All New Transformation WSBP

Dear Shareholders and Stakeholders,

Our utmost gratitude is bestowed upon God Almighty for His abundance of mercy and grace upon all of us, so that PT Waskita Beton Precast Tbk (“WSBP”) can pass through the year of 2022. 2022 was a year full of challenges for WSBP, which is engaged in the Precast Concrete Industry in Indonesia, apart from being caused by WSBP still in the process of recovering from the impact of COVID-19 on the Company’s going concern and business, in 2022 WSBP was also undergoing Debt Restructuring based on the Homologation Decision on Suspension of Debt Payment Obligations (PKPU).

The global economic outlook for 2022 was still heavily affected by COVID-19, even though recovery has been seen in many social and economic aspects. The pandemic caused widespread disruption to economic activities in early 2022, leading to a sharp contraction in the global Gross Domestic Product (GDP) with a trend toward recession. Most countries have relaxed their lockdowns, but protection is still running and the pandemic has begun to be accepted as endemic. Protective measures to slow the spread of the virus are still in place and holding back the acceleration of business and consumer spending.

Furthermore, the Russia-Ukrainian War and Scarcity of Electronic Chips have also disrupted global trade and supply chains, exacerbating rising global commodity and food prices. Constantly high global inflation accompanied by slow growth tends to raise fears of stagflation. Amidst this condition, developed countries sharply tightened monetary policy to curb inflation. This has translated into tighter external financing conditions and financial pressures for some emerging markets.

On a national scale, real GDP growth has increased from 3.7% in 2021, to 5.4% (YoY) in the first three quarters of 2022. The increase in real GDP growth was due to reduced COVID-19 infection rates and successful vaccination program that led to the lifting of restrictions on mobility, resulting in a sharp acceleration in private consumption. Indonesia can sustain strong growth and address potential challenges through a number of initiatives including implementing tax reform and moving from a subsidy model to a rule-based pricing model for energy. Social safety net programs can be targeted more effectively and expanded to create a guaranteed minimum protection across the entire life cycle of the people.

However, even though there has been an increase in real GDP growth, for the infrastructure and construction sectors, Indonesia was still negatively affected by the COVID-19 pandemic in 2022. This is due to the handling of COVID-19 virus having a widespread disruptive impact on economic activities, resulting in a decrease demand for construction services and a slowdown in the progress of infrastructure projects.

In order to mitigate the ongoing impact of the above, the Government of Indonesia has applied a number of measures to support the economy, including fiscal stimulus measures, such as increasing government spending on infrastructure projects. The policy helped reduce the impact of the pandemic on infrastructure sector to some extent, but overall progress of infrastructure projects and demand for construction services were still affected.

In addition to the things mentioned above, the pandemic has also caused delays in the procurement process for several infrastructure projects and difficulties for business actors in securing financing for these projects. Nevertheless, despite these challenges, the infrastructure and construction sector in Indonesia is still considered the main driver of economic growth in Indonesia.

WSBP contributes to the development of national infrastructure in supplying the needs of precast and readymix concrete market. Throughout 2022, WSBP supplied precast concrete worth Rp820,440,982,817 and readymix concrete worth Rp485,788,604,627. This production value underwent an increase when compared to 2021 of 6.29% for precast concrete and 57.02% for readymix.

WSBP also continues to innovate by producing new products, namely sloof precast, semi T Girder section, PHC type spun pile, type 1067 and type 1435 rail sleepers, WBP modular precast house, Risha Type 36, non standard type SPRigWP, porous concrete, concrete power pole products-PLN. Readymix product innovation is casting using mortar foam which has been carried out at Palembang Batching Plant.

Performance Appraisal of Board of Directors

Board of Commissioners assesses the performance of Board of Directors by using the Key Performance Indicators (KPI) that have been set out in the 2022 Corporate Work Plan and Budget (RKAP). Board of Commissioners also considers external conditions such as global and local economy, and socio-political conditions, This is because the achievement of KPIs in 2022 is very dynamic and influenced by these external conditions. In addition to the recovery effects from COVID-19, the Russia-Ukraine War and Electronic Chip Scarcity are also factors that negatively influence global economic growth predictions leading to recession and stagflation. Economic growth in the range of 3.2% illustrates that Indonesia is still recovering and this is quite disruptive to the achievement of the KPI of the Board of Directors.

The achievement of the Board of Directors’ KPI is still not optimal with the prognosis and realization value in the range of 42% for readymix and the realization of precast concrete is in the range of 90.13%, from the target set in RKAP 2022. Factors that cause the non-achievement of the RKAP target are the achievement of a New Contract Value (NKB) that is lower than the target, the unavoidable costs of non-operating facilities, and the non-implementation of the strategy due to the Homologation and Company Restructuring process based on the PKPU Decision.

However, Board of Commissioners appreciates the implementation of Homologation and Debt Restructuring and the General Meeting of Corporate Bondholders which provided clear direction and financial projections for WSBP for 2022 and beyond.

