ALI AR 02.indd - Ayala Land Inc.

Transcription

Ayala Land, Inc.
A MEMBER OF THE AYALA GROUP OF COMPANIES
Annual Report
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trust
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ayala land, inc.
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This annual report is dedicated to our shareholders, partners, customers, employees,
and the various communities we serve. Their trust is the reason why Ayala remains one
of the most stable and respected business groups in Asia today. Their confidence in our
stewardship drives us to grow and evolve, not just to face the challenges of the present
but to seize the opportunities of the future.
This defines our continuing commitment to build superior value into that trust.
THE AYALA GROUP OF COMPANIES
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Do your best or don’t do it at all—these are the words I live by every day.
In fact, it’s probably the credo that has made Kamiseta grow from a single rack into a chain of stores.
I’m just as enthusiastic today about coming out with a new clothing line as I was when we started
out with guts and ideas and little else. To this day, I never leave home without a little notebook in
my bag. It’s great for jotting things down: thoughts, observations, and fresh inspiration. Sometimes
a great idea gets me so excited that I have trouble sleeping!
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Now the good thing about those sleepless nights is that I’ve discovered a passion for cooking.
Instead of tossing and turning in bed late, I wind up in the kitchen concocting dishes for the
next day! I can’t stand being idle. I need to be involved with something creative all the time,
something that keeps my hands and my mind busy. Chalk it up to being passionate about
everything I do—an attitude that I try to instill in my staff and a virtue that I hope to pass along to
my children.
After all, work isn’t just about earning a living; it’s about being able to enthusiastically look forward
to each new day.
Chris Aldeguer-Roque
Ms. Roque is Vice-President and Creative Director of Kamiseta, a popular
clothing store, with branches in all Ayala Malls.
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ayala land, inc.
Fashion designer,
Entrepreneur,
Amateur chef
In anything you set out to do, if you persevere, there’s nothing to fear. I speak from experience
when I say that poverty is not a hindrance to success in life. I survived being orphaned, the
Japanese Occupation, the war, and still managed to get a bachelor’s degree and establish my
own business.
It wasn’t easy, though. I had to work my way through college—spending my days as an agent
for a chemical company and my nights in class. When my wife and I started our own chemical
company, I personally made all the deliveries. Sometimes I would be working until the wee hours
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of the morning—even on Sundays!
My perseverance paid off. I was able to send my two children to good schools, saw my business
grow into a professionally-run company, and maintain a portfolio of investments that includes
companies like Ayala Land. Today, although I still serve as adviser to our company, I can sit back
and enjoy the fruits of my hard work. I go to the gym regularly and stay on a healthy diet of fish
and vegetables.
I owe it to my family to stay fit. After all, I want to live long enough to see all my grandchildren
grow up.
Liberato De Jesus
Mr. De Jesus is President of L&S Chemical Supply Inc. and a
long-time stockholder of Ayala Land.
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ayala land, inc.
Businessman,
Stockholder,
Survivor
In 1981, when I was just a student, I overheard some ladies talking about a job opening at
Ayala Corporation. I needed to continue supporting myself through my secretarial course, so I
immediately jumped at the chance to apply. Fortunately, I was hired as a clerk-typist. I’d work until
5:30 p.m.; then take a train to get to class by 6:00.
I met my husband here and built a home with the company’s help. Now I have three children and
am still a loyal employee of Ayala.
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My work as an executive secretary is so challenging and rewarding. Even if my role often keeps me
behind the scenes, I enjoy the thrill of seeing a project through successfully. Whenever Ayala Land
has a very important bid at stake, I go down to the chapel to say a prayer. Knowing that I can, in a
small, supportive way, be party to the company’s progress—is reward enough.
I’d like to be remembered as someone with the gift of service. Someone who always lends a hand
without counting the cost.
Lolit Savares-Prepeña
Ms. Prepeña is Confidential Secretary to Executive Vice President Vincent Y.Tan
and was chosen by the Philippine Association of Secretaries as Secretary of the Year in 1999.
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ayala land, inc.
Dedicated secretary,
Loyal employee,
Devoted mother
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Signicant
Events - 2002
Opening of
Makro’s ninth store
in Batangas
Issuance of
P1.06B Fixed Rate
Corporate
Notes (FXCNs)
Launch of
Verdana Homes
Issuance of
P3.0B Bonds
Launch of One
Legazpi Park
Payment of
P6.0B Long Term
Commercial
Papers (LTCPs)
Formation of
Community
Innovations, Inc.
Formation of Ayala
Land Sales, Inc.
January
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February
March
Opening of
Greenbelt 2 &
Greenbelt 3
Start of
Market! Market!
development
Launch of
St. Alexandra
Estates and St.
Gabriel Heights
April
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May
June
Financial
Highlights
Year Ended December 31
2002
2001
2000
1999
1998
12,227,029
11,692,626
10,305,615
8,940,293
10,442,903
Net Income
2,519,529
2,287,283
1,844,205
2,601,345
2,568,225
Cash Dividends
2,245,261
641,593
588,022
534,456
484,758
–
–
1,781,519
–
1,450,208
61,857,676
61,707,640
57,954,467
56,030,870
55,484,480
5,713,495
6,737,331
4,108,929
5,316,131
6,243,557
Total Borrowings*
10,874,498
10,920,028
8,312,638
7,870,863
8,270,403
Stockholders’ Equity
35,475,820
35,190,263
33,559,705
32,297,942
30,243,554
Earnings**
0.24
0.21
0.17
0.24
0.24
Cash Dividends
0.21
0.06
0.06
0.06
0.06
Book Value**
3.32
3.29
3.14
3.02
2.88
For the Year (in thousand Pesos)
Revenues
Stock Dividends
At Year-End (in thousand Pesos)
Total Assets
Cash and Cash Equivalents
Per Share (in Pesos)
Current Ratio
2.10 : 1
1.50 : 1
2.50 : 1
2.74 : 1
2.43 : 1
Bank Debt*-to-Equity Ratio
0.31 : 1
0.31 : 1
0.25 : 1
0.24 : 1
0.27 : 1
Net Debt***-to-Equity Ratio
0.15 : 1
0.12 : 1
0.13 : 1
0.08 : 1
0.07 : 1
* Interest-bearing payables, including bonds
** Adjusted to include retroactive effects of the 20% stock dividend in 2000
*** Bank debt, net of cash and cash equivalents
Adoption of the
Code of Corporate
Governance
Manual
Soft launch of
Santa Catalina
Village in Cavite
Ayala Center
receives “Mall of
the Year” award
from the Philippine
Retailers
Association and
Department of
Trade and Industry
Launch of Ayala
Hillside Estates
Launch of Hacienda
Santa Monica and
Villa Santa Monica
Formation of
Leisure and
Lifestyle
Communities Group
July
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August
10-11
September
Launch of
Plantazionne
Verdana Homes
Launch of Ayala
Greenfield Estates
Golf and Leisure Club
Launch of “Last
Quarter Storm”
promotions program
Opening of the
Laguna Properties
Holdings, Inc.
representative
office in Rome
Soft launch of
The Columns
ALI-GDC MOA
signing with
Metro Pacific to
acquire a
significant position
in Fort Bonifacio
Opening of
MRT-LRT link to
Metropoint mall
Opening of
The Residences
at Greenbelt
Ayala Land wins
award from
Asiamoney
magazine as the
Best in Financial
Management
for 2002 in
the Philippines
BCDA award of the
joint development
rights for the
8.5-hectare Lot B in
Fort Bonifacio
October
November
December
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ayala land, inc.
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Financial Ratios
Declaration of
P0.15 special
cash dividend
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At a Glance
Strategic Business Unit
Key Products
Commercial Centers Group
Retail space and land for lease; movie theaters;
food court and entertainment facilities
Land and Community
Development Group
High-end residential lots;
commercial lots
Corporate Business Group
Office space for sale/lease;
industrial estate lots for sale;
ready built factory units for lease
Residential Buildings Group
High-end residential condominium units for sale/lease;
single detached housing; townhouse developments
Mass Housing Group
Mass housing units and lots;
farm and vacation lots
Core-Mid Residential Group
Middle-income residential condominium units;
single detached housing; lots
Visayas-Mindanao Group
Within Visayas-Mindanao:
Retail space and land for lease; movie theaters; food court and
entertainment facilities; residential and commercial lots; office
space for sale; residential condominium and single detached
units for sale; city sports club
Leisure and Lifestyle
Communities Group
Integrated leisure communities; city sports and golf clubs;
beach resorts; vacation homes
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Highlights of 2002
Focus for 2003
•
•
•
•
Grew Ayala Center sales by 2.4%
Maintained high occupancy rate at Ayala Center (96%, excluding Greenbelt)
Opened first Urban Retail Entertainment Center in the country in Greenbelt
Started construction of Market! Market!
•
•
•
•
•
•
•
•
Increased residential lot sales by 6% to P1.5 billion
Launched Ayala Hillside Estates
Launched Ayala Greenfield Golf and Leisure Club
Sold out Paseo de Magallanes commercial lots
• Concentrate on new phases and expansion of ongoing projects:
Ayala Westgrove Heights, Ayala Greenfield Estates, Ayala Hillside
Estates and Paseo de Magallanes
• Achieved high average occupancy rate of 92% for office buildings within MCBD
• Ensured competitiveness of office buildings through continuing capital
expenditures and customer service improvements
• Sold one lot and leased out four out of five Standard Factory Buildings within
Laguna Technopark
Continue major build-up of retail stock
Begin partial operations of Market! Market!
Start construction of North Triangle Commercial Complex
Launch first provincial mall project
• Improve occupancy levels and rental revenues for MCBD
office buildings
• Develop additional 12 hectares in Laguna Technopark
to cater to residual demand
• Fully sell out Ferndale Homes and One Legazpi Park
• Launch next condominium project in Makati
• Finalize plans for the development of an 8.5-hectare land
parcel in Fort Bonifacio awarded by the Bases Conversion
Development Authority
• Increased booked sales by 77% to P1.45 billion
• Reinvigorated and strengthened selling operations
• Enhanced design and purchasing capability for new, more
affordable products
• Focus on the affordable (P750,000 -1.8 M selling price) house-and-lot
product line
• Launch 2nd affordable housing project in Dasmariñas, Cavite
• Start development of AFP offbase housing project in Tanza, Cavite
• Develop medium-rise residential building in Parañaque
• Began operations of Community Innovations, Inc.; built up own marketing and
sales organization
• Launched 1st project, Verdana Homes 1 & 2, and achieved 94% take-up
by year end
• Soft launched The Columns high-rise residential project in Makati
• Aggressively negotiate acquisition or joint development
of properties that can be developed immediately
• Launch commercial lots across Verdana Homes
• Grew Ayala Center Cebu sales by 6%
• Increased Ayala Northpoint take-up rate to 54% (out of 416 lots)
• Entered core-mid residential market through the launch of Plantazionne
Verdana Homes in Talisay City, Negros Occidental
• Consolidate leadership of Ayala Center Cebu in ABC+ market through
enhanced merchandise mix and customer service
• Sustain marketing initiatives for Ayala Northpoint and
Plantazionne Verdana Homes
• Launch Country Estates in Kang-Irag, Cebu
• SBU created in 3rd Quarter 2002
• Identified and began planning initial projects
• Launch first project
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ayala land, inc.
• Launched One Legazpi Park in March and achieved take-up of 270 units by year-end
• Increased take-up of Ferndale Homes and Montgomery Place to 76%
and 75%, respectively
• Improved take-up of One Roxas Triangle to 63%; leased 15 units
• Completion of the Residences at Greenbelt in December
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Fellow Stockholders,
The level of public trust in products and
services from Ayala Land is still unequaled
in the local real estate industry.
Despite the difficult economic and political
environment in 2002, your Company’s core
strengths enabled Ayala Land to realize
gains and create value from new business
opportunities and strategic investments.
The level of public trust in products and
services from Ayala Land is still unequaled
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in the local real estate industry. In today’s
buyers’ market, customers have a wide
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ayala land, inc.
variety of choices. We are heartened by
the way our clients have invariably chosen
your Company’s products over that of the
competition. It speaks well of the level of
trust and confidence that Ayala Land has
earned over the years.
Ayala Land has always sought to be
the market leader by offering distinctive
products to a discerning clientele. This
ability to innovate has become a source
of competitive advantage in today’s weak
markets. In 2002, we managed to position
ourselves in a number of new and growing
markets through the application of timetested management skills, sharp focus on
product innovation and improvement, and
the elevation of marketing and technical
skills to even higher levels.
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Also part of the unique mix of a
recurring revenue base, low gearing and
automatically become members of the club
revitalized Greenbelt are 28 private
a high level of credibility in the investor
without the need to purchase club shares.
townhouses called “The Residences
community allowed us to ride out uncertain
Ayala Greenfield Golf and Leisure Club
at Greenbelt,” which are available
periods, fund projects for ventures into
is anchored on an all-weather 18-hole
for lease. Located on the fourth level
new market areas and make bold
championship golf course now undergoing
of the new Greenbelt 2 carpark,
investment moves.
construction, which was designed by noted
the townhouses have easy access
environmental golf designer Robert
to work places and leisure spots.
By capitalizing on these core strengths,
Trent Jones Jr. The club will have its
A 600-square-meter central
your Company earned a consolidated net
own spa and wellness center, a swimming
courtyard features rock and sand
income of P2.52 billion in 2002, 10% higher
pool, badminton and bowling facilities –
gardens and ponds.
than the previous year’s. Consolidated
all in addition to the recently completed
revenues reached P12.23 billion, up 5%
village clubhouse and its considerable
Journalists have praised the new
year on year.
surrounding amenities.
developments in the Greenbelt area
as “a place for sophisticated dining
YEAR 2002 HIGHLIGHTS
At the Ayala Center, Greenbelt 2 and 3 are
and entertainment;” “a paradise
now fully operational, and Greenbelt is fast
for movie buffs;” “a successful
becoming the country’s first urban retail
combination that reinvents specific
In 2002, your Company explored
entertainment center. Compared to a regular building types;” and “a responsible
opportunities in untapped or underserved
mall where shopping is the main activity,
and responsive shift towards
market segments, creating value through
70% of the new Greenbelt is focused on
creating urban places that are
new products and product innovations
food and entertainment. The redeveloped
special and successful; a seamless
even as it continued to strengthen its lead
Greenbelt has perhaps the largest number
blend between the natural
in traditional markets.
of fine dining choices in any single location
and man-made.”
in Metro Manila and has established itself
Offering innovative and
as the destination of choice for dining and
Serving new markets with new
distinctive products
entertainment in the metropolis.
products at new locations
In 2002, a number of cutting-edge and one-
In 2002, Ayala Land launched
of-a-kind projects were introduced to an
Greenbelt’s unique centerpiece is a
appreciative public.
sprawling 2.8-hectare park with a large
exciting new products.
variety of trees. This “softscape” departs
Early last year, your Company
With the October launch of the Ayala
from the traditional mall design of long
formed a subsidiary called
Greenfield Golf and Leisure Club, Ayala
corridors flanked by rows of stores. At
Community Innovations, Inc. (CII)
Greenfield Estates (AGE) has become
Greenbelt, the public can enjoy leisurely
primarily to address the core-mid
the Philippines’ first true golf course
walks in an open and relaxed environment.
residential market. In subsequent
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community. All lot owners in AGE will
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ayala land, inc.
Financially, a solid cash position, a strong
months, this wholly owned
Ayala North Point. Plantazionne Verdana
In Quezon City, responding to pent-up
subsidiary was able to launch two
will have lush landscaping, Spanish-
demand for high-end subdivision lots in
projects. In March, offerings at
Mediterranean inspired architecture and
the vicinity of Ayala Heights, your Company
Phase 1 of Verdana Homes in
amenities designed for growing families.
launched a 23-hectare development called
Bacoor, Cavite were quickly sold,
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Ayala Hillside Estates. This high-end
prompting CII to open Phase 2 much
Our mass housing arm, Laguna Properties
residential subdivision is being integrated
earlier than originally planned. In
Holdings, Inc. (LPHI), tapped underserved
into the redesigned 18-hole precision golf
November, CII put on the market
markets east of Metro Manila through
course of Capitol Hills Golf and Country
The Columns – a three-tower
the St. Alexandra Estates and St. Gabriel
Club. The resulting development will be
residential condominium complex at
Heights residential projects in Antipolo
a gated community of houses situated
the corner of Ayala Avenue and
City. House and lot packages in these
among fairways and water features.
Sen. Gil Puyat Avenue in Makati.
master-planned communities have been
Each of the three towers, built on a
made affordable to more people through
Eagerly awaited by bargain hunters and
large podium, will have 23 storeys
in-house, bank and government
budget-conscious shoppers is Market!
of residential units, five levels of
financing schemes.
Market! – a five-level value mall being
above ground parking, and cafes,
developed along C-5 Road in Taguig,
restaurants and convenience stores
The year also marked Ayala’s initial venture
which will offer 150,000 square meters of
at the ground floor level.
