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PERFORMANCE OF COMPANY

WOM Finance is one of big players in consumer financing specifically engaged in two-
wheeled motor vehicles with Jjapanese brand that is Honda, Yamaha dan Suzuki where these
brands have great market share in this country.

There are four important things a multifinance company must do to keep its highly
quality of performance: Focus on running the businesses, Eenhancing the quality of services,
oOptimizing IT to support the business activity, iImproving operational cost efficiency. Some of
them are expanding branch offices and working on market potential outside Java island [2].

Production efficiency

The longer company running its business, the more efficient and stable the company will
be. The president director of Wahana Ottomitra Multi (WOM Finance), Suwandi Wiratno said
that high value of ROE is an evidence the company has a good performance. In the multifinance
industry, ROE and ROA is a benchmark to show that the business performance of a company
runs well.

WOM Finance is aware that there are three very valuable assets for existence of the
company also for supporting the operational efficiency and productivity:

 Human resources →

◦ Conducting MDP (Management Development Program) to qualifying the employees

◦ External training which is based on each department’s needs

 ◦ Internal training that is done on a regular basis: credit initiation, collection training
and leadership training (soft skill)

◦ Branch Manager Refreshment Program (MRP) which is held for all branch managers
in 2009 period

◦ Competency base and major criteria performance indicator (KPI) in assessing

employee’s performance, to encourage employee to show continuity in the
productivity and excellent achievement to ensure sustainable growth

◦ By uniting employee’s efforts, company can reach a higher goal.

 Information Technology (IT) → IT development to accommodate reliable network in

supporting company's operation and process.

◦ In 2008, WOM Finance is now approaching one day service by continuously

renewing and preparing its proper infrastructure

◦ In 2008, WOM Finance was starting to implement online system. To connects each
branches with head office. It helps to increase services to customers, a company can
monitoring the updated consumer’s financing data, enabling consumers doing their
payment transaction throughout WOM Finance branches anywhere.

◦ In February 2009, the Company has developed an Account Status Daily Update that
could monitor the account overdue status on daily basis. It also helps the Company to
establish a strategic collection process to improve its non performing loan level.

◦ In August 2009, the Company has successfully implemented Oracle Finance that
could generate accurate and timely report and also support in preparing certain reports
easily

◦ During 2009, the Company also successfully implemented other various supporting
applications:

▪ Payment system  as the convenient facilities for the customers to pay their
installment, such as: Field Collection Management System, online payment point,
EDC (Electronic Data Captured) payment point, extended payment channel
through automatic teller machine with cooperation with PT Bank Internasional
Indonesia, Tbk, PT Bank Mandiri Tbk, and with PT Pos Indonesia to provide
customers with faster, easier and more convenient service in paying their
installment.

▪ KAWAN (KArtu Wom bermANfaat) Membership Card System  the privilege

card for the Company’s customer, valid for two years, can be extended as long as
 the member is still the Company’s active customer. The KAWAN member
receives various privileges such as obtaining more points to win prize award and
discount for services at participant merchants.

◦ The Company has developed Customer Care, handled by professional consultants

which are always committed to give the best service. So the information easier to get
for every problem relating to financing process up to settlement process of
motorcycle financing.

◦ Company’s website with new enhancement to provide an easy public access to the
Company’s information. The website can be accessed through www.wom.co.id.

 Risk management → starting from credit application proposal, initial process of credit
approval, final process of credit approved.

◦ Loan Origination System (LOS) has been built in risk policy to manage the flexible
application process flow for faster and easier approval, product segmentation and
management dashboard to monitor the process and control the quality of portfolio,
internal checking to identify blacklist customer

◦ In September 2009, the Company has successfully tested disaster recovery center to
address the Company’s going concern from the possibility of disaster by nature or
others damage. The backup server is located at different place from the production
system to serve the business in case of malfunction or disaster occurs to the
production system.

Performance’s overview in 2007

WOM Finance employed 2.742 permanent employees. Employee’s salary and benefit is
increasing 96,9 % into Rp 129,4 billion, because of the opening of new branch offices. The
incentive given over the sales/financing is significantly increased. This year the company was
experiencing lost because it followed the policy of Bank Indonesia to isolate the doubtful
account receivable (piutang ragu-ragu). The company was noted to loss (after-tax) as much as
Rp 241.40 billion. WOM Finance had 102 branch offices around Indonesia and cooperating with
more than 4,000 dealers in Indonesia. These are done to boost financing numbers. Marketing
strategy and a solid team cooperation between the management and the staff made the target was
achieved that of Rp 4.5 trillion.

