“Every era always presents a momentum in which opportunities abound. Success is sometimes determined by how well you can read the momentum and how capable you are of creating value from every available opportunity.”
Dear Shareholders and Stakeholders,
Representing the Board of Directors of PT Intiland Development Tbk (Intiland), I hereby present the Company’s 2022 Annual Report where our business performance has been satisfactory. We consider 2022 as a year of awakening momentum for property developers and the Company, after nearly three years of surviving and struggling with various changes and impacts due to the Covid-19 pandemic. In the midst of these challenges, the Company continued to innovate and develop in presenting quality property products and satisfying services to consumers. We believe that every era always creates a ‘momentum’, and key stages do deliver a big impact to the Company. All organs of the Company without exception have seriously taken advantage of and utilized every available momentum as an opportunity to improve the quality of products and services, as well as the performance of sustainable business growth. We continue to observe and scrutinize the dynamics of economic conditions, socio-politics, market changes and consumer purchasing power—these are important considerations in the effort to create quality products and services.
We have seen how global economic conditions in 2022 faced numerous challenges and experienced a slowdown. The International Monetary Fund (IMF) reported a global growth rate of only 3.4 percent in 2022, and projected a figure of 2.9 percent for 2023. The condition raises concerns that it will have an impact on increasing the risk of recession and inflation. The increase in global economic will be challenging for the business world in helping the Government accelerate the national economic recovery.
In the midst of increasing slowdown risks in the global economy, we convey our highest appreciation to the Government for its success in maintaining Indonesia’s economic resilience vis-à-vis these global risks.
Throughout 2022, we have observed how Government support in building synergy and innovation in fiscal and monetary policies became a key factor for continued economic recovery. We believe that the synergy between national policy instruments and stimulus from the Government and industry players will be able to accelerate economic recovery while preserving stability. The public in general remained confident that the national economy would continue to be resilient. This optimism was reflected in the increasing mobility of the people as a result of the easing of pandemic restrictions to prevent the spread of Covid-19.
Referring to data from the Central Bureau of Statistics (BPS), the economy in Indonesia in 2022 grew by 5.31 percent. This figure was higher than the achievement in 2021, which only grew by 3.70 percent. This was even the highest achievement since 2014. Consumer Price Index (CPI) inflation also showed controlled development. BPS noted that 2022 CPI inflation was 5.51 percent. This figure increased compared to the 2021 CPI inflation of 1.87 percent.
Banking interest rates tended to experience an increasing trend throughout 2022. Based on data from Bank Indonesia, the BI 7 Days Repo Rate during 2022 has increased from a position of 3.50 percent at the beginning of the year to 5.50 percent at the end of 2022. Nonetheless, The rupiah exchange rate against the United States (US) dollar was relatively stable. On 30 December 2022, the Rupiah exchange rate against the US Dollar closed trading at Rp15,640, weaker compared with 31 December 2021’s closing figure of Rp14,278. At the close of trading on the Indonesia Stock Exchange in 2022, the Indonesia Stock Exchange’s Composite Stock Price Index closed at the level of 6,850.62, or strengthened 4.09% compared to the year-end position. The JCI had set a new record at the level of 7,318.02 on 13 September 2022, the highest in the history of the Indonesian Stock Exchange.
Dynamics of the National Property Industry
The Covid-19 pandemic, which has lasted more than two years, has had a major impact on the national property industry. Even though the property market is moving more dynamically from the end of 2021 to mid-2022, the recovery trend throughout 2022 still faced tough challenges. Investment in the property sector, particularly the residential sub-sector, continued to be under pressure due to a number of factors, including the end of the Value Added Tax (VAT) waiver period, rising material prices, and rising basic electricity rates and fuel prices. These conditions have delivered a compounded impact on people’s decisions to buy or invest in property products. Consumer buying interest weakened again entering the middle of the year due to declining purchasing power and sluggish momentum for property investors.
