1
ABRIDGED PROSPECTUS
THE FINANCIAL SERVICES AUTHORITY (“FSA”) NEITHER GIVES ITS APPROVAL OR DISAPPROVAL ON THE SECURITIES, NOR DOES THE FSA CONFIRM THE ACCURACY OR COMPLETENESS OF THE CONTENT OF THIS ABRIDGED PROSPECTUS. ANY STATEMENT CONTRARY TO BE THE ABOVE SHALL BE AGAINST THE LAW.
-PT PP (PERSERO) TBK Main Business Activities:
Construction Services, Property, EPC Services, Pre-Cast, Equipment, Energy, Infrastructure and Investment
Domiciled in East Jakarta, Indonesia
Head Office: Plaza PP –Wisma Subiyanto Jl. Letjend. TB. Simatupang No. 57
Pasar Rebo – Jakarta 13760 Phone: 021-8403883 Facsimile: 021-8403890 Email: corsec@pt-pp.com Website: www.pt-pp.com
Has 4 (four) Operational Division Offices and 9 (nine) Branches
PUBLIC OFFERING TO RAISE ADDITIONAL CAPITAL WITH PREEMPTIVE RIGHTS I (“RIGHT ISSUE I”)
The Company has obtained the approval from the EGMS to issue a maximum of 1,776,311,645 (one billion seven hundred seventy six million three hundred eleven thousand six hundred forty five) new shares, having a nominal value of Rp100.- (one hundred Rupiah) per share (“Right Shares”). The estimated amount of proceeds to be received by the Company in this Right Issue I is approximately Rp4.411.764.446.855 (four trillion four hundred eleven billion seven hundred sixty four million four hundred forty six thousand eight hundred fifty five Rupiah). The Preemptive Right Exercise Price (“Exercise Price”) and Preemptive Right ratio shall be determined by the Company’s Board of Directors.
The Company shall have the rights to change the provisions of the Preemptive Rights with due considerations to other circumst ances and factors as deemed appropriate. The provisions concerning the issuance of Preemptive Rights in Right Issue I, including the Exercise Price and final amount of shares to be offered shall be announced in time.
All of the Preemptive Rights shares shall be issued from portfolio and shall be listed on the IDX with due considerations to the prevailing laws and regulations. The Right Shares shall
have identical rights in all respect (including the right to receive dividends) and rank equally with the Company’s existing paid-up shares. Each fraction of Preemptive Right shall be rounded down.
The Company’s Shareholder, namely the Republic of Indonesia shall exercise its rights in this Right Issue I in accordance with its portion of ownership as stipulated in Law No. 14 of 2015 concerning the State Budget of 2016 Budget Year juncto Law no. 12 of 2016 concerning the Amendment of Law No. 14 of 2015 concerning the State Budget of 2016 Budget Year.
In the event that the Right Shares offered in this Right Issue I are not entirely subscribed by the public holders of Preemptive Rights, the remaining shall be allocated to other Preemptive Right Holders subscribing more than their rights as stated in the Preemptive Right Certificate of the Additional Shares Subscription Form proportionally based on the exercised rights. In the event that there are remaining Right Shares available subsequent to the said allocation of additional share subscriptions, then all of the remaining Right Shares must be subscribed by the Stand-by Buyer. The remaining Right Shares that must be subscribed by the said Stand-by Buyer shall not include the shares issued from the exercise of Preemptive Rights of the Controlling Shareholders in this Right Issue I.
THIS RIGHT ISSUE I SHALL BE EFFECTIVE UPON APPROVAL OF THE COMPANY'S EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS (“EGMS”), WHICH HAS CONVENED ON AUGUST 23, 2016, AND UPON RECEIPT OF EFFECTIVE STATEMENT FROM THE FSA.
THE PREEMPTIVE RIGHTS SHALL BE LISTED ON THE INDONESIA STOCK EXCHANGE (“IDX”). THE PREEMPTIVE RIGHTS ARE TRADABLE IN AND OUTSIDE OF IDX FOR A PERIOD OF NO LESS THAN 5 (FIVE) BUSINESS DAYS COMMENCING ON NOVEMBER 23, 2016, UP TO NOVEMBER 29, 2016. NEW SHARES FROM THE EXERCISE OF PREEMPTIVE RIGHTS SHALL BE LISTED ON THE INDONESIA STOCK EXCHANGE ON NOVEMBER 23, 2016. THE LAST DATE TO EXERCISE THE PREEMPTIVE RIGHTS SHALL BE NOVEMBER 29, 2016, PROVIDED THAT THE RIGHTS THAT ARE NOT EXERCISED UP TO SUCH DATE SHALL BE NO LONGER VALID.
IMPORTANT NOTICE TO SHAREHOLDERS
IN THE EVENT THAT THE MINORITY SHAREHOLDERS DO NOT EXERCISE THEIR RIGHTS TO SUBSCRIBE TO THE PREEMPTIVE RIGHTS SHARES OFFERED IN THIS RIGHT ISSUE I IN ACCORDANCE WITH THEIR RESPECTIVE PREEMPTIVE RIGHTS, THE PERCENTAGE OF OWNERSHIP OF SUCH MINORITY SHAREHOL DERS SHALL BE DILUTED BY A MAXIMUM OF 26.8% (TWENTY EIGHT POINT SIX PERCENT).
THE COMPANY'S MAIN RISK EXPOSURE IS MARKETING RISK.
THE COMPANY SHALL NOT ISSUE ANY COLLECTIVE SHARE CERTIFICATE IN THIS RIGHT ISSUE I, HOWEVER, THE NEW SHARES FROM THE EXERCISE OF PREEMPTIVE RIGHTS SHALL BE ELECTRONICALLY DISTRIBUTED AND ADMINISTERED IN THE COLLECTIVE DEPOSITORY OF PT KUSTODIAN SENTRAL E FEK INDONESIA.
STAND-BY BUYERS
To be determined
THE INVESTORS’ MAIN RISK EXPOSURE IS THE RISK OF PRICE AND LIQUIDITY OF THE COMPANY’S SHARES, WHICH SHALL BE AFFECTED BY THE CONDITION OF THE INDONESIAN CAPITAL MARKET.
This Abridged Prospectus is issued in Jakarta on October 3, 2016.
THIS ABRIDGED PROSPECTUS IS IMPORTANT AND REQUIRES IMMEDIATE ATTENTION. SHOULD THERE BE ANY DOUBT CONCERNING THE PROPER ACTIONS TO BE TAKEN, IT IS ADVISED TO CONSULT WITH THE COMPETENT PARTIES.
INDICATIVE SCHEDULE
Date of Extraordinary General Meeting of Shareholders (EGMS)
: August 23, 2016 Distribution of Preemptive Right Certificate : November 22, 2016
Effective Date of the Preemptive Rights Registration Statement
: November 9, 2016 Share Listing Date on the Indonesia Stock Exchange
: November 23, 2016
Last Recording Date to acquire Preemptive Rights
: November 21, 2016 Preemptive Rights Trading Period : November 23 - 29, 2016
The Last Trading Date of Shares with Preemptive Rights (Cum-Right)
Preemptive Rights Registration, Payment and Exercise Period
: November 23 - 29, 2016
Regular Market and Negotiated Market : November 18, 2016 Right Shares Distribution Period : November 25 - December 1, 2016
Cash Market : November 21, 2016 Last Payment Date of Additional Shares
Subscription
: December 1, 2016
The First Trading Date of Shares without Preemptive Rights (Ex-Right)
: Allotment Date : December 2, 2016
Regular Market and Negotiated Market November 21, 2016 Subscription Fund Refund Date : December 5, 2016
Cash Market : November 22, 2016
PT PP (Persero) Tbk (hereinafter referred to as “the Company” in this Prospectus) has filed the Registration Statement with respect to the
Right Issue I in relation to the Issue of Preemptive Rights to the FSA by letter No. 363/EXT/PP/DU/2016 on Oktober 3, 2016, in accordance with the requirements set forth in the FSA Regulation No. 32/POJK.04/2015 dated December 22, 2015, concerning the Additional Capital of
Public Companies with Preemptive Rights (“FSAR No. 32/2015”), and FSA Regulation No. 33/POJK.04/2015 dated December 16, 2015,
concerning the Form and Content of Prospectus for Additional Capital of Public Companies with Preemptive Rights (“FSAR No.33/2015”),
which are the implementation of Law of the Republic of Indonesia No. 8 of 1995 concerning the Capital Market, State Gazette of the Republic of Indonesia No. 64 of 1995, Supplement No. 3608 (“Capital Market Law”) and its implementing regulations.
