Cebu Holdings Inc. 2009 Integrated Annual and Sustainability Report

Transcription

Catalyzing Change
A spiral connotes change. From the core, it expands progressively, moving outwards gradually, but consistently - creating a path that
manifests evolution. For Cebu Holdings, Inc. (CHI), the spiral is an apt metaphor for the Company’s transformation into an organization
firmly committed to sustainable development.
For more than 20 years, CHI has served as a development catalyst in Cebu and a key partner in developing the city’s landscape - now replete
with first-class business districts, prime living spaces and world-renowned as an investment destination. Today, while it continues to pursue
its vision of creating landmark projects and setting regional standards in property development, it is likewise fully committed to sustaining
relationships with its customers, suppliers and stakeholder communities.
The Company recognizes the inherent challenges of its business and strives to operate responsibly and responsively—mindful, always, of
its footprint. Looking ahead, as these principles become truly pervasive, CHI will lead the local market in driving economic growth, pursue
opportunities to deepen its portfolio with relevant real estate and retail products, and do its share in creating a truly sustainable future for
the country.
Annual Report
Sustainability Report
About this Integrated Annual and Sustainability Report
1
Our Sustainability Management
50
At a Glance
2
Message from the Corporate Sustainability Officer
51
Message to Stockholders
3
Our Stakeholders
54
Report of the Finance and Control Officer
8
Environmental Performance
58
Real Estate Business
12
Environmental and Health and Safety Risk Assessment 59
Retail Business
22
Climate-change Related Assessment
60
Management Systems
28
Energy and Emissions Management
62
Corporate Governance
32
Water and Wastewater Management
65
Enterprise-wide Risk Management
42
Solid Waste Management
66
Board of Directors
44
Biodiversity Management
68
48
Management Team
Social Performance
72
101
Human Resources
72
Report of the Audit Committee to the Board of Directors
102
Community Partnerships
79
Independent Auditor’s Report
103
Employee Volunteer Program
84
Financial Statements
104
Product Responsibility
87
Statement of Management’s Responsibility
Shareholder Information
IBC
Economic Performance
93
Stakeholders’ Commentaries
97
GRI Index
98
This Cebu Holdings, Inc. 2009 Integrated Annual and Sustainability Report cover is printed on FSC®certified Mohawk Options 100% PC, which is made of 100% process chlorine-free post-consumer
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Catalyzing Change
About This Integrated Annual
and Sustainability Report
This report gives Cebu Holdings Inc.’s stakeholders a glimpse of the
Company’s internal business processes, how it manages its resources
to gain efficiencies and achieve profitability while keeping in mind the
ecological and social impacts of its business.
This is the third year in a row that Cebu Holdings, Inc. (CHI) has
consumption, as well as the savings generated and the emissions
published an “Integrated Annual and Sustainability Report”
avoided in every energy saving program implemented in all its
covering both financial and non-financial aspects of its business.
managed properties. This has even permeated into the personal
lives of its employees, who have started to quantify their own
This report covers the Company’s performance for the year 2009,
carbon emission. On the social front, the Company endeavors
with comparative data for the years 2008 and 2007, particularly
to nurture its relationships with its human resources, project
on continuing programs, although combined with a set of
partners, customers, neighboring communities, business and
baseline data on new initiatives implemented in 2009. As the
socio-civic organizations, communicating to these stakeholders the
Company strives to build on the previous years’ reports, this
Company’s sustainability initiatives, thereby expanding its circle of
publication shows a significant progress in CHI’s sustainability
influence and contributing to a larger purpose.
reporting, from 28 indicators in 2008 to a total of 52 indicators
in 2009, largely because of the Company’s more improved and
All these are taken into account in this report, being one of
expanded economic, social and environmental programs. This
the major communication tools the Company uses to reach its
report is self-declared at level B, according to the Global Reporting
stakeholders. An added feature of this report is a set of insightful
Initiative (GRI) – Third Generation (G3) guidelines, as reported in
commentaries from stakeholders the Company engaged to look at
the previous year. This report covers the performance of CHI’s
its sustainability performance objectively.
subsidiaries and of an affiliate.
The Company plans to seek report assurance and third party
This report reflects the Company’s commitment to transparency
verification in the future as we move towards achieving full
and good corporate governance. It sets out its sustainability
compliance reporting.
goals and management approach on the strategic execution and
achievement of these goals and objectives. It intends to share, in
This report includes a form, through which the organization can
more depth, the details of the documentation and monitoring of
obtain feedback from its stakeholders and external publics to
the Company’s actual performance on its sustainability priority
aid the organization in continually improving its sustainability
areas. Furthermore, this report gives its stakeholders a glimpse
reporting approach. Information may also be accessed through
of the Company’s internal business processes, how it manages
www.cebuholdings.com. Inquiries may be done via email through
its resources to gain efficiencies and achieve profitability while
[email protected].
keeping in mind the ecological and social impacts of its business.
Finally, this report reflects the organization’s mindset to help
While the Company continues to intensify its drive to improve its
catalyze change and to respond to the challenges of sustainable
financial performance, it continues to provide economic value
development. By documenting the initiatives and results of
particularly through the resources it allocates for community
the Company’s triple-bottom line performance, CHI is able to
investment purposes. In the area of environmental performance,
provide a benchmark from which the organization can assess its
the Company continues to quantify its energy and water
progress and fine-tune as it continuously improves on its systems
and strategies, as well as further explores opportunities to face
challenges in the years ahead.
At a Glance
VISION/MISSION STATEMENT
We shall be the premier real estate company in Cebu creating and
providing market-driven products of enduring value through a customer
focused and highly-motivated team of professionals.
We ensure the trust and confidence of our shareholders with sustainable
and profitable growth while improving the quality of life of the
communities in the markets, which we serve with honor and integrity.
Core Values
Focus on Customer
Empowerment of People
We believe in giving our customers products with enduring value and
Respecting each person’s role in the Company’s success, we provide our
services that are always aimed at attaining their ultimate satisfaction.
employees with the means to fulfill their responsibilities with authority
We understand customer needs and requirements, and in creating
and accountability. By doing so, they feel a sense of ownership of their
our products and delivering services we strive to exceed customer
jobs and projects, and are responsible for their own success.
expectation.
Pursuit of Excellence
Bias for Results
By striving to be the best in everything we do, we please our
We deliver results that will earn the trust and confidence of our
customers, our employees, our shareholders, our suppliers, and
Company’s shareholders. Our performance speaks of how we actively
our business associates and alliances. This effort may require
respond to problems and opportunities.
working beyond what we are asked to do.
Entrepreneurial Drive
Responsibility to the Community
We are a team of professionals dedicated to practice the highest ethical
We are catalysts in the community. We help break new grounds
standards by conducting our business with honor and integrity. With
for development and enterprise. The projects that we initiate
a mindset for innovation and creativity, we aim for expansion in new
bring the community at par with others in the world. Our
markets, products and techniques.
interactions with the community spell our commitment to be a
responsible corporate citizen.
Teamwork
We are a team of professionals whose coordinated efforts and
Love of God
collective competencies can lead to the attainment of greater results.
We acknowledge God as Sovereign Lord above self, family,
By working together with our colleagues, our customers, our suppliers
work and career. This orientation leads us to putting ourselves
and the communities with whom we do business, we can accomplish
completely in His love and care and to practices that are according
more.
to His will.
Concern for People
Enhancement of the Quality of Life
We acknowledge every person’s dignity and self-worth. We place
We belong to a community of persons, sharing common
emphasis on our employee’s personal and professional growth and
aspirations and dreams of a better life for all. By the nature of
development. Equally concerned for the welfare of others, we commit
our business, we commit to helping improve the quality of life of
to enhance a person’s effectiveness through training and other
communities in the markets that we serve.
development opportunities.
Catalyzing Change
Our Business
Cebu Holdings, Inc. (CHI) is a publicly listed company engaged
Cebu Property Ventures &
in real property ownership, development, marketing and
Development Corporation (CPVDC)
management. It was registered with the Securities and
CPVDC was registered with the Securities and Exchange
Exchange Commission on December 9, 1988, with an authorized
Commission (SEC) on August 2, 1990 and started commercial
capitalization of P1.0 billion.
operations on September 1, 1996. The company started as a joint
venture corporation between the Province of Cebu and Ayala
CHI is an affiliate company of Ayala Land, Inc. (47.26 percent). Other
Land, Inc. CPVDC is now 76 percent owned by Cebu Holdings,
stockholders include BPI Capital Corp. (15.39 percent); PCD Nominee
Inc. after a successful tender offering undertaken in 1995.
(Filipino and non-Filipino - 21.39 percent); First Metro Investment
The company’s operations consist of three types of activities:
Corporation, (11.55 percent) and the public (4.41 percent).
commercial land sales, residential subdivision sales and office
space leasing. CPVDC is the owner and developer of Asiatown I.T.
The Company’s operations consist of seven types of activities:
Park, a 24-hectare prime property for mixed-use development
•
Commercial land sales
located in the former Lahug Airport.
•
Office and residential condominium sales
•
Sale of residential subdivisions
Cebu Insular Hotel Company, Inc. (CIHCI)
•
Rental of retail space
The company was incorporated on April 6, 1995 with the primary
•
Sale of proprietary sports club shares
purpose of hotel development and management. In September
•
Lease of office space via a subsidiary Cebu Property Ventures
1996, the company began work on the 303-room businessman’s
& Development Corporation
hotel called the Cebu City Marriott Hotel. The project is owned by
Hotel development/operations via an affiliate Cebu Insular
Cebu Insular Hotel Company, Inc., a 63 percent - 37 percent joint
Hotel Co. Inc.
venture between Ayala Hotels, Inc. and the Company.
•
% Ownership
Cebu Leisure Company, Inc. (CLCI)
Cebu Leisure Company, Inc. was formed in 1994. It started as
a joint venture company between Fun Corporation and Cebu
Holdings, Inc. In 1997, the former sold its shares to the latter. It is
now a wholly-owned subsidiary of CHI.
Projects/Operations
Cebu Leisure Company, Inc.
100%
Entertainment facilities
management
Cebu Property Ventures
and Development Corporation
76%
Mixed-use development
Cebu Insular Hotel Company, Inc.
37%
Hotel development/
operations
Message to stockholders
Antonino T. Aquino
Chairman
Catalyzing Change
Francis O. Monera
President
Catalyzing Change:
Responding to the Challenges of Sustainable Development
Putting sustainability at the core of our strategy and the institutionalization of the triple
bottom line approach is a very different way of doing business. But this, we believe, will
be most rewarding in the long run. Embracing sustainability will lead to innovation and
competitive advantage, while giving everyone in the organization a sense of pride in our role
in society.
Dear fellow stockholders,
To help stabilize the Company’s cash flow and net income during
Time and again, the Filipino spirit and ingenuity has proven to be
difficult periods, we concentrated on increasing recurring income by
resilient in the face of trying times. The Philippines weathered the
expanding our leasing portfolio. In 2009, we increased our leasing
financial global crisis better than its regional peers due to lower
portfolio on both the retail and real estate fronts by a total of 21,000
dependence on exports and higher levels of domestic consumption,
square meters of gross leasable area.
fueled by large remittances from about five million overseas Filipino
workers (OFWs).
Ayala Center Cebu, the centerpiece of CBP, generated total revenue of
P 696.77 million, 19 percent higher than last year’s level. This was
While many were still reeling from the effects of the global financial
due to higher rental rates and sales per square meter, and the
crisis, Cebu Holdings Inc. (CHI) approached 2009 with a battle-ready
full operation of The Terraces, which houses a total of 55 dining,
stance – calibrating our strategy to adapt to market conditions while
entertainment and lifestyle outlets. The Terraces brings in an
implementing prudent cash and spend management to improve
additional 9,000 square meters of leasable area. Both additions to
our margins. This included managing risks, placing a bias towards
the mall cater to the changing demands of the growing market in the
preserving capital, and increasing short-term profitability without
region.
sacrificing long-term value creation.
Revenues from commercial lots amounted to P 137.11 million, derived
With the market tight-fisted in investing their money during such
from the sale of one lot in CBP and one lot at Asiatown I.T. Park,
conditions, we capitalized on what differentiated us as a
the flagship project of CHI subsidiary, Cebu Property Ventures and
brand from the rest of the competition. We focused on what was
Development Corporation (CPVDC).
important to our customer – value for money, quality, and delivery.
We did not sell as many commercial lots as compared to the previous
These initiatives paid off as the Company ended the year with higher
year as part of our strategic direction to strengthen the Company’s
income than was expected.
recurring income. With the dwindling inventory of prime land within
the city, we plan to shift our strategy from commercial land sales to
Our 2009 performance
long-term recurring income. As we use our existing prime properties
CHI registered consolidated revenues of P 1.29 billion in 2009.
to increase our leasing portfolio, we ensure appreciation of land and
Compared to the 2008 performance, it posted a decline of 14 percent
shareholder value. This is one of our strategies for sustainable growth
mainly due to a one-time sale of a 1.7-hectare commercial block in
for the Company.
the Cebu Business Park (CBP) that year (factoring this revenue out,
consolidated revenue grew by nine percent while net income after tax
Also in 2009, 34 lots were sold at the premier seaside residential
increased by 18 percent).
enclave, Amara. This, combined with the previous years’ sale
computed based on percentage of completion, brought in P 276.84
Still, CHI posted a relatively higher growth compared to the general
million in revenues. This is 51 percent higher than the revenue of the
economy and industry performance, as reflected in our high sales take-
previous year. By constantly innovating the product and adding unique
up and continued market leadership of our products.
facilities in each phase to enhance the seaside living experience,
we have maintained market leadership of Amara since it was first
In 2009, commercial and retail space also enjoyed higher occupancy
launched in 2005.
and sales per square meter while residential lots enjoyed higher sales
take-up despite price increases.
A more comprehensive discussion of the performance on both retail
and real estate business fronts will be discussed by the respective group
heads within this report.
Message to Stockholders
Margins likewise improved due to prudent cash and spend
Aware of the effects of land development and the operation of our
management. In keeping with the times, operating and administrative
projects, we have set in place various systems and innovations not only
costs were kept at the lowest possible level. In addition, project
to ensure compliance with regulatory and statutory requirements but
development processes were enhanced and allowed the Company to
also to lessen our negative impact on the natural environment.
post project cost savings.
In our Company’s operations and internal business processes, we
All these initiatives were achieved without compromising our focus on
continue to be certified to the international ISO and OHSAS standards
the customer and commitment to quality. Our customers and their
for quality, environment and health and safety. These have been
satisfaction continue to be our first priority. The drive to always exceed
aligned with the disclosure framework of the Global Reporting
customer expectations paid off last year as the Company, through its
Initiative (GRI) to which we also subscribe.
projects, continued to lead in the markets it serves.
As a company growing in the backdrop of increasing risks, CHI, in
The entry of more established retail brands and the opening of
2009, formalized its Enterprise-Wide Risk Management Framework
The Terraces at Ayala Center Cebu created an impact in attracting a
and created a more integrated approach. A structure, headed by
large base of our customers. This, coupled with various marketing
the Audit and Risk Committee at the Board level, was set in place to
initiatives and additional programs for the convenience of shoppers,
analyze, consolidate and manage all the opportunities, threats and
helped increase average daily foot traffic at the mall by 11 percent
risks faced by the Company in achieving its goals. By identifying our
and car park usage by 49 percent in 2009. With this, Ayala Center
risks and strengthening our control measures, we are more confident
Cebu continues to be the preferred lifestyle destination for its target
in ensuring the Company’s sustainability for the long term.
customers.
As we increase our initiatives and projects for the Company, our
Amara continues to be the market leader among premium residential
in-house expertise is our most important asset in accomplishing
offerings in Cebu. Despite the economic uncertainty last year, the
the goals we have set. Last year, despite contracted resources for
second phase of Amara North was launched and was received by the
external training, we developed competency by sharing learnings,
market with sustained enthusiasm.
cross-posting and other creative development strategies. With these,
the organizational culture has become an enabler, equipping and
Putting sustainability at the core of our operations
empowering each employee to effectively contribute to corporate
But even more important than crunching the numbers and
goals.
exceeding customer expectations were the steps we took to ensure
social sustainability and environmental stewardship, internally as an
We continue to support wellness programs for our employees through
organization and as a member of the community.
the CHI PLUS program, with the belief that well-rounded individuals
make more efficient and effective team players. We also continue to
We at the Ayala group have taken on that challenge of putting
strengthen our community development programs and our employee
sustainability at the core of our strategy and business operations. As
volunteer program, “Agbayay,” to strengthen our relationship with the
we strengthen our management systems and innovate our processes,
members of our fence line communities. This program also helps
we aim to continue to produce results without sacrificing the needs of
develop our employees’ sense of social responsibility as members of a
tomorrow.
society who care.
Last year, we launched our sustainability campaign with the theme,
These initiatives resulted in continued employee satisfaction, as
“Catalyzing Change: Responding to the Challenges of Sustainable
reflected in an organizational climate survey at the end of last
Development” for CHI. The theme puts forward a direct connection
year. The survey presented favorable results in all areas measured,
between the changes we need to do and the sustainable outcomes we
particularly in the aspects of job security and standards of excellence in
hope to achieve.
the performance of tasks.
For our employees, partners and other stakeholders in CHI, we have
As we move along this path, we are seeing a continuous transformation
translated sustainability in the most applicable and measurable
and improvement in the way we face our daily challenges to reach our
ways possible, in all aspects of the business and at every level of the
short-term goals in the economic, environmental and social areas. This
organization.
is a major accomplishment for everyone in the organization.
Catalyzing Change
We are also proud to share with you some unexpected triumphs along
tourist destination and as the top emerging global outsourcing
the way – all of which have inspired us to strive to do even better.
destination.
Awards and recognition such as the Best in Corporate Governance
Disclosure Award from the Management Association of the Philippines
CHI will be at the forefront in this upturn with increased
and the Silver Award for Corporate Governance Disclosure for Publicly-
offerings which cater to the growing market demand in the retail and
Listed Companies from the Institute of Corporate Directors have
real estate fronts.
encouraged us to continue to improve our corporate governance
practices. The 2009 E3 (Excellence in Economy and Ecology) Award
In response to the changing lifestyle and increased purchasing power
from the Philippine Chamber of Commerce and Industry has also
of the local workforce, we are finalizing plans to add leasable space at
inspired us to enhance further our management systems, particularly
Ayala Center Cebu. This expansion project will complete the full circle
concerning our impact to the environment within the framework of
design of the mall, as well as provide more local and international
the GRI or triple bottomline reporting, and hopefully inspire other
brands in the merchandise mix.
companies to do the same.
The BPO industry will continue to be one of the main drivers of growth
All these we have carried on with the end in mind of contributing
for Cebu. To capitalize on this, we are working towards the Philippine
to a larger purpose -- socio-economic growth in the area where we
Economic Zone Authority (PEZA) accreditation of CBP to accelerate
operate. We strive to go beyond the business of producing profit and
build-up within the park.
operational results to look at the larger picture of sustainability. Our
Integrated Management System, inclusive of the continuous adoption
The year 2010 will also be an exciting year as we work with other
of the Balanced Scorecard, ISO and GRI, has become a template that
companies within the Ayala Group. The adoption of partnerships
has allowed us to have a more structured and measurable approach in
with the other strategic business units of Ayala Land Inc. (ALI) aimed
realizing these targets. As we strive to achieve the goals we have set for
at maximizing industry expertise within the group as we set up new
ourselves as part of the community, we are becoming the change we
projects and explore various markets.
want to see.
We have already started, through CPVDC, to partner with the
At any given year the Company’s 2009 performance is commendable.
Corporate Business Group of ALI to create the eBloc Tower which was
Achieving that level in the context of last year’s dismal economic
fully-leased out last year. A partnership with Avida is also underway
backdrop made it an even bigger achievement. This demonstrated
for the development of affordable residential condominiums in
the organization’s agility to shift strategies and be flexible enough to
Asiatown I.T. Park intended to fully complement the other amenities
respond to change without sacrificing profit and the quality of the way
in the park.
we do things.
This year, we will also embark on a residential condominium project
Optimistic about 2010
within CBP to take advantage of the emerging demand in the market.
We move with momentum towards the year 2010.
The project will allow us to unlock the value of the land as well as
Putting sustainability at the core of our strategy and the
boost the value of ownership at City Sports Club Cebu. Here, residents
institutionalization of the triple bottom line approach is a very
will enjoy a strategically located address complemented with full
different way of doing business. But this, we believe, will be most
access to a range of leisure and sports amenities.
rewarding in the long run. Embracing sustainability will lead to
innovation and competitive advantage, while giving everyone in
2009 was a remarkable year not only for the organization, but for all
the organization a sense of pride in our role in society.
the stakeholders in the Company as well. We thank our shareholders,
our employees, the Board of Directors, and all our partners in business
This requires a perpetual and sophisticated recalibration to
for their continued support as we steer this organization in the road
create profitability while contributing toward healthy ecosystems,
towards sustainable development.
thriving societies and productive economies.
With the stabilization of the global financial sector and economic
recovery in sight, economists predict an upturn this year.
Cebu specifically is at a prime position in this curve, having
Francis O. Monera
Antonino T. Aquino
already caught international investor interest as a preferred
President
Chairman
Message from the Finance and Control Officer
Strengthening the Company’s
Business Portfolio
CHI has largely benefited from a more balanced portfolio and a healthy balance sheet
to support revenue and margin growth from operations during the year. The Company’s
2009 performance was generally driven by its increasing stake in recurring income.
Revenue from real estate development projects such as commercial lots posted a
decline on account of the Company’s strategy to hold on to its remaining commercial
lots for value appreciation and for new developments to fuel recurring income.
The year 2009 was a testament to the resilience of Cebu Holdings, Inc.
(CHI) as it ends the year with a very satisfactory performance despite
the economic slowdown that began in the previous year.
As the financial crisis peaked at mid-year, consumer spending grew
weaker. The retail sector remained stable throughout 2009 but
consumer demand slowly became more complicated and gravitated
towards mall formats with a better merchant mix.
For the real estate industry, the year 2009 also heralded more
conservative customers for both residential and commercial property,
with demand high for projects that provide a clear differentiation
strategy in terms of brand, price, quality and delivery.
As the competitive landscape changed, CHI braced itself with
programs for greater cost efficiency and a strategic focus shifted
towards capitalizing on market opportunities and more balanced
revenue sources.
Managing Our Business Portfolio
CHI’s total consolidated revenues for 2009 reached P1.29 billion.
Revenues were mainly driven by lease income for retail and office
spaces which drew in P697.95 million, and the sale of commercial
and residential lots which grossed P413.95 million in total revenues.
Eleanore R. Tomaneng
Finance and Control Officer
Catalyzing Change
Other sources comprise theater revenues of P72.75 million, interest
and other income of P83.96 million and a P19.69 million take-up of
CHI’s equity in affiliates, Asian I-Office Properties, Inc. (AiO) and Cebu
Insular Hotel, Inc.
Revenues
(in thousand pesos)
2009 Revenue Mix
Interest and other
income sources
8%
1,500,031
Theater
operations
6%
1,288,284
1,281,745
1,037,397
691,274
Commercial and
residential lot sales
32%
2005
2006
2007
2008
Retail and office
space leasing
54%
2009
CHI’s strategy in 2009 was focused on strengthening its business
proposition and CHI’s proven track record, boosted the Company’s
portfolio via an increasing stake in recurring income from retail and
leadership in the high-end residential market in spite of increases in
office space leasing. From the revenue mix for 2009, 54 percent came
average price by 11 percent from last year.
from lease as compared to 40 percent in 2008. Revenues from lot
sales then comprised 32 percent of the total for 2009 as compared to
Commercial Center Operations
49 percent in the previous year. This enabled CHI to achieve a greater
The year 2009 was another fruitful year for Ayala Center Cebu. Ninety
balance between short-term returns, financial stability and long-term
percent of Ayala Center Cebu’s total revenues was derived from retail
growth.
space rentals which increased by 20 percent in 2009 to P624.02
million. The remaining 10 percent of commercial center revenues
CHI registered a net income after tax (NIAT) of P302.19 million for
came from theater operations which increased by nine percent to
2009, lower than the prior year. Barring the effect of the 1.7 hectare
P72.75 million, on account of greater theater receipts due to higher
Cebu Business Park (CBP) transaction which tipped the revenue mix
average occupancy in 2009. With a lease occupancy of 95.5 percent
towards commercial lot sales in 2008, CHI exhibits an actual growth of
and the full-year operation of the Terraces, revenue generated by
nine percent in revenues and 18 percent for NIAT.
Ayala Center Cebu reached record levels of P696.77 million, higher by
19 percent from the previous year’s P586.43 million.
Real Estate Operations
The sale of commercial lots in Asiatown I.T. Park and CBP contributed
Also contributing to total revenues for CHI’s retail segment, is The
11 percent to total revenues or P137.11 million in 2009. Commercial
Walk of Asiatown I.T. Park, with its first full year of operations in 2009,
lot selling was decelerated to capitalize on the considerable value
averaged a lease occupancy of 83.5 percent and posted P16.89 million
appreciation of the remaining commercial lots.
in total revenues, P9.99 million higher than last year’s level.
As for the residential business segment, lot sales from Amara
Business Process Outsourcing - Office Leasing Operations
contributed 21 percent or P276.84 million to total consolidated
CHI also profits from the leasing of eOffice spaces in Asiatown I.T.
revenues, surpassing last year’s P183.27 million by 51 percent.
Park. Rentals, earned through CHI subsidiary, Cebu Property Ventures
Returns were derived from the sale of 34 lots and prior year’s sales
and Development Corporation (CPVDC), contributed P55.89 million
recognition computed based on the project’s percentage completion.
to revenues, 17 percent lower than last year. The decline in revenue
Amara’s successful differentiation strategy, superior customer value
resulted from the transfer of a major eOffice locator at mid-year to
Message from the Finance and Control Officer
Net Income
(in thousand pesos)
2009 Stock Price
(Quarterly)
2.50
399,479
2.00
302,192
251,775
1.76
206,778
1.38
117,346
2005
2006
2007
2008
2009
Q1
Q2
Q3
Q4
eBloc Tower, a 12-storey business process outsourcing building project
the year. Total stockholders’ equity increased by four percent at
by AiO – a CHI associate accounted for under the equity method.
yearend, net of such dividend declaration.
Controlling Costs And Improving Margins
Stock price closed at P1.56 per share in 2008 and reached a lower
Focal improvement of revenue drivers were complemented with
level of P1.38 at the end of the first quarter of 2009 when the global
programs for greater cost efficiency and tighter overhead control.
financial crisis pushed down the overall stock market. However,
Substantial cost savings were garnered from the execution of
CHI stock prices showed an upward trend in the last three quarters
guaranteed maximum price contracts for major CHI and CPVDC
of 2009, finally closing at P2.50 per share and resulting in a total
construction projects. Continuing water and energy conservation
shareholder return of 63.68 percent.
initiatives have also contributed to lower utility expenses for 2009.
These and other cost-saving measures have contributed significantly
Looking Forward
to margins for the year.
CHI was able to manage its various segments of operations amidst
changing market conditions in 2009. CHI has largely benefited from
Maintaining A Healthy Balance Sheet
a more balanced portfolio and a healthy balance sheet to support
CHI’s balance sheet remains sufficiently healthy to support and ensure
revenue and margin growth from operations during the year.
sustainable growth. Total assets stood at P5.77 billion at yearend,
showing a two percent increase of P114.63 million.
The year ended with economic conditions moderately easing. CHI
is poised to take advantage of several opportunities presented
Of total consolidated assets, P1.84 billion is classified as current,
by the market. The Company remains prudent with its business
representing an increase of 17 percent from the P1.57 billion total
development and is confident that its balanced portfolio, strong cash
of 2008. Cash and cash equivalents increased by eight percent to
position, healthy balance sheet, customer-oriented approach and
P905.09 million at the end of the year.
reputation for superior quality will sustain its business and propel CHI
to even greater heights in the years to come.
Bank debt at yearend amounted to P275 million, lower by P55 million
from the 2008 yearend balance.
CHI was able to improve its current ratio, increasing it to 1.68:1 from
the previous year’s 1.51:1. Marginal improvements were also noted for
CHI’s solvency ratios at yearend as bank debt-to-equity and total debtto equity ratios registered at 0.07:1 and 0.32:1, respectively.
As part of our continuing commitment to our stockholders, CHI
declared and paid a total of P134.41 million of cash dividends during
10
10
Catalyzing Change
Total Assets
(in thousand pesos)
5,327,720
4,579,702
2005
Stockholders’ Equity*
(in thousand pesos)
5,658,583
3,975,562
5,773,216
3,443,944
4,694,705
2006
2007
2008
2009
2005
3,554,718
4,143,348
3,710,489
2006
2007
2008
2009
*Before minority interest
Cebu Holdings, Inc. and Subsidiaries
Year Ended December 31
As Restated
2009
2008
2007
2006
2005
1,288,284
1,500,031
1,281,745
1,037,397
691,274
Net Income
302,192
399,479
251,775
206,778
117,346
Cash Dividends (P0.07-2009) a share
134,406
134,406
96,004
96,004
-
For the Year (in thousand pesos)
Revenues
At Year-End (in thousand pesos)
5,773,216
5,658,583
5,327,720
4,694,705
4,579,702
Cash and Cash Equivalents
905,093
834,752
904,767
532,127
427,734
Bank Loans
275,000
330,000
330,000
199,995
349,715
4,440,531
4,267,732
3,983,183
3,808,761
3,678,158
Earnings
0.16
0.21
0.13
0.11
0.06
Cash Dividends
0.07
0.07
0.05
0.05
0
Book Value
2.16
2.07
1.93
1.85
1.79
Current Ratio
1.68
1.51
2.01
1.93
2.16
Bank Debt-to-Equity Ratio
0.07
0.08
0.09
0.06
0.10
Total Assets
Stockholders’ Equity
Per Share (in pesos)
Financial Ratios
11
11
We will continue to drive the business by shifting our focus to
recurring income. Through properties we develop, we create
increasing value to achieve a sustainable future.
Similarly, Cebu Business Park (CBP) is also working on its PEZA
accreditation and was granted pre-qualification clearance for the
declaration of CBP as an Information Technology (IT) Park. With
the endorsement of the Cebu City Mayor secured, the PEZA Board
endorsed CBP-IT Park (the name with which CBP will henceforth be
known) to the Office of the President for the issuance of the required
Presidential Proclamation. The PEZA accreditation is envisioned to spur
activity as we ride on the IT boom — one of Cebu’s primary engines of
growth.
As the commercial front remained active, real estate development
followed suit. Affordable to mid-market projects entered the market
with house and lots for the Filipino breadwinner, whether domestic or
overseas.
The high-end residential market remains stable with Amara as market
leader (71 percent market share). By the end of 2009, Amara North
Tranche 1 was 91 percent sold while Tranche 2 was 56 percent sold,
Jose Maria D. Lopez
Real Estate Development
Group Head
just two months from its launch in October.
Market demand for real estate remained healthy throughout 2009.
Regardless of the economic climate, a positive outlook persisted. As
Real estate will always have to ride the waves of economic cycles.
With a greater part of the world falling into one of the steepest global
slumps since the Great Depression, the Philippines proved resilient
with the economy growing at a pace of 1.1 percent (GDP) due to strong
remittance inflows, tourism and business process outsourcing (BPO)
investments.
The BPO sector in Cebu has continued to support the province with
continued investments and increased manpower employment. Not
surprisingly, Cebu has been dubbed the Top Emerging BPO Destination
two years in a row.
Asiatown IT Park has capitalized on the influx of BPO companies as
the preferred BPO location in Metro Cebu. It houses a clear majority
(71 percent) of PEZA-accredited BPO companies in the city. The major
mover this year was the establishment of the P900 million Aegis
People Support House within Asiatown I.T. Park. The eBloc Tower office
floors were also fully leased in 2009 (only one year post-completion) to
international locators - NCR and JP Morgan Chase Bank.
12
12
Catalyzing Change
observed in the customer satisfaction survey, motivation to purchase
Amara has shifted from that of previous years and is now leaning
towards investment rather than personal use. This proves Amara’s
value appreciation as a critical factor for buyers. Discerning buyers
consider property value as an important consideration for purchase.
The continued introduction of fresh project features coupled with
the strategic release of limited inventory adds a scarcity value to our
development as evidenced by the successful launch of Amara North
Tranche 2.
Condominium development continued to thrive in Cebu as a byproduct of the outsourcing boom. It expanded the client base to
include not only local residents, investors and overseas Filipinos but
also expatriates and foreign nationals.
The real estate industry in Cebu is poised for a rebound in 2010. While
some chose the side of caution during the economic crisis, we have
decided to view this as an opportunity. Fueled by positive market
indices in the sectors of BPO, overseas remittances and tourism – Cebu
Holdings, Inc. will play an active role in Cebu’s upturn with real estate
development at its epicenter.
Ultimately, it is the intimate understanding of the customers we
serve which continuously allows us to deliver beyond expectations.
Q: How has the 2009 global financial crunch affected the Cebu
real estate market?
A: The year 2009 was faced with challenges from the global
economic crisis to the natural and political calamities which
plagued our country. The market felt the need to exercise
caution, if not restraint. This impetus drove the Marketing and
Sales Team to turn the crisis into opportunities which spelled
our success story for 2009.
Despite the crunch, Cebuanos proved to be a class of their
own. Amara generated higher sales take-ups for Amara North
Tranche 2 versus the earlier Tranche 1 launched in 2008,
despite a notable price increase which raised the bar in
Cebu’s high-end lots only category. This we achieved through
continuous improvement of the project features coupled with
the strategic release of limited inventory to create scarcity value.
Cebu Business Park continues to be a reliable investment in the
midst of the unstable economic climate.
These prove that though the market reeled from the crunch, it
was nevertheless able to hold its own.
would make it attractive to a market with varying preferences for
Q: What opportunities were made available in 2009 and how has
the Marketing and Sales Team responded to these?
their dream seaside home.
For Cebu Business Park, we leveraged on our relationships with our
A: The crisis confirmed a strong need for superior value from a
developer with the best track record. More than any other time,
integrity was key. The crisis provided an opportunity for us to
leverage on the difference our name makes. When everything
old buyers. This forged a strong confidence in our product/service
package that keep bringing customers back.
Ultimately, it is the intimate understanding of the customers we
else is uncertain, the brand markets itself.
serve which continuously allows us to deliver beyond expectations.
The crisis was an opportunity to grow the brand name by virtue of
the market’s enduring trust especially at the most trying of times.
People looked to a name they could be sure of: they turned to us.
We used this break to show our continuous development in all our
projects and assure buyers of our commitment.
Q: What were the results of these responses?
A: The year indelibly stamped Cebu Holdings, Inc. for our more than
20 years of community-building. This track record precedes and
guides us in setting the pace and development of the region.
In response to the challenges of the previous year, the Marketing
For Amara, we saw a chance to meet the market’s varying needs
through lot classifications that give wider options to our customers.
Despite increased prices, we gave added value to each lot that
Laurence John I. Visco
Marketing and Sales Head
and Sales Team took to heart our persistent mission of delighting
the customers.
13
13
For Amara, we benefited from offering our prime lots in limited
Q: What were the results in terms of customer satisfaction?
tranches. Despite the economic turmoil, our customers responded
with their usual gusto: take-up of the limited lots was brisk and
A: We are proud to have maintained our Very Good rating from the
within target. To generate superior value, the team went through
External Customer Satisfaction (ECS) survey which solicited and
the painstaking process of deliberate classification of each lot
quantified our customers’ feedback to the Marketing and Sales
to fully consider our customers’ needs. As a result, Amara North
process.
Tranche 2 achieved 50 percent take-up within one month from
launch, versus the same take-up in six months of Tranche 1 lots
In 2009, we expanded the ECS survey beyond our customers’
launched in 2008. Amara maintains its leading position in the high-
experience upon purchase. We took the survey a step further
end lots only residential market in Cebu, a record maintained since
and tried to gauge our customers’ level of satisfaction with
Amara’s launch in 2005.
Amara’s masterplan, documentation, titling, lot turnover
experience, village administration, etc. In other words, we
Cebu Business Park (CBP) remains the premier business district in
gauged the post-sales experience.
the region, and will maintain its formidable position by riding on
Cebu’s leverage as the top emerging BPO destination in the world
Our buyers rated us Very Good for documentation and titling
(Tholons magazine). CBP is expecting the PEZA accreditation as an
(8.46 out of 10) and lot turnover experience (8.84). Furthermore,
IT Park soon. This will definitely spur more activity in development
89 percent rated that Amara exceeded client expectations for the
for the succeeding years.
lot turnover experience. Similarly, 88 percent of buyers felt that
their delivered lots exceeded their expectation.
Asiatown I.T. Park remains to be the biggest IT/BPO player in the
region. Housing 71 percent of BPO players in the island and 26
The village administration office was rated Excellent (9.08) while
percent of the total estimated BPO workforce, Asiatown I.T. Park’s
the village administration team rated Very Good (8.84), with 91
position is indeed a force to reckon with. BPO buildings in Asiatown
percent of the respondents noting the team’s within-the-day
I.T. Park enjoy higher lease and occupancy rates than any of its
response. The village facilities were rated Excellent (9.31).
counterparts. The eBloc Tower office spaces, designed for big BPO
players, were fully leased in the fourth quarter of 2009, less than a
year from the building’s completion.
14
14
Catalyzing Change
The overall service for post-turnover was rated Excellent (9.04).
Q: What is the Marketing and Sales Team’s outlook for 2010?
A: As the economy recovers, the team forges ahead, having bravely
maintained our leadership despite the tumultuous climate of
2009. Marketing and Sales is ready for a banner year in 2010
with three new project/phase launches for potentially recordbreaking sales. We will see the launch of Amara’s newest phase.
An affordable residential condo play is slated for Asiatown I.T.
Park. City Sports Club Cebu is set to excite the market with an
The year indelibly stamped Cebu
Holdings, Inc. for our more than
20 years of community-building.
This track record precedes and
guides us in setting the pace and
development of the region.
upscale residential condo.
Synergies will be forged with the formation of the Ayala Land
Corporate Marketing and Sales Group (CMSG), a gathering
of Ayala Land-wide marketing and sales team members for
enlarged strength and shared empowerment. 2010 will see
deliberate moves to unite the group and utilize the available
resources and best practices to launch greater success of our
projects.
15
15
Amara
Amara has maintained its position as the leader in the local high-end
residential market. More than 40 percent of the lots were sold in 2009
with the launching of the Amara North tranche 2 in October 2009.
