COVER SHEET

Transcription

COVER SHEET

8 6 1 8 8
COVER SHEET
C I T Y L A N D ,
SEC Registration Number
I N C .
(Company’s Full Name)
2 n d
a n d
3 r d
F l o o r s ,
C o n d o m i n i u m
1 0 ,
d e
S t r e e t ,
l a
C o s t a
V i l l a g e
M a k a t i
C i t y l a n d
T o w e r
I ,
1 5 6
H . V .
S a l c e d o
C i t y
(Business Address: No. Street City/Town/Province)
Rufina C. Buensuceso
893-6060
(Contact Person)
(Company Telephone Number)
1 2
3 1
Month
Day
1 2 - 1
Month
(Form Type)
(Calendar Year)
Day
(Annual Meeting)
(Secondary License Type, If Applicable)
CFD
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders
Domestic
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 12-1
REGISTRATION STATEMENT UNDER THE SECURITIES REGULATION CODE
1. SEC Identification Number
86188
............
2. CITYLAND, INC.
........................................................................................
Exact name of registrant as specified in its character
3. MAKATI CITY, PHILIPPINES
...............................................................
Province, country or other jurisdiction of
incorporation or organization
4. 000-662-829
..................................................
BIR Tax Identification Number
5. REAL ESTATE DEVELOPER
.....................................................................
General character of business of registrant
6. Industry Classification Code:
(SEC Use only)
7. 2F Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo Village, Makati City
1226
Telephone No.: (632) 893-6060
FAX No.: (632) 892-8656
...........................................................................................................................................................
Address, including postal code, telephone number, FAX number including area code of
registrant's principal office
8. ...........................................................................................................................................................
If registrant is not resident in the Philippines, or its principal business is outside the Philippines,
state name and address including postal code, telephone number and FAX number, including
area code and email address of resident agent in the Philippines.
9. Fiscal Year Ending Date (Month and Day) : December 31
.....................
COMPUTATION OF REGISTRATION FEE
Title of each class of securities to be Amount to be registered
registered
Short Term Commercial Papers
Php 1,100,000,000
1% Legal Research Fee
Total
Amount of
registration fee
Php 837,500
8,375
Php 845,875
PRELIMINARY PROSPECTUS
CITYLAND, INC.
(A corporation organized under Philippine laws)
Registration of Philippine Peso Php 1,100,000,000
Short-Term Commercial Papers
Cityland, Inc. (hereinafter referred to as “CI”, the
“Company” or “Issuer”) is offering for public
sale at face value, up to Php 1,100,000,000 worth
of its Short-Term Commercial Papers (hereinafter
referred to as “STCPs” or the “Offered STCPs”)
to be traded over-the-counter
The date of this Prospectus is August 28, 2012
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION BUT HAS NOT YET BEEN DECLARED EFFECTIVE. NO
OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART
OF THE PURCHASE PRICE CAN BE ACCEPTED OR RECEIVED UNTIL
THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND
ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT
OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME PRIOR
TO NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE EFFECTIVE
DATE. AN INDICATION OF INTEREST IN RESPONSE HERETO
INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY.
RISK DISCLOSURE STATEMENT
General Risk Warning
The price of securities can and does fluctuate, and any individual security may experience
upward or downward movements, and may even become valueless. There is an inherent risk
that losses may be incurred rather than profit made as a result of buying and selling securities.
Past performance is not a guide to future performance.
There is an extra risk of losing money when securities are bought from smaller companies.
There may be a big difference between the buying price and the selling price of these securities.
An investor deals in a range of investments each of which may carry a different level of risk.
Prudence Required
This risk disclosure does not purport to disclose all the risks and other significant aspects of
investing in these securities. An investor should undertake his or her own research and study on
the trading of securities before commencing any trading activity. He / she may request
information on the securities and the issuer thereof from the Commission which are available to
the public.
Professional Advice
An investor should seek professional advice if he or she is uncertain of, or has not understood
any aspect of the securities to invest in or the nature of risks involved in trading of securities
specially those high risk securities.
CITYLAND, INC.
(A corporation organized under Philippine laws)
Registration of Php 1,100,000,000 worth of Short-Term Commercial Papers for public sale at face
value.
The Company is registering Php 1,100,000,000 worth of Short-Term Commercial Papers which it is
offering for public sale at face value. The gross proceeds that will be raised from the offering is
Php 1,100,000,000 less registration fees, taxes, professional fees and other related expenses.
The net proceeds from the offering of the Short-Term Commercial Papers is Php1,093,565,125
which is intended to be used as follows (in order of priority):
1) Project – Related Costs
2) Payment of Maturing Loans/ Notes
3) Interest Expense
Net Proceeds
Php
676,000,000
375,655,125
41,910,000
1,093,565,125
The Company is organized under the laws of the Republic of the Philippines. Its principal office is
located at 2nd Floor Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo
Village, Makati City. Its telephone number is (632) 893-60-60.
Unless otherwise stated, the information contained in this document have been supplied by the
Company which accepts full responsibility for the accuracy of the information and confirms, after
having made all reasonable inquiries, that to the best of its knowledge and belief, there are no
material facts, the omission of which would make any statement in this document misleading in any
material respect. Neither the delivery of this document nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is correct as of any time
subsequent to the date hereof.
No dealer, salesman or any other person has been authorized by the Company to issue any
advertisement or to give any information or make any representation in connection with the sale of
the Short-Term Commercial Papers other than those contained in this document and, if issued, given
or made, such advertisement, information or representation must not be relied upon as having been
authorized by the Company.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE AND SHOULD BE REPORTED IMMEDIATELY TO THE
SECURITIES AND EXCHANGE COMMISSION.
TABLE OF CONTENTS
Page
Glossary……………………………………………………………………………………..
1
Summary Information ………………………………………………………………………
2
Risks Factors ………………………………………………………………………………..
4
Use of Proceeds……………………………………………………………………………..
7
Determination of the Offering Price ………………………………………………………..
10
Offering Period……………………………………………………………………………...
11
Plan of Distribution ……………….……….……….……….……….……….……………..
12
Description of Registrant’s Securities……….……….……….……….……….…………...
13
Market Information For Securities Other Than Common Equity ……….……….…………
16
Market For Issuer’s Common Equity and Related Stockholders’ Matters ……….………...
17
Interests of Named Experts and Independent Counsels ……….……….……….…………..
19
Information With Respect to the Registrant
Business ……….……….……….……….……….……….……….……….…………...
Properties ……….……….……….……….……….……….……….……….………….
Legal Proceedings……….……….……….……….……….……….……….………….
Management’s Discussion and Analysis or Plan of Operation ……….……….……….
Changes in and Disagreements With Accountants On Accounting and Financial
Disclosure ……….……….……….……….……….……….……….……….…………
Directors and Executive Officers……….……….……….……….……….……………
Executive Compensation ……….……….……….……….……….……….…………...
Security Ownership of Certain Record and Beneficial Owners and Management …….
Certain Relationships and Related Transactions ……….……….……….……………..
Corporate Governance ………………………………………………………………….
20
33
35
37
51
51
56
56
58
59
Other Expenses Of Issuance and Distribution ……….……….……….……….…………...
60
Financial Information ……….……….……….……….……….……….……….………….
**
Exhibits ……….……….……….……….……….……….……….……….……….……….
**
Signatures ……….……….……….……….……….……….……….……….……………...
**
1
GLOSSARY
In this prospectus, unless the context otherwise requires, the following words or expressions shall
have the following corresponding meanings:
“Articles”
The Articles
Company
of
Incorporation
of
the
“Board”
The Incumbent Members of the Board of
Directors of the Company
“CI” or “Cityland” or “Company” or
“Issuer” or “Registrant”
Cityland, Inc.
“HLURB”
Housing and Land Use Regulatory Board
“IAS”
International Accounting Standards
“IFRS”
International Financial Reporting Standards
“Offer”
The
offering
for
public
sale
Php 1,100,000,000 worth of STCPs.
“Offering Period”
The offering period shall commence upon
the approval of the SEC permit to sell the
STCPs and ends upon the expiry of the SEC
permit to sell the STCPs.
“Offering Price”
The offering price is 100% of the face value
of the STCPs.
“PAS”
Philippine Accounting Standards
“PDST-F”
Philippine Dealing System Treasury- Fixing
“PFRS”
Philippine Financial Reporting Standards
“Php”, “Pesos”
The Philippine currency
“SEC”
Securities and Exchange Commission
“SGV”
SyCip, Gorres, Velayo and Co.
“SRC”
Securities Regulations Code
“STCPs”, Offered “STCPs”
Short - Term Commercial Papers
of
2
SUMMARY INFORMATION
THE COMPANY
Cityland, Inc. is a domestic corporation which is duly organized and existing under and by
virtue of the laws of the Philippines since May 15, 1979 with the primary purpose of engaging in real
estate development.
The Company's primary purpose is to acquire and develop suitable land sites for residential,
office, commercial, institutional and industrial uses. Its projects include medium to high-rise office,
commercial and residential condominiums located in Mandaluyong City, Pasig City, City of Manila,
Makati City and Tagaytay City; and residential subdivisions in Tagaytay City and Cavite. It completed
Brentwood Mansion, a residential condominium located at Santolan, Pasig City and The Manila
Residences, a commercial, office and residential condominium located at Taft Ave., Malate, City of
Manila. It has also completed Cityland Vito Cruz Tower 2 together with City & Land Developers,
Inc., a commercial, office and residential condominium located at Pablo Ocampo Sr. Avenue
(formerly Vito Cruz), City of Manila. Also together with Cityplans, Inc., it developed Pasig Royale
Mansion, Oxford Mansion and Windsor Mansion, all located at Santolan Road, Pasig City.
As to residential subdivision, it has completed Tagaytay Executive Village located at
Barangay San Jose (near Rotonda) and Tagaytay Country Homes 2B and 2C situated at Barangay
Neogan, Tagaytay City.
It is currently developing Tagaytay Prime Residences, a 21-storey condominium project
consisting of two (2) buildings located Brgy. San Jose, Tagaytay City and The Manila Residences
Tower II, a 39-storey office, commercial and residential condominium located at Taft Ave, Manila
City.
Detailed discussion of the Company and its Business is found under “Information with
Respect to the Registrant”.
RISKS OF INVESTING
Before making an investment decision, investors should carefully assess the risks associated with an
investment in this Offer. These include the internal risks such as credit risk, interest rate risk, market
risk and liquidity risk; and external ones arising from the political and economic situation, real estate
industry outlook and market competition. These are discussed more extensively under “Risks
Factors”.
SUMMARY FINANCIAL INFORMATION
The selected financial information below were derived from the audited financial statements as of and
for the years ended December 31, 2011 and 2010 and unaudited financial statements as and for the six
months ended June 30, 2012. The audited financial statements were audited by SyCip Gorres, Velayo
& Co., in accordance with the Philippine Generally Accepted Accounting Principles. The information
should be read in conjunction with, and is qualified in its entirety be reference to such financial
statements and related notes thereto and “Management's Discussion and Analysis or Plan of
Operations”.
3
As of and For the Years Ended
December 31
(Audited)
2010
2011
June 30
(Unaudited)
2012
INCOME STATEMENT
Revenues
3,182,898,262
2,714,604,009
1,306,435,068
Expenses
2,155,726,867
1,877,170,148
937,028,103
Income before tax
1,027,171,395
837,433,861
369,406,965
822,337,474
726,544,436
313,120,886
11,476,423,855
11,853,788,813
11,748,509,312
Total Liabilities
5,062,982,045
4,912,767,350
4,590,221,271
Stockholders’ Equity
6,413,441,810
6,941,021,463
7,194,288,041
Net Income
BALANCE SHEET
Total Assets
PER SHARE (Php)
Earnings per share
* Annualized
Php 15.49
Php10.12
Php 8.64*
4
RISKS FACTORS
The risk factors in the order of importance are as follows:
REFINANCING RISKS
The Company is primarily engaged in real estate development. Risk Factors are: the
moderately aggressive debt level of the Company's borrowings being short-term in nature
increase the possibility of refinancing risks. This debt mix in favor of short-term borrowings is
a strategy which the Company adopted to take advantage of lower cost of money for short-term
loans versus long-term loans. Because the Company has the flexibility to convert its short-term
loans to a long-term position by drawing down its credit lines with several banks or sell its
receivables, refinancing risk is greatly reduced.
The Company manages such refinancing risks by improving the acid-test and current ratio at
0.99:1 and 1.64:1 in June 2012 from 0.88:1 and 1.59:1 in December 2011.
CREDIT RISK
This is defined as the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation.
The financial instruments which may be the subject of credit risk are the installment contracts
receivables and other financial assets of the Company. The corresponding management
strategies for the aforementioned risks are as follows:
1. The credit risk on the installment contracts receivables may arise from the buyers
who may default on the payment of their amortizations. The Company manages this
risk by dealing only with recognized, credit worthy third parties. Moreover, it is the
Company's policy to subject customers who buy on financing to credit verification
procedures. Also, receivable balances are monitored on an on-going basis with the
result that the Company's exposure to bad debts is insignificant.
2. The credit risk on the financial assets of the Company such as cash and cash
equivalents, short-term cash investments, financial assets at fair value through profit
or loss and available for sale investments may arise from default of the counterparty.
The Company manages such risks by its policy to enter into transactions with a
diversity of creditworthy parties to mitigate any significant concentration of credit
risks. As such, there are no significant concentrations of credit risks in the Company.
INTEREST RATE RISK
This is the risk arising from uncertain future interest rates.
The Company's financial instruments are:
1. The Company's financial assets mainly consist of installment contract receivables,
cash and cash equivalents and short-term investments. Interest rates on these assets
are fixed at their inception and are therefore not subject to fluctuations in interest
rates.
2. For the financial liabilities, the Company's loans payable to bank are subject to
periodic repricing of interest rates. The Company manages this risk by entering into
5
loan agreements with a ceiling on repricing rates (current ceiling from lenders is
based on benchmark rates (PDSTF) plus 150 basis points). In this way, the Company
can review and analyze the future effects of repricing to the operations and position
of the Company, thus mitigating interest rate risk. On the other hand, short-term
commercial papers bear fixed interest rates, thus are not exposed to fluctuations in
interest rates.
MARKET RISK
This is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices. Financial instruments which rely their value on market
factors are subject to market risk.
The available for sale investments are exposed to market risk. There is a risk for a decline in
the value due to changes in the market. The exposure however, is negligible because the
amount of the said investment is insignificant as compared to the financial assets of the
Company.
LIQUIDITY RISK
This is the current and prospective risk to earnings or capital from a company's inability to
meet it obligations when they come due without incurring unacceptable losses.
The Company's treasury has a well-monitored funding and settlement management plan. The
following is the liquidity risk management framework maintained by the Company:
1. Asset- Liability Management: Funding sources are abundant and provide a
competitive cost advantage. The Company also holds financial assets for which there
is a liquid market and are, therefore, readily saleable to meet liquidity needs.
2. Conservative Liability Structure: Funding is widely diversified. There is little
reliance on wholesale funding services or other credit-sensitive fund providers. The
company accesses funding across a diverse range of markets and counterparties.
3. Excess Liquidity: The Company maintains considerable excess liquidity to meet a
broad range of potential cash outflows from business needs including financial
obligations.
4. Funding Flexibility: The Company has an objective to maintain a balance between
continuity of funding and flexibility through the use of loans from banks and STCPs.
As such, the Company addresses risk on liquidity by maintaining committed
borrowing facilities in the form of bank lines and a established record in accessing
these markets.
ECONOMIC FACTORS
The Company’s business consists mainly of providing office and housing units in the
Philippines and the results of its operations will be influenced by the general conditions of the
Philippine economy. Any economic instability or failure to register improved economic
performance in the future may adversely affect the Company’s operations and eventually its
financial performance.
6
POLITICAL STABILITY
The Company’s business like all other businesses may be influenced by the political situation
in the country. Any political instability in the future could have a material adverse effect in
the Company’s business and the results of operations.
INDUSTRY OUTLOOK
The real estate industry is characterized by boom-bust cyclical pattern exhibited in the past
couple of decades where the industry normally goes through years of robust growth following
years of slowdown. The Company believes that the industry is in the boom cycle.
COMPETITION
The demand for housing especially in the medium-cost category has moderately stepped up.
The situation has attracted both old and new players to develop projects that cater to this
rising demand. As a result of the foregoing, competition in the area of medium-cost
development is expected to intensify. The Company believes that it is in a better position to
cope with the competition because of the affordability of the projects it offers in the market.
The following preventive measures are being undertaken by the Registrant to manage the
aforementioned risks:
1. Conducting assessments of the economic and political situations of the country as well as new
developments in the industry. The procedures involved in gathering of information of
economic indicators and political events as well as being aware of the new developments in
the industry is through media, business conferences, economic briefings and other sources.
2. Maintaining our competitive edge by keeping up to date with the technological advances in
the construction industry, improving our marketing strategies and continuously updating the
skills of our personnel.
Note: STCPs are not insured with the Philippine Deposit Insurance Corporation (PDIC).
7
USE OF PROCEEDS
The gross proceeds that will be derived from the offering is Php 1,100,000,000 less
registration fees, taxes, professional fees and other related expenses.
The net proceeds from the offering of the Short-Term Commercial Papers is
Php1,093,565,125 which is intended to be used as follows (in order of priority):
1) Project – Related Costs
3) Interest Expense
Net Proceeds
676,000,000
375,655,125
41,910,000
1,093,565,125
Php
The total actual and estimated expenses amounting to Php 6,434,875 is shown under “Other
Expenses of Issuance and Distribution on page 60.
1) Project-related costs
The proceeds from the offering will be used to partially finance the construction of Tagaytay
Prime Residences and The Manila Residences II.
Tagaytay Prime Residences consists of two (2) condominium buildings rising 21-storey high,
situated at the Tagaytay Rotunda, Brgy. San Jose, Tagaytay City. Its percentage of completion as of
June 30, 2012 is 58.58%
The Manila Residences II is a 39- storey office, commercial and residential condominium
located along Taft Ave. Its percentage of completion as of June 30, 2012 is 17.02%.
The utilization of the P 676 million project-related costs is broken down as follows:
Project
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total
(Nov. 2012-Jan. 2013) (Feb. 2013-Apr. 2013) (May 2013-July 2013) (Aug. 2013-Oct. 2013)
Tagaytay Prime Residences
P 87 million
The Manila Residences II
Total
P
87 million
P
87 million
P
87 million P 348 million
P 82 million
P 82 million
P
82 million
P
82 million P 328 million
P 169 million
P 169 million
P 169 million
P 169 million P 676 million
The above Php 676 million project costs is just part of the Php 1,722 million total estimated
development cost to complete Tagaytay Prime Residences and The Manila Residences II projects. The
balance of Php 1,046 million will be financed through internally-generated funds. The components of
the total estimated development cost is as follows:
Project
Labors & Materials
Supplied by
Contractors
Materials Supplied /
Permits & Licenses
by Owner
Estimated
Development Cost
Php 386 M
Php 282M
Php 668M
Php 575M
Php 479M
Php 1,054M
Labor & Materials Supplied by Contractors- These are for civil, architectural, electrical,
mechanical, plumbing, structural works, fire protection, elevator, garbage chute, sewage treatment,
etc.
8
Materials Supplied / Permits & Licenses by Owner- These are for the purchase of ownerfurnished materials like rebars, cements, CHB, pipes, electrical wires, etc. and permits and licenses
paid to government agencies like building permit/ local clearance, occupancy permit and others.
Extent of financial commitment to complete the project: The total credit line available for the
Company from banks is P2.30B all of which is unavailed. This total P2.30B credit line were all made
available to the company by the following banks: Rizal Commercial Banking Corporation, Security
Bank, Metrobank and United Coconut Planters Bank.
The Php 376M proceeds for the payment of loans/ notes are all estimated to be allocated for the
payment of maturing Commercial Papers/ Promissory Notes.
Breakdown of Outstanding Loans/ Notes as of June 30, 2012:
Financial Institution
Short-term Commercial Papers *
Short-term Promissory Notes **
Amount
Interest Rate
966,300,000
-various491,267,927 - variousPhp 1,457,567,927
Maturity Date
-various-various-
.
*(a) Breakdown according to type of investors as of June 30, 2012:
Individual:
Corporate:
Total:
Amount
P 794,450,000
P 171,850,000
P 966,300,000
Percentage
82.22%
17.78%
100.00%
(b) Breakdown according to SEC Permit to Sell as of June 30, 2012:
Dated November 2, 2010
Dated October 21, 2011
:
:
P 55,550,000.00
P 910,750,000.00
P 966,300,000.00
** Short-term Promissory Notes are covered by a contract of guaranty with Home Guaranty
Corporation. The guaranty covers the unpaid principal due on the outstanding promissory
notes and unpaid interest thereon up to 10% per annum.
3) Interest Expense
Interest expense pertains to this P 1.1B STCP issue computed on the average STCP rate as of
June 30, 2012 as shown below:
Lender
New STCP
Principal
P 1,100,000,000
Rate
Term
3.81% One year
Interest
P 41.91M
In the event of any deviation/ adjustment in the planned uses of proceeds, the Company shall
inform the Commission and STCP investors within thirty (30) days prior to its implementation.
9
Others:
1) If proceeds are substantially less than maximum proceeds, the Company will tap existing lines
with the banks.
2) If material amount of other funds are necessary to accomplish purpose(s), the Company will
also avail from the existing lines with banks. The total credit line available for the Company
from banks is P2.30B all of which is unavailed. This total P2.30B credit line were all made
available to the company by the following banks: Rizal Commercial Banking Corporation,
Security Bank, Metrobank and United Coconut Planters Bank.
3) The proceeds from this offering will not be used to reimburse any officer, director, employee
or shareholder.
4) The proceeds from the offering is not intended to acquire properties within the next twelve
months.
10
DETERMINATION OF THE OFFERING PRICE
The Offering Price is One Hundred Percent (100%) of the face value.
The interest rates are fixed and are determinable at the time of issuances of the STCPs. The
interest rates are based on the prevailing market rates at the time of issue.
11
OFFERING PERIOD
The offering period will commence upon approval of the SEC of the STCPs and will end upon
the expiry of the Permit to Sell the STCPs.
12
PLAN OF DISTRIBUTION
The Short-Term Commercial Papers will be offered by the Company to local small investors,
institutional buyers and general public as follows:
Institutional Buyers
General Public
% to Total
30 %
70 %
Amount
330,000,000
770,000,000
Php 1,100,000,000
The projected STCPs to be offered within the offering period is as follows:
Within the First Quarter
Within the Second Quarter
Within the Third Quarter
Within the Fourth Quarter
Php
Php
Amount
275,000,000
275,000,000
275,000,000
275,000,000
1,100,000,000
The securities to be registered are to be offered through the Company's salesmen duly licensed by the
Commission. The Company's salesmen are registered and authorized to act as Fixed Income Market
Salesman with a Certificate of Registration issued by the SEC- Company Registration and Monitoring
Department (CRMD). Please see Exhibit 18 for the Certificate of Registration of Salesmen. The
monthly compensation of these salesmen will range from Php18,000.00 to Php62,000.00. They are
also entitled to incentives and bonuses.
As in the previously approved issues, the Company requested for exemption from the
underwriting agreement as it has demonstrated its capability to sell the STCPs through its own selling
efforts as mentioned in the foregoing paragraph.
Upon approval of the Registration Statement and the request for exemptive relief, the
Company will provide a statement that its request for exemption from the submission of underwriting
agreement has been granted.
13
DESCRIPTION OF REGISTRANT'S SECURITIES
1. Total Issue Amount
The issue amount is ONE BILLION ONE HUNDRED MILLION PESOS (Php1,100,000,000)
outstanding STCPs at any given time within the validity period granted by the SEC.
2. Provisions:
a.) Instrument
The instrument is Short-Term Commercial Papers (STCPs). STCPs constitute direct,
unconditional and general obligations of the Issuer. The STCPs maybe in registered or bearer
form.
b.) Issue Date
The issue dates can be one or more dates to commence within the validity period granted by
the Securities and Exchange Commission.
c.) Term/Maturity
The STCPs shall have a term/maturity not exceeding 365 days from issue date.
d.) Interest Rates
The interest rate(s) will be fixed and payable in arrears either monthly, quarterly, semiannually or annually or at the end of the term based on the prevailing market interest rates at
the time of issuances. The average interest rate as of June 30, 2012 is 3.8110%.
e.) Redemption
Redemption shall be on a one-time payment at the end of each term.
f.) Minimum Denomination Purchase
The minimum amount of STCP instruments shall not be lower than Php 300,000. The
Issuer shall cause the STCP certificates to be made available to the purchaser upon full
payment of the offering price.
g.) Penalty Interest
Should any amount payable by the Issuer under the STCPs, whether for principal, interest or
otherwise, be not paid on due date, the Issuer shall pay in addition to the computed interest,
liquidated damages equivalent to one percent (1%) of the outstanding amount of the note, plus
attorney’s fees and cost of collection in case of suit, an amount equal to Php 2,000 or 5% of
the principal or interest whichever is higher. The Issuer further agrees that any action for the
STCPs shall be instituted in the proper court of Makati City or the proper Regional Trial
Court of Metro Manila or the case maybe.
h.) Tax on the Interest on the STCP
Interest income on the STCPs shall be subject to a twenty percent (20%) final withholding tax
or such rate that maybe provided by law or regulation. The tax shall be for the account of
14
the holder of the STCPs. Corporate and institutional purchasers who are exempt from or are
not subject to the said tax shall submit pertinent documents evidencing their tax - exempt
status.
i.) Documentary Stamps on Original Issuance
The cost of documentary stamps on the original issues shall be for the account of the Issuer.
The documentary stamps by reason of the secondary sales/transfers involving the change of
the registered holdings shall be for the account of the secondary buyers.
j.) Conversion, amortization, sinking fund, retirement
Conversion, amortization, sinking fund and retirement are not applicable in this STCP issue.
3. Substitution
Substitution is not permitted with or without notice.
4. Material Provisions Giving or Limiting Rights of Debt Holders
a) STCPs are unsecured obligations; as such, STCP debt holders are subordinate to secure
creditors.
b) There is no limitation on the declaration of dividends; no restrictions on issuance of
additional debt; no maintenance of asset ratios; and no provision on security (collateral).
5. Financial Ratios
2009
2010
2011
Average
June 30, 2012
Current Ratio
1.15
1.45
1.59
1.40
1.64
Acid- Test Ratio
0.62
0.90
0.88
0.80
0.99
Asset to equity ratio
3.16
2.86
2.75
2.92
2.63
Interest rate coverage ratio
7.62
9.57
9.32
8.84
9.65
Return on Equity
12.56%
13.42%
9.80%
11.93%
Debt-Equity Ratio
1.02
0.85
0.70
0.86
8.02%
0.65
* Annualized
Manner of Calculation:
Current Ratio
= Current Assets / Current Liabilities
Acid-Test Ratio
= Cash & Cash Equivalents + Short-Term Investments + Available-for-sale Investments +
Installment Contracts Receivables + Other Receivables
Total Current Liabilities
Asset to Equity Ratio
= Total Assets / Total Stockholders’ Equity (net of Net Change in Fair Value of Investments)
Interest Rate Coverage Ratio
Return on Equity
= Net Income before Tax + Depreciation + Interest Expense
Interest Expense
= Net Income (attributable to equity holders of the parent) / Total Stockholder’s Equity (attributable to equity holders of the parent)
Debt – Equity Ratio
=
Loans & Notes Payable
Total Stockholders' Equity-attributable to equity holders of the parent (net of Net Changes in FV of
Investments)
15
Significance:
Current Ratio and Acid-Test Ratio are ratios of short-term solvency which measures the ability of the firm to
meet recurring and current financial obligations. Current ratio is often associated with net working capital
which is the difference between current assets and current liabilities. Acid –test ratio on the other hand is the
ratio between quick assets (as enumerated above) and current liabilities. Quick assets are the currents assets
that are quickly convertible to cash.
Asset to Equity Ratio measures the financial stability of the company.
Interest Rate Coverage Ratio is used to determine the company's ability to pay interest payments. It determines
how easily a company can pay interest expenses on outstanding debt.
Return on Equity or ROE is one of the measures of a company’s profitability from the stockholders’ viewpoint. It
indicates the profitability of their investment in a company.
Debt to Equity Ratio provides information about the protection of creditors for insolvency and the ability of the
company to obtain additional financing for potentially attractive investment opportunities.
6. Track Record of Securities Registered
SEC Order No.
Date Issued
Nature of
Securities
Amount
Registered
Amount
Outstanding as of
June 30, 2012
1.
317 Series of 2011
October 21, 2011
STCP
P 1,100,000,000
P 910,750,000.00
2.
258 Series of 2010
November 2, 2010
STCP
P 1,100,000,000
P 55,550,000.00
3.
167 Series of 2009
November 9, 2009
STCP
P
900,000,000
--
4.
129 Series of 2008
November 3, 2008
STCP
P 1,150,000,000
--
5.
197 Series of 2007
December 17, 2007
STCP
P 1,000,000,000
--
6.
183 Series of 2006
December 28, 2006
STCP
P
970,000,000
--
7.
152 Series of 2005
December 28, 2005
STCP
P
610,000,000
--
8.
178 Series of 2004
December 29, 2004
STCP
P
710,000,000
--
16
MARKET INFORMATION FOR SECURITIES OTHER THAN COMMON EQUITY
STCPs has no established public trading market from which market information for STCPs
can be obtained.
17
MARKET FOR ISSUER’S COMMON EQUITY AND RELATED STOCKHOLDER’S
MATTERS
The Company is not a public corporation and is not listed with the Philippine Stock Exchange.
It is a regular corporation engaged in real estate development.
Dividends Policy
Dividends declared by the Company on its shares of stocks are payable in cash or in
additional shares of stock. The payment of dividends in the future will depend upon the earnings,
cash flow, and financial condition of the Corporation and other factors.
Dividends
2012
2011
2010
Cash
Php 3.5900 / share
Php 3.7100 / share
Php 4.2900 / share
Stock
20%
20%
20%
The record date of P 3.59 per share cash dividends is on July 3, 2012 and for payment on
July 27, 2012.
The record date of 20% stock dividends is on July 4, 2012 and for payment of July 30, 2012.
Holders
a. The number of shareholders of record as of June 30, 2012 was 14.
b. List of Stockholders on record as of June 30, 2012:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Name
Stephen C. Roxas
Grace C. Liuson
Andrew I. Liuson
Daniel Yen Chiong
Lucy Fan
Helen C. Roxas
The Good Seed Sower Foundation Inc.
Alice C. Gohoc
Jefferson C. Roxas
Lincoln C. Roxas
Aurora M. Pattugalan
Josef C. Gohoc
Peter S. Dee
Paul Y. Ung
Total
No. of Shares Held
11,737,664
6,126,970
5,655,675
3,770,449
3,770,449
3,770,449
3,770,438
3,015,935
22,491
22,491
7,538
414
16
14
41,670,993
%
28.17%
14.70
13.57
9.05
9.05
9.05
9.05
7.24
0.05
0.05
0.02
---100.00%
Changes in Control
There are no agreements which may result in changes in control of the registrant.
18
Recent Sale of Unregistered Securities (including recent issuance of securities constituting an
exempt transactions)
The total number of shares issued and outstanding of the Company increased for the past
three (3) as a result of stock dividends as follows:
Stock
Dividend
Outstanding Shares
From
To
Date Distributed
2010
20%
28,938,199
34,725,833
October 13, 2010
2011
20%
34,725,833
41,670,933
August 16, 2011
2012
20%
41,670,993
50,005,183
July 30, 2012
Stock dividends are exempted from registration under Section 10.1 (d) of the Securities
Regulation Code (SRC).
19
INTERESTS OF NAMED EXPERTS AND COUNSELS
The validity of the STCP Offer and other matters concerning the registration and offering of
the STCPs was passed upon for the Company by Abaya Elias Law Firm.
The audited financial statements of the Company as of and for the years ended December 31,
2011, 2010 and 2009, together with the notes thereto, have been audited by SyCip, Gorres, Velayo &
Co., independent public accountants, as indicated in their reports with respect thereto included herein,
and have been so included in reliance upon the authority of SGV as experts in accounting and auditing
in giving such reports.
The expert or independent counsel will not receive a direct or indirect interest in the registrant
nor such expert or independent counsel a promoter, underwriter, voting trustee, director, officer or
employee of the registrant.
20
INFORMATION WITH RESPECT TO THE REGISTRANT
Business
A.
Background Information
1. Brief Company History
Cityland, Inc., a domestic corporation which is duly organized and existing under and by
virtue of the laws of the Philippines since May 15, 1979 with the primary purpose of engaging
in real estate development.
The Company’s primary purpose is to acquire and develop suitable land sites for residential,
office, commercial, institutional and industrial uses.
Its projects include medium to high-rise office, commercial, and residential condominiums
located in Manila City, Mandaluyong City, Pasig City, Makati City and Tagaytay City and
residential subdivisions in Tagaytay City and Cavite.
The Company is not involved in any bankruptcy, receivership or similar proceedings. It has
not entered in any reclassification, merger, consolidation or purchase or sale of significant
assets (not ordinary).
SEC Registration No. - 86188
2. Subsidiaries
As the ultimate parent company, CI prepares consolidated financial statements which consists
of its financial statements and that of its subsidiaries.
a. Cityland Development Corporation (Subsidiary)
Cityland Development Corporation was incorporated on January 31, 1978 with the
primary purpose of engaging in real estate development. Its principal office is at 2/F
Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo Village Makati
City.
The financial performance:
Revenues
Expenses
Income before tax
Net Income
2010
1,092,567,749
712,849,042
379,718,707
320,223,996
2011
1,001,519,023
635,324,340
366,194,683
321,564,675
June 30, 2012
536,953,688
372,857,582
164,096,106
128,462,482
b. City & Land Developers, Inc. (Subsidiary of Cityland Development Corporation)
City & Land Developers, Inc. was incorporated on June 28, 1988 with a primary purpose
of acquiring and developing suitable land sites for residential, office, commercial,
institutional, and industrial uses. Its principal office is at 3/F Cityland Condominium 10
Tower 1 156 H.V. Dela Costa Street, Salcedo Village, Makati City.
21
Revenues
Expenses
Income before tax
Net Income
2010
940,719,658
608,583,385
332,136,273
265,596,227
2011
1,115,696,076
740,957,878
374,738,198
316,984,047
June 30, 2012
407,885,387
238,523,247
169,362,140
149,731,258
c. Cityplans, Inc. (Subsidiary of Cityland Development Corporation)
Cityplans, Inc. was incorporated on October 27, 1988 with a primary purpose of
establishing, organizing, developing, maintaining, conducting, operating, marketing and
selling educational assistance and pensions. Its principal office is at 3F Cityland
Condominium 10 Tower 2, 154 H.V. Dela Costa Street, Salcedo Village, Makati City.
Revenues
Expenses
Income before tax
Net Income
2010
24,660,713
10,429,613
14,231,100
10,766,213
2011
21,121,587
12,679,414
8,442,173
8,127,860
June 30, 2012
11,287,178
7,022,855
4,264,323
3,106,074
d. Cityads, Inc. (Subsidiary)
Cityads, Inc. was incorporated on February 20, 1980 for the purpose of engaging in
general advertising business. Its principal office is at 2/F Cityland Condominium 10
Tower 1, 156 H.V. Dela Cota Street, Salcedo Village, Makati City.
Revenues
Expenses
Income(Loss) before tax
Net Income (Loss)
2010
1,456,257
1,327,989
128,268
90,920
2011
1,359,487
1,255,173
104,314
72,224
June 30, 2012
579,266
599,983
-20,717
-20,808
e. Credit and Land Holdings, Inc. (Subsidiary)
Credit and Land Holdings, Inc. was incorporated on July 16, 1980 for the purpose of
purchasing, selling or disposing of real and personal property of any kind including shares
of stocks and securities. The company’s registered office and principal place of business
is at 2/F Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo
Village, Makati City.
22
Revenues
Expenses
Income before tax
Net Income
2010
195,703
5,904
189,799
179,688
2011
473,846
4,234
469,612
456,081
June 30, 2012
38,795
15,123
23,672
15,929
B.
Development of business for the past two (2) years (2010-2011)
We present herewith the status of sales and construction of our projects as of the end of the
following years:
Cityland, Inc. (Parent)
2010
Tagaytay Executive Village
Lots Only
House & Lots
Pasig Royale Mansion
Oxford Mansion
Manila Residences I
Tagaytay Country Homes 2B
Windsor Mansion
Brentwood Mansion
Tagaytay Country Homes 2C
Manila Residences II
Tagaytay Country Homes 2D
Naic Country Homes
PERCENTAGE SOLD
2011
June 30, 2012
Launched in 2002
98.67%
100.00
96.42
97.91
84.71
90.09
84.36
47.49
58.64
6.10
16.18
-19.30
100.00%
100.00
100.00
99.07
93.09
92.19
90.15
59.49
78.36
10.67
23.38
35.87
20.42
99.55%*
100.00
100.00
98.76*
97.86
91.64*
88.68*
78.36
78.36
14.16
26.31
53.06
20.75
Launched in 2003
Launched in 2004
Launched in 2006
Launched in 2006
Launched in 2007
Launched in 2008
Launched in 2010
Launched in 2010
Launched in 2010
Launched in 2011
Launched in 1996
* The decrease in percentage sold as of June 30, 2012 as compared with the previous year 2011 was due to cancellation of contracts
to sell due to non- payment.