Board of Commissioners believes that Board of Directors needs to continue to strengthen the formulation of right strategies to deal with declining business conditions, and consistently carry out programs to improve resource optimization, cost efficiency and organizational structure effectiveness so as to boost WSBP performance.

Board of Commissioners Activities in 2022 Fiscal Year

In accordance with the Company’s Articles of Association and prevailing laws and regulations, Board of Commissioners is in charge and responsible for supervising the policies and management of the Company carried out by Board of Directors, as well as providing advice to Board of Directors. The ultimate goal of Board of Commissioners’ oversight is achieving improved performance and progress of WSBP. In practice, Board of Commissioners is assisted by Audit Committee and Risk Management Committee.

Regarding the oversight mechanism for the implementation of Corporate strategy, Board of Commissioners is involved in the process of preparing the Company’s 2022 Work Plan and Budget (RKAP), which contains business strategies and objectives as well as the Company’s work plan for 2022 fiscal year, in order to ensure that the RKAP prepared is aligned with WSBP vision and mission. This involvement was carried out from the beginning of preparation stage until the approval of 2022 RKAP and 2022 RKAP Revision on March 23, 2022.

Regarding the approval of 2022 RKAP and 2022 RKAP Revision, Board of Commissioners has provided the following written notes/advice to Board of Directors:

  1. Board of Directors should further explain the target of 5 product innovations.
  2. Board of Directors should explain in details the NKB and SNK as well as the EAT business.
  3. Board of Directors should explain the 5-year trend and its comparison with the RKAP, as well as the management strategy so that homologation is achieved.
  4. Board of Directors should prepare and submit Board of Directors KPI and the trend of 5 (five) years and compliance with the Company’s Long Term Plan (RJPP).

Board of Commissioners was also involved in the approval process for 2022 RKAP Revision on October 27, 2022, where Board of Commissioners also provided the following written notes/advice to Board of Directors:

  1. Board of Directors should change the macro assumptions used to become national standard assumptions.
  2. Board of Directors should coordinate with the legal department regarding the CAPEX of Bojonegoro land.
  3. Board of Directors should improve the EBITDA in RKAP in order to increase public trust in WSBP.
  4. Board of Directors is required to attach details regarding expenses incurred related to the legal case, along with the case details.
  5. Board of Directors should review the figures presented in RKAP Revision to ensure that they are more achievable.
  6. Board of Directors should always review the Contract Value whether it generates profit or not.
  7. Board of Directors should perform efficiency by optimizing WSBP Plant so as not to cause high variance.
  8. Board of Directors should always update the standard price for each contract, so that it does not generate biased information because the standard price has expired or is irrelevant.
  9. Board of Directors is required to attach an ongoing efficiency program.
  10. Board of Directors should present a detailed work plan (not only regarding operational work plans), then present the articles of association.
  11. Board of Directors should attach the same calculation between new cost structure and old cost structure so that the numbers can be clearly compared.
  12. Board of Directors should review Bojonegoro plant so that inefficiencies do not occur which will lead to inspections.
  13. Board of Directors should conduct employee training regarding mastery of international contract law, bearing in mind that there has been a new contract whose domain is outside Indonesia.

In addition to monitoring the formulation of 2022 RKAP and 2022 RKAP Revision, Board of Commissioners also monitored and oversaw the performance of WSBP management through periodic reviews of reports submitted by Board of Directors, including the Company’s Annual Report, Quarterly Management Report and Other Management Reports.

The oversight function of the policies and performance of WSBP management by Board of Commissioners has been carried out through the provision of advice/responses, especially written responses to the Corporate Action or Operational Action plans to be carried out by WSBP as referred to in Letters issued by Board of Commissioners as well as in Board of Commissioners Meeting forums both inviting Board of Directors or Board of Commissioners internal meetings/ Audit Committee and Risk Management Committee, with the following description:

  1. Establishment of Joint Venture
    Regarding the establishment of joint venture, Board of Commissioners provided feedback via Letter No. 62/WBP/ DK/2022 dated September 15, 2022, with the following several notes/advice for the Board of Directors:
    1. Board of Commissioners did not approve the Board of Directors’ request regarding the establishment of Joint Venture Company/Special Purpose Vehicle (SPV) in the concrete production sector in the National Capital City (IKN), considering that the joint venture formation will be carried out directly by PT Waskita Karya (Persero) Tbk as WSBP shareholder.
    2. Board of Directors should follow up on the following matters:
      1. Board of Directors should convey the impact on WSBP organizational and internal structure.
      2. Board of Directors should submit a separate feasibility study from internal since it is related with internal WSBP.
      3. Board of Directors should prepare step/action plans other than the SPV scenario.
      4. Board of Directors should submit reviews from independent consultants, both legal consultants and other consultants related to the content, impact and mitigation of the SPV agreement, including financial aspects, profit sharing, etc.
  2. PKPU Peace Agreement and Implementation of Peace Agreement
    Board of Commissioners has approved the proposed Peace Agreement through PKPU mechanism based on Letter No. 21.2/WBP/DK/2022 dated June 15, 2022. In the letter, Board of Commissioners also provided notes/advice to Board of Directors to follow up on the Board of Commissioners’ approval with prudence principle and based on Good Corporate Governance (GCG) principles, while taking into account applicable laws and regulations.