The second Tranche of Amara North has 50 lots, including a limited
number of highly coveted “Horizon” lots perched on the bluff of the
Catarman headland, affording infinite views of the Camotes Sea. This
new cluster of prime lots in Amara North will enjoy close access to the
jewel of this phase, an existing wharf at the headland.
In 2009, there were 19 lots sold since tranche 2 was launched, while 31
out of 58 lots were sold in Amara North 1.
Designed as a truly distinctive community, Amara North complements
the first-class resort amenities of earlier sold-out phases, including the
grand clubhouse, an esplanade, the sports and recreation center, the
Serenity Park and the picnic grove.
over 40%
of the lots sold in 2009 with the launching
of the Amara North tranche in October 2009
Amara 2009
New vs. Repeat Buyers
High-End Residential Lots
Market Pie
Competitor X
0%
Competitor Y
7%
Competitor Z
22%
Repeat
29%
New
71%
Amara
71%
Amara retains market leadership in the high-end residential segment with 71 percent. Despite the
year’s economy described as being in “crisis mode”, sales continued to come in. This shows that
real estate and to be specific, an Amara property is indeed an excellent hedge during economic
uncertainty.
16
16
Catalyzing Change
Slight increase in repeat buyers, illustrate the trend where previous Amara buyers are purchasing
even more Amara lots as testament to superior project delivery and customer service. Amara is not
just a residence built for people to live in but it is now being explored as a second home, a vacation
home and even a worthwhile investment given its appreciation over the years.
17
17
17
Cebu Business Park
The Company sold a 1,223 square-meter corner lot at Cebu Business Park (CBP) at P43 million in 2009.
The continuing growth of CBP is evidenced by the robust build-up in the area. Among the recently completed constructions in CBP are
the 23-storey Lexmark building, Chinabank, Creativo and The Terraces. CBP now hosts a total of 23 buildings, with another four under
construction.
In 2009, Cebu Holdings, Inc. pushed for the accreditation of CBP as economic zone. The Company secured the endorsement of the Cebu
City government and received the approval from Philippine Economic Zone Authority (PEZA) for the declaration of CBP as an Information
Technology (IT) Park. With IT as one of Cebu’s engines of growth, the accreditation of PEZA is expected to create a fresh market for CBP.
23
buildings located at the CBP
18
18
Catalyzing Change
Cebu Business Park 2009
New vs. Repeat Buyers
Repeat
22%
New
78%
19
19
19
Asiatown I.T. Park
Asiatown I.T. Park, flagship project of CHI subsidiary Cebu Property
Ventures and Development Corporation, is now home to more than
80 local and multi-national companies. With the increasing build-up
and recent completion of Skyrise 3, i3, TGU Tower and eBloc Tower, it
continues to serve the fast growing information and communications
technology (ICT) industry by providing IT-enabled buildings, office
spaces, amenities and facilities.
There are currently 12 buildings in Asiatown I.T. Park, housing some
over 13,000
jobs generated at the IT park in 2009
of the top IT companies including NEC Telecom Software Phils, Aegis
People Support, Rapid Solutions, NCR Cebu Development Corp., JP
Morgan Chase Bank, Xlibris, IBM Philippines, Qualfone Philippines,
eTelecare, Convergys, Dash Engineering, ACS Philippines, Globe
Telecom and Innove. Asiatown I.T. Park is home to 70 percent of
business process outsourcing (BPO) companies in Cebu.
Asiatown I.T. Park
new and repeat buyers (1996-2009)
The IT Park generated over 13,000 jobs as of the end of 2009, more
than a hundred percent increase in workforce from over 6,000 in 2006.
Asiatown I.T. Park is the first IT Park accredited by the Philippine
Economic Zone Authority (PEZA) in Visayas and Mindanao. It is
Repeat
44%
positioned as a viable place for locators engaged in the business of
New
56%
20
20
Catalyzing Change
information technology and IT-enabled services.
eBloc Tower
A 12-story mid-rise office building, the eBloc Tower was completed
in 2009 and is now addressing the need for more office space of
business process outsourcing (BPO) companies and retail stores in
Cebu.
The first among many projects to be pushed for Cebu’s twin-win
industries—information and communication technology (ICT)
and tourism—the eBloc Tower is a project of the Asian i-Office
Properties Inc. (AiO). AiO is a special purpose vehicle created
with the efforts and resources of the Cebu Property Ventures and
Development Corporation (CPVDC) and the Ayala Land Inc. (ALI)
corporate business group.
The eBloc Tower houses two of the biggest global BPO/IT
companies: NCR Cebu Development Center, Inc., which is 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, and JP Morgan Chase Inc., a
leading global financial services firm.
Located along Jose Ma. Del Mar Avenue in Phase 1 of the Asiatown
I.T. Park, the eBloc Tower sits on a 4,432-square meter lot near the
Globe Telecom Tower, Skyrise and CJRS buildings.
21
21
21
Retail Business
To maintain our position as the premier lifestyle destination in the
region, we continue to increase our leasing portfolio to add top brands
and promising homegrown concepts to our mall offerengs.
2009 marks the 15th anniversary of
Ayala Center Cebu.
options, and created special zones that
will spark interest for our shoppers.
Through the years, Ayala Center Cebu
has become a unique landmark and
popular lifestyle destination in Cebu.
After more than a decade of operations,
Ayala Center Cebu continues to redefine
the cosmopolitan lifestyle of the
Cebuanos with a diverse mix of retail,
dining, and entertainment choices
conveniently located right in the middle
of the bustling urban city.
The Terraces has exceeded the
expectations of mall-goers – tourists
and locals alike. Shortly after its
opening in November 2008, it gained
recognition from the Provincial Board
in a resolution commending the mall’s
environment-friendly development.
With its distinctive world-class
architecture and a wide variety of
international cuisine, The Terraces
has since then become a favourite
celebrations destination for gourmands,
photography buffs, and nature lovers.
Undaunted by the economic downturn
in 2009, Ayala Center Cebu continues to
sustain leadership in its target market.
Since the mall’s opening in 1994, we
have always listened to the market’s
evolving demands and strive to rise up
to the challenge. With this, we have
refined the offerings of the mall to
cater to more sophisticated lifestyle.
We introduced new concepts in Cebu,
expanded our wellness and pampering
The growing number of sports
enthusiasts in Cebu led to the
conversion of the previous Ayala Food
and Entertainment Center to the Active
Zone. Conveniently located in one of
the mall’s high traffic car drop-offs and
accessible from both the main mall and
The Terraces, the Active Zone introduces
popular brands in fitness and sporting
goods and apparel in answer to the
demands of the active lifestyle of the
Cebuanos.
Because of these efforts, Ayala Center
Cebu increased in average daily foot
traffic by 11 percent in 2009. With
additional access to our basement
parking and parking building, carpark
usage increased by 49 percent. By the
end of 2009, the existing mall was
already 98 percent leased out, while
The Terraces was 91 percent leased out.
As a result, the mall realized a sales
growth of 25 percent.
We would not have been able to achieve
such success without the continued
support of our merchant partners. In
turn, we go the extra mile to make our
merchants feel proud to be part of the
Ayala Malls family. With our Merchant
C.A.R.E. Program (Communication,
Alliance, Recognition, and Enrichment),
our team gets to meet with merchants
regularly to discuss issues ranging
from customer complaints, visual
merchandising, sales performance,
among others. We also hold an annual
merchants’ meeting to provide updates
on the mall’s performance and to
discuss future directions. We give due
recognition to exemplary stores in
our Annual Merchants Awards. To give
equal importance to our merchants’
employees, we provide them with
trainings and workshops on customer
service, security, customer safety and
health. To strengthen our relationship
with them, we give them a chance to
enjoy, in an annual fellowship. All
these initiatives serve to ensure that the
brand proposition of an Ayala Mall will
be carried out through those who have
direct contact with our shoppers.
The positive results of our 2009
initiatives prove that growth
opportunities continue to emerge even
in difficult business environments. In
these challenging times, we believe
that it is even more important not
only to focus on our customers, but
also to deliver more than what is
expected. With renewed passion and
determination, we look forward to
making Ayala Center Cebu the mall of
choice for both valued shoppers and
merchants.
Clavel G. Tongco
Retail Business Group Head
22
22
Catalyzing Change
Q: How was 2009 for the mall in terms of
the market’s visiting and spending?
A: We are happy to note that the mall
registered positive sales growth in 2009
despite the slowdown on economic
activities due to the global crisis. Dining
and basic shopping were indicated as the
top activities. We have seen people who
kept coming back to The Terraces as they
explored its new offerings in dining and
wellness concepts.
The entry of more established retail
brands created an impact in attracting
a large base of our customers. Each
shopper who visited the mall was noted to
do more than shopping for their fashion
choices.
To address the shift of shopping activities,
we focused on strengthening our
marketing communications in terms of
our fashion mix. In 2009, we did a series
of events and activities to hype up these
offerings, particularly in the second and
third quarters of the year. These were
unique concepts combining fashion and
electronic gadgets, photography, arts
and music. Major events included the
“Summer Soiree,” featuring summer wear
collections, the “World Music and Fashion
Walk,” “Kaleidoscope Fashion and Art,”
and the “Amazing Shopping Challenge”.
participation in the global “Earth Hour”
activities in March. Before the switch-off,
the day’s activities included a forum and a
signature campaign among shoppers.
relationships with socio-civic groups like
the Rotary Club of Fuente-Cebu and Gloria
Maris, Cebu Cancer Society, I Can ServeCebu Chapter.
During the global “Earth Day” celebration
in April, the mall provided space
for our partners in our neighboring
communities to showcase products
made from recyclables, including organic
fertilizers generated from the successful
implementation of the mall’s solid
waste management program conducted
in partnership with our neighboring
communities.
“Think Pink in 2009 (Year 2)” was even
bigger, with more exciting activities and
greater participation from the community.
Events included a photo exhibit featuring
cancer survivors and selected advocates,
“Pink Organic Garden,” “Pink Concert” and
the “Pink Dinner”.
The biggest campaign in the area
of environmental stewardship was
“Greenology”. It was a month-long
celebration in September that earned
a Cebu City Council commendation for
environmental consciousness among
Cebuanos. The campaign featured
“Eco Art,” entitled Eco-Librium, an art
competition, using junk or recyclable
materials, the “Green Fashion Line”,
creation of clothes and accessories
made from eco-friendly materials, the
launching of eco bags or reusable bags
by top fashion designers, “Eco-Dash,” an
environmental fun run, and “Save Money
and Save the Earth” promo at the Food
Choices. These events culminated with a
mall-wide “Green Sale.”
Q: How did you engage and encourage your
merchants to support your marketing
programs?
Q: When do you consider a marketing
initiative effective? Can you cite some
that you did for 2009?
A: A key element in the success of our
sales and promotions was the support
and cooperation of our merchants.
What makes our relationship with our
merchants distinct is the extra mile we go
to assist them with their marketing needs
and requirements. This is especially true
with our Manila-based merchants with
whom we collaborate closely in terms of
logistics and other needed support in the
local setting. Last year, with the entry of
new concepts, we assisted several of our
merchants in their store launches and
sustaining events.
A: A successful marketing plan generates the
shopper traffic that we want, pulls in the
target market we identified, and increases
the sales of our merchants. In addition,
recognition from either the government
or respectable organizations also serves
as validation of the relevance of our
initiatives.
Q: What were the new marketing initiatives
for 2009?
A: In line with the direction of the Ayala
group of companies, sustainability
was a major thrust in 2009. This was
highlighted in various marketing
initiatives, which started with the mall’s
Another milestone for Ayala Center Cebu
was the “Philippine Quill Merit Award”
given by the International Association
of Business Communicators (IABC)
One of the prestigious awards that the
mall earned in 2009 was a “Gold Award
for Marketing,” under the Community
Relations category for the “Think Pink”
campaign, given by the International
Council of Shopping Centers in Suntec
Singapore last October 15, 2009.
The “Think Pink” campaign was developed
to increase awareness and participation of
our shoppers in observing healthy living
through fashion, dining and the “pink”
or healthy lifestyle. Think Pink was made
possible with partnerships and forged
Jovita R. Polloso
Commercial Center Division Head
23
23
Retail Business
Ayala Center Cebu Revenues
(in millions)
Philippines for the “Terraces Grand Launch Campaign”. Gaining
special recognition in the Communication Management Category
for Special Events, the winning entry entitled “The Terraces: An
Urban Escape Made for Extraordinary Celebrations,” detailed Ayala
Center Cebu’s pre-launch, launch and sustaining activities that have
defined The Terraces as truly a Cebuano landmark.
697
586
538
508
492
Q: How did you strengthen the Customer Service program?
A: In 2009, we launched the “It’s Always U-First” campaign for the
mall. This is an expression of how we give attention and priority to
the needs of our shoppers. One is the “U-First Priority Shopping”
that provides convenience to the senior citizens and Persons With
Disabilities (PWD). Another program is the “U Talk, We Listen” which
receives and processes comments, suggestions and feedback from
shoppers. And the last is the “Family Corner and U”, a safe, quiet
and comfortable place where families can bond.
The mall initiated a partnership with the PWD Council, which
provided guidelines that would help PWDs achieve independence
and self-reliance. To address this market, improvements were
done in 2009 that included elevators and seats with signages that
give priority to PWDs, designated tables at Food Choices, lowered
pay phones for ease and accessibility, and separate lanes at the taxi
loading areas and at the Ayala Cinemas. We also renovated our
PWD restrooms to comply with the requirements prescribed by the
PWD Council and the Cebu City Government.
2005
2006
2007
2008
2009
Revenue grew by 19% in 2009 due to:
• The Terraces’ first full year of operations
• Sales growth of 25% versus 2008
• Increased carpark usage, 49% higher than 2008
Ayala Center Cebu Net Operating Income
(in millions)
410
222
2005
264
2006
313
2007
337
2008
2009
Net operating income grew by 22% in 2009 due to:
• Efficiency of The Terraces in terms of operating cost
• Lower marketing expenses versus 2008
• Control of the common utilities expenses in the main mall
• Rationalization of guard deployment
24
24
Catalyzing Change
Lease Occupancy: The Terraces
Lease Occupancy: Main Mall
(as of December 31, 2009)
Under Construction
4.9%
Under Negotiation
4.3%
For Offer
5.4%
Under Construction
1.1%
Vacant Spaces
1.3%
Operational
97.6%
Operational
85.3 %
Ayala Center Cebu - The Terraces
The year 2009 marks the first full year of operations for The Terraces, the ambiance-driven dining and lifestyle component of Ayala Center
Cebu The development saw the opening of several much awaited first-in-Cebu dining concepts, such as Seattle’s Best Coffee, UCC Café
Terrace, Red Kimono, and Mesa. Also introduced were new and unique home-grown concepts like Canvas Bistro Bar Gallery and Tsim Sha
Tsui Dimsum and Tea Bar. Coupled with the opening of popular dining and entertainment concepts like BreadTalk, Bistro Ecila, Casa Verde,
Hola España, La Tegola, among others, The Terraces continues to offer a wide variety of gastronomical delights in a distinctive sun-up to
sun-down experience amidst landscaped greeneries and soothing water features.
The lifestyle and wellness area of The Terraces was highlighted with the greatly anticipated opening of Belo Medical and the Spa at Cebu in
the first half of the year. The main mall also introduced more pampering and wellness options with the opening of David’s Salon, Bruno’s
Barbers, Skin Science, Hollywood Nails, Care and Cure Hub and others.
With over 50 dining, entertainment and lifestyle outlets, The Terraces has become a landmark in Cebu and a very strong anchor of the
mall. Carpark usage increased by 49 percent and average daily foot traffic grew by 11 percent.
25
25
Retail Business
Active Zone
As evidenced by the increasing popularity of numerous sports,
hobbies and events, Cebu is gaining increasing numbers of sportsconscious habitués with a health agenda. Thus, a section of the
mall was especially created to address and support the active and
healthy lifestyle of these Cebuanos. The Active Zone, which had a
soft opening during the last quarter of 2009, houses sports and
other active lifestyle-related brands with flagship stores, such as
R.O.X. (Recreational Outdoor Exchange), DC Shoes, Puma, Sanuk,
Hip Street, Wellness Concepts (carrying Life Fitness and Reebok
Fitness sports equipment), R Options, Skechers, Merrell, Juego by
Badminton Hub, Nike Park, Speedo, Adidas, Timberland, Fila and
G-Force.
Blessing and soft opening of Active Zone on October 15, 2009
26
26
Catalyzing Change
The Walk
After its launch in 2008, retail center, The Walk is now 93 percent
leased out. It now has more service offerings strengthening its
position as the place to unwind and de-stress at the heart of IT
hub, Asiatown I.T. Park.
Lease Occupancy: The Walk
The Walk is the first retail venture of CHI-subsidiary, Cebu Property
Ventures and Development Corporation.
This retail facility combines a strong mix of affordable dining
options and convenient services, making it the favorite hangout at
Vacant Spaces
6.9%
Under Construction
7.6%
Asiatown I.T. Park.
With the opening of five new outlets in 2009 including East West
Café, Go Nuts Donuts, Gamecore, CD-R King, and Smile Dental Care
Center, The Walk now houses a total of 20 stores. The Walk’s other
tenants are Barbecue Joe, Casa Verde, East West, Eye Bar, Figaro, La
Operational
85.5%
Marea, McDonald’s, Mercury Drug, Mooon Café, Pier One Bar and
Grill, Shakey’s, Tapa King and Galeon, Tomaneng and Torregosa
Law Offices.
After its first full year of operations, The Walk still retains its
unique charm and popularity with a steady stream of patrons – a
mix of BPO workers, executives, families, teenagers, and tourists
– foreign and local alike.
27
27
Management Systems
Management Systems
Cebu Holdings Inc.’s (CHI) Integrated Management Systems
(IMS) framework organizes the Company’s performance metrics.
Defining CHI as a company, the framework is reflected in our
vision, core values and the manner of doing business. This
framework aligns the Quality, Environment, Health and Safety
Management Systems (QEHS MS) with the Balanced Scorecard
(BSC). The broader scope is to document, monitor and evaluate
sustainability practices based on the triple bottom line approach
which encompasses economic, social and environment
Core
Competencie
s
Strategy
Core
Values
Cor
pora
ce
te Governan
TRI
PLE
BOTT
OM
28
28
Catalyzing Change
RA M
E
RK
INT
E
R
D
E
T
A
EM ENT S YS TEM
G
A
N
F
MA
WO
G
parameters.
NCE
LINE PERFORMA
Corporate Balanced Scorecard
FINANCIAL
Customer
Economic
Sustainability
Financial
Growth
Effective
Resource
Management
Internal Customer
Satisfaction Rating
(All departments)
Returns ROE/ROA
Revenue /
Income Growth
Margin
Improvement
External Customer
Satisfaction Rating
(All Projects and Managed
Properties)
Dividends
Asset Growth
Cost & Expense
Management
Total
Shareholder
Returns (TSR)
Community
Investments
internal business process
Market Leadership
Market Acquisition and
Retention
Improved Stakeholder
Engagement and
Customer Complaints
Handling
learning and growth
Improved
Business
Development
Processes
Transparency
/ Corporate
Governance
Best Practices
Environmental
Sustainability
Corporate
Social
Sustainability
Employee
Productivity
Competence
Building
Program
Integrated
Management
System
Improved
Product Quality
and Service
Delivery
Compliance
with Regulatory
Requirements
Employee
Health & Safety
Program
Employee
Volunteer
Program
Community
Alliances &
Partnerships
Employee
Wellness
Program
Employee
Satisfaction
Technology
Infrastructure
Technological
Innovations
Balanced Scorecard
Since first applying the strategic management tool in 2000, CHI continues to use the BSC to integrate performance drivers, based on the
QEHS Management Systems. With the system in place, the BSC, being an open framework, has started to incorporate key sustainabilityrelated indicators that form part of the overall corporate objectives, targets and programs.
In 2008, CHI moved towards BSC automation. The system enables employees to upload their scorecards, monitor the achievement of
targets on a monthly basis and align their scorecards with other departments. Part of the future enhancement is to eventually link the
system with the performance appraisal, which connects the key performance indicators in the BSC with actual results. The system was
rolled out initially to the senior personnel and to select teams who carried out a test run. The corporate scorecard shows CHI’s performance
in four interconnected aspects: financial, customer, internal business process and learning and growth.
29
29
Management Systems
The Value Delivery Chain
Determining Customer Value
Creating the Value
Innovation
Identification
of Customer
Needs
Marketing and
Communicating the Value
Operations
Delivering and
Sustaining the Value
After-Sales Service
Market
Research
Project
Conceptualization
Construction
Management
Value
Proposition
Marketing and Sales
Consultative
Collaborations
Quality, Time
and Cost
Monitoring
and Retail Operations
(Marketing and Sales)
(Marketing and Leasing)
Sales/Lease
Admin/Property
Management
Customer Satisfaction
Monitoring
Delivery of
Customer
Needs
Management Processes
Audit
Management
Review
Strategic Planning
and Review
Corrective / Preventive
Action
Control of Documents/
Records
Customer Surveys/Customer
Complaints Handling
Corporate Processes
Human Resource
Processes
Information Systems
Processes
Finance Processes
Corporate Communication
Processes
Accreditation, Bidding and
Purchasing Processes
Security Processes
Value Delivery Chain
CHI regards the value delivery chain as the basic element of strategic management, the means by which the organization at
various stages in its operations, determines, creates, communicates, delivers and sustains customer value.
Efficient and effective management of the Company’s value delivery chain relies on the use of the Balanced Scorecard
and QEHS MS. These systems serve as tools and standards by which each link in the value delivery chain is reviewed and
optimized.
The primary activities in the chain are supported by the organization’s infrastructure: its human resources, organizational
structure, finance and control systems, corporate culture, technology development, audit and communication processes.
Quality, Environment, Health and Safety Management Systems (QEHS MS)
CHI and its subsidiary, Cebu Property Ventures and Development Corporation (CPVDC) continue to be certified to the three
international standards on Quality (ISO 9001), Environment (ISO 14001), and Occupational Health and Safety (OHSAS 18001)
Management Systems. In 2009, two surveillance audits were done in February and October by the Company’s external
auditor, Certification International, Philippines. One internal audit was done in July of the same year by the internal QEHS
auditors, to ensure that the system is deployed, maintained and continually improved, in conformity with the ISO/OHSAS
standards.
Also in February 2009, CHI and CPVDC successfully passed the certification audit to the new OHSAS 18001:2007 standard and
prepared for the transition to the new ISO 9001:2008 standard.
30
30
Catalyzing Change
QEHS POLICIES INTERRELATIONSHIP
From the Company’s perspective, the Integrated Management System (IMS) policies are the guideposts on the Company’s
objectives and targets for:
a.Products and services - These should be of the best quality, with no negative impact on the environment, and delivered
with minimal risk to people working for the Company.
b.The laws and regulations relevant to the business - CHI’s aim is to go beyond mere compliance and to become the
industry trailblazer in best governance practices.
c. Employees - The Company ensures that they are competent to deliver the Company’s products and services of the best
quality; are cognizant of the environmental impacts and occupational health and safety risks of what they are doing; and
are working to prevent any negative impact and risk from occuring and recurring.
d.System - The Company aims to continually improve its system through a structured approach because it recognizes that
customers’ requirements are continually changing.
QEHS Policies Interrelationship
QUALITY
ENVIRONMENT
Customer satisfaction through product
Environmental impacts of the delivered
quality and service delivery
products/services are addressed
Address and comply with relevant
regulatory and statutory requirements
of products/services
Address and comply with relevant
environmental regulatory requirements
of products/services
Address and comply with relevant labor
laws and safety regulations
Employee competence to provide
quality products/services
Employee competence to deliver
quality products or services that use less
resources, and protect the environment
Employee competence to mitigate
hazards and risks in the operations to
deliver quality products and services
System improvement through regular
process reviews
System improvement through
regular resource conservation and
environmental protection
HEALTH AND SAFETY
Health and safety of employees when
delivering the products/services are not
compromised
System improvement through regular
risk mitigation
Raising QEHS MS Awareness among Suppliers and Contractors
To ensure that other interested parties (contractors, outsourced personnel and merchants) are made aware of the Company’s
QEHS MS, the information is disseminated through these means:
• For contractors, the Company does information dissemination through orientations and regular meetings, as reflected
in the provisions of the contract.
• Potential merchants are oriented on the Company’s QEHS requirements prior to the awarding of lease. This is also
captured in the processes of the Retail Business Group.
• The outsourced personnel are made to undergo an orientation prior to their deployment to the units. They also
participate as auditees in the internal and external QEHS MS audits.
As a proactive approach, the Company initiated the Contractors Development Program, with the aim of having the
contractors certified to ISO/OHSAS standards so that the contractors will have the same level of understanding particularly in
the areas of customer focus and socio-environmental impact. The program was started in the fourth quarter of 2008 and
continued in 2009, with the partnership of six contractors and a training company.
31
31
The Company’s structure of corporate governance is contained
Decision-making at the Board level adheres to an objective process
in the Articles of Incorporation and By-Laws and the Manual of
that does not undermine the independence and integrity of
Corporate Governance approved by the Board of Directors.
judgment of each individual director.
The corporate governance structure of Cebu Holdings, Inc. (CHI)
None of the members of the Company’s directors and
is a key element in promoting competitiveness, improving
management own two percent or more of the outstanding capital
financial growth and ultimately enhancing investor confidence. It
stock of the Company.
facilitates an efficient enforcement of the Company’s sustainability
Independent Directors
framework.
As a publicly listed company in the Philippine Stock Exchange
Board Structure and Process
(PSE), CHI conforms to the legal requirement to have at least two
Key Role and Responsibilities
independent directors or at least twenty percent of its board size,
Overall stewardship of the Company rests on the Board
whichever is less. CHI has three independent directors, Fr. Roderick
of Directors, the highest governing authority within CHI’s
C. Salazar, Jr., Enrique L. Benedicto and Hernando O. Streegan.
management structure. Collectively, the Board of Directors is
responsible for the success of the Company and ensures that CHI’s
The Company defines an independent director as holding no
obligations to its stakeholders are met.
interests or relationships with the Company that may hinder
his independence from the Company or management or would
Composition
interfere with the exercise of independent judgment in carrying
The Board brings to the organization a balanced mix of business,
out the responsibilities of a director. The Company complies
legal, and finance competencies, with each director capable of
with the rules of the Securities and Exchange Commission (SEC)
adding value and rendering independent judgment in relation to
with regard to the nomination and election of the independent
the formulation of sound corporate policies, on issues of strategy,
director.
resources, standards and performance related to corporate social
responsibility, environmental and economic sustainability.
Chairman
The Chairman of the Board is Antonino T. Aquino, who assumed
the position in 2009. Francis O. Monera holds the position of
Board Profile
Gender Profile
Age Profile
11%
Female
41-50
11%
Male
89%
Female
11%
51 and above
89%
89%
Male
32
32
Catalyzing Change
president. The existing board structure provides a clear division of responsibilities at the top of the Company, between the Board and the
executive responsibilities for the business. The respective roles of the chairman of the Board and the president are complementary. This
ensures an appropriate balance of power, increased accountability and further provides a greater capacity of the Board for independent
decision making.
Board Performance
Board meetings are held at least thrice a year or as often as necessary to fulfill its role. The Board has separate and independent access to
the Corporate Secretary who, among other functions, oversees the adequate flow of information to the Board prior to meetings and serves
as an adviser to the directors on their responsibilities and obligations.
Discussions during Board meetings are open and independent views are given due consideration. The Board held four meetings, including
the organizational meeting, in 2009. The record of attendance of the Company’s directors during the Board meetings is shown below.
Annual Stockholders’ and
Organizational Meeting
Regular MeetingS
Director
April 03
Jaime I Ayala *
Percentage
AUGUsT 24
NOVEMBER 16
April 29
P
P
P
100.00%
P
100.00%
Antonino T. Aquino
Francis O. Monera
P
P
P
P
100.00%
Antonio S. Abacan, Jr.
A
P
P
P
75.00%
Natividad N. Alejo
P
A
A
P
50.00%
Enrique L. Benedicto
P
P
P
P
100.00%
Fr. Roderick C. Salazar, Jr.
P
P
A
P
75.00%
Hernando O. Streegan
P
P
P
P
100.00%
Emilio J. Tumbocon
P
P
P
P
100.00%
Jaime E. Ysmael
P
P
P
P
100.00%
*Replaced by Antonino T. Aquino Legend: P – Present A – Absent
In 2009, the Board of Directors conducted a self-assessment of their performance covering the year, focusing on the level of Board’s
compliance with leading practices and principles on good governance, both as an individual member and as a Board’s collective governing
role. The formal self-rating system takes into account factors such as independence, experience, judgment, knowledge, time commitment
and teamwork, and identifies areas for improvement.
Board Committees
The Board has established committees to assist in exercising its authority including monitoring the performance of the business. To
aid in good governance, the committees support the Board in the performance of specific functions. The committees are the Executive
Committee, the Compensation Committee, Sustainability Committee, the Nomination Committee and the Audit and Risk Committee.
Executive Committee. The Executive Committee acts in accordance with the authority granted by the Board or in case of absence of the
Board on specific matters within the competence of the Board of Directors as prescribed in the Company’s By-Laws, except with respect to
any action for which shareholders’ approval is also required such as distribution of cash dividends; filling of vacancies in the Board or in
the Executive Committee; amendment or repeal of By-Laws or the adoption of new By-Laws; amendment or repeal of any resolution of
the Board of Directors which by its express terms is not so amendable or repealable; and the exercise of powers delegated by the Board
exclusively to other committees.
33
33
Compensation Committee. The Compensation Committee
of Corporate Governance of the Company and the pertinent
establishes a formal and transparent procedure for fixing the
rules of the Securities and Exchange Commission. Also, the
remuneration packages of corporate officers and directors. It
Committee is tasked to review and evaluate the qualifications of
provides oversight over remuneration of senior management and
all persons nominated to positions in the Company which require
other key personnel.
appointment by the Board.
In 2009, the Compensation Committee considered and approved:
In 2009, the Nomination Committee considered and approved the
1) the 2008 performance evaluation and promotion of associates,
final list of nominees for directors for the year 2009-2010.
managers and executives; 2) 2008 performance bonus for the
associates, managers and executives; 3) the salary adjustments for
Sustainability Committee. In 2009, the Company created
the qualified managers and executives for the year 2009.
a Sustainability Committee at the board level to establish
sustainability goals and objectives and oversee the
Nomination Committee. The Nomination Committee’s main
implementation of the Company’s sustainability initiatives and
function is to install and maintain a process to ensure that
programs. The Committee is chaired by Francis O. Monera,
all directors to be nominated for election at the annual
who also serves as the Company’s president. He has Emilio
stockholders’ meeting have all the qualifications and none of the
J. Tumbocon and Hernando O. Streegan as members. The
disqualifications for directors as stated in the By-Laws, the Manual
Committee, in the performance of its functions, is supported by
Executive Committee
Board
Compensation Committee
Internal Audit
Risk and Audit Committee
President
Nomination Committee
Sustainability Council
Sustainability Committee
Compliance Officer
Management Committee
Business Groups
Real Estate
Development Group
Project /
Business
Development
34
34
Catalyzing Change
Marketing
and Sales
Corporate Services
Group
Retail Business Group
Project /
Business
Development
Marketing and
Operations
Finance
Human
Resources
and Admin
Market
Research
Construction
Management
Property
Management
Corporate
Communication
and Customer
Affairs
Information
Systems
Security
the Sustainability Technical Working Group (STWG) headed by the
The Audit and Risk Committee had four (4) meetings in 2009.
Corporate Sustainability Officer (CSO), and the three-person core
During these meetings, the Audit Committee reviewed and
team. The Sustainability Committee’s role is to provide assistance
approved the following: 1) internal and external audit plans;
to the Board of Directors in its responsibility to the Company’s
2) re-appointment of Sycip, Gorres, Velayo and Company (SGV
stakeholders that relate to the Company’s growth in the areas of
& Co.), as the external auditors of the Company; 3) quarterly
1) economic performance, 2) environmental stewardship and 3)
unaudited financial statements; 4) consolidated audited financial
corporate social responsibility.
statements as prepared by the external auditors SGV & Co.; and
5) internal audit results.
The Committee is tasked to review and evaluate the following:
1) initiatives and recommendations of the Company’s STWG;
In 2009, the Audit and Risk Committee was also oriented on
2) existing and proposed external stakeholder partnerships;
other aspects of the Company apart from internal audit, financial
3) new and innovative technologies applied in the Company’s new
reporting and external audit. This is for the Committee’s further
projects and managed properties; and 4) the performance of the
awareness and appreciation of Company’s initiatives and
CSO, the three-person core team and the STWG.
programs.
Audit and Risk Committee. The scope of the Audit Committee was
An overview of the internal business processes of the following
expanded to include Risk Management in its oversight functions.
were taken up in 2009: 1) Corporate Communication and
The Committee is now named the Audit & Risk Committee.
Customer Affairs Division (CCCAD), 2) Retail Business Group or
Ayala Malls Group (AMG), 3) Corporate Sustainability Framework,
The Audit and Risk Committee’s roles and responsibilities are
and 4) Marketing Department of the Real Estate Development
defined in the Audit and Risk Committee Charter approved by
Group (REDG). The Audit Committee will continue to be oriented
the Board of Directors. The Audit and Risk Committee provides
on other initiatives and programs in the succeeding years.
assistance to the Board of Directors in fulfilling its oversight
responsibility to the shareholders relating to: 1) the Company’s
The Audit and Risk Committee’s activities are further discussed in
financial statements and the financial reporting process; 2) the
its Report to the Board of Directors.
systems of internal controls and financial reporting controls;
3) the internal audit activity; 4) the annual independent audit
Director and Senior Executive Compensation
of the Company’s financial statements; 5) compliance with legal
Non-executive directors, are defined as members of the Board of
and regulatory matters; and 6) the adequacy of risk management.
Directors who are neither officers nor consultants of the Company,
Committee Members
The members of each Committee are set forth in the matrix below:
Executive
Committee
Compensation
Committee
Nomination
Committee
Antonino T. Aquino
M
C
M
Francis O. Monera
M
M
C
Natividad N. Alejo
M
M
Emilio J. Tumbocon
C
Jaime E. Ysmael
M
Audit and Risk
Committee
Sustainability
Committee
C
M
Fr. Roderick C. Salazar, Jr.*
Enrique L. Benedicto*
Hernando O. Streegan*
C
M
M
M
M
C - Chairman, M - Member, * - Independent Director
35
35
receive remuneration consisting of a per diem of P20,000.00
by establishing the following mechanisms in its organization:
for each Board meeting attended and P10,000.00 per Board
1) purposeful legal and organizational structures that work
committee meeting actually attended. The said remuneration of
effectively and efficiently in attaining the goals of the Company;
non-executive directors was implemented effective April 28, 2006.
2) useful planning, control, and risk management systems
that assess risks on an integrated cross-functional approach; 3)
None of the directors, in their personal capacity, has been
information systems that are defined and aligned with IT strategy
contracted and compensated by the Company for services other
and the business goals of the Company; 4) a plan of succession
than those provided as a director.
that formalizes the process of identifying, training and selection of
successors in key positions in the Company.
The Company adopts a performance-based compensation scheme
for its senior executives as incentive. Performance assessment of
Management is primarily accountable to the Board for the
top management and associates is based on the corporate and
operations of the Company. As part of its accountability, it is
functional Balanced Scorecard (BSC) Management System in which
also obligated to provide the Board with complete, adequate
targets include, but are not limited to the financial aspects of the
information on the operations and affairs of the Company in a
business. Other key result areas focus on non-financial aspects
timely manner.
such as the Company’s customers, internal business processes,
and the organization’s learning and growth that cover the
Accountability and Audit
requirements of the Company’s Quality, Environment, Health and
The Audit and Risk Committee provides oversight to external and
Safety Management Systems (QEHS MS). The QEHS Management
internal auditors. The internal audit function of the Audit and Risk
Systems establish the processes of implementing and monitoring
Committee is governed by a separate Internal Audit Charter.
programs and initiatives related to quality products and services,
customer satisfaction, environmental sustainability and social
Independent Public Accountants. The principal accountants and
responsibility.
external auditors of the Company is the accounting firm of SGV &
Co. Davee M. Zuñiga is the Partner In-charge in 2009.
The total compensation paid to non-executive directors as well
as officers is disclosed annually in the Definitive Information
The Audit and Risk Committee is empowered to independently
Statement sent to shareholders, together with the Notice of
review the integrity of the Company’s financial reporting and
Annual General Meeting, 15 business days prior to the Annual
oversees the independence of the external auditors.
General Meeting. The total annual compensation includes the
basic salary and other variable pay (i.e. guaranteed bonus and
The Audit and Risk Committee is responsible for checking all
performance-based incentive).
financial reports for compliance with the internal financial
management handbook and pertinent accounting standards,
Management
including regulatory requirements. It also recommends to the
Management stands as the locus of decision-making for the day-
Board and stockholders the appointment of the external auditors
to-day affairs of the Corporation. It determines the Company’s
and the setting of appropriate audit fees.
activities by putting the Company’s targets in concrete terms and
by formulating the basic strategies for achieving these targets. It
Over the past two years, CHI and its subsidiaries paid or accrued
also puts in place the infrastructure for the Company’s success
the billed fees (see table below), to its external auditors, SGV &
Audit and Audit-related fees
Tax Fees
Other Fees
2009
P 589k
None
None
2008
P 561k
None
P 150k
2007
P 488k
None
None
*Other services and out-of-pocket expenses
36
36
Catalyzing Change
Co., who was engaged to audit the Company’s annual financial
Compliance Officer. Eleanore R. Tomaneng has been the
statements.
Compliance Officer of the Company since 2008. She holds the
position of Finance and Control Officer with the rank of senior
Internal Audit
division manager. As Compliance Officer she reports directly to
The Internal Audit Department provides independent and
the Board. She is responsible for monitoring compliance with
objective assurance and consulting services to the Company
the Code of Corporate Governance and the rules and regulations
with the objective of adding value and assisting the organization
of regulatory agencies and, if any violations are found, reports
in accomplishing its objectives through effective control, risk
the matter to the Board. She recommends the imposition of
management and governance processes.
appropriate disciplinary action on the responsible parties and the
adoption of measures to prevent a repetition of the violation.