The mixed-use & high rise development segment was the most affected. Sales of property products such as apartments and offices tend to be stagnant and did not experience growth. On the contrary, the demand for property products, especially landed houses, continues to grow entering the new normal period after the Covid-19 pandemic.
Based on the results of the Bank Indonesia Residential Property Price Survey, the residential property sub-sector prices in the primary market on an annual basis continued to increase until the fourth quarter of 2022. The Residential Property Price Index (IHPR) in the fourth quarter of 2022 recorded an increase of 2.00% (yoy), higher than the 1.94% (yoy) rate recorded in the previous quarter. Nevertheless, survey results showed that residential property sales on the primary market in the fourth quarter of 2022 grew at a slower pace, consistent with the Government’s decree to revoke the Value Added Tax Waiver Incentive (PPN DTP) in September 2022.
This change was closely linked to the fact that the Home Ownership Loan (KPR) facility remained the preferred choice among customers when purchasing residential property. The implementation of PPN DTP regulation proved to be hugely effective in shoring up the growth of the property sector. This policy waived 100 percent of the VAT for residential products purchases under Rp2 billion, and 50 percent for residential products worth Rp2 billion to Rp5 billion for landed houses and new flats.
These changes created new challenges for the property industry players. A host of new strategies and breakthroughs were needed to preserve sectoral growth, including by focusing on the strengthening of housing product market, which was widely considered to retain some potential. As a property developer, we have continued to adapt our business, create new innovations, instigate business process efficiencies, and strengthen our marketing strategy by targeting more potential target markets.
In keeping with the national economic growth that has continued to show resilience and is gradually recovering, the Company maintains its focus on seizing every opportunity to deliver advantage to its business. A number of important and strategic measures were taken to ensure that our business operations run smoothly and continue to boost sales effectiveness. The application of the principle of prudence in every policy that we make remains a fundamental step in the context of risk management especially when faced with unfavorable market conditions. The Company continues to take conservative measures in expanding and making decision on each new project development. Utilization of the Company’s resources was carried out incessantly to achieve our growth targets.
Throughout 2022, the Company continued to boost sales, especially for its inventory which can be recorded directly as operating revenue. The Company also focused on developing ongoing projects in 2022. However, the Company never ceased to take advantage of every potential for long-term project development that it encountered. One of the notable achievements in 2022 was the strategic collaboration with Mitbana Urban Development Fund III Pte Ltd (Mitbana) to establish a joint venture, PT Inti Mitbana Development (IMD). This strategic synergy was made in the context of developing an integrated Transit Oriented Development (TOD) area encompassing 51 hectares in Talaga Bestari residential area in Tangerang. By synergizing the strengths and experiences of both parties, we believe this partnership can become a key growth strategy for us in the long term.
The Company also launched Aurora, a new commercial area with the Small Office Home Office (SOHO) concept in Graha Natura area in Surabaya. This new development is becoming the characteristic landmark in the area, as well as a form of the Company’s commitment to meeting the high demand for opening businesses in Graha Natura area. The development of the integrated mixed-use area Amesta Living in Surabaya also continued to be intensified in line with the commencement of the area development stage following its successful launch in 2021. In 2022, the Company also succeeded in completing the construction stage of Fifty-Seven Promenade apartment project in Thamrin, Central Jakarta. The Company has begun to hand over the units to the buyers since September 2022.
The Company also successfully completed the construction phase of SQ Rés apartment project in South Jakarta. This stage was marked by the ceremonial topping off of the tower in June 2022. Another monumental achievement in 2022 was the Company’s decision to strengthen its industrial area business line, by commencing the development of Batang Industrial Park (BIP), the latest expansion in the development of an integrated industrial area in Batang Regency, Central Java. BIP is the second industrial area project that the Company has developed, after the Ngoro Industrial Park in Mojokerto, East Java.
