ANNUAL REPORT

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ANNUAL REPORT

2014

Supported by competence, experience and learning process that span more than 125 years, we are here as part of the fight to save lives and improve the quality of living, as we play a crucial role in developing the health of the nation, maintaining our existence throughout the years. With “Dedicated to Improve Quality of Life” as our philosophy, we are ready to dedicate our hard work to the global health security, so that through Bio for Life, we provide solutions for global welfare.

CONTENT 2

PREFACE

BRIEF PROFILE OF MEMBERS OF THE BOARD OF COMMISSIONERS

60

BRIEF PROFILE OF MEMBERS OF THE BOARD OF DIRECTORS

64

HUMAN RESOURCES

68

GOLD PROPER

6

SHAREHOLDING COMPOSITION

78

PENTABIO VACCINE

8

BIO FARMA'S SIGNIFICANT ACHIEVEMENT IN 2014

10

LIST OF SUBSIDIARIES AND/OR ASSOCIATED ENTITIES

78

Bio Farma in Brief

14

CORPORATE GROUP STRUCTURE

78

CORPORATE POLICY AND CULTURE

17

SHARELISTING CHRONOLOGY

78

2014 STRATEGIES

18

LISTING CHRONOLOGY OF OTHER SECURITIES

79

2015 PRIORITY STRATEGIES

19

NAMES AND ADDRESSES OF CAPITAL MARKET SUPPORTING PROFESSIONAL INSTITUTIONS

79

Vaccine Production Processes

20

CERTIFICATIONS & AWARDS

80

Vaccine Development Lifecycle

22

SIGNIFICANT EVENTS

84

Cold Chain System

24

How Our Vaccines Reach Our Customers

25

SUBSIDIARIES AND/OR BRANCH OFFICES OR REPRESENTATIVE OFFICES

90

Management Analysis and Discussion Company Performance

92

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

95

FINANCIAL HIGHLIGHTS Bio Farma’s Business Results in the Past 5 Years

26

Bio Farma’s Financial Positions in the Past 5 Years

27

FINANCIAL RATIOS

29

Share Performance AND Sharelisting Chronology

30

Summary of Bonds/Sukuk/Convertible Bonds and the Listing Chronology of Other Securities

30

Report from the Board of Commissioners and The Board of Director Report from the Board of Commissioners

32

Report from the Board of DIRECTORS

38

Responsibility Statement for Annual Report of 2014

49

COMPANY PROFILE

The Company’s Financial Statements

107

THE COMPANY’S SOLVENCY AND RECEIVABLES COLLECTIBILITY

138

CAPITAL STRUCTURE and MANAGEMENT POLICY ON CAPITAL STRUCTURE

139

MATERIAL COMMITMENTS FOR INVESTMENT OF CAPITAL GOODS

140

REALIZED INVESTMENT OF CAPITAL GOODS IN THE PAST FISCAL YEAR

141

COMPARISON OF TARGETS IN THE BEGINNING OF THE FISCAL YEAR TO THE ACTUAL RESULTS, AND TARGETS OR PROJECTIONS FOR THE NEXT FISCAL YEAR

144

SUBSEQUENT MATERIAL FACTS AND INFORMATION

148

COMPANY NAME AND ADDRESS

50

THE COMPANY’S PROSPECTS ASSOCIATED WITH THE GENERAL ECONOMIC AND INDUSTRY

148

BRIEF HISTORY OF THE COMPANY

52

MARKETING ASPECT

154

LINE OF BUSINESS

54

ORGANIZATIONAL STRUCTURE

56

PHILOSOPHY, VISION, MISSION

58

DIVIDEND POLICY, AMOUNT OF CASH DIVIDEND PER SHARE, AND AMOUNT OF DIVIDEND PER YEAR ANNOUNCED OR PAID FOR THE PAST FIVE FISCAL YEARS

157

EMPLOYEE/MANAGEMENT STOCK OWNERSHIP PROGRAM CARRIED OUT BY THE COMPANY

159

USE OF INITIAL PUBLIC OFFERING PROCEEDS

159

INVESTMENT, EXPANSION, DIVESTMENT, MERGER, ACQUISITION, OR RESTRUCTURING OF CAPITAL DEBT

159

MATERIAL INFORMATION ON CONFLICT OF INTEREST AND/OR ON TRANSACTIONS WITH RELATED PARTIES

160

CHANGES TO REGULATIONS AND THE IMPACTS ON THE COMPANY’S PERFORMANCE

160

CHANGES TO ACCOUNTING POLICIES IMPLEMENTED BY THE COMPANY IN THE LAST FISCAL YEAR

161

GOOD CORPORATE GOVERNANCE

162

Description OF the Board of Commissioners

165

INDEPENDENCE OF the Board of Commissioners

180

THE BOARD OF DIRECTORS

182

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS PERFORMANCE ASSESSMENT

200

REMUNERATION FOR THE BOARD OF DIRECTORS

206

INFORMATION ON ULTIMATE SHAREHOLDER

208

DISCLOSURE OF AFFILIATIONS BETWEEN MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND THE ULTIMATE AND/OR CONTROLLING SHAREHOLDERS OF THE COMPANY

208

AUDIT COMMITTEE

213

RISK, DEVELOPMENT & GCG COMMITTEE

217

SECRETARY OF THE BOARD OF COMMISSIONERS

222

CORPORATE SECRETARY

223

GENERAL MEETING OF SHAREHOLDERS (GMS)

226

PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

230

PUBLIC ACCOUNTANT

239

CORPORATE RISK MANAGEMENT

241

DESCRIPTION OF THE INTERNAL CONTROL SYSTEM

249

MATERIAL CASES FACED BY THE COMPANY

250

ACCESS TO CORPORATE INFORMATION AND DATA

251

CODE OF CONDUCT

254

WHISTLEBLOWING SYSTEM

259

CORPORATE SOCIAL RESPONSIBILITY

262

ENVIRONMENTAL CSR

265

CORPORATE SOCIAL RESPONSIBILITY FOR SOCIAL AND COMMUNITY DEVELOPMENT

270

CSR IN PRODUCT RESPONSIBILITY

273

Information Technology

274

FINANCIAL STATEMENTS

282

CROSS REFERENCE TO BAPEPAM & LK REGULATION NO. X.K.6

339

HIGHLIGHTS

GOLD PROPER

Gold Proper – PROOF OF OUTSTANDING RESULT OF COMMUNITY EMPOWERMENT

President Director of PT Bio Farma (Persero), Iskandar (fourth from right), posed with Vice President of the Republic of Indonesia, Jusuf Kalla (sixth from left) and the Minister of Environment and Forestry of the Republic of Indonesia, Siti Nurbaya (seventh from left) and the winners of the PROPER Gold rating in the 2014 PROPER Environmental Award Night at Manggala Wanabakti Jakarta, 2 December 2014.

2008-2009 Blue PROPER

ANNUAL REPORT

2014

2011 Green PROPER

• PT Bio Farma (Persero) •

2012 Green PROPER

2013 Green PROPER

2014 Gold PROPER

6

The implementation of beyond compliance standards in all operational activities is a reflection of our commitment to achieve environmental excellence. Bio Farma obtained the Gold rating for the Company Performance Ranking Assessment Program (PROPER) from the Ministry of Environment and Forestry for the sector of Manufacture, Infrastructure, and Services. The award was handed out by the Vice President of the Republic of Indonesia. Gold Proper rating is the highest award in the environmental field, which signifies that a company has implemented a comprehensive and sustainable environmental management system, which has been proven to develop the communities. Bio Farma implements a beyond compliance environmental management policy, reflecting Bio Farma’s commitment to achieve environmental excellence in all its operational activities.

Bio Farma believes that high-quality vaccines that are environmentally friendly can only materialize through a conducive and environmentally friendly production activities, and implementation of environmental management in a comprehensive manner, starting from the stage of planning, implementation, monitoring, review, and continuous improvement, with an ecoefficient production principle. The diversity in resources, including bio-diversity, geo-diversity, and cultural-diversity, becomes the driving force for innovation, by utilizing and conserving biodiversity through purification, which continuously inspires us and accordingly we spread it out for the sovereignty and wellbeing of the human race and the sustainability of the coming generations.

Prof. Ibrahim Komoo (third from left), President of Asia Pacific Geopark Network (APGN), visited the Batik Pakidulan artisans in Sukabumi.

7

HIGHLIGHTS

PENTABIO VACCINE

PENTABIO VACCINE – ENVIRONMENTALLY FRIENDLY PRODUCT On 16 December 2014, the Pentabio 5 in 1 vaccine product (for Diphtheria, Tetanus, Pertussis, Hepatitis B, and Haemophilus Influenzae Type B) obtained the Pre-Qualification (PQ) from the World Health Organization, so that the product became part of Bio Farma’s vaccine portfolio that is ready for purchase by the WHO, UNICEF, PAHO, and sovereign countries in the world, in addition to the priority to supply the domestic demand.

PROOF OF ADVANTAGE PENTABIO VACCINE onE injection, 5 protection »

The Pentabio vaccine offers, in injection to the baby, protection from five diseases, namely Diphtheria, Tetanus, Pertussis, Hepatitis B, and Haemophilus Influenzae Type B.

68.57 MWh ENERGY SAVED PER YEAR »

ANNUAL REPORT

2014

66.67% WATER CONSUMPTION RATE REDUCTION, 914 M3 WATER POLLUTION LOAD REDUCTION »

• PT Bio Farma (Persero) •

8

MINIMIZING VISITATIONS TO CLINICS »

10.21% CONSERVATION RATE FOR RAW MATERIALS AND PACKAGING MATERIALS »

2.3% REDUCTION IN HAZARDOUS AND TOXIC WASTE PILEUP IN 2012, AND UP TO 113.2% IN 2013

SIGNIFICANT REDUCTION IN PACKAGING WASTE AND MORE ENVIRONMENTALLY FRIENDLY PRODUCT

»

»

Reduction in Dtp+Hb waste by 16.49 tons, Pentabio (Dtp+HepB+Hib) by 5.54 tons.

VACCINE RECIPIENTS IN INDONESIA PER YEAR»

5 million babies,

27.6 million school-age children

15 million fertileage women

9

HIGHLIGHTS

Bio Farma’s Significant Achievements in 2014

Bio Farma’s Significant Achievements in 2014 Net Sales

[Rp trillion]

10,27%

1,85

2,04

2013

2014

Income Before Tax

Bio Farma’s net sales in 2014 reached Rp 2.04 trillion, up 10.27% from the net sales in 2013 amounting to Rp 1.85 trillion.

Current Tax Liability

[Rp billion]

[Rp billion]

0,71%

4,90%

778,59

773,08

207,29

197,14

2013

2014

2013

2014

Bio Farma recorded income before tax of Rp 773.60 billion in 2014, down 0.71% from 2013 income before tax of Rp 778.59 billion.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Bio Farma’s contribution to the state through the payment of income tax of Rp197.14 billion in 2014, down 4.90% from 2013 income tax of Rp207.29 billion.

10

Net Income

[Rp billion]

1,33% 572,47

580,07

2013

2014

Total Equity

Bio Farma booked a net income of Rp580.07 billion in 2014, up 1.13% from 2013 net income of Rp572.47 billion.

Total Assets

[Rp trillion]

[Rp trillion]

12,60%

15,52% 2,27

2,62

2,70

3,04

2013

2014

2013

2014

Bio Farma’s total equity in 2014 was Rp2.62 trillion, up 15.52% from total equity at the end of 2013 of Rp2.27 trillion.

In its 124th year, Bio Farma has reached a new milestone as a company, with total assets amounting to Rp3.04 trillion as at end of 2014. Bio Farma’s total assets increased 12.60% from Rp 2.70 trillion as at end of 2013.

11

HIGHLIGHTS

Bio Farma’s Significant Achievements in 2014

The Excellence Performance Assessment Criteria (KPKU)

34,21%

315

422,75

2013

2014

Result of the Criteria for Performance Excellence (CfPE) assessment result in 2014 was 422.75, or up by 34.21% from the 2013 score of 315.

PUBLIC INFORMATION DISCLOSURE SCORE

41,44%

60,66

85,80

2013

2014

Bio Farma obtained the highest score for its Public Information Disclosure (KIP) among state-owned enterprises in 2014, reaching 85.80 or up 41.44% from 2013 score of 60.66.

GCG Assessment Score

83,42% Category:

GOOD

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

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Human Capital Competence Development Expenditures

INFORMATION TECHNOLOGY INVESTMENT

[Rp billion]

[Rp billion]

0,63%

9,12%

15,35

16,75

11,10

11,17

2013

2014

2013

2014

Bio Farma spent a total of Rp16.75 billion for its human capital competence development in 2014, up 9.12% from 2013 expenditures of Rp15.35 billion.

Total information technology system and infrastructure development investment in 2014 amounted to Rp11.17 billion, or up by 0.63% from 2013 figure of Rp11.10 billion.

Export Performance

WHO Prequalification

[Rp billion]

12,30%

1,22

1,37

2013

2014

The Pentabio Vaccine (DTP, Hepatitis B, Haemophilus Influenza Type b) obtained the World Health Organization (WHO) Prequalification certification, ensuring the vaccine’s quality, safety, and efficacy, on 16 December 2014.

Bio Farma’s total export value in 2014 reached Rp1.37 trillion, up 12.30% from 2013 total export value of Rp1.22 trillion.

13

HIGHLIGHTS

Bio Farma in Brief

As the only vaccines and antisera producer in Indonesia, Bio Farma has played a significant role in nurturing future Indonesian generations with good health, freedom from infectious diseases, and the capability to become productive and ready to compete globally.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

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Bio Farma in Brief Bio Farma has gone a long way towards becoming a world-class vaccines and antisera producer, beginning from when the Dutch East Indies colonial government established the “Parc-vaccinogène” (State Vaccine Development Institute) on 6 August 1890. The institute initially occupied a building in Weltevreden, Batavia, which is now the Central Army Hospital (RSPAD) Gatot Subroto, Jakarta. From the time of its establishment, Parc-vaccinogène focused on research to eradicate infectious diseases, and eventually Parcvaccinogène collaborated with Institut Pasteur to conduct research on microbiology, so that the institution changed its name to Parcvaccinogène en Institute Pasteur. In keeping with the developments of the era, the Company had undergone several name changes and legal entity forms, up until 1997 when, based on the Government Regulation No. 1 Year 1997, the Company was transformed into a state-owned limited liability company, with all its shares owned by the Government of the Republic of Indonesia, and named PT Bio Farma (Persero). The Deed of Incorporation and the Articles of Association of the Company were notarized by the Deed of Muhani Salim SH., No. 1 dated 3 February 1997, and approved by the Minister of Justice of the Republic of Indonesia in the Decree No.C2 - 1423HT.01.01. dated 5 March 1998 on the Ratification of the Deed of Company and published in the State Gazette of the Republic of Indonesia No.57 dated 16 July 2002 Supplement No.6884. The Articles of Association of the Company have been amended several times and most recently the Articles of Association were published in the State Gazette of the Republic of Indonesia No. 65 dated 14 August 2009 Supplement No. 21702. The most recent composition of the Board of Directors was stated in the Deed No. 45 dated 30 October 2009

on the Statement of the Minister of State Owned Enterprises as the General Meeting of Shareholders (GMS) of the Company, notarized by Fathiah Helmi, SH., and has been received and recorded in the database of the Department of Legal Administration of Justice and Human Rights No. AHU-AH.01.10 - 19828 dated 9 November 2009, and the changes in issued capital have been included in the Deed No. 26 dated 18 July 2012 of decision of the General Meeting of the Company’s Extraordinary Shareholders of the Company, which was notarized by Fathiah Helmi, SH. To this day, Bio Farma has played a significant role in the history of the development of vaccines and sera. It is currently the only state-owned enterprise that produces vaccines and antisera. Bio Farma’s accomplishments have been globally recognized. Since 1997, Bio Farma has been one of approximately 29 vaccine manufacturers in 22 countries globally that have earned WHO (World Health Organization) Prequalification, earning the world’s trust to meet the needs of vaccines in more than 130 countries. Working closely within a global international network of research institutions, regional professional organizations, and multinational companies, Bio Farma actively participates in the efforts to improve public health worldwide, both by providing quality vaccine products and developing technology transfer partnerships, resulting in health policies that are more beneficial for everyone. Currently, Bio Farma’s activities are centered on Jalan Pasteur No. 28, Bandung, on an area of 91,058 m2 for production, research and development, marketing and administration facilities. In addition, the Company maintains a supporting facility in Cisarua, Lembang, West Bandung regency, on an area of 282,441 m2 used for breeding and raising laboratory animals. The Company also has a representative office in Prakarti Center Building  Tanah Abang III Street No. 23-27, Jakarta.

15

HIGHLIGHTS

Bio Farma in Brief

Corporate Policy and Culture

INTEGRATED MANAGEMENT SYSTEM

The commitment to offer quality and innovative products is shown by Bio Farma’s reference to international standards and current quality management systems. Bio Farma has implemented a wide range of integrated systems, among others: Good Manufacturing Practices (GMP) of National Food & Drugs Control Agency, and current Good Manufacturing Practices (cGMP) of World Health Organization (WHO), Good Laboratory Practices (GLP), Good Clinical Practices (GCP), Good Distribution Practices (GDP), ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007. As well as world-class standards, including ISO 26000 for CSR, ISO 31000 Enterprise Risk Management, and International Financial Reporting Standard (IFRS).

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

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Corporate Policy and Culture Corporate Culture

Corporate Policy

Each organ of the Company acts and thinks in a professional manner, with high integrity, spirit of teamwork, innovationdriven and customer service-oriented.

1. High quality products.

Professional

4. Customer satisfaction.

Committed to executing all tasks with responsibility, efficiency, effectiveness, forward-orientation, and procedural compliance.

5. Continuous improvement.

Integrity Honest, transparent, and accountable, in line with the Company’s objective.

2. Environmentally friendly products. 3. Global competitiveness.

6. Pollution control. 7. Prevention of occupational accidents and workrelated diseases. 8. Conservation of energy and natural resources. 9. Compliance to laws and other regulations.

Teamwork Working together by respecting others’ roles and opinions. Innovation Carrying out continuous improvement and development to generate new ideas. Customer Oriented Understanding the needs of customers and providing the right solutions to them.

17

HIGHLIGHTS

2014 STRATEGIES

2015 Priority Strategies

2014 STRATEGIES Priority scaling the investment for production capacity increase.

Implementation of Information Technology through ERP (Enterprise Resources Planning) to improve effectiveness and efficiency of business processes and control for improving the Company’s performance.

Bio Farma’s Strategies in 2014

Rearrangement of product supply chain.

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2014

• PT Bio Farma (Persero) •

Enhancement of domestic marketing and expansion of global markets.

Increase of research and partnership through the National Vaccine Research Forum.

18

2015 Priority Strategies We aim to create a sustainable value for all stakeholders of the Company, by enhancing our 2014 vision to a world-class life science company with global competitiveness. To achieve that goal, we require acceleration regarding our rate of change in Bio Farma through the integration of strategies that we have implemented in 2014.

Integrasi Strategi Menuju World Class Company Improvement of the R&D activities are focused on enhancing our product portfolio, beginning with the improvement of the R&D Division organizational structure to be more focused and efficient in terms of operations and business model, and also improve the competence of our human capital. We continue to focus on improving our R&D results’ quantity and quality by creating a synergy with various research institutions and universities, governmental institutions and enterprises, both from the country and overseas. We believe that the long-term growth for life science products will continue to rise, in line with better understanding among people on the importance of health.

RESEARCH & PARTNERSHIP

INVESTMENT

INFORMATION TECHNOLOGY Our marketing strategy consists of expanding our export market, our private market share in the domestic market, and improving the public’s awareness on the importance of preventing infectious diseases through the use of vaccines. Market penetration for adult vaccine products is carried out in the private sector of the domestic market as well as through geographical marketing activities and market development. Our marketing aspect is also strengthened by the improvement of the Company’s reputation through education, information dissemination on various media, both domestic and overseas.

Our investment strategy is done by increasing our production capacity and expanding our product portfolio through additional infrastructure and area for production facility. The selection for the area used for our production facility takes into consideration the holistic environmental view at all times, starting from the very beginning.

Our information technology strategy is one of the steps in the business transformation of Bio Farma. This will enable Bio Farma to compete in the global scene. Information technology used for supporting our vaccine production include the implementation of Enterprise Resource Planning (ERP) and Electronic Batch Production Record (E-BPR). The implementation of ERP helps control all processes and activities and also integrate all data.

MARKETING

PRODUCT SUPPLY CHAIN

The strategy to increase production capacity is carried out by adding new production machinery, especially for the fill and finish process. The implementation of the Material Resource Planing (MRP) to support the inventory control process is aimed at ensuring raw material availability so that all production processes can take place as planned, and thus the vaccines that we produce can meet public demand

19

HIGHLIGHTS

Vaccine Production Processes

Vaccine Production Processes

1. Media Preparation

2. Inoculation & Cultivation

3. Harvesting







Selection of the best vaccine seeds (virus/bacteria) to fulfill the needs of vaccine production.

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• PT Bio Farma (Persero) •

Cultivation of virus or bacteria on a media that has been purified.

Harvest of the virus or bacteria that have been grown on a media at a certain amount.

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4. Inactivation

5. Purification.

6. Formulation







Attenuation/inactivation of the virus or bacteria which have been harvested.

Elimination of substances that are not relevant to the function of the vaccine.

Formulation of vaccine bulk which has been purified with additional substances

7. Final Product (Filling & Packaging)

Filling the vaccine into the packaging. Labeling of the packaging.

Vaccine production processes are highly regulated and complicated. This pictorial guide is for illustrative purposes only and provides a general overview of how a vaccine is produced. It is not representative of the actual production of any or all vaccines produced by Bio Farma.

21

HIGHLIGHTS

Vaccine Development Lifecycle

Vaccine Development Lifecycle Research is the basis for the development of a product. Research begins with an exploratory stage, where the pattern of a disease that becomes the subject of the research is studied in order to be understood. Identification of a molecule or antigen that will be used as a precursor for a product, as well as the method to produce or to purify such antigen, are two critical things in the development of a product. Also important is the information regarding the seed’s history and the documentation of the material. The output of this research is the proof of concept.

Various universities, research institution also both local and foreign industries has visited Bio Farma vaccine production facilities.

RESEARCH & DEVELOPMENT

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2014

Find Potential Disease

Exploratory

Vaccine Candidate Design

Vaccine Characterization

Preclinical Studies

1

2

3

4

5

Determining diseases that can be prevented by vaccination.

Conducting preliminary research to determine the type of virus or bacteria that can provide immunity to the human body. At this stage, vaccine candidates are determined (3-5): -Understand the disease. -Epid Data. -Identify antigen

- Seed history. - Presentation. - Route of administration.

To understand the immunogenicity in animals and its safety (6 Months).

- Safety. - Toxicology. - Teratology. - Dan lain-lain. Etc.

• PT Bio Farma (Persero) •

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Clinical Development 7 Pilot Scale Manufacturing

Phase I

Phase II

Phase III

6 Manufacturing of vaccines at the pilot scale, taking into account these aspects: - Clinical lots. - Current Good Manufacturing Practise (cGMP). - Quality Control (QC). - Quality Service (QS).

Clinical Trial I: Understanding the safety of product and side effects that may arise. In this stage, the product is administered to 10 to 100 people. Clinical Trial II: understanding and evaluating the immunity response by increasing the number of respondents to 100-300 people. Clinical Trial III: Understanding the efficacy level of the vaccine by statistical calculation of subjects.

Regulatory Approval

Commercial Manufacturing

8

9

Register and compile data on safety level, efficacy, and immunity level, to the authorities (Food & Drugs Supervision Agency or BPOM). Timeframe required is around 100 to 300 working days.

- Regulatory Compliance. - Current Good Manufacturing Practise (cGMP). - Quality Control (QC). - Quality Management System (QMS). - Post Marketing Surveillance (PMS).

This vaccine development lifecycle is for illustrative purposes only and provides general overview. It is not representative of the development of any or all vaccines produced by Bio Farma.

23

HIGHLIGHTS

Cold Chain System

How Our Vaccines Reach Our Customers

Vaccine Manufacturer

Vaccines International Transport Transportation with refrigerated trucks and/or cold boxes (vaccine carriers for outreach) National Airport Transit storage facilities (2 to 8 ° C)

Cold Chain System Vaccine is a biological product that requires special handling in its distribution.

Primary Vaccine Store Cold room (2 to 8 ° C) and freezer room (-15 to -25 ° C)

A special system called the Cold Chain System is required for the distribution of vaccines, starting from the manufacturer, distribution, storage at the destination, storage of stock vaccines, up to the delivery of vaccines to the customers.

Intermediate Vaccine Store Cold room (2 to 8 ° C) and freezer room (-15 to -25 ° C)

Vaccine temperature must be maintained within the range of 2 to 8 degrees Celsius, for BCG, DTP, TT, Td, DTP-HB-Hib, Measles, Hepatitis B, and Influenza vaccines. Polio vaccines must be stored at -20 (minus twenty) degrees Celsius.

Intermediate Vaccine Store Refrigerator (2 to 8 ° C) and freezer room (-15 to -25 ° C)

The Cold Chain System is a procedure to keep vaccines in a stable condition, so that their safety, efficacy, and quality will be maintained and thus the recipients obtain the benefit of protection and prevention from various infectious diseases. Deadline for delivery of all vaccines must not exceed 48 hours, as stipulated in WHO guidelines, and with due regard to the Cold Chain System for all types of vaccine.

Health Centre Refrigerator (2 to 8 ° C) and cold boxes

Health Post Refrigerator (2 to 8 ° C) and cold boxes/ vaccine carriers

Customer

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2014

• PT Bio Farma (Persero) •

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How Our Vaccines Reach Our Customers Distribution of Vaccines in the Governmental Sector

1

2

3

From Bio Farma’s warehouse, vaccines are transported using refrigeration vehicles to the Provincial Health Office Warehouses.

From these Provincial Health Office Warehouses, the vaccines are subsequently distributed to storage facilities owned by the Municipality and District Health Offices.

From the warehouses of the Municipality and District Health Offices, the vaccines will then be distributed to Community Health Centers, where they will then reach the customers.

Distribution of Vaccines in the Private Sector

1

2

From Bio Farma’s warehouse, vaccines are transported using refrigeration vehicles via air or land to distributors’ warehouses, where the cold chain system is maintained at all times.

From the distributors’ warehouses, the vaccines are transported using refrigeration vehicles to their final destination (hospitals, clinics, doctors’ practices), where they will then reach the customers.

Distribution of Vaccines Overseas

1

2

From Bio Farma’s warehouse, vaccines are transported using refrigeration vehicles via air to buyers’ warehouses, where the cold chain system is maintained at all times.

From buyers’ warehouses, the vaccines are transported using refrigeration vehicles to their final destinations, where they will then reach the customers.

25

FINANCIAL HIGHLIGHTS

Bio Farma’s Business Results in the Past 5 Years

Bio Farma’s Financial Positions in the Past 5 Years

FINANCIAL HIGHLIGHTS 1. Bio Farma’s Business Results in the Past 5 Years Sales/Revenue, Income/(Loss), and Total Comprehensive Income/(Loss) Numerical notations in all tables and graphs in this Annual Report are in Indonesia. [Rp million]

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Description

Increase/Decrease 6/4

[%]

6/5

Net Sales Company’s Products

1,186,361

1,324,046

1,432,966

1,848,452

1,939,918

2,028,988

9.77

4.59

21,067

1,784

1,206

1,848

2,200

10,287

456.65

367.59

2,835

2,899

3,470

3,382

3,920

4,805

42.09

22.59

1,210,263

1,328,729

1,437,642

1,853,682

1,946,038

2,044,080

10.27

5.04

(481,125)

(535,017)

(580,216)

(718,462)

(734,085)

(767,609)

6.84

4.57

Merchandise Products Services Total Net Sales Cost of Goods Sold Company’s Products Merchandise Products

(18,121)

(848)

(518)

(1,148)

(512)

(8,827)

668.90

1.624.02

Services Expenses

(2,792)

(3,133)

(3,183)

(3,986)

(3,814)

(3,654)

(8.33)

(4.20)

(502,038)

(538,998)

(583,917)

(723,596)

(738,411)

(780,090)

7.81

5.64

708,225

789,731

853,724

1,130,085

1,207,627

1,263,991

11.85

4.67

42,639

62,660

53,159

152,838

1,785

118,630

(22.38)

6.545.96

General and Administrative Expenses

(160,871)

(206,088)

(227,583)

(304,313)

(345,212)

(378,448)

24.36

9.63

Selling Expenses

(160,818)

(128,095)

(58,592)

(72,830)

(63,990)

(72,570)

(0.36)

13.41

Research Developments and Survey Expenses

(40,501)

(68,793)

(78,262)

(68,318)

(98,916)

(88,779)

29.95

(10.25)

Other Expenses

(50,255)

(41,643)

(21,346)

(58,873)

(10,521)

(69,748)

18.47

562.94

(369,806)

(381,959)

(332,624)

(351,496)

(516,854)

(490,915)

39.66

(5.02)

338,419

407,772

521,100

778,589

690,772

773,076

(0.71)

11.91

(89,843)

(105,826)

(137,261)

(207,288)

(189,055)

(197,136)

(4.90)

4.27

2,239

473

2,053

1,166

1,397

4,134

254.51

195,89

Total Tax Expenses

(87,604)

(105,353)

(135,208)

(206,121)

(187,658)

(193,002)

(6.36)

2.85

Net Income (Loss)

250,815

302,419

385,892

572,468

503,115

580,074

1.33

15.30

-

-

-

-

-

377

-

-

250.815

302.419

385.892

572.468

503.115

580.451

1.39

15.37

Total Cost of Goods and Services Sold Gross Profit Other Income

Total Income (Loss) Before Income Tax

Income Tax Benefits (Expenses) Current Tax Deferred Tax

Other Comprehensive Income Comprehensive Income (Loss) RKAP: Company’s Budget Plan.

Earnings/(Loss) per Share As on 31 December 2014, Bio Farma remains non-listed as a State-Owned Enterprise, i.e. it had no shares listed on the Indonesia Stock Exchange, and therefore the earnings/(loss) per share information is not available.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

26

2. Bio Farma’s Financial Positions in the Past 5 Years A. TOTAL INVESTMENTS ON ENTITIES a. Investment Realization According to Usage Investment Realization According to Usage [In Million Rupiah] 2010

2011

2012

2013

2014

Total

Increase/Decrease [%]

1

2

3

4

5

6

5/4

Assessment WHO & GMP

41,085

136,242

39,428

50,654

30,873

298,282

(39.05)

Replacement

25,734

18,464

18,592

44,814

29,889

137,493

(33.30)

3,372

6,984

2,695

1,632

10,133

24,816

520.89

Investment Group Routine

Quality Control Development Capacity Building

60,817

20,648

25,423

114,224

69,109

290,221

(39.50)

Research & Development

40,876

39,945

9,106

24,690

12,984

127,601

(47.41)

New Products

23,962

50,605

80,878

12,262

21,636

189,343

76.44

2011

2012

2013

RKAP 2014

2014

b. Investment by Group. Investment by Group [In Million Rupiah] Investment Group

2010

4

5

6

6/4

6/5

6,231

7,110

10,968

34,051

32,554

196.81

(4.40)

Factory Equipment

81,413

53,900

29,208

82,722

83,513

49,448

(40.22)

(40.79)

Machinery

15,972

79,169

99,457

16.411

15,136

27,424

67,11

81.18

8,233

2,161

8,926

15,546

13,500

4,595

(70.44)

(65.96)

Building

67,573

128,314

30,903

115,387

409,646

39,849

(65.46)

(90.27)

Vehicles

462

745

-

-

700

750

-

7.14

-

-

-

-

12,000

-

-

Intangible Asset

6,615

2,367

518

7,242

27,458

20,004

176.22

(27.15)

Deferred Charges

1,746

-

-

-

-

-

-

-

195,846

272,887

176,122

248,276

596,004

174,623

(29.67)

(70.70)

Utility Equipment

Land Investment

Total

2

3

[%]

13,832

Office Equipment

1

Increase/Decrease

c. Cash Flows. Statements of Cash Flows [In Million Rupiah] Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Increase/Decrease 6/4

[%]

6/5

Cash Flows from Operation Activities Net Cash Provided by (Used in) Operating Activities

216,420

339,416

378,642

632,880

471,496

505,839

(20.07)

7.28

(270,307)

(210,656)

(199,177)

(744,672)

(208,727)

4.79

(71.97)

Cash Flows from Investing Activities Net Cash Provided by (Used in) Investing Activities

(144,532)

27

FINANCIAL HIGHLIGHTS

Bio Farma’s Business Results in the Past 5 Years

FINANCIAL RATIOS

Statements of Cash Flows [In Million Rupiah] Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Increase/Decrease 6/4

[%]

6/5

Cash Flows Provided by Financing Activities Net Cash Provided by (Used in) Financing Activities

72,701

(135,394)

(57,460)

(113,938)

(82,890)

(228,987)

100.98

176.26

Increase (Decrease) of Net Cash

144,589

(66,285)

110,527

319,765

(356,065)

68,125

(78.70)

(119.13)

Effect of Foreign Exchange Translation on Cash and Cash Equivalent

(15,256)

(5,972)

16,100

72,988

-

12,341

(83.09)

-

Cash and Cash Equivalent at Beginning of Year

314,794

444,127

371,871

498,498

704,780

891,251

78.79

26.46

Cash and Cash Equivalent at End of Year

444,127

371,870

498,498

891,251

348,714

971,717

9.03

178.66

2010

2011

2012

2013

1 856,606 714,363 1,570,969

2 814,712 918,792 1,733,504

3 1,033,864 1,011,824 2,045,688

4 1,542,901 1,160,169 2,703,070

2010

2011

2012

2013

1 252,982 107,912 360,894

2 220,879 34,525 255,404

3 197,714 41,441 239,155

4 389,637 48,371 438,008

2010

2011

2012

2013

B. TOTAL ASSETS Assets [In Million Rupiah] Description Current Assets Non Current Assets Total Assets

RKAP 2014 5 1,242,132 1,702,442 2,944,574

2014 6 1,824,639 1,219,141 3,043,780

Increase/Decrease 6/4 18.26 5.08 12.60

[%]

6/5 46.90 (28.39) 3.37

C. TOTAL LIABILITIES Liabilities [In Million Rupiah] Description Short Term Liabilities Long Term Liabilities Total Liabilities

RKAP 2014 5 334,723 55,258 389,980

2014 6 339,668 87,586 427,254

Increase/Decrease [%] 6/4 (12.82) 81.07 (2.46)

6/5 1.48 58.50 9.56

D. TOTAL EQUITY Equity [In Million Rupiah] Description Share Capital Donated Capital Unrealized gain (loss) on the ownership of securities available for sale (2010 – RKAP) Retained Earnings (Loss) - Appropriated - Un-appropriated Total Equity Total Liabilities and Equity

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

1 450,000 -

2 450,000 -

3 750,000 -

4 750,000 -

RKAP 2014 5 1,250,000 -

-

-

-

-

-

377

-

-

490,635 269,441 1,210,076

701,913 326,187 1,478,100

670,641 385,892 1,806,533

941,919 573,143 2,265,062

801,478 503,115 2,554,593

786,075 580,074 2,616,526

(16.55) 1.21 15.52

(1.92) 15.30 2.42

1,570,969

1,733,504

2,045,688

2,703,070

2,944,574

3,043,780

12.60

3.37

2014

Increase/Decrease

[%]

6 1,250,000 -

6/4 66.67 -

6/5 0.00 -

28

3. Financial Ratios Financial Ratios

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Increase/Decrease 6/4

[%]

6/5

Liquidity Cash Ratio

176%

168%

252.13%

228.74%

104.18%

286.08%

25.07

174.60

Current Ratio

339%

369%

522.91%

395.98%

371.09%

537.18%

35.66

44.76

Gross Profit Margin

58.52%

59.44%

59.38%

60.96%

62.06%

61.84%

1.44

(0.35)

Operating Margin

28.59%

29.11%

34.03%

36.93%

35.95%

35.43%

(4.06)

(1.45)

Rentabilitas

Net Profit Margin

20.72%

22.76%

26.84%

30.88%

25.85%

28.38%

(8.10)

9.79

Return on Equity (ROE)

30.00%

34.70%

29.36%

37.81%

30.51%

30.76%

(18.65)

0.82

Return on Investment (ROI)

28.34%

33.53%

31.22%

34.81%

32.33%

31.20%

(10.37)

(3.50)

Return on Assets (ROA)

18.36%

18.47%

20.42%

24.11%

17.70%

20.19%

(16.27)

14.06

29.87%

17.65%

13.24%

19.34%

15.27%

16.33%

(15.56)

6.94

Inventory Turnover

3.19

3.15

3.59

3.95

3.01%

2.94%

(99.26)

(2.33)

Receivable Turnover

7.93

8.93

7.8

7.29

10.25%

7.54%

(98.97)

(26.44)

Sales

102.31%

109.79%

108.20%

128.94%

116.65%

110.27%

(14.48)

(5.47)

Operating Income

101.49%

111.77%

126.51%

139.92%

121.48%

105.78%

(24.40)

(12.92)

Net Income before Tax

106.62%

120.49%

127.79%

149.41%

119.77%

99.29%

(33.55)

(17.10)

Solvability Debt to Equity Turnover (Times)

Growth

35.66%

1.44%

NET PROFIT MARGIN

DEBT TO EQUITY

8.10%

15.56%

CURRENT RATIO

GROSS PROFIT MARGIN

Inventory Turnover

RETURN ON ASSETS (ROA)

RETURN ON EQUITY (ROE)

RETURN ON INVESTMENT (ROI)

99.26%

16.27%

18.65%

10.37%

29

FINANCIAL HIGHLIGHTS

Share Performance AND Sharelisting Chronology

4. Share Performance AND Sharelisting Chronology Share Ownership Composition As on December 31, 2014, Bio Farma is not a publicly listed company so the public, the Board of Directors, or the Board of Commissioners of Bio Farma do not have the shares of Bio Farma. The Company is entirely or 100% owned by the Government of the Republic of Indonesia.

Share Performance As on December 31, 2014, Bio Farma is not a publicly listed state-owned enterprise, which means it has not listed its shares on the Indonesia Stock Exchange. Therefore, there was no pertinent information regarding total number of shares outstanding, market capitalization, highest, lowest, and closing prices of the traded shares, or the transaction volume of shares.

Sharelisting Chronology

Summary of Bonds/Sukuk/ Convertible Bonds and the Listing Chronology of Other Securities

5. Summary of Bonds/Sukuk/ Convertible Bonds and the Listing Chronology of Other Securities Summary of Bonds/Sukuk/Convertible Bonds Bio Farma has never issued any bonds/sukuk/ convertible bonds, and therefore it has no pertinent information regarding the amount of bonds/sukuk/ convertible bonds outstanding, interest rate, maturity date of such securities, or the rating of such securities.

Listing Chronology of Other Securities Bio Farma has not issued securities in any form, and therefore it has no pertinent information regarding the listing chronology of securities, corporate actions, changes in the number of securities, the exchange on which the securities are listed, or the rating of such securities.

As on December 31, 2014, Bio Farma is not a publicly listed state-owned enterprise, which means it has not listed its shares on the Indonesia Stock Exchange. Therefore, there was no pertinent information regarding sharelisting chronology, corporate actions, changes in the number of shares, or the exchange on which the Company’s shares are listed.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

30

Net Sales [in million Rp]

Export Sales [in million Rp] 1,853,682

2,044,080

1,328,729 1,437,642 1,182,992 1,210,263

2009

2010

2011

2012

2013

2014

Sales - Government [in million Rp] 476,894 363,588

1,222,852 741,175

758,433

781,880

2009

2010

2011

515,254

548,724

2010

2011

2012

2013

2014

708,225

789,731

2009

2010

2011

69,955 2010

2011

72,474

2012

1,263,991

853,724

82,106

2013

2014

2012

572,468

580,074

2013

2014

438,008

427,254

2013

2014

385,892

2013

2014

2009

250,815

302,419

2010

2011

2012

Liabilities [in million Rp] 2,703,070

1,570,969 1,733,504

2010

84,784

Net Income [in million Rp]

Asset [in million Rp]

2009

2014

130,119

223,081

1,255,302

2013

367,047

1,130,085

2009

2012

539,959

Gross Profit [in million Rp]

703,248

849,914

Sales-Private [in million Rp]

75,527

2009

1,366,232

2011

3,043,780 360,894

2,045,688

2012

267,743

2013

2014

2009

2010

255,404

239,155

2011

2012

Equity [in million Rp]

987,559

2009

1,210,076

2010

1,478,100

2011

1,806,533

2012

2,265,062

2013

2,616,526

2014

31

Report from the Board of Commissioners and The Board of Director

Report from the Board of Commissioners

Report from the Board of Commissioners

Bio Farma has aspired to be a world class lifescience company with global competitiveness. This is a challenge as well as an opportunity for Bio Farma, to always create innovations and develop products in order to be recognized by its peers in the biotechnology industry.

Ahmad M. Ramli

PRESIDENT COMMISSIONER

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

32

Bio Farma continuously conducts research in collaboration with local and international universities and research institutions to create innovative new products, as well as improve product quality and functions, in accordance with the Company’s philosophy, that is “Dedicated to improve the quality of life”. In 2014, Bio Farma carried out initiatives such as implementing the Innovation Management Policy, receiving an award as an area of work with innovative culture, and has registered several innovations to be patented by the Directorate General of Intellectual Property Rights, the Ministry of Law and Human Rights, the Republic of Indonesia. We hope that by receiving this award Bio Farma will have an established role in participating and improving the acceleration of drug innovation, especially vaccines for national self-sufficiency.

Dear Stakeholders, With praises to the God Almighty, allow us the Board of Commissioners present the 2014 Annual Report to shareholders of Bio Farma, in order to inform you with the latest developments and management of Bio Farma for the year ending 31 December 2014. In general, the global economic growth showed an improvement compared to in 2013, eventhough the growth was not as rapid as predicted. The United States economy, deemed as the locomotive of global economic growth, was not followed with a similar pace by the European region. In fact,

Japan’s economy tended to be stagnant, and China’s too, slowed down, leading to a structural deceleration. IMF corrected its estimate for global economic growth from originally 3.7% to 3.4%. Naturally Indonesia was affected by this slowing down of the global economic growth. Indonesia’s growth, predicted to be at 5.6%, only grew by 5.1%. However, the human vaccine industry is a unique industry. This industry is not directly affected by the global economic crisis. This shows that vaccine is still a primary need for humans in the aspect of health, that is to prevent the spread of diseases caused by viruses/bacteria.

33

Report from the Board of Commissioners and The Board of Director

Performance Assessment The Board of Directors Regarding Corporate Management and The Basis Of The Assessment The Board of Commissioners congratulates the Board of Directors and all employees for Bio Farma’s achievement of various awards in 2014, including the First Prize for Keterbukaan Informasi Publik (KIP) or Public Information Disclosure, and also as one of the first companies to implement KIP. Furthermore, Bio Farma has also achieved international awards, namely the Star Quality Award from the BID Conventions in Geneva, Switzerland, Green CSR from an international institution in Germany, the Primaniyarta award from the Ministry of Trade of the Republic of Indonesia, and the PROPER Gold Award from the Ministry of Environment and Forestry of the Republic of Indonesia, and other prestigious awards. In terms of product absorption, in 2014 Bio Farma’s latest product, Pentabio, a vaccine to prevent Diphtheria, Tetanus, Pertussis, Hepatitis B, and Haemophylus Influenza Type B (DTP-HB-Hib) now has been used in 33 provinces in Indonesia, while previously in 2012–2013, Pentabio was only used in 4 provinces. The Board of Commissioners appreciates the Board of Directors and all employees of Bio Farma that have succeeded in increasing the Company’s revenue by 9.46% from Rp2.04 trillion, from 2013 revenue of Rp1.85 trillion. The revenue recorded in 2014 was also higher than the target planned in the 2014 RKAP, namely Rp82.3 billion, or up by 4.26%. The increase in revenue in 2014 significantly contributed to the Net Profit in 2014, namely Rp580.07 billion or 1.33% rise compared to the 2013 Net Profit of Rp572.47 billion. And compared to the 2014 RKAP there was an increase in Profit by 15.3%. We believe that we were able to achieve this by implementing professional management principles, complying with good corporate governance principles, and topped with hard work, exceptional performance, and a solid synergy carried out by the Board of Directors and all employees of Bio Farma in 2014.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Report from the Board of Commissioners

View of the Company's Business Prospects Drawn Up By The Board of Directors And The Basis Of The Reasoning The vaccine industry is one of the industries with a unique characteristic. It is highly regulated and involves rapid changes. Every company in this industry is expected to adapt with the latest updates issued by the WHO to comply with the Current Good Manufacturing Practices (cGMP) standards. Not many companies can survive in the rapidly changing environment of vaccine standardization, as Bio Farma has. Since 1997, Bio Farma has been the one and only vaccine company in ASEAN that consistently maintains its Pre-Qualification World Health Organization (PQ-WHO). This fact demonstrates the commitment and full intent of the Company in delivering and providing quality products After our Oral Polio Vaccine 10 doses (OPV 10ds), Diphtheria Tetanus Pertussis (DTP), Diphtheria Tetanus (DT), Tetanus Toxoid (TT), Tetanus Toxoid Uniject casing (TT Uniject), Hep-B Uniject, DTP - Hep, measles, Monovalent Oral Polio Vaccine type 1 (mOPV 1), Bivalent Oral Polio Vaccine Type 1 and type 3 (bOPV), and Tetanus Diphtheria (Td) products have maintained their PQ WHO since 1997, in the end of 2014, our Pentabio Vaccine was certified by WHO for export. We are expecting as many as 500.000 doses of Pentabio vaccine to be purchased by UNICEF in early 2015. Other countries have also expressed interest in purchasing the Pentabio vaccine. The Board of Commissioners encourages the Board of Directors and Employees of Bio Farma to prepare themselves well to fulfill the immediate demands for Pentabio vaccine from various countries. Vaccines for humans are still the main priority to prevent the spread of diseases caused by virus/bacteria, especially those hosted by animals (zoonosis). For a developing country such as Indonesia, the usage of vaccines to prevent diseases caused by virus/bacteria is still greatly needed. Moreover, in 2014, there was an outbreak of the Ebola virus in Africa which eventually spread to the Americas and Europe. Eventhough Asia is not an endemic area of this disease, the prospect of this virus to spread to Asia, especially Southeast Asia,

34

4 2 1 3 5 6

1

Ahmad M. Ramli

3

Nizar Yamanie

5 Heridadi

COMMISSIONER

2

Herman L. Djuni

4

Ihsan Setiadi Latief

6

Paruli Lubis





PRESIDENT COMMISSIONER

COMMISSIONER

should make us cautious at all times. Therefore the Board of Commissioners is expecting that Bio Farma, in particular the Board of Directors, continously maintain a good relationship with local and international institutions that are registered in the Forum Riset Vaksin Nasional (FRVN) or the National Vaccine Research Forum and other international forums, such as the World Health Organization (WHO), Developing Countries Vaccine Manufacturer Network (DCVMN), Organization Islamic Cooperation (OIC), and Global Alliances Vaccine Immunization (GAVI), so that Bio Farma may accelerate its invention of new products required by the public. Besides maintaining good relationship with other institutions, the Board of Commissioners expects Bio Farma to maintain an intensive communication between each of its business units to realize the work plans within an appropriate system framework.





COMMISSIONER

COMMISSIONER



COMMISSIONER

Competition in the vaccine industry has become more intensive and tough, as shown by the emergence of new biotechnology and pharmacy players in the industry. Vaccines are considered highly profitable as there are no generic products available yet, in contrast to pharmaceutical drugs that after their patent expires will have their generic version made. The vaccine market will be populated with more than 200-250 producers that are operating globally, developing more than 600 types of vaccine. Players in Asia such as in India and China will also develop rapidly. Due to that, Bio Farma will face competition not only in the global market, but also in the domestic and regional markets ASEAN by the year 2015.

35

Report from the Board of Commissioners and The Board of Director

Report from the Board of Commissioners

“The Board of Commissioners is expecting that Bio Farma, in particular the Board of Directors, continuously maintain a good relationship with local and international institutions that are registered in the Forum Riset Vaksin Nasional (FRVN) or the National Vaccine Research Forum and other international forums, such as the World Health Organization (WHO), Developing Countries Vaccine Manufacturer Network (DCVMN), Organization Islamic Conference (OIC), and Global Alliances Vaccine Immunization (GAVI), so that Bio Farma may accelerate its invention of new products required by the public.”

In order to achieve the performance targets in 2015, the Board of Commissioners hopes that the principle of placing the right man in the right place at the right time continues to be upheld by the Company. This will make it easier to evaluate employees in their respective positions as we strive to achieve our goals. We consider this very important, because amidst the tight competition in the vaccine industry, the Board of Commissioners would like to emphasize on Human Capital as one of the most important factors in business, apart from Method, Machine, Capital, and Material. Bio Farma employs people with specialized competencies in biotechnology that are the best talents in the country. We remain optimistic that we are set to be a world class life science company.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Good Corporate Governance The Board of Commissioners expects that all decisions made by the Board of Directors and all employees of Bio Farma be grounded upon Good Corporate Governance (GCG) principles, namely: Transparency, Accountability, Responsibility, Independence, and Fairness, to allow for accurate risk analysis and evaluation mechanism, thus reducing operational risks of business.

36

Performance Assessment of the Committees Under the Board of Commissioners

Changes in Composision Of The Board Of Commissioners And The Reason For The Change

In supporting the Board of Commissioners in the exercise of duties, that is to advise, control, and approve matters, in line with its authorities and responsibilities, the Board of Commissioners is assisted by a number of committees, namely the Audit Committee, whose function is as a supervisor on financial issues and the implementation of GCG principles; the Risk Committee that is responsible for assuring that risk management principles are implemented properly and that the management has implemented an adequate system in the processes of employee selection, recruitment, and succession, and the Nomination Committee, whose task is to prepare candidates for the Board of Directors from within the Company.

In early 2014, the President Commissioner of PT Bio Farma (Persero), Sam Soeharto, passed away. On behalf of the Board of Commissioners and the Board of Directors we would like to posthumously commend his hard work and ideas while serving as President Commissioner. On 23 January 2014, Bio Farma appointed myself, Ahmad M. Ramli, as President Commissioner, who was previously serving as Commissioner of Bio Farma. In order to complete the composition of the Board of Commissioners, Heridadi was appointed as a Commissioner also on 23 January 2014, in accordance with the SK-17/MBU/2014.

The Remuneration and Nomination Committee of PT Bio Farma (Persero) was changed into the Audit and Remuneration Committee and the Risk & Nomination Committee. In 2014 these committees conducted their functions and advised the Board of Commissioners regarding the Board of Directors’ reports, especially Financial Reports, Management Reports, Community Development Programs and partnership programs, Internal Audit Reports, analyzed the independence and objectivity of external audit, analyzed the effectiveness of internal control, as well as reviewed the Company's compliance with the laws and regulations. In carrying out their functions, these committees conducted intensive meetings with the relevant Directors, the internal audit unit and the Compliance and Risk Management (CRM) Division. Recommendations brought by the committees have greatly assisted the Board of Commissioners in supervising the policies and management course of the Company, and in providing a comprehensive view and input on the performance of the Board of Directors to the GMS. The Risk & Nomination Committee carried out their duties according to their work plans, including recognizing and monitoring risk potentials and advising improvements through the review of the Enterprise Risk Management (ERM) implementation within the Company. Using the advice from the committee, the Board of Commissioners was able to evaluate the effectiveness of control activities in all work units and business units, based on the regulations and the thorough implementation of risk management.

Appreciation Last but not least, the Board of Commissioners extends appreciation for the continuous support and trust from the shareholders and stakeholders, we extend our sincere gratitude to the Board of Directors, the management and all employees that have displayed their hard work and dedication. A change of vision and mission that was carried out in 2014 should be a reference point for all of us to step into becoming a life science industry, while preventing us from stepping out from the Company’s philosophy: Dedicated to improve quality of life. We hope that God Almighty will always lead our path and shield us, keep ourselves united and set us on a propitious path towards realizing Bio Farma’s Work Plan for 2015.

On Behalf of the Board of Commissioners

Ahmad M. Ramli President Commissioner

37

Report from the Board of Commissioners and The Board of Director

Report from the Board of DIRECTORS

Report from the Board of DIRECTORS

We give praise to God Almighty that Bio Farma managed to top off 2014 with an outstanding achievement. Various accomplishments, awards and global trust were gained through the hard work of all employees of Bio Farma.

Iskandar

PRESIDENT DIRECTOR

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

38

The 2014 Proper Gold is one of the highest achievement received through the shared value Biotech for Community that has been applied by our partners thanks to successful community development programs. Bio Farma’s most recent product, Pentabio (DTP, Hepatitis B, Hib) received the Pre-Qualification World Health Organization (PQ-WHO) certification at the end of 2014, increasing the number of Bio Farma’s products that have received PQ-WHO certification to 12 products. The year 2014 was also a year of achievements for Bio Farma, with the continuing trust by various international institutes to become the leader of the Developing Countries Vaccine Manufacturer Network (DCVMN) and given the confidence for technology transfer to allow for vaccine manufacturers’ selfsufficiency in Islamic countries. Dear Shareholders, We are thankful to God Almighty because His blessings allowed Bio Farma to get through 2014 successfully with outstanding achievements in all business aspects. Furthermore, let us present the performance report of PT Bio Farma (Persero) for the year ended 31 December 2014.

MACRO ECONOMIC CONDITIONS Throughout 2014, the global economic situation was similar to the one in 2013. The United States was still leading in economic terms compared to other countries, even though its growth was not as high as had been predicted. China was one of the countries recording remarkable growth, while Brazil, Mexico, Russia, African nations and other developing countries continued to grow and contributed positively to the global economic growth. This condition shows that global economy is recovering but not yet in its optimal state. Indonesia was also affected by this. Indonesia’s economic growth was predicted to be 5.8%, yet in reality the growth was recorded at 5.1%. This condition had been predicted by the World Bank and the International Monetary Fund (IMF), and the government took strategic measures by

diverting energy subsidies to develop infrastructure in order to Indonesia’s economy to grow as impressively as it had been in the previous years.

Company Performance Analysis Strategic Policy, Comparison Between The Outcomes With The Target We are thankful to God Almighty that Bio Farma ended 2014 with a satisfactory tone. Bio Farma’s hard work has created a positive impact in the gaining of various awards and achievements. Virtues that we passed along to the public also have brought positive results. From the business point of view, the growth trend of Bio Farma shows a significant rise in 2010-2014, even though in that period Indonesia’s economic, as well as global economic, remained volatile.

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Report from the Board of Commissioners and The Board of Director

Our Operating Revenue graph for 2013-2014 shows an increase of 10.27% from Rp . trillion in 2013 to Rp 2.04 trillion in 2014. Compared to the 2014 RKAP (Work Plan and Budget), there was a growth of Rp 9 8.04 trillion or around 5%. The largest contribution was still from the export sector, namely 66.84% of the total 2014 revenue, or Rp1.37 trillion. This signifies an increase of 11.73% from 2013 revenue. When compared to the target set in the 2014 RKAP, the actual figure exceeded the target by 18.76%. The increase in export sales was triggered by increase in sales of products such as tOPV 20 ds, Td 10 ds, bOPV 20 ds, BioTT 1 ds, Pertussis bulk, Tetanus bulk and Diphtheria bulk. There was an increase in sales to the private sector in 2014 by 58.48% from 2013 figure, thus actual realized figure was Rp130.12 billion, compared to Rp82.11 billion in 2013. Meanwhile, in the domestic Government sector, sales in 2014 changed due to the decrease in vaccine demand from the Government. Sales to this sector in 2014 reached 83.24% of the budget or Rp547.73 billion, while in 2013 the figure was Rp548.71 billion. The increase in the Company’s revenue in 2014 positively affected the Net Profit recorded by Bio Farma. In 2014, Net Profit recorded by Bio Farma was Rp580.07 billion, up 1.33% from 2013 Net Profit of Rp572.47 billion. In this occasion we would like to extend our greatest appreciation to the rise in sales to the domestic private sector, which contributed to the 58,48% increase in total sales compared to 2013. The Board of Directors believes that although the domestic private sector is a captive market, in order to maintain and strengthen the government as Bio Farma’s partner, Bio Farma shall continue to support the national vaccination program while not reducing the sales target for the foreign market. Biofarma’s achievements are due to the hard work of all employees, who have worked in an integrated business system, with strategic policies. Our product development is already on the right track, as Bio Farma is entrusted to produce new vaccines, such as for pneumococcus, typhoid conjugate, and other vaccines that are still in the research stage.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Report from the Board of DIRECTORS

11.73% INCREASE IN EXPORT SALES Human Resources Some important initiatives that we have carried out in developing our human capital are employee mapping based on competence and Human Resources management by implementing the talent management strategy, which covers talent need and talent selection to obtain employees with an excellent competence in biotechnology. To maintain human resources competence development in biotechnology and biopharmaceutical industry, one of the ways we do is assigning employees to continue their postgraduate studies either domestically or abroad, and assigning them to conduct research with international institutions. This is because build a life-science industry specializing in biotechnology requires a strong human capital. In accordance with our Human Capital Development Management Roadmap 2012-2017 towards the life science industry, in 2014 our efforts were focused on reinforcing the human capital management system and infrastructure based on information technology, namely the Human Capital Management System (HCMS). This system contains modules such as performance management, reward management, talent management, and knowledge management. With the knowledge management module, the learning and sharing of knowledge in Bio Farma environment can be done continuously without being limited by time and physical place. We expect that the culture of learning and sharing of knowledge in Bio Farma continues to thrive. Every year, Bio Farma assigns its employees to participate in various competence development programs within and outside of the country. The programs may either be related to core business, i.e. biotechnology, or other specialities that supports the Company’s business processes.

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4 2 1 3 5 6

1 Iskandar

PRESIDNET DIRECTOR

3

Mahendra Suhardono

5 Juliman

PRODUCTION DIRECTOR

2

Andjang Kusumah

4

Pramusti Indrascaryo

6

Sugeng Raharso



HUMAN RESOURCES DIRECTORS





Issues Faced by the Company Achieving progress in 2014 was not a walk in the park for us. There were several external as well as internal issues that we had to face. The main issue was the fact that our research activities—carried out by university research teams and research institutions—had not been integrated, which resulted in the delay in publishing our research results to the public. In addressing this issue, Bio Farma welcomed the establishment of the Forum Peneliti Pemuda Indonesia (ForMind) or the Indonesian Young Researchers Forum in Bandung on 28 October 2014. ForMind is a community

MARKETING DIRECTOR

FINANCE DIRECTOR



PLANNING & DEVELOPMENT DIRECTOR

of researchers from various disciplines that is formed to gather thoughts and engender discussions in collaborative manner across disciplines. Through this forum, Bio Farma as a knowledge based life science industry may obtain a qualified intellectual asset which it requires. Bio Farma shall be able to grow with the strong support of Research & Development, and in order to minimize research delay issues, we shall ensure that the synchronization of researchers’ goals with the needs of the industry takes place, so that the government’s aim, namely to be self sufficient and sovereign, can be realized.

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Report from the Board of Commissioners and The Board of Director

Report from the Board of DIRECTORS

Analysis of Prospects Bio Farma is now more confident in entering the new phase of its life as a world class life science industry with global competitiveness to upgrade the quality of life of mankind, in accordance with its vision, mission and philosophy that is currently aligned with the development of biotechnology and pharmacy. In the last few years, chemistry based medical innovations will soon be replaced by life science. To put it simply, the life science industry is “science of life for nature’s creature”, that is science about and for humans (biology, medicine, anthropology, ecology) that in majority are based on nature. Biotechnology, Biomedical, and Neurobiology. We have formulated various plans and developments as we go into this life science industry, one of which is to build a life science centre in Jasinga, Bogor. Jasinga will be used not only in the interest of mankind, but also for the conservation of animals and plants. The construction of Bio Farma’s facility in Jasigna is aimed at making it the biggest vaccine and pharmaceutical drugs testing center in all of South East Asia. We are also planning to implement the Rain Water Harvesting technology to prevent water shortage. Using this technology, rain water will be collected and subsequently retained for use in the dry season. This demonstrates that we want our operations to remain environmentally friendly. In 27 March 2014, at the Conference Hall of the World Health Organization, South-East Asia Regional Office in New Delhi, India, Indonesia received the PolioFree Certificate. There is no doubt about Bio Farma’s ability to provide Oral Polio Vaccine (OPV). Bio Farma has been able to supply 60% of all polio vaccines in the world. However, it is predicted that by 2018 polio will be eradicated, and therefore Bio Farma has anticipated this situation by providing new vaccines required by public.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

10.27% INCREASE IN SALES IN 2014

Bio Farma has constantly received offers to conduct research from the world’s notable research institutes to develop new vaccines. The trust given by these research institutions shows that Bio Farma has a great potential in terms of infrastructure and competent human capital, and also a potential for acceleration in producing new vaccines. Currently we are developing Rotavirus, Pneumococcus, and Typhoid Conjugate vaccine. Pneumococcus will be a revolutionary vaccine in the world to be launched, while for Typhoid Conjugate vaccine, provided that it is launched with the right timing, Bio Farma shall be the second producer of this vaccine. In the upcoming years, Bio Farma will not only have to deal with WHO for international standardization. Bio Farma will also need to obtain industry standardizations from the United Nations Industrial Development Organization (UNIDO). It is an organization within the United Nations whose function is to promote and accelerate industrial development in developing countries and in countries in economic transition, and to promote international industrial cooperation. The UNIDO has required Bio Farma to create shared values based on its core competence in technology to the public that are the eventual stakeholders of Bio Farma.

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National Vaccine Research Forum

Strategy & Initiatives

The Fourth Forum Riset Vaksin Nasional (FRVN) or the National Vaccine Research Forum was held on 1920 August 2014 in Jakarta. This forum was formed in 2011 and mainly consists of researchers in the fields of biotechnology and vaccine. The main purpose of FRVN is to allow for self sufficiency and acceleration, so that it will take less than 15-20 years, which is normal for vaccine development, to introduce a new vaccine to the public. In addition, we will support the creation of new vaccines that are needed by the public, especially in Indonesia, through self-sufficient cooperation with self sufficient vaccine research by maintaining synergy with academics, the government, and the industry and community.

The advanced biotechnology industry create products that are considered “low volume high value”, two of whose indicators are quantity and number of patents. In this context, seen from the product spread coverage standpoint, Bio Farma’s market share in the global market is around 0.5-0.6%. Based on the Global Mapping issued by a multinational vaccine manufacturer, Bio Farma’s international scope is in the medium level going towards global. However, in terms of product portfolio, Bio Farma already enjoys global recognition as it offers a complete range of products.

The Fourth FRVN’s theme, i.e. “Implementing Vaccine Research Result for National Vaccine Self Sufficiency” was expected to capture the implementation of research results from each previously established consortium, and to disseminate product regulation in order for vaccine development and research in Indonesia to be adequately regulated and to have a better strategy for implementation. The substantial results from this FRVN was the formation of consortia and working groups. There are currently five consortia, two of which have shown a significant progress and in the near future will be launching the Hepatitis B and Erythropoietin (EPO). There are five consortia that cover Hepatitis B, New-TB, Dengue, HIV, Erythropoietin (EPO) or Bio Similar vaccines, and seven working groups that cover Influenza, Malaria, Rotavirus, Stem Cell, Pneumococcus And Delivery System, Human Papilloma Virus (HPV), and Policy. The existence of FVRN is expected to help Indonesia achieve the targets of MDGs (Millennium Development Goals), namely the control of infectious diseases, such as HIV/AIDS, TB (Tuberculosis) and Malaria, all of which are included on the list of diseases that can be prevented by vaccination (PD3I). In addition, FRVN also provides the opportunity for researchers to upgrade their research capacity in order for their basic vaccine products to be useful for and aligned to public needs and the epidemiologic characteristic of the diseases.

On the other hand, multinational vaccine manufacturers consider the Indonesian and ASEAN markets as a hugely potential market. This is one of the biggest challenges currently faced by Bio Farma. Bio Farma has to upgrade its marketing strategies especially to win a larger market share in the domestic non-governmental, or private, sector. Within the ASEAN community, Bio Farma has taken strategic steps by establishing the center of excellence in the vaccine industry by forging a synergy in ASEAN countries that are stepping into the pharmacy industry by engaging in vaccine technology transfer agreements. Bio Farma aims to enter the market in Islamic countries. We closely are eyeing the development potential in the Islamic countries in Asia, Africa, and East Europe, whose populations will significantly increase in the next few years, and the market in United Arab Emirates. As one of the top ranking vaccine producer in an Islamic country, Bio Farma is confident to enter these markets. We have begun to approach these markets by joining the Organization of Islamic Cooperation (OIC). At the Fourth Organization of Islamic Cooperation – Strategic Health Programme of Action (OIC-SHPA) Health Ministry Level Forum held in Jakarta in 2013, followed by subsequent meetings in 2014 in Islamic countries, Indonesia has been entrusted to act as the Head of Hub of Vaccine Technology for OIC countries. Indonesia supports other OIC members to achieve self-sufficiency in producing qualified and affordable

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Report from the Board of Commissioners and The Board of Director

Report from the Board of DIRECTORS

In 2014, the world was shocked by the ebola virus outbreak in Africa which eventually spread to the Americas and Europe. Even though Asia is not an endemic area of this disease, the prospect of this virus spreading to Asia, especially Southeast Asia, should make us cautious at all times. Currently the world’s vaccine manufacturers are teaming up to accelerate the invention of new vaccines in anticipation of the rapid mutation of viruses, which will most likely be faster than the discovery of the vaccines to combat them. Bio Farma continues to play an active role in the international community in ensuring Global Health Security.

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2014

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vaccine and pharmaceutical products. Bio Farma as a vaccine manufacturer that has passed the WHO prequalification is prepared to support OIC members in the supply of raw materials and intermediate products, as well as upgrading their human resources in carrying out downstream or Fill and Finish processes. With a comprehensive experience on a global forum, such as as the organizer of TCTP (Third Country Training Program), Executive Committee and President of DCVMN (Developing Countries Vaccine Manufacturer Network) and GAVI Alternate Board, Bio Farma is confident to lead the establishment of a center for excellence for biological products to be marketed to Islamic countries. In maintaining partnerships, our marketing strategy is not only focused on competitiveness, cost and quality. It is more focused on synchronizing the perception on the importance of Global Vaccine Security such as ensuring vaccine production and vaccine cost allocation, estimation of national and global vaccine needs, green industry, GRC (governance, risk management, compliance), and world class CSR (corporate social responsibility). One of the elements that support our capacity and supply increase strategy is a reliable information technology system to support the business processes of Bio Farma towards becoming a world class company. In order to achieve this, Bio Farma has carried out a number of breakthroughs in information technology. The implementation of Enterprise Resource Planning (ERP) in 2014 is expected to manage all business processes and all support functions in an integrated manner. The implementation of ERP in Bio Farma’s business processes, aside from ensuring the implementation of GMP (Good Manufacturing Practices), also showed our commitment towards running a green industry. We participate in the effort to minimize deforestation and global warming by implementing the touch screen technology to reduce our paper use.

Future Prospects In the vaccine business, vaccine security is an important issue. In recent years, market conditions have changed due to the difference in the vaccines needed in developed countries and those needed in developing countries. Developed countries require more complex vaccines for a great number of diseases, while developing countries require vaccines that are more basic for the prevention of infectious diseases. Some major producers do not produce basic vaccines. This is why UNICEF has a concern to support the vaccine industry in developing countries so as to increase production capacity, to ensure the availability of vaccines for global vaccination programs especially in less developing countries. Vaccine security and global vaccination program are two main issues for GAVI Alliance (Global Alliance for Vaccines and Immunizations), a non-profit organization that engages in global health partnerships dedicated to providing “vaccination for all”. GAVI Alliance has ample funding to carry out global vaccination programs as it has the support of international donors such as Bill & Melinda Gates Foundation. Currently GAVI Allince is supporting the funding of Pentavalent vaccination program in Indonesia up to the next three years. There are still huge market opportunities in the vaccine business. Bio Farma has the opportunity to produce vaccines for infectious diseases as industries in developed countries in general are producing pharmaceutical products and vaccines for noncontagious diseases. The domestic and private sectors will also grow due to the expansion of middle and upper class segments that are willing to spend more for premium health services for their family. Bio Farma’s long term vision is to transform itself as a Life Science Industry by focusing in five strategies, namely Research and Partnership, Investment, Information Technology, Marketing, and Product Supply Chain.

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Report from the Board of Commissioners and The Board of Director

As a player in the Life Science industry, Bio Farma can focus more on biological products that now are increasingly dominating in the health field. Supported by the competence and experience in the fields of biotechnology and vaccines, Bio Farma is confident that it can produce more economical and affordable biological products. The development of biological products will require the interaction of various disciplines with the exploitation of nanotechnology and bio-informatics. Biological products are not only used for medication nowadays, but also for preventing diseases. About 50% of biological products are blood products and their derivatives, while 19% are diagnostic products, 16% are vaccine products, and 15% are monoclonal antibodies. These biological products make up more than 70% of the global pharmacy industry. The market for biosimilar products will also grow in the near future. A biosimilar product is created by duplicating microorganisms using the recombinant DNA technology. These products are high on demand yet not accessible for all due to their high costs. However, using current technologies whose patents will expire in a few years’ time is a solution to this.

Good Corporate Governance Implementation Bio Farma maintains and uphold the values of integrity and apply the principles of Good Corporate Governance – GCG) as the groundwork for all of its business activitise. GCG practices based on the highest standards of ethics are inherent in the attitude, behavior, mindset and work ethic of Bio Farma employees. In 2014, various policies related to the implementation of GCG were enhanced, disseminated to all, and implemented. A number of Decrees of the Board of Directors and Joint Decrees of the Board of Commissioners and the Board of Directors related to GCG policy in 2014 were on Code of Conduct, Whistle Blowing System (WBS), control of gratification and the Board Manual for the Board of Commissioners and the Board of Directors.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Report from the Board of DIRECTORS

The Company conducts periodic evaluation of its GCG implementation using external assessment and selfassessment in order to achieve its GCG implementation goals. In 2014, GCG self-assessment was conducted by the counterpart team. Aside from conducting the assessment, GCG awareness was enhanced through the of KPKU (Criteria for Performance Excellence) Assessment in November 2014. Based on KPKU team’s evaluation that were carried out in two stages, i.e. on-desk review and site visit, Bio Farma’s Criteria for Performance Excellence score was 422.75, higher than what we achieved in the year before, i.e. 315. An external evaluation was conducted by a Financial and Development Supervisory Board (BPKP) of West Java in March 2013 for the period of 2011–2012. The result of the assessment was a score of 83.416, or equal to the “Good” category. The achievement of every aspect under evaluation in the fourt assessment periods continued to improve, although the total score obtained in 2013 assessment was slightly lower than the scores for 2009-2010, which was 86.68. This was due to the change in and separation of certain evaluation aspects along with their weighting, compared to the previous year.

Risk Management Since 2009, the Risk Management System implemented in Bio Farma has been based on COSO Enterprise Risk Management – Integrated Framework. Along with the formulation of Bio Farma’s Integrated Management System, Bio Farma also combined and integrated the ISO 31000 (2009) and COSO Enterprise Risk Management – Integrated Framework into its risk management system. In 2014 there were 7 (seven) corporate risks that were divided into 4 (four) risks from regular activities and 3 (three) project risks. Among these risks are increased competition, global delay in vaccine supply, changes in WHO’s regulations and requirements, fluctuation

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in foreign exchange rates, delayed investments, unpreparedness of the influenza vaccine, and upgrade of the Information Technology (IT) Integration. After determining the corporate risks and strategic steps to be taken in addressing these risks, the Corporate Risk Management (CRM) Division, which is responsible for corporate risks, will conduct an evaluation and monitoring of risk management activities carried out by every unit. Each Unit Head will be held responsible for each risk and overall mitigation activities that altogether will become the measure of effectiveness of risk management implementation in Bio Farma.

Corporate Social Responsibility Bio Farma carries out its Corporate Social Responsibility (CSR) based on the ISO 26000:2010 standard guidelines for Social Responsibility. Since 1890 when the Company was first established until now in its 124th year, Bio Farma has the skills and experience in developing and managing virus and bacteria, the environment, water, air, cold chain and distribution system. Using these skills we create shared value in order to provide solutions for the public, especially for small industries to align our sustainability to the social, economic and environmental aspects. Aside from our operational activities, the beyond compliance standard is a reflection of Bio Farma’s commitment to achieve environmental excellence at every operational stage. Bio Farma believes that high quality and environmentally friendly products, which are the most important element of the Company, may only be possible through conducive and environmentally friendly production activities. All production efforts can be done comprehensively, from planning, implementing, monitoring, reviewing and continuous improvement with the clean production principle, or eco-efficiency.

sovereignty and welfare of mankind and sustainability for future generations. This will be the overarching objective of our Corporate Social Responsibility activities. Community development programs are conducted to foster the self-sufficiency of the communities. Least developed villages are brought up to be self-sufficient by exploring their potential resources, creating business opportunities for SMEs, and supporting villagers to engage in economically productive activities. Bio Farma’s effort received the appreciation from the Ministry of Environment that took the form of the highest award in the environmental field, namely the Gold Proper, which was received in December 2014. The Proper award assessed about 1,980 companies in Indonesia, and Bio Farma was the only pharmaceutical company in Indonesia to achieve the Gold Proper.

Development of Villages under Our Patronage In line with one of Bio Farma’s Corporate Social Responsibility (CSR) programs, that is developing the Tamanjaya Village located at the center of the Ciletuh Geopark, Bio Farma in cooperation with several parties are developing this village to turn it into a world class ecotourism village without overlooking the local wisdom. One of the cultural values of this ecopark village is the Pakidulan batik motif that emerged from Taman Jaya village. The creation of this type of batik employs nanotechnology for the coloring agents, making the process environmentally friendly. Pakidulan motifs display the beautiful natural scenery in Ciletuh Geopark, and these motifs have been registered as patents to the Directorate General of Intellectual Property Rights.

The diversity of resources, which includes bio-diversity, geo-diversity and cultural diversity, can be the main driver for innovation from year to year. Biodiversity can be harnessed in such a way that will allow for the

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Report from the Board of Commissioners and The Board of Director

In addition, social mapping has been conducted to discover geo-diversity, biodiversity and cultural diversity potentials.

Access to Medicine and Healthcare The World Health Organization (WHO) has determined that every country should support each other especially in driving the pharmaceutical industry to play a greater role in increasing public access to medicine and healthcare for those who still require support, in particular in developing countries. Bio Farma is implementing the Access to Medicine and Healthcare program through its CSR activity. This was brought to reality through educational programs and nutrient rehabilitation programs for toddlers, which include medical check-up, delivery of vitamin supplements, nutrient supplement, supervision of nutrition status and counseling. Bio Farma distributes free vaccines to the public, trains health educators, establishes and empowers village health cadre system, assists malnutrition eradication and has built a Public Health Center in Ujung Genteng, Sukabumi. Bio Farma works with UNICEF in providing free vaccines to relatively inaccesible countries, such as Iran, Tunisia, African countries, Timor Leste, and Tajikistan. In Indonesia, the access to medicine and healthcare program was carried out in remote areas such as Inner Baduy and South Garut.

Report from the Board of DIRECTORS

Responsibility Statement for Annual Report of 2014

with greater contribution to all in the future. We also report that the Board of Directors of Bio Farma is capable for actively participating in national or international interactions.

Appreciation We would like to extend our appreciation to our Stakeholders, the Board of Commissioners, our partners and other stakeholders for their support and trust in Bio Farma. We commend all employees that have shown their dedication and professionalism by working consistently and upholding our corporate values. We are confident that with the support of all parties, in the future Bio Farma will continue to increase its value for shareholders, benefit the public, and fulfill the Company’s vision, that is to be a world class company in the life science industry. On behalf of the Board of Directors,

Iskandar PRESIDENT DIRECTORS

Changes to the Composition of the Board of Directors In 2014 there were no changes to the composition of the Board of Directors of Bio Farma. It is our hope that the current composition of the Board of Directors, made up of people from various backgrounds, competence and experience, will result in a more excellent performance

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Responsibility Statement for Annual Report of 2014 This 2013’s Annual Report includes financial statement and other information falls under the full responsibility of all Board of Directors and Board of Commissioners whose signature appears below.

Board of commissioner

Ahmad M. Ramli PRESIDENT COMMISSIONER

Herman L. Djuni COMMISSIONER

Nizar Yamanie COMMISSIONER

Paruli Lubis COMMISSIONER

Ihsan Setiadi Latief COMMISSIONER

Heridadi COMMISSIONER

Iskandar PRESIDENT DIRECTORS

Andjang Kusumah Human Resources Director

Mahendra Suhardono Marketing Director

Pramusti Indrascaryo Finance Director

Juliman Production Director

Sugeng Raharso Planning & Development Director

BOARD of DIRECTOR

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COMPANY PROFILE

COMPANY NAME AND ADDRESS

COMPANY NAME AND ADDRESS Company Name PT Bio Farma (Persero).

Domicile Bandung.

Establishment 6 Agustus 1890.

Establishment Deed Decree of the Minister of Justice of the Republic of Indonesia on 5 March 1998 with No. C2-1423hT.01.01. in 1998.

Authorized Capital Rp 5 trillion consisting of 5 million shares with a nominal value of Rp 1 million per share.

Issued & Paid-Up Capital Rp 1.25 trillion consisting of 1.25 million shares with a nominal value of Rp 1 million per share.

Share Ownership Composition 100% owned by the Government of the Republic of Indonesia. No Subsidiary. Non Listed.

Scope of Business Research, development, production, marketing of biological products, pharmaceutical products and medical devices.

Address PT Bio Farma (Persero) Jl. Pasteur No. 28, Bandung 40161 Tel.: (62-22) 203 3755

Fax.: (62-22) 204 1306 E-mail:

[email protected]

Website:

www.biofarma.co.id

Facebook: Info Imunisasi Twitter: @infoimunisasi @biofarmaID

Blog:

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2014

www.infoimunisasi.com

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COMPANY PROFILE

BRIEF HISTORY OF THE COMPANY

BRIEF HISTORY OF THE COMPANY

6 August 1890

1942-1945

Bio Farma was established under the name of “Parc Vaccinogene” on 6 August 1890 based on the Decree of the Governor of the Dutch Indies No. 14 of 1890, in the Welter vreden Militar y Hospital, Batavia, which now function as the militar y Hospital (RSPAD) Gatot Soebroto, Jakarta.

During the Japanese occupation, Bio Farma changed its name to “Bandung Boeki Kenkyusho” and was led by Kikuo Kurauchi.

1945-1946 The Indonesian name of “Gedung Cacar and Lembaga Pasteur” was attributed to the Company, which was then led by R.M. Sardjito, the first Indonesian officer who led the Company. Under his leadership, the head office was moved to Klaten.

1895-1901 The Company’s name was changed to “Parc Vaccinogene en Instituut Pasteur.”

1946-1949 During the Military Aggression, when Bandung was taken over by the Dutch army, the Company changed its name once more to “Landskoepoek Inrichting en Instituut Pasteur.”

1950-1954 1902-1941 The Company changed its name again to “Landskoepoek Inrichting en Instituut Pasteur.” In 1923, Bio Farma was relocated in Jalan Pasteur No. 28 Bandung, and led by L. Otten.

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The Company changed its name again to “Gedung Cacar and Lembaga Pasteur”, and was one of the institutions under the auspices of the Ministry of Health of the Republic of Indonesia.

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1955-1960

2009

During the nationalization of Dutch companies in Indonesia, the Company later changed its name to “State Company Pasteur”. The Company was then more popularly known as PN. Pasteur.

Under the new management team, Bio Farma stepped forward as a worldclass vaccine company with global competitiveness.

1997-2011 Bio Farma succeeded in obtaining WHO Prequalification for 12 types of vaccines, marking WHO’s approval for entering global market.

1978-1996 Based on Government Regulation No. 26/1978, the Company changed its name to Bio Farma public company, better known as Perum Bio Farma.

2008 1997 1961-1978 The Company changed its name again to “Bio Farma state company” or better known as PN. Bio Farma.

Based on Government Regulation No. 1/1997, the Company changed its name from Perum Bio Farma to Perusahaan Perseroan or more familiarly PT Bio Farma (Persero) up to the present time.

The launch of a new logo reflected the spirit and optimism towards entry into the world class vaccine industry.

2014

Enhancement of a new Vision, “To be a World Class Lifescience Company with Global Competitiveness”.

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COMPANY PROFILE

LINE OF BUSINESS

LINE OF BUSINESS

COMPANY BUSINESS ACTIVITIES In accordance with the articles of association of the Company, the purpose of the establishment of the Company is to engage in research, development, production and marketing of biological, pharmaceutical, and medical products, and optimization of the Company’s resources to create high quality products and services with a strong competitiveness to secure profit in order to improve the Company’s value by implementing the principles of a limited liability company.

BACTERIAL VACCINES 1. TT Vaccine – for tetanus and Neonatal Tetanus (Tetanus in newborns) prevention. 2. DT Vaccine – for diphtheria and tetanus prevention. 3. DTP Vaccine – for diphtheria, tetanus and pertussis prevention. 4. BCG Vaccine (Freeze Dried) – for tuberculosis prevention. 5. Td Vaccine – for tetanus and diphtheria prevention, for children aged 7 years and over.

CURRENTLY ENGAGED LINES OF BUSINESS The Company is currently engaged in the following lines of business: 1. Research and development of biological and pharmaceutical products, both on its own as well as in collaboration with other parties; Production of biological and pharmaceutical 2. products, both on its own as well as in collaboration with other parties; 3. Marketing, trading and distribution of biological, pharmaceutical, and medical products, including general goods, both domestically and overseas; 4. Medical laboratory services and clinic services; 5. Services related to the businesses described in points a, b, c, and d. COMPANY PRODUCTS Our products consist of vaccines and antisera for human, classified as follows:

VIRAL VACCINES 1. Oral Polio Vaccine –for poliomyelitis type 1, type 2, and type 3 prevention. 2. Bivalent Oral Poliomyelitis Vaccine – for poliomyelitis type 1 and type 3 prevention. 3. Monovalent Oral Poliomyelitis Tipe 1 Vaccine (mOPV1) – for the prevention of type 1 poliomyelitis disease. 4. Measles Vaccine (Freeze Dried) –for measles prevention. 5. Recombinant Hepatitis B Vaccine –for Hepatitis B prevention. 6. Flubio Vaccine – for seasonal influenza disease prevention.

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• PT Bio Farma (Persero) •

COMBINATION VACCINES 1. DTP-HB Vaccine – for prevention of Diphtheria, Tetanus, Pertussis (whooping cough) and Hepatitis B. 2. Pentabio Vaccine (DTP-HB-Hib) – for Diphtheria, Tetanus, Pertussis, Hepatitis B and Haemophilus influenza type B prevention.

ANTISERA 1. Anti-tetanus Serum – for treatment of tetanus. 2. Anti-diphtheria Serum – for curing diphtheria diseases. 3. Anti-snake Venom Serum – for curing the poisonous snakes bite which contains neurotoxin effects (Naja sputratix/cobra and Bungarus fasciatus/ striped snake) and hemotoxin effect (Ankystrodon rhodostoma/ground snake).

DIAGNOSTICS PPD RT 23 (Purified Protein Derivative) –for testing an individual’s sensitivity against tuberculosis Infection.

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ORGANIZATIONAL STRUCTURE

ORGANIZATIONAL STRUCTURE President Director Iskandar

Finance Director

Pramusti Indrascaryo

Finance Division Ema Asmarawati

Financial Administration Department Erwina Windari

Treasury Department Emil Sinaga

Taxation Department Muhammad Yushar

Divisi Anggaran & Akutansi Mamay Ramali

Budgeting and Accounting Division Dadan Ramdhani

Marketing Director

Mahendra Suhardono

Domestic Sales Division Drajat Alamsyah

Government Sector Sales Department Dewi Tiara

Private Sector Sales Department Fitri Puspadewi

Distribution Department Deden Margawaluta

Export Sales Division

Hegar Al Fatah Suprayogi

Institutional Export Sales Department Ani Resmiani

Budgeting Department Riny Widiasatuti

Financial Accounting Department Mohamad Arif Budiman

Management Accounting Department Mohamad Usman

Compliance & Risk Management Division Basuki Harjo

ERM & GCG Department Endang Sri Maryatun

Matriks Analis Kebijakan Perusahaan

Corporation Export Sales Department Fitriana Rahmawati

Promotion Department Ita Yuanita

Marketing Division Product Management Department Geographical Marketers Matrix

Human Capital Director Andjang Kusumah

Human Capital Division Wawan Setiawan

Talent Management Department Lilis Kartikasari Dewi

Performance & Reward Management Department Adityanto Prayogo

Knowledge Management Department R. Soni Odang Sonjaya

Organizational Development & Industrial Relations Development Department Filman Galuh Purnawidjaya

Procurement Division Sri Widayatiningasih

General Procurement Department Dede Wanda

Capex & Spare Parts Procurement Department Bagus Kurniawan

Procurement Supporting Department Budi Sulistyadi

General & CSR Division R. Herry

Clinic & Immunization Division Immunization Center Department

Environment, Health and Safety Department General Department Didi Sulanto

Clinical Diagnostics Department Regulatory Affairs Division Tjut Vina Irviyanti

Corporate Social Responsibility Department Wawan Sutiawan

Domestic Licensing Department Iman Suryaman

Foreign Licensing Department Mirawati Muchtar Rafei

Business Development Department

Bio Farma’s organizational structure is based on the Decree of the Board of Directors of PT Bio Farma (Persero) No. 02491/DIR/VI/2014 dated 2 June 2014 on PT Bio Farma (Persero)’s Organizational Structure.

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Production Director Juliman

Virus Vaccines Production Division Bambang Heriyanto

OPV Production Department Wadi Hidayat

Measles Vaccine Production Department Dewi Purnomo Rukmi Media Production Department Irpan Darfian

Influenza Vaccine Production Department Ida Nurnaeni

Planning & Development Director Sugeng Raharso

Production Planning & Control Division Andi Rachmatmulya

PPIC Department Taufik Wilmansyah

Warehousing Department Hasanurdin

Quality Control Division Dori Ugiyadi

Bagian Pengujian Mutu Vaksin Bakteri

sIPV Vaccine Production Department

Vinca Medica Lestari

Rotavirus Vaccine Production Department

Bacteria Vaccines Quality Testing Department

Bacterial Vaccines Production Division Ganjar Trisnasari Diphtheria Vaccine Production Department Windhy Febryanti Tetanus Vaccine Production Department Oom Oman Abdurrahman BCG Vaccine Production Department Ipah Epalia Pertussis Vaccine Production Department Rochani Sri Herni Astuti Hib Vaccine Production Department Dida Baginda Raya

Pharmacy Production Division Jeni Tresnabudi

Vaccine & Solvent Formulation & Filling Department Yuyus Sirhanudin Permana

Vaccine & Sera Formulation & Filling Department Leni Lestari

Packaging Department Yudha Bramanti

Engineering & Maintenance Division Ahmad Tomy Zulfikar

Electricity & Equipment Department Tono Dwi Roesanto Mechanical & Utilities Department Said Syahputra

Nia Kurniati

Chemical & Physical Quality Testing Department Irma Riyanti

Microbiological Quality Testing Department Nunung Harini

Pathology & Toxicology Department Purnomo

Laboratory Animals Division Rachmawati Noverina

Animal Breeding Department Hirawan Setiadi

Internal Control Ida Farida Hayati

Auditor Matrix Quality Assurance Division Iin Susanti

QA Operation Department Poppy Patricia

QA Service Department Diah Novitasari

QA System Department Tri Yuni Nugraha

Corporate Secretary M. Rahman Rustan

Secretariat Department Astri Rahmawati

Corporate Communications Department N. Nurlaela Corporate Planning & Strategy Division Hikmat Alitamsar

Business Planning & Strategy Analysis Matrix Information Technology Division Hikmatullah Insan P.

Infrastructure & Operations Department Amin bin Kanda IT System Development Department

Clean Colony Poultry Department Animal Testing Department

IT System Development Matrix

Ivov Rinaldi Hasibuan

SPF Animal Department Agung Subekti

Surveillance & Clinical Testing Division

Research Division

Surveillance & Epidemiology Department

Research Matrix

Novilia Sjafri Bachtiar

Dyah Widhiastuti

Clinical Testing Department Rini Mulia Sari

Cooler & Buildings Department Agung Nugroho

Adriansjah Azhari

Product Development Division Product Development Matrix

Validation & Calibration Department Fitra Rezkiyansyah

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PHILOSOPHY, VISION, MISSION

PHILOSOPHY, VISION, MISSION Our Philosophy Dedicated to Improve Quality of Life Our Vision To become a World-Class Life Science Company with Global Competitiveness. Our Mission Provide and Develop Life Science Products of International Standards to Improve the quality of Life.

Description on Changes to the Philosophy, Vision, Mission and Values On 6 March 2014, Bio Farma transformed its Philosophy, Vision, Mission and Values in accordance with the Joint Decision of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-07/DK/BF/ III/2014, No. 01103/DIR/III/2014 on Changes to the Joint Decision of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-05/DK/BF/ II/2013, No. 01024/DIR/II/2013 on the Code of Conduct of PT Bio Farma (Persero) Article I verse 1.5 and 1.6. The new Philosophy, Vision, Mission and Values have been disseminated by the Company to its employees through: • Training programs held on 21-25 April 2014 at GH Universal Bandung, with the theme of “Internalization of Corporate Vision, Mission and Values”. • Directors’ Induction on 26 May 2014 in Bio Farma’s Multi-Purpose Building • Moderated e-mail on 30 June 2014.

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Explanation of the Company’s Vision

Explanation on the Company’s Mission

Bio Farma’s Vision is stipulated in the Document MBF01 revision 12, dated 30 June 2014, that is to be a worldclass producer of vaccines and antisera with global competitiveness. This vision emphasizes Bio Farma’s role in fulfilling the national and global needs for vaccines, repositioning itself from a vaccine producer to a life science company in the spirit of greater transformation. The world-class status is achieved through innovation in various segments, increasing efficiency in various environmentally-friendly business processes, technological updating, implementation of world-class CSR activities, and enhancement of worldclass human capital quality.

Bio Farma’s Mission in order to make its Vision come to life has been formulated by taking into consideration the Company’s primary competencies and the strategic challenges it faces. Bio Farma continuously implements innovations by producing, marketing, and distributing vaccines and antisera with international standards of quality. To maintain its quality, Bio Farma has deployed various integrated systems that have been certified with ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, CPOB, ASEAN GMP, WHO GMP, and followed the global development of cGMP requirements. In running its mission, Bio Farma continues to uphold the principles of GCG. Its presence for 123 years is expected to contribute optimally to all of the Company’s stakeholders.

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BRIEF PROFILE OF MEMBERS OF THE BOARD OF COMMISSIONERS

COMPANY PROFILE

BRIEF PROFILE OF MEMBERS OF THE BOARD OF COMMISSIONERS AHMAD M. RAMLI

President Commissioner Born in Bandung, 4 July 1961, Ahmad M. Ramli obtained the Bachelor of Law degree from the Faculty of Law, Padjadjaran University, Bandung in 1985. He obtained the Master of Law degree at the Legal Studies Master’s Program and Doctor of International Law from Padjajaran University in 1999. Began his career as Assistant Lecturer at the Faculty of Law of Padjajaran University in 1986. Served as Assistant Dean II (1999-2001) and Assistant Dean I (2001-2004). An Intellectual Property Rights and Cyber Law expert, and holds the Certificate on Industrial Property Rights, Japan Institute of Invention and Innovation. He is also a Professor at the Faculty of Law of Padjajaran University, and has served as Expert Staff for the Minister of Communications and Informatics of the Republic of Indonesia (20042007), member of the Arbitration and Alternative Dispute Resolution Law Preparation Team, and member of the Law Review (Law Reform) Team at the Ministry of Justice of the Republic of Indoneisa (1998-1999), Chairman of the Interdepartmental Team of Public Information Acquisition Freedom Law, Department of Communications and Informatics, Department of Law and Human Rights (2006), Head of the National Law Encouragement, Department of Law and Human Rights (2007) and member of the Telecommunications Regulation Agency – BRTI (2005-2007). Has been working as Arbiter at the Indonesian National Arbitration Agency (BANI) since 2004, and also as Director General of Intellectual Property Rights at the Ministry of Law and Human Rights of the Republic of Indonesia. Appointed as Commissioner of Bio Farma on 8 October 2007 to 5 November 2012, and then reappointed as Commissioner of Bio Farma on 12 April 2013. As of 31 December 2014 he was 53 years of age. His legal basis of appointment as Commissioner is the Decree of the Minister of SOE No. SK-220/MBU/2013 dated 12 April 2013. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

Nizar Yamani

Commissioner

Born in Surabaya, 23 December 1952, Nizar Yamani graduated from the Faculty of Medicine of Airlangga University, Surabaya and completed his Consulting Neurospecialist program at the University of Indonesia. Active at Cipto Mangunkusumo Hospital Jakarta, National Brain Hospital Jakarta, and Husada Utama Hospital in Surabaya. Member of the advisory team at the Indonesian Epilepsy Prevention Union (PERPEI) and appointed as Commissioner of Bio Farma on 28 May 2012. As of 31 December 2014 he was 62 years of age. His legal basis of appointment as Commissioner is the Decision Outside of the GMS No. 204/MBU/2012 dated 28 May 2012 in conjunction with the Decree of the Minister of SOE No. SK-81/MBU/2013 dated 4 February 2013. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

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Herman L. Djuni

Commissioner

Born in Brastagi, 7 August 1949, Herman L. Djuni was a retired Army Officer graduating from the Armed Forces Academy of the Republic of Indonesia (Akabri) in 1972. Enrolled on various advanced military courses among others Infantry Special Course (1973), Infantry Officer Advanced Course (1983), School of Staff and Commando of TNI-AD (1991) and School of Staff and Commando of ABRI (1994). Obtained a Bachelor of Industrial Engineering degree from the Jenderal Achmad Yani University, Bandung (2000). Accomplished various military assignments, among others as Commander of the Mechanical Infantry Battalion 203/Arya Kemuning (1972), Tangerang, Adjutant of the Minister of Information of the Republic of Indonesia, Commander of the Infantry Battalion 642/Kapuas in Sintang, West Kalimantan (1987-1989), lecturer of Seskoad (1991), Widya Iswara Lemhanas (2002) and member of the DPR RI from the TNI/POLRI Fraction (2003). Appointed as Commissioner of Bio Farma on 27 June 2011. As of 31 December 2014 he was 65 years of age. His legal basis of appointment as Commissioner is the Decree of the Minister of SOE No. KEP-153/MBU/2011 dated 27 June 2011. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

PARULI LUBIS

Commissioner

Born in Yogyakarta, 21 January 1953, Paruli Lubis completed his education at the Financial Sciences Institution in Jakarta in 1980. He graduated with the of Business Administration degree from Washington University – Saint Louis, USA (1986). Worked in the scope of the Ministry of Finance of the Republic of Indonesia and had served as Chief of the XXVII Regional Office, Directorate General of Budgeting in Manado (2002), Director of Budget Execution (2004), Director of Treasury System (2008) and Director of Treasury Transformation, Directorate General of Treasury of the Ministry of Finance of the Republic of Indonesia (2009). Appointed as Commissioner of Bio Farma on 5 November 2012. As of 31 December 2014 he was 61 years of age. His legal basis of appointment as Commissioner is the Decree of the Minister of SOE No. 392/MBU/2012 dated 5 November 2012. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

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IDENTITAS & RIWAYAT SINGKAT ANGGOTA DEWAN KOMISARIS

Ihsan Setiadi Latief

Commissioner

Born in Bandung, 14 July 1972, Ihsan Setiadi Latief completed his bachelor’s degree at the Ushuluddin Faculty, majoring in Philosophy of Aqidah, IAIN Sunan Gunung Djati Bandung in 1996. He studied at the Social Sciences Master’s Program majoring in Communication Sciences at Padjadjaran University in 2004. Has been active since as a student in various organizations, such as ICMI (Indonesian Muslim Academics Association), Perhimpunan Masyarakat Madani, Komunitas Konsultasi Komunikasi (Konklusi) and Persatuan Islam. Worked in various higher learning institutions, such as a teacher at the Sekolah Tinggi Agama Islam Persatuan Islam (STAI Persis), Chairman III of the Sekolah Tinggi Keguruan dan Ilmu Pendidikan Persatuan Islam (STKIP Persis) from 1998 to 2002, and then as Chairman of STKIP Persis until present. Also serves as guest lecturer of Communications and Counseling at the Sekolah Tinggi Ilmu Kesehatan Jenderal Achmad Yani (Stikes Unjani) Bandung, guest lecturer of Communications and Negotiations at Al- Azhar University Indonesia Jakarta and Bung Karno University. Founded the Cita Insani Mandiri Foundation that engages in the teaching of Islam and social issues. Appointed as Commissioner of Bio Farma on 1 May 2013. As of 31 December 2014 he was 42 years of age. His legal basis of appointment as Commissioner is the Decree of the Minister of SOE No. SK-235/MBU/2013 dated 1 May 2013. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

HERIDADI

Commissioner Born in Tanjung Karang on 24 July 1952. Heridadi obtained a Doctoral degree from the Faculty of Medicine, University of Indonesia in 1997, then enrolled to the ABRI Military School. His first assignment as TNI AD Officer was at Kesdam II/Sriwijaya with the rank First Liutenant CKM as Pusat Latihan Tempur (Puslatpur) Doctor. In 1985-1987 was enrolled to the Health Planning and Management Master’s Program at the Faculty of Health, University of Indonesia, and afterwards he was assigned to the Directorate of Health, TNI AD. In 1990 he became the Vice Commander of the Health Batallion, First Infantry Division Kostrad and in 1992 participated in Seskoad education. Subsequently served as Commander of the Health Battalion, First Infantry Division of Kostrad. In 1994-1995 served as Commander of the XIV/A Garuda Contingent for UN duty in Bosnia Herzegovina. His subsequent military post was at Health Chief of Kostrad, Health Chief of Kodam Jaya, and Health Education Center Commander of TNI AD. In 2004 he served as Director of Health of TNI AD until 2008. In 2007 participated in Lemhannas program and in 2008 became the Health Chief of TNI up to 2010. In 2013 graduated with a Doctoral degree at the Faculty of Medicine of the Gadjah Mada University, majoring in Biodefense. Appointed as Commissioner of Bio Farma on 23 January 2014. As of 31 December 2014 he was 62 years of age. His legal basis of appointment as Commissioner is the Decree of the Minister of SOE No. SK-17/MBU/2014 dated 23 January 2014. He has no affiliation with members of the Board of Directors or other members of the Board of Commissioners or the shareholders.