(through LPHI) into Lipa City in Batangas
gross leasable space. Aimed at the mid-
via the Hacienda Sta. Monica and Villa
market, this large shopping mall will be
In September, your Company’s
Sta. Monica farm and residential estates.
anchored by a leading department store
Vis-Min Group launched
These estates appeal to city dwellers
and supermarket chain, and will have retail
Plantazionne Verdana Homes in
who like to farm and spend weekends
and specialty stores, restaurants, bazaars,
Talisay City, Negros Occidental.
in comfortable second homes in rustic
fruit and flower stalls, car accessory and
The 21.5-hectare development, also
settings. For city residents with little or
repair rows on five floors of roughly
targeting the core-mid market, uses
no farming knowledge, LPHI has engaged
three hectares each. An IT zone as a
the cluster arrangement concept
horticulturists and advisers who can assist
one-stop shop for technology-related retail
and is on a property adjacent to
lot owners with their farm lots.
products, interactive entertainment and
Your Company enhanced product offerings by
creating financing terms to fit specific markets.
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service concepts will also be included.
In September, Montgomery Place, an
generated a steady stream of sales
A transportation hub in the area will
upscale townhouse community in the New
at One Roxas Triangle. At One
help establish Market! Market! as a major
Manila area of Quezon City, topped off
Legazpi Park, low downpayment and
regional center.
its two-storey clubhouse – the “Townhall.”
low monthly amortization offerings
Phase 1B was also launched with 44 units.
encouraged buyers to purchase
Investing in existing developments to
A month later, Ferndale Homes in north
almost half of all units offered in
enhance values
Quezon City launched Phase 4C with 28 lots.
a three-month period following its
launch in March. The introduction
In a difficult environment, your Company
managed to increase sales volume through
Strengthening marketing capabilities
of a liberal two-year scheme was
the well-timed opening of new phases
To complement initiatives in product
key to selling out Paseo de
at its residential projects. Buyer interest
innovation and positioning, we built up
Magallanes’ remaining inventory of
increased as key facilities and amenities
our distribution channels to achieve the
14 commercial lots.
were completed and put to use.
broadest possible market reach.
02
In the second quarter, we formed Ayala
“Last Quarter Storm,” which offered
with an infinity pool and the first part of a
Land Sales, Inc. (ALSI) – an in-house
special discounts for selected lots
15-hectare nature park – along with a lush
brokerage group. After only four months of
and gave special gifts to buyers who
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landscaped view corridor – were completed
operation, ALSI was able to generate P1
booked within a prescribed 30-day
in the second quarter.
billion in gross property sales. The group
reservation period. This program
also managed to establish satellite offices
also helped generate sales.
In April, a skating rink, a basketball court,
in Quezon City and Alabang.
Investing for the future
a bike trail and a dry play area for children
were added to the Kidsgrove playground/
In the same period, the sales organizations
In 2002, your Company made some
clubhouse at Phases 4 and 5 of Ayala
of CII and LPHI were also strengthened.
important strategic investments.
Westgrove Heights. This coincided with the
In September, CII completed its sales
opening of Westgrove’s Phase 4B – with
division’s full complement of six sales
In October, we received the right
30 new lots. In June, another 52 lots
teams who are now active in different areas
to develop an 8.3-hectare area in
were made available at Phase 3B while 63
in Metro Manila.
Fort Bonifacio adjacent to Market!
Market!, which we plan to turn
additional lots were opened in Phase 5 in
September. A total of 160 lots were taken
Making products affordable
into a community of medium- to
up in 2002, bringing the aggregate take-up
Your Company enhanced product offerings
high-density residential buildings.
rate to 86% since the project was launched
by creating financing terms to fit specific
Development of this area is
in August 1998.
markets. A five-year, interest-free scheme
expected to begin in early 2004.
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ayala land, inc.
At Ayala Greenfield Estates, a clubhouse
annual report
In the fourth quarter, we launched
Our market presence and strategic nvestments were
made possible by our financial strength.
Last November, Ayala Land and the
FINANCIAL PERFORMANCE
Campos Group signed a US$90-
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when interest rates were close to historic
million agreement with Metro
Our market presence and strategic
lows. In February, ALI signed a Fixed Rate
Pacific Corp. that would enable
investments were made possible by our
Corporate Notes (FXCN) facility amounting
the partnership to gain control
financial strength. Your Company’s balance
to P1.06 billion. The transaction, which
of Bonifacio Land Corporation,
sheet remained solid with a high degree
marked ALI’s re-entry into the peso capital
thereby securing a firm hold on
of liquidity and strong cash flows. At the
market after a five-year absence, met with
Bonifacio Global City. We believe
end of 2002, total assets stood at P61.9
strong investor demand and closed 1.75
this property will provide us with
billion. Stockholders’ equity amounted to
times oversubscribed.
an opportunity to replicate your
P35.5 billion.
Company’s success in the
In April, your Company issued P3 billion
development of the Makati Central
Continuing to sharpen its focus on cash
bonds which were well received by
Business District (CBD). We view
flow and to improve liquidity, your
participating underwriters. The proceeds
Bonifacio Global City as a natural
Company generated cash reserves of
ensured funding availability for ALI’s
and complementary extension of
P5.7 billion, and achieved a current
growth strategy and helped refinance
the Makati CBD, and with our
ratio of 2.10:1. Bank debt-to-equity ratios
the Long-Term Commercial Papers which
dwindling inventory in Makati, this
remained at 0.31:1 and net debt-to-equity
matured in March and April.
acquisition assures us of ample
was at 0.15:1. Operating cash flow stood at
prime inventory over the long term.
P4.5 billion.
As is the case in any of the
THE ROAD AHEAD
world’s major urban centers, the
We were able to fund P2.6 billion in
growth of new CBDs is both
project and capital expenditures without
We expect to achieve further gains in the
inevitable and necessary. With its
increasing our debt levels. In July, we
coming year and beyond by continuing
proximity to Makati, as well as its
declared a special cash dividend
to invest in the future and by faithfully
strategic location relative to new
amounting to P1.6 billion.
maintaining strategic directions in key areas:
infrastructure such as the Ninoy
ALI AR 02.indd
was accessed early in the year at a time
• The expansion of retail centers.
Aquino International Airport 3 and
Capitalizing on its strong balance sheet
With the initial phase of Greenbelt’s
C-5 Road, the Bonifacio Global City
and credit standing, your Company secured
redevelopment nearing completion, we
is well-positioned to become a new
financing for its strategic investments and
are fast-tracking Market! Market!, which
growth area.
refinanced its debts. Long-term funding
will be partially operational in late
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core values such as the pursuit
season at Christmastime. In the second
intend to explore market opportunities
of excellence in product quality,
quarter of 2003, we intend to begin
in leisure-related fields. Leisure
the highest standards of customer
development of a major shopping mall
communities in mountain, lakeside,
service, ethical dealings, social
at the North Triangle depot of the
beach and farm environments as well
consciousness, concern for people
Metrostar Railway Transit, which will
as a wide array of options such as
and financial conservatism. We also
cater to the growing number of rail
vacation houses for sale or lease
realize how essential it is to
commuters. We also intend to set up
are possibilities being considered by
continue building on these core
smaller malls outside Metro Manila,
the Leisure and Lifestyle Communities
values and on our Company’s core
including one in Angeles City.
Group, a strategic business unit formed
strengths as we set our sights on
in September 2002.
the future.
• The continuing development of Ayala
South. Our efforts at realizing Ayala
• Liquidating non-strategic assets. We
South’s full potential will continue.
will pursue the sale of non-strategic
Please allow us to take this
With key developments such as Ayala
assets in our portfolio. We expect some
opportunity to thank the members
Westgrove Heights and Ayala Greenfield
of these assets to achieve good prices
of our Board and you, our
Estates now in place, we intend to
and subsequently generate funds that
stockholders, for your continued
implement other components of the
will help fund our more strategic and
confidence and support.
master plan for this major undertaking
core activities.
in Laguna and Cavite.
• Expanding middle-income residential
and mass housing markets. We
SUMMING UP
continue to see significant opportunities
in both the middle- and low-income
We thank all the members of our
markets. The success of Verdana Homes
dedicated workforce for successfully
has proven that there is strong demand
launching new market concepts in spite of
for products in the core-mid category,
the difficult economic environment.
Fernando Zobel de Ayala
CHAIRMAN
and we are confident that projects lined
up by CII and LPHI in these market
Experience has taught us how important
niches will be well received.
it is to have an organization with strong
ALI AR 02.indd
16-17
Francisco H. Licuanan III
PRESIDENT
3/11/2003, 1:34 PM
02
annual report
• Tapping leisure-related market. We
17
ayala land, inc.
2003, in time for the peak buying
Review of Operations
CURRENT RATIO, BANK DEBT-TO-EQUITY
& NET DEBT-TO-EQUITY RATIOS
3.0
>>
low gearing ratios
financial prudence.
Despite the prolonged industry downturn,
strategy, the Company managed to grow its
Ayala Land’s balance sheet continued to
consolidated net income in year 2002 to
reflect its fundamental strength and long-
P2.52 billion, a 10% increase from previous
term growth prospects.
year’s level of P2.29 billion. This was
The Company readily serviced its
revenues, which represented a 5% growth
1.5
obligations, including the P6.0 billion long-
over the 2001 level.
1.0
term commercial papers which matured in
0.5
March and April 2002. As a result of
Among product groupings, leasing
its high credit standing, P3.0 billion peso-
operations continued to drive revenues.
denominated bonds and P1.06 billion fixed
Rentals from shopping centers and office
rate corporate notes were offered in the
buildings contributed P3.33 billion or
first half of 2002. Proceeds from these
27% to total. The Company’s recent
issues, together with internally generated
investments in retail expansion in Ayala
cash from operations, provided the funds
Center began to generate returns. The
needed for debt servicing, project and
Restaurant Row along Park Square Drive
capital expenditures and working capital.
started operations in the third quarter with
98
99
00
01
02
Bank Debt-to-Equity
Ratio (X:1)
Net Debt-to-Equity
Ratio (X:1)
02
annual report
these difficult times. As a result of this
2.0
Current Ratio (X:1)
CONSOLIDATED REVENUES (P12.23B) BY
PRODUCT LINE: YR. 2002
7
ayala land, inc.
Financial Position
realized from P12.23 billion of consolidated
0.0
18
generate development income even during
2.5
High liquidity and
demonstrate long-standing
Financial Highlights
6
1
>>
Revenues
5
from leasing operations
and land sales continued
to drive consolidated
revenues.
four establishments open as of year-end.
At the end of 2002, the Company’s
Greenbelt 2 and 3 opened in May, quickly
interest-bearing debt remained
establishing itself as the newest dining and
manageable at P10.9 billion. As such,
entertainment center.
debt-to-equity and net debt-to-equity
4
2
3
1 Rentals
2 Land Sales
27%
21%
3 Residential Unit Sales
13%
4 Mass Housing
12%
5 Hotel Operations
11%
6 Construction Projects
7 Interest & Other Income
8%
8%
ratios were kept at comfortable levels of
New residential subdivision projects
0.31:1 and 0.15:1, respectively.
boosted revenues from land sales which
amounted to P2.58 billion, accounting for
Given the prevailing uncertainties,
21% of consolidated revenues. The launch
preserving the Company’s liquidity was of
of Verdana Homes and Ayala Hillside
utmost concern. Current ratio stood at a
Estates, as well as the re-positioning of
high level of 2.10:1 while cash reserves
Ayala Greenfield Estates as a golf and
leveled at P5.7 billion.
leisure community, pushed land sales
revenues higher by 21% year-on-year.
Results of Operations
ALI AR 02.indd
18-19
Cushioned by a strong recurring revenue
Residential unit sales, mostly generated
base, Ayala Land set its sights on new
from new phases at Ferndale Homes and
niche markets and opportunities to
Montgomery Place, amounted to P1.57
3/11/2003, 1:34 PM
billion, about 13% of the Company’s total
In terms of revenue and income
About P848 million or 32% of the
Of the eight Strategic Business Units, the
revenues. With demand for high-end resi-
contributions of the Strategic Business
2002 expenditures was used for the
and Community Development Group were the
dential buildings still weak, One Legazpi
Units, the Commercial Centers Group,
development of shopping centers,
Park was launched in March 2002 offering
followed by the Land and Community
mostly for the Greenbelt
smaller and more affordable condominium
Development Group, took the lead. Due
redevelopment which was
units. Although the project is scheduled
to the unprecedented success of its first
substantially operational at the end
for completion in January 2006, year-end
project, Verdana Homes, the Core-mid
of 2002.
sales already exceeded break-even point.
Group, through Community Innovations,
largest income and revenue contributors.
REVENUE BREAKDOWN BY STRATEGIC
BUSINESS UNITS : YR. 2002
1
8
2
The launch of new mass housing projects
bottomline, despite having started
townhomes projects, the Company
enabled the Company to post higher
operations only in March.
spent P1.0 billion, accounting for
7
6
5
1 Commercial Centers Group
2 Land & Community
Development Group
3 Residential Buildings Group
40% of the 2002 actual expenditures.
last year’s. This translates to a 77%
The Commercial Centers Group and Land &
Projects undertaken during the year
growth in mass housing revenues which
Community Development Group also hold
included Montgomery Place, Ferndale
totaled P1.45 billion, representing 12%
the largest share of the Company’s total
Homes, The Residences at Greenbelt
of Ayala Land’s consolidated revenues.
assets, consisting mostly of investments
and One Legazpi Park.
Brisk take-up was noted at the newly-
in land and building for the former and
launched Sta. Catalina Village in Cavite
landbank for the latter.
while the Company’s venture into two
4 Mass Housing Group
5 Corporate Business Group
6 Core-Mid Group
7 Visayas-Mindanao Group
8 Support Groups*
The balance of capital and project
spending was used for residential
6
Capital & Project Expenditures
subdivision projects, including the
5
and St. Gabriel Heights in Antipolo, as
Given the poor business environment,
projects in the Visayas-Mindanao
4
well as Villa Sta. Monica and Hacienda
the Parent Company’s capital and project
area, as well as equity investments in
3
Sta. Monica in Lipa, Batangas, was also
expenditures slowed down to P2.6 billion
subsidiaries and affiliates.
2
favorably received.
in 2002, lower compared to previous years.
For year 2003, Ayala Land is
P4.2 billion budget for the year as some
earmarking P7.9 billion for its capital
hotel subsidiaries contributed 8% and
projects were moved back, largely due to
and project expenditures, nearly triple
11%, respectively to Ayala Land’s
market conditions.
the actual expenses in 2002. Capital
expenditures will comprise 64% or
projects contributed P922 million in
Capital expenditures, which pertain mainly to P5.1 billion, while project expenditures
revenues, sourced from Ayala-related
the Parent Company’s investments in rental
projects, as well as external clients from
assets and equity infusions to subsidiaries
the public and private sectors. Revenues
and affiliates, amounted to only P1.1 billion
Capital expenditures programmed
from hotel operations was almost
versus budget of P2.1 billion. On the other
for 2003 include the planned P2.8
maintained at P1.31 billion as the low-rate
hand, project expenditures, representing the
billion investment in the Fort
strategy in the hotel sector offset the
Parent Company’s outlays for development
Bonifacio Global City through
improved occupancy rates.
projects for sale, totaled P1.5 billion.
Bonifacio Land Corporation.
ALI AR 02.indd
18-19
14%
13%
13%
5%
4%
2%
30%
CAPITAL & PROJECT EXPENDITURES
(Parent Company Only)
5.8
4.2
3.1
2.5
2.6
01
02
1
Actual expenditures were lower than the
consolidated revenues. Construction
19%
* hotels, construction, property
management and other revenue sources
new areas, namely, St. Alexandra Estates
Support groups such as construction and
3
4
will account for 36% or P2.8 billion.
3/11/2003, 1:34 PM
0
98
99
02
annual report
For residential buildings and
19
ayala land, inc.
Inc., made a strong contribution to the
booked sales of 1,121 units, 39% above
Commercial Centers Group and the Land
00
Project Expenditures
Capital Expenditures
Responding to the market downturn triggered
by the regional economic crisis in 1997,
the Company conserved cash and limited its
expenditures to strategic investments.
Stock Performance
AYALA LAND, INC.
Ayala Land remained one of the biggest
listed companies in the Philippines. With
With negative global developments
market capitalization of P48.7 billion as
including the looming US-Iraq conflict,
of end-2002, the Company was the 9th
as well as lingering domestic problems
largest company in terms of market capital,
such as the budget deficit and peace and
accounting for 6.7% of the composite index
order concerns, the overall stock market
and 2.4% of total market capital.
performance was lackluster throughout
Starting Price
Ending Price
Percent Change
Highest Close
Lowest Close
Avg Daily Price
Avg Daily Volume
Avg Daily Value
Date
Dec. 28, 2001
Dec. 27, 2002
4.85
4.55
-6.19
7.50
4.35
6.12
8,054,049
49,269,355
Parent company Ayala Corporation,
the year.
STOCK PRICE INFORMATION
together with its related companies,
Apr. 18, 2002
Dec. 19, 2002
Ayala Land’s stock (ALI) performance was
effectively held 65.5% of Ayala Land’s
affected by these unfavorable events. ALI
10.69 billion outstanding shares at the end
closed at P4.55 per share at the end
of 2002. Foreign investors held 21.3% of
of 2002, 6% lower than its end-2001
the outstanding shares.
level. Volume and value turnover of
annual report
02
ALI, PHISIX AND PROPERTY
ayala land, inc.
