SEC 17A - 2012 Annual Report

Transcription

SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 17 OF THE
SECURITIES REGULATION CODE AND SECTION 141 OF
CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended December 31, 2012
2. SEC Identification Number 157912
3. BIR Identification No. 000-551-890-000
4. Exact name of the issuer as specified in its charter: CEBU HOLDINGS, INC.
5. Province, Country or other jurisdiction of incorporation or organization:
Cebu, Philippines
6. Industry Classification Code: _______ (SEC Use Only)
7. Address of principal office: 7/F, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu
Business Park, Cebu City
Postal code: 6000
8. Issuer’s telephone number: (032) 231-5301
9. Former name, former address, former fiscal year: not applicable
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sections 4 and 8 of the
RSA:
Title of each class
Common shares
Number of shares of common stock outstanding
1,920,073,623 shares P1,920,073,623
Amount of debt outstanding: The Company has no registered debt.
11. Are any or all of these securities listed on a Stock Exchange?
Yes [x]
No [ ]
Name of Stock Exchange: Philippine Stock Exchange
Class of securities listed: Common stocks
12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and sections
26 and 141 of the Corporation Code of the Philippines during the preceeding 12
months (or for such shorter period that the registrant was required to file such
reports):
Yes [x]
No [ ]
(b) has been subject to such filing requirements for the past 90 days:
Yes [x]
No [ ]
13. Aggregate market value of the voting stock held by non-affiliates: P 7.680 billion
(as of end-Dec.2012)
No. of Shares
%
Market Value
(P4.00/share)
Ayala Land, Inc. (Parent Company) 956,241,738
49.80% 3,824,966,952.00
Non-affiliate (Public)
963,831,885
50.20% 3,855,327,540.00
Total
1,920,073,623 100.00% 7,680,294,492.00
APPLICABLE ONLY TO ISSUERS INVOLVED IN
INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS
DURING THE PRECEEDING FIVE YEARS
1.
Check whether the issuer has filed all documents and reports required to be filed by
Section 17 of the Code subsequent to the distribution of securities under a plan confirmed
by a court or the Commission.
Not applicable.
DOCUMENTS INCORPORATED BY REFERENCE
2.
Briefly describe documents incorporated by reference and identify the part of the SEC
Form 17-A into which the document is incorporated:
2012 Audited Consolidated Financial Statements (incorporated as reference for Item 7
of SEC Form 17-A)
TABLE OF CONTENTS
Page No.
PART I - BUSINESS AND GENERAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
Business
Properties
Legal Proceedings
Submission of Matters to a Vote of Security Holders
1
25
26
26
PART II – OPERATIONAL AND FINANCIAL INFORMATION
Item 5.
Item 6.
Item 7.
Item 8.
Market for Issuer’s Common Equity and Related
Stockholder Matters
Management’s Discussion and Analysis or Plan of
Operation
Financial Statements
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
26
28
36
36
PART III – CONTROL AND COMPENSATION INFORMATION
Item 9.
Item 10.
Item 11.
Item 12.
Item 13.
Directors and Executive Officers of the Issuer
Executive Compensation
Security Ownership of Certain Beneficial
Owners and Management
Certain Relationships and Related Transactions
Compliance with Leading Practice on Corporate Governance
36
41
43
44
46
PART IV - EXHIBITS AND SCHEDULES
Item 14.
Exhibits and Reports on SEC Form 17-C
Item 14.
(a) Exhibits
(b) Reports on SEC Form 17-C
Additional Disclosures Data
SIGNATURES
INDEX TO EXHIBITS
INDEX TO SUPPLEMENTARY SCHEDULES
47
47
48
52
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business
(Part I, Paragraph (A) of SRC Rule 12)
(A) Description of the Business (The Company)
(1) Business Development.
Cebu Holdings, Inc. is a publicly listed company engaged in real property ownership, development,
marketing, management. It was registered with the Securities and Exchange Commission on December 9,
1988 with an authorized capitalization of P1 Billion.
It is an affiliate company of ALI (49.80%). Other partners include BPI Capital Corp. (15.29%), a whollyowned real estate subsidiary of the Bank of the Philippine Islands, First Metro Investment Corporation,
(11.52%), and the Public (23.39%).
The Company's operations consist of seven (7) types of activities:
rental of retail space
commercial land sales
office and residential condominium sales
sale of proprietary sports club shares
sale of residential subdivisions
lease of office space (e-office / eBloc) via a subsidiary CPVDC
hotel development/operations via an affiliate Cebu Insular Hotel Co. Inc.
The Company owns and manages the Cebu Business Park (CBP), a 50-hectare business and commercial
subdivision in Cebu City, and, to date, the single largest urban development project in Southern Philippines.
CBP is master-planned to be the central business district in Cebu that integrates business, high-rise
residential, shopping, and sports and recreational facilities. CBP is complete with world-class utilities and is
home to some of the top local and international companies.
CBP is strategically located to co-exist with the development plans and directions of Cebu City’s urban
growth. CBP’s major streets serve as a vital part of Cebu City’s radial road network in the northern district.
CBP was officially proclaimed as a PEZA-accredited IT Park pursuant to Presidential Proclamation 2053 (2010).
According to the Special Economic Zone Act of 1995 (as amended in R.A. 7916), all investors and locators in
PEZA-accredited IT Parks are now entitled to fiscal and non-fiscal incentives. Among the benefits of an IT Park
are improvement in international competitiveness, increase in direct investments and capital formation,
employment of job creation, and an improved of quality of life
This development allows Cebu to maximize its advantages as a preferred business and tourist destination in the
country.
There are currently 25 buildings in CBP, with 12 ongoing constructions.
This development is noteworthy not only for its scale but also because of its environment and urban
development aspects. Its roadways have become integral to Cebu City’s road network, and therefore
contribute to the easy flow of vehicular traffic and to daytime population distribution. The master plan allows
for generous open spaces (20 percent of CBP is devoted to open green space and greenery), and makes
allowances for the growing demands of a modern urban commercial community.
The Cebu Business Park and Cebu IT Park, the flagship project of CHI’s subsidiary CPVDC, are unified
through an integrated brand identity as Cebu Park District, which was launched in 2011 Each one is a
complete destination comprising a dynamic whole. Their respective strengths will be highlighted as a
representation of shared growth. The Cebu Park District’s identity will serve to magnify each park’s bestin-class positioning and unify both park’s value proposition of being the premier district for business, leisure
-1-
and living. This integrated brand also serves to sustain continuing build up and promote investment in both
developments.
Ayala Center Cebu is the shopping and lifestyle destination of the region. Nestled at the heart of the
vibrant metropolis, it showcases the most sought-after retail brands as well as promising concepts clustered
in specialized zones. It has also a collection of popular dining and hangout places for fun, bonding, and
nurturing relationship activities.
Since 1994, Ayala Center has continuously offered the most unique and rewarding shopping and dining
experiences to both its local and tourist patrons. It is the preferred mall of the AB market, gated villages,
and office workers with its wide selection of foreign and local brands. It is a masterpiece of retail innovation.
Strategically located at the center of CBP, it is only 20 minutes away from the Mactan Cebu International
Airport, and is just a walk away from some of Cebu’s best hotels, including Cebu City Marriott Hotel. It is
also just 10 minutes away from the nearest seaports for that quick island getaway.
The Terraces at Ayala Center Cebu aims to strengthen the mall’s ambiance-driven dining component with
a cohesive and comprehensive mix of established Manila restaurants like BonChon Chicken which recently
opened in 2012 and Cebu dining concepts like Casa Verde and Mooon Café to name a few. Set at the
center of this area is the outdoor activity area surrounded by vibrant greeneries and soothing water features
that provides distinctive sun up to sun down experience in dining and entertainment. The Terraces
strengthens Ayala Center Cebu’s position as the landmark of unsurpassed shopping, dining, and
entertainment in the region.
In 2011, the Company embarked on the expansion project of Ayala Center Cebu to address the market gap
and strengthen its landmark as the lifestyle and retail destination in Metro Cebu. The expansion will add
four levels of retail stores with over 36,000 square meters of gross leasable space in a gross floor area of
approximately 50,000 square meters. Rustan’s Fresh will transfer to an area twice its existing space at the
basement of the mall. Rustan’s Department Store will likewise expand to a three-storey area four times its
current size to bring in their full line-up in product and brand offerings. The expansion is expected to open
in the last quarter of 2013 and with its seamless connectivity to the existing mall and The Terraces, it will
complete the full-circle architecture of the mall.
The Company also developed the City Sports Club Cebu (CSCC), an exclusive urban resort equipped
with state-of-the-art health and fitness equipment. This project is in partnership with ALI. In 2004, CSCC
signed reciprocity agreements with American Club in Singapore and United Services Recreation Club in
Hongkong.
In 2010, CHI partnered with Ayala Land Premier (ALP), the high-end product category of Ayala Land, for the
development of a premier residential condominium project within CBP. 1016 Residences will provide 109 units
of country club living in Cebu’s address of choice. Located beside the City Sports Club Cebu, residents will be
entitled to club usage rights.
With the success of 1016 Residences, CHI and ALP unveiled another 38-storey residential tower, the first of
its kind in ALP’s residential portfolio in the region. Primed to rise on top of the mall’s soon-to-be-completed
wing, Park Point Residences is said to mark the beginning of sophisticatedly modern and integrated
convenient living in the district since its location will offer private access to future destinations in Ayala
Center Cebu.
CHI also partnered with Alveo Land for the development of Sedona Parc in 2010. This residential condominium
of 114 units will offer upscale lifestyle inspired by style, design, and nature. It is set to rise in a tranquil and highlyaccessible parkside location in Cebu Business Park.
The following year, CHI and Alveo Land showcased its residential innovation through Solinea—its first
multi-tower Alveo project in Cebu that upholds a city-resort living experience through its overall design while
reminiscent of a vacation destination.
-2-
CBP is also the site of the Cebu City Marriott Hotel, the first businessman's hotel managed by worldrenowned Marriott International in Visayas-Mindanao.
Amara is Cebu Holdings Inc.’s premier residential development in Catarman, Liloan, which carries the
Ayala Land Premier (ALP) label and follows the standards of the brand. ALP is set exclusively for the most
well-appointed addresses—the likes of renowned communities such as Ayala Alabang, Forbes Park, and
Dasmariñas Village in Luzon.
Amara offers a master-planned community nestled by the sea and undulating hills accentuated by the
eternal warmth of a historical lighthouse. It provides a safe haven for families and a luxurious seaside living
experience with first-class facilities.
Amara Phase 1 has an esplanade and the grand clubhouse with infinity pools, jacuzzi, social hall, function
room, a beach bar, and view decks with spectacular views of the Mactan channel. Amenities in Phase 2
include a Serenity Park with floating gazebos and a Sports and Recreation Center with covered basketball
and badminton courts and a fitness gym that overlooks the sea. Picnic Groves will be located in Phase 3 of
the sprawling Amara development.
Amara continues to lead the high-end residential open lot category in Cebu at 51 percent market share for 2010.
The opening of the North Coastal Road and the Cansaga Bridge in March 2010 reduced travel time from the city
to the luxury seaside community by half, bringing the opulent Ayala Land Premier lifestyle closer to the central
business district.
In 2010, the Company opened a new phase Amara North. It is the best choice for luxurious seaside living for a
privileged few with its enviable sea access through an existing wharf for yachts and speed boats in an exclusive
enclave at the Catarman headland with an infinity view of the sea. This phase is designed to complement active
lifestyle through five seamlessly connected open parks that are designed to heighten the sense of adventure as
residents will be encouraged to explore the natural terrain and enjoy an enviable lifestyle.
A CHI subsidiary, Cebu Property Ventures and Development Corporation, has also developed a 24-hectare
property not far from the CBP. This project is called Cebu I.T. Park (formerly Asiatown I.T. Park).
Cebu I.T. Park is a well-planned IT economic zone and modern trading hub with global gateway. The 24hectare integrated mixed-use I.T. Park obtained accreditation from the Philippine Economic Zone Authority
(PEZA) as an IT Park in 2000. The PEZA accreditation is the first such distinction accorded a property
development project in the Visayas and Mindanao.
In September 22, 2011, Asiatown I.T. Park was officially re-named Cebu I.T. Park – strengthening the
emphasis the queen city of the South which has today become one of the top BPO destinations globally.
Home to over a hundred IT companies and related services, Cebu I.T. Park is host to over 70
percent of Cebu’s business process outsourcing (BPO) industry. It hosts a good mix of software
research and development, BPOs, and contact centers, bringing in millions of pesos in investments and
employing thousands of people. In fact, by end of 2011, it has provided employment to almost 23,000 – a
mixture of engineers, and information and communication technology professionals.
Cebu’s thriving IT and BPO industry is most evident in the bullish build-up within Cebu I.T. Park
with seven buildings under construction which will be an addition to the existing 13 buildings at the I.T. Park.
eOffice One, a one-storey modular building (11,370 sqm), now hosts BPOs, I.T. firms, conveyor design and
software research multinational companies.
e-Office One is due for redevelopment this year. This will be a very exciting addition to Cebu IT Park.
e-Bloc Tower 1 is 12-storey mid-rise office condominium with retail provision at the ground floor. It is a
project of Asian I-Office Properties, a joint venture between CPVDC and Ayala Land, Inc. The building has
redundant power and water supply, optimum telecommunications facilities, centralized sewage and a
secure location within the heart of the city.
-3-
With its first tower fully leased out, AiO started the development, e-Bloc Tower 2, a 16-level office building with a
total gross floor area of 34,762sqm located in Phase 2 of Cebu I.T. Park, launched in June 2010. e-Bloc Tower 2
is proud manifestation of sustainable design practices. It addresses the increasing demand for office/IT/BPO
space in Metro Cebu. The office building is fully leased out to some of the big players in the BPO/IT industry.
To accommodate the increase in demand for office spaces, e-Bloc Tower 3 was launched last February
2012. It is a 12-level office building with a total gross floor area of 15,760sqm. Estimated completion will be
4th quarter of 2013.
Seeing the demand for residential spaces within this bustling IT park, AiO in partnership with Avida Land (Ayala
Land’s best value brand offering affordable living at its best) launched Avida Towers Cebu in June of 2010. The
first Ayala Land affordable condominium outside Luzon, Avida redefines life with exciting options for future
residents to enjoy the benefits of home, office, and play inside the most vibrant address in town for young
professionals and families. The first tower of over 500 units was sold in an unprecedented rate, prompting the
launch of the second tower after only three months since it was first offered to the market.
The Avida brand further expanded its portfolio in Cebu with the multi-tower Avida Towers Riala. The said
development will seamlessly include spaces for retail and dining in its masterplan, furthering the lifestyle
options that are already present in its location.
The Walk. The Walk steadily remains to be a strong retail magnet in the ever-busy Cebu IT Park. Heavily
frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has emerged from
simply being a hangout haven into popular venue for showcasing recreational activities like sports, music,
photography, and even luxury vehicle collections.
The magnitude and significance of its projects make CHI the leading real estate company in Cebu; a
positive contribution towards the attainment of its mission as part of ALI's Visayas-Mindanao Division - to
become the premier multi-lined real estate organization in the Vis-Min region, and it continues to create
landmarks, set standards, and build lasting relationships with its customers. The Company has definitely
changed the physical landscape of Cebu, bringing with it a distinctive lifestyle for a market that aspires
“world class”.
SUBSIDIARIES AND ASSOCIATE
% Ownership
CBP Theater Management, Inc.
100%
Cebu Leisure Company, Inc.
100%
Cebu Property Ventures and Devt. Corp. 76%
Cebu Insular Hotel Company, Inc.
37%
Nature of Projects
Theater management (Pre-operating)
Entertainment facilities management
Mixed-use development
Hotel development/operations
(2) Business of the Issuer (Operations).
(A) Description of Registrant
(i) CHI’s operations consist of seven types of activities:
•
•
•
•
•
•
rental of retail space
commercial land sales
office and residential condominium sales
sale of proprietary sports club shares
sale of residential lots
lease of office space (e-office/eBloc) via a subsidiary Cebu Property Ventures &
Development Corp.
• hotel development/operations via an affiliate Cebu Insular Hotel Co. Inc.
-4-
(ii) The following spells out CHI’s operating (real estate) revenues by category of activity for
the periods indicated:
For the years ended 31 December
2012
2011
2010
P Mn
%
P Mn
%
P Mn
%
Commercial land sales
Residential lot (Amara)
Residential Condo(1016,
Sedona Parc, Park Point
& Avida Riala Tower)
City Sport Club shares
Rental Income
Ayala Center Cebu
Cebu Leisure Co., Inc.
AITP Retail (The Walk)
e-Office
Others
Theater income
Equity in net earnings of
an associate
Interest and other income
120.2
19.2
169.6
7
1
11
.7
0
750.0
53.9
21.5
29.5
0
96.0
73.9
46
3
1
2
0
6
5
298.5
1,633.0
18
100
131.3
63.6
51.2
10
4
4
174.4
272.9
12
19
0
0.8
0
699.8
50.2
21.8
66.4
0
80.3
28.5
48
3
1
5
0
6
2
632.8
44.5
19.5
49.3
1.5
77.9
29.0
40
3
1
4
0
5
2
249.6
1,442.7
17
100
219.3
1,521.9
14
100
0
Commercial Land Sales
Cebu Business Park. CBP is a 50-hectare master-planned development and the first in the VisMin region
that integrates business, high-rise residential, shopping and sports/recreational uses.
It is strategically located to co-exist with the development plans and directions of Cebu City’s urban growth.
Cebu Business Park’s major streets serve as a vital part of Cebu City’s radial road network in the northern
district. Situated at the center of Cebu City, the CBP is bounded by Archbishop Reyes Avenue in the west,
Juan Luna Avenue to the north, M.J. Cuenco Avenue to the east and Gorordo Avenue to the South. The
Park is located approximately three (3) kilometers from residential subdivisions in the north, and fifteen (15)
kilometers from the Mactan International Airport.
Lot owners at CBP include various prestigious companies such as A. Soriano Corporation, Asian Bank
Corporation, Phinma Properties & Holding Co., Philippine National Bank, Insular Life Insurance Co., China
Bank, Metropolitan Bank & Trust Co., Bank of the Philippine Islands, Bigfoot Properties Phils., Inc., Adelaida
Ghassemi, Alveo Land, Corp., Repro Optima Center for Reproductive Health, Inc., Ms. Lina Danaque Ong,
Ahava Realty & Development Corporation and Contempo Property Holdings, Inc.
A number of vertical construction project started since the Company initiated the construction of Cebu
Holdings Center in 1992. Other CHI-owned projects include Ayala Center Cebu, Park Tower One and Park
Tower Two, Ayala Life FGU Center (jointly with Ayala Life Assurance, Inc. and FGU Insurance Corp.), Cebu
City Marriott Hotel (the 303-room businessman’s hotel jointly with Ayala Hotels, Inc.), Ayala Center Phase
2b, 1016 Residences & Park Point Residences (jointly with Ayala Land Premier) and Sedona Parc &
Solinea (jointly with Alveo Corp.). Other lot owners who count among the early builders are Keppel Center,
First Abacus Financial Tower (owned by the Prosperity Properties and Management Corporation) and the
HDMF / WTI Tower owned by Pag-ibig Fund and WTI, Metro Bank, Union Bank and Taft Financial Center,
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Security Bank, Pioneer House, 8990 Housing and Development Building, Cebu IT Tower, Lexmark Building
1, 2&3, China Bank, Insular Building and Pagoda Realty Corp. In 2012, Avalon Building was completed. The
Apple One Property, Calyx, Creativo building, 2-Quad & China Bank expansion building, were still under
construction during the period. Others are expected to begin construction within the next five years, thus
hastening the pace of full development in the area.
Apart from the office/residential condominium projects and the City Sports Club Cebu, CBP also has a
luxury hotel. This is in accordance with the plan of making CBP a world class mixed-use commercial
property designed to meet the demands of the 21st century.
A CHI subsidiary, Cebu Property Ventures and Development Corporation, has also developed a 24-hectare
property not far from the CBP. This project is called Cebu I.T. Park (formerly Asiatown I.T. Park).
Cebu I.T. Park is a well-planned IT economic zone and modern trading hub with global gateway. The 24hectare integrated mixed-use I.T. Park obtained accreditation from the Philippine Economic Zone Authority
(PEZA) as an IT Park in 2000. The PEZA accreditation is the first such distinction accorded a property
development project in the Visayas and Mindanao.
In September 22, 2011, Asiatown I.T. Park was officially re-named Cebu I.T. Park – strengthening the
emphasis the queen city of the South which has today become one of the top BPO destinations globally.
Home to over a hundred IT companies and related services, Cebu I.T. Park is host to over 70
percent of Cebu’s business process outsourcing (BPO) industry. It hosts a good mix of software
research and development, BPOs, and contact centers, bringing in millions of pesos in investments and
employing thousands of people. In fact, by end of 2011, it has provided employment to almost 23,000 – a
mixture of engineers, and information and communication technology professionals.
Cebu’s thriving IT and BPO industry is most evident in the bullish build-up within Cebu I.T. Park
with seven buildings under construction which will be an addition to the existing 13 buildings at the I.T. Park.
Residential Lot Sales
Amara is Cebu Holdings Inc.’s premier residential development in Catarman, Liloan, which carries the
Ayala Land Premier (ALP) label and follows the standards of the brand. ALP is set exclusively for the most
well-appointed addresses—the likes of renowned communities such as Ayala Alabang, Forbes Park, and
Dasmariñas Village in Luzon.
Amara offers a master-planned community nestled by the sea and undulating hills accentuated by the
eternal warmth of a historical lighthouse. It provides a safe haven for families and a luxurious seaside living
experience with first-class facilities.
Amara Phase 1 has an esplanade and the grand clubhouse with infinity pools, jacuzzi, social hall, function
room, a beach bar, and view decks with spectacular views of the Mactan channel. Amenities in Phase 2
include a Serenity Park with floating gazebos and a Sports and Recreation Center with covered basketball
and badminton courts and a fitness gym that overlooks the sea. Picnic Groves will be located in Phase 3 of
the sprawling Amara development.
Amara continues to lead the high-end residential open lot category in Cebu at 51 percent market share for 2010.
The opening of the North Coastal Road and the Cansaga Bridge in March 2010 reduced travel time from the city
to the luxury seaside community by half, bringing the opulent Ayala Land Premier lifestyle closer to the central
business district.
In 2010, the Company opened a new phase Amara North. It is the best choice for luxurious seaside living for a
privileged few with its enviable sea access through an existing wharf for yachts and speed boats in an exclusive
enclave at the Catarman headland with an infinity view of the sea. This phase is designed to complement active
lifestyle through five seamlessly connected open parks that are designed to heighten the sense of adventure as
residents will be encouraged to explore the natural terrain and enjoy an enviable lifestyle.
-6-
City Sports Club Shares
The Company also developed the City Sports Club Cebu (CSCC), an exclusive urban resort equipped
with state-of-the-art health and fitness equipment. This project is in partnership with ALI. In 2004, CSCC
signed reciprocity agreements with American Club in Singapore and United Services Recreation Club in
Hongkong.
Residential Condominium Sales (Cebu Business Park)
In 2010, CHI partnered with Ayala Land Premier (ALP), the high-end product category of Ayala Land, for the
development of a premier residential condominium project within CBP. 1016 Residences will provide 109 units
of country club living in Cebu’s address of choice. Located beside the City Sports Club Cebu, residents will be
entitled to club usage rights.
With the success of 1016 Residences, CHI and ALP unveiled another 38-storey residential tower, the first of
its kind in ALP’s residential portfolio in the region. Primed to rise on top of the mall’s soon-to-be-completed
wing, Park Point Residences is said to mark the beginning of sophisticatedly modern and integrated
convenient living in the district since its location will offer private access to future destinations in Ayala
Center Cebu.
CHI also partnered with Alveo Land for the development of Sedona Parc in 2010. This residential condominium
of 114 units will offer upscale lifestyle inspired by style, design, and nature. It is set to rise in a tranquil and highlyaccessible parkside location in Cebu Business Park.
The following year, CHI and Alveo Land showcased its residential innovation through Solinea—its first
multi-tower Alveo project in Cebu that upholds a city-resort living experience through its overall design while
reminiscent of a vacation destination.
Rental of Retail Space
Ayala Center Cebu is the shopping and lifestyle destination of the region. Nestled at the heart of the
vibrant metropolis, it showcases the most sought-after retail brands as well as promising concepts clustered
in specialized zones. It has also a collection of popular dining and hangout places for fun, bonding, and
nurturing relationship activities.
Since 1994, Ayala Center has continuously offered the most unique and rewarding shopping and dining
experiences to both its local and tourist patrons. It is the preferred mall of the AB market, gated villages,
and office workers with its wide selection of foreign and local brands. It is a masterpiece of retail innovation.
Strategically located at the center of CBP, it is only 20 minutes away from the Mactan Cebu International
Airport, and is just a walk away from some of Cebu’s best hotels, including Cebu City Marriott Hotel. It is
also just 10 minutes away from the nearest seaports for that quick island getaway.
Ayala Center Cebu plays host to a number of popular foreign brands such as Marks & Spencer, Lacoste,
Guess, Mango, Promod, Esprit, Topshop, Etam, Samsonite, Geox, Rockport, Levi’s, Benetton, Penguin,
Nautica, Dockers, The Body Shop, Naturalizer, Nine West, Springfield, Steve Madden, Girbaud, Converse,
Crocs, and Call It Spring.
Popular national brands like Plains & Prints, Maldita, Kashieca, Folded and Hung, Bench, Penshoppe,
Oxygen, Hot Pink, Lava, Kamiseta, Bayo, ForMe, Memo, Freeway, Artwork, Celine, Officine, CMG,
Bratpack, and Restoerun can also be found in the mall. Cebu home-grown fashion concepts include What
a Girl Wants, Isis, Cocoon, Sunny Side Up, July and Simon.
To respond to the increasing need of the Cebuanos to be physically fit and active, a section of the mall was
redeveloped. The Active Zone features two levels of performance sports brands, fitness equipments,
wellness gadgets, and other related concepts to cater to the need of shoppers who engage in an active
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lifestyle. This included first-in-Cebu concepts like R.O.X., Phiten, Puma, Skechers, Merrell, Wellness
Concepts, R. Options, Runnr, as well as the staple popular sports brands like Nike and Adidas with Rudy
Project and Empire Golf opening in 2012. A special nook at the center of the Active Zone’s second level
was created with a good selection of food kiosks. The popular and well-patronized pretzels of Auntie
Anne’s, the local chocolate bar at Tablea and the Japanese inspired dessert at Mochiko, are names that
have drawn traffic towards this area of the mall.
With Metro Gaisano as its anchor department store and supermarket – which introduced major renovations
in their area in 2012, the mall also houses Healthy Options, Rustan’s Fresh, and Rustan’s Department
Store. The mall also provides for a wide offering for IT, appliances, home furnitures, and specialty stores.
To ease convenience of shoppers, an old cinema was converted into a Service hub – a destination zone
where one can transact travelling and ticketing requirements, payments for utility bills, money changer
exchangem and even tutorial language services. For Entertainment, the fourth floor offers four theaters,
one of which is equipped with 3D digital technology.
Food offerings in the mall range from the popular national fast food names like Jollibee, McDonald’s,
Chowking, Greenwich, Pizza Hut, KFC, and Kenny Rogers, to the casual homegrown food concepts of
Cebu like Oh George, Idea Italia, Harbour City, Orange Brutus, and My Joy. For a more relaxed dining
atmosphere, shoppers may conveniently head out to The Terraces and enjoy its al fresco ambiance,
carefully maintained landscaping and water features.
The Terraces at Ayala Center Cebu aims to strengthen the mall’s ambiance-driven dining component with
a cohesive and comprehensive mix of established Manila restaurants like BonChon Chicken which recently
opened in 2012 and Cebu dining concepts like Casa Verde and Mooon Café to name a few. It hosts
popular, trendy and al fresco dining like TGIFridays, Banana Leaf, Cyma, Café Laguna, Big Mao, Gerry’s
Grill, Pancake House, Hukad (by Golden Cowrie), Gelatissimo, Yellowcab, The Dessert Factory, Lemon
Grass, and Bread Talk. Here, coffee lovers have a handful of choices including Starbucks, Figaro, Seattle’s
Best, Coffee Bean & Tea Leaf, and UCC. To complement the development with nightlife offerings, Red Box
offers a big capacity to host a variety of parties and functions. Set at the center of this area is the outdoor
activity area surrounded by vibrant greeneries and soothing water features that provides distinctive sun up
to sun down experience in dining and entertainment. The Terraces strengthens Ayala Center Cebu’s
position as the landmark of unsurpassed shopping, dining, and entertainment in the region.
In 2011, the Company embarked on the expansion project of Ayala Center Cebu to address the market gap
and strengthen its landmark as the lifestyle and retail destination in Metro Cebu. The expansion will add
four levels of retail stores with over 36,000 square meters of gross leasable space in a gross floor area of
approximately 50,000 square meters. Rustan’s Fresh will transfer to an area twice its existing space at the
basement of the mall. Rustan’s Department Store will likewise expand to a three-storey area four times its
current size to bring in their full line-up in product and brand offerings. The expansion is expected to open
in the last quarter of 2013 and with its seamless connectivity to the existing mall and The Terraces, it will
complete the full-circle architecture of the mall.
For the period ended 31 December 2012 the mall registered total revenues of P
= 750.0 million. This is 7%
higher than same period of last year due to higher lease occupancy. Net operating income is 7% higher
also than same period of last year.
The Walk. The Walk steadily remains to be a strong retail magnet in the ever-busy Cebu IT Park. Heavily
frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has emerged from
simply being a hangout haven into popular venue for showcasing recreational activities like sports, music,
photography, and even luxury vehicle collections.
The right mix of affordable cuisine and elegant ambiance enables restaurants like Blue Elephant, Mooon Café,
Casa Verde, La Marea, Shakeys, and Barbecue Joe to remain a favorite in the area. Favoring the proximity to
popular jogging trails, The Sports Warehouse opened at the second level, offering the best sports brands at
affordable prices. Additional service offerings were made available in Xchange (for currency exchange), and
Smile Dental Care Center (for dental services). With its convenient surface parking, wide open spaces, safe
environment, and its strategic location, the Walk becomes vibrant at night.
-8-
Rental of Office Space
eOffice One, a one-storey modular building (11,370 sqm), now hosts BPOs, I.T. firms, conveyor design and
software research multinational companies, namely: NKC Conveyors Philippines Corporation, Academic
Forward Thinking, Inc., Advance World Solutions, Inc. and Ameeratel, Inc.
e-Bloc Tower 1 is 12-storey mid-rise office condominium with retail provision at the ground floor. It is a
project of Asian I-Office Properties, a joint venture between CPVDC and Ayala Land, Inc. The building has
redundant power and water supply, optimum telecommunications facilities, centralized sewage and a
secure location within the heart of the city. The project is fully leased out to two big companies. NCR
Corporation (NYSE:NCR), a leading global IT business solutions company with world-class offerings in the
areas of financial self-service, store automation, business consumables and IT support service, was the first to
move into e-Bloc Tower 1 and occupying 6,974sqm.
Another locator is JP Morgan Chase Bank, NA- Philippine Customer Care Center, one of the largest banks
in the US and one of the oldest financial firms in the world. The company occupies 12,404sqm of office
space for their Philippine Customer Care Center.
With its first tower fully leased out, AiO started the development, e-Bloc Tower 2, a 16-level office building with a
total gross floor area of 34,762sqm located in Phase 2 of Cebu I.T. Park, launched in June 2010. e-Bloc Tower 2
is proud manifestation of sustainable design practices. It addresses the increasing demand for office/IT/BPO
space in Metro Cebu. The office building is fully leased out to some of the big players in the BPO/IT industry.
NEC, a Japanese software company, occupies 2,679.00sqm while Accenture and Teletech Philippines Inc.
occupy 10,473.50sqm and 13,648.00sqm respectively.
To accommodate the increase in demand for office spaces, e-Bloc Tower 3 was launched last February
2012. It is a 12-level office building with a total gross floor area of 15,760sqm. Estimated completion will be
4th quarter of 2013.
Residential Condominium Sales (Cebu I.T. Park)
Seeing the demand for residential spaces within this bustling IT park, AiO in partnership with Avida Land (Ayala
Land’s best value brand offering affordable living at its best) launched Avida Towers Cebu in June of 2010. The
first Ayala Land affordable condominium outside Luzon, Avida redefines life with exciting options for future
residents to enjoy the benefits of home, office, and play inside the most vibrant address in town for young
professionals and families. The first tower of over 500 units was sold in an unprecedented rate, prompting the
launch of the second tower after only three months since it was first offered to the market.
The Avida brand further expanded its portfolio in Cebu with the multi-tower Avida Towers Riala. The said
development will seamlessly include spaces for retail and dining in its masterplan, furthering the lifestyle
options that are already present in its location.
The company and its subsidiaries had no material Reclassification, Merger, Consolidation or
Purchase of a Significant Amount of Assets during the last three years.
The company and its subsidiaries have not filed any bankruptcy, Receivership or similar
proceedings during the last three years.
Business Development of CHI’s subsidiaries/affiliate:
Cebu Property Ventures & Development Corp. (76% owned subsidiary)
Cebu Property Ventures and Development Corporation was registered with the Securities and Exchange
Commission (SEC) on August 2, 1990 and started commercial operation on September 1, 1996. The
Company started as a joint venture corporation between the Province of Cebu and Ayala Land, Inc. CPVDC
is now 76% owned by Cebu Holdings, Inc. (CHI) after a successful tender offering undertaken in 1995.
-9-
CPVDC is a publicly listed company engaged in real property ownership, marketing, management and
development. The Company's operations consist of five types of activities:
•
•
•
•
•
commercial land sales (Cebu I.T. Park)
development and leasing of office space (eOffice one / eBloc)
residential subdivision sales (Garden Ridge Village – sold out)
rental of retail space (The Walk)
residential condominium sales (Avida Towers Cebu / Avida Riala Tower)
CPVDC is the owner and developer of Cebu I.T. Park (formerly Asiatown I.T. Park), a 24-hectare prime
property complementing the Cebu Business Park. It is ideally located in the former Lahug Airport, now
Cebu's primest area.
Competition:
The Company has no known competitor in the area of commercial land sales. With respect to residential
subdivision sales CPVDC competes for purchasers primarily on the basis of reputation, price, availability of
attractive in-house financing terms, reliability, and the quality and location of the community in which the
relevant site is located.
CPVDC’s THREE YEAR RESULTS OF OPERATIONS
2012 vs. 2011 Results of Operations
Cebu Property Ventures and Development Corporation (CPVDC) posted total revenues of P
= 242.2
million, 7% lower than last year’s P
= 261.5 million. The decline was mainly due to sale of commercial lot at
Cebu IT Park in 2011 and lower rental income from e-Office. Net Income for the period amounted to P
=
132.1 million, 23% lower than the previous year’s P
= 171.3 million.
Earnings before Interest and Taxes (EBIT) showed a 54% decrease from P 106.9 million in 2011 to P
48.8 million in 2012.
Stock price increased from a closing of P2.80 per share in 2011 to P5.00 per share in 2012 resulting to a
total shareholder return (TSR) of 81.52%.
In 2012, CPVDC declared cash dividend from the unappropriated retained earnings of the company as of
December 31, 2011, of P0.12 per share to all shareholders as of record date December 07, 2012 and paid
on December 21, 2012.
= 242.2 million, 7% lower than last year’s P
= 261.5 million.
Revenues amounted to P
•
Cebu I.T. Park‘s revenues registered at P
= 34.0 million, a 54% decline versus last year’s P
= 73.3
million.
•
Rental from e-Office contributed total revenues of P
= 29.5 million, a 56% decline compared to the P
=
66.4 million in 2011. The decrease was due to management decision not to renew lease contracts
at e-Office to allow redevelopment of the area.
•
The Walk posted total revenues of P
= 21.1 million, 3% lower than last year of P
= 21.8 million. As of
December 2012, lease occupancy is 83.2%.
•
Revenue from the sale of condominium units at Avida Riala Tower stood at P
= 3.9 million.
•
Interest and other Income reached P
= 119.5 million, 44% higher than the 2011 level of P
= 82.8
million. The increase was mainly due to sale of services.
- 10 -
•
CPVDC generated P
= 33.7 million in equity in net earnings from an associate, Asian I-Office
Properties, Inc. (AiO. This is 95% higher than the P
= 17.3 million of the previous year.
Cost and Expenses reached P
= 73.8 million, 3% higher than the P
= 71.9 million of the previous year. The
bulk of which was primarily of dues & fees, repairs & maintenance and ad & promo expenses.
= 132.1 million, 23% lower than the previous year’s P
= 171.3 million.
Net Income registered at P
Financial Condition
The company’s financial position remained strong as its total assets stood at P
= 1.567 billion as of December
31, 2012. Current ratio registered at 5.25: 1 lower compared to December 31, 2011 level of 6.44: 1. Current
assets stood at P
= 988.7 million, P
= 430.0 million of which is cash while total liabilities stood only at P
= 188.3
million. The bulk of the company’s liabilities consist of reserve provision for the development of Phase 2 of
Cebu IT Park and newly acquired property amounting to P
= 24.6 million. Debt-to-equity ratio stood at 0.14: 1
higher than December 2011 level of .09: 1.
Key Performance Indicators
The table below sets forth the comparative key performance indicators of the Company:
Indicators
Current Ratio 1
Total Debt to Equity Ratio 2
Bank Debt to Equity Ratio 3
Return on Assets (ROA) 4
Return on Equity (ROE) 5
2012
5.25: 1
0.14: 1
No Bank Loans
8.65%
9.65%
2011
6.44: 1
0.09: 1
No Bank Loans
11.64%
12.88%
1
Current Asserts / Current Liabilities
Total Liabilities / Stockholders’ Equity
3
Total Bank Debt / Stockholders’ Equity
4
Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by
two)
5
Net Income / Average Stockholders’ Equity (Stockholders’ Equity beginning of the year plus Stockholders’
Equity end of the year divide by two)
2
Causes for Material Changes from Period to Period of Financial Statements
Cash and Cash Equivalents amounted to P430.0 million, 19% higher than the P360.2 million in December
2011 mainly due to collection of receivables, rental income and service income during the period.
Short-term Investments decreased by 100% in comparison to the P560 thousand in 2011.
Accounts Receivable reached P271.3 million, 55% higher than the P174.8 million of December 2011 due
to reclassification of accounts from non-current to current. This is mainly the sale of CITP lots to an affiliate
Asian I-Office Properties, Inc. (AiO) on installment in 2009 & 2011 and advances to contractors during the
period.
= 286.3 million, 6% higher than last year’s P
= 269.9 million. The increase was due to
Inventories reached P
the company’s investment in the development of Avida Riala Tower. This is new residential condominium
project of CPVDC in partnership with Avida Land Corporation.
Other Current Assets is 100% or P1.0 million higher than year ago level caused by recognition of prepaid