Oxford Mansion
Manila Residences
Windsor Mansion
Brentwood Mansion
Naic Country Homes
PERCENTAGE OF COMPLETION
2010
2011
June 30, 2012
100.00%
100.00%
100.00%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
4.10
35.89
58.58
1.17
9.70
17.02
-100.00
100.00
100.00
100.00
100.00
Cityland Development Corporation (Subsidiary)
Makati Executive Tower II
Corinthian Executive Regency
Rada Regency
Manila Executive Regency
Makati Executive Tower III
PERCENTAGE SOLD
2010
2011
June 30, 2012
100.00%
100.00%
99.43%*
98.95
99.84
99.63*
99.40
100.00
99.77*
98.98
99.89
99.63*
81.83
88.09
89.76
Launched in 2003
Launched in 2004
Launched in 2005
Launched in 2005
Launched in 2006
23
Mandaluyong Executive Mansion III
Makati Executive Tower IV
Grand Central Residences I
32.67
11.58
7.92
62.72
18.90
11.72
86.35
28.59
15.59
Launched in 2008
Launched in 2009
Launched in 2010
Makati Executive Tower II
Rada Regency
2010
2011
June 30, 2012
100.00%
100.00%
100.00%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
23.00
23.00
91.50
4.68
4.68
13.94
City & Land Developers, Inc. (Subsidiary)
Pacific Regency
Grand Emerald Tower
Manila Residences Bocobo
PERCENTAGE SOLD
2010
2011
June 30, 2012
99.67%
99.79%
99.78%*
68.24
86.50
93.61
58.61
72.52
83.52
Launched in 2004
Launched in 2006
Launched in 2009
Pacific Regency
Grand Emerald Tower
2010
2011
June 30, 2012
100.00%
100.00%
100.00%
97.52
100.00
100.00
38.10
96.36
100.00
Cityplans, Inc. (Subsidiary)
Oxford Mansion
Windsor Mansion
PERCENTAGE SOLD
2010
2011
June 30, 2012
95.63%
95.70%
98.23%
86.91
87.46
90.90
Oxford Mansion
Windsor Mansion
2010
2011
June 30, 2012
100.00%
100.00%
100.00%
100.00
100.00
100.00
Launched in 2004
Launched in 2007
The details of the above projects are as follows:
The Manila Residences II is a 39-storey office, commercial and residential condominium
located along Taft Avenue. Amenities include swimming pool, mini-gym, sauna for men and
women, function room, viewing deck, children’s playground and 24-hour association security.
Estimated Date of Completion: September 2015
24
Tagaytay Prime Residences consists of two (2) condominium buildings rising 21-storey high.
It is situated at the Tagaytay Rotunda, Brgy. San Jose, Tagaytay City. Features and amenities
include common viewing balcony for residential floors, swimming pool, multi-purpose area,
24-hour association security and viewing deck with jogging path.
Estimated Completion Date: 2nd half of 2014
The Manila Residences I
The Manila Residences is a 39-storey office, commercial and residential condominium
located along Taft Avenue. Amenities include swimming pool, mini-gym, sauna for men and
women, function room, viewing deck, children’s playground and 24-hour association security.
Date Completed: September 2010 (completed nine months in advance)
Brentwood Mansion
Brentwood Mansion is an 12-storey commercial and residential condominium located along
Evangelista St., New Santolan, Pasig City. Amenities and facilities include two (2) elevators,
administrative office, visitors' lounge, provision for cable TV and telephone line, individual
water submeter / Meralco meter and 24- hour association security.
Date Completed: June 2010
Windsor Mansion
Windsor Mansion is an 8-storey commercial and residential condominium located along
Evangelista St., New Santolan, Pasig City. Amenities and facilities include 2 elevators,
administrative office, visitor’s lounge, provision for cable TV and telephone line, individual
water submeter / Meralco meter and 24-hour association security. This project is developed
together with Cityplans, Inc.
Date Completed: December 2007
Tagaytay Country Homes 2-B
Tagaytay Country Homes 2-B, a residential subdivision located at Barangay Neogan,
Tagaytay City. Features include multi-purpose hall, swimming pool and 24-hour association
security.
Tagaytay Country Homes 2-C, a residential subdivision located at Barangay Neogan,
security.
Tagaytay Country Homes 2-D, a residential subdivision located at Barangay Neogan,
security.
25
Oxford Mansion
Oxford Mansion, an 8-storey commercial and residential condominium located along
Evangelista St., New Santolan, Pasig City is being developed together with Cityplans, Inc.
Amenities and facilities include 2 elevators, administrative office, visitor’s lounge, provision
for cable TV and telephone line, individual water submeter / Meralco meter and 24-hour
association security.
Naic Country Homes
Naic Country Homes is a completed residential subdivision located at Baranggay Malaenen,
Luma, Cavite. This subdivision has the following features: main entrance with guardhouse,
concrete hollow block perimeter fence, common shallow walls, concrete roads, Meralco
supplied electricity, basketball / tennis court and lined open canal.
Grand Central Residences I is a 40-storey office, commercial and residential condominium
located at EDSA corner Sultan St., (fronting MRT Shaw), Mandaluyong City. It is in close
proximity to schools, churches, malls, and hospitals. It is equipped with swimming pool,
multi-purpose function room, gym, multi-purpose deck, CCTV and 24-hour association
security.
Estimated Date of Completion: March 2015
Makati Executive Tower IV is a 29-storey commercial and residential condominium located
at Cityland Square, Sen. Gil Puyat Ave., cor. P. Medina St., Makati City. It is in close
proximity to schools, malls, hypermarkets and hospitals. Its amenities include swimming
pool, gym, playground, function room, roof deck and 24-hour association security.
Estimated Date of Completion: December 2013
Mandaluyong Executive Mansion III is a 7-storey office, commercial and residential
condominium located at Mandaluyong Executive Subdivision, G. Emriquez St., Brgy.
Vergara, Mandaluyong City, with close proximity to Don Bosco Technical College,
Rockwell, SM Megamall, Podium, Shangri-la Plaza, Puregold, Market Place, Robinson's
Pioneer, Edsa Central and Starmall. Its amenities include playground, basketball court and 24hour association security.
Date Completed: January 2011
Makati Executive Tower III is a 40-storey commercial, office, and residential condominium
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City. Its amenities
include swimming pool, sauna, viewing deck, jogging area, mini-gym, children’s playground,
function room, and 24-hour association security.
Date Completed: April 2010
26
City & Land Developers, Inc. (Subsidiary of Cityland Development Corporation)
Manila Residences Bocobo is a 34-storey commercial, office and residential building located
at 1160 Jorge Bocobo St., Ermita, Manila City. Its amenities and features include swimming
pool, gymnasium, function room, multi-purpose deck, children's play area and 24-hour
association security.
Estimated Date of Completion: June 2012 (completed one year in advance )
Grand Emerald Tower
Grand Emerald Tower , a 39-storey commercial, office and residential condominium located
along Emerald corner Ruby and Garnet Streets, Ortigas Center, Pasig City. Its amenities and
facilities include swimming pool, gymnasium, viewing deck, sauna, children’s playground,
multi purpose function room, and 24-hour association security. It is proximate to schools,
hospitals, shopping malls, banks, restaurants, hotels , churches and other leisure and business
establishments.
Date of Completion: February 2011 (completed four months in advance)
Pacific Regency
Pacific Regency is a 38-storey commercial, office, and residential condominium located at
Pablo Ocampo Sr. Ave. (formerly Vito Cruz Street) in front of Rizal Memorial Sports
Complex in Manila. Amenities and facilities include swimming pool, gymnasium, separate
sauna for male and female, function room, children’s playground, 24-hour association
security, viewing area, and jogging areas at the roof deck.
Date Completed: October 2007 (completed eight months in advance)
Cityplans, Inc. (Subsidiary of Cityland Development Corporation)
Oxford Mansion
Oxford Mansion is an 8-storey commercial and residential condominium located along
Evangelista St., New Santolan, Pasig City. Amenities and facilities include 2 elevators,
administrative office, visitor’s lounge, provision for cable TV and telephone line, individual
water submeter / Meralco meter and 24-hour association security.
Date Completed: October 2006
Windsor Mansion
Windsor Mansion is a joint project of the Company and Cityplans. It is a commercial and
residential condominium located at Santolan, Pasig City. Amenities include common
clubhouse, swimming pool and 24-hours association security for the whole complex. It is
proximate to schools, commercial establishments, business and office centers.
Date Completed: December 2007
2. Marketing
All projects are sold by direct company salesmen and independent brokers.
27
3. Revenue Contribution to Total Revenues on Sales of Real Estate
2010
Oxford Mansion
Manila Residences
Windsor Mansion
Brentwood Mansion
Others
Cityland Makati Executive Tower II
Rada Regency
Cityland Makati Executive Tower III
Cityland Makati Executive Tower IV
Others
Pacific Regency
Grand Emerald Tower
Others
Oxford Mansion
Windsor Mansion
Total
PERCENTAGE
June 30, 2012
2011
0.45%
-30.21
1.10
1.92
-0.05
3.92
0.22
0.19
0.02
0.44%
-9.89
1.02
0.78
0.13
0.08
2.06
3.80
2.47
0.24
-0.16%
8.63%
0.47%
-0.23%
0.04%
0.97%
5.95%
3.86%
5.38%
1.07
0.89
0.62
2.76
15.68
3.86
1.57
0.30
2.47
0.58
1.20
0.57
1.74
8.69
8.88
8.26
0.67
1.25
0.74%
0.64%
0.45%
0.67%
7.08%
16.98%
9.81%
2.85%
0.65%
0.03
23.42
9.07
0.14
0.49
18.45
28.08
0.23
0.20%
13.31%
20.03%
0.03%
-0.04
-100.00%
---100.00%
-0.22%
0.65%
100.00%
4. Domestic and Foreign Sales Contribution to Total Sales
2010
Sales
Filipino Citizens
Foreign Citizens
Total
90.23%
9.77
100.00%
2011
89.75%
10.25
100.00%
June 30, 2012
90.39%
9.61%
100.00%
5. Competition
The property development industry in the Philippines where the Registrant is selling its
products and services is characterized by boom-bust cyclical pattern exhibited in the past
couple of decades where the industry normally goes through years of robust growth following
years of slowdown. Currently, the industry is in the middle of this cycle.
The geographical area/ location of the Company's projects are in Manila, Makati, Pasig,
Mandaluyong and Tagaytay cities and in the province of Cavite. The Company builds highrise condominium projects and residential subdivisions catering to middle and high- income
groups.
28
Cityland's projects are offered at affordable prices and affordable payment schemes. The
Company has proven its track record in the timely turn-over or even advanced turn-over of its
projects in line with its, “We commit, we deliver” slogan.
In the property development industry, the principal methods of competition among the
developers are as follows: price; product or the type of development (i.e. high, middle, lowend); service or property management after the project is turned over to the buyers.
Cityland sell its products which consist of condominium projects, to both end-users and
investors. City & Land projects are offered at affordable prices. It foresees that the demand
for real estate products such as residential units will remain underserved due to: I) continued
shift from rural to urban areas; ii) continued increase in number of Overseas Filipino Workers
(OFW) who have shown growing propensity for home purchase; and iii) population growth.
Manila Residences Towers I and II are located along Taft Avenue, Manila City. The
condominium similar in terms of classification and location to Manila Residences Towers I
and II are Green Residences along Taft Ave., Manila City. This is a project of SM
Development Corporation (SMDC). In terms of size, financial and market strengths, said
developer is one of the major developers in the country having launched several projects. SM
Development Corporation (SMDC) is part of the business conglomerate of Henry Sy.
Brentwood Mansion is located at Evangelista Street, New Santolan, Pasig City. The
condominiums similar in terms of classification and location to Brentwood are Villa Sole
Condominium Tower I, II and III, a project of Earth Chef Residences, located along Amang
Rodriguez, Pasig City.
Tagaytay Country Homes 2-B, 2-C and 2-D are a residential and commercial subdivisions
located along Barangay Neogan, Tagaytay City. The subdivision which is similar in terms of
classification of the projects is Pueblo del Sol, a project of Sta. Lucia Realty and
Development, Inc., located at Heroes’ Farm, Barangay Patutong, Tagaytay City. In terms of
size, financial and market strengths, Sta. Lucia Realty and Development, Inc., is one of the
established subdivision developers in the country having launched several projects.
Tagaytay Prime Residences is located at Prime Rotunda, Brgy. San Jose, Tagaytay City. The
condominium similar in terms of classification and location to Tagaytay Prime Residences is
Wind Residences which is located along Aguinaldo Highway, Brgy. Maharlika West,
Tagaytay City, a project of SMDC. In terms of size, financial and market strengths, said
developer is one of the major developers in the country having launched several projects. SM
Development Corporation (SMDC) is part of the business conglomerate of Henry Sy.
The Registrant's competitors have their own respective financial and market strengths.
However, Cityland believes it can effectively compete with other companies because of good
location, affordable pricing, and quality development.
6. Customers
Cityland has a broad market base and is not dependent upon single or few customers. It has
no single customer that accounts for 20% or more of its sales. Like wise, there are no major
existing sales contracts.
7. Purchases of Raw Materials and Supplies
Cityland engaged the services of JDBEC, Inc. and Millennium Erectors Corporation for the
civil and architectural in the development of Tagaytay Prime Residences and The Manila
Residences Tower II, respectively.
29
As to the construction materials, Cityland has no major existing supply contracts for its
projects. The major construction materials like steel bars, cement, etc. are sourced through
canvassing and bidding from its list of accredited suppliers. Cityland then buys the materials
from the lowest bidder.
8. Number of Employees
Cityland, Inc. has a total of 88 personnel composed of 9 officers and 79 employees as of June
30, 2012. It is expected to increase by 11% within the next 12 months. The Company
maintains an organizational framework whereby important management functions as well as
administrative tasks are shared within the Cityland group. CI compensates the group for the
actual costs of these services.
The Company gives bonuses to its employees. Also, employees are entitled to vacation and
sick leaves and are covered by a retirement plan.
All employees are not subject to collective bargaining agreement.
The Company's employees are not on strike or are threatening to strike nor they have been on
strike in the past three (3) years.
9. Government Approval Projects
Status of Approval of
On-going Projects
Government Agency:
a. Housing and Land Use Regulatory Board
- Certificate of Registration/License to
Sell
b. City/Municipal Building Official /
Department of Public Works and Highways.
1. Development Permit by HLRB/Location
2. Building Permit
- Excavation, Civil Works
- Mechanical, Electrical, Sanitary,
Sidewalk
- Fire Protection
3. Occupancy Permit (Electrical, Fire,
Mechanical, Civil, Sanitary)
c. Department of Environment and Natural
Resources
- Environmental Compliance Certificate
- Permit to Construct Sewage Treatment
Plant (STP)
- Permit to Operate STP
d. Laguna Lake Development Authority
- Permit to Construct Sewage Treatment
Plant (STP)
- Permit to Operate STP
Tagaytay Prime
Residences
The Manila Residences
Tower II
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
To be applied upon
completion
To be applied upon
completion
Approved
Approved
Not Applicable
(included in Building
Permit)
For Application after
completion
Not Applicable
For Application
For Application
For Application
For Application
To be applied upon
completion
30
10. Effect of Existing Government Regulations on the Business
The Company has complied with all the appropriate government regulations for the
development and marketing of its projects. Compliance with these requirements symbolize
the unrelenting commitment of the management to service and protection of its community
and environment.
The effect of the various regulations on the business of the issuer are projects developed in
accordance with the high quality standards required by the various regulatory agencies of the
government.
11. Amount Spent for Research/Development Activities
There is no amount spent on research and development activities.
12. Cost and effect of Compliance with Environmental Laws
Payments made for environmental clearances to the Department of Environment & Natural
Resources are as follows:
2012
No payment was made.
2011
No payment was made.
2010
Payment of 458,055 to WET Consultancy Inc and 419,030 to LAQ Consulting
for ECC and LLDA clearance of Tagaytay Country Homes 2-C and 2-D, Pasig
Royal Townhomes, Tagaytay Prime Residences, Manila Residences II and
Manila Grand Residences. Additional payment of 141,706 to Laguna Lake
Development Authority for LLDA clearance of Tagaytay Prime Residences.
13. Transactions with and/or dependence on related parties
Transactions with related parties are confined to cash advances and non-interest-bearing
advances for reimbursable expenses from and to the registrant which the Company enters into
with its affiliates in the regular course of its business. It also includes an existing management
agreement with Cityland Development Corporation, its subsidiary.
The Registrant's affiliates are Cityland Development Corporation (CDC), City and Land
Developers, Inc. (CLDI) and Cityplans, Inc. (CPI), its subsidiaries.
14. Principal Terms and Expiration Dates of All Patents, Trademarks, Copyrights, Licenses and
Royalty Agreements Held
The Company holds no patents, trademarks, copyrights, licenses, franchises, concessions and
royalty agreements.
15. Additional Requirement on Debt Issues
The Registrant’s net worth exceeds P25 Million and that the Registrant has been in business
for more than thirty (30) years.
16. Major Risks Involved in Each of the Businesses of the Company
The Company is primarily engaged in real estate development. Risk factors are:
Refinancing Risk: The Company is primarily engaged in real estate development. Risk Factors
are: the moderately aggressive debt level of the Company's borrowings being
short-term in nature increase the possibility of refinancing risks. This debt
mix in favor of short-term borrowings is a strategy which the Company
31
adopted to take advantage of lower cost of money for short-term loans versus
long-term loans. Because the Company has the flexibility to convert its shortterm loans to a long-term position by drawing down its credit lines with
several banks or sell its receivables, refinancing risk is greatly reduced.
The Company manages such refinancing risks by improving the acid-test ratio
and current ratio at 0.99:1 and 1.64:1 in June 2012 from 0.88:1 and 1.59:1 in
December 2011.
Credit Risk:
This is defined as the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation.
The financial instruments which may be the subject of credit risk are the
installment contracts receivables and other financial assets of the Company.
The corresponding management strategies for the aforementioned risks are as
follows:
1. The credit risk on the installment contracts receivables may arise from the
buyers who may default on the payment of their amortizations. The Company
manages this risk by dealing only with recognized, credit worthy third
parties. Moreover, it is the Company's policy to subject customers who buy
on financing to credit verification procedures. Also, receivable balances are
monitored on an on-going basis with the result that the Company's exposure
to bad debts is insignificant.
2.The credit risk on the financial assets of the Company such as cash and cash
equivalents, short-term cash investments, financial assets at fair value
through profit or loss and available for sale investments may arise from
default of the counterparty. The Company manages such risks by its policy to
enter into transactions with a diversity of creditworthy parties to mitigate any
significant concentration of credit risks. As such, there are no significant
concentrations of credit risks in the Company.
Interest Rate
Risk:
This is the risk arising from uncertain future interest rates.
The Company's financial instruments are:
1. The Company's financial assets mainly consist of installment
contract receivables, cash and cash equivalents and short-term
investments. Interest rates on these assets are fixed at their inception
and are therefore not subject to fluctuations in interest rates.
2. For the financial liabilities, the Company's loans payable to bank are
subject to periodic repricing of interest rates. The Company manages
this risk by entering into loan agreements with a ceiling on repricing
rates (current ceiling from lenders is based on benchmark rates
(PDSTF) plus 150 basis points). In this way, the Company can review
and analyze the future effects of repricing to the operations and
position of the Company, thus mitigating interest rate risk. On the
other hand, short-term commercial papers bear fixed interest rates,
thus are not exposed to fluctuations in interest rates.
32
Market Risk: This is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices. Financial instruments which
rely their value on market factors are subject to market risk.
The available for sale investments are exposed to market risk. There is a risk for
a decline in the value due to changes in the market. The exposure however, is
negligible because the amount of the said investment is insignificant as
compared to the financial assets of the Company.
Liquidity Risk: This is the current and prospective risk to earnings or capital from a company's
inability to meet it obligations when they come due without incurring
unacceptable losses.
The Company's treasury has a well-monitored funding and settlement
management plan. The following is the liquidity risk management framework
maintained by the Company:
1. Asset- Liability Management: Funding sources are abundant and
provide a competitive cost advantage. The Company also holds
financial assets for which there is a liquid market and are, therefore,
readily saleable to meet liquidity needs.
2. Conservative Liability Structure: Funding is widely diversified. There
is little reliance on wholesale funding services or other creditsensitive fund providers. The company accesses funding across a
diverse range of markets and counterparties.
3. Excess Liquidity: The Company maintains considerable excess
liquidity to meet a broad range of potential cash outflows from
business needs including financial obligations.
4. Funding Flexibility: The Company has an objective to maintain a
balance between continuity of funding and flexibility through the use
of loans from banks and STCPs. As such, the Company already has
committed borrowing facilities in the form of bank lines and a
established record in accessing these markets.
Economic:
Results of operations is influenced by the general condition of the Philippine
economy. Any economic instability or failure to register improved economic
performance may adversely affect the Company’s operations.
Political:
The Company’s business like all other business may be influenced by the
political situation in the country. Any political instability in the future could
have a material adverse effect in the Company’s business.
Industry:
The real estate industry is characterized by boom-bust cyclical pattern exhibited
in the past couple of decades where the industry normally goes through years of
robust growth following years of slowdown.
The management manages the above risk by conducting assessments of the economic and
political situations of the country as well as new developments in the industry. The
procedures involved in gathering of information of economic indicators and political events as
well as being aware of the new developments in the industry is through media, business
conferences, economic briefings and other sources.
33
With this information, the Company is able to assess and manage the risks mentioned above.
Properties
Investment in Real Estate Properties as of June 30, 2012 are as follows:
Particular
Location
1. Land
Brgy. Talipusngo,
Maragondon,Cavite
2. Land
Total Area
(in sq.m.)
Description
Mortgagee/
Limitation
2,496,532
Located along
Maragondon Magallanes
boundary line. Title for
2,456,350 sq.m. is still in
process.
---
Doña Concha Cruz
Drive, Las Piñas City
52,705
Land within AlabangZapote Road. Land is
partially mortgaged with
the bank.
RCBC/
350M
3. Land & building
Evangelista St.,
Santolan, Pasig
40,469
Land & building within
Evangelista St., Pasig
City. Land is mortgaged
with the bank.
Union Bank /
215M
4. Land
Brgy. Malainen Luma,
Naic, Cavite
5. Land & building
Taft Ave., Malate,
Manila
220,165
1,118
Raw land in Naic, Cavite.
Title for 150,822 sq.m. is
still in process.
---
Land and building along
Taft Ave.
---
Investment in Real Estate Properties of Cityland Development Corporation, a subsidiary:
1. Land & building
Corner of Pioneer and
12,502 The property is located
Reliance Sts., partly
near MRT3 Boni Station;
located in Mandaluyong
about a km. away from
City
Ortigas Center and
presently improved with
warehouse buildings.
Portion of property is
mortgaged with banks.
2. Land
Corner Union and Pines
Sts., Mandaluyong City
3. Land
Metrobank/
200M
&
Security
Bank/
1,600M
6,130
The land is located in an
area where land
development is for
commercial and industrial
purposes.
---
Baranggay
Punungyanan, Gen.
Trias, Cavite
501,832
The land is adjacent to
Eagle Ridge Golf Course
& Gateway Business Park
---
4. Land
Brgy.Sabang,
Naic, Cavite
670,891
The land is for mixed
commercial and
residential use.
---
5. Land
Bo.Wack-Wack
Mandaluyong City
2,367
The land is located near
POEA in front of
Robinson's Galleria;
along EDSA very near
MRT3 Ortigas Station.
Property is mortgaged
with bank.
Security
Bank/
1,600M
34
Particular
Location
6. Office Condo
H.V.dela Costa Street,
Salcedo Village,
Makati City
7. Land
Baranggay Sabang,
Naic, Cavite
8. Land
Baranggay Almanza
Uno, Las Piñas
9. Land
Brgy. Highway Hills,
Mandaluyong City
Total Area
(in sq.m.)
3,493
513,705
Description
This is an office
condominium for lease
and office use located at
Cityland 10 Tower I & II
in H.V.Dela Costa cor.
Geronimo and Valero
Sts.,Makati City. Only
1,683.42 sqm of property
is mortgaged with bank.
Mortgagee/
Limitation
Metrobank/
200M
Lot is near subdivisions
like Coastal City and
Retirement Village.
---
1,400
Lot is located in front of
Alabang-Zapote road near
Madrigal Business Park.
---
2,864
Lot is located near EDSA
Central & Shangri-La
Mall in Shaw Blvd.
---
Investment in Real Estate Properties of City & Land Developers, Inc., a subsidiary of CDC:
1. Land
Roxas Blvd. Cor.
3,154 Lot is located along
Seaside Drive, Brgy.
Roxas Blvd. Property.
Tambo, Parañaque City
2. Land
Samar Ave. cor. Eugenio
Lopez Ave., Quezon
City
3,096
Lot is located along
Samar Ave., Quezon City
3. Land
EDSA cor. Lanutan
Alley, Brgy. Veterans
Village, Quezon City
1,661
Lot is located in Veterans
Village, Quezon City
4. Parking
Mega Plaza, Ortigas
Center, Pasig City
50 slots
---
---
This parking lots are
being leased to tenants
and visitors.
Investment in Real Estate Properties of Cityads, Inc., a subsidiary:
1. Land
Brgy. San Jose,
310 Located along Tagaytay
Tagaytay City
Sta. Rosa Road.
---
Ownership
The Company has complete ownership of the above mentioned properties.
Plan to Purchase
The Company has intentions to acquire property(ies) in the next twelve (12) months within the
vicinity of Metro Manila. Actual acquisition is dependent on the outcome of negotiation with
prospective seller(s). The source of financing the Company expects to use is the unavailed credit
line of the Company amounting to P 2.30B.
35
Lease Contracts
Leased properties as of June 30, 2012 are as follows:
Pioneer – Warehouse / Parking
Makati Executive Towers – Units / Parking
Grand Emerald Tower – Units/ Storage
Evangelista, Santolan, Pasig City
Cityland Condominium 10 Towers I and II - Units/Parking
Roxas Boulevard – Lot
Edsa Ortigas – Lot
Mandaluyong Executive Mansion III- Units/ Parking
Cityland Dela Rosa Condominium – Parking/Storage
Cityland Herrera Tower – Parking/Storage
Rada Regency- Parking
Prince Plaza II – Units
Vito Cruz Properties
Doña Concha Cruz Drive, Las Piñas City
Mega Plaza – Parking
Others
Total
Rental Income
4,576,105
2,491,163
2,120,891
1,938,411
1,951,095
740,453
402,102
394,215
357,251
280,229
259,311
141,904
139,961
93,780
23,214
312,408
16,222,493
Renewal Options
Lease contracts are renewable upon written agreement of the parties.
Legal Proceedings
The material legal proceedings to which the registrant, its subsidiaries or affiliates is a party
or of which any of their property is the subject as of June 30, 2012 are as follows:
1.) Registrant
Tagaytay Executive Village Homeowners’ Association, Inc. vs Cityland, Inc.
Case No. REM-A-11-01574
Tagaytay Executive Village Homeowners’ Association, Inc. (TEVHAI) filed an Appeal
Memorandum dated November 9, 2011 with the HLURB Board of Commissioners and
received by Cityland last November 19, 2011. The case involves a petition to revoke the
certificate of completion (“COC”) dated March 10, 2010 issued by the Regional Office,
HLURB, Southern Tagalog Region, in favor of Cityland, Inc., owner and developer of
Tagaytay Executive Village located at Brgy. San Jose, Tagaytay City. TEVHAI wants the
Court to recall/cancel the COC and that Cityland be ordered to fully complete the alleged
deficiencies in the amenities.
The case was dismissed by the HLURB Region IV office. Consequently, the TEVHAI filed
an appeal with the HLURB Board of Commissioners (which was dismissed in a Decision
dated February 2, 2012).
2) Subsidiaries
a) Cityland Development Corporation (CDC)
Esmeraldo Balosa vs. Cityland Development Corporation
(Civil Case No. MC08 – 3563)
36
Mandaluyong Regional Trial Court- Branch 208
Date Instituted: April 11, 2008
Esmeraldo Balosa filed a case for preliminary Mandatory Injunction with damages against
Cityland after the Business and License Department of Mandaluyong City closed his stalls
due to Balosa’s failure to secure the necessary permits. He alleged that he has not been
paying the lease because another entity is also claiming ownership of the leased property and
that property cannot be used for his business. Balosa claims Cityland illegally ejected him.
Trial of the case is on going.
b) City & Land Developers, Inc. (CLDI)
Angapat Realty vs. CLDI
Manila Regional Trial Court- Branch 11
Date Instituted: March 16, 2004
This is a complaint for injunction and damages with a prayer for preliminary injunction with
temporary restraining order filed by Angapat Realty and Development Corporation
(“Angapat”) against CLDI to enjoin the corporation from further constructing a billboard that
allegedly blocks the view of Angapat’s billboard. Angapat is asking for actual damages in
the amount of P100,000 a month, exemplary damages to P 500,000 and attorney’s fees
amounting to P 250,000.
The prayer for preliminary injunction was denied and the case was subsequently archived in
an Order dated May 18, 2007.Motion to Revive Case with Motion to Dismiss were granted in
an Order dated October 4, 2011.
3) Property
There was no any case filed wherein any of its property/ies as the subject.
The Company does not expect that the outcome of the above material legal proceedings involving
the registrant's subsidiaries will have a material adverse effect on the financial condition of the
Company.
During the past five years up to present, there is no bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer of the Registrant either at
a time of the bankruptcy or within two years prior to that time.
During the past five years up to present, the Registrant, any of its directors or executive officers
has no conviction by final judgment, domestic or foreign, or is not subject to a pending criminal
proceeding, domestic or foreign.
During the past five years up to present, the Registrant, any of its directors or executive officers is
not subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of
any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of business, securities,
commodities or banking activities.
During the past five years up to present, the Registrant, any of its directors or executive officers
has not been found by a domestic or foreign court of competent jurisdiction (in civil action), the
Commission or comparable foreign body, or a domestic or foreign exchange or other organized
trading market or self- regulatory organization, to have violated a securities or commodities law or
regulation and the judgment has not been reversed, suspended, or vacated.
37
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
a) Financial Performance
For the six months ended June 30, 2012
On June 2012 the Company’s subsidiary, City & Land Developers, Inc. (CLDI) turned over,
one year ahead of schedule, Manila Residences Bocobo, a 34-storey office, commercial and
residential condominium located in Jorge Bocobo St., Ermita, Manila City. CLDI is now
selling its remaining unsold units.
The Company is selling the following projects:
Brentwood Mansion, an 8-storey residential condominium located along Evangelista St. ,
New Santolan, Pasig City.
Windsor Mansion, an 8-storey commercial and residential condominium located at New
Santolan, Pasig City, a joint project of Cityland, Inc. (CI) and Cityplans, Inc. (CPI).
Evangelista St., New Santolan, Pasig City, a joint project of CI and CPI.
The Manila Residences, a 39-storey office, commercial and residential condominium located
along Taft Avenue, Metro Manila.
The Manila Residences Tower II, a 39-storey office, commercial and residential condominium
located along Taft Avenue, Metro Manila, an on-going project of CI.
Tagaytay Prime Residences is a 21-storey commercial and residential condominium located at
Tagaytay Prime Rotunda, Brgy. San Jose, Tagaytay City, an on-going project of CI.
Tagaytay Country Homes 2 (phase B and C), a residential subdivision located at Barangay
Naic Country Homes, a residential subdivision located in Malainen Luma, Naic Cavite.
The Company’s subsidiaries are selling the following projects:
Grand Central Residences I, a 40-storey office, commercial and residential condominium
located at EDSA corner Sultan St., (fronting MRT Shaw), Mandaluyong City, an on-going
project of Cityland Development Corporation (CDC).
Makati Executive Tower IV, a 29-storey commercial, office, and residential condominium
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City, an on-going
project of CDC.
Mandaluyong Executive Mansion III, a residential condominium located at Mandaluyong
Executive Mansion Subdivision, G. Enriquez St., Barangay Vergara, Mandaluyong City, a
project of CDC.
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City, a project of
CDC.
The Company has also a number of prime lots reserved for future projects. Its land bank is
situated in strategic locations ideal for horizontal and vertical developments.
38
Internal sources come from sales of condominiums and real estate projects, collection of
installment receivables, maturing short-term investments and other sources such as rental
income, interest income and dividend income. External sources come from bank loans.
The estimated development cost of 531.94 million as of June 30, 2011 representing the cost to
complete the development of real estate projects sold and the contract payable amounting to
20.37 million representing the liabilities from the contracts to purchase land held to future
development will be sourced through:
a. Sales of condominium and real estate projects
b. Collection of installment receivables
c. Maturing short-term investments
d. Availment of bank lines
e. Issuance of commercial papers
For the Year Ended December 31, 2011
The Philippine economy as measured by the gross domestic product (GDP) posted a modest
3.7 percent growth in 2011. The slowdown can be attributed to the typhoons and the decline
in foreign trade due to the poorly performing U.S economy, the European debt crisis and the
Japan earthquake. In addition, political tensions in the Middle East resulted to high oil prices.
The government is now pushing for a more robust growth rate in 2012 by increasing tax
collection, implementing sound monetary policies and pledging to boost public spending on
infrastructure development through public-private partnership. Amidst the economic
slowdown, the Company’s sales remained stable indicating a sustained demand for
condominium projects. At present, low interest rates encouraged availment of loans resulting
to investments in real estate properties. The Company projects that sales will further increase
with the stable macroeconomic environment and the gradual recovery of the world economy.
The Company managed to achieve financial stability by maintaining a cautious stance given
the current environment. The Company will continue to offer quality projects in convenient
locations at affordable and easy payment terms.
On June 2011, the Company launched Tagaytay Country Homes 2-D, a completed residential
subdivision located at Barangay Neogan, Tagaytay City.
On February 2011, City & Land Developers, Inc. (CLDI), the Company’s subsidiary,
completed four months ahead of schedule, Grand Emerald Tower, a 39-storey office,
residential and commercial condominium located along Emerald Avenue corner Garnet and
Ruby Roads, Ortigas Center, Pasig City, and is now selling its remaining unsold units.
The Company and its subsidiaries are selling the following projects:
Brentwood Mansion, an 8-storey residential condominium located along Evangelista St. ,
New Santolan, Pasig City.
39
The Manila Residences Tower II, a 39-storey office, commercial and residential condominium
located along Taft Avenue, Metro Manila, an on-going project of CI.
Tagaytay Prime Residences is a 21-storey commercial and residential condominium located at
Tagaytay Prime Rotunda, Brgy. San Jose, Tagaytay City, an on-going project of CI.
Tagaytay Country Homes 2 (phase B and C), a residential subdivision located at Barangay
Grand Central Residences I, a 40-storey office, commercial and residential condominium
located at EDSA corner Sultan St., (fronting MRT Shaw), Mandaluyong City, an on-going
Makati Executive Tower IV, a 29-storey commercial, office, and residential condominium
project of CDC.
project of CDC.
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City, a project of
CDC.
Manila Residences Bocobo, a 34-storey office, residential and commercial condominium
located at J. Bocobo St., Ermita, City of Manila, an on-going project of CLDI.
income, interest income and dividend income. External sources come from SEC-registered
commercial papers and Home Guaranty Corporation’s guaranteed promissory notes.
The country’s economy grew dramatically from 0.9% in 2009 to 7.3 % in 2010, the highest in
more than two decades. The high gross domestic product (GDP) rate came during a peaceful
political transition of a new administration. The strong growth can be attributed to improved
investor’s confidence, government and election expenditures, continued inflow of overseas
remittances, growth of the business outsourcing sector and the high rate of foreign trade due to
the improving global economy. At present, real estate sales remained strong as bank interest
rates remained low while inflation rate remained manageable at below 5%. The Company is
optimistic that the favorable political and business environment combined with the recovery
of the world economy will bring more investments in the real estate industry.
40
For the year 2010, the Company launched 3 projects, namely, Tagaytay Prime Residences, a
21-storey commercial and residential condominium located at Prime Rotunda, Brgy. San Jose,
Tagaytay City; The Manila Residences Tower II, a 39-storey commercial and residential
condominium located along Taft Ave., Malate, Manila; and Tagaytay Country Homes 2-C, a
horizontal project located at Brgy. Neogan, Tagaytay City.
The Company’s subsidiary, Cityland Development Corporation (CDC), also launched Grand
Central Residences I, a 40-storey commercial and residential condominium, located at EDSA
corner Sultan St., Mandaluyong City.
The Company and its subsidiaries are selling the following projects:
Brentwood Mansion, an 8-storey residential condominium located along Evangelista St. , New
Santolan, Pasig City.
Tagaytay Country Homes 2B, a residential subdivision located at Barangay Neogan, Tagaytay
City.
Tagaytay Executive Village, a residential subdivision located along 41 st Division Ave., Brgy.
San Jose, Tagaytay City.
Makati Executive Tower IV is a 29-storey commercial, office, and residential condominium
project of CDC.
recently completed project of CDC.
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City, a recently
completed project of CDC.
Manila Executive Regency, a 39-storey office, commercial and residential condominium
located along J. Bocobo St., Ermita, Manila, a project of CDC.
Corinthian Executive Regency, a 39-storey commercial and residential condominium located
along Ortigas Ave., Ortigas Center, Pasig City, a project of CDC.
Manila Residences Bocobo, a 34-storey office, residential and commercial condominium
located at J. Bocobo St., Ermita, City of Manila, an on-going project of City and Land
Developers, Inc. (CLDI).
Grand Emerald Tower, a 39 storey office, residential and commercial condominium located
along Emerald Ave. corner Garnet & Ruby Roads Ortigas Center, Pasig City, an almost
41
completed project of CLDI.