Performance’s overview in 2008

There was grand opening of branch offices in Yogyakarta and Bengkulu in June. WOM
Finance was expanding its network in the potential area, focusing on market potential and
dealer’s partnership. The company has 140 network including branch offices, financing unit
offices and financing postal office in nationwide. The expanding focused in the east Indonesia
district because of the purchasing power increment there affected by the commodity’s price was
raised. But the decrease of commodity’s price was happened by global economic crisis in the
forth quartile this year, WOM had stopped the expansion in the area of east Indonesia and back
focus on financing in Java island. That crisis brought massive impact on many businesses
activity.

In responding this situation, the company managed the existing human resources to be more
focus on core business to get work efficiency and optimal productivity. It was done through
“kegiatan alih daya” step by step since year end of 2008 and afterwards supported by the
business process growth and online system.

This year, there were 3,113 permanent employees and it is relatively not significantly increasing
compared in 2007 (2,742 permanent employees).

WOM reached after-tax net profit which increasing 107,3% from net loss of Rp. 281.8 billion in
2007 into net profit of Rp. 20.7 billion in 2008 (due to the raise in other income, decrement of
loan and isolation of doubtful account-receivable / piutang ragu-ragu). Ratio of profit on Asset
(ROA) and ratio of profit on equity (ROE) are 0.6% and 7.5% in 2008.

Performance’s overview in 2009

The companies in consumer financing industry in the first quartile this year was still
experiencing fluctuative situation as the impact from global economic crisis since third quartile
in 2008. The implication of world financial crisis made company was more struggling and
challenging, caused of higher interest rate given by banks and the difficulty of liquidity.

This was also interrupting the growth in several industries such as banking and real economic
sector. Then the number of unemployment and poor people increased. As a result, the decreasing
in consumers’ purchases capability and domestic consumption affected the sales of new
motorcycles in this year, that is 5.8 million units, it decreased as much as 7% from last year that
of 6.2 million units.

Stepping into the second quartile this year such condition of economic and consumer financing
industry had been recovering and improving which especially reached on August and September
near to Muslim’s celebration day. This quartile, WOM Finance was arising back. It had worked
hard to get through crisis time and achieving satisfaction result indicated by net profit increased
of 193% compared to a year before and the decrease of non performed account receivable on
consumer financing as much as 50%, from 4.8% in 2008 into 2.4% in 2009.
WOM successful maintained itself strategically with hard work to take all opportunities in the
market to obtain the best result., significant increased net profit 192.9 % that is Rp. 60.671
million. The Company is continuously expanding its business networks by opening new
branches, unit offices, and sales representative office. As of 31 December 2009, the Company
had 141 business networks which consisted of branch offices, unit offices, and sales
representative offices. All business networks are spread over Indonesia to absorb wider market
share throughout the country. There were 3.311 permanent employees in the company.

Dynamic of the company in the whole industry

World economic crisis in the third quartile in 2008 was affecting the economic in Indonesia.
Export and foreigner investment were facing challenges and so the difficulties in world economic
growth.

The average market share of WOM Finance in financing new motorcycles in 2007 is 9.9 %, in
2008 is 8.1 %, and in 2009 is 6.7 %. The market share decreased in line with the emerging of
new competitors coming in this industry segment. That competitively market was tightening
along with many new financing companies jumped in this industry. Then every company gives
their distinguished themselves by offering special services to grab more market share. For
examples: accelerating credit application process, simpler and easier documentation
requirements, and competitive interest-rate.
Perusahaan maintain its existence by providing better services to customers and dealers,
competitive credit requirements, keep improving the motorcycles market and start looking for
other new brands.
A number of national financing companies were success in grabbing profits although in the
global financial crisis in 2008. According to Investor Daily data, there were five financing
companies which are still able reaching net profit increment. Such companies are: PT Adira
Dinamika Multifinance Tbk (Adira Finance), PT Wahana Ottomitra Multifinance (WOM
Finance), PT Summit Oto Finance, PT Federal International (FIF), and PT Astra Sedaya Finance
(ASF) [3]. See the tables and charts below:

Asset Data [3]

 Company's Asset (in 2008) Total asset of these five
Rp. (in trillion)
financing companies
Net Profit /
Net Profit /Adira
Loss Finance Rp. 3.59
Wom Finance Growth Loss (in 2007)
(in 2008) (in billion) 3.43
Rp. (in billion)
Summit Oto Finance 6.9 31.53
Adira Finance 1020 82.24 % 559.71
FIF 9.17
Wom FinanceASF 20.71 107.35% -281.85 8.44
Total asset of others financing companies 136.92
FIF Total asset of the612.38
whole financing industry in
ASF national 353.97 168.45
Summit Oto Finance 80.65

Net Profit / Loss Data [3]

 The Company is closely monitoring the strategy applied by the competitors and
responding properly to compete in the industry. Given the same service provided by multi-
finance companies, it is important for the Company to increase the services excellence, by
differentiating the financing scheme to attract more customers.

