1.12 Laporan Tahunan | Semen Indonesia AR SI English 2014

Management Reports Company Information Information For Investors Operational Review Assuring the Move Into Next Level 74 To convert the consumption of low calory coals, the Company has completed the construction of one unit of coal mill in Indarung IV Plant, with the capacity of 50 tons per hour and has been in operating since 2014. • Semen Tonasa The Company increased the capacity in Tonasa IV plant from 7,800 tons per day to 8,500 tons per day. The increment was executed partially. Aligned with the capacity increment in Semen Tonasa Plant, the Company is currently constructing one unit of coal mill in Tonasa IV Plant, with the capacity of 80 tons per hour, and the construction progress at the end of 2014 has reached 88.49. • Semen Gresik In 2014, the Company has completed 1 unit of vertical cement mill in Tuban Plant with the capacity of 1.5 million tons per annum. With the completion of this project, Tuban Plant total capacity increased to 14.7 million tons cement per annum. In line with the capacity increment, the Company also has completed the construction of supporting facilities, as follows: - Centralized Coal Storage, to serve coal requirements in Tuban Plant I, II, III, and IV. - Added the Bulk Cement storage capacity to the vessels. - Centralized Trass Storage, to fulfill trass requirements in the cement mill of Tuban Plant I, Tuban II and new vertical cement mill. The Company has finalized the procurement contract of main machineries to modify the Clinker Cooler Tuban II and Tuban III with the latest technology of Cross bar Cooler. The installation of Clinker Cooler for Tuban Plant II has been completed in 2014. Meanwhile the completion for Tuban III Plant was targeted in 2015. Packing Plant Construction To support the distribution facility, the Company currently posses 24 units of packing plant across Indonesia. In 2014, the Company has finalized the additional of 1 packing plant in Mamuju, West Sulawesi and 1 packing plant in Kendari, Southeast Sulawesi. Presently, the Company is in the midst of completing the other packing plants, each in Lampung, Pontianak and Balikpapan. The objectives of packing plant construction was to: • Maintain cost efficiency in transportation, distribution and packaging. • Ensure the continuity of cement supply in the Company’s marketing areas. • Market expansion. The completion of several distribution supporting facilities has enabled the Company to be ready in taking the opportunities of the increasing domestic demands, and to increase market share in the future. Business Development Report Tinjauan Kinerja Domestic Expansion Corporate Governance Implementation Report Corporate Social Responsibility Report Corporate Data Management Discussion and Analysis Financial Statements Assuring the Move Into Next Level 75 Business Development Funds Optimally managing the internal funds and acquiring a long term funding with effective costs and in accordance with the requirements to support business development, to achieve new performance level in the future PRODUCTION FACILITY AND DISTRIBUTION DEVELOPMENT The Company is recognized to have a cash surplus sufficient to meet the funding needs for regular investments, such as production facility maintenance, upgradings, distribution facility development and others. in the last couple of years, the Company has and is executing several business development programs, with investment activities, including: acquisitions, establishment of new subsidiaries business lines, construction of new plants, including the development of production and distribution facilities. To meet the funding needs for investments, the Company sees the need to acquire external funding sources, in an adequate limits, in order to provide optimum benefits in short term or long term. For this purpose, the Company has cooperated with several financial institutions. In the effort to fulfill funding requirements for business development as previously elaborated See Sub-Chapter “Regional Expansion” and “Domestic Expansion”, the Company utilizes loans from banks, in the various loans facility as required. Thereby the Company’s sources of funding in general is derived from internal cash funds, and banking loans. To intensify the optimum use of internal and banking funds in supporting investment activities, the Company has stipulated investment agreement policy, which among others are to determine the investments types and the amount of appropriated funds. The following are policy and programs stipulated by the Company to fulfill the investment funding requirements: • Controlling the loans within limits. • Pursuing funding sources combination that supports maximum IRR to provide optimum benefits on financial performance. • Taking the covenants with optimum benefits for the Company. • Maximizing the corporate internal funding utilization. • Fund raising was centrally enacted in the holding in order to attain competitive pricing and term of conditions. FUNDING REALIZATION IN 2014 In 2014, the Company has finalized the funding to finance several new plants amounted to Rp1.95 trillion. The required fund was constituted of 50 of the financed project, which was a total of Rp3.9 billion. “ “