Good Corporate Governance

Corporate Governance

 


Quote text:
The commitment to implement corporate governance is manifested through the application of values and code of conduct of which are embedded into the Company business activity. The Company also actively monitored and mitigates its business risk by following the applicable policy and strategy.

 

Implementation of Corporate Governance
PT Ciputra Property Tbk is committed to implement good corporate governance in order to enhance the performance as well as clear accountability and responsibilities, as mandated to all Ciputra Group. The commitment is manifested as the foundation and solid foothold for the growth of the Company, to become one of the leading and prominent properties company in Indonesia. The Company also ensures that the principles of corporate governance is embedded in the corporate culture. 


The objective of corporate governance enforcement is to create balance in managing the Company and to avoid any misconduct. PT Ciputra Property Tbk has conducted systematic corporate governance’s practice in its business environment; and it is applied based on the foundation and principles of corporate governance as it was stipulated in the prevailing laws of Indonesia.


The management has set corporate governance as a pattern of its intellectual thinking and work methods, and as a basis to enable efficient and effective work system adjusted to business development, both internal and external.
 

The principles of corporate governance include: 

Ö       

Transparency, is being transparent in decision-making process and transparent in a disclosure of material and relevant information of the Company. This principle has been reflected in the decision making process at the Board of Directors meeting, at internal meetings, with Management of the Company, or in meeting with the Board of Commissioners. 

 

Ö       

Independence, is conducting a professional management of the company without conflict of interest and influence or pressure from any party unsuitable with the regulation and principles of healthy corporate. In conducting its activities, the Company is managed according to the applicable rules and corporations principles without any coercion. 

  

Ö       

Accountability, is clarity of function, implementation and accountability of the organization that allows management to manage the company effectively. In its implementation this has been reflected in a variety of fundamental and reference of the Company’s performance applied to the legislation. 

  

Ö       

Responsibility, is conformity in the management of the company toward the legislation and the principles of healthy corporate. In this case, all action, conducts and performance of the Company should be able to be accounted for. 

  

Ö       

Fairness, is an equal treatment in the fulfillment of stakeholders rights based on rules and regulations. It is conducted fairly by providing opportunities to all management. 

  

To that end, as the basis of corporate governance principles implementation, PT. Ciputra Property Tbk has established Audit Committee, Corporate Secretary and Internal Audit Department. The Company is actively monitors business risks and strives to anticipate and minimize such risks that aligned with applicable policies and strategies. The Company realized that the performance of the Company is the result of good governance and the Company’s ability in managing and mitigates risks. 


PT Ciputra Property Tbk has a strong belief to maintain and improve the implementation of corporate governance at all levels of the company. Commitment to the implementation is actualized in the application of values ​​and norms of corporate behavior, which must be adhered and applied in daily activities. In this case, the Company acted very systematically, in order to apply efficiency in performing best work. In addition to responsibility, the Company continues to provide significant contribution to the community and environment by conducting social programs. Thus, the governance policy is functioned entirely and embedded into the Company.

  

The Company's ability to implement good governance brought positive results and may be seen through the growing confidence from investor, increasing revenue and performance, and also by the acceptace of both local and international awards as a true recognition. Investor community also recognizes the level of transparency and quality of data disclosure by the Company.    

 

Structure and Mechanism of Corporate Governance
The Company has established key structures in implementing optimum corporate governance. As mandated by the governance structure and mechanisms which is: Based on the Law of the Republic of Indonesia No. 40 year 2007 on Limited Companies (Corporate Law), the Company organ consists of General Meeting of Shareholders (GMS), Board of Commissioners and Board of Directors. The administration of limited company adopts two board system which is Board of Commissioners and Board of Directors, which hold authority and responsibility clearly fit their respective functions as mandated by the Articles of Association and laws.

  

GENERAL MEETING OF SHAREHOLDERS
General Meeting of Shareholders (GMS) is a substantial organ of the Company and as a forum for shareholders to take key decisions in regards to the Company, by upholding rules Article of Associations and regulations. GMS also holds the highest authority, legally enforceable and binding in decisions making. The GMS is held once a year.

 The GMS implementation has been applied in accordance with the laws and regulations. PT Ciputra Property Tbk has organized GMS on May 22, 2012, at 10:30 in the Seminar Room, Stock Exchange Building (BEI), 1st Floor, Jalan Sudirman, Kav 52-53, Jakarta 12190.

 

Agenda and Decision of the Annual GMS

1.   

Report of supervisory duties from the Board of Commissioners for the fiscal year ended December 31, 2011;

2.   

Approval of the annual report including endorsment of financial statements and determination of net profit utilization;

3.   

Appointment of Public Accountant to audit financial statements of the Company for the fiscal year ended December 31, 2012;

4.   

Determination of honorarium and allowances of Commissioners and Board of Directors;

5.   

