FINANCIAL STATEMENTS ANALYSIS

PT JASA MARGA TBK

Company Profile

JASA MARGA COMPANY

Indonesia Highway Corp.

To support the economic growth in Indonesia, Government Regulation number 4 year

1978, regarding the establishment of PT Jasa Marga (persero) Tbk. Indonesia, was established on
March 1, 1978 to provide a reliable road network in the country.

Jasa Marga's Jakarta-Bogor-Ciawi Toll Road, which was constructed in 1978, was a
milestone in the history of the toll road industry in Indonesia. Not only did it primarily function
as an operator, but it also had national toll roads authority. Until 1987, Jasa Marga had been the
only toll road operator in the country which was funded by the Government through foreign
loans and bond issuance.

Since late 80s, the Indonesian Government had begun to include private sectors in the toll
road development through the Build, Operate and Transfer (BOT) mechanism. During the 90s,
however, PT Jasa Marga (persero) Tbk. began to facilitate private investors which mostly failed
to realize their project. JORR and Cipularang were some of the toll roads taken over.

The Government then established Law number 38 year 2004 on Road which replaced
Law number 13 year 1980, along with Government Regulation number 15, which further
specified regulations regarding toll roads. This have altered the mechanism of the toll road
business. The Toll Road Regulatory Agency establishment and biannual toll tarif rate
adjustments by the Minister of Public Works are some of the implications. Therefore, the whole
authorization has been handed back to the Government. From that moment on, Jasa Marga, as a
toll road operator and developer, requires a concession license from the Government.

Vision:

“To be the Largest, the Most Reliable and Sustainable National Toll Toad Company”
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 Mission:

1. To Professionally Lead Indonesian Toll Road Business in the Entire Value Chain

2. To Optimize Regional Developments for Community Advancement

3. To Increase Shareholder Value

4. To Escalate Customer Satisfaction through Service Excellence

5. To Encourage the Development and the Augmentation of Employee Performance in a

Harmonious Environment

Financial Statement Analysis

The consolidated financial statements have been prepared in accordance with Indonesian
Financial Accounting Standards (“SAK”), which comprise the Statements of Financial
Accounting Standards (“PSAK”) and Interpretations of Financial Accounting Standards
(“ISAK”) issued by the Financial Accounting Standards Board of the Indonesian Institute of
Accountants (“DSAK”) and the Regulations and the Guidelines on Financial Statement
Presentation and Disclosures issued by the Indonesian Financial Services Authority

The consolidated statement of cash flows, which has been prepared using the direct
method, presents cash receipts and disbursements of cash and cash equivalents classified into
operating, investing and financing activities. In 2015, along with the increasing value of the non-
toll transactions on the Group and the addition of non-toll subsidiaries to comply with applicable
financial accounting standards, the Company changed the format of consolidated statement of
profit or loss and other comprehensive income.

Time deposits with maturities of three months or less at the time of placement, which are
not restricted, are classified as “Cash Equivalents”. Cash in banks and time deposits which are
restricted as to use or are used as collateral for obligations are not classified as part of “Cash and
Cash Equivalents”. There are presented in ”Restricted funds” and as part of “Non-current
Assets”

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The Company restated its consolidated financial statements as of December 31, 2014 and for the
year then ended due to,

1. The application of PSAK 24 (revised 2013), employee Benefits

This PSAK provides, among others, (i) the elimination of the “corridor approach”
permitted under the previous version and (ii) significant changes in the recognition,
presentation and disclosure of postemployment benefits which, among others, are as
follows:

 Actuarial gains and losses are now required to be recognized in other

comprehensive income (OCI) and excluded permanently from profit or loss.

 Expected return on plan assets will no longer be recognized in profit or loss.

Expected returns are replaced by recognizing interest income (or expense) on the
net defined benefit asset (or liability) in profit or loss, which is calculated using
the discount rate used to measure the pension obligation.

 Unvested past service costs can no longer be deferred and recognized over the
future vesting period. Instead, all past service costs will be recognized at the
earlier of when the amendment/curtailment occurs and when the Group
recognizes the related restructuring or termination costs.

Such changes are made in order that the net pension assets or liabilities are recognized in
the consolidated statements of financial position to reflect the full value of the plan deficit
or surplus. Corridor approach is where actuarial gains and losses, which fall within a
corridor, need not to be recognized.

