Document 6526520

Transcription

Document 6526520

COVERSHEET
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PRELIMINARY
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A nerd.d Anic N Ntr bs/Sediof
Toul Atr$urr ol Roridsiir8s
Toheilci
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F r m aL \ P ( a n d e B l , A C r , t T o , ( i n h g p r u o 5 !
ALCO PRELIMINARY llfo.malion SLalemenL
I
2011ANNUAI
NOTICE
OF
STOCKHOLDERS' MEETING
NOTICE rs hereby given thai 6e 2011 annual stocklolders' meeting of
ARTHATAND CORPORATION will be held on 24 June 2011,Fdday, rt 8:30 A.M., at
th€ Arthaland Sales Pavilion, McKinley Padffay comet 7th Av€nue, Global City,
Taguig City.
' llou';
1.
2.
CaI to Order
Secretary's
Proof o f Due N otice o f the lvfeetingand
Determinaron ofQuotum
3.
Approvd ofN4hutes of the AnnLralStoclholders'Meeung
heldon 25June2010
4.
NlanagenentReport
5.
RatifrcationofActs ofthe Board ofDrectors and Managemenr
Duflng the Plefious Year
6.
Cance atronof Warrants
-.'.rpo"ed
{ n " r d r e n t o f r h e r o r p o r u r r o n\.r u . l e . o f l n . o p o - ' u o n
and ByJarw IncreaseNumber of Directors to Nine (9)
8.
ElectionofDirectors(includtnglndependentDirectors)
l{atificatjonofAppointment of ExternalAuditor
9.
10.
Other Nlalters
11.
.A.djoummcnt
Common stockholdersof record as of 01June 2011will be entided to nottce of and
to r-otc at saidmcctlng. The stock and transferbooks of the Corporatronwill be closedas of
salddate and ufltr1after the annualmccting.
If you cannot peJsonrlll attcnd thc meeting and if you wish to, you may desrgn;re
your auihorizedrepresentat|e by subrdtting a signedPROXY instrumert to the.,OfF.. of
the Corpomte Secretary,Arthaland Corporation, 81FPicadilly Star Building,4'' Avenue
corner 27"' St., Bonifacio Clobal City, Taguig City 163,1,not larerthan 5:00 P.M., fl June
2011(Ftiday), for venficrtion and record puryoses. The proxy instrument shoulctconfotm
to the requiremcntsof thc Corporation Code and should be atfixed with a duly paid
documentarystamptax in accordancewrth Sec.192 of the Netioral Intemal RevenueCocle.
Makat City,01lune 2011.
MkD
e
Corpolarc Secletary
8 1 hF . o t P . i 1 C!lS L a B L r i d f . r , 4 1 h A , r e n L r e . o L z l r h S r r € e i , E o r i a a c i o C o b a C i t y , f a g ! g ! 6 1 . 1 , P h i p p n e t T E L : ( 6 : 2 ) 4 0 1 6 9 1 0 . l - A X ( 6 3 1
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE RNQUESTEDNOT TO SENDUS A PROXY
A. GENERAL INFORMATION
ITEM 1. Dat€,Time and Placeof ANIruAL STOCKHOLDERS'MEETING ofSecurityHolders
a.
Date: 24 June2010(Friday)
Timei 8:30 A.M.
Place: Afthaland SalesPavilion
McKinleyParkwayconrer7th Avenue
Bonifacioclobal City,TaguigCity
b.
PliDcipal
Address
oflssuer:
c.
Ihe approximate
dateon whichthe Infonn,ltionStatenentis flrst sentor givento secuityholders
is 0l June2010.
8/FPioadilly
StarBuilding
4'l'Avenuecomcr27'r'street
BonifacioClobalCity, TaguigCity
ITEM 2. Dissenter!'
Righrof Appraisal
The stockholders'
right olAppraisalis givenutder the irrstances
providedby SectionTitle X, Appraisal
Right,CofporationCodeoflhe Philippines.
ln the forthcomingAnnualStockholders'
Meeting,approvalof the stockholders
will be soughtfor the
amendmenl
ofthe latestArticlesof Incorpomtion
aDdBy-lawsofArthaland Corporation(ALCO) fbf
purposes
of increasing
the numberof directorsf'romseven(7) to ninc (9). UDderthe CorporalionCode,
this wouldentitledisse|Xillg
slockholders
to exercise
thet appraisal
right.
F.orthe valid exerciseofthe appraisalright, ALCO adoplsthe procedureIaid down in the Corporation
Code.aslollows:
L
The dissentingstockholdermusl havevotedagainstthe proposedcolpomteaction. ln
this case,the proposedamendment
to ALCO'SAfticles of Incorporation
and By-Laws
shallincreasiDg
the numberofdirectorsfrom seven(7) to nine(9).
2..
The dissenting
stockholder
musrmakea writtendemandwithin thirty (30)daysfrom the
datethe votewastaken. Failureto makethe demandwithin the Drescribed
Deriodshall
be deemeda waiverofthe appraisal
right.
Frcm thetime ofdemand,all rightsaccruingto the shares,
includingvolinganddividend
rights,shall be suspended
in accofdance
with the provisioDs
of the CorporationCooE,
exceptthe right ofthe stockholder
to recei\,epaymentof the fair valueof his/itsshares.
The dividend,volirg and rightsof the dissenting
stockholder
shallbe restoredifALCO
failsto paythe fair valuewithinthirty(30)daysaftertheawald.
AI CO PRFII\,fl.IARY Inforrnali,rn
Slalernent
J
3.
The priceofthe shareswillbe determined
basedon the fair valueofthe sharesasofthe
day prior to the date on which the vote was taken,excludingany appreciationor
depreciation
in anticipation
of suchcorporate
action.
4.
The withdra*ing stockholdermust submit (througl the Office of the Corpomte
Secretar)')thestockcertificate/s
representing
his/itsALCO sharesfor notationofbeing a
dissenting
stockholder,
within ten(10) daysfrom writtendemand.Failureto do so shall,
at ALCO's option,terminate
the stockholdeisappraisal
right.
5.
ALCO shallpaythe withdrawingstockiolderfor his/itsshares,
pro.ti.led that,ALCOhas
unrestricted
retainedeamingsin its books1()coversuchpayment.
TherightofpaymentshallceaseundertheIollowinginstances:
a. Iflhe dissenting
stockholder
withdrawshis demandfor payment,subjectto ALCO'S
consenl:
b. IfALCO abandons
theproposed
action;
c. lf the Securities
(SEC)disapproves
and Exchange
Comrnission
the proposed
action;
and,
d. Wberethe SECdetenniDes
thatsuchstockholder
is norentitledto theappraisal
right.
tJponpaymentby ALCO, thestockholder's
sharesmustthenbetransferred
to ALCO.
ITf,M 3. lnterestofCertain Personsin or Oppositionto Mattersto be act€dupon
While certainpersonsmay haveinterestin the matters10be acteduponin the meeling,as olthe dateof
this InformationStatehent,ALCO hasnol receivedany writteni formationfrom any director,nominee
or stockholder
on anyintentionto opposeanyaction10betakenup at th€meeting.
B. CONTROL AND COMPENSATIONINFORMATION
ITEM 4. Voting Securiti€sand PrincipalHold€rsThcreof
a.
Classentitledto vote
Classgf Sharqt
No.ofShores
(Asof 30April20ll\
Common
b.
5,318,095,199
Voting Rights
Wirhvotinqriqhts
R€cordDate: 0l June2010(Wednesday)
CumulatiY€Voting Rights
Section4, Afticle II ofALCO's Bylaws, asamended
on 25 June2010,provides,asfollows:
I 8/FPicadillyStarBuilding,4bAvenuecomer2td
Streer,
BonifacioclobatCio', TaguigCiiy 1634
ALCOPRFLIMINAR.|Informarion
srare-renr
-
entitledto vote in accordance
"A1 all slockiolders'meetings,everystockholder
with Section4 ofArticle VI oftheseBylaws shallbe entitledto one(1) votefor
each shareof voting stock standingin his nameon the properbook of the
Corporation
at thetime ofclosingthereofforthepurposeofthe meeting.
At every electionof directors,each stockiolderentitledto vote during the
meetingin accordance
with Section4 of Article Vl of theseBy-lawsis entitled
to one(i) votefor eaohshareof stockheldby him for as manypersonsasthere
aredirectorsto be elected,or to cumulatesaidsharesandgive one(1) candidate
as manyvotesas the numberofdirectorsmultipliedby the numberofhis share
shall equal,or to distributesuchvoteson the sameprincipleamongas maBy
candidates
ashe shallthinkfit."
The total numberof votesto be casl by the stockholder
mustnot exceedthe numberof shares
ownedby him/it as shownin the booksofALCO multipliedby the wholenumberofdirectorsto
beelected.
d.
SecurityOrvnershipofCertdn R€cordand BeneficialOwnersand Managementr
(D
SecurityOwn€rshipofCertain R€cordand BeneficialOwnersofmore than 57oof
thc Voting Sharcs(ar crl30April2010)
Tirle
ofClass
Common
Nane and Addressof Record
Owners,Natureof Ownership
& Natueol Behelicial Owner
Citizenship No.oJSharer
Percentage
Held
CPGHoldings,Inc.
RecordahdDiecl BenelcialO ner
filipiro
1,800,000,000*
33.84'7%
Filipino
1.183,730,0004+
26.019%
Filipino
981.69e,819***18.460%
7,ryTheCenterpoint
Building
JuliaVargasAvenue
OrtigasCenter,PasigCiS,
Common AO CapitalHoldingsI,Inc.
RecordandDirectBenelicialO ,ner
25lF PhilamlifeTower
8767 Paseode Roxas,Makati
City
Common Export and Industry Bank, Inc.
Recad dnd Diru.t Bene.licial O,Mel
Exportbank
Plaza,Exportbank
DrivecomerChinoRoces
Avenue,MakatiCity
' Fieuresarebasedo! thetotalcom$onvolingsharcsofAI-CO d of30 April20l0
ALCO PRELIMINARYInfomationSlaiement
5
* The name/softhe person/s
autiorizedto voteth€ sharesunderthis accountarcunavailable
at
thetime ofdistributionofthis InfomationStatement.
** Theshareswill be votedby Mr. JaimeC. Gonzalez,
ChaimanofAO CapitalHoldingsl, lnc.,
with business
address
at the25,4 PhilamlifeTower,8767PaseodeRoxas,MakatiCity.
** The shareswill be voledby the Chairmanand/orthe President
of ExportandIndustf Bank,
Inc.,with business
address
at the 37lF ExportbankPlaza,ExportbankDrive comerChinoRoces
Avenue,MakatiCity.
Thereareno otherparticipants
who own morethan5% ofALCO's votingsecurities.
(2)
SecurityOwnershipof Managementfaso/J 0 April 2010)
There are no sharesheld or acquiredbeneficiallyby any one of the directorsand executive
officersofALCO, otherthanthenominalsharesheldby saiddirectorsandexecutivepfficers.
Title
ofClax
Name,Addressand Positionof
Record^rnerc
Common ErnestK. Cuy€gkeng
Independent
Director
1839Sanranstreer,Dasmarinas
Village,MakatiCity
Common Jaim€ C, Gonzal€z
Directot/Chaitmah
50 N4cKinlcy
Road,ForbesPark.
MakatiCity
Common Angelade Villa-Lacson
Diector/Prcsideltt
Unil J50J fhe Regenc)al Salcedo
Tordesillas
comerSanchez
Streets
Salcedo
Village,MakatiCity
Common FernanVictor P. Lukban
Independe\tDirector
6 t) ler Sneet.NonhCreenhills,
SanJuanCity,MetroManila
.
Citizenship
Amount &
Nature of
Ownership
% of
Class
Filipino
1
lccor4PlDik(t
Es!tj-cLa!_4s
0.00%
FiliDino
I
B!!el!-!!d-0ja!!