taxes and other various charges.
- 11 -
Investment in an Associate showed a 26% improvement versus last year’s level of P188.8 million as it
reached to P238.0 million. The increase was due to higher income for the period.
= 1.5 million, 24% higher than last year’s P
= 1.2 million. The increase
Property & Equipment-Net reached P
was mainly due to purchase of new office equipment for the period.
Deferred Tax Assets showed an 11% (P930k) decrease compared to the P8.7 million in December 2011
mainly due to interest accretion during the period.
= 840 thousand showing a 99% (P
= 147.6m) decline due to
Noncurrent Accounts Receivable totaled P
reclassification of accounts from non-current to current.
Other Noncurrent Assets stood at P254 thousand, 82% lower than the year ago level of P1.4 million. The
decrease was mainly due to reclassification of suspense accounts.
Accounts and Other Payables showed a 76% or P60.7 million increase compared to the P79.6 million in
December 2011 mainly due to Accrued DOE & GAE, retention payable, dividends payable, taxes payable
and advance payment to Avida Land Corporation during the period.
Deposits and Other Liabilities posted an 5% or P2.0 million decrease mainly due to the application of
advance rent from various e-Office locators.
Income Tax Payable reached P11.2 million, 66% higher compared to the December 2011 level of P6.7
million primarily due to provision for income tax during the period.
= 2.2m) due to reclassification of
Deposits and Other Noncurrent Liabilities decreased by 100% (P
tenants’ deposit from non-current to current portion.
= 19.2 million improvement as a result of the 2012 Net Income net of
Retained Earnings showed a 5% or P
cash dividend paid in December 2012 amounted to P
= 112.8 million.
•
Due to the Company’s sound financial condition, there is no foreseeable trend or event which may have
material impact on its short-term or long-term liquidity.
•
Funding will be sourced from internally-generated funds.
•
There is no material commitment for capital expenditures other than those performed in the ordinary
course of trade or business.
•
There is no known trend, event or uncertainty that have had or that are reasonably expected to have a
material impact on the net sales or revenues or income from continuing operations.
•
There is no significant element of income arising from continuing operations.
•
There is no material change from period to period in one or more line items of the financial statements.
•
There have not been any seasonal aspects that had a material effect on the financial condition or
results of the Company’s operations.
•
There were no known events and uncertainties that will trigger direct or contingent financial obligation
that is material to the company, including any default or acceleration of an obligation.
•
There were no material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationship of the company with unconsolidated entities or other persons
created during the reporting period.
- 12 -
Cebu Property Ventures and Development Corporation (CPVDC) registered a total revenue of P 261.5
million, a 1% decline vis-à-vis last year’s P
= 263.4 million primarily due to lower land sales, and interest and
other income. Net Income during the period reached 171.3 million a 4% increase vis-à-vis the previous
year’s 164.4 million.
Earnings before Interest and Taxes (EBIT) posted a 20% increase from P 89.1 million in 2010 to P 106.9
million in 2011.
Stock price increased from a closing of P2.00 per share in 2010 to P2.80 per share in 2011 resulting to a
Last year, CPVDC declared cash dividend from the unappropriated retained earnings of the Company as of
December 31, 2010 of P0.12 per share to all shareholders as of record date November 18, 2011 and paid
Revenues stood at P
= 263.4 million.
•
Cebu I.T. Park’s (formerly Asiatown I.T. Park) total sales stood at P
= 105.7 million derived from the sale
of one (1) office lot (3,304 sqm) to AiO, an associate, with a price of P
= 32k per square meter. It was
25% lower versus the 2010 level of P
= 140.3 million where one (1) lot was sold (4,383 sqm.) with a price
of P
= 32k per square meter. Revenue recognized out of the sale was P
= 73.3 million.
•
Revenue generated from e-Office reached P
= 66.4 million, 37% higher than last year (P
= 48.5m).
•
The Walk contributed a total revenue of P
= 21.8 million, a 12% improvement compared to the P
= 19.5
million of last year. Lease occupancy for the period is 98.3%.
•
Interest and other Income reached P
= 82.8 million, a 9% decline vis-à-vis last year’s P
= 90.7 million.
•
CPVDC generated P
= 17.3 million in equity in net earnings from AiO. This was 46% higher than the P
=
11.8 million of the previous year.
Cost and Expenses totaled P
= 71.9 million, 14% lower than the P
= 84.0 million of the previous year, the bulk
of which was due to the cost of sale of the lots sold last year.
= 171.3 million, representing a 4% growth compared to the 2010
Net Income for the period amounted to P
level of P
= 164.4 million.
Financial Condition
The Company’s financial position remained strong as its total assets stood at P
= 1.487 billion as of
December 31, 2011. Current ratio registered at 6.44: 1 higher compared to December 31, 2010 level of
4.72: 1. Current assets stood at P
= 805.5 million, P
= 360.8 million of which was cash while total liabilities
stood only at P
= 127.3 million. The bulk of the Company’s liabilities consisted of the reserve provision for the
development of Phase 2 of Cebu IT Park amounting to P
= 42.9 million. Debt-to-equity ratio stood at 0.09: 1
lower than December 2010 level of .12: 1.
- 13 -
Indicators
2011
2010
Current Ratio 1
6.44: 1
4.72: 1
0.09: 1
0.12: 1
No Bank Loans
No Bank Loans
11.64%
11.56%
12.88%
12.89%
1
Current Assets / Current Liabilities
2
3
4
Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divided by
two)
5
Equity end of the year divided by two)
Causes for Material Changes from Period to Period of Financial Statements
Cash and Cash Equivalents (Note 3) reached P
= 360.2 million, showing a decrease of 21% vis-a-vis the P
=
456.1 million in 2010 mainly due to purchase of a parcel of lot.
Short-term Cash Investments of P
= 560 thousand were money market placement with maturity of more than
three months.
Receivables reached P174.8 million, indicating a 112% improvement versus the P82.3 million of December
2010 due to reclassification of accounts from non-current to current for the sale of CITP lot to AiO on
installment in 2011.
Subdivided Land for Sale & Development stood at P
= 269.9 million, representing an increase of 85% versus
last year’s P
= 145.8 million. The increase was mainly due to reclassification of purchase of newly acquired
property at CITP from Land & Improvements to subdivided land for sale.
Other Current Assets decreased by 100% in comparison to the P
= 3.6 million in 2010 mainly caused by
recognition of value-added tax (VAT) output and other various charges.
Property & Equipment-Net reached P
= 1.6 million. The decrease
was mainly brought about by the depreciation of equipment.
Deferred Tax Assets showed a 6% decrease on account of deferred income from sold lot to AiO on
installment in 2011 and provision for doubtful accounts.
Non-current Portion of Trade Receivables totaled P
= 148.4 million showing a 30% (P
= 65.1 million) decline
due to reclassification of accounts from non-current to current.
Other Non-current Assets amounted to P1.4 million, lower by 68% versus December 2010’s P 4.4 million.
The decline was mainly on account of the payment to various contractors during the period.
Accounts and Other Payables decreased by 31% from P
= 115.4 million in 2010 to P
= 79.6 million due to
settlements made during the year.
Customers’ Deposits & Deferred Credits posted a 54% or P12.3 million increase mainly due to rental
deposit from various e-Office locators.
Income Tax Payable amounted to P
= 6.7 million, 26% lower vis-à-vis the December 2010 level of P
= 9.2
million due to payment of income taxes for 2010.
- 14 -
= 2.2 million, a 75% decline versus that of
Customers’ Deposits and Deferred Credits amounted to P
December 2010 due to reclassification of tenants’ deposit from non-current to current portion.
= 58.5 million improvement as a result of the 2011 Net Income net of
Retained Earnings showed a 16% or P
cash dividend paid in December 2011 that amounted to P
= 112.8 million.
•
Due to the Company’s sound financial condition, there was no foreseeable trend or event which could
have material impact on its short-term or long-term liquidity.
•
Funding would be sourced from internally-generated funds.
•
There was no material commitment for capital expenditures other than those performed in the ordinary
•
There was no known trend, event, or uncertainty that has had or that was reasonably expected to have
a material impact on the net sales or revenues or income from continuing operations.
•
There was no significant element of income arising from continuing operations.
•
There was no material change from period to period in one or more line items of the financial
statements.
•
There were no seasonal aspects that had a material effect on the financial condition or results of the
Company’s operations.
•
There were no known events and uncertainties that would trigger direct or contingent financial
obligation that was material to the Company, including any default or acceleration of an obligation.
•
obligations), and other relationship of the Company with unconsolidated entities or other persons
Cebu Insular Hotel Company, Inc. (37% owned affiliate)
Cebu City Marriott Hotel. The company was incorporated in April 6, 1995 with the primary purpose of hotel
development and management. In September 1996, the Company began work on the 303-room
businessman’s hotel called the Cebu City Marriott Hotel. It is situated within the superblock of CBP and a
walking distance from ACC and the nearby business establishments. The project is owned by Cebu Insular
Hotel Company, Inc., a 63%-37% joint venture between Ayala Hotels, Inc. and the Company.
In January 1997, CHI and AHI announced the appointment of Marriott International as manager and
operator of the hotel. Marriott International is one of the world’s largest hotel chains with over 2,900
establishments in its portfolio including properties in the United States and in 67 other countries. Cebu City
Marriott Hotel was formally opened in February, 1998 amidst uncertainties in the tourism market. Even in
its infancy, the hotel acquired a market niche with its own distinctive brand of service. It is fast becoming a
preferred destination of transient businessmen and the favorite venue for conferences, parties and
banquets. After a year of operation, the Cebu City Marriott Hotel ranked first in guest satisfaction surveys
among Marriott hotels in Asia Pacific, and second worldwide. In 1999, Cebu City Marriott Hotel was cited as
number one in market share among city hotels in Cebu and highest in revenue per available room, twice as
much compared to its nearest competitors.
The company generated a total revenue of P423 million, P388 million and P410 million, for the years 2012,
2011 and 2010, respectively. Furthermore, during the same periods, the company posted a net income of
P37.3 million, P34.4 million and P46.4 million, respectively.
- 15 -
Cebu Leisure Company, Inc.
Cebu Leisure Company, Inc. was formed in 1994, engaged in business of ownership, management and
leasing entertainment facilities. It was a joint venture company between Fun Corporation and Cebu
Holdings Incorporated. The first venture was Glico’s Imaginature. It was registered with the Securities and
Exchange Commission on January 31, 1994, with an authorized capital of P100 Million and a subscribed &
paid up capital of P70 Million.
In its first year of operations as “Glicos Imaginature”, the business was not doing well. Fun Corporation sold
its shares to Cebu Holdings Incorporated thus the latter gaining control over the company. Cebu Leisure
Company, Inc. is a wholly owned subsidiary of Cebu Holdings Incorporated.
Cebu Leisure Company, Inc changed the concept of Glico’s Imaginature into an Entertainment Center. The
first mall to have an entertainment (including cinema) and food center within its premises. The new Ayala
Food & Entertainment Center was launched in August 18, 2001. It has definitely captured the market being
the top destination for entertainment in Cebu. It redefined the lifestyle of the Cebuanos and made Ayala
Center Cebu as the trail blazer not only in shopping but also in dining & entertainment.
In 2012, Active Zone and Food Choices posted growth in sales performance versus last year, which is 16%
and 8%, respectively. Ayala Cinemas on the other hand posted an occupancy rate of 18.4% which is
higher by 3%pts versus last year. Food Choices is due for renovation next year to enable it to complement
to the mall’s new expansion.
For the period ended 31 December 2012, total revenue is P
= 150.0 million showing a 15% growth versus last
year. Net operating income is higher than last year by 18% due to the high financial performance of the
Active Zone.
CBP Theater Management, Inc., founded on February 1, 1994 is still in the pre-operating stage.
(iii) Distribution Method;
The Marketing and Sales Department Ayala Land Sales, Inc.(ALSI), and its accredited real estate brokers
handle the selling/distribution of the Company’s product under CHI-ALSI partnership.
(iv) Status of Any Publicly-Announced Product;
The company has no new products other than the above mentioned Cebu Business Park (CBP) and Cebu
I.T. Park office lots, Sports Club Shares, Amara residential lots, 1016 Residences, Sedona Parc & Park
Point Residences (Residential Condo), e-office, AITP Retail (The Walk), eBloc (BPO Office Building) and
Avida Tower Cebu & Avida Riala Tower (Residential Condo).
(v) Competitive Business Condition;
CHI’s Position in Cebu Real Estate Market 2012
Market Assessment
The Philippine economy grew by +6.0% in 2012, exceeding previous market expectations and making the
Philippines one of the fastest growing economies in Asia.
The service sector remained a major contributor to growth, comprising almost half of the country’s total
GDP. It grew by +7.4% in 2012, driven by the strong performances of subsectors such as Real Estate at
+18.9%.
The growing BPO industry and the steady inflow of Overseas Filipino remittances facilitated growth in the
Real Estate sector as take-ups were high particularly for commercial and residential properties. Meanwhile,
remittances from OFW’s reached USD 19.4 B last year, or +6.0% from the previous year.
- 16 -
In Cebu, the number of IT-BPO companies is up by +24% from the previous years and now registers a total
of 126 companies. Cebu continues to be one of the top outsourcing locations for IT and voice services in
the world, mainly due to continued investments in infrastructure, improvements in policies, and effective
efforts of key industry stakeholders.
Tourism also continued to be resilient with the number of foreign visitors increasing by +8.0% from 2011,
reaching 4.2 Mio.
Cebu also experienced resiliency in its tourism sector with the launch of its Tourism Roadmap (Sept 2012)
and with the support of the National DOT campaign, “It’s more Fun in the Philippines”. Under the next five
years, advocates of the tourism road map intend to enhance Cebu’s strengths as a prime tourism center in
the country, develop new sustainable and authentic tourism products that cater to the current and new
market demands, and create more linkages among local destinations and businesses with different
products and services.
In 2012, Cebu achieved 1.7 M in tourist arrivals, +11% growth vs. the previous year. It also ranked as the
7th best island destination in Asia (based on the Conde Nast Traveler).
Also fueling the economy’s growth were consumer and government spending, both of which increased by
+6.1% and +11.1% respectively. With strong domestic spending and preparations for the 2013 election
underway, analysts perceive this bullish growth to be sustained in the year ahead.
CEBU RESIDENTIAL MARKET
Aside from the BPO and Tourism industries, the Cebu Real Estate industry remained robust in 2012,
posting an all-time high in take-up and number of units launched in the Vertical market. The number of units
launched in 2012 (7,188 Units) was +35% higher than the previous year. Take-up was also at an all time
high at Php 15.3 B, ending the year at +23% vs. the previous year.
High growth was attributed to the growing BPO sector with a total of 17 new companies generating 11,000
new jobs, as well as the continuous interest of investors and major developers in Cebu’s property market
and the steady inflow of OFW remittances, leading to rapid expansion of developments across and beyond
the central business districts. Simultaneously, government projects, mainly infrastructure, and
improvements in policies were continuously underway in support of the area’s actively growing economy.
The data below illustrates the vertical real estate competitive market.
• Park Point Residences from CHI - Ayala Land Premiere is a 255-unit tower with 41% sales take up.
• CHI – Alveo, launched Solinea in Q4 under Ayala’s Mig-High brand and was recognized as the
fastest selling condominium in Cebu, with 75% offtake out of its 591 units.
• Sedona Parc, also from CHI – Alveo, was launched with 114 units and 83% sold out.
• 1016 Residences from CHI - Ayala Land Premiere is a 109-unit tower with sales take up reaching
66% as of year end.
• Primary Homes launched a series of condominiums since 2008 with Avalon being its first project
having a sales offtake of 91%. The four hundred forty La Guardia condominium units is already
100% sold out while the 236-unit Mabolo Garden Flats launched in 2011 is only at 28% sales take
up. Among its subdivision projects, only the 166-unit Woodcrest Residences did well at 93% offtake
with the rest only generating a sales take up of 36% out of 306 units.
• Grand Land launched 2 condominium projects, Grand Residences 1 and 2 along Archbishop Reyes
Avenue with a total number of 496 units. Only Grand Residences 1 showed a considerable offtake
at 84%.
• Fuente Triangle launched Ultima Residences, Prime Residences, and City Loft in the years 2007
and 2008 with a total of 1,110 units. However, among the three projects, take up had been sluggish
except for Ultima Residences with 99% of its units already sold out.
- 17 -
•
•
•
•
•
•
•
•
•
•
•
Gold Peach: (Gaisano) One Pavillion with two towers containing 550 units had a sales take up of
79% in both its North Tower and South Tower. City Soho is another condo with 135 units and sales
take up of 44%.
Filinvest Land, Inc., launched three new multi-tower condominiums (One Oasis Bldg 4 with 647
units across four towers, SanRemo with 592 units across two towers, and Amalfi Oasis with 300
units across two towers) all in the South Reclamation Properties (SRP). One Oasis had a sales
take up of 95%, 100%, 58% and 31% in its Towers 1 to 4, respectively. SanRemo sold out 98% of
its units in Building 3 while Buildings 5,6, and 7 sales take up reached 85%, 54% and 88%,
respectively. Amalfi Oasis had an offtake of 89% and 77% across it two towers.
AboitizLand also launched a new resort inspired condominium, Hanaya in Canduman, Mandaue
City. It is a mid-rise building with 94 units and only 14% sold out by year end. Persimmon Studios
was launched 3rd quarter of 2012 generating a total of 950 Persimmon units. A total of 89% of the
existing Persimmon units were sold by year end while the sales take up of the newly launched
Persimmon studios stood at only 13%.
Following the launch of 238-unit Calyx Center in Cebu IT Park, Innoland Development Corporation
launched Calyx Residences with the same number of units in June 2011 in Cebu Business Park
and experienced significant take up particularly amongst its studio units with reported sales of
100% and 95%, respectively.
Federal Land, Inc., launches yet another tower, Marco Polo Parkview with 396 units, also under the
Marco Polo brand. It had a sales take up of 65%. Its first two towers, Marco Polo Residences and
Two Residences had sold out 87% out of 171 units and 37% out of 270 units already.
Taft Properties was also active launching the tallest condominiums in Cebu, Horizons 101 Towers 1
and 2 in the heart of Mango Avenue. As of year end, 83% of Tower One 847 units had already been
sold while only 3% of the 649 units from Tower 2 were sold.
Robinsons Land Corporation introduced another high rise condominium, Robinland Residences in
April 2012 with 79% of its 90 units already sold. Azalea Place which is closely situated to Cebu’s
main business district, has one tower with 407 units and a sales take up of 46%. Amisa
Condominiums with a total number of 478 units had a sales take up of 73%.
New entrant Mega World launched the first of many planned residential developments in their
township, Mactan Newtown Center. The 1,137-unit, multi-tower development, caters specifically to
the Japanese retiree market and had a sales take up of 96%.
Amara under Cebu Holdings, Inc., is a 44-hectare project with its North Phase already 99% sold. Its
new phase The Parks launched in September 2011, is at 20% take up.
Ma. Luisa Properties launched a new high end, 13.6-hectare residential subdivision, Heritage, in
Jagobiao, Mandaue City late in 2011. Given its less desirable location, take up has been sluggish.
AboitizLand, Inc.’s successful project Ajoya continued to do well in 2011. Lot offer was sold out and
house and lot offers did well in this 15.64-hectare project.
.
Amara
Amara, the only premier seaside residential community in Cebu, continues to remain unrivaled as
competitors offer less attractive developments despite positioning themselves as high-end. The completion
of the North Coastal Road and the Cansaga Bridge continued to benefit the project as more consumers
make Amara their primary home now that it is made more accessible. Amara sells outs its North Phase in
2012. To sustain consumer demand, Amara launched its most spacious phase, “The Parks” at Amara,
which to date is 19% sold.
CEBU COMMERCIAL (BPO/IT)
The IT-BPO sector is seen as a long term growth driver. The industry will continue to offer opportunities and
will carry on to contribute significantly to the nation’s economy year after year. The Philippine BPO industry
targets to reach $ 25 Billion in export sales by 2016, and increase direct employment to at least 1 million.
In Cebu, 17 new BPO companies opened in 2012, generating 11,000 new jobs. The industry now employs
over 95,000 workers, +12% vs. last year. Cebu continues to be one of the top outsourcing locations for IT
and voice services in the world, mainly due to continued investments in infrastructure, improvements in
policies, and effective efforts of key industry stakeholders. Cebu is now the 8th best outsourcing destination
in the world (based on the Study), an improvement in ranking from previous years
- 18 -
OVERALL MARKET
Industry experts forecast that the Residential demand will stay strong for all Real Estate segments. The
unfulfilled demand brought by the housing backlog will continue to fuel residential sales in the country.
Moreover, the low interest rate environment will also encourage greater take-up particularly for first home
buyers.
Cebu’s property market is expected to remain strong as remittances from overseas workers are expected to
remain resilient in 2013 and the IT-BPO industry is expected to strengthen as it expands beyond voice
services. The expanding labor market brought about by growth in the IT-BPO and off-shoring industries will
continue to fuel the demand for entry-level condominium units particularly for developments located within
or near the business districts. Similarly, as the leasing market continues to gain ground, the demand for
expatriate housing from the requirements of BPO companies will also rise. Such bright prospects will
continue to encourage developers to introduce new and more attractive real estate products.
Moreover, Cebu’s main attraction will continue to be its livability. As the province continues to progress,
Cebu will offer a wider range of residential facilities and a good combination of urban and resort facilities,
making it a desirable destination city for years to come.
Top performers in the Cebu real estate segment continue to be Ayala-CHI, ending the year as market
leader in the vertical segment at 24% value share. Its solid performance was attributed to the strong take-up
behind Ayala Land’s 3 brands, Ayala Land Premier, Alveo and Avida, which all launched new projects in
2012 and collectively garnering Php 3.7 B in sales.
Also performing well are new entrant, Mega World, which ended the year at 23% value share due to the
strong market acceptance of its new township project in Mactan, and long time player Federal Land, which
ended the year at third place with 12% share of the market.
CEBU MALL LEASING
Ayala Center Cebu is the centerpiece of Cebu Business Park, a fully-integrated shopping center. Built on a
9-hectare property, this shopping center is ideally situated at the crossroads of connecting avenues that link
up with the rest of Cebu City.
Since its inception in 1994, Ayala Center Cebu has surged on with remarkable excellence in all areas of the
business. Through the years, it has set forth groundbreaking innovations in shopping, dining and
entertainment in this side of the Philippines. Ayala Center Cebu has become the preferred lifestyle
destination in Cebu for its growing market. It is an agora for new products, a venue for community
interaction and the trendsetter for new attitudes and lifestyle.
Ayala Center Cebu | 2012 Performance
For 2012, the retail industry had become more dynamic and competitive with the presence of big players
announcing its major developments in Cebu. The local conglomerates and some corporations have also
embarked on developing retail concepts and commercial play in their own real estate developments. But,
the market remains upbeat and excited on the upcoming expansion of Ayala Center Cebu.
The retail market remains strong and growing especially within the primary trade area of Ayala Center
Cebu. Across the ABC market, the mall continued to enjoy its no. 1 position in terms of market leadership
with consistent and significant increase in shares from gated villages and office workers. This manifestation
in terms of growth from office workers with higher incidence of mall visits can be attributed to the opening of
more office buildings around Cebu Business Park and Cebu IT Park.
Retail is a growing industry fueled by the continuous growth in the BPO and Tourism industry. The tourist
market recognized as a secondary target market for malls remained to be strong and was seen apparent
also with Ayala Center Cebu, as more business hotels opened its doors in 2012 which locations are just a
cross road away from Cebu Business Park. The same factor on convenient location remains to be reason
considered by the guests of Cebu City Marriott Hotel which is seamlessly connected to Ayala Center Cebu.
- 19 -
With the growing local economy, more retailers are coming in with new concepts in the market. The retail
sector is seen to continue to grow in the coming years with the entry of new brands that are ready to set
foot on Cebu through the expansion developments of the retail players.
Consumers will see heightened retail experience with more options in terms of retail offerings, mall
developments sprouting in the area. Local players have managed to grow and become competitive in terms
of customer service, store concept and merchandising. With the increasing competition, Ayala Center Cebu
sets new ways to be differentiated and to stay relevant to the market it serves – making it the top of mind for
shoppers.
Aggressive Retail Expansion in Cebu
It was a vibrant year for Cebu’s retail industry in 2012. Retail grew strong despite intense market
competition. Strong overseas remittances, high spending power of young consumers, business expansions
and sustained tourism arrivals bolstered growth in the industry despite continuing global challenges.
Malls have been mushrooming here in Cebu City and in the Cebu province. Still, a Cebuano economist
predicted that in the next five years, more malls would be constructed on Cebu island, which stretches 225
km from north to south and had a total population of 4.17 million in 2010. The reason: Increase in spending
power of those living and working in Cebu. The growth has come from remittances of overseas Filipino
workers, business process outsourcing companies and tourism. Competition has forced industry players to
identify and focus on their market.
For this year, several malls and retail stores opened; among them are SM Consolacion, Gaisano Capital
SRP, Gaisano Talamban, One Pavilion Mall, Escario Central and Insular Square in Mandaue City. Entry of
imported brands and the expansion of national players in Cebu were also noted in 2012; among them are
7Eleven, Ministop, BonChon Chicken and Chatime. Operators of these brands have expressed interest in
growing their chain in Cebu in the coming years.
Another growth indicator for Cebu’s aggressive retail expansion is the current trend of a hypermarket-type
of development. A hypermarket occupies an area of about 2,000 to 4,000 square meters. It has a grocery
as its main highlight that is surrounded with stalls and booths rented by tenants. According to the president
of the Philippines Allied Chamber of Real Estate Brokers and Licensed Salesperson (PhilACRE, Inc.), 64
new hypermarkets will be developed in Cebu. Currently, there are about eight (8) hypermarket players in
Cebu namely: SM Hypermarket, Savemore, Fooda Saversmart, Shopwise, Insular Square, Collanade, HMall and Shang Mactan Town Center.
Major Players in Cebu’s Retail Industry
Ayala Center Cebu (ACC) has an existing GLA of 94,247sqm and is undergoing a P2-billion expansion,
bringing in an additional GLA of 36,000sqm, which will be completed in 2013. In the case of ACC, it targets
the A, B and C markets—office workers and those living in gated residences and villages. With this kind of
market mix, ACC provides not just a mere shopping mall but a wide array of options on dining, shopping
and relaxation. Condominiums, hotels and office buildings create a natural market for Ayala Center Cebu.
Tourists and regional visitors are part of the second market.
SM City Cebu still competes head-on with Ayala Center Cebu. It has a total of 177,000sqm of GLA and
caters to the A, B and broad C, D, E markets. SM recently opened this year its second mall in the province
in the town of Consolacion in northern Cebu while construction of SM Seaside City at the South Road
Properties is on-going. SM Prime Holdings Inc. is leasing a five-hectare property from Everjust Realty for its
SM City Consolacion with a GLA of 57,000sqm and caters mostly to the broad C, D and E market.
J Mall opened in Mandaue City opened in November 2011 with a GLA of 70,000sqm and caters to the ABC
market. New player J Mall does not rely on the local market to survive. It plans to take advantage of Cebu’s
position as transportation, education, financial and commercial hub in the Visayas and Mindanao. This is
the reason J Center—where J Mall is located—has decided to create an integrated development that
addresses the needs of the MICE (meetings, incentives, conferences and exhibitions) market and tourists. J
- 20 -
Center will also house a hotel, a theater, a convention center, service apartments and BPO offices. J Center
is the first foray of Everjust Realty Development Corp. into the real estate business.
The Gaisano group has joined the bandwagon with its simultaneous construction of at least four malls in the
province namely: Metro Gaisano Basak, Metro Gaisano Lapu-Lapu, Gaisano Grand Mall Cordova and
Gaisano Grand Mall Dumajug. They are putting up their malls in the towns to corner the market there and
prevent it from going to Cebu City proper. It recently opened Gaisano Capital SRP, Gaisano Talamban and
One Pavilion Mall this year.
Cebu City alone has 16 malls. These are Banilad Town Center, Robinson’s Place Cebu, Robinson’s
Cybergate, JY Square Mall, Elizabeth Mall, SM City Cebu, Ayala Center Cebu, Raintree Mall, Coco Mall,
Colonade Mall, Gaisano Main, Gaisano Capital-South (which was gutted by fire in December last year),
Gaisano Capital Tisa, Gaisano Grand Talamban, Gaisano Country Mall and Gaisano Metro Colon.
In Mandaue, there are six—Parkmall, Bridges Town Square, North Atrium, J Mall, Gaisano Pacific Mall and
Gaisano Grand Mall.
The three malls in Lapu-Lapu City are Mactan Marina Mall, Gaisano Mactan Island Mall and the Gaisano
Grand Mall.
Other malls are located in Talisay City (Gaisano Grand Fiesta Mall), Minglanilla town (Gaisano Grand
Minglanilla), Consolacion (Fooda Mall), Carcar City (Gaisano Grand Carcar), Toledo City (Gaisano Grand
Toledo and Metro Plaza Toledo), Balamban town (Gaisano Balamban), Bogo City (Gaisano) and Danao
City (Gaisano Capital).
(vi) Sources and Availability of Raw Materials and the Names of Principal Suppliers;
The Company engaged the services of the following contractors for the development of its on-going
projects.
* Makati Development Corp.
- Amara The Parks, 1016 Residences, Sedona Parc, Park Point
Residences, Solinea and Cebu IT Park (eBloc, Avida Tower Cebu & Avida Riala Tower).
(vii) Dependence on One or Few Major Customers and Identify Any Such Major Customers;
The Company is not dependent on one particular segment or group of customers in the real estate market.
(viii) Dependence on One or Few Materials and the Names of Principal Suppliers;
The Company is not dependent on one or few suppliers/contractors. There are a number of eligible and
reliable contractors in the country today which can serve the Company’s requirements.
(ix) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty, Agreements, or Labor
Contracts;
The Company has engaged the services of various contractors or agencies for the maintenance of its
projects. Among these are the security and janitorial services, with terms of one year for each contractor or
agency.
(x) Need for Any Government Approval of Principal Products or Services.
The Company secures various government approvals such as the ECC, development permits, license to
sell, etc. as part of the normal course of its business. CHI has obtained the following government approvals
for the development of its projects:
1.
2.
3.
4.
Provisional Approval and Locational Clearance (PALC) - Office of the Mayor
Development Permit
- Office of the Mayor
Environmental Compliance Certificate
- DENR
License to Sell
- HLURB
- 21 -
(xi) Effects of Existing or Probable Government regulations on the Business;
The Company operates a material part of its business in a highly regulated environment. The introduction
of inconsistent or unpredictable application of, or changes in, regulations may from time to time materially
affect the Company’s operations.
(xii) Research and Development;
The Company has not allocated any amount for research and development for the last three (3) fiscal
years.
(xiii) Cost and Effect of Compliance with Environmental Laws
The Company’s projects (CBP/Cebu I.T. Park) are designed to be environment-friendly commercial
communities with amenities such as the Sewage Treatment Plant (STP), tree-lined avenues and parks. It is
a standard operating procedure of any CHI project to comply with environmental laws, the cost of which is
already incorporated in the total development cost of the project.
(xiv) Number of Employees;
The company has a total of eighty-six (86) employees as of year-end, four (4) of which are Ayala Land, Inc.
employees seconded to Cebu Holdings, Inc.
•
Senior Personnel-(ALI seconded to CHI)
4
•
Senior Personnel-CHI
17
•
Supervisors
24
•
Non Senior Personnel – Technical
35
•
Non Senior Personnel – Clerical
6
There is no union nor CBA in the Company and its subsidiaries. Employees receive above industry
compensation and benefits (ie. hospitalization, medical allowance, clothing, commodities check, 13th and
14th month and other government mandated benefits) plus performance bonus. Annual salary increases
are also given. There have been no strike in the past three years nor threat to strike as there are no dispute
between management and employees.
Enterprise-Wide Risk Management (ERM)
Risk management is an essential component in the strategic management of Cebu Holdings, Inc.
Launched in 2009, the Enterprise-wide Risk Management Program of the Company continues to put in
place robust risk management capabilities to protect and enhance shareholder value amidst a rapidly
changing business environment.
The Framework
The ERM framework involves the systematic approach of identifying, managing, monitoring and reporting of
its key risks. It takes into consideration the organizational structure, policy, scope and process
methodology that enables it to identify and effectively manage key risks early on, while directing &
highlighting the Organization to possible opportunities to more effectively achieve its business strategy. The
scope of the ERM covers each step of the Value Delivery Chain, from the identification of the customer
needs all the way to the satisfactory delivery of those needs with the complete contribution of each of the
Business and Support Groups.
The ERM Process
The ERM is an ongoing and cyclical process that requires involvement from each of the Business and
Support Groups.
The process is comprised of coordinated activities of identification, analysis, and
treatment and monitoring of risks. To ensure that risk analysis and risk assessments are relevant and up-todate, periodic risk refresher sessions with the executive management and with each of the business units
- 22 -
will be conducted. These sessions aim to identify new and emerging risks on the account of changes in the
external and internal operating environment.
ERM Activities
In 2011, a top-down driven, bottom-focused approach was adopted to update the ERM program of the
Company. Facilitated sessions were conducted by the ERM committee, together with the various Business
Groups, to review and update the existing list of identified key business risks, control strategies and
improvement plans. Separate meetings with the Management Committee and the Audit and Risk
Committee were held to present the outcomes of the facilitated sessions for their review, evaluation and
approval.
In 2012, the updated ERM program was rolled-out to the rest of the organization. As a systematic and
proactive process, the status of key risks, indicators and mitigation strategies were updated, monitored as a
regular part of operations and reported on at least on a quarterly basis to determine whether these
significant risks are appropriately and adequately addressed by the responsible Business Units.
Results of the monitoring of the ERM process were presented to the Audit & Risk Committee at least
quarterly, in the Committee’s oversight capacity, to gain assurance that management is monitoring and
managing risks within acceptable levels.
As a result of periodic reviews with the Chief Risk Officer, the Organization has observed an increased
awareness and integrated view of the corporate business strategy, its associated risks and the systematic
mitigation approach for each. Management and key personnel have taken on an active role in the risk
management processes, allowing for a more inclusive and proactive process, leading to risks being
identified and addressed early both at the day to day tactical and management strategic level for 2012:
- 23 -
1. Protecting the Balance Sheet through Financial Risk Management – The Company takes
advantage of the current low –interest rate business environment by taking on debt, allowing the
lock-in of favorable long-term rates to fund the construction of its leasing projects.
2. Optimization of Existing Assets - the company extends and enhances the usefulness of its
existing assets through redevelopment. This is evident in projects such as the revitalization of the
Cebu Park Districts, including the expansion of Ayala Center Cebu and the integrated planning of
the residential developments in CBP and the upcoming redevelopment of the Cebu I.T. Park, to
include retail and hotel operations.
3. Monitoring of Leading Market Indicators – industry reports, forecasts and Sales Reports are
regularly prepared, summarized and presented to the Management & project teams as inputs to
decision-making and operational processes. Market needs and preferences, particularly those of
the local market, are identified and applied in the design of the Company’s products. This enables
the company to address its market’s needs as evidenced by garnering twenty-four percent (24%) of
the local vertical residential market share in 2012.
4. Continued Partnership with ALI on Development Projects – diversification of risk through a
healthy and strong partnership with ALI, allowing the Company to use the strength of ALI (sales,
construction, and property management) to expand its product portfolio through advance master
planning, branding and knowledge of the market. This enables the Company to better coordinate
its projects at a faster pace, enable the career advancement of its people and effectively manage
costs. As of year-end 2012, twelve (12) projects have been launched with three (3) projects
ongoing.
Structure, Roles and Functions
The Board of Directors, through its Audit & Risk Committee, continues to oversee the Enterprise-wide Risk
Management program of the Company. The Chief Risk Officer (CRO) reports functionally to the Audit
& Risk Committee, and administratively to the President and the Management Committee. The CRO heads
the cross-functional ERM Committee and is primarily responsible for enabling the efficient and effective
governance of the company’s key risks and controls. Integrated into their day to day operations, members
of the cross-functional ERM Committee monitor the Company’s adherence to the risk management policies
and procedures. The ERM Committee ensures that the Company’s processes are functioning within
normal operating standards and the business is operating within acceptable risk metrics or limits. The
Internal Audit Department, apart from functionally reporting to the Audit & Risk Committee, also provides
administrative support to the Chief Risk Officer in the discharge of his ERM-related functions.
- 24 -
Item 2. Properties
(Part I, Paragraph (B) of SRC Rule 12)
a. Cebu Business Park , a 50-hectare property strategically located at the center of Cebu City. The
CBP is bounded by Archbishop Reyes Avenue in the west, Juan Luna Avenue to the north, M. J.
Cuenco Avenue to the east and Gorordo Avenue to the south. The business park is located
approximately three (3) kilometers from residential subdivisions in the north, fifteen (15) kilometers
from the Mactan International Airport, a kilometer from Fuente Osmeña, and is two (2) kilometers
from the downtown commercial area. Because of its strategic location, Cebu Business Park’s major
streets now serve as a vital part of City’s road network. The property is free from any lien and
encumbrances. CBP was officially proclaimed as a PEZA-accredited IT Park pursuant to Presidential
Proclamation 2053 (2010). According to the Special Economic Zone Act of 1995 (as amended in R.A.
7916), all investors and locators in PEZA-accredited IT Parks are now entitled to fiscal and non-fiscal