Appointment of members of the Board of Commissioners and Board of Directors; 


In addition, PT Ciputra Property Tbk also held Extraordinary General Meeting (Extraordinary GMS) to discuss the plan and amendment in the utilization of remaining proceeds from the initial public offering. As of March 31, 2012, the remaining proceeds were amounted to Rp. 342.385.203.325. Previously, based on Extraordinary GMS on November 23, 2011, a total amount of Rp. 362,5 billion was approved for PT Sarananeka Indahpancar (SNIP). Thus the remaining was further converted into a total of Rp. 82,5 billion, both utilized and unutilized funds.

 

 The balance of Rp. 280 billion will be applied for working capital of subsidiaries to develop their business. The fund was distributed for land purchse, lending, and to increase capital investment, all are provided with the terms and conditions deemed satisfactory by the Board of Directors, taking into account of the Company's articles of association.

 

Agenda and Decision of Extraordinary General Meeting
The GMS also discussed the Company's plans to conduct buy back of shares issued by the Company to comply with Bapepam-LK No. XI.B.2, Annex Decision of Chairman of Bapepam-LK No. Kep-105/BL/2010 concerning the Shares Buy Back purchased by Issuer or Public Company.

 The share buyback is conducted to increase share performance of the Company of which the result will increase earnings per share in the future. The fund for buyback will be set up from available balance of cash flows as of June 30, 2012 amounted to Rp. 567.000.000.000 (five hundred and sixty-seven billion rupiah); this was excluded from the balance of public offering fund.

 

Based on the buyback report dated January 1, 2012 until December 2012, the Company recorded 6 transactions. Total number of shares buyback was 189,839,500 sheets, or equal to 43.91% of the nominal amount of shares buyback from all nominal amount of shares buyback under the GMS.


The shares buyback is held as a treasury stock by following applicable legislations. The Company will utilize the treasury funds for substantial matters, including but not limited to:

 

1. Resell the shares.
2. Debt financing in equity instruments, such as bonds that are convertible into shares.
3. Investment exchange for future plan.
4. Shares retrieval through capital reduction with the approval of the Board of Commissioners.

  

The plan to amend the allocation of initial public offering proceeds was also stipulated in the GMS. From the total amount of Rp. 1.450.000.000.000 (one billion four hundred and fifty billion), a 75% proceeds was allocated to PT Ciputra Adigraha (CAG) and the balance of which was allocated to PT Subur Agung Sejahtera Abadi (SSAA), was converted to PT Saraneka Indahpancar (SNIP). The Company has a 99% ownership in both subsidiaries.

The GMS was attended by 4,573,980,736 (four billion five hundred and seventy-three million nine hundred eighty thousand seven hundred thirty-six) shares, or 74.37% of the 6.159 billion (six billion, one hundred fifty million) shares, of which are the Company’s shares.

The shareholders will also receive a portion of profits earned by the Company in the form of dividends. The GMS 2012 has approved the distribution of dividends for year 2011 amounting to Rp. 8 per share or a total of Rp. 49.2 billion. This dividend equivalent to 30.9% from net profit fiscal year 2011, which stood at Rp. 159 billion. The dividend distribution was conducted in August 2012.

 

THE REALIZATION OF INITIAL PUBLIC OFFERING PROCEEDS 

   

Revenue from initial public offering              

2,107,000

Initial public offering expenses

73,996

Net Proceeds

2,033,004

Acquisition of PT Ciputra Liang Court

100,035

Acquisition of PT Subursejahtera Agungabadi

128,336

Acquisition of PT Sarananeka Indahpancar

293,537

Construction Cost PT Ciputra Adigraha

1,087,500

Construction Cost PT Sarananeka Indahpancar

20,115

Company and subsidiaries working capital

246,567

Other operational expenses

61,096

Total fund used

1,937,187

Remaning Balance

95,816 

   

* in million Rupiah 

 


BOARD OF COMMISSIONERS 

Pursuant to the Company’s Article of Associations, the Board of Commisioners and Directors were appointed by Annual General Meeting of Shareholders for 3 (three) years tenure and may be reappointed. Until recently the Company assigned 5 (five) Commissioners, 2 (two) of whom are Independent Commissioners, whose duties is to oversee Directors policies and performance in carrying out its business plan and to promote implementation of good governance in the company environment. 


The Board of Commissioners is mandated to conduct supervisory and assessment to the Board of Directors’ management and oversees the committees under the Board of Commissioners. The Board of Commisioners is collectively responsible to the shareholders and is assigned to provide advice to the Board of Directors related to the policy in managing the Company, including planning and development, operations and budget, in accordance with the Company's compliance to the Article of Association and the fulfillment of mandate and decisions at Annual GMS and Extraordinary GMS.