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COMPANY PROFILE

BRIEF PROFILE OF MEMBERS OF THE BOARD OF DIRECTORS

BRIEF PROFILE OF MEMBERS OF THE BOARD OF DIRECTORS ISKANDAR

President Director Born in Sukabumi, 25 December 1955, Iskandar obtained a Bachelor of Pharmacy (1980) and the Pharmacist Professional Certification (1981) from the Department of Pharmacy, Faculty of Mathematics and Natural Sciences, Bandung Institute of Technology. He obtained his Master of Management degree, majoring in Financial Management, from the Master of Management Program at the Faculty of Economics and Business at Padjadjaran University in 2004. Has been working in Bio Farma for more than 30 years, and occupied various managerial positions, such as Head of Intravenous Production Unit (1988), Head of Miscellaneous Production Unit (1994), Head of Logistics Division (2002), Head of Research and Development Division (2005), and Director of Planning and Development (2007). Active in various global vaccine industry and currently is member of the Board of Trustees of the International Vaccine Institute (IVI) Korea, Chairman of the Self Reliance Vaccine Production program at the Islamic Development Bank (SRVP – IDB) and Member of the National Vaccines Research Board. Appointed as President Director of Bio Farma on 17 September 2009 and reappointed for the second term of office on 12 April 2013. As of 31 December 2014 he was 59 years of age. His legal basis of appointment as President Director is the Decree of the Minister of SOE No. SK-285/MBU/2012 dated 3 August 2012 and SK-221/MBU/2013 dated 12 April 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

Mahendra Suhardono

Marketing Director

Born in Situbondo, 5 April 1962, Mahendra Suhardono obtained his Bachelor of Pharmacy (1986) and the Pharmacist Professional Certification (1988) from the Department of Pharmacy, Faculty of Mathematics and Natural Sciences, Bandung Institute of Technology. He obtained his Master of Management degree from the Master of Management Program of Sekolah Tinggi Manajemen Bandung (STMB)/Institut Manajemen Telkom Bandung in 2009. Throughout his career at Bio Farma, he served in a number of positions, such as Head of Packaging Unit (1994-1997), Head of Quality Assurance Division (2002-2007) and Production Director (2007-2012). Active as member of Indonesian Pharmaceutical Association (ISFI). Is one of the key persons of Bio Farma with active participation in various World Health Organization (WHO) activities. Selected as President of DCVMN (Developing Countries Vaccine Manufacturers Network) for the period of 2012-2014. Reselected as the President of DCVMN (Developing Countries Vaccine Manufacturers Network) for the period of 20142016. Appointed as Marketing Director of the Company on 12 April 2013. As of 31 December 2014 he was 52 years of age. His legal basis of appointment as Marketing Director is the Decree of the Minister of SOE No. SK-285/MBU/2012 dated 3 August 2012 and SK-221/MBU/2013 dated 12 April 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

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Andjang Kusumah

Human Resources Director Born in Cianjur, 8 August 1953, Andjang Kusumah obtained his Bachelor of Economics degree from the Faculty of Economics, Padjadjaran University (1979) and Master of Management from the Financial Management Postgraduate Program in Jakarta (2002). Has been working in the Ministry of SOE and occupied various positions, such as Assistant Deputy of Manufacturing and Strategic Industries (2010-2012) and Assistant Deputy of Telecommunications Business (2007-2010) and as Commissioner in various SOEs, such as PT Kawasan Berikat Nusantara (2001-2007), PT Dahana (2007-2011), PT Jakarta Lloyd (2007-2011) and PT Sucofindo (2010-2012). Appointed as Human Resources Director of Bio Farma on 7 March 2012. As of 31 December 2014 he was 61 years of age. His legal basis of appointment as Human Resources Director is the Decision Outside of GMS No. SK-116/MBU/2012 dated 7 March 2012 in conjunction with the Decree of the Minister of SOE No. SK-69/MBU/2013 dated 4 February 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

JULIMAN

Production Director Born in Pangkalpinang, 23 September 1962, Juliman obtained his Bachelor of Pharmacy (1988) and the Pharmacist Professional Certification (1989) from the Department of Pharmacy, Faculty of Mathematics and Natural Sciences, Bandung Institute of Technology. He obtained his Master of Management degree from the Master of Management Program of the Faculty of Economics and Business, Padjajaran University in 2005. Working in Bio Farma, he had occupied a number of important positions, such as Head of Polio and Measles Vaccine Support Unit (1994-1998), Head of Measles Vaccine Production Unit (1998-2002), Head of Production Engineering and Maintenance Division (2002-2003), Head of Export Sales Division (2003-2012) and Head of Logistics Division (2012-2013). Active as trainer in Global Training Network (GTN)/Third Country Training Program (TCTP) and participated in various fora organized by the World Health Organization (WHO) and Global Alliance for Vaccine Immunisation (GAVI). Appointed as Production Director of Bio Farma on 12 April 2013. As of 31 December 2014 he was 52 years of age. His legal basis of appointment as Production Director is the Decree of the Minister of SOE No. SK-221/MBU/2013 dated 12 April 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

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COMPANY PROFILE

BRIEF PROFILE OF MEMBERS OF THE BOARD OF DIRECTORS

Pramusti Indrascaryo Finance Director Born in Semarang, 23 August 1965, Pramusti Indrascaryo obtained his bachelor’s degree from Diponegoro University, Semarang, in 1989 and his Master of Management, majoring in Financial Management, from the Faculty of Economics and Business, Gadjah Mada University, Yogyakarta in 1998. He has a long history working in the banking industry. He had worked as Branch Head at Bank Ekspor Impor Indonesia prior to the merger of four stateowned banks into Bank Mandiri in 1999. Subsequently he occupied a number of important positions in Bank Mandiri, such as Senior Manager at the Corporate Risk Management and Corporate Banking (2003), Assistant Vice President (2004) and Vice President (2012). Appointed as Finance Director of Bio Farma on 12 April 2013. As of 31 December 2014 he was 49 years of age. His legal basis of appointment as Finance Director is the Decree of the Minister of SOE No. SK-221/MBU/2013 dated 12 April 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

Sugeng Raharso

Planning & Development Director Born in Surabaya, 20 December 1959, Sugeng Raharso obtained his Bachelor of Veterinarian Studies in 1983 and his Veterinary Professional Certification in 1984 from the Faculty of Veterinarian Studies, Bogor Institute of Agriculture. He obtained his Master of Management, majoring in Operational Management, from the Master of Management Program, Faculty of Economics and Business, Padjajaran University, in 2004. He has participated in various workshops on Biosimilar and Vaccine Technology at Finlai. He has worked in Bio Farma since he had graduated and had occupied a number of positions, such as Head of Animal Husbandry Unit (1985-1989) and Staff to the Board of Directors (20022007). He holds the Certified Professional Internal Auditor (CPIA) certification from the Center for Development of Accountancy and Finance – The Association of Internal Auditor. He had been appointed as Internal Audit Head (2007-2010) prior to his role as Head of Laboratory Animals Division (2010-2013). He has trained SPF Eggs Production for Measles Vaccine Substrate Production and Quality Control in Kanonji, Research Foundation for Microbial Diseases of Osaka University, Japan (1989 – 1990), Workshop on Immunological Aspect os Difteria Toxin Neutralization and Antisera Production, IVAC, Na Thrang, Vietnam (1997 and 2001) He was appointed as Director of Planning & Development of Bio Farma on 12 April 2013. As of 31 December 2014 he was 55 years old. His legal basis of appointment as Planning & Development Director is the Decree of the Minister of SOE No. SK-221/MBU/2013 dated 12 April 2013. He has no affiliation with other members of the Board of Directors or members of the Board of Commissioners or the shareholders.

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HUMAN RESOURCES

HUMAN RESOURCES Human resources (HR) is the most important and decisive factor responsible for the success and sustainability of Bio Farma. As a company engaged in the vaccines and life-science industry that applies modern technology and has global business partners, Bio Farma requires professional human resources with world-class competence. Human Resource Management

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in Bio Farma follows the concept of Human Capital (HC) management, in which the employees are the main capital of the Company. Bio Farma is encouraged to continuously improve individuals’ quality and competence to achieve optimum performance. In the end, the overall competence of human resources will reflect the Company's ability in achieving its best performance.

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"We focus on planning and recruiting highly competent workforce, so that they not only possess a good talent, but a great talent, through creating learning & development solutions that are in line with the Company's business needs as well as human resource management's pattern of transformation based on information technology, The challenge of tomorrow for Bio Farma is to change and push the envelope beyond the comfort zone in order to be ready to face economic competition of the upcoming ASEAN Economic Community (AEC)."

Andjang Kusumah Human Resources Director

HR Planning Bio Farma systematically undertook various initiatives to anticipate the Bioeconomy or Life Science Industry era in 2030, where biotechnology will become the backbone of economic growth in the world. Bio Farma has formulated up a human capital development road map towards the Life Science Industry, with the following stages: 1. HCMS Building (2012-2013) The period of 2012–2013 was a year of development for the information Technology (IT)-based HR management system, which was then called the Human Capital Management System (HCMS). HCMS is a continuation of the Human Resource Management System (HRMS). HCMS includes the application of Performance Management System (PMS), Reward Management System (RMS), Talent Management System (TMS) and Knowledge Management System (KMS). 2. Learning Organization Building (2014) In 2014, the KMS applications and infrastructure initiated in 2013 were expected to perform satisfactorily. Upon the availability of these facilities,

2012-2013 Human Capital Management System (HCMS) Building

2014 Learning Organization Building

it is expected that a culture of knowledge learning and sharing grow quickly in Bio Farma as it aims to transform itself into a learning organization. 3. Talent & Competency Based Development (2015) By 2015, the Talent Management System (TMS) will have been applied comprehensively and supported with an excellent Knowledge Management infrastructure. TMS provides a fully-documented workforce competence data for easy analysis. Thus, workforce development process is expected to be more effective and efficient. 4. Embedding Values in Corporate Culture (2016) Bio Farma will enhance its cultural values in 2016. The Company had designed a systematic and comprehensive program for internalizing Company Values based on the results of the Culture Value Assessment conducted in 2013. It is expected that during the process, the values applied will become the culture of the workforce and the organization.

2015 Talent & Competency Based Developemnet

2016 Organization with Embedded Corporate Culture

2017 HC Excellent Integrated

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HUMAN RESOURCES

5. Human Capital Excellent Integrated (2017) By 2017, the entire Human Capital System (HCMS) consisting of PMS, RMS, TMS and KMS along with the organizational culture will have been integrated perfectly into the system, to realize an excellent and world-class company.

5. Established Bio Farma's core competencies, namely Affordable Life Science Product, Green Process/ Product, Global Marketing, Employee Engagement and Innovation. 6. Continuously internalized and externalized the Company’s Vision, Mission, Values and Culture.

To achieve the goals of Human Capital development in accordance with the roadmap prepared, the Company has established Human Capital strategies as follows:

7. Instilled the habit of knowledge sharing among workforce with specific expertises and/or welltrained workforce.

1. Adopt a performance and competency-based human capital management, including remuneration system.

8. Knowledge systems through Information Technology (IT) media.

2. Set a Multi-Rater System for workforce performance assessment. 3. Implement the Attract strategy in recruiting talented candidates with above average competence. 4. Promote a Work Life Balance by developing various programs. 5. Build a knowledge sharing culture to accelerate learning process. 6. Set up information technology (IT)-based Human Capital Information System (HCIS) application, which is integrated with ERP. Strategic HR initiatives that were implemented in 2014 were as follows:

successfully

1. Bio Farma developed its information technology system as a foundation for its HCMS. Dispatched 2. selected employees to pursue postgraduate programs specifically in the field of Biotechnology and organize both soft- and hardskills training to support future business plans. 3. Established individual working capacity optimization process by performing Work Load Analysis in advance for all positions to map each employee's job position and contribution to the result. 4. Completed the HCMS-related system tests through mini projects.

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IN 2014, BIO FARMA DETERMINED ITS 5 CORE COMPETENCIES, NAMELY: • AFFORDABLE LIFE SCIENCE PRODUCT • GREEN PROCESS/PRODUCT • GLOBAL MARKETING • EMPLOYEE ENGAGEMENT • INNOVATION Andjang Kusumah, Human Resources Director

Recruitment The Company recruits people based on the formation management established in its Work Plan and Budget (RKAP) in line with Bio Farma's business development and organizational growth. Bio Farma provides equal employment opportunity to both male and female job applicants. The Company also gradually offered employment opportunity for people with disabilities in 2014. The recruitment process is open and accessible to everyone, without discrimination as long as they meet the given requirements. To provide wider employment opportunities, Bio Farma publicly promoted its recruitment process on both national and local print media (including Pikiran Rakyat, Kompas and Media Indonesia daily newspapers), electronic media (company website, Facebook, Twitter, SOE portals and radio) as well as job fairs, special events, and on-campus recruitment.

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The selection process begins with following up prospective applicants applying online through www. biofarma.co.id career portal. Furthermore, applicants will go through a selection mechanism including verification, interview and psychological examination by the HR team, technical aptitude test and interview by the user, as well as medical test assessed by the Company's doctors. Applicants who are successfully accepted are the best candidates selected after a rigorous selection process based on the Company's requirements. The number of employees recruited in 2014 was 67, in line with the Company’s needs.

1. Professional: Committed to being responsible, efficient, effective, future-oriented and to abide by work procedures.

Performance Management

In order to deepen the corporate culture's understanding, Bio Farma has implemented a gradual internalization to all employees and socialized it publicly to the Company's guests and suppliers through its website.

In the end of 2013 Bio Farma designed a performance appraisal system, namely Multi Rater System or the 360-degree feedback system replacing the previous 90-degree feedback system (employee assessment by their direct supervisor). The performance of each employee is assessed by the users, subordinates, equal partners and stakeholders (internal/external customers) in order to obtain a more objective result. The 360-degree performance appraisal system in 2014 was complemented with an application and was put on trial. The system will be implemented fully starting in 2015.

Corporate Culture Corporate culture plays an important role in achieving the Company's vision, mission, goals and objectives. Hence, all employees are required to understand and apply them daily in the workplace. Along with the demands of our globally oriented business, Bio Farma has carried out an evaluation of the Company's culture by conducting a survey in 2014 to explore and create values based on employee perception. These values aim to design an organizational value internalization program systematically and comprehensively. Workforce contributed to this process and it is expected to strongly become a positive culture to promote the Company's growth and achieve its new vision, mission and values. They are as follows:

2. Integrity: To be honest, transparent and credible in accordance with the Company's purposes. 3. Teamwork: To build a strong teamwork with respect of other roles and opinions. 4. Innovation: To make improvements and continuous development to generate new ideas. 5. Customer Oriented: Understand customers' needs and provide proper solutions.

Remuneration Bio Farma imposes a competitive remuneration system by considering the wage levels in similar industries, labor regulations, provincial minimum wage (UMP) provisions and the Company's ability. Bio Farma ensures that the minimum wage for its workforce is above the provincial minimum wage. In addition, there is no remuneration policy that discriminates between male and female employees across all job levels. Competitive remuneration will retain highly-competence workforce. The given remuneration is based on a fair performance assessment. It continues to develop the remuneration system to be in line with the company's business development. The Human Capital Division develops a performance and competency-based remuneration system in 2014. The total rewards received by the employees include: 1. Pay For Person (compensation of competencies), 2. Pay For Position (compensation for work), 3. Pay For Performance (compensation for performance), and 4. Incentives. Workforce payroll system is applied by grade and job level, from grade 17 (lowest) to grade 2 (highest). The following table shows the monthly wage (Take Home Pay) in December 2014.

71

COMPANY PROFILE

HUMAN RESOURCES

Gross Monthly Income Position Level

Grade

Minimum

Maximum

Division Head

6-2

15.845.847

28.081.906

Department Head

8-3

10.815.727

19.937.323

12-3

5.856.204

16.397.396

9-5

6.253.860

8.338.027

Junior Staff

13-5

4.407.853

11.246.004

Operation Staff

17-7

3.396.621

9.089.201

Section Head Staff

Workforce Welfare Bio Farma provides various benefits to its employees as part of the remuneration package. The benefits take the form of Holiday Allowance, Welfare Allowance, Paid Annual Leave, Holiday Entitlement, Uniform Allowance, and Annual (Production) Bonus. Employees also receive other facilities, such as medical treatment (both outpatient and inpatient), cafeteria, sports facilities, places of worship and recreation. In providing basic rights to the employees, Bio Farma has determined: 1. Types of leave: Holiday Entitlement, Paid Annual, Sick, Maternity, Menstruation, Abortion, Religious and Unpaid Leaves. Employees are entitled to obtain permission and take leave for important reasons in accordance with the prevailing regulations. 2. Retirement plans with defined contribution and benefits of monthly income, superannuation, life insurance, and healthcare. Basically all employees, both permanent or contract, receive all incentives/bonuses. Uniform Allowance and Holiday Entitlement however are not provided to contract employees.

technical/functional skill development, mandatory expertise certifications, management training and knowledge sharing sessions. The Company also provides scholarships to its employees to pursue postgraduate studies. Training and development activities in 2014 were as follows: 1. Training The Company held 308 training programs in 2014, with 21 training held based on current needs of the organization and future business plans. There were 287 training that were based on divisions’ needs related to technical competencies. Among the training were the Update of Good Manufacturing Practices (GMP), Environment Health & Safety Behavior, Character Building Training, Emotional Spiritual Quotient, Executive English Class with Native Speakers, Public Speaking, Career Transition Program, Accelerated Culture Transformation, Team work, Work Load Analysis, CSR ISO 26000, Communication skills, Microsoft Office, AutoCAD, Creative Design Presentation and Customer Service Orientation.

Training and Development The Company designs and develops workforce training programs on an ongoing basis to maintain performance quality and increase competency. Each employee has an equal opportunity to improve their competencies based on their respective potentials, abilities and skills. Bio Farma conducts various training in-house as well as external training at selected educational institutions. Trainings that are provided include competency training,

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •



72

Type of Training Organizational Competency Divisional Competency

Training Basis

Number of Programs

Number of Participants

Organizational competence needs

21

1.899

Division technical/hard-skills competence needs

278

656 Domestic 127 Abroad

On average, each employee participated in Bio Farma's training for 8 days in a year, or equivalent to 4 times of training (assuming an average training duration of 2 days).

a. Knowledge Exchange

2. Postgraduate Scholarship Bio Farma provides scholarships to its employees to pursue graduate and postgraduate studies. Majors are chosen according to the Company's strategic plan for organizational development, management and product development. Thus, the thesis or dissertation will not merely be a basic research, but a valuable practical business study for the employees. Bio Farma dispatches its employees to attend graduate programs at various universities which have research collaborations with the Company, so that it has a distinct selling value and contributes to the acceleration of the Company’s research. In 2014 there was 1 (one) employee receiving doctorate scholarships at the University of Melbourne (lecture and research studies) and 1 (one) employee taking up a doctorate study at Bandung Institute of Technology (ITB). 3. Knowledge Management Knowledge management aims to secure the knowledge assets owned by the Company. It includes identifying knowledge resources, knowledge storage and knowledge dissemination. Activities in Knowledge Management include:

This is knowledge sharing among skilled employees through presentations or coaching sessions. These activities also include exit interviews for retiring employees in order to provide knowledge to future generations. There were 21 Knowledge Exchange events held in 2014. b. Community of Practice (CoP) This is a sharing process among the internal workforce community to discuss a specific technical problem which aims to collect knowledge from other disciplines to formulate solutions. There are 2 CoP events held during 2014. c. Lesson-Learned Sharing This is knowledge sharing event following a particular training session outside the Company (public training) or benchmarking. The knowledge learned has to be shared and implemented in order to distribute equal knowledge in particular in each work units. Employee participation in this program reached 70% of public training realization, with a total of 420 contributors.

Development Programs & Realization I. Training of Leaders Year

2010

2011

2012

2013

2014

Planned

134

150

117

177

109

77

87

49

129

50

Year

2010

2011

2012

2013

2014

Planned

143

202

64

148

139

Actual

114

181

51

117

30

Actual II. Training of Non-Leaders

73

COMPANY PROFILE

HUMAN RESOURCES

III. Formal Education Year

2010

2011

2012

2013

2014

Planned

3.118

3.567

4.158

6.444

7.839

Actual

2.973

4.056

3.968

5.111

3.775

- Domestic

-

20

1

1

1

- Overseas

-

-

2

2

1

Number of Participants

Employee Competency Development Expenditures The total expenditures for Bio Farma's employee competency development in 2014, including formal education and training, were as follows: 1. The budget for formal education programs was Rp 3 billion with a realization of Rp 1.83 billion (60.87%) used to finance 2 employees' postgraduate education in the study year of 2014/2015 and 3 employees' postgraduate education from the previous study year of 2013/2014. 2. The budget for training program was Rp 13.75 billion with a realization of 99.99% to finance training activities, seminars and workshops in 2014. Cost of Employee Competence Development and Number of Participants Year

2010

2011

2012

2013

2014

Cost: - Domestic

1.268.371.857

972.764.500

1.593.634.460

5.236.670.299

4.025.550.883

- Overseas

1.268.371.857

559.227.360

1.049.928.981

1.629.923.768

1.689.115.734

- Domestic

213

182

196

- Overseas

43

38

40

Number of Training Participants

the employees and the Company to foster a harmonious relationship and bring mutual benefits to all parties.

THE TOTAL COST FOR EMPLOYEE COMPETENCY DEVELOPMENT IN 2014 WAS RP 16.75 BILLION, OR 9% HIGHER THAN IN 2013 OF RP 15.35 BILLION.

Industrial Relations Bio Farma recognizes its employees’ freedom to establish union within the Company's area. Employees’ freedom to gather and associate is in compliance with the Employment Law No. 13/2003 and ILO Conventions No. 87 and 98. On 1 April 1999, the employees of PT Bio Farma (Persero) formed an organization called the Employees Association (HIKA). On 5 April 2010, another organization called the Employees Communications Forum (Forwan) was formed. The Company encourages the existing unions to be managed professionally to serve as a liaison between

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

The most recent negotiation between the Labor Unions and the Company took place in 2012, in which the current Collective Labour Agreement (CLA) for the period of 2012 to 2014 was agreed. The CLA was subsequently registered as stipulated in the Decree of the Head of the Office for Manpower and Transmigration of West Java No. 568/07/PKB/Perlind/2012.

Awards for Employees The Company confers awards to its employees that have shown exceptional achievements, dedication and professionalism at work. Each year, Bio Farma rewards exemplary employees with the Hajj and Umrah pilgrimage, and gives rewards to those with over 20 years of dedication to the Company, as well as gives awards to blood donors. Here is the list of awards and the number of award recipients in 2014.

74

Type of Reward

Number of Recipient 2012

Number of Recipient 2013

Number of Recipient 2014

3 and partners

3 and partners

3 and partners

5

5

11 and partners

20 Years of Service Award

28

22

16

Blood Donor

54

37

31

Hajj Umrah

Work-Life Balance (WLB)

Human Resources Development Plan in 2015

Work-life balance is a concept of work without ignoring other aspects of life aside from work. This includes prioritizing personal, family, spiritual and social life to take full responsibility and contribute fully to the work. Recognizing the importance of quality in employment, the Company pays attention to both the physical and emotional wellbeing of its employees. In 2014, Bio Farma formed a special Work-Life Balance team, namely the Healthy Living Paradigm Team. This team is tasked to formulate the programs for the employees and is responsible for evaluating its implementation.

Bio Farma's human resources development will be integrated with the Company's entire business operations. In 2015, training programs and human resources development will refer to competency-based training for personal and divisional levels. The goal is to fill workforce competency gaps, requirements of compliance with standard unit of competency, and development of structured human resources through continuous learning, knowledge sharing and knowledge dissemination.

Five important aspects of the healthy living paradigm program according to Bio Farma's philosophy of 'Dedicated to Improve the Quality of Life' include the aspects of personal life, work life, religious life, family & community life, and culture. In addition to improving life quality, the Company also pays attention to creating a HAPPY (Healthy, Balanced & Enthusiastic) workforce.

Workforce Profile Bio Farma employed 1,029 permanent employees, 446 contract employees and 192 outsourced employees as at 31 December 2014. There was an 8% increase % in the number of permanent employees in 2014 from 2013, where there were 953 permanent employees. The Company’s breakdown of workforce profile for the past

six years is provided as follows: Employee Composition by Directorate Direktorat

2010

2011

2012

2013

2014

Main

148

150

83

77

97

Finance

102

102

58

57

61

78

80

76

83

82

0

0

110

122

126

348

336

369

405

450

Marketing Human Capital Production Planning & Development

218

214

225

209

213

Total

894

882

921

953

1029

75

COMPANY PROFILE

HUMAN RESOURCES

Employee Composition by Position Level Position

2010

2011

2012

2013

2014

Division Head

148

150

83

77

30

Main Expert

102

102

58

57

78

80

76

83

0

0

110

122

348

336

369

405

167

218

214

225

209

116

Department Head Middle Expert Section Head

98

Junior Expert Staff Junior Staff

894

882

921

953

132

Operation Staff

429

388

419

439

486

Portfolio Management Team

0

0

4

4

-

Project Integration Manager

0

0

2

2

-

Researcher Matrix

Research Coordinator

0

0

2

1

-

Researcher

0

0

4

5

-

Junior Researcher

0

0

21

14

-

Operation Staff Total

0

0

12

12

-

894

882

921

953

1.029

2010

2011

2012

2013

2014

Employee Composition by Years of Service Years of Service 0-5

311

301

326

316

333

6-10

172

187

197

194

261

11-15

155

160

147

174

162

16-20

110

105

108

118

119

21-25

60

52

63

68

79

26-30

71

63

62

54

48

>31

15

14

18

29

27

894

882

921

953

1.029

2010

2011

2012

2013

2014

0

0

0

0

0

Total Employee Composition by Age Years of Service <20 21-25

67

56

43

27

43

26-30

154

160

171

193

221

31-35

183

186

201

210

228

36-40

207

185

166

172

165

41-45

142

159

192

189

201

46-50

97

96

102

112

112

>51 Total

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

44

40

46

50

59

894

882

921

953

1.029

76

Employee Composition by Education Level Education Level

2010

2011

2012

2013

2014

2

2

2

2

1

Doctorate

38

41

44

43

44

S1

212

227

231

234

262

Diploma

149

162

157

170

189

High School

493

450

487

504

533

Total

894

882

921

953

1.029

Postgraduate

Employee Composition by Gender Gender

2010

2011

2012

2013

2014

Male

695

674

716

747

810

Female

199

208

205

206

219

Total

894

882

921

953

1.029

2013

2014

Recapitulation of Employees of PT Bio Farma (Persero) 2009-2014 by Position & Gender Position

2010 L

Division Head Main Expert

2011 P

2012 L

P

L

13

5

15

5

19

9

18

11

14

9

2

0

4

1

L

P

L

P

P

0

0

0

0

0

0

Department Head

32

27

31

28

32

28

32

24

32

26

Middle Expert

16

6

14

4

16

2

22

4

30

9

Section Head

91

39

94

43

86

43

87

41

85

44

Junior Expert

12

5

14

6

16

7

19

13

19

14

Staff

56

56

64

61

63

60

52

57

57

46

Junior Staff

73

34

81

34

79

30

89

31

98

34

402

27

361

27

405

26

426

25

450

25

Portfolio Management Team

-

-

-

-

-

-

-

-

0

0

Research Coordinator

-

-

-

-

-

-

-

-

1

0

Researcher

-

-

-

-

-

-

-

-

4

1

Junior Researcher

-

-

-

-

-

-

-

-

4

9

Operation Staff

-

-

-

-

-

-

-

-

11

Operation Staff Researcher Matrix

Total

0

894

882

921

953

1.029

Employee Composition by Employment Status 2010

2011

2012

2013

2014

Permanent Employees

Employment Status

894

882

921

953

1029

Contract/CBT Employees

291

326

311

376

421

Outsourced Employees Total

92

101

152

164

190

1.277

1.309

1.384

1.493

1.640

77

COMPANY PROFILE

LIST OF SUBSIDIARIES AND/OR ASSOCIATED ENTITIES

SHAREHOLDING COMPOSITION

CORPORATE GROUP STRUCTURE

Employee Composition by Expertise (Field of Work) Year

2010

2011

2012

2013

2014

Production

277

416

408

481

394

46

35

58

52

54

Marketing & Support

527

431

455

420

581

Total

850

882

921

953

1.029

Research & Development

Gender Balance in Bio Farma’s Workforce Bio Farma upholds gender equality and fair employment. It provides a great chance and encourages anyone to apply for a position regardless of their gender. Currently the number of women in the workforce is 217, and 45% of the Company’s female employees work as Division Heads and Department Heads.

SHAREHOLDING COMPOSITION

SHARELISTING CHRONOLOGY Share Performance & Sharelisting Chronology Share Ownership Composition

Government of the Republic of Indonesia

100%

LIST OF SUBSIDIARIES AND/OR ASSOCIATED ENTITIES As on 31 December 2014, Bio Farma had no subsidiaries and/or associated entities.

As on 31 December 2014, Bio Farma is not a publicly listed company so the public, the Board of Directors, or the Board of Commissioners of Bio Farma do not have the shares of Bio Farma. The Company is entirely or 100% owned by the Government of the Republic of Indonesia.

Share Performance As on 31 December 2014, Bio Farma is not a publicly listed state-owned enterprise, which means it has not listed its shares on the Indonesia Stock Exchange. Therefore, there was no pertinent information regarding total number of shares outstanding, market capitalization, highest, lowest, and closing prices of the traded shares, or the transaction volume.

CORPORATE GROUP STRUCTURE

Sharelisting Chronology

As on 31 December 2014, Bio Farma had no subsidiaries and/or associated entities, joint ventures, or other special purpose vehicles (SPVs), and thus Bio Farma has no corporate group structure that can be portrayed as a diagram of itself with subsidiaries, associated entities, joint ventures, or special purpose vehicles (SPVs).

As on 31 December 2014, Bio Farma is not a publicly listed state-owned enterprise, which means it has not listed its shares on the Indonesia Stock Exchange. Therefore, there was no pertinent information regarding sharelisting chronology, corporate actions, changes in the number of shares, or the exchange on which the Company’s shares are listed.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

78

SHARELISTING CHRONOLOGY

LISTING CHRONOLOGY OF OTHER SECURITIES

NAMES AND ADDRESSES OF CAPITAL MARKET SUPPORTING PROFESSIONAL INSTITUTIONS

LISTING CHRONOLOGY OF OTHER SECURITIES Summary of Bonds/Sukuk/Convertible Bonds and the Listing Chronology of Other Securities Summary of Bonds/Sukuk/Convertible Bonds Bio Farma has never issued any bonds/sukuk/convertible bonds, and therefore it has no pertinent information regarding the amount of bonds/sukuk/convertible bonds outstanding, interest rate, maturity date of such securities, or the rating of such securities.

Listing Chronology of Other Securities Bio Farma has not issued securities in any form, and therefore it has no pertinent information regarding the listing chronology of securities, corporate actions, changes in the number of securities, the exchange on which the securities are listed, or the rating of such securities.

NAMES AND ADDRESSES OF CAPITAL MARKET SUPPORTING PROFESSIONAL INSTITUTIONS Bio Farma as on 31 December 2014 did not use the services of any share registrar to administer the Company’s shares, securities rating agency, or public accountant.Lembaga Profesi Penunjang Perseroan: Supporting Professional Institutions: •

Public Accountant Office Djoemarma, Wahyudin & Rekan Jl. Dr. Slamet No. 55, Bandung Tel. (62-22) 203 4044 Fax. (62-22) 203 7466 E-mail: [email protected]



Notary Fathiah Helmi, SH. Graha Irama Lt. 6C Jl. H.R. Rasuna Said Blok X-1 Kav. 1&2, Kuningan Jakarta 12950 Tel. (62-21) 5290 7304 / 5290 7305 / 5290 7306 Fax. (62-21) 526 1136

Bio Farma’s products have been used widely in 130 countries.

79

COMPANY PROFILE

CERTIFICATIONS & AWARDS

CERTIFICATIONS & AWARDS CERTIFICATIONS World Health Organization (WHO) Recognition from the World Health Organization (WHO) for polio vaccines (9 April 1997), measles 10 doses & 20 doses (9 April 1997 & 4 September 2006), Hepatitis B Uniject (13 May 2004), Oral Polio Vaccine Tipe 1/mOPV-1 monovalent (3 November 2009), Oral Polio Vaccine/bOPV bivalent (26 May 2010), bacterial vaccines (Diphtheria, Pertussis, Tetanus) (6 April 2011), Tetanus in vial form (11 March 1999) & Uniject (29 October 2003), Td (6 July 2011), DT (11 March 1999) and DTP-HB combination vaccine, have all passed the WHO prequalified test (7 October 2004), Pentabio (16 December 2014).**

CPOB Certificate CPOB (Cara Pembuatan Obat yang Baik—Good Manufacturing Practice) from National Agency of Drugs and Food Control of the Republic of Indonesia : • Polio Vaccine: Manufacturing of bulk antigens type 1, 2, and 3, validity until 4 Apr 2016. • Measles Vaccine: Formulation, Filling, Liophilization of Measles Vaccine, validity until 4 Apr 2016. • Bacterial Vaccines: Preparation of Bulk Pertussis Production, Cultivation for Bulk Pertussis Production, Pooling for Bulk Pertussis Production, Preparation for Bulk HiB Production, Cultivation for Bulk HiB Production, Conjugation & Purification for Bulk HiB Production, validity until 16 Sep 2018. • Bulk Measles Vaccine: Breeding of SPF Chicken, Bulk Production, validity until 31 Mar 2019. • Bulk BCG Vaccine: Bulk Production, validity until 31 Mar 2019 • Diphtheria Toxoid Bulk: Bulk Production (Cultivation & Detoxification), Bulk Production (Purification), validity until 31 Mar 2019. • Tetanus Toxoid Bulk: Bulk Production (Cultivation & Detoxification), Bulk Production (Purification), validity until 31 Mar 2019. • Viral Vaccine: Formulation, Filling, Liofilisasi Measles Vaccine, Measles Vaccine Packaging, Formulation, Polio Vaccine Filling, Polio Vaccine Packaging, Formulation, Hepatitis B Vaccine Filling, Hepatitis B Vaccine Packaging, Formulation, Influenza Seasonal Vaccine Filling, Influenza Seasonal Vaccine Packaging, validity until 31 Mar 2019. • Bacterial Vaccine: Formulation, Filling, Liofilisasi BCG Vaccine, BCG Vaccine Packaging, validity until 31 Mar 2019. • Bacterial Vaccines: Formulation, Filling of DTP Vaccine, DTP Vaccine Packaging, Formulation, Filling of TT Vaccine, TT Vaccine Packaging, Formulation, Filling of DT Vaccine, DT Vaccine Packaging, Formulation, Filling of Td Vaccine, Td Vaccine Packaging, validity until 31 Mar 2019. • Combination Vaccines: Formulation, Filling of DTP-HB Vaccine, DTP-HB Vaccine Packaging, Formulation, Filling of DTP-HB-HiB Vaccine, DTP-HB-HiB Vaccine Packaging, validity until 31 Mar 2019. • Bulk Pertussis Vaccine: Preparation, Cultivation, Inactivation and Pooling, validity until 31 Mar 2019. • Bulk Polio Vaccine: Bulk Production, validity until 31 Mar 2019. • Bulk Antisera: Separation & Pooling of Plasma, Bulk Production, validity until 14 Jan 2020. • Antisera: Formulation of Antisera, Filling of Antisera, Packaging of Antisera, validity until 14 Jan 2020.

*Certificate has a validity period **Certificate has no validity period

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

80

Environmental Management SystemISO 14001:2004 ISO 14001:2004 certification for Environmental Management System was given by Lloyd’s Register Quality Assurance Ltd., Singapore, valid until 3 October 2015.*

Occupational, Health and Safety Management System-OHSAS 18001:2007 Occupational, Health and Safety Management System–OHSAS 18001:2007 for the management of occupational security, safety and health was given by Lloyd’s Register Quality Assurance Ltd., Singapore. Valid until 16 September 2015.*

Laboratory Accreditation from WHO Regional South East Asia

Vaccine Vial Monitor (VVM) Certificate Certificate of Honor from the World Health Organization (WHO) in implementing the use of Vaccine Vial Monitor (VVM) for Indonesia through Bio Farma.**

Bill & Melinda Gates Foundation Certificate of Appreciation Bio Farma received an appreciation from the Bill & Melinda Gates Foundation. This Certificate of Appreciation was given for Bio Farma’s commitment and dedication in improving global health, among others in eradicating polio disease by producing twothird of the world’s global demand for Oral Polio Vaccine (OPV).**

Laboratory Accreditation Certificate was given by the World Health Organization (WHO) Regional South East Asia and Immunization and Vaccine Development (IVD) to Bio Farma for passing the accreditation for the laboratorium facility as a reference for polio laboratory test. Valid until December 2013.

81

COMPANY PROFILE

AWARDS

PENGHARGAAN

1

9

2

3

10

4

5

13

12

14

11

1

2





6

18 MARCH 2014 10 BEST TAXPAYERS IN 2013 AWARD







7

GLOBAL GREEN AWARD, BERLIN 2014



5





8

CLEAN SOE WITH THE “COMMITTED” CATEGORY

2014



21 AUGUST 2014 BUMN MARKETING AWARD 2014



25 SEPTEMBER 2014 PKBL BUMN AWARD FOR PUBLIC SERVICE IN 2014

15 APRIL 2014 INTELLECTUAL PROPERTY RIGHTS-ORIENTED AREA AWARD

9



21 SEPTEMBER 2014 INTERNATIONAL STAR AWARD FOR QUALITY (ISAQ) GENEVA 2014

20 MAY 2014

10

INDONESIA’S CENTENNIAL 2045

ANNUAL REPORT

INDONESIA GREEN AWARD FOR 6 CATEGORIES AND THE BEST IGA 2014

27 MARCH 2014

4

18 JUNE 2014

MARCH 2014

3



• PT Bio Farma (Persero) •

PRIMANIYARTA AWARD 2014 FIVE TIMES ACHIEVEMENTS

82

7

8

6

18 16

19

17

15

11

12

13

CEO OF CHOICE AT SPS 2014 CORPORATION OF CHOICE AT SPS 2014

INDONESIAN RED CROSS AWARD FOR DONATING 1923 BLOOD BAGS IN 2013

16

17





BIO FARMA COMMENDATION FOR 1ST G4 SUSTAINABILITY REPORT 2013 FROM THE NATIONAL CENTER FOR SUSTAINABILITY REPORTING

2 DECEMBER 2014 PROPER GOLD 2014 FROM THE MINISTRY OF ENVIRONMENT

19 15

ISKANDAR, PRESIDENT DIRECTOR OF PT BIO FARMA (PERSERO), AS AN “AGENT OF DEVELOPMENT OF NON LISTED STATE OWNED ENTERPRISE 2014” ACCORDING TO INVESTOR MAGAZINE

BUMN MARKETING AWARD 2014 GOLD (STRATEGIC MARKETING), SILVER (TACTICAL MARKETING)

18

14

“EXCELLENT” RANKING FOR 2013 FINANCIAL PERFORMANCE ACCORDING TO INFOBANK

PUBLIK 2 BUILDING AS “2014 ENERGY EFFICIENT BUILDING”, NATIONAL ENERGY EFFICIENCY AWARD, MINISTRY OF ENERGY AND MINERAL RESOURCES

AWARD FOR PUBLIC INSTITUTIONS THAT IMPLEMENT LAW NO. 14/2008 ON KIP FOR SOE CATEGORY

83

COMPANY PROFILE

SIGNIFICANT EVENTS

SIGNIFICANT EVENTS 5 FEBRUARY 2014

27 MARCH 2014

CREATION OF 1,240 BIOPORES, INAUGURATION OF THE EMISSION-FREE PARKING SPACE, AND SIGNING OF THE STONE INSCRIPTION BY MAYOR OF BANDUNG, RIDWAN KAMIL

BUMN BERSIH ASSESSMENT RESULTING IN “COMMITTED” RATING

Creation of 1,240 biopores, inauguration of the emission-free parking space, and signing of the stone inscription by Mayor of bandung, Ridwan Kamil.

PT Bio Farma (Persero) obtained the highest score in the BUMN Bersih Assessment 2014 out of all state-owned enterprises in West Java. The BUMN Bersih Assessment 2014 was conducted by the BPKP Team of West Java and announced at the Exit Meeting on 27 March 2014 at Arthaloka Building Jakarta, attended by BPKP West Java officers, the Board of Commissioners, the Committees of the Board of Commissioners, the Board of Directors, and Executives of Bio Farma.

The six-storey building with a capacity of 300 four-wheeled vehicles was built with the green building concept and features a cross-ventilation (open walls) system, solar cells and LED lighting, so that this building will reduce electricity usage by 40%. The building, called the Publik II building, will be used as the first parking space in Bandung and even in West Java that may only be used for four-wheeled vehicles that have passed the emission test. This means that 100% of the vehicles parking in this Publik II building will be those passing the emission test by the Transportation Office of Bandung.

6 MARCH 2014

END OF MARCH 2014

CHANGE OF PHILOSOPHY (MEANING), VISION AND MISSION OF PT BIO FARMA (PERSERO)

GLOBAL GREEN AWARD 2014

Bio Farma changed its Philosophy (Meaning), Vision and Mission, in accordance with the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-07/ DK/BF/III/2014, No. 01103/DIR/III/2014.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

In the end of March 2014 Bio Farma received the Global Green Award from Otherways Association Management & Consulting – France in Berlin, Germany. This demonstrated Bio Farma’s innovation in the green & environmental aspect. The energy efficiency commitment has been consistently implemented by Bio Farma, not only on production activities but also on other operational activities, starting from energy-efficient office space design and HVAC system and sterilization of production area and storage area that shall not be interrupted in its 24-hour a day operations.

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18 JUNE 2014 INDONESIA GREEN AWARDS

Bio Farma obtained “The Best Indonesia Green Awards 2014” initiated by The La Tofi School of CSR, supported by the Ministry of Forestry and Ministry of Industry. Bio Farma received awards in five categories, namely: 1. Preservation of Water Resources. 2. Development of New and Renewable Energy. 3. Development of Biodiversity. 4. Pioneer Work in Pollution Prevention. 5. Development of Integrated Waste Management. These awards were given by the Chairman of the DPD RI, Irman Gusman, on 18 June 2014 to the Marketing Director of Bio Farma, Mahendra Suhardono, at Hotel Indonesia Kempinski, Jakarta.

6 AUGUST 2014

124TH ANNIVERSARY OF BIO FARMA

On 6 August 2014 Bio Farma celebrated its 124th anniversary. In gratitude the Company conducted the mass prayer and tausyiah at the Multipurpose Building. The event was participated by the Board of Directors, the Board of Commissioners, and Employees. The President Director of Bio Farma at this event expressed his appreciation of the employees’ hard work and hope that Bio Farma may rise up to future global challenges.

16 AUGUST 2014

INAUGURATION OF PUSKESMAS PARIWISATA

Located in the beach of Ujung Genteng, Sukabumi Regency, the Puskesmas Pariwisata (Tourism Public Health Center) was inaugurated by the Regent of Sukabumi and the President Director of Bio Farma. This facility is a manifestation of the Access to Medicine and Healthcare program.

19-20 AUGUST 2014

4TH NATIONAL VACCINE RESEARCH FORUM (FRVN)

The Fourth National Vaccine Research Forum was conducted at the Grand Hyatt Hotel in Jakarta for two days straight and carried the theme “Indonesia is Ready to Implement Vaccine Research Results to Achieve National Vaccine Self-Sufficiency”. The purpose of this event was to view the picture of research implementation in each established consortium, as well as to disseminate information regarding the product regulation aspect so that research and development of vaccines in Indonesia may be more well-structured and well-implemented. The aim of the FRVN is to achieve national vaccine research self-sufficiency.

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COMPANY PROFILE

SIGNIFICANT EVENTS

22 AUGUST 2014 ROADSHOW OF THE VACCINE YOUNG AMBASSADORS 27 SEPTEMBER 2014 SPEECH TO IMPROVE QUALITY OF LIFE

PT Bio Farma (Persero) yet again conducted the Roadshow to seek the Vaccine Young Ambassadors, i.e. 10 students from high school or its equivalents in West Java. The selection of the Vaccine Young Ambassadors took place in 10 regencies and municipalities, among others the City of Bandung, Bandung Regency, Cimahi, Kuningan, Palimanan, Cirebon, Depok, Bogor, Cianjur, and Garut. These ten areas were selected owing to their still low immunization coverage, based on the data from the Health Office of West Java.

The event that carried the theme of “Speech to Improve Quality of Life” was conducted to commemorate the 124th anniversary of Bio Farma in August 2014. The theme was chosen as it was aligned with the philosophy of Bio Farma, namely “dedicated to improve quality of life”. As a world-class company, Bio Farma invited young generations to speak up publicly using the English language, to prepare themselves in facing global challenges.

21 SEPTEMBER 2014

21 SEPTEMBER 2014

INTERNATIONAL STAR QUALITY AWARD 2014

CELEBRATING ITS 124TH ANNIVERSARY, BIO FARMA ORGANIZED DRAWING COMPETITION FOR ELEMENTARY SCHOOL STUDENTS IN BANDUNG

PT Bio Farma (Persero) received the International Star Quality Award – Gold Category for at the 15th annual program of BID Conventions in Geneva, Swiss, on 21 September 2014. The award was given for Bio Farma’s consistent commitment to maintain the quality of its vaccine products. The event was participated by businesses, organizations and entrepreneurs from all over the world, and was aimed at awarding parties that had shown their commitment in maintaining their products’ quality.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Commemorating the 124th anniversary of Bio Farma, and grounded by the hope to provide an understanding as early as possible on the importance of immunization, vaccines and Bio Farma to the children, Bio Farma organized a drawing competition for elementary school students in all of Bandung. The theme “Immunization and I” was selected as the major theme of this competition, which was participated by around 200 students. Participants were divided into two categories, category I was for students in the first to third grades, and category II was for students in the fourth to sixth grade.

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7 NOVEMBER 2014 INAUGURATION OF THE LEUWISACA BRIDGE

27-29 OCTOBER 2014 MAHENDRA SUHARDONO, MARKETING DIRECTOR OF BIO FARMA, SELECTED AS PRESIDENT OF DCVMN FOR THE PERIOD OF 2014-2016

On 27-29 October 2014 the 15th annual meeting of the Developing Countries Vaccine Manufacturers Association took place.

The Leuwisaca Suspension Bridge, connecting two villages, i.e. Mekarwangi and Sagara Villages in the Subdistrict of Cibalong, Regency of Garut, was inaugurated on Friday, 7 November, by the Vice Governor of West Java, Deddy Mizwar, witnessed by the Regent of Garut, Rudi Gunawan, and HR Director of Bio Farma, Andjang Kusumah and the locals. The Leuwisaca Suspension Bridge was a manifestation of Bio Farma’s CSR initiative.

30 OCTOBER 2014

18 NOVEMBER 2014

GOLDEN TROPHY INFOBANK BUMN AWARD 2014

2014 NATIONAL ENERGY EFFICIENCY AWARD FOR THE MOST ENERGY-EFFICIENT BUILDING CATEGORY, FROM THE MINISTRY OF ENERGY AND MINERAL RESOURCES

Thursday, 30 October 2014, located in the Ballroom of ShangriLa Hotel, Jakarta, the 5th Infobank BUMN Awards 2014 took place. Out of the 122 State-Owned Enterprises surveyed by the Infobank’s Research Bureau, 54 SOEs managed to obtain the “Excellent” rating and Bio Farma was at the top of the ranking. It received the Golden Trophy for its excellent financial performance for five consecutive years, namely from 2009 to 2013. The award was conferred by Gatot Trihargo, Deputy of Financial Services Business, Construction Business, and Other Services, Ministry of SOE, representing the Minister of SOE of the Republic Indonesia, to Pramusti Indrascaryo as the Finance Director of PT Bio Farma (Persero).

The Ministry of Energy and Mineral Resources (MEMR) awarded the most energy-efficient building title to PT Bio Farma (Persero) at the Inauguration Night of the 2014 National Energy Efficiency Award (PEEN) at the Borobudur Hotel, Jakarta, on 18 November 2014. The National Energy Efficiency Award was conceived by the MEMR, and is given to companies and governmental institutions that have been successful in running energy-efficiency measures.

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COMPANY PROFILE

SIGNIFICANT EVENTS

2 DECEMBER 2014 PROPER GOLD FROM THE MINISTRY OF ENVIRONMENT AND FORESTRY

12 DECEMBER 2014 FIRST IN PUBLIC INFORMATION DISCLOSURE FROM THE CENTRAL INFORMATION COMMISSION

PT Bio Farma (Persero) received the Corporations Performance Rating Assessment Program (PROPER) Gold award from the Ministry of Environment and Forestry, for the sector of Manufacturing, Facilities, and Services. The Award was given by the Vice President of the Republic of Indonesia, Jusuf Kalla, to the President Director of Bio Farma, Iskandar, on 2 December 2014, at the Auditorium Manggala Wanabakti, Ministry of Environment of the Republic of Indonesia. The Proper Gold is the highest award in the environmental sector which demonstrates a company’s commitment and thorough and comprehensive implementation of sustainable environmental management programs.

Bio Farma received the first prize in Public Information Disclosure from the Central Information Commission. The award was conferred by the Vice President of the Republic of Indonesia, Jusuf Kalla, to the HR Director of PT Bio Farma, Andjang Kusumah, at the Vice Presidential Palace on Friday afternoon.

10 DECEMBER 2014 AWARD FOR THE PRESIDENT DIRECTOR OF PT BIO FARMA (PERSERO), ISKANDAR, AS THE AGENT OF DEVELOPMENT OF NON-LISTED STATE-OWNED ENTERPRISE 2014”

Iskandar, the CEO of PT Bio Farma (Persero) was selected as Agent of Development of Non-Listed State-Owned Enterprise 2014. The award was given to CEOs at the Inauguration Night of the Indonesian Financial Figures 2014, on Wednesday (10/12) at the Sasono Mulyo Ballroom, Le Meridien Hotel, Jakarta. The event was attended by the Minister of Finance, Bambang PS Brodjonegoro. For the selection of candidates and winners, the jury referred to the theme of “Sustainable Growth and Innovation in the Politically Tumultuous Year”. The CEOs chosen to receive the award were considered successful in bringing new innovations and strategies in their business in order to achieve positive performance amidst the global economic slowdown and Indonesia’s economic issues. These CEOs were also considered as having contributed substantially to the industries in which their companies were engaged, and thus should be seen as role models.

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2014

• PT Bio Farma (Persero) •

88

15 DECEMBER 2014 NATIONAL HEALTH DAY SEMINAR

Commemorating the National Health Day on 12 December 2014, PT Bio Farma (Persero) collaborated with the Health Office of West Java and the Rumah Vaksinasi to conduct the HKN Campaign, by organizing a seminar with the theme “Immunization for a Better Quality of Life”, held on Monday, 15 December 2014.

16 DECEMBER 2014 WORLD HEALTH ORGANIZATION (WHO) PRE-QUALIFICATION FOR PENTABIO VACCINE

On 16 December 2014, the Pentabio 5 in 1 Vaccine (Diphtheria, Tetanus, Pertussis, Hepatitis B, Haemophilus influenzae type b) was declared passing the World Health Organization (WHO) Pre-Qualification. Thus the product is now part of the Bio Farma’s portfolio of vaccines that are purchased by the World Health Organization (WHO), UNICEF, PAHO, and other countries in the world. However, Bio Farma still focuses on fulfilling domestic demand for vaccines.

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COMPANY PROFILE

SUBSIDIARIES AND/OR BRANCH OFFICES OR REPRESENTATIVE OFFICES

SUBSIDIARIES AND/OR BRANCH OFFICES OR REPRESENTATIVE OFFICES Bio Farma as on 31 December 2014 did not have any subsidiary or branch office. It had one representative office located at Gedung Pakarti Centre, Jl. Tanah Abang III No. 23-27, Jakarta. National & international supply and distribution via:

• PT Bio Farma Jl. Pasteur No. 28 Bandung 40161 Indonesia Tel. (62) 22 203 2755 ext. 747 Fax. (62) 22 204 1306 E-mail: [email protected]

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91

Management Analysis and Discussion Company Performance

Management Analysis and Discussion Company Performance

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

By implementing a strategy of optimizing production capacity to meet a dynamic marketing projection, in 2014 Bio Farma achieved its production target of 1.7 billion doses.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

94

Global Economic Overview

Macro economic Developments

The global economy in 2015 is predicted to be burdened still by growth downside risks as in 2014 and the previous years.

In 2014 Indonesia successfully held a democratic election that became a cornerstone for its subsequent development stages. Macroeconomic conditions throughout 2014 displayed a considerable development as illustrated by the macroeconomic indicators below: 1. Economic growth of 5.1% 2. Inflation rate of 8.36% 3. Rupiah’s exchange rate against the US dollar on average of Rp 11,878/US$ 4. Interest rate of the 3-month SPN of 5.8% 5. Indonesian crude oil price on average of US$97/barrel 6. Average lifting of oil of 794 thousand barrels/day 7. Average lifting of natural gas of 1,224 thousand barrels of oil equivalent per day.

As a result of these risks, the 2014 economic growth was projected to be 0.1% lower than the original estimate to 3.3%, and in 2015 economic growth is predicted to be 0.2% lower, to 3.8%. There are three risks that resulted from the 2009 crisis and these will build up to create more uncertainties in the global economy in 2015. These risks are: 1. Low interest rate in many developed countries that have been going on for several years. This may drive investors to seek unnaturally large return in the global money markets with the prospect of increase of interest rate in the United States. Prudent macroeconomic policies are recommended to stave off this risk. 2. Geopolitical risk that will have a significant impact on the global economy, although in 2014 the effect had not been clearly seen. 3. The presence of a possibility of a global economic stagnation and deflation in the countries within the European Union. In anticipation of this risk, Oliver Blanchard suggested developing countries should seek to continue their structural reforms, both those that are mandatory and those that are deemed politically feasible. Asia’s economy, according to the Capital Economics research institution, can still be relied upon as the driver of global economic growth in 2015. Asia’s economic growth is predicted to reach 4.7%, higher than 4.3% in 2014. There are three factors that may help accelerate this, i.e. the low global oil price situation, lenient economic policy in many developed countries, and the recovery of global demand. These opportunities must be exploited as fully as possible by Indonesia by carrying out structural reforms so that it may achieve the upper limit of its growth projection window between 5.1% to 5.8%. Indonesia is expected to continue facing economic stability issues with its current account deficit that remained relatively high entering 2015. The Rupiah’s exchange rate is expected to further depreciate alongside the Rupee and the Australian dollar, due to the increase in the interest rate of the Federal Reserve. This should be anticipated again by carrying out structural reforms as early as the beginning of the year in order to strengthen investment and export, so that the current account deficit can be reduced and the foreign exchange reserve can be improved.

The actual economic growth of 5.1% was lower than the economic growth estimated in the 2014 APBNP of 5.5%. This was due to the weakening export performance in line with the anemic global demand and the decline in global commodity prices throughout 2014.

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT Description and Performance of Each Business Segment Production and Business Activity Production Bio Farma is a State-Owned Enterprise that manufactures vaccines and antisera for humans to support vaccination/ immunization programs in Indonesia and in other countries. Bio Farma has been listed on the World Health Organization’s (WHO) Pre-Qualification. The quality control and assurance aspect of all the products of PT Bio Farma (Persero) have complied with the international standards in terms of quality control and quality assurance. In addition, Bio Farma’s production processes and quality control processes for its vaccines are constantly monitored by the National Control Authority (NCA)/ Badan POM (BPOM) RI, as recognized by the WHO. In accordance with the Articles of Association of the Company, the purpose and objective of the Company is to engage in the research, development, production and marketing of biological, pharmaceutical, and medical products, and the optimization of utilization of the Company’s resources to create high quality goods and/ or services with great competitiveness to obtain profit in order to improve the Company’s value by implementing the principles of a limited liability company.

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Management Analysis and Discussion Company Performance

The products manufactured by PT Bio Farma (Persero) consist of vaccines and antisera for humans, as follows: 1. Viral Vaccines a. Oral Polio Vaccine

For the prevention of poliomyelitis types 1, 2, and 3. Poliomyelitis Vaccine For the prevention of poliomyelitis types 1 and 3. For the prevention of measles.

d. Hepatitis & Recombinant Vaccine

For the prevention of Hepatitis B.

3. Combination Vaccines

4. Antisera

e. Flubio Vaccine

e. Td Vaccine For the prevention of Tetanus and Diphtheria for children aged 7 and above.

b. Pentabio (DTP-HB-Hib) Vaccine For the prevention of Diphtheria, Tetanus, Pertussis, Hepatitis B, and Haemophillus influenza type B.

c. Measles Vaccine (Frozen Dried)

For the prevention of Tuberculosis.

a. DTP-HB Vaccine For the prevention of Diphtheria, Tetanus, Pertussis and Hepatitis B.

b. Bivalent Oral

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

a. Anti Tetanus Serum for the treatment of Tetanus.

For the prevention of seasonal influenza.

b. Anti Diphtheria Serum For the treatment of Diphtheria

2. Bacterial Vaccines a. TT Vaccine For the prevention of Tetanus and Neonatal Tetanus (which attacks newborns baby).

c. Snake Antivenom Serum For treating bites by poisonous snakes with neurotoxic properties (Naja sputratix/cobra and Bungarus fasciatus/striped snake) and with haemotoxic properties (Ankystrodon rhodostoma/ ground snake).

b. DT Vaccine For the prevention of Diphtheria and Tetanus. c. DTP Vaccine For the prevention of Diphtheria, Tetanus and Pertussis.

5. Diagnostics PPD RT 23 (Purified Protein Derivative)

d. BCG Vaccine (Freeze Dried)

For the testing of one’s sensitivity to Tuberculosis infection.

The amount of vaccines and antisera manufactured by Bio Farma in 2014 reached 1.7 billion doses, with actual production costs in 2014 for finished goods and products in process of Rp 882.77 billion, increased by 18.72% from 2013 figure of Rp 139.17 billion, and 12.54% higher than the 2014 target. The details for each of the product categories are as follows:

Cost of Production Realization (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014 / Target 2014

2014

1

2

3

4

5

6

Bacterial Vaccine

131,392

148,960

168,521

187,208

213,096

229,639

22.67

7.76

Viral Vaccine

313,000

334,624

334,875

430,334

415,547

457,444

6.30

10.08

39,931

57,818

54,142

95,464

115,590

163,490

71.26

41.44

27,163

21,739

29,379

30,594

40,199

32,196

5.24

(19.91)

511,486

563,141

586,917

743,600

784,432

882,769

18.72

12.54

Description

Combination Vaccine Sera & Diagnostics Total

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Increase/Decrease (%) 6/4

6/5

96

Bacterial Vaccine

Viral Vaccine

[In Million Rupiah]

[In Million Rupiah]

229,639

430,334

457,444

187,208 168,521 313,000

148,960

334,624

334,875

131,392 2010

2011

2012

2013

2014

Sera & Diagnostics

2010

2011

2012

2013

Combination Vaccine

[In Million Rupiah]

2014

163.490

[In Million Rupiah]

95.464

29,379

27,163

30,594

32,196 57.818

21,739

54.142

39.931 2010

2011

2012

2013

2014

Actual production costs in 2014 was 12.54% above the 2014 target, due to the following reasons: 1. Bacterial vaccines. Production cost for bacterial vaccines was 7.76% above the budget as there was an increase in production cost for local BCG vaccine. 2. Viral vaccines. Production cost for viral vaccines was 10.08% above the budget as there was a 19.20% increase in the bulk Polio production amount in order to fulfill the increase in export sales of bulk Polio by 10,9% in 2014, and the increase in inventories as at the end of 2014 for fulfilling the demand in the first quarter of 2015, and the increase in the price of bulk HbsAg concentrate for the production of the Infant Hepatitis B vaccine. 3. Combination vaccine. Production cost for combination vaccine was 41.44% above the budget as there was a 5.55% increase in the Pentabio vaccine production amount, to fulfill demand for sales in 2014, and the increase in inventories as at the end of 2014 for fulfilling the demand in the first quarter of 2015, and also this was affected by the increase in the price of bulk HbsAg concentrate for the production of Pentabio vaccine.

2010

2011

2012

2013

2014

4. Antisera and diagnostics. Production cost for antisera and diagnostics was 19.91 above the budget in line with the low production volume, reaching only 50.56% of the target, with the exception of the PPD.2TU. Compared to 2013 figure, production costs increased by 18.72%, due to the following reasons: 1. Bacterial vaccines. Production cost for bacterial vaccines was 22.7% above the 2013 figure as there was an increase in the purchase price for imported BCG vaccine and increase in the production cost for local BCG vaccine. 2. Viral vaccines. Production cost for viral vaccines was 6.3% above the 2013 figure as there was a 13.9% increase in the bulk Polio production amount in order to fulfill sales in 2014, and the increase in inventories as at the end of 2014 for fulfilling the demand in the first quarter of 2015, and the increase in the price of bulk HbsAg concentrate for the production of the Infant Hepatitis B vaccine. 3. Combination vaccine. Production cost for combination vaccine was 71.3% above the 2013 figure as there was a 5.5% increase in the Pentabio vaccine production amount, to fulfill demand

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Management Analysis and Discussion Company Performance

for sales in 2014, and the increase in inventories as at the end of 2014 for fulfilling the demand in the first quarter of 2015, and also this was affected by the increase in the price of bulk HbsAg concentrate for the production of Pentabio vaccine. 4. Sera Products & Diagnostika Production expenses for sera and diagnostic products was 5.2% above the 2013 figure due to an increase in machine maintenance expenses while the production volume was 32% below the previous year.

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

4. Reward The Company extends rewards for accomplished, highly dedicated, and professional employees.

Business Activities Bio Farma is engaged in the following business activities: 1. Research and development of biological and pharmaceutical products, both on its own as well as in collaboration with other parties;

The measures that were taken by Bio Farma in order to improve its productivity are as follows:

2. Production of biological and pharmaceutical products, both on its own as well as in collaboration with other parties;

1. Enhancing the work motivation of employees by encouraging them to participate in proper training programs to maintain and improve their motivation to yield high productivity.

3. Marketing, trading and distribution of biological, pharmaceutical, and medical products, including general goods, both domestically and overseas;

2. Conducive work environment The role of the top leader in creating a conductive work environment in which employees feel comfortable and optimistic in their work and in providing training that will result in a more positive mindset 3. Integration of Time Management with the Company’s Systems An integrated time management that work hand in hand with the Company’s systems contributed to employee productivity, as they are efficient and productive.

4. Medical laboratory services and clinic services; 5. Services related to the businesses described in points a, b, c, and d. In addition to the main business activities as mentioned above, in order to optimize the utilization of resources it owns, Bio Farma conducts education and training, agriculture, farming, breeding of laboratory animals, property, office management, warehousing, and tourism businesses.

Research and Development Bio Farma pays close attention to Research and Development as it aims to improve its own core businesses. In supporting the Research and Development activities, Bio Farma maintains partnerships with various competent parties in order to support the Company’s performance. Surveillance and Clinical Testing Division Organizational Structure

Director of Planning and Development

Surveillance & Clinical Trial Division

Surveillance & Epidemiology Section

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2014

• PT Bio Farma (Persero) •

Clinical Trials Section

Research Division

Product Development Division

Research Matrix

Product Development Matrix

98

Research and Development Program consists of: 1. Research and development of products. During 2014 there were activities of research and product development: a. DTaP vaccine b. Adjuvant Development R4 / E8 Pam2Cys c. Liposome Delivery System (TB vaccines as a model) d. Typhoid vaccine e. Pneumococcus vaccine f. Hepatitis B vaccine g. Hepatitis B Vaccine Consortium h. vaccines Heksavalent i. Stemcell j. Nanoparticle Adjuvant k. s-IPV vaccine l. Rotavirus vaccine m. Development of Human Monoclonal Antibodies Against GAD65 autoantibodies - (Mab-hGAD65 Ab): Early Detection Method Development for Type 1 Diabetes Mellitus. 2. Product Innovation. There are several product innovation activities carried out in 2014 which includes: a. Optimization of refining NZ-Case b. Making the Working Seed Pertussis In Glycerin

c. BCG Vaccine in Vial Packaging d. Manufacturing BCG Seed Lot e. Up Scaling Hib Conjugate Process f. Increasing Vaccine Production Capacity of Pentabio 5 ds Formulation Scale 450L 3. Surveillance and Clinical Trials. There are several surveillance activities and clinical trials carried out in 2014 include: a. AFP (Acute Flaccid Paralysis) Surveillance b. Polio Environment Surveillance c. Measles surveillance d. Rotavirus surveillance e. Farmakovigilans implementation f. RV3 Clinical Trials Phase II b g. Bridging Study tOPV h. Clinical trials Pentabio Booster i. STD Vaccine Pentabio j. Prepandemi H5N1 Vaccine Clinical Trials Preparation k. Polio antibody titer examination subject pentavalent Phase III clinical trials l. Bactericidal test for Penta Phase II Clinical Trial samples m. Employees Antibody titers examination n. Flubio Clinical trials in children

Marketing As a company engaged in the manufacturing of vaccines and antisera products, Bio Farma manufacture products aimed at meeting thedemands in the export sector, private sector, and the governmental sector. In 2014, the export sector contributed 67.34% to total revenue, while the private sector contributed 6.05% to sales and the governmental sector contributed 26.61% to sales. Marketing Division Organizational Structure

Marketing Director

Local Sales division

Divisi Penjualan Ekspor

Marketing Division

Divisi Klinik & Imunisasi

Regulatory Affairs Division

Government Sector Sales Department

Export Sales Division

Product Management Department

Clinic & Immunization Division

Domestic Licensing Department

Private Sector Sales Department

Export Institutions Sales Department

Geographical Marketers Matrix

Clinical Diagnostics Center Department

Overseas Licensing Department

Distribution Department

Promotional Department

Business Development Department

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Management Analysis and Discussion Company Performance

1. The nature of business of Bio Farma is to serve domestic and global market needs: a. Domestic Market: sector: serving the • Governmental government’s needs for national vaccination programs in Indonesia through the Ministry of Health, namely the BCG, DT, TT, Polio, Measles, Hepatitis , DTP-HB, and Td (EPI vaccine) and those outside of regular vaccination programs, i.e. DTP-HB-Hib (pentavalent) and Anti Diphtheria Serum (ADS). • National private market, i.e. the Private sector: serving domestic distributors fulfill the demand for vaccines outside of the government’s vaccination programs that are BCG, BioTd, BioTT, FluBio, Measles, Polio, Hepatitis B, PentaBio, and the BioSAT, BioADS, BioSave, ABU II (Australia) and PPD 2 TU. 2. Overseas Market: a. Institutional Export Sector: supply of vaccines through institutions such as the World Health Organization (WHO), the UNICEF, PAHO, to fulfill demands for vaccines in developing countries for vaccination programs. b. General Export Sector: supply of vaccines directly, business to business, business to government or cooperation with appointed agents. All vaccines have passed the WHO Pre-Qualification, both as the finished goods and as bulk. The vaccines sold overseas have all passed the WHO Pre-Qualification both as the finished goods and as bulk, namely the TT, Td, BioTT, DTP, Polio, Measles, DTP-HB, bulk Polio, bulk Diphtheria, bulk Pertussis, and bulk Tetanus.

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

Medical Laboratory and Clinic Services Medical laboratory and clinic services are under the control of the Marketing Directorate, the Clinic and Vaccination Division. The main tasks of this Clinic and Vaccination Division are as follows: 1. Provide vaccination and laboratorial services to loyal customers and garner new customers 2. Establishment of the review team to determine the feasibility of establishing a business unit for laboratory and vaccination services. 3. Carrying out of ISO 17025 certification and KAN accreditation programs for its bacteriology and micology laboratories so that more customers may conduct food/industry microbiological testing. 4. Establishment of the radiology unit to improve medical check-up services, with the target of completing a laboratory for reference among the employees of the Company in terms of their medical check-up results of the Company’s employees and candidates for overseas Indonesian workers. Certain details of the business activities carried out by Bio Farma in order to support its production processes are as follows:

Production Planning and Inventory Control PPIC is a part that is aimed at planning and controlling the whole production process chain, so that it is carried out in accordance with the prescribed standards and to control inventory to be compatible with the existing need. The PPIC bridges two sections, namely marketing and production. The PPIC translates all of its marketing needs into Production & Raw Materials Availability plan which will be implemented, so that that order received by Marketing can be delivered on time and on quantity.

Ppic Organizational Structure Director of Planning & Development Head of Production Planning and Control Division

Head of PPIC

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2014

• PT Bio Farma (Persero) •

Head of Warehousing

100

The duties of the PPIC are as follows: 1. Receive orders from Marketing and create a production plan according to the given order. 2. Prepare the planning for the procurement of raw materials, packaging, and auxiliaries based on the forecast from Marketing, by taking into consideration the stock availability by calculating the needs for production materials according to the ideal stocking standard. 3. Monitor every inventory for production processes, and ensuring how much available stock is in the warehouse and to arrive, so that the production processes and order receipt may be run smoothly.

4. Prepare the schedule for production processes at the right time, routing, and quantity, so that the goods may be delivered on time and are suited to the customers’ requirements. 5. Maintain the balance among business lines in production to ensure that no machine gets overloaded while other machines are waiting for orders. 6. Inform marketing should there be a problem in the production processes that result in the delay of the delivery. 7. Actively communicate with all relevant parties to obtain an accurate and up-to-date manner.

Procurement Procurement Division Organizational Structure Human Resources Director

Procurement Division

General Purchasing Department

Capex & Spare Part Purchasing Department

Purchasing Support Department

Both local and import purchases in 2014 totaled Rp 827.74 billion, or 66.55% above its target and lower by 6.04% when compared to the 2013 figure. The details broken down by group are as follows:

Realization of Purchase Per Group in 2014 (In Million Rupiah) No.

Group

1

Chemicals

2

2012 Realization 2013 Realization (Audited) (Audited)

RKAP 2014 / 2014 Target

2014 (Audited)

Increase/Decrease (%)

49,983

64,240

66,624

63,282

(1.49)

(5.02)

Raw Materials & Auxiliary

133,654

179,390

145,623

195,388

8.92

34.17

3

Laboratory Equipment

106,144

117,809

122,345

121,672

3.28

(0.55)

4

Work Equipment

2,952

5,100

4,807

4,767

(6.53)

(0.83)

5

Packaging & Embalage

94,435

123,769

114,203

130,658

5.57

14.4

6

Maintenance Parts

59,849

88,226

101,304

69,778

(20.91)

(31.12)

7

Professional Fee

8

Investment

9

Test

10

General Goods

11

Merchandise

 

Total

25,863

23,592

46,092

27,855

18.07

(39.57)

176,122

248,276

596,004

174,623

(29.67)

(70.70)

3,138

4,089

3,965

5,416

32.45

36.60

22,510

25,047

42,299

23,990

(4.22)

(43.28)

666

1414

512

10,316

629.56

194.84

675,316

880,952

1,243,778

827,745

(6.04)

(33.45)

101

Management Analysis and Discussion Company Performance

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

Production scheduling must be carried out tightly to fulfill market needs, given the limitation in production capacity in particular at the fill and finish facility. To address this issue, Production Directorate has prepared and planned for the fill and finish capacity increase through gradual investment from 2013 to 2016. In addition, in 2014 a number of production facilities were rejuvenated, certain production equipment were added, and certain machines were maintained. The Company wishes to achieve the target of carrying out vaccine manufacturing program without any technical hindrances that may result in the delay of the fulfillment of vaccine contribution.

Local and import purchases in 2014 comprised 59% local and 41% import, with the note that the local goods purchased through agents in Indonesia contained certain import goods. Purchases were lower than the budget as there was a slowdown in the demand for investment realization which was only 29.3% from the budget.

Increase Production Capacity The achievement of production performance in 2014 was in accordance with the planned targets in early 2014 one of the strategies implemented by the directorate of production is to optimize the production capacity to adjust to dynamic market demand. In 2013 Bio Farma has been producing a new vaccine, the vaccine Pentabio 5 in 1 (Diphtheria, Tetanus, Pertussis, Hepatitis B, Haemophilus Influanzae Type B) were directly distributed to meet the national immunization program.

Sales/Revenue In 2014 the Company’s performance was better compared to 2013, due to ongoing efficiency measures, the presence of other income in the form of gain from foreign exchange transactions of Rupiah to USD and the shift in the cooperation for research, development, and surveillance to external parties in 2015.

In December 16, 2014, Pentabio vaccine products have passed the - Pre-qualification (PQ) of the World Health Organization (WHO) so the product will add to the portfolio of Bio Farma vaccines that is ready to be bought by the World Health Organization (WHO), UNICEF, PAHO and other countries in the world,given the priority to fulfill the needs of domestic market. This new product provides many efficiencies in terms of the cost of production and storage of vaccines.

The Company’s sales performance in 2014 recorded Rp 2.04 trillion, or increased by 10.27% compared to realization in 2013, while the Company’s expenses totaled Rp 1.43 trillion or increased by 20.31% from 2013. However the Company’s net income increased by 1.34% from the 2013 amounted to Rp 580.07 billion.

Net Sales (In Million Rupiah)

2010

Description

Company’s Products

2012

2013

2014 Target

2014

Increase/Decrease (%)

1

2

3

4

5

6

6/4

6/5

1,186,361

1,324,046

1,432,966

1,848,452

1,941,579

2,028,988

9.77

4.59

Merchandise Products

21,067

1,784

1,206

1,848

2,200

10,287

456.65

367.59

2,835

2,899

3,470

3,382

6,120

4,805

42.09

22.59

1,210,263

1,328,729

1,437,642

1,853,682

1,949,899

2,044,080

10.27

5.04

2013

RKAP 2014 / 2014 Target

2014

Services Total Net Sales

2011

RKAP 2014 /

Cost Goods Sold (In Million Rupiah)

Description

2010

2011

2012

Increase/Decrease (%)

1

2

3

4

5

6

6/4

6/5

Company’s Products

(481,125)

(535,017)

(580,216)

(718,463)

(734,085)

(767,609)

6.84

4.57

Company’s Products

(18,121)

(848)

(518)

(1,148)

(512)

(8,827)

668.90

1,622.60

(2,792)

(3,133)

(3,183)

(3,986)

(3,814)

(3,654)

(8.33)

(4.21)

(502,038)

(538,998)

(583,917)

(723,596)

(738,412)

(780,090)

7.81

5.64

Services Expenses Total Cost of Goods and Services Sold

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

102

The Company’s revenue was derived from sales of products, sales of merchandise goods, and sales of services. revenue In 2014 recorded Rp 2.04 trillion, increased Rp 190.40 billion or 10.27% from 2013 figure of Rp 1.85 trillion and 5.04% above the 2014 target s of Rp 1.95 trillion. Recapitulation of Sales of the Company’s Products (In Million Rupiah) 2010

2011

2012

2013

1 202,874 819,122 113,933 50,872 1,186,801 (440) 1,186,361

2 199,719 936,970 132,420 55,490 1,324,599 (553) 1,324,046

3 226,713 939,684 210,286 56,581 1,433,264 (298) 1,432,966

4 233,753 1,302,853 248,565 63,635 1,848,806 (354) 1,848,452

Description

Bacterial Vaccine Viral Vaccine Combination Vaccine Sera & Diagnostics Total Less: Sales Discount Net Sales of Product

Bacterial Vaccine [In Million Rupiah] 202,874

199,719

226,713

2011

2012

233,753

113,933

2010

2013

2014

1,302,853

248,565

2010

2013

936,970

939,684

2011

2012

2013

276,548

6/5 (12.39) 14.93 (15.97) (4.48) 5.25 4.59

1,457,280

2014

90,240 50,872

2012

6/4 (6.91) 11.85 11.26 41.81 10.43 9.77

Sera & Diagnostics [In Million Rupiah]

132,420

2011

6 217,605 1,457,280 276,548 90,240 2,041,673 (12,685) 2,028,988

217,605

Combination Vaccine [In Million Rupiah]

210,286

Increase/Decrease (%)

2014

Viral Vaccine [In Million Rupiah]

819,122

2010

RKAP 2014 /2014 Target 5 248,388 1,267,967 329,089 94,474 1,939,918 1,939,918

2014

2010

55,490

56,581

63,635

2011

2012

2013

2014

Net Sales of Product [In Million Rupiah]

1,186,361

2010

1,324,046

2011

1,848,452

2,028,988

2013

2014

1,432,966

2012

103

Management Analysis and Discussion Company Performance

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

Sales of Merchandise Goods (In Million Rupiah) Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/5

-

-

-

-

7.769

-

-

21.140

1.785

1.206

1.848

2.200

2.641

42,93

20,06

(73)

(1)

-

-

-

(123)

-

-

21.067

1.784

1.206

1.848

2.200

10.287

456,65

367,59

Less: Sales Discount Total Sales of Merchandise Goods

6/4

-

Government Private/Non-Government

Increase/Decrease

Sales of Services (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Immunization

1.305

1.714

2.134

2.501

2.695

3.978

59,06

47,61

Laboratory

1.546

1.186

1.337

881

1.225

827

(6,10)

(32,47)

Total

2.851

2.900

3.471

3.382

3.920

4.805

42,09

22,59

(16)

(1)

(2)

-

-

-

-

-

2.835

2.899

3.469

3.382

3.920

4.805

42,09

22,59

1.210.263

1.328.729

1.437.641

1.853.682

1.946.038

2.044.080

10,27

5,04

Description

Less: Sales Discount Total Sales of Services - Net Total Sales of Product, Goods and Services

Total Sales of Merchandise Goods

Kenaikan/Penurunan 6/4

6/5

Total Sales of Services - Net [In Million Rupiah]

[In Million Rupiah]

10,287 4,805 21,067 2,835

2010

1,784

1,206

1,848

2011

2012

2013

2014

2010

2,899

3,469

2011

2012

3,382

2013

2014

Total Sales of Product, Goods and Services [In Million Rupiah]

1,853,682 1,210,263

2010

ANNUAL REPORT

2014

1,328,729

1,437,641

2011

2012

• PT Bio Farma (Persero) •

2013

2,044,080

2014

104

Profitability The Company’s profitability can be assessed by the increase in net profit of Rp 7.61 billion from Rp572,47 billion in 2013 to Rp. 580.07 billion in 2014. NPM resulted in the decrease of 28.38% in 2014, or decreased by 8.10% compared to 2013 which was recorded at 30.88% Increase in net income in 2014, compared with the budget, due to increased in export sales ongoing efficiency measures, and the non-realization the expenses for a number of research, development and surveillance with external parties, whose completion has been extended to 2015, and the rise in other income from foreign exchange transactions of the Rupiah against the USD thanks to sound foreign exchange management.

2010

2011

2012

2013

RKAP 2014 / Target 2014

1

2

3

4

5

6

6/4

6/5

Cash Ratio

176%

168%

252.13%

228.74%

104.18%

286.08%

25.07

174.60

Current Ratio

339%

369%

522.91%

395.98%

371.09%

537.18%

35.66

44.76

Gross Profit Margin

58.52%

59.44%

59.38%

60.96%

62.06%

61.84%

1.44

(0.35)

Operating Margin

28.59%

29.11%

34.03%

36.93%

35.95%

35.43%

(4.06)

(1.45)

Net Profit Margin

20.72%

22.76%

26.84%

30.88%

25.85%

28.38%

(8.10)

9.79

Return on Equity (ROE)

30.00%

34.70%

29.36%

37.81%

30.51%

30.76%

(18.65)

0.82

Return on Investment (ROI)

28.34%

33.53%

31.22%

34.81%

32.33%

31.20%

(10.37)

(3.50)

Return on Assets (ROA)

18.36%

18.47%

20.42%

24.11%

17.70%

20.19%

(16.26)

14.06

29.87%

17.65%

13.24%

19.34%

15.27%

16.33%

(15.56)

6.94

Financial Ratios

2014

Increase/Decrease (%)

LIQUIDITY

PROFITABILITY(%)

SOLVABILITY Debt to Equity TURNOVER (TIMES) Inventory Turnover

3.19

3.15

3.59

3.95

3.01%

2.94%

(99.26)

(2.33)

Receivable Turnover

7.93

8.93

7.8

7.29

10.25%

7.54%

(98.97)

(26.44)

GROWTH Sales

102.31%

109.79%

108.20%

128.94%

116.65%

110.27%

(14.48)

(5.47)

Operating Income

101.49%

111.77%

126.51%

139.92%

121.48%

105.78%

(24.40)

(12.92)

Net Income before Tax

106.62%

120.49%

127.79%

149.41%

119.77%

99.29%

(33.55)

(17.10)

a. Liquidity Liquidity ratio in 2014 was above the target as there was an increase in current assets and a decrease in current liabilities. b. Profitability In 2014 the Company’s profitability ratios were mostly below the targets with the exception of Net Profit Margin and Return on Equity. mainly derived from profits on deposits rates that had reached Rp. 35.6 Billion.

c. Solvability Solvability ratios in 2014 were lower than the targets as the actual total liabilities exceeded actual total equity d. Turnover Compared to the previous year, the Company’s receivables turnover was relatively unaltered, which means that the Company’s capability to collect its receivables has not changed. e. Growth At the end of 2014 the Company recorded a net income growth of 1.3% from the previous year’s.

105

Management Analysis and Discussion Company Performance

REVIEW OF OPERATIONS OF EACH BUSINESS SEGMENT

The Company’s Financial Statements

The Company’s Ten Major Indicators in 2014 The ten major indicators of the Company’s business in 2014 are detailed below:

 No.

Description

1.

Growth (% )

2012 Realization

2013 Realization

2014 Budget

2014 Realization

 

a. Revenue/Net Sales

 

b. Operations Profit

108.2

128.94

116.65

110.27

126.51

139.92

121.48

105.78

 

c. Profit Before Tax

2.

Return On Investment (ROI) (% ) *)

127.79

149.41

119.77

99.29

25.47

28.8

23.46

25.40

3.

Profit Margin (PROMA) (%

4.

Company Productivity (COPRO) Rp /Person

5.

Employee Productivity (EMPRO) Rp /Person

6.

Asset Productivity (ASPRO) (% )

7.

Inventory Turn Over (ITO) (Times)

8.

Receivable Turn Over (RTO) (Times)

9.

Base Cost Productivity (BASE PRO) (%)

10.

Quality Performance Rate

 

a. Product Defect (%)

 

b. Material Defect (%)

0.19

36.25

42

35.50

37.82

918,391,979

1,192,270,887

1,186,243,079

1,224,519,154

1,561,282,295

1,945,473,637

1,885,696,049

1,998,919,897

70.28

68.58

66.09

67.16

3.59

3.95

3.01

2.94

7.8

7.29

10.25

7.54

65.97

63.07

64.05

64.57

 

 

 

 

0.92

1.96

-

4.31

0.06

-

0.15

*) KEP. 210/M-PBUMN/1999

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

106

The Company’s Financial Statements The following are discussions on the Company’s financial statements for the year ended 31 December 2014. Comparable figures associated to the year ended 31 December 2013 and the targets set in the budget for 2014 for the purpose of analysis and/or comparation.

Current Assets, Noncurrent Assets, and Total Assets (In Million Rupiah)

2010

2011

2012

1

2

3

444,127

371,870

-

-

Trade Receivables

149,543

Other Receivables

Description

2013

Increase/Decrease

RKAP 2014

2014

4

5

6

6/4

6/5

498,498

891,251

348,714

971,717

9.03

178.66

-

-

-

25,600

-

-

148,256

220,544

288,246

203,205

257,260

(10.75)

26.60

1,462

574

28

346

564

850

145.68

50.83

(%)

Current Assets

Cash and Cash Equivalent Securities Available for Sale

178,481

163,645

161,924

204,899

268,461

326,600

59.40

21.66

Advances

Inventories

31,845

46,339

18,363

38,623

233,730

50,412

30.52

(78.43)

Prepaid Taxes

49,366

81,459

103,184

96,972

164,834

154,008

58.82

(6.57)

Prepaid Expenses

1,023

1,063

1,530

1,590

1,624

4,767

199.84

193.50

Security Deposits

153

154

-

-

-

-

-

-

Accrued Income

606

1,352

1,889

3,104

21,000

2,726

(12.19)

(87.02)

Other Current Assets

-

-

27,903

17,870

-

30,698

71.78

-

Total Current Assets

856,606

814,712

1,033,864

1,542,901

1,242,132

1,824,639

18.26

46.90

Non-Current Assets

Deferred Tax Assets Fixed Assets

9,220

9,694

11,746

12,913

15,200

17,046

32.01

12.14

653,355

889,758

985,019

1,126,086

1,654,864

1,163,473

3.32

(29.69)

Intangible Assets

11,250

13,236

13,365

20,214

31,572

37,855

87.27

19.90

Other Non-Current Assets

40,538

6,103

1,694

956

805

766

(19.84)

(4.85)

Total Non-Current Assets

714,363

918,792

1,011,824

1,160,169

1,702,442

1,219,141

05.08

(28.39)

1,570,969

1,733,504

2,045,688

2,703,070

2,944,574

3,043,779

12.60

3.37

TOTAL ASSETS

Current Assets Compared to 2013, current assets in 2014 increased by 18.26% from Rp 1.54 trillion to Rp 1.82 trillion. The Company’s current assets comprise cash and cash equivalents 53.26%, securities available for sale 1.40%, trade receivables 14.10%, other receivables 0.05%, inventories 17.90%, advances 2.76%, prepaid taxes 8.44%, prepaid expenses 0.26%, accrued income 0.15%, and other current assets 1.68%. Cash and Cash Equivalents (In Million Rupiah)

Description

2010

2011

2012

2013

RKAP 2014 /Target 2014

2014

1

2

3

4

5

6

6/4

6/5

Increase/Decrease %

Cash

63

261

104

74

-

130

75.07

-

Bank

199,916

247,335

98,786

113,542

-

175,725

54.77

-

Deposits

244,148

124,274

399,608

777,635

-

795,863

2.34

-

Total Cash And Cash Equivalents

444,127

371,870

498,498

891,251

348,714

971,717

9.03

178.66

107

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Total Cash And Cash Equivalents [In Million Rupiah] 891.251

444.127

371.870

2010

Cash and cash equivalents at the end of year 2014 increased by 9.03% compared to 2013 amounted Rp 891.251 billion to Rp 971.717 billion at 31 December 2013 . This was due to the increased in cash 75.07%.

971.717

498.498

2011

2012

2013

2014

Trade Receivables (In Million Rupiah) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

Total Receivables Domestic Customers

14,863

13,278

8,541

14,052

-

29,765

111.81

-

Total Receivables Overseas Customers

134,160

135,168

212,054

273,615

-

226,850

(17.09)

-

539

535

721

619

-

766

23.89

-

149,562

148,981

221,316

288,286

-

257,382

(10.72)

-

(19)

(725)

(772)

(40)

-

122

206.20

-

149,543

148,256

220,544

288,246

203,205

257,260

(10.75)

26.60

Services Total Less: Allowance for Impairment Total Trade Receivables-Net

Company’s Net trade receivables of the Company on 31 December 2014 was recorded Rp 257.260 billion or down decreased by 10.75% from Rp 288.247 billion at the end of 2013. This the decline of company’s net receivables is caused by decrease in the amount of receivables around

Total Trade Receivables-Net [In Million Rupiah] 288,246

257,260

220,544 149,543

148,256

2010

2011

ANNUAL REPORT

2014

2012

• PT Bio Farma (Persero) •

2013

2014

108

Other Receivables Other Receivables (In Million Rupiah) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

4,214

1,378

1,328

1,303

-

1,303

-

-

1,462

574

28

346

-

850

145.89

-

Allowance for Impairment

4,214

1,378

1,328

1,303

-

1,303

-

-

Total Other Receivables-Net

1,462

574

28

346

564

850

145.89

50.72

4,895

4,214

1,378

1,328

-

1,303

1.88

-

Provision for Impairment Losses

2

-

-

-

-

-

-

-

Bad Debt Recoveries for the Year

386

2,836

50

25

-

-

-

-

4,214

1,378

1,328

1,303

564

1,303

-

130.96

Related Parties Receivables with Related Third Party Other Receivables Less:

Changes In The Allowance For Decline Beginning Balance

Ending Balance

Other Receivables [In Million Rupiah] 850 1,462 574

2010

2011

28

346

2012

2013

2014

Compared to other receivables in 2013, there is an increase in 2014 there is an increased by 145.89% from Rp 346 million to Rp 850 million. The cause of the increase is due to other receivables from third parties. Inventories Inventories (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

106.141

83.599

81.292

116.251

-

164,540

41,54

-

Product in Progress

31.262

48.087

34.134

46.676

-

97,889

109,72

-

Finished Goods

43.743

31.059

46.963

42.582

-

65,775

54,47

-

2.878

2.963

2.392

1.293

-

1,139

(11,92)

-

Description Raw Materials/ Auxiliaries

Supplies Merchandise Goods Total Inventory

Increase/Decrease &

195

83

40

34

-

1,313

3.746,89

-

184.219

165.791

164.821

206.836

-

330,656

59,86

-

109

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Inventories (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

5.738

2.147

2.897

1.937

-

4.056

109,40

-

178.481

163.645

161.924

204.899

-

326.600

59,40

-

Description Allowance for Impairment Total Inventory-Net

Increase/Decrease &

Changes In The Allowance For Decline In Value of Inventories Beginning Balance

509

5.738

2.147

2.897

-

1.937

(33,13)

-

Provision for Impairment Losses

5.474

1.513

2.392

1.549

-

4.077

163,22

-

245

5.104

1.642

2.509

-

1.958

(21,96)

-

5.738

2.147

2.897

1.937

268.461

4.056

109,40

(98,49)

Current Year’s Impairment Recovery Ending Balance

Total Inventory-Net [In Million Rupiah] 326.600 178.481

163.645

161.924

2010

2011

2012

204.899

2013

2014

The Company’s inventories at the end of year 2014 was Rp 326.600 billion or increased by 59.40% from Rp 204.899 billion at 31 December 2013. This is due to the increased supply of raw / auxiliary materials, products in process, finished products and merchandise. Advances Advances (In Million Rupiah) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

3,140

38,356

-

12,179

-

11,445

(6.03)

-

23,525

6,449

15,275

10,625

-

37,859

256.32

-

5,140

936

2,556

1,415

-

17

(98.76)

-

Advance Payments for Monitoring

-

284

346

-

-

-

-

-

Office Travelling

-

108

176

750

-

998

33.12

-

Training Advances

-

106

5

320

-

-

-

-

Other Advances

40

100

5

13,335

-

93

(99.30)

-

Total Advances

31,845

46,339

18,363

38,624

233,730

50,412

30.52

(78.43)

Purchases of Imported Goods Local Purchases Import under Settlement

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

110

Total Advances [In Million Rupiah] 46,339 38,624

50,412

18,363 31,845

2010

2011

2012

2013

2014

At the end of 2014 the Company’s advances recorced Rp 50.41 billion or increased by 30.52% from Rp 38.624 billion in 2013. The largest contributor to the Company’s advances was local purchases, namely for the construction of packaging and production facility building, purchase of diesel oil, procurement of cold room at Adm II building, and others. Purchases of imported goods were for the down payment for the purchase of Cell Stack/Cell Factory of Rp 7.27 billion, VVM label of Rp 1.32 billion, vial-ampoule packaging line machine of Rp 1.20 billion, and other purchases of Rp 1.65 billion. Advances for import under settlement are for the payment of insurance costs, unloading costs, inclearing fees, and taxes related to the handling of import goods from domestic ports to the Company’s domicile. Taxes Prepaid Taxes (In Million Rupiah) 2010

2011

2012

2013

Description

Input Value Added Tax

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

49,366

81,348

103,073

96,972

-

154,008

58.82

-

-

111

111

-

-

-

49,366

81,459

103,184

96,972

164,834

154,008

Income Tax Article 28 A Total Prepaid Taxes

RKAP 2014

58.82

(6.57)

Prepaid taxes increase 58.82% from Rp 96.97 billion at the end of year 2013 to Rp 154.01 billion at the end of year 2014.

Income Taxes Benefit (Expense) Income Taxes Benefit (Expense) (In Million Rupiah) 2010

2011

2012

2013

Description

Current Income Tax Expense Deferred Tax Benefit (Expenses) Income Tax Expense-Net

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

89,843

105,826

137,261

207,288

189,055

197,136

(4.90)

4.27

2,239

473

2,053

1,166

1,397

4,134

254.51

195.89

87,604

105,353

135,208

206,122

187,657

193,002

(6.36)

2.85

Bio Farma’s contribution to the state through the payment of income tax recorded Rp 193.00 billion in 2014, decreased by by 6.36% from the 2013 was recordedRp 206.12 billion.

111

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Prepaid Expenses and Margin Deposit Prepaid Expenses and Margin Deposit (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

Insurance

867

972

1,113

1,273

-

4,220

231.54

-

Rent

156

91

417

317

-

547

72.54

-

-

-

-

-

-

-

-

-

1,023

1,063

1,530

1,590

1,624

4,767

199.84

193.56

153

154

-

-

-

-

-

-

Description

Increase/Decrease %

Prepaid Expenses

Others Total Prepaid Expenses Security Deposits

Total Prepaid Expenses [In Million Rupiah] 4,767 1,530 1,023

1,063

2010

2011

2012

1,590

2013

2014

In 2014 prepaid expenses increased by 199.8.4% to Rp 4.767 billion from Rp 1.590 billion at the end of 2013. The increase due to employee, Board of Commissioners and Board of Directors, inventories, fire and vehicles insurance. Accrued Income Accrued Income (In Million Rupiah) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

-

1,089

1,322

930

-

563

(39.50)

-

139

246

567

1,908

-

2,113

10.73

-

42

-

-

-

-

-

-

Others

425

17

-

266

-

50

(81.09)

-

Total Accrued Income

606

1,352

1,889

3,104

21,000

2,726

(12.19)

(87.02)

Vaccine Registration Services Deposits Interest Repayment Delay Fines for Distributors and Delivery of Goods and Services by the Supplier Share Results of Kimia Farma Pharmacies & Farming Results of K2BF

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

-

112

Total Accrued Income [In Million Rupiah]

Compared to the year 2013, accrued income in 2014 decreased by 12.19% , from Rp 3.10 billion to Rp 2.73 billion in 2013. The decrease in accrued income due to vaccine registration services and others.

3,104 2,726 1,889 606

2010

1,352

2011

2012

2013

2014

Other Current Assets Other Current Assets (In Million Rupiah) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

Inventories in Delivery

-

-

3,525

6,140

-

3,698

(39.78)

-

Inventories in Quarantine

-

-

24,378

11,730

-

15,684

33.71

-

Inventories in Replacement Process

-

-

-

-

-

11,316

-

-

Total Other Current Assets

-

-

27,903

17,870

-

30,698

71.78

-

Compared with the year 2013, other current assets in 2014 increased by 71.78% from Rp17.87 billion to Rp30.70 billion. Inventories in delivery consist of purchase of 2ml and 5ml clear vial, which is categorized as inventories on delivery as at 31 December 2014. Inventories in quarantine consist of the purchase of raw materials for vaccines and sera, and packaging goods that are still in quarantine as at 31 December 2014, as they are still ini testing phase. Inventories in replacement process consist of the inventory of Uniject Blank product of 5,842,821 items that are declared to have failed in the tests. The supplier of these goods have agreed to replace all these goods in a gradual manner up to the month of December 2015.

Non Current Assets Non Current Assets (In Million Rupiah) 2010

2011

2012

2013

Description

Deferred Tax Assets Fixed Assets Intangible Assets Other Non Current Assets Total Non Current Assets

RKAP 2014 / Target 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

9,220

9,694

11,746

12,913

15,200

17,046

32.01

12.15

653,355

889,758

985,019

1,126,086

1,654,864

1,163,473

3.32

(29.69)

11,250

13,236

13,365

20,214

31,572

37,855

87.27

19.90

6,103

1,694

956

805

766

(19.84)

(4.80)

918,791 1,011,824 1,160,169 1,702,442 1,219,141

5.08

(28.39)

40,538 714,363

Total non-current assets of the Company at the end of 2014 Increased by 5.08% to Rp 1.22 trillion, compared to 2013 was recorded Rp 1.16 trillion. The non-current assets of the Company comprise deferred tax assets 32.01%, fixed assets 3.32%, intangible assets 87.27%, and other non-current assets decreased 19.84%.

113

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Deferred Tax Assets The reconciliation between the estimated income tax calculated using the prevailing tax rate of 25% of accounting profit prior to the estimate of the income tax benefit (expense) and tax expenses was detailed as follows: Deferred Tax In Million Rupiah 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

331,563

407,772

521,100

778,589

-

773,076

(0.71)

-

Tax Expenses based on Maximum Tax Rate

82,891

101,943

130,275

194,647

-

193,269

(0.71)

-

Tax Effect on Permanent Differences

3,023

3,420

5,050

11,489

-

528

(95.41)

-

Description

Increase/Decrease %

Deferred Tax Based on Income Statements

Effect of Changes in Tax Rate

-

Recovery of Prepaid Expenses

-

23

10

117

15

-

794

5,194.69

-

Income Tax Expenses

85,890

105,353

135,208

206,122

-

193,002

(6.36)

-

Current Tax

88,129

105,826

137,261

207,288

-

197,136

(4.90)

-

2,239

473

2,053

1,166

1,397

4,134

254.51

195.89

Deferred Tax Expense (Benefit)

Deferred tax is calculated based on the effects from the temporary change between the total recorded assets and liabilities based on the financial statements from the basis for calculating assets and liabilities taxes. The details of the Company’s deferred tax assets and liabilities are as follows: Deferred Tax Assets ( In Million Rupiah ) 2010

2011

2012

2013

Description

RKAP 2014

2014

Increase/Decrease %

1

2

3

4

5

6

6/4

6/5

Employee Benefits

6,728

8,631

525

12,093

-

15,676

29.63

-

Allowance for Doubtful Account

1,058

526

724

336

-

356

6.04

-

Allowance for Inventories

1,434

537

137

484

-

1,014

109.52

-

-

-

11,746

-

-

-

-

-

9,220

9,694

13,132

12,913

15,200

17,046

32.01

12.14

Asset Impairment Deferred Tax Asset Net

Deferred tax assets as at the end of 2014 increased by 32.01% r, from Rp 12.91 billion at the end of 2013 to Rp 17.05 billion.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

114

Fixed Assets Product Sales In Million Rupiah Increase/Decrease (%) 6/4 6/5

2010

2011

2012

2013

RKAP 2014

2014

1 Acquisition Cost Land 13,756 Buildings 186,304 Non Permanent 2,357 Buildings Official Housing 54 Machinery 189,050 Utility Equipment 36,852 Factory Equipment 420,715 Inventaris Kantor Group I 23,031 Group II 14,143 Vehicles 3,990 Construction In Progress - Buildings 76,291 - Machine, Factory, 46,994 Utility Total of Cost Acquisitions 1,013,537 Accumulated Depreciation Buildings 51,211 Non Permanent 774 Buildings Official Housing 54 Machinery 80,316 Utility Equipment 13,399 Factory Equipment 189,120 Office Inventory Group I 14,781 Group II 8,893 Vehicles 1,635 Total 360,183 Book Value 653,355

2

3

4

5

6

13,756 229,370

17,182 404,787

-

17,140 496,256

(0.25) 21.77

-

4,170

5,595

17,182 407,551 6,270

-

7,026

12.05

-

2 207,207 43,023 467,130

2 324,410 52,914 524,092

2 386,557 55,897 610,208

-

2 405,886 67,354 670,165

5.00 20.50 9.83

-

26,738 15,324 4,734

37,126 17,231 4,734

46,414 18,690 4,460

-

55,930 23,360 5,210

20.50 24.98 16.81

-

159,591

13,240

125,106

-

75,539

(39.62)

-

144,671

93,021

53,549

-

62,566

16.84

-

1,315,716

1,494,334

1,731,886

2,385,423

1,886,433

8.92

(20.92)

61,648

76,463

-

120,620

24.78

-

1,112

1,632

96,665 2,151

-

2,785

29.48

-

2 95,120 16.900 219.169

2 114,818 20,577 254,525

2 142,447 24,870 289,836

-

2 174,517 29,441 334,703

22.51 18.38 15.48

-

19.719 10.003 2.285 425.958 889.758

26,680 11,629 2,989 509,315 985,019

33,646 13,022 3,162 605,801 1,126,086

730,559 1,654,864

42,373 14,982 3,538 722,959 1,163,473

25.94 15.05 11.88 19.34 3.32

(1.04) (29.69)

Description

Total of Cost Acquisitions [In Million Rupiah]

1,315,316

1,494,343

1,731,885

Book Value [In Million Rupiah]

889,758

1,163,473

985,019

653,355

1,013,537

2010

1,126,086

1,886,433

2011

2012

2013

2014

2010

2011

2012

2013

2014

115

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

The largest contributor to the Company’s fixed assets was factory equipment. In total, the fixed assets at the end of 2014 amounted to Rp 1.16 trillion, increased by 3.32% from 2013 amounted Rp 1.13 trillion. a decrease in land assets in 2014 amounted to Rp 41.96 million in 2014 due to the a reduction in the value of the acquisition due to reduced land area located in Kertawangi Village, Cisarua Subdistrict, owing to these reasons: 1. Shifting of boundaries which are appropriated for the river of 3,258 m2; 2. Appropriated for the public facilities, roads, alleys, and waterways of 5,141 m2; 3. Road for the community of 2,065 m2, subsequently handed over to the Municipal Government of West Bandung. The change to the status of the land has been approved by the Ministry of State-Owned Enterprises with the letter No. S-680/MBU/10/2014 dated 17 October 2014. Up to the reporting date of 31 December 2014, the status change is still an ongoing process. Depreciation Methods 1. Directly-owned fixed assets are stated as the acquisition cost less the accumulated depreciation and value impairment. The current year’s depreciation for buildings is calculated using the straight-line method, while the depreciation for non-buildings is calculated using the diminishing balance method. The details are provided below:

Fixed Asset Category

Depreciation Methods

Useful Lives

Depreciation Rates

Building

Straight Line Method

20 Year

5%

Non-Permanent Building

Straight Line Method

10 Year

10%

Official Housing

Straight Line Method

20 Year

5%

Group II

Declining Balance Method

8 Year

25%

Group III

Declining Balance Method

16 Year

12.50%

Utility Equipment

Declining Balance Method

16 Year

12.50%

Group II

Declining Balance Method

8 Year

25%

Group III

Declining Balance Method

16 Year

12.50%

Group I

Declining Balance Method

4 Year

50%

Group II

Declining Balance Method

8 Year

25%

Group I

Declining Balance Method

4 Year

50%

Group II

Declining Balance Method

8 Year

25%

Machinery

Factory Equipment

Office Equipment

Vehicle

2. Land is stated as the acquisition cost and is not depreciated. 3. Repairs and maintenance costs are charged into the statements of comprehensive income on the date the event take place. Material expenditures after the initial acquisition of an asset may increase the useful life in the future, when capitalized. 4. Fixed assets that are no longer utilized or impaired are excluded out of the fixed assets category, and the resulting profit or loss is recognized in the statements of comprehensive income.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

5. Fixed assets in progress are presented separately in the category of fixed assets and are stated as the acquisition cost. All costs, including loan costs that have fulfilled the criteria as costs that can be capitalized, which occur in relation to the construction of such asset, are capitalized as part of the acquisition cost of the fixed asset in progress. Accumulated acquisition costs will then be transferred to the related fixed asset at the time the fixed asset is completed or is ready to use.