    Furthermore, based on Letter No. 86/WBP/DK/2022 dated November 15, 2022 Board of Commissioners has approved the implementation of PKPU Peace Agreement in accordance with WSBP’s financial projections for the next 5 (five years) and the Company’s strategic plans. In the letter, Board of Commissioners provided direction to the Board of Directors to follow up the approval with the following notes:
    1. Board of Directors should conduct benchmarks to other companies with low ownership but remains in control.
    2. Board of Directors should ensure that no claims are left behind after the verification deadline of November 21, 2021.
    3. Board of Directors should carry out careful risk management, bearing in mind that currently there are vendors who own shares, hence there is a possibility of subjectivity in vendor selection.
    4. Board of Directors should explain in a special agenda to discuss risk mitigation according to PKPU scenario.
    5. Board of Directors should ensure that the legal opinion regarding claims with the parties involved in the case can be clearly ascertained.
    6. Board of Directors should submit an attachment to the legal basis which became a reference for PKPU homologation and the opinion of legal consultant that WSBP had complied with all legal bases regarding PKPU homologation.
    7. Board of Directors should be taking concrete steps so that no parties will ask for re-verification.
    8. Board of Directors should send a letter containing confirmation of debt and terms desired by WSBP and the consequences, verification is not done by November 21, 2021.
    9. Board of Directors should convey the articles in the regulations that are complied with by WSBP regarding the implementation of PKPU homologation.
    10. Board of Directors should ensure that verification only changes the value but does not change the legal status of PKPU.
    11. The integrity pact that has been signed by Board of Directors is an inherent part of this agreement.
    12. Board of Directors should carry out the approval by taking into account the articles of association, the principle of prudence and based on the principles of Good Corporate Governance, while taking into account the applicable laws and regulations.
  3. Divestment Follow-up
    Regarding the Company’s divestment plan and following up the meeting between Board of Directors and Board of Commissioners, through Letter No. 28/WBP/DK/2022 dated June 24, 2022, Board of Commissioners conveyed the followings:
    1. Board of Commissioners had previously given approval for the Company’s Divestment to Board of Directors. However, considering that until now the Divestment has not been realized and the Board of Commissioners’ approval has reached a period of 1 (one) year, Board of Commissioners declared that the previous approval is not valid as of the date of this letter.
    2. Furthermore, Board of Directors should follow up on the following matters:
      1. Board of Directors can re-submit a Divestment application by taking into account the applicable provisions and attaching a risk study, legal review and application of the principles of good corporate governance.
      2. Board of Directors reclassifies inventory (bad inventory) to fixed assets and recognizes depreciation expense in accordance with applicable PSAK provisions.
  4. Changes to Accounting Guidelines Policy
    Board of Commissioners has provided responses through Letter No. 01.2/WBP/DK/2022 dated March 23, 2022. In the letter, Board of Commissioners also provided the following notes/advice to the Board of Directors including:
    1. Board of Directors should submit a review of the impact of changes in accounting policies.
    2. Board of Directors should immediately put the new accounting policies into procedures.
    3. Board of Directors should explain the goals and benefits of changing accounting policies.
    4. Board of Directors should emphasize the fixed asset revaluation policy.
    5. Regarding the purchase of assets, Board of Directors should make the value, for example, under Rp10 million or above Rp10 million can be capitalized as fixed assets, so that it is more controlled.
    6. Board of Directors is required to submit in writing regulatory references or recommendations that underlie changes in accounting policies.
  5. Changes in Organizational Structure
    Board of Commissioners has submitted responses to the Board of Directors regarding the proposed changes to WSBP Organizational Structure through Letter No. 11/WBP/ DK/2022 dated February 24, 2022, among other things, stated that:
    1. Board of Commissioners approved changes to WSBP Organizational Structure with the following notes:
      1. Board of Directors evaluates the suitability of organizational structure with the direction and development of the company’s latest performance.
      2. Board of Directors conveys details regarding job descriptions, other organizational structures outside the organizational structure (STO) of Head Office and other completeness of details needed in the future.
    2. Board of Directors follows up on this agreement with prudence principle and based on the principles of Good Corporate Governance, while taking into account prevailing applicable laws and regulations.
    Furthermore, Board of Commissioners has approved changes to the organizational structure based on Letter No. 33/WBP/DK/2022 dated July 12, 2022. In the letter, Board of Commissioners provided the following notes/ advice to the Board of Directors:
    1. Changes in the organizational structure must not worsen the Company’s financial condition.
    2. Board of Directors must carry out an assessment of work balance so that the organization becomes optimal in order to be able to respond to challenges from stakeholders, especially PKPU participants who observe WSBP actions.
    3. Board of Directors follows up on this agreement with prudence principle and based on the principles of Good Corporate Governance while taking into account prevailing laws and regulations.
  6. Changes to the Company’s Vision, Mission, Logo and Tagline
    1. Changes in Vision and Mission
      Board of Commissioners has submitted approval to the Board of Directors regarding the proposed changes to the Company’s Vision and Mission through Letter No. 70.1/WBP/DK/2022 dated October 6, 2022. In the letter, Board of Commissioners provided the following notes/advice to the Board of Directors:
      1. Board of Directors should consider changing the measurement for vendor settlement to “100% settlement of old vendor invoices”.
      2. Board of Directors should consider the need to publish the results of customer engagement to increase trust in the community.
      3. Board of Directors should consider the need for an independent institution to assess customer engagement so that measurements are more qualified.
      4. Board of Directors should consider creating a separate column regarding the calculation of EBITDA in the financial statements so that EBITDA figures can be clearly reflected in the financial statements.
      5. Board of Directors should do a breakdown of the vision and mission to personnel and units regarding their roles in achieving the vision and mission. This can be stated in assignments that are made comprehensively for each employee within WSBP.
      6. Board of Directors should consider the need for an emphasis on the strategy to be carried out by WSBP, whether to increase the strength of business unit or increase the effectiveness of WSBP business.
      7. Board of Directors should be able to describe the level of failure that occurs in order to describe the zero reject to be achieved in WSBP operational report.
      8. Board of Directors should attach an integrity pact which is an attachment to the Board of Directors Letter No. 809/WBP/DIR/2022 dated September 30, 2022 regarding the Submission of Requests for Approval for Changes in Vision and Mission of PT Waskita Beton Precast Tbk.
      9. Board of Directors should follow up on this agreement by taking into account the Articles of Association, prudence principle and based on the principles of Good Corporate Governance, while taking into account prevailing laws and regulations.
    2. Changes to the Company Logo and Tagline
      Board of Commissioners has submitted approval to the Board of Directors regarding the proposed changes to the Company Logo and Tagline through Letter No. 63/ WBP/DK/2022 dated September 15, 2022. In the letter, Board of Commissioners provided the following notes/ advice to the Board of Directors:
      1. Board of Directors should ensure that the new Company logo & tagline is in line with the logo & tagline of PT Waskita Karya (Persero) Tbk as the Company’s shareholder.
      2. Board of Directors should ensure that the implementation costs remain a concern after the Company’s PKPU based on effective and efficient budgeting.
      3. Board of Directors should ensure the impact of communication to regulators, banks, vendors and other interested parties/stakeholders.
      4. Board of Directors should ensure the fulfillment of permits in accordance with applicable regulations.
      5. Board of Directors should ensure the basis for determining and the meaning of colors in the logo by continuing to communicate with PT Waskita Karya (Persero) Tbk as a shareholder of WSBP.
      6. Board of Directors can consider old brands that are well known in the community and provide a good image.
      7. Board of Directors should review that the basic principles of creating a logo are guided by practicality/simplicity, easy to remember and full of meaning.
      8. Board of Directors should ensure the implementation of this agreement while still paying attention to the articles of association, applicable regulations, and the principles of Good Corporate Governance.