20
the stock, however, increased to daily
By way of recognition of investors’ support,
averages of 8.1 million shares and P49.3
particularly during the continuing years of
million in 2002, up by 4% and 16%
difficulty, Ayala Land declared a special
year-on-year, respectively.
cash dividend of P0.15 per share, in
addition to the regular cash dividends
RELATIVE PERFORMANCE
Dec. 28, 2001
ALI
Phisix
Property Index
4.85
1,168.08
501.30
Dec. 27, 2002
Change
4.55
1,018.41
417.52
-6.19%
-12.81%
-16.71%
Notwithstanding, ALI performed well
of P0.03 per share per semester. This
relative to the overall stock market and
move was undertaken to distribute excess
the property counter. ALI outperformed
profits to shareholders and was part of the
the Philippine Composite Index (Phisix)
Company’s effort to reduce its capital base
and the Property Index which posted
in tandem with an asset rationalization
bigger year-on-year losses of 12.8% and
program, both aimed at increasing the
16.7%, respectively.
economic value added to shareholders.
CASH DIVIDENDS
Despite the 6% year-on-year decline in ALI’s share price, the stock
outperformed the overall stock market and the property counter.
Cash Dividend
per share
>>
In recognition of investors’ support, Ayala Land
declared a special cash dividend of P0.15 per
share, in addition to the regular cash dividends of
P0.03 per share per semester.
ALI AR 02.indd
20-21
Declaration
Date
Record Date
Payment Date
P0.03 (1H 2002)
July 23, 2002
August 6, 2002
September 6, 2002
P0.15 (special)
July 23, 2002
August 6, 2002
September 6, 2002
P0.03 (2H 2002)
November 29, 2002
January 16, 2003
February 11, 2003
3/11/2003, 1:34 PM
Commercial Centers Group
count Plus Program, with a total membership
ping center leasable area by about 50%
of 22,520 maintains a core of loyal shoppers
within the five-year period 2001-2005
Key Objectives Achieved
for Ayala Center. The Ayala Center Merchant
and increase the Company’s presence in
The Company’s commercial centers did
Reward program recognized merchants with
the broad C market. Volume build-up will
better in 2002 than in the previous year.
exceptional performance in the field of market-
be complemented by a move to under-
Ayala Center Makati, which constitutes the
ing, operations and visual merchandising.
served markets in key provincial cities.
South of Makati, Alabang Town Center, owned
Following a product differentiation
bulk of retail rental revenues, continued to
strategy, the new retail projects will
Despite cautious consumer spending, Ayala
Excluding Greenbelt, Ayala Center’s overall
targeted the ABC+ family markets and
build on the strengths of a traditional
occupancy was at a high of 96%.
positioned itself as the “family shopping
shopping center and incorporate new
and entertainment destination in the South.”
concepts and special zones in response
Continuing merchant replacement ensured
to specific markets.
The addition of new retail stock and a
Center continued to post increases in sales
over the years.
AYALA CENTER
SALES PERFORMANCE
(in Php Billion)
25
product differentiation strategy enabled Ayala affordability and a wide variety of shopping
20
Center to benefit from the modest growth in
and entertainment facilities. Infrastructure
Three projects have been lined up. Last
personal consumption expenditure. Within
improvement was undertaken to improve
August, the Company broke ground on
Ayala Center, the Park Square Drive Restau-
accessibility and circulation. Despite some
Market! Market!, a major retail center
10
catering to the mid-market located
5
on a 9.8-hectare site next to Bonifacio
0
rant row partly opened in the 3rd quarter, with disruption due to the ongoing improvement
four establishments operational by year-end.
works, occupancy rate stood at 95%, while
sales increased by 10% over the previous year.
The Company successfully expanded into
in the last quarter of 2003 and the
ment center, began to generate returns.
the Class C and D markets through two value
remainder of the initial phase will be
Completed in May, Greenbelt 2 and Greenbelt malls, namely Pavilion Mall and Metropoint.
20.18
20.66
02
21
98
99
00
01
02
1,500
1,225
1,200
Pavilion Mall’s rental income grew from
able Area (GLA) to Ayala Center. As of
previous year’s level with the full year effect
Construction of the North Triangle Com-
900
year- end, store spaces had been fully leased
of its cinema operations as well as improved
mercial Complex with around 200,000
600
out and 74 stores were operational. Con-
sales performance and occupancy.
square meter GLA is scheduled to begin
300
in Quezon City within 2003. The com-
struction of Greenbelt 4 is well underway and
Despite the delayed opening of its MRT-LRT
mercial center is the initial component of
link in November, Metropoint – fully opera-
a mixed-use commercial complex in the
An aggressive merchant replacement pro-
tional in January – managed to surpass budget 16-hectare depot site of the Metro Rail
gram introduced new and fresh concepts,
owing to savings and additional revenues from Transit Development Corporation.
local and foreign. A customer care program
carts, kiosks and billboard advertising.
The third mall project located in Metro
carried out monthly high impact, traffic-gener-
TOTAL SHOPPING CENTER
LEASABLE AREAS
(in ‘000 sqms)
completed in 2004.
3 added 22,000 square meters of Gross Leas-
ating events and strong promotions for the
Strategic Initiatives
Angeles is scheduled to begin
Electronic Gift Certificates (e-GC). The Dis-
Ongoing is a program that will expand shop-
construction in 2003.
20-21
19.13
15
Global City. This 152,000 square meter
as the country’s first urban retail entertain-
ALI AR 02.indd
18.72
GLA shopping mall will partially open
New investments in Greenbelt, positioned
will be completed in the last quarter of 2003.
18.44
annual report
and 3, Ayala Center’s occupancy was at 92%. by affiliate Alabang Commercial Center,
3/11/2003, 1:34 PM
0
1,024
800
832
838
01
02
03
04
05
* Leasable areas exclude parking
An expansion program is increasing the
Company’s shopping center leasable area
by about 50% from 2001 to 2005.
ayala land, inc.
post growth in sales. Including Greenbelt 2
Land & Community
Development
Course into residential pockets surrounded by a tination. Each Ayala Greenfield lot owner is
new executive golf course. Because of pent-up entitled to one club share. The golf course
demand for a high-end development in the area, will be an 18-hole, par 72, championship golf
sales of these high value lots since its launch
course, covering approximately 60 hectares.
Despite the continued industry
were brisk. By year-end, after barely three
Construction of the golf course commenced in
downturn, demand for the Compa-
months of selling, take-up of the Company’s
February 2003 and is targeted for completion
ny’s high-end residential lots, while share of 55 lots was at 87%.
by December 2004.
reduced, never really dried up.
The Company’s Ayala South developments con- As of year-end, 80% of total 363 lots was
The market for Company-developed
tinued to be primed with the introduction of new taken up, with the Ayala Greenfield Golf and
subdivisions was boosted by the low amenities and the launch of additional phases.
Leisure Club as the primary volume driver.
interest rate environment and the
value assured by the Ayala brand
New amenities completed in Ayala Westgrove
name itself and continuing Company Heights include the Kidsgrove recreational
investments. Sales improved in the
facilities and the initial Greenbelt redevelop-
second half of 2002 with the launch
ment for Phase 3B. An alternative access
de Magallanes sold out its remaining 14
commercial lots during the year.
02
Location
: Quezon City
annual report
Ayala Hillside Estates
In terms of commercial lots, the Paseo
Launch Date
: October 2002
of Ayala Hillside Estates and the
road leading to Ayala Westgrove Heights is
Project Size
: 23 has. (residential)
Ayala Greenfield Estates Golf and
scheduled to open in the 1st half of 2003.
For the next two years, high-end lot sales
31 has. (golf course)
22
ayala land, inc.
Phase 1
No. of lots
Ave. lot size : 579 sqms.
Take up as of
end-2002
: 87%
AYALA SOUTH BOOKED LOT SALES
(no. of lots)
306
282
93
140
143
100
46
135
99
00
01
02
Ayala Greeneld Estates
Ayala Westgrove Heights
Managed release of Ayala South lots to the
market over the past four years have resulted in
booked sales of over 1,167 lots since 1998.
ALI AR 02.indd
the year saw sustained demand. Boosting
Heights, Ayala Greenfield Estates and Ayala
two objectives it had set for itself
sales was a stretched financing scheme intro-
Hillside Estates.
for its traditional market: first,
duced in the first quarter and the “Last Quarter
re-establish a strong presence north Storm” promo implemented in the fourth
This applies to Paseo de Magallanes as
of Makati; and, second, increase the quarter. By the end of 2002, 86% of the 1,094
well. Since all 22 commercial and 48
value of its products in Ayala South
cumulative lot offering had been taken up.
residential lots put on the market in 2001
have been sold out, development plans for
The completion of banner amenities in Ayala
the Company’s remaining 1.8 hectares in
Greenfield Estates also boosted sales during Magallanes are being finalized.
In September, Ayala Land launched
the year. These amenities include the
its newest high-end residential sub-
Clubhouse, Nature Park and View Corridor.
The focus on current projects will enable
the Company to utilize the sales momentum
division, Ayala Hillside Estates, near
94
50
98
By year-end, the Company had met
228
211
150
0
sion of existing projects: Ayala Westgrove
product enhancements.
139
250
200
A total of 145 new lots offered for sale during
through continuing investments and
350
300
will be focused on new phases and expan-
Leisure Club.
: 55 lots (ALI)
Ayala Heights in Quezon City. This
Significantly enhancing project value was the
generated by market acceptance and
23-hectare project, a joint venture
launch in October of the Ayala Greenfield Golf
continuing investments in existing properties.
with Capitol Hills Golf and Country
and Leisure Club. This amenity strengthened
It specifically enables the Company to
Club (CHGCC), involves the redevelop- the market positioning of Ayala Greenfield
ment of the existing Capitol Hills Golf
22-23
Estates as a superior residential weekend des-
concentrate on building up the value of its
Ayala South communities.
3/11/2003, 1:34 PM
Corporate Business Group
and improve customer service. Capital
cuts to accommodate a wider range
expenditures undertaken included the
of locators.
upgrade of 6750 and MSE to the standards
As expected, office leasing proved to be
of the newer buildings.
Fortunately, the relatively small
revenue contribution of office
more difficult than in the previous year.
More tenants opted not to renew their
As a result of an oversupply of developed
rentals which comprised 4% of
leases because of closure or downsizing
economic zones in the region, take-up
total revenues in 2002, and of
of local operations in the case of
at Laguna Technopark was limited to
industrial lot sales, reduce the
multinationals. A few moved to cheaper
a purchase of one lot of less than 1
negative effects of the poor market.
office locations outside MCBD. It took much
hectare, by an existing locator. Despite
longer to replace tenants.
competitors’ aggressive price reductions,
Laguna Technopark maintained its selling
Grade A buildings with high vacancy rates
of remaining inventory into smaller lots is
were also a problem. As the supply
being undertaken to increase saleability.
AYALA LAND AND MAKATI CENTRAL
BUSINESS DISTRICT OFFICE
OCCUPANCY RATES
pressure eased during the last half of the
year, the market became steadier albeit
Leasing of standard factory building did
still depressed.
better. Four out of five available units
100%
02
98%
95%
95%
90.6%
were leased out to the suppliers of
90%
The Company nonetheless realized its
major electronic locator companies in the
85%
key objectives for the year of achieving
Technopark. Construction of a second
80%
the highest possible occupancy rates and
standard factory building is thus
75%
maximizing leasing income.
being considered.
70%
96%
94%
92%
89.6%
<<
The Company’s office
87.3%
buildings continued to
83.0%
85.2%
perform better than
market. In 2002, average
occupancy rate was 92%,
compared to market’s
85% rate.
98
99
00
01
02
ALI Ave. Occupancy Rate
Occupancy rates of Tower One, 6750
Ayala Avenue, MSE Building and Ayala Life-
Market conditions in 2003 will remain
FGU Center averaged 92% for the year
difficult and improvements, if any, will be
2002, higher compared to MCBD’s 85%.
minimal. For 2003, the Company targets
Similarly, Ayala Land’s office rental rates of
to maintain, if not slightly improve, office
P482-731 per sqm/month were higher than
leasing income on the back of improved
the P275-605 per sqm/month being quoted
12000
4%
4%
4%
<<
Office rentals represented
5%
4% of total revenues in
5%
Yr. 2002. The relatively
small contribution of office
Since demand for industrial lots is expected
To ensure the competitiveness of its
concentrate on developing an additional
office buildings, the Company continued
12-hectare inventory in Phase 5 of the
to invest in various capital expenditures
Laguna Technopark, consisting of smaller
22-23
15000
9000
to remain soft in 2003, the Company will
ALI AR 02.indd
OFFICE RENTAL REVENUE
CONTRIBUTION TO CONSOLIDATED
REVENUES (in Php Million)
occupancy levels.
by Premium and Grade A office buildings
within the Makati Central Business District.
MCBD Ofce Occupancy Rate
Source: Colliers International
rentals to total revenues
6000
reduce the negative effects
of the poor market.
3000
0
98
99
00
01
02
Ofce Buildings
3/11/2003, 1:34 PM
annual report
price at P3,300 per sqm. Reblocking
23
ayala land, inc.
Low rental rates in newer Premium and
Residential
Buildings Group
demand remains weak and vacancy
phases 1, 2 and 3 of Ferndale Homes,
of One Legazpi Park.
83% have been taken up by the end of
2002, while 69% of the total 142 phase
Launched in March 2002, One Legazpi Park
4 lots have been sold. At Montgomery
residential buildings sector have
experienced brisk sales with almost 50%
Place, 75% of the 270 townhouses released
been steady given the sound value
of the 369-unit inventory taken up within
to the market have been taken up. Sales
propositions offered by its various
the first three months from launch date. By
are expected to step up when Phase 1
projects. The poor investment
year-end, the project’s take-up rate moved
units are completed and turnover starts in
climate notwithstanding, the
up to 73%. Year-end bookings exceeded
early 2003.
Company managed to establish
the project break-even point. Construction
4%
a sustained presence in several
of the project is ongoing and is expected to
2%
segments of the high-end
be completed by January 2006.
Although the market outlook for 2003
MCBD RESIDENTIAL CONDOMINIUM
VACANCY RATES
14%
11.6%
12%
10%
10.2%
12.9%
10.1%
8.5%
8%
6%
0%
annual report
was evident in the favorable performance
Company sales in the high-end
rates remain high.
98
99
00
01
02
Source: Colliers International
One Legazpi Park
Location
: Legazpi St.,
Launch Date
: March 2002
Legazpi Village, Makati
Construction
Period
: 1Q2002-January 2006
No. of Units
: 369
Unit Sizes
: 40-203 sqms.
Ave. Unit Sizes : 70 sqms.
Take up as of
end-2002
: 73%
remains difficult, the Company expects
residential buildings sector
and create value from these
Also within the Makati Central Business
to achieve revenue and income growth
niche markets.
District, the Company, in the fourth quarter
by steadily tapping pockets of demand
of 2002, completed the development of
and through careful management of
The market for luxury
28 townhouse units at The Residences at
its resources.
condominiums remained weak due
Greenbelt, all intended for lease. Centrally
to flat demand and high vacancies.
located within the newly redeveloped
Within the next two to three years, the
Take-up at the 182-unit One
Greenbelt, the project targets the expatriate
Company intends to sell out Ferndale
Roxas Triangle, however, managed
community and empty nesters. Opening of
Homes and Montgomery Place.
to improve from 50% at the end of
the project in December 2002 generated a
2001 to 63% at the end of 2002
good list of prospects. As of year-end, these
Other residential building projects are pro-
as new payment schemes helped
two- and three-bedroom units had been
actively under study and planning for
attract buyers. Three Company-
14% leased out.
launch at the proper time.
who were assured lease income
North of Makati, in Quezon City, the
Within the next two years, the Company
from their investments. As of year-
Company’s high-end single detached
will begin developing on a joint venture
end, there were 15 units being
housing and townhouse projects continued
basis an 8.5-hectare land parcel in Fort
leased out by the Company.
to sell. New phases launched in Ferndale
Bonifacio, which was awarded by the
Homes and Montgomery Place helped
Bases Conversion Development Authority
Demand in certain niche markets,
spark buyers’ interest and captured a share
in October 2002.
particularly for smaller high quality,
of the demand.
24
ayala land, inc.
Of the total 132 house-and-lot units across
Although supply has bottomed,
02
competitively priced condominium units,
leased units were sold to investors
ALI AR 02.indd
24-25
3/11/2003, 1:34 PM
Mass Housing Group
More liberal inhouse financing schemes
Dasmariñas, Cavite, in the vicinity
were also introduced and Pag-ibig
of Sta. Catalina Homes. Later in the
accreditation obtained, giving buyers
year, LPHI will start development of
Demand for affordable housing continued
access to Pag-ibig’s reduced interest rates
another affordable housing project
to exceed supply, but was, however,
and longer terms.
in Tanza, Cavite, an offshoot of
a result of intensified sales efforts and
increased availability of liberal buyer
financing schemes.
MASS HOUSING BOOKED UNIT SALES*
Forces of the Philippines (AFP)
offbase housing project. About
was set up in Rome, thus broadening LPHI’s 1,000 units to be priced at P400,000
1200
800
Despite a sluggish first half in 2002, the
reach of the overseas Filipino workers’
- P700,000 will be constructed on
600
Company, through its mass housing arm,
market in Italy. In 2002, sales to overseas
the 20-hectare AFP property.
400
Filipino workers increased to 14.3% of total
maintained its superior market position
sales from 6.2% in the previous year.
Further product and geographic
its products in Dasmariñas, Cavite and
To improve cash flow, LPHI intensified
the coming months. In the first
Antipolo, Rizal. Booked sales amounted to
its collection efforts from buyers and
quarter of 2003, LPHI will begin
P1.45 billion, up 77% from previous years.
promoted the active migration of existing-
developing its first medium-rise
0
2.2-hectare site in Parañaque. The
1200
aggressive thrusts in the marketing end.
financed its expansion for the year.
units will have floor areas from 20
900
sold for P750,000 - P1.8 million.
