The Honorable Shareholders,
Notwithstanding at the end of the year 2008 the global economy experienced a crisis situation, but this condition did not influence much relatively to the performance of ADHI year 2009. It can be seen from the achievement of satisfactory performance that exceeds the target and performance the previous year. Obviously things mentioned above are the result of hard work by all employees and managements as well as support of stakeholders.
In the year 2009, ADHI has successfully booked Revenues of IDR7.7 trillion or 16% over Revenues in the year 2008, or 2.5% above Revenues target of IDR7.5 trillion. While for Net Income, it has succeeded to increase 103% compared to the year 2008 from IDR81.4 billion (net profit margin of 1.2%) to IDR165.5 billion (net profit margin of 2.1%) or an increase of 38% far exceeded the Net Income target of IDR120.1 billion.
Despite the increase in Tax Expense due to enactment of final tax regulations, Net Income still rose quite high. In addition to the increase in Revenues, a large increase in Income was caused by several factors such as the success of the cost efficiency program on both Production Costs (Cost of Contract) and Operating Cost efficiency of 0.3% compared to the realization in 2008. Bad Debt expense, which burdens the Company, was being reduced significantly and causing decrease of Interest Expense of 0.2%. The increase in Income was also caused by increase in profit from joint operation projects.
Revenues in 2009 was still dominated by government and state-owned enterprises projects, amounting to 56%. Although the portion was still smaller than the previous year. As for the private project portion increase was through obtaining toll road projects Kanci-Pejagan that was opened in late January 2010.
As can be seen in the Annual Report especially on part of Management’s Discussion and Analysis and Financial Statements, for fiscal year 2009 we have made allowance for receivables of some troubling projects. The largest allowance was on overseas project burden especially Qatar project. ADHI Management has embraced conservative principles over this problem with the assumption that dispute settlement will consume a long time therefore the management still having the allowance for this year. However, the management is still working hard in the settlement of disputes, either through the efforts of amicable settlement or arbitration as per agreement contract of both parties.
Concerning the Jakarta Monorail Project, the management continues to make efforts in solving the project problems, although in 2008 it has been made all allowances for Accounts Receivables and Gross Accounts Receivable as a conservative step that was taken. These efforts were performed with hopes to obtain reimbursement of costs that already spent by the Company. When this report was made, a Presidential Instruction No. 1 year 2010 had been enacted that include Jakarta Monorail project to the list of priority projects to be continued.
Future targets
The infrastructure development in Indonesia at present and in the future will continue to rise. Moreover the support from Government to private parties to participate in infrastructure development programs through Public Private Partnership scheme (PPP). This remains in line with the response of Company Business Definitions that develop the core business of the construction by entering Engineering Procurement Construction (EPC) business and a good investment business in property or in infrastructure.
Like previous years, in the coming year the management remains focused on achieving quality income (Quality of Earning). Efforts to improve production and operating cost efficiency will continue to be conducted such as main material waste target can be reduced. The procurement activities were also focused especially for the procurement of major materials and services that were expected to lower production costs on a consolidated basis.
The target of Revenues and Net Income for the year 2010 is expected growth of 12%. For such achievement, a planned capital expenditures amounted to IDR 82,5 billion that will be used, in addition to the production equipment that is also planned for investment of property or infrastructure projects.
In the long term, to be able to grow and at the same time to respond the development programs such as infrastructure, etc. in Indonesia, ADHI requires additional capital. Therefore, it will conduct Rights Issues in addition to other efforts.
Innovation for Sustainability
The Company cannot grow and compete if there is no innovation. It is believed by management and that management has been committed to digging innovation by establishing a special section dealing with research and development, at the same time set a new directorate task named Director of Business Development.
In the implementation of toll road projects Kanci-Pejagan, ADHI has successfully applied precast concrete pavement system with pre-stress strength. This system we named Adhi Concrete Pavement System (ACPS). We also registered and patented this system in the Department of Justice & Human Rights, Directorate General of Intellectual Property Rights. We hope - as a competitive advantage - in addition to encouraging the growth of the company, ACPS will be able to contribute to the development of road infrastructure in Indonesia. Obviously this effort will not only stop here, in of the future other innovations are expected to continue to emerge and become improved competitiveness for ADHI.
Improved Standard of Corporate Governance
Good Corporate Governance is closely related to sustainability of the Company in the long term that relevant to the company’s performance. Final value of the implementation of GCG is a high performance and good corporate image. By implementing Good Corporate Governance in the entire business process, ADHI is expected to improve the competitiveness of company which will enhance customer confidence to ADHI.
To see the level of implementation of GCG in ADHI, there has been assessments - using standard criteria of the Ministry of State-Owned-Enterprise by an independent party on the company management during the year 2009 with the achievement value of 90.13 or Very Good ratings in the quality of GCG implementation. By looking at the above achievement mentioned, to further enhance the implementation of corporate governance in the Company, in the year 2010 we intend to improve the standard criteria for assessment.
Management Changes
One of the General Meeting of Shareholders (GMOS) Financial Year 2008 was the change in Board of Directors of the Company, which originally composed of five persons was changed to only four people and temporarily - until the next GMOS - shall not conduct replacement of members of Board of Commissioners who died. GMOS also authorized Board of Directors to perform the division of duties among members of Board of Directors after consultation with Board of Commissioners.
But when this Annual Report was written, the Extraordinary General Meeting of Shareholders were held, resulting the appointment of one member of Board of Directors Bambang Pramusinto and one Independent Commissioner Amir Muin. Thus the number of Independent Commissioner has met the requirements of Bapepam and the Stock Exchange to two persons or 40% of the total members of Board of Commissioners. The composition of Board of Directors can be seen on the Corporate Governance chapter of this Annual Report.
Adhi Stock Performance
At the beginning of the year 2009 ADHI conducted share buyback as a continuation of the previous buyback plan period that began in late 2008. Realization of the whole buyback of shares into a number of 44,094,500 million. So the total shares outstanding of 1,757,225,500 shares. ADHI stock prices since the beginning of the year until the end of the year increased by 37% from IDR300 to IDR410. The highest share price increase occurred in the mid-year to IDR490 per share or an increase of 63%. Going forward, the management will continue to do business breakthroughs that could provide additional value to ADHI which will be reflected in increase of ADHI stock prices.
Award for Supporting Reputation
Like previous years, throughout the year 2009, the Company also received numerous awards both maintain previous achievements as well as a new form of appreciation. The Awards are Best Disclosure & Transparency by the Indonesian Institute for Corporate Directorship (IICD) and Business Review Magazines, The Most Trusted Company in the assessment of Corporate Governance Perception Index (CGPI) by The Indonesian Institute for Corporate Governance (IICG) and SWA Magazine, The Best in Building and Managing Corporate Image in the awards of Indonesia’s Most Admired Company (IMAC) by Frontier Consulting Group and BusinessWeek, First winner of 2008 Annual Report Award in the category of Listed Non-Financial sector SOE, The Best User Interface in the awards of best website by the Office of the Ministry of SOEs, and in Indonesia Quality Award (IQA).
The awards which are constantly obtained by the Company in maintaining the achievements indicate the performance that the Company remains having high reputation and trust. All this of course cannot be separated from the support and cooperation of all stakeholders such as employees, shareholders and other stakeholders. On this occasion, a high appreciation is presented. Hopefully the achievement can still be maintained or enhanced in the future with the blessings of God Almighty.
PT Adhi Karya (Persero) Tbk.
Board of Directors,
Bambang Triwibowo
President Director