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Audit Committee

The Audit Committee functions to support the Board of Commissioners in performing its oversight duties in accordance with prevailing requirements of OJK Regulation No. 55/POJK.04/2015, 29 November 2015, regarding the Establishment and Guidelines for the Work of Audit Committees, and the Indonesia Stock Exchange – pertaining to the integrity of financial report, risk management and internal control; compliance with legal and regulatory requirements; the external auditor’s performance, qualifications and independence; and the performance of the internal audit function. The Audit Committee, however, functioned independently.

Members of the Company’s Audit Committee are elected by the Board of Commissioners. The Chairman of the Audit Committee also acts as the Company’s Independent Commissioner who reports directly to the Board of Commissioners. All members of Audit Committee intensively attend meetings which are scheduled every quarter (4 times a year) to review the effectiveness of internal audit functions, evaluate the effectiveness of audit implementation by external auditor, review all financial statement, and evaluate effectiveness of internal control – as specified in the Audit Committee Charter.

In 2021, the Audit Committee members were:

Ashish Saboo (Chairman)

Indian citizen, born in 1971 (50 years old). Master’s degree in Business Administration and a Bachelor’s degree in Electronic and Communication Engineering. He has served as an Independent Commissioner of the Company since August 2020.

Suwandi (Member)

Indonesian citizen, born on 6th April 1978. He earned his Bachelor’s Degree from Faculty of Economics, majoring in Accounting in 2000 from Tarumanegara University. He has served as member of Audit Committee of the Company since 2021.

Wahyu Septiana (Member)

Indonesian citizen, born on 11 September 1960. He earned his Diploma in Accountancy in 1988 from Sekolah Tinggi Akuntansi Negara. He has served as member of Audit Committee of the Company since 2018.

During 2021 the Audit Committee has carried out their functions and responsibilities pursuant to the Audit Committee Charter.

Appointment of Chairman and Members of the Audit Committee was based on Resolution of Board of Commissioners’ meeting on 28 September 2021. The Audit Committee’s term of duty for this period will end at the closing of the 2022 AGMS. In 2021, due to the pandemic situation, the Company’s Audit Committee did not sign up for any training program.

Code of Conduct

Maintaining high standards of ethical and legal conduct is central to MBA’s success. All staff of MBA including the Board of Commissioners and Board of Directors are expected to comply with applicable legislations as well as internal rules which are laid down in our code of conduct. First implemented in 2017, our code of conduct sets forth the standards and expectation that all staff must fulfil at work. It also serves as a guide to the way we conduct our business and forms the basis for decisions we take every day at MBA.
All new employees of PT Map Boga Adiperkasa Tbk will receive induction program of the Company’s code of conduct, as well as continuous and consistent socialization on Company’s policies.

Culture of respect and equal opportunity
MBA is committed to promoting and maintaining a culture of respect and equal opportunity. We do not discriminate on the basis of gender, religion, race, national or ethnic origin, cultural background, social group, disability or illness, marital status, or age. Decisions pertaining to recruitment, promotions and other related areas are based solely on staff’s qualifications and merit.

Confidentiality
Everyone at MBA is expected to protect sensitive information by taking steps to maintain confidentiality, in order to prevent inappropriate disclosure.

Safe and healthy environment
MBA makes a conscious effort to ensure that our work environment and practices are safe, healthy and environmentally sound. Everyone at MBA is expected to act in full compliance with applicable safety, health and environment legislations.

Use of company’s assets
MBA provides the tools necessary to perform jobs. These tools are properties of MBA and must not be used for personal interest.

Integrity
At MBA, we always follow legislations and reasonable business practices. We act at arm’s length and adhere to the highest standards of integrity and transparency. The Company has an anti-corruption policy set forth in the Company’s Code of Conduct. We avoid conflicts of interest, and always put the interest of MBA ahead of other personal and business interests.

Commitment to environmental responsibility
We are committed to environmental responsibility and take steps to reinforce this commitment through environmentally-responsible practices.

Risks & how we manage

MBA is subject to variety of risks. It is crucial for the company to identify and control these risks to optimize shareholder value and ensure that a proper system of checks and balances is in place to effectively manage the risks without inhibiting business flexibility and operation.

Set forth below are some of the major risk factors associated with the Company. Additional risks not presently known to the Company, or currently deemed less material, may also have an adverse effect on the business.

