur ICT diseluruh Kantor Perwakilan SP

=> Assessment tahunan rutin terhadap seluruh perangkat infrastruktur ICT yang terpasang di seluruh wilayah kerja PT Semen Padang in Indonesia (including Representative Office & Warehouse), which is one of the prerequisites for

ISO 27001 certification• Certification Preparation ISO 27001 => Fulfillment of

requirements to obtain ISO 27001 Certification from all aspects: Infrastructure, Security, and Resources (asset & organization)

• Implementatione-Insurance=>Launchingandimplementinge-InsuranceapplicationatPTSemenPadanginApril2017

GOVERNANCE INFORMATION TECHNOLOGY & COMMUNICATIONSPT Semen Padang establishes the ICT Governance Guidelines as a corporate policy based on the Blueprint Information & Communication (ICT) in order to realize the Company’s commitment to continuously conduct business in accordance with Good Corporate Governance principles. The guidelines are passed through a Decree of the Board of Directors, referring to best practices and comply to relevant external regulations, both the Laws, Ministerial Regulations, PSAK, and other relevant regulations.

The ICT Semen Indonesia Group Governance Guidelines are internalized as guidelines for PT Semen Padang in monitoring and controlling the development and utilization of information and communication technology and systems in the Company for decision-making by the management (Decision Support System). ICT Cement Indonesia Group is developed and planned with due regard to the principles of corporate governance and value proposition for the Company and is consistent with the long term goals and strategies and needs of the Company.

Implementation of ICT in PT Semen Padang is based on mature design, good technology implementation, Good IT Governance, and based on the compliance of corporate targets. Semen Padang continues to improve its Information & Communication Technology based services and improve the quality of ICT efficiently and “reliably”. Implementation of ICT throughout 2017 has an important role in supporting the strategy and achievement of the Company’s business goals in increasing efficiency, synergy and decision making that is vital to the competitiveness of PT Semen Padang.

ORGANIZATION ICTPT Semen Padang stipulates that ICT organizations are centralized incorporated into strategic shared service functions at the enterprise level. All ICT service provision and support activities including the development of new services are conducted centrally by the ICT functions in the Company.

In general, the function of ICT Cement Indonesia Group has three main roles, namely strategic, development, and operation. The objective and scope of each of these roles can be seen as in the following figure:

PT Semen Padang establishes the ICT Governance Guidelines as a corporate policy prepared under Blueprint Information &

Communication

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ICT FUNCTION

objective•StrategicICT(ICTMP)•SupportCorporateAction•AdoptRelevantTechnology

EnablingSMIG’sBusinessGrowth

EnablingSMIG’sCompetitiveEdge

SupportingSMIG’sOperation

•Business Process Reengineering

•DemandManagement•ICTServieDevelopment

•ManageEffectiveandEfficientICTService

•ICTGovernment

Strategic Development OPERATION

rules

Since 2014, the ICT Organization of Cement Indonesia Group has been centralized to become one of the strategic functions in holding PT Semen Indonesia (Persero) Tbk. To optimize assets in the form of ICT personnel competence, in June 2014 formed a subsidiary (SBU) engaged in the ICT, namely PT Sinergi Informatika Cement Indonesia (PT SISI), with the main task of supporting ICT operational and development activities in Semen Indonesia Group .

ICT MANAGEMENT STRUCTUREThe function of ICT was encompassed by the Semen PadangICT Operations Bureau, operating under the Accounting and Finance Department through direct coordination with the ICT Department of Semen Indonesia Group. The following illustrates the management structure of ICT at Semen Padang:

ICT Management Structure

Directors

Echelon I

Echelon II

Financial Director

PT Semen Indonesia Department ICT

ICT Bureau

Department of Accounting and Finance

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Leadership Profile of ICT in 2017

Refcan Afivi, SE, MMHead of ICT Bureau

Born in Andalas West Sumatra on July 15, 1968 He now serves as the the head of ICT Operations Bureau. Obtained his bachelor’s degree in computer, economics and master of Management from management at Padang State University, started his career at the 1989 PDE Bureau as a Programmer & Analyst, and currently serves as Head of ICT Operations Bureau since january 2010 who has attended various trainings and seminars.

Development of ICT OrganizationWith the existence of PT SISI, there is an advanced transformation of ICT organization in Semen Indonesia Group. The functions of ICT Holding PT SISI transformed into a strategic ICT Function. The ICT Strategic Department coordinates with ICT subsidiaries that act as ICT counterparts that handle ICT operational and development activities within the Semen Indonesia Group’s environments in order to meet the needs of ICT services.

ICT Business Point of View

Key Partners• SAP• Microsoft• Indosat• Telkom• Data Center Provider• Konsultan• SISI• Application

Developer

Cost Structure• Depreciation/Amortization• HRM• License• Maintenance• Consultant/Outsourcing

Revenue Streams• Appropriate Charging Services

Key Activities• Service Strategy• Service Design &

Development• Service Transition• Service Operation• Service Improvement

Key Resources• ICT Infra• Lisensi Apps• Source Code• HRM• Best Practice/

Knowledge

Value Proposition• ICT Services

Providing Business Value

• Reliability of Service• Servicedesk 24/7• More Efficient

(Economic Scale)• New Service

Development• DRC

Customer Segments• Hold Co• OpCo Cement

Making: Including Partner such as Vendor, Distributor, Bank, etc

• OpCo Non-Cement Making

Customer Relationship• Servicedesk• On Site Technican

Support• Centralized

Technican Support

Channels• Service Catalogue• LAN & WAN

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KNOWLEDGE MANAGEMENTPT Semen Padang utilizes a variety of media to gather employee knowledge and insight by applying the following methods:1. Documentation of guidelines, procedures, and work

instructions.2. Storage of papers, books, training materials, and other

knowledge in the library, and KM Share portal.3. Collection of information from expert locator, project

retrospective, community of interest, as set forth in Knowledge Management Procedures (No. Doc PR / HRM / 070).

Knowledge for information technology issues is collected and disseminated through the website servicedesk (http://servicedesk.semenindonesia.com). As for knowledge and factory information, can be accessed through CBM Online website, Plant Information System (PIS), and website for knowledge dissemination (http://km.semenindonesia.com).PT Semen Padang transfers knowledge with various methods such as, Learn and Share (Semen Padang Discussion Club, Leader Cafe, Inspiring Day), Peer Assist, Community of Practice, Online Document, KM Share portal (http://km.semenindonesia.com ), and socialization.

User Coordination Line, ICT with PT SISI

ServiceDevelopment

ICTGovernance

DemandManagement

PerformanceManagement

Requirement& Policies

ChangeRequest

SIMG Users

ServiceOperationPerformance

PT SISI

Contract:–Scope–SLA–Tariff

StrategicICT

ServiceSupport

ICTService

ServiceRequirement

ServiceRequest

Marketing

Strategic&DemandManagement

Transfer Knowledge Method

Communitiesof Practices

CommunitiesofInterest

TECHNOLOGY

CHAN

GE

MAN

AGEM

ENT STRATEG

Y

PeerAssist

SharedLearning

ProjectRetrospect

ExpertLocator

PT Semen Padang manages innovations to create innovation and improvement through the Semen Indonesia Award on Innovation (SMIAI) and Semen Padang ImprovementEvent (SPIE). The event is intended to combine and correlate data from different sources to build new knowledge. The transfer of relevant knowledge to and from Semen Padang’s business customers, suppliers, business partners and collaborators is done through presentations, knowledge sharing, customer meetings, training / workshops, informal meetings, published Semen Padang reports, and http: // www. semenpadang.co.id is governed in Customer Service Procedures (No. Doc. PR / PSR / 023).

PT Semen Padang assembles and transfers relevant knowledge for use in innovation and strategic planning by encouraging innovation and facilitating the implementation of learn and share (PT Semen Padang Innovation Management Guidelines (No. Dk PD / PSM / 012) and Knowledge Management Management Procedures (No. DOC PR / SDM / 070).

LEARNING AT SEMEN PADANGTo integrate operational learning within the Company, PT Semen Padang regularly performs and implements innovations such as the Learn and Share work unit, Community of Practice, and Semen Padang Discussion Club in one application, making it more efficient and effective both in accessibility and reach the purpose of this learning application

QUALITY OF DATA AND INFORMATIONTo conduct data verification and quality, PT Semen Padang manages archives management systems set forth in the Technical Guidelines of Archives Management (No. Doc PD / HKM / 014), Document and Record Control Procedures (No. Doc. PR / PSM / 001), and Technical Guidelines for Information System Security (No. Doc PD / SIM / 017).

In addition, the electronic data verification process is done manually and systemally. Data entered through the interface can be validated by means of calibration of the tool periodically. To ensure the accuracy, validity, integrity, reliability, and current data and information, PT Semen Padang takes action as illustrated in the table:

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Table Methods to ensure the Quality of Data, Information, and Knowledge.

Karakteristik Metode

Accuracy and Validity Usertesting,internalandexternalaudit,costcontrolofficercertification,archivistcertification

Integrity & Reliability Employee ethics, multilevel approval process & audit log review, Authorized Access (Physical & logical), security review, non disclosure statement.

Reliability Master data management, centralized IT management, backup & restore process redundant network & server, disaster recovery center.

The present Real time application (transactional), batch application (report), network & server monitoring, service desk

DATA AND INFORMATION SECURITYThe policy of PT Semen Padang in ensuring the security and confidentiality of information is carried out by implementing policies that can ensure that the Company has disclosed and

submitted material information or facts that must be disclosed to the public and other interested parties to the relevant authorities and all stakeholders. To ensure the security of the sensitivity of such data and information, the Company adopts a formal procedure requiring approval from superiors or competent authorities.

In addition, infrastructure technology is also equipped with firewalls, anti-virus, and anti-spam, and periodic security assessment. Confidentiality of data is ensured by applying the user role system for each application used Semen Padang, set out in Account Management Procedures (No. Doc PR / SIM / 191).

AVAILABILITY OF DATA AND INFORMATIONPT Semen Padang carefully, filtered on the provision of data and information needed by implementing the established policies and procedures and arranging mechanisms to obtain the information. Availability and method of accessing data and information is illustrated below.

Image Data & Information Availability

Data access to employees is provided in accordance with its authority to perform daily tasks. In general, employees are equipped with computers to access the required information. PT Semen Padang provides local area network (LAN) infrastructure for employees in Indarung and surrounding areas, as well as Wide Area Network (WAN) and website (www.semenpadang.co.id) managed by Ministry of Communications & Public Facilities.

If there are any obstacles or complaints regarding the information technology (IT) facility, employees may submit it via web http://servicedesk.semenindonesia.com or call to call center 51.

NATURE HARDWARE AND SOFTWAREPT Semen Padang through PT Semen Indonesia (Dept. ICT), ensures the reliability, security, and ease of use of hardware and software depicted in the Matrix of Reliability, Security, and Ease of Use of Hardware and Software Table. In addition to managing and maintaining ERP systems, information technology also provides a reliable and secure network that supports the operation of all business applications. The current ERP system is equipped with a Disaster Recovery Center (DRC) ready to operate in case of a failure on the main system managed by SMIG shared service. While the network, also has been using redundancy by using the infrastructure of 2 (two) different providers.

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Table Matrix of Reliability, Security and Ease of Use Hardware and Software

Guarantee Method

Reliability Monitoring & maintenance system, DRC, Redundancy, servicedesk, change control, service standardization, and monitoring infrastructure used solarwinds

Security Authorization process for permissions, firewall, antivirus, anti spam, service standardization

Ease of Use Active user engagement, training, service standardization.

In order to deal with incidents quickly, the ICT Team provides 24/7 service assisted with servidesk tools for monitoring. The performance of the ICT Team is measured one of them through the time of incident resolution and the availability of ICT services.

Reliability is also gained by applying the change control process. Cement Indonesia adopted the Information Technology Infrastructure Library (ITIL) framework for the incident management process, problems, change and release. In implementing several major issues, the ICT Bureau of Operation of PT Semen Padang adopted the framework of Project Management Body of Knowledge (PMBOK), which is outlined in the form of Information Systems Development System Procedure No. Dock. PR / SIM / 204.

PT Semen Padang has also set standards using active directories (control tool for end user device control) as a means of controlling all applications through single sign on for ease of use of ICT services. The guidance on reliability, security and use of information system facilities is further stipulated in ICT Management Guideline of PT Semen Indonesia No. Dock. 020 / Ktps / DIR / 2014). Standardization services provide the Intranet portal (http://intrasp.semenpadang.co.id, http://indarung6.semenpadang.co.id). Each department is given the opportunity to update the news portal at http://intranet.semenpadang.co.id.

SUPPORT ENTERPRISE RESOURCE PLANNING (ERP) TO BUSINESS PROCESSImplementation of information systems in PT Semen Padang is aimed to meet the needs and contribute in improving the welfare of Stakeholders. Therefore, the strategic steps undertaken through Supporting Process, Monitoring and Improvement Process:

Supporting Process is a process that aims to provide resources for core processes. While the Monitoring and Improvement Process is a process aimed at ensuring the achievement of

targets and performance improvements.

To ensure the availability of hardware and software and the availability of data and information in emergencies, Semen Indonesia prepares the following:• DisasterRecoveryCenter(DRC)• If the ERP system fails, then the transaction operation will

still run by enabling ERP system in DRC managed by shared service SMIG.

• Network redundancy.• In the event of a network interruption, the network will be

diverted to the back-up path.• Periodicbackup.• For ERP, incremental back ups are performed on a daily

basis and full back ups every week are stored in an external hard drive / tape back up, for data center Jakarta is managed by SMIG shared service, while for data center in Padang conducted by ICT Bureau of Cement Operations Padang.

• Contingencyplanisabackupplanorprocedureperformedwhenthetransactionisnotworkingproperly.

ICT DEVELOPMENTIn order to support the acceleration of business decision making as well as improve operational efficiency and effectiveness, PT Semen Padang develops and improves the quality of its main assets, namely information capital. Quality improvement is done through the development of the role of Information and Communication Technology as a catalyst that can directly accelerate the growth of the Company’s business. Therefore, in line with the preparation of business development strategy and roadmap, Semen Padang consistently runs the initiatives embodied in the master plan of information and communication technology (ICT Master plan) in order to support business strategy and strengthen competitiveness in cement industry, where efficiency cost is one of the key to winning the competition.

PT Semen Padang also set up the Target Operating Model ICT to ensure the support of information and communication technology within the Company in implementing business strategy based on the existence of:• Standardization of Business and System Processes across

the Indonesian Cement Group• Increased level of process automation• Improved control

The Target Operating Model ICT scheme to support business strategy is illustrated in the following scheme.

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IMPLEMENTATION OF ICT MASTER PLAN (ICTMP)PT Semen Padang has developed and implemented the ICT Master Plan with a methodology that ensures alignment between business needs and ICT initiatives. All business operating plans and business plans (OpCo) are identified, both at the operational and strategic levels. Subsequently, ICT initiatives were established to support ICT infrastructure categories, ICT Management, and Business Services.

ICT Master Plan Phase II (ICTMP II) for the period 2014-2017 was a continuation of Phase I (ICTMP I). While ICTMP I concentrated on providing an ERP system platform so that it could standardize business processes between OpCo, ICTMP II sought to revitalize and upgrade ERP modules and expand the ability to support Customer Relation Management (CRM) and Supply Chain Management (SCM). CRM and SCM are the keys to improving the Company’s competitiveness in domestic and regional markets to “increase the company’s growth.“

Implementation ICT Master Plan

CustomerRelationshipManagement:AttractandRetainCustomerthroughIntegrated• CustomerProfile• Marketing• Sales• Support

RevitalizeSAPCoreModule:• Maintenance

Management• IntegratedPlantInformationSystem

• AnalyticalReport• ProjectManagement• Performance

Management

SupplyChainManagement:IntegratedManagementofSupplyNetwork• SupplierManagement• Purchasing• Warehouse• Transportation• Distribution•Delivery

SAP Core Module:• FICO• SD• MM• PP, QM• PM, PS• HR

02

0301

ICTMP II

ICTMP ISCM

SAP ECC

SAP ECC

CRM

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ICTMP COMPETITION METHODOLOGY READ THE BUSINESS STRATEGY The assessment results of the current condition of ICT services, gap analysis, risk management is explained through the following figure:

ICT Assessment

Current Business Requirement Business Strategy

ICT StrategyBest Practice Gaps

Initiatives Priorization

Risk Management ICT Roadmap

Evaluation on the effectiveness of ICT Governance implementation is done through risk assessment to find out the gap between current ICT service condition with Company requirement. The results of risk assessment are as follows:

Risk Assessment of ICT Services

Risiko/Identifikasi tantangan Dampak bisnis Mitigasi/Rencan Kerja

The capability / utilization of IT to support internal processes, both core and supporting processes, is still not satisfied and there is still a difference between Opco

Operational performance between OpCo is varied and not maximal yet

Enhance standardization Knowledge / HR strategy strategic development sharing through industry benchmarking and Utilizing IT (ERP) system to maximize performance management

Lack of adequate IT skills to support operations The time required for the procurement process is very long, the uncertainty is high for delivery time so that there is a discrepancy with the perspective of related operational users, the quality and quantity of goods, especially spare parts, tends to increase, and lack of strategic management of key resources (coal, spare parts, outsourcing).

Perform benchmarking of industry Leverage IT systems (ERP, SRM) to reduce risk uncertainty.

There is no adequate ability of IT Support in Customer Relationship Management

The customer's perception of the product does not meet expectations, the value proposition offered by the company is not communicated / clearly understood by the customer, it is difficult to maintain price leadership in the market

Understand more about customer profiles, requirements, and behaviors to build better communication channels with customers to win new customers. Utilizing IT (ERP, CRM) system to manage customer relationships

There is no adequate ability of IT support in Supply Chain Management, especially in delivering products to customers, control systems / collaboration with distributors, transporters, and unintegrated stores

It is difficult to control the availability of products in the market, the bargaining power of distributors and transporters decreases, and it is difficult to control prices in the market.

Understanding the new business environment that influences the delivery of products, review and understand the business model Implementation of IT Leverage system (ERP, CRM, SCM) system to manage customer relationships

There is no adequate ability of IT support in terms of strategic planning and analysis

Inappropriateness of initiatives from strategic management, between strategy and operational strategy.

Influence of IT systems (ERP, BI, EPM) to improve the effectiveness of strategic management

There is no adequate IT support capability in Capex planning and management

Lack of visibility on the status of the project, the increase in the number of projects not completed in a timely manner, incompatibility of profit plans with realization.

Visits industry development skills Leverage IT systems (ERP, BI) to improve project and portfolio management

There is no adequate capability of IT support in the planning and implementation of mergers and acquisitions of new business lines (domestic and regional)

Unexpected challenges post harmonized merger Development of IT Leverage system skills (ERP, BI) to improve M & A success rate

Maturity of IT management resources (budget, organization, people, hardware, software, partners) in HoldCo and OpCo is still in development stage.

Lack of effectiveness of IT resource management, increased number of infringing SLAs, delayed IT projects, and incompatibility of IT service utilization

The industry benchmark for developing IT Leverage system skills (ERP, BI) to improve the IT management process

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ASSESSMENT ICT MATURITY LEVELOn an ongoing basis each year, PT Semen Padang organizes a maturity level assessment related to ICT management and provides input for improving the Company’s ICT management. By 2016, the Company Maturity Level score is 4.14, up from 4.07 the previous year.

Scale ICT Maturity Level:

01

02

03

04

01

03

04

05 05

02

INITIALProcessesisunredictable,poorlycontrolledandreactive

DEFINEDProjectstailortheirprocessesfromtheorganizationsdevel-opmentmethodology

MANAGEDProcessaremeasuredandcontrolled

OPTIMIZINGFocusonprocessimprove-ment

REPEATABLEProcessesarecharacterizedforspecificprojectsandor-ganization is often reactive

THINGS TO SUPPORT IMPLEMENTATION OF INFORMATION SYSTEMS IN THE COMPANY

Integrated Computer NetworkIn 2016, PT Semen Padang has one backbone group network so that data, voice and video communications can be accessed

from every branch end point of the Company. The company has also implemented server centralization so that all business applications are in one central place that can be accessed from all places either from the location of office, factory, Packing Plant, Distributor, Expenditure, Vendor or Banking Office.

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Virtual MeetingVirtual Meeting for the coordination between work units, even between companies in the Cement Indonesia Group has been entrenched. Almost all meeting rooms at PT Semen Padang are equipped with advanced Video Conference equipment, allowing Users to conduct remote coordination meetings effectively and efficiently. Thus, the decision-making process can take place quickly, the cost of official travel can be saved and the User need not lose much time and energy to coordinate.

ICT Servicedesk/Call CenterIn order to provide good and measurable service to ICT users, ICT Unit / Call Center has been established. This unit performs centralized management and operates 24/7 (24 hours a day, 7 days a week). All ICT related issues in the Operating Company are reported to the Servicedesk unit to be recorded in the system and given a ticket number. Subsequently the ticket will be completed by the technician and report back to completion status. Thus, the constraints can be managed well and can satisfy the Users.

BUSINESS PROCESS AUTOMATIONIn identifying and monitoring trucking, PT Semen Padang implements RFID technology that will automatically input data into the SAP system if it passes certain posts. It facilitates the process of distributing products.

The company has applied this technology to a wider distribution area. The performance of industrial machines throughout the factory site can also be monitored in real time and displayed in the form of dashboards to be detected as early as possible and to mitigate potential problems.

Global Positioning System technology other than used to monitor ship position, also used by Area Manager to report the position

of new store that has not been identified. Thus, transportation and shop management can be done well.

IMPACT OF ICT DEVELOPMENT BUSINESS

I. Corporate Culture Single SAP ERP system grows the terminology equation,

so the intercompany communications progressively smooth. Information transparency is on the rise, so that companies within the Group can share their strategies and experiences to cope with increasing competition and take advantage of opportunities created by market growth. With the unification of ICT organizations at the holding level, the Company’s ICT planning pattern is no longer done separately, but is professionally designed to meet the needs of all OpCo in the long run.

II. IT Shared services In line with the application of a single and centralized

business service system in the holding, all business services required by OpCo are provided by the ICT organization in the holding, and will then be charged / charged according to the service received.

With the implementation of this shared service, the Group’s strategic policies and standardization of business processes can be maintained, service quality can be improved and operational costs become more efficient. PT Semen Padang is committed to continuously support the development of ICT programs and expects the hard work of all stakeholders from the management level, executors and vendors to ensure the success and optimal role of ICT in improving the Company’s performance in the future.

ICT portal service scheme

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ServicedeskAll ICT services to the User are managed using the servicedesk app so that it can be measured, monitored and reported online and centrally and become a knowledge base for the company. Broadly speaking the management of ICT services

in servicedesk are grouped into two parts, namely incident and request (demand) to distinguish between interruption or service request. The table below shows performance servicedesk until December 2017:

No Kriteria Oktober November Desember Target Keterangan

1 Total Ticket 308 267 444 <100 Good

2 RequeststillOpen(Thismonth) 0 0 0 <20 Excellent

3 RequeststilOpen(All) 0 0 0 <50 Excellent

4 % SLA Realization Incident 90,77% 93,88% 99,66 >85% Good

5 % Realization Request 91,52% 88% 100% >85% Good

6 % Account Realization 97,67% 94,44% 100% >85% Excellent

7 Total Surveyor 202 466 423 >50 Good

8 Survey Value 85,15% 82,62% 87,27% >75% Good

Incident ManagementIncident Management merupakan proses penanganan gangguan operasional layanan ICT. Proses ini bertujuan agar:- Setiap gangguan layanan dapat ditangani secara cepat.- Penyebab utama (root cause) gangguan teridentifikasi dan

ditindak lanjuti untuk mencegah berulangnya gangguan serupa.

- Memberi manfaat yang optimal bagi peningkatan layanan ICT.

ICT service interruption information can be sourced from user reports (support request / ticket incident) or alert of system (event management). If interference can not be resolved immediately, escalate to a technician at a higher level, such as the order below:* Level 1 : Handling of interference by personnel

Servicedesk* Level 2 : Interference handling by ICT technicians

on-site at each OpCo* Level 3 : Handling of interference by ICT technicians

located in HoldCo* Level 4 : Handling of interference by vendors or

consultants

In practice, it refers to the standard procedure governing Incident Management.

Problem ManagementProblem Management is the process of handling repetitive disturbances in ICT service operations. This process is aimed at causing root cause disorders to be identified and acted upon to prevent the recurrence of similar disturbances.

Recurrent ICT service interruption information can be sourced from an evaluation of the log or report of the servicedesk application or evaluation of the alert of the system (event management). If repeated handling of interruptions requires service changes (setting changes, configuration, flow or service coding) then this is handled by the change management process.

In practice, it refers to the standard procedure governing Problem Management.Change ManagementChange management is the process of managing changes to ICT services aimed at making it:- Ensuring changes are made to effectively solve problems or

meet user demands.- Identify and anticipate the negative impact of service

changes.

Information about the needs of change management comes from changing requests from users. The need for service changes is categorized into minor, major and emergency and followed according to their respective categories.

In practice, it refers to the standard procedures governing Change Management.

Demand ManagementDemand Management is the process of managing the demand (needs) of developing new services or changing services according to the business needs of the company. This process aims to:- Evaluate the feasibility of developing new services.- Identify and determine alternative new service options as

needed.- Identify the availability of resources (facilities, budget, human

resources).- Define development priorities.- Determine the schedule of development activities.- Determine the new service development project team and

other resources needed for service development / change.

In practice, it refers to the standard procedure governing Demand Management.







Photo title:The Night view of Indarung factory

Photo location:The Peak Silo of factory Indarung V

Photo caption:The plant operates 24 hours a day, 7 days in a week, and 365 days in a year. This shows that PT Semen Padang has implemented good corporate governance for achieving produce optimal performance in order to realize a reliable and superior cement company.







MANAGEMENT DISCUSSION & ANALYSIS

The rapid development of national infrastructure in 2017 makes competition in the cement industry increasingly tight. To face the competition, Indarung VI factory of Semen Padang has operated and increased its production capacity to 8.9 million tons per year. Semen Padang also performs efficiency in order to keep Semen Padang growing and developing, in addition to increasing production capacity.







6.601 thousand ton 7.707 thousand ton

499Billion Rupiah

1.106 thousand tonDomestic Sales Total Sales

Profit for the year

Export of Cement & Slag

7.444thousand ton6.532thousand ton

Cement Production

Clincer Production

1.125Billion RupiahOperating Expenses

6.652 Billion RupiahRevenues

826 Billion Rupiah

Operating Profit

1.178Billion Rupiah

Ebitda


MANAGEMENT DISCUSSION& ANALYSIS







10.141Billion Rupiah

4.938 Billion Rupiah

986 Billion Rupiah

17,7 %

8,0 Times

45 Days

5.190 Billion Rupiah

347Billion Rupiah

Total Assets

Equity

Total Investment of The Capital Goods

Ebitda Margin

Inventory Turn over Ratio

Collection Period

Total Liabilities

Working Capital

10,1 %

4,9 %

ReturnsOn Equity

ReturnsOn Assets


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INDUSTRY OVERVIEWGLOBAL ECONOMIC REVIEWGlobal economic growth in 2017 was estimated at 3.0%, the figure was higher than the year before by 2.4%. In line with global economic growth, China’s economic growth during 2017 reached 6.9%, exceeding the target set by the Chinese government at 6.5% and exceeding the previous year’s achievement of 6.7%.

This growth contributes positively to the Indonesian economy as China contributes the largest balance of Indonesia’s export and import trade. Indonesia’s overall exports reached $ 14.8 billion, deals with China of $ 2 billion, equivalent to 13.9%. As for the overall import of Indonesia reached $ 15.1 billion, transactions with China amounted to $ 4 billion or equivalent to 26.8%. In contrast to previous conditions, China’s economy is expected to slow again to 6.5% in 2018. The slowdown in China’s economic growth is predicted because of the potential risks that will hamper China’s economic growth in 2018 including trade protectionism by the United States government.

According to the world bank economic growth is likely to be temporary. This is in line with the opinion of economics experts Price Waterhouse Cooper (PwC) estimates the world economic growth average reached 3.5% per year until 2020. But will tend to fall after 2020, Global economic growth slowdown caused by slowing growth in developed countries. This happens because the population of productive age in many developed countries.

Global economic growth in 2018 is estimated at 3.1% .The economic growth is dominated by the growth of developing countries. The region with the highest economic growth according to the world bank is East Asia and the pacific region of China and India. This shows the shift of world economic power to developing countries continues to occur. PwC expects the growth of developing country economies will be able to shift the position of developed countries such as Japan, Germany, Britain or France. Economic development in developing countries is mainly supported by the rapid development of population, which encourages domestic demand and the number of workers. However, the growth in the number of workers needs to be balanced with investments in education and improvements in micro-economic foundations. As for other regions, including countries in Africa, Latin America, Middle East and Asian countries economic growth in 2018 is expected to reach 5.4%.

MACRO ECONOMIC INDONESIAIndonesia’s Gross Domestic Product (GDP) growth in 2017 was slightly better than in the previous year, the growth rate of Gross Domestic Product (GDP) in 2017 was 5.1% increasing by 0.1% compared to 2016 (5.0 %). This growth was influenced by the high levels of investment during 2017. Investments in 2017 amounted to Rp692.8 trillion, an increase of 13.0% compared to 2016 of Rp613 trillion, consisting of Domestic Investment of Rp262.3 trillion and Foreign Investment of Rp430, 5 trillion. The government maintained the stability of investment power by maintaining the stability of the exchange rate according to economic fundamentals.

State revenues in 2018 are expected to continue to improve as the country’s revenues increase due to the rise in world oil prices to $ 65.6 per barrel or higher than the assumption of the State Budget of 2018 of $ 48 per barrel, in addition to the increase in state revenues from taxes and non-tax state revenues as well has increased due to increased economic activity including the manufacturing, mining, agriculture and telecommunications sectors.

Infrastructure development provides great opportunities in related industries such as property, cement producers and construction companies so that it is expected to improve the Indonesian economy. The year 2017 was expected to be the momentum of the rise of property was not achieved, although the government stimulus through the package of economic policies ranging from the decline in lending rates, relaxation loan to value, sales tax cuts, deregulation of licensing to tax amnesty. The property sector in Indonesia has the following characteristics of supply driven meaning that developers’ actions are the determinants, not demand driven, so the government stimulus does not significantly affect to the property sector growth in 2017. In 2018, the growth of the property sector is targeted improved in line with the improving macro and fundamental conditions of the national economy. INFLATIONIndonesia’s inflation rate in 2017 has fluctuated. For inflation rate of 2017 is at 3.61%, higher than the year 2016 which stood at 3.0%. The high inflation rate in 2017 was affected by the administrated prices component (the government regulated price) the highest increase was from the policy of basic electricity tariff adjustment and the increase of renewal fee of vehicle registration certificate (STNK). On the other hand, the government can control the rise of volatile food (food prices fluctuate) so as not to have a significant effect on inflation in 2017.

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PT SEMEN PADANG •ANNUAL REPORT 2017







Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 3,5 3,8 3,6 4,2 4,3 4,4 3,9 3,8 3,7 3,6 3,3 3,6

2016 4,1 4,4 4,5 3,6 3,3 3,5 3,2 2,8 3,1 3,3 3,6 3,0

2015 7,0 6,3 6,4 6,8 7,2 7,3 7,3 7,2 6,8 6,3 4,9 3,4

Chart of National Inflation Rate 2015 - 2017

EXCHANGE RATEThe rupiah exchange rate against the United States Dollar tends to stabilize at the beginning of 2017. Rupiah stands at Rp13,485 before closing at Rp13,548 as of 31 December 2017. The rupiah exchange rate outlook in 2018 to 2019 is expected to depreciate on average by 2.5% per annum against United States Dollar. This is due to the the interest rate differential between Indonesia and the United States decreases, so that rupiah-denominated assets become less attractive to international investors. Although, on the other hand, investment worthy status is expected to support rupiah and reduce volatility.

In line with the expected domestic demand and improved global economic conditions, Bank Indonesia predicts the economy in 2018 will grow better in the range of 5.1 - 5.5%. The World Bank predicts Indonesia’s economic growth will rise 5.3% from 2018 driven by continued strong investment growth and gradual recovery of consumption. However, The Economist predicts Indonesia’s economic growth of only 5.1% or 0.2% lower than the APBN 2018 of 5.3%. This is due to slowing structure reforms and slowing global demand for commodities even though government-focused infrastructure programs are able to keep investments stable

.

REVIEW OF NATIONAL CEMENT INDUSTRYIndonesia’s economic growth contributes directly or indirectly to the growth of the national cement industry by 2017. The total national cement supply during 2017 was posted at 66.3 million Tons, icreasing compared to 2016. The national cement supply decreased by 4.7 million tons compared to 2016.

Cement industry was still experiencing cement over supply in 2017 caused by the growing number of new producers and expansions by the existing cement producers. The over-supply condition causes the competition of PT Semen Padang in the cement industry in Indonesia is getting tighter. The national cement production capacity in 2017 reached 96.9 million tons higher compared 89.7 million tons in 2016.

COMPETITION IN THE CEMENT INDUSTRYThe increasingly tight competition of the national cement industry is also evident in new cement producers who have entered the cement industry since 2015 including PT Sinar Tambang Arthalestari (Semen Bima), Siam Cement Group (SCG), PT Jui Shin Indonesia (Semen Garuda), and PT Cement Cemindo Gemilang (Semen Merah Putih) and PT Conch Cement Indonesia (Cement Conch). The presence of new cement producers undermines the market share of existing cement companies that have affected the market share decline of Semen Indonesia Group from 41.7% in 2016 to 40.8% in 2017. Holcim has decreased from 15.3% in 2016 to 14.6% 2017. In the second position is occupied by Indocement, which also decreased from 26.1% in 2016 to 25.3% in 2017.

The competition of the cement industry was driving the decline in prices by cement producers in the face of competition. This price drop affected the decreasing margin for Semen Indonesia Group. Anticipation steps taken is to make savings through the total program Cost Transformation and efforts to increase sales volume. The increase in sales volume was done domestically and abroad if domestic consumption did not increase as well as for expansion of market share along with the increase of production from Rembang factory and especially Indarung VI for Semen Padang in 2017.

Various strategies implemented by Semen Padang in the cement industry in order to survive and grow in the middle of the condition of over-supply of cement. One of the strategies implemented by PT Semen Padang in the cement industry is included price reduction to attract the consumers’ interest. The price reduction had a positive impact on the sales volume of cement. However, the increase in sales volume did not coincide with the increase in margin, because the decline in prices resulted in the decrease of margin obtained by the Company in the cement industry.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 13,3 13,3 13,3 13,3 13,3 13,3 13,3 13,4 13,5 13,6 13,5 13,5

2016 13,8 13,4 13,3 13,2 13,6 13,2 13,1 13,3 13,0 13,1 13,6 13,4

2015 12,6 12,9 13,1 12,9 13,2 13,3 13,5 14,0 14,7 13,6 13,8 13,8

Chart of rupiah against dollar 2015 - 2017 (in thousand rupiah)

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Semen Padang in the cement industry anticipates the decline of margin due to the cement price reduction strategy by taking efficiency measures. Efficiency measures implemented by Semen Padang Group are:1. Raw material and auxiliary savings2. Fuel cost savings3. Maintenance cost savings through optimization of capex

and iInsurance claims4. Optimizing power consumption through Waste Heat

Recovery Power Generation (WHRPG)5. Overhead cost savings and employee overtime,6. Optimal use of own pockets and decreased reject

ofproduction7. Optimal use and production of own pockets8. Potential income through sales of non-cement products9. Optimization of heavy equipment rental10. General and administrative cost savings11. Optimization of Subsidiaries and Supporting Institutions

(APLP)12. Optimization of Outsourced Personnel

The condition of cement competition in 2018 is estimated to be more severe due to the increased production capacity of cement producers in Indonesia. Strategic steps to achieve increased sales volume include expansion in Southeast Asian and Southern Asian markets, if domestic cement consumption does not increase. In addition, expansion decisions are also a strategy for expanding market share.

SEMEN PADANG’S POSITION IN NATIONAL CEMENT INDUSTRIAs one of the cement companies in Indonesia, Semen Padang also faces problems and challenges that are not much different from those experienced by other national cement producers. The Company’s performance will influence the performance of the national cement industry in general. The Company’s performance during 2017 was in line with the performance condition of the national cement industry in general. The company was able to improve some of its performance, although the increase was not significant.

PROSPECT OF NATIONAL CEMENT INDUSTRY Nevertheless, the domestic market is predicted to increase in 2018. This increase is due to the government will continue to focus on infrastructure development. The infrastructure spending budget is estimated at Rp410.7 trillion, an increase of Rp23.7 trillion from 2017 of Rp387 trillion. The main drivers of the economy continue to rely on government spending that focuses on infrastructure sector spending.

By 2018 the total national cement capacity is expected to increase by 9% while cement consumption only increases by 5%, in line with the high realization of investment in the domestic cement industry, due to the oversupply that has occurred since 2017 and will continue until 2018, the remaining more production is expected to meet the demand of the export market.

In the future, the national cement demand is expected to continue increasing, supported by property growth, as well as government-driven infrastructure development programs over the next few years. Government projects are also predicted to require a large supply of cement and will continue to increase every year, especially with the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), the Papua and West Papua Development Acceleration Unit (UP4B), and the People’s House Building and the Thousand Tower by Kemenpera .

Therefore, the demand for cement on a national scale is expected to continue increasing as the government continues to pursue development efforts to pursue Indonesia’s economic growth through sustainable infrastructure improvement projects from 2011 to 2025.

OPERATIONAL REVIEW PER BUSINESS SEGMENTSThe business segments of Semen Padang and subsidiaries are grouped into two business segments, namely ::1. Cement Production Segment, is a business segment that

focuses its activity on the production a holding and sales of cement. Semen Padang, as a holding company conducts the management of this cement production activity.

2. Cement Packing and Distribution Services Segment, is a business segment focusing on the activities of cement packing, cement distribution, and other general sales are managed by subsidiaries namely, PT Sepatim Batamtama for Riau Islands and PT Bima Sepaja Abadi for DKI Jakarta, West Java and Banten area.

Cost Transformation is a strategic step to anticipate the decline in margins due to price

competition

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CEMENT PRODUCTION SEGMENT

Cement Production Process and CapacityThe scope of the cement production segment includes the manufacture of various types of cement products to meet the market demand and started its commercial production since 1913. Production results are more prioritized for domestic consumption. The production process of Semen Padang can generally described through the following phases:

• Mining of raw materials (quarry) phase. The raw material consists of limestone, clay, iron sand and silica sand. These materials are mined using heavy equipment and then sent to the cement plant.

• The raw materials are examined in the laboratory, then mixed with the appropriate proportions and begins the initial milling

stage of the raw material commenced with the crusher forming a powder.

• The next phase, the material is heated in the preheater.• The heating is continued in the kiln so that it reacts to form

clinker crystals.• The clinker crystals are then cooled in the cooler with the

help of the wind. The heat from this cooling process is streamed back into the preheater to save energy.

• The clinker is then smoothed again in a rotating tube with steel balls to form a fine cement powder.

• This smooth clinker is stored in a silo (a cement container similar to Pertamina oil tank).

• From this silo, then cement is packed and sold to consumers

In detail, the Company’s production process is illustrated as follows:

Raw Mix Terak Semen PengantonganPenambangan Batu Kapur

Limestone mining Raw Mix clinker Cement Packing

Raw Materials Work in Process materials Finish Goods

Until the end of 2017, Semen Padang has 6 plants with a total production capacity of 7,444,143 tons of cement. The number has increased 15.3% or 988,084 tons compared to the actual production in 2016 amounted to 6,456,059 tons. On the other hand, The cement production of Cement Mill Dumai decreased by 37,808 tons or 7.1% to 497,485 tons compared to 2016 with 535,293 tons.

Table of Cement Production (in Tons)Keterangan 2015 2016 2017 Difference %Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Plant

Indarung I 29.732 21.907 8.642 -13.265 -21.090 -60,6 -70,9

Indarung II 760.893 705.009 626.500 -78.509 -134.393 -11,1 -17,7

Indarung III 836.690 792.906 752.291 -40.615 -84.399 -5,1 -10,1

Indarung IV 1.970.343 1.782.568 1.660.638 -121.930 -309.705 -6,8 -15,7

Indarung V 2.927.786 2.618.376 2.705.069 86.693 -222.717 3,3 -7,6

Indarung VI - - 1.193.518 1.193.518 1.193.518 0,0 0,0

Cement Mill Dumai 363.069 535.293 497.485 -37.808 134.416 -7,1 37,0

Production 6.888.513 6.456.059 7.444.143 988.084 555.630 15,3 8,1

Production

OPC 1.786.267 1.565.061 2.696.253 1.131.192 909.986 72,3 50,9

Non OPC 5.102.246 4.890.998 4.747.890 -143.108 -354.356 -2,9 -6,9

Total 6.888.513 6.456.059 7.444.143 988.084 555.630 15,3 8,1

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Cement Production Graph (in Tons)

The main cause of the increase in cement production compared to 2016 is due to the fact that Indarung VI factory has been commercially operating in mid-2017 to contribute 1,193,518 tons in 2017. With additional production from Indarung VI PT Semen Padang can realize the export sales of cement and slag 806,285 tons and 299,600 tons respectively.