The Department reports to the Audit and Risk Committee of
the Board of Directors, and likewise assists the Audit and Risk
Disclosure and Transparency
Committee in carrying out its duties and responsibilities as
CHI is committed to high standards of disclosure and transparency
provided for in the Company’s Manual of Corporate Governance.
to enable the investment community to understand the true
Annual audit plans, status updates and accomplishment reports
financial condition of the Company and the quality of its
are submitted by the department to the Audit Committee for
corporate governance.
review and approval.
Ownership Structure. The Company has a transparent ownership
Regular audits of business and corporate service groups are
structure. It annually discloses the top 20 holders of the common
conducted in accordance with the approved audit plan. Special
equity securities of the Company. In addition, disclosure of the
audits are undertaken when necessary. The QEHS MS internal
security ownership of certain record and beneficial owners owning
audits are conducted every 12 months and in accordance with the
more than five percent as well as of directors and management is
QEHS MS annual audit program. The Department also heads a
made annually. This information is also contained in the Definitive
cross-functional team of QEHS MS auditors.
Information Statement sent to shareholders.
Risk-Based Audit Approach. The Internal Audit Department
Content and Timing of Disclosures. CHI updates the investing
executed its audit activities for 2009 in accordance with the
public with strategic, operational and financial information
risk-based audit approach in conformity with the International
through adequate and timely disclosures filed with the SEC
Standards for the Professional Practice of Internal Auditing (ISPPIA)
and PSE.
and, at the same time, complies with the Securities and Exchange
Commission’s Code of Corporate Governance (SEC Memorandum
In addition to compliance with periodic reportorial requirements,
Circular No. 6: Series of 2009).
the Company punctually discloses major and market-sensitive
information such as dividend declarations, joint ventures and
Quality Assurance Improvement Program (QAIP). In compliance with
acquisitions, sale and disposition of significant assets, as well
ISPPIA and the ongoing commitment to growth and improvement, the
as other material information that may affect the investment
Internal Audit Department implemented a five-year Quality Assurance
decision of the investing public. In 2009, unstructured disclosures
Improvement Program (QAIP) beginning 2009.
were filed involving matters such as the declaration of P0.07 cash
dividend to common shareholders.
As scheduled, the department conducted assessments involving
internal evaluations of the internal audit activity, coupled with
Consolidated audited financial statements for the latest financial
periodic self-assessment and/or reviews.
year are submitted to the SEC on April 15, as required. The audited
annual report is submitted at least 15 working days before the
The Department also addressed the recommendations of the
Annual General Meeting. In 2009 the audited Annual Report as
external Quality Assessment Review (QAR) conducted in 2008,
contained in the Definitive Information Statement was submitted
including best practices and areas for improvement.
to the SEC and the PSE on March 18, 2009, more than three weeks
before the April 29, 2009 Annual General Meeting.
37
37
Top shareholders of the common equity securities of the Company
Name, address of Record
Title of Class
Owner
Name of Beneficial Owner
Common
Ayala Land, Inc.
31/F Tower One Bldg.
Ayala Ave., Makati City
Ayala Land, Inc.
907,350,833
Common
BPI Capital Corp.
8/F BPI Bldg., 6768 Ayala Avenue,
Makati City
BPI Capital Corp.
295,499,857
Common
PCD Nominee Corp.
(Non-Filipino)
G/F MSE Bldg.
Hongkong and Shanghai Banking
Corporation (HSBC)
254,979,125
Common
PCD Nominee Corp.
(Filipino)
G/F MSE Bldg.
Hongkong and Shanghai Banking
Corporation (HSBC)
187,947,701
Common
First Metro Investment Corp.
2/F Wellington Bldg.
Plaza Lowrenzo Ruiz
Binondo, Manila
First Metro Investment Corp.
186,695,363
Interim (i.e., quarterly financial statements) are released between
The following are disclosed in the Note on Business Segments:
30 and 45 days from the end of the financial period. The results
• total revenue
are disclosed to the SEC and PSE within 24 hours from the time
• operating profit
the Board meets to accept the results. The results are also sent to
• net income
financial and stock market analysts via the internet immediately
• segment assets
upon confirmation by the SEC of its receipt of disclosure, and
• investments in associates and jointly controlled entities
made available on the Company’s corporate web site.
• segment liabilities
• depreciation and amortization
Financial Reporting. The Company’s financial statements comply
with the Philippine Accounting Standards and the Philippine
Transactions entered into with associates and other related parties
Financial Reporting Standards which are in compliance with
in their conduct of business are on an arms-length basis. Sales
International Accounting Standards.
and purchases of goods and services to and from related parties
are made at normal market prices. Related party transactions
The annual consolidated financial statements provide a
are discussed and quantified in the Notes to the Consolidated
breakdown of total assets, total liabilities and equity, revenues,
Financial Statements.
costs and expenses, income before income tax, net income
attributable to equity holders of CHI and minority interests and
Information on the Company’s financial instruments is
earnings per share.
accompanied by a presentation of the Company’s risk
management objectives and policies to allow for a better
A more extensive, transparent disclosure of segment results
assessment of financial performance and cash flows. Significant
such as assets, liabilities and revenues is provided to enable
accounting judgments and estimates are also disclosed.
shareholders to appreciate various businesses and their impact on
overall value enhancement.
Dealings in Securities
CHI continues to adopt a uniform policy on securities transactions
to reinforce and formalize existing government regulations against
insider trading.
38
38
Catalyzing Change
Reporting of Transactions. CHI is compliant with the requirement
The Company, through its Finance Division reporting
of the PSE for directors and principal officers to report any
directly to the President, addresses the various information
acquisition, disposal or change in their shareholdings of the
requirements of the investing public and communicates with
Company to the SEC and to report changes in ownership of
minority shareholders through timely and full disclosures
Company shares within five trading days.
to the PSE, Annual General Meetings, one-on-one meetings,
conference calls, investor visits and tours, web site and emails
The Company expanded coverage of this reporting requirement
or telephone calls.
to include members of the management committee. All other
officers are required to submit a quarterly report on their trades of
The Company has updated the Investor Relations section of its
Company shares to the Office of the Compliance Officer.
website to include the organization structure, performance,
ownership and governance of the Company. The section is
Trading Blackouts. The Company continues to adopt a policy
updated promptly when and as disclosures to the regulatory
on insider trading. Under this policy, directors, officers and
agencies are made. Proceedings of analysts’ briefings by way of
employees who are considered to have knowledge of material
presentations are immediately made available on the web.
facts or changes in the affairs of CHI which have not been
disclosed to the public, including any information likely to affect
Shareholder Meeting and Voting Procedures
the market price of the securities of the Company are prohibited
Stockholders are informed at least 15 business days in advance
from buying or selling the Company’s securities during trading
of the scheduled date of the general meetings. Notice of
blackout periods. The policy covers the Company’s shares of
regular or special meetings contain, in addition to the date,
stock, options to purchase stocks, bonds, and other evidence of
the hour and place of the meeting, and a statement of the
indebtedness.
matters to be transacted at the meeting. The notice to
stockholders also set the date, time and place of the validation
All members of the Board of Directors, all key officers,
of proxies which is prescribed to be no less than five business
consultants and advisers and all other employees of the
days prior to the annual stockholders’ meeting.
Company who are made aware of undisclosed material
information, including members of the immediate families of
Each common share of stock entitles the person in whose
key officers are covered in this policy.
name it is registered in the books of the Corporation to one
vote, provided the conditions as regards payment have been
During the year, notices of trading blackouts for structured
complied with.
disclosures were issued for a period covering ten (10) trading
days before and three (3) trading days after the disclosure of
Employee Relations
quarterly and annual financial results. Compliance with these
CHI is committed to promoting the safety and welfare of its
trading blackout periods is strictly enforced. There have been no
employees. It believes in inspiring its employees, developing
cases of violation of the Company’s policy on insider trading.
their talents, and recognizing their needs as business partners.
Strong and open lines of communication are maintained to
Stakeholder Relations
relay the Company’s concern for their welfare and safety, and
CHI seeks to adhere to a high level of moral conduct and fair
deepen their understanding of the Company’s value creating
dealings with all its stakeholders. The Company believes this
proposition. These are all articulated in the Company’s
is the basis and foundation for building long-term, mutually-
strategic management system, the Balanced Scorecard
beneficial relationships.
specifically under the Learning and Growth perspective and
also in the Health and Safety Management System certified to
Shareholder and Investor Relations
OHSAS 18001: 2007 standard.
The Company believes that open and transparent
communications are requisite for sustained growth and building
investor confidence. Our investor communications program
seeks to promote greater understanding of the Company’s longterm value creation proposition.
39
39
Code of Ethical Behavior
The Code of Ethical Behavior outlines the general expectations and
CORPORATE OFFICERS
the rights, safety, and benefit of the total employee force.
Chairman of the Board
President Treasurer
Corporate Secretary Assistant Corporate Secretary Finance and Control Officer and Compliance Officer Head, Retail Business Group
Head, Real Estate Development Group
Head, Marketing and Sales
Company employees are required to annually disclose any
Board Committees and memberships
set standards for employee behavior and ethical conduct. It covers
all CHI employees, its subsidiaries and affiliate. The Company and
its employees commit to adhere to the Company’s core values in
conducting personal and business affairs. The Code of Ethical
Behavior is intended to be read in conjunction with the Company’s
Human Resources Manual of Personnel Policies which includes
the Code of Conduct governing acceptable office conduct for the
orderly operation of the Company as well as for the protection of
business and family-related transactions to the Company by
accomplishing the conflict of interest disclosure statement
submitted to the Human Resources and Admin Department that
monitors compliance of this policy.
Certifications
CHI and its subsidiary, CPVDC continue to be certified to the
three international standards on Quality (ISO 9001), Environment
(ISO 14001) and Occupational Health and Safety (OHSAS 18001)
Management Systems. To ensure that the system is deployed,
Antonino T. Aquino
Francis O. Monera Natividad N. Alejo Sheila Marie U. Tan Renan R. Osero Eleanore R. Tomaneng
Ma. Clavel G. Tongco Jose Maria D. Lopez Lawrence John I. Visco Executive Committee
Chairman : Members : Emilio J. Tumbocon
Antonino T. Aquino
Francis O. Monera
Natividad N. Alejo
Jaime E. Ysmael
Audit and Risk Committee
Chairman: Members: Fr. Roderick C. Salazar, Jr., SVD
Sustainability Committee
Chairman:
Members:
Francis O. Monera
Emilio J. Tumbocon
Compensation Committee
Chairman:
Members:
Antonino T. Aquino
Francis O. Monera
Natividad N. Alejo
Nomination Committee
Chairman:
Members:
Francis O. Monera
Antonino T. Aquino
maintained and continually improved in conformity with the ISO
and OHSAS standards, regular internal and external audits are
conducted. In 2009, an internal audit was conducted in July by
the internal QEHS auditors and two surveillance audits were done
in February and October by the company’s external certifying
body, Certification International Philippines, Inc.
CHI and CPVDC are prepared for the transition to the new ISO
9001: 2008 standard to be fully implemented in mid-2010.
Anti-Money Laundering. CHI is committed to comply with
the Anti-Money Laundering law. The Company ensures strict
compliance to its provisions by instituting internal control
procedures. Since the enactment of the law, the Company has
been compliant with all the rules, regulations and directives issued
by the Bangko Sentral ng Pilipinas and the national government’s
Anti-Money Laundering Council (AMLC), and has not faced any
anti-money laundering issues.
Website
Additional information on the Company’s Corporate Governance
initiatives may be viewed at www.cebuholdings.com.
40
40
Catalyzing Change
7. Cebu Property Ventures and Development Corporation 2008
Annual Report-Most Improved Annual Report (highest in
scorecard jump in the past three years) awarded on November 10,
2009 (Management Association of the Philippines)
Awards and Recognition
1. 2009 E3 Award (Excellence in Economy and Ecology) (Large
Enterprise Category) for Cebu Holdings, Inc. – Environmental
Management System awarded on October 21, 2009
(Philippine Chamber of Commerce and Industry)
2. Gold Award for Ayala Center Cebu’s Think Pink 2009 ICSC Asia
Shopping Center Awards given on October 15, 2009 Suntec City,
Singapore (International Council of Shopping Centers)
3. 2009 Philippine Quill Award of Merit (Communication
Management Division, Category 13 – Special Events) for
The Terraces: An Urban Escape Made for Extraordinary
Celebrations (International Association of Business
Communicators)
8. Cebu Property Ventures and Development Corporation, 2008
Annual Report - Third Runner Up, awarded on November 10,
2009 (Management Association of the Philippines)
9. Cebu Property Ventures and Development Corporation Gold
Awardee, Corporate Governance Scorecard for Publicly-listed
companies awarded on May 27, 2009 2008 (Institute of Corporate
Directors, Philippine Stock Exchange and Ateneo de Manila Law
School)
10. Cebu Holdings, Inc. Silver Awardee 2008 Corporate Governance Scorecard for Publicly-listed companies awarded
on May 27, 2009 (Institute of Corporate Directors, Philippine Stock
Exchange and Ateneo de Manila Law School)
4. Cebu City Council Commendation: Ayala Center Cebu’s
Greenology Campaign (for public awareness on socioenvironmental sustainability)
5. Cebu Holdings, Inc. 2008 Integrated Annual and Sustainability
Report - Best in Corporate Governance Disclosure (For NonFinancial Institution Category) awarded on November 10, 2009
(Management Association of the Philippines)
6. Cebu Holdings, Inc. 2008 Integrated Annual and Sustainability
Report - Second Runner Up awarded on November 10, 2009
(Management Association of the Philippines)
11. Anvil Award (Merit) for Cebu Holdings, Inc. 2008 Integrated
Annual and Sustainability Report (45th Anvil Awards
Competition, Public Relations Society of the Philippines)
12. Anvil Award (Merit) for Ayala Center Cebu’s Think Pink
(45th Anvil Awards Competition, Public Relations Society of the
Philippines)
Membership in Associations
Cebu Holdings, Inc. is a member of the following organizations:
Ayala Business Club Cebu, Inc.
Ayala Heights Nature Park Foundation, Inc.
Cebu Business Park and Neighboring Barangays
Altruistic Alliance, Inc.
Cebu Business Park Association of Building
Administrators, Inc.
Cebu Chamber of Commerce and Industry
Cebu Educational Foundation for
Information Technology
Cebu Uniting for Sustainable Water
Francis Monera (center), CHI president, receiving the award from (L-R)
BusinessWorld VP and COO Anthony Cuaycong, MAP 2009 president Joey
Bermudez, SEC chair Fe Barin and PSE president and CEO Francis Ed Lim.
Central Visayas Information Sharing Network
Cebu Holdings Inc. (CHI) was awarded Best in Corporate
Chamber of Real Estate and Builders’
Governance Disclosure (for non-financial institutions) in the
Associations, Inc.
Best Annual Report Awards of the Management Association
Geoplan Cebu Foundation, Inc.
of the Philippines (MAP).
International Council of Shopping Centers
Kapunungan sa Nagkahugpong nga Kanait
In the same awards, held at the Intercontinental Hotel on
nga mga Barangay ug ang Ayala, Inc.
November 10, 2009, CHI also placed third in the ranking of
Management Association of the Philippines
the nominated finalists.
Philippine Quality and Productivity
Movement - Visayas
CHI subsidiary, Cebu Property Ventures and Development
Philippine Retailers Association
Corp. placed fourth in the top five best annual reports,
Pollution Control Association of the Philippines, Inc.
and bagged a special award for the most-improved annual
Protected Area Management Board
report, as the company with the highest jump in the score-
Technical Infrastructure Committee
card ratings compared to the previous year’s results.
of Metro Cebu
41
41
Enterprise Risk Management
Enterprise-Wide Risk Management (ERM)
Amidst the rapidly changing external environment–unstable economy and climate change issues, Cebu Holdings, Inc. (CHI) aims to put in
place robust risk management capabilities to protect and enhance stakeholders’ value. Hence, the Enterprise-wide Risk Management (ERM)
initiative was launched in March 2009 to elevate the current risk management of the Company from operational to the strategic level.
The Framework
An ERM framework was developed to achieve a systematic approach to risk management in CHI. The framework embodies the policy,
scope, process methodology, and organizational structure. The scope of the ERM encompasses the processes in the value delivery chain and
isk
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Catalyzing Change
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42
42
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support processes starting from the identification of customer needs to the delivery of these needs.
Risk Management Process
Risk Identification
The first step is the identification of risks that affect the achievement of corporate
objectives.
Risk Measurement
Next is the evaluation of the likelihood and impact of the risk. The identified risks
are classified into four categories, namely: strategic, operational, financial and
compliance risks. These are recorded in a risk register.
Risk Treatment
Control measures are identified and evaluated whether the controls are effective,
efficient and operational. If residual risks are present, control improvements are
implemented.
Risk Monitoring and Review
Monthly Performance Reviews (MPR) are conducted on the status of action
items and control improvements. Periodic reviews and updates of the risks,
prioritization, controls and ratings are scheduled as needed.
Roles and Functions
The members of the ERM Committee
Risk Assessment Workshop
The Board of Directors, through the Audit
come from the Real Estate Development
In March 2009, the Company conducted
and Risk Committee, oversees the enterprise-
Group (REDG), Retail Business Group
a two-day risk assessment workshop
wide risk management of CHI. In 2009,
(RBG), Property Management Division
participated in by the management team
the scope of the Audit Committee’s role
(PMD), Construction Management Division
to come up with a registry of risks for review
was expanded to include risk management
(CMD), and the Corporate Services Group
of Management Committee and for the
oversight; thus, the renaming to Audit and
(CSG), covering Human Resources and
approval of the Audit and Risk Committee at
Risk Committee.
Administration, Information Systems,
the board level
Corporate Communication and Customer
The stewardship and accountability for
Affairs (CCCAD), Finance and Audit.
risk management is vested upon the
Structure
The ERM organizational structure was
Management Committee. They ensure the
Part of the corporate risk function is lodged
created in 2009 to highlight the oversight
effective implementation of the ERM system
under Finance and Internal Audit. The
function of the Board of Directors and the
and that risk management is raised to a
Finance group manages the exposures or
corporate risk functions of Finance, Audit
strategic level. They are also responsible
risks related to the physical and financial
ERM and Management committees.
for the identification and management
assets in the balance sheet that are vital
of critical risks and the allocation of the
to the liquidity of the Company. The
Company’s resources.
role of Internal Audit is to provide an
independent and objective assurance that
To lead the ERM initiatives of the Company,
the risk management and internal control
the ERM Committee was created. This cross-
frameworks are operating effectively. This is
functional committee is headed by the Chief
done through periodic assessment either for
Risk Officer (CRO) who reports functionally
the Company as a whole or for the individual
to the Audit and Risk Committee, and
audit engagements.
administratively to the President and
Management Committee. The fundamental
role and responsibility of the ERM Committee
is to monitor the risk management policies
and processes to ensure the continued
flow of relevant risk information and
its integration with the achievement of
Board of Directors
Audit and Risk Committee
President/ Management
Committee
Chief Risk Officer/ ERM
Committee
Real Estate Development
Group
Property Management
Division
Corporate Services Group
corporate goals and objectives.
43
43
Board of Directors
Antonino T. Aquino
Chairman of the Board
Antonino T. Aquino, 62, has served as Chairman and director of Cebu Holdings
Inc. since April 2009. He is director and president of Ayala Land, Inc., chairman
of Alveo Land Corp., Avida Land Corp., , Cebu Property Ventures & Development
Corp., Makati Development Corp., Ayala Property Management Corp., North
Triangle Depot Commercial Corp., Station Square East Commercial Corp. and Hero
Foundation, president and director of Fort Bonifacio Development Corp., Bonifacio
Arts Foundation, Alabang Commercial Corp., Accendo Commercial Corp., Aurora
Properties, Inc., Ceci Realty, Inc. and Vesta Property Holdings, Inc., director of
Manila Water Company, Ayala Hotels, Inc. and Ayala Foundation, Inc. Awarded
as Management Man of the Year for 2009 by the Management Association of the
Philippines. He graduated with a Bachelor of Science Major in Management degree
from the Ateneo de Manila University in 1968 and has completed academic units
for the Masteral Degree in Business Management at the Ateneo Graduate School of
Business in 1975.
44
44
Catalyzing Change
Francis O. Monera
President and Director
Francis O. Monera, 55, Filipino, has served as director and president of Cebu Holdings
Inc. since April 2006. He was the chief operating officer of Cebu Holdings, Inc. before
he was elected president of the Company effective January 1, 2007. He is also the
president of Cebu Property Ventures and Development Corporation. He also holds
the position of vice president of Ayala Land, Inc. Before joining ALI, he was the senior
AVP and 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 regional governor of Philippine Chamber of
Commerce and Industry for Central Visayas. He graduated Magna Cum Laude with a
Bachelor of Science in Commerce degree. He finished his MBA studies at the Ateneo
de Manila Graduate School of Business and attended an executive development
program at the Harvard University Graduate School of Business.
Emilio J. Tumbocon
Director
Jaime E. Ysmael
Director
Emilio J. Tumbocon, 53, Filipino, has served as director of Cebu
Holdings Inc. since April 2008. He is a senior vice president and
a member of the management committee of Ayala Land Inc. He
heads Visayas-Mindanao SBU Group and concurrently technical
services director of Superblock Projects of ALI. His other significant
positions include: director of Ayala Property Management
Corporation, Laguna Technopark, Inc., Cebu Property Ventures
and Development Corporation, Makati Development Corporation,
Accendo Commercial Corporation and Anvaya Cove Beach and
Nature Club, Inc. He is also a certified Project Management
Professional (PMP) of the Project Management Institute and past
president of the Philippine Constructors Association, Inc. (PCA). He
graduated from the University of the Philippines with a degree of
Bachelor of Science in Civil Engineering (C.E. ‘79) and graduated
in Masters in Business Administration (MBA ‘85) from the same
university. He also took the Construction Executive Program (CEPS
‘87) at Stanford University, Palo Alto, 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,
Charlottesville, Virginia, U.S.A.
Jaime E. Ysmael, 49, Filipino, has served as director of Cebu Holdings Inc. since
April 2008. He is senior vice president, chief finance officer and member of the
management committee of ALI. Concurrently, he is a managing director of Ayala
Corporation. His other significant positions include: director and president of CMPI
Holdings, Inc.,CMPI Land, Inc. and One Legaspi Park Residential Commercial Corp.;
director and vice-president of Ayala Westgrove Heights Homeowner’s Association,
Inc.; director and treasurer Ayala Land International Sales, Inc., Ayala Land
Sales, Inc., Alveo Land Corp., Laguna Technopark, Inc., Makati Property Ventures,
Inc.,Serendra, Inc., Alinet.Com, Amorsedia Development Corp., Crans Montana
Property Holdings Corp., Gisborne Property, Inc., Hillford Property Corporation,
HLC Development Corporation and Tower One Condominum Corp.; director,
treasurer, CFO & chairman of the Finance Committee of Anvaya Cove Beach &
Nature Club, Inc.; director, treasurer and CFO of Glensworth Development, Inc.;
director, treasurer and member of the executive committee of Ayala Hotels, Inc.,
Enjay Hotels, Inc.; director of Alabang Commercial Corp., Asterion Technopod,
Inc., Avida Land Corp., Ayala Greenfield Development Corporation, Brightnote Asset
Corporation, Cebu Insular Hotel Company, Inc., Crestview E-Office Corporation, First
Longfield Investments Ltd., Gammon Philippines, Inc., Green Horizons Holdings,
Ltd., Laguna Phenix Structures Corporation, Makati Theaters, Inc., MG Construction
Holdings, Ltd., North Triangle Depot Commercial Corp., Regent Time International,
Ltd., Station Square East Commercial Corp., Summerfield E-Office, Inc., and
Summerhill E-Office Corporation; and chief finance officer of Roxas Land Corp.
He is currently president, of the Asian Public Real Estate Association; and trustee
of the Serendra Condominium Corporation. He graduated Summa Cum Laude
from the University of the East with a degree of Bachelor of Science in Business
Administration, Major in Accounting. He holds an M.B.A. degree (Major in Finance)
at The Wharton School and an M.A. degree in International Studies at the School
of Arts and Sciences of the University of Pennsylvania under the Joseph H. Lauder
Institute of Management and International Studies.
45
45
Board of Directors
Fr. Roderick C. Salazar, Jr.
Director
Director
Fr. Roderick C. Salazar Jr., SVD, 63, Filipino, has served as an independent director
of Cebu Holdings Inc. since 2005. He is currently the presidential assistant for
planning and development, university chaplain and chairman of the Department
of Religious Education of the University of San Carlos. His other significant positions
include: regional director of CEAP Region VII; regional secretary for Asia of the
Office Internationale de Enseignment Catholique (OIEC); chairman of the board of
trustees of St. Jude Catholic School in Manila, St. Scholastica’s Academy in Talisay
City, Cebu, Liceo del Verbo Divino in Tacloban City and CHED Technical Working
Group on Autonomy and Deregulation; trustee of St. Paul University in Tuguegarao,
St. Paul University in Dumaguete City, Center for Educational Measurement (CEM),
Cebu State College of Science and Technology, People’s Television Network (PTV4,
now National Broadcasting Network) and Presidential Task Force on Education.
He was the past president of the University of San Carlos, Catholic Educational
Association of the Philippines (CEAP) and Coordinating Council of Private Educational
Associations (COCOPEA); chairman of the board of trustees of Holy Name University
in Tagbilaran City; vice president for Asia of the Office Internationale de Enseignment
Catholique (OIEC) and member of the Private Education Assistance Council
(PEAC). He was ordained priest on June 21, 1974. He finished his Master of Arts in
Philosophy at Divine Word Seminary, Tagaytay City in 1975 and Master of Arts in Mass
Communication from the University of Leicester in 1983. He had his doctoral studies
in mass communication at the University of Leicester, England from October 1983 to
October 1987.
Antonio S. Abacan, Jr., 67, Filipino, has served as director of Cebu Holdings, Inc. since
November 1993. Concurrently, he is the chairman of Metropolitan Bank & Trust Company
and vice chairman of the Metrobank Group of Companies. He chairs other companies
within the Metrobank Group such as First Metro Investment Corporation (FMIC), Toyota
Financial Services (Phils), Inc. (TFS), Sumisho Motor Finance, Federal Homes (FHI), Circa
2000 Homes, Inc., Baywatch Realty Corp. and Baywatch Project Management Corporation.
He also holds other significant positions such as president of GT Capital Holdings, Inc.
Honorary Chairman of MBTC Technology, Inc., vice chairman and honorary vice chairman
for Global Business Holdings, Inc. and First Metro Travelex, Inc., respectively. He sits at
the Board of Global Business Power Corporation, Cebu Energy Development Corporation,
Panay Energy Development Corporation and Manila GT Medical Center. He is likewise a
director of Bankers Association of the Philippines, director and vice president for Banking
and Finance 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). He is also in the Advisory
Boards of Metrobank Foundation, Inc. Philippine AXA Life Insurance Corporation, Toyota
Cubao, Inc. and Toyota Manila Bay Corp. He obtained his Bachelor of Science degree
in Business Administration major in Banking and Finance from Mapua Institute of
Technology and also took up Accounting at Far Eastern University. He is a graduate of
the Executive Program of the Stanford University Graduate School of Business. He was
awarded The Outstanding Filipino Award (TOFIL) for Banking by the Philippine Jaycee
Senate in 2008. Mr. Abacan was also the recipient of the 2006 CEO Excel award given
the International Association of Business Communicators (IABC) and 2007 Outstanding
Alumnus Award of the Far Eastern University.
Shiela Marie U. Tan, Corporate Secretary
Renan R. Osero, Assistant Corporate Secretary
46
46
Catalyzing Change
Natividad N. Alejo
Treasurer and Director
Director
Director
Natividad N. Alejo, 53, Filipino, has served as director
of Cebu Holdings Inc. since 2003 and is currently the
head of Consumer Banking Group of Bank of the
Philippine Islands (BPI). She has also served as the
president and director of BPI Capital Corporation and
BPI Securities Corporation from 2001 to 2006. She also
holds the following positions: director of BPI Family
Savings Bank, Inc., Pilipinas Savings Bank, Beacon
Property Ventures, Inc., BPI Bancasssurance, Santiago
Land Development Corp., Cebu Property Ventures
and Development Corp., FEB Speed International
Inc., Shemberg Biotech, BPI-Philam Life Assurance
Corp. (a subsidiary of Philamlife and an affiliate of
BPI, formerly known as Ayala Life Assurance, Inc.),
and a private sector representative of Leyte Normal
University. She graduated AB Economics (Summa Cum
Laude) from the Divine Word University, Tacloban
City in 1976. She took MA Economics at University of
the Philippines in 1978 and completed the Advanced
Management Program at Harvard Business School in
Fall 2005.
Enrique L. Benedicto, 68, Filipino, has served as an
independent director of Cebu Holdings, Inc. 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., Cebu Grand Industries, Inc. and Grand
Steel, Inc. and 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; Most Outstanding
Cebuano Citizen per Cebu City Council Resolution
dated February 18, 1991 and presented during the
54th Cebu City’s Charter Day celebration on the same
year, 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, Agustinian
Recollection Awards 4th Centennial 1989 Alumni
Awards. He has been a member of the Board of
Trustees of Cebu Investment Promotions Center for
12 consecutive years. He graduated with a degree of
Bachelor of Science in Commerce at the University of
San Jose-Recoletos in 1964.
Hernando O. Streegan, 75, Filipino, has served as an
independent director of Cebu Holdings Inc. since
2006. He is chief executive officer of Rhine Marketing
Corporation. His other significant positions include:
regular director of Charmaine Corp., Cebu City Youth
Center, Inc. and PBSP Visayas Executive Committee,
chairman of the Cebu Council-Boy Scouts of the Phils.
and Ten Most Outstanding High School Students of
Cebu; member and former president of the Cebu
Chamber of Commerce & Industry; the Philippines
Foundation, Inc. and the Kiwanis Club of Cebu. In
2007, he received the Bronze Tamaraw Award and was
chosen as one of the Outstanding Council Chairman
of the Boy Scouts of the Philippines. He completed
Management Development Program at the Asian
Institute of Management and Strategic Business
Economics Program at the University of Asia and the
Pacific.
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47
Management Team
Real Estate Development Group
Rizalito S. Casinillo
Head - Construction
Management
Athena G. Catedral
Marketing Manager
Laurence John I. Visco
Head - Marketing
and Sales
Jose Maria D. Lopez
Head - Real Estate
Development Group
Lydwena R. Eco
Project Development
Manager
Raul S. Mananquil
Sales & Sales Admin
Manager
Celeste Bernardine K. Dy
Operations Manager
Dominador M. Rey
Security Manager
Emma G. Mawe
Finance Manager
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48
Clavel G. Tongco
Head - RetailBusiness
Group
Catalyzing Change
Jovita R. Polloso
Commercial Center
Division Head
Wilfredo W. Gonzales
Project Director Construction Management
Property Management Group
Clement Gerald
A. del Rosario
Manager - Property
Management
Elson R. Homez
Head - Technical
Support and Real Estate
Development Group
Property Management
Levi L. Lopez
Manager - Technical
Support
Ernesto T. Alfante, Jr.
Manager - Property
Management
Rudy I. Reuyan
Head - Retail Business
Group Property
Management
Noel F. Alicaya
Control and Analysis
Manager
Vera R. Alejandria
Corporate Communication
and Customer Affairs
Manager
Judyline L. Boholst
Accounting Manager
Suzette T. Go
Information Systems
Manager
Ma. Cecilia T. Urbina
Human Resources and
Admin Manager
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49
Our Sustainability Management
Sustainability Policy
As a leading real estate company in Cebu, we commit to integrate sustainable development
practices into our strategy and business operations. We strive to develop sustainable
communities and manage our environmental footprint as we optimize value and secure
financial growth for our shareholders.
To achieve this, we focus on:
• Adhering to the best practices of corporate governance, transparency and
accountability;
• Integrating our management systems to serve as our tool for strategic execution
of our goals towards sustainability;
• Improving the quality of our stakeholder engagement and partnerships,
providing better mechanisms for open communication ;
• Inculcating sustainability in the leadership and corporate culture so that
responsibility resides at every level of the organization along the value delivery
chain;
• Raising awareness among our suppliers, contractors and outsourced personnel
on our sustainability practices.
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50
Catalyzing Change
Challenges and Opportunities
Message from the Corporate Sustainability Officer
The year 2009 saw the Company achieve tremendous strides in its
competency-building sessions aligned with continual improvements
sustainability initiatives. Yet we did not stop there.
of its internal business processes.
To provide a better focus on the Company’s sustainability thrust,
Communication
Cebu Holdings Inc. (CHI) formalized the creation of the Sustainability
At the corporate level, sustainability objectives, targets and initiatives
Technical Working Group (STWG) and elevated it to the board level.
are reflected in the corporate BSC. Each department or division
head of the Company champions sustainability at the functional
A three-person Sustainability Core Group, with the Corporate
level, and cascades these objectives to his or her team. Each
Sustainability Officer (CSO), was created. It reports to the
member of the team translates applicable objectives into his or her
Sustainability Council, which is the CHI Management Committee. The
own BSC. Internal communication is also done through multi-media
Sustainability Core Group steers the STWG in the planning, execution,
materials generated by the Corporate Communication & Customer
communication and reporting of the Company’s sustainability
Affairs Division (CCCAD) and are made available to all employees.
objectives, targets and programs.
Reporting
Competency Requirements
Sustainability reporting is done via the STWG. The reporting process
The STWG underwent a series of workshops not only to tackle
includes data submission, data verification, consolidation, writing,
the complexities of sustainability reporting process but also to
design conceptualization, review, GRI compliance check, production
understand global sustainability and how it applies to CHI’s areas
and registration.
of operations. CHI’s use of the Balanced Scorecard (BSC) and its
recertification to the ISO/OHSAS standards on Quality, Environment,
The release of the sustainability report is timed during the annual
Health and Safety Management Systems make the execution of the
stockholders’ meeting, as in the previous years.
reporting process easier because the measurement and monitoring
systems are in place. The STWG continues with its sustainability
Board
(Sustainability Committee)
Sustainability Structure
Integrated in Business Functions
President
Sustainability Council
(Management Committee)
Corporate Sustainability Officer
Sustainability Technical Working
Group
Communication/Information Systems (CCCAD/ISD)
Economic
Social
Environment
REDG and RBG Marketing & Operations
Energy and Carbon Management (PMD/PCO)
Employee Welfare (HRD & Admin)
Finance
Water and Wastewater Management (PMD/PCO)
Health and Safety (H&S Committee)
CCCAD-CSR/ComRel
Biodiversity Management (PMD/CCCAD-CSR)
Product Responsibility (RBG Operations and
Marketing/REDG M&S/PDG/CMD/PMD)
Community Investment (CSR/RBG & REDG M&S)
Solid Waste Management (PMD/CCCAD-CSR)
Community Involvement (CCCAD-CSR)
Environmental Compliance
(PDG/CMD/PMD/PCO/all areas)
Employee Volunteerism (CCCAD-CSR/HR)
Materials Use/Efficiency (CMD/PDG)
REDG - Real Estate Development Group
RBG - Retail Business Group
PMD - Property Management Division
H&S - Health and Safety
PCO - Pollution Control Officers
HRD - Human Resources Department
M&S - Marketing and Sales
CCCAD - Corporate Communication
and Customer Affairs Division
CMD - Construction Management Division
CSR - Corporate Social Responsibility/ ComRel - Community Relations
PDG - Project Development Group
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51
Message from the Sustainability Officer
Challenges and Opportunities
Companies in the real estate sector face
enormous challenges and complexities as
they strive to operate responsibly and be
more attuned and responsive to the needs
of stakeholders: customers, partners, the
community and the greater environment.
Among the challenges confronting the
sector are land use and land use changes,
materials and usage, energy, water, waste
and climate change, and the social impact
of operations.
Challenge 1:
Land Use and Land Use Change
Everything starts with a piece of land.
Once land is zoned for a specific use, it is
nearly impossible to revert it to its original
character.
Therefore, the challenge is to optimize
the value of the land while ensuring
that its specific character is protected
and sustained, that it will not be an
eyesore to the community, and that its
future activities will not contribute to the
degradation of the environment.
communities as a result of increased
economic activity;
c. the environmental footprint is managed
well by the provision of generous
green spaces for landscaped areas and
wastewater treatment facilities, as well
as the management of solid waste.
Challenge 2: Materials and Usage
For a real estate company, the challenge
is to specify or use materials that are
aesthetically pleasing, cost-competitive,
and blend well with the environment. On
a similar note, the materials may have to
be locally produced and easy to maintain.
Opportunity:
CHI and its contractors to implement the
principles and practices on sustainable
construction, which aims to:
• use locally available materials
• generate less waste
• recycle (whenever possible)
• provide job opportunities to the local
population
• protect workers from work-related
hazards
Opportunity:
CHI to be the trendsetter on masterplanned and integrated communities,
where:
a. the people can live, work and play
within the community;
b. the Company or its locators can provide
livelihood opportunities to the nearby
This practice will in turn, make the
Company’s contractors more cost-efficient
and cost-competitive, and give indirect
benefits to the local economy through
value creation.
Challenge 3: Energy, Water, Waste and Climate Change
Human activities are identified as the
cause of the increase in greenhouse gas
emission, which has an effect on the
climate and the survival of the planet.
Buildings particularly, are more energyintensive (per square meter of land area),
compared to other developments since
they provide more occupied spaces. In
addition, buildings also consume more
water and generate more solid and liquid
wastes.
Opportunity:
CHI to be more efficient in properly
managing consumption and waste
throughout the value delivery chain (from
planning to construction and operations).
Wastewater quality
than target
5-day BOD (mg/li) = 15-35 ppm
10.4% = 900,459 kwh = avoided
173 metric tons of CO2
Lower than target (9%)
Projects
excluding The Terraces/
Ayala Center Cebu consumption
Variable Speed Drives
High-efficiency chillers
(not factored in the budget)
Net Income P 302 M
Revenues P 1.29 B
Assets: 5.67 B
Carbon Emissions
· from direct energy
503 metric tons of CO2
68 kgs of methane (CH4)
4.1 kgs of Nitrous Oxide (NOx)
· from indirect energy
1,745 tons of CO2
· 70.3 tons from businessrelated travel
Tree inventory
89 Tree species
(from 71 in 2008)
S/H Equity: 4.18 B
GAE lower vs 2008 and budget
Bird inventory
38 species (from 27
in 2008)
SUSTAINABILITY
Community investment
P16.5 m
2009 Sustainability
Key Result Areas
Solid waste
Recyclables:
· 2007 - 138 tons
· 2008 - 259.3 tons
· 2009 - 421 tons
Residuals:
· 2007 - 1,979.25 tons
· 2008 - 975.18 tons
· 2009 - 1,242 tons
Community alliance programs
Scholarship of 17 OSY
Entrepreneurship
Community coop income of
P 400k from waste recycling
Employee Welfare
CHI Plus wellness
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52
Catalyzing Change
Customer
Average External Customer
Employee Volunteer Program
Ave 8.55 out of 10
Voluntee count: 60% of headcount
Complaints Handling
724 kgs (3 mos)
rate 63%
Managing consumption means:
• managing operating expenses, which
will have an impact on the financial
bottom line;
• making scarce resources (e.g. energy
and water) available to other
stakeholders in the community;
• managing carbon emission from
operations.