E!!!I!4:a!-!!r
0.00%
filioino
l
Rcco'd
MdDircr
B!!d=]!ra!-!!:
0.00%
Filipino
I
!e!or:d
?nl:Dikd 0.00%
DrE_[sj'i_0]ssl
Common Ricardo S.Po, Sr.
Directohryice
Chairman
Filioino
'
28JaclsonSlreel,
WestGreenhills,
SanJuan,MetroManila
I
Rcloril
mdDiELr
Benefi(
alosnel
0.00%
ALCO PRELIMINARYInformationStatement
6
Common Omar T. Salvo
Director/Compliance
Ofrcel
l5 Peace
sLreer,
Mukinational
Village,P.ranaque
Ciry
Filipino
'
1
0.00%
lcco,g19:DjKL
Beneficialoqnel
Common PaulineC. Tan
Dircctor
pasa)cit)
42 Russel
srreer.
FiliDino
I
&s!d-!!d-Djl!!r
Benefi'
aloqrr
None
None
None
LeonardoT, Po
Treasurer
2913AmorsoloTower
RockwellCenter,MakatiCity
DaisyP. Arce
ColporateSecletar!
200 Recoletos
Sreel,Urdanela
Village,MakatiCity
Riva Khristin€ V, Maslo
AssistantCorponte
Secretary/Corporate Information
Filipino
0.00%
0.00%
Filipino
0
N,A.
Filipino
0
N.A.
TOTAL
7 shar€s
Ofiicer
2l J.Paredcs
Sr.,BFHomes,
Diliman
City
Quezon
(3)
Voting Trust Holdersof57o or Mor€
Thereareno votingtrustholdersregistered
in thebooksofALCO,
(4)
Changesin Control
During ALCO's Annual Stockholders'Meeting
held on 25 June 2010,the stockholders
unanimously
electedthe followingas the membersof its Boardof Directorsfor the year2010201l, to holdoffice as suchanduntil theirrespective
successors
areduly nominated,
el€ctedand
qualified:
RepularDirectors
1.
2.
3.
4.
5.
Mr. DionisioE. Carpio,Jr,
Mr. JaimeC. Gonzalez
Ms.AngeladeVilla-Lacson
Ms. PaulineC. Tan
Mr. OmarT. Salvo
Independent
Directors
6.
7.
Mr. EmestK. Cuyegkeng,
and
Mr. ReneR. Fuentes
ALCO PRELIMINARYInfbrmalionStatement
7
Duringthe Organizational
Meetingoftbe BoardofDirectorsheld immediatelyafterthe Annual
Stockholders'
Meeting,thefollowingwereelectedasofficersofALCO for theyear2010-201
1 to
holdollce assuchanduntil theirrespective
successors
areduly nominated,
electedandqualified,
to wit:
ChaiIman
President
Trgasurcr
CotporateSecretary
AssistantCorporate
Secretary
andCorporale
lnlbrmationOfficer
Compliance
OIficer
Ms. AngeladeVilla Lacson
Ms.Pauline
C. Tan
Ms. DaisyP. Arce
Ms. RivaKhristineV. Maala
Mr. DionisioE.Carpio,
Jr.
Messrs.DionisioE. Carpio,Jr.andReneR. Fuentes
resigned
as regularandindepend.ent
dircotors
of ALCO, respectively,
on 26 April 2011. Mr. Carpio,Jr. likewiseceasedto be ALCO'S
Compliance
officer asofsaid date.
As the Boardstill constituted
a quorum,Messrs.RicardoS. Po,Sr.and FernanVictor P. Lukban
were respectively
electedas regularand independent
directorsof ALCO afterthe Nomination
'fhey
Committeeconveneda meetingand qualifiedthem.
shall hold office for the unexpired
portionoflhe termsofMessrs.Carpio,Jr.andFuentes.
In the samemeetingof 26 April 2011.Ms. PaulineC. Tan resigned
as Treasurer
and Mr,
LeonardoT. Powasappointed
to takeherplace.
Duringthemeetingof ALCO'SBoardof Directorson 04 May 201l, Mr, Po,Sr.wasappointed
as
ALCO's Vice Chaifrnanwhile Mr. Salvowasappointed
asCompliance
Offlcer.
On 26 April 2011,CPG Holdings,Inc, becamea stockholder
of ALCO with a rotal of
1,800,000,000
commonshalesregisleredin ils Damein ALCO'S books,or an equivalentof
33.847%ofALCO's total issuedandoutstardinqcommonsl'tares.
ITEM 5. Directors,includingIndepend€ntDir€ctors,and ExecutiveOfficers
a.
IncumbentDirectorsand PositionsHeldlBusiness
Experiencelor the PastFive (5) Years
The folloiing are ALCO's incumbentDirectorswho wereelectedin accordance
wixhthe BytawsofALCO.
Ase
Name
Position
JaimeC. Gonzalez
RicardoS. Po,Sr.
AngeladeVilla Lacson
PaulineC. Tan
OmarT. Salvo
EmestK. Cuyegkeng
FemanVictor P. Lukban
Chairman
65
Vice Chainnan
80
President
65
Director
4I
Director/ComplianceOfficer49
Director(Independent)
65
Director(lndependent)
50
ALCO PRELIMINARYInfbrmationStatement
8
JaimeC. Conzalez,Filipino,is fte ChairmanofAO CapitalHoldings1, Inc. andEliteHoldings,
Inc. concunently. He also holds the chairmanshipof Export and Industry Bank, Inc.
("Exportbank")and its groupof companies.He is the co-founderand presentlyChairmanand
CEOofAO CapitatPartners,
a boutiqueinvestment
in theAsianregion.He
bankwith operations
serveson the boardsofa numberoiother publiclylistedcompanies
includingIPVG Corp.(which
is involved in informatjontechnologyand communicatiorls
in the Philippinesand selected
countriesin Asia) andEuromoneylnstitutionalInvestorplc (whichis a UK companyinvolvedin
publishing,
conferences
anddataservices).He is a graduate
School.
ofthe HaNardBusiness
Ricardo S. Po, Sr., Filipino,is the Founderand Chairmanof the Boardof the CenturyPacific
Groupof Companies,
one ol the largestcannedfood companiesin the Philippineswhich owns
and operalesseveraltop consumerbrandssuch as Contllry Tuna, ArgentinaComed Beef,
ArgentinaMeatloaf,555 Sardincs,
AngelMilk andIliroh TrceFull Cr€amMilk. Mr. Po,Sr. was
awardedMastetsin Business
Administraiion
by theUniversityofSanto lomasin 2005
Angelade Villa-Lacson,
Filipino,conlesfroma successful
stiDrwith AyalaLand.lnc.(ALl)
whereshewas involvcdin $owing the Residenti4l
BusiDess
of the companyfrom a vefy small
sharein 1999duringthe depressed
rcal estatemarket,10ils ourrentpositiono[ aocountingfor
more than half of the revenuesof the company. While in ALI, she led variolrshigh-end
fesidentialdevelopments,
notablyOne RoxasTriangle,Serendra,lhe Residences
at Creenbelt
andOneLegazpiPark,aDdsomelow-risedevelopnents,
MontgomeryPIaceandFemdalc.She
was also involvedin the development
of thc new communiliesiD the SouthiAyala Creenfields
and Ayala Westgrove.Concurrcnl10her positioniD ALI as headof Ayala Land Premier,she
startcdand grew its subsidiary,
Comnurity Innovations,
Inc. (Cll), the companythat addressed
the needsoftlre middlemarket.Someof Cll's projeotsthat sheled wereTheColumnsilt Ayala
AvenueandLegazpi,
ard Verdana.Shealsoheaded
the lnnovation
andDesignCroupofALl.
Thisgroupleadsthedesign,
masterplanning
anddevelopment
v4rious
of
communities
of Al,l in
gated
residential
high-rise,
villages,commercialbuildi:rgs,BPOcampuses
andretail. Sheheaded
the Ayala Museum1oo,leadingthe designdevelopment
and installationof its newestpfimary
'Crossroads
exhibition,
of Civilization',
Priofto joinirrgALl, shewasmarkeling
direclorof San
Migucl Corporation(Beerand lroods)aDdheadedvariousmarketinggroupsof Unilever,both
hereandin Europe.
PaulineC. Tan,Filipiio,is lhePresideDt
andGeneral
Manager
of EIB Secufities,
Inc.,a wholly
ownedsubsidiary
of Exportbank,
which
of
shewasa dircctoruntil 25May2006. Sheisalso
presentlya Vice PresideDrDircctor
aDdCompliance
Officer ofMedco Holdings,Inc. Shewas
oonneoted
with the HongKonBChineseBank in 1994.From 1995to 1999,shewasa dircctorof
Lippo Secuitics,lnc.; from 1995to 1998,of MedcoAsia lnveshnent
Corp.,formerlyLippoAsia
llrveslmentCorporation;
and,t'rom1995to 2000,of ManilaExpositionComplex,Inc. Shewas
also the ManagingDirccior ofSung HuIg Kai SecuritiesPhilippines,lnc. froD i999 1()June
2000.
Omar T. Salvo,Filipino, is ManagingDirectorol AmericanOrientCapitalPartners,Inc. and
concunentlyPrcsidcntofBeaconHill Resources
Management,
Inc. He waspreviouslyconnected
with the Land Bank of the Philippines,wherehe held seniormanagement
positions1nvanous
units coveringcorporatebanking,invesinentbankingand assetrecovery. He holds an AB
Economicsdegreefrom theAteneode ManilaUniversityand a Masterin Business
Management
degieelrom theAsianInstituteofManagement.
A L C OP R F Ir v l \ A R \
1 l u r m i , r iS
o l' d l ( l( n ra
Ernesl K. Cuyegkeng,Filipino, is prcsentlythe ExecutiveVioe PresidentchiefFinancial
OfficerolA. SorianoCoryoration.His otherconcuffentpositionsincludebeingthe President
of
PhelpsDodgePhilippires,Inc- and AnscorLand,Inc.,and a Directorof SevenSeasResofts&
Leisure,Inc.,A. SorianoAir Corporation,
andAB Capital& lnvestmenlCorporation.He holdsa
Bachelorof Arts degreein Economicsand a Bachelorof Sciencedegreein Business
Adminishation,both from the De La SalleUniversity. He also obtaineda Maslersdegreein
Business
Administration
from theColumbiaGraduate
SchoolofBusinessin New York
Fernan Victor P, Lukban, Filipino, is one ol the country'sleadingconsultantsin Family
Business,Strategy,Enirepreneurship
and GovemanceHe is a long-timeadvisorto someoi the
mostprogressive
f'amilybusinesses
in thecountry.Overthe pastfour (4) years,he hasput special
tbcus on developingBase of the Pyramid initiatives(BOPI) in variolls provincesln the
Phi)ippines.Mr. Lukbanholdsundergraduate
(Mechanical
degrees
in Engineering
andInduslrial
ftom Dc Lasalle Univetsity,Manila) and graduatcdcgreesin llconomios(MSc in Industrial
Dconomiosfiom the Centerlbr Research& Comnunisation,now Universityof Asia & the
Pacific,Manila)and in Business(MBA from IESE,Barcelona,SpAin). He spentmuohof his
yearsin the academe
earlyprofessional
helpingestablishandgrowthe Universityof Asia & the
Pacifiowhers he still participalesas a oonsultant,
m€ntofand gllestlecturcrtoday. IIc is a
foundingfellow ofthe lnstitlrtcofCorpomteDirectors,an International
Fellowofthe Australian
InstituteofConpany Direoto$andan independenl
direclorofPancakeHouse,lnc.
Temrof Office:
UnderSectioD
2, Articlclll of ALCO'SBy-laws,
the Boardof Dircctorc
shallbc composcd
o1'
seven(7) membeN,at leasttwo of whom shall be iftiependent
difeoto|s.The directorsshallbe
electedat the anDualslockholderc'
meelirgandtheirtermol officeshallbeone( l) yearanduntil
their successors
shall have beenelectedat $e next anl]ltalslockholdcrs'nccling aDdhavc
qualifledin accordance
with ALCO'S By-lawsand uDderporlinenllawsand regulalioDs
of the
Philippines.
