BOD Report

DEAR SHAREHOLDERS,

We raise gratitude to the presence of Almighty God who has bestowed grace on all of us, hence PT Jasamarga Transjawa Tol went through the year 2023 well and be able to provide its best performance, even though the tense geopolitical situation throughout the year has been an important year for PT Jasamarga Transjawa Tol (JTT) where after successfully implementing the restructuring plan, the company have to prove existence of the company by conducting better and more sustainable development and corporate governance. The Board of Directors and Employees of PT Jasamarga Transjawa Tol (JTT) are committed to provides the best performance, hence all Company targets were achieved. Furthermore, we will submit the Annual Report for the fiscal year December 31, 2023.

INDUSTRY AND BUSINESS DEVELOPMENT IN 2023

In 2023, the toll road industry is projected to be better than the previous year. One indicator is the increasing toll road activity, especially during the Eid al-Fitr holiday, collective holidays, and other national holidays. The increasing growth of vehicles also encourages the growth of vehicle traffic volume on toll roads. PT Jasamarga Transjawa Tol continues to strive to improve toll road services in order to create driving comfort and ultimately will lead PT Jasamarga Transjawa Tol to become a company that has sustainable business in the future.

According to Indonesian Economic Report, real sector transformation policies were being improved to encourage high economic growth and at the same time to support macroeconomic stability. Infrastructure development which has begun massively since 2013 has increased economic growth, both in terms of capital increases and productivity. Overall, from the endogenous growth model approach, infrastructure development, downstreaming, ease of business permits and investment, as well as digitalization increase economic capacity and growth, both in terms of capital increases, employment, and productivity. This is in line with data from the Toll Road Regulatory Agency (BPJT), as of June 2023 there were already 2,493.42 km of toll roads operating in Indonesia and spread across the islands of Sumatra, Kalimantan, Java, and Sulawesi. Apart from that, there are also 41 toll road sections of 2,500 km length which expected to be built by 2029. Until now, there are 66 toll roads that are recorded as being officially operates and 30 toll roads that are currently under construction. On the other hand, the Ministry of Public Works and Housing (PUPR) has opened up toll road investment opportunities with a value of Rp82 trillion. Interest in toll road investment will remain high in the future in line with the extensive toll road construction. This makes toll roads one of the backbones of the national economy.

STRATEGY

The formulation of strategies and policies issued by the Board of Directors is ensured to be in line with the aspirations of Shareholders and management. In order to support the achievement of the Company’s performance targets and maintain the sustainability of its business in the future, the Company has developed strategic directions based on the 2023 work plan, namely:

1. Implement business processes by ensuring shareholder direction as a Toll Management Company, where implementation is based on a management contract whose efficiency and sustainability can be ensured to maintain Service Level Agreements and meet Minimum Service Standards

2. Ensure the company’s portfolio by determining funding scheme that benefits the company, one of which is by supporting the Equity Financing Corporate Action process.

3. Maintaining the quality of financial performance.

The above strategic directions have been conducted and implemented throughout the year with various strategic programs such as:

1. Fulfillment of Minimum Service Standards on all toll roads in the Jasamarga Transjawa Group

2. Implementation of Equity Financing until the end of 2023 is running according to the timeline

3. Acquisition of PT Lintas Marga Jawa as a form of continuation of the impact of RDPT

4. Management of the company as shareholder in various subsidiaries, including renewal of the Shareholder Agreement to ensure control as shareholder is maintained

5. Improving the quality of toll roads by widening the Jakarta Cikampek Section, the results of which support the increase in traffic volume during holidays, especially during Eid homecoming and return flows.

6. In the field of governance, the company has received a recommendation for ISO 37001:2016 Anti-Bribery Management System (SMAP) certification

 

In order to support the achievements of the Board of Directors, various supporting programs were implemented and ensured that the Board of Directors actively formulates policies and directions as well as ensures that the framework runs effectively, also policies and procedures were on target. In the discussion, we review various risks from all factors which affecting the industry and the Company. Apart from that, we also review the competitive advantages that the Company has.