In the midst of relatively unfavorable property market conditions, the Company continued to bolster its sales performance, both regularly and through the implementation of specific marketing campaigns. In 2022, there were two marketing campaign activities that took place, namely the Intiland Collections and Intiland Funfair, held in June and October 2022, respectively. During these two programs, the Company offered special promotions that made it easier for the public to buy various property products, such as landed houses, apartments, offices, commercial areas, SOHO, and warehouses. A total of 17 of the Company’s property projects in Jakarta, Tangerang, and Surabaya participated in this program. Organizing this promo program showed the Company’s commitment to facilitating the public in obtaining the best property products on offer at Intiland.
In 2022, the Company recorded pre-sales or marketing sales of Rp1.08 trillion, achieving 44.9% of the target of Rp2.4 trillion. The acquisition of marketing sales decreased by 34.1% compared with the 2021 figure of Rp1.64 trillion. The biggest achievemen came from the sale of landed houses in the residential area development segment, in particular from Talaga Bestari, Graha Natura and Serenia Hills projects. This segment contributed Rp639 billion to marketing sales, or 59 percent of the total. This figure decreased by 31% compared with the previous year’s achievement of Rp922 billion. Meanwhile, the mixed-use & high-rise development segment contributed Rp159 billion or 15 percent of the total, down by 59 percent from the previous year’s figure. Sales from the industrial estate segment recorded marketing sales of Rp283 billion, a decrease of 14% from the previous year’s figure of Rp329 billion. This segment contributed 26 percent to the total marketing sales.
The Company also continued to maintain its financial performance throughout 2022. Operating revenue reached Rp3.1 trillion, an increase of 19.8 percent compared with 2021 revenue of Rp2.6 trillion. Gross profit and operating profit amounted to Rp1.3 trillion and Rp969 billion, respectively, demonstrating respective increases of 24 percent and 45 percent from 2021 achievements. A positive trend in performance in 2022 was further reflected in profit for the year, which amounted to Rp192 billion. This figure jumped 760 percent from the loss of Rp29 billion recorded in 2021. However, the Company booked a net loss of Rp98.8 billion, a drop from 2021’s net profit of Rp13.2 billion. This decline in profitability was mainly due to the large sum of the profit for the year attributable to non-controlling interest from collaborative projects, in particular from the FiftySeven Promenade project which contributed quite a significant amount of revenue. In this collaborative project, the portion of the Company’s share ownership is 36.6 percent. A more detailed explanation on financial performance is presented in the financial statements, which should be read in full to prevent any misinterpretation of the content.
The movement of the Company’s share price on the capital market also saw some dynamics in 2022. At the opening of the 2022 trading, the Company’s share price was recorded at Rp149 per share. At the close of the final trading day in 2022, the Company’s share price rose to Rp171 per share. The Company’s shares, with the ticker code DILD, peaked at Rp226 per share on 16 August 2021. Then the shares experienced a decline until they reached the lowest price point of Rp138 per share on 12 May 2022.
The Company also continued to implement prudent financial management in 2022. The Company conducted efforts to maintain a strong financial structure to ensure the availability of funds for its short- and long-term business development. In 2022, the Company issued the Sustainable Intiland Development Sukuk Ijarah I Tranche II Year 2022 worth Rp250 billion, which was listed on the Indonesia Stock Exchange on 26 August 2022.
On December 2, 2022, the Company again issued the Sustainable Intiland Development Sukuk Ijarah I Tranche III Year 2022, amounting to Rp250 billion. The Sustainable Intiland Development Sukuk Ijarah I Tranche III Year 2022 came in two series, namely Series A amounting to Rp125 billion, with a coupon of 10.3% per annum, and Series B amounting to Rp125 billion with a coupon of 10.6% per annum.
As an effort to maintain cash flow to support business activities, the Company restructured some of its bank loans. This effort exhibited a risk mitigation effort towards fulfilling obligations to the banks, as its creditors, by proposing an extension to the restructuring period. The Company succeeded in restructuring its debts by proposing a grace period for the obligation to pay back the principal in installments, which subsequently resulted in the relatively well-maintained financial performance in 2022.