In theforthconi g AnnualStockholders'
Meeting,approvalofthe slockholders
will besoughtlor
the amendmentof ALCO'S lalest Anicles of Incorporationand By-laws lbr purposesof
(7) 10Dire(9).
iDcreasing
the numberoldirectorslion seveD
Procedurefor thc Nomination& ElectionoflndependentDirectors
ALCO'SBoardof Direclofssetthe endol ofllce hoursof I5 ADril 201I as the deadlinefor llre
submission
ofnoninees10lheBoard.
Forlhe n6minationandelcctionof lndependent
Directors,ALCO adoptsthe rlllesprescribed
by
SRCRulc 38 of the Implementing
RulesandRegulalions
of the Securities
Regulalion
ard
Code,
provisionsofits By-Laws.
asamended,
in conjunction
with pel.tinent
NominalionandElectionollndependentDirecrors
Section2, Article III ofALCO's Bylaws definesan independent
directorasa directorwho,apart
fiom his leesand shareholdings,
is jndependent
of management
and free from any businessor
otherrelationship
perceived
which could,or couldbe reasonably
to materiallyinterferewith his
judgmentin canyingout his responsibilities
exerciseof independent
as a director,and includes,
amongomerpersons,
onewho:
ALCO PRELIMINARYlnformationStatemenl
l0
is not or hasnot beenan officeror employeeof ALCO, its subsidiaries
or
affiliatesor relatedinterests
duringthe pastthree(3) yearscountedfrom the
dateof his election(otherthan as an independent
directorof any of the
foregoing);
is not a directoror officer of the relatedcompaniesof ALCO'S majoriry
(olherthanasan independent
stockholder
dircctorthereof);
is not a majoritystockholder
oiALCO, anyof its relatedcompanies,
or ofits
majoril, shareholders;
d . is not a relative within the foufth degreeof consanguinityor affinity,
legitimateor common-law,
ofany director,officeror majorilyshnreholder
of
ALCO or anyofils relatedcompanies;
is not acting as nomineeor representative
of any direotoror substaqtial
shareholder
of AI-CO, any of its relatedcompanies
or any ol its substantial
shareholders;
f.
is not retained,or within the lasttwo (2) yearshasnol beenretained,as d
protessional
adviser,consultant,
agontor couDsel
ofALCO, anyolits relatcd
companiesor any of its substantialghareholders,
either in his personal
capacityor throughhis flfm, or hasnot engagedaDddoesnot engageiD arry
transaclion
with ALCO or wilh any ol its relatedcolnpanies
or wirh any of
its substantial
shareholdels,
whetherby himsell or with other persons,or
througha flrm of which he is a padneror a conpany of which he is a
director or substantialshareholder,other than transaclionswhioh are
conducted
at annslengthandcouldnot naxeriallyinterlerewith or influence
theexerciseolhis judgment:
g. is not affiliatedwith or employedby or within the lastthree(3) years,has
not beenaffiliatedwith or employedby ALCO's presentor formerexterDal
auditorsor affiliates;and,
h. complieswilh all the qualitications
requircdolan independent
directorand
does not possessany of the disqualifioations,
and has not withheld nor
suppressed
any informationmatefialto his qualificationor disqualification
asan independent
director.
When usiid in relationto ALCO, "relaledcompany"meansanothercompanywhich is (i) its
holdingoompany;(ii) its subsidiary;
or (iii) a subsidiary
of its holdingcompany;and"subsranrial
person
shareholdef"
meansany
who is ditectlyor indirectlythe beneficialownerolmore thanten
percent(10%)ofany classof its equitysecurity.
No personshallqualilyor be eligiblefor nomiDation
or electionto the BoardofDirectorsif he is
engaged
in any business
thatcompetes
with or is antagonistic
to thatofALCO or its subsidiaries,
takingintoconsideration
suchfactorcasbusiness
andfamilyrelationships.
ln addition,no personshall qualifi, or be eligiblefor nominationor electionto the Boardof
Directorsifhe is sufferingfrom anyofthe followinggroundsfor disqualification:
A l C OP R L L I M I \ A R Y
l l r o n n a r i oSrt a t e n e l l
a. Conviction by final judgment or order of a competentjudicial or
administrativebody of any crime involving moral turyitude or similar
tiaudulentactsor transgressions;
b- Convicledor adjudgedby final judgmentor orderby a court or competent
administrative
body of an offensepunishable
by impisonmentfor a period
(6)
years,
exceedingsix
or to have willfully violaled,or willfully aided,
abetted,counseled,
inducedor procuredthe violationof any provisionofthe
Corporation
Code,Securities
Regulation
Codeor anyotherlaw administered
by the Securitjes
andExchange
Commission
ot BangkoSentralngPilipinas,
committedwithin five (5) yearspriorto thedateof electionasdhector;
c. Any personearlier electedas an indopendent
directorwho becomesan
officer,employeoor consultant
ofALCO;
d. Judicialdeclaration
ofbankruptcyor ;nsolvency;
and,
e. Finaljudgmentor orderof a loreigncourtor equivalentregulaloryauthority
of acts,violalionsor misconductsimilar to any of the ac1s,violationsor
misconduct
(a) to (d) above.
enumerated
ir sub-paragraphs
Section14,Article III of ALCO's By-lawsfurlherprovidesthat the nominationof independent
directorsshallbe conducted
by the NominationCommittee'priorto a slockholdcrs'
meeting.All
recommendations
shallbe signedby the DomiDaling
stockholders
logetherwith the acceptarce
andconformityby thewould-benominoes,
The NohinalioDCornmilteeshall pre-screen
the qualiflcationsand preparea final list of all
candidates
Andput in placescreeningpoliciesaDdparameters
10enableil to effectivelyreview
thequaliflcations
ofthe nominees
for indepeDdent
directors.
After the nomination,
the Nomin4tiorCommitteeshallpreparea firal List of Candida(es
which
shallconlainall the infonnationaboutall the nominees
fbr indeDendent
which list shall
direcxors.
be madeavailableto all stockholders
throughthe filing and distributionof lhis Information
Statement
in accordance
with the Securities
RegulationCodeor in suchotherreporlsALCO is
rcquired to sub'ni1to the Commission. The name of the personor group of persons
recoDmendiDg
the nominationof the independent
directorshall be identifiedi suchrepofl
including
anyrelarion.hrp
$ h lhenomines
Only oomineeswhoseuamesappearon the FinalList ofCandidatesshallbe eligiblefor election
as independent
director/s. No other nominationsshall be entertained
after the Final List of
Candidates
shallhavebeenprepared.No furrhernominations
shallbe entertained
or allowedon
thefloor duringthe actllalstockholders'meeting.
Exiept as those r'equiredunder the SRC and subjectto peftinentexisting laws, rules and
regulationsof the Commission,the conductof the electionof independent
director/sshall be
madein accordance
with thestandard
electionDrocedures
underALCO's Bv-la\'r's.
r For theperiodof25 June2010up to 26 April20l1, theNoninatjonCornmittee
wascomposed
ofMessrs.JaimeC.
(Chainnan),
Gonzalez
DionisioE. Ca+io,Jr.andEmestK. Cuyeskens.
On04May20ll,Mr.tucardoS.Po,Sr.
replacedMr. Carpio,Jr. asamenberofthe Conmiite€.
l2
it
TheChairmanofthe stockholders'
meetingshallberesponsible
for informingall stocklrolders
ofthe mandaloryrequirement
directors.lle shallensurethat
attendance
of electingindependent
independentdircctorsare electedduring the stockiolders'meetingand specificslot/s lor
independent
directorsshallnot be filled up by unqu4lifiednominees.In caseoffailure ofelection
for independent
directors,the Chairmanof the meetingshall call a separate
electionduringthe
meeting
vacancy.
same
to fill up the
ln the forthcomingAnnualStockholders'
Meelingon 24 June201l, approvalofthe stockholders
and By-lawsfor
will be soughtfor the amendment
of ALCO'S latestArticlesof Incorporation
purposes
of incrcasing
thenumbcrofdirectorsfrom seven(7) to nine(9).
In anticipationof the slockholders'approvalof the amendmentof ALCO'S Articles of
Incorporationand ByJaws wherebythe numberof directorsis increasedto nine (9) and the
corresponding
approvalthereofby the Commission,below is the Final List of Candidates
as
dhectorsandindependent
directorsofALCO for theensuingyear:
A.
Nomineesfor ReqlrlarDirectors
l.
2.
3.
4.
5.
6.
7.
B
Mr. JaimeEnfique
Y. Conzalez
Ms.ADgela
deVilla-Lacson
Mr. Christopher
T. Po
Mr. Ricardo
S.Po,Sr.
Mr. OmarT. Salvo
l\4s.Pauline
C. Tan
Nomrnee'
forlDdependent
Direclor'
8.
9.
Mr. EncstK. Cuyegkeng
Mr.Feman
VictorP.Lukban
Thercareonly seven(7) seatsin theBoardto be fllled up at thetime ofthe AnnualSrockholders'
MeetiDg
on 24 June2011.]'he inclusion
of Messrs.
JaimeEnrique
Y. Conzalez
aDdChrislophcr
T. Po ro the fbregoinglist ofnomincesto thc Boardis subjectto theconditionthatshouldtheybe
elected,theywill assumeofficeonly afterthe Commission
approves
the amendment
of ALCO's
Articlesof lncorporation
andBylaws wherebythe numberoldirectorsis increased
to nine(9).
Jaime Inrique Y, Gonzalez,Filipino,is currentlytheChief ExecutiveOfficerof IPVC Cory.,a
publicly Iistedcompanyon the PhilippineStockExchan8eengagedin informationtechnology
and.communications
space.He directlyhandlesallinveslmenl-related
acliviliesof IPVC Cory.,
including
fund-raising,
mergers
andacquisitions,
anddivestments.
He hashada successfultrack
recordin thc intcmctspace,havingfoundeda scriesof intemetstan-upsthathavebeenacquired
by largerU.S.basedfirrns(match.ph/itzamatch.com),
andhastakenIPVC Cory.from garageto
public. Mr. EnriqueGonzalezholds a Bachelorof Aris degreein InternationalPoliticsand
a1
Economicsfrom MiddleburyCollege,attendedthe programfor Mastersin Entrepreneursbip
the Asian Instituteof Management,
andcompletedBLlsiness
coLlrses
from SophiaUniversiDin
Tokyo. He is considered
an authorityon the Intemetand onlinegamesspace.Priorto IPVG,
Enriquewas involvedin investment
bankingwith a focuson fund-raising
andrestructuring.
ChristopherT. Po, Filipino,is the President
andChief ExecutiveOfficerof theCennrryPacific
Groupof Companies.Prior to this, he was ManagingDirectorfor Guggenheim
Parfners.He
ALCO PRELIMINARYlnformationStatement
l3
gtad\\ated
summacum la de from Wlafion SchoolandCollegeofEngineeringofthe University
of Pennsylvania
with dual degreesin Economics(FinanceConcennation)
and AppliedScience
(Systems
Engineering).He holdsa Mastersdegreein Business
Administration
from the Harvard
lJniversiryGraduate
Sclroolof BusiDess
Administration.
Messrs.Cuyegkengand Lukbanwerenominatedas independent
directorsby Mr. Salvo. They
arenot in anylvayrelatedto Mr. Salvoor to anyoneofALCO'S shareholders
owningmorethan
5% of its voting shares. Both of them possessall the qualificationsand none of the
disqualifications
ofan independent
director.Further,ftey arenot officersor employees
ofALCO
or anyof its subsidiaries
andarefreefrom any business
or otherrelationships
with ALCO or any
oI its subsidiaries
which could,or couldrcasonably
be perceivedto materiallyinterferewith the
judgment
exerciseof their independent
in carryingout their responsibilities
as independent
directors,
Corporat€and ExecutiveOflicersand PositionsH€ldlBusiness
Experiencefor the PastFive
(5) Years
ThefbllowingareALCO's prinoipalcorporate
officers:
Chairrnan
olthe Board
ViceChairman
President
Trcasufer
CorpomteSecretary
AssislanlCorporate
Secretary/
ComorateInformationOfficer
Compli4nce
Oflicer
JaimcC. Gonzalez
RicardoS. Po,Sr.