incentives. Among the benefits of an IT Park are improvement in international competitiveness, increase
in direct investments and capital formation, employment of job creation and an improved of quality of life.
b. Ayala Center Cebu (ACC) a shopping complex built on a nine-hectare property located at the heart
of CBP and serves as the centerpiece of one of the largest and fully integrated business and
commercial areas in Cebu City. This property sits on a lot with total area of 88,412 square meters
which is subject to mortgage trust indenture. The carrying value (lodged under “Land and
Improvements” and Investments in Real Properties” accounts in the consolidated balance sheets)
amounted to P2.011 billion in 2012 and P2.060 billion in 2011.
c.
The Company also developed the City Sports Club Cebu (CSCC), an exclusive urban resort
equipped with state-of-the-art health and fitness equipment. This project is in partnership with ALI.
In 2004, CSCC signed reciprocity agreements with American Club in Singapore and United
Services Recreation Club in Hongkong.
d. Cebu I.T. Park- a 24-hectare mixed-use community that will host office and residential buildings, a
hotel, as well as retail and recreational facilities. The property was proclaimed as a special
economic zone by virtue of Proclamation No. 12 singed on 27 February 2001 by the President of
the Republic. The property is situated at Salinas Drive, Lahug, Cebu City. Phase 1 covering 18
hectares was completed in 1999. Horizontal development on the remaining phase is ongoing. The
property is free from any lien and encumbrances. The property is owned by Cebu Property
Ventures Development Corporation (CPVDC), a 76% owned subsidiary of Cebu Holdings,
Incorporated.
- 25 -
e. eOffice One, a one-storey modular building (11,370 sqm), now hosts BPOs, I.T. firms, conveyor
design and software research multinational companies.
f.
The Walk. The Walk steadily remains to be a strong retail magnet in the ever-busy Cebu IT Park.
Heavily frequented by BPO workers, young professionals, tourists, families, and sports enthusiasts, it has
emerged from simply being a hangout haven into popular venue for showcasing recreational activities
like sports, music, photography, and even luxury vehicle collections.
CHI is a leasee of three Condominium Units:
Condominium Units at Cebu Holdings Center: CHI leased two office units (Units 201 and 704) at Cebu
Holdings Center located at Cardinal Rosales Avenue, Cebu Business Park, Cebu City.
•
•
Unit 201 has a total area of 232.90 sqm. With monthly rental of P74,311.40 (Non-vat) payable in
advance within the first five days of the month. The term of the lease shall be a period of five years,
commencing from December 1, 2010 to November 30, 2015. This is may be renewed under the
same terms and conditions except for an annual increase in the rental rate of 5%. CHI discontinued
renting the unit since December 2012 due to the transfer of Projects Department to another CHIowned unit.
Unit 704 has a total area of 93.13 sqm. with monthly rental of P56,678.74 (inclusive of VAT). The
term of the lease is one (1) year, commencing on 1 January 2012 and expiring 31 December 2012.
The lease maybe renewed under the same terms and condition except for the rental rate which is
subject to re-negotiation and mutual agreement of both parties.
The company has no plan to acquire or plan to lease any property in the next 12 months.
Item 3. Legal Proceedings
(Part I, Paragraph (C) of SRC Rule 12)
Cebu Holdings, Inc. and its subsidiaries and affiliate do not have any pending litigation in any court or
administrative agency of the government. There are no material pending legal proceedings to which the
property of the registrant or any of its subsidiaries or associate is the subject.
Item 4. Submission of Matter to a Vote of Security Holders
Except for the matters taken up during the Annual Meeting of Stockholders, there was no other matter
submitted to a vote of security holders during the period covered by this report.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
(Part II, Paragraph (A)(1) through (4) of SRC Rule 12)
(1) Market Information
Price Information of CHI Shares
The issued and outstanding shares of stock of the Company have been listed on the Makati Stock
Exchange and the Manila Stock Exchange, predecessors of the Philippine Stock Exchange.
The following table shows the closing prices (in PHP) of Cebu Holdings, Inc.’s shares in the
Philippine Stock Exchange for the year 2012 and 2011:
- 26 -
2012
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
8.70
6.00
5.18
4.19
Low
8.38
5.55
5.16
4.00
Close
8.38
5.55
5.16
4.00
2011
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
2.98
2.45
2.45
2.70
Low
2.20
2.24
2.26
2.33
Close
2.25
2.28
2.29
2.50
The market capitalization of the Company as of end-2012 based on the closing price of P4.00/share
was approximately P7.68 billion.
The price information as of the close of the latest practicable trading date, March 20, 2013, is P4.50
per share.
(2) Holders
There are approximately 4,498 registered holders of common equity security of the Company as of
January 31, 2013. The following are the top 20 registered holders of the common equity securities of
the Company:
1.
2.
3.
4.
5.
6.
7.
8.
8.
8.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
18
18.
18.
19.
20.
Stockholder Name
Ayala Land, Inc.
PCD Nominee Corp. (Filipino)
PCD Nominee Corp. (Non-Filipino)
First Metro Investment Corporation
Makati Supermarket Corporation
Laguna Properties Holdings, Inc.
Alfonso Lao
Jose C. Lee
Jennifer C. Lee &/or Josephine C. Lim
Jennifer C. Lee
Josephine C. Lim
Aurora E. Panlilio
Vicente Jayme, Jr.
Fermin P. Angcao
Victor G. Sy
Jose E. Suarez
Maximo S. Uy
Alejandra R. Malaya
Pua Yok Bing
Alberto Mendoza &/or Jeanie C. Mendoza
Salvador Mariposa
Mercedes A. Tuason
Vincent Y. Tan
Carolyn Chua
Robert Tan
Teodora Chuan &/or Irene C. Limtao
- 27 -
No. of Shares
956,241,738
469,016,200
238,514,086
186,695,363
3,013,265
1,875,000
1,750,000
1,000,000
1,000,000
1,000,000
1,000,000
937,500
767,500
670,000
625,000
618,750
470,000
385,000
382,127
376,250
375,000
375,000
375,000
375,000
358,750
350,000
Percentage
49.80%
24.43%
12.42%
9.72%
0.16%
0.10%
0.09%
0.05%
0.05%
0.05%
0.05%
0.05%
0.04%
0.03%
0.03%
0.03%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
(3) Dividend
(A) Dividend History
Stock Dividend (per share)
Record Date
August 5, 1994
October 2, 1997
Percent
50%
25%
Peso Amount
P0.05
0.05
0.07
0.07
0.07
0.07
0.10
Cash Dividend (per share)
Declaration Date
Record Date
20 September 2006
13 October 2006
19 November 2007
04 December 2007
08 October 2008
06 November 2008
16 November 2009
01 December 2009
27 October 2010
25 November 2010
20 October 2011
18 November 2011
22 November 2012
07 December 2012
Payment Date
August 31, 1994
November 12, 1997
Payment Date
27 October 2006
18 December 2007
28 November 2008
22 December 2009
17 December 2010
14 December 2011
21 December 2012
(B) Dividend Restrictions
There are no restrictions that limit the ability to pay dividends except those provided under Section
43 of the Corporation Code and other existing laws. To the extent feasible, it is the policy of the
Company to declare periodically a portion of its unrestricted retained earnings as dividends to
shareholders, either in the form of stock or cash, or both. The payment of dividends in the future will
depend on the Company’s earnings, cash flow, investment program and other factors.
(4) Recent Sales of Unregistered Securities
The company has no unregistered securities nor has engaged in any sale of unregistered securities for
the period covered in this report.
Item 6. Management’s Discussion and Analysis or Plan of Operation.
(Part III, Paragraph (A) of SRC Rule 12)
Cebu Holdings, Inc. registered consolidated revenues of P
= 1.633 billion exceeding its 2011 performance
by 13%. The improvement in revenue was mainly on account of the higher rental income from Ayala Center
Cebu, sale of condominium units (1016 Residencies, Sedona Parc, Park Point Residences & Avida Riala
Tower) and interest and other income. Net income reached P
= 441.3 million, 4% higher compared to P
= 424.3
million last year.
Consolidated revenues were derived from commercial land sales, lease income from commercial center,
sale of Amara residential lots, condominium units and sports club shares. Other revenue contributors are
rental from e-office & The Walk and sale of condominium units from Avida Riala Tower, projects of 76%
owned subsidiary - Cebu Property Ventures & Development Corporation. The company also derived
income from Interest earnings from short-term investments and interest and other income.
Earnings before Interest and Taxes (EBIT) showed a slight increase from P 385.0 million in 2011 to
P386.3 million in 2012.
- 28 -
Stock price increased from a closing of P2.50 per share in 2011 to P4.00 per share in 2012 resulting in a
In 2012, CHI declared cash dividend from the unappropriated retained earnings of the company as of
December 31, 2011, of P0.10 per share to all shareholders as of record date December 7, 2012 and paid
Rental Income
Ayala Center Cebu as the ultimate lifestyle icon in Cebu.
The company’s commercial business hinges on the fact that Cebu is one of the major retail and IT
destinations in the South, with burgeoning that cater to IT and BPO locators.
As more office buildings are constructed in Cebu’s premier district – Cebu Business Park and Cebu I.T.
Park, the steady incline of mall visits from the working segment is expected to persist. Aside from the office
buildings, more hotels have opened its doors just within the vicinity of the mall thereby increasing Ayala
Center Cebu’s secondary target – the tourist market.
In an effort to continuously complement the mall in terms of retail concepts, there were stores that have
been relocated and put in place where they can be easily found by the mall’s target markets.
For the period ended 31 December 2012 the mall registered total revenues of P
= 750.0 million. This is 7%
higher than same period of last year due to higher lease occupancy. Net operating income is 7% higher
also than same period of last year.
Cebu Leisure Company, Inc. (CLCI-a wholly owned subsidiary)
In 2012, Active Zone and Food Choices posted growth in sales performance versus last year, which is 16%
and 8%, respectively. Ayala Cinemas on the other hand posted an occupancy rate of 18.4% which is
higher by 3%pts versus last year. Food Choices is due for renovation next year to enable it to complement
to the mall’s new expansion.
For the period ended 31 December 2012, total revenue is P
= 150.0 million showing a 15% growth versus last
year. Net operating income is higher than last year by 18% due to the high financial performance of the
Active Zone.
The Walk posted total revenues of P
= 21.5 million, slightly lower than last year of P
= 21.8 million. As of
December 2012, lease occupancy is 83.2%.
Rental from e-Office contributed a total revenues of P
= 29.5 million, a 56% decline compared to the P
= 66.4
million in 2011. The decrease was due to management decision not renew lease contracts at e-office to
allow the redevelopment of the area to commence in 2013.
Real Estate Income
Commercial Land Sales registered the sale of two (2) CBP lots with a total area of 2,334 sqm. contributing
P
= 120.2 million in revenue (net of the P
= 3.6 million discounting loss). Compared to last year’s figure of P
=
131.3 million, revenue is lower by 8%. In 2011, there were two (2) lots (1 CBP and 1 CITP) sold.
Amara’s current year sales of two (2) lots with prior years’ sales computed based on percentage of
completion brought in total revenue of P
= 19.2 million, which is 70% lower than last year’s P
= 63.6 million due
to lower lots sold. Percentage of completion at Amara, The Parks, as of December 2012 stood at 77.00%.
1016 Residences registered total rental revenues of P
= 94.8 million from the sale of two residential
condominium units and prior year’s sale computed based on percentage of completion. Compared to last
year’s figure of P
= 36.0 million, it registered an increase of 163%. Percentage of completion as of December
2012 stood at 50.88%.
- 29 -
From the sale of one (1) unit and four (4) parking slots and prior year’s sale computed based on percentage
of completion, Sedona Parc posted total revenues of P
= 56.3 million, which is 270% higher than last year’s
P
= 15.2 million. As of end of 2012, percentage of completion was at 79.94%.
Park Point Residences contributed total revenues of P
= 14.6 million from the sale of twenty-eight (28)
condominium units computed based on percentage of completion. Percentage of completion as of
December 2012 stood at 5.00%. Total of seven (7) units were reserved during the period.
Revenue from the sale of twelve (12) condominium units at Avida Riala Tower stood at P
= 3.9 million
computed based on percentage of completion. Avida Riala was already 15.50% completed as of December
2012. Total of twenty-three (23) units were reserved for the period.
Sports Club Shares registered P
= 660 thousand in total revenue.
The company also generated interest and other income primarily from the sale of services, well placed
short-term investments, water & utility charges and penalty imposed to a locator due to construction
violation amounting to P
= 298.5 million, exceeding last year’s level of P
= 249.6 million by 20%.
Equity in net earnings of affiliates (Cebu Insular Hotel Co., Inc., Asian I-Office Properties, Inc. (AiO) and
Solinea, Inc., reached P
= 73.9 million, 159% higher compared to the previous year’s level of P
= 28.5 million.
Financial Condition
The company’s balance sheet remained strong as its total assets stood at P
31, 2012. Current assets stood at P
= 3.742 billion, P
= 1.864 billion of which is cash. It has current ratio of
1.37:1 compared to 2.28:1 in December 2011. Total liabilities as of the period stood at P4.467 billion, P
=
2.728 billion of which is current. Debt-to-equity ratio stood at 0.90:1 compared to 0.45:1 in December 2011.
Bank Debt to equity ratio stood at 0.37:1 compared to December 2011 of 0.20:1.
The table below shows the comparative key performance indicators of the Company:
Indicators
Current Ratio 1
2012
1.37: 1
0.90: 1
0.37: 1
5.23%
9.14%
2011
2.28: 1
0.45: 1
0.20: 1
6.44%
9.31%
1
Current Asserts / Current Liabilities
3
4
Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divide by
two)
5
Equity end of the year divide by two)
2
Cause for Material Changes from Period to Period of the Financial Statements
Increase in consolidated revenues (real estate & rental income) by 8% or P96.0 million:
• Sale of 2 CBP lots with a total area of 2,334 sq. m. to Ahava Realty & Development Corp. & Contempo
Property Holdings, Inc.
• Increase in revenue from residential condo (1016 Res, Sedona Parc, Park Point Res & Avida Riala
Tower)
• Increase in revenue from Sports Club Share
- 30 -
•
•
•
•
•
Increase in rental income from ACC
Increase in rental and theater revenue from Cebu Leisure Company, Inc.
Decrease in revenue from residential lot (Amara)
Decrease in rental income from The Walk
Decrease in rental income from e-office building
Increase in interest and other income by 20% or P48.9 million:
• Primarily due to sale of services amounting P55 million.
Increase in equity in net earnings of associates by 159% or P45.4 million
• Cebu Insular Hotel Co., Inc. (Marriott Hotel), Asian I-Office Properties, Inc. & Solinea’s income
improved during the year.
Increase in real estate cost and expenses by 19% or P158.8 million
• Due to the cost from commercial lots sold during the year
• Rising costs of direct operating expenses (ex. Light and power, water charges, repairs and
maintenance, aircon, security & janitorial, dues & fees, ad & promo and other utilities).
• Higher interest expense due to availment of additional bank loans
Increase in cash and cash equivalents by 54% or P649.8 million
• Collection of receivables from Ayala Center Cebu (ACC) and The Walk.
• Loan proceeds during the period.
• Collections from sale of Commercial & Amara lots and condo units.
Increase in accounts receivable by 38% or P150.3 million
• Due to sale of condo units and residential (Amara) lots.
• Due to receivables from Ayala Center Cebu merchants.
• Due to advances from various contractors.
Increase in Inventories by 27% or P270.8 million
• Primarily due to Inventory of Amara, The Parks lots.
• Mainly due to the company’s investment in the development of Park Point Residences and increase in
percentage of completion of 1016 Residences and Sedona Parc projects.
Increase in other current assets by 339% or P60.9 million
• Due to booking of various taxes (Vat Input, Creditable Withholding Tax and Others).
Decrease in non-current accounts receivable by 6% or P32.8 million
• Mainly due to reclassification from non-current to current accounts
Decrease in deferred tax assets of 10% or P941 thousand
o Pertains to the unrealized gain on intercompany sale of CPVDC’s lot to AiO and interest accretion.
Increase in property and equipment by P9.8 million or 25%
• The increase was primarily due to purchase of new office equipments.
Increase in investment in associates by 12% or P82.9 million
• The increase was mainly due to equity in net earnings during the period.
Increase in investment properties by P1.465 billion or 46%
• Primarily due to construction in progress of Ayala Center Cebu-Phase 2b project.
Decrease in other non-current assets by 40% or P34.7 million
• Mainly on account of deferred VAT input and from affiliate-Cebu Insular Hotel Company (CIHC)
dividends receivable.
- 31 -
Increase in accounts and other payables by P1.392 billion or 213%
• Mainly due to various accruals of operating expenses (additional estimated liability for the new
projects), contractor’s payable and retention payable.
Increase in current portion of long term debt by P108.3 million or 197%
• Reclassification of non-current to current.
Decrease in income tax payable by 56% or P20.3 million
• Mainly due to payment of quarterly income tax and lower creditable withholding tax during the period
Increase in other current liabilities by 25% or P100.2 million
• Primarily to due to various deposits from condo unit buyers and escalated rates & various deposits
made by new merchants of Ayala Center Cebu.
Increase in long term debt by P786.1 million or 88%
• Mainly due to additional availment of loan during the period.
Increase in deferred tax liabilities by 16% or P4.5 million
• The increase was primarily brought about by additional provision deferred tax during the period.
Decrease in other non-current liabilities by 41% or P5.2 million
• Mainly on account of rental deposits from the new merchants of Ayala Center Cebu & the Walk.
Retained Earnings showed a growth of P249.3 million as a result of the 2012 Net Income net of P192
million cash dividend.
•
•
Funding will be sourced from internally-generated funds and bank loans.
•
•
There is no known trend, event or uncertainty that have had or that are reasonably expected to have a
•
•
There have not been any seasonal aspects that had a material effect on the financial condition or
results of the Company’s operations.
•
There were no known events and uncertainties that will trigger direct or contingent financial obligation
that is material to the company, including any default or acceleration of an obligation.
•
obligations), and other relationship of the company with unconsolidated entities or other persons
2011 vs. 2010 Results of Operation
For the period ended December 2011, Cebu Holdings, Inc.’s consolidated revenue reached P
= 1.443
billion, 5% lower compared to P
= 1.522 billion of the same period last year. Net income of P
= 424.3 million
increased versus the 2010 level performance by 4%. The decrease in revenue was mainly on account of
the higher residential and commercial lots in 2010.
- 32 -
Consolidated Revenue was derived from commercial land sales, lease income from commercial center,
sale of Amara residential lots, and condominium units from 1016 Residencies & Sedona Parc. Other
revenue contributors were the office lots from Cebu IT Park (formerly Asiatown IT Park) and rental from eoffice & The Walk, projects of 76% owned subsidiary Cebu Property Ventures & Development Corporation.
The Company also derived income from interest earnings from short-term investments, interest, and other
income.
Earnings before Interest and Taxes (EBIT) posted a 1% decrease from P 388.6 million in 2010 to P385.0
million in 2011.
Stock price closed at P2.50 per share in 2011.
In 2011, CHI declared cash dividend from its unappropriated retained earnings as of December 31, 2010
of P0.07 per share to all shareholders as of record date November 18, 2011 and paid on December 14,
2011.
Rental Income
Ayala Center Cebu as the ultimate lifestyle icon in Cebu.
Ayala Center Cebu has continuously offered the most unique and rewarding shopping and dining
experiences to both its local and tourist patrons.
The mall fuses popular and fast-fashion international and local brands, a wide selection of established to
home-grown dining concepts, as well as high-energy entertainment outlets in varied ambient settings,
making each visit a delightful treat.
The verdant landscaping and refreshing water features provide a dramatic counterpoint for bonding, perfect
for unwinding and celebrating blockbuster and important events.
The mall further captivates the hearts of the Cebuanos with its showcase of world-class Ayala signature
shows and engaging local events. It is a destination favored by local and foreign guests strengthened by
tourist-oriented programs reflecting the genuine Cebuano hospitality.
With the leasing program that resulted to the accelerated opening of big spaces such as Payless, People ‘R
People, and Terranova, it further improved the lease occupancy of the mall while providing the needs of the
target markets.
For the period ended December 31, 2011, Ayala Center Cebu posted total revenue of P
= 699.8 million. This
was 11% higher than last year due to higher lease occupancy. Net operating income was 13% higher than
same period of last year.
Cebu Leisure Company, Inc. (CLCI-a wholly owned subsidiary)
The Active Zone maintained its significant sales per square meter growth at 9% versus last year, which
could be attributed to its unique sports and wellness merchandise offerings. Food Choices also realized a
15% increase against last year. Ayala Cinemas’ occupancy rate of 15.8% was lower by 3% points versus
last year’s rate.
For the period ended December 31, 2011, the total revenue was at P
= 130.4 million. This was 7% higher
than last year’ total revenue. The net operating income was also 21% higher than last year’s net operating
income due to the high financial performance of the Active Zone.
The Walk contributed a total revenue of P
= 21.8 million, which indicated a 12% increase from the P
= 19.5
million total revenue of last year. Lease occupancy for the period was at 98.3%.
Revenue generated from e-Office reached P
= 66.4 million, which was 37% higher than last year’s P
= 48.5
million.
- 33 -
Real Estate Income
Commercial Land Sales posted the sale of one (1) Cebu Business Park lot with an area of 1,573 square
meters and one (1) Cebu IT Park lot with a total area of 3,304 square meters, which contributed P
= 131.3
million in revenue (net of the P
= 3.7 million discounting loss). Compared to last year’s figure of P
= 174.4
million, revenue was lower by 25%. During the same period last year, there were three (3) lots (2 Cebu
Business Park and 1 Cebu IT Park) sold.
Amara revenue stood at P
= 63.6 million derived from the current year’s sale and the previous year’s sale
computed based on percentage of completion. Compared to last year’s figure of P
= 272.9 million, it
registered a decrease of 77% due to deferred launch of the next phase in Amara.
1016 Residences & Sedona Parc, residential condominium projects of the Company in partnership with
ALI and Alveo Land Corp. registered P
= 51.2 million in total revenue.
The Company also derived interest and other investment income amounting to P
= 249.6 million, which
was 14% higher than previous year’s P
= 219.3 million.
Associates Cebu Insular Hotel Co., Inc. and Asian I-Office Properties, Inc. (AiO) contributed P
= 28.5
million in equity in net earnings, indicating a 2% decrease compared to P
= 29 million net earnings of the
previous year.
Financial Condition
The Company’s balance sheet remained strong as its total assets stood at P
31, 2011. Current assets stood at P
= 2.613 billion, P
= 1.217 billion of which was cash. It has current ratio of
2.28:1 compared to 1.84:1 ratio in December 2010. Total liabilities as of the period stood at P2.103 billion,
P
= 1.148 billion of which was considered current. Debt-to-equity ratio stood at 0.45:1 compared to 0.30:1 in
December 2010. Bank debt to equity ratio stood at 0.20:1 compared to 0.04:1 of December 2010.
Indicators
Current Ratio 1
2011
2.28: 1
0.45: 1
0.20: 1
6.44%
9.31%
1
2010
1.84: 1
0.30: 1
0.04: 1
6.88%
9.49%
Current Assets / Current Liabilities
3
4
Net Income / Average Total Assets (Assets beginning of the year plus Assets end of the year divided by
two)
5
Equity end of the year divided by two)
2
Cause for Material Changes from Period to Period of the Financial Statements
Decline in consolidated revenues by 9% or P108.9 million:
• Decline in commercial lots revenue due to lower number of lots sold in 2011
• Decline in revenue from residential project (Amara)
• Increase in revenue from residential condo (1016 and Sedona Parc)
- 34 -
•
•
•
•
Increase in rental income from Ayala Center Cebu
Increase in rental income from The Walk
Increase in rental and theater revenue from Cebu Leisure Company, Inc.
Increase in rental income from e-office building
Increase in interest and other income by 14% or P30.3 million:
• Mainly due to interest income from money market placement and charges (water and sewer) from
various locators.
Decrease in equity in net earnings of associates by 2% or P.5 million
• Cebu Insular Hotel Co., Inc. (Marriott Hotel) lower income during the year.
Decrease in real estate cost and expenses by 11% or P106.5 million
• Mainly due to lower commercial and residential lots sold in 2011.
Increase in cash and cash equivalents by 32% or P294 million
• Collections from sale of commercial and Amara lots, and condominium units.
• Collection of receivables from Ayala Center Cebu and The Walk.
• Loan proceeds during the period.
Increase in receivables by 49% or P128.6 million
• Due to sale of commercial (Cebu Business Park and Cebu IT Park) and residential (Amara) lots, and
condominium units.
• Due to reclassification of accounts from non-current to current for the sale of Cebu IT Park lot to an
affiliate Asian I-Office Properties, Inc. (AiO) on installment in 2011.
Decrease in subdivided land for sale and development by 7% or P43.1 million
• Mainly due to sale of two (2) commercial lots at Cebu Business Park and Cebu IT Park.
Increase in condominium units for sale by 100% or P36.4 million
• Mainly on account of the Company’s investment in the development of 1016 Residences and Sedona
Parc. These are new residential condominiums project of CHI in partnership with ALI and Alveo Land
Corporation.
Increase in other current assets by 34% or P4.6 million
• Due to booking of broker’s commission and various taxes (business tax, creditable withholding tax,
prepaid tax, and other taxes).
Decrease in deferred tax assets of 12% or P1.4 million
• Pertains to the unrealized gain on intercompany sale of CPVDC’s lot to AiO and interest accretion.
Decrease in property and equipment by P3.6 million or 6%
• The decrease was primarily due to depreciation of equipment.
Increase in investment in associates by 75% or P296.8 million
• The increase was mainly due to investments in Solinea Inc. and equity in net earnings during the
period.
Increase in other non-current assets by 295% or P288.5 million
• Primarily on account of advances to contractors and deferred value-added tax input.
Decrease in accounts and other payables by P19.5 million or 2%
• Mainly due to settlements made during the period.
- 35 -
Increase in current customers’ deposits and deferred credits by 14% or P38.5 million
• Primarily to due to escalated rates and various deposits made by new merchants of Ayala Center Cebu
and The Walk.
Increase in income tax payable by 37% or P9.8 million
• Due to provision for 2011 income tax.
Decrease in current portion of long term debt by P55 million or 50%
• This is caused by the payment made during the period amounting to P55 million.
Decrease in customers’ deposits and deferred credits by 58% or P17.9 million
• Mainly on account of rental deposits from the new merchants of Ayala Center Cebu and The Walk.
Decrease in deferred tax liabilities by 21% or P7.5 million
• Primarily brought about by unrealized gain on Amara lots during the period.
Increase in long term debt by P840.7 million or 1,529%
• Mainly due to additional availment of loan during the period.
Retained Earnings showed a growth of P289.9 million as a result of the 2011 Net Income net of P134
million cash dividend.
•
•
Funding will be sourced from internally-generated funds and bank loans.
•
•
There is no known trend, event, or uncertainty that have had or that are reasonably expected to have a
•
•
There have not been seasonal aspects that had a material effect on the financial condition or results of
the Company’s operations.
•
There is no known events, and uncertainties that will trigger direct or contingent financial obligation that
is material to the Company, including any default or acceleration of an obligation.
•
There is no material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationship of the Company with unconsolidated entities or other persons
Item 7. Financial Statements (see annex audited financial statements and supplementary schedules)
The consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules are filed as part of this Form 17-A.
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
(Part III, Paragraph (B) of SRC Rule 12)
There are no changes in and disagreements with accountants on accounting and financial disclosures.
- 36 -
PART III - CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Registrant
(Part IV, Paragraph (A) of SRC Rule 12)
(1) (A-E) Directors and Executive Officers
Board of Directors
Antonino T. Aquino
Chairman
Francis O. Monera
President
Maria Theresa M. Javier Treasurer
Antonio S. Abacan, Jr.
Emilio J. Tumbocon
Jaime E. Ysmael
Enrique L. Benedicto*
Fr. Roderick Salasar, Jr., SVD*
Hernando O. Streegan*
* Independent Directors
Executive Committee Members
Emilio J. Tumbocon - Chairman
Antonino T. Aquino
Francis O. Monera
Maria Theresa M. Javier
Jaime E. Ysmael
BOARD OF DIRECTORS
The members of the Board of Directors are elected at the general meeting of stockholders, who shall hold
office for the term of one (1) year or until their successors shall have been elected and qualified. The
following are the directors and officers’ brief description of their business experiences during the past five
years.
Antonino T. Aquino, Filipino, 65, has served as Chairman of CHI since 2009. He also holds the following
positions: Senior Managing Director of Ayala Corporation; Chairman of Alveo Land Corp., Cebu Property
Ventures & Development Corp., Ayala Hotels, Inc., Makati Development Corp., North Triangle Depot
Commercial Corp. and Station Square East Commercial Corp.; Presidentof Fort Bonifacio Development
Corp., Alabang Commercial Corp., Accendo Commercial Corp., Aurora Properties, Inc., Ceci Realty, Inc.,
and Vesta Property Holdings, Inc.; Director of Manila Water Company, Inc. He also serves as a member of
the board of various corporate social responsibility foundations such as Ayala Foundation, Inc., Makati
Commercial Estate Association, Inc., Hero Foundation and Bonifacio Arts Foundation, Inc. He also served
as President of Manila Water Company, Inc., and Ayala Property Management Corporation and a Business
Unit Manager in IBM Philippines, Inc. He was named “Co-Management Man of the Year 2009” by the
Management Association of the Philippines for his leadership role in a very successful waterworks
privatization and public-private sector partnership.
Francis O. Monera, Filipino, 58, has served as director of Cebu Holdings, Inc. and Cebu Property Ventures
& Development Corp. since April 2006. He is currently the President of CHI and CPVDC. He was the Chief
Operating Officer of CHI before he was elected president of the Company effective January 1, 2007. He
also holds the position of Vice President of Ayala Land, Inc. Before joining ALI, he was the senior
AVP/Corporate Controller of Philippine National Construction Corporation. He served as president of the
Cebu Chamber of Commerce and Industry from February 2006 to 2008. He is currently the vice president
for Visayas of Philippine Chamber of Commerce and Industry.
Antonio S. Abacan, Jr., Filipino, 69, has served as Director of CHI since November 1993. Concurrently, he
is the Vice Chairman of the Metrobank Group of Companies. Involved in the management of all allied and
non-allied businesses of the Group, he chairs companies within the Group such as Toyota Financial
Services (Phils) Inc. (TFS), Sumisho Motor Finance, Manila Medical Services Inc., Circa 2000 Homes,Inc.
and Manila-GT Medical Center. He holds other significant positions such as Chairman of the Advisory
Board of Metropolitan Bank & Trust Company, Executive Vice Chairman of Global Business Power
Corporation and Vice Chairman/Director of Panay Energy Development Corporation. He likewise sits at
the Board of Cebu Energy Development Corporation, Panay Power Corporation, Panay Power Holdings,
- 37 -
ARB Power Ventures, Inc., GBH Power Resources, Inc., Global Formosa Power Holdings, Inc and Global
Eneregy Supply Corporation. He is also a member of the Advisory Boards of First Metro Investment Corp.,
Philippine AXA Life Insurance Corporation, Metrobank Foundation, Inc., Toyota Manila Bay Corporation and
Toyota Cubao, Inc. and a member of the Board of Trustees of Manila Tytana Colleges and GT Metro
Foundation. He also holds key positions with various affiliate institutions. He is the Chairman of the
Committee on Banking of the Philippine Chamber of Commerce and Industry, Director Corporate Secretary
and Treasurer of the LGU Guarantee Corporation and a member of the Board of Governors of Makati
Commercial Estate Association (MACEA). For his personal accomplishments, he was awarded The
Outstanding Filipino Award (TOFIL) for Banking by the Philippine Jaycee Senate in 2008 and Huwarang
Anak ng Bulacan/Outstanding Bulakeno Achievers by Club Bulakeno, Inc. in 2011. He was also the
recipient of the 1987 Outstanding Alumnus of Mapua Institute of Technology, 1999 Communications and
Leadership Award by Toastmasters International, 2006 CEO Excel award given by the International
Association of Business Communicators (IABC) and 2007 Outstanding Alumnus Award of the Far Eastern
University.
Ma. Theresa M. Javier, Filipino, 42, has served as a director of Cebu Holdings, Inc. as of July 2012. She is
the Group Head of the Asset Management and Trust Group of Bank of the Philippine Islands. She also
holds the following postions: Director of BPI Investment Management, Inc., McCann World Group
Philippines, Inc., Fintec Holdings, Inc., Phase II Holdings, Inc., Roxas Land Corporation and various mutual
fund companies of BPI (ALFM Peso Bond Fund, ALFM Dollar Bond Fund, ALFM Euro Bond Fund, ALFM
Money Market Fund, ALFM Growth Fund, and Philippine Stock Index Fund). She is also a member of the
Board of Senior Advisers of the Fund Managers Association of the Philippines and the Trust Officers
Association of the Philippines and served as President of both associations. She graduated cum laude from
the University of the Philippines Los Banos in 1990 with a B.S. Economics degree and finished her Masters
Degree in Economics in 1994 at the University of the Philippines School of Economics Diliman. She took up
the CFA Institute Investment Management Workshop at the Harvard Business School in Boston,
Massachusetts in 2006 and completed the Advanced Management Program also at the Harvard Business
School in 2010.
Enrique L. Benedicto, Filipino, 71, has served as an independent director of CHI since 2003. He is
currently the honorary consul of Belgium. His other regular directorships include: chairman of Mabuhay
Filcement, Inc., Enrison Land, Inc., Enrison Holdings, Inc., Berbenwood Industries, Inc., Benedict Ventures,
Inc., Vice-Chairman of Bernardo Benedicto Foundation, Inc. He received the following awards: ‘Officer in
the Order of Leopold II’ by his Majesty Baudowin King of the Belgians; ‘Officer in the Order of Leopold’ by
His Majesty King Albert II of the Kingdom of Belgium, the highest award that can be given to civilians,
Belgian or non-Belgian; Garbo sa Sugbu Awardee given by the Province of Cebu for his outstanding
achievement in International Relations as Honorary Consul of Belgium; Most Outstanding Cebuano Citizen
per Cebu City Council Resolution dated February 18, 1991, Great Cebuano Award conferred by the
Province of Cebu, Sugbuanong Kumintaristang Nagpakabana (SUKNA), Kapisanan Ng Mga Brodkaster Ng
Pilipinas (KBP) and Mandaue Chamber of Commerce and Industry, Inc; ‘Most Outstanding Alumnus’ award
given by the University of San Jose-Recoletos.
Fr. Roderick C. Salazar Jr. SVD, Filipino, 65, has served as an independent director of CHI since 2005.
He is currently the chairman of the board of trustees of St. Jude Catholic School in Manila and of St. Agnes
Academy in Legazpi City. He is a member of the board of trustees of St. Paul University in Dumaguete City,
Cebu Technological University, and Center for Educational Measurement (CEM). He is the regional
secretary for Asia, and the president of the Office Internationale de l’Enseignement Catholique (OIEC) while
concurrently serving as the executive secretary of the Office of Education and Faith Formation of the
Federation of Asian Bishops Conferences (FABC- OEFF). He worked at the University of San Carlos for 34
years in various academic and administrative offices. He was USC president for twelve years (four 3-year
terms) between 1987 and 2008. From 1992 to 2008, he was also president of the Catholic Educational
Association of the Philippines (CEAP). Before being elected OIEC president in October 2011, he was vice
president for Asia of the same organization. Outside USC, he was member of various groups like:
FILIPINO, Inc. (Filipino Institute for the Promotion of Integrity and Nobility); San Carlos Community
Development Foundation; Divine Word Educational Association (DWEA); Philippine Accrediting Association
of Schools, Colleges, and Universities (PAASCU); Private Education Advisory Council (PEAC); Word
Broadcasting Corporation. As CEAP president, he served three terms as chair of the Coordinating Council
of Private Educational Associations (COCOPEA). He has also been chairman of the board of trustees of
- 38 -
St. Scholastica’s Academy in Talisay City, Cebu; Divine Word University (now Liceo del Verbo Divino) in
Tacloban City; and Divine Word College of Tagbilaran (now Holy Name University). He was a member of
the board of trustees of St. Paul University in Tuguegarao, and, at different times, of the St Paul Colleges in
Pasig, Iloilo, and Surigao, as well as of the Visayas Cluster of the Daughters of Charity Schools. He was a
board director of People’s Television Network (PTV4), and of First Metro Asset Management, Inc. He has
two honorary Doctorates in the Humanities, the first given in March 2010 by St Paul University, Tuguegarao
City; the second, awarded by Aquinas University, Legazpi City on April 8, 2011. On August 14, 2010 he
received the Papal Award Croce Pro Ecclesia et Pontifice for his years of service to Catholic Education.
Hernando O. Streegan, Filipino, 78, has served as an Independent Director of CHI since 2006. His other
significant positions include: regular Director of Charmaine Corp., Cebu City Youth Center, Inc.; chairman of
the Cebu Council-Boy Scouts of the Phils.; former president of the Cebu Chamber of Commerce & Industry
and Casino Español de Cebu; former governor of the Philippine South District of Kiwanis International;
former charter president of the Philippines Foundation, Inc. and member of the Kiwanis Club of Cebu. He
was the chief executive officer of Rhine Marketing Corporation before his retirement on August 31, 2010.
He was chosen as one of the Outstanding Council Chairman of the Boy Scouts of the Philippines; he was
also awarded as one of the Outstanding Families of Cebu City and given the Signum Commercio Meriti of
University of Cebu. In 2013, he will receive the Silver Tamaraw Award.
Emilio J. Tumbocon, Filipino, 56, has served as a Director of CHI since 2008. He is a Senior VicePresident at Ayala Land, Inc., and a member of its Management Committee. He heads the ALI-VisMin
Group and concurrently Technical Services Director of Superblock Projects since 2008. His other
significant positions are Director of the following companies: Cebu Property Ventures & Development
Corporation, Cebu Insular Hotel Co., Inc., Accendo Commercial Corporation, Cagayan de Oro Gateway
Corp., Makati Development Corporation, MDC Buildplus, Inc., Direct Power Services, Inc., Ecozone Power
Management, Laguna Technopark, Inc., Anvaya Cove Golf & Sports Club, Inc., Asian-I Office Properties,
Inc., Northgate Hotel Ventures, Inc., Southcrest Hotel Ventures, Inc., and Crest View E-Office Corporation.
He graduated at the University of the Philippines with a degree of Bachelor of Science in Civil Engineering
in 1979 and finished his Masters in Business Administration in the same university in 1985. He also took
the Construction Executive Program (CEPS '87) at Stanford University, California, U.S.A., the Senior
Business Executive Program (SBEP ‘91) at the University of Asia and the Pacific, and The Executive
Program (TEP ‘97) at Darden Graduate School of Business Administration, University of Virginia, Virginia,
U.S.A. He is a certified Project Management Professional (PMP) of the Project Management Institute since
2006. He has 32 years of extensive work experience in the construction and real estate industry.
Jaime E. Ysmael, Filipino, 52, has served as Director of CHI since April 2008. He is a Senior Vice
President, Chief Finance Officer, Compliance Officer and member of the Management Committee of Ayala
Land, Inc. Concurrently, he is a Managing Director of Ayala Corporation. His other significant positions
include: Chairman of the Board of Directors and Chief Executive Officer of Aprisa Business Process
Solutions, Inc.; Director and President of CMPI Holdings, Inc. and CMPI Land, Inc.; Director and President
of South Gateway Development Corporation; President of Tower One & Exchange Plaza Condominium
Corporation; Director and Treasurer of Ayala Land International Sales, Inc., Ayala Land Sales, Inc., Alveo
Land Corp., Laguna Technopark, Inc., Serendra, Inc., Ayala Hotels and Resorts Corporation and Anvaya
Cove Beach & Nature Club, Inc.; Director, Treasurer and ExCom Member of Ayala Hotels, Inc. and Enjay
Hotels, Inc.; Director of Alabang Commercial Corp., Avida Land Corp., Cebu Insular Hotel Company, Inc.,
North Triangle Depot Commercial Corp., Station Square East Commercial Corp., Philippine Integrated
Energy Solutions, Inc, Ceci Realty, Inc., Aurora Properties, Inc. and Vesta Properties Holdings, Inc. He is