During the process, the Board of Commissioners provides informal input and perspective on industry risks and proposes strategies that should be implemented. The Company’s strategic planning and strategic policies are based on the strategic direction and policies of the Company’s Shareholders.

The formulation of this strategy was then discussed further at the Board of Directors and Board of Commissioners Meeting (Radirkom) to further determine the direction of the Company’s Vision and Mission while still considering the Company’s external and internal analysis conditions. The formulation of strategies and strategic policies is prepared and formulated by the Board of Directors by involving each work unit through limited meetings. It is expected that each work unit can carry out business activities according to clear directions while still paying attention to good corporate governance. From this process, the Board of Commissioners approved and stated it in the 2023 Company Budget Work Plan (RKAP) document along with its addendum and the Company’s Long Term Plan (RJPP) for 2023-2027.

We continue to monitor and review the implementation of the strategies outlined in the RKAP and RJPP through the Company’s work programs prepared by each work unit while still taking into account the achievement of operational, business, financial, and human resource targets, hence able to achieved in accordance with strategic direction. We carry out this monitoring and review periodically to achieve it according to targets. All work programs that will be implemented will be reviewed and analyzed based on cost-benefit which will then be approved by the Board of Directors.

COMPANY PERFORMANCE

In 2023, the Company’s total assets was higher than in 2022, mainly due to increase in non-current assets in intangible assets - net toll road concession rights with the repurchase of Mandiri Infrastruktur Equity Transjawa (MIET) Limited Participation Mutual Funds (RDPT) in PT Lintas Marga Jawa (LMJ) on three toll roads, namely Semarang-Batang, Solo-Ngawi, and Ngawi-Kertosono, hence to apply the implementation of Financial Accounting Standards (PSAK) 22 on Business Combinations.

The Company's operational and financial performance was influenced by global and national economic conditions which increasingly recovering even though still in the midst of uncertainty. In 2023 traffic volume transactions was 409.6 million or 0.97% achievement from the plan of 406.4 million transactions. In terms of growth trends, transaction traffic volume shows increase of 2.63% when compared to the realization in 2022. This was influenced by post-COVID-19 trends and increasing community mobility as community activities in several regions, especially on Java Island, return to normal. Until 2023, we have concessions and manage a total of 676 km of toll roads consisting of 4 (four) operational segments that have been transferred from PT Jasa Marga (Persero) Tbk, namely the Jakarta-Cikampek, Palimanan-Kanci, Semarang A, B, C, and Surabaya-Gempol as well as share ownership in 9 (nine) Toll Road Subsidiary to the Company. On that basis, we was able to record operating revenues of Rp4.9 trillion with contributions including toll revenues of Rp4.8 trillion and other business revenues of Rp37 billion. In line with controlling operating expenses, including HR expenses, operating expenses, as well as general and administrative expenses, we was able to increase realized EBITDA performance by Rp4.0 trillion or 42.27% higher than the previous year. Total assets realized in 2023 amounted to Rp60.9 trillion, 134.14% higher than the previous year of Rp26.0 trillion. In 2023 total realized liabilities amounted to Rp31.1 trillion or 267.96% higher than the previous year of Rp8.4 trillion. Total realized equity was Rp29.8 trillion or 69.64% higher than the previous year of Rp17.5 trillion.

CHALLENGES IN 2023

During 2023, the Company encountered various conditions that can be managed well in line with external conditions that continue to improve and conducive. The dynamics of changes in economic policy direction that affect the toll road industry encourage the Company to adapt agilely to achieve performance targets that have been set. We was able to overcome a number of challenges well and record performance growth in 2023. It cannot be denied that recovery in economic conditions in 2023 had positive effect on increasing traffic on the Trans Java toll road, which affected Company’s toll revenue.