Opportunity:
CHI to link with the communities beyond
the fence lines for mutual gain. The
community can provide their resources:
human resources. The Company in turn
ties up with locators to provide livelihood
opportunities, thereby sharing resources
for the betterment of the quality of life in
the community.
Managing waste means:
• managing its impact on the
environment;
• engaging the community to profit
from the solid waste and provide
livelihood opportunities to the
community.
Some years back, CHI started this journey
with the establishment of the Cebu
Business Park and Neighboring Barangays
Altruistic Alliance, Inc. (CBP-NBAAI),
composed of six neighboring barangays.
The alliance focuses on the local areas of
interest: entrepreneurship, environment,
education and employment.
Challenge 4: Social Impact of Operations
The Company’s operations not only interact
with the physical environment but also
with the social environment. CHI shares
the same location with the people in the
immediate community. Hence, the image
of the immediate community will have an
impact on the Company’s development, and
indirectly, on the local economy through
property value appreciation and the business
opportunities generated by operations.
The alliance resulted in providing
employment and livelihood opportunities
to the community while helping manage
the solid waste of the properties. This
also becomes a model of public-private
partnership to achieve a common goal.
These opportunities arising from the challenges will enable the
Company to be at the forefront of businesses that use not just financial
bottom line as the yardstick of good performance, but also consider the
positive impacts on the economic, social and environmental spheres as
measures of success.
Elson R. Homez
Corporate Sustainability Officer
CHI Gets Invited to the GRI Working Group in London
Cebu Holdings, Inc. (CHI) represented the Philippines in the Global Reporting Initiative (GRI) Construction and Real Estate Sector
Supplement Working Group (CRESS WG) held in London in October 2009, the first of a series of six face-to-face meetings spread
within a two-year period until the supplement is released in 2011.
The CRESS WG is composed of ten industry representatives (CHI included) from different parts of the world and another 10 from
the non-government sector. Only two countries in Asia are represented in the working group: Philippines and India. Most of the
members came from first world countries.
Discussions revolved around varying subjects that are relevant to the construction and real estate sector. For the built environment,
the group recognized that buildings contribute significantly to CO2 emission yet are also one of the most feasible areas to implement
CO2 emission reduction since the control and monitoring of these areas are achievable. The issue on energy, efficiency and
subcontracting are some of the issues cutting across countries and regions from first to third world.
From interactions in the CRESS WG, developed and developing countries have found a common ground in the issues and challenges
they face. Developing countries can learn from the controls and the benchmarks that developed countries have implemented.
The GRI has taken note of CHI’s Integrated Annual and Sustainability Reports for the past two years. After a careful selection of the
lineup of members to compose the CRESS Working Group, the GRI selected CHI to represent the initiatives taken by a developing
country.
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53
Our Stakeholders
Business Partners
Banks and Other
Employees
Insurers/Insurance Brokers
Property Buyers/Lessees
Brokers and Property Specialists
Shareholders
Local Government Units
Financial Analysts
Securities and Exchange Commission/
Philippine Stock Exchange
CEBU HOLDINGS, INC.
Regulatory Bodies
Mall Merchants
Mall Merchants’ Employees
Third-party Organizers/Exhibitors
Shoppers
Allied Industries
Suppliers
Service Contractors
Manpower Agencies
Event and Talent Agencies
Media
Overseas Filipino Professionals
Tourists
Stakeholder Engagement
For more than 20 years, Cebu Holdings, Inc. (CHI) has always
CHI’s stakeholder engagement process has become part of its
placed a great emphasis on the value of partnership and has
management system through the value delivery chain – from
continued to work with its stakeholders to understand their
identification of stakeholders’ needs to the delivery of these needs.
perspectives and incorporate them into the strategic decisionmaking processes.
CHI recognizes that its stakeholders have the ability to influence
the success of the business at various levels. Therefore, improving
After CHI documented its stakeholder engagement process in
the quality of the Company’s stakeholder engagement process
2007, and progressed towards identifying the gaps in 2008, the
is important to achieve this goal while it helps sustain the
Company, in 2009, revisited the list of key issues of mutual interest
relationships the Company has built.
and the steps taken to address these issues.
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54
Catalyzing Change
Why we engage
How We Engage
Issues on Which
We Engage
Employees
Employees are the Company’s
most important resource.
Employee engagement enables
a link between employee roles
and the Company’s business
goals, mission and strategies.
Through these engagements,
a high level of productivity
is achieved due to employee
satisfaction.
- townhall meetings
- climate survey
- employee volunteer program
- internal publication
- internal customer survey
- adequate compensation and
benefits
- wellness and work-life
balance
- health and safety
- benefits-upgrade, merit increases,
other privileges
- wellness program: CHI PLUS
- competency development
program: trainings and seminars
- health and safety programs,
adoption of international health
and safety standards (OHSAS)
Shareholders
CHI seeks to protect the
interests of the shareholders by
striving to increase shareholder
value.
- sale of shares of stocks
- shareholder inquiries and
updates
- updating of Company
performance through annual
stockholders’ meeting
- annual report
- share price
- share valuation
- dividends
- investor relations
- updates of Company performance
through annual stockholders’
meeting
- declaration of dividends
Institutional investors
CHI seeks to continue its
position as an excellent
investment vehicle to the
institutional investors.
- investor briefings
- sale of shares of stocks,
updating of Company
performance through annual
stockholders’ meeting,
annual report & other
correspondences
- share price
- share valuation
- dividends
- investor relations
- updates of Company performance
through annual stockholders’
meeting
- dividends
Analysts
CHI recognizes the value of
analysts who are key sources
of information to existing and
probable investors.
- analyst briefings
- Company performance
- negative reviews & feedback
- clarifying of issues through analyst
briefings and meetings
Business partners
CHI sees business partnerships
as a strategic move for
landbanking which is critical to
the business.
- JV partnership
- JV terms and conditions
- adherence to JV terms and
conditions
Securities and Exchange
Commission / Philippine
Stock Exchange
CHI complies with regulatory
requirements as a publiclylisted company to assure
shareholders of good corporate
governance.
- submission of reports,
disclosures and other
requirements
- involvement in SEC/ICD
programs and initiatives
- transparency and adequacy
of disclosures
- timeliness of report
submission
- completeness of disclosures
- practice transparency and full
disclosure
- prompt submission of
requirements
- review of reports prior to
submission
Banks and other financial
institutions
Banks provide for the
Company’s depository and
funding needs.
loans, deposits and other
banking transactions
- rates
- funding needs
- type of securities
- adherence to loan covenants
- careful selection of creditors
Insurers/Insurance
brokers
They provide insurance
coverage of physical and
operational assets.
insurance coverage for
company properties and
employees’ healthcare
- premium/rates
- cover terms & conditions
- insurance companies to
undertake
- insurance premium within
benchmark
- ensure more responsive covers
which protect the Company from
identified risks
Property buyers and
lessees
For CHI, customer is first and
this is translated in several
programs to delight the
customer.
- sale and lease of lots and
other real estate products
(office condos, residential
condos, residential
subdivisions)
- price
- location, security and safety
- buyers’ satisfaction
- product quality
- compliance to contract
provisions
- integrated marketing and
sales initiatives that meet the
Company’s markets where they are
with products and projects that
address their needs and evolving
lifestyle
- providing value to their real estate
investments
- after sales service
- customer satisfaction surveys,
complaints handling
STAKEHOLDERS
Our Response
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55
Our Stakeholders
STAKEHOLDERS
56
56
Why we engage
How We Engage
Issues on Which
We Engage
Our Response
Brokers and Property
Specialists
CHI sees them as partners
in offering the Company’s
products to the market.
- sales meetings
- project orientations
- annual sales rally
- brand orientation
- price
- location
- product quality
- compliance to contract
provisions
- offering discounts, promos and
various payment terms
- customer satisfaction surveys,
complaints handling
Homeowners and
business park
association/condominium
corporations
They are the owners and
tenants of the Company’s
developments. CHI provides
them with continued services
while they occupy the
property they bought from the
Company.
- property management
services
- conduct of regular
membership meetings
- property valuation
- restrictions
- property management
services
- improved external customer
satisfaction survey instrument
- improved property management
services
Mall merchants
They provide products/services
which cater to shoppers’ needs.
- leasing of spaces
- merchant satisfaction
- lease contract rates and
provisions
- advertising and promotional
activities
- quality and reliability of
building maintenance
- security and safety
- merchant relations
- merchants survey
- marketing events
- regular maintenance and
improvement programs
Merchants’ employees
They provide services to mall
shoppers.
- seminars, trainings,
clarificatory meetings,
fellowships
- availability of facilities for
merchants’ employees
- health & safety
- provision of facilities for
employees
- health and safety programs and
seminars
Third party organizers/
exhibitors
CHI provides a venue for
other companies or groups to
promote their products while
providing increased offerings
for shoppers, and leading to
higher traffic and revenue
generation.
- advertising
- contract signing
- pre and post event meetings
- space availability and
prioritization
- feedback on exhibitors’
requests
- security
- conformity to mall standards
- exhibit guidelines
- define product /service
differentiation and duration of
exhibit
- discuss guidelines, restrictions and
security requirements
Shoppers
CHI finds ways to identify the
shoppers’ needs and address
these to generate mall traffic
and increase revenues.
- mall experience
- shoppers’ satisfaction
- product and service quality
- facilities
- security and safety
- surveys
- continuous upgrade and
maintenance of facilities
- intensified market research
- enhancements and provision of
better services
Contractors, suppliers and
service providers
They provide products /
services for the Company to
implement projects, programs
and initiatives.
- accreditation, bidding
- payment
- promptness of payments
- alignment and conformity to
QEHS standards
- establishment of and compliance
to Process Cycle Time (PCT)
standards
- programs to educate and orient
contractors and suppliers on QEHS
best practices & benefits
Local Government Units/
national government
agencies/regulatory
bodies
CHI values its relationship
with government agencies.
This allows the Company to
practice corporate citizenship
to establish good community
relations, implement projects
for public use, provide venue
for information dissemination
and for compliance with
all applicable regulatory
requirements.
- payment of taxes
- business permits and licenses
- co-sponsored events
- compliance with regulatory
requirements
- timeliness in payments and
submission of requirements
- provision of good
infrastructure for public use
- traffic management
- solid waste management
- prompt payment of taxes and
submission of reports
- regular reviews of compliance with
regulatory requirements
- provision and maintenance of
good road networks
- partnership with LGU or the local
communities for SWM programs
Catalyzing Change
STAKEHOLDERS
Why we engage
How We Engage
Issues on Which
We Engage
Our Response
Local communities
CHI’s relationship with the
local communities allows
the Company to achieve
its goal to be the neighbor
of choice, adding value to
the communities where the
Company operates.
- implementation of
development programs on
education, employment,
environment, peace & order
& livelihood
- community’s acceptance of
the Company and its projects
- readiness and competency
of the community folks to
establish partnerships and
implement programs
- creation and strengthening of the
alliance
- implementation of programs
aligned to the needs of the
community
Media
They are vehicles of
communication through which
CHI promotes its brand, image
and reputation.
- press conferences
- media fellowships
- publicity
- paid advertisements
- access to and availability of
the source of information
- regular fellowships
- regular updates on new
developments
Allied industries (e.g.
tourism, retailers
association)
They are vehicles to promote
tourism and retail industries
which have direct significant
impact to the business.
- cross-branding
- cross-promotion activities
- tie-ups
- more innovative marketing
/promotional events
- intensified market research
- strengthened partnerships
Business organizations
CHI’s partnerships with these
groups promote the general
well-being of the communities
it serves. The Company shares
socio-political advocacies for
the benefit of the community.
- membership and active
involvement in these
organizations
- attendance to conferences
and conventions
- support to programs and
initiatives
- intensified support to
programs
- use of mall space
- strengthened partnerships
Overseas Filipino
Professionals / Tourists
This is the Company’s
important market segment to
which it can likewise promote
tourism and investments in
Cebu and in the Visayas region.
- balikbayan program
- mall privileges
- online marketing innovations
- tactical promotions
- Turista program
- sponsorship of events for this
market
- need for more information
- continued Balik Cebu program
- strengthened multi-sectoral
partnerships to cater to needs of
this segment
- enhanced Turista program
Socio-civic/ charitable
organizations
They are project beneficiaries
where the Company can create
linkages and tap their assistance
and expertise for better service
to the community.
- meetings
- volunteer participation
- provision of venue for
activities
- beneficiary selection
- space availability
- assessment of project beneficiaries
- discuss project mechanics/
guidelines
Educational institutions
They respond to the training
needs of employees,
outsourced personnel,
merchants’ employees and
fence line communities.
- consultation,agreements /
contracts
- training costs
- participants and beneficiaries
- needs assessment
- guidelines-setting
- participation and involvement in
selection or pre-screening process
Non-Government
Organizations (NGO)
They provide technical
expertise and networking
capabilities.
- partnerships
- meetings
- agreements and provision of
venue for activities
- space/ venue availability
- resource limitations
- discussion with NGO partners
- find more sources of funding for
projects
Utility companies
(power, water and
telecommunications)
They provide utilities for
locators, lot and unit owners
and tenants.
- contract agreements
- regular communication
- installation schedules
- utility costs
- increased frequency of
coordination / communication
Service contractors
for janitorial, security,
maintenance and other
manpower requirements
They are CHI’s partners in
the delivery of services to
the locators, owners, office
building tenants, mall
merchants, exhibitors and
shoppers.
- contractor accreditation
- performance management
- service contract cost
- performance
- regular monitoring / performance
evaluation
Event and talent agencies
They have the expertise in the
execution of creative concepts
for events and promotions.
- accreditation
- booking
- coordination
- availability/ schedule of
performers
- contract costs
- venue
- proper coordination
- aligning schedules
- space considerations in planning
events and performances
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Disclosure on Management Approach
The mission and vision of the Company specifically mentions two
phrases: “Responsibility to the Community” and “Enhancement of
the Quality of Life”. These are two values that communicate the
Company’s commitment to its environment, which are also reinforced
by the Sustainability Policy and the Climate Change Policy of the
Company. These core values are also reinforced by the Environment
and Health and Safety Policy of the Company, which is the basis of the
Company’s goals on environmental performance, specifically on the
following areas:
•
Mitigating land, air and water pollution by addressing the
significant environmental impact of the Company’s operations;
Complying with relevant environmental and occupational health
and safety laws and regulations;
Continuously reviewing operational processes for resource
conservation, waste reduction and the mitigation of occupational
hazards and risks; and,
Continuously improving efficiencies through new, safe and
innovative technologies and processes.
•
•
•
The Company aims to sustain improving environmental performance
through the efficient use of natural resources, reducing input materials
and waste, and contributing to the conservation of biodiversity
by measuring and reviewing the effectiveness of the Company’s
Quality, Environment and Health and Safety Management Systems
(QEHS MS), in conformity with the requirements of ISO 9001: 2008,
ISO14001:2004, and OHSAS 18001:2007.
With the interlinked management systems in place, namely the
Balanced Scorecard (BSC), the Integrated Management System (IMS) or
the QEHS MS and the Sustainability Framework, the Company develops
a sustainable development strategy to manage key challenges and
identify opportunities, including specific strategies to manage material
environmental issues such as energy efficiency and emissions, water
and wastewater management, resource conservation, sustainable
technologies and the environmental impact of the Company’s products
and services.
Organization
Formed in 2005, the Company’s Pollution Control Officers’ Team (PCO
Team) is composed of the property administrators and technical
supervisors and assistants of the Property Management Division
(PMD), which handle these focused areas. The QEHS Management
Representative (MR) ensures that the PCO Team is always guided
and aligned with the overall environmental goals of the Company.
These personnel are also accredited Pollution Control Officers by the
Department of Environment and Natural Resources (DENR).
A complementary structure is the Sustainability Technical Working
Group (STWG), with which the PCO Team is responsible for
implementing, monitoring and reporting the environmental initiatives
and programs under the sustainability framework.
To further strengthen the functional link between the QEHS MS and
the STWG, the Corporate Sustainability Officer (CSO), who is the former
QEHS Management Representative, is also appointed as the QEHS
Technical Consultant.
Climate Change Policy
We believe that climate change is the greatest threat to mankind and business sustainability, and its
effect is global, local, and personal.
We recognize our important role in mitigating climate change through our business practices.
As a response we will:
•
•
•
58
58
Become more energy-efficient in our operations;
Begin to account and reduce the carbon footprint in our operations and our products and
services through our own efforts and by influencing our contractors; and
Continue to ensure the health and viability of our controlled protected areas, which serve as
carbon sinks.
Catalyzing Change
Pollution Control Officers
Structure
POLLUTION CONTROL OFFICERS
STRUCTURE
Sustainability
Technical Working
Group
Corporate Sustainability Officer,
QEHS* Technical Consultant
Environment
Management
PCO Team Leader
Mall / Retail
Cebu Business Park
Buildings
Asiatown I.T. Park
Ayala Center Cebu
City Sports Club Cebu
Amara
eOffice
Amara
The Walk
Park Tower 1 and 2
Garden Ridge Village
eBloc
Asiatown I.T. Park
Phase 2
eBloc Retail
Cebu Holdings Center &
Ayala Life-FGU Center
(Office Buildings)
* QEHS - Quality, Environment, Health and Safety
Environmental and Occupational Health and Safety Impact and Risk Assessment and Objective Setting
To identify priority areas, the PCO Team, together with the Health and Safety Committee and the representatives of all departments,
underwent an Environmental and Occupational Health and Safety Impact and Risk Assessment for all areas and processes. This exercise is
done in a structured manner and at least once a year; if there are changes in operations or if there are incidents that need to be analyzed,
in conformity with the requirements of ISO 14001:2004 and OHSAS 18001:2007 standards.
Environmental, Health and Safety Policy
In providing real estate products and services, we commit to sustainable development and the safety and
health of our employees by:
•
•
•
•
•
Mitigating land, air and water pollution by addressing the significant environmental impacts of
our operations;
Mitigating the occupational risks by addressing the significant hazards in the workplace and operations;
Complying with relevant environmental and occupational health and safety laws and regulations;
Continuously reviewing our operational processes for resource conservation, waste reduction
and the mitigation of occupational hazards and risks; and,
Continually improving efficiencies through new, safe and innovative technologies and processes.
59
59
b. Storm Risk Assessment for Amara
As of December 2009, there is no impact/risk
areas are also becoming prime areas,
that is rated above 27, so all are considered
with high-rise buildings built at their
As the property is at the Liloan shoreline,
not significant. To strengthen it further, we
peripheries. This adds to the burden on
storm surges were considered during
have subjected the impacts/risks rated above
the surface runoff, waste and vehicular
the design stage. That is why a generous
15 to further filter the applicable hierarchy
traffic, as the density of the area
buffer is allowed from the government
of controls (e.g. elimination, substitution,
increases.
shoreline easement to the property line
and ultimately, to the lot’s buildable area.
controls, etc).
The risk for CBP and the Asiatown I.T.
c. Power Shortfall
Even though the EHS Impact/Risk is
Park is that as the city drainage is not
considered as not significant, the Company
upgraded, the excess surface runoff goes
Starting the second quarter of 2009, a
still implements objectives and targets to
to the CBP and I.T. Park streets, whose
power shortfall was already felt by the
ensure that these are managed.
drainage systems are not designed to
community. To avert debilitating power
convey additional runoff from the city
interruption, the electric utility company
Financial Implication Due to Climate
Change
Climate Change-Related Risk Assessment
streets. In abnormal events, such as
initiated the “Interruptible Load Program
Typhoon Ondoy in 2009, there is a big
(ILP),” with which big power consumers
probability that some areas or buildings,
that have backup generating units are
As a result of Typhoon Ondoy (international
especially in the low-lying areas may be
disconnected from the grid during peak
name Ketsana), which flooded a greater part
flooded. This will bring a host of other
hours.
of Metro Manila in 2009, and the power
problems, such as water supply, health
crisis that the whole Visayas area has been
and sanitation, and business interruption
The risk is that the CO2 emission to the
experiencing since 2009, the Company
with the possible loss of income.
environment due to operating the diesel
generating units is higher than the CO2
started its assessment of climate changerelated risks in the following areas:
In response to this, the Property
emission from the grid.
Management Division (PMD) initiated
a. Flood Risk Assessment for the Cebu
talks with a water expert to conduct a
Business Park (CBP) and the Asiatown I.T.
study for the properties mentioned. In
Park
the interim, all managed properties
CBP and Asiatown I.T. Park are the
are preparing contingency measures to
convergence areas for business in Cebu.
mitigate the impact of flood on their
Because of their location, the surrounding
properties.
Start
Identify EHS aspect and impact for each
activity, area or process
Each department or operating unit identifies the EHS aspect and impact for each activity, area
or process as to its inputs, outputs, emissions and discharges.
Combine similar EHS aspect and impact
and screen for significance
EHS impact is assessed as to its effect to internal and external environment and how significant
it is by using the risk assessment criteria. For impacts with assessment greater than 27,
management plans are prepared to address these significant aspects and impacts.
Check if EHS aspect or impact is covered by relevant
environmental or occupational health and safety laws
If covered by laws, regulatory requirements and reports are considered.
Prepare EHS Management Plan
(Control and/or Improvement Plan)
EHS management plans are prepared to address EHS impacts and risks.
Set EHS objectives, targets and progams
Implement programs and monitor
performance against targets
Review EHS aspect or impact at least once a year and
revise objectives, targets and programs as needed
End
60
60
A Simplified Diagram on Environmental and Occupational
Health and Safety Impact and Risk Assessment
Catalyzing Change
These are formulated and communicated to the internal organization and reflected in the
corporate Balanced Scorecard (BSC) as part of the commitment for the year.
Monitoring of actual achievements against targets and reporting are done through monthly
performance and management reviews.
Effectiveness of the process is reviewed. If new aspects and impacts are present, another set of
objectives, targets and programs is formulated.
For 2009, the environmental objectives and targets of the Company, as approved by the Management Committee, are as follows:
EHS IMPACT/RISK
Land and water
contamination due to
disposal of solid waste
SUSTAINABILITY
ALIGNMENT (GRI)
Solid waste
OBJECTIVES
Continue to
implement
Solid Waste
Management
(SWM) program
2009 TARGETS
Improve SWM
initiatives
Implement SWM
program to tie up
with the barangays
2009 RESULTS
Recycled 29 percent, not
including the composted
organic waste (from 21
percent in 2008)
Barangay Luz – recipient
of the Galing-Pook award
(showcasing the privatepublic partnership)
BUSINESS BENEFITS
Offered alternative
livelihood program for
the unemployed
Eliminated the cost of
hauling and dumping of
waste
Land and water
disposal of hazardous
and special waste
Solid waste
Compliance
with RA 6969
and DAO 29
(Hazardous Waste
Management)
Monitor and control
waste identified as
hazardous, example:
fluorescent lamps,
generator set oil
Compliant with RA 6969 –
monitored and controlled
hazardous wastes
Avoidance of penalties
due to improper disposal;
improved environmental
performance
Water contamination
due to discharge of
wastewater
Wastewater
(Effluents)
Compliance with
DAO 35, Class C
(Receiving Body of
Water)
Monitor quality of
wastewater from
buildings
Wastewater quality after
treatment: BOD = 15 to
31 mg/li, below the limit
of 50 mg/li
due to improper
treatment; improved
environmental
performance
performance
Treat wastewater
to below Class C
(BOD<50 mg/li)
Land and water
oil spill
Effluents and
emissions
Compliance with
RA 6969 and DAO
29
Zero incidence of oil
spill, accidental or
intentional
Zero incidence
Depletion of Resources
due to use of water
Water
Water
Management
Maintain water use
to 2008 level
Higher by 55 percent due Identified areas for
to non-inclusion of Ayala
improvement
Center Cebu’s The Terraces
in the water consumption
target
Depletion of resources
due to use of energy
Energy and
emissions
Energy
management
Maintain electrical
energy use to 2008
level
Lower than target by 10.6
percent
Better cost management,
lower operating expenses
Air pollution due to
smoke emission
Greenhouse gas
(GHG) emission
Compliance with
Clean Air Act
Generator set
emission in
conformity with the
provisions of the
Clean Air Act
Within set limits
performance
Ozone depletion due to
use of CFC
Greenhouse gas
(GHG) emission
Compliance with
Montreal Protocol
No purchase of CFCs
by end of 2010
Identified equipment
using CFCs
Improved environmental
performance
Compliance with
Bureau of Working
Conditions (BWC)
and Occupational
Health and Safety
Standards
No lost time due to
accidents (LTA)
No LTA
Employee well-being
Injury and Illness due to Employee health
work-related hazards
and safety
61
61
The following table details the system to ensure that these environmental objectives, targets and programs are deployed, monitored and
reported.
PERSONS
RESPONSIBLE
OBJECTIVE
ROLE / FUNCTION
Documentation
QEHS Procedure
Set Quality, Environment,
Health and Safety (QEHS)
objectives and targets
Management Committee
and management team
members
Objective-setting for the
year
Corporate QEHS and
individual Balanced
Scorecards (BSC)
Strategic Planning and
Review
Ensure that objectives and
targets are continually
monitored, measured and
analyzed
All operating units
Monitoring and analysis
of results, semiannual reporting for
management review
Departmental
monthly performance
reviews and
management review
reports
Management Review
Ensure that the Company is
compliant with all applicable
environmental regulations
Pollution Control Officers
(PCOs) and Property
Management Division
(PMD)
Monitoring on
compliance with
environmental
requirements
Submission of
notarized SelfMonitoring Report
(SMR) and a copy of
the transmittal letter
to DENR-EMB (with
received stamp)
Identification, listing,
dissemination, monitoring
and updating of EHS
Regulations
Ensure that contractors,
outsourced personnel and
merchants are made aware
of the Company’s QEHS
Management Systems
All operating units,
PCOs and Management
Representative
Conduct of orientations,
trainings and workshops
on QEHS Management
Systems procedures
Development of
in-house training
materials for
orientation and
trainings, launch
Contractors’
Development
Program
Identification of
Environment, Health and
Safety Aspects, matrix of
outsourced processes and
controls
Results and Achievements
Climate Change-Related Indicators: Energy and Emissions
I. Energy Consumption
a) Direct Energy Consumption
The Company and its managed properties consumed 184,934.75 liters of diesel in 2009.
Direct Energy Consumption
(in liters of diesel)
2008
2009
Park
Tower 1
62
62
Park
Tower 2
ALAI-FGU Cebu Holdings Garden Ridge
Center
Village
Center
Catalyzing Change
eOffice City Sports
Club Cebu
Amara
28,885
18,834
120
1,333
34
908
180
646
384
827
782
855
835
881
265
2,263
3,400
8,104
169,130
2007
Ayala Center Cebu
The increase in diesel fuel in 2009 is due
to the power shortfall that the Visayas grid
experienced. Ayala Center Cebu participated in
the Interruptible Load Agreement with VECO. The
Interruptible Load Agreement is the agreement
between VECO and properties with selfgenerating power to be taken off the grid during
peak hours. The generating sets of all properties
supply electricity for a certain period so that the
utility distribution is offloaded.
b) Indirect Energy Consumption (Purchased Electricity)
Indirect Energy Consumption
Park
Tower 2
ALAI-FGU
Center
Cebu Holdings
Center
Asiatown I.T.
Park
6,047,527
109,600
395,379
293,090
Cebu Business
Park
132,709
134,226
130,469
361,598
310,335
339,221
502,283
510,507
485,870
158,908
157,569
155,202
179,203
184,529
180,281
Park
Tower 1
7,321,007
2009
7,626,653
2008
1,352,700
2007
eOffice
City Sports
Club Cebu
Almost all properties achieved their targets except for the Cebu Business Park. This is because of the energization of
other streetlights and the temporary tapping of the construction bunkhouse.
Ayala Center Cebu
Lower energy consumption (10 percent lower), partly
due to the interruptible load agreement (at least 20
hours per month) and the energy efficiency initiatives
implemented.
c) Indirect Energy Saved and CO2 Avoided
The Company and its managed properties saved a total of 900,459 kwhr in 2009, 10.4 percent lower than the target for the year. This
resulted in eliminating 172.81 tons of CO2 emissions, and brought in a total of P5.85 million (at P6.50 per kWhr) in savings for the Company
and its managed properties.
2009 Energy Saved
(kWhrs)
Energy Saved
(All CHI-Managed Properties)
CO2 Emission Avoided
(metric tons)
5,852,983
Amount Saved (Php)
172.81
155
816,805
900,459
4,900,830
Energy Saved (kwh)
2008
Ayala
Center
Cebu
708,991.24
OTHERS: 191,467.68
Cebu Business Park 102,451.84
Asiatown I.T. Park 6,910
eOffice 15,200
Park Tower 1 5,719
Park Tower 2 3,198
ALAI-FGU Center 46,689.84
Cebu Holdings Center11,299
2009
63
63
II. Emissions
One of the largest sources of CO2 emission from the Company’s operations is the emission from indirect energy consumption:
the purchased electrical energy from the power utility company, VECO, amounting to 1,486 tons of CO2.
Power Generation Mix
c) Indirect Energy
Fortunately, the Visayas grid’s power generation mix is heavily
Total emission from indirect energy is 1,486 tons, with the Ayala
dependent on renewable geothermal energy. These are details
Center Cebu having the largest emission at 1,161 tons.
from the Department of Energy (DOE) data for 2008:
Generation Mix
(in percent)
Visayas
Mindanao
Ayala
Center
Cebu
1,160.63
Natural Gas Geothermal
Oil Based
Coal
Ayala Center Cebu
457.86
Cebu Business Park 65.10
Asiatown IT Park 56.25
eOffice 21.03
City Sports Club Park 259.61
Park Tower 1 34.60
Park Tower 2 29.79
ALAI-FGU Center 293.25
Cebu Holdings Center 25.04
Wind
0.02
12.22
0.46
0.14
18.81
8.62
19.25
16.00
4.36
8.44
9.96
30.55
44.29
55.22
71.67
Luzon
Emissions from Indirect Energy
Carbon Dioxide (CO2)
Hydro
Emissions from Direct Energy
Carbon Dioxide (CO2)
Solar
Data Source on Generation Mix: Department of Energy, 2008
As compared with other island grids (Luzon and Mindanao), the
carbon dioxide emission (in grams of CO2 per kwhr) for the Visayas
grid is lower by 25 percent, when compared to Mindanao, and
lower by 110 percent, when compared to Luzon.
eOffice
21.94
Garden Ridge Village 0.09
City Sports Club Cebu 3.61
Park Tower 1
0.81
Park Tower 2
21.97
ALAI-FGU Center 7.21
Ayala
Center
Cebu
457.86
Carbon emission from the following sources:
a) Direct Energy
Methane (CH4)
In 2009, the total CO2 emission from direct energy (generating sets)
is 503.35 metric tons. This is about 22 percent of the total CO2
emission from the Company’s direct and indirect energy sources.
Of the total CO2 emission from direct energy source, Ayala
Center Cebu accounts for 91 percent, at 458 metric tons. This
is understandable since Ayala Center Cebu backup generating
eOffice
2.96
Park Tower 1
0.11
Park Tower 2
0.27
ALAI-FGU Center
0.97
Ayala
Center
Cebu
61.82
sets (with a total generating capacity of 11.2 MW) are sized to
accommodate all the load requirements of the mall.
Nitrous Oxide (NOx)
b) Non- CO2 Emissions
Total methane emission from direct energy is 67.96 kgs, while
nitrous oxide emission from direct energy is 4.08 kgs.
Converting this to its equivalent value in CO2, the methane
emission (at 21 GWP) is 1.43 tons, and for nitrous oxide (at 310
GWP), 1.26 tons.
64
64
Catalyzing Change
Ayala
Center
Cebu
3.71
eOffice
0.18
Park Tower 1
0.01
Park Tower 2
0.02
ALAI-FGU Center
0.06
d) CO2 Emissions from Business Travel - Distance Traveled Approach
Mode of
Transportation
Air
Description
Distance
Traveled
Unit
CO2 emission
factor kg/unit
kg/unit
CO2 emissions
in kg
CO2 emissions
in metric tons
Short Flight
0
km
0.15
kg/km
0
0.00
Medium Flight
574,599
km
0.12
kg/km
68,607
68.61
Long Flight
15,698
km
0.11
kg/km
1,727
1.73
CO2 emissions: 70.3 metric tons
e) Ozone-depleting Substances (Refrigerants)
the CBP drainage line should be lower than what is prescribed by
There is no ozone-depleting substance emitted by the Company.
the DENR-Environmental Management Bureau (EMB) for class C
The refrigerant used in the new chillers is R134a. The Company is
water quality (50 mg/liter).
also preparing for the phase-out of the CFCs by the end of 2010 by
scouting for retrofill refrigerants.
The figure below shows the five-day Biochemical Oxygen Demand
(BOD5) of the treated wastewater that is discharged to the
Water and Wastewater Management
Water Consumption
nearest receiving body of water. The figures are the average on a
quarterly basis.
The Metro Cebu Water District (MCWD) supplies water to the
Wastewater Quality
5-Day BOD (mg/li)
Company and its managed properties. In 2009, a total of 378,863
cubic meters was supplied by MCWD.
1st Quarter
3rd Quarter
2nd Quarter
35
4th Quarter
Ayala Center Cebu and the Cebu Business Park (CBP) posted
29
increases in their consumption and did not hit their target
27
23
reduction of three percent.
20
23
18
17 18
17
11.5
For Ayala Center Cebu, the consumption for the newly opened
6.5
area, The Terraces, was not included in their target plans, thereby
increasing its consumption by 60 percent as against target.
2007
For CBP, a building contractor requested to tap water from the
commissioned to get and analyze the Company’s water quality
gained from this transaction, its water consumption reflected in
samples monthly. The results are documented in the Self-
the water meter increased by as much as 200 percent.
Monitoring Report submitted on a quarterly basis to the DENREMB. Additionally, water is treated through chlorination to kill
Wastewater Quality
the microorganisms prior to discharge. A part of the treated
As part of its environmental performance measures, the Company
Cebu
Holdings
Center
Cebu
Business
Park
875
2,039
1,715
1,460
1,031
ALAI-FGU
Center
342,706
12,013
2009
293,753
2008
5,824
6,098
5,326
9,936
11,848
(in liters)
2007
1,289
1,596
5,520
4,248
5,246
10,636
Water Consumption
590,785
wastewater is also recycled for the park’s irrigation purposes.
sees to it that the treated wastewater quality prior to discharge to
Park
Tower 2
2009
A third party laboratory accredited by the DENR-EMB is
CBP office. While the Cebu Business Park Association, Inc. (CBPAI)
Park
Tower 1
2008
eOffice
City Sports
Club Cebu
Ayala Center Cebu
Water consumption is lower
than the 2008 level but higher
than target in 2009. This is
due to the non-inclusion of
The Terraces in Ayala Center
Cebu’s water consumption
target.
65
65
Hazardous Waste Management
In 2009, total residuals increased because of the continued
The Company identified two hazardous wastes, based on the
buildup at Cebu Business Park (CBP). Data include construction
list of regulated and identified hazardous wastes issued by the
waste disposed of by the building contractors. This construction
regulatory agency, DENR: fluorescent lamps (mercury content)
waste, however, is not hazardous or banned since this is composed
and used oil (from the generating sets). These wastes are stored in
primarily of excess concrete hollow blocks, broken concrete, and
a separate area for transport and disposal. The Company hires a
gypsum boards that cannot be used.
DENR-accredited transporter and waste treatment specialist for the
transport and disposal of these wastes. This is also in compliance
1,038,460
573,800
with the provisions and implementing guidelines of the Republic
Act (RA) 6069, or the Hazardous and Nuclear Wastes Act.
Recyclable
Ayala Center Cebu
Recyclable CBP
204,404
234,909
Residual
Ayala Center Cebu
186,059
401,983
259,308
184,315
Solid Waste Generation
(in kg)
Residual CBP
Number and Volume of Significant Spills
As embodied in the Company’s QEHS manual, there is a procedure
to prevent or control the damage caused by oil and diesel spills.
Spill containment chambers or spill dikes are built around day
tanks. When a diesel-generating set engine changes oil, a spill
container is positioned below the drain, with a used oil container.
2008
2009
This containment facility prevents oil and diesel spills.
The solid waste management system of the CBP and Ayala Center
As a result, the Company and its managed properties have not
Cebu is implemented in partnership with CBP and the Neighboring
experienced any oil or diesel spills.
Barangays Altruistic Alliance, Inc. (CBPNBAAI), with Barangay Luz
handling the daily garbage collection.
Other Initiatives to Promote Environmental Awareness to the
Community
Recyclable materials are either sold to recyclers or made into
Initiatives to Reduce Indirect Energy Consumption
saleable products while biodegradable materials are brought to
For the year 2009, the Property Management Division (PMD)
the composting facility in Cebu Business Park called Tugkaran.
implemented energy management measures to reduce the energy
This 2,805-square meter facility also serves as a nursery to meet
consumption, as follows:
the landscaping requirements of CBP and Ayala Center Cebu. It
also serves as a venue for environmental education by showcasing
Ayala Center Cebu:
the full cycle of solid waste management at CBP.
a. Continued re-lamping of basement areas, using the T5
fluorescent lamps and electronic ballasts. The T5 consumes
The composting activities of Tugkaran include two types: vermicomposting using African Night Crawlers, and photosynthetic
composting using a bio-solution to hasten the decomposition
process. In 2009, this project generated 1,920 kilos of organic
fertilizers sold at P300 per sack.
less energy at 32 watts, compared to the traditional fluorescent
lamps at 40 watts.
b. Implementation of schedules for switching on or off of lights
and equipment
c. Purchase of additional 1 x 1000 tons of refrigeration (TR) chiller
with an efficiency of 0.65 kw/TR
The organic fertilizer produced in Tugkaran is of good quality and
complies with the Nitrogen, Phosphorus and Potassium (NPK)
Other Managed Properties:
requirement of the Department of Agriculture (DA).
d. Implementation of the schedules for switching on or off of
lights and equipment.
e. Continued re-lamping of exit lights from fluorescent to
Compact Flourescent Lights (CFLs).
