BOD Report

Dear Shareholders and Stakeholders,

Praise and gratitude be to God the Almighty for His grace and blessings, the Management of PT Jasamarga Transjawa Tol (“JTT” or “the Company”) has managed to survive the 2021 Financial Year with such amazing achievements, in accordance with the mandate and aspiration of the Shareholders.

The COVID-19 pandemic, which began in 2020, was not over in 2021. Yet together with the community and the world of business, the Government has made various efforts to overcome the pandemic and the positive results were indicated by the signs of improved growth of Indonesia’s economy in 2021 that reached 3.69%, an increase from that of 2020 with a contraction of -2.07%.

The positive indicator of growth brings optimism after the COVID-19 pandemic’s significant impacts on all aspects of the world’s economy in general and the mobility of goods and services in particular. With joint efforts between the Government, corporation and the community, the economy is expected to recover and continue to move towards a more positive direction in the years to come.

STRATEGY AND STRATEGIC POLICY

In 2021, as Jasa Marga’s strategic directions and policies through the second addendum of Management Contract of JTT on 1 April 2020 regarding Changes in the Scope of Duties, the Company was given a mandate from the Shareholders to conduct spin-off process of Jasa Marga’s Trans Java Sections and IPO of JTT. Meanwhile, the management of the Trans Java Toll Road sections is still carried out by Jasa Marga and Trans Java’s Toll Road Business Entities (BUJT) .

ACTIVITIES OF THE COMPANIES

In 2021, the Company’s operational activities focused on preparations for the spin-off of Trans Java section from Jasa Marga to JTT. The preparation for transferring the concession rights of 4 sections of the branch offices and transferring the shares of 9 BUJT needs to be conducted thoroughly while taking into account the applicable laws and regulations as well as the interests of all Jasa Marga’s stakeholders as the majority shareholder of the Company.

The spin-off of Trans Java sections is carried out through framework of the Regulation of the Minister of Finance (PMK) Number 56/PMK.010/2021 on the Second Amendment to the Regulation of the Minister of Finance Number 52/ PMK.010/2017 on the Use of Book Value for Transfer and Acquisition of Assets in the Context of Merger, Consolidation, Expansion or Business Takeover decided by the Government on 3 June 2021. The enactment of the said PMK strengthens the realization of the spin-off plan of Jasa Marga’s Trans Java sections positively and serves as a reflection of the Government’s support to the efforts in improving SOEs performances that bring positive impacts on the development of road infrastructure, especially Toll Roads in Indonesia.

The Company also completed the reviews in the aspects of legal, commercial, financial and tax as the basis of spin- off implementation. In 2021, Jasa Marga and the Company focused on important and required approvals that must be obtained by Jasa Marga as the party transferring its assets and liabilities to JTT as stated in its articles of association as well as applicable laws and regulations.

The spin-off is the separation of 4 (four) Jasa Marga’s operating segments, namely Jakarta-Cikampek, Palikanci, Semarang ABC, and Surabaya-Gempol Toll Roads along with the transfer of Jasa Marga’s shares ownership in 9 (nine) BUJT, namely PT Jasamarga Layang Cikampek for Cikampek Elevated Mohammed Bin Zaid (MBZ) Toll Road, PT Jasamarga Semarang Batang for Semarang-Batang Toll Road, PT Trans Marga Jateng for Semarang-Solo Toll Road, PT Jasamarga Solo Ngawi for Solo-Ngawi Toll Road, PT Jasamarga Ngawi Kertosono for Ngawi-Kertosono-Kediri Toll Road, Jasamarga Surabaya Mojokerto for Surabaya- Mojokerto Toll Road, PT Jasamarga Pandaan Tol for Gempol- Pandaan Toll Road, PT Jasamarga Gempol Pasuruan for Gempol-Pasuruan Toll Road and PT Jasamarga Pandaan Malang for Pandaan-Malang Toll Road.

The spin-off of 4 (four) Jasa Marga’s operating segments requires the approval of the Government, which in this case is the Minister of PUPR. In accordance with the Toll Road Concession Agreement (PPJT) of 4 (four) operating segments Article 19.2.2, Jasa Marga may transfer the Toll Road concession rights to a special company established by Jasa Marga. Through letter of the Minister of PUPR No.BM.07.01-Mn/287 dated 10 February 2022, the Minister of PUPR has approved the transfer of the Concession Rights of Jakarta-Cikampek; Palimanan-Kanci; Semarang A, B, C; and Surabaya-Gempol Toll Roads.

Jasa Marga has also received the approval from the Minister of SOEs for the Spin-Off of Jasa Marga’s Trans Java Sections through letter No. S-144/MBU/03/2022 dated 1 March 2022. As the party that oversee State-Owned Enterprises, and in accordance with Regulation of the Minister of Finance No. 56/PMK.010/2021, for tax related issues, the Minister of SOEs has approved the restructuring plan of separation in the form of spin-off of 13 Toll Road sections consisting of the concession rights of 4 operating segments and Jasa Marga’s shares ownership in 9 Trans Java BUJT into its subsidiary company called JTT to improve its financial performance. With the restructuring plan, Jasa Marga is expected to obtain equity-based funding for business development while improving its performance.

