COVER SHEET

2
COVER SHEET
7 7 8 2 3
SEC Registration Number
C I T Y L A N D
D E V E L O P ME N T
C O R P O R A T I O N
A N D
S U B S I D I A R I E S
(Company’s Full Name)
1 5 6
H . V .
D E L A
C O S T A
S T . ,
,
S A L C E D O
V I L L A G E ,
MA K A T I
C I T Y
(Business Address: No. Street City/Town/Province)
Rufina C. Buensuceso
893 – 6060
Contact Person
1 2
3 1
Month
Day
Fiscal Year
Company Telephone Number
1 7 - Q
FORM TYPE
Month
Day
Annual Meeting
(Secondary License Type, If Applicable)
C F D
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 = pls. use black ink for scanning purposes
0
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17- Q
QUARTERLY REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended September 30, 2012
2. SEC Identification Number 77823
4.
3. BIR Tax Identification No. 000-527-103
CITYLAND DEVELOPMENT CORPORATION
Exact name of issuer as specified in its charter
5. Makati City, Philippines
Province, country or other jurisdiction
of incorporation
7.
6.
(SEC Use Only)
Industry Classification Code
2/F Cityland Condominium 10 Tower 1,
#156 H.V. Dela Costa St., Salcedo Village, Makati City
Address of Principal Office
1226
Postal Code
8.
(632)-893-60-60
Issuer's telephone number, including area code
9.
Former name, former address and former fiscal year, if changed since last report N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Title of Each Class
Unclassified Common Shares
Number of Shares of Common Stock Outstanding
3,239,855,939
11. Are any or all of these securities listed on a Stock Exchange.
Yes [ x ]
No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein:
Stock Exchange
Philippine Stock Exchange
Title of Each Class
Unclassified Common Shares
12. Check whether the issuer:
(a) Has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section
11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the
Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was
required to file such reports):
Yes [ x ]
No [ ]
(b) Has been subject to such filing requirements for the past 90 days.
Yes [ x ]
No [
]
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements and accompanying notes are filed as part of this form (pages 5 to 23).
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
On July 2012, the Company (CDC) launched Pines Peak Tower 1, a 27-storey residential condominium located at
Union corner Pines St., Barangka, City of Mandaluyong. Also, 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 and its subsidiaries are pre-selling the following on-going projects:
Grand Central Residences, a 40-storey office, commercial and residential condominium located at EDSA corner
Sultan St., Mandaluyong City, a project of CDC.
Makati Executive Tower IV, a 29-storey office, commercial and residential condominium located at Cityland
Square, Senator Gil Puyat Avenue, Pio del Pilar Makati City, a project of CDC.
Also, the Company and its subsidiaries are selling the following completed and operational projects:
Grand Emerald Tower, a 39-storey commercial, office and residential condominium located along Emerald corner
Ruby and Garnet Streets, Ortigas Center, Pasig City, a project of CLDI.
Makati Executive Tower III, a 37-storey office, commercial and residential condominium located at Cityland
Square, Senator Gil Puyat Avenue, Pio del Pilar Makati City, a project of CDC.
Mandaluyong Executive Mansion III, a residential condominium located at Mandaluyong Executive Mansion
Subdivision, G. Enriquez St., Brgy. Vergara, Mandaluyong City, a project of CDC.
Oxford Mansion, an 8-storey commercial and residential condominium located along Evangelista St., New Santolan,
Pasig City, a joint project of Cityplans, Inc. (CPI), a subsidiary of CDC and Cityland, Inc. (CI).
Windsor Mansion, an 8-storey commercial and residential condominium located at New Santolan, Pasig City, a joint
project of CPI and CI.
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.
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 SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed
promissory notes.
The estimated development cost of P
=307.93 million as of September 30, 2012 representing the cost to complete the
development of real estate projects sold will be sourced through:
a)
b)
c)
d)
e)
Sales of condominium and real estate projects
Collection of installment receivables
Maturing short-term investments
Issuance of commercial papers
Availment of bank lines (bank lines as of September 30, 2012 amounted to =
P2.515 billion of which =
P2.515
billion is still unavailed).
Financial Condition (September 30, 2012 vs. December 31, 2011)
Total assets amounted to P
=8.226B as of the third quarter of 2012 as compared with the previous year’s ending
balance of P
=8.030B. Cash and cash equivalents stood at =
P2.163B as of September 2012, derived from net operating
activities, proceeds from loans and shift of funds to shorter term period investments. Although cash and cash
equivalents increased by 50.88%, total assets slightly increased by 2.44% due to the decrease in installment contracts
receivable, real estate properties for sale, investment properties and short term cash investments. Collection of
receivables decreased installment contracts receivables and sales of real estate properties decreased real estate
properties for sale. The launching of a project in July 2012 also decreased investment properties due to reclass of lot
to real estate properties for sale.
2
On the liabilities side, the Company’s payment of accounts payable and accrued expenses, income tax payable and
deferred tax liabilities resulted to the reduction of liabilities. However, loans and notes payable increased due to
additional issuance of notes payable, while increase in contracts payable was due to purchase of a property resulting
to a 2.16% reduction in total liabilities. Total stockholders’ equity stood at =
P5.602B as of September 30, 2012
higher by 4.75% from 2011 year end balance of =
P5.348B due to net income of =
P383.56M less cash dividends of =
P
138.45M plus other adjustment of P
=9.00M. As a result of the foregoing, the Company’s liquidity position improved
with acid-test and current ratio at 1.53:1 and 2.26:1 as of the third quarter of 2012 as compared to 1.21:1 and 2.01:1
in December 2011, respectively. Debt-equity ratio is also improved to 0.37:1 as of the third quarter of 2012, as
compared with 0.42 as of the same period of the previous year.
Results of Operation (September 30, 2012 vs. September 30, 2011)
Total revenues reached P
=1.377B as compared with last year’s figure of =
P1.473B. The decrease can be attributed to
lower sales of the subsidiary, CLDI because of the decrease of inventory of the condominium project, Grand
Emerald Tower as of December 2011. This project was already sold at 86.50% last year. On the cost side, lower
sales decreased cost of sales and operating expenses and income tax. Financial expenses decrease due to lower
interest rates. Altogether, the financial performance as of September 30, 2012 resulted to a net income of =
P383.56M
compared to the previous year of P
=404.91M. This translated to earnings per share and return on equity (both
annualized) of P
=0.11 and 7.56% as compared to the previous year of =
P0.12 and 9.07%, respectively.
Financial Soundness Indicators
Earnings per share *
Return on equity *
Acid-test ratio
Current ratio
Interest rate coverage ratio
Asset to equity ratio
Debt-equity ratio
September 2012
=0.11
P
7.56%
1.53
2.26
15.14
1.72
0.37
December 2011
=0.14
P
9.59%
1.21
2.01
14.14
1.75
0.34
September 2011
=0.12
P
9.07%
1.24
1.95
13.21
1.78
0.42
* annualized
Note: Earnings per share and return on equity are after retroactive effect of 10% stock dividends in 2012.
Manner of calculations:
Earnings per share
=
Return on equity
=
Acid – test ratio
=
Current ratio
Interest rate coverage ratio
=
=
Asset to equity ratio
=
Debt – equity ratio
=
____Net Income attributable to Equity Holders of Parent____
Average Number of Shares Issued and Outstanding
___ Net Income attributable to equity holders________
Total Stockholder’s Equity (Net of Minority Interest)
Cash and cash equivalents + Short-term Cash Investments + Financial Assets at Fair
Value Through Profit and Loss + Installment Contracts Receivable + Other Receivables
Total Current Liabilities
Total Current Assets / Total