Report of the Directors

With this spirit of transformation, Waskita continues to move forward. Board of Directors believes that the strategic measures taken will serve as a strong foundation for the Company in creating sustainable value for shareholders, business partners, and the wider community. Therefore, please allow us to present the 2024 Annual Report as a reflection of Waskita’s transformation journey and achievements made in strengthening business competitiveness and sustainability for the future.

At the national level, Indonesia’s economy has demonstrated strong resilience, supported by robust domestic consumption, stable investment, and government policies to maintain macroeconomic stability. In 2024, Indonesia’s economy grew by 5.03%, slightly slowing down compared to the 5.05% growth recorded in 2023 (year-on-year). From a production perspective, the highest growth was recorded in the Other Services sector at 9.80%. Meanwhile, in terms of expenditure, the highest growth was achieved by the Non-Profit Institution Serving Households Consumption Expenditure (PK-LNPRT) component, which increased by 12.48%.

The construction sector remains one of the key pillars of Indonesia’s national economy, contributing around 10.09% to the Gross Domestic Product (GDP). Data from the Central Statistics Agency (BPS) indicates an increase in the value of completed construction projects by medium and large-scale companies. This indicator reflects the continued development activities in the infrastructure sector, despite challenges such as rising material costs and labor wages.

The government continues to promote infrastructure development as one of the key drivers of economic growth, aligning with the efforts to enhance connectivity and national competitiveness. The Indonesian government remains committed to increasing infrastructure spending as part of the National Medium-Term Development Plan (RPJMN). Major projects, such as toll roads, bridges, dams, and industrial zone developments, are prioritized to support economic growth and equitable development.

For Waskita, these economic dynamics have significant implications for the Company’s strategy and operations. To navigate these challenges, the Company continues to optimize strategic initiatives through sustainable business transformation. Financial restructuring, project portfolio optimization, and business process digitalization are the key measures to strengthen the Company’s fundamentals amid economic uncertainty.

Additionally, Waskita continues to enhance strategic partnerships with both the government and the private sector to ensure the continuity of national strategic projects. Through these initiatives, the Company remains optimistic about maintaining competitiveness and business sustainability while continue to contributing to Indonesia’s infrastructure development, leading to more inclusive economic growth.

Meanwhile, in 2024, the Company continues to play an active role in infrastructure development in Indonesia. The Company has worked on 92 National Strategic Projects (PSN), of which 72 projects have been completed, while 20 others are still under construction. As of December 31, 2024, the Company manages 26 connectivity projects including toll roads, bridges, and Light Rail Transit (LRT). In the water infrastructure sector, there are 22 projects that include the construction of dams and irrigation systems. As for the Building sector, there are 17 projects that include the Coordinating Ministry Building 3 and 4 projects in the IKN, the Airport project, and the Kanjuruhan stadium renovation project. In addition, the Company also manages several EPC projects which include the Wastewater Treatment Plant (WWTP) and Drinking Water Supply System (DWSS) projects.

Specifically, of the 2000 kilometers built in Indonesia in the last 10 years, Waskita has contributed to the construction of more than 1000 kilometers of toll roads. The existence of toll roads provides significant benefits to the community, including a reduction in travel time by up to 50 percent. In addition, the toll road projects developed by the Company provide a multiplier effect from construction to operation, through employment and stimulating economic growth in the surrounding areas that support the food, tourism, and logistics sectors.

1. Business Transformation and Financial Recovery As part of its 8 (eight) steps of financial recovery plan, Waskita has implemented a financial restructuring strategy to improve liquidity and strengthen capital structure. This strategy includes:
   • Divestment of toll roads to reduce debt burden and improve cash flow.
   • Debt restructuring for both the parent company and subsidiaries to restore financial balance.
   • Issuance of bonds/sharia bonds to secure working capital and refinance maturing debt.
   • State Capital Injection (PMN) and Rights Issue to support the Company’s capital structure.
2. Operational Strategy
   Waskita continuously enhances its capacity to achieve the corporate vision and mission, aligning with ongoing business transformation. To achieve these goals, the Company managed to secure work contracts throughout 2024 through two main business models:
   • Independent Contracts, where projects are fully managed by Waskita.
   • Joint Operations (JO), involving collaboration with strategic partners to optimize resources and expertise.
3. Marketing Strategy
   To strengthen its market position and enhance competitiveness, Waskita has developed a comprehensive marketing strategy. This includes identifying and analyzing relevant information, evaluating resources and capabilities of the Company, and assessing competition in targeted segments and customer groups.
   • Expanding the market by focusing on new projects that meet the 4N criteria (New Market, New Owner, New Strategic Partner, New Area).
   • Prioritizing projects with sustainable monthly payments.
   • Increasing the proportion of non-government projects to over 20% of total tenders.
   • Expanding partnerships with strategic partners to secure priority projects.
   • Collaborating with leading companies to address gaps in experience and financial support.
   • Increasing certifications to ensure competencies align with industry needs.
   • Minimizing tender failures by ensuring the completeness of administrative documents through the Tender Document Verification (TDV) function.
   • Developing the Digital Marketing Application WELCOME 2.0 to assist in monitoring tenders and implementing marketing procedures.