also a Director of the Asia Pacific Real Estate Association Ltd. and Chairman of the Board of Directors of its
Philippine Chapter.
Nominees to the Board of Directors for election at the stockholders’ meeting
All the nominees who are named above are incumbent directors.
- 39 -
Executive Officers
Antonino T. Aquino*
Francis O. Monera*
Ma. Theresa M. Javier*
Enrique B. Manuel Jr.
Ma. Clavel G. Tongco
Jose Maria D. Lopez
Ma. Cecilia Crispina T. Urbina
Sheila Marie U. Tan
Ma. Carlota Christina LaiñoSantiago
* Members of the Board of Directors
Chairman of the Board
President
Treasurer
Chief Finance Officer and Compliance Officer
VisMin Assistant Vice President, Commercial Business Group
Division Head, Business Development Group
Senior Division Manager, Human Resource and Administration
Corporate Secretary
Assistant Corporate Secretary
Enrique B. Manuel Jr., Filipino, 39, is the Chief Financial Officer and Chief Compliance Officer of Cebu
Holdings, Inc. Concurrently, he is also the Chief Financial Officer and Chief Compliance Officer of Cebu
Property Ventures & Development Corporation, and Cebu Leisure Company, Inc.; Assistant Vice President
and Group Chief Finance Officer of Ayala Land Inc., Visayas and Mindanao Group. His other significant
positions include: Treasurer of Accendo Commercial Corp., Cagayan De Oro Gateway Corp., and Solinea,
Inc. Prior to joining the Ayala Group of Companies in 2007, he was a Senior Manager in the Risk
Management Group of Ernst & Young LLP, based out of New York City, USA. He was appointed as member
of the Management Committee (Mancom) of the Company in March 2011.
Ma. Clavel G. Tongco, CPA, Filipino, 45, serves as the Commercial Business Group’s Assistant Vice
President for Visayas and Mindanao of ALI and Cebu Holdings, Inc. Concurrently, she is also the General
Manager of Abreeza (Davao), Centrio (Cagayan de Oro) and The District North Point in Talisay City Negros
Occidental. Prior to being named VisMin Assitant Vice President, she headed the Commercial Center
Business Group of CHI and was responsible for sustaining the Company’s growth in retail operations,
specifically for Ayala Center Cebu, its successive expansions, including Phase 2A, The Terraces, and The
Walk in Cebu IT Park. Prior to joining CHI, she was the Assistant Comptroller of Alegre Beach
Resort. Previously, she was the General Accountant of Cebu Plaza Hotel (Pathfinder Holdings, Inc.). She
was appointed as member of the Management Committee (Mancom) of the Company in May 11, 2009.
Jose Maria D. Lopez, Filipino, 55, is currently the Head of the Business Development Group of Cebu
Holdings, Inc. and Cebu Property Ventures & Development Corporation. Concurrently, he serves as an
Assistant Vice President of ALI overseeing business development in Visayas and Mindanao. He joined ALI
in 1993 and has since then participated in the development of several ALI office, retail, residential, and
mixed-use projects. He was appointed as member of the Management Committee (Mancom) of the
Company in May 11, 2009.
Ma. Cecilia Crispina T. Urbina, Filipino, 43, is the Senior Division Manager of the Human Resource and
Administration Division, the QEHS MS Champion at the Mancom level, and the Health and Safety
Chairperson for Cebu Holdings, Inc. and Cebu Property Ventures & Development Corp. She joined the
Company in October 1997 as Personnel Officer. In 1998, she was formally appointed as the Company’s
HR and Administration Manager. She was appointed as member of the Management Committee (Mancom)
of the Company in August 12, 2010. Prior to joining the Company, she was connected with China Banking
Corporation.
Sheila Marie U. Tan, Filipino, 45, is the Corporate Secretary of Cebu Holdings, Inc. since April 2009.
Currently, she also holds the Position of Corporate Secretary of Integrated Micro-Electronics, Inc., Cebu
Property Ventures & Development Corp., Alveo Land Corp., Avida Land Corporation, Amaia Land Corp.,
Alabang Commercial Corporation, North Triangle Depot Commercial Corporation, Laguna Technopark, Inc.,
Makati Development Corporation: and Ayala Property Management Corporation. She is also the Assistant
Corporate Secretary of Ayala Corporation and Ayala Land, Inc. She graduated Cum Laude from the
University of the Philippines where she finished BS Economics. She pursued her Bachelor of Laws in the
same university in March 1992. She joined Sycip, Salazar, Hernandez & Gatmaitan Law Firm as Associate
until she joined Ayala Land, Inc. in 1995. She was a former head of the Legal Department of Ayala Land,
- 40 -
Inc. She is an Associate Director in Ayala Corporation from January 1, 2009 to July 1, 2012. She is now
the Managing Director and Corporate Secretary of AG Counselors Corporation (Ayala Group Legal).
Ma. Carlota Christina G. Laiño-Santiago, Filipino, 39, is the Assistant Corporate Secretary of Cebu
Holdings, Inc. since April 2011. Currently, she also holds the position of Assistant Corporate Secretary of
Cebu Property Ventures and Development Corporation, Ayala Foundation, Inc., Columbus Holdings, Inc.,
Berkshire Holdings, Inc., Emerging City Holdings, Inc., Fort Bonifacio Development Corporation, Sonoma
Services, Inc., Mermac, Inc., Aprisa Business Process Solutions, Inc., Bonifacio Land Corporation, and
Corporate Secretary of Hero Foundation, Inc., Amicassa Process Solutions, Inc., Bonifacio Estate Services
Corporation, Bonifacio Global City Estate Association, Inc., and Bonifacio Transport Corporation.
(2) Significant Employees
The Corporation considers its entire work force as significant employees. Everyone is expected to work
together as a team to achieve the Corporation’s goals and objectives.
(3) Family Relationship
None of the Directors or Executive Officers is related to another by affinity or consanguinity.
(4) Legal Proceedings
None of the Directors or Executive Officers is involved in any material pending legal proceeding in any court
or administrative agency of the Government in the last five years.
Item 10. Executive Compensation (of Directors & Officers)
(Part V, Paragraph (b) of RSA 3-3)
Directors. Article IV Section 10 of the Company’s Amended By-Laws provides:
“Section 10 - The Chairman and members of the Board shall receive such remuneration as may be
fixed by the Board of Directors each year.”
Officers Annual Compensation
The total annual compensation paid to the top five (5) Officers of the Corporation, including the
President for the year 2012 amounted to P 21.7 million. During the previous year, the total
compensation paid of the Corporation amounted to P 25.8 million. For the current year, it is projected
that the total annual compensation will total P22.8 million.
Name and Principal Position
Year
Francis O. Monera
President
Enrique B. Manuel Jr.
Chief Finance Officer and
Compliance Officer
Ma. Clavel G. Tongco
VisMin Assistant Vice President,
Commercial Business Group
Jose Maria D. Lopez
Division Head, Business
Development Group
- 41 -
Salary
Other Variable
Pay
Ma. Cecilia Crispina T. Urbina
Senior Division Manager
Human Resource and
Administration
All above-named Officers as a
group
Actual 2011
Actual 2012
Projected 2013
All other officers* as a group
Actual 2011
unnamed
Actual 2012
Projected 2013
* Senior Personnel with pay class of SP-C.
P 18.2 M
P 17.1 M
P 18.0 M
P 13.5M
P 12.9M
P 13.5M
P 7.6 M
P 4.6 M
P 4.8 M
P 7.2M
P 7.7M
P 8.1M
The total annual compensation was all paid in cash. The total annual compensation included the basic
salary and other variable pay (performance bonus).
The Company has no other arrangement with regard to the remuneration of its existing directors and
officers aside from the compensation received as herein stated.
The executive officers are composed of regular employees of the Company and four (4) are seconded
personnel from Ayala Land, Inc.
Compensation of Directors
The members of the Board of Directors are entitled to receive a reasonable per diem for attendance at each
meeting of the Board of Directors. Other than such per diem, there is no other arrangement pursuant to
which any amount or compensation is due to the directors for services rendered as such.
Employment Contracts, Termination of Employment and Change-in-Control Arrangements
An employment contract between the Registrant and a named executive officer will normally include a
compensation package, duties and responsibilities and term of employment. The Registrant has not entered
into any compensatory plan or arrangement with any named executive officer which would entitle such
named executive officer to receive any amount under such plan or arrangement as a result of, or which will
result from, the resignation, retirement or any other termination of such executive officer’s employment with
the Registrant and its subsidiaries or from a change in control of the Registrant or a change in the executive
officer’s responsibilities following a change in control of the Registrant.
Warrants and Options Outstanding
Other than options to purchase shares of the authorized capital stock of the Registrant in their capacity as
stockholders of the Registrant pursuant to their pre-emptive right granted by the Articles of Incorporation,
there are no outstanding warrants or options held by the chief executive officer, named executive officers
and other officers or directors of the Registrant.
- 42 -
Item 11. Security Ownership of Certain Beneficial Owners and Management
(Part IV, Paragraph (C) of SRC Rule 12)
1. Security Ownership of Certain Record and Beneficial Owners (of more than 5%) of Common
Shares as of January 31, 2013.
Title of
Class
Common
Common
Common
Common
Common
Name, address of
Record Owner and
Relationship with
Issuer
Ayala Land, Inc.1
31/F Tower One &
Exchange Plaza
Ayala Triangle, Ayala
Ave.
Makati City
PCD Nominee Corp.
(Filipino)4
G/F MSE Bldg.
Ayala Ave., Makati City
PCD Nominee Corp.
(Non-Filipino)4
G/F MSE Bldg.
PCD Nominee Corp.
(Non-Filipino)4
G/F MSE Bldg.
First Metro Investment
Corporation7
45/F G.T. Tower
International, Ayala Ave.
cor. H.V. Dela Costa St.
Makati City
Name of Beneficial
Owner and
Relationship with
Record Owner
Ayala Land, Inc.2
Citizenship
No. of
Shares Held
Percent
Filipino
956,241,738
49.8023%
Filipino
434,511,199
22.6299%
Singaporean
298,979,000
15.5712%
Aberdeen International
Fund Managers
Limited6
Hong Kong
201,221,000
10.4798%
First Metro Investment
Corporation8
Filipino
186,695,363
9.7233%
PCD participants
acting for themselves
or for their customers5
Aberdeen Asset
Management Asia
Limited6
Ayala Land, Inc. (ALI) is a major shareholder of CHI.
Pursuant to the By-Laws of ALI and the Corporation Code, the Board of Directors of ALI has the power to
decide how ALI shares in CHI are to be voted. Mr. Antonino T. Aquino has been named and appointed to
exercise the voting power.
4 The PCD is not related to the Company.
5 Each beneficial owner of shares through a PCD participant is the beneficial owner to the extent of the
number of shares in his account with the PCD participants. Out of the 434,511,199 shares registered in the
name of PCD Nominee Corporation (Filipino), 113,805,123 (5.9271%) are for the account of BPI Securities
Corporation and 307,660,000 (16.0233% ) are for the account of Hongkong and Shanghai Banking
Corporation (“HSBC”). The Company has no record relating to the power to decide how the shares held by
PCD are to be voted. As advised to the Company, none of BPI Securities, or any of their customers
beneficially owns more than 5% of the Company’s common shares. One of the clients of HSBC owns 9.5%
of the Company’s outstanding shares.
6 As stated in the Statements of Changes in Beneficial Ownership of Securities (SEC Form 23-B) filed on
February 1, 2013, Aberdeen Asset Management Asia Limited and Aberdeen International Fund Managers
Limited (“Aberdeen Companies”) are clients of a PCD participant. The Company has no record on how
Aberdeen Companies exercise the power to decide how their shares in the Company are to be voted.
7 First Metro Investment Corp. (First Metro) is not related to the Company.
8 The Board of Directors of First Metro has the power to decide how First Metro’s shares in CHI are to be
voted. Mr. Antonio S. Abacan, Jr. is usually appointed to exercise the voting power.
1
2
- 43 -
2. Security Ownership of Directors and Management (Executive Officers) as of January 31, 2013.
Title of
Class
Directors
Common
Common
Common
Common
Common
Common
Common
Common
Common
Name of Beneficial Owner
Antonino T. Aquino
Francis O. Monera
Antonio S. Abacan Jr.
Maria Theresa M. Javier
Emilio J. Tumbocon
Enrique L. Benedicto
Fr. Roderick C. Salazar Jr.
Hernando O. Streegan
Jaime E. Ysmael
Amount and
Nature of
Beneficial
Ownership
1
1
18,751
1
112,500
1
1
1
16,875
President and Highly Compensated Officers
Common Francis O. Monera
1
Common Enrique B. Manuel Jr.
0
Common Ma. Clavel G. Tongco
6,250
Common Jose Maria D. Lopez
1,875
Common Ma. Cecilia Crispina T.
0
Urbina
Other Executive Officers
Common Sheila Marie U. Tan
0
Common Ma.
Carlota
Christina
0
Laiño-Santiago
All Directors and Officers as a 156,257
group
Citizenship
Percent of
Class
(direct)
(direct)
(direct)
(direct)
(direct)
(direct)
(direct)
(direct)
(direct &
indirect)
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
0.0000%
0.0000%
0.0010%
0.0000%
0.0059%
0.0000%
0.0000%
0.0000%
0.0009%
(direct)
Filipino
Filipino
Filipino
Filipino
Filipino
0.0000%
n/a
0.0003%
0.0001%
n/a
Filipino
Filipino
n/a
n/a
(direct)
(direct)
0.0081%
None of the members of the Company’s directors and management owns 2.0% or more of the
outstanding capital stock of the Company.
No change of control in the Corporation has occurred since the beginning of its last fiscal year.
(3) Voting Trust Holders of 2% or More
No Director, Executive Officer, or stockholder holds more than 2% of a class under a voting trust or similar
agreement.
(4) Changes in Control
As of the date hereof, there is no agreement or arrangement which may result in a change in control of the
Company.
Item 12. Certain Relationships and Related Transactions
(Part IV, Paragraph (D) of SRC Rule 12)
CHI and its subsidiaries (the “Group”), in its regular conduct of business has entered into transactions
with related parties. Parties are considered to be related if, among others, one party has the ability,
directly or indirectly, to control the other party in making financial and operating decisions, the parties
are subject to common control or the party is an associate or a joint venture. Except as otherwise
indicated, the outstanding accounts with related parties shall be settled in cash. The transactions are
- 44 -
made at terms and prices agreed upon by the parties.
The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial year (in thousands):
Amounts owed by related
parties
2011
2012
Associates
Solinea
AiO
Joint Venture Partner
VH Properties
Shareholder
ALI
Subsidiaries of ALI
Avida
Alveo
Others
Total
P
= 84,387
28,339
P
= 55,075
5,099
P
=–
–
P
=–
–
9,394
–
–
–
3,049
1,836
44,672
3,419
7,865
376
2,451
P
= 135,861
836
788
–
P
= 63,634
51,041
18,132
1,052
P
= 114,897
–
15,180
–
P
= 18,599
Revenues
2012
Associate
AiO
Shareholder
ALI
Joint Venture
VH Properties
Philippines, Inc.
(VH)
Total
Amount owed to related
parties
2011
2012
2011
Expenses
2012
2011
P
= 19,752
P
= 114,702
P
=–
P
= 39,481
–
–
58,925
58,888
55,261
P
= 99,801
–
P
= 83,949
–
P
= 73,401
–
P
= 87,668
Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances and
reimbursements of operating expenses related to joint venture agreements including development costs
and land acquisitions. Other related party receivables and payables pertain to advances and
reimbursements arising from the Group’s ordinary course of business. These are generally trade
related, non-interest bearing and payable within one year.
The following describes the nature of the material transactions of the Group with related parties as of
December 31, 2012 and 2011:
Income and expenses from AiO pertain to management fees, utility charges and sales of commercial
lots.
Management fees charged to AiO amounted to P
= 15.8 million and P
= 5.9 million in 2012 and 2011,
respectively.
In 2011, CPVDC sold commercial lots to AiO with total selling price of P
= 105.7 million. Related cost of
sales from the transaction amounted to P
= 63.4 million. Receivables from these sales are noninterestbearing and collectible in annual installments starting 2009 until 2013. The Group’s “Accounts
Receivable” account includes the receivable from sale of lot to AiO amounting to P
=
307.7 million as of December 31, 2012 and 2011, respectively.
The Group also recognized income from utility charges to AiO amounting to P
= 3.9 million and P
= 3.1
million in 2012 and 2011, respectively.
- 45 -
Expenses to ALI pertain to management fees, professional fees and systems costs.
Management and service agreement with ALI, amounted to P
= 43.1 million in 2012 and
2011, respectively. Payable to ALI as of December 31, 2012 and 2011 arising from this transaction
amounted to P
= 24.3 million, respectively.
Professional fees to ALI amounted to P
= 0.6 million and nil in 2012 and 2011, respectively. Systems
costs which were included in the Group’s manpower costs amounted to P
= 15.8 million
in 2012 and 2011, respectively.
Income from VH pertains to service income from joint venture agreements.
Included in the Group’s other noncurrent assets is a dividend receivable from CIHCI amounting to
P
= 33.7 million as of December 31, 2012 and 2011, respectively which is collectible
until 2015.
Compensation of key management personnel by benefit type follows:
2011
(In Thousands)
P
= 20,376
P
= 18,832
5,412
2,807
P
= 25,788
P
= 21,639
2012
Short-term employee benefits
Post-employment pension and other benefits
2010
P
= 17,388
3,847
P
= 21,235
Terms and conditions of transactions with related parties
There have been no guarantees provided or received for any related party receivables or payables.
These accounts are noninterest-bearing and are generally unsecured except for those indicated under
Note 6. Impairment assessment is undertaken each financial year through a review of the financial
position of the related party and the market in which the related party operates.
Item 13. Compliance with Leading Practice on Corporate Governance
Compliance with leading practice on Corporate Governance
a. The evaluation system which was established to measure or determine the level of compliance
of the Board of Directors and top level management with its Revised Manual of Corporate
Governance consists of a Customer Satisfaction Survey form that is filled out by the various
functional groups indicating the compliance rating of certain institutional units and their
activities. The evaluation process also includes a Board Performance Assessment that is
accomplished by the Board of Directors indicating the compliance ratings. The aformentioned
forms are submitted to the Compliance Officer who issues the required certificate of compliance
with the Company’s Revised Manual of Corporate Governance to the Securities and Exchange
Commission.
b. To ensure good governance, the Board establishes the vision, strategic objectives, key policies,
and procedures for the management of the Company, as well as the mechanism for monitoring
and evaluating Management’s performance. The Board also ensures the presence and
adequacy of internal control mechanisms for good governance.
c.
There was no deviation committed by any of the Company’s directors and officers on the
Revised Manual of Corporate Governance during the period covered in this report. The
Company adopted the Revised Manual of Corporate Governance, and full compliance with the
same has been made since the adoption of the Revised Manual.
- 46 -
d. The Company is taking further steps to enhance adherence to principles and practices of good
corporate governance. Below are some of the initiatives being undertaken by the Company to
ensure adherence to corporate governance.
o Adoption of Risks Management System
o Adherence to Organizational and Procedural Controls
o Independent Audit Mechanism
o Regular Reporting to Audit Committee
o Creation of Board Committees
o Financial and Operational Reporting
o Compliance to government regulatory and reportorial requirements
o Disclosure and Transparency to the Public
There was no deviation committed by any of the Company’s directors’ and officers on the Manual of
Corporate Governance during the period covered in this report.
List of all parents of the registrant showing the basis of control and as to each parent, the percentage of
voting securities owned or the basis of control by its immediate parent, if any.
* Ayala Land, Inc. (ALI)
49.80% owner (956,241,738 shares)
ALI is majority owned by Ayala Corporation.
PART IV EXIBITS AND SCHEDULES
Item 14. Exhibits and Reports on SEC Form 17-C
(a) Exhibits - See accompanying Index to Exhibits
The following exhibit is incorporated by reference in this report:
2012 Consolidated Financial Statements
The other exhibits, as indicated in the Index to Exhibits are either not applicable to the
Company or require no answer.
(b) Reports on Sec Form 17-C
The following current reports have been reported by Cebu Holdings during the year 2012 through
official disclosure letters dated:
January 10, 2012
Cebu Holdings, Inc. has adopted the Manual of Corporate Governance practices & principles, and
compliance therewith started since the adoption of the manual up to the present.
January 13, 2012
Cebu Holdings, Inc. certified the attendance of the Board of Directors in all meetings of the
corporation’s Board of Directors in 2011.
April 23, 2012
CHI announced the Results of the Annual Stockholders’ Meeting and Organizational Board of
Directors’ Meeting.
May 22, 2012
Cebu Holdings, Inc. submitted the enclosed certification of its Independent Directors in compliance
with the notice of the Securities & Exchange Commission implementing Section 38 of the Securities
Regulation Code (SRC).
- 47 -
July 16, 2012
CHI accepted the resignation of Mrs. Natividad N. Alejo as director and Treasurer and
correspondingly elected Ms. Maria Theresa Marcial-Javier to assume the positions.
November 22, 2012
Cebu Holdings, Inc. Board of Directors (BOD) approved the declaration and payment of a cash
dividend of P0.10 per share to all outstanding shares of the company as of record date December 7,
2012, payable on December 21, 2012.
Item 14. Additional Disclosures Data:
a.
External Audit Fees: Independent Public Accountants
Audit and Audit-Related Fees
The Company paid its external auditor the following fees in the past two years:
Audit & Audit-related Fees
Tax Fees
2012
P 531 k*
None
2011
P 472 k*
None
* Exclusive of value-added tax and out of pocket expenses
Other Fees
None
None
SGV & Co. was engaged by the Company to audit its annual financial statements.
b.
Tax Fees
No tax fees or other consultancy services were secured from external auditors, specifically
SGV & Co.
c.
The audit committee’s approval policies and procedures for the above services:
As indicated in the Audit & Risk Committee Charter, the Committee is responsible for the
recommendation on the appointment of the external auditors and the fixing of their
remuneration to the full Board. The Audit & Risk Committee reviews and approves the
appointment &/or renewal of external auditors (SGV & Co.) for the fiscal year. A presentation
of the scope of services to be rendered by external auditors and its corresponding
professional fees are presented to the Committee for its approval during the 1st Quarter
regular Audit & Risk Committee meeting. The Committee, through its Chairman,
recommends to the board en banc the approval of the external auditor appointment.
- 48 -
d.
Financial Ratios (SRC Rule 68, Amended)
Cebu Holdings Inc. and Subsidiaries
Financial Soundness Indicator
2012
2011
a. Current/ liquidity ratios
Current ratios
Quick ratios
137.1%
137.1%
227.6%
227.6%
b. Solvency/ Debt-to-Equity Ratios
Debt-to equity ratios
Net debt-to equity ratios
37.2%
-0.38%
20.2%
-5.66%
c. Asset -to equity ratios
196.8%
151.6%
d. Interest rate coverage ratios
e. Profitability ratios
Net Income Margin
Return on total assets
Return on equity
8.73
18.30
27.02%
5.23%
9.14%
f. Other relevant ratios
None
- 49 -
29.41%
6.44%
9.31%
None
a. Current/ liquidity ratios
Current asset
Current Liabilities
Current ratios
2012
3,741,663
2,728,180
137%
2011
2,612,801
1,147,859
228%
Current Asset
Inventory
Quick Assets
Current Liabilities
Quick Ratios
2,483,899
1,257,764
3,741,663
2,728,180
137%
1,625,865
986,936
2,612,801
1,147,859
228%
b. Solvency/Debt-to-Equity Ratios
Short term Debt
Current Portion of Long Term Debt
Long-term Debt - net of current portion
Bank Debt
Equity
Less: Noncontrolling interest
Equity attributable to parent
Less: Unrealized gain- AFS
Equity, net of unrealized gain
Debt to-equity ratios
163,315
1,681,747
1,845,062
5,282,246
327,892
4,954,354
4,954,354
37%
55,000
895,675
950,675
5,028,391
323,322
4,705,069
4,705,069
20%
Bank Debt
Cash and cash equivalent
Short term investments
Financial Assets at FV through P&L
Net Debt
Equity
Net Debt ot equity ratios
1,845,062
1,864,017
(18,955)
4,954,354
-0.38%
950,675
1,214,231
2,956
(266,512)
4,705,069
-5.66%
c. Asset -to equity ratios
Total Asset
Total Equity
Asset to Equity Ratio
9,749,063
4,954,354
197%
7,131,313
4,705,069
152%
d. Interest rate coverage ratios
8.73
e. Profitability ratios
Net Income after tax
Revenue
Net Income Margin
18.30
441,292
1,633,034
27%
424,333
1,442,701
29%
Total Assets CY
Total Assets PY
Average Total Assets
Return on total assets
441,292
9,749,063
7,131,313
8,440,188
5.23%
424,333
7,131,313
6,038,390
6,584,851
6.44%
Total Equity- CY
Total Equity- PY
Average total equity
Return on Equity
441,292
4,954,354
4,705,069
4,829,712
9.14%
424,333
4,705,069
4,415,142
4,560,106
9.31%
- 50 -
2012
2011
Interest Rate Coverage Ratios =EBITDA/Interest Expense
Add:
Provision for income tax
Interest expense and other financing charges
Less:
Interest and investment income
Other income
EBIT
Add:
Depreciation & Amortization
EBITDA
Interest Expense - Loan
Interest Rate Coverage Ratio
- 51 -
441,291,589.25
424,333,467.49
167,033,217.07
45,073,000.00
212,106,217.07
143,117,000.00
26,489,000.00
169,606,000.00
298,481,836.01
298,481,836.01
354,915,970.31
249,571,000.00
249,571,000.00
344,368,467.49
12,466,681.73
367,382,652.04
42,071,196.10
8.73
12,046,080.00
356,414,547.49
19,473,439.90
18.30
Cebu Holdings, Inc. and Subsidiaries
Consolidated Financial Statements
December 31, 2012 and 2011
and Years ended December 31, 2012, 2011 and 2010
and
Independent Auditors’ Report
SyCip Gorres Velayo & Co.
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001,
December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015
INDEPENDENT AUDITORS’ REPORT
The Stockholders and the Board of Directors
Cebu Holdings, Inc.
We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and its
subsidiaries, which comprise the consolidated statements of financial position as at
December 31, 2012 and 2011, and the consolidated statements of income, statements of
comprehensive income, statements of changes in equity and statements of cash flows for each of the
three years in the period ended December 31, 2012, and a summary of significant accounting policies
and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Philippine Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
*SGVMG100137*
A member firm of Ernst & Young Global Limited
-2Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Cebu Holdings, Inc. and its subsidiaries as at December 31, 2012 and 2011, and
their financial performance and their cash flows for each of the three years in the period ended
December 31, 2012 in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Jessie D. Cabaluna
Partner
CPA Certificate No. 36317
SEC Accreditation No. 0069-AR-3 (Group A),
February 14, 2013, valid until February 13, 2016
Tax Identification No. 102-082-365
BIR Accreditation No. 08-001998-10-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 3669666, January 2, 2013, Makati City
March 7, 2013
*SGVMG100137*
CEBU HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands)
2012
December 31
2011
P
=1,864,017
–
541,004
1,257,764
78,878
3,741,663
=1,214,231
P
2,956
390,697
986,936
17,981
2,612,801
489,701
49,265
773,260
4,635,201
8,638
51,335
6,007,400
P
=9,749,063
522,526
39,432
690,354
3,170,576
9,579
86,045
4,518,512
=7,131,313
P
P
=2,046,332
163,315
16,259
502,274
2,728,180
=654,135
P
55,000
36,609
402,115
1,147,859
1,681,747
16,239
33,094
7,557
1,738,637
4,466,817
895,675
18,044
28,556
12,788
955,063
2,102,922
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 23)
Short-term investments (Notes 5 and 23)
Accounts receivable (Notes 6, 16 and 23)
Inventories (Note 7)
Other current assets (Note 8)
Total Current Assets
Noncurrent Assets
Noncurrent accounts receivable (Notes 6, 16 and 23)
Property and equipment (Note 9)
Investments in associates (Note 10)
Investment properties (Note 11)
Deferred tax assets - net (Note 21)
Other noncurrent assets (Note 12)
Total Noncurrent Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts and other payables (Notes 13, 16 and 23)
Current portion of long-term debt (Notes 14 and 23)
Income tax payable
Other current liabilities (Notes 15 and 23)
Total Current Liabilities
Noncurrent Liabilities
Long-term debt - net of current portion (Notes 14 and 23)
Pension liabilities (Note 20)
Deferred tax liabilities - net (Note 21)
Other noncurrent liabilities (Note 23)
Total Noncurrent Liabilities
Total Liabilities
(Forward)
*SGVMG100137*
-2-
Equity (Note 24)
Equity attributable to equity holders of Cebu Holdings, Inc.
Paid-in capital
Retained earnings
Non-controlling interests
Total Equity
2012
December 31
2011
P
=2,776,758
2,177,596
4,954,354
327,892
5,282,246
P
=9,749,063
=2,776,758
P
1,928,311
4,705,069
323,322
5,028,391
=7,131,313
P
See accompanying Notes to Consolidated Financial Statements.
*SGVMG100137*
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, except Earnings Per Share)
Years Ended December 31
2011
2010
2012
REVENUE
Real estate (Note 17)
Equity in net earnings of associates (Note 10)
Interest income (Note 18)
Other income (Note 18)
COSTS AND EXPENSES
Real estate (Note 19)
General and administrative expenses (Notes 16, 19 and 20)
Interest and other financing charges (Notes 16 and 19)
Other charges
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX (Note 21)
Current
Deferred
NET INCOME
Net Income Attributable to:
Equity holders of Cebu Holdings, Inc.
Basic/Diluted Earnings Per Share (Note 22)
Net income attributable to equity holders of
Cebu Holdings, Inc.
P1,164,625 =
P1,273,515
P
=1,260,651 =
28,505
29,020
73,901
59,384
52,240
83,179
190,187
167,095
215,303
1,442,701 1,521,870
1,633,034
751,590
196,682
43,545
1,528
993,345
617,901
190,180
22,409
4,080
834,570
740,346
173,541
25,347
1,824
941,058
639,689
608,131
580,812
161,570
5,463
167,033
150,066
(6,949)
143,117
124,615
10,934
135,549
P
=472,656
=465,014
P
=445,263
P
P
=441,292
31,364
P
=472,656
=424,333
P
40,681
=465,014
P
=406,200
P
39,063
=445,263
P
P
=0.23
=0.22
P
=0.21
P
*SGVMG100137*
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2011
2010
2012
Net income
Other comprehensive income
Total comprehensive income
Total comprehensive income attributable to:
P
=472,656
=465,014
P
=445,263
P
−
−
−
P
=472,656
=465,014
P
=445,263
P
P
=441,292
31,364
P
=472,656
=424,333
P
40,681
=465,014
P
=406,200
P
39,063
=445,263
P
*SGVMG100137*
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands, except Cash Dividends Per Share)
2011
2010
2012
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF CEBU HOLDINGS, INC.
Capital Stock - P
=1 par value (Note 24)
Balance at beginning and end of year
Additional Paid-in Capital
Balance at beginning and end of year
Total Paid-in Capital
Retained Earnings (Note 24)
Appropriated for future expansion
Unappropriated:
At beginning of year
Net income
Cash dividends - P
=0.10 per share in 2012 and
=0.07 per share in 2011 and 2010
P
Appropriations during the year
At end of year
NON-CONTROLLING INTERESTS
Net income
Dividends paid to non-controlling interests
At end of year
P
=1,920,073
=1,920,073
P
=1,920,073
P
856,685
856,685
856,685
2,776,758
2,776,758
2,776,758
1,300,000
–
–
1,928,311
441,292
1,638,384
424,333
1,366,590
406,200
(192,007)
(1,300,000)
877,596
2,177,596
(134,406)
–
1,928,311
1,928,311
(134,406)
–
1,638,384
1,638,384
323,322
31,364
(26,794)
327,892
P
=5,282,246
309,435
40,681
(26,794)
323,322
=5,028,391
P
297,183
39,063
(26,811)
309,435
=4,724,577
P
*SGVMG100137*
CONSOLIDATED STATEMENTS OF CASH FLOWS
2011
2010
2012
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization
(Notes 9, 11 and 19)
Interest and other financing charges (Note 19)
Unrealized foreign exchange losses
Provision for doubtful accounts (Note 6)
Loss (gain) on disposal of property and
equipment
Realized profit from downstream sale (Notes 10
and 29)
Equity in net earnings of associates (Note 10)
Interest income (Note 18)
Operating income before working capital changes
Decrease (increase) in:
Accounts receivable
Inventories (Note 29)
Other current assets
Increase (decrease) in:
Accounts and other payables (Note 29)
Other liabilities
Pension liabilities
Net cash generated from operations
Interest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisitions of:
Investment properties (Notes 11 and 29)
Property and equipment (Note 9)
Investments in associates (Notes 10 and 29)
Decrease (increase) in:
Short-term investments
Other noncurrent assets
Proceeds from sale of property and equipment
Net cash used in investing activities
P
=639,689
=608,131
P
=580,812
P
138,362
43,545
1,531
−
137,054
22,409
4,099
1,000
126,355
25,347
1,903
151
(217)
155
(129)
(9,005)
(73,901)
(83,179)
656,825
(16,920)
(28,505)
(59,384)
668,039
−
(29,020)
(52,240)
653,179
(98,241)
75,610
(60,897)
(381,532)
(130,755)
(4,608)
(90,034)
30,343
11,479
213,284
93,454
(1,805)
878,230
63,938
(38,099)
(181,920)
722,149
(180,962)
20,588
15,332
6,102
58,249
(21,387)
(140,227)
(97,263)
(3,926)
26,704
160
627,905
39,773
(19,473)
(123,698)
524,507
(757,864)
(22,886)
–
(223,071)
(11,626)
–
(100,916)
(34,874)
(90,454)
2,956
34,710
803
(742,281)
22,864
5,588
10
(206,235)
211,690
(7,358)
295
(21,617)
(Forward)
*SGVMG100137*
-2Years Ended December 31
2011
2010
2012
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments of long-term debt
Availments of long-term debt
Dividends paid to:
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND
CASH EQUIVALENTS
(P
=55,000)
945,250
(P
=110,000)
895,675
(P
=110,000)
−
(26,794)
(192,007)
671,449
(26,794)
(134,406)
624,475
(26,811)
(134,406)
(271,217)
(1,531)
(4,099)
(1,903)
649,786
316,878
229,770
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR (Note 4)
1,214,231
897,353
667,583
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 4)
P
=1,864,017
=1,214,231
P
=897,353
P
See accompanying Notes to Consolidated Financial Statements
*SGVMG100137*
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Group Information
Cebu Holdings, Inc. (the Parent Company) was incorporated in the Republic of the Philippines on
December 9, 1988 and is engaged in real estate development, sale of subdivided land, residential
and office condominium units, sports club shares, and lease of commercial spaces. The registered
office address of the Parent Company is at 7th Floor, Cebu Holdings Center, Cebu Business Park,
Cebu City, Philippines.
Cebu Property Ventures and Development Corporation (CPVDC), a subsidiary, is engaged in real
estate development and sale of subdivision land and residential units. The registered office
address of the CPVDC is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City,
Philippines.
Asian I-Office Properties, Inc. (AiO) is 40%-owned by CPVDC starting in 2008. Its purpose is to
engage in all aspects of real estate development and in leasing of corporate spaces. The registered
office address of AiO is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City,
Philippines. AiO was incorporated on September 24, 2007 and has commenced its operations in
May 2009.
Cebu Leisure Company, Inc. (CLCI), a wholly owned subsidiary, is engaged in subleasing of
commercial spaces, food courts and entertainment facilities. The registered office address of
CLCI is at 7/F Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.
CBP Theatre Management Company, Inc. (CBP Theatre), a subsidiary, was registered with the
Securities and Exchange Commission to engage in all aspects of the theatrical and
cinematographic entertainment business, including theatre management and other related
undertakings. The registered office address of CBP Theatre is at 7th Floor, Cebu Holdings Center,
Cebu Business Park, Cebu City, Philippines. CBP Theatre has not yet started its operations as of
December 31, 2012.
The consolidated financial statements of Cebu Holdings, Inc. and its subsidiaries (the Group) as of
December 31, 2012 and 2011 and for each of the three years ended December 31, 2012 were
authorized for issue by the Executive Committee of the Board of Directors (BOD) on
March 7, 2013.
2. Summary of Significant Accounting Policies
Basis of Preparation
The accompanying consolidated financial statements of the Group have been prepared on a
historical cost basis. The consolidated financial statements are presented in Philippine Peso (P
=),
which is the functional currency of the Parent Company. All values are rounded to the nearest
thousand (P
=000) except when otherwise indicated.
Statement of Compliance
The consolidated financial statements of the Group have been prepared in compliance with
Philippine Financial Reporting Standards (PFRS).
*SGVMG100137*
-2Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company
and the following wholly owned and majority owned subsidiaries (the Group) as of December 31,
2012 and 2011:
CLCI
CBP Theatre
CPVDC
Effective Percentages
of Ownership
100%
100
76
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date such control ceases. The financial
statements of the subsidiaries are prepared for the same reporting year as the Parent Company,
using consistent accounting policies. All intercompany balances and transactions, including
income, expenses and dividends, are eliminated in full.
Non-controlling interests represent the portion of profit or loss and net assets in CPVDC not held
by the Parent Company and are presented separately in the consolidated statements of income,
consolidated statements of comprehensive income, consolidated statements of changes in equity
and within equity in the consolidated statements of financial position, separately from the equity
attributable to the Parent Company.
The excess of the Parent Company’s cost of investment in CPVDC over its proportionate share in
the underlying net assets at date of acquisition was allocated to “Inventories” and “Investment
properties” accounts in the consolidated statement of financial position. The purchase premium is
amortized in proportion to the area of lots (in square meters) sold by CPVDC.
Adoption of New and Amended Accounting Standards and Interpretations
The accounting policies adopted in the preparation of the Group’s consolidated financial
statements are consistent with those of the previous financial year except for the adoption of the
following amended PFRS and Philippine Accounting Standard (PAS) which became effective
January 1, 2012. Except as otherwise indicated, the adoption of the new and amended standards
did not have any significant impact on the Group’s financial statements.
·
PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets (Amendments)
The amendments require additional disclosures about financial assets that have been
transferred but not derecognized to enhance the understanding of the relationship between
those assets that have not been derecognized and their associated liabilities. In addition, the
amendments require disclosures about continuing involvement in derecognized assets to
enable users of financial statements to evaluate the nature of, and risks associated with, the
entity’s continuing involvement in those derecognized assets. The amendments affect
disclosures only and do not have significant impact on the Group’s financial position or
performance since the Group does not engage in these types of transfers of financial assets.
*SGVMG100137*
-3·
PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets (Amendments)
This amendment to PAS 12 clarifies the determination of deferred tax on investment property
measured at fair value. The amendment introduces a rebuttable presumption that the carrying
amount of investment property measured using the fair value model in PAS 40, Investment
Property, will be recovered through sale and, accordingly, requires that any related deferred
tax should be measured on a ‘sale’ basis. The presumption is rebutted if the investment
property is depreciable and is held within a business model whose objective is to consume
substantially all of the economic benefits in the investment property over time (‘use’ basis),
rather than through sale. Furthermore, the amendment introduces the requirement that
deferred tax on non-depreciable assets measured using the revaluation model in
PAS 16, Property, Plant and Equipment, always be measured on a sale basis of the asset. The
amendments have no impact on the Group’s financial position or performance since the Group
does not have property and equipment and investment properties measured at fair value.
Future Changes in Accounting Policies
The Group will adopt the following amended standards and Philippine Interpretations enumerated
below when these become effective. Except as otherwise indicated, the Group does not expect the
adoption of these new and amended PFRS and Philippine Interpretations to have significant
impact on the consolidated financial statements.
Effective 2013
·
PFRS 7, Financial instruments: Disclosures - Offsetting Financial Assets and Financial
Liabilities
These amendments require an entity to disclose information about rights of set-off and related
arrangements (such as collateral agreements). The new disclosures are required for all
recognized financial instruments that are set off in accordance with PAS 32, Financial
Instruments: Presentation and Disclosure. These disclosures also apply to recognized
financial instruments that are subject to an enforceable master netting arrangement or ‘similar
agreement’, irrespective of whether they are set-off in accordance with PAS 32. The
amendments require entities to disclose, in a tabular format unless another format is more
appropriate, the following minimum quantitative information. This is presented separately for
financial assets and financial liabilities recognized at the end of the reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
b) The amounts that are set off in accordance with the criteria in PAS 32 when determining
the net amounts presented in the statement of financial position;
c) The net amounts presented in the statement of financial position;
d) The amounts subject to an enforceable master netting arrangement or similar agreement
that are not otherwise included in (b) above, including:
i. Amounts related to recognized financial instruments that do not meet some or all
of the offsetting criteria in PAS 32; and
ii. Amounts related to financial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
The amendments to PFRS 7 are to be retrospectively applied for annual periods beginning on
or after January 1, 2013. The amendment affects disclosures only on the Group’s financial
position or performance since the Group does not have financial instruments that are set off in
accordance with the criteria in PAS 32.