In carrying out the supervisory function as described above, we strive to maintain good coordination with the Board of Directors, one of which is carried out through Board of Commissioners meeting forum which invites Board of Directors. In 2022, Board of Commissioners has held meetings inviting Board of Directors with a frequency of meetings every month or 12 times a year.

Board of Commissioners is also active in providing advice, suggestions and directions to Board of Directors regarding policies and strategies, current conditions or strategic issues as well as the implementation of action plans to support WSBP’s performance in the current fiscal year, and maintain WSBP’s business continuity.

In addition, Board of Commissioners has conducted site visits in order to directly monitor and supervise the business management and operational performance of WSBP. Board of Commissioners has conducted 9 site visits throughout 2022 fiscal year, including to Kayu Agung-Palembang-Betung Toll Road (KAPB) Project, Cimanggis Cibitung Tollways (CCTW) Project, Flood Control Project and Loji River Rob Pekalongan, JPM Sudirman Project, Penajam Plant, Gasing Plant, Bojonegara Plant, Karawang Plant and Cikopo Workshop.

During the working visit, Board of Commissioners carried out the oversight function by providing the following advices:

  1. Kayu Agung-Palembang-Betung Toll Road (KAPB) Project
    1. Board of Directors should ensure the steps/ action plans related to the acceleration of gross receivables into receivables.
    2. Board of Directors should ensure that the absorption of PMN holding at WSBP can go according to plan as revenue for WSBP.
    3. Board of Directors should ensure the stockyard area because it can mitigate constraints on delivery of ordered products.
    4. Board of Directors should immediately establish communication with the owner regarding the price increase.
    5. Board of Directors should ensure the implementation of ISO, namely by making a list of obstacles along with risk mitigation and management.
    6. Board of Directors should ensure the implementation of HSE related to night work in anticipation of safety and audits.
    7. Board of Directors should ensure the running of quality control in the form of documentation and quality control passing, especially structural work.
    8. Board of Directors should ensure the handling of rejected goods or product defects and ensure that they are included in the calculation.
    9. Board of Directors should ensure that project improvisation can be carried out properly and is guided by the work contract.
    10. Board of Directors should ensure the creation of risk analysis and handling of issues such as social issues, payments, weather.
    11. Board of Directors should ensure the fulfillment of procedures related to licensing.
    12. Board of Directors should ensure the implementation of orderly administration according to the contract
    13. Board of Directors should ensure that problem mitigation is explained and monitored every week or every month.
  2. Cimanggis Cibitung Tollways (CCTW) Toll Road Project
    1. Risk management steps are required, namely risk assessment of both internal and external factors related to the feasibility of carrying out the work.
    2. Board of Directors should always be in a state of defense considering that WSBP is still in a state of PKPU.
    3. Board of Directors should ensure that the implementation of work continues to bring maximum profit.
    4. Board of Directors should ensure certainty of payment from the owner, namely orderly administration of the contract, validity of the contract and articles in the contract.
    5. Board of Directors should ensure that product supply can be maintained by continuing to coordinate with the owner to anticipate more demand.
  3. Flood Control and Loji Pekalongan River Robust Project
    1. Board of Directors should ensure orderly fulfillment of contract administration with employers so that the legality aspect is protected.
    2. Board of Directors should ensure that supporting document attachments in the contract are available and fulfilled considering that this project uses custom products so that product durability is the responsibility of project owner.
    3. Board of Directors should ensure that the system has accommodated custom orders.
    4. Board of Directors should ensure that all product shipments must comply with eligibility and safety.
    5. Board of Directors should ensure that the flow of internal communication can be structured and measurable with time standardized into internal procedures, including the division of job desks and outreach to all employees.
    6. Management needs to pay attention to the risks that occur in the field and prioritize them, based on input from implementers in the field.
  4. JPM Sudirman Project
    1. Board of Directors should ensure the fulfillment of financial close of JPM Sudirman Project.