116

Cost Model Accounting Policy Bio Farma, in valuing its assets, uses the cost model accounting as it is deemed to yield more benefit, among others, to be used as a decision making tool on actual costs, as market changes have no effects on the calculations. In addition, in the benchmarking of similar companies both inside and outside of the country, all similar companies also use the cost model. The calculation of fixed assets value comprise acquisition cost and all directly attributable costs, including costs related to the demolishing and removal of fixed assets and restoration of asset location. Fixed Asset Intangible Assets (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

1,683

1,820

2,224

2,478

-

29,630

1,095.72

-

Less: Accumulated Amortization

867

1,248

1,637

2,029

-

4,392

116.46

-

Sub Total

816

572

587

449

-

25,238

5,520.91

-

10,118

10,317

10,317

-

12,339

14.34

-

316

2,347

2,461

8,974

-

279

(96.89)

-

11,250

13,236

13,365

20,214

31,572

37,855

87.27

19.90

Description Software

Development of Upstream Flu Vaccine Software in Progress Total Intangible Assets

10,791

Increase/Decrease (%)

Total Intangible Assets [In Million Rupiah] 37,855 20,214 13,236

13,365

2011

2012

11,250

2010

2013

2014

The largest contributor to the Company’s intangible assets was the cost of development of upstream flu vaccine in progress. In total, intangible assets of the Company in the end of year 2014 reached Rp 37.855 billion, or significantly increased by 87.27% from 2013 intaible assets, which recorded Rp 20.214 billion. This increase was due to the significant increase in software, which at the end of 2014 amounted to Rp 25.24 billion, significantly increased by 5,520.91% from the 2013 was recorded only Rp 449 million.

The software consists of: 2013

2014

ERP System

-

8,968,652,000

EBR System Pertussis

-

7,688,377,223

EBR System PV. Hib

-

7,999,822,746

LIMS Gemini Matrix

-

1,285,678,750

MRP

-

637,000,000

Others (Under 500 million)

2,478,571,070

3,050,371,070

Total

2,478,571,070

29,629,901,789

117

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Other Non Current Assets Intangible Assets (In Million Rupiah) Increase/Decrease

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

3,783

5,529

1,746

1,746

1,746

0.01

231

721

800

1,237

1,673

35.28

3,552

4,808

946

509

73

(85.71)

34,263

-

-

-

-

-

Non Productive Asset

407

848

301

-

-

-

Guarantee Deposits

447

447

447

447

694

39.27

1,746

-

-

-

-

-

123

-

-

-

-

-

40,538

6,103

1,694

956

766

(4.80)

Description

Deferred Charges Less: Accumulated Amortization Total Deferred Charges - Net Assets on Delivery

Deferred Charges in Construction Repossessed Assets Total Other Non Current Assets

307

498

805

(%) 6/5

(76.30)

1.39

(4.84)

Total Other Non Current Assets [In Million Rupiah] 40,538

6,103

2010

2011

1,694

956

766

2012

2013

2014

There was a decline in other non-current assets in 2014 by 19.84% to Rp 766 million, compared to 2013 amounted Rp 956 million. Deferred charges are for the PLN electricity grid system that is amortized over the period of 4 years. Guarantee deposits are deposits for the addition of power capacity, guarantee for the lease of Pakarti Center building (The Board of Directors’ Representative Office), and guarantee for LPG.

Total Asset The Company’s total assets on 31 December 2014 were recorded Rp 3.04 trillion, it is higher 3.37% compared to the total assets budgeted in 2014, which expected reach Rp2.94 trillion, and if the total assets in 2014 compared to total assets in 2013, increased by 12.60% recorded Rp 2.94 trillion. This increase is caused by realization of total current assets recorded Rp 1.82 trillion, 46.90% higher than budgeted in 2014 about Rp 1.24 trillion. The increase of total assets is caused by the rise in advances which exceeded the target by 193.50%. The Company’s total assets were made up of 59.95% current assets and 40.05% non-current assets.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

118

Liability (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Trade Payables

130,748

128,725

85,896

158,098

220,947

Taxes Payable

19,353

22,320

30,131

86,916

24,780

Accrued Expenses

69,042

52,862

66,464

112,781

66,996

Unearned Revenue

118

68

1,921

5,405

-

Current maturities of long-term loans

20,000

-

-

-

Other Current Liabilities

13,721

16,904

13,302

252,982

220,879

Long-Term Loans

81,000

Estimated Employee Benefits Liabilities

Description

Kenaikan/Penurunan 6/4

6/5

145,095

(8.22)

(34.33)

38,919

(55.22)

57.05

128,280

13.74

91.47

1,366

(74.72)

-

-

-

-

26,437

21,998

26,009

(1.62)

18.23

197,714

389,637

334,723

339,668

(12.82)

1.48

-

-

-

55,258

-

-

-

26,912

34,525

41,441

48,371

-

62,703

29.63

-

-

-

-

-

-

24,882

-

-

Current Liabilities

Total Short-Terms Non Current Liabilities

Total Non-Current Liabilities

107,912

34,525

41,441

48,371

55,258

87,586

81.07

58.50

Total Liabilities

360,894

255,404

239,155

438,008

389,980

427,254

(2.46)

9.56

The Company’s total liabilities on December 2014 were recorded at Rp 427.25 billion, it is higher 9.56% compared to the total liabilities budgeted in 2014 which is expected reach Rp 389.98 billion. and if the total liabilities in 2014 is compared to total assets in 2013, increased by 12.60%. If Compared to year 2013, the toal liabilities, decreased by 2.46% or decline amounted Rp 10.76 billion from Rp 438.01 billion to Rp 427.25 billion. The Company’s liabilities consist of 79.50% current liabilities and 20.50% non current liabilities.

Current Liabilities The Company’s total liabilities on 31 December 2014 were decreased by 12.82%, from Rp 389.64 million in 2013, became 339.67 million in 2014. The short-term trade payables consist of Trade payables, tax liabilities, unearned income, prepaid their debts -masing decreased respectively by 8.22%, 55.22%, 74.72% and 1.62%. While the cost of which remains to be paid in advance increased by 13.74% Trade Payable Trade Payable (In Million Rupiah) Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

Increase/Decrease (%) 6/4

6/5

Payables on Purchase of Raw Material/Auxiliaries

67,525

73,338

72,773

105,175

-

106,577

1.33

-

Payables on Purchase of Assets

60,235

51,265

12,201

48,854

-

34,274

(29.84)

-

2,989

4,122

922

-

4,243

4.28

-

130,748

128,725

85,896

220,947

145,095

(8.22)

(34.33)

Payables on Procurement of Services Total Trade Payable

4,069 158,098

119

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

The Company’s trade payable consists of payables on the purchase of raw material/auxiliaries, payables on purchase of assets, and payables on procurement of services. Total trade payable on 2014 was Rp 145.09 billion or 8.22% lower compared to total trade payeble in 2013, amounted Rp 158.10 billion. This decrease in 2014 due to a decrease in the amount of debt in asset purchases amounting to 29.84% to 34.27 billion from 48.85 billion in 2013. Taxes Payable Taxes payable decreased significantly by 55.22% to Rp 38.92 billion in 2014 from Rp 86.92 billion at the end of 2013 which is primarily due to a decrease in income tax payable article 21, article 29 and VAT WAPU. In Million Rupiah RKAP 2014 5 24,780

2011

2012

2013

1 17,831 696 43 783 19,353

2 6,773 5,654 172 239 9,482 22,320

3 8,926 5,426 159 593 15,027 30,131

4 10,301 3,762 225 441 60,124 12,035 28 86,916

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

35,472

44,876

55,779

92,948

-

102,542

10.32

-

1,585

3,809

2,494

1,747

-

3,716

112.72

-

29,821

2,017

3,402

8,479

-

11,717

38.18

-

1,508

1,235

-

-

-

2,887

-

-

346

741

1,690

4,519

-

2,874

(36.39)

-

17

86

741

1,564

-

1,065

(31.91)

-

Office Administration

110

82

1,785

2,962

-

2,678

(9.58)

-

Business Travelling

109

17

226

559

-

347

(37.79)

-

-

-

347

3

-

-

-

-

Utilization of Raw Material & Auxiliaries

54

-

-

-

-

-

-

-

Others

20

-

-

-

-

453

-

-

69,042

52,862

66,464

112,780

66,996

128,280

13.74

91.47

Income Tax Article 25 Income Tax Article 21 Income Tax Article 23 Income Tax Article 4 (2) Income Tax Article 29 Corporate Income Tax Other Income Tax VAT Collected Income Tax Article 22 Total Taxes Payable

2014

Increase/Decrease (%) 6/4 6/5 38.08 (11.79) 172.36 171.51 (84.03) (17.83) 55.86 (55.22) 57.06

2010

Description

6 14,224 3,319 613 1,197 9,604 30 9,889 44 38,919

Accrued Expenses Accrued Expenses (In Million Rupiah)

Description

Employee Bonus and Others Professional Fees Export Agencies, Royalties and Sales Incentives Repairs & Maintenance Transportation and Embalage Human Resources Improvement and Development

Monitoring

Total Accrued Expenses

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Increase/Decrease (%)

120

Total accrued expenses of the Company at the end of 2014 were Rp 128.28 billion, which signifies an increased by 13.74% from Rp 112.78 billion at the end of 2013. This is due to increased by 112.72% in professional services, export agency, royalties and sales incentives increased by 38.18%, and the increase of production services of accrued employee’s bonus the recognized liability which estimated in 2014 and 2013 . Unearned Revenue Unearned Revenue (In Million Rupiah) Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

118

68

91

160

41

(74.11)

-

-

-

1,830

5,245

1,325

(74.74)

-

118

68

1,921

5,405

1,366

(74.72)

-

Private Third parties Total Unearned Revenue

-

Increase/Decrease (%)

The Company’s unearned revenue declined by 74.72% to Rp 1.37 billion in 2014, from Rp 5.40 billion in 2013, due to the decrease in unearned revenue from the private sector and third parties. Other Current Liabilities Other Current Liabilities (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

Management Bonus

5,319

8,910

6,305

16,529

-

17,521

6.00

-

Estimated Freights and Embarkation

5,611

7,487

6,250

9,555

-

7,992

(16.37)

-

105

65

543

258

-

83

(67.66)

-

2,686

442

204

94

-

412

338.25

-

13,721

16,904

13,302

26,437

21,998

26,009

(1.62)

18.23

Description

Third Parties Deposits Others Total Other Current Liabilities

Total Other Current Liabilities (In Million Rupiah)

26,437 13,721

2010

16,504

2011

26,009

13,302

2012

Kenaikan/Penurunan

Management bonus payable for 2014 was the recognized amount of the liability estimated based on the prognosis for the management bonus for 2014, as stipulated in the 2015 RKAP, while the Management bonus payable for 2013. Taxation for estimated freights and embarkation is the recognized amount of the estimated freights and embarkation estimated on 31 December 2014 for the shipping of vaccine sales to the Government.

2013

2014

121

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Long-Term Liabilities (In Million Rupiah) Accrued Expenses 2010

2011

2012

2013

1 81,000 26,912 107,912

2 34,525 34,525

3 41,441 41,441

4 48,371 48,371

Description Long-Term Loans Estimated Employee Benefit Liabilities Other Non-Current Liabilities Total Long-Term Liabilities

RKAP 2014 5 55,258 55,258

2014 Kenaikan/Penurunan 6 62,703 24,882 87,586

6/4 29.63 81.07

6/5 13.47 58.50

Estimated Employee Benefit Liabilities The Company implements the employee benefit liabilities in accordance with the SFAS 24 (Revised 2010). In addition, the Company also enrolls all of its contract and permanent employees on the pension program managed by the third party DPLK. The following description summarizes the calculation for the expenses and liabilities related to employee benefit for 2014 and 2013, as recognized in the statements of financial positions and statements of comprehensive income. The calculation for the expenses and liabilities related to employee benefit for 2014 and 2013 was carried out by an independent, thirdpart actuarial firm as reported on 17 January 2015 and 30 December 2013 using the “Projected Unit Credit” method.

Estimated Employee Benefit Liabilities (In Million Rupiah) Increase/Decrease

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

Current Service Cost

3,760

4,814

5,563

6,477

-

9.080

40.19

-

Interest Cost

2,826

3,204

5,102

5,418

-

9,284

71.36

-

781

781

781

781

-

781

-

-

-

299

(536)

1,161

-

2,045

76.14

-

9,220

17,350

7,752

4,362

-

4,236

2.89

-

16,587

26,448

18,661

18,198

-

25.427

39.72

-

-

Description

(%)

Post-Employment Benefits Cost

Past Service Cost-Non Vested Actuarial Gains (Loss) Recognized Retirement Total Employee Benefit Expenses

Estimated Liabilities on Post-Employment Benefits Beginning Balance of Present Value of Estimated Employee Benefit

35,326

45,767

56,101

77,396

-

103,161

33.29

Impact of Changes in Actuarial Assumption

-

-

-

(17,509)

-

12,553

(28.31)

Current Service Expense

3,760

4,814

5,563

6,477

-

9,080

40.19

Interest Expense

2,826

3,204

5,102

5,418

-

9,284

71.36

(12,181)

(18,835)

(11,745)

(6,907)

-

(6.858)

0.70

Actuarial Loss on Liability

16,035

21,152

22,374

37,773

-

9,148

75.78

Balance of Present Value of Estimated Employee Benefit

45,767

56,101

77,395

102,647

-

136,368

32.85

Payment of Pension

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

122

Estimated Employee Benefit Liabilities (In Million Rupiah) Increase/Decrease

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

Unrecognized Past Service Cost

9,640

8,860

8,079

7,299

-

6,518

10.70

Unrecognized Actuarial Gains

9,215

12,716

27,875

46,978

-

67,147

42,93

26,912

34,525

41,441

48,371

55,258

62,703

29.63

Description

(%) 6/5

Employment Benefit

Employee Benefit Liability

13.47

Changes in Liabilities Estimated on Post-Employment Benefits Beginning Balance

22,506

26,912

34,525

41,441

-

48,371

16.72

Employee Benefit Expense of the Year

16,587

26,448

18,661

18,198

-

25,427

39.72

(12,181)

(18,835)

(11,745)

(11,268)

-

(11.094)

(1.55)

26,912

34,525

41,441

48,371

55,258

62,703

29.63

Payment of Pension Ending Balance

Total Employee Benefit Expenses

Employee Benefit Liability

(In Million Rupiah)

(In Million Rupiah)

26,448 18,661

16,587

2010

2011

2012

13.47

41,441

25,427 18,198

26,912

2013

2014

2010

62,703

48,371

34,525

2011

2012

2013

2014

Estimated employee benefit liabilities was the sole component of the Company’s total non current liabilities. At the end of 2014, the value of this account increased by 29.63% from Rp 48.37 billion as at 31 December 2013 to Rp 62.70 billion. The Company implements the employee benefit liabilities in accordance with the SFAS 24 (Revised 2010). In addition, the Company also enrolls all of its contract and permanent employees on the pension program managed by the third party DPLK.

Equity (In Million Rupiah) Uraian Share Capital Donated Capital

2013 RKAP 2014

2014

2010

2011

2012

Increase/Decrease

1

2

3

4

5

6

6/4

6/5

450,000

450,000

750,000

750,000

1,250,000

1,250,00

66.67

-

-

-

-

-

-

377

-

-

123

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

(In Million Rupiah) 2013 RKAP 2014

2014

2010

2011

2012

1

2

3

4

5

6

6/4

6/5

• Appropriated

490,635

701,913

670,641

941,919

801,478

786,075

(16.55)

(1.92)

• Un appropriated

269,441

326,187

385,892

573,143

503,115

580,074

1.21

15.30

1,210,076

1,478,100

1,806,533

2,265,062

2,554,593

2,616,526

15.52

2.42

2010

2011

2012

2013 RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

450,000

450,000

450,000

750,000

1,250,000

750,000

-

(40.00)

-

-

300,000

-

Uraian

Increase/Decrease

Retained Earnings (Losses)

Total Equity

Share Capital (In Million Rupiah)

Description

Share capital issued and fully paid at the beginning of the Year Capitalization of Reserve Share capital issued and fully paid

450,000

450,000

750,000

750,000

Increase/Decrease (%)

500,000 1,250,000

1,250,000

66.67

-

In 2014, in accordance with the Decree of the Minister of State-Owned Enterprises No. S315/MBU/2014 dated 20 May 2014 as registered in the Act No. 26 dated 6 June 2014 drawn by Fathiah Helmi, SH, Notary, and approved by the Minister of Law and Human Rights of the Republic of Indonesia according to the letter No. AHU-04104.40.20.2014 dated 10 June 2014, the Company’s share capital was increased from previously Rp 2 trillion (2 million shares) to Rp 5 trillion (5 million shares), and the issued and fully paid capital was increased from previously Rp 750 billion (750 thousand shares) to Rp 1.25 trillion (1.25 million shares), through the capitalization of reserve amounting to Rp 500 billion.

Share capital issued and fully paid

(In Million Rupiah)

125,000

45,000

45,000

2010

2011

ANNUAL REPORT

2014

750,000

750,000

2012

2013

• PT Bio Farma (Persero) •

Total equity of the Company on December 31, 2014 was Rp 1.25 trillion, or in accordance with a budget of Rp 1.25 trillion. Issued and fully paid in 2014 increased by 66.67% to Rp 1.25 trillion, from Rp 750 billion in 2013.

2014

124

Sales/Revenue, Expenses and Income (Loss) and total comprehensive income Sales /Revenue Net Sales (In Million Rupiah)

Company’s Products

2012

1

2

3

4

5

6

6/4

6/5

1,186,361

1,324,046

1,432,966

1,848,452

1,939,918

2,028,988

9.77

4.59

21,067

1,784

1,206

1,848

2,200

10,287

456.65

367.59

2,835

2,899

3,470

3,382

3,920

4,805

42.09

22.59

1,210,263

1,328,729

1,437,642

1,853,682

1,946,038

2,044,080

10.27

5.04

Merchandise Products Services Total Net Sales

Increase/Decrease

2011

Description

2013 RKAP 2014

2014

2010

(%)

The Company’s net sales in 2014 increased by 10.27% to Rp 2.04 trillion, from Rp 1.85 trillion at the end of 31 December 2013, and 5.04% higher than the 2014 target expected to reach Rp 1.95 trillion. Company’s product sales was dominating the increase of net sales in 2014 around 99.26%, this is due to the increase in sales of virus vaccines, combination vaccines, sera and diagnostics, merchandise products and services by 11.85%, 11.26%, 41.81%, 456.65%, and 42.11%, respectively.

Sales of the Company’s Products Sales of the Company’s Products (In Million Rupiah) 2010 Description Private Sector Government Local Export Product Sales Bacterial Vaccine 102,955 4,709 95,211

Total

2011 Private Sector Local Export

Government

Total

202,874

118,383

5,017

76,319

199,719

Virus Vaccine

150,729

5,171

663,222

819,122

234,822

4,728

697,422

936,972

Combination Vaccine Sera & Diagnostica Total Substract: discounted sales Product Nett Sales

113,363 367,047

570 50,872 61,322

758,433

113,933 50,872 1,186,801

123,689 476,894

592 55,490 65,827

8,139 781,880

132,420 55,490 1,324,601

-

(440)

-

(440)

-

(554)

-

(554)

367,047

60,882

758,433

1,186,361

476,894

65,273

781,880

1,324,047

(In Million Rupiah) Description Product Sales Bacterial Vaccine Virus Vaccine Combination Vaccine Sera & Diagnostica Total Substract: discounted sales

Government 127,508 177,941 209,246 559 515,254 515,254

2012 Private Sector Local Export 5,714 5,888 472 56,022 68,096 (298) 67.798

93,490 755,856 568 849,914 849,914

Total 226,713 939,684 210,286 56,581 1,433,264 (298) 1,432,966

Government 130,988 183,656 233,509 571 548,724 548,724

2013 Private Sector Local Export 3,558 10,268 341 63,064 77,230 (354) 76,876

99,208 1,108,929 14,715 0 1,222,852 0 1,222,852

Total 233,754 1,302,853 248,565 63,635 1,848,806 (354) 1,848,452

125

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Product Nett Sales RKAP 2014 Description

Government

2014

Private Sector Local

Total

Export

Private Sector

Government

Lokal

Total

Export

Product Sales Bacterial Vaccine

137,881

4,127

106,380

248,388

98,522

7,776

111,308

217,605

Virus Vaccine

216,530

19,158

1,032,279

1,267,967

167,684

34,687

1,254,909

1,457,280

Combination Vaccine

303,581

13,748

11,760

329,089

273,678

2,870

-

276,548

-

94,474

-

94,474

76

90,149

15

90,240

657,992

131,507

1,150,419

1,939,918

539,959

135,481

1,366,232

2,041,673

-

-

-

-

-

12,685

-

12,685

657,992

131,507

1,150,419

1,939,918

539,959

122,796

1,366,232

2,028,988

Sera & Diagnostica Total Substract: discounted sales Product Net Sales

Sales Recapitulation of the Company’s Products (In Million Rupiah) Increase/Decrease

2013 RKAP 2014

2014

4

5

6

6/4

6/5

226,713

233,754

248,388

217,605

(6.91)

(12.39)

936,970

939,684

1,302,852

1,267,967

1,457,280

11.85

14.93

113,933

132,420

210,286

248,565

329,089

276,548

11.26

(15.97)

50,872

55,490

56,581

63,636

94,474

90,240

41.81

(4.48)

1,186,801

1,324,599

1,433,264

1,848,807

1,939,918

2,041,673

10.43

5.25

Less: Sales Discount

440

553

298

354

-

12,685

3.483.38

-

Net Sales of Product

1,186,361

1,324,046

1,432,966

1,848,453

1,939,918

2,028,988

9.77

4.59

2010

2011

2012

1

2

3

Bacterial Vaccine

202,874

199,719

Viral Vaccine

819,122

Combination Vaccine

Description

Sera & Diagnostics Total

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

(%)

126

Sales of Bacterial Vaccine

Sales of Viral Vaccine

(In Million Rupiah)

(In Million Rupiah)

1.302.852 936,970

939,684

2011

2012

1,457,280

819,122 202,874

199,719

2010

2011

226,713

233.754

2012

2013

217,605

2014

Sales of Combination Vaccine

113,933

2010

248.565

90,240

276,548

50,872

2012

2014

(In Million Rupiah)

132,420

2011

2013

Sales of Sera & Diagnostica

(In Million Rupiah)

210,286

2010

2013

2014

2010

55,490

56,581

2011

2012

63,636

2013

2014

Net Sales Company Products (In Million Rupiah)

1,186,361

2010

1,324,046

1,432,966

2011

2012

1,848,452

2013

2,028,988

2014

127

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Broken down by sector, the Company’s sales in 2014 were as follows: Sales Recapitulation of Products by Sector (In Million Rupiah) Description Government Private Export

2010

2012

Increase/Decrease (%)

2

3

4

5

6

6/4

6/5

515,254

548,724

657,992

539,959

(1.60)

(17.94)

60,882

65,273

67,798

76,876

131,507

122,796

59.73

(6.62)

849,914 1,222,852 1,150,419

1,366,232

11.73

18.76

2,028,988

9.77

4.59

781,880

1,186,801 1,324,047 1,432,966 1,848,452

• PT Bio Farma (Persero) •

2014

476,894

• Actual sales to the Private Sector in 2014: » And if compared to 2014 budget, only achieved 93.38%. Although the sale of the private sector did not meet its sales targets, there are some products that actually exceeds its budget such as DT 10 ds, DTP 10 ds, Flu Bio 1 ds, Pentabio 1 ds, ATS 20,000/BIOSAT-20, and PPD 2TU, of, respectively, 65.0%, 57.8%, 66.1%, 15.5%, 0.01%, and 50.4% from their targets, and there were some products that were not sold as successfully as planned, i.e. the Bio TT 1 ds and Bio Td 1 ds vaccines, valued at Rp 1.4 billion and Rp 622.5 billion, respectively.

2014

RKAP 2014

1

• Actual sales to the Government in 2014: » The Sales of product from the government sector in 2014 reached only 82.06% of the budgeted, recorded Rp.539,959 million. Compared to government sector sales in 2013, declined by 1.6% from Rp. 548.72 million in 2013, to Rp. 539.959 million in 2014. this was due to a declining in demand of Td vaccine 10ds about 15.6% and 10 ds DT vaccine at 41.8%. However, the sale of public sector earn Rp. 7.8 billion from the sale of IPV vaccines, which in early 2014 was not budgeted. » Compared to 2013 figure, the 2014 figure was 1,6% lower, due to the decline in the value of contracts for regular vaccines, in particular for the Td 10 ds and DT 10 ds vaccines, which were 89.0% and 70.9%, although in 2014 there were sales of merchandise goods of IPV vaccines amounting to Rp 7.8 billion which were nonexistent in 2013.

ANNUAL REPORT

2013

367,047 758,433

Total

2011

1,939,918

» Compared to private sector in 2013, the 2014 figure was 59.73% higher, as almost all product sales, merchandise goods, and services increased significantly, and there were sales of a new product, i.e. the Pentabio 1 ds, which were not existent in the previous year. However, there was a decrease of 23.3% and 99.98% in the sales of DTP 10 ds and ATS 20,000 IU/BIOSAT-20 vaccines, respectively. • Actual Export Sales in 2014: » Compared to the budget, export sales denominated in rupiah achieved 118.8% of the target, or equivalent to 104.9% when denominated in USD. The products that were considerably successful were TT 10 ds, tOPV 20 ds, bOPV 20 ds, Measles 10 ds, Bio TT, bulk Pertussis and bulk Polio, which achieved 718.6%, 168.8%, 121.9%, 113.3%, 103.8%, 131.1%, and 116.9% from their budgets, respectively, due to the increase in the amount of sales of these vaccines. For bulk Pertussis, the sales increase was due to the increase in price. Compared to 2013 figure, the 2014 figure denominated in rupiah was 11.7% higher, or equivalent to 0.3% increase when denominated in USD. This was driven by the increase in the sales of tOPV 20 ds, Td 10 ds, bOPV 20 ds, Bio TT 1 ds, bulk Pertussis, bulk Tetanus, and bulk Diphtheria, which increased by 223.1%, 93.4%, 43.8%, 25.0%, 399.0%, 117.6%, and 40.6% from the 2013 figures, respectively.

128

Sales of Merchandise Goods Sales of Merchandise Goods (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

Fluarix

-

-

-

-

-

-

-

-

Syringe

-

-

-

-

-

-

-

-

IPV

-

-

-

-

-

7,769

-

-

Sub Total

-

-

-

-

-

7,769

-

-

19,761

-

-

-

-

-

-

-

Polyvalent Snake Anti Venom

694

1,785

1,206

1,848

-

2,641

42.93

-

Syringe

542

-

-

-

-

-

-

-

Fluarix

-

-

-

-

-

-

-

-

Vaccine Yellow Fever

-

-

-

-

2,200

-

-

-

143

-

-

-

-

-

-

-

21,140

1,785

1,206

1,848

2,200

2,641

42.93

2.06

73

1

-

-

-

123

-

-

21,067

1,784

1,206

1,848

2,200

10,287

456.65

367.59

Description

Increase/Decrease (%)

Government

Private Meningitis

Others (less than Rp 500 Million) Sub Total Less: Sales Discount Total Sales of Merchandise Goods

Sales of merchandise goods in 2014 increased by 456.65%, to Rp 10.29 billion from Rp 1.85 billion compared to 2013, and increased by 367.59% from budgeted amount of Rp 2.20 billion.

Sales of Services Sales of Services (In Million Rupiah) Description Immunization

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

1.305

1.714

2.134

2.501

2.695

3.978

59.06

47,61

Increase/Decrease (%)

Laboratory

1.546

1.186

1.337

881

1.225

827

(6,10)

(32,47)

Total

2.851

2.900

3.471

3.382

3.920

4.805

42,09

22,59

16

1

2

-

-

-

-

-

2.835

2.899

3.469

3.382

3.920

4.805

42.09

22,59

1.210.263

1.328.729

1.437.641

1.853.682

1.946.038

2.044.080

10,27

5,04

Less: Sales Discount Total Sales of Services - Net Total Sales of Product, Goods and Services - Net

129

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Sales of services in 31 December 2014 recorded Rp 4.80 billion or increased by 42.09% from Rp3.382 billion in 2013 sales of services. Sales of services also increased by 22.59% compared tp 2014 target, from Rp3.920 million to Rp4.805 million.

Jumlah Penjualan Bersih Barang Dagangan

Jumlah Penjualan Jasa Bersih

(dalam juta Rupiah)

(dalam juta Rupiah)

10,287

4,805

21,067

2010

1,384

1,206

1,848

2011

2012

2013

2014

Jumlah Penjualan Produk Barang Dagangan dan Jasa (dalam juta Rupiah)

2,835

2,899

2010

2011

3,469

3,382

2012

2013

2014

Jumlah Rekapitulasi Penjualan Produk Perusahaan (dalam juta Rupiah)

2,044,080 1,853,682 1,210,263

2010

ANNUAL REPORT

2014

1,328,729

1,848,452

1,437,641 1,186,361

2011

2012

• PT Bio Farma (Persero) •

2013

2014

2010

1,324,047

2011

2,028,988

1,432,966

2012

2013

2014

130

Expenses Cost of Sales and Services In total, the cost of sales reached Rp 780.09 billion or increased by 7.81% from 2013 from Rp 723.56 billion and 5.64% above the target of Rp738.41 billion, with the details as follows: Cost of Sales of the Company’s Products Cost of sales of the Company’s products as at the end of 2014 reached Rp 767.61 billion or 6.84% higher than Rp 718.46 billion as at 31 December 2013, or 4.57% above the target for the year of Rp734.09 billion. This increase was driven by the increase in production expenses in 2014. Beban Pokok Penjualan Produk Perusahaan (dalam juta rupiah) 2011

2012

2013

RKAP 2014

2014

2

3

4

5

6

6/4

511,486

563,141

586,917

743,600

-

882,769

18.72

22,430

31,262

48,087

34,134

-

46,676

36.74

-

at the End of the Year

(31,262)

(48,087)

(34,134)

(46,676)

-

(97,889)

109.72

-

Cost of Goods Manufactured

502,654

546,316

600,870

731,059

-

831,555

13.75

-

2010

Description

1

Production Expenses

Increase/Decrease (%) 6/5

Work in Process at the Beginning of the Year

Finished Good At the Beginning of the Year

23,992

43,743

31,059

46,963

-

42,582

(9.33)

-

Out of Date/Damaged

(1,225)

(16,357)

(3,229)

(14,561)

-

38,040

161.25

-

Promotion, Damages, Donated, Replacement and Self Consumptions

311

7,185

837

792

-

1,234

55.59

-

525,110

566,516

627,863

762,668

-

834,863

9.47

-

Sold for Immunization

(242)

(440)

(684)

(1,623)

-

(1,479)

(8.85)

-

Inventory at the end of the Year

(43,743)

(31,059)

(46,963)

(42,582)

-

(65,775)

54.47

-

Cost of Sales of the Company’s Products

481,125

535,017

580,216

718,463

734,085

767,609

6.84

4.57

Cost of Goods Available for Sale



Jumlah Penjualan Pokok Penjualan Perusahaan (dalam juta Rupiah)

718,463 481,125

2010

535,013

2011

767,609

580,216

2012

2013

2014

131

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Cost of Sales of Merchandise Goods As shown in the table below, cost of sales of the merchandise goods as at the end of 2014 increased significantly by 668.90% to Rp 8.83 billion from Rp 1.15 billion in 31 December 2013 and 1,624.02% above the 2014 target of Rp512 billion. This increase was driven by the increase in purchases in 2014 by 630.69% from Rp 1.41 billion to Rp 10.33 billion, and the increase in the goods available for sale by 612.93% from Rp 1.45 billion as at the end of 2013 to Rp 10.37 billion.. Cost of Sales of Merchandise Goods (In Million Rupiah) 2010

Description

2012

2013

RKAP 2014

2014

2

3

4

5

6

6/4

6/5

195

84

40

-

34

(15.00)

-

1

Inventories at the Beginning of The Year -

2011

152

Increase/Decrease (%)

Purchases

18,740

1,087

665

1,414

-

10,332

630.69

-

Available for Sale

18,892

1,282

749

1,454

-

10,366

612.93

-

-

(29)

(1)

(9)

-

-

-

-

(1)

(1)

(1)

-

-

-

-

-

Used for Immunization

(575)

(322)

(191)

(263)

-

(226)

(13,99)

-

Inventories at the End of The Year

(195)

(84)

(40)

(34)

(1,313)

3,746,89

-

18,121

848

518

1,148

8,827

668.90

1,624.02

Out of Date/Damaged Used for Promotion, Replacement, Self Consumption and Donation

Total of Cost of Sales of Merchandise Goods

512

Total of Cost of Sales of Merchandise Goods (In Million Rupiah)

8,827

18,121

2010

848

518

1,148

2011

2012

2013

2014

Cost of Sales Services Compared to the 2013 cost of services of Rp 3.99 billion, as at the end of 2014 the Company’s cost of services declined by 8.33% to Rp 3.65 billion or 95.79% from 2014 budget amounted to Rp3,81 billion. This is due to the decline in employee cost around Rp 447 million, from Rp 1.41 billion in 2013 to Rp 967 million in 2014. There was also a decline in the value of products used for immunization by Rp 144 million, use of merchandise goods for immunization of Rp 37 million, and repairs and maintenance of Rp 168 million.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

132

Cost of Services (In Million Rupiah) Description

2010

2011

2012

2013

RKAP 2014

2014

1

2

3

4

5

6

6/4

6/5

Increase/Decrease (%)

1,612

2,042

1,952

1,414

967

(31.61)

-

Products used for Immunization

242

440

684

1,623

1,479

(8.85)

-

Merchandise Goods used for Immunization

575

322

190

263

226

(14.18)

-

Travelling

69

103

89

53

66

24.66

-

Depreciation of Fixed Assets

86

69

73

117

218

86.35

-

Repairs and Maintenance

24

17

31

182

14

(92.09)

-

Insurances

1

1

1

1

2

105.40

-

Office

-

-

-

-

-

-

-

Employees

183

139

163

333

681

104.55

-

2,792

3,133

3,183

3,986

3,814

3,654

(8.33)

(4.20)

502.038

538.998

583.917

723.593

738.411

780.090

7,81

5,64

502,038

538,998

583,917

723,593

738,411

780,090

7.81

5.64

Others Total Cost of Services Total cost of sales of products, merchandise and services

Total Cost of Services (In Million Rupiah)

2,792

2010

3,133

3,986

3,183

2011

Total cost of sales of products, merchandise and services (In Million Rupiah) 3,654

2012

2013

723,593 502,038

538,998

2010

2011

2014

780,090

583,917

2012

2013

2014

Income (Loss) Before Income Tax Income (loss) before income tax is detailed in the table below: Beban Jasa (dalam juta rupiah) 2011

2012

2013

RKAP 2014

2014

2

3

4

5

6

708,225

789,731

853,724

1,130,085

1,207,627

1,263,991

11.85

4.67

42,639

62,660

53,159

152,838

1,785

118,630

(22.38)

6,547.31

General and Adminstrative Expenses

(160,871)

(206,088)

(227,583)

(304,313)

(345,212)

(378,448)

24.36

9.63

Selling Expenses

(160,818)

(128,095)

(58,592)

(72,830)

(63,990)

(72,570)

(0.36)

13.41

Research, Developments and Surveillance Expenses

(40,501)

(68,793)

(78,262)

(68,318)

(98,916)

(88,779)

29.95

(10.25)

Other Expenses

(50,255)

(41,643)

(21,346)

(58,873)

(10,521)

(69,748)

18.47

562.94

(369,806)

(381,959)

(332,624)

(351,496)

(516,855)

(490,915)

39.66

(5.02)

338,419

407,772

521,100

778,589

690,772

773,076

(0.71)

11.91

Description

GROSS PROFIT Other Income

Total INCOME (LOSS) BEFORE INCOME TAX

2010 1

Increase/Decrease (%) 6/4

6/5

133

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Gross Profit (Loss)

Sales Expenses

The Company’s gross profit increased by 11.85% to Rp1.26 trillion for the year ended 31 December 2014, from Rp 1.13 trillion for the year ended 31 December 2013. This was 4.67% above the 2014 target of Rp 1.21 trillion.

Sales expenses at the end of 2014 amounted to Rp72,570 million, decreased by 0.36% from Rp 72.830 million as at 31 December 2013. This was also 13.41% above the Company’s target of Rp63,990 million. This decrease was due to the decrease in export agency fees, transportation expenses, and embalage.

Other Income The Company’s other income in 2014, was targeted at Rp 1.785 million, the realization was recorded Rp 118.630 million or increased significantly by 6,545.94%. even though signifiantly increase, compare to realization of 2013, other income in 2014 decreased by 22.38% from Rp152,838 million in 2013, to Rp118,630 million in 2014. Other income mainly consisted of the gain from exchange rate in foreign exchange transactions. Administrative and General Expenses Administrative and general expenses at the end of 2014 amounted to Rp378,448 million increased by 24.36% compared to at the end of 2013, amounted Rp304,313 million. This was also 9.63% above the target of Rp345,212 million.

Research, Development and Surveillance Expenses Compared to 2013, the research, development and surveillance expenses is increased by 29.95% from Rp68,318 million in 2013 to Rp88,779 million in 2014. This was 10.25% below the Company’s target of Rp98,916 billion. The increase was due to the rise in use of raw materials and auxiliaries, professional fees, employee costs, depreciation of fixed assets, repairs and maintenance, and human capital enhancement and development. Other Expenses Other expenses in 2014 increased by 18.47% from the previous year’s, i.e. from Rp 58.873 million as at 31 December 2013 to Rp 69.748 billion. This was also far above the target for the year, which was set at Rp 10.521 million.

Statements of Comprehensive Income Statements of Comprehensive Income (In Million Rupiah) 2010 2011 2012 Description 1 2 3 Net Sales Company’s Products 1,186,361 1,324,046 1.432.966 Merchandise Products 21,067 1,784 1,206 Services 2,835 2,899 3,470 Total Net Sales 1,210,263 1,328,729 1,437,642 Cost Of Goods Sold Company’s Products (481,125) (535,017) (580,216) Merchandise Products (18,121) (848) (518) Services (2,792) (3,133) (3,183) Total Cost of Goods and (502,038) (538,998) (583,917) Services Sold GROSS PROFIT 708,225 789,731 853,724 Other Income 42,639 62,660 53,159 General and (160,871) (206,088) (227,583) Administrative Expenses Selling Expenses (160,818) (128,095) (58,592) Research, Developments (40.501) (68.793) (78.262) and Survey Expenses Other Expenses (50,255) (41,643) (21,346) Total (369,806) (381,959) (332,624)

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

2013 4

RKAP 2014 5

2014 6

1,848,452 1,848 3,382 1,853,682

1,939,918 2,200 3,920 1,946,038

2,028,988 10,287 4,805 2,044,080

9.77 456.65 42.09 10.27

4.59 367.59 22.59 5.04

(734,085) (512) (3,814)

(767,609) (8,827) (3,654)

6.84 668.90 (8.33)

4.57 1,622.60 (4.21)

(723,596)

(738,412)

(780,090)

7.81

5.64

1,130,085 152,838

1,207,627 1,785

1,263,991 118,630

11.85 (22.38)

4.67 6,547.31

(304,313)

(345,212)

(378,448)

24.36

9.63

(72,830)

(63,990)

(72,570)

(0.36)

13.41

(68.318)

(98.916)

(88.779)

29,95

(10,25)

(58,873) (351,496)

(10,521) (516,855)

(69,748) (490,915)

18.47 39.66

562.94 (5.02)

(718,463) (1,148) (3,986)

Increase/Decrease (%) 6/4 6/5

134

Statements of Comprehensive Income (In Million Rupiah) 2010 2011 2012 Description 1 2 3 INCOME (LOSS) BEFORE 338,419 407,772 521,100 INCOME TAX Benefit (Expense) Income Tax Current Tax (89,843) (105,826) (137,261) Deferred Tax 2,239 473 2,053 Total Tax Expenses (87,604) (105,353) (135,208) NET INCOME (LOSS) 250,815 302,419 385,892 Other Comprehensive Income TOTAL COMPREHENSIVE 250,815 302,419 385,892 INCOME (LOSS)

Income Tax Expense For the fiscal year ended 31 December 2014, the Company recorded a decrease in tax expense by 6.36% to Rp 193.002 million from Rp 206.121 million in 2013. This was 2.85% above the target of Rp 187.657 million.

Other Comprehensive Income For the fiscal year ended 31 December 2014, the Company recorded other comprehensive income from unrealized gain from the ownership of securities available for sale, of Rp 377 million.

Net Income The Company’s net income at the end of 2014 increased by 1.33% from Rp 572.468 million to Rp 580.074 million, and this was 15.30% above the target of Rp 503.115 million.

Total Comprehensive Income The Company’s total comprehensive income in 2014 was Rp 580.451 million or 15.37% higher from target, with net profit margin of 28.38%. Compared to the 2013 net profit, increased by 1,39% from Rp 572.468 million, and 15.37% above the target of Rp 503.115 million.

2013 4

RKAP 2014 5

2014 6

778,589

690,772

773,076

(207,288) 1,166 (206,121) 572,468

(189.055) 1.397 (187.657) 503.115

-

-

572,468

503.115

Increase/Decrease (%) 6/4 6/5 (0.71)

11.91

(197,136) 4,134 (193,002) 580,074

(4.90) 254.51 (6.36) 1.33

4.27 195,89 2.85 15.30

377

-

-

580,451

1.39

15.37

The net profit in 2014 was exceeding the budget is mainly due to an increase in export sales, some of the burden of research that are not realized, development and surveillance of the external parties of which the settlement postponed to 2015 and an increase in other income from foreign exchange and increasing acceptance monetary deposits.

Cash Flows Cash Flows from Operating Activities For the year ended 31 December 2014, the Company recorded net cash from operating activities of Rp505.839 million, consisting of sales receipt from customers of Rp 2.11 trillion, tax income of Rp 19.53 million, interest income of Rp35.39 million, and WHO donation/grant receipt of Rp4.99 million, which was compensated by the cash payments to suppliers and employees of Rp1.33 trillion, other income (payment) amounting to Rp11.673 million, income from insurance claims amounting to Rp107 million, tax payments of Rp334.448 million and tantiem payment of Rp9.727 million. Cash flows from operating activities in 2014 were 20.07% lower than 2013, from Rp 632.880 million to Rp505.839 million. The decrease due to the decline in tax restitution by 78.16% and decline in other revenues/ receipts – net, by 160.94%. or increased by 7.28% from 2014 budget, amounted Rp471.50 billion.

135

Management Analysis and Discussion Company Performance

The Company’s Financial Statements

Cash Flows from Investing Activities Net cash flows at 31 December 2014, from investing activities increased by 4.79% compared to 2013 from Rp199.117 million to Rp208.727 million. This was due to the increase in the purchase of intangible assets in 2014, amouted Rp20.578 million or increased by 208.47% from Rp6.671 million in 2013. But compare to intagible assets decrease by 71.97% which is targeted to raech Rp744.67 million.

Cash Flows from Financing Activities Compared to 2013, net cash flows from financing activities in 2014 increased by 100.98% from Rp113.938 million, to Rp228.987 million. Net cash flows from this activity consist of dividend payment of Rp228.99 billion.. Cash Flows from Financing Activities Description

2010

1 Cash Flows from Operating Activities Cash receipts from 1,218,318 customers tax income 65,592 (restitution) Interest Receipts 3,530 Cash Received from Grant/WHO’s 6,857 Donations Other Receipts 4,955 (Payments) - Net Cash Received from 226 Insurance Claims Payment of Interest (8,635) Payment of Tantiem (5,319) Payment for Taxes (137,587) Cash Paid to Suppliers (931,517) and Employees Net Cash Provided (Used) by Operating 216,420 Activities Cash Flows from Investing Activities Purchase of Fixed (139,074) Assets Placement of Security Deposit Purchase of Intangible (5,839) Assets Proceeds from Sale of 381 Fixed Assets Net Cash Provided (Used) by Investing (144,532) Activities Cash Flows from Financing Activities Short-Term Loan 77,000 Receipts Short-Term Loan (77,000) Payments Payment of Dividends (21,768) Payment for (6,531) Partnership and

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Increase/Decrease (%) 06-Apr 06-May

2011

2012

  2013

RKAP 2014

2014

2

3

4

5

6

1,339,426

1,375,334

1,800,735

1,919,331

2,108,672

17.1

9.86

54,435

32,346

89,417

(307,866)

19,529

(78.16)

(106.34)

4,269

3,138

12,822

1,300

35.395

176.05

2,622.68

3,103

1,767

1,278

-

4,989

290.37

-

3,064

2,405

(19,156)

985

11,673

(160.94)

1,085.51

10

-

-

-

107

-

-

(2,779) (4,796) (149,472)

(5,867) (172,123)

(6,980) (241,386)

(11,207) -

(9,727) (334,488)

39.35 38.57

(13.21) -

(907,844)

(858,357)

(1,003,850)

(1,131,047)

(1,330,310)

32.52

17.62

339,416

378,643

632,880

471,496

505,839

(20.07)

7.28

(269,330)

(208,860)

(192,644)

(717,214)

(163,149)

(15.31)

(77.25)

-

-

-

-

(25,000)

-

-

(1,251)

(1,816)

(6,671)

(27,458)

(20,578)

208.47

(25.06)

274

20

138

-

-

-

-

(270,307)

(210,656)

(199,177)

(744,672)

(208,727)

4.79

(71.97)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(24,567)

(45,363)

(105,178)

 

(228,987)

117.71

-

(9,827)

(12,097)

(8,760)

-

-

-

-

136

Cash Flows from Financing Activities Description Community Programs Donation Capital from WHO Long-Term Loan Receipts Long-Term Loan Payments Net Cash Provided (Used) by Financing Activities Net Increase (Decrease) in Cash Effect of Foreign Exchange Rate Changes Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents at The End of The Year

Increase/Decrease (%) 06-Apr 06-May

2010

2011

2012

  2013

RKAP 2014

2014

1

2

3

4

5

6

-

-

-

-

-

-

-

-

101,000

-

-

-

-

-

-

-

-

(101,000)

-

-

-

-

-

-

72,701

(135,394)

(57,460)

(113,938)

(82,890)

(228,987)

100.98

176.26

144,589

(66,285)

110,527

319,765

(356,065)

68,125

(78.7)

(119.13)

(15,256)

(5,972)

16,100

72,988

-

12,341

(83.09

-

314,794

444,127

371,871

498,498

704,780

891,251

78.79

26.46

444,127

371,870

498,498

891,251

348,714

971,717

9.03

178.66

137

THE COMPANY’S SOLVENCY AND RECEIVABLES COLLECTIBILITY

Management Analysis and Discussion Company Performance

CAPITAL STRUCTURE and MANAGEMENT POLICY ON CAPITAL STRUCTURE

THE COMPANY’S SOLVENCY AND RECEIVABLES COLLECTIBILITY Short-Term and Long-Term Solvency Solvency The Company’s solvency is can be seen from the ratio of current liabilities to its equity, which recorded at 12.98% in 2014. This ratio was better compared to 2013 which recorded 17.20%. Meanwhile, non-current liabilities to equity ratio was increase from 2.14% in 2013, to 3.35% in

2014. Total liabilities to equity ratio was better than 2013 which is recorded 19.34% to 16.33% in 2014,. This is due to a decrease in accounts payable of 8.22% to Rp. 145.095 million from Rp158.098 million, tax debt decreased by 55.22% to 38.919 million from Rp.86.916 million.

(In Million Rupiah) 2010 1

2011 2

Trade Payables

130,748

128,725

85,896

Taxes Payable

19,353

22,320

30,131

86,916

Accrued Expenses

69,042

52,862

66,464

112,781

118

68

1,921

5,405

20,000

-

-

13,721

16,904

252,982

Description

2012 3

2013 4

RKAP 2014 5

2014 6

Increase/Decrease (%) 6/5

Current Liabilities

Deferred Revenue Current maturities of long-term loans Other Current Liabilities Total Current Liabilities

145,095

(8.22)

(34.33)

24,780

38,919

(55.22)

57.05

66,996

128,280

13.74

91.47

-

1,366

(74.72)

-

-

-

-

-

-

13,302

26,437

21,998

26,009

(1.62)

18.23

220,879

197,714

389,637

334,723

339,668

(12.82)

1.48

81,000

-

-

-

-

-

-

-

26,912

34,525

41,441

48,371

55,258

62,703

29.63

13.47

158,098

220,947

Non Current Liabilities Long_Term Loans Estimated Employee Benefits Liabilities Other Non Current Liabilities Total Non-Current Liabilities

-

-

-

-

-

24,882

-

-

107,912

34,525

41,441

48,371

55,258

87,586

81.07

58.50

Total Liabilities

360,894

255,404

239,155

438,008

389,980

427,254

(2.46)

9.56

450,000

450,000

750,000

750,000

1,250,000

1,250,000

66.67

-

-

-

-

-

-

377

-

-

-

-

-

-

-

-

-

-

Appropriated

490,635

701,913

670,641

941,919

801,478

786,075

(16.55)

(1.92)

Unappropriated

269,441

326,187

385,892

573,143

503,115

580,074

1.28

15.38

1,210,076

1,478,100

1,806,533

2,265,062

2,554,593

2,616,526

15.52

2.42

29.87%

17.65%

13.24%

19.34%

15.27%

16.33%

(15.56)

6.94

Equity Share Capital Profits (losses not yet realized on the ownership of securities available for sale) Retained Earnings

Total Equity Debt to Equity

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

138

The Company’s Receivables Collectibility Receivables Collectability Receivables Collectability describes Bio Farma’s ability to collect its receivables. At the end of 2014, the collection period showed a decline amounted 19.06% to 45.94 days, from 56.76 days in 2013. To reduce the risk of default, Bio Farma implement policies to anticipate the distributor fails to make loan payments or fails to pay debt, as follows: 1. A 1% fine is charged upon the invoice value for each day of delay in the payment, calculated using calendar days. (stated in the distributorship agreement, article 12). 2. Goods to be shipped are held until the distributor has made a payment. (stated in the SOP and the distributorship agreement). 3. Filed a claim the bank guarantee issued by the distributor. This claim will be filed by the sale of the private sector, which will then be submitted to the financial administration, to be submitted to the bank or insurance company guarantee bank issuers. (A clause on Bank Guarantee is stated in the distributorship agreement article 12 and the SOP). 4. The amount of the Bank Guarantee is determined by the Marketing Department.

2010

2011

2012

2013

2014

Increase/Decrease (%)

Description

Unit

1

2

3

4

5

Collection Period

Day

45,10

40,73

55,99

56,76

45,94

(19.06)

Average A/R

Time

7,93

8,93

7,80

7,29

7,54

3.43

5/4

CAPITAL STRUCTURE and MANAGEMENT POLICY ON CAPITAL STRUCTURE Capital Structure (In Million Rupiah) 2010

2011

2012

2013

RKAP 2014

2014

Description

1

2

3

4

5

6

Share Capital

1,000,000

1,000,000

2,000,000

2,000,000

5,000,000

5,000,000

150.00

-

Share capital not yet issued

550.000

550.000

1.550.000

1.250.000

3.750.000

3.750.000

200,00

-

Share capital issued and fully paid at the beginning of the Year

450,000

450,000

450,000

750,000

1,250,000

1,250,000

66.67

-

-

-

300,000

-

-

-

-

-

750,000

750,000

1,250,000

1,250,000

66.67

-

Capitalization of Reserve Share capital issued and fully paid

450,000

450,000

Increase/Decrease (%) 6/4

6/5

The Company’s capital structure consists of owner’s equity, i.e. 100% capital from the government, and the issued and fully paid capital as reflected on the Company’s equity, and external financing sources such as loans, with a very low debt-to-equity ratio at 16.33%. it shown a very good capital ability of the company. The debt-to-equity ratio decline 15.56% from the ratio in 2013, due to the increase in equity and profit for the year.

139

Management Analysis and Discussion Company Performance

Management Policy on Capital Structure and Basis for the Determination of Such Policy Authorized capital consisted of 5 million and 2 million shares as at 31 December 2014 and 2013, respectively, with the nominal value of Rp 1 million per share. Issued and fully paid capital consisted of 1,250,000 and 750,000 shares at 31 December 2014 and 2013, respectively. In accordance with the Decree of the Minister of StateOwned Enterprises No. S-315/MBU/2014, dated 20 May 2014 as stated in the Deed No. 26 dated 6 June 2014 by the

CAPITAL STRUCTURE and MANAGEMENT POLICY ON CAPITAL STRUCTURE

MATERIAL COMMITMENTS FOR INVESTMENT OF CAPITAL GOODS

Notary Fathiah Helmi, SH., and approved by the Minister of Law and Human Rights of the Republic of Indonesia in the letter No. AHU-04104.40.20.2014 dated 10 June 2014, the Company’s authorized capital as of 30 June 2014 was increased from initially 2 million shares valued at Rp 2 trillion to 5 million shares valued at Rp 5 trillion, and the Company’s issued and fully paid capital was increased from initially Rp 750 billion (consisting of 750,000 shares) to Rp 1.25 trillion (consisting of 1,250,000 shares) through the capitalization of reserves up to the end of 31 December 2013, valued at Rp 500 billion.

MATERIAL COMMITMENTS FOR INVESTMENT OF CAPITAL GOODS Purpose of the Commitments During 2014, Bio Farma do binding material for capital goods investment with several partners with the aim of procurement related to the WHO Assessment & GMP, Replacement, wastewater treatment plant / Occupational Health and Safety/ Environment, Capacity Building, Research and Development and New Products. Total actual investment in 2014 recorded Rp 174.623 million or reached only 29.90% from the 2014 budgeted amount and decreased by 29.67% compared to total actual investment in 2013. this is due to the shift in investment of Rp421.38 billion to 2015

Source of Funding to Serve the Commitments The current source for the Company’s investment of capital goods is the Company’s internal funding.

Operational Currency The currency that is used in the preparation of the financial statements is Rupiah. Foreign exchange transactions are stated in Rupiah using the exchange rate prevailing on the day each of these transactions take place. Gains or losses resulting from the statement of financial assets and liabilities in foreign currencies are recognized in the statements of comprehensive income for the year. At the date of the financial statements, all finances denominated in foreign currencies are stated in rupiah using the Bank Indonesia’s middle rate on the date, as follows:

2012

2013

2014

Rp

Rp

Rp

12,809.86

16,821.44

15,133.26

9,670.00

12,189.00

12,440.00

1 Dollar Australia (AUD)

10,025.39

10,875.66

10,218.22

1 Dollar Singapura (SGD)

7,907.12

9,627.99

9,422.10

1 Poundsterling Inggris (GBP)

15,578.86

20,096.63

19,370.33

1 Frank Swiss (CHF)

10,596.70

13,731.78

12,582.82

1,717.16

2,254.99

2,031.90

111.97

116.17

104.24

1 Euro (EUR) 1 Dollar Amerika Serikat ( USD)

1 Danish Krone Denmark (DKK) 1 Yen Jepang (JPY)

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

140

REALIZED INVESTMENT OF CAPITAL GOODS IN THE PAST FISCAL YEAR

Measures Planned by the Company to Mitigate Risk Arising from Related Currencies Positions

Fluctuation of the Rupiah against foreign currencies may affect the Company’s financial conditions. So far the Company has planned measures to protect itself from the risk of fluctuating foreign exchange rate by carrying out natural hedging policy. The Company is still evaluating the full impact of the implementation of hedging on the changes to the financial transactions.

The main financial risks faced by the Company are credit risk, foreign currency risk, interest rate risk, and liquidity risk. Through the proper risk management approach, the Company aims to minimize the negative impacts of the above mentioned risks. Foreign currency risk is the risk arising from the fluctuations of values of financial instruments caused by changes in the exchange rates of foreign currencies.

REALIZED INVESTMENT OF CAPITAL GOODS IN THE PAST FISCAL YEAR Types of Investments of Capital Goods

• Capacity Increase • Research and Development • New Products

The investments of capital goods taking place in Bio Farma are categorized into two, as follows:

2. Investments by Group, covering: a. Office Inventory b. Plant Inventory c. Machinery d. Utilities e. Buildings f. Vehicles g. Intangible Assets

1. Investments by Usage, covering: a. Regular: • WHO & GMP Assessments • Replacements • wastewater treatment plant / Occupational Health and Safety /Environment b. Development

h. Deferred Expenses

Purpose of Investments of Capital Goods Throughout 2014 Bio Farma made investment of capital goods for the preparation of the Basic of Design (BOD) and Detail Engineering Design (DED) for its Vaccine Production & Packaging Facilities which will be followed with physical development of these facilities in the coming years.

Value of Investments of Capital Goods Spent in the Past Fiscal Year The actual investment in 2014 was Rp 174.62 billion, or 29,30% of the budgeted amount, decreased 29.67% when compared to 2013 realization due to shifted investments to the year 2015 amounting to Rp. 421.38 billion. From the total actual investment in 2014 there were some parts in progress valued at Rp 85.84 billion, among others the Administration 2 (Ex Hall) Building and the Packaging Line. The details are as follows: Investment Realization by Usage (In Million Rupiah) Investment Group

Routine 2010

2011

2012

2013

2014

TOTAL

%

1

2

3

4

5

6

5/4

WHO & GMP Evaluation Office Equipment Factory Equipment Machinery Utility Equipment Building

1,923

395

180

1,013

1,327

5,645

31.00

34,484

20,030

8,969

21,863

17,425

103,896

(20.30)

1,312

67,453

23,564

7,142

3,026

103,068

(57.63)

542

-

-

-

107

649

-

2,824

48,364

6,715

20,580

1,354

81,144

(93.42) 141

REALIZED INVESTMENT OF CAPITAL GOODS IN THE PAST FISCAL YEAR

Management Analysis and Discussion Company Performance

Investment Realization by Usage (In Million Rupiah) Investment Group

Intangible Asset Total

Routine 2010

2011

2012

2013

2014

TOTAL

%

1

2

3

4

5

6

5/4

-

-

-

56

7,632

7,688

13,528.57

41,085

136,242

39,428

50,654

30,873

302,092

(39.05)

5,850

3,141

5,507

5,620

17,876

42,033

218.08

Replacements Office Equipment

12,057

10,570

4,651

23,284

7,320

70,413

(68.56)

Machinery

1,623

-

51

3,249

1,341

27,716

(58.73)

Utility Equipment

2,841

1,212

6,843

10,538

1,692

25,944

(983.94)

Building

2,901

2,796

1,540

2,123

909

12,588

(57.18)

462

745

-

-

750

4,384

-

-

-

-

-

-

-

-

25,734

18,464

18,592

44,814

29,889

183,079

(33.30)

Factory Equipment

Vehicle Intagible Asset Total WWTP/ OHS/ Environment/ Quality Control Office Equipment

692

84

340

728

832

2,715

14.29

Factory Equipment

503

5,537

1,713

479

9,277

17,689

1,836.74

Machinery

-

-

-

-

-

-

-

Utility Equipment

-

-

-

-

-

-

-

2,177

1,363

642

425

25

4,939

(92.12)

-

-

-

-

-

-

-

3,372

6,984

2,695

1,632

10,133

25,342

520.89

1

2

3

4

5

6

5/4

Building Intagible Asset Total Development Investment Group Capacity Upgrades Office Equipment Factory Equipment Machinery Utility Equipment Building Intagible Asset Deferred Charges Total

5,009

1,644

259

3,589

12,115

23,000

237.56

10,080

3,865

611

8,067

482

62,363

(94.03)

0

2,285

0

0

13,276

30,689

-

4,758

949

2,083

5,009

2,795

21,874

(44.20)

38,967

9,737

21,952

90,904

37,561

225,093

(58.68)

257

2,168

518

6,655

2,880

13,408

(56.72)

1,746

-

-

-

-

5,529

-

60,817

20,648

25,423

114,224

69,109

381,956

(39.50)

359

804

375

324

243

2,199

(25.00)

8,686

11,244

2,679

19,579

7,886

61,514

(59.72)

12,686

9,432

6,023

4,787

4,855

51,740

1.42

91

-

-

-

0

91

-

19,054

18,465

29

-

0

37,826

-

-

-

-

-

0

3,760

-

40,876

39,945

9,106

24,690

12,984

157,130

(47.41)

R&D/ Basic Research Office Equipment Factory Equipment Machinery Utility Equipment Building Intagible Asset Total

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

142

Investment Realization by Usage (In Million Rupiah) Investment Group

Routine 2010

2011

2012

2013

2014

TOTAL

%

1

2

3

4

5

6

5/4

-

163

449

230

161

1,003

(30.00)

15,603

2,655

10,585

9,449

7,058

45,350

(25.30)

350

-

69,820

1,233

4,925

76,328

299.43

New Product Office Equipment Factory Equipment Machinery

-

-

-

-

-

-

-

1,651

47,589

24

819

-

50,083

-

Utility Equipment Building Intagible Asset Total

6,358

198

-

531

9,492

16,579

1,687.57

23,962

50,605

80,878

12,262

21,636

189,343

76.45

Investment Realization by Group: Investment Realization by Group (In Million Rupiah)

2010

2011

2012

 2013

RKAP 2014

2014

1

2

3

4

5

6

13,832

6,231

7,110

10,968

34,051

Factory Equipment

81,413

53,900

29,208

82,722

Machinery

15,972

79,169

99,457

16,411

8,233

2,161

8,926

Building

67,573

128,314

Vehicles

462

745

-

Intagible Asset Deferred Charges

195,846

Investment Group Office Equipment

Utility Equipment

Land

Total

Increase/Decrease (%) 6/4

6/5

32,554

196.81

(4.40)

83,513

49,448

(40.22)

(40.79)

15,136

27,424

67.11

(81.18)

15,546

13,500

4,595

(70.44)

(65.96)

30,903

115,387

409,646

39,849

65.46

(90.27)

-

-

700

750

-

7.14

-

-

-

12,000

0

-

(100.00)

6,615

2,367

518

7,242

27,458

20,004

176.22

(27.15)

1,746

-

-

-

-

-

-

272,887

176,122

248,276

174,623

(29.67)

(70.70)

596,004

Office equipment

Machinery

The actual procurement of office equipment in 2014 increased by 196,81% to Rp32.554 million of Rp10,97 million in 2013, or only reached 95.60% of budgeted in 2014. This is due to some inventory shifts to 2015 amounted to Rp1.5 billion, which include furniture for the administrative building II (previously : Auditorium).

The realization of machinery procurement inventory in 2014 was increased by 67,11% to Rp27.424 million from Rp16.412 million in 2013, or reaching 181.18% of 2014 budget. This is due to some equipment manufacturing progress has already reached 50% in 2014 in the form of Packaging Line.

Plant Inventory

Utilities

The realization of factory inventory procurement in 2014 decreased by 40.22% to Rp49.448 million from Rp 82,722 million in 2013, or the 2014 factory inventory realization only reached 59.21% of budgeted in 2014. This was due to some parts of factory inventory were rescheduled to 2015, amounting to Rp34.1 billion, consists of cold rooms cold room to store end products and SS tanks.

The procurement realization of utilities inventory in 2014 decreased by 70.44% to Rp4.595 million from Rp15.546 million in 2013, or only reached 34.04% of budgeted in 2014. This is due to Rp8.9 billion worth of utilities for the Vaccine Production and Packaging Facilities was rescheduled to 2015 in line with the facility’s construction date of completion being rescheduled to 2015.

143

Management Analysis and Discussion Company Performance

REALIZED INVESTMENT OF CAPITAL GOODS IN THE PAST FISCAL YEAR

Buildings

Intangible Assets

The procurement realization of building inventory in 2014 decreased by 65.46% to Rp39.85 million from Rp115,39 million in 2013, or only reached 9.73% of budgeted in 2014. This is due to certain parts of this investment that were rescheduled to 2015, amounting to Rp369.79 billion consist of Vaccine Production and Packaging Facilities, Restoration of the Heritage Building, and Renovation of the Distribution Building (Distribution and Administration Facility).

Realization of intangible assets in 2014 increased by 176.22% to Rp20.004 million from Rp7.242 million in 2013, or only reached 72.85% of budgeted 2014. This was due to some parts of this investment is rescheduled to 2015, amounting to Rp7.45 billion, consits of Electronic Quality Management System Software and Sales Administration Software.

Vehicles The realization of inventory procurement of vehicles in 2014 was amounted to Rp 750 billion, in other words the realization of vehicle procurement reached 107.14% of the budget.

Land There were no budget uptake in land use investment during 2014 due to the actual investment for the land use masterplan in the new location was rescheduled to 2015.

COMPARISON OF TARGETS IN THE BEGINNING OF THE FISCAL YEAR TO THE ACTUAL RESULTS, AND TARGETS OR PROJECTIONS FOR THE NEXT FISCAL YEAR

The Company’s Position

Product Mapping

According to the SWOT Analysis in the Company’s LongTerm Plan (RJPP) 2012–2016, Company’s position is in the growth phase, which internally the Company has more strengths than weaknesses, and externally has greater opportunities than threats. Likewise, in the Industrial Attractiveness and Business Strength Analysis, the Company is considered to also be in the growth phase, whereby the vaccine industry is considered medium scale, with an average business strength. Being in the growth stage, the Company is pursuing a strategy of horizontal integration.

The company continues to strive to increase of export sales after fulfill the domestic demand from the Ministry of Health of the Republic of Indonesia that will be used in the Expanded Program on Immunization (EPI) or the National Immunization Program.

In 2014, the Company was in the growth phase, running the strategies of production capacity increase for its final products and bulk Polio; continuation of the new vaccine development of DtaP, TB, Typhoid, Pneumococcus, Rotavirus, s-IPV, Hepatitis B Consortium vaccines, early detection methods for Diabetes Mellitus Type-1 patients; research and development of among others Adjuvant R4/ E8 Pam2Cys, Hexavalent vaccine, Stemcell, Nanoparticle Adjuvant; and maintenance of its quality, environmental, and occupational health and safety management systems; as well as implementation of good corporate governance (GCG) principles.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

In 2014, the Company’s market shares were 100% for the Government sector, while for UNICEF demand the market share varied, i.e. 27.48% for Measles 10 ds vaccine, 100% for DTP 10 ds, 37.50% for Td 10 ds, and 37.50% for TT 10 ds. For Polio vaccine, Bio Farma prioritized more on supplying vaccines for domestic demand under the regular vaccination programs, while also exporting in bulk quantities to various vaccine manufacturers. The global demand for Polio vaccines as supplied by the WHO/UNICEF in 2014 was 1.27 billion doses, of which Bio Farma provided as many as 173.48 million doses of vaccine, or covering 13.66% of the global/UNICEF demand.

144

COMPARISON OF TARGETS IN THE BEGINNING OF THE FISCAL YEAR TO THE ACTUAL RESULTS, AND TARGETS OR PROJECTIONS FOR THE NEXT FISCAL YEAR

Comparison of Targets in the Beginning of the Fiscal Year to the Actual Results In 2014, the Company’s market shares were 100% for the Government sector, while for UNICEF demand the market share varied, i.e. 27.48% for Measles 10 ds vaccine, 100% for DTP 10 ds, 37.50% for Td 10 ds, and 37.50% for TT 10 ds. For Polio vaccine, Bio Farma prioritized more on supplying vaccines for domestic demand under the regular vaccination programs, while also exporting in bulk quantities to various vaccine manufacturers. The global demand for Polio vaccines as supplied by the WHO/UNICEF in 2014 was 1.27 billion doses, of which Bio Farma provided as many as 173.48 million doses of vaccine, or covering 13.66% of the global/UNICEF demand.

Actual Results vs. RJPP & RKAP The Company’s performance in 2014 compared to the RJPP and RKAP is as follows: Net sales in 2014 were higher than RJPP and RKAP targets by 4.3% and 5.0%, respectively, and net income in 2014 was 43.0% and 15.4% above the targets set in the RJPP and RKAP, respectively. 2014 Performance Realization Compared to 2012-2016 RJPP and 2014 RKAP In Million Rupiah

Description

RJPP 2012-2016 Untuk 2014

Realization 2013 (Audited)

RKAP 2014

Realization 2014 (Audited)

1

2

3

4

Increase/Decrease (%)

4/3

4/1

1,960,287

1,853,682

1,946,038

2,044,080

5.04

4.27

824,575

723,596

738,412

780,090

5.64

(10.80)

Company’s Expense

1,323,009

1,192,575

1,296,244

1,434,847

10.65

8.41

Investment

1,372,749

248,276

596,004

174,623

(70.70)

(87.28)

Income Before Tax Expense

550,200

778,589

690,772

773,076

11.99

40.60

Net Income

405,854

572,468

503,115

580,074

15.38

43.02

4,250,446

2,703,070

2,944,574

3,043,780

3.36

(28.39)

Net Sales Cost of Goods & Services Sold

Total Aset

Ten-Year Statistics of the Company For the past ten years, the Company’s performance has increased significantly, as demonstrated by the following table which also displays growth rate using the 2005 as the base year (100%). 2004-2013 Company’s Statistics (%) 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Net Sales

100

142

172

186

273

279

306

331

427

471

Cost of Goods & Services Sold

100

131

152

140

199

208

223

242

299

323

Company’s Expense

100

140

162

177

225

247

268

264

330

397

Investment

100

74

236

312

341

390

543

351

494

348

Income Before Tax Expense

100

153

205

247

372

405

488

624

932

925

Net Income

100

155

211

250

393

453

546

697

1,034

1048

Total Assets

100

110

138

171

231

289

319

376

497

560

145

Management Analysis and Discussion Company Performance

COMPARISON OF TARGETS IN THE BEGINNING OF THE FISCAL YEAR TO THE ACTUAL RESULTS, AND TARGETS OR PROJECTIONS FOR THE NEXT FISCAL YEAR

The Company’s statistics from 2005 to 2014 in rupiah are provided in the table below. 2005-2014 Company’s Statistics (In Million Rupiah)

Description

2005

2006

2007

2008

Net Sales

433,700

615,660

745,440

805,790

Cost of Goods & Services Sold

241,606

316,583

366,336

337,649

479,744

502,038

538,998

583,917

Company’s Expense

361,842

506,827

584,833

641,686

815,860

894,396

969,575

954,329

Investment

50,219

37,163

118,666

156,690

171,186

195,846

272,887

176,122

248,276

174,623

Income Before Tax Expense

83,567

128,006

171,369

206,492

310,982

338,419

407,772

521,124

778,589

773,076

217,681

250,815

302,419

385,916

572,468

580,074

Net Income Total Aset

55,344

85,977

116,767

138,385

543,627

599,908

751,795

930,971

From the above table it can be seen that the Company has grown significantly with the exception of the year 2005, as demonstrated by the growth in sales and income. This was due to the WHO delisting occurring in January to September 2005, which caused export sales to decline and the repercussions were still felt in 2006. In 2007, the Company’s activities recovered with a number of strategic measures taken by the Company, namely increase of production capacity for final products and bulk Polio, and the initiation of technology transfer for Hib Liquid, s-IPV, and Seasonal Flu vaccines, aside from continuing the development of the Rotavirus vaccine, which it had pioneered several years prior. From 2008 to 2014, the Company conducted various cost efficiency measures in various sectors (including energy efficiency), and increased production capacity for final products and bulk Polio, which was followed by the construction of a storage facility. As a result, net income increased substantially despite the management bonus for the previous year which was taken from the net income of the Company, and increase in employee welfare among others with the Income Improvement Benefit (2009) and Vehicle Allowance (2009). In terms of research and development activities, the Company has continued the development of new vaccines as well as researching for new products such as the s-IPV vaccine (2007), pandemic flu vaccine (2008), Hepatitis C Indonesian strain, mastering of technological platforms such as MCB TR-7 characterization, development of TB vaccine (2009), development of DTaP vaccine, transfection of vero cells to GMO substrate for influenza virus (2011), development of Hepatitis B vaccine (2012), development of Pneumococcus virus, immuno-contraception for women based on Pelluside-3 monoclonal antibody, early detection method for Diabetes Mellitus Type 1 patients (2013), and development of Adjuvant R4/E8 Pam2Cys,

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

2009

2010

2011

2012

2013

2014

1,182,992 1,210,263 1,328,729 1,437,665 1,853,682 2,044,080 723,596

780,090

1,192,575 1,434,847

1,255,302 1,570,969 1,733,504 2,045,688 2,703,070 3,043,780

Typhoid vaccine, Hepatitis B Consortium vaccine, Hexavalent vaccine, Stemcell, and Nanoparticle Adjuvant (2014). In addition, the Company has carried out research and development activities of production innovation, i.e. increasing the concentration of Diphtheria and Tetanus vaccine (2008), in-vial BCG vaccine (2009), Inoculum B Pertussis in Fermentor 70L and Snake Antivenom Serum using Non-Detoxified Venom (2011).

Targets That We Want To Acomplish In The Future Evaluation of the Company's Long Term Plan

Company’s Position In the Company's Long-Term Plan (RJPP) from 2012 to 2016, the Company's position with a "SWOT Analysis" is in a position to grow where internally the Company has greater strength than weakness and externally have greater opportunities than threats. Similarly, the "Industry Attractiveness and Business Strength Analysis ", the Company is in a position to grow where the vaccine industry is classified as moderate with average business strength. With the growing position, the Company pursues a strategy through horizontal integration. In the year 2013, the Company is in a position with a growth strategy to increase production capacity of final products and bulk Polio; continuing development of new vaccines such as DTaP, Tuberculosis, Typhoid, Pneumococcus, Rotavirus, s-IPV, monoclonal antibody-based women ImmunoContraception Pellusida-3, early detection method for patients with Type 1 Diabetes Mellitus; and maintain the quality management system, environment and OHS and also implement the principles of good corporate governance (GCG).

146

Challenges and Future Plans In the future, the need for vaccines and other biological products will increase. But the challenge will also be stricter either due to increased competition, regulatory developments and technology as well as the intensifications of counter immunization movement. The World Health Organization (WHO) will also conduct a re-assessment of Bio Farma, so Bio Farma must attempt to maintain WHO prequalification status for existing products and the WHO prequalification status for vaccine Pentabio to be immediately obtained. Possessing the strength ranging from research and development, production and marketing which are already extensive and being independent, we will overcome the tough challenges in the future. Bio Farma must increase the diversification of products and expand the types of products towards other biological products and also work hard to meet the needs of the market including 100% fulfillment of Pentabio for the government needs. Bio Farma will build a new production facility that is equipped with facilities for formulation and filling for the vaccines currently being produced and new vaccines researched by Bio Farma (MR vaccine, sIPV, rotavirus, and others), bulk sIPV production facilities, bulk tetanus and bulk diphtheria. Production facilities will be built in accordance with European standards so that in addition to increasing the production capacity, it is also an opportunity for Bio Farma to supply products to the European market, and improve efficiency because it uses large size batches reduces the use of paper by applying e-BPR (Electronic Batch Production Record).

"The means of production that will be built are in accordance with European standards so that in addition to increasing the production capacity it is also an opportunity for Bio Farma to supply products to the European market, and improving efficiency because it uses a large batch sizes. Another benefit is the use of e-BPR (Electronic Batch Production Record) ".

Juliman Director of Production

Other future plans: 1. Maintaining good cooperation with the Ministry of Commerce and Ministry of Foreign Affairs, and participate in trade missions in several countries. The aim is to expand the range of export markets. 2. Working closely with international partners to find new markets with a mechanism of cooperation that will benefit both parties. 3. Seeking for markets in India, China, and ASEAN to expand the market.

4. Increase the supply of bulk polio, measles and other bulks. 5. Market penetration for products that are already PQ WHO (Bulk, ready to fill final bulk and finished products). 6. Registering products in potential countries. 7. Strengthen marketing activities in the private sector in domestic sales. 8. Conduct marketing activities to seek synergies among SOEs. .

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Management Analysis and Discussion Company Performance

SUBSEQUENT MATERIAL FACTS AND INFORMATION

THE COMPANY’S PROSPECTS ASSOCIATED WITH THE GENERAL ECONOMIC AND INDUSTRY

SUBSEQUENT MATERIAL FACTS AND INFORMATION There were no subsequent material facts and information pertaining to the Company after the date of publication of the Audited Financial Statements, i.e. 30 January 2014.

THE COMPANY’S PROSPECTS THE COMPANY’S PROSPECTS ASSOCIATED WITH THE GENERAL ECONOMIC AND INDUSTRY

OVERVIEW OF THE VACCINE INDUSTRY The characteristics of the vaccine industry nowadays are vastly different than those in a few years ago, along with the increasing public awareness regarding preventive measures against diseases and increasing government budget for vaccine purchase. Vaccines business that was previously regarded as a business with lower margins, has now become one of the most lucrative segments in the pharmaceutical industry. Moreover, the success of a number of blockbuster vaccine products, i.e. products which generate sales of more than USD1 billion per year, has changed the vaccine market dramatically. The pharmaceutical industry's business focus is now aimed at vaccine products as a driver of business growth in the future.

Vaccines have become a big business for multinational companies (MNC) around the world, and these MNCs capture a large majority of the market share for pharmaceutical products and vaccines. A series of mergers and acquisitions by MNCs in the pharmaceutical industry have impacted the shifting of the vaccine market as a whole. China’s and India’s vaccine markets will grow with a quite promising rate in the future and Japan’s vaccine market is also starting to open up through the removal of regulatory and political barriers. Overall, the worldwide vaccine market recorded revenues of more than USD22 billion in 2010.

EMERGING MANUFACTURERS ARE PLAYING AN ACTIVE ROLE China

- Chengdu - Shanghai (SIBP) - Sinovac - Shenzhen AVP - Shenzhen Kangtai

South Korea

Mexico

- Bema Green Cross (Bema) - LG Life Sciences (LG)

Binmex

Cuba

- CIGB - Instituto Finlay

India

Brazil

- Bio-Manguinhos - Butantan Institute

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

- Panacea Biotec - Shantha Biotechnics - Bharat Biotech - Biological E (BE) - Serum Inst. of India

Indonesia Bio Farma

148

Global Vaccine Development In 2014 the general public was shocked by the outbreak of Ebola in West Africa that led to hundreds of deaths, as illustrated in the following table:

health and recommendations for securing greater health benefits for everyone everywhere. Of the 20 resolutions there were several resolutions related to vaccines and drugs in general, summarized from the official release via www.who.int as follows: • Implementation of Regulations (2005).

the

International

Health

The International Health Regulations (2005) stipulate that Yellow Fever is a disease that warrants proof of vaccination rating as a condition of entry into countries under certain conditions. The World Health Assembly adopted a revision of the provisions concerning yellow fever vaccination or its booster, based on the International Health Regulations (2005). This includes adding the validity period for the yellow fever vaccination certificate, from 10 years to the lifetime of those who are vaccinated. The revised provisions are based on the recommendations of the Strategic Advisory Group of Experts (SAGE) on immunization according to the results of analyses and reviews of scientific evidences. Member states have reaffirmed their strong and ongoing commitment to the implementation of the International Health Regulations (2005). • Access to essential medicines.

The vaccine industry in the world continued to strive to innovate and accelerate the discovery of a vaccine against new diseases such as Ebola, MERS, and so on. In line with the effort of finding new vaccines, the World Health Organization (WHO) provides guidelines and policies related to global immunization vision and strategy issued at the World Health Assembly (WHA). In 2011 it established that within the framework of the first 10 years (2006-2015) immunization is a preventive measure that should be taken to control the level of mortality and disability from diseases that are preventable by vaccines. The vision and strategy are the main umbrella in the development of the global vaccine industry. WHA is the highest decision-making body of the World Health Organization (WHO). The 67th World Health Assembly (WHA) in 2014 in Geneva, which was attended by the delegations of the Ministers of Health of all WHO member states resulted in a variety of agreements in an effort to improve public

WHO’s strategy to assist countries in improving access to essential medicines has been approved. The main principles include selecting a limited range of medicines based on the best evidence available, the procurement of efficient, affordable, effective distribution system, and rational use of the medicines. List of essential drugs published by WHO is recognized as a tool of paramount importance that enables countries to identify a set of essential medicines that should be made available to provide quality medical care. • Strengthening of regulatory systems Regulations related to effective use of medicines and medical products require high quality, safety and efficacy; medicines to be manufactured, stored, and distributed properly; production and illegal trafficking of drugs to be controlled and prevented; health professionals and patients to have necessary information to enable them to use medicines rationally; promotion and advertising to be regulated; and access to medicines is to not be compromised by regulations. In order to improve regulation of medical products in general and ensure that the quality of medical

149

Management Analysis and Discussion Company Performance

products, the need for strengthening the regulations of, and improve collaboration in, the regulatory system must be addressed. • Newborn health: draft action plan. For the first time a global plan for preventing neonatal deaths and stillbirths by 2035, it is imperative for all countries to achieve the target of less than 10 infant deaths per 1,000 births, and less than 10 stillbirths

THE COMPANY’S PROSPECTS ASSOCIATED WITH THE GENERAL ECONOMIC AND INDUSTRY

per 1,000 total births by 2035. Every year, almost 3 million babies die in their first month of life, and 2.6 million stillbirths (death in the last trimester of pregnancy or during childbirth). Most of these deaths could have been prevented with cost-effective interventions through vaccination.

Polio-free world in 2018.

On March 27, 2014 held at the Conference Hall of the World Health Organization, SouthEast Asia Regional Office in New Delhi India, Indonesia received the Certificate of Non Polio. The presence of Bio Farma in providing Oral Polio Vaccine (OPV) is without a doubt. Bio Farma is able to provide 60% of the polio vaccine to the entire world. However, the world predicts that the year 2018 is the eradication of polio, and for that reason Bio Farma is ready to anticipate this situation by creating new vaccines needed by the community.

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150

Vaccine Industry in Developing Countries On 28 October 2014 the 15th annual meeting of Developing Countries Vaccine Manufacturers Network (DCVMN) took place in New Delhi, India. This activity is held regularly once a year, and this time there was added confidence in Indonesia, with the appointment of Mahendra Suhardono, Marketing Director of Bio Farma, as President of DCVMN for the period of 2014-2016. The 15th DCVMN Annual Meeting was attended by their members of 42 developing country vaccine manufacturers spread over 16 countries, as well as global health organizations such as UNICEF, GAVI (Global Alliance for Vaccine Initiative), and The Bill & Melinda Gates Foundation.

to safeguard and secure a sustainable supply of vaccines, especially for vaccines that are prioritized to meet global needs. Developing countries that have large populations must prepare themselves to face the emergence of new diseases, and to that end, DCVMN has prioritized targets to be achieved, including new vaccines such as pentavalent/hexavalent, pneumococcal conjugate, rotavirus, typhoid conjugate, human papilloma, measles/ rubella and inactivated polio vaccines.

In 2014, DCVMN committed to programs that enable more vaccines to be produced in developing countries, with a good quality (meet WHO standards) and at an affordable price. DCVMN also encouraged vaccine manufacturers

Mahendra Suhardono (left) receives confirmation as President DCVMN 2014-2016.

DCVMN Member States • Argentina • Brazil • Cuba • Egypt • India

• Indonesia • Iran • Mexico • China • North Korea

• Romania • South Africa • Thailand • Vietnam

• South Korea • Bangladesh

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Management Analysis and Discussion Company Performance

THE COMPANY’S PROSPECTS ASSOCIATED WITH THE GENERAL ECONOMIC AND INDUSTRY

Vaccine Industry Self-Reliance in Islamic Countries Bio Farma, together with vaccine producers from Islamic countries, held the First Meeting of the Vaccine Manufacturers Group From OIC Countries in Jeddah, Saudi Arabia. The meeting discussed the effort to achieve vaccine self-reliance in Islamic countries.

Iskandar (left-front), President Director of PT Bio Farma (Persero) and Prof. Louzir, Director General of the Pasteur Institute of Tunis, and was witnessed by Director General of Pharmaceutical and Medical Devices Ministry of the Republic of Indonesia Maura Linda Sitanggang, as well as Ambassador to Tunisia.

In the 2014 increase of victims due to the Middle East respiratory syndrome corona virus (Mers-CoV) outbreak demanded governments and vaccine manufacturers to immediately put together efforts in research and development of the vaccine. Bio Farma actively collaborates with several OIC member countries (Organization of Islamic Cooperation) such as Tunisia and Saudi Arabia in the field of research of new vaccines, one of the meeting agenda of the Islamic State of vaccine manufacturers is to discuss the production of Corona Mers (Middle East Respiratory Syndrome) vaccine of which in 2014 is endemic in the Middle East Countries.

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152

Currently, some Islamic countries have their vaccine industries. Islamic countries that possess the vaccine industry include Indonesia, Iran, Tunisia, Egypt, and Senegal. But not all vaccines produced in Islamic countries can compete in meeting the needs of global vaccines. This is because most of the vaccine industries have not yet met the WHO prequalification (PQ) requirement. So far, Bio Farma from Indonesia is one vaccine manufacturer from an Islamic country that has obtained the PQ-WHO certification. Indonesia should be proud of being a state with a majority of Muslim population, whose vaccine industry has obtained the largest number of PQ-WHOcertified products since 1997. Results of the discussion of the OIC-SHPA will be implemented for a period of 10 years (2013-2022) with at least six priority areas, namely: Health System Strengthening; Disease Prevention and Control; Maternal, Newborn and Child Health and Nutrition; Medicines, Vaccines and Medical Technologies; Health Emergency Response and Interventions; and Information, Research, Education and Advocacy. Indonesia, as one of the OIC member countries, has contributed to the OIC in order to be able to achieve self-reliance in producing pharmaceutical products, especially quality and affordable vaccines. Indonesia, which has been designated as the hub of vaccine technology, has shown concrete evidence in an effort to achieve one of the visions of the OIC, namely self-reliance for vaccine production (SRVP) in Islamic countries, thanks to its latest product, the pentavalent vaccine, produced independently by Bio Farma. The pentavalent vaccine has been used in a national immunization program

since 2013. Bio Farma from Indonesia, as a vaccine manufacturer that has met the qualification standard of the World Health Organization (WHO) is ready to help OIC member countries provide supply of raw materials/ intermediate products (bulk) and improve the expertise for downstream process (Fill and Finish Process).

Vaccine Industry in ASEAN 2015 is the year when ASEAN Economic Community (AEC) is commenced. AEC was formed with a mission to improve economies in ASEAN, making them more competitive with countries whose economies are more advanced than the current condition of ASEAN countries. In addition, the realization of the ASEAN Community, in which AEC exists, will bring ASEAN into a more strategic position at the international arena. The existence of the ASEAN Economic Community can establish a complementary synergy among the economic sector stakeholders of the ASEAN countries. With the AEC, new industries in the field of biotechnology from ASEAN countries have already started to prepare themselves. Bio Farma undertook strategic measures to welcome ASEAN countries’s offer to step into the biotechnology industry to collaborate in the vaccine technology transfer, to become a partner in the global framework for cooperatively eradicating diseases that threaten the world.

153

Management Analysis and Discussion Company Performance

MARKETING ASPECT

MARKETING ASPECT Marketing Strategy In order to achieve the sales targets, the Company’s strategy is to maintain existing market share, and also expanding the new potential markets in order to enhance the marketing of existing products as well as new products, building and fostering a more strategic partnership through direct meetings with customers, so that the Company may become more customeroriented and may understand what they require and what required by the global markets, participating in project tenders for vaccine supply for specific countries or international agencies, and registering new products selectively by firstly evaluating the market potentials in the export market destinations.The marketing strategies mentioned above are further elaborated below: a. The Market Penetration of Vaccine Adults , such as Influenza, Hepatitis B, and other vaccines. In the domestic private sector, the Marketing Directorate conducting market penetration measurement through Geographical Marketing activities and offering vaccination programs to various governmental agencies and private institutions in the country. b. Market Development in the international market by expanding the market to member countries of the Organization of Islamic Cooperation (OIC) and Latin American countries through the Pan American Health Organization (PAHO).

d. Integrated Media Strategy to increase the awareness among customers of the Company and its products through various above-the-line, below-the-line, and through-the-line media campaigns. In facing the needs in the international sector that exceed the available supply, the Company has taken these strategic measures, i.e. planning the construction of new facilities to increase its production and packaging capacity. Other measures taken by the Company to accommodate its customers’ demands are extension of expiration date for Measles 10 ds vaccine from previously two years to three years, so that should there be a delay in a country’s vaccination campaign execution, the residual shelf life of the vaccine is still acceptable by the country to which the Company exports its vaccine, as well as increasing the batch size for Polio vaccine production. To improve performance in domestic sector, the Company needs to enhance and adjust the business processes that require the support of an integrated set of facilities and information technology systems. The Company has taken the following strategic measures to address this, namely by investing in the development of the Customer Relationship Management (CRM) application as part of its IT Masterplan, and developing the integrated inventory stock application with domestic distributors.

c. Product Development by developing branded products such as BIO Td, BIOSAT, BIOADS, BIOSAVE for entry into the domestic private sector.

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154

Sales in all sector brought in a revenue of Rp 2.04 trillion or 5.04% higher than the target set in the 2014 RKAP of Rp 1.95 trillion. The details are provided below: In Million Rupiah

 Description

Realization in 2013 (Rp)  

Exports Private/Non-Government Government Total

2

RKAP 2014 Target in 2014 (Rp) 3

Realization in 2014 (Rp)

Increase/Decrease (%)

4

4/2

4/3

1,222,852

1,150,419

1,366,232

11.73

18.76

82,106

137,627

130,120

58.48

(5.45)

548,724

657,993

547,728

(0.18)

(16.76)

1,853,682

1,946,038

2,044,080

10.27

5.04

Market Share Domestic Market • Government Sector: serving the needs of the government for the Indonesian national vaccination program • Private Sector: serving the needs for products outside of the national vaccination program through domestic distributors.

International Market • Institutional Export Sector: supplying vaccines through institutions such as the World Health Organization (WHO), UNICEF, and PAHO, to fulfill the needs for vaccines in the developing countries for their vaccination programs. • General Export Sector: supplying vaccines through bilateral agreements with export countries via business-to-business, business-to-government, or other mechanisms of cooperation with international or local partners that have been appointed. Vaccines that are used for this market are vaccines that have met the WHO Pre-Qualification and both in final and bulk forms.

Realization of Marketing Division’s Work Programs The work programs of the Marketing Division which were carried out in 2014 are, among others:

Domestic Marketing 1. Sales of existing vaccine products and new products of Bio Farma through the government and private sectors. 2. Improvement of distributors’ performance. 3. Division of distributors’ operational areas.

4. Establishment of internal marketing staff. 5. Training for internal marketing staff. 6. Training for distributors. 7. Search of alternative products. 8. Marketing of branded products. 9. Enhancement of product image through branded products.

Overseas Marketing 1. Participation in tenders for bilateral countries both regular and new ones. 2. Search of fill-finishers and new buyers of vaccines through international partners and direct marketing. 3. Participation in vaccine manufacturers’ meetings held by UNICEF to update trends of global vaccine demands through UNICEF. 4. Execution of UNICEF Long Term Arrangements (LTA) for DTP 10 ds, Td 10 ds, bOPV 20 ds, tOPV 20 ds, and Measles 10 ds vaccines. 5. Supply of DTP 10 ds vaccines to countries under the jurisdiction of PAHO. 6. Sales of a new product, i.e. Td 1 ds, through international partners and direct marketing. 7. Regular sales to meet buyers’ demand by prioritizing on bulk sales. 8. Registration of Td products (1 and 10 ds) and Pentabio in potential countries in Asia and Africa.

Clinic and Immunization Division 1. Provision of vaccination and laboratory services to existing customers and new customers. 2. Establishment of a team to study the feasibility of establishing a strategic business unit for the Clinic and Immunization Division.

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Management Analysis and Discussion Company Performance

3. Execution of the ISO 17025 (KAN) accreditation process for the bacteriology laboratory in order to increase the number of customers for industrial/food microbiology testing. The marketing working programs that have been implemented in 2014 are as follows: 1. Domestic Sales: • Coordination with Sub Directorate Immunization Directorate General PP – LP regarding the vaccine needs plans for the National Immunization Program in 2014. • Signing of the regular vaccine procurement contract in 2014 with the Government. • The signing of procurement contracts DTP-HBHib in 2014 by the Government. • Carry out the vaccines / serum procurement billing, both to the government and private sector. • Convey information regarding the availability of stock to all Distributors. • To evaluate the performance of the branch distributors for the region of Yogyakarta and Central Java. • Extend Contracts Distributorship 2014. • Conduct a presentation about purchasing mechanism in 2014 • Sending vaccines, sera and other products based on sales demands. • Prepare and organize the availability of vaccine stocks to meet domestic demand and exports. • Maintaining the quality of vaccines through continuous temperature monitoring. • Following the regular vaccine procurement budget year 2014 (repeated auction) through open tender mechanism (E-Tendering). • Following the procurement process DTP-HBHib fiscal year 2014 through direct appointment mechanisms. • Conduct product analysis for market potential and opportunities for 13 products. • Conducting socialization and information of products to various companies, government offices / agencies / government agencies, universities and various organizations both internally and externally, as much as 34 + places / activities. • Perform the preparation of SM & SOP for Product Management Department. • Price proposal for vaccines and serum immunization programs in 2015. • Participating for the procurement of APBN-P vaccines (Optimization) at the Ministry of Health of

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

MARKETING ASPECT

Indonesia. • Conveying information regarding the status of Bank Guarantee to all Distributors. • Conducting the distributor visit in order to audit vaccine and serum storage facilities and administrative regulatory compliance and other administration. • Meet the needs of Hepatitis B Adult vaccines for the Army, Navy, and Air Force. 2. Overseas Sales: • Perform initial stage registration of products and registration of variations in some countries. • Conduct an extension of the registration in several countries. • Following tenders abroad. • Receive visits from customers / export sales agent • The appointment of a local agent for registration activities, marketing and sales abroad. 3. Marketing Support • Designing materials for corporate and products advertising in 23 mass media. • Installation of a logo (brand) Bio Farma in 108 media / activities. • Distributing promotional kits to various companies, government offices / agencies / government agencies, universities and various organizations both internally and externally as well as in various exhibitions, as much as 283 + places / activities. • Participating in various exhibition / symposium / open table 37 times. • Registration of imported products as much as 13 times, the registration of imported product variations 16 times and pre-registration products of imported products as much as 19 times. • Registration of local products as much as 2 times, registration variety of local produce and products as much as 33 times and the pre-registration products of local products as much as 8 times. • Analysis of market potential and opportunities for 21 products. • Conducting surveys for market potential and opportunities of Adalimumab protein product, EPO products, varicella vaccine products, influenza vaccine products, typhoid vaccine products, as well as customer satisfaction. • Make ACYW135 meningitis vaccine packaging design, bOPV Indonesia and IPV. • Creating a calendar and agenda design PT Bio Farma 2015..

156

DIVIDEND POLICY, AMOUNT OF CASH DIVIDEND PER SHARE, AND AMOUNT OF DIVIDEND PER YEAR ANNOUNCED OR PAID FOR THE PAST FIVE FISCAL YEARS

DIVIDEND POLICY, AMOUNT OF CASH DIVIDEND PER SHARE, AND AMOUNT OF DIVIDEND PER YEAR ANNOUNCED OR PAID FOR THE PAST FIVE FISCAL YEARS Dividend Policy The dividend from the net income for 2013 as determined at the General Meeting of Shareholders (GMS) for the 2013 Annual Report held on 21 March 2014 amounted to Rp 171,740,287,00.00, however, in accordance with the letter from the Minister of State-Owned Enterprises No. S-805/

MBU/12/2014 dated 23 December 2014, the Company was requested to pay additional dividend from the net income for 2013 amounting to Rp 57,247,000,000.00. The fund was taken from the Company’s equity, so that the total dividend paid was Rp 228,987,287,000.00. The amount of dividend from the net income for FY2014 will be determined at the GMS for the 2014 Annual Report.