2. Application of PSAK 44, “Accounting For Real Estate Development Activities” for JMP.
3. Restatement of recognition for deferred tax of JLP and MSJ due to the implementation of
PSAK 46 (Revised 2013), “Pajak Penghasilan”.
4. Restatement of fixed asset - net and concession asset - net, depreciation and amortization
expense of MSJ due to change in classification and additional information of contractor
payable.

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These restatement adjustments materially impacted several accounts; therefore, the Company
restated its consolidated financial statements as of December 31, 2014 and January 1, 2014/
December 31, 2013, and for the year ended December 31, 2014.

Financial Position Analysis

By using common-size financial position and perform vertical analysis, we use total asset as
the benchmark where we convert each item in the financial position into percentage of total
assets. The results for Jasa Marga Financial Position Analysis are:

1. The cash and cash equivalent in 2018 is at the lowest since 2014
2. There is a high increase on other receivables since 2016, this is caused by the bridging
funds. In 2016, other receivables – related party mainly consists of bridging fund and
added value of bridging fund that has been paid by the subsidiaries to the land owners
and will be reimbursed to the Government in accordance with PPJT. (2015=0.45% &
2016=15.47%)
3. The percentage of the total current asset in 2018 is decreased by a large number
compared with the two previous years, this could be a worry since this will decrease the
company’s liquidity. In addition to that the current liability in 2018 is the highest since
2014. This tells investors and analysts how a company can maximize the current assets
on its balance sheet to satisfy its current debt and other payables. Further explanation will
be explained in the ratio analysis.
4. The highest asset item throughout the years for Jasa Marga is Intangible Asset as in Toll
Road Concession Rights. Toll road concession rights are granted by the Government of
Indonesia in the form of toll road concessions to the Group. Starting January 1, 2015, the
Group decided to change its amortization method of toll road concession rights – road
and bridge from the straight-line method over the concession period to the unit of usage
method based on traffic volume. The change in the amortization method is applied on a
prospective basis.

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Income Statement Analysis

Similar with financial position analysis, the income statement is also analyzed by using
common-size vertical analysis with total revenue as the benchmark for the percentages of each
items. The results are:

1. There were no gains on divestment in year 2014, 2015, and 2016. This is because they
didn’t divest anything or the company didn’t gain (loss) from divesting activity.
2. There is a high increase on the construction revenue from 2016 to 2017. In 2017, the
Company’s Revenue Expense increased by 152.30% from Rp 11.81 trillion in 2016 to Rp
29.78 trillion in 2017. This was due to a significant increase in construction expenses by
234.26% from the previous year due to the increase of construction activities in
subsidiary level.
3.

Cashflow Analysis

One way to analyze cashflow is by using EBITDA. EBITDA is useful not only for its
simplicity, but because it allows us to compare companies based on operations, without
considering how companies choose to finance their assets. In analyzing companies in industries
that require heavy capital investments, such as telecommunications, EBITDA may give a better
measure of performance than, say, net income because the large depreciation expenses do not
affect EBITDA. However, this measure suffers from the accrual-accounting bias in EBITDA,
which may result in the omission of significant cash flows. Additionally, EBITDA is before
interest and taxes, which may be substantial cash outflows for some companies. For Jasa Marga,
the EBITDA are as shown below (in Rupiah)

2018 2017 2016 2015 2014

EBIT 4,530,098,911 3,645,232,886 3,489,772,531 2,781,832,939 2,634,305,761
EBITDA 4,614,266,069 3,731,864,432 3,571,334,670 2,842,909,596 2,683,466,271
EBDA 2,120,658,193 2,180,287,608 1,884,616,595 1,380,277,203 1,286,174,682

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 By ignoring tax and interest expenses allows analysts to focus specifically on operational
performance. The EBITDA kept on increasing which indicate that profitability from its core
operations before the impact of capital structure, leverage, and non-cash items like depreciation
are taken into account is getting better.

Equity Analysis

1. The earning before interest and tax keeps increasing from 2014 to 2018 and in 2018
itself it increases by 24.27%. This shows that the company’s performance keep
getting better over the year.