Barring any major economic disruption,
and the recruitment of an additional broker
and given further interest rate reduction
LPHI will sharpen its focus on
group resulted in a major reinvigoration of
of government housing loans, housing
cash generation given the new
selling operations. Design breakthroughs
demand is expected to be reasonably
projects’ funding requirements.
and an enhanced capability to purchase
healthy, particularly in the segments
The downpayment period for
materials at the lowest possible prices
serviced by LPHI.
in-house buyer loans will be
reduced to 8 months from 12
affordable products within existing target
For 2003, focus will be on the affordable
months. Non-strategic properties
markets which are superior to competition
house-and-lot product line priced from
in its landbank will be offered for
in size and quality. Hacienda and farm lots
P750,000 to P1.8 million, which
sale or joint venture. To conserve
projects were launched in Lipa, Batangas to
represented nearly half of previous year’s
cash, landbanking will be
exploit new development markets.
sales value. In early 2003, another
undertaken through joint
affordable project will be launched in
development agreements.
ALI AR 02.indd
24-25
02
1,453
821
600
605
649
99
00
415
300
establishment of an in-house sales group
enabled LPHI to launch new, more
99
1500
of receivables, proceeds of which partly
to 43 square meters, and will be
98
MASS HOUSING REVENUE BREAKDOWN
BY PRODUCT LINE (In Php Million)
This performance can be attributed to
01
292
02
residential building project on a
backed up by improved commission rates,
00
608
*Excludes socialized housing units
in-house buyers. It sold P132 million worth
The adoption of higher sales quotas
806
200
diversification will be pursued in
and outsold competition, particularly with
754
3/11/2003, 1:35 PM
0
98
01
02
Lots only (P200,000 - 2.0M)
House-and-lots
Low-cost (P350,000 - 650,000)
Affordable (P750,000 - 1.8M)
Middle-income (P2.8M - 4.0M)
The range of mass housing products has
steadily expanded through the years, with
affordable housing accounting for 45% of
total revenues in 2002.
annual report
Laguna Properties Holdings, Inc. (LPHI),
1,121
1000
25
ayala land, inc.
To augment the existing representative
office in Milan, a new representative office
employment prospects.
grown over the past five years, largely
its successful bid for the Armed
weighed down by economic uncertainties,
notably job security concerns and poor
The volume of mass housing sales has
Core-Middle Income
Residential Group
Homes, a 25-hectare residential subdivision
Columns is ongoing and is expected to be
development in Bacoor, Cavite, a few
completed by mid-2006. The second and
kilometers from Ayala Southvale. Phase
third towers will commence construction
In 2002, the Company, through
1 consisted of 236 lots and 50 house-
within 2003 and 2004, respectively.
Community Innovations, Inc. (CII),
and-lot units to prime the area. The
entered the middle-income urban
lots, which had an average area of 230
CII built up a separate sales organization
residential segment and began to
sqms, were priced competitively and backed
to service its market, which is different
build a name for itself as a builder
by affordable payment schemes. Market
from Ayala Land’s traditional high-end
of communities for young and
response exceeded expectations. The lots
market. In September 2002, CII completed
upwardly mobile urban achievers
were sold out within three months from
its Sales Division’s full complement.
-- executives, professionals and
launch. Due to its success, development
entrepreneurs. In line with its
and launch of Phase 2, consisting of 221 lots
mandate of launching at least
and 38 house-and-lot-units, was advanced
Although the weakness of the real estate
two new projects every year, CII
to July 2002 from April 2003.
market is expected to persist, the core mid
Columns during the year.
annual report
ayala land, inc.
Construction of the first tower of The
introduced Verdana Homes and The
02
26
CII started operations in March with Verdana
Verdana Homes
Location
Launch Date
Total Area
Phase 1
No. of lots
No. of H&L
Phase 2
No. of lots
No. of H&L
Ave. Lot Size
Ave. H&L Size
Take up as of end-2002
: Bacoor, Cavite
: March 2002
: 25 has.
: 236
: 50
: 221
: 38
: 230 sqms.
: 200 sqms. (H); 265 sqms. (L)
: 99% of 457 lots
: 67% of 88 houses
The Columns
Location
Launch Date
No. of Buildings:
First Tower
No. of Resd’l Units
Floor Area
: Ayala Ave. cor
Buendia Ave., Makati
: November 2002 (soft launch)
January 2003 (official launch)
:3
: 284
: 30-71 sqms.
(average of 45 sqms.)
Take up as of end-2002 : 25%
residential market segment is a rich pocket
At the end of 2002, take-up of lots in
of opportunities remaining to be tapped.
Phases 1 and 2 were 100% and 99%,
As in 2002, CII, being an Ayala company,
respectively. Of the total 88 house-and-lot
is expected to benefit from the “flight
units offered for sale, 67% were sold
to quality” mindset prevailing under the
by year-end, mostly to end users. Land
current market.
development works for both phases are
ahead of schedule.
To serve the needs of Verdana Homes
residents, a commercial strip across the
Having achieved its objectives for Verdana
subdivision will be opened for sale in 2003.
Homes, CII conducted a soft launch of
The Columns in November. Strategically
In support of its targeted two project
located at the corner of Makati’s two
launches per year, CII is aggressively
major thoroughfares, Ayala and Buendia
negotiating the acquisition or joint
Avenues, the project consists of three
development of several properties which
30-storey residential buildings, 23 storeys
are immediately developable. Market
of which will be residential. Each tower will
permitting, the target of launching two
have residential units competitively priced
projects per year will be met. CII will also
at P2.0-6.0 million per unit. 25% of the 284
participate in the development of certain
units of the first tower were already taken
areas in Fort Bonifacio.
up by the end of 2002, prior to the official
launch in January 2003.
ALI AR 02.indd
26-27
3/11/2003, 1:35 PM
lower priced lots and higher cash discounts,
With high occupancy rates and increased mall
visitors, Ayala Center Cebu consistently increased
take-up was 25% after three months of selling. The Company expects the market
sales over the past five years.
to remain difficult and will more
As in Metro Manila, the real estate industry
Ayala Center Cebu, the centerpiece project
vigorously pursue the initiatives
in the Visayas and Mindanao regions faced a
of Cebu Holdings at the Cebu Business
taken in 2002.
buyers’ market. Prospective buyers carefully
Park, performed well and maintained its
evaluated options in terms of getting value
foothold in the ABC+ market, ranking first
To further strengthen Ayala Center
for money and competition among developers
in terms of spending per capita. Average
Cebu’s leadership in the ABC+
became even more intense. Consumer
merchant leasing occupancy was 99% for
market, marketing programs will be
spending has been equally cautious, and
2002. Despite security concerns in the last
undertaken in neighboring regional
centered on basic goods.
quarter, mall visits and expenditure levels
cities, as well as for specific market
continued to increase.
segments such as family shoppers,
AYALA CENTER CEBU
SALES PERFORMANCE
(In Php Million)
4000
3,327
2,472
2000
1000
0
98
99
00
01
02
Not surprisingly in a market where club shares
exclusive shops are being introduced
well as the only developer in Visayas
are considered luxury products, City Sports
as well to enhance the tenant mix.
and Mindanao with a wide range of
Club Cebu (CSCC) experienced a slowdown
Land leases of available space will
real estate products. In general, its
in sales. As of year-end, cumulative take-up
also be pursued to maximize
projects have attained the highest market
reached 66% out of the 1,391 shares which
utilization of the existing asset base.
share in different categories owing to the
had been put on the market in five tranches
Company’s credibility and track record.
since February 1999. Despite the recent
Release of new tranches of City Sports
availability of CSCC shares in the secondary
Club Cebu shares will be managed
In Bacolod, ALI attained its objective of
market, and the entry of new projects, share
to promote value appreciation and
strengthening the market leadership of
prices have, however, remained firm and were
operations will be enhanced in various
Ayala Northpoint, a high-end residential
holding up at P859,000 for Class A shares;
aspects, including reciprocal
community. Cumulative take-up reached
P841,000 for Class B shares; and P1,350,000
arrangements forged with other
54% of a total of 416 lots, inclusive of the
for Class C shares, as of year-end.
prestigious clubs. In Bacolod, ALI’s
dominance in the high-end residential
179 Phase 2 lots launched in April.
The Asiatown IT Park of CHI subsidiary,
market, through Ayala Northpoint, will
Also in Bacolod, the Company launched
Cebu Property Ventures and Development
be sustained and its current involvement
Plantazionne Verdana Homes, a themed-
Corporation, has attracted two Japanese
in the core mid market expanded.
residential community featuring the clustered
information technology (IT) software firms.
lots concept, in October. This project is
Globe Telecom earlier set up its IT Plaza,
In the third quarter of 2003,
the Company’s successful entry into the
which serves as its technical communications
Country Estates, a countryside farm
core-mid residential market in the Visayas-
backbone in Visayas and Mindanao, at the IT
estate, will be launched in
Mindanao region. For the initial phase, 159
park. To date, the Asiatown IT Park is the only
Kang-irag, Cebu City, near Ayala
lots were put on the market. Notwithstanding
IT Park accredited by the Philippine Economic
Heights Cebu, the Company’s
competition from similar projects featuring
Zone Authority outside Luzon.
high-end residential subdivision.
3/11/2003, 1:35 PM
Plantazionne Verdana Homes
Location
: Talisay, Bacolod
Launch Date : October 2002
Area
: 21.5 has. (total)
6.3 has. (Phase1)
No. of Lots
: 590 lots (total)
159 lots (Phase 1)
Ave. Lot Size : 224 sqms.
Take up as of
end-2002 : 25%
02
annual report
Inc., continued to weather the downturn
26-27
2,889
3000
and overseas contract workers. More
Ayala Land and its affiliate, Cebu Holdings,
ALI AR 02.indd
3,890
3,676
27
ayala land, inc.
Visayas and Mindanao Group
Other Business
Interests
Construction
won the bidding and was awarded the
averaging 75%, better than MCBD’s
construction of BCDA’s Samapaguita West
average hotel occupancy rate of 66%.
Ramp and MACEA’s Ayala Avenue-Salcedo
Oakwood’s average room rate of P4,943
Street underpass.
per night continues to be above market of
P3,633. Oakwood, ranked number one in
Consistent with its mandate, Makati
annual report
02
ayala land, inc.
28
Development Corporation (MDC)
During the year, MDC focused on reducing
terms of revenue per available room, has
continued to serve the construction
its construction cost by e-procuring its
established itself as the country’s premier
needs of Ayala Land, Inc. and its
direct materials and subcontract works in
luxury serviced apartment.
subsidiaries which accounted for
order to get the best prices possible.
64% of its revenue. The balance
Currently, it is modernizing and upgrading
Cebu Marriott Hotel’s occupancy rate
represented construction contracts
its construction equipment to improve
averaged 65%, better than Cebu hotel
obtained through biddings and
productivity and quality, and to reduce
market’s 56% average. Average room rate
negotiations from both private and
direct labor cost through mechanization.
was maintained at P1,732 per night, higher
than market average of P1,413.
public sectors that enhanced the
company’s contribution to the Ayala
MDC extensively used the SAP software to
Group as a whole.
strengthen its business processes, improve
In 2002, the focus of Ayala Hotels, Inc.
quality and increase productivity while
was on improving profitability through
In January 2003, MDC became the
recording and monitoring actual cost of its
active asset management. It also sought
first company in the Philippines to
construction business on a real time basis
to protect the average room rates at 2001
receive all three certifications for
vis-à-vis approved operating budgets.
level given the soft market condition that
quality assurance (ISO 9001:2000),
Project offices located outside MDC’s head
emerged in the aftermath of the global
environmental management (IS0
office were given access to SAP.
terror wave.
health and safety standards (OHSAS
Hotels
Property Management
18001:1999).
In 2002, the hotel markets in the Makati
Sparse new developments limited business
Commercial Business District (MCBD) and
prospects and further tightened
Among the projects completed by
Cebu Business District remained soft and
competition among property managers.
MDC during the year were the
competitive in view of the prevailing excess
Globe-Islacom corporate office at
of room supply over demand.
14001:1996) and compliance with
(APMC) maintained its high quality of
the Cebu Business Park, a Makro
ALI AR 02.indd
Ayala Property Management Corporation
store in Batangas City, and the
However, Hotel Intercontinental Manila
service and set up a technical emergency
Ayala Greenfield Estates village
and Oakwood Premier Ayala Center each
team and concierge system to further
clubhouse and nature park. It also
maintained high occupancy rates,
address clients’ needs and requirements.
28-29
3/11/2003, 1:35 PM
Terrorist threats prompted the adoption
The move recognizes a growing niche
high-volume operator focusing on a
of tighter security measures in all
market for leisure activities amid a
specific target group of customers.
managed properties.
generally weak real estate market. It
Target customers are small and
aims to further strengthen the Company’s
medium-size retailers (including
To improve revenues, APMC pursued
positioning as the most diversified real
sari-sari stores), caterers and
property management opportunities
estate company in the country.
institutional customers, such as
outside Ayala Land. In 2002, the Company
hotels and restaurants.
obtained management contracts for two
LLCG plans to develop leisure communities
Additionally, PMI is emphasizing
properties in the Makati Central Business
in a mountain, lakeside, beach or farm
smaller, low-cost stores and larger
District and is managing the premises
environment, offering a wide array of real
quantities at cheaper prices.
of two major tenants in 6750 and MSE
estate options such as lots, vacation homes
Building. The Company will be increasing
and vacation units for rent.
The new Strategic Business Unit will initially interest in Metro Rail Transit Corp.
target the domestic high-end market and
(MRTC) which undertook the MRT-3
In line with efforts to enhance customer
undertake stand-alone leisure projects, as
Project, a light rail, mass transit
satisfaction, APMC initiated seminars and
well as integrated leisure communities.
system that travels approximately
training sessions designed to improve
Preparations are ongoing for project
18 kilometers along the median of
its employees’ property management and
launches in 2003.
the Epifanio de Los Santos Avenue
people handling skills. It also launched
(EDSA), under a Build, Lease and
its proactive call center, which utilizes
Wholesale Distribution
Transfer Agreement. EDSA, the
the Customer Relations Management
Pilipinas Makro, Inc. (PMI), a joint venture
most traveled thoroughfare in Metro
module of SAP to solicit customer
among Ayala Land, Inc., SM Investments
Manila, is a semi-circumferential
concerns, check pending jobs and capture
Corp., and SHV Makro N.V, continues to
road along the north-south axis,
unanswered calls.
expand its market reach and solidify its
connecting major residential and
position as the leading wholesaler in the
commercial centers to Makati, the
Leisure and Lifestyle Communities
Philippines. In 2002, PMI opened its ninth
city’s central business district.
In September 2002, the Company created
store in Batangas.
the Leisure and Lifestyle Communities
MRT-3 is presently being used
Group (LLCG) to develop real estate
Amid a more competitive market, PMI’s
by approximately 350,000
products with a leisure component.
business strategy is to remain a low-cost,
riders everyday.
ALI AR 02.indd
28-29
3/11/2003, 1:35 PM
02
annual report
coming months.
Ayala Land holds an effective 15.8%
29
ayala land, inc.
leasing and brokerage activities in the
Infrastructure
LANDBANK (As of December 2002)
3,866 Hectares
4
In November 2002, the Company, together
compensation committees have been
with Greenfield Development Corporation,
organized with an independent director
signed an agreement with Metro Pacific
as member. An Anti-Money Laundering
Asset Rationalization
Corporation to acquire a controlling interest
Manual was likewise adopted in November
One of the Company’s strengths
in Bonifacio Land Corporation (BLC)
pursuant to the government anti-money
is its large, high quality landbank
constituting 50.38% of its outstanding
laundering initiative.
which as of end-2002 stood at
capital stock. The agreement will enable the
3,866 hectares, estimated to be
partnership to acquire a significant position
Marketing Organization
at least 15-20 years worth of
in Fort Bonifacio, the single most attractive
Faced with a weak market, the Company’s
development. About 74% of this
available parcel of land of that size in Metro
Sales and Marketing Services Group
landbank is located in the
Manila at a fair price. Over the medium and
(SMSG) intensified its efforts to generate
Calabarzon area where the
long term, Fort Bonifacio will evolve as a
healthy sales volumes and development
2,500-hectare Ayala South
natural and complementary extension of the
income for the Company.
community is being developed.
Makati Central Business District.
Key Corporate
Initiatives
3
1
2
1 Calabarzon
2 Visayas/ Mindanao Area
74%
13%
3 Metro Manila
10%
4 Other Luzon Area
3%
The 3,866-hectare landbank consisting
of high-quality, low cost properties
in choice locations is a source of the
Company’s strength.
annual report
02
ayala land, inc.
30
The Company structured its sales
Last year, the Company continued
The asset rationalization program is
organization to reach the widest markets.
to implement an asset
expected to continue in the next five years
In the second quarter of 2002, the
rationalization program aimed at
until the Company is able to establish the
Company formed Ayala Land Sales, Inc.,
generating liquidity and increasing
right mix of assets that will support its
also known as ALI Property Specialists
the Company’s capability for
medium- to long-term growth.