Total Dividends Paid and Dates of Announcement and Payment of Cash Dividend for Each Year The distribution of dividends for FY2013 and FY2012 was determined at the GMS for the Annual Report approval, financial statements approval, and distribution of net income for the FY2013 and FY2012, respectively held on 21 March 2014 and 26 March 2013, and in accordance with the letter from the Ministry of State-Owned Enterprises No. S-805/MBU/12/2014 dated 23 December 2014 on the additional payment of dividend from State-Owned Enterprises for FY2013, which was completed on 29 December 2014. The details are provided below: In Million Rupiah

Description

Net Income Net Income for the Fiscal for the Fiscal Year 2009 Year 2010

Net Income for the Fiscal Year 2011 Total

Net Income for the Fiscal Year 2012

Presentase

Net Income for the Fiscal Year 2013

Total Percentage

Total

%

Reserve

189,383

211,278

244,959

81.00

271,279

77.56

344,155

60.00

Dividend

21,768

24,567

45,363

15.00

105,178

20.00

228,987

40.00

Partnership Program

4,354

4,913

6,048

2.00

1,930

0.50

-

-

Community Development

2,177

4,913

6,048

2.00

6,830

1.77

-

-

-

675

-

-

-

217,682

245,673

302,419

100%

385,892

99.83

573,143

100.00

Tantiem Total net Income

Retained Earnings and Distribution of Income (In Million Ruipah) 2009 Description 1 Retained Earnings - Reserved Balance at Beginning of Year 166,327 Reclassification of Retained Earnings Donated Capital Establishment of Reserve 134,925 Capitalization of Reserves to Share Capital Conversion of Appropriation to Dividend Additional dividend from reserves   Retained Earnings at the end of Year - Appropiated 301,252 Retained Earnings - Unappropriated Balance at Beginning of Year 151,611 Income Distribution (134,925)

2010 1

2011 2

2012 3

2013 4

RKAP 2014 5

2014 6

Increase/ Decrease (%) 6/4

301,252

490,635

701,913

670,641

 

941,920

40.45

189,383

211,278

23,769 244,959

299,279

   

400,727

33.90

-

-

(300,000)

-

-

500,000

-

-

-

-

(28,000)

 

675

(102.41)

 

 

 

 

 

57,247

-

490,635

701,913

670,641

941,920

-

786,075

(16.55)

236,307 (189,383)

269,441 -

326,187

385,892  

 

573,143 228,987

48.52 -

157

DIVIDEND POLICY, AMOUNT OF CASH DIVIDEND PER SHARE, AND AMOUNT OF DIVIDEND PER YEAR ANNOUNCED OR PAID FOR THE PAST FIVE FISCAL YEARS

Management Analysis and Discussion Company Performance

Retained Earnings and Distribution of Income (In Million Ruipah)

Description Reserve Reclassification of Retained Earnings Dividends Reclassification of Retained Earnings Donated Capital Dividends Partnership and Community Development Programs Tantiem Reclassification of Unappropiated Earnings from Additional Bonus 2012, 2013 Additional dividend from reserves Net Income for the Year Retained Earnings at the end of Year Unappropriated

2009 1 -

2010 1 -

2011 2 (211,278)

2012 3 (244,959)

2013 4 (299,279)

RKAP 2014 5  

2014 6 400,727

Increase/ Decrease (%) 6/4 (233.90)

-

-

-

-

28,000 (105,178)

   

-

-

-

-

-

(23,768)

-

 

-

-

-

(21,768)

(24,567)

(45,363)

-

 

-

-

(3,460) -

(6,530) -

(9,827) -

(12,097) -

(8,760) (675)

   

-

-

-

-

-

-

675

 

675

-

223,081

250,815

302,419

385,892

572,468

  503,115 

57,247 580,074

1.33

236,307

269,441

326,188

385,892

573.143

503,115

580,074

1.21

Amount of Cash Dividend per Share Bio Farma as at the end of 2014 was one of the non-listed State-Owned Enterprises whose shares are 100% owned by the Government of the Republic of Indonesia, and thus there is no information regarding the amount of cash dividend per share that can be divulged to the public. Dividen Payout Ratio (DPR) (In Million Rupiah) Kelompok Account Net Income After Tax Dividends

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

2010

2011

2012

2013

2014

1

2

3

4

5

5/4

250,815

302,419

385,892

572,468

580,074

1.33

228,987

-

24,567

45,363

105,178

Kenaikan/Penurunan (%)

-

158

EMPLOYEE/MANAGEMENT STOCK OWNERSHIP PROGRAM CARRIED OUT BY THE COMPANY

USE OF INITIAL PUBLIC OFFERING PROCEEDS

INVESTMENT, EXPANSION, DIVESTMENT, MERGER, ACQUISITION, OR RESTRUCTURING OF CAPITAL DEBT

EMPLOYEE/MANAGEMENT STOCK OWNERSHIP PROGRAM CARRIED OUT BY THE COMPANY As at the end of 2014 Bio Farma was one of the non-listed State-Owned Enterprises whose shares are 100% owned by the Government of the Republic of Indonesia. There has been no employee or management stock ownership program (MSOP/ESOP) carried out by the Company.

USE OF INITIAL PUBLIC OFFERING PROCEEDS PT Bio Farma (Persero) is a State-Owned Enterprise that has not conducted an initial public offering of its shares or bonds on the market, and consequently it has no initial public offering proceeds making up its current equity.

INVESTMENT, EXPANSION, DIVESTMENT, MERGER, ACQUISITION, OR RESTRUCTURING OF CAPITAL DEBT Purpose of Transactions

Value of Transaction or Amount Restructured

Throughout 2014 PT Bio Farma (Persero) made an investment for the preparation of Basic of Design (BOD) and Detail Engineering Design (DED) for its Vaccine Production & Packaging Facilities, which will be followed with physical construction of said facilities in the coming years.

The actual investment in 2014 was Rp 174.62 billion, or 29.90% of the budgeted amount. This was due to, among otheres, certain parts of the investment rescheduled to 2015, amounting to Rp 421.38 billion. From the total actual investment in 2014 there were some parts in progress valued at Rp 85.84 billion, among others the Administration 2 (Ex Hall) Building and the Packaging

Source of Funding

Line.

The source of funding for the abovementioned investment is from the Company’s internal funding.

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Management Analysis and Discussion Company Performance

MATERIAL INFORMATION ON CONFLICT OF INTEREST AND/OR ON TRANSACTIONS WITH RELATED PARTIES

MATERIAL INFORMATION ON CONFLICT OF INTEREST AND/OR ON TRANSACTIONS WITH RELATED PARTIES Throughout 2014 the Company did not engage in affiliated transactions with related parties or other transactions with conflict on interest or transactions with related parties. Account Balance With Related Parties

Account Balance With Related Parties 31 December 2013

31 December 2014

Account Cash and Cash Equivalents (Note 3) Accounts Receivable (Note 5) Other receivables (Note 6) Advances Local Purchases (Note 8) Accrued income (Note 11)

Total

Percentage*

Total

Percentage*

951.717.046.000

31,27%

866.250.766.156

32,05%

11,959,603,001

0.39%

7,697,268,220

0.28%

1,302,637,458

0.04%

1,302,637,458

0.05%

34,294,004,725

1.13%

9,285,164,861

0.34%

2,163,072,734

0.07%

2,129,257,903

0.08%

18,396,559,596

0.60%

9,339,128,539

0.35%

3,089,624,258

0.10%

1,856,745,234

0.07%

0.00%

4,136,589,807

0.15%

9,171,083,655

0.34%

Business debt (Note 16) Bio Farma Employee Coperation CV Karya Cahya Abadi PT Pembangunan Perumahan (Tbk) PT Adhi Karya (Persero)

2,189,372,274

0.07%

Universitas Brawijaya

1,150,000,000

0.04%

PT Kimia Farma (Tbk)

410,324,291

0.01%

PT Telkom Indonesia (Tbk) Total Business Debt

290,000,000

0.01%

25,525,880,419

0.84%

0 1,046,691,590

0.04%

25,550,238,825

0.95%

0

* Percentage of total assets.

Nature of Relationship Related Parties

Relation with Company

Nature of Account Balance/ Transaction

State/ Region - Owned Banks

Entities Under Common Control

Cash and Cash Equivalents

PT Kimia Farma T&D

Entities Under Common Control

Product Sales

PT Indofarma Global Medika

Entities Under Common Control

Product Sales

PT Rajawali Nusantara Indonesia

Entities Under Common Control

Product Sales

PT Iglas

Entities Under Common Control

Other Receivables

PT Pembangunan Perumahan

Entities Under Common Control

Investment Purchases

PT Adhi Karya

Entities Under Common Control

Investment Purchases

Bio Farma Employee Coperation

Privileged Relationship

Purchase Of Goods And Investment

CV Karya Cahya Abadi

Privileged Relationship

Purchase Of Goods And Investment

Other Related Parties

Entities Under Common Control

Others with each transaction under Rp. 1 billion

CHANGES TO REGULATIONS AND THE IMPACTS ON THE COMPANY’S PERFORMANCE In 2014 there were no changes to the prevailing regulations that made a significant impact on the Company’s performance.

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160

CHANGES TO REGULATIONS AND THE IMPACTS ON THE COMPANY’S PERFORMANCE

CHANGES TO ACCOUNTING POLICIES IMPLEMENTED BY THE COMPANY IN THE LAST FISCAL YEAR

CHANGES TO ACCOUNTING POLICIES IMPLEMENTED BY THE COMPANY IN THE LAST FISCAL YEAR The consolidated financial statements of the Company and its subsidiaries have been prepared in conformity with the prevailing Financial Accounting Standards in Indonesia. The Company and its subsidiaries implement certain new accounting standards and interpretations or revisions that were effective in 2014.

Reason for the Changes to the Accounting Policies The changes to the standards and interpretations issued by the Indonesian Financial Accounting Standards Board of the Indonesian Accountants Association had to be implemented by the Company starting from 1 January 2011 and 2012.

Implementation of Statements and Interpretations to the Revised Financial Accounting Standards The following are new standards, changes to the standards, and interpretations of the standards issued by the Indonesian Financial Accounting Standards Board of the Indonesian Accountants Association that must be implemented by the Company starting from 1 January 2015. The Indonesian Financial Accounting Standards Board issued a number of new and revised Statements of Financial Accounting Standards (SFAS) that will be enforced starting from 1 January 2015. SFAS that are relevant to the Company’s preparation of its financial statements are as follows: SFAS 1 (2013) “Presentation of the Financial Statements” SFAS 24 (2013) “Employee Benefits” SFAS 46 (2014) “Income Taxes” SFAS 48 (2014) “Impairment of Assets” SFAS 68 (2013) “Measurement of Fair Value” The Company is still evaluating the potential impact of these new and revised SFAS to the financial statements of the Company.

Impact of Changes to the Accounting Policies to the Financial Statements The changes to the accounting policies require the Company to adjust its presentation of financial statements either prospectively or to restate the financial statements for the previous period.

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* THIS IS A HEPATITIS VIRUS ILLUSTRATION. Fact: This virus can be transmitted through contact with blood or bodily fluids. .

GOOD CORPORATE GOVERNANCE

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

Bio Farma believes that GCG implementation can support the achievement of the Company’s purpose in terms of business growth, profitability, as well as long-term business sustainability, and thus will provide added value to stakeholders. In 2014, Bio Farma achieved the score of Excelent Performance Assessment Criteria (KPKU) 422.75 conducted by SOE Excellence Forum (FEB) compared with the year 2013 which was 315. This increase proves the commitment of GCG implementation and Bio Farma’s integrated systems in a sustainable manner.

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164

Bio Farma’s journey that has spanned more than 124 years in building its reputation has resulted in the Company continuously maintaining and upholding the values of integrity and principles of Good Corporate Governance (GCG) as the main foundation for all of its business activities. Governance practices that are in line with the policies and prevailing regulations have become an inherent aspect in the attitude, behavior, mindset, and work ethos of every Bio Farma employee, as reflected in the Company’s culture of professionalism, integrity, transparency, and accountability. GCG implementation in Bio Farma is aimed to achieve the vision, the mission, and the purpose of the Company, grounded upon the five basic principles of GCG, namely: 1. Transparency, the openness in disclosing materials and relevant information about the Company. 2. Accountability, the explication of function, the execution and the organ responsibility so that management of the company is done effectively. 3. Responsibility, the conformance in the management of the company regarding the regulations and the principles of a healthy corporation. 4. Independency is a state in which the company is professionally managed without conflict of interest and intervention or pressure from any parties that is not in accordance with the laws and principles of a healthy corporate. 5. Fairness, namely justice and equality in fulfilling the rights of stakeholders arising based on agreement and regulations.

Description on the Board of Commissioners The Board of Commissioners is a company organ that is responsible for supervising the Company’s management based on the Articles of Association and providing recommendations to the Board of Directors.

Appointment and Dismissal of the Board of Commissioners A. Appointment of the Board of Commissioners The Board of Commissioners is appointed and dismissed by the Shareholders through the GMS. All members of the Board of Commissioners are appointed and dismissed with consideration to the aspects of integrity, competence, and reputation, in accordance with Bio Farma’s business requirements. The Board of Commissioners is appointed and dismissed by the Shareholders through the GMS with the following quality as consideration: 1. Having an integrity, dedication, understanding of salient issues that are related to one of many management functions, adequate knowledge of the Company’s business, and has adequate time to carry out their tasks. 2. Is able to carry out legal actions and has never been declared bankrupt for the last five years prior to the appointment, has never been appointed as member of the Board of Directors or the Board of Commissioners that has been declared guilty for causing a business entity to go bankrupt for the past five years prior to the appointment, and has never

been indicted for any criminal offense that result in the loss of the state’s finances and/or anything related to the financial sector for the past five years prior to the appointment. The appointment of the Board of Commissioners includes the fit and proper test. B. Dismissal of the Board of Commissioners The dismissal of the a Commissioner takes place if said Commissioner is deemed unable to carry out its tasks adequately, has violated the provisions of the Articles of Association of the Company and/or regulations, is involved in actions that result in the loss of a State-Owned Enterprise and/or the state, has conducted actions that violate ethics and/or the principle of decency expected from members of the Board of Commissioners of a State-Owned Enterprise, charged as guilty by the court with a permanent legal force, or resigns.

Composition of the Board of Commissioners In 2014 there was a change to the composition of the Board of Commissioners, i.e. Sam Soeharto, appointed as the President Commissioner of PT Bio Farma (Persero) based on the Decree of the Minister of State-Owned Enterprises acting as the General Meeting of Shareholders of PT Bio Farma (Persero) No. SK-392/MBU/2012 dated 5 November 2012, passed away. Therefore there arose the need to affirm the dismissal of the person as the President Commissioner of PT Bio Farma (Persero) on 2 January 2014, with expressions of gratitude for all his contribution

165

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

while serving as the President Commissioner. The role of President Commissioner was subsequently assigned to Ahmad M. Ramli, who was appointed as member of the Board of Commissioners based on the Decree of the Minister of StateOwned Enterprises acting as the General Meeting of Shareholders of PT Bio Farma (Persero) No. SK-220/MBU/2013 dated 12 April 2013, to serve as President Commissioner for the remaining period of the previous President Commissioner as stipulated in the decree. In addition, Heridadi was also appointed as member of the Board of Commissioners of PT Bio Farma (Persero). As a result, as at 31 December 2014, the Board of Commissioners of Bio Farma consisted of six persons, namely one President Commissioner and five Commissioners, with the following composition: Composition the Board of Commissioners Name

Position

Ahmad M. Ramli

President Commissioner 23 January 2014

Date of First Served

Kep Men BUMN No: SK-17/MBU/2014 dated 23 January 2014

Appointment Basis

Paruli Lubis

Commisioner

5 November 2012

Kep Men BUMN No: 392/MBU/2012 dated 5 November 2012

Herman L. Djuni

Commisioner

27 June 2011

Kep Men BUMN No: 153/MBU/2011 dated 27 June 2011

Nizar Yamani

Commisioner

28 May 2012

Decision other than GMS No. 204/MBU/2012 dated 28 May 2012 Jo

Kep Men BUMN No: Komisaris SK-81/MBU/2013 dated 4 February 2013

1 Mei 2013

Kep Men BUMN Nomor: SK-235/MBU/2013 tanggal 1 Mei 2013

Ihsan Setiadi Latief

Commisioner

1 May 2013

Kep Men BUMN No: SK-235/MBU/2013 dated 1 May 2013

Heridadi

Commisioner

23 January 2014

Kep Men BUMN No: SK-17/MBU/2014 dated 23 January 2014

The brief profile of each Commissioner is available in the Corporate Data section within this Annual Report.

Description of the Board of Commissioners’ Responsibilities Duties, Authorities, and Responsibilities of the Board of Commissioners Duties of the Board of Commissioners Duties, authorities, and responsibilities of the board of commissioners as stipulated in the Joint Decision of the Board of Commissioners and Directors of PT Bio Farma (Persero) No. KEP-06 / DK / BF / II / 2013, No. 01025 / DIR / II / 2013 on Guidelines the Board of Commissioners and Directors (Board Manual) PT Bio Farma (Persero). a. Duties of the Board of Commissioners 1. The Board of Commissioners is obliged to supervise management policies, general operations in tems of the Company and corporate actions taken by the Board of Directors, and to provide recommendations to the Board of Directors including the supervision of implementation of the Long-Term Corporate Plan (RJPP), the Company’s Work Plan and Budget (RKAP), the Articles of Association, GMS resolutions and the applicable laws and regulations, for Company benefit and in accordance with the Company’s purposes and objectives.

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2014

• PT Bio Farma (Persero) •

2. In carrying out these duties, each member of the Board of Commissioners must: a. Comply with the Articles of Association and the laws and regulations in performing its roles according to principles of professionalism, efficiency, transparency, independence, accountability, responsibility and fairness. b. Act with good faith, prudence and responsibility in carrying out the supervision of management policies and in providing recommendations to the Board of Directors for the interest of the Company, in line with the Company’s goals and purposes. b. Authorities of the Board of Commissioners 1. In carrying out its duties, the Board of Commissioners is authorized to: a. Examine books, letters and other documents, inspect cash for verification purposes and other marketable securities and check the Company’s assets; b. Enter the grounds, buildings and offices used by the Company;

166

c. Request explanation from the Board of Directors and/or other officers concerning any matters related to the Company’s management; d. Be informed of all policies and actions that have been and will be done by the Board of Directors; e. Request the Board of Directors and/or other officers under the Board of Directors as acknowledged by the Board of Directors to attend Board of Commissioners meetings; f. Appoint and terminate Secretary of the Board of Commissioners, if deemed necessary; g. Temporarily terminate the Board of Directors in accordance with the Articles of Association; h. Form other committees other than Audit Committee, if deemed necessary with consideration of the Company’s capability; i. Use expert staff for particular matters and in a certain period at the Company’s expense, if deemed necessary; j. Perform management actions in certain circumstances for a certain period in accordance with the Articles of Association; k. Attend the Board of Directors’ meetings and provide insights on discussed matters; l. Perform other supervisory authorities as long as not contrary to the laws and regulations, the Articles of Association and/or the GMS resolutions. 2. The Board of Commissioners is authorized to approve or not approve in writing the Board of Directors’ plans in terms of: a. Placing fixed assets as collaterals with banks to obtain short-term loans. b. Entering into a cooperation with other business entities or parties in the form of licensing cooperation, management contract, lease of assets, Joint Operation (KSO), Build Operate Transfer/BOT, Build Own Transfer/ BOwT, Build Transfer Operate/BTO and other cooperation arrangements with the following conditions: 1. Lease of assets. The Board of Directors must obtain written consent of the Board of Commissioners to lease Company assets with period of more

than three (3) years to 5 (five) years with rent/transaction value of more than 1% to 2.5% of revenue, or more than 2% to 5% of equity, whichever is smaller. 2. Build Operate Transfer (BOT), Build Own Transfer (BowT), Build Transfer Operate (BTO). 3. The Board of Directors must obtain written consent of the Board of Commissioners to conduct Build OperateTransfer (BOT), Build OwnTransfer (BowT), Build Operate Transfer (BTO) with period of more than 10 (ten) years to 20 (twenty) years of the Company asset value of more than 6% to 12.5% of revenue, or more than 6.5% to 13% of equity, whichever is smaller. 4. Management Contract and Other Cooperation. The Board of Directors must obtain written consent of the Board of Commissioners to enter into a management contract and other cooperations with period of more than 10 (ten) years with value of investment (the Company’s cooperated asset) more than 2.5% to 5% of revenue, or more than 5% to 10% of equity, whichever is smaller. 5. Implementation of the aforementioned actions on numbers 1), 2), 3) and 4), must be accompanied with Integrity Pact containing statement of the Board of Directors and/or Board of Commissioners that implementation of actions has been considered carefully and in good faith, without influence from other parties, without conflict of interest, and with full caution to the best interests of the Company with regard to the applicable regulations and the Good Corporate Governance (GCG) principles. c. Obtain or grant medium/long term loans, except for payables or receivables arising from business transactions and loan granted to a Company subsidiary, which have to be reported to the Board of Commissioners;

167

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

d. Eliminate uncollectible receivables and obsolete inventory; e. Dispose of fixed assets with normal economic age in industry up to 5 (five) years. f. Establish organization structure of 1 (one) level below the Board of Directors. g. Appoint and dismiss the Head of the Internal Audit Unit. h. Appoint and dismiss the Corporate Secretary.

Prepare minutes of Board of Commissioners 11. meetings and keep a copy.

3. Within the period of 30 (thirty) days from the admission of the application or explanation and complete documentation from the Board of Directors, the Board of Commissioners must make a decision on the Board of Directors’ application, as stipulated in point (2) above.

14. Other obligations in a supervisory and advisory context, as long as not in violation of laws and regulations, the Articles of Association and/or the GMS resolutions.

C. Obligations of the Board of Commissioners In performing its duties, the Board of Commissioners is obliged, among others, to: 1. Provide advice to the Board of Directors in managing the Company. Examine, review and approve Long Term 2. Corporate Plan (RJPP) and Corporate Work Plan and Budget (RKAP) prepared by the Board of Directors, in accordance with the Company’s Articles of Association. 3. Provide opinion and advice to the GMS pertaining to RJPP and RKAP regarding explanation on Board of Commissioners’s approval for RJPP and RKAP. 4. Keep track of the Company’s activities, provide opinion and recommendation to the GMS on every important matter in Company management. 5. Immediately report to the GMS for any indication of the Company’s declining performance. 6. Examine and review periodic reports and Annual Report prepared by the Board of Directors and approve Annual Report. 7. Provide explanation, opinion and recommendation to the GMS regarding Annual Report, if requested. 8. Prepare annual work plan and budget of the Board of Commissioners, which is an integral part of RKAP. 9. Establish Audit Committee 10. Nominate public accountant to the GMS

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2014

• PT Bio Farma (Persero) •

12. Report to the Company regarding share ownership of members of the Board of Commissioners and/or their families in the Company or in other companies. 13. Submit report on supervisory roles performed for current/previous years to the GMS.

15. Monitor and ensure that the GCG is implemented effectively and continuously. 16. Propose Key Performance Indicators (KPIs) of the Board of Commissioners to the GMS, and Submit Quarterly Report on progress of Key 17. Performance Indicators (KPI) realization to Shareholders. The Board of Commissioners’ Obligation Related to Long-Term Planning The Board of Commissioners examines and provides opinion to the RJP prepared by the Board of Directors prior to signing it together with the the Board of Directors. The Board of Commissioners’ Obligation Related to the Work Plan and Budget Formulation a. The Board of Commissioners examines and provides opinion to the RKAP prepared by the Board of Directors prior to signing it together with the the Board of Directors. b. The Board of Commissioners provides a guidance to the the Board of Directors for the implementation of the Company’s plans and policies in the RKAP that are the detailed version of the RJP. The Board of Commissioners’ Obligation Related to the Annual Report Preparation a. The Board of Commissioners examines the Annual Report draft and the audited financial statements from the Public Accounting Firm. The Board of Directors and the Board of b. Commissioners sign the Annual Report to be subsequently submitted by the Board of Directors to the Shareholders.

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Risk Management Implementation The Board of Commissioners is obliged to supervise and provide advice to the the Board of Directors on a regular basis regarding the effectiveness of risk management implementation. Internal Control System The Board of Commissioners is obliged to supervise and provide advice to the the Board of Directors on a regular basis to determine an effective internal control system. Information Disclosure & Confidentiality a. The Board of Commissioners must ensure that in the Company’s Annual Report the information regarding their identity, main jobs, position as Commissioner in other companies, as well as the meetings held in one fiscal year (internal and joint meetings with the the Board of Directors) and the honorarium, facilities and/or other allowances received from the Company, be disclosed. b. The Board of Commissioners is obliged to the Company regarding their ownership of shares and/ or their family’s ownership of shares in the Company and other companies, including every change thereof. c. The Board of Commissioners is responsible to the Company to maintain the confidentiality of the Company’s information.

d. Information that based on the rules and regulations and/or corporate regulations is deemed confidential related to the Company must be kept confidential in accordance with the rules and regulations and/or corporate regulations. e. Confidential information obtained while serving as Commissioner must be kept secret in accordance with the rules and regulations.

Quorum for The Board of Commissioners Meetings (Data from the Board Manual) A member of the Board of Commissioners can be represented in the Board of Commissioners meeting only by another member of the the Board of Commissioners that is present in the selfsame the Board of Commissioners meeting, based on a written power of attorney that is specific only for the purpose of that the Board of Commissioners meeting. A member of the Board of Commissioners can represent one other member of the Board of Commissioners

Distribution of Duties of The Board of Commissioners The distribution of duties among members of the Board of Commissioners is determined by the Board of Commissioners itself, and to ensure the smoothness of its duties the Board of Commissioners is assisted by a Secretary to the Board of Commissioners appointed and dismissed by the Board of Commissioners at the Company’s expense.

169

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

In performing the supervisory and advisory functions, the Board of Commissioners has distributed its duties among its members, in accordance with the Decree of The Board of Commissioners of PT Bio Farma (Persero) No. KEP-04/ DK/BF/II/2014 dated 19 February 2014, as follows: No.

Name

Area of Assignment

Detail of Assignment

1.

Ahmad M. Ramli

President Commissioner

• Coordinating the duties of the members of the Board of Commissioners. • Supervising and advising the the Board of Directors in performing the latter’s duties including its compliance to the provisions of the Articles of Association, and the prevailing rules and regulations.

2.

Paruli Lubis

In Charge of Finance

• Supervising and providing advice on all aspects related to the procedures and processes of work planning and budgeting, long-term planning, financial responsibility and preparation of reports that include the quarterly management reports by considering all the prevailing reporting standards. • Acting as the Chairman of the Audit Committee with the list of duties as stipulated in the Audit Committee Charter.

3.

Herman L. Djuni

In Charge of Marketing and Information Technology

• Supervising and providing advice on all aspects related to the domestic and overseas sales and marketing as well as supervising the preparation and implementation of IT Masterplan. • Acting as the Vice Chairman of the Audit Committee with the list of duties as stipulated in the Audit Committee Charter.

4.

Heridadi

In Charge of Research and Development

• Supervising and providing advice on all aspects related to research and development of vaccines and antisera. • Acting as Vice Chairman of the Risk, Development and GCG Committee with the list of duties as stipulated in the Risk, Development and GCG Committee Charter.

5.

Nizar Yamani

In Charge of Production

• Supervising and providing advice on all aspects related to production activities, involving processes such as production capacity increase, availability of end products, works-in-progress, raw materials, and control of expired inventory. • Acting as the First Vice Chairman of the Risk, Development and GCG Committee with the list of duties as stipulated in the Risk, Development and GCG Committee Charter

6.

Ihsan S. Latief

In Charge of HR

• Supervising and providing advice on all aspects related to all labor-related system and procedures, starting from recruitment, disciplinary actions, remuneration and incentives, employee training, and the Company’s organizational. • Acting as Second Vice Chairman of the Risk, Development and GCG Committee with the list of duties as stipulated in the Risk, Development and GCG Committee Charter.

Performance of Duties, Authorities and Obligations of the Board of Commissioners in 2014 Throughout 2014, the Board of Commissioners of Bio Farma performed the following duties and responsibilities in accordance with the Articles of Association, including the following: 1. Supervised the policies and management of the Company and advised on the execution of the RJPP, RKAP including the KPIs for the Board of Directors, and the provisions of the Articles of Association and the Resolutions of the GMS and all prevailing regulations for the interest of the Company and in line with the Company’s purpose and goals. 2. Implemented GCG principles in the Board of Commissioners and supervised their implementation within the organization.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

3. Opined on and provided general input about the Board of Directors Performance Report to the GMS. Led the committees under the Board of 4. Commissioners in carrying out all of their duties and communications among each other. 5. Approved the Board of Directors and provided responses/opinion to the GMS on the Board of Directors’ plans in exercising their policies based on the provisions of the Articles of Association. 6. Kept abreast with the Company’s developments and provided opinion and recommendations regarding the planning and implementation of RJPP, RKAP, and important issues faced by the Company. 7. Ensured that the Company disclosed its GCG implementation to the GMS and in the Annual Report.

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8. Held meetings with the Board of Directors, the Committees under the Board of Commissioners, and other units that are related to the Company, among others: a. Internal meetings of the Board of Commissioners b. Joint meetings with the Board of Directors c. Meetings with divisions related to Internal Audit, Risk Management, and GCG implementation. d. Meetings with divisions and branches to comprehend the issues faced by the Company. e. With external auditors. Details of the Board of Commissioners’ supervisory activities in 2014 are provided below: 1. On Good Corporate Governance In relation to the GCG self assessment, the final stage of which was held in February 2015 by the Counterpart Team for the GCG implementation assessment for FY2014, PT Bio Farma (Persero) provisionally has earned a score of 83.96, with the “Good” predicate. The assessment includes evaluation of parameters related to the Board of Commissioners and its activities and organs, which earned the score of 82.25. Based on this result for the Board of Commissioners, a number of administrative improvements to the Board of Commissioners are required by acting upon the areas of improvement from the GCG assessment by the provisional Counterpart Team. This will ensure that at the time of assessment by BPKP for FY2015, the Board of Commissioners parameters will earn a higher score, which means that the GCG implementation will also be better. 2. On Research and Development a. Supported the formulation and preparation of the Product Development Plan (PDP) for quick-win vaccine product (IPV, rotavirus, dengue, malaria, pneumococcus, etc.) and allocation of resources (human resources, budget, etc.) and oversaw the research and development of said new product. b. Supported the preparation for polio eradication by preparing the transfer of polio vaccine from OVP type to IPV. c. Collectively discussed Bio Farma’s future product and business developments for the basis of policymaking. d. Oversaw the research conducted in cooperation with research institutions and universities in and

outside of the country, so that it is always aligned with Bio Farma’s vaccine production planning. e. Encouraged the synergy among the Academia, Business, and the Government spheres in strengthening the research and development for new products. 3. On Human Capital a. Encouraged the dissemination on change management and related reorganization by implementing the ERP. b. Urged that marketing staff be equipped with the adequate knowledge and capacity in terms of Bio Farma’s product knowledge and process knowledge. c. Supervised and directed the planning and development of human capital in Bio Farma. d. Encouraged the implementation of knowledge management in line with the Company’s needs so that the Company may no longer be dependent on any individual. Urged for the implementation of talent e. management in accordance with Bio Farma’s needs and the challenges it faces. f. Urged the Board of Directors to regularly review the golden shakehand policy, which includes: • to ensure and anticipate that Bio Farma’s employees that are still needed by the Company or those with substantial expertise do not quit the Company, especially through the golden shakehand clause, • urged that the golden shakehand rules and implementation are oriented on its original purpose, i.e. human resources management, • a clause on trade secret must be added with the purpose of safeguarding the Company’s confidential documentation so that those who quit the Company with a golden shakehand may not take such documentation away. 4. On Finance Carried out periodic monitoring of financial management in the following activities: • Coordination Meeting for 2014 RKAP. • Discussion of LMP & Activity Report of the 2013 PKBL (unaudited). • Discussion LMP & CSR Activities Report for Q1 2014.

171

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

• Discussion LMP & Wipe CSR Activities Report for H1 2014. • Discussion of the selection/reappointment of the Public Accounting Firm. • Discussion of investment policy and actual use of the investment budget. • Discussion of the planning and actual use of the Board of Commissioners’ budget. 5. On Marketing a. Urged market diversification, thereby reducing the risk of dependence on certain buyers considering the impact of the delisting of Panacea Biotech and Bharat Biotech (potential customers from India) from the WHO prequalification list on the export sales of Bio Farma. b. Encouraged marketing innovation and creativity regarding transfer of polio vaccine from the OPV type to the injection (IPV) type. c. Urged the creation of market Intellegence in line with Bio Farma’s needs to become a global player. d. Encouraged the market diversification in particular for bulk DTP and OPV as they are highly profitable. e. Urged for the creation of sales force teams to address the needs of the private market and institutional market in the country.

b. Urged the implementation of Business Continuity Planning (BCP) and Disaster Recovery Planning (DRP). c. Supervised and monitored the Company’s IT Governance. d. Urged the management to compete and test the reliability of the Company’s IT system by participating in IT-related award events. e. Reviewed the IT Masterplan of PT Bio Farma (Persero) for 2014-2017. 8. On Production a. Supervised the BCG and polio production activities to meet market demand. b. Supervised the production and encourage efforts to minimize damage to end products. c. Supervised the readiness to produce new vaccines according to market needs. d. Supervised the efficiency measures done in all areas including at lowering production costs and the cost of goods sold. e. Urged for production capacity increase to reduce fixed costs and achieve economy of scale. 9. On Strategic Issues

f. Urged for promotional cooperation with media (above-the-line) and below-the-line events.

a. Supervised the planned transfer of polio vaccines from OPV to IPV type.

g. Urged for the restructuring of the marketing organization including the strengthening of regulatory affairs.

b. Urged for actions to address the changes in the business environment, such as: WHO regulations, government regulations: BPJS, Intellectual Property Rights, level of competition, and the exchange rate.

h. Urged the management to create a brand image or corporate image by advertising in mass media. i. Urged for an accelerated registration of products, especially for sales to the private sector. 6. On Investments Monitored the progress of the capital expenditures plan and realizatoin in 2014 in order to fulfill the aspiration of the shareholders, i.e. physical investment (75%) and program-based investment (100%). 7. On Information System Supervised a. and monitored the System Development Life Cycle (SDLC) of the ERP implementation and the progress reports thereof.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

c. Monitored and advised the Board of Directors for dealing with the Halal Product Guarantee Bill, should it be enacted. d. Monitored the progress of H5N1 (Flu Pandemic) vaccine production plan. e. Supervised Bio Farma’s readiness to address WHO PQ in 2014. f. Supervised the restructuring of the marketing organization. g. Supervised the planning and realization of the Bio Farma Geopark CSR program.

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The Board of Commissioners provided a number of directives, advice and approval on the survival/growth of the Company’s business. The details for the directives given by the Board of Commissioners in 2014 include: 1. Suggested that the Board of Directors undertake measured and tactical iniatives to address constraints in the processes of planning, budgeting, execution/ implementation, and close monitoring of investment projects, because investment is a key factor for determining the sustainability and progress of the Company in the long run. 2. Suggested that the Board of Directors prepare a scenario planning and investment-operational risk management properly, so that when an issue arises related to WHO or BPOM regulatory changes while an investment is ongoing, it can be detected as early as possible and its mitigation measures be formulated. 3. Bio Farma’s net income reached USD 572,467,623,000, up 48.3% from 2012 income of Rp 385,891,884,000. However the increase in net profit was partly derived from the contribution of foreign exchange gain of Rp 93,965,032,980 or 50.36% of the total increase in net profit of Rp 186,575,739,000, or 16.41% of the total net income. Therefore, the Board of Commissioners advised the management to continue to improve its operational performance by market expansion, product diversification, and operational efficiency measures. 4. Although the foreign exchange gain did not fully reflect the actual performance of the Company, the management has been advised to apply sound financial management to obtain optimum benefit (no foreign exchange losses) on foreign exchange management. If possible, a Treasury unit that is supported by the proper employees’ competence and expertise in the field of financial management be established. 5. The management has been advised to strengthen the internal control system with all components of the assessment of internal controls, both by themselves or with the help of external parties.

Company's business. 7.

Suggested that the management perform a comprehensive tax planning by inventarizing and assessing all taxes and transactions that potentially contain taxable objects based on the prevailing tax regulations, so that all tax corrections and tax penalties are prevented, and prepare the staffing with qualified competence in taxation.

In accordance with its authority as stipulated in the Articles of Association of PT Bio Farma (Persero), the Board has given approval/recommendation for, among others: 1. Approval of the extension of the appointment of the public accounting firm to audit the Financial Statements for FY2014. 2. Approval of the remuneration system of the Board of Directors in accordance with the resolution of the GMS. 3. Approval of the Renewal of Agreement/Extension Period for Working Capital Loan Facility for Export (KMKE) from Indonesia Eximbank (LPEI) Year 20132014. 4. Approval of the extension of non-cash loan facilities, treasury bills and bills purchasing line with PT Bank Mandiri (Persero) for the period of 2013 to 2014. 5. Approval of the write-off and transfer of nonproductive fixed assets of PT Bio Farma (Persero) in 2014. 6. Approval of changes in the organizational structure of the Company on the level below the Board of Directors. 7. Approval of the increase in subscribed and fully paid capital by the Republic of Indonesia from originally Rp 750,000,000,000 (seven hundred and fifty billion rupiahs), consisting of 750,000 (seven hundred and fifty thousand) shares, to Rp 1,250,000,000,000 (one billion two hundred and fifty billion rupiahs), consisting of 1,250,000 (one million two hundred and fifty thousand) shares.

6. Suggested to the management to prioritize the allocation of funds for Community Development programs/activities that are aligned with the

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Description on the Board of Commissioners

The Board of Commissioners’ 2014 Work Plans Supervise and provide advice on: 1. Implementation of the 2014 RKAP and the RJPP. 2. Strategic issues for the Company, such as WHO PQ, Vaccine Development Project, etc. 3. Compliance with relevant laws and regulations. 4. Application of GCG principles, ISO, cGMP and others. 5. Implementation of Enterprise Risk Management (ERM). Make a decision or approve or respond to: 1. RKAP and RKA PKBL Reports 2. Quarterly/Semesterly/Annual Management Reports. 3. Appointment of the Public Accounting Firm. 4. Approval of Assets Write-offs. 5. Remuneration for the Board of Directors. 6. The Board of Commissioners’ approval of the Company’s management in line with the budget of the Company.

INFORMATION DISCLOSURE CONCERNING THE PROCEDURES FOR DETERMINING REMUNERATION a. Basis for Determining Remuneration The determination of remuneration for the Board of Directors and Board of Commissioners of Bio Farma, which includes salary/honorarium, allowances, facilities, and bonuses/incentives, is under the authority of the Board of Commissioners and is stipulated in the Decree of the Board of Commissioners of PT Bio Farma (Persero) No. KEP-04/DK/BF/III/2014 on 25 March 2014 on the Determination of Remuneration for the Board of Directors and Board of Commissioners of PT Bio Farma (Persero) in 2014, Such remuneration has been formulated by referring to the Regulation of the Minister of State-Owned Enterprises No. PER-04/ MBU/2014 dated 10 March 2014 on the Guidelines for Determining the Remuneration for Board of Directors, Board of Commissioners, and Supervisory Board of State Owned Enterprises.

b. The procedures for determining remuneration for the Board of Commissioners and the Board of Directors are as follows: 1. The GMS determines the Board of Directors and the Board of Commissioners remuneration based on the PER-04/MBU/2014. 2. The remuneration for the President Director is formulated based on the internal guidelines set by the Minister as a reference for the calculation of remuneration for the Board of Commissioners and its members. 3. The salary/honorarium and bonuses for members of the Board of Directors and the Board of Commissioners for FY2014 was determined by the Resolution of Shareholders as the GMS of PT Bio Farma (Persero) as stipulated in the the Minutes GMS No. RIS-20/D2.MBU/2014 dated 21 March 2014 on the Determination of Remuneration for FY2014, including performance bonuses on the 2013 performance of the Board of Directors and the Board of Commissioners. 4. Based on the approval and the resolution of the Annual GMS of PT Bio Farma (Persero) for FY2013, the bonus for the President Commissioner was set at 40% of the bonus for the President Director, while the bonus for other members of the Board of Commissioners was set at 36% of the bonus for the President Director.

c. Indicators used for determining the remuneration of the Board of Commissioners: • Remuneration in the form of salary/honorarium, allowances and facilities that are fixed is calculated by considering the factors of income, assets, financial condition and capability of the Company, inflation rate, and other relevant factors, and must not conflict with the prevailing laws and regulations. • The determination of remuneration in the form of allowances and bonuses which are variable by nature, was carried out by taking into account the achievement of targets, the level of soundness and financial capacity of the Company, as well as other relevant factors. • The remuneration for the Board of Commissioners took into consideration the achievement of Key Performance Indicators (KPIs) of the Board of Commissioners for its supervision of the Company in 2014.

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REMUNERATION STRUCTURE AND NUMBER OF MEMBERS OF THE BOARD OF COMMISIONERS IN 2014 In accordance with the approval of the annual report and financial statements for FY2013 by the GMS as stipulated in the Minutes of GMS No. RIS-20/D2.MBU/2014 dated 21 March 2014, the salary for the President Director for 2014 amounted to Rp 72.5 million per month, while the salary for the Directors was set at 90% of the salary for the President Director. The remuneration for the Board of Commissioners of Bio Farma, in accordance with policy of remuneration for the Board of Commissioners, include salary/honorarium, allowances, facilities and bonuses/incentives. The remuneration for the Board of Commissioners in accordance with the GMS resolution is as follows: 1. Honorarium. a. Honorarium for the President Commissioner was determined to be 45% of the salary for the position President Director. b. The honorarium for the members of the commissioners was determined to be 90% of the President Commissioner’s honorarium.

b. Transport allowance was set to be 20% of honorarium c. Post-Employment Insurance: a maximum premium of 25% of the honorarium in one year 3. Facilities a. Health: health facilities are provided in the form of health insurance or reimbursement of medical expenses, with the details outlined in the Regulation of the Minister of State-Owned Enterprises No. PER-04/MBU/2014 on the Guidelines for Determining the Remuneration for the Board of Directors and the Board of Commissioners of State-Owned Enterprises. b. Legal Aid: legal aid facilities are outlined in the Minister of State-Owned Enterprises No. PER04/MBU/2014 on the Guidelines for Determining the Remuneration for the Board of Directors and the Board of Commissioners of State-Owned Enterprises. 4. Performance Bonus/Incentive Performance bonus/incentive performance in FY2013.

was

based

on

2. Allowances a. Holiday allowance was set to be 1 (one) time monthly honorarium

Remuneration for the Board of Commissioners is detailed as follows: BOC’s Remuneration in 2014 (In Rupiah)

Name Ahmad M. Ramli* Nizar Yamanie** Paruli Lubis*** Herman L. Djuni Ihsan Setiadi Latief**** Heridadi***** Total

Honorarium per Year 1 389,169,643 352,350,000 352,350,000 352,350,000 352,350,000 331,376,786 2,129,946,429

Allowance per Year Net Salary per Year 2 3=1+2 77,833,928 467,003,571 70,470,000 422,820,000 70,470,000 422,820,000 70,470,000 422,820,000 70,470,000 422,820,000 66,275,357 397,652,143 425,989,286 2,555,935,714

Tantiem & Religious Holiday Allowance 4 269,574,230 356,962,500 356,962,500 356,962,500 249,258,386 29,362,500 1,619,082,616

Total 5=3+4 736,577,801 779,782,500 779,782,500 779,782,500 673,078,386 427,014,643 4,175,018,330

* Appointed as President Commissioner on 23 January 2014 ** Appointed as Commissioner on 28 May 2012 *** Appointed as Commissioner on 05 November 2012 **** Appointed as Commissioner on 1 May 2013 ***** Appointed as Commissioner on 23 January 2014

Honorarium, Allowances and Facilities of BOC Honorarium Allowances President • Holiday Allowance: 1 (one) Commissioners month honorarium Rp 316,800,000. • Pension benefit insurance: up to 25% of honorarium/year Commissioners • Transports allowances Rp 285,120,000. Rp 6,525,000.

Facilities Health Facility • insurance or reimbursement of medical expenses, with the details outlined in the Regulation of the Minister of State-Owned Enterprises No. PER-04/MBU/2014 on the Guidelines for Determining the Remuneration for the Board of Directors and the Board of Commissioners of State-Owned Enterprises. • legal aid facilities are outlined in the Minister of State-Owned Enterprises No. PER-04/MBU/2014 on the Guidelines for Determining the Remuneration for the Board of Directors and the Board of Commissioners of State-Owned Enterprises.

175

GOOD CORPORATE GOVERNANCE

Description on the Board of Commissioners

Meetings of the Board of Commissioners Meetings of the Board of Commissioners as stipulated in the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-06/DK/BF/II/2013, and No. 01025/DIR/II/2013 on the Guidelines for the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) (Board Manual). Meeting Basis, Time and Venue 1. The Board of Commissioners meeting is held regularly, at least once a month. 2. In addition to the scheduled meetings, the Board of Commissioners may also hold a meeting at any other time by stating the issues to be discussed and/or for which a decision shall be made: a. At the request of 1 (one) or more members of the Board of Commissioners. b. At the request of the Board of Directors. c. At the written request of the Shareholders. 3. The Board of Commissioners meetings are held at the Company or elsewhere within the territory of the Republic of Indonesia as determined by the Board of Commissioners. Participant of Meeting Board Commissioner The Board of Commissioners meetings are attended by all members of the Board of Commissioners. If the Board of Commissioners deems it necessary, other parties may attend the Board of Commissioners meetings to provide certain explanations that are deemed necessary. The Board of Commissioners Meeting Agenda 1. The Board of Commissioners who propose the meeting of the Board of Commissioners must specify the event and prepare the materials/files needed to be discussed in the meeting of the Board of Commissioners. 2. The agenda for the meeting of the Board of Commissioners may be submitted orally or in writing in the form of memo, letter or others, accompanied by the materials/files needed for the meeting of the Board of Commissioners. The Board of Commissioners Meeting Invitation 1. Meeting invitations is made in writing by the President Commissioner or by the members of the Board of Commissioners representing the President Commissioner and is delivered within at most 3

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(three) days before the meeting is held or in a shorter time should it be required to immediately hold a meeting, with no regard to the date of the summons and the meeting date. 2. Invitation to the meeting of the Board of Commissioners should include the date, time, place and agenda of the meeting of the Board of Commissioners. Invitation to the meeting of the Board of 3. Commissioners is not required if all the members of the Board of Commissioners are in attendance. Quorum of the Board of Commissioners Meetings 1. The Board of Commissioners meeting is deemed legitimate and may take binding decisions if it is attended by more than half of the total members of the Board of Commissioners or their authorized representatives. 2. The meeting of the Board of Commissioners should by norm be attended by all members of the Board of Commissioners. 3. Any member of the Board of Commissioners may be represented in a Board of Commissioners meeting only by another member of the Board of Commissioners who attends the said meeting of the Board of Commissioners, based on a written power of attorney specifically written for the purpose of the said meeting of the Board of Commissioners. 4. A member of the Board of Commissioners may represent another member of the Board of Commissioners. Board of Commissioners Meetings Chairman 1. The meetings of the Board of Commissioners is chaired by the President Commissioner. 2. In the event that the President Commissioner is absent, the Board of Commissioners meeting shall be chaired by a member of the Board of Commissioners that has been appointed in writing by the President Commissioner. 3. In the event that the President Commissioner is absent and the President Commissioner has not appointed a replacement, then a member of the Board of Commissioners who has served the longest in office as a member of the Board of Commissioners shall chair the Board of Commissioners meeting. 4. In the case that there are more than one member of the Board of Commissioners with the longest serving period as a member of the Board of Commissioners, then the oldest member of the Board of Commissioners of these longest-serving Commissioners shall chair the Board of Commissioners meeting.

Minutes of Meeting of the Board of Commissioners 1. For each meeting of the Board of Commissioners, the Minutes of Meeting should be made. 2. The Minutes of Meeting of the Board of Commissioners shall include: a. Reason for absence of members of the Board of Commissioners, should there be anyone not present; b. The results of the evaluation of the implementation of all the decisions made in the previous meeting of the Board of Commissioners; c. The dynamics of the decision-making process at the meeting of the Board of Commissioners, including the opinions that are formed in the meeting, both arguments in favor or against, or a different opinion (dissenting opinion) if any; d. Consideration and/or analysis in the decisionmaking at the meeting of the Board of Commissioners; e. Issues that are decided at the meeting of the Board of Commissioners. 3. The Minutes of Meeting of the Board of Commissioners document is signed by the chairman of the meeting, all members of the Board of Commissioners who are present at the meeting, and the secretary. 4. The Minutes of Meeting of the Board of Commissioners document is reproduced and circulated to all members of the Board of Commissioners, both those who are present or not present in the meeting of the Board of Commissioners. 5. The original document for the meeting of the Board of Commissioners is stored and maintained by the Board of Directors. The Board of Directors may assign this duty to the Corporate Secretary. A copy of the Minutes of Meeting of the Board of Commissioners is stored and maintained by the Secretary to the Board of Commissioners. Secretary of the Board of Commissioners Meetings 1. The secretary of the Board of Commissioners meetings is the Secretary to the Board of Commissioners. 2. In the event that the Secretary to the Board of Commissioners is absent or unavailable, then an attending member of the Board of Commissioners or another person appointed by the chairman of the Board of Commissioners meeting may act as the Secretary of the Board of Commissioners meeting.

177

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Description on the Board of Commissioners

Frequency of Meetings and Attendance of the Commissioners at the Meetings of the Board of Commissioners Frequency of the Board of Commissioners Throughout 2014, the Board of Commissioners conducted 15 internal meetings of the Board of Commissioners, and 10 supervisory and consultative meetings with the Board of Directors (joint meetings) to discuss various aspects of the operations and management of the Company. The list of members of the Board of Commissioners who were present in those meetings of the Board of Commissioners and the joint meetings with the Board of Directors in 2014 is provided below: Name Ahmad Ramli*** Paruli Lubis Herman L. Djuni Nizar Yamani* Ihsan Setiadi Latief** Heridadi***

Position President Commissioner Commissioner Commissioner Commissioner Commissioner Commissioner

Total Board of Commissioners Meetings 11 11 11 11 11 11

Total Attendance 11 11 11 10 8 9

* Serving since February 2013, ** Serving since May 2013, *** Serving since January 2014 Agendas for the Meetings of the Board of Commissioners in 2014 Throughout 2014, the Board of Commissioners discussed various issues, performance and strategy related to the Company’s management, with the following meeting agendas: No. Date

Meeting Agenda

Conclusion

1.

10 January

Appointment of Audit Committee and Development Committee, Risk Committee and GCG

Determination of Audit Committee members and the extension of the duty of the Development Committee, Risk Committee and GCG

2.

21 January

Proposed improvements for treatise of GMS

Implement the recommendations from the BPK examination results and follow-up letters from the deputy of strategic industries and manufacturing.

3.

14 February

Task divisions of the BOC and change of Development Committee, Risk and GCG nomenclature.

BOD Decree was made on the task division for BOC members.

4.

14 April

Requests for approval the authorized capital and paid-up / placed

Request approval for the increase of the authorized capital and paid-up / placed as a recommendation to shareholders.

5.

14 May

Board of Commissioners monitoring reports and activities of the Committee for the First Quarter of 2014

Agreed upon submission of the Board of Commissioners monitoring reports and activities of the Committee for the First Quarter of 2014 to share holders.

6.

20 June

Request for approval from the BOD to extend KMKE facilities 2014-2015.

Given approval to extend KMKE facilities with consideration of tangible assets.

7.

10 August

The Company's management reports and monitoring reports of the Board of Commissioners, as well as the activities of the Committee reports first quarter 2014.

Approval of the report to be submitted to the shareholders and proposes to form a team to evaluate investment issues.

8.

3 September

Investment and infrastructure constructions.

Form a team to evaluate the investment.

9.

11 October

Performance reports, cooperation and official travel Directors, discussing halal product guarantee bill.

Bio Farma needs to improve relations with international organizations to increase export sales.

10. 28 October

BOC Business and Budget Plan 2015 and discussing the Bio Farma third quarter 2014 management report.

Finalization of Business and Budget Plan BOC 2015.

11.

SOE Minister Circular No.08 / MBU / 2014 on efficiency and operational cost savings of SOEs.

Discussion with the Board of Directors on efficiency and operational cost savings of SOEs at a joint meeting of the Board of Directors and the Board of Commissioners

5 December

TRAINING PROGRAMS IN ORDER TO INCREASE THE COMPETENCE OF THE BOARD OF COMMISSIONERS AND ORIENTATION PROGRAM FOR NEW COMMISSIONERS a. Training Programs and Increasing Competence Of The Board Of Commissioners In order to improve the competence of the members of the Board of Commissioners so that their professionalism, performance, and self-potential may be enhanced to support their duties as members of the Board of Commissioners, in 2014 members of the Board of Commissioners participated in various training programs, workshops, conferences and seminars as well as the induction program for new commissioners.

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b. Orientation Program for New Commissioner In order to develop the competence and introduce the Company to a new Commissioner, Bio Farma maintains an induction program for new Commissioners, which is aimed at providing an overview of the Company, including the general condition of the Company, financial conditions, strategies currently being executed, business activities, long-term plans, as well as the duties and responsibilities of the Board of Directors. The induction program for new Commissioners was held at Bio Farma on 30 January 2014, titled the Induction Program for New Commissioner of PT Bio Farma (Persero), taking place in Bandung. This induction program for the new Commissioner was prepared by the Corporate Secretary in collaboration with the Human Resources Division and other relevant divisions, and was presented in the form of presentations, handover of annual reports, company profile, company history, Corporate Governance Policy, as well as laws and regulations related to the business processes of Bio Farma. At the induction program, the new Commissioner agreed to avoid the potential of being involved in the Company’s operations, which fall under the authority of the Board of Directors, and to avoid graft and to be committed to implementing good corporate governance as exceptionally as possible. The Board of Commissioners also agreed on the division of duties between the individual Commissioners. The new Commissioner also actively participated in various forums held by the Company, both on a national scale such as the Vaccine Research Forum and on the international scale such as the Developing Countries Vaccine Manufacturer Networks and the Organization of Islamic Cooperation (OIC).

BOARD MANUAL The Board Manual for the Board of Commissioners was prepared based on the mutual agreement of Board of Directors and Board of Commissioners. The Board Manual was prepared based on the prevailing rules and regulations. The documentation is reviewed periodically. In addition to the Board Manual, the Board of Commissioners also has the Board of Commissioners Charter, as decreed by the President Commissioner with the letter No. SK-06/DK/BF/XII/2011, dated 19 December 2011. The guidelines set out in the Board Manual and Charter among others discuss these aspects: a. Induction program b. Training programs c. Work relationship between the Board of Commissioners and the Board of Directors d. Duties, authorities and obligations as well as the division of duties of the Board of Commissioners e. Provisions for the execution of duties of a vacant Commissioner position f. Obligations of the Board of Commissioners related to the long-term planning g. Obligations of the Board of Commissioners related the RKAP preparation h. Obligations of the Board of Commissioners related to the preparation of Annual Report i. Risk management j. Internal control systems k. Disclosure and confidentiality of information l. Business ethics and anti-corruption m. Prohibition of acting for personal interest n. Supporting organs for the Board of Commissioners o. Meetings of the Board of Commissioners p. Meetings of the Board of Directors and the Board of Commissioners q. Meetings of the Committees of the Board of Commissioners with the Counterparts to the Board of Commissioners

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INDEPENDENCE OF THE BOARD OF COMMISSIONERS

INDEPENDENCE OF THE BOARD OF COMMISSIONERS Each member of the boc of the Company is expected to act with independence without any conflict of interest that might disrupt their ability to carry out their duties properly, and in maintaining the relationship with all parties related to the Company as well as with the Board of Directors. All members of the boc of PT Bio Farma (Persero) acts with independence and are free from intervention from any parties. To ensure the independence in carrying out their duties, the boc encourages the creation of an objective working environment, where the principle of fairness is upheld at all times amidst various interests without any conflict of interest. On 24 January 2014, the entire boc of PT Bio Farma (Persero) signed the Conflict of Interest Statement, which stipulates that they have no relation whatsoever with the management, ownership, and/or financial relation with all business entities owned by the Shareholders or in similar companies, that they have no relation by blood up to the third degree both vertically or horizontally or from relationships arising from marriage with other members of the boc or the bod. This independence is described in the following Table of Family and Financial Relationships among Members of the boc with the organs of PT Bio Farma (Persero) in 2014: Familial and Financial Relations of the Board of Commissioners with PT Bio Farma Organs Family Relationship with Name

BOC Yes

BOD No

Yes

Financial relationship with

Shareholder No

Yes

No

BOC Yes

BOD No

Yes

Shareholder No

Yes

No

Ahmad M. Ramli













Paruli Lubis













Herman L. Djuni













Nizar Yamani













Heridadi













Ihsan Setiadi Latief













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The composition of the boc has met the requirements of the law. The boc currently has six members, all of whom are Commissioners representing parties outside of the Shareholders, in order to maintain the independence of the supervision of the boc and ensure that the check and balance mechanism is carried out. In 2014, no members of the boc of Bio Farma owned shares of the Company. And in order to minimize any potential conflict of interest, each member of the boc has made a special list containing the information on their or their family members’ share ownership, and submitted it to the Company. Share Ownership Name

PT Bio Farma Yes

No

Other SOE Yes

Other Company No

Yes

No

Description

Ahmad M. Ramli







Nihil

Paruli Lubis







Nihil

Herman L. Djuni







Nihil

Nizar Yamani







Nihil

Heridadi







Nihil

Ihsan Setiadi Latief







Nihil

In addition, all members of the boc of PT Bio Farma has no concurrent positions as member of the boc, bod, or as Executive Officer at other State-Owned Enterprises or other companies, with the details as follows: Dual Positions of the Board of Commissioners Name

Position at PT Bio Farma

BOD Member at other SOE/ ROE/ Private Company/ Other Organizations

Other Positions at other SOE/ ROE/ Private Company/ Other Organizations

Ahmad M. Ramli

President Commissioner

None

None

Paruli Lubis

Commissioner

None

None

Herman L. Djuni

Commissioner

None

None

Nizar Yamani

Commissioner

None

None

Heridadi

Commissioner

None

None

Ihsan Setiadi Latief

Commissioner

None

None

181

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THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS The Board of Directors is a company organ that has the authority and full responsibility for managing the Company for the interest of the Company, in accordance with the purposes and objectives of the Company and to represent the Company, both in and outside of the court in line with the provisions in the Articles of Association and the prevailing rules and regulations. Members of the Board of Directors are appointed and removed through the GMS. Appointment of the Board of Directors is through fit and proper test in accordance with the applicable laws and regulations. All Bio Farma Directors have adequate integrity, competency and reputation. The Directors may be dismissed from their position due to reaching the end of their term, their resignation, death or removal by the GMS resolution for reasons such as inability to perform their roles properly, violation of applicable laws and regulations or the Company’s Articles of Association, or found guilty by the court with a binding legal decision.

Composition of the Board of Directors Based on the Decree of the Minister of State-Owned Enterprises No. SK-221/MBU/2013 dated 12 April 2013 and Decree of the Minister of State-Owned Enterprises No. SK-69/MBU/2013 dated 4 February 2013 on the Appointment and Dismissal of Members of the Board of Directors of PT Bio Farma, the composition of the Board of Directors of the Company is determined by the shareholders, to run the Company to achieve its targets in line with its vision and mission. The Board of Directors is made up of 6 (six) Directors, with the following composition:

Name

Position

Date of First Served

Legal Basis of Appointment

Iskandar

President Director

April 12, 2013

Kep Men BUMN Number: SK-221/MBU/2013

Juliman

Production Director

April 12, 2013

Kep Men BUMN Number: SK-221/MBU/2013

Sugeng Raharso

Planning & Development Director

April 12, 2013

Kep Men BUMN Number: SK-221/MBU/2013

Mahendra Suhardono

Marketing Director

April 12, 2013

Kep Men BUMN Number: SK-221/MBU/2013

Pramusti Indrascaryo

Finance Director

April 12, 2013

Kep Men BUMN Number: SK-221/MBU/2013

Andjang Kusumah

HR Director

Februari,14 2013

Company (Persero) PT Bio Farma Shareholders Decree Ouytside of GMS No.: SK-116 / MBU / 2012 dated March 7, 2012 Jo. SOE Ministry Decree Number: SK-69 / MBU / 2013

The brief profile of each member of the Board of Directors is available in the Corporate Information section in this Annual Report, on pages 70-72.

SCOPE OF DUTIES AND RESPONSIBILITIES OF EACH MEMBER OF THE BOARD DIRECTORS Duties and Responsibilities of the Board of Directors The Board of Directors is the Company’s organ retaining full authorization and responsibility for the Company’s operations. The Board of Directors has responsibility to achieve the short-term work plan stated in Corporate Work Plan and Budget (RKAP) and Long Term Corporate Plan (RJPP). The Board of Directors must be able to make decisions effectively, precisely, and quickly and act independently, at the same time be responsible for consistent and continuous implementation of good corporate governance and a risk management system. The duties, authorities and responsibilities of the Board of Directors are stipulated in the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-06/DK/BF/II/2013 and No. 01025/DIR/ II/2013 on the Guidelines for the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero).

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Duties of the Board of Directors The duties, authorities and responsibilities of the Board of Directors are stipulated in the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-06/DK/BF/II/2013 and No. 01025/DIR/II/2013 on the Guidelines for the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero). 1. The Board of Directors performs all actions related to the Company management for the interest of the Company and in accordance with the Company’s purposes and objectives and represents the Company both inside and outside the court on all things and all events within limitations stipulated by the laws and regulations, the Articles of Association and/or GMS Resolutions. 2. In performing its duties, the Board of Directors must fully dedicate their energy, thought, attention, and devotion on its duties, obligations and achievement of the Company’s goals. 3. In performing its roles, the Board of Directors must comply with the Company’s Articles of Association and the laws and regulations and must implement professionalism, efficiency, transparency, independence, accountability, responsibility and fairness principles. 4. Each member of the Board of Directors must have good faith and full responsibility in performing his/ her roles for the Company’s benefits and business with regard to the applicable laws. Authorities of the Board of Directors In performing its duties, the Board of Directors has the authority to: 1. Establish the management policies of the Company. 2. Determine the transfer of authority of the Board of Directors to one or several members of the Board of Directors to make decisions on behalf of the Board of Directors or to represent the Company in and outside of the court of law. 3. Determine the transfer of authority of the Board of Directors to an individual or a collection of individuals working at the Company, either individually or collectively, or to another party, to represent the Company in and outside of the court of law. 4. Determine the provisions related to employment in the Company, including the determination of salary, pension or retirement benefits and other incomes for the employees of the Company based on the prevailing

regulations, with the proviso that any determination of salary, pension or retirement benefits and other income for employees that exceeds the liabilities stipulated by the laws and regulations must obtain prior approval from the GMS. 5. Appoint and dismiss employees of the Company based on the Company’s employment regulations and the prevailing laws. 6. Appoint and dismiss a Corporate Secretary. The appointment and dismissal of the Company Secretary is carried out in accordance with the Company’s internal mechanism with the approval of the Board of Commissioners. 7. Appoint and dismiss the Head of Internal Control Unit. The appointment and dismissal of the Head of Internal Audit Unit is carried out in accordance with the Company's internal mechanism with the approval of the Board of Commissioners. 8. Perform all actions and other activities regarding the maintenance and ownership of the Company’s assets, to legally bind the Company with other parties and/ or to bind other parties with the Company, as well as representing the Company in and out of the court of law on all matters and all events, with the limitations as stipulated in the prevailing laws and regulations and the Company’s Articles of Association and/or the Resolutions of the GMS. 9. Cooperate with companies or other parties with their authority limited to: a. Rental of Assets The Board of Directors of the Company may lease assets with maturities of up to three years with the maximum value of transaction of 1% of the Company’s revenue or 2% of its equity, whichever is smaller. b. Joint Operations and Business Cooperation The Board of Directors may enter into Joint Operations and Business Cooperations with maturities of up to five years with a maximum value of investment (the Company’s assets placed into the venture) of up to 2.5% of the Company’s revenue or 5% of its equity, whichever is smaller. c. Build Operate Transfer (BOT), Build Own Transfer (BowT), Build Operate Transfer (BTO) The Board of Directors can enter into cooperation with maturities of up to ten years with a maximum value of the Company’s assets placed into the cooperation of 6% of the Company’s revenue or 6.5% of its equity, whichever is smaller.

183

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THE BOARD OF DIRECTORS

d. Management Contracts and Others The Board of Directors may enter into cooperation with maturities of up to five years with a maximum value of investment (the Company’s assets placed into the venture) of 2.5% of the Company’s revenue or 5% of its equity, whichever is smaller. e. The implementation of measures stated above (points a to d), must be accompanied by an Integrity Pact that contains the Board of Directors’ statement that the implementation of these measures have been considered carefully and in good faith, without the influence of other parties and without any conflict of interest, as well as with prudence to serve the best interests of the Company, and subject to the applicable regulations and the principles of Good Corporate Governance (GCG). Obligations of the Board of Directors In performing its duties, the Board of Directors is obliged to:

9. Submit the Company’s Balance Sheet and Statements of Income that havebeen approved by the GMS to the minister in charge of law and human rights, in accordance with the provisions of the laws. 10. Submit the statement describing the changes to the composition of the Shareholders, the Board of Directors and the Board of Commissioners to the minister in charge of law and human rights. 11. Maintain the Register of Shareholders, the Special Register, Minutes of the GMS, Minutes of Meetings of the Board of Commissioners and the Board of Directors, the Annual Report and financial documents and other corporate documents. 12. Keep the following items in the domicile of the Company: List of Shareholders, the Special Register, Minutes of the GMS, the Minutes of Meetings of the Board of Commissioners and the Board of Directors, the Annual Report and financial documents and other corporate documents.

1. Strive for and guarantee the running of business and activities of the Company in accordance with the Company’s purposes and business activities.

13. Develop an accounting system in accordance with the Financial Accounting Standards and based on the principles of internal control, especially the functions of management, recording, storage, and supervision.

2. Prepare the Company’s Long Term Plan, Work Plan and Budget, and amendments thereof on time, and submit them to the Board of Commissioners and the Shareholders for approval at the GMS.

14. Provide regular reports in the manner and time that is in accordance with the prevailing regulations, as well as other reports upon the request of the Board of Commissioners and/or the shareholders.

3. Provide information to the GMS of the Company's Long-Term Plan and Work Plan and Budget.

Set up the Company’s organizational structure 15. complete with the details and description of duties.

4. Prepare a list of Shareholders, the Special Register, Minutes of GMS and the meetings of the Board of Directors.

16. Provide an explanation about issues that are asked or requested by the members of the Board of Commissioners and the Shareholders.

5. Prepare the Annual Report as a form of accountability of the Company’s management, and the Company's financial documents as stipulated in the law on Corporate Documents.

17. Develop and establish an organizational blueprint for the Company.

6. Prepare the Financial Statements based on the prevailing Financial Accounting Standards and submit them to the Public Accountant to be audited. 7. Submit the Annual Report including the Financial Statements to the GMS for approval.

18. Develop Key Performance Indicators for the Board of Directors to the GMS to obtain the GMS’ approval. 19. Perform other obligations in accordance with the provisions set forth in the Company’s Articles of Association and those determined by the GMS based on the prevailing regulations.

8. Provide information to the GMS regarding the Annual Report.

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Distribution of Tasks and Authorities of Each Member of the Board of Directors Members of the Board of Directors perform their duties collegially, however in the interest of efficiency and effectiveness in performing such tasks, the duties and responsibilities can be divided among the members of the Board of Directors. The division of duties and responsibilities between members of the Board of Directors does not eliminate the responsibility of the Board of Directors for managing the Company collegially. The duties and responsibilities of each member of the Board of Directors are set out in the Company’s Organizational Chart, and determined upon the approval of the Board of Commissioners. The Board of Directors’ Obligations related to LongTerm Planning (RJP) 1. The Board of Directors shall prepare an RJP, which is a strategic plan that includes the goals and objectives to be achieved within a period of 5 (five) years. 2. The RJP must at least contain: a. Evaluation of the implementation of previous RJP. b. The current position of the Company. c. The assumptions used in the preparation of the RJP. d. Determination of the mission, goals, strategies, policies and long-term work program. 3. The Board of Commissioners reviews and provides opinion on the RJP that has been prepared by the Board of Directors prior to signing it together with the Board of Directors to signify its approval. The Board of Directors’ Obligations related to the Work Plan and Budget (RKAP) 1. The Board of Directors shall annually prepare an elaboration of the RJP known as the RKAP. 2. The RKAP must at least contain: The Company’s mission, goals, strategies, a. policies and work programs/activities. b. The Company’s detailed budget for each program/ activity. c. The Company’s and its subsidiaries’ financial projections. d. Work program for the Board of Commissioners. e. Other matters that require the decision of the GMS. 3. The Board of Commissioners reviews and provides opinion on the RKAP that has been prepared by the Board of Directors prior to signing it together with the Board of Directors to signify its approval. 4. The RKAP draft that has been signed by all the members of the Board of Directors and all the members of the Board of Commissioners must

then be submitted by the Board of Directors to the Shareholders no later than 60 (sixty) days prior to the relevant financial year to obtain the GMS’ approval, subject to the prevailing regulations. 5. The RKAP draft is to be approved by the GMS no later than 30 (thirty) days after the current fiscal year. 6. In the event that the RKAP draft has not been submitted by the Board of Directors and/or the RKAP has not been approved within the period referred to in point 5 above, then the RKAP for the previous year shall be imposed on the current year. 7. The RKAP draft as referred to in point 4 above should be made available in the Company’s office from the date of the summons to the date of implementation of the GMS to serve the interests of the Shareholders. The Board of Directors’ Obligations related to the Preparation of the Annual Report 1. The Company’s fiscal year is the calendar year, and at the end of December of each year, the Company’s books are concluded. 2. The Board of Directors shall prepare the annual report that includes at least: a. The financial statements, comprised of at least the balance at the end of the fiscal year in comparison with the previous financial year, the statements of income for the fiscal year, cash flow statements and statement of changes in equity, and the notes to the financial statements. b. Report on the Company's activities. c. Report on the implementation of the Company’s Social and Environmental Responsibility programs, if any. d. Details of issues that arose during the fiscal year that have affected the Company's business activities. e. Report on the monitoring task that has been carried out by the Board of Commissioners during the fiscal year. f. The names of the members of the Board of Directors and the Board of Commissioners. g. The salaries and benefits/facilities for the members of the Board of Directors and compensation and benefits/facilities for the members of the Board of Commissioners for the fiscal year being reported. 3. The Annual Report draft includes the financial statements as audited by a public accountant, which has been signed by all members of the Board of Directors and submitted to the Board of Commissioners for review and signing, before it is submitted to the Shareholders.

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4. The Public Accountant as referred to in point 3 above is selected by the GMS by taking into consideration the proposal from the Board of Commissioners. 5. The Annual Report, as referred to in point 2 above, which has been signed by all the members of the Board of Directors and all the members of the Board of Commissioners, must then be submitted by the Board of Directors to the Shareholders no later than five months after the end of the fiscal year, subject to the prevailing regulations. 6. In the event that any member of the Board of Directors and Board of Commissioners did not sign the annual report, a reason must be provided in writing, or stated by the Board of Directors in a separate letter attached to the annual report. 7. In the event that a member of the Board of Directors or the Board of Commissioners did not sign the annual report as referred to in point 5 above and did not provide a reason in writing, then he or she is deemed to have approved the content of the annual report. 8. The approval of the Annual Report includes approval of the financial statements as referred to in point 5 above. This must be performed by the GMS at the latest by the end of the sixth month after the end of the fiscal year reported. 9. The approval of the Annual Report including the approval of financial statements by the GMS means that the members of the Board of Directors and the Board of Commissioners have been fully released and discharged from the management and supervision that were implemented during the past financial year, as far as the actions are stated in the Annual Report including the financial statements, subject to the prevailing regulations. 10. The Annual Report including the Financial Statements as referred to in point 5 above shall be made available in the Company’s office since the date of the summons to the date of implementation of the GMS to serve the interests of the Shareholders. 11. In the event that the financial statements provided are incorrect and/or misleading, the members of the Board of Directors and the Board of Commissioners must collectively be held responsible for the losses incurred by any party, unless it has been proven that such losses have not been caused by their mistake.

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2014

• PT Bio Farma (Persero) •

The Board of Directors’ Obligations related to the Preparation of Periodic Reports 1. The Board of Directors shall prepare periodic reports detailing the implementation of the RKAP. 2. The annual report as referred to in point 1 above includes the quarterly reports and annual reports. 3. In addition to periodic reports as referred to in point 2 above, the Board of Directors at any time may also prepare a special report for the Board of Commissioners, the Shareholders, and/or the GMS. 4. The periodic reports and other reports as referred to in points 1 and 3 above are prepared in terms of form, content and procedures in accordance with the provisions of the prevailing regulations. 5. The Board of Directors shall submit quarterly reports to the Board of Commissioners and/or the Shareholders no later than thirty days after the end of the quarterly period reported. 6. The quarterly reports as referred to in point 5 above must be signed by all members of the Board of Directors. 7. In the event that a member of the Board of Directors does not sign the quarterly report as referred to in point 6 above, a reason must be provided in writing. Risk Management Implementation 1. The Board of Directors in making each decision/ action should always consider the risks involved. 2. The Board of Directors shall establish and implement an integrated corporate risk management program as part of the GCG program implementation. 3. The implementation of a risk management program may be done by: a. Forming a separate unit under the Board of Directors, or b. Assigning an existing and relevant unit to perform the function of risk management. 4. The Board of Directors shall submit a report concerning the Company’s risk management profile and its handling, along with the periodic reports of the Company.

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reconciliation, assessment on job performance, division of tasks and the security of the Company’s assets. d. Information and communication systems, i.e. the process of preparing a report on the activities of the Company’s operations and finance and compliance with the prevailing regulations. e. Monitoring, i.e. the process of assessing the quality of the internal control system, including internal audit function at every level and unit within the Company's organizational structure, so that the system can be implemented optimally. Disclosure and Confidentiality of Information

Internal Control System 1. The Board of Directors establishes an effective internal control system to secure the Company’s assets and investments. 2. This internal control system must cover, among others: a. Internal control environment within the Company that is treated with structured discipline, comprised of: 1. Integrity, values, ethics and employee competence 2. Philosophy and management style 3. Measures taken by the management to execute its authorities and responsibilities. 4. Organization and development of human resources. 5. Concerns and directives of the Board of Directors. b. Assessment of business risk management, i.e. a process for identifying, analyzing, and assessing the management of relevant risks. c. Control activities, i.e. actions undertaken within a control process of the Company's activities that must be present on every level and unit within the organizational structure of the Company, among others, the authority, authorization, verification,

1. The Board of Directors must submit the information on their identities, main jobs, positions as members of the Board of Commissioners in subsidiaries/joint ventures or other companies, as well as the meetings held in the fiscal year (internal meetings and joint meetings with the Board of Commissioners or the Supervisory Board) and the salaries, facilities, and/or other benefits received from the relevant companies and subsidiaries/joint ventures, to be published in the Company’s Annual Report. 2. The Board of Directors shall report to the Company regarding their and/or their family’s (wife/husband and children) share ownership of the Company and other companies, including any changes thereto. 3. The Board of Directors is responsible for the Company to maintain the confidentiality of corporate information. 4. Information that under the provisions of prevailing regulations and/or the provisions of the Company's regulations is deemed confidential shall be kept confidential in accordance with the prevailing regulations and/or the Company's regulations. 5. Confidential information obtained while serving as member of the Board of Directors should be kept confidential in accordance with the prevailing regulations.

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Delegation of Authority

Director of Planning & Development

A Director may delegate their authority to other members of the Board of Directors and officers under the Board of Directors. The delegation of authority includes the duties, responsibilities and authorities, and must be made in writing. Each delegation of authority is carried out through a thorough analysis of the work to be delegated and the competence of the person who will be delegated with such authority.

Is responsible for assisting the President Director in setting the direction of the Company's business through planning and evaluation of the product development procedures and supporting the effectiveness and efficiency of production processes, and establishing policies on product development, taking into account the domestic and global markets.

In 2014 members of the Board of Directors delegated their authority 37 times to other members of the Board of Directors, each through a power of attorney. Distribution of Duties of Directors The Board of Directors reports its performance to Shareholders at the GMS. The Board of Directors also has to serve the Company’s interests in accordance with its vision and mission, and represents the Company in accordance with the Company’s Articles of Association and the prevailing laws and regulations. The specific duties and responsibilities of each Director are as follows: President Director Is responsible for planning and evaluating the Company’s business progress to make sure that they are in line with the Company’s vision, representing the Company in cooperation with other parties, determining and adjusting the organizational structure of the Company, and ensuring the that Company carries out its social responsibilities and pays attention to the interest of stakeholders in accordance with the prevailing rules and regulations. Director of Finance Is responsible for assisting the President Director in setting the direction of the Company's business through planning and evaluation of the Company's financial management procedures, establishing policies in financial management, preparing accounting system based on the principles of internal control, especially the function of managing, recording, storage, and supervision, and being accountable for state and operations of the Company in the form of an annual report including the annual accounting and the management report to the GMS. Director of Marketing Is responsible for assisting the President Director in setting the direction of the Company's business through planning and evaluation of the enterprise marketing management procedures, and establishing policies in the management of corporate marketing.

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• PT Bio Farma (Persero) •

Director of Production Is responsible for assisting the President Director in setting the direction of the Company's business through planning, implementation, and evaluation of the management of production procedures, and establishing policies in production management, including the policy on product quality that meets national and international standards. Director of Human Resources Is responsible for assisting the President Director in setting the direction of the Company's Human Resources (HR) management, logistics management, Information Technology (IT) management, and Implementation of Corporate Social Responsibility (CSR) and the Partnership and Community Development Programs (PKBL), setting the policies for Human Resources management, including the performance and reward management system, talent management, knowledge management, and organizational development, establishing policies on logistics management, information technology, and the implementation of CSR and CSR activities.

FREQUENCY OF MEETINGS AND ATTENDANCE OF DIRECTORS IN THE BOARD OF DIRECTORS MEETING Meetings of the Board of Directors of Bio Farma as stipulated in the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-06/DK/BF/II/2013 and No. 01025/DIR/II/2013 on the Guidelines for the Board of Commissioners and Board of Directors of PT Bio Farma (Persero) (Board Manual).

Meeting Basis, Time and Venue 1. Meetings of the Board of Directors are conducted on a regular basis, at least once a month. 2. In addition to this schedule, the Board of Directors may also hold meetings at any time by mentioning the issues to be discussed and/or the issues for which a decision must be made, if:

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a. It is requested by 1 (one) or more members of the Board of Directors. b. It is requested in writing by one or more members of the Board of Commissioners. c. It is requested in writing by the Shareholders. 3. Meetings of the Board of Directors is held at the domicile of the Company or in any other place in the jurisdiction of the Republic of Indonesia as determined by the Board of Directors.

Participants of the Meetings of the Board of Directors 1. The participants of the meetings of the Board of Directors are all members of the Board of Directors. 2. Should the Board of Directors deem it necessary, another party can be invited to the meetings of the Board of Directors to provide explanation on the issues being discussed.

Board of Directors Meeting Agenda 1. The Director that proposes that a meeting of the Board of Directors be held must specify the event and prepare the materials/files that need to be discussed at the meeting of the Board of Directors. 2. The agenda for the meeting of the Board of Directors may be submitted orally or in writing in the form of memos, letters and others, accompanied by the material/files that will be needed in the meeting. 3. The Director that proposes that a meeting of the Board of Directors be held must determine the agenda to be discussed/decided in the meeting, for which, if deemed necessary by that particular member of the Board of Directors, the Company Secretary can be assigned to carry out the preparation for the event and prepare the materials/files for the meeting of the Board of Directors. 4. Any agenda that has not been conclusively discussed/ decided at the previous meeting of the Board of Directors may be submitted again to the following meeting of the Board of Directors by any concerned member of the Board of Directors. 5. Any member of the Board of Directors may add an agenda to the meeting of the Board of Directors that has been arranged in advance, to be discussed/ decided in the meeting of the Board of Directors, as long as the materials/files have been prepared by said member the Board of Directors, and as long as this motion has been agreed by the other members of the Board of Directors or their authorized representatives. 6. All materials/files that need to be discussed in the meeting of the Board of Directors are submitted by the Corporate Secretary to the members of the Board of Directors prior to the meeting.

Board of Directors Meeting Invitation 1. Meeting invitations are prepared in writing by the President Director or by any other member of the Board of Directors on behalf of the President Director and are delivered within 3 (three) days before the meeting is held, or in a shorter time period if required for a meeting that will be held immediately, without regard to the date of the invitation and the meeting date. 2. In the invitation to the meeting of the Board of Directors, the meeting date, time, place and agenda of must be stated. 3. Invitation to the meeting of the Board of Directors is not required if all members of the Board of Directors are present at the meeting.

Quorum for The Board of Directors Meetings 1. Meetings of the Board of Directors are deemed legitimate and may take binding decisions if attended by more than half of the total members of the Board of Directors or their authorized representatives. 2. Every Director should strive to attend all meetings of the Board of Directors. 3. Any member of the Board of Directors may be represented at the meetings of the Board of Directors only by another member of the Board of Directors, based on a written power of attorney made for the specific purpose, i.e. for the said meeting of the Board of Directors. 4. A member of the Board of Directors may only represent another member of the Board of Directors.

Board of Directors Meeting Chairman 1. Meetings of the Board of Directors are chaired by the President Director. 2. In the event that the President Director is absent, the Board of Directors meeting shall be chaired by a member of the Board of Directors that has been appointed in writing by the President Director. 3. In the event that the President Director is absent and the President Director has not appointed a replacement, then a member of the Board of Directors who has served the longest in office as a member of the Board of Directors shall chair the Board of Directors meeting. 4. In the case that there are more than one member of the Board of Directors with the longest serving period as a member of the Board of Directors, then the oldest member of the Board of Directors among these longest-serving Directors shall chair the Board of Directors meeting.

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Minutes of Meetings of the Board of Directors 1. For each meeting of the Board of Directors, the Minutes of Meeting should be made. 2. The Minutes of Meeting of the Board of Directors shall include: a. Reason for absence of members of the Board of Directors, should there be anyone not present; b. The results of the evaluation of the implementation of all the decisions made in the previous meeting of the Board of Directors; c. The dynamics of the decision-making process at the meeting of the Board of Directors, including the opinions that are formed in the meeting, both arguments in favor or against, or a different opinion (dissenting opinion) if any; d. Consideration and/or analysis in the decisionmaking at the meeting of the Board of Directors; e. Issues that are decided at the meeting of the Board of Directors. 3. The Minutes of Meeting of the Board of Directors document is signed by the chairman of the meeting, all members of the Board of Directors who are present at the meeting, and the secretary. 4. The Minutes of Meeting of the Board of Directors document is reproduced and circulated to all members of the Board of Directors, both those who are present and not present in the meeting of the Board of Directors. 5. The original document for the meeting of the Board of Directors is stored and maintained by the Board of Directors. The Board of Directors may assign this duty to the Corporate Secretary.

Secretary of the Board of Directors Meetings 1. The secretary of the Board of Directors meetings is the Corporate Secretary. 2. In the event that the Corporate Secretary is absent or unavailable, then an attending member of the Board of Directors or another person appointed by the chairman of the Board of Directors meeting may act as the secretary of the Board of Directors meeting.

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Frequency of the Board of Directors Meetings and Attendance in Meetings In 2014, the Board of Directors met 24 times with their members’ attendance at these meetings described below: No. Name

Position

Number of Meetings of the Board of Directors

Jumlah Kehadiran

Number of Times Present

Direktur Utama

20

20 (100%)

1.

Iskandar

President Director

20

20 (100%)

2.

Juliman Fuad

Production Director

20

19 (95%)

3.

Sugeng Raharso

Planning & Development Director

20

19 (95%)

4.

Mahendra Suhardono

Marketing Director

20

19 (95%)

5.

Pramusti Indrascaryo

Finance Director

20

20 (100%)

6.

Andjang Kusumah

HR Director

20

20 (100%)

Board of Directors Meeting Agendas in 2014 Throughout 2014 the Board of Directors meetings discussed various issues faced by the Company, its performance and strategies related to the management of the Company, as described in the following agendas: No. Day/Date 1. Tuesday, 21 January 2014

2. Thursday, 6 February 2014

3. Thursday, 13 February 2014

4. Thursday, 13 March 2014

5. Thursday, 20 March 2014

6. Thursday, 10 April 2014

7. Thursday, 5 June 2014

8. Friday, 20 June 2014

9. Monday, 23 June 2014 10. Thursday, 10 July 2014

11. Thursday, 7 August 2014

Meeting Agenda - Follow up on previous meeting - Discussion on the recommendations of the Board of Commissioners - Other issues - Follow up on ERP - ERP implementation - Production Facility project implementation - Placemenf of funds in the RDPT of PT Inti - Other issues - Follow up on previous meeting - Preparation for the meetings with IDB and Arabio - Results of meeting with the Cuban party - Other issues - Follow up on previous meeting - RJPP - Other issues - Follow up on previous meeting - Plan for the Escalation of Status of Cisarua Land - Other issues - Follow up on previous meeting - Bio Farma’s new land search progress - Other issues - Follow up on previous meeting - Investment realization and planning in 2014 RKAP - 2014 production realization - 2014 organizational structure planning - Other issues - Follow up on previous meeting - Preparation for the formulation of 2015 RKAP - Preparation for WHO audit - Other issues - Submission of Meeting Resolutions - Other issues - - - - -

Follow up on previous meeting WHO Audit results Other issues Follow up on previous meeting Human resources placement

Venue Board of Directors of PT Bio Farma (Persero) Meeting Room, Arthaloka Building, Jl. Sudirman, Jakarta Lower Meeting Room, Jl. Pasteur No. 28, Bandung

Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung

Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung

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No. Day/Date 12. Thursday, 14 August 2014

Meeting Agenda - Follow up on previous meeting - National Vaccine Research Forum - New land - Official vehicles - Human Capital - Other issues 13. Thursday, 20 August 2014 - Follow up on previous meeting - Preparation for the formulation of 2015 RKAP 14. Monday, 8 September 2014 - Follow up on previous meeting - Formulation of 2015 RKAP 15. Monday, 6 October 2014 - Follow up on previous meeting - Blank Uniject - Core Competency - Other issues 16. Friday, 7 November 2014 - Follow up on previous meeting - Program Explanation from the Healthy Living Paradigm Program - BIKEN meeting agendas - Executive Gathering schedules - Company Visit: MPU Aceh on 12 Nov 2014 and NHSO & FDA Thailand on 13 Nov 2014 - Other issues 17. Friday, 12 November 2014 - Follow up on previous meeting - Directives of the Ministry of State-Owned Enterprises - Other issues 18. Wednesday, 19 November - Follow up on previous meeting 2014 - Calculation of Number of Employees after ERP Implementation - Other issues 19. Thursday, 27 November - Follow up on previous meeting 2014 - SOE Operations Efficiency - Plan for the arrival of GAVI team - Other issues 20. Thursday, 18 December - Follow up on previous meeting 2014 - Career transfer of division heads - Other issues

Venue Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung

Hyatt Hotel Meeting Room, Jakarta Administration Building 1 Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Lower Meeting Room, Jl. Pasteur No. 28, Bandung

Lower Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung Board of Directors of PT Bio Farma (Persero) Meeting Room, Jl. Pasteur No. 28, Bandung

FREQUENCY OF MEETINGS AND ATTENDANCE OF THE DIRECTORS AT THE JOINT MEETINGS OF THE BOARD OF DIRECTORS AND THE BOARD OF COMMISSIONERS Joint Meetings of the Board of Directors and the Board of Commissioners Meeting Basis, Time and Venue 1. The Joint Meetings of the Board of Directors and the Board of Commissioners are held regularly, at least once a month. 2. In addition to the scheduled meetings, The Joint Meetings of the Board of Directors and the Board of Commissioners may also be held at any other time by stating the issues to be discussed and/or for which a decision shall be made: a. At the request of 1 (one) or more members of the Board of Commissioners or more than half the total number of members of the Board of Directors or more than half the total number of members of the Board of Commissioners.

ANNUAL REPORT

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• PT Bio Farma (Persero) •

b. At the written request of the Shareholders. 3. The Joint Meetings of the Board of Directors and the Board of Commissioners are held at the Company or elsewhere within the territory of the Republic of Indonesia as determined by the Board of Directors. Participants of the Joint Meetings of the Board of Directors and the Board of Commissioners 1. The Joint Meetings of the Board of Directors and the Board of Commissioners are attended by all members of the Board of Commissioners and the Board of Directors. 2. If the Board of Commissioners or the Board of Directors deems it necessary, other parties may attend the Joint Meetings of the Board of Directors and the Board of Commissioners to provide certain explanations that are deemed necessary.

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Agendas of the Joint Meetings of the Board of Directors and the Board of Commissioners 1. The Board of Directors and the Board of Commissioners who propose the Joint Meetings of the Board of Directors and the Board of Commissioners must specify the event and prepare the materials/files needed to be discussed in the Joint Meetings of the Board of Directors and the Board of Commissioners. 2. The agenda for the Joint Meetings of the Board of Directors and the Board of Commissioners may be submitted orally or in writing in the form of memo, letter or others, accompanied by the materials/files needed for the Joint Meeting of the Board of Directors and the Board of Commissioners. 3. The Director or Commissioner that proposes that a Joint Meeting of the Board of Directors and the Board of Commissioners be held must determine the agenda to be discussed/decided in the meeting, for which, if deemed necessary by that particular member of the Board of Directors or the Board of Commissioners, the Company Secretary can be assigned to carry out the preparation for the event and prepare the materials/files for the Joint Meeting of the Board of Directors and the Board of Commissioners. 4. Any agenda that has not been conclusively discussed/ decided at the previous Joint Meeting of the Board of Directors and the Board of Commissioners may be submitted again to the following Joint Meeting of the Board of Directors and the Board of Commissioners by any concerned member of the Board of Directors or the Board of Commissioners. 5. Any member of the Board of Directors or the Board of Commissioners may add an agenda to the Joint Meeting of the Board of Directors and the Board of Commissioners that has been arranged in advance, to be discussed/ decided in the Joint Meeting of the Board of Directors and the Board of Commissioners, as long as the materials/ files have been prepared by said member the Board of Directors or the Board of Commissioners, and as long as this motion has been agreed by the other members of the Board of Directors and/or the Board of Commissioners, or their authorized representatives. 6. All materials/files that need to be discussed in the Joint Meeting of the Board of Directors and the Board of Commissioners that come from the Board of Directors are presented to the Corporate Secretary, to be subsequently be transmitted by the Corporate Secretary to the members of the Board of Directors and the Board of Commissioners through the Secretary to the Board of Commissioners, prior to the Joint Meeting of the Board of Directors and the Board of Commissioners.

7. All materials/files that need to be discussed in the Joint Meeting of the Board of Directors and the Board of Commissioners that come from the Board of Commissioners are presented to the Secretary to the Board of Commissioners, to be subsequently be transmitted by the Secretary to the Board of Commissioners to the members of the Board of Directors through the Corporate Secretary, prior to the Joint Meeting of the Board of Directors and the Board of Commissioners. Invitation to Joint Meetings of the Board of Directors and the Board of Commissioners 1. If the Board of Directors initiates the Joint Meeting of the Board of Directors and the Board of Commissioners, then the schedule for the said meeting is to be agreed upon by the Board of Directors and the Board of Commissioners. Meeting invitations are made in writing by the President Director or by the members of the Board of Directors representing the President Director and is delivered within at most 3 (three) days before the said meeting is held, or in a shorter time should it be required to immediately hold the meeting, with no regard to the date of the summons and the meeting date. 2. If the Board of Commissioners initiates the Joint Meeting of the Board of Directors and the Board of Commissioners, then the schedule for the said meeting is to be agreed upon by the Board of Directors and the Board of Commissioners. Meeting invitations are made in writing by the President Commissioner or by the members of the Board of Commissioners representing the President Commissioner and is delivered within at most 3 (three) days before the meeting is held or in a shorter time should it be required to immediately hold a meeting, with no regard to the date of the summons and the meeting date. 3. Invitation to the Joint Meeting of the Board of Directors and the Board of Commissioners should include the date, time, place and agenda of the Joint Meeting of the Board of Directors and the Board of Commissioners. 4. Invitation to the Joint Meeting of the Board of Directors and the Board of Commissioners is not required if all the members of the Board of Directors and the Board of Commissioners are in attendance.

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THE BOARD OF DIRECTORS

Quorum for the Joint Meetings of the Board of Directors and the Board of Commissioners

4. In the case that there are more than one member of the Board of Commissioner with the longest serving period as a member of the Board of Commissioners, then the oldest member of the Board of Commissioners among these longest-serving Commissioners shall chair the Joint Meeting of the Board of Directors and the Board of Commissioners.

1. Joint Meetings of the Board of Directors and the Board of Commissioners are deemed legitimate and may take binding decisions if attended by more than half of the total members of the Board of Directors or their authorized representatives and more than half of the total members of the Board of Commissioners or their authorized representatives.

Minutes of Joint Meetings of the Board of Directors and the Board of Commissioners

2. Every Director and Commissioner should strive to attend all Joint Meetings of the Board of Directors and the Board of Commissioners.

1. For each Joint Meeting of the Board of Directors and the Board of Commissioners, the Minutes of Meeting should be made.

3. Any member of the Board of Directors may be represented at the Joint Meeting of the Board of Directors and the Board of Commissioners only by another member of the Board of Directors, based on a written power of attorney made for the specific purpose, i.e. for the said Joint Meeting of the Board of Directors and the Board of Commissioners.

2. The Minutes of Joint Meetings of the Board of Directors and the Board of Commissioners shall include:

4. A member of the Board of Directors may only represent another member of the Board of Directors. 5. Any member of the Board of Commissioners may be represented at the Joint Meeting of the Board of Directors and the Board of Commissioners only by another member of the Board of Commissioners, based on a written power of attorney made for the specific purpose, i.e. for the said Joint Meeting of the Board of Directors and the Board of Commissioners. 6. A member of the Board of Commissioners may only represent another member of the Board of Commissioners. Joint Meetings of the Board of Directors and the Board of Commissioners Chairman 1. Joint Meetings of the Board of Directors and the Board of Commissioners are chaired by the President Commissioner. 2. In the event that the President Commissioner is absent, the Joint Meeting of the Board of Directors and the Board of Commissioners shall be chaired by a member of the Board of Commissioners that has been appointed in writing by the President Commissioner. 3. In the event that the President Commissioner is absent and the President Commissioner has not appointed a replacement, then a member of the Board of Commissioner who has served the longest in office as a member of the Board of Commissioners shall chair the Joint Meeting of the Board of Directors and the Board of Commissioners.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

a. Reason for absence of members of the Board of Directors and/or Board of Commissioners, should there be anyone not present; b. The results of the evaluation of the implementation of all the decisions made in the previous Joint Meeting of the Board of Directors and the Board of Commissioners; c. The dynamics of the decision-making process at the Joint Meeting of the Board of Directors and the Board of Commissioners, including the opinions that are formed in the meeting, both arguments in favor or against, or a different opinion (dissenting opinion) if any; d. Consideration and/or analysis in the decisionmaking at the Joint Meeting of the Board of Directors and the Board of Commissioners; e. Issues that are decided at the Joint Meeting of the Board of Directors and the Board of Commissioners. 3. The Minutes of Joint Meeting of the Board of Directors and the Board of Commissioners document is signed by the chairman of the meeting, all members of the Board of Directors and the Board of Commissioners who are present at the meeting, and the meeting secretary. 4. The Minutes of Joint Meeting of the Board of Directors and the Board of Commissioners document is reproduced and circulated to all members of the Board of Directors and the Board of Commissioners, both those who are present and not present in the Joint Meeting of the Board of Directors and the Board of Commissioners. 5. The original document for the meeting of the Board of Directors and the Board of Commissioners is stored and maintained by the Corporate Secretary.

194

Secretary of the Joint Meetings of the Board of Directors and the Board of Commissioners The role of secretary at the Joint Meetings of the Board of Directors and the Board of Commissioners is assigned to the Secretary to the Board of Commissioners. In the event that the Secretary to the Board of Commissioners is absent or unavailable, then another person appointed by the chairman of the Board of Directors meeting may act as the secretary at the Joint Meetings of the Board of Directors and the Board of Commissioners. In 2014, the Board of Directors and the Board of Commissioners met 10 times with their members’ attendance at these meetings described below: No. Name

Position

BOC – BOD Meeting

1.

Iskandar

President Director

10 (100%)

2.

Juliman Fuad

Production Director

3.

Sugeng Raharso

Planning & Development Director

10 (100%)

4.

Mahendra Suhardono

Marketing Director

10 (100%)

5.

Pramusti Indrascaryo

Finance Director

10 (100%)

6.

Andjang Kusumah

HR Director

10 (100%)

8 (80%)

Attendance | 2014 Board of Commissioners – Board of Directors Meeting No. Nama

LMP 2014 (Unaudited) 28 January 2014

LMP 2014 (Audited) 19 February 2014

LMP 2014 (28-04-2014)

LMP 2014 (24-07-2014)

LMP 2014 (28-10-2014)

First Quarter

First Half

Third Quarter

RKAP 2015 (28-10-2014)

I. Directors 1.

Iskandar

Present

Present

Absence

Present

Present

Present

2.

Pramusti Indrascaryo

Present

Present

Present

Present

Present

Present

3.

Andjang Kusumah

Present

Present

Present

Absence

Present

Present

4.

Mahendra Suhardono

Present

Present

Absence

Absence

Absence

Absence

5.

Juliman

Present

Present

Present

Absence

Absence

Absence

6.

Sugeng Raharso

Present

Present

Absence

Present

Present

Present

II. Board Of Directors 1.

Ahmad M. Ramli

Absence

Present

Present

Present

Present

Present

2.

Herman Ladjidja Djuni

Present

Present

Present

Present

Present

Present

3.

Nizar Yamanie

Present

Present

Absence

Present

Present

Present

4.

Paruli Lubis

Present

Present

Present

Present

Present

Present

5.

Ihsan Setiadi Latief

Present

Present

Present

Present

Absence

Absence

6.

Heridadi

Present

Present

Absence

Present

Present

Present

195

GOOD CORPORATE GOVERNANCE

THE BOARD OF DIRECTORS

Agendas of the Joint Meetings of the Board of Directors and the Board of Commissioners in 2014 Throughout 2014, the Joint Meetings of the Board of Directors and the Board of Commissioners discussed various issues faced by the Company, the performance and strategies related to the management of the Company, as detailed in the following table: No. Day/Date 1. 10 January 2014

Meeting Agenda 1. Follow up on the results of meeting on 24 December 2014 2. 2014 Corporate Agendas 3. Medical & retirement expenses in 2014

Decision Approval of the 2014 Corporate agenda Making the law assessment to review the medical expenses.

2. 22 January 2014

Discussion of the Response to the Letter of the Deputy of Strategic Industries and Manufacturing

Following up on the letter of the Deputy of Strategic Industries and Manufacturing.

3. 28 January 2014

Discussion on the 2013 Unaudited Management BOC appreciate the performance achievements of Bio Farma in 2013. Report of PT Bio Farma

4. 19 February 2014

Discussion of the 2013 Audited Management Report of PT Bio Farma

5. 28 April 2014

Discussion of the Management Report of PT Bio Achievement of the first quarter of 2014 investment needs to be improved and to Farma and PKBL Activity Report for Q1 2014 accelerate vaccine contract signing with the Government Discussion on the 2014 Investment Plans Approval of the Board of Commissioners on the mechanisms of the use of credit facilities Follow up on RUPS resolutions Health insurance for employees need to be consulted with shareholders 1. Urgency of securing land for development Noting the legal aspects related to the land development in Jasinga 2. Health insurance

6. 14 May 2014 7. 27 June 2014 8. 11 July 2014

9. 24 July 2014

10. 10 October 2014

11. 28 October 12. 22 December

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

1. Discussion of the Management Report of PT Bio Farma (Persero) for H1 2014 2. Discussion of the Letter of the Board of Directors of PT Bio Farma on the Application for Approval of Extension of Non-Cash Loan Credit Facility 1. Discussion of the Halal Product Guarantee Bill 2. Performance Report, Cooperations and Official Travels and Overseas Travels Corporate business plans 2015 Land leasing plans for development and investment in Jasinga

Achieving company KPI score of 122,66 and health level of 96,00 with health criteria “AAA”

Approval of the extension of Non Cash Loan credit facilities.

Preparation on the application of Halal Product Guarantee Bill.

Approval of the proposed RKAP 2015 Assessment of the legal aspects related to the land to be used for development and investment is required.