All the Capital Market Supporting Institutions and Professionals referred to in connection with this Right Issue I shall be fully responsible for the data presented in accordance with their functions and positions, in accordance with the provisions of the laws and regulations in the Capital Market as well as their respective code of ethics, norms and professional standards.
With respect to this Right Issue I, all parties, including affiliated parties, are prohibited from providing any information or issuing any statements whatsoever concerning data or matters that are not disclosed in this Prospectus without the Company's prior written approval.
The Capital Market Supporting Institutions and Professionals in this Right Issue I are not affiliated to the Company, whether directly or indirectly, within the meaning defined in the Capital Market Law.
In the event that the Right Shares offered in this Right Issue I are not entirely subscribed by the public holders of Preemptive Rights, the remaining shall be allocated to other Preemptive Right Holders subscribing more than their rights as stated in the Preemptive Right Certificate of the Additional Shares Subscription Form proportionally based on the exercised rights. In the event that there are remaining public portion shares available subsequent to the said allocation of additional share subscriptions, then all of the remaining public portion shares must be subscribed by the Stand-by Buyer, which shall be subsequently determined. The remaining Right Shares that must be subscribed by the said Stand-by Buyer shall not include the shares issued from the exercise of Preemptive Rights of the Controlling Shareholders in this Preemptive Rights I. The Right Shares shall have identical rights in all respect (including the right to receive dividends) and rank equally with the
Company’s existing paid-up shares.
Pursuant to the FSAR No. 32/2015, in the event that the shareholders own the Preemptive Right Certificate (“PRC”) in a fraction form, the
Company shall own and sell such fraction of shares and the proceeds of which shall be deposited in the Company's account.
THIS RIGHT ISSUE I IS NOT REGISTERED PURSUANT TO LAWS AND REGULATIONS OTHER THAN THOSE PREVAILING IN INDONESIA. SHOULD ANY PARTY OUTSIDE THE JURISDICTION OF INDONESIA OBTAIN THIS PROSPECTUS OR PRC, OR OTHER DOCUMENTS RELATED TO THIS RIGHT ISSUE I, SUCH DOCUMENTS ARE NOT INTENDED AS OFFERING DOCUMENTS TO PURCHASE ORDINARY REGISTERED SHARES RESULTING FROM THE EXERCISE OF PREEMPTIVE RIGHTS, UNLESS SUCH PURCHASE OR EXERCISE OF PREEMPTIVE RIGHTS ARE NOT IN CONTRATRY TO OR DO NOT CONSTITUTE A VIOLATION TO THE PREVAILING LAWS IN SUCH JURISDICTIONS.
THE PROSPECTUS IS ISSUED BASED ON THE PREVAILING LAWS AND/OR REGULATIONS IN INDONESIA. NO PART OF THIS DOCUMENT SHALL BE CONDSIDERED AS AN OFFERING TO SELL SECURITIES IN THE JURISDICTIONS PROHIBITING SUCH OFFERINGS. EVERY PARTY OUTSIDE THE JURISDICTION OF INDONESIA SHALL BE FULLY REPONSIBLE FOR THE COMPLIANCE WITH THE PREVAILING REGULATIONS IN SUCH JUSRISDICTION.
ADDITIONAL CAPITAL WITH PREEMPTIVE RIGHTS
The Company has obtained the approval from the EGMS to issue a maximum of 1,776,311,645 (one billion seven hundred seventy six million three hundred eleven thousand six hundred forty five) new shares, having a nominal value of Rp100.- (one hundred Rupiah) per share (“Right
Shares”). The estimated amount of proceeds to be received by the Company in this Right Issue I is approximately Rp4.411.764.446.855 (four trillion four hundred eleven billion seven hundred sixty four million four hundred forty six thousand eight hundred fifty five Rupiah). The
Preemptive Right Exercise Price (“Exercise Price”) and Preemptive Right ratio shall be determined by the Company’s Board of Directors.
The Company shall have the rights to change the provisions of the Preemptive Rights with due considerations to other circumstances and factors as deemed appropriate. The provisions concerning the issuance of Preemptive Rights in Right Issue I, including the Exercise Price and final amount of shares to be offered shall be announced in time.
The Preemptive Rights are tradable on or outside the IDX in accordance with FSAR No. 32/2015 for 5 (five) Exchange Days, commencing on November 23, 2016 up to November 29, 2016. The Right Shares shall be issued from portfolio and the Shares issued from the exercise of Preemptive Rights shall be listed on the IDX on November 23, 2016. The last Preemptive Rights exercise date shall be November 29, 2016, therefore Preemptive Rights that are not exercised up to such date shall be no longer valid. The Right Shares shall have identical rights in all
respect (including the right to receive dividends) and rank equally with the Company’s existing paid-up shares. Each fraction of Preemptive Right shall be rounded down.
In the event that the Right Shares offered in this Right Issue I are not entirely subscribed by the public holders of Preemptive Rights, the remaining shall be allocated to other Preemptive Right Holders subscribing more than their rights as stated in the Preemptive Right Certificate of the Additional Shares Subscription Form proportionally based on the exercised rights. If, subsequent to the allocation of additional share subscription there are remaining public portion shares unsubscribed, then, pursuant to the Agreement on Implementing Agent and Share Administration Management in connection with the Right Issue I of PT PP (Persero) Tbk Agreement No. 38 dated August 23, 2016, drawn up before Fathiah Helmi, S.H., a Notary in Jakarta, by and between the Company and the SAB, the Stand-by Buyer shall be obligated to purchase the remaining Right Shares unsubscribed referred to above, whereby such remaining Rights Shares which the stand-by buyer shall be obligated to purchase shall exclude the shares resulting from the Majority Shareholder’s Preemptive Rights exercised in this Right Issue I. The Company’s capital structure and shareholder compositions are as follows:
Shareholders Nominal Value Rp100.00 per share
Share Rupiah %
Authorized Capital 15,000,000,000 1,500,000,000,000
- A Series Dwiwarna Shares 2,469,642,760 246,964,276,000 51.00 - B Series Shares 2,372,793,740 237,279,374,000 49.00
Issued and Fully Paid-up Capital
The State the Republic of Indonesia 2,469,642,760 246,964,276,000 51.00 - A Series Dwiwarna Shares
- B Series Shares
Public 2,372,793,740 237,279,374,000 49.00 -B Series Shares
Total Issued and Fully Paid-up Capital 4,842,436,500 484,243,650,000
- A Series Dwiwarna Shares 2,469,642,760 246,964,276,000 51.00 - B Series Shares 2,372,793,740 237,279,374,000 49.00
Total Shares in Portfolio 10,157,563,500 1,015,756,350,000 100.00
WITHIN A PERIOD OF 12 (TWELVE) MONTHS FOLLOWING THE EFFECTIVENES OF THE REGISTRATION STATEMENT WITH RESPECT TO THIS RIGHT ISSUE I, THE COMPANY SHALL NOT ISSUE OR REGISTER ANY NEW SHARES OR OTHER SECURITIES CONVERTIBLE TO SHARES OTHER THAN THOSE OFFERED IN RIGHT ISSUE I.