Angelade Villa Lacson
Leonardo
T. Po
Atty. DaisyP. Arce
Atty. I{iva KhristineV. Ma4la
OmarT. Salvo
Daisy P. Arce - Atty Arce, Filipino,is the CorporateSecretary
of Expodbankand its groupof
companies,
Shewasalsorecently
elected
a Director
ofEIB Secuilies,
Inc. Sheholdsa Bachelor
of Laws degreefrom the Ateneode Matila University. Shewas a partnerat QuashaAncheta
Pefia& NolascoLaw Officesandnowhasherown Dractice.
Riva Khristine V. Maala - Any. Maala, Filipino, is the AssistantCorporateSecret^ryol
Exportbank
andifsgroupofconpanies.SheholdsaBachelorofAfsdegeeiPhilosophy(c
m
laude)and a Bachelorof Laws degree,both frorn the Universilyofthe Philippines.Prior to
joirirg Exportbank,
shewasanAssociale
AttomeyoiFortunNafl/asaandSalazar
Law Offices.
LeonardoArthur T. Po - Mr. LeonardoPo, Filipino,is an ExccutiveDirecxorof the Cenlury
PacificGroupof Conpaniesand the GeneralManagerfor its EmergingBusinessUnits. He is
alsoan independent
directorol IPVG Corp.at preseDt.Mr. LeonardoPo graduated
magnacum
/a de from BostonUniversitywith a degreein BusinessAdministrationand hasextensiveand
solidbushessexperieDca
in the marketingandoperations
ofquick-serverestaurants,
foodservice
goods.
andfastmovingconsumer
l!!]l-al-Q!l!el
Pursuant
to Sections
2, 3 and4, ArticleIV ofALCO's By-laws,the corporate
olficersoIALCO
are electedin the llrst meetingof the Board of Directorsimmediatelyafter the slockholders'
meetingwhere
the directorsareelected.Theofficersshallbeelectedby a majorityvoteofallthe
directorsactuallycomposingthe Boardof Directors,and shallhold ofllce for a term of one (l)
14
yearand until their successors
shallhavebeenelectedand qualifiedin accordance
with the ByLawsand underpertiDent
lawsandregulations,
unlessotherwiseremovedtvith or withoutcause
at anytime,by a majorityvoteof all thedirectorsactuallycomposing
theBoad ofDirectors.
Any officermay resignat any time by givingwrittennoticeto the Chairmanoffte Boardor the
President.Suchresignationshall takeeffect at the time specifiedtherein,and the acceptaDce
thereofshallnotbe necessary
10makethe resignation
effective.
Any vacancyin an o{fice createdunderSection1, Article IV of ALCO'S By-Lawsbecause
of
death,resignation,removalor any causeshall be {illed by the Board of Dhectorsfor the
portionofthe tenniDthesamemanncrprcscribed
unexpired
hereinfor theelectionto suchoffice.
d.
SignificantEmployees
Otherthanthe above-named
directolsandcorporate
officers,the followingaresignificantor kcy
personnelof ALCO who are expectedto make a signifrcantcontributionto the businessof
AI CO:
CathcrineA, Ilagan,Filipino,is the HeadolProjeotBusiness
Development.Shecomcswith aD
extensive
fifteen(15)yearsexperience
in RealEslatein AyalaLand,Inc.(ALI). Shespentseven
(7) yearsin CorporatePlanning,wberesheplayeda key role in thc delcnninalion
of the growth
projectsof dre compaDy.This was followedby aboutsix and a half (6%) yearsof Vertical
ResidentialProjectDevelopments,Her last one and half (l%) yearstheresaw her do Estate
ManagemeDl
wheresheplayeda key role olmaximizingthe vahleofthe ALI laDddevelopcdby
the variousbusiness
unitsolALl. Shew4spartofdre teanrthal conceplualized
andsucoessfully
lauDchcd
Nuvali,the 1,600hectal
e landholdings
of ALI in Canlubang.Shewasalsoresponsiblc
for themanagement
oIALI's landholdings
in Makati.
JoseV. Asuncion,Jr., Filipino,is theVice President
fbr TechnicalServices.Llereplaced
Neslor
OmarT. Arce-lgnacio
in Decenb€r2009. Mr. Asuncion
hasover30yealsofcxperience
asan
architectin variouspropertydevelopment
ycars.
finns, playingan integralpan duringils success
While he is a licensedarchilect,his previousposts havc allowed him 10 be involved in
corNtruction
management
aswell. His recenX
pfojectspriorto joining ALCO includethe FaiNays
Towerin BonilacioGlobalCity and St. FrancisTowe$ in Mardaluyong.He wasalsoinvolved
in Makali CBD high-risedevelopmenls
like BSA Mansion,BSA Plaza,PrinccPlazaand the
AsianMansionCondos.Previousto rhis,he headedthe ArchitectuttlCroupofthe HLTJRBt'rom
r982-1991.
Froilan Q Tejad|, Filipino,is the ChiefFinanceOfficer. He joined ALCO with fburteen(14)
yearsof Financeexperience
andwasinvolvedwith the acquisition,
tum-aloundandexpansion
of
groupssuch as K]-C, Philippines(7 years)and Bitexco,a real estateproperrydevelopment
companyir Vietnam(3 years). He was involvedlor four (4) years in rhe Fort Bonifbcio
Development
Corporation,headingthe treasuryand planningfunctions. For Bitexco,he was
involvedin raishg tundsof aboutUS$200.0MMfor their variousproperryprojects.He setup
and implemented
the SAP EnterpriseResource
Plannitgsystemin Bitexcoand mappedout its
corporaterestructuring
and mediurnterm financialplan. He had also negotiatedand closeda
management
agreement
wifh Malriolt in Vietnam.
l5
Family Relatiotrship
With the exceptionof Vice ChairmanRicardoS. Po,Sr. andhis sonLeonardo'LPo,the aboveDentionedincumbentdirectorsand execuliveoffrcersof ALCO are not relatedto eaclrother.
eitherby consanguinity
or affinity.
1:
Involvementin Certain LegalProceedings
The above-named
directorsand corporate/executive
olficersof ALCO havenot beeninvolved
duringthe pastfive (5) yearsup to the dateof this InlormationStalementin any bankruptcy
proceedingor any proceedinginvolving a violation oI securitiesor comrnoditieslaws or
regulations,
nor havethey beenconvictedby finaljudgmentin a criminalproceeding.Neither
hastherebeenanyorderor judgmentenjoining,barring,suspending
or limitinStheir involvement
in anytypeofbusiness,
securities,
commodities
or bankingactivities.
As of thc date of this InlormationStatement,
there is no official notice tlled )vith ALCO
involvingany of its directorsand executiveotficersin their personalcapacitiesin any legal
proceeding.
g.
Certain Rclationshipsand RelatedTransactions
In the ordinarycourseof business,ALCO has nonnal bankingtraDsactions
with ono of its
shareholders.
ExDortbank.
Exceptfbr the above,thereare no olhcr transactio;s(or seriesof sirnilartransaclioDs)
with or
ilvolving Exportbankor any of its subsidiaries
in which a directolor an executiveofficeror a
stockholderwho owns ten percerrt(10%) ot more of ALCO'S total outstaudingsharesor
member/s
family,hador is to havea director indirectmaterialiDteresl.
oftheif immediate
ITEM 6. Compensation
ofDirectors and f,xecutiveOfficcrs
a.
CompcnsationofDir€ctors and ExecutiveOfficers
Scction10,Article III of ALCO's By-lawsprovidesthat the "Boardol Directorsis empowered
and authorizedto fix and determinethe compensation
of its members,includingprofit sharing
and other incentives,
subjectto tbe limitalionsimposedby law." Pursuant
to this provision,to
per
given
compensate
tlremembeNof theBoard,a
diemofP7,500.00is
to eachdirectorfbr each
boardofdirector'smeeling(specialor regular)attended.Eachdirectoris alsopaida perdiemol
P2,500.00for each committeemeetinghe has attendcd,of which he is a member. These
committeesare thc Audit Cornmittee,
the StockOptionand Compensation
Committeeand the
NominationCommitlee.
Section7, ArticleIV in tum providesthat1he"ChainnaD,
or suchotherofficer(s)astheBoardof
Directorsmay authorize,shalldetenninelhe compensation
of
of all the offioersand employees
ihe Corporalion.A directorshall not be precludedfrom servingthe Corporationin any other
capacityasanofficer,agentor otherwise,
andreceivingcompensalion
therefor."
ALCO PRELIMINARYtnfomatior Statemenl
l6
Compensation
for 2010
Name and Plincipal Positio\
DirectorsandExecutives
Year
Salary
2008
2009
2010
P20.150M
P29.097M
P29.097M
Bonhl
Other
None
None
None
None
None
None
EstimatedCompe!!4tia4ttbl2!l!
b,
Name and Pritlcipal Position
Y,!ar
Saletry
Bonr$
Other
Directorsmd Exequtives
1. President/CEO
2. ChiefFinancialOfficer
3. VP, Business
Development
4. VP. TechnicalServices
2 0 1I
P29.097M
None
None
StandardArrangement/MaterialTerms of Any Other Arrangcment/Tcrmsand Conditions
ofEmploymentContrnctwith AboveNamedCorporatemxecutive
Officers
In ALCO's annualmeelingheld on 16 October2009,the slockholders
representing
morethan
percent(67%)ofall its issuedandoutstanding
sixty-seven
commonshareswhichareentitlcdand
qualifledto voteapprovedthe 2009ALCO StockOptionPlanfor its qualifiedemployees.The
totalamountolshareswhichareavailableandmaybe issuedfor this purposewill amounlto l0%
of ALCO'S lotal outstandingcapital stock at any given time, The Stock Option and
Compensation
Committeeconsistingof at leastthree (3) directors,one (l) ol whom is an
independent
director,will administer
the implementaxioD
olthis plan.
Underthe 2009ALCO StockOptionPlan,the qualifiedernployees
eligibleto participate
are (i)
membersofthe Board;(ii) PrcsideDt
aDdCEO and othercorporateofficers,which includethe
(iii) Elnployees
CorporateSecrctary
andthe AssistantCorporateSecretary:
andConsultanls
who
are exercisingmanageriallgvel ftnclions or are membersof the Management
Committee;and,
officers
ussigned
to ALCO'ssub<idiaries
I iv, Excculrve
or affiliatesa.
The Stock Option and Compensation
Committeeis empoweredto determineto whom the
Optionsareto be granted,determinethe pricethe Option is to be exercised(which ill llo case
shall be below the par value of ALCO'S commonstock),decidewhen suchOption shall be
grantedand its effectivitydates,anddeterminethe numberandclassol sharesto be allocatedto
each qualifiedemployee. The Cofrmitteewill also considerat all times the perfomrance
evaluationof the qualifiedemployeeand/orthe resultof the achievement
of the objectivcsof
ALCO eachyear.
TheOptionPeriodduringwhichthc qualifiedemployeemay exercisedreoptionto purchase
such
numberolsharesgrantedwill be three(3) yearsslartingwith thefull yearvesting.
On the ExerciseDale,the qualifiedemployeeshouldpaythe full Purchase
Priceor in suchterms
asmay bedecideduponby the Committee.
a ALCO musthaveat least50%equityholdingstherern
ALCO PRELIMINARYlnformationStatement
l7
As of the date of $is lnformationStatement,
optionsequivalent1() 164,800,000
have been
gmnrco.