Furthermore, as the majority shareholder of JTT, Jasa Marga has received the approval for the spin-off of the Trans Java sections from the Jasa Marga’s Board of Commissioners through letter No. DK 020/III/2022 dated 2 March 2022.

The above principal approvals have been strengthened by the approvals of Jasa Marga bondholders along with all creditors, at the levels of both Jasa Marga and Trans Java BUJT. Approvals have also been given by business partners of BUJT in the form of a statement of Waiver of Partner’s Rights to purchase shares in advance regarding the plan to transfer shares owned by Jasa Marga in Trans Java BUJT.

Following the already obtained approvals, in accordance with the Law on Limited Liability Company, Jasa Marga has announced the Spin-Off Plan in Kontan daily newspaper on 4 March 2022 prior to convening its AGM on 27 April 2022 with the Spin-Off of Trans Java sections as one of the agenda.

The 27 April 2022 Jasa Marga’s AGM has approved the Spin Off of the Trans Java sections owned by Jasa Marga to JTT, and the signing of the Deed of the Spin-Off is scheduled on 1 July 2022.

The establishment of the Subholding of the Trans Java Toll Road sections will be one of the sustainable driving forces of Jasa Marga’s positive performance. Established by Jasa Marga, JTT is mandated to conduct the spin-off process and prepare for equity fund raising or equity-based funding.

The 13 (thirteen) Toll Roads located in the Trans Java section and operated by Jasa Marga Group have the length of 676 km representing 57% of the whole Trans Java Toll Road sections with the total length of 1,184 km.

The spin-off of Trans Java Toll Road sections conducted by Jasa Marga is one of its Asset Recycling programs that enables an integration of mature and prospective Toll Roads, providing more optimal benefit of asset management.

In addition to the activities of the spin-off implementation preparation, the Company also carried out several strategic policies mandated by the Shareholders, namely the buyback of Limited Participation Mutual Private Equity Funds of Mandiri Investasi Ekuitas Transjawa (RDPT-MIET) of Semarang- Batang, Solo-Ngawi, and Ngawi-Kertosono Toll Roads; along with the Buyback of Collective Investment Contract (KIK) DINFRA of Semarang-Solo and Gempol-Pandaan Toll Roads. The buyback of RDPT-MIET and KIK DINFRA is the option taken by Jasa Marga through JTT.

In 2021, the number of RDPTs that have been bought buyback reached 185,285,529 units worth Rp247.29 billion, whereas KIK DINFRA’s participation buyback reached 80,490.00 units worth Rp88.03 billion. The buyback of RDPT and DINFRA was recorded in the Company’s Assets of Short-Term Investment, which, as of the end of 2021, amounted to Rp1,209.94 billion representing an increase by Rp480.54 billion or 67.25% compared to the same period in the previous year. In 2021, the Company also recorded unrealized profit amounting to Rp71.39 billion.

ACHIEVEMENT OF TARGET

In 2021, the Company has managed to record a profit of Rp1.52 billion which represents a decrease from that of 2020 amounting to Rp5.11 billion. This was the result of lower revenue deriving from management contracts in 2021 amounting to Rp6 billion compared to that of 2020 reaching Rp14.70 billion, and this was accompanied with the completion of the spin-off reviews that were part of the preparation activities . The Company’s achievements were resulted from the efforts such as working efficiently and effectively as well as setting a priority scale of controlling cost while still observing health protocols amidst COVID-19 pandemic in the Company’s work environment.

CHALLENGES

Throughout 2021, the Company faced a number of challenges that had been addressed very well. The pandemic that had not yet ended in 2021, the dynamics of the changes in the direction of economic policies that affected Toll Road industry, along with traffic volume that was not yet fully recover due to COVID-19, pushed the Company to adapt quickly in order to achieve the already determined performance targets.

BUSINESS POTENTIAL

The enhancement of economic growth marked by improving sales of vehicles and increasing traffic volume on Toll Roads compared to 2020, brings optimism that in the coming years we will see the ever-rising performance and development of Toll Road industry.

APPRECIATION

The Board of Directors of the Company will always be committed to maintain and encourage positive corporate performance by carrying out business strategy that has been carefully prepared and planned while still implementing the principles of good corporate governance. For the achievement of the performance targets that have been achieved in 2021, the Board of Directors is grateful and appreciates the Shareholders for the support and trust that has been given to the management of the Company. The Board of Directors would also like to thank the Board of Commissioners and the Company’s employees for their hard work and professionalism, hence the Company is able to continue to maintain positive performance achievements. We wish that the positive performance can be maintained and improved to achieve bigger and more challenging targets in the coming years to support the Company’s rapid and sustainable growth. May Allah SWT bless and provide convenience and smoothness for all the efforts of the Company.