Proses dan Kapasitas Produksi TerakClinker Production Table (in Tons)

Keterangan 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Plant

Indarung II 649.059 593.729 557.249 -36.480 -91.810 -6,1 -14,1

Indarung III 642.331 559.089 568.743 9.654 -73.588 1,7 -11,5

Indarung IV 1.570.261 1.504.506 1.410.795 -93.711 -159.466 -6,2 -10,2

Indarung V 2.415.475 2.323.661 2.316.129 -7.532 -99.346 -0,3 -4,1

Indarung VI - - 1.678.673 1.678.673 1.678.673 0,0 0,0

Total 5.277.126 4.980.985 6.531.589 1.550.604 1.254.463 31,1 23,8

region and also markets the products overseas namely to to South Asia. Total sales volume during 2017 reached 7,706,6870 tons, up 10.4% or 726,256 tons compared to 2016 sales volume of 6,980,615 tons. The increase in sales volume occurred in several major markets of PT Semen Padang, among others, West Sumatra, Riau Mainland and Lampung. Meanwhile, export sales of cement and slag have increased significant realization in 2017 of 1,105,885 tons grew 128.0% or 620,817 tons compared to the realization in 2016 of 485,068 tons.

Indarung III Indarung IV Indarung V CM DumaiIndarung IIIndarung I

29.73

2

8.64221

.907

760.8

93

626.5

00

705.0

09

836.6

90

752.7

91

792.9

06

1.97

0.343

1.66

0.638

1.782

.568

2.92

7.786

2.70

5.069

2.618

.376

363.0

69

497.4

85

535.2

93

201720162015

1.19

3.518

Indarung VI

The development of the last 5 (five) years of cement production can be seen in the following graph:

2013 2014 2015 2016 2017

Produksi Semen 6.612.577 6.671.107 6.888.513 6.456.059 7.444.143

Pertumbuhan 1,4% 0,9% 3,3% -6,3% 15,3%

Clinker is a product of Semi-finished goods which is a mixture of some available raw materials processed further to be mixed additional materials based on the needs of each type of cement.

In 2017 the total clinker production of 6,531,589 tons increased by 31.1% or 1,550,604 tons compared to the year 2016 of 4,980,985 tons. The increase in slag production compared to 2016 was mainly due to the commercial operation of Indarung VI plant in mid 2017 which can be realized at 1,678,673 tons. So that the Company still able to meet the needs of consumption and competition in the sale of slag mainly for export sales.Sales and RevenuePT Semen Padang has the major market in Sumatera region, besides that the Company also conducts marketing in the Java

0 0

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Sales Volume Table (in Tons)Keterangan 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Domestic

Sumatera 5.699.369 5.749.318 6.021.477 272.159 322.109 4,7 5,7

Java 1.155.795 746.228 579.508 -166.720 -576.287 -22,3 -49,9

Total Domestic 6.855.163 6.495.547 6.616.718 121.171 -238.445 1,9 -3,5

Export 397.445 485.068 1.105.885 620.817 708.440 128,0 178,2

Total 7.252.609 6.980.615 7.706.870 726.256 454.261 10,4 6,3

2015-2017 Sales Volume Graph Year (in Tons)

201720162015

7.706.870

6.980.6157.252.609

Meanwhile, cement sales revenue obtained by Semen Padang in 2016 is as follows:

Table of Cement And Clinker Sales (in tons)Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Sales of Cement 7.252.609 6.891.092 6.600.985 -290.107 -651.624 -4,2 -9,0

Sales of Clinker - 89.523 1.105.885 1.016.362 1.105.885 1.135,3 0,0

Total 7.252.609 6.980.615 7.706.870 726.256 454.261 10,4 6,3

CEMENT PACKING AND SALES SERVICES SEGMENTMost of the packing service and distribution segments of Semen Padang products are managed by its subsidiaries, namely PT Sepatim Batamtama and PT Bima Sepaja Abadi. The scope of this segment covers the areas of bagging, sales and general trading services. PT Sepatim Batamtama commenced commercial operations in 1994 with Riau Islands marketing area, while PT Bima Sepaja Abadi started commercial operation in 1996 which controls the distribution of cement for DKI Jakarta, Banten and West Java.

Process and Volume of Cement Slaughtering ServicesThe service in 2017 is carried out by the subsidiaries, namely PT Sepatim Batamtama and PT Bima Sepaja Abadi. The cement bagging process is done after the cement at

Silo is put into the bucket elevator before entering the water slide. Next go in bin central to do stirring to mix evenly. Then, enter in packing machine or roto packer which is used for cement bags automatically. Cement that has been packaged, then sorted to selected the best quality. Furthermore, it is distributed by means of transportation of belt-shaped and driven by motor belt conveyor.

In 2017, the deposit segment can realize 945,430 tons of cement selling and selling services, up 12.5% compared to 2016.

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Table of Packing Service of Subsidiaries (in Tons)Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

PT Sepatim Batamtama Packing Services 317.903 240.109 298.220 58.111 -19.683 24,2 -6,2 Cement Sales 78.395 67.744 90.000 22.256 11.605 32,9 14,8PT Bima Sepaja Abadi Packing Services 603.459 366.446 341.339 0 -237.013 0,0 -39,3 Cement Sales 272.495 166.430 215.871 0 -106.065 0,0 -38,9Total 603.459 366.446 945.430 0 -237.013 0,0 -39,3

Cement Loading Service RevenueSegment revenue of cement selling and selling services in 2017 by subsidiaries reached Rp327 billion or increased by 14.9% or Rp42 billion compared to IDR285 billion in 2016. This revenue increase occurred on the sale of cement by PT Sepatim Batamtama and other merchandise sales by PT Bima Sepaja Abadi.

Table of Cement Packing and Sales Services Revenue of Subsidiaries (in billion Rupiah)Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

PT Sepatim Batamtama Packing Services 15 12 12 0 -4 0,0 -24,5 Cement Sales 74 67 94 26 19 39,0 26,1 Other Products 3 7 2 -4 0 -63,6 -7,5PT Bima Sepaja Abadi Packing Services 34 22 21 -1 -13 -2,9 -37,3 Cement Sales 255 148 164 16 -91 10,6 -35,7 Other Products 22 29 34 5 12 18,6 54,0Total 403 285 327 42 -76 14,9 -18,9

PROFITABILITY PER BUSINESS SEGMENTFrom the result of the sales per segment, Semen Padang successfully posted the following Operating Income per business segment as follows:

Table of Operating Income per Business Segment (in billion Rupiah) Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Cement prodution 1.012 1.040 826 -214 -187 -20,6 -18,4Packing Services 8 (0) 2 2 -6 404,5 -80,3Inter segment net off -5 0 -2 -1 4 948,6 -71,7Total 1.015 1.039 826 -214 -189 -20,5 -18,6

Operating income from the cement production segment of 2017 of Rp826 billion fell by 20.5% or Rp214 billion compared to 2016 of Rp1,039 billion. As for the segment of packing services in 2017, the company achieved a profit of Rp2 billion or an increase of 404.5% compared to the year 2016 with an operating loss of Rp302 million.

MARKETING STRATEGY AND POLICY PT Semen Padang has several types of products to meet the needs of the cement market. The quality of cement products is always maintained consistently accompanied by optimal service in an effort to improve customer satisfaction.

Company policy in marketing is by prioritizing customer satisfaction and maintaining and increasing market share. The policy is embodied in the company policy. In an effort to increase market share, the Company determines a marketing strategy that includes optimizing synergies, rewards, and punishments against distributors, and conducting effective promotional activities to strengthen / maintain brand image. Semen Padang’s marketing policy and strategy refers to Semen Padang’s long term goals and synergies with marketing policies and strategies within the Semen Indonesia Group.

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The company prioritizes customer satisfaction and customer trust, by striving to provide excellent quality service, quality, and innovative solutions to customers. The company interacts with customers directly to find out the actual needs of its customers and provide services according to customer needs.

As an effort to maintain and increase market share, the Company conducted a customer satisfaction survey. The survey was conducted to measure the level of customer satisfaction and to evaluate the customer’s perception objectively on the performance of the products and services produced to be a further evaluation material for Semen Padang in determining the action plan as a continuous improvement effort and ensuring the achievement of the quality of customer service performance. Performance indicator of customer satisfaction score is a survey conducted by an independent party to measure the level of customer satisfaction with the services provided by the Company.

Measurements are made using the Customer Satisfaction Index (CSI) method to determine the overall level of customer satisfaction with an approach that takes into account the expected level of service quality dimension. The dimensions assessed in the CSI survey include product quality and packaging, pricing and profits, distribution / delivery, and promotion and customer service. The company understands the importance of customer satisfaction to maintain market share. Therefore, the Company routinely measures customer satisfaction as reflected in CSI activities. Measurement of customer satisfaction is done to the distribution channel and the end user, in fl uencer to assess the products and services produced through survey data collection of questionnaire distribution results. From the results of CSI, Semen Padang can determine the future step to improve customer satisfaction (Improvement Plan).

Table of Customer Satisfaction Index Assessment Results2014-2016 (%)

CSI 2015 2016 2017

Distribution Channel 85,80 86,82 88,20

End User 87,02 92,53 86,30

Influencer 86,10 89,50 90,20

CSI Overall 86,40 90,50 87,40

In 2017, the CSI survey results obtained a score of 87.40% decreased compared to 2016 which obtained a score of 90.50%.

MARKET SHAREIn 2017, PT Semen Padang posted revenues of Rp6,652 billion, a decrease of 6.9% compared to 2016. Sales volume in 2017 amounted to 7,706,870 tons, an increase of 10.4% compared to 2016. The national market share year 2017 was 9.8% or down 3.8% compared to 2016. The decline was due to the high competition and the number of newcomers, especially in the Java region.

Semen Padang is committed to maintaining its national market share, based on Indarung VI being able to produce commercially until supply constraints have been overcome. Meanwhile, the strategy is to increase group synergy in the form of purchase and sale of Intercompany cement and SWAP with Semen Indonesia Group. Semen Padang in 2017 realized the purchase of Intercompany cement of 169,612 tons. Meanwhile, Intercompany and SWAP sales were realized at 59,735 tons in 2017. Semen Padang also purchased a domestic Non Intercompany cement of 26,820 tons to meet market demand in Sumatera region, while the purchase of non domestic Intercompany clinker in 2017 was realized at 59,722 tons, partially large to meet the demand of Cement Mill in Dumai.

Market share in 2017 tends to decrease when compared with market share in 2016. The decline in market share was due to the increasing level of competition in the national cement industry due to the entry of new competitors from abroad, causing a decline in market share of domestic cement producers.

Table of Market Share (in Tons)Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Sumatra Market Demand (Tons) 13.058.296 13.516.456 14.190.905 674.449 1.132.610 5,0% 8,7% Market Share (%) 43,6% 42,5% 42,3% -0,2% -1,3% -0,5% -3,0%Java Market Demand (Tons) 34.451.165 33.423.918 37.646.484 4.040.566 3.013.319 12,1% 8,7% Market Share (%) 2,4% 1,6% 1,4% -0,2% -1,0% -15,0% -41,8%Total Domestic Market Demand (ton) 61.994.900 61.587.892 66.349.944 4.762.052 4.352.044 7,7% 7,0% Market share (%) 10,5% 10,2% 9,8% -0,4% -0,7% -3,8% -6,5%

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PROMOTION STRATEGY AND CHANNELSPT Semen Padang seeks to inform, offer and influence its products to attract potential buyers to use the Company’s products through promotional activities and various media on an ongoing basis in order to create Brand Awareness and Brand Image that are positive to the general public and its customers in particular, allowing the improvement of support in each marketing area. Corporate promotional activities are conducted in various manners, such as the installation of

Marketing Management Organization Structure

BoD

Echelon I

Commercial Director Pudjo Suseno

Distribution & Transportation

Sumarsono

SalesBenas Azhari

ProcurementJuke Ismara

PROFILE OF THE HEAD OF MARKETING DEPARTMENT OF SEMEN PADANG IN 2017

Head of Sales Department

Benas Azhari

Born in Pekanbaru, October 24, 1962. Graduated from University of Andalas Padang (1988) and Magister Management of Universitas Gadjah Mada (2001). Began his career as an orientation staff in the HR Department (1988), served as the market analysis division head, Head of Marketing Bureau, Head of Sales Department, Head of Distribution and Transportation Department, Director of PT Pasoka Sumber Karya, and now, serving as the Head of Sales Department.

billboards, banners, distributor summit, customer meetings and more.

MARKETING MANAGEMENT ORGANIZATIONThe Organization of Marketing Management is coordinated by the Commercial Directorate under the leadership of Commercial Director in the implementation of daily activities and run by the Sales Department, Distribution and Transportation Department.

Head of Distribution and Transportation Department

Sumarsono

Born in Bukittinggi, June 8, 1968. Graduated from Bandung Institute of Technology (1995) and Open University (2004). Started his career as an orientation staff in the Department of Design (1995), project staff of Indarung V, Head of Cement Mill V Maintenance Field, Raw Mill V Maintenance Division Head, Maintenance Di vision Head of Indarung Kiln Coal Mill V, Ditribution and Transportation I Bureau Head, President Director of PT Pasoka Sumber Karya, Head of Distribution and Transportation Department.

Each marketing area is supported by several personnel as sales representatives to monitor market conditions in each region as well as maintain customer relationship supported by managers in every marketing area. So that the consumer relationship can be well established and complaints and consumer desires can be followed up immediately.

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MARKETING CONTACT

Customer Service CenterTo accommodate and provide an alternative solution to all kinds of suggestions, criticisms, complaints, or questions from customers or the public regarding the products, packing, distribution, price etc. Semen Padang provides customer service through phone number + 62-800- 1-888-222 (toll free) or via email [email protected]. The number of complaints that entered into customer service during the year 2016 as many as 7 complaints, with details as follows:

Table of Customer Complaints In 2017

Description Total (%) Follow-up Complaints

Product quality 7 Complaint 100 100

Packing Quality 0 Complaint – –

Delivery / Distribution 0 Complaint – –

Price 0 Complaint – –

Customer service 0 Complaint – –

Total 7 Complaint 100 100

All complaints have been resolved properly to maintain customers’ satisfaction regarding complaints that they have submitted to the Company.

Technical ServicesPT Semen Padang is Intensively disseminates its products to embed the brand equity and brand awareness by performing product presentation or joint test / technical support to the end users and potential customers as a form of the Company’s technical services program. It is necessary to conduct due to be importance of informing customers about the use of products well, correctly, and appropriately in order to produce economical and high quality product utilization. Technical service activities are conducted regularly every year to PT Semen Padang’s customers. This activity is carried out by the Technical Services Team of Semen Padang incorporated from marketing unit, Quality Assurance & Technical Services unit, distribution and transportation unit, and other related units In 2017, 7 technical service activities in all marketing areas of Semen Padang, such as trial mix in Lampung and Palembang, product socialization in Batam, Pekanbaru, and Palembang, as well as ready mix laboratory training in Jambi.

Distribution, Integration and AllianceThe marketing area of Semen Padang is currently spread on the island of Sumatra and parts of Java Island. To increase market share, Semen Padang undertakes various strategies in dealing with incessant competition in national cement industry.

The mechanism of delivery of products to consumers is carried out through a distribution network consisting of distributors, agents, and stores. Cement delivery is carried out by land and sea, either in bulk or pocket / packaging, with various terms of delivery as follows: 1. FOT (Free on Truck)2. FOB (Free on Board)3. Warehouse Franco4. CIF (Cost Insurance Freight)5. C & F (Cost and Freight)

In distributing the products, the Company uses distributors with networks spread over area of Aceh, North Sumatera, West Sumatera, Bengkulu, Mainland of Riau, Islands of Riau, South Sumatera, Jambi, Lampung, Bangka Belitung, DKI Jakarta, West Java, Banten and Java Central. This provides an opportunity for the Company to increase its sales and achieved the settled capacity because Sumatra and Java are Indonesian territory.

FINANCIAL PERFORMANCE OVERVIEWThe following financial performance overview has been prepared based on the Financial Statement of PT Semen Padang ended on December 31, 2017 and has been audited by the Public Accountant Office of Satrio Bing Eny & Rekan which was appointed by the Company. The Financial Statement of PT Semen Padang has been presented fairly, in all material respects and in accordance with Indonesian Financial Accounting Standards.

STATEMENT OF FINANCIAL POSITION

AssetPT Semen Padang’s total assets in 2017 reached Rp10,141 billion or grew 10.1% or Rp930 billion compared to 2016 amounting to Rp9,211 billion. Total assets consist of current assets which amounted to Rp2,461 billion, an increase of 15.7% or Rp334 billion compared to 2016 of Rp2,127 billion and non-current assets of Rp7,679 billion or an 8.4% growth of Rp596 billion compared to in 2016 which amounted to Rp7,084 billion.

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Table Of Financial Position (in billion Rupiah)Description 2015 2016 2017 Difference % change

201720162015

2.461

2.1272.297

Cash and cash equivalentsCash and cash equivalents in 2017 was posted at at Rp470 billion, decreasing by 27.6% or Rp 179 billion compared to 2016 of Rp648 billion. The decrease mainly came from cash and cash equivalents was mainly due to investment expenditures for completion of Indarung VI project development.

Restricted Cash and Cash EquivalentsRestricted cash and cash equivalents in 2017 was posted at

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Asset

Current assets 2.297 2.127 2.461 334 164 15,7 7,2

Non-Current Assets 5.096 7.084 7.679 596 2.583 8,4 50,7

Total Assets 7.393 9.211 10.141 930 2.748 10,1 37,2

Liability and equity

Short-term liabilities 2.244 1.894 2.114 220 -130 11,6 -5,8

Long Term Liabilities 689 2.427 3.076 648 2.387 26,7 346,6

Total Liabilities 2.933 4.321 5.190 868 2.257 20,1 77,0

Equity 4.460 4.890 4.951 61 490 1,3 11,0

Total Liabilities and Equity 7.393 9.211 10.141 930 2.748 10,1 37,2

Current assetsCurrent assets in 2017 amounted to Rp2,461 billion, up 15.7% or Rp334 billion compared to 2016 of Rp2,127 billion. The increase mainly came from accounts receivable and inventories, which rose by 22.6% and 47.7%, respectively. A detailed description of current assets is shown in the following table and discussion:

Current Assets Table (in billion Rupiah)Description 2015 2016 2017 Difference % change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Current assets

Cash and cash equivalents 743 648 470 -179 -273 -27,6 -36,8

Accounts Receivable - Net 785 744 912 168 127 22,6 16,2

Stock 657 608 898 290 241 47,7 36,7

Down payment 17 17 14 -3 -3 -18,6 -17,7

Other current assets 95 110 168 58 73 52,2 76,5

Total Current Assets 2.297 2.127 2.461 334 164 15,7 7,2

Graph of 2015-2017 Current Assets Year (in billion Rupiah)

Rp14.5 billion, up 49.9% or Rp4.8 billion compared to Rp6.7 billion in 2016. In 2017, the cash and cash equivalents of PT Semen Padang are in PT Bank Negara Indonesia Tbk, PT Bank Mandiri (Persero) Tbk and PT Bank Rakyat Indonesia Tbk, the balance is Non-Cash guarantee

Loan at the bank for each opening letter of credit. The Company is required to deposit a deposit margin of 10% of the nominal value of the letter of credit issued, while the Subsidiary also provides Working Capital Credit (KMK) for PT Sepatim Batamtama amounting to Rp361 million.

Trade Accounts ReceivableAccounts receivable represents receivables arising from the main business activities in the sale of products in this case cement and slag. Accounts receivable in 2017 amounting to Rp912 billion rose by 22.6% or Rp168 billion compared to 2016 amounting to Rp744 billion.

Trade receivables consist of trade accounts receivable to third parties and trade receivables to related parties. Trade

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receivables to related parties amounted to Rp204 billion, up by 0.6% or Rp1 billion compared to Rp203 billion in 2016. On the other hand, trade receivables to third parties in 2017 amounting to Rp708 billion increased by 30.9% or Rp167 billion compared to Rp541 billion in 2016, primarily due to the addition of Term of Payment day on the sale of cement from the previous average of 45 days to average 60 days. The net trade receivables balances represent the net of allowance for decline in value amounting to Rp18.5 billion.

Receivable turnover ratio in 2017 decreased compared to 2016. The ratio of receivable turnover of 2017 was 8.0 times while in 2016 it was 8.1 times. Comparison of receivable turnover ratio can be seen in the following table:

Accounts Receivable Turnover Tables Year 2015-2017 (times)

Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Receivable Turnover Rate 8,6 8,1 8,0 0 -1 -1,3 -6,2

StockPersediaan pada tahun 2017 sebesar Rp898 miliar, lebih tinggi amounting to 47.7% or Rp290 billion compared to 2016 of Rp608 billion. The inventory turnover ratio has decreased from 7.1 times in 2016 to 5.2 times in 2017. This is due to the increase in inventories due to the operation of the Indarung VI plant.

Down paymentIn 2017, the down payment stood at Rp14 billion, down 18.6% or Rp3 billion compared to Rp17 billion in 2016. The down payment was primarily due to a decrease in local purchases of 95.9%.

Prepaid taxesPrepaid taxes in 2017 amounting to Rp119 billion,

increased by 1,366.0% or Rp111 billion compared to the year of 2016 amounting to Rp8 billion. The increase was mainly due to an increase in domestic input VAT and income tax article 28A amounting to Rp28 billion and Rp79 billion, due to the overpayment of tax advances in connection with the decline in the company’s sales performance..

Prepaid expensesPrepaid expenses in 2017 amounted to Rp3 billion, a decrease of 63.4% or Rp5 billion compared to the year 2016 of Rp8 billion. This decrease was primarily due to lower rental advances.

Non-Current AssetsTotal non-current assets in 2017 amounted to Rp7,679 billion, an increase of 8.4% or Rp596 billion compared to 2016 of Rp7,084 billion. The increase was mainly attributable to the increase in net asset value of Rp637 billion due to the realization of strategic investments related to the Indarung VI plant project. A description of non-current assets details is shown in the following table:

Table of Non-Current Assets (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Non-Current Assets

Advance investment 115 43 7 -36 -108 -84,0 -94,1

Investment Properties 111 104 98 -6 -12 -5,8 -10,9

Fixed assets - net 4.763 6.800 7.437 637 2.674 9,4 56,1

Other non-current assets 108 137 137 1 30 0,6 27,4

Total Non-Current Assets 5.096 7.084 7.679 596 2.583 8,4 50,7

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Table of Liabilities (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Short-term liabilities 2.244 1.894 2.114 231 -130 12,2 -5,8Long-term liabilities 689 2.427 3.076 638 2.387 26,2 346,6Total Liabilities 2.933 4.321 5.190 868 2.257 20,1 77,0

Graph of 2014-2016 Liabilities (in billion Rupiah)

201720162015

5.190

4.321

2.933

Investment PropertiesIn 2017, PT Semen Padang has an investment property in the form of buildings and leased infrastructure to the Semen Padang Hospital Foundation for a period of 10 years. The value of investment properties in 2017 amounting to Rp98 billion fell 5.8% or Rp6 billion compared to 2016 amounting to Rp104 billion. This is due to the depreciation expense of investment properties in 2017.

Fixed assetsFixed assets in 2017 amounted to Rp7,437 billion, an increase of 9.4% compared to 2016 of Rp6,800 billion. This increase was mainly due to the realization of strategic investments related to the Indarung VI plant project.

LiabilitiesTotal liabilities in 2017 amounting to Rp5,190 billion increased by 20.1% or Rp868 billion compared to 2014 amounting to Rp4,321 billion. The value consists of short-term liabilities of Rp2,114 billion or 40.7% of total liabilities and long-term liabilities of Rp3,076 billion or 59.3% of total liabilities. The description of the liability is shown in the following table:

Graph of 2014-2016 Non-Current Assets (in billion Rupiah)

201720162015

7.679

7.084

5.096

Advance PaymentThe investment advances represent advances for asset purchases for strategic projects, by 2017 down payment of investment of Rp7 billion by 84.0% compared to the realization of 2016, this decrease was mainly due to the completed Indarung VI Project and commenced operations on August of 2017.

Investments in Associated EntitiesInvestments in Associated Entities in 2017 amounted to Rp751 million, up 15.1% or Rp556 thousand compared to 2016 of Rp678 million. The investment is conducted at PT Igasar with the main business of distribution of cement for West Sumatera, Riau and Jambi.

SHORT-TERM LIABILITIESTotal liabilities short-term in 2017 amounting to Rp2,114 billion rose 12.2% or Rp231 billion compared to 2016 amounting to Rp1,884 billion. The increase in short-term liabilities is mainly due to dividend payables, other debts and short-term bank debt.

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Short term Liabilities Graph Year 2015-2017(in billion Rupiah)

201720162015

2.1141.894

2.244

Accounts payableBusiness debt of 2017 amounting to Rp1,126 billion fell 2.9% or Rp34 billion compared to 2016 of Rp1,159 billion. This debt consists of accounts payable to third parties amounting to Rp804 billion and accounts payable to related parties amounting to Rp322 billion. The decrease was caused by the payment of debt due to the completion of Indarung VI project.

Debt MiscOther debts of 2017 amounting to Rp246 billion rose 71.1% or Rp102 billion compared to 2016 amounting to Rp144 billion. The increase in other debts is primarily interest expense on dividends.

Tax debtThe tax debt of 2017 amounting to Rp40 billion fell 59.4% or Rp58 billion compared to the year 2016 of Rp98 billion. The decrease of the tax debt in line with the decrease of the company’s sales performance compared to last year to cause the overpayment of the debts of Income Tax Article 25 and Article 29 and the decrease of VAT of 2017.

Accrued ExpensesAccrued expenses in 2017 amounted to Rp282 billion increasing by 9.9% or Rp25 billion compared to 2016 which amounted to Rp257 billion. The increase is due to the accrual of maintenance expense which increase due to the increasing number of maintenance activities in 2017 and the addition of Indarung VI Plant in mid of 2017.

Short-term Employee Benefit LiabilitiesIn 2017, short-term employee benefits liabilities was posted at Rp158 billion, was 23.7% or Rp49 billion compared to Rp207 billion in 2016. This was due to the decrease in the accrual of production service costs in line with the decrease in corporate profits.

Short Term Bank LoansShort-term and long-term bank were posted at that will mature in 1 year in 2017, short-term bank loans were posted at Rp1,362 million, while long-term bank loan that will mature in one year stood at Rp137 billion, up by Rp135 billion compared to Rp2 billion in 2016.

Finance Lease LiabilitiesIn 2017, financing lease liabilities were posted at Rp24 billion, decreasing by 6.38% or Rp1.6 billion compared to Rp25 billion in 2016. This was mainly due to the expiration of the contract period of some leasing assets such as vehicles.

LONG TERM LIABILITIESTotal long-term liabilities in 2017 amounted to Rp3,076 billion increasing by 26.7% or Rp648 billion compared to 2016 amounted to Rp2,427 billion, an increase in dividend and bank loan.

Table of Short-term Liabilities (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Short-term liabilities

Accounts payable 902 1.159 1.126 -34 223 -2,9 24,8

Bank debt - - 137 137 137

Tax debt 54 98 40 -58 -14 -59,4 -26,1

Accruals 207 257 282 25 75 9,9 36,2

Debt dividend 732 - 100 100 -632 0,0 -86,3

Employee benefits 213 207 158 -49 -55 -23,7 -25,9

Other current liabilities 136 172 271 99 136 57,5 100,3

Total Long-Term Liabilities 2.244 1.894 2.114 220 -130 11,6 -5,8

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201720162015

3.076

2.427

689

Bank LoansIn 2017, bank loan was posted at Rp1,273 billion, up 24.7% or Rp252 billion compared to 2011 of Rp1,020 billion.

Finance Lease ObligationThe debt financing lease in 2017 of Rp18 billion was down 53.2% or Rp20 billion compared to 2014 amounting to Rp38 billion. The decline was mainly due to the end of several rental contracts for vessel financing.

Dividend PayableDebt of dividends in 2017 amounted to Rp1,187 billion which is the dividend debenture of 2013, 2014, 2015 and 2016 which was postponed by PT Semen Padang payment in the framework of SMIG financial synergy.

Long Term Employee Benefit LiabilitiesLong-term employee benefits obligation is a liability for the defined benefit pension employee of PT Semen Padang. This tota liability is calculated by an Independent Actuary of the Central Bureau of Acturia (BPA) using the Projected Unit Credit method. PSAK No. 24 requires the Company to calculate and record the liability for the employee benefits obligation. Long-term employee benefits obligation in 2017 amounted to Rp506 billion, 68.5% higher or Rp206 billion compared to 2016 of Rp300 billion.

Other Non-Current LiabilitiesOther non-current liabilities are contingent liabilities for the loading costs of PT Semen Padang Packing Plant located in PT Pelindo land at the end of the land lease contract and restoration of the mine land. The balance of other non-current liabilities in 2017 amounted to Rp92 billion, up 36.7% compared to 2016.

EquityTotal Equity of PT Semen Padang in 2016 amounted Rp4,951 billion increased by 1.3% or Rp61 billion compared to 2017 amounting to Rp4,890 billion. This increase comes from the net profit of book year 2017 after deducting the dividend of book year 2016. The current year profit of book year 2017 is Rp499 billion and the dividend of book year 2016 is Rp290 billion.

Table of Equity (in Billion Rupiah)Description 2015 2016 2017

Equity* 4.460 4.890 4.951

Total equity of total controlling interests (Rp4,938 billion) and non controlling (Rp12 billion).

Equity Graph 2015-2017 (in billion Rupiah)

201720162015

4.9514.890

4.460

INCOME STATEMENTIn 2017 Semen Padang earned a net profit of Rp499 billion, decreasing 31.1% or Rp225 billion compared to Rp724 billion in 2016. The decrease in current year’s profit was mainly due to the lower realization of average selling prices which decreased by 3.5% compared to 2016. This resulted in a decrease in net income for the year 2017. The following table discuss “Revenue”

Table of Long Term Liabilities (In Billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Long Term Liabilities

Bank Debt 296 1.020 1.273 252 976 24,7 330 Dividend Debt 0 1.001 1.187 186 1.187 18,6 - Debt Lease Financing 64 38 18 -20 -46 -53,2 -71,8Liability for Employee Benefits

267 300 506 206 239 68,5 89,7

Other Non-Current Liabilities

62 67 92 25 30 36,7 47,8

Total Long Term Liabilities 689 2.427 3.076 648 2.387 26,7 346,6

Graph of 2015-2017 Long Term Liabilities (in billion Rupiah))

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Table of Income Statement Calculation (in Billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Income 6.528 6.221 6.652 431 124 6,9 1,9

Cost of revenue -4.839 -4.330 -4.701 -371 137 8,6 -2,8

Gross profit 1.690 1.891 1.951 60 261 3,2 15,5

Operating expenses -675 -852 -1.125 -273 -450 32,1 66,7

Operating profit 1.015 1.039 826 -213 -189 -20,5 -18,6

Financial income / (expense) -26 -53 -136 -83 -110 154,8 418,5

Profit before tax 989 987 690 -296 -298 -30,0 -30,2

Current year profit 723 724 499 -225 -224 -31,1 -31,0

Net Profit Graph Year 2015-2017 (in Billion Rupiah)

201720162015

499

724723

IncomeIn 2017, revenue of PT Semen Padang amounted to Rp6,652 billion, up 6.9% or Rp431 billion compared to 2016 amounting to Rp6,221 billion. This revenue came from the cement production segment of Rp6,599 billion and the cement selling and selling segment segment of Rp327 billion as shown in the following table:

Table of Revenues Per Business Segment (in Billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement production 6.500 6.192 6.599 407 99 6,6 1,5

Cement Packing Service 403 285 327 42 -76 14,9 -18,9

Inter segment net off -375 -255 -274 -19 101 7,3 -27,0

Total 6.528 6.221 6.652 431 124 6,9 1,9

Inter segment net off is the elimination of the value of sales and purchase transactions between segments. The sales of cement segments to the cement selling and selling segment are cement sales, while the sales of cement service and cement sales segment to the cement production segment is the sale of cement bagging services.

SEGMENT REVENUE OF CEMENT PRODUCTIONCement segment revenue in 2017 was recorded at Rp6,599 billion, up 6.6% or Rp407 billion compared to 2016 of Rp6,192

billion. The increase in revenue from the production segment was due to the increase of cement sales volume in Sumatra area by 4.7% and export sales by 128.0%. The discussion of cement sales volume in more detail can be seen in the sub-section of previous sales volume. The description of segment production income per cement by region, as shown in the following table:

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competition in the cement industry due to the number of new players entering and existing players that increase the capacity of cement production.

SEGMENT REVENUES FOR HANDLING SERVICESSegment Revenue The Services of the Contracting Services include the income of the deposit service, the sale of cement and general trading income. Cement service segment revenue and cement sales in 2017 reached Rp327 billion, up 14.9% or Rp42 billion compared to 2016 of Rp285 billion. The decrease in cement service and cement sales revenues occurred in PT Bima Sepaja Abadi, including the decline in cement sales as described previously.

Revenue Table Segment Cement ProductionDescription 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Revenue (in billion Rupiah)

Domestic

Sumatra 5.217 5.345 5.640 295 423 5,5 8,1

Java 1.025 587 405 -183 -621 -31,1 -60,5

Total Domestic 6.242 5.933 6.045 112 -197 1,9 -3,2

Export 258 259 554 295 296 113,8 114,6

Total 6.500 6.192 6.599 407 99 6,6 1,5

Volume (thousand tons)

Domestic

Sumatra 5.699 5.749 6.021 272 322 4,7 5,7

Java 1.156 746 580 -167 -576 -22,3 -49,9

Total Domestic 6.855 6.496 6.601 105 -254 1,6 -3,7

Export 397 485 1.106 621 708 128,0 178,2

Total 7.253 6.981 7.707 726 454 10,4 6,3

Selling Price (Rp / ton)

Domestic

Sumatra 915.349 929.719 936.694 6.975 21.344 0,8 2,3

Java 887.117 787.099 698.529 -88.570 -188.588 -11,3 -21,3

Total Domestic 910.589 913.334 915.785 2.451 5.196 0,3 0,6

Export 649.745 534.377 501.011 -33.366 -148.735 -6,2 -22,9

Total 896.295 887.001 856.268 -30.734 -40.027 -3,5 -4,5

Graph of Cement Production Segment Revenue 2015-2017 (in billion Rupiah)

201720162015

6.5996.192

6.500

The sales volume was lower compared to the plan in 2017 and higher than the realization in 2016 due to the increasing

Table of Packing Services Revenue (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2PT Sepatim Batamtama

Packing Services 15 12 12 0 -4 0,0 -24,5

Cement Sales 74 67 94 26 19 39,0 26,1

Other Product 3 7 2 -4 0 -63,6 -7,5


Packing Services 34 22 21 -1 -13 -2,9 -37,3

Cement Sales 255 148 164 16 -91 10,6 -35,7

Other Product 22 29 34 5 12 18,6 54,0

Total 403 285 327 42 -76 14,9 -18,9

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Table of Cost of Good Sold Per Business Segment (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement Production 4.833 4.314 4.666 352 -167 8,2 -3,5

Packing Service 381 271 310 38 -71 14,1 -18,8

Inter segment net off -375 -255 -274 -19 101 7,4 -27,0

Total 4.839 4.330 4.701 371 -137 8,6 -2,8

Per Ton 667.176 620.321 608.787 -11.534 -58.389 -1,9 -8,8

Cost Of Goods SoldCost Of Goods Sold in 2017 amounted to Rp4,701 billion, decreasing by 8.6% or Rp371 billion compared to 2014 amounting to Rp4,330 billion. The cost of goods sold consisted cement production segment’s cost of goods sold in the amount of Rp4,666 billion and the packing services and cement salessegment in the amount of Rp310 billion.

But if viewed from the rupiah per ton, the cost of revenues in 2017 decreased by Rp11,534 per ton. This is because the total cost transformation program run by the company. Year 2017 total pengehematannya amounting to Rp161 billion. Description of cost of revenues per segment of business, as shown in the following table:

Graph of Segment Revenue Service Expenditure Year 2015-2017 (in billion Rupiah)

201720162015

327285

403

No VariantValue

DescriptionProjection Actual %

1 Raw Material & Helper 12.859 71.439 556Optimization of fly ash (Dumai) usage of gypsum purified (indarung), decrease of clinker factor, soil mining utilization and efficiency of Ministry of Mine, Supply of Dumai clinker from Indarung

2 Fuel 13.031 31.843 244 Optimization of coal supply via land Rp 13.711 / ton of coal

3 Maintenance 25.148 20.504 82Capex budget optimization, insurance reimbursement potential, refurbishment ticket refund, trade in and optimization of outsourcing services

4 Electricity 11.499 - 0 Optimization of power usage index

5 Overhead & Overtime 5.449 14.896 273 More selective overtime control

6 Packaging 6.331 1.479 23Optimization of the use and production of own pockets (pasted), savings of kraft paper grammature for bags, decreased reject of bag production

7Sales of Non-Cement & Clinker

9.344 295 3Utilization of basalt as Aggregate

8Cost Raw material handling

277 47 17Optimization of heavy equipment rental

9ADM and General costs

19.600 11.438 58The cost of follow-up adum includes Perjadin, Consultant, Public Relation, Meeting, Guest Feast, etc.

10 APLP & A 4.000 9.555 239Decline in PT Pasoka's Retention from 10% to 7% no fee for additional work, SPH health contract cost savings

11 Outsourcing Cost - - -Optimization of outsourcing as well as needs evaluation, overtime and outsourcing administration

COST OF CEMENT PRODUCTION SEGMENTPT Semen Padang faces several important issues affecting the Company’s cost performance when compared to 2016 such as the increase of purchase price for raw materials, auxiliary materials and fuel. With the Synergy of Cement Indonesia Group and by continuing the efficiency program “Total Cost Transformation”.

Description 2015 2016 2017 Difference % Change1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Total Cost Transformation 124.983 411.051 161.495 (249.556) 36.512 39,3 129,2

The Company may make savings during 2017 of Rp161 billion with details as follows:

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Amerika Serikat

NETWORK AND BUSINESS PARTNERS

INSIDE AND OUTSIDE THE COUNTRY

151








AustraliaAfrika Selatan

Mauritius

Sri Lanka

BangladeshIndia

Uni Emirates Arab

Jerman

Kuwait

NETWORK AND BUSINESS PARTNERS

INSIDE AND OUTSIDE THE COUNTRY

152








COST OF SEGMENT REVENUE SERVICEIn 2017, cost of goods sold service segment sales increased by Rp310 billion, up 14.1% or Rp38 billion compared to Rp261 billion in 2016. This increase is in line with the increase in cement sales and service revenue.

Gross profitGross profit per business segment in 2017 increased by 3.2% or Rp60 billion from Rp1,891 billion in 2016 to Rp1,951 billion in 2017. Higher gross profit compared to 2016, primarily due to higher sales revenue compared to year 2016

Table of Gross Profit Per Business Segment (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement Production 1.668 1.878 1.934 56 266 3,0 15,9

Handling Services 22 13 17 4 -5 31,5 -21,6

Segment Elimination 0 0 0 0 0 1.311,6 -1.173,7

Total 1.690 1.891 1.951 60 261 3,2 15,5

Gross Profit Margin (%) 26,0 30,5 29,6 -1 4 -3,2 13,7

Graph of Gross Profit Per Business Segment Year 2015-2017 (in billion Rupiah)

201720162015

1.9511.891

1.690

Operating expensesIn detail, sales and general administrative expenses in 2017 amounted to Rp1,184 billion, an increase of Rp241 billion, an increase of 25.5% compared to 2016 of Rp944 billion. This is mainly due to the increase in commercial expenses in the form of increased freight costs. Details of general sales and administrative expenses per business segment are as follows:

Table of Business Expenses (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement production 658 928 1.168 240 510 25,9 77,5

Handling services 17 16 16 0 -1 2,8 -5,2

Elimination between segments 0 0 0 0 0 0,0 0,0

Total 675 944 1.184 241 509 25,5 75,4

Graph of Operating Expenses 2015-2017 (in billion Rupiah)

201720162015

1.184944

675

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BUSINESS LOAD DETAILS In more detail, operating expenses consist of sales expenses and general administrative expenses. Sales expenses increased significantly in 2017 by Rp250 billion compared to the realization of 2016. This is due to changes in distribution patterns following the sales pattern that more sales of franco. Administrative and general expenses decreased by Rp10 billion compared to the realization in 2016. This was mainly due to the implementation of the Total Cost Transformation efficiency program on the Company’s operating costs.

Table Details of Operating Expenses for 2015-2017 (in billion Rupiah)Keterangan 2015 2016 2017 Selisih % Perubahan

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Selling expenses 263 532 782 250 519 47,1 1,5

General and Administrative Expenses

412 412 402 -10 -10 -2,4 -2,4

Total 675 944 1.184 241 509 25,5 75,4

Graph of Sales Expense and General Administration of Business Persenues 2015-2017 (in billion Rupiah)

OTHER OPERATING REVENUES AND EXPENSESOther operating income and expenses arise from activities other than the main business, such as claims income, rent, other income and foreign exchange differences. In 2017 revenues and other operating expenses were net of Rp59 billion, while in 2016 amounted to Rp92 billion. The decrease in other operating income was mainly due to the decrease in other income from waste treatment compared to 2016.