196

TRAINING FOR ENHANCING COMPETENCE OF THE BOARD OF DIRECTORS AND INDUCTION FOR NEW DIRECTORS a. Training and Competence Enhancement for the Board of Directors Training and self-development for members of the Board of Directors must be carried out in a sustainable manner, to ensure the knowledge, competence, and support the execution of duties of the Board of Directors. In 2014, the Board of Directors participated in the following training, workshop, and information dissemination sessions as follows: No. Program Date 1. Culture Revitalidation Workshop 8 January 2014 2. National Work Meeting of PT Indofarma Global 22 January 2014 Medika 3. Finalization of Vision, Mission, Value & Meaning Workshop 23 January 2014

Place Bandung

Participant Iskandar

Jakarta

Mahendra Suhardono (Speaker)

Bandung

4. Executive Meeting “PKBL Policy”

5. GAVI Alliance Board Strategy Workshop

14 February 2014

Bandung

27 - 28 February 2014

Geneva, Switzerland

Juliman

Dubai, UEA

Mahendra Suhardono, Juliman

Geneva, Switzerland

Mahendra Suhardono

12 April 2014

Surabaya

Iskandar (Speaker)

15 April 2014

Jakarta

Iskandar

19 April 2014

Bandung Washington, D.C., USA

Iskandar (Speaker) Iskandar, Mahendra Suhardono (Speaker)

27 April 2014

Seattle, USA

Iskandar

30 April 14

Jakarta, Indonesia

Juliman (Panelist)

Jakarta

Mahendra Suhardono (Speaker)

Geneva, Switzerland

Juliman

6. The 7th meeting with International Partners on Prospects for Influenza Vaccine Technology 24 – 28 March 2014 Transfer to Developing Country Vaccine Manufacturers 7. SAGE (Strategic Advisory Group Experts) 1 - 2 April 2014 8. Seminar “Application of Scientific Discoveries in Industries” 9. Seminar “Intellectual Property Rights in Improving the Competitiveness in the Pharmaceutical Industry” 10. Seminar “Road to Entrepreneur” 11. Sabin 20th Anniversary Scientific Forum 12. 2014 Global Health Product Development Forum 13. MetroTV Talkshow “World Vaccination Week”

Iskandar, Andjang Kusumah, Mahendra Suhardono, Juliman, Sugeng Raharso, Pramusti Indrascaryo Iskandar, Andjang Kusumah, Mahendra Suhardono, Juliman, Sugeng Raharso, Pramusti Indrascaryo

25 April 2014

14. Government Goods and Services Procurement 11 June 2014 Policy Institution 15. GAVI Alliance Board Meeting 18 - 19 June 2014 16. Executive Meeting “Main Tasks and Organizational Functions of the Ministry of 10-11 August 2014 State-Owned Enterprises in the Global Life Science Industry” 17. National Vaccine Research Forum, “Implementation of Vaccine Research Results in Ensuring National Vaccine Self-Sufficiency” 18-19 August 2014

Jakarta

18. Seminar “Ready to Retire”

Bandung

6 September 2014

Banjarmasin

Iskandar, Andjang Kusumah, Mahendra Suhardono, Juliman, Sugeng Raharso, Pramusti Indrascaryo Iskandar (Pengarah), Andjang Kusumah, Mahendra Suhardono (Speaker), Juliman (Moderator), Sugeng Raharso (Speaker), Pramusti Indrascaryo (Moderator) Iskandar (Speaker)

197

GOOD CORPORATE GOVERNANCE

THE BOARD OF DIRECTORS

No. Program 19. Talkshow “Kick Andy” Metro TV 20. The 13th Annual WHO/UNICEF Consultation with OPV/IPV Manufacturers and National Regulatory Authorities 21. Industry Consultation for Vaccine Manufacturers 22. Seminar “Success Story in Upholding Corporate Reputation” held by the SPS 23. National Economic Committee Seminar 24 . 15th Annual General Meeting DCVMN (Developing Countries Vaccine Manufacturers Network) 25. Seminar “Harmonization and Translation of Research (with the Life Science Industry)” held by the Indonesian Young Researchers Forum 26. Training ISO 26000:2010 27. SUKUK Workshop at the Ministry of StateOwned Enterprises 28. Science and Technology Workshop for Building Indonesia from the Remote Areas 29. GAVI Alliance Board Meeting 30. Seminar “Geopark Ciletuh Publication” 31. Seminar “Entrepreneurship and Leadership”

Date 17 September 2014

Place Jakarta, Indonesia

Participant Juliman (Panelist)

Geneva, Switzerland

Juliman

8 - 9 October 2014

Copenhagen, Denmark

Mahendra Suhardono

17 October 2014

Yogyakarta

Iskandar (Speaker)

17 October 2014 27 – 29 October 2014

Jakarta New Delhi, India

Andjang Kusumah

28 October 2014

Bandung

Iskandar (Speaker)

14 November 2014

Bandung

Iskandar (Speaker)

18 November 2014

Jakarta

Pramusti Indrascaryo

9 December 2014

Jakarta

Iskandar (Speaker)

10 - 11 December 2014 13 December 2014 13 December 2014

Geneva, Switzerland Sukabumi Semarang

02-03 October 2014

Mahendra Suhardono (Speaker), Juliman

Juliman Iskandar (Speaker) Pramusti Indrascaryo (Speaker)

b. Induction Program for New Directors In order to develop the competence and introduce the Company to a new Director, Bio Farma maintains an induction program for new Directors, which is aimed at providing an overview of the Company, including the general condition of the Company, financial conditions, strategies currently being executed, business activities, long-term plans, as well as the duties and responsibilities of the Board of Directors. The induction program for new Directors is prepared by the Corporate Secretary in collaboration with the Human Resources Division and other relevant divisions, and was presented in the form of presentations, handover of annual reports, company profile, company history, GCG-related documentation, product knowledge, and a site visit to the vaccine production facilities. The new Directors also actively participate in various forums held by the Company, both on a national scale such as the Vaccine Research Forum and on the international scale such as the Developing Countries Vaccine Manufacturer Networks and the Organization of Islamic Cooperation (OIC). In 2014 there were no changes to the composition of the Board of Directors of PT Bio Farma (Persero), and therefore no induction program was held that year.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

198

BOARD MANUAL In order to perform the functions and roles as the Company’s management and to build rapport with the Board of Commissioners, the Board of Directors is guided by the Board Manual for the Board of Directors.

7. Obligations of the Board of Directors related to the long-term planning

The Board Manual is a living document, and thus it must be regularly updated and enhanced based on the Company’s current needs and the requirements of the prevailing regulations.

9. Obligations of the Board of Directors related to the preparation of Annual Report 10. Risk management

The purpose of the Board Manual is

11. Internal control systems

• To act as a set of guidelines for the Board of Commissioners and the Board of Directors in performing their respective duties in a professional and responsible manner.

12. Disclosure and confidentiality of information

• To detail the work relationships between the Board of Commissioners and the Board of Directors in performing their duties, so as to ensure a professional management of the Company in line with the good corporate governance principles The Board Manual for the Board of Commissioners and the Board of Directors was prepared based on the mutual agreement of Board of Directors and Board of Commissioners, and stipulated in the documents No. KEP-06/DK/BF/II/2013 and No. 01025/DIR/II/2013 on the Board Manual for the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero). The guidelines set out in the Board Manual for the Board of Directors among others discuss these aspects: 1. Induction program for new Directors 2. Training programs for Directors 3. Work relationship between the Board Commissioners and the Board of Directors

of

4. Duties, authorities and obligations as well as the division of duties of the Board of Directors 5. Provisions for the execution of duties of a vacant Director position 6. Conflict of interest

8. Obligations of the Board of Directors related the RKAP preparation

13. Business ethics and anti-corruption 14. Prohibition of acting for personal interest 15. Meetings of the Board of Directors 16. Joint Meetings of the Board of Directors and the Board of Commissioners

Policy on the Board of Directors Succession Program The policy on the Board of Directors succession is stipulated in the Decree of the Board of Directors of PT Bio Farma (Persero) No. 03982/DIR/VII/2013 on the Third Amendment to the Decree of the Board of Directors of PT Bio Farma (Persero) No. 03940/DIR/VI/2007 dated 4 June 2007 on the Employee Career Planning System in PT Bio Farma (Persero). The management succession is intended to prepare the candidates for the members of the Board of Directors from within the Company. The management succession begins with the cadre program, by taking into account the integrity, dedication and competence of the individual. Candidates for the members of the Board of Directors that are from State-Owned Enterprises may be considered to be appointed as members of the Board of Directors at the State-Owned Enterprise based on the Fit & Proper Test by a professional institution appointed by the State-Owned Enterprise. Alternatively, the Technical Deputy or the Secretary of the Ministry of the StateOwned Enterprise may request an opinion from the Board of Commissioners regarding the candidates for the members of the Board of Directors that are from State-Owned Enterprises.

199

GOOD CORPORATE GOVERNANCE

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS PERFORMANCE ASSESSMENT

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS PERFORMANCE ASSESSMENT BOARD OF COMMISSIONERS A. Board of Commissioners Performance Assessment Procedures Board of Commissioners performance is evaluated by the Shareholders at the GMS based on the Company’s performance as stated in the authorization of the Company’s Financial Statements by the GMS. Board of Commissioners performance assessment by the GMS is reflected on the resolution of the GMS that approves and authorizes the Financial Statements including the Report of the Board of Commissioners on their supervision of the Company for the past fiscal year. Referring to the Minister of State-Owned Enterprises Regulation No. PER-01/MBU/2011, that the GMS determines the Board of Commissioners Performance Achievement Indicators based on the recommendation from the Board of Commissioners, the Board of Commissioners of Bio Farma issued the Decree of the Board of Commissioners No. SK-06/DK/BF/XII/2011 dated 19 December 2011 on the Determination and Assessment of Key Performance Indicators (KPI) for the Board of Commissioners in 2012. The Board of Commissioners KPI Assessment results for 2014 are as follows:

B. Criteria Used in the Board of Commissioners Performance Assessment Board of Commissioners KPI 2014 Indicator

Rumusan

Target

Aspects of Supervision and Instructions :

Weight

Realization

60%

Score 60,4

a.

Review / analysis of company performance

Meeting to discuss the performance of the company with the Board of Directors

12 kali

15%

12 kali

15

b.

Board of Commissioners Meetings Number of Meetings

Board of Commissioners Internal Meetings

12 kali

15%

12 kali

15

c.

Attendance rate

% of Board of Commissioners that attended

90%

10%

94%

10,4

d.

Providing advice / suggestions to the Board of Directors

Number of reports / minutes of which there are suggestions from the Board of Commissioners to the Board of Directors

12 lap/ris

10%

12 lap/ris

10

e.

Monitoring follow up results / findings of the internal / external audit

Number of reports on the results of monitoring / audit findings

2 kali

10%

2 kali

10

Reporting Aspect

30%

30

a.

Prepare and submit annual work program

Number of annual work programs

1 kali

5%

1 kali

5

b.

Delivering reports / opinions / advice to the share holders

Number of responses submitted to the shareholders

5 surat

10%

5 surat

10

c.

Delivering the Supervisory

Number of supervisory report

1 kali

5%

1 kali

5

% The number of Board of Directors letters that have been addressed by the Board of Commissioners

100%

10%

100%

10

Working visit oversight to understand the company’s business conducted in the official travel domestic or abroad when deemed necessary

Number of official travel visit domestic or abroad

10 kali

5%

6 kali

3

Knowledge and capacity building

Number of seminars/ workshops/ FGD/ trainings that has been followed

2 kali

5%

2 kali

5

Report d.

Delivering a reply / response to the letter of the Board of Directors

Dynamic Aspects/ Others :

Total Weight

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

10%

100%

8

98,4

200

201

GOOD CORPORATE GOVERNANCE

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS PERFORMANCE ASSESSMENT

The following table displays the comparison of the Board of Commissioners KPI achievements for the years 2012, 2013, and 2014: KPI Achievement of The Board of Commissioners of 2014 KPI

Weight

2012

2013

2014

10

6.83

7.33

8.83

5

3.33

3.82

5.00

Feedback Disposal rate

10

12.67

13.63

15.00

Special GCG Assessment Result for Board of Commissioners

10

7.20

7.40

9.34

Work Plan Implementation

20

18.35

18.77

19.06

Efficiency of Audit & Remuneration Committee’s Task

15

1.00

15.00

15.00

Efficiency of Risiko & Nominasi Committee’s Task

15

13.33

13.50

13.75

Contribution towards Corporate Performance

20

18.83

19.35

19.50

100

95.54

98.80

100.48

Board of Commissioners’ Meeting Board of Commissioners development program

Total

C. Party Conducting the Assessment The Board of Commissioners performance The Board of Commissioners performance was self-assessed collegially and is part of the Board of Commissioners Report of Supervision. The execution of duties is planned at the beginning of each year in a Work Program stipulated in the Work Plan and Budget. At the end of the year, the Board of Commissioners prepares its Repot of Supervision which is subsequently submitted to the Shareholders at the GMS to be evaluated and authorized.

BOARD OF DIRECTORS A. Board of Directors Performance Assessment Procedures Board of Directors performance is evaluated by the Shareholders at the GMS in a collective collegial manner based on the Company’s performance as stated in the authorization of the Company’s Financial Statements by the GMS. At the beginning of each year, the Board of Directors is required to formulate their Key Performance Indicators (KPIs) that captures the Work Plan and Budget authorized by the GMS and stipulated in the management contract. The formulation of the KPIs refers to the Minister of State-Owned Enterprises Letter No. S-676/MBU/2004 dated 22 December 2004 on the Determination of KPIs for the Shareholders’ purpose of measuring the Board of Directors performance up to the end of the year. The Board of Directors performance is collectively reported by the Board of Commissioners to the GMS in the Board of Commissioners Report of Supervision.

B. Criteria Used in the Board of Directors Performance Assessment KPI Evaluation on the Board of Directors of 2014 KPI Process and Product Effectiveness

Operational Performance Investment realization (Capex) Investment tangible realization Research Program Energy Saving Program

Sub Total

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Formula Realization/ Target Realization/ Target Realization/ Target Realization/ Target Realization/ Target

Unit

Weight

Plan

Realization

Score

%

4

2

2

4.00

%

4

100

90

3.60

%

4

75

75

4.00

Program

4

12

12

4.00

%

4

100

100

4.00

20

19.60

202

KPI Evaluation on the Board of Directors of 2014 KPI Customer Focus

Customer satisfaction survey Sales performance Market Growth

Sub Total Human Resources Training ratio of Focus employees Employees productivity Employees Engagement Sub Total Leadership, Good Corporate Governance, and Corporate Social Responsibility

CSR Performance Update data Portal BUMN GCG Implementation Environment Green Proper

Sub Total Financial and market

EBITDA margin Return on equity Cash Operation Growth Sales Growth COPRO

Formula

Unit

Weight

Plan

Realization

Score

Realization/ Target Realization/ Target Realization/ Target

%

8

1.00

1

8.00

%

7

100

80

5.60

%

7

20

15

5.25

Realization/ Target

Day

22 6

8

7

18.85 5.25

Realization/ Target

Day

6 6

1,707,768,630 25

1,707,768,630 25

6.00 6.00

Realization/ Target Realization/ Target Assessment Score Assessment Score

Score

18 4

6

6

17.25 4.00

Score

4

Score

4

80

80

4.37

Score

4

76

83

4.00

Realization/ Target Realization/ Target Realization/ Target Realization/ Target Realization/ Target

%

16 5

100 38.51

100 38.51

16.37 5.00

%

5

25.64

25.64

5.00

%

4

22.08

22.08

4.00

%

5

13

13.26

5.00

Rupiah

5

1,016,060,798

1,016,060,798

5.00

Sub Total TOTAL

4.00

24

24.00 96.07

The Board of Directors KPI Assessment results for 2012, 2013, and 2014 are as follows: KPI Achievement of The Board of Directors of 2013 Score Maximum

2012

2013

2014

110

38,50

27,5

38,50

Customer Focus

90

18

13,5

18

Human Resources Focus

80

24

24

28

Leadership, Good Corporate Governance, and Corporate Social Responsibility

80

28

20

36

Financial and market

90

31,50

27

45

450

140

112

165,5

KPI Process and product effectiveness

Total

C. Party Conducting the Assessment The Board of Commissioners performance was self-assessed collegially and is part of the Board of Commissioners Report of Supervision. The execution of duties is planned at the beginning of each year in a Work Program stipulated in the Work Plan and Budget. At the end of the year, the Board of Commissioners prepares its Repot of Supervision which is subsequently submitted to the Shareholders at the GMS to be evaluated and authorized.

203

GOOD CORPORATE GOVERNANCE

BOARD OF COMMISSIONERS AND BOARD OF DIRECTORS PERFORMANCE ASSESSMENT

Key Performance Indicators (KPIs) As a whole, the 2014 KPIs have exceeded the targets in particular in the aspects of finance & market, and leadership, governance & social responsibility. However, in the aspects of process & product effectiveness, focus on the customer, and focus on the employees the KPI achievements were below their respective targets. Target No. KPKU Perspective

2013

Realization by Year 2014

2013

Weight I

Achievement 2013

2014 Score

2014 %

Process and Product Effectiveness (7.1)

20%

20%

18.42

17.27

92.10

93.76

II

Focus On The Customer (7.2)

22%

22%

20.81

23.59

94.59

113.36

III

Focus On The Employees (7.3)

17%

17%

22.79

16.18

134.06

71.00

IV

Leadership, Governance and Social Responsibility 7.4)

17%

17%

17.95

19.06

105.59

106.18

V

Finance and Market (7.5) Total

24%

24%

42.8

22.03

178.33

51.47

100%

100%

122.77

98.13

122.77

79.93

Description of 2013 KPIs Process and Product Effectiveness The 2013 KPI achievement for process and product effectiveness was 18.42. This was 1.58 points lower than the KPI target of 20.00. The indicators that were measured below the 2013 KPI targets were Realization of Investment (Capital Expenditures) and Physical Realization of Investment, with scores of 2.81 and 2.80, respectively, or only reaching 72% and 70% of the 2013 KPI target of 4.

were EBITDA Margin (with a score of 6.19 out of the KPI weighting of 5.00), Return on Equity (7.44 out of 5.00), Cash Operation Growth (12.17 out of 4.00), Sales Growth (11.13 out of 5.00), and COPRO (5.87 out of 5.00).

Description of 2014 KPIs Process and Product Effectiveness

The 2013 KPI achievement for focus on the customer was 94.59% of the KPI target of 22.00. The indicator that was measured below the 2013 KPI target was Actual Domestic Sales, with a score of 5.81 or 83% of the 2013 KPI target of 7.

The 2014 KPI achievement for process and product effectiveness was 18.42. This was 1.58 points lower than the KPI target of 20.00. The indicators that were measured below the 2013 KPI targets were Realization of Investment (Capital Expenditures) and Physical Realization of Investment, with scores of 2.81 and 2.80, respectively, or only reaching 72% and 70% of the 2013 KPI target of 4.

Focus on the Employees

Focus on the Customer

The 2013 KPI achievement for focus on the employees was 22.79. This was 134.06% of the KPI target of 17. The indicators that were measured were Employee Training Ratio (with as score of 4.05), Employee Productivity (6.84), and Educational Upgrade (11.90).

The 2014 KPI achievement for focus on the customer was 94.59% of the KPI target of 22.00. The indicator that was measured below the 2013 KPI target was Actual Domestic Sales, with a score of 5.81 or 83% of the 2013 KPI target of 7.

Leadership, Governance and Social Responsibility

Focus on the Employees

The 2013 KPI achievement for leadership, governance and social responsibility was 17.95, or 105.59% of the 2013 KPI target of 17.

The 2014 KPI achievement for focus on the employees was 22.79. This was 134.06% of the KPI target of 17. The indicators that were measured were Employee Training Ratio (with as score of 4.05), Employee Productivity (6.84), and Educational Upgrade (11.90).

Focus on the Customer

Finance and Market The 2013 KPI achievement for finance and market was 42.80 or 178.33% of the KPI target of 24.00. All indicators were measured above the 2013 KPI targets, and they

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

204

Leadership, Governance and Social Responsibility The 2014 KPI achievement for leadership, governance and social responsibility was 17.95, or 105.59% of the 2014 KPI target of 17.

were EBITDA Margin (with a score of 6.19 out of the KPI weighting of 5.00), Return on Equity (7.44 out of 5.00), Cash Operation Growth (12.17 out of 4.00), Sales Growth (11.13 out of 5.00), and COPRO (5.87 out of 5.00).

Finance and Market

Company Soundness Level Assessment

The 2014 KPI achievement for finance and market was 42.80 or 178.33% of the KPI target of 24.00. All indicators were measured above the 2014 KPI targets, and they

Based on the Decision of the Minister of State-Owned Enterprises No. KEP-100/MBU/2002 dated 4 June 2002

on the Assessment of Company Soundness Level for State-Owned Enterprises, the Company’s performance score in 2012 was 95.50, putting it in the “AAA Sound” criterion. In 2013 the score was 96.00 and the criterion was “AAA Sound” and the score in 2014 was 95.50 and the criterion was maintained at “AAA Sound”. Based on the company soundness level assessments carried out in 2012 and 2013, there was a 0.52% increase in score, while from 2013 to 2014 there was an increase in score of 0.52%. Company Soundness Level Assessment (Audited) No. Indikator A.

B.

C.

Financial Aspect (ROE) (ROI) Cash Ratio Current Ratio Collection Period Inventory Turnover Total Asset Turnover Owned Fund Ratio to Total Asset Financial Aspect Operational Aspect Efficiency in Production & Productivity Capital Maintenance Research & Development Results of Implementation of Government’s Assignments Operational Aspect Administrative Aspect Financial Annual Report RKAP Plan Periodic Report PKBL Performance: Effectivity Loan Collectibility Administrative Aspect Amount Level of Category/Healthiness

Score Value

Score 2012

Value

Score 2013

Value

2014

20.00 15.00 5.00 5.00 5.00 5.00 3.50 7.00 65.50

29.36 31.22 252.13 522.91 55.99 41.11 76.87 84.61

20.00 15.00 5.00 5.00 5.00 5.00 3.50 7.50 66.00

37.81 34.81 228.74 395.98 56.76 40.35 79.48 77.56

20.00 15.00 5.00 5.00 5.00 5.00 5.00 10.00 70.00

30.76 31.20 286.08 537.18 45.94 58.32 75.56 81.53

5.00 5.00 2.00

744.29 14.44 87.76

5.00 5.00 2.00

766.16 12.89 89.24

5.00 5.00 2.00

800.39 16.39 87.20

3.00

100.00

3.00

100.00

3.00

100.00

15.00

15.00

15.00

3.00 3.00 3.00

100.00 100.00 100.00

3.00 3.00 3.00

100.00 100.00 100.00

3.00 3.00 3.00

100.00 100.00 100.00

3.00 3.00 15.00 95.50 AAA

91.91 83.95

3.00 3.00 15.00 96.00 AAA

15.87 71.32

3.00 3.00 15.00 95.50 AAA

90.07 75.72

Given that the PKBL programs for 2013-2014 were not optimally implemented due to certain policy changes, based on the Letter of the Minister of State-Owned Enterprises No. S-723/MBU/2013 dated 3 December 2013, the assessment for the effectiveness of the Partnership Program funding for 2013 was accordingly adjusted, with a score of 3.

205

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REMUNERATION FOR THE BOARD OF DIRECTORS

REMUNERATION FOR THE BOARD OF DIRECTORS BASIS FOR DETERMINING REMUNERATION The authority to determine remuneration for members of the Board of Commissioners and the Board of Directors belongs to the Shareholders and is authorized at the GMS. The formulation for determining remuneration refers to the Regulation of the Minister of State-Owned Enterprises No. PER-04/MBU/2014 dated 10 March 2014 on the Guidelines for the Determination of Salary for the Board of Directors, Board of Commissioners, and Supervisory Board of State-Owned Enterprises, the Decree of the Board of Commissioners of PT Bio Farma (Persero) No. KEP-08/DK/BF/III/2014 dated 25 March 2014 on the Determination of Salary for the Board of Directors and Board of Commissioners of PT Bio Farma (Persero) in 2014 and the Resolution of the Shareholders at the GMS of PT Bio Farma (Persero) No. RIS-20/ D2.MBU/2014 dated 21 March 2014 on the Determination of Salary for 2014, including Bonus for 2013 Performance for the Board of Directors and Board of Commissioners.

PROCEDURES FOR DETERMINING REMUNERATION a. The GMS determines the salary for the Board of Directors and Board of Commissioners based on PER-04/MBU/2014. b. The formulation for calculating the President Director’s salary is based on an internal guideline determined by the Minister as a reference for calculating the salary for Directors. c. Salary/honorarium and bonus for members of the Board of Directors and Board of Commissioners for FY2014 are determined based on the Resolution of the Shareholders at the GMS of PT Bio Farma (Persero) as stipulated in the Minutes of Meeting No. RIS-20/D2.MBU/2014 dated 21 March 2014 on the Determination of Salary for 2014, including Bonus for 2013 Performance for the Board of Directors and Board of Commissioners.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

d. Based on the approval and resolution of the GMS of the Annual Report of PT Bio Farma (Persero) for FY2013, the salary for the President Director for FY2014 is set at Rp 72,500,000 per month, and the salary for other Directors is set at 90% of the salary for the President Director. Bonus for other members of the Board of Directors is set at 90% of the bonus for the President Director.

INDICATORS USED IN THE DETERMINATION OF DIRECTOR’S REMUNERATION a. The determination of income, which is defined as salary/honorarium, allowances and facilities that are permanent, takes into consideration the revenue, assets, and the financial conditions and capability of the Company, inflation rate, and other relevant factors, as long as all these comply to the relevant laws and regulations. b. The determination of allowances and bonus that are variable takes into consideration the achievement of targets, the financial situation and capability of the Company, as well as other relevant factors. c. Remuneration is given to the Board of Directors by taking into account the achievement of the Board of Directors’ Key Performance Indicators (KPIs) in relation to the Company’s achievements in 2013.

BOARD OF DIRECTOR’S REMUNERATION STRUCTURE IN 2014 According to the Resolution of the GMS on the approval of the annual report and approval of the financial statements for FY2013, as stipulated in the document No. RIS-20/D2.MBU/2014 dated 21 March 2014, the salary for the President Director for 2013 was set at Rp 72,500,000 per month, while the salary for other members of the Board of Directors was set at 90% of the salary for the President Director.

206

Based on the Regulation of the Minister of State-Owned Enterprises No. PER-04/MBU/2014, the remuneration received by the Board of Directors of Bio Farma in 2014 consisted of honorarium, allowances, and other facilities such as insurance and pension, as detailed below: BOD’s Remuneration in 2014 (In Rupiah)

Name

Salary per Year Allowance per Year

1 Iskandar

2

870,000,000

517,500,000

Service Deduction

Net Salary per Year

Tantiem + Religious Holiday Allowance

Total

4

5=1+2-4

6

7=5+6

1,387,500,000

2,170,000,000

3,557,500,000

Andjang Kusumah

747,000,000

459,750,000

1,242,750,000

1,953,000,000

3,195,750,000

Pramusti Indrascaryo*

747,000,000

1,278,750,000

2,025,750,000

1,953,000,000

3,195,750,000

Mahendra Suhardono

747,000,000

1,278,750,000

2,025,750,000

1,953,000,000

3,195,750,000

Juliman Fuad*

747,000,000

1,278,750,000

2,025,750,000

1,953,000,000

3,195,750,000

Sugeng Raharso*

747,000,000

1,278,750,000

2,025,750,000

1,953,000,000

3,195,750,000

*) Appointed as Director since 12 April 2013

Aside from earning salary, the Directors also receive the following allowances and facilities: Salary, Allowances and Facilities of BOD Salary per Year

Allowances

Facilities

President Director Rp 870,000,000,Board of Directors Rp 747,000,000,-

• • • •

vehicle facilities • Health facilities Medication reimbursement • Legal facility: as needed

Holiday Allowance 1 (one) month salary Pension benefit insurance up to 25% of salary/year Housing Allowance Capital City of Province Transportation Allowance

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INFORMATION ON ULTIMATE SHAREHOLDER

DISCLOSURE OF AFFILIATIONS BETWEEN MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND THE ULTIMATE AND/OR CONTROLLING SHAREHOLDERS OF THE COMPANY

INFORMATION ON ULTIMATE SHAREHOLDER As at 31 December 2014 Bio Farma is a non-listed company, and thus the public, members of the Board of Directors, or members of the Board of Commissioners of Bio Farma retained no ownership of Bio Farma’s shares. All shares (100%) of Bio Farma are owned by the Government of the Republic of Indonesia.

DISCLOSURE OF AFFILIATIONS BETWEEN MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND THE ULTIMATE AND/OR CONTROLLING SHAREHOLDERS OF THE COMPANY

1. Affiliations between Members of the Board of Directors, Members of the Board of Commissioners, and the Ultimate and/or Controlling Shareholders Independence and Affiliations between the Board of Directors All Bio Farma Directors do not have any relationships with each other, with any member of the Board of Commissioners, and the Ultimate and/or Controlling Shareholders. The independence of the Board of Directors is determined to run all of the Company’s management and interaction with other parties in an independent manner without the intervention of any outside parties or which may be in violation of the laws and regulations and the Company’s Articles of Association, and thus may disrupt the objectivity and independence of the Board of Directors’ tasks carried out to serve the interest of the Company. Between members of the Board of Directors and members of the Board of Commissioners there are no relationships either by blood up to the third degree vertically or horizontally, nor any relationships that may arise due to marriage. As at 31 December 2014, no members of the Board of Directors hold shares of PT Bio Farma (Persero), other StateOwned Enterprises, or other companies. Therefore, the Board of Directors of Bio Farma has fulfilled the independence criteria as stipulated in the Regulation of the Minister of State-Owned Enterprises No. PER-01/MBU/2011. Share Ownership of the Board of DIrectors Name PT Bio Farma (Persero) Iskandar None Juliman Fuad None Sugeng Raharso None Mahendra Suhardono None Pramusti Indrascaryo None Andjang Kusumah None

Other SoE None None None None None None

Other COmpany None None None None None None

Based on the Regulation of the Minister of State-Owned Enterprises No. PER-01/MBU/2011 Article 19, the Board of Directors must disclose information regarding the position of Commissioner at any subsidiary/joint venture/other company. In relation to this, throughout 2014 all members of the Board of Directors of Bio Farma did not have any concurrent position as member of the Board of Commissioners, Board of Directors, or as Executive Officer at other State-Owned Enterprises nor other companies. Double Position on the Board of Directors Name Iskandar Juliman Fuad Sugeng Raharso Mahendra Suhardono Pramusti Indrascaryo Andjang Kusumah

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

Position in Bio Farma President Director Production Director Planning & Development Director Marketing Director Finance Director HR Director

Position in the other SoE None None None None None None

Position in the Other Company/Institution None None None None None None

208

2. Affiliations between Members of the Board of Commissioners with the Ultimate and/or Controlling Shareholders Independence and Affiliations of the Board of Commissioners All Bio Farma Commissioners must act independently, not have any conflict of interest, and be free from intervention from any party that is related to the Company and that may disrupt or affect the actions they take as members of the Board of Commissioners. In order to maintain the independence of the Board of Commissioners’ supervisory function and ensure the mechanism of check and balance, all members of the Board of Commissioners of Bio Farma are external to the Shareholders. All members of the Board of Commissioners of Bio Farma do not have any financial, managerial, share ownership, or family relationships either by blood up to the third degree by vertical line or horizontal line or those arising from marriage with each other and/or with the Ultimate and/or Controlling Shareholders and/or with the members of the Board of Directors. Therefore, in carrying out its duties, the Board of Commissioners can act independently. PT Bio Farma (Persero) does not have any Independent Commissioner as 100% of its shares are owned by the Government. Family and Financial Relationships of the Board of Commissioners The family and financial relationships between members of the Board of Commissioners and/or with the members of the Board of Directors and the Company’s Shareholders throughout 2014 are shown below: Family and Financial Relationship of the Board of Commissioners Family Relationship with Name

BOC Yes

Shareholder

BOD No

Yes

Financial relationship with

No

Yes

No

BOC Yes

Shareholder

BOD No

Yes

No

Yes

No

Ahmad M. Ramli













Paruli Lubis













Herman L. Djuni













Nizar Yamani













Heridadi













Ihsan Setiadi Latief













Family and Financial Relationship of the Board of Directors Family Relationship with Name

BOC Yes

BOD No

Yes

Financial relationship with

Shareholder No

Yes

No

BOC Yes

BOD No

Yes

Shareholder No

Yes

No

Iskandar













Andjang Kusumah













Sugeng Raharso













Pramusti Indrascaryo













Mahendra Suhardono













209

GOOD CORPORATE GOVERNANCE

DISCLOSURE OF AFFILIATIONS BETWEEN MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND THE ULTIMATE AND/OR CONTROLLING SHAREHOLDERS OF THE COMPANY

Concurrent Position and Share Ownership of Members of the Board of Commissioners in Other Companies The concurrent positions and share ownership of members of the Board of Commissioners in 2014 in companies, State-Owned Enterprises, or other institutions are detailed below: Directorship and Share Ownership in Other Companies As Member of BOC

Name

Yes

No

As Member of BOD Yes

No

As Shareholder Yes

No

Ahmad M. Ramli







Paruli Lubis







Herman L. Djuni







Nizar Yamani







Heridadi







Ihsan Setiadi Latief







Remuneration for the Audit Committee Remuneration for the Audit Committee is determined internally by the Board of Commissioners of Bio Farma and is further regulated in the Decree of the Board of Commissioners of PT Bio Farma (Persero) No. KEP-10/DK/BF/ IV/2014 dated 15 April 2014 on the Determination of Salary for Members of the Audit Committee of PT Bio Farma (Persero). Remuneration received by the Audit Committee consists of a honorarium. Members of the Board of Commissioners that serve as the Chairman, Vice Chairman, or members of the Committee are not provided additional salary apart from their salary as Commissioners. Members of the Audit Committee that are not members of the Board of Commissioners receive monthly honorarium whose amount si determined by the Decision of the Board of Commissioners according to the prevailing regulations, with all taxes paid by the Company, and these members not allowed to receive other types of income apart from the honorarium. All costs disbursed by the Audit Committee to carry out its duties are borne by the Company. The amount of remuneration for the Audit Committee is determined at the GMS, with the following details: Determination of Remuneration for Members of the Audit Committee No. Type of Income 1.

Monthly honorarium for members of the Audit Committee

2.

Allowances:

3. 4.

ANNUAL REPORT

2014

Amount 220% of the remuneration for the President Director

- National Holiday Allowance

None

- Communications Allowance

None

- Post-Service Allowance

None

- Transportation Allowance

None

Facilities: - Health Facility

None

Bonus/Incentive

None

• PT Bio Farma (Persero) •

210

Remuneration of Audit Committee in 2014 (In Rupiah) Name

Paruli Lubis

*

Herman L. Djuni

*

Dedi Sopyan

(masa jabatan sampai dengan Mei 2014)

Abu Bakar M. Aswir Harahap

(diangkat mulai Juli 2014)

Jumlah

Salary per Year

Allowance per Year

Net Salary per Year

Tantiem + Religious Holiday Allowance

Total

1

2

3=1+2

4

5=3+4

-

-

-

-

-

-

-

-

-

-

87,000,000

-

87,000,000

-

87,000,000

174,000,000

-

174,000,000

-

174,000,000

87,000,000

-

87,000,000

-

87,000,000

348,000,000

-

348,000,000

-

348,000,000

* Commissioner cum member of Committe

Remuneration for the Secretary to the Board of Commissioners Remuneration for the Secretary to the Board of Commissioners is determined by the Decree of the Board of Commissioners of PT Bio Farma (Persero) No. KEP-14/DK/BF/VI/2014 on the Revision to the Attachment to the Decree Determining the Salary and Facilities for the Secretary to the Board of Commissioners of PT Bio Farma (Persero). The remuneration received by the Secretary to the Board of Commissioners consists of honorarium, allowances, facilities, and bonus/incentive. Determination of Remuneration for the Secretary to the Board of Commissioners of PT Bio Farma (Persero) No. Type of Income

Amount

1.

Monthly honorarium for members of the Audit Committee

15% of the remuneration for the President Director

2.

Allowance 1. National Holiday Allowance 2. Communications Allowance 3. Post-Service Allowance 4. Transportation Allowance

3.

Facilities: 1. Health Facility 2. Legal Aid

1. Secretary to the Board of Commissioners and his/her spouse and a maximum of 3 (three) children below 25 years old are eligible for heath facility given in the form of health insurance or reimbursement of medical expenses 2. In accordance with the Company’s regulations

4.

Bonus/Incentive

In accordance with the Circular of the Deputy Minister of State-Owned Enterprises No. SE-03/MBU/Wk/2014 on the Affirmation of the Income for the Secretary to the Board of Commissioners/Supervisory Board.

1. 1 (one) take home pay per month 2. 5% of the monthly honorarium 3. Post-Service Insurance is given with the following conditions: 1. Given while serving (from appointment to termination) 2. Premium paid by the Company is maximum 25% of total honorarium in a year 3. The term “Premium” or other similar terminology used for post-service insurance already includes premium for accidents and death. 4. 20% of the monthly honorarium

All tax obligations such as income tax is borne by the Company, with the exception of the income tax for the bonus/ incentive, which is borne by the Secretary to the Board of Commissioners. The amount of remuneration for the Secretary to the Board of Commissioners is determined by the GMS with the details as follows: Remunerasi Sekretaris Dewan Komisaris Tahun 2014 (dalam rupiah) Name

Salary per Year

Allowance per Year

Net Salary per Year

Tantiem&Religious Holiday Allowance

Total

1

2

3=1+2

4

5=3+4

Roslyn Sitohang

130,500,000

32,625,000

163,125,000

208,593,750

371,718,750

Total

130,500,000

32,625,000

163,125,000

208,593,750

371,718,750

211

GOOD CORPORATE GOVERNANCE

DISCLOSURE OF AFFILIATIONS BETWEEN MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF COMMISSIONERS, AND THE ULTIMATE AND/OR CONTROLLING SHAREHOLDERS OF THE COMPANY

AUDIT COMMITTEE

Remuneration for the Risk, Development & GCG Committee Remuneration for the Risk, Development & GCG Committee is determined internally by the Board of Commissioners of Bio Farma and is further regulated in the Decree of the Board of Commissioners of PT Bio Farma (Persero) No. KEP-11/DK/BF/IV/2014 dated 15 April 2014 on the Determination of Salary for Members of the Risk, Development & GCG Committee of PT Bio Farma (Persero). Remuneration received by the Risk, Development & GCG Committee consists of a honorarium. Members of the Board of Commissioners that serve as the Chairman, Vice Chairman, or members of the Committee are not provided additional salary apart from their salary as Commissioners. Members of the Risk, Development & GCG Committee that are not members of the Board of Commissioners receive monthly honorarium whose amount si determined by the Decision of the Board of Commissioners according to the prevailing regulations, with all taxes paid by the Company, and these members not allowed to receive other types of income apart from the honorarium. All costs disbursed by the Risk, Development & GCG Committee to carry out its duties are borne by the Company. The amount of remuneration for the Risk, Development & GCG Committee is determined at the GMS, with the following details: Determination of Remuneration for Members of the Risk, Development & GCG Committee No. Type of Income

Amount

1.

Monthly honorarium for members of the Risk, Development & GCG Committee

2.

Allowances: 1. National Holiday Allowance 2. Communications Allowance 3. Post-Service Allowance 4. Transportation Allowance

None None None None

3.

Facilities: - Health Facility

None

Bonus/Incentive

None

4.

20% of the remuneration for the President Director

The amount of remuneration for the Risk, Development & GCG Committee is determined at the GMS, with the following details: Remuneration for the Risk, Development & GCG Committee in 2014 (Rp)

Salary per Year

Allowance per Year

Net Salary per Year

Tantiem&Religious Holiday Allowance

Total

1

2

3=1+2

4

5=3+4

Afrizal

174,000,000

-

174,000,000

-

174,000,000

Dadang Epi Sukarsa

174,000,000

-

174,000,000

-

174,000,000

Total

348,000,000

Name Heridadi* Nizar Yamanie* Ihsan Setiadi Latief*

-

348,000,000

-

348,000,000

* Komisaris merangkap anggota Komite

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

212

AUDIT COMMITTEE The Audit Committee of PT Bio Farma (Persero) was established in 2004 to support the Board of Commissioners in carrying out the supervision of the Company’s management based on the principles of good corporate governance. Members of the Audit Committee are appointed and dismissed by the Board of Commissioners and reported to the GMS. Members of the Committee that concurrently serve on the Board of Commissioners are automatically dismissed once their respective term of office on the Board of Commissioners ends. The establishment of the Committee was pursuant to Law No. 19/2003 on SOE article 70 paragraph 1, which states that the Board of Commissioners must establish an Audit Committee that functions collectively as an organ of supervision of the Company, as well as pursuant

to Regulation of the Minister of SOE No. PER-05/ MBU/2006 dated 20 December 2006 on Audit Committee for State Owned Enterprises, as amended by Regulation of the Minister of SOE No. PER-12/MBU/2012 dated 24 August 2012 on the Supporting Organs of the Board of Commissioners/Supevisory Board of SOEs. In carrying out their duties, the Audit Committee is guided by the Audit Committee Charter, authorized on 1 July 2014. The Audit Committee Charter stipulates the vision, mission, purpose and goals of the Committee, the membership, authority and rights, duties and responsibilities, relationships with all related parties, conflict of interest, and code of conduct.

Membership Composition The Audit Committee in office in 2014 was appointed under the Decree of the Board of Commissioners No. KEP-05/DK/ BF/II/2014 dated 19 February 2014. The Audit Committee has four members, namely 2 (two) Commissioners, one as a Chairman and one as a Vice Chairman/Member, as well as two independent parties. The term of office of the Chairman and Vice Chairman of the Audit Committee is three years. The Audit Committee composition is as follows: No. Name

Position

1.

Paruli Lubis

Chairman

2.

Herman L. Djuni

Vice Chairman/Member

3.

Dedi Sopyan Appointed under the Decree of the Board of Commissioners No.KEP-01/DK/BF/I/2014, in office until May 2014

Member (external)

4.

Abu Bakar Appointed under the Decree of the Board of Commissioners No. KEP-01/DK/BF/I/2014

Member (external)

5.

M. Asawir Harahap Appointed under the Decree of the Board of Commissioners No. KEP-15/DK/BF/VII/2014

Member (external)

Paruli Lubis Audit Committee Chairman His profile is available in the Profile of the Board of Commissioners section.

Herman L. Djuni Audit Committee Vice Chairman /Member His profile is available in the Profile of the Board of Commissioners section.

213

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AUDIT COMMITTEE

Born in Tangerang in 1980, obtained his Master of Management degree from the Faculty of Business and Economics, Gadjah Mada University, Yogyakarta, and Bachelor’s degree in Industrial Engineering, Faculty of Engineering, University of Indonesia. Currently active as Managing Director at Indonesia Centre for Continuing Professional Education (ICCPE) Consulting Group. Appointed by the Decree of the Board of Commissioners No. Kep-01/DK/BF/I/2014 with the term of office until May 2014.

Dedi Sopyan Audit Committee Member

Born on 31 December 1964, graduated from the Faculty of Economics, Syiah Kuala University, majoring in accounting, and is experienced working as middle level auditor at the Ministry of SOE and member of the audit committee of PT PNM in 2012-2013, as well as other institutions. Appointed by the Decree of the Board of Commissioners No. Kep-01/ DK/BF/I/2014.

Abu Bakar Audit Committee Member

Born in Padangsidimpuan, 11 August 1946. Graduated with a Bachelor’s degree in Finances/Accounting and has an experience working as auditor at various state-owned enterprises and regional government-owned enterprises at the State Accounting Directorate, as well as various positions at Regional Office VII DJPKN Palembang, BPKP of South Sumatera. Appointed by the Decree of the Board of Commissioners No. Kep-15/DK/BF/VII/2014.

M. Asawir Harahap Audit Committee Member

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

214

Duties and Responsibilities

Authority

Based on the Decree of the Board of Commissioners No. KEP-05/DK/BF/II/2014 on the Appointment of the Audit Committee of PT Bio Farma (Persero), the primary duties of the Audit Committee are as follows:

The Board of Commissioners grants authority to the Audit Committee to conduct its duties to obtain various information legally and ethically, from internal and external parties in relation to accounting, funding, human resources, assets, and other resources of the Company.

1. Assist the Board of Commissioners in ensuring the effectiveness of internal control system and the execution of duties of the external and internal auditors. 2. Assess the execution of activities and audit results of the Internal Audit Unit and external auditors. 3. Provide a recommendation for the improvement of the management control system and related implementation. 4. Ensure the existence of a satisfactory evaluation procedure for the information released by the Company. 5. Identify issues that may require the attention of the Board of Commissioners and other duties of the Board of Commissioners. 6. Formulate the type and amount of honorarium, allowances and facilities that have been or will be given to the Board of Directors and the Board of Commissioners, to be submitted by the Board of Commissioners to the GMS. 7. Evaluate and analyze the remuneration system including the honorarium, allowances and facilities that have been or will be given to the management and employees. Conduct other duties assigned by the Board of Commissioners, including but not limited to: 1. Regularly formulate and review the Audit Committee Charter. 2. Evaluate the the information released by the Company, including the financial statements, financial planning projection reports, work plan and budget reports, five-year business plans, management reports, and other information. 3. Review the Company’s compliance with the prevailing regulations in all of its activities. 4. Review complaints or grievances related to the Company.

In executing this authority, the Audit Committee collaborates with the Internal Audit Unit (IAU) and the management of the Company. Based on the approval of the Board of Commissioners, the Audit Committee may request advice or recommendation from professionals external to the Company, such as accountants, consultants, legal consultants, and other professions, in relation to executing the Audit Committee’s duties.

Requirements for Membership and Independence To become a member of the Audit Committee a person should first and foremost has a strong integrity and educated in accounting or finance, has extensive knowledge to be able to properly read and understand financial statements, as well as extensive knowledge in relation to his or her background, and able to communicate effectively. The educational backgrounds, qualifications and competencies of the Audit Committee members are presented in the profile of each member of the Audit Committee, provided in a separate part of this Annual Report. To ensure independence in carrying out their duties, Audit Committee members are selected from outside of the Company and they have no financial or managerial relations, share ownership, or familial relationships whatsoever with the members of the Board of Commissioners, the Board of Directors, and have no concurrent positions as director of other companies and/ or committee members.

Audit Committee Activities in 2014 Throughout 2014, the Audit Committee conducted a number of activities in accordance with the Audit Committee Work Plan approved by the Board of Commissioners, as follows: 1. Reviewed the audited financial statements and management report for FY 2014. 2. Reviewed the audited PKBL report for FY 2013.

5. Review the adequacy of the internal audit function, including number of auditors, annual audit work plan, and assignments executed. 6. Review the adequacy of the external audit function, including audit plan and number of auditors.

215

GOOD CORPORATE GOVERNANCE

AUDIT COMMITTEE

RISK, DEVELOPMENT & GCG COMMITTEE

3. Reviewed the audit result report of the IAU for the First Quarter, First Semester, Third Quarter, and Fourth Quarter of 2014.

8. Conducted regular meetings with the IAU to discuss the effectiveness of internal audit and follow up to the audit results of the IAU and external auditors.

4. Assisted the Board of Commissioners in appointing an external auditor to audit the Company by taking into account the aspects of independence and objectivity, audit scope and adequacy, and reviewed the fairness of the audit fee.

9. Conducted other duties assigned by the Board of Commissioners.

5. Reviewed the effectiveness of internal control implementation. 6. Supervised the implementation of GCG. 7. Reviewed the remuneration for the Board of Commissioners and the Board of Directors.

Meeting Frequency and Attendance The Audit Committee conducted at least one meeting per month, both internally and with the Board of Commissioners, the Board of Directors, Head of the IAU, Division Heads, or External Auditors. Minutes of Audit Committee meetings are distributed to all meeting participants and presented to the Board of Commissioners. The Audit Committee may also be present at meetings of the Board of Commissioners or at joint meetings of the Board of Commissioners and the Board of Directors upon invitation.

Throughout 2014, the Audit Committee conducted seven meetings, including internal meetings, meetings with the IAU, meetings with external auditors, meetings with risk management team, and attended the meetings of the Board of Commissioners and joint meetings of Board of Commissioners and the Board of Directors. The attendance of each member of the Audit Committee in these meetings is as follows: No. Name

Position

Attendance

Chairman

17

1.

Paruli Lubis

2.

Herman L. Djuni

Vice Chairman/Member

17

3.

Dedi Sopyan Appointed under the Decree of the Board of Commissioners No.KEP-01/DK/BF/I/2014, in office until May 2014

Member (external)

12

4.

Abu Bakar Appointed under the Decree of the Board of Commissioners No. KEP-01/DK/BF/I/2014

Member (external)

17

Member (external)

15

5.

M. Asawir Harahap Appointed under the Decree of the Board of Commissioners No. KEP-15/DK/BF/VII/2014

Meeting Agenda No. Date & Place

Agenda

1.

Jakarta, 7 February 2014

Discussion of the 2014 Audit Committee Work Plan and Budget

2.

Bandung, 14 February 2014

Discussion of the Progress Report of LHP from External Auditors or final draft of the Audited Financial Statements of Bio Farma for FY 2013

3.

Jakarta, 19 February 2014

Technical Discussion of the Financial Statements and LMP for FY 2013 (audited)

4.

Jakarta, 19 February 2014

Discussion of the Progress Report of LHP for Fourth Quarter of 2013 with IAU

5.

Jakarta, 27 February 2014

1. Discussion of the evaluation and determination of external auditors to audit the Financial Statements and PKBL activities of PT Bio Farma (Persero) FY 2014 2. Planning to procure independen management consultant services from the Big Four institutions

6.

Jakarta, 3 March 2014

Discussion of the BUMN Bersih Evaluation Criteria with the Board of Directors and the Board of Commissioners

7.

Bandung, 28 April 2014

Technical Discussion of the Financial Statements and LMP for PKBL activities for First Quarter of 2014

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

216

Remuneration for the Audit Committee The Audit Committee members receive remuneration consisting of honorarium and other facilities such as insurance. Members of the Audit Committee that are also members of the Board of Commissioners do not receive monthly honorarium and facilities. Members of the Audit Committee that are not members of the Board of Commissioners receive monthly honorarium whose amount si determined by the Decision of the Board of Commissioners according to the prevailing regulations, with all taxes paid by the Company, and these members not allowed to receive other types of income apart from the honorarium. All costs disbursed by the Audit Committee to carry out its duties are borne by the Company. The amount of remuneration for the Audit Committee is determined at the GMS, with the following details: Remuneration of Audit Committee in 2014 (In Rupiah) Name

Salary per Year 1

Allowance per Year Net Salary per Year 2

Tantiem + Religious Holiday Allowance

Total

4

5=3+4

3=1+2

Paruli Lubis

-

-

-

-

-

Herman L. Djuni*

-

-

-

-

-

*

Dedi Sopyan Abu Bakar M. Aswir Harahap Total

87,000,000

-

87,000,000

-

87,000,000

174,000,000

-

174,000,000

-

174,000,000

87,000,000

-

87,000,000

-

87,000,000

348,000,000

-

348,000,000

-

348,000,000

* Commissioner cum Committee Member

RISK, DEVELOPMENT & GCG COMMITTEE Risk Committee is formed by the Board of Commissioners to assist the Board of Commissioners in performing their duties. Risk Committee is responsible directly to the Board of Commissioners. Risk Committee members are appointed and dismissed by the Board of Commissioners and reported to the GMS. Risk Committee members who are also members of the Board of Commissioners will have their term of office terminated as their respective term of office as members of the Board of Commissioners ends.

MEMBERSHIP COMPOSITION Members of the Risk Development and GCG Committee of Bio Farma consists of the Chairman and Vice Chairman and members from the Board of Commissioners and two members from external parties. Term of office of the Chairman and Vice Chairman of the Risk Development and GCG Committee is 3 (three) years. The Risk Development and GCG Committee in office in 2013 was appointed by the Decree of the Board of Commissioners No. KEP-06/DK/BF/II/2014 dated 19 February 2014. The decree changed the name of the previously existing Risk Committee to Risk, Development and GCG Committee. The composition of the Risk Development and GCG Committee, is as follows: No. Name

Position

1.

Heridadi

Chairman

2.

Nizar Yamanie

Vice Chairman I/Member

3.

Ihsan Setiadi Latief

Vice Chairman II/Member

4.

Dadang Epi Sukarsa

Member (external)

5.

Afrizal

Member (external)

217

GOOD CORPORATE GOVERNANCE

RISK, DEVELOPMENT & GCG COMMITTEE

Heridadi

Nizar Yamanie

Ihsan Setiadi Latief

Risk, Development and GCG Committee Chairman

Risk, Development and GCG Committee Vice Chairman I/Member

His profile is available in the Profile of the Board of Commissioners section.

His profile is available in the Profile of the Board of Commissioners section.

Risk, Development and GCG Committee Vice Chairman II/ Member

His profile is available in the Profile of the Board of Commissioners section.

Born in Garut on 1 June 1960, graduated from the Faculty of Law of Padjajaran University, and from the Master Studies in Legal Studies at the Gadjah Mada University and is currently undertaking Legal Studies at the Faculty of Law of Padjajaran University. He has extensive experience teaching at the Faculty of Law of Padjajaran University since 1990 to the present, as well as the member of the Brand Appeal Commission, Directorate of Intellectual Property Rights, Ministry of Law and Human Rights.

Dadang Epi Sukarsa Risk, Development and GCG Committee Member

Born in Jakarta on 17 April 1960, graduated from the Faculty of Economics, University of Indonesia majoring in Accounting and from the tax policy administration with a graduate degree from the Faculty of Political Sciences, University of Indonesia. He has extensive work experience as the head of internal audit of University of Indonesia since 2008 until now and has occupied various positions such as director of accounting, audit manager at the University of Indonesia.

Afrizal Risk, Development and GCG Committee Member

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

218

Duties and responsibilities Based on the Decree of the Board of Commissioners No. KEP-06/DK/BF/II/2014 on the Appointment of the Risk, Development and GCG Committee PT Bio Farma (Persero), the principal duties of the Risk Committee are as follows: 1. Risk, Development and GCG Committee assists the Board of Commissioners to provide recommendations on the implementation of business strategy, monitoring, evaluation and periodic monitoring of risks in the Company, including reviewing business risks that could potentially disrupt the Company's goals, as well as providing recommendations to the Board of Commissioners of the methods of risk management. 2. The Chairman of the Risk, Development and GCG Committee act as a steering member of the Risk, Development and GCG Committee about any risks faced by the Board of Directors to be immediately discussed by the Board of Commissioners as a form of early warning system implementation. 3. Review and provide recommendations on the effectiveness of risk management performed by the Division of Compliance and Risk Management, through regular meetings or other means to discuss the progress of the stages of the duties and responsibilities carried out by the Risk Management Unit. 4. Review the risk assessment by the Division of Compliance and Risk Management of the investment plan of the material. Supervise the activities of the Division of 5. Compliance and Risk Management in monitoring the implementation of risk mitigation by related work units. Supervise 6. the implementation of the recommendations of Risk, Development and GCG Committee by the Division of Compliance and Risk Management. 7. Conduct analysis and evaluation of the proposed RKAP and annual reviews on RJPP proposed by the Board of Directors. 8. A review of information risk and risk management company in the reports that will be published, malalui process: • Discussion with management. • Review the draft of a report to be published. 9. Discussion on significant risks on units in a corporate environment, as required.

10. Develop a system of assessment and nomination of candidates for the Board of Directors and the Board of Commissioners. 11. Provide evaluation and analysis of the system of selection, recruitment, and succession of the company's employees. 12. Develop a system of selection and recruitment of candidates for members of the Board of Directors and the Board of Commissioners. E stablish the type and amount of salary or 13. honorarium, allowances and facilities that have been/ will be given to the Board of Directors and the Board of Commissioners to be submitted by the Board of Commissioners to the GMS. 14. Evaluation and analysis of the payroll system, honorarium, allowances and facilities that have been/will be given to the level of management and employees. In performing its duties, especially in the aspect of risk management, the Risk, Development and GCG Committee has had a Risk Committee Charter, Development and GCG containing objectives, structure, composition, and time of the Committee's tasks, requirements and the Code of Ethics Committee Member, duties, responsibilities and authority, as well as the execution of tasks of the Risk, Development and GCG Committee which serve as guidelines in each operation.

Requirements for Membership and Independence Risk Committee members are required to have a strong integrity, educational background, knowledge, ability, and experience that are considered sufficient, and able to communicate effectively. Educational background, qualifications, and competence of members of the Risk Committee can be seen on the profile of each member on a separate section in this Annual Report.

Risk Committee Activities in 2014 Throughout 2014, the Risk, Development and GCG Committee carried out the following tasks according to the work plan approved by the Board of Commissioners: 1. Conducted internal meetings for discussion and preparation of the Work Plan and Budget of the Risk, Development and GCG Committee, and Risk, Development and GCG Committee Charter of PT Bio Farma. 2. Conducted review of corporate risk register in RKAP 2014. 3. Reviewed the risk management report to be issued by the Company.

219

GOOD CORPORATE GOVERNANCE

RISK, DEVELOPMENT & GCG COMMITTEE

4. Discussed BUMN Bersih assessment in PT Bio Farma (Persero) with BPKP. 5. Monitored various potential risks faced by the Company. 6. Reviewed the company's management report and financial statements of PT Bio Farma (Persero) First Quarter - 2014. 7. Perform an internal meeting to evaluate the realization of the work program of the Risk, Development and GCG Committee in the first quarter of 2014. 8. Reviewed and analyzed the Company's management report and financial statements in order to provide feedback and recommendations for improvement. 9. Monitored the various potential risks faced by the company. 10. Conducted discussions on corporate register monitoring plan with counterpart. 11. Conducted discussions of plans and progress on the development of vaccines and other products. 12. Conducted discussions corporate monitoring plan counterparty risk register along with the management of PT Bio Farma: a. Delays in vaccine supply. b. Changes in policy and the requirements of the WHO. 13. Conducted discussions on the planned monitoring corporate risk register with a counterpart management team of PT Bio Farma:

a. Increased global risk. b. No investment realization schedule. Conducted discussions on planned monitoring 14. corporate risk register with a counterpart team management of PT Bio Farma: a. Unpreparedness facilities and pandemic influenza vaccine production. b. Increased integration of IT technology. 15. Conducted discussions following the implementation of this plan along with the management of PT Bio Farma counterpart: a. GCG self assessment scorecards. b. Governance, Risk Management & Compliance (GRC) and the achievement of corporate goals. 16. Conducted discussions of the following monitoring along with counterparty management of PT Bio Farma, the Division of Human Capital and CRM: a. System selection, recruitment and employee succession. Payroll system, honoraria, allowances and b. facilities. The sanctions system and management c. employees. 17. Performed the following discussion of the monitoring plan along with the management of PT Bio Farma counterpart: a. Preparation of corporate risk register in 2015. b. Aligned the RKAP 2015 with the RJPP for 20122016.

Frequency of Meetings and Attendance The Risk, Development and GCG Committee hold meetings at least once a month, led by the Chairman of the Committee. Decision Committee meeting is considered valid if approved by the Chairman of the Committee. Each Committee meeting shall be detailed in the minutes of meeting submitted to the Board of Commissioners no later than five (5) days after the meeting is held. During 2014, the Risk, Development and GCG Committee held or attended 16 meetings. The entire meetings were held in accordance with the provisions of the duties and responsibilities of the Risk, Development and GCG Committee. Attendance of each member of the Committee in the meetings is as follows: No. Name

Position

Attendance

Chairman

9

Nizar Yamanie

Vice Chairman I/Member

6

1.

Heridadi

2. 3.

Ihsan Setiadi Latief

Vice Chairman II/Member

9

4.

Dadang Epi Sukarsa

Member (external)

8

5.

Afrizal

Member (external)

9

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

220

Meeting No. 1. 2. 3.

Date & Place Bandung, 28 & 29 January 2014 Jakarta, 7 February 2014 Bandung, 27 February 2014

4. Jakarta, 3 March 2014 5. Bandung, 13-14 March 2014 6. Jakarta, 27 March 2014 7. Jakarta, 21 April 2014 8. Jakarta, 7 May 2014 9. Jakarta, 14 May 2014 10. Bandung, 11 July 2014 11. Bandung, 22 August 2014 12. Bandung, 19 September 2014 13. Jakarta, 9 October 2014 14. Bandung, 31 October 2014 15. Bandung, 28 November 2014

16. Bandung, 12 December 2014

Agenda Participated in the the Working Meeting (Plan of Action) PT Bio Farma (Persero) Year 2014 Discussion of the Work Plan and Budget Risk, Development and GCG Committee for 2014 BUMN Bersih assessment preparation discussion with BPKP Entry Meeting BUMN Bersih Assessment with the Board of Directors and the Board of Commissioners Technical Discussion Document Application The Board of Commissioners Ratings for BUMN Ber 2014 Exit Meeting for BUMN Bersih Assessment 2014

Internal Meeting for the Realization of Work Program of the Risk, Development and GCG Commit in 2014 Internal meeting - conducted a review and analysis of the company’s management report and financial statements of PT Bio Farma First Quarter 2014 to prepare the responses and recommendations for improvement that the operation and performance of the company at least according to RKAP 2014 a. Discussion of corporate risk management reports of PT Bio Farma b. Discussion of the plan and progress the development of vaccines and other products Discussion meeting on the corporate risk register with the Company’s management as counterparty Discussion meeting on the corporate risk register with the Company’s management as counterpa Discussion meeting on the corporate risk register with the Company’s management as counterpa Internal meeting - conducted a review and analysis of the company’s management report and financial statements of PT Bio Farma Third Quarter 2014 to prepare the responses and recommendations for improvement that the operation and performance of the company at least according to RKAP 2014 Discussion on GCG and KPKU preparation Discussion with counterparty, including: a. Recruitment system and career system selection b. Remuneration system including honorarium, allowances and benefits c. Punishments and employee management at the HC Division Discussion with the management of PT Bio Farma as counterparty: a. Preparation of the 2015 corporate risk register b. Alignment of RKAP 2015 with RJPP 2012-2016

Remuneration for the Risk, Development & GCG Committee The Risk, Development and GCG Committee members receive remuneration consisting of honorarium and other facilities such as insurance. Members of the Risk, Development and GCG Committee that are also members of the Board of Commissioners do not receive monthly honorarium and facilities. Members of the Risk, Development and GCG Committee that are not members of the Board of Commissioners receive monthly honorarium whose amount si determined by the Decision of the Board of Commissioners according to the prevailing regulations, with all taxes paid by the Company, and these members not allowed to receive other types of income apart from the honorarium. All costs disbursed by the Risk, Development and GCG Committee to carry out its duties are borne by the Company. The amount of remuneration for the Risk, Development and GCG Committee is determined at the GMS, with the following details: Remuneration for the Risk, Development & GCG Committee in 2014 (Rp) Name

Salary per Year

Allowance per Year Net Salary per Year

Tantiem + Religious Holiday Allowance

Total

1

2

3=1+2

4

5=3+4

Heridadi*

-

-

-

-

-

Nizar Yamanie*

-

-

-

-

-

Ihsan Setiadi Latief*

-

-

-

-

-

Afrizal

174,000,000

-

174,000,000

-

174,000,000

Dadang Epi Sukarsa

174,000,000

-

174,000,000

-

Total

348,000,000

-

348,000,000

174,000,000 -

348,000,000

* Commissioner cum Committee Member

221

GOOD CORPORATE GOVERNANCE

SECRETARY OF THE BOARD OF COMMISSIONERS

CORPORATE SECRETARY

SECRETARY OF THE BOARD OF COMMISSIONERS The Secretary of the Board of Commissioners is currently held by Roslyn Sitohang. Graduated from STIAMI Jakarta in Business Administration. Born in Rapusan, North Tapanuli, North Sumatra in 1963. Before becoming Secretary of the Board of Commissioners of PT Bio Farma (Persero), has served in the Ministry of SOE as Head of Sub-Section of LA1 Deputy of Strategic Industries and Manufacturing Businesses.

Roslyn Sitohang Secretary of the Board of Commissioners

Secretary of the Board of Commissioners was established through the Decree of the Board of Commissioners No. 18/DK/XII/2012 to assist in the work, transparency, accountability, and the smooth implementation of the tasks of the Board of Commissioners. Criteria and procedures for appointment of the Secretary of the Board of Commissioners are stipulated in the Regulation of the Minister of SOE No. PER-12/MBU/2012 dated 24 August 2012 on the Supporting Organs of the Board of Commissioners of SOEs, which among other things requires the Secretary of the Board of Commissioners to hail from outside of the company, be appointed by the Board of Commissioners, understand aspects of corporate governance, and able to communicate effectively.

DUTIES AND RESPONSIBILITIES The Secretary of the Board of Commissioners is responsible to the Board of Commissioners with the duties and responsibilities including: 1. Prepare meetings, including meeting materials of the Board of Commissioners. 2. Make the minutes of meetings of the Board of

Commissioners in accordance with the Articles of Association. 3. Administer documents of the Board of Commissioners both incoming mail, outgoing mail, minutes of meetings, as well as other documents. 4. Develop Work Plan and Budget for the Board of Commissioners. 5. Make the draft for the reports of the Board of Commissioners. 6. Carry out other duties of the Board of Commissioners. 7. Ensure that the Board of Commissioners comply with legislation and apply the principles of GCG. 8. Provide information needed by the Board of Commissioners periodically or at any time when requested. 9. Coordinate Committee members The Board of Commissioners if necessary in order to facilitate the tasks of the Board of Commissioners. 10. Act as a liaison between the Board of Commissioners with other parties. 11. Ensure that all documents stored properly carrying out activities in the Company in order to administration and implementation of good corporate governance.

REMUNERATION FOR THE SECRETARY OF THE BOARD OF COMMISSIONERS The remuneration received by the Secretary of the Board of Commissioners consists of honorarium, allowances, and other facilities such as insurance. The amount of remuneration Secretary The Board of Commissioners is determined by the GMS with the following details: Remuneration For The Secretary Of The Board Of Commissioners In 2014 (Rp)

Name

Salary per Year

Roslyn Sitohang

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

1 130.500.000

Allowance per Year Net Salary per Year Tantiem + Religious Holiday Allowance 2 3=1+2 4 32.625.000 163.125.000 208.593.750

Total 5=3+4 371.718.750

222

CORPORATE SECRETARY

M. Rahman Roestan Company Secretary

DESCRIPTION AND DUTIES AND FUNCTIONS OF THE CORPORATE SECRETARY The Corporate Secretary of Bio Farma performs three main functions. The first function is as the Gate Keeper, with a responsibility for analyzing the corporation systems that have been implemented and new systems/standards that need to be implemented in an integrated management system. The second function is as a Compliance Adviser, with a responsibility for providing studies and recommendations to the management in GRC (Governance, Risk, Com pliance/ legal aspects). The third function is as the Corporate Agenda, with the responsibility for coordinating the Company’s agenda and collaboration with other agencies in the national, regional and international scope. The Corporate Secretary plays an important role in facilitating communication between the Company and all stakeholders. The Corporate Secretary is also responsible for ensuring adherence to laws and regulations, as well as the disclosure of the Company. The Corporate Secretary is directly responsible to the President Director and assists the Board of Directors in complying with good corporate governance. The Corporate Secretary acts as the representative of the Company in dealing with shareholders, is responsible for the administration of documents and minutes of meetings, policy formulation, planning and control of corporate

Born in Bandung in 1970, obtained his Bachelor of Pharmacy and license to work as a Pharmacist from the University of Padjadjaran, Bandung. Earned the Master of Business Administration (MBA) degree from ITB and is currently continuing the Doctorate Program in Strategic Management at the University of Padjadjaran. Joined PT Bio Farma (Persero) in 1998, and has held various structural positions such as Head of Formulations and Packaging, Head of Quality Assurance System, and Head of Production Planning and Control Division. Since 2009, he has been serving as a Management Representative for the integrated management system. Active in the Indonesian Pharmaceutical Association, Indonesian Pharmacists Association, and is active at the Indonesian Quality Award Foundation (IQAF) as Examiner for the Malcolm Baldridge Criteria for Excellence. Since 2012 he has been included as a delegation to the International Meeting of Occupational Health at the World Health Organization (WHO) in Geneva and Organization of Islamic Cooperation (OIC) forum.

communications with stakeholder relationships, the public, and internal parties. The Corporate Secretary of Bio Farma is in charge of two areas, namely Corporate Communications and the Secretariat.

APPOINTMENT AND DISMISSAL OF THE CORPORATE SECRETARY In accordance with the Regulation of the Minister of StateOwned Enterprises No. PER-01/MBU/2011 Article 28 (3), the Corporate Secretary is appointed and dismissed by the President Director, with the approval of the Board of Commissioners. The Corporate Secretary of PT Bio Farma (Persero) as at the end of 2014 was M. Rahman Roestan, who was appointed based on the Decree No. 341/TK/ASDM/IV/2008 dated 2 June 2008.

EDUCATIONAL QUALIFICATION & COMPETENCE OF THE CORPORATE SECRETARY The Corporate Secretary of PT Bio Farma (Persero) has met all job competence requirements, is able to build rapport and working relationship as well as having an analytical mindset and is able to think conceptually. The Company Secretary is responsible for ensuring an integrated management system and corporate agenda can be managed effectively and efficiently through the planning, implementation and monitoring functions and compliance advisor as well as gate keeper.

223

GOOD CORPORATE GOVERNANCE

CORPORATE SECRETARY

CORPORATE SECRETARY IN THE ORGANIZATIONAL STRUCTURE According to the Decree of the Board of Directors No. 02491/DIR/VI/2014 dated 2 June 2014 on the Organizational Structure of PT Bio Farma (Persero) in 2014, the position of the Corporate Secretary is under the President Director. The Corporate Secretary is to perform three main functions, namely: 1. As the Gate Keeper, with a responsibility for analyzing the corporation systems that have been implemented and new systems/standards that need to be implemented in an integrated management system. 2. As a Compliance Adviser, with a responsibility for providing studies and recommendations to the management in GRC (Governance, Risk, Com pliance/ legal aspects). 3. As the Corporate Agenda, with the responsibility for coordinating the Company’s agenda and collaboration with other agencies in the national, regional and international scope.

WORKING GUIDELINES FOR THE CORPORATE SECRETARY The Working Guidelines for the Corporate Secretary of PT Bio Farma (Persero) are based on the Regulation of the Minister of State-Owned Enterprises No. PER-01/ MBU/2011 on the Implementation of Good Corporate Governance in State-Owned Enterprises.

DUTIES AND RESPONSIBILITIES OF THE CORPORATE SECRETARY Description of Duties and Responsibilities of the Corporate Secretary The duties and responsibilities of the Corporate Secretary are regulated in the Job Description and & Job Specification Document Rev #02 dated 22 June 2012, to be, among others: 1. Acts as the representative of the Company and a liaison officer between the Company and all stakeholders to communicate the activities of the Company accurately and on a timely manner. 2. Directs all aspects in the organization of the GMS, so the GMS runs well and smoothly. 3. Determines the strategy and implement corporate communication program for various audiences domestically and overseas so the reputation of Bio Farma can be properly maintained.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

4. Controls the delivery of information about the Company’s performance and corporate actions to the concerned parties. Analyzes and oversees the management of 5. communication strategies to buid a corporate image based on key performance indicators. 6. Delivers the Company’s Annual Report and Financial Report periodically to the Board of Directors and Commissioners. 7. Coordinates the implementation of Board of Directors meetings, Board of Directors meetings with the Board of Commissioners and Annual General Meeting of Shareholders, coordinates the minutes of the meetings as well as controls the Board of Directors secretarial administration. 8. Acts as the Management Representative for the ISO, OHSAS, ERM, and IFRS integrated management systems. 9. Coordinates, monitors, and evaluates aspects of GCG and regulation with the Company’s risk activities. In relation to the tasks of evaluating aspects of corporate governance, the Corporate Secretary provides advice and recommendations to the management with an aim to improve and complement the corporate governance policies such as the Code of Conduct, GCG Policy, Guidelines for Implementation and Internal Assessment of Good Corporate Governance, Internal Audit Charter and Audit Committee Charter. To support the Company’s vision of becoming a world-class manufacturer of vaccines with global competitiveness, the Corporate Secretary assumes the strategic task of representing the Company to actively participate in various international forums such as the World Health Organization (WHO), the Organization of Islamic Cooperation (OIC), DCVMN, GAVI, and others.

Execution of Duties of the Corporate Secretary 1. As the Gate Keeper, with a responsibility for analyzing the corporation systems that have been implemented and new systems/standards that need to be implemented in an integrated management system. 2. As a Compliance Adviser, with a responsibility for providing studies and recommendations to the management in GRC (Governance, Risk, Com pliance/ legal aspects). 3. As the Corporate Agenda, with the responsibility for coordinating the Company’s agenda and collaboration with other agencies in the national, regional and international scope.

224

TRAINING PROGRAMS In order to bolster the performance of the Corporate Secretary and expands the insight in Good Corporate Governance, in 2014 the Corporate Secretary participated in the following training programs: Competency Development Program of Corporate Secretary Date

Place

Integration of Corporate Vision, Mission, and Values

31 January 2014

Bandung

Government Policy in Determining New Vaccines in the National Immunization Program

19 August 2014

Jakarta

Vaccine Industry’s Potential in Global Competition

19 August 2014

Jakarta

Mapping of R&D Competition in the Global Vaccine Industry

19 August 2014

Jakarta

Policy of Health Development and Policy for National Self-Sufficiency in Health

19 August 2014

Jakarta

16-19 December 2014

Bandung

Program

Good Corporate Governance & Self Assessment Refreshment

CORPORATE SECRETARY PERFORMANCE EVALUATION IN 2014 The Corporate Secretary has carried out the strategies and the work plans related to the disclosure of information to investors and the public. In implementing GCG internalization, the Corporate Secretary has carried out various activities that together help integrate the culture of GCG implementation in the entire Bio Farma environment. The Corporate Secretary’s performance is evaluated against a set of Key Performance Indicators (KPI). The Corporate Secretary’s KPI achievement in 2014 is as follows: Corporate Secretary in 2014 Indicators

Targeted

Formula

Unit

Weight Value (%) Score

Ensuring the management of Public Information, Ensuring the preparation of the 2013 Annual Report and Sustainability Report

No later than 3 months after the Company received the Audited Reports

Realization/ Target

%

15

100%

15.00

Ensuring positive and harmonious relationships with all stakeholders of the Company

15% brand awareness improvement

Realization/ Target

%

15

90%

13.50

Ensuring improvement and management of corporate iage in the country and globally through all communication channels

10% positive news improvement

Realization/ Target

%

15

90%

13.50

Coordinating and overseeing the implementations of events involving both domestic and foreign parties (National Vaccine Research Forum, 2nd meeting of OIC, Education Seminar, Young Ambassador Program)

Implementation of at least 1 event

Realization/ Target

%

15

100%

15.00

Ensuring the preparation and updates of Company documentation (video profile, company profile, safety video, others)

No later than December 2012

Realization/ Target

%

10

100%

10.00

Reviewing and responding to correspondence with stakeholders, as well as to plan, coordinate and control Corporate Secretarial activities.

No less than 75% submitted in 2 (two) working days

Realization/ Target

%

10

90%

9.00

A. Routine

Sub Jumlah

80

76.00

B. Non Routine Implementation of an integrated Quality Management System

System Management Integration

Realization/ Target

%

10

100%

10.00

2014 Investment Realization (Rp 1,672,964,786.95)

No less than 75% can be realized in the current year

Realization/ Target

%

10

75%

7.50

Sub Total Total

20

17.50

100

93.50

225

GOOD CORPORATE GOVERNANCE

GENERAL MEETING OF SHAREHOLDERS (GMS)

GENERAL MEETING OF SHAREHOLDERS (GMS) The General Meeting of Shareholders (GMS) is a mechanism for Shareholders to convene and make important decisions regarding the share ownership of the Company. The GMS is a company organ which has authorities that are not granted to the Board of Directors or Board of Commissioners in accordance with the Law or the Articles of Association of the Company. The GMS has the authority to appoint and dismiss members of the Board of Commissioners and Board of Directors, evaluate performance and request for accountability of the Board of Commissioners and the Board of Directors in the management of the Company, approve amendments to the Articles of Association, approve Annual Reports, determine profit allocation, appoint the public accountant and determine amount and type of compensation for the Board of Commissioners and the Board of Directors. Decision-making in the GMS is carried out in a fair and transparent manner. Furthermore, in decision-making, the GMS pays attention to and considers important issues related to the Company’s long-term interests and other interests in the Company. The GMS or the Shareholders do not have authority to intervene in the roles, functions and authorities of the Board of Commissioners and/or the Board of Directors. However, this does not diminish GMS authority to exercise its rights and obligations in accordance with the Articles of Association and the Law.

PREVIOUS YEAR’S GMS RESOLUTIONS Execution of the GMS, Agenda and Resolutions of the Previous Year’s GMS In the year 2014, Bio Farma conducted three General Meeting of Shareholders, namely 1 GMS for the Company’s 2014 Work Plan and Budget, 1 GMS for the Approval and Authorization of the Financial Statements for FY2013, and 1 GMS for the Company’s 2015 Work Plan and Budget. The details of the agenda and resolutions of these GMSes in 2014 are as follows: I. GMS for the Company’s 2014 Work Plan and Budget GMS on the Discussion and Approval of RKAP 2014 and RKA-PKBL 2014 was held on Friday, 20 December 2013 at the Ministry of SOE Building on Jalan Medan Merdeka Selatan 13, Central Jakarta. This GMS discussed:

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

1. Approval of the Work Plan and Budget 2014. 2. Approval of the Work Plan and Budget for the Partnership and Community Development Programs (RKA-PKBL) 2014. 3. Approval of the Operational Aspects Indicators for PT Bio Farma (Persero) in 2014 for the calculation of the soundness level of the Company based on the Decree of the Minister of SOE No. KEP-100/ MBU/2002 dated 4 June 2002. 4. Determination of KPI as stipulated in the 2014 management contract between the Board of Directors and the Board of Commissioners with the Shareholders of PT Bio Farma (Persero). 5. Approval of charging the company for the company's internal organization. 6. Approval of the Company's authorized capital increase from Rp 2 trillion to Rp 5 trillion at the same time to increase the issued and fully paid by the State of Indonesia from originally Rp 750 billion to Rp 1,250 billion from the capitalization of partial reserves of Rp 500 billion and grant power to the Board of Directors of PT Bio Farma (Persero) with substitution right to declare in a notary deed the GMS resolutions to change the Articles of Association. Based on the Minutes of the Annual General Meeting of Shareholders of PT Bio Farma (Persero) on the Ratification of RKAP and RKA-PKBL 2014 No. RIS-48/ D2.MBU/2013, the resolutions are as follows: 1. Approved the Work Plan and Budget 2014. 2. Approved the Work Plan and Budget for the Partnership and Community Development Programs (RKA-PKBL) 2014. 3. Approved the Operational Aspects Indicators for PT Bio Farma (Persero) in 2014 for the calculation of the soundness level of the Company based on the Decree of the Minister of SOE No. KEP-100/ MBU/2002 dated 4 June 2002. 4. Determined the KPI as stipulated in the 2014 management contract between the Board of Directors and the Board of Commissioners with the Shareholders of PT Bio Farma (Persero).

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5. Approved the charging the company for the company's internal organization. 6. Approved the Company's authorized capital increase from Rp 2 trillion to Rp 5 trillion at the same time to increase the issued and fully paid by the State of Indonesia from originally Rp 750 billion to Rp 1,250 billion from the capitalization of partial reserves of Rp 500 billion and grant power to the Board of Directors of PT Bio Farma (Persero) with substitution right to declare in a notary deed the GMS resolutions to change the Articles of Association.

II. GMS for the Approval and Authorization of the Financial Statements for FY2013 GMS for the Approval and Authorization of the Financial Statements and Reports of PKBL Activities for 2013 was held on Friday, 21 March 2014 at the Ministry of SOE Building on Jalan Medan Merdeka Selatan 13, Central Jakarta. This GMS discussed: 1. Approval of the Annual Report on the condition and the course of the Company’s business, including the Report of the Supervision of the Board of Commissioners during FY 2013. 2. Approval of the Financial Statements and Reports of PKBL Activities for 2013. 3. Determination of the use of Company’s Net Income for FY 2013. Approval of the annual bonus based on 4. performance in 2013 and the remuneration for the Board of Directors and the Board of Commissioners for FY 2014. 5. Approval of the Public Accounting Firm (KAP) to audit the Company's Financial Statements and Reports of PKBL Activities for 2014. Based on the Minutes of the Annual General Meeting of Shareholders of PT Bio Farma (Persero) on the Approval and Authorization of the Financial Statements and Reports of PKBL Activities for 2013 No. RIS-20/D2.MBU/2014, 01394/DIR/III/2014 dated 21 March 2014 the resolutions are as follows: 1. Approve the Annual Report on the condition and the course of the Company’s business, including the Report of the Supervision of the Board of Commissioners during FY 2013. 2. Approved the Financial Report for FY 2013 and PBKL Activities Report for 2013 as audited by the Public Accounting Firm (KAP) of Djoemarna, Wahyudin & Rekan.

3. Approved the use of Net Income of PT Bio Farma (Persero) for FY 2013 of Rp 572.47 billion, with the following distribution: a. Dividends of 30% or Rp 171.74 billion. b. Reserve of 70% or Rp 400.73 billion. 4. Determined: To award annual bonus based for 2013 a. performance and the remuneration for the Board of Directors and the Board of Commissioners for FY 2014. b. Details regarding the salary of the Board of Directors and the Board of Commissioners are not regulated in this GMS resolution and to follow the provisions of the Regulation of the Minister of SOE No. PER-04/MBU/2014 on Guidelines for Determination of the Salary for the Board of Directors and the Board of Commissioners of SOEs. c. The Board of Directors & the Board of Commissioners of PT Bio Farma (Persero) are not allowed to receive honorarium for meetings held by the Company. 5. Approved the re-appointment of the Public Accounting Firm (KAP) Djoemarma, Wahyudin & Rekan that will audit the financial statements and the Company's 2014 PKBL Financial Statements. III. GMS for the Company’s 2015 Work Plan and Budget Discussion and approval RKAP 2015 held at the Ministry of SOEs on Friday, January 16, 2015 at the Ministry of SOEs Jalan Medan Merdeka Selatan 13, Central Jakarta. According Minutes of Meeting The Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. RIS-01/AGM/BF/I/2015, the decision was approved at the meeting are as follows: 1. To approve the Work Plan and Budget (RKAP) 2015, RKAP Partnership 2015, RKAP The Board of Commissioners in 2015. 2. Establish Key Performance Indicators (KPI) in accordance with Criteria for Performance Excellence (KPKU) and set out in the Management Contract in 2015 between the shareholders, the Board of Directors and The Board of Commissioners of PT Bio Farma (Persero). 3. Establish indicators for the operational aspects of the calculation of the soundness level of the Company in the RKAP 2015 of PT Bio Farma (Persero).

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GOOD CORPORATE GOVERNANCE

GENERAL MEETING OF SHAREHOLDERS (GMS)

• Annual bonus for the Directors: 90% of the annual bonus for the President Director • Annual bonus for the President Commissioner: 40% of the annual bonus for the President Director • Annual bonus for the Commissioners: 36% of the annual bonus for the President Director

4. Establish Key Performance Indicators (KPI) for the Board of Commissioners of PT Bio Farma (Persero) in 2015.

FULFILLMENT OF THE GMS RESOLUTIONS IN THE YEAR Bio Farma has acted upon the directives given at the General Meeting of Shareholders in relation to the approval of the 2013 Annual Report pada hari Jum’at tanggal 21 Maret 2014 sebagai berikut:

c. The determination of salary for the President Director, the salary/honorarium for Directors, President Commissioner, and Commissioners as per the GMS resolution has been implemented.

a. Bio Farma has recorded the 2013 net income of Rp 572.47 billion to be distributed as follows: • Dividend of 30% or Rp 171.74 billion. • Reserve of 70% or Rp 400.73 billion.

d. The KAP Djoemarma, Wahyudin & Rekan has been appointed to audit the Company’s Financial Statements and its CSR Programs’ Financial Statements for FY2014.

b. Bonus for the Board of Directors and the Board of Commissioners of PT Bio Farma (Persero) has been distributed.

Follow-Up to the Shareholders’ Directives In order to improve the implementation of good corporate governance, the Board of Directors and the Board of Commissioners have followed up the Directives of the GMS, as follows: Status Settlement Deadline

Effective

Not Effective Yet

The Board of Directors and the Board of Commissioners were requested to follow up thoroughly all findings of the auditors from the Company’s Financial Statements and PKBL Financial Statements for FY 2013 and determine the settlement date so that in 2014 these issues will not become findings again.

V

-

All recommendations of the auditors on the Company’s Financial Statements and PKBL Financial Statements for FY 2013 have been followed up, internal supervision will be stricter.

-

2.

Settle the issue of outsourcing work in the Company, in accordance with the Circular of the Minister of SOE No. SE-06/mbu/2013 dated 22 November 2013

V

-

Outsourcing practice in Bio Farma has been in accordance with labor regulations. Bio Farma reported this to the Ministry of SOE on 7 January 2014.

-

3.

Encourage non-cash payment for all transactions conducted by the Company.

V

-

• Payments and receipts to/from third parties, except for vaccination services and laboratory examinations involving the customers directly are still paid in cash.

-

No.

Shareholders Directive

1.

Description

• Payment of salary/honorarium/ allowances that are both regular and non-regular to employees/Board of Directors/Board of Commissioners including Contract Employees

4.

ANNUAL REPORT

2014

Prioritize the use of domestic products including for construction and engineering as well as expanding the opportunity for small businesses as long as the quality, price and purpose can be accounted for.

• PT Bio Farma (Persero) •

V

-

Until presently the procurement of services have provided ample opportunities to small businesses except for procurement of specific goods that cannot be fulfilled by small businesses.

-

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Status Settlement Deadline

Effective

Not Effective Yet

Audit of the Company’s Financial Statements for FY 2014 including the 2014 Annual Report should be completed and presented to the Shareholders at the latest in February 2015.

V

-

Shall be followed up according to the Shareholders Directive and it is expected that the delivery of the Financial Statements to the Shareholders is similar to the time of presentation of the 2013 Financial Statements so that the GMS can be held in March 2015.

-

6.

Encourage the procurement of goods and services through e-procurement mechanism.

V

-

E-procurement cannot yet be implemented for the procurement of goods and services.

-

7.

Pay close attention to taxation obligations in line with the prevailing regulations.

V

-

• In calculating, paying, and presenting its rights and obligations with respect to taxation, the Company has always updated its understanding on the latest tax regulations both by seeking information independently as well as participating in relevant training programs to solve its taxation issues, and to synchronize the Company’s Standard Operating Procedures accordingly. • Should a taxation issue occur, the Company consults with the IAU and/ or the Account Representative at the registered Tax Office.

-

8.

Obey the regulations on the requirement to register and report participants of the social security program to BPJS.

V

-

Currently the registration process has just been completed, and the preparation for the provision of funding for BPJS premium for employees has been recently completed.

-

9.

Annual bonus for the Secretary of the Board of Commissioners is to be determined by the Board of Commissioners by taking into account the aspects of propriety and fairness, while the annual bonus for the staff of the secretariat of the Board of Commissioners is pursuant to the Regulation of the Minister of SOE No. PER-12/MBU/2012 article 7 on the Supporting Organs of the Board of Commissioners/Supervisory Board of SOEs.

V

-

Payment of annual bonus for the Secretary of the Board of Commissioners and for the staff of the secretariat of the Board of Commissioners has been done in accordance with the prevailing regulations.

-

10.

Attend to and implement the responses from the Board of Commissioners and the directives from Shareholders, which make up an inseparable part of the GMS resolutions.

V

-

The Board of Directors has regularly evaluated the follow up to the recommendations and responses of the Board of Commissioners and the shareholders’ directives.

-

No.

Shareholders Directive

5.

Description

REASONS FOR THE NON-REALIZATION OF CERTAIN GMS RESOLUTIONS GMS Resolution Not Yet Implemented

Reason

Encourage the procurement of goods and services through e-procurement mechanism.

E-procurement has not been implemented for the procurement of goods and services. However, specific e-auctions have been conducted for the procurement of office stationeries, but the implementation is still dependent on the preparedness of the integration of the ERP application with the e-auction module itself.

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GOOD CORPORATE GOVERNANCE

PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

Bio Farma believes that GCG implementation may support the achievement of the Company’s goals in terms of business growth, profitability, as well as long-term business continuity and provide added value to stakeholders.

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PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT Bio Farma established an Internal Audit Unit led by the Head of the Internal Audit Unit (IAU), who is appointed and dismissed by the President Director upon the approval of the Board of Commissioners. The IAU is an objective and independent supervisory body established to provide added value in the Company’s performance by abiding to the principles of good corporate governance (GCG).

PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT Ida Farida Hayati was appointed as the Head of Internal Audit Unit (SPI) in 2010. She was born in Solo in 1961, graduated bachelor of Economics from Padjajaran University 1986 and a Master of Management from the same university in 2005. She joined Bio Farma in 1997, was appointed as Head of Internal Audit bassed on the Decision of the Board of Directoros of PT Bio Farma (Persero) No.461/TK/ASDM/ VIII/2010 dated 24 August 2010 and the approval of the the Board of Commissioners No. 25/DK/BF/VIII/2010 dated 20 August 2010.

Ida Farida Hayati Head of Internal Audit Unit

Note: The Auditor Matrix consists of Production Auditor, HR Auditor, Marketing Auditor, R&D Auditor, Finance and Administration Auditor.

NUMBER OF INTERNAL AUDITORS UNDER IAU As at 31 December 2014, the IAU had 12 employees that are directly responsible for the execution of internal audit and 1 personnel that concurrently holds the position as the Secretariat of the IAU. IAU’s auditors have either postgraduate, undergraduate, and high school backgrounds. Each auditor has participated in audit training programs. The composition of IAU personnel as at 31 December 2014 Position

Number of Personnel

Head of the Internal Audit Unit

1

Finance and Administration Auditors

2

Production Auditors

2

Marketing Auditors

2

HR Auditor

1

R&D Auditors

2

PKBL & CSR Auditors

2

Total

12

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GOOD CORPORATE GOVERNANCE

PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

The IAU’s personnel breakdown based on function Function

Number of Personnel

Penanggung Jawab Audit

1

Pengawas Audit

1

Ketua Tim Audit

5

Auditor

5

Pembantu Auditor

-

Jumlah

12

Competence Development for IAU Auditors In order to enhance the competence and capability of its internal auditors, they participate in various training programs, seminars, and workshops, as follows: Internal Audit Competence Development Program 2014 TRAINING

HEAD OF IA UNIT

IA ASSOCIATED

IA JUNIOR EXPERT

Current SFAS in accordance with IFRS Convergence Program

-

1

1

Qualified Internal Auditor (QIA)

-

-

1

SFAS 4 Consolidated Financial Statements & Common Management

-

-

1

Interpretation of KPKU BUMN

-

2

1

INTERNAL AUDIT CERTIFICATIONS In carrying out internal audit tasks, the IAU is supported by a host of professional auditors. As at 31 December 2014, the qualifications and competencies of Bio Farma’s IAU personnel are as follows: Position

Number of Employees

Qualification

Number of Employees

1

Qualified Internal Auditor (QIA)

-

Senior Auditor

6

Certified Fraud Examiners (CFE) Qualified Internal Auditor (QIA) Certificate in International Financial Reporting (CIFR) Certified PSAK (CPSAK)

1 1

Junior Auditor

5

Qualified Internal Auditor (QIA) Certified PSAK (CPSAK)

1 1

Total

12

Total

4

Head of Internal Audit Unit

A number of other auditors have considerable experience and are undergoing certification program. In 2014 five auditors participated in professional training programs and certification programs.

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• PT Bio Farma (Persero) •

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SPI’S POSITION IN THE ORGANIZATIONAL STRUCTURE IAU Organizational Structure In accordance with the Decree of the Board of Directors No. 02491/DIR/VI/2014 dated 2 June 2014 on the Organizational Structure of PT Bio Farma (Persero), the IAU is structurally established under the President Director, and is led by the Head of the IAU. The Head is superior to the Auditor Matrix (Senior and Junior Auditors), which consists of Finance and Administration Auditor, Production Auditor, Marketing Auditor, HR Auditor, and R&D Auditor. Bio Farma’s IAU organizational profile is as follows: President Director

Head of Internal Audit Unit

Finance and Administration Auditor

Production Auditor

Marketing Auditor

HR Auditor

R&D Auditor

Matrix Auditors (IA Associate Experts and IA Junior Experts)

Internal Audit Charter Based on the Joint Decree of Board of Commissioners and Board of Directors No. KEP-13A/DK/BF/XII/2012 and No. 07357/DIR/XII/2012 dated 17 December 2012 on the Internal Audit Charter, the position of the IAU as an internal audit organization, its scope of work, responsibility of reporting, authorities and roles, as well as its professional standards have been outlined. The Internal Audit Charter was formulated to be used as the guidelines for Internal Auditors to carry out their duties optimally, and to be understood by auditees and other related parties in order to create an atmosphere of understanding and excellent cooperation so that Bio Farma’s vision and mission can be achieved. With the Internal Audit Charter, the IAU is expected to produce quality audit reports in order to support all of the Company’s activities.

IAU Duties, Authorities and Responsibilities Execution of Duties and Responsibilities In performing its duties and responsibilities, the IAU refers to the internationally recognized COSO – Internal Control Framework and the Internal Audit Charter as stipulated in the Decree of the Board of Directors No. 05166/Dir/VII/2006 dated 28 July 2006 on the Internal

Audit Charter which was updated and affirmed by the Joint Decree of Board of Commissioners and Board of Directors No. 07357/DIR/XII/2012 dated 17 December 2012, which outlines the vision, mission, structure and position, authorities, duties and responsibilities of the IAU, requirements for professional auditors, and the internal audit code of conduct. The Internal Audit Charter is regularly evaluated and agreed upon by the President Director and the Board of Commissioners through the Audit Committee. Execution of audit tasks refers to the Audit Manual for the IAU, as stipulated by the Decree of the Board of Directors No. 05094/Dir/VIII/2012 dated 27 August 2012. Duties, Authorities and Responsibilities of the IAU a. The Duties and responsibilities of the IAU include the following: 1. Prepare and implement the Annual Monitoring Work Program (PKPT). 2. Test and evaluate the implementation of internal audit, risk management, and GCG in accordance with the Company’s policy.

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PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

3. Perform inspection and assessment on the efficiency and effectiveness of operational, financial, human resources, information technology and other activities in the Company.

a. Operational Assessment on the Quality Assurance Division.

4. Provide recommendations for improvements and objective information on the activities being examined to Management.

c. Operational Assessment on the Diphteria Vaccine Production Division.

5. Preparing audit result reports and submitting them to the President Director and the Board of Commissioners. 6. Monitor the follow-up implementation of the recommended improvements. 7. Perform consulting tasks to improve the internal control system. 8. Together with the Audit Committee to discuss audit result reports and request necessary input. 9. Conduct special inspections if necessary. b. The authorities of the IAU include the following: 1. Conduct direct communication with the Board of Directors and the Board of Commissioners, the Audit Committee, and the Risk Committee. 2. Hold periodic and ad-hoc meetings with the Boards of Directors and Commissioners, and Audit and Risk Committees. 3. Coordinate tasks as the Company is being audited by external auditors (KAP, BPK, etc.). 4. Allocate audit resources, determine the focus and scope and schedule of the audit. 5. Improve knowledge and skills in the field of audits. 6. Obtain advice and counsel from professionals/ experts.

SUMMARY OF 2014 WORK REPORT OF THE IAU The Internal Audit Unit of Bio Farma formulates and implements an Annual Audit Work Program (PKPT) for the audit implementation of the control operations, risk management and corporate governance processes, providing consultation and recommendations that are independent and objective. In assessing risks, the IAU coordinates its activities with the risk owners to obtain input on the risk assessment resulted from the risk management process. Throughout 2014, the IAU conducted the Annual Audit Work Program (PKPT) and assessments outside of PKPT (Non-PKPT), namely: 1. Conducted assessments on 10 (ten) audit objects in accordance with the PKPT, as follows:

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

b. Operational Assessment on the Budget and Accounting Division.

d. Operational Assessment on R&D and Marketing Export Division. e. Operational Assessment on the Logistic Division. f. Operational Assessment on the HR Division. g. Operational Assessment on the Production Planning & Control Division. h. Operational Assessment on the PKBL & CSR Division. i. Operational Assessment on the Finance Division. j. Operational Assessment Marketing Division.

on

the

Domestic

2. Assessment outside of PKPT (Non-PKPT), namely: a. Stock Opname on 31 December 2014. b. The Company’s and PKBL program’s budget opname on 5 January 2015 and as at 5 January 2015. c. Counterpart for the audit of Financial Statements and PKBL Activities Report for FY2014 by KAP Djoemarma, Wahyudin & Rekan. Based on the Decree of the Board of Directors of PT Bio Farma (Persero) No. 04544/DIR/IX/2014 on the Establishment of the Counterpart Team to the Public Accounting Office for the general audit of PT Bio Farma’s financial statements for FY2014 on 29 September 2014. Monthly activities regular audit (production, 3. marketing, purchase, and book keeping evidences). Of the 2014 work program in accordance with PKPT, 10 (ten) Inspection Reports (LHP) were published, and 10 (ten) recommendations were given, of which all 10 (ten) were followed up. The Internal Audit Unit also conducted meetings with the Audit Committee, which were carried out at least once a month, with an agreed meeting agenda. The IAU reports the audit results and follow-up of the examination results and discusses the financial statements of, and the latest issues faced by, the Company. The IAU also establishes a good relationship with external auditors, such as BPKP, BPK, and the Public Accounting Firm in order to expedite the audit being conducted.

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2015 Internal Audits Plans At the end of every year, the IAU prepares the Annual Audit Work Plan or PKPT for the following year. The IAU prepares the internal audit schedule by taking into account the risk level of each of the auditees. In 2014, SPI carried out 10 audit tasks. The PKPT has been approved by the President Director, and communicated to the Board of Directors and the Board of Commissioners through the Audit Committee. Aside from audit plans, the IAU also prepares the auditors’ competence development plan. The Annual Audit Work Plan (PKPT) and the Bio Farma Auditors’ Competence Development Plan for 2015 are detailed below: Activity Program

Auditing Period

Month of Publication

Number of Audit Reports

Operational Assessment on Chemical & Physical Quality Assurance

26/01-23/03-15

March

1

Operational Assessment on the Clinic and Vaccination Division

28/01-23/03-15

March

1

Operational Assessment on the Marketing Division

14/04-19/06-15

June

1

Operational Assessment on Management, Performance & Reward, and the HR Division

14/04-19/06-15

June

1

Operational Assessment on divisions that are related to investment management

14/07-18/09-15

September

1

Operational Assessment on the Import Procurement, Logistics Division

14/07-18/09-15

September

1

Operational Assessment on the CSR/PKBL Division

14/07-18/09-15

September

1

Operational Assessment on the Treasury Division

14/10-18/12-15

December

1

Operational Assessment on Management Information System (SIM)

14/10-18/12-15

December

1

APPOINTMENT AND DISMISSAL OF THE HEAD OF THE IAU

The appointment of the new Head of the IAU was based on the Decree of the Board of Directors of PT Bio Farma (Persero) No. 317/TM/TKK/XII/2014 on the Employee Career Transfer dated 18 December 2014, Widayatiningsih SE., Grade 4 (four), previously Head of the Procurement Division under the Human Resources Directorate, was transferred as the Head of Internal Audit Unit at the Main Directorate.

In accordance with the Regulation of the Minister of StateOwned Enterprises No. PER-01/MBU/2011 Article 28 (3) dated 1 August 2011, the Head of the IAU is appointed and dismissed by the President Director upon the approval of the Board of Commissioners, the Decree of the Board of Directors of Bio Farma No. 25/DK/BF/VIII/2010 dated 20 August 2010 and 461/TK/ASDM/VIII/2010 dated 24 August 2010 on the Appointment of the Head of the IAU.