    2. Board of Directors should ensure risk mitigation in connection with the design & build implementation of JPM Sudirman Project.
    3. Board of Directors should ensure that all legal aspects of JPM Sudirman Project are fulfilled.
    4. Board of Directors should conduct a risk study along with the pros & cons regarding JPM Sudirman Project.
    5. Board of Directors should ensure the handling of all stakeholders (stakeholders) so that the credibility of WSBP is well maintained.
    6. Board of Directors should prepares steps for handling gross receivables in accordance with contracts and other regulations in order to prevent greater losses, including through slow down to termination of work.
  5. Penajam Plant
    1. Board of Directors needs to conduct a strategic review to determine steps will be taken regarding Penajam Plant, including options to relocate the Plant closer to IKN or remain in its current location.
    2. Board of Directors needs to resolve the legal status of land at Penajam Plant, including conducting studies from legal aspects, risks and mitigation related to ownership issues at Penajam Plant.
    3. Board of Directors through Penajam Plant should confirm the Regional Spatial Plan which will be used to ensure the suitability of WSBP allotment plan.
    4. Board of Directors should ensure studies regarding AMDAL, pay attention to the potential for flooding in surrounding area, and review efficiency options for Penajam Plant such as water salinity.
    5. Board of Directors should make a matrix of action plans, schedules and studies of activities and costs needed for Plant activation, including fence repairs, M/E, equipment and others.
  6. Gasing Plant
    1. Board of Directors should immediately evaluate the Cost Structure so that irrelevant expenses should not be recognized as COGM.
    2. Board of Directors should immediately form a Winning Team to prepare the Company’s strategy.
    3. Board of Directors should immediately conduct an independent consultant review regarding the method of recording expenses, including: the cost method, measured profit and loss at the Plant or division level and pros and cons as the basis for selecting the recording.
    4. Board of Directors should conduct a Plant cost analysis.
    5. Board of Directors should evaluate the pricing policy for the parent so that it can be reviewed and the results are presented in the Radirtas and Radirming, supported by studies from independent consultants such as legal consultants and other consultants.
    6. Board of Directors should immediately creat an internal AR (Account Receivable) War Room to discuss accelerating billing and disbursing invoices.
  7. Bojonegara Plant
    1. Board of Directors should immediately resolve the legal issue considering that Bojonegara Plant is the spearhead of the Company’s production.
    2. Board of Directors should immediately carry out risk mitigation, financial, legal regarding the clarity of sale and purchase transactions and feasibility studies to be completed.
    3. Board of Directors should make a timeline regarding legal issues including steps that have been taken and efforts to be made.
    4. Board of Directors should be assisted by an independent consultant regarding the fairness of transaction and transaction price.
    5. Board of Directors should conduct an evaluation/ feasibility study regarding the wharf construction plan.
    6. Board of Directors should immediately finalize the permits required for Bojonegara Plant.
  8. Karawang Plant
    1. Board of Directors should review efficiency options for renting land used as a stockyard.
    2. Board of Directors should ensure the optimization of equipment division, strict supervision, implementation of quality control of modified spare parts, and the creation of internal procedures based on consultant reviews so that the related parties can work according to applicable standards.
    3. Board of Directors should ensure the availability of systems and procedures for custom products.
  9. Cikopo Workshop
    1. Board of Directors should carry out the arrangement of spare parts by paying attention to cleanliness a maximum of 30 (thirty) days after the work visit is carried out.
    2. Board of Directors should ensure the management of spare parts in a professional manner by taking into account benchmark studies of other companies.
    3. Board of Directors should ensure that the stock taking is carried out on the same date.
    4. Board of Directors should immediately carry out the extension of vehicle registration certificates that have expired and ensure that there is no repetition of vehicles whose tax validity period has expired.
    5. Board of Directors should implement steps to optimize assets in order to avoid omissions that cause assets/spare parts to be neglected and not maintained.
    6. Board of Directors should apply standard procedures in carrying out work so that work time is measured.
Views on the Implementation of Good Corporate Governance