Table of Other Income and Other Operating Expense per Business Segment (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement Production 3 90 60 -30 57 -32,8 1.901,2

Handling Services 3 2 0 -2 -2 -83,2 -86,3

Segment Elimination -5 0 -2 -1 4 948,6 -71,7

Total 0 92 59 -33 59 -35,6 16.250,5

Graph of Revenue and Other Operating Expenses 2015-2017 (in billion Rupiah)

201720162015

59

92

0

201720162015

782

532263

201720162015

402412412

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Operating profitIn 2017, PT Semen Padang booked operating profit of Rp826 billion, decreasing of 20.5% or Rp214 billion compared to 2016 of Rp1,039 billion. The decrease in operating income was due to the high selling expenses in the form of freight charges. Operating income per business segment is as shown in the following table:

Table of Business Returns Per Business Segment (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement Production 1.012 1.040 826 -214 -187 -20,6 -18,4

Handling Services 8 -0 2 2 -6 -604,5 -80,3


Total 1.015 1.039 826 -214 -189 -20,5 -18,6

Graph of Operating Income Growth in 2015-2017 (in billion Rupiah)

Profit Before Tax Per SegmentIn terms of profit before tax, after calculating the financial revenues and financial expenses, the profit before tax was smaller by Rp296 billion or 30% when compared to 2016. Details of profit before tax per business segment were as follows:

Table of Profit Before Tax Per Business Segment (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cement Production 986 987 689 -298 -296 -30,2 -30,0

Handling Services 8 0 2 3 -6 -980,4 -72,1


Total 989 987 690 -296 -298 -30,0 -30,2

Growth Graph Before Income Tax Year 2015-2017 (in billion Rupiah)

201720162015

690

987989

Income Tax ExpenseThe income tax expense in 2017 decreased from Rp263 billion in 2016 to Rp192 billion in 2017, a decrease in income tax expense inline with lower income before income tax as compared to 2016. Details of income tax expense per business segment are as follows:

201720162015

826

1.0391.015

155








Tax Table Per Segment (in Billion Rupiah)Description 2015 2016 2017 Difference % Change


Handling Services 2 0 1 1 -1 -484,6 -65,2

Total 266 263 192 -71 -74 -27,1 -27,9

Graph of Taxes Per Segment (in Billion Rupiahs)

201720162015

192

263266

Current year profitAfter taking into account the above income tax expense, the current net profit in 2017 amounted to Rp499 billion, down 31.1% or Rp225 billion compared to Rp724 billion in 2016. The details of net income per business segment are as follows:

Profit Per Segment Table (in Billion Rupiah)Description 2015 2016 2017 Difference % Change


Handling Services 6 0 2 2 -5 -2.519,2 -74,5


Total 723 724 499 -225 -224 -31,1 -31,0

Graph of Earnings of Current Year 2015-2017(in billion Rupiah)

201720162015

499

724723

Profit of the Current Year Per SegmentIn 2017, Semen Padang managed to record the current profit amounted to Rp499 billion, down 31.1% or Rp225 billion compared to the year 2016 of Rp724 billion.

CASH FLOW STATEMENTCash and cash equivalents position in 2017 amounted to Rp455 billion, down 28.6% or Rp183 billion compared to 2016 of Rp638 billion. The decrease in cash was mainly due to financing activities in the form of implementation of Indarung VI strategic project. In addition, cash disbursements for operating activities and investment activities decreased compared to 2016 as it entered the final phase of the Indarung VI project. As for cash flow from financing activities, the Company disbursed bank loans to support several strategic projects and operational activities, while expenditures for dividend payments for fiscal year 2013 through 2016 were delayed by shareholders.

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Table of Cash Flow (in Billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Cash Flows from Operating Activities

1.430 1.413 393 -1.020 -1.037 -72,2 -72,5

Cash Flows for Investment Activities

-1.967 -2.168 -901 1.267 1.066 -58,4 -54,2

Cash Flow for Financing Activities

245 672 326 -346 80 -51,5 32,8

Increase (Decrease) in Cash and Cash Equivalents

-292 -83 -183 -99 109 118,8 -37,5

Cash and Cash Equivalents at the Beginning of the Year

1.013 721 638 -83 -375 -11,6 -37,1

Cash and Cash Equivalents at End of Year

721 638 455 -183 -266 -28,6 -36,9

Graph of Cash Flow (in billion Rupiah)

201720162015

455639

721

Cash Flows for Operating ActivitiesCash flows from operating activities decreased 72.2% or amounting of Rp1,020 billion from Rp1,413 billion in 2016 to Rp393 billion in 2017, the decrease in cash from operating results was primarily due to an increase in interest payment.

Cash Flows for Investment Activities Cash flows used for investment activities in 2017 decreased by

58.4% or Rp1,267 billion from Rp2,168 billion in 2016 to Rp901 billion in 2017. Cash flows for investment activities were used for the implementation of the strategic project of Indarung VI and Packing Plant Bengkulu.

Cash Flow for Financing ActivitiesIn 2017, Semen Padang disbursed bank loans to support the smooth implementation of Indarung VI’s strategic project amounting to Rp321 billion, while for the fiscal year 2013 to 2016 get delay from shareholders. Cash flows used for financing activities in 2017 amounted to Rp326 billion, down 51.5% or Rp346 billion compared to 2016 of Rp672 billion

COMPARISON BETWEEN TARGET AND REALIZATION 2017The comparison between the targets listed in the 2017 RKAP and the realization of financial performance in 2017 can be informed through the following table:

Table of Comparison Between Target and Realization 2017 (in billion Rupiah)Description Realization of 2017 Budget of 2017 % Achievement

1 2 3 4 = 2:3

Income 6.652 7.011 94,9

Cost of Revenue -4.701 -4.965 94,7

Gross profit 1.951 2.045 95,4

Operating expenses -1.125 -981 114,7

Operating profit 826 1.065 77,6

Profit before tax 690 866 79,7

Current year profit 499 728 68,5

Although the achievement of the current year’s profit did not reach the target and decreased from the previous year but the decline in profit in the current year is still relatively better compared to the average of other companies in one cement industry.

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COMMITMENT AND CONTINGENCY In 2017, PT Semen Padang has no commitments and contingencies made throughout the fiscal year.

FINANCIAL RATIOS Table of Financial Ratios 2015 - 2017 (in%)

Description 2015 2016 2017Ratio of Repaying Short-term Liabilities (%)Cash Ratio 33,10 34,42 22,21Current Asset Ratio To Current Debt 68,08 73,90 65,34Current Rate 102,35 112,95 116,41 Profit Ratio (%) Profit Margin 15,54 16,71 12,42Net Profit Margin 11,06 11,64 7,50EBITDA Margin 19,31 20,64 17,71Return on Equity 16,25 14,84 10,10Return on Assets 9,78 7,86 4,92Return on Profit 11,07 11,63 7,50Return on Investment 9,78 7,86 4,92 Ratio of Repaying Liability (%) Debt Comparison Ratio To Assets 39,67 46,91 51,18Debt Comparison Ratio To Equity 65,75 88,38 104,82 Activity Ratio (day) Inventory Turnover 45,48 43,83 48,06Days of Accounts Turnover 42,03 44,23 44,80Total Asset Turnover 88,30 67,54 65,60Total Equity Against Assets 60,16 52,95 48,70

ABILITY TO PAY DEBT The Company’s ability to repay short-term liabilities in 2017 increased as indicated by current assets ratio to current liabilities increased from 112.9% in 2016 to 116.4% in 2017. Ability to repay overall liabilities well short-term liabilities as well as long-term liabilities strengthened as seen from the ratio of liability to equity (debt to equity ratio) in 2017 amounted to 104.8%, up compared to 2016 reached 88.4%. The ability to pay obligations is also relatively safe even though the Company has loans to financial institutions or banks.

Table of Ratio of Debt-Repaying Ability 2015-2017 (in%)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Current Asset Ratio to Short Term Liabilities

102,4 112,9 116,4 3 14 3,1 13,7

Ratio of Liabilities to Equity 65,7 88,4 104,8 16 39 18,6 59,4

Ratio of Liabilities to EBITDA 232,6 336,6 440,6 104 208 30,9 89,4

LEVEL OF COLLECTIBILITYIn 2017 the collectibility of receivables decreased compared to 2016 as seen from the day of receivables rose from 44 days in 2016 to 45 days in 2017. This increase occurred because the percentage increase in receivables greater than the percentage increase in sales. This is due to the reckedul receivables of some distributors due to the market situation and competition and the decline in sales volume occurred on the island of Java.

Table of Receivables Collectibility Rate Year 2015-2017 (in days)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Day of Receivables 42 44 45 1 3 1,3 6,6

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LEVEL LIQUIDITY OF CEMENT PADANG

PT Semen Padang’s liquidity level in 2017 increased from 2016. The Company’s ability to meet its short-term liabilities is relatively safe with its current ratio (current asset ratio to current liabilities) still above 100%, as shown in the following table:

Table of Liquidity Rates 2015-2017 (in%)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Current Assets Ratio against Short-Term Liabilities

102,4 112,9 116,4 3 14 3,1 13,7

Cash and Cash Equivalents Ratio to Short-Term Liabilities

32,1 33,9 22,2 -12 -11 -35,5 -32,9

Quick Ratio 73,1 80,7 73,9 -7 1 -8,3 1,2

CAPITAL STRUCTURE Capital structure is a balance between liabilities and equity. The main objective of Group capital management is to ensure the maintenance of a sound capital ratio to support the business and maximize shareholder rewards.

The Company is required to maintain a certain level of capital by the loan agreement. The capital requirement has been fulfilled by the related entity as of December 31, 2017 and 2016. In addition, the Company is also required by Law no. 40 of 2007 on Limited Companies, effective from August 16, 2007, to allocate up to 20% of the issued and fully paid share capital into reserve funds that may not be distributed. These external capital requirements have been considered by the Group and have been decided at the General Meeting of Shareholders (“GMS”).

Capital structure greatly affects the rate of return on capital invested. Capital structure with minimum cost of capital can increase the value of the Company. The Company monitors capital using gearing ratios, by dividing the total interest-bearing loan with total equity attributable to the owner of the parent. The following are the capital management or capital structure tables of PT Semen Padang and subsidiaries which form the net loan to equity ratio:

Table of Capital Management 2015-2017 (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Loan

Bank loans 296 1.023 1.411 387 1.115 37,8 376,5

Dividend debt 732 1.001 1.287 286 556 28,6 76,0

Liability for finance lease 94 64 42 -22 -52 -34,6 -55,5

Cash and cash equivalents and short-term investments

(743) (648) (470) 178 272 -27,5 -36,7

Amount of loan 379 1.440 2.269 829 1.891 57,6 499,4

Total equitythat can be attributedto the owner of the parent

4.448 4.877 4.938 61 491 1,2 11,0

Loan to Equity Ratio 8,51 29,52 45,95 16 37 55,7 439,9

Table of Capital Structure (in Billion Rupiah) Description 2015 2016 2017

Liabilities 2.933 4.321 5.190

Equity 4.448 4.877 4.938

Asset 7.393 9.211 10.141

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MANAGEMENT POLICY FOR CAPITAL STRUCTUREPT Semen Padang manages the capital structure and adjusts as needed, based on changes in economic conditions. To maintain and adjust the capital structure, the Company may adjust its dividend payout to shareholders, issue new shares or seek financing through loans. There was a change in the capital structure policy of PT Semen Padang in the form of adjustment of dividend payout to shareholders in 2016, as well as seeking financing through loan in 2017. The change in capital structure policy was done to fund the Indarung VI project. In 2017 the assets of PT Semen Padang were financed 51.2% of liabilities and 48.8% by equity.

Table of Net Working Capital Year 2015-2017 (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Current assets 2.297 2.127 2.461 334 164 15,7 7,2

Current liabilities 2.244 1.884 2.114 231 -130 12,2 -5,8

Net Working Capital 53 244 347 103 294 42,3 557,0

Graph of 2014-2016 Net Working Capital (in billion Rupiah)

201720162015

347

244

53

The Company’s policy is to keep the gearing ratio within a relatively equal range of Indonesia’s leading companies to secure access to funding at a reasonable cost. Included in the total interest-bearing loan are short-term bank loans and lease liabilities.

WORKING CAPITALNet working capital represents the difference between current assets and current liabilities. In 2017 net working capital amounted to Rp347 billion an increase of Rp103 billion or 42.3% compared to 2016.

The increase in working capital is mainly due to the change in the dividend liabilities that were previously short-term liabilities to be long-term dividends, which has a significant effect on net working capital.

MATERIAL COMMITMENT FOR CAPITAL INVESTMENT

In 2017 PT Semen Padang had a material-worthy bond for capital investment with several contractors for the construction of several strategic projects, among others, the signing of contracts for the purchase of major equipment of Indarung VI Project and land acquisition for to limestone mining new entrance.

The objective of this engagement was to ensure the realization of the project’s, the source of the project’s financing fund was derived from the Company’s internal funds as well as in the form of third party loans denominated in currency IDR, Euro and USD.

SIGNIFICANT COMMITMENTS AND AGREEMENTSSome of significant commitments and agreements made by PT Semen Padang during 2017 consisted of purchase commitments, coal, mining rights commitments, hedges, and loan facilities from several banks.

Purchase CommitmentAs of December 31, 2017, PT Semen Padang has several inventory purchase agreements from several suppliers in the amount of Rp726 billion. The purchase commitments include purchase commitments using the loan facility from Bank Negara Indonesia and Bank Mandiri amounting to Rp86,139,700 thousand, USD 94,823 and EUR 3,324,108.

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CoalSupplier Contract No. Unit of measure Quantity Period

PT Winner Prima Sekata 0001787/HK.03.02/PJJ/50003763/3000/09.2017

Metric Ton 5.000/month 1 September- 30 August 2018

The price of coal upon arrival at Teluk Bayur Bay is based on addendum II of Rp515,000 per ton, adjusted for calorific value, ash, sulfur and water content. The base price will be reviewed periodically.

Mining Rights CommitmentThe Company entered into an agreement with the Nagari Lubuk Kilangan (Nagari Lubuk Kilangan) community to obtain mining rights of 412.03 hectares in the area of Bukit Karang Putih with 30%, 30% and 40% payment terms which is to be paid in June 2004, 2005 and 2006 respectively. so the amount of compensation is estimated at Rp13 billion, excluding other forms compensation amounting to of Rp2 billion.

License for Use of limited production forest area of approximately 242 hectares has been obtained by the Company based on Decree of the Minister of Forestry No.SK.467 / Menhut-II / 2013 dated June 28, 2013. As of December 31, 2017, the Company has spent Rp23 billion to acquire mining rights and Rp61 billion for the preparation of mining land facilities which are recorded as assets - mining land

Hedging During the year 2017 the Company has used hedging either with forward or non-derivative instruments. The implementation of the forward instruments were using the following facilities:

- Bank Mandiri Treasury Line Facility No.CRO.KP/079/TL/14 with facility period up to 27 June 2018.

- BNI Forex Line facility No.1108 / PJJDEPAK / 08.2016 with facility period up to 17 April 2018.

- BRI Forex Line Facility No.R.II.119-ADK / DKR- 2/06/2017 with facility period up to May 29, 2018.

PT Semen Padang also hedges using non derivative instruments which are deposits in USD. This hedge is used for payment of goods / services of Indarung VI Project.

Loan Facilities The loan facilities obtained by PT Semen Padang in 2016 were from PT Bank Negara Indonesia Tbk, PT Bank Mandiri (Persero) Tbk, and PT Bank Rakyat Indonesia (Persero) Tbk.

MEASURE PLANNED BY PT SEMEN PADANG TO PROTECT FROM FOREIGN CURRENCY FLUCTUATION RISK

Foreign currency risk is the risk of changes in the fair value of future cash flows of a financial instrument that fluctuates as a result of changes in the foreign currency exchange rates used by the Group. The Group’s exposure to exchange rate fluctuations mainly derived from debt for the procurement of goods and services denominated in USD and EUR, as well as receivables from export sales denominated in USD.

Due to the change in the Rupiah exchange rate against foreign currencies during 2017, the management set a reasonable probability of sensitivity by 10%. The sensitivity analysis of the effect of a 10% change in foreign exchange ratea on profit after tax with all other variables is are held constant, will lead to a net effect to the profit loss due to foreign currency changes in the amount of Rp 13 billion.

In 2017, the Company managed the risk of fluctuations in foreign currency exchange rates based on the evaluation of foreign currency requirement of monthly imports. These needs were prepared and fulfilled through tforeign currency according to the needs at the time of the foreign exchange rate at the optimum condition conditions

CAPITAL INVESTMENT REALIZED IN THE LAST FISCAL YEARInvestment in Capital good is fund expenditure activity used to buy a number of fixed assets or to increse the value offixed assets that are expected beneficial in the future. In 2017 investment in Capital Investment performed by Semen Padang amounted to Rp985 billion or decrease of Rp1,327 billion or by 57.4% compared to 2016.

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Table of 2014-2016 Capital Goods Investment Growth (in million Rupiah)

Description 2015 2016 2017 Difference % Change1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2

Acquisition costSoil - - - - - - - Buildings and infrastructure 88 409 11.853 11.444 11.765 2.798,3 3.362,9 Machinery Factory 1.260 421 9.317 8.896 8.057 2.111,1 639,2 Heavy equipment and vehicles

4.379 106 34 (73) (4.345) (68,3) (99,2)

Office supplies 252 428 116 (312) (136) (72,9) (54,0)Leased assets 19.560 25.279 3.796 (21.483) (15.764) (85,0) (80,6)Major spare parts and ready-made equipment 12.255 15.596 3.238 (12.359) (9.017) (79,2) (73,6)

Assets In Settlement

Land of mining 8.662 5.216 13.315 8.099 4.653 155,3 53,7 Buildings and infrastructure 648.396 871.614 362.901 (508.713) (285.495) (58,4) (44,0)Machinery factory 1.430.972 834.223 534.606 (299.617) (896.365) (35,9) (62,6)Heavy equipment and vehicles 57.597 40.089 40.993 903 (16.604) 2,3 (28,8)

Office supplies and equipment 49.190 518.993 5.485 (513.507) (43.705) (98,9) (88,8)

amount 2.232.610 2.312.375 2.312.375 985.653 (1.326.722) (1.246.957) (57,4) (55,9)

SUBTANTIAL COMPONENTS OF OTHER REVENUES AND EXPENSES Other revenues and expenses consist of other operating income and expenses, revenues and finance costs as well as associates entity profit share with the following explanation:

Table of 2015-2017 other Revenues / (Expenses) (in billion Rupiah)Description 2015 2016 2017 Difference % Change

1 2 3 4 5 = 4 - 3 6 = 4 - 2 7 = 4 : 3 8 = 4 : 2Other Operating Revenues and Expenses

Other Operating Income 21 272 133 -139 112 -50,9 536,4

Other Operating Expenses -21 -180 -74 106 -54 -58,8 259,8

Sub-Total 0 92 59 -33 59 -35,6 16.250,5

Financial Revenues and Expenses

Financial Revenue 34 28 14 -14 -20 -49,2 -57,8

Financial Expenses -60 -82 -150 -69 -90 83,9 148,8

Sub-Total -26 -53 -136 -83 -110 154,8 418,5

Equity in Associate Profit 0 1 0 0 1 595,9 -56,1

OTHER REVENUES AND EXPENSES INSURANCE CLAIMThe substantial components of other operating revenues and other operating expenses are insurance claims, workshop revenues, foreign exchange differences, leasing and other revenues and expenses. Total revenues and other operating expenses in 2017 amounted to Rp59 billion.

FINANCIAL REVENUE AND EXPENSES Substantial component of income and finance costs is interest income from PT Semen Padang’s deposits, in addition to leasing interest cost and deconstruction of fixed assets. Total value of

revenues and financing costs in 2017 minus Rp136 billion, increasing by 154.8% compared to 2016 due to bank loan interest expense and dividend interest expenses to shareholders for used for supporting investment of Indarung VI project

FINANCIAL INFORMATION FOR EXTRAORDINARY AND INFREQUENT EVENTSIn 2017, no extraordinary events have affected to the Financial Statement of PT Semen Padang.

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MATERIAL INFORMATION AND FACTS OCCURING AFTER THE ACCOUNTANT’S REPORTING DATEPursuant to Notarial Deeds of Harti Virgo Putri, S.H., No. 145 dated January 26, 2018, the composition of Commissioner and Board of Directors of PT Semen Padang changed with the main commissioner of Mr. Ahyanizzaman with commissioner Mr. Werry Darta Taifur and Mr. Khairul Jasmi and President Director Mr. Yosviandri and the directors of Mr. Tri Hartono Rianto and Mr. Firdaus.

DIVIDEND POLICYThe policy of dividend distribution of PT Semen Padang refers to the policy of PT Semen Indonesia (Persero) Tbk, as the majority shareholder of PT Semen Padang as stipulated in the General Meeting of Shareholders. Description of the dividend-sharing policy according to the year of his book as follows:

Table of 2011-2015 Dividend Distribution PolicyDescription 2015 2016

Profit of the current year (billion Rupiah)

722 724

Dividend payout ratio 40% 40%

Dividends distributed (billion Rupiah)

289 290

Dividend per share (in Rupiah)

870 872

Announcement Date 16-6-2016 29-03-2017

Due date 16-7-2016 29-04-2017

*) the dividend payout policy for the financial year of 2017 is still awaiting the results of the GMS to be held in 2018

The average percentage of dividend payout (Dividend Pay Out Ratio) for the last 3 years is 40%. In 2017, the shareholders agreed to distribute the dividends for fiscal year 2016 amounted to Rp290 billion and retained earnings reserves for business development amounting to Rp434 billion based on the Annual General Meeting of Shareholders on 29 March 2017 and the Annual General Meeting of Shareholders of PT Semen Indonesia (Persero) Tbk on March 30, 2017.

Up to December 31, 2017 of the dividend announced, Semen Padang received a delay for dividend payment of Rp1,287 billion in connection with the funding needs of Indarung VI strategic project. The 2017 book year dividend awaits the outcome of the GMS decision of 2017.EMPLOYEE/MANAGEMENT STOCK OWNERSHIP PROGRAM As of December 31, 2017, the shares of PT Semen Padang were 99.99% owned by PT Semen Indonesia Tbk and 0.01% by the Semen Padang Family Cooperative. Therefore, the Company does not have a shareholding program by employees or management, so there is no information regarding the number of shares of the Employee Stock Option (ESOP) and

the Management Stock Option (MSOP) and its realization, terms, terms of employee and / or eligible management and price exercise.

REALIZATION OF THE USE OF PROCEEDS FROM PUBLIC OFFERINGUntil 2017, PT Semen Padang has not yet become a public company or has not made a Public Offering on the Stock Exchange so that there is no information related to the acquisition of funds, the plan for the use of funds, the balance of funds and the date of the AGM’s approval of the use of funds from the proceeds.

OBLIGATIONS TO THE COUNTRYPT Semen Padang is committed to fulfilling its obligations to the country embodied in fulfilling the Company’s obligations as a taxpayer and as a tax cutter, as well as the Company’s contribution to the country from year to year. During the year 2017, the Company did not delay the submission of tax documentation obligations (annual and monthly tax returns), never delayed payment of tax liabilities, including employee income tax, corporate income tax, VAT and Match and PBB. In addition, there is no delay in submitting liability documents to regulatory agencies, as well as the largest taxpayers in the State-Owned Enterprises of West Sumatra and Jambi.

MATERIAL INFORMATION ON INVESTMENT, EXPANSION, DIVESTMENT, BUSINESS / BUSINESS COSOLIDATION, ACQUISITION, AND DEBT/CAPITAL RESTRUCTURING

In 2017, PT Semen Padang had no material information regarding expansion, divestment, merger / consolidation, acquisition, and debt / capital restructuring. However, the Company has investment activities that do not affect its cash and were not included in the consolidated statements of cash flows as follows:

Table of Non-Cash Investment Disclosures in billion RupiahDescription 2015 2016 2017

Acquisition of property and equipment through lease financing

20 25 4

Acquisition of property and equipment through reclassification of advances for purchase of property and equipment

246 95 32

Unpaid capitalized borrowing costs 6 24 27

The cost of dismantling the capitalized assets

0 0 21

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INFORMATION ON MATERIAL TRANSACTION INFORMATION CONTAINING CONFLICT OF INTEREST AND / OR TRANSACTIONS WITH AFFILIATION

CONFLICT OF INTEREST TRANSACTIONIn 2017 PT Semen Padang did not conduct any transaction containing conflict of interest with any party. In order to avoid a conflict of interest, the Company sets out the policies set forth in the following guidebook and statements:

1. Guidelines for Semen Padang Good Corporate Governance (GCG)

2. Company Code of Conduct what can and cannot be done by Semen Padang and individuals within Semen Padang in dealing with customers, suppliers, contractors, government officials, and other parties who have relationships with Semen Padang.

3. Annual Statements of the board of Commissioners, Board of Directors, Employees and Business Partners, on the understanding and compliance to the Code of Conduct.

TRANSACTIONS WITH RELATED PARTYPT Semen Padang conducts transactions with related parties due to ownership relationships and other properties. The definition of a related party is in accordance with the provisions of PSAK No. 7 (Revised 2010), “Related Party Disclosures”.

OTHER AFFILIATES RECEIVABLEOther affiliates receivables is the accounts receivable of PT Igasar in the amount of Rp17 billion which was restructured in 2013 with an 8.03 % interest rate per year for 8 years with a graceperiod of 6 months.Regarding these receivables, PT Igasar has provided collateral to Semen Padang in the form of a bank guarantee amounting to Rp5 billions, insurance amounting to Rp40 billions and assets of Rp24 billions.

SHORT-TERM EMPLOYEE BENEFIT COMPESATIONShort-term employee benefits compensation paid to The Board of Commissioner and Board of Directors of PT Semen Padang for the year ended December 31, 2017 amounted to Rp33 billion. The Company provides benefits in the form of post-employment benefits to members of the Board of Commissioners and Board of Directors through cooperation with PT Asuransi Jiwasraya (“Jiwasraya”), whereby the Company pays a single premium to Jiwasraya and Jiwasraya will pay the post-employment benefits to members of the Board of Commissioners and Board of Directors Semen Padang when the members of the Board of Commissioners and / or the Board of Directors are terminated, terminated, resigned or passed away.

COMPANY POLICY REGARDING THE REVIEW MECHANISM ON TRANSACTION AND COMPLIANCE WITH THE RELATED REGULATIONS Of all transactions associated to related parties, management considers that all transactions are within reasonable limits in accordance with prevailing laws and regulations related to Related Parties Disclosure. Management has conducted a review mechanism on transactions with related parties through audit process whether conducted by internal auditors or external auditors. In order to ensure the fairness of the transaction and conformity with generally accepted accounting standards in Indonesia, the above affiliate transaction report has been audited by the Independent Auditor Deloitte.

CHANGES IN THE REGULATION THAT HAVE SIGNIFICANT IMPACTThroughout 2017, several regulations have been issued which have a significant impact on the performance and operation of Semen Padang as follows:

Description RegulationsBorrow Use Forest Area The issuance of Minister of Forestry Regulation no. P.38 / Menhut-II / 2012 on Amendment to Minister of Forestry

Regulation no. P.18 / MENHUT-II / 2011 concerning Guidelines for Use of Forest Areas, where the regulation becomes the new guideline for obtaining License for Borrowing of Kawasan Hutan for the Company.

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Despite having an impact on the Company’s performance, the changes in the above laws and regulations do not have a significant impact on the Company’s performance.

CHANGES IN ACCOUNTING POLICYIn the current year, PT Semen Padang has adopted a new standard, a number of amendments and interpretations of PSAK issued by the Indonesian Accounting Standards Board of Financial Accounting Standards that were relevant to its operations and effective for accounting periods beginning on January 1, 2016. Amendment of SFAS 5 Operating Segments i) requires an entity to disclose the considerations made by management in applying the merging criteria of the operating segment, including a brief description of the combined operating segments and the economic indicators that have been assessed in determining that the combined segment of operations have similar economic characteristics; and (ii) clarify that the reconciliation of total segment assets reported against the entity’s assets is disclosed only if the segment assets were regularly provided to the operational decision maker. The Company incorporated several operating segments into a single operating segment and makes the required disclosures in accordance with the amendments.

The application of the following amendments and interpretations of the standard has no significant effect on the disclosures or amounts recorded in the consolidated financial statements in the current year and the previous year as follows:• PSAK 24 (adjustment), Employee Benefits• PSAK 58 (adjustment), Non-current Assets Held for Sale

and Discontinued Operations• PSAK 60 (adjustment), Financial Instruments: Disclosures• ISAK 31, Interpretation of the Scope of SFAS 13: Investment

Property• ISAK 32, Definition and Hierarchy of Financial Accounting

Standards:

PROJECTION OF PROYEKSI YEAR 2018In the future, Semen Padang the following 2018 financial statements projection achievement- PT Semen Padang projected revenue achievement in 2018

amounting to Rp7,354 billion or 110.5% from 2017 realization of Rp6,652 billion.

- PT Semen Padang projected the cost of revenue in 2018 amounting to Rp5,200 billion or 110.6% from the realization in 2017 of Rp4,701 billion.

- PT Semen Padang projects its 2018 gross profit to reach Rp2,154 billion, or 110.4% of the 2017 realization of Rp1,951 billion.

- PT Semen Padang projected its operating expenses in 2018 amounting to Rp1,078 billion or 96.5% of the 2017 realization of Rp1,125 billion.

- PT Semen Padang projected the achievement of 2018

operating profit of Rp1,068 billion or 107.5% of the realization in 2017 of Rp826 billion.

- PT Semen Padang projected the achievement of profit before tax of 2018 amounting to Rp826 billion or reached 119.6% of the realization in 2017 amounting to Rp690 billion.

- PT Semen Padang projected the achievement of net profit of 2018 of Rp599 billion or 120.1% from the realization in 2017 of Rp499 billion.

The Company has prepared the strategies to support the achievement of income target in 2018, among others through the growth of production capacity (optimizing production capacity, realization of investment target, optimizing production of Cement Mill Dumai, optimizing kiln capacity with new coal mill), revenue growth (achieving sales target and maintaining market share, emphasizing on domestic cement sales and conducting export sales and optimizing marketing synergies) and improving customer quality (ensuring product quality and product availability, optimizing holding synergies, conducting marketing activities according to customer needs).

The projection for the statement of financial position in 2018 is as follows:• PT Semen Padang is projecting the achievement of current

assets in 2018 which amounted to Rp2,392 billion or 97.2% of realization in 2017 of Rp2,461 billion.

• PT Semen Padang is projecting the achievement of non-current assets in 2018 which amounted to Rp7,789 billion or 101.4% of the realization in 2017 of Rp7,679 billion.

• PT Semen Padang is projecting the achievement of total assets in 2018 which amounted to Rp10,181 billion or 100.4% of the realization in 2017 amounting to Rp10,141 billion.

• PT Semen Padang is projecting the achievement of short-term liabilities in 2018 which amounted to Rp1,732 billion or reaching 81.9% of the realization in 2017 of Rp2,114 billion.

• PT Semen Padang is projecting the achievement of long-term liabilities in 2018 which amounted to Rp3,048 billion or 99.1% of the realization in 2017 amounting to Rp3.076 billion.

• PT Semen Padang is projecting the achievement of total liabilities in 2018 which amounted to Rp4,781 billion or 92.1% of the realization in 2017 amounting to Rp5,190 billion.

• PT Semen Padang is projecting the achievement of equity in 2018 which amounted to Rp5,400 billion or reaching 109.1% of the realization in 2017 which amounted to Rp4,951 billion.

The company had prepared a strategy in an effort to support the achievement of the target assets, liabilities and assets financed by liabilities is 51.2% indicated 4.3% higher than in 2016. Projected 2018, assets financed by liabilities is 47.0%. Assets financed by equities are 53.0%, showing 4.2% lower than 2017,

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while projected by 2018.Table of Financial Projection 2017 (In Billion Rupiah)

Description Actual 2017

Projection 2018

% Real 2017 : RKAP 2018

1 2 3 4 = 3 : 2

Current assets 2.461 2.392 97,2

Non-Current Assets 7.679 7.789 101,4

Total Assets 10.141 10.181 100,4

Short-term liabilities 2.114 1.732 81,9

Long Term Liabilities 3.076 3.048 99,1

Total Liabilities 5.190 4.781 92,1

Equity 4.951 5.400 109,1

Assets financed by equity are 48.7% lower by 4.2% higher than in 2016. This right is due to the addition of debt to investment indarung VI. Projections in 2018, equity financed assets of 53.0% due to repayment of principal debt that will begin in 2018.

Table Of 2017 Capital Structure Projection (in billion Rupiah)

Desccription Actual 2016 % Actual 2016 Actual 2017 % Actual 2017 Budget 2018 % Actual 2018

Total Liabilities 4.321 46,9 5.190 51,2 4.781 47,0

Equity 4.877 52,9 4.938 48,7 5.400 53,0

Total Assets 9.211 100,0 10.141 100,0 10.181 100,0

ASSUMPTION OF CAPITAL STRUCTURE PROSPECTS IN 2018 USING MACRO ECONOMIC ASSUMPTIONS (LOAN INTEREST RATE)PT Semen Padang has prepared a strategy to support the achievement of the optimum comparison of Liabilities and Equity in 2017 among others by obtaining and utilizing bank credit facility in the form of NCL and LC, withdrawal of investment credit to support strategic projects and working capital for routine operations..

The preparation of assumptions on the prospects of achievement of profit and loss and financial position in 2018 using macroeconomic assumptions consisting of; GDP growth, inflation rate, USD exchange rate, EURO rate and interest rate. Other assumptions used are assumption of cement demand growth, sales assumption, production assumption, escalation assumption of main material increase, and capex plan.

INFORMATION OF BUSINESS CONTINUITYThe condition of the domestic economy plays an important role in the growth of national cement sector business. In 2017, Indonesia’s economic growth recorded at 5.1% increased compared to 2016 by 5.0%. This condition is a bit more influential on the domestic cement sector.

In the midst of a challenging year, the Company was able to record a current profit of Rp499 billion, down 31.1% or Rp205 billion compared to Rp724 billion in 2016.

Based on data from Bank Indonesia, in the future, domestic economic growth is expected to continue to recover. This will certainly affect the cement industry which then gives effect to the performance and achievement of the Company. Thus, it can be said that, there are no things that have the potential to significantly affect the viability of the Company in 2018 as well as in the future.

Introduction Report from the Board of Commissioners and Directors

Company Profile Business Support Overview

Photo title:Comply to the rules

Photo location:The Plant of Indarung area

Photo caption:PT Semen Padang carries a vision on GCG principles and rules that apply to the company


Management Discussion and Analysis

Good Corporate Governance

Corporate Social Responsibility

Audited Financial Report

GOOD CORPORATE GOVERNANCE

PT Semen Padang continues to provide the best to its stakeholders by consistently applying Good Corporate Governance (GCG), Risk Management and Corporate Internal Control System as necessity in conducting business activities in order to maintain sustainable growth and increase the company value




OVERVIEW OF CORPORATE GOVERNANCETo be the benchmark of GRC implementation in West Sumatra - 2022

T

A R

I F

TransparencyTransparency regarding to thedecision-making processes andin the disclosure of materialand relevant information aboutthe Company..

ResponsibilityAlignment of the execution ofbusiness activities with prevailinglaws and regulations, based on soundcorporate principles, and activelycooperate to realize mutual benefitsand tangible contribution.

FairnessEnsuring and guaranteeing justness, fairnessand impartiality in performing the rights andresponsibilities of stakeholders arising due toagreement or in accordance with prevailinglaws and regulations.

IndependenceThe professional management of the Companywithout conflict of interest or influence/pressureform external parties that is not in accordance withprevailing laws and regulations as well as soundcorporate principles.

AccountabilityClarity of functions, execution and accountability of the Company personnel to enable the effective management of the Company.






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Number of WBSreports received

0Follow-up toWBS reports

received

100%Number ofgratification

reports

4 timesFollow-up togratification

reports received

100%

Whistleblowing System Gratification Control Program

http://intra.semenpadang.co.id/gratifikasi

https://wbs.semenpadang.co.id

83,70 87,02 615 4,18GCG SCORE LEVEL

Predicate“GOOD”

scale 0-100

SPIP SCORE LEVEL Predicate

“VERY EFFECTIVE”scale 0-100

IQA SCORE LEVELPredicate

“EMERGING INDUSTRY LEADER”

scale 0-1.000

RML LEVEL Predicate

“MANAGED”scale 0-5

GCG SPIP IQA RML

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GOOD CORPORATE GOVERNANCEGood Corporate Governance (GCG) is a process and structure used by the Company’s organs to determine policies in order to improve the Company’s business success and accountability, while taking into account the interests of stakeholders based on the provisions of the Articles of Association and the laws and regulations apply. For Semen Padang, the implementation of GCG is not merely to abort obligations but becomes a necessity in running the Company’s business activities to maintain sustainable business growth and increase the Company’s value in the face of business competition.

The implementation of GCG in line with best practice is able to direct and control the company to be in line with the expectations of the stakeholders, in line with the prevailing laws and regulations, and adhere to the norms of business ethics that apply universally and the Company’s upheld by management and all employees. This mechanism or system influences the determination and achievement of Company objectives, business risk monitoring and assessment, maximizes performance improvement efforts and the establishment and development of work culture within the Company.

Continuous implementation of GCG will increase the Company’s value and as an effort to survive in the competition in line with the long-term 3P-oriented corporate plan of Profit, Planet and People (triple bottom line), optimizing profitability, developing a clean and healthy environment , as well as the welfare of the environmental community, particularly for surrounding community based on the principles of Good Corporate Governance.

One form of GCG implementation at PT Semen Padang, hence The company participated in the Indonesia Quality Award event with score 615 (scale 1,000) and get the title Emerging Industry Leader

PRINCIPLES, COMMITMENTS AND OBJECTIVES OF GOOD CORPORATE GOVERNANCE IMPLEMENTATION

GCG PRINCIPLESThe conduct of business activities based on GCG principles has been consistently, comprehensively and integrated within the Company in accordance with the GCG Guidelines on 16 August

2013. Semen Padang always ensures that the basic principles of GCG are consistently and continuously applied to every aspect of the business including the five principles as follows:

GCG Basic Principles

TransparencyPT Semen Padang guarantees transparency in conducting the decision-making process and disclosure in revealing the material and relevant information about the Company.

AccountabilityPT Semen Padang guarantees the clarity of the Company’s functions, implementation and accountability that enable effective management of the company.

ResponsibilityPT Semen Padang ensures that conformity in carrying out its business activities against applicable legislation, based on sound corporate principles, cooperates actively for mutual benefits and strives to make a real contribution to society as a form of social responsibility of Semen Padang.

IndependencePT Semen Padang ensures the management of the Companyin a professional manner without any conflict of interest and undue influence/pressure from any party that is not in compliance with the regulations and the principles of a healthy and sound enterprise. Each Company organs will perform their duties in accordance with their respective obligations. In addition to the Company’s organs, no one can interfere with the Company’s management.

Fairness and EquityPT Semen Padang at all times ensures and assures justice and equality in fulfilling the rights of stakeholders (Stakeholder) arising under applicable agreements and laws and regulations.

GCG COMMITMENT PT Semen Padang is committed to implementing GCG principles thoroughly and consistently in performing its duties and responsibilities throughout the Company’s governance structure. The Company believes that the implementation of GCG that is beyond compliance with statutory standards and regulations, is capable of creating a highly competitive and sustainable Company.

GOAL OF GCG IMPLEMENTATION The implementation of corporate governance principles is aimed at:1. Optimizing the value of Semen Padang so that the Company

maintains its strong competitiveness, both at national and international level, so as have sustainable business to achieve its goals and objectives.

Continued implementation of GCG will increase the value of the

company

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Implementation of GCG in PT Semen Padang during 2017 has been highly beneficial. The positive influence of GCG implementation is outlined into 3 (three) major categories which cover the following:• People - creating competent and capable human resources

to adapt GCG values.• Profit - Optimizing the profits earning and achieving high

growth.• Planet - providing real contributions to environment and

people empowerment.

GCG FRAMEWORK AND ROADMAPFRAMEWORKIn general, the implementation of GCG in PT Semen Padang refers to the Regulation of the Minister of State Owned Enterprise. PER-01 / MBU / 2011 on the Implementation of GCG in State-Owned Enterprises (BUMN), “General Guidelines for Good Corporate Governance Indonesia” issued by the National Committee on Governance Policy (KNKG), Law no. 40 Year 2007 concerning Limited Liability Company, Circular Letter of State Minister of SOE No. S-375 / MBU / .Wk / 2011 on the Policy of State Minister of State-Owned Enterprises in the Management and Supervision of SOEs and best practices of GCG implementation.

The Principle of GCG called TARIF

HEREARCH STRUCTURE

RUPS GCG Guidelines

Semen Padang Management System Guidelines

Board Manual & Code of Ethics

Stak

ehol

der

BOC

BOD

Manager

Employee

• GCG manual represents a set of basic provisions based on the Articles of Association and Regulations which govern the corporate governance among the organs of the company including General Meeting of Shareholders (GMS), Board of Commissioners (BOC) and its committees, Board of Directors (BOD) and its committees and the corporate governance of the Company’s organs and stakeholders. GCG Manual is elaborated further into Board Manual, Code of Conduct and Semen Padang Management System (SMSP) Guidelines..

• The Board Manual contains a compilation of prevailing rules and regulations, the Articles of Association and the directions of the Shareholders set forth in the GMS which govern the ordinances of the Board of Commissioners and the Board of Directors.