The current composition of the Board of Commissioners:
President Commissioner: DR. Ir. Ciputra
Commissioner: Dian Sumeler
Commissioner: Sandra Hendharto
Commissioner: Henk Wangitan
Commissioner: Thomas Bambang

Frequency of meetings and BOC attendance


In 2012, the Board of Commissioners had 7 (seven) meetings. Attendance number of Commissioners Meeting During 2012 is 100%

 

Board of Commissioners Training Program

During 2012 there were no training carried out for the Board of Commissioners.

BOARD OF DIRECTORS
The Board of Directors hold full responsibility for management of the company in order to achieve goals as mandated by the Article of Associations and GMS. The Board of Directors also actively coordinate and cooperate with the management and functions within the organization, and communicate the progress of the company's strategy, to ensure that the policies are in line with the aims and objectives of the Company. In addition, the Board of Directors must also fulfill its social responsibility and meet the interests of the shareholders.

The Board of Directors continues to promote a consistent good corporate governance implementation within the company. The Board of Directors performs independent duties without interference from other parties, which may lead into conflict of interest or conflict with the laws and article of associations of the Company.

 

Currently the Board of Directors consists of 8 (eight) Directors, two (2) of whom are Unaffiliated Director. The main task of the Board of Directors is to lead and run the Company in accordance with goals, vision and mission, as well as business plans and strategies that have been set.

The current Board of Directors are:
President Director: Candra Ciputra
Director: Budiarsa Sastrawinata
Director: Rina Ciputra Sastrawinata
Director: Harun Hajadi
Director: Junita Ciputra
Director: Cakra Ciputra
Director: Ir. Artadinata Djangkar
Director: Bing Sugiarto Chandra

Frequency of meetings and attendance of Board of Directors
In 2012, the Board of Directors held 6 (six) meetings. The attendance of members of the Board of Directors in the Meeting During 2012 is 100%.

  

The Board of Directors Training Program
During 2012 there were no training carried out for the Board of Directors.

REMUNERATION POLICY FOR DIRECTORS
Duties and responsibilities of Remuneration Committee is to support the Board of Commissioners to determine the remuneration policy for the Board of Commissioners and Board of Directors. The Remuneration Committee is responsible to Board of Commissioners. Remuneration policy for the Board of Commissioners and Board of Directors was presented by the Board of Commissioners in the GMS with respect to the Company's financial performance and fulfillment of reserves, individual job performance and long-term performance considerations.
The Company established the Nomination and Remuneration Committee in 2011.

The Remuneration of the Board of Commissioners and Board of Directors 2012 can be seen in the table below.

 

  Sub Holding 3A

Directors  

       Commissioner and Audit Committee  

Total  

 

 

 

 

 - Ciputra Property

7,800,857,158

1,816,448,000

9,617,305,158

 - Ciputra Adigraha

843,522,000

-

843,522,000

 - Ciputra Sentra

1,284,027,191

-

1,284,027,191

 - Ciputra Semarang

1,160,000,000

-

1,160,000,000

 - Sarananeka Indahpancar

1,052,836,013

-

1,052,836,013

 

 

 

 

Total

12,141,242,362

1,816,448,000

13,957,690,362

 

 

AUDIT COMMITTEE
The Audit Committee was established and appointed by the Board of Commissioners on November 8, 2007. Its main task is to assist the Board of Commissioners on its supervisory function toward the Board of Directors in carrying out business plan and assess the adequacy of internal control systems, the adequacy of the reporting and disclosure of financial statements, and other tasks as stated in the Charter of the Audit Committee.


The Audit Committee may conduct the examination or investigation as necessary, to ensure that the work program or strategy of the Board of Directors is in line with vision, mission and plans that have been established.


In accordance with the Charter of the Audit Committee, the Audit Committee is responsible for reviewing:

·        

Financial Information issued by the Company, such as financial statements, projections and other Financial Information.

·        

Adherence to Capital Market regulations and other fields related to the Company's activities.

·        

Work Plan and internal audit examination results and internal control effectiveness.

·        

Audit adequacy performed by an external auditor and provides opinion in the selection process of public accountants.

·        

Business risks toward the Company and implementation of risk management by the Board of Directors and management. 

 

As for the Board of Commissioners, Audit Committee has full access without restriction to all information, data and records relating to all existing resources. The Audit Committee was appointed by the Board of Commissioners and chaired by an Independent Commissioner.

 

The Audit Committee is chaired by a Member of Board of Commissioners, which also as a Member of the Audit Committee. Members of the Audit Committee consists of at least 1 (one) Commissioner and at least two (2) other members from outside the company. The Audit Committee is periodically evaluated and conducted necessary amendments to ensure the Company’s compliance to regulations of Bapepam-LK and SEC and other relevant regulations.

 

The term of appointment for Audit Committee is the same as the Board of Commissioners. Currently, the Audit Committee consists of three (3) members, including the Chairman, and required to hold general meeting at least once a year. During 2012, the Audit Committee held 5 meetings.