ITEM 7. IndependentPublic Accourtant
Article V ofALCO's Bylaws provides,amongothers,thatthe ExternalAuditorshallbe appointed
by its
BoardofDirectorsandshallrecei\resuchcompensation
or fee asmay be determined
by the Chainnanor
sucho$er ollicer(s)asthe BoardofDirectorsmayauthorize.
ALCO is in compliance
with SRCRule 68 ofthe Implementing
RulesandRegulations
of the Securities
andRegulation
Code,as amended,
requiringfte rotationofextemalauditorsor engagement
partners
after
period
(5)
theirengagemenl
for a consecutive
years.
offive
Punongbayan
and Araullo(P&A) was appointedas ALCO's externalauditorfor 2008,2009and2010
andtherehadbeenno disagreement
wilh P&A duringthistime.
P&A shallseDdits representatives
to the annualslockholders'
meetingon 24 June2011for purposes
of
jn thesaid
addressing
accounting
concemsandrelatedquestions
whichmaybe raisedby thestookholders
meeting,
lnformationon lndeoendent
Accountant
Accountant
MailingAddress
CertifJirrgPartner
C.P.A.Reg.No.
TIN No.
PTRNo.
SECAccreditation
No,
BIR Account
No.
Punongbay4n
& Araullo
20lFTowerl, TheEnterprise
Center
6766AyalaAvenue,
MakatiCity
Mr. Francis
B. Albalale
0088499
120-319-015
2641855,
03January
201I, Makati
City
0002-FR-2
(unlil24Novernber
08-00251l-5-2008
201
FeesandOtherArraneenents
The externalauditor'steesare basedon the estimatedtime that wolrld be spenton an eng4gement
and
ALCO is chargedat hourlyftltesvis-d'vistheexperience
leveloflhe professional
staflmembers
who will
be assigned
to work on the engagement.Feesare alsogenerallybasedon the complexityofthe issues
involvedandthework to beperfomed,aswell asthespecialskillsrequiredto completethework.
P&A's feesfor the servicesrenderedto ALCO are P400,000.00
for 2010,P2?0,000.00
for 2009,and
F220,000.00
for 2008. ThesefeesareexclusiveofVAT andout ofDocketexDcnses.
ITEM 8. CoffpensationPlans
As reflectedin ltem 6b above,ALCO madeavailableto its qualifiedemployees
in 2009a stockoption
planwhereintheycanenjoythe benefitsofownershipofALCO andtherebyincrease
theirconcemfor its
long-termprogessandwell-being,inducetheircontinuedserviceandstimulatetheireffortstowardsthe
conlinued
5ucces)
lhereol
ALCO PRELIMINARYInformationSlatement
l8
C. ISSUANCEAND EXCHANGE OF SECURITIf,S
No actionwill be takenduringthe AnnualStockholders'
Meetingon 24 June20l l with respectto the
(Item 9); Modificationor Exchangeof
Authorizationor Issuance
of SecuriliesOtherthanfor Exchange
(Item 10); Financialand OtherInformalion(ltem 1l); Mergers,Consolidations,
Securities
Acquisitions
and Similar Matters(Item 12); Acquisitionor Dispositionof Property(ltem l3); or, Restatement
of
Accounts(Item 14).
D. OTHER I\{,ATTERS
lT[M 15.Action With Respectto R€ports
Management
will prcsentat the Annual Stockholders'MeetingALCO'S financial rspons as ofJl
December
2010.
The Milrulesof the Stockholders'
Meetingheld on 25 June2010will be submittedfor approvalof the
stocklolders.
Ratificationby the stockholders
of all actionsof ALCO'SBoardof Directorsand Managemenl
from the
last stockholders'meetingof 25 June 2010 uDtil the date of the fbrthcomingAnnual Stockholders'
Meetingwill alsobe sought.Thesereferto all aclionsundertaken
in thedevelopmenl
ofALCO's pilol
project,Arya Residences,
andthecanc€llation
ofthe Purchase
of Exportbank
Plaza.
Cop'esof the Minutestogetherwilh a sunmaryof all resolutions
of the Boardand Management
will be
distributed
duringtheannualmeetingitself.
Otherthanthe foregoiDg,
thereis no othermatterwith respectto Reponsto be presented
tbr whichthe
stockholders'
approvalis sought,
ITEM 16.MattersNot Requir€dTo Be Submittcd
The stockholders
will be advisedofthe cancellation
ofthe issuance
ofwarrantsto shareholders
oIALCO
asof04 Decernber
20075.
ALCO stocldolderswill be remindedthat when ALCO proposedto acquireExpoftbankPlaza,as
discussed
during the annualstockholders
meetingon 27 November2008,the Board oi Directorsof
ALCO alsoapproved
the issuance
ofwarrantsto existingshareholders
then- Thepuryoseofthe issuance
ofsaid wamants
wasto usethe proceeds
thereoflopayALCO'Sobligationsarisingfrom the purchase
of
ExportbankPlaza.As the saleof ExportbankPlazadid not pushthrough,the reasonfor the issuance
of
thewanantsIikewiseno longerexists.
' Thedatewhentbe Securiries
andExchange
Cor nissionapproved
ihe decrease
in theparvalueofALCO common
sbareswiih tle conespording
decrease
in its authorized
capitalsiock.
ALCO PRELIMINARYInformalionStatemenl
19
ITEM 17.AmendmentofCharter, By-Lawsor Other Documents
The stockholders
will be askedduring the Annual Slockiolders'Meetingto approvethe proposed
amendmentof ALCO'S latestAfticles of Incorporationand By-laws for purposesof ;ncreasingthe
numberofdirectorsfrom seven(7) to nine(9).
ITEM 18.Other ProposedAction
The electionof ALCO'S Extemal Auditor for the ensuingyear will be taken up at the Annual
Stockholders'
Meeting,pursuantto ALCO'S By-Laws. Management
will nominateP&A as ALCO's
ExternalAuditorfor 201L
ITEM 19.Voting Proccdurcs- Voling for CorporaleActions
a.
Voting for CorporateAclions
Votingon malterssubmittedfor stookholders'
shallbe
approvalduringthe AnnualStockholders'
l\,'leeting
doneby vira voceandshallbe supervised
by thedesignated
staffofP&A, ALCO'SExtemalAudilor,and
by Professional
StockTransfer,Inc,,ALCO's StockandTransferAgent.
b.
Nominationsand Voting for the ElectionofDirectors
(l)
Section4, ArticleII oIALCO'S By-lawsprovides
thala1"all slockholders'meetings,
everystockholder
shallbe entitledto one(l) votefor eachshareofvoting stockstanding
in his nameon the properbooksof the Corporation
at tlretime of closingthereolfor the
purposeof themeeting."
(2)
No nominationsfrom the floor during the stockholders'meetingshall be allowedor
recog zed,
(3)
For the purposeof electingdirectors,the systemof cumulativevoting shallbe followed
asprovided
underS€ction
IV, Articlell ofALCO'sBy-laws,
to wit:
.
meetings,
everystockholder
enlitledto votein
"xxx At all slockholders'
accordance
with Section4 of Article Vl oI theseBy-laws shall be
entitledto one (l) vote lor eachshareof voting stockstandirgin his
nameor1Xheproper book of the Coryorationat the time of closiDg
thereofforrhepurposeof themeeting.
.
"At everyelectionof directors,eachstockholder
entitledto voteduring
the meetingin accordance
with Section4 ofArticle VI oftheseBylaws
is entitledto one(i) votefor eachshaieofstock heldby him lor asmany
personsas thereare directorsto be elected,or to cumuiatesaidshares
and give one (l) candidateas many votesas the numberof directors
multipliedby the numberof his sharcshallequal,or to distributesuch
voteson the sameprincipleamongas manycandidates
as he shallthink
fit."
ALCO PRELIMINARY Information Statement20
MANAGEMENT REPORT
BUSINESS AND GENERAL INFORMATION
a.
Business Development
ARTHALAND CORPORATION (“ALCO”), formerly EIB Realty Developers, Inc., was
incorporated on 10 August 1994 for the purpose of engaging in property development of
residential, commercial, leisure and industrial projects. ALCO’s principal office has been
moved to the 8th floor Picadilly Star Building, 4th Avenue corner 27th Street, Bonifacio Global
City, Taguig City.
Under EIB Realty Developers, Inc., the Company undertook the development and completion of
Exportbank Plaza and the One McKinley Place Condominium, which was a joint venture
undertaking of ALCO and the Philippine Townships, Inc. (formerly RFM Properties and
Holdings, Inc.) through One McKinley Place, Inc. as the corporate vehicle.
ALCO’s property investments include three (3) parcels of land at the Bonifacio Global City
(BGC) with a combined land area of close to one (1) hectare and a 35-hectare property in
Calamba, Laguna.
In 2007, ALCO instituted several corporate actions to prepare for its medium and long term
business goals. It underwent a quasi-reorganization consisting of the following:
1.
Decrease in the par value of ALCO’s common shares from P1.00 to P0.18 per share, with
the corresponding decrease in the authorized capital stock from P2.0 Billion to the paid-in
capital stock of P246,257,136.00 only1;
2.
Increase in the authorized capital stock from P246,257,136.00 to P2,946,257,135.82,
divided into 16,368,095,199 common shares at a par value of P0.18 per share2; and
Following the reduction in the par value of its shares and decrease in authorized capital stock,
ALCO undertook a recapitalization program which led to the entry of new investors, namely AO
Capital Holdings 1, (AOCH1) Vista Holdings Corporation, The First Resources Management and
Securities Corporation and Elite Holdings, Inc. The Board approved the P750.0 million
subscription in ALCO equivalent to 3.750 billion common shares of the new investors on 12
August 2008.
With the entry of the new investors, ALCO became a subsidiary of AOCH1.
On 27 November 2008, during ALCO’s annual stockholders’ meeting, a resolution was made to
change its name to ArthaLand Corporation which was subsequently approved by the Securities
and Exchange Commission on 26 January 2009. This change in name was made to reflect the
renewed thrust of ALCO’s new Board and Management.
1
2
As approved by the SEC on 04 December 2007.
As approved by the SEC on 24 December 2008.
Ms. Angela De Villa-Lacson was elected to the Board of Directors of ALCO on 14 March 2008.
The Board also appointed Ms. Lacson as ALCO’s President effective on 01 April 2008. Upon
her assumption of office, Mr. Jaime Gonzalez, who was then Chairman and President
concurrently, continued to be ALCO’s Chairman of the Board.
By end-2008, ALCO has completed its line-up of the key management team. ALCO set up its
sales team in 2009.
b.
Business/Projects
ALCO’s main business activity is property development of residential, commercial and leisure
projects. It is geared to pursuing niched and boutique developments beginning with its land
investments in the BGC as well as opportunistic joint venture developments.
ALCO is a listed company in the Philippine Stock Exchange which was launched two years ago
as an entrepreneurial boutique property developer which is pioneering sustainable developments
in the country.
ALCO is a registered member of the US Green Building Council’s Leadership in Energy and
Environmental Design (LEED) for its endeavors in sustainable developments. LEED is a US
organization which sets the world standards for green buildings and sustainable developments.
ALCO’s various properties consist of the following:
Lot 7-1 in BGC: A 1,585-square meter property within the E-Square which is the Philippine
Economic Zone Authority (PEZA) area of the BGC. It is across the new St. Luke’s Medical
Center. The property is intended for a residential development.
2. Lot 5-5 in BGC: A 2,233-square meter property which is likewise within the E-Square. The
property is across the street from the proposed Shangri La Hotel and the Philippine Stock
Exchange. The development plan for this property may be mixed-use.
3. Lot 4-1 in BGC: A 6,357-square meter property located along prestigious McKinley
Parkway. ALCO commenced planning for this property for a residential development at the
beginning of 2009.
1.