Quality Assurance (QA)

Based on the Decree of the Board of Directors of PT Bio Farma (Persero) No. 315/TM/TKK/XII/2014 on the Employee Career Transfer dated 16 December 2014, Ida Farida Hayati, Dra., MM Grade 3 (three), previously Head of Internal Audit Unit at the Main Directorate, was transferred as the Head of the Finance Division under the Finance Directorate.

Aside from the Internal Audit Unit (IAU), Bio Farma also has the Quality Assurance Division with the duties, authorities and responsibilities among others to conduct audit on Quality Management System, Environmental Management System, Occupational Health and Safety Management System, Good Manufacturing Practice (GMP), Vendors, and Customer Complaints.

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PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

Appointment and Dismissal of the Quality Assurance Division Head The Quality Assurance Division Head is appointed and dismissed by the President Director, as stipulated in the Decree of the Board of Directors of Bio Farma No. 0461/TKK/SDM/VIII/2012 dated 16 August 2012 on the appointment of the Quality Assurance Division Head. Head of Quality Assurance Division, has responsibility in implementation of ISO 900.ISO 14001, and QHSAS 18001 integration system. She was born in Semarang, July 20, 1967, was appointed as Head of Quality Assurance (QA) division since 2012 up to present. She obtained a bachelor degree in phahrmacy and Magister Management from Padjajaran University Bandung. She joined Bio Farma since 1991 as staff of bacterial vaccine quality control department (1991-1997), and has served in various structural positions such as Head of Viral Vaccine Quality Control Department (1997-2006), Quality Control Head Division (2006-2012). She has competencies in quality control and management system, current GMP,etc. she has qualification as audit for vendor and lead auditor, her experiences as lead auditor of some company national and abroad to ensure Bio Farma vendor fulfill quality management and environmentfriendly aspect.

Iin Susanti Head of Quality Assurance Division

Quality Assurance Organizational Structure In accordance with tthe Decree of the Board of Directors No. 02491/DIR/VI/2014 dated 2 June 2014 on the Organizational Structure of PT Bio Farma (Persero), the Quality Assurance Division is structurally placed under the President Director, and is led by the Division Head that is superior to QA System, QA Operation, and QA Service. Bio Farma’s QA Division organizational structure is as follows:

QA Manager

Quality Engineer

QA Patrol

Water System

Raw Materials

Provess Methode Validation

Change Management

Product Q Review

QA Operation • • • •

BPR Review Trend Analysis Batch Release Environment Monitoring Stability

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

QA Service • • • • •

Validation & calibration Document Control Vendor Qualification Internal Audit GMP Training

QA System • • • • •

Deviation CAPA Product Complaint Quality Risk Management Change Control

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Number of QA Auditors QA Auditors consist of personnel from various work units within Bio Farma that have been qualified as internal auditor. As at 31 December 2014, there were 88 internal auditors of QA, as representatives of the Quality Assurance, Quality Control, Production, Engineering, Laboratory Animals, Inventory Management, Marketing, and Administration Divisions. Auditor Competence

Number of Personnel

GMP, ISO & OHSAS Auditors

76 personnel

ISO & OHSAS Auditors

12 personnel

Total

88 personnel

These auditors have postgraduate and undergraduate backgrounds in Pharmacy, Biology, Medicine, and many other disciplines. Each Auditor has participated in audit-related training programs.

Competence Development for QA Auditors In order to enhance the competence and capability of QA Internal Auditors, they participated in various training programs, seminars and workshops, as detailed below: Training

Coaching for GMP audit implementation with GMP consultant, David Buckley, on 21-24 July 2014, involving 17 auditors. Internal QMS training for auditors based on ISO 19001:2008 by Lloyd’s Register Quality Assurance, approved IRCA Registered, on 18-19 September 2014, involving 2 auditors. Quality Management System training based on ISO 9001:2015 draft by INTLCERT, on 5-6 November 2014 involving 54 auditors and on 31 December 2014 involving 3 auditors.

QA Auditors Certifications In carrying out internal audit tasks, the QA is supported by a host of professional auditors. As at 31 December 2014, the qualifications and competencies of Bio Farma’s QA auditors are as follows: Auditor Competence

Number of Personnel

Lead Auditor

39 personnel

A number of other observers have considerable experience and are undergoing certification program. In 2014 two auditor candidates participated in an auditor qualification program.

Duties, Authorities and Responsibilities of the QA in Relation to Internal & External Audits 1. Head of the QA Division and/or Management Representative (MR) is authorized to approve audit programs and appoint an audit team that is competent and independent to conduct audit to each related division/section, and request for unscheduled audits that have been determined with or without prior announcement to the auditee. 2. Head of the QA Service section is responsible for preparing the schedules, audit programs, audit scope, and evaluation including the safekeeping of internal audit records and reporting of the audit implementation to the QA Division Head and/or MR. The internal audit schedule is prepared based on proper risk analysis.

Summary of 2014 Work Report of the QA Auditors Quality Management System Implementation The implementation of the Quality Management System in Bio Farma is aimed at maintaining a consistently integrated system. In its implementation, the Company has appointed a Management Representative (MR) as the person in charge, i.e. the Corporate Secretary, and the representative of the Quality MR for the implementation is the Quality Assurance Division. The team for the integration of ISO 9001, ISO 14001, and OHSAS 18001 systems is composed of various work

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PROFIL OF THE HEAD OF THE INTERNAL AUDIT UNIT

PUBLIC ACCOUNTANT

units, and has a function to coordinate, ensure the implementation of an integrated system, and act as internal auditor and vendor auditor for Bio Farma, in accordance with a decree that is updated on an annual basis, namely the Decree No. 00064/DIR/I/2014 dated 2 January 2014. The implementation of the Quality Management System in 2014 is detailed below: No. 1.

2.

3.

4.

5.

6.

7.

8. 8.1

Activity Internal Audit - Internal Audit Period I was conducted on 6th February – 30th June 2014, covering 46 working units. - Internal Audit Period II was conducted on 11th June – 3rd October 2014, covering 30 working units. - Internal Audit Period III was conducted on 10th October 2014 – 8th January 2015, covering 30 working units. Quality Management System Audit - ISO 9001:2008 1st and 2nd Surveillance was conducted on 1st-2nd December 2014. PT Bio Farma (Persero) was recommended for an extension of the ISO 9001:2008 certification and gave the impression of a particularly high level of commitment and quality awareness. Environmental Management System Audit - ISO 14001:2004 4th and 5th Surveillance was conducted on 1st-2nd December 2014. PT Bio Farma (Persero) was recommended for an extension of the ISO 14001: 2004 certification. Occupational Health & Safety Management System - OHSAS 18001:2007 4th and 5th Surveillance was conducted on 1st-2nd December 2014. PT Bio Farma (Persero) was recommended for an extension of the OHSAS 18001:2007 certification. Good Manufacturing Practice (GMP) Audit - GMP audit was conducted on 17-19 March 2014.

Remarks Internal audit is conducted by Qualified Auditor to monitor and evaluate the implementation of integrated management systems include Quality, Environment, and Occupational Health and Safety.

The Surveillance audit is conducted by the Lloyd’sRegister Quality Assurance (LRQA) certification body to assess the effectiveness of the implementation of the Quality Management System in PT Bio Farma (Persero) The Surveillance audit is conducted by the Lloyd’sRegister Quality Assurance (LRQA) certification body to assess the effectiveness of the implementation of the Environment Management System in PT Bio Farma (Persero) The Surveillance audit is conducted by the Lloyd’sRegister Quality Assurance (LRQA) certification body to assess the effectiveness of the implementation of the Occupational Health & Safety Management System in PT Bio Farma (Persero)

GMP audit is conducted by Badan Pemeriksaan Obat & Makanan (BPOM) as National Regulatory Authority to assess company’s compliance with Good Manufacturing Practice Regulation. Vendor Audit Referring to ISO 9001:2008 and cGMP requirements, - As part of Bio Farma’s Quality Management System, 66 vendor audit is conducted to evaluate qualification of vendors were audited in 2014. 58 of it were existing vendors vendors in their capacity to provide product or service for and the rest were potential vendors which were audited as part PT Bio Farma (Persero). of vendor qualification process. Customer Complaints All the AEFI and AE reports concluded as unrelated to In 2014, 16 complaint was reported, 4 complaints were related product quality. to Adverse effect following immunization (AEFI), 1 compain was related to adverse effect (AE) and 19 related to Product Technical Complaints (PTC) Continual Improvements Pentabio vaccine is improvement of quadrivalent vaccine, WHO prequalification for New Product: Pentabio Vaccine (DTP_ Hepatitis B-HiB vaccine) DTP-Hepatitis B. Hib is added as the fifth component to prevent pneumonia caused by Haemophilus influenza type B.

2015 QA Audit Plans The audits that will be conducted by QA Auditors in 2015 are as follows: 1. Administration section is to be audited at least once a year (as regards quality, environment, and OHS aspects). 2. Production, QA, QC, engineering and other sections apart from Administration are to be audited at least twice a year (as regards quality, environment, and OHS aspects). 3. EHS section is to be audited at least three times a year (as regards quality, environment, and OHS aspects).

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PUBLIC ACCOUNTANT Number of Periods the Public Accountant Conducted Audit of Financial Statements and the number of Periods the Public Accounting Firm Conducted Audit of Financial Statements

registered on the BPK and had considerable experience in auditing to participate in the procurement process, and was concluded with the approval of the Board of Commissioners and the report to Shareholders.

The function of independent oversight to the financial aspects of the Company is done by conducting an external audit performed by an Public Accounting Firm (KAP). Based on the results of the General Meeting of Shareholders (GMS) of Bio Farma on 21 March 2014, the Company appointed the Public Accounting Firm KAP Djoemarma, Wahyudin & Rekan for the third time as the external auditor to conduct an independent audit of the Company’s Financial Statements and CSR Programs’ Financial Statement for the 2014 Fiscal Year. This Public Accounting Firm has a license from the Minister of Finance No. KEP-350/KM.17/2000 dated 18 September 2000 and BAPEPAM No. 320/PM/STTD-AP/2002 dated 28 June 2002.

KAP Djoemarma, Wahyudin & Rekan has audited the Financial Statements of PT Bio Farma (Persero) Tbk for the years ended 31 December 2014 and 2013, along with the statements of comprehensive income, statements of changes in equity, and statements of cash flows for the years ended 31 December 2014 and 2013, as well as examined the Company’s compliance with certain regulations and internal control.

The appointment abided by the Regulation of the Minister of Finance No. 17/PMK.01/2008 dated 5 February 2008 Article 3 paragraph 1 that states that the general audit service of the financial statements of an entity is carried out by a Public Accounting Firm for at most six fiscal years in a row, and by a Public Accountant for at most three fiscal years in a row. The appointment of the Public Accounting Firm had gone through the necessary stages for service procurement in Bio Farma. This began with the invitation of various public accounting firms

KAP Djoemarma, Wahyudin & Rekan carried out the audit process in full accordance with the auditing standards established by the Indonesian Institute of Certified Public Accountants and the State Auditing Standards issued by the State Audit Board of the Republic of Indonesia. According to the KAP Djoemarma, Wahyudin & Rekan’s Report No. 326/LAI.138F/DWR/2014 dated 30 January 2014, the financial statements of PT Bio Farma (Persero) have presented fairly, in all material aspects, the financial position of PT Bio Farma (Persero) as at 31 December 2014 and 2013, as well as the business results, changes in equity, and cash flows for the years ended on such dates, in accordance with the prevailing Financial Auditing Standards in Indonesia.

TOTAL FEE PAID TO THE PUBLIC ACCOUNTANT The audit of PT Bio Farma (Persero)’s Financial Statements and the fees paid to external auditors for the past six years is are detailed as follows: Company’s Financial Report Audit for the last 6 years (in rupiah) Audit Period 2014 2013

2012

Accountant Djoemarma Registered under NRAP No. AP.0190 Djoemarna Registered under NRAP No. AP.0190 Aryanto, Amir Jusuf, Mawar & Saptono Registered under NRAP No. R/108. AGA/sat.3/2012

Public Accountant

Audit Fee

Djoemarma, Wahyudin & Rekan

200,000,000

Djoemarma, Wahyudin & Rekan

200,200,000

Aryanto, Amir Jusuf, Mawar & Saptoto

200,200,000

Opinion Reasonable in all material terms Reasonable in all material terms Reasonable in all material terms

Services beyond Financial Audit Non Non

Non

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2011

2010

2009

PUBLIC ACCOUNTANT

Aryanto, Amir Jusuf, Mawar & Saptono Registered under NRAP No. R/134. AGA/4.2/2011 Aryanto, Amir Jusuf, Mawar & Saptono Registered under NRAP No. R/123. AGA/4.1/04/2010 Aryanto, Amir Jusuf, Mawar & Saptono Registered under NRAP No. R/077.S/7/03/08

CORPORATE RISK MANAGEMENT

Aryanto, Amir Jusuf, Mawar & Saptoto

242,000,000

Aryanto, Amir Jusuf, Mawar & Saptoto

187,000,000

Aryanto, Amir Jusuf, Mawar & Saptoto

187,000,000

Reasonable in all material terms Reasonable in all material terms Reasonable in all material terms

Non

Non

Non

OTHER SERVICES RENDERED BY THE PUBLIC ACCOUNTANT ASIDE FROM FINANCIAL STATEMENTS AUDIT Aside from the audit of financial statements, the Public Accounting Firm did not provide any other services to Bio Farma.

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CORPORATE RISK MANAGEMENT The obligation for companies to implement risk management is stipulated in the Regulation of the Minister of State-Owned Enterprises No. PER-01/ MBU/2011 dated 1 August 2011 on the Good Corporate Governance Implementation in State-Owned Enterprises. The Corporate Risk Management function in Bio Farma is laid out in the Bio Farma Manual (MBF-01 and MBF-02). Corporate Risk Management is a concerted initiative to identify, analyze and evaluate, manage and review the risks that are faced by the Company so that the goals that have been set by the Company can be achieved while the impact of the risks is kept at a minimum.

RISK MANAGEMENT SYSTEM IMPLEMENTED BY THE COMPANY Bio Farma realizes that the Company’s operations cannot be separated from a variety of risks, both under the control or outside the control of the Company. This is why these risks should not be ignored and must be managed in an integrated, optimal, and continuous manner, as an integral part of good corporate governance practices. Managing risk is the responsibility of each person within the organization; thus, every employee should identify any risks associated with the job and manage them proactively. The application of Risk Management at Bio Farma is aimed at raising awareness on the impacts of business activities and actions and/or external factors that involve risks, reducing the potential of events that are considered harmful which may occur in the present or the future, increasing shareholders value, and providing a comprehensive picture to the stakeholders and the management about advantages and drawbacks so that decision makers and internal policy makers have the adequate set of data and information on the Company’s performance in order to make decisions that are more effective and efficient. Bio Farma is continuously developing and improving its risk management system’s framework and its internal control structure in an integrated and comprehensive manner, so as to provide information regarding any potential risk as early as possible, and then afterwards necessary steps may be taken to minimize the impact of the identified risks. This risk management framework is laid out in the policies, procedures, authorities and other provisions as well as other risk management tools that are valid within the entire range of the Company’s business activities.

Since 2009, Bio Farma’s Risk Management System has been based on the principles of the Committee of Sponsoring Organizations (COSO) of the Treadway Commission’s Enterprise Risk Management – Integrated Framework. In accordance with the design of Bio Farma’s Risk Management System, the framework underwent changes affected by the ISO 31000:2009 and the COSO Enterprise Risk Management – Integrated Framework.

Basis for Risk Management Implementation Based on the prevailing rules and regulations and the Regulation of the Minister of State-Owned Enterprises No. PER-01/MBU/2011 Article 25, Bio Farma implements the following: a. The Board of Directors, in making any decision or corporate action, must take into consideration the Company’s business risks. b. The Board of Directors is required to build and implement a corporate risk management program in an integrated manner, as part of the GCG program implementation. c. The implementation of risk management program may be done by establishing a specific work unit under the Board of Directors or by assigning to an existing and relevant work unit to carry out the risk management function.

Risk Management Policy In order to adapt to the developments of the standards in Enterprise Risk Management practices, Bio Farma’s risk management policy refers to ISO 31000:2009 Risk Management Principles and Guidelines, which have been adopted as the SNI ISO 31000:2011 national standard and the COSO Enterprise Risk Management – Integrated Framework.

Risk Management Rollout Risk Management is rolled out regularly and continuously within Bio Farma’s environment. In order to improve the competence and obtain risk management certification, employees of Bio Farma have participated in training, workshops, and seminars within and outside of the Company.

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EVALUATION ON THE RISK MANAGEMENT SYSTEM’S EFFECTIVENESS The evaluation on the risk management system’s effectiveness is carried out by measuring eight Key Risk Indicators, namely: a. Awareness, i.e. the level of awareness among internal stakeholders on risk in general as well as the ongoing implementation of risk management. b. Reputation, i.e. view and acceptance of internal stakeholders on risk management implementation. c. Culture, i.e. how far the risk awareness culture has taken root and supported risk management practices.

h. Process, i.e. how far risk management practices have been carried out based on the methodology referred to as the best practice in the field of risk management. Based on the above measurements, Bio Farma’s Risk Management System is deemed to run effectively and is continuously being developed in accordance with Bio Farma’s Risk Management Roadmap, as demonstrated by the following: a. Awareness among risk owners to conduct selfassessment of risks.

d. Skills, i.e. the level of competence of internal stakeholders in Risk Management to support risk management implementation.

b. The culture of risk awareness has been relatively strong in risk owners, as shown by the efforts to review risks as part of the Company’s operational activities.

e. Trust, i.e. the level of trust among internal stakeholders in the results of risk management implementation.

c. Stakeholders related to Risk Management have been able to effectively review risks and employ quantitative risk analysis.

f. Resources, i.e. the availability and adequacy of resources, especially human capital, for supporting risk management implementation.

d. There are adequate resources for risk management.

g. Implementation, i.e. how far risk management practices and management of data/information related to risk management in the Company have been supported by automated processes based on information technology.

There were more than 700 identified risks from all work units that have been evaluated and measured against their respective likelihood of occurring and their impact, which resulted in a list of prioritized risks that must be controlled.

RISKS FACED BY THE COMPANY

In 2014 there were seven corporate risks, four of which arose from routine activities and three from projects. After determining the corporate-related risks and the strategic measures that would be taken to mitigate these risks, the Corporate Risk Management (CRM) Division as the unit responsible for corporate risks conducted evaluation and monitoring of risk mitigation activities carried out by each work unit. Each Section Head or head of risk unit becomes the person in charge for each risk and its mitigative measures that collectively become the measure of effectiveness of Bio Farma’s risk management implementation. The details of the corporate risks are as follows: Risk Category Risks Faced Strategic Measures to Manage Risk Risks from 1. Increasing Competitors’ products (such as from China and India) • Performing product research policy Regular global competition that are PQ-WHO certified, and the ASEAN single market in accordance with the trend and Activities may pose a serious threat to the Company’s continuation seeks to accelerate the research of business. The addition of new competitors that will so that the product time to market obtain PQ-WHO certification will drive up competition meets market needs. and may take the Company’s domestic and overseas • Initiating partnership with research market share. Therefore, the appropriateness of institutes/other vaccine producers products that follow market trends is of great importance to accelerate the product availability to the Company. Products that are marketed should meet on the market. market demands and can be provided in a timely manner. Delays in introducing new products that are greatly needed will result in the loss of potential markets.

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2. Vaccine supply delay

3. Changes on World Health Organization (WHO) policies and requirements

4. Fluctuating foreign exchange

5. Delayed Realization of Investment

The Company is the only vaccine producer in Indonesia that supplies all vaccines required for vaccination programs in Indonesia. In addition to meeting the government’s needs, the Company also export vaccines to various institutions and other countries. Fulfillment of demands must be carried out in a timely manner, given that the production processes and quality control may take a long time and production capacity is limeted. Delay in signing contracts may shorten time to supply products, thus resulting in thedelay of fulfilling order requests. This may be detrimental to the Company’s image and reputation and the Company may be demanded to pay a fine. • The Company exports its products to various countries to fulfill the countries’ needs for vaccination program. The products are supplied there through the UNICEF, which has a strict requirement that all products are to pass the PQ-WHO. Thus, the WHO’s recognition of the product’s quality holds a key role in ensuring the success of the Company’s export sales. The Company must at all time abide by thepolicies and requirements issued by the WHO. • The risk of the Company being deemed unable to meet WHO’s policies and requirements (which means the Company is delisted by WHO) is shared with other parties, i.e. partners that are making bulk purchases (to be subsequently processed into vaccine products). If such partners are delisted, bulk sales to these parties will be disrupted. To fulfill the obligations arising from the Company’s purchase of goods/imported materials, the Company shall optimize the availability of foreign exchange reserves to pay for such transactions. The risk that the Company faces is that there may be a substantial difference in exchange rate, between the one agreed at the opening of the L/C (at the time of the purchase order) and the one at the time of the payment for such goods as they are delivered. The Company must maintain the availabilty of products that are aligned to market needs. Therefore, the Company conducts resaserch and development for new products. Adequate facilities are required to support this research and development program and the production phase, so that product development may be carried out in a timely manner, and the product can be introduced to the market while the need is still there. Delay in investment programs that support the research and development stage or the production stage will result in loss of potential market. Thus, planning and implementation of the Company’s investment programs must be as prompt and accurate as possible.

• Performing continuous coordination with Ministry of Health and other buyers to ensure the contract can be signed in a timely manner. • Optimizing IT based supply chain management. • Optimizing production and QC schedule according to market needs.

• Implementing quality management system consistently and continuously in accordance with WHO regulations so that the Company able to maintain its prequalification status. • Forging cooperation with the bulk consumer to maintain the quality management system in order to avoid delisting WHO. • Taking an active role in international activities of both WHO and other organizations, mainly in relation to vaccines to obtain the latest information. • Analyzing foreign exchange rates that will be used at the time of the purchase order (opening of the L/C) for the imported goods. • Maintaining close communication with vendors to ascertain the arrival of imported goods, given that the longer the time it takes for the goods to arrive, the greater will the difference in exchange rate be. • Aligning the investment program plan with the needs of research and development of new product and the market requirement for existing products. • Determining priorities in investment program which have major impact on corporate earnings. • Improving the quality of procurement systems and control of project investment execution. • Accelerating the qualification process of new facilities and equipment to be used on schedule.

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6. Unpreparedness of Influenza Vaccine Production

As an anticipative measure for the possibility of a flu pandemic, the government through the Ministry of Health of the Republic of Indonesia is currently building a human flu vaccine manufacturing facility. When the construction is finished, the facility will be handed over to Bio Farma to be managed in anticipation of the flu pandemic, taking into account that Bio Farma has controlled the technology for flu vaccine manufacturing. However, as of now there is no significant development in the plan. This brings up a risk of unpreparedness in anticipating the flu pandemic, should it happen.

7. Improved Integration of Information Technology (IT)

In order to enhance administrative and operational activities, an integrated information technology system that is aligned with the Company’s business characteristics is required. Therefore, an incorrect implementation of IT system may prove hugely detrimental to the Company’s financial situation.

RISK MANAGEMENT Bio Farma is committed to complying with all laws and reglations in conducting its activities and continuing its efforts to always implement the culture of compliance and ensuring that he compliance function is upheld at all times. This covers the following actions: • Ensuring that the culture of compliance is espoused by all levels of the organization and in all business activities of the Company. • Managing the compliance risk faced by the Company. • Ensuring that all policies, provisions, procedures and business activities are aligned with the prevailing laws and regulations and business ethics.

Risk Management Concept Bio Farma’s risk management is based on the Joint Decree of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-06/DK/BF/ II/2013, No. 01025/DIRR/II/2013 dated 22 February 2013 on the Board Manual of PT Bio Farma (Persero), the Bio Farma Manual MBF-01 and MBF-02, Risk Management Guidelines SM-S.20, as well as Standard Operating Procedures (SOP): 100K-SIS-QRM, Quality Risk

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• Coordinating with Ministry of Health to monitor the possibility of the project continuation and the possibility of a flu pandemic status in Indonesia. • Setting up own production facilities for the seasonal flu vaccine to reduce dependency on imported bulk seasonal flu, and the facility at any time can be used to produce pandemic influenza vaccine if needed (although in a smaller scale). • Developing integrated business applications involving all businsess functions within the Company. • Developing IT organization that have a harmonious balance between centralized and distributed policies (autonomy), which is supported by a good change management proces. • Increasing partnership with third parties (outsourcing) for development and maintenance, considering the cost saving, time efficiency, quality of solution, quality of product and service, as well as flexibility. • Developing IT infrastructure to accommodate the current and future business needs.

Management; 100K-SIS-IAP, identification of Important Aspects; 100K-SIS-ORM, Operational Risk Management; 100K-SIS-KBS, Finance, Business and Strategic, and 100K-SIS-ERM, Enterprise Risk Management.

Risk Management Components The risk management system consists of three interconnected components, namely: 1. Risk management principles. The risk management principles provide a groundwork for the development of risk management framework that serves as a pillar for the implementation of risk management. 2. Risk management framework. 3. Risk management process. The risk management process is the detailed version of the risk management framework aimed at expediting the implementation of risk management principles, on corporate, work unit, and individual levels.

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Risk Management Goals 1. Raising awareness that all efforts to achieve the Company’s goals and targets inherently have risks, so that all individuals and work units must be able to manage risks based on their respective position and responsibility as part of an integrated corporate risk management. 2. Improving the certainty of achieving the Company’s goals and targets by: • Reducing the possibility of events that may disrupt business processes. • Minimizing the potential losses as the impacts from the occurrence of such events.

Risk Management Policy Administrator To administer risk management activities, Bio Farma established the Compliance & Risk Management Division under the Director of Finance, to be responsible for ensuring the management of Compliance function and ensuring compliance within Bio Farma in accordance with all the prevailing rules and regulations.

Profile of the Head of the Compliance & Risk Management Division Mohammad Usman was appointed as the Head of Compliance & Risk Management Division in 2011. Born in Cirebon in 1970, he holds a Bachelor in Pharmacy (1995) and Pharmacists (1996) from the Institute of Technology Bandung (ITB) and the Master of Management in 2005. He built his career in Bio Farma as a staff in the BCG Vaccine Production Division (1996), Diphtheria Vaccine Production Staff (2000), Head of Diphtheria Vaccine Production (2001), Head of Quality Assurance System (2008). He was appointed as Head of Compliance & Risk Management by Board of Directors Decision No:563/PROM/ASDM/XI/2011 dated 16 November 2011. Mohamad Usman Head of Compliance & Risk Management Division

Compliance & Risk Management Division Organizational Structure Finance Director

Compliance & Risk Management Division

GCG & ERM Department

Legal Department

Corporate Policy Matrix

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Roles of the Board of Commissioners and the Board of Directors Board of Commissioners The Board of Commissioners is obliged to carry out active supervision of the compliance function through the committees under the Board of Commissioners, which evaluate the implementation of the compliance function. The Board of Commissioners provides recommendations in order to improve the quality of compliance function implementation. Board of Directors • The Board of Directors, in making any decision or corporate action, must take into consideration the Company’s business risks. • The Board of Directors is required to build and implement a corporate risk management program in an integrated manner, as part of the GCG program implementation. • The Board of Directors is required to submit a risk management profile report and the mitigating measures, together with the Company’s periodic reports. • TheBoard of Directors plays a role in ensuring the implementation of the compliance function and ensuring the culture of compliance is upheld on all organizational levels and in all business activities, among others by formulating the policies and/or making decisions under theguidance of the prevailing laws and regulations.

Duties and Responsibilities of the Compliance & Risk Management Division 1. Coordinating the Company’s compliance with GCG, regulations, and corporate risk activities 2. Monitoring the GCG, Risk, and Legal aspects 3. Evaluating the GCG, Risk, and Legal aspects

Risk Management Measures To manage risks, the following measures may be taken: a. Carrying out a risk assessment on each business target as stipulated in the RKAP and preparing a mitigation plan or risk control plan, which is stipulated in the Operational Work Plan.

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b. Monitoring and evaluating the existing risks to ensure that those risks have been properly managed, among others through regular evaluation by the Compliance & Risk Management Division and through risk-based audits by the Internal Audit Unit.

Compliance Risk Management The management of compliance risk is focused on improving the culture of compliance in all of the Company’s business activities and on all organizational levels. In 2014, the Compliance & Risk Management Division conducted the following activities: • Disseminated the importance of compliance function and role in encouraging the culture of compliance in all of the Company’s activities • Determined compliance-related steps to be taken to ensure that all policies, provisions, systems, and procedures as well as business activities of the Company had been aligned with the prevailing rules and regulations. • Monitored and maintained the Company’s activities so as not to stray from the prevailing regulations in order to minimize the Company’s compliance risk. • Prevented, whenever necessary, any policy or decision made by the Board of Directors from straying from the prevailing regulations. • Monitored and maintained the Company’s compliance with all agreements and commitments between the Company and other parties. • Summarized regulations and analyzed their impacts on the Company, and informed each regulatory change issued by the government to the Board of Directors and the relevant Division/Function Heads to expedite the compliance function implementation. • Assessed risks against each business target, as stipulated in the RKAP and preparing a mitigation plan or risk control plan, which is stipulated in the Operational Work Plan. • Monitored and evaluated existing risks to ensure that those risks have been properly managed, among others through regular evaluation by the Compliance & Risk Management Division and through risk-based audits by the Internal Audit Unit.

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Bio Farma’s ERM is divided into Risk Unit ERM and Corporate ERM. Risk Unit ERM is prepared by all Risk units in accordance to the Standard Operating Procedure/ SOP 100K-SISERM, i.e., each Risk Unit prepares an annual Risk Unit ERM report, the format of the report is as follows: 1. Introduction Chapter, contains the purpose and objective of ERM in every risk unit, among others to explore and understand all risks that exist in the Company as a whole so the risk can be managed and controlled. 2. The Scope of Study Chapter, contains the explanation of business processes taking place in the Company. 3. Risk Register, explains the steps of risks identification and measurement to determine the emergence of risk or events, then the value of probability is calculated by the Poisson, Binomial, Z score, and approximation methods and impact with the value at risk (var) method, defining the Risk Status, whether it is in the Quadrant I (Minor/Prevention), Quadrant II (Major/ Catastrophic/Avoidance), Quadrant III (Insignificant/ Acceptance) or Quadrant IV (Moderate/Mitigation).

4. Discussion Chapter, containing information on: • The number of risks that have been identified and stated as the risk of a risk unit. • Risk status which is sorted from the largest to the smallest as a basis of risk management priorities. • The risks that are considered in the categories of Acceptance, Mitigation or Avoidance 5. Conclusion, which summarize risks that will be or arein the category of a corporate risk and the measures that should be conducted to handle it. 6. The risk management follow-up report, in the form of table that explain how an action or mitigation of the risk that might arise, contains: • Risk handling type of activities. • Cost estimation to handle the risk. • Implementation of the plan. • Person in Charge (PIC). Meanwhile, the Corporate ERM is compiled by the Division of Compliance & Risk Management by analyzing and providing recommendations based on the risk unit ERM report froms all divisions, submission to the management (Board of Directors) will help determine the Corporate Risk Profile.

Follow Up of Corporate Risk Management After determining the risks associated with corporate and strategic steps to be taken in addressing these risks, the Corporate & Risk Management (CRM) Division, which is responsible for corporate risk, will conduct an evaluation and monitoring that risk management activities are carried out in every unit in which a head of each risk unit is accountable for any risk and overall handling activities, becoming a measurement of the effective implementation of risk Management at Bio Farma. The following table displays risk management activities of each corporate risk faced by PT Bio Farma (Persero) in 2014: Risk Mitigation Activities of PT Bio Farma (Persero) Corporate Risk No. Event

Risk Mitigation Activities

PIC

1.

Increasing global competition

• Performing product research policy in accordance with Kabag. Produksi Vaksin sIPV the trend and seeks to accelerate the research so that the product time to market meets market needs. • Initiating partnership with research institutes/other vaccine producer to accelerate the product availability on the market.

2.

Vaccine supply delay

• Performing continuous coordination with Ministry of Health and other buyers to ensure the contract can be signed in a timely manner. • Optimizing IT based supply chain management. • Optimizing production and QC schedule according to market needs.

Dept. Head of Domestic Sales

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DESCRIPTION OF THE INTERNAL CONTROL SYSTEM

3.

Changes on World Health Organization (WHO) policy and requirement

• Implementation of quality management consistently Dept. Head of QA Service and continuously in accordance with WHO regulation that the Company able to maintain its pre-qualification status. • Building cooperation with the bulk consumer to maintain the quality management system in order to avoid delisting WHO. • Taking an active role in international activities of both WHO and other organizations, mainly in connection with vaccines to get the latest information.

4.

Fluctuation in the exchange rate of foreign curriencies

• Analyzing exchange rates to be used for opening of LC for Dept. Head of Treasury imported goods/materials • Communicating with vendors regarding the schedule of arrivalfor the goods/materials, considering that the longer it takes for the goods to be delivered, the fluctuation in the exchange rate for the foreign currency to be used for payment will be greater.

5.

Realization of investment is out of schedule

• Aligning the investment program plan with the needs of research and development of new product and the market requirement for existing products. • Determining priorities in investment program which have major impact on corporate earnings. • Improving the quality of procurement systems and control of project investment execution. • Accelerating the qualification process of new facilities and equipment to be used on schedule.

6.

Unpreparedness of Influenza Vaccine Production

• Coordinating with Ministry of Health to monitor the Dept. Head of PV Influenza possibility of the project continuation and the possibility of a flu pandemic status in Indonesia. • Setting up own production facilities for the seasonal flu vaccine to reduce dependency on imported bulk seasonal flu, and the facility at any time can be used to produce pandemic influenza vaccine if needed (although in a smaller scale).

7.

Improved Integration of Information Technology (IT)

• Developing integrated business applications involving all Dept. Head of MIS businsess functions within the Company. (Management • Developing IT organization that have a harmonious Information System) balance between centralized and distributed policies (autonomy), which is supported by a good change management proces. • Increasing partnership with third parties (outsourcing) for development and maintenance, considering the cost saving, time efficiency, quality of solution, quality of product and service, as well as flexibility. • Development of IT infrastructure to accommodate the current and future business needs.

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All Department of Work Function which summitted investment proposal in 2014

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DESCRIPTION OF THE INTERNAL CONTROL SYSTEM BRIEF DESCRIPTION OF INTERNAL CONTROL OF FINANCIAL AND OPERATIONAL ASPECTS Internal control system is a process involving the Board of Commissioners, management and other personnel, formed to provide assurance on the achievement of such objectives: • Reliability and validity of information. • The Company’s compliance with work plan, policies, procedures and regulations. • Safety of assets of the Company. • Use of resources in the most economical and efficient manner. • Achievement of the goals and objectives of operations or programs. Bio Farma has been carrying out monitoring and control system as mandated in the Minister of SOE Regulation No. PER-01/MBU/2011 on the Implementation of Good Corporate Governance, article 26 and article 28. Bio Farma will continuously seek to improve the implementation of the internal control system to safeguard all assets of the Company. To determine the adequacy of internal controls applied by its business units, Bio Farma developed monitoring and control system in accordance with the Decree of the Board of Directors No. 05097/DIR/VIII/2012 dated 27 August 2012 on Public Policy on Internal Control. The policy covers: a. Improvement of internal control environment in a structured and disciplined manner. b. Implementation of assessment and management of business risks, including processes to identify, analyze, assess and manage relevant business risks on an ongoing basis. c. Control activities to be performed at every level and unit in the organizational structure, among others, authority, authorization, verification, reconciliation, assessment of job performance, job security and the Company’s assets.

d. Improvement and development of the information and communication system which includes the process of preparing reports on the operational and financial aspects and compliance with rules and regulations. e. Monitoring of the processes of assessment of internal control system quality, including involvement of the internal audit function at every level and unit within the organizational structure of the Company. The above activities are handled in a coordinated and proportional manner, across all sections, involving the activities of Internal Audit Unit (IAU), Division of Compliance and Risk Management, Information Technology, Division of Quality Assurance and other related parts.

CONFORMITY OF THE INTERNAL CONTROL SYSTEM WITH INTERNATIONAL FRAMEWORK (COSO) The scope of Bio Farma’s internal control system is as follows: • Internal control environment: integrity, values and Code of Conduct, employee competence, organization and development of human resources, attention and direction given by the Board of Directors. • Assessment and management of business risks: processes for identifying, analyzing, assessing and managing relevant business risks. • Control activities: actions undertaken within a control process of the activities of the Company at every level and unit in the organizational structure. • Information and communication systems including the processes of preparing reports on the operational and financial aspects and compliance with rules and regulations that apply to SOEs. • Monitoring covers the assessment of the quality of the internal control system including the internal audit function at every level and unit within the organizational structure so that it can be implemented optimally.

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DESCRIPTION OF THE INTERNAL CONTROL SYSTEM

EVALUATION OF INTERNAL CONTROL SYSTEM’S EFFECTIVENESS To maintain and improve the effectiveness of supervision and internal control system, the Company evaluates its internal control system at regular intervals. The intent and purpose of the evaluation is to: 1. Provide assurance to the Board of Directors in granting assertions regarding the effectiveness of internal control, thus giving confidence to other stakeholders that the implementation of the internal control system the company has been sufficient to achieve the desired objectives, namely compliance with prevailing regulations, availability of financial information and management in a correct, complete and timely manner, as well as efficiency/effectiveness of the Company's operations.

MATERIAL CASES FACED BY THE COMPANY

ACCESS TO CORPORATE INFORMATION AND DATA

2. Provide recommendations to the Board of Directors concerning the improvement of the implementation of internal control systems in the future (areas of improvement). Evaluation of the effectiveness of Bio Farma’s internal control system is conducted at the entity and operational levels. Evaluation of the effectiveness of the Internal Control System is conducted periodically by internal and external auditors in accordance with the prevailing standard audit procedures. Internal Audit Unit (IAU) evaluates the audited sections while entity-wide evaluation is conducted by external auditors, i.e. the Public Accounting Firm (KAP) during the general audit after the closing of each fiscal year. Audit of the effectiveness of the internal control system is set forth in the Independent Auditor's Report on Compliance with Regulations and Internal Control.

MATERIAL CASES FACED BY THE COMPANY In 2014, there were no material cases faced by the Company, members of the Board of Directors and/or members of the Board of Commissioners who served during the period of the annual report, involving any civil or criminal cases. Thus there was no impact on the financial condition and operation of the Company. This demonstrates the level of compliance of the Board of Directors and the Board of Commissioners with the rules related to the Company's management as well as management's commitment to uphold the principles of good governance.

ADMINISTRATIVE SANCTIONS In 2014 there were no administrative sanctions from regulators that were imposed on the Company nor the members of the Board of Commissioners or of the Board of Directors.

TRANSACTIONS WITH CONFLICT OF INTEREST In 2014, there were no transactions with conflict of interest which may be detrimental to the Company.

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ACCESS TO CORPORATE INFORMATION AND DATA Bio Farma utilizes and provides various media of communications and information, including electronic media as access to effective two-way communication with stakeholders including employees and the wider public. Bio Farma has implemented a public disclosure policy that refers to the Freedom of Information Law No. 14/2008. Its continued implementation is accompanied by a comprehensive set of devices has led it to the number 1 in the category of SOE application of public disclosure according to the Central Information Commission.

2014 Bio Farma was named Number One in the Category of SOE Application of Public Disclosure

EXTERNAL COMMUNICATION Bio Farma maintains a corporate website, www.biofarma. co.id, which presents a complete information about Bio Farma through its company profile, vision, mission, strategies, products, management structure, corporate governance policies, code of conduct, news, annual reports, sustainability reports and media releases. Bio Farma’s website features the latest information in a transparent, consistent and targeted manner, so as to create a good understanding in the public of Bio Farma. The Corporate Secretary is responsible for ensuring that the information submitted through the website is timely, accurate, complete and does not violate the prevailing regulations. In addition, through its website Bio Farma also implements a two-way communication through social media, namely infoimunisasi consisting of Twitter, Facebook, microsite and biofarmaID consisting of Twitter, Instagram, Path, and Youtube accounts. Bio Farma also utilizes TV and print media by engaging in educational and social campaigns about the importance of vaccines. The print media is utilised to disseminate important information relevant to stakeholders. During 2014, Bio Farma has issued about 33 press releases with the following details:

Press Releases in 2014 No. Title of Press Release

Date

Category

1.

Bio Farma Dirikan Gedung Parkir Emisi Bersih

24-Jan-14

CSR

2.

Bio Farma Telah Membuat 1240 Biopori di Tahun 2014

5-Feb-14

CSR

3.

Bio Farma Bagikan Beasiswa Kepada 500 Anak

9-Feb-14

CSR

4.

Hasil Kerjasama Riset Bio Farma dengan UniBraw Akan Segera Diluncurkan

28-Feb-14

Corporate

5.

Bio Farma menyediakan Vaksin yang terjangkau

16-Mar-14

Corporate

6.

Apresiasi untuk Bio Farma atas Kepatuhan Pajak Terbaik

18-Mar-14

Corporate

7.

Bio Farma Bagian Sejarah Imunisasi

19-Mar-14

Corporate

8.

Bio Farma 60 Menit Tanpa Listrik

29-Mar-04

Corporate

9.

Peran HIKA-BF_2014

4-Apr-14

Corporate

10. Rilis Bio FarmaRaihInovasi HKI REVISI

15-Apr-14

Corporate

11. Bio Farma MoU dengan Pasteur Institute Tunisia

6-May-14

Corporate

12. Bio Farma Adakan Pengobatan Gratis di Kota Cimahi

7-Jun-14

CSR

13. Komitmen Bio Farma Kembangkan Kemandirian Vaksin

13-Jun-14

Corporate

14. Bio Farma Serahkan Bantuan Mobil Hijau

17-Jun-14

CSR

15. Bio Farma Raih Best of the Best Indonesia Green Award 2014

18-Jun-14

Corporate

16. Bio Farma Gelar School of Vaccine for Journalist

12-Aug-14

Corporate

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17. Bio Farma Siapkan Posko Mudik 2014

13-Aug-14

Corporate

18. Indonesia Siap Implementasikan Hasil Riset Vaksin

19-Aug-14

Corporate

19. Quadruple Helix Tingkatkan Daya Saing Industri Farmasi Nasional

06-Sep-14

Corporate

20. Bio Farma Ajak Generasi Muda Berani Bicara Bahasa Inggris

27-Sep-14

Corporate

21. Bio Farma Raih Eksportir Pelopor Pasar Baru

08/10/2014

Corporate

22. Kemenkes RI dan Bio Farma Gelar Pertemuan Nasional Koordinasi Pelaksanaan Intensifikasi Imunisasi Rutin

15/10/2014

Corporate

23. Batik Pakidulan Produk Baru Ramah Lingkungan

22/10/2014

CSR

24. Peneliti Muda Indonesia Dukung Riset Vaksin

28/10/2014

Corporate

25. Bio Farma dipercaya Menjadi Presiden Asosiasi Produsen Vaksin Negara Berkembang

29/10/2014

Corporate

26. Bio Farma Raih Golden Trophy Infobank BUMN Award 2014

30/10/2014

Corporate

27. Wagub Jabar Resmikan Jembatan Gantung Leuwisaca

07/11/2014

CSR

28. Bio Farma Miliki Gedung Paling Hemat Energi

18/11/2014

Corporate

29. Bio Farma Raih PROPER Emas Kementerian Lingkungan Hidup dan Kehutanan

02/12/2014

Corporate

30. Green Culture jalan menuju PROPER Emas

02/12/2014

Corporate

31. Roll out of Pentavalent Vaccine & Rotavirus Vaccine

03/12/2014

Corporate

32. Bio Farma Raih Peringkat ke 1 Keterbukaan Informasi Publik

12/12/2014

Corporate

33. Bio Farma Gelar Seminar “Imunisasi Untuk Kualitas Hidup yang Lebih Baik”

15/12/2014

Corporate

Bio Farma also distributes PERSS releases not only domestically but internationally via ACN Newswire network, quoted by various international media companies, especially in Asia and the Middle East.

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School of Vaccine for Journalist

News Clippings The Company regularly distributes news clippings related to the Company to the Board of Directors and employees through its intranet network. In 2014 a total of 138,724 news pieces were distributed, with an average of 34.29 news read.

On 12-13 and 19-20 August 2014, a seminar with the theme "School of Vaccine for Journalists" was held in two places, namely in Bandung on 12-13 August 2014 held at the GSG BioFarma, and in Jakarta on 19-20 August 2014 at the Dewan Pers Pusat Building. A total of 20 participants came from the Bandung and national media companies. The main objective of this activity is to brief the media on vaccines and biotechnology issues that are not easy to comprehened and refresh the media in terms of newswriting, especially features about vaccine. A total of 20 mass media companies participated in the event. The School of Vaccine for Journalists featured speakers who are competent in the field of vaccination and journalism, among others, Dr. dr. Julitasari Sundoro., MSc. PH, dr. Sujatmiko., Sp. Ak (K) and other speakers such as chief editors of major media companies.

Site Visits The Company welcomes outside parties to site visits which are aimed at introducing the Company to them and educate them about the importance of vaccination. Guests visiting Bio Farma in 2014 came from within and outside of Java, with a total of 70 groups visiting the Company last year.

INTERNAL COMMUNICATIONS Ease of access to internal communication is key to the smooth dissemination of information about the Company and as a means to build the Company's internal solidity. The success of internal communication is supported by the communications media used and content of information disseminated. Thus, all employees can understand the information that is delivered quickly and effectively to them.

Intranet Portal Bio Farma maintains an intranet portal as a means of internal communication for its employees. Content of the portal includes dissemination of policies, rules and guidelines related to corporate governance and other operational activities.

Bulletin Bio Magzs Bio Magzs are quarterly internal newsletters containing information about the Company's activities. They are distributed via e-bulletin mechanism. In 2014 a total of three editions were published: Edition I for January-April 2014, Edition II for April-June 2014, and Edition III for July to September 2014.

Newsletters Newsletters containing public information is distributed via e-mail and posted on the bulletin board.

Morning Coffee Morning Coffee is an informal knowledge sharing activity are conducted every 3 months and attended by the Board of Directors, Heads of Division, Heads of Department concerned with the internal organization. In addition to internal sources, in some occasions speakers from outside the Company are invited to broaden the employees’ knowledge.

Intranet Announcement Intranet (e-mail) is used for disseminating information on activities, announcements and news, such as those concerning human resources and internal organization, the announcement of efficiency and energy conservation measures, blood donation activities, obituaries, etc.

BIO FARMA’S INFORMATION SERVICE CENTER Bio Farma maintains an information service center for its customers through a variety of interactive communication media, where customers and communities may submit their opinions, complaints or questions via: Customer Care Menu: on the corporate website: www.biofarma.co.id Ministry of SOE Portal: http://www.bumn.go.id/biofarma/kontak-kami/ Corporate blog: www.infoimunisasi.com Phone: [62-22] 203 3755 • Facsimile: [62-22] 204 1306 E-mail: [email protected] • Facebook: infoimunisasi Twitter: @biofarmaID, @infoimunisasi

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CODE OF CONDUCT

CODE OF CONDUCT EXISTENCE OF CODE OF CONDUCT

Conduct of PT Bio Farma (Persero).

All elements of Bio Farma (Board of Commissioners, Supporting Organs of the Board of Commissioners, Board of Directors, and all employees of the Company) are required to enforce the principles of Good Corporate Governance in the day-to-day management of the Company. To that end, the Board of Directors of Bio Farma has issued the Decree of the Board of Directors No. 00223/Dir/I/2009 dated 12 January 2009 on the Code of Conduct, Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-05/DK/BF/II/2013, No. 01024/DIR/II/2013 dated 22 February 2013 on the Code of Conduct of PT Bio Farma (Persero), as amended by the Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-07/DK/BF/III/2014, No. 01103/DIR/III/2014 dated 6 March 2014 on the Amendment of the Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-05/ DK/BF/II/2013, No. 01024/DIR/II/2013 on the Code of

The Code of Conduct is a guideline for all elements of Bio Farma to align their attitude and behavior accordingly in carrying out everyday tasks as well as in interacting with co-workers, business partners and other parties concerned. Bio Farma’s working environment is thus expected to become a professional working environment that is also convenient, so that all employees’ potentials can be optimized. Contents of the Code of Conduct The Code of Conduct is a form of commitment of Bio Farma in the framework of the implementation and enforcement of good corporate governance and a set of commitments concerning obligations, prohibitions and relations with other stakeholders. Code of Conduct regulates the obligations that must be adhered to by every element of Bio Farma, and this contains: • Chapter II Business Ethics: How the Company Does Business. • Chapter III Work Ethics: Conduct of the Management and Employees.

Business Ethics, How The Company Does Business

Ethics towards customers

Ethics towards law enforcement agencies

Ethics towards suppliers/business partners

Ethics towards the government/state

Ethics towards creditors

Ethics towards society and the environment

Ethics towards competitors

Ethics towards employees

Ethics towards mass media

Ethics towards shareholders

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Work Ethics, Conduct Of The Management And Employees

Compliance with the regulations

Recording and compilation of data and integrity of the Company's financial statements

Conflict of interest

Protection of the Company’s information

Giving and receiving of gifts, souvenirs, meals, entertainment, donations and other facilities

Protection of the Company's assets

Equal opportunity to acquire employment and promotion Concern for health and safety and environmental protection

Disclosure concerning the Code of Conduct’s Applicability to All Levels in Bio Farma All elements of Bio Farma should be committed to aligning themselves with the working culture and value systems of the Company. Therefore, all elements of Bio Farma are obliged to implement the desirable attitudes and behaviors at work in accordance with the system of values and work culture adopted by the Company, as codified in the Code of Conduct. The successful implementation of the Code of Conduct is the responsibility of every element of Bio Farma in the environment of each business unit. On 31 October 2014, held at the the GSG, Bio Farma internalized and disseminated the Decrees No. KEP05/DK/BF/II/2013, No. 01024/DIR/II/2013, as amended by the Joint Decrees No. KEP-07/DK/BF/III/2014 and No. 01103/DIR/III/2014 dated 6 March 2014 on the Code of Conduct of PT Bio Farma (Persero). The event was attended by all elements of Bio Farma and concluded with the signing of the Statement of Compliance with the Code of Conduct. Once a year all elements of Bio Farma are required in writing to express their willingness to obey and execute every part of the Code of Conduct, which is embodied in the statement of compliance signed by every member of Bio Farma as a condition for continued employment with the Company.

Political activities Immoral behaviors, use of narcotics, drugs and gambling Ethical behaviors of the management and employees

Dissemination of the Code of Conduct The Company disseminates its Code of Conduct to provide all of its elements with an understanding and awareness to implement the Code of Conduct. The Code of Conduct has been disseminated in the following manner: • Each element of Bio Farma is given a handbook and requested to sign the integrity pact which stipulates their commitment to implementing the Code of Conduct of PT Bio Farma (Persero). • The management provides an understanding and awareness to employees for implementing the Code of Conduct. • Integrity Pact which contains statements about their willingness to fully implement the Code of Conduct, commitment to report upon one’s awareness of any violations of the Code of Conduct taking place, and the readiness to receive punishment in accordance with the provisions that apply. This document is signed annually by every element of Bio Farma and may be updated if necessary.

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Efforts to Enforce and Sanctions for Code of Conduct Violations Enforcement and sanctions for violators of the Code of Conduct are stipulated in the Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-05/DK/BF/II/2013 and No. 01024/DIR/II/2013, as amended by the Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-07/ DK/BF/III/2014 and No. 01103/DIR/III/2014 dated 6 March 2014 About the Code of Conduct of PT Bio Farma ( Persero) Chapter IV: Mechanisms of Code of Conduct Enforcement, Including Reporting and Sanctions for Violations, sub-section 4.4: Handling of Alleged Violations of the Code of Conduct and sub-section 4.5: Sanctions for Violations of the Code of Conduct. They essentially stipulate the following: Enforcement and sanction for violations of the code of conduct are implemented through the Bio Farma Whistleblowing System. The mechanism for reporting violations is as follows:

a. To their immediate supervisor. b. the Violation Through Whistleblowing System.

Reporting

Box/

2. Reporting of violation should be based on good faith and not on ill will or slander. 3. Besides by parties internal to the Company, reporting of violations of the Code of Conduct can also be done by external parties such as the Company's customers, business partners and other stakeholders. 4. Reporter should state clearly their identity and back their report with the relevant supporting evidence for the alleged violation of the Code of Conduct. 5. The Company will retain the identity of the reporter in accordance with the applicable procedures. 6. The Company is obliged to follow up reports that may cause material loss to the Company and/ or may damage its image, in accordance with the applicable procedures.

1. In case of violation of the Code of Conduct, any element of Bio Farma is obliged to report the violation: Handling of Alleged Violations of the Code of Conduct Authority to Handle Alleged Violations of the Code of Conduct The authority to handle the alleged violations of the Code of Conduct is given in stages, where the party that handles alleged violations should be led by someone who is one level higher than the alleged perpetrator. Alleged Perpetrator

Officers Handling the Report

Bio Farma members aside from Head of HC Division, Commissioners, and Directors

- Coordinator: Head of HC Division - Members: Officers of the CRM Division, IAU, HC Division, upon assignment by the Human Resources Director or the President Director

Head of HC Division, Commissioners, and Directors

President Director

Directors

Board of Commissioners

Sanctions for Violations of the Code of Conduct Any employee of Bio Farma that has been proven to have violated the Code of Conduct will be given a sanction in accordance with the applicable provisions of the Company, under the following conditions: 1. Penalties for employees who violated the Code of Conduct are determined by the Board of Directors. 2. Penalties for members of the the Board of Commissioners, Directors and Supporting Organs

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of the Board of Commissioners who violated the Code of Conduct are determined by the Board of Commissioners. 3. If the violation is committed by an external party (suppliers, business partners or other stakeholders), it will be subject to the provisions set forth in the contract and the relevant procedures. If there is any indication of criminal offense, the Company may forward it to the police.

256

The decision regarding the sanctions for violations committed by employees, Directors, Commissioners and members of the supporting organs of the Board of Commissioners is determined based on the following considerations: 1. Ramifications of the violation: a. Violation of the laws and regulations as well as corporate regulations. b. Losses for the Company and/or other parties both financially and non-financially. c. Disruption of the running of the processes or activities in the Company. d. Disturbance to the security and/or safety of Bio Farma’s elements or other parties. e. Libel for Bio Farma or its employees or other parties. f. Violation of the decency and norms prevailing in the community and/or the rights and dignity of other individuals. 2. Degree of intentionality: a. Whether the violation was made intentionally or not. b. Whether the alleged perpetrator has previously received warning regarding their violation. c. Motivation: whether there is any financial or nonfinancial motivation behind the violation.

Enforcement Enforcement of the Code of Conduct is stipulated in the Collective Labor Agreement (CLA) between the Company (Bio Farma) with the Bio Farma Employees Association (Hika BF) in Chapter XVII: Discipline and Work Rules, Articles 69 to 81. For the Board of Directors and Board of Commissioners, this is set in the Articles of Association of Bio Farma, which has been approved by the Minister of Justice and Human Rights of the Republic of Indonesia through Decree No. AHU-61576.AH.01.02 Tahun 2008 dated 12 September 2008 on the Approval of Amendment of the Articles of Association of the Company. Conflict of Interest Conflict of interest is a situation where there is a conflict between the economic interests of the Company and the personal economic interests of the Shareholders, members of the Board of Commissioners or the Board of Directors, and Employees of the Company. According to the Minister of SOE Regulation No. PER-01/MBU/2011, the Board of Directors of SOE is prohibited from having conflicts of interest and personal benefit, either directly or indirectly from the decisions and activities of said SOE other than their official income.

Sanctions for violations committed by employees will depend on the severity of the violation, which is divided into mild, moderate and severe. The types of warning given include verbal warning, warning letter (I, II and III) and layoff. Layoff is conducted in accordance with the applicable labor regulations.

In relation to these provisions, all members of the Board of Directors of Bio Farma signed a Statement of No Conflict of Interest on 2 January 2014, whose contents are as follows:

Sanctions for violations that may apply to employees are as follows:

In order to uphold the Good Corporate Governance (GCG) in PT Bio Farma (Persero), I hereby declare that I:

a. Reduction to the merit component for determining their salary. b. Reduction to their incentive. c. Postponement of their periodic salary increase or promotion, demotion. d. Suspension (layoff). e. Termination of employment. If the violation is committed by a member of the Board of Directors, the Board of Commissioners and/or supporting organs of the Board of Commissioners, and if it has been proven, the penalty depends on the severity of the violation and the ramifications. The decision on the sanction is established by the Board of Commissioners.

STATEMENT OF NO CONFLICT OF INTEREST

1. Have never done any despicable acts in banking, finance and other businesses, has never been convicted of felony nor received any sanctions which prohibit me from taking part as the Company’s management, as stipulated in the prevailing rules and regulations. 2. Am able to perform legal actions and has never been declared bankrupt or become a member of the Board of Directors or Board of Commissioners that were found guilty of causing a company to be declared bankrupt by a court decision in the last 5 years before the date of my appointment. 3. Am willing to not hold other positions as: a. Member of Board of Directors in another SOE, Regional SOE, Private Owned Enterprises, and other positions which may cause conflict of interest; b. Other positions in accordance with the prevailing regulations. 4. Shall fully implement the principles of good corporate governance that emphasizes the principles of transparency, accountability, responsibility, independence, and fairness in the management of the Company. 5. Do not have a relationship in the management, ownership and/or finances of the entire business group of the Shareholders of similar companies.

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6. Will not perform transactions in any form, either directly or indirectly through another party where I or my family has an interest in, or may benefit from. 7. Will not serve as a member of the board of any political parties and/ or candidates/members of the legislature and/or the candidate or the Head/Deputy Head of Local Government. 8. Am not be related by blood to the 3rd degree either vertically or horizontally or as a result of marriage with any members of the Board of Directors or the Board of Commissioners. 9. Will wholeheartedly avoid any conflict of interest that may affect the decision-making process in the Company's operations. If in the future I am found to have made these statements untruthfully, I am willing to be penalized under the applicable regulations.

Throughout 2014, there were no events related to conflicts of interest regarding the members of the Board of Commissioners and Board of Directors. Donation to Social and Political Activities The Company does not engage in any form of political activity and does not give donations to political interests. In contrast, a high concern for social and environmental issues is an essential part of the duties and responsibilities of the Company towards its stakeholders and society at large. For that, Bio Farma perform a variety of social and environmental activities through CSR (Corporate Social Responsibility) independently or through the Partnership and Community Development Programs.

Statement on Corporate Culture Corporate Culture Bio Farma, in developing its business operations, requires a corporate culture in the form of written guidelines, which can be used as a reference for

WHISTLEBLOWING SYSTEM

organs of the Company in carrying out their duties and obligations. The guidelines containing these Corporate Values are established by the Joint Decree of the Board of Commissioners and the Board of Directors No. KEP-07/DK/BF/III/2014 and No. 01103/DIR/III/2014 dated 6 March 2014 on the Amendment of the Joint Decrees of the Board of Commissioners and the Board of Directors of PT Bio Farma (Persero) No. KEP-05/ DK/BF/II/2013 and No. 01024/DIR/II/2013 on the Code of Conduct of PT Bio Farma (Persero). The corporate culture has been formulated as "PITIC", with the following description: Each organ of the Company which behaves and thinks in a professional, high integrity, working in a team, full of innovation and oriented towards customer service. P = Professional Committed to carrying out all duties with full responsibility, efficiency, effectiveness, forwardlooking orientation, and compliance with procedures. I = Integrity Honest, transparent and credible in accordance with the objectives of the Company. T = Teamwork In cooperation with respect to the role and the opinions of others. I = Innovation Make improvements and continuous development to result in new ideas. C = Customer Oriented Understand the needs and provide the right solutions to customers.

In an effort to inculcate the corporate culture in the Company, in 2013 certain activities beginning with the online culture value assessment survey, participated by 793 employees and six members of the Board of Directors. The aim of this survey are:

To recognize these values in the employees (their Personal Values)

To recognize the current culture of the Companyas perceived by employees and Directors

To recognize at the desired culture for the Company as perceived by employees and Directors

To analyze the values that may present obstacle to the performance of the Company

After the Culture Value Assessment, a program will be designed to internalize these corporate values systematically and comprehensively based on the values that arise from within the Company . With such a process, these values are expected to become an inherent aspect of each employee and become a culture that is positive for the growth and development of the Company.

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WHISTLEBLOWING SYSTEM The Whistleblowing System (WBS) is a system that manages complaints or reports regarding unlawful behaviors, unethical acts/improperly in secret, anonymous, and independent manner. WBS is used to optimize the participation of Bio Farma individuals (Board of Commissioners, Supporting Organs of the Board of Commissioners, Board of Directors and all employees of the Company) and other parties in reporting violations occurring within the Company. This system shall be based on the value of corporate culture which states that every organ of the Company acts and thinks professionally, has integrity, upholds teamwork, is innovative and oriented towards customer service. Thus, the Whistleblowing System is testament to the implementation of the cultural values in the Company. The added value achieved by the Company through the implementation of this program is the system of supervision and internal control that can detect the occurrence of operational risk, especially early detection of frauds, allowing the Company to be able to cope with risky events promptly.

SUBMISSION OF REPORTS 1. Alleged violations that can be reported through the WBS are: corruption, fraud, theft, bribery and/or receiving of bribes, gratuities, conflict of interest, violation of laws and policies/procedures of the Company. 2. Essentially, the reporter or whistleblower is an employee (internal party), but can also be from external parties (customers, suppliers, the public).

3. The report must be accompanied by supporting evidence of the violation, which must convey, among others: a. The subject matter of the complaint; b. Parties involved, ie anyone who is involved in the infringement complained of included parties that are harmed or benefit from the case; c. Time and location of the violation, the time and date the violation took place and the unit or function in the Company in which the violation took place; d. Chronology of the case; e. Supporting documentation for the case. 4. Report may be submitted via: a. E-mail: [email protected] b. Letter: Up. Tim Pengelola Laporan Pelanggaran PT Bio Farma (Persero), Jalan Pasteur No. 28, Bandung 40161. c. Drop Box at the Company's office.

PROTECTION FOR WHISTLEBLOWERS The Company provides protection to the whistleblowers, as follows: a. Protection of the confidentiality on the identity of the whistleblower. b. Protection of the whistleblower from reprisals from the reported party. c. Protection of the whistleblower from the dismissal, demotion, or postponement in their periodic increase in grade, work pressure, or physical action. d. Protection from having an adverse record included in their personal data file. e. Information on the follow-up process that is being carried out, conveyed confidentially to the whistleblower. If necessary, the whistleblower may request assistance from the Witness and Victim Protection Agency (LPSK).

PARTY HANDLING WHISTLEBLOWERS’ REPORTS The parties assigned to handle the reports are the WBS Management Team and the Investigation Team, which will pursue the case reported in line with the applicable procedures.

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HANDLING OF REPORTS Whistleblower Report the violation and provide supportinge vidence

Whistleblowing System Administrator Receives, registers and administers the reports

WBS Management Team • Verifies the documents presented by the whistleblower • Prepares statement of Verification Board of Commissioners Examines the Statement of Verification on the report of violation allegedly committed by members of the Board of Directors, Board of Commissioners, or Supporting Organs of the Board of Commissioners

Board of Directors Examines the Statement of Verification on the report of violation allegedly committed by employees

Does the report fulfill all the requirements for follow up?

Tidak

Inform the whistleblower through the WBS Team

Ya

Investigation Team • Further investigates the substance of the report • Prepare the Statement of Investigation Board of Commissioners Examines the Statement of Investigation on the report of violation allegedly committed by members of the Board of Directors, Board of Commissioners, or Supporting Organs of the Board of Commissioners

Board of Directors Examines the Statement of Investigation on the report of violation allegedly committed by employees

Has the reported party been found guilty?

Tidak

Inform the whistleblower through the WBS Team

Ya Reported party is found guilty

Sanction is given in accordance with the prevailing Company regulations

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2014

• PT Bio Farma (Persero) •

Legal process by the authorities initiated for violations that are criminal

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WHISTLEBLOWING RESULTS IN 2014 In 2014, the WBS Administrator received zero report regarding violations committed by any element of Bio Farma, and thus there was none to be followed up on. As a manifestation of an effective implementation of good corporate governance, the Whistleblowing System shall be disseminated and enforced further as well as improved in order to align with the Company’s business growth.

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CORPORATE SOCIAL RESPONSIBILITY

ENVIRONMENTAL CSR

Create Shared Value, Bio Farma gives solution to help developing community potential, one of the examples is breeding of garut sheep.

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As a company which grow among the community, Bio Farma continues to maintain a harmonious relationship with the community and runs a pro-environment operation by minimizing its environmental impacts. As a leading manufacturer of vaccines and anti-sera, Bio Farma's business activities cannot be separated from the support of community and environment. Bio Farma has adopted the ISO 26000:2010: Guidance on Social Responsibility as a guideline in implementing internationally standardized CSR programs since 2011. The ISO 26000 defines CSR as a responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour. By implementing international standard, Bio Farma is demonstrating its commitment to yield the greatest possible benefit for all stakeholders, including its workforce and the surrounding community. By implementing ISO 26000, Bio Farma aims to realize a social responsibility which is more than simply to fulfill its obligations and sets aside a certain amount of its profits for donation activities. Bio Farma believes which CSR should not only provide short-term relief which does not solve root cause of the problems in the society and the environment, but also should provides long-term impact for all stakeholders. Bio Farma's CSR vision is "to become a company which has a reliable social responsibility and a global reputation in social and environmental development."

programs have been in accordance with the provisions of the Indonesia Financial Services Authority (OJK) through the Decree of the Chairman of Bapepam-LK issuance No. Kep-431/BL/2012 dated 1 August 2012 on Submission of Annual Reports of Public Listed Companies.

ENVIRONMENTAL CSR Preservation is an integration of three potential sets of diversity, which are biological diversity (biodiversity), geological diversity (geodiversity) and cultural diversity. All three potentials are interrelated. Potention of ecosystem, species and genetic diversity are include in Biodiversity. Geodiversity is an overview of geological diversity which can be found in a region, including the presence, spread and circumstances which represent regional geological evolution. Cultural diversity is works of art and culture of a community as a result of human interactions with natural surroundings. Cultural diversity describes local communities understanding in addressing natural conditions in which they live. Thus, through CSR programs, Bio Farma strives to encourage people to utilize those three potential sets of diversity.

Since 2013, Bio Farma has published a Sustainability Report annually as a complement to the Annual Report. The report includes CSR activities undertaken by Bio Farma, and it is prepared in accordance with the international standard issued by the Global Reporting Initiative (GRI), based in Amsterdam, the Netherlands.

Bio Farma continues to implementing strategic actions in controlling and preventing pollution. The legal basis for this implementation is Regulation No. 32/2009 on Environmental Protection and Management. Bio Farma is committed to becoming a green and sustainable corporation by operating a pro-environment and procommunity business. Bio Farma has a strict policy on utilizing energy and natural resources efficiently and effectively. Our operations end results should provide optimal benefits for all stakeholders, including our workforce and the society at wide.

In this report, we present a sustainability report overview in accordance with Article 66 (2c) of Regulation No. 40/2007 on Incorporated Company, which requires to include the company's implementation of Corporate Social Responsibility (CSR) in the annual report. The systematics for reporting the summary of our CSR

Bio Farma's foundational policy as a green company is formulated in such a way which it encompasses five (5) main areas. The first is Green Process, i.e. applying green principles on the Company’s entire business processes from the selection of raw materials (through selection of environmentally-conscious vendors), production,

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ENVIRONMENTAL CSR

formulation, filling, packaging, to the handling of finished products. The second is efficient use of energy. The third is efficient use of water and water conservation by applying the 4R (reduce, reuse, recycle, recovery) principle. The fourth is sorting and categorizing waste into five categories. And the fifth is ensuring workforce involvement in fostering a pro-environment culture and attitude both in their workplace and in their families.

d) Workforce awareness campaign to turn off electronic appliance in the office when not in use.

PRO-ENVIRONMENT PRODUCT: PENTABIO VACCINE

These efforts has reduced our average electricity consumption by up to 2.4 million kWh/year, or about 9-11% of our total electricity use per year.

Bio Farma’s most recent innovation, namely the Pentabio vaccine, which is consist of 5 different vaccines (Diphtheria, Tetanus, Pertussis, HB and HiB vaccines) combines in one single product, thus maximizing efficiency in various aspects including electricity and water consumption during the production processes, reduction of packaging and waste (on syringe per dosage and cold chain/vial costs). From this innovation, we have obtained the following energy saving: Year

Batch

Saving/Batch

Saving/Year

2013

41

1,672 MWh

68,565 MWh

2014

40

1,672 MWh

66,892 MWh

EFFICIENCY AND ENERGY CONSERVATION Pharmaceutical industry is an industry which has strict quality requirements as it intimately deals with human lives. Energy consumption thus becomes substantial as the utility system has to operate at all times to guarantee the quality of product, although the production processes have stopped. Nonetheless, Bio Farma strives to reduce its energy use without jeopardizing its quality of product. Energy efficiency programs are carried out both in manufacturing and administrative activities, starting with energy-efficient office design. The programs which have been implemented include: a) Installation of timer control on the Air Handling Unit (AHU) cooling system (which turns off the AHU in the evening). b) Installation of Inverter on Chiller pump in the Polio and Measles Production Building and Packaging Building. c) Installation of Inverter and night mode on 25 Laminar Air Flows.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

e) Utilization of Musicool Hydrocarbon refrigerant in 2 Cold Rooms and 5 Split Air Conditioners. f) Replacement of fluorescent lights with LED lights. g) Installation of timer control on drinking water dispensers.

In addition, through the Exhaust Air Energy Recovery Program we have reduced our electricity power by about 30 to 40 kW. The amount of energy saved is 259.2 Mw if the AHU operate for 24 hours. Total energy saving compared to which without the precooling system is 32%.

Installation of Solar Cells, LED Lights and Motion Sensors Bio Farma constructed the Public Building in 2013 which equipped with energy-efficient parking area, dining room, and sport center which are energy efficient, by installing solar panels which produce 1.5 MWh of electricity per month or equivalent to 18.0 MWh per year. Bio Farma also saves 50 MWh per year by replacing its fluorescent lamps with LED lights. Other effort performed was installing motion sensors to turn on and turn off LED lights automatically based on the movement of people or vehicles. Bio Farma gradually replaced all of its mercury lamps with LED lights for garden lighting from 2012 to 2014. The replacement resulted in energy saving of 1,555.20 kWh per month. The power source for the LED lights was subsequently changed to solar panel. The use of solar panel can reduce consumption of electricity purchased from PLN by 25.197 MWh/year. In February 2014, Bio Farma installed the water recycling pump with solar panel which is used to transfer raw water from the Recycle Water Plant to the tanks. To transfer water, the pump consumes 2.4 kW power for around 10 hours a day derived from the solar panels. The use of solar panels for the water recycling pump resulted in the decrease in electricity consumption from PLN or from genset by 5.76 MWh per year.

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Use of the Musicool Hydrocarbons Refrigerant The installation of a more environmentally friendly and energy saving refrigerant has been carried out on 22 refrigerators (2 cold rooms and 20 split Air Conditioners) by replacing the R22 refrigerant with Musicool Hydrocarbon. This replacement was performed gradually and in stages from 2011 to 2013. Its main objective was to reduce the release of ozone-depleting substances to the environment, as well as saving energy by around 21%. This program saves electricity by up to 1,305 kWh/ month (equivalent to 15.66 MWh/year), or equivalent to a reduction of 0.9 tons of CO2eq/month (or about 10 tons of CO2 eq/year).

Installation of Timer Control on AHU Cooling System Bio Farma has HVAC unit which works 24/7. The rooms which use HVAC are production rooms which mostly are clean rooms and require a specific range of temperatures. i.e. from 220 to 260 C. Based on the data calculation and assessment results on electricity consumption, Bio Farma installed 32 Timer Controls on the AHU cooling system which is turned on in nighttime as the chilling requirement has been fulfilled. The saving can be up to 40% per instrument, or approximately 176.64 MWh/month (equivalent to 2,119.68 Mwh/year), which translates to a reduction of 121.8 tons of CO2 eq/month (equivalent to 1,461.65 tons of CO2 eq/year).

TREE PLANTING AND MAINTENANCE PROGRAM The tree planting and maintenance programs conducted both within and outside Bio Farma’s operational areas show the Company’s commitment to, responsibility for, and concern in environmental management, particularly in order to reduce air pollution, global warming, and as one of the efforts of enriching and preserving biodiversity. Each tree planted (depending on he type and age) is able to absorb different levels of CO2 emissions. The approximate amount of CO2 which can be absorbed is calculated using the Method for Calculating the Carbon Sequestration by Tree in Urban and Suburban Settings, Voluntary Reporting of Green House Gases, US Department of Energy, Energy Information Administration, April 1998 documentation1. By planting more than 100,000 individual trees from more than 50

species of trees from 2011 to 2014, we are able to absorb carbon dioxide emissions by up to 609.34 CO2eq/year.

WASTE MANAGEMENT Bio Farma conducts the reutilization of hazardous and toxic waste in liquid form, which is used lubricants. In cooperation with PT Wiraswasta Gemilang Indonesia, 100% used lubricants are processed and reused since 2011. The utilization ratio in 2011–2014 reached an average of 7.2% of the total hazardous and toxic waste in liquid form which we generated. Deionization system substitution program, from resin– based ion exchanger to a continuous electro de–ionization (CEDI) has eliminated the hazardous and toxic waste of resin from used ion exchanger for each maintenance period (once every two years) by switching from a resin–based system into an electrical–based system in the deionized Water Treatment Plant. A total of 4,192 kilograms of used resin were successfully eliminated in the period of 2010–2014. Bio Farma’s waste management concept starts from waste separation, storage and further management of organic waste composting and recycling of non–organic waste to reduce the burden of landfills. Bio Farma cooperates with PD Usaha Baru for its waste management efforts, to manage and whenever possible recycle non-organic waste such as plastic, paper and glass. Recycled plastic waste is subsequently formed into pellets which can be used for manufacturing ropes, sacks, plastic bags, etc. Metal and glass waste is molten to create raw materials, while pulp and paper waste is pulverized to create new recycled paper and handicrafts.

WATER MANAGEMENT Bio Farma has three raw water sources, which are from the State Water Company’s , ground water, and treated water from the Recycle Water Plant. Total water consumption was about 193,108 m3/year, the lowest when compared to all other vaccine manufacturers in the world. Bio Farma uses raw water for its operational activities in the form of treated water (water for injection/ WFI, pure steam and purified water) and water for steam boilers whose usage amounts to 183,452 m3/year. On the other hand, raw water consumption for domestic needs and non-production washing reached around 9,656 m3/ year.

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Water saving efforts through the 3R program has resulted in an efficiency of 15.40% of our total water consumption. Bio Farma's water consumption intensity per activity stood at 84.8 m3/year. The ground water recovery effort, conducted over the past five years (2010–2014) has been successfully carried out. And despite the incremental rise in our water consumption each year, according to Bio Farma’s GeoElectricity Estimation report, our ground water reserves are well-maintained and their level has increased by an average of 3.53%. In addition to water use for raw material, water is also utilized for various processes in production activities, such as washing and sterilization of equipment, vials, bottles, and production tanks, which in the process yields polluted water. The total amount of waste water stood at 16,549 m3/year, quite low compared to other vaccine manufacturers in the world. As a commitment to actively participate in water conservation and water pollution load reduction initiatives, Bio Farma has been running the 3R program, whereby the Reuse and Reduce programs have been able to reduce water pollution load significantly by 47.85% of the total liquid waste.

PRIMATE CONSERVATION PROGRAM The International Union for the Conservation of Nature (IUCN) states which there are currently 25 endangered species of primate in the world, some of which live in Indonesia. They are the Sumatran Orangutan (Pongo abelii), the Siau Island Tarsier (Tarsius tumpara), the Javanese Lemur (Nycticebus javanicus) and the Pig-tailed Langur (Simias cocolor). In the Regulation of Minister of Forestry No. P57/2008, the Indonesian government made a catalog of these endangered primate species, and from this list, the species which are endemic to the region of West Java which are listed as national priority are the Javanese Silvery Gibbon (Hylobates moloch) and the Javan Surili (Presbytis comata). As such, the Company maintains a primate conservation and rehabilitation program throughout 2013–2014 in cooperation with PPSC Cikananga, Sukabumi. The program had managed to release 21 primate species including orangutans, gibbons, macaques, ebony-leaf langurs and silvery-leaf langurs in the wild. The Company also performed rehabilitation on other primate species to be released back to their native habitat.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

ENVIRONMENTAL CSR

GEOTOURISM VILLAGE DEVELOPMENT PROGRAM A geopark is a geographical area where a geological heritage site is part of the overall concept of protection, education, and sustainable development. Geopark is a concept of geodiversity management which takes the form of a tourist attraction which includes geological, biological, socio-cultural and tourism potentials. The Ciletuh region is located on the southeast of the Pelabuhan Ratu Bay, Sukabumi, West Java. Ciletuh Geopark possesses one of the oldest pre-tertiary rock complexes in West Java. Ciletuh Geopark boasts an exotic scenery of mountains, hills, river, waterfall, beach, and an amazing view of the ancient rocks. Bio Farma develops Geotourism village located in Tamanjaya Village, Ciemas District, Sukabumi. This part of Ciletuh Geopark is developed in conjunction with the West Java Provincial Government, Sukabumi Local Government, and the Paguyuban Alam Pakidulan Sukabumi (PAPSI) community group. This CSR program aims at raising Ciletuh local community values in various aspects, such as biodiversity, geological, and cultural values. An integrated conservation, education, special interest tourism and economy program will be developed according to Bio Farma's Priority Pillars for CSR in the village of Tamanjaya.

SILVOFISHERY AND MANGROVE CONSERVATION PROGRAM Bio Farma implements a mangrove conservation program in the coastal areas of Karangsong, Indramayu Regency, West Java. This program has been carried out since 2012, involving the planting of 12,300 mangrove trees from the Avicennia sp., Rhizophora sp., Bruguiera sp., and Sonneratia sp. species in an area of around two hectares. The conservation program is carried out in cooperation with the LSM Siklus, Karangsong villagers, Indramayu Marine and Fisheries Department, Walhi West Java and Wiralodra University of Indramayu. The program successfully reduced coastal erosion by 10 m/year. The sedimentation process was also decreased to 30 m. Another step taken by the Company in mangrove conservation was the creation of six wavebreakers made

268

from bamboo and used tires donated by the Company's employees. The wavebreakers are 500 meters long and are used to modulate ocean waves and currents. In 2014, Bio Farma cooperates with LSM Siklus to carry out silvofishery activities in the coastal areas of Karangsong. This silvofishery program was implemented by combining mangrove planting activities with the establishment of shrimp and milkfish ponds. This program is expected to bring about various benefits to the environment, as well as manage and protect mangrove ecosystems. The shrimp and milkfish ponds are also expected to benefit the economic development of the community. Bio Farma has also planted 5,000 mangrove trees, as well as hatched 12,500 milkfish and 15,000 shrimps.

2014 ENVIRONMENTAL AWARDS Bio Farma's commitment to the environment is reflected on the several awards it earned in 2014: • 2 December 2014: Performance Rating Program on Evironmental Management(PROPER) Gold Award from the Indonesian Ministry of Environment and Forestry. • March 2014: Global Green Award from Otherways Association Management & Consulting France in Berlin. • 18 June 2014: The Best Indonesia Green Award 2014, organized by The La Tofi School of CSR and supported by the Ministry of Forestry and Industry

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CORPORATE SOCIAL RESPONSIBILITY FOR SOCIAL AND COMMUNITY DEVELOPMENT

CORPORATE SOCIAL RESPONSIBILITY FOR SOCIAL AND COMMUNITY DEVELOPMENT

Rp6,345,673,995 has been distributed through Community Development Program in 2014. Details are as follows: 1.

Relief for Natural Disaster Victims

Rp.

238,061,347

Bio Farma's CSR Program in the field of social and community development aims to improve the quality of life in local communities. The program is carried out through the Community Development Program, which is a part of the Partnership and Community Development Programs, as mandated by the Government to be executed by all State Owned Enterprises (SOE).

2.

Education and Training Assistance

Rp.

1,272,562,700

3.

Health Assistance and Health Improvement

Rp.

2,189,464,010

4.

Infrastructure and Public Facilities Development Assistance

Rp.

1,090,483,688

The scope of this Community Development Program includes:

5.

Spiritual and Religious Facilities Assistance

Rp.

1,161,915,500

1. Health Improvement Aid

6.

Nature Conservation Assistance

Rp.

331,991,000



7.

Social Welfare Assistance of Poverty Eradication

Rp.

61,195,750

Total

Rp.

6,345,673,995

COMMUNITY DEVELOPMENT PROGRAM

An aid which provided to improve the quality of public health, including the improvement of physical health through sport activities in the communities.

2. Education and Training Aid

An aid related to the education sector which have a purpose to educate or train members of community, both formally and informally, including education and training to preserve local arts and cultural values.

3. Nature Conservation Aid

An aid which aims to rehabilitate or preserve natural biological diversity.

4. Infrastructure and Public Facilities Development Aid An aid provided for improving people's welfare facilities, particularly in the aspects of health, education and the environment. 5. Spiritual and Religious Facilities Aid

Furthermore, the funding for Bio Farma’s Community Development Program does not only come from its own budget but also from the Company's CSR budget. The fund was distributed through programs in Health, Education, Economic, and Environmental Pillars. Rp 1,643,920,366 has been distributed through CSR Programs in 2014, with the details as follows: 1.

Aid for the Health Sector

Rp.

718,813,554

2.

Aid for the Education Sector

Rp.

188,204,812

3.

Aid for the Economic Sector

Rp.

265,266,700

4.

Aid for the Environmental Sector

Rp.

471,635,300

Total

Rp.

1,643,920,366

An aid which helps to improve the quality of places of worship in the communities.

6. Relief for Victims of Natural Disasters

A relief provided to ease the burden of victims of natural disasters or calamities.

7. Social Welfare Aid for Poverty Reduction

Provided in the form of social welfare aid in order to reduce poverty.

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2014

• PT Bio Farma (Persero) •

270

Koi Carp Aquaculture Development Program in Sukamulya Village The Community Development Program held in Sukamulya village was an integration of the four pillars of priority, which are health, education, economy, and environment. The Koi Carp Aquaculture Development Program has helped fish farmers successfully breed koi carp, as well as supported the surrounding village community. This program has provided grant which is deposition pond for the farmers. The program also provided Public Toilet facilities (to improve communities Clean and Healthy Lifestyle) and established an Integrated Health Center to provide easy access to health services which would help improve the community’s health. On the capacity building, the koi carp farmers were given training on the bio-secure koi carp farming management, which adopts the vaccine production processes. On the empowerment, the Company provided assistance to Mizu-mi Koi Carp Farmer Group (KMK) in the form of 18 high-quality mature koi fish. Currently the KMK has 12 members. The fish farmers group has been developed using the plasma-core model, in which the existing group members are able to create new groups using the same fish farming methodology. The KMK currently employs 26 local workers whose previous income had been Rp 500,000/month. They now earn about Rp 3,000,000/month, with an average production of around 3,500 fish/month.

Garut Sheep Breeding Village Program The Garut sheep is the most prolific breed of cattle in the world. Sheep breeding is relatively stagnant at this moment, with the genetic purity of the purebred sheep declining due to predominantly uncontrolled sheep mating (sheep-breeding) with other sheep species or inbreeding (where closely biologically related animals are mated). This activity clearly decreases the number of purebred Garut sheep. Sheep development requires a particular attention. For illustrative purposes, the 2006 Livestock Statistics recorded a population of 7 million sheep in Indonesia and 4 million sheep in West Java (55% of the national sheep population). In the same year, it also recorded the slaughter of 3 million sheep in West Java. Based on the facts provided, this is the time to improve and increase purebred Garut sheep population by DEVELOPING THE GARUT SHEEP BREEDING VILLAGE. Garut sheep breeding program is one of PT Bio Farma's CSR programs aimed to preserving Indonesia's biodiversity. This program also to preserve Indonesia's geographical indicators ( germplasm resources, nature, culture and customs). The Garut sheep conservation and breeding program has been implemented in the Wanajaya Village, Wanaraja Subdistrict, Garut. The Company’s vision in developing Garut sheep breeding program is to contribute to the society’s welfare, as well as to preserve the indigenous livestock in Garut, West Java.

The Green Car handover, in cooperation with Solidarity of United Indonesia Cabinet Wives (SIKIB), handovered directly by Pramusti Indrascaryo, Bio Farma Director of Finance, to Silvia Agung Laksono as the Chairwoman of SIKIB. The purpose of Green Car to socialize and educate about the environment, nature conservation and CSR.

Inauguration of Leuwisaca Bridge by the Vice Governor of West Java, Deddy Mizwar (second from the left), accompanied by the Regent of Garut, Rudy Gunawan (third from the right), and the HR Director, Andiang Kusumah (fourth from the right).

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CORPORATE SOCIAL RESPONSIBILITY FOR SOCIAL AND COMMUNITY DEVELOPMENT

PARTNERSHIP PROGRAM To empower the community's economy, Bio Farma continued to implement its Partnership programs in 2014 by providing soft loans to small and medium enterprises in order to develop their businesses. This is a revolving program, whereby repayments from development partners will be subsequently used to assist other development partners.

This program has helped the community improve their wellbeing and their social and economic conditions. Bio Farma's Partnership Program soft loan funds from 1992 to 2014 reached a total of Rp 82,051,325,000.

Batik Pakidulan as an assisted partner of Bio Farma has implemented green process using nano technology and also has registered copyright to the Directorate General of Intellectual Property Rights.

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2014

• PT Bio Farma (Persero) •

272

CSR IN PRODUCT RESPONSIBILITY

CSR IN PRODUCT RESPONSIBILITY The Pentabio innovation is one of the indicators of Bio Farma's success in product research. Innovation is implemented in the process of vaccine filling, so which the D, T, P, Hib, and HB vaccines can be integrated in one single product. The innovation's purposes are to increase product value in which the consumers are able to obtain 5 different vaccines in one single product at a cheaper price, and also to reduce the number of visits to the health facilities. The obligation to visit health facilities also reduces the number of individuals which undergo vaccination, when the obligation is not fulfilled. Thus, Bio Farma's Pentabio innovation has also successfully increased the vaccine’s protection and reduce the number of unvaccinated individuals. On the other hand, this innovation has also reduced the number of vaccine packaging waste which classified as a toxic and hazardous waste, particularly in the healthcare facilities. Hence, toxic and hazardous waste processing load in these facilities can be minimized. The innovation is an example of Bio Farma’s product responsibility, by extending its responsibility of the impacts of its products on the environment as and after they are utilized. There was a reduction in the amount of toxic and hazardous waste produced, from 2.3% in 2012, to 113.2% after the innovation of Pentabio. This shows a significant influence of Pentabio innovation, especially for its consumers.

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Information Technology

Information Technology

In line with the Company’s vision to become a world-class company, an adequate information technology system and infrastructure is highly needed to support the Company’s business processes in order to maintain competitive advantage in the global market. An effective information technology solution will increase work efficiency, effectiveness and productivity so that the Company is able to create competitive products and services. Information technology at Bio Farma is handled by the Information Technology Division that acts as a supporting unit for the Company’s operational activities, by providing information technology and communication services that are adequate, reliable, and aligned with the Company’s business needs.

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2014

• PT Bio Farma (Persero) •

276

Information Technology Development

Main Applications:

Bio Farma continues to develop business application systems that are integrated to support the operations of all business units in the organization. By designing an effective and efficient IT system, the existing IT system may support the Company’s competitive advantage in facing competition and developing its business in the future.

1. Enterprise Resource Planning (ERP) Application. 2. Human Capital Management System (HCMS) Application. 3. Laboratory Information Management System (LIMS) Application. 4. BioQA Application. 5. Deviation Application. 6. Change Control Application. 7. CAPA Application. 8. Raw Material & Vendor Management Application. 9. Environment Monitoring Application. 10. Physical Monitoring Application. 11. Data Form Application. 12. Calibration Validation Application. 13. Relationship Management (CRM) Customer Application.

The Company has developed its information technology system development up to 2017, which includes the development of tools and applications especially related to the improvement of service quality and production processes. In 2014 new application development was underway in a more integrated manner and the application covers the needs for the Marketing, Production, Warehousing and Quality Assurance, as well as Human Resources Directorates. In the Marketing Directorate, the development of CRM (Customer Relationship Management) application was completed, to be implemented in 2015. In the Production, Warehousing and Quality Assurance Directorate, the Bio Production Managements (BioPM) application was developed as a collaboration between various production modules of Forecast & Schedule, Master Formula, Inventory, Raw Material Management, Production, Quality Control, Quality Assurance, Label, Product Sales, and Preventive Management. The process is nearly completed and it will be live in 2015. In the Human Resources Directorate, the ERP-HR application was developed, integrating the HR (Human Resources) and Payroll applications with the ERP (Enterprise Resource Planning). All tools and applications are aligned to the standard operating procedures (SOP) in order to provide an integrated, timely, and effective information system. The business process applications that were developed are categorized into main, supporting, E-Office, and document workflow applications, as follows:

Supporting Applications 1. Training Record Application. 2. Filling System Application. 3. Help Desk Online (SIMApp) Application. 4. Bio Budgeting Application. 5. Inventory (SIAAP) Application. 6. Accounting (SIAB, Fixed Asset) Application. 7. Finance (SIAK) Application. 8. E-SPT Application. 9. Marketing Application. 10. Logistics (SIAPBJ) Application. 11. e-procurement (Bioeproc) Application. 12. Biosis Application. 13. Medical Records Application. 14. Online Attendance Application. 15. Payroll Application. 16. Services Application. 17. Laboratory Animals (Bioware) Application. 18. SMS Gateway Application.

E-Office Applications 1. Intranet, communications media and internal publication applications. 2. Internet Application www.biofarma.co.id, corporate website publication media. 3. Mail Server, for corporate electronic mailing system. 4. News Clipping Admin, internal application developed to document news clippings related to the Company. 5. File server, file documentation, and centralized data applications.

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Information Technology

Document Workflow Applications In order to support the Company’s activities that uphold the spirit of Go Green Industry, the Information Technology Division has implemented applications that may reduce the use of paper and result in paperless business in all internal administrative activities, among others: 1. e-Correspondence Database Application. 2. Online SPPD Application. 3. Online Leave Application. 4. Payroll Application. 5. Logistics Document Workflow Application. 6. User Access Control Application.

IT Infrastructure at Bio Farma Up to the end of 2014, the development of information technology systems, networks and infrastructure at Bio Farma had covered the following: 1. Telecommunications Server (IP-PBX), IP (internet protocol) based telecommunications system integrated with mail server and applications. 2. Server Virtualization, whereby one server system allows many logical servers running simultaneously on a physical server, therefore vastly reducing the use of resources (electricity, hard drive space, memory, etc.) 3. Implementation of the latest operating system and database. 4. Implementation of infrastructure security monitoring technology. 5. Implementation of a centralized antivirus system. 6. Infrastructure enhancement according to the IT Master Plan, i.e. installation of fiber optic cables, server virtualizations, blade servers, SAN storage, and Tape backup. 7. Preparation for the room and installation of Disaster Recovery Plan (DRP) tools, including grounding, CCTV, fire system and raised floor. 8. Consultation for the planning of ERP implementation with PT Sigma Cipta Caraka.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

9. Regular monitoring and maintenance of physical and logical network infrastructure. 10. Maintenance of networks and phone lines. 11. Installation of internal access points (Wi-Fi) in meeting rooms and other rooms requiring connectivity for the smoothness of internal operations of ERP, internet access, and other applications. 12. Installation of physical firewall to replace old firewall. 13. Plan for installation of IP-based phone infrastructure and call center connected to the CRM application. 14. Installation of fiber optic cables that connect data network from Pasteur to Cisarua Lembang as the first step in DRC (Disaster Recovery Center) development.

Information System Governance Information system investments nowadays are not only aimed at improving effectiveness, efficiency and work speed, but also to improve overall organizational performance. Therefore, responsibility for IT management cannot be wholly ascribed to any single unit specifically managing the technical aspect of IT, but also must be shouldered by the various elements of the management. This is a new paradigm in managing information system, and it is called IT Governance. IT Governance is a commitment, awareness and process of the organization’s management controlling the entire IT resources, including computing resources (software, brainware, database, etc.) and information technology as well as LAN/internet. Subsequently, the implementation of IT governance is targeted to be in line with the Company’s goals. To implement IT governance at Bio Farma, the Company has established the following IT Policy, covering: 1. Policy for Development of Software and Computer System Validation a. Software A set of instructions executed by computer in order to run its tasks. Software can process input and produce output used as information. b. Computerized System A combination of various software, hardware, networking, and standard operating procedures, users, interconnecting input and output processes of information used in reporting or control of information system.

278

c. Computer System Validation (CSV) A process for validating a software or a computerized system to ensure that such software or computerized system has been aligned with its intended functions and user’s requirements. d. Hardware Qualification Process for determining that the hardware used in a computerized system has been ensured in terms of configuration and performance. e. Creation and development of software is properly managed in line with the prevailing regulations and the System Development Life Cycle (SDLC) concept. f. Validation of software or computerized systems is implemented according to the prevailing regulations to ensure quality. 2. Information Security Policy a. The Company has full authority to implement the security measures for its information system to protect its information-related assets and ensure its business process continuity. b. Bio Farma’s information-related assets belong to the Company and are intended to further the Company’s business/operations and to ensure confidentiality, integrity, and availability of information as well as effectiveness and efficiency of IT services. c. IT risks are managed by the Company to ensure security of Bio Farma’s IT governance. 3. Electronic Record and Electronic Signature Policy a. Electronic Record Electronic record is a combination of text, graphics, audio, images, and or other information in digital form that can be created, modified, updated, saved, acquired, or distributed by computerized systems. b. Electronic Signature Electronic signature is a compilation of data consisting of computer symbols that are executed, adopted or authorized and legalized to be considered equivalent to a manual signature.

c. Electronic record that is an output from a process done by a computerized system and electronic signature at Bio Farma is considered to be valid and legally binding, equivalent to the manual processes and signatures that are also valid. Documents related to the information technology governance policy in Bio Farma are as follows: 1. Manual Bio Farma MBF2, Information Technology Policy subchapter. 2. IT Master Plan for 2013-2017. 3. Backup and Restore Data Guidelines. 4. Computer Troubleshooting Guidelines. 5. Software Development, Hardware Qualification, and Computerized System Validation Guidelines. 6. Information Technology Policy Guidelines. 7. Email Creation Standard Guidelines. 8. Data Backup and Restore Standard Guidelines. 9. Antivirus Standard Guidelines. 10. Computer Troubleshooting Standard Guidelines. 11. Logical Access Standard Guidelines.. Manual Backup 12. Guidelines.

of

BioQa

Database

Online Document Application 13. Standard Guidelines for Users.

Standard

Intranet

Usage

Online Document Application Intranet 14. Standard Guidelines for Administrators.

Usage

15. Batch Record Software Usage Standard Guidelines. 16. Training Record Software Usage Standard Guidelines. 17. Software Testing Standard Guidelines. Physical Monitoring 18. Guidelines.

Software

Usage

Standard

279

Information Technology

19. Environment Monitoring Software Usage Standard Guidelines. 20. Data Form Software Usage Standard Guidelines. 21. DEV-CC-CAPA Software Usage Standard Guidelines. 22. Documentation System Software Usage Standard Guidelines. 23. Raw Material Software Usage Standard Guidelines.

Bio Farma realizes that the challenges ahead will be more complex and competitive, especially in the vaccine and antisera industry. The support of an integrated communications and information technology system that is aligned with the Company’s business characteristics can provide strategic planning and decisionmaking solutions that are more timely, accurate, and affective. In contrast, a mistake in implementing IT system may lead to substantial losses. Therefore, the Company has determined the following information technologyrelated strategies:

Qualification, 24. Installation, Operations Performance of BioQA Online Application.

and

Qualification, 25. Installation, Operations Performance of EM Application.

and

a. Building integrated business applications that involve all functions within the Company.

Qualification, 26. Installation, Performance of Batch Record.

and

b. Developing IT organization that is harmoniously organized and featuring both centralized and decentralized (autonomous) policymaking, followed by a sound change management process.

27. Design Qualification Application.

(DQ)

Operations of

Qualification, Installation, 28. Performance of TR Software.

Val-Cal

Manager

Operations

and

29. Design Qualification (DQ) of Batch Record Application. 30. Design Qualification (DQ) of Environment Monitoring Application. Design Qualification 31. Application.

(DQ)

of

Training

Qualification, 32. Installation, Operations Performance of Val-Cal Manager.

Record and

33. Physical Monitoring Software Validation Protocol. 34. Documentation System Software Validation Protocol. 35. DEV-CC-CAPA Software Validation Protocol. 36. Batch Record Software Validation Protocol. 37. Spreadsheets Validation Protocol. 38. Training Record Software Validation Protocol. 39. Data Form Software Validation Protocol.

Increasing collaboration with third parties c. (outsourcing) for development and maintenance by taking into consideration effectiveness and efficiency of cost, time, solution quality, products and services quality, and flexibility. d. Developing IT infrastructure to accommodate current and future business needs.

IT Human Resources Training and Development The training and development of IT human resources in 2014 began to be aimed at IT as Business Enabler. Bio Farma’s IT Team not only participated in technical training programs but also business-related ones. The training programs in which Bio Farma’s IT Team participated were:

Technical Training a. ERP for Programming and Administering Databases.

40. Training Record Software Validation Protocol.

b. ERP for all modules implemented, such as Finance & Accounting, Procurement, Inventory, and Sales.

41. DEV-CC-CAPA Software Validation Protocol.

c. Infrastructure.

Online Document Application Intranet Validation 42. Protocol.

d. Programming Language aligned to the IT Masterplan, such as VB.Net.

43. Raw Material Software Validation Protocol.

e. Essential Networking and TCP/IP Fundamentals.

44. SIAAP Software Validation Protocol.

f. VMP Training & Workshop Assessment Workshop HP.

and

Risk-Based

g. Microsoft Exchange 2010.

ANNUAL REPORT

2014

• PT Bio Farma (Persero) •

280

Non-Technical Training

j. Smart and Effective Presentation.

a. Basic Accounting.

k. Business Process Mapping.

b. Public Speaking.

l. Big Data Management and Data Mining.

c. Control Objective for Information and Related Technology—COBIT 5.

IT System Investment

d. Software Validation. e. HP Solution and Product Knowledge. f. Work Load Analysis.

In 2014, the value of investment in IT system and infrastructure development was higher than the previous year, owing to the implementation of firewall and IPBXbased telephone technology.

g. Risk Analysis. h. Software Validation. i. Executive Presentation for Staff.