As the primary decision-makers, Board of Directors plays a strategic role in shaping policies and guiding the Company to remain competitive and sustainable in the dynamic construction industry. In 2024, Board of Directors is committed to accelerating business transformation, including financial restructuring and improving transparent and accountable corporate governance.

During strategy formulation, Board of Directos ensures that every policy aligns with the Company’s vision and mission while complying with relevant regulations. One of the key regulatory guidelines in the Company’s management is the Minister of SOEs Regulation No. PER-2/ MBU/03/2023 on Corporate Governance and Significant Corporate Activities. Guided with this regulation, Board of Directors emphasizes the transparency and accountability principles, as well as risk management to establish a trustworthy corporate governance system.

This optimized task distribution also supports the continuous achievement of strategic goals. With clear responsibility distribution, Waskita enhances operational efficiency, accelerates strategy execution, and strengthens competitiveness in the industry. A structured coordination mechanism is also implemented to ensure synergy among members of Board of Directors. Policies and strategies are communicated transparently in regular meetings, allowing each Board member to contribute insights from their respective perspectives. Thus, the decision-making process can be carried out more holistically and comprehensively.

This system integrates various cutting-edge technologies, including System Application and Product (SAP), Building Information Modelling (BIM) 4D/5D, Geographic Information System (GIS), Master Schedule, and Earn Value Analysis (EVA). All of these systems are combined in the Procurement Schedule, Digital Control Tower, and Value Stream Booster (VSB), which then become the basis for decision making based on Site Diagnostic Collaboration. With this approach, the system is able to make predictions, monitoring, and decision making that are more accurate and faster.

The result of the integration of these various technologies is the Project Performance Index (PPI), which enables the Company to monitor project performance in real-time through an application that can be accessed via PC, iOS, and Android. Based on the PPI results, the performance of projects that reach superior operational standards has increased significantly, from 21% in August 2024 to 45% in December 2024, with a target of a further increase to 70% in 2025. The implementation of this system began in September 2024 and has had a positive impact on the Company’s operational efficiency.

As a pioneer in the construction industry, Waskita Karya is the first and only company to implement an Integrated Construction Management System. Therefore, the Company plans to register a patent for this digital innovation. The implementation of this system has provided various benefits, including operational cost efficiency, increased productivity, and more optimal cost management, thus supporting the achievement of more effective and sustainable performance.

In the same period, the Company recorded a loss for the year amounting to minus Rp3,913.60 billion, or 142,38% of the target profit (loss) for the year which had been set at minus Rp2,748.83 billion. The main factor contributing to this is the Company’s continued high financial burden.

In terms of capital structure, the Company’s total assets in 2024 were recorded at Rp77,214.00 billion. In addition, the amount of realized cash and cash equivalents reached Rp2,516.21 billion.

In terms of liabilities, the Company’s total liabilities throughout 2024 were recorded at Rp69,329.82 billion. Meanwhile, the Company’s equity in 2024 reached Rp7,884.18 billion.

In addition, global and national economic uncertainty also has an impact on the construction industry. Fluctuations in raw material prices, high interest rates, and changes in economic policy are external factors that must be anticipated with an adaptive strategy. The government continues to encourage infrastructure development, but changes in regulations related to investment and national strategic projects require Waskita to be more flexible in adjusting its business strategy.

In terms of operations, the completion of strategic projects also has to face technical and administrative challenges that affect the progress of development. The management of these more complex projects requires Waskita to improve efficiency in construction management to ensure the timely completion of projects in accordance with established quality standards.

In facing these various challenges, Waskita has taken a number of strategic steps to ensure sustainability, with financial restructuring being a top priority. This step is expected to provide room for Waskita to improve its capital structure and increase financial flexibility to support future business growth.

Operationally, Waskita continues to improve efficiency through digitization and innovation in project management. The Company has adopted an Integrated Construction Management System, which combines various digital technologies such as Building Information Modeling (BIM), Geographic Information System (GIS), Digital Control Tower, and a real-time monitoring system to improve the effectiveness and efficiency of project implementation. With this system, Waskita can identify potential obstacles early on and take appropriate mitigation steps to avoid project delays and cost overruns.

In line with these opportunities, the Company has established several strategic pillars in its Long-Term Corporate Plan (RJPP) 2024-2029. These pillars include business development, human capital (HC) competency enhancement, strengthening corporate governance through Governance, Risk & Compliance (GRC), and accelerating digitalization. The implementation of these strategies is aimed at realizing Waskita’s vision of becoming a leading construction company that contributes to building a sustainable infrastructure ecosystem.

Additionally, Waskita has developed a work plan and roadmap for 2025, placing financial restructuring as its main pillar. The successful execution of this strategy will serve as the foundation for various other strategic initiatives, ensuring that Waskita remains on a path of sustainable growth and continues to be competitive in the construction industry.