Towards the end of 2009, ALCO introduced its first project called Arya Residences, a 2-tower
high-end residential development. Tower 1 was officially launched on 10 February 2010, and
will rise 39 floors with 301 units consisting of 1’s, 2’s & 3 bedrooms and penthouse units. Arya
Residences will have an amenity podium called The Terrace which will offer three function
rooms, landscaped walking trail, open garden, indoor children’s play area with adjacent outdoor
playground, 25-meter lap pool, kiddie pool, leisure pool, open deck, fitness facility and media
room. The Plaza at the ground floor will offer choice destination retail and dining options. Arya
Residences is the first residential high-rise in the country to be registered under LEED with a
certification goal of gold.
Arya Residences will give its future residents the chance to Live Well, enjoying the comforts of
gracious living, and to Live Right, leading a greener, healthier and more cost efficient lifestyle.
By using less energy, LEED-certified buildings translate into savings, reduced greenhouse gas
emissions, and a healthier environment for the community.
ALCO Management Report
2
ALCO’s Sales Pavilion which houses the model units for Arya Residences was completed in the
third quarter of 2009. It is located at McKinley Parkway corner 7th Avenue, Bonifacio Global
City, Taguig City.
The Company commenced excavation works of Arya Residences in August 2010 and
substructure works in January 2011. Construction is in full swing with the expected handover of
Tower 1 in the first quarter of 2014.
In 2007, ALCO offered to acquire from Export and Industry Bank, Inc. (EIB) its rights, title and
interests in Exportbank Plaza subject to EIB securing the appropriate regulatory approvals for the
transaction. Due to the protracted delay in obtaining the said regulatory approvals, ALCO is no
longer pushing through with the said acquisition and advised EIB accordingly on 17 May 2010.
While ALCO currently intends to develop its BGC properties as described above, these plans
may change subject to market conditions.
Even when these projects are completed, ALCO commits to provide property management
services to the condominium corporation of the developments. Post-completion involvement
allows ALCO to maintain a high standard of maintenance quality in its developments.
c.
Subsidiaries
Urban Property Holdings, Inc. (UPHI) is a subsidiary of ALCO originally established as a 55-45
joint venture company with PR Builders Developers and Managers, Inc. (PR Builders) for the
development of a housing project on a 35-hectare property in Calamba, Laguna. On December
28, 2009, UPHI became a wholly-owned subsidiary of ALCO by virtue of a Deed of Assignment
between ALCO and PR Builders. UPHI remains non-operational to date. There is no major
imminent risk involved in the business of UPHI except for any market price volatility on the
property it owns.
ALCO wholly owns three (3) other subsidiaries namely, Cazneau Inc., Irmo Inc. and Technopod,
Inc., which are real estate companies. Irmo, Inc. is the co-owner of Lot 7-1 to the extent of
66.39%. These companies are non-operational to date.
d.
Competition
ALCO faces competition from other domestic property developers. The level of competition
depends on product types, target market segments, location of developments and pricing, among
others.
ALCO views the major property players which are into the middle and high market categories for
high-rise residential in the vicinity of its investment properties as direct competition.
There are significant barriers to entry into the market such as the considerable capital needed for
the acquisition and development of land, the development expertise and reputation required from
an experienced management team, technological know-how from a technical team, to name a
few.
Competition can also be present in the procurement of raw materials particularly in a tight supply
market. ALCO will also have to contend with competition with other property developers for
high-caliber sales/leasing agents and brokers.
3
ALCO believes that given the desirability of the project locations, its strict adherence to quality,
innovation and sustainability, its competitive pricing schemes and commitment to its projects
even after sales, it will be able to compete effectively.
e.
Industry Risk
1. High-rise Residential Market
The property development sector is cyclical and is subjected to the Philippine economic, political
and business performance. The industry is dependent primarily on consumer spending for
housing. In the past years, a significant portion of housing demand is being driven by purchases
from the overseas workers’ market. This exposes the industry to the economic performance of
foreign countries of the overseas workers such as the United States, Saudi Arabia and countries in
Europe.
The industry, and thus ALCO, contends with risks relating to volatility in overseas remittances,
interest rates, credit availability, foreign exchange, political developments, costs and supply of
construction materials, wages, changes in national and local laws, and regulations governing
Philippine real estate and investments.
2.
Commercial Office Market
The office market has been largely driven by the business process outsourcing (BPO) sector
which caters largely to US and European customers. The BPO industry, organized under the
Business Process Association of the Philippines (BPAP), comprises primarily of contact centers,
back office operations, medical transcription, among others.
The BPO industry has been experiencing phenomenal growth since the mid-2000. In 2008-2009,
however, demand for BPO office space dropped as a result of the global recession which led to a
glut in office space and a reduction in rental rates. The industry saw a recovery in 2010 as BPO
offices resumed their expansion plans which brought an upward adjustment in rental rates.
f.
Sources and availability of raw materials
Construction of the projects are awarded to qualified reputable construction firms subject to a
bidding process and management’s evaluation of contractors’ qualifications and satisfactory
working relationships. The construction materials, primarily cement and rebars, are normally
provided for by the contractors as part of the contract. However, ALCO may opt to procure
owner-supplied construction materials should it be more cost-effective for the projects.
g.
Advances to Related Parties
In the regular conduct of its business, ALCO and its subsidiaries enter into inter-company
transactions with each other, principally consisting of advances and reimbursements for expenses.
These transactions are made substantially on the same terms as with other individuals and
businesses of comparable risks.
h.
Patents and Trademarks
4
ALCO’s operations are not dependent on patents, trademarks, copyrights and the like.
The
Company filed for the patent of the tradename logos and taglines of ArthaLand and Arya
Residences with the Intellectual Property Office (IPO) last February 2010. The ArthaLand
tradename logo is being processed while the ArthaLand tagline and Arya Residences tradename
logo and tagline have been registered with the IPO as of December 2010.
i.
Government approval for principal products or services
ALCO secures various government approvals such as Environmental Compliance Certificates
(ECCs), development permits and licenses to sell as part of its normal course of business.
1.
High-rise residential projects
Real estate development and sale of residential condominiums or subdivisions are governed by
Presidential Decree No. 957. The administrative function is vested on the Housing and Land Use
Regulatory Board (HLURB). The HLURB with local government units administer Presidential
Decree No. 957 and regulate real estate business in the country.
2.
Philippine Economic Zone Authority
ALCO has properties at the PEZA area of the BGC, otherwise called the E-Square. PEZA is a
government unit that oversees economic zones which are created by presidential proclamations
and which consist of industrial estates, export processing zones, free trade zones, tourist areas and
information technology enterprises. PEZA-registered enterprises enjoy income tax holidays and
duty-free importation of equipment, machinery and raw materials.
j.
Cost and Effects of Compliance with Environmental Laws
ALCO has complied with all environmental regulatory requirements for both the pre-construction
and operational phases of completed projects. ALCO will be obtaining government approvals for
its new projects based on the projects’ timetable for development and pre-selling.
k.
Employees
As of the date of this Report, ALCO has a total of forty (40) employees.
not covered by a collective bargaining agreement.
l.
These employees are
Working Capital
In general, ALCO finances its projects through pre-selling activities, loans and support from its
strategic partnerships with other corporations, considering the long construction time and the
magnitude of investments necessary to complete its projects.
5
MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following are the financial highlights of ALCO and its subsidiaries, UPHI, Cazneau Inc., Irmo, Inc.
and Technopod, Inc. (hereinafter, collectively referred to as the “Group”) for 2010 vis-à-vis 2009 and
2008:
COMPARABLE DISCUSSION FOR FISCAL YEAR 2010
Key Performance Indicators
December 2010
December 2009
Earnings Per Share
Net Earnings (loss) attributable
to equity holdings of the
Parent to Weighted Average
Number of Outstanding
Common Shares
P 0.0620
P -0.0837
Capital Adequacy Ratio
Total Equity to Total Assets
Ratio
21.97%
46.71%
Liquidity
Liquid to Total Assets Ratio
2.09%
1.08%
23.84%
-26.44%
Profitability
Return on Average Equity
EARNINGS (LOSS) PER SHARE
Earnings/(loss) per share is computed as follows:
Group
2009
2010
Net Earnings/(Loss)
Divided by weighted average
number of outstanding
common shares
Earnings/(Loss) per Share
P 128,971,977
2,071,865,199
P
0.0622
(P 140,749,470)
1,682,480,199
(P
0.0837)
2008
(P
1,537,202)
1,368,095,199
(P
0.0011)
6
Parent
2009
2010
(P 271,344,382)
Net Earnings/(Loss)
Divided by weighted average
number of outstanding
common shares
Earnings/(Loss) per Share
2,071,865,199
(P
2008
(P 138,365,410)
1,682,480,199
0.1310)
(P
0.0822)
(P
572,372)
1,368,095,199
(P
0.0004)
In 2010, the Group’s Capital Adequacy Ratio (CAR) stood at 2 1 . 9 7 % or 5 3 % lower compared
to previous year’s ratio of 46.71%. CAR was computed by dividing the Total Average Stockholder’s
Equity over the Total Assets:
Total Average Stockholder’s Equity (P)
Total Assets
Ratio
2010
540.901M
2,462.205M
21.97%
2009
532.395M
1,139.851M
46.71%
Liquidity ratio indicates the proportion of total assets which can be readily converted into cash. It
also measures the extent to which the assets can be converted into cash to meet its liquidity
requirements. Liquid assets include cash and other cash items. Below is the computation for Liquidity
Ratio:
2010
51.360M
2,462.205M
2.09%
Total Liquid Assets (P)
Total Assets
Ratio
2009
12.322M
1,139.851M
1.08%
Return on average equity (ROE) ratio increased from - 2 6 . 4 4 % in 2009 to 23.84% in 2010. Return
on Average Equity Ratio was calculated as follows:
Total Income/(Loss) (P)
Total Average Stockholder’s Equity (P)
Ratio
2010
128.972M
540.901M
23.84%
2009
(140.749M)
532.395M
-26.44%
Discussion and Analysis of Materials Events
(1)
There are no other known trends, commitments, events or uncertainties that will have
a material impact on ALCO’s liquidity within the next twelve (12) months except for
those mentioned above.
(2)
i.
The present capital expenditure commitments are the planning and development works
on Arya Residences.
ii.
There are no events that will trigger any direct or contingent financial obligation that
is material to the Group or any default or acceleration of an obligation for the period.
(3)
There
is
nothing
to
disclose
regarding
any
material
off balance
sheet
7
transactions, arrangements, obligations (including contingent obligations) and other
relationships of ALCO with unconsolidated entities or other persons created during the
reporting period.
(4)
There are no other significant elements of income or loss that did not arise from the
ALCO’s operations or borrowings for its projects.
(5)
The causes of the material changes of 5% or more from period to period of the following
accounts are as follows:
Balance Sheet Accounts
(i)
Cash and Cash Equivalent – The increase of 316.83% to P
51,360.301Mn from P 12,321. 772 M n is due to increased minimum
cash balance employed by the C ompany to ensure funding for the
requirements of Arya Residences.
(ii)
Receivables – The increase in receivables is mainly due to outstanding fees
for project management.
(iii)
Other Current Assets – Increase is mainly due to creditable withholding tax.
(iv)
Property and Equipment – This is due to the construction and completion of
the sales pavilion.
(v)
Loans Payable – This is primarily attributable to new and increased credit
facilities from banks n a m e l y , Banco de Oro (BDO) and Malayan Bank
and private placements to fund the requirements of Arya Residences.
(vi)
Accounts Payable and Accrued Expenses – The increase is primarily due to
professional fees related to Arya Residences.
(vii)
Other Current Liabilities – The increase is mainly due to customer’s deposits
and the payable to Goldpath Properties Development Corporation (GPDC).
Income Statement
(i) The increase in Gross income in 2010 is primarily due to recognition of an
excess of fair value over book value of the asset of Manchesterland Properties,
Inc. (MPI) which the Group consolidated for accounting purposes. Gross
revenue also included management and marketing fees for EIB Plaza that
cover tenant administration and facilitation income for tenant lease
renewals and booking new building tenants.
(ii) The increase in operating expenses is due to 2010 reflecting full year corporate
overhead considering that substantial recruitment came in the last
quarter of 2009.