The Philippine gross domestic product registered a 0.9% growth in 2009, the slowest pace in
11 years amid the global financial crisis and after being devastated by two strong typhoons
during the year. The growth was still within the government’s target showing the economy’s
resilience as compared with other economies experiencing a negative growth rate. A large
fiscal stimulus, an accommodative monetary policy and strong remittances from increasing
overseas Filipinos helped the economy elude a recession. The government aims to achieve a
better growth rate in 2010 and plans to implement appropriate policies that will continue to
provide the right environment to boost economic growth. At present, the low interest rates,
the availability of capital to investors and borrowers, the influx of dollars from overseas
workers, the growth of the business outsourcing sector and the rapidly expanding population
continued to fuel the demand of real estate properties. It is for this reason that despite the
odds, the Company posted a respectable performance in 2009. It is hopeful that the year 2010
will bring in fresh mandates that will usher in new energy and opportunities of growth that
will be beneficial to the real estate industry and to the entire business community.
For the year 2009, the Group launched 2 new condominium projects. These are: Makati
Execuitve Tower IV, a 29 storey commercial , office and residential condominium located at
Cityland Square, Senator Gil puyat Avenue, corner P. Medina St., Makati City, ( a project of
CDC) and Manila Residences Bocobo, a 34-storey office, commercial and residential
condominium located at Jorge Bocobo St,. Ermita Manila City, (a project of CLDI). These
projects were well received and are expected to boost the Company’s sales and revenues.
The Company is selling the following projects:
Brentwood Mansion , an 8-storey residential condominium located along Evangelista St., New
Tagaytay Country Homes 2B, a residential subdivision located at Barangay Neogan, Tagaytay
City.
Tagaytay Executive Village, a residential subdivision located along 41st division Avenue,
Barangay San Jose, Tagaytay City.
Naic Country Homes, a residential subdivision located at Malainen Luma, Naic Cavite.
The Company’s subsidiaries are selling the following projects:
42
located at Cityland Square, Sen. Gil Puyat Avenue, Pio Del Pilar, Makati City, a project of its
subsidiary, Cityland Development Corporation (CDC).
Grand Emerald Tower, a 39 storey office, residential and commercial condominium located
along Emerald Ave. corner Garnet & Ruby Roads Ortigas Center, Pasig City, a project of
City and Land Developers, Inc. (CLDI), a subsidiary of CDC.
Manila Executive Regency, a 39-storey office, commercial and residential condominium
located along J. Bocobo St., Ermita, Manila, a project of CDC.
Rada Regency, a 24-storey condominium located along Rada St. corner Dela Rosa St.,
Legaspi Village Makati City, a project of CDC.
Corinthian Executive Regency, a 39-storey office, commercial and residential condominium
located along Ortigas Avenue, Pasig City, a project of CDC.
Also, the Company and Cityplans Inc. (CPI), a subsidiary of Cityland Development
Corporation (CDC) are selling the last few units of the following completed and operational
projects (these are joint projects of Cityland Inc. and CPI)
Evangelista St., New Santolan, Pasig City.
Pasig Royale Mansion, an 8-storey commercial and residential condominium located at New
b) Financial Condition
June 30, 2012 vs. December 31, 2011
Total assets amounted to 11.79B as of June 2012 as compared with 11.85B in December
2011. The slight decrease in assets can be attributed to the decrease in real estate properties
for sale and installment contracts receivable. Collections decreased installment contracts
receivable while sales decreased real estate properties for sale. The decrease in these accounts
were partially offset by the increase in cash and cash equivalents. Cash and cash equivalents
increased due to the net cash flows from operating activities and the shift of investments to
shorter period resulting to a reclassification of account. Majority of the company’s funds were
used for project development and for the partial payment of accounts payable and accrued
expenses, loans and notes payable, payable to stockholders and income tax resulting to the
decline in liabilities.
43
Total stockholders’ equity now stands at 7.194B as of June 2012 which is higher than 6.941B
in December 2011 due to net income of 313.12M plus other adjustments of 5.16M less cash
dividends of 64.85M. As a result of the foregoing, the company’s liquidity position improved
with acid-test and current ratio at 0.99:1 and 1.64:1 in June 2012 from 0.88:1 and 1.59:1 in
December 2011.
December 2011 vs. December 2010
The Company’s balance sheet remained to be healthy with total assets of 11.854B in 2011,
higher than the previous year's level of 11.476B. Cash and cash equivalents increased due to
net cash inflows from operating activities and the shift of investments to shorter period
resulting to the reclassification of account. The Company’s funds were substantially utilized
for the construction of condominium projects and were also used to purchase properties,
partially settle loans and notes payable and pay cash dividends. As a result of the foregoing,
the group’s liquidity position remained stable with current and acid test ratio of 1.59:1 and
0.88:1 as compared to 2010 of 1.45:1 and 0.90:1, respectively. The decrease in liabilities
improved its solvency position with asset and debt ratio at 2.41:1 and 0.70:1 compared with
the previous year of 2.27:1 and 0.85:1, respectively.
Total stockholders' equity stood at 6.941B, higher by 8.23% as compared with 2010 of
6.413B. The increase was due to net income of 726.54M less cash dividends of 204.88M plus
other adjustments of 5.92M.
The Company’s balance sheet remained solid with total assets of 11.476B in 2010, higher by
171.00M compared with last year’s level of 11.305B. Short term cash investments increased
by 1.193B due to net cash inflows from operating activities and reinvestment of held to
maturity investments. Collection of receivables and higher unrealized gross profit of newly
launched projects led to the decrease in installment contract’s receivable (net) by 11.27%.
Majority of the funds were used for project development resulting to the completion of The
Manila Residences Tower I, Makati Executive Tower III (project of CDC) and Mandaluyong
Executive Mansion III (a project of CDC). The stable cash flow has also enabled the Group
to purchase a prime lot, pay cash dividends and reduce accounts payable and accrued
expenses by 158.14M as well as notes and loans payable by 243.00M
Total stockholders’ equity stood at 6.413B compared to the previous level of 5.798B. The
increase was due to the following: (1) increase in net income of 822.34M; (2) decrease by
202.65M due to cash dividends; and (3) decrease by P4.13M due to other adjustments. As a
result of the foregoing, the group strengthened its liquidity position with current and acid test
ratio of 1.45:1 and 0.90:1 as compared with 2009 of 1.15:1 and 0.62:1, respectively. Debt
equity ratio likewise improved to 0.85:1 as compared with 2009 of 1.02:1.
Total assets amounted to 11.305B in 2009, higher by 6.39% than last year’s level of 10.626B.
The increase in assets can be attributed to higher short-term cash investments, installment
contracts receivable and real estate properties for sale and for future development. The
opening of two condominium projects in 2009 increased real estate properties for sale and
installment contracts receivable. The Company’s funds were utilized for the development of
the project and a substantial portion was used to purchase prime lots in Manila resulting to
the increase in real estate properties for future development. Excess funds were placed in
short-term cash investments totaling 485.40M.
44
Total stockholders’ equity now stands at 5.798B from 5.257B as of 2009 and 2008,
respectively due to the following: (1) increase in net income of 739.01M; (2) decrease by
118.65M due to cash dividends; (3) decrease by 89.84M due to cash dividends of subsidiaries
(4) increase by 5.11M due to transfer of revaluation increment to retained earnings through
sale and depreciation and; (5) plus other adjustments of 5.37M As a result of the foregoing,
the group strengthened its liquidity position with current and and acid test ratio of 1.15:1
and 0.62:1 as compared with 2008 of 1.06:1 and 0.52:1, respectively. Debt equity ratio
likewise improved to 1.02:1 as compared with 2008 of 1.13:1.
c) Results of Operation
June 30, 2012 vs. June 30, 2011
Total revenues reached 1.306B as compared to the previous year of 1.336B. Lower revenues
were due to lower sales and interest income from sales of real estate. On the cost side, lower
sales decreased cost of sales and operating expenses. The Company’s payment of notes
payable decreased financial expense by 16.21%. Altogether the financial performance for the
first semester of 2012 resulted to a net income of 313.12M as compared to the previous year
of 347.61M. This translated to earnings per share and return on equity (both annualized) of
8.64 and 8.02% as compared to the previous year of 10.53 and 10.69%, respectively.
December 2011 vs December 2010
Despite the global crisis, the Company’s sale of real estate properties reached 1.989B, as
compared to last year's 2.348B. Lower sales can be attributed to the projects launched last
year which are still in the initial stages of construction. These are The Manila Residences
Tower II and Tagaytay Prime Residences. However, the last few units of the completed
condominium project, The Manila Residences Tower I, continued to contribute to total sales
which reached a 93.09% sell-out rate at the end of the year. In addition, Brentwood Mansion,
a condominium located in Pasig City and other horizontal projects in Tagaytay continued to
contribute modestly to the Company's sales.
Meantime, the construction activities of the subsidiaries were on full blast, leading to the
75.06% completion rate of Makati Executive Tower IV, while Grand Emerald Tower and
Manila Residences Bocobo, reached a completion rate of 100% and 96.36%, respectively.
The high completion rate and sales of these projects contributed significantly to revenues.
Other completed projects like the Makati Executive Tower III and Mandaluyong Executive
Mansion III continued to contribute to revenue on sales and provided stable cash flows. Other
sources of revenues are financial income and rent income. Financial income which is
substantially composed of interest income from sale of real estate properties accounted for
24.58% of total revenues.
The Company remained prudent in managing costs and other disbursements during the year.
Cost of sales decreased since this move in tandem with sales. Cost of sales was recorded at
1.209B in 2011 as compared with 1.546B in 2010. On the other hand, operating expenses
increased by 16.52% due to higher professional fees, membership dues and donations.
However, payment of loans and notes payable eased interest payments resulting to the decline
in financial expenses by 16.97%, while lower net income before tax decreased provision for
income tax by 45.86%.
Altogether, financial performance for the year 2011 resulted to a net income of 726.54M, as
compared to the previous year of 822.34M, while net income attributable to equity holders of
the parent amounted to 421.93M, as compared to the previous year of 538.08M. This
translated an earning per share and return on equity of 10.13 and 9.80% in 2011 as compared
with 12.91 and 13.42% in 2010. The Company is optimistic that sales and revenues will
improve as the projects near their completion dates.
45
December 2010 vs December 2009
The Company’s total revenues on sales reached 2.348B from 2.329B in 2009, slightly higher
by 18.56M. Revenue growth was driven by sales and high project completion rates of the
group’s projects. Revenue on sales of Manila Residences I continued to contribute
significantly to total sales since its launching in 2006. The completion of this project this year
prompted the opening in of Manila Residences Tower II in September 2010. In addition, the
new vertical project, Tagaytay Prime Residences and the other horizontal projects, Tagaytay
Country Homes 2B and 2C also contributed modestly to total revenues. .
Its subsidiaries’ projects which contributed significantly to the Company’s sales and revenues
in 2010 are: Makati Executive Tower III and IV, both are located in Makati City,
Mandaluyong Executive Mansion III in Mandaluyong City; Manila Executive Residences and
Manila Residences Bocobo in Manila; and Grand Emerald Tower in Ortigas Center, Pasig
City.
In addition, financial income which is substantially composed of interest on sales of real
estate properties increased to 691.73M from 651.52M, higher by 6.17%, accounting for
21.73% of total revenues. Moreover, recovery of impairment loss of real estate properties
increased other revenues.
On the cost side, cost of sales was recorded at 1.546B in 2010 as compared with 1.519B in
2009. Higher revenues increased cost of sales, operating expenses and provision for income
tax. On the other hand, reduction of notes and loans payable eased interest payments
consequently reducing financial expenses by 13.97%.
Altogether, financial performance for the year 2010 resulted to a net income of 822.34M,
11.28% higher than the previous year of 739.01M, while net income attributable to equity
holders of the parent amounted to 538.08M higher by 19.36% than the previous year. This
translated to an earnings per share of 15.49 and return on equity of 13.42% in 2010 as
compared with 12.98 and 12.56% in 2009, respectively.
Revenue on sales of real estate reached 2.329B as compared with last year’s figure of
2.339B despite the economic and business uncertainties that prevailed during the year.
Revenue on sales was driven by sales and high project completion rates of real estate
projects.
The projects which contributed to the Company’s sales and revenues in 2009 are: The Manila
Residences and Brentwood Mansion, both are vertical projects, while Tagaytay Executive
Village and Tagaytay Country Homes 2B (phase B) are horizontal projects. In addition, three
projects that were co-developed with Cityplans Inc., namely, Oxford Mansion and Windsor
Mansion are vertical projects which contributed modestly to sales and revenues for the year.
The Company’s subsidiary (CDC), which contributed significantly to the Company’s sales
and revenues in 2009 are: Makati Executive Tower III and IV and Rada Regency, which are
located in Makati City; Manila Executive Regency and Manila Residences Bocobo (a project
of CLDI) in Manila City; Corinthian Executive Regency and Grand Emerald Tower ( a
project of CLDI) in Ortigas Center, Pasig City and; Mandaluyong Executive Mansion III in
Mandaluyong City.
In addition, financial income which is substantially composed of interest on sales of real
estate properties reached 651.52M in 2009 as compared with 653.12M in 2008, accounting
for 21.29% and 21.08% , respectively of total revenues.
On the cost side, cost of sales was recorded at 1.519B in 2009 as compared with 1.544B in
46
2008. Operating expenses on the other hand increased due to higher taxes paid. The
Company’s partial termination of loans eased interest expense payments resulting to the
decline of financial expenses by 9.47%. Lower tax rate and taxable income decreased
income tax by 12.54%.
Altogether, financial performance for the year 2009 resulted to a net income of 739.01M,
higher than the previous year of 729.48M, while net income attributable to equity holders of
the parent amounted to 450.80M higher than 440.99M. This translated to an per share and
return on equity of 15.58 and 12.56% in 2009 as compared with 15.24 and 13.53% in 2008.
Key Performance Indicators
Cityland, Inc. (Consolidated)
Earnings per share
Return on equity
Asset to liability ratio
Debt – equity ratio
Current ratio
Acid – test ratio
Cityland Development Corp. (Consolidated)
Earnings per share
Return on equity
Current ratio
Acid – test ratio
Earnings per share
Return on equity
Current ratio
Acid – test ratio
Earnings per share
Return on equity
Current ratio
Acid – test ratio
June 30, 2012
2011
2010
8.64
8.02%
2.57
0.65
1.64
0.99
10.13
9.80%
2.41
0.70
1.59
0.88
15.49
13.42%
2.27
0.85
1.45
0.90
12.98
12.56%
2.05
1.02
1.15
0.62
0.12
0.15
9.59%
2.99
0.34
2.01
1.21
0.18
10.47%
2.64
0.46
1.77
1.07
0.21
12.86%
2.33
0.56
1.57
0.87
0.47
21.95%
2.86
0.22
2.00
1.26
0.47
22.02%
2.71
0.29
2.10
1.20
0.23
13.38%
2.79
0.30
2.23
0.88
0.07
3.01%
5.91
-22.93
21.09
0.11
4.14%
5.39
-22.41
21.23
0.18
7.20%
4.88
-17.01
15.95
7.62%
3.14
0.33
2.01
1.39
0.44
20.06%
2.85
0.21
1.68
1.38
0.05
2.24%
6.35
--
16.10
14.81
2009
Manner of Calculations
Earnings Per Share
Return on Equity
= Net Income attributable to equity holders / Ave. # of Shares Issued & Outstanding
=
Net Income attributable to equity holders
Total Stockholder’s Equity (net of minority interest)
Asset to Liability Ratio
= Total Assets / Total Liabilities
Debt – Equity Ratio
=
Loans & Notes Payable
____________
Total Stockholder’s Equity (net of Net Changes in Fair Value of Investments)
Current Ratio
= Total Current Assets / Total Current Liabilities
Acid Test Ratio
= Cash and Cash Equivalents + Short-term Investments + Available
for Sale Investments + Financial Asset at Fair Value +
Installment Contracts Receivable + Other Receivables
Total Current Liabilities
47
1. Items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of
their nature, size or incidents
There are no unusual items affecting assets, liabilities, equity, net income or cash flows.
2. Any changes in estimates of amounts reported in prior interim periods of the current financial
year or changes in estimates of amounts reported in prior financial years that have a material
effect in the current interim period
There are no changes in estimates of amounts reported in prior interim periods of the current
financial year or changes in estimates of amounts reported in prior financial years that have a
material effect in the current interim period.
3. Any issuances, repurchases, and repayments of debt and equity securities
The Parent Company and its subsidiaries issued SEC-Registered Short-Term Commercial
Papers during the period with outstanding balance of 966.30 million and 983.70 million,
respectively as of June 30, 2012.
4. Any material events subsequent to the end of the interim period that have not been reflected in
the financial statements for the interim period
There are no material events subsequent to the end of the interim period that have not been
reflected in the financial statements for the interim period.
5. Effect of changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
There are no changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
6. Any changes in contingent liabilities or contingent assets since the last annual balance sheet
date
There are no changes in the contingent liabilities or contingent assets since the last annual
balance sheet date.
7. Any Known Trends, Events or Uncertainties (Material impact on liquidity)
There is no known trends, events or uncertainties that has a material effect on liquidity.
8. Internal and External Sources of Liquidity
Internal sources come from sales of condominium and real estate projects, collection of
installment receivables and maturing short-term investments. External sources come from
bank loans.
9. Any Material Commitments for Capital Expenditures and Expected Sources of Funds of such
Expenditures
The estimated development cost of 509.87 million as of June 30, 2012 representing the cost to
complete the development of real estate projects sold and the contract payable amounting to
6.78 million representing the liabilities from the contracts to purchase land held to future development will be sourced through:
a. Sales of condominium and real estate projects
b. Collection of installment receivables
c. Maturing short-term investments
48
d. Availment of bank lines
e. Issuance of commercial papers
10. Any Known Trend or Events or Uncertainties (Material Impact on Net Sales or Revenues or
Income from Continuing Operations)
There is no known trend, event or uncertainties that has a material effect on the net sales,
revenues or income from continuing operations.
11. Any Significant Elements of Income or Loss that did not arise from Registrant’s Continuing
Operations
There are no significant elements of income or loss that did not arise from registrant’s
continuing operations.
12. Any Known Trends or Events or Uncertainties (Direct or Contingent Financial Obligation)
There are no events that will trigger direct or contingent financial obligation, including any
default or acceleration of an obligation that is material to the Company.
13. Any Known Trends or Events or Uncertainties (Material off-balance sheet transactions,
arrangements, obligations and other relationships)
There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the Company with unconsolidated entities
created during the reporting period.
Causes for any Material Changes from Period to Period in One or More Line of the
Registrant's Financial Statements
June 30, 2012 vs. December 31, 2011
a) Increase in Cash and Cash Equivalents was due to net cash flows from operating activities and
reinvestment of matured short term investments to shorter period.
b) Decrease in Short Term Cash Investments was due to maturity.
c) Decrease in Investments in Trust Funds was due to maturity and termination of pension plans.
d) Decrease in Installment Contracts Receivable was due to collection of receivables.
e) Decrease in Other Receivables was due to collection of real estate taxes from clients, accrued
interest and other receivables from contractors.
f) Decrease in Real Estate Properties for Sale was due to sales.
g) Decrease in Other Assets was due to donation of investment in real estate properties and input
VAT to real estate properties for sale.
h) Decrease in Account Payable and Accrued Expenses was due to payment.
i) Decrease in Income Tax Payable was due to payment.
j) Decrease in Pre-need Reserves was due to maturity and termination of pension plans.
k) Decrease in Payable to Stockholders was due to payment.
l) Increase in Retained Earnings was due net income and other adjustments less cash dividends.
m) Decrease in Financial Income was due to decrease in interest income from sales of real estate
properties.
n) Increase in Rental Income was due to increase in units available for lease.
o) Increase in Other Revenues was due to increase in miscellaneous and trust fund income.
p) Increase in Cost of Sales was due to cost adjustment.
q) Decrease in Operating Expenses was due to decrease in professional fees, repairs and
maintenance, association dues, taxes and licenses, and insurance expenses.
r) Decrease in Financial Expenses was due to decrease in loans and notes payable and interest
rate.
49
s) Increase in Provision for Income Tax was due to increase in provision for deferred income tax
and final tax.
t) Decrease in Net Income After Tax was due to lower revenues, higher cost of sales and
provision for income tax.
Full Fiscal Years:
December 31, 2011 vs. December 31, 2010
a) Decrease in Cash and Cash Equivalents was to was due to payment of notes and loans
payable and reinvestment in short term cash investments.
b) Increase in Short-term Cash Investments was due to net cash flows from operations and
reinvestment of maturity of held-to-maturity investments.
c) Decrease in Financial Assets at Fair Value through Profit and Loss was due to maturity
and termination of plans.
d) Decrease in Held to Maturity Investments was due to maturity of investments.
e) Decrease in Installment Contracts Receivables (net of estimated development cost) was
due to increase in unrealized gross profit account which is deducted in this account.
f) Decrease in Real Estate Properties held for future development was due to
reclassification of lot cost to Real Estate for Sale of the new project.
g) Decrease in Property and Equipment was primarily due to depreciation.
h) Decrease in Accounts Payable and Accrued Expenses was due to payment of
development costs, accrued director’s fee, and deposits.
i) Decrease in Notes and Loans Payable was due to payment.
j) Decrease in Pre-need Reserves was due to termination and maturity of contracts.
k) Increase in Capital Stock was due to 20% stock dividends.
l) Decrease in Net Changes in Fair Value of Investments was due to recognition of realized
gain on sale of stocks and impairment loss in the statements of income.
m) Increase in Retained Earnings was due to net income – net of dividends.
n) Increase in Minority Interests was due to net income of subsidiaries.
o) Increase in Financial Income was due to gain on sale of stocks and higher interests from
sale of real estate properties, cash equivalents and short-term cash investments.
p) Increase in Other Income was due to full recovery of the remaining impairment loss on
real estate properties.
q) Increase in Operating Expenses was due to higher sales.
r) Decrease in Financial Expenses was due to lower interest rates and payment of loans.
s) Increase in Provision for Income Tax was due to higher taxable income.
t)
u)
v)
w)
x)
y)
z)
aa)
ab)
ac)
Decrease in Cash and Cash Equivalents was to was due to payment of notes and loans
payable and reinvestment in short term cash investments.
Increase in Short-term Cash Investments was due to net cash flows from operations and
reinvestment of maturity of held-to-maturity investments.
Decrease in Financial Assets at Fair Value through Profit and Loss was due to maturity
and termination of plans.
Decrease in Held to Maturity Investments was due to maturity of investments.
Decrease in Installment Contracts Receivables (net of estimated development cost) was
due to increase in unrealized gross profit account which is deducted in this account.
Decrease in Real Estate Properties held for future development was due to
reclassification of lot cost to Real Estate for Sale of the new project.
Decrease in Property and Equipment was primarily due to depreciation.
Decrease in Accounts Payable and Accrued Expenses was due to payment of
development costs, accrued director’s fee, and deposits.
Decrease in Notes and Loans Payable was due to payment.
Decrease in Pre-need Reserves was due to termination and maturity of contracts.
50
ad) Increase in Capital Stock was due to 20% stock dividends.
ae) Decrease in Net Changes in Fair Value of Investments was due to recognition of realized
gain on sale of stocks and impairment loss in the statements of income.
af) Increase in Retained Earnings was due to net income – net of dividends.
ag) Increase in Minority Interests was due to net income of subsidiaries.
ah) Increase in Financial Income was due to gain on sale of stocks and higher interests from
sale of real estate properties, cash equivalents and short-term cash investments.
ai) Increase in Other Income was due to full recovery of the remaining impairment loss on
real estate properties.
aj) Increase in Operating Expenses was due to higher sales.
ak) Decrease in Financial Expenses was due to lower interest rates and payment of loans.
al) Increase in Provision for Income Tax was due to higher taxable income.
a) Decrease in Cash and Cash Equivalents was due to placements and payment of loans and
contract payable.
b) Increase in Short-Term Cash Investments was due to placements.
c) Decrease in Financial Assets through Profit and Loss was due to decrease in market
value.
d) Increase in Other Receivables was due to increase in receivable from real estate
transactions and advances.
e) Increase in Real Estate Properties for Sale and decrease in Real Estate Properties for
Lease was due to the launching of a new projects.
f) Increase in Real Estate Properties Held for Future Development was due to purchase of
properties.
g) Decrease in Property and Equipment was due to depreciation.
h) Increase in Other Assets was due to net income from retirement plan assets.
i) Increase in Accounts Payable and Accrued Expenses was due to accrual of development
costs.
j) Increase in Income Tax Payable was due to lower prepaid tax.
k) Decrease in Pre-need Reserves was due to termination and maturity of contracts.
l) Decrease in Advances from Stockholders was due to payment.
m) Increase in Net Changes in Fair Value of Investments was due to increase in value of
stocks.
n) Increase in Retained Earnings was due to net income – net of cash dividends.
o) Increase in Minority Interests was due to net income of subsidiaries.
p) Decrease in Rental Income was due to expiration of lease contracts.
q) Decrease in Other Revenues was due to decrease in recovery of impairment loss.
r) Decrease in Financial Expenses was due to decrease in loans.
s) Decrease in Provision for Income Tax was due to lower taxable income and tax rate.
Information On Independent Accountant
The company's external auditor is SyCip, Gorres, Velayo & Company.
External Audit Fees
Audit and Audit-Related Fees
Tax Fees
All Other Fees
Total
2012
410,000
--410,000
2011
390,000
--390,000
51
The Audit Committee’s approval policies and procedures consist of:
a) Discussion with the external auditors of the Audited Financial Statements.
b) Recommendation to the Board of Directors for the approval and release of the Audited
Financial Statements.
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
There is no change in and disagreements with accountants on accounting and financial
disclosure. SyCip, Gorres, Velayo and Company is the external auditor of the company.
Directors and Executive Officers
1. Identify Directors, Independent Directors and Executive Officers:
Name
Citizenship
Position
Term of Period of Service
Office
(Year)
1 07/01/97 to Present
Stephen C. Roxas
Filipino
Director/ Chairman of
the Board
Andrew I. Liuson
Filipino
1
Grace C. Liuson
Filipino
Director/ ViceChairman of the Board
Director/ Deputy ViceChairman of the Board
Josef C. Gohoc
Filipino
Peter S. Dee
Age
Family Relationship
70
Husband of Helen Roxas,
brother of Grace Liuson
and Alice Gohoc
01/16/08 to Present
68
Husband of Grace Liuson
1
02/01/11 to Present
66
Wife of Andrew Liuson
and sister of Stephen
Roxas & Alice Gohoc
Director/ President
1
02/01/11 to Present
42
Filipino
Independent Director
1
11/22/04 to Present
70
Nephew of Stephen
Roxas and Grace Liuson
& Son of Alice Gohoc
---
Paul Y. Ung
Filipino
1
11/18/08 to Present
69
---
Alice C. Gohoc
Filipino
Director
1
9/01/01 to Present
70
Sister of Stephen Roxas
& Grace Liuson
Helen C. Roxas
Filipino
Director
1
1979 to Present
63
Wife of Stephen Roxas
Filipino
Executive Vice
President/ Compliance
Officer
1
02/01/11 to Present
63
---
Emma A. Choa
Filipino
02/01/11 to Present
51
---
1
1
1/16/08 to Present
59
---
8/16/07 to Present
52
---
Eden F. Go
Filipino
Senior Vice President/
Treasurer
Vice President
Rudy Go
Filipino
Vice President
Melita M. Revuelta
Filipino
Vice President &
Assistant Corporate
Secretary
1
1/16/06 to Present
53
---
Romeo E. Ng
Filipino
Vice President
1
1/10/05 to Present
50
---
Melita L. Tan
Filipino
Vice President
1
2/16/04 to Present
52
---
Josie T. Uy
Filipino
Vice President-Manila
Branch
1
2/16/04 to Present
57
---
Emma G. Jularbal
Filipino
Corporate Secretary
--
2/15/01 to Present
56
---
1
52
1. Stephen C. Roxas
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Position
Director / Chairman of the Executive
Committee
Director / Chairman of the Executive
Committee
Director / President
Director / Chairman of the Board
Chairman
Vice- Chairman
City & Land Developers, Inc
Cityplans, Inc.
Cityland Asset-Backed Securities (SPC), Inc.
MGC New Life Christian Academy
Center for Community Transformation
Date Assumed
July 1997
July 1997
October 1988
December 2005
Past positions in other private institutions:
2.
1988 to June 1997
1978 to June 1997
Andrew I. Liuson
Name of Office
Position
Director / Vice Chairman of the
Board
Director / Vice Chairman of the
Board
Director / Chairman
Chairman
Chairman
Chairman
Chairman
Cityplans, Inc.
Febias College of Bible
International Graduate School of Leadership
Grace Christian College
Philippine Council of Evangelical Churches
Date Assumed
January 2008
January 2008
September 2006
December 2005
Cityplans, Inc.
3.
1997 to Jan. 2008
1997 to Jan. 2008
Director / Vice Chairman / Exec. Vice 1988 to September 2006
President
Grace C. Liuson
Name of Office
Position
Director / Deputy ViceChairman of the Board
Director / Deputy ViceChairman of the Board
Director / Executive Vice
President
Director / Executive Vice
President / Treasurer
Treasurer / Trustee
Treasurer
Cityplans, Inc.
Youth Gospel Center
Makati Gospel Church
Date Assumed
February 1, 2011
February 1, 2011
September 2006
December 2005
President
Executive Vice President &
Treasurer
February 2008 to January 2011
1997 to February 2008
53
Cityplans, Inc.
President
Executive Vice President &
Treasurer
Senior Vice President
February 2008 to January 2011
1997 to February 2008
1988 to September 2006
4. Josef C. Gohoc
Name of Office
City & Land Developers, Inc.
Cityland Foundation Inc.
Asian Business Solutions, Inc.
Philippine Trading & Investment Corporation
Atlas Agricultural & Mercantile Development
Corp.
Position
Director
Director
Director
Director
Director
Treasurer
First Vice President
Treasurer
First Vice President
5.
Date Assumed
February 1, 2011
February 1, 2011
December 2005
2002
1996
1997
1997
Jan. 2008 to Jan. 2011
June 2008 to Jan. 2011
Sept. 2006 to Jan. 2008
Jan. 2008 to Jan. 2011
June 2008 to Jan. 2011
Sept. 2006 to Jan. 2008
Peter S. Dee
Name of Office
Asean Finance Corporation Limited
Alpolac, Inc.
Bankers Association of the Philippines
China Banking Corp.
CBC Forex Corp.
CBC Insurance Brokers, Inc
CBC Properties & Computer Center, Inc.
Cityplans, Incorporated
Cityland Development Corp.
City And Land Developers, Inc.
GDSK Development Corp.
Hydee Management & Resources Corporation
Kemwerke, Inc.
Makati Curbs Holdings Corp.
Silver Falcon Insurance Agency
6.
Position
Director
Director
Director / President & CEO
Director / Chairman of the
Board
Chairman of the Board
Director
Director
Director
Director
Director
Duration
Past 5 years up to Present
- do - do - do - do - do - do - do - do - do - do - do - do - do -
Paul Y. Ung
Name of Office
Security Bank Corporation
Position
Director / Vice Chairman
Duration
Present
Pacific Paint & Oil Mfg. Inc.
JWL Chemical Corporation
President / Gen. Manager
1988 – 2002
1988 – 2005
54
Century Chemical Corporation
Pacific Land
Atlantic Coatings
Em-Pol Corporation
7.
Chairman
Vice President
Chairman
1989 – 2005
1989 – 2005
1989 – 2005
1989 – 2005
Alice C. Gohoc
Name of Office
Philippine Trading & Investment Corp.
Atlas Agricultural & Mercantile Development
Corp.
Asian Business Solutions, Inc.
8.
Director
Director
Director
Director
Position
Date Assumed
09/01/2001
09/01/2001
1997
1997
Director
1996
Helen C. Roxas
Name of Office
Cityplans, Inc.
Good Tidings Foundation Inc
MGC New Life Christian Academy
Position
Director
Director
Director
Director
Treasurer
Board of Trustee
Date Assumed
1978
1979
October 1988
December 2005
1992
1992
9. Rufina C. Buensuceso
Name of Office
Cityplans, Inc.
Position
Executive Vice President
Comptroller
10.
Date Assumed
February 1, 2011
February 1, 2011
September 12, 1990
1997 to 2011
1997 to 2011
Emma A. Choa
Name of Office
Position
Senior Vice President / Treasurer
Senior Vice President / Treasurer
Date Assumed
February 1, 2011
February 1, 2011
11. Eden F. Go
Name of Office
Position
Vice President
Vice President
12. Rudy Go
Date Assumed
January 2008
January 2008
55
Name of Office
Position
Vice President
Vice President
Date Assumed
August 2007
August 2007
13. Melita M. Revuelta
Name of Office
14.
Position
Vice President
Vice President
Date Assumed
January 2008
January 2008
Romeo E. Ng
Name of Office
Position
Vice President
Vice President
Date Assumed
January 2005
January 2005
15. Melita L. Tan
Name of Office
Position
Vice President
Vice President
Date Assumed
February 2004
February 2004
16. Josie T. Uy
Name of Office
Position
Vice President-Manila Branch
Vice President-Manila Branch
Date Assumed
February 2004
February 2004
17. Emma G. Jularbal
Name of Office
Position
Asst. Corporate Secretary
Corporate Secretary
Corporate Secretary
Date Assumed
July 1997
July 1997
December 2005
2. Identify Significant Employees
There is no identifiable significant employee because the Company expect each employee to do
his/her share in achieving the corporation's set goal.
3. Involvement in Certain Legal Proceedings of Any of the Directors and Executive Officers, during
the past five years:
During the past five years and up to the latest date, there is no involvement in certain legal
proceedings of any of the directors and executive officers such as:
a) Any bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or within two
years prior to that time;
b) Any conviction by final judgment, including the nature of the offense, in a criminal
proceeding, domestic or foreign, or being subject to a pending criminal proceeding,
domestic or foreign;
56
c) Being subject to any order, judgment, or decree, not subsequently reversed suspended or
vacated, of any court of competent jurisdiction, domestic or foreign, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement in any
type of business, securities, commodities or banking activities; and
d) Being found by a domestic or foreign court of competent jurisdiction (in a civil action),
the Commission or comparable foreign body, or a domestic or foreign Exchange or other
organized trading market or self regulatory organization, to have violated a securities or
commodities law or regulation and the judgment has not been reversed, suspended, or
vacated.
Executive Compensation
EXECUTIVE COMPENSATION SUMMARY TABLE
Name
Position
Josef C. Gohoc
President effective Feb. 1, 2011
Grace C. Liuson
President up to Jan. 31, 2011
Emma A. Choa
Eden F. Go
Vice President
Melita M. Revuelta
Vice President
Rudy Go
Vice President
Ma. Riza Q. Sta Ana Manager
Salaries
Bonus
Others
Total (Top 5)
Salaries
Bonus
Others
All officers & directors as a group unnamed
2010
x
x
x
x
x
3,652,846.00
4,918,883.00
9,406,662.30
17,978,391.30
6,020,820.00
5,585,185.00
1,733,282.26
13,339,287.26
2011
x
2012 (estimate)
x
x
x
x
x
x
x
3,615,570.00
6,007,832.00
4,824,736.32
14,448,138.32
6,254,481.00
5,172,525.00
3,429,027.43
14,856,033.43
x
x
3,874,404.00
968,601.00
711,487.32
5,554,492.32
5,857,757.00
2,436,319.00
2,970,096.43
11,264,172.43
X= represents the top five officers for the specific or given year
The Company has no standard arrangements with regards to the remuneration of its directors. In 2011
and 2010, the Board of Directors received a total of 2,030,634.75 and 1,439,412.56 respectively,
including a total per diem of 14,400.00 per annum for each director for the board meetings attended,
as part of the compensation under all officers and directors as a group unnamed. Moreover, the
Company has no standard arrangement with regards to the remuneration of its existing officers aside
from the compensation received nor any other arrangement with employment contracts, compensatory
plan and stock warrants or options.
Security Ownership of Certain Beneficial Owners and Management
a) Security Ownership of Record and Beneficial Owner owning more than 5% of the outstanding
capital stock of the Registrant as of June 30, 2012:
Title of Class
Unclassified
Common Shares
Name, Address &
Relationship with Issuer
Stephen C. Roxas
3F Cityland Condo 10
Tower II, 154 H.V. Dela
Costa St., Ayala North,
Makati City / Director
Beneficial Owner & Citizenship
Relationship
--Filipino
No. of Shares
Held
11,737,664
Percentage
28.17%
57
Title of Class
Unclassified
Common Shares
Name, Address &
Relationship with Issuer
Grace C. Liuson
Tower I, 156 H.V. Dela
Unclassified
Common Shares
Andrew I. Liuson
Tower I, 156 H.V. Dela
Unclassified
Common Shares
Beneficial Owner & Citizenship
Relationship
--Filipino
No. of Shares
Held
6,126,970
Percentage
14.70%
---
Filipino
5,655,675
13.57%
Helen C. Roxas
---
Filipino
3,770,449
9.05%
Unclassified
Common Shares
Daniel Yen Chiong
1148 Tamarind Road,
Dasmariñas Village, Makati
City / Stockholder
---
Filipino
3,770,449
9.05%
Unclassified
Common Shares
Lucy Fan
47 Cambridge Circle, North
Forbes Park, Makati City /
Stockholder
---
American
3,770,449
9.05%
Unclassified
Common Shares
The Good Seed Sower
Foundation Inc.