We constantly recommend to Board of Directors and all WSBP personnel to implement Good Corporate Governance (GCG) in WSBP environment with the hope that WSBP business activities will remain within the scope of applicable laws and regulations and uphold WSBP’s culture and business ethics.

GCG practices at WSBP have been carried out well, according to the GCG assessment score for 2022 fiscal year conducted by the Financial and Development Supervisory Agency (BPKP) of 81,489 in “Good” category. This score has decreased compared to the results of 2020 GCG assessment conducted by BPKP of 82,253 in “Good” category.

As a Public Company, WSBP strives to always comply with applicable regulations, including regulations issued by the Financial Services Authority (OJK) regarding the implementation of GCG in Public Companies as stipulated in OJK Regulation No. 21/POJK.04/2015 concerning Guidelines for Public Company Governance Guidelines and OJK Circular Letter No. 32/SEOJK.04/2015 concerning Guidelines for Public Company Governance.

In the view of Board of Commissioners, the implementation of GCG within WSBP has been running properly in accordance with prevailing laws and regulations, as well as the expectations of shareholders and stakeholders, but certainly there is still a space for improvements. Risk management, internal control system, and internal audit can still be improved for the purpose of creating more accountable business processes. WSBP also carries out Joint Audit with WSBP parent, and Independent Audit process conducted by Public Accountant on the Company’s Financial Statements. In order to maintain the independence of Public Accountant, the appointment mechanism of Public Accountant is carried out up to the approval level of Shareholders at the GMS. This mechanism is expected to create an independent audit process that is free from conflict of interest from any party.

As part of fulfilling GCG pillars, WSBP has prepared PT Waskita Beton Precast Tbk’s Good Corporate Governance (GCG) Code that has been approved by Board of Commissioners based on Letter No. 100.1/WBP/DK/2022 dated December 8, 2022.

View on the Effectiveness of Risk Management System

Similar with the Internal Control System, Risk Management is part of GCG principles implementation. As a guideline for implementation, WSBP Management has established a Corporate Risk Management Policy which refers to the Board of Directors’ Decree No. 40.5/SK/WBP/PEN/2015 dated December 1, 2015 concerning Risk Management Procedures of PT Waskita Beton Precast Tbk. Board of Commissioners strongly supports WSBP Management’s efforts in increasing the effectiveness of Risk Management System within WSBP because WSBP is engaged in the Precast Concrete Industry which is included in the category of industry with high level of risk, hence a prudent Risk Management System is needed.

Board of Commissioners together with Risk Management Committee have carried out monitoring and evaluation of Risk Management practices, application of risk culture, and implementation of Risk Management supporting tools to improve the smooth running of risk management at the strategic, project and operational levels. The agenda discussed includes Corporate Risk Register and Process and Risk Heat Map Evaluation, Risk Management Policy Evaluation, and Review of the Effectiveness of other related Company Policies including GCG Policy, Quality and Service Policy, and Company Organizational Structure. In addition, Board of Commissioners and Risk Management Committee have also provided input, advice and directions to the Board of Directors regarding Company Financial Performance Evaluation, Homologation, Concrete SPV Establishment Plan in IKN, Organizational Structure Changes, Vision and Mission, Logo and Tagline, and Review of the Company’s Internal Policies/Regulations including the Internal Control System, Systems and IT Policies, Risk Management Policies, Accounting Guidelines Policies, Board of Directors Compliance with Applicable Regulations, and Implementation of GCG Principles.

In connection with the implementation of homologation, Board of Commissioners advices the Board of Directors to always update the risk management.