In the midst of an era of disruption and transformation, the Company faces the challenge in constantly developing the quality of its human resources (HR). Moreover, organizational development has a linear relationship with HR development. The long-term sustainability of the Company’s business is inseparable from the role of its employees. We place HR development as one of the top priorities, and we make this evident in the wide array of training programs, competitions, mentoring, and ample opportunities for employees to optimize their potentials. Programs that were implemented included knowledge management, training and workshops, sharing sessions, employee engagement, and innovation competition programs, all of which any employee could participate in without exception. The Company consistently organizes employee career development programs through objective and measurable assessment methods, starting from mapping the responsibilities, determining the Key Performance Indicators (KPIs), setting the targets, and developing the talent with specific programs.
As an effort to foster a spirit of change, the Company regularly organizes employee innovation competitions on an annual basis. This flagship program provides a venue for employees to generate creative ideas to increase work effectiveness to achieve optimum results. This competition had resulted in 70 extraordinary innovations which could be developed further to become part of a new set of standards for the Company’s procedures and work guidelines.
The Company realizes that a ‘sense of belonging’ is one of the important aspects that every employee should develop. Therefore, it is the responsibility of the Company to create a harmonious work environment, as well as to provide opportunities for employees to explore their potential and engage in self-development.
Corporate Governance Implementation
At all times, we apply the principles of good corporate governance (GCG) to maximize corporate value, improve performance and contribution, and maintain the Company’s sustainability in the long term. In practice, the Company always refers to the Corporate Governance Guidelines issued by the Financial Services Authority (OJK). We believe that a robust GCG system must be able to provide information and financial transparency to the shareholders and all stakeholders, so that they can be certain that they stand to benefit from the best outcomes through their investment.
As a public company, maintaining public trust is our main task as this is closely related to the attitudes and decisions of investors. The clearer the information we convey, the better the reputation and credibility of the Company will be. We also realize that implementing GCG principles is necessary for the Company to survive against the increasingly fierce competitive business landscape. We therefore hope that GCG can become a means for us to achieve our vision and mission. A robust GCG implementation is also required to maintain the integrity of all internal elements of the Company, without exception. Thus, a conducive environment for corporate sustainability shall also be formed this way.
Owing to the support from the Board of Commissioners and all organs within the Company, we have been able to live up to this commitment. The support provided by the Board of Commissioners so far has extensively helped the Company to uphold its superior position in the industry and grow forward in a sustainable manner. As an accompaniment to this Annual Report, we also publish our 2022 Sustainability Report. This year is the third year that we published our sustainability report. This Sustainability Report is our form of sharpening our vision and strategy for sustainability, sharpening our sustainable management system, increasing transparency, and facilitating evaluation. We hope that this Sustainability Report will increase our competitiveness and strengthen our relationship with stakeholders.
The Company acknowledges that its Corporate Social Responsibility (CSR) commitment and concrete actions serve as an integral part of its sustainable business practice. CSR is a long-term investment for the Company. Developing the potentials of the younger generation and supporting the community around our projects continued to be our focus in conducting CSR throughout 2022.
Composition of the Board of Directors
During 2022, the Company made changes to the composition of the Board of Directors, with the addition of one Deputy President Director. The addition of this Deputy President Director position was aimed at strengthening the Company’s strategy and maintaining its performance. Through the resolution of the Annual General Meeting of Shareholders held on 20 July 2022, the Shareholders approved the appointment of Mr. Moedjianto Soesilo Tjahjono as the Deputy President Director. With this appointment, the Board of Directors of the Company now consists of eight personnel: one President Director, three Deputy President Directors, and four Directors.
Awards for the Company
The Company’s dedication and commitment to the community in presenting quality property products has been ongoing for more than 45 years. Various of the Company’s top-of-the-class property creations, in the residential, mixed-use and high-rise development, industrial estates, to investment properties, have received multiple accolades from various parties, from within and outside of the country. All the awards we have received we dedicate to our loyal customers, investors, and all employees. We wish that the achievements that we have recorded so far will encourage other players in the property industry to bring excellent and sus tainable property products to the market.