These initiatives resulted in a net savings of 900,459 kwhrs for the
Company and its managed properties.
66
66
Catalyzing Change
Tree Inventory
Participation to Earth Hour
In 2009, the Company conducted an inventory of the trees in its
All CHI-managed properties participated in the one-hour switch-
managed properties. As of yearend, there are 71 tree species,
off on March 28, 2009 in support of Earth Hour. The Company
totaling 5,828 trees, thriving within the corporate property
reduced its carbon emission by 1,961.5 kilograms and saved
boundaries.
7,074.5 kilowatts of power, equivalent to P45,984.25
Inventory of Trees for 2009 (Managed Properties)
3,099
Campaigning for Environmental Awareness
To promote environmental awareness in the community, the
Company, represented by its Corporate Sustainability Officer
(CSO), participated in different fora and focused group discussions
1,622
organized by various government and non-government sectors,
namely:
552
134
Asiatown
I.T. Park
125
a. As a reactor for the “Forum on Climate Justice,” organized by
296
Ayala Center The Terraces
Cebu
City Sports
Cebu
Business Park Club Cebu
the Integrated Bar of the Philippines (IBP) and the University of
Amara
Cebu (UC);
b. As a representative of the business sector in the “Solid Waste
Environment Protection Expenditures
Management Forum,” organized by the 888 Club; and
a. Operation and management of Sewage Treatment Plant (STP)
c. As a reactor for the business sector in the “Climate Change
b. Landscape maintenance and enhancement
Forum,” organized by the Talisay City Government.
c. Orientation and training of outsourced personnel on Quality,
Environment and Health and Safety
Monetary Value of Fines for Violations
As embodied in the Company’s QEHS Management Systems, the
Estimated total cost of these initiatives is P5.701 Million.
Company, through its Pollution Control Officers (PCOs), continually
monitors the compliance with the environmental laws, statutes
The Company also conducted Environment, Health and Safety
and regulations.
(EHS) orientation, training and workshops for all employees, which
include modules on “Solid Waste Segregation,” “5S System of Good
The Company has no history of non-compliance with the
Housekeeping,” “Construction Safety,” “Power and Water Usage/
requirements of environmental and other laws and regulations.
Conservation and Office Safety”. This is conducted annually with
Hence, the Company has no recorded fines due to violations of
an estimated training cost of P 30,000 for each training session.
these laws.
Excellence in Economy and Ecology (E3) Award
Cebu Holdings, Inc. (CHI) was conferred the 2009 Excellence in Economy and Ecology
Award (large enterprise category) by the Philippine Chamber of Commerce and Industry
(PCCI) during the 35th Philippine Business Conference and Expo (PBC&E) on October 21,
2009 at the historic Manila Hotel.
CHI was recognized for “integrating environmental considerations in its business
operations and for having undertaken environmental initiatives that made significant
impact to the business and the community”.
CHI’s innovative environmental practices as communicated in its Sustainability and
Quality, Environment, Health and Safety policies, programs and activities are translated
in terms of legislative compliance, reduced environmental risks, cost savings, increased
market opportunities and employee participation.
The award was presented by President Gloria Macapagal-Arroyo
with Philippine Chamber of Commerce and Industry (PCCI)
president Edgardo G. Lacson and the chairman of the PBC&E
Roberto C. Amores and received by CHI president Francis O.
Monera and Corporate Sustainability Officer Elson R. Homez.
67
67
Habitats Protected or Restored
Biodiversity Management at Kan-irag Nature Park
Biodiversity is an element of the Company’s Climate Change
Policy. Cebu Holdings, Inc. (CHI) continues to ensure the health
and viability of the Kan-irag Nature Park being a protected area
that serves as a carbon sink of Cebu.
CHI manages the Kan-irag Nature Park. It is part of the Central
Cebu Protected Landscape (CCPL). CHI and mother company Ayala
Land, Inc. (ALI) engaged environmental research organizations
and formed a foundation to operate the 71-hectare protected
area. The park is planned to be an eco-tourism destination that
will serve as a venue for recreation, environmental education and
research. The foundation strives to attain its goals for watershed
management and biodiversity restoration through stakeholder
engagement and partnership.
68
68
Catalyzing Change
Inventory of Flora and Fauna
Diversification of Flora Species
•
Timber Stand Improvement of Existing Indigenous Species
Birds
There are about 38 species of birds observed at the park. These
This activity has been carried since the start of the diversification
species are constantly seen feeding within the park boundaries.
process. Due to the limited number of maintenance workers,
The listing of birds is a preparatory approach to an actual scientific
only the species that are within the developed areas are
study that may serve as baseline data generated by the local
basically maintained.
inhabitants. It is also useful for visitor information. The dramatic
•
increase of population is a result of the park’s diversification
Monitoring of Introduced Dipterocarp Species
Three test areas of the dipterocarps’ domestication are
program. Enhancing vegetation has increased biodiversity and the
constantly monitored by the park workers. These test areas are
bird population.
of different gradients and habitats. This is to observe where
these species best thrive. The survival rate at present is about
It should be noted that the bird listing is derived only from
90 percent of the total number of dipterocarps planted.
observations, not the actual capture-identify-release system. The
Survival rate in general is quite remarkable, considering that
pictures generated in the park’s bird guidebook are from reliable
most dipterocarps are known to thrive in old mountain forest.
guide keys that are available in the market. A supplemental activity
In due time, these test sites will allow better planning in
to generate new photos for the park’s bird guidebook is being
selecting the best area within the existing vegetation of the
planned.
park for planting dipterocarps. In consideration of its high
survival rate in the park area, it is best to introduce more
Tree Species, Ferns, Vines, Shrubs and Grasses Partial Listing
of these species as the tree planting activities in open areas
In 2009, additional species were added to the list after focused group
continue.
discussions were conducted with the park workers. This consultation
and planting cycle is still continued. This is just to keep track of new
species that have been dispersed by natural means. The recent list
•
Continued Thinning of Exotic Species
Part of the foundation’s long-term program is thinning exotic
bared 89 tree species, approximately 25 percent higher than the list
species since barely 30 percent of the exotic species that were
submitted one year ago.
planted before have been thinned out.
Biodiversity
2008
2009
71
89
25%
27
38
41%
Bird Release: Barred Rail (commonly known as Tikling). This bird
was captured for the purpose of proper identification and photo
documentation. The commonly practiced inventory method is “captureidentify-release.” This way the captured animals are no longer confined in
cages for several days before they are set free. The method only requires a
few minutes of documentation. Proper handling is required in the process
so as not to cause injury before setting it out in the wild.
Indigenous Tree Species
Bird Species
69
69
•
Tree Planting Activities on Selected Sites
While a number of tree planting activities is done
each year, there are certain areas left with only a
few surviving species. Noticeably, some areas in
the park especially near the western boundary of
the land are open or otherwise grassland. These are
potential areas for future tree planting activities.
Organizations may be encouraged to include the
monitoring and maintenance of trees, aside from
planting.
•
Vegetation Improvement through Assisted Natural
Regeneration (ANR) Growth.
Established ANR sites at present are those that are
near the developed areas. These are open sites
near the upper Lantawan, portions of open areas
heading to the campsite, two areas within the
vicinity of the campsite, and a larger portion at
the adventure zone area. The total estimated area
of the ANR sites is over five hectares. For over a
year of assisted growth, these areas are no longer
considered open as trees are starting to overgrow
the lower plants. Other open areas are subjected
to undergo the same activity when access trails are
completed.
70
70
Catalyzing Change
Watershed Management/ Rehabilitation Initiatives
•
Rehabilitation and Stabilization of Waterways
•
Dredging of Clogged Waterways and Gabion Dams
This activity is part of rehabilitation and stabilization works.
Sections of the waterways where dredging is essential have
been made. Harvested materials from the dredging are utilized
in several ways: sandy materials are used as a potting media,
conglomerates are used in the trails as fillers, and the mixture of
sandy and clayish materials are subjects for soil brick purposes.
This initiative is still under experimentation to determine if
the dried bricks are stable enough for house construction. This
will be displayed in future facility developments.
•
Stabilization of Critical Slopes
This refers to areas where the physical development is active.
Simple stabilization works thru the introduction of erosion
control plants and deep rooting trees as terrace supports are
already administered in these areas.
71
71
Social Performance: Human Resources
The CHI Management Team with chairman of the Board Antonino T. Aquino, president Fancis O. Monera, and ALI Vismin Head Emilio J. Tumbocon.
Human resources (HR) management is an integral part of the business strategy of Cebu Holdings, Inc. (CHI). The Company acknowledges
every person’s dignity and self-worth.
Three core values put emphasis on the importance of people: concern for people’s personal and professional growth, empowerment and
teamwork. The Company commits to enhance a person’s effectiveness through training and development and to provide each employee the
means to fulfill his or her responsibilities with authority and accountability.
As an employer in this local community, the Company strives to create and sustain an environment in which people are valued for their
individuality and contributions.
The HR-Admin Department ensures full implementation of policies and procedures relating to recruitment, compensation and benefits,
training and development, performance and career management and employee-labor relations. The department is steered by the HR/Admin
manager who also serves as the chairman of the Health and Safety Committee and therefore champions all initiatives relating to this area.
The HR Department also handles annual reporting on several other social and economic indicators that directly relate to the Company’s
workforce. Policies and programs are internally communicated and reinforced through varied channels that are documented as internal
communication procedure in the Integrated Management System (IMS) manual.
Employee engagement is evaluated bi-annually via internal customer survey. This helps the department evaluate its efficiency in the
implementation of policies and programs.
72
72
Catalyzing Change
Total Workforce by Category
In 2009, CHI’s total workforce registered 114 employees. This includes CHI’s subsidiaries Cebu Property Ventures and Development Corporation
and Cebu Leisure Company, Inc.
Total Workforce by Category
Rate of Employee Turnover (LA2)
by Age and Gender
Male: 45 (39%)
Gender Profile
20-30 years old
Female: 69 (61%)
Male: 1
Female: 9
21-30 yo: 53 (46%)
31-40 yo: 39 (34%)
41-50 yo: 18 (16%)
51-up: 4 (4%)
Age Profile
31-40 years old
Female: 2
Male: 2
41-50 years old
Female: 1
51-60 years old
Group Profile
Male: 1
Management Team: 21 (18%)
Supervisors: 39 (34%)
Associates: 52 (46%)
Contractual/Per Project: 2 (2%)
Human Rights and Labor Policy
given a performance review at least a month prior to the end of
CHI supports and respects the protection of international human
their probationary period. Contractual employees undergo the
rights within the circle of the Company’s influence, and ensures
same review to determine whether their contract is to be renewed,
that the institution is not carrying out human rights abuses.
extended or terminated.
Provision of a Good and Safe Working Place
Equal Opportunity
The Company identifies, evaluates, and eliminates any kind of risk
Composition of Governance Bodies and Breakdown of
to a safe working place. It provides appropriate access to needed
Employees per Category (Gender, Age)
resources, fair remuneration, training, education, and satisfaction
of basic needs.
While the Company has only one female member of the Board,
there are more women managing teams or departments than
Working Hours
men.
CHI does not require workers to work more than the maximum
hours of daily labor set by local laws. The Company complies with
Ratio of Basic Salary of Men and Women
overtime pay requirements.
The Company exercises impartiality in determining remuneration.
Salary rates reflect equality between male and female employees
Benefits to Full-Time Employees
across all groups.
On top of the regular statutory benefits, permanent employees
receive medical and clothing allowances and are entitled to
Defined Benefit Plan Obligations
vacation, emergency and sick leaves. They are also covered under
Retirement Plan
a group life, health insurance and retirement program.
The Company has a funded, non-contributory retirement plan
covering all its regular employees. The benefits are based on the
Performance and Career Development Reviews
employees’ years of service and final monthly salary.
Yearend performance reviews are regularly conducted in the
Company. All regular employees as of October 2009 were covered
Entry Level Wages
in this review. On a similar basis, probationary employees are
All employees hired are paid above minimum wage. Those hired
to fill entry-level positions are paid at least 40 to 50 percent more
than the minimum wage.
73
73
Composition of Goverance Bodies and
Breakdown of Employees per Category
(by Gender and Age)
CHI Board of
Directors
M
F
Management
Team
M
F
Supervisors
Associates
M
F
M
F
21-30 yrs old
1
3
7
9
31
31-40 yrs old
5
13
12
5
4
5
2
2
3
41-50 yrs old
1
51-up yrs old
7
7
1
3
1
Procedure for Local Hiring/ Percent of Local Senior
In addition, the Company’s Quality, Environment, Health and
Management
Safety procedures on accreditation, purchasing and bidding,
Three out of five (or 60 percent) senior division managers or
evaluate and accredit technical and financial capability of the
management committee members are from Cebu.
suppliers and service providers prior to business transactions.
Non-discrimination
Training on Anti-corruption Policies and Procedures
There are no incidents of discrimination in the workplace.
All newly hired employees are oriented in anti-corruption policies
Equal opportunity is given from hiring employees to transfers
and procedures. The Company’s Code of Ethics covers the Conflict
or movements, promotions, cross-posting and training and
of Interest Policy, which states that all employees are expected
development. The Company prohibits discrimination of race,
to promote primarily the Company’s interest. No employee shall
color, age, gender, sexual orientation, gender identity and
compete with the Company, nor shall he or she allow business
expression, ethnicity, religion, disability and political affiliation.
dealings on behalf of CHI to be influenced, or even appear to be
influenced, by personal or family interests.
No Child Labor
The Company does not practice child labor in the workplace.
Annually, the Company releases the Disclosure Statement form
There are no risks related to child labor in any of its operations
to all employees before yearend in compliance with the Conflict
and development sites. CHI strictly adheres with local minimum
of Interest Policy. The policy covers areas, such as: 1) abuse
age laws and requirements.
of authority for personal advantage; 2) personal or business
involvement or vested interest with CHI or competitors, suppliers
Freely chosen Employment
and customers; 3) vested interest with the Company’s suppliers,
The Company ensures that the overall terms of employment are
competitors and customers; 4) unauthorized disbursement
voluntary. There has been no significant risk for incidents of
of funds; 5) use of Company resources and information for
forced or compulsory labor in all areas of operations.
personal gain; and 6) acceptance of gifts or bribes. This applies
to all regular employees, 21 management team members, 39
Percentage and Total Number of Business Units Analyzed for
supervisors and 52 associates.
Risks Related to Corruption
The Company, through its Audit Department continues to conduct
Monetary value of significant fines and total number of
audits and risk assessments for all departments in relation to
non-monetary sanctions for non-compliance with laws and
corruption. These audit results are reported and discussed with
regulations
the head of the division and submitted to the president.
The Company is steadfastly compliant with the applicable laws
and regulations of its business, aside from the environmental
and product responsibility laws. Hence, the Company was not
sanctioned nor fined by regulatory agencies for non-compliance
74
74
Catalyzing Change
with laws and regulations.
Employee Health and Safety
Percentage of Total Workforce Represented in Health and Safety
Committee
Cebu Holdings, Inc. (CHI) has a designated Health and Safety
Committee, the Company’s planning group in all matters
pertaining to employee health and safety. The total workforce
is represented in this committee. Representatives come from
the associates, supervisors and management team levels of all
functional teams: Real Estate Development Group (REDG), Retail
Business Group (RBG), Property Management Division (PMD) and
b. Review of EHS Aspect/Impact, Hazard/Risk Assessment
Procedure
Corporate Services Group (CSG).
The H&S Committee reviewed the general procedure on the
Environment, Health and Safety (EHS) Programs and Initiatives
In 2009, the Health and Safety (H&S) Committee pursued the
EHS Aspect/Impact, Hazard/Risk Assessment to further improve
its process and incorporate the determination and application
following initiatives:
of the hierarchy of controls. Further to this, a workshop with
all departments’ process owners and project-in-charge is being
a. Work Assessment Measurement
arranged, to update the consolidated inputs on the identified EHS
The Work Assessment Measurement (WEM) was conducted to
Aspect/Impact and Hazard/Risk in all identified activities.
identify hazards in the workplace and to recommend appropriate
corrective actions for the improvement of the work environment.
c. Review of Corporate Emergency Preparedness Plans
Areas included in the WEM project were Cebu Holdings Center
In 2009, the Health and Safety Committee reviewed the corporate
offices, Ayala Center Cebu’s The Terraces, Amara and Park Towers
and managed properties’ Emergency Preparedness Plans and
1 and 2. The H&S Committee made sure that the corrective actions
interfaced with all the departments in the creation of the CHI
to address the hazards were implemented.
Crisis Management team.
HealthAND
and SAFETY
Safety Committee
2009 2009
HEALTH
COMMITTEE
Human Resources and
Admin Manager
Chairperson
OIC, Property Management Division
Division Head
Technical Consultant
Quality, Environment, Health & Safety
Technical Support Group Manager/
Concurrent Asiatown IT Park Administrator
Health & Safety Officer
Security
Manager
Management
Rep 1
Management
Rep 2
Management
Rep 3
HR & Admin
Supervisor
Employee
HR & Admin
Assistant
Secretariat
Property
Management
Property
Management
Ayala Center Cebu
Rep 1
Ayala Center Cebu
Rep 2
Property Management
Property
Management
Real Estate
Development Group
Rep 1
Cebu Holdings Center/
City Sports Club Cebu
Rep 2
Park Towers 1 & 2/
ALAI-FGU Center
Ex-Officio
Member
Property Administrator
Cebu Business Park
75
75
Safety Statistics
In 2009, CHI registered zero lost time from work accidents and injuries while work illnesses are reported as follows:
Awareness of Workforce Regarding Serious Diseases
Work Accident
Work Illness
79
56
28
0 Incident
Lost Time
Fever
Headache
Colds
Primer and Guidelines on Influenza A
In response to the threat of transmission or spread of Influenza A (H1N1) virus in the workplace, the Company released the primer on
AH1N1 and guidelines to all employees on May 11, 2009. All employees were required to submit an employee information sheet for
reference in the event of emergency. Merchants of Ayala Center Cebu, administrators of the CHI-managed properties and all outsourced
personnel were likewise given a two-day orientation on the Influenza A (H1N1). The event was conducted by the Department of Health
(DOH).
Policy on TB Prevention and Control in the Workplace
In 2009, the Company implemented the Tuberculosis or TB
Prevention and Control in the Workplace Policy, in compliance
with Department Order 73-05 of the Department of Labor and
Employment (DOLE). The policy covers TB workplace programs
on prevention, treatment, rehabilitation, restoration to work and
social policies.
The TB Management orientation series was conducted by the
DOH to all employees, including outsourced personnel. This is the
latest of four health and safety policies implemented, the others
being: Drug Free Workplace, Anti-Sexual Harassment, and the
HIV/Aids Prevention and Control.
76
76
Catalyzing Change
Employee Development
In 2009, the Company pursued a set of training modules in various areas that address competency requirements and work-life balance.
Technical Competency Matrix Workshop ·
Company and
Management Systems
10%
Life Skills
2%
Total Quality Service Seminar ·
Developing Customer Service Superstars ·
· ALI Incident Response
· Comprehensive Real Estate Seminar
Customer Service
6%
Alignment of Sustainability Priority Areas with the Quality, ·
Environment, Health and Safety Management Systems
Sustainability
8%
· Project Development ALI 102
· Tax, PICPA, Financial-related Seminars
· ICT Summit, Technology-related Seminars
· Supervisory Skills Program
Technical and
Competency-based
2009
EMPLOYEE
DEVELOPMENT
· Developing Secretaries and Admin Assistants
· Human Resources-related Seminars
· Internal Audit Course (9001:2008) using the
38%
· Corporate Social Responsibility Summit
· Energy Technical Conference
(for internal auditors)
(for all employees)
ISO Standards Review ·
Root Cause Analysis and
·
Quality Management
System
16%
Health and Safety
Management System
14%
Refresher Course on Integrated Management System (IMS) ·
(for internal auditors)
Environmental
Management
System
6%
· Environmental Impact / Risk Analysis Seminar
· Environmental Management System Seminar / Workshop
QEHS MS Review and Revalida ·
· Health and Safety / Office Safety Seminar
· Health and Safety Impact/ Risk Analysis Seminar
· First Aid and Basic Life Support Training
· Loss Control Management Seminar
Average Training Hours
Per Employee Category
Average Training Hours
In 2009, the average training hours registered by an employee
was 27.5 hours. This covers in-house training programs only and
does not include external competency-based or technical trainings
and workshops.
32.54
24.57
Management
Team
23.65
Supervisors
Associates
77
77
Competency Building
Following the initial identification of functional, behavioral and
technical competencies of the employees in 2007, the “Technical
Competency Workshop” was pursued in 2009. It was attended by
all the members of the Management Team to further assess the
employees against the level of competencies, determine gaps and
identify development programs to address these gaps.
Employee Feedback
To obtain the employees’ feedback on the different aspects of their work in the Company, an organizational climate survey and an internal
customer satisfaction (ICS) survey were conducted in 2009. The results of the ICS are found on page 88.
The organizational climate survey presented favorable results in all areas measured. Job security registered the highest average score at 11.5
on a scale that has 15 as the highest possible score, while standards of excellence and job interest and challenge were second highest with an
average rating of 11.2. Such rating shows that employees perceive very high standards of excellence in the Integrated Management System.
Employees have a positive perception of their jobs and find their work interesting and challenging.
Other areas also perceived to be positive are rewards and satisfaction, with an average of 9.8 and advancement and mobility, with an average
of 8.1.
Results of this survey will be helpful for management in continually improving employee welfare.
Organizational Climate Survey
Employee Wellness
In 2009, team leaders of the Company’s wellness program, Cebu
Holdings, Inc. Personality and Lifestyle Upliftment Strategy or CHI
PLUS, organized more than 50 activities for the year, covering 13
clubs or specific areas of interest.
78
78
Catalyzing Change
Self-Confidence: 9.7
Personnel Policies and Procedures: 10.2
Management’s Credibility: 10.2
Job Security: 11.5
Advancement or Mobility: 8.1
Working Relationships: 10.7
Highly Favorable
Personal Development: 10
Degree of Responsibility: 10.8
Standards of Excellence: 11.2
Rewards and Satisfaction: 9.8
Job Interest and Challenge: 11.2
Clarity of Goals: 11.1
Favorable
Social Performance: Community Partnerships
Responsibility to the Community and Enhancement of the Quality of Life–these are two core values that communicate the Company’s
commitment to serve the community where it operates.
The scope of the Company’s social responsibility starts with neighboring communities where the projects are located. It then extends to
the business and civic organizations, academic institutions, government agencies, non-government organizations and the society at large.
These are the Company’s partners in the strategic execution of the Company’s social initiatives.
The Company’s social objectives and targets are reflected in the corporate, functional and individual balanced scorecards. Each employee
contributes to the achievement of the social targets via the implementation of development programs on environment, education and
entrepreneurship. These are areas where the Company’s operations can have the most impact on the community.
The community relations and Corporate Social Responsibility (CSR) function of the Corporate Communication and Customer Affairs Division
handles community engagement activities: needs assessment, organizing, monitoring and reporting. The resources and expertise required
to implement the major development programs are provided by cross-functional teams via committees within the Sustainability Technical
Working Group (STWG). The Property Management Division (PMD) and Marketing Divisions of the Real Estate Development Group (REDG)
and Retail Business Group (RBG) also carry out other community partnerships beyond the major development programs. “Agbayay,” the
Company’s Employee Volunteer Program, serves as a support vehicle to implement these programs.
Development Programs: Results and Achievements
These programs are implemented in partnership with the Cebu Business Park and Neighboring Barangays Altruistic Alliance, Inc.
(CBPNBAAI), a neighborhood alliance established since the year 2000. The alliance membership composition is a good balance between the
leaders in the local community and the representatives of the Company. The Board of Trustees is composed of all barangay chairpersons
and one Company representative, while the Board of Officers is elected by the rest of the members. Meetings with the alliance are
scheduled and consultations with barangay council members are conducted to determine the needs of the individual barangays. For the
implementation of specific development programs, consultations and dialogues are conducted with the environment, education, livelihood
and peace and order committees of each of the member barangays. A major challenge in the implementation of these programs is the
varying levels of readiness of the barangay folks to accept the challenge and take advantage of the opportunities presented to them
through the various projects and initiatives of the alliance.
Ap
A
a
o
s (P
p ul
n
to w
s ia
n
atio
I.T.
: 20 , 49
2)
P a rk
Ma
pu
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l at i o
8
n: 2 7, 49 )
Cebu
Business Park
87
)
tio
n:
10,
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pu t
( Po
27
)
am
lo
( P o p u l at i o n :
93
P o p u l at i o n : 3 2 , 0 0
0)
ha (
bo
Luz
Hi
,6
po
17
dro
mo (Population:
ula
op
P
(
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t
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r
Car
Cebu Business Park and Neighboring Barangays
Altruistic Alliance, Inc.
We are building a larger community of people with varied
resources, yet common and collective in goals and aspirations.
This is an alliance established on trust, a bonding based on
respect.
79
79
Social Performance: Development Programs
Environment and Entrepreneurship
In 2009, a total of 234,909 kilos of recyclables were collected from
Ayala Center Cebu.
The partnership with Barangay Luz in the Solid Waste
Management program of Cebu Business Park and the Ayala Center
Total recyclables collected accounted for a total cash conversion
Cebu strengthened in the second full year of implementation. A
of P440,865.00. The income is generated from the sale of these
total of 26 residents from Barangay Luz are employed to handle
materials to recyclers while some are generated from the sale of
garbage collection for Ayala Center Cebu and CBP while six
products made from recyclable materials.
members from the barangay’s “ERPAT” (Empowerment Reaffirmation of Paternal Ability Training) continue to handle the
The success of this partnership was one of the highlights when
composting project at Tugkaran, Cebu Business Park’s green space
Barangay Luz presented its initiatives to vie for the “2009 Gawad
and composting facility launched on April 22, 2009 coinciding with
Galing Pook Award for Participatory Environment Management”.
the Earth Day celebration.
Barangay Luz was among the awardees for its sustainable community
development program known as “Kwarta sa Basura,” which entailed
In 2009, this project generated 48 sacks or 1,920 kilos of organic
the participation of various stakeholders.
fertilizers sold at P300 per sack.
Launching Cebu Business Park’s Green Space
To celebrate Earth Day on April 22, 2009, Cebu Holdings, Inc. (CHI) launched Tugkaran, a nursery and composting facility
at the Cebu Business Park (CBP). Secretary Heherson Alvarez, presidential adviser on global warming and climate change
inspected the quality of organic fertilizer produced in Tugkaran. The event was attended by the CBP board of governors,
representatives from Cebu City government, City Agriculture and Department of Environment and Natural Resources,
members of the neighboring communities and CHI employees who worked for the establishment of the facility. This
project is part of CHI’s thrust to maintain 20 percent of the total area of CBP as open and green space.
80
80
Catalyzing Change
2009 Cash Conversion of
2009 Cash Conversion
of in
Recyclables
in Pesos
Recyclables
Pesos
Metal
Type of Waste in Kilos
Type of Waste in Kilos
Wet Carton
P2,580
P8,653.75
Paper
P6,633.75
Polybag
Polybag
P17,565
5,855
Metal
Chipboard
430
P16,242
Paper
Drinking
Straw
P68,057.50
P16,383
Assorted
Wet
Carton
12,041
Others
20,563
15,977
Assorted
Pet
18,838
P127,386
Cups
Tin Cans
Chipboard
P69,788
22,067
32,484
Drinking Straw
5,421
Pet
Cartons
P52,584
Glass
20,563
P75,352
Tin Cans
Glass
28,086
Cups
Cartons
P40,682
52,584
P7,015.50
234,909
P440,865.00
kilos of collected recyclables
cash conversion from collected recyclables
Tugkaran
Cebu Business Park Green Space and Composting Facility
This 2,805-square meter facility showcases the full cycle of waste management at Cebu
Business Park (CBP). This provides a space that will allow CBP and Ayala Center Cebu to
divert organic materials from the solid waste stream. Organic waste (i.e. grass cuttings
from the business park, food waste, and fruit peelings and vegetables from the mall’s
food merchants and supermarkets) will go into the system of compost production until
organic fertilizer is harvested, sold or used locally or regionally.
Income generated from this project is plowed back to the Barangay Luz Homeowners
Multi-purpose Coop and to the families of the garbage collection and compost
production teams working for this project.
The facility’s composting process includes two types: vermi composting and the use of
photosynthentic bacteria to hasten the decomposition process.
The facility has served as a venue for raising awareness about solid waste management in
a business setting. Orientation, training and workshop series highlighting opportunities
to reuse and recycle waste are conducted here. Participants include a mix of the
Company’s employees and outsourced personnel, CBP locators and its employees,
merchants of Ayala Center Cebu, the workforce of CBP and the neighboring communities,
external organizations, educational institutions, NGOs and local government units from
other regions that visit the facility for education and research purposes.
The Vermicomposting Process
Gathering of Materials
Preparation of Materials
Anaerobic Decomposition (10-12 days)
Aerobic Decomposition (30-35 days)
Earthworm Biomass
Vermicompost
Market
On-farm use
Recycle
Verminal Production
81
81
Social Performance: Development Programs
The results generated from this program inspired CHI’s mother
encourage the practice of waste diversion techniques, such as reuse,
company, Ayala Land Inc., to organize the neighboring communities
recycling and composting, and to empower these communities to
of Nuvali in Canlubang, Laguna and replicate the “Kwarta sa Basura”
earn money from trash by making products from recyclables.
project. Barangay Luz leaders were invited to conduct a livelihood
training series. The participants were taught how to weave paper
Education
baskets from old newspapers and telephone directories. At yearend,
The Company granted vocational scholarships to 17 out-of-school
the baskets were purchased by Ayala Land to be used as corporate
youths who completed the three-month “Barista Course”. The
Christmas giveaways.
program was implemented in partnership with the University of
Southern Philippines Foundation Inc. (USPFI) and the CBPNBAAI.
Solid Waste Management and livelihood workshops were also
conducted for residents of Barangays Kamputhaw, Budlaan and
The program beneficiaries came from the neighboring communities
the rest of the neighboring communities of Kan-irag Nature Park to
of CBP and Asiatown I.T. Park, namely Hipodromo, Carreta, Mabolo,
Luz, Kamputhaw and Apas.
82
82
Catalyzing Change
The trainees took a 127-hour “Barista Basics Course” and eight hours
CHI Health and Safety Committee members, security guards,
of entrepreneurial training that started in mid-March and culminated
outsourced personnel and the neighboring communities of Cebu
in June. The course involved a five-day internship program at Ayala
Business Park and Amara.
Center Cebu’s partner-merchants: Bo’s Coffee, Figaro, Gloria Jeans and
Seattle’s Best Coffee. More than half of the graduates were eventually
To improve coordination with neighboring communities in emergency
employed with some of these merchants.
situations, the Company turned over a set of communications
equipment configured for direct contact between the security force of
all CHI-managed properties and barangay leaders.
Peace and Order/Emergency Preparedness
Unified Security Force
As part of the Company’s program for a unified security force
and emergency preparedness for the community, CHI’s security
department partnered with the Bureau of Fire Protection (BFP)
and the Cebu Business Park and Neighboring Barangays Altruistic
Alliance, Inc. (CBPNBAAI) in conducting a series of workshops on Fire
Prevention and Suppression to neighboring communities. Invitation
to the workshops was extended to property locators, office employees,
83
83
Social Performance: Employee Volunteer Program
The increased participation of the employees in volunteer activities in 2009 reinforced the implementation of the Company’s social
initiatives on environment, education and entrepreneurship.
Volunteer Activities by Area of Focus
Breakdown of Employee Volunteers
CLCI, ALI,
CBPAI, AITP
13%
Others
216.50 hours
21%
Others
7%
Entrepreneurship
8 hours
1%
Associates
29%
Project
7%
88.50 hours
9%
Environment
704.25 hours
69%
Senior Personnel
15%
Supervisors
29%
In 2009, a total of 1,017 hours was spent on over 20 volunteer
activities.
Participation in Earth Hour
The Company’s employee volunteers led the activities in support
of Earth Hour. A forum, online voting, signature campaign, and
an exhibit at Ayala Center Cebu were organized to raise awareness
on the need to take action to address climate change issues. It
emphasized the importance of reducing carbon emission by
switching off non-essential lighting and equipment for at least an
hour. Employee volunteers gathered 613 Earth Votes during the
online voting campaign.
• Agbayay depicts an intimate fellowship among equals, evocative of empathy,
kinship and easy warmth.
• Uncomplicated, a relatively common Visayan term but deep in its meaning. Agbay
is among friends, peers or those who have found a connection that breaches
borders.
• Agbay has the word ‘Bai’ in it, suggesting brotherhood or a familiarity with each
other, which is what the spirit of true volunteerism encourages.
84
84
Catalyzing Change
Clean up at the Composting Facility
The Company’s volunteers were joined by Cebu Business
Park locators and barangay residents from the neighboring
communities in clearing a space at Cebu Business Park, which was
launched as Tugkaran on April 22, 2009. It is now being used as a
tree nursery and composting facility.
Wellness Training for Garbage Collectors
Volunteers from the Company’s Property Management team
conducted a training on solid waste management and health
and safety, particularly on the proper use of Personal Protective
Equipment (PPE), while the rest of the volunteers introduced
wellness activities to the members of the garbage collection team.
Employee Recyclables Fair
To augment the volume of recyclables Barangay Luz collects from
CBP and Ayala Center Cebu, the weekly employee recyclables
fair was implemented. Employees gather recyclables from the
workplace and their households. These are donated to the
neighboring community. While some recyclables are directly sold
to recyclers, some are made into products that are sold and even
exported. Proceeds from the sale go to the families of the garbage
collectors assigned to collect waste from CBP and Ayala Center
Cebu.
While this program helps sustain the livelihood of people in the
community, it also encourages employees to practice reuse and
help reduce waste thrown into the city landfill. At yearend, 723
kilograms of recyclables and reusable items were collected.
Computer Tutorials
The Information Systems Department (ISD) volunteered to conduct
a training and workshop series on computer hardware and
software basics for 11 faculty members of Hipodromo Elementary
School. At yearend, the ISD turned over a new computer
workstation for the faculty’s use.
Basic News Writing and Photography
Employee volunteers facilitated the conduct of workshops on
special skills and interests for the community. Members of
the CHI Plus Perspectives and the Corporate Communication
team spearheaded the conduct of basic photography and basic
news writing training for teachers, students, barangay officials,
Sangguniang Kabataan leaders and heads of the homeowners
association of Barangays Luz and Apas.
85
85
Social Performance: Employee Volunteer Program
Feeding and Story-telling
The Company participated in the feeding program led by Ayala
Business Club Cebu, Inc. (ABCCI) at Garing Elementary School in
Consolacion, Cebu. A total of 275 children from Kinder to Grade 6
benefited from the activity which culminated with a story-telling
done by the volunteers.
Online Marketing
The volunteers introduced the concept of marketing products
online via social networking sites, such as Facebook and Multiply,
to the members of the Barangay Luz cooperative. This has helped
the cooperative develop new avenues to sell their products made
from recyclables.
Tree Planting at Asiatown I.T. Park
The Property Management Division (PMD) led the tree planting
activity at Asiatown I.T. Park participated in by volunteers from
the neighboring community, Barangay Apas, the project’s
contractor and outsourced personnel. The group planted about
100 Narra seedlings.
Volunteer work at Kan-irag Nature Park
Employee volunteers were exposed to various types of nature
park activities. Aside from planting more indigenous trees,
volunteers helped in the stabilizing micro water catchments at the
campsite by rock-piling on soft and saturated portion of these
catchments and by adding planting materials that serve as natural
filters. Other activities include wood staining on the park’s lower
Lantawan, weaving of cogon shingles to augment the production
of roofing materials to be used for the nature park’s facilities and
vermi-cast harvesting at the tree nursery for the park’s organic
garden.
86
86
Catalyzing Change
Social Performance: Product Responsibility
Product Responsibility
For a Company that focuses on development and marketing real estate products, mall operations management and property management,
Customer Focus is a core value. Being a real estate company, the Company has a broad spectrum of customers. The Company strives to
exceed customer satisfaction in creating products and delivering services. The Company adheres to laws regulating product labeling,
customer safety and marketing communications.
Quality Policy and Objectives
The Company’s Quality Management System (QMS, certified to ISO 9001:2008) strongly emphasizes the importance of the customer and the
Company’s commitment to fulfill customer requirements. Objectives and targets pertaining to customer acquisition, retention, market
leadership and customer satisfaction are reflected in the corporate, functional and individual balanced scorecards.
The Quality Policy states that:
For us, the CUSTOMER is FIRST and QUALITY IS EVERYONE’S JOB.
We commit to:
• deliver our products and services to continually satisfy ever changing expectations of our
customers;
• design our products and deliver our services to meet all applicable statutory and regulatory
requirements;
• provide our employees with competence building programs to improve productivity; and
• continually improve the Quality Management System’s effectiveness through a regular review
process.
Customer Satisfaction
Customer satisfaction measures the strength and performance of the value delivery chain, from the identification of customer needs to
value creation and delivery.
The conduct of customer satisfaction surveys requires customization of methodologies and instruments. Marketing, Sales, and Property
Management functions serve as the primary interface to customers and therefore are the areas analyzed in surveys.
87
87
Internal Customer Satisfaction (ICS) Results
Sales Admin
Property
Management
Marketing
Operations:
Leasing
Operations:
Finance
Operations:
MIS
8.01
7.58
8.12
8.57
8.38
8.31
8.57
8.13
8.38
8.70
8.74
2009
8.37
8.46
8.18
8.56
2008
8.71
8.46
8.32
8.56
8.53
8.19
8.33
8.75
8.83
2007
Accounting
Audit
Control and
Analysis
CorpComm/
Customer
Affairs
Funds
Management
HR/ Admin
Information
Systems
Security
Working seamlessly as components of the value delivery chain, the Company’s various departments are each others’ internal customers. To
gauge the level of satisfaction in terms of coordination, work quality and service delivery, each department designs a survey questionnaire
for its specific internal customers. The ICS for all departments is conducted twice a year through an online system designed by the
Information Systems Department. Results are tabulated and analyzed, and form part of each department’s performance as committed in
the departmental Balanced Scorecard.