The Company has also set strategic goals to restore its performance to an optimal level by 2025. To achieve this, the Company is targetting several key milestones, including increasing New Contract Value (NKB), revenue growth, achieving a positive Operating Cash Flow (CFO), and more efficient Operational Expenditure (Opex) management. To realize these goals, Waskita has formulated comprehensive strategies focused on financial performance improvement, asset optimization, strengthening corporate governance, and enhancing human capital capabilities. The key strategies include:

1. Cash Lab & Liquidity Management, namely strengthening cash flow and ensuring liquidity availability to support company operations and strategic investments.
2. Asset Optimization, by utilizing and managing assets more effectively to increase added value and reduce financial burdens.
3. Revenue Growth as an Economic Development Agent in Construction Services, aiming to strengthening Waskita’s role as a key player in the construction industry while expanding project scope to contribute significantly to economic growth.
4. Strengthening the Governance, Risk & Compliance (GRC) Framework, in order to ensuring all company operations adhere to good corporate governance principles, transparency, and accountability.
5. Improvement of the Risk Maturity Index, which focused on enhancing risk management by proactively and systematically identifying and mitigating potential risks.
6. Data-Driven Decision Making with Dashboard Management, by utilizing digital technology and data analytics to support faster, more accurate, and factbased decision-making.
7. HC Capabilities Aligned with Corporate Goals, by developing workforce competencies to align with business needs and the increasingly complex challenges in the industry.

As a manifestation of this commitment, Waskita constantly adheres to the Regulation of the Minister of SOEs No. PER-2/MBU/03/2023, which is a reference in the management of the Company and the implementation of corporate activities within SOEs. By complying with this regulation, the Company ensures that the application of GCG principles is in line with national and international standards, in order to create a more professional, transparent, and accountable governance.

To ensure more optimal implementation of good corporate governance, Waskita has established strategic partnerships with a number of independent institutions that play a role in providing supervisory support and evaluating the Company’s policies and strategic measures. This supervisory mechanism is designed transparently, enabling comprehensive monitoring so that every business decision and action taken always refers to the principle of high accountability.

In addition, Waskita also applies a strict corporate code of ethics to prevent conflicts of interest, including a prohibition on employees and management from collaborating with business partners that have the potential to cause conflicts of interest. With the implementation of holistic and sustainable corporate governance, Waskita is optimistic that this strategy will not only provide added value for shareholders, but also increase stakeholder confidence. This commitment is a major factor in ensuring business sustainability and strengthening Waskita’s position as a professional, trustworthy, and reliable construction company in the future.

The results of these audit and consultancy activities have been comprehensively presented and discussed at the management level, as a basis for formulating strategic measures to improve and enhance the internal control system. Each recommendation resulting from the evaluation is followed up with a concrete and systematic action plan, which is then monitored periodically to ensure its implementation is going according to expectations.

In its implementation, Waskita develops a risk management system that is guided by the Regulation of Minister of State-Owned Enterprises (SOEs) regarding Governance and Significant Corporate Activities, and applies best practices in risk management based on international standards, including ISO 31000:2018 and COSO - Enterprise Risk Management Framework. By referring to these guidelines and methodologies, the Company ensures that the implemented risk management system runs effectively and contributes to supporting the Company’s resilience and competitiveness amid increasingly complex industry challenges.

To ensure its effectiveness, the Company periodically monitors and evaluates the implementation of WBS. This evaluation includes updating the whistleblowing system to make it more responsive and able to follow up on reports quickly, accurately, and professionally. Through these steps, the Company aims to reduce reputational risk, increase transparency, and build public and stakeholder confidence in the Company’s integrity in the long term.

In the aspect of Information Technology (IT) management, Waskita, through the Transformation, Digital & Systems Division, has carried out various strategic initiatives that refer to Waskita’s IT Development Roadmap. Throughout 2024, IT management is directed at supporting digital transformation and ensuring the optimization of technology utilization in business processes. Some of the main focuses in Information Technology management and development in 2024 are:

1. Development of Business Process Solutions and Controls to improve operational efficiency.
2. Development of a New Data Warehouse to accelerate data processing and analysis.
3. Increasing IT Maturity Level to strengthen information technology governance.
4. Strategic IT Procurement to support digital innovation.
5. Dashboard Management to improve real-time monitoring of business performance.
6. Information Security Management System (ISMS) audit based on ISO 27001:2022 to ensure data security.
7. Revision of IT Guidelines and Policies (IT-GP) to align with regulatory developments and industry needs.
8. Penetration Test to test the system’s resilience to potential cyber-attacks.
9. Trial of the Disaster Recovery Center (DRC) to ensure system readiness in the event of disruption or disaster.
10. Application Development to support the digitization of business processes.

Board of Directors Composition for the Period of May 22 – December 31, 2024

In the period of May 22 – December 31, 2024, the composition of Board of Directors experienced changes and there were changes in nomenclature and assignment transfers as explained in the Company Profile chapter, Board of Directors Profile section. Thus, the number of Board of Directors members for this period is 6 (six) people consisting of 1 (one) President Director and 5 (five) Directors. All Board of Directors members have met the criteria and provisions required in the fit and proper test in accordance with the Limited Liability Company Law, the Company’s Articles of Association, regulations related to good corporate governance, and other related regulations and provisions.

Board of Directors Composition for the Period of May 22 – December 31, 2024