Views on the Effectiveness of Internal Control System

As one of the efforts made to fulfilling GCG pillars, WSBP has prepared PT Waskita Beton Precast Tbk Internal Control System Guidelines which are stipulated based on Board of Directors Decree No. 62.2/SK/WBP/PEN/2019 dated October 21, 2019. The Internal Control System (SPI) is a strategic partner for Management in carrying out the Internal Oversight function of WSBP’s Operational and Financial Management. The Head of SPI is appointed and dismissed by the President Director after obtaining approval from Board of Commissioners.

Board of Commissioners, assisted by Audit Committee, has evaluated and approved the proposed changes to Head of SPI, reviewed the SPI activity plan for 2022 (Annual Audit Work Program (PKPT), and implementation results and Internal and External Audit Reports). Most of the 2022 audit findings, both internal and external, have been followed up by WSBP Management. In addition, we have also reviewed the performance of Public Accounting Firm in 2022.

View on the Effectiveness of Whistleblowing System

To be able to maintain and improve the implementation of GCG pillars, an applicable Whistleblowing System (WBS) process and mechanism is needed so that the reporting of violations of GCG principles, WSBP Code of Conduct, and violations of laws and regulations within WSBP can be implemented. To maintain the independence of WBS processes and mechanisms, WSBP has formed a WBS Team that reports directly to the President Director. Reports can be submitted through the Whistleblowing System channel provided, namely via email wbs@waskitaprecast.co.id or directly reported to the Company’s WBS Team.

In WSBP’s WBS mechanism, Board of Commissioners acts as a recipient of reports if the reported party is a member of Board of Directors, or a person who has a special relationship with a member of Board of Directors. Further handling is handed over to Board of Commissioners who will be assisted by 2 (two) supporting organs of Board of Commissioners to carry out inspections and investigations (if necessary).

In order to increase the effectiveness of WBS at WSBP, Board of Commissioners periodically monitors WBS reports submitted by the Borad of Directors. According to our assessment, the implementation of WBS at WSBP has been carried out effectively. The foregoing is supported by the absence of complaint reports submitted to the WBS Team in 2022.

Performance Assessment of Supporting Organs Under Board of Commissioners

Throughout 2022, Board of Commissioners considers that the Secretary of Board of Commissioners and other committees have carried out their duties and responsibilities properly. The Secretary of Board of Commissioners has carried out its duties, including: preparing meetings, preparing minutes of Board of Commissioners meetings, administering documents for Board of Commissioners, preparing Work Plans and Budgets for Board of Commissioners, drafting reports for Board of Commissioners and carrying out other duties of Board of Commissioners. Throughout 2022, the Secretary of Board of Commissioners has prepared 14 (fourteen) meetings for Board of Commissioners in internal meetings with Audit Committee and Risk Management Committee and 12 (twelve) joint meetings with Board of Directors, held working visits for Board of Commissioners and was active in attending meetings held by Audit Committee and Risk Management Committee.

In carrying out its duties, functions and responsibilities in the areas of supervision and providing advice to Board of Directors, Board of Commissioners is assisted by 2 (two) committees under the supervision of Board of Commissioners, namely Audit Committee and Risk Management Committee.

Board of Commissioners also assesses that Audit Committee and Risk Monitoring Committee have carried out their duties properly in increasing the transparency, accountability and quality of financial reports in accordance with applicable accounting standards as well as reports on WSBP business activities and results in accordance with GCG principles. In addition, Audit Committee and Risk Monitoring Committee have also made maximum efforts to improve the internal control function in order to achieve effectiveness and efficiency in managing WSBP resources to obtain optimal results.

Throughout 2022, the committee has held meetings between Audit Committee and Risk Management Committee with Board of Directors and management, which also serves as a method of monitoring the implementation of their work plans as stipulated in the 2022 RKAP and 2022 RKAP Revision. There were 62 committee reviews or memos with issues and topics, including:

  1. Discussion of the Application for Approval in Principle for the Establishment of a Special Purpose Vehicle (SPV) in Concrete Production in National Capital City (IKN)
  2. Discussion of the Application for Approval of the Implementation of PKPU Peace Agreement
  3. Review of the Approval for 2022 RKAP and 2022 RKAP Revision
  4. Discussion on Top Corporate Risk Risk Profile for Quarter I-IV 2022
  5. Company Financial Performance Every Month
  6. Proposed Changes in Organizational Structure
  7. Review of the Accounting Guideline Policy, Procurement of Goods and Services Policy, Quality and Service Policy, and HC Management & Management Succession Policy
  8. Discussion on Changes in Vision and Mission, Logo, and Tagline
  9. Discussion on Efficiency, Sunk Cost and Company Projections for the next 5 years
  10. Oversight of the compliance of Board of Directors in implementing laws and regulations, including: Evaluation Results of Risk and Legal Studies, Performance and Settlement of Litigation and Non-Litigation Cases, and Legal studies of action plans and problems that occur. In this regard, throughout 2022 there was no legally enforceable sentencing decision against WSBP and WSBP has shown commitment to agreements and/or commitments made with third parties.
Views on the Company’s Business Outlook

Board of Commissioners views that WSBP has a chance to grow and survive in 2023. The predicted economic growth at 4.4% (Source: IMF) with the shadows of recession and stagflation illustrates that the Indonesian economy is relatively unfavorable, but the growth in government and private consumption for infrastructure and consumption is expected to provide an opportunity for WSBP to recover, grow and develop.