Right Issue I
Type of Offering : Preemptive Rights Exercise Price : to be determined Conversion Ratio : to be determined
Dilution of Ownership : 26.8% (twenty six point eight percent) Preemptive Rights Trading Period : November 23 - 29, 2016
Assuming all of the Company's shareholders exercise their Preemptive Rights which they are entitled to in this Right Issue I, the
Company’s capital structure subsequent to the Rights Issue I on a proforma basis shall be as follows:
Shareholders
Before Rights Issue I After Rights Issue I
Nominal Value Rp.100,- per share Nominal Value Rp.100,- per share
Number of
- B Series Shares 14.999.999.999 1.499.999.999.900 14.999.999.999 1.499.999.999.900
15.000.000.000 1.500.000.000.000 15.000.000.000 1.500.000.000.000
Issued and Paid-up
- Public 2.372.793.740 237.279.374.000 49,00 3.243.186.394 324.318.639.400 49,00
Total Issued and
The Company’s Majority Shareholder, namely the Republic of Indonesia shall exercise its rights in this Right Issue I in accordance with its portion of ownership as stipulated in Law No. 14 of 2015 concerning the State Budget of 2016 Budget Year juncto Law no. 12 of 2016 concerning the Amendment of Law No. 14 of 2015 concerning the State Budget of 2016 Budget Year, which implementation shall be stipulated by a Government Regulation, which shall be issued prior to the Effective Statement from the Financial Services Authority.
WITHIN A PERIOD OF 12 (TWELVE) MONTHS FOLLOWING THE EFFECTIVENES OF THE REGISTRATION STATEMENT WITH RESPECT TO THIS RIGHT ISSUE I, THE COMPANY SHALL NOT ISSUE OR REGISTER ANY NEW SHARES OR OTHER SECURITIES CONVERTIBLE TO SHARES OTHER THAN THOSE OFFERED IN RIGHT ISSUE I.
USE OF PROCEEDS
Proceeds received by the Company from this Right Issue I (net of commission, cost, fees and other issuance cost) shall be used to finance projects, among others, development of industrial estates, port areas and construction of ports, toll roads, power plants, apartments and
housing for Low Income Class (“LIC”) and to be used as the Company’s Working Capital.
INDEBTEDNESS
The following indebtedness is derived from the Company’s consolidated financial statements for the six-month period ended June 30, 2016, which have been audited by the Registered Public Accountant Firm Hertanto, Grace, Karunawan, which expressed an Unqualified Opinion on the financial statements as a whole.
As of June 30, 2016, the Company had a total liability of Rp15,032,071 million, consisting of current liabilities of Rp11,082,288 million and non-current liabilities of Rp3,949,783 million, as detailed below:
Advances from Employers and Consumers 815,097
Lease Payables 18,507
Other Current Liabilities 131,696
Total Current Liabilities 11,082,288
NON-CURRENT LIABILITIES
Post-employment benefit obligation 303 Long-Term Loans
Third Parties 86,270
Related Parties 577,727
Long-term liabilities, net of current maturities
Medium Term Notes 800,000
Advances from Employers and Consumers 1,024,489
Lease Payables 34,602
Bonds payable 998,918
Other Non-Current Liabilities 427,474
Total Non-Current Liabilities 3,949,783
Total Liabilities 15,032,071
KEY FINANCIAL HIGHLIGHTS
The Company’s key financial highlights presented below are derived from the Company’s audited financial statements for the statements of financial position as of (i) June 30, 2016, and statements of profit and loss for the six-month period ended June 30, 2016, and 2015, which are prepared and presented in accordance with the Financial Accounting Standards in Indonesia and are presented elsewhere in this Prospectus. The audited consolidated financial statements as of and for the periods then ended have been audited based on the auditing standards stipulated by the Indonesian Institute of Certified Public Accountant (Institut Akuntan Publik Indonesia, “IAPI”) by the Registered Public
Accountant Firm Hertanto, Grace, Karunawan, an independent public accountant, which audit reports were signed by Bambang Karunawan, CPA, on August 5, 2016, with unqualified opinion.
The Company’s key financial highlights presented below are derived from the Company’s audited financial statements for the statements of financial position as of (i) December 31, 2015, and 2014, and statements of profit and loss for the years ended December 31, 2015, and 2014, which are prepared and presented in accordance with the Financial Accounting Standards in Indonesia and are presented elsewhere in this Prospectus. The audited consolidated financial statements as of and for the years then ended have been audited based on the standards of auditing established by the Indonesian Institute of Certified Public Accountants (Institut Akuntan Publik Indonesia, “IAPI”) by the Registered Public Accountant Firm Soejatna, Mulyana & Partners, an independent public accountant, which audit reports were signed by Drs. Sukarna Rusdjana, CA, CPA on February 29, 2016, with unqualified opinion.
STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
(In millions of Rupiah)
DESCRIPTION
For the year ended December 31,
For the six-month period ended June 30,
2014 2015 2015 2016
Revenue 12,427,371 14,217,373 5,221,447 6,472,196 Cost of Goods Sold (10,877,659) (12,210,412) (4,538,386) (5,565,689)
Gross profit 1,549,712 2,006,961 683,061 906,507
Operating Expenses
Personnel 201,678 287,556 139,498 156,104 General Administration 65,449 96,072 36,931 50,183 Depreciation 8,830 21,287 6,047 14,494 Marketing 5,323 4,882 2,940 2,869 Total Operating Expenses 281,280 409,797 185,416 223,650
Operating income 1,268,432 1,597,164 497,645 682,857
Other income (expenses)
Other Income 38,371 121,459 31,013 56,334 Other Expenses (33,125) (61,119) (26,768) (18,634) Allowance for Impairment (81,255) (63,954) (27,918) (10,111) Financing Cost/Interest Expense (343,921) (372,987) (100,951) (104,286) Profit Share of Joint Ventures 71,024 66,925 9,972 32,647
Share in Associates’ Net Income 1,375 46 - -
Income Before Income Tax 920,901 1,287,534 382,993 638,807
(In millions of Rupiah) Income Tax Benefit (Expense) (387,380) (441,971) (172,138) (228,398)
Profit for the Year from Continuing Operations 533,521 845,563 210,855 410,409
Other Comprehensive Income
Comprehensive Income for the Year 520,263 2,037,655 200,456 470,065
Income attributable to:
Owner of parent entity 533,407 740,323 160,778 355,341 Non-controlling interest 114 105,240 50,077 55,068
533,521 845,563 210,855 410,409
Total Comprehensive Income (losses) attributable to:
Owner of parent entity 520,148 1,932,415 150,378 414,997 Non-controlling interest 114 105,240 50,078 55,068
520,263 2,037,655 200,456 470,065
Basic Earnings per Share (in Rupiah): 110 153 33 73
Cash and Cash Equivalent 2,408,126 3,025,395 2,171,299 Short-Term Investments 202,500 276,900 228,050 Trade Receivables - Net
Third Parties 1,898,034 2,427,628 3,551,786 Related Parties 402,130 499,742 522,005 Retention Receivables - Net
Third Parties 528,792 723,273 799,510 Related Parties 278,473 457,204 487,489 Due from Customer - net
Third Parties 3,125,387 2,599,743 2,541,656 Related Parties 1,011,576 2,121,579 2,134,432 Other receivables:
Third Parties 25,852 247 53 Related Parties 1,762 3,640 1,653 Inventories 2,502,497 2,498,625 2,628,109 Advances from Joint Ventures 156,074 3,000 3,000 Advance 138,087 48,602 249,922 Prepaid Tax 462,184 467,772 326,555 Prepaid Expenses 329,627 259,322 509,410 Collaterals 6,231 17,864 20,683
Total Current Assets 13,477,332 15,430,536 16,175,612
NON-CURRENT ASSETS
(In millions of Rupiah)
DESCRIPTION As of December 31, As of June 30,
2014 2015 2016
Land for Development 172,372 247,993 247,993 Investment in Associates 147,393 272,134 526,495 Other Long-term Investment 67,799 73,799 128,549 Investment Properties - net 2,876 113,376 113,376 Fixed Assets - Net 709,714 2,989,066 3,250,795 Intangible Assets 882 1,121 1,896
Total Non-Current Assets 1,101,823 3,698,276 4,269,891
Total Assets 14,579,155 19,128,812 20,445,503
LIABILITIES AND EQUITY
Current Liabilities
Bank Loans - Short-term
