PT. Waskita Beton Precast Tbk

Dear Shareholders and Stakeholders,

Let us first send our praise and gratitude to the presence of Almighty God, because of the abundance of His blessings, PT Waskita Beton Precast Tbk as a national scale provider of precast and ready mix concrete managed to record positive performance in 2019. The acceleration of infrastructure development programs that the Government continues to carry out as an effort to improve Indonesia’s economic growth and global competitiveness have created great opportunities for the Company to continue to grow while participating in and contributing to the acceleration agenda.

The Company’s Annual Report for the fiscal year 2019 is an effort to provide a comprehensive picture of the Company’s performance throughout 2019. Through this report book, the Company’s management tries to summarize and document the Company’s journey and achievements in 2019, which will eventually become part of management accountability in managing the company

2019 Strategic Policies

Based on the analysis of global and national economy released by the Ministry of Finance, the condition of global economic uncertainty continues with the growth rate in the range of 3.0%, which is the lowest growth since the 2008 crisis. This uncertainty was among others influenced by the escalation of trade war between the US and China. Other causes are the Brexit process in the UK which has yet to produce a meeting point; a trade war between Japan and Korea; and the Aramco oil facility in Saudi Arabia that was attacked, resulting in a 5% reduction in global supply and pushed global crude oil prices increased to 15% immediately.

Amid the unfavorable global economic conditions, Indonesia’s economy in 2019 also experienced a slowdown with a growth rate of 5.02% compared to previous year of 5.17%. While inflation throughout 2019 was maintained below 3.5%. The Indonesian economy, which tends to be quite stable, was inseparable from the monetary policy and efforts made by the Government of the Republic of Indonesia in boosting domestic demand.

In 2019, the Government continued to encourage the acceleration of Indonesia’s economic development through 5 (five) Medium-Term Priority Work Programs, namely human resources development, infrastructure development, simplification of regulations, simplification of bureaucracy, and economic transformation.

The goal of infrastructure development is the development of national infrastructure that has the carrying capacity and power to bring about equitable economic and social growth by encouraging community participation.

The infrastructure developments depends on the support of the availability of construction materials and equipment (MPK) that must also have higher quality, more effective, efficient and timely. The Government through the Ministry of Public Works and Public Housing (PUPR) continues to encourage the use of pre-cast concrete technology, which has more standardized quality advantages and is safer to use. Besides that, precast technology also has several main advantages, i.e. guaranteed speed and continuity of the concrete production process . Most of the raw materials of the products are widely available in the country, so that the price of products is increasingly competitive.

PT Waskita Beton Precast Tbk as a company engaged in the precast and ready mix concrete manufacturing industry continues to make its best contribution to the acceleration of Government infrastructure development programs by providing precast and ready mix concrete products with superior and competitive quality.

The Company also prepared a number of strategic actions and policies to support the achievement of targets set out in the 2019 Corporate Work Plan and Budget. The strategic policies are:

  1. Marketing strategy, i.e. strengthening the external market position, developing market segments by entering the concrete business with all its derivative activities, product development and innovation, and conducting market mapping.
  2. Financial strategy, i.e. the strategy that aims for the Company to have a healthy financial condition, by way of, one of which is maintaining financial ratio.
  3. Operational strategy, i.e. among others, improving production cycles to increase utility and increase product quality in order to have high competitiveness;
  4. Engineering strategy, i.e. among others, generating innovations and standardizing precast and ready mix products.
  5. HSE (Health, safety and environment) Strategy, i.e. among others is carried out through HSE implementation inspection and evaluation of follow-up results, in addition to environmental and work environment measurements;
  6. Risk management strategy, includes among others, reviewing risks and renewing risk assessment for all levels by utilizing digital applications.
  7. . Investment and corporate development strategy, includes among others, the preparation of industry landscape mapping and the preparation of strategies to increase asset turnover
  8. HR development strategies, i.e. one of which is by increasing Human Capital competencies according to the training syllabus.

These strategies have been implemented effectively, supported by the commitment of Board Directors and all employees of WSBP. Going forward, the Company will continue to make improvements so that its performance can be maintained and business development can be encouraged.

Comparison Between Target Achievement and Realization

When compared to the targets in the Company’s Work Plan and Budget, overall, the Company has not succeeded in achieving the targets set. This failure was mainly due to the political year that caused several projects completion to be postponed and had a direct impact on the achievement of construction sector performance.

In 2019, the Company’s revenues were realized at Rp.7.47 trillion or 76.08% of the target set at Rp9.81 trillion. Although the Company’s cost of revenues decreased in 2019, the realization of the Company’s gross profit in 2019 was only reached 91.28% of the 2019 target.

The Company’s operating expenses in 2019 were realized at Rp273.93 billion or higher than the 2019 RKAP of 115.25% or Rp237.69 billion. The high operating expenses of the Company were caused by increased sales and general & administration expenses by 68.42% and 38.19% in 2019.

The realization of the Company’s net profit for the year in 2019 was recorded at Rp806.15 billion or 87.87% of the 2019 target of Rp917.40 billion. The non-achievement of the Company’s net profit target was caused by the decrease in operating revenues of the Company in 2019 by -6.66%.

While the Company’s total assets amounted to Rp16.52 trillion or 97.62% of the target set at Rp16.56 trillion. While total liabilities of the Company in 2019 was Rp8.02 trillion or 96.61% of the 2019 target of RpR8.30 trillion. In terms of equity, in 2019 the Company’s total equity was Rp8.13 trillion or 98.62% of the 2019 target of Rp 8.25 trillion.