The composition of the Audit Committee are as follows:

 

 

Head : Thomas Bambang

Other position in Company : Independent Commisioner

Member : Lanny Bambang

Member : Melina Indrawati Sutandi

 

 

Profile of Audit Committee Members

 
Widigdo Sukarman
Indonesian citizen, 68 years. Obtained a degree in Economics from the University of Gadjah Mada (UGM) in 1964, earned a Master of Public Administration from Harvard University, USA in 1983, and a Master of Business Administration from Boston University, USA in 1985. Earned a doctorate in economics from the University of Gajah Mada (UGM) in 2003. Appointed as Independent Commissioner and Chairman of Audit Committee since 2007. He also serves as President Commissioner of PT Swadharma Kerry Satya, Commissioner of PT Damai Indah Golf and a member of the Indonesian Banking Supervisory Agency. Currently a lecturer at several universities, including UGM, IPB, UNIMA Manado and Indonesian Banking Development Institute.

 

Thomas Bambang
Indonesian citizen, 55 years. Appointed as member of Audit Committee since June 2007. Earned a Bachelor of Social Workers STPS Widuri Jakarta, in 1982 and a Masters in Social Work from the Asian Social Institute, Manila, Philippines in 1989. Become a member of several social organizations under auspices of the Jakarta Archdiocese since 1976. Being a team member of National Examiners for Vocational Schools at Ministry of National Education since 2005. He currently serves as Independent Commissioner of PT Ciputra Property Tbk, a subsidiary since 2007. Actively engaged as Vice Chairman of the Indonesian Orphanage Forum since 2000, Special Staff and Chief of Bureau of Daya Dharma Institute since 2003.

 

Melina Indrawati Sutandi

Indonesian Citizen, 53 years old. Graduated from Budi Luhur Computer School in 1983. Started her career at Bank Perniagaan Indonesia (BPI) in 1984. Worked at Bank Umum Nasional (BUN) in 1987 until 1993. Currently also serve as Audit Committee Member of PT Ciputra Surya Tbk.

 

Authority of the Audit Committee 

1.   

To perform its duties, Audit Committee is entitled to full access, free and unlimited to notes, records, employees, funds and other corporate assets and resources related to the implementation of their duties.

2.    Direct communication with relevant parties, including information, operations, finance and company‘s management.

 3.    Undertake test or inspection to learn the location where necessary. 

4.   

Coordinate with Risk Management Committee.

5.   

Upon approval from the Board of Commissioners, may seek input from professionals outside the Company relating to performance of duties at the expense of the Company.

 

 Duties and Responsibilities of Audit Committee

·        

Audit Committee’s task is to create Annual Work Program, which approved by the Board of Commissioners.

·        

Evaluate implementation and the results of examination conducted by the Internal Audit Unit 

·        

Assist the Board of Commissioners to ensure effectiveness of role and duties of External Auditors.

·        

Evaluating follow-ups on findings from External Auditor.

·        

Reviewing the effectiveness of internal control system of the Company. 

·        

Provide recommendations on improvement of management control systems and practices. 

·        

Provide advice and input on the issues raised by the Board of Commissioners. 

·        

Reviewing the Company's compliance toward laws and regulations relating to business activities of the Company.

  

RISK MONITORING COMMITTEE 

 

The Managing Director of Sub-Holding Secretariat Committee chairs this committee, which is Risk Manager.

Permanent members consist of:
- Board of Sub Holding Directors / Project Director
 Temporary members consist of:
- General Manager of Related Projects
- Internal Audit


Vision and Mission of Risk Monitoring Commitee

 
Vision
Managing risk to maximize the Company's ability to achieve business goals which lead to the maximization of corporate value and shareholder wealth.

Mission
Manifest the Company's vision by building a comprehensive system and risk management approach to anticipate, identify, prioritize, and manage the material risks toward achievement of the Company objectives.


Risk Coverage
Risk Coverage include any important events or circumstances that may affect the achievement of corporate objectives, including strategic risk, financial, operational, hazard, as well as compliance to applicable laws and regulations. The Company is aware of the importance of a comprehensive framework to manage the risks that may arise. Proactive steps were taken to manage potential in each business unit, thus providing optimal results to the Company.

 

Several of principal risks identified by the management include:

 

Ö       

Effectiveness in managing costs and funding strategies that affects the Company's financial performance, which affect returns to shareholders. The Company minimizes this risk by carefuly calculate costs, advance cost budgeting of construction, advance purchase agreement of various building materials, and capital raising activities suitable to the need of company to obtain optimal funding.

  

Ö       

Existing competition in property development business to always attain potential and strategic land, which will affect the profit rate and growth of property development projects in the long term. The Company reduces this risk by purchasing land continuously in the area of ​​development as well as potential land in other strategic locations for further development in the future.