Makati City / Stockholder
---
Filipino
3,770,438
9.05%
Unclassified
Common Shares
Alice Gohoc
24 Pili Ave., Forbes Park,
---
Filipino
3,015,935
7.24%
The person who will vote the shares of Good Seed Sower Foundation, Inc. is Winnie Go, the
treasurer and director of the foundation.
b) No change of control in the corporation has occurred since the beginning of its last fiscal year.
c) Security Ownership of Management as of June 30, 2012
Title of Class
DIRECTORS:
Unclassified
Common Shares
Name of Beneficial
Owner / Position
Nature & Amount of
Ownership
Stephen C. Roxas
Director/ Chairman of the
Board
Direct/
Indirect
Unclassified
Common Shares
Andrew I. Liuson
Director/ Vice Chairman
of the Board
Unclassified
Common Shares
Grace C. Liuson
Director/ Deputy ViceChairman of the Board
Citizenship
Percentage
11,737,664
Filipino
28.18%
Direct
5,655,675
Filipino
13.57%
Direct/
Indirect
6,126,970
Filipino
14.70%
58
Title of Class
Unclassified
Common Shares
Name of Beneficial
Owner / Position
Josef C. Gohoc
Director/ President
Nature & Amount of
Citizenship
Ownership
Direct
414 Filipino
Unclassified
Common Shares
Peter S. Dee
Direct
16
Filipino
---
Unclassified
Common Shares
Paul Y. Ung
Direct
14
Filipino
---
Unclassified
Common Shares
Unclassified
Common Shares
Alice C. Gohoc
Director
Helen C. Roxas
Director
Direct/
Indirect
Direct
3,015,935
Filipino
7.24%
3,770,449
Filipino
9.05%
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
---
---
Filipino
---
EXECUTIVE OFFICERS:
Unclassified
Common Shares
Unclassified
Emma A. Choa
Common Shares
Treasurer
Unclassified
Eden F. Go
Common Shares
Vice President
Unclassified
Rudy Go
Common Shares
Vice President
Unclassified
Melita M. Revuelta
Common Shares
Vice President
Unclassified
Romeo E. Ng
Common Shares
Vice President
Unclassified
Melita L. Tan
Common Shares
Vice President
Unclassified
Josie T. Uy
Common Shares
Vice President – Mla
Unclassified
Emma G. Jularbal
Common Shares
Corporate Secretary
Security Ownership of all Directors & Officers
30,307,137
Percentage
---
72.74%
d) Voting Trust Holders of 5% or More
There is no voting trust or similar arrangement holding 5% of a class securities.
Certain Relationships and Related Transactions
1. Transactions of Registrant with Any Director, Executive Officer of the Registrant and Any
Nominee for Election as a Director
There is no transaction (or series of similar transactions) with or involving the registrant or
any of each subsidiary with a director, executive officer, and a nominee for election as a
director.
2. Significant Transactions with related parties:
a) Interest-bearing cash advances and non-interest-bearing advances for reimbursable
expenses from and to the registrant which the Company enters into with its affiliates in
the regular course of its business.
59
The Registrant's affiliates are its subsidiaries, Cityland Development Corporation (CDC),
City and Land Developers, Inc. ( CLDI) and Cityplans, Inc. (CPI).
Interest rates used by the parties for the interest-bearing cash advances were the prevailing
market interest rates for loans averaged by the parties.
b) Existing management contract with Cityland Incorporated (CI), its parent company.
Business Purpose / Nature of the transaction:
CI, a major stockholder of Cityland Development Corporation (CDC), has an existing
management agreement with CDC wherein CI provides management services to CDC.
The agreement is for a period of five years renewable automatically for another five years
unless either party notifies the other six months prior to expiration. The management fee
is based on a certain percentage of net income as mutually agreed upon by both parties.
The management fees for 2011, 2010 and 2009 were waived by CI.
Corporate Governance
The evaluation system employed by the Corporation is thru a periodic self-rating system based on
the criteria on the leading practices and principles on good governance.
1. Measures being undertaken by the Company to fully comply with the adopted Leading
Practices On Good Corporate Governance
We have started implementing the periodic self-rating system.
2. Any Deviation from the Company's Manual of Corporate Governance (including a
disclosure of the name and position of the persons involved and sanctions imposed on said
individual).
There were no major deviations that require sanctions.
3. Any Plan to Improve Corporate Governance of the Company.
Based on the outcome of the periodic self-rating, we will come up with necessary actions /
procedures to improve the corporate governance of the Company.
In compliance with SEC Memorandum Circular No. 6, Series of 2009, the Company has
started implementing the applicable rules of the Revised Code of Corporate Governance
in its aim to continually improve its corporate governance system.
60
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Actual Fees and Expenses:
Registration Fee:
Filing Fee
Legal Research Fee
Legal and Accounting Fees
Publication Fee
Php
837,500
8,375
845,875
30,000
29,000
Estimated Fees and Expenses:
Printing Costs of STCPs (estimate)
Documentary Stamps (estimate)
Total
Php
There is no insurance premium paid by the Registrant in connection with this offering.
30,000
5,500,000
6,434,875
61
CITYLAND, INC.
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
Audited for Year 2011, 2010 and 2009 and
Unaudited As of and For the Six Months Ended June 30, 2012
Financial Statements
Statement of Management’s Responsibility for Financial Statements
Report of Independent Public Accountant
Balance Sheets as of December 31, 2011 and 2010
Statements of Income for the Years Ended December 31, 2011, 2010 and 2009
Statements of Changes in Stockholders’ Equity for the Years Ended
December 31, 2011, 2010 and 2009
Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009
Notes to Financial Statements
Balance Sheets as of June 30, 2012 and December 31, 2011
Statements of Income for the Six Months Ended June 30, 2012 and June 30, 2011
Statements of Comprehensive Income for the Six Months Ended June 30, 2012 and June 30,
2011
Statements of Changes in Stockholders’ Equity as of June 30, 2012 and June 30, 2011
Statements of Cash Flows as of June 30, 2012 and June 30, 2011
Notes to Financial Statements
Page
Supplementary Schedules
Report of Independent Public Accountants on Supplementary Schedules
A. Financial Assets
B. Amounts Receivable from Directors, Officers, Employees, Related Parties and
Principal Stockholders (Other than Related Parties)
C. Amounts Receivable from Related Parties which are Eliminated during the
Consolidation of Financial Statements
D. Intangible Assets – Other Assets
E. Long-Term Debt
F. Indebtedness to Related Parties
G. Guarantees of Securities of Other Issuers
H. Capital Stock
***
***
***
***
***
Others
Annex “A” Retained Earnings Available for Dividend Declaration
Annex “B” Map of the Relationships of the Companies within the Group
Annex “C” Supplementary Schedule of All Effective Standards and Interpretations
(Part 1, 4j)
Index to Exhibits
______________
***
These schedules, which are required by Part II of SRA Rule 68, as amended, have been
omitted because they are either not required, not applicable or the information required to be
presented is included in the Company’s financial statements or the notes to financial
statements.
COVER SHEET
8 1 6 1 8 8
SEC Registration Number
C I T Y L A N D ,
I N C .
A N D
S U B S I D I A R I E S
(Company’s Full Name)
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,
(Business Address: No. Street City/Town/Province)
Rufina Buensuceso
893-6060
(Contact Person)
(Company Telephone Number)
1 2
3 1
A A C F S
Month
Day
(Form Type)
Month
(Calendar Year)
Day
(Annual Meeting)
Not Applicable
(Secondary License Type, If Applicable)
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
14
Total No. of Stockholders
Domestic
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
*SGVMC312822*
A member firm of Ernst & Young Global Limited
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SyCip Gorres Velayo & Co.
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001,
January 25, 2010, valid until December 31, 2012
SEC Accreditation No. 0012-FR-2 (Group A),
February 4, 2010, valid until February 3, 2013
INDEPENDENT AUDITORS’ REPORT
The Stockholders and the Board of Directors
Cityland, Inc.
2nd and 3rd Floors, Cityland Condominium 10, Tower I
156 H.V. de la Costa Street
Ayala North, Makati City
We have audited the accompanying consolidated financial statements of Cityland Inc. and its
subsidiaries, which comprise the consolidated balance sheets as at December 31, 2011 and 2010, 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, 2011, and a summary of significant accounting policies
and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Philippine Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
*SGVMC312822*
-2Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Cityland, Inc. and its subsidiaries as at December 31, 2011 and 2010, and their
financial performance and their cash flows for each of the three years in the period ended
December 31, 2011 in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Aileen L. Saringan
Partner
CPA Certificate No. 72557
SEC Accreditation No. 0096-AR-2 (Group A),
March 18, 2010, valid until March 17, 2013
Tax Identification No. 102-089-397
BIR Accreditation No. 08-001998-58-2009,
June 1, 2009, valid until May 31, 2012
PTR No. 3174828, January 2, 2012, Makati City
March 21, 2012
*SGVMC312822*
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CITYLAND, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31
2010
2009
2011
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Changes in fair value of available-for-sale financial
assets (Note 12)
Realized loss on sale of available-for-sale financial
assets recognized in the consolidated statements
of income (Note 12)
Loss on impairment of available-for-sale financial
assets recognized in the consolidated statements of
income (Notes 12 and 20)
TOTAL COMPREHENSIVE INCOME
Attributable to:
Equity holders of the parent
Non-controlling interests
=822,337,474
P
=726,544,436 P
P
=739,008,253
446,253
10,346,048
(78,821)
–
–
(78,821)
(12,892,158)
(5,031,251)
1,752,711
(10,693,194)
–
5,314,797
=811,644,280
P
=726,465,615 P
P
=744,323,050
P532,431,035
P
=421,848,208 =
304,617,407 279,213,245
=811,644,280
P
=726,465,615 P
P
=453,934,012
290,389,038
P
=744,323,050
See accompanying Notes to Consolidated Financial Statements.
*SGVMC312822*
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009
Capital
Stock
(Note 15)
Attributable To Equity Holders of the Parent
Net Changes
in Fair Values
of Availablefor-sale
Financial assets
Retained Earnings (Note 15)
(Note 12)
Appropriated
Unappropriated
Non-controlling
Interests
Total
P
=3,260,416,810
450,786,567
3,147,445
453,934,012
P
=1,996,520,684
288,221,686
2,167,352
290,389,038
P
=5,256,937,494
739,008,253
5,314,797
744,323,050
9,705,572
2,236,125
BALANCES AT DECEMBER 31, 2008
Net income
Other comprehensive income
Total comprehensive income
Transfer of deferred income tax liability on
deemed cost adjustments realized through sale
Net decrease in deemed cost adjustment in
properties of a subsidiary
Cash dividends - P
=4.10 per share
Cash dividends declared by subsidiaries
Appropriation of retained earnings
P
=289,381,990
–
–
–
P
=3,392,346
–
3,147,445
3,147,445
P
=–
–
–
–
–
–
–
(7,469,447)
(7,469,447)
–
–
–
–
–
–
–
–
–
–
–
100,000,000
1,447,971
(118,646,616)
–
(100,000,000)
1,447,971
(118,646,616)
–
–
1,423,496
–
(89,835,368)
–
2,871,467
(118,646,616)
(89,835,368)
–
Net income
Other comprehensive income
Increase in market value of stocks held by CPI’s
investments in trust fund
deemed cost adjustment realized through sale
Stock dividends - 20%
Fractional shares
Cash dividends - P
=4.29 per share
289,381,990
–
–
–
3,589,682,730
538,075,506
(5,644,471)
532,431,035
2,208,203,422
284,261,968
(5,048,723)
279,213,245
5,797,886,152
822,337,474
(10,693,194)
811,644,280
(36,764)
(36,764)
(6,315,388)
–
(229)
–
(78,506,479)
6,599,782
–
(287)
(124,144,874)
(78,506,479)
6,539,791
–
(5,644,471)
(5,644,471)
P
=2,967,642,474
450,786,567
–
450,786,567
Total
100,000,000
–
–
–
3,193,760,949
538,075,506
–
538,075,506
–
–
–
–
–
57,876,340
–
–
–
–
–
–
–
–
–
–
–
–
–
12,915,170
(57,876,340)
(58)
(124,144,874)
–
–
12,915,170
–
(58)
(124,144,874)
–
(Forward)
*SGVMC312822*
-2-
Capital
Stock
(Note 15)
Net income
Other comprehensive income (loss)
Increase in market value of stocks held by CPI’s
investments in trust fund
deemed cost adjustments realized through sale
and depreciation
Appropriation
Stock dividends - 20%
Fractional shares
Cash dividends - P
=3.71 per share
P
=347,258,330
–
–
–
Attributable To Equity Holders of the Parent
Net Changes
in Fair Values
of Availablefor-sale
Financial assets
Retained Earnings (Note 15)
(Note 12)
Appropriated
Unappropriated
P
=895,320
–
(78,697)
(78,697)
P
=100,000,000
–
–
–
P
=3,562,730,353
421,926,905
–
421,926,905
–
–
–
–
–
–
69,451,600
–
–
–
–
–
–
–
–
–
–
100,000,000
–
–
–
–
P
=416,709,930
P
=816,623
P
=200,000,000
3,335,800
(100,000,000)
(69,451,600)
(66)
(128,832,840)
–
P
=3,689,708,552
Total
P
=4,010,884,003
421,926,905
(78,697)
421,848,208
–
3,335,800
–
–
(66)
(128,832,840)
–
P
=4,307,235,105
Non-controlling
Interests
Total
P
=2,402,557,807
304,617,531
(124)
304,617,407
P
=6,413,441,810
726,544,436
(78,821)
726,465,615
(146,138)
(146,138)
2,810,283
–
–
–
–
(76,053,001)
6,146,083
–
–
(66)
(128,832,840)
(76,053,001)
P
=2,633,786,358
P
=6,941,021,463
*SGVMC312822*
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31
2009
2010
2011
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Interest income (Note 19)
Interest expense - net of amounts capitalized (Note 20)
Donation of real estate property
Depreciation (Note 18)
Retirement benefits cost (income) (Note 22)
Loss on demolition of investment properties
Decrease in pre-need reserves (Note 5)
Trust fund income (Note 21)
Dividend income (Note 19)
Recovery of impairment loss on real estate properties
for lease (Notes 10 and 21)
Gain on sale of available-for-sale financial assets
(Notes 19 and 20)
Impairment loss of available-for-sale financial assets
(Note 20)
Gain on sale of property and equipment
Operating income before working capital changes
Decrease (increase) in:
Installment contracts receivable
Other receivables
Real estate properties for sale
Real estate properties held for future development
Deposits and others
Increase (decrease) in:
Accounts payable and accrued expenses
Other reserve
Cash generated from operations
Interest received
Income taxes paid, including creditable and
final withholding taxes
Contribution to plan assets (Note 22)
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Matured short-term cash investments (Note 4)
Demolition of investment properties
Disposal of property and equipment
Sale of available-for-sale financial assets (Note 12)
Matured held-to-maturity investments
Withdrawals from investments in trust funds (Note 5)
Additions to:
Investment properties (Note 10)
Property and equipment (Note 11)
Contributions to investments in trust funds (Note 5)
Dividends received (Note 19)
Purchases of short-term cash investments (Note 4)
Net cash flows from (used in) investing activities
=1,027,171,395
P
=837,433,861 P
(667,307,814)
103,291,729
30,611,833
21,659,334
(1,689,687)
5,588,239
(2,548,858)
(2,213,192)
(51,118)
=933,791,845
P
(671,914,669) (646,093,404)
122,520,248
144,596,418
–
–
23,301,123
23,270,974
188,730
(14,275,459)
–
–
(5,279,339) (11,995,491)
(2,669,444)
(3,212,279)
(207,791)
(397,090)
–
(86,937,620)
(28,992,020)
–
(19,607,724)
(5,031,251)
–
–
324,774,327
1,752,711
(59,999)
388,257,621
–
(76,999)
391,585,244
86,707,970
(21,380,699)
(275,869,218)
(111,975,937)
(4,284,368)
302,129,959
(50,502)
300,051,532
669,858,935
(200,586,881)
(118,683)
769,204,903
967,068,028
6,696,429
–
–
–
7,932,725
339,691,380 (129,665,103)
4,793,618
(4,426,589)
481,946,239
60,627,226
(184,739,867) (188,785,442)
(12,560,520)
(1,263,651)
(155,741,013)
(76,930)
861,570,528
667,679,431
188,500,353
(177,530)
316,394,508
647,692,661
(237,093,389) (182,779,720)
(180,507)
(860,586)
1,291,976,063
780,446,863
–
–
60,000
14,671,265
150,949,247
8,388,256
76,999
5,524,369
3,123,478
15,422,893
(343,907)
(651,039)
(6,800,632)
(1,792,428)
–
–
(747,509)
(1,940,761)
(2,430,147)
207,791
397,090
51,118
– (1,193,100,028) (485,400,000)
972,517,521 (1,021,707,313) (463,446,971)
(Forward)
*SGVMC312822*
-2Years Ended December 31
2009
2010
2011
CASH FLOWS FROM FINANCING ACTIVITIES
Net availments (payments) of short-term notes and loans
(Note 14)
Dividends paid (Note 15)
Interest paid (Note 14)
Increase in (payments of) payable to stockholders (Note 24)
Payments of long-term loans (Note 14)
Availments of long-term loans
Payments of contracts payable (Note 14)
Net cash flows used in financing activities
(P
=370,253,021)
(204,302,314)
(108,500,647)
66,665,888
(46,000,000)
–
–
(662,390,094)
=55,734,293
P
(201,983,096)
(125,590,590)
(990,241)
(303,735,023)
5,000,000
–
(571,564,657)
P682,828,659
=
(207,936,701)
(140,787,914)
(26,400,909)
(455,595,006)
44,000,000
(293,984,572)
(397,876,443)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
1,079,332,330
(301,295,907)
(80,876,551)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
882,491,430
1,183,787,337 1,264,663,888
END OF YEAR (Note 4)
P
=1,961,823,760
=882,491,430 P
P
=1,183,787,337
*SGVMC312822*
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
Cityland, Inc. (the Parent Company) was incorporated in the Philippines on May 15, 1979. The
Parent Company has a majority owned subsidiary, namely, Cityland Development Corporation
(CDC), a publicly listed company, and two wholly owned subsidiaries, namely, Credit & Land
Holding, Inc. (CLHI) and Cityads Incorporated (CAI). CDC has two majority owned subsidiaries,
namely, City & Land Developers, Incorporated (CLDI), another publicly listed company, and
Cityplans, Incorporated (CPI). The primary purpose of the Parent Company and its subsidiaries
(the Group), which are all domiciled in the Philippines, is to acquire, develop, improve, subdivide,
cultivate, lease, sublease, sell, exchange, barter and/or dispose of agricultural, industrial,
commercial, residential and other real properties, as well as to construct, improve, lease, sublease,
sell and/or dispose of houses, buildings and other improvements thereon, and to manage and
operate subdivisions and housing projects or otherwise engage in the financing and trading of real
estate. In addition, CPI is engaged in the business of establishing, organizing, developing,
maintaining, conducting, operating, marketing and selling pension plans.
The Group’s registered office and principal place of business is 2nd and 3rd Floors, Cityland
Condominium 10, Tower I, 156 H.V. de la Costa Street, Ayala North, Makati City.
The consolidated financial statements of Cityland, Inc. were authorized for issue by the Board of
Directors (BOD) on March 21, 2012.
2. Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The consolidated financial statements of the Group have been prepared using the historical cost
basis, except for financial assets at fair value through profit or loss and available-for-sale financial
assets that have been measured at fair values and certain items of property and equipment which
are stated at revalued amounts. These consolidated financial statements are presented in
Philippine peso (Peso), which is the Parent Company’s functional currency, rounded to the nearest
Peso except when otherwise indicated.
Statement of Compliance
The consolidated financial statements have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS).
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for
the adoption of the following new and amended Philippine Accounting Standards (PAS), PFRS
and new Philippine Interpretations based on International Financial Reporting Interpretations
Committee (IFRIC) interpretations effective in 2011. The adoption of the following revised PAS
is relevant but does not have a significant impact on the consolidated financial statements:
·
Revised PAS 24, Related Party Disclosures, simplifies the identification of related party
relationships, particularly in relation to significant influence and joint control. The
amendment emphasizes a symmetrical view on related party relationships as well as clarifies
in which circumstances persons and key management personnel affect the related party
*SGVMC312822*
-2relationships of an entity. The amendment also introduces an exemption from the general
related party disclosure requirements, for transactions with a government and entities that are
controlled, jointly controlled or significantly influenced by the same government as the
reporting entity. The adoption of the amendment did not have any impact on the financial
position and performance of the Group.
The adoption of the following new and amended PFRS, PAS and Philippine Interpretations are
either not relevant to or have no significant impact on the consolidated financial statements:
·
·
·
Amended PAS 32, Financial Instruments: Presentation - Clarification of Rights Issues
Amended Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding
Requirement
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity
Instruments
Improvements to PFRS
The annual improvements process has been adopted by the International Accounting Standards
Board (IASB) to deal with non-urgent but necessary amendments to PFRS. The following
summarizes the amendments that are effective on or after January 1, 2011. The adoption of the
following amendments is relevant but does not have a significant impact on the consolidated
financial statements:
·
PFRS 7, Financial Instruments Disclosures, emphasizes the interaction between quantitative
and qualitative disclosures and the nature and extent of risks associated with financial
instruments.
·
PAS 1, Presentation of Financial Statements, clarifies that an entity will present an analysis of
other comprehensive income for each component of equity, either in the consolidated
statement of changes in equity or in the notes to the consolidated financial statements.
·
PAS 27, Consolidated and Separate Financial Statements (Amended), clarifies the
consequential amendments from PAS 27 made to PAS 21, The Effect of Changes in Foreign
Exchange Rates, PAS 28, Investment in Associates, and PAS 31, Interest in Joint Ventures,
apply prospectively.
·
PAS 34, Interim Financial Reporting, provides guidance to illustrate how to apply disclosure
principles in PAS 34 and requires additional disclosures on: (a) the circumstances likely to
affect fair values of financial instruments and their classification, (b) transfers of financial
instruments between different levels of the fair value hierarchy, (c) changes in the
classification of financial assets and (d) changes in contingent liabilities and assets.
Other amendments resulting from the following 2011 improvements to PFRS, PAS and Philippine
Interpretations did not have any significant impact on the accounting policies, financial position or
performance of the Group:
·
·
PFRS 3, Business Combinations (Revised)
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
*SGVMC312822*
-3Basis of Consolidation
The consolidated financial statements include the financial statements of the Parent Company and
its subsidiaries as of December 31 of each year. The financial statements of the subsidiaries are
prepared for the same reporting year as the Parent Company using consistent accounting policies.
These subsidiaries, all incorporated and domiciled in the Philippines, and the percentage of
ownership of the Parent Company in 2011, 2010 and 2009, are as follows:
Direct:
CAI
CLHI
CDC
Indirect through CDC (including direct ownership of
the Parent Company in CLDI of 29.54% and
CPI of 9.18%):
CLDI
CPI
Percentage
of Ownership
Nature of
Activity
100.00
100.00
50.40
Advertising
Holding
Real estate
54.60
Real estate
Pre-need
pension plans
54.95
Subsidiaries are entities over which the Parent Company has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of any potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Parent Company controls another entity.
Subsidiaries are consolidated from the date on which control is transferred to the Parent Company
and cease to be consolidated from the date on which control is transferred out of the Parent
Company.
The equity, net income and total comprehensive income attributable to non-controlling interests of
the consolidated subsidiaries are shown separately in the consolidated balance sheet, consolidated
statement of income and consolidated statement of comprehensive income, respectively.
All significant intercompany accounts and transactions are eliminated.
Non-controlling Interests
Non-controlling interest represents the portion of the net assets of consolidated subsidiaries not
held by the Group, and are presented separately in the consolidated statement of income,
consolidated statement of comprehensive income and within the equity section of the consolidated
balance sheets, separate from the Parent company’s equity. The losses applicable to the minority
in a consolidated subsidiary may exceed the non-controlling interest’s equity in the subsidiary
even if the losses exceed the non-controlling equity investment in the subsidiary.
The acquisition of non-controlling interests is not considered a business combination under
PFRS 3, Business Combinations, and therefore, the re-measurement of the net assets acquired is
not permissible and is not performed. Subsequent to January 1, 2010, changes in the parent's
ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. In such circumstances, the carrying amounts of the controlling and non-controlling
interests shall be adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interests is adjusted and the fair value
of the consideration paid or received shall be recognized directly in equity and attributed to the
owners of the parent. This is applied on a prospective basis. Prior to January 1, 2010, acquisitions
*SGVMC312822*
-4of non-controlling are accounted for using the parent entity extension concept method, wherein
any excess of the consideration given up over the book value of the net assets acquired is
recognized as goodwill. Any excess of the book value of the net assets acquired over the
consideration given up is recognized as negative goodwill referred to as “Excess of net book value
of non-controlling interests acquired over acquisition cost” in the consolidated statement of
income.
Non-controlling interests represent interests in CDC, CLDI and CPI not held by the Group.
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of three
months or less from dates of acquisition, and are subject to an insignificant risk of change in value.
Short-term Cash Investments
Short-term cash investments are investments with maturities of more than three months but not
exceeding one year from dates of acquisition.
Financial Assets and Financial Liabilities
Date of recognition
The Group recognizes a financial asset or a financial liability in the consolidated balance sheet
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 settlement date accounting.
Initial recognition of financial instruments
Financial instruments are recognized initially at fair value, which is the fair value of the
consideration given (in case of an asset) or received (in case of a liability). The initial
measurement of financial instruments, except for those designated at fair value through profit or
loss, includes directly attributable transaction costs.
Classification of financial instruments
Subsequent to initial recognition, the Group classifies its financial instruments in the following
categories: financial assets and financial liabilities at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets and other financial
liabilities. The classification depends on the purpose for which the instruments are acquired and
whether they are quoted in an active market. Management determines the classification at initial
recognition and, where allowed and appropriate, re-evaluates this classification at each end of
reporting period.
a. Financial Assets or Financial Liabilities at Fair Value Through Profit or Loss
A financial asset or financial liability is classified in this category if acquired principally for
the purpose of selling or repurchasing in the near term or upon initial recognition it is
designated by the management as at fair value through profit or loss. Financial assets or
financial liabilities classified in this category are designated as at fair value through profit or
loss by management on initial recognition when the following criteria are met:
·
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on
them on a different basis; or
*SGVMC312822*
-5·
·
The assets or liabilities are part of a group of financial assets or financial liabilities, or
both financial assets and financial liabilities, which are managed and their performance is
evaluated on a fair value basis, in accordance with a documented risk management or
investment strategy; or
The financial instrument contains an embedded derivative, unless the embedded
derivative does not significantly modify the cash flows or it is clear, with little or no
analysis, that it would not be separately recorded.
Financial assets or financial liabilities classified under this category are carried at fair value in
the consolidated balance sheet. Changes in the fair value of such assets and liabilities are
recognized in the consolidated statement of income.
The Group designated its investments in trust funds as financial assets at fair value through
profit or loss. The Group’s investments in trust funds directly relate to the pre-need reserves
accounts.
b. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Group provides money, goods or
services directly to a debtor with no intention of trading the receivables. Loans and receivables
are carried at cost or amortized cost in the consolidated balance sheet. Amortization is
determined using the effective interest rate method. Loans and receivables are included in
current assets if maturity is within 12 months from the end of reporting period. Otherwise,
these are classified as noncurrent assets.
The Group’s loans and receivables consist of cash in banks and cash equivalents, short-term
cash investments, installment contracts receivable and other receivables.
c. Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities wherein the Group has the positive intention and ability to hold
to maturity. Held-to-maturity investments are carried at cost or amortized cost in the
consolidated balance sheet. Amortization is determined using the effective interest rate
method. Assets under this category are classified as current assets if maturity is within 12
months from the end of the reporting period and noncurrent assets if maturity is more than a
year.
The Group has no held-to-maturity investments as of December 31, 2011 and 2010.
d. Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. Available-for-sale financial assets are
carried at fair value in the consolidated balance sheet. Changes in the fair value of such assets
are accounted in the consolidated statement of comprehensive income and in equity. These
financial assets are classified as noncurrent assets unless the intention is to dispose such assets
within 12 months from the end of reporting period.
*SGVMC312822*
-6The Group’s available-for-sale financial assets consist of investments in quoted equity
securities that are traded in liquid markets, held for the purpose of investing in liquid funds
and not generally intended to be retained on a long-term basis.
e. Other Financial Liabilities
Other financial liabilities are non-derivative financial liabilities with fixed or determinable
payments that are not quoted in an active market. They arise when the Group owes money,
goods or services directly to a creditor with no intention of trading the payables. Other
financial liabilities are carried at cost or amortized cost in the consolidated balance sheet.
Amortization is determined using the effective interest rate method. Other financial liabilities
are included in current liabilities if maturity is within 12 months from the end of reporting
period, otherwise, these are classified as noncurrent.
The Group’s other financial liabilities consist of accounts payable and accrued expenses, notes
and loans payable and payables to stockholders.
Determination of fair value
The fair value of financial instruments traded in active markets at the end of reporting period 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 traded in an active market, the fair value is determined
using appropriate valuation techniques. Valuation techniques include net present value
techniques, comparison to similar instruments for which market observable prices exist, option
pricing models and other relevant valuation models.
“Day 1” Difference
Where the transaction price in a non-active market is different from the fair value of 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” difference) in the consolidated statement
of income unless it qualifies for recognition as some other type of asset. In cases where inputs are
made of data which are 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” difference.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated
balance sheet 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.
*SGVMC312822*
-7Derecognition of Financial Assets and Financial Liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when:
·
·
·
the rights to receive cash flows from the asset have expired; or
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
the Group has transferred its right to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
When the Group has transferred its rights to receive cash flows from a financial asset and has
neither transferred nor retained substantially all the risks and rewards of the financial asset nor
transferred control of the asset, the asset is recognized to the extent of the Group’s continuing
involvement in the financial 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 liabilities
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 end of the reporting period whether a financial asset or a group of
financial assets is impaired.
Assets carried at amortized cost
The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. Objective evidence includes observable data that comes
to the attention of the Group about loss events such as, but not limited, to significant financial
difficulty of the counterparty, a breach of contract, such as default or delinquency in interest or
principal payments, probability that the borrower will enter bankruptcy or other financial
reorganization. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in the group
of financial assets with similar credit risk and characteristics and that group of financial assets is
collectively assessed for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is recognized are not included in a collective assessment of impairment.
The impairment assessment is performed at each end of the reporting period. For the purpose of a
collective evaluation of impairment, financial assets are grouped on the basis of such credit risk
characteristics such as customer type, payment history, past-due status and term.
*SGVMC312822*
-8If there is an objective evidence that an impairment loss on loans and receivable carried at
amortized cost has been incurred, the amount of loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rates (i.e., the effective interest rate computed at initial recognition). The carrying amount
of the asset shall be reduced either directly or through the use of an allowance account. The
amount of loss, if any, is recognized in the consolidated statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed by adjusting the allowance account. The amount of the
reversal is recognized in the consolidated statement of income. Interest income continues to be
accrued on the reduced carrying amount based on the original effective interest rate of the asset.
Loans together with the associated allowance are written off when there is no realistic prospect of
future recovery and all collateral, if any, has been realized or has been transferred to the Group. If
in a subsequent year, the amount of the estimated impairment loss increases or decreases because
of an event occurring after the impairment was recognized, the previously recognized impairment
loss is increased or reduced by adjusting the allowance for impairment losses account. If a future
write off is later recovered, the recovery is recognized in the consolidated statement of income
under “Other income” account. Any subsequent reversal of an impairment loss is recognized in
the consolidated statement of income to the extent that the carrying value of the asset does not
exceed its amortized cost at reversal date.
Assets carried at cost
If there is an objective evidence that an impairment loss of an unquoted equity instrument that is
not carried at fair value because its fair value cannot be reliably measured, or a derivative asset
that is linked to and must be settled by delivery of such an unquoted equity instrument has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the current market rate of return
for a similar financial asset.
Available-for-sale financial assets
In case of debt instruments classified as available-for-sale financial assets, impairment is assessed
based on the same criteria as financial assets carried at amortized cost. Future interest income is
based on the reduced carrying amount and is accrued based on the rate of interest used to discount
future cash flows for the purpose of measuring impairment loss. Such accrual is recorded as part
of “Financial income” account in the consolidated statement of income. If, in subsequent year, the
fair value of a debt instrument increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in the consolidated statement of income, the
impairment loss is reversed through the consolidated statement of income.
In case of equity investments classified as available-for-sale financial assets, this would include a
significant or prolonged decline in the fair value of the investments below its cost. Where there is
evidence of impairment, the cumulative loss - measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously
recognized in the consolidated statement of income - is removed from equity and recognized in the
consolidated statement of income. Increases in fair value after impairment are recognized in the
consolidated statement of comprehensive income and directly in the consolidated statement of
changes in equity.
*SGVMC312822*
-9Real Estate Properties for Sale and Real Estate Properties Held for Future Development
Real estate properties for sale and real estate properties held for future development are valued at
the lower of cost and net realizable value. Cost consists of all expenditures incurred which are
directly attributable to the acquisition, development, and construction of the real estate properties.
Interests on loans (borrowing costs) incurred during the development or construction phase are
also capitalized as part of the cost of real estate properties. Net realizable value is the estimated
selling price in the ordinary course of business less the estimated costs of completion and
estimated costs necessary to make the sale.
Investment Properties
Investment properties are measured initially at cost, including transaction costs. The carrying
amount includes the cost of replacing part of existing investment properties at the time that cost is
incurred if the recognition criteria are met, and excludes the costs of day-to-day servicing of the
property. The carrying values of revalued properties transferred to investment properties on
January 1, 2004 were considered the assets’ deemed cost as of said date. Subsequent to initial
measurement, investment properties are carried at cost less accumulated depreciation and
impairment loss.
Investment properties, except 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.
Buildings for lease are depreciated over their useful life of 25 years using the straight-line method.
Investment properties are derecognized when either they have been disposed of or when the
property is permanently withdrawn from use and no future economic benefit is expected from its
disposal. Any gains or losses on the retirement or disposal of 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 properties, owner-occupied property and real estate properties for
sale 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.
Property and Equipment
Property and equipment, except for office premises, are stated at cost less accumulated
depreciation and any impairment in value. Office premises are stated at appraised values as
determined by independent firms of appraisers on various dates, less accumulated depreciation and
any impairment in value. Subsequent additions prior to the next regular appraisal are stated at
cost.
The initial cost of property and equipment consists of the purchase price and any directly
attributable cost of bringing the assets to their working condition and location for their intended
use. Expenditures incurred after the property and equipment have been put into operation, such as
repairs and maintenance, are normally charged to the consolidated statement of income in the
period in which the costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained
from the use of an item of property and equipment beyond its originally assessed standard of
performance, the expenditures are capitalized as an additional cost of property and equipment.
*SGVMC312822*
- 10 Depreciation of an item of property and equipment begins when the asset becomes available for
use, i.e., when it is in the location and condition necessary for it to be capable of operating in the
manner intended by management. Depreciation ceases at the earlier of the date that the item is
classified as held for sale (or included in a disposal group that is classified as held for sale) in
accordance with PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations, and the
date the asset is derecognized.
Depreciation is computed using the straight-line method over the estimated useful lives of the
properties as follows:
Office premises
Furniture, fixtures and office equipment
Transportation and other equipment
Years
25
5
5
The assets’ useful lives and depreciation method are reviewed periodically to ensure that these are
consistent with the expected pattern of economic benefits from items of property and equipment.
When property and equipment are sold or retired, the cost and related accumulated depreciation
and any impairment in value are removed from the accounts, and any gains or losses from their
disposal is included in the consolidated statement of income.
Impairment of Nonfinancial Assets
The carrying values of investment properties and property and equipment are reviewed for
impairment when events or changes in circumstances indicate that the carrying values may not be
recoverable. If any such indication exists and where the carrying value exceeds the estimated
recoverable amount, the assets are either written down to their recoverable amount or provided
with valuation allowance. The recoverable amount of the assets is the greater of fair value less
costs to sell and value-in-use. Valuation allowance is provided for the carrying amount of assets
which is not expected to be recovered. Impairment losses, if any, are recognized in the
consolidated statement of income.
The Group assesses at each reporting period whether there is an indication that previously
recognized impairment losses may no longer exist or may have decreased. The Group considers
external and internal sources of information in its assessment of the reversal of previously
recognized impairment losses. 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, had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the consolidated statement of income. After such a
reversal, the depreciation 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.
Value-added Tax (VAT)
Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where
the VAT incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable.
*SGVMC312822*
- 11 The net amount of VAT recoverable from or payable to, the taxation authority is included as part
of “Other assets” or “Accounts payable and accrued expenses,” respectively, in the consolidated
balance sheet.
Pre-Need Reserves (PNR)
Pre-need reserves for pension plans are calculated on the basis of the methodology and
assumptions set out in the Pre-need Rule 31, as Amended, as follows:
The amount of provision is the present value of the funding expected to be required to settle the
obligation with due consideration of the different probabilities as follows:
On Currently-Being-Paid Plans
i.
ii.
Provision for termination values applying the inactivity and surrender rate experience of
CPI.
For the portion of currently-being-paid plans that will reach full payment, applying the full
payment experience of CPI, the liability is equivalent to the present value of future
maturity benefits reduced by the present value of future trust fund contributions required
per Product Model discounted at the approved hurdle rate per Product Model of CPI.
On Lapsed Plans within the Allowable Reinstatement Period
i.
Provision for termination values applying the reinstatement experience of CPI.
On Fully Paid Plans
i.
ii.