Economic Risks

MBA’s operation is highly susceptible to the state of domestic, regional and global economic conditions. Changes in consumer confidence and the health of the economy may have a material adverse effect on our business in many ways, including slowing demand for our products and ultimately, our financial performance. To mitigate exposures to such risks, external economic outlook is carefully considered and continuously monitored when developing strategies. We have a planning and management review process (including periodic monitoring of budgets and expenditures) to respond to changes in economic conditions.

   

Political & Social Risks

MBA may be impacted by political and social changes, increased scrutiny by authorities and political developments relevant to the retail sector. The Company tries to anticipate and has specified insurance policies as well as crisis management processes involving our CEO and senior management team to respond to emergencies and/or catastrophic events. Apart from covering operational risks pertaining to health and safety of employees and customers, the company is also protected by public liability insurance coverage. The Company is also covered up to a certain limit for possible business interruption.

Regulatory Risks

Our business and the retail sector as a whole are subject to a wide array of laws and regulations. Significant legislative changes and failure to comply with applicable laws and regulations could adversely affect our financial performance and operations. However, the Company continuously monitors legal and regulatory compliance. We also regularly participate in discussions with regulatory authorities as well as the industry to provide feedback on regulatory reforms and developments in the retail industry.

Competitive Risks

The Company engages in intense competition with other retail companies. If we are unable to positively differentiate ourselves from other retailers, our results could be adversely affected. To circumvent competition, we create an attractive value proposition through a careful combination of price, product assortment, convenience, customer service and marketing efforts. We also continue to invest heavily in innovation and technologies to build customer satisfaction and loyalty, providing many compelling reasons to shop with MBA.

New Business Risks

As part of our aggressive growth strategy, a substantial part of our business is dependent on our ability to invest in new growth areas to create new revenue streams, and make trend-right decisions. Failure to predict constantly changing consumer preferences, spending patterns and other lifestyle decisions may lead to deterioration in our financial results.

There is no guarantee that the Company will achieve success in all new ventures. However, to mitigate risks, we conduct market feasibility studies before acquiring new brands or venturing into new cities or malls.

Financial Risks

The principal financial risks faced by the Company include changes in foreign currency, interest rate, market liquidity/ funding, and access to financing resources. To hedge exposure to these risks, the Company established policies, guidelines and control procedures to manage and report exposure to such risks.

Partnership Relations Risks

While we do not own many of the brands in our portfolio, MBA plays a highly significant role and much of our success depends on the relationship we uphold with principals as well as the strength and popularity of the respective brands.

Either with the brand, or with its principal, there is no assurance that the Company will be able to maintain these relationships. To address the possible risks of principal’s termination or failure to renew existing contracts, we set out a clearly defined partnership strategy – while improving relationships with our brands’ principals.

Natural Disasters & Disease Outbreak Risks

Severe weather or other natural disasters, including storms, floods, fires, earthquakes or terrorist attacks, as well as health pandemics that lead to declaration of state of emergency, lockdown, travel ban, closure of malls and quarantines, could adversely affect our business. Any such event affecting our stores or facilities could result in significant interruption and disruption of our business. Mitigating the risks and challenges of disasters takes extensive planning. It is critical for MBA to ensure there are crisis management plans and experienced real-time crisis response personnel in place to mitigate the potential impacts of a natural disaster or disease pandemic and return to normal operations as quickly as possible. In relation to the safeguarding of Company’s assets, the Company has a comprehensive insurance coverage for risks or perils that could damage any of the Company’s assets or facilities.

Data Security Risk

Due to our large network, most of our communication, data storage, and transactions, are handled through an IT system. Breach of our IT system is one of our business risks. To manage those risk, MBA has an extensive IT system that comprises of networks, servers and data storage infrastructure that are securely located in a tier-3 certified and ISO 27001-compliant data center and also at a secondary data center for Disaster Recovery Center.

We conduct periodic IT vulnerability assessment to identify potential IT system disruption and security threats in real-time to mitigate disruption and data breaches.

All incidents are investigated through root cause analysis to prevent future occurrence. For all business units that collect customer personal information, we have an established privacy policy that complies with government’s regulations on personal data protection.