  

Ö       

Competition in property business, investment and management, which affect profitability of managed assets, as the impact of growing number of shopping center development in Jakarta. This risk was minimized with disciplinary approach and to continue innovation in marketing strategy as well as maintain modern facilities so that the mall will remain as shopping destination for visitors.

 

Ö       

Unstable political situation, which affects the risk of macroeconomic conditions and limit the growth of business. The Company reduces this risk by continuous monitoring and preparing business plans and strategies to anticipate unexpected conditions.

  

Ö       

Changes in laws and regulations related to property business, which may inhibit or increase cost in business activity. The Company reduces this risk by maintaining information on latest regulations. 

 

OTHER COMMITTEES

 In addition to the above committees, the Company does not have any other committees.

 

CORPORATE SECRETARY

 The Company has established Corporate Secretary that function to implement good corporate governance, especially in terms of information disclosure. The Corporate Secretary was assigned to ensure the Company’s compliance toward regulation of the Capital Market Supervisory Agency and Financial Institution (Bapepam-LK) and Indonesia Stock Exchange, as well as a liason between the Company and the community.

 

Corporate Secretary consists of Compliance Division, Investor Relations and Business Analyst, where its functions and responsibilities under the direct supervision of the Executive Director, which is held by Ir. Artadinata Djangkar.

 

INTERNAL AUDIT UNIT

 Internal Audit Unit is chaired by Martin Rahardja, aged 33 years, a graduate of the Faculty of Economics/Accounting from the University of Tarumanagara, Jakarta.

 

Mission
Provide confidence (assurance) and independent and objective consulting in order to increase the value and improve the Company’s operations, through systematic approach, by evaluating and improving the effectiveness of risk management, control and governance processes.

 

Scope of Duties
To ascertain that the risk management, control and management of the Company, which designed and implemented by management has properly functioned, include:

o  

The risk has been sufficiently identified and managed. 

o  

 Interactions with manager as it should.

o  

Important financial, managerial and operational information is accurate, reliable, and timely.

o  

Employees’ conduct has met the policies, standards, procedures, laws and regulations.

o  

Resources are acquired economically, used efficiently, and adequately protected.

o  

To achieve Programs, Plans, and Goals.

o  

Quality and continuous improvement is maintained in controling process in the Company.

o  

Important rules and legislation affecting the Company has been acknowledged and cared of properly.

o  

Potential improvements over management control, profitability, and image of the Company can be found during the audit process, and will be communicated to appropriate management level.


Internal audit can also be a problem-solving partner on the management and operational issues within the Company.


Structure and Position
Structure and position of the Internal Audit Unit are as follows:

o  

Internal Audit Unit is lead by head of the Internal Audit Unit.

o  

Head of Internal Audit shall be appointed and dismissed by President Director with approval of the Board of Commissioners.

 o   President Director may dismiss head of the Internal Audit Unit, following the approval from the Board of Commissioners, if head of the Internal Audit Unit does not qualify as an internal auditor, as set out in this charter and or fail or not capable in carrying out his duties

o   The Head of Internal Audit is responsible to President Director.


Auditors who sat in Internal Audit Unit are responsible directly to the head of Internal Audit Unit. 

o  

Prohibition of double tasks and positions of auditors and executive in Internal Audit Unit in the implementation of operations in both the Company and its subsidiaries. 

  

Duties and Responsibilities 

The following are Internal Audit Unit duties and responsibilities:

 o   Arrange and implement the Annual Internal Audit Plan; 

 o   Test and evaluate the implementation of internal control and risk management system in accordance with the Company’s policy;

 o   Conduct inspection and assessment of the efficiency and effectiveness in finance, accounting, operations, human resources, marketing, information technology and other activities;

 o   Provide suggestions for objective improvement and information about activities that were checked on all managerial level;

 o   Compile audit report and submit to President Director and Board of Commissioners;

o   Monitor, analyze and report the follow-up on conduct of suggested improvements;

 o   Working closely with Audit Committee;

 o   Develop a program to evaluate quality of internal audit activities

o   Perform special inspections when required by the Company or subsidiaries.


Authority

Authority of Internal Audit Unit includes:

o  

To access all relevant information about the Company related to its duties and functions;

o  

To communicate directly with the Board of Directors, the Board of Commissioners, and/or the Audit Committee and member of the Board of Directors, the Board of Commissioners, and/or the Audit Committee;

o  

Hold a regular and incidental meetings with the Board of Directors, the Board of Commissioners, and/or the Audit Committee;

o  

Coordinate audit activities with the activities of the external auditors;

o  

Allocating human resources, specify frequency, choosing subjects, determine the scope of the task, and applying techniques required to accomplish audit objectives.

 

Internal Audit Code of Ethics
Internal Audit Code of Ethics includes two elements, namely (1) Basic Principles and (2) the Code of Conduct.