For those due for payment within the next five years, the reserve is the present value of
future maturity benefits discounted at the attainable rate, as determined and certified by
CPI’s trustee using industry best practices and principles which shall be indicated in such
certification;
For those not yet due for payment within the next five years, the reserves is the present
value of future maturity benefits discounted at the approved hurdle rate per Product Model
of CPI.
The rates of surrender, cancellation, reinstatement, utilization, and inflation considered the actual
experience of CPI in the last three years.
The computation of the foregoing assumptions has been validated by a qualified actuary of CPI.
Based on CPI’s experience, the probability of pre-termination on surrender of fully paid plans is
below 5% and therefore considered insignificant. As such, no pretermination rate was considered
in determining the PNR of fully paid plans. The derecognition of liability shall be recorded at
pretermination date.
Capital Stock
Capital stock is measured at par value for all shares issued and outstanding. When the Parent
Company issues more than one class of stock, a separate account is maintained for each class of
stock and the number of shares issued. Incremental costs incurred directly attributable to the
issuance of new shares are shown in equity as a deduction from proceeds, net of tax.
*SGVMC312822*
- 12 Retained Earnings
Retained earnings represent the cumulative balance of net income or loss, dividend distributions,
effects of the changes in accounting policy and other capital adjustments.
Unappropriated retained earnings represent that portion which is free and can be declared as
dividends to stockholders. Appropriated retained earnings represent that portion which has been
restricted and therefore is not available for any dividend declaration.
Dividend Distributions
Dividends on common shares are recognized as a liability and deducted from retained earnings
when approved by the shareholders of the Group. Dividends for the year that are approved after
the end of reporting period but before the approval for issuance of the financial statements are
dealt with as an event after the reporting period.
Revenue and Costs Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the amount of revenue can be reliably measured. Revenue is measured at the fair value
of the consideration received or receivable excluding VAT. The Group assesses its revenue
arrangements against specific criteria in order to determine if it is acting as principal or agent. The
Group has concluded that it is acting as a principal in all of its revenue arrangements. The
following specific recognition criteria must also be met before revenue is recognized:
Sales of real estate properties
Sales of condominium units and residential houses where the Group has material obligations under
the sales contract to provide improvements after the property is sold are accounted for under the
percentage of completion method. Under this method, revenue on sale is recognized as the related
obligations are fulfilled.
Revenue from sales of completed residential lots and housing units, where a sufficient down
payment has been received, the collectability of the sales price is reasonably assured, the refund
period has expired, the receivables are not subordinated and the seller is not obligated to complete
improvements, is accounted for under the full accrual method. If the criterion of full accrual
method was not satisfied, any cash received by the Group is included in the “Accounts payable
and accrued expenses” in the consolidated balance sheet until all the conditions for recording a
sale are met.
Cost of real estate sales
Costs of real estate sales is recognized consistent with the revenue recognition method applied.
Cost of condominium units sold before the completion of the development is determined on the
basis of the acquisition cost of the land plus its full development costs, which include estimated
costs for future development works as determined by the Company’s in-house technical staff.
In addition, cost of real estate sales of 100% completed projects represents the proportionate share
of the sold units to the total of the development cost which includes land, direct materials, labor
cost and other indirect costs related to the project. If the project is still under construction, the cost
of real estate sales of the sold units is multiplied by the percentage of completion. The cost
referred to is the same total development costs and not only actual expenditures. The percentage
of completion is based on the technical evaluation of the project engineers as well as
management’s monitoring costs, progress and improvements of the projects.
*SGVMC312822*
- 13 Sales of pre-need plans
Premiums from sale of pre-need plans, included under “Other income” account in the consolidated
statement of income are recognized as earned when collected.
Cost of contracts issued account pertains to (a) the increase in PNR as at the current year as
compared to the provision for the same period of the previous year. If there is a decrease
in the PNR as a result from new information or new developments, the amount shall be deducted
from the cost of contracts issued of the current period. In case of material prior period errors, the
requirements of PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, shall
be complied with by the pre-need company; (b) amount of trust funds contributed during the year;
and (c) documentary stamp tax and SEC registration fees.
Interest income
Interest income from cash in banks, cash equivalents, short-term cash investments and installment
contracts receivable is recognized as the interest accrues taking into account the effective yield on
interest.
Dividend income
Dividend income is recognized when the Group’s right to receive the payment is established.
Operating leases
Operating leases represent those short-term leases under which substantially all risks and rewards
of ownership of the leased assets remain with the lessors. Rent income from operating leases is
recognized as income when earned on a straight-line basis over the term of the lease agreement.
Initial direct costs incurred specifically to earn revenue from an operating lease are recognized as
an expense in the consolidated statement of income in the period in which they are incurred.
Operating expenses
Operating expenses constitute costs of administering the business. These costs are expensed as
incurred.
Financial expenses
Financial expenses consist of interest incurred from notes and loans payable. Interest attributable
to a qualifying asset is capitalized as part of the cost of the property while others are expensed as
incurred.
Interest costs are capitalized if they are directly attributable to the acquisition, development and
construction of real estate projects as part of the cost of such projects. Capitalization of interest
costs (1) commences when the activities to prepare the assets for their intended use are in progress
and expenditures and interest costs are being incurred, (2) is suspended during extended periods in
which active development is interrupted, and (3) ceases when substantially all the activities
necessary to prepare the assets for their intended use are complete.
Other Comprehensive Income
Other comprehensive income comprises items of income and expense (including items previously
presented under the consolidated statement of changes in equity) that are not recognized in the
consolidated statement of income for the year in accordance with PFRS. Other comprehensive
income of the Group includes gains and losses on remeasuring available-for-sale financial assets.
Retirement Benefits Cost
Retirement benefits cost is actuarially determined using the projected unit credit method.
Actuarial gains and losses are recognized as income or expense when the net cumulative
*SGVMC312822*
- 14 unrecognized actuarial gains and losses for the plan at the end of the previous reporting year
exceeded 10% of the higher of the present value of the defined benefit obligation and the fair
value of plan assets at that date. These gains or losses are recognized over the expected average
remaining working lives of the employees participating in the plan.
Past service cost is recognized as an expense on a straight-line basis over the average period until
the benefits become vested. If the benefits are already vested immediately following the
introduction of, or changes to, a retirement plan, past service cost is recognized immediately.
The retirement plan liability is the aggregate of the present value of the defined benefit obligation
and actuarial gains and losses not recognized, reduced by past service cost not yet recognized, and
the fair value of plan assets out of which the obligations are to be settled directly. If such
aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of
cumulative unrecognized net actuarial losses and past service cost and the present value of any
economic benefits available in the form of refunds from the plans or reductions in the future
contributions to the plan.
If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past
service cost and the present value of any economic benefits available in the form of refunds from
the plan or reductions in the future contributions to the plan, net actuarial losses of the current
period and past service cost of the current period are recognized immediately to the extent that
they exceed any reduction in the present value of those economic benefits. If there is no change or
increase in the present value of economic benefits, the entire net actuarial losses of the current
period and past service cost of the current period are recognized immediately. Similarly, net
actuarial gains of the current period after the deduction of past service cost of the current period
exceeding any increase in the present value of the economic benefits stated above are recognized
immediately if the asset is measured at the aggregate of cumulative unrecognized net actuarial
losses and past service cost at the present value of any economic benefits available in the form of
refunds from the plan or reductions in the future contributions to the plan. If there is no change or
decrease in the present value of the economic benefits, the entire net actuarial gains of the current
period after the deduction of past service cost of the current period are recognized immediately.
Provisions and Contingencies
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. If the effect of the time value of money is material, provisions are determined by
discounting the effective future cash flows at a pre-tax rate that reflects current market assessment
of the time value of money and, 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 an
interest expense.
Contingent liabilities are not recognized in the consolidated financial statements. They are
disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote. A contingent asset is not recognized in the consolidated financial statements but disclosed
when an inflow of economic benefits is probable.
Income Taxes
Current income tax
Current income 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 the tax
*SGVMC312822*
- 15 laws used to compute the amount are those that are enacted or substantively enacted at the end of
the reporting period.
Current income tax for current and prior periods shall, to the extent unpaid, be recognized as a
liability under “Income tax payable” account in the consolidated balance sheet. If the amount
already paid in respect of current and prior periods exceeds the amount due for those periods, the
excess shall be recognized as an asset under “Other assets” account in the consolidated balance
sheet.
Deferred income tax
Deferred income tax is recognized on all temporary differences at the end of reporting period
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, including
asset revaluations. Deferred income tax assets are recognized for all deductible temporary
differences to the extent that it is probable that sufficient future taxable profits will be available
against which the deductible temporary differences can be utilized. Deferred income tax assets
and deferred tax liabilities are not recognized when it arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
Deferred income tax liabilities are not provided on nontaxable temporary differences associated
with investments in subsidiaries and affiliates.
The carrying amount of deferred income tax assets is reviewed at each end of reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the deferred income tax assets to be utilized. Unrecognized deferred income
tax assets are reassessed at each end of reporting period and are recognized to the extent that it has
become probable that sufficient future taxable profits will allow the deferred income tax asset to
be recovered.
Deferred income tax assets and deferred income tax 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 at the end of reporting period.
Income tax relating to items recognized directly in equity is recognized in the consolidated
statement of comprehensive income and in the consolidated statement of changes in equity and not
in the consolidated statement of income.
Deferred income tax assets and deferred income tax 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.
Earnings per Share
Basic earnings per share based on net income is computed by dividing net income for the year
attributable to equity holders of the Parent Company by the weighted average number of ordinary
shares issued and outstanding after considering the retrospective effect, if any, of stock dividends
declared during the year.
Diluted earnings per share is calculated by dividing the net income attributable to equity holders of
the Parent Company by the weighted average number of ordinary shares outstanding during the
*SGVMC312822*
- 16 year, excluding treasury shares, and adjusted for the effects of all dilutive potential common
shares, if any. In determining both the basic and diluted earnings per share, the effect of stock
dividends, if any, is accounted for retrospectively.
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 29 to the consolidated financial statements. The Group’s assetproducing revenues are located in the Philippines (i.e., one geographical location). Therefore,
geographical segment information is no longer presented.
Events After the Reporting Period
Post year-end events that provide additional information about the Group’s position at the end of
reporting period (adjusting events) are reflected in the consolidated financial statements. Post
year-end events that are not adjusting events are disclosed in the notes to consolidated financial
statements when material.
Future Changes in Accounting Policies
The Group will adopt the following standards and interpretations when these become effective
subsequent to 2011. Except as otherwise indicated, the Group does not expect the adoption of
these new, and amended and improvements to PFRS, PAS and Philippine Interpretations to have
significant impact on the consolidated financial statements.
Effective in 2012
· PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure
Requirements, requires additional disclosure about financial assets that have been transferred
but not derecognized to enable the user of the consolidated financial statements to understand
the relationship with those assets that have not been derecognized and their associated
liabilities. In addition, the amendment requires disclosures about continuing involvement in
derecognized assets to enable the user to evaluate the nature of, and risks associated with, the
entity’s continuing involvement in those derecognized assets.
·
Amended PAS 12, Income Taxes - Deferred Taxes: Recovery of Underlying Assets, introduces
a rebuttable presumption that deferred tax on investment properties measured at fair value will
be recognized on a sale basis, unless an entity has a business model that would indicate the
investment property will be consumed in the business. If consumed, an own use basis must be
adopted. The amendment also introduces the requirement that deferred tax on non-depreciable
assets measured using the revaluation model in PAS 16, Property, Plant and Equipment,
should always be measured on a sale basis.
Effective in 2013
· PFRS 7, Financial instruments: Disclosures - Offsetting Financial Assets and Financial
Liabilities, requires an entity to disclose information about rights of set-off and related
arrangements (such as collateral agreements). The new disclosures are required for all
recognized financial instruments that are offset in accordance with PAS 32. These disclosures
also apply to recognized financial instruments that are subject to an enforceable master netting
arrangement or ‘similar agreement’, irrespective of whether they are set-off in accordance
with PAS 32. The amendments require entities to disclose, in a tabular format unless another
format is more appropriate, the following minimum quantitative information.
*SGVMC312822*
- 17 This is presented separately for financial assets and financial liabilities recognized at the end
of the reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
b) The amounts that are offset in accordance with the criteria in PAS 32 when determining
the net amounts presented in the consolidated balance sheet;
c) The net amounts presented in the consolidated balance sheet;
d) The amounts subject to an enforceable master netting arrangement or similar agreement
that are not otherwise included in (b) above, including:
i.
Amounts related to recognized financial instruments that do not meet some or all
of the offsetting criteria in PAS 32; and
ii.
Amounts related to financial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
The amendments to PFRS 7 are to be applied retrospectively.
·
PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27 that addresses
the accounting for consolidated financial statements. It also addresses the issues raised in
SIC-12, Consolidation - Special Purpose Entities resulting in SIC-12 being withdrawn. It
establishes a single control model that applies to all entities including special purpose entities
The changes introduced by PFRS 10 will require management to exercise significant judgment
to determine which entities are controlled, and therefore, are required to be consolidated by a
parent, compared with the requirements that were in PAS 27.
·
PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13,
Jointly-controlled Entities – Non-monetary Contributions by Ventures. PFRS 11 removes the
option to account for jointly controlled entities (JCEs) using proportionate consolidation.
Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity
method.
·
PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were
previously in PAS 27 related to consolidated financial statements, as well as all of the
disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to
an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A
number of new disclosures are also required.
·
PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all
fair value measurements. PFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under PFRS when fair value
is required or permitted.
·
PAS 1, Financial Statements Presentation - Presentation of Items of Other Comprehensive
Income, changes the grouping of items presented in other comprehensive income (OCI).
Items that would be reclassified (or recycled) to profit or loss at a future point in time (e.g.,
upon derecognition or settlement) would be presented separately from items that will never be
reclassified. The amendments affect presentation only and have therefore no impact on the
Group’s financial position or performance.
*SGVMC312822*
- 18 ·
Revised PAS 19, Employee Benefits, includes a number of amendments that range from
fundamental changes to simple clarifications and re-wording. Significant changes include the
following:
o For defined benefit plans, the ability to defer recognition of actuarial gains and losses has
been removed.
o Objectives for disclosures of defined benefit plans are explicitly stated in the revised
standard, along with new or revised disclosure requirements.
o Termination benefits will be recognized at the earlier of when the offer of termination
cannot be withdrawn or when the related restructuring costs are recognized under
PAS 37, Provisions, Contingent Liabilities and Contingent Assets.
o The distinction between short-term and other long-term employee benefits will be based
on expected timing of settlement rather than the employee’s entitlement of the benefits.
·
PAS 27, Separate Financial Statements (Revised). As a consequence of the new PFRS 10 and
PFRS 12, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled
entities, and associates in separate financial statements.
·
PAS 28, Investments in Associates and Joint Ventures. As a consequence of the new
PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and
Joint Ventures, and describes the application of the equity method to investments in joint
ventures in addition to associates.
·
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface
Mine, applies to waste removal costs that are incurred in surface mining activity during the
production phase of the mine (“production stripping costs”) and provides guidance on the
recognition of production stripping costs as an asset and measurement of the stripping activity
asset.
Effective in 2014
· Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets
and Financial Liabilities, clarifies the meaning of “currently has a legally enforceable right to
set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems
(such as central clearing house systems) which apply gross settlement mechanisms that are not
simultaneous.
Effective in 2015
· PFRS 9, Financial Instruments - Classification and Measurement, as issued reflects the first
phase on the replacement of PAS 39 and applies to classification and measurement of
financial assets and financial liabilities as defined in PAS 39. In subsequent phases, hedge
accounting and impairment of financial assets will be addressed with the completion of this
project expected on the first half of 2012. The adoption of the first phase of PFRS 9 will have
an effect on the classification and measurement of the Group’s financial assets, but will
potentially have no impact on classification and measurements of financial liabilities. The
Group will quantify the effect in conjunction with the other phases, when issued, to present a
comprehensive picture.
Standard Issued but not yet Effective
· Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estates, 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
*SGVMC312822*
- 19 qualifies as construction contract to be accounted for under PAS 11, Construction Contracts,
or involves rendering of services in which case revenue is recognized based on stage of
completion. Contracts involving provision of services with the construction materials and
where the risks and reward of ownership are transferred to the buyer on a continuous basis
will also be accounted for based on stage of completion. The SEC and the Financial
Reporting Standards Council (FRSC) have deferred the effectivity of this interpretation until
the final Revenue standard is issued by IASB and an evaluation of the requirements of the
final Revenue standard against the practices of the Philippine real estate industry is completed.
The Group will quantify the impact when the final revenue standard is issued.
Additional disclosures required by these amendments will be included in the consolidated
financial statements when these amendments are adopted.
3. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes.
In the opinion of management, these consolidated financial statements reflect all adjustments
necessary to present fairly the results for the periods presented. 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 has the most significant effect on the
amounts recognized in the consolidated financial statements:
Determination of the Parent Company’s functional currency
The Parent Company, based on the relevant economic substance of the underlying circumstances,
has determined its functional currency to be Peso. It is the currency that influences the sale of real
estate properties and the cost of selling the same.
Classification of financial instruments
The Group classifies a financial instrument, or its component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the Group’s consolidated balance sheet (see Note 25).
The Group determines the classification at initial recognition and, where allowed and appropriate,
and re-evaluates this designation at every reporting date.
Classification of leases - Group as Lessor
The Group has entered into property leases of its investment properties where it has determined
that the risk and rewards related to those properties are retained with the Group. As such, these
lease agreements are accounted for as operating leases.
Classification of real estate properties
The Group determines whether a property is classified as for investment or for sale and for future
development.
*SGVMC312822*
- 20 Real estate properties which are not occupied substantially for use by, or in the operations of, the
Company, nor for sale in the ordinary course of business, but are held primarily to earn rental
income and capital appreciation are classified as investment properties. Investment properties
amounted to P
=2,493.11 million and P
=2,506.37 million as of December 31, 2011 and 2010,
respectively (see Note 10).
Real estate properties which the Company develops and intends to sell before or on completion of
construction are classified as real estate properties for sale and for future development. Real estate
properties for sale and for future development amounted to P
=3,456.81
million, respectively as of December 31, 2011 and 2010, respectively (see Notes 8 and 9).
Provisions
The Group provides for present obligations (legal or constructive) where it is probable that there
will be an outflow of resources embodying economic benefits that will be required to settle said
obligations. An estimate of the provision is based on known information at the end of reporting
period, net of any estimated amount that may be reimbursed to the Group. If the effect of the time
value of money is material, provisions are discounted using a current pre-tax rate that reflects the
risks specific to the liability. The amount of provision is being re-assessed at least on an annual
basis to consider new relevant information. There are no provisions recognized as of and for the
years ended December 31, 2011, 2010 and 2009.
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the
end of reporting period that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below:
Determination of fair value of financial instruments
Financial assets and financial liabilities, on initial recognition, are accounted for at fair value. The
fair values of financial assets and financial liabilities, on initial recognition, are normally the
transaction prices. In the case of those financial assets and financial liabilities that have no active
markets, fair values are determined using an appropriate valuation technique.
As of December 31, 2011 and 2010, the total carrying values, which are equal to total fair values,
of financial assets recognized in the consolidated balance sheets amounted to P
=5,370.34 million
and P
=5,328.12 million, respectively, while the total carrying values of financial liabilities
amounted to P
=4,092.32 million, respectively (see Note 25).
Estimation of allowance for impairment of receivables
The level of this allowance is evaluated by management based on past collection history and other
factors which include, but are not limited to the length of the Group’s relationship with the
customer, the customer’s payment behavior and known market factors that affect the collectability
of the accounts. As of December 31, 2011 and 2010, installment contracts receivable and other
receivables aggregated to P
=2,723.26 million, respectively. There was no
impairment of receivables in 2011 and 2010 (see Notes 6 and 7).
Estimation of percentage of completion of projects
The Group estimates the percentage of completion of ongoing projects for purposes of accounting
for the estimated costs of development as well as revenue to be recognized. The percentage of
completion is based on the technical evaluation of the independent project engineers as well as
management’s monitoring of the costs, progress and improvements of the projects. As of
December 31, 2011 and 2010, installment contracts receivable from sales of real estate properties
amounted to P
=2,675.53 million, respectively (see Note 6). Gross profit on
*SGVMC312822*
- 21 sales of real estate properties amounted to P
=780.06 million, P
=801.94 million and P
=810.09 million
in 2011, 2010 and 2009, respectively.
Determination of net realizable value of real estate properties for sale and
held for future development
The Group’s estimates of the net realizable value of real estate properties for sale and held for
future development are based on the most reliable evidence available at the time the estimates are
made, or the amount that the inventories are expected to be realized. These estimates consider the
fluctuations of price or cost directly relating to events occurring after the end of the period to the
extent that such events confirm conditions existing at the end of the period. A new assessment is
made of net realizable value in each subsequent period. When the circumstances that previously
caused inventories to be written down below cost no longer exist or when there is a clear evidence
of an increase in net realizable value because of change in economic circumstances, the amount of
the write-down is reversed so that the new carrying amount is the lower of the cost and the revised
net realizable value. The Group’s real estate properties for sale and held for future development as
of December 31, 2011 and 2010 amounted to P
=3,456.81 million,
respectively (see Notes 8 and 9).
Estimation of useful lives of investment properties and property and equipment
The Group estimates the useful lives of investment properties and property and equipment based
on the internal technical evaluation and experience with similar assets. Estimated lives of
investment properties and property and equipment are reviewed periodically and updated if
expectations differ from previous estimates due to wear and tear, technical and commercial
obsolescence and other limits on the use of the assets. As of December 31, 2011 and 2010, net
book value of depreciable investment properties amounted to P
=31.88 million,
respectively (see Note 10). On the other hand, the carrying value of property and equipment
amounted to P
=69.28 million as of December 31, 2011 and 2010, respectively
(see Note 11).
Impairment of investment properties and property and equipment
The Group determines whether its investment properties and property and equipment are impaired
when impairment indicators exist such as significant underperformance relative to expected
historical or projected future operating results and significant negative industry or economic
trends. When an impairment indicator is noted, the Company makes an estimation of the value-inuse of the cash-generating units to which the assets belong. Estimating the value-in-use requires
the Group to make an estimate of the expected future cash flows from the cash-generating unit and
also to choose an appropriate discount rate in order to calculate the present value of those cash
flows. Net book value of investment properties as of December 31, 2011 and 2010 amounted to
2,493.11 million and =
P2,506.37 million, respectively (see Notes 10 and 21). On the other hand,
property and equipment amounted to P
=69.28 million as of December 31, 2011
and 2010, respectively (see Note 11).
Impairment loss of P
=176.50 million was recognized in 2006 to reduce the carrying value of certain
investment properties to their recoverable amount, which is the estimated net selling price as of
that date. In 2010 and 2009, a partial recovery of the impairment loss was recognized amounting
to P
=28.99 million, respectively (see Note 10). Recoverable amounts of the
impaired properties were established as the ultimate selling price based on an independent
valuation by a third party.
Impairment of available-for-sale financial assets
An impairment issue arises when there is an objective evidence of impairment, which involves
significant judgment. In making this judgment, the Group evaluates the financial health of the
*SGVMC312822*
- 22 issuer, among others. The Group treats available-for-sale equity financial assets as impaired when
there has been a significant or prolonged decline in the fair value below its cost or where other
objective evidence of impairment exists. The Group treats ‘significant’ generally as 20% or more
of cost and ‘prolonged’ as greater than 12 months for quoted equity securities. In addition, the
Group evaluates other factors, including normal volatility in share price for quoted equities and the
future cash flows and the discount factors for unquoted equities.
In 2010, the Group recognized impairment loss amounted to P
=1.75 million on available-for-sale
financial assets. No impairment loss was recognized in 2011 and 2009 (see Note 12).
Available-for-sale financial assets amounted to P
=1.98 million and P
=2.06 million as of
December 31, 2011 and 2010, respectively (see Note 12).
Estimation of retirement benefits cost
The determination of the Group’s obligation and costs for retirement benefits depends on
management’s selection of certain assumptions used by actuaries in calculating such amounts. The
assumptions for retirement benefits cost include, among others, discount rates, expected annual
rates of return on plan assets and rates of salary increase. Actual results that differ from
assumptions are accumulated and amortized over future periods and therefore, generally affect the
Group’s recognized expenses and recorded obligation in such future periods. While management
believes that the assumptions are reasonable and appropriate, significant differences in actual
experience or significant changes in management assumptions may materially affect the Group’s
retirement obligations. Net retirement benefits income amounted to P
=1.69 million and
=14.28 million in 2011 and 2009, respectively, while net retirement benefits cost amounted to
P
=0.19 million in 2010. (see Note 22). Retirement plan assets amounted to P
P
=18.59 million and
=16.79 million, as of December 31, 2011 and 2010, respectively (see Notes 12 and 22).
P
Estimation of pre-need reserves (PNR)
The determination of CPI’s PNR is based on the actuarial formula, methods and assumptions
allowed by applicable SEC circulars. This is dependent on management’s selection of certain
assumptions used by actuaries in computing this amount.
Management believes that the amount of PNR recorded in the books closely reflect actual
potential plan claims as of end of reporting period. As of December 31, 2011 and 2010, PNR
amounted to P
=48.39 million, respectively (see Note 5).
The following are the assumptions used in the computation of PNR:
December 31, 2011:
a. Currently-Being-Paid Pension Plans - Actively Paying Plans
Plans issued prior to 2006 - 12 % (hurdle rate) discount rate and no surrender/lapse rates were
used.
Plans issued in 2006 and after - 10% (hurdle rate) discount rate and surrender /lapse rates
were used as per original assumptions.
*SGVMC312822*
- 23 b. Currently-Being-Paid Pension Plans - Lapsed Plans
Plans issued prior to 2006 - reserves equal the termination values (as originally computed) at
the date of lapse and no reinstatement rate was assumed.
Plans issued in 2006 and after - reserves equal the termination values (as originally computed)
at the date of lapse and no reinstatement rate was assumed.
c. Fully paid plans - Availing and Not Yet Availing
Plans with maturity dates in years 2011 to 2015 - 6.0306% discount rate (average rate of
return of the three trustee banks) and no surrender rates were assumed for fully paid plans.
Plans with maturity dates in years 2016 and after - 12% (hurdle rate) discount rate and no
surrender rates were assumed for fully paid plans.
December 31, 2010:
a. Currently-Being-Paid Pension Plans - Actively Paying Plans
Plans issued prior to 2006 - 12 % (hurdle rate) discount rate and no surrender/lapse rates were
used.
Plans issued in 2006 and after - 10% (hurdle rate) discount rate and surrender /lapse rates were
used as per original assumptions.
b. Currently-Being-Paid Pension Plans - Lapsed Plans
Plans issued prior to 2006 - reserves equal the termination values (as originally computed) at
the date of lapse and no reinstatement rate was assumed.
Plans issued in 2006 and after - reserves equal the termination values (as originally computed)
at the date of lapse and no reinstatement rate was assumed.
c. Fully paid plans - Availing and Not Yet Availing
Plans with maturity dates in years 2010 to 2014 - 6.3452% discount rate (average rate of
return of the two trustee banks) and no surrender rates were assumed for fully paid plans.
Plans with maturity dates in years 2015 and after - 12% (hurdle rate) discount rate and no
surrender rates were assumed for fully paid plans.
Recognition of deferred income tax assets
The Group reviews the carrying amounts of deferred income tax assets at the end of each reporting
period and reduces deferred income tax assets to the extent that it is no longer probable that
sufficient future taxable profits will be available to allow all or part of deferred income tax assets
to be utilized. As of December 31, 2011 and 2010, deferred income tax assets amounted to
=9.49 million and P
P
=6.22 million, respectively (see Note 23).
*SGVMC312822*
- 24 -
4. Cash and Cash Equivalents and Short-term Cash Investments
Cash and cash equivalents consist of:
Cash on hand and in banks
Cash equivalents
2011
P
=19,747,597
1,942,076,163
P
=1,961,823,760
2010
P30,195,157
=
852,296,273
=882,491,430
P
Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are made for
varying periods of up to three months depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term investment rates.
Short-term cash investments amounting to P
=1,678.50 million as of
December 31, 2011 and 2010, respectively, are investments placed in banks with maturities of
more than three months to one year from dates of acquisition and earn interest at the prevailing
market rates.
Interest income earned from cash and cash equivalents and short-term cash investments amounted
to P
=123.40 million, P
=68.77 million in 2011, 2010 and 2009, respectively
(Note 19).
5. Investments in Trust Funds
Pursuant to the provisions of SEC Memorandum Circular No. 6, Guidelines on the Management
of the Trust Fund of Pre-Need Corporation (SEC Circular No. 4), the SEC requires, among others,
that companies engaged in the sale of pre-need plans and similar contracts set up a trust fund to
guarantee the delivery of property or performance of service in the future. Withdrawals from
these trust funds are limited to, among others, payments of pension plan benefits, bank charges
and investment expenses in the operation of the trust funds, termination value payable to
planholders, contributions to the trust funds of cancelled plans and final taxes on investment
income of the trust funds.
In accordance with the SEC requirements, CPI had funds deposited with two local trustee banks
aggregating to P
=50.12 million as of December 31, 2011 and 2010,
respectively. Total contributions to the trust funds amounted to P
=2.43 million in 2011 and
=0.75 million in 2010.
P
Based on the actuarial reports, the required balances of the trust funds as of December 31, 2011
and 2010 amounted to P
=46.04 million, respectively. As of December 31, 2011
and 2010, CPI has trust fund assets amounting to P
=50.12 million, respectively
(including contributions and related trust fund income of pension holders) and recorded
reserve liabilities (shown in the consolidated balance sheets as Pre-need and other reserves
account) of P
=48.79 million, respectively (composed of actuarially computed
liabilities of =
P44.22 million and P
=46.04 million, other reserves amounting to P
=0.36 million and
=0.40 million as of December 31, 2011 and 2010, respectively, and pension bonus owing to
P
pension holders amounting to P
=1.92 million in 2011 and P
=2.35 million in 2010).
*SGVMC312822*
- 25 -
In the opinion of management and the independent actuary, CPI’s net contractual liabilities of
about P
=46.04 million as of December 31, 2011 and 2010, respectively, closely
reflect actual potential plan claims as of those dates. In accordance with the Pre-Need New Rules,
should the Insurance Commission discover a deficiency in the trust fund, it shall give notice to the
CPI and require CPI to make additional deposits to the trust fund. CPI shall have 30 days from
receipt of notice to make the said deposits and correct the deficiency.
The current portion of pre-need reserves amounted to P
=3.84 million and P
=4.51 million as of
The details of CPI’s investments in trust funds as of December 31 are as follows:
2011
Assets
Debt and listed equity securities
Others
Liabilities
P
=26,440,344
19,675,422
46,115,766
(424,093)
P
=45,691,673
2010
=24,989,402
P
24,400,153
49,389,555
(573,084)
=48,816,471
P
6. Installment Contracts Receivable
Installment contracts receivable arise from sales of real estate properties.
The installment contracts receivable on sales of real estate properties are collectible in monthly
installments for periods ranging from one to 10 years and bear monthly interest rates of 0.67% to
2.00% in 2011, 2010 and 2009 computed on the diminishing balance. Interest income
earned from installment contracts receivable amounted to P
=542.08 million, P
=572.58 million and
=563.33 million in 2011, 2010 and 2009, respectively (see Note 19).
P
The portion due within one year amounted to P
=941.76 million as of
The Group entered a contract of guaranty under Retail Guaranty Line in the amount of P
=2,000.00
million in 2010, with Home Guaranty Corporation (HGC). The amount of installment contracts
receivable enrolled by the Group amounted to P
=3,239.00 million in 2011
and 2010, respectively. The Group paid a guarantee premium of 0.90% based on the outstanding
principal balance of the receivables enrolled in 2011 and 2010 (see Note 16).
7. Other Receivables
Other receivables consist of:
Accrued interest
2011
P
=10,106,929
2010
=12,658,050
P
(Forward)
*SGVMC312822*
- 26 -
Advances to:
Customers
Contractors
Retention
Others
2011
2010
P
=38,417,228
6,084,089
3,561,104
8,388,144
P
=66,557,494
=14,824,537
P
7,004,832
4,140,285
9,100,212
=47,727,916
P
Advances to customers are receivables of the Group for the real estate property taxes of sold units
where as advances to contractors are advances made by the Group for the contractor’s supply
requirements. Other receivables include receivables from customers relating to registration
initially paid by the Group and employee’s advances.
Other receivables due within one year amounted to P
8. Real Estate Properties for Sale
Real estate properties for sale consist of costs incurred in the development of condominium units
and residential houses for sale amounting to P
=2,159.08 million as of
December 31, 2011 and 2010, respectively.
Condominium units and residential houses for sale account includes capitalized interest costs
incurred during each year in connection with the development of the properties (see Note 14). The
capitalization rates used to determine the amount of borrowing costs eligible for capitalization
were 3.86%, 4.07% and 4.97% in 2011, 2010 and 2009, respectively.
In 2011, the Parent Company purchased various condominium units for P
=105.19 million of which
=50.00 million were paid out of the purchase rights (see Note 12).
P
Some real estate properties for sale with carrying values of P
December 31, 2010 were used as collateral of loans availed from financial institutions in 2010 (see
Note 14).
Shown below are the aggregate cash price values and related aggregate carrying costs of
condominium units and residential houses for sale as of December 31, 2011 and 2010
(in millions):
Aggregate cash price values
Less aggregate carrying costs
Excess of aggregate cash price values
over aggregate carrying costs
2011
P
=8,675
5,006
2010
=9,974
P
6,084
P
=3,669
=3,890
P
Real estate properties for sale includes deemed cost adjustment amounting to P
=176.91 million and
=211.08 million as of December 31, 2011 and 2010, respectively (see Note 15). The deemed cost
P
adjustment arose when the Group transitioned to PFRS in 2005.
*SGVMC312822*
- 27 -
9. Real Estate Properties Held for Future Development
Movements of real estate properties held for future development are follows:
2010
2011
P1,499,497,908
P
=1,297,732,082 =
184,739,867
111,975,937
(386,505,693)
(47,660,200)
–
(61,223,666)
=1,297,732,082
P
=1,300,824,153 P
Balances at beginning of the year
Additions
Transfer to real estate properties for sale
Transfer to other assets
Balances at end of the year
Real estate properties held for future development includes land properties reserved by the Group
for its future condominium projects. During 2011 and 2010, CLDI acquired a parcel of land
amounting to P
=125.71 million, respectively, held for future development.
During 2011 and 2010, the Group transferred portion of its real estate properties held for future
development to its newly launched projects accounted for under real estate properties for sale. In
2011, the Parent Company’s property amounting to P
=61.22 million intended for donation was
reclassified to other assets.
10. Investment Properties
Investment properties consist of:
Real estate properties for lease
Real estate properties held for capital appreciation
2011
P
=1,544,412,715
948,700,000
P
=2,493,112,715
2010
=2,506,373,655
P
–
=2,506,373,655
P
Real estate properties amounting to P
=948.70 million were determined by management as held for
capital appreciation starting in 2011.
Movements of investment properties follow:
Land
Cost
Balances at beginning of year
Additions
Demolition
Reclassification
Balances at end of year
Accumulated Depreciation
Demolition
Depreciation for the year
Net Book Value
2011
Building
Total
P
=2,474,494,751
6,800,632
–
(12,488,347)
2,468,807,036
P
=145,950,055
–
(57,328,273)
12,488,347
101,110,129
P
=2,620,444,806
6,800,632
(57,328,273)
–
2,569,917,165
–
–
–
–
P
=2,468,807,036
114,071,151
(45,043,605)
7,776,904
76,804,450
P
=24,305,679
114,071,151
(45,043,605)
7,776,904
76,804,450
P
=2,493,112,715
*SGVMC312822*
- 28 -
Cost
Additions
Transfers to real estate properties
for sale
Reversal of impairment loss
(Note 21)
Net Book Value
Land
2010
Building
Total
=2,424,778,152
P
343,907
=145,950,055
P
–
=2,570,728,207
P
343,907
(37,564,928)
–
(37,564,928)
86,937,620
2,474,494,751
–
145,950,055
86,937,620
2,620,444,806
–
–
–
=2,474,494,751
P
104,929,290
9,141,861
114,071,151
=31,878,904
P
104,929,290
9,141,861
114,071,151
=2,506,373,655
P
The net book values of land and building includes deemed cost adjustment amounting to
=1,500.06 million as of December 31, 2011 and 2010 (see Note 15). The deemed cost adjustment
P
arose when the Group transitioned to PFRS in 2005.
Investment properties are rented out at different rates generally for a one-year term renewable
every year. Rent income from investment properties amounted to P
=29.36 million, P
=22.24 million
and P
=22.32 million in 2011, 2010 and 2009, respectively. The related cost of real estate for lease
amounted to P
=17.78 million, P
=15.20 million, respectively.
Based on the appraisal reports by independent firms of appraisers using market data approach at
various dates in 2011 and 2010, the appraised value of these investment properties amounted to
P
=2,979.30 million as of the dates of appraisal.
In 2006, impairment loss of P
=176.50 million was recognized to reduce the carrying value of
investment properties to its recoverable amount. Recovery of the impairment loss was recognized
in 2010 and 2009 amounting to P
=28.99 million, respectively, which is included
under “Other income” in the consolidated statements of income (see Note 21).
Some real estate properties for lease with carrying values of P
December 31, 2011 and 2010 were used as collateral for loans availed from financial institution in
2010 (see Note 14).