(iii) Finance charges increased by P
47,909.399 Mn due to interest on increased
8
borrowings.
Summary of Significant Accounting Policies
Basis of Preparation of Financial Statements
The consolidated financial statements of ALCO and its Subsidiaries UPHI, Cazneau, Inc.,
Technopod, Inc., Irmo, Inc. and MPI have been prepared in accordance with PFRS. PFRS
are adopted by the Financial Reporting Standards Council (FRSC) from the pronouncements
issued by the International Accounting Standards Board.
The consolidated financial statements have been prepared using the measurement bases
specified by PFRS for each type of asset, liability, income and expense.
These
consolidated financial statements have been prepared on the historical cost basis.
2010 – As of December 2010, the Group’s total assets stood at P 2,462.204 Mn while its total liabilities
and equity amounted to P 1,849.318 Mn and P 612.886 Mn respectively. Total resources went up by P
1,322.353 Mn compared to 31 December 2009 level of P 1,139.851 Mn. The increase was primarily
due to the consolidation of MPI for accounting purposes. In 2010, the Group also incurred costs related
to the construction of Arya Residences and the model units for the Lot 7-1 project. These are charged
to the construction in progress asset account. Total liabilities in 2010 also increased by P 1,178.381 Mn.
This is also due to the take-up of MPI corresponding to the principal balance consisting of eight
remaining quarterly installments. The Group also increased credit facilities from banks and private
placements to fund the requirements of Arya Residences. Total stockholders’ equity amounted to P
612.886 Mn in 2010 and P468.914 Mn in 2009.
In terms of profitability, the Group showed profit in 2010 compared to 2009 due to the recognition of
an excess of fair value over book value of the asset of MPI which the Group consolidated for
accounting purposes.
Impact of New Amendments and Interpretations to Existing Standards
Adoption of New Interpretations, Revisions and Amendments to PFRS
(a) Effective in 2010 that are Relevant to the Group
In 2010, the Group adopted the following new revisions and amendments to PFRS that are
relevant to the Group and effective for financial statements for the annual period beginning
on or after January 1, 2010:
PAS 27 (Revised 2008)
:
PFRS 3 (Revised 2008)
:
Philippine Interpretation
International Financial
Reporting Interpretations
Committee (IFRIC) 17
Various Standards
:
Consolidated and Separate Financial
Statements
Business Combinations
: Distribution of Non-cash Assets to Owners
2009 Annual Improvements to PFRS
Discussed below are the effects on the financial statements of the revised and amended
standards.
9
PAS 27 (Revised 2008), Consolidated and Separate Financial Statements
(effective from July 1, 2009). The revised standard requires the effects of all
transactions with non-controlling interests to be recorded in equity if there is no change
in control and these transactions will no longer result in goodwill or gains and losses.
The standard also specifies the accounting when control is lost. Any remaining interest
in the entity is re-measured to fair value and a gain or loss is recognized in profit or
loss. The adoption of the standard did not result in any adjustment to the financial
statements as there were no transactions with non-controlling interests during the year.
(i)
PFRS 3 (Revised 2008), Business Combinations (effective from July 1, 2009).
The revised standard continues to apply the acquisition method to business
combination with significant changes. For example, all payments to purchase a
business are to be recorded at fair value at the acquisition date, with contingent
payments classified as debt subsequently re-measured through the profit or loss. There
is a choice on an acquisition-by-acquisition basis to measure the non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share in the acquiree’s identifiable net assets. All acquisition-related
costs should be expensed. The Group has acquired a business during the year and the
new standard was applied in its 2010 financial statements (see Note 8.3).
(ii)
Philippine Interpretation IFRIC 17, Distribution of Non-cash Assets to Owners.
IFRIC 17 clarifies that dividend payable should be recognized when the dividend is
appropriately authorized and is no longer at the discretion of the entity. Also, an entity
should measure the dividend payable at the fair value of the net assets to be distributed
and the difference between the dividend paid and the carrying amount of the net assets
distributed should be recognized in profit or loss. The Group’s adoption of this
interpretation did not have a material impact on the Group’s financial statements
because the Group did not distribute non-cash assets to stockholders during the year.
(iii)
2009 Annual Improvements to PFRS. The FRSC has adopted the Improvements
to PFRS 2009. Most of these amendments became effective for the annual periods
beginning on or after July 1, 2009, or January 1, 2010. Among those improvements,
only the following amendments were identified to be relevant to the Group’s financial
statements but which did not have any material impact on the financial statements:
(iv)
•
PAS 1 (Amendment), Presentation of Financial Statements. The
amendment clarifies the current and non-current classification of a liability that
can, at the option of the counterparty, be settled by the issue of the entity’s equity
instruments.
PAS 7 (Amendment), Statement of Cash Flows. The amendment
clarifies that only an expenditure that results in a recognized asset can be classified
as a cash flow from investing activities. Under its current policies, only recognized
assets are classified by the Group as cash flow from investing activities.
•
PAS 17 (Amendment), Leases. The amendment clarifies that when a
lease includes both land and building elements, an entity assesses the classification
of each element as finance or an operating lease separately in accordance with the
general guidance on lease classification set out in PAS 17.
•
ALCO Management Report 10
•
PAS 18 (Amendment), Revenue. The amendment provides guidance on
determining whether an entity is acting as a principal or as an agent. Presently, the
Group is the principal in all of its business undertakings.
(b) Effective in 2010 but not Relevant to the Group
The following amendments, interpretations and improvements to published
standards are mandatory for accounting periods beginning on or after January 1, 2010 but
not relevant to the Group’s financial statements:
PAS 39 (Amendment)
:
PFRS 3 (Revised)
PFRS 1 (Amendment)
:
:
PFRS 1 (Amendment)
:
PFRS 2 (Amendment)
:
Financial Instruments: Recognition and
Measurement
Business Combinations
First-time Adoption of International
Financial Reporting Standards
(Revised 2008)
Additional Exemptions for First-time
Adopters
Group Cash-settled Share Based
Payment
(c) Effective Subsequent to 2010
There are new PFRS, revisions, amendments, annual improvements and
interpretations to existing standards that are effective for period subsequent to 2010.
Management has initially determined the following pronouncements, which the Group will
apply in accordance with its transitional provisions, to be relevant to its financial
statements.
(i) Philippine Interpretation IFRIC 15, Agreements for Construction of Real Estate,
(effective from January 1, 2012). This Interpretation provides guidance on how to
determine whether an agreement for the construction of real estate is within the scope
of PAS 11, Construction Contracts, or PAS 18, Revenue, and accordingly, when
revenue from the construction should be recognized. It is likely to result in PAS 18
being applied to a wider range of transactions. The Group is currently evaluating the
impact of the interpretation and looks into the possibility of early adopting in 2011
financial statements.
(ii) Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity
Instruments (effective from July 1, 2010). It addresses accounting by an entity when
the terms of a financial liability are renegotiated and result in the entity issuing equity
instruments to a creditor to extinguish all or part of the financial liability. These
transactions are sometimes referred to as “debt for equity” exchanges or swaps. The
interpretation requires the debtor to account for a financial liability which is
extinguished by equity instruments as follows:
• the issue of equity instruments to a creditor to extinguish all or part of a financial
liability is consideration paid in accordance with PAS 39, Financial Instruments:
Recognition and Measurement;
• the entity measures the equity instruments issued at fair value, unless this cannot
be reliably measured;
• if the fair value of the equity instruments cannot be reliably measured, then the
fair value of the financial liability extinguished is used; and,
• the difference between the carrying amount of the financial liability extinguished
and the consideration paid is recognized in profit or loss.
Management has determined that the adoption of the interpretation will not have a
material effect on its financial statements as management does not anticipate to
extinguish financial liabilities through equity swap in the subsequent periods.
(iii) PAS 12 (Amendment), Income Taxes (effective from January 1, 2012). An entity is
required to measure the deferred tax relating to an asset depending on whether the
entity expects to recover the carrying amount of the asset through use or sale.
However, when the asset is measured using the fair value model under PAS 40,
Investment Property, it can be difficult and subjective to assess whether recovery will
be through use or through sale; accordingly, an amendment to PAS 12 was made. The
amendment introduces a presumption that recovery of the carrying amount will be or
normally be through sale.
Consequently, Philippine Interpretation Standard Interpretation Committee (SIC) - 21
Income Taxes – Recovery of Revalued Non-Depreciable Assets would no longer apply
to investment properties carried at fair value. The amendments also incorporate into
PAS 12 the remaining guidance previously contained in Philippine Interpretation SIC21, which is accordingly withdrawn. As of December 31, 2010, management is still
evaluating the effect of this amendment to the Group’s financial statements.
(iv) 2010 Annual Improvements to PFRS. The FRSC has adopted the Improvements to
Philippine Financial Reporting Standards 2010. These amendments become effective
for annual periods beginning on or after July 1, 2010 and January 1, 2011. The
Company expects the amendments to the following standards to be relevant to the
Company’s accounting policies but does not expect any material effect on the
Company’s financial statements.
• PFRS 3, Business Combinations (effective from July 1, 2010). This clarifies
that contingent consideration balances arising from business combinations that
occurred before an entity’s date of adoption of PFRS 3 (Revised 2008) shall not be
adjusted on the adoption date. It also provides guidance on the subsequent
accounting for such balances.
• PAS 1, Presentation of Financial Statements – Clarification of Statement of
Changes in Equity (effective from July 1, 2010). This clarifies that entities may
present the required reconciliations for each component of other comprehensive
income either in the statement of changes in equity or in the notes to the financial
statements.
Risk Management Objectives And Policies
The Group is exposed to a variety of financial risks which result from both its operating and investing
activities. The Group’s risk management is coordinated with the Board of Directors and focuses on
actively securing the Group’s short- to medium-term cash flows by minimizing the exposure to financial
markets. Long-term financial investments are managed to generate lasting returns.
The Group does not actively engage in the trading of financial assets for speculative purposes nor does it
write options. The most significant financial risks to which the Group is exposed to is described below.
Credit Risk
The Group and the Parent’s exposure to credit risk is limited to the carrying amount of financial
assets recognized as of December 31, 2010 summarized below:
Notes
Cash in bank
Receivables - net
Advances to subsidiaries - net
Deposit
5
6
8
11
Group
Parent
P
51,331,301
18,987,789
11,793,989
P
51,137,442
18,897,789
260,234,254
11,793,989
P
82,113,079
P
342,153,474
This compares to the Group and the Parent’s exposure to credit risk limited to the carrying
amount of financial assets recognized as of December 31, 2009 as follows:
2009
Notes
Cash in bank
Receivables - net
Advances to subsidiaries - net
Deposit in escrow account
5
6
8
10
Group
P
Parent
12,313,772 P
16,591,070
183,081,600
12,121,272
16,591,070
256,345,759
183,081,600
P 211,986,442 P
468,139,701
Generally, the maximum credit risk exposure of financial assets is the carrying amount of the
financial assets as shown in the statements of financial position (or in the detailed analysis
provided in the notes to the financial statements). Credit risk, therefore, is only disclosed in
circumstances where the maximum potential loss differs significantly from the financial asset’s
carrying amount.
Cash in banks are insured by the Philippine Deposit Insurance Corporation up to a maximum
coverage of P500,000 per depositor per banking institution. For advances to subsidiaries, the
Group is not exposed to significant risk more than the carrying amount of the advances since such
net assets of the subsidiary are sufficient to cover the Group’s investments and advances.
Liquidity Risk
Liquidity risk is the risk that there are insufficient funds available to adequately meet the credit
demands of the Group’s customers and repay liabilities on maturity.
The Group closely monitors the current and prospective maturity structure of its resources and
liabilities and the market condition to guide pricing and asset/liability allocation strategies to
manage its liquidity risks.