Third Parties 90,063 199,143 316,110 Related Parties 801,805 1,147,275 1,576,175 Non-Bank Loans - Related Parties 674,830 401,595 911,695 Trade payables
Third Parties 6,472,632 7,245,562 5,971,413 Related Parties 106,094 239,615 161,124 Taxes payable 34,723 56,570 54,598 Final Income Tax Payables 220,289 291,212 354,065 Unearned Revenue 13,675 9,627 8,446 Accrued Expenses 333,077 324,088 298,863 Current maturities of long-term liabilities
Bank Loans 10,218 66,879 134,499 Medium Term Notes - - 330,000 Advances from Employers and Consumers 622,849 697,645 815,097 Lease Payables 15,229 14,492 18,507 Other Current Liabilities 22,734 68,096 131,696
Total Current Liabilities 9,418,218 10,761,799 11,082,288
NON-CURRENT LIABILITIES
Post-employment benefit obligation - 114 303 Long-Term Loans
Third Parties 6,554 29,036 86,270 Related Parties 420,111 505,413 577,727 Long-term liabilities, net of current maturities
Medium Term Notes 330,000 330,000 800,000 Advances from Employers and Consumers 830,417 911,780 1,024,489 Lease Payables 50,399 25,832 34,602 Bonds payable 698,318 998,636 998,918 Other Non-Current Liabilities 490,205 447,130 427,474
Total Non-Current Liabilities 2,826,004 3,247,941 3,949,783
Total Liabilities 12,244,222 14,009,740 15,032,071
EQUITY
Equity attributable to: Owner of Parent Entity
Issued and Paid-up Capital 484,244 484,244 484,244 Additional Paid-in Capital 462,018 431,845 431,845 Changes in Equity of Subsidiary Company - 255,864 255,864 Gain on Revaluation of Fixed Assets - 1,193,469 1,256,852 Remeasurement of Defined Benefit Pension Plan (29,323) (30,700) (34,427) Retained earnings
Appropriated 883,538 1,306,832 1,900,351 Unappropriated 533,406 740,323 355,341
Total 2,333,883 4,381,877 4,650,070
Non-Controlling Interest 1,050 737,195 763,362
(In millions of Rupiah)
DESCRIPTION As of December 31, As of June 30,
2014 2015 2016
TOTAL LIABILITIES AND EQUITY 14,579,155 19,128,812 20,445,503
KEY FINANCIAL RATIOS
DESCRIPTION
As of and for the year ended December 31,
As of and for the six-month period ended June 30,
2014 2015 2015 2016
FINANCIAL PERFORMANCE RATIO Liquidity Ratio
Cash ratio (%) 27.72 30.69 26.20 21.65 Quick ratio (%) 25.57 28.11 23.18 19.59 Current ratio (%) 143.10 143.38 165.26 145.96
Profitability Ratio
Gross profit Margin (%) 12.47 14.12 13.08 14.01 Operating profit Margin (%) 10.21 11.23 9.53 10.55 Net Profit Margin (%) 4.29 5.95 4.04 6.34 Return on Assets (%) 3.96 5.02 2.82 4.15 Return on Equity (%) 30.05 31.68 17.63 25.04 Return on Investment (%) 9.08 9.53 6.74 8.05
SOLVENCY RATIOS
Total Liabilities to Total Assets Ratio (%) 83.98 73.24 78.33 73.52 Debt to Equity Ratio (%) 524.39 273.68 361.54 277.68 Interest Bearing Debt to Equity Ratio (%) 132.66 133.92 103.95 106.85 Own Capital to Total Assets Ratio (%) 12.18 13.95 15.56 16.03 EBITDA to Interest Expense (%) 384.40 466.82 511.62 751.94
ACTIVITY RATIOS
Inventory Turnover (days) 79 71 101 81 Collection Period (days) 91 105 137 151 Asset Turnover (x) 0.86 0.79 0.69 0.67
GROWTH RATIO
Revenue (%) 6.62 14.40 13.44 23.95 Operating income (%) 16.89 25.92 32.12 37.22 Comprehensive Net Income (%) 22.18 291.66 34.23 134.50 Total Assets 17.64 31.21 5.48 6.88 Total Liabilities (%) 17.15 14.42 (1.62) 7.30 Equity (%) 20.28 119.24 42.69 5.75
FINANCIAL RATIOS REQUIRED BY LOAN AGREEMENTS OR OTHER LIABILITIES
Ratio Requirement of Loan Agreements The Company's Financial
Ratios as of June 30, 2016
Minimum EBITDA to Interest Expense (%) 300% 751.94% Minimum Current Ratio 110% 145.96%
Minimum DSCR 130% 188.00%
Maximum Gearing Ratio 300% 106.85%
As of June 30, 2016, the Company has satisfied all the required financial ratios.
MANAGEMENT'S DISCUSSION AND ANALYSIS
a. Revenue
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
segments, namely (i) construction service totaling Rp4,355,935 million (67.30%), (ii) EPC totaling Rp1,068,206 million (16.50%), (iii) property & realty totaling Rp992,805 million (15.34%), (iv) pre-cast totaling Rp21,536 million (0.33%), and (v) equipment totaling Rp33,714 million (0.52%).
The Company’s revenue has increased by 23.95% from Rp5,221,447 million for the six-month period ended June 30, 2015, to Rp6,472,196 million for the six-month period ended June 30, 2016. The increase was mainly due to an increase in revenue from the EPC segment by Rp811,568 million or 316.21%, combined with an increase in revenue from property and realty by Rp252,833 million or 34.17%.
The Company's revenue for the six-month period ended June 30, 2016, was contributed by, among others, PT GE Operation Indonesia totaling Rp929,339 million, PT Pelindo II (Persero) totaling Rp754,200 million, PT Kalla Inti Karsa totaling Rp103,350 million, Department of Transportation, Directorate General of Air Transportation, Airport Management Unit of Radin Inten II Airport Lampung, totaling Rp68,431 million.
Employer contributing more than 10% of the Company's revenue for the six-month period ended June 30, 2016, and June 30, 2015, was PT Pelindo II (Persero), which contributed Rp754,200 million and Rp1,167,067 million, respectively.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company's revenue for the year ended December 31, 2015, was Rp14,217,373 million. The revenue was generated from five segments, namely (i) construction service totaling Rp11,610,895 million (81.67%), (ii) EPC totaling Rp928,319 million (6.53%), (iii) property & realty totaling Rp1,572,504 million (11.06%), (iv) pre-cast totaling Rp33,4441 million (0.24%), and (v) equipment totaling Rp72,213 million (0.51%).
The Company’s revenue has increased by 14.40% from Rp12,427,371 million for the year ended December 31, 2014, to Rp14,217,373 million for the year ended December 31, 2015. The increase was mainly due to an increase in revenue from the construction service segment by Rp94,338 million or 316.21%, combined with an increase in revenue from the equipment segment by Rp42,874 million or 146.13%.
The Company’s revenue for the year ended December 31, 2015, was contributed by, among others, PT Duta Anggada Realty Tbk totaling Rp201,654 million, PT Kalla Inti Karsa totaling Rp124,828 million and PT Servo Lintas Raya totaling Rp258,439 million and PT Pelindo II (Persero) totaling Rp2,219,252 million.
Employer contributing more than 10% of the Company's revenue for the year ended December 31, 2015, and December 31, 2014, was PT Pelindo II (Persero), which contributed Rp2,219,252 million and Rp1,726,802 million, respectively.
b. Cost of Goods Sold
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company's Cost of Goods Sold for the six-month period ended June 30, 2015, was Rp5,565,689 million. The largest Cost of Goods Sold was contributed by the construction service segment, which contributed 70.37% to total Cost of Goods Sold. The Cost of Goods Sold margin to total sales was 85.99%.
The Company’s Cost of Goods Sold has increased by 22.64% from Rp4,538,386 million for the six-month period ended June 30, 2015, to Rp5,565,689 million for the six-month period ended June 30, 2016. The increase in Cost of Goods Sold was mainly contributed by the EPC segment, i.e. Rp682,885 million or 299.99%.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company's Cost of Goods Sold for the year ended December 31, 2015, was Rp12,210,412 million. The largest Cost of Goods Sold was contributed by the construction service segment, which contributed 84.90% to total Cost of Goods Sold. The Cost of Goods Sold margin to total sales was 85.88%.
The Company’s Cost of Goods Sold has increased by 12.25% from Rp10,877,659 million for the year ended December 31, 2014, to Rp12,210,412 million for the year ended December 31, 2015. The increase in Cost of Goods Sold was mainly contributed by the increase in construction service segment by Rp1,119,239 million or 12.10% and the property and realty segment by Rp513,330 million or 135.50%.
c. Gross profit
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company’s gross profit has increased by 32.71% from Rp683,061 million for the six-month period ended June 30, 2015, to Rp906,507 million for the six-month period ended June 30, 2016.