11. Property and Equipment
Property and equipment consist of:
2011
At Cost
Balances at beginning and end of year
Office
Premises
Furniture,
Fixtures and
Office
Equipment
Transportation
and Other
Equipment
Total
P
=–
P
=28,970,381
P
=5,734,531
P
=34,704,912
(Forward)
*SGVMC312822*
- 29 2011
Net Book Value
At Deemed Cost
Net Deemed Cost
Total
Office
Premises
Furniture,
Fixtures and
Office
Equipment
Transportation
and Other
Equipment
Total
=–
P
–
–
–
259,448,852
P
=27,617,043
736,895
28,353,938
616,443
–
P
=3,769,812
507,235
4,277,047
1,457,484
–
P
=31,386,855
1,244,130
32,630,985
2,073,927
259,448,852
193,489,171
12,638,300
206,127,471
53,321,381
P
=53,321,381
–
–
–
–
P
=616,443
–
–
–
–
P
=1,457,484
193,489,171
12,638,300
206,127,471
53,321,381
P
=55,395,308
Office
Premises
Furniture,
Fixtures and
Office
Equipment
=–
P
–
–
–
=28,970,381
P
–
–
28,970,381
=4,255,739
P
1,792,428
(313,636)
5,734,531
=33,226,120
P
1,792,428
(313,636)
34,704,912
–
–
–
–
–
259,448,852
26,526,014
–
1,091,029
27,617,043
1,353,338
–
3,653,517
(313,635)
429,930
3,769,812
1,964,719
–
30,179,531
(313,635)
1,520,959
31,386,855
3,318,057
259,448,852
180,850,868
12,638,303
193,489,171
65,959,681
=65,959,681
P
–
–
–
–
=1,353,338
P
2010
At Cost
Additions
Disposals
Disposals
Net Book Value
At Deemed Cost
Net Deemed Cost
Total
Transportation
and Other
Equipment
–
–
–
–
=1,964,719
P
Total
180,850,868
12,638,303
193,489,171
65,959,681
=69,277,738
P
For the office premises, the Group elected to apply the optional exemption under PFRS 1, FirstTime Adoption of PFRS, to use the previous revaluation as deemed cost at January 1, 2005, date of
transition to PFRS.
As at December 31, 2011 and 2010, the balances at cost of the office premises are as follows:
Office premises
Less accumulated depreciation
2011
P
=61,858,970
46,672,058
P
=15,186,912
2010
=61,858,970
P
43,605,480
=18,253,490
P
Difference between the net deemed cost and the net pre-PFRS cost amounting to P
=38.13 million
and P
=47.71 million as of December 31, 2011 and 2010, respectively, represents the remaining
balance of the deemed cost adjustment (see Note 15).
*SGVMC312822*
- 30 The cost of fully depreciated property and equipment as of December 31, 2011 and 2010
amounted to P
12. Other Assets
Other assets consist of:
Available-for-sale financial assets
Retirement plan assets (Note 22)
Deposits and others (Notes 8 and 9)
2011
P
=1,981,595
18,594,814
76,948,341
P
=97,524,750
2010
=2,060,416
P
16,786,444
92,052,140
=110,899,000
P
Available-for-sale financial assets consist of investments in quoted equity securities.
The movement in “Net changes in fair values of available-for-sale financial assets” presented in
the equity section of the consolidated balance sheets, are as follows:
Mark-to-market gain (loss)
Disposals
Impairment loss
2011
P
=895,320
(78,697)
–
–
P
=816,623
2010
=6,539,791
P
317,834
(7,064,028)
1,101,723
=895,320
P
Net changes in fair values of available-for-sale financial assets pertaining to the non-controlling
interests amounted to P
=124.00 and P
=5.05 million in 2011 and 2010, respectively.
The fair values of available-for-sale financial assets were determined based on published prices in
the active market.
As of December 31, 2010, deposits include payment of P
=50.00 million purchase rights by the
Parent Company for the five parcels of land to ASB Realty Corporation (ASB) in 2000. In 2011,
these purchase rights were used to buy various condominium units in BSA Twin Towers classified
as real estate properties for sale (see Note 8). The application of deposit is a noncash activity in
the 2011 consolidated statement of cash flows.
On March 3, 2006, the Parent Company and ASB reached an agreement wherein: (a) ASB shall
reserve and allocate in favor of the Parent Company an aggregate area of 16,670 square meters
from ASB’s percentage interest in the joint venture between ASB and Sta. Lucia Properties; and
(b) a portion of the receivable amounting to P
=1.00 million shall be converted to equity of the joint
venture while the full conversion shall be implemented upon the completion of the joint venture
project. In 2011, the joint venture was did not push through.
In 2011, the Parent Company reclassified its real estate properties amounting to P
=61.22 million
intended for donation from held for future development to other assets. Of the total amount, the
Parent Company donated property amounting to P
=30.61 million (see Note 9). Outstanding cost of
property intended for donation amounted to P
=30.61 million as of December 31, 2011.
*SGVMC312822*
- 31 The portion of other assets due within one year aggregated to P
=40.15 million
as of December 31, 2011 and 2010, respectively (see Note 26).
13. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of:
Trade payables
Deposits
Accrued expenses:
Development costs
Director’s fee (Note 24)
Interest payable
Taxes, premiums, others
Withholding taxes payable
Dividends payable
Output VAT payable
Others
2011
P
=77,688,413
27,041,287
2010
=82,540,113
P
30,858,052
735,127,486
30,879,836
15,542,739
5,325,024
10,436,712
6,302,776
414,822
13,397,549
P
=922,156,644
434,684,775
19,866,781
20,751,657
6,499,508
11,149,586
5,719,183
5,279,258
7,303,097
=624,652,010
P
Trade payables consist of payables to contractors and other counterparties, whereas deposits
consist of rental deposits and collected deposits for water and electric meters of the sold units.
Accrued expenses represent various accrual of the Group for its expenses and real estate projects.
Accrued development costs represent the corresponding accrued expenses for the sold and
completed real estate projects of the Group. Other payables consist of customer’s reservation, and
employees’ payable.
Accounts payable and accrued expenses due within one year amounted to P
=509.78 million and
=498.68 million as of December 31, 2011 and 2010, respectively (see Note 26).
P
14. Notes and Loans Payable
Notes and Loans payable consist of:
Notes payable
Loans payable
Contracts payable
2011
P
=2,995,522,273
–
2,995,522,273
6,804,433
P
=3,002,326,706
2010
=3,365,775,294
P
46,000,000
3,411,775,294
6,804,433
=3,418,579,727
P
*SGVMC312822*
- 32 The details of notes and loans payable are as follows:
Short-term commercial papers (STCP):
Short-term promissory notes with varying
maturities and annual interest rates ranging
from 2.13% to 5.39% in 2011 and 2.50% to
5.47% in 2010
Short-term promissory notes enrolled with HGC
with varying maturities and annual interest
rates ranging from 1.70% to 3.45% in 2011
and 2.00% to 3.40% in 2010
Loans from financial institutions:
Long-term loans with annual average interest
rates from 5.41% to 9.25% in 2010
2011
2010
P
=1,963,500,000
=2,039,400,000
P
1,032,022,273
1,326,375,294
–
P
=2,995,522,273
46,000,000
=3,411,775,294
P
At various dates in 2011 and 2010, the SEC authorized the Group to issue P
=2,300.00 million worth
of STCP registered with the SEC in accordance with the provision of the Securities Regulation
Code and its implementing rules and regulations, the Code of Corporate Governance and other
applicable laws and orders. Outstanding STCP issued by the Group as of December 31, 2011 and
2010 aggregated to P
=2,039.40 million, respectively.
In 2011 and 2010, the Group entered a contract of guaranty under a Revolving Cash Guaranty
Line with HGC amounting to P
=1,650.00 million, respectively. The
guaranty covers the unpaid principal due on the outstanding STCP and unpaid interest thereon of
10% per annum. The guaranty premium paid was 0.90% per annum based on enrolled
commercial papers in 2011 and 2010, respectively. Outstanding STCP covered by the guaranty
amounted to P
=1,326.38 million as of December 31, 2011 and 2010,
respectively.
The Group has omnibus credit line with financial institutions aggregating to about
=2,165.00 million as of December 31, 2011 and 2010, which is available for drawing by any of the
P
companies of the Group. In addition, the Parent Company, CDC and CLDI have specific credit
lines as follows (amounts in millions):
CI
CDC
CLDI
2011
P
=350.00
200.00
–
P
=550.00
2010
=350.00
P
200.00
735.00
=1,285.00
P
Outstanding balances of loans from financial institutions availed from the omnibus and specific
credit lines for each company as of December 31, 2010 follow (amounts in millions):
CI
CDC
CLDI
=36.00
P
5.00
5.00
=46.00
P
The Company has no outstanding loan from financial institutions as of December 31, 2011.
*SGVMC312822*
- 33 Outstanding balances of loans from financial institutions and collaterals as of December 31 follow
(amounts in millions):
Outstanding Loan Balances
Secured
Unsecured
Total
2011
P
=–
2010
P5.00
=
–
P
=–
41.00
=46.00
P
Collaterals
Carrying Values
Description
2010
2011
Real estate properties
for sale, lease and
investment
=977.15
P
P
=581.76
=977.15
P
P
=581.76
Long-term loans obtained from financial institutions aggregating P
December 31, 2010, which shall mature at various dates from January 2012 to December 2016,
were fully paid in 2011. In 2010, the Group paid loans amounting to P
=303.74 million.
Contracts payable represent liabilities arising from contracts to purchase land for future
development. Title of the properties purchased will be transferred to the Group upon full payment
of the contracts payable.
Interest expense related to short-term notes amounted to P
=120.13 million, P
=130.54 million and
=151.14 million in 2011, 2010 and 2009, respectively, while interest expense related to long-term
P
loans amounted to P
=1.15 million, P
=45.12 million in 2011, 2010 and 2009,
respectively (see Note 20). Capitalized interest in 2011, 2010 and 2009 amounted to
=18.68 million, P
P
=52.02 million, respectively (see Notes 8 and 20).
The portion of notes and loans payable due within one year amounted to P
=3,002.33 million and
=3,372.58 million as of December 31, 2011 and 2010, respectively (see Note 26).
P
15. Equity
Capital stock consists of:
Shares
Common stock - P
=10 par value:
Authorized - beginning of the year
Increase in authorized capital stock
Authorized - end of year
Amount
2011
2010
2011
2010
53,000,000
–
53,000,000
30,000,000
23,000,000
53,000,000
P
=530,000,000
–
P
=530,000,000
=300,000,000
P
230,000,000
=530,000,000
P
The following summarizes the reconciliation of the issued and outstanding shares of capital stock
for each of the following:
Shares
Issued, beginning
Stock dividends
Issued, ending
2011
34,725,833
6,945,100
41,670,933
2010
28,938,199
5,787,634
34,725,833
Amount
2011
P
=347,258,330
69,451,600
P
=416,709,930
2010
=289,381,990
P
57,876,340
=347,258,330
P
*SGVMC312822*
- 34 Dividends declared and issued/paid by the Parent Company in 2011, 2010 and 2009 are as
follows:
Dividends
Cash
Stock
Date Approved
June 15, 2011
July 19, 2010
July 30, 2009
June 21, 2011
October 7, 2010
Per Share
=3.71
P
4.29
4.10
20%
20%
Stockholders of
Record Date
June 24, 2011
July 30, 2010
August 11, 2009
July 21, 2011
October 13, 2010
Date Issued/Paid
July 20, 2011
August 13, 2010
September 8, 2009
August 16, 2011
October 13, 2010
Fractional shares of stock dividends are paid in cash based on the par value.
On October 7, 2010, the SEC approved the Amended Articles of Incorporation on the application
for increase in authorized capital stock from P
=300.00 million to P
=530.00 million with a par value
of P
=10.00 each. The SEC also authorized the issuance of 20% stock dividend to stockholders of
record as of October 13, 2010, to cover stock dividend declared last August 17, 2010 and ratified
by the stockholders on August 24, 2010.
On May 25, 2009, the Parent Company’s BOD approved to appropriate the amount of
=100.00 million from the balance of its unappropriated retained earnings as of December 31, 2008
P
to finance the cost of the development of its project, The Manila Residences, located at 2320 Taft
Avenue, Manila.
On May 9, 2011, the Parent Company’s BOD authorized the transfer of appropriated retained
earnings for the development costs of The Manila Residences, which was 100% completed, to
appropriated retained earnings to finance the development costs of The Manila Residences Tower
II in the same amount of P
=100.00 million. Also, an additional appropriation amounting to
=100.00 million was authorized for the development costs of its newly launched project, the
P
Tagaytay Prime Residences. As of December 31, 2011, the completion rate of The Manila
Residences Tower II and Tagaytay Prime Residences is 9.70% and 35.89%, respectively.
As of December 31, 2011 and 2010, the unappropriated retained earnings attributable to equity
holders of the Parent Company and the non-controlling interest include the remaining balance of
deemed cost adjustment which arose when the Group transitioned to PFRS in 2005.
The components of the deemed cost adjustment as of December 31 are as follows:
Real estate properties for sale (Note 8)
Deferred income tax liability (Note 23)
Net deemed cost adjustment
2010
2011
=211,082,638
P
P
=176,912,049
1,500,055,190
1,500,055,190
47,706,191
38,134,466
1,758,844,019
1,715,101,705
(527,653,206)
(514,530,511)
P1,231,190,813
P
=1,200,571,194 =
*SGVMC312822*
- 35 The deemed cost adjustment is allocated in the consolidated statements of changes in equity as
follows:
Attributable to:
Equity holders of the Parent
Non-controlling interest
2011
2010
P
=1,035,736,304
164,834,890
P
=1,200,571,194
=1,051,848,991
P
179,341,822
=1,231,190,813
P
The deemed cost adjustment has yet to be realized through additional depreciation in profit or loss
in case of depreciable assets (classified under property and equipment) and building (classified
under investment properties) and through sales in case of inventory (classified under real estate
properties for sale) and land (classified under investment properties).
The balance of retained earnings is restricted for the payment of dividends to the extent of the
following:
Undistributed earnings of subsidiaries
Net deemed cost adjustment in properties
2011
P
=2,266,077,744
1,035,736,304
P
=3,301,814,048
2010
=2,036,364,136
P
1,051,848,991
=3,088,213,127
P
2010
=233,299,916
P
77,532,603
12,828,439
28,444,053
32,203,157
13,201,793
23,301,123
12,511,314
9,455,673
10,245,052
–
3,949,507
4,143,729
3,233,881
1,174,858
828,795
16,192,754
=482,546,647
P
2009
=188,771,416
P
82,205,800
1,800,000
55,719,442
32,106,527
6,938,628
23,270,974
13,639,827
8,987,876
11,774,711
–
6,707,009
4,491,272
3,297,526
1,131,682
1,036,597
17,399,303
=459,278,590
P
16. Operating Expenses
Operating expenses consist of:
Personnel (Note 17)
Taxes and licenses
Donations and contributions
Professional fees
Insurance (Notes 6 and 14)
Membership dues
Depreciation (Note 18)
Outside services
Brokers’ commission
Advertising and promotions
Loss on demolition of building
Repairs and maintenance
Light, power and water
Postage, telephone and telegraph
Transportation and travel
Stationery and office supplies
Others
2011
P
=223,384,830
78,531,677
60,414,833
53,178,379
24,160,848
24,062,117
21,659,334
15,128,900
10,459,681
10,417,123
5,588,239
5,290,426
4,271,347
2,950,683
1,362,685
1,345,722
20,074,634
P
=562,281,458
Other expenses include representation, rent and miscellaneous expenses.
*SGVMC312822*
- 36 -
17. Personnel Expenses
Personnel expenses consist of:
Salaries and wages
Commission
Bonuses and other employee
benefits (Note 22)
2011
P
=88,385,418
61,051,029
2010
=83,873,409
P
77,353,435
2009
=81,446,818
P
58,501,126
73,948,383
P
=223,384,830
72,073,072
=233,299,916
P
48,823,472
=188,771,416
P
2011
P
=7,776,904
13,882,430
P
=21,659,334
2010
P9,141,861
=
14,159,262
=23,301,123
P
2009
P9,141,861
=
14,129,113
=23,270,974
P
18. Depreciation
Depreciation consists of:
19. Financial Income
Financial income consists of:
Interest income from:
relating to sales of real estate
(Note 6)
Cash equivalents and short-term
cash investments (Note 4)
Cash in banks (Note 4)
Held-to-maturity investments
Others
Dividend income
Gain on sale of available-for-sale
financial assets
2011
2010
2009
P
=542,079,081
=572,583,893
P
=563,325,420
P
123,224,414
171,172
–
1,833,147
51,118
84,008,316
273,815
12,513,759
2,534,886
207,791
68,126,469
638,768
10,516,306
3,486,441
397,090
–
P
=667,358,932
19,607,724
=691,730,184
P
5,031,251
=651,521,745
P
Held-to-maturity investments amounting to P
=151.01 million matured in various dates from July to
September 2010. Interest rates of held-to-maturity investments ranges from 10.65% to 10.88% in
2010 and 2009.
*SGVMC312822*
- 37 -
20. Financial Expenses
Financial expenses consist of:
2010
2011
Interest expense on (Note 14):
Notes payable
Loans payable
Capitalized interest
Others
Finance charges
Impairment loss on available-forsale financial assets (Note 12)
2009
P
=120,132,938
1,147,033
121,279,971
(18,682,142)
102,597,829
693,900
2,165,785
=130,538,672
P
11,280,123
141,818,795
(19,310,873)
122,507,922
12,326
2,737,892
=151,143,316
P
45,121,629
196,264,945
(52,017,063)
144,247,882
348,536
3,042,555
–
P
=105,457,514
1,752,711
=127,010,851
P
–
=147,638,973
P
2011
P
=2,213,192
2010
=2,669,444
P
2009
=3,212,279
P
–
26,186,737
P
=28,399,929
86,937,620
31,216,000
=120,823,064
P
28,992,020
24,571,074
=56,775,373
P
21. Other Income
Other income consists of:
Trust fund income
Recovery of loss on impairment
of real estate properties for
lease (Note 10)
Others
Other income includes premium revenue, penalties for customers’ late payments, forfeiture of
reservations and down payments received on sales which were not consummated, sale of scraps
and miscellaneous income.
22. Retirement Benefits Cost
The Group, jointly with affiliated companies, has a funded, noncontributory defined benefit
retirement plans, administered by a trustee, covering all of its permanent employees.
The latest actuarial valuation report was as of December 31, 2011. The following tables
summarize the components of the net retirement benefits cost (income) recognized in the
consolidated statements of income and the funded status and amounts recognized in the
consolidated balance sheets.
The details of net retirement benefits cost (income) are as follows:
Current service cost
Interest cost on benefit obligation
2011
P
=1,362,370
2,858,809
2010
=1,278,794
P
2,845,465
2009
P229,078
=
2,678,142
(Forward)
*SGVMC312822*
- 38 -
Expected return on plan assets
Net actuarial loss (gain)
recognized during the year
Actuarial loss recognized
immediately
Effect of asset limit
Net retirement benefits cost
(income)
Actual return (loss) on plan assets
2011
(P
=6,154,698)
2010
(P
=5,935,745)
2009
(P
=5,833,203)
(92,414)
5,812
(964,510)
12,241,971
(11,905,725)
−
1,994,404
−
(10,384,966)
(P
=1,689,687)
(P
=279,994)
P188,730
=
=5,935,745
P
(P
=14,275,459)
=4,547,582
P
2010
=26,564,609
P
61,546,976
(34,982,367)
2009
=26,367,080
P
59,357,454
(32,990,374)
The details of retirement plan assets are as follows:
Defined benefit obligation
Fair value of plan assets
Unrecognized net actuarial
gains (losses)
Amount not recognized because
of limit
Retirement plan assets
2011
P
=62,338,478
61,113,057
1,225,421
(20,017,773)
197,538
(P
=18,594,814)
6,092,660
12,103,263
(P
=16,786,444)
6,086,848
10,108,859
(P
=16,794,667)
Changes in present value of defined benefit obligation are as follows:
2011
Defined benefit obligation,
January 1
Current service cost
Interest cost on benefit obligation
Benefits paid
Actuarial loss on obligation
Defined benefit obligation,
December 31
2010
2009
P
=26,564,609
1,362,370
2,858,809
(272,608)
31,825,298
=26,367,080
P
1,278,794
2,845,465
(3,926,730)
–
=8,332,233
P
229,078
2,678,142
(4,382,745)
19,510,372
P
=62,338,478
=26,564,609
P
=26,367,080
P
2010
2009
Changes in fair value of plan assets are as follows:
2011
Fair value of plan assets,
January 1
Expected return on plan assets
Contributions to the plan
Benefits paid
Actuarial loss on plan assets
Fair value of plan assets,
December 31
P
=61,546,976
6,154,698
118,683
(272,608)
(6,434,692)
=59,357,454
P
5,935,745
180,507
(3,926,730)
–
=58,332,031
P
5,833,203
860,586
(4,382,745)
(1,285,621)
P
=61,113,057
=61,546,976
P
=59,357,454
P
*SGVMC312822*
- 39 The major categories of plan assets of the Group as a percentage of the fair value of net plan assets
are as follows:
2010
0.47%
15.85%
83.72%
(0.04%)
100.00%
2011
–
8.35%
91.78%
(0.13%)
100.00%
Cash and cash equivalents
Investments in securities
Receivables
Liabilities
2009
0.06%
36.89%
63.09%
(0.04%)
100.00%
The overall expected return on the plan assets is determined based on the market prices prevailing
on the date applicable to the period over which the obligation is to be settled.
The principal assumptions used in determining retirement benefits costs for the Group’s plan as of
January 1 are as follows:
Discount rate per annum
Expected annual rate of return on
plan assets
Future annual increase in salary
2011
10.83%
2010
10.83%
2009
32.14%
10%
6%
10%
6%
10%
6%
As of December 31, 2011, the discount rate is 5.97%, the future increase in salary is 6% and the
expected annual rate of return on plan assets is 6%.
There are 311 employees as of December 31, 2011 while there are 290 employees in the plan as of
December 31, 2010 and 2009.
Amounts for the current and previous years are as follows:
Defined benefit obligation
Fair value of plan assets
Deficit (surplus)
Experience adjustment on plan
liabilities - gain (loss)
Experience adjustment on
plan assets - loss (gain)
2011
P
=62,338,478
61,113,057
1,225,421
–
(6,434,692)
2010
=26,564,609
P
61,546,976
(34,982,367)
2009
=26,367,080
P
59,357,454
(32,990,374)
–
1,021,655
–
(1,285,621)
2008
P8,332,233
=
58,332,031
(49,999,798)
452,136
(1,739,611)
2007
=30,587,688
P
53,828,233
(23,240,545)
(482,374)
4,535,083
The Group expects to contribute P
=0.18 million to the retirement fund in 2012.
23. Income Taxes
a. Provision for income tax consists of:
Current
Deferred
Final tax on interest income
2011
P
=148,637,752
(62,427,443)
86,210,309
24,679,116
P
=110,889,425
2010
=218,976,338
P
(33,501,595)
185,474,743
19,359,178
=204,833,921
P
2009
=177,519,698
P
1,407,586
178,927,284
15,856,308
=194,783,592
P
*SGVMC312822*
- 40 b. The components of the net deferred income tax liabilities are as follows:
Deferred income tax assets:
Accrued expenses and others
Deferred income tax liabilities:
Deemed cost adjustment in properties (Note 15)
Unrealized gain on real estate transactions
Capitalized interest
Net deferred income tax liabilities
2011
2010
P
=9,491,643
=6,220,712
P
514,530,511
261,333,053
10,529,018
5,578,444
791,971,026
P
=782,479,383
527,653,206
305,064,883
19,519,599
5,035,933
857,273,621
=851,052,909
P
c. The reconciliation of income tax computed at statutory tax rates to the provision for income
tax follows:
Income tax at statutory tax rates
Additions to (reductions in)
income tax resulting from:
Tax-exempt interest income
Interest income subjected to
final tax
Income entitled to tax holiday
(Note 30)
Nondeductible interest expense
Trust fund income already
subjected to final tax
Non-taxable dividend income
Others - net
Provision for income tax
2011
P
=251,230,158
2010
=308,151,419
P
2009
=280,137,554
P
(58,419,922)
(75,387,353)
(75,999,049)
(37,018,676)
(29,038,767)
(23,784,463)
(88,088,987)
24,679,116
11,431,957
(27,460,555)
19,359,178
8,859,095
(10,789,542)
15,856,308
7,140,918
(663,958)
(15,336)
7,755,073
P
=110,889,425
(800,833)
(62,337)
1,214,074
=204,833,921
P
(963,684)
(119,127)
3,304,677
=194,783,592
P
For income tax purposes, full revenue recognition for the sale of real estate properties is
applied when more than 25% of the contract price has been collected in the year of sale;
otherwise, the installment method is applied where gain from sales is recognized based on
collection multiplied by the gross profit rates of individual sales contract.
24. Related Party Transactions
Parties are considered to be related if one party has the ability to control, directly or indirectly, the
other party or exercise significant influence over the other party in making financial and operating
decisions. It includes companies in which one or more of the directors and/or shareholder of the
company either has a beneficial controlling interest or are in a position to exercise significant
influence therein.
The Group discloses the nature of the related party relationship and information about the
transactions and outstanding balances necessary for an understanding of the potential effect of the
relationship on the financial statements, including, as a minimum, the amount of outstanding
balances and its terms and conditions including whether they are secured, and the nature of the
*SGVMC312822*
- 41 consideration to be provided in settlement. The Group, in the normal course of business, has
transactions and account balances with related parties consisting mainly of the following:
a. Shares of stock of the Parent Company held by members of the BOD aggregated to
30,311,015 shares equivalent to P
=303.11 million and 25,259,183 shares equivalent to
=252.59 million as of December 31, 2011 and 2010, respectively.
P
b. The Parent Company has outstanding payables to stockholders amounting to
P
=65.77 million as of December 31, 2011 and 2010, respectively,
representing cash advances which are due and demandable. There were no collateral for these
advances.
c. The Group has a trust fund for the retirement plan of its employees. Contributions to the fund
amounted to P
=0.12 million and P
=0.18 million in 2011 and 2010, respectively, while the net
fund assets amounted to P
=61.55 million as of December 31, 2011 and
2010, respectively (see Note 22).
d. Compensation of key management personnel are as follows:
2011
P
=37,615,135
37,225,036
40,143,809
P
=114,983,980
Salaries
Bonuses
Other benefits
2010
=34,845,849
P
32,415,668
40,761,780
=108,023,297
P
2009
=34,149,021
P
29,863,929
40,439,871
=104,452,821
P
The Group has no standard arrangement with regards to the remuneration of its directors. In
2011, 2010 and 2009, the BOD received a total of P
=29.54 million, P
=25.40 million and
=26.83 million, respectively. Moreover, the Group has no standard arrangement with regards
P
to the remuneration of its existing officers aside from the compensation received or any other
arrangements in the employment contracts and compensatory plan. The Group does not have
any arrangements for stock warrants or options offered to its employees.
The following transactions of the Parent Company with its subsidiaries are eliminated in the
consolidated financial statements:
a. Interest-bearing cash advances, which are settled and noninterest-bearing cash advances for
reimbursable expenses are unsecured and are to be settled in cash.
Related Party
CDC
Relationship
Subsidiary
CLDI
Subsidiary
CPI
Subsidiary
Total
Total
2011
2010
2011
2010
2011
2010
2011
2010
Interest
Income on
Advances to
Related Parties
P
=209,143
50,315
29,551
36,371
5,410
–
P
=244,104
=86,686
P
Interest
Expense
on Advances
from Related
Parties
P
=66,266
94,425
60,111
50,674
–
–
P
=126,377
=145,099
P
Amounts
Owed By
Related
Parties
P
=–
76,805
954,663
–
–
–
P
=954,663
=76,805
P
Amounts
Owed To
Related
Parties
P
=–
2,959,849
–
–
–
P
=–
=2,959,849
P
b. The Parent Company also has an existing management contract with CDC, wherein the Parent
Company provides management services to CDC. The agreement is for a period of five years
renewable automatically for another five years unless either party notifies the other six months
*SGVMC312822*
- 42 prior to expiration. The management fee is based on a certain percentage of net income of
CDC as mutually agreed upon by both parties. The management fees for 2011 and 2010 were
waived by the Parent Company.
c. In 2011, CPI purchased condominium units from CI and CDC amounting to P
=20.20 million
and P
25. Financial Instruments
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise of cash and cash equivalents, and short-term
cash investments, notes and loans payable and contracts payable. The main purpose of these
financial instruments is to finance the Group’s operations. The Group’s other financial
instruments consist of financial assets at fair value through profit or loss, held-to-maturity
investments and available-for-sale financial assets, which are held for investing purposes. The
Group has various other financial instruments such as installment contracts receivable, other
receivables, accounts payable and accrued expenses and advances from stockholders, which arise
directly from its operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in
financial instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk,
credit risk, equity price risk and liquidity risk. The BOD reviews and approves policies for
managing these risks and they are summarized as follows:
Cash flow interest rate risk
Cash flow interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the
risk for changes in market interest rates relates primarily to the Group’s short-term and long-term
loans payable, all with repriced interest rates.
The Group’s policy in addressing volatility in interest rates includes maximizing the use of
operating cash flows to be able to fulfill principal and interest obligations even in periods of rising
interest rates.
The following table demonstrates the sensitivity of the Group’s income before income tax to a
reasonable change in interest rates (with all other variables held constant):
December 31, 2011
December 31, 2010
Change in
Basis Points (bps)
-/+ 6 bps
-/+ 5 bps
Effect on Income
before Income Tax
+/- P
=1,797,313
+/- P
=23,000
There is no impact on the Group’s equity other than those already affecting income before income
tax.
Credit risk
Credit risk arises when the Group will incur a loss because its customers, clients or counterparties
failed to discharge their obligations. It is the Group’s policy that all customers who wish to trade
on credit terms are subject to credit verification procedures. In addition, receivable balances are
*SGVMC312822*
- 43 monitored on an on-going basis with the objective that the Group’s exposure to bad debts is not
significant. The Group’s policy is to enter into transactions with a diversity of credit-worthy
parties to mitigate any significant concentration of credit risk. There are no significant
concentrations of credit risk within the Group.
The tables below show the Group’s exposure to credit risk for the components of the consolidated
balance sheets. The exposure as of December 31, 2011 and 2010 is shown at gross, before taking
the effect of mitigation through the use of collateral agreements, and at net, after taking the effect
of mitigation through the use of collateral agreements.
December 31, 2011:
Financial assets at fair value through profit or loss
Investments in Trust Funds
Loans and receivables:
Cash and cash equivalents, excluding cash on
hand
Short-term cash investments
Other receivables:
Accrued interest
Advances to customers
Retention
Others
Total credit risk exposure
Gross
Net
P
=45,691,673
P
=–
1,961,639,193
711,432,000
2,588,819,755
777,220,782
589,432,000
–
10,106,929
38,417,228
3,561,104
8,388,144
P
=5,368,056,026
–
13,926,420
224,159
821,556
P
=1,381,624,917
Gross
Net
=48,816,494
P
=–
P
882,297,468
1,678,500,028
2,675,527,725
577,806,202
1,519,343,000
–
12,658,050
14,824,537
4,140,285
9,100,212
=5,325,864,799
P
–
13,800,797
103,767
336,389
P
=2,111,390,155
December 31, 2010:
Financial assets at fair value through profit or loss
Cash and cash equivalents, excluding cash on
hand
Other receivables:
Accrued interest
Retention
Others
*SGVMC312822*
- 44 The following tables summarize the aging analysis of receivables:
December 31, 2011:
Past Due But Not Impaired
Current*
Installment contracts
receivable
Other receivables:
Accrued interest
Retention
Others
Over 90
days
< 30 days
31-60 days
61-90 days
> One year*
Total
P
=416,118,545 P
=10,497,883
P
=2,596,779
P
=2,610,131 P
=17,162,818 P
=2,139,833,599
2,588,819,755
10,106,929
–
24,490,808
1,158
–
224,159
7,516,029
821,556
P
=458,232,311 P
=11,544,756
–
730,747
–
–
P
=3,327,526
–
–
–
10,106,929
739,381
12,455,134
–
38,417,228
–
–
3,336,945
3,561,104
–
–
50,559
8,388,144
P
=3,349,512 P
=29,617,952 P
=2,143,221,103 P
=2,649,293,160
*classified as neither past due nor impaired
December 31, 2010:
receivable
Other receivables:
Accrued interest
Retention
Others
Over 90
days
Current*
< 30 days
31-60 days
61-90 days
> One year*
Total
=914,920,153
P
=8,309,127
P
=2,457,786
P
=3,014,195 =
P
P13,062,396 =
P1,733,764,068 =
P2,675,527,725
12,658,050
1,023,740
2,160,561
7,199,188
=937,961,692
P
–
886,383
103,767
336,389
=9,635,666
P
–
679,904
–
–
=3,137,690
P
–
–
–
12,658,050
239
12,234,271
–
14,824,537
–
–
1,875,957
4,140,285
–
–
1,564,635
9,100,212
=3,014,434 =
P
P25,296,667 P
=1,737,204,660 P
=2,716,250,809
*classified as neither past due nor impaired
The tables below show the credit quality by class of asset for loan-related balance sheet lines
based on the Group’s credit rating system:
December 31, 2011:
Medium
Grade**
Past due but
not impaired
Total
P
=45,691,673
P
=–
P
=–
P
=45,691,673
1,961,639,193
711,432,000
–
–
–
–
1,961,639,193
711,432,000
2,555,952,144
–
32,867,611
2,588,819,755
10,106,929
24,490,808
3,336,945
7,075,475
5,274,033,494
P
= 5,319,725,167
–
–
–
491,113
491,113
P
=491,113
–
13,926,420
224,159
821,556
47,839,746
P
=47,839,746
10,106,929
38,417,228
3,561,104
8,388,144
5,322,364,353
P
=5,368,056,026
High Grade*
Financial Assets at Fair Value
through profit or loss
Cash and cash equivalents,
excluding cash on hand
receivable
Other receivables:
Accrued interest
Retention
Others
Total
** High Grade - financial assets with reputable counterparties and which management believes to be reasonably
assured to be recoverable.
** Medium Grade - financial assets for which there is low risk of default of counterparties.
*SGVMC312822*
- 45 December 31, 2010:
Medium
Grade**
Past due but
not impaired
Total
=48,816,494
P
=–
P
=–
P
=48,816,494
P
882,297,468
1,678,500,028
–
–
–
–
882,297,468
1,678,500,028
2,648,684,221
–
26,843,504
2,675,527,725
12,658,050
1,023,740
4,036,518
7,782,051
5,234,982,076
=5,283,798,570
P
–
–
–
981,772
981,772
=981,772
P
–
13,800,797
103,767
336,389
41,084,457
=41,084,457
P
12,658,050
14,824,537
4,140,285
9,100,212
5,277,048,305
=5,325,864,799
P
High Grade*
Financial Assets at Fair Value
through profit or loss
Cash and cash equivalents,
excluding cash on hand
receivable
Other receivables:
Accrued interest
Retention
Others
Total
** High Grade - financial assets with reputable counterparties and which management believes to be reasonably
assured to be recoverable.
** Medium Grade - financial assets for which there is low risk of default of counterparties.
The main considerations for impairment assessment include whether any payments are overdue or
if there are any known difficulties in the cash flows of the counterparties. The Group assesses
impairment into two areas: individually assessed allowances and collectively assessed allowances.
The Group determines allowance for each significant receivable on an individual basis. Among the
factors that the Group considers in assessing impairment is the inability to collect from the
counterparty based on the contractual terms of the receivables. The Group also considers the fair
value of the real estate collateralized in computing the impairment of the receivables. Receivables
included in the specific assessment are those receivables under the installment contracts receivable
accounts.
For collective assessment, allowances are assessed for receivables that are not individually
significant and for individually significant receivables where there is no objective evidence of
individual impairment. Impairment losses are estimated by taking into consideration the age of
the receivables, past collection experience and other factors that may affect collectability.
No impairment has been recognized because the Group holds the title to the real estate properties
with outstanding installment contracts receivable balance, and the Group can repossess such real
estate properties upon default of the customer in paying the outstanding balance.
Equity price risk
Equity price risk is the risk that the fair values of investments in equity securities will decrease as
a result of changes in the market value of individual shares of stock. The Group is exposed to
equity price risk because of investments held by the Group classified as available-for-sale
financial assets included under “Other assets” in the consolidated balance sheets. The Group
employs the service of a third-party stockbroker to manage its investments in shares of stock.
*SGVMC312822*
- 46 The following table demonstrates the sensitivity analysis of the Group’s equity to a reasonably
possible change in equity price based on forecasted and average movements of the equity prices
(with all other variables held constant):
Change in equity price
P
=0.03
+/-P
=0.25
2011
2010
Effect on equity
+/-P
=67,148
+/-P
=508,894
Liquidity risk
Liquidity risk is defined as the risk that the Group would not be able to settle or meet its
obligations on time or at a reasonable price.
The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank loans and STCPs (see Note 14).