• Code of Conduct represents a series of commitments in behavioural ethics in managing the business applicable for all personnel within the Company including BOC, BOD, and employees in accordance with the prevailing principles, norms and rules.

• SMSP Guidelines are a set of rules / procedures that integrate various management systems in Semen Padang that are used as a reference for all activities from the Board of Directors to all employees.

SYNERGY OF SEMEN PADANG WITH ITS SUBSIDIARIES IN THE IMPLEMENTATION OF GCGSince 2014 PT Semen Padang has evaluated the application of principles and structure of GCG implementation to Subsidiaries and Supporting Institutions (APLP). The process begins with monitoring and assistance for the completion of the Improvement / Area of Improvement (AoI) basedon of the GCG implementation assessment in 2017 to 3 (three) APLP of PT Semen Padang, namely Semen Padang Hospital, PT Yasiga Sarana Utama and PT Pasoka Sumber Karya. As for PT Sepatim Batamtama, PT Bima Sepaja Abadi and PT Igasar have been completed in 2014. Through the synergy process with subsidiaries in GCG implementation, the subsidiaries could strengthen and align their GCG implementation and iimprove their performance and make optimal contribution.

2. Managing the Company in a professional, efficient, and effective manner, and empowering the functions and improving the independence of the Company’s organs. All of the decision making process and any actions taken by the organs of the Company shall be made based on high moral values and adherence to laws and regulations, as well as the awareness of its corporate social responsibility to its stakeholders and the environment in which the Company operates.

3. Improving the company’s contribution in the national economy.

4. Improving the conducive environment for to the development of national investment.

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ROADMAP GCGSemen Padang establishes GCG implementation roadmap 2015-2017 in achieving the ideal condition of GCG implementation in a gradual and sustainable manner. Referring to the parameters of GCG SOEs in the Decree of the Minister of SOEs no. SK-16/2012 as follows:

Realization of GCG Roadmap achievement for 2017 focused on commitment to the implementation of Good Corporate Governance on in a sustainable manner which includes among others:1. Refining the Annual Report material on an ongoing basis to

the Annual Report Award (ARA) criteria.2. Improving the materials of Sustainability Report by referring

to the criteria ofGlobal Reporting Initiative (GRI) criteria.3. Performing a GCG assessment by an Indenpendent

consultant, PT Synergy Daya Prima with a score of 83.70.

FLASHBACK OF CORPORATE GOVERNANCE IMPLEMENTATION IN SEMEN PADANG

2014Set Up of Anti Fraud Program and Launching of Corporate website https://wbs.semenpadang.co.id

2015Evaluation of the implementation of anti-gratification.

2016Declaration of anti-corruption during the commemoration of national anti-corruption day.

2017Review of GCG Guidelines, Code of Conduct and Board Manual

STRENGTHENING THE FOUNDATIONS OF CORPORATE GOVERNANCEPT Semen Padang realizes that the implementation of GCG through a long-term process that will produce sustainable value, in order to face the global competition of the business world so that the company is able to operate and grow sustainably.

Semen Padang determined that the effective implementation of GCG is a strategic challenge that requires commitment and is

therefore translated into a systematic and targeted work plan. A number of GCG program initiatives have been implemented during 2017, as an evidence of a full commitment to the Company’s management in the implementation of GCG as follows:1. The signing of an annual statement (Integrity Pact) by the

Board of Commissioners, Board of Directors, all employees and business partners early in 2016;

2. Completion of Areas of Improvement (AOI) related to GCG self-assessment in 2016 from Internal Audit of Semen Padang;

3. Continuous socialization concerning the application and use of Whistle Blowing System (WBS) and gratification control system to all stakeholders, both in internal office and at representative offices;

4. Risk management workshop to all Risk Owners and Leaders so that each decision made represents a risk-based decision;

5. Following on the Improvement / Area of Improvements (AoI) Recommendation from Internal Audit of PT Semen Padang on the results of the RML assessment in 2016;

6. Commemoration of National Anti-Corruption Day.

ASSESSMENT OF CORPORATE GOVERNANCEIMPLEMENTATION PROCEDURES AND ASSESSMENT PARTIESSemen Padang consistently and continuously performed optimization of GCG implementation through the strengthening of its owned infrastructure, GCG assessment, better technical guidance adjustments and GCG implementation support procedures. The Company also makes measurements on the implementation of GCG and reviews on a regular basis.

ACHIEVEMENT OF 2014 GCG SCOREIn 2017, GCG assessment was conducted by PT Sinergi Daya Prima which is an independent consultant. Each of the Company’s organs was measured by its own criteria in accordance with the ideal structure and process as stipulated in Regulation of the Minister of SOEs no. PER 01 / MBU / 2011 dated August 1, 2011 and Technical Guidance of the Secretary of the Minister of SOEs no. SK-16 / S.MBU / 2012.

The following table describes the comparison of GCG scores in the last 4 (four) years:

2014 2015 2016 2017

84,17 85,81 86,48 83,70

Implementation of GCG assessment 2017 was conducted for 2 (two) months and Company got “good”, with score 83,70 (equal to 83,70%). the results of the assessment as follows:

PT Semen Padang guarantees conformity in carrying out its

business activities against the rules of invitation

173






Table of Governance Aspect in 2017 No. Aspek Governance Bobot Capaian Persentase

1 Commitment to the implementation of governance in a sustainable manner

7 6,016 85,95%

2 Shareholders & GMS 9 8,271 91,90%

3 Board of Commissioners 35 30,101 86,00%

4 Board of Directors 35 31,672 90,49%

5 Disclosure of Information & Transparency

9 7,636 84,84%

6 Other Aspects 5 0 0%

Total 100 83,70

STATE APPARATUS WEALTH REPORT (LHKPN)

In 2017, in line with Anti-Fraud program rules and in an effort to improve the Company’s good corporate governance commitment sustainably Commissioner, Board of Directors, and management staff (Echelon I-III) PT Semen Padang has conducted reporting in the form of State Property Wealth Report (LHKPN ). The reporting form used is Form A and in accordance with the LHKPN No. procedure. PR / PGW / 378 which regulates the Management of PT Semen Padang LHKPN and its executor is the Human Resources Department.

GRATIFICATION MANAGEMENT PROGRAMPT Semen Padang created a Memorandum of Understanding (MoU) to follow up the implementation of the gratuity control program, in cooperation with the Corruption Eradication Commission (KPK) in the implementation of the Gratification Control Program (PPG). The Company has also compiled and approved the Gratification Handling Procedure no. PR / PGW / 375 governing the reporting obligation of gratuities.

GRATIFICATION REPORTDuring the year 2017, the success of the Gratification Management Program serves as one of the measurement of success in the Anti Fraud program that was launched on July 22, 2014. In 2017, there were 4 (four) reports of gratuities acceptance. After verification by the GCG & MR Bureau, the

gratification received is categorized as illegal gratification. Received goods / gratuities have been submitted to GCG & MR Bureau and confiscated by the Company and subsequently in accordance with the Fraud Control Program Guidelines Semen Padang Revision 02 “the goods / gratuities that have accumulated during one year will be utilized for social activities of Semen Padang as agreed President Director.”SOCIALIZATION OF FCP AND WBS All policies related to gthe management of gratification are communicated to the Board of Commissioners, Board of Directors and all employees of the Company. To facilitate the reporting of gratuities, since 2014 Semen Padang has launched the website https: //intranet.semenpadang. co.id/gratifikasi and in 2015 become https://intra.semenpadang.co.id/gratifikasi, The change was made after a process of review and evaluation of the effectiveness of the website and reporting mechanisms which aim at facilitating the process for the personnel in the Company to report any gratification received.

GCG IMPLEMENTATION PLAN AND STRATEGY IN 2018

PT Semen Padang has performed socialization and internalization programs to all management and employees to ensure compliance with GCG practices. In the future, as a follow-up and high commitment to sustainability of GCG practices at all operational levels, and referring to the GCG assessment results in the form of recommendations and the Area of Improvement (AoI), the Company embarked on several important activities related to GCG practices and improvements for 2018.

The roadmap for GCG implementation of PT Semen Padang is focused on improving and improving GCG in line with the Company’s needs. PT Semen Padang sets the direction of GCG implementation in the form of a GCG roadmap which is expected to guide the implementation of GCG implementation at all levels. The GCG Roadmap is also directed to make GCG a reference in every operational activity. The final goal of GCG Roadmap is the realization of PT Semen Padang to be a benchmark of GRC implementation in Southeast Asia. It is expected that with the achievement of the ultimate goal, the Company is optimistic to improve and maintain performance on an ongoing basis.

174




GCG Roadmap Information 2018-2022 as follows:

20182019

20202021

2022

Good Sustainabiity Company

Excellent Sustainability Company

Sustainability Citizenship and Behaviour Practice

Good Sustainability Citizenship Good Behaviour Practice

Menjadi Benchmark Penerapan GRC di Sumatera Barat

CORPORATE GOVERNANCE STRUCTURE AND MECHANISM

GOVERNANCE STRUCTURE In building governance structures, the Company considers the mapping of functions or business activities to business ethics standards and ensures that the mechanism of check and balance could work in an effective manner. The corporate governance structure at PT Semen Padang is in line with Law no. 40/2007 on Limited Liability Companies, in the form of major organs including; General Meeting of Shareholders (GMS), Commissioners and Board of Directors and supporting bodies including Committees under the Commissioners, Legal & Governance Risk Compliance (LGRC / MR), Internal Audit Unit, and GCG and Risk Management Bureaus.

PT Semen Indonesia (Persero) Tbk is a major shareholder and controller of PT Semen Padang with share ownership of 332,000,000 (three hundred thirty two million) shares. The interests of major shareholders and controllers are represented by the President Director of PT Semen Indonesia (Persero) Tbk.

CORPORATE GOVERNANCE MECHANISM The Corporate Governance Mechanism is a GCG implementation that is reflected in a robust system. GCG implementation is not enough just to rely on the pillars of governance structure, but there is a need for clear rules in the form of mechanisms. Corporate governance mechanisms can be defined as clear rules, procedures, and relationships between decision-making parties and those who exercise control over those decisions.

This mechanism refers to the existing GCG Guidelines in PT Semen Padang which is then incorporated into the Board Manual, the Code of Conduct and the Management Guidance for Semen Padang Management System (SMSP). All relevant policies and procedures in the implementation of GCG are intended to create an effective check and balances mechanism, a culture of friendly corporate stakeholder management, and sustainable profit and sustainability.

GENERAL MEETING OF SHAREHOLDERS (GMS)The General Meeting of Shareholders (GMS) serves as the supreme organ of the Company which has become a forumfor shareholders to make important decisions with such an authority not granted to the Board of Directors and Board of Commissioners. GMS is granted with the authority to appoint and dismiss members of the Board of Commissioners and/or Board of Directors, to ratify the amendments, to approve the annual report submitted by BOD, to approve the utilization of the company’s profit, and to approve the appointment of the Public Accountant and other matters..

GENERAL MEETING OF SHAREHOLDERS IN 2017 In 2017, PT Semen Padang had conducted 1 (one) time AGMS on March 30, 2017 with the procedure of organizing according to the Company’s Articles of Association.

175






Table of Execution of GMS Year 2017GMS Invitation Event

AGM Approval of Financial Statements Book Year 2017

Date 28 February 2017 Letter no. 0000112 / KS.00.01 / E / 50003887 / 02.2017to Shareholders.

1. Approval of the Company’s Annual Report on the circumstances and the course of the Company during the fiscal year 2016 (two thousand and sixteen) as well as the full volledig acquit et de charge to the Directors and Commissioners of the Company for the management and control of the Company which has been in operation for 2016 (two thousand sixteen).

2. The ratification of the annual report of Partnership and Community Development Program (PKBL) of the Fiscal Year of 2016 (two thousand and sixteen) as well as the grant of acquisition and discharge of responsibility to the Directors and Commissioners of the Company for the actions of the management and supervisory of the PKBL fiscal year 2016 (two thousand sixteen)

3. Determination of current year profit in 2016 (two thousand sixteen).

4. Determining tentiem of fiscal year of 2016 (two thousand and fifteen) salaries for the Board of Directors and honorarium for Commissioners and other facilities and allowances for 2017 (two thousand and sixteen).

5. Approval of appointment of Public Accounting Office (KAP) to audit the Company’s financial report for the fiscal year of 2017 (two thousand and seventeen) and financial report of partnership program and community development program of book year of 2017 (two thousand seventeen).

6. Changes to the management of Perseron.

DECISION AND REALIZATION OF GMS IN 2017 In 2017, PT Semen Padang has conducted 1 (one) time AGMS on March 30, 2017 with the procedure of organizing according to the Company’s Articles of Association. Information regarding the decisions and realization of the GMS of 2017 as follows:

GMS Agenda and Resolution 2017 Realization

1. Giving authority to PT Semen Indonesia (Persero) Tbk. As shareholders to determine the final dividend for the fiscal year 2016 (two thousand and sixteen) includes stipulating the schedule and procedure for payment of dividends for the fiscal year of 2016 (two thousand and sixteen) which shall be conveyed by a separate letter with regard to the percentage of the final dividend which shall be in payment by PT Semen Indonesia (Persero) Tbk. To its shareholders for the same fiscal year.

2. The rest is allocated as reserves that will be used for the development of the Company’s business.3. Giving authority and power to PT Semen Indonesia (Persero) Tbk. As shareholder to determine the quantity and program of partnership

and community development for the fiscal year of 2017 (two thousand and seventeen) to be delivered by separate letters and is part of the budget in the Company’s work plan and budget year 2017 (two thousand and seventeen)

4. Giving power to PT Semen Indonesia (Persero) Tbk. As one of the Company’s shareholders to appoint tantiem for the Company’s directors and commissioners for the fiscal year 2016 (two thousand and sixteen) as well as salaries for directors and honoraria for commissioners and other facilities and allowances for 2017 (two thousand and seventeen)

5. Approve the appointment of public accounting firm as will be stipulated in the annual shareholders meeting of PT Semen Indonesia (Persero) Tbk. The fiscal year of 2017 (two thousand and seventeen) to audit the Company’s financial statements of the fiscal year of 2017 (two thousand and seventeen), as well as the financial statements of the fiscal year of 2017 (two thousand and seventeen) partnership and community development program, and the expenses of the Company.

6. Appoint the same replacement public accounting firm with PT Semen Indonesia (Persero) Tbk. In the event that the appointed public accountant office is unable to continue or perform its duties for any reason including the applicable legal and statutory grounds.

7. Determine the addition of the scope of work for the designated KAP & KAP replacements, as long as necessary for the Company’s specific actions.

8. The Meeting approved the annual report on the circumstances and the course of the Company during the fiscal year of 2016 (two thousand and sixteen) including the report on the execution of the duties of supervisory commissioners during the fiscal year of 2016 (two thousand and sixteen), as long as the annual report of PT Semen Indonesia (Persero) Tbk. Approved by Annual General Meeting of Shareholders of PT Semen Indonesia (Persero) Tbk.

√

√√

√

√

√

√

√

176





9. Ratify the financial statements of the Company for the fiscal year 2016 (two thousand and sixteen) audited by the public accountant firm satrio bing eny & associates, member firm of deloitte touche tohmatsi limited in accordance with the attachment in letter number GA.117 0015 SP FAN date 13-02- 2017 (thirteen february two thousand seventeen) with the opinion: “fair in all material matters of financial position of PT Semen Padang 31-12-2016 (thirty one december two thousand sixteen), as well as financial performance and cash flow for the year which shall terminate on such date in accordance with Indonesian financial standards “while simultaneously giving volledig acquit et de charge to the directors and commissioners of the management and supervisory measures made during the fiscal year 2016 (two thousand and sixteen) insofar as it is not a criminal act or violates applicable legal provisions and procedures and is recorded in the Company’s financial statements n does not conflict with the laws and financial statements of PT Semen Indonesia (Persero) Tbk. For the year 2016 (two thousand sixteen) is approved by AGM of PT Semen Indonesia (Persero) Tbk. With notes:

√

a. Companies to mappping major market positions and develop marketing strategy initiatives with targets to increase market share, especially the main and regional markets of Sumatra and increase export markets through synergy with the group.

√

b. Companies to continue the Cost Transformation program fundamentally through group resource synergies to improve competitiveness that includes:

√

1. Transformation in the field of energy, distribution and logistics maintenance, raw materials, auxiliaries and packaging

2. Secure short-term and long-term supply of coal, and achieve the best energy costs, by synergizing the group's procurement.

3. Maximizing logical synergies in holding.

c. Company to implement operational excellence system to increase utilization and productivity in all production facilities including new factory facilities Indarung VI

√

d. Companies to increase group synergy in the field of human resources to improve competitiveness through increased productivity ratios to be better than similar industries. Accelerate the improvement of the quality of human resources and continue the program of internalization of a sustainable corporate culture.

√

e. Company to improve environmental management especially dust emission control and maintain harmonization with the surrounding environment to maintain proper green.

√

f. Companies to manage capex focus on areas that have a major impact on the Company's business will thus achieve a better overall productivity level.

√

g. Companies to conduct closing audits and prepare commercial operations for the Indarung Vl cement plant. √

10. Ratified the annual report of partnership and community development program for the fiscal year ending on 31-12-2016 (thirty one december two thousand sixteen) prepared based on financial statements of PKLB audited by public accountant firm satrio bing eny & partners, member firm of deloitte touche tohmatsu limited with letter number GA 117 0016 PKBL SP FAN dated 13-02-2017 (thirteen february two thousand seventeen) with the opinion "reasonable in all material matters" the financial position of the partnership and environmental development unit PT Semen Padang dated 31-12-2016 thirty one december two thousand and sixteen), as well as reports of activities and cash flows for the year then ended, in accordance with the financial accounting standards of entities without public accountability in Indonesia,

√

11. To grant the acquisition and discharge of responsibility to directors and commissioners for the management and supervision of the partnership and community development program implemented during the fiscal year 2016 (two thousand and sixteen) as long as it is not a criminal act or violates legal provisions and procedures in effect, are recorded in the Company's annual report and are not contradictory to the prevailing laws and regulations, as well as the annual report of PT Semen Indonesia (Persero) Tbk. For the fiscal year of 2016 (two thousand and sixteen) is endorsed by the general meeting of shareholders of PT Semen Indonesia (Persero) Tbk. With notes:

√

a. In order that the management of PKBL of 2017 (two thousand and seventeen) is more optimal and more appropriately targeted and explored the possibility of integrating PK and BL so as to help improve the economy and social conditions in real and sustainable societies by using benchmarks to assess the success of the program and include the measure as key performance indicator (KPI).

√

b. Prioritize the channeling of PK and BL in the company's jurisdiction areas or activities related to the corporate value chain in the cluster scheme so as to encourage the improvement of the quality of life of the community and increase the value of the company in a sustainable manner while mitigating the risk of default.

√

c. The company was asked to budget the prioritized BL program on activities to improve the human development index in order to help reduce the poverty rate.

√

d. Companies to effectively channel a partnership program of at least 80% (eighty percent) of the budget and distribution budget are equal and available. Thus, for state-owned enterprises that plan disbursement is not the same as available funds, it can revise the distribution by first requesting approval from the Board of Commissioners, unless there is a change in the policy of the management of PK SOE.

√

e. The rate of return (collektibililtas) of the last 2 (two) year partnership program shall be at least 80% (eighty percent). √

12. Approved the adoption of net profit after tax of the fiscal year 2016 (two thousand and sixteen) amounting to Rp.724.012.206.916, (seven hundred twenty four billion twelve million two nine hundred and sixteen Rupiah) as follows:

√

177







a. Giving authority and power to PT Semen Indonesia (Persero) Tbk. As the shareholder to determine the amount of the final dividend of the fiscal year of 2016 (two thousand and sixteen) includes stipulating the schedule and procedure of payment of dividends for the fiscal year of 2016 (two thousand and sixteen) which shall be conveyed by a separate letter with due regard to the amount of the final dividend percentage to be paid by PT Semen Indonesia (Persero) Tbk. To its shareholders for the same fiscal year

√

b. The rest is allocated as reserves that will be used for the development of the Company's business. √

c. Giving authority and power to PT Semen Indonesia (Persero) Tbk. As shareholder to determine the quantity and program of partnership and community development for the fiscal year of 2017 (two thousand and seventeen) to be delivered by a separate letter and is part of the budget of work and budget of the Company for book year of 2017 (two thousand seventeen)

√

13. Giving authority to PT Semen Indonesia (Persero) Tbk. As the Company's shareholders to appoint tantiem for the Board of Directors and Commissioners of the Company for the fiscal year 2016 (two thousand sixteen) as well as salaries for directors and honoraria for Commissioners and other facilities and allowances for 2017 (two thousand seventeen)

√

14. Approved the appointment of public accounting firm as will be stipulated in the annual shareholders meeting of PT Semen Indonesia (Persero) Tbk. The fiscal year of 2017 (two thousand and seventeen) to audit the Company's financial statements of the fiscal year of 2017 (two thousand and seventeen) and the financial statements of the fiscal year of 2017 (two thousand and seventeen) partnership and community development program and the expenses of the Company.

√

15. Appointed the same replacement public accounting firm with PT Semen Indonesia (Persero) Tbk. In the event that the appointed public accountant office is unable to continue or perform its duties for any reason including the applicable legal and statutory grounds.

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16. Determine the addition of the scope of work for the designated KAP & KAP replacement, as long as necessary for the Company's specific actions, and

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17. Determined the amount of the audit service fee and other reasonable terms for the replacement KAP. √

18. The Meeting approved the change of the Company's Board of Commissioners and / or Board of Directors composition to be set at the next general meeting of shareholders.

√

BOARD OF COMMISSIONERS (BOC)BOC represents an organ of the Company which functions to perform monitoring in general and/or for specific matters based on the Company’s articles of association and Board Manual and to provide advice to BOD in managing the Company. BOC is also responsible for monitoring the effectiveness of GCG practices implemented by the Company. If deemed necessary, the Company should also prepare adjustments based on the Company’s needs.

COMMISSIONERS REPORT OF 2017BOC is an organ of the Company collegially responsible for overseeing and advising the Board of Directors and ensuring that Semen Padang implements GCG at all levels in the organization. To perform these tasks, the Board established supporting committees namely Audit Committee and Legal Committee and Environmental Development. In implementing its duties, each member of the Board of Commissioners shall act collegially.

Each member of the Board of Commissioners shall act in good faith based on the principles of prudence and responsibility. The Board of Commissioners performs required to BOD in managing the Company both on strategic and operational levels. On a strategic level, Board of Commissioners supervises the preparation of the Company’s Long Term Plan (RJPP).

Meanwhile, in the implementation of the Company’s management annually, BOC supervises the preparation of the Company’s Work Plan and Budget (RKAP) to ascertain that the RKAP has

been prepared in accordance with the vision and mission by considering the external and internal conditions of the Company. In the implementation, BOC performs the control by referring to the targets set forth in RKAP.

CRITERIA OF COMMISSIONERIn line with the consistent implementation of GCG, Semen Padang sets the criteria for the candidates as follows:1. A Candidate of Commissioners is an Indonesian Citizen

who has competencies relevant to the duties of the Board of Commissioners, the experience and skills required to perform his duties, and meets other criteria set out in the General Meeting of Shareholders, Company Regulations and Articles of Association.

2. The Board of Commissioners shall not have a directional relationship up to the third degree either directly, vertically or by marriage with other members of the Board of Commissioners or with the Board of Directors.

3. Able to allocate sufficient time to perform their duties

FIT AND PROPER TEST FOR BOC To ensure the professionalism and integrity of the candidates, the Shareholders have performed a selection and assessment to ensure that the candidates for BOC possess the fit and proper criteria to perform the tasks. Furthermore, the elected Board of Commissioners is appointed and dismissed by the extraordinary GMS.

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Table of BOC Fit and Proper Test StatusName Domicile Selection and

Assessment

Ir. Suharto, MM Surabaya Passed

Prof. Eddy R. Rasyid, PhD, CA Padang Passed

Prof. Dr. Saldi Isra, SH, MPA*) Padang Passed

Wiztian Yutri, SH Padang Passed

*) Resigned as President Commissioner since 11 April 2017

APPOINTMENT AND DISMISSAL OF THE BOCAs noted earlier, the appointment of Board of Commissioners is made after the selection and assessment process has been performed by shareholders. The appointment of BOC meets the requirements established in Board Manual. The appointment of new members should also consider the Company’s needs and main criteria including skills, willingness and attitude. All members of the Board of Commissioners possess the required integrity, competence and reputation.

Dismissal of the Board of Commissioners shall be made if the respective person meets the following conditions:1. Losing Indonesian citizenship2. Reaching the end of the term of office3. Being declared bankrupt or placed under custodianship by a

court decision4. Resigning5. No longer meeting the requirements under the prevailing

regulations6. Deceased7. Being dismissed by decision of the GMS

BOC COMPOSITION AND SEGREGATION OF DUTIES

BOC COMPOSITION The composition of the members of the Board of Commissioners of PT Semen Padang as of December 31, 2017 is established under GMS resolutions on April 6, 2015 and the May 11, 2016

Table of Composition of the Board of Commissioners

Name Position Appointment Representation

Prof. Dr. Saldi Isra, SH, MPA

President Commissioner

Annual GMS resolutionNo. 35 dated 11 May 2016

Academician

Ir. Suharto, MM BoC Member Annual GMS resolutionNo. 46 dated 6 April 2015

Commissioner

Prof. Eddy R. Rasyid, PhD, CA

BoC Member Annual GMS resolutionNo. 46 dated 6 april 2015

Academician

Wiztian Yutri, SH BoC Member Annual GMS resolutionNo. 35 dated 11 May 2016

Journalist

NoteIr. Suharto, MM, Prof. Eddy R. Rasyid, PhD, CA, and Wiztian Yutri, SH, were dismissed as

Commissioners of the Company at the AGM on 24 January 2018

BOC SEGREGATION of DUTIES In order to perform its duties and responsibilities effectively and by considering to the composition of the members, the Commissioner has determined the division of duties and responsibilities of each member of the Board of Commissioners through the Decision of Commissioner. 92 / DK / Kep / VI / 2016 dated June 7, 2016. Meanwhile, for the smooth functioning of its administrative duties, the Board of Commissioners is assisted by the Secretary of Commissioners appointed by the Board of Commissioners in accordance with Commissioners’ Decision. 89 / DK / Kep / IV / 2015 dated April 27, 2015. The segregation of duties according BOC Decree No. 92 / DK / Kep / VI / 2016 are as follows:

Table of Segregation of Duties and Responsibilities of the Board of Commissioners

Name Position Area of Supervision



Coordinating the execution of duties and responsibilities of members of the Board of Commissioners, including the coordination of oversight of the implementation of Good Corporate Governance and Risk Management

Ir. Suharto, MM Commissioner To evaluate, review and supervise the execution of duties of the Board of Directors related to the field of production, procurement, research, development / investment and operation

PT Semen Padang makes the implementation of GCG become one of The Element of Key Performance

Indicator

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Name Position Area of Supervision


Komisaris Evaluating, reviewing and supervising the execution of duties of Directors related to finance, marketing including pengawassan implementation of human resources development and Good Corporate Governance and Rsesiko Management, as well as Chairman of the Audit Committee

Wiztian Yutri, SH Komisaris Evaluating, reviewing and supervising the implementation of Directors' duties related to marketing, implementation of Corporate Social Responsibility (CSR) and the relationship between the company and the government, both local government and central government, stakeholders and corporate relations with social and community environment as well as related to law , as well as Chairman of the Legal and Community Development Committee

BOC DIVERSE COMPOSITIONThe composition of the members of Board of Commissioners has met the required elements of diversity and has met the prevailing regulations which represent the combination of independence, competence in the form of skills/education, work experience, and age. All Members of the Board of Commissioners Semen Padang possess the integrity, competence and good reputation. These are evidenced by their successfully passing the selection and assessmentprocedures performed by Shareholders.

The table below shows that the decision of the composition of the Board of Commissioners has considered the business needs and complexities of the Company including the observance towards diversity.

Table of Diverse Composition of the Board of Commissioners

Diversity Aspect Diversity of BoC

Education The diversity of the Commissioner’s educational background is shown by the education mix:The levels of education cover the level of bachelor, master, doctor and professor

Work experience The diversity of work experience of the Commissioners are:Lecturer and Headmaster of University of AndalasFormer Board of Directors of PT Semen Indonesia (Persero) TbkMember of the Audit CommitteeJournalistic

Age The age of BOC members is ranging within the fairly productive age bracket from 46-60 years

Gender All Commissioners are male

INDEPENDENCE OF BOC All members of the Board of Commissioners have no financial, management, share ownership and / or family relationships with other Commissioners and / or with Shareholders or any other relationship with PT Semen Padang that may affect its ability to act independently. In this sense all members of the Board of Commissioners are independent.In addition, all members of the Board of Commissioners are not concurrent positions prohibited by applicable laws and regulations regarding the implementation of GCG.

SHAREHOLDING IN SEMEN PADANG ANDOTHER COMPANIES The Commissioner has disclosed its share ownership, both to PT Semen Padang and to other companies and renewed annually, as in the following table:

Table of Shareholding of Board of Commissioners in Semen Padang and Other Companies

Name Shareholding in Semen Padang

Shareholding in Other Companies

Yes No Yes No


- √ - √

Ir. Suharto, MM - √ - √


- √ - √

Wiztian Yutri, SH - √ - √

FAMILY RELATIONS AND MANAGEMENT POSITIONS IN OTHER COMPANIES The following information disloses the relationship between the family and the management of the members of the Board of Commissioners with fellow members of the Board of Commissioners and / or members of the Board of Directors and Shareholders of PT Semen Padang. The following information also shows the relationship between the Board of Commissioners and the management of other companies throughout 2017.

BOC CONCURRENT POSITIONSIn addition to being a member of BOC of Semen Padang, a few members of BOC also have concurrent positions as follows:1. Prof. Dr. Saldi Isra, SH, MPA, served as Head Master of Law

at Andalas University.2. Prof. Eddy R Rasyid, PhD, CA, served as Head Master of

Accounting Studies at Andalas University.

BOC ROLES AND RESPONSIBILITIESIn performing its duties, the Board of Commissioners shall be responsible to the BOC is reporting to GMS. BOC accountability to the GMS represents its oversight accountability for the management of the Company in the implementation of corporate governance principles.

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The duties and responsibilities of the Board of Commissioners in accordance with the Company’s Articles of Association are as follows:1. Supervision is conducted by considering the interests of

shareholders and being responsible to the General Meeting of Shareholders.

2. Supervise the Company’s management policies performed by the Board of Directors and provide advice to the Board of Directors in running the Company including Corporate Development Plans, Implementation of Work Plan and Corporate Budget (RKAP), the Articles of Association and resolutions of the General Meeting of Shareholders and applicable laws and regulations.

3. Review and respond to RKAP already signed by the Board of Directors, prior to being submitted by the Board of Directors to the Shareholders for approval.

4. Make request for approval from Shareholder on the Company’s Long Term Plan (RJPP) presented by the Board of Directors.

5. Advise the Directors in carrying out the Company’s management.

6. Provide regular reports and explanations to majority shareholders either inside or outside the General Meeting of Shareholders (GMS).

7. To carry out the decisions decided by the majority shareholders in the GMS forum.

8. Following the Company’s activities, providing opinions and suggestions to the GMS regarding any issues deemed important to the management of the Company.

9. Report immediately to the GMS accompanied by suggestions and remedial measures to be taken if the Company shows symptoms of decline.

10. Examine and review the periodic reports and Annual Reports prepared by the Board of Directors and signing the Annual Report.

11. Provide explanations, opinions and suggestions to the AGMS on the Annual Report if requested.

12. Propose a public accountant to the GMS.13. Making minutes of meetings of the Board of Commissioners.14. Provide reports on supervisory duties that have been

conducted during the previous financial year to the GMS.15. Reviewing the additional operational and strategic annual

work programs proposed by the Board of Directors outside the RKAP approved by the Shareholders for the approval of the GMS or majority shareholders.

16. Carry out other obligations in the context of supervisory and advising duties, as long as they do not conflict with laws and regulations, statutes, and / or decisions of the GMS.

The Board of Commissioners ‘resolutions are part of the supervisory duties, so as not to eliminate the Board of Directors’ responsibility for the Company’s management. In relation to the supervisory duties of the Board of Directors, the Board of Commissioners shall follow the Company’s activities, provide opinions and suggestions to the General Meeting of Shareholders, regarding any issues deemed important and to report to shareholders in case of any performance degradation.

However, the Commissioner shall not interfere with the authority of the Board of Directors to administer the Company. More oversight of the evaluation of the Company’s execution and analysis of transactions that require the approval of the Board of Commissioners.

In conducting the supervisory duties, BOC shall follow the developments in the Company’s activities, provide their opinions and recommendations at GMS, concerning any matters deemed important and also report to shareholders in the event of any signs of regressions in the Company’s performance.

The Board of Commissioners has mandated the Board of Directors to improve the quality of GCG practices and to continuously disseminate to all of the Company’s employees. All rules covered by GCG Guidelines, Code of Conduct and explanations of the Company’s values are expected to be well understood and guided by the Company’s employees. The Commissioner shall direct the Board of Directors to promptly follow up on the corporate actions that have been carried out by ensuring that all provisions are covered by the GCG Guidelines and Code of Conduct guidelines have been complied with.

The Board of Commissioners also has a high concern on efforts to improve the quality of the application of GCG principles by making various adjustments in the Board of Commissioners. Following up the Decision of the Ministry of SOEs. PER-012 / MBU / 2012 and Decree of the Secretary of the Minister of SOEs no. SK-16 / S.MBU / 2012, by establishing the Legal and Community Development Committee in addition to the existing Audit Committee. The Commissioners’ authority is as follows:

1. Board of Commissioners either collegially or individually at any time during the Company’s office working hours is entitled to enter the building and the yard or other places used or controlled by the Company, and is entitled to inspect all books, letters and other documents, to check and match against the cash and others and is also entitled to know all actions taken by the Board of Directors.

2. The Board of Directors and each member of the Board of Directors shall be required to provide an explanation concerning all things inquired by the Board of Commissioners

3. BOC meetings with the highest vote reserve the right at all times to temporarily dismiss one or more than one members of the Board of Directors, if such BOD member breaches the articles of association and prevailing regulations

4. Attend meetings of the Board of Directors and provide views on the issues discussed. Requesting the Board of Directors and / or other officials under the Board of Directors with the knowledge of the Board of Directors to attend the Board of Commissioners meetings.

5. The Commissioner has the authority to give approval in the case of the Board of Directors:a Conducting cooperation with a business entity or other

party with a certain value or period specified by the GMS.b Enter into transactions that exceed 10% to 20% of the

total amount budgeted in the RKAP.

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c Receive or provide short-term loans that are nonoperational in nature, and receive or provide mediumterm loans.

d Record receivables as uncollectible receivables and change inventory status into inventory reserves can not be used.

e Conduct legal actions by transferring or disposing the rights or securing the assets as a guarantee less than or equal to 50% of the Company’s total net worth (including fixed assets), either in a single separated transaction or multiple related transactions in 1 (one) financial year.

f Releasing used goods (afval).

The Commissioners’ policy principles in providing advice and recommendations to the Board of Directors and the treatment to stakeholders are as follows:

1 Policies are made based on good faith, prudence and a sense of responsibility for the interests of the Company.

2 Policies are taken transparently to the Directors and stakeholders.

3 Policies are based on objectivity and fair and consistent treatment concerning the data and information submitted by the Board of Directors.

BOC MANUALBOC and BOD have been equipped with Board Manual in performing their respective duties. Board Manual represents the results of codification of various regulations applicable for the Company and the best practices in GCG principles,corporate law principles, prevailing regulations, directions from shareholders, and articles of association which govern the work procedures of BOC. Board Manual sets fort the work procedures for BOC and BOD and elaborates the stages of activities in a structured, systematic, easy to comprehend and to implement in a consistent manner. The Board Manual could also serve as a reference for BOC and BOD in performing their respective duties to achieve the Company’s vision and mission so as to achieve high work standards in line with GCG principles.

The Board of Manual contains instructions on the operation of the Board of Commissioners and the Board of Directors and explains the stages of activities in a structured, systematic, understandable and consistent manner that can serve as a reference for the Commissioners and Directors in performing their respective duties to achieve the Company’s vision and mission, high work standards will be achieved in line with GCG principles.

The Manual Board is structured according to prevailing laws and regulations, and is constantly reviewed periodically. Manual

Board regulates aspects:1. Duties, authorities and obligations of the Commissioner2. Division of duties of Commissioners3. Introduction program for New Commissioners4. The supporting organ of the Board of Commissioners5. Board of Commissioners Meeting6. Evaluate the performance of the Board of Commissioners

FREQUENCY AND ATTENDANCE LEVEL IN BOC MEETINGS

The process of supervision of PT Semen Padang’s operational activities is done through the mechanism of meetings such as:1. The Board of Commissioners and the Board of Directors

meetings are held in one month to discuss the Company’s performance, and meetings to discuss specific or specific matters as required.

2. Internal meetings of Commissioners, held once a month, which may also be attended by Committees.

3. Meetings can be held in the cities where PT Semen Padang has its offices. Meetings can also be accompanied by other activities such as outbound, team building and seminars with speakers from outside as well as within the Company.

4. The decision of the Board of Commissioners’ Meeting is based on deliberations for consensus. In the event that a decision based on a consensus agreement is not reached, a decision shall be made by vote based on an agreed vote of at least more than ½ (one-half) of the number of valid votes cast in the meeting.

The Commissioner may also take a valid and binding decision without holding a Meeting provided that all members of the Board of Commissioners approve the proposal submitted in writing and sign the agreement. The decision taken has the same power as the decision taken through the meeting.