(ALIPS), an in-house, commission-based
making additional strategic
brokerage group, to focus on ALI’s high-
investments. Non-strategic
Corporate Governance
properties and investments were
The Company has a long-standing
identified for possible disposal.
commitment to the principles of good
ALIPS complements the Company’s two
These include 319 hectares
and transparent corporate governance. Its
other primary distribution channels, Ayala
representing 8% of total landbank.
focus on creating and sustaining increased
Land’s SMSG and external brokers.
shareholder value has been key to its
Aside from serving as an in-house sales
Landbanking activities will focus
financial strength and competitiveness in a
group, SMSG manages the external brokers
on properties used for its core
volatile market.
and champions customers’ interests
end subdivision and building projects.
businesses, particularly shopping
ALI AR 02.indd
through its involvement in project
centers and low- to middle-cost
In line with the best practices of corporate
conceptualization, design
housing. In October 2002, the
governance contained in the Code of
and development.
Company signed a joint
Corporate Governance approved by the
development agreement with the
Securities and Exchange Commission (SEC)
Working with the Buyer Financing Division,
BCDA on the 8.5-hectare Lot B which
on 4 April 2002, the Company adopted
attractive payment schemes were
will be developed as a residential
a Manual on Corporate Governance in
introduced and served as effective
enclave in Fort Bonifacio.
August. Audit, nomination and
incentives for buyers. Sales initiatives
30-31
3/11/2003, 1:35 PM
and broker briefings were conducted
out the software to Ayala Land and
P900 million, generating savings
on a quarterly basis to ensure market
its major subsidiaries. mySAP.com is
of P195 million by year-end.
penetration. A comprehensive sales
the leading enterprise resource planning
E-bidding has since been rolled-out
program called the “Last Quarter Storm”
software designed to provide a fully
to Ayala Land subsidiaries,
was implemented in the fourth quarter
integrated and widely accessible system
namely Makati Development
to increase prospects and bookings,
that can provide consistent and up-to-date
Corporation and Laguna Properties
enhance broker incentives and push
information valuable for better decision
Holdings, Inc.
slow moving units. By year-end, this
making and quicker response.
The tangible benefits of an integrated, real-
owned subsidiary ALInet.com,
time information system are already being
expects to further enhance its cost
Buyer Financing
realized. More benefits are expected to be
competitiveness with its
Sales and project development staff
realized through a continuous improvement
establishment of myCVP.com, Inc.
continued to work hand-in-hand with
program and expanding the utilization of
in 2002 together with five other
the Buyer’s Financing Division to make
mySAP.com to a broader user base.
players in the construction industry.
payment terms attractive to as wide
myCVP.com, the country’s premiere
a market as possible. Low borrowing
Cost Management
construction vertical portal, allows
cost allowed the Company to reduce
The Company made steady progress in
a broad range of local and foreign
interest rates on its installment packages,
reducing costs to ensure competitiveness of companies to purchase a wide
resulting in more affordable monthly
its products and address the needs of the
variety of construction and building-
amortization levels.
price sensitive market.
related products in an electronic
purchasing marketplace through its
Brisk take-up enabled the Company
Cost reduction initiatives include bulk
e-bidding facility (via BayanTrade)
to bring down our downpayment
purchases of cement and reinforced steel
and other value-added services.
requirements, making it easier for buyers
bars, value engineering measures to assess
to own their desired Ayala property.
the efficiencies of designs against costs, the
Lastly, a solid balance sheet allowed
use of locally or regionally manufactured
the Company to season its installment
construction materials, whenever feasible,
receivables longer, while it continues
and adoption of contract packaging formula
negotiating with various financial
on volume construction, in the case of
institutions for no-recourse discounting
Laguna Properties Holdings, Inc.
facilities for its Contracts-to-Sell (CTS).
E-bidding, through business-to-business
Integrated Information System
solutions service provider, BayanTrade,
Ayala Land completed the implementation
was successfully institutionalized in the
of mySAP.com substantially on time and
Company’s procurement process. In
below budget and successfully rolled
2002, e-bid volume amounted to over
ALI AR 02.indd
30-31
3/11/2003, 1:35 PM
02
annual report
key projects.
Ayala Land, through its wholly
31
ayala land, inc.
program managed to accelerate sales of
Ayala Land’s achievements in 2002 included the opening of
Greenbelt 2 and 3 as the country’s rst urban retail entertainment
center and the successful launches of new residential developments
catering to distinct market niches.
Verdana Homes,
Bacoor, Cavite
Ayala Greenfield Estates clubhouse
ALI AR 02.indd
32-33
3/11/2003, 1:35 PM
One Legazpi Park
model unit
Hacienda Sta. Monica,
Lipa, Batangas
ALI AR 02.indd
32-33
3/11/2003, 1:35 PM
Greenbelt park
St. Alexandra
Estates, Antipolo
ALI AR 02.indd
34-35
3/11/2003, 1:36 PM
Plantazionne Verdana Homes, Bacolod
Greenbelt 3
Montgomery Place Townhall
The Residences
at Greenbelt
Ayala HIllside Estates
ALI AR 02.indd
34-35
3/11/2003, 1:36 PM
Board of Directors
annual report
02
ayala land, inc.
36
Chairman of the Board
ALI AR 02.indd
36-37
President
Jaime Augusto Zobel de Ayala II
Vice Chairman
3/11/2003, 1:36 PM
Manuel Q. Bengson
Leandro Y. Locsin, Jr.
ALI AR 02.indd
Aristón Estrada, Jr.
36-37
Deln L. Lazaro
Ramón R. del Rosario, Jr.
Mercedita S. Nolledo
Corporate Secretary and Treasurer
3/11/2003, 1:36 PM
Management Committee
President
ALI AR 02.indd
Vincent Y. Tan
Executive Vice President
38-39
Executive Vice President
Manuel J. Colayco, Jr.
SVP, Head - Mass Housing Group
3/11/2003, 1:36 PM
Miriam O. Katigbak
SVP, Head - Commercial
Centers Group
Emilio J. Tumbocon
VP, Head - Construction
Management Group
ALI AR 02.indd
Tristan B. de la Rosa
SVP, Head - Land and Community
Development Group and Sales and
Marketing Services Group
Ma. Victoria E. Añonuevo
VP, Head - Corporate Business
Group and Leisure & Lifestyle
Communities Group
38-39
Angela dV. Lacson
VP, Head - Residential Buildings
Group and Core Middle Income
Residential Group
Jose Rene D. Almendras
VP, Head - Vis-Min Group
3/11/2003, 1:36 PM
Jaime E. Ysmael
VP, Chief Finance Ofcer
Ayala Land, Inc. Ofcers
annual report
02
ayala land, inc.
40
President
Assistant Vice Presidents
Pierangeli T. Sulit
Dinna G. Bayangos
Roberto P. Tagamolila
Aniceto V. Bisnar, Jr.
Sheila Marie U. Tan
Executive Vice Presidents
Roberto A. Chan
Jonathan E. Umali
Maria Corazon G. Dizon
Vincent Y. Tan
Bernard Vincent O. Dy
Division Managers
Vernon A. Gamboa
Dante M. Abando
Senior Vice Presidents
Raul M. Irlanda
Rosabella S. Abella
Manuel J. Colayco, Jr.
Segundina J. Laurel
Leovigildo D. Abot
Tristan B. dela Rosa
Helen Grace T. Lazo
Tetta B. Baad
Miriam O. Katigbak
Michael Alexis C. Legaspi
Cristina C. Comia
Joselito N. Luna
Melito A. Cruz
Vice Presidents
Estrella E. Mariano
Rowena Paz S. Cruz
Jose Rene D. Almendras
Joseph V. Mendoza
Wenceslao A. Cruz, Jr.
Ma. Victoria E. Añonuevo
Francis O. Monera
Ma. Cristina D. Esguerra
Marcelo M. Casillan, Jr.
Rowena M. Nazareth
Berni C. Espiritu
Arturo G. Corpuz
Ma. Teresa S. Palma
Myrna Lynne C. Fernandez
Angela dV. Lacson
David L. Rafael
Josue A. Ferrer
Ma. Cynthia H. Poblador
Ruperto G. Rodriguez
Javier D. Hernandez
Eliezer C. Tanlapco
Juanito P. Rosales
Yolanda F. Ibarle
Emilio J. Tumbocon
Rowena M. Tomeldan
Ma. Carmela K. Ignacio
Jaime E. Ysmael
Jose Emmanuel H. Jalandoni
Senior Division Managers
Cesar Jose C. Jesena
Ma. Cristina G. Angan
Jose Juan Z. Jugo
Ruel C. Bautista
Roberto S. Marquez, Jr.
Steven J. Dy
Mario C. Monsalve
Ramoncito J. Gabriel
Rafael Ramon L.Prats, Jr.
Catherine A. Ilagan
Ana Marie Y. Raymundo
Jose Ma. D. Lopez
Christine Y. Reyes
Ramel R. Mella
Salvador C. Tan
Thomas F. Mirasol
Zosimo G. Tayaban
Rosaleo M. Montenegro
Laurence John I. Visco
Simon C. Mossesgeld
Ma. Katrina M. Yatco
Rodelito J. Ocampo
Eliseo P. Cardenas
Ma. Carmen M. Rosal
Francisco Ma. D. Roxas
Teodoro B. San Juan
ALI AR 02.indd
40-41
As of December 31, 2002
3/11/2003, 1:36 PM
Statement of Management’s Responsibility for Financial Statements
The management of Ayala Land, Inc. is responsible for all information and representations contained in the consolidated balance sheets of Ayala Land, Inc.
and Subsidiaries as of December 31, 2002 and 2001 and the related consolidated statements of income, changes in stockholders’ equity and cash flows for
each of the three years in the period ended December 31, 2002. The consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the Philippines and reflect amounts that are based on the best estimates and informed judgment of management with an
appropriate consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are
properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.
its subsidiaries in accordance with auditing standards generally accepted in the Philippines and have expressed their opinion on the fairness of presentation
41
The Board of Directors reviews the consolidated financial statements before such statements are approved and submitted to the stockholders of the Company.
upon completion of such audit in their report to stockholders.
Chairman
President
Jaime E. Ysmael
Chief Finance Officer
ALI AR 02.indd
40-41
3/11/2003, 1:36 PM
ayala land, inc.
SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, have audited the consolidated financial statements of the Company and
annual report
02
Report of Independent Auditors
The Stockholders and the Board of Directors
Ayala Land, Inc.
We have audited the accompanying consolidated balance sheets of Ayala Land, Inc. and Subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2002.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Philippines. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
annual report
02
ayala land, inc.
42
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ayala Land, Inc. and
Subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally accepted in the Philippines.
January 28, 2003
Makati City
ALI AR 02.indd
42-43
3/11/2003, 1:36 PM
AYALA LAND, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
December 31
2002
2001
P5,713,495
P6,737,331
Accounts and notes receivable - net (Notes 4 and 13)
3,942,943
4,228,444
Subdivision land for sale
4,441,539
4,591,768
Condominium and residential units for sale
2,829,936
4,164,684
780,253
828,067
17,708,166
20,550,294
ASSETS
Current Assets
Other current assets (Note 12)
Total Current Assets
4,045,752
2,088,302
Land and Improvements (Note 8)
19,261,894
19,888,310
Investments - net (Notes 5 and 8)
18,903,013
17,278,933
1,150,700
1,011,518
788,151
890,283
P61,857,676
P61,707,640
Noncurrent Accounts and Notes Receivable (Note 4)
Property and Equipment - net (Notes 6 and 8)
Other Assets (Note 12)
02
annual report
Cash and cash equivalents (Note 3)
ayala land, inc.
43
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
P3,792,662
P4,818,735
Bank loans (Note 8)
1,942,000
760,000
Income tax payable
538,681
315,555
309,884
6,418,957
1,427,642
859,291
431,703
496,002
8,442,572
13,668,540
Long-term Debt - net of current portion (Note 8)
8,622,614
3,741,071
Noncurrent Liabilities and Deposits (Notes 9 and 12)
2,886,994
2,660,252
731,546
643,559
5,698,130
5,803,955
35,475,820
35,190,263
P61,857,676
P61,707,640
Accounts payable and accrued expenses (Note 7)
Current portion of:
Long-term debt (Note 8)
Estimated liability for land and property development
Other current liabilities (Note 12)
Total Current Liabilities
Estimated Liability for Land and Property Development - net of current portion
Minority Interest in Consolidated Subsidiaries
Stockholders’ Equity (Note 10)
See accompanying Notes to Consolidated Financial Statements.
ALI AR 02.indd
42-43
3/11/2003, 1:36 PM
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Earnings Per Share)
Years Ended December 31
2002
2001
2000
P9,860,057
P9,104,315
P7,793,667
1,308,957
1,320,417
1,185,091
1,058,015
1,267,894
1,326,857
12,227,029
11,692,626
10,305,615
Real estate (Notes 11 and 13)
5,458,797
5,616,815
4,903,218
Hotel operations (Note 11)
1,080,195
1,055,530
945,521
General and administrative expenses (Notes 11 and 14)
1,332,985
1,064,646
1,029,905
695,130
783,524
799,656
1,123,414
918,847
631,849
9,690,521
9,439,362
8,310,149
2,536,508
2,253,264
1,995,466
REVENUES
Real estate (Note 13)
Hotel operations
Equity in net earnings of associates, interest, fees,
investment and other income (Notes 5 and 13)
COSTS AND EXPENSES
annual report
02
Interest and other charges (Note 8)
Provision for income tax (Note 12)
ayala land, inc.
44
INCOME BEFORE NET EARNINGS (LOSS)
APPLICABLE TO MINORITY INTEREST
NET EARNINGS (LOSS) APPLICABLE TO MINORITY INTEREST
NET INCOME
Earnings Per Share (Note 15)
16,979
(34,019)
P2,519,529
P2,287,283
P1,844,205
P0.24
P0.21
P0.17
ALI AR 02.indd
44-45
151,261
3/11/2003, 1:36 PM
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in Thousands, Except Par Value and Cash Dividends Per Share)
2002
2001
2000
P10,684,310
P10,684,075
P8,893,551
CAPITAL STOCK - P1 par value (Note 10)
Issued
Balance at beginning of year
50
235
7,326
Stock options exercised
—
—
4,477
Stock dividends
—
—
1,778,721
10,684,360
10,684,310
10,684,075
9,022
9,046
14,066
Issuance of shares
Balance at end of year
Subscribed (Notes 10 and 16)
Issuance of shares
(50)
(235)
Stock options exercised (cancelled)
389
211
(492)
—
—
2,798
9,361
9,022
9,046
02
ADDITIONAL PAID-IN CAPITAL (Note 16)
3,013,769
Stock options exercised (cancelled)
5,221
3,018,990
3,063,340
(49,571)
3,013,769
3,181,759
(118,419)
3,063,340
SUBSCRIPTIONS RECEIVABLE (Note 16)
(22,266)
5,679
Stock options exercised - net
(16,587)
(56,494)
(176,532)
34,228
120,038
(22,266)
(56,494)
13,696,124
13,684,835
13,699,967
6,000,000
6,000,000
6,000,000
15,505,985
13,860,295
14,385,631
Cash dividends - P0.21 per share in 2002 and P0.06 per share in 2001 and 2000
(2,245,261)
RETAINED EARNINGS (Note 10)
Appropriated for future expansion
Unappropriated:
(641,593)
—
Stock dividends - 20%
Net income
—
(588,022)
(1,781,519)
2,519,529
2,287,283
1,844,205
15,780,253
15,505,985
13,860,295
21,780,253
21,505,985
19,860,295
TREASURY STOCK (Note 10)
(557)
(557)
(533)
—
(24)
(557)
(557)
—
Shares repurchased
(557)
P35,475,820
P35,190,263
ALI AR 02.indd
44-45
3/11/2003, 1:36 PM
P33,559,705
annual report
Stock dividends
(7,326)
45
ayala land, inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
2002
2001
2000
P3,659,922
P3,172,111
P2,627,315
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax and net earnings (loss) applicable to minority interest
Adjustments to reconcile income before income tax
and net earnings (loss) applicable to minority interest
to operating income before changes in working capital:
Depreciation and amortization
829,748
752,546
699,894
Interest expense - net of amount capitalized
685,085
542,465
454,385
Provision for doubtful accounts
37,003
23,543
6,054
Dividends received from associates
10,500
14,000
29,750
(696,926)
(626,618)
(479,191)
(50,091)
(66,824)
(102,453)
Interest income
Equity in net earnings of associates
Operating income before changes in working capital
annual report
02
4,475,241
3,811,223
3,235,754
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts and notes receivable - trade
46
ayala land, inc.