An automotive industry has a linier movement with the financing businesses. They are
giving benefit of each other. That means the growth in financing industry is highly depending on
the automotive company production. Therefore, dealers hold an important role to acquire new
consumer. In order to stimulate the new financing from dealers, the Company always tries to
maintain close and good relationship with dealers by providing various incentive programs to
dealers. The incentive programs are incentive, prizes, and also tour package [2].
 A high competition in this multifinance industry causes the interest-rate setting for every
company must be competitive as well. Suwandi Wiratno stated that a good role model of
financing company should be able optimizing its income from many ways of services and has
efficiently managerial capability along with properly risk management implementation.

Beside have to compete with other players in this industry, a multifinance company must
facing new competitors who are coming from banking industry. In this case, a multifinance is
hard to compete with the banks, because all this time, most of multifinance companies relying
their source of funds from banks to support their businesses. Therefore the high interest rate
charged by bank to the multifinance company, affecting to a relatively high interest rate offered
by a multifinance company to its consumers.

Infobank has been doing a survey to rate among 148 financing companies per December
2008-2009. the rating assesment criterion consisting of several points such as growth, financing,
capital, solvability, efficiency, rentability (ROA, ROE). Whereas the financing companies are
classified into three fundamental category such as the ones with asset above Rp. 1 trillion, asset
in range between Rp. 100 Billion and Rp. 1 trillion, and asset under Rp. 100 Billion. Then, based
on the survey result, PT. Wahana Ottomitra Multiartha (WOM Finance) is included in the
category of financing companies with asset above Rp. 1 trillion, occupying on the thirty-third
position [2].

The infobank magazine also reviewed the group-based ten best financing companies of
ownership group-based, submitted capital group-based and go public group-based. WOM
Finance is included within the go public group-based occupying the ninth position. It awarded of
a “good” predicate, an improved and better quality than the year before (in 2008) which was
attached to a “not good” predicate [2].

Corporate Social Responsibility

Corporate Social Responsibility (CSR) has a significant role in every company at this
time which is indivisible part of company’s operations. CSR is considered to improve the lives of
the nation’s people and has widely positive effect on its prosperity and purchasing power. WOM
Finance has committed in implementing its CSR and believes that the welfare of society is
essentially affecting the company growth.

WOM Finance has an objective to develop a high-performance society through its

activity in order to enhance its performance. To make the objective comes into reality, WOM
Finance works together with several organizations active in economics, education, health-care
and social care through such ways: society financing / funding, activity sponsorship, donations,
and active participation. To coordinate these activities, WOM Finance has a substantial internal
unit named “Humanikasih”, that shows its great concern and care for other people in a less-
privileged society:
- WOM Finance organizes charity events, sponsoring activities, offering donations, and
active participation including through collecting the employees and the donors to pass
on their financial support for those who really need that.

- In 2007, WOM Finance was assisting in building restoration to one of the Elementary
Schools in Cidokom, Bogor, also with all the necessary facilities to facilitate the
school in the process of education (learning-teaching process). WOM Finance knows
that the quality of education is important for the continuity in nationwide generation
since it can keep our nation moving forward and growing toward bright future.

- WOM Finance provided an extension of the due date payments to its customers
which being victims during flood disaster was running down Jakarta

- Visit local penitentiaries as well as other humanitarian services like giving morale and
material support

- The other social activity such as blood donor

- In 2008, WOM Finance through Humanikasih conducted “Bakti Sosial Bibir

Sumbing” and “Celah Langit-Langit” program which successful in helping less than
hundreds children to get free surgery, treatment, and medicine. Under this program,
WOM Finance was attempting to raise confidences on children who suffering “bibir
sumbing” and “celah langit langit”, so they could reach a better future

WOM Finance has a concept of “Learn to Give”, that provide assistance with much
benefit it offers to company’s management and employees, also those who are in really
need of. Along with this contribution to society, WOM Finance is expecting to build an
image as a company that actively participates to give positive values in the nation’s
population.

References:

[1]. www.WOMFinance.com

[2]. Infobank magazine/No.377/August 2010

[3]. (Investor Daily - 11 Maret 2009) http://www.ifsa.or.id/news_detail.php?id=2550