Food Safety Risk

Food safety and integrity remain vital for our business. To ensure we always comply to changing food safety requirements, we impose strict control across all stages of our retailing process, from the raw material sourcing, storage, food preparation, serving and store cleanliness. MBA has attained the ISO 22000 on Food Safety Management System for central production of Cold Stone Creamery and Krispy Kreme. Our stores also implement clear Standard Operating Procedure (SOP), which outlines standards of food handling, hygiene and sanitation. With the ever-growing demand for certified Halal products, MBA’s brands including Starbucks, Krispy Kreme, Cold Stone Creamery, and Pizza Marzano have obtained Halal certificates from MUI. In order to receive and respond to our customers’ feedback, we also provide customer service support in each of our F&B business unit.

Litigation

We face risks of litigations, regulatory investigations and actions by regulators or private parties in connection with our operations. Any substantial legal liability or regulatory action could have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and credibility. To protect the Company from these risks, MBA takes great care in complying with regulations. The Company has also put in place contract policies to manage contractual agreements with principals, vendors, third party strategic partners and customers.

WHISTLEBLOWING SYSTEM

The whistleblowing system (WBS) is an integral part of the Company’s Code of Conduct. WBS can be used by all parties within the Company to report an action that is considered as a violation of the Company’s Code of Conduct or other Company’s regulations.

Reports can be submitted through the WBS contact point in the form of email and hotline number. Internal Audit/Compliance will follow up on all reports that come in through WBS, based on the applicable whistleblower’s SOP. If necessary, Internal Audit/Compliance and Human Capital will also conduct a joint discussion to respond to reports that are deemed necessary for further investigation. Internal Audit/Compliance provide a thorough report on the performance of the WBS to the Company’s management regularly.

Through the WBS, the Company guarantees freedom of speech for all parties who submit their reports through the system. The Company guarantees the confidentiality of the party submitting the report, as well as ensures the protection of the whistleblower in connection with concerns associated with loss of employment or other losses. The Company values every report, and will investigate all reports submitted through the system.

Violation and Follow Up

In 2021, there were several violation complaints received by the whistleblowing system, on issues related to reporting, security, discipline, violation of procedure (SOP), and fraudulence. Currently these cases have been resolved internally and in accordance with Company’s regulations.

Nomination and Remuneration Committee

Remuneration and Nomination Committee

The Company established a Nomination and Remuneration Committee pursuant to the Decree of Board of Commissioners dated 6 March 2015 concerning the Appointment and Establishment of New Nomination and Remuneration Committee Members. With the Committee’s establishment, the Company indicated its regulatory compliance, particularly with FSA Regulation No. 34/POJK.04/2014 dated 8 December 2014, concerning the Nomination and Remuneration Committee of Issuer or Public Company.

The Nomination and Remuneration Committee is intended to support the supervisory function of the Board of Directors’, Board of Management and employees’ nominations, and their remunerations.

The Company ensures that all of the Nomination and Remuneration Committee members always act in independent manner and have no financial relationship with the Company, unless remuneration which is entitled to be paid for their services as the members of Nomination and Remuneration Committee.

The criteria and rules for the appointment of members of the Nomination and Remuneration Committee are discussed and decided at the General Meeting of Shareholders.

a. Structure and Membership

In 2021, structure of the Nomination and Remuneration Committee consist of:

Ashish Saboo (Chairman)

Indian citizen, born in 1971 (50 years old). Mr. Saboo holds a Master’s degree in Business Administration and a Bachelor’s degree in Electronic and Communication Engineering. He has served as an Independent Commissioner of the Company since August 2020.

Handaka Santosa (Member)

Indonesian citizen born in 1956 (65 years old), he earned his Bachelor Degree in Civil Engineering from University of Diponegoro, Semarang, in 1981. He has served as a member of the Nomination and Remuneration Committee of the Company since 2020.

Anastasia Dwiyani (Member)

Born in 1968 (53 years old). She holds a Bachelor Degree in Law from Gadjah Mada university (Jogjakarta) in 1994.

Appointment of Chairman and Members of the Nomination & Remuneration Committee was based on the Board of Commissioners’ Decree No.01/RES-DK/MBA/III/2017, dated 23 March 2017. In 2021, due to the pandemic situation, the Company’s Nomination and Remuneration Committee, did not sign up for any training program.

b. Duties and Responsibilities

The Committee is responsible for the following duties:

I. Nomination Functions:

1. Make recommendations to the BOC on:

a. Composition and nomination procedure of membership of the BOD and/or BOC

b. Required policies and criteria for nomination procedure

c. Performance evaluation policies for BOD and/or BOC

2. Assist the BOC in evaluating the performance of the BOD and/or BOC based on the prepared benchmarks

3. Make recommendations to the BOC on programs for developing the capabilities of the BOD and/or BOC

4. Propose to the BOC any candidate who might qualify as a member of the BOD or BOC to be submitted to the general meeting of shareholders (“GMS”)