Throughout 2017, the Commissioners conducted 42 meetings consisting of 13 internal meetings of the Board of Commissioners and 29 meetings of Commissioners and Directors of the respective plan 12 times. The frequency table of meetings and the frequency of attendance of the Board of Commissioners at the Board of Commissioners’ internal meetings in 2017 can be seen in the following table:

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Table of Attendance of Internal Meeting of Commissioners Year 2017

Meeting Dates in 2017

CommisionersMeeting Event

Saldi Isra SuhartoEddy R Rasyid

Witian Yutri

12 Januari √ √ √ √ - Evaluation of Indarung V overhaul readiness- Progress Audit Book Year 2016- Performance Evaluation of 2016

14 Pebruari √ √ - √ - Evaluation of Indarung V overhaul preparation- Progress Follow-up Commemmission of GMS Book

Year 2015- Performance Evaluation for January 2017

13 Maret √ √ √ √ - Progress readiness overhaul Indarung v- Evaluate the performance of February 2017

12 April - √ √ √ - Evaluate performance in March 2017

16 Mei - √ √ √ - Evaluation of Indarung V operation post-overhaul- Evaluation of Indarung IV overhaul preparation- Evaluation of fine coal needs with coal of 5,200 and

5,600 calories- Performance Evaluation for April 2017

14 Juni - √ √ √ - Performance Evaluation May 2017

14 Juli - √ √ √ - Sales and market share improvement analysis- Evaluation of Indarung IV overhaul- Operational evaluation of Indarung V and VI- Evaluation of coal-3 procurement scenario- Performance Evaluation for June 2017

7 Agustus - √ √ √ - Follow-up of 3-scenario coal pengadan- Progess action plan to increase sales and market

share- Evaluation of pessimistic, optimistic and moderate

prognostic scenario- Progressive audit of IgAs and evaluation of Team B PT

Task force results- Performance Evaluation for July 2017

14 September - √ √ √ - Follow-up to the AGM General Meeting 2016- Monitoring the implementation of the broadcasting

strategy- Monitoring on the supply of coal- Performance Evaluation for August 2017

12 Oktober √ √ √ - Monitoring marketing action plan 3 months ahead- Improvement of SOP of coal procurement scenario-3- Monitoring of coal vendor evaluation- Evaluation of Indarung VI factory operation- Performance Evaluation for September 2017

13 Nopember √ - √ - Evaluation of marketing actin plan next 3 months- Monitoring of internal control system- Evaluate the implementation of internal audit- Evaluate the WBS implementation report- Performance Evaluation for October 2017

21 Nopember - √ √ √ - Evaluation of Indarung VI project audit- Progress Audit PT Igasar- Progress of Bengkulu Packing Plant Project

12 Desember - √ √ √ - Evaluation of coal-3 procurement scenario- Evaluation of future marketing action plan plan 3

months ahead- Follow up of task ahead of Indarung VI and General

Audit for book year 2017- Performance Evaluation for November 2017

Total 3 13 11 13

% 100 100 100 100Note: Prof. Dr. Saldi Isra, resigned as President Commissioner on 11 April 2017

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Table of Attendance of BOC-BOD Joint Meetings in 2017Meeting Dates

in 2017Commisioners Director

Meeting EventSI SH ER WY BW II THR PS FKW

12 Januari √ √ √ √ √ √ √ - - - Follow up Pending Matters meeting 2016- Performance Evaluation for Desember 2016- Risk analysis and risk mitigation of RKAP 2017- Risk analysis and risk mitigation of Indarung V overhaul

preparation- Update evaluation of Lampung cement silk capex and

Dumai capex- Progress of Indarung VI Project, Risk identification and

mitigation

14 Pebruari √ √ - √ √ √ √ √ - - The follow up of Pending Matters last month- Evaluation of indarung overhaul preparation V- Performance evaluation for January 2017- Project Progress Indarung VI- Special audit progress of PT Igasar

14 Maret - √ √ √ √ √ √ √ - - The follow up of Pending Matters last month- Evaluation of indarung overhaul preparation V- Discussion of performance in February 2017- Preparation of GMS 2016 Fiscal Year- Project Progress Indarung VI- Special audit progress of PT Igasar

28 Maret √ √ √ √ √ √ √ √ - - Evaluate the report at the GMS for the fiscal year 2016

7 April √ √ √ √ √ √ √ √ - - Follow up the mandate of GMS 2016 fiscal year- Follow up the results of PT BSA’s Task Force team

12 April - √ √ √ √ √ √ √ - - Follow up of Pending Matters- Evaluation of Indarung V post-overhaul operation- Evaluation of Indarung VI factory operations ahead of

commercial period- Performance Evaluation for March 2017- Special audit progress of PT Igasar- Follow up the results of PT BSA’s Task Force team

21 April - √ √ √ - - √ - - - Improved organizational structure

27 April - √ √ √ √ √ √ √ - - Discussion of PT BSA TeamTask Force results

16 Mei - √ √ √ √ √ √ √ - - Progress audit of PT Igasar

17 Mei - √ √ √ √ √ √ √ - - Follow up of Pending Matters- Evaluation of Indarung V post-overhaul operation- Evaluation of Indarung VI factory operations ahead of

commercial period- Evaluation of overhaul indarung IV preparation- Performance Evaluation for April 2017

22 Mei - √ √ √ √ √ √ √ - - Discussion of the results of BSA TeamTask Force evaluation- Credit Limit Distributor Discussion- Progress of PT Igasar Audit

31 Mei - √ - √ √ √ √ √ - - Discussion of the improvement of organizational structure

14 Juni - √ √ √ √ √ √ √ - - Follow up of Pending Matters- Evaluation of Indarung V post-overhaul operation- Evaluation of Indarung VI factory operations ahead of

commercial period- Evaluation of overhaul indarung IV preparation- Performance Evaluation for May 2017

7 Juli - √ √ √ √ √ √ - - - Closing of Indarung VI Project

14 Juli - √ √ √ √ √ √ √ - - No Pending Matters- Evaluate the marketing / market share enhancement action

plan- Follow-up of coal procurement scenario 3- Progress of Bengkulu Packing Plant Project- Indarung IV Overhaul Progress- Performance Evaluation for June 2017

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Meeting Dates in 2017

Commisioners DirectorMeeting Event

SI SH ER WY BW II THR PS FKW

25 Juli - √ √ √ √ - √ √ - - Closing project Indarung VI

26 Juli - √ √ √ √ - √ √ - - Discussion of Indarung VI project

2 Agustus - √ √ √ √ - √ √ √ - Procurement of Coal

3 Agustus - √ √ √ √ - - - - - Progress of Bengkulu packing plant project

8 Agustus - √ √ √ √ - √ √ √ - Follow up of Pending Matters- Follow-up provision of coal -3 scenario- Increased sales / market share action plan- Progress Bricking Indarung IV- Evaluate the performance of July 2017- Prognosis performance in 2017 with an optimistic,

pessimistic, and moderate scenario

30 Agustus - √ √ √ √ - √ - √ - Evaluation of Indarung VI factory condition

14 September - √ √ √ √ - √ √ √ - Follow up of Pending Matters- Evaluation of packer conditions and cost perton packer- Follow up visits to Lampung, Bengkulu, North Sumatra and

Aceh- Evaluate revised RKAP 2017- Evaluate performance in August 2017

26 September - √ √ √ - - √ √ - - Review of contracts and supporting documents of Indarung VI

12 Oktober - √ √ √ - - √ √ √ - Follow up of Pending Matters- Progress of refining the coal SOP according to the -3

scenario- Marketing plan 3 months ahead- Follow up audit findings of indarung VI by IA-SI and follow-

up of PwC auditor’s recommendations- Evaluate performance in September 2017

23 Oktober - √ - √ - - √ √ √ - RKAP 2018 Principles

13 November - √ - √ - - √ √ √ - Indarung VI project audit progress- Progress audit of PT Igasar- Follow up of Pending Matters- The principal - RKAP 2018- Evaluate performance in October 2017

21 November - √ - √ - - √ √ √ - Indarung VI project audit progress- Progress audit of PT Igasar- Progress of Bengkulu Packing Plant project

12 Desember - √ √ √ - - √ √ √ - Follow up of Pending Matters- Follow-up of coal procurement according to scenario -3- Follow up evaluation of Indarung VI project task force- Follow up evaluation of PT BSA Task Force team result- Progress of auditing financial report of book year 2017- Evaluate performance in November 2017- RKAP 2018

27 Desember - √ - √ - - √ √ √ - Organizational improvements

Total Attendance

4 29 23 29 21 14 28 24 10

% Attendance 13,79 100 79,31 100 72,41 48,28 96,55 82,76 34,48SI : Prof. Dr. Saldi Isra, SH, MPASu : Ir. Suharto, MMERR : Prof. Eddy R Rasyid, PhD, CAWY : Wiztian Yutri, SH

BW : Ir. Benny Wendry, MMII : Ir. Indrieffouny IndraTHR : Tri Hartono Rianto, SE, MBus, Akt, CAPS : Pudjo Suseno, SEFKW : Ir. Firdaus., MM

Note:Prof. Dr. Saldi Isra, SH, MPA, pursuant to the Shareholders’ Decision Excluding the General Meeting of HoldersThe Company’s shares dated July 24, 2017 were dismissed as the President Commissioner commencing from the date of issuance dateself-accusation on 11 April 2017.Ir. Suharto, MM, in accordance with the Resolutions of Shareholders Excluding the General Meeting of ShareholdersThe Company dated July 24, 2017 was appointed as Acting President Commissioner (Plt) since tJuly 24, 2017Ir. Benni Wendry, MM, confirmed his dismissal as President Director of the Company sinceresignation dated September 15, 2017, pursuant to the Shareholders’ Decree OutsideThe Company’s General Meeting of Shareholders dated January 24, 2018.Ir. Indireffouny Indra, MM pursuant to the Shareholders’ Decision Excluding the General Meeting of HoldersThe Company’s shares dated July 24, 2017 were terminated as Production Director of the Company

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The decisions taken at the meeting of Commissioner of PT Semen Padang have been recorded and well documented in the minutes of the meeting signed by the chairman of the meeting and the President Director of the Company and distributed to all members of the Board of Commissioners attending the meeting or not. The disenting opinion that occurs in the meeting will be included in the minutes of the meeting along with the reasons for disagreements

BOC AREAS OF SUPERVISION IN 2017During 2017, Commissioner of PT Semen Padang has performed its supervisory duties, as follows:1. Supervising the follow-up decisions of the GMS fiscal year

2016 and requesting the Board of Directors explanation regarding the follow-up.

2. Supervising the follow ups to BPK Audit Findings of 2014.3. Supervision over the implementation of the audited

Consolidated Financial Statements and Corporate Budget Reports of the fiscal year of 2017 includes the implementation of an independent auditor service procurement process, in collaboration with the Audit Committee of PT Semen Indonesia Tbk., And recommending the Commissioner of PT Semen Indonesia Tbk.

4. Overseeing and encouraging the Board of Directors to strictly control the acceleration of completion of Indarung VI Project (including by conducting field assessment), improving quality assurance / quality control on each job, communicating with Shareholders and Commissioners of PT Semen Indonesia (Persero) Tbk. as well as with other stakeholders.

5. Monitor and supervise the implementation of strategic capex, including Bengkulu packing plant development

6. Monitor and supervise the implementation of PKBL in 2017.7. Monitor and supervise the implementation of GCG principles

and implementation of Risk Management as well as conduct review and provide opinions / suggestions related to GCG implementation and implementation of risk management in 2016 and Semester I 2017.

8. Monitor and supervise the implementation of the Special Audit of a subsidiary of PT Igasar and advise Shareholders through the Board of Directors to follow up the auditor’s findings / recommendations.

9. Monitor and supervise the evaluation of Task Force Team of PT Bima Sepaja Abadi

10. Conduct field visits in the context of supervision and provide inputs related to increasing marketing and capacity utilization utilization Packing plant in Medan, Lampung and Aceh as well as Bengkulu packing plant project

FOCUS OF SUPERVISIONS COMMISSIONER IN YEAR 2017In accordance with its duties and responsibilities, the Board of Commissioners in 2017 focuses on supervision such as: 1. Overseeing and encouraging management to seek the

development / expansion of the market, given the domestic demand is still sluggish.

2. Monitor and supervise the supply of coal as per the operational requirements of the plant

3. Monitoring the implementation of efficiency through Cost Transformation in an effort to increase competitiveness.

4. Supervising and encouraging the management to strictly control the acceleration of Indarung VI Project development so it can be completed and operated commercially by 2017.

5. Supervising and Monitoring the implementation of GCG and risk management.

6. Supervising and Monitoring the implementation of RKAP 2017.

BOC SUCCESSION PLAN PT Semen Padang has a Commissioner succession policy, one of which includes introduction and orientation program of Commissioners. This policy is the responsibility of the Department of Legal & Governance, Risk, Compliance (GRC) / Management Representative in charge of providing the required materials.

BOC INDUCTION AND ORIENTATION PROGRAM To the members of the Board of Commissioners who are appointed for the first time or those who have served before are given an orientation program / introduction about PT Semen Padang. The implementation of the orientation program is implemented by the Department of Legal & Governance, Risk, Compliance (GRC) / Management Representative. The orientation program materials that have been given to the new Commissioner are as follows: 1. Implementation of GCG principles by PT Semen Padang.2. The description of PT Semen Padang relates to the

objectives, nature and scope of activities, financial and operating performance, strategy, short-term and long-term business plan, competitive position, risk and strategic issues.

3. The figures relate to delegated authority, internal and external audits, internal control systems and policies, including the Audit Committee.

4. Description of the duties and responsibilities of Commissioner and Board of Directors of PT Semen Padang.

5. Orientation program which is held in the form of presentation, meeting, field visit

BOC DECISIONS IN 2017As part of the implementation of its duties and responsibilities, the Board of Commissioners continues to promote the effective implementation of monitoring and supervisory decisions by issuing supervisory decisions. During the year 2017, the decision of the Board of Commissioners is the Commissioners’ Decision on Remuneration of the Dekom Committees.

OPINIONS / RECOMMENDATIONS OF BOC IN 2017 All decisions of the Board of Commissioners and Board of Directors meeting in the Minutes of Meeting are monitored for the follow-up of completion at each subsequent meeting. During 2017, the Board of Commissioners has provided various opinions / suggestions that need to be of concern to the Board of Directors, among others, providing opinions and suggestions

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regarding:1. Periodic monthly and quarterly evaluations of Company

performance followed by providing opinions and suggestions for achieving RKAP targets of 2017.

2. Reviewing/ doing assessment on quarterly performance of Book 2017 Year

3. Reviewing/ doing assessment of the 2016 Fiscal Year Report.

4. Reviewing the Company’s Work Plan and Budget (RKAP) of 2018 which will be submitted by the Board of Directors to Shareholders for approval.

5. Preparating the integration of Blue Print Marketing with the Company’s business activities”

6. Procurement of independent public accountant office services that will audit the Consolidated Financial Statements and PKBL of 2017 year.

7. Amendment of Regulation of PT Semen Padang ’s Pension Fund.

8. IPO plan of PT Semen Padang9. The availability of coal according to the operational needs10. Monitoring the progress, exceeding budget and time and

closing of Indarung VI Project11. Implementation of GCG and Risk Management in 2016 and

First Semester of 2017.12. Communication / coordination with SOE Works and Local

Government.

Completion of Company legal issues with PT. SUPS and PT Pelindo I (Persero); the formation of a joint venture between PT Semen Padang and PT Pelindo I (Persero); Lampung Packing Plant land issues and problem solving related to the Company’s environmental community.

APPROVAL/RECOMMENDATIONS OF BOC IN 2017 In accordance with the provisions of article 11, paragraph 3 of the Company’s Articles of Association, the Board of Directors may perform certain actions or transactions after obtaining approval from the Board of Commissioners. During 2017, the Board of Commissioners after conducting the review and evaluation provides approval / recommendation, among others related to: 1. The establishment and equity of a subsidiary of the

Company between PT Semen Padang and PT Pelindo I2. The write-off and auctions are not productive.3. Management of factory sewage4. Withdrawal time of completion of Indarung VI project5. Additional capex silo cement in Lampung

6. Improved Organizational Structure7. Extension of Non Cash Loan Facility8. Following Joint Borrowing with Cement Indonesia9. Corporate action through project task force activities

Indarung VI10. The smooth operation of the Company11. Capacity of investment budget packing Plant Bengkulu BOC PERFORMANCE ASSESSMENT The Board of Commissioners performs supervisory duties and advises the Directors in managing and managing the Company. The performance of the Board of Commissioners shall be conducted in connection with the performance of such supervisory duties. The performance of the Board of Commissioners is conducted collectively by the Shareholders and Assessment conducted by PT Sinergi Daya Prima. Performance appraisal by shareholders shall be made in the Annual General Meeting of Shareholders’ Responsibility Report on the performance of Commissioners’ and Financial Statements’ duties. For the fiscal year 2017, the GMS will be held around March 2018. The Board of Commissioners will be evaluated through the results of supervision in achieving the performance targets stated in the Company’s Long Term Plan, Work Plan and Budget, Key Performance Indicators (KPI) and follow-up of the previous GMS decisions.

BOC ASSESSMENTIn the assessment, there are 12 indicators of the Commissioners’ assessments as follows:1. Implementing a continuous training / learning program.2. Undertaking a clear division of tasks, authorities and

responsibilities and determine the factors needed to support the execution of the Commissioner’s duties.

3. To approve the RJPP and RKAP draft submitted by the Board of Directors.

4. Providing direction to the Board of Directors on the implementation of the plan and Corporate Policy.

5. Implement supervision of the Board of Directors on the implementation of the plan and Company Policy.

6. Supervising the implementation of management policies of Subsidiaries and Supporting Institutions (APLP).

7. Participating in the nomination of members of the Board of Directors, assess the performance of the Board of Directors (individual and collegial) and propose tantiem / performance incentives in accordance with applicable regulations.

8. Taking action against potential conflict of interest concerning him / her.

9. Monitoring and ensuring that good corporate governance practices have been implemented effectively and sustainably.

10. Conducting effective Board of Commissioners meetings and attending Commissioners meeting in accordance with the provisions of legislation.

All members of the Board of Commissioners have adequate

integrity, competence and reputation

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11. Having a Commissioner’s Secretary to support the Commissioner’s secretarial duties.

12. Having an effective Audit Committee.

BOC PERFORMANCE ASSESSMENTThe policy of determining and appraising the performance of the Board of Commissioners is stipulated in the Key Performance Indicators (KPI) of the Commissioners in accordance with the Regulation of the Minister of State-Owned Enterprise. PER-01 / MBU / 2011

Table of BOC Key Performance Indicators (KPI)

Work Program TargetRealisasi Tahun

2017 1. Monitoring and Advisory Aspect

a. Review/analysis of Company’s performance

12 Times 15 Times

b. BOC meeting• Total meetings 12 Times 29 Times• Attendance in meetings 100% 141%

c. Advice/recommendation to BOD 12 Times 29 Timesd. Monitoring of follow-up of

external audit findings3 Times 4 Times

e. Monitoring of projects 4 Times 17 Timesf. Field visit 4 Times 8 Times

2. Reporting Aspecta. Preparing and submitting Work

Program1 Times 1 Times

b. Preparing and submitting Governance Report

1 Times 1 Times

c. Submitting report/opinion and recommendation to Shareholders/GMS

2 Times 5 Times

d. Submitting report of oversight duties

1 Times 1 Times

3. Dynamics/Others Competence development

1 Times 1 Times

PERFORMANCE ASSESSMENT FOR BOCSUPPORTING COMMITTEES The Board of Commissioners believes that the Audit Committee and the Legal and Environment Development Committee throughout 2017 perform the tasks and responsibilities very well. This is reflected in the performance appraisal of each committee that has carried out the routine work program well. In detail, information about it can be seen in the discussion of the Commissioner’s performance appraisal on the discussion of each committee.

REMUNERATION POLICY COMMISSIONER YEAR 2017 Disclosure of Proposal Procedures up to the Appointment of Commissioners Remuneration The procedure for proposing remuneration of Commissioners is made by the shareholders in this case PT Semen Indonesia Tbk based on the Company’s

performance in the fiscal year. The proposed remuneration is then scheduled and approved in the GMS.

REMUNERATION STRUCTUREAs a follow-up to the annual GMS of 2017, the Shareholders issue Letter No. 1344 / SM-09/50000026/2000 / 07.2017 dated July 17, 2017 regarding Salary / honorarium 2017, Tantiem Year 2016 Board of Directors and Commissioners of PT Semen Padang. The following table of salary / honorarium and tantiem Commissioners and Directors in 2017:\

Table of Salaries/Remuneration and Bonus of BOC and BOD 2017 (in Rupiah)

Position Salary/Month %


50.396.355 45% of the salary ofPresident Director

Commissioner 45.356.720 90% of the salary ofPresident Commissioner

Position Tantiem %


1.510.146.547 45% of the salary ofPresident Director

Commissioner 1.359.058.462 90% of the salary of President Commissioner

PERFORMANCE INDICATOR AND THE LINKAGE BETWEEN REMUNERATION AND THE COMPANY’S PERFORMANCEOne of main indicators in proposing the remuneration package for BOC is the performance achieved by the Company in the fiscal year. Performance growth would haveimpact on the remuneration of BOC.

INDEPENDENT COMMISSIONERS

INDEPENDENT COMMISSIONERS DETERMINATION CRITERIAThe Independent Commissioner in the Company has fulfilled the requirements of Minister of State-Owned Enterprise Regulation no. PER-01 / MBU / 2011 on the Implementation of GCG to State-Owned Enterprises which states that 20% of Commissioners’ composition is independent. The Independent Commissioner is a member of the Board of Commissioners not originating from the Company (not being affiliated with the Company) who are selected in a transparent and independent manner, who have appropriate integrity and competence, who are free from influence of personal interest or other parties interest, and who can act objectively and independently by referring to GCG principles.

INDEPENDENCE STATEMENT OF INDEPENDENT COMMMISSIONER In alignment with GCG practices, BOC already signed Integrity Pact and submitted State Apparatus Wealth Report (LHKPn) and Personal Tax Returns (LP2P) as a commitmentto prevent any conflicting transactions. All members of

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Independent Commissioner act independently and are free of any interference from any parties.

AUDIT COMMITTEE The Audit Committee is an organ of supervision under the Board of Commissioners, whose task is to assist the execution of the duties of the Commissioners, especially in order to maintain the implementation of GCG practices in the Company. Its establishment is intended to maintain corporate governance practices in the Company. This is in line with Permeneg BUMN. PER-12 / MBU / 2012 concerning Supporting Organizations of Commissioners / Supervisory Board of SOEs. PT Semen Padang establishes an Audit Committee assigned and accountable to the Commissioner in performing oversight functions on the financial reporting process including monitoring and evaluating the independence of external auditors. Appointment of Audit Committee is done through Decision Letter of Commissioner no. 90 / DK / kep / IV / 2015 dated 27 April 2015.

Membership of the Audit Committee approved by the Commissioner. The execution of duties and responsibilities are carried out jointly so that they can effectively carry out their duties properly. In practice each member of the Audit Committee has a special focus of attention and ensures that the tasks are well executed.

STRUCTURE AND MEMBERSHIP OF AUDIT COMMITTEEAudit Committee is composed of three people, which includes an independent commissioner who serves as Chairman assisted by 2 independent parties as members. In 2017, the members of the Audit Committee are as follows:1. Prof. Eddy R.Rasyid, PhD. CA

Position : ChairmanPeriod and Term of Office : 1 May 2016 - 30 April 2018

2. Prof. Dr. Syukri LukmanPosition : MemberPeriod and Term of Office : 1 May 2016 - 30 April 2018

3. Dr. Henmaidi ST, M.Eng.Position : MemberPeriod and Term of Office : 1 May 2016 - 30 April 2018

COMPETENCE AND SKILLS OF AUDIT COMMITTEE MEMBERSCompetence and expertise of Audit Committee members of PT Semen Padang for the period of 2017 are available in the profile below :

Prof. Eddy R. Rasyid, PhD, CAProfile is available under BOC section.

Prof. Dr. Drs. Syukri Lukman, MSIndonesian citizen, domiciled in Padang. Born in Pariaman, West Sumatra, February 2, 1952, 64 aged years old.

Indonesian citizen, domiciled in Padang. Born in Pariaman, West Sumatra, February 2, 1952, aged 65 years. Economics degree in Management - University of Andalas Padang 1977, Master of Science Degree in Financial Management at Gadjah Mada University, Yogyakarta, 1984 and Ph.D in Strategic Management, University Sains Malaysia, Malaysia, 2007. His previous employment history includes a career as a lecturer at the Faculty Economics of Andalas University, Master of Management Program (1980 s / d now) and Doctoral Program of Management Faculty of Economics Unand Padang (2012-present Until appointed as Andalas University Professor Rector of Dharma Andalas University (2014-2016) and as Member of Assessment Team Credit Score (Academic Position) Head and Professor Lecturer (Professor) Central Level Directorate General of Higher Education Ministry of Education and Culture, since 2011.

Dr Henmaidi ST, M.Eng.

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Indonesian citizen, domiciled in Padang. Born in Payakumbuh, West Sumatra, May 20, 1970, aged 47 years. Bachelor of Mechanical Engineering - University of Andalas, Master of Computer Integrated Manufacturing and Doctorate in Manufacturing Management - University of New South Wales Australia.His previous work experiences among other Head of Affiliated Institutions of Technology and Industry Faculty of Engineering Andalas University, Secretary of Quality Assurance Board of Andalas University and currently still serves as Deputy Director II of Postgraduate Program of Andalas University. Deputy Director II of the Graduate Program of Andalas University, and now still the head of the Andalas University Character Team.

INDEPENDENCE AND CONCURRENT POSITION OF AUDIT COMMITTEE MEMBERAll members of the Audit Committee of PT Semen Padang are independent and professional parties who do not hold concurrent positions in accordance with the regulations on the implementation of GCG guidelines. The Audit Committee is chaired by Prof. Eddy R.Rasyid, PhD., CA. The Independence of the Audit Committee based on the Audit Committee Charter is as follows:a. Not an employee of the company.b. Have no shares in the company.c. Display independent behavior and thinking.d. Have no conflict of interest with the Company.

Based on Those criteria, all members of the Audit Committee already meet the independent criteria, namely:Independence Aspect ERR SL He

Not an employee of Semen Padang √ √ √

Display independent behaviour and thinking √ √ √

Have no financial relationship with BOC and BOD √ √ √

Have no management relationship in Semen Padang, subsidiaries or affiliates

√ √ √

Have no share ownership in Semen Padang √ √ √

Have no family relationship with BOC, BOD and/or fellow members of Audit Committee

√ √ √

Have no position as political party officer, local government officer √ √ √

ERR = Prof. Eddy R. Rasyid, PhD, CA SL = Prof. Dr. Syukri Lukman, M.S He = Dr.Henmaidi, ST, M, Eng.

DUTIES AND RESPONSIBILITIES OF THE AUDIT COMMITTEEDetermination of duties of the Audit Committee shall be guided by the Regulation of the Minister of State Owned Enterprise. PER-12 / MBU / 2012 concerning the Supporting Organizations of the Commissioners / Supervisory Board of State-Owned Enterprises, as well as the Decision of Commissioners. 92 / DK / Kep / IV / 2016 Regarding Division of Commissioners and Organ Commissioners.In accordance with the Regulation of the Minister of SOEs, the duties and responsibilities of the Audit Committee are as follows:

1. Analyzing and reviewing the Company Long Term Plan (RJPP) coordinates with the Secretary of the Board of Commissioners and provides RJPP related input to the Board of Commissioners;

2. Analyzing and reviewing the Company’s Work Plan and Budget (RKAP) in coordination with the Secretary of the Board of Commissioners, as well as providing RKAP related input to the Board of Commissioners;

3. Ensuring the effectiveness of internal control systems including internal control over Financial Statements;

4. Monitoring the conduct and results of audit conducted by the Internal Auditor and the External Auditor;

AUDIT COMMITTEE GUIDELINES AND CHARTERIn carrying out the duties and responsibilities of the Audit Committee throughout 2017, there is a Working Manual set forth in the Audit Committee Charter which became effective as of April 2007. The document was prepared in accordance with prevailing laws and regulations and was revised in September 2014.The duties of the Audit Committee as set forth in the Charter of the Audit Committee include, among other things, giving opinion to the Board of Commissioners on reports or matters submitted by the Board of Directors to the Commissioners, identifying matters that require the attention of the Commissioner, giving pre- non-audit services to be assigned to independent auditors, overseeing the conduct of quality audits to ensure that audits have been carried out in accordance with ISO 19011 standards, reviewing the adequacy of management efforts in maintaining the effectiveness of internal controls and performing other duties granted by the Commissioners under the terms prevailing laws and regulations

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5. Provide recommendations on the improvement of management control system and its implementation;

6. Providing input and recommendation on the appointment of the public accountant office to the Commissioner to be submitted to the GMS;

7. Identifying matters that require the attention of the Board of Commissioners

8. Coordinating with Internal Auditor and the Audit Committee of Semen Indonesia in performing the task;

9. Reviewing the policies and implementation of risk management includes identification, measurement, monitoring and risk control in coordination with the Commissioner’s Committee on Community and Community Development;

10. Submitting a report to the BOC concerning the conduct of duties including preparing the Mid Year Activities Report and Year End Activities Report.

In addition, the Audit Committee works in coordination with the Secretary of the Board of Commissioners and, if necessary, also coordinates with the Legal and Community Development Committee. Such coordination is necessary to assist the Board of Commissioners in terms of:1. Reviewing the business environment information related to

the company and coordinate with the Secretary of the Board of Commissioners;

2. Reviewing the information from stakeholders in coordination with the Secretary and Legal Committee and Community Development Commissioner;

3. Reviewing the policies and implementation of career HR career The Company coordinates with the Secretary and Committee of Legal and Community Development Commissioner;

4. Reviewing the implementation of procurement policies in coordination with the Secretary and Committee of Legal and Community Development Commissioners;

5. Reviewing the implementation of the company’s quality and service policies and coordinates with the Committee on Law and Community Development of the Board of Commissioners;

6. Reviewing BOC compliance with RJPP and/or RKAP in coordination with the Secretary and Legal and Community Development Committee under Board of Commissioners;

7. Reviewing the request for approval from the Board of Directors in coordination with the Secretary and Legal Committees and Bina Lingkungan of Commissioners;

8. Reviewing the company’s performance should there be any signs of regression in coordination with the Secretary and Legal and Community Development Committee under Board of Commissioners

9. To review / evaluate the performance of the subsidiaries in coordination with the Law Committee and Community Development Board of Commissioners;

10. Reviewing the performance of the Board of Directors in coordination with the Secretary and Legal Committee and Community Development Commissioner;

11. Reviewing the proposed remuneration of the Board of Directors in coordination with the Committee of Law and Community Development Commissioner;

12. Monitoring the effectiveness of remedial efforts by the Board of Directors on the components that are considered to still require improvement in coordination with the Law Commission and Community Development Board of Commissioners;

13. Evaluating the achievement of the performance of each member of the Board of Commissioners in coordination with the Secretary and Legal and Community Development Committee under Board of Commissioners

AUDIT COMMITTEE MEETING POLICY IN 2017Audit Committee PT Semen Padang prepares a meeting plan at least once a month or 12 times a year. The focus of the meeting agenda is in accordance with the duties and functions described in the Audit Committee Charter. In the implementation of such frequency can be adjusted to the needs and according to the agreement of all members of the Audit Committee.

AUDIT COMMITTEE MEETING FREQUENCY AND ATTENDANCE LEVELThroughout 2017, the Audit Committee held regular meetings referring to the Audit Committee Charter. The meetings consist of:1. Internal Audit Committee meeting attended by Audit

Committee Chairman and Members to coordinate the conduct of duties and to address important issues to the Chairman of the Audit Committee.

2. Audit Committee Meetings with Internal Audit to coordinate or discuss important issues related to audit findings by Internal Audit or Audit Committee audit results.

3. Audit Committee – Independent Auditor meetings with either financial statements auditor or PKBL auditor. The meeting is held for the purpose of performing supervisory duties over the conduct of audit by an independent auditor.

4. The coordination meeting with the Audit Committee of SMIG discusses primarily the selection of independent auditors and oversight of audit implementation by independent auditors and discussion of issues on the adoption of new SFAS on the preparation of the Company’s Financial Statements.

5. Meeting with the Board of Directors to discuss any issues arising from the results of supervision and monitoring made by the Audit Committee

During 2017, the Audit Committee has conducted 14 internal meetings with details of attendance rate, date and meeting agenda as follows:

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No Meeting Date

Meeting Agenda Attendance

ER SL He

1 16-Jan-17 Planning of monitoring doing by Audit Committee for 2017

√ √ √

2 13-Feb-17 Discussion of GMS Preparation √ √ √

3 10-Apr-17 Discussion of the assessment of GCG Implementation monitoring

√ √ √

4 05-Mei-17 Company Performance and Monitoring of GMS’

√ √ -

5 19-Jul-17 Coordination Meeting of Monitoring activities and findings of Internal Audit

√ √ √

6 20-Jul-17 Coordination between The head of Semen Padang Internal Audit and the head of Semen Indonesia. and company Performance and Progress

√ √ √

7 07-Agt-17 Coordination of Operational and performance monitoring

√ √ √

8 15-Agt-17 Monitoring the progress of GMS √ √ √

9 12-Sep-17 Coordination of operational anad sales monitoring

√ √ √

10 20-Sep-17 Analysis of Cost Realization and Efficiency Efforts

√ √ √

11 29-Sep-17 Discussing Supervision of the Implementation of Bengkulu and Lampung PP Strategic Investment

√ √ √

12 13-Nov-17 Discussion the progress of Arao of Improvement and the monitoring of Audit commitee

√ - √

13 23-Nov-17 Coordination Meeting of AuditCommittee – Internal Audit

√ - √

14 12-Des-17 Discussion of the Monitoring Result √ √ √

Catatan: ER = Prof. Eddy R. Rasyid, PhD, CA, SL = Prof. Dr. Drs. Syukri Lukman, M.S, HE = Dr. Henmaidi, ST, M. Eng.

The realization of the meetings of the Audit Committee and the attendance of each of the members of the Committee at the meeting during 2017 are as follows:

Types of Meeting Frequence Attendance

ER SL He

Audit Committee Internal Meeting 12 12 12 11

Audit committee coordination meeting with internal audit

10 10 10 10

Supervision meeting for the implementation of audits by independent auditors

- - - -

Audit coordination meeting with the SMIG committee

4 4 4 3

All decisions taken in Audit Committee meetings are recorded and properly documented in the minutes of the Audit Committee meetings. The minutes of the meeting are signed by the chairman of the meeting and distributed to all members of the Audit Committee who attended the meeting or not. The dissenting opinion that occurs in the meeting will be included in the minutes of the meeting along with the reasons for such disagreements.

DUTIES OF THE AUDIT COMMITTEE IN 2017 In performing its duties, the Audit Committee refers to the Charter of the Audit Committee of PT Semen Padang. During 2017, the Audit Committee has conducted, among others, the following activities related to:

1. The independent audit of the Consolidated Financial Statements and Report of Partnership Program and Community Development (PKLBL) in 2017:

• Conducting independent supervision of the audit including reviewing the plan, discussing the progress in the conduct of the audit performed by Public Accountant (KPA) and monitoring the discussions of audit findings with management

• Ensuring that the independent auditor has communicated all matters that need to be communicated based on the auditing standards to management.

• Ensuring that management has discussed the concept of the Consolidated Financial Statements 2017 and PKBL Report 2017 with the independent auditor prior to publication.

• Ensuring that independent auditor has submitted management letter to the management concerning internal control weaknesses and recommendations for improvement

• In cooperation with the Audit Committee of PT Semen Indonesia (Persero) Tbk, performing the selection process of the independent auditors and giving recommendations to the Shareholders for the appointment of such auditor for the Consolidated Financial Statements and Report of Partnership Program and Community Development (PKBL) in fiscal year 2017.

2. Strengthening of internal control:• Conducting regular meetings with the Internal Auditor to

discuss among others the findings of the examination by the Internal Audit.

• Monitoring the follow-up on recommendations made by the auditors in the management letter.

• Reviewing and analyzing the Company’s Internal Control System (SPIP).

• Coordination of monitoring with Internal Audit include:• Reviewing the proposed work program of the Internal Audit

and provide feedback to completion.• Discussing the findings of the Internal Audit examination

and report to the Commissioners significant findings that require the attention of the Commissioner.

• Monitoring the follow-up on the internal audit findings which are significant.

3. As for the coordination of supervision made by SMIG Audit Committee as presented above, the Audit Committee has performed the following:

a. Coordinating the monitoring of the independent auditors work in auditing the Consolidated Financial Statements 2017 and PKBL Report 2017.

b. Discussing the management letter submitted by the independent auditor for the audit of the Consolidated Financial Statements Report of the year book of PKBL 2016.

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c. Discussing the issues of applying the new SFAS in the Financial Statements.

d. Discussing Internal Audit synergy in SMIG.5. Monitoring of the follow-up made by management on the

mandate given by Shareholders submitted in the General Meeting of Shareholders 2017.

6. Reviewing the monthly interim financial report published by management.

7. Carrying out supervisory duties related to the operational and investment management (capex) provided by the Commissioners among them:a.Providing Advice and opinions in the preparation of RKAP

2018.b.Supervising the investments made in fiscal year 2017,

mainly in the construction of Indarung VI project.c.Providing advice and direction related to efforts to increase

efficiency through Cost Transformation.d.Evaluating, monitoring and supervision of the procurement,

storage and use of coal.e.Monitoring the bulk cement sea transportation management

with a focus on the realization of cost transformation efforts in distribution and transportation system.

f.Conducting a review, providing opinions and recommendations on the implementation of GCG of Semen Padang

g.Reviewing , providing opinions and recommendations on Implementation of Risk Management

h.Reviewing , providing opinions and recommendations for optimization efforts

AUDIT COMMITTEE PERFORMANCE ASSESSMENT IN YEAR 2017The Board of Commissioners has evaluated the performance of the Audit Committee during 2017, in accordance with the Audit Committee charter. In 2017, the Board of Commissioners assessed the performance of the Audit Committee as “Good”. based on the following performance:1. Has reviewed and supervised the company’s monthly

financial statements and company budgets that include proposing candidates for independent auditors, supervising supervision over audit implementation, reviewing long-term corporate work plans and review of financial information.

2. Has supervised the recruitment of independent auditor candidates.

3. Has performed a review of the adequacy of management efforts in maintaining the effectiveness of the Company’s Internal Control System (SPIP).

4. Has reviewed the company’s compliance with laws and quality standards related to the company’s activities.

5. Have reviewed the implementation of examination by Internal Auditor.

6. Has performed the specific duties given by the Commissioner.

7. The result of this performance appraisal shall be considered by the Commissioners to re-appoint and / or dismiss the members of the Audit Committee for the next term of office

LEGAL & ENVIRONMENTAL DEVELOPMENT COMMITTEE Based on Law no. 40 Year 2007 Concerning Limited Liability Companies, the Board of Commissioners in performing its supervisory duties may establish committees as required. Semen Padang which is engaged in the cement industry requires a committee that oversees the Company’s policy which does the complexity of legal and environmental issues faced by the Company. The Commissioner considers it necessary to form a committee that is specifically assigned. The committee is the Committee on Law and Community Development.

The establishment of the Legal and Community Development Committee is also intended to assist the Commissioner of PT Semen Padang in performing supervisory duties on the Company’s ranks in the implementation of Good Corporate Governance principles, particularly in relation to the principles of compliance and observance of the rule of law, related to environmental development.

The Committee on Law and Environmental Development of Semen Padang was established Commissioners’ Decision No. 91 / DK / Kep / IV / 2015 dated 27 April 2015 and no. 91 / DK / Kep / VI / 2016 dated June 7, 2016. As an organ within the Board of Commissioners, this committee is responsible for monitoring and assessment, as well as providing reviews and recommendations on Company activities that have legal and environmental implications. In addition, this committee is also given a special assignment and is accountable to the Commissioner.

STRUCTURE AND MEMBERSHIP OF LEGAL AND ENVIRONMENTAL DEVELOPMENTALMembers of the Legal and Community Development Committee have integrity, competence and professionalism in the performance of their duties. The Committee on Law and Community Development was appointed through the Decree of Commissioner. 91 / DK / Kep / IV / 2015.

The membership composition of the Legal and Community Development Committee consists of 3 (three) persons, namely an Independent Commissioner who serves as Chairman and is assisted by 2 (two) independent parties as members. The membership of the Legal and Community Development

In general, the policy of the commissioners is based on good

faith, prudence, responsibility, openness, objective, fair and

consistent

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Committee is as follows:1. Wiztian Yutri, SH

Position : chairmanPeriod and Term of office : 12 Mei 2016 - 1 April 2018

2. H. Basril DjabarPosition :MemberPeriod and Term of office : 12 Mei 2016 - 1 April 2018

3. Prof. Dr. H. Elwi Danil, SH, MHPosition :MemberPeriod and Term of office : 12 Mei 2016 - 1 April 2018

COMPETENCE AND SKILLS OF MEMBERS OF LEGAL AND ENVIRONMENTAL DEVELOPMENTCOMMITTEEThe competence and expertise of the Members of the Legal and Environmental Development Committee of Semen Padang Period of 2017 can be seen in the following brief profile:

Wiztian Yutri, SHProfile is available under BOC section

H. Basril DjabarIndonesian citizen, domiciled in Padang Born in Payakumbuh, West Sumatra, on 21 April 1943, was 74 years old. Bachelor of Laws, Andalas University. His previous employment history included a career as an entrepreneur, General Chief of Singgalang, Commissioner of PT Sarana West Sumatra Venture, active as a Board of Trustees of Andalas University and Chair of Advisory Board of Kadinda West Sumatra

Prof. Dr. H. Elwi Danil, SH, MH

Indonesian citizen, domiciled in Padang. Born in Ombilin, West Sumatra, on June 25, 1960, 57 years old. Bachelor of Law - University of Andalas, Master of Law - University of Indonesia and Doctor of Legal Sciences - Law University of Andalas University, Head of the University of Andalas Padang Law Program, Professor of Legal Studies at Andalas University. In addition, teaching / testing in Doctoral Program of Law Science University of North Sumatra Medan, Doctoral Program of Law Science University Trisakti Jakarta, and Doctoral Program of Law Science University Jayabaya Jakarta

INDEPENDENCE AND DUAL ROLES OF LEGAL COMMITTEE AND COMMUNITY DEVELOPMENT COMMITTEEAll members of the the Legal and Environmental Development Committee are originating from independent parties and thy have no dual roles as prohibited under the regulations concerning GCG implementation.1. The Chairman of the Legal and Environmental Development

Committee, Wiztian Yutri, SH, is a Commissioner.2. H. Basril Djabbar, an entrepreneur who is not associated with

the Company’s activities.3. Prof. Dr. H. Elwi Danil, SH, MM, Lecturer and Professor of the

Faculty of Law, University of Andalas Padang.

In accordance with the Charter of legal and Community Development Committee, the independence criteria of the committee are as follows:1. Not an employee of the company.2. Not having shares in the company.3. Displaying independent behavior and thinking.4. Having no conflict of interest with the Company.

Based on the results of the review of the independence criteria, all members of the Legal and Community Development Committee have fulfilled the following independent criteria:

Independency aspect WY BD ED

Not an employee of PT Semen Padang √ √ √

Displaying independent behavior and thinking.

√ √ √

Not having management relationship in Semen Padang, subsidiaries and affiliates.

√ √ √

Not having family relationship with BOC, BOD, and/or fellow members of Legal andEnvironmental Development Committee.

√ √ √

Not having shareholding relationship in PT Semen Padang

√ √ √

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Has no family relationship with Commissioners, directors and / or fellow members of the audit committee

√ √ √

Does not serve as a political party official, a local government official

√ √ √

Catatan: WY = Wiztian Yutri, SH BD = Basril Djabar ED = Prof. Dr. Elwi Danil, SH, MH

GUIDELINES AND REGULATORY COMMITTEE OF LEGAL AND COMMUNITY COMMITTEEIn performing its duties, responsibilities and functions, the Legal and Community Development Committee shall be equipped with the Work Manual set out in the Board Manual. PD / PGW / 023 dated August 14, 2013 and shall be guided by the Charter of the Law and Community Development Committee in January 2014. The guidelines are prepared under applicable laws and regulations, reviewed regularly and will be reviewed continuously in accordance with the conditions of Semen Padang .

In addition, the duties of the Legal and Environment Development Committee are also regulated under Commissioners’ Decree No. 92 / DK / Kep / VI / 2016 concerning the segregation of dutiesof BOC and BOC organs.

DUTIES AND RESPONSIBILITIES OF THE LEGAL AND COMMUNITY COMMITTEEAs an organ within the Board of Commissioners, the task of the Legal and Community Development Committee is determined through the Decision of Commissioner 92 / DK / Kep / VI / 2016 on the Division of Commissioners and Organ Commissioners. The Legal and Community Development Committee has the duty of assisting the Board of Commissioners in terms of:1. Reviewing and supervising Semen Padang activities related

to legal aspects and community development, both between Semen Padang and the Government at the Central and Regional levels, as well as with the community.