88
88
Catalyzing Change
8.03
7.94
8.12
8.89
Marketing
8.46
8.39
8.60
Customer
Service/ Sales
2009
8.32
8.43
Construction
Management
Division
2008
8.26
8.46
8.60
7.80
7.37
7.51
Innovation
and Design
7.60
7.97
8.17
8.60
8.64
8.80
8.88
8.39
8.63
8.63
8.05
8.18
8.27
7.57
7.98
7.96
Project
Development
Group
2007
2009
8.90
9.12
2008
8.97
8.97
2007
Property
Management
External Customer Satisfaction
1 Newly-acquired customers: Property Buyers Survey
Newly-Acquired Property Buyers
Satisfaction Survey
Frequency and Methodology
On an annual basis, an external customer survey is conducted to assess how newly
acquired customers give feedback on current products and services. This survey covers
everything from collaterals and post-sales service to ratings on the project’s construction
and master plan. Comments from new buyers relating to their pre- and post-sales
Good
Very Good
Excellent
Fair
Poor
Overall score is Very Good at 8.8 out of 10
Property Specialists: Customer feedback
experiences are also compiled annually, gathering feedback on all Company touch points
from: a) marketing collaterals; b) sales/customer service; c) post-sales service (sales
Sales Administration: Prompt delivery of documentation
administration and documentation; and d) turn-over (product quality, expectation-setting
vs. actual product delivered).
Amara overall service
The study is conducted via one-on-one interviews, using open-ended questions, allowing
the customer to provide more information and discuss further comments and suggestions.
The study also provides rating scales to allow the customer to rate satisfaction levels at
different touch points.
Other feedback mechanisms include the text feedback system linked to the Total Customer
REDG marketing collaterals
Amara website
7.7
8.2
8.7
9.2
10
Satisfaction Management System (TCS- MS) for daily concerns or comments.
2 Merchants Satisfaction Survey
Merchants Satisfaction Survey
To annually measure the effectiveness of the retail business processes, feedback is
obtained from merchants of Ayala Center Cebu. The survey generates the satisfaction level
of the merchants on the aspects of administration personnel, building facilities, utilities,
systems and procedures, marketing and security.
Good
Very Good
Excellent
Fair
Poor
Overall score is Very Good at 7.84 out of 10.
Established operating hours
In 2009, the survey registered a very good rating. However, this was lower than the 2008
rating by one percentage point from 8.03 to 7.84. This can be attributed to a higher
number of respondents and more areas evaluated, compared to the previous year’s survey.
The manner of conducting the survey was done through actual interview and filling up
Customer complaints handling
Utilities, garbage collection/disposal
Security
of forms that were collected immediately after the interview. This helped in screening
respondents and ensuring that only merchants or owners and managers or supervisors
are eligible to be respondents of the survey. Prior to this, the questionnaires were mailed
to respondents. The survey is conducted every December to determine the level of
satisfaction of the merchants on the services, mall offerings and support extended to them
Building facilities improvement
Customer service
6.7
7.2
7.7
8.2
9
by the Retail Business Group (RBG).
Shoppers Satisfaction Survey
3 Shoppers Satisfaction Survey
The survey generates the satisfaction levels of the shoppers on the aspects of mall
facilities, marketing activities, product offerings and mall personnel.
Excellent
Very Good
Good
Fair
Poor
Overall score is Very Good at 8.34.
Cinemas rated excellent for outstanding sound quality
The rating achieved in 2009 was an impressive 8.34 percent, a one percentage improvement
from the previous year’s 7.73 percent. The manner of conducting the survey was also
Food choices rated excellent for its food variety
improved to include an actual interview and visit to all the facilities. A new set of criteria
Product offerings and merchandise quality
and specific questions for each facility were added to the survey questionnaires. The
respondents were also provided the opportunity to openly discuss their concerns and
suggestions. This has helped the team identify improvements on certain facilities.
Cleanliness
Customer service
Marketing Events
7.7
8.2
8.7
9.2
9.7
89
89
8
5
7.8
5
4
7.6
4
3
7.4
3
2
7.2
2
1
7
1
0
6.8
2008
Maintenance
and Cleanliness
Parking
Attendants
Systems
Procedures
Lighting
Availability
of Slots
Systems
Procedures
Lighting
2007
Street
Pavements
Taxi Loading/
Unloading
Safety
6
6
Proximity and
Accessibility
7
Security Guards
8.2
Maintenance
and Cleanliness
7
Easy Navigation
8.4
8
Security
8.6
8
Maintenance
and Cleanliness
9
9
Availability
of Slots
10
Sufficiency of
routes
PUJ Loading/Unloading
Orderliness
Basement Parking
Availability
of Vehicles
Surface Parking
2009
Mall Facilities/Utilities
9.5
9
8.5
8
7.5
7
6.5
6
Restrooms
ATMs
Ceiling
Escalator
Elevator
Mall Entrance
Basement
Parking
2007
Surface
Parking
2008
Public
Phones
Parks
and Lawns
PUJ Loading/
Unloading
Lighting
Trash Cans
2009
The mall’s facilities and utilities registered a noticeably higher set of external customer satisfaction ratings mainly due to the opening of The Terraces. The
ratings can also be attributed to the newly-installed lighting fixtures and the replacement of two scenic elevators and the construction of the parking building.
8
8.08
8.53
8.52
8.70
7.51
8.65
7.84
8.66
8.45
8.08
8.31
8.33
8.89
8.41
8.36
9
8.72
8.42
9.08
9.17
10
8.80
4 Lot Owners, Unit Owners, Occupants and Locators of CHI-managed properties
7
6
5
4
3
2
1
Park Tower 1
Park Tower 2
ALAI-FGU Center
2007
Cebu Holdings
Center
2008
Cebu Business
Park
Asiatown
I.T. Park
Garden Ridge
Village
2009
Respondents: At least 40 percent of the property owners and locators
The survey rating shows the average of semi-annual customer satisfaction surveys
90
90
Catalyzing Change
90
Complaints Management System
2,720
Customer Safety and Health
77%
The Company ensures that the health and safety of the people
solved within
the day
2,102
within its area of operations are considered in every aspect of
2,099
the Company’s operations. This includes the employees, its
63%
solved within
the day
1,332
1,603
outsourced personnel and, more importantly, its customers.
63%
solved within
the day
Specific to its customers, the Company ensures that the real estate
945
products and services provided are designed to promote the
customers’ well-being. This is done on every phase of the project
development process, as follows:
2007
number of complaints
2008
a. During the land acquisition process, the property,
2009
including the outside areas, are evaluated for natural (e.g.
flood, earth faults) and man-made hazards (e.g. proximity
number of cases solved within the day
to industrial areas, landfill, fuel storage and others). The
existence of these hazards is used as inputs for the
planning and the project feasibility.
Customer Feedback Management
b. During the planning stage, the design process considers
The Total Customer Satisfaction Management System (TCS-MS)
all the relevant regulations, such as building codes.
implemented since 2003 has continually evolved to aid users in
the recording, deployment, monitoring and archiving of customer
complaints.
Specific to vertical structures (buildings), these are designed
to withstand earthquakes, as provided for in the structural
codes, the Philippines being at the “Pacific Rim of Fire”.
Exit areas are properly defined and sized accordingly.
Feature enhancements include deployment tracking and case
acceptance by persons responsible to address complaints, with
c. During the construction stage, the project is defined
the data to specify dates the complaints were deployed, received
as off-limits to unauthorized personnel. The would-be
and responded to. Case updating in the current improved system
buyers, during site visits, are issued Personal Protective
includes visuals or images attached to the text updates. Other
Equipment (PPEs) and guided accordingly.
enhancements were done on the reports generation system,
further segregating complaints according to project or period.
d. When the project is already operational, the property
management, in coordination with the security and other
The continuing implementation of the text feedback system,
operations personnel, ensure that the area is cleared of
which is linked to the TCS-MS, has generated faster and better
hazards, and operational control measures are in place to
customer response, especially in the mall where customer traffic
ensure the safety and well-being of customers, merchants
is highest.
and employees.
In 2009, total complaints recorded dropped by 28 percent,
This is also in line with the quality, environmental and
compared to 2008 levels. Within-the-day resolution rate was
occupational health and safety management systems that are
maintained at 63 percent of the total complaints recorded.
being practiced by the Company.
91
91
Product and Service Labeling
Real Estate Products and Services
delivery chain (i.e. construction, project development, innovation
As required by law, all selling materials (marketing collaterals)
for all selling materials or marketing collaterals.
and design). The HLURB requires the Company to secure licenses
have their own respective License To Sell (LTS) numbers as
provided by the Housing and Land Use Regulatory Board (HLURB)
Retail Business Operations
via the Project Development Group (PDG). The project is described
In compliance with government regulations, policies and rulings
according to the facilities and amenities the Company intends
covering sales and promotions, the mall’s communication
to deliver as end-product. One hundred percent of committed
materials, such as print ads, merchandising collaterals, posters
products and services, as reflected in the Company’s marketing
and flyers, carry the permit number issued by the Department of
collaterals and communicated to clients, have been delivered in
Trade and Industry (DTI).
2009 for Amara and Asiatown I.T. Park. The value proposition
for each project has been upheld not only as enforced by the
The quantity of promotional items for shopper distribution is
regulatory board, the HLURB, but as a continued commitment to
complied with. The discounts committed in the application for
buyers to provide quality products and services.
mall-wide sale activities are given and properly complied with.
Corresponding taxes required of prizes for promotions are also
All marketing collaterals include a disclaimer stating that the
paid to the Bureau of Internal Revenue (BIR).
details and visuals shown in such collaterals are intended to give
a general idea of the project and as such are not to be relied upon
Compliance to Regulations
as statements of fact. While such particulars and details are based
In 2009, all regulations and voluntary codes concerning
on present plans, which have been prepared with utmost care
marketing communications, including advertising, promotion and
and given in good faith, buyers are invited to verify their factual
sponsorships, were complied with.
correctness and subsequent changes.
Customer Privacy
Retail Business Operations
The Company’s Code of Ethics covers guidelines on the use
It is the group’s commitment to deliver the products and services
of Company resources, including classified or confidential
as promised to the merchants and shoppers. The design of
information, particularly corporate plans and customer data.
new developments, whether new or expansion, is based on
Controls on the disclosure of classified information are in place.
specifications and features that have been identified in the
mall’s value proposition. The design concept is always a balance
Data is protected via stringent file access restrictions as
between functionality and aesthetics for a rewarding customer
implemented by the Information Systems team. Customer
experience. Facilities for accessibility, as well as parking and
database and records are held in a fireproof vault, with limited
common areas, are not only provided to comply with laws and
access permits that are issued only as needed.
regulations but designed for the comfort and convenience of the
shoppers.
There have been no substantiated complaints regarding breaches
of customer privacy and losses of customer data.
The turnover of leased spaces to mall merchants is conducted
to ensure suitability of the area. Construction plans are duly
reviewed to validate its compliance to the prescribed guidelines
Monetary value of Significant Fines for Non-Compliance with
Laws and Regulations
for construction. Inspection of leased areas after construction is
The Company is steadfastly compliant with the applicable laws
made prior to the commencement of operations to check on the
and regulations of its business, aside from the environmental
consistency of design details, as specified in the plans.
and other laws and regulations. Hence, the Company was not
sanctioned nor fined by regulatory agencies for non-compliance
Marketing Communications
The Company ensures that marketing collaterals and selling
materials are not distributed without the proper license. A process
that incorporates layers of approval from the varying strategic
business units ensures that the product is feasible and aligned
with commitments made by the other members of the value
92
92
Catalyzing Change
with laws and regulations.
Revenues
(in thousand pesos)
The business operations of Cebu Holdings, Inc. (CHI) consist of
activities related to real estate planning, development, marketing
1,500,031
and management. One hundred percent of the Company’s capital
1,281,745
is invested in Cebu, Philippines.
1,288,284
1,037,397
As a publicly listed company, CHI seeks to deliver the results that
will earn the trust and confidence of the Company’s shareholders
691,274
while it balances the economic value distributed back to the rest of
its stakeholders.
The balance of the Company’s economic performance does not rest
solely on the finance division, nor on the Company’s profit centers.
Accountabilities in terms of economic value generation and budget
2005
2006
2007
2008
2009
management are spread across all the teams in the value delivery
chain and are reflected in the functional balanced scorecards of all
CHI continues to aim for balance between the two areas of
divisions.
operation that generate recurring and non-recurring income:
real estate business and retail and office space leasing business.
Economic Value Generation
Revenues from mall space and BPO office leasing contributed 54
The year 2009 ended with a relatively favorable financial
percent (P697.9 million) of consolidated revenue while theater
performance despite the economic downturn. Consolidated
income added another six percent or P 72.7 million. Sale of
revenues reached P 1.288 billion and net income of 302.2 million.
commercial and residential lots contributed 32 percent (P413.9
million). Eight percent came from interest and other income and
equity take–up of an associate.
As of end of 2009, CHI’s total assests grew by two percent, as it
reached P5.773 billion, P1.839 billion of which is current. Cash and
cash equivalent stood at P905.1 million while total bank debt was
Direct Economic Value Generated
at P275 million level. Bank debt-to-equity ratio was P0.07 while
(in millions)
Revenues
2007
2008
2009
1,282
1,500
1,288
current ratio was 1.68.
Economic Value Distributed
Salaries and benefits paid to employees
Taxes paid to the government
Amount paid to suppliers and contractors
Dividends paid to stockholders
Amount paid to communities and project
beneficiaries
89*
96
99
124*
195
216
1, 118*
1,458
1,039
96
134
134
9
14
17
Proportion of Spending on Locally-based Supliers
While CHI does not have a formal policy on purchasing
from locally-based suppliers, the Company’s
accreditation, bidding, purchasing and payment
processes provide the system to track its locally-based
expenditures to include project contracts. In 2009,
76 percent or P790,499,747.02 of the total amount
disbursed were paid to suppliers and contractors
based in Cebu.
93
93
Economic Value Distribution
As a local company, CHI’s operations and activities have direct and indirect economic impacts on:
a) Employees via salaries, benefits and investments in career development and wellness programs;
b) Government in terms of tax payments;
c) Suppliers in the course of executing the client’s business operations;
d) Shareholders in the form of dividends;
e) The neighboring communities via investments on socio-economic programs and;
f) The rest of the stakeholders by providing employment as outsourced personnel, workers of the Company’s contractors, merchants,
17
Community Investment
Community Investment (in millions)
134
14
(in millions)
1,039
1,143
134
196
Environment - P 8.612
52%
9
96
124
99
96
89
216
1,458
locators and building occupants.
1%
Entrepreneurship /
Employment - P 1.081
7%
Health and
Wellness - P 1.369
8%
Miscellaneous Relationship
Building - P .966
6%
Salaries and
Benefits
Taxes paid to
the government
2007
Amount paid to
suppliers and
contractors
2008
Dividends paid
to stockholders
Amount paid
to communities
and project
benefecaries
Peace and
Order - P .119
1%
Tourism, Arts and
Culture - P 4.138
25%
2009
Indirect Economic Impacts
Employment Generation
The Company is one of the drivers of Cebu’s development. Its
The Cebu Business Park (CBP) provided employment opportunities
presence has triggered the following indirect economic impacts:
for the local population, with its operation of the commercial
center, two residential condominiums, a hotel, a sports club, and
Property Value Appreciation
14 office buildings. It is estimated that the employee population
The Company’s first foray into the Cebu market started with the
of the Cebu Business Park is around 8,000.
transformation of a former golf course into a masterplanned
business district, the Cebu Business Park (CBP).
The Asiatown I.T. Park is a burgeoning Information Technology
and Information Technology Enabled Services (IT/ITES) hub in
In the late 1980s, land values in and around the area ranged from
Cebu, with a workforce of about 13,000 as of yearend 2009.
P700 to P1,500 per square meter. To date, land values are now
from P25,000 to P35,000 per square meter. Zonal valuations have
The developments provide financial security to the community,
also increased considerably, approximating the market values of
which also feeds into the local economy as the money that they
the land.
earned are spent in the locality.
This is also true with its other business district, the Cebu Civic and
Generation of Downstream Service Industry
Trade Center, which was launched in 1996 and was subsequently
The two developments have also helped in boosting other
repositioned as an I.T. Park and renamed Asiatown I.T. Park in
service industries, such as transport services, food services for the
2001.
employees in and around the developments, establishment of
hotel buildings at the periphery of the two developments, and
long-term house or room rental services around the periphery to
cater to the employees’ needs.
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94
Catalyzing Change
Crisis brings about golden opportunities for growth. The perceptible effects of climate change and the dire implications of a societal upheaval
triggered a heightened realization among key players to work and craft climate solutions together. It is inspiring that a growing number
of “green knights in shining armor” from the private sector are taking determined steps to pursue the sustainable pathway, in this crucial
transition phase towards a low-carbon economy.
It is significant that Cebu Holdings, Inc., as the real estate leader in Cebu, is taking on the daunting task of proving that integrating
sustainability in its business operations and programs and in its relations with its shareholders, employees and other stakeholders is the
smarter way to go.
In so short a time since it adopted and implemented the sustainability policy, as a management strategy, CHI has proven that private sector
engagement in governance does uplift lives, improve the standards of living and alleviate poverty, not to mention contribute to the greening
of the community. The public-private sector partnership that it strongly espouses is a good model for sustainable and good governance
practice in the world. No small feat indeed is CHI’s trail-blazing partnership with Barangay Luz and its support in the barangay’s Kwarta sa
Basura Program. It helped clinch for the barangay a Galing Pook Award for Participatory Environmental Management for 2009. The barangay
is among the fourteen local government recipients, and the only one out of the 42,000 barangays in the country, to be so recognized in
2009.
Instilling a culture of eco-stewardship and volunteerism among the employees and officers is another noteworthy and highly-commendable
CHI program. Meeting the many challenges of the millennium requires the active participation of each citizen, especially by those imbued
with the knowledge and the privilege of being in a position to help. There is never a contribution that is considered small for conserving
our threatened resources and lowering our carbon footprint. Each mindful choice for a greener world is already a tremendous boost to the
crusade to have a sustainable future for our children and the future generations.
It is our hope that more corporate entities will follow CHI’s sustainability trail and recognize the benefits not just to their shareholders but to
society as well. Dr. John Llewellyn, Senior Economic Policy Advisor, in “The Business of Climate Change Report 2007” aptly said that “Firms
that recognize the challenge early, and respond imaginatively and constructively, will create opportunities for themselves and thereby
prosper. Others, slower to realize what is going on or electing to ignore it, will likely do markedly less well.”
As it is, CHI is a stand-out in promoting sustainable practices and programs among its peers in the corporate arena. But, there is still a space
for taking on greater challenges, among which is constructing more green buildings and installing the first smart grid network in the country.
I have so much faith in CHI‘s capacity for innovativeness and creativity that I have no doubt these will become a reality in the next few years.
Mabuhay, CHI!
Atty. Gloria Estenzo Ramos
Environmental Lawyer and Advocate
Columnist, Cebu Daily News
95
95
The world of business has shifted its
focus from the traditional financial
wealth maximization to a broader one
that allows for the enhancement of
stakeholder value.
Cebu Holdings, Inc. (CHI’s) Integrated
Management System (IMS) enables the
Company to clearly define and organize
its performance metrics and by doing so,
enhance the value of its stakeholders,
particularly the employees.
The Company also takes a serious role
on sustainability within the organization
and in the community. As a leader in
the real estate industry, CHI takes on a
serious role as a partner in caring for and
protecting the environment.
The integration of the Company’s
management systems is adopted even
at the functional levels. Its influence is
visible in our daily work routine, even in
our personal lives.
(QEHS) programs, letting their objectives
The interaction of the four perspectives
permeate into our work. Seemingly
signifies the Company’s thrust to strike
insignificant but telling efforts — from
a balance of financial strategies, value
re-using paper to closing the tap and
creation for our customers, strength-
switching off the lights not in use—make
building in core processes, and the
large contributions to the achievement of
enhancement of employees’ capabilities.
the overall objectives of the management
system, as well as generate a sense
On Sustainability
of pride and belongingness among
Sustainable development practices are
employees.
well-integrated into the management
systems and business processes and
On the Balanced Scorecard (BSC)
operations. CHI has set up mechanisms
The Company adopts the Balanced
to measure, monitor and report
Scorecard (BSC) as a strategic
sustainable practices, based on the triple
management system for measuring
bottom line that encompasses social,
whether the activities of the Company
economic and environmental factors.
are meeting its objectives of vision and
strategy. The strategy is the reference
CHI Management is a determined
point for the entire management process,
advocate of the Company’s sustainability
with the shared vision as the foundation
thrust, providing inspiration to employees
for strategic learning. It allows
in putting these ideals into action.
Management to assess the business on
Employee involvement and participation
four perspectives — financial, customer,
are considered essential for the
internal business process, and learning
achievement of sustainability programs.
and growth.
As we conscientiously perform our core
On the Integrated Management System
(IMS)
We feel a sense of pride in garnering
certifications in three standards:
9001:2008, 14001:2004, and 18001:2007.
Beyond the certificates displayed in our
office is the conscious effort to achieve
quality outputs in our functions, protect
the environment and maintain health
and safety in the workplace.
In performing our respective duties
and functions, we strive for excellence
in the tasks assigned and in addressing
the needs of our customers. We go
beyond compliance with the Quality,
Environmental, Health and Safety
functions, we are enjoined to engage in
management system is its ability to align
the sustainable thrust of the Company.
goals from top to bottom. As goals
Participation in the employee welfare
are translated at a functional level, it
programs, training and development
enables us, employees, to see how our
programs, volunteerism, community
individual work leaves an impact on the
alliances and partnerships are central to
achievement of the overall corporate
our holistic growth and work-life balance.
goals. By seeing this direct link between
our roles and corporate goals, we
Sustainability is also translated beyond
experience a sense of ownership of our
our daily functions and reflected in
duties and responsibilities.
the world at large. As we begin to
shift paradigms in the light of pressing
The BSC develops a culture that enhances
environmental issues, we are given
employee motivation, encourages
the opportunity to re-evaluate current
empowerment, and optimizes our
practices at work and at home. The
potentials.
results of these are reflected in the
choices we make, the way we choose
“The aim is to provide meaningful contribution to the CHI’s
“We can reduce our ecological footprint by reducing the amount
business operations and corporate goals in the delivery of
of resources we use through energy and water conservation not
my function.” - Jonelyn A. Ocular-Ocasiones of the Human
only in our offices but also at home.” – Romulo A. Alajid of the
Retail Business Group (Ayala Center Cebu)
Resources and Administration Department
96
96
The beauty of the BSC as a strategic
Catalyzing Change
how to operate our business and how
We also aspire that the level of
On this note, we can reflect on the
we design projects with the environment
participation and implementation of
sentiments expressed by Lee Scott, chief
in mind. It is also reflected in how each
the Company’s IMS eventually becomes
executive of Wal-Mart:
individual employee chooses to live
a way of life for each stakeholder, not
a sustainable lifestyle that minimizes
just the employees. In aspiring for the
“Being a good steward of the environment
environmental impact. Practicing waste
enhancement of the interaction and the
and our communities, as well as being an
segregation at source, going organic,
sharing of expertise among the various
efficient and profitable business, are not
embracing the concept of resource
stakeholders, we hope to achieve not just
mutually exclusive. In fact, they are one
efficiency (water, electricity, energy), and
economic growth but also the protection
and the same.”
managing our environmental footprint at
of the environment as well.
the workplace and at home testify to these
We believe that CHI is soaring to greater
choices.
heights.
With pro-active awareness and conscious
application of these programs in our daily
lives, we have realized that improvements
can meet the needs of the present without
compromising the ability of the future
generations to meet their own.
A Way of Life
We are delighted to see CHI’s elevation
to greater heights while keeping in mind
the welfare of its employees and the
community where it operates. This is the
We are delighted to see CHI’s elevation
to greater heights while keeping in mind
the welfare of its employees and the
community where it operates. This is the
testament of its continued commitment
to improve stakeholder value.
Romulo A. Alajid, Jennifer G. Sia and Jonelyn A. Ocular-Ocasiones
Employees of Cebu Holdings, Inc.
testament of its continued commitment to
improve stakeholder value.
As we go beyond the CHI Integrated
Management System Framework and
apply these to a personal level, we
continue to be inspired to perform our
duties to support the Company and
provide value-adding contributions to the
achievement of its goals.
We aspire to maintain the work
environment that is anchored on the
friendship and trust exchanged among
employees. A sense of ownership is felt in
our accomplishments.
“Our perspective should go beyond our daily operational tasks. We need to consider the impact
of our actions to the greater communities and
the various stakeholders.” – Jennifer G. Sia of the
Audit Department
97
97
Key Indicators
Global Reporting Initiative (GRI) INDEX
Reference Page
Profile Disclosure Items
1 Strategy and Analysis
1.1 Statement from the most senior decision maker(s) of the organization
5-7
1.2 Description of the main impacts, risks and opportunities
42-43, 51-53
2 Organizational Profile
2.1 Name of the organization
2-3
2.2 Primary brands, products, and/or services
2-3
2.3 Operational structure and major divisions
34
2.4 Location of the company headquarters
2-3, Inside Back Cover
2.5 Countries of operations
Not applicable
2.6 Nature of ownership and legal form
2-3
2.7 Markets served
2-3, 12-13, 22-23
2.8 Scale of the reporting organization
34
2.9 Significant changes during the reporting period
Not applicable
2.10 Awards and recognitions received during the reporting period
41
3 Report Parameters
3.1 Reporting period
1
3.2 Date of most recent previous report
1
3.3 Reporting cycle
1
3.4 Contact point for questions about the report and its contents
1, Inside Back Cover
Report Scope and Boundary
3.5 Process for defining report content
1
3.6 Boundary of the report
1
3.7 Limitations on the scope or boundary of the report
1
3.8 Basis for reporting on joint ventures, subsidiaries, and other related entities
1
3.9 Assessment methods for data and bases for estimates in data compilation
1
3.10 Explanation of the effect of any re-statements of information provided in previous reports
Not applicable
3.11 Signficant changes from previous reporting period
Not applicable
3.13 Current policy and practice dealing with external verification
1
GRI Content Index
3.12 GRI Content Index Page
98-100
4. Governance, Commitments and Engagement
98
98
4.1 Governance structure of the organization
32-40
4.2 Indicate if the Chair of the highest governance body is also an Executive Officer
32-33
4.3 Number of independent and non-executive members
32
4.4 Mechanisms for shareholders and employees to provide recommendations
36-40
4.5 Association between the compensation of the members of top management, high directors and the performance of
the organization including environmental and social performance
34-36
4.6 Procedures for avoiding conflict of interest in top management
40
4.7 Procedures for determining qualifications and experience of top management for guiding the organization in economic,
environmental and social aspects
35-36
4.8 Statement concerning missions and values implemented internally, codes of conduct and standards for economic,
environmental, and social performance, and the status of implementation
2, 40, 58-61, 87-91
4.9 Procedures for top management to supervise the identification and management of the organization’s economic,
environmental, and social performance, including assessment of risks and opportunities, as well as adherence to
international level codes of conduct and standards
28-31, 42-43, 51, 58, 72,
79, 87, 93
4.10 Process to assess the performance of top management, especially with respect to economic, environmental, and
social performance
35-36, 29-31, 42-43
4.11 Explanation of how the organization has adopted the precautionary principle
30, 42-43, 60
Catalyzing Change
Reference Page
4.12 Externally developed economic, environmental, and social standards adopted or any other related initiatives
28-31, 51-53, 61
4.13 Listing of groups of interest included by the organization
54-57
Stakeholder Engagement
4.14 List of stakeholders groups
54-57
4.15 Basis for identification and selection of stakeholders groups
54-57
4.16 Approaches used to include interest groups, including frequency of participation according to the type of group of
interest
54-57
4.17 Main concerns and topics raised by stakeholders and how the organizations has responded to these concerns
54-57
ECONOMIC
EC1 Economic value generated and distributed, including revenues, operating costs, employee compensation, donations and
other community investments, retained earnings, and payments to capital providers and governments
93-94
EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change
60
EC3 Coverage of the organization’s defined benefit plan obligations.
73
EC5 Standard entry level wage compared to local minimum wage in locations of operations
74
EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation
93-94
EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant
locations of operation
74
EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through
commercial, in-kind, or pro bono engagement
93-94
EC9
94
Understanding and describing significant indirect economic impacts, including the extent of impacts.
ENVIRONMENT
EN3 Direct energy consumption by primary energy source
62
EN4 Indirect energy consumption by primary source
63
EN5 Energy saved due to conservation and efficiency improvements.
63
EN6 Initiatives for using energy-efficient or renewable based products and services
63, 66
EN7 Initiatives to reduce indirect energy consumption
66-67
EN8 Total water withdrawal by source
65
EN13 Habitats protected or restored
68-71
EN16 Total direct and indirect greenhouse gas emissions by weight
64-65
EN17 Other relevant indirect greenhouse gas emissions by weight
64-65
EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved
63, 66-67
EN19 Ozone depleting substances
65
EN20 NOx, SOx, and other significant air emissions by type and weight
64
EN21 Total water discharged by quality and destination
65
EN22 Total weight of waste by type and disposal method
66
EN23 Total number and volume of significant spills
66
EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention
Annex I, II, III, and VIII, and percentage of transported waste shipped internationally
66
EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.
66
EN28 Monetary value of significant fines and total number of monetary sanctions for non-compliance with environmental
laws and regulations
67
EN30 Total environmental protection expenditures and investments by type
67
SOCIAL
LA1 Total workforce by employment type
73
LA2 Total number and rate of employee turnover by gender, age
73
LA3 Benefits provided to full-time (permanent) employees
73
LA6 Percentage of total workforce represented in joint management and worker health and safety committees
75
LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities
76
LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their
families, or community members regarding serious diseases
76
99
99
Reference Page
LA10 Average hours of training per year per employee by employee category (e.g., seniors, juniors, rank and file)
77
LA12 Percentage of employees receiving regular performance and career development reviews
73
LA13 Composition of governance bodies and breakdown of employees per category
73-74
LA14 Ratio of basic salary of men to women by employee category
73
HR4 Total number of incidents of discrimination and actions taken
74
HR6 Operations identified as having significant risk for incidents of child labor and measures taken to contribute to the
elimination of child labor
74
HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute
to the elimination of forced or compulsory labor
74
SO1
Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on
communities, including entering, operating, and exiting
79-83
SO2
Percentage and total number of business units analyzed for risks related to corruption
74
SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures
74
SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and
regulations
74
PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and
percentage of significant products and services categories subject to such procedures
87-92
PR2
91
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety
impacts of products and services during their life cycle, by type of outcomes
PR3 Type of product and service information required by procedures, and percentage of significant products and services
subject to such information requirements
92
PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction
88-91
PR6
92
Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including
advertising, promotion, and sponsorship
PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing
communications, including advertising, promotion, and sponsorship by type of outcomes
92
PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data
92
PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of
products and services
92
We include this GRI Application Level table in our report to support
our self-declaration of this report at Application Level B.
100
100
G3 Profile
Disclosures
Report on:
1.1
2.1-2.10
3.1-3.8, 3.10-3.12
4.1-4.4, 4.14-4.15
Report on all criteria
listed for Level C plus:
1.2
3.9, 3.13
4.5-4.13, 4.16-4.17
Same as requirement
for Level B
G3 Management
Approach Disclosures
Not Required
Management Approach
Disclosures for each Indicator
Category
Management Approach
Disclosures for each Indicator
Cate gory
G3 Performance Indicators
& Sector Supplement
Performance Indicators
Report on a mimimum of
10 Performance Indicators,
including at least one from
each: Economic, Social, and
Environmental
Report on a minimum of
20 Performance Indicators,
at least one from each:
Economic, Environmental,
Human Rights, Labor, Social,
Product Responsibility.
Report on each core G3 and
Sector Supplement Indicator
with due regard to the
Materiality Principle by either:
(a) reporting on the Indicator
or (b) explaining the reason for
the omission.
Catalyzing Change
Statement of Management’s Responsibility
for Financial Statements
The management of Cebu Holdings, Inc. and Subsidiaries is responsible for all information and representations contained in the consolidated
financial statements for the years ended December 31, 2009, 2008 and 2007. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles in the Philippines and reflect amounts that are based on the best estimates and
informed judgment of management with an appropriate consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure
that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are
recognized. The management likewise discloses to the Company’s audit committee and to its external auditor: (i) all significant deficiencies
in the design or operation of internal controls that could adversely affect its ability to record, process, and report financial data; (ii) material
weaknesses in the interal controls; and (iii) any fraud that involves management or other employees who exercise significant roles in internal
controls.
The Board of Directors reviews the consolidated financial statements before such statements are approved and submitted to the stockholders
of the Company.
SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has examined the consolidated financial statements
of Cebu Holdings, Inc. and Subsidiaries in accordance with generally accepted auditing standards in the Philippines and has expressed its
opinion on the fairness of presentation upon completion of such examination, in its report to the Board of Directors and stockholders.
ANTONINO T. AQUINO
Chairman, Board of Directors
FRANCIS O. MONERA
President
ELEANORE R. TOMANENG
101
101
Report of the Audit Committee to the Board of
Directors for the Year Ended December 31, 2008
The Audit & Risk Committee’s roles and responsibilities are defined in the Audit & Risk Committee Charter approved by the Board of Directors. The
Audit & Risk Committee provides assistance to the Board of Directors in fulfilling its oversight responsibility to the shareholders relating to:
a.) the Company’s financial statements and the financial reporting process,
b.) the systems of internal controls and financial reporting controls,
c.) the internal audit activity,
d.) the annual independent audit of the Company’s financial statements,
e.) compliance with legal and regulatory matters and,
f.) the adequacy of risk management
In compliance with the Audit & Risk Committee Charter, we confirm that:
• An independent director chairs the Audit &Risk Committee;
• We had four (4) meetings for the year. All members were present;
• We recommended to the Board of Directors the re-appointment of SGV & Co. as independent external auditor for 2009, based on the review of
their performance and qualifications, including consideration of management’s recommendation;
• We reviewed and discussed the quarterly consolidated financial statements and annual consolidated financial statements of Cebu Holdings Inc.
and subsidiaries (the “Company”, including Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and
for the year ended December 31, 2009, with the Company’s management and SGV & Co. We confirm the report of the external auditors and the
results of the review of the 2009 audited financial statements. These activities were performed in the following context:
• That management has the primary responsibility for the financial statements and the reporting process,
• That SGV & Co. is responsible for expressing the opinion on the conformity of the Company’s consolidated audited financial statements
with the Philippine Financial Reporting Standards;
• We discussed and approved the overall scope and the respective audit plans of the Company’s Internal Auditors and SGV & Co. We have also
discussed the results of their audits and their assessment of the Company’s internal controls and the overall quality of the financial reporting
process;
• We reviewed and approved all audit services provided by SGV & Co. to the Company and have concluded that such services do not impair their
independence;
• We reviewed the reports of the Internal Auditors, ensuring that management is taking appropriate corrective actions in a timely manner,
including addressing internal control and compliance with legal and regulatory issues;
• We were given updates on the status of the recommendations of the external Qualtiy Assessment Review (QAR) for the Internal Audit
Department conducted in 2008. Best practices and areas for improvement are currently being addressed by the Internal Audit Department;
• The Committee was also oriented on other aspects of the company apart from internal audit, financial reporting and external audit. This is for
the Committee’s further awareness and appreciation of the company’s initiatives and programs. An overview of the following were taken up in
2009: (1) Corporate Communications and Customer Affairs Division (CCCAD), (2) Ayala Malls Group (AMG), (3) the Sustainability Framework and
(4) the Marketing Department of the Real Estate Development Group (REDG Marketing). The Audit & Risk Committee will continue to get sessions
on the other initiatives and programs in the succeeding years.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above, the Audit & Risk
Committee recommended to the Board of Directors the inclusion of the Company’s consolidated financial statements as of and for the year ended
December 31, 2009 in the Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange Commission.
February 12, 2010
102
102
FR. RODERICK C. SALAZAR, JR., SVD
ENRIQUE L. BENEDICTO
HERNANDO O. STREEGAN
Committee Chair
Member
Member
Catalyzing Change
Independent Auditors’ Report
The Stockholders and the Board of Directors
Cebu Holdings, Inc.
7th Floor, Cebu Holdings Center
Cebu Business Park, Cebu City
We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and Subsidiaries, which comprise the
consolidated statements of financial position as at December 31, 2009 and 2008, and the consolidated statements of income, consolidated
statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of the
three years in the period ended December 31, 2009, and a summary of significant accounting policies and other explanatory notes.
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. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
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 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. Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Cebu Holdings, Inc. and
Subsidiaries as of December 31, 2009 and 2008, and their financial performance and their cash flows for each of the three years in the period
ended December 31, 2009 in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Davee M. Zuñiga
Partner
CPA Certificate No. 88990
SEC Accreditation No. 0665-A
Tax Identification No. 160-302-953
PTR No. 9681205, January 4, 2010, Cebu City
February 26, 2010
103
103
Consolidated Statements of Financial Position
(Amounts in Thousands, except for Par Value, Authorized and Issued Shares)
CEBU HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands, except for Par Value, Authorized and Issued Shares)
2009
December 31
2008
P
= 667,583
237,510
230,275
321,447
357,864
24,852
1,839,531
P
= 750,589
84,163
203,534
141,335
357,864
30,108
1,567,593
158,384
9,540
656,579
34,065
278,107
2,708,218
88,792
3,933,685
P
= 5,773,216
66,813
7,910
888,868
46,594
293,962
2,642,628
144,215
4,090,990
P
= 5,658,583
Current Liabilities
Accounts and other payables (Notes 13, 16, 21 and 24)
Customers‟ deposits (Notes 15 and 24)
Income tax payable
Current portion of long-term debt (Notes 14 and 24)
Total Current Liabilities
P
= 738,025
221,999
25,853
110,000
1,095,877
P
= 777,898
197,839
8,785
55,000
1,039,522
Noncurrent Liabilities
Customers‟ deposits and deferred credits (Notes 15 and 24)
Deferred tax liabilities - net (Note 22)
Long-term debt - net of current portion (Notes 14 and 24)
Total Noncurrent Liabilities
Total Liabilities
48,075
23,733
165,000
236,808
1,332,685
53,521
22,808
275,000
351,329
1,390,851
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 24)
Short-term cash investments (Notes 5 and 24)
Receivables - net (Notes 6, 16 and 24)
Subdivision land for sale and development - at cost (Note 7)
Sports club shares for sale - at cost
Other current assets (Note 8)
Total Current Assets
Noncurrent Assets
Noncurrent portion of receivables - net (Notes 6 and 24)
Deferred tax assets (Note 22)
Land and improvements - at cost (Note 7)
Property and equipment - net (Note 9)
Investments in associates (Note 10)
Investment properties - net (Note 11)
Other noncurrent assets (Note 12)
Total Noncurrent Assets
LIABILITIES AND EQUITY
(Forward)
104
104
Catalyzing Change
Equity (Note 25)
Equity attributable to equity holders of Cebu Holdings, Inc.