*SGVMG100137*
-4·
PFRS 10, Consolidated Financial Statements
PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements
that addresses the accounting for consolidated financial statements. It also includes the issues
raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single
control model that applies to all entities including special purpose entities. The changes
introduced by PFRS 10 will require management to exercise significant judgment to determine
which entities are controlled, and therefore, are required to be consolidated by a parent,
compared with the requirements that were in PAS 27.
·
PFRS 11, Joint Arrangements
PFRS 11 replaces PAS 31, Interests in Joint Ventures and SIC13, Jointly controlled Entities
(JCEs) - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account
for JCEs using proportionate consolidation. Instead, JCEs that meet the definition of a joint
venture must be accounted for using the equity method. The application of this new standard
will have no impact on the financial position of the Group since the Group does not have
JCEs. The Group will adopt the standard when it enters into joint arrangements.
·
·
PFRS 12, Disclosure of Interests with Other Entities
PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated
financial statements, as well as all of the disclosures that were previously included in
PAS 31, Interest in Joint Ventures and PAS 28, Investment in Associates. These disclosures
relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured
entities. A number of new disclosures are also required. The adoption of PFRS 12 will affect
disclosures only and has no impact on the Group’s financial position or performance since the
Group assessed that there will be no significant changes in the disclosures required by PAS
27, 28 and 31.
PFRS 13, Fair Value Measurement
PFRS 13 establishes a single source of guidance under PFRS for all fair value measurements.
PFRS 13 does not change when an entity is required to use fair value, but rather provides
guidance on how to measure fair value under PFRS when fair value is required or permitted.
This Standard should be applied prospectively as of the beginning of the annual period in
which it is initially applied. Its disclosure requirements need not be applied in comparative
information provided for periods before initial application of PFRS 13.
The Group does not consider that the definition of fair value that is applied in PFRS 13 differs
in a material way from its current approach and consequently anticipates there will not be any
impact from this standard on its financial position. However, PFRS 13 does expand the
disclosure requirements in respect of fair value measurement.
·
PAS 1, Presentation of Financial Statements - Presentation of Items of Other Comprehensive
Income or OCI (Amendments)
The amendments to PAS 1 change the grouping of items presented in OCI. Items that can be
reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon
derecognition or settlement) will be presented separately from items that will never be
recycled. The amendments affect presentation only and have no impact on the Group’s
financial position or performance. The amendment becomes effective for annual periods
beginning on or after July 1, 2012. The amendments will be applied retrospectively and will
result to the modification of the presentation of items of OCI including unrealized gains on
AFS financial assets and cumulative translation adjustments.
*SGVMG100137*
-5·
PAS 19, Employee Benefits (Revised)
Amendments to PAS 19 range from fundamental changes such as removing the corridor
mechanism and the concept of expected returns on plan assets to simple clarifications and
rewording. The revised standard also requires new disclosures such as, among others, a
sensitivity analysis for each significant actuarial assumption, information on asset-liability
matching strategies, duration of the defined benefit obligation, and disaggregation of plan
assets by nature and risk. Once effective, the Group has to apply the amendments
retroactively to the earliest period presented. The effects are detailed below:
Increase (decrease)
As at
As at
December
December
31, 2011
31, 2012
(In Thousands)
Consolidated Statements of Financial Position
Net defined benefit obligation
Other comprehensive loss
Retained earnings
P
=8,408
(15,366)
(220)
=586
P
(7,858)
8,294
As at
January 1,
2011
P17,997
=
(13,517)
(2,825)
Increase (decrease)
2011
2012
(In thousands)
Consolidated Statements of Income
Net benefit cost
Income tax expense
Profit (loss) for the year
Attributable to the equity holders of
Cebu Holdings, Inc.
P
=314
94
(220)
(P
=11,849)
(3,555)
8,294
·
PAS 27, Separate Financial Statements (as revised in 2011)
As a consequence of the new PFRS 10, Consolidated Financial Statements, and PFRS 12,
Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for
subsidiaries, jointly controlled entities, and associates in separate financial statements. The
adoption of the amended PAS 27 will not have a significant impact on the separate financial
statements of the entities in the Group since the Group’s accounting policy is already
consistent with the revised PAS 27.
·
PAS 28, Investments in Associates and Joint Ventures (as revised in 2011)
As a consequence of the new PFRS 11, Joint Arrangements and PFRS 12, PAS 28 has been
renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application
of the equity method to investments in joint ventures in addition to associates.
Effective 2014
·
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
liabilities (Amendments)
These amendments to PAS 32 clarify the meaning of “currently has a legally enforceable right
to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement
systems (such as central clearing house systems) which apply gross settlement mechanisms
that are not simultaneous. The amendments affect presentation only on the Group’s financial
position or performance. The amendments to PAS 32 are to be retrospectively applied for
annual periods beginning on or after January 1, 2014.
*SGVMG100137*
-6Effective 2015
·
PFRS 9, Financial Instruments
PFRS 9, as issued, reflects the first phase on the replacement of PAS 39, Financial
Instruments: Recognition and Measurement and applies to the classification and measurement
of financial assets and liabilities as defined in PAS 39. Work on impairment of financial
instruments and hedge accounting is still ongoing, with a view to replacing PAS 39 in its
entirety. PFRS 9 requires all financial assets to be measured at fair value at initial recognition.
A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently
measured at amortized cost if it is held within a business model that has the objective to hold
the assets to collect the contractual cash flows and its contractual terms give rise, on specified
dates, to cash flows that are solely payments of principal and interest on the principal
outstanding. All other debt instruments are subsequently measured at fair value through profit
or loss. All equity financial assets are measured at fair value either through OCI or profit or
loss. Equity financial assets held for trading must be measured at fair value through profit or
loss. For FVO liabilities, the amount of change in the fair value of a liability that is
attributable to changes in credit risk must be presented in OCI. The remainder of the change
in fair value is presented in profit or loss, unless presentation of the fair value change in
respect of the liability’s credit risk in OCI would create or enlarge an accounting mismatch in
profit or loss. All other PAS 39 classification and measurement requirements for financial
liabilities have been carried forward into PFRS 9, including the embedded derivative
separation rules and the criteria for using the FVO. The adoption of the first phase of PFRS 9
will have an effect on the classification and measurement of the Group’s financial assets, but
will potentially have no impact on the classification and measurement of financial liabilities.
·
Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate
This Interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors. The Interpretation
requires that revenue on construction of real estate be recognized only upon completion,
except when such contract qualifies as construction contract to be accounted for under
PAS 11, Construction Contracts, or involves rendering of services in which case revenue is
recognized based on stage of completion. Contracts involving provision of services with the
construction materials and where the risks and reward of ownership are transferred to the
buyer on a continuous basis will also be accounted for based on stage of completion. The
SEC and the Financial Reporting Standards Council (FRSC) have deferred the effectivity of
this Interpretation until the final Revenue standard is issued by International Accounting
Standards Board (IASB) and an evaluation of the requirements of the final Revenue standard
against the practices of the Philippine real estate industry is completed.
The adoption of this Philippine Interpretation may significantly affect the determination of the
revenue from real estate sales and the corresponding costs, and the related trade receivables,
deferred tax liabilities and retained earnings accounts. The Group is in the process of
quantifying the impact of adoption of this Interpretation.
Improvements to PFRSs
Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to
removing inconsistencies and clarifying wording. There are separate transitional provisions for
each standard. The amendments are effective for annual periods beginning on or after
January 1, 2013 and are applied retrospectively. Earlier application is permitted.
*SGVMG100137*
-7·
PFRS 1, First-time Adoption of PFRS - Borrowing Costs
The amendment clarifies that, upon adoption of PFRS, an entity that capitalized borrowing
costs in accordance with its previous generally accepted accounting principles, may carry
forward, without any adjustment, the amount previously capitalized in its opening statement of
financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing
costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not
apply to the Group as it is not a first-time adopter of PFRS.
·
PAS 1, Presentation of Financial Statements - Clarification of the requirements for
comparative information
The amendments clarify the requirements for comparative information that are disclosed
voluntarily and those that are mandatory due to retrospective application of an accounting
policy, or retrospective restatement or reclassification of items in the financial statements. An
entity must include comparative information in the related notes to the financial statements
when it voluntarily provides comparative information beyond the minimum required
comparative period. The additional comparative period does not need to contain a complete
set of financial statements. On the other hand, supporting notes for the third balance sheet
(mandatory when there is a retrospective application of an accounting policy, or retrospective
restatement or reclassification of items in the financial statements) are not required. The
amendments affect disclosures only and have no impact on the Group’s financial position or
performance. The amendment will not have significant impact on the Group’s consolidated
financial statements since the comparative information disclosures are in accordance with the
requirements of PAS 1.
·
PAS 16, Property, Plant and Equipment - Classification of servicing equipment
The amendment clarifies that spare parts, stand-by equipment and servicing equipment should
be recognized as property, plant and equipment when they meet the definition of property,
plant and equipment and should be recognized as inventory if otherwise. The amendment will
not have any significant impact on the Group’s financial position or performance.
·
PAS 32, Financial Instruments: Presentation - Tax effect of distribution to holders of equity
instruments
The amendment clarifies that income taxes relating to distributions to equity holders and to
transaction costs of an equity transaction are accounted for in accordance with PAS 12,
Income Taxes. The Group expects that this amendment will not have any impact on its
financial position or performance.
·
PAS 34, Interim Financial Reporting - Interim financial reporting and segment information
for total assets and liabilities
The amendment clarifies that the total assets and liabilities for a particular reportable segment
need to be disclosed only when the amounts are regularly provided to the chief operating
decision maker and there has been a material change from the amount disclosed in the entity’s
previous annual financial statements for that reportable segment. The amendment affects
disclosures only on the Group’s financial position or performance.
Cash and Cash Equivalents and Short-term Investments
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amount of cash with original maturities of three
(3) months or less from date of placement and that are subject to an insignificant risk of changes in
value. Cash investments with original maturities beyond three months but within one year are
classified as short-term investments.
*SGVMG100137*
-8Financial Assets and Financial Liabilities
Date of recognition
The Group recognizes a financial asset or a financial liability in the consolidated statement of
financial position when it becomes a party to the contractual provisions of the instrument. In the
case of a regular way purchase or sale of financial assets, recognition and derecognition, as
applicable, is done using the settlement date accounting.
Initial recognition
Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are
included in the initial measurement of all financial assets and liabilities, except for financial
instruments measured at fair value through profit or loss (FVPL).
Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans
and receivables, held-to-maturity financial assets, or available-for-sale (AFS) financial assets, as
appropriate. Financial liabilities are classified as either financial liabilities at FVPL or other
financial liabilities. The Group’s financial assets and financial liabilities are of the nature of loans
and receivables and other financial liabilities, respectively. The classification depends on the
purpose for which the investments were acquired or liabilities were incurred and whether they are
quoted in an active market. Management determines the classification of its financial instruments
at initial recognition and, where allowed and appropriate, re-evaluates such designation at every
reporting date.
Determination of fair value
The fair value for financial instruments traded in active markets at the reporting date is based on
their quoted market price or dealer price quotations (bid price for long positions and ask price for
short positions), without any deduction for transaction costs. When current bid and ask prices are
not available, the price of the most recent transaction provides evidence of the current fair value as
long as there has not been a significant change in economic circumstances since the time of the
transaction.
For all other financial instruments not listed in an active market, the fair value is determined by
using appropriate valuation techniques. Valuation techniques include net present value
techniques, comparison to similar instruments for which market observable prices exist, options
pricing models, and other relevant valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured
are provided in Note 23.
“Day 1” profit
Where the transaction price in a non-active market is different to the fair value from other
observable current market transactions in the same instrument or based on a valuation technique
whose variables include only data from observable market, the Group recognizes the difference
between the transaction price and fair value (a “Day 1” profit) in the consolidated statement of
income unless it qualifies for recognition as some other type of asset. In cases where variables
used are made of data which is not observable, the difference between the transaction price and
model value is only recognized in the consolidated statement of income when the inputs become
observable or when the instrument is derecognized. For each transaction, the Group determines
the appropriate method of recognizing the “Day 1” profit amount.
*SGVMG100137*
-9Loans and receivables
Loans and receivables are nonderivative financial assets with fixed or determinable payments that
are not quoted in an active market. They are not entered into with the intention of immediate or
short-term resale and are not designated as AFS financial assets or financial assets at FVPL. This
accounting policy relates to the consolidated statement of financial position captions “Cash and
cash equivalents”, “Short-term investments” and “Accounts receivable” except advances to
contractors.
After initial measurement, the loans and receivables are subsequently measured at amortized cost
using the effective interest method, less allowance for impairment. Amortized cost is calculated
by taking into account any discount or premium on acquisition and fees that are an integral part of
the effective interest rate (EIR). The amortization is included in “Interest income” account in the
consolidated statement of income. The losses arising from impairment of such loans and
receivables are recognized under “General and administrative expenses” account in the
consolidated statement of income. Loans and receivables are included in current assets if maturity
is within twelve months from the reporting date. Otherwise, these are classified as noncurrent
assets.
Other financial liabilities
Other financial liabilities are financial liabilities not designated as at FVPL where the substance of
the contractual arrangement results in the Group having an obligation either to deliver cash or
another financial asset to the holder, or to satisfy the obligation other than by the exchange of a
fixed amount of cash. After initial measurement, other financial liabilities are subsequently
measured at amortized cost using the effective interest method. Amortized cost is calculated by
taking into account any discount or premium on the issue and fees that are an integral part of the
EIR. The amortization is included in the “Interest and other financing charges” account in the
consolidated statement of income.
This accounting policy applies primarily to the Group’s “Accounts and other payables”, “Longterm debt” and other obligations that meet the above definition (other than liabilities covered by
other accounting standards, such as income tax payable).
Other Liabilities
Other liabilities which include customers’ deposits are measured initially at fair value. The
difference between the cash received and the fair value of customers’ deposits is recognized as
deferred credits (included in “Other liabilities” in the consolidated statement of financial position)
and amortized using the straight-line method under the “Real estate” account in the consolidated
statement of income. After initial recognition, customers’ deposits are subsequently measured at
amortized cost using effective interest method. Accretion of discount is recognized under
“Interest and other financing charges” in the consolidated statement of income.
Derecognition of Financial Assets and Financial Liabilities
Financial asset
A financial asset (or, where applicable, a part of a group of financial assets) is derecognized when:
(a) the right to receive cash flows from the assets has expired; (b) the Group retains the right to
receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third-party under a “pass-through” arrangement; or (c) the Group has
transferred its right to receive cash flows from the asset and either: (i) has transferred substantially
all the risks and rewards of the asset; or (ii) has neither transferred nor retained the risks and
rewards of the asset but has transferred control of the asset.
*SGVMG100137*
- 10 Where the Group has transferred its right to receive cash flows from an asset or has entered into a
“pass-through” arrangement, and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the
Group’s continuing involvement in the asset. In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained. Continuing involvement that takes the form of
a guarantee over the transferred asset is measured at the lower of the original carrying amount of
the asset and the maximum amount of consideration that the Group could be required to repay.
Financial liability
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or expired. Where an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in the consolidated statement of income.
Impairment of Financial Assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a group of financial assets is deemed
to be impaired if, and only if, there is objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that
loss event (or events) has an impact on the estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the borrower or a group of borrowers is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will
enter bankruptcy or other financial reorganization and where observable data indicate that there is
measurable decrease in the estimated future cash flows, such as changes in economic conditions
that correlate with defaults.
Loans and receivables
For loans and receivables carried at amortized cost, the Group first assesses whether objective
evidence of impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant. If the Group determines that
no objective evidence of impairment exists for individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses for impairment. Those characteristics are relevant to the
estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability
to pay all amounts due according to the contractual terms of the assets being evaluated. Assets
that are individually assessed for impairment and for which an impairment loss is, or continues to
be, recognized are not included in a collective assessment for impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of the
estimated future cash flows (excluding future credit losses that have not been incurred). The
carrying amount of the asset is reduced through use of an allowance account and the amount of
loss is charged to the consolidated statement of income. Interest income continues to be
recognized based on the original effective interest rate (EIR) of the asset. Loans and receivables,
together with the associated allowance accounts, are written off when there is no realistic prospect
of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases
or decreases because of an event occurring after the impairment was recognized, the previously
recognized impairment loss is increased or reduced by adjusting the allowance account. Any
*SGVMG100137*
- 11 subsequent reversal of an impairment loss is recognized in consolidated statement of income, to
the extent that the carrying value of the asset does not exceed its amortized cost at the reversal
date.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis
of such credit risk characteristics as customer type, credit history, past-due status and term.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of historical loss experience for assets with credit risk characteristics similar
to those in the group. The methodology and assumptions used for estimating future cash flows are
reviewed regularly by the Group to reduce any differences between loss estimates and actual loss
experience.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated
statement of financial position if, and only if, there is a currently enforceable legal right to offset
the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously. This is not generally the case with master netting agreements,
and the related assets and liabilities are presented gross in the consolidated statement of financial
position.
Inventories
Property acquired or being constructed for sale in the ordinary course of business, rather than to be
held for rental or capital appreciation, is held as inventory and is valued at the lower of cost or net
realizable value (NRV). NRV is the estimated selling price in the ordinary course of business, less
estimated costs to complete and sell. Cost includes those incurred for the acquisition and
development of the properties and is measured using the average cost method.
Cost includes:
· Land cost
· Amount paid to contractors for construction
· Borrowing costs, planning and design costs, cost of site preparation, professional fees,
property transfer taxes, construction overheads and other related costs
The cost of inventory recognized in profit or loss in disposal is determined with reference to the
specific costs incurred on the property sold and an allocation of any non-specific cost based on the
relative size of the property sold.
Club shares are valued at the lower of cost or NRV. Cost comprise of acquisition and actual
development cost incurred plus the estimated development cost to complete the project based on
the estimates as determined by in-house engineers, adjusted with the actual cost incurred as the
development progresses. NRV is the estimated selling price in the ordinary course of business,
less estimated costs to sell. Cost is determined using the average cost method.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and amortization and any
impairment in value. The initial cost of property and equipment comprises its purchase price and
any directly attributable costs of bringing the property and equipment to its intended location and
working condition, including borrowing costs.
*SGVMG100137*
- 12 Major repairs are capitalized as property and equipment only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the items can be
measured reliably. All other repairs and maintenance are charged against current operations as
incurred.
Depreciation and amortization of assets commence once the property and equipment are available
for their intended use and is computed on a straight-line basis over the estimated useful lives of the
property and equipment as follows:
Buildings and improvements
Furniture, fixtures and equipment
Transportation equipment
Years
40
3 - 10
3-5
The useful lives and depreciation and amortization method are reviewed periodically to ensure that
the period and method of depreciation and amortization are consistent with the expected pattern
of economic benefits from items of property and equipment.
When property and equipment are retired or otherwise disposed of, the cost of the related
accumulated depreciation and amortization and accumulated provision for impairment losses, if
any, are removed from the accounts and any resulting gain or loss is credited or charged against
current operations.
Fully depreciated property ad equipment are retained in the accounts while still in use although no
further depreciation is credited or charged to current operations.
Investments in Associates
Investment in associates is accounted for under the equity method of accounting. An associate is
an entity in which the Group has significant influence.
Under the equity method, the investment in associates is carried in the consolidated statement of
financial position at cost plus post-acquisition changes in the Group’s share in the net assets of the
investee companies. Cost includes all amounts provided to the associate which are intended to be
the associate’s capital. The consolidated statement of income includes the Group’s share in the
results of the operations of the associate. Profit and losses resulting from transactions between the
Group and the associate are eliminated to the extent of the interest in the associate.
The reporting date of the associate and the Group are identical and the associate’s accounting
policies conform to those used by the Group for like transactions and events in similar
circumstances.
Investment Properties
Investment properties consist of properties that are held to earn rentals and for capital appreciation
or both. Investment properties, except for land, are carried at cost less accumulated depreciation
and amortization and any impairment in value. Land is carried at cost less any impairment in
value. The initial cost of investment properties consists of any directly attributable costs of
bringing the investment properties to its intended location and working condition, including
borrowing costs.
*SGVMG100137*
- 13 Depreciation and amortization is computed using the straight-line method over its useful life. The
estimated lives of investment properties under buildings and improvements are 5 to 40 years.
Construction in progress is stated at cost. This includes cost of construction, equipment and other
direct costs. Construction in progress is not depreciated until such time that the relevant assets are
available for their intended use.
Investment properties are derecognized when either they have been disposed of or when they are
is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognized in the
consolidated statement of income in the year of retirement or disposal.
Transfers are made to investment properties when, and only when, there is a change in use,
evidenced by ending of owner-occupation and commencement of an operating lease to another
party. Transfers are made from investment properties when, and only when, there is a change in
use, evidenced by commencement of owner-occupation or commencement of development with a
view to sale.
Transfers between investment properties, owner-occupied properties and inventories do not
change the carrying amount of the property transferred and they do not change the cost of that
property for measurement or disclosure purposes.
Impairment of Nonfinancial Assets
Investment properties, property and equipment and noncurrent assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is
the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use,
and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. Where the carrying amount of
an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In determining fair value less costs to sell,
recent market transactions are taken into account, if available. If no such transactions can be
identified, an appropriate valuation model is used. Impairment losses of continuing operations are
recognized in the consolidated statement of income in those expense categories consistent with the
function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication
exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognized. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation and amortization, had no impairment loss
been recognized for the asset in prior years. Such reversal is recognized in the consolidated
statement of income unless the asset is carried at revalued amount, in which case, the reversal is
treated as a revaluation increase. After such reversal the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic
basis over its remaining useful life.
*SGVMG100137*
- 14 Investments in associates
After application of the equity method, the Group determines whether it is necessary to recognize
any additional impairment loss with respect to the Group’s net investment in the investee
companies. The Group determines at each reporting date whether there is any objective evidence
that the investment in associates is impaired. If this is the case, the Group calculates the amount of
impairment as being the difference between the fair value of the investee company and the
carrying value, and recognizes the amount in the consolidated statement of income.
Borrowing Costs
Interest and other financing costs incurred during the construction period on borrowings used to
finance property development are capitalized as part of development costs of the specific asset.
Capitalization of borrowing costs commences when the activities to prepare the asset are in
progress, and expenditures and borrowing costs are being incurred. Capitalization of borrowing
costs ceases when substantially all the activities necessary to prepare the asset for its intended use
or sale are complete. If the carrying amount of the asset exceeds its recoverable amount, an
impairment loss is recorded. Capitalized borrowing cost is based on applicable weighted average
borrowing rate. Capitalization rate ranged from 1.3% to 6.5% in 2012, 2011, and 2010 (see
Note 14).
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Group expects some or all of the provision to be reimbursed, for example
under an insurance contract, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as a borrowing cost. Provisions are reviewed at each reporting date and adjusted to
reflect the current best estimates.
Interest in Joint Venture
For joint ventures, the Group accounts for its transactions under jointly-controlled operations. The
Group recognizes its own assets that it controls and the liabilities that it incurs rather than
establishment of a corporation, partnership or other entity; and the expenses that it incurs and the
revenue that it earns from real estate sales.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at inception date whether the fulfillment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that
right is not explicitly specified in an arrangement.
Group as lessor
Leases where the Group does not transfer substantially all the risk and benefits of ownership of the
assets are classified as operating leases. Lease payments received are recognized as an income in
the consolidated statement of income on a straight-line basis over the lease term. Initial direct
costs incurred in negotiating operating leases are added to the carrying amount of the leased asset
and recognized over the lease term on the same basis as the rental income. Contingent rents are
recognized as revenue in the period in which they are earned.
*SGVMG100137*
- 15 Revenue and Cost Recognition
Revenue from sales of completed subdivision land and sports club shares are accounted for under
the full accrual method. The percentage of completion method is used to recognize revenue from
sales of projects where the Group have material obligations under the sales contract to complete
the project after the property is sold. Under this method, revenue is recognized as the related
obligations are fulfilled, measured principally on the basis of the estimated completion of a
physical proportion of the contract work.
Any excess of collections over the recognized receivables are included in the “Other current
liabilties” account in the liabilities section of the consolidated statement of financial position.
When a sale of real estate does not meet the requirements for revenue recognition, the sale is
accounted for under the deposit method. Under this method, revenue is not recognized, and the
receivable from the buyer is not recorded. Cash received is recognized under “Other current
liabilities” account in the consolidated statement of financial position.
Cost of real estate sales include land and development costs. Expected losses are recognized
immediately when it is probable that the cost will exceed the related contract price. Revisions in
estimated costs are accounted for starting in the year the change is made. Commissions for precompleted real estate units are deferred and are charged to expense when the related revenue is
recognized.
Rental income from noncancellable and cancellable leases are recognized in the consolidated
statement of income on a straight-line basis and the terms of the lease, respectively, or based on a
certain percentage of the gross revenue of the tenants, as provided for under the terms of the lease
contract.
Theater income is recognized when earned.
Interest income is recognized as it accrues (using the effective interest method that is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial
instrument to the net carrying amount of the financial assets).
Recoveries are recognized as they accrue.
Service income is recognized when the services are rendered.
Pension Cost
Pension cost is actuarially determined using the projected unit credit method. This method reflects
services rendered by employees up to the date of valuation and incorporates assumptions
concerning employees’ projected salaries. Actuarial valuations are conducted with sufficient
regularity, with option to accelerate when significant changes to underlying assumptions occur.
Pension cost includes current service cost, interest cost, expected return on any plan assets,
actuarial gains and losses and the effect of any curtailment or settlement.
The liability recognized in the consolidated statement of financial position in respect of defined
benefit pension plans is the present value of the defined benefit obligation at the reporting date less
fair value of the plan assets. The defined benefit obligation is calculated annually by independent
actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by using risk-free interest rates of long-term government bonds that have
terms to maturity approximating the terms of the related pension liabilities or applying a single
weighted average discount rate that reflects the estimated timing and amount of benefit payments.
*SGVMG100137*
- 16 Actuarial gains and losses is recognized as income or expense if the cumulative unrecognized
actuarial gains and losses at the end of the previous reporting period exceeded the greater of
10% of the present value of defined benefit obligation or 10% of the fair value of plan assets.
These gains and losses are recognized over the expected average remaining working lives of the
employees participating in the plans.
Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted at the reporting date.
Deferred tax is provided, using the liability method, on all temporary differences with certain
exceptions, at the reporting date between the tax bases of assets and liabilities and its carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets
are recognized for all deductible temporary differences and carryforward benefits of unused tax
credits from excess of minimum corporate income tax (MCIT) over the regular corporate income
tax and unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable
income will be available against which the deductible temporary differences and carryforward
benefits of unused MCIT and NOLCO can be utilized.
Deferred tax liabilities are not provided on nontaxable temporary differences associated with
investments in associates.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable income will be available to allow all or
part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at
each reporting date and are recognized to the extent that it has become probable that future taxable
income will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled, based on tax rates and tax laws that have
been enacted or substantively enacted as of reporting date.
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Foreign Currency Denominated Transactions/Translations
The consolidated financial statements are presented in Philippine Peso, which is the Group’s
functional and presentation currency. Each entity in the group determines its own functional
currency and items included in the financial statements of each entity are measured using that
functional currency. Transactions in foreign currencies are initially recorded using the exchange
rate, based on the Philippine Dealing System (PDS) rate, at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies are restated using the closing PDS rate
prevailing at reporting dates. Exchange gains or losses arising from foreign exchange transactions
are credited to or charged against operations for the year.
*SGVMG100137*
- 17 Earnings Per Share (EPS)
Basic EPS is computed by dividing net income for the year attributable to common stockholders
by the weighted average number of common shares issued and outstanding during the year
adjusted for any subsequent stock dividends declared. Diluted EPS is computed by dividing net
income for the year by the weighted average number of common shares issued and outstanding
during the year after giving effect to assumed conversion of potential common shares, if any.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are
disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the consolidated financial statements but disclosed when
an inflow of economic benefits is probable.
Events after the Reporting Date
Post year-end events up to the date the financial statements were authorized for issue that provide
additional information about the Group’s position at the reporting date (adjusting events) are
reflected in the consolidated financial statements. Post year-end events that are not adjusting
events are disclosed in the notes to the consolidated financial statements when material.
3. Significant Accounting Judgments and Estimates
The preparation of the consolidated financial statements of the Group in conformity with PFRS
requires management to make judgments and estimates that affect the amounts reported in the
consolidated financial statements and accompanying notes. The judgments and estimates used in
the consolidated financial statements are based upon management’s evaluation of relevant facts
and circumstances as of the date of the consolidated financial statements. Actual results could
differ from such estimates.
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the
amounts recognized in the consolidated financial statements:
Operating lease commitments - Group as lessor
The Group has entered into commercial property leases on its investment property portfolio. The
Group has determined that it retains all significant risks and rewards of ownership of these
properties. The Group considered, among others, the length of the lease term as compared with
the estimated life of the assets. A number of the Group’s operating lease contracts are accounted
for as non-cancellable operating leases and the rest are cancellable. In determining whether a
lease contract is cancellable or not, the Group considered, among others, the significance of the
penalty, including economic consequence to the lessee.
Club shares
Being a real estate developer, the Group determines how these shares shall be accounted for. In
determining whether these shares shall be accounted for as inventories or as financial instruments,
the Group considers its role in the development of the Club and its intent for holding these shares.
The Group classifies such shares as inventories when the Group acted as the developer and its
intent is to sell a developed property.
*SGVMG100137*
- 18 Distinction between investment properties and owner-occupied properties
The Group determines whether a property qualifies as investment property. In making its
judgment, the Group considers whether the property generates cash flows largely independent of
the other assets held by an entity. Owner-occupied properties generate cash flows that are
attributable not only to property but also to the other assets used in the production or supply
process.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and
another portion that is held for use in the production or supply of services or for administrative
purposes. If these portions cannot be sold separately as of reporting date, the property is
accounted for as investment property only if an insignificant portion is held for use in the supply