The increase in gross profit was mainly due to the increase in the Company revenue, which was higher than the increase in Cost of Goods Sold. The Company's revenue for the six-month period ended June 30, 2016, has increased by 23.95% compared to the six-month period ended June 30, 2015, whereas Cost of Goods Sold for the six-month period ended June 30, 2016, has only increased by 22.64% compared to the six-month period ended June 30, 2015.
The Company’s gross profit has increased by 29.51% from Rp1,549,712 million for the year ended December 31, 2014, to Rp2,006,961 million for the year ended December 31, 2015.
The increase in gross profit was mainly due to the increase in the Company revenue, which was higher than the increase in Cost of Goods Sold. The Company's revenue for the year ended December 31, 2015, has increased by 14.40% compared to the year ended December 31, 2014, whereas Cost of Goods Sold for the year ended December 31, 2015, has only increased by 12.25% compared to the year ended December 31, 2014.
d. Operating Expenses
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company’s operating expenses for the six-month period ended June 30, 2016 have reached Rp223,650 million, with employee, general and administrative, depreciation and marketing expenses each contributing Rp156,104 million (69.80%), Rp50,183 million (22.44%), Rp14,494 million (6.48%) and Rp2,869 million (1,28%), respectively.
The Company’s operating expenses have increased by 20.62% from Rp185,417 million for the six-month period ended June 30, 2015, to Rp223,650 million for the six-month period ended June 30, 2016. The increase was mainly contributed by the increase in employee expenses by Rp16,606 million or 11.90%, combined with the increase in general expenses by Rp13,252 million or 35.88%.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company’s operating expenses for the year ended December 31, 2015, have reached Rp409,797 million, with employee, general and administrative, depreciation and marketing expenses each contributing Rp287,556 million (70.17%), Rp96,072 million (23.44%), Rp21,287 million (5.19%) and Rp4,882 million (1,19%), respectively.
The Company’s operating expenses have increased by 45.69% from Rp281,280 million for the year ended December 31, 2014, to Rp409,797 million for the year ended December 31, 2015. The increase was mainly contributed by the increase in employee expenses by Rp85,878 million or 42.58%, combined with the increase in general expenses by Rp30,622 million or 46.79%.
e. Operating income
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company’s operating income has increased by 37.22% from Rp497,645 million for the six-month period ended June 30, 2015, to Rp682,857 million for the six-month period ended June 30, 2016. The growth of operating income was affected by the increase in revenue from each business segment. The highest business development up to June 30, 2016, was contributed by the EPC segment, i.e. Rp811,569 million or 316.23%.
The Company’s profit margin has increased from 9.53% for the six-month period ended June 30, 2015, to 10.55% for the six-month period ended June 30, 2016.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company’s operating income has increased by 25.92% from Rp1,268,432 million for the year ended December 31, 2014, to Rp1,597,164 million for the year ended December 31, 2015. The growth of operating income was affected by the increase in revenue from each business segment. The highest business development up to December 31, 2015, was contributed by the Property and Realty segment, i.e. Rp927,079 million or 143.64%.
The Company’s profit margin has increased from 10.21% for the year ended December 31, 2014, to 11.23% for the year ended December 31, 2015.
f. Income Before Income Tax
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company’s income before income tax has increased by 66.79% from Rp382,993 million for the six-month period ended June 30, 2015, to Rp638,807 million for the six-month period ended June 30, 2016. The growth of income before income tax was affected by the successful increase of the Company's gross profit and the increase in operating income, while other expenses have decreased.
The Company’s profit before tax margin has increased from 7.33% for the six-month period ended June 30, 2015, to 9.87% for the six-month period ended June 30, 2016.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company’s profit before tax margin has increased from 7.41% for the year ended December 31, 2014, to 9.06% for the year ended December 31, 2015.
g. Profit for the Year from Continuing Operations
Six-month period ended June 30, 2016, compared to the Six-month period ended June 30, 2015
The Company’s profit for the year from continuing operation has increased by 94.64% from Rp210,855 million for the six-month period ended June 30, 2015, to Rp410,409 million for the six-month period ended June 30, 2016. The increase of profit for the year from continuing operation incurred due to the increase in the Company's revenue that has higher compared to the increase in the Company's expenses.
The Company’s margin of profit for the year from continuing operation has increased from 4.04% for the six-month period ended June 30, 2015, to 6.34% for the six-month period ended June 30, 2016.
Year Ended December 31, 2015, compared to the Year Ended December 31, 2014
The Company’s profit for the year from continuing operation has increased by 58.94% from Rp533,521 million for the year ended December 31, 2014, to Rp845,563 million for the year ended December 31, 2015. The increase of profit for the year from continuing operation incurred due to the increase in the Company's revenue that has higher compared to the increase in the Company's expenses.
The Company’s margin of profit for the year from continuing operation has increased from 4.29% for the year ended December 31, 2014, to 5.95% for the year ended December 31, 2015.
h. Asset Growth
As of June 30, 2016 compared to as of December 31, 2015
The Company’s total assets as of June 30, 2016, was Rp20,445,503 million, an increase of 6.88% compared to total assets as of December 31, 2015, of Rp19,128,812 million.
The Company's total current assets as of June 30, 2016, was Rp16,175,612 million, an increase of Rp745,077 million or 4.83% compared to total current assets as of December 31, 2015, of Rp15,430,535 million. The increase was due to the increase in new contracts acquired in the period ended June 30, 2016, totaling Rp14,093 billion. Whereas net trade receivables - third parties has increase by Rp1,041,294 million or 41.48%, combined with the increase in prepaid expenses by Rp250,088 million or 96.44%, consisting of marketing expenses, i.e. Indirect Expenses, Marketing Expenses, Provision Expenses and Insurance Expenses.
The Company's total non-current assets as of June 30, 2016, was Rp4,269,890 million, an increase of Rp571,614 million or 15.46% compared to total non-current assets as of December 31, 2015, of Rp3,698,276 million. The increase was mainly due to the increase in investment in associates by Rp254,361 million or 93.47% resulting from capital contribution to associates.
As of December 31, 2015 compared to as of December 31, 2014
The Company’s total assets as of December 31, 2015, was Rp19,128,812 million, an increase of 31.21% compared to total assets as of December 31, 2014, of Rp14,579,155 million.
The Company's total current assets as of December 31, 2015, was Rp15,430,535 million, an increase of Rp1,953,203 million or 14.49% compared to total current assets as of December 31, 2014, of Rp13,477,332 million. The increase was mainly due to the increase in due from customer - net - related parties by Rp711,425 million or 73.13%. The largest Due from Customer net-related parties was contributed by PT Prima Multi Terminal totaling Rp275,752 million.
The Company's total non-current assets as of December 31, 2015, was Rp3,698,276 million, an increase of Rp2,596,453 million or 235.65% compared to total non-current assets as of December 31, 2014, of Rp1,101,823 million. The increase was mainly due to the increase in investment in associates by Rp124,741 million or 72.36% resulting from capital contribution to associates.
i. Liability Growth
As of June 30, 2016 compared to as of December 31, 2015
The Company’s total liabilities as of June 30, 2016, was Rp15,032,070 million, an increase of 7.30% compared to total liabilities as of December 31, 2015, of Rp14,009,740 million.
The Company's total non-current liabilities as of June 30, 2016, was Rp11,082,288 million, an increase of Rp320,488 million or 2.99% compared to total non-current liabilities as of December 31, 2015, of Rp10,761,780 million. The increase was due to additional Loans from Non-Bank Parties, i.e. a new loan from PT Sarana Multi Infrastruktur totaling Rp100,000 million and additional loan from Lembaga Pembiayaan Ekspor Indonesia totaling Rp410,100 or 102.11%.
As of December 31, 2015 compared to as of December 31, 2014
The Company’s total liabilities as of December 31, 2015, was Rp14,009,740 million, an increase of 14.42% compared to total liabilities as of December 31, 2014, of Rp12,244,222 million.