281

FINANCIAL STATEMENTS

PT BIO FARMA (PERSERO) LAPORAN KEUANGAN

31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut DAN LAPORAN AUDITOR INDEPENDEN

FINANCIAL STATEMENTS

December 31, 2014 and 2013 and For The Years Then Ended AND INDEPENDENT AUDITOR’S REPORT

PT. BIO FARMA (Persero)

Jl. Pasteur No. 28 Bandung 40161 Indonesia, PO. Box 1136, Telp. 022 2033755, Fax 022 2041306 email : [email protected] – http : //www.biofarma.co.id

DAFTAR ISI

TABLE OF CONTENTS

Halaman/ Page

SURAT PERNYATAAN DIREKSI

BOARD OF DIRECTORS’ STATEMENT

LAPORAN AUDITOR INDEPENDEN

INDEPENDENT AUDITOR’S REPORT

Laporan Posisi Keuangan

1

Statement of Financial Position

Laporan Laba Rugi Komprehensif

2

Statement of Comprehensive Income

Laporan Perubahan Ekuitas

3

Statement of Changes in Equity

Laporan Arus Kas

4

Statement of Cash Flows

Catatan atas Laporan Keuangan

5

Notes to Financial Statements

i

DIRECTOR’S STATEMENT LETTER RELATING TO THE RESPONSIBILITY FOR FINANCIAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013 PT BIO FARMA (PERSERO)

We the undersigned: Name Office address Residential address Phone Title

: Iskandar : Jl. Pasteur No. 28 Bandung 40161, Jawa Barat : Komplek Bio Farma no. 17 Bandung 40184 : (022) 2033755 : President Director

Name : Pramusti Indrascaryo Office address : Jl. Pasteur No. 28 Bandung 40161, Jawa Barat Residential address : Kav. Lestari II / 63 RT 012 RW 007 Lebak Bulus, Cilandak - Jakarta Phone : (022) 2033755 Title : Finance Director State that: 1.

Responsible for the preparation and the presentation of the financial statements’

2.

The financial statements have been prepared and presented in accordance with the Indonesian financial accounting standards; a. All information has been fully and correctly in the Company’s financial statements; b. The Company’s financial statements do not contain false material information or facts, nor do they omit material information or facts.

3.

Responsible for the Company internal control system.

This statement letter is made truthfully

Bandung, February 2, 2014 President Director

Finance Director

PT BIO FARMA (PERSERO) LAPORAN POSISI KEUANGAN Per 31 Desember 2014 dan 2013

PT BIO FARMA (PERSERO) STATEMENT OF FINANCIAL POSITION As of December 31, 2014 and 2013

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

ASET ASET LANCAR Kas dan Setara Kas Efek Tersedia Untuk Dijual Piutang Usaha (setelah dikurangi penyisihan penurunan nilai sebesar Rp.122.481.675 pada 31 Desember 2014 dan Rp.39.963.975 pada 31 Desember 2013)

(Expressed in Rupiah, unless otherwise stated)

2014

Catatan/ Note

2013

ASSETS CURRENT ASSETS Cash and Cash Equivalents Available For Sale Securities Trade Receivables (Net of provision for impairment of Rp.122.481.675 on December 31, 2014 and Rp.39.963.975 on December 31, 2013)

971.717.046.000 25.599.792.849 257.259.801.488

2.d., 2.e., 3 2.d., 2.e., 4 2.d., 2.e., 5

891.250.766.156 288.245.632.609

Piutang Lain-Lain (setelah dikurangi penyisihan penurunan nilai sebesar Rp.1.302.637.458 pada 31 Desember 2014 dan 2013)

850.045.644

2.d., 2.e., 6

345.695.659

Other Receivables (Net of provision for impairment of Rp.1.302.637.458 on December 31, 2014 and 2013)

Persediaan (setelah dikurangi penyisihan penurunan nilai sebesar Rp.4.056.315.911 pada 31 Desember 2013 dan Rp.1.937.136.864 pada 31 Desember 2013)

326.600.044.823

2.g., 7

204.898.642.887

Inventories (Net of provision for impairment of Rp.4.056.315.911 on December 31,2014 and Rp.1.937.136.864 on December 31,2013)

Uang Muka Pajak Dibayar Dimuka Biaya Dibayar Dimuka Pendapatan yang Masih Akan Diterima Aset Lancar Lainnya

50.412.492.381 154.008.287.440 4.767.416.002 2.725.696.829 30.697.999.071

2.d., 2.e. 8 2.l.,9 2.j., 10 2.j., 11 12

38.623.576.284 96.972.139.772 1.590.600.267 3.103.901.498 17.870.452.584

Advances Prepaid Taxes Prepaid Exenses Accrued Income Other Current Assets

Jumlah Aset Lancar ASET TIDAK LANCAR Aset Pajak Tangguhan Aset Tetap (setelah dikurangi akumulasi penyusutan sebesar Rp.722.959.394.505 pada 31 Desember 2014 dan Rp.605.800.589.557 pada 31 Desember 2013)

1.824.638.622.527

1.542.901.407.716

Total Current Assets NON CURRENT ASSETS Deferred Tax Assets Fixed Assets (Net of accumulated depreciation of Rp.722.959.394.505 on December 31, 2014 and Rp.605.800.589.557 on December 31,2013)

17.046.156.404 1.163.473.244.976

9 2.h., 13

12.912.599.379 1.126.085.478.917

Aset Takberwujud (setelah dikurangi akumulasi amortisasi sebesar Rp.4.392.006.950 pada 31 Desember 2014 dan Rp.2.029.191.105 pada 31 Desember 2013)

37.855.462.048

2.i.,14

20.214.346.797

Intangible Assets (Net of accumulated ammortization of Rp.4.392.006.950 on December 31, 2014 and Rp.2.029.191.105 on December 31,2013)

Aset Tidak Lancar Lainnya (setelah dikurangi akumulasi amortisasi sebesar Rp.1.673.441.667 pada 31 Desember 2014 dan Rp.1.236.891.667 pada 31 Desember 2013)

766.323.829

956.273.829

Other Assets (Net of accumulated ammortization of Rp.1.673.441.667 on December 31, 2014 and Rp.1.236.891.667 on December 31,2013)

15

Jumlah Aset Tidak Lancar

1.219.141.187.257

1.160.168.698.923

Total Non Current Assets

JUMLAH ASET

3.043.779.809.784

2.703.070.106.639

TOTAL ASSETS

Lihat catatan atas laporan keuangan yang merupakan bagian tidak terpisahkan dari laporan keuangan secara keseluruhan

See the accompanying notes which are an intergral part of the financial statements taken as a whole

1

PT BIO FARMA (PERSERO) LAPORAN POSISI KEUANGAN Per 31 Desember 2014 dan 2013

PT BIO FARMA (PERSERO) STATEMENT OF FINANCIAL POSITION As of December 31, 2014 and 2013

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

LIABILITAS DAN EKUITAS

(Expressed in Rupiah, unless otherwise stated)

2014

Catatan/ Note

2013

LIABILITIES AND EQUITY

LIABILITAS Liabilitas Jangka Pendek Utang Usaha Utang Pajak Biaya Yang Masih Harus Dibayar Pendapatan Diterima Dimuka Liabilitas Lancar Lainnya Jumlah Liabilitas Jangka Pendek Liabilitas Jangka Panjang Liabilitas Diestimasi Imbalan Pasca Kerja Liabillitas Tidak Lancar Lainnya Jumlah Liabilitas Jangka Panjang JUMLAH LIABILITAS EKUITAS Modal Saham Modal dasar - 5.000.000 dan 2.000.000 lembar saham pada 31 Desember 2014 dan 2013, nominal Rp.1.000.000 per lembar saham. Ditempatkan dan disetor penuh 1.250.000 dan 750.000 saham pada 31 Desember 2014 dan 2013 Keuntungan (Kerugian) Belum Direalisasi Atas Kepemilikan Efek Tersedia Untuk Dijual Saldo Laba (Rugi) Dicadangkan Belum Dicadangkan

LIABILITIES 145.094.985.807 38.918.793.669 128.279.650.927 1.366.412.394 26.008.569.142 339.668.411.938

16 2.l.,9 17 2.j.,18 19

158.098.233.953 86.916.418.287 112.780.949.155 5.405.049.445 26.436.649.335 389.637.300.175

Current Liabilities Trade Payables Taxes Payable Accrued Expenses Unearned Revenue Other Current Liabilities Total Current Liabilities

62.703.190.571 24.882.312.222 87.585.502.793

2.m.,20 21

48.370.659.217 48.370.659.217

Non Current Liabilities Estimated Employee Benefits Liabilities Other Non-Current Liabillities Total Non Current Liabilities

427.253.914.731

438.007.959.392

1.250.000.000.000

21

377.292.849

750.000.000.000 -

786.074.860.369 580.073.741.835

22 22

941.919.524.322 573.142.622.925

TOTAL LIABILITIES EQUITY Share Capital Authorized capital - 5,000,000 and 2,000,000 shares on December 31, 2014 and 2013, par value Rp.1.000.000 per share. Issued and fully paid 1,250,000 and 750,000 shares as on December 31, 2014 and 2013. Unrealized Gains (Loss) From Available For Sale Securities Retained Earnings Appropriated Un-appropriated

JUMLAH EKUITAS

2.616.525.895.053

2.265.062.147.247

Total Equity

JUMLAH LIABILITAS DAN EKUITAS

3.043.779.809.784

2.703.070.106.639

TOTAL LIABILITIES AND EQUITY

Lihat catatan atas laporan keuangan yang merupakan bagian tidak terpisahkan dari laporan keuangan secara keseluruhan

See the accompanying notes which are an intergral part of the financial statements taken as a whole

2

PT BIO FARMA (PERSERO) LAPORAN LABA-RUGI KOMPREHENSIF Untuk Tahun-Tahun Yang Berakhir Pada Tanggal 31 Desember 2014 dan 2013

PT BIO FARMA (PERSERO) STATEMENT OF COMPREHENSIVE INCOME For the Years Ended December 31, 2014 and 2013

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

2014 PENJUALAN BERSIH Produk Perusahaan Barang Dagangan Jasa Jumlah Penjualan Bersih BEBAN POKOK PENJUALAN Produk Perusahaan Barang Dagangan Beban Jasa Jumlah Beban Pokok Penjualan dan Jasa LABA (RUGI ) KOTOR Penghasilan Lain-lain Beban Administrasi dan Umum Beban Penjualan Beban Penelitian, Pengembangan dan Surveilans Beban Lain-Lain Jumlah LABA (RUGI) SEBELUM PAJAK PENGHASILAN

Catatan/ Notes

2.028.988.085.136 10.286.943.546 4.805.423.299 2.044.080.451.981

2.j., 24 2.j., 25 2.j., 26

1.848.451.643.595 1.848.000.000 3.381.998.910 1.853.681.642.505

(767.608.689.091) (8.826.987.298) (3.653.929.719)

2.j., 27 2.j., 28 2.j., 29

(718.462.581.178) (1.148.140.277) (3.985.651.305)

PENDAPATAN KOMPREHENSIF LAIN Keuntungan (Kerugian) belum direalisasi Atas kepemilikan efek tersedia untuk dijual LABA (RUGI) KOMPREHENSIF

NET SALES The Company’s Product Merchandise Product Services Total Net Sales

(780.089.606.108)

(723.596.372.760)

COST OF GOODS SOLD The Company’s Product Merchandise Product Services Total Cost of Good and Services Sold

1.263.990.845.873

1.130.085.269.745

GROSS PROFIT

118.630.367.414 (378.448.122.194) (72.569.877.903)

2.j., 30 2.j., 31 2.j.,32

152.837.828.951 (304.313.116.086) (72.830.286.610)

(88.779.215.457) (69.747.838.173) (490.914.686.313)

2.k., 33 2.j., 34

(68.317.911.755) (58.872.795.971) (351.496.281.472)

Other Income General and Adminstrative Expenses Selling Expense Research, Developments and Surveillances Expenses Other Expenses Total

778.588.988.274

INCOME (LOSS) BEFORE INCOME TAX

(207.287.750.500) 1.166.385.151 (206.121.365.349)

INCOME TAX BENEFITS (EXPENSES) Current Tax Deferred Tax Total Tax Expenses

572.467.622.925

NET INCOME (LOSS)

-

OTHER COMPREHENSIVE INCOME Unrealized Gains (Loss) From Available For Sale Securities

572.467.622.925

COMPREHENSIVE INCOME (LOSS)

773.076.159.560

MANFAAT (BEBAN) PAJAK PENGHASILAN Pajak Kini (197.135.974.750) Pajak Tangguhan 4.133.557.025 Jumlah Beban Pajak Penghasilan (193.002.417.725) LABA (RUGI) BERSIH

2013

2.l.,9 2.l.,9

580.073.741.835 35

377.292.849 580.451.034.684

Lihat catatan atas laporan keuangan yang merupakan bagian tidak terpisahkan dari laporan keuangan secara keseluruhan

See the accompanying notes which are an intergral part of the financial statements taken as a whole

3

1.250.000.000.000

377.292.849

Lihat catatan atas laporan keuangan yang merupakan bagian tidak terpisahkan dari laporan keuangan secara keseluruhan

Saldo Akhir per 31 Desember 2014

377.292.849

786.074.860.369

-

4

580.073.741.835

580.073.741.835

57.247.000.000

675.000.000 (57.247.000.000) (500.000.000.000)

Konversi Saldo Laba ke Cadangan Tambahan Dividen dari Cadangan Kapitalisasi Cadangan ke Setoran Modal 500.000.000.000 Keuntungan (kerugian) belum direalisasi atas kepemilikan efek tersedia untuk dijual Laba (Rugi) tahun 2014 -

Koreksi Saldo Laba

(228.987.286.878) (400.727.336.047) (675.000.000)

400.727.336.047

-

573.142.622.925

675.000.000 28.000.000.000 572.467.622.925

573.142.622.925

-

750.000.000.000

Saldo Awal per 1 Januari 2014 Pembagian Laba : Dividen Cadangan

941.919.524.322

(28.000.000.000) -

941.919.524.322

-

750.000.000.000

-

-

(105.178.377.000) (299.278.762.000) (1.929.459.000) (6.830.285.598) (675.000.000)

299.278.762.000 -

-

385.891.883.599

Belum Dicadangkan/ Unappropriated

670.640.762.322

Dicadangkan/ Appropriated

Jumlah/ Total

1.366.525.895.053

377.292.849 580.073.741.835

(228.987.286.878) (675.000.000) 675.000.000 (500.000.000.000)

1.515.062.147.247

1.515.062.147.247

(105.178.377.000) (1.929.459.000) (6.830.285.598) (675.000.000) 675.000.000 572.467.622.925

1.056.532.645.920

Saldo Laba/Retained Earnings

750.000.000.000

Keuntungan (Kerugian) Belum Direalisasi/ Unrealized Gain (Loss)

Saldo Akhir per 31 Desember 2013

Saldo Awal per 1 Januari 2013 Pembagian Laba : Dividen Cadangan Program Kemitraan Bina Lingkungan Tantiem Reklasifikasi Saldo Laba - dari Tambahan Tantiem tahun 2013 Tambahan Dividen dari Cadangan Laba (Rugi) Tahun 2013

Modal Saham/ Share Capital

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

PT BIO FARMA (PERSERO) LAPORAN PERUBAHAN EKUITAS Untuk Tahun-Tahun Yang Berakhir Pada Tanggal 31 Desember 2014 dan 2013

Beginning Balance as of January 1, 2014 Profit Sharing Dividend Reserve

Ending Balance as of December 31, 2013

Beginning Balance as of January 1, 2013 Profit Sharing Dividend Appropiated Partnership Program Community Development Tantiem Reclassiification of Unappropiated from Additional Tantiem 2013 Additional Dividen from Appropiated Earnings Comprehensive Income for the Year

Ending Balance as of December 31, 2014

See the accompanying notes which are an intergral part of the financial statements taken as a whole

2.616.525.895.053

(228.987.286.878) (675.000.000) Correction of Retained Earnings 675.000.000 Convertion of Unappropiated to Appropiated - Additional Dividen from Appropiated Earnings Capitalization of Appropiated to Capital Unrealized Gains (Loss) from 377.292.849 available for sale securities 580.073.741.835 Comprehensive Income for the Year

2.265.062.147.247

2.265.062.147.247

(105.178.377.000) (1.929.459.000) (6.830.285.598) (675.000.000) 675.000.000 572.467.622.925

1.806.532.645.920

Jumlah Ekuitas/ Total Equity

(Expressed in Rupiah, unless otherwise stated)

PT BIOFARMA (PERSERO) STATEMENT OF CHANGES IN EQUITY For the Years Ended December 31, 2014 and 2013

PT BIO FARMA (PERSERO) LAPORAN ARUS KAS Untuk Tahun-Tahun Yang Berakhir Pada Tanggal 31 Desember 2014 dan 2013

PT BIO FARMA (PERSERO) STATEMENT OF CASH FLOWS For the Years Ended December 31, 2014 and 2013

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

2014 ARUS KAS DARI AKTIVITAS OPERASI Penerimaan Kas dari Pelanggan Penerimaan Pajak (Restitusi) Penerimaan Bunga Penerimaan Hibah/ Donasi WHO Penerimaan (Pembayaran) Lainnya - Bersih Penerimaan Klaim Asuransi Pembayaran Bunga Pembayaran Tantiem Pembayaran Pajak Pembayaran Kepada Pemasok dan Karyawan Kas Bersih Diperoleh Dari (Digunakan Untuk) Aktivitas Operasi ARUS KAS DARI AKTIVITAS INVESTASI Pembelian Aset Tetap Penyertaan pada aset keuangan tersedia untuk dijual Pembelian Aset Takberwujud Hasil Penjualan Aset Lain-lain Kas Bersih Diperoleh Dari (Digunakan Untuk) Aktivitas Investasi ARUS KAS DARI AKTIVITAS PENDANAAN Pembayaran Dividen Pembayaran Program Kemitraan dan Bina Lingkungan Kas Bersih Diperoleh Dari (Digunakan Untuk) Aktivitas Pendanaan Kenaikan (Penurunan) Kas Bersih Pengaruh Selisih Kurs Kas dan Setara Kas Saldo Kas dan Setara Kas Pada Awal Tahun SALDO KAS DAN SETARA KAS PADA AKHIR TAHUN

2013

2.108.671.544.170 19.528.791.388 35.394.883.454 4.988.917.314 11.672.993.296 106.644.572 (9.726.635.616) (334.487.626.174) (1.330.310.145.264)

1.800.734.695.980 89.417.116.595 12.822.588.282 1.277.818.181 (19.155.596.412) (6.980.000.000) (241.386.211.508) (1.003.850.388.951)

505.839.367.140

632.880.022.167

(163.149.134.027)

(192.643.776.114)

(25.000.000.000) (20.578.114.493) -

Net Cash Provided by (Used in) Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Fixed Assets Cash paid for investment in available for available financial assets (6.671.065.935) Acquisitions of Intangible Assets 138.392.500 Proceeds from Sale of Other Assets

(208.727.248.520)

(199.176.449.549)

(228.987.286.878)

(105.178.377.000)

-

CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers Tax Refund Interest Receipts Cash Received from Grant/WHO's Donation Other Receipts (Payments) - Net Cash Received from Insurance Claims Interest Payment Payment of Tantiem Payment for Taxes Cash Paid to Suppliers and Employees

Net Cash Provided by (Used in) Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES Payment of Dividends Payment for Partnership and Community (8.759.744.598) Development Program

(228.987.286.878)

(113.938.121.598)

Net Cash Provided by (Used in) Financing Activities

68.124.831.741

319.765.451.020

Net Increase (Decrease) in Cash

12.341.448.103

72.987.703.163

Effect of Changes in Foreign Exchange Rate

891.250.766.156

498.497.611.973

Cash and Cash Equivalents at the Beginning of the Year

971.717.046.000

891.250.766.156

CASH AND CASH EQUIVALENTS AT END OF YEAR

Lihat catatan atas laporan keuangan yang merupakan bagian tidak terpisahkan dari laporan keuangan secara keseluruhan

5

See the accompanying notes which are an intergral part of the financial statements taken as a whole

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

1.

(Expressed in Rupiah, unless otherwise stated)

UMUM 1.a. Pendirian Perusahaan PT Bio Farma (Persero) (“Perusahaan”), pada awalnya bernama “Parc Vaccinogene” yang didirikan berdasarkan Surat Keputusan Gubernur Hindia Belanda No.14 tanggal 6 Agustus 1890. Mulai tahun 1955, berdasarkan UndangUndang Darurat No.14 tahun 1955 status Perusahaan berubah menjadi Perusahaan Negara (PN) Pasteur. Pada tahun 1961, Perusahaan berubah menjadi PN Bio Farma berdasarkan Peraturan Pemerintah No.80 tahun 1961 Tentang Pendirian Perusahaan Negara Bio Farma. Sesuai dengan Peraturan Pemerintah No.26 tahun 1978 tentang Pengalihan Bentuk Perusahaan Negara Bio Farma menjadi Perusahaan Umum, status Perusahaan berubah menjadi Perusahaan Umum (Perum).

1. GENERAL 1.a. The Company's Establishment PT Bio Farma (Persero) ("the Company"), formerly "Parc Vaccinogene", was established based on Decree No.14 dated August 6, 1890 of the Governor of Netherlands Indies. In 1955, under Emergency Law No.14 year 1955, the legal status of the Company was changed to a state-owned company named Perusahaan Negara (PN) Pasteur. In 1961, based on the Government Regulation No.80 year 1961, the Company's name changed to PN Bio Farma. Later in 1978, based on the Government Regulation No. 26 year 1978 regarding the Transformation of the State-Owned Company (PN) Bio Farma, the Company status was changed to a Public Company (Perum).

Berdasarkan Peraturan Pemerintah No. 1 tahun 1997 tentang Pengalihan Bentuk Perusahaan Umum (Perum) Bio Farma Menjadi Perusahaan Perseroan (Persero), status Perusahaan berubah menjadi Perusahaan Perseroan (Persero). Akta pendirian dan Anggaran Dasar atas perubahan bentuk Perusahaan tersebut telah dimuat dalam Akta No. 1 tanggal 3 Februari 1997, Akta No. 188 tanggal 20 Juni 1997, dan Akta No. 30 tanggal 21 Oktober 1997 yang dibuat oleh notaris Muhani Salim, S.H., dan telah mendapat persetujuan berdasarkan Keputusan Menteri Kehakiman Republik Indonesia No. C2-1423 HT.01.01.Th.98 tanggal 5 Maret 1998 yang telah diumumkan dalam Berita Negara Republik Indonesia tanggal 16 Juli 2002 No. 57 Tambahan No. 6884.

Based on Government Regulation No. 1 year 1997 regarding the Transformation of the Public Company (Perum) Bio Farma Into a LImited Liability Corporation, the status of the Company was changed into a state-owned limited liability corporation (Persero). The Article of Association of the Company's transformation was appeared in notarial deed No.1 dated February 3, 1997, No.188 dated June 20, 1997, and No.30 dated October 21, 1997 of Muhani Salim, S.H., Notary. It has been approved by the Minister of Justice of the Republic of Indonesia in his Decision Letter No. C2-1423 HT.01.01.Th.98 dated March 5, 1998, and published in State Gazette of the Republic of Indonesia No. 57 Supplement No. 6884 dated July 16, 2002.

Anggaran Dasar Perusahaan telah mengalami beberapa kali perubahan dan terakhir Anggaran Dasar Perusahaan Nomor 26 tanggal 6 Juni 2014 yang dibuat oleh notaris Fathiah Helmi, S.H., dan telah mendapat persetujuan Menteri Hukum dan Hak Asasi Manusia, berdasarkan Keputusan Nomor AHU0104.40.20.2014 tanggal 10 Juni 2014, tentang Persetujuan Perubahan Badan Hukum Perseroan Terbatas PT Bio Farma (Persero).

The Company's Articles of Association has been amended several times, the most recent amendment was made through notarial deed No. 26 dated June 6, 2014 of Fathiah Helmi, S.H., Notary, and has been approved by the Minister of Law and Human Rights in his Decision Letter No. AHU-0104.40.20.2014 date June 10, 2014, regarding the Approval of Amendment of the State-Owned Limited Liability Corporation of PT Bio Farma (Persero).

1.b Tujuan Kegiatan Usaha Perusahaan Sesuai dengan Anggaran Dasar Perusahaan tujuan Perusahaan adalah melakukan usaha di bidang penelitian, pengembangan, produksi dan pemasaran produk biologi, produk farmasi dan alat kesehatan serta optimalisasi pemanfaatan sumber daya yang dimiliki Perseroan untuk menghasilkan barang dan/atau jasa yang bermutu tinggi dan berdaya saing kuat untuk mendapatkan/mengejar keuntungan guna meningkatkan nilai Perseroan dengan menerapkan prinsip-prinsip Perseroan Terbatas.

1.b The Company’s Objective According to the Company's Articles of Association, the Company’s objectives are to make the efforts in research, development, production, and marketing of biological products, pharmaceutical products, and medical equipments, and optimalization of the Company's resources to produce high quality and strong competitive products and services to seek profits that enhance the Company's value by applying the principles of the limited liability corporation.

Untuk mencapai tujuan tersebut di atas, Perseroan dapat melaksanakan kegiatan usaha utama sebagai berikut : a. Penelitian dan pengembangan produk biologi dan farmasi, baik yang dilakukan sendiri maupun kerjasama dengan pihak lain; b. Produksi produk biologi dan produk farmasi, baik yang dilakukan sendiri maupun kerjasama dengan pihak lain;

To achieve the objectives mentioned above, the Company performs major activities as follows: a. Research and development of biological and pharmaceutical products, both performed by the Company itself and by cooperation with other parties; b. Production of biological and pharmaceutical products, both from the Company's own production and from cooperation with other parties;

6

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

1. UMUM (lanjutan) 1.b Tujuan Kegiatan Usaha Perusahaan (lanjutan)

1. GENERAL (continued) 1.b The Company’s Objective (continued)

c. Pemasaran, perdagangan dan distribusi produk biologi, farmasi, alat kesehatan, termasuk barang umum, baik di dalam maupun di luar negeri; d. Pelayanan Laboratorium Kesehatan dan Klinik; e. Berusaha di bidang jasa yang ada hubungannya dengan yang tertera pada huruf a,b, c, dan d.

c. Marketing, trading and distribution of biological and pharmaceutical products and medical equipments, including general products, for domestics and international d. Health care laboratory and clinic services; e. Providing services related to a, b, c,and d activities

Sifat usaha Perusahaan adalah melayani kebutuhan pasar domestik dan global, sebagai berikut :

The nature of the Company is to serve domestic and global market needs as follows: a. Government market, provides the Government with BCG, DPT, DT, TT, polio, measles, hepatitis B, Td vaccines for basic/regular immunization programs, and with DTP-HB-Hib and IPV for non-regular immunization programs;

a. Pasar Pemerintah, yaitu melayani kebutuhan Pemerintah untuk program imunisasi dasar/reguler yaitu vaksin BCG, DPT, DT, TT, Polio, Campak, Hepatitis B, Td serta diluar program-program imunisasi reguler yaitu vaksin DTP-HBHib dan IPV; b. Pasar swasta nasional, yaitu melayani para distributor dalam negeri untuk memenuhi kebutuhan vaksin di luar program imunisasi rutin Pemerintah yaitu vaksin BCG, BioTd, BioTT, FluBio, Campak, Polio, Hepatitis B, Pentabio, anti sera (BioADS, BioSAVE, ABUII (Australia)) dan PPD2TU;

b. National private market, provides domestic distributors with BCG, BioTd, BioTT, FluBio, Measles, Polio, Hepatitis B, Pentabio, anti-sera (BioADS, BioSAVE, ABUII (Australia) ) and PPD2TU vaccines for non-regular Government immunization programs.

c. Pasar intemasional, terutama untuk melayani kebutuhan UNICEF dan pihak-pihak lainnya yang telah melakukan kerjasama bilateral. Vaksin yang digunakan merupakan vaksin yang telah memenuhi prakualifikasi WHO baik dalam bentuk produk jadi maupun bulk, yaitu vaksin TT, Td, BioTT, DTP, Polio, Campak, DTP-HB, Pentabio, bulk Polio, bulk Difteri, bulk Pertusis dan bulk Tetanus.

c. International markets, provides particularly the UNICEF needs, and other parties who have bilateral cooperation with the Company, with TT, Td, BioTT, DTP, Polio, Measles, DTPHB, Pentabio, Polio bulk, Diphtheria bulk, Pertusis bulk, and Tetanus bulk vaccines. The vaccines are those that meet the pre-qualification of the WHO, both in finished products and bulk.

1.c Dewan Komisaris, Direksi, Komite - Komite dan Karyawan

1.c Boards of Commissioners, Directors, Committees, and Employees

Susunan pengurus Perusahaan pada tanggal 31 Desember 2014 dan 2013 adalah sebagai berikut:

The Company's Board of Commissioners, Directors and Commitees as of December 31, 2014 and 2013 are as follows:

2014

2013

Dewan Komisaris Komisaris Utama Komisaris 2) 3) Komisaris Komisaris 4) Komisaris 1) Komisaris 1)

1)

Dewan Direksi 6) Direktur Utama Direktur Pemasaran Direktur Produksi Direktur Keuangan Direktur Perencanaan dan Pengembangan Direktur Sumber Daya Manusia7)

Prof. DR. Ahmad Ramli, S.H., MH Drs. Paruli Lubis, MBA Herman Ladjidja Djuni, ST dr. Nizar Yamani, Sp.S (K) Ihsan Setiadi Latief Heridadi

Prof. Dr. Sam Soeharto, Sp.MK Drs. Paruli Lubis, MBA Herman Ladjidja Djuni, ST dr. Nizar Yamani, Sp.S (K) Prof. DR. Ahmad Ramli, S.H., MH Ihsan Setiadi Latief

Drs. Iskandar, Apt. MM Drs. Mahendra Suhardono, Apt, MM Drs. Juliman, MM Drs. Pramusti Indrascaryo

Drs. Iskandar, Apt. MM Drs. Mahendra Suhardono, Apt, MM Drs. Juliman, MM Drs. Pramusti Indrascaryo

Drh.Sugeng Raharso, MM

Drh.Sugeng Raharso, MM

Drs. Andjang Kusumah, MM

Drs. Andjang Kusumah, MM

7

Board of Commissioners President Commissioner 1) Commissioner Commissioner Commissioner Commissioner Commissioner

2) 3) 4) 1) 1)

Board of Directors 6) President Director Director of Marketing Director of Production Director of Finance Director of Planning and Development Director of Human Resource Development

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

1. UMUM (lanjutan) 1.c Dewan Komisaris, Direksi, Komite - Komite dan Karyawan (lanjutan)

1. GENERAL (continued) 1.c Boards of Commissioners, Directors, Committees, and Employees (continued)

2014 Komite Audit Ketua Wakil Ketua Anggota Anggota 9)

2013

8)

8)

Drs. Paruli Lubis, MBA Herman Ladjidja Djuni, ST Abu Bakar Asawir Harahap

Drs. Paruli Lubis, MBA Prof. DR. Ahmad Ramli, S.H., MH DR. M. Iqbal Alamsjah, SE, Ak, MA Dedi Sopyan

10)

Audit Committee Chairman Vice Chairman Member Member

9)

10)

Komite Pengembangan, Risiko dan GCG Ketua Heridadi Wakil Ketua dr. Nizar Yamani, Sp.S (K) Wakil Ketua II Ihsan Setiadi Latif Anggota Dadang Epi Sukarsa, SH., MH Anggota Afrizal, SE.Msi.Ak

Committee of Development, Risk, and GCG Herman Ladjidja Djuni, ST Chairman dr. Nizar Yamani, Sp.S (K) Vice Chairman Vice Chairman II Dadang Epi Sukarsa, SH., MH Member Sawijan Gunadi Member

) Berdasarkan Keputusan Menteri BUMN No. SK-17/MBU/2014, tanggal 23 Januari 2014. 2 Berdasarkan Keputusan Menteri BUMN No. KEP 392/MBU/ ) 2012, tanggal 5 November 2012 3 Berdasarkan Keputusan Menteri BUMN No. KEP 153/MBU/ ) 2011, tanggal 27 Juni 2011. 4 Berdasarkan Keputusan Menteri BUMN No. SK-204/MBU/ 2012, ) tanggal 28 Mei 2012. 5 Berdasarkan Keputusan Menteri BUMN No.SK-235/MBU/2013, ) tanggal 1 Mei 2013. 6 Berdasarkan Keputusan Menteri BUMN No.SK-221/MBU/2013, ) tanggal 12 April 2013. 7 Berdasarkan Keputusan Menteri BUMN No. SK 116/MBU/ 2012, ) tanggal 7 Maret 2012. 8 Berdasarkan Keputusan Dewan Komisaris No. KEP-05/DK/BF/ ) II/2014, tanggal 19 Februari 2014. 9 Berdasarkan Keputusan Dewan Komisaris No. KEP-15/DK/BF/ ) VII/2014, tanggal 1 Juli 2014. 10) Berdasarkan Keputusan Dewan Komisaris No. KEP-06/DK/BF/ II/2014, tanggal 19 Februari 2014. 1

) Based on Decision Letter of the Minister of State-Owned Enterprises No.SK-17/MBU/2014 dated January 23, 2014. 2 ) Based on Decision Letter of the Minister of State-Owned Enterprises No.KEP- 392/MBU/2012 dated November 5, 2012. 3 ) Based on Decision Letter of the Minister of State-Owned Enterprises No. SK- 153/MBU/2011 dated Juni 27, 2011. 4 ) Based on Decision Letter of the Minister of State-Owned Enterprises No. SK- 204/MBU/2012 dated Mei 28, 2012. 5 ) Based on Decision Letter of the Minister of State-Owned Enterprises No. SK-235/MBU/2013 dated Mei 1, 2013. 6 ) Based on Decision Letter of the Minister of State-Owned Enterprises No. SK-221/MBU/2013 dated April 12, 2013. 7 ) Based on Decision Letter of the Minister of State-Owned Enterprises No. SK-116/MBU/2012 dated Maret 7, 2012. 8 ) Based on Decision Letter of the Board of Commissioners No. KEP-05/DK/BF/II/2014 dated February 19, 2014. 9 ) Based on Decision Letter of the Board of Commissioners No. KEP-15/DK/BF/VII/2014 dated July 1, 2014. 10) Based on Decision Letter of the Board of Commissioners No. KEP-06/DK/BF/II/2014 dated February 19, 2014. 1

Susunan Direksi Perusahaan terakhir berdasarkan Akta Nomor 86 tanggal 26 April 2013 yang dibuat oleh Notaris Fathiah Helmi, S.H., dan telah diterima dan dicatat di dalam database Sistem Administrasi Badan Hukum Kementerian Hukum dan Hak Asasi Manusia Republik Indonesia berdasarkan Surat Kementerian Hukum dan Hak Asasi Manusia Republik Indonesia Nomor AHU-AH.01.10-17236 tanggal 3 Mei 2013 perihal Penerimaan Pemberitahuan Perubahan Data Perseroan PT Bio Farma (Persero). Susunan Dewan Komisaris Perusahaan terakhir berdasarkan Akta Nomor 9 tanggal 6 Februari 2014 yang dibuat oleh Notaris Fathiah Helmi, S.H., dan telah diterima dan dicatat di dalam database Sistem Administrasi Badan Hukum Kementerian Hukum dan Hak Asasi Manusia Republik Indonesia berdasarkan surat Kementerian Hukum dan Hak Asasi Manusia Republik Indonesia Nomor AHU-AH.01.10-06408 tanggal 25 Februari 2014 perihal Penerimaan Pemberitahuan Perubahan Data Perseroan PT Bio Farma (Persero) .

The last Company's Board of Directors is based on Notary Deed No. 86 dated April 26, 2013 of Fathiah Helmi, SH, Notary, and has been accepted and recorded in database system of Legal Entity Administration at the Ministry of Justice and Human Rights of the Republic of Indonesia, according to letter of the Ministry of Justice and Human Rights of the Republic Indonesia No. AHU-AH.01.1017236 dated May 3, 2013 regarding the Notification of Data Change of PT Bio Farma (Persero). Whereas the last Company's Board of Commissioners is based on Notary Deed No. 9 dated February 6, 2014 of Fathiah Helmi, SH, Notary, and has been accepted and recorded in database system of Legal Entity Administration of the Ministry of Justice and Human Rights of the Republic of Indonesia according to letter of the Ministry of Justice and Human Rights of the Republic of Indonesia No. AHU-AH.01.10-06408 dated February 25, 2014, regarding the Notification of Data Change of PT Bio Farma (Persero).

Pada 31 Desember 2014 dan 2013, Perusahaan memiliki karyawan masing-masing 1029 dan 953 karyawan (tidak diaudit).

As of December 31, 2014 and 2013 the Company had 1029 and 953 employees (unaudited), respectively.

8

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

1. GENERAL (continued) 1d. Remuneration Boards of Commissioners, Directors The details of salaries and allowances of the Board of Commissioners, Directors and key management personnel Company for 2014 and 2013, are as follows:

1. UMUM (lanjutan) 1d. Remunerasi Dewan Komisaris dan Direksi Perincian gaji dan tunjangan untuk Dewan Komisaris dan Direksi untuk tahun 2014 dan 2013, adalah sebagai berikut: 2014 Dewan Komisaris Direksi

2.

2013

10.060.821.834 27.609.955.163 37.670.776.997

10.852.805.219 28.321.420.919 39.174.226.138

Board of Commissioners Directors

IKHTISAR KEBIJAKAN AKUNTANSI 2.a. Pernyataan Kepatuhan Laporan keuangan PT Bio Farma (Persero) untuk tahun yang berakhir 31 Desember 2014 dan 2013 telah disusun sesuai dengan Standar Akuntansi Keuangan di Indonesia dan telah memenuhi semua persyaratannya.

January 1, 2015 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.a Statement of Compliance The financial statements of PT Bio Farma (Persero) for the year ended December 31, 2014 and 2013 have been prepared in accordance with Financial Accounting Standards in Indonesia and have met all its requirements .

2.b. Dasar Penyusunan Laporan Keuangan Dasar pengukuran dalam penyusunan laporan keuangan adalah konsep biaya perolehan (historical cost), kecuali beberapa akun tertentu menggunakan dasar pengukuran lain sebagaimana diuraikan dalam kebijakan akuntansi masingmasing akun tersebut. Laporan keuangan disusun dengan menggunakan metode akrual, kecuali untuk laporan arus kas.

2.b.Basis for Preparation of the Finacial Statements The financial statements have been prepared under the historical cost method, except for several accounts which use other measurement basis as explained in the accounting policies applied for those accounts.The financial statements, except for statement of cash flows, are prepared under the accrual basis of accounting, except for statement of cash flows.

Laporan arus kas disusun dengan menggunakan metode Iangsung (direct method) dengan mengelompokkan arus kas ke dalam aktivitas operasi, investasi dan pendanaan.

Statement of cash flows is prepared using the direct method by classifying cash flows into operating, investing and financing activities.

Perubahan PSAK yang akan berlaku efektif per 1 Januari 2015 Dewan Standar Akuntansi Keuangan Ikatan Indonesia (DSAK IAI) telah menerbitkan beberapa Pernyataan Standar Akuntansi Keuangan (PSAK) baru maupun revisi yang akan berlaku efektif sejak atau setelah tanggal 1 Januari 2015. PSAK-PSAK yang dipandang relevan dengan laporan keuangan adalah sebagai berikut: - PSAK 1 (2013) "Penyajian Laporan Keuangan" - PSAK 24 (2013) "Imbalan Kerja" - PSAK 46 (2014) "Pajak Penghasilan" - PSAK 48 (2014) "Penurunan Nilai Aset" - PSAK 68 (2013) "Pengukuran Nilai Wajar"

Changes to the Financial Accounting Standards (PSAKs) that will be effective as of January 1, 2015 The Financial Accounting Standards Board of the Indonesian Institute of Accountants (DSAK IAI) has issued new and revised Statement of Financial Accounting Standards (PSAKs) that will be effective on or after January 1, 2015. The followings are the PSAKs that may considered relevant to the Company's financial statements : - PSAK 1 (2013) "Presentation of Financial Statements" - PSAK 24 (2013) ”Employee Benefits” - PSAK 46 (2014) ”Income Tax” - PSAK 48 (2014) "Impairment of Assets" - PSAK 68 (2014) "Measurement of Fair Value"

Perusahaan masih mempelajari dampak yang mungkin timbul dari penerapan standar-standar ini terhadap laporan keuangan perusahaan.

The Company is still evaluating the possible impacts of the implementation of these standards on the Company's financial statements.

2.c. Penentuan Tingkat Materialitas Suatu Berdasarkan SM-S15 Pedoman Akuntansi Keuangan, sebagai ukuran obyektif sesuatu dinyatakan material, jika:

2.c. Materiality Level According to the Company's Financial Accounting Guidelines (SM-S15), as objective measurement, something is considered material, if: a. 5% of total assets for asset accounts; b. 5% of total liabilities for liability accounts:

a. 5 % dari jumlah seluruh aset untuk akun-akun aset; b. 5 % dari jumlah seluruh kewajiban untuk akun-akun kewajiban; c. 5 % dari jumlah seluruh ekuitas untuk akun-akun ekuitas; d. 10 % dari pendapatan untuk akun-akun laba rugi; dan e. 10 % dari laba sebelum pajak untuk pengaruh suatu peristiwa atau transaksi seperti perubahan estimasi akuntansi.

c. 5% of total equity for equity accounts; d. 10% of revenues for profit and loss accounts; and e. 10% of income before taxes for the effect of an event or transaction such as change in accounting estimates.

9

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.d. Transaksi dan Saldo dalam Mata Uang Asing Mata uang pelaporan yang digunakan dalam penyusunan laporan keuangan ini adalah Rupiah. Transaksi-transaksi dalam mata uang asing dijabarkan dalam mata uang Rupiah dengan menggunakan kurs pada tanggal transaksi.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.d.Foreign Currency Transactions The reporting currency used in the preparation of these financial statements is Indonesian Rupiah, which is the Company's functional currency .Transactions involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made. Gains or losses arising from transactions of monetary assets and liabilities denominated in foreign exchenge currencies are presented in the current year's statement of comprehensive income.

Keuntungan atau kerugian yang timbul sebagai akibat dari penjabaran aset dan liabilitas keuangan dalam mata uang asing diakui dalam laporan laba rugi komprehensif tahun berjalan. 2.e. Aset dan Liabilitas Keuangan Aset Keuangan Aset keuangan dikelompokkan menjadi 4 kategori, yaitu (i) aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi, (ii) pinjaman yang diberikan dan piutang, (iii) investasi yang dimiliki hingga jatuh tempo serta (iv) aset keuangan yang tersedia untuk dijual. Klasifikasi ini tergantung dari tujuan perolehan aset keuangan tersebut pada saat awal pengakuannya. (i) Aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi Aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi adalah aset keuangan yang ditujukan untuk diperdagangkan. Aset keuangan diklasifikasikan sebagai diperdagangkan jika diperoleh terutama untuk tujuan dijual atau dibeli kembali dalam waktu dekat dan terdapat bukti mengenai pola ambil untung dalam jangka pendek. Keuntungan/kerugian yang timbul dari perubahan nilai wajar diakui dalam laporan laba rugi komprehensif. Derivatif diklasifikasikan sebagai aset diperdagangkan kecuali telah ditetapkan dan efektif sebagai instrumen lindung nilai.

2.e. Financial Assets and Liabilities Financial Assets Financial assets are classified into 4 categories: (i) financial assets measured at fair value through profit or loss, (ii) loans and receivables, (iii) held-to-maturity financial assets, and (iv) available-for-sale financial assets.This classification depends on the purpose of acquisition of the financial assets at initial recognition.

Pada tahun 2014 dan 2013, Perusahaan tidak mempunyai aset keuangan yang diklasifikasikan sebagai aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi.

In 2014 and 2013, The Company has no financial asset classified as financial assets measured at fair value through profit or loss.

(ii) Pinjaman yang diberikan dan piutang Pinjaman yang diberikan dan piutang adalah aset keuangan non-derivatif dengan pembayaran tetap atau telah ditentukan dan tidak mempunyai kuotasi di pasar aktif. Pada saat pengakuan awal, pinjaman yang diberikan dan piutang diakui pada nilai wajarnya ditambah biaya transaksi dan selanjutnya diukur pada biaya perolehan diamortisasi dengan menggunakan metode suku bunga efektif.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus transaction costs, and subsequently measured at amortized cost using the effective interest rate method.

Penyisihan penurunan nilai piutang dibentuk berdasarkan evaluasi manajemen terhadap tingkat ketertagihan saldo piutang. Pencatatan atas penyisihan penurunan nilai piutang dilakukan pada setiap triwulan. Piutang dihapuskan dalam periode ketika piutang tersebut dipastikan tidak dapat tertagih.

Provision for impairment of receivables is determined based on management's evaluation of the collectability of accounts receivable balances. This provision is recorded on a quarterly basis. Receivables are written off in the period when they are determined to be uncollectible.

Pada tahun 2014 dan 2013, Perusahaan mempunyai kas dan setara kas, piutang usaha, dan piutang lain-lain yang diklasifikasikan sebagai pinjaman yang diberikan dan piutang.

In 2014 and 2013, the Company has cash and cash equivalent, trade receivables, and other receivables that are classifies as loans and receivables.

(i) Financial assets measured at fair value through profit or loss Financial assets measured at fair value through profit or loss are financial assets which are held for trading. A financial asset is classified as trading if it obtained particularly for the purpose of selling or repurchasing it in the near term, and for which there is evidence of recent actual pattern of short-term profit taking. Gains or Losses arising from changes in fair value are recognized in the statement of comprehensive income. Derivatives are also categorized as held-for-trading, unless they are designated and effective as hedging instruments.

10

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.e Aset dan Liabilitas Keuangan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.e. Financial Assets and Liabilities (continued)

(iii) Investasi yang dimiliki hingga jatuh tempo Investasi yang dimiliki hingga jatuh tempo adalah investasi non-derivatif dengan pembayaran tetap atau telah ditentukan dan jatuh temponya telah ditetapkan, dimana Perusahaan mempunyai intensi positif dan kemampuan untuk memiliki aset keuangan tersebut hingga jatuh tempo, selain: (a Investasi yang pada saat pengakuan awal ditetapkan sebagai aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi; (b Investasi yang ditetapkan dalam kelompok tersedia untuk dijual; dan (c)Investasi yang memenuhi definisi pinjaman yang diberikan dan piutang.

(iii) Held-to-maturity Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities for which the Company’s management has the positive intention and ability to hold to maturity, other than:

Pada saat pengakuan awal, investasi yang dimiliki hingga jatuh tempo diakui pada nilai wajarnya ditambah biaya transaksi, dan selanjutnya diukur pada biaya perolehan diamortisasi dengan menggunakan metode suku bunga efektif.

At the time of initial recognition, held-to-maturity investments are recognized at fair value plus transaction costs, and subsequently measured at amortized cost using the effective interest method.

Pada tahun 2014 dan 2013, Perusahaan tidak mempunyai aset keuangan yang diklasifikasikan sebagai investasi dimiliki hingga jatuh tempo.

In 2014 and 2013, the Company has no financial assets classified as held-to-maturity.

(iv) Aset keuangan tersedia untuk dijual Aset keuangan tersedia untuk dijual adalah aset keuangan non-derivatif yang ditetapkan untuk dimiliki selama periode yang tidak ditentukan, dimana akan dijual dalam rangka pemenuhan likuiditas atau perubahan suku bunga, valuta asing atau yang tidak diklasifikasikan sebagai pinjaman yang diberikan atau piutang, investasi yang diklasifikasikan sebagai dimiliki hingga jatuh tempo atau aset keuangan yang diukur pada nilai wajar melalui laporan laba rugi.

(iv) Available for sale Available-for-sale financial assets are non-derivative financial assets that are intended to be held for indefinite period of time, which might be sold in response to needs for liquidity or changes in interest rates, foreign exchange or are not classified as loans or receivables, investments that are classified as held to maturity, or financial assets at fair value through profit or loss.

Pada saat pengakuan awal, aset keuangan tersedia untuk dijual diakui pada nilai wajarnya ditambah biaya transaksi, dan selanjutnya diukur pada nilai wajarnya. Keuntungan/kerugian yang belum direalisasi dari perubahan nilai wajar diakui sebagai pendapatan (beban) komprehensif lain dan disajikan tersendiri pada bagian ekuitas hingga terealisasi, kecuali untuk kerugian penurunan nilai dibawah nilai perolehan yang bersifat nontemporer dan keuntungan (kerugian) yang timbul dari perubahan nilai tukar.

At initial recognition, available for sale of financial assets are recognized at fair value plus transaction costs, and subsequently measured at fair value. Gains/losses arising from changes in fair value are recognized as other comprehensive income (expense) and presented separately as part of equity until realized, except for impairment losses below the value of the acquisition of a non-temporary and gains (losses) arising from changes in the value of exchange.

Pada tahun 2014, Perusahaan mempunyai aset reksadana penyertaan terbatas yang diklasifikasikan sebagai aset keuangan tersedia untuk dijual.

In 2014, the Company has investment in limited investment mutual fund classified as available-for-sale financial assets.

Liabilitas Keuangan Liabilitas keuangan dikelompokkan ke dalam kategori : (i) Liabilitas keuangan yang diukur pada nilai wajar melalui laporan laba rugi.

Financial Liabilities Financial Liabilities are classified in categories of : (i) Financial liabilities measured at fair value through profit or loss.

Liabilitas keuangan yang diukur pada nilai wajar melalui laporan laba rugi adalah liabilitas keuangan yang ditujukan untuk diperdagangkan.

Financial liabilities at fair value through profit or loss are financial liabilities held for trading.

(a) investments which are designated as financial assets measured at fair value through profit or loss at initial recognition; (b) investments that are designated as available for sale category; and (c) investments that meet the definition of loans and receivables.

11

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.e Aset dan Liabilitas Keuangan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.e. Financial Assets and Liabilities (continued)

Liabilitas Keuangan (lanjutan) Liabilitas keuangan diklasifikasikan sebagai diperdagangkan jika diperoleh terutama untuk tujuan dijual atau dibeli kembali dalam waktu dekat dan terdapat bukti mengenai pola ambil untung dalam jangka pendek. Derivatif diklasifikasikan sebagai liabilitas diperdagangkan kecuali ditetapkan dan efektif sebagai instrumen lindung nilai.

Financial Liabilities (continued) Financial liabilities are classified as held for trading if acquired particularly for the purpose of selling or repurchasing in the near future and there is evidence of a pattern of short-term profit taking. Derivatives are classified as liabilities for trading unless they are designated and effective as hedging instruments.

Pada tahun 2014 dan 2013 Perusahaan tidak memiliki liabilitas keuangan yang diukur pada nilai wajar melalui laporan laba rugi.

In 2014 and 2013, the Company has no financial liabilities measured at fair value through profit or loss.

(ii) Liabilitas keuangan yang diukur dengan biaya perolehan diamortisasi. Liabilitas keuangan yang tidak diklasifikasikan sebagai liabilitas keuangan yang diukur pada nilai wajar melalui laporan laba rugi dikategorikan dan diukur pada biaya perolehan diamortisasi dengan menggunakan metode suku bunga efektif.

(ii) Financial liabilities measured at amortized cost. Financial liabilities that are not classified as financial liabilities at fair value through profit and loss fall into this category and measured at amortized cost using the effective interest rate method.

Pada tahun 2014 dan 2013, Perusahaan mempunyai utang usaha, biaya masih harus dibayar, dan liabilitas lancar lainnya yang diklasifikasikan sebagai liabilitas keuangan yang diukur dengan biaya perolehan

In 2014 and 2013, the Company has trade payables, accrued expenses and other current liabilities are classified as financial liabilities at amortized cost.

Estimasi nilai wajar Nilai wajar instrumen keuangan yang diperdagangkan di pasar aktif ditentukan berdasarkan harga pasar yang berlaku pada tanggal pelaporan.

Estimation of Fair Value The fair value for financial instruments that are traded in active markets is determined based on quoted market price at the reporting date.

Untuk instrumen keuangan yang tidak diperdagangkan dalam pasar aktif, nilai wajarnya ditentukan dengan menggunakan teknik penilaian tertentu yang meliputi transaksi pasar wajar terkini, referensi nilai wajar instrumen keuangan lainnya yang serupa dan analisis arus kas diskonto atau model penilaian lainnya.

The fair value of financial instruments that are not traded in active markets is determined using appropiate valuation techniques such as current fair market transactions, reference to the fair value of other financial instruments that are substantially similar, a discounted cash flow analysis or other valuation models.

Penghentian Pengakuan Penghentian pengakuan aset keuangan dilakukan ketika hak kontraktual atas arus kas yang berasal dari aset keuangan berakhir, atau ketika aset keuangan tersebut telah ditransfer dan secara substansial seluruh risiko dan manfaat atas kepemilikan aset tersebut telah ditransfer. Jika secara substansial seluruh risiko dan manfaat tidak ditransfer, maka Perusahaan melakukan evaluasi untuk memastikan bahwa keterlibatan berkelanjutan atas kendali yang masih dimiliki tidak mencegah penghentian pengakuan. Liabilitas keuangan dihentikan pengakuannya ketika liabilitas dilepaskan, dibatalkan atau kadaluwarsa.

Termination of Recognition Financial assets are derecognized when the contractual rights to receive cash flows from these assets have ceased, or when the assets have transferred and substantially all risks and benefits of the ownership of the assets are transferred. If, all the risks and benefits have not substantially transferred, the Company conducts an evaluation to ensure the ongoing involvement of the existing controls does not prevent the termination of recognition. Financial liabilities are derecognized when they have been redeemed or expired.

Penurunan Nilai Aset Keuangan Pada setiap tanggal pelaporan, Perusahaan mengevaluasi apakah terdapat bukti obyektif bahwa aset keuangan mengalami penurunan nilai. Aset keuangan diturunkan nilainya, dan kerugian penurunan nilai diakui jika, dan hanya jika, terdapat bukti obyektif bahwa penurunan nilai terjadi sebagai akibat dari adanya peristiwa merugikan yang terjadi setelah pengakuan awal aset keuangan tersebut.

Impairment of Financial Assets At each reporting date, the Company evaluates whether there is any objective evidence that a financial asset is impaired. A financial asset is impaired and an impairment loss is recognized if, and only if, there is any objective evidence that the impairment occured as the result of one or more loss events occurred after the initial recognition.

12

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.e Aset dan Liabilitas Keuangan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.e. Financial Assets and Liabilities (continued)

Penurunan Nilai Aset Keuangan (lanjutan) Peristiwa yang merugikan tersebut dapat diestimasi secara handal dan berdampak negatif pada estimasi arus kas masa depan dari aset keuangan yang bersangkutan.

Impairment of Financial Assets (continued) The loss events can be estimated reliably and have adverse impact on estimated future cash flows for the financial assets

Aset keuangan yang dicatat berdasarkan biaya perolehan diamortisasi penurunan nilainya diukur dari selisih antara nilai tercatat dan nilai kini estimasi arus kas di masa depan yang didiskontokan dengan menggunakan suku bunga efektif.

Impairment of a financial asset carried at amortized cost is measured as the difference between its carrying amount and the present value of estimated future cash flows discounted using the effective interest rate.

2.f. Transaksi Dengan Pihak-pihak Berelasi Perusahaan mempunyai transaksi dengan pihak-pihak berelasi. Definisi pihak-pihak berelasi adalah sesuai dengan yang diatur dalam PSAK No. 7 (Revisi 2010) "Pengungkapan Pihak-Pihak Berelasi". Sifat hubungan dengan pihak-pihak berelasi antara lain sebagai berikut: ● Pemerintah RI yang diwakili oleh Menteri BUMN yang merupakan pemegang saham Perusahaan, Perusahaan dan BUMN lainnya yang memiliki hubungan afiliasi melalui Penyertaan Modal Pemerintah. ● Perusahaan menempatkan dana dan memiliki pinjaman pada bank yang dimiliki oleh Pemerintah atau dari bank yang dimiliki oleh BUMN/D dengan persyaratan dan tingkat bunga normal sebagaimana yang berlaku untuk nasabah pihak ketiga.

2.f. Transactions with Related Parties The Company has transactions with certain parties which is considered a related party transaction as defined under PSAK No. 7 (Revised 2010) “Related Party Disclosures”.

● Mempunyai anggota, pengurus yang sama dengan Entitas Anak (komisaris atau Direksi) ● Perusahaan mengadakan perjanjian dalam rangka usaha dengan BUMN lain maupun Entitas Anak BUMN serta badan/lembaga-lembaga Pemerintah.

● The Company has same board members (commissioners or directors) as its subsidiaries. ● The Company entered into business agreements with other stateowned entities and their subsidiaries, and Government institutions or agencies .

2.g. Persediaan 1. Biaya Perolehan Persediaan Biaya perolehan persediaan meliputi harga beli, PPN masukan yang tidak dapat dikreditkan, biaya konversi, dan biaya lainnya yang timbul sampai persediaan dalam kondisi dan tempat yang siap untuk dijual atau dipakai, kecuali untuk persediaan produk dalam proses dicatat sebesar prosentase beban pokok barang dalam proses terhadap beban pokok barang jadi, yaitu : ● Produk dalam proses untuk barang curah (bulk) penilaiannya disamakan dengan yang akan diformulasi menjadi produk akhir atau yang akan dijual.

2.g.Inventories 1. Inventory Cost Inventories are stated at acquisition cost, which includes such purchase price, the VAT that cannot be credited, conversion costs, and other costs incurred in bringing inventories to present location and conditions, except for inventories of products in process which are recorded at the percentage of cost of goods in process on cost of finished goods, those are : ● The valuation of work in process of bulk goods (bulk) is measured equivalent to which will be formulated to final products or products to be sold.

● Produk dalam proses untuk produk akhir dilakukan berdasarkan rata-rata beban pokok produksi (HPP) tanpa bahan kemasan terhadap HPP Vaksin terapan tahun 2009/2010 dan 2010/2011 dikurangi prosentase produk reject saat dikemas, sebagaimana tertuang dalam Nota Dinas Direksi No.07841/DIR/XII/2010 tanggal 8 Desember 2010.

● Work in process for end products are valued based on the average of production cost without package materials to the applied production cost of Vaccines in 2009/2010 and 2010/2011 less the percentage of reject products incurred as packaging, as stated in the Directors Memorandum No.07841/DIR/XII/2010 dated December 8, 2010.

Nature of the relationship with related parties are as follows: ● Government of the Republic of Indonesia, represented by the Minister for State-Owned Enterprises, which is a shareholder of the Company, and other state-owned Companies that have affiliated relationships through government investments. ● The Company puts its funds and has loans from banks owned by the government or from staate-owned banks with normal terms and interest rates as applicable to third party customers.

13

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.g. Persediaan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.g.Inventories (continued)

2. Persediaan Bahan Baku, Penolong dan Perlengkapan Persediaan bahan baku, penolong dan perlengkapan dinyatakan berdasarkan nilai terendah antara biaya perolehan dan nilai realisasi bersih (the lower of cost or net realizable value) yang ditentukan dengan menggunakan metode rata-rata bergerak.

2. Raw Materials, Auxiliary Materials and Supplies Raw and auxiliary materials, and supplies are stated at the lower of cost or net realizable value, which are determined using the moving average method.

3. Persediaan Produk Dalam Proses Perhitungan persediaan produk dalam proses di hitung pada setiap triwulan berdasarkan beban pokok produksi terapan dan pada akhir tahun buku dinyatakan sebesar beban pokok produksi dengan menggunakan metode ratarata sederhana. Persediaan barang dalam proses terdiri dari : ● Bulk hasil produksi yang telah lulus uji (quality control) dengan kondisi siap untuk diformulasi menjadi produk akhir dan siap untuk dijual sebelum dilakukan pengemasan.

3. Work In Process Work in process inventories are computed at quarterly basis based on the applied production cost. At the end of book year they are stated at production cost using a simple average method .

● Produk akhir hasil produksi yang telah dikemas dalam wadah (botol/ampul/vial/uniject blank) dan telah lulus uji (quality control) sebelum diberi etiket, leaflet dan dimasukkan ke dalam dus.

● Final products which have been packaged in bottle, ampul, vial, blank uniject and passed the quality control tests before putting label, brouchure and loading into the boxes.

4. Persediaan Produk Jadi ● Persediaan Produk Hasil Produksi Sendiri Persediaan produk hasil produksi sendiri dinyatakan sebesar nilai terendah antara biaya perolehan dan nilai realisasi bersih (the lower of cost or net realizable value). Biaya perolehan produk hasil produksi sendiri adalah biaya pokok produksi yang ditentukan dengan metode rata-rata sederhana.

4. Finished Goods ● Products from the Company's Own Production Inventory of products from its own production is stated at the lower of cost or net realizable value. The cost represents cost of production which is determined using the simple average method .

● Persediaan Barang Dagangan Persediaan barang dagangan terdiri dari barang jadi yang dibeli secara lokal maupun impor dinyatakan sebesar nilai terendah antara biaya perolehan dan nilai realisasi bersih. Biaya perolehan ditentukan dengan menggunakan metode rata-rata bergerak (moving average method).

● Merchandise Products Merchandise inventory of finished goods purchased from both domestic and imported is stated at the lower of cost or net realizable value. The cost is determined using the moving average method.

5. Persediaan Tidak Produktif Persediaan usang secara teknologi atau tidak dapat dipergunakan lagi karena rusak, dipindahkan ke kelompok Aset Tidak Lancar Lainnya pada akun Persediaan Tidak Produktif dan dihapusbukukan setelah mendapat persetujuan dari Dewan Komisaris atau Pemegang Saham dalam RUPS.

5. Non Productive Inventory Technologically obsolete or damaged unused inventory is transferred to other non-current assets as ”Non Productive Inventory”, and is written-off under approval of Board of Commissioners or Shareholders in General Meeting of Shareholders.

6. Persediaan Dalam Perjalanan Persediaan dalam perjalanan merupakan persediaan bahan baku/bahan penolong/perlengkapan/barang dagangan yang pada akhir periode pelaporan barangnya sudah diterima/tiba di pelabuhan dan sesuai syarat penyerahan barang sudah menjadi milik Perusahaan. Khusus untuk barang yang berasal dari impor dibuat Nota Perhitungan Barang Impor (NPI) sementara sebagai dasar mencatat nilai "Persediaan dalam Perjalanan".

6. Inventory in Transit Inventories in transit are raw materials/auxiliaries/ supplies/merchandises that have been arrived/received at the port and. according to the delivery terms, have to be the belongings of the Company. Particularly for imported goods are made a temporarily Memorandum of the Calculation of Imported Goods as the basis for recording the value of "Inventories in Transit".

Work in process inventories consist of : ● Bulk products which are already passed the quality control tests and ready to be formulated and converted to finished goods inventory and available for sale, prior to packing process.

14

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.g. Persediaan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.g.Inventories (continued)

7. Persediaan dalam Karantina Persediaan dalam karantina merupakan persediaan bahan baku/bahan penolong/perlengkapan/barang dagangan yang pada akhir periode pelaporan barangnya sudah diterima/tiba di Perusahaan, tetapi belum memenuhi syarat penyerahan barang karena belum lulus uji.

7. Inventory in quarantine Inventories in quarantine are raw materials/auxiliary materials/supplies/merchandises that have been received at reporting date but have not eligible yet because they have not passed the tests.

8. Penyisihan Nilai Persediaan Persediaan barang yang kadaluarsa dan rusak dibebankan ke laporan laba rugi pada saat terjadinya. Mulai tahun 2009 berdasarkan Nota Dinas Direksi No. 02179/DIR/III/2009 tanggal 25 Maret 2009 tentang Penyisihan Nilai Persediaan, dilakukan penyisihan nilai persediaan dengan besaran sebagai berikut :

8. Provision for Inventory Impairment Expired and damaged inventories are directly charged to current statement of comprehensive income. Since 2009, based on Director’s Memoradum No. 02179/DIR/III/2009 dated March 25, 2009 regarding the Provision for Inventory Impairment, the Company makes provision for its inventories as follows:

Jenis Persediaan/ Type of Inventory Fast Moving Slow Moving Surplus Dead Stock Obselete Expired

Persentase Penyisihan/ Percentage of Provision 0% 10% 20% 20% 100% 100%

2.h. Aset Tetap 1. Aset Tetap pemilikan langsung dinyatakan sebesar biaya perolehan dikurangi akumulasi penyusutan dan penurunan nilai. Penyusutan untuk golongan bangunan dihitung dengan menggunakan metode garis lurus (straight-line method ) sedangkan penyusutan untuk golongan bukan bangunan dihitung menggunakan metode saldo menurun (diminishing balance method ) sebagai berikut: Kelompok Aset Tetap Bangunan Bangunan Tidak Permanen Rumah Dinas Inventaris Mesin Kelompok 2 Kelompok 3 Inventaris Utility Inventaris Pabrik Kelompok 2 Kelompok 3 Inventaris Kantor Kelompok 1 Kelompok 2 Kendaraan Bermotor Kelompok 1 Kelompok 2

2.h.Fixed Assets 1. Direct ownership fixed assets are stated at acquisition cost less accumulated depreciation and impairment. Depreciation of buildings is computed using the straight-line method, whereas depreciation for non-buildings is computed using the diminishing balance method, as follows:

Metode Penyusutan/ Depreciation Method Garis Lurus Garis Lurus Garis Lurus

Manfaat Useful Life 20 tahun 10 tahun 20 tahun

Tarip Penyusutan/ Depreciation Rate 5% 10% 5%

Saldo Menurun Saldo Menurun Saldo Menurun

8 tahun 16 tahun 16 tahun

25% 12,50%

Saldo Menurun Saldo Menurun

8 tahun 16 tahun

25% 12,50%

Saldo Menurun Saldo Menurun

4 tahun 8 tahun

50% 25%

Saldo Menurun Saldo Menurun

4 tahun 8 tahun

50% 25%

15

Fixed Asset Category Building Non Permanent Building Official Housing Machinery Group 2 Group 3 Utility Equipment Factory Equipment Group 2 Group 3 Office Equipment Group 1 Group 2 Vehicles Group 1 Group 1

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.h. Aset Tetap (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.h.Fixed Assets (continued)

2. Tanah dinyatakan sebesar biaya perolehan dan tidak disusutkan. 3. Biaya pemeliharaan dan perbaikan dibebankan ke dalam laporan laba rugi komprehensif pada saat terjadinya. Pengeluaran dalam jumlah yang material setelah perolehan awal suatu aset dan dapat meningkatkan manfaat keekonomian di masa yang akan datang, dikapitalisasi. 4. Aset tetap yang tidak digunakan lagi atau rusak dikeluarkan dari kelompok aset tetap, dan keuntungan atau kerugian yang timbul diakui dalam laporan laba rugi komprehensif. 5. Aset tetap dalam penyelesaian disajikan tersendiri didalam kelompok aset tetap dan dinyatakan sebesar biaya perolehan. Semua biaya, termasuk biaya pinjaman yang memenuhi kriteria sebagai biaya yang dapat dikapitalisasi, yang terjadi sehubungan dengan pembangunan aset dikapitalisasi sebagai bagian dari biaya perolehan aset tetap dalam penyelesaian. Akumulasi biaya pembangunan dipindahkan ke aset tetap pada saat aset tersebut selesai dikerjakan atau siap digunakan.

2. Lands are stated at cost and not depreciated. 3. Maintenance and repair expenses are charged to the statement of comprehensive income as incurred. Subsequent material expenditures are capitalized when they are probable that economic benefits of the assets will flow to the Company in the future. 4. Unused or damaged fixed assets are disposed from fixed assets section, and gains or losses incurred are reported in the statement of comprehensive income. 5. Fixed assets in construction are presented separately as part of fixed assets and are stated at cost. All costs of construction, including borrowing costs of loans used in financing the construction of a qualifying asset, are capitalized as part of cost of the assets. The accumulated costs of construction are reclassified to the respective fixed asset when it is complete or ready for use.

2.i. Aset Takberwujud 1. Biaya yang berhubungan dengan penyempurnaan sistem dan prosedur yang dapat diidentifikasi, dikendalikan serta memberikan manfaat ekonomi yang melebihi biayanya dalam jangka waktu lebih dari satu tahun, diakui sebagai aset takberwujud. Biaya ini diamortisasi dengan metode garis lurus selama masa manfaat 4 (empat) tahun. 2. Biaya pengembangan upstream vaksin flu yaitu biaya yang terkait dengan penemuan riset atau pengetahuan produksi vaksin flu yang berbasis telur dari penyiapan telur, pembuatan bulk , uji klinis sampai registrasi dari produk tersebut yang dilakukan oleh pihak eksternal. Biaya pengembangan upstream vaksin flu diakui sebagai aset takberwujud dan diamortisasi dengan metode garis lurus selama masa manfaat 8 (delapan) tahun.

2.i. Intangible Assets 1. Costs associated with refinement of systems and procedures that can be identified, controlled and provide economic benefits for more than one year are recognized as intangible assets. These costs are amortized using the straight-line method over the estimated useful life of 4 years.

2.j. Pengakuan Pendapatan dan Beban Pendapatan diakui pada saat terjadi transaksi yaitu pada saat penyerahan barang atau jasa kepada pelanggan. Beban diakui pada saat terjadinya (metode akrual).

2.j. Revenue and Expense Recognition Revenues are recognized when the deliver of goods or services to customers have been completed. Expenses are recognized as incurred (the accrual method).

2.k. Beban Penelitian, Pengembangan dan Surveilans Biaya yang dikeluarkan dalam tahapan penelitian atau tahapan penelitian pada proyek internal termasuk pemantauan produk yang sudah dijual diakui sebagai beban pada saat terjadinya.

2.k. Research, Development and Surveillance Expenses Expenditures in research steps on internal research projects including monitoring of sold products are expensed as incurred.

2.l. Pajak Penghasilan Seluruh perbedaan temporer antara jumlah tercatat aset dan liabilitas dengan dasar pengenaan pajaknya diakui sebagai pajak tangguhan dengan metode liabilitas. Pajak tangguhan diukur dengan tarif pajak yang berlaku saat ini.

2.l. Income Tax All temporary differences between the tax based of assets and liabilities and their carrying amounts are recognized as deferred taxes using liability method. Deferred tax is measured by enacted tax rate.

2. Development costs of upstream flu vaccines represent the costs associated with research findings or knowledge of production of egg-based flu vaccines from egg preparation, bulk manufacture, clinical trials to registration of such products which performed by external parties. The development costs of upstream flu vaccines are recognized as intangible assets and will be amortized using straight line method over the useful life of 8 (eight) years.

16

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.l. Pajak Penghasilan (lanjutan)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2.l. Income Tax (continued)

Pajak kini diakui berdasarkan taksiran laba kena pajak untuk tahun yang bersangkutan sesuai dengan peraturan perpajakan yang berlaku.

Current tax is recognized based on taxable income for the year, in accordance with current tax regulations.

Perubahan terhadap liabilitas perpajakan diakui pada saat Perusahaan menerima Surat Ketetapan Pajak (SKP) atau, jika Perusahaan mengajukan keberatan, pada saat keputusan atas keberatan tersebut telah ditetapkan.

Corrections of tax liabilities are recognized at the time when tax assessment letter (SKP) is received, or if the Company appealed, when the result of the appeal is determined.

2.m Imbalan Kerja Perusahaan membukukan imbalan manfaat karyawan untuk karyawan sesuai dengan Undang-Undang Tenaga Kerja No.13 tahun 2003. Perhitungan imbalan manfaat karyawan menggunakan metode Projected Unit Credit , sesuai dengan PSAK 24 (Revisi 2010) tentang Imbalan Kerja.

2.mEmployee Benefits The Company records employee benefits in accordance with labor law No.13 of 2003. Computation of the employee benefits using the Projected Unit Credit Method, in accordance with PSAK 24 (Revised 2010) "Employee Benefits" .

Akumulasi keuntungan dan kerugian aktuarial bersih yang belum diakui yang melebihi jumlah lebih besar diantara 10% dari nilai kini pasti dan 10% nilal wajar aset program diakui dengan metode garis lurus selama rata-rata sisa masa kerja yang diperkirakan dari karyawan dalam program tersebut.

Net cumulative unrecognized actuarial gains and losses that exceed the greater of 10% of the present value of the defined benefit obligation and 10% of the fair value of any plan assets are recognized on a straight-line basis over the expected average remaining working lives of the employees.

Biaya jasa lalu dibebankan langsung apabila imbalan tersebut menjadi hak atau vested , dan sebaliknya akan diakui sebagai beban dengan metode garis lurus selama periode rata-rata sampai Imbalan tersebut vested .

Past service costs are charged directly if the benefits become vested, on the other hand it will be recognized as expense using straight line method over the average period until the benefits become vested.

Selain imbalan manfaat karyawan, perusahaan juga menyelenggarakan program pensiun untuk seluruh karyawan tetap yang memenuhi syarat dan karyawan kontrak. Program ini memberikan imbalan manfaat karyawan berdasarkan penghasilan dasar pensiun dan masa kerja karyawan.

In addition to employee benefits, the Company also provides a pension plan for all eligible permanent employees and contract workers. This program provides employee benefits based on pension basic income and working period of the employees.

Dana pensiun ini dikelola oleh Dana Pensiun Lembaga Keuangan (DPLK) PT Asuransi Jiwasraya. Pendanaan dana pensiun berdasarkan ketentuan terakhir yang dituangkan dalam Perjanjian Kerja Bersama antara Perusahaan dengan Himpunan Karyawan (HIKA) periode 2013-2014 pasal 66, yaitu 15% dari gaji dasar dengan komposisi 60% ditanggung oleh pemberi kerja sedangkan 40% ditanggung karyawan masing-masing.

The pension plan is managed by the Financial Institution of Pension Plan (DPLK) PT Asuransi Jiwasraya. The pension plan funding is based on the latest decree which is stipulated in the agreement between the Company and the Association of the Company's Employees (HIKA) for the period of 2012-2014 article 66, that is 15% from basic salary with the composition of 60% of which is supported by the Employer and the other 40% is charged to the respective employee.

2.n. Hibah Sejak 1 Januari 2011, Perusahaan melakukan penerapan lebih awal terhadap PSAK 61, “Akuntansi Hibah Pemerintah dan Pengungkapan Bantuan Pemerintah” sehubungan dengan diberlakukannya PPSAK 6, “Pencabutan PSAK 21: Akuntansi Ekuitas, ISAK 1: Penentuan Harga Pasar Dividen, ISAK 2: Penyajian Modal Dalam Neraca dan Piutang Kepada Pemegang Saham dan ISAK 3: Akuntansi Atas Pemberian Sumbangan atau Bantuan”. Penerapan PSAK ini dilakukan secara retrospektif. Hibah terkait dengan aset, termasuk hibah nonmoneter pada nilai wajar, disajikan dalam laporan posisi keuangan sebagai penghasilan ditangguhkan atau dicatat sebagai pengurang jumlah tercatat aset. Hibah terkait dengan penghasilan disajikan dalam laporan laba rugi komprehensif dalam pos umum seperti “penghasilan lain‐lain” atau alternatif pengurang dalam beban terkait.

2.n.Grant Since January 1, 2011, the Company applied early the PSAK 61, "Accounting for Government Grants and Disclosure of Government Assistance" in relation to the enforcement of PPSAK 6, "Revocation of PSAK 21 "Accounting for Equity", ISAK 1 "Determination of Market Price Dividend", ISAK 2: "Presentation of Capital in the Balance Sheet and Receivable to Shareholders" and ISAK 3: "Accounting for Donations or Grant". The application of those SFASs are done retrospectively. Grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position as deferred income or recorded as reduction of the carrying amount of the asset. Grants related to income are presented in the statement of comprehensive income in a general heading such as "other income" or as reduction of the related costs.

17

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

2.

(Expressed in Rupiah, unless otherwise stated)

IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2.n. Hibah (lanjutan) Hibah diakui dalam laporan laba rugi dengan dasar yang sistematis selama periode entitas mengakui sebagai beban atas biaya terkait yang dimaksudkan akan dikompensasikan dengan hibah.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont inued) 2.n.Grant (continued) Grants are recognized in statement of comprehensive income on a systematic basis over the period of the entity recognizes as an expense over the related costs which are intended to be compensated with grants.

2.o. Penggunaan Estimasi Penyusunan laporan keuangan sesuai dengan prinsip yang berlaku umum, mensyaratkan Perusahaan untuk memakai estimasi-estimasi dan asumsi-asumsi yang mempengaruhi jumlah yang dilaporkan. Sehubungan dengan ketidakpastian yang melekat dalam pembuatan estimasi, hasil sebenarnya yang dilaporkan dalam periode mendatang mungkin didasarkan atas jumlah-jumlah yang berbeda dari estimasi tersebut.

2.o.Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in Indonesia requires the Company to make estimates and assumptions that affects the amounts reported in the financial statements. Due to inherent uncertainty in determination of estimation, the actual amount reported in the future might possibly be different from these estimates.

3. KAS DAN SETARA KAS

3. CASH AND CASH EQUIVALENTS 2014

Kas Bank Pihak Berelasi Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk PT Bank Jabar Banten Tbk Lembaga Pembiayaan Ekspor Indonesia Dolar Amerika Serikat PT Bank Mandiri (Persero) Tbk 2014 : USD 10,747,820.13 2013 : USD 7,385,907.87 PT Bank Negara Indonesia (Persero) Tbk 2014 : USD 45,103.84 2013 : USD 45,011.43 Lembaga Pembiayaan Ekspor Indonesia 2014 : USD 19,881.75 2013: USD 47,610.51 Euro PT Bank Mandiri (Persero) Tbk 2014 : EUR 1,665,476.75 2013 : EUR 320,548.40 Sub Jumlah Kas dan Bank Setara Kas Pihak Berelasi Deposit on call - Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk Deposito Berjangka - Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk PT Bank BRI (Persero) Tbk PT Bank BTN (Persero) Tbk PT Bank Jabar Banten Tbk Jumlah dipindahkan

2013

129.553.541

74.578.894

13.599.595.163 1.678.876.808 557.995.142 172.657.508

11.915.983.841 1.524.780.860 3.415.831.663 137.029.666

133.702.882.417 -

90.026.831.027

561.091.770 -

548.644.320

247.328.970 -

580.324.507

25.204.092.682 175.724.520.459 175.854.074.000

5.392.085.678 113.541.511.562 113.616.090.456

50.000.000.000 30.000.000.000

5.000.000.000

550.000.000.000 100.000.000.000 40.000.000.000 770.000.000.000

430.000.000.000 70.000.000.000 40.000.000.000 30.000.000.000 50.000.000.000 625.000.000.000

18

Cash Bank Related Parties Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk PT Bank Jabar Banten Tbk Lembaga Pembiayaan Ekspor Indonesia United States Dollar PT Bank Mandiri (Persero) Tbk 2014 : USD 10,747,820.13 2013 : USD 7,385,907.87 PT Bank Negara Indonesia (Persero) Tbk 2014 : USD 45,103.84 2013 : USD 45,011.43 Lembaga Pembiayaan Ekspor Indonesia 2014 : USD 19,881.75 2013: USD 47,610.51 Euro PT Bank Mandiri (Persero) Tbk 2014 : EUR 1,665,476.75 2013 : EUR 320,548.40 Sub Total Cash and Bank Cash Equivalents Related Parties Deposits On Call - Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk Time Deposits - Rupiah PT Bank Mandiri (Persero) Tbk PT Bank Negara Indonesia (Persero) Tbk PT Bank BRI (Persero) Tbk PT Bank BTN (Persero) Tbk PT Bank Jabar Banten Tbk Carried Forward

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

3. CASH AND CASH EQUIVALENTS (continued)

3. KAS DAN SETARA KAS (lanjutan) 2014 Sub Jumlah Kas dan Bank Setara Kas - pindahan Deposito Berjangka - Dolar Amerika Serikat PT Bank Mandiri (Persero) Tbk 2014: USD 471,300 2013: USD 5,471,300 PT Bank Jabar Banten Tbk 2013: USD 5,000,000 Pihak Ketiga Deposito Berjangka - Rupiah PT Bank Muamalat Sub Jumlah Setara Kas Jumlah Kas dan Setara Kas Tingkat Bunga Deposito Berjangka : Deposit On Call - Rupiah Deposito Berjangka : Rupiah US Dolar Nisbah Bagi Hasil Deposito Bank

2013

175.854.074.000

113.616.090.456

770.000.000.000

625.000.000.000

5.862.972.000 -

66.689.675.700

-

60.945.000.000

20.000.000.000 795.862.972.000

25.000.000.000 777.634.675.700

971.717.046.000

891.250.766.156

2014 5,60 % - 6,25 % 9,75% - 11,25% 1,50%

6,25% 9,00% - 10,75% 1,50% - 2,10%

50:50

50:50

4. EFEK TERSEDIA UNTUK DIJUAL Reksadana Penyertaan Terbatas (RDPT)

Interest Rates on Time Deposits Deposits on Call - Rupiah Time Deposits : Rupiah US Dollar Sharing Portion of Deposits at Muamalat Bank

At reporting date, cash and cash equivalents denominated in foreign currencies are translated into Rupiah using the following prevailing middle rate of Central Bank of Indonesia at that date :

2014 Rp Euro (EUR) Dollar Amerika Serikat ( USD) Dollar Australia (AUD) Dollar Singapura (SGD) Poundsterling Inggris (GBP) Frank Swiss (CHF) Danish Krone Denmark (DKK) Yen Jepang (JPY)

Total Cash and Cash Equivalents

2013

Pada tanggal pelaporan, kas dan setara kas dalam mata uang asing dijabarkan kedalam Rupiah dengan menggunakan kurs tengah Bank Indonesia pada tanggal tersebut, sebagai berikut:

1 1 1 1 1 1 1 1

Sub Total Cash and Bank Cash Equivalents - brought forward Time Deposits - US Dollar PT Bank Mandiri (Persero) Tbk 2014: USD 471,300 2013: USD 5,471,300 PT Bank Jabar Banten Tbk 2013: USD 5,000,000 Third Parties Time Deposits - Rupiah PT Bank Muamalat Sub Total

2013 Rp

15.133,26 12.440,00 10.218,22 9.422,10 19.370,33 12.582,82 2.031,90 104,24

16.821,44 12.189,00 10.875,66 9.627,99 20.096,63 13.731,78 2.254,99 116,17

1 1 1 1 1 1 1 1

Euro (EUR) United States Dollar ( USD) Australia Dollar (AUD) Singapore Dollar (SGD) Poundsterling (GBP) Switzerland Frank (CHF) Danish Krone (DKK) Japan Yen (JPY)

4. AVAILABLE FOR SALE SECURITIES 2013 Limited Investment Mutual Fund -

2014 25.599.792.849 25.599.792.849

Reksadana Penyertaan Terbatas (RDPT) merupakan Penyertaan pada PNM Pembiayaan Industri Telekomunikasi BUMN 2013 MTN INTI 2014 seri B sebanyak 5 unit dengan nilai Rp 25.000.000.000 ditambah biaya transaksi sebesar Rp 222.500.000. Penyertaan ini berjangka waktu 16 bulan dan akan jatuh tempo pada 3 Juli 2015 dengan tingkat keuntungan sebesar 10,44 % per tahun.

Investment in limited investment mutual fund represents the investment in 5 units of mutual fund of "PNM Pembiayaan Industri Telekomunikasi BUMN 2013 - MTN INTI 2014 Seri B" with value of Rp.25.000.000.000, plus transaction cost of Rp.222.500.000. The period of this investment is 16 months, and will due at July 3, 2015 with a yield of 10,44 % per year.

Pada tanggal laporan Reksadana tersebut disajikan sebesar nilai wajar sesuai Laporan PT PNM Investment Management No.INVACC00006316 tanggal Desember 2014. Selisih atas nilai perolehan awal/ nilai tercatat dengan nilai wajar diakui sebagai keuntungan (kerugian) belum direalisasi atas kepemilikan efek pada pendapatan komprehensif lain.

At reporting date the mutual fund is presented at fair value in accordance the report of PT PNM Investment Management No.INVACC00006316 dated December 2014. The difference between carrying value of the mutual fund and its fair value is recognized as unrealized gain (loss) in other comprehensive income section.

19

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

5. PIUTANG USAHA Pelanggan Dalam Negeri Pihak Berelasi : PT Rajawali Nusantara Indonesia PT Indofarma Global Medika PT Kimia Farma Trading & Distribution Pihak Ketiga PT Merapi Utama Pharma PT Sagi Capri PT Kertajaya Utama PT Sawah Besar Farma PT Triputra Maju Sentosa PT Pamor Baru Sub Jumlah Pelanggan Luar Negeri Pihak Ketiga Bionet 2014 : USD 12,323,712.00 2013 : USD 10,870,640.00 Universal - Exim 2014 : USD 2,212,375.00 2013 : USD 10,404,507.50 UE-BIBCOL 2014 : USD 2,008,912.50 UNICEF 2014 : USD 1,443,751.40 2013 : USD 1,087,759.00 Emerald Pharma 2014 : USD 124,000.00 Propam 2014 : USD 63,684.00 WHO 2014 : USD 59,131.80 State Pharmaceutical Corporation of-Srilanka 2013 : USD 76,800.00 Berna 2013 : USD 8,000.00 Sub Jumlah

5. TRADE RECEIVABLES 2013

2014 6.700.016.887 5.259.266.369 319.745 11.959.603.001

3.261.919.886 366.100.438 4.069.247.896 7.697.268.220

8.757.406.324 8.725.827.663 322.607.002 17.805.840.989

3.587.515.750 1.500.623.406 380.893.309 139.749.258 366.804.878 379.057.335 6.354.643.936

29.765.443.990

14.051.912.156

153.306.977.280 -

132.502.234.007

27.521.945.000 -

126.820.541.918

24.990.871.500

-

17.960.267.416 -

13.258.694.451

1.542.560.000

-

792.228.960

-

735.599.592

-

-

936.115.200

226.850.449.748

97.512.000 273.615.097.576

Domestic Customers Related Parties PT Rajawali Nusantara Indonesia PT Kimia Farma Trading & Distribution PT Indofarma Global Medika Third Parties PT Merapi Utama Pharma PT Sagi Capri PT Kertajaya Utama PT Sawah Besar Farma PT Triputra Maju Sentosa PT Pamor Baru Sub-total Overseas Customers Third Parties Bionet 2014 : USD 12,323,712.00 2013 : USD 10,870,640.00 Universal - Exim 2013 : USD 2,212,375.00 2013 : USD 10,404,507.50 UE-BIBCOL 2014 : USD 2,008,912.50 UNICEF 2014 : USD 1,443,751.40 2013 : USD 1,087,759.00 Emerald Pharma 2014 : USD 124,000.00 Propam 2014 : USD 63,684.00 WHO 2014 : USD 59,131.80 State Pharmaceutical Corporation of-Srilanka 2013 : USD 76,800.00 Berna 2013 : USD 8,000.00 Sub Total

766.389.425

618.586.853

Services

Jumlah Dikurangi : Penyisihan Penurunan Nilai

257.382.283.163 122.481.675

288.285.596.584 39.963.975

Total Less: Provision for Impairment

Jumlah Piutang Usaha - Bersih

257.259.801.488

288.245.632.609

Total Accounts Receivable-Net

Jasa

Rincian piutang usaha berdasarkan umur (tahun) :

The aging of accounts receivable is as follows : 2014

Sampai dengan 1 Tahun 1 s/d 2 Tahun 2 s/d 3 Tahun Jumlah

2013

256.916.916.878 399.061.102 66.305.183 257.382.283.163

288.113.866.068 172.005.516 288.285.871.584

20

Up to 1 Year 1 up to 2 Years 2 up to 3 Years Total

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

5. TRADE RECEIVABLES (continued)

5. PIUTANG USAHA (lanjutan) Mutasi penyisihan penurunan nilai adalah sebagai berikut : Saldo Awal Penyisihan Kerugian Penurunan Nilai Penghapusan Tahun Berjalan Saldo Akhir

The movements of provision for impairment losses are as follows :

2014

2013

39.963.975 118.427.772 (35.910.072) 122.481.675

771.882.856 38.206.401 (770.125.281) 39.963.975

Jumlah piutang usaha berdasarkan jenis mata uang :

Details of trade receivables based on currencies : 2013

2014 Rupiah Mata Uang Asing Dikurangi : Penyisihan Penurunan Nilai

Beginning Balance Provision for Impairment Losses Bad Debt Recoveries for the Year Ending Balance

30.531.833.415 226.850.449.748 257.382.283.163 (122.481.675) 257.259.801.488

14.670.499.009 273.615.097.576 288.285.596.584 (39.963.975) 288.245.632.609

Rupiah Forreign Curencies Less: Allowance for Impairment

Piutang usaha senilai Rp.16.800.000.000 dijadikan jaminan yang bersifat fidusia atas fasilitas kredit yang diterima dari Lembaga Pembiayaan Ekspor Indonesia (LPEI) berdasarkan Surat Persetujuan Perpanjangan Fasilitas Pembiayaan (SPPFP) No.PBD/SP3/28/2014 tanggal 11 Juni 2014 dan Perubahan Perjanjian Kredit Modal Kerja Ekspor No.180/ADDDPK/06/2014 tanggal 23 Juni 2014 untuk perpanjangan jangka waktu kredit sampai dengan 24 Juni 2015. Manajemen berkeyakinan bahwa penyisihan penurunan nilai piutang cukup untuk menutupi kerugian yang mungkin timbul atas tidak tertagihnya piutang.

Trade receivables amounting to Rp.16.800.000.000 have been pledged as fiduciary collateral for credit facility obtained from the Lembaga Pembiayaan Ekspor Indonesia (LPEI) based on Letter of Approval for Extended Financing Facility No.PBD/SP3/28/2014 dated June 11, 2014 and Amendment of Export Working Capital Loan Agreement No.180/ADDDPK/06/2014 dated June 23, 2014 for the extension of loan period until June 24, 2015.

Adanya hubungan berelasi mungkin mengakibatkan persyaratan transaksi tersebut di atas tidak sama dengan transaksi lain yang dilakukan dengan pihak ketiga.

A related party transaction may result in difference terms of the transactions with those of similar transactions to third parties.

Management believes that the amount of provision for impairment losses is adequate to cover possible losses from uncollectible trade receivables.

6. PIUTANG LAIN-LAIN Pihak Berelasi : Piutang PT Iglas (Persero) Pihak Ketiga : Piutang Lainnya Dikurangi : Penyisihan Penurunan Nilai Jumlah Piutang Lain-Lain

6. OTHER RECEIVABLES 2014

2013

1.302.637.458

1.302.637.458

850.045.644 2.152.683.102 (1.302.637.458) 850.045.644

345.695.659 1.648.333.117 (1.302.637.458) 345.695.659

Mutasi Penyisihan Penurunan Nilai :

Less: Provision for Impairment Total Other Receivables-Net

The movements of provision for impairment losses is as follow : 2013 Beginning Balance 1.327.637.458 Bad Debt Recoveries for the Year (25.000.000) Ending Balance 1.302.637.458

2014 Saldo Awal Pemulihan Tahun Berjalan Saldo Akhir

Related Party PT Iglas (Persero) Third Party Other Receivables

1.302.637.458 1.302.637.458

Piutang PT Iglas (Persero) merupakan piutang atas pinjaman yang diberikan berdasarkan perjanjian kerjasama keuangan No. P0087/10-2006 dan No. 07256/DIR/X/2006 tanggal 19 Oktober 2006. Putusan Mahkamah Agung RI No. 397K/Pdt.Sus/2009 tanggal 30 Juli 2009, Jo No. 01/Pailit/2009/PN Niaga Sby tanggal 30 September 2009 menyatakan bahwa PT Iglas (Persero) dalam pailit.

PT Iglas (Persero) account represents the balance of loan provided for PT Iglas (Persero) based on agreement No.P-0087/10-2006 and No.07256/DIR/X/ 2006 dated October 19, 2006. In 2009, the Supreme Court Decision No.397K/Pdt.Sus/ 2009 dated July 30, 2009, Jo No.01/ Bankruptcy/2009/PN Commerce SBY September 30, 2009 stated that PT Iglas (Persero) was in bankrupt.

21

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

6. PIUTANG LAIN-LAIN (lanjutan)

6. OTHER RECEIVABLES (continued)

Atas dasar putusan tersebut, Perusahaan melakukan penyisihan 100 % atas pokok piutang PT Iglas (Persero) sebesar Rp.4.894.737.040 dari jumlah kewajibannya sebesar Rp.6.503.458.205 yang terdiri dari : -

Pokok Piutang Akumulasi Bunga Akumulasi Denda

Rp Rp Rp

Based on the Court decision, the Company impaired 100% on the principal of receivable to PT Iglas (Persero) amounting to Rp.4.894.737.040 from total of its debt of Rp.6.503.458.205 which consist of: Rp 4.894.737.040 - Principal Rp 1.398.732.896 - Accumulated interests Rp 209.988.269 - Accumulated penalties

4.894.737.040 1.398.732.896 209.988.269

Perusahaan belum mengakui pendapatan bunga dan denda atas piutang tersebut karena pendapatan dan denda atas piutang tersebut dapat diakui pada saat diterima.

The Company has not yet recognized the interests and penalties on such receivable as revenues. These interests and penaltes will be recognized when received.

Sesuai putusan Perdamaian tanggal 13 Januari 2010 yang diputuskan oleh Pengadilan Niaga di Pengadilan Negeri Surabaya bahwa Perusahaan sebagai Kreditur Konkuren PT Iglas (Persero) berhak untuk memperoleh pembayaran atas piutang, sehingga terbuka kembali kemungkinan untuk tertagihnya piutang tersebut.

According to peace decision dated January 13, 2010 which was decided by Commercial Court at the District Court of Surabaya, the Company as a Concurrent Creditor of PT Iglas (Persero) is entitled to obtain payment from this receivable, thus the possibility of collection of this receivable become open.

Posisi Piutang PT Iglas adalah sebagai berikut:

Details of the receivables to PT Iglas are as follows:

Total Piutang PT Iglas pada saat pailit Rp Pembayaran : a. Sumber Dana dari PT Iglas (Persero) - Tahun 2010 Rp 681.057.000 - Tahun 2011 Rp 302.691.939 - Tahun 2012 Rp 50.000.000 - Tahun 2013 Rp 25.000.000 jumlah Rp 1.058.748.939

4.894.737.040

Total receivable at time of in bankrupt Payments : a. Source of funds from PT Iglas (Persero) Rp 681.057.000 -Year 2010 Rp 302.691.939 -Year 2011 Rp 50.000.000 -Year 2012 Rp 25.000.000 -Year 2013 Total Rp 1.058.748.939

Rp 4.894.737.040

b. Sumber Dana dari PT Perusahaan Pengelola Aset (PT PPA) - Tahun 2011 Rp 2.533.350.643 Total Pembayaran Rp 3.592.099.582 Saldo Piutang Per 31 Desember 2014 Rp 1.302.637.458

b. Source of funds from PT Perusahaan Pengelola Aset (PT PPA) Rp 2.533.350.643 -Year 2011 Total Payments Rp 3.592.099.582 Balance as of December 31, 2014 Rp 1.302.637.458

Pembayaran sebagian piutang PT Iglas oleh PT PPA sesuai dengan kesepakatan antara PT Iglas dan para Krediturnya yang dimediasi oleh Kurator dari Kantor Pengadilan Niaga Surabaya. Sesuai kesepakatan tersebut, bagian piutang yang akan dibayar oleh PT Iglas dengan sumber dana PT PPA adalah sebesar Rp. 3.533.041.412, sehingga sisa hutang PT Iglas yang belum dibayarkan dengan sumber dana PT PPA sebesar Rp.999.690.769.

The payment from PT PPA was based on an agreement between PT Iglas and its creditors under mediation of Curator from the Office of Commercial Court at Surabaya. According to this agreement, a part of receivable to PT Iglas amounting to Rp.3.533.041.412 would be paid by the source of fund from the PT PPA. Therefore, the rest of the receivable to PT Iglas that would be funded by the source of PT PPA is Rp. 999.690.769.

Dalam tahun 2013 penerimaan piutang dari PT Iglas berjumlah Rp 25.000.000. dan dalam tahun 2014 tidak ada penerimaan pelunasan piutang.

In 2013, PT Iglas paid Rp.25,000,000. and in 2014 there was not any collection from it.

7. PERSEDIAAN Bahan Baku/ Penolong Produk Dalam Proses Produk Jadi Perlengkapan Barang Dagangan Dikurangi : Penyisihan Penurunan Nilai Jumlah Persediaan-Bersih

7.

2014 164.539.897.265 97.889.204.813 65.775.265.667 1.138.633.444 1.313.359.545 330.656.360.734 4.056.315.911 326.600.044.823

INVENTORIES 2013 116.250.644.680 46.675.802.415 42.582.402.135 1.292.789.722 34.140.799 206.835.779.751 1.937.136.864 204.898.642.887

22

Raw Materials/Auxiliaries Products in Progress Finished Goods Supplies Merchandise Goods Less: Provision for Impairment Losses Total Inventory-Net

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

7.

7. PERSEDIAAN (lanjutan) Mutasi Penyisihan Penurunan Nilai Persediaan Saldo Awal Pembebanan Tahun Berjalan Pemulihan Tahun Berjalan Saldo Akhir

INVENTORIES (continued) The movements of provision for impairment of inventories are: 2013 Beginning Balance 2.896.861.910 Provision for Impairment Losses 1.548.850.701 Current Year's Impairment Recovery (2.508.575.746) Ending Balance 1.937.136.865

2014 1.937.136.865 4.076.943.172 (1.957.764.125) 4.056.315.911

Persediaan telah diasuransikan terhadap risiko kerugian berdasarkan suatu paket polis tertentu dengan nilai pertanggungan masing-masing sebesar Rp.308.654.734.044 dan Rp.164.821.243.647 pada tahun 2014 dan 2013. Nilai pertanggungan asuransi tahun 2014 mencerminkan 95 % dari total persediaan bersih.

Inventories have been insured against loss by certain policy packages with coverage vakue of Rp.308.654.734.044 and Rp.164.821.243.647 in 2014 and 2013 respectively. The insurance coverage in 2014 represents 95% of the total net inventory.

Manajemen berkeyakinan bahwa nilai pertanggungan asuransi cukup untuk menutup kerugian yang mungkin timbul atas risiko kerugian.

Management believes that the amount of insurance coverage is adequate to cover potential losses from the insured risks.

Persediaan barang senilai Rp.34.700.000.000 dijadikan jaminan yang bersifat fidusia atas fasilitas kredit yang diterima dari Lembaga Pembiayaan Ekspor Indonesia (LPEI) berdasarkan Surat Persetujuan Perpanjangan Fasilitas Pembiayaan (SPPFP) No.PBD/SP3/28/2014 tanggal 11 Juni 2014 dan Perubahan Perjanjian Kredit Modal Kerja Ekspor No.180/ADDDPK/06/2014 tanggal 23 Juni 2014 untuk perpanjangan jangka waktu kredit sampai dengan 24 Juni 2015.

Inventories amounting to Rp.34.700.000.000 have been pledged as fiduciary collateral for credit facility obtained from the Lembaga Pembiayaan Ekspor Indonesia (LPEI), based on Letter of Approval of Extended Financing No.PBD/SP3/28/2014 dated Juni 11, 2014 and Changes on Export Working Capital Loan Agreement No.180/ADDDPK/06/2014 dated Juny 23, 2014 for the extension of credit period until June 24, 2015.

8. UANG MUKA Pembelian Lokal Pembelian Barang Impor Perjalanan Dinas Impor Dalam Penyelesaian Uang Muka Diklat Uang Muka Jasa Produksi Uang Muka Lainnya Jumlah Uang muka pembelian lokal terdiri dari : -

Pembangunan gedung fasilitas produksi dan pengemasan Pembelian solar Pengadaan cold room gedung administrasi II Pembangunan gedung administrasi II Lainnya Jumlah

Uang muka pembelian barang impor terdiri dari : - Pembelian Cell Stack/Cell Factory - Pembelian Heatmarker VVM2 for OPV - Pembelian mesin Vial-Ampoule Packaging Liine - Pembelian EBR Bio Farma Pertusis Facility - Pembelian lainnya Jumlah

8. ADVANCES 2013

2014 37.858.774.000 11.444.997.065 998.429.248 17.492.068 92.800.000 50.412.492.381

10.624.982.711 12.178.828.284 749.922.358 1.414.874.731 320.000.000 13.057.408.200 277.560.000 38.623.576.284

2014

Advances for domestic purchases consist of:

2013

31.849.057.818 2.289.989.050

5.028.661.773

1.952.000.000 1.767.727.132 37.858.774.000

3.988.503.088 1.607.817.850 10.624.982.711

7.266.763.800 1.324.492.025

6.310.610.970 -

1.201.202.513

-

1.652.538.728 11.444.997.066

2.422.287.360 3.445.929.954 12.178.828.284

23

Domestics Purchases Purchases of Imported Goods Business Travelling Import in Progress Training Bonuses Other Advances Total

Construction of buildings for production and packaging facilities Purchase of fuel Acquisition of cold room at administration building II Construction of administration building II Others Total

-

Advance for purchases of imported goods consist of : Purchase of Cell Stack / Cell Factory Purchase of Heatmarker VVM2 for OPV Purchase of Vial-Ampoule Packaging Line Machine Purchase of EBR Bio Farma Pertusis Facility Other Purchases Total

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

8. UANG MUKA (lanjutan)

8. ADVANCES (continued)

Uang muka impor dalam penyelesaian merupakan pembayaran biaya asuransi, biaya bongkar muat, biaya inklaring, dan pajak terkait proses penanganan barang impor dari pelabuhan dalam negeri ke lokasi Perusahaan.