of services or for administrative purposes. Judgment is applied in determining whether ancillary
services are so significant that a property does not qualify as investment property. The Group
considers each property separately in making its judgment.
Management’s Use of Estimates
The key assumptions concerning the future and other key sources of estimation and uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are discussed below.
Revenue and cost recognition
The Group’s revenue recognition policies require management to make use of estimates and
assumptions that may affect the reported amounts of revenues and costs. The Group’s revenue
from real estate is recognized based on the percentage of completion measured principally on the
basis of the estimated completion of a physical proportion of the contract work, and by reference
to the actual costs incurred to date over the estimated total costs of the project.
As of December 31, 2012 and 2011, the outstanding net trade receivable from real estate sales
amounted to P
=450.1 million and P
=459.9 million, respectively (see Note 6).
Estimating allowance for impairment losses
The Group maintains allowance for impairment losses based on the result of the individual and
collective assessment under PAS 39. Under the individual assessment, the Group is required to
obtain the present value of estimated cash flows using the receivable’s original EIR. Impairment
loss is determined as the difference between the receivables’ carrying balance and the computed
present value. Factors considered in individual assessment are payment history, past due status
and term. The collective assessment would require the Group to group its receivables based on the
credit risk characteristics (customer type, credit history, past-due status and term) of the
customers. Impairment loss is then determined based on historical loss experience of the
receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not exist currently. The methodology and assumptions used for the
individual and collective assessments are based on management’s judgment and estimate.
Therefore, the amount and timing of recorded expense for any period would differ depending on
the judgments and estimates made for the year.
As of December 31, 2012 and 2011, receivables, net of allowance for impairment losses,
amounted to P
=1,030.7 million and P
*SGVMG100137*
- 19 Estimating useful lives of property and equipment and investment properties
The Group estimates the useful lives of its property and equipment and investment properties
based on the period over which these assets are expected to be available for use. The estimated
useful lives of property and equipment and investment properties are reviewed at least annually
and are updated if expectations differ from previous estimates due to physical wear and tear and
technical or commercial obsolescence on the use of these assets. It is possible that future results of
operations could be materially affected by changes in estimates brought about by changes in
factors mentioned above. See Notes 9 and 11 for the related balances.
Evaluating impairment of nonfinancial assets
The Group reviews investments in associates, property and equipment, investment properties and
other noncurrent assets (other than financial assets, such as dividends receivable) for impairment
of value. This includes considering certain indications of impairment such as significant changes
in asset usage, significant decline in assets’ market value, obsolescence or physical damage of an
asset, plans in the real estate projects, significant underperformance relative to expected historical
or projected future operating results and significant negative industry or economic trends.
As described in the accounting policy, the Group estimates the recoverable amount as the higher
of an asset’s fair value less costs to sell and value in use. In determining the present value of
estimated future cash flows expected to be generated from the continued use of the assets, the
Group is required to make estimates and assumptions that may affect investments in associates,
investment properties, property and equipment and other noncurrent assets. See Notes 9, 10, 11
and 12 for the related balances.
Deferred tax assets
The Group reviews the carrying amounts of deferred taxes at each reporting date and reduces
deferred tax assets to the extent that it is no longer probable that sufficient taxable income will be
available to allow all or part of the deferred tax assets to be utilized. However, there is no
assurance that the Group will generate sufficient taxable income to allow all or part of deferred tax
assets to be utilized. The Group looks at its projected performance in assessing the sufficiency of
future taxable income.
As of December 31, 2012 and 2011, deferred tax assets recognized amounted to P
=27.5 million and
P
Estimating pension obligation and other retirement benefits
The determination of the Group’s obligation and cost for pension and other retirement benefits is
dependent on selection of certain assumptions used by actuaries in calculating such amounts.
Those assumptions are described in Note 20 and include among others, discount rates, expected
return on plan assets and salary increase rate. While the Group believes that the assumptions are
reasonable and appropriate, significant differences in actual experience or significant changes in
assumptions materially affect retirement obligations.
As of December 31, 2012 and 2011, the net pension liabilities amounted to P
=16.2 million and
P
*SGVMG100137*
- 20 Fair value of financial instruments
PFRS requires certain financial assets and liabilities to be carried at fair value or have the fair
values disclosed in the notes, which requires use of extensive accounting estimates and judgments.
While significant components of fair value measurement were determined using verifiable
objective evidence (i.e., foreign exchange rates and interest rates), the amount of changes in fair
value would differ if the Group utilized different valuation methodology. Any changes in fair
value of these financial assets and liabilities would affect directly the consolidated statement of
income and consolidated statement of changes in equity. Certain financial assets and liabilities of
the Group were initially recorded at its fair value by using the discounted cash flow methodology.
See Note 23 for the related balances.
Contingencies
The Group is contingently liable arising from various claims. The estimate of the probable costs
for the resolution of these claims has been developed in consultation with the legal counsels and
based upon an analysis of potential results. The Group currently does not believe these
proceedings will have a material adverse effect on the Group’s financial position. It is possible,
however, that the results of operations could be materially affected by changes in the estimates.
4. Cash and Cash Equivalents
This account consists of:
Cash on hand and in banks
Cash equivalents
2011
2012
(In Thousands)
=68,173
P
P
=63,323
1,146,058
1,800,694
=1,214,231
P
P
=1,864,017
Cash in banks earns interest at the respective bank deposit rates. Cash equivalents are short-term,
highly liquid investments that are made for varying periods of up to three (3) months depending on
the immediate cash requirements of the Group, and earn interest at the respective short-term rates.
Total interest income earned from cash and cash equivalents amounted to P
=51.7 million,
=34.8 million and P
P
=38.6 million in 2012, 2011 and 2010, respectively (see Note 18).
5. Short-term Investments
This account consists of money market placements made for varying periods of more than
three (3) months and up to six (6) months and earn interest at the respective short-term investment
rates. Interest income earned from short-term investments amounted to P
=0.4 million,
=0.8 million and P
P
=0.3 million in 2012, 2011 and 2010, respectively (see Note 18).
*SGVMG100137*
- 21 -
6. Accounts Receivable
2012
(In Thousands)
Trade
Residential development
Commercial development
Shopping centers
Corporate business
Others
Advances to contractors (Note 16)
Receivable from related parties (Note 16)
Receivables from employees
Others
Less allowance for impairment losses
Less noncurrent portion
P
=365,540
84,517
71,548
1,186
1,178
342,405
135,861
27,162
14,885
1,044,282
13,577
1,030,705
489,701
P
=541,004
2011
=374,757
P
85,124
40,126
12,590
426
300,385
63,634
17,804
31,954
926,800
13,577
913,223
522,526
=390,697
P
The classes of trade receivables of the Group are as follows:
·
·
·
·
·
Residential development pertains to receivables arising from sale of high-end residential lots
and condominium units.
Commercial development pertains to receivables arising from sale of commercial lots and club
shares.
Shopping centers pertain to receivables arising from lease of retail space and land therein,
movie theaters, food courts, entertainment facilities and carparks.
Corporate business pertains to receivables arising from lease of office buildings.
Others pertain substantially to advances to joint venture partners (see Note 27).
Terms and conditions of receivables are as follows:
·
·
·
·
·
·
·
·
The sales contract receivables, included under residential development, are noninterestbearing and are collectible in monthly installments over a period of one to two years.
Receivables from sale of commercial lots, included under commercial development are
noninterest-bearing and are collectible in monthly or quarterly installments over a period
ranging from two to four years. Titles to real estate properties are not transferred to buyers
until full payment has been made.
The lease of retail space and land therein, included under shopping centers, are noninterestbearing and are collectible monthly based on the terms of the lease contracts.
The leases of office spaces, included under corporate business, are noninterest-bearing and are
collectible monthly based on the terms of the lease contracts.
Advances to contractors are recouped upon every progress billing payment depending on the
percentage of accomplishment.
Receivables from related parties are noninterest-bearing and collectible within one year.
Receivable from employees are generally noninterest-bearing and are collectible over a period
of one year.
Other receivables are noninterest-bearing and collectible over a period of one to ten years.
*SGVMG100137*
- 22 As of December 31, 2012 and 2011, commercial development and residential development trade
receivables, receivable from employees and others (included in other receivables) with a nominal
amount of P
=553.7 million, respectively, were initially recorded at fair value.
The fair value of the receivables was obtained by discounting future cash flows using the
applicable rates of similar types of instruments ranging from 5.1% to 11.9% and 6.1% to 11.9% in
2012 and 2011, respectively.
The aggregate unamortized discount amounted to P
=17.8 million and P
=33.7 million as of
December 31, 2012 and 2011, respectively.
Movements in the unamortized discount as of December 31, 2012 and 2011 are as follows:
2011
2012
(In Thousands)
P39,222
=
P
=33,678
18,204
15,203
(23,748)
(31,037)
=33,678
P
P
=17,844
Balance at beginning of the year
Additions
Accretion (Note 18)
Balance at end of the year
Movements in the allowance for impairment losses are as follows:
2012
Shopping
Centers
At January 1
Provisions
Write offs
At December 31
Gross amounts of individually impaired receivables
P
=7,611
–
–
P
=7,611
P
=7,611
Others
(In Thousands)
P
=5,966
–
–
P
=5,966
P
=5,966
Total
P
=13,577
–
–
P
=13,577
P
=13,577
2011
Shopping
Centers
At January 1
Provisions
Write offs
At December 31
Gross amounts of individually impaired receivables
Others
(In Thousands)
=9,347
P
=5,966
P
1,000
–
(2,736)
–
=7,611
P
=5,966
P
=7,611
P
=5,966
P
Total
=15,313
P
1,000
(2,736)
=13,577
P
=13,577
P
As of December 31, 2012 and 2011, the Group has not recognized impairment on receivables
based on collective assessment.
*SGVMG100137*
- 23 -
7. Inventories
Subdivision land for sale and development
Club shares
Condominium units under development
2011
2012
(In Thousands)
=592,648
P
P
=735,083
357,864
357,340
36,424
165,341
=986,936
P
P
=1,257,764
The rollforward of inventories follows:
At January 1
Construction cost incurred
Transfers from investment properties (Note 11)
Cost of real estate from downstream sales (Note 16)
Disposals (recognized in cost of real estate sales)
At December 31
2011
2012
(In Thousands)
=993,638
P
P
=986,936
129,309
476,618
–
14,108
28,780
14,476
(164,791)
(234,374)
=986,936
P
P
=1,257,764
8. Other Current Assets
Value-added input tax
Prepaid expenses
Creditable withholding tax
Others
2011
2012
(In Thousands)
=189
P
P
=55,360
15,956
21,721
1,462
1,306
374
491
=17,981
P
P
=78,878
The value-added input tax is applied against value-added output tax. The balance is recoverable in
future periods.
Prepaid expenses consist of advance payments for project management fees, business taxes, office
supplies, rentals, commissions and employee benefits of the Group.
*SGVMG100137*
- 24 -
9. Property and Equipment
The rollforward analyses of this account follow:
2012
Buildings
and
Improvements
Cost
At January 1
Additions
Disposals
At December 31
Accumulated Depreciation
and Amortization
At January 1
(Note 19)
Disposals
At December 31
Net Book Value
Furniture,
Fixtures and Transportation
Equipment
Equipment
(In Thousands)
Total
P
=88,338
1,016
–
P
=89,354
P
=82,793
16,647
(1,337)
P
=98,103
P
=28,438
5,223
(676)
P
=32,985
P
=199,569
22,886
(2,013)
P
=220,442
74,911
65,557
19,669
160,137
2,432
–
77,343
P
=12,011
7,300
(1,166)
71,691
P
=26,412
2,735
(261)
22,143
P
=10,842
12,467
(1,427)
171,177
P
=49,265
2011
Buildings
and
Improvements
Cost
At January 1
Additions
Disposals
At December 31
Accumulated Depreciation
and Amortization
At January 1
(Note 19)
Disposals
At December 31
Net Book Value
Furniture,
Fixtures and Transportation
Equipment
Equipment
(In Thousands)
Total
=87,014
P
1,324
–
88,338
=79,110
P
4,602
(919)
82,793
=23,117
P
5,700
(379)
28,438
=189,241
P
11,626
(1,298)
199,569
71,495
58,559
16,131
146,185
3,416
–
74,911
=13,427
P
7,883
(885)
65,557
=17,236
P
3,786
(248)
19,669
=8,769
P
15,085
(1,133)
160,137
=39,432
P
Depreciation and amortization charged to general and administrative expenses amounted to
=12.5 million, P
P
=15.1 million and P
=12.6 million for the years ended December 31, 2012, 2011 and
2010, respectively (see Note 19).
As of December 31, 2012 and 2011, there are no capital commitments for property and equipment.
*SGVMG100137*
- 25 -
10. Investments in Associates
2011
2012
(In Thousands)
=800,819
P
P
=800,819
Acquisition cost
Accumulated equity in net income:
Equity in net earnings for the year
Realized profit for the year (Note 16)
Elimination of intercompany profit for the year
At end of year
(110,465)
73,901
9,005
–
(27,559)
P
=773,260
(54,458)
28,505
16,920
(101,432)
(110,465)
=690,354
P
The Group’s equity in net assets of associates and the related percentages of ownership are shown
below.
Percentages of
Ownership
2011
2012
Solinea, Inc. (Solinea)
AiO
Cebu Insular Hotel Company, Inc. (CIHCI)
35%
40
37
35%
40
37
Carrying Amounts
2011
2012
(In Thousands)
=289,534
P
P
=316,673
221,716
263,670
179,104
192,917
=690,354
P
P
=773,260
In 2011, CHI purchased 35% stake in Solinea amounting to P
=291.1 million. The remaining shares
equivalent to 65% of ownership were purchased by Alveo Land Corporation (Alveo), a subsidiary
of ALI.
In 2010, CPVDC infused additional investment in AiO amounting to P
=90.5 million which is
equivalent to 40% in AiO’s total increase of capital stock. AiO’s capital stock increased by
226,135,100 common shares with a par value of P
=100 per share. The remaining shares equivalent
to 60% of ownership were subscribed by Ayala Land, Inc (ALI).
The following table presents the summarized financial information for equity investment in
Solinea, AiO and CIHCI as of and for the years ended December 31, 2012 and 2011:
Solinea
Current assets
Noncurrent assets
Total assets
2011
2012
(In Thousands)
=377,139
P
P
=861,961
584,214
659,466
=961,353
P
P
=1,521,427
Current liabilities
Noncurrent liabilities
Equity
Total liabilities and equity
P
=1,415,208
14,298
91,921
P
=1,521,427
=295,281
P
651,274
14,798
=961,353
P
(Forward)
*SGVMG100137*
- 26 -
Revenue
Costs and expenses
Net income (loss)
2011
2012
(In Thousands)
=–
P
P
=315,782
4,369
238,242
(P
=4,369)
P
=77,540
AiO
Current assets
Noncurrent assets
Total assets
2011
2012
(In Thousands)
=304,341
P
P
=371,756
2,263,985
2,427,233
=2,568,326
P
P
=2,798,989
Current liabilities
Equity
P
=689,547
1,283,747
825,695
P
=2,798,989
=524,104
P
1,302,087
742,135
=2,568,326
P
P
=427,198
342,833
P
=84,365
=226,076
P
195,369
=30,707
P
Revenue
Costs and expenses
Net income
CIHCI
Current assets
Noncurrent assets
Total assets
2011
2012
(In Thousands)
=156,834
P
P
=158,391
706,216
696,665
=863,050
P
P
=855,056
Current liabilities
Equity
P
=87,706
258,581
508,769
P
=855,056
P68,482
=
323,122
471,446
=863,050
P
Revenue
Costs and expenses
Net income
P
=423,385
386,113
P
=37,272
=387,965
P
353,623
=34,342
P
*SGVMG100137*
- 27 -
11. Investment Properties
The rollforward analyses of this account follow:
2012
Land
Cost
At January 1
Additions
Transfers (Note 29)
At December 31
Accumulated Depreciation and
Amortization
At January 1
(Note 19)
At December 31
Net Book Value
Buildings and Construction
Improvements
in Progress
(In Thousands)
Total
P
=802,317
2,435
(14,108)
790,644
P
=3,351,832
59,580
–
3,411,412
P
=232,022
1,542,613
–
1,774,635
P
=4,386,171
1,604,628
(14,108)
5,976,691
–
1,215,595
–
1,215,595
–
–
P
=790,644
125,895
1,341,490
P
=2,069,922
–
–
P
=1,774,635
125,895
1,341,490
P
=4,635,201
2011
Land
Cost
At January 1
Additions
Transfers/disposals
At December 31
Accumulated Depreciation and
Amortization
At January 1
(Note 19)
Transfers/disposals
At December 31
Net Book Value
Buildings and
Construction
Improvements
in Progress
(In Thousands)
=802,317
P
–
–
802,317
=3,302,375
P
69,750
(20,293)
3,351,832
–
1,120,128
–
–
–
=802,317
P
121,969
(26,502)
1,215,595
=2,136,237
P
P84,910
=
153,321
(6,209)
232,022
–
–
–
–
=232,022
P
Total
=4,189,602
P
223,071
(26,502)
4,386,171
1,120,128
121,969
(26,502)
1,215,595
=3,170,576
P
The Group’s investment properties are currently held for commercial leasing.
Depreciation and amortization on buildings and improvements charged to operations amounted to
=125.9 million, P
P
=113.7 million for the years ended December 31, 2012, 2011
and 2010, respectively (see Note 19).
Total rental income from investment properties amounted to P
=854.9 million, P
=838.1 million and
=746.8 million for the years ended December 31, 2012, 2011 and 2010, respectively (see
P
Note 17). Total operating expenses related to investment properties that generated rental income
amounted to P
=280.1 million, P
=240.3 million for the years ended
December 31, 2012, 2011 and 2010, respectively.
*SGVMG100137*
- 28 The aggregate fair value of the Group’s investment properties amounted to P
=7,508.2 million and
=7,324.1 million as of December 31, 2012 and 2011, respectively.
P
The fair values of the investment properties were determined by independent professionally
qualified appraisers. The fair value represents the amount at which the assets could be exchanged
between a knowledgeable, willing buyer and knowledgeable, willing seller in an arm’s length
transaction at the date of valuation.
The value of the investment properties was arrived using the Market Data Approach. In this
approach, the value of the investment properties is based on sales and listings of comparable
property registered within the vicinity. The technique of this approach requires the establishing of
comparable property by reducing reasonable comparative sales and listings to a common
denominator. This is done by adjusting the differences between the subject property and those
actual sales and listings regarded as comparable. The properties used as basis of comparison are
situated within the immediate vicinity of the subject property.
As of December 31, 2012 and 2011, capital commitments for investment properties amounted to
=1.9 billion.
P
12. Other Noncurrent Assets
Dividends receivable (Note 16)
Deferred input tax
Deposits
Others
2011
2012
(In Thousands)
=33,677
P
P
=27,943
47,908
20,699
2,324
2,154
2,136
539
=86,045
P
P
=51,335
Deferred input tax arises from purchase of capital goods and is recoverable in future periods.
13. Accounts and Other Payables
Accrued project costs
Accounts payable (Note 27)
Accrued expenses
Retentions payable
Payable to related parties (Note 16)
Taxes payable
Dividends payable (Note 24)
Interest payable
Others
2011
2012
(In Thousands)
=81,090
P
P
=1,260,184
140,560
290,724
262,115
194,784
54,328
140,928
18,899
114,897
82,481
24,206
5,277
16,434
1,726
1,562
7,659
2,613
=654,135
P
P
=2,046,332
*SGVMG100137*
- 29 Accrued project costs arise from progress billings or unbilled completed work on the development
of residential and commercial projects.
Accounts payable consists of estimated liabilities or costs to complete.
Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems
cost and marketing expenses.
Retentions payable pertains to the portion of the progress billings of constructions retained by the
Group.
Taxes payable pertains to amusement taxes and net output tax payable.
Dividends payable pertain to dividends declared by CPVDC in 2012 and 2011 (see Note 24).
Accounts payable and accrued expenses are noninterest-bearing and are normally settled on 30 to
180-day terms.
Other payables are noninterest-bearing and are normally settled within one year.
14. Long-term Debt
This account consists of long-term bank loans availed by the Parent Company as follows:
2011
2012
(In Thousands)
At 0.60% per annum spread over the floating rate of
average 91-day treasury bill rate
At 0.60% per annum spread over the fixed rate of
average 5-year treasury bond rate
At 0.50% per annum spread over the fixed rate based
on PDST-R1 rate
At 0.50% per annum spread over the fixed rate of
average 5-year treasury bond rate
Less unamortized debt issue cost
Less current portion of long-term debt
P
=1,840,000
=890,000
P
10,000
10,000
–
30,000
–
1,850,000
4,938
1,845,062
163,315
P
=1,681,747
25,000
955,000
4,325
950,675
55,000
=895,675
P
Portion of the loans, which were availed from a local bank, are secured by mortgage trust
indenture on Ayala Center Cebu and other prime lots in the Cebu Business Park (included under
“Investment properties” account in the consolidated statements of financial position) with carrying
value of P
=4,116.0 million and P
=2,638.0 million as of December 31, 2012 and 2011, respectively
(see Note 11). Such loans have been fully paid and the related indenture has been terminated as of
December 31, 2012.
The loan agreements provide for certain restrictions and requirements with respect to, among
others, major disposal of property, pledge of assets, liquidation, merger or consolidation and
maintenance of ratio between debt and the tangible net worth not to exceed 3:1. These restrictions
and requirements were complied with by the Parent Company as of December 31, 2012 and 2011.
*SGVMG100137*
- 30 As of December 31, 2012 and 2011, the Group has capitalized interest as part of the investment
properties account amounting to P
=12.0 million and P
=3.0 million, respectively.
The rollforward of unamortized debt issue cost follows:
2011
2012
(In Thousands)
=–
P
P
=4,325
4,500
4,750
(175)
(4,137)
=4,325
P
P
=4,938
Additions
Accretions
At end of year
15. Other current liabilities
This account consists of advances from customers of real estate transactions, tenants’ deposits and
construction bonds which are to be refunded by the Group. Total other current liabilities
amounted to P
=402.1 million as of December 31, 2012 and 2011, respectively.
16. Related Party Transactions
The Group in its regular conduct of business has entered into transactions with related parties.
Parties are considered to be related if, among others, one party has the ability, directly or
indirectly, to control the other party in making financial and operating decisions, the parties are
subject to common control or the party is an associate or a joint venture. Except as otherwise
indicated, the outstanding accounts with related parties shall be settled in cash. The transactions
are made at terms and prices agreed upon by the parties.
The following tables provide the total amount of transactions that have been entered into with
related parties for the relevant financial year (in thousands):
Amounts owed by related
parties
2011
2012
Associates
Solinea
AiO
Joint Venture Partner
VH Properties
Shareholder
ALI
Subsidiaries of ALI
Avida
Alveo
Others
Total
Amount owed to related
parties
2011
2012
P
=84,387
28,339
=55,075
P
5,099
P
=–
–
=–
P
–
9,394
–
–
–
3,049
1,836
44,672
3,419
7,865
376
2,451
P
=135,861
836
788
–
=63,634
P
51,041
18,132
1,052
P
=114,897
–
15,180
–
=18,599
P
*SGVMG100137*
- 31 Revenues
2012
Associate
AiO
Shareholder
ALI
Joint Venture
VH Properties
Philippines, Inc. (VH)
Total
2011
Expenses
2012
2011
P
=19,752
=114,702
P
P
=–
=39,481
P
–
–
58,925
58,888
55,261
P
=99,801
–
=83,949
P
–
P
=73,401
–
=87,668
P
Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances and
reimbursements of operating expenses related to joint venture agreements including development
costs and land acquisitions. Other related party receivables and payables pertain to advances and
reimbursements arising from the Group’s ordinary course of business. These are generally trade
related, non-interest bearing and payable within one year.
The following describes the nature of the material transactions of the Group with related parties as
of December 31, 2012 and 2011:
Income and expenses from AiO pertain to management fees, utility charges and sales of
commercial lots.
Management fees charged to AiO amounted to P
=15.8 million and P
=5.9 million in 2012 and 2011,
respectively.
In 2011, CPVDC sold commercial lots to AiO with total selling price of P
=105.7 million. Related
cost of sales from the transaction amounted to P
=63.4 million. Receivables from these sales are
noninterest-bearing and collectible in annual installments starting 2009 until 2013. The Group’s
“Accounts Receivable” account includes the receivable from sale of lot to AiO amounting to
P
The Group also recognized income from utility charges to AiO amounting to P
=3.9 million and
P3.1 million in 2012 and 2011, respectively.
=
Expenses to ALI pertain to management fees, professional fees and systems costs.
Management and service agreement with ALI, amounted to P
=44.4 million and P
=43.1 million in
2012 and 2011, respectively. Payable to ALI as of December 31, 2012 and 2011 arising from this
transaction amounted to P
=42.9 million and P
=24.3 million, respectively.
Professional fees to ALI amounted to P
=0.6 million and nil in 2012 and 2011, respectively.
Systems costs which were included in the Group’s manpower costs amounted to P
=13.9 million and
=15.8 million in 2012 and 2011, respectively.
P
Income from VH pertains to service income from joint venture agreements.
Included in the Group’s other noncurrent assets is a dividend receivable from CIHCI amounting to
=27.9 million and P
P
=33.7 million as of December 31, 2012 and 2011, respectively which is
collectible until 2015.
*SGVMG100137*
- 32 Compensation of key management personnel by benefit type follows:
2011
(In Thousands)
=20,376
P
P
=18,832
5,412
2,807
=25,788
P
P
=21,639
2012
Short-term employee benefits
Post-employment pension and other benefits
2010
=17,388
P
3,847
=21,235
P
Terms and conditions of transactions with related parties
There have been no guarantees provided or received for any related party receivables or payables.
These accounts are noninterest-bearing and are generally unsecured except for those indicated
under Note 6. Impairment assessment is undertaken each financial year through a review of the
financial position of the related party and the market in which the related party operates.
17. Real Estate Revenue
2012
Rental income
Real estate sales
Theater income
P
=854,939
309,682
96,030
P
=1,260,651
2011
2010
(In Thousands)
=838,133
P
=746,781
P
246,235
448,868
80,257
77,866
=1,164,625 =
P
P1,273,515
18. Interest and Other Income
Interest income consists of:
2011
2012
(In Thousands)
Interest income:
Cash in banks (Note 4)
Cash equivalents (Note 4)
Short-term investments (Note 5)
Accretion of receivables (Note 6)
P
=239
51,503
400
31,037
P
=83,179
=205
P
34,624
807
23,748
=59,384
P
2010
=257
P
38,386
266
13,331
=52,240
P
Other income consists of:
2012
Recoveries
Service income
Penalties
Beverage
Others
P
=110,785
79,210
15,300
4,533
5,475
P
=215,303
2011
(In Thousands)
=109,700
P
27,831
40,597
4,723
7,336
=190,187
P
2010
=90,704
P
21,260
46,100
4,310
4,721
=167,095
P
*SGVMG100137*
- 33 Recoveries pertain to income from sewer, light and power and water charges from its rental
operations. These are recognized when earned.
Service income pertains to various management fees charged by the Group.
Penalties represent payments made by a lot buyer in relation to certain construction violations.
The lot buyer has agreed to comply with the specified restrictions. Penalties are based on the
contractual terms of the agreement.
19. Cost and Expenses
Real estate, rental and theater expenses consist of:
2012
Cost of real estate sales (Notes 7 and 16)
Depreciation and amortization (Note 11)
Marketing and management fees (Note 16)
Rental
Manpower cost (Notes 16 and 20)
Direct operating expenses:
Light and water
Security and janitorial
Taxes and licenses
Repairs and maintenance
Dues and fees
Commission
Insurance
Professional fees
Transportation and travel
Entertainment, amusement and recreation
Others
P
=234,374
125,895
91,969
27,714
10,494
92,856
44,189
41,504
30,268
17,351
12,635
8,598
610
475
227
12,431
P
=751,590
2011
(In Thousands)
=164,791
P
121,969
78,200
26,386
10,010
82,255
40,246
34,492
25,220
5,830
8,475
9,096
346
548
836
9,201
=617,901
P
2010
=296,090
P
113,737
71,426
24,036
10,344
53,591
30,711
37,925
45,134
7,246
13,227
8,470
18,273
214
192
9,730
=740,346
P
Direct operating expenses consist of direct costs charged to the Group’s operations.
General and administrative expenses consist of:
2012
Manpower cost (Notes 16 and 20)
Depreciation and amortization (Note 9)
Stockholders' meeting
Professional fees
Transportation and travel
Repairs and maintenance
Utilities
Postal and communication
P
=123,961
12,467
7,807
7,643
6,938
6,813
4,495
4,304
2011
(In Thousands)
=118,238
P
15,085
6,327
4,584
7,514
4,074
5,723
3,851
2010
=107,782
P
12,618
5,536
5,347
7,333
3,176
4,090
3,458
(Forward)
*SGVMG100137*
- 34 2012
Advertising
Security and janitorial
Insurance
Supplies
Rental
Entertainment, amusement and recreation
Dues and fees
Taxes and licenses
Others
P
=3,973
3,265
2,591
2,251
1,507
1,304
1,287
285
5,791
P
=196,682
2011
(In Thousands)
=8,667
P
2,491
430
2,221
1,735
1,107
1,219
325
6,589
=190,180
P
2010
=5,880
P
2,424
405
2,265
1,733
1,330
1,306
242
8,616
=173,541
P
Interest expense and other financing charges consist of:
2011
(In Thousands)
=17,650
P
P
=29,959
4,759
13,586
=22,409
P
P
=43,545
2010
2012
Interest expense on long-term debt (Note 14)
Other financing charges
=19,473
P
5,874
=25,347
P
20. Pension Plan
The Group has a funded, noncontributory retirement plan covering all its regular employees. The
benefits are based on the employees’ years of service and final monthly salary. Retirement costs
charged to operations amounted to P
=10.5 million, P
=18.3 million and P
=3.4 million for the years
ended December 31, 2012, 2011 and 2010, respectively.
The principal actuarial assumptions used to determine retirement benefits with respect to the
discount rate, salary increases and return on plan assets were based on historical and projected
normal rates. Actuarial valuations are made at least every three years. The Group’s annual
contribution to the retirement plan consists of a payment covering the current service cost for the
year plus a payment toward funding the actuarial accrued liability.
The components of pension expense (included in manpower costs under “General and
administrative expenses”) in the consolidated statements of income are as follows:
2012
Current service cost
Interest cost on benefit obligation
Expected return
Past service cost
Net actuarial loss (gain)
Adjustment due to curtailment
Total pension expense
P
=2,003
2,676
−
226
(540)
6,135
P
=10,500
2011
(In Thousands)
=4,934
P
3,099
(1,413)
226
11,476
−
=18,322
P
2010
=3,295
P
1,640
(1,118)
−
(457)
−
=3,360
P
*SGVMG100137*
- 35 The amounts recognized as pension liabilities in the consolidated statements of financial position
for the pension plan as of December 31, 2012 and 2011 are as follows:
2011
2012
(In Thousands)
=39,358
P
P
=24,647
(20,728)
−
3,161
(4,887)
(3,747)
(3,521)
=18,044
P
P
=16,239
Benefit obligation
Plan assets
Unrecognized actuarial gain (loss)
Unrecognized past service cost
Net pension liabilities
Changes in the present value of the defined benefit obligation are as follows:
2011
2012
(In Thousands)
=41,607
P
P
=39,358
4,934
2,003
3,099
2,676
(5,322)
(13,220)
(4,960)
(12,305)
−
6,135
=39,358
P
P
=24,647
At January 1
Current service cost
Interest cost
Actuarial gain
Benefits paid
Curtailment
At December 31
Changes in the fair value of plan assets are as follows:
2011
2012
(In Thousands)
=20,938
P
P
=20,728
1,413
−
3,000
12,305
(4,960)
(12,305)
337
(20,728)
=20,728
P
P
=−
=1,750
P
(P
=20,728)
At January 1
Expected return
Contributions
Benefits paid
Actuarial gain (loss)
At December 31
Actual return on plan assets
The Group expects to make P
=3.8 million contributions to its retirement fund in 2013.
The rollforward analysis of unrecognized actuarial gains (losses) follows:
2011
2012
(In Thousands)
(P
=13,974)
P
=3,161
17,135
(8,048)
=
P
3,161
(P
=4,887)
Balance at beginning of year
Actuarial gain (loss)
Balance at end of year
The allocations of the fair value of plan assets are as follows:
Investment in trust funds
Others
2012
99.9%
0.1
2011
99.9%
0.1
2010
99.9%
0.1
*SGVMG100137*
- 36 The assumptions used to determine pension benefits for the Group for the years ended
December 31, 2012, 2011 and 2010 are as follows:
2011
6.8%
8.8
7.0
2012
6.8%
8.8
7.0
Discount rate
Expected return on plan assets
Salary increase rate
2010
7.4%
6.7
7.0
Amounts for the current and the previous periods are as follows:
2012
Defined benefit obligation
Plan assets
Experience adjustments on
plan liabilities
Experience adjustments on
plan assets
P
=24,647
−
P
=24,647
2011
2010
(In Thousands)
=39,358
P
=41,607
P
(20,728)
(20,938)
=18,630
P
=20,669
P
2009
2008
P17,322
=
(15,965)
=1,357
P
=21,979
P
(20,076)
=1,903
P
(P
=17,408)
=1,389
P
=14,008
P
=1,324
P
=1,405
P
(P
=20,728)
=337
P
=1,773
P
=6,399
P
=171
P
21. Income Taxes
Reconciliation between the statutory income tax rate and the effective income tax rate follows:
Statutory income tax rate
Tax effect of:
Income subjected to lower income tax
rates
Equity in net earnings of associates
Interest income and capital gains taxed at
lower rates
Others
Effective income tax rate
2012
30.00%
2011
30.00%
2010
30.00%
(1.47)
(3.47)
(5.42)
(1.41)
(6.12)
(1.50)
(0.83)
1.88
26.11%
(2.10)
2.46
23.53%
(0.70)
1.65
23.33%
The components of net deferred tax assets as of December 31, 2012 and 2011 follow:
2011
2012
(In Thousands)
Deferred tax assets on:
Difference between tax and book basis of
accounting for real estate transactions
Allowance for probable losses
Advance rent
Unrealized foreign exchange loss
Accrued expenses
Others
Deferred tax liability on deferred credits
P
=3,750
2,102
1,175
923
295
422
8,667
29
P
=8,638
P5,143
=
1,894
563
1,071
295
897
9,863
284
=9,579
P
*SGVMG100137*
- 37 The components of net deferred tax liabilities as of December 31, 2012 and 2011 are as follows:
2011
2012
(In Thousands)
Deferred tax assets on:
Discounting losses
Allowance for probable losses
Retirement benefits
Unrealized foreign exchange loss
Deferred tax liabilities on:
Capitalized interest and other expenses
Excess of acquisition cost over the net assets
of a subsidiary
Difference between tax and book basis of
accounting for real estate transactions
Others
P
=6,325
4,623
4,555
3,309
18,812
=4,994
P
4,539
4,127
2,945
16,605
21,477
20,238
15,441
15,705
13,759
1,229
51,906
P
=33,094
8,042
1,176
45,161
=28,556
P
22. Earnings Per Share
The following table presents information necessary to compute EPS:
2011
2010
2012
(In Thousands, except EPS)
a. Net income attributable to the equity
holders of the Parent Company
b. Weighted average number of outstanding
shares
c. Earnings per share (a/b)
P
=441,292
=424,333
P
=406,200
P
1,920,073
P
=0.23
1,920,073
=0.22
P
1,920,073
=0.21
P
*SGVMG100137*
- 38 -
23. Financial Instruments
Fair Value Information
The following tables set forth the carrying values and estimated fair values of all of the Group’s
financial instruments recognized as of December 31:
2011
2012
Fair Value Carrying Value
Carrying Value
(In Thousands)
FINANCIAL ASSETS
Loans and Receivables
Cash and cash equivalents (excluding
cash on hand)
Trade receivables
Shopping centers
Corporate business
Others
Receivable from related parties
Dividends receivable
Others
Total Financial Assets
OTHER FINANCIAL LIABILITIES
Accounts and other payables
Accrued project costs
Accounts payable
Accrued expenses
Retentions payable
Payable to related parties
Dividends payable
Interest payable
Others
Long-term debt
Other liabilities
Total Financial Liabilities
Fair Value
P
=1,862,914
–
P
=1,862,914
–
=1,213,981
P
2,956
=1,213,981
P
2,956
365,540
84,517
63,937
1,186
1,178
135,861
27,943
27,162
8,919
P
=2,579,157
408,431
94,352
63,937
1,186
1,178
135,861
27,943
27,162
8,919
P
=2,631,883
374,757
85,124
32,515
12,590
426
63,634
33,677
17,804
25,988
=1,863,452
P
373,076
85,124
32,515
12,590
426
63,634
33,677
17,804
25,988
=1,861,771
P
P
=1,260,184
290,724
194,784
140,928
114,897
16,434
1,562
2,613
1,845,062
509,831
P
=4,377,019
P
=1,260,184
290,724
194,784
140,928
114,897
16,434
1,562
2,613
1,796,763
509,264
P
=4,328,153
P81,090
=
140,560
262,115
54,328
18,899
5,277
1,726
7,659
950,675
414,903
=1,937,232
P
P81,090
=
140,560
262,115
54,328
18,899
5,277
1,726
7,659
935,766
418,392
=1,925,812
P
The methods and assumptions used by the Group in estimating the fair value of the financial
instruments are as follows:
Cash and cash equivalents, short-term investments and current accounts receivable - The carrying
amounts approximate fair values due to the relatively short-term maturities of these instruments.
Noncurrent accounts and dividends receivable - The fair values are estimated based on the
discounted cash flow methodology using the applicable discount rates for similar types of
instruments. The discount rates used ranged from 1.4% to 2.8% and 4.3% to 5.3% as of December
31, 2012 and 2011, respectively.
Accounts and other payables and current portion of other liabilities and long-term debt - The fair
values approximate the carrying amounts due to the short-term nature of these accounts.
*SGVMG100137*
- 39 Noncurrent portion of other liabilities and long-term debt - The fair value of fixed rate
instruments are estimated using the discounted cash flow methodology using the Group’s current
incremental borrowing rates for similar borrowings with maturities consistent with those
remaining for the liability being valued. The discount rates used ranged from 2.1% to 4.8% and
2.2% to 7.2% as of December 31, 2012 and 2011, respectively.
Fair Value Hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of the
financial instruments by valuation technique:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or
liabilities, either directly or indirectly
Level 3: inputs for the asset or liability that are not based on observable market data
As of December 31, 2012, the Group has no financial instruments recorded at fair value.
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise of cash and cash equivalents, short-term
investments and long-term debt. The main purpose of the Group’s financial instruments is to fund
its operations, capital expenditures and finance the projects. The Group has various other financial
assets and liabilities such as trade receivables and trade payables, which arise directly from its
operations.
Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate
risk) arises in the normal course of the Group’s business activities. The main objectives of the
Group’s financial risk management are as follows:
·
·
·
to identify and monitor such risks on an ongoing basis;
to minimize and mitigate such risks; and
to provide a degree of certainty about costs.
The Group’s financing and treasury function operates as a centralized service for managing
financial risks and activities as well as providing optimum investment yield and cost-efficient
funding for the Group. The Group’s BOD reviews and approves policies for managing each of
these risks.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. The Group’s credit risks are primarily
attributable to financial assets such as cash and cash equivalents, short-term cash investments and
receivables. To manage credit risk, the Group maintains defined credit policies and monitors on a
continuous basis the Group’s exposure to credit risks.
*SGVMG100137*
- 40 Cash and cash equivalents and short-term investments. The Group adheres to fixed limits and
guidelines in its dealing with counterparty banks and its investment in financial instruments. Bank
limits are established on the basis of the Group’s rating that covers the area of liquidity, capital
adequacy and financial stability. Given the high credit standing of its accredited counterparty
banks, management does not expect any of these financial institutions to fail in meeting their
obligation. The Group’s exposure to credit risk from these financial assets arise from the default
of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.
Commercial development, corporate business and residential development trade receivables.
With respect to trade receivables from the sale of real estate properties, credit risk is managed
primarily through credit reviews and monitoring of receivables on a continuous basis. The Group
undertakes supplemental credit review procedures to ensure the adequacy of provisioning for
certain installment payment structures. Customer payments are facilitated through various
collection modes including the use of post-dated checks and auto-debit arrangements. Exposure to
bad debts is not significant and the requirement for remedial procedures is minimal given the
profile of buyers. As for the sale of lots, the Group includes in the contract to sell provisions that
the title to the properties will only be transferred to the buyers upon full payment of the contract
price.
Shopping center trade receivables. Credit risk arising from rental income from leasing properties
is primarily managed through a tenant selection process. Prospective tenants are evaluated on the
basis of payment track record and other credit information. In accordance with the provisions of
the lease contracts, the lessees are required to deposit with the Group security deposits and
advance rentals which help reduce the Group’s credit risk exposure in case of defaults by the
tenants. For existing tenants, the Group has put in place a monitoring and follow-up system.
Receivables are aged and analyzed on a continuous basis to minimize credit risk associated with
these receivables. Regular meetings with tenants are also undertaken to provide opportunities for