The Government’s commitment to continuing to increase infrastructure and construction capacity in Indonesia also provides positive predictions to encourage positive sentiment in the national construction industry, thereby enabling business opportunities that can be utilized by WSBP, both with Waskita group and independently. Therefore, we always recommend the Board of Directors to further optimize the business opportunities that will arise in 2023.

Board of Commissioners also supports the Board of Directors and Management’s Strategy to focus on consistent implementation of Financial Homologation and Restructuring results, operational and financial business transformation, implementation of non-contributing plant asset divestments, asset revitalization for operational excellence, obtaining new working capital, and improving Good Corporate Governance (GCG) and Risk Management.

Emphasis on a Thing

Homologation

Board of Commissioners views that WSBP’s obligations as stated in the homologation will be implemented obediently by WSBP accompanied by concrete steps in efficiency for WSBP’s going concern.

Company Expenses

Board of Commissioners always supervises and provides advice and input to the Board of Directors in handling/treating WSBP’s expenses, including the expenses on unproductive assets.

Internal Control

Board of Commissioners intensively supervises the Board of Directors to always carry out WSBP internal control in order to provide added value to WSBP.

Changes in the Composition of Board of Commissioners

Throughout 2022, the composition of PT Waskita Beton Precast Tbk’s Board of Commissioners of underwent several changes. Changes in the composition of Board of Commissioners in 2022 and the reasons for changes are as follows:

Name Position Basis of Appointment Basis of Dismissal
Bambang Rianto President Commissioner AGMS resolution based on Deed No. 12 dated May 4 2021, made before Jose Dima Satria, S.H., M.Kn., Notary in Jakarta. EGMS resolution based on Notarial Deed of Ashoya Ratam, S.H., M.Kn. No. 45 dated December 20, 2022
Eka Desniati Commissioner AGMS resolution based on Deed No. 12 dated May 4 2021, made before Jose Dima Satria, S.H., M.Kn., Notary in Jakarta. EGMS resolution based on Notarial Deed of Ashoya Ratam, S.H., M.Kn. No. 45 dated December 20, 2022
Agus Budiman Manalu Independent Commissioner AGMS resolution based on Deed No. 12 dated May 4 2021, made before Jose Dima Satria, S.H., M.Kn., Notary in Jakarta. Still actively serving as of December 31, 2021.
Hadi Sucahyono Commissioner EGMS resolution based on Deed No. 26 dated September 23, 2020, made before Ashoya Ratam, S.H., M.Kn., Notary in Jakarta. EGMS resolution based on Notarial Deed of Ashoya Ratam, S.H., M.Kn. No. 45 dated December 20, 2022
Abdul Ghofarrozin Independent Commissioner EGMS resolution based on Deed No. 61 dated July 26 2017, made before Dina Chozie, S.H., as Alternate Notary of Fathiah Helmi, S.H., Notary in Jakarta. 2022 Annual General Meeting of Shareholders (AGMS) resolution on June 27, 2022, notarized through Notarial Deed of Titik Krisna Murti Wikaningsih Hastuti, S.H., M.Kn. No. 08 dated July 12, 2022
Abianti Riana Independent Commissioner 2022 Annual General Meeting of Shareholders (AGMS) Resolution on June 27, 2022, notarized through Notarial Deed of Titik Krisna Murti Wikaningsih Hastuti, S.H., M.Kn. No. 08 dated July 12, 2022 Still actively serving as of December 31, 2021.
Poerwanto Plt. President Commissioner / Commissioner
Acting President Commissioner/ Commissioner
EGMS resolution based on Notarial Deed of Ashoya Ratam, S.H., M.Kn. No. 45 dated December 20, 2022 Still actively serving as of December 31, 2021.
Asep Arofah Permana Commissioner EGMS resolution based on Notarial Deed of Ashoya Ratam, S.H., M.Kn. No. 45 dated December 20, 2022 Still actively serving as of December 31, 2021.
Final Words

Finally, we, the entire Board of Commissioners of WSBP, would like to express our highest appreciation to all members of Board of Directors and all employees of PT Waskita Beton Precast Tbk who have devoted all their abilities and dedication in order to promote the optimization of WSBP performance. We would also like to express our deepest gratitude to all shareholders and stakeholders for the support that has been given.

Through strengthening good synergies with all parties related to WSBP business chain in a sustainable manner, we are optimistic that PT Waskita Beton Precast Tbk will be able to achieve strong and sustainable business growth in the future while also being able to provide added value to shareholders and stakeholders.

Jakarta April 28, 2023

Board of Commissioners
PT Waskita Beton Precast Tbk


Poerwanto
Plt. President Commissioner/ Commissioner
Acting President Commissioner/ Commissioner