Advances for imports in progress represent payments in advance for insurance, unloading, and inklaring expenses and taxes related to the process of handling the imported goods from the port to the Company's location.

9. PERPAJAKAN a. Pajak Dibayar Dimuka

9. TAXES a. Prepaid Taxes 2014

Pajak Pertambahan Nilai - Masukan Jumlah

2013

154.008.287.440 154.008.287.440

96.972.139.772 96.972.139.772

Input - Value Added Tax Total

Saldo PPN Masukan per 31 Desember 2014 telah memperhitungkan restitusi PPN Masa Pajak September Desember 2012 sebesar Rp.19.415.502.236 sesuai Surat Perintah Membayar Kelebihan Pajak (SPMKP) No. 80081/0510081-2014 tanggal 19 Maret 2014.

The balance of input-Value Added Tax (VAT) as of December 31, 2014 has taken into account the amount of VAT refund for the period of September to December 2012 amounted to Rp.19.415.502.236, in accordance with Order Letter of Payment of Tax Overpayment (SPMKP) No.80081/051-0081-2014 dated March 19, 2014.

Saldo PPN Masukan per 31 Desember 2013 telah memperhitungkan restitusi PPN Masa Pajak Juli - Desember 2011 sebesar Rp.45.383.887.276 sesuai Surat Perintah Membayar Kelebihan Pajak (SPMKP) No. 80016/051-00162014 tanggal 7 Januari 2013, restitusi PPN Masa Pajak Juni Agustus 2012 sebesar Rp.22.188.528.719 sesuai Surat Perintah Membayar Kelebihan Pajak (SPMKP) No.80039/0510039-2014 tanggal 22 Februari 2013, dan restitusi PPN Masa Januari - Mei 2013 sebesar Rp.21.844.700.600 sesuai Surat Perintah Membayar Kelebihan Pajak (SPMKP) No.80148/0510148-2014 tanggal 1 Agustus 2013.

The amount of input-VAT balance as of December 31, 2013 has taaken into account the amounts of VAT refund for the period of JulyDecember 2011 amounted to Rp.45.383.887.276, in accordance with Order Letter of Payment of Tax Overpayment No.80016/0510016-2014 dated January 7, 2013, VAT refund for the period of JuneAugust 2012 amounted to Rp.22.188.528.719 in accordance with Order Letter of Payment of Tax Overpayment No.80039/051-00392014 dated February 22, 2013, and VAT refund for the period of January-May 2013 amounted to Rp.21.844.700.600 in accordance with Order Letter of Payment of Tax Overpayment No.80148/0510148-2014 dated August 1, 2013

Perusahaan sedang mengajukan restitusi PPN Masa Pajak januari - desember 2013 sebesar Rp.71.489.840.600 dan PPN Masa Pajak Januari - Juni 2014 Rp.39.462.446.632 yang masih dalam proses pengajuan restitusi.

The Company will claim for VAT refunds for the period of January December 2013 amounted to Rp.71.489.840.600, and for the period of January - June 2014 amounted to Rp.39.462.446.632.

b. Utang Pajak Pajak Penghasilan Pasal 25 Pajak Penghasilan pasal 29 PPN Wapu Pajak Penghasilan Pasal 21 Pajak Penghasilan Final Pajak Penghasilan Pasal 23 Pajak Penghasilan Pasal 22 Pajak Penghasilan Pasal 26 Jumlah

b. Taxes Payable 2014 14.223.627.380 9.603.719.797 9.888.701.993 3.318.578.569 1.197.361.995 612.819.202 43.640.308 30.344.425 38.918.793.669

2013 10.300.606.190 60.124.202.025 12.034.882.228 3.762.422.419 440.599.829 225.215.694 28.489.902 86.916.418.287

c. Manfaat (Beban) Pajak Penghasilan Pajak Kini Manfaat (Beban) Pajak Tangguhan Beban Pajak Penghasilan - Bersih

Income Tax Article 25 Income Tax Article 29 VAT Collected Income Tax Article 21 Income Tax - Final Income Tax Article 23 Income Tax Article 22 Income Tax Article 26 Total

c. Income Taxes Benefit (Expense) 2014 (197.135.974.750) 4.133.557.025 (193.002.417.725)

2013 (207.287.750.500) 1.166.385.151 (206.121.365.349)

24

Current Income Tax Expense Deferred Tax Benefit (Expenses) Income Tax Expense-Net

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

9. PERPAJAKAN (lanjutan)

9. TAXES (continued)

Rekonsiliasi antara laba komersial dan laba fiskal adalah :

The reconciliation between the commercial income (income before income tax) and estimated taxable income is as follows:

2014

2013

Laba sebelum pajak penghasilan menurut laporan laba rugi komprehensif

773.076.159.560

778.588.988.274

Income before income tax as shown in the statement of comprehensive income

Beda Waktu Penyisihan nilai persediaan Beban imbalan pasca kerja Pemulihan biaya dibayar dimuka Penyisihan penurunan nilai piutang Biaya dibayar dimuka Penurunan nilai aset tetap Jumlah Beda Waktu

2.119.179.047 14.332.531.353 1.590.600.268 82.517.700 (4.767.416.002) 13.357.412.365

(959.725.046) 6.929.427.107 1.529.847.560 (756.918.881) (1.590.600.268) (547.242.577) 4.604.787.896

Temporary Differences Provision for impairment of inventories Employees benefit expense Recovery of prepaid expenses Provision for impairment of receivables Prepaid expenses Impairment of fixed assets Total Temporary Differences

Beda Permanen 10.718.398.616 Tantiem 3.104.395.882 Sumbangan sosial masyarakat 14.115.386.930 Bantuan sosial pegawai Beban HUT perusahaan, dan paket ramadhan 3.698.365.000 3.760.908.867 Jamuan tamu 67.738.990 Koreksi pajak dan denda pajak 488.795.990 Penghargaan dalam bentuk natura 125.319.946 Penyusutan mobil direksi 484.202.495 Langganan perpustakaan & surat kabar 9.633.165 Fasilitas utilities dan keamanan direksi 68.678.637 Beban telepon genggam 1.160.576.192 Beban promosi Selisih tantiem antara taksasi dengan RUPS Sewa ruangan dan bagi hasil yg kena PPh final (92.312.500) Bunga jasa giro dan deposito yg kena PPh final (35.599.760.785) 2.110.327.425 Jumlah Beda Tetap Laba Kena Pajak Laba Kena Pajak (Dibulatkan)

Dikurangi : Pajak Dibayar Dimuka Pasal 22 Pasal 25 Pasal 23 Estimasi Pajak Penghasilan Badan (Lebih) Kurang Bayar

3.247.724.000 3.136.287.590 23.717.554.904 1.609.353.950 125.319.946 342.938.343 104.068.016 431.133.413 675.000.000 (243.250.000) (14.163.439.167) 45.957.225.914

788.543.899.350 788.543.899.000

Taksiran Beban Pajak Penghasilan Badan 25 % x Rp. 788.543.899.000 25 % x Rp. 829.151.002.000

16.529.371.000 1.367.928.971 9.077.234.948

829.151.002.083 829.151.002.000

2014

2013

197.135.974.750 197.135.974.750

207.287.750.500 207.287.750.500

14.775.680.258 172.683.528.558 73.046.137 187.532.254.953

13.486.121.395 133.634.040.780 43.386.300 147.163.548.475

9.603.719.797

60.124.202.025

25

Permanent Differences Management bonus Public social donations Employee social aids The Company's anniversary and ramadhan packages Entertainment Tax corection and penalties Rewards Depreciation of directors' cars Subscription of newspapers and library Directors' utilities and security Mobile telephone expenses Promotion expenses Difference between estimated (RUPS) and actual management bonus Room rent and taxable profit sharing Interests on bank accounts and time deposits subject to final tax Total Permanent Difference Taxable Income Taxable Income (Rounded off) Estimated Corporate Income Tax 25 % x Rp. 788.543.899.000 25 % x Rp. 829.151.002.000 Less : Prepaid Income Tax Article 22 Article 25 Article 23 Total Prepaid Tax Estimated Corporate Income Tax (Over) Under Payment

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

9. PERPAJAKAN (lanjutan) d. Pajak Tangguhan Rekonsiliasi antara taksiran pajak penghasilan yang dihitung menggunakan tarif pajak yang berlaku sebesar 25% dari laba akuntansi sebelum beban (manfaat) pajak penghasilan dan beban pajak seperti yang tercantum dalam laporan laba rugi untuk tahun-tahun yang berakhir tanggal 31 Desember 2014 dan 2013 adalah sebagai berikut: Laba Sebelum Pajak Penghasilan Menurut Laporan Laba Rugi Beban Pajak dengan Tarif Maksimum Pengaruh Pajak atas Beda Tetap Pemulihan Biaya Dibayar Dimuka Beban Pajak Perusahaan Beban Kini Beban (Manfaat) Pajak Tangguhan

9. TAXES (continued) d. Deferred Tax The reconciliation between estimated income tax expense computed using the prevailing tax rate of 25% of the income before income tax expense (benefit) and the tax expense as showned in the statement of comprehensive income for the years ended December 31, 2014 and 2013 are as follows:

2014

2013

773.076.159.560 193.269.039.890 527.581.768 (794.203.934) 193.002.417.724 197.135.974.750 (4.133.557.025)

778.588.988.272 194.647.247.068 11.489.306.457 (15.188.177) 206.121.365.349 207.287.750.500 (1.166.385.151)

Pajak tangguhan dihitung berdasarkan pengaruh dari perbedaan temporer antara jumlah tercatat aset dan Iiabilitas menurut laporan keuangan dari dasar pengenaan pajak aset dan Iiabilitas. Rincian dari aset dan liabilitas pajak tangguhan Perusahaan sebagai berikut: 1 Januari 2013/ January 1, 2013 Aset Pajak Tangguhan 10.360.308.027 Imbalan Kerja Penyisihan Piutang Ragu-ragu 524.880.078 Penyisihan 724.215.477 Persediaan Penurunan nilai aset 136.810.644 Jumlah Aset Pajak Tangguhan 11.746.214.227

10. BIAYA DIBAYAR DIMUKA Asuransi Sewa Jumlah Asuransi dibayar dimuka terdiri dari : -

asuransi karyawan asuransi Dewan Komisaris & Direksi asuransi persediaan asuransi kebakaran asuransi kendaraan

Income before Income tax as shown in the Statement of Comprehensive Income Tax Expense Based on Maximum Rate Tax Effect on Permanent Differences Recovery of Prepaid Expenses Income Tax Expenses Current Tax Expense (Benefit) Deferred Tax

Deferred tax is computed based on the effect of the temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. The details of the Company’s deferred tax assets and liabilities are as follows:

Dibebankan ke Dibebankan ke Laba Rugi/ 31 Desember 2013/ Laba Rugi/ 31 Desember 2014/ Charged to the December 21, 2013 Charged to the December 2014, 31 Income Statement Income Statement 1.732.356.777

12.092.664.804

3.583.132.839

(189.229.720)

335.650.358

20.629.425

(239.931.261) (136.810.644)

484.284.216 -

529.794.762

1.166.385.151

12.912.599.379

4.133.557.025

Deffered Tax Asset Employee Benefits Provision for impairment 356.279.783 of accounts receivable Provision for impairment 1.014.078.978 of inventories Asset impairment

15.675.797.643

17.046.156.404

Deffered Tax Asset Net

10. PREPAID EXPENSE 2013

2014 4.220.466.002 546.950.000 4.767.416.002

1.273.292.217 317.308.050 1.590.600.267

2014 320.838.833 1.756.312.500 33.696.852 2.066.982.403 42.635.413 4.220.466.002

2013 292.416.667 29.702.824 911.371.787 39.800.939 1.273.292.217

Asuransi dibayar dimuka tersebut merupakan asuransi kepada PT Asuransi Jiwasraya (Persero), PT Asuransi Parolamas, PT Asuransi Bumiputera Muda dan PT Asuransi Jasa Indonesia (Persero).

Insurance Rent Total Prepaid insurance consists of : Employee insurance Comissioner and Director insurance Inventory insurance Fire insurance Vehicle insurance

These prepaid insurances represent insurance premiums paid in advance to PT Asuransi Jiwasraya (Persero), PT Asuransi Parolamas, PT Asuransi Bumiputera Muda and PT Asuransi Jasa Indonesia (Persero).

26

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

11. PENDAPATAN YANG MASIH AKAN DITERIMA Bunga Deposito Jasa Registrasi Vaksin Lainnya Jumlah 12. ASET LANCAR LAINNYA Persediaan dalam Perjalanan Persediaan dalam Karantina Persediaan Dalam Proses Penggantian Jumlah

11. ACCRUED INCOME 2013 1.907.882.903 929.697.595 266.321.000 3.103.901.498

2014 2.112.760.234 562.624.095 50.312.500 2.725.696.829

Interest on Time Deposits Vaccine Registration Services Others Total

12. OTHER CURRENT ASSETS 2013 6.140.613.770 11.729.838.814 17.870.452.584

2014 3.698.169.935 15.683.892.268 11.315.936.868 30.697.999.071

Inventory in Transit Inventory in Quarantine Inventory in Exchange Process Total

Persediaan dalam perjalanan merupakan pembelian Impor 2ml Uniject dan 5ml Vial clear yang masuk dalam kategori persediaan dalam perjalanan karena posisinya per 31 Desember 2014 masih di pelabuhan. (Lihat Catatan 2g)

Inventory in transit represents imported goods of 2ml Uniject and 5ml Vial Clear that included in inventoy in transit because they are still at the port as of December 31, 2014 (See Note 2g)

Persediaan dalam karantina berasal dari pembelian bahan baku vaksin dan sera dan bahan perkemasan yang sampai dengan tanggal 31 Desember 2014 masih dalam status karantina karena sedang dalam proses pengujian. (Lihat Catatan 2g)

Inventories in quarantine are purchased raw materials of vaccine and sera and packing materials that are in quarantine for testing process. (See Note 2g)

Persediaan Dalam Proses Penggantian merupakan persediaan produk Uniject Blank sebanyak 5.842.821 buah yang dinyatakan tidak lulus uji. Becton Dickinson (BD) selaku supplier telah menyetujui untuk mengganti seluruh produk tersebut secara bertahap sampai dengan bulan Desember 2015.

Inventory in exchange process represents purchased products of 5,842,821 pieces Uniject Blank that did not pass the test. Becton Dickinson (BD), the supplier, agreed to change the products gradually until December 2015.

13. ASET TETAP

13. FIXED ASSETS

2014 Saldo awal/ Beginning Balance

Biaya Perolehan Tanah Bangunan Bangunan Tidak Permanen Rumah Dinas Inventaris Mesin Inventaris Utility Inventaris Pabrik Inventaris Kantor Kelompok I Kelompok II Kendaraan Aset Dlm Penyelesaian Bangunan Mesin, Pabrik, Utility Jumlah Akumulasi Penyusutan Bangunan Bangunan Tidak Permanen Rumah Dinas Inventaris Mesin Inventaris Utility Inventaris Pabrik Inventaris Kantor Kelompok I Kelompok II Kendaraan Jumlah Nilai Buku

Penambahan/ Additions

Pengurangan/ Disposal

Reklasifikasi/ Reclasification

Saldo Akhir/ Ending Balance

17.181.840.772 407.550.963.298 6.269.685.436 1.956.000 386.557.475.668 55.897.339.885 610.207.624.298

18.390.383.379 730.837.300 33.774.263.030

41.955.815 -

88.705.213.193 755.976.870 938.600.000 10.725.327.000 26.182.770.602

17.139.884.957 496.256.176.491 7.025.662.307 1.956.000 405.886.459.047 67.353.504.185 670.164.657.930

46.413.524.805 18.690.233.119 4.459.520.100

575.573.084 69.894.000 750.000.000

8.940.746.840 4.599.450.774 -

55.929.844.729 23.359.577.893 5.209.520.100

125.106.452.330 53.549.452.764 1.731.886.068.474

40.583.999.449 64.960.629.427 159.835.579.669

41.955.815

(90.151.190.063) (55.943.948.065) -

75.539.261.716 62.566.134.126 1.886.432.639.481

96.664.719.308 2.150.933.420 1.955.998 142.446.638.962 24.870.063.479 289.835.940.544

23.955.254.110 634.236.456 32.069.974.516 4.570.480.600 44.866.802.034

-

-

120.619.973.418 2.785.169.876 1.955.998 174.516.613.478 29.440.544.079 334.702.742.578

33.645.679.021 13.022.122.572 3.162.536.252 605.800.589.557 1.126.085.478.917

8.727.580.351 1.959.453.279 375.023.603 117.158.804.948 -

-

-

42.373.259.372 14.981.575.852 3.537.559.855 722.959.394.505 1.163.473.244.976

27

Cost Acquisitions Land Building Non Permanent Building Official Housing Machinery Utility Equipment Factory Equipment Office Equipment Group I Group II Vehicles Construction in Progress Building Machine, Factory, Utility Total Accumulated Depreciation Building Non Permanent Building Official Housing Machinery Utility Equipment Factory Equipment Office Equipment Group I Group II Vehicles Total Book Value

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

13. FIXED ASSETS (continued)

13. ASET TETAP (lanjutan)

2013 Saldo awal/ Beginning Balance Biaya Perolehan Tanah Bangunan Bangunan Tidak Permanen Rumah Dinas Inventaris Mesin Inventaris Utility Inventaris Pabrik Inventaris Kantor Kelompok I Kelompok II Kendaraan Aset Dlm Penyelesaian Bangunan Mesin, Pabrik, Utility Jumlah Akumulasi Penyusutan Bangunan Bangunan Tidak Permanen Rumah Dinas Inventaris Mesin Inventaris Utility Inventaris Pabrik Inventaris Kantor Kelompok I Kelompok II Kendaraan Jumlah Nilai Buku

Penambahan/ Additions

Pengurangan/ Disposal

Reklasifikasi/ Reclasification

Saldo Akhir/ Ending Balance

17.181.840.772 404.786.544.543 5.594.737.267 1.956.000 324.409.578.197 52.914.364.335 524.092.459.050

829.204.370 44.941.568.980

18.216.615 62.809.451 111.199.813 15.500.000 2.767.402.838

2.782.635.370 737.757.620 62.259.097.284 2.169.271.180 43.940.999.105

17.181.840.772 407.550.963.298 6.269.685.436 1.956.000 386.557.475.668 55.897.339.884 610.207.624.298

37.125.828.791 17.231.258.203 4.734.355.100

8.781.245.034 1.560.591.280 -

225.591.364 274.835.000

506.450.979 123.975.000 -

46.413.524.805 18.690.233.119 4.459.520.100

13.240.149.088 93.021.274.379 1.494.334.345.727

115.386.696.231 69.527.971.930 241.027.277.826

3.475.555.081

(3.520.392.990) (108.999.793.545) -

125.106.452.329 53.549.452.765 1.731.886.068.474

76.462.580.528 1.632.045.956 1.955.998 114.817.609.968 20.577.577.152 254.525.407.816

20.215.801.241 579.079.855 27.740.228.803 4.307.986.326 37.521.738.034

13.662.461 60.192.391 111.199.809 15.499.999 2.211.205.306

96.664.719.308 2.150.933.420 1.955.998 142.446.638.962 24.870.063.479 289.835.940.544

26.679.919.834 11.628.838.230 2.988.890.697 509.314.826.179

6.965.759.187 1.615.634.546 448.480.552 99.394.708.543

222.350.203 274.834.997 2.908.945.166

-

985.019.519.548

1.126.085.478.917

Rincian Aset Dalam Pelaksanaan sebagai berikut:

Accumulated Depreciation Building Non Permanent Building Official Housing Machinery Utility Equipment Factory Equipment Office Equipment Group I Group II Vehicles Total Per Book

The details of construction in progress are as follows:

2014 Bangunan 54.037.408.551 Gedung Adm II 10.897.625.650 Gedung Produksi Vaksin & Pengemasan 6.518.089.000 Gedung Sentral Lab Gedung Publik II Perluasan Bangunan R. Penyimpanan Freezer 4.086.138.515 Lainnya 75.539.261.716 Jumlah Mesin Pabrik, Utility Pekerjaan Interior Admin II Vial Ampoule Packaging Line Bio Reactor 150L Autoclave Overhaul Mesin Washing Gilowy Overhaul Autoclave Sakura Kompressor Udara Mesin Boiler Furniture Gd. Upakarti Aset Pabrik/ Mesin/ Utility/ Kantor Eks. IHU jumlah dipindahkan

33.645.679.021 13.022.122.572 3.162.536.252 605.800.589.557

Cost Acquisitions Land Building Non Permanent Building Official Housing Machinery Utility Equipment Factory Equipment Office Equipment Group I Group II Vehicles Construction in Progress Building Machine, Factory, Utility Total

2013 22.852.074.088 10.884.575.650 1.980.199.000 71.632.530.680 15.154.379.924 2.602.692.989 125.106.452.330

2014

2013

14.963.634.072 13.276.234.084 4.924.906.112 4.477.507.901 3.797.857.000 2.673.440.000 2.500.000.000 1.985.500.000 1.786.813.200 1.662.238.625 52.048.130.994

3.797.857.000 5.346.880.000 1.662.238.625 10.806.975.625

28

Buildings Administration Building II Production of Vaccines and Packaging Central Laboratory Building Public Building II Extension of Freezer Storage Room Others Total Factory Machine, Utility Interior work for Admin II Vial Ampoule Packaging Line Bio Reactor 150L Autoclave Overhaul of Washing Gilowy Machine Overhaul of Autoclave Sakura Air Compressor Boiler Machine Furnitures for Upakarti Building Factory/Machines/Utility/IHU Office Carried forward

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

13. ASET TETAP (lanjutan) Mesin Pabrik, Utility jumlah pindahan Kompressor Udara Perbaikan Water Chiller HPLC FFF URS Documents Rekondisi Autoclave Boiler Kompressor Udara Overhaul Mesin2 Filling Bosch, WahinG Capping, Tunnel/FPVS GE 71413 ARC-2 EU Sterilizer-Getinge Biostat C Plus 30 L-Sartorius Jalur Pipa, kabel, Kill Tank dll Retrofit System Control Panel Distribusi Utama Genset Pure Steam Generator-Stilmas Lainnya Jumlah

13. FIXED ASSETS (continued) 2014

2013

52.048.130.994 1.498.055.000 1.317.536.000 1.149.750.000 1.063.601.200 916.300.000 367.536.000 10.340.000

10.806.975.625 1.317.536.000 550.942.800 916.300.000 1.567.500.000 3.840.365.000

4.194.884.932 62.566.134.126

2.676.878.000 4.876.772.089 4.180.227.245 3.997.500.000 3.249.382.500 3.151.742.000 3.099.627.741 9.317.703.764 53.549.452.764

Factory Machine, Utility brought forward Air Compressor Repair of Water Chiler HPLC FFD URS Documents Reconditioning Autoclave Boiler Air Compressor Overhaul of Filling Bosch, Wahing, Capping, Tunnel/ FPVS Machines GE 71413 ARC-2 EU Sterilizer-Getinge Biostat C Plus 3 Pipe Track, cable, Kill Tank Retrofit System Control Distribution of First Planel Genset Pure Steam Generator-Stilmas Others Total

Pengurangan aset tanah dalam tahun 2014 sebesar Rp.41.955.815 adalah pengurangan nilai perolehan tanah akibat berkurangnya luas tanah yang berlokasi di Desa Kertawangi Kecamatan Cisarua setelah dilakukan pengukuran ulang sehubungan dengan proses perubahan status tanah tersebut dari Hak Pakai menjadi Hak Guna Bangunan.Total luas tanah berkurang 10.464m2 disebabkan karena: a. Pergeseran batas dan dikeluarkan untuk sungai seluas 3.258 m2. b. Menjadi sarana umum, jalan, gang, saluran air seluas 5.141 m2. c. Sarana jalan oleh masyarakat sekitar seluas 2.065 m2 yang selanjutnya diserahkan kepada Pemerintah Daerah Bandung Barat.

In 2014, land cost amounting to Rp.41,955,815 was written-off due to reduction of the area of land located at Kertawangi Village, Cisarua after it was re-measured for the process of change the land status from Use Rights (Hak Pakai) to Building Use Rights (HGB). The area of the land has been reduced by 10.464 m2, and it was caused by :

Perubahan status tanah tersebut telah mendapat persetujuan Menteri BUMN dengan surat Nomor S-680/MBU/10/2014 tanggal 17 Oktober 2014. Sampai dengan tanggal laporan 31 Desember 2014 perubahan status masih dalam proses penyelesaian.

The change of the land status has been approved by the Minister of State-Owned Enterprise in his letter No.S-680/MBU/10/2014 dated October 17, 2014. Until the reporting date of December 31, 2014 the change of the status is still in progress.

Pada tahun 2009 Perusahaan menyediakan lahan untuk digunakan sebagai fasilitas vaksin flu burung oleh Departemen Kesehatan RI. Lahan tersebut berlokasi di Desa Kertawangi Kecamatan Cisarua Kabupaten Bandung Barat seluas 5.145 m2 dan di Jalan Pasteur seluas 3.953 m2. Sejak tahun 2011 proyek tersebut terhenti dan sampai dengan tanggal laporan ini lahan tersebut masih tertutup dan belum dapat digunakan Perusahaan.

In 2009 the Company provided certain lands for use by the Miistry of Health to build a facility of bird flu vaccines. The lands located at Kertawangi, Cisarua, District of West Bandung in the area of 5,145 2 2 m and at Jalan Pasteur of 3,953 m . Since 2011 the project was suspended, and until this reporting date the lands is closed and the Company has not used them yet.

Sebagian aset tetap yang terdiri dari mesin, inventaris dan peralatan pabrik yang berlokasi di JI. Pasteur No.28 Bandung senilai Rp.80.500.000.000 dijadikan jaminan fidusia atas fasilitas kredit dari Lembaga Pembiayaan Ekspor Indonesia (LPEI) berdasarkan Surat Persetujuan Perpanjangan Fasilitas Pembiayaan (SPPFP) No.PBD/SP3/28/2014 tanggal 11 Juni 2014 dan Perubahan Perjanjian Kredit Modal Kerja Ekspor No.180/ADDPK/06/2014 tanggal 23 Juni 2014 untuk perpanjangan jangka waktu kredit sampai dengan 24 Juni 2015.

Certain fixed assets consist of machinery, office and manufacture equipments located at Jalan Pasteur No.28 Bandung with carrying amount of Rp.80.500.000.000 have been pledged as fiduciary collateral for credit facility from an export financing agency named the Lembaga Pembiayaan Ekspor Indonesia (LPEI) based on the Letter of Approval for Extendec Financing Facility (SPPFP) No.PBD/SP3/28/ 2014 dated June 11, 2014, and Amendment of Export Working Capital Loan Agreement No.180/ADDPK/06/2014 dated June 23, 2014 for the extension of the period of the loan until June 24, 2015.

29

2 a. shifting the boundaries and excluded for river of 3,258 m 2 b. use for public facilities, roads, alleys, drains of 5,141 m . c. use for public road of 2,065 m 2 . This area has submitted to the Local Government of West Bandung.

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

13. ASET TETAP (lanjutan) Sebagian inventaris mesin yang berlokasi di Jl. Pasteur No.28 Bandung senilai Rp 135.000.000.000 juga dijadikan jaminan atas fasilitas non cash loan yang terdiri dari penerbitan LC Import (sight, usance & UPAS); treasury line; dan bills purchasing linedari PT Bank Mandiri (Persero) Tbk berdasarkan Surat Penawaran Pemberian Kredit (SPPK) No. IBG.IB1/SPPK.027/2014 tanggal 25 Juli 2014 dengan jangka waktu satu tahun dari 15 Agustus 2014 sampai dengan 14 Agustus 2015.

13. FIXED ASSETS (continued) Other equipments located at Jl. Pasteur 28 Bandung with carrying amount of Rp 135.000.000.000 have also been pledged for noncash loan facilities which consist of the issuance of Import LC (sight, usance & UPAS); treasury line; and bills purchasing line from PT Bank Mandiri (Persero) Tbk based on Letter of Credit Offering (SPPK) No.IBG.IB1/SPPK.027/2014 dated July 25, 2014 for one year from August 15, 2014 until August 14, 2015.

Aset tetap kecuali tanah, telah diasuransikan pada PT Asuransi Parolamas, PT Asuransi Bumiputera Muda dan PT Asuransi Jasa Indonesia (Persero) terhadap risiko kebakaran dan risiko lainnya kecuali gempa bumi berdasarkan suatu paket polis tertentu dengan nilai pertanggungan masing-masing sebesar Rp.1.615.330.118.410,44 dan Rp.1.566.251.280.488,69 pada 31 Desember 2014 dan 2013.

Fixed assets, except land, have been insured against fire and other risks, unless the earthquake, from PT Asuransi Parolamas, PT Asuransi Bumiputera Muda and PT Asuransi Jasa Indonesia (Persero) under certain blanket policies with coverage value of Rp.1.615.330.118.410,44 and Rp.1.566.251.280.488,69 at December 31, 2014 and 2013, respectively.

Kendaraan telah diasuransikan terhadap risiko All Risk dan Total Loss Only (TLO) kepada PT Asuransi Parolamas dan PT Bumiputera Muda 1967 dengan total nilai pertanggungan sebesar Rp.3.395.039.000 dan Rp.3.809.939.000 pada tanggal 31 Desember 2014 dan 2013.

Vehicles have been insured against All Risks and Total Loss Only (TLO) from PT Asuransi Parolamas and PT Bumiputera Muda 1967 for Rp.3.395.039.000 and Rp.3.809.939.000 at December 31, 2014 and 2013, respectively.

Manajemen berkeyakinan bahwa nilai pertanggungan asuransi cukup untuk menutup kerugian yang mungkin timbul atas risiko kebakaran dan lainnya.

Management believes that the insurance coverage is adequate to cover potential losses from fire and other risks.

Beban penyusutan aset tetap dialokasikan sebagai berikut :

Depreciation expense of fixed assets was allocated as follows:

Beban Produksi Beban Jasa Beban Usaha Administrasi dan Umum Penelitian, Pengembangan dan Surveilans Jumlah

2014 88.620.608.520 218.033.938 13.594.559.195 14.725.288.243 117.158.489.896

2013 77.566.505.770 116.479.715 9.174.621.162 12.537.101.897 99.394.708.544

14. ASET TAKBERWUJUD

14. INTANGIBLE ASSETS 2014

Perangkat Lunak Dikurangi : Akumulasi Amortisasi Perangkat Jumlah Pengembangan Upstream Vaksin Flu Dalam Penyelesaian Perangkat Lunak Dalam Penyelesaian Jumlah Perangkat Lunak terdiri dari : Sistem ERP EBR SystemPertusis EBR SystemPV. Hib Matrix LIMS Gemini MRP Lain-lain (dibawah 500 juta) Jumlah

Production Expense Cost of Service Operating Expenses General and Administrative Research, Development and Surveilans Total

2013

29.629.901.789 (4.392.006.950) 25.237.894.839

2.478.571.070 (2.029.191.105) 449.379.965

12.338.806.708 278.760.500 37.855.462.048

10.791.097.460 8.973.869.373 20.214.346.797

2014

2013

8.968.652.000 7.688.377.223 7.999.822.746 1.285.678.750 637.000.000 3.050.371.070 29.629.901.789

2.478.571.070 2.478.571.070

30

Software Less: Accumulated Amortization - Software Total Development of Upstream Flu Vaccines in Progress Software in Progress Total Software consists of : ERP System EBR System Pertusis EBR System PV. Hib Matrix LIMS Gemini MRP Other (below Rp500 millions) Total

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

14. ASET TAKBERWUJUD (lanjutan)

14. INTANGIBLE ASSETS (continued)

Pengembangan Upstream Vaksin Flu dicatat sebagai aset takberwujud sesuai Nota Dinas No.09698/XII/2009 tanggal 21 Desember 2009 yang sampai dengan tanggal 31 Desember 2014 masih dalam penyelesaian. Biaya ini merupakan biaya yang terkait dengan penerapan temuan riset atau pengetahuan produksi vaksin flu yang berbasis telur dari penyiapan telur, pembuatan bulk, uji klinis sampai registrasi dari produk tersebut.

Cost of development of upstream flu vaccines is recorded as intangible assets in accordance with the Office Memo No.09698/XII/ 2009 dated December 21, 2009. Until December 31, 2014, the project is still in progress. This cost arises from the application of research findings or egg-based production knowledge of flu vaccine from egg preparation, bulk manufacture, clinical trials, to registration of the product.

Biaya Pengembangan Upstream Vaksin Flu Dalam Penyelesaian sebesar Rp.10.791.097.458,31 merupakan biaya yang terkait dengan transfer teknologi upstream flu dengan BIKEN-Jepang yang meliputi aktivitas pengembangan vaksin flu pada skala pilot (5000 telur), optimalisasi proses produksi pada skala pilot untuk memperoleh hasil yang ekonomis, produksi preclinical lot, uji pra klinis (uji immunogenisitas pada hewan coba mencit), hingga produksi clinical lot untuk vaksin flu prepandemik.

Cost of development of upstream flu vaccine in progress amount to Rp10.791.097.458,31 represents costs arise from transfer of flu upstream technology from Biken - Japan that include activities of flu vaccine development at a pilot scale (5000 eggs), optimalization of production process at the pilot scale to meet economic yields, preclinical production lots, pre-clinical trials (testing immunogenicity at experimental mice animals), to the production of clinical lots of flu vaccine prepandemic.

Tahapan selanjutnya dari proses pengembangan vaksin flu (prepandemik) yang telah diselesaikan sampai dengan tanggal 31 Desember 2014 meliputi uji preklinis (uji toksisitas) pada hewan percobaan (tikus dan kelinci) dengan nilai sebesar Rp.1.547.709.250. Pada tahun 2014, juga secara bersamaan dikembangkan produksi vaksin seasonal flu dengan 4 jenis strain skala 5000 telur. Tahapan selanjutnya yang akan dilaksanakan mulai tahun 2015 untuk vaksin flu (pre-pandemik) meliputi uji tantang (challenge study) pada hewan uji ferret, produksi down stream clinical lot pada proses formulasi-filling, dan uji klinis phase 1. Uji klinis fase 2 dan 3 serta lisensi/registrasi produk ke BPOM diharapkan dapat diselesaikan hingga tahun 2017.

The next steps of the process of developing flu vaccine (prepandemic) that were completed until December 31, 2014 include preclinical trials (toxicity) at experimental animals (rats and rabbits) of Rp.1.547.709.250. In 2014, at the same time, it has also developed the production of seasonal flu vaccine for 4 types of strain scale of 5000 eggs. Further steps of the process of developing flu vaccine (pre-pandemic) that will be performed starting in 2015 include the challenge study at animal trails of ferrets, production of down stream clinical lots at filling formulation process, and phase 1 of clinical trials. Phase 2 and 3 of clinical trials and the process of product license/ registration to BPOM are expected to be completed until 2017.

Biaya pengembangan Upstream Vaksin Flu ini akan diamortisasi dengan metode garis lurus selama masa manfaat 8 (delapan) tahun sejak vaksin tersebut diproduksi secara komersil. Jika pengembangan tidak dilanjutkan (dibatalkan), diakui seluruhya sebagai beban pada laporan laba rugi komprehensif.

This cost of development of upstream flu vaccine will be amortized on a straight-line basis over the period of 8 (eight) years since the vaccines are produced commercially. If the development process is terminated (canceled), the costs are recognized as expense in the statement.of comprehensive income.

15. ASET TIDAK LANCAR LAINNYA

15. OTHER ASSETS 2014

Beban Tangguhan Dikurangi : Akumulasi Amortisasi Jumlah Beban Tangguhan Bersih Setoran Jaminan Jumlah Aset Tidak Lancar Lainnya

2013

1.746.200.000 (1.673.441.667) 72.758.333 693.565.496 766.323.829

1.746.200.000 (1.236.891.667) 509.308.333 446.965.496 956.273.829

Deferred Charges Less: Accumulated Amortization Total Deferred Charges - Net Guarantee Deposits Total Others Assets - Net

Beban Tangguhan merupakan pengeluaran untuk sistem jaringan listrik PLN yang diamortisasi selama 4 tahun.

Deferred charges represent expenditures for installing system of electricity network from PLN which were deferred and amortized over 4 years.

Setoran jaminan merupakan jaminan yang diberikan untuk penambahan daya listrik, jaminan sewa gedung Pakarti Center (Kantor Perwakilan Direksi) dan jaminan gas elpiji.

Guarantee deposits represent deposits provided for additional electric power, lease of Pakarti Center Building (Directors' Representative Office) and LPG.

31

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

16. TRADE PAYABLES 2013

16. UTANG USAHA Pembelian Bahan Baku/Penolong : Pihak Berelasi - Rupiah Koperasi Karyawan Bio Farma (K2BF) CV Karya Cahya Abadi PT Kimia Farma (Persero) Tbk Pihak Ketiga - Rupiah CV Sinar Gemilang Nurtilab Pratama PT Global Satria Aji Pall Filtration Indonesia EMS Menjangan Sakti PT Green Medica PT Schott Igar Glass Bakti Mega Lestari Media Televisi Indonesia PT Alere Health PT Cipta Cekas Grafika CV Pop Grafika CV Adytia Pratama Brata Jaya Dipa Puspa Labsains Inquatex Primates Juwana Parahyangan Mes Propharma Surya Teknik Tiara Utama Lainnya (di bawah Rp 1 Milyar) Pihak Ketiga - Mata Uang Asing Green Signal (USD 16,900.00) Jangsung (USD 341,308.80) Celeris : 2014 : UER 122,504.60 2013 : UER 52,072.80 Staten Serum Institute : 2014 : DKK 777,400.00 2013 : DKK 208,647.60 Wuxi (USD 57,760.00) Becton Dickinson (USD : 30.142,78) Berna (USD 3,271,763.00) Getinge (USD 517,730.00) Biken (JPY) 53,523,964.00) Marchesini Bio Laboratories (USD 109,979.60) IMA (USD 123,870.39) Temptime (USD 231,70) Lainnya (di bawah Rp 1 Milyar) Jumlah - dipindahkan

2014 14.297.577.296 2.071.539.658 410.324.291 16.779.441.245

6.430.251.889 1.620.925.585 1.046.691.590 9.097.869.064

6.216.959.210 5.277.761.550 3.078.681.345 4.356.876.540 2.693.427.500 2.566.209.360 1.631.103.670 1.480.094.300 1.462.500.000 1.380.000.000 1.259.600.000 1.218.241.360 870.710.000 369.183.470 1.011.289.300 1.685.171.779 1.049.200.000 1.973.845.000 1.421.206.320 1.453.280.250 1.417.615.487 15.757.950.635 59.630.907.075

4.039.419.453 535.116.000 2.434.932.750 944.634.214 977.060.000 789.376.800 1.101.248.750 3.315.782.440 3.299.256.000 1.039.953.099 2.673.889.000 1.511.092.500 463.152.618 285.151.450 275.200.000 206.002.500 283.125.674 531.625.000 356.859.480 11.480.377.367 36.543.255.095

21.023.600.000 4.245.881.472

-

1.853.893.963 -

875.939.481

1.579.599.060 718.534.400 374.976.183 -

2.543.205.596 39.879.519.207 6.310.610.970 6.217.878.898

370.655.193 30.167.140.272 106.577.488.592

1.850.015.243 1.509.856.184 2.824.191 344.290.393 59.534.140.163 105.175.264.321

32

Purchases of Raw Material/Auxiliaries Related Parties - Rupiah Koperasi Karyawan Bio Farma (K2BF) CV Karya Cahya Abadi PT Kimia Farma (Persero) Tbk Third Parties - Rupiah CV Sinar Gemilang Nurtilab Pratama PT Global Satria Aji Pall Filtration Indonesia EMS Menjangan Sakti PT Green Medica PT Schott Igar Glass Bakti Mega Lestari Media Televisi Indonesia PT Alere Health PT Cipta Cekas Grafika CV Pop Grafika CV Adytia Pratama Brata Jaya Dipa Puspa Labsains Inquatex Primates Juwana Parahyangan Mes Propharma Surya Teknik Tiara Utama Others (Less than Rp 1 Billion) r) Third Parties - Foreign Currencies Green Signal (USD 16,900.00) Jangsung (USD 341,308.80) Celeris : 2014 : UER 122,504.60 2013 : UER 52,072.80 Staten Serum Institute : 2014 : DKK 777,400.00 2013 : DKK 208,647.60 Wuxi (USD 57,760.00) Becton Dickinson (USD : 30.142,78) Berna (USD 3,271,763) Getinge (USD 517,730.00) Biken (JPY) 53,523,964.00) Marchesini Bio Laboratories (USD 109,979.60) IMA (USD 123,870.39) Temptime (USD 231,70) Others (Less than Rp 1 Billion) Total - carried forward

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

16. TRADE PAYABLES (continued)

16. UTANG USAHA (lanjutan) Pembelian Bahan Baku/ Penolong - pindahan Pembelian Aset Pihak Berelasi - Rupiah PT Pembangunan Perumahan (Persero) Koperasi Karyawan Bio Farma (K2BF) PT Adhi Karya (Persero) CV Karya Cahya Abadi Pihak Ketiga - Rupiah Karya Mentari Seraya PT Sinar Gemilang Sigma Bimed PT Biotech Maju Sejahtera Fajar Mas Murni PT Fluida Teknika Kromtekindo PT Bakti Mega Lestari CV Catu Daya Perkasa CV Adytia Pratama PT Daya Cipta Dianrancana Lainnya (di bawah Rp 1 Milyar) Pihak Ketiga - Mata Uang Asing Biott Corporation ( JPY 4,460,000.00) Marchesini (UER 12,048.30) Subjumlah - Pembelian Aset Utang Usaha Lainnya Jasa Audit Manajemen dan Riset Biaya Impor Subjumlah - Lainnya Jumlah Utang Usaha

2014

2013 105.175.264.321

Purchases of Raw Material/ Auxiliaries - brought forward

4.098.982.300 2.189.372.274 1.018.084.600

4.136.589.807 2.908.876.650 9.171.083.655 235.819.650

Purchases of Assets Related Parties - Rupiah PT Pembangunan Perumahan (Persero) Koperasi Karyawan Bio Farma (K2BF) PT Adhi Karya (Persero) CV Karya Cahya Abadi

4.406.712.725 3.589.522.550 2.335.639.650 1.557.850.000 1.344.400.000 1.300.000.000 1.149.750.000 923.650.000 573.750.000 9.139.241.833 26.320.516.758

7.961.493.750 258.500.000 4.677.741.240 375.653.000 2.140.977.000 2.709.900.000 2.829.916.100 1.063.952.500 151.896.881 10.231.321.156 32.401.351.627

464.910.400 182.330.056 647.240.456 34.274.196.388

48.853.721.389

106.577.488.592

Third Parties - Foreign Currencies Biott Corporation ( JPY 4,460,000.00) Marchesini (UER 12,048.30) Subtotal - Purchases of Assets Other Accounts Payable

3.873.571.620 Audit Management and Researches Services 195.676.623 Import Expenses

2.732.900.000 1.510.400.827 4.243.300.827 145.094.985.807

4.069.248.243 158.098.233.953

17. ACCURED EXPENSES 2013 78.739.000.000 14.209.320.733

17. BIAYA YANG MASIH HARUS DIBAYAR Jasa Produksi Karyawan Beban Karyawan Keagenan Ekspor, Royalti dan Insentif Penjualan Jasa Profesional Pemeliharaan dan Perbaikan Beban Angkutan dan Embalage Beban Kantor Peningkatan dan Pengembangan Sumberdaya Manusia Perjalanan Dinas Monitoring Lainnya Jumlah

Third Parties - Rupiah Karya Mentari Seraya PT Sinar Gemilang Sigma Bimed PT Biotech Maju Sejahtera Fajar Mas Murni PT Fluida Teknika Kromtekindo PT Bakti Mega Lestari CV Catu Daya Perkasa CV Adytia Pratama PT Daya Cipta Dianrancana Others (Less than Rp 1 Billion)

2014 86.705.000.000 15.836.708.807 11.716.530.647 3.716.194.621 2.887.314.575 2.874.208.270 2.678.072.559

8.479.320.145 1.747.437.883 4.518.581.407 2.961.955.259

1.065.010.500 347.448.946 453.162.002 128.279.650.927

1.564.195.441 558.511.594 2.626.693 112.780.949.155

Jasa produksi karyawan yang masih harus dibayar merupakan pengakuan liabilitas diestimasi tahun 2014 dan 2013 masingmasing sebesar 13 % dan 12% dari laba bersih setelah pajak, sesuai Nota Dinas Direksi No.00433/DIR/I/2015 untuk tahun 2014 dan Nota Dinas Direksi No.00246/DIR/I/2014 untuk tahun 2013.

Subtotal - Others Total Accounts Payable

Employee Bonus Employee Expenses Export Agencies, Royalties and Sales Incentives Professional Fees Maintenace and Repairs Freights and Embarkations Office Expenses Improvement and Development of Human Resources Business Traveling Monitoring Others Total

Accrued employee bonus represents the amount of estimated employee bonus liability recognized for 2014 and 2013 which represent of 12% and 11% of net income after tax, respectively, in acordance with the Directors Memorandum No.00433/DIR/I/2015 for 2014 and No.00246/DIR/I/2014 for 2013.

33

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

18. UNEARNED REVENUE 2013

18. PENDAPATAN DITERIMA DIMUKA 2014 Swasta Dalam Negeri Propam Pharnak Vaccine Bionet Asia Servbio Biological Ltd Zhejiang Med Jumlah Pendapatan Diterima Dimuka

41.431.996 839.482.300 72.774.000 29.856.000 8.863.500 374.004.598 1.366.412.394

160.227.037 335.234.478 4.909.587.930 5.405.049.445 19. OTHER CURRENT LIABILITIES

19. LIABILITAS LANCAR LAINNYA 2014 Tantiem Taksasi Ongkos angkut dan embalage Titipan Pihak Ketiga Lainnya Jumlah

Domestic Private Propam Pharnak Vaccine Bionet Asian Servibio Biological Ltd Zhejiang Med Total Unearned Revenue

2013

17.521.134.000 7.992.038.341 83.444.591 411.952.210 26.008.569.142

16.529.371.000 9.555.622.801 258.252.126 93.403.408 26.436.649.335

Management Bonus Estimated Freights and Embarkations Third Parties Deposits Others Total

Utang tantiem tahun 2014 merupakan pengakuan liabilitas yang diestimasi berdasarkan prognosa tantiem tahun 2014 yang tercantum pada RKAP 2015, sedangkan tantiem tahun 2013 diestimasi dari laba bersih setelah pajak sesuai Nota Dinas Direksi No. 00423/DIR/I/2014.

Management bonus liability as of December 31, 2014 represents the recognition of estimated management bonus liability based on prognosis of management bonus for 2014 as shown in the RKAP 2015, whereas management bonus for 2013 was estimated from net income after tax in accordance with Directors' Memorandum No. 00423/DIR/I/2014.

Taksasi ongkos angkut dan embalage merupakan pengakuan jumlah biaya angkut dan embalage yang diestimasi per 31 Desember 2014 dan 2013 untuk pengiriman penjualan vaksin kepada Pemerintah.

Freights and embarkations liabilities represent the recognition of the amount of estimated liabilities for freights and embarkations expenses as of December 31, 2014 and 2013 due to delivery of selling vaccines to the Government.

20. LIABILITAS DIESTIMASI ATAS IMBALAN PASCA KERJA Perusahaan menerapkan liabilitas imbalan pasca kerja sesuai dengan PSAK 24 (Revisi 2010). Selain itu Perusahaan juga mengikutsertakan seluruh karyawan tetap dan kontrak ke dalam program pensiun yang dikelola oleh Dana Pensiun Lembaga Keuangan (DPLK) PT Asuransi Jiwasraya.

20. ESTIMATED EMPLOYEE BENEFIT LIABILITIES The Company accounts for employee benefits liabilities in conformity with PSAK 24 (Revised 2010). In addition, the Company arranges a defined contribution pension plan covering both its permanent and contract employees. The plan is managed by Financial Institutions of Pension Fund (Dana Pensiun Lembaga Keuangan or DPLK) PT Asuransi Jiwasraya.

Uraian berikut ini merupakan rangkuman perhitungan beban dan liabilitas imbalan pasca kerja karyawan tahun 2014 dan 2013 yang diakui pada laporan laba rugi dan laporan posisi keuangan. Perhitungan beban dan liabilitas imbalan pasca kerja karyawan tahun 2014 dan 2013 dilakukan oleh aktuaris independen PT Katsir Imam Sapto Sejahtera Aktuaria dalam laporannya tanggal 7 Januari 2015 dan 30 Desember 2013 dengan menggunakan metode "Projected Unit Credit ”.

The following information is the summary of computation of employee benefit expenses and its liabilities in 2014 and 2013 which were recognized in the statement of comprehensiive income and the statement of financial position. The amount of estimated employee benefit expenses and liabilities for the years 2014 and 2013 were computed using "Projected Unit Credit" method by independent actuary of PT Katsir Imam Sapto Sejahtera Aktuaria as mentioned in its reports dated January 7, 2015 and December 30, 2013. Post Employee Benefit Expenses 2013 Current Service Costs 6.476.743.015 5.417.689.783 Interest Costs 780.528.804 Past Service Costs 1.161.222.551 Actuarial Gains (Losses) Recognized 4.361.692.330 Retirements 18.197.876.483 Total Employee Benefit Expenses

Beban Imbalan Pasca Kerja Beban Jasa Kini Beban Bunga Beban Jasa lalu - Non Vested Laba (Rugi) Aktuaria yang Diakui Pemberhentian Jumlah Beban Imbalan Pasca Kerja

2014 9.080.370.505 9.284.473.649 780.528.804 2.045.300.912 4.235.960.873 25.426.634.744

34

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

20. ESTIMATED EMPLOYEE BENEFIT LIABILITIES (continued)

20. LIABILITAS DIESTIMASI ATAS IMBALAN PASCA KERJA (lanjutan) Liabilitas Diestimasi atas Imbalan Pasca Kerja Saldo Awal Nilai Kini Liabilitas Imbalan Kerja Dampak Perubahan Asumsi Aktuaria Beban Jasa Kini Beban Bunga Pembayaran Pensiun Rugi Aktuaria atas Kewajiban Saldo Akhir Nilai Kini Liabilitas Imbalan Kerja Beban Jasa lalu yang Belum Diakui Keuntungan Aktuarial yang Belum Diakui Liabilitas Imbalan Pasca Kerja

Post Employee Benefit Liabilities 2014

2013

103.160.818.325

77.395.568.323

12.552.956.172 9.080.370.505 9.284.473.649 (6.858.142.517) 9.147.633.731

(17.509.477.859) 6.476.743.015 5.417.689.783 (6.906.757.046) 37.773.189.734

136.368.109.865 (6.518.122.731) (67.146.796.563) 62.703.190.571

102.646.955.950 (7.298.651.535) (46.977.645.197) 48.370.659.217

Perubahan Liabilitas Diestimasi atas Imbalan Pasca Kerja Saldo Awal Beban Imbalan Pasca Kerja Tahun Berjalan Pembayaran Pensiun Pembayaran GSH (sesuai cadangan) Pembayaran GSH (beban langsung) Saldo Akhir Asumsi utama yang digunakan : Usia Pensiun Normal Tingkat Diskonto Tingkat Proyeksi Kenaikan Gaji Tabel Mortalita Tingkat Cacat Tingkat Pengunduran Diri

Changes in Post Employee Benefit Liabilities

2014 48.370.659.217

2013 41.441.232.110

25.426.634.744 (6.200.891.390) (657.251.127) (4.235.960.873) 62.703.190.571

18.197.876.483 (5.290.702.376) (1.616.054.670) (4.361.692.330) 48.370.659.217

2014 56 Tahun / 56 Years 8% 8% TMI III 2011 1% dari Mortalita 0 % sesuai/conform with TMI III 2011

Beginning Balance Employee Benefit Expense of the Year Payments of Pension Payments of GSH (reserved) Payments of GSH (direct charges) Ending Balance The principal assumptions used :

2013 56 Tahun / 56 Years 9% 8% TMI III 2011 1% from Mortalita 0 % sesuai/conform with TMI III 2011

21 LIABILITAS TIDAK LANCAR LAINNYA

Normal Pension Age Discount Rate Projection of Salary Increase Rate Mortality Table Disability Rate Resignation Rate

21 OTHER NON-CURRENT LIABILITIES 2014

Grant

Beginning Balance of Present Value of Estimated Employee Benefit Effect of Changes in Actuarial Assumtions Current Service Costs Interest Costs Payments of Pension Actuarial Loss on Liability Ending Balance of Present Value of Estimated Employee Benefit Unrecognized Past Service Costs Unrecognized Actuarial Gains Employee Benefit Liability

2013 -

24.882.312.222 24.882.312.222

Perusahaan menandatangani perjanjian untuk melaksanakan suatu proyek dengan grant senilai USD 2,919,998 yang berlaku sejak 17 November 2014 sampai dengan 31 Juli 2017. Grant tahap pertama telah diterima sebesar USD 2,000,000, yang diakui sebagai liabilitas. Keberlanjutan proyek akan dievaluasi pada tanggal 30 Juni 2015. Jika hasil evaluasi menyimpulkan proyek dapat dilanjutkan, sisa dana sebesar USD 919,998 akan dibayarkan. Namun jika tidak dilanjutkan, maka proyek akan dihentikan dan seluruh sisa dana harus dikembalikan. Berkenaan dengan syarat dan ketentuan grant, perusahaan mengakui grant sebagai pendapatan hibah berdasarkan laporan progres proyek.

Grant

The Company entered into an agreement to perform a grant project amounting to USD 2,919,998. The project is in effect since November 17, 2014 until July 31, 2017. The Company had received the first term of the grant amounting to USD 2,000,000 which was recognized as a liability. The sustainability of the project will be evaluated on June 30, 2015. If the result of the evaluation concludes that the project can be continued, the Company will receive the remaining grant of USD 919.998. However, if it is not continued, the project will be terminated and the rest of the funds should be returned to. Considering the terms and conditions of the grant, the company will recognize the grant as revenue based on progress report of the project.

35

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

22. MODAL SAHAM Modal ditempatkan dan disetor pada awal tahun Kapitalisasi Cadangan ke Modal Disetor Modal ditempatkan dan disetor pada akhir tahun

22. SHARE CAPITAL 2014

2013

750.000.000.000 500.000.000.000

450.000.000.000 300.000.000.000

1.250.000.000.000

750.000.000.000

Pada tahun 2014, sesuai dengan Keputusan Menteri Negara BUMN No.S315/MBU/2014, tanggal 20 Mei 2014 yang telah dicatatkan dalam akta No. 26 tanggal 6 Juni 2014 dari Notaris Fathiah Helmi, SH., dan telah mendapat persetujuan dari Menteri Hukum dan Hak Asasi Manusia Republik Indonesia sesuai surat Nomor: AHU-04104.40.20.2014 tanggal 10 Juni 2014, modal dasar Perusahaan ditingkatkan dari semula Rp.2.000.000.000.000 (2.000.000 lembar saham) menjadi Rp.5.000.000.000.000 (5.000.000 lembar saham) dan modal ditempatkan dan disetor ditingkatkan dari semula Rp.750.000.000.000 (750.000 lembar saham) menjadi Rp.1.250.000.000.000 (1.250.000 lembar saham) melalui kapitalisasi cadangan sebesar Rp.500.000.000.000.

In 2014, in accordance with Decision Letter of the Minister of StateOwned Enterprises No.S315/MBU/2014, dated May 20, 2014 that has been recorded in Deed No. 26 dated June 6, 2014 of Notary Fathiah Helmi, SH., and has been approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his Letter No. AHU-04104.40.20.2014 dated June 10, 2014, the Company's authorized capital was increased from Rp.2.000.000.000.000 (2.000.000 shares) to Rp.5.000.000.000.000 (5.000.000 shares), and share issued and fullly paid was increased from Rp.750.000.000.000 (750.000 shares) to Rp.1.250.000.000.000 (1.250.000 shares) through the capitalization of reserves amounting to Rp.500.000.000.000.

23. SALDO LABA DAN PENGGUNAAN LABA

23. RETAINED EARNINGS AND DISTRIBUTION OF INCOME

a. Saldo Laba - Dicadangkan Saldo pada Awal Tahun Pembentukan Cadangan Kapitalisasi Cadangan ke Setoran Moda Tambahan Dividen dari Cadangan Konversi Saldo Laba ke Cadangan Saldo Laba - Dicadangkan Pada Akhir Tahun

a. Retained Earnings - Appropiated 2014 941.919.524.322 400.727.336.047 (500.000.000.000)

2013 670.640.762.322 299.278.762.000 -

(57.247.000.000) 675.000.000

(28.000.000.000) -

786.074.860.369

941.919.524.322

b. Saldo Laba - Belum Dicadangkan Saldo Laba pada awal tahun Pembagian Laba Cadangan Dividen Tambahan Dividen dari Cadangan Program PKBL Tambahan Tantiem Koreksi Saldo Laba Konversi Saldo Laba ke Cadangan Laba (Rugi) Tahun Berjalan Saldo Laba - Belum Dicadangkan Pada Akhir Tahun

Share capital issued and fully paid at the beginning of the year Capitalization of Reserve Share capital issued and fully paid at end of year

Balance at Beginning of Year Establishment of Reserves Capitalization of Reserves to Share Capital Additional Dividen from Appropiated Earnings Transfer of Unappropiated to Appropiated Appropiated Retained Earnings at End of Year

b. Retained Earnings - Unappropiated 2013 Balance at Beginning of Year 385.891.883.599 Income Distribution Reserve (299.278.762.000) (105.178.377.000) Dividend Additional dividends from 28.000.000.000 Appropiated Earnings Partnership Program (8.759.744.599) Additional Management Bonus (675.000.000) Correction of Retained Earnings 675.000.000 Transfer of Unappropiated to Appropiated Net Income for the Year 572.467.622.925 Unappropiated Retained Earnings 573.142.622.925 at End of Year

2014 573.142.622.925 (400.727.336.047) (228.987.286.878) 57.247.000.000 (675.000.000) 580.073.741.835 580.073.741.835

c. Penggunaan Laba Pembagian atas laba bersih tahun 2013 dan 2012 ditetapkan dalam RUPS tentang persetujuan laporan keuangan tahunan, pengesahan perhitungan tahunan, dan pembagian laba bersih tahun buku 2013 dan 2012 pada tanggal 21 Maret 2014 dan 26 Maret 2013.

c. Distribution of Income The distribution of net income for the years of 2013 and 2012 was decided in the General Meeting of the Company's Shareholders regarding the approval of the annual financial statements and distribution of net income for the years of 2013 and 2012 on March 21, 2014 and March 26, 2013, respectively.

36

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

23. RETAINED EARNINGS AND DISTRIBUTION OF INCOME (Continued)

23. SALDO LABA DAN PENGGUNAAN LABA (lanjutan)

Deviden Cadangan Kemitraan Bina Lingkungan Tantiem Jumlah

Laba Tahun Buku 2013 Net Income for the year 2012 Jumlah Persentase Total Percentage 171.740.286.877 39,95% 401.402.336.047 60,05% 0% 0% 0% 573.142.622.924 100%

Laba Tahun Buku 2012 Net Income for the year 2012 Jumlah Persentase Total Percentage 77.178.377.000 15,00% 299.278.762.000 81,00% 1.929.459.000 2,00% 6.830.286.000 2,00% 675.000.000 0% 385.891.884.000 100%

Sesuai surat Menteri BUMN No.S-805/MBU/2014 tanggal 23 Desember 2014 dan No. S‐765/MBU/2014 tanggal 20 Desember 2013 keputusan RUPS tersebut dirubah dengan menambah dividen masing-masing sebesar Rp.57.247.000.000 untuk tahun 2014 dan Rp.28.000.000.000 untuk tahun 2013.

According to the Letter of the Minister of State-Owned Enterprises No.S-805/MBU/2014 dated December 23, 2014 and No.S-765/MBU/2014 dated December 20, 2013, dividends for 2014 and 2013 were added by Rp.57.247.000.000 and Rp.28.000.000.000, respectively.

24. PENJUALAN PRODUK PERUSAHAAN

24. SALE OF THE COMPANY'S PRODUCTS 2014 Swasta/Private Ekspor/ Export Lokal/Local

Pemerintah / Goverment Penjualan Produk Vaksin Bakteri Vaksin Virus Vaksin Kombinasi Sera & Diagnostika

Dividend Approriated Partnership Community Development Management Bonus Total

Jumlah/ Total

Dikurangi : Potongan Penjualan

98.521.504.420 167.683.728.790 273.678.128.790 75.955.500 539.959.317.500 -

7.775.693.842 34.687.104.183 2.869.785.960 90.148.847.936 135.481.431.921 (12.685.163.736)

111.308.249.149 1.254.909.371.263 14.879.040 1.366.232.499.452 -

217.605.447.411 1.457.280.204.236 276.547.914.750 90.239.682.476 2.041.673.248.873 (12.685.163.736)

Jumlah Penjualan Bersih

539.959.317.500

122.796.268.185

1.366.232.499.452

2.028.988.085.136

2013 Swasta/Private Ekspor/ Export Lokal/Local

Pemerintah/ Goverment Penjualan Produk Vaksin Bakteri Vaksin Virus Vaksin Kombinasi Sera & Diagnostika Dikurangi : Potongan Penjualan

Pemerintah IPV Swasta Polyvalent Snake Anti Venom Dikurangi : Potongan Penjualan Jumlah Penjualan Bersih

Less: Sales Discount Total Net Sales

Jumlah/ Total

130.988.124.650 183.656.344.950 233.508.586.620 571.441.200 548.724.497.420 -

3.557.837.386 10.267.594.029 340.927.797 63.063.647.414 77.230.006.626 (354.394.452)

99.207.773.391 1.108.928.760.611 14.715.000.000 1.222.851.534.001 -

233.753.735.427 1.302.852.699.590 248.564.514.417 63.635.088.614 1.848.806.038.047 (354.394.452)

548.724.497.420

76.875.612.174

1.222.851.534.001

1.848.451.643.595

25. PENJUALAN BARANG DAGANGAN

Sale of Products Bacterial Vaccines Virus Vaccines Combination Vaccines Antisera and Diagnostics

Sale of Products Bacterial Vaccines Virus Vaccines Combination Vaccines Antisera and Diagnostics Less: Sales Discount

25. SALE OF MERCHANDISE GOODS 2014

2013

7.768.581.546

-

2.641.320.000 10.409.901.546 (122.958.000) 10.286.943.546

1.848.000.000 1.848.000.000 1.848.000.000

37

Government IPV Private Polyvalent Snake anti Venom Less: Sales Discount Net Sales of Merchandise Goods

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

26. PENJUALAN JASA Imunisasi Laboratorium Dikurangi : Potongan Penjualan Jumlah Penjualan Jasa Bersih

26. SALE OF SERVICES 2013

2014 3.978.163.573 827.259.726 4.805.423.299 4.805.423.299

2.500.869.260 881.468.400 3.382.337.660 (338.750) 3.381.998.910

Hasil penjualan imunisasi diperoleh dari imunisasi vaksin dan serum, sedangkan hasil penjualan laboratorium diperoleh dari jasa pengujian mutu dan pemeriksaan laboratorium.

Beban Produksi Tidak Langsung Pemakaian Bahan baku Pemakaian Bahan Penolong Karyawan Sosial Karyawan Perjalanan Dinas Jasa Profesional Pemeliharaan dan Perbaikan Asuransi Penyusutan dan Amortisasi Kantor

Peningkatan dan Pengembangan SDM Total Beban Produksi Tidak Langsung Beban Produksi Persediaan Produk Dalam Proses Awal Tahun Akhir Tahun Beban Pokok Produksi Persediaan Produk Jadi Awal Tahun Kadaluarsa/Rusak Promosi, Rusak, Disumbangkan, Penggantian dan Pemakaian Sendiri Tersedia untuk Dijual Dijual untuk Imunisasi Akhir Tahun Jumlah Beban Pokok Penjualan

Less: Sales Discount Total Sales of Service-Net

The sales of immunization obtained from vaccine and serum immunization services, whereas the laboratory sales obtained from providing the laboratory and quality testing services.

27. BEBAN POKOK PENJUALAN PRODUK PERUSAHAAN Beban Produksi Langsung Pemakaian Bahan baku Karyawan Total Beban Produksi Langsung

Immunization Laboratorium

27. COST OF SALES OF THE COMPANY'S PRODUCTS

2014

2013

316.474.526.851 39.349.456.729 355.823.983.580

308.657.992.574 31.155.101.954 339.813.094.528

44.502.629.822 148.920.764.165 96.334.363.135 5.544.496.183 3.563.809.743 2.705.006.417 124.174.675.333 1.446.458.020 89.753.664.615 7.016.279.858

10.524.914.577 124.812.752.438 81.180.792.701 4.371.229.639 3.362.147.094 2.838.422.936 86.668.908.059 870.158.412 78.174.380.157 8.253.624.592

2.982.472.221 526.944.619.513

2.729.792.931 403.787.123.536

882.768.603.093

743.600.218.064

46.675.802.415 (97.889.204.813) 831.555.200.695

34.134.147.653 (46.675.802.415) 731.058.563.301

42.582.402.135 (38.040.438.465)

46.962.748.523 (14.560.529.952)

(1.233.818.867) 834.863.345.498 (1.479.390.740) (65.775.265.667) 767.608.689.091

(792.456.741) 762.668.325.132 (1.623.341.818) (42.582.402.135) 718.462.581.178

28. BEBAN POKOK PENJUALAN BARANG DAGANGAN 2014 34.140.799 Persediaan Awal Tahun 10.331.922.097 Pembelian 10.366.062.896 Tersedia untuk Dijual Kadaluarsa/rusak Digunakan untuk Promosi, Penggantian, Pemakaian Sendiri dan Disumbangkan (225.716.053) Digunakan untuk Imunisasi (1.313.359.545) Persediaan Akhir Tahun 8.826.987.298 Jumlah

Direct Production Costs Raw Materials Used Employees Total Direct Production Costs Indirect Production Costs Raw Materials Used Auxiliary Materials Used Employees Social Employee Business Travelling Professional Fees Maintanence and Repairs Insurance Depreciation and amortization Office

Improvement and Development of Human Resources Total Indirect Production Costs Production Costs Goods in Process Inventory at the Beginning of the Year at the End of the Year Cost of Goods Manufactured Finished Goods Inventory at the Beginning of the Year Expired/Damaged Promotion, Damages, Donated, Replacement and Self Consumptions Cost of Goods Available for Sale Sold for Immnunization Inventory at End of the Year Cost of Sales

28. COST OF SALES OF MERCHANDISE GOODS 2013 Inventories at Beginning of Year 39.784.250 Purchases 1.413.671.927 Available for Sale 1.453.456.177 Out of Date/Damaged (8.641.408) Used for Promotion, Replacement, Self Consumption and Donation (94.500) Used for Immunization (262.439.193) Inventories at End of Year (34.140.799) Total 1.148.140.277

38

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

29. BEBAN JASA Karyawan Pemakaian Produk Jadi untuk Imunisasi Pemakaian Bahan Baku dan Penolong Pemakaian Barang Dagang untuk Imunisasi Perjalanan Dinas Penyusutan Aset Tetap Pemeliharaan dan Perbaikan Asuransi Lain-lain Jumlah

29. COST OF SERVICE 2014 967.140.262 1.479.390.741 149.668.392

2013 1.414.253.568 1.623.341.818 187.480.164

225.716.053 66.071.440 218.033.938 14.405.000 2.054.577 531.449.318 3.653.929.719

262.439.193 53.033.000 116.479.715 181.438.655 1.336.240 145.848.951 3.985.651.305

30. PENGHASILAN LAIN-LAIN

30. OTHER INCOME 2014

Keuntungan Selisih Kurs Pemulihan Penyisihan Persediaan Pemulihan Penyisihan Piutang Pendapatan Hibah Royalti Pendapatan Jasa Giro Pendapatan Bunga Deposito Pendapatan Bunga Investasi Pendapatan Denda dari Pemasok dan Pelanggan Hasil Sewa Ruangan dan Bagi Hasil Klaim Asuransi Penghasilan Lainnya (di bawah Rp 1 milyar) Jumlah

Employees Products used for Immunization Raw Materials and Auxiliaries used Merchandise Goods used for Immunization Business travelling Depreciation of Fixed Assets Repairs and Maintenance Insurance Others Total

2013

70.215.332.574 1.957.764.125 34.960.874 4.988.917.314 1.493.832.930 988.749.765 33.089.386.020 1.521.625.000

127.501.194.468 28.824.130 1.277.818.181 1.870.124.469 1.062.607.726 13.100.831.441 -

389.605.973 92.312.500 106.644.572 3.751.235.767 118.630.367.414

799.099.888 243.250.000 6.954.078.648 152.837.828.951

31. BEBAN ADMINISTRASI DAN UMUM

Gains on Foreign Exchange Recovery of Inventory Impairment Recovery of Receivable Impairment Donation Revenue Royalties Interest from Deposit Accounts Interest from Time Deposits Interest from Investment Penalties from Distributors and Supplier Room Rent and Profit Sharing Insurance Claims Others (below Rp 1 billion) Total

31. GENERAL AND ADMINISTRATIVE EXPENSES 2014

2013

207.334.353.634 Karyawan 37.670.776.997 Dewan Komisaris dan Direksi 36.010.265.385 Beban Kantor 29.377.750.248 Pemeliharaan dan Perbaikan 13.076.837.761 Sosial Karyawan 13.594.559.195 Penyusutan Aset Tetap 12.885.533.823 Peningkatan dan Pengembangan SDM 6.113.251.087 Perjalanan Dinas 3.669.884.233 Jasa Profesional 3.698.365.000 HUT Perusahaan dan Olahraga 3.760.908.867 Jamuan Tamu 1.903.287.248 Pajak Bumi dan Bangunan & Pajak Kendaraan Kemitraan dan Bina Lingkungan 4.061.787.035 1.969.132.866 Sumbangan Sosial Masyarakat 85.517.965 Asuransi Amortisasi Beban Tangguhan dan 1.666.309.750 Aset Takberwujud 1.569.601.100 Lain-lain 378.448.122.194 Jumlah

173.050.921.213 39.174.226.137 25.905.606.849 14.433.566.029 10.708.205.506 9.174.621.162 11.085.794.003 4.757.097.962 5.956.003.520 3.247.724.000 3.136.287.590 1.790.540.355 1.367.928.971 103.950.392 220.935.877 199.706.520 304.313.116.086

39

Employees Directos and Commisioners Office Expenses Repairs and Maintenance Employees Social Expenses Depreciation Expense Human Resources Development Business travelling Professional Fees Company's Anniversary and Sports Entertainment Land and Buildings and Vehicle Taxes Partnership and Community Devlpomemt Donation Insurance Amortization of Deffered Charges and Intangible Assets Others Total

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

32. BEBAN PENJUALAN

32. SELLING EXPENSES 2013

2014 Keagenan Ekspor Ongkos Angkut Embalage Promosi dan Periklanan Pemeliharaan Pasar Insentif Penjualan Jaminan dan Kerugian Penjualan Royalti Penyisihan Penurunan Nilai Piutang Jumlah

27.021.798.405 13.075.049.196 9.818.143.008 10.522.105.506 1.775.301.247 326.010.138 9.913.042.631 118.427.772 72.569.877.903

876.933.648 31.269.417.083 20.159.386.968 6.382.782.157 7.456.712.536 1.606.268.651 249.695.600 4.790.883.567 38.206.401 72.830.286.610

Rincian beban royalti tahun 2014 dan 2013 terdiri dari : Biken-Jepang atas penjualan vaksin flu bio Cape Biologicals atas penjualan vaksin pentabio Bionet Asia atas penjualan vaksin pentabio Jumlah

Details of royalty expenses in 2014 and 2013 consist of :

2014

2013

246.398.600

162.139.097

4.970.640.022

2.314.372.235

4.696.004.008 9.913.042.631

2.314.372.235 4.790.883.567

33. BEBAN PENELITIAN, PENGEMBANGAN DAN SURVEILANS

2013

21.242.673.637 21.030.107.325 17.910.310.534 14.725.288.243 8.020.363.195 2.352.694.597 588.764.489 2.739.770.846 169.242.590 88.779.215.457

13.119.084.947 14.797.860.627 15.739.734.589 12.537.101.897 6.611.799.104 2.614.749.385 743.556.141 2.029.716.358 124.308.708 68.317.911.755

34. BEBAN LAIN-LAIN

2013

59.322.831.500 67.738.990 378.189.000 41.955.815 9.937.122.869 69.747.838.173

30.432.437.421 23.717.554.904 729.188.915 3.993.614.730 58.872.795.971

35. PENDAPATAN KOMPREHENSIF LAINNYA Keuntungan (Kerugian) belum direalisasi atas kepemilikan efek tersedia untuk dijual

Materails and Auxilliaries Used Professional Fees Employees Depreciation Expense Repairs and Maintenance Business travelling Office Expenses Human Resources Development Insurances Total

34. OTHER EXPENSES 2014

Kerugian Selisih Kurs Bunga Pinjaman Koreksi Pajak dan Denda Pajak Denda selain Pajak Kerugian Penjualan Aset Lain-lain Beban Penurunan Nilai Aset Beban Lainnya (di bawah Rp 1 milyar) Jumlah

Biken-Japan on sale of flu bio vaccines Cape Biologicals on sale of pentabio vaccines Bionet Asian on sale of pentabio vaccines Total

33. RESEARCH AND DEVELOPMENT EXPENSES

2014 Pemakaian Bahan Baku dan Penolong Jasa Profesional Karyawan Penyusutan Aset Tetap Pemeliharaan dan Perbaikan Perjalanan Dinas Beban Kantor Peningkatan & Pengembangan SDM Asuransi Jumlah

Export Agencies Transportations Embarkations Advertising and Promotion Market Maintenance Sales Incentives Sales Warranties Royalties Provision for Impairment of Receivables Total

Loss on Foreign Exchange Interest of Loans Tax Corrections and Penalties Other penalties Loss on Sale of Other Assets Loss on Impairment of Assets Other Expenses (below Rp 1 billion) Total

35. OTHER COMPERHENSIVE INCOME 2014

2013

Unrealized Gains (Loss) From Available For Sale Securities

377.292.849 377.292.849

-

40

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

36. ASET DAN LIABILITAS DALAM MATA UANG ASING

Aset Kas dan Setara Kas Piutang Usaha Uang Muka

Jumlah Aset Liabilitas Pendapatan Dimuka Utang Usaha

Biaya YMH Dibayar Utang Lainnya Jumlah Liabilitas

36. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

31 Desember 2014 Mata Uang Asing/ Ekuivalen Rupiah/ Foreign Currency Rupiah Equivalent

31 Desember 2013 Mata Uang Asing/ Ekuivalen Rupiah/ Foreign Currency Rupiah Equivalent

USD EUR USD USD EUR AUD SGD

11.284.106 1.665.477 18.235.567 809.856 155.047 2.100 -

140.374.275.157 25.204.092.682 226.850.449.748 10.074.606.028 2.346.362.023 21.458.262 404.871.243.899

17.949.830 320.548 22.447.707 573.710 347.000 4.294

218.790.475.554 5.392.085.678 273.615.097.576 6.992.949.362 5.837.039.680 41.342.568 510.668.990.417

EUR USD USD EUR GBP JPY DKK USD USD

24.714 76.445 438.000 134.553 6.966.954 777.400 28.800 31.020

374.004.598 950.975.800 5.448.722.364 2.036.224.019 726.235.285 1.579.599.060 358.272.000 385.885.939 11.859.919.065

19.929 402.788 4.139.035 162.052 3.464 54.126.452 320.764 45.677

335.234.478 4.909.587.929 50.450.700.784 2.725.954.723 69.614.726 6.287.869.929 3.909.794.346 556.756.953 69.245.513.869

Aset (Liabilitas) - Bersih

393.011.324.834

Assets Cash and Cash Equivalent Trade Receivables Advances

Total Assets Liabilities Unearned Revenues Trade Payables

Accrued Expenses Other Liabilities Total Liabilities Assets (Liabilities) - Net

441.423.476.548

36. TRANSAKSI DENGAN PIHAK-PIHAK BERELASI

36. TRANSACTIONS WITH RELATED PARTIES

a. Saldo akun dengan pihak berelasi adalah sebagai berikut :

a. Account balances with the related parties are as follows:

31 Desember 2014 December 31, 2014 Persen* / Jumlah/ Total Percentage*

31 Desember 2013 December 31, 2013 Persen */ Jumlah/ Total Percentage*

Kas dan Setara Kas (Catatan 3) 951.717.046.000

31,27%

866.250.766.156

32,05%

Cash and Cash Equivalent (Note 3)

Piutang Usaha (Catatan 5)

11.959.603.001

0,39%

7.697.268.220

0,28%

Trade Receivables (Note 5)

Piutang Lainnya (Catatan 6)

1.302.637.458

0,04%

1.302.637.458

0,05%

Other Receivables (Note 6)

Uang Muka Pembelian Lokal (Catatan 8)

34.294.004.725

1,13%

9.285.164.861

0,34%

Advances (Note 8)

Pendapatan yang masih akan diterima ( Catatan 11)

2.163.072.734

0,07%

2.129.257.903

0,08%

Accrued income (Note 11)

18.396.559.596 3.089.624.258 2.189.372.274 1.150.000.000 410.324.291 290.000.000 25.525.880.419

0,60% 0,10%

9.339.128.539 1.856.745.234 4.136.589.807 9.171.083.655 1.046.691.590 25.550.238.825

0,35% 0,07% 0,15% 0,34% 0,00% 0,04% 0,00% 0,95%

Trade Payables (Note 16) Koperasi Karyawan Bio Farma CV Karya Cahya Abadi PT Pembangunan Perumahan PT Adhi Karya Universitas Brawijaya PT Kimia Farma Tbk PT Telkom Indonesia Tbk Total

Utang Usaha (Catatan 16) Koperasi Karyawan Bio Farma CV Karya Cahya Abadi PT Pembangunan Perumahan PT Adhi Karya Universitas Brawijaya PT Kimia Farma Tbk PT Telkom Indonesia Tbk Jumlah

0,07% 0,04% 0,01% 0,01% 0,84%

-

* Persentase terhadap jumlah aset / Percentage to total asset

41

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

36. TRANSAKSI DENGAN PIHAK-PIHAK BERELASI (lanjutan) b. Sifat Hubungan Pihak Berelasi Related Parties Bank Milik Negara/ Daerah PT Kimia Farma T&D PT Indofarma Global Medika PT Rajawali Nusantara Indonesia PT Iglas PT Pembangunan Perumahan PT Adhi Karya Koperasi Karyawan Bio Farma CV Karya Cahya Abadi Pihak Berelasi Lainnya

36. TRANSACTIONS WITH RELATED PARTIES (continued)

Hubungan dengan Perusahaan Relationship with the Company Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control Entitas Sepengendali Entity Under Common Control

38. PERJANJIAN DAN PERIKATAN PENTING a. Pada tanggal 21 Juli 2014, Perusahaan mengadakan perjanjian jual beli pengadaan vaksin regular tahun 2014 dengan Direktorat Bina Obat Publik dan Perbekalan Kesehatan Direktorat Jenderal Bina Kefarmasian dan Alat Kesehatan Kementerian Kesehatan Republik Indonesia, dengan nomor perjanjian No.KN.01.01/5/221-PK/2014. Disepakati bahwa Direktorat Bina Obat Publik dan Perbekalan Kesehatan Direktorat Jenderal Bina Kefarmasian dan Alat Kesehatan Kementerian Kesehatan Republik Indonesia akan membeli berbagai jenis vaksin untuk program tersebut dari Perusahaan dengan rincian sebagai berikut: Jenis Vaksin/ BCG TT DT Campak Polio Hep. B 0.5 ml IPV Td

Kemasan/ Pack 20 ds/amp 10 ds/vial 10 ds/vial 10 ds/vial 10 ds/vial 1 ds/pouch 10 ds/vial 10 ds/vial Total PPN/VAT 10% Total + PPN/VAT 10%

Sifat Saldo Akun/Transaksi Nature of Accounts/Transactions Kas dan setara kas Cash and Equivalent Cash Penjualan Produk Sale of Products Penjualan Produk Sale of Products Penjualan Produk Sale of Products Piutang Lain-lain Other Receivables Pembelian Investasi Purchase of Investment Pembelian Investasi Purchase of Investment Pembelian Barang dan Investasi Purchase Goods and Investment Pembelian Barang dan Investasi Purchase Goods and Investment Lain-lain dengan transaksi dibawah Rp 1 milyar Other Transactions under Rp 1 billion

38. SIGNIFCANT AGREEMENTS AND COMMITMENTS a. On July 21, 2014, the Company entered into an agreement with the Directorate of Public Drugs and Medical Products of the Directorate General of Pharmaceutical and Medical Devices of the Ministry of Health of the Republic of Indonesia regarding the sale and purchase of regular vaccine in 2014 as mentioned in a letter of agreement No.No.KN.01.01/5/221-PK/2014. It was agreed that the Directorate General of Pharmaceutical and Medical Devices of the Ministry of Health of the Republic of Indonesia will purchase the following various types of vaccines from the Company :

Kuantum/ Quantity 1.384.254 1.425.101 375.316 2.771.691 2.597.272 3.042.044 29.984 291.397

Persyaratan Perusahaan dalam memenuhi perjanjian tersebut antara lain: 1. Vaksin yang diproduksi harus memiliki spesifikasi sebagaimana tercantum dalam Perjanjian Jual Beli (kontrak).

Harga/ Unit Price 50.460 12.910 15.550 24.450 17.270 18.100 259.091 14.710

Jumlah/ Vaccine Type Amount 69.849.456.840 BCG 18.398.053.910 TT 5.836.163.800 DT 67.767.844.950 Measles 44.854.887.440 Poliomyelitis 55.060.996.400 Hepatitis B Ads (PID) 7.768.581.546 DTP Hepatitis B 5 mcg 4.286.449.870 Td 273.822.434.756 27.382.243.476 301.204.678.231

The terms of the agreement that should be followed by the Company among others are: 1. Vaccines produced should have specifications as stated in the sale and purchase agreement.

42

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

38. PERJANJIAN DAN PERIKATAN PENTING (lanjutan)

38. SIGNIFCANT AGREEMENTS AND COMMITMENTS (continued)

2. Semua jenis vaksin tersebut harus diserahkan di gudang tujuan paling lambat tanggal 13 Desember 2014 serta dianggap sah apabila sudah dilengkapi dengan Berita Acara Penerimaan Barang di Dinas Kesehatan Provinsi yang bersangkutan, ditandatangani oleh Penerima Barang dan diketahui oleh Pejabat Struktural Dinas Kesehatan di Provinsi. Bukti Berita Acara Penerimaan Barang di Pusat ditandatangani oleh Penerima Barang di Gudang Direktorat Jenderal Pengendalian Penyakit dan Penyehatan Lingkungan (PP&PL) dan diketahui Pejabat Struktural. Panitia Penerimaan Hasil Pekerjaan Pengadaan Barang/Jasa Direktorat Bina Kefarmasian membuatkan rekap bukti penerimaan yang diketahui oleh Pejabat Pembuat Komitmen Satuan Kerja Direktorat Bina Obat Publik dan Perbekalan Kesehatan.

2. The Company has to submit those vaccines at the destination warehouse by December 13, 2014, and it is considered valid if it is equipped by the Receiving Report issued by the Provincial Health Office, signed by the recipient of goods, and known by the Official of the Provincial Health Office.

3. Menyerahkan jaminan pelaksanaan (Bank Garansi) yang diterbitkan oleh Bank Mandiri (Persero) No.MBG666089988814N tanggal 18 Juli 2014, sebesar 5% dari nilai kontrak atau sebesar Rp.15.060.233.912, yang berlaku sampai tanggal 31 Desember 2014.

3. Submit a performance bond (Bank Guarantee) of 5% of the contract price, or equivalent to Rp.15.060.233.912. The bond was issued by Bank Mandiri (Persero) No.MBG666089988814N dated July 18, 2014, valid until December 31, 2014.

b. Pada tanggal 21 Juli 2014, Perusahaan mengadakan perjanjian jual beli pengadaan vaksin DPT-HB-Hib untuk tahun 2014 dengan Direktorat Bina Obat Publik dan Perbekalan Kesehatan Direktorat Jenderal Bina Kefarmasian dan Alat Kesehatan Kementerian Kesehatan Republik Indonesia, dengan nomor perjanjian No.KN.01.01/5/223PK/2014. Disepakati bahwa Direktorat Bina Obat Publik dan Perbekalan Kesehatan Direktorat Jenderal Bina Kefarmasian dan Alat Kesehatan Kementerian Kesehatan Republik Indonesia akan membeli vaksin DPT-HB-Hib untuk program tersebut dari Perusahaan dengan rincian sebagai berikut:

b. On July 21, 2014, the Company entered into an agreement to sell DPT-HB-Hib vaccines to Directorate of Public Drugs and Health Products of the Directorate General of Pharmaceutical and Medical Devices of the Ministry of Health, Republic of Indonesia, as shown in letter of agreement No.KN.01.01/5/223PK/2014. It was agreed that the Directorate will buy the following vaccines from the Company.

Jenis Vaksin/ Vaccine Type DTP-HB-Hib

Kemasan/ Pack 5 ds/vial

At the Ministry Office, the reveiving report should be signed by the recipient of goods at the Warehouse of Directorate General of Disease Control and Environmental Healthcare (PP & PL), and known by the Official of the Directorate. The Committee for Receiving of Goods/Services of the Directorate of Pharmaceutical provides a recapitulation of the Receiving Reports and ​known by the Official in Charge of the Directorate of Public Drugs and Medical Products.

Kuantum/ Quantity

Harga/ Unit Price 63.930

2.280.424 Total PPN/VAT 10% Total + PPN/VAT 10%

Persyaratan Perusahaan dalam memenuhi perjanjian tersebut antara lain:

Jumlah/Amount Amount 145.787.506.320 145.787.506.320 14.578.750.632 160.366.256.952

The terms of the agreement which should be followed by the Company, among others are: 1. Vaccines produced should have specifications as stated in the agreement.

1. Vaksin yang diproduksi harus memiliki spesifikasi sebagaimana tercantum dalam Perjanjian Jual Beli. 2. Semua jenis vaksin tersebut harus diserahkan di gudang tujuan paling lambat 13 Desember 2014 serta dianggap sah apabila sudah dilengkapi dengan Berita Acara Penerimaan Barang di Dinas Kesehatan Provinsi yang bersangkutan, ditandatangani oleh Penerima Barang dan diketahui oleh Pejabat Struktural Dinas Kesehatan di Provinsi. Bukti Berita Acara Penerimaan Barang di Pusat ditandatangani oleh Penerima Barang di Gudang Direktorat Jenderal Pengendalian Penyakit dan Penyehatan Lingkungan (PP&PL) dan diketahui Pejabat Struktural.

2. The Company has to submit the vaccines at the destination warehouse by December 13, 2014, and it is considered valid if it is equipped by the Receiving Report issued by the Provincial Health Office, signed by the recipient of goods, and known by the Official of the Provincial Health Office. At the Ministry Office, the Receiving Report should be signed by the recipient at the Warehouse of Directorate General of Disease Control and Environmental Healthcare (PP & PL) and known by the Official of the Directorate.

43

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

38. PERJANJIAN DAN PERIKATAN PENTING (lanjutan)

c.

38. SIGNIFCANT AGREEMENTS AND COMMITMENTS (continued)

Panitia Penerimaan Hasil Pekerjaan Pengadaan Barang/Jasa. Direktorat Bina Kefarmasian membuatkan rekap bukti penerimaan yang diketahui oleh Pejabat Pembuat Komitmen Satuan Kerja Direktorat Bina Obat Publik dan Perbekalan Kesehatan.

The Committee for Receiving of Goods/Services of the Directorate of Pharmaceutical provides a recapitulation of the reveiving reports, and known by the Official in Charge of the Directorate of Public Drugs and Medical Products .

3. Menyerahkan jaminan pelaksanaan (Bank Garansi) yang diterbitkan oleh Bank Mandiri (Persero) No.MBG666089982214N tanggal 18 Juli 2014, sebesar 5% dari nilai kontrak atau sebesar Rp.8.018.312.848, yang berlaku sampai dengan tanggal 31 Desember 2014.

3. Submit a performance bond (Bank Guarantee) of 5% of the contract price, or equivalent to Rp.8.018.312.848. The bond was issued by Bank Mandiri (Persero) No.MBG666089982214N dated July 18, 2014, valid until December 31, 2014.

Pada tanggal 23 Juli 2014, Perusahaan mengadakan perjanjian jual beli pengadaan vaksin DPT-HB-Hib (Dana Hibah GAVI) tahun 2014 dengan Direktorat Surveilans, Imunisasi, Karantina dan Kesehatan Matra Kementrian Kesehatan Republik Indonesia dengan nomor perjanjian No.BN.01.03/II.5/1926/2014. Disepakati bahwa Direktorat Surveilans, Imunisasi, Karantina dan Kesehatan Matra Kementrian Kesehatan Republik Indonesia akan membeli DPT-HB-Hib (Dana Hibah GAVI) untuk program tersebut dari Perusahaan dengan rincian sebagai berikut:

c. On July 23, 2014, the Company entered into an agreement to sell DPT-HB-Hib vaccines (GAVI Grant) to the Directorate of Surveillance, Immunization, Quarrantine and Matra Health of the Ministry of Health of the Republic of Indonesia, as mentioned in letter of agreement No.KN.01.03/5/1926/2014. It was agreed that the Directorate will buy the following vaccines (GAVI Grant) from the Company :

Jenis Vaksin/ Vaccine Type DTP-HB-Hib

Kemasan/ Pack 5 ds/vial

Kuantum/ Quantity

Harga/ Unit Price 63.930

2.000.479 Total PPN/VAT 10% Total + PPN/VAT 10%

Persyaratan Perusahaan dalam memenuhi perjanjian tersebut antara lain: 1. Vaksin yang diproduksi harus memiliki spesifikasi sebagaimana tercantum dalam Perjanjian Jual Beli.

Jumlah/Amount Amount 127.890.622.470 127.890.622.470 12.789.062.247 140.679.684.717

The terms of the agreement which should be followed by the Company, among others are: 1. Vaccines produced should have specifications as stated in the agreement. 2. The Company has to submit the vaccines at the destination warehouse by December 13, 2014, and it is considered valid if it was equipped with the Receiiving Report issued by the Provincial Health Office, signed by the Committe of Receiving of Goods/Services, and known by the Official of the Provincial Health Office. At the Ministry Office, the receiving report should be signed by the Commiitte of Receiving of Goods/Services and known by the Official in Charge of GAVI/UNICEF of the Directorate of Surveilance, Immunization, Quarrantine, and Matra Health of the Ministry of Health of the Republic of Indonesia.

2. Semua jenis vaksin tersebut harus diserahkan di gudang tujuan paling lambat 31 Desember 2014 serta dianggap sah apabila sudah dilengkapi dengan Bukti Penerimaan Barang di Dinas Kesehatan Provinsi yang bersangkutan, ditandatangani oleh Panitia Penerima Barang/ Jasa dan diketahui oleh Pejabat Struktural Dinas Kesehatan di Provinsi. Bukti Penerimaan barang di Pusat ditandatangani oleh Panitia Penerimaan Barang/Jasa dan diketahui Pejabat Pembuat Komitmen GAVI/UNICEF Satker Direktorat Surveilans, Imunisasi, Karantina dan Kesehatan Matra Kementrian Kesehatan Republik Indonesia. 3. Menyerahkan jaminan pelaksanaan (Bank Garansi) yang diterbitkan oleh Bank Mandiri (Persero) No.MBG6660800541114N tanggal 22 Juli 2014, sebesar 5% dari nilai kontrak atau sebesar Rp.6.394.531.124, yang berlaku sampai dengan tanggal 20 Januari 2015.

3. Submit a performance bond (Bank Guarantee) of 5% of the contract price, or equivalent to Rp.6.394.531.124. The bond was issued by Bank Mandiri (Persero) No.MBG666080054111N dated July 22, 2014, valid until January 20, 2015.

44

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

38. PERJANJIAN DAN PERIKATAN PENTING (lanjutan)

38. SIGNIFCANT AGREEMENTS AND COMMITMENTS (continued)

d. Perusahaan melakukan penandatanganan perpanjangan Fasilitas Kredit dengan PT Bank Mandiri (Persero), Tbk pada 25 Juli 2014 dengan rincian fasilitas sebagaimana tercantum pada SPPK No.IBG.IB1/SPPK.027/2014 perihal Surat Penawaran Pemberian Kredit (SPPK) untuk jangka waktu satu tahun dari 15 Agustus 2014 sampai dengan 14 Agustus 2015 yang meliputi fasilitas Non Cash Loan untuk penerbitan LC Impor/SKDN (Sight, Usance & UPAS)/BG dengan sub limit Trust Receipt, Fasilitas Treasury Line, dan Purchasing Line. Jaminan Fidusia atas Mesin, Inventaris, dan Peralatan Pabrik yang berlokasi di Jl.Pasteur No. 28 Bandung dengan nilai penjaminan sebesar IDR135.000.000.000.

d. On July 25, 2014, the Company obtained the extension of credit facilities from PT Bank Mandiri (Persero) Tbk for one year from August 15, 2014 to August 14, 2015. This credit, as stated in the Offer Letter of Credit Facility No.IBG.IB1/SPPK.027/2014, includes a Non-Cash Loan Facility for the issuance of LC Import/SKDN (Sight, Usance & UPAS)/BG with sub limit Trust Receipt, Treasury Line Facilities, and Purchasing Line. This facility is fiducialy secured by machineries, office equipments, and factory equipments which are located at Jalan Pasteur No 28 Bandung with the value of IDR135 000 000 000

e. Perusahaan melakukan penandatanganan perpanjangan Fasilitas Kredit Modal Kerja Ekspor (KMKE) dengan Lembaga Pembiayaan Ekspor Indonesia (LPEI)/Indonesia Exim Bank pada tanggal 11 Juni 2014 sesuai dengan Surat Persetujuan Pemberian Pembiayaan (SPPP) No.PBD/SP3/28/2014 dan Perubahan Perjanjian Kredit Modal Kerja Ekspor No.180/ADDPK/06/2014 tanggal 23 Juni 2014 untuk perpanjangan jangka waktu kredit sampai dengan 24 Juni 2015, yang meliputi Fasilitas Kredit Modal Kerja Ekspor (KMKE) Transaksional dan/atau Fasilitas Non Cash Loan (Pembukaan LC Sight/Usance/UPAS dan/atau Pembiayaan LC Impor (Post Import Financing) dan/atau Pembukaan SKBDN dan/atau Pembiayaan SKBDN dan/atau Trust Receipt dan/atau Pembelian Tagihan Ekspor/SKBDN dan/atau Pembelian Tagihan atas dasar Non LC/SKBDN); - Jaminan; - Fidusia atas Mesin, Inventaris, dan Peralatan Pabrik yang berlokasi di Jl.Pasteur No. 28 Bandung dengan nilai penjaminan sebesar IDR. 80.500.000.000 - Fidusia atas Persediaan barang yang berlokasi di Jl.Pasteur No. 28 Bandung dengan nilai penjaminan sebesar IDR. 34.700.000.000. - Fidusia atas piutang dagang dengan nilai penjaminan sebesar IDR 16.800.000.000.

e. On June 11, 2014, the company obtained the extension of the Export Working Capital Loan Facility (KMKE) from the Indonesia Exim Bank (Lembaga Pembiayaan Ekspor Indonesia - LPEI) for the period until June 24, 2015. This facility, in accordance with Letter of Acceptance for Financing (SPPP) No.PBD/SP3/28/2014, and Amendment of the Agreement of Export Working Capital Loan No.180/ADDPK/06/ 2014 dated June 23, 2014, includes an Export Working Capital Credit Facility (KMKE) Transactional and/or Non Cash Loan Facility (Opening LC Sight/Usance/UPAS) and/or LC Import Financing (Post Import Financing) and/or Opening SKBDN and/or SKBDN Financing and/or Trust Receipt and/or Export Bills Purchase/SKBDN and/or Bill Purchase on the basis of Non LC/SKBDN);

f.

f.

-

Perusahaan mengadakan perjanjian kerjasama kegiatan pengembangan produk dengan pihak ketiga yaitu University of Melbourne, Artes Biotechnology GmbH., PATH Vaccine Solution (PVS), International Vaccine Institute, Lipotek Pty.Ltd, Iwate Medical University, dan Japan Poliomyelitis Research Institute (JPRI), Jepang. Selain itu, Perusahaan juga ikut terlibat didalam konsorsium pengembangan vaksin yang dilakukan oleh beberapa institusi didalam negeri yang berada di bawah koordinasi Kementrian Riset dan Teknologi.

Guarrantee - Fiduciary of Machinery, Office and Factory Equipments located at No. Jalan Pasteur.28 Bandung with a guarantee value of IDR 80.500.000.000 - Fiduciary of Inventories which are located at Jalan Pasteur.28 Bandung with a guarantee value of IDR. 34.000.000.000 - Fiduciary of trade receivables with a guarantee value of IDR 16.800.000.000

The Company entered into cooperation agreements for product development activities with the University of Melbourne, Artes Biotechnology GmbH., PATH Vaccine Solutions (PVS), the International Vaccine Institute, Lipotek Pty Ltd, Iwate Medical University, and the Japan Poliomyelitis Research Institute (JPRI), Japan . In addition, the Company also involved in the consorsium of vaccine development conducted by several domestic institutions under the coordination of the Ministry of Research and Technology.

g. Perusahaan mengadakan perjanjian jual beli produk produk Perusahaan dengan beberapa pelanggan di luar negeri sebagai berikut:

g. The Company entered into the following sales agreements with some overseas customers :

1. Pada tanggal 3 Desember 2014, Perusahaan mengadakan perjanjian No.05887/DIR/XI/2014 dengan Propharm (M) SDN.BHD tentang penjualan Finished Product (Vaccine), yang berlaku hingga 30 April 2018.

1. Agreement No.05887/DIR/XI/2014 dated December 3, 2014 with the Propharm (M) Sdn.Bhd concerning the sale of Finished Product (Vaccine), which is valid until 30 April 2018.

45

PT BIO FARMA (PERSERO) CATATAN ATAS LAPORAN KEUANGAN 31 Desember 2014 dan 2013 dan Untuk Tahun-Tahun Yang Berakhir Pada Tanggal Tersebut

PT BIO FARMA (PERSERO) NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 and For The Years Then Ended

(Dinyatakan dalam Rupiah, kecuali dinyatakan lain)

(Expressed in Rupiah, unless otherwise stated)

38. PERJANJIAN DAN PERIKATAN PENTING (lanjutan)

38. SIGNIFCANT AGREEMENTS AND COMMITMENTS (continued)

2. Pada tanggal 27 Desember 2013, Perusahaan mengadakan perjanjian dengan PAHO (Pan American Health Organization) untuk pe