Basic Principles
Internal auditors are expected to apply and uphold the following principles:

·   

Integrity
The integrity of internal auditors establishes trust and thus provides the basis for the belief on internal audit expertise.

 

·   

Objectivity
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information concerning the activity or process being examined. Internal auditors prepare a balanced assessment of all relevant circumstances and are not unduly influenced by their own interests or by others in forming the judgment skills.

  

·   

Confidentiality
Internal auditors respect the value and ownership of information they receive and do not disclose information without legitimate authority unless there is a lawful obligation or profession to do so.

 

·   

Ability
Internal auditors apply the knowledge, skills, and experience needed in conducting internal audit task/services.

 

Code of Conduct

·        

Integrity

o 

Will conduct the taks by upholding honesty, diligent and responsible. 

o 

Will observe the law and give expected disclosures to the law and the profession.

o 

Will be aware to avoid becoming part of any illegal activity or engage in actions that could eliminate trust in the profession of internal auditing or internal audit department. 

o 

Will respect and contribute to the legal and ethical objectives of the Company.

 

·        

Objectivity

o

Will not take part in any activity or relationship that may damage or any allegedly damage a fair impartial assesment. This participation includes activities or relationships that may be contradictive to the interests of the Company. 

o

Will not accept anything, which can damage or allegedly damage their professional judgment skills. 

o

Will disclose all essential facts, which if not disclosed then possibly to change the reporting activities being observed.

 

·        

Confidentiality

o 

Will be careful in utilizing and protecting information, which obtained during assignment. 

o 

Will not use the information for any personal interest or in any manner against the law or would adversely affect the Company's legal and ethical objectives. 

 

·        

Ability

o

Will only be involved in services in which they posses the knowledge, skills, and required experience.

o

Will perform internal audit services in accordance with the Standards of Professional Internal Auditing.


Practice

o Will continuously improve its ability and effectiveness as well as service quality. 

 

Accountability
Head of Internal Audit Unit is responsible in carrying out their duties to the President Director and has access to the Board of Commissioners, in order to:

o 

Communicate the results of the annual review of adequacy and effectiveness of internal controls and risk management of the business operation conducted by the Company.

o 

Reporting important issues related to internal control of the company/business unit, and provides corrective recommendation.

o 

Regularly deliver the status and results of Annual Audit Plan and adequacy of resource in the unit.

o 

Coordinate and cooperate with other existing control functions (audit committee, external auditors, and others).

  

COMPANY ACCOUNTANT 

 

The company's audited financial statements for the period 2007 - 2012 by the accounting firm as follows:

 

In 2010 by Purwantono, Sarwoko & Sandjaja (Ernst and Young). Payment made for financial statement audit services for the public accounting firm valued at Rp. 814 million. A number of the company’s subsidiaries are audited by a different public accounting office KAP Kosasih, Nurdiyaman, Tjahjo and Partners.

 

In 2011 by Purwantono, Sarwoko & Sandjaja (Ernst and Young). Payment made for financial statement audit services to the public accounting firm valued at Rp. 1,095 million. A number of the company’s subsidiaries are audited by a different public accounting office KAP Kosasih, Nurdiyaman, Tjahjo and Partners.

 

In 2012 by Purwantono, Sarwoko & Sandjaja (Ernst and Young). Payment made for financial statement audit services to the public accounting firm valued at Rp. 1,280 million. A number of the company’s subsidiaries are audited by a different public accounting office KAP Kosasih, Nurdiyaman, Tjahjo and Partners.


In 2012, other services of the public accounting firm is used by the company in addition to financial statement audit, details are as follows:


1. PT Ciputra Adigraha

Tax advisory service: 225,000,000

Out of pocket expense: 215,000

Sub - Total: 225 215 000

VAT: 22,521,500

TOTAL: 247 736 500

 

RISK MANAGEMENT
The Company has taken important step by establishing risk management and integrated it with multi aspect approach known as Enterprise Risk Management (ERM), which has been implemented since 2009. The risk management progress and results in 2012, was much better than the previous year.
 


The Company risk management aims to manage risks that will or happening in the company. The method is to assess risk, develop strategies to address it and mitigate these risks by using or managing existing resources. Strategies that can be taken are diverse, namely by transferring the risk to another party, avoiding the risk, reducing the negative effects of risk, and hold some or all of consequences of a particular risk.
 


Traditional risk management focuses on the risks arising from physical or legal cause (such as a natural disaster or fire, death, and lawsuits). Financial risk management, on the other hand, focuses on risks that can be managed by utilizing financial instruments.


Risk management has duties and functions, including:
• Monitoring and mapping the risks
• Management of risk mitigation
• Evaluation of the results of risk mitigation
• Performance Analysis of risk management

Vision and Mission of Risk Management

Vision
• Minimize risk by conducting maximum risk mitigation efforts to maintain corporate health


Mission
• Managing risks that may occur in the property company
• Provide responsibility lesson for employees toward the business risk

• Increase stakeholder confidence toward the company

 

The goal of implementing risk management is to reduce different risks related to the selected field at a level that can be accepted by community. It can be different types of threats caused by environment, technology, humans, organizations and politics. On the other hand implementation of risk management involves all means available for humans, especially for risk management entities (people, staff, and organization). 