Capital stock - P
= 1 par value
Authorized - 3,000,000,000 shares
Issued and outstanding - 1,920,073,623 shares
Additional paid-in capital
Retained earnings
Non-controlling interests
Total Equity
2009
December 31
2008
P
= 1,920,073
856,685
1,366,590
4,143,348
297,183
4,440,531
P
= 5,773,216
P
= 1,920,073
856,685
1,198,804
3,975,562
292,170
4,267,732
P
= 5,658,583
See accompanying Notes to Consolidated Financial Statements.
105
105
Consolidated Statements of Income
(Amounts in Thousands, except Earnings Per Share)
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, except Earnings Per Share)
Years Ended December 31
2009
2008
2007
REVENUE
Real estate (Note 16)
Rental income (Notes 11 and 27)
Theater income
Equity in net earnings of associates (Note 10)
Interest and other income (Note 17)
P
= 413,945
697,950
72,747
19,687
83,955
1,288,284
P
= 738,357
594,802
66,542
14,909
85,421
1,500,031
P
= 589,301
530,345
66,579
23,695
71,825
1,281,745
671,029
161,732
22,060
854,821
713,951
161,582
11,164
886,697
720,022
146,536
37,175
903,733
INCOME BEFORE INCOME TAX
433,463
613,334
378,012
PROVISION FOR INCOME TAX (Note 22)
103,920
172,041
85,262
P
= 329,543
P
= 441,293
P
= 292,750
P
= 302,192
27,351
P
= 329,543
P
= 399,479
41,814
P
= 441,293
P
= 251,775
40,975
P
= 292,750
P
= 0.16
P
= 0.21
P
= 0.13
COSTS AND EXPENSES
Real estate, rental and theater expenses (Note 18)
General and administrative (Notes 16, 19 and 21)
Interest and other charges (Notes 14, 15 and 20)
NET INCOME
Net Income Attributable to:
Equity holders of Cebu Holdings, Inc.
Basic/Diluted Earnings Per Share (Note 23)
106
106
Catalyzing Change
Consolidated Statements of Comprehensive Income
(Amounts in Thousands)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2009
2007
2008
NET INCOME FOR THE PERIOD
P
= 329,543
P
= 441,293
P
= 292,750
OTHER COMPREHENSIVE INCOME
−
−
−
TOTAL COMPREHENSIVE INCOME
P
= 329,543
P
= 441,293
P
= 292,750
P
= 302,192
27,351
P
= 329,543
P
= 399,479
41,814
P
= 441,293
P
= 251,775
40,975
P
= 292,750
Total Comprehensive Income Attributable to:
107
107
Consolidated Statements of Changes in Equity
(Amounts in Thousands, except Cash Dividends Per Share)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands, except Cash Dividends Per Share)
2009
2007
2008
ATTRIBUTABLE TO EQUITY HOLDERS OF CEBU
HOLDINGS, INC.
Capital Stock (Note 25)
Additional Paid-in Capital (Note 25)
Retained Earnings (Note 25)
At beginning of year
Net income
Cash dividends - P
= 0.07 per share in 2009 and 2008
and P
= 0.05 per share in 2007
At end of year
NON-CONTROLLING INTERESTS
Net income
Dividends paid to non-controlling interest
At end of year
108
108
Catalyzing Change
P
= 1,920,073
P
= 1,920,073
P
= 1,920,073
856,685
856,685
856,685
1,198,804
302,192
933,731
399,479
777,960
251,775
(134,406)
1,366,590
4,143,348
(134,406)
1,198,804
3,975,562
(96,004)
933,731
3,710,489
292,170
27,351
(22,338)
297,183
P
= 4,440,531
272,694
41,814
(22,338)
292,170
P
= 4,267,732
254,043
40,975
(22,324)
272,694
P
= 3,983,183
Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS
2009
2008
2007
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization (Notes 9, 11, 18
and 19)
Interest income (Note 17)
Equity in net earnings of associates (Note 10)
Interest expense (Note 20)
Foreign exchange losses (gains) (Note 17)
Gain on redemption of investments in an
associate (Note 10)
Loss (gain) on disposal of property and
equipment
Operating income before working capital changes
Decrease (increase) in:
Receivables
Subdivision land for sale and development
Sports club shares for sale
Other current assets
Increase (decrease) in:
Accounts and other payables
Customers‟ deposits and deferred credits
Net cash generated from operations
Interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to short-term cash investments
Acquisitions of:
Investment properties (Note 11)
Property and equipment (Note 9)
Decrease (increase) in:
Land and improvements
Other noncurrent assets
Investments in associates
Proceeds from sale of property and equipment
Proceeds from redemption of investments in an
associate
Cash of deconsolidated subsidiary
Net cash used in investing activities
P
= 433,463
135,801
(51,648)
(19,687)
17,647
4,292
−
P
= 613,334
117,193
(65,993)
(14,909)
11,164
(8,536)
−
P
= 378,012
101,501
(62,966)
(23,695)
22,232
14,943
(3,335)
−
519,868
(301)
651,952
3,451
430,143
(68,918)
52,177
−
5,256
17,784
212,986
1,686
39,725
62,137
132,886
1,124
(34,631)
(39,922)
14,121
482,582
37,796
(16,689)
(87,767)
415,922
39,533
17,409
981,075
49,725
(21,774)
(162,952)
846,074
240,449
85,716
917,824
37,058
(17,634)
(40,277)
896,971
(153,347)
(84,163)
(186,233)
(5,200)
(93,954)
(480,560)
(296,491)
(149,122)
–
55,633
−
6,255
(52,208)
63,035
(173,750)
454
(39,999)
(89,744)
−
−
−
−
(282,892)
−
(6,250)
(827,396)
70,038
−
(505,318)
−
(Forward)
109
109
2009
2008
2007
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of:
Bank loans
Long-term debt
Availment of long-term debt
Dividends paid to:
Decrease in amounts due to related parties
Net cash used in financing activities
(22,338)
(134,406)
−
(211,744)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
(4,292)
P
=−
−
−
(22,338)
(134,406)
(24,648)
(181,392)
8,536
(P
= 180,000)
(19,995)
330,000
(22,324)
(96,004)
(15,747)
(4,070)
(14,943)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
(83,006)
(154,178)
372,640
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR (Note 4)
750,589
904,767
532,127
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 4)
P
= 667,583
P
= 750,589
P
= 904,767
110
110
P
=−
(55,000)
−
Catalyzing Change
Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Group Information
Cebu Holdings, Inc. (the Parent Company) was incorporated in the Republic of the Philippines on
November 29, 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.
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
Company is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City.
Asian I-Office Properties, Inc. (AiO) is 40%-owned by CPVDC starting in 2008 and 100%-owned in 2007. 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 subsidiary, is engaged in subleasing of commercial spaces, food
courts and entertainment facilities. The registered office address of CLCI is at Basement II, Ayala Center
Cebu, Cebu Business Park, Cebu City.
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. CBP Theatre has not yet started its
operations.
The consolidated financial statements of Cebu Holdings, Inc. and Subsidiaries (the Group) as of
December 31, 2009 and 2008 and for each of the three years in the period ended December 31, 2009 were
endorsed for approval by the Audit Committee on February 12, 2010 and were authorized for issue by the
Executive Committee of the Board of Directors (BOD) on February 26, 2010.
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, and all values are rounded to
the nearest thousand (P
= 000) except when otherwise indicated. The Group‟s functional currency is Philippine
Peso.
Statement of Compliance
The consolidated financial statements of the Group have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
Basis 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, 2009 and 2008 and
for each of the three years in the period ended December 31, 2009.
Effective Percentages of
Ownership
2009
Cebu Leisure Company, Inc. (CLCI)
CBP Theatre Management Company, Inc. (CBP Theatre)
Cebu Property Ventures & Development Corporation (CPVDC)
100%
100
76
2008
100%
100
76
111
111
The financial statements of the subsidiaries are prepared for the same reporting year as the Parent
Company, using consistent accounting policies.
All inter-company balances and transactions, including income, expenses and dividends, are eliminated in
full.
Subsidiaries are 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. Due to the change in CPVDC‟s interest
in AiO from 100% in 2007 to 40% in 2008, the Group deconsolidated its former subsidiary in 2008, and
accounted for its investment under the equity method of accounting.
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 identified to, and thus allocated to “Subdivision land for sale”
and “Land and improvements” 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.
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 statement of income, consolidated
statement of comprehensive income, consolidated statement of changes in equity and within equity in the
consolidated statement of financial position, separately from the equity attributable to the Parent Company.
Changes in Accounting Policies and Disclosures
The accounting policies adopted are consistent with those of the previous financial year except for the
following new and amended Philippine Financial Reporting Standards (PFRSs) and Philippine Interpretations
which were adopted as of January 1, 2009.
New Standards and Interpretations
PAS 1, Presentation of Financial Statements effective January 1, 2009
PAS 23, Borrowing Costs (Revised) effective January 1, 2009
PFRS 8, Operating Segments effective January 1, 2009
Amendments to Standards
PFRS 1 and PAS 27 Amendments - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or
Associate effective January 1, 2009
PFRS 7 Amendments - Improving Disclosures about Financial Instruments effective
January 1, 2009
Philippine Interpretation IFRIC 9 and PAS 39 Amendments, Embedded Derivatives effective
June 30, 2009
Improvements to PFRSs, with respect to the amendment to the Appendix to PAS 18, Revenue
Standards or interpretations that have been adopted and that are deemed to have an impact on the
consolidated financial statements or performance of the Group are described below:
PFRS 8, Operating Segments
PFRS 8 replaced PAS 14, Segment Reporting, and adopts a full management approach to identifying,
measuring and disclosing the results of an entity‟s operating segments. The Group concluded that the
operating segments determined in accordance with PFRS 8 are the same as the business segments
previously identified under PAS 14. PFRS 8 disclosures are shown in Note 26.
PAS 1, Presentation of Financial Statements
The revised standard separates owner and non-owner changes in equity. The consolidated statement of
changes in equity includes only details of transactions with owners, with non-owner changes in equity
presented in a reconciliation of each component of equity. In addition, the standard introduces the
consolidated statement of comprehensive income: it presents all items of recognized income and expense,
either in one single statement, or in two linked statements. The Group has elected to present two linked
statements.
112
112
Catalyzing Change
PFRS 1 and PAS 27 Amendments - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or
Associate
The amendments to PFRS 1, First-time Adoption of PFRS, allowed an entity to determine the „cost‟ of
investments in subsidiaries, jointly controlled entities or associates in its opening PFRS consolidated financial
statements in accordance with PAS 27, Consolidated and Separate Financial Statements, or using a deemed
cost method. The amendment to PAS 27 required all dividends from a subsidiary, jointly controlled entity or
associate to be recognized in the consolidated statement of income in the separate financial statement. The
revision to PAS 27 was applied prospectively. The new requirement affects only the parent‟s separate
financial statement and does not have an impact on the consolidated financial statements.
PFRS 7 Amendments - Improving Disclosures about Financial Instruments
The amendments to PFRS 7, Financial Instruments: Disclosures, require additional disclosures about fair
value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to
be disclosed by source of inputs using a three level fair value hierarchy, by class, for all financial instruments
recognized at fair value. In addition, a reconciliation between the beginning and ending balance for level 3
fair value measurements is now required, as well as significant transfers between levels in the fair value
hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to
derivative transactions and financial assets used for liquidity management. The fair value measurement
disclosures did not have any impact on the financial position or performance of the Group since the Group
does not have financial instruments carried at fair value. The liquidity risk disclosures are not significantly
impacted by the amendments and are presented in Note 24.
Improvements to PFRSs
The omnibus amendments to PFRSs issued in 2009 were issued primarily with a view to removing
inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The
adoption of the following amendments resulted in changes in accounting policies but did not have any impact
on the financial position or performance of the Group.
PAS 18, Revenue: The amendment adds guidance (which accompanies the standard) to determine
whether an entity is acting as a principal or as an agent. The features to consider are whether the entity:
-
Has primary responsibility for providing the goods or service
Has inventory risk
Has discretion in establishing prices
Bears the credit risk
The Group has assessed its revenue arrangements against these criteria and concluded that it is acting
as principal in all arrangements. The revenue recognition policy has been updated accordingly.
Standards Issued but not yet Effective
The Group will adopt the following 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.
PFRS 3, Business Combinations (Revised) and PAS 27, Consolidated and Separate Financial Statements
(Amended)
The revised standards are effective for annual periods beginning on or after July 1, 2009. PFRS 3 (Revised)
introduces significant changes in the accounting for business combinations occurring after this date.
Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial
recognition and subsequent measurement of a contingent consideration and business combinations achieved
in stages. These changes will impact the amount of goodwill recognized, the reported results in the period
that an acquisition occurs and future reported results. PAS 27 (Amended) requires that a change in the
113
113
ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in
their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise
to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the
subsidiary as well as the loss of control of a subsidiary. The changes by PFRS 3 (Revised) and PAS 27
(Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with noncontrolling interests. PFRS 3 (Revised) will be applied prospectively while PAS 27 (Amended) will be applied
retrospectively with few exceptions. The changes will affect the Group‟s future acquisitions and transactions
with non-controlling interests.
Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate
This Interpretation, effective for annual periods beginning on or after January 1, 2012, 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 adoption of this Philippine Interpretation will be accounted for
retrospectively, and will result to restatement of prior period consolidated financial statements.
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 and will disclose the impact when it becomes effective in 2012.
Philippine Interpretation IFRIC 17, Distributions of Non-Cash Assets to Owners
This Interpretation is effective for annual periods beginning on or after July 1, 2009 with early application
permitted. It provides guidance on how to account for non-cash distributions to owners. The interpretation
clarifies when to recognize a liability, how to measure it and the associated assets, and when to derecognize
the asset and liability. The Group does not expect the Interpretation to have an impact on the consolidated
financial statements as the Group has not made non-cash distributions to shareholders in the past.
PAS 39 Amendment - Eligible Hedged Items
The amendment to PAS 39, Financial Instruments: Recognition and Measurement, effective for annual
periods beginning on or after July 1, 2009, clarifies that an entity is permitted to designate a portion of the fair
value changes or cash flow variability of a financial instrument as a hedged item. This also covers the
designation of inflation as a hedged risk or portion in particular situations. The Group has concluded that the
amendment will have no impact on the consolidated financial position or performance of the Group, as the
Group has not entered into any such hedges.
PFRS 2 Amendments - Group Cash-settled Share-based Payment Transactions
The amendments to PFRS 2, Share-based Payments, effective for annual periods beginning on or after
January 1, 2010, clarify the scope and the accounting for group cash-settled share-based payment
transactions. The Group has concluded that the amendment will have no impact on the consolidated
financial position or performance of the Group as the Group has not entered into any such share-based
payment transactions.
Improvements to PFRSs 2009
The omnibus amendments to PFRSs issued in 2009 were issued primarily with a view to removing
inconsistencies and clarifying wording. The amendments are effective for annual periods financial years
January 1, 2010 except otherwise stated. The Group has not yet adopted the following amendments and
anticipates that these changes will have no material effect on the consolidated financial statements.
114
114
Catalyzing Change
PFRS 2, Share-based Payment: clarifies that the contribution of a business on formation of a joint
venture and combinations under common control are not within the scope of PFRS 2 even though they
are out of scope of PFRS 3, Business Combinations (Revised). The amendment is effective for financial
years on or after July 1, 2009.
PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations: clarifies that the disclosures
required in respect of noncurrent assets and disposal groups classified as held for sale or discontinued
operations are only those set out in PFRS 5. The disclosure requirements of other PFRSs only apply if
specifically required for such noncurrent assets or discontinued operations.
PFRS 8, Operating Segment Information: clarifies that segment assets and liabilities need only be
reported when those assets and liabilities are included in measures that are used by the chief operating
decision maker.
PAS 1, Presentation of Financial Statements: clarifies that the terms of a liability that could result, at
anytime, in its settlement by the issuance of equity instruments at the option of the counterparty do not
affect its classification.
PAS 7, Statement of Cash Flows: explicitly states that only expenditure that results in a recognized asset
can be classified as a cash flow from investing activities.
PAS 17, Leases: removes the specific guidance on classifying land as a lease. Prior to the amendment,
leases of land were classified as operating leases. The amendment now requires that leases of land are
classified as either „finance‟ or „operating‟ in accordance with the general principles of PAS 17. The
amendments will be applied retrospectively.
PAS 36, Impairment of Assets: clarifies that the largest unit permitted for allocating goodwill, acquired in
a business combination, is the operating segment as defined in PFRS 8 before aggregation for reporting
purposes.
PAS 38, Intangible Assets: clarifies that if an intangible asset acquired in a business combination is
identifiable only with another intangible asset, the acquirer may recognize the group of intangible assets
as a single asset provided the individual assets have similar useful lives. Also clarifies that the valuation
techniques presented for determining the fair value of intangible assets acquired in a business
combination that are not traded in active markets are only examples and are not restrictive on the
methods that can be used.
PAS 39, Financial Instruments: Recognition and Measurement: clarifies the following:
o
o
o
that a prepayment option is considered closely related to the host contract when the exercise price
of a prepayment option reimburses the lender up to the approximate present value of lost interest for
the remaining term of the host contract.
that the scope exemption for contracts between an acquirer and a vendor in a business combination
to buy or sell an acquiree at a future date applies only to binding forward contracts, and not
derivative contracts where further actions by either party are still to be taken.
that gains or losses on cash flow hedges of a forecast transaction that subsequently results in the
recognition of a financial instrument or on cash flow hedges of recognized financial instruments
should be reclassified in the period that the hedged forecast cash flows affect profit or loss.
Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives: clarifies that it does not apply
to possible reassessment at the date of acquisition, to embedded derivatives in contracts acquired in a
business combination between entities or businesses under common control or the formation of joint
venture.
115
115
Philippine Interpretation IFRIC 16, Hedge of a Net Investment in a Foreign Operation: states that, in a
hedge of a net investment in a foreign operation, qualifying hedging instruments may be held by any
entity or entities within the group, including the foreign operation itself, as long as the designation,
documentation and effectiveness requirements of PAS 39 that relate to a net investment hedge are
satisfied.
Except as otherwise indicated, the Group does not expect the adoption of these new standards and
interpretations to have a significant impact on its consolidated financial statements.
Cash and Cash Equivalents and Short-term Cash 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 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 are classified as short-term cash investments.
Financial 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.
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 asking 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.
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.
116
116
Catalyzing Change
Loans and receivables
Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are carried at amortized cost using the effective interest rate
method. 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 cash
investments” and “Receivables”.
After initial measurement, the loans and receivables are subsequently measured at amortized cost using the
effective interest rate 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. The amortization is included in the “Interest and other income” account in the consolidated statement of
income. The losses arising from impairment of such loans and receivables are recognized in the
consolidated statement of income.
Other financial liabilities
Other financial liabilities are financial liabilities not designated 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 rate 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 effective interest rate.
This accounting policy applies primarily to the Group‟s accounts and other payables, long-term debt and
other obligations that meet the above definition (other than liabilities covered by other accounting standards,
such as income tax payable).
Derivative Financial Instruments
Derivative instruments (including bifurcated embedded derivatives) are initially recognized at fair value on the
date in which a derivative transaction is entered into or bifurcated, and are subsequently re-measured at fair
value. Changes in fair value of derivative instruments not accounted for as hedges are recognized
immediately in the consolidated statement of income. Derivatives are carried as assets when the fair value is
positive and as liabilities when the fair value is negative.
Derivative financial instruments also include bifurcated embedded derivatives. An embedded derivative is
separated from the hybrid or combined contract if all the following conditions are met: (a) the economic
characteristics and risks of the embedded derivative are not clearly and closely related to the economic
characteristics and risks of the host contract; (b) a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative; and (c) the hybrid instrument is not recognized at FVPL.
The Group assesses whether embedded derivatives are required to be separated from the host contracts
when the Group first becomes a party to the contract. Reassessment of embedded derivatives is only done
when there are changes in the contract that significantly modifies the contractual cash flows.
Where derivatives are designated as effective hedging instruments, provisions of hedge accounting apply.
Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting
are taken directly to net profit or loss for the year.
The Group has no derivatives as of December 31, 2009 and 2008.
Customers‟ Deposits
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 “Customers‟ deposit and
deferred credits” in the consolidated statement of financial position) and amortized using the straight-line
method under the “Rental income” account in the consolidated statement of income. After initial recognition,
customers‟ deposits are subsequently measured at amortized cost using effective interest rate method.
Accretion of discount is recognized under “Interest expense” in the consolidated statement of income.
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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 have 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.
Where the Group has transferred its right to receive cash flows from an asset or has entered into a passthrough 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. 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 has
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
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 decreases because of an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed. Any 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, customer location, credit history, past-due status and term.
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Catalyzing Change
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. 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 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.
Subdivision Land for Sale
Subdivision land for sale 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.
Sports Club Shares for Sale
These are assets held for sale in the ordinary course of business. Sports club shares for sale are valued at
the lower of cost or NRV. Cost comprise of acquisition, development and improvement of the sports club
facilities while NRV is the selling price in the ordinary course of business, less estimated cost to sell. Cost is
determined using the average cost method.
Land and Improvements
Land and improvements consist of properties acquired exclusively for future development and are carried at
the lower of aggregate cost or NRV. Cost includes those incurred for the acquisition, start-up development
and improvement of the properties. NRV is the estimated selling price in the ordinary course of business,
less estimated costs to complete and sell. Cost is measured 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.
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.
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:
Years
40
3 - 10
3-5
Office condominium and improvements
Furniture, fixtures and equipment
Transportation equipment
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.
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119
When assets 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.
Investment 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. 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 associates and the Group are identical and the associates‟ 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.
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 - 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
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or
losses on the retirement or disposal of investment properties 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, commencement of an operating lease to another party or ending of construction
or development. 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 property, 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.
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120
Catalyzing Change
Impairment of Nonfinancial Assets
Investment properties and property and equipment
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. 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.
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
Borrowing costs are generally expensed as incurred. 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 (included in “Subdivision land for sale”, “Investment properties” and
“Property and equipment” accounts in the consolidated statement of financial position). 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.
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.
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121
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; and the expenses that it incurs and
its share of the income that it earns from the sale by the joint venture.
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. A reassessment is made after
inception of the lease only if one of the following applies:
(a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
(b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was
initially included in the lease term;
(c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or
(d) There is substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when the change
in circumstances gave rise to the reassessment for scenarios (a), (c), or (d) and at the date of renewal or
extension period for scenario (b).
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.
Revenue and Cost Recognition
Real estate sales
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 “Accounts and other payables”
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 “Customers‟ deposits” 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 pre-completed real estate units are
deferred and are charged to expense when the related revenue is recognized.
Rental income
Rental income from non-cancellable 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.
Interest income
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).
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122
Catalyzing Change
Theater and Service income
Theater and service income is recognized when the related 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 the defined benefit
pension plan is the present value of the defined benefit obligation at the reporting date less the 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 discounting
the estimated future cash outflows using risk-free interest rates of government bonds that have terms to
maturity approximating to the terms of the related pension liability.
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.
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123
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.
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.
Segment Reporting
The Group‟s operating businesses are organized and managed separately according to the nature of the
products and services provided, with each segment representing a strategic business unit that offers different
products and serves different markets. Financial information on business segments is presented in Note 26.
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 Period
Post year-end events up to the date of auditors‟ report 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 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 as the leased item
is land and for properties other than land, 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.
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124
Catalyzing Change
Sports club shares for sale
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.
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.
Distinction between Land and improvements and Subdivision land for sale
The Group determines whether a property will be classified as Subdivision land for sale or Land and
improvements. In making this judgment, the Group considers whether the property will be sold in the normal
operating cycle (Subdivision land for sale) or whether it will be retained as part of the Group‟s strategic
landbanking activities for development or sale in the medium or long-term (Land and improvements).
Contingencies
The Group is involved in a legal proceeding. The Group currently does not believe this proceeding will have
a material effect on the Group‟s financial position.
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, 2009 and 2008, the outstanding net trade receivable from real estate sales amounted to
P
= 246.7 million and P
= 140.9 million, respectively (see Note 6).
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125
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 effective interest rate. 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, customer location, credit history, pastdue 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, 2009 and 2008, receivables, net of allowance for impairment losses, amounted to
P
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.
As of December 31, 2009 and 2008, the net book value of property and equipment amounted to
P
As of December 31, 2009 and 2008, the net book value of investment properties amounted to
P
= 2,708.2 million and P
= 2,642.6 million, respectively (see Note 11).
Evaluating impairment of nonfinancial assets
The Group reviews investments in associates, property and equipment, investment properties and other
noncurrent assets 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 the net
selling price 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 income 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, 2009 and 2008, net deferred tax assets recognized amounted to P
= 9.5 million and
P
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126
Catalyzing Change
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 21 and include among others, discount rates, expected returns on plan assets and rates of
salary increase. 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, 2009 and 2008, the present value of the defined benefit obligation amounted to
P
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 we 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 Notes 6, 15 and 24 for the related balances.
4.
Cash and Cash Equivalents
This account consists of:
Cash on hand and in banks
Cash equivalents
2009
2008
(In Thousands)
P
= 35,244
P
= 53,245
632,339
697,344
P
= 667,583
P
= 750,589
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.
5.
Short-term Cash 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.
127
127
6.
Receivables
Receivables are summarized as follow:
2009
2008
(In Thousands)
Trade
Commercial development
Related party (Note 16)
Third parties
Shopping centers
Corporate business
Residential
Advances to officers and employees
Related parties (Note 16)
Others
Less allowance for impairment losses
Less noncurrent portion
P
= 144,856
88,298
62,130
16,980
13,567
15,363
25,549
39,759
406,502
17,843
388,659
158,384
P
= 230,275
P
=–
135,981
81,344
15,223
4,939
11,412
11,092
30,823
290,814
20,467
270,347
66,813
P
= 203,534
The classes of trade receivables of the Group are as follow:
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, food courts
and entertainment facilities.
Corporate business pertains to receivables arising from lease of office buildings.
Residential pertains to receivables arising from sale of high-end residential lots.
Terms and conditions of receivables are as follow:
Receivables from sale of commercial lots, included under commercial development are noninterestbearing 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 noninterest-bearing and
are collectible monthly based on the terms of the lease contracts.
The sales contract receivables, included under residential, are noninterest-bearing and are collectible in
monthly installments over a period of one to two years.
The leases of office spaces, included under corporate business, are noninterest-bearing and are
collectible monthly bases on the terms of the lease contracts.
Advances to officers and employees are noninterest-bearing and are collectible in monthly installments
over a period of one to twenty years.
Receivables from related parties are noninterest-bearing and collectible within one year
Other receivables are noninterest-bearing and collectible over a period of one to ten years.
As of December 31, 2009 and 2008, commercial development and residential trade receivables, advances to
officers and employees and others (included in other receivables) with a nominal amount of P
= 350.1 million
and P
= 201.7 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 6.8% to 10.5% and 7.8% to 10.8% in 2009 and 2008, respectively. The aggregate unamortized
discount amounted to P
= 18.6 million as of December 31, 2009 and 2008, respectively.
128
128
Catalyzing Change
Movements in the unamortized discount as of December 31, 2009 and 2008 are as follows (in thousands):
2009
At January 1
Additions
Accretion (Note 17)
Elimination of interest
accretion on
intercompany sale
At December 31
Commercial
Development
P
= 11,559
41,844
(10,066)
Advances to
Officers and
Residential
Employees
P
= 1,997
P
= 385
1,861
–
(2,182)
(46)
–
P
= 1,676
(623)
P
= 42,714
–
P
= 339
Others
P
= 4,616
–
(1,098)
Total
P
= 18,557
43,705
(13,392)
–
P
= 3,518
(623)
P
= 48,247
Others
P
= 5,273
–
(657)
P
= 4,616
Total
P
= 21,148
13,762
(16,353)
P
= 18,557
2008
At January 1
Additions
Accretion (Note 17)
At December 31
Commercial
Development
P
= 11,605
12,029
(12,075)
P
= 11,559
Residential
P
= 3,839
1,733
(3,575)
P
= 1,997
Advances to
Officers and
Employees
P
= 431
–
(46)
P
= 385
Movements in the allowance for impairment losses are as follows (in thousands):
2009
At January 1
Provisions (Note 19)
Reversal of provision (Note 19)
At December 31
Individually impaired
Gross amounts of individually
impaired receivables
Shopping
Centers
P
= 11,820
–
(3,124)
P
= 8,696
Corporate
Business
P
= 356
500
–
P
= 856
Related
Parties
P
= 2,325
–
–
P
= 2,325
Others
P
= 5,966
–
–
P
= 5,966
Total
P
= 20,467
500
(3,124)
P
= 17,843
P
= 8,696
P
= 856
P
= 2,325
P
= 5,966
P
= 17,843
P
= 8,696
P
= 856
P
= 2,325
P
= 5,966
P
= 17,843
Shopping
Centers
P
= 11,820
–
P
= 11,820
Corporate
Business
P
= 356
–
P
= 356
Related
Parties
P
=–
2,325
P
= 2,325
Others
P
= 5,966
–
P
= 5,966
Total
P
= 18,142
2,325
P
= 20,467
P
= 8,431
3,389
P
= 11,820
P
= 356
−
P
= 356
P
= 2,325
−
P
= 2,325
P
= 5,966
−
P
= 5,966
P
= 17,078
3,389
P
= 20,467
P
= 8,431
P
= 356
P
= 2,325
P
= 5,966
P
= 17,078
2008
At January 1
Provisions (Note 19)
At December 31
Individually impaired
Collectively impaired
Total
Gross amounts of individually
impaired receivables
In 2009, the Group recorded provision for impairment amounting to P
= 0.5 million for corporate business
receivables which may no longer be recovered. Reversal of impairment loss amounting to P
= 3.1 million
pertains to over provision of impairment on receivables from shopping centers.
In 2008, the impairment loss provided for related parties arose from the reconciliation performed with the
related parties.
129
129
7.
Real Estate Inventories
Subdivision land for sale and development consist of:
Completed
Land for development
2009
2008
(In Thousands)
P
= 194,927
P
= 141,335
126,520
−
P
= 321,447
P
= 141,335
Interest capitalized on subdivision land for sale amounted to P
= 0.5 million for the year ended
December 31, 2009 (see Note 14).
Land and improvements consist of:
Balance at beginning of year
Improvement costs
Transfers to subdivision land for sale and development
2009
2008
(In Thousands)
P
= 888,868
P
= 836,660
−
52,208
(232,189)
−
P
= 656,679
P
= 888,868
Real estate inventories charged to costs of real estate and rental operations amounted to P
= 287.6 million,
P
= 407.7 million in 2009, 2008 and 2007, respectively (see Note 18).
8.
Other Current Assets
Value-added input tax
Prepaid expenses
Creditable withholding tax
Others
2009
2008
(In Thousands)
P
= 7,556
P
= 9,559
16,235
12,955
594
7,136
467
458
P
= 24,852
P
= 30,108
The value-added input tax is applied against value-added output tax. The remaining balance is recoverable
in future periods.
130
130
Catalyzing Change
9.
Property and Equipment
2009
Office
Furniture,
Condominium Fixtures and Transportation Constructionand Improvements Equipment
Equipment in-Progress
(In Thousands)
Cost
At January 1
Additions
Transfers/disposals
At December 31
Accumulated Depreciation
and Amortization
At January 1
Depreciation and
amortization (Note 19)
Transfers/disposals
At December 31
Net Book Value
P
= 55,280
1,508
–
56,788
39,915
2,212
–
42,127
P
= 14,661
P
= 61,606
3,679
(236)
65,049
P
= 23,207
1,700
(4,573)
20,334
44,277
11,504
7,206
(43)
51,440
P
= 13,609
3,637
(602)
14,539
P
= 5,795
Total
P
= 2,197 P
= 142,290
–
6,887
(2,197)
(7,006)
– 142,171
–
–
–
–
P
=–
95,696
13,055
(645)
108,106
P
= 34,065
2008
Office
Furniture,
Condominium Fixtures and
and Improvements
Equipment
Cost
At January 1
Additions
Transfers/disposals
At December 31
Accumulated Depreciation
and Amortization
At January 1
Depreciation and
amortization (Note 19)
Transfers/disposals
At December 31
Net Book Value
Transportation ConstructionEquipment
in-Progress
(In Thousands)
P
= 53,355
1,925
–
P
= 55,280
P
= 51,784
10,676
(854)
P
= 61,606
P
= 19,541
4,971
(1,305)
P
= 23,207
P
= 37,371
P
= 38,480
P
= 9,439
2,544
–
39,915
P
= 15,365
6,498
(701)
44,277
P
= 17,329
3,370
(1,305)
11,504
P
= 11,703
Total
P
= 184,665 P
= 309,345
452,355 469,927
(634,823) (636,982)
P
= 2,197 P
= 142,290
P
=–
–
–
–
P
= 2,197
P
= 85,290
12,412
(2,006)
95,696
P
= 46,594
Depreciation and amortization charged to general and administrative expenses amounted to P
= 13.1 million,
P
= 10.1 million for the years ended December 31, 2009, 2008 and 2007, respectively
(see Note 19).
As of December 31, 2009, there are no capital commitments for property and equipment. As of
December 31, 2008, total commitments for property and equipment amounted to P
= 38.7 million.
131
131
10. Investments in Associates
2009
2008
(In Thousands)
Acquisition cost:
Cebu Insular Hotel Company, Inc. (CIHCI 37% ownership)
Asian i-Office Properties, Inc. (AiO - 40%
ownership)
Accumulated equity in net losses:
Equity in net earnings for the year
At end of year
Less:
Dividends (Note 12)
Elimination of intercompany sale
P
= 239,302
P
= 239,302
180,000
419,302
180,000
419,302
(33,369)
19,687
(13,682)
405,620
(48,278)
14,909
(33,369)
385,933
69,796
57,717
P
= 278,107
69,796
22,175
P
= 293,962
In 2008, CPVDC infused additional investment in AiO amounting to P
= 173.8 million to be issued out of AiO‟s
increase in authorized capital stock to 450,000 common shares and 4,050,000 preferred shares with a par
value of P
= 100 per share.
The remaining shares from the proposed increase of AiO were subscribed by Ayala Land, Inc. which resulted
to the decrease in percentage of ownership of CPVDC in AiO to 40%. Accordingly, the accounts of AiO were
deconsolidated in 2008.
The following table presents the summarized financial information for equity investment in CIHCI and AiO as
of and for the years ended December 31, 2009 and 2008:
CIHCI
132
132
Current assets
Noncurrent assets
Total assets
2009
2008
(In Thousands)
P
= 166,365
P
= 190,928
782,493
814,906
P
= 948,858
P
= 1,005,834
Current liabilities
Noncurrent liabilities
Equity
Total liabilities and equity
P
= 206,378
351,413
391,067
P
= 948,858
P
= 298,732
351,969
355,133
P
= 1,005,834
Revenue
Costs and expenses
Net income
P
= 358,732
322,799
P
= 35,933
P
= 305,026
266,025
P
= 39,001
Catalyzing Change
AiO
Current assets
Noncurrent assets
Total assets
2009
2008
(In Thousands)
P
= 51,157
P
= 72,036
1,107,602
880,117
P
= 1,158,759
P
= 952,153
Current liabilities
Noncurrent liabilities
Equity
Total liabilities and equity
P
= 216,664
475,610
466,485
P
= 1,158,759
P
= 76,593
425,000
450,560
P
= 952,153
P
= 71,136
55,212
P
= 15,924
P
= 1,277
615
P
= 662
Revenue
Costs and expenses
Net income
Retained earnings include undistributed net earnings of subsidiaries and associates amounting to
P
= 389.0 million as of December 31, 2009 and 2008, respectively.
11. Investment Properties
2009
Land
Cost
At January 1
Additions
Disposals
Transfers
Transfers from property and equipment
At December 31
Accumulated Depreciation and
Amortization
At January 1
Depreciation and amortization (Note 18)
At December 31
Net Book Value
Buildings and Construction
Improvements -in-Progress
(In Thousands)
P
= 437,184
–
–
–
–
437,184
P
= 3,084,363
93,299
(2,091)
22,118
–
3,197,689
–
–
–
P
= 437,184
878,919
122,746
1,001,665
P
= 2,196,024
P
=–
94,931
–
(22,118)
2,197
75,010
–
–
–
P
= 75,010
Total
P
= 3,521,547
188,230
(2,091)
–
2,197
3,709,883
878,919
122,746
1,001,665
P
= 2,708,218
133
133
2008
Buildings and
Land Improvements
(In Thousands)
Cost
At January 1
Additions
Transfers from property and equipment
At December 31
Accumulated Depreciation and Amortization
At January 1
At December 31
Net Book Value
Total
P
= 437,184
–
–
437,184
P
= 2,339,312
110,228
634,823
3,084,363
P
= 2,776,496
110,228
634,823
3,521,547
–
–
–
P
= 437,184
774,138
104,781
878,919
P
= 2,205,444
774,138
104,781
878,919
P
= 2,642,628
Interest capitalized on investment properties amounted to P
= 3.7 million and P
= 16.3 million for the years ended
December 31, 2009 and 2008, respectively (see Note 14).
Depreciation and amortization on buildings and improvements charged to operations amounted to
P
= 122.7 million, P
= 91.4 million for the years ended December 31, 2009, 2008 and 2007,
respectively (see Note 18).
Total rental income from investment property amounted to P
= 698.0 million, P
= 594.8 million and
P
= 530.3 million for the years ended December 31, 2009, 2008 and 2007, respectively. Total operating
expenses related to investment properties that generated rental income amounted to P
= 223.5 million,
P
= 186.7 million for the years ended December 31, 2009, 2008 and 2007, respectively.
The aggregate fair value of the Group‟s investment properties amounted to P
= 6,080.2 million and
P
= 6,074.3 million as of December 31, 2009 and 2008, respectively.
The fair value 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, 2009 and 2008, there are no capital commitments for investment properties.