2. Reviewing the compliance of the Board of Directors in implementing legislation and agreements with third parties

3. Reviewing / appraising, recommending and monitoring the implementation of Semen Padang’s activities which contains legal and environmental implications;

4. Carries out the work specially assigned by the Commissioner and is responsible for the assignment to the Commissioner;

5. Conducting coaching relationships on “stakeholders”, among others with the surrounding community, community leaders Padang and West Sumatra.

In addition, the tasks of other Legal and Community Development Committees assist the Board of Commissioners in terms of:1. Review the business environment information related to the

company and coordinate with the Secretary of the Board of Commissioners and the Audit Committee;

2. Reviewing the policies and implementation of risk management in this case in coordination with the Audit

Committee;3. Reviewing the policies and implementation of career HR

career The Company coordinates with the Secretary of Commissioners and Audit Committee;

4. Reviewing the implementation of procurement policies in coordination with the Secretary of the Board of Commissioners and the Audit Committee;

5. Reviewing the compliance of the Board of Directors in implementing RJPP and / or RKAP relating to legal and environmental issues in coordination with the Secretary of Commissioners and Audit Committee.

6. Reviewing and evaluating applications for approval from the Board of Directors to the Commissioners on matters related to legislation and environment development in coordination with the Secretary of the Board of Commissioners and the Audit Committee;

7. On the orders of the Board of Commissioners in collaboration with the Audit Committee to review and evaluate the issue of the Subsidiary related to legal and environmental issues;

8. Together with the Audit Committee, the Board of Directors’ remuneration proposal shall coordinate with the Secretary of the Board of Commissioners to be submitted to the Board of Commissioners;

9. Monitoring the effectiveness of improvement efforts undertaken by the Board of Directors on the components considered to still require improvement in coordination with the Audit Committee;

10. Cooperation with the Audit Committee assists the Board of Commissioners in an effort to improve the performance of each member of the Board of Commissioners

POLICY ON IMPLEMENTATION OF LEGAL AND COMMUNITY COMMITTEE CONDITIONS 2017In 2017, PT Semen Padang’s Legal and Community Development Committee has planned to meet once a month or 12 times a year, with a focus on solving legal problems faced by the Company and Community Development Problems. The number of meetings may change as required if agreed upon by all members of the Legal and Community Development Committee.

FREQUENCY AND ATTENDANCE LEVELS IN THE LEGAL AND COMMUNITY DEVELOPMENT COMMITTEE MEETINGSThe Legal and Community Development Committee held regular meetings referring to the Charter of the Legal and Community Development Committee consisting of regular meetings and meetings with related work units within PT Semen Padang.

During 2017, the Legal and Community Development Committee has conducted meetings with relevant parties 13 times with details of attendance and meeting agenda as follows

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Table of Meeting Agenda and Attendance of Legal and Environmental Development Committee Members in 2017

No Meeting Date

Meeting Agenda Attendance

ER SL He

1 12 Januari - Disscussion of IPO / Right Issue Plan PT Semen Padang- Legal and Community Development issues

√ √ √

2 13 Pebruari -Review Charter of the HBL Committee- Disscussion of IPO / right Issue plan of PT Semen Padang

√ √ √

3 6 Maret -Disscussion of Legal Opinion related to land issues with respect to IPO / Right Issue plan

√ √ √

4 11 April -Disscussion of The legal issue of Indarung VI project with PT WIKON- Disscussion of IPO / Right Issue Plan

√ √ √

5 16 Mei - Disscussion of The legal issue of Indarung VI Project is related to PT Pembangunan Perumahan and PT WIKON

√ √ √

6 13 Juni - Disscussion of Legal issues relatedto timeframe and budget of IndarungVI Project

√ √ √

7 14 Juli - Disscussion of IPO / Right Issue Plan PT Semen Padang- Disscussion of Cooperation of PT Semen Padang, PT Pelindo and PT SUPS Medan- Disscussion of Legal issues related to time and budget over Indarung VI project

√ √ √

8 7 Agustus -Disscussion of The problem of coal supply contracts and administration-Monitoring Special Audit PT Igasar

√ √ √

9 9 Agustus - Disscussion of Legal issues related to cooperation of PT Semen Padang, PT Pelindo and PT SUPS

√ √ √

10 14 September

-Implementation of Rules relating to coal procurement- Cooperation of PT Semen Padang, PT Pelindo and PT SUPS

√ √ √

11 11 Oktober -IPO / Right Issue Plan √ √ √

12 13 Nopember

-Response Decision WBS Procedure- Disscussion of BUMN regulations related to subsidiaries-Problems related to procurement of gypsum- Disscussion of Legal issues related to PT WIKON

√ √ √

13 12 Desember

Disscussion of Legal issues related to PT WIKON

√ √ √

Total 13 13 13

% 100 100 100

Catatan: WY = Wiztian Yutri, SH BD = Basril Djabar ED = Prof. Dr. Elwi Danil, SH, MH

The decisions taken in the meeting of the Legal and Community Development Committee have been recorded and documented well in the minutes of the Committee on Law and Community Development meetings. The minutes of meetings are addressed by the chairman of the meeting and distributed to all members of the Legal and Environmental Committee who attend the meeting or not.

The disenting opinion that occurs in the meeting is included in the minutes of the meeting with the reasons for dissenting opinions

DUTIES OF LEGAL AND ENVIRONMENTALDEVELOPMENT COMMITTEE IN 2017 Implementation of duties and activities that have been done by the Legal and Environmental Development Committee of PT Semen Padang during the year 2017 in assisting the execution of duties Commissioners are as follows:1. Conducting regular meetings and coordination meetings

with relevant departments and agencies in the Company, as well as with law enforcement agencies and “external stakeholders” in discussing and finding solutions to the various legal and environmental issues facing the Company.

2. Evaluating, reviewing and providing legal input related to the formation of a joint venture between PT Semen Padang and PT Pelindo I in Medan

3. Evaluating, reviewing and providing legal input related to legal issues faced by companies in Lampung PP

4. Monitoring the continuation of corporate legal settlement issues with PT Berkala Internasional

5. Evaluating, review and input related to legal issues faced by PT Igasar.

6. Conducting evaluation and examination of issues related to legal issues related to Indarung VI project

7. Evaluating and having issues related to legal issues related to IPO plan of PT Semen Padang

PERFORMANCE ASSESSMENT OF LEGAL AND COMMUNITY DEVELOPMENT IN 2017Performance evaluations are conducted by the Board of Commissioners during 2017, based on the Charter, the Board of Commissioners assessed that the performance of the Legaland Environmental Development Committee has been “Good”.

The result is based on the performance of the Legal and Environmental Development Committee as follows:1. Has reviewed and supervised the activities of PT

Semen Padang related to legal aspects and community development, either between PT Semen Padang with central and local government, as well as with the community.

2. Have reviewed the Board of Directors’ compliance in implementing laws and agreements with third parties.

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3. Has conducted a review / assessment, recommendation and monitoring of the implementation of PT Semen Padang activities in which contains legal and environmental implications.

4. Has performed the work specially assigned by the Commissioner and is responsible for the assignment to the Commissioner.

5. Has been conducting coaching relationships to “stakeholders”, among others, with communities around the company, community leaders Padang and West Sumatra.

The result of the assessment become the consideration for the Commissioner to re-appoint and / or dismiss the members of the Legal and Community Development Committee for the following period.

REMUNERATION OF COMMITTEE MEMBERSIn 2017, members of the Legal and Community Development Committee who do not serve as members of the Board of Commissioners received remuneration consisting of honoraria of Rp19,598,593 per month

NOMINATION AND REMUNERATION COMMITTEE PT Semen Padang has not established a Nomination and Remuneration Committee. Functions, nominations and remuneration in 2017 were implemented directly by Semen Indonesia Group as the Holding company, including the following:

1. Nominating the candidates of the Board of Commissioners and members of the Board of Directors to be appointed in the GMS.

2. Determining the criteria required in selecting the candidates for the Board of Commissioners and Directors, including: Strength of character, inquiring and independent thinking, practical wisdom, sound judgment, technical expertise, special background.

3. Reviewing and providing recommendation for the changes in remuneration system of Commissioners, Directors and Employees so as to reflect the relationship between achieving the Company’s performance targets with the level of reward or punishment received.

4. Reviewing and recommending changes to the provision and use of facilities provided to Commissioners, Directors and Employees to prevent abuse and inefficiency.

BOC SECRETARYOther than being assisted by the committee, the Commissioners are also assisted by the Secretary of the Board of Commissioners for effective conduct of administrative duties. BOC secretary is appointed by the Board of Commissioners’ Decision Letter No. 92 / DK / Kep / VI / 2016. The Secretary of the Board of Commissioners is assigned to provide administrative and secretarial support. In performing secretarial duties, assisted by a secretarial staff.

BRIEF PROFILE OF BOC SECRETARY

Musri Nizar, SE, MM, M.HumIndonesian citizen, domiciled in Jakarta Born in Sei Jambu -Sumatera Barat, August 7, 1957, aged 60 years. Obtained his Bachelor degree in Economics majoring in Economics Development Studies from the Faculty of Economics, University of Andalas Padang in 1982, and Masters Degree in Management from Financial Management from the School of Economics IPWI Jakarta in 1996, Masters Degree in Law in Business Law from the Graduate Program of Law, University of Gadjah Mada Yogyakarta in 2004. He attended non-degree education program in Islamic Financial Analyst at the Faculty of Social and Political Sciences (FISP), University of Indonesia, Jakarta in 2000.

He was appointed as Secretary to the Board of Commissioners of PT Semen Padang with BoC Decree No. 89 / DK / Kep / IV / 2015 with a term of office and tenure from 1 May 2015 to 30 April 2018.

CAREERFrom March 1984 he worked at the Ministry of Industry, and ever served as Head of Various Industrial Agriculture Products, Bureau of Administration of SOE Sales and Industrial 1996 to in 1998, Head of Sub Directorate (Directorate General of Chemical Industry, Agro and Forest Products, Ministry of Industry and Trade 1999-2005, Directorate General of Agro Industry and Chemical Industry Dept. 2005-2010, and last as Director of Basic Inorganic Chemical Industry Directorate General of Base Manufacturing Industry Ministry of Industry 2010-2013). Has been assigned as coordinator / responsible for Fertilizer Industry Revitalization Program 2009-2013, Petrochemical Industry Development in Tangguh West Papua 2012-2013, and become a member of Team / Working Group in various agencies especially related to the utilization of natural gas and coal for industry. He was also assigned as staff of PT Pupuk Iskandar Muda (Persero) Commissioner from 1986-1997. He retired from the Ministry of Industry in September 2013.

DUTIES AND RESPONSIBILITIES OF BOC SECRETARYIn accordance with Decision Letter No. 92 / DK / Kep / VI / 2016, the duties and responsibilities of the Secretary of the Board of Commissioners are as follows:

1. Studying and reviewing the Company Long Term Plan (RJPP) coordinates with the Committees Committees.

2. Studying and reviewing the Work Plan and Corporate Budget (RKAP) coordinates with the Committees Committees.

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3. Drafting the Annual Work Plan and Budget (RKAT) of the Commissioners, in coordination with the Committees Committees

4. Preparing for the meetings including Board Meeting materials.

5. Preparing minutes of meetings of the Board of Commissioners in accordance with the Company’s Articles of Association.

6. Together with the Department of Public Relation and Public Facilities prepare minutes of meetings of Commissioners and Directors.

7. Administering documents of the Board of Commissioners, whether incoming mail, outgoing mail, minutes of meetings or other documents.

8. Drafting the Reporter’s Reports.9. Perform another task from the Commissioner. Other duties

in assisting the Board of Commissioners are related to:• Ensure the Board of Commissioners comply with laws

and regulations and apply GCG principles.• Provide information required by the Board of

Commissioners on a regular basis or at any time if requested.

• Coordinate members of the Committees Committees in order to expedite the Commissioners’ duties.

• As a liaison to the Commissioners with other stakeholders.

10. Reviewing the business environment information related to the company and coordinate with the Committees Committees.

11. Conducting a review of information from stakeholders in coordination with the Committees Committees

12. Conducting a review of the policies and implementation of the Company’s HR career development and coordinate with the Committees Committees.

13. Conducting a review of the Board of Directors’ compliance in implementing RJPP and / or RKAP in coordination with the Committees Committees.

14. Conducting a review / evaluation of the approval application of the Board of Directors in coordination with the Committees Committees.

15. Reviewing of the performance of PT Semen Padang if there are symptoms of performance degradation in coordination with the Committees Committees.

BOC SECRETARY ACTIVITIESBOC Secretary Activities during 2017, covering:1. Developing the schedule and agenda of the Board

of Commissioners’ internal meetings and Board of Commissioners meetings with the Board of Directors in 2017.

2. Preparing the materials for internal meetings of the Board of Commissioners and Board of Commissioners meetings with the Board of Directors and coordinate with the Committees Committees covering the monthly meeting material of book year 2017 and other meeting materials.

3. Preparing the evaluation, have the Board of Commissioner / Shareholder’s evaluation / performance to the Company’s quarterly performance in 2017.

4. Preparing the meeting material and review / assessment of the Board of Commissioners on the performance of the company’s book year 2016 in coordination with the Committees Committees.

5. Preparing the evaluation, review and opinion of the Board of Commissioners to Shareholders on the performance of the Book Year 2016.

6. Preparing the Commissioner’s Work Plan and Annual Budget (RKAT) in 2018 in coordination with the Committees Committees.

7. Preparing the evaluation, reviewing and giving opinion of the Commissioners on the Company’s Work Plan and Budget (RKAP) in 2018, before submitted by the Board of Directors to the Shareholders of PT Semen Padang.

8. Preparing the Annual Report of the Oversight Duties of Board of Commissioners in 2015 in coordination with the committees of the Board of Commissioners

9. The Report of the Implementation of Good Corporate Governance (GCG) by Board of Commissioners 2015 in coordination with the Committees of the Board of Commissioners

10. Preparing letters of the Board of Commissioners to the Board of Directors and any related Shareholders, among others, with the proposed Capex / investment, changes / additional Capex / investment, corporate operations that require opinions,

11. Preparing Commissioners’ Decisions and Rules in coordination with the Commissioners Committees, among others, related to the Decision of the Remuneration of the Committees Committees

12. Preparing the data, information required by the Board of Commissioners

13. Preparing minutes of internal meetings of Commissioners and preparing minutes of meetings of the Board of Commissioners with the Board of Directors in coordination with the Head of Department of Public Relation

14. Documenting the letters, reports, and minutes of the Board of Commissioners meetings.

BOARD OF DIRECTORSThe Board of Directors is responsible and collegial in managing the Company in order to maximize value drivers so as to improve operational profitability with the end result improving the Company’s performance and reputation.

Each member of the Board of Directors conducts and makes decisions in accordance with the division of duties and authorities, however collegial responsibility remains in force.

BOD CRITERIASemen Padang establish the criteria of appointment of theBoard of Directors as follows:1. Those to be appointed as Directors are Indonesian citizens

who have competence relevant to the duties of the Board of Commissioners, possess necessary experience and skills

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to perform the duties, and meet other criteria required by the General Meeting of Shareholders, regulations and the Company’s Articles of Association.

2. The Board of Directors shall not have a blood relation up to the third degree either directly, sideways or semenda with other Commissioners or with other Directors.

3. BOD members shall have no dual roles as BOD or BOC in similar companies, except for BOC position in subsidiaries.

BOD FIT AND PROPER TESTThe BoD’s fit and proper test is conducted through an open fit and proper test process in order to ensure that the candidates of the Board of Directors are free of affiliation or other conflicts of interest, and the fulfillment of the interests of minority shareholders fairly. Subsequently, the elected Directors are appointed and dismissed by the GMS through a transparent process.

Members of the Board of Directors shall be elected and appointed through a GMS, with a term of 5 (five) years. To ensure the integrity and professionalism in the field, all candidates of the Board of Directors shall undergo the selection of fit and proper test by Shareholders, in cooperation with the team of Ministry of State Enterprise.

Table of Bod Fit and Proper TestName Domicile Fit and Proper Test

Benny Wendry* Padang Passed

Tri Hartono Rianto Padang Passed

Pudjo Suseno Padang Passed

Firdaus** Padang Passed

Indriefounny Indra*** Padang Passed

*) Respectfully discharged in accordance with the GMS on January 26, 2018**) Appointed in accordance with the GMS on July 25, 2017***) Respectfully discharged in accordance with the GMS on July 25, 2017

APPOINTMENT AND DISMISSAL THE BOARD OF DIRECTORSThe appointment and dismissal of members of the Board of Directors shall be conducted through the GMS, and have passed the process of fit and proper test based on the prevailing regulations and the provisions of GCG. All members of the Board of Directors posses the required integrity, competence and reputation. Members of the Boards shall terminate if:1. Loss of Indonesian Citizenship.2. Reaching the end of term of office..3. Being declared bankrupt or placed under custodianship by a

court decision.4. Resigned.5. No longer comply with applicable laws and regulations.6. Deceased.7. Dismissed based on the GMS decision.

BOD COMPOSITION AND SEGREGATION OF DUTIES AND RESPONSIBILITIES OF EACH BOD MEMBERComplete Board of Directors of PT Semen Padang until December 31, 2017

Name PositionOther positions

outside the Company

Tenure

Tri Hartono Rianto FinancialDirector

√ 2014 – 2019

Pudjo Suseno CommercialDirector

√ 2014 – 2019

Firdaus ProductionDirector

√ 2017 – 2022

AUTHORITY OF THE BOARD OF DIRECTORSThe Board of Directors has the right to represent the Company in and out of court on all matters and in any event, binds the Company to other parties and other parties with the Company, and carries out all actions, both regarding management or ownership, but with certain restrictions . (Acts of the Board of Directors requiring the written approval of the Board of Commissioners and / or the GMS). (a) the President Director shall have the right and authority to act for and on behalf of the Board of Directors and represent the Company; (b) In the event that the President Director is absent or unavailable for any reason whatsoever, it shall not be proven to a third party, then the Board of Directors shall be represented by 2 (two) Directors together. The members of the Board of Directors of the Company can not represent the Company either inside or outside the Court, if: (a) a case in court between the Company and the member of the Board of Directors concerned; or (b) the relevant member of the Board of Directors has a conflict of interest with the Company.

BOD SUCCESSION POLICYPT Semen Padang has a succession policy of the Board of Directors, one of which includes the introduction and orientation program of members of the Board of Directors. This policy is the responsibility of the Department of Legal & Governance, Risk, Compliance (LGRC) / Management Representative in charge of providing the required materials.

BOD INDUCTION AND ORIENTATION PROGRAMThe responsibility for conducting the orientation program is at the Legal & GRC / MR Department, the introduction to the new Board of Directors is the responsibility of the President Director. If the President Director is absent or the new Board of Directors is the President Director, the introduction program becomes the responsibility of the President Commissioner. Materials introduced to the new Board of Directors include at least the following:1. The introduction to macroeconomics and cement industry.2. Introduction profiles, Vision, Mission, Strategy, Value, and

Corporate Culture and RJPP.3. Introduction of corporate of the Company’s business

processes.

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4. Regulation related to the business activities of SemenPadang.5. Aspects of GCG and Risk Management at PT Semen Padang6. Management Systems of Semen Padang.

DISCLOSURE BOD MANUALA good working relationship between the Board of Commissioners and the Board of Directors is one of the most important things that each of these organs can work according to their respective functions effectively and efficiently. In the framework of effectiveness of the implementation of working relationships, the Board of Directors and the Board of Commissioners have prepared a Working Manual called Board Manual which is determined by mutual agreement between the Board of Directors and the Board of Commissioners.

The Board of Commissioners and the Board of Directors have a high commitment to make the Board Manual a guide in performing the functions, duties, and working relationships between the Board of Commissioners and the Board of Directors so as to be effective. The Manual Board is structured according to the prevailing laws and regulations, and the document is constantly reviewed periodically. The Board Manual has been updated and ratified on September 25, 2015. The Board Manual and Charter of the Board of Directors, among others, govern the following aspects:1. Roles, authorities and obligations of the Board of Directors.2. The segregation of duties of the Board of Directors.3. Directors’ orientation and enhancement program.4. The organ supporting the Board of Directors.

5. Board of Directors Meeting.6. Evaluate the performance of the Board of Directors.7. Governance of relationship between Board of Commissioners

and Board of Directors.

BOD MEETING FREQUENCY AND ATTENDANCE LEVELTo coordinate all activities of the Board of Directors, in order to monitor and anticipate matters that may interfere and threaten PT Semen Padang’s operations, the Board of Directors regularly conducts Internal Meetings of the Board of Directors, and may be held at any time deemed necessary upon request of the President Director or at the proposal of one or more members of the Board of Directors or at the written request of one or more members of the Board of Commissioners. The meeting of the Board of Directors shall be deemed valid and entitled to take a valid and binding decision only if more than one-half of the total number of Directors are present or legally represented in the meeting.During the year 2017, Semen Padang held a Board of Directors meeting involving Echelon I (Ka Department) 12 times discussing various management agenda of the Company, covering aspects such as:1. Achievement of RKAP 2017 and Monthly Performance Report.2. Progress strategic projects and the realization of investment.3. Follow-up internal and external audits.4. Other aspects, such as GCG, Risk Management, Human Resources, Information Systems, CSR and others.The agenda discussed in the Board of Directors meeting can be seen in the following table:

DateBOD Attendance

AgendaBW* THR PS FR** II***

3 Januari √ √ √ - √1. Evaluate the performance of December 20162. Prognosis January 2017

9 Februari √ √ √ - √

1. Monthly performance evaluation & quarterly prognosis2. Indereign Progress VI3. Progress of projects and other investments4. Progress of GMS preparation for fiscal year 20165. Progress mandate GSM, Management letter, & follow-up

findings BPK6. Management review

8 Maret √ √ √ - √

1. Monthly performance evaluation & quarterly prognosis2. Indereign Progress VI3. Progress of projects and other investments4. Progress of GMS preparation for fiscal year 20165. Progress mandate GSM, Management letter, & follow-up

findings BPK

6 April √ √ √ - √

1. Monthly performance evaluation & quarterly prognosis2. Indereign Progress VI3. Progress of projects and other investments4. Progress mandate of the GMS

16 Mei √ √ √ - √


7 Juni √ √ √ - √


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DateBOD Attendance

AgendaBW* THR PS FR** II***

18 Juli √ √ √ - √1. Prognosis2. Direction of the Board of Directors

7 Agustus √ √ √ √ -


12 September √ √ - √ -1. Monthly performance evaluation & quarterly prognosis2. Progress of projects and other investments3. Progress mandate of GMS

6 Oktober - √ √ √ -1. Monthly performance evaluation & quarterly prognosis2. Progress of projects and other investments3. Progress mandate of GMS

15 November - √ √ √ -1. Monthly performance evaluation & quarterly prognosis2. Progress of the project and other investments3. Progress mandate of GMS

11 Desember - √ √ √ -1. Monthly performance evaluation & quarterly prognosis2. Progress of projects and other investments3. Progress Closing mandate of GMS

*) Respectfully discharged in accordance with the GMS on January 26, 2018

**) Appointed in accordance with the GMS on July 25, 20177

***) Respectfully discharged in accordance with the GMS on July 25, 2017

In the minutes of meetings of the Board of Directors and joint meetings also include dissenting opinions, meeting dynamics, previous meeting evaluations, and meeting decisions. The minutes of meetings of the Board of Directors and joint meetings have been submitted to each member of the Board of Directors. Validation of the minutes of the Board of Commissioners’ meetings shall be no later than 5 (five) working days. The original minutes of meetings have been well kept and accessible to each member of the Board of Directors.

Table of Salary/Compensation and Bonus of BOC and BOD in 2017 (in Rupiah)

Position Salary/A Month %

PresidentDirector

111.991.900 100% of salary of PresidentDirector

Director 100.792.710 90% of salary of PresidentDirector

Position Tantiem %

PresidentDirector

1.640.244.764 100% of tantiem of President Director

Director 1.215.864.000 90% of salary of PresidentDirector

PROCUREMENT OF GOODS AND SERVICESPT Semen Padang has procedures and procedures for the procurement of goods and services that are conducted properly and transparently, by applying the principles of GCG and Presidential Decree No. RI. 70 of 2012 on the Second Amendment to Presidential Regulation no. 54 of 2010 concerning Procurement of Government Goods / Services and

Regulation of the Head of LKPP No. 6 of 2012 on Technical Guidelines of Presidential Regulation no. 70 of 2012 on the Second Amendment to Presidential Regulation no. 54 of 2010 on Procurement of Government Goods and Services.MECHANISM OF GOODS AND SERVICE PROCUREMENTPT Semen Padang continues to process the procurement of goods and services that refers to the implementation of good corporate governance as well as various regulations and regulations governing the procurement of goods and services. In its implementation, the Company already has internal guidelines for the procurement of goods and services namely Technical Guidelines on Procurement of Goods and Services. PD / PGD / 011 Rev 03 dated November 27, 2015 and is constantly updated in accordance with the latest regulations governing the procurement of goods and services. Procurement of goods and services is also reinforced by the Decision of the Board of Directors on Approval Authority Arrangement No. HK.00.02 / 049 / SKD / GRCMR / 05.2014 dated 1 May 2015. The company implements several mechanisms for procurement of goods and services, namely:

The Mechanism of Good and Service Procurement

Mechanism Definition

Open Auctions Purchase with demand for offers through mass media. Selection of goods and service providers by inviting at least 3 (three) candidates.

Direct Selection Procurement of goods and services by inviting at least 2 (two) candidates

Direct appointment Procurement of goods and services by direct appointing providers of goods and services without going through auctions or direct elections for procurement with certain criteria.

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The Mechanism of Good and Service Procurement

Mechanism Definition

Direct purchase The purchase of goods or services directly by the user (without involving the Procurement Department) of goods or services in the market.

Joint Purchasing Purchase of goods carried out through negotiations with the Semen Indonesia Group. Technical implementation of joint purchasing arranged separately.

PROCUREMENT OF GOODS AND SERVICES In general, the business process of procurement of goods and services in PT Semen Padang consists of the following stages:1. Self-Estimated Price Estimation (HPS)2. Purchase Requisition (PR)3. Selection of potential suppliers / Bidder list4. The process of determining the Winner5. Creation of Purchase Order6. Acceptance of Goods or Services7. Verify Billing8. Payment

EVALUATION OF SUPPLIERSSupplier evaluation starts from when the prospective supplier signs up to be a potential supplier of PT Semen Padang and after the supplier makes a transaction with the Company. Any prospective supplier who signs up as a supplier of Semen Padang must go through the verification stage of the completeness of the requirements and field review documents.

Performance evaluation of suppliers is made periodically, to all suppliers who transact during the period, in order to obtain supplier performance for supplier learning process, and to support the efficiency and effectiveness of the procurement process.

CORPORATE SECRETARYAlong with the increasingly dynamic business development, in 2017 PT Semen Padang has made changes to the organizational structure as stipulated in the decision of Directors No. SM.02.02 / 056 / KD / DESDM / 05.17 Date June 1, 2017. Based on the decision the function of Corporate Secretary as stated in the Regulation of the Minister of SOEs no. PER 01 / MBU / 2011 is run by the Legal & Governance Risk Compliance / Management Representative (LGRC / MR).

DEPARTMENT OF LEGAL & GOVERNANCE RISK COMPLIANCE/MANAGEMENT REPRESENTATIVE (LGRC/MR)

Organization Structure Department Legal & Governance Risk Compliance / Management Representative

Legal & GRC/MR DepartementAsri Mukhtar

Bureau of Analysis of PerformanceManagementHasfi Rafiq

Analysis and Performance Management

Nasrun Deby Syahputra

Legal BureauMasrizal

Legal StafOxivia

M. Ilham MirzaFauzan Prasetya

GCG & MR BureauGhufron Vebrianto

Risk Management Division

Satrio Rian Bhakti

GCG & Complinace Division

Rika Putri WahyuniContract Evaluation

and Licences DivisionWinterman

Archieve DivisionSyamsuarni

Development of Management System

BureauZulkarnaen

Management System

Development StafAsrining SariReni Sari R

Bureau of Development &

Evaluation of APLPAndri Andi

APLP Development & Evaluation Staff

Riki AzwarDasril

AlexanderDirgantara

Echelon I

Echelon II

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the Company’s activities, including GMS documents, Minutes of Board of Directors Meetings, Minutes of Joint Meetings, Special Lists and related documents.

3. Coordinating the development and implementation of GCG and Risk Management practices and ensure that the Annual Report of Semen Padang has included the implementation of GCG and Risk Management.

4. Ensuring the Company’s compliance with regulations and providing legal advice.

5. Providing recommendation for improving company performance to management through analysis conducted by the Bureau of Performance Analysis and Management.

6. Coordinating and facilitating the Subsidiaries Company and Affiliation with Semen Padang.

b. External:1. Coordinating the execution of strategies and synergy

policy in GRC/MR with Semen Indonesia Group.2. Implementing the communication strategy by becoming

the coordinator in the publication of the Annual Report.3. On behalf of the Board of Directors, representing the BOD

to interact with parties in accordance with the assignment and predefined policies.

In performing its duties, the Department of Legal & GRC / MR has a work guide as stipulated in the job description, which contains the following aspects of task, authority and responsibilities:1. Establishing corporate risk management.2. Managing company archives.3. Preparing and managing the Company’s compliance with

laws and regulations and providing legal advice.4. Implementing the SIMO (Strategic Initiative Management

Officer) function, which includes formulating strategies and defining the company’s strategic objectives.

5. Reviewing the effectiveness of the management system, as well as coordinate the preparation, implementation and follow-up of management reviews.

6. Supervising, monitoring and evaluating the performance of the management of the Subsidiary and Supporting Institutions (APLP).

7. Analyzing the company’s performance and providing suggestions and recommendations for the Company’s improvement/development to management.

DESCRIPTION OF DUTIES OF DEPARTMENT OFLEGAL & GRC/MR IN 2017During 2017, the Legal & GRC / MR Department has been conducting activities and submitting the Legal & GRC / MR Department Report in accordance with segregated divisions in the organizational structure including:1. The Bureau of GCG and Risk Management ensures that

corporate governance and risk management in the Company have been in compliance with prevailing regulations.

In the organizational structure of Semen Padang, the Legal Department and GRC / MR are directly responsible to the President Director. To perform its functions and roles, the Legal & GRC / MR Department includes the GCG and Risk Management Bureau, Legal Bureau, Performance Analysis and Management Bureau, Management System Management Bureau, Development and Evaluation Bureau of Subsidiaries and Supporting Institutions.

PROFILE OF HEAD OF DEPARTMENT OF LEGAL & GRC/MRHead of Department GRC / MR Semen Padang held by Ir. Asri Mukhtar, MM who is directly responsible to the President Director based on the decision of the Board of Directors SM.02.02 / 056 / KD / DESDM / 05.17 Date June 1, 2017

Brief Profile of Head of Legal & GRC / MR Department

Ir. Asri Mukhtar, MMIndonesian citizen, domiciled in Padang Born in Pariaman, January 23, 1966, aged 51 years.

Graduated from Electrical Engineering Department in Bandung Institute of Technology (1989) and Master of Management at Gadjah Mada University (2001), started his career as an orientation staff at the R & D Department, has served as Head of Engineering Design Staff, Head of Electricity & Instrument Construction Project Indarung V, Technical Department Staff, Head of Department of Treasury, Head of Distribution & Transportation Department, Head of Sales Department and commencing from 12 January 2015 until now serving as Head of Dept. Legal & GRC / MR.

DUTIES AND RESPONSIBILITIES OF LEGAL DEPARTMENT & GRC / MR The duties and responsibilities of the Legal & GRC / MR Department are as follows:a. Internal:

1. The Compliance Officer is responsible for monitoring the implementation of GCG, handling legal issues and managing corporate risk.

2. Conducting activities in secretarial and administrative fields within the Board of Directors and the Company and managing and maintaining documents related to

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2. The Management System Development Bureau verifies the existing document system in Semen Padang.

3. The Bureau of Development and Evaluation of Subsidiary Institutions provides recommendations to management concerning the performance of Subsidiaries institution.

4. Legal Bureau ensures business compliance with laws and regulations

5. Performance Management Analysis Bureau analyzes the Company’s performance and prepares recommendations concerning the Company’s development to management

PERFORMANCE EVALUATION OF LEGAL & GRC / MR DEPARTMENTThe performance of the Legal & GRC / MR Department and the results of execution of duties are reported monthly to the Board of Directors. The Board of Directors shall evaluate each semester at the Company Working Meeting to ensure the functions of the Corporate Secretary listed in the SOE Minister Regulation no. PER 01 / MBU / 2011 is held in quality and effective manner.

COMPETENCE DEVELOPMENT OF DEPT. LEGAL & GRC/MRTo effectively follow the progress of the function and role of the Legal & GRC/MR Department, PT Semen Padang has facilitated the employees of the Department of Legal & GRC / MR to participate in the following training:

Table of Competence Development of Legal & GRC/MR Department

Training Participation Time and venue

1. Enterprise Risk Management ( ERM ISO 31000 )

Legal & GRC/MRDepartment

Padang17 January 2017

2. ISO 17025 Development of management System Bureau

Padang30 - 31 March 2017

3. Certified Strategy Execution Proffesional

Bureau of Analysis of PerformanceManagementa

Jakarta24 March 2017

4. Manajemen Energi ISO 50001 : 2011

Development of management System Bureau

Padang10-12 April 2017

5. Balanced Score Card & Performance Indikator

Development of management System Bureau

Padang25-27 April 2017

6. Bussines Continuity Management

GCG & MR Bureau Padang11-12 Juli 2017

7. Perpajakan Brevet A dan Brevet B Terpadu

Legal Bureau Jakarta1 Agustus 2017

8. Innovative & Creative Thinking Skill

Bureau ofDevelopment &Evaluation of APLP

Padang16-17 November

2017

THE COMPANY’S PUBLISHED INFORMATIONFor the purpose of transparency of corporate information, during 2017 has been publishing information continuously both through internal media and external media with the recapitulation of published news as follows:

No. Month

Total Company’s

related News in Media

(Appearance)

Update of Website

(frequency)

Press Conference

1. Januari 171 5 4

2. Februari 191 5 2

3. Maret 170 9 3

4. April 193 5 5

5. Mei 230 11 6

6. Juni 122 2 2

7. Juli 192 12 4

8. Agustus 183 13 4

9. September 161 3 3

10. Oktober 169 4 4

11. November 114 4 5

12. Desember 80 6 4

INTERNAL AUDIT Internal Audit is a work unit established within an organization that provides independent and objective assurance and consultancy services designed to add value and improve operations of PT Semen Padang. Internal Audit helps the Company achieve its objectives by taking a systematic and disciplined approach to evaluate and improve the effectiveness of risk management and internal control. Therefore, Internal Audit supports the Company by conducting analysis, assessment, recommendation, consultation and conveying information about the activity being reviewed.

STRUCTURE AND POSITION OF INTERNAL AUDIT The Chairman of the Internal Audit is appointed and dismissed by the President Director. The Internal Audit function is immediately reporting to the President Director, as well as coordinating and partnering with the Audit Committee and external auditors. In order to generate impartial and prejudicial opinions, the purpose of the authority and responsibility of the Internal Audit shall be defined formally and in writing within an Internal Audit Charter.

The Head of Internal Audit as the coordinator of the Auditors (Senior / Junior Auditor) is divided into Bureaus assigned in accordance with their fields to conduct audit planning and development, conducting audits, evaluation and monitoring of

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assignment results, which also reviews business processes as well other activities deemed necessary. PROFILE OF THE INTERNAL AUDIT HEADThe Head of Internal Audit is held by Oktoweri ST who is directly responsible to the President Director based on the decision of Directors No. SM.02.02 / 056 / KD / DESDM / 05.17 Date June 1, 2017.

BRIEF PROFILE OF INTERNAL AUDIT HEAD.

Oktoweri, ST

Indonesian citizen, domiciled in Padang Born in Talawi, October 6, 1968, aged 49 years. Graduated from Industrial Engineering at Bandung Institute of Technology, started his career as an orientation staff in the HR Department, has served as Chief of Personnel Bureau, Head of Bureau of Directors, Head of GCG & Risk Management, Head of Human Resources and Director of Pensiun Semen Padang , Head of Internal Audit PT Semen Padang From 2016 to 2017.

Education and Training Head of Internal Audit

No. Types of Training Training Provider Location

1. Internal Audit Sertification Semen Padang Padang,

2. Auditing for Audit Commitee Ernst & Young Jakarta

3. ISO 585001 Mangement Asset

Semen Padang Padang

4. Risk Management Semen Padang Padang

INTERNAL AUDIT CHARTERIn carrying out its duties and responsibilities, Internal Audit refers to the Internal Audit Charter. The Charter is approved and approved by the Board of Directors and Commissioners of Semen Padang as Chairman of the Audit Committee, and is known by PT Semen Indonesia (Persero) Tbk as the majority shareholder.

QUANTITY AND QUALITY OF INTERNAL AUDITORSThe Internal Audit Unit is led by the Head of Internal Audit who is assisted by 3 (three) heads of bureaus and staff of 23 (twenty

three) persons. To meet the qualifications and competencies, the Internal Audit auditors are certified as financial and operational auditors and management systems.

Auditors assigned to the Internal Audit must:1. Possess the technical audit skills obtained from continuing

education such as certification, training, seminars and others; constantly follow and understand the latest development of auditing standards, procedures and methods and also the Company’s business.

2. Have good track record, reliable integrity, and professional, independent, honest, and objective behavior in the conduct of their duties

3. Posses knowledge and experience on technical audit and other disciplines relevant to their field of duty.

4. Have adequate knowledge of risks and controls related to key information technology and existing technology-based audit techniques to carry out the work provided. However, not all internal auditors are expected to have such expertise as the Internal Auditor whose primary responsibility is an information technology audit.

5. Posses the knowledge of the laws and regulations in the field of capital market and other related legislation.

6. Posses the ability to interact and communicate both orally and in writing effectively.

7. Have sufficient knowledge to evaluate the risk of fraud or other matters managed by Semen Padang, but it is not expected to have a skill level of an expert whose primary responsibility is to detect and investigate fraud.

8. Meet the professional skills and expertise needed to establish:• The level of materiality or significance of the problem,• The level of reliability and effectiveness of internal controls,• Audit costs are compared to the potential benefits gained• Standards of operation acceptable and complied with by

the implementer.

9. Compulsory to comply with professional standards issued by the Internal Audit Association.

10. Understand its role as Internal Auditor and willing to comply with the Internal Audit Code and Code of Conduct Standards.

11. Understand the principles of Good Corporate Governance and risk management.

AUDITOR COMPETENCE AND TRAININGCOMPLIANCEFor certification of financial and operational auditors, PT Semen Padang has engaged auditors in training held by the Center for Accounting and Finance Development (PPAK) under the name of Internal Auditor Professional Certification (PIA) and training conducted by Yayasan Pendidikan Internal Audit (YPIA) under the name Qualified Internal Auditor (QIA) certification expertise, as well as for management system auditors attending training organized by Naville Clark certification body.

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Realization of Internal Audit Training in 2017No Training and sertification Attendant

1 API Spec Q1 9th ed. Fundamental Training Zulfahmi

2 Audit of Construction Works Wempi Kurniawan, Ferry Fuadi

3 CFO (Preparation) Zulfahmi

4 Accounting Workshop - Audit (Implementation of SFAS 70) Mareza Harlan

5 Marketing Research & Intelligence Ferry Fuadi, Denny Hilman, Romi Rahman

6 Implementation of Environmental Audit at Cement Plant Merisa Putri

7 Inauguration of PIA (PPAK) Merisa Putri

8 Report Writing Effective Audit Juli Fernando

9 Refreshment Management ISO 9001: 2015 & ISO 14001: 2015

Ulfatmi

10 Social Service Office (NDO) Oktoweri, Mareza Harlan, Zulfahmi, Jamaluddin, Zalman

11 Socialization of Company Asset Insurance Aisyah Nur

12 Socialization of KM Share New Jamaluddin

13 Socialization of the submission of SPP WP OP Year 2016 e-Filling

Denny Hilman, Nailul Hamdhani

14 Internal Audit Training Tk. Basic II (YPIA) Mareza Harlan, Zulfahmi

15 Internal Audit Training Tk. Advanced I (YPIA) Anton Syofnevil, Romi Rahman, Aulia Kurnia Yunas

16 Training of Cheating Audit (PPAK) Merisa Putri

17 Training of K3 Mining Management System Audit Denny Hilman, Nailul Hamdhani

18 Training Business Continuity Management Mareza Harlan, Zulfahmi, Wempi Kurniawan, Zalman, Elisa Maris Heru

19 Tax Policy Training Post Tax Amnesty Oktoweri, Zulfahmi

20 Communication Training & Audit Psychology (PPAK) Jamaluddin, Ferry Fuadi

21 Energy Management Training ISO 50001: 2011 (Awareness) Zulfahmi, Elisa Maris Heru

22 Training Marketing for non Marketer Wempi Kurniawan

23 Training of Audit Task Management (PPAK) Denny Hilman

24 Personal Development Training Denny Hilman

25 Training of Current Financial Statements under IFRS Convergence

Mareza Harlan

26 Training SMKP Batch 2 Elisa Maris Heru, Denny Hilman, Nailul Hamdhani

27 Workshop on National Corporate Financial Management System Policy

Oktoweri

28 Quality Assurance Review Workshop Oktoweri, Mareza Harlan, Zulfahmi,Wempi Kurniawan, Jamaluddin

ROLES AND RESPONSIBILITIES OF INTERNAL AUDITORInternal Audit Roles and responsibilities in accordance with Internal Audit Charter are as follows:a. Developing and implementing the Annual Internal Audit Work

Plan includes examination and assessment of the efficiency and effectiveness of finance, accounting, operations, human resources, procurement, marketing, and other activities.

b. Provide suggestions for improvements and objective information on activities examined at all levels of management.

c. Monitoring, analyzing and reporting on the implementation of recommended improvement follow-up.

d. Develop a quality assurance program (quality assurance) of internal audit activities undertaken.

e. Review and / or audit corporate financial reports periodically.f. Carry out duties as counterpart in coordinating with external

auditors and other oversight institutions.g. Conduct a special inspection, if necessary.

h. Conducting advisory consulting services, generally organized on the specific request of the client. The nature and scope of consultancy services is based on an agreement with the client. In the implementation of consulting services, Internal Audit should always maintain independence, objectivity and not accept / take over management responsibilities. The management responsibilities include but are not limited to:• Client operations.• Any decision-making by the client based on the results of

consultation activities.i. Conduct analysis, assessment, recommendation,

consultation and report submission of all activities undertaken in accordance with:• Internal Audit Professional Standards,• International Professional Practices Framework (IPPF),• Applicable laws, rules and regulations,• Other rules that bind the Company such as Management

Systems, Directors Decisions, Manuals, Work Instructions.