 

The following risks faced by the Company namely; Fluctuations in foreign currency exchange rates, which are mitigated by using money market instruments such as forward, hedging, and others. The capital requirement is mitigated by signing credit agreement with Bank Mandiri. Increases in building materials price are mitigated by signing agreements with contractors and suppliers to bind the sale price. 


A number of projects have been compiling list of risks and mitigation actions in 2012, then be filtered based on priorities with the approval of project director. The risk map wil be viewed from the list. The next actions are mitigation and monitoring to reduce the risk level.

To minimize business risks, the Company strives to always conduct a feasibility study on each project, create a work schedule, and also conduct regular analysis of performance of the project. In addition, to prepare new projects and continue to work closely with experts in respective field to create superior property product. 


In case of an incident, it must immediately be reported by the projects, whether it is ordinary and critical incident. Each incident shall be reported periodically. Risk maps and monitoring of risk levels continue to be enhanced, and further to be embedded in the company culture.

  

Risk Management Supervisor
Risk Management Manager: Adi Subrata, 49 years.
Currently also serve as Financial Comptroller Mal Ciputra Jakarta, Semarang. (?)

Member of Risk Management Supervisor:

 

1.   

Supreme Trihendardoyo, 38 years.
Serve as Accounting Staff, Hotel Ciputra Jakarta.

2.   

Sani Rudy Ramli, 44 years.
Serve as Human Resources, Department Supervisor Hotel Ciputra Jakarta.

3.   

Veronica Ria E., 42 years.
Serve as Chief Human Resources, Mal Ciputra Semarang.

4.   

Setyoadhi Pratomo, 48 years.
Serve as Head of Engineering, Hotel Ciputra Semarang.

5.   

Andi Ibrahim, 32 years.
Serve as Collection Officer, Ciputra World Jakarta.

 

Risk Management Conducts
In various aspects of business, PT Ciputra Property Tbk also met various aspects of risk. To that end, the Company strives to focus and continuously improve its effort and ability to manage risks. Anything that could potentially become risk is classified and analysed thouroughly through the implementation of ERM so as to prevent it from developing into risk that will hinder performance of the company. The company act prudently and cautiously in managing the business toward various risks inherent in the company's decisions and activities.

 

 The following are the principal risks:


Risk of Land Availability
The Company already set plan for business development, including land acquisition in various regions with high growth rates, such as in the central business areas of Jakarta, however the company find limitation in land availability. Any failure of the acquisition will impact on the strategic plan established by the company and may affect the financial condition and operations results in the future.

  

Risk of Legal Certainty
The Company strives to obtain the Building Permits (HGB) and development rights of acquired land. This is an absolute requirement on legal certainty as stated in the land laws. Any absence of the law will impact to a dispute of the status of land rights with the previous owner.
 

 

Risk of Property Fluctuation
Indonesian property industry has cycles and significantly influenced by changes in general and local economic conditions, such as high unemployment rates, availability of financing, interest rates, consumer confidence and demand for property products, both retail, office, hotel and residential. These conditions create risk. For instance, if the project sold when market experienced depression level, this will affect development, payment and other resources conducted previously. This kind of pressure surely will affect the business, financial condition and operations results of the Company

  Financial Risk of Financing

Property development activities require substantial capital investment. The Company may require seeking additional or external financing to meet those needs. However, there is no guarantee of the availability of additional fnancing, both short term and long term. In the course of fund availability, it is advisable to review the terms of funding that favorable to the Company. 


Risk of Competition
In recent years, property industry in Indonesia is dominated by intense competition, not only among local property developers but also the foreign developers. Increasing competition could result in increased costs for land acquisition, excess supply of land and the slow approval process for new property development from the authorities. These issues could adversely affect the Company's operations and performance.
 


Economic Risks
Property industry encounter the economic risk that includes factors of which solely or together may have a negative impact on the property industry. Fluctuation of Rupiah exchange rate against U.S. dollar, interest rates and inflation, have a major impact on financial position of the Company, consumer buying power, consumer spending and demand for the retail market.


Other Risks
The Company’s business activities may be affected by economic conditions, socio-political, natural disasters, terrorist attacks, fire disaster and other risks. To face and mitigate these risks, the Company takes various measurements; including to maintain quality and uniqueness of the property, insuring its main assets, actively seeking land for location of new development, seek funding either through banks or corporate action on the market capital funds to meet the needs of a large and various other programs.