12. Other Noncurrent Assets
Dividends receivable (Notes 10 and 16)
Deferred input tax
Advances to contractors (Note 16)
Others
134
134
Catalyzing Change
2009
2008
(In Thousands)
P
= 47,562
P
= 69,796
22,930
16,942
4,450
8,107
13,850
49,370
P
= 88,792
P
= 144,215
13. Accounts and Other Payables
2009
2008
(In Thousands)
P
= 130,896
P
= 95,830
126,556
90,368
122,043
182,290
116,861
63,048
53,857
135,818
38,041
29,385
28,523
46,464
27,623
−
18,809
19,856
18,058
19,523
17,561
6,414
13,493
26,601
6,452
3,682
5,016
3,568
2,562
2,196
11,674
52,855
P
= 738,025
P
= 777,898
Accrued expenses
Payable to contractors
Advances from customers
Accrued project cost
Retention payable (Note 16)
Related parties (Note 16)
Accrued management fees
Output tax payable - net
Accrued repairs and maintenance
Accrued utilities
Accrued taxes and licenses
Accrued manpower cost
Dividends payable
Payable to customers
Accrued retirement (Note 21)
Others
The classes of accounts and other payables of the Group are as follows:
Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems cost
and marketing expenses.
Payable to contractors arises from progress billings or unbilled completed work on the development of
residential and commercial projects.
Advances from customers pertain to unrealized portion of collected residential receivables.
Retention payable pertains to the portion of the progress billings of constructions retained by the Group.
Terms and conditions of the financial liabilities are as follows:
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:
2009
2008
(In Thousands)
At 0.50% 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
Less current portion
P
= 125,000
P
= 150,000
150,000
275,000
110,000
P
= 165,000
180,000
330,000
55,000
P
= 275,000
135
135
The maturities of long-term debt at nominal values as of December 31 follow:
2009
2008
(In Thousands)
Due in:
2009
2010
2011
2012
P
=−
110,000
110,000
P
= 55,000
110,000
110,000
55,000
55,000
P
= 275,000
P
= 330,000
These 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 “Land and improvements” and
“Investment properties” accounts in the consolidated statements of financial position) with carrying values of
P
= 341.0 million as of December 31, 2009 and 2008, respectively (see Note 11).
The loan agreements provide for certain restrictions and requirements with respect to, among others,
payment of dividends, major disposal of property, pledge of assets, liquidation, merger or consolidation and
maintenance of financial ratios at certain levels. These restrictions and requirements were complied with by
the Parent Company.
Interest capitalized amounted to P
= 16.3 million in 2009 and 2008, respectively. The
weighted average effective capitalization rate ranges from 6.9% to 7.6% and 5.0% to 6.6% in 2009 and 2008,
respectively (see Notes 7 and 11).
15. Customers’ Deposits and Deferred Credits
Customers‟ deposits
Less current portion
Deferred credits
2009
2008
(In Thousands)
P
= 263,451
P
= 241,903
221,999
197,839
41,452
44,064
6,623
9,457
P
= 48,075
P
= 53,521
Customers‟ deposits on rental are recorded initially at fair value, which was obtained by discounting its future
cash flows using the applicable rates of similar types of investments. The difference between the cash
received and its fair values is included under “Deferred credits”.
Movements in the unamortized discount of the customers‟ deposit follows:
Additions
Accretions (Note 20)
At end of year
136
136
Catalyzing Change
2009
2008
(In Thousands)
P
= 9,884
P
= 8,803
909
6,745
(4,593)
(5,664)
P
= 6,200
P
= 9,884
16. Related Party Transactions
The Group in its regular conduct of business has entered into transactions with other related parties. The
transactions are made at prices agreed upon by the parties. The significant transactions with related parties
follow:
a.
Management and service agreement with Ayala Land, Inc. (ALI), a major shareholder amounted to
P
= 41.7 million, P
= 33.8 million in 2009, 2008 and 2007, respectively. Amount due to ALI
amounted to P
= 85.6 million as of December 31, 2009 and 2008, respectively. This
amount is noninterest-bearing and is due within the year.
b.
Construction contracts with Makati Development Corporation (MDC), a subsidiary of ALI, with total
expenditures amounted to P
= 149.1 million, P
= 224.0 million in 2009, 2008 and 2007,
respectively. Amount due to/from MDC are recorded as follows (see Note 12):
2009
(In Thousands)
P
= 3,196
P
= 13,818
26,065
45,344
Advances to contractors
Retention payable
c.
2008
Noninterest-bearing advances and reimbursement of expenses due within one year. The Group‟s
“Receivables” account includes the following:
2009
AiO
Cebu City Sports Club
AsiaTown IT Park Association, Inc.
Avida Land Corporation
Ayala Land, Inc.
Associate
Common key management
personnel
Common key management
personnel
Subsidiary of ALI
Major shareholder
2008
(In Thousands)
P
= 16,207
P
= 18
11,721
9,960
4,568
4,348
649
4,237
4,937
1,855
d.
Sales to AiO amounting to P
= 66.5 million in 2009 and 2008, respectively. The Group‟s
“Receivables” account includes the fair value of the receivable from sale of lot to AiO amounting to
P
= 144.9 million. The receivable is noninterest-bearing and collectible in annual installments starting 2011
until 2013.
e.
Management fees charged to AiO amounted to P
= 16.0 million in 2009.
f.
Professional fees to ALI amounted to P
= 0.7 million in 2009.
g.
Dividends receivable from CIHCI amounted to P
= 69.8 million in 2009 and 2008,
respectively (see Notes 10 and 12).
137
137
h.
Compensation of key management personnel by benefit type follows:
2009
Short-term employee benefits
Post-employment pension and medical benefits
Other benefits
2008
(In Thousands)
P
= 16,722
P
= 11,251
7,663
2,097
1,017
1,005
P
= 25,402
P
= 14,353
2007
P
= 12,520
1,192
509
P
= 14,221
17. Interest and Other Income
2009
Interest income:
Cash in banks (Note 4)
Cash equivalents (Note 4)
Short-term cash investments (Note 5)
Receivables (Note 6)
Service income
Water charges
Beverage
Foreign exchange gain
Others
P
= 149
35,799
2,308
13,392
18,256
7,094
4,388
−
2,569
P
= 83,955
2008
(In Thousands)
P
= 334
47,878
1,428
16,353
−
5,241
2,622
8,536
3,029
P
= 85,421
2007
P
= 2,125
29,704
−
31,137
−
3,472
1,815
−
3,572
P
= 71,825
18. Real Estate, Rental and Theater Expenses
2009
Development costs
Utilities
Taxes and licenses
Management fees
Producer‟s booking and film share
Repairs and maintenance
Land cost
Amortization of purchase premium
Advertising and promotions
Commission
Others
P
= 235,991
122,746
51,955
42,151
39,804
39,742
28,959
26,558
25,014
18,215
11,595
28,299
P
= 671,029
2008
(In Thousands)
P
= 262,283
104,781
38,649
31,386
44,913
34,620
24,487
78,078
31,489
25,580
13,750
23,935
P
= 713,951
2007
P
= 303,550
91,368
43,446
40,961
35,501
33,847
12,914
70,217
33,935
21,965
14,788
17,530
P
= 720,022
Other than the real estate inventories recognized under “Real estate, rental and theater expenses” account,
no other inventory cost was recognized as expense during the period.
138
138
Catalyzing Change
19. General and Administrative Expenses
2009
Manpower cost (Notes 16 and 21)
Utilities
Travel and transportation
Professional fees
Advertising
Trainings and seminars
Postal and communications
Office supplies
Janitorial and security services
Representation and entertainment
Insurance
Provision for (reversal of) impairment losses
(Note 6)
Others
P
= 102,898
13,055
7,850
6,552
6,274
6,220
3,983
3,422
3,073
2,308
1,411
436
(2,624)
6,874
P
= 161,732
2008
(In Thousands)
P
= 95,911
12,412
7,436
5,848
7,366
5,655
5,223
3,858
2,422
2,361
1,386
540
2,325
8,839
P
= 161,582
2007
P
= 91,975
10,133
6,710
4,919
5,348
5,647
5,476
3,525
3,050
2,976
1,356
747
650
4,024
P
= 146,536
20. Interest and Other Charges
2009
Interest expense on (Note 14)
Short-term debt
Long-term debt
Amortization of discount (Note 15)
Foreign exchange loss
Others
P
=−
13,054
4,593
4,292
121
P
= 22,060
2008
(In Thousands)
P
=−
5,500
5,664
−
−
P
= 11,164
2007
P
= 9,630
8,338
4,264
14,943
−
P
= 37,175
21. 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
= 4.1 million, P
= 2.6 million and P
= 1.8 million for the years ended December 31, 2009,
2008 and 2007, 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.
139
139
The components of pension expense (included in manpower costs under “General and administrative
expenses”) in the consolidated statements of income are as follows:
2009
Current service cost
Interest cost on benefit obligation
Net actuarial gain
Total pension expense
P
= 3,822
2,151
(1,913)
P
= 4,060
2008
(In Thousands)
P
= 2,520
2,440
(2,407)
P
= 2,553
2007
P
= 1,757
1,018
(994)
P
= 1,781
The amounts recognized in the consolidated statements of financial position for the pension plan as of
December 31, 2009 and 2008 are as follows (see Note 13):
2009
2008
(In Thousands)
P
= 17,322
P
= 21,979
(15,965)
(20,076)
1,205
293
P
= 2,562
P
= 2,196
Benefit obligation
Plan assets
Unrecognized actuarial gain
Net pension liabilities
Changes in the present value of the defined benefit obligation are as follows:
2009
2008
(In Thousands)
P
= 21,979
P
= 18,519
3,822
2,520
2,151
2,440
(10,630)
(1,500)
P
= 17,322
P
= 21,979
At January 1
Current service cost
Interest cost
Actuarial gain
At December 31
P
= 921
Actual return on plan assets
P
= 1,016
Changes in the fair value of plan assets are as follows:
2009
2008
(In Thousands)
P
= 20,076
P
= 17,455
3,694
2,450
(7,805)
171
P
= 15,965
P
= 20,076
At January 1
Contributions
Actuarial gain (loss)
At December 31
The Group expects to make contributions of P
= 3.2 million to its retirement fund in 2010.
The allocations of the fair value of plan assets are as follows:
Investment in trust funds
Investments in government instruments
Investments in deposit instruments
Others
140
140
Catalyzing Change
2009
93.6%
−
−
6.4
2008
−%
55.6
24.9
19.5
2007
−%
75.7
−
24.3
The assumptions used to determine pension benefits for the Group for the years ended
December 31, 2009, 2008 and 2007 are as follows:
2009
9.5%
7.5
Discount rate
Salary increase rate
2008
13.5%
8.0
2007
8.4%
7.0
Amounts for the current and the previous periods are as follows:
2009
Defined benefit obligation
Plan assets
Experience adjustments on
plan liabilities
P
= 17,322
(15,965)
P
= 1,357
P
= 1,324
2008
2007
(In Thousands)
P
= 21,979
P
= 18,519
(20,076)
(17,455)
P
= 1,903
P
= 1,064
P
= 1,405
2006
2005
P
= 14,613
(13,476)
P
= 1,137
P
= 58
P
= 9,660
(10,201)
(P
= 541)
P
= 58
P
= 58
22. Income Taxes
Provision for income tax consists of:
2009
Current tax:
Corporate income tax
Final withholding tax on interest income
Deferred tax
P
= 97,995
6,840
104,835
(915)
P
= 103,920
2008
(In Thousands)
P
= 157,294
8,804
166,098
5,943
P
= 172,041
2007
P
= 67,459
5,802
73,261
12,001
P
= 85,262
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 (Note 29)
Changes in unrecognized deferred tax
assets
Equity in net earnings of associates
Interest income and capital gains taxed at
lower rates
Effect of change in statutory income tax
rate
Others
Effective income tax rate
2009
30.00%
2008
35.00%
(6.19)
(8.01)
(11.05)
(0.30)
(1.41)
−
(0.85)
1.93
(2.19)
(1.07)
(1.19)
(2.47)
−
2.94
23.97%
0.03
3.07
28.05%
−
1.34
22.56%
2007
35.00%
141
141
The components of deferred tax assets as of December 31, 2009 and 2008 are as follows:
2009
2008
(In Thousands)
Deferred tax assets on:
Difference between tax and book basis of
accounting for real estate transactions
Allowance for impairment losses
Others
P
= 3,234
2,505
3,801
P
= 9,540
P
= 3,966
2,160
1,784
P
= 7,910
The components of net deferred tax liabilities as of December 31, 2009 and 2008 are as follows:
2009
2008
(In Thousands)
Deferred tax assets on:
Difference between tax and book basis of
accounting for real estate transactions
Allowance for impairment losses
Others
Deferred tax liabilities on:
Unamortized capitalized interest
Excess of acquisition cost over the net assets
of a subsidiary
Others
P
= 13,365
2,966
1,151
17,482
P
= 13,926
2,966
2,133
19,025
22,716
20,794
17,201
1,298
41,215
P
= 23,733
18,392
2,647
41,833
P
= 22,808
Republic Act No. 9337 (RA No. 9337)
RA No. 9337 was enacted into law which amended various provisions in the existing 1997 National Internal
Revenue Code, among the reforms introduced by the said RA were the reduction in the regular corporate
income tax rate from 35% to 30% beginning January 1, 2009.
23. Earnings Per Share
The following table presents information necessary to compute EPS:
2009
2008
(In Thousands, except EPS)
a.
b.
c.
142
142
Catalyzing Change
Net income attributable to the equity
holders of CHI
Weighted average number of outstanding
shares
Earnings per share (a/b)
2007
P
= 302,192
P
= 399,479
P
= 251,775
1,920,073
P
= 0.16
1,920,073
P
= 0.21
1,920,073
P
= 0.13
24. Financial Assets and Liabilities
Fair Value Information
The following tables set forth the carrying values and estimated fair values of the Group‟s financial assets
and liabilities recognized as of December 31, 2009 and 2008:
2009
2008
Carrying
Carrying
Value
Fair Value
Value
Fair Value
(In Thousands)
LOAN AND RECEIVABLES
Cash and cash equivalents
Short-term cash investments
Trade receivables
Shopping centers
Corporate business
Residential
Total trade receivables
Non-trade receivables
Advances to officers and employees
Related parties
Others
Total non-trade receivables
Total Financial Assets
OTHER FINANCIAL LIABILITIES
Current financial liabilities
Accrued expenses
Advances from customers
Retention payable
Payable to contractors
Related parties
Dividends payable
Payable to customers
Others
Current portion of long-term debt
Total current financial liabilities
Noncurrent Financial Liabilities
Long-term debt
Total noncurrent financial liabilities
Total Financial Liabilities
P
= 667,583
237,510
P
= 667,583
237,510
P
= 750,589
84,163
P
= 750,589
84,163
233,154
53,434
16,124
13,567
316,279
231,158
53,434
16,124
13,567
314,283
135,981
69,524
14,867
4,939
225,311
138,863
69,524
14,867
4,939
228,193
15,363
23,224
45,447
84,034
P
= 1,305,406
15,655
23,224
45,967
84,846
P
= 1,304,222
11,412
8,767
24,857
45,036
P
= 1,105,099
12,006
8,767
23,785
44,558
P
= 1,107,503
P
= 329,202
122,043
53,857
126,556
38,041
6,452
5,016
11,674
110,000
221,999
1,024,840
P
= 329,202
122,043
53,857
126,556
38,041
6,452
5,016
11,674
110,000
221,999
1,024,840
P
= 273,518
182,290
135,818
90,368
29,385
3,682
3,568
52,084
55,000
197,839
1,023,552
P
= 273,518
182,290
135,818
90,368
29,385
3,682
3,568
52,084
55,000
197,839
1,023,552
P
= 41,452
165,000
206,452
P
= 1,231,292
P
= 42,854
174,223
217,077
P
= 1,241,917
P
= 44,064
275,000
319,064
P
= 1,342,616
P
= 46,477
280,576
327,053
P
= 1,350,605
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 cash investments and current receivables - Carrying amounts
approximate fair values due to the relatively short-term maturities of these investments.
Noncurrent receivables - The fair values are based on the discounted value of future cash flows using the
applicable rates for similar types of instruments. The discount rates used ranged from 6.8% to 10.5% and
5.6% to 11.0% as of December 31, 2009 and 2008, respectively.
Accounts and other payables and current portion of customers‟ deposits and long-term debt - The fair values
approximate the carrying amounts due to the short-term nature of these transactions.
143
143
Noncurrent portion of customers‟ deposits 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 4.9% to 8.1% and 5.6% to 6.7% as of December 31, 2009 and 2008,
respectively. The fair value of floating rate instruments approximate their carrying amounts due to the
quarterly repricing of the instruments.
Financial Risk Management Objectives and Policies
The Group‟s principal financial instruments comprise of cash and cash equivalents, short-term cash
investments and bank loans. The bank loans were availed primarily to finance the Group‟s 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, liquidity, foreign currency and interest rate risks arise 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 a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. 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.
Cash and cash equivalents and short-term cash 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.
Commercial development, corporate business and residential 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 autodebit arrangements. Exposure to bad debts is not significant and the requirement for remedial procedures is
minimal given the profile of buyers.
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 helps 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.
144
144
Catalyzing Change
The table below shows the maximum exposure to credit risk for the components of the consolidated
statements of financial position. The maximum exposure is shown gross, before the effect of mitigation
through the use of collateral agreements.
2009
2008
(In Thousands)
Financial position items
Receivables
Total
P
= 667,583
237,510
388,659
P
= 1,293,752
P
= 750,589
84,163
270,347
P
= 1,105,099
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.
The table below shows the credit quality of the Company‟s financial assets.
2009
Trade
Shopping centers
Corporate business
Residential
Advances to officers and
employees
Related parties
Others
Neither Past Due nor Impaired
Past Due or
High Grade Medium Grade Low Grade
Total
Impaired
(In Thousands)
P
= 667,583
P
=−
P
=−
P
=− P
= 667,583
237,510
−
−
−
237,510
232,603
35,164
9,661
13,567
−
2,105
−
−
−
7,890
−
−
15,363
16,146
33,793
P
= 1,261,390
−
−
−
P
= 2,105
−
−
−
P
= 7,890
551
16,971
7,319
−
233,154
62,130
16,980
13,567
−
15,363
9,403
25,549
5,966
39,759
P
= 40,210 P
= 1,311,595
2008
Trade
Shopping centers
Corporate business
Residential
Advances to officers and
employees
Related parties
Others
Neither Past Due nor Impaired
Past Due or
High Grade Medium Grade Low Grade
Impaired
Total
(In Thousands)
P
= 750,589
P
=−
P
=−
P
=− P
= 750,589
84,163
−
−
−
84,163
135,753
39,836
14,242
4,939
−
3,162
7
−
−
11,114
−
−
11,408
6,155
24,857
P
= 1,071,942
−
−
−
P
= 3,169
−
−
−
P
= 11,114
228
27,232
974
−
135,981
81,344
15,223
4,939
4
11,412
4,937
11,092
5,966
30,823
P
= 39,341 P
= 1,125,566
145
145
The credit quality of the financial assets was determined as follows:
Cash and cash equivalents and short-term cash investments - based on the nature of the counterparty and
the Group‟s rating procedure.
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, 2009 and 2008, 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, 2009 and 2008, the aging analysis of receivables presented per class, is as follows:
2009
Neither
Past
Due nor
Impaired
Trade
Commercial
= 232,603
development P
Shopping centers 45,159
Corporate
9,661
business
13,567
Residential
Advances to officers
15,363
and employees
16,146
Related parties
33,793
Others
P
= 366,292
Total
Past Due but not Impaired
Impaired
<30
days
30-60
days
60-90
90-120
days
days
(In Thousands)
>120 Financial
days Assets
P
=−
1,126
P
=−
3,151
P
=−
747
P
= 195
1,022
P
=−
2,229
6,253
−
119
−
130
−
105
−
212
−
−
183
−
P
= 7,562
−
−
−
P
= 3,270
−
−
−
P
= 877
−
−
−
P
= 1,322
Total
P
= 356 P
= 233,154
8,696 62,130
500
−
16,980
13,567
−
− 15,363
6,895
2,325 25,549
−
5,966 39,759
P
= 9,336 P
= 17,843 P
= 406,502
2008
Neither
Past
Due nor
Impaired
<30
days
Trade
Commercial
development P
= 135,753
P
=−
Shopping centers 54,112 12,581
Corporate
business
14,249
256
Residential
4,939
−
Advances to officers
and employees
11,408
−
Related parties
6,155
−
Others
24,857
−
Total
P
= 251,473 P
= 12,837
146
146
Catalyzing Change
Past Due but not Impaired
30-60
60-90
90-120
days
days
days
(In Thousands)
Impaired
>120 Financial
days Assets
P
=−
1,524
P
=−
525
P
=−
142
P
= 228
640
17
−
7
−
208
−
130
−
−
−
−
P
= 1,541
4
−
−
P
= 536
−
−
−
P
= 350
Total
P
=− P
= 135,981
11,820 81,344
356
−
15,223
4,939
−
− 11,412
2,612
2,325 11,092
−
5,966 30,823
P
= 3,610 P
= 20,467 P
= 290,814
The Group has no collaterals held for the past due or impaired financial assets as of December 31, 2009 and
2008.
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, 2009, current ratio is 1.7:1.0, with cash and cash equivalents and short-term cash
investments of P
= 905.1 million accounting for 49.2% of the total current assets, and resulting in a net working
capital of P
= 743.6 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 liabilities at
December 31, 2009 and 2008 based on contractual undiscounted payments.
2009
Long-term debt
Interest payable
< 1 year 1 to < 2 years 2 to < 3 years > 3 years
Total
(In Thousands)
P
= 720,464
P
=−
P
=−
P
=−
P
= 720,464
110,000
110,000
55,000
−
275,000
221,999
26,630
15,789
5,233
269,651
P
= 1,052,463
P
= 136,630
P
= 70,789
P
= 5,233 P
= 1,265,115
P
= 17,021
P
= 9,011
P
= 1,502
P
=−
P
= 27,534
2008
Long-term debt
Interest payable
< 1 year 1 to < 2 years 2 to < 3 years > 3 years
Total
(In Thousands)
P
= 770,713
P
=−
P
=−
P
=−
P
= 770,713
55,000
110,000
110,000
55,000
330,000
197,839
39,507
6,938
7,503
251,787
P
= 1,023,552
P
= 149,507
P
= 116,938 P
= 62,503 P
= 1,352,500
P
= 17,522
P
= 17,021
P
= 9,011
P
= 1,502
P
= 45,056
Cash and cash equivalents and short-term cash investments 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.
147
147
The following table shows the Group‟s consolidated foreign currency-denominated monetary assets and their
peso equivalents as of December 31, 2009 and 2008:
2009
2008
US Dollar Php Equivalent
US Dollar Php Equivalent
(In Thousands)
$994
P
= 45,906
$1,098
P
= 52,175
295
13,669
−
−
$1,289
P
= 59,575
$1,098
P
= 52,175
In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates
used were P
= 46.20 to US$1.00 and P
= 47.52 to US$1.00, the Philippine Peso-US Dollar exchange rates as of
December 31, 2009 and 2008, respectively.
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). There is no other impact on the Group‟s equity other than those
already affecting the profit or loss.
2009
2008
Increase
Effect on Profit
(Decrease)
Before Tax
(In Thousands)
P
= 1.00
P
= 994
(P
= 1.00)
(P
= 994)
P
= 1.00
(P
= 1.00)
P
= 1,098
(P
= 1,098)
Interest rate risk
The Group‟s interest rate exposure management policy focuses 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 converting its debt portfolio mix of both fixed and floating interest
rates to debts with fixed interest rates in order to mitigate the Group‟s exposure to fluctuating interest rates.
As of December 31, 2009 and 2008, all of the Group‟s debt obligations are at fixed rates.
148
148
Catalyzing Change
149
149
Peso
Company
Long-term debt
Fixed
Peso
Group
Short-term cash
investments
Receivables
2008
Peso
Company
Long-term debt
Fixed
Peso
Group
Short-term cash
investments
Receivables
2009
Maturity date
Maturity date
Various
Date of sale
Fixed at the date of investment
Fixed at the date of sale
Fixed rate based on 5-years T-bill
+ 0.50% spread
Fixed rate based on PDST-R1
+ 0.50% spread
Various
Rate Fixing Period
Interest terms (p.a.)
Maturity date
Maturity date
Various
Date of sale
Fixed at the date of sale
Fixed rate based on 5-years T-bill
+ 0.50% spread
Fixed rate based on PDST-R1
+ 0.50% spread
Various
Rate Fixing Period
Interest terms (p.a.)
180,000
P
= 330,000
P
= 150,000
84,163
251,043
P
= 1,085,795
P
= 750,589
Nominal Amount
150,000
P
= 275,000
30,000
P
= 55,000
P
= 25,000
84,163
193,235
P
= 1,027,987
P
= 750,589
< 1 year
60,000
P
= 110,000
P
= 50,000
237,510
182,459
P
= 1,087,552
237,510
364,639
P
= 1,269,732
P
= 125,000
P
= 667,583
< 1 year
P
= 667,583
Nominal Amount
150,000
P
= 275,000
180,000
P
= 330,000
P
= 150,000
84,163
237,487
P
= 1,072,239
–
57,808
P
= 57,808
P
= 125,000
P
= 750,589
Carrying Value
150,000
P
= 275,000
P
=–
1 to 5 years
90,000
P
= 165,000
P
= 125,000
237,510
320,144
P
= 1,225,237
–
182,180
P
= 182,180
P
= 75,000
P
= 667,583
P
=–
1 to 5 years Carrying Value
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:
25. 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 its premier credit rating and
allows it the financial flexibility, while providing it sufficient cushion to absorb cyclical industry risks. 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 cash investments. The Group considers as capital the
equity attributable to equity holders of the Parent Company. As of December 31, 2009 and 2008, the Group
had the following ratios:
Long-term debt
Less:
Net debt
Equity attributable to equity holders of the
Parent Company
Debt to equity
Net debt to equity
2009
2008
(In Thousands)
P
= 275,000
P
= 330,000
667,583
237,510
(630,093)
750,589
84,163
(504,752)
4,143,348
6.6%
3,975,562
8.3%
(15.2%)
(12.7%)
26. Segment Information
The business segments where the Group operates are as follows:
Core business:
Commercial development - sale of commercial lots
Residential - development and sale of high-end residential lots
Shopping center - 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 income from investment activities
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.
150
150
Catalyzing Change
Business Segments
The following tables regarding business segments present assets and liabilities as of December 31, 2009
and 2008 and revenue and expense information for the three year period ended December 31, 2009.
2009
Commercial Residential Shopping Corporate
Centers Business
Development (see Note 28)
Others
Total
(In Thousands)
Revenue
Sales to external customers
Equity in net earnings of
associates
Total revenue
Costs and expenses
Operating profit (loss)
Interest income
Interest expense
Other income
Provision for income tax
Net income (loss)
Net income (loss)
attributable to:
Equity holders of Cebu
Holdings, Inc,
Other Information
Segment assets
Deferred tax assets
Total assets
Segment assets
Deferred tax liabilities
Total liabilities
Segment additions to
property and equipment
and investment
properties
Depreciation and
amortization
Provision (reversal) of
impairment losses
P
= 137,107
P
= 276,838
P
= 696,770
P
= 72,782
P
= 1,145 P
= 1,184,642
–
137,107
116,068
21,039
12,909
(710)
362
(2,668)
P
= 30,932
–
–
276,838
696,770
320,466
349,632
(43,628)
347,138
4,378
9,610
(4,924)
(10,751)
908
6,254
10,368
(83,663)
(P
= 32,898) P
= 268,588
–
72,782
21,780
51,002
–
–
7,094
(2,647)
P
= 55,449
19,687
20,832
24,815
(3,983)
24,751
(5,675)
17,689
(25,310)
P
= 7,472
19,687
1,204,329
832,761
371,568
51,648
(22,060)
32,307
(103,920)
P
= 329,543
P
= 19,246
11,686
P
= 30,932
(P
= 32,898) P
= 268,588
–
–
(P
= 32,898) P
= 268,588
P
= 42,274
13,175
P
= 55,449
P
= 4,982
2,490
P
= 7,472
P
= 302,192
27,351
P
= 329,543
P
= 1,764,634
–
9,276
P
= 1,773,910
P
= 307,398
16,102
P
= 323,500
P
= 149,915 P
= 2,349,679
–
–
–
1,630
P
= 149,915 P
= 2,351,309
P
= 343,066 P
= 646,016
(10,792)
21,201
P
= 332,274 P
= 667,217
P
= 257,519 P
= 963,822
–
278,107
(175)
(1,191)
P
= 257,344 P
= 1,240,738
P
= 44,359 (P
= 31,887)
–
(2,778)
P
= 44,359 (P
= 34,665)
P
= 5,485,569
278,107
9,540
P
= 5,773,216
P
= 1,308,952
23,733
P
= 1,332,685
P
= 494
P
= 3,427
P
= 188,806
P
= 1,584
P
= 806
P
= 195,117
P
= 1,491
P
= 6,793
P
= 111,916
P
= 14,600
P
= 1,001
P
= 135,801
P
=–
P
=–
P
= 500
P
=–
(P
= 3,124)
(P
= 2,624)
151
151
2008
Commercial
Development
Residential
(see Note
28)
P
= 552,667
P
= 183,270
P
= 586,427
P
= 74,520
–
552,667
321,819
230,848
16,902
(3,007)
1,673
(53,343)
P
= 193,073
–
183,270
210,521
(27,251)
7,303
(1,767)
783
7,474
(P
= 13,458)
–
586,427
266,277
320,150
16,070
(553)
4,452
(90,135)
P
= 249,984
–
74,520
22,323
52,197
–
–
3,552
(4,956)
P
= 50,793
14,909
17,726
54,593
(36,867)
25,718
(5,837)
8,968
(31,081)
(P
= 39,099)
14,909
1,414,610
875,533
539,077
65,993
(11,164)
19,428
(172,041)
P
= 441,293
P
= 164,355
28,718
P
= 193,073
(P
= 13,458)
–
(P
= 13,458)
P
= 249,984
–
P
= 249,984
P
= 38,727
12,066
P
= 50,793
(P
= 40,129)
1,030
(P
= 39,099)
P
= 399,479
41,814
P
= 441,293
P
= 210,097 P
= 921,534
–
293,962
(266)
316
P
= 209,831 P
= 1,215,812
P
= 50,660 P
= 104,648
–
(356)
P
= 50,660 P
= 104,292
P
= 5,356,711
293,962
7,910
P
= 5,658,583
P
= 1,368,043
22,808
P
= 1,390,851
Revenue
associates
Total revenue
Costs and expenses
Interest income
Interest expense
Other income
Net income (loss)
Net income (loss)
attributable to:
Holdings, Inc,
Other Information
Segment assets
Deferred tax assets
Total assets
Segment liabilities
Total liabilities
and investment
properties
Depreciation and
amortization
Provision for impairment
losses
P
= 1,682,281
–
6,388
P
= 1,688,669
P
= 241,716
17,179
P
= 258,895
Shopping Corporate
Centers Business
(In Thousands)
P
= 172,959 P
= 2,369,840
–
–
–
1,472
P
= 172,959 P
= 2,371,312
P
= 395,183
P
= 575,836
(13,633)
19,618
P
= 381,550
P
= 595,454
Others
Total
P
= 2,817 P
= 1,399,701
P
= 8,587
P
= 3,952
P
= 550,124
P
= 16,440
P
= 1,052
P
= 580,155
P
= 5,539
P
= 2,986
P
= 89,789
P
= 18,084
P
= 795
P
= 117,193
P
=–
P
=–
P
=–
P
=–
P
= 2,325
P
= 2,325
Commercial development sales made to a significant customer amounted to P
= 319.1 million.
2007
Revenue
associates
(Forward)
152
152
Catalyzing Change
Commercial
Development
Residential
(see Note
28)
P
= 365,898
P
= 221,817
P
= 534,402
P
= 56,871
–
–
–
–
Shopping Corporate
Centers Business
(In Thousands)
Others
Total
P
= 7,237 P
= 1,186,225
23,695
23,695
Commercial
Development
Total revenue
Costs and expenses
Interest income
Interest expense
Other income
Net income (loss)
Net income (loss)
attributable to:
Holdings, Inc,
Other Information
Segment assets
Investment in an associate
Total assets
Segment liabilities
Total liabilities
and investment
properties
Depreciation and
amortization
Provision for impairment
losses
Residential
(see Note
28)
P
= 365,898
290,187
P
= 75,711
22,080
(1,780)
3,587
(15,474)
P
= 84,124
P
= 221,817
301,631
(P
= 79,814)
2,265
(4,490)
7,457
15,122
(P
= 59,460)
Shopping Corporate
Centers Business
(In Thousands)
P
= 534,402
P
= 56,871
245,570
17,861
P
= 288,832
P
= 39,010
11,994
–
(3,020)
–
(140)
–
(60,831)
(2,166)
P
= 236,835
P
= 36,844
P
= 53,997
30,127
P
= 84,124
(P
= 59,460)
–
(P
= 59,460)
P
= 236,835
–
P
= 236,835
P
= 1,560,785
–
P
= 1,560,785
P
= 246,145
35,777
P
= 281,922
P
= 28,097
8,747
P
= 36,844
P
= 186,834 P
= 2,187,794 P
= 417,618
–
–
–
P
= 186,834 P
= 2,187,794 P
= 417,618
P
= 402,761
P
= 529,050
P
= 39,069
(14,147)
(2,845)
(18)
P
= 388,614
P
= 526,205
P
= 39,051
Others
Total
P
= 30,932 P
= 1,209,920
11,309
866,558
P
= 19,623
P
= 343,362
20,109
56,448
(27,885)
(37,175)
4,473
15,377
(21,913)
(85,262)
(P
= 5,593) P
= 292,750
(P
= 7,694)
2,101
(P
= 5,593)
P
= 251,775
40,975
P
= 292,750
P
= 783,665
191,024
P
= 974,689
P
= 118,557
(9,812)
P
= 108,745
P
= 5,136,696
191,024
P
= 5,327,720
P
= 1,335,582
8,955
P
= 1,344,537
P
= 635
P
=–
P
= 370,770
P
= 61,516
P
= 14,308
P
= 447,229
P
= 495
P
=–
P
= 74,529
P
= 19,912
P
= 6,565
P
= 101,501
P
=–
P
=–
P
= 650
P
=–
P
=–
P
= 650
27. Leases
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
2009
2008
(In Thousands)
P
= 47,039
P
= 31,299
77,346
44,977
P
= 124,385
P
= 76,276
Contingent rent recognized in 2009, 2008 and 2007 amounted to P
= 81.0 million, P
= 81.7 million and
P
= 97.0 million, respectively.
153
153
28. Joint Development Agreement
The Parent Company entered into a Joint Development Agreement (the Project) with Coastal Highpoint
Ventures, Inc. (CHVI) on April 5, 2004, where both jointly undertake the development of a portion of the CHVI
Property with an aggregate area of approximately 47.16 hectares more or less into a primarily residential
community with mixed support uses such as a school and a commercial area, called Amara. In order to
undertake the aforesaid development, the Parent Company has agreed to finance the development of the
Project, and CHVI has agreed to contribute the land, and to distribute and allocate among themselves the
developed property corresponding to their respective interests in the Project.
The Project consists of the planning of the Project Site and development of a subdivision thereon into an
integrated and controlled community primarily for residential uses and supplemented by educational,
commercial and recreational uses in such a manner contemplated in the master plan and the Site
Development Plan, as well as the marketing, sale and/or lease of Saleable Lots therein.
The Amara Project started in 2005. The amounts disclosed in segment information under residential relates
to this joint development agreement (see Note 26). Capital commitments amounted to P
= 303.0 million and
P
= 419.4 million as of December 31, 2009 and 2008 respectively.
29. Philippine Economic Zone Authority (PEZA) Registration
CPVDC is 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.
30. Notes to Consolidated Statements of Cash Flows
Noncash investing activities in 2009 follows (in thousands):
Reclassification of land and improvements to subdivision land
for sale and development due to the commencement of development of
land and improvements
Elimination of intercompany profit arising from a transaction on account
(see Note 12)
P
= 232,189
35,542
P
= 267,731
Details of the decrease in consolidated noncash net assets (in thousands) resulting from the deconsolidation
of AiO in 2008 (see Note 10) follows:
154
154
Assets
Other current assets
Construction-in-progress
Total Assets
P
= 68
10,633
P
= 10,701
Liabilities
Due to related parties
P
= 10,701
Catalyzing Change
Corporate Headquarters
Publication Team
7/F Cebu Holdings Center
Adviser
Cardinal Rosales Avenue, Cebu Business Park
Francis O. Monera, President
Cebu City 6000 Philippines
Tel (6332) 231 5301
Editorial Team
Fax (6332) 231 5300
Vera R. Alejandria, Corporate Communication Manager
Noel F. Alicaya, Control and Analysis Manager
Stakeholder Information
Elson R. Homez, Head - Technical Support Group and Property For inquiries from institutional investors, analysts, the financial
and business community on the financial report and feedback
Jeanette A. Japzon, Corporate Communication Officer
Management Division
from our various stakeholder groups on the sustainability report,
Contributors
please write or call:
Sustainability Technical Working Group
Cebu Holdings, Inc.
7/F Cebu Holdings Center
Photography
Cardinal Rosales Avenue, Cebu Business Park
Raul V. Arambulo - Landscape / Portraiture
Cebu City 6000 Philippines
Wig Tysmans - Portraiture
Tel (6332) 231 5301
Operations
Fax (6332) 231 5300
Levi L. Lopez
Ernest G. Ocasiones
Fraulein T. Quijada
or
4/F Tower One and Exchange Plaza
Melvin S. Tugbo
Kayee C. Villas
Ayala Triangle, Ayala Avenue
Makati City 1226 Philippines
Concept, Content Design and Layout
Tel (632) 841 5575
Cebu Holdings, Inc. and K2 Interactive (Asia) Inc.
Fax (632) 848 5382
www.cebuholdings.com
[email protected]
Shareholder Services and Assistance
For inquiries regarding dividend payments, change of address and
account status, lost or damaged stock certificates, please write or
call:
Stock Transfer Service, Inc.
34/F Unit D
Rufino Pacific Tower
6784 Ayala Avenue
Makati City 1226 Philippines
Tel (632) 403 2410
(632) 403 2412
Fax (632) 403 2414
[email protected]
101
101
102
102
Catalyzing Change

Cebu Holdings Inc. 2009 Integrated Annual and Sustainability Report

Transcription

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