Subdivision land for sale
Condominium and residential units for sale
Other current assets
(1,788,714)
(333,343)
245,352
406,244
118,447
(278,586)
1,728,329
652,954
(130,048)
73,903
181,353
(155,500)
340,666
(113,326)
(175,036)
132,358
Increase (decrease) in:
Accounts payable and accrued expenses
Other current liabilities
Estimated liability for land and property development
(1,067,411)
5
656,338
(116,982)
136,825
4,483,935
4,479,282
3,072,829
Interest received
390,461
489,788
372,611
Income tax paid
(911,576)
(851,879)
(1,043,180)
Interest paid - net of amount capitalized
(643,763)
(575,196)
(408,174)
Cash generated from operations
Net cash provided by operating activities
3,319,057
3,541,995
1,994,086
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to:
(23,179)
(301,666)
(1,221,224)
(2,121,065)
(1,743,552)
(1,084,884)
(376,602)
(232,538)
(196,338)
Accounts and notes receivable - nontrade
386,227
266,160
(755,158)
Other assets
107,859
(206,415)
139,379
Land and improvements
Investments
Property and equipment
Decrease (increase) in:
Net cash used in investing activities
(2,026,760)
(Forward)
ALI AR 02.indd
46-47
3/11/2003, 1:36 PM
(2,218,011)
(3,118,225)
2002
2001
2000
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (payments of):
Bank loans
P1,182,000
P527,000
(P261,000)
Long-term debt
(1,227,530)
2,080,390
702,775
Increase (decrease) in:
Minority interest in consolidated subsidiaries
Proceeds from issuance of capital stock (cancellation of subscriptions)
Dividends paid
86,158
(251,179)
198,134
(122,804)
(395,072)
(194,097)
11,289
(15,131)
(2,245,246)
(641,590)
—
Purchase of treasury shares
5,604
(534,456)
—
(24)
Net cash provided by (used in) financing activities
(2,316,133)
1,304,418
(83,064)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(1,023,836)
2,628,402
(1,207,203)
6,737,331
4,108,929
5,316,132
P5,713,495
P6,737,331
P4,108,929
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
47
46-47
ayala land, inc.
ALI AR 02.indd
02
annual report
Noncurrent liabilities and deposits
3/11/2003, 1:36 PM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Corporate Information
SFAS 31/IAS 31, “Financial Reporting of Interests in Joint Ventures,” and SFAS
36/IAS 36, “Impairment of Assets” effective January 1, 2002.
Ayala Land, Inc. (the Company) is incorporated in the Republic of the
Philippines. The Company’s registered office and its principal place of
Adoption of the above standards in 2002 did not result in restatements of prior
business is at Tower One, Ayala Triangle, Ayala Avenue, Makati City. The
year consolidated financial statements. Additional disclosures required by the
Company’s parent is Ayala Corporation (AC).
new standards, however, were included in prior year consolidated financial
statements, where applicable.
The Company is incorporated to hold, develop, manage, administer, sell,
convey, encumber, purchase, acquire, rent or otherwise deal in and dispose
Basis of Consolidation
of, for itself or for others, residential including, but not limited to, all kinds of
The consolidated financial statements represent the consolidation of the
housing projects, commercial, industrial, urban or other kinds of real property;
financial statements of the Company and the following wholly owned and
to acquire, purchase, hold, manage, develop and sell subdivision lots, with or
majority owned subsidiaries:
without buildings or improvements; to erect, construct, alter, manage, operate,
lease, in whole or in part, buildings and tenements of the Company or of other
annual report
02
Effective
persons; and, to engage or act as real estate broker.
Percentages
of Ownership
48
ayala land, inc.
The number of employees of the Company and its subsidiaries averaged 1,678
in 2002 and 1,657 in 2001.
Real Estate:
Amorsedia Development Corporation and subsidiaries
OLC Development Corporation
Ayala Greenfield Development Corporation (AGDC)
2.
Summary of Significant Accounting Policies
The principal accounting policies adopted in preparing the consolidated
financial statements of the Company and its subsidiaries are as follows:
100%
100
50
Ayala Land Sales, Inc.
100
Buendia Landholdings, Inc.
100
Community Innovations, Inc. (formerly Five Corners
Ventures Corp.)
100
Crimson Field Enterprises, Inc.
100
Basis of Preparation
First South Properties, Inc.
100
The consolidated financial statements are prepared in conformity with
Food Court Company, Inc.
100
accounting principles generally accepted in the Philippines and under the
Laguna Properties Holdings, Inc. and subsidiaries
100
historical cost convention.
Las Lucas Development Corporation
100
Liberty Real Holdings Corporation (LRHC)
100
Adoption of New Standards
Red Creek Properties, Inc.
100
The Company and its subsidiaries adopted Statement of Financial Accounting
Aurora Properties Incorporated
70
Standards (SFAS) 16/International Accounting Standard (IAS) 16, “Property,
Vesta Property Holdings, Inc.
70
Plant and Equipment,” SFAS 24/IAS 24, “Related Party Disclosures,” SFAS
Laguna Technopark, Inc.
61
27/IAS 27, “Consolidated Financial Statements and Accounting for Investments
CMPI Holdings, Inc.
60
in Subsidiaries,” SFAS 28/IAS 28, “Accounting for Investments in Associates,”
ALI-CII Development Corporation (ALI-CII)
50
Roxas Land Corporation (RLC)
50
ALI AR 02.indd
48-49
3/11/2003, 1:36 PM
Effective
gross profit rates of individual sales contracts. The percentage of completion
Percentages
method is used to recognize income from sales of projects where the Company
of Ownership
and certain subsidiaries have material obligations under the sales contract to
Construction:
complete the project after the property is sold. Under this method, the gain on
Makati Development Corporation
100
sale is recognized as the related obligations are fulfilled.
Hotels:
Ayala Hotels, Inc. (AHI) and subsidiaries
50
Property Management:
Cost of subdivision land sold before the completion of the development is
determined on the basis of the acquisition cost of the land plus its full
100
development costs, which include estimated costs for future development
Ayala Theatres Management, Inc. and subsidiaries
100
works, as determined by the technical staff of the Company and certain
Entertainment:
subsidiaries. Cost of condominium and residential units sold before completion
Five Star Cinema, Inc.
100
Leisure and Allied Industries Philippines, Inc. (LAI)
50
Others:
of the project is determined based on actual costs and project estimates of
building contractors and technical staff. The estimated future expenditures for
the development of the sold portion of the subdivision land and condominium
ALInet.com, Inc.
100
and residential units are shown under the “Estimated Liability for Land and
Ayala Infrastructure Ventures, Inc.
100
Property Development” account in the consolidated balance sheets with the
portion expected to be incurred within the succeeding year presented as a
significant management influence and control over AHI and subsidiaries.
Revenues from construction contracts of a subsidiary are recognized using the
Likewise, the Company, through its 50% effective ownership and by virtue
percentage of completion method, measured principally on the basis of the
of a management contract or shareholders’ agreement, exercises significant
estimated physical completion of the contract work.
influence and control over the operation and management of RLC, AGDC, ALI-CII
and LAI. Accordingly, the accounts of AHI, RLC, AGDC, ALI-CII and LAI are
Contract costs include all direct materials and labor costs and those indirect
consolidated with the accounts of the Company.
costs related to contract performance. Expected losses on contracts are
recognized immediately when it is probable that the total contract costs will
Except as stated otherwise, consolidated financial statements are prepared
exceed total contract revenues. Changes in contract performance, contract
using uniform accounting policies for like transactions and other events in
conditions and estimated profitability, including those arising from contract
similar circumstances. All significant intercompany transactions and balances
penalty provisions, and final contract settlements which may result in revisions
are eliminated in consolidation. The excess or deficiency of the Company’s and
to estimated costs and gross margins are recognized in the year in which the
certain subsidiaries’ cost of such investments over their proportionate share
changes are determined.
in the underlying net assets at dates of acquisition which is not identifiable to
specific assets is amortized on a straight-line basis over a period of 10 years.
Revenues from hotel operations of a subsidiary are recognized when services
are rendered. Revenues from banquets and other special events are recognized
Revenue and Cost Recognition
when the events take place.
Income from sales of substantially completed projects where collectibility of
sales price is reasonably assured is accounted for using the full accrual method
Revenues from rent as well as management fees from administrative and
while income from sales of projects where collectibility of sales price is not
property management are recognized when earned.
reasonably assured is recognized using the installment method. Realized
income on installment sales is computed based on collections multiplied by the
ALI AR 02.indd
48-49
Interest is recognized as it accrues.
3/11/2003, 1:36 PM
annual report
AC owns the other 50% of AHI and subsidiaries. The Company exercises
02
49
ayala land, inc.
current liability.
Cash and Cash Equivalents
represents the excess of the cost of the acquisition over the fair value of
Cash includes cash on hand and cash in banks. Cash equivalents are short-term,
identifiable net assets of the associate at the date of acquisition which is not
highly liquid investments that are readily convertible to known amounts of cash
identifiable to specific assets. Goodwill is amortized on a straight-line basis
with original maturities of three months or less from dates of acquisition and that
over a ten-year period.
are subject to an insignificant risk of change in value.
Investments in shares of stock of companies in which the Company and certain
Trade Receivables
subsidiaries do not exercise significant influence and investments in land are
Trade receivables are recognized and carried at the original contract price
carried at cost less any substantial and presumably permanent decline in
or invoice amount less any unrealized gain, as applicable, and allowance for
aggregate carrying value of these investments. Land improvements, buildings
any uncollectible amounts. An estimate for doubtful accounts is made when
and hotel property and equipment are carried at cost less accumulated
collection of the full amount is no longer probable.
amortization and depreciation and any impairment in value. All costs that
are directly attributable to the construction of the building and hotel property
Subdivision Land for Sale and Condominium and Residential Units for Sale
and equipment are capitalized, including interest during construction period.
Subdivision land for sale and condominium and residential units for sale are
Amortization and depreciation are computed on a straight-line method over the
carried at the lower of cost or net realizable value (estimated selling price less
estimated useful lives of the assets.
cost to complete and sell) and include those costs incurred for development
and improvement of the properties.
hotel property and equipment are as follows: land improvements - 5 years;
annual report
02
ayala land, inc.
50
The estimated useful lives of investments in land improvements, buildings and
Land and Improvements
buildings - 20 to 40 years; and, hotel property and equipment - 10 to 50 years.
Land and improvements are carried at the lower of aggregate cost or
net realizable value and include those costs incurred for development and
The cost of significant additions, renewals and betterments are capitalized
improvement of the properties. The aggregate net realizable value on a per
while minor expenditures for repairs and maintenance are directly charged
location basis is substantially in excess of costs.
to operations. When assets are retired or otherwise disposed of, the cost
and related accumulated depreciation are removed from the accounts and any
Investments
resulting gain or loss is credited or charged to operations.
Investments in associates are accounted for under the equity method of
accounting. An associate is an entity in which the Company has significant
Investment in government bond is carried at cost.
influence and which is neither a subsidiary nor a joint venture.
Property and Equipment
Investments in associates are carried in the consolidated balance sheets at
Property and equipment are carried at cost less accumulated depreciation and
cost plus post-acquisition changes in the Company’s share in the net assets
amortization and any impairment in value.
of the associates, less any impairment in value. The consolidated statements
of income reflect the Company’s share on the results of operations of these
The initial cost of property and equipment comprises its construction cost or
associates. Unrealized gains arising from transactions with the associates are
purchase price and any directly attributable costs of bringing the asset to its
eliminated to the extent of the Company’s interest in the associates, against the
working condition and location for its intended use. Expenditures incurred
investments in associates. Unrealized losses are eliminated similarly but only
after the fixed assets have been put into operation, such as repairs and
to the extent that there is no evidence of impairment of the asset transferred.
maintenance, are normally charged to operations in the period in which the
Dividends received are treated as a reduction in the carrying value of the
costs are incurred. In situations where it can be clearly demonstrated that
investments.
the expenditures have resulted in an increase in the future economic benefits
expected to be obtained from the use of an item of property and equipment
The Company’s investments in associates include goodwill on acquisition
beyond its originally assessed standard of performance, the expenditures are
(net of accumulated amortization and any impairment in value). Goodwill
capitalized as an additional cost of property and equipment.
ALI AR 02.indd
50-51
3/11/2003, 1:36 PM
Depreciation is computed on a straight-line basis over the estimated useful
rate of interest assumed in the actuarial valuation, is sufficient to provide the
life of the asset as follows: buildings and improvements - 20 to 40 years;
required retirement benefit at the employee’s retirement.
machinery and construction equipment - 5 years; furniture, fixtures and office
equipment - 3 to 10 years; and, transportation equipment - 3 to 5 years.
Certain subsidiaries and associates continue to determine their retirement
costs using the projected unit credit method. The projected unit credit method
The useful life and depreciation method are reviewed periodically to
sees each year of service as giving rise to an additional unit of pension
ensure that the method and period of depreciation are consistent
entitlement and values each unit separately to build up a total retirement
with the expected pattern of economic benefits from items of property
benefit obligation. Under this method, the annual normal cost for an equal unit
and equipment.
of benefit increases each year because the period to the employee’s retirement
continually shortens, and the probability of reaching retirement increases. It
Impairment of Assets
is not practical for these companies to shift to the entry age normal method in
An assessment is made at each balance sheet date to determine whether there
2002. Had these companies used the entry age normal method, the effect in
is any indication of impairment of any asset, or whether there is any indication
net income would not be material.
that an impairment loss previously recognized for an asset in prior years may no
recoverable amount is estimated. An asset’s recoverable amount is computed
Deferred income tax is provided using the liability method. Deferred tax assets
as the higher of the asset’s value in use or its net selling price.
and liabilities are recognized for the future tax consequences attributable to
(a) differences between the financial reporting bases of assets and liabilities
An impairment loss is recognized only if the carrying amount of an asset
and their related tax bases and (b) carryforward benefit of minimum corporate
exceeds its recoverable amount. An impairment loss is charged to operations
income tax (MCIT) and net operating loss carryover (NOLCO). Deferred tax
in the period in which it arises.
assets and liabilities are measured using the tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
A previously recognized impairment loss is reversed only if there has been
to be recovered or settled and the NOLCO is expected to be applied.
a change in the estimates used to determine the recoverable amount of an
asset, however, not to an amount higher than the carrying amount that would
A valuation allowance is provided for deferred tax assets which are not
have been determined (net of any depreciation), had no impairment loss been
reasonably expected to be realized in the future. Any change in the valuation
recognized for the asset in prior years.
allowance on deferred tax assets is included in the computation of the provision
for deferred income tax for the period.
A reversal of an impairment loss is credited to current operations.
Borrowing Costs
Stock Option Plans
Borrowing costs are generally expensed as incurred. Interest and other
The Company has stock option plans for the granting of nontransferable options
financing costs incurred during the construction period on borrowings used
to key officers and employees, whereby they are granted an option to purchase
to finance property development are capitalized as part of development
a fixed number of shares of stock at a stated price during a specified period.
costs (included in “Subdivision land for sale,” “Condominium and residential
Options exercised are recorded at the option price.
units for sale,” “Land and Improvements” and “Investments” accounts in the
consolidated balance sheets). Capitalization of borrowing costs commences
Retirement Costs
when the activities to prepare the asset are in progress and expenditures and
The Company’s and most of its subsidiaries’ retirement costs are determined
borrowing costs are being incurred. Capitalization of borrowing costs ceases
using the entry age normal method. Under the entry age normal method, each
when substantially all the activities necessary to prepare the asset for its
employee is assumed to have entered the plan when first employed or as soon
intended use or sale are complete. If the carrying amount of the asset exceeds
as he or she became eligible. Under this method, the current service cost is a
its recoverable amount, an impairment loss is recorded.
level annual amount or a fixed percentage of salary which, when invested at the
ALI AR 02.indd
50-51
3/11/2003, 1:37 PM
02
annual report
Income Taxes
51
ayala land, inc.
longer exist or may have decreased. If any such indication exists, the asset’s
Foreign Currency Transactions
standard also requires that expenditures on research, start-up, training,
Transactions in foreign currencies are recorded using the exchange rate at the
advertising and relocation be expensed as incurred. The Company and
date of the transactions. Foreign currency assets and liabilities are stated
certain subsidiaries will adopt SFAS 38/IAS 38 in 2003. This will result in
at the exchange rates prevailing at balance sheet dates. Exchange gains or
a retroactive adjustment to beginning retained earnings in 2003 of P82.5
losses arising from foreign exchange transactions are credited or charged to
million relating to the write-off of start-up costs. Comparative prior period
operations for the year, except as stated otherwise.
financial statements presented will be restated accordingly.
Exchange gains or losses of AHI and subsidiaries relating to the restatement
of its long-term dollar loans obtained to construct the hotel property are
3. Cash and Cash Equivalents
capitalized to hotel property and equipment.
This account consists of:
Earnings Per Share
Basic earnings per share (EPS) is computed by dividing net income for the
2002
year attributable to common stockholders by the weighted average number
(In Thousands)
of common shares issued and outstanding during the year adjusted for
Cash on hand and in bank
P801,693
P722,350
any subsequent stock dividends declared. Diluted EPS is computed
Short-term investments
4,911,802
6,014,981
P5,713,495
P6,737,331
by dividing net income plus interest expense (net of income tax)
annual report
02
ayala land, inc.
52
2001
on convertible long-term commercial papers by the weighted average
number of common shares issued and outstanding during the year after
Cash in bank earns interest at the respective bank deposit rates. Short-term
giving effect to assumed conversions and the retroactive effect of stock
investments are made for varying periods depending on the immediate cash
dividends declared.
requirements of the Company and its subsidiaries, and earn interest at the
respective short-term investment rates.
New Accounting Standards Effective Subsequent to 2002
The Accounting Standards Council has approved the following accounting
standards which will be effective subsequent to 2002:
• SFAS 10/IAS 10, “Events After the Balance Sheet Date,” which prescribes
4. Accounts and Notes Receivable
Accounts and notes receivable are summarized as follows:
the accounting and disclosure related to adjusting and non-adjusting
subsequent events. The Company and its subsidiaries will adopt SFAS
2002
10/IAS 10 in 2003 and, based on current circumstances, does not believe the
effect of adoption will be material.