II. Remuneration Functions:

1. Make recommendations to the BOC on:

a. Remuneration Structure

b. Policy on remuneration

c. Amount of remuneration

2. Assist the BOC in evaluating the performance of the BOD and/or BOC in accordance with their remunerations.

c. Frequency and Attendance

The Nomination and Remuneration Committee met 3 times in 2021, representing attendance rate of 100%.

d. Performance Assessment of Members of the Boards of Commissioners and Directors

The individual performance of the members of the Board of Commissioners and the Board of Directors is assessed on annual basis by the Nomination and Remuneration Committee.

e. Remuneration Policy for Members of the Boards of Commissioners and Directors

The General Meeting of Shareholders authorized the Board of Commissioners to design, establish and execute the remuneration system, including honorarium, allowances, salaries, bonuses and other remuneration for members of the Company’s Board of Directors.

The following factors are included in the calculation of remuneration of the Board of Commissioners and Board of Directors for the year 2021, which was approved at the Annual General Meeting of Shareholders on 18th August 2021: individual performance, the Company’s results, market competitiveness, the Company’s financial capacity, and other matter.

In 2021, The Group provides short-term benefits to its Board of Directors amounting to Rp23,780 million. Certain members of the Board of Commissioners of the Group are also directors of PT Mitra Adiperkasa Tbk. All of the benefits given to these Commissioners are being borne and paid by PT Mitra Adiperkasa Tbk.

STOCK INFORMATION

HISTORY OF SHARE LISTING

The Company’s total of 2,170,922,900 shares was listed on the Indonesia Stock Exchange on 21 June 2017, with initial offer price of Rp 1,680,- per share. Listing of stock was based on effective notice from the Chairman of the Financial Service Authority through letter No. S-306/D.04/2017 dated 14 June 2017.

The number of Company’s shares since our listing on Indonesia Stock Exchange up to 31 December 2021 remains unchanged.

Internal Audit Unit

Pursuant to Bapepam – LK Rule No. IX.I.7 on the formation and Charter’s guidelines on Internal Audit Unit, the Company established an Internal Audit Unit on 7 December 2009. Internal, The Internal Audit Unit was established to improve the efficiency and effectiveness of the Company’s operations, including risk management governance. The Internal Audit Unit is neutral and operates independently from other business activities of the Company.

Stipulated in the Internal Audit Unit Charter, duties and responsibilities of the Internal Audit Unit include, among others, the development and execution of the Annual Internal Audit Plan – as well as the testing, evaluation and implementation of internal control and risk management system. The Internal Audit Unit also conducts evaluation and assessment of various key corporate functions including finance, accounting, operations, human capital, marketing and information technology. Another responsibility of the Audit Internal Unit is to conduct Investigative Auditing if deemed necessary to protect the Company’s interest.

The Internal Audit Unit monitors, analyzes and reports the Follow-Up Auditing process to ensure that all internal audit findings and related recommendations are properly addressed. The Unit directly reports to the President Director on its duty performance. In carrying out its responsibilities, the Internal Audit Unit works closely with the Audit Committee.

Independency, integrity, honesty and objectivity, as well as the quality of audit implementation are always upheld based on Code of Ethics by the Internal Auditor. All audit results are submitted to the organizational unit to be evaluated – as well as the President Director and Board of Commissioners.

Nicholas Oktavius Budiman

Indonesian citizen, born in 1985, Nicholas is currently an Internal Auditor for MBA. Prior to joining MBA in 2019, he was a Junior Auditor for Deloitte Indonesia (2010 – 2012), Senior Auditor for KPMG Indonesia (2012 – 2014), and Branch Operation Control & Risk Management Analyst for PT Astra International Tbk Daihatsu Sales Operation (2014 – 2019). He is a Certified Risk Management Professional (CRMP) by the Risk Management Professional Certification Institute.

Appointment of the Internal Audit Unit was based on Directors’ Decision Letter no. 001/SK-DIR/MBA/III/2021, dated 23rd March 2021. His appointment as Chairman of the Internal Audit Unit was based on his academic background and professional experiences in related fields.

In 2021, due to the pandemic situation, the Company’s Internal Audit Unit did not sign up for any training program.