Apart from that, throughout 2023, the company had to also ensure that the investment climate on toll roads can run well,that adjustments to the applicable tariffs for 9 sections of the Jasamarga Transjawa Toll Road have been fulfilled. This tariff adjustment cannot be separated from the contribution of all parties, especially in maintaining and improving the quality of operational services on each toll road.

From financial perspective, the company also focuses on maintaining financial ratios so that they remain within the limits required by creditors. The Company was able to maintain a minimum Interest Coverage Ratio (ICR) of 1.25 and Debt to Total Equity (DER) maximal 3x. To mitigate this, we strive to maintain financial performance by continuing to make efficiency in operational expenses, HR expenses, general and administrative expenses including providing innovation in financial aspects, especially regarding funding schemes and corporate action programs in Toll Road Subsidiaries, one of which is through refinancing to increase EBITDA Margin of the company.

DEVELOPMENT OF HUMAN RESOURCES AND INFORMATION TECHNOLOGY

Massive economic growth in the future will encourage the Company to continue to strive to provide human resources with integrity and competence that suit the needs of the organization. We will continue to increase human resource capacity through various means Competency improvement programs through training, coaching and mentoring. We will also continue to coordinate with the management unit and shareholders to continue evaluating business processes, adjusting organizational structure and fulfilling human resources in the Company. This is done in order to increase the speed of adaptation and organizational refreshment. With the issuance of Regulation of the Minister of Public Works and Housing (Permen PUPR) No. 16 of 2017 concerning Non-Cash Transactions on Toll Roads, PT Jasamarga Transjawa Tol continues to improve the governance of the toll road service system in the field of information technology through the operation of the Jasamarga Traffic Information Center (JMTIC). This technology utilized to monitor traffic conditions in real time.

CORPORATE GOVERNANCE

The Company’s performance achievements during 2023 cannot be separated from our commitment to continue to improve Good Corporate Governance (GCG) practices within the Company. We continue to strive to apply the principles of Good Corporate Governance (GCG) in running our business in accordance with the directions of Shareholders. GCG principles which include transparency, accountability, responsibility, independence, and fairness must be implemented within the Company properly as one of the Company’s commitments to achieve vision and mission. By implementing GCG principles, the Company has the following objectives.

 

1. Manage relationships between stakeholders.

2. Running a business that are transparent, complies with regulations, and has good business ethics.

3. Improved risk management.

4. Increasing the Company’s competitiveness and ability to face very dynamic industrial changes.

5. Prevent irregularities and conflicts of interest in managing the Company.

The manifestation of this commitment includes continuing to perfecting the implementation of Good Governance in accordance with statutory regulations and best practices for GCG implementation. The Board of Directors, Board of Commissioners, and all Company people are committed to implementing the best Governance practices so that every program and plan can be realized according to expectations. For this reason, we always carry out improvements and refinements to GCG every year. In 2023, we have made various adjustments and improvements even though we are still implementing the Governance tools together and integrated with the parent company PT Jasa Marga (Persero) Tbk.

SUSTAINABILITY

Implementing sustainability provides a way for the Company to build harmonious relationships with all stakeholders. The Company, through its subsidiaries, has developed Corporate Social Responsibility (CSR) program that balances environmental, social, and economic aspects to create environmentally friendly and sustainable business operations and has impact on improving the quality of life. Our commitment to realizing sustainability in the Company’s business operations is carried out as a response to future challenges. This commitment is the Company’s effort to realize the implementation of the principle of responsibility in order to grow a positive image of the Company in the eyes of the surrounding community and all stakeholders.