2001
(In Thousands)
Trade - net of unrealized gain of P1,228,524
in 2002 and P421,526 in 2001
• SFAS 37/IAS 37, “Provisions, Contingent Liabilities and Assets,” which
(see Note 8)
P6,241,292
P4,489,581
provides the criteria for the recognition and bases for measurement of
Related parties (see Note 13)
235,233
419,359
provisions, contingent liabilities and contingent assets. It also specifies the
Advances to contractors
134,699
119,395
disclosures that should be included with respect to these items. The Company
Accrued receivables
and its subsidiaries will adopt SFAS 37/IAS 37 in 2003 and, based on current
Advances and others
circumstances, does not believe the effect of adoption will be material.
Less allowance for doubtful accounts
• SFAS 38/IAS 38, “Intangible Assets,” which establishes the criteria for the
recognition and measurement of intangible assets. Intangible assets that
Less noncurrent portion
are recognized should be amortized generally over 20 years. The new
ALI AR 02.indd
52-53
3/11/2003, 1:37 PM
2,315
35,913
1,500,547
1,341,178
8,114,086
6,405,426
125,391
88,680
7,988,695
6,316,746
4,045,752
2,088,302
P3,942,943
P4,228,444
5. Investments
The Company’s equity in the net assets of its associates and the related
percentages of ownership are shown below.
This account consists of investments in:
2002
2001
2002
(In Thousands)
Percentage of
Shares of stock:
Ownership
At equity:
Equity in Net Assets
2002
2001
(In Thousands)
Acquisition cost
P2,617,182
P2,652,508
Accumulated equity in net earnings:
Equity in net earnings for the year
605,860
553,036
50,091
66,824
Cebu Holdings, Inc. (CHI) and subsidiaries
47
P1,593,998
P1,594,218
Pilipinas Makro, Inc. (PMI)
28
1,078,834
1,037,111
Alabang Commercial Corporation (ACC)
50
440,337
437,861
Ayala Port, Inc.
50
50,013
71,234
Dividends received during the year
(10,500)
(14,000)
Lagoon Development Corporation
30
84,401
98,986
645,451
605,860
MyAyala.com, Inc.
50
15,050
18,958
3,262,633
3,258,368
P3,262,633
P3,258,368
1,132,986
1,132,986
Certain parcels of land are leased to several individuals and corporations. Some
970,663
1,020,188
of the lease contracts provide, among others, that within a certain period from
2,103,649
2,153,174
the expiration of the contracts, the lessee will have to demolish and remove
5,366,282
5,411,542
any and all improvements (like buildings) introduced or built within the leased
114,322
–
At cost:
Government bond
Land and improvements
properties. Otherwise, the lessor will cause the demolition and removal thereof
and charge the cost to the lessee unless the lessor occupies and appropriates
- net of amortization
1,780,561
1,783,863
the same for its use and benefit.
Buildings - net of accumulated
depreciation of P2,423,131 in 2002
and P2,115,330 in 2001
Consolidated depreciation on buildings and hotel property and equipment
7,848,187
6,155,956
Hotel property and equipment - net of
in 2000. Consolidated amortization of land improvements amounted to P16.2
accumulated depreciation of P1,186,069
in 2002 and P978,960 in 2001
6.
amounted to P536.6 million in 2002, P550.7 million in 2001 and P489.3 million
million in 2002, P14.5 million in 2001 and P18.4 million in 2000.
3,793,661
3,927,572
P18,903,013
P17,278,933
Property and Equipment
Land,
Buildings
and
Improvements
Machinery
and
Construction
Equipment
Furniture,
Fixtures
and
Equipment
Transportation
Equipment
2002
Total
2001
(In Thousands)
Cost
January 1
P579,054
P738,330
P307,427
P193,765
P1,818,576
P 1,706,666
Additions
33,311
123,258
211,792
44,782
413,143
267,753
Disposals
(29,844)
(18,410)
(30,321)
(79,831)
(155,843)
December 31
582,521
843,178
ALI AR 02.indd
52-53
(1,256)
517,963
208,226
3/11/2003, 1:37 PM
2,151,888
1,818,576
02
annual report
Others
53
ayala land, inc.
MRT Holdings, Inc.
Land,
Buildings
and
Improvements
Machinery
and
Construction
Equipment
Furniture,
Fixtures
and
Equipment
Transportation
Equipment
2002
Total
2001
(In Thousands)
Accumulated Depreciation
January 1
120,022
339,962
228,056
119,018
807,058
758,635
Depreciation
33,824
71,681
95,157
39,972
240,634
183,117
Disposals
(2,829)
(18,410)
December 31
Net Book Value
(859)
(24,406)
(46,504)
(134,694)
151,017
393,233
322,354
134,584
1,001,188
807,058
P431,504
P449,945
P195,609
P73,642
P1,150,700
P1,011,518
Consolidated depreciation and amortization of property and equipment (charged to various expense and development cost accounts) amounted to P240.6 million in
2002, P183.1 million in 2001 and P163.1 million in 2000.
7.
2002
2001
(In Thousands)
2002
54
ayala land, inc.
Long-term debt consists of:
annual report
02
Accounts Payable and Accrued Expenses
2001
(In Thousands)
Accounts payable
Parent Company:
Bonds, due 2007
P3,000,000
P–
2,170,000
2,170,000
1,060,000
–
6% Convertible, due 2002
–
3,998,200
91-day treasury bill rate + 7/8% due 2002
–
2,000,000
6,230,000
8,168,200
P1,464,199
P1,387,223
Bank loans - with interest rates
Taxes payable
434,342
279,845
ranging from 6.72% to 7.29%
Dividends payable
328,297
485,859
per annum
Retentions payable
43,479
55,877
1,522,345
2,609,931
P3,792,662
P4,818,735
Accrued expenses and others
8. Bank Loans and Long-term Debt
Fixed rate corporate notes (FXCNs)
Long-term commercial papers (LTCPs):
Subsidiaries:
Bank loans - with interest rates ranging
Bank loans of P1,942.0 million in 2002 and P760.0 million in 2001 represent
from 6.79% to 14.88% per annum
peso-denominated short-term borrowings by the Company and its subsidiaries
Philippine peso
1,607,596
722,322
with interest rates ranging from 5.75% to 9.25% per annum. These borrowings
Foreign currency
1,094,902
1,269,506
are unsecured except for the P400.0 million short-term loan drawn by the
2,702,498
1,991,828
Company in 2002 which is secured by a mortgage on certain parcels of land
8,932,498
10,160,028
with a carrying value of P79.4 million.
ALI AR 02.indd
54-55
Less current portion
3/11/2003, 1:37 PM
309,884
6,418,957
P8,622,614
P3,741,071
In 2002, the Company issued P3.0 billion bonds at par, with interest at a certain
In November 2002, the Board of Directors approved the issuance of short-term
spread over the 91-day Treasury Bill Rate.
commercial papers, through general public offering, with an aggregate face
value of up to P1.0 billion to be issued at par subject to the registration
The Company’s long-term bank loans are unsecured and will mature on various
requirements of the Securities and Exchange Commission. PhilRatings assigned
dates up to 2006.
a PRS 1 rating, likewise indicating the Company’s strong capacity to meet its
financial commitment on this issue.
The FXCNs consist of 3-, 5-, 7- and 10-year notes issued to various financial
institutions and will mature on various dates up to 2012. The FXCNs bear fixed
interest rates ranging from 11.875% to 14.875% depending on the term of the
9. Noncurrent Liabilities and Deposits
loan. The Company may redeem all (but not part only) of the FXCNs on the 2 , 3 ,
rd
Noncurrent liabilities and deposits consist of:
In 1997, the Company issued LTCPs totaling P6.0 billion, of which P4.0 billion
2002
are convertible at the option of the holders into shares of stock of the Company
2001
(In Thousands)
based on a predetermined formula. As of December 31, 2001, total conversions
Deposits
P782,745
P848,523
of LTCPs into shares of stock of the Company amounted to P1.8 million. The
Retentions payable
502,585
521,934
remaining LTCPs were fully paid in April 2002.
Deferred tax (see Note 12)
535,042
394,458
Deferred credits
508,345
355,027
147,222
294,445
411,055
245,865
P2,886,994
P2,660,252
The subsidiaries’ loans will mature on various dates up to 2009.
Installment payable - net of current
In 2002, the Company pledged its investment in shares of stock of LRHC with a
Other liabilities
portion of P147,222
carrying value of P806.5 million as collateral to secure the latter’s bank loans.
Certain subsidiaries’ loans are collateralized by trade receivables amounting
to P65.6 million and mortgages on real estate properties, hotel property and
10. Stockholders’ Equity
equipment and leasehold rights with a total carrying value of
P3.56 billion.
The details of the number of shares (in thousands) follow:
The loan agreements contain some or all of the following restrictions: material
2002
2001
2000
changes in nature of business; payment of dividends; merger or consolidation;
Authorized
12,000,000
12,000,000
12,000,000
guaranties, investments or advances; encumbrance for borrowed money; sale of
Issued
10,684,360
10,684,310
10,684,075
substantially all of assets and additional loans maturing beyond a year, except
Subscribed
9,361
9,022
9,046
under certain conditions. These restrictions and requirements were complied
Treasury
(24)
with by the Company and its subsidiaries.
10,693,697
(24)
10,693,308
(24)
10,693,097
Interest capitalized amounted to P288.4 million in 2002, P337.0 million in 2001
No transfer of stock or interest which will reduce the ownership of Filipino
and P311.1 million in 2000.
citizens to less than the required percentage of the capital stock as provided
by existing laws shall be allowed or permitted to be recorded in the books
In 2002, the Philippine Rating Service Corporation (PhilRatings) assigned a PRS
of the Company.
Aa rating on the Company’s P3.0 billion bond issue indicating its strong capacity
to meet its financial commitment on the bond issue.
ALI AR 02.indd
54-55
3/11/2003, 1:37 PM
02
annual report
4th and 7th anniversaries, respectively, of the 3-, 5-, 7- and 10-year FXCNs.
55
ayala land, inc.
nd
In 2002, the Board of Directors approved the declaration and payment from
12. Income Taxes
unappropriated retained earnings of the following cash dividends:
Components of the deferred tax assets and liabilities as of December 31, 2002
a) a regular cash dividend of P0.06 per share
and 2001 are as follows:
b) a special cash dividend of P0.15 per share.
2002
2001
(In Thousands)
Retained earnings include undistributed net earnings amounting to P3,406.3
Deferred tax assets on:
million, P3,438.4 million and P3,888.9 million as of December 31, 2002, 2001
NOLCO
and 2000, respectively, representing accumulated equity in the net earnings of
Unrealized gain, deposits and provisions
subsidiaries and associates, which are not available for dividend declaration
until received in the form of dividends from the subsidiaries and associates.
Retained earnings are further restricted for the payment of dividends to the
estate transactions and MCIT
173,459
114,488
Allowance for doubtful accounts
40,125
28,378
Unrealized foreign exchange loss
22,098
5,897
457,441
425,919
125,930
202,573
331,511
223,346
(554,373)
(457,496)
(P222,862)
(P234,150)
Less valuation allowance
annual report
ayala land, inc.
56
11. Costs and Expenses
P277,156
for various expenses on real
extent of the cost of the shares held in treasury.
02
P221,759
Deferred tax liabilities on capitalized customs
duties, interest and other expenses
Depreciation and amortization expense included in consolidated statements of
income are as follows:
The net current and noncurrent components of deferred tax assets and
2002
2001
2000
(In Thousands)
liabilities are included in the following accounts in the consolidated
balance sheets:
Included in:
Cost of:
2002
Real estate
Hotel operations
P430,801
P415,694
P371,454
206,648
215,835
190,903
General and
(In Thousands)
Other current assets
Other assets
administrative expenses
192,299
121,017
137,537
P829,748
P752,546
P699,894
Other current liabilities
General and administrative expenses consists of :
2001
2000
P264,017
P237,928
255,605
194,126
(207,442)
(271,746)
(535,042)
(394,458)
(P222,862)
(P234,150)
Noncurrent liabilities and
deposits (see Note 9)
2002
2001
Provision for income tax consists of:
(In Thousands)
Manpower cost (see Note 14)
P733,985
P644,018
P607,025
192,299
121,017
137,537
Utilities
58,031
73,371
44,324
Current
Others
348,670
226,240
241,019
Deferred
P1,332,985
P1,064,646
P1,029,905
ALI AR 02.indd
56-57
2002
2001
2000
(In Thousands)
P1,134,702
P875,194
(11,288)
43,653
P1,123,414
P918,847
3/11/2003, 1:37 PM
P1,014,210
(382,361)
P631,849
A reconciliation between the statutory and the effective income tax rates follows:
Statutory income tax rate
2002
2001
2000
32.00%
32.00%
32.00%
14.
Retirement Plan
The Company and its subsidiaries have funded, noncontributory tax-qualified
defined contribution type of retirement plans covering substantially all of their
Tax effect of:
Equity in net earnings of associates
(0.44)
(0.67)
employees. The benefits are based on defined contribution formula with minimum
(1.25)
lump-sum guarantee of 1.5 months’ basic salary per year of service. The
Income subjected to lower income
tax rates (see Note 19)
(0.60)
(1.79)
consolidated retirement costs charged to operations amounted to P76.8 million in
(1.13)
Interest income and capital gains
taxed at lower rates
Others - net
Effective income tax rate
(1.58)
(4.62)
(3.47)
1.32
4.05
(2.10)
30.70%
28.97%
24.05%
Based on the latest actuarial valuations of the Company and its subsidiaries, the
aggregate actuarial present value of pension benefits amounted to P496.0 million.
The aggregate fair value of their respective plan assets amounted to P357.2 million.
The principal actuarial assumptions used to determine the cost of pension benefits
with respect to the discount rate, salary increases and return on plan assets were
13. Related Party Transactions
based on historical and projected normal rates. Actuarial valuations are made
at least every one to three years. The Company’s and its subsidiaries’ annual
The Company and its subsidiaries, in their regular conduct of business, have
contributions to their respective plans consist principally of payments covering the
entered into transactions with associates and other related parties principally
current service cost for the year and the required funding relative to the guaranteed
consisting of advances and reimbursement of expenses, purchase and sale
02
of real properties, construction contracts, and development, management,
annual report
minimum benefits as applicable.
underwriting, marketing, and administrative service agreements. Sales and
15.
57
Earnings Per Share
ayala land, inc.
purchases of goods and services to and from related parties are made at
normal market prices.
The following table presents information necessary to compute EPS (in
Revenues from transactions with associates amounted to P230.4 million in
thousands except EPS):
2002
2001
2000
P2,519,529
P2,287,283
P1,844,205
shares
10,693,608
10,693,190
10,690,113
c. EPS (a/b)
P0.24
P0.21
P0.17
a. Net income
The following are the outstanding balances due from related parties as of
December 31, 2002 and 2001 (see Note 4).
number of common
2002
2001
(In Thousands)
CHI and subsidiaries
b. Weighted average
P103,993
P218,039
Ayalaport Makati, Inc.
50,290
27,669
The assumed conversion of the Company’s LTCPs into common shares (see
Globe Telecom, Inc.
21,431
82,957
Note 8) has no dilutive effect. Accordingly, no diluted EPS is presented in the
AC
18,682
22,129
accompanying consolidated statements of income for such years.
ACC
9,209
13,941
PMI
9,002
8,268
MyAyala.com, Inc.
8,817
6,544
Manila Water Company, Inc.
7,034
261
Bank of the Philippine Islands
5,641
38,530
Integrated Microelectronics, Inc.
1,134
1,021
P235,233
P419,359
ALI AR 02.indd
56-57
16. Stock Option Plans
The Company has stock option plans for key officers (Executive Stock Option
Plan - ESOP) and employees (Employee Stock Ownership Plan - ESOWN) covering
2.5% of the Company’s authorized capital stock. The plans provided for an initial
subscription price of shares subject to each option granted equivalent to 85% of
3/11/2003, 1:37 PM
the initial offer price. Any subsequent subscriptions shall be paid for at a price
The options that have been exercised during the year had a weighted average
equivalent to 85% of the average closing price for the month prior to the month
exercise price of P4.03 or about P32.6 million. The fair value of the shares as at
of eligibility under ESOP and the average closing price for the month prior to the
exercise date was P5.69 or about P46.06 million.
month of eligibility under ESOWN.
Outstanding options for the executives and key officers have the
The qualified officers and employees shall pay for the shares subscribed under the
following terms:
plans through installments over a maximum period of 10 years. The shares of
stock have a holding period of five years and the employees must remain with the
Number of
Company or any of its subsidiaries over such period. The plans also restrict the sale
Exercise Dates
or assignment of such shares for five years from dates of subscription.
2002 to 2011
26,061,724
2003 to 2012
36,193,971
Subscriptions receivable from the stock option plans are presented in the statements
2004 to 2013
32,459,823
of changes in stockholders’ equity.
2005 to 2014
11,202,444
Options
105,917,962
In June 2000, the Company offered all its ESOP subscribers with outstanding
subscriptions the option to either cancel their subscriptions, convert their payments
on outstanding subscriptions to fully paid shares or maintain their existing
17. Segment Information
subscriptions. The availments of the cancellation or conversion options have resulted
annual report
02
ayala land, inc.
58
in the reduction in the subscribed capital stock, additional paid-in capital and
The industry segments where the Company and its subsidiaries and associates
subscriptions receivable of the Company.
operate are as follows:
In 2001, the Company offered new ESOP to the executives and key officers of
•
Land, condominium and residential units - development and sale of lots for
the Company. The ESOP is a ten-year option plan. The grantee is selected based
residential, business and industrial purposes, development of residential
on certain criteria like outstanding performance over a three-year period. The
and office condominium projects and single-detached housing for high-
executive or officer may subscribe to the number of shares allocated for him in
end, middle income and low income markets;
accordance with the vesting percentage and vesting schedule stated in the Plan.
