Report of the Board of Directors

Esteemed shareholders,

As we all know, growth in the property sector is greatly affected by the dynamics in the global economy as well as by the national fiscal policy. The key interest rate hike by the US Federal Reserve (The Fed), rupiah volatility, and tightening global liquidity, might pose an obstacle to the property sector’s growth performance. That was what occurred in 2018.

The property market’s growth in 2018 was lower than expectations. Both consumers and investors choose to take a wait-and-see approach, and when they did make a purchase, they remained extremely selective.

The Company was well aware of the stimulus programs promulgated by the government to encourage growth in the property market throughout 2018. However, these policies were not fully capable of providing an uplifting force in the property industry.

Intiland’s Performance

In 2018, Intiland booked marketing sales revenue of Rp2.28 trillion, a lower figure compared with 2017’s Rp2.93 trillion. This was equivalent to 67.5% of the target set for 2018, which was Rp3.38 trillion. The drop in marketing sales revenue was mainly owing to the weak property market, which was in turn caused by the drop in demand from consumers.

However, in 2018 the Company managed to increase its recurring income by 12.8%, from Rp528.2 billion in 2017 to Rp595.7 billion. This was primarily derived from the revenue from the lease of office space and industrial estates. Going forward, the contribution of recurring income is expected to continue to rise, in line with the completion of the construction of office and retail areas, such as Praxis and Spazio Tower in Surabaya.

In 2018, the Company maintained a conservative stance in terms of business expansion, focusing instead on the ongoing projects and optimizing the land in its possession. Market testing and research should be performed so as the Company’s future projects will be well-received by the market. Should the market become less conducive, the management will determinedly opt to strengthen its business plans, especially with regards to the development of high-rise buildings which carry with it a significant level of risk.

Regardless of the immense challenges in 2018, Intiland was able to deliver its achievements through its relentless performance and property products that have garnered awards and appreciation from various parties. Intiland received a total of 13 awards in 2018, ranging from the special award as The 2018 Real Estate Personality of the Year, awards for Intiland as a corporation, and awards for the Company’s top-performing projects.

In terms of corporate governance, we continued to improve and upgrade its implementation across all levels of the organization. With the full support from the Board of Commissioners and all governance organs of the Company, we evaluate our corporate governance performance regularly, to render it ever stronger.

With the issuance of POJK No. 51/POJK.03/2017 on Implementation of Sustainable Finance, we are preparing ourselves for sustainable reporting, aided by GRI (Global Reporting Initiative). The principle of sustainability remains one of the foundational principles which we uphold in our business development, and integral to this is our management of corporate social responsibility within our business process, as we seek to deliver sustainable and positive impacts on our surroundings.

To make Intiland’s business processes more resilient, the General Meeting of Shareholders on 20 April 2018 approved the appointment of Utama Gondokusumo as Vice President Director and Permadi Indra as Director of Business Development.

Business Prospect

The positive trend of the Indonesian economic growth has created a market filled with promising potentials, bolstered even further by Indonesia’s demographic bonus. This is our main rationale in being optimistic that the property industry will grow in 2019.

In addition, several factors will further boost the property industry in 2019 after a period of slowdown in 2018. These factors are, among others: (1) completion of many infrastructure projects of the government, (2) the strong demand for housing units below Rp2 billion in price, (3) a relatively substantial housing backlog which has created a massive market potential, (4) the government’s plan to scrap the Sales Tax on Luxury Goods on property purchases, and (5) Bank Indonesia’s policy to loosen the down payment and the loan to value policy for public housing loans.

In light of the above factors, we are optimistic that the Company will be able to maintain its financial stability and its business growth momentum. However, given the prevailing challenges and high-risk business milieu, the Company will continue to apply a conservative and prudent policy with respect to its business development initiatives. The Company is actively seeking new opportunities to forge strategic alliances for the development of new projects. This policy is a strategy to accelerate performance growth, carry out risk management measures, and boost long-term investment value. The Company will also focus on efforts to boost the sale of its ongoing projects and to release assets that are not in the core category or those less productive ones.

Appreciation

On behalf of the Board of Directors, I extend my appreciation and gratitude to all shareholders, the Board of Commissioners and all committees under it, our loyal customers and business partners, and all our employees, for the support, trust, and collaboration that we have enjoyed so far. With a strong collaboration we will be able to overcome all challenges successfully, and together we can grow and contribute to the development of our beloved nation.

Hendro S. Gondokusumo

President Director