The tables below summarize the maturity analysis of the Group’s financial assets held for
managing liquidity and financial liabilities based on contractual discounted payments:
December 31, 2011:
Financial Assets
30 days
31 - 90 days
91 - 180 days
181 - 360 days
Above 1 year
Total
P
= 1,557,273,760
285,450,000
85,779,765
1,928,503,525
P
= 404,550,000
424,300,000
102,804,024
931,654,024
P
=–
1,682,000
125,354,888
127,036,888
P
=–
–
265,167,998
265,167,998
P
=–
–
2,359,309,214
2,359,309,214
P
= 1,961,823,760
711,432,000
2,938,415,889
5,611,671,649
178,894,054
412,376,808
92,643,120
–
6,804,433
–
66,217,375
–
344,558,982
412,376,808
(P
= 79,390,984) P
=1,946,932,406
911,051,414
3,111,149,433
6,804,433
132,434,750
4,161,440,030
P
= 1,450,231,619
Financial Liabilities
Accounts payable and accrued
expenses*
Notes payable**
Contracts payable
Payables to stockholders
128,147,735
59,426,658
132,206,159
1,099,199,165
1,268,166,010
651,141,138
–
–
–
11,036,229
22,072,458
33,108,688
1,238,383,129
1,349,665,126
816,455,985
P
= 690,120,396
(P
= 418,011,102) (P
=689,419,097)
* Excludes statutory liabilities amounting to =
P11,105,230
** Include future interest expense amounting to =
P115,627,160.
December 31, 2010:
30 days
31 - 90 days
91 - 180 days
181 - 360 days
Above 1 year
Total
=
P651,891,430
498,350,000
84,863,404
1,235,104,834
=230,600,000
P
931,650,028
269,880,795
1,432,130,823
=
P–
243,500,000
424,615,446
668,115,446
=–
P
5,000,000
305,814,481
310,814,481
=–
P
–
2,040,760,620
2,040,760,620
=
P882,491,430
1,678,500,028
3,125,934,746
5,686,926,204
109,839,430
65,850,415
128,890,510
1,191,924,078
1,639,991,618
560,942,084
–
–
–
–
–
–
5,480,738
10,961,477
16,442,216
1,307,244,246
1,716,803,510
706,274,810
(P
=72,139,412)
(P
=284,672,687) (P
=38,159,364)
* Excludes statutory liabilities amounting to =
P16,678,687
** Includes future interest expense amounting to =
P136,926,471
*** Includes future interest expense amounting to =
P 1,871,372
177,421,603
109,843,985
–
6,804,433
32,884,431
326,954,452
(P
=16,139,971)
125,971,365
–
47,871,372
–
–
173,842,737
=1,866,917,883
P
607,973,323
3,502,701,765
47,871,372
6,804,433
65,768,862
4,231,119,755
=
P1,455,806,449
Financial Assets
Accounts payable and
accrued expenses*
Notes payable**
Loans payable***
Contracts payable
Advances from stockholders
*SGVMC312822*
- 47 -
Fair Values
The carrying amounts of recorded financial assets and financial liabilities as of December 31,
2011 and 2010 are as follows:
2011
Carrying Value
Financial Assets
Cash on hand
Financial assets at fair value through
profit or loss
Cash in banks and cash equivalents
Other receivables:
Accrued interest
Retention
Others
Available-for-sale financial assets*
Fair Value
2010
Carrying Value
Fair Value
P
=184,567
P
=184,567
=193,962
P
=193,962
P
45,691,673
45,691,673
48,816,494
48,816,494
1,961,639,193
711,432,000
2,588,933,555
1,961,639,193
711,432,000
2,588,933,555
882,297,468
1,678,500,028
2,675,527,725
882,297,468
1,678,500,028
2,675,527,725
10,106,929
38,417,228
3,561,104
8,388,144
5,322,478,153
1,981,595
P
=5,370,335,988
10,106,929
38,417,228
3,561,104
8,388,144
5,322,478,153
1,981,595
P
=5,370,335,988
12,658,050
14,824,537
4,140,285
9,100,212
5,277,048,305
2,060,416
=5,328,119,177
P
12,658,050
14,824,537
4,140,285
9,100,212
5,277,048,305
2,060,416
=5,328,119,177
P
Other financial liabilities:
Accounts payable and
accrued expenses**
Notes and loans payable
=607,973,323
P
=607,973,323
P
P
=911,051,414
P
=911,051,414
3,418,579,727
3,418,579,727
3,002,326,706
3,002,326,706
65,768,862
65,768,862
132,434,750
132,434,750
=4,092,321,912
P
=4,092,321,912
P
P
=4,045,812,870
P
=4,045,812,870
** Included under “Other assets” in the consolidated balance sheets.
** Excludes statutory liabilities amounting to =
P 11,105,230 and =
P 16,678,687 as of December 31, 2011 and 2010, respectively.
Cash and cash equivalents, short-term cash investments, other receivables,
accounts payable and accrued expenses and payable to stockholders
Due to the short-term nature of the transactions, the fair values of cash and cash equivalents,
short-term cash investments, other receivables, accounts payable and accrued expenses and
payable to stockholders approximate their carrying amounts.
The fair value of installment contracts receivable cannot be reasonably estimated due to the
significant volume of transactions and the varied terms and maturities.
Financial assets at fair value through profit or loss and available-for-sale financial assets
Financial assets at fair value through profit or loss and available-for-sale financial assets are stated
at fair value based on quoted market prices.
Due to monthly quarterly repricing of interest, loans and notes payable are stated at fair value.
Fair Value Hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
· Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities;
· Level 2 - other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly; and
*SGVMC312822*
- 48 ·
Level 3 - techniques which use inputs which have a significant effect on the recorded fair
value that are not based on observable market data.
As of December 31, 2011 and 2010, the Group’s financial asset measured at fair value under the
Level 1 consists of financial assets at fair value through profit or loss and available-for-sale
financial assets. There are no financial assets that are measured at Level 2 and 3.
26. Current Assets and Current Liabilities
The Group’s current assets and current liabilities are as follows:
Current Assets
Investments in trust funds
Other receivables
Other assets
Current Liabilities
Income tax payable
Pre-need reserves
2011
2010
P
=1,961,823,760
711,432,000
45,691,673
448,986,156
57,085,901
2,532,607,205
75,643,876
P
=5,833,270,571
P882,491,430
=
1,678,500,028
48,816,494
941,763,657
37,282,492
2,159,077,787
40,147,991
=5,788,079,879
P
P
=509,779,836
3,002,326,706
26,867,476
3,840,320
132,434,750
P
=3,675,249,088
=498,680,645
P
3,372,579,727
54,137,489
4,513,460
65,768,862
=3,995,680,183
P
27. Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains a strong
credit and healthy capital ratios in order to support its business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it, in the light of changes in
economic conditions. It monitors capital using leverage ratios on both gross debt and net debt
basis.
As of December 31, 2011 and 2010, the Group had the following ratios:
Total equity attributable to parent
Less net changes in fair values of availablefor-sale financial assets
2011
P
=3,002,326,706
2010
=3,418,579,727
P
P
=4,307,235,105
=4,010,884,003
P
816,623
P
=4,306,418,482
895,320
=4,009,988,683
P
*SGVMC312822*
- 49 2011
0.70
2010
0.85
Less:
P
=3,002,326,706
=3,418,579,727
P
1,961,823,760
711,432,000
P
=329,070,946
882,491,430
1,678,500,028
=857,588,269
P
Total equity attributable to parent
Less net changes in fair values of availablefor-sale financial assets
P
=4,307,235,105
=4,010,884,003
P
816,623
P
=4,306,418,482
895,320
=4,009,988,683
P
0.08
0.21
Debt to equity ratio
Net debt to equity ratio
As of December 31, 2011 and 2010, the Group has no externally imposed capital
requirements.
Debt consists of short-term and long-term debt. Net debt includes short-term and long-term
debt less cash and cash equivalents and short-term investments. The Group considers as
capital the total equity of the Parent Company less net changes in fair values of available-forsale financial assets.
28. Basic/Diluted Earnings Per Share
Basic/diluted earnings per share amounts were computed as follows:
Net income attributable to equity holders of
the parent
Weighted average number of shares
Basic/diluted earnings per share
2011
2010
2009
P
=421,926,905
41,670,933
P
=10.12
=538,075,506
P
41,670,933
=12.91*
P
=450,786,567
P
41,670,933
=10.82*
P
*After retroactive effect of 20% stock dividends in 2011
The Group has no dilutive common shares as of December 31, 2011, 2010 and 2009. Thus, the
basic and diluted earnings per share are the same as of those date.
29. Business Segments
The Group derives its revenues primarily from the sale and lease of real estate properties and
marketing of pension plans.
The Group does not have any major customers and all sales and leases of real estate properties and
sales of pension plans are made to external customers.
*SGVMC312822*
- 50 Segment Revenue and Expenses
Sales of Real
Estate Properties
Revenue:
Sales of real estate
Interest income
Rent income
Other income
Operating expenses
Personnel
Taxes and licenses
Insurance
Professional fees
Depreciation
Others
Financial expense
Provision for income
tax (benefit from)
Net income
Revenue:
Interest income
Rent income
Other income
Operating expenses:
Personnel
Taxes and licenses
Insurance
Professional fees
Depreciation
Others
Financial expense
Provision for income
tax (benefit from)
Net income
Revenue:
Interest income
Rent income
Other income
Operating expenses:
Personnel
Taxes and licenses
Professional fees
Insurance
Depreciation
Others
2011
Lease of Real
Estate Properties
Pension Plan
Operations
Total
P
= 1,989,488,893
664,063,647
–
25,681,692
1,209,431,176
P
=–
–
29,356,255
–
–
P
=–
3,244,168
–
2,769,354
–
P
=1,989,488,893
667,307,815
29,356,255
28,451,046
1,209,431,176
221,697,830
69,848,265
24,159,889
52,411,494
13,882,430
154,208,363
105,457,514
–
8,071,594
–
–
7,776,904
1,933,558
–
1,687,000
611,818
959
766,885
–
5,224,469
–
223,384,830
78,531,677
24,160,848
53,178,379
21,659,334
161,366,390
105,457,514
108,100,448
720,036,823
3,472,260
8,101,939
(683,283)
(1,594,326)
110,889,425
726,544,436
Pension Plan
Operations
Total
Sales of Real
Estate Properties
2010
Lease of Real
Estate Properties
=2,348,105,064
P
668,310,318
–
136,911,839
1,546,169,369
=–
P
–
22,239,950
–
–
=–
P
3,604,351
–
3,726,740
–
=2,348,105,064
P
671,914,669
22,239,950
140,638,579
1,546,169,369
231,382,029
70,127,665
32,201,810
27,437,499
14,159,262
81,003,624
122,520,248
–
7,074,553
–
–
9,141,861
3,014,921
–
1,917,887
330,385
1,347
1,006,554
–
3,747,250
–
233,299,916
77,532,603
32,203,157
28,444,053
23,301,123
87,765,795
122,520,248
204,196,042
819,639,070
902,585
2,106,030
(264,706)
592,374
204,833,921
822,337,474
Pension Plan
Operations
Total
Sales of Real
Estate Properties
2009
Lease of Real
Estate Properties
=2,329,548,848
P
641,623,701
–
57,420,469
1,519,457,679
=–
P
–
22,321,121
–
–
=–
P
4,469,703
–
4,783,245
–
=2,329,548,848
P
646,093,404
22,321,121
62,203,714
1,519,457,679
185,983,447
81,859,667
55,407,592
32,104,506
19,926,676
57,510,815
–
160,287
–
–
3,344,298
11,700,301
2,787,969
185,846
311,850
–
–
7,995,336
188,771,416
82,205,800
55,719,442
32,104,506
23,270,974
77,206,452
(Forward)
*SGVMC312822*
- 51 -
Financial expense
Net income
Sales of Real
Estate Properties
=144,596,418
P
192,223,352
733,034,361
2009
Lease of Real
Estate Properties
=–
P
2,182,957
5,093,565
Pension Plan
Operations
=–
P
377,283
880,327
Total
P144,596,418
=
194,783,592
739,008,253
Segment Assets and Liabilities
December 31, 2011:
Total assets
Total liabilities
Sales of Real
Estate Properties
P
= 10,105,792,670
4,857,776,502
Lease of Real
Estate Properties
P
=1,544,412,715
6,682,259
Pension Plan
Operations
P
=203,583,428
48,308,589
Total
P
=11,853,788,813
4,912,767,350
Sales of Real
Estate Properties
=8,845,270,625
P
5,007,755,839
Lease of Real
Estate Properties
=2,506,373,655
P
4,475,966
Pension Plan
Operations
=124,779,575
P
50,750,240
Total
=11,476,423,855
P
5,062,982,045
December 31, 2010:
Total assets
Total liabilities
30. Income Subject to Tax Holiday
In 2010, the Group has an additional registration with the Board of Investments (BOI) as a New
Developer of Low-Cost Mass Housing Project (Tagaytay Prime Residences-Tagaytay Prime
Rotunda, Brgy. San Jose, Tagaytay City with Registration No. 2010-123 dated July 5, 2010; The
Manila Residences Tower II-2310 Taft Ave., Malate, Manila with Registration No. 2010-151
dated August 23, 2010; and Grand Central Residences I-EDSA cor Sultan St., Brgy. Highway
Hills, Mandaluyong City with Registration No. 2010-117 dated June 16, 2010) on a Non-Pioneer
Status under the Omnibus Investments Code of 1987 (Executive Order No. 226). The Group shall
be entitled to Income tax Holiday (ITH) for a period of four years from date of registration or
actual start of commercial operations, whichever is earlier. The ITH shall be limited only to
revenue generated for these registered projects. Revenue from units with selling price exceeding
=3.00 million shall not be covered by ITH.
P
The income (loss) on projects registered under BOI for the year ended December 31, 2011 are as
follows:
CI - Brentwood Mansion:
Income Subject to
Tax Holiday
Revenues from sale of condominium
units
Cost of sales
Gross profit
Other income:
Interest income
Others
=35,990,907
P
(9,305,616)
26,685,291
13,485,459
142,829
13,628,288
Adjustment due to
Percentage of
Completion
=–
P
(1,600,635)
(1,600,635)
–
–
–
Income based on
Percentage of
Completion
P35,990,907
=
(10,906,251)
25,084,656
13,485,459
142,829
13,628,288
(Forward)
*SGVMC312822*
- 52 -
Income Subject to
Tax Holiday
Expenses:
Operating expenses
Net income (loss)
(P
=6,839,971)
(6,839,971)
=33,473,608
P
Adjustment due to
Percentage of
Completion
=–
P
–
(P
=1,600,635)
Income based on
Percentage of
Completion
(P
=6,839,971)
(6,839,971)
=31,872,973
P
CI - Tagaytay Prime Residences:
Income Subject to
Tax Holiday
units
Cost of sales
Gross profit
Other income:
Interest income
Others
Expenses:
Operating expenses
Financial expenses
Net income (loss)
P86,309,319
=
(50,413,561)
35,895,758
9,731,358
126,681
9,858,039
(12,800,249)
(445,282)
(13,245,531)
=32,508,266
P
Adjustment due to
Percentage of
Completion
(P
=20,424,276)
12,021,661
(8,402,615)
–
–
–
–
–
–
(P
=8,402,615)
Income based on
Percentage of
Completion
P65,885,043
=
(38,391,900)
27,493,143
9,731,358
126,681
9,858,039
(12,800,249)
(445,282)
(13,245,531)
=24,105,651
P
CI - The Manila Residences Tower II:
Income Subject to
Tax Holiday
units
Cost of sales
Gross profit
Other income:
Interest income
Others
Expenses:
Operating expenses
Financial expenses
Net income (loss)
=135,600,898
P
(88,019,348)
47,581,550
16,962,888
96,313
17,059,201
(18,635,993)
(666,145)
(19,302,138)
=45,338,613
P
Adjustment due to
Percentage of
Completion
(P
=102,915,438)
65,525,296
(37,390,142)
–
–
–
–
–
–
(P
=37,390,142)
Income based on
Percentage of
Completion
P32,685,460
=
(22,494,052)
10,191,408
16,962,888
96,313
17,059,201
(18,635,993)
(666,145)
(19,302,138)
=7,948,471
P
CDC - Grand Central Residences 1:
Income Subject to
Tax Holiday
units
Cost of sales
Gross profit
=115,870,236
P
(93,051,219)
22,819,017
Adjustment due to
Percentage of
Completion
(P
=105,533,116)
84,592,505
(20,940,611)
Income based on
Percentage of
Completion
P10,337120
=
(8,458,714)
1,878,406
(Forward)
*SGVMC312822*
- 53 -
Income Subject to
Tax Holiday
Adjustment due to
Percentage of
Completion
Income based on
Percentage of
Completion
=6,430,604
P
200,108
6,630,712
=–
P
–
–
=6,430,604
P
200,108
6,630,712
Other income:
Interest income
Others
Expenses:
Operating expenses
Financial expenses
(15,159,463)
(240,483)
(15,399,946)
=14,049,783
P
Net income (loss)
–
–
–
(P
=20,940,611)
(15,159,463)
(240,483)
(15,399,946)
(P
=6,890,828)
CDC - Mandaluyong Executive Mansion III:
Income Subject to
Tax Holiday
units
Cost of sales
Gross profit
Other income:
Interest income
Others
Expenses:
Operating expenses
Net income
=155,270,116
P
(72,738,240)
82,531,876
Adjustment due to
Percentage of
Completion
=–
P
–
–
Income based on
Percentage of
Completion
=155,270,116
P
(72,738,240)
82,531,876
19,937,565
381,590
20,319,155
-
19,937,565
381,590
20,319,155
(23,657,220)
(23,657,220)
=79,193,811
P
=P
(23,657,220)
(23,657,220)
=79,193,811
P
CDC - Makati Executive Tower IV:
Income Subject to
Tax Holiday
units
Cost of sales
Gross profit
Other income:
Interest income
Others
Expenses:
Operating expenses
Financial expenses
Net income (loss)
P60,692,661
=
(33,801,617)
26,891,044
8,055,373
161,744
8,217,117
(8,576,336)
(937,194)
(9,513,530)
=25,594,631
P
Adjustment due to
Percentage of
Completion
P28,687,909
=
(28,876,140)
(188,231)
(P
=188,231)
Income based on
Percentage of
Completion
P89,380,570
=
(62,677,757)
26,702,813
8,055,373
161,744
8,217,117
(8,576,336)
(937,194)
(9,513,530)
=25,406,400
P
*SGVMC312822*
- 54 CLDI - Manila Residences Bocobo:
units
Cost of sales
Gross profit
Other income:
Interest income
Others
Expenses:
Operating expenses
Financial expenses
Net income (loss)
Income Subject to
Tax Holiday
Adjustment due to
Percentage of
Completion
Income based on
Percentage of
Completion
P112,043,827
=
(58,767,728)
53,276,099
=205,206,314
P
(135,272,754)
69,933,560
=317,250,141
P
(194,040,482)
123,209,659
24,973,906
254,602
25,228,508
–
–
–
24,973,906
(15,402,380)
(1,042,308)
(16,444,688)
=62,059,919
P
–
–
–
=69,933,560
P
(15,402,380)
(1,042,308)
(16,444,688)
=131,993,479
P
254,602
25,228,508
The consolidated income for the year ended December 31, 2011 which is entitled to the ITH from
revenues from sale of residential units with selling price not exceeding P
=3.00 million is presented
as follows:
BOI Registered
Activities
units
Cost of sales
Gross profit
Other income:
Interest income
Rent income
Dividend income
Others
Less:
Operating expenses
Financial expenses
Net income
Non-BOI
Registered Income as Shown in
Activities Statement of Income
=706,799,357
P
409,707,396
297,091,961
=1,282,689,536
P
799,723,780
482,965,756
=1,989,488,893
P
1,209,431,176
780,057,717
99,577,153
–
–
1,363,867
100,941,020
567,730,661
29,356,255
51,118
27,036,062
624,174,096
667,307,814
29,356,255
51,118
28,399,929
725,115,116
101,071,612
3,331,412
104,403,024
293,629,957
–
=293,629,957
P
461,209,846
102,126,102
563,335,948
543,803,904
110,889,425
=432,914,479
P
562,281,458
105,457,514
667,738,972
837,433,861
110,889,425
=726,544,436
P
All common operating expenses not specifically identifiable to the project, except for brokers’
commission, depreciation and advertising expenses are shared based on sales.
31. Contingencies
The Group is contingently liable for certain lawsuits or claims filed by third parties which are
either pending decisions by the courts or are under negotiation, the outcomes of which are not
presently determinable. In the opinion of management and its legal counsel, the eventual liability
under these lawsuits or claims, if any, will not have a material effect on the consolidated financial
statements. Hence, no provision for contingencies was recognized as of December 31, 2011 and
2010.
*SGVMC312822*
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
Cityland, Inc.
We have audited the accompanying consolidated financial statements of Cityland, Inc. as at and for the
year ended December 31, 2011, on which we have rendered the attached report dated March 21, 2012.
In compliance with Securities Regulation Code Rule 68, we are stating that the above Company has
12 stockholders owning 100 or more shares each.
Aileen L. Saringan
Partner
March 21, 2012
*SGVMC312822*
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
ON SUPPLEMENTARY SCHEDULES
Cityland, Inc.
We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Cityland, Inc. and subsidiaries as at December 31, 2011 and 2010 and for each of the
three years in the period ended December 31, 2011, included in this Form 17-A, and have issued our
report thereon dated March 21, 2012. Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedules listed in the Index to the Consolidated
Financial Statements and Supplementary Schedules are the responsibility of the Company’s
management. These schedules are presented for purposes of complying with Securities Regulation
Code Rule 68, As Amended (2011) and are not part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state, in all material respects, the information required to be set forth therein
in relation to the basic financial statements taken as a whole.
Aileen L. Saringan
Partner
March 21, 2012
*SGVMC312822*
CITYLAND INC. AND SUBSIDIARIES
DECEMBER 31, 2011
Schedule A. Financial Assets
Name of Issuing Entity and Description of Each Issue
Temporary Investments
Rizal Commercial Banking Corporation
United Coconut Planters Bank
China Bank Corporation
Philippine National Bank
East West Savings Bank
Allied Bank
Planters Development Bank
Amalgamated Bancorporation
Union Bank
Security Bank
Philippine Savings Bank
Bank of Commerce
Banco De Oro
Philippine Commercial Capital Inc.
Other maturities during the year
Short-term Cash Investments
Union Bank
Philippine Savings Bank
Planters Development Bank
United Coconut Planters Bank
Philippine Commercial Capital Inc.
Amalgamated Bancorporation
East West Savings Bank
Other maturities during the year
Number of Shares or Principal
Amount of Bonds and Notes
Amount Shown in the
Balance Sheet
Value Based on Market
Quotations at Balance
Sheet Date
Income Received and
Accrued
19,747,597
171,172
345,000,000
339,550,000
250,000,000
162,000,000
161,300,000
136,413,716
129,500,000
104,150,000
85,500,000
82,000,000
40,200,000
37,500,000
37,000,000
31,962,447
-1,961,823,760
3,803,459
14,655,080
8,574,163
8,231,751
2,761,358
4,959,478
5,405,882
5,034,531
7,435,195
6,831,007
13,226,586
5,741,613
6,873,062
4,331,661
5,198,639
103,234,637
301,100,000
124,300,000
105,650,000
70,382,000
46,000,000
39,000,000
25,000,000
-711,432,000
5,586,515
3,758,343
1,947,204
2,468,335
222,092
769,870
294,774
5,113,816
20,160,949
Name of Issuing Entity and Description of Each Issue
Number of Shares or Principal
Amount of Bonds and Notes
Available-for-sale Investments
Ayala Land “B”
Ayala Corporation “B”
First Holding “B”
Swift
Empire East
PLDT
Filinvest Land
Union Bank
Empire East
Ayala Land
Cebu Holdings
Filinvest Land
A. Brown
URC
Negros Navigation
Empire East
Mondragon
Amount Shown in the
Balance Sheet
33,750
903
5,126
1,866
300,301
74
1,445
415
300,301
16,874
13,125
270,995
22,312
759
2,625
168,203
1,350
Investment in Trust Funds
Installment Contract Receivables
Other Receivables
Value Based on Market
Quotations at Balance
Sheet Date
257,513
210,463
315,249
220
177,177
188,108
1,430
27,390
177,178
128,749
32,813
268,285
60,242
36,432
971
99,240
135
1,981,595
45,691,673
2,588,933,555
60,473,405
5,370,335,988
Income Received and
Accrued
257,513
210,463
315,249
220
177,177
188,108
1,430
27,390
177,178
128,749
32,813
268,285
60,242
36,432
971
99,240
135
1,981,595
45,691,673
2,588,933,555
60,473,405
5,370,335,988
Schedule C. Amounts Receivable from Related Parties which are Eliminated during Consolidation of Financial Statements
Name and
Designation of Debtor
CDC (subsidiary)
CLDI (subsidiary)
CPI (subsidiary)
CAI (wholly owned)
CLHI (wholly owned)
Balance at
beginning of period
76,805
-----
Additions
68,701
4,748,871
2,102
180
--
Amounts collected
145,506
3,794,208
2,102
180
--
Amounts
written-off
------
Current
-954,663
----
Parent Company’s transactions with CDC, CLDI, CPI, CAI and CLHI are eliminated in the consolidated balance sheets.
Non-current
------
Balance at
end of period
-954,663
----
Schedule H. Capital Stock
Title of Issue
Common Stock – P10 par value
Number of Shares
Authorized
53,000,000
Number of Shares
Issued and
Outstanding
41,670,993
Number of Shares
Reserved for Options,
Warrants, Conversion
and Other Rights
--
Number of Shares Held By
Affiliates
--
Directors, Officers
and Employees
30,311,015
Others
11,359,978
Annex “A”
CITYLAND, INC.
RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION
AS OF DECEMBER 31, 2011
The SEC issued Memorandum Circular No. 11 series of 2008 on December 5, 2008, which provides guidance on
the determination of retained earnings available for dividend declaration.
The table below presents the reconciliation of retained earnings available for dividend declaration as of December
31, 2011:
Unappropriated, Retained Earnings as restated, beginning
Adjustments:
Deferred tax assets
Revaluation reserves related to assets carried at deemed cost
Unappropriated, Retained Earnings available for dividend declaration, beg.
Net income during the period closed to retained earnings
Add (Less): Non-actual / unrealized loss (income) net of tax
Movement in deferred tax assets
Net income actually earned during the period
Add (Less):
Appropriations
Dividends declarations during the period
Realized revaluation reserves related to assets carried at deemed cost
Unappropriated, Retained Earnings Available for Dividends
Declaration, Ending
1,343,129,510
(153,314)
(868,812,285)
(868,765,599)
474,363,911
217,360,158
24,706
217,384,864
(100,000,000)
(198,284,506)
1,851,962
395,316,231
Annex “B”
CITYLAND, INC.
MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP
CITYLAND, INC. (CI)
(ultimate parent)
100.00%
↓
100.00%
↓
CREDIT & LAND HOLDINGS,
INCORPORATED (CLHI)
(subsidiary of CI)
CITYADS, INC. (CAI)
(subsidiary of CI)
50.40%
CITYLAND DEVELOPMENT CORPORATION (CDC)
(subsidiary of CI)
29.54%
CITY & LAND DEVELOPERS,
INCORPORATED (CLDI)
(subsidiary of CDC)
9.18%
49.73%
90.81%
CITYPLANS, INCORPORATED (CPI)
(subsidiary of CDC)
“Annex C”
CITYLAND, INC.
SUPPLEMENTARY SCHEDULE OF ALL EFFECTIVE
STANDARDS AND INTERPRETATIONS (PART 1, 4J)
List of Philippine Financial Reporting Standards (PFRSs) [which consist of PFRSs, Philippine Accounting
Standards (PASs) and Philippine Interpretations] and Philippine Interpretations Committee (PIC) Q&As effective
as of December 31, 2011:
PFRSs and PIC Q&As
PFRS 1, First-time Adoption of Philippine Financial
Reporting Standards
PFRS 2, Share-based Payment
PFRS 3, Business Combinations
PFRS 4, Insurance Contracts
PFRS 5, Non-current Assets Held for Sale and Discontinued
Operations
PFRS 6, Exploration for and Evaluation of Mineral Resources
PFRS 7, Financial Instruments: Disclosures
PFRS 8, Operating Segments
PAS 1, Presentation of Financial Statements
PAS 2, Inventories
PAS 7, Statement of Cash Flows
PAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors
PAS 10, Events after the Reporting Period
PAS 11, Construction Contracts
PAS 12, Income Taxes
PAS 16, Property, Plant and Equipment
PAS 17, Leases
PAS 18, Revenue
PAS 19, Employee Benefits
PAS 20, Accounting for Government Grants and Disclosure
of Government Assistance
PAS 21, The Effects of Changes in Foreign Exchange Rates
PAS 23, Borrowing Costs
PAS 24, Related Party Disclosures
PAS 26, Accounting and Reporting by Retirement Benefit
Plans
PAS 27, Consolidated and Separate Financial Statements
PAS 28, Investments in Associates
PAS 29, Financial Reporting in Hyperinflationary Economies
PAS 31, Interests in Joint Ventures
PAS 32, Financial Instruments: Presentation
PAS 33, Earnings per Share
PAS 34, Interim Financial Reporting
PAS 36, Impairment of Assets
PAS 37, Provisions, Contingent Liabilities and Contingent
Assets
PAS 38, Intangible Assets
PAS 39, Financial Instruments: Recognition and
Measurement
PAS 40, Investment Property
PAS 41, Agriculture
Adopted/Not adopted/Not applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Adopted
Adopted
Adopted
Adopted
Adopted
Adopted
Adopted
Not Applicable
Adopted
Adopted
Adopted
Adopted
Adopted
Not Applicable
Adopted
Adopted
Adopted
Not Applicable
Adopted
Not Applicable
Not Applicable
Not Applicable
Adopted
Adopted
Adopted
Adopted
Adopted
Not Applicable
Adopted
Adopted
Not Applicable
PFRSs and PIC Q&As
Philippine Interpretation IFRIC–1, Changes in Existing
Decommissioning, Restoration and Similar Liabilities
Philippine Interpretation IFRIC–2, Members' Shares in Cooperative Entities and Similar Instruments
Philippine Interpretation IFRIC–4, Determining whether an
Arrangement contains a Lease
Philippine Interpretation IFRIC–5, Rights to Interests arising
from Decommissioning, Restoration and Environmental
Rehabilitation Funds
Philippine Interpretation IFRIC–6, Liabilities arising from
Participating in a Specific Market - Waste Electrical and
Electronic Equipment
Philippine Interpretation IFRIC–7, Applying the Restatement
Approach under PAS 29 Financial Reporting in
Hyperinflationary Economies
Philippine Interpretation IFRIC–9, Reassessment of
Embedded Derivatives
Philippine Interpretation IFRIC–10, Interim Financial
Reporting and Impairment
Philippine Interpretation IFRIC–12, Service Concession
Arrangements
Philippine Interpretation IFRIC–13, Customer Loyalty
Programmes
Philippine Interpretation IFRIC–14, PAS 19 - The Limit on a
Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
Philippine Interpretation IFRIC–16, Hedges of a Net
Investment in a Foreign Operation
Philippine Interpretation IFRIC–17, Distributions of Non-cash
Assets to Owners
Philippine Interpretation IFRIC–18, Transfers of Assets from
Customers
Philippine Interpretation IFRIC–19, Extinguishing Financial
Liabilities with Equity Instruments
Philippine Interpretation SIC–7, Introduction of the Euro
Philippine Interpretation SIC–10, Government Assistance - No
Specific Relation to Operating Activities
Philippine Interpretation SIC–12, Consolidation - Special
Purpose Entities
Philippine Interpretation SIC–13, Jointly Controlled Entities Non-Monetary Contributions by Venturers
Philippine Interpretation SIC–15, Operating Leases –
Incentives
Philippine Interpretation SIC–21, Income Taxes - Recovery of
Revalued Non-Depreciable Assets
Philippine Interpretation SIC–25, Income Taxes - Changes in
the Tax Status of an Entity or its Shareholders
Philippine Interpretation SIC–27, Evaluating the Substance of
Transactions Involving the Legal Form of a Lease
Philippine Interpretation SIC–29, Service Concession
Arrangements: Disclosures
Philippine Interpretation SIC–31, Revenue - Barter
Transactions Involving Advertising Services
Philippine Interpretation SIC–32, Intangible Assets - Web Site
Costs
PIC Q&A No. 2006-01: PAS 18, Appendix, paragraph 9 –
Not Applicable
Not Applicable
Adopted
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Adopted
Not Applicable
Not Applicable
Adopted
Not Applicable
Adopted
Not Applicable
Adopted
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Adopted
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Adopted
PFRSs and PIC Q&As
Revenue recognition for sales of property units under precompletion contracts
PIC Q&A No. 2006-02: PAS 27.10(d) – Clarification of
criteria for exemption from presenting consolidated financial
statements
PIC Q&A No. 2007-03: PAS 40.27 – Valuation of bank real
and other properties acquired (ROPA)
PIC Q&A No. 2008-01 (Revised): PAS 19.78 – Rate used in
discounting post-employment benefit obligations
PIC Q&A No. 2008-02: PAS 20.43 – Accounting for
government loans with low interest rates under the
amendments to PAS 20
PIC Q&A No. 2009-01: Framework.23 and PAS 1.23 –
Financial statements prepared on a basis other than going
concern
PIC Q&A No. 2010-01: PAS 39.AG71-72 – Rate used in
determining the fair value of government securities in the
Philippines
PIC Q&A No. 2010-02: PAS 1R.16 – Basis of preparation of
financial statements
PIC Q&A No. 2011-01: PAS 1.10(f) – Requirements for a
Third Statement of Financial Position
Adopted
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Adopted
Adopted
Adopted
INDEX TO EXHIBITS
Form 17-A
No.
Page No.
(3)
Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession
*
(5)
Instrument Defining the Rights of Security Holders, Including Indentures
*
ARTICLE IV :
ARTICLE V :
ARTICLE VII :
ARTICLE VIII :
CERTIFICATE OF STOCK
TRANSFER OF SHARES OF STOCK
STOCKHOLDERS MEETING
AMENDMENTS
101
101
101
102
(8)
Voting Trust Agreement
*
(9)
Material Contracts
*
(10)
Annual Report to Security Holders, Form 11-Q or Quarterly Report to
Security Holders
*
(13)
Letters re Change in Certifying Accountant
*
(16)
Report Furnished to Security Holders
*
(18)
Subsidiaries of the Registrant
*
(19)
Published Report Regarding Matters Submitted to Vote of Security Holders
*
(20)
Consent of Experts and Independent Counsel
*
(21)
Power of Attorney
*
(29)
Additional Exhibits
*
* These exhibits are either not applicable to the Company or require no answer.
ARTICLE IV
CERTIFICATE OF STOCK
Each stockholder whose share of stock has been paid in full shall be entitled to a stock certificate or
certificates for such shares of stock.
The certificate of stock shall be in such form and design as may be determined by the Board of Directors.
Every certificate shall be signed by the President and countersigned by the Secretary and shall be sealed with the
Corporate seal and shall state on its face its number, the date of issue, the number of shares for which it was
issued, and the name of the person in whose favor it was issued.
Each share of stock will represent a pro-rate equity in the assets of the Corporation and the rights
represented in each and every share of stock shall be identical in all respects and shall be stated herein.
The stockholders shall have no pre-emptive right to subscribe to any issue or disposition of shares of any
class and all the stockholders, their transferees and/or assignees take the shares subject to this condition.
ARTICLE V
TRANSFER OF SHARES OF STOCK
Shares of stock shall be transferred by delivery of the certificate endorsed by the owner or his attorney-infact or other person legally authorized to make the transfer, but no transfer shall be valid except as between the
parties until the transfer is annotated in the books of the Corporation.
No surrendered certificate shall be cancelled by the Secretary before a new certificate in lieu thereof is
issued, and the Secretary shall keep the cancelled certificate as a proof of substitution. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit of that fact and shall advertise the same in such
manner as the Board may require, and shall give the Corporation a bond of indemnity, in the form and with the
sureties satisfactory to the Board, in the sum at least double the par value of such certificate in lieu of the one
alleged to be lost or destroyed, always subject to the approval of the Board, and provided further that the
requirements of Republic Act No. 201 are first complied with.
ARTICLE VII
STOCKHOLDERS’ MEETING
1.
Place – All meetings of the stockholders shall be held at the principal office of the Corporation, unless written
notices of such meetings should fix another place within the City of Manila.
2. Proxy – Stockholders may vote at all meetings either in person or by proxy. All proxies, voting trusts, and
other voting arrangements must be received by the Corporate Secretary or the Assistant Corporate Secretary at
the corporation's head office not later than five (5) working days before the date of the meeting. Before the
deadline such proxies, voting trusts and other voting arrangements may be accepted or rejected by a special
committee of inspectors if they do not have the appearance of prima facie authenticity.
3.
Quorum – No stockholders’ meeting shall be competent to decide any matter or to transact any business
unless a majority of the subscribed capital stock is present or represented thereat, except in those cases in
which the Corporation law requires the affirmative vote of a greater proportion.
4.
Vote – Voting upon all questions at all meetings of the stockholders shall be by shares of stock and not per
capital.
5.
Annual Meeting – The annual meeting of the stockholders shall be held on the first Tuesday of June of each
calendar year, when the Board of Directors shall be elected by plurality of votes by ballot system or viva voce.
Written notice of the annual meeting of the Corporation shall be sent to each registered stockholder at least
fifteen (15) working days prior to the date of such meeting. Waiver of such notice may only be made in
writing.
Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of such
meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.
6.
Special Meeting – Special meetings of the stockholders may be called by the President at his discretion, or on
demand of stockholders holding the majority of the subscribed capital stock of the Corporation.
A written notice stating the day and place of the meeting and the general nature of the business to be
transacted shall be sent to each stockholder at least fifteen (15) working days before the date of such special
meeting; provided, that this requisite may be waived in writing by the stockholders.
Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of such
meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.
7.
Minutes – Minutes of all meeting of the stockholders shall be kept and carefully preserved as a record of the
business transacted at such meetings. The minutes shall contain such entries as may be required by law.