•
Rentals - development of commercial centers and lease to third parties
of retail space and land therein; operation of movie theaters, food courts
In November 2001, the Company offered all its ESOWN subscribers with outstanding
and entertainment facilities in these commercial centers; office units and
subscriptions the option to cancel the subscriptions within the 5-year holding period.
carparks leasing;
The availments of the cancellation have resulted in the reduction of subscribed
•
capital stock, additional paid-in capital and subscriptions receivable of the Company.
In December 2001, the program for ESOWN was indefinitely suspended.
Hotel operations - development and operation of hotels and
serviced apartments;
•
Construction - engineering, design and construction of vertical and
horizontal developments;
Movements in the number of stock options outstanding are as follows:
ESOP
•
ESOWN
Others - management services contracts and other investment activities
Business segments
2002
2001
2002
2001
At January 1
71,433,929
576,000
2,141,100
6,668,550
The following tables regarding business segments present assests and
Granted
37,341,481
70,857,929
–
–
liabilities as of December 31, 2002 and 2001 and revenues and income
Exercised
(2,857,448)
–
–
–
information for each of the three years in the period ended December 31, 2002
Cancelled
–
–
–
(4,527,450)
105,917,962
71,433,929
2,141,100
2,141,100
At December 31
ALI AR 02.indd
58-59
(in thousands).
3/11/2003, 1:37 PM
2002
Land,
Condominium and
Residential Units
Revenues
P5,608,105
Operating expenses
4,149,660
Earnings before interest, taxes, depreciation
and amortization (EBITDA)
1,458,445
59,495
EBIT
P1,398,950
Segment assets
P29,193,671
Segment liabilities
P7,949,470
Rentals
P3,329,626
823,869
Hotel
Operations
P1,308,957
904,557
Construction
P922,326
715,318
Others
P1,058,015
448,825
Total
P12,227,029
7,042,229
2,505,757
434,050
P2,071,707
P13,469,247
P1,735,041
404,400
227,380
P177,020
P4,798,684
P3,514,721
207,008
56,213
P150,795
P1,256,697
P950,113
609,190
52,610
P556,580
P13,139,377
P12,232,511
5,184,800
829,748
P4,355,052
P61,857,676
P26,381,856
Rentals
P3,107,298
822,043
Hotel
Operations
P1,320,417
871,220
Construction
P1,563,575
1,291,957
Others
P1,267,894
422,293
Total
P11,692,626
6,984,445
2,285,255
395,641
P1,889,614
P13,493,302
P1,901,239
449,197
229,527
P219,670
P4,990,724
P3,694,873
271,618
56,222
P215,396
P1,518,277
P1,210,619
845,601
43,543
P802,058
P11,947,582
P11,875,191
4,708,181
752,546
P3,955,635
P61,707,640
P26,517,377
2001
Land,
Condominium and
Residential Units
Revenues
P4,067,607
Operating expenses
3,398,495
669,112
50,646
EBIT
P618,466
Rentals
P2,814,275
739,234
Hotel
Operations
P1,185,091
863,728
Construction
P911,784
754,371
Others
P1,326,858
422,922
Total
P10,305,615
6,178,750
2,075,041
377,541
P1,697,500
321,363
196,143
P125,220
157,413
21,086
P136,327
903,936
54,478
P849,458
4,126,865
699,894
P3,426,971
18. Note to Consolidated Statements of Cash Flows
for real property tax. Prior to said date, the subsidiary was registered with
the BOI as an expanding operator of an industrial estate on a preferred
The principal noncash transaction of the Company relates to land purchased on
nonpioneer status under Executive Order No. 226, otherwise known as the
installment amounting to P442 million in 2001.
Omnibus Investments Code of 1987. In accordance with the registration,
the subsidiary is entitled to certain tax and nontax incentives which include,
among others, a three-year income tax holiday for its expansion projects
Registration with Philippine Economic Zone Authority (PEZA) and Board of
through July 11, 2000.
Investments (BOI)
A certain subsidiary is registered with PEZA on October 27, 1999. The PEZA registration
20. Long-term Commitments and Contingencies
entitles the subsidiary to certain incentives under Republic Act No. 7916 as amended,
which includes the 5% gross income tax in lieu of all national and local taxes except
ALI AR 02.indd
58-59
In July 2000, the Company was awarded by the Bases Conversion
3/11/2003, 1:38 PM
ayala land, inc.
59
2000
19.
02
annual report
Land,
Condominium and
Residential Units
Revenues
P4,433,442
Operating expenses
3,576,932
856,510
27,613
EBIT
P828,897
Segment assets
P29,757,755
Segment liabilities
P7,835,455
Development Authority (BCDA) the contract to develop, under a lease agreement, a 9.8
consideration due from the Company and Greenfield in respect of these
hectare lot inside Fort Bonifacio. The Company offered to develop a mall on
transactions will be approximately US$90 million, adjusted in part for foreign
the lot with an estimated gross leasable area of 152,000 square meters. The
exchange fluctuations. The agreement also provides for the constitution of
lease agreement covers 25 years, renewable for another 25 years subject to
a pledge over 5% of BLC’s unencumbered shares as security for contingent
reappraisal of the lot at market value. The annual fixed lease rental amounts to
liabilities and breach of representations and warranties. As part of the
P113 million while the variable rent ranges from 5% to 20% of gross revenues.
agreement, the Company and Greenfield will advance P280 million to finance
Subsequently, the Company entered into a tripartite agreement with BCDA and
the costs to be incurred in BLC’s restructuring program. The closing of these
LRHC, a subsidiary, whereby the Company transferred its rights and obligations
transactions is subject to certain conditions precedent, including obtaining
granted to or imposed under the lease agreement to the subsidiary in exchange
necessary corporate approvals and the completion of BLC’s debt restructuring.
for equity.
In 2002, the Company agreed to underwrite the subscription to North Triangle
In October 2002, the Company was awarded by the BCDA the contract to develop an
Depot Commercial Corporation (NTDCC) additional shares amounting to P1.4
8.5 hectare lot adjacent to the above-mentioned lot which is intended for
billion over a 4-year equity schedule up to 2005 in exchange for a 5%
residential development. The Company’s bid was made on the basis of a joint
underwriting fee (net of a 1.5% rebate to existing shareholders who subscribed).
development structure, and subject to the terms and conditions stated in its
bid, includes an upfront cash payment of P700 million and a guaranteed annual
MRT Development Co. assigned development rights to NTDCC in 2002. NTDCC
revenue stream totaling P1.1 billion over an 8-year period. The execution of the joint
will construct and operate the commercial center under certain terms and
development agreement between the Company and BCDA remains subject to both
conditions until the end of a 50-year lease term renewable for another 25 years.
parties agreeing on certain issues.
The Company and its subsidiaries are contingently liable for lawsuits or claims
annual report
02
ayala land, inc.
60
In November 2002, the Company and Greenfield Development Corporation
filed by third parties which are either pending decision by the courts or under
(Greenfield) signed an agreement with Metro Pacific Corporation (MPC) to
negotiation, the outcomes of which are not presently determinable. In the
acquire a controlling interest in Bonifacio Land Corporation (BLC) constituting
opinion of management and its legal counsel, the eventual liability under these
50.38% of its outstanding capital stock. This acquisition will be effected in
lawsuits or claims, if any, will not have a material effect on the consolidated
relation to the acquisition by the Company and Greenfield of the rights of
financial statements.
Larouge B.V. (Larouge) in the loan which Larouge extended to MPC in the
principal amount of US$90 million and in the security used for such loan in the
form of a pledge over the BLC shares the Company and Greenfield have agreed
21. Reclassification of Accounts
to acquire. As part of these transactions, the Company and Greenfield will
also be acquiring payables of BLC in the principal amount of P655 million
Certain accounts in the 2001 and 2000 consolidated financial statements were
secured by a pledge over shares of stock of Fort Bonifacio Development
reclassified to conform with the 2002 presentation of accounts.
Corporation representing 5.55% of its outstanding capital stock. The total
ALI AR 02.indd
60-61
3/11/2003, 1:38 PM
Subsidiaries & Afliates
Afliates
Alabang Commercial Corporation
Cebu Holdings, Inc.
Cebu Property Ventures & Devt. Corporation
Cebu Leisure Company, Inc.
CBP Theatre Management Inc.
Cebu Insular Hotel Company, Inc.
Lagoon Development Corporation
Pilipinas Makro, Inc.
ALI AR 02.indd
60-61
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
70.0
70.0
61.0
60.0
50.0
50.0
50.0
50.0
By ALI
50.0
47.2
8.0
30.0
28.0
100.0
100.0
100.0
50.0
66.0
100.0
18.6
84.9
100.0
50.0
100.0
50.0
50.0
62.0
60.0
100.0
100.0
100.0
100.0
62.9
60.0
By Afliate
76.0
100.0
100.0
37.1
Mass housing development
Socialized housing development
Financing company
Pre-fabricated house manufacturing
Pre-fabricated house manufacturing
Construction company
Construction holding company
Residential property development
Real estate broker company
Property management
Theatre management
Theatre management
Theatre management
Holding company (for infrastructure and related activities)
Holding company (for rail transport and development)
Transportation development
Land holding company
Property development
Shopping center development/operations
Food court operations
Holding company (for IT-related ventures)
Lifestyle and entertainment portal
Holding company
Internet data center development
Mixed-used development
Industrial estate development
Holding company
Hotel holding company
Hotel operations
Investment company
Hotel operations
Serviced apartment operations
Property development
Family entertainment center operation/management
Entertainment facilities management
Theatre management
Hotel operations
Wholesale consumer products distribution
3/11/2003, 1:38 PM
02
annual report
Laguna Properties Holdings, Inc.
Buklod Bahayan Realty and Devt. Corporation
First Communities Finance Corporation
Concorde Buildings Systems Corporation
Laguna Phenix Structures Corporation
Makati Development Corporation
MG Construction Ventures Holdings, Inc.
Community Innovations, Inc.
Ayala Land Sales, Inc.
Ayala Theatres Management, Inc.
Alabang Theatres Management Corporation
Five Star Cinema, Inc.
Ayala Infrastructure Ventures, Inc.
MRT Holdings, Inc.
Metro Rail Transit Corporation Ltd.
Amorsedia Development Corporation
OLC Development Corporation
Ayala Greenfield Development Corporation
HLC Development Corporation
Las Lucas Development Corporation
First South Properties, Inc.
Red Creek Properties, Inc.
Crimson Field Enterprises, Inc.
Liberty Real Holdings Corporation
Food Court Company, Inc.
ALInet.com, Inc.
MyAyala.com, Inc.
Ayalaport, Inc.
Ayalaport Makati, Inc.
Vesta Property Holdings, Inc.
Aurora Properties, Inc.
Laguna Technopark, Inc.
CMPI Holdings, Inc.
CMPI Land, Inc.
Ayala Hotels, Inc.
Enjay Hotels, Inc.
Enjay, Inc.
Boracay Property Holdings, Inc.
Southern Visayas Property Holdings, Inc.
Cebu Insular Hotel Company, Inc.
Makati Property Ventures, Inc.
Roxas Land Corporation
ALI-CII Development Corporation
Leisure and Allied Industries Phils., Inc.
Nature of Business
61
ayala land, inc.
Ownership
By ALI By Subsidiary
Subsidiaries
Shareholder Information
Ayala Land, Inc.
Corporate Information
Address:
Tower One Building
Ayala Triangle, Ayala Avenue
Makati City 1226
Philippines
Tel. Nos.:
(632) 848-5000
(632) 848-5643
Fax No.:
(632) 848-5336
Web site:
www.ayalaland.com.ph
Email:
ir@ayalaland.com.ph
Shareholder Services and Assistance
annual
annualreport
report
02
02
ayala
ayalaland,
land,inc.
inc.
62
62
For inquiries regarding dividend payments, change of address and account status, lost or
damaged stock certificates, please write or call Bank of the Philippine Islands
Address:
4th Floor, BPI Building
Ayala Avenue corner Paseo de Roxas
Makati City
Philippines
Tel. Nos.:
(632) 816-9067 to 68
Fax No.:
(632) 845-5515
Institutional Investor Inquiries
For inquiries from institutional investors, analysts and the financial community;
please write or call Ayala Land, Inc. - Investor Relations Unit
Address:
29th Floor, Tower One
Ayala Triangle, Ayala Avenue
Makati City 1226
Philippines
Tel. Nos.:
(632) 848-5313
(632) 841-5675 to 77
Fax No.:
(632) 848-6059
Email:
ir@ayalaland.com.ph
concept and design k2 interactive, inc. portraiture by tom epperson operations photography + internal portraits by jo avila
ALI AR 02.indd
62-63
3/11/2003, 1:38 PM
Caring for the Community
ALI is also a prime mover in the Laguna Manpower Employment
and Development Council, a multisectoral organization advocating
programs on workforce development and employment. Its
projects include the establishment of Centers for Technical
Training Excellence, the creation of the Laguna Workforce
Information System and implementation of an entrepreneurship
development program.
Environment The Calamba Green Stream Brigade (CGSB), an
awardee of the Department of Environment and Natural Resources
and the Laguna Lake Development Authority, was created by
ALI to help protect and rehabilitate waterways. CGSB worked
with barangays, private corporations and government agencies in
rehabilitating the Baranca de Sipit and Bucal creeks - two waterways
that replenish Laguna de Bay.
Formed in 1999, the Laguna Water Conservancy is a forum of
more than 30 business enterprises regularly discussing issues
of water resource utilization, protection and management with
national agencies.
The Ayala Tree Nursery, established in 1994, has 10,000 shade
tree saplings and is now a primary supplier of full-grown narra
and mahogany saplings for various reforestation programs. It was
recently made a partner by the Quezon City government in its urban
re-greening program.
ALI AR 02.indd
Yearly, ALI - in coordination with the Museo ng Makati - provides
free tours and seminars at the Ayala Museum for public elementary
students. ALI also supports Lakbay Aral programs in Laguna, Cavite
and Muntinlupa.
Health The Ayala Land Mobile Clinic has conducted free dental
and medical missions in various parts of Luzon, benefiting more
than 1,000 patients. In 2002, missions were undertaken in Makati,
Mandaluyong, Quezon, Pasay, Taguig, Muntinlupa and Las Piñas as
well as in the provinces of Laguna and Cavite.
Culture and Tourism In Makati, your Company helped in the
formation of the Makati Festivals Foundation, a partnership between
the Makati city government and the business sector. The foundation
seeks to manage and promote city-wide cultural events such as the
Caracol, Araw ng Makati and Makati New Year’s Party. ALI is also a
partner of the Department of Tourism in its bid to make Makati a
primary tourist destination.
Also in 2002, the Laguna Tourism Foundation (LTF) was founded
through the efforts of Ayala Land. LTF involves the private sector
in the formulation and implementation of tourism-related policies
and projects.
Trafc Management The Laguna Traffic Task Force is a joint private
sector-government initiative to manage traffic in Laguna’s first and
second districts -specifically the industrial and commercial corridors
along the Sta. Rosa-Tagaytay Road and the Biñan-Sta. Rosa portion
of the old national highway.
A similar traffic program is in place for the Alabang-Zapote Road,
which straddles the growth areas of Muntinlupa and Las Piñas.
Formed by ALI in 1997, Task Force A-Z is made up of corporate entities
and village associations, and works closely with the local government.
Flood Control ALI spearheeded the creation of the MakatiParañaque-Pasay Flood Control Association (also known as Task
Force Noah) to find solutions to flooding. The group dialogues with
government agencies on flood management programs covering,
among others, the Maricaban-Dilain and Tripa de Gallina creeks.
Investment Promotion The Laguna Investment Promotions Bureau
(LIPB) - a special project of ALI and the Laguna provincial
government - is a one-stop shop for investors interested in doing
business in Laguna. LIPB provides investors basic information on
Laguna such as investment-related ordinances, regulations and
permits processing.
Education Every year, your Company donates school supplies to
incoming elementary school pupils. Launched in 1998, the “School
Starter” program has benefited thousands of school children in
Quezon City, Muntinlupa, Las Piñas, Laguna and Cavite.
Special Concerns Your Company continues to extend help to Elsie
Gaches Village - a government-run institution for the mentally
challenged - through ground maintenance work, provision of water
supply, and special events management.
62-63
3/11/2003, 1:38 PM
02
annual report
Livelihood Through the “Dagdag-Kita sa Pamilya” program,
your Company partnered with the Technical Education Skills
and Development Authority (TESDA), Calamba city government,
barangays Maunong and Puting Lupa to teach food processing,
cooking and landscaping skills to over 100 local residents.
In Muntinlupa, ALI is an active partner of the city government in
its “Adopt-A-School Program” and has chosen Putatan Elementary
School, one of the city’s biggest public schools, as a beneficiary.
63
ayala land, inc.
In 2002, Ayala Land strengthened its commitment to improve
the quality of life of residents in target communities through
the promotion of livelihood opportunities; protection of the
environment; implementation of support activities for education,
health, culture and tourism, traffic management; as well as
investment promotion.
Ayala Land, Inc.
ALI AR 02.indd
64
3/11/2003, 1:39 PM

ALI AR 02.indd - Ayala Land Inc.

Transcription

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