The analysis of the maturity profile of financial assets and financial liabilities as of
December 31, 2010 are presented below:
Group
Current
Within
6 Months
Financial Assets:
Cash
Receivables
Deposit
P
Financial Liabilities:
Loans payable
Accounts payable, accrued expenses
and other liabilities
51,360,301
14,309,151
65,669,452
Non-current
1 to 5
Later than
Years
5 years
6 to 12
Months
P
360,802,296
360,802,296
4,678,638
4,678,638
P
P
11,793,989
11,793,989
-
459,134,554
411,875,912
-
277,934,895
737,069,449
325,571,068
737,446,980
-
(P 725,652,991 ) P
-
Total gap
(P 295,132,844) (P 732,390,811 )
Cumulative gap
(P 295,132,844) (P1,027,523,655) (P1,753,176,646) (P1,753,176,646 )
Parent
Current
Within
6 Months
Financial Assets:
Cash
Receivables
Advances to subsidiaries
Deposit
P
Loans payable
Subscription payable
51,166,442
14,309,151
65,475,593
285,167,548
285,167,548
Non-current
1 to 5
Later than
Years
5 years
6 to 12
Months
P
4,678,638
4,678,638
P
P
260,234,254
11,793,989
272,028,243
-
459,134,554
411,875,913
-
277,934,895
562,500
737,631,949
325,571,068
737,446,981
-
Total gap
(P
219,691,955 ) (P 732,953,311)
(P 465,418,738 ) P
Cumulative gap
(P
219,691,955) (P 952,645,266)
(P1,418,064,004) (P1,418,064,003)
This compares to the analysis of the maturity profile of financial assets and financial liabilities as of
December 31, 2009 as follows:
Group
Current
Within
6 Months
Financial Assets:
Cash
Receivables
Deposit
P
Loans payable
12,321,772
16,591,070
28,912,842
Non-current
1 to 5
Later than
Years
5 years
6 to 12
Months
P
-
P
P
183,081,600
183,081,600
-
173,331,266
197,343,012
150,000,000
-
150,262,495
323,593,761
197,343,012
150,000,000
-
Total gap
(P
294,680,919) (P 197,343,012 )
P
33,081,600 P
-
Cumulative gap
(P
294,680,919) (P 492,023,931 ) (P 458,942,331 ) (P 458,942,331 )
Parent
Current
Within
6 Months
Financial Assets:
Cash
Receivables
Advances to subsidiaries
Deposit
P
Loans payable
Subscription payable
12,134,272
16,591,070
28,725,342
Non-current
1 to 5
Later than
Years
5 years
6 to 12
Months
P
-
P
P
256,345,759
183,081,600
439,427,359
-
173,331,266
197,343,012
150,000,000
-
89,991,254
263,322,520
562,500
197,905,512
150,000,000
-
P 289,427,359 P
-
Total gap
(P
234,597,178 ) (P 197,905,512)
Cumulative gap
(P
234,597,178) (P 432,502,690)
(P 143,075,331 ) (P 143,075,331)
2009 – As of 31 December 2009, the Group’s total assets stood at P 1,139.851 Mn, while its total
liabilities and equity amounted to P 670.937 Mn and P 468.915 Mn, respectively. Total resources
went up by P 230.734 Mn compared to 31 December 2008 level of P 909.118 Mn. The increase
was brought about by ALCO’s increased interest in Bonifacio lot identified as lot 7 1 and
expenditures for the planning and design of its first residential project, Arya Residences, including
the construction and completion of the sales pavilion. Total liabilities increased by P 357.695 Mn.
This was primarily due to new and increased credit facilities from banks and private lenders to fund
the requirements of Arya Residences. Total stockholders’ equity amounted to P 468.915 Mn in
2009 and P 595.876 Mn in 31 December 2008. The decrease is due to necessary operating expenses
for the launch of the residential project.
In terms of profitability, the Group performed lower in 2009 compared to 2008 because of higher
operating expenses and higher interest expenses. The higher operating expenses is due to
2009 reflecting full year corporate overhead whereas for 2008, the corporate overhead was
effectively for only half a year since the personnel recruitment commenced primarily starting the
second quarter of 2008. From 15 employees in end 2008, ALCO had 30 employees in 2009. Finance
charges increased by P 26.408 Mn due to the interest on increased borrowings.
2008 – As of 31 December 2008, the Group’s total assets stood at P 909.118 Mn, while its total
liabilities and equity amounted to P 313.242 Mn and P 595.876 Mn, respectively. Total resources
went up by P388.105 Mn compared to 31 December 2007 level of P521.012 Mn. The increase was
brought about by the deposit in shares in MPI of P 183.061 Mn, purchase of transportation and office
equipment and FFE amounting to P 12.733 Mn, acquisition of property in Tagaytay and Batangas of
P 45.020 Mn and increase in receivables of P 74.079 Mn from EIB. Total liabilities increased by P
275.644 Mn. The major causes include credit facility from Asia United Bank (AUB)and
borrowings from private lenders. Total stockholders’ equity amounted to P 595.876 Mn in 2008 and
P 483.415 Mn in 31 December 2007. Increase of P 112.461 Mn is due to capital infusion of new
investors. ALCO’s increase of its authorized capital stock by P 2.7 Bn was approved by the SEC on
December 24, 2008.
In terms of profitability, the Group performed lower in 2008 compared to 2007. ALCO’s net income
as parent in 2008 was P 0.572 Mn as compared to P 159.307 Mn 2007.
Gross income of P 72.829 Mn in 2008 is mainly attributable to the recovery of its impairment of
asset in Fort Bonifacio amounting to P 52.70 Mn and recovery of P 15 Mn provision for OMP
accounts. Operating expenses in 2008 went up by approximately P 31.637 Mn from 2007 due to
salaries and related accounts brought about by the increase of manpower from 1 employee in 2007 to
15 employees in 2008. Finance charges increased by P 7.442 Mn due to the AUB loan and various
short term notes.
a.
Market Information
ALCO’s common shares are traded in the Philippine Stock Exchange. The volume of its shares
traded from 2003 to 2009 has been negligible due to market conditions. On 24 May 2007, ALCO
sought the voluntary suspension of trading of its shares until such time as the Securities and
Exchange Commission (SEC) approves its capital reorganization and the listing of its additional
shares in the Exchange. The suspension was lifted on 08 January 2009.
The following are the highlights of quarterly trading for the periods of 2008-2010:
Quarter
1
2
3
4
High
0.300
0.230
0.230
0.239
2010
Low
0.135
0.170
0.181
0.163
Close
0.1950
0.1900
0.2050
0.1780
High
0.26
0.23
0.25
0.29
2009
Low
0.09
0.14
0.125
0.155
Close
.17
.14
.155
.160
High
-----
2008
Low
-----
Close
-----
The highlights of trading for the first quarter of 2011 are as follows:
Quarter
1
2011
High Low
0.200 0.143
b.
Security Holders
The number of shareholders of record as of the date of this Report is 2,134 and common shares
outstanding are 5,318,095,199.
Article Seventh of ALCO’s Articles of Incorporation provides that ALCO’s common shares of
stock are not subject to pre-emptive rights of the stockholders and may therefore be issued in
such quantities at such times as the Board of Directors may determine. Article Tenth also
provides that no issuance or transfer of shares of stock shall be allowed if it will reduce the
ownership of Filipino citizens to less than the percentage required by law.
ALCO’s top 20 stockholders as of 31 December 2010 are as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Name of Shareholders
AO Capital Holdings I
Export and Industry Bank, Inc.
The First Resources Management and Securities Corp.
Elite Holdings, Inc.
E.Securities, Inc., (Under PCD)
Abacus Sec. Corp. (PCD)
The First Resources Mgt. And Sec. Corp.
Keng, Tina
AB Capital Securities, Inc. (Under PCD)
Citiseconline.Com, Inc. (PCD)
Accord Capital Equities Corporation (PCD)
Bartolome, Rosario
E. Chua Chiaco Sec., Inc. (PCD)
Tower Securities, Inc. (PCD)
EQL Properties, Inc.
Ansaldo Godinez & Co., Inc. (Under PCD)
Eastern Securities Development Corp. (PCD)
ATR-Kim Eng Sec., Inc. (PCD)
Iinvestors Sec., Inc. (PCD)
I.Ackerman & Co., Inc. (PCD)
TOTAL
No. of Shares
2,983,730,000
981,699,817
363,820,237
119,810,000
43,504,426
39,999,404
37,500,000
25,000,000
20,020,523
16,754,073
15,931,286
15,231,750
14,739,703
14,672,300
14,671,125
12,668,587
12,283,149
10,830,774
10,036,975
9,978,524
4,773,376,578
%
58.30
19.18
7.11
2.34
0.85
0.78
0.73
0.49
0.39
0.33
0.31
0.30
0.29
0.29
0.29
0.25
0.24
0.21
0.20
0.19
On 26 April 2011, CPG Holdings, Inc. (i) subscribed to 200.0 Million common shares of stock of
ALCO for a total subscription price of Philippine Pesos: Fifty Million (P50,000,000.00); and, (ii)
acquired 1,600,000,000 ALCO common shares registered in the name of AO Capital Holding I,
Inc. for a total purchase price of Philippine Pesos: Four Hundred Million (P400,000,000.00),
which sale was effected via a special block sale.
c.
Dividends
There were no dividends declared in the years 2008, 2009 and 2010.
Whether ALCO plans to declare dividends within the next twelve (12) months is uncertain but the
same shall be subject to Section 2, Article VII of ALCO’s By-laws, as amended on 25 June 2010,
which provides, as follows:
“Dividends shall be declared from the unrestricted retained earnings of the
Corporation, including stock dividends from paid-in surplus, at such time and in
such amounts as the Board of Directors may determine. Dividend declarations
shall not in any manner reduce the paid-in capital of the Corporation. Unless
otherwise resolved by the Board of Directors, a fraction of one-half or more of a
share owing to a stockholder resulting from a declaration of stock dividends shall
be issued as one full share, while a fraction of less than one-half share shall be
disregarded.
“Declaration of stock dividends shall be submitted to a stockholders’ meeting for
approval within forty (40) business days from such approval by the Board of
Directors. The record date for stock dividends shall not be earlier than the date
of approval by the stockholders.
“Declaration of cash dividends shall have a record date which shall not be less
than ten (10) business days but not more than thirty (30) business days from the
date of declaration by the Board of Directors.”
d.
Recent Sales of Unregistered or Exempt Securities – This provision is not applicable to
ALCO.
CORPORATE GOVERNANCE
ALCO’s compliance with its Manual of Corporate Governance is monitored by its Compliance Officer
who is tasked, among others, to determine and measure the compliance with the said Manual. ALCO’s
Board of Directors has not adopted any other specific measure to comply with leading practices on good
corporate governance.
Immediately after the Annual Stockholders’ Meeting on 25 June 2010, the Board of Directors formed
several committees to perform some of its functions in aid of good governance and pursuant to the
mandates of the Securities and Exchange Commission, namely the Audit Committee3, the Stock Option
and Compensation Committee4, and the Nomination Committee5.
For 2010, the Philippine Stock Exchange, Inc. imposed on ALCO monetary penalties equivalent to
P125,000.00 for the delayed filing of its SEC Form 17-A (2009 Annual Report). The Securities and
Exchange Commission, on the other hand, ordered ALCO to pay monetary penalties in the amounts of
P65,400.00 and P102,500.00 for the delayed filing of its SEC Forms 17-Q (2010 1 st Quarter Report for
the period ended 31 March 2010) and 17-A (2009 Annual Report), respectively.
(Nothing follows.)
3
Composed of Messrs. Rene R. Fuentes (Chairman), Ernest K. Cuyegkeng and Omar T. Salvo.
Composed of Messrs. Jaime C. Gonzalez (Chairman), Dionisio E. Carpio, Jr. and Ernest K. Cuyegkeng,
and Ms. Angela de Villa Lacson (Vice Chair).
5
Composed of Messrs. Jaime C. Gonzalez (Chairman), Dionisio E. Carpio, Jr. and Ernest K. Cuyegkeng.
4

Document 6526520

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