The Company's total current liabilities as of December 31, 2015, was Rp10,761,780 million, an increase of Rp1,343,581 million or 14.27% compared to total non-current liabilities as of December 31, 2014, of Rp9,418,218 million. The increase was due to the increase in Advances from Employers and Customers by Rp14,093 billion as a result of new contracts acquired in the period ended June 30, 2016.
The Company's total non-current liabilities as of December 31, 2015, was Rp3,247,940 million, an increase of Rp421,936 million or 14.94% compared to total non-current liabilities as of December 31, 2014, of Rp2,826,004 million. The increase was mainly due to the increase in Bonds Payable by Rp300,317 million or 43.01%.
j. Equity Growth
As of June 30, 2016 compared to as of December 31, 2015
The Company’s total equity as of June 30, 2016, was Rp5,413,432 million, an increase of 5.75% compared to total equity as of December 31, 2015, of Rp5,119,072 million.
The increase in equity was due to the increase in appropriated retained earnings by Rp593,519 million or 45.42% as a portion of prior year’s income was appropriated as the Company's retained earnings in accordance with the GMS resolution concerning the appropriation of use of the Company's net income for the year ended December 31, 2015, with the following net income distribution proportion: 20% for dividends, 75% for development reserves and 5% of appropriated reserves.
As of December 31, 2015 compared to as of December 31, 2014
The Company’s total equity as of December 31, 2015, was Rp5,119,072 million, an increase of 54.39% compared to total equity as of December 31, 2014, of Rp2,334,933 million.
The increase in equity was due to the increase in appropriated retained earnings by Rp423,294 million or 47.91% as a portion of prior year’s income was appropriated as the Company's retained earnings in accordance with the GMS resolution concerning the appropriation of use of the Company's net income for the year ended December 31, 2014, with the following net income distribution proportion: 20% for dividends, 75% for development reserves and 5% of appropriated reserves.
BUSINESS RISKS
As a State-Owned Enterprise that operates as a construction and investment company, the Company is not immune to the following risks: 1. Marketing risk, i.e. failure to achieve marketing targets;
2. Operational risk, such as delayed projects due to untimely payment of down payments and milestone payments.
3. Financial risks, such as the fluctuation in foreign exchange rate, inflation and the high amount of the bank’s interest rate due to negative cash flows.
4. HR risk, among others, the requirement for project personnel that is higher than those available; 5. Legal Risk, such as securing Building Construction Permit or Environmental Impact Analysis (AMDAL);
6. Social risk such as noise, air pollution, emission, Hazardous and Toxic Waste disposal and issues with the local community concerning limited project's working hours.
7. Technical risk, such as unpredictable land condition.
Risks Associated with Share Ownership
In addition to the risks faced by the Company, the Company's business activities and industry, share ownership involves the following risks: 1. The conditions of Indonesian Capital Market may affect the price and liquidity of the Company’s shares.
2. The Company's share price may fluctuate.
3. Future sales of the Company's shares may affect the market price of such shares. 4. The ability of shareholders to participate in future private placements may be limited.
5. The buyers or shareholders may be subject to certain limitations concerning the rights of minority shareholders.
THE COMPANY’S MANAGEMENT HEREBY REPRESENTS THAT THE COMPANY HAS DISCLOSED ALL MATERIAL BUSINESS RISKS
THAT ARE PREPARED IN ORDER OF SIGNIFICANCE OF SUCH RISKS TO THE COMPANY’S AND ITS SUBSIDIARIES’ BUSINESS ACTIVITIES AND FINANCIAL PERFORMANCE.
There are no significant events with material impact to the Company's financial condition and operating results, which occur subsequent to the
date of the Independent Auditor's report, i.e. August 5, 2016, for the Company's and its Subsidiaries’ consolidated financial statements for the six-month period ended June 30, 2016, requiring disclosures in this Prospectus. The said consolidated financial statements were audited by the Registered Public Accountant Firm Hertanto, Grace, Karunawan based on the auditing standards stipulated by the Indonesian Institute of Certified Public Accountant, with unqualified opinion.
DESCRIPTION OF THE COMPANY
Brief History of the Company
The Company was established under the name of N.V. Pembangunan Perumahan based on the Notarial Deed drawn up by Raden Mr. Soewandi in Jakarta, No. 48 dated August 26, 1953, (Bank Industri Negara was subsequently merged into Bank Pembangunan Indonesia), and based on the Law No. 19 Government Regulation in Lieu of Law of 1960 was further merged into P.N. Pembangunan Perumahan, a State Company established by virtue of Government Regulation No. 63 of 1961 dated March 29, 1961, considering the Establishment of Perusahaan Negara Pembangunan Perumahan, which was announced in the State Gazette of the Republic of Indonesia No. 84/1961, Supplement to the State Gazette of the Republic of Indonesia No. 2218.
Furthermore, based on Government Regulation No. 39 of 1971 concerning the Transformation of Perusahaan Negara (PN) Pembangunan Perumahan into a Limited Liability Company (Persero), which was announced in the State Gazette of the Republic of Indonesia No. 50 of 1971, the form of Perusahaan Negara Pembangunan Perumahan was changed into a Limited Liability Company (Persero), and the Company was established by virtue of Deed of Limited Liability Company PT Pembangunan Perumahan No. 78 dated March 15, 1973, jo. Deed of Amendment No. 247 dated March 21, 1974, both of which were drawn up before Kartini Muljadi, S.H., a Notary in Jakarta, and was approved by the Minister of Justice of the Republic of Indonesia by virtue of Decree No. Y.A.5/105/2 dated March 30, 1974, registered in the District Court of Jakarta on April 3, 1974, under No. 1186 and 1187, and was announced in the State Gazette of the Republic of Indonesia No. 48 dated June 14, 1974, Supplement to the State Gazette of the Republic of Indonesia No. 249/1974 (“Deed of Establishment”).
PT PP Persero Tbk’s Articles of Association have been amended several times, and have been amended in its entirety to conform to the Capital Market and Financial Institution Supervisory Board Regulation, and the Company's name has been changed from “Perusahaan
Perseroan (Persero) PT Pembangunan Perumahan” to “PT Pembangunan Perumahan (Persero) Tbk.” as stipulated in the Deed of
Shareholder Circular Resolutions and Amendment to the Articles of Association of Perusahaan Perseroan (Persero) PT Pembangunan Perumahan Tbk, abbreviated as PT PP (Persero) Tbk. No. 02 dated January 5, 2010, drawn up before Imas Fatimah, S.H., M.Kn., a Notary in Jakarta, which was approved by the Minister of Law and Human Rights (“MoLHR”) of the Republic of Indonesia by virtue of Decree No. AHU -00127.AH.01.02.Tahun 2010 dated January 5, 2010, and was registered in the Company Register under No. AHU-0000185.AH.01.09.Tahun 2010 dated January 5, 2010, and was announced in Supplement No. 82 to the State Gazette of the Republic of Indonesia No. 29752 dated
October 12, 2010 (“Deed No. 02/2010”).
The latest amendments to PT PP Persero Tbk’s Articles of Association, commencing from the Registration Public Offering of PP
Shelf-Registered Bonds I Phase II of 2015 (“Public Offering of PP Shelf-Registered Bonds I Phase II”) are as stipulated in the following deeds:
1. Deed of Amendment to Articles of Association of Perusahaan Perseroan (Persero) PT Pembangunan Perumahan Tbk or abbreviated as PT PP (Persero) Tbk No. 25 dated May 21, 2015, drawn up before Mochamad Nova Faisal, S.H., M.Kn., a Notary in South Jakarta, which was received and recorded in the database of Legal Entity Administration System (“LEAS”) of the Ministry of Law and Human Rights of
the Republic of Indonesia No. AH.01.03-0936938 dated June 4, 2015, and was registered in the Company Register under No. AHU-3512783.AH.01.11.Tahun 2015 dated June 4, 2015, ("Deed No. 25/2015”); and
2. Deed of Resolutions of Extraordinary General Meeting of Shareholders of Perusahaan Perseroan (Persero) PT Pembangunan Perumahan Tbk or abbreviated as PT PP (Persero) Tbk No. 37 dated August 23, 2016, which was approved by the Minister of Law and Human Rights by virtue of Decree No. AHU-0016573.AH.01.02.TAHUN 2016 dated September 14, 2016, and received and recorded in the database of the Legal Entity Administration System under No. AHU-AH.01.03-0080065 dated September 14, 2016, and was registered in the Company Register under No. AHU-0107323.AH.01.11.TAHUN 2016 dated September 14, 2016, ("Deed No. 37/2016”).