Even though the financial aspect of the Company’s performance was corrected, the Company had recorded a number of best achievements in terms of operational aspect, among others, the Company succeeded in expanding its marketing by exporting 150,000 tetrapod units to Singapore, where the tetrapod is used as coastal guard on Tuas Island, Singapore. Tertrapod is the latest product in the form of four-legged cast concrete that serves as a coastal protection construction from the threat of damage to sea water waves.

In addition to tetrapod, the Company’s latest innovative products include 1.2 meter diameter spun piles with a length of 50 meters, WP Sprig, 1435mm Rail Type Bearings, RC Pipe, Concrete Power Poles, Building Structure Component (Precast Column Beams), and precast house.

The Company’s operational performance is supported by 6 (six) Marketing Area Offices spread throughout Indonesia, 9 (nine) Precast Plants, and 73 Batching Plants.

Challenges and Solutions

As explained earlier that 2019 was a year full of challenges but also opened up opportunities for the Company. A significant challenge for the Company was the political activity held every 5 year that has led to several projects completion being postponed and had a direct impact on the achievement of construction sector performance.

There are also other challenges that have been identified by the Company, firstly, slowing economic growth acceleration, especially related to the infrastructure sector, and secondly, high exchange rate volatility and trade balance imbalances. In addition, the Company also dealt with financial market risks in the country that are still not conducive, as well as domestic political conditions. Facing these obstacles, the Company was more focused on developing new products and developing marketing strategies by expanding marketing coverage to foreign countries.

Business Outlook

The Company has prepared the 2020 Corporate Work Plan and Budget (RKAP) as the main reference for the Company in carrying out its business activities. The preparation of 2020 RKAP is based on a number of macroeconomic assumptions set out in the 2020 State Budget Draft.

In 2020, the infrastructure development is still one of the Government’s priority programs because of its important function in increasing the capacity and productivity of the economy, expediting the distribution of goods and services, mitigating high urbanization and its role in reducing poverty. The construction sector in 2020 is expected to grow from 5.7 to 6.0 percent with the completion of several national strategic projects and the increased government capital expenditure.

Corporate Governance Implementation

One of the big agendas in strengthening the Company’s organization is the implementation of or Good Corporate Governance (GCG). As a business entity with the status of public company, the Company is required to carry out business management in compliance with applicable laws and regulations. The implementation of GCG principles is mainly based on 5 (five) basic principles, namely transparency, accountability, responsibility, independence and fairness, as released in the General Guidelines for Good Corporate Governance issued by the National Committee on Governance Policy (KNKG).

The Company’s management has endeavored to implement all GCG principles as outlined in the organizational scheme and policy instruments, as well as various programs and activities. In the policy instruments, Board of Directors together with Board of Commissioners compiles various guidelines and regulations that can limit the responsibilities of each Corporate body. This limitation becomes important so that the pattern of relations between corporate bodies can be intertwined harmoniously, and is able to support the achievement of predetermined vision and mission.

The Company also holds the General Meeting of Shareholders (GMS) as a forum for shareholders to established a number of limited strategic policies for the survival of the Company.

The existence of supporting bodies such as Corporate Secretary, Internal Audit Unit, and Risk Management function, is supported by the policy instruments as a GCG process and mechanism that is enforced in the scope of the Company. The management periodically conducts reviews and updates on its policy instruments, so that they will continue to have relevance to both the development of the Company, the development of regulations in force, and the growth of the industry in Indonesia.

In order for the implementation of GCG principles and practices to achieve its ultimate goal, which is to become part of the culture, the Company considers the importance of organizing GCG socialization to all WSBP employees. In addition, the evaluation, monitoring and improvement of GCG implementation within the Company’s scope also becomes an important part of the overall development of GCG, hence GCG implementation can improve each year. The assessment is carried out both on the implementation of GCG aspects and the risk management in accordance with compliance with OJK.

The Company’s commitment to implementing GCG is reflected in the achievement of GCG assessments that continue to increase every year. 2017 was the first time for the Company to conduct a GCG assessment and obtained a score of 76.81 with “Good” predicate. In 2018, the GCG assessment score increased by 2 points to 78.16 with “Good” predicate, while in 2019 increased to 89.142 with “Very Good” predicate.

Wishtleblowing System

Even though the Company has just recently become a publicly listed company in 2015, the Company has a strong commitment to grounding all of its activities on the principles of Good Corporate Governance. The Company implements the violation reporting system (whistleblowing system) with reference to the Guidelines for Gratification Control of the Company. In 2019, the Company conducted socialization to stakeholders, both directly through face-to-face meetings between management and all employees, as well as indirectly through the Company’s internal portal and the website. The socialization aims to provide an understanding of the whistleblowing system in the Company that is managed through the WSB team, with directly report to the Directors.

Changes in the Board of Directors Composition in 2019

In 2019, there were no changes in the composition of Board of Directors. The following is the composition of Board of Directors as at December 31, 2019:

Regarding the changes in Board of Directors composition fully becomes the right of the shareholders.

Closing Remarks

For the achievements recorded in 2019, allow the Board of Directors to express respect and gratitude to the Board of Commissioners, Shareholders and other stakeholders. To all employees, the Board of Directors would like to send highest appreciation for the hard work and smart work that has been demonstrated. Hopefully these achievements will become a strong foothold to optimize future performance and become the Company’s capital to continue to grow into the future.

Jakarta, March 2020
On behalf of Board of Directors
Jarot Subana
President Director