  

INTERNAL CONTROL SISTEM

The Company has prepared and applied Internal Control System in the form of a series of policy and standard procedure in conducting daily operational as well as information system and reporting to support mangement decision. This System is continuously enhanced and considered effective to control and minimize existing risk.

  

Internal Audit Division duties is to ensure that Internal Control System has been well established and effectively conducted in every line of business, it is aligned with the mission stated in Internal Audit Charter, which is to provide objective and independent measurement as well as providing consultative service on the effectiveness and adequacy of controlling, risk management and corporate governance.

 

During 2012, Internal Audit has conducted internal control system as follows:

·        

Compiling Annual Audit Plan both for business unit and head office and implemented the entire audit assignment as planned.

 ·         Audit scope covers examination and evaluation of internal controll system effectiveness and adequecy. 

·        

The measurement on effectiveness and efficientcy of the finance, accounts, marketing, human resource, operational information technology and other activities with risk based audit approach, also detection on possibility of violation or fraud.

 

Provide corrective advise on internal control system and conduct disscusion with Director and related management. 

·        

Monitor follow-ups on agreed correction

 ·         Prepare and report Audit result along with the follow-up to President Director.

 ·         Report the progress and result of audit periodically and follow-up from the Board of Directors and management to Audit Committee and the Board Of Commisioners

·        

Evaluate Internal Audit quality and conduct completion of audit program, technique, reporting system also improve the auditor’s competence.

 

LITIGATIONS

PT Ciputra Property Tbk and subsidiaries currently are not involved in any case and litigation in Indonesia and abroad, either in the form of a lawsuit or in settlement status with significant impact on our financial condition, revenues, assets and business sustainability of the Company and its Subsidiaries.

  

ACCESS TO INFORMATION AND CORPORATE DATA
The access to information and corporate data which required by stakeholders can be accessed via:
Website:
www.ciputraproperty.com.

Press Release
Press Conference
Advertorial
Reports accordingly to Capital Markets regulation via IDX


Investors and the public can also obtain further information and explanation regarding the Company through e-mail at
investor@ciputraproperty.com.


CORPORATE ETHICS AND CODE OF CONDUCT
Code of Conduct is a set of Corporate Governance practices which explains value and standards of business practice conducted by the Company and as a reference for every individual. At the same time it provides explanation to shareholders on the management of the Company.
 


Integrity is set as philosophy of the Company's Code of Conduct. To uphold honesty, ethics, and morals in works, to create favorable work climate and optimize the value for shareholders in accordance with the Company's vision and mission.

 

These statements are established as the company culture that will be turned into work ethic and bring positive image in the hearts of individuals and public.

Key to successful implementation of Code of Conduct is cooperation and participation from all boards and employees.

Every board and employee of the Company received a copy of Code of Conduct. All chapters and rules in Company's Code of Conduct apply to all individuals without exception. The Company will impose penalty for officials and employees who violate the rules that has been established accordingly to Company Regulations of and applicable Legislation.

 

WHISTLEBLOWING SYSTEM

Whistleblowing system, or commonly referred as mechanism of violation reporting which implemented by the Company in order to maintain reputation and stakeholder’s confidence toward the Company. Complaints and recording system is communicated to Directors. This is a two-way communication and carried out consistently in each unit in the Company.

 

Reporting can be delivered both orally or in writing to the board of directors. The mechanisms to report violations follow the procedures as below:

 

1. Mechanisms for violations report in writing:

a. Address official letter to the company c.q Board of Commissioners, by hand delivery, sent by facsimile, or post mail.

b. Presented to the official address:

         PT Ciputra Property Tbk
Jl. Prof. DR. Satria Kav. 11
Jakarta 12930, Indonesia
Tel: (021) 5202585
Fax: (021) 52922846

 c.   Written violations report shall be completed with photocopies of identity and supporting documents, such as: documents related to the transactions and/or violations.

 d. Written violations report without identification shall be completed with photocopies of supporting documents, such as: documents related to the transactions and/or violations.

 2.  Stakeholders Representative

When violations report filed by representatives of stakeholders, in addition to the above documents, other documents may be submittes, such as:

a. Photocopy of identity proof from Stakeholders and Stakeholders’ representative.

b. Letter of Attorney from stakeholder for representatives, which stated that stakeholders provide authority to act for and on behalf of the stakeholders.

c.   If the representatives of stakeholders are an institution or legal entity, there shall be documents attached with power of attorney to represent the institution or legal entity.

 

 3. Recipient of violations report

 a. The Company receives Violations Report from stakeholders and/or representatives of stakeholders both verbally and in writing.

 b. The Company provides explanation on policies and procedures of completion of the violations report to Stakeholders and/or representatives who filed violations report.

 c.   The Company provides receipt, when the written report is submitted

 d. The Recipient of Violations Report is the Board of Commissioners c.q Audit Committee.

 

4.   Mechanism of Reporting Violation is published to all stakeholders to meet implementation of GCG.