Policy

RISK MANAGEMENT

The Company is committed to implement risk management systematically, structurally, and integratedly in order to evaluates and anticipates potential uncertainty or loss in business activities. The Company has also compiled policies, guidelines and procedures to identify risks, as well as determine risk management strategies which covers dodging risks, risk mitigation, and protection towards several or all risk consequences.

In addition, the Company establishes Risk Management Team to coordinates all departments and employees in implementing risk management system in every work process of each department. The Company is also committed to make risk awareness as a part of the Company’s culture through an effective and optimal risk management in order to create, protect, improve Shareholders value, improve the certainty of development and sustainability of business.

PROFIL AND RISK MITIGATION

The Company has identified the following risks that may affect the Company:

Foreign Exchange Risk

Foreign exchange risk is caused by the fluctuations of normal value or future cash flow from a financial instrument due to changes in foreign exchange rates. The Company’s exposure toward this foreign exchange fluctuation mainly comes from short-term loans and trade payables as which is mostly in US Dollars.

The Company uses foreign currency for a portion of its revenues and costs of raw materials, the prices of which refer to the London Metal Exchange (LME) reference prices. The Company uses derivative financial instruments such as foreign currency swap contracts and commodity swap contracts to anticipate risks that may occur. The Company uses derivative transactions for hedging and not as trading instruments or for speculative purposes.

Price Risk

Price risk is a financial loss caused by the price changes of the Company’s production raw material. One of the causes of the Company facing price risk is a change in prices in the future  to purchase High Concentrate Aluminum and Copper.

Therefore, the Company uses commodity futures contracts (buy-sell) with international financial institutions in connection with the risk of changes in prices of these raw materials. The Company is confident that it has reduced some risks of changes in commodity prices in the future.

Interest Rate Risk

Interest rate risk is a normal value or future value from financial instrument that fluctuates due to the changes of the market interest rates. At this time the Company has exposure mainly on bank loans and short-term and long-term financing lease, which affected the loan repayment at maturity.

Credit Risk

Credit risk is a financial loss experienced by the Company when the customer fails to fulfill the liability under the contract, no concentration on the significant credit risk. The Company manages and controls credit risk by determining acceptable risk limits for each customer and monitors related exposure with this limit.

The Company only establishes business relationships with third parties that have reputation and credibility. The Company also has a policy that requires all of its customers to go through credit verification. Total of credit will also be monitored constantly to reduce the impairment loss.

Liquidity Risk

Liquidity risk is a risk where the Company will have a difficulties in disbursing funds to fulfill commitments related to financial instruments. To mitigate this risk, the Company implements a policy to regularly monitor current and future liquidity needs to ensure that the Company has sufficient cash reserves to meet short-term and long-term liquidity needs.


WHISTLEBLOWING SYSTEM

Through divisions, departments and work units that are actively involved in supervision, the Company has a working mechanism that receives reports of violations of the Company’s code of ethics, which indicates fraud. Reports of violations can also be submitted to the Business Ethics Committee, or via telephone, fax, PO.Box, e-mail or other media. The report can also be submitted in anonym. The Company is also committed to keep the confidentiality of the whistleblower’s identity in order to protect them from all forms of threats, harassment, and retaliation.

Furthermore, the Company will conduct an investigation on the report and take the necessary actions. In addition, the Company will take corrective actions that are considered important in order to prevent similar violations in the future.