ARTICLE VIII
AMENDMENTS
The provisions of these By-Laws may be amended or repealed by a majority vote of the Board of
Directors and the owners of at least a majority of the outstanding capital stock at a regular or special meeting
called for the purpose.
The power to amend or repeal these By-Laws may be delegated to the Board of Directors in the manner provided
by law.
8
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
2nd Qtr
2012
2nd Qtr
2011
447,232,864
153,777,784
8,113,421
6,539,562
615,663,631
For the 6-months
ending June 2012
For the 6-months
ending June 2011
411,373,055
169,281,716
6,670,494
7,042,311
594,367,576
959,908,272
315,152,983
16,222,493
15,151,320
1,306,435,068
968,013,457
342,047,161
13,557,197
12,275,762
1,335,893,577
277,496,041
118,455,566
21,981,993
417,933,600
221,584,312
130,538,091
25,942,545
378,064,948
601,016,600
291,361,240
44,650,263
937,028,103
567,726,181
312,337,016
53,289,428
933,352,625
197,730,031
216,302,628
369,406,965
402,540,952
31,948,876
27,999,655
56,286,079
54,930,504
165,781,155
188,302,973
313,120,886
347,610,448
Attributable to:
Minority interest
180,026,217
133,094,669
219,374,485
128,235,963
EARNINGS PER SHARE
4.320
5.264
REVENUES
Sales from real estate
Financial income (Note 18)
Rental income
Other revenues
EXPENSES
Cost of sales
Operating expenses (Note 15)
Financial expenses (Note 18)
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX (Note 20)
NET INCOME
*After retroactive effect of 20% stock dividends in 2011.
9
STATEMENT OF COMPREHENSIVE INCOME
Net income for the period
Other comprehensive income:
Net changes in fair value of stocks
Total other comprehensive income
Total Comprehensive Income – net
Attributable to:
Minority interests
Earnings per share
2nd Qtr
2012
165,781,155
2nd Qtr
2011
188,302,973
(269,178)
(269,178)
165,511,977
(1,118,061)
(1,118,061)
187,184,912
For the 6-months For the 6-months
ending June 2012 ending June 2011
313,120,886
347,610,448
(165,161)
(165,161)
312,955,725
12,580
12,580
347,623,028
180,028,172
132,927,553
219,372,749
128,250,279
4.320
5.264
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Balance, January 1, 2011
Cash dividends
Parent’s shares of stocks held by
CPI’s trust fund
Transfer of deferred tax on
deemed cost adjustment
Balance, As of June 30, 2012
Balance, January 1, 2011
Cash dividends
Stock dividends
Fractional shares
Appropriation
Parent company shares of stock
held by CPI’s trust fund
Transfer of deferred tax on
deemed cost adjustment
Balance, As of June 30, 2011
Capital stock
416,709,930
Stock
dividends
distributable
-
Net changes
in fair value of
investments
816,623
416,709,930
-
1,954
818,577
Capital stock
347,258,330
Stock
dividends
distributable
--
Net changes
In fair value of
investments
895,320
69,451,600
347,258,330
69,451,600
(1,736)
893,584
Retained earnings
Appropriated
Unappropriated
200,000,000
3,689,708,552
200,000,000
2,661,222
180,026,218
3,872,395,992
Retained earnings
Appropriated
Unappropriated
100,000,000
3,562,730,353
(128,832,840)
(69,451,600)
(66)
100,000,000
(100,000,000)
200,000,000
1,940,451
219,374,485
3,485,760,783
Minority interest
2,633,786,358
(64,847,954)
Total
6,941,021,463
(64,847,954)
(16,544)
(16,544)
2,514,129
132,927,553
2,704,363,542
5,175,351
312,955,725
7,194,288,041
Minority interest
2,402,557,807
(77,220,123)
Total
6,413,441,810
(206,052,963)
-(66)
--
(206,799)
(206,799)
1,626,165
128,250,279
2,455,007,329
3,566,616
347,623,028
6,558,371,626
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOW FROM OPERATING ACTIVITIES
Adjustments for:
Interest expense – net of amount capitalized
Depreciation
Interest income
Trust fund income
Dividend income
Decrease in pre-need reserves
Other receivables
Real estate properties for future development
Increase (decrease) in:
Cash generated from (used in) operations
Interest received
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received
Additions to property and equipment
Purchase of short-term cash investments
Purchase of available-for-sale investments
Contributions to trust fund
Withdrawals from trust fund
Investment properties
Other assets
Net cash flows from (used in) investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from (payments of) loans payable
Payable to stockholders
Interest paid
Dividends paid
Net cash flows from (used in) financing activities
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD
2nd Qtr
2012
2nd Qtr
2011
197,730,031
216,302,628
369,406,965
402,540,952
21,981,993
5,050,685
(153,747,215)
(730,895)
(30,570)
(4,217,313)
25,168,573
5,829,486
(169,248,949)
(568,026)
(32,767)
(1,457,073)
44,650,263
10,038,513
(315,118,290)
(1,361,990)
(34,693)
(3,773,215)
51,902,726
11,683,675
(342,011,738)
(1,082,489)
(35,423)
(2,619,682)
88,349,959
35,709,695
57,149,483
3,607,434
155,282,325
8,257,690
(24,310,935)
(39,849,458)
184,183,963
15,942,055
196,520,120
(2,089,272)
(9,873,192)
(3,072,198)
65,731,527
(40,884,960)
(97,327,968)
153,525,319
153,467,465
(69,402,385)
237,590,399
(60,684,738)
114,688,756
172,791,484
(91,185,536)
196,294,704
(236,946,199)
261,418,220
319,255,907
(87,461,983)
493,212,144
110,653,512
242,932,710
347,901,851
(114,618,661)
476,215,900
30,570
-452,000
(2,531)
(70,867)
3,365,216
32,767
-1,005,000,000
-(119,131)
2,075,424
34,693
(1,257,143)
710,202,000
(2,531)
(529,673)
5,581,867
35,423
-1,529,550,028
-(214,405)
3,975,488
(798,831)
21,347,805
24,323,362
(182,090)
23,701,382
1,030,508,352
(1,046,763)
46,759,495
759,741,945
(622,764)
28,617,321
1,561,341,091
(6,321,410)
(34,726,000)
(22,843,956)
(28,964)
(63,920,330)
(60,357,889)
(20,071,120)
(29,420,924)
(12,837)
(109,862,770)
(79,152,373)
(32,834,000)
(43,608,483)
721,292
(154,873,564)
(282,354,515)
3,185,888
(59,685,046)
(18,535)
(338,872,208)
197,993,431
1,116,940,286
1,098,080,525
1,698,684,783
2,861,910,854
1,464,235,927
1,961,823,760
882,491,430
3,059,904,285
2,581,176,213
3,059,904,285
2,581,176,213
As of June
2012
As of June
2011
1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Corporate Information
Cityland Inc. (the Parent Company) was incorporated in the Philippines on May 15, 1979. The Parent Company has
a majority-owned domestic subsidiary, namely Cityland Development Corporation (CDC), and the two wholly
owned domestic subsidiaries, namely, Credit & Land Holding, Inc. (CLHI), Cityads Incorporated (CAI). The
primary purpose of the Parent Company and its subsidiaries (the Group) is to acquire, develop, improve, subdivide,
cultivate, lease, sublease, sell, exchange, barter and/or dispose of agricultural, industrial, commercial, and residential
and other real properties, as well as to construct, improve, lease, sublease, sell and/or dispose of houses, buildings
and other improvements thereon, and to manage and operate subdivisions and housing projects or otherwise engage
in the financing and trading of real estate. In addition, CPI, a subsidiary of CDC, is engaged in the business of
establishing, organizing, developing, maintaining, conducting, operating, marketing and selling educational
assistance and pension plans.
The average number of employees of the Group was 306 as of June 2012 and 310 as of December 2011. The
Group’s registered office and principal place of business is at 2nd floor and 3rd Floors, Cityland Condominium 10,
Tower 1, 156 H.V. Dela Costa Street, Ayala North, Makati City.
CPI’s securities, amounting to 600 million worth of pension plans, are registered with the Securities and Exchange
Commission (SEC) subject to the terms and conditions provided in SEC Circular No. 2, Series of 1984. CPI
obtained from the SEC the permit to sell the said pension plans. As of June 30, 2012, CPI has sold about P 297M
worth of securities.
2. Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The consolidated financial statements of the Group have been prepared using the historical cost basis, except for
financial assets at fair value through profit or loss and available-for-sale investments that have been measured at fair
values, and office premises which are stated at revalued amounts. These consolidated financial statements are
presented in Philippine peso, which is the Parent Company’s functional currency, rounded to the nearest peso except
when otherwise indicated.
Statement of Compliance
The accompanying consolidated financial statements have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS).
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for the adoption of
the following new and amended Philippine Accounting Standards (PAS), PFRS and new Philippine Interpretations
based on International Financial Reporting Interpretations Committee (IFRIC) interpretations effective in 2011. The
adoption of the following revised PAS is relevant but does not have a significant impact on the consolidated
financial statements:
•
Revised PAS 24, Related Party Disclosures, simplifies the identification of related party relationships, particularly in relation to significant influence and joint control. The adoption of the amendment did not have any impact on the financial position and performance of the Group.
The adoption of the following new and amended PFRS, PAS and Philippine Interpretations are either not relevant to
or have no significant impact on the consolidated financial statements:
•
•
•
Amended PAS 32, Financial Instruments: Presentation - Clarification of Rights Issues
Amended IFRIC 14, Prepayments of a Minimum Funding Requirement
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
Improvements to PFRS
The annual improvements process has been adopted by the International Accounting Standards Board (IASB) to deal
with non-urgent but necessary amendments to PFRS. The following summarizes the amendments that are effective
1
on or after January 1, 2011. The adoption of the following amendments is relevant but does not have a significant
impact on the consolidated financial statements:
•
PFRS 7, Financial Instruments Disclosures, emphasizes the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments.
•
PAS 1, Presentation of Financial Statements, clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the
•
PAS 27, Consolidated and Separate Financial Statements (Amended), clarifies that the consequential amendments from PAS 27 made to PAS 21, The Effect of Changes in Foreign Exchange Rates, PAS 28, Investment in
Associates, and PAS 31, Interest in Joint Ventures, apply prospectively.
•
PAS 34, Interim Financial Reporting, provides guidance to illustrate how to apply disclosure principles in PAS
34 and requires additional disclosures on: (a) the circumstances likely to affect fair values of financial instruments and their classification, (b) transfers of financial instruments between different levels of the fair value hierarchy, (c) changes in the classification of financial assets and (d) changes in contingent liabilities and assets.
Other amendments resulting from the following 2011 improvements to PFRS, PAS and Philippine Interpretations
did not have any significant impact on the accounting policies, financial position or performance of the Group.
•
•
PFRS 3, Business Combinations
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
Basis of Consolidation
The consolidated financial statements consist of the financial statements of the Parent Company and its subsidiaries
as of December 31 of each year. The financial statements of the subsidiaries are prepared for the same reporting
year as the Parent Company using consistent accounting policies.
Percentage of
Ownership
Nature of Activity
Direct:
CAI
CLHI
CDC
Indirect through CDC (including direct ownership of
the Parent Company in CLDI of 29.54% and CPI
of 9.18%)
CLDI
CPI
100.00
100.00
50.40
54.60
54.95
Advertising
Holding
Real estate
Real estate
Pre-need pension plans
All significant intercompany accounts and transactions are eliminated.
Revenue and Costs Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the
amount of revenue can be reliably measured. Revenue is measured at the fair value of the consideration received
excluding VAT. The Group assesses its revenue arrangements against specific criteria in order to determine if it is
acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue
arrangements. The following specific recognition criteria must also be met before revenue is recognized:
Sales of real estate properties
Sales of condominium units and residential houses where the Group has material obligations under the sales contract
to provide improvements after the property is sold are accounted for under the percentage of completion method.
Under this method, revenue on sale is recognized as the related obligations are fulfilled.
Revenue from sales of completed residential lots and housing units, where a sufficient down payment has been
received, the collectability of the sales price is reasonably assured, the refund period has expired, the receivables are
not subordinated and the seller is not obligated to complete improvements, is accounted for under the full accrual
method. If the criterion of full accrual method was not satisfied, any cash received by the Group is included in the
“Accounts payable and accrued expenses” in the consolidated balance sheet until all the conditions for recording a
sale are met.
1
Costs of real estate sales are recognized consistent with the revenue recognition method applied. Cost of
condominium units sold before the completion of the development is determined on the basis of the acquisition cost
of the land plus its full development costs, which include estimated costs for future development works as
determined by the Group’s in-house technical staff.
In addition, cost of real estate sales of 100% completed projects represents the proportionate share of the sold units
to the total of the development cost which includes land, direct materials, labor cost and other indirect costs related
to the project. If the project is still under construction, the cost of real estate sales of the sold units is multiplied by
the percentage of completion. The cost referred to is the same total development costs and not only actual
expenditures. The percentage of completion is based on the technical evaluation of the project engineers as well as
management’s monitoring costs, progress and improvements of the projects.
Future Changes in Accounting Policies
The Group will adopt the following standards and interpretations when these become effective subsequent to 2011.
Except as otherwise indicated, the Group does not expect the adoption of these new, and amended and improvements
to PFRS, PAS and Philippine Interpretations to have significant impact on the consolidated financial statements.
Effective in 2012
• PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements, requires additional disclosure about financial assets that have been transferred but not derecognized to enable the user of the
consolidated financial statements to understand the relationship with those assets that have not been derecognized and their associated liabilities.
•
Amended PAS 12, Income Taxes - Deferred Taxes: Recovery of Underlying Assets, introduces a rebuttable presumption that deferred tax on investment properties measured at fair value will be recognized on a sale basis,
unless an entity has a business model that would indicate the investment property will be consumed in the business.
Effective in 2013
• PFRS 7, Financial instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, requires an
entity to disclose information about rights of offset and related arrangements (such as collateral agreements).
The new disclosures are required for all recognized financial instruments that are offset in accordance with PAS
32.
•
PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27 that addresses the accounting for
consolidated financial statements. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a
parent, compared with the requirements that were in PAS 27.
•
PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled
entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must
be accounted for using the equity method.
•
PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were previously in PAS
27 related to consolidated financial statements, as well as all of the disclosures that were previously included in
PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required.
•
PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance
on how to measure fair value under PFRS when fair value is required or permitted.
•
PAS 1, Financial Statements Presentation - Presentation of Items of Other Comprehensive Income, changes the
grouping of items presented in other comprehensive income (OCI). Items that would be reclassified (or recycled) to profit or loss at a future point in time (e.g., upon derecognition or settlement) would be presented separately from items that will never be reclassified
•
Revised PAS 19, Employee Benefits, includes a number of amendments that range from fundamental changes to
simple clarifications and re-wording.
1
•
PAS 27, Separate Financial Statements (Revised). As a consequence of the new PFRS 10 and PFRS 12, what
remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate
•
PAS 28, Investments in Associates and Joint Ventures. As a consequence of the new PFRS 11 and PFRS 12,
PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application
of the equity method to investments in joint ventures in addition to associates.
•
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, applies to waste
removal costs that are incurred in surface mining activity during the production phase of the mine (“production
stripping costs”) and provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity asset.
Effective in 2014
• Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities, clarifies the meaning of “currently has a legally enforceable right to offset” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply
gross settlement mechanisms that are not simultaneous.
Effective in 2015
• PFRS 9, Financial Instruments - Classification and Measurement, as issued reflects the first phase on the replacement of PAS 39 and applies to classification and measurement of financial assets and financial liabilities as
defined in PAS 39. The Company will quantify the effect in conjunction with the other phases, when issued, to
present a comprehensive picture.
After consideration of the result of its impact evaluation, the Group has decided not to early adopt either PFRS 9
(2009) of PFRS 9 (2010) for its 2012 financial reporting, thus the interim report as of March 31, 2012 does not
reflect the application of the requirements and does not contain a qualitative and quantitative discussion of the
result of the company’s impact evaluation.
Standard Issued but not yet Effective
• Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estates, covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The SEC and the Financial Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue standard is issued by IASB and an evaluation of the requirements of the final
Revenue standard against the practices of the Philippine real estate industry is completed. The Group will quantify the effect when the final Revenue standard is issued.
Additional disclosures required by these amendments will be included in the consolidated financial statements when
these amendments are adopted.
Events After the Balance Sheet Date
Post year-end events that provide additional information about the Group’s position at the end of reporting period
(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.
Segment Reporting
The Group’s operating business 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. The Group’s asset-producing revenues are located in the Philippines (i.e., one geographical
location). Therefore, geographical segment information is no longer presented.
3.
Significant Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements requires management to make judgments, estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
In the opinion of management, these consolidated financial statements reflect all adjustments necessary to present
fairly the results for the period presented. Actual results could differ from such estimates.
1
4.
Cash equivalents
June 2012
12,453,566
3,047,450,719
3,059,904,285
Dec. 2011
19,747,597
1,942,076,163
1,961,823,760
Cash in banks earn interest at the respective bank deposit rates. Short-term deposits are made for varying periods up
to three months depending on the immediate cash requirements of the Group and earn interest at the respective shortterm investment rates.
Short-term cash investments amounting to 1.23 million and 711.43 million as of June 30, 2012 and December 31,
2011, respectively, are investments in banks with maturities of more than three months to one year from dates of
acquisition and earn interest at the prevailing market rates.
5.
Pursuant to the provisions of SEC Memorandum Circular No. 6, Guidelines on the Management of the Trust Fund of
Pre-Need Corporation (SEC Circular No. 4), the SEC requires, among others, that companies engaged in the sale of
pre-need plans and similar contracts set up a trust fund to guarantee the delivery of property or performance of
service in the future. Withdrawals from these trust funds are limited to, among others, payments of pension plan
benefits, bank charges and investment expenses in the operation of the trust funds, termination value payable to
planholders, contributions to the trust funds of cancelled plans and final taxes on investment income of the trust
funds.
6.
Installment Contracts Receivable
Installment contracts receivable arise from sales of real estate properties.
The installment contracts receivable on sales of real estate are collectible in monthly installments for periods ranging
from one to 10 years and bear monthly interest rates of 0.67% to 2.00% computed on the diminishing balance.
The portion due within one year (net of current unrealized gross profit, estimated development cost for sold units and
deferred vat) amounted to 491.58 million in June 2012 and 448.99 million in December 2011.
The Group entered into a contract of guaranty under Retail Guaranty Line in the amount of 2.00 billion in 2010 with
Home Guaranty Corporation (HGC). The Group paid a guarantee premium of 0.90%, based on outstanding
principal balance of the receivables enrolled in 2011 and 2010.
7.
Other Receivables
This account consists of receivables relating to:
Customers
Contractors
Accrued interest
Retention
Advances and others
June 2012
20,416,711
3,858,764
5,969,312
4,083,216
12,149,819
46,477,822
Dec. 2011
38,417,228
6,084,089
10,106,929
3,561,104
8,388,144
66,557,494
The portion due within one year amounted to 39.00 million in June 2012 and 57.09 million in December 2011.
8.
Real Estate Properties for Sale and Held for Future Development
Real estate properties for sale consist of cost incurred in the development of condominium units and residential
houses for sale. This includes borrowing costs incurred in connection with the development of the properties. The
capitalization rates used to determine the amount of borrowing costs eligible for capitalization were 3.76% and
3.86% as of June 2012 and December 2011, respectively.
1
Real estate properties held for future development includes land properties reserved by the Group for its future
condominium projects. During 2011, the Company’s subsidiary acquired a parcel of land amounting to 109.81
million for future development. During 2011, the Group transferred portion of its real estate properties held for
future development to its newly launched projects accounted for under real estate properties for sale.
9.
Investment Properties
Investment properties consist of real estate for lease and held for capital appreciation. Real estate properties for
lease are rented out at different rates generally for a one-year term renewable every year. These real estate
properties were appraised by independent firms of appraisers at various dates. Some real estate properties for lease
of the Group were used as collateral for loans availed from the omnibus credit line.
Real estate properties amounting to ₱948.70 million were determined by management as held for capital
appreciation starting in 2011.
10. Property and Equipment
At cost
Beginning balance
Additions
Ending balance
Accum. Depreciation
Beginning balance
Depreciation
Ending balance
Net book value
At revalued amounts
Beginning balance
Ending balance
Accum. Depreciation
Beginning balance
Depreciation
Ending balance
Net revalued amounts
Total
Office Premises
Furniture, Fixtures
Equipment
Transportation
equipment
Total
June 2012
Total
Dec. 2011
----
28,970,381
-28,970,381
5,734,531
1,257,143
6,991,674
34,704,912
1,257,143
35,962,055
34,704,912
-----
28,353,938
208,080
28,562,018
408,363
4,277,047
305,314
4,582,361
2,409,313
32,630,985
513,394
33,144,379
2,817,676
31,386,855
1,244,130
32,630,985
2,073,927
259,448,852
259,448,852
---
---
259,448,852
259,448,852
259,448,852
259,448,852
206,127,471
6,319,148
212,446,619
47,002,232
47,002,233
----408,363
----2,409,313
206,127,471
6,319.148
212,446,619
47,002,232
49,819,909
193,489,171
12,638,300
206,127,471
53,321,381
55,395,308
34,704,912
As of June 30, 2012 the balances at cost of the office premises above are as follows:
Office premises
Less: accumulated depreciation
June 2012
61,858,970
48,205,346
13,653,624
Dec. 2011
61,858,970
46,672,058
15,186,912
Office premises were appraised by independent firms of appraisers on various dates. The cost of fully depreciated
property and equipment amounted to 29.74 million as of March 31, 2012.
11. Other Assets
Available-for-sale investments
Deposits and others
June 2012
2,612,459
18,594,814
30,188,843
51,396,119
Dec. 2011
1,981,595
18,594,814
76,948,341
97,524,750
June 2012
80,042,159
20,773,648
Dec. 2011
77,688,413
27,041,287
12. Accounts Payable and Accrued Expenses
Trade payables
Deposits
1
Accrued expenses:
Development costs
Interest payable
Director’s fee
Taxes, premiums, others
Withholding tax
Dividends
Others
509,869,946
16,647,727
18,188,727
17,909,073
4,314,454
71,872,022
12,203,652
751,821,408
735,127,486
15,542,739
30,879,836
5,325,024
10,436,712
6,302,776
13,812,371
922,156,644
June 2012
Dec. 2011
1,950,000,000
1,963,500,000
966,393,936
1,032,022,273
6,780,397
2,923,174,333
6,804,433
3,002,326,706
13. Loans and Notes Payable
Short-term commercial papers (STCP) with
various maturities and interest rate ranging from
2.19% to 5.39% in June 2012 and from 2.19% to
5.39% in Dec. 2011
Short-term promissory notes with various
maturities and annual interest rates ranging
1.70% to 3.25% in June 2012 and from 1.70% to
3.40% in Dec. 2011
Contract payable
At various dates in 2011 and 2010, the SEC authorized the Group to issue 2.30 billion worth of STCP registered
with the SEC in accordance with the provision of the Securities Regulation Code and its implementing rules and
regulations, the code of Corporate Governance and other applicable laws and orders.
In 2011 and 2010, the Group entered a contract of guaranty under a Revolving Cash Guaranty Line with HGC in the
amount of 1.90 billion and 1.65 billion, respectively. The guaranty covers the unpaid principal due on the
outstanding STCP and unpaid interest thereon of 10.00% per annum.
The Group has no outstanding loan from financial institutions as of June 30, 2012.
14. Stockholders' Equity
Cash dividends declared and paid by the Parent Company from retained earnings were as follows:
Date Approved
June 15, 2012
June 15, 2011
July 19, 2010
July 30, 2009
Per Share
3.59
3.71
4.29
4.10
Stockholders of
Record Date
July 03, 2012
June 24, 2011
July 30, 2010
August 11, 2009
Date Paid
July 27, 2012
July 20, 2011
August 13, 2010
September 8, 2009
Stock dividends declared and paid by the Parent Company from retained earnings were as follows:
Date Ratified
Percentage
June 19, 2012
June 21, 2011
October 7, 2010
20%
20%
20%
Stockholders of
Record Date
July 04, 2012
July 21, 2011
October 13, 2010
Date Paid
July 30, 2012
August 16, 2011
October 13, 2010
On October 7, 2010, the SEC approved the Amended Articles of Incorporation on the application for increase in
authorized capital stock from 300 million to 530 million with par value of 10 each. The SEC also authorized the
issuance of 20% stock dividend declared last August 17, 2010 and ratified by the stockholders on August 24, 2010.
On May 9, 2011, the Parent Company’s BOD authorized the transfer of appropriated retained earnings for the
development costs of The Manila Residences, which was 100% completed, to appropriated retained earnings to
finance the development costs of The Manila Residences Tower II in the same amount of ₱100.00 million. Also, an
additional appropriation amounting to ₱100.00 million was authorized for the development costs of its newly
1
launched project, the Tagaytay Prime Residences. As of June 30, 2012, the completion rate of The Manila
Residences Tower II and Tagaytay Prime Residences is 14.81% and 45.40%, respectively.
As of June 30, 2012, the unappropriated retained earnings include the remaining balance of deemed cost adjustment
amounting to 1.465B, net of related deferred tax of 0.440B, related to real estate properties for sale and lease which
rose when the Company transitioned to PFRS in 2005. This amount has yet to be absorbed through sales and
depreciation and is restricted for the payment of dividends.
The Company’s objectives in capital management is to maintain an optimal capital structure by ensuring that debt
and equity capital are mobilized efficiently and to provide returns for stockholders and benefit for other stakeholders.
The Company manages its capital structure and makes adjustments to it, in the light of changes in economic
conditions. It monitors capital using leverage ratios on both gross debt and net debt basis.
As part of our goal to provide returns for shareholders, the company declares dividends depending on the earnings,
cash flows and financial condition of the corporation and other factors.
15. Operating Expenses
Personnel expenses (see Note 16)
Taxes and licenses
Donations
Professional fees
Insurance expense
Depreciation (see Note 17)
Membership dues
Outside services
Brokers’ commission
Advertising and promotions
Light, power and water
Postage, telephone and telegraph
Transportation and Travel
Stationery and office supplies
Repairs and maintenance
Miscellaneous
June 2012
130,029,064
46,000,400
33,786,131
17,372,086
12,000,166
10,038,513
9,588,186
7,796,398
5,360,230
4,792,160
2,097,106
1,604,437
725,578
212,742
45,093
9,912,950
291,361,240
June 2011
128,761,231
52,034,282
26,203,000
30,226,634
15,275,809
11,683,675
12,318,305
6,752,412
6,435,263
5,589,941
2,128,547
1,590,041
657,546
623,151
4,022,941
8,034,238
312,337,016
Revenue Regulations (RR) No. 10-2002 defines expenses to be classified as entertainment, amusement and recreation
(EAR) expenses and sets a limit for the amount that is deductible for tax purposes. EAR expenses are limited to 0.5%
of net sales for sellers of goods or properties or 1% of net revenues for sellers of services. For sellers of both goods or
properties and services, an apportionment formula is used in determining the ceiling on such expenses.
16. Personnel Expenses
Employee benefits and commissions
Salaries and wages
Other social charges
June 2012
80,509,862
45,505,262
4,013,940
130,029,064
June 2011
79,656,404
43,220,566
5,884,261
128,761,231
17. Depreciation
This consists of depreciation pertaining to the following:
Investment in real estate properties under lease
Property and equipment
June 2012
3,205,968
6,832,545
10,038,513
June 2011
4,570,934
7,112,741
11,683,675
2
18. Financial Income (Expenses)
Interest income
Dividend income
Total financial income
Interest expense – net
Finance charges
Total financial expenses
June 2012
315,118,290
34,693
315,152,983
(43,863,334)
(786,929)
44,650,263
270,502,720
June 2011
342,011,738
35,423
342,047,161
(51,902,726)
(1,386,702)
(53,289,428)
288,757,733
19. Retirement Costs
The Group, jointly with affiliated companies, has a funded, noncontributory defined benefit retirement plan covering
substantially all of its employees.
20. Income Taxes
Provision for income tax consists of:
Current
Deferred
June 2012
57,604,687
(14,057,010)
12,738,402
56,286,079
June 2011
70,498,738
(27,155,372)
11,587,138
54,930,504
21. Related Party Transactions
Parties are considered to be related if one party has the ability to control, directly or indirectly, the other party or
exercise significant influence over the other party in making financial and operating decisions. It includes companies
in which one or more of the directors and/or shareholder of the Parent Company either has a beneficial controlling
interest or are in a position to exercise significant influence therein.
The Group discloses the nature of the related party relationship and information about the transactions and
outstanding balances necessary for an understanding of the potential effect of the relationship on the consolidated
financial statements, including, as a minimum, the amount of outstanding balances and its terms and conditions
including whether they are secured, and the nature of the consideration to be provided in settlement. The Group, in
the normal course of business, has transactions and account balances with related parties consisting mainly of the
following:
The omnibus credit lines of the Parent Company, CDC and CLDI amounting to about 2,715 million as of June
2012 and December 2011, are partly secured by investment properties, condominium units for sale, and office
premises of the Group. There is no outstanding availment of these credit lines.
The Group has a trust fund for the retirement plan of its employees with Insular Life Savings and Trust Company.
The Group has no standard arrangements with regards to the remuneration of its directors. Moreover, the Group
has no standard arrangement with regards to the remuneration of its existing officers aside from the compensation
received or any other arrangements in the employment contracts and compensatory plan. The Group does not have
any arrangements for stock warrants or options offered to its employees.
22. Financial Instruments
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise of bank loans and notes payables and cash and cash
equivalents and short-term cash investments. The main purpose of these financial instruments is to finance the
Group’s operations. The Group’s other financial instruments consist of investments in trust funds and available-forsale investments which are held for investing purposes. The Group has various other financial assets and liabilities
such as installment contracts receivable and trade payables, which arise directly from its operations.
2
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall
be undertaken.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, equity price risk, credit
risk, foreign currency risk and liquidity risk. The BOD reviews and approves policies for managing these risks and
they are summarized as follows:
Cash flow interest rate risk
The Group’s exposure to the risk for changes in market interest rates relates primarily to the Group’s short-term and
long-term loans and notes payable all with repriced interest rates.
The Group manages its interest rate risk by maintaining credit lines with financial institutions and limiting
borrowings to the Group’s cash requirements.
A sensitivity analysis to a reasonable change in the interest rates (with all other variables held constant) of 0.0959%
higher or lower, would increase or decrease the Groups’ income before income tax of 2,803,324.
Credit risk
The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers that
wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an on-going basis with the objective that the Group’s exposure to bad debts is not significant. The
Group’s policy is to enter into transactions with a diversity of creditworthy parties to mitigate any significant
concentration of credit risk. There are no significant concentrations of credit risk with in the Group.
The table below shows the Group's exposure to credit risk for the components of the balance sheets. The exposure
as of June 30, 2012 is shown at gross, before taking the effect of mitigation through the use of and collateral
agreements and at net, after taking the effect of mitigation through the use of collateral agreements.
Cash and cash equivalents, excluding cash on hand
Installment contract receivables
Other receivables
Investment in trust funds
Gross
Net
3,059,705,276
1,230,000
2,404,635,792
42,619,058
41,091,368
5,549,281,494
1,199,920,357
730,000
13,606,473
1,214,256,830
The following table summarizes the aging analysis of receivable and the credit quality of the receivables as of June
30, 2012:
Current
receivable
Other receivables:
Accrued interest
Customers
Retention
Others
> One Year
< 30 days
31 – 60
61 – 91
days
days
> 90 days
Total
466,030,030
1,913,060,340
9,251,979
5,326,783
1,667,970
9,298,690
2,404,635,792
5,969,312
7,228,250
450,000
12,019,640
491,697,232
-3,296,945
48,438
1,916,405,723
--81,741
9,333,720
1,127,131
--6,453,914
788,729
--2,456,699
11,272,601
336,271
-20,907,562
5,969,312
20,416,711
4,083,216
12,149,819
2,447,254,850
The table below shows the credit quality by class of asset for loan-related balance sheet lines, based on the
Company’s credit rating system.
Cash and cash equivalent
Investment in trust funds
Installment contract receivables
Other receivables:
*
**
* High Grade
3,059,705,276
1,230,000
41,091,368
2,379,090,370
30,324,113
5,511,441,127
** Medium Grade
----594,102
594,102
Past due but
not impaired
---25,545,422
11,700,843
37,246,265
Total
3,059,705,276
1,230,000
41,091,368
2,404,635,792
42,619,058
5,549,281,494
High Grade - financial assets with reputable counterparties and which management believes to be reasonably assured to be recoverable.
Medium Grade - financial assets for which there is low risk on default of counterparties.
2
The main considerations for impairment assessment include whether any payments are overdue or if there are any
known difficulties in the cash flows of the counterparties. The Company assesses impairment into two areas:
individually assessed allowances and collectively assessed allowances.
The Group determines allowance for each significant receivable on an individual basis. Among the items that the
Company considers in assessing impairment is the inability to collect from the counterparty based on the contractual
terms of the receivables. The Company also considers the fair value of the real estate collateralized in computing the
impairment of the receivables.
For collective assessment, allowances are assessed for receivables that are not individually significant and for
individually significant receivables where there is not yet objective evidence of individual impairment. Impairment
losses are estimated by taking into consideration the age of the receivables, past collection experience and other
factors that may affect collectability.
Because the Group holds the title to the real estate properties with outstanding installment contracts receivable
balance, and the Group can repossess such real estate properties upon default of the customer in paying the
outstanding balance, the Group does not provide for allowance for impairment of its installment contracts receivable.
Equity price risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in the market value of
individual stock. The Group is exposed to equity securities price risk because of investments held by the Group,
which are classified in the balance sheets as available-for-sale investments. The Group employs the service of a
third-party stockholder to manage its investments in shares of stocks.
A sensitivity analysis to a reasonable change in the equity price (with all other variables held constant) of 0.35,
higher or lower, would increase or decrease the equity by 920,332.
Foreign currency risk
The Group’s transactional currency exposures arise from purchases in currencies other than its functional currency.
However, the Group’s exposure to foreign currency risk is minimal.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
loans and STCP. The table below summarizes the maturity analysis of the Group’s financial liabilities as of June 30,
2012:
Accounts payable and accrued expenses *
Payable to stockholders
Loans and notes payable:
Notes
Contracts
Up to
One Year
359,164,806
134,326,750
Above
One Year
409,657,698
--
Total
768,822,504
134,326,750
3,036,844,457
6,780,397
3,537,116,410
--409,657,698
3,036,844,457
6,780,397
3,946,774,108
Fair Values
The carrying amounts of recorded financial assets and liabilities as of March 31, 2012 and December 31, 2011 are as
follows:
March 31, 2012
Carrying value
Fair value
Financial assets
Other receivables
Investments in trust funds
Available-for-sale investments
Financial liabilities
Accounts payable & accrued
expenses*
Loans and notes payable
December 31, 2011
Carrying value
Fair value
2,861,910,854
1,682,000
2,492,985,751
76,680,913
44,358,555
2,436,795
5,480,054,868
2,861,910,854
1,682,000
2,492,985,751
76,680,913
44,358,555
2,436,795
5,480,054,868
1,961,823,760
711,432,000
2,588,819,755
60,473,405
45,691,673
1,981,595
5,370,335,988
1,961,823,760
711,432,000
2,588,819,755
60,473,405
45,691,673
1,981,595
5,370,335,988
768,822,504
2,929,495,743
768,822,504
2,929,495,743
911,051,414
3,002,326,706
911,051,414
3,002,326,706
2
*
134,326,750
3,832,644,997
134,326,750
3,832,644,997
132,434,750
4,045,812,870
132,434,750
4,045,812,870
Excludes statutory liabilities amounting to 16,368,586and 11,105,230 as of March 31, 2012 and December 2011, respectively.
Cash and cash equivalents, short-term cash investments, other receivables, accounts payable and accrued expenses
and payable to stockholders
Due to the short-term nature of the transactions, the fair value of cash and cash equivalents, short-term cash
investments, other receivables, accounts payable and accrued expenses and payable to stockholders approximate
amount of consideration at the time of initial recognition.
Investments in trust funds and available-for-sale investments
Investments in trust funds and available for-sale financial assets are stated at fair value based on quoted market
prices.
The fair value of installment contracts receivable cannot be reasonably estimated due to the significant volume of
transactions and the varied terms and maturities.
Loans and notes payable
Due to the monthly/quarterly repricing of interest, loans and notes payable are stated at fair value.
24. Earnings Per Share
Basic earnings per share amounts were computed as follows:
June 2012
a. Net income
b. Weighted average number of shares
c. Earnings per share (a/b)
June 2011
219,374,485
34,725,833
6.32
25. Business Segments
The Group derives its revenues primarily from the sale and lease of real estate properties and marketing of pension
plans.
The Group does not have any major customers and all sales and leases of real estate properties and sales of pension
plans are made to external customers.
Segment revenues and expenses:
June 2012
Rental income
Others
June 2011
1,251,098,292
13,557,197
71,238,088
1,335,893,577
93.66%
1.01%
5.33%
100.00%
Except for the following expenses directly relating to the leasing and pension plan operations, operating expenses
pertain primarily to the real estate sales.
26. Contingencies
The Group is contingently liable for lawsuits or claims filed by third parties which are either pending decisions by
the courts or are under negotiation, the outcomes of which are not presently determinable. In the opinion of
management and its legal counsel, the eventual liability under these lawsuits or claims, if any, will not have a
material effect on the consolidated financial statements.

COVER SHEET

Transcription

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