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j. Make Report of Inspection Result and submit the report to the President Director and Commissioner cq. Audit Committee.

k. Implementing Internal Audit of Semen Padang Management System (SMSP).

l. Coordinate, cooperate and work in partnership with the Audit Committee in performing their respective roles and functions in accordance with applicable regulations

REALIZATION OF AUDIT No Audit Topics Status

A. Implementation of RKIA Audit

1 Financial Accounting Audit Done

2 HR Audit Done

3 CSR Audit Done

4 Marketing Audit Done

5 Maintenance Production Audits Done

6 Procurement Audit Done

7 Non-Strategic Capex Audit Inprogress

8 Supply & Petty Cash Option TW II, IV Done

9 Analytical Review TW I, TW II, TW III Done

10 ICoFR TW I, II, III Done

11 Management System Audit Semester I Done

12 Management System Audit Semester II Done

13 Project Audit Bengkulu Inprogress

B. Implementation of Non-RKIA Audit

1 Material Storage at Work Unit Location Done

2 Supply & Petty Cash Option TW I, TW III Done

3 K3 Mining Management System Audit Done

4 Observation of Bulk Cement Seals Done

C. Implementation of RKIA Non-Audit

1 Internal Audit TL Monitoring Year 2016 Done

2 Monitoring Audit BPK RI Th 2015 Done

3 Watching / Watching Bulk Material Opname

Done

4 Counterpart Audit of Financial Statements Done

5 Counterpart Auditor KPPK Done

6 Counterpart Audit Financial Report Indarung Project VI

Done

7 Counterpart Audit Review of Indarung VIProject (PWC)

Done

8 Counterpart Audit of Indarung VI Project (IA SI)

Done

9 Counterpart Quality Assurance Review (QAR)

Done

10 Counterpart Internal Control System (SPIP)

Inprogress

AUDIT FOLLOW UP The follow-up is reported by the Auditee with supporting evidence to the Internal Audit Head, which is then forwarded to the audit team, then the follow-up is declared (closed) or “finished up” after being verified by the audit team and monitoring staff. The unfinished follow-up will be written back by the monitoring staff. Slightly different from the internal audit of Semen Padang Management System, the follow-up completion process is done within the following timeframe:• Major findings completed within 30 working days.• Minor findings completed within 45 working days

Observations were completed until the next audit.

INTERNAL DEVIATIONSDuring 2017, PT Semen Padang consistently conducted socialization on fraud which includes gratification, abuse of authority and whistle blowing system. So the positive impact that the company gets is the compliance of all the Company’s employees.

EXTERNAL AUDITORSIn ensuring the integrity of financial statement presentation to shareholders and all stakeholders, PT Semen Padang uses the services of an external auditor. The appointment of an external auditor to audit the Company’s Financial Statements is determined through the Annual GMS based on recommendations from the Board of Commissioners and the Audit Committee. The External Auditor is responsible for submitting an opinion on the compliance of the audited Financial Statement of the Company against the generally accepted Financial Accounting Standards.

THE APPOINTMENT OF THE EXTERNAL AUDITOR Based on the resolution of the Annual General Meeting of Shareholders dated March 30, 2017 related to the approval of the appointment of Public Accounting Firm (KAP) which will conduct a general audit of the Company’s Financial Report and audit the Financial Report of Partnership and Community Development Program for the Fiscal Year 2017, Public Accounting Firm Satrio Bing Eny, (a member firm of Deloitte Touche Tohmatsu Limited) to conduct the General Audit of Consolidated Financial Statement of PT Semen Padang and the General Audit of Financial Report on the Use of Partnership and Community Development Fund (PKBL) for book year 2017. External auditor the designated party may not have a conflict of interest with the Company’s organs, and is responsible for expressing opinions on compliance with applicable accounting standards. Financial Statement Audit of PT Semen Padang in 2014, 2015, 2016 and 2017 is performed by the Accountant and Firm as follows:

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Fical Year Accountant External Audit Audit Scope Audit Opinion

2017 Xenia AyubudhiIzin No. AP 332/PMH/2016

Satrio Bing Eny & Rekan (member of Deloitte)

Consolidated Financial StatementsPKBL Fund Annual Report and Approved Procedures

Fair in all material things

2016 Muhammad Irfan Izin No. AP.0565

Osman Bing Sagtrio dan Eny (member of Deloitte)











Tabel of Audit Fees from 2014 s/d 2017 (In Million Rupiah)

Types of AuditFor the years that ended 31 Desember

2014 2015 2016 2017

General audit cost of financial statements 1.320 1.320 1.360,8 1.390,8

Audit fee of PKBL annual report 195 204,75 215,78 219,78

Note:The annual audit fee of PKBL’s 2014, 2015, 2016 and 2017 statements includes fees for AUP (Agreed Upon Procedure).

FOLLOW UP THE EXTERNAL AUDITOR FINDINGSThe development of KAP findings in the last 4 (four) years and PT Semen Padang’s follow up on external audit findings can be seen in the following table:

Tahun Buku Jumlah temuan KAP Progres tindak lanjut

2017 0 -

2016 1 70%

2015 0 -

2014 1 100%

RISK MANAGEMENT REPORTPT Semen Padang continuously develops and enhances the comprehensive framework of the risk management system to protect the Company from risks that negatively impact on achievement of objectives. Risk management is done in anticipation of possible financial pressures and protection against serious losses. each unit in the company shall identify, measure, monitor and report on risks that may potentially cause non-compliance with the Company’s objectives.

The application of risk management can increase shareholder value, as well as provide a comprehensive overview to stakeholders as well as management of the Company about potential opportunities and losses, thus the decision makers and internal policy makers have the availability of data and information on the Company’s performance, enabling more effective and efficient decision-making.

PROFILE OF HEAD OF GCG AND RISKMANAGEMENT

Ghufron Vebrianto Gunawan, ST MM

HEAD OF GCG AND RISK MANAGEMENT BUREAUIndonesian citizen, domiciled in Padang. Born in Pamekasan on 10 March 1978, 39 years old. Completed his undergraduate education at the Institute of Technology November 10, Surabaya (2001) and Master of Management at UPI YPTK year (2013). He began his career as a staff in the Department of Supply (2005-2009), served as head of spare parts and spare parts (2009-2013), staff of the Bureau of Performance Management Analysis (2013-2016) and head of the GCG & Risk Management Bureau (2016-present ).

THE FRAMEWORK OF RISK MANAGEMENTEnterprise Risk Management (ERM) is a comprehensive risk management approach in enhancing the Company’s ability to manage uncertainty, and maximize opportunities. ERM implementation for all functions within all levels of

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the organization adapts to ISO 31000 standard on Risk Management. Some of the implementation implemented in 2017 as evidence of management commitment of PT Semen Padang in the implementation of Risk Management are:1. Following 32 recommendations of self assessment result

of Risk Maturity Level (RML) in 2016 in collaboration with Internal Audit and accompanied by BPKP Representative of West Sumatera Province;

2. Conducting assessment of Risk Maturity Level (RML) in 2017 by BPKP West Sumatra;

3. Improving the web-based risk management application in cooperation with the information system unit;

4. Mapping the ISO 31000 training to all risk owners in the work unit

5. Conduct risk identification / risk register mapping6. Risk by all work units to be formulated into Corporate Risk

mapping and controlled by corporation. Continuous Risk Management and Risk Clinic Program to assess the progress of risk management implementation and ensure that risks identified, updating risk registers and risk mapping for monitoring controls are well implemented;

7. Conducting risk assessment of procurement contracts of goods and services exceeding Rp 5 billion.

RISK MANAGEMENT IMPLEMENTATION POLICYThe implementation of risk management in Semen Padang refers to ISO 31000 as set forth in the Risk Management Technical Guidelines and other provisions and is supported by System Operating Procedure (SOP) at the implementation level.

In ensuring an effective risk management mechanism, in addition to establishing clear functions, the Company constantly improves the quality of risk management procedures, guidelines and manuals. PT Semen Padang has risk management policies and procedures, including:1. Corporate Policy No. KB / PSM / 001 Revision 052. Risk Management Technical Guideline No. PD / HKM / 0053. SKD of Risk Management Organization 20154. Contract Risk Arrangement Procedure PR / PGW / 3055. Risk Assessment and Control Procedure No. PR / GCG / 176

RISK MAPPING OF PT SEMEN PADANG IN 2017 In order to minimize the risks occurring in PT Semen Padang, all of the work unit risk in PT Semen Padang is identified by risk owner using online application. Use of this application for monitoring risk mitigation of any identified risks. Here risk mapping PT Semen Padang 2017:

Table of The Risk Mapping of Semen Padang In 2017No. Unit Status

Risk level

Low Medium High Extreme

1. Internal Audit Approved 7 6 0 02. Mining Department Approved 2 15 3 03. Production II/III Department Approved 1 8 5 04. Communication & Public Facilities Department Approved 10 8 0 25. Legal & GRC/MR Department Approved 14 3 2 06. Sales Department Approved 10 4 1 07. Distribution & Transportation Department Approved 5 7 4 58. Production IV Department Approved 46 80 35 09. Procurement Department Approved 8 7 7 3

10. Plant Engineering Department Approved 20 25 2 011. Quality Assurance & SHE Department Approved 13 7 2 012. Accounting & Finance Department Approved 4 71 13 113. Human Resources Department Approved 8 30 5 014. Production V Department Approved 3 12 33 0

Total 151 283 112 11

RISKS ENCOUNTERED AND RISKMANAGEMENT EFFORTSThe risks faced by PT Semen Padang in conducting business activities and the Company’s efforts to mitigate the risks include the following:

Strategic RiskThe strategic risk is related to the delay in project implementation. This risk management effort is to plan and provide the resources needed for the smooth implementation of the project.

Financial RiskFinancial risk is related to the increase of non-performing receivables. The Company undertakes mitigation efforts by conducting an optimal and comprehensive analysis in order to minimize the potential for future debts.

Legal RiskLegal risk is a risk associated with lawsuits. In mitigating these risks, the Company continues to seek to comply fully and comply with applicable laws and regulations.

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Social RiskSocial risk is a risk associated with the demands of the community around the plant site. By implementing and optimizing the CSR program, it is expected to embrace the community and maintain a harmonious relationship in a sustainable manner.

MONITORING OF RISK MANAGEMENTTo ensure effective risk management, it is necessary to monitor the implementation of risk management in order to:• Formulation of context• Identification• Analysis• Evaluation• Control• Monitoring and Review

EVALUATION TO THE EFFECTIVENESS OF THE RISK MANAGEMENTSemen Padang always identifies and evaluates the risks made through each risk owner. The Board of Directors together with the Internal Audit and the Commissioners represented by the Audit Committee shall review and formulate necessary management and mitigation strategies. In 2017, the evaluation of the Company’s risk management system has been effective. The results of the study are recommendations that must be followed up in better improvement of Semen Padang risk management system in the future.

MATURITY LEVEL ASSESSMENT (REVIEW RESULTS OF RISK MANAGEMENT SYSTEM IN 2017)Assessment Risk Maturity Level is done periodically, ie once in two years executed by External Assessor. For evaluation of the follow-up assessment results are carried out by the Internal Audit called self assessment. At the end of 2017 an assessment is conducted for book year 2017. The assessment of risk maturity level of 2017 is as follows:

Table of RML Assessment ResultsNo. Component

Max Maturity

Achievement

2017

1 Communication and Consultation 5,00 4,48

2 Setting Context 5,00 4,92

3 Risk Identification 5,00 3,97

4 Risk Analysis 5,00 3,93

5 Risk Evaluation 5,00 4,50

6 Risk Management 5,00 3,45

7 Monitoring and review 5,00 4,00

Maturity Level 5,00 4,18

INTERNAL CONTROL SYSTEMInternal control system is a system consisting of organizational structure, methods and measures to maintain and direct the way the company to move in accordance with corporate goals and programs and encourage efficiency by complying with management policies.

In order to implement Good Corporate Governance according to the principles of transparency, accountability, responsibility, independency, and fairness, the Board of Directors of PT Semen Padang stipulates the implementation of the System Internal Control over all activities of the Company. Starting from the planning, implementation, supervision to accountability in an orderly, controlled, efficient and effective manner, so as to give confidence for all stakeholders that the organization of the company’s activities to achieve goals have been done efficiently and effectively, reporting financial management reliably, securing company assets and encouraging compliance with laws and regulations.

FINANCIAL AND OPERATIONAL CONTROL SYSTEMInternal Control System of PT Semen Padang is implemented based on the rules and policies and standard of operational procedures which are developed and approved by the management, among others: 1. Detailed organizational structure, whether corporate

organizational structure (corporate) or per department / division that shows the level of position as well as the duties and authority of each employee.

2. Rules and policies that continue to grow in accordance with the conditions of the Company.

3. Determination and enforcement of Standard Operating Procedures (Standard Operating Procedures).

CONFORMITY OF INTERNAL CONTROL WITH INTERNATIONALLY RECOGNIZED FRAMEWORKThe Internal Control Policy refers to the internal control framework of the Committe of Sponsoring Organizations of the Treadway Commission (COSO). The COSO framework sees internal control as an integral part of PT Semen Padang’s business processes. The COSO Internal Control System Framework consists of five elements:1. Supervision by management and establishment of control

environment2. Risk identification and assessment (risk assessment)3. Activity control and segregation of functions (control

activities)4. Accounting system, information and communication

(information and communication)

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EVALUATION AND RESULT OF REVIEW IMPLEMENTATION OF INTERNAL CONTROL SYSTEMPT Semen Padang has conducted a self assessment assessment of the implementation of Internal Control System of PT Semen Padang. Based on the evaluation conducted on 29 November 2017, it is concluded that the condition of the

Company’s Internal Control System (SPIP) reaches the value of 87.02 or is at a very effective compliance level of internal control has been integrated and allows rapid changes according to the demands of organizational and operational change .

Evaluation of the implementation of Internal Control System is done by using information gathering method through document review, questionnaire submission, interview, and observation. The results of the assessment show the level of effectiveness of the implementation of the Internal Control System in the

Company which is categorized into 5 (five) categories with the range of achievements of each effectiveness score as follows:

Level Component of SPIP Implementation Weight Score% Effectiveness

Level

1 Control environment 25 22,50 90,01

2 Risk assessment 25 17,87 71,49

3 Control activities 20 19,53 97,66

4 Information & Communication 17,50 14,61 83,49

5 Monitoring 12,50 12,50 100

Total 100 87,02 87,02

INTERNAL CONTROL OVER FINANCIAL REPORTING (ICOFR)Internal Control Over Financial Reporting (ICOFR) is a process that is under the supervision of the President Director and the Director of Finance and related work units carried out in the company’s activities by management and other personnel can provide reasonable assurance about the “reliability” of financial reporting and financial reporting for external parties in accordance with generally accepted accounting principles. In this context, “reliability” means free from material misstatements. The reliability of the financial statements implicitly requires accurate accounting records, classification and timing, as well as all other aspects of financial reporting control. The tests undertaken aim to ensure the effectiveness and implementation of internal controls in order to provide adequate confidence in the reliability of financial reporting.

In accordance with the stages in the implementation and development of ICoFR there are four stages of the process that can be described as follows:

No Process Stages Output

1 Identification Selection of priority elements

Top down risk assessment

2 Mapping Documentation of high risk account process identification of risk sources of control documentation

Mapping of key business processes

3 Design Establish a risk control matrix to build an audit strategy to build an audit program

Risk control matrix audit program audit audit format working paper format

4 Testing The ICOFR audit summary audit paper

For the implementation of ICoFR testing in 2017 refers to Risk Control Matrix (RCM) which is a high risk and medium risk with the number of tests as much as 318 controls, with test areas in the income, inventory and production cycle, expenditure, fixed assets, payroll and personnel, taxation, and Financial Closing and Reporting.Based on ICoFR test results in 2017, 318 controls tested can be explained as follows:1. There is 263 controls or 82.7% of which are applicable in

accordance with RCM or are effective.2.There are 55 controls or 17.3% can not be tested due to

several conditions, such as the absence of related controlling related activities / activities as much as 27 controls or 8.5%, business process changes that resulted in testing on the application of control contained in RCM become irrelevant as much as 9 controls or 2.8%, and there are no longer run business processes as much as 19 controls or 6%.

From the results of ICoFR testing conducted for the fiscal year 2017, overall internal control over financial reporting has been effective.

ACCESS TO CORPORATE INFORMATION AND DATAAs a manifestation of the application of transparency principle, PT Semen Padang is committed to providing access to public information and data that are publicly-available with easy access both externally and internally. Externally, information access to Company data can be obtained through print and electronic media, while internally the Company provides access to information through the Internal Communications Forum.

PT Semen Padang’s policy on access to Company information and data refers to the Law of the Republic of Indonesia no. 14

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of 2008 on Public Information Disclosure stating “that public information disclosure is a means of optimizing public oversight of the administration of the State and other Public Bodies and everything that results in the public interest.”

CORPORATE WEBSITEPT Semen Padang has provided various information and company data which are grouped into seven sections: company profile, product, distributor, news, technical service, contact us, and e-paper. In the company profile section, the public can access information on history, vision, mission, company policy, management, production, achievements, guidelines, and annual reports.

Product information and specifications can be accessed in the product section. In the distributor section has been published information about distributors in 13 provinces. The public can also access press releases, Corporate activities related to CSR and Employee Communication Forum of PT Semen Padang (FKKSP), and announcements in the news section.

The information presented on the website of PT Semen Padang is about exposure to company activities, covering all internal and external activities of Semen Padang. It also provides information on policies, annual reports, organizational structure, product information, customer service and more.Here are Communications media used by Semen Padang:1. Website : Http://www.semenpadang.co.id2. Facebook : PT Semen Padang3. Twitter : @semenpadang4. Instagram : @semenpadang1910 5. Youtube : PT Semen Padang

Electronic MediaSemen Padang already has three electronic media as a means of dissemination of data and information company, namely TV, radio in the form of installation of adlips / spot radio, company info and talk-show. This cooperation is one form of corporate accountability and transparency to stakeholders. Among these are Classy 103 FM radio.

Printed mediaPT Semen Padang provides information to shareholders and stakeholders in the form of print media in the form of PT Semen Padang News, Website and others. Through the media, all the Company’s Cement activities that need to be known by shareholders and stakeholders and the public can be accessed easily, quickly and effectively.

Internal Communication ForumPT Semen Padang provides a communication channel as a means of discussion between employees and management through PT Semen Padang (SPSP) Workers Union conducted under a collective agreement.

CORPORATE CODE OF CONDUCT

EXISTENCE OF THE CORPORATE CODE OF CONDUCTAs a manifestation of PT Semen Padang’s commitment to make GCG a core culture, Semen Padang establishes a Code of Conduct Code that must be implemented by all Company Insan. The Code of Conduct of the Company Code of Ethics is used as a foundation for establishing and managing consistent behavior based on ethical sensibility, ethical reasoning and ethical conduct as part of efforts to foster high integrity.

PURPOSE OF CODE OF CONDUCT The preparation of PT Semen Padang’s Code of Conduct aims to: 1. As a practical guide and code of conduct for every Company,

Subsidiaries and Affiliates and other Stakeholders to be obeyed in daily interaction with all parties, as well as the basis for thinking in the decision-making process.

2. Ensure that the Company’s activities are properly and properly within the limits of norms and ethics in accordance with applicable legislation.

3. As a means to create a harmonious, synergistic and mutually beneficial relationship between Stakeholders and the Company.

4. As a means to create a healthy and comfortable working environment within the Company and minimize the chances of deviation.

5. As one of the guidelines in the management and development of Corporate value which will ultimately improve the Company’s image.

CONTENTS OF CODE OF CONDUCTPT Semen Padang Code of Ethics guidelines describe the Company’s behavioral policies, the various types of violations, grievance mechanisms and sanctions for violations. The Code of Conduct governs matters that are the responsibility of the Company, Individuals of PT Semen Padang and other parties doing business with the Company.

The PT Semen Padang Code of Ethics provides the following details:1. Company Conduct Policy It is a code of conduct for Company employees in terms of

interaction, acting and acting in accordance with rules and ethics in accordance with applicable provisions.

2. Socialization It is a way of providing understanding and explaining the

Company’s Code of Conduct to Company Persons and other stakeholders.

3. Code Violations It is an aberration to the Code of Conduct set by the

Company.4. Infringement Reporting Mechanism It is a procedure for reporting violations of the Company

Code of Conduct.

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5. Gifts and donations Arrangements for the awarding and receiving of gifts and

donations constitute rules of acceptance and awarding of gifts and donations that may cause conflicts of interest and / or decline in public confidence in the integrity of the Company.

6. Obedience Compliance Statement Company Code of Ethics Is a

statement of understanding and willingness to comply with the Company Code of Conduct.

The main rules covered by the Business Ethics of Companies with critical aspects of the operational process, among others, regulate:1. Ethics in dealing with stakeholders.2. Concern for the environment, health and safety.3. Compliance with laws and regulations4. Fair job opportunities.5. Giving and receiving gifts and donations.6. Intellectual property rights.7. Ethics compete.8. Work ethics.9. The Work Ethics to be met by the Company’s individual

employees, including:a. Integrity and Commitmentb. Abuse of office,c. Ethics deals with Management and fellow employeesd. Information Confidentialitye. Insider Tradingf. Efficient protection and use of assetsg. Corporate Imageh. Involvement in alcohol abuse andi. Drugs.

Giving and Receiving Gifts And DonationsThe provisions on giving and receiving gifts and donations of PT Semen Padang as stipulated in the Company Code of Conduct are as follows:1. Prohibited from receiving, soliciting gifts and or giving

donations that may have an impact and or will affect the decision-making process and / or create a view of morbidity. The exception to this is to receive promotional items that are believed to have no impact and influence the decision-making process;

2. It is prohibited to permit or agree to accept gifts or rewards and or gifts from other parties concerned with the intent to obtain facilities or facilities and Company related activities in the Company;

3. It is prohibited to provide or offer anything, directly or indirectly, to State Officials and / or individuals representing business partners, which may influence decision making;

4. It is prohibited to donate to a political party or to one or more legislative or executive candidates in accordance with prevailing laws and regulations;

5. In the event that another party presents a gift or reward that is believed to have an impact and / or affects the decision-making process and or the value of a prize or reward equal to or greater than Rp1,000,000 (one million Rupiah) or equivalent, the recipient is required for:a. Returns well and in accordance with applicable ethics.b. Reporting to a direct supervisor or an indirect supervisor,

if for any reason the prize or reward is not refundable. To that end, the prize or reward is kept by the Legal & GRC / MR Department as the GCG Compliance Officer, then it will be a door prize at a special event of the Company, and donated to the public interest.

6. Each of the Company’s personnel is required to sign Annual Statement of Compliance

Competition EthicsProvisions of Ethics Competition PT Semen Padang in its Code of Ethics provides the following: 1. Not performing any activities in marketing, procurement,

agreement or cooperation agreements against the prevailing regulations

2. Not engaging in commercial bribery.3. Being meticulous and honest in interacting with customers,

and providing the correct information regarding the quality, aspects, and the availability of goods and services.

Ethics in Relation to StakeholdersThrough an understanding of stakeholder values, Semen Padang hopes to realize GCG as a core culture and cultivate those values in every interaction with stakeholders. Refers to the Company’s Code of Ethics.

Information Confidentiality PT Semen Padang Information Confidentiality Provisions in the Company Code of Conduct set out the following:1. Each of the Company’s personnel is responsible for taking

appropriate measures to ensure that the information has been protected commensurate with their corresponding business values and risks.

2. The Company guarantees access to information for the parties performing the inspection tasks relating to its duties.

3. The Company implements the data storage policy in all forms of information (archives) for a certain period of time, in accordance with applicable provisions and supported by complete records.

4. The company has an internet network to support the progress of achieving the Company’s business objectives. Every Company employee is responsible for avoiding Internet sites that conflict with applicable moral and ethical nuances and avoiding the use of internet sites for personal purposes. The Company reserves the right to monitor and review records of Internet activity and to block offensive, racial, unlawful, offensive / racially or racially / ethnic or gender-specific websites and is not related to business.

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5. The Company operates and maintains an electronic mail system (e-mail) to facilitate internal and external business communications. Every Company employee shall be wise to use electronic mail for personal and / or for any purpose that may hamper the Company’s operations, or offensive to any other party, or violate Company policy and law.

6. Companies set up file or program access procedures, both computerized and unedited.

7. Every Company Employee is required to keep Confidential or Confidential Information and is not used for personal, family, or other benefits.

8. Information on business or Confidential activities The Company is not permitted to be disseminated to third parties, except by and on behalf of the Company in accordance with the established internal policies and procedures, and is not contrary to applicable laws and regulations.

Every Company Person avoids the dissemination of information about:1. Corporate activities with the Government of the Republic of

Indonesia, both central and regional that are strategic and confidential.

2. Internal work policies and procedures, which have nothing to do with outsiders,

3. Management of Information Systems and data and reports that are not related to outsiders.

4. Strategy between the Company and its customers and partners.

5. The use of internal information in the framework of the purchase or sale of securities for personal, family or other parties’ interests is prohibited unless such information is widely known by the public.

DISSEMINATION AND INTERNALIZATION OF CODE OF COMPANY ETHICS Socialization of the application of the code of ethics is always done to all PT Semen Padang, from management up to the operational level through various media owned by the Company, including the utilization through information technology media that can be accessed by all employees easily at any time.

PT Semen Padang conducts socialization effectively and comprehensively with the following steps:1. Socialize the Code of Conduct to all levels of the

Company, Customers and Partners periodically through the dissemination of the Company Code of Conduct, the signing of annual statements by the Board of Commissioners, the Board of Directors, all employees and Partners and the presentation of the material code of ethics.

2. Evaluate the achievement or understanding to the Company’s staff, both during orientation and working period.

3. The regular review of the Code of Ethics rules in the context of further development of the Code of Ethics.

COMPLIANCE STATEMENT (INTEGRITY PACT)To build a culture of compliance across all lines of organization, PT Semen Padang distributes the Annual Compliance Statements for Commissioners, Directors and all employees to implement the ethical standards established by the Company and also signed by the Husband / Wives and their respective direct supervisors. Thus, the Code of Ethics applies to all PT Semen Padang employees, from Commissioners, Directors, and all employees as a work culture in daily operational activities. Implementation of this ethical value becomes part of compliance with GCG implementation.

REWARD AND SANCTIONS FOR VIOLATION OFCODE OF CONDUCTImplementation of Company Code of Conduct is done by Department of Legal & GRC / MR and Human Resources. For employees who comply with the Code of Ethics, PT Semen Padang undertakes an assessment to reward the exemplary employees in the form of hajj / umrah or other services for non-Muslims.

While to provide deterrent effect to employees, for those who violate the provisions in the Code of Ethics of the Company, then the concerned will get sanction, among others in the form of warning and demotion.

TOTAL BREACHES OF CODE OF CONDUCT AND FOLLOW-UPS Throughout the year 2017, PT Semen Padang has provided disciplinary action to employees with the following details:

Types of Violation Total Violation

Light 10

Medium 2

Weight 4

Any violations of the code of ethics that are occurring are evaluated and acted upon in order to minimize similar violations occurring in the future.

SOCIALIZATION AND IMPLEMENTATION OF CULTURE OF COMPANYTo socialize Culture, Corporations publish banners, banners and pocket books “CHAMPS Book - Corporate Culture of Semen Padang” distributed to all employees. In the book in addition to explaining in detail about the corporate culture also contains examples that should be done (DO) and that should not be done (DO NOT), so that all activities undertaken by employees can reflect the corporate culture of the Company is expected.

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REPORTING SYSTEM OF VIOLATIONSemen Padang is updating the Whistle Blowing System (WBS) Policy hereinafter abbreviated to ‘WBS Policy’ which was originally done manually (mailbox). The update aims to create a conducive climate and encourage the initiative of all parties to convey any alleged violations that could harm the financial and non-financial aspects of the Company.

The WBS Policy has been implemented on July 22, 2014. The provisions are governed by Technical Guideline no. PD / PSM / 21 on Fraud Control Program (FCP) and Board of Commissioner’s decision. 15 / DK / Kep / I / 2014 on Whistle Blower procedure. Through regulation in the policy of violation reporting system, Semen Padang aims to achieve the following: 1. Establish a policy and infrastructure to protect the

complainant from internal and external counterparties.2. Reduce losses incurred due to violations through early

detection.3. Improving effectiveness and facilitate handling reports of

violations and at the same time protecting the confidentiality of the complainant.

4. Improve the Company’s reputation.

SCOPE OF THE POLICY OF VIOLATION REPORTING SYSTEMWBS Policy Scope regulates aspects ranging from management units, confidentiality and reporting protection, reporting methods, and sanctions. Which can be reported in WBS Policy of PT Semen Padang is corruption, misuse or embezzlement of assets and manipulation of report conducted by Company Insan.

Structure of Reporting System Abuse Management System Bearing in mind that WBS Policy is part of the Company’s control in preventing fraud and requires independence in its application.

Accordingly, the structure of WBS management is under the Board of Commissioners, with details as follows: 1. Board of Commissioners is in charge of the WBS.2. Audit Committee is the executive conducting the program

immediately reporting to the Board of Commissioners

3. Clarification Team serves as the team responsible for clarifying cases already reported by the whistleblower and for conducting the investigative audit if necessary,establishing Investigative Audit Team as well.

4. WBS Officer is responsible for managing the administrative maters of WBS and is appointed by and reporting to the Audit Committee.

WBS REPORTING MECHANISMPT Semen Padang guarantees that all alleged infringement reports will be properly acted upon through the website https://wbs.semenpadang.co.id. Repeated and systemic violations will be reported to relevant officials who have the authority to make improvements, under the general mechanism of the Reporting System of Violations.

WHISTLEBLOWER PROTECTION AND MEDIA REPORTING POLICYIn the current reporting system of violations at PT Semen Padang, there is a reporting protection policy which covers the following aspects:1. The Company is obliged to protect the complainant.2. The identity of the reporter is kept confidential, so the

unauthorized parties do not know the identity of the complainant.

3. If the matter is processed further, even to the court, the Company is obliged to provide legal assistance to the complainant.

GOOD CORPORATE GOVERNANCE AND BAD CORPORATE GOVERNANCE IN ANNUAL REPORTPT Semen Padang has implemented all the principles of good corporate governance in its annual report. The Company complies with and complies with the reporting requirements stipulated by the relevant authorities. In addition, the Company has developed and submitted a Sustainability / CSR Report compiled based on internationally accepted standards (GRI Sustainability Reporting Guidelines). so that during 2017 PT Semen Padang never before in practice Bad Corporate Governance.

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CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility is closely linked to “sustainable development”, in which PT Semen Padang carrying out its activities not only concerns to the financial factors, but also incorporates social (people) and environment consequences (planet).








Photo title:Carving out the hope of knitting the culture

Photo location:Semen Padang’s SMEs

Photo caption:One of the programs of PT Semen Padang is to foster SMEs to become more advanced and developed as a form of corporate responsibility to improve the welfare of the surrounding community








THE OVERVIEW OF CORPORATE SOCIAL RESPONSIBILITY


CO2e reduced greenhouse gases GRK emissions from

WHRPG operations

43.117 ton

Energy Generated byWHRPG TechnologyGREEN INDUSTRY

50 MWh

414 Elementary school

students

271Junior High school

students

222Senior High School

Students

33College students








251Land 2017

Ha

4.502Trees

GREEN PROPER

RP 8,22 miliarDISBURSEMENT OF LOAN

181 Foster Patner in Padang 152 Foster Patner

Outside Padang90,77%Effectiveness

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PRELImINARYPT Semen Padang realizes that as a business entity, the existence of a company that aims to create profit, must contribute to the environment and society and national development in a sustainable way. Therefore, in conducting business activities, the Company continues to focus on generating profits, simultaneously conducting programs and activities of social responsibility or Corporate Social Responsibility (CSR).

In its development, the accountability of the financial statements is expected not only to pay attention to the interests of shareholders but also to the interests of the stakeholders as a whole. Therefore, the Company’s responsibilities are no longer on the single bottom line, which only concerns the financial condition, but also incorporates social and environmental issues (triple bottom line) (Wibisono, 2007).

The Company embodies the activities of responsibility towards social and environmental issues in the form of CSR activities. The implementation of CSR program is a mandate from Law no. 40 of 2007, the first article on Limited Liability Companies where social and environmental responsibility is the Company’s commitment to participate in sustainable economic, social and environmental development. The Company recognizes that the sustainability and achievement of the Company’s performance, one of which is determined by the harmonious relationship between the Company and the community and the environment. In the midst of the competition of the national cement industry business, the Company continues to show continued growth and business development. Therefore, the Company sees the need to realize and improve the CSR program as a form of awareness of the environment, the empowerment of surrounding communities and the improvement of relationships with stakeholders. In addition, the implementation of CSR programs is also the Company’s efforts to behave ethically and contribute to sustainable economic development, simultaneously improving the quality of life of employees.

Companies use Triple Bottom Line (Planet, People, and Profit) as parameters that need to get the same attention to improve

the competitiveness of the company. With the presence of ISO 26000 SR as the latest reference in the implementation of social responsibility with seven core subjects are: Governance, employment, human rights, consumer, fair operation, involvement and development of society and environment, considered highly relevant and align with Triple Bottom Line, so that in carrying out the Company’s strategy is expected to continue sustainably by adopting ISO 26000 in CSR policy of PT Semen Padang.

VISION AND MISSION OF CSR

VISIONEmpowering the community by optimizing resources in improving the image and value of the company in an environmentally sustainable way.

MISSION1. Maintain the image of the company through improving the

quality of good relationships with stakeholders.2. Implementing GCG and increasing social responsibility in

the corporate value chain.3. Improve community empowerment4. Fostering industrial relations and developing human

resources.5. Respect the culture and traditions of local wisdom and

respect for human rights.6. Minimize operational impacts, increase sustainable resource

use and preserve the environment.7. Improving the quality and education services and skills of

sustainable communities.

METHODOLOGY AND ROADMAP OF CSR PT Semen Padang designed the target and implemented a systematic and integrated CSR program which was carried out by participatory method, that is by empowering the potential of the existing area in order to improve the ability, income and prosperity for society and environment in a sustainable manner. In the long run, the Company conducts an evaluation and monitoring of CSR programs conducted so that these CSR programs can achieve the stated objectives and roadmaps.

CSR POLICYPT Semen Padang actively plays role in sustainable economic development in order to improve the quality of life and

Corporate Responsibilityno longer on the single bottom line,

which is only paying attentionfinancial condition only, but

also put the problem social and environmental issues

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environment that is worthwhile for the Company, environmental community, and future generations. Such commitment is implemented through the stipulation of policy of management of various CSR programs that are directed, programmed, and also consistent.

PT Semen Padang’s CSR policy is based on CSR mission of Semen Padang’s such as 7 (seven) main principles of social responsibility policy which have become a commitment to guide the Company’s progress are listed below: 1. Customer service PT Semen Padang attempts to improve its work performance

beyond the Company’s customers’ expectations in creating a sustainable and useful relationship.

2. Organizational Governance PT Semen Padang is fully committed to be the role model

in the cement industry through strengthening roles and functions in all lines level of organizational structure, the trust of all stakeholders in improving values and work ethics and maintaining long-term sustainability. Through the decent, responsibility, transparency, fairness, independence and accountability the company attempts to achieve the vision, mission and as well as the goals.

3. Fair operational practices PT Semen Padang ensures fairness and integrity in

fostering relationships with stakeholders under applicable laws and regulations, free from corruption and bribery, neutrality on political issues, competing fairly, promoting social responsibility in the business value chain, respecting copyright, accessibility to essential services and customer education and awareness.

4. Community Involvement and Development By optimizing the available natural resources and the

commitment of all stakeholders the Company implement community empowerment by improving the development of education and local culture, creating employment, improving skills and property, developing technological access, improving health aspect and also responsible social investments.

5. Employment Practices PT Semen Padang ensures the quality of industrial

relationship to be beyond the requirement of the laws while being committed to develop human resources..

6. Human Rights PT Semen Padang appreciates local culture and local wisdom

as well as respect towards for human rights. The Company supports equality (religion, gender, race, and social status), Human Rights Protection (health and safety in work place,

work hour, and also compensation), and also freedom to be allied (organizational rights, rights of expressing opinion, and also social rights). rights).

7. Environment PT Semen Padang is committed to minimize the operational

impacts, improve the use of sustainable also resources and preserves the environment by internalizing it in the corporate culture.

CSR Program of Semen Padang policy is communicated to all stakeholders as well as implemented consistently and evaluated for continuous improvement.

PT Semen Padang CSR Program is a form of implementation of the Company’s vision and mission in terms of developing “industry with environmental awareness”, these are is the Company’s strategy to grow sustainably in accordance to TripleBottom Line aligned with the best practice ISO 26000 SR.

Picture of Triple Bottom line

PROFITConsumer’s voice fair

operating practice

PLANETEnvironment

PEOPLECommunity’s involvement and empowerment human rights,

manpower management.

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The Triple Bottom Line Scheme is Integrated with Core Subject ISO 26000

GOVERN

ANCE

ORG

ANIZATIONAL

PEO-PLE

PLANET

Sustainable& Balance

Community Involvement &Development

Human Right

Labour Proces

The Environment

Operating Practices

Consumer Issues

PROFIT

1

2

1

2

3

1

ORGANIZATIONAL STRUCTURE OF CSR MANAGEMENTTo support the implementation of CSR program activities, PT Semen Padang has formally appointed a working unit to manage CSR activities each year. During the process, there have been several organizational enhancements that run the CSR program. The organizational structure of CSR management of PT Semen Padang is currently stipulated on Board of Directors Decree No.SM.02.02 / 056 / KD / DESDM / 05.17 The date of June 1, 2017 is as follows:

Organizational Structure of CSR Management

President DirectorBenny Wendry,

Section of Education Empowerment,

Social & Environmental Health

Masykur Rauf

Section of Economic Empowerment

Syafrianto Rusli

Section of Finance & Administration

Delfiadri

Department of Communications

& Public facilitiesIskandar Z. Lubis

CSR BureauMuhamad Ikrar

Description Table of CSR Officer Job Description Title Name Job Description

President Director Ir. Benny Wendry, MM 1. Determining the policy and the target of the Key Performance Index (KPI) of the CSR program.

2. Ensuring the suitability of the policy to the CSR programs.3. Evaluating the effectiveness and efficiency of CSR programs.

Dept. of Communication & Public Facilities

Iskandar Zulkarnain Lubis, ST, MM 1. Coordinating the preparation of Long Term Plan (CPR) with partners, implementation of surveys and preparation of Work Plan and Budget (RKA)

2. Coordinating the implementation of RKA.

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Title Name Job Description3. Ensuring the effectiveness of RKA implementation, including the achievement of

KPI CSR program.4. Deciding the distribution of program and coaching program, in the given

economic empowerment.5. Cooperating with other units in programming.6. Working closely with other units in terms of programming.7. Supervising of program implementation.8. Ensuring policy conformity with CSR programs.9. Evaluating the effectiveness of CSR program policies.

Head of CSR Bureau Muhamad Ikrar, ST, MM 1. Conducting RJP and RKA arrangements with partners.2. Executing the RKA.3. Ensuring the effectiveness of program implementation according to RKA

including the achievement of KPI of the CSR program.4. Performing evaluation of the effectiveness of CSR program distribution.5. Deciding the implementation of the program.6. Performing cooperation with other units in preparation of the program.7. Coordinating the preparation of the reports of realization of activities and the

achievement of monthly KPI of the CSR program.8. Being Responsible to requirement of data internal and external audit

documentation.9. Evaluating the effectiveness of planning and implementation of CSR programs.