For 20 (twenty) years since the transformation into a limited liability company, the Company has diversified its office and realty business, therefore the Company's present business activities include construction service, realty and property. In 1998, during the prolonged crisis in Indonesia, the Company conducted a reorganization by downsizing the number of employees and entering financial restructuring. In a more streamlined and efficient form, the Company successfully maintained it business performance and improved its profitability.
In 2004, the Company implemented the EMBO (Employee Management Buy Out) Program, a program to sell the shares of the Republic of Indonesia (divestment) to be allocated for employee and management share ownership. The sale of shares through the EMBO program was conducted through a separate agreement between the shareholder and cooperative, which in this case represented the management and employees.
Subsequently, in 2009, the Company conducted an Initial Public offering through privatization of the Company through an IPO, and its shares were listed on February 9, 2010.
The Company’s Management Composition
by virtue of Decree No. AHU-AH.01.03-0080066 dated September 14, 2016, the compositions of PT PP (Persero) Tbk’s Board of Directors and Commissioners are as follows:
Board of Commissioners
President Commissioner/Independent Commissioner : Andi Gani Nena Wea, SH
Independent Commissioner : Irjen. (Purn) Drs. Aryanto Sutadi, M.Sc. Commissioner : Letjend. (Purn) Sumardi
Commissioner : Muhammad Khoerur Roziqin, SE., M.Sc. Commissioner
Commissioner
: :
Ir. Hediyanto W. Husaini, MSCE, M. Si. Ir. Wismana Adi Suryabrata, MIA
Board of Directors:
President Director : : Ir. Tumiyana, MBA (Unaffiliated) Director : Agus Purbianto, SE, AK, MM (Unaffiliated) Director : Ir. Lukman Hidayat (Unaffiliated) Director : Ir. M. Toha Fauzi, MT (Unaffiliated) Director : Ir. Abdul Haris Tatang, M.Sc. (Unaffiliated) Director : Ir. M. Aprindy, MT (Unaffiliated)
Description of Subsidiaries
No. Company Name Last Capital
Contribution Business Activities Status
Direct Ownership
(%) SUBSIDIARIES
1. PT PP Properti 2013 Development, construction, and operation of
a number of commercial buildings, hotels, apartments,
offices, real estates, mall, trade centers, and other facilities.
Operating 99.90
2. PT PP Pracetak 2013 Construction and Pile Services Operating 99.99
3. PT PP Alat 2014 Lease of supporting heavy equipment for
construction and formwork contractors
Operating 99.98
4. PP Energi 2016 Construction, electricity, power plants,
renewable energy and conversion energy.
Not yet operating
99.00
5. PP Infrastruktur 2016 Construction, electricity, power plants,
renewable energy and conversion energy.
1998 Construction Service Operating 15.00
2. PT Citra Waspphutowa 2006 Toll Road Management Operating 12.50
3. PT Inpola Meka Energi 2008 Mini Hydro Power Plant Operating 38.25
4. PT Alam Inti Energi 2010 Geothermal Power Plant Not yet
operating
30.00
5. PT Muba Daya Pratama 2011 Gas Fired Power Plant Operating 49.00
6. PT Prima Multi Terminal 2014 Port Terminal Management Operating 25.00
7. PT Jasamarga Kualanamu Tol 2014 Toll Road Management Not yet
operating
15.00
8. PT Jasamarga Balikpapan
Samarinda
2016 Toll Road Management Not yet
operating
15.00
9. PT Jasamarga Manado Bitung 2016 Toll Road Management Not yet
operating
20.00
10. PT Jasamarga Pandaan Malang 2016 Toll Road Management Not yet
operating
35.00
11. PT Sinergi Investasi Properti 2015 Service, general contractor and/or trade Not yet
operating
20.00
BUSINESS ACTIVITIES AND PROSPECTS
Overview
stakeholders, with the support of sound financial structure, efficiency and innovation, green program as one of its competitive advantages, with global reach and prosperous employees.
Pursuant to the Company's Articles of Association No. 2 dated January 5, 2010, the aims and objectives of the Company are to carry out business in construction industry, fabrication industry, leasing services, agency services, investment, agro-industry, Engineering, Procurement
and Construction (“EPC”), trade, estate management, construction, engineering, information technology, tourism, hospitality, engineering and planning skill upgrade service to produce highly competitive quality products and/or services, and to generate profit in order to increase the Company's value through the implementation of principles of Limited Liability Companies.
As of the issuance of this Prospectus, the Company is engaged in the construction service business, including, Construction Services, Property, EPC, Pre-cast, Equipment, Energy, Infrastructure and investment; will continue to develop investment business activities in the energy, infrastructure and property sectors.
Competitive Advantages.
The Company believes that it possesses competitive advantages with its ability to offer superior and complete services. The Company's future business prospects are directly related to the combination of competitive advantages, among others, as follows:
1. A Leading SOE engaged in the construction sector; 2. Strong track records with extensive experience; 3. Operational area and network located across Indonesia; 4. Solid management and experienced employees; 5. High-quality and innovative products
6. Cost Structure efficiency; 7. Green Construction Concept.
Business Activities
Up to date, the business activities carried out by the Company are focused on 8 (eight) business pillars, namely, Construction, including Building and Infrastructure construction, Property and Realty, Pre-Cast, Equipment, Engineering, Procurement & Construction (EPC), Energy, Infrastructure and Investment. The Construction segment contributed the largest revenue, with a target growth rate of 30%. The Company undertakes construction of Multistory Buildings, Power Plants, Bridges, Roads and Ports. In the Property and Realty Segment, the Company undertakes the construction of Office Buildings, Apartments up to Trade Centers. In EPC, the Company provides Power Plant EPC Services to SOEs or Companies engaged in the Energy business. Meanwhile, in the Investment segment, the Company makes capital investment in Infrastructure and Power Plant projects. In the Pre-cast segment, the Company produces pile, girder and sheet pile. Whereas in the equipment segment, the Company leases construction equipment, among others, tower crane, excavator, dump track, crawler crane, scaffolding.
1. Construction Service
The Company is engaged in the Public Construction Service, which main business activities include: Multistory Buildings, Roads and Bridges, Dams and Irrigation, Power Plants and EPC. The construction business not only contribute significant benefits to the public, it is creates history symbols for the State.
2. Property
The Company, through its subsidiary, PT PP Property Tbk, is engaged in business development in Property and Realty by developing idle land and cooperating with strategic partners to create Property development business, such as: Apartments, Hotels, Offices, Malls, Trade Centers and Real Estate for sale and lease. PP Property has 3 (three) business units, Commercial, Residential and Hospitality. The Company has developed approximately 15 (fifteen) projects in the three type of developments, consisting of 7 (seven) residential projects, 6 (six) commercial projects, and 2 (two) hospitality projects.
3. Engineering Procurement & Construction (EPC)
Business development in the EPC business is designed in a business model that considers market segment, competition strategies, value chain structures, revenue, capital, and growth strategy. The Company has prepared an EPC business road map, where the Company plans to develop its business by expanding the scope projects in the EPC business to include mining and oil and gas construction project in addition to Power Plant.
4. Investment
The Company has developed strategies in the form of Investment activities in Infrastructure projects, namely 12.5% share ownership in PT CW, Joint Venture company in Depok - Antasari Toll Road and investment in the Gas Engine Power Plant and Gas Turbine Power Plant of Talang Duku with 60 MW capacity in South Sumatera through a capital contribution totaling 49% of the capital. Presently, one of the TM2500 Turbine with 21.5 MW capacity is operating, whereas other Turbine, i.e. LM2500 with 35.2 MW is in the commissioning stage.