counseling and further assessment of paying capacity.
As for the receivables from related parties, receivable from employees, dividends receivable and
other receivables, the maximum exposure to credit risk from these financial assets arise from the
default of the counterparty with a maximum exposure equal to their carrying amounts.
An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the
fair values of the related collaterals are shown below:
2012
Maximum exposure
Fair value of
to credit risk
collaterals
(In Thousands)
Trade receivables
Shopping centers
Corporate business
Total
P
=365,540
84,517
63,937
1,186
P
=515,180
P
=879,084
328,291
58,576
7,563
P
=1,273,514
Financial effect of
collateral or credit
Net Exposure
enhancement
P
=18,726
–
7,767
198
P
=26,691
P
=346,814
84,517
56,170
988
P
=488,489
*SGVMG100137*
- 41 -
2011
Maximum exposure
to credit risk
Trade receivables
Shopping centers
Corporate business
Total
=374,757
P
85,124
32,515
12,590
=504,986
P
Fair value of
collaterals
(In Thousands)
Net Exposure
=489,585
P
369,658
60,150
–
=919,393
P
Financial effect of
collateral or credit
enhancement
=–
P
–
11,041
12,590
=23,631
P
=374,757
P
85,124
21,474
–
=481,355
P
The table below shows the credit quality by class of the Group’s financial assets (gross of
allowance for impairment losses):
2012
Neither Past Due nor Impaired
Past Due or
High Grade Medium Grade Low Grade
Impaired
(In Thousands)
cash on hand)
Trade
Shopping centers
Corporate business
Others
Others
P
=1,862,914
–
P
=–
–
P
=–
–
365,540
84,517
43,788
–
1,178
135,861
27,943
27,162
8,919
P
=2,557,822
–
–
–
5,597
–
–
–
–
–
–
P
=5,597
7,611
1,186
–
–
–
–
5,966
P
=14,763
14,552–
–
–
–
–
–
–
P
=14,552
Total
P
=– P
=1,862,914
–
–
365,540
84,517
71,548
1,186
1,178
135,861
27,943
27,162
14,885
P
=2,592,734
2011
Neither Past Due nor Impaired
Past Due or
High Grade Medium Grade Low Grade
Impaired
(In Thousands)
cash on hand)
Short-term cash investments
Trade
Shopping centers
Corporate business
Others
Others
Total
=1,213,981
P
2,956
=−
P
−
=−
P
−
=− P
P
=1,213,981
−
2,956
374,757
85,124
4,303
12,590
426
63,634
33,677
17,804
25,988
=1,835,240
P
−
−
1,877
−
−
−
−
−
−
=1,877
P
−
−
5,449
−
−
−
−
−
−
=5,449
P
−
374,757
−
85,124
28,497
40,126
−
12,590
−
426
−
63,634
−
33,677
−
17,804
5,966
31,954
=34,463 P
P
=1,877,029
Others includes non-trade receivables from sewer and management fees, receivable from SSS and
accrued interest receivable from money market placements.
*SGVMG100137*
- 42 The credit quality of the financial assets was determined as follows:
Cash and cash equivalents and short-term investments - based on the nature of the counterparty
and the Company’s rating procedure. These are held by counterparty banks with minimal risk of
bankruptcy and are therefore classified as high grade..
Accounts and dividends receivables - high grade pertains to receivables with no default in
payment; medium grade pertains to receivables with up to 3 defaults in payment; and low grade
pertains to receivables with more than 3 defaults in payment.
As of December 31, 2012 and 2011, the Group does not have restructured financial assets.
The Group has no significant credit risk concentrations on its receivables. Policies are in place to
ensure that lease contracts and contract to sell are made with customers with good credit history.
Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit
risk. As of December 31, 2012 and 2011, the aging analysis of receivables presented per class, is
as follows:
2012
Neither
Past
Due nor
Impaired
<30 days
30-60 days
Past Due but not Impaired
60-90 days 90-120 days
>120 days
Individually
Impaired
Total
P
=−
−
344
−
−
−
−
−
−
P
= 344
P
=−
−
5,253
−
−
−
−
−
−
P
= 5,253
P
=−
−
7,611
−
−
−
−
−
5,966
P
= 13,577
P
= 365,540
84,517
71,548
1,186
1,178
135,861
27,943
27,162
14,885
P
= 729,820
Past Due but not Impaired
60-90 days 90-120 days
>120 days
Individually
Impaired
Total
=−
P
−
7,303
−
−
−
−
−
−
=7,303
P
=−
P
−
7,611
−
−
−
−
−
5,966
=13,577
P
=374,757
P
85,124
40,126
12,590
426
63,634
33,677
17,804
31,954
=660,092
P
(In Thousands)
Trade
Shopping centers
Corporate business
Others
Receivable from employees
Others
Total
P
= 365,540
84,517
43,788
−
1,178
135,861
27,943
27,162
8,919
P
= 694,908
P
=−
−
6,453
1,186
−
−
−
−
−
P
= 7,639
P
=−
−
3,946
−
−
−
−
−
−
P
= 3,946
Neither
Past
Due nor
Impaired
<30 days
30-60 days
P
=−
−
4,153
−
−
−
−
−
−
P
= 4,153
2011
(In Thousands)
Trade
Shopping centers
Corporate business
Others
Receivable from employees
Others
Total
=374,757
P
85,124
11,629
12,590
426
63,634
33,677
17,804
25,988
=625,629
P
=−
P
−
8,261
−
−
−
−
−
−
=8,261
P
=−
P
−
3,147
−
−
−
−
−
−
=3,147
P
=−
P
−
1,290
−
−
−
−
−
−
=1,290
P
=−
P
−
885
−
−
−
−
−
−
=885
P
The Group has no collaterals held for the past due or impaired financial assets as of
December 31, 2012 and 2011.
*SGVMG100137*
- 43 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet
commitments associated with financial instruments. Liquidity risk may result from either the
inability to sell financial assets quickly at their fair values; or the counterparty failing on
repayment of a contractual obligation; or inability to generate cash inflows as anticipated.
The Group monitors its cash flow position, debt maturity profile and overall liquidity position in
assessing its exposure to liquidity risk. The Group maintains a level of cash and cash equivalents
deemed sufficient to finance operations and to mitigate the effects of fluctuation in cash flows.
Accordingly, its loan maturity profile is regularly reviewed to ensure availability of funding
through an adequate amount of credit facilities with financial institutions.
As of December 31, 2012, current ratio is 1.4:1.0, with cash and cash equivalents and short-term
investments of P
=1,864.0 million accounting for 49.8% of the total current assets, and resulting in a
net working capital of P
=1,013.5 million.
As of December 31, 2011, current ratio is 2.3:1.0, with cash and cash equivalents and short-term
investments of P
=1,217.2 million accounting for 46.6% of the total current assets, and resulting in a
net working capital of P
=1,464.9 million.
Overall, the Group’s funding arrangements are designed to keep an appropriate balance between
equity and debt, to give financing flexibility while continuously enhancing the Group’s businesses.
The table below summarizes the maturity profile of the Group’s financial assets and financial
liabilities at December 31, 2012 and 2011 based on contractual undiscounted payments.
2012
< 1 year
1 to < 2 years
cash on hand)
Accounts receivable
Total financial assets
P
=1,862,914
–
618,813
1,591
P
=2,483,318
P
=–
–
198,032
1,525
P
=199,557
P
=–
–
–
24,827
P
=24,827
P
=–
–
–
–
P
=–
P
=1,862,914
–
816,845
27,943
P
=2,707,702
Long-term debt
Other liabilities
Total other financial liabilities
P
=2,022,126
218,815
502,274
P
=2,743,215
P
=−
447,029
7,557
P
=454,586
P
=−
435,136
–
P
=435,136
P
=−
744,082
–
P
=744,082
P
=2,022,126
1,845,062
509,831
P
=4,377,019
P
=139
P
=335
P
=335
P
=753
P
=1,562
Interest payable
2 to < 3 years
(In Thousands)
> 3 years
Total
*SGVMG100137*
- 44 2011
< 1 year
1 to < 2 years
cash on hand)
Accounts receivable
Total financial assets
=1,213,981
P
2,956
425,525
1,967,007
=3,609,469
P
=−
P
−
271,402
1,911,153
=2,182,555
P
Long-term debt
Other liabilities
Total other financial liabilities
=571,654
P
55,000
402,116
=1,028,770
P
=154
P
Interest payable
2 to < 3 years
(In Thousands)
> 3 years
Total
=−
P
−
75,031
1,812,945
=1,887,976
P
=−
P
−
−
27,986,190
=27,986,190
P
=1,213,981
P
2,956
771,958
33,677,295
=35,666,190
P
=−
P
51,259
12,788
=64,047
P
=−
P
191,810
−
=191,810
P
=−
P
652,606
−
=652,606
P
=571,654
P
950,675
414,904
=1,937,233
P
=370
P
=370
P
=832
P
=1,726
P
Cash and cash equivalents, short-term investments, accounts receivable and dividends receivable
are used for the Group's liquidity requirements. Please refer to the terms and maturity profile of
these financial assets under the maturity profile of the interest-bearing financial assets and
liabilities disclosed under interest rate risk section.
Foreign currency risk
Majority of the Group’s transactions are denominated in Philippine Peso. There are only minimal
placements in foreign currencies and the Group does not have any foreign currency denominated
debt. As such, the Group’s foreign currency risk is minimal.
The following table shows the Group’s consolidated foreign currency-denominated monetary
assets and their peso equivalents as of December 31, 2012 and 2011:
Cash and cash equivalents
2011
2012
US Dollar
Php Equivalent
US Dollar Php Equivalent
(In Thousands)
$723
=31,708
P
$516
P
=21,818
67
2,945
–
–
$790
=34,653
P
$516
P
=21,818
In translating the foreign currency-denominated monetary assets into peso amounts, the exchange
rates used were P
=41.05 to US$1.00 and P
=43.84 to US$1.00, the Philippine Peso-US Dollar
exchange rates as at December 31, 2012 and 2011.
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar
rate, with all variables held constant, of the Group’s profit before tax (due to changes in the peso
equivalent of the dollar denominated cash and cash equivalents and short-term investments).
There is no other impact on the Group’s equity other than those already affecting the profit or loss.
2012
2011
Increase
(Decrease) Effect on Profit
in US $
Before Tax
(In Thousands)
P
=1.00
P
=516
(P
=1.00)
(P
=516)
=1.00
P
=790
P
(P
=1.00)
(P
=790)
*SGVMG100137*
- 45 Interest rate risk
The Group’s interest rate exposure management policy centers on reducing the Group’s overall
interest expense and exposure to changes in interest rates. Changes in market interest rates relate
primarily to the Group’s interest-bearing debt obligations with floating interest rate as it can cause
a change in the amount of interest payments.
The Group manages its interest rate risk by leveraging on its premier credit rating and maintaining
a debt portfolio mix of both fixed and floating interest rates. The portfolio mix is a function of
historical, current trend and outlook of interest rates, volatility of short term interest rates, the
steepness of the yield curve and degree of variability of cash flows.
The floating portion of the loan portfolio comprises the newly availed loan with which the Group
has the option to convert from floating to fixed rate within one year from drawdown date. The
current trend of interest rate is at its low and is forecasted to stay low during the duration of the
loan term.
The following tables demonstrate the sensitivity of the Group’s profit before tax and equity to a
reasonably possible change in interest rates on December 31, 2012 and 2011, with all variables
held constant, (through the impact on floating rate borrowings):
2012
Change in basis points
Floating rate borrowings
Effect on income before income tax
Increase (decrease)
+ 100 basis points - 100 basis points
(In Thousands)
P
=12,880
(P
=12,880)
2011
Change in basis points
Floating rate borrowings
Effect on income before income tax
Increase (decrease)
+ 100 basis points
- 100 basis points
(In Thousands)
(P
=885)
=885
P
*SGVMG100137*
- 46 The terms and maturity profile of the interest-bearing financial assets and liabilities, together with its corresponding nominal amounts and carrying values
(in thousands) are shown in the following table:
2012
Group
Accounts receivable
Parent Company
Long-term debt
Fixed
Peso
Floating
Peso
Nominal Amount
< 1 year
1 to 5 years
Carrying Value
P
=1,862,914
397,330
P
=2,260,244
P
=1,862,914
151,893
P
=2,014,807
P
=–
198,032
P
=198,032
P
=1,862,914
349,925
P
=2,212,839
Maturity date
P
=10,000
P
=–
P
=11,435
P
=9,969
Floating rate of average 91-day treasury
bill rate + 0.60% spread
Maturity date
1,840,000
P
=1,850,000
218,815
P
=218,815
1,616,278
P
=1,627,713
1,835,093
P
=1,845,062
Interest terms (p.a.)
Rate Fixing Period
Nominal Amount
< 1 year
1 to 5 years
Carrying Value
Fixed at the date of investment
Fixed at the date of sale
Various
Various
Date of sale
=1,214,231
P
2,956
652,508
=1,869,695
P
=1,214,231
P
2,956
323,446
=1,540,633
P
=–
P
–
281,978
=281,978
P
=1,214,231
P
2,956
605,424
=1,822,611
P
Interest terms (p.a.)
Rate Fixing Period
Fixed at the date of sale
Various
Date of sale
Fixed rate of average 5-year treasury bond
+ 0.60% spread
2011
Group
Accounts receivable
(Forward)
*SGVMG100137*
- 47 Interest terms (p.a.)
Parent Company
Long-term debt
Fixed
Peso
Peso
Peso
Floating
Peso
Fixed rate based on 5-years T-bill
+ 0.50% spread
Fixed rate based on PDST-R1
+ 0.50% spread
Fixed rate of average 5-year treasury bond
+ 0.60% spread
Floating rate of average 91-day treasury
bill rate + 0.60% spread
Rate Fixing Period
Nominal Amount
< 1 year
1 to 5 years
Carrying Value
Maturity date
=25,000
P
=25,000
P
=–
P
=25,000
P
Maturity date
30,000
30,000
–
30,000
Maturity date
10,000
–
9,958
9,958
Maturity date
889,842
=954,842
P
–
=55,000
P
885,717
=895,675
P
885,717
=950,675
P
*SGVMG100137*
- 48 -
24. Equity
Capital Stock
The details of the Parent Company’s common shares are as follows:
2012
3,000,000,000
P
=1.0
1,920,073,623
Authorized shares
Par value per share
Shares issued and outstanding
2011
3,000,000,000
=1.0
P
1,920,073,623
In accordance with SRC Rule 68, as Amended (2011), Annex 68-D, below is a summary of the
Company’s track record of registration of securities.
Common shares
Number of shares
registered
3,000,000,000
Issue/offer price
=1.00 par value
P
=4.00 issue price
P
Date of approval
February 14, 1994
2012
Number of
holders of
securities as of
December 31
4,498
2011
Number of
holders of
securities as of
December 31
4,698
Retained Earnings
The retained earnings available for dividend distribution amounted to P
=619.7 million and
=1,739.7 million as of December 31, 2012 and 2011, respectively. Retained earnings include
P
undistributed net earnings of subsidiaries and associates amounting P
=508.2 million and
P
On November 7, 2012, the Parent Company’s BOD declared P
=0.10 per share cash dividends from
unappropriated retained earnings to all its issued and outstanding shares as of record date
December 7, 2012, and paid on December 21, 2012. On October 20, 2011, the BOD declared
=0.07 per share cash dividends to all issued and outstanding shares as of record date
P
November 18, 2011, and paid on December 14, 2011.
In 2012 and 2011, the BOD of CPVDC declared P
=0.12 per share cash dividends from
unappropriated retained earnings of which P
=16.4 million and P
=5.3 million remained outstanding as
of December 31, 2012 and 2011, respectively.
On November 22, 2012, the Parent Company’s BOD approved the appropriaton of retained
earnings amounting to P
=1,300.0 million for future expansion. In the normal course of business of
the Group, it represents continuing appropriation for land banking activities, planned building
construction projects. Each year, the Group incurs residential capital expenditures for property
development which includes among others land banking and building construction projects. The
annual appropriation is being fully utilized to cover part of the annual expenditure requirement of
the Group. In 2013, it is expected that the capital expenditure requirement will exceed the
=1,300.0 million appropriations, hence the Group will provide future appropriation as the need
P
arises.
Capital Management
The primary objective of the Group’s capital management policy is to ensure that debt and equity
capital are mobilized efficiently to support business objectives and maximize shareholder value.
The Group establishes the appropriate capital structure for each business line that properly reflects
*SGVMG100137*
- 49 its premier credit rating and allows it the financial flexibility, while providing it sufficient cushion
to absorb cyclical industry risks.
The Parent Company is not subject to externally imposed capital requirements. No changes were
made in the objectives, policies and processes from the previous years.
The Group monitors its capital structure using leverage ratios on both a gross and net basis, and
makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt
includes long-term debt less cash and cash equivalents and short-term investments. The Group
considers as capital the equity attributable to equity holders of the Parent Company.
As of December 31, 2012 and 2011, the Group had the following ratios:
Long-term debt
Less:
Net debt
Equity attributable to equity holders of Cebu
Holdings, Inc.
Debt to equity
Net debt to equity
2011
2012
(In Thousands)
=950,675
P
P
=1,845,062
1,864,017
–
(18,955)
1,214,231
2,956
(266,512)
P
=4,954,354
37.24%
(0.38%)
=4,705,069
P
20.21%
(5.66%)
25. Segment Information
The business segments where the Group operates are as follows:
Core business:
· Commercial development - sale of commercial lots and club shares
· Residential development - sale of high-end residential lots and condominium units
· Shopping centers - development of shopping centers and lease to third parties of retail space
and land therein; operation of movie theaters, food courts, entertainment facilities and
carparks in these shopping centers; management and operation of malls
· Corporate business - development and lease of office buildings
· Others - other investing activities such as investment in joint ventures and sale of non-core
assets
No business segments have been aggregated to form the reportable business segments.
Management monitors the operating results of its business units separately for the purpose of
making decisions about resource allocation and performance assessment. The accounting and
measurement policies used are consistent with the policies used in preparing general-purpose
financial statements.
Sales, costs and expenses include amounts that are directly attributable to each segment. Items
that are not directly identified are allocated based on the segment’s proportionate share on the total
revenue. Starting 2010, intersegment accounts of the reportable business segments are reported on
a gross basis, this resulted in the increase of the amounts under the reportable business segments.
*SGVMG100137*
- 50 Business Segments
The following tables regarding business segments present assets and liabilities as of December 31, 2012 and 2011 and revenue and expense information
for the three years period ended December 31, 2012.
2012
Commercial
Development
Revenue
Sales to external customers
Total revenue
Operating expenses
Operating profit (loss)
Interest income
Other income
Interest and other financing charges
Other charges
Benefit from (provision for) income tax
Net income (loss)
Net income (loss) attributable to:
Equity holders of Cebu Holdings, Inc,
Other Information
Segment assets
Investments in associates
Deferred tax assets
Total assets
Segment liabilities
Deferred tax liabilities
Total liabilities
Segment additions to property and equipment and
investment properties
Residential
Development
Shopping
Centers
Corporate
Business
(In Thousands)
Others
Eliminations
and
Adjustments
Total
P
= 86,876
–
86,876
(59,137)
27,739
4,461
–
–
–
–
P
=32,200
P
=283,587
–
283,587
(279,090)
4,497
15,331
24,562
–
–
(23,228)
P
=21,162
P
=886,581
–
886,581
(470,989)
415,592
–
11,056
–
–
(81,915)
P
= 344,733
P
= 29,508
–
29,508
(8,425)
21,083
–
1,387
–
–
(3,876)
P
=18,594
P
=–
194,026
194,026
(151,251)
42,775
63,387
264,346
(43,545)
(1,528)
(58,278)
P
=267,157
(P
=25,901)
(120,125)
(146,026)
20,620
(125,406)
–
(86,048)
–
–
264
(P
= 211,190)
P
=1,260,651
73,901
1,334,552
(948,272)
386,280
83,179
215,303
(43,545)
(1,528)
(167,033)
P
=472,656
P
=32,200
P
=32,200
P
=14,410
6,752
P
=21,162
P
= 342,906
1,827
P
= 344,733
P
=14,176
4,418
P
=18,594
P
=248,790
18,367
P
=267,157
(P
= 211,190)
–
(P
=211,190)
P
=441,292
31,364
P
=472,656
P
=718,012
–
–
P
=718,012
P
=–
–
P
=–
P
=1,339,559
–
–
P
=1,339,559
P
=197,090
13,759
P
=210,849
P
= 4,262,438
–
849
P
= 4,263,287
P
= 135,404
(4,623)
P
= 130,781
P
= 520,031
–
–
P
= 520,031
P
=22,285
–
P
=22,285
P
=1,903,994
2,213,957
7,789
P
=4,125,740
P
=4,056,629
8,517
P
=4,065,146
P
=215,874
(1,433,440)
–
(P
=1,217,566)
P
=22,315
15,441
P
=37,756
P
=8,959,908
780,517
8,638
P
=9,749,063
P
=4,433,723
33,094
P
=4,466,817
P
=–
P
=–
P
=–
P
=–
P
=–
P
=235
P
=22,886
P
=12,467
P
= 1,604,628
P
= 125,660
P
=–
P
=
P
=1,627,514
P
=138,362
*SGVMG100137*
- 51 2011
Commercial
Development
Revenue
Total revenue
Operating expenses
Interest income
Other income
Other charges
Net income (loss)
Other Information
Segment assets
Deferred tax assets
Total assets
Segment liabilities (assets)
Deferred tax liabilities (assets)
Total liabilities (assets)
Provision for impairment losses
=131,333
P
–
131,333
(62,485)
68,848
–
32,300
–
–
(9,500)
=91,648
P
Residential
Development
=114,902
P
–
114,902
(118,302)
(3,400)
–
16,769
–
–
(4,011)
=9,358
P
74,555
17,093
=91,648
P
9,358
–
=9,358
P
=1,168,464
P
−
2,813
=1,171,277
P
=277,453
P
−
=277,453
P
=209,983
P
−
−
=209,983
P
=208,005
P
20,968
=228,973
P
P−
=
=−
P
=−
P
P29
=
=3
P
=−
P
Shopping
Centers
Corporate
Business
(In Thousands)
Others
Eliminations
and
Adjustments
Total
=855,273
P
–
855,273
(433,050)
422,223
1,863
85,833
(462)
–
(157,342)
=352,115
P
=88,133
P
–
88,133
(15,287)
72,846
–
–
–
–
(5,581)
=67,265
P
=–
P
17,307
17,307
(187,776)
(170,469)
57,521
141,332
(21,947)
(4,080)
32,449
=34,806
P
(P
=25,016)
11,198
(13,818)
8,819
(4,999)
–
(86,047)
–
–
868
(P
=90,178)
=1,164,625
P
28,505
1,193,130
(808,081)
385,049
59,384
190,187
(22,409)
(4,080)
(143,117)
=465,014
P
352,115
–
=352,115
P
51,283
15,982
=67,265
P
27,200
7,606
=34,806
P
(90,178)
–
(P
=90,178)
=424,333
P
40,681
=465,014
P
=2,982,013
P
−
843
=2,982,856
P
=1,406,168
P
(15,740)
=1,390,428
P
=515,093
P
−
3,893
=518,986
P
=39,812
P
−
=39,812
P
=1,345,467
P
2,247,998
2,030
=3,595,495
P
=208,896
P
7,623
=216,519
P
=210,360
P
(1,557,644)
−
(P
=1,347,284)
(P
=65,968)
15,705
(P
=50,263)
=6,431,380
P
690,354
9,579
=7,131,313
P
=2,074,366
P
28,556
=2,102,922
P
P1,684
=
=5,603
P
=1,000
P
P10,690
=
=15,085
P
=−
P
P222,294
=
=116,363
P
=−
P
P−
=
=−
P
=−
P
P234,697
=
=137,054
P
=1,000
P
*SGVMG100137*
- 52 2010
Commercial
Development
Revenue
Total revenue
Operating expenses
Interest income
Other income
Other charges
Net income (loss)
Other Information
Segment assets
Deferred tax assets
Total assets
Segment liabilities
Deferred tax liabilities
Total liabilities
Provision for impairment losses
Residential
Development
Shopping
Centers
Corporate
Business
(In Thousands)
Others
Eliminations
and
Adjustments
Total
=174,356
P
–
174,356
(84,368)
89,988
13,331
48,580
–
–
(5,774)
=146,125
P
=272,852
P
–
272,852
(239,923)
32,929
–
1,998
–
–
–
=34,927
P
=784,406
P
–
784,406
(395,378)
389,028
–
77,556
–
–
(6,897)
=459,687
P
=69,432
P
–
69,432
(198,876)
(129,444)
17,081
108,989
(25,347)
–
(116,262)
(144,983)
=29,219
P
11,831
41,050
(32,659)
8,391
21,828
16,019
–
(1,824)
(7,244)
=37,170
P
(P
=56,750)
17,189
(39,561)
37,317
(2,244)
–
(86,047)
–
–
628
(P
=87,663)
=1,273,515
P
29,020
1,302,535
(913,887)
388,648
52,240
167,095
(25,347)
(1,824)
(135,549)
=445,263
P
=127,236
P
18,889
=146,125
P
=34,927
P
–
=34,927
P
=459,687
P
–
=459,687
P
(P
=149,625)
4,642
(P
=144,983)
=21,638
P
15,532
=37,170
P
(P
=87,663)
–
(P
=87,663)
=406,200
P
39,063
=445,263
P
=4,984,372
P
–
–
=4,984,372
P
=572,958
P
–
=572,958
P
=268,599
P
–
4,758
=273,357
P
=47,075
P
–
=47,075
P
(P
=857,925)
–
2,903
(P
=855,022)
=290,868
P
19,475
=310,343
P
(P
=1,253,184)
–
–
(P
=1,253,184)
(P
=55,675)
16,573
(P
=39,102)
=5,633,877
P
393,575
10,938
=6,038,390
P
=1,277,765
P
36,048
=1,313,813
P
=68,114
P
P108,753
=
=151
P
P37,034
=
=1,270
P
=–
P
P30,642
=
=14,526
P
=–
P
=2,137,099
P
393,575
3,277
=2,533,951
P
=452,905
P
–
=452,905
P
=–
P
=5,960
P
=–
P
=354,916
P
–
–
=354,916
P
(P
=30,366)
–
(P
=30,366)
P–
=
=–
P
=–
P
P–
=
=–
P
=–
P
P135,790
=
=130,509
P
=151
P
Commercial development sales made to a significant customer amounted to P
=319.1 million.
*SGVMG100137*
- 53 -
26. Leases
Operating Leases - Group as Lessor
The Group enters into lease agreements with third parties covering rentals of commercial and
office spaces and land therein. These leases generally provide for either (a) fixed monthly rent, or
(b) minimum rent on a certain percentage of gross revenue, whichever is higher. All leases
include a clause to enable upward revision on its rental charge on annual basis based on prevailing
market conditions.
Future minimum rentals receivable under non-cancellable operating leases of the Group are as
follows:
Within one year
After one year but not more than five years
2011
2012
(In Thousands)
=21,719
P
P
=12,005
1,584
–
=23,303
P
P
=12,005
Contingent rent recognized in 2012, 2011 and 2010 amounted to P
=52.1 million, P
=92.9 million and
P85.5 million, respectively.
=
Operating Leases - Group as Lessee
The Group entered into lease agreements with third parties. These leases generally provide for
either (a) fixed monthly rent, or (b) minimum rent or a certain percentage of gross revenue,
whichever is higher.
27. Interest in Joint Ventures
The Group has entered into joint venture agreements with various landowners which include
related parties. The Group’s share in the joint ventures ranges from 25% to 34%. These joint
venture agreements relate to the development and sale of subdivision lots and condominium
projects with certain specified lots or units allocated to the joint venture partner. The Group’s
joint venture arrangements typically require the joint venture partner to contribute the land free
from any lien, encumbrance and tenants or informal settlers to the project with the Group bearing
costs related to land development and the construction of subdivision and condominium facilities.
Sales and marketing costs are allocated to both the Group and the joint venture partners. The
projects covering the joint venture agreements are expected to be completed in 2014.
The amounts disclosed in segment information under residential development relate to the joint
venture agreements. Capital commitments amounted to P
=726.1 million as of
December 31, 2012 and 2011, respectively.
*SGVMG100137*
- 54 -
28. Philippine Economic Zone Authority (PEZA) Registration
CPVDC was registered with PEZA on April 6, 2000 as an Information Technology (IT) Park
developer or operator and was granted approval by PEZA on October 10, 2001. The PEZA
registration entitled CPVDC to a four-year tax holiday from the start of approval of registered
activities. At the expiration of its four-year tax holiday, CPVDC pays income tax at the special
rate of 5% on its gross income earned from sources within the PEZA economic zone in lieu of
paying all national and local income taxes.
29. Notes to Consolidated Statements of Cash Flows
Noncash activities of the Group pertain to:
· Transfers from investment properties to inventories amounting to P
=14.1 million in 2012.
· Elimination of intercompany profit arising from a downstream sale transaction amounting to
=101.4 million in 2011.
P
· Equity in realized profit from an associate amounting to P
=9.0 million and P
=16.9 million in
2012 and 2011, respectively.
· Accrued construction billings (included in accounts and other payables) recognized under
inventories amounted to P
=146.0 million in 2012 and 2011, respectively.
Accrued construction billings under investment properties amounted to P
=846.8 million in
2012.
*SGVMG100137*
INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY
SCHEDULES
Schedule I
Schedule II
:
:
Schedule III
:
Reconciliation of retained earnings available for dividend declaration
Map showing the relationships between and among the companies in the
Group, its ultimate parent company and co-subsidiaries
Schedule of all effective standards and interpretations under Philippine Financial
Reporting Standards
*SGVMG100137*
SCHEDULE I
CEBU HOLDINGS, INC AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2012
Unappropriated Retained Earnings, beginning
Adjustments:
(See adjustments in previous year’s Reconciliation)
Unappropriated Retained Earnings, as adjusted, beginning
Net income based on the face of AFS
Less: Non-actual / unrealized income net of tax
Equity in net income of associate/joint venture
Other unrealized gains or adjustments to the retained earnings
as a result of certain transactions accounted for under the PFRS
Net income actually earned during the year
Other adjustments:
Amount of provision for deferred tax during the year
Dividends declared
Appropriation during the year
Unappropriated Retained Earnings, end available for dividend
distribution
=1,851,753,309
P
(112,035,688)
1,739,717,621
367,233,353
–
–
–
367,233,353
4,802,973
(192,007,362)
(1,300,000,000)
(1,487,204,389)
=619,746,585
P
*SGVMG100137*
SCHEDULE II
CEBU HOLDINGS INC. AND SBUBSIDIARIES
MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE
COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND
CO-SUBSIDIARIES
Ayala Land,
Inc.
49.80%
PCD
Nominee
Corporation
(Filipino)
22.02%
First Metro
Investment
Corp.
9.72%
PCD Nominee
Corporation
(Non-Filipino)
14.36%
Others
4.10%
CEBU HOLDINGS, INC.
Cebu
Property
Ventures,
Inc.
76.26%
Cebu
Leisure
Company,
Inc.
100.00%
Cebu
Insular
Hotel,
Company,
Inc.
37.06%
Solinea, Inc.
35.00%
CBP Theatre
Management
Company,
Inc.
100.00%
Asian IOffice
Properties,
Inc.
40.00%
*SGVMG100137*
SCHEDULE III
Cebu Holdings, Inc. and Subsidiaries
List of Applicable Standards and Interpretations
December 31, 2012
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of December 31, 2012
Adopted
Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics
ü
PFRSs Practice Statement Management Commentary
ü
Not
Adopted
Not
Applicable
Philippine Financial Reporting Standards
PFRS 1
(Revised)
PFRS 2
First-time Adoption of Philippine Financial Reporting
Standards
ü
Amendments to PFRS 1 and PAS 27: Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or Associate
ü
Amendments to PFRS 1: Additional Exemptions for Firsttime Adopters
ü
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time Adopters
ü
Amendments to PFRS 1: Severe Hyperinflation and
Removal of Fixed Date for First-time Adopters
ü
Amendments to PFRS 1: Government Loans
ü
Share-based Payment
ü
Amendments to PFRS 2: Vesting Conditions and
Cancellations
ü
Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions
ü
PFRS 3
(Revised)
Business Combinations
PFRS 4
Insurance Contracts
ü
Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts
ü
Non-current Assets Held for Sale and Discontinued
Operations
ü
PFRS 6
Exploration for and Evaluation of Mineral Resources
ü
PFRS 7
Financial Instruments: Disclosures
ü
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets
ü
Financial Assets – Effective Date and Transition
ü
PFRS 5
ü
*SGVMG100137*
-2-
INTERPRETATIONS
Adopted
Amendments to PFRS 7: Improving Disclosures about
Financial Instruments
ü
Amendments to PFRS 7: Disclosures - Transfers of
Financial Assets
ü
Not
Adopted
Amendments to PFRS 7: Disclosures – Offsetting Financial
Assets and Financial Liabilities
ü
Amendments to PFRS 7: Mandatory Effective Date of
PFRS 9 and Transition Disclosures
ü
PFRS 8
Operating Segments
ü
PFRS 9
ü
ü
PFRS 10
ü
PFRS 11
Joint Arrangements
ü
PFRS 12
Disclosure of Interests in Other Entities
ü
PFRS 13
Fair Value Measurement
ü
Not
Applicable
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements
ü
Amendment to PAS 1: Capital Disclosures
ü
Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
ü
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income
ü
PAS 2
Inventories
ü
PAS 7
Statement of Cash Flows
ü
PAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors
ü
PAS 10
PAS 11
Construction Contracts
ü
PAS 12
Income Taxes
ü
Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets
ü
PAS 16
Property, Plant and Equipment
ü
PAS 17
Leases
ü
PAS 18
Revenue
ü
PAS 19
Employee Benefits
ü
Amendments to PAS 19: Actuarial Gains and Losses,
Group Plans and Disclosures
ü
ü
*SGVMG100137*
-3-
Adopted
INTERPRETATIONS
Employee Benefits
PAS 19
(Amended)
PAS 20
PAS 21
Not
Adopted
ü
Accounting for Government Grants and Disclosure of
Government Assistance
The Effects of Changes in Foreign Exchange Rates
ü
ü
Amendment: Net Investment in a Foreign Operation
PAS 23
(Revised)
Borrowing Costs
PAS 24
(Revised)
Related Party Disclosures
PAS 26
Accounting and Reporting by Retirement Benefit Plans
PAS 27
Consolidated and Separate Financial Statements
ü
ü
ü
ü
ü
Separate Financial Statements
PAS 27
(Amended)
PAS 28
Not
Applicable
Investment in Associates
ü
ü
Investments in Associates and Joint Ventures
PAS 28
(Amended)
ü
PAS 29
Financial Reporting in Hyperinflationary Economies
PAS 31
Interests in Joint Ventures
ü
PAS 32
Financial Instruments: Disclosure and Presentation
ü
ü
Amendment to PAS 32: Classification of Rights Issues
ü
ü
Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities
ü
PAS 33
Earnings per Share
ü
PAS 34
Interim Financial Reporting
ü
PAS 36
Impairment of Assets
ü
PAS 37
Provisions, Contingent Liabilities and Contingent Assets
ü
PAS 38
Intangible Assets
PAS 39
Financial Instruments: Recognition and Measurement
ü
Amendments to PAS 39: Transition and Initial Recognition
of Financial Assets and Financial Liabilities
ü
ü
Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option
ü
ü
*SGVMG100137*
-4-
INTERPRETATIONS
Adopted
Contracts
ü
ü
Amendments to Philippine Interpretation IFRIC–9 and PAS
39: Embedded Derivatives
ü
Amendment to PAS 39: Eligible Hedged Items
Investment Property
PAS 41
Agriculture
Not
Applicable
ü
Financial Assets
PAS 40
Not
Adopted
ü
ü
ü
Philippine Interpretations
IFRIC 1
IFRIC 2
Changes in Existing Decommissioning, Restoration and
Similar Liabilities
ü
Members' Share in Co-operative Entities and Similar
Instruments
ü
IFRIC 4
Determining Whether an Arrangement Contains a Lease
IFRIC 5
Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
ü
Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment
ü
Applying the Restatement Approach under PAS 29
ü
IFRIC 8
Scope of PFRS 2
ü
IFRIC 9
Reassessment of Embedded Derivatives
ü
ü
IFRIC 10
Interim Financial Reporting and Impairment
ü
IFRIC 11
PFRS 2- Group and Treasury Share Transactions
ü
IFRIC 12
Service Concession Arrangements
ü
IFRIC 13
Customer Loyalty Programmes
ü
IFRIC 14
The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
ü
Amendments to Philippine Interpretations IFRIC- 14,
Prepayments of a Minimum Funding Requirement
ü
IFRIC 16
Hedges of a Net Investment in a Foreign Operation
ü
IFRIC 17
Distributions of Non-cash Assets to Owners
ü
IFRIC 18
Transfers of Assets from Customers
ü
IFRIC 6
IFRIC 7
ü
*SGVMG100137*
-5-
INTERPRETATIONS
Adopted
Not
Adopted
Not
Applicable
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
ü
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
ü
SIC-7
Introduction of the Euro
ü
SIC-10
Government Assistance - No Specific Relation to Operating
Activities
ü
Consolidation - Special Purpose Entities
ü
Amendment to SIC - 12: Scope of SIC 12
ü
Jointly Controlled Entities - Non-Monetary Contributions
by Venturers
ü
SIC-12
SIC-13
SIC-15
Operating Leases - Incentives
SIC-25
Income Taxes - Changes in the Tax Status of an Entity or
its Shareholders
SIC-27
Evaluating the Substance of Transactions Involving the
Legal Form of a Lease
ü
ü
ü
SIC-29
Service Concession Arrangements: Disclosures.
ü
SIC-31
Revenue - Barter Transactions Involving Advertising
Services
ü
Intangible Assets - Web Site Costs
ü
SIC-32
*SGVMG100137*
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001,
December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015
INDEPENDENT AUDITORS’ REPORT
ON THE SUPPLEMENTARY SCHEDULES
The Stockholders and the Board of Directors
Cebu Holdings, Inc.
7th Floor, Cebu Holdings Center
Cebu Business Park, Cebu City
We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Cebu Holdings, Inc. and its subsidiaries (the Group) as at December 31, 2012 and 2011
and for each of the three years in the period ended December 31, 2012 included in this Form 17-A and
have issued our report thereon dated March 7, 2013. Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken as a whole. The schedules A to K
listed in the Index to the Consolidated Financial Statements and Supplementary Schedules are the
responsibility of the Group’s management. These schedules are presented for purposes of complying
with Securities Regulation Code Rule 68, as Amended (2011) and are not part of the basic
consolidated financial statements. These schedules have been subjected to the auditing procedures
applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state, in all
material respects, the financial data required to be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Jessie D. Cabaluna
Partner
CPA Certificate No. 36317
SEC Accreditation No. 0069-AR-3 (Group A),
February 14, 2013, valid until February 13, 2016
Tax Identification No. 102-082-365
BIR Accreditation No. 08-001998-10-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 3669666, January 2, 2013, Makati City
March 7, 2013
A member firm of Ernst & Young Global Limited
INDEX TO THE FINANCIAL STATEMENTS AND SUPPLEMENTARY
SCHEDULES
Schedule
Contents
A
Financial Assets
B
Amounts Receivable from Directors, Officers, Employees, Related
Parties, and Principal Stockholders (Other than Related parties)
C
Amounts Receivable from Related Parties which are Eliminated
during the Consolidation of Financial Statements
D
Intangible Assets - Other Assets
E
Long-Term Debt
F
Indebtedness to Related Parties
G
Guarantees of Securities of Other Issuers
H
Capital Stock
I
Reconciliation of Retained Earnings Available for Dividend Declaration
J
Map Showing the Relationships Between and Among the Companies in the
Group, its Ultimate Parent Company and Co-subsidiaries
K
Schedule of All Effective Standards and Interpretations Under Philippine
Financial Reporting Standards
SCHEDULE A
SUPPLEMENTARY SCHEDULE OF FINANCIAL ASSETS
DECEMBER 31, 2012
Name of Issuing entity and association of
each issue
Number of
shares or
principal
amount of bonds
and notes
Amount shown
in the balance
sheet
Income received
or accrued
Not Applicable
The Group does not have financial assets at fair value through profit or loss.
SCHEDULE B
SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES, AND
PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES)
DECEMBER 31, 2012
Balance at
Name and Designation of beginning of
debtor
period
ALAJID, ROMULO M
=241,716
P
ALFANTE, ERNESTO T
111,461
ALICAYA, NOEL F
355,784
BOHOLST, JUDILYNE L
692,494
CADIZ, LEONARD B
284,159
CASINILLO, RIZALITO S
4,170
DEL ROSARIO,
CLEMENT GERALD G
1,272,327
DEE, JOSEPH
FRANCISCO
–
DELIMA, JOSIE
–
DY, CELESTE
BERNARDINE K
356,875
GO, SUZETTE T
1,531,424
GONZALES,
WILFREDO W
331,907
JAPZON, JEANETTE A
287,301
LOPEZ, LEVI L
–
MANANQUIL, RAUL S
2,445,657
MAWE, ELVIRA G
1,835,753
POLLOSO, JOY R
–
PARRENO, JANICE
–
REUYAN, RUDY I
53,020
REY, DOMINADOR M
31,788
SIA, JENNIFER
–
SUAN, JONAS
–
TRACES, FRANCISCO
GIOVANNI O
249,601
URBINA, MA. CECILIA T
1,134,561
TOTAL
=11,219,999
P
Additions
=–
P
376,994
80,000
–
–
–
Amounts
collected
=73,017
P
149,161
112,567
692,494
75,399
4,170
Current
= 73,017
P
75,399
140,275
–
75,399
–
Not Current
= 95,682
P
263,895
182,942
–
133,362
–
Balance at
the end of
the period
= 168,699
P
339,294
323,217
–
208,760
–
–
132,780
132,780
1,006,768
1,139,547
150,773
62,813
94,853
20,938
55,920
41,875
–
–
55,920
41,875
–
76,663
86,999
263,962
86,999
163,040
182,878
1,181,086
269,877
1,344,126
83,750
–
422,730
–
–
3,000,000
376,994
129,709
–
347,994
376,994
170,749
75,399
79,262
331,117
257,918
290,907
56,549
67,659
31,788
26,100
37,699
86,999
75,399
105,683
331,117
257,918
290,907
75,399
92,090
–
69,599
75,399
157,910
136,503
237,786
1,783,424
1,319,918
2,418,186
245,046
22,979
–
252,296
263,895
244,909
211,902
343,468
2,114,541
1,577,836
2,709,093
320,444
115,070
–
321,894
339,294
–
45,000
75,399
279,738
75,399
267,238
98,804
632,584
174,203
899,822
=5,530,412
P
=3,486,620
P
= 2,647,847
P
=10,615,944
P
=13,263,791
P
SCHEDULE C
SUPPLEMENTARY SCHEDULE OF AMOUNTS RECEIVABLE FROM
RELATED PARTIES WHICH ARE ELIMINATED DURING THE
CONSOLIDATION OF FINANCIAL STATEMENTS
DECEMBER 31, 2012
CPVDC
CLCI
CBPTMI
Total Eliminated Receivables
Receivable
Balance per
CHI Parent
=372,803
P
460,905
25,993
=859,701
P
Payable Balance
per CHI
Subsidiaries
=372,803
P
460,905
25,993
=859,701
P
Current
Portion
=372,803
P
460,905
25,993
=859,701
P
SCHEDULE D
SUPPLEMENTARY SCHEDULE OF INTANGIBLE ASSETS - OTHER
ASSETS
DECEMBER 31, 2012
Intangible Assets - Other Assets
Description
Beginning
Balance
Additions at
cost
Charged to
cost and
expenses
Charged to
other
accounts
Other
changes
additions
(deductions)
Ending
Balance
Not Applicable
The Group does not have intangible assets in its statements of financial position.
SCHEDULE E
SUPPLEMENTARY SCHEDULE OF LONG-TERM DEBT
DECEMBER 31, 2012
Long-term Debt
Title of Issue and type of obligation
PN - BPI
Amount
authorized by
indenture
–
Amount shown under
caption "current
portion of long-term”
in related balance
sheet
=163,314,602
P
Amount shown under
caption “long-term
debt” in related
balance sheet
=1,681,747,061
P
SCHEDULE F
SUPPLEMENTARY SCHEDULE OF INDEBTEDNESS TO RELATED
PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES)
DECEMBER 31, 2012
Indebtedness to related parties (Long-term loans from Related Companies)
Name of related party
Balance at beginning of period
Balance at end of period
Not Applicable
The Group does not have long-term loans from related companies in its statements of financial
position.
SCHEDULE G
SUPPLEMENTARY SCHEDULE OF GUARANTEES OF SECURITIES OF
OTHER ISSUERS
DECEMBER 31, 2012
Name of issuing entity of
securities guaranteed by
the company for which
this statement is filed
Guarantees of Securities of Other Issuers
Title of issue of
Amount owned
each class of
Total amount
by person for
securities
guaranteed and which statement
guaranteed
outstanding
is file
Nature of
guarantee
Not Applicable
The Group does not have any guarantees of securities of other issuing entities by the issuer for
which the statement is filed.
SCHEDULE H
SUPPLEMENTARY SCHEDULE OF CAPITAL STOCK
DECEMBER 31, 2012
Title of Issue
Capital Stock
Number of
shares
authorized
3,000,000,000
Number of
shares issued
and outstanding
as shown under
related balance
sheet caption
1,920,073,623
Capital Stock
Number of
shares reserved
for options
warrants,
conversion and
other rights
–
Number of
shares held by
related parties
1,841,461,681
Directors,
officers and
employees
231,105
Others
78,611,942
SCHEDULE I
SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS
DECEMBER 31, 2012
Unappropriated Retained Earnings, beginning
Adjustments:
(See adjustments in previous year’s Reconciliation)
Unappropriated Retained Earnings, as adjusted, beginning
Net income based on the face of AFS
Other adjustments:
Amount of provision for deferred tax during the year
Dividends declared
Appropriation during the year
Unappropriated Retained Earnings, end available for dividend
distribution
=1,851,753,309
P
(112,035,688)
1,739,717,621
367,233,353
4,802,973
(192,007,362)
(1,300,000,000)
(1,119,971,036)
=619,746,585
P
SCHEDULE J
CEBU HOLDINGS INC. AND SUBSIDIARIES
MAP SHOWING THE RELATIONSHIPS BETWEEN AND AMONG THE
COMPANIES IN THE GROUP, ITS ULTIMATE PARENT COMPANY AND
CO-SUBSIDIARIES
DECEMBER 31, 2012
Ayala Land,
Inc.
49.80%
PCD
Nominee
Corporation
(Filipino)
22.02%
First Metro
Investment
Corp.
9.72%
PCD Nominee
Corporation
(Non-Filipino)
14.36%
Others
4.10%
CEBU HOLDINGS, INC.
Cebu
Property
Ventures and
Development
Corporation
76.26%
Asian IOffice
Properties,
Inc.
40.00%
Cebu
Leisure
Company,
Inc.
100.00%
Cebu
Insular
Hotel,
Company,
Inc.
37.06%
Solinea, Inc.
35.00%
CBP Theatre
Management
Company,
Inc.
100.00%
SCHEDULE K
CEBU HOLDINGS INC. AND SUBSIDIARIES
LIST OF EFFECTIVE STANDARDS AND INTERPRETATIONS
DECEMBER 31, 2012
INTERPRETATIONS
Adopted
Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics

PFRSs Practice Statement Management Commentary

Not
Adopted
Not
Applicable
Philippine Financial Reporting Standards
PFRS 1
(Revised)
PFRS 2
First-time Adoption of Philippine Financial Reporting
Standards

Amendments to PFRS 1 and PAS 27: Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to PFRS 1: Additional Exemptions for Firsttime Adopters

Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time Adopters

Amendments to PFRS 1: Severe Hyperinflation and
Removal of Fixed Date for First-time Adopters

Amendments to PFRS 1: Government Loans

Share-based Payment

Amendments to PFRS 2: Vesting Conditions and
Cancellations

Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions

PFRS 3
(Revised)
Business Combinations
PFRS 4
Insurance Contracts

Contracts

Non-current Assets Held for Sale and Discontinued
Operations

PFRS 6
Exploration for and Evaluation of Mineral Resources

PFRS 7
Financial Instruments: Disclosures

Financial Assets


PFRS 5

-2-
INTERPRETATIONS
Adopted
Amendments to PFRS 7: Improving Disclosures about

Amendments to PFRS 7: Disclosures - Transfers of
Financial Assets

Not
Adopted
Not
Applicable
Amendments to PFRS 7: Disclosures – Offsetting Financial
Assets and Financial Liabilities
Not Early Adopted
Not Early Adopted

PFRS 8
Operating Segments
PFRS 9
Not Early Adopted
Not Early Adopted
PFRS 10
Not Early Adopted
PFRS 11
Joint Arrangements
Not Early Adopted
PFRS 12
Disclosure of Interests in Other Entities
Not Early Adopted
PFRS 13
Fair Value Measurement
Not Early Adopted
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements

Amendment to PAS 1: Capital Disclosures


Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income
Not Early Adopted
PAS 2
Inventories

PAS 7
Statement of Cash Flows

PAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors


PAS 10
PAS 11
Construction Contracts

PAS 12
Income Taxes

Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets

PAS 16
Property, Plant and Equipment

PAS 17
Leases

PAS 18
Revenue

PAS 19
Employee Benefits

Amendments to PAS 19: Actuarial Gains and Losses,
Group Plans and Disclosures

-3-
Adopted
INTERPRETATIONS
Employee Benefits
PAS 19
(Amended)
PAS 20
PAS 21
Not
Adopted
Not
Applicable
Not Early Adopted
Accounting for Government Grants and Disclosure of
Government Assistance
The Effects of Changes in Foreign Exchange Rates



Amendment: Net Investment in a Foreign Operation
PAS 23
(Revised)
Borrowing Costs
PAS 24
(Revised)
Related Party Disclosures
PAS 26
Accounting and Reporting by Retirement Benefit Plans
PAS 27
Consolidated and Separate Financial Statements




Separate Financial Statements
PAS 27
(Amended)
PAS 28
Investment in Associates
Not Early Adopted

Investments in Associates and Joint Ventures
PAS 28
(Amended)
Not Early Adopted

PAS 29
PAS 31
Interests in Joint Ventures

PAS 32
Financial Instruments: Disclosure and Presentation


Amendment to PAS 32: Classification of Rights Issues

Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities
Not Early Adopted
PAS 33
Earnings per Share

PAS 34
Interim Financial Reporting

PAS 36
Impairment of Assets

PAS 37
Provisions, Contingent Liabilities and Contingent Assets

PAS 38
Intangible Assets
PAS 39
Financial Instruments: Recognition and Measurement

Amendments to PAS 39: Transition and Initial Recognition
of Financial Assets and Financial Liabilities


Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option


-4-
INTERPRETATIONS
Adopted
Contracts




Amendment to PAS 39: Eligible Hedged Items
Investment Property
PAS 41
Agriculture
Not
Applicable

Financial Assets
PAS 40
Not
Adopted


Philippine Interpretations
IFRIC 1
IFRIC 2
Changes in Existing Decommissioning, Restoration and
Similar Liabilities

Members' Share in Co-operative Entities and Similar
Instruments


IFRIC 4
Determining Whether an Arrangement Contains a Lease
IFRIC 5
Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds

Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment

Applying the Restatement Approach under PAS 29

IFRIC 8
Scope of PFRS 2

IFRIC 9
Reassessment of Embedded Derivatives


IFRIC 10
Interim Financial Reporting and Impairment

IFRIC 11
PFRS 2- Group and Treasury Share Transactions

IFRIC 12
Service Concession Arrangements

IFRIC 13
Customer Loyalty Programmes

IFRIC 14
The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction

Amendments to Philippine Interpretations IFRIC- 14,
Prepayments of a Minimum Funding Requirement

IFRIC 16
Hedges of a Net Investment in a Foreign Operation

IFRIC 17
Distributions of Non-cash Assets to Owners

IFRIC 18
Transfers of Assets from Customers

IFRIC 6
IFRIC 7
-5-
INTERPRETATIONS
Adopted
Not
Adopted
Not
Applicable

IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
SIC-7
Introduction of the Euro

SIC-10
Government Assistance - No Specific Relation to Operating
Activities

Consolidation - Special Purpose Entities

Amendment to SIC - 12: Scope of SIC 12

Jointly Controlled Entities - Non-Monetary Contributions
by Venturers

SIC-12
SIC-13
SIC-15
Operating Leases - Incentives
SIC-25
Income Taxes - Changes in the Tax Status of an Entity or
its Shareholders
SIC-27
Evaluating the Substance of Transactions Involving the
Legal Form of a Lease
Not Early Adopted



SIC-29
Service Concession Arrangements: Disclosures.

SIC-31
Revenue - Barter Transactions Involving Advertising
Services

Intangible Assets - Web Site Costs

SIC-32

SEC 17A - 2012 Annual Report

Transcription

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