BUSINESS PROSPECTS AND FUTURE CHALLENGES

The challenge of global recession and uncertain economic conditions will occur in 2024. From various existing economic indicator data, Indonesian economy will continue to grow at around 5% until 2045. Indonesia will also position itself to become the largest economic country in the world. There are four foundations that will support the Indonesian economy, namely the downstream program for various products originating from Natural Resources (SDA) in line with the progress of industrialization, strengthening the agricultural sector to make Indonesia a world food basket, creative and innovative human resources, variety of new creative industries through start-up companies, helping Indonesia encourage national economic growth. Furthermore, in maintaining domestic economic growth, Bank Indonesia and the Government will continue to coordinate by directing monetary policy to maintain economic stability, through 4 (four) other instruments to support economic growth. One of them is that macroprudential policy will remain loose to support banking credit growth, payment system digitization activities will remain accommodative, money market deepening and inclusive economic development and other policies to continue to encourage economic growth. The Ministry of Public Works and Housing (PUPR) also targeting to build 2,724 km of new toll roads throughout Indonesia by 2025, hence the total length of toll roads throughout the archipelago will reach 4,817 km and targeting to reach 6,155 km in 2025.

With the government’s program continues to strive to accelerate the construction of toll road projects, the Company’s future business prospects are still very promising. The Company has competitive advantage as a toll road operator on the Trans Java section so that integration of new sections in the future can create opportunities to support future performance growth. The Company will continue to be optimistic about future business prospects and achieve increasingly better and sustainable performance growth, which can provide benefits to Shareholders and stakeholders. Various strategic plans have also been prepared, especially maintaining the toll road business as a business that has good prospects. On the financial side, the company needs to ensure that future business potential will bring the Company to be more optimistic in line with improving economic conditions and increasing traffic on the Trans Java toll road compared to 2023. Based on the strategic direction and policies of Shareholders and in accordance with Company Budget Work Plan (RKAP) for 2024 along with its addendum and the Company’s Long Term Plan (RJPP) for 2023-2027, we will continue to coordinate with related parties in order to support corporate actions in the form of equity-based funding on the Trans Java Toll Road section that planned to be implemented in 2024.

CHANGES IN COMPOSITION OF THE BOARD OF DIRECTORS

Throughout 2023 there was dismissal and appointment of member of the Company’s Board of Directors, namely as follows:

1. Confirmation of the honorable dismissal of Mrs. Pramitha Wulanjani, from her position as Director of Finance and Risk Management, effectively on February 8, 2023, based on the Deed of Statement of Company Shareholder Decision No. 1 dated March 3, 2023, made before Mira Aranti Ciptadi, S.H. , M.Kn., Notary in Karawang.

2. Appointment of Mrs. Siti Sarah as Director of Finance and Risk Management, with a term of office effective from February 27, 2023 until the closing of the 5th (fifth) annual GMS since her appointment, namely the 2027 annual GMS (annual GMS for financial year 2026 ), without prejudice to the GMS’s right to dismiss her at any time before her term of office ends, as based on the Deed of Statement of Company Shareholder Decision No. 3 dated March 14, 2023, made before Mira Aranti Ciptadi, S.H., M.Kn., Notary in Karawang.

CLOSING AND APPRECIATION

2023 was a year full of challenges that was passed well in line with the collaboration and optimism of every person within PT Jasamarga Transjawa Tol. For this reason, on behalf of the Board of Directors, we give the highest appreciation to all employees who have worked with high dedication, hence PT Jasamarga Transjawa Tol was able to pass 2023 with extraordinary performance results. Not to forget, we would like to express our respect and gratitude to the Board of Commissioners and Shareholders for their direction which continues to guide our steps in carrying out our mandate to manage and produce increased value for the company which we believe can provide added value for shareholders. We also express our appreciation to all business partners, regulators, and stakeholders, hence PT Jasamarga Transjawa Tol always stand strong and continue to develop as a company with achievements and integrity. We optimistic that, with all support during 2023, we could provide a place for PT Jasamarga Transjawa Tol to continue to be an important part of the toll road business journey and will be able to continue to progress into the future in an effort to achieve the goals that determined in the Company’s vision and mission