5. Pre-cast
Following its acquisition by the Company in 2013, PT PP Dirganeka’s name has been changed to PT PP Pracetak, and presently owns 2 (two) pre-cast plants in Cilegon, Banten, and Sadang, West Java. The pre-cast plant in Cilegon has contributed to the construction project of
Kalibaru jetty and projects other than the Company’s projects. To increase revenue, PT PP Pracetak will spread its wings to Eastern Indonesia and operate at least 4 (four) pre-cast plants in Indonesia.
6. Equipment
To support construction service, the Company acquired PT PP Prima Jasa Aldoua in June 2014, which name was changed to PP Peralatan
services. PP Peralatan leases heavy and light equipment, such as tower crane, excavator and scaffolding. Most of the construction equipment is leased to the Company to support construction work activities.
7. Energi
In order to develop its business, the Company established PT PP Energi in August 2016. PP Energy is established to support the Company's business activities, particularly in the energy sector, among others: oil & gas, power plant, storage, pipeline, etc.
8. Infrastructure
In order to develop its business, the Company established PT PP Infrastruktur in August 2016. PP Infrastruktur is established to support the
Company’s business activities, particularly in the infrastructure industry, which is currently promoted by the Government, among others: Toll Road, Airport, Port, transportation, etc.
Marketing
The Company has proven its ability to grow and develop from year to year and to provide contribution to the state and nation in the form of
various project implementation, both Government and Private Sector’s projects located across Indonesia.
In implementing its strategies to win tender, the Company utilizes information and previous tender experience and improve synergies with other companies. The Marketing division must selectively select the market in accordance with the Company's competitiveness. The Company gathers information on potential projects from information acquired from consultants, financial institutions, SOEs, Regional Governments, Central and Regional Investment Coordinating Board, as well as announcement from the mass media.
With the assistance of its Marketing Division, the Company continues to develop integrated marketing strategies which are focused on the achievement of project acquisition target. The Company's marketing strategies are implemented since the project design early stage, by implementing rigid supervision on the construction implementation and providing training on and improvement of work safety in the operational areas.
The Company's Marketing Division is supported by 4 (four) Operational Divisions (ODV), namely the Operation Division I in Medan, Operation Division II in Jakarta, Operation Division III in Surabaya and Operation Division IV in Makassar, and EPC Division in Jakarta. In handling a project, the existing ODV and EPC Division have the authorities to perform project calculation or estimation.
Presented below is the list of development of marketing contribution (contract value) of each of the Company's branch as of December 31, 201, 2012, 2013, 2014, 2015, and June 30, 2016.
Customer
The Company’s customers can be categorized into 3 (three) main groups, namely, the Government, SOE, and Private Sector. The following table presents the contribution of each sector from 2011 up to June 30, 2016.
Year Government SOE Private Sector Total
(Million Rp) % (Million Rp) % (Million Rp) % (Million Rp)
2011 5,507 44.58% 2,910 23.56% 3,935 31.86% 12,352
2012 4,459 22.90% 10,259 52.68% 4,756 24.42% 19,474
2013 1,870 9.55% 6,868 35.07% 10,845 55.38% 19,583
2014 4,145 20.48% 3,675 18.16% 12,419 61.36% 20,239
2015 5,623 20.77% 11,469 42.36% 9,980 36.86% 27,072
June 30, 2016 766 5.42% 10,375 73.36% 3,001 21.22% 14,152 Supplier
The Company’s suppliers consist of financial suppliers, material suppliers, sub-contractors, labor suppliers and heavy equipment suppliers.
a. Financial suppliers: since the financial crisis in the fourth quarter of 2008, the central bank tends to increase interest rate, and the Government policies continue to maintain growth at 6.2%, therefore, the real sectors must be immediately encouraged to obtain credit facilities from the banking sector, which is a more readily available option compared to waiting for the recovery of the capital sector, which is another alternative of financing sources.
b. Material suppliers: facilitation from the banking sector will automatically facilitate supply of material, labor and heavy equipment available in the market.
c. Sub-contractors: implementation of back to back payment, and are facilitated to increase partnership loan through the Company and banks.
The Company is not dependent on any specific supplier for civil works or Mechanical & Electrical (M&E) works.
Competition
In an increasingly competitive construction industry, there are approximately 90,000 companies that continue to compete in offering the best quality for their projects. Pursuant to the Law of Construction Services No. 11 of 2006, companies engaged in the construction business are divided by project value as described below:
No. Qualification Project Value
1 Grade 7 > Rp10 Billion 2 Grade 6 < Rp10 Billion 3 Grade 5 and below < Rp3 Billion
Based on the above classification, the Company is categorized as a Grade 7 company since the value of projects handled by the Company exceeds Rp10 billion.
The Company believes that the Company continues to offer its best performance. The Company consistently strives to offer the best quality by improving its competitiveness through technical and commercial skill upgrade. The Company also cooperates with foreign companies that have technological and commercial excellence, which renders the Company superior compared to other competitors.
Current competition trend is mainly triggered by companies with bigger funding that are able to enter into various large scale projects. In addition, with the growing competition in the construction industry, the Company also competes to offer the best quality and price.
BUSINESS PROSPECTS
Activities of the construction sector are one of the driving forces of economic development system, since provision of facilities and infrastructures will improve other economic sectors. Construction sector spending in Indonesia is expected to increase, in line with the government's plan to promote infrastructure development across Indonesia up to 2019. Based on data from BCI Asia, the 2016 construction market share is estimated to reach Rp658 trillion.
The construction sector is expected to provide fairly significant contribution to economic growth performance in 2016. In 2016, the construction sector is expected to grow by approximately 7%, mainly driven by the sustainability of infrastructure development acceleration that has started since 2015. Several infrastructure development acceleration projects that are expected to encourage the performance of construction sector are, among others, construction of 35 GW power plants for a period of 5 years (target 4.2 GW by 2016), construction of one million house for low income class (LIC) program, the construction and rehabilitation of dams and irrigation channels.
EQUITY
Registered Public Accountant Soejatna, Mulyana & Partners, whereas the Company's financial statements for the six-month period ended June 30, 2016, were audited by the Registered Public Accountant Firm Hertanto, Grace, Karunawan, which expressed an Unqualified Opinion on the financial statements as a whole.
DESCRIPTION December 31, June 30,
2014 2015 2016
EQUITY
Equity attributable to: Owner of Parent Entity
Issued and Paid-up Capital 484,244 484,244 484,244 Additional Paid-in Capital 462,018 431,845 431,845 Changes in Equity of Subsidiary Company - 255,864 255,864 Gain on Revaluation of Fixed Assets - 1,193,469 1,256,852 Remeasurement of Defined Benefit Pension Plan (29,323) (30,700) (34,427) Retained earnings
Appropriated 883,538 1,306,832 1,900,350 Unappropriated 533,406 740,323 355,341
Total 2,333,883 4,381,877 4,650,069
Non-Controlling Interest 1,050 737,195 763,363
TOTAL EQUITY 2,334,933 5,119,072 5,413,432
DIVIDEND POLICY
The Company has a policy to distribute cash dividends to all of the Company's shareholders, with due consideration to the Company's financial position or soundness and without prejudice to the rights of the Company's General Meeting of Shareholders to determine such dividend distributions, which shall be determine in the Company's General Meeting of Shareholders.
Presented below are the descriptions of the Company's dividend payments for the 2011 up to 2015 fiscal year, which are paid on the following year.
TAXATION
Prospective Preemptive Right Holders in this Right Issue I are expected to consult their respective tax consultants about the tax consequences that may arise from the purchase, possession and sale of Preemptive Rights acquired through this Right Issue I.
CAPITAL MARKET SUPPORTING INSTITUTIONS AND PROFESSIONALS
The Capital Market Supporting Institutions and Professionals participating in this Right Issue I are as follows:
Public Accountant : Registered Public Accountant Firm Hertanto Grace Karunawan
Legal Consultant : Tumbuan & Partners
Notary : Notary Office of Fathiah Helmi, S.H.
Securities Administration Bureau
: PT BSR Indonesia
TERMS OF THE COMPANY'S SHARE SUBSCRIPTION
The Company has appointed PT BSR Indonesia as the Company’s Shares Administration Management Agency and Rights Issue I
Year Amount Paid
(billions of Rp)
Total cash dividend per
share (Rp) Payout ratio Payment Date