In 2022, the Company won six awards from home and abroad covering the areas of property, design, architecture, CSR, environment, and sustainable development. Among others, one award was won by South Quarter, as the best office building in the world, with the World Gold Winner for the Office Category in the world’s most prestigious property masterpiece competition, FIABCI World Prix d’Excellence Award 2022. In addition, the development of a modern-minimalist residential area Amesta Living in Surabaya won the Best New Housing Development award at the 2021 Lamudi.co.id Property Awards. The Surabaya Municipal Government conferred the Environmental Management Compliance Award to three of the Company’s projects, namely Graha Golf, Praxis, and Spazio, for their strong commitment to complying with environmental aspects. Intiland also won the TrenAsia ESG Excellence 2022 award in the Commercial Property for Sustainability category at the TrenAsia ESG Excellence 2022 Awards event. These achievements and recognitions were given in appreciation of the Company’s commitment to, and success in, implementing the principles of sustainable development from environmental, social and governance standpoints in the property projects that it has launched and is currently developing.
Amidst the projected challenges and opportunities in 2023, the Company strongly believes that the condition of the property sector will gradually improve. The Company is optimistic that it will be able to grow by optimally seizing every potential and opportunity. Given the dynamics of the global economy, still overshadowed by economic slowdown due to various factors, all parties are working hard to restore conducive conditions as promptly as possible. The threat of recession and raises in global interest rates, as well as the strengthening of the US Dollar, are expected to continue for a long time. Highly uncertain macroeconomic conditions due to the prolonged war between Russia and Ukraine, and the hike in the United States federal interest rate are all risk factors that we believe should be carefully taken into consideration.
The government has displayed a calm and optimistic attitude towards the prospects for economic growth in 2023. This poise gives confidence to businesses to always have a positive and optimistic mindset about the prospects going forward. As one of the 20 largest economies in the world, Indonesia has robust economic fundamentals and is showing a trend of stable economic growth. Even in a time when many other countries are experiencing a severe economic downturn due to the Covid-19 pandemic, Indonesia has actually been able to record a notable growth.
The government projects Indonesia’s economic growth in 2023 to remain strong and stable in the range of 4.5 percent to 5.3 percent. Even though 2024 is an election year, the government projects that the trend of economic growth will continue at 4.7 percent to 5.5 percent. This confidence is underpinned by private consumption, investment, and continued positive export per formance amidst slowing global economic growth. The national inflation rate is estimated to remain under control in the range of 3 percent, plus-minus 1 percent in 2023 and 2.5 percent, plusminus 1 percent in 2024.
The Company envisions that the national property market will continue having to deal with multiple challenges in 2023. The trend of increasing prices for building construction materials is a key factor that has driven the increase in the property price index. Increases in material prices can have an impact on production costs. Should this situation be out of control, it will have an adverse impact on the speed of growth in the property sector and reduce purchasing power for property products.
The Company remains optimistic that the government will take important steps to maintain economic stability and the national property sector. This condition certainly provides a positive signal for businesses to foster optimism and boost their investments. The Company has determined a number of main strategies for business growth to pursue in 2023. The main focus of the Company is to continue with the developments and increase sales of ongoing projects. The Company will also continue to explore opportunities for collaboration with potential strategic partners in developing new projects for 2023 as well as for long-term development.
On behalf of the Board of Directors, I express my gratitude and appreciation to shareholders, investors and loyal customers for the trust and support that has been given to the Company up to now. I also express my gratitude and appreciation to the Board of Commissioners and all committees, who have always provided their direction, support, and advice in order to realize the Company’s governance and business growth in a sustainable manner.
Finally, I also give thank and appreciation to the management and employees for their dedication, loyalty, and hard work so far, so that the Company was able to execute its work plan and stands ready to welcome 2023. In line with the theme of the 2022 Annual Report, the Company will continue to continuously optimizing resources to create opportunities that can promote growth and allow it to develop in a sustainable manner.
Hendro S. Gondokusumo