Ratio Analysis

1. Current Ratio

The current ratio measures whether a company has the ability to use its current
assets to pay its short-term creditors (current liabilities). Financial Analysts deem a 2
to 1 ratio as an acceptable current ratio. Jasa Marga Company's current ratios for
2014, 2015, 2016, 2017 and 2018 are calculated below.

2014 2015 2016 2017 2018

Current Assets = 0.84

= 0.48 = 0.69 = 0.76 = 0.38
Current Liabilities

In 2014, the company's current assets exceeded current liabilities by 0.84 times. In
2015, the company's current assets exceeded current liabilities by 0.48 times. In 2016, the
company's current assets exceeded current liabilities by 0.69 times. In 2017, the
company's current assets exceeded current liabilities by 0.76 times. In 2018, the

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 company's current assets exceeded current liabilities by 0.38 times. In those five years,
the company has the ability to use it as a current asset (resource) to pay its short-term
debt (current liabilities).

Current Ratio Trend:

The current ratio has significantly increased from 2015 to 2016 with amount 0.21 times.
This means the company is becoming stronger and has more current assets in relation to
its current liabilities. But there was decreased from 2017 to 2018 with amount 0.28.
That’s means the current asset is not stable.

2. Quick Ratio

The quick ratio measures whether a company has the ability to use its current assets
(without selling inventory) to pay its short-term creditors. Investors like to see a high
quick ratio, since it shows the venture does not have to rely heavily on selling its
inventory in order to pay its short-term debt. A quick ratio that is greater than 1 means
that the company has enough quick assets to pay for its current liabilities. Quick assets
(cash and cash equivalents, marketable securities, and short-term receivables) are current
assets that can be converted very easily into cash. Hence, companies with good quick
ratios are favored by creditors. The Jasa Marga Tbk Company’s quick ratios for 2014
until 2018 are calculated below.

2014 2015 2016 2017 2018

Current Assets - Inventories 0.47895 0.47895 0.6913 0.7541 0.3787

Current Liabilities

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 The Jasa Marga Tbk Company’s quick ratio for 2014 to 2018, shows that Jasa
Marga Company has not enough current assets to cover its current liabilities. For every
Rp 1 of current liability, the company has Rp 0.47895 of quick assets to pay for it in 2014
and 2015, in contrast to 2016 and 2017, there has been a significant increase for every Rp
1 of current liability, the company has Rp 0.6913 and Rp 0.7541 of quick assets to pay
for it, but there was a powerful decrease to Rp 0.3787 for each quick assets.

Quick Ratio Trend :

The quick ratio has increased from 2014 until 2017. This means the company is
becoming stronger and has more current assets (excluding inventory) in relation to its
current liabilities. Therefore, its ability to pay short-term creditors has improved. But in
2018 there is dramatically decreasing from 0.7541 times to 0.3787 times, maybe it caused
by the financial statement in 2018 are not publish a whole information about the current
asset or inventory.

3. Inventory Turnover

The inventory Turnover ratio provides an indication on whether a company has an

excessive or inadequate amount of product in inventory. The ratio will determine the
number of times per year a company uses or consumes an average stock of inventory.
The Jasa Marga Tbk Company’s inventory turnover ratios for 2014 to 2018 are calculated
below.

2014 2015 2016 2017 2018

Cost of Goods Sold

= 249.723 = 283.839 = 135.728 = 221.865 = 758.416
Average Inventory

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 As you can see, the company's inventory turnover ratios are 135.728 and 758.426 for
2015 and 2018 respectively. This means the company "used up" its inventory 135.728
times during 2015 and "used up" its inventory 758.416 times during 2018. And also, you
can see, the company's inventory turnover ratios are 135.728 and 758.416 for 2014 and
2018 irrespectively. This means the company "used up" its inventory 135.728 times
during 2015 and "used up" its inventory 758.416 times during 2018. In other words, the
company has more money tied up in financing its inventory in 2018 than it had in 2015.
Furthermore, the company did not sell off its inventory as fast in 2015 as it did in 2018.
The Jasa Marga Tbk Company must re-evaluate its inventory management policy.

4. Debt Ratio

The debt ratio measures the extent to which borrowed money has been used to
finance a company's operation. Investors like to see a low debt ratio, since it shows a
company is relying less on creditors (such as banks, suppliers, etc) to finance its
operation. The Jasa Marga Tbk Company’s debt ratios for 2014 until 2018 are calculated
below.