Section Head of Education, Health, Social and Environmental Empowerment Division

Masykur Rauf 1. Preparing for planning, program and implementation.2. Performing effective distribution programs.3. Monitoring and evaluation and effectiveness on the programs that have been

implemented.4. Communicating program activities internally and externally.5. Preparing activity reports periodically.6. Evaluate the implementation of the program.7. Being Responsible to requirement of internal and external audit data and

documentation.Section Head of Economic Empowerment

Syafrianto Rusli 1. Developing planning, program and implementation.2. Implementing effective program.3. Planning Monitoring and evaluation and effectiveness of programs that have

been implemented.4. Communicating program activities internally and externally.5. Prepare activity reports on a regular basis.6. Being responsible to requirement internal and external audit data and

documentation.7. Evaluating the implementation of the program.

Section Head of Finance and Administration

Delfiadri 1. Developing Work Plan and Budget.2. Performing control functions against CSR Bureau budgets.3. Performing accounting and finance functions.4. Preparing evaluation report of the effectiveness of CSR Program distribution.5. Carrying out the CSR verification and administration function.6. Making periodic report of the CSR activities (monthly and annually).7. Preparing and be responsible for presentation materials, publications, data

requirements and internal and external audit documentation.8. Being Responsible to the implementation of Information Communication

Technology (ICT) in CSR.

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PROFILE OF CSR MANAGEMENT

DEPARTMENT OF COMMUNICATIONS & PUBLIC FACILITIES

Iskandar Zulkarnain Lubis, ST. MM

Indonesian citizen, domiciled in Padang. Born in Kotanopan on 26 June 1970, 46 years old. obtained his undergraduate degree majoring Mining Engineering at ITB and master’s degree of management majoring at UPI Padang. Before officiating as the Head of Department of Communications & Public Facilities, various positions have been achieved, among them are the Head of CSR Bureau (2014-2016), Head of Public Relations Bureau (2016), Head of Limestone Mining (2002-2005), Head of Limestone Processing and Transportation Department (2005-2008), Mining Development Planning Staff (2008-2009), Head of Bureau of TPM (2009-2011), Head of Mining Bureau (2011-2012), Senior Manager of Offsite and Mining Project Indarung VI (2012-2014) .

CSR BUREAU

Muhamad Ikrar, ST, MM

Indonesian citizen, domiciled in Padang. Born in Bukittinggi on April 2, 1983, aged 35 years. Graduate of Industrial Engineering Department of Gajah Mada University and S2 Master of Management of Andalas University. Prior to becoming Chief of Bureau of CSR (2017-present), various positions have been achieved, among them are Management Trainee of PT Semen Padang (2005-2006), Corporate Secretary of PT Semen Padang (2006-2012), Senior Manager of Human Resources and General Affair Indarung VI Project PT Semen Padang (2012-2014), Senior Logistic and Warehousing Manager of Indarung IV Project (2014-2016), Senior Project Procurement Manager of Indarung VI Project (2016-2017).

CSR STRATEGY In line with the concept of Triple Bottom Line and ISO 26000 SR, PT Semen Padang has developed strategic CSR flagship tailored to the Company’s development direction:1. Building a superior performing Company (Profit)2. Build and empower the leading human resources (People)3. Environmental conservation and energy conversion (Planet)

Illustration of CSR Management Organization

Semen PadangPADULI Nagari

Semen Padang

CAMPIN Nagari

Semen PadangELOK Nagari

Semen PadangPANDAI Nagari

Referring to the strategic flagship, the Company lays out CSR in the pillars of the program implemented in synergy in cooperation with all stakeholders. The pillars of CSR program of PT Semen Padang include CAMPIN Nagari, Semen Padang PANDAI Nagari, Semen Padang PADULI Nagari and Semen Padang ELOK Nagari.

CAmPIN NagariIt is a program which supports Semen Padang CSR mission related to the fair ISO 26000SR- operational core subjects as well as the, Governance and Consumer Voice. Some of the main programs implemented through CAMPIN Nagari among others:1. Marketing Program: certification of construction workers

/ laborers, affordable and sustainable housing programs, sustainable products and services.

2. R & D and Quality Assurance Program: Innovation of cement derivative products for sustainable construction

3. Implementation of Governance, risk and compliance integrated manner

Semen Padang PANDAI NagariIs a program that supports CSR mission of PT Semen Padang

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related to core subject ISO 26000 SR-Employment. Semen Padang PANDAI Nagari has several main programs such as:1. Implementation of Human Capital Master Plan (HCMP)

consisting of: Leadership Development Program (LDP), Talent Management (TM), Knowledge Management (KM), and Specialization.

2. Encouraging the establishment of social relations of workers and social dialogue.

3. Ensuring the fulfillment of the basic rights of workers; conditions of welfare, insurance, health and safety and the quality of service workers.

Semen Padang PADULI NagariIt is a program that supports CSR mission of PT Semen Padang related to core subject ISO 26000 SR. Semen Padang PADULI Nagari is one of the community empowerment and development and human rights programs, with major programs such as:1. Granary Village; Increased productivity of livestock, fisheries

and agriculture, partnerships for assisted Partners, marketing support for Partner products built, and ecopreneurship development.

2. Healthy Village; Improving maternal and child nutrition, revitalizing posyandu, as well as environmental campaign and healthy living behavior.

3. Development of Vocational and Cultural Education; outstanding scholarships, green schools (adiwiyata), and Skill Training (Lolapil).

4. Social investment on infrastructure development and strengthening of social institutions of society.

Semen Padang ELOK NagariIt is a program that supports CSR mission of PT Semen Padang related to core subject ISO 26000 SR-Environment. Some of the main programs of Semen Padang ELOK Nagari are:1. Control of emissions.2. Control of liquid waste3. Solid waste management.4. Use of renewable energy and environmentally friendly.5. Use of environmentally friendly technologies and reduce

fossil energy consumption.6. Biodiversity.7. Green environment.

PLANS AND REALIZATION OF CSR SEMEN PADANG ACTIVITIES

In 2017, the plan and realization of CSR activities of PT Semen Padang was focused on several areas including:

1. Corporate responsibility to the environment, relating to the Company’s operational activities, such as the use of materials, environmentally friendly and recyclable energy through the Company’s waste treatment system, the

mechanism of environmental complaints, and other related matters.

2. Corporate responsibility regarding employment and occupational health and safety, relating to the Company policy on employees which is about gender equality and employment, employment and safety, employee turnover rate, accident rate, remuneration, employment complaints mechanisms, and related matters others.

3. Corporate responsibility for social and community development, related to the empowerment of the community both inside and around the company and outside the company, the use of local labor, empowerment of communities around the company, improvement of social facilities and infrastructure, other forms of donations, communication on policy and anti-corruption procedures, anti-corruption training, and other related matters.

4. Corporate responsibility to customers, relating to the Company’s product or service responsibility policies, such as consumer health and safety, product information, means, quantities and remedies for consumer complaints, and other related matters.

Framework Illustration of CSR Semen Padang Programs

SuStainabilityGrowth

01

Empowerment and development of

society

Operational practice

Healthy environment and

Human Right

Company image

Development

CompetitenessPreservationEnvironment

Legal compliance

Society’s expectation

0302

The success of PT Semen Padang CSR program can be achieved by the commitment of management and all stakeholders, as well as the support of resources in the form of policies, human resources, supporting organizations, budget and social capital, so as to overcome the potential social risks due to social and economic disparities and environmental impact inflicted.

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CSR BUDGETPT Semen Padang continues to encourage the implementation of CSR activities as a program developed by taking into account the long-term needs and sustainability of the program to create a balance between the Company, the community and the environment.

The Sources of CSR program funds of PT Semen Padang comes from the Company’s expenses budgeted in the RKAP (Work plan of compny’s budget). Company’s CSR budget regarding social and community development is also provided by the company net profit in former years, remaining fund from PKBL in former years, the return of loan, the revenue of loan’s administration services, and also the income from the received interests in the current year.

CORPORATE RESPONSIBILITY TO ENVIRONMENT

PT Semen Padang is committed to minimizing operational impacts, enhancing sustainable use of resources and preserving the environment by internalizing the Company’s culture through “Semen Padang ELOK Nagari” program.

ENVIRONMENT CONSERVATION AND ENERGY CONVERSION (PLANET)PT Semen Padang always strives to preserve Environment and Energy Conversion (Planet) as part of its environmental responsibility program. Through this program, Semen Padang preserves the village forest that is basedon the community as synergetic program with Forestry Agency of West Sumatra and the Faculty of Agriculture Universitas Andalas Padang.

Rehabilitation activities carried out by planting trees covering an area of 251.51 hectares. The location of the plantation is located in the Protected Forest area in Lubuk Kilangan subdistrict and Pauh sub-district of Padang.Environmental conservation efforts were also conducted in the company area by planting 4502 trees during 2017.

CORPORATE RESPONSIBILITY TO COMPANY’S OPERATIONALTo initiate green industry as reflected on its vision and mission statements, which are to become the excellent and reliable cement company with the environmental awareness in West Indonesia and South East Asia. PT Semen Padang’s mission is to empower, develop and synergize the Company’s environmentally sound resources.

During 2017, the activities that aim for green industry are as follows:1. waste heat recovery Power Generation (WHRPG) PT Semen Padang plays an active role in reducing emissions

one of them is using flue gas. Utilization of WHRPG provides positive impacts such as reducing water consumption in the process system of gas conditioning tower, increasing recyle water, reducing CO2 emissions by 43,117 tons per year.

2. Pollution Prevention PT Semen Padang guarantees the operation of

environmentally friendly business, as manufacturing industry in cement sector, air pollution, water and land pollution prevention are priority.

PT Semen Padang develops programs to reduce dust emissions, through improved performance of Electro Static Precipirator (ESP). The working principle of ESP is based on electrically charged particles that are passed in an electrostatic field.

Illustration of Electro Static Precipirator

3. Green belt Program PT Semen Padang is also implements green belt program,

which provides reforestation land in urban or residential areas, in order to protect the natural or semi-natural environment and improve air quality.

The Green Belt program was conducted since 2013 and succeeded in reducing emissions of 241,349 tons of CO2 per year. The Green Belt program is implemented along the company’s boundary with community-owned land. Plants that ditaman along the Green Belt include trembesi and giant bamboo.

Productive tree planting is a commitment and support of Semen Padang to the Adiwiyata Program by providing

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productive trees such as mango seedlings, soursop, longan, jambu air, sawo and guava to schools in Padang City. During 2017, the Company invested in the environment Rp6.3 billion.

SUSTAINABLE RESOURCES UTILIZATION

PT Semen Padang is committed to environmental performance and consistent in the management and utilization of renewable resources, through efficiency and processing into converted or reusable resources such as alternative energy use (AFR), water conservation, energy and material usage efficiency, and the use of environmentally friendly and recyclable materials and energy.

In reducing environmental impact, the Company operates the 3R (Reduce, Reuse and Recycle) principle, through innovation programs to reduce the cost of electricity consumption, such as the replacement of fluorescent spheres with LEDs, the use of used oil into lubricants, the utilization of biomass as coal substitution and development WHRPG, from the use of steam from the kiln. All these activities are carried out in order to to save energy and utilize waste.

For the control of air emissions, the Company made the addition of a sophisticated system as a dust filter. This filter filters the dust in two stages with new technology. The first stage, the dust is filtered by the separator, and then filtered again by Electrostatic Precipirator (EP). The air of the EP is what can come out into ambient air. Each of the ambient air chimneys, mounted the sensor for realtime emissions and out in graphical form.

Through the Occupational Health and Safety (K3LH) Bureau of the Quality Assurance & SHE Department, the Company employs solid and liquid waste processing systems. All waste disposed between B3 or non B3 wastes, such as oil, grease and majun are used as Alternative Fuel Reduce (AFR) materials while B3 waste such as TL lamps, used batteries, oil drums, cartridges and chemical bottles, for further management is left to licensed third party. The Company has also utilized waste to substitute the main raw materials, among others, replacement of iron sand with copper slag and concrete bins, clay substitution with Drilling Cutting Cement (DCC), gypsum purified and fly ash. Semen Padang also utilizes biomass such as rice husk, palm fiber, sawdust, waste paper as alternative fuel.\

CLIMATE CHANGE, MITIGATION, AND ADAPTATIONPT Semen Padang always operates under the priority of environmental friendly principles. Therefore, in its business operations, the Company constantly reduces the effects of greenhouse gas emissions, such as CO2 emissions, Nitrose Oxide (N2O), Methane (CH4) as a commitment to play a role in mitigating and adapting global warming.

ENVIRONMENTAL PROTECTION, BIODIVERSITY AND RECOVERY OF NATURAL RESOURCESPT Semen Padang also minimizes ecosystem changes due to business operations, particularly to flora and fauna habitats in a natural life chain and focuses on treating hazardous and toxic wastes such as B3 waste from business / industrial operations.

BIOLOGICAL BIODIVERSITY PROTECTIONThere are 225 species of animals and plants in Taman Kehati Semen Padang, including 6 rare plants and protected (based on PP No. 7 of 1999 and Cites Red List). To increase the diversity of species in Taman Kehati, a rare tree planting effort, namely Andalas tree, was done. The tree is a protected rare tree, Andalas tree is a characteristic tree of West Sumatra according to Decree of the Minister of Home Affairs. 48 in 1999. Taman Kehati Semen Padang is the only natural park that breeds Andalas seedlings.

The Company also conducts reforestation forest protection in Bung Hatta Forest Park area, Koto Baru forest, Gadut and Batu Busuk forest covering 275 hectares.

ENVIRONMENTAL PROPERTY MECHANISMPT Semen Padang appreciates environmental value-added activities, ecosystem recovery services and sustainable utilization of natural resources, such as land, water and air. In the event of a complaint arising from the Company’s operational activities in relation to the environment, the Company openly accepts the problem and acts as optimally as possible. All stakeholders can provide input and suggestions as well as complaints of environmental issues through email address [email protected].

CONSIDERATION OF ENVIRONMENTAL ASPECTS THROUGH THE DISTRIBUTION OF ROLLING LOANSAs a cement company that cares about the economy of West Sumatera society, PT Semen Padang through Bureau of Corporate Social Responsibility (CSR), channeling business capital loan to MSMEs in West Sumatera. One of the main conditions to be considered in the aspect of business capital loan is environmental aspect.

This disbursed capital loan is a Partnership Program that has been running since 1987. The perpetrators of MSMEs who become partners, are routinely made visits to all the targeted partners with the objective, to determine whether there are obstacles experienced by the partners in developing their business.

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ENVIRONMENTAL CERTIFICATIONAs a proof of commitment from the CSR program until 2017, Semen Padang has been certified in the environmental field, namely Certificate of ISO 14001: 2004 / SNI 19-14001: 2005 from Sucofindo International Certification Services with validity from January 25, 2015 to January 24, 2018

CORPORATE RESPONSIBILITY OF OCCUPATIONAL HEALTH AND SAFETY (K3)

Employees are a strategic asset for Semen Padang. Therefore, the Company always creates a safe and comfortable working ambiance and environment for employees. The Company is committed to providing quality relationships with employees who meet even beyond the requirements of legislation in developing human resources through the “Semen Padang Pandai Nagari” program.

BUILDING AND EMPOWERING HUMANRESOURCES, EQUAL TREATMENT FOR ALL EMPLOYEES ACTIVITY PROGRAMSIn the field of human rights covering the employment aspect, Semen Padang refers to the Collective Labor Agreement (PKB) between the management of PT Semen Padang and the Semen Padang Workers Union (SPSP) authorized by the Manpower Office of Padang City on 12 January 2016 in Padang. The provisions govern the rights and obligations of the Company and its employees in accordance with applicable labor regulations. In addition, the Company also has a Code of Conduct and discipline rules for employees in managing the Company and employees’ relationships further.

The Company carries out activities of social responsibility in the field of employment, which are applied with due regard to the following aspects:1. Equality, ethnicity, religion, race, and class according to

the mandate of Law no. 13 year 2003. Welfare aspect, establishing Bipartite Cooperation Institution (LKS) Bipartite at company level, implementation of just wage system, providing health protection, care of employees and their families, providing Jamsostek program, Life Insurance,

Pension Fund, giving bonus, leave, incentive and Holiday Allowance

2. Safety aspect, PT Semen Padang runs SMK3, ensures safety and health, and provides work equipment.

3. Aspects of Development, by conducting training in accordance with the competence of workers based on Training Need Analysts to achieve Human Capital Resources Management (HCRM).

In 2017, the Company applies dynamic learning method in conducting Training Need Analysis (Training Need Analysis), which is an employee development and training program that emphasizes the fulfillment of employee development needs, to support the achievement of business unit goals. Employee performance appraisal system that has been based on the assessment of employee behavior, in 2017 has been using performance-based assessment system and competence. It is expected that with this change can improve the work climate of employees.

EDUCATION AND TRAINING OF EMPLOYEESTo ensure the availability of a competent employees, Semen Padang conducts training and employee competency development opportunities. The 2017 training program is still focused on improving technical competence. Total realization of training hours in 2017 is 31.3 hours of training / employee / year, while still paying attention to the quality of training.In 2017 as a commitment of the Company to the employee development program, the Company has allocated training budget for the employee of Rp7.16 billion. In addition, the training program is also strengthened with Knowledge Management activities, where in 2017 reached 1198 points from the target 1080 points.

EMPLOYMENT SURVEYPT Semen Padang always strives to give every employee an opportunity to provide input related to the expectation of the employees given by PT Semen Padang in order to increase employee’s ties with the Company. The mechanisms taken include family gathering, festival, and cafe leader.

In 2017, The Company has conducted a labor survey in the form of a Working Climate Index (WCI) survey in the fourth quarter with the following assessment indicators:

No. Type of WCI 2017 Predicate

1 Corporate Commitment 3,83 Satisfied

2 Worker Communications 3,73 Satisfied

3 Teamwork 3,98 Satisfied

Semen Padang Elok Nagari is a form of commitment in the use of environmentally friendly

technology and reduce fossil energy consumption

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Description Ratio

Highest and Lowest Salary 1 : 11,5

IMPLEMENTATION OF OCCUPATIONAL HEALTH AND SAFETY PT Semen Padang believes that a safe, comfortable and healthy work environment can improve employee engagement and productivity. Therefore, through the implementation of HSE Management System (SMK3) integrated with Semen Padang Management System (SMSP) in all aspects of the Company’s operational activities. All activities undertaken by the Company are intended to maintain employment relations, working conditions and social security of employment, Health and Safety (K3).

The activities related to safety and health in the Company’s environment include the following:1. Counseling2. Prevention3. Treatment

UnitYear

Total Fund(Rp Thousand) 2016

Total Fund (Rp Thousand) 2017

All Employees 29.800.000 29.800.000

RATE OF WORK ACCIDENT AND OCCUPATIONAL SAFETY FACILITIESThroughout the year 2017, there were no fatal work accidents during the business operations within PT Semen Padang. Detailed information on the Company’s accident rate in 2017 as follows:

Description 2017

First aid 4

Light 3

Weight*) 4

Fatal / Died 0

Amount 11

The Company has undertaken planning, controlling, reviewing, and feedback, improvements and prevention efforts to achieve safety and health.

In matters of mitigation and prevention of workplace accidents within the Company, periodically, evaluations of program implementation to ensure the effectiveness of hazard risk reduction, which has been in accordance with the plan as well as the data included in determining further improvement measures.

The Company has established the organizational structure of the Working Safety and Health Management Committee (P2K3) and

4 Performance Management System

3,59 Satisfied

5 Compensation & Benefit 3,70 Satisfied

6 Training & Development 3,58 Satisfied

7 Integration of Employment & Social Relations

3,79 Satisfied

INDUSTRIAL RELATIONS AND EMPLOYMENT COMPLAINT MECHANISMPT Semen Padang fully supports employees’ freedom to assemble, unionize, and opinion through Trade Unions. Through Trade Unions, all employees can file employment issues as well as serve as a forum for communication and aspirations of employees, who always provide labor rights and justice protection in the law enforcement process for employees through unions, the Company gives employees the freedom to join the union .

A mutually respectful constructive relationship between the Company and the Trade Union is manifested in terms of agreements and rules as set forth in the Collective Labor Agreement (PKB), reviewed and updated on a regular basis every 2 (two) years.

TURNOVER LEVELIn 2017, the number of employees of PT Semen Padang as many as 1625 people with the number of employee turnover of 84 people. The turnover of PT Semen Padang’s employees during the last 3 (three) years is reflected in the table as follows:

Description 2015 2016 2017

Pension 107 84 80

Died 2 5 0

Resign 2 1 4

Total Reductions of Employees 111 90 84

Total Added of Employees 0 0 0

Turnaround Rate 0% 0% 0%

EMPLOYEE REMUNERATIONOne of the forms of attention given by PT Semen Padang to employees is the provision of remuneration in accordance with the needs of employees and the performance of the Company. Some aspects of remuneration are as follows:1. Personal grade2. Performance and competence3. Position4. Period of work

The salaries, wages and employee benefits paid by the Company throughout 2017 reached Rp689 billion.

HIGHEST AND LOWEST SALARY RATIO The highest and lowest salary information available in PT Semen Padang is as follows:

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conducts regular coordination meetings to collect and process all K3 data and or problems, and formulate solutions in order to provide advice and consideration to management related to OSH issues.

The K3 program implemented by the Company throughout 2017 includes:

1. Ensuring the reliability of emergency relief facilities (Hydrant, APAR, Fire Truck, Fire Alarm, Fire Suppression System and Lightning Distribution Installation).

2. Ensuring the reliability of production facilities and other supporting facilities by implementing certification and recertification of equipment.

3. Monitoring and measurement of physical factors of work environment, including noise, lighting, vibration, and working climate.

4. Microbiological measurements include water, air, and psychological measurements of work.

5. Implementation of K3 training and socialization to all parties in Semen Padang area (employees, outsourcing, contractors, and all Company guests) to raise awareness of OSH norms.

6. Fulfilling the application of OSH norms in the workplace, such as the use of Personal Protective Equipment (PPE).

7. Periodic checking of annual medical checkups for all employees, including new employees, and special health checks including spirometry and audiometry.

8. Prevention of disease outbreaks through fogging, wild dog elimination, and rodent control.

9. Emergency preparedness and emergency response at 10 work sites and preparing human resources for emergency response through internal training.

10. Implementation of internal and external audits of SMK3 / OHSAS.

For more details please find out the discussion of the Company’s responsibilities in the field of Manpower and Health and Safety is discussed in Chapter Business Supporting Overview of Human Resources.

CORPORATE SOCIAL RESPONSIBILITY TOWARDS SOCIAL AND COMMUNITY DEVELOPMENT PT Semen Padang is committed to empowering communities through enhancing educational and cultural development,

creating employment and skills development, accessing technology, creating wealth and income, health and responsible social investment by optimizing existing resources through the “Semen Padang PADULI Nagari” program.

IMPROVEMENT OF EDUCATIONALDEVELOPMENT AND COMMUNITY LOCALCULTUREPT Semen Padang realizes the importance of continuing to improve development in the field of education and community culture, in the hope of increasing the empowerment of the community. The Company also continues to encourage the preservation and preservation of local culture, so that local cultural values and wisdom are maintained, defended and able to inspire the reinforcement of social values.

During 2017, activities to improve education and community cultural development were conducted through measurable programs such as:1. The scholarship program is an ongoing program and

distributed twice a year or per semester, awarded to students to outstanding students from underprivileged families residing within the Company. The scholarship recipients start from elementary to university level as well as athletes with achievement of 940 people (SD 414 people, SLTP 271 people, 222 high school and 33 colleges).

2. Development of Bustanul Ulum Elementary School is a form of Company’s concern to the community of Batu Busuk where the Company’s Hydro Power Plant (HEPP) is established. Through the Igasar Foundation, the Company regularly supports teaching and learning activities with programs such as; improving the quality of education, student tuition, improvement of facilities and infrastructure and operational costs. In order to improve the quality of education. To realize a caring and cultured school environment, Bustanul Ulum Elementary School runs Adiwiyata program since 2013. This program was successfully implemented by awarding Adiwiyata School from Mayor of Padang in June 2014 as Environmental Care School. Culture Caring for the environment is also transmitted to guardians and communities around the school, by disseminating organic and inorganic waste and utilization of waste into compost.

CREATING EMPLOYMENT OPPORTUNITIES AND COMMUNITY VOCATIONAL DEVELOPMENT PT Semen Padang attempts to reduce unemployment around the Company, to prevent economic and social gaps in society due to the increase and growth of business over time. Employment creation and skills development are important in community empowerment strategies.

CREATING COMMUNITY WEALTH AND EARNINGSIn line with the Company’s growth, PT Semen Padang attempts to increase assets and the community by fostering local

PT Semen Padang conserves community-based Nagari forests

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entrepreneurs into partners through gradual business operations, in accordance with their business capabilities. This coaching is expected to have a double impact on West Sumatera’s economic growth as well as opening up employment opportunities.

Partnership Program mandated by the Ministry of State Enterprises according to Ministerial Regulation no. PER-09 / MBU / 07/2015, on Partnership Program of SOEs with Small Enterprises and Community Development Program, has been implemented by guidance to Micro Small and Medium Enterprises since 1987. Partnership Program is done in an effort to increase people’s income through the development of productive SMEs as partners of Semen Padang in various economic sectors (industry, trade, agriculture / plantation, fishery / livestock and services). The Partnership Program is implemented in the form of revolving fund lending to strengthen venture capital, accompanied by mentoring activities in the form of managerial training as well as promotional and marketing activities.

From 1987 until the end of 2017, the total funds disbursed reached Rp120 billion, to 6,799 MSMEs scattered throughout the city and district in West Sumatra and Lampung Province. In 2017, the total disbursed funds reached Rp8.22 billion to 333 MSMEs with an effectiveness rate of 90.77%.

Table of Partnership Program Loan Distribution per Region In 2017 No Wilayah

Realisasi

UKM Nilai (Rupiah)

1 Kab. Agam 15 352.000.0002 Kota Bukittinggi 4 280.000.0003 Kab. Dharmasraya 1 50.000.0004 Kab. Solok 5 135.000.0005 Kab. 50 Kota 25 525.000.0006 Kota Padang 181 4.212.500.0007 Kota Padang Panjang 1 30.000.0008 Kab. Padang Pariaman 7 240.000.0009 Kota Pariaman 42 680.500.000

10 Kab. Pasaman 1 15.000.00011 Kab. Pasaman Barat 2 35.000.00012 Kota Payakumbuh 10 305.000.00013 Kab. Pesisir Selatan 16 555.000.00014 Kota Sawahlunto 4 165.000.00015 Kab. Sawahlunto/SJJ 1 15.000.00016 Kota Solok 3 55.000.00017 Kab. Solok Selatan 2 90.000.00018 Kab. Tanah Datar 12 495.000.000

Total 333 8.227.500.000

HEALTH IMPROVEMENT In the implementation of community health service improvement, PT Semen Padang conducts social and community activities, such as Integrated Health Services Center and hospitals as well as mobile clinics that are continuously improved from time to time.

Health development programs undertaken during 2017 are:1. Revitalization of Integrated Health Services Center Program

in the region of Lubuk Kilangan. Improvement of Integrated Health Services Center function as center of maternal and child health service for the surrounding community. Programs conducted in the form of counseling and health socialization, supplementary feeding, provision of play facilities and improved nutrition.

2. Medical Service Program through Mobile Ambulance. The CSR PT Semen Padang cooperates with Semen Padang Hospital (SPH) in providing free medical services or medical treatment directly to the community through ambulance ambulances providing medical personnel (doctors) and medicines.

3. Implementation of mass circumcision, in cooperation with Semen Padang Hospital (SPH) is regularly conducted every year for children from underprivileged families around Semen Padang.

CORPORATE SOCIAL INVESTMENTSemen Padang ensures that every fund utilization which promotes social investment value is considered as the Company investment, in relation to a reduction in risk management, and provides the joint sustainability of stakeholders.

Forms of social investment in the form of infrastructure development, natural disaster aid, worship facilities and other social aids to improve the social life of the community. Here are several social investments that have been realized in 2017:1. Empowerment of Nagari Bussiness Group in the form

of group management training for the communities and capital loan provision that is managed by the communities themselves.

2. Building agricultural irrigation for the agricultural communities.3. Building kindergartens4. Revitalizing and building roads and bridges for the local

community.5. Qurban Animal Aids to mosques and mushallas in the

Company environment every Moslem feast day (Eid Adha Mubarak). This program is aimed for increasing the relationship as well as Syiar Islam (Missionary endeavor). On the Eid Adha MubarakH2016, the distribution of Qurban animals was up to 50 animals..

6. Operational support and the needed aid for foster Children’s Home in Lubuk Kilangan.

7. Renovation of mosques and mushals in the environment of the Company.

8. Aids that consist of volunteers and groceries for flood disasters victims in the region of South Coast, South Solok and City of Padang.

9. Aids that consist of volunteers and food aids for earthquake victims in Pidie Aceh Province.

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ANTI CORRUPTION POLICIES AND PROCEDURESThe existing anti-corruption policies and procedures in Semen Padang have been written in the Fraud Control Program (FCP) technical guidelines and the Company Code of Conduct. Through FCP, PT Semen Padang implements a system of violation reporting and gratification control, including anti-corruption policies and procedures, online.

By 2017, there were 4 (four) reports regarding gratification receipts. After verification by the GCG & MR Bureau, the gratifkasi received is categorized as illegal gratification. Goods / gratuities received have been submitted to GCG & MR Bureau and seized by the Company and subsequently utilized for social activities. This is in line with the procedures contained in the FCP.The Company guarantees that all reports of alleged infringements primarily concerning corruption and other violations will be followed up properly. As a form of support against anti-corruption, on December 19, 2017. The Company commemorated the National Anti-Corruption Day, which was attended by members of Commissioners, Directors and Employees of PT Semen Padang.

TRAINING ABOUT ANTI CORRUPTIONAs a form of concern for anti-corruption, Semen Padang is motivated to erase corruption actions by formulating the ethic codes. The Code embodies the importance of integrity that builds values and develops the capacity necessary to shape employee positions in the fight against and mitigate acts of corruption. The company also conducts training and socialization regarding anti fraud.

CORPORATE RESPONSIBILITY TO THE PRODUCTS AND CUSTOMERS

PT Semen Padang is committed to providing the best products and services, ensuring the provision of quality-quality products beyond defined standards with clear product information, providing technical services, resolving all complaints and ensuring the fulfillment of customer expectations as one of the Company’s stakeholders through the “Semen Padang Campin Nagari “.

BUILDING THE COMPANY WITH EXCELLENCEPERFORMANCE (PROFIT) AND MAINTAININGPRODUCT QUALITY ACCORDING TOSTANDARDS AND REGULATIONSPT Semen Padang realizes the importance of maintaining the growth of the Company’s performance in order for the business to be carried out continuously. One of the most well-maintained things is the high trust of customers, that the products and

services chosen provide real and valuable benefits to be gained.

The company continues to strive to maintain the trust of all customers for the quality of products sold and provide the best service. The Company maintains the quality of products through the implementation of ISO 9001: 2008 standard quality management system that is applied consistently. The company opens opportunities for independent surveyors to conduct periodic inspection of commitment in the implementation of the production system and the consistency of product quality quality according to the required standard

CLARITY OF PRODUCT INFORMATION In providing clarity upon product and service information, Semen Padang implements has stipulated protection standard and minimizes the health impacts of products made, from the start of raw material mining, production activities, and distribution in the form of bulk and bulk packaging along with adequate standard of transport and distribution procedures. The Company strictly monitors the impact of the product in terms of health and safety aspects.

This has made the Company remain free from any penaltiesin terms of discrepancy of disobedience in concerning onhealth and safety impacts of the product..

Every manufactured product that is sold to customers, always concerns on to the health and safety of customers as well as completed with clear information regarding thequalities and specifications on the outside cement packaging.The information covers:1. Mark/logo of Semen Padang as the producer.2. Product name.3. Indonesian National Standard Number (SNI) and Product

Registration Number (NRP).4. Nett weight.5. Type of cement / product.6. Information of the type, advantage and the product use.7. Instructions on product protection and safety information.8. Usage dosage / composition of usage.9. Storage methods and product safety instructions.10. Consumer service hotline number if there is a complaint /

grievance.

The inclusion of information indicates the Company’s obedienceof the provisions, regulations, as well as the laws that assuresthe customers provided with information as stipulated in ActNo. 8 of 1999 regarding Consumer Protection. The fulfillment of all provisions concerning such consumer protection, makes the Company never get sanction or punishment from the authorized party, related to alleged violation of inclusion of product information.

MARKETING COMMUNICATIONIn addition to maintaining the product and resolving any incoming customer complaints, PT Semen Padang seeks to maintain

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the product image and ensure the availability of products on the market, through the implementation of various forms of marketing communications. the goal is to strengthen the position of products and brands in the market and maintain customer loyalty.

There are two forms of marketing communication that are implemented, namely:1. In the form of advertising / promotion on television, radio,

magazines, newspapers, internet media, and outdoor media.2. In the form of gatherings or periodic meetings with

distributors, events, sponsorship, point of sale materials, the establishment of cement user community, including skilled craftsmen on the island of Sumatra and Java.

One form of sponsorship cooperation is the support of PT Semen Padang as the main sponsor of Semen Padang FC, a football club competing in national and regional Asian competition. Marketing communications activities are always carried out with due regard to the prevailing law regulation, so that the Company never gets legal sanction in connection with the implementation of marketing communications in violation of regulatory and regulatory provisions.

The Company already has a system and mechanism for securing customer data and ensuring customers who can access the system are customers with authority and authority only. The procedure is implemented with the aim of preventing the occurrence of actions or actions that may be indicated as misuse of the privacy of other customer data.

REALIZATION OF PRODUCT PROMOTIONPT Semen Padang attempts to inform, offer, and influence consumers regarding its products in order to attract potential buyers to use the product of PT Semen Padang through continuous promotion events through various media and promotion events. The Company’s promotion events are aimed to create positive brand awareness and brand image so that the Company’s positive image stays in the customer’s mind and ultimately can support the sales increase.

FACILITIES, AMOUNT AND DISTRIBUTION OF CUSTOMER’S COMPLAINTSPT Semen Padang always fulfills its responsibility for the procurement of products and their use, with the principle of compliance with the terms, regulations and legislation so that it is never in conflict with the law, either financially or other legal sanctions. In running the marketing activities, the Company is always customer oriented, strives to create sustainable customer satisfaction and loyalty.

To realize the commitment, the Company has realized several programs related to customer as follows:1. Customer Satisfaction index (CSI) PT Semen Padang understands the importance of customer

satisfaction to maintain market share. Therefore, the Company routinely measures customer satisfaction stated in the CSI. Measurement of customer satisfaction is done to channel distributors (distributors, stores / agents), end users (households), ready mix concrete, contractors) and influencers to assess the products and services generated, through survey data collection of questionnaire distribution results.

From the results of CSI, the Company determines the steps forward to improve the maximum customer satisfaction (improvement plan).

2. Conduct Customer Service Call Centers To accommodate and provide an alternative solution to any suggestions, criticisms, complaints or inquiries from customers and the public regarding the products, packaging, distribution, pricing and more, the Company provides customer service facilities, through +62 -800-1-888-222 (toll free) or via email [email protected]. Any customer complaints will be professionally handled through clear standards and mechanisms aimed at customer satisfaction as long as customer complaints are filed with the Company.

3. Technical Services PT Semen Padang is active iniatiating product socialization

to create brand equity and brand awareness by delivering product presentation or joint test / technical support to end users and potential customers as the Company’s technical service program. This is done because of the importance of information to customers about the use of products properly, correctly, and appropriately in order to produce economic product utilization and high quality.

Technical service activities are carried out regularly by the Company’s Technical Services Team incorporated from the marketing unit, quality assurance unit, distribution and transportation unit, and other related units. The company has a service center that handles complaints from customers, both distributors and end users. Each complaint is directly followed up by applying a series of activities, including:• Coordinating with the technical service team to observe

complaints and clarify. If necessary, technical service team, using mobile bag facility to conduct sample test in the field

• Conducting ongoing evaluations with the settlement of any customer complaints.

• Regarding discussions related to customer / product responsibilities are discussed further in Chapter Business Support Overview, Marketing section.

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QUALITATIVE IMPACT UPON CSR ACTIVITIES IMPLEMENTATION FOR STAKEHOLDERS AND COMPANY

Implementation of PT Semen Padang CSR program based on Triple Bottom Line, regarding positive impact to stakeholders. Qualitatively, the resulting impact is the fulfillment of community expectations as stakeholders, supporting the preservation of the environment, and meet the provisions of law, regulations, legislation and compliance with applicable norms and ethics.

The expected priorities and benefits of CSR programs have a positive impact to the company, namely enhancement of corporate image, asset development and security as well as strengthening the competitiveness of the company. These three benefits will greatly affect to the main objectives of the CSR program, namely sustainability and growth.

CSR MILESTONE PLAN OF 2018As an initial stage of CSR implementation that adopt international standard system, in 2018 PT Semen Padang will conduct a series of initiatives as follows:1. Optimizing & harmonizing integrated CSR strategies.2. Implementing of CSR Program implementation that is

participative, planned and measurable and integrated with the Company’s performance.

3. Strengthening the effectiveness of Monitoring and Evaluation of CSR Program.

4. Strengthening the information & reporting system. 5. Supporting the Company’s program in Environmental

Excellency.

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Photo title:For my Indonesia

Photo location:Lime stone Mining - Bukit Karang Putih

Photo caption:Human Resources is an important asset, then PT

Semen Padang is committed to developing Human Resources. The scholarship program is one of the programs routinely initiated by the Company as a

contribution to the state

Position Name Work unitPerson in Charge Yosviandri Dir. Utama

Tri Hartono Rianto Dir. Keuangan & SDMFirdaus Dir. Operasi

Chairman Iskandar Z Lubis Dept. Komunikasi Perusahaan

Vice Chairman Dedi Zaherdi Dept.Akuntansi & Keuangan

Secretary 1 Masrizal Biro Hukum & GRCSecretary 2 Arini Kasmira Biro AkuntansiMember Nur Anita Rahmawati Biro Humas

Ika Nopikasari Biro Pengembangan Organisasi & SDM

Hasfi Rafiq Biro Sistem Manajemen

Refrizon Biro Sarana UmumMuhammad Ikrar Biro CSRMusytaqim Nasra Biro HSEErick Reza Alandri Biro Pemeliharaan

PenunjangPiery Togap Biro Perencanaan

PengadaanYulia Hidayati Biro Manajemen

KeuanganFajar Aristyanto Biro Perencanaan &

Evaluasi ProduksiMareza Harlan Biro Audit Akuntansi &

KeuanganNuralib Biro Quality AssuranceHasmeru Hasler Staf CapexGhufron Vebrianto Staf GRCRika Putri Wahyuni Staf GRCEva Fitriani Staf GRCYoza Reno Hastuti Staf GRCAldyans Rio Pratra Staf GRCFredi Jonafri Staf GRCRebi Yanto Staf GRCMarganti Staf GRCFitria Intan Purwanti Staf GRCIvan Richardo Staf GRCPradiptya Wibawa Staf Akuntansi UmumWelly Gusril Staf Akuntansi UmumIndra Staf Akuntansi UmumFebrizon Biro HumasRaviko Maar Biro HumasThomi Darma Biro HumasNila Puspa Reni Biro CSR

Position Name Work unitMember Kelly Maysha Biro CSR

Dhea Novanda Staf Perencanaan SDM, Pengembangan Organisasi & Manajemen Talenta

Agrian Peby Biro Perencanaan & Evaluasi Produksi

Sarman Durmalay Staf AFR & InovasiHarri Kurniawan Biro Pemeliharaan

PenjunjangRika Rachman Biro HSEFerdy Dinardo Biro HSESiska Ayu Soraya Biro Pengembangan

Organisasi & SDMRisa Rizki P. Biro PersonaliaElisa Maris Heru Staf Audit Sistem

ManajemenRausyan Fikri Staf CapexAjeng Dwi Utami Biro HumasPuspha Sari Staf Perencanaan

SDM, Pengembangan Organisasi & Manajemen Talenta

Ria Kusuma Wati Staf Evaluasi KinerjaHisko Aritivon Biro Hukum & GRCDeby Syahputra Biro Sistem

ManajemenHendra Kusuma Biro Sistem

ManajemenNanda Kurniawan Karyawan yang

Ditugaskan ke PT SISari Ramadhani Karyawan yang

Ditugaskan ke PT SIRonal Karyawan yang

Ditugaskan ke PT SIVerdy Radinal Gusman Biro Perencanaan

PengadaanDelvianti Biro Perencanaan

PengadaanLilik Agus Sugiyono Staf CapexRefcan Afivi Karyawan yang

Ditugaskan ke PT SIHenzo Bernando Karyawan yang

Ditugaskan ke PT SINilvi Rahmi Biro AkuntansiWieky Gusta Biro PersonaliaSri Hartati Karyawan yang

Ditugaskan ke PT SI

The Compilation Team of the Annual Report of PT Semen Padang 2017

Head OfficeIndarung, Padang 25237West SumatraTel p :(0751) 815 250Fax :(0751) 815 590

www.semenpadang.co.id

Kualanamu International

Airport

Bank Indonesia Museum

Gentala Arasy Bridge

Aceh Tsunami Museum Barelang Bridge Great Mosque of

West Sumatra

INCREASING THE EFFECTIVENESSOF BUSINESS PROCESSES AND EFFICIENCY FOR GROWTH ANNUAL REPORT

PT Semen Padang

2017

increasing the effectiveness of business … · high synergy through semen indonesia group in...

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