2014 2015 2016 2017 2018

Total Debt 0.67 0.72 0.56 0.72 0.49

Total Assets

The debt ratio for 2015 and 2017 is 0.72 or in other words, 72% of the company's
assets are financed by creditors. From a dollar point of view, for every one dollar the
company has in assets, it has 72 cents in debt. In 2018, the debt ratio is 0.49. This means,
49% of the company's assets are financed by creditors. Or, for every one dollar the
company has in assets, it has 49 cents in debt.

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 Debt Ratio Trend:
As indicated above, the company's debt ratio is declining. Therefore, the company is
paying off its creditors and thus, owes less money to them. This is an indication that the
company is becoming stronger, and closer to "self sufficiency".

5. Debt-to-Equity

The debt-to-equity ratio compares the investments made by creditors to the

investments made by the company's owners or shareholders. Investors like to see a low
debt-to-equity ratio, since it indicates owner's investments into the company are higher
than creditor's investments into the company. The Jasa Marga Tbk Company’s debt-to-
equity ratios for 2014 until 2018 are calculated below.

2014 2015 2016 2017 2018

Total Debt =2 =2 =2 =3 =3
Total Equity

The debt-to-equity ratio for 2017 and 2018 is 3.0 . Furthermore, for every one dollar
the owners have invested into the company, creditors invested Rp 3.0. In 2014, 2015 and
2016, the debt-to-equity ratio is 2.0. That is, for every Rp 2.00 invested by the company's
owners, investors such as banks invested (loaned) Rp 2.00

Debt-to-Equity Ratio Trend:

As you can see, the company's debt-to-equity ratio is declining. In other words, the
company shareholders own more of the company in 2017 and 2018 then they owned in
2014. Creditors, however, still "own" (contributed more to) more of the company in 2014

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 until 2016 then the owners. At any rate, the company is paying its debt and therefore,
owe less money to creditors in 2014 until 2016. This is an indication that the company is
becoming somewhat stronger, but as you'll see, the company still owes too much money
to its creditors and therefore, these debt-to-equity ratios are not deemed acceptable.

6. Gross Profit Margin

The gross profit margin ratio provides an indication on how well a company is setting
its prices and controlling its production costs. Investors like to see a high gross profit
margin since it indicates the enterprise is generating more money from each sale. The
Jasa Marga Tbk Company’s gross profit margin ratios for 2014 to 2018 are calculated
below.

2014 2015 2016 2017 2018

Sales - Cost of goods sold

= 0.4021 = 0.4191 = 0.2914 = 0.1512 = 0.1600
Sales

As you can see, the 2017 gross margin is 0.1512 or 15%. This means, for every one
Rupiah (Rp 1.00) generated in sales, 15 cents remain in the company to pay for its
operating expenses income taxes, dividends, etc.... If we were to assume, all products
sold by the company sell for Rp 1.00, then in 2017 the company made 15 cents from each
sale.

In 2015, the company gross profit margin is 0.4191 or 42%. This means, for every
one rupiah (Rp 1.00) generated in sales, 42 cents remain in the company to pay for its
operating expenses income taxes, dividends, etc... If we assume that all products sold by

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 the company has a selling price of Rp 1.00, then in 2015 the company made 42 cents
from each sale.

Gross Profit Trend:

The gross profit margin has increased by 27 cents over 2017. This means the
company's management team is improving its price setting policies, and/or reducing
the company's production costs, or a combination of both. At any rate, a higher gross
profit margin indicates the company is making more from each sale.

7. Net Profit Margin

The Net Profit Margin ratio assists a company in determining whether their selling
prices are too low or if expenses are too high or both. Investors like to see high net profit
margins since it provides an indication of how well management's is setting its prices and
controlling both production costs and operating expenses. The Jasa Marga Tbk
Company’s net profit margin ratios for 200X and 200Y are calculated below.

2014 2015 2016 2017 2018

Net income after taxes

= 0.1324 = 0.1339 = 0.1082 = 0.0596 = 0.0550
Sales

As you can see, the 2018 net profit margin is 0.0550 or 5%. This means, for every
one rupiah (Rp 1.00) generated in sales, 5 cents remain in the company or is available to
be distributed to the owners of the company or both. If we were to assume, all products
sold by the company had a selling price of Rp 1.00, then 5 cents from each sale
contributed to the company's net income.

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 In 2015, the company net profit margin is 0.1339 or 13%. This means, for every one
rupiah (Rp 1.00) generated in sales, 13 cents remain in the company or is available to be
distributed to the owners of the company or both. If we assume that all products sold by
the company had a selling price of Rp 1.00, then we can conclude that 13 cents from
every sale "contributed" to their net income.

Net Profit Trend:

The net profit margin has increased by 8 cent from 2018. This means the company's
management team is improving its price setting policies and/or reducing their
production costs and operating expenses. At any rate, a higher net profit margin
indicates the company is becoming stronger.

8. Return on Total Assets

The Return on Total Assets ratio measures how well a company is using its assets to
generate after tax profits (net income after taxes). Investors like to see a high return on
total assets since it indicates a company is using its assets efficiently to generate after tax
profits. The Jasa Marga Tbk Company’sreturn on total assets ratios for 2014 to 2018 are
calculated below.

2014 2015 2016 2017 2018

Net income after taxes

Total assets = 0.03814 = 0.0359 = 0.0218 = 0.0264 = 0.0380

As you can see, the company's 2015 return on total assets is 0.02 or 2%. This means,
for every one rupiah (Rp 1.00) spent on purchasing assets, the company generated 2 cents

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 in after tax profits. The after tax profits (net income after taxes) may remain in the
company or may be distributed to the owners of the firm or both.

In 2014, the company net profit margin is 0.03814 or 4%. This means, for every one
rupiah (Rp 1.00) spent on purchasing assets, the company generated 4 cents in after tax
profits. The after tax profits may remain in the company or may be distributed to the
owners of the firm or both.

Return on Total Assets Trend:

The return on total assets has increased by 2 cent from 2015. This means the company's
management team is using the assets more efficiently to generate after tax profits.
Moreover, a higher return on total assets indicates the company is becoming stronger.

9. Return on Equity

The return on equity ratio measures how well a company is using its owner's
investments to generate after tax profits (net income after taxes). Investors like to see a
high return on equity since it indicates the company is uses the owner's investments
efficiently to generate after tax profits. The Jasa Marga Tbk Company’s return on equity
ratios for 200X and 200Y are calculated below.

2014 2015 2016 2017 2018

Net income after taxes

Total Equity = 0.1063 = 0.1066 = 0.1103 = 0.1140 = 0.1008

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 As you can see, the company's 2017 return on equity is 0.114 or 11.4%. This
means, for every one rupiah (Rp 1.00) invested into the business by the owners, it
generated 11.4 cents in after tax profits for 2017. The after tax profits (net income after
taxes) may remain in the company or may be distributed to the owners of the firm or a
combination of both.

In 2018, the company net profit margin is 0.1008 or 10.08%. This means, for
every one rupiah (Rp 1.00) invested by the owners, the company generated 10.08 cents in
after tax profits.

Return on Equity Trend:

The return on equity has decreased by 1.32 percent from 2017. This means the
company's owners earned 1.2% less from their investment in 2017. Moreover, a lower
return on investment in 2017, in most cases, will "disturb" the owners.

Conclusion

Trend Analysis Summary:

The ratio trend analysis compares a company's previous year’s performance to its current
year performance and determines whether or not a company is improving or deteriorating. As
indicated above, the Widget Manufacturing Company has improved its overall performance and
is becoming a stronger company (with the exception of collecting receivables and the return on
equity). Moreover compared to 2018, the company in 2017 and the previous;

- has more current assets to cover its short-term obligations;

- can rely less on its inventory to pay its short term debts;
- has fewer debts; both short-term and long-term;
- is paying less in interest charges;
- is increasing its equity base;

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 - making more from each product sold (lower production costs & effective price
setting);
- making more after production costs, operating expenses & taxes are considered;
- is using its assets more efficiently to generate profits.

Therefore, the trend analysis can show how a company is improving internally over the years.
What it does not tell a company is how well it's performing compared to other businesses within
the same industry. To do this, a company would compare its ratios to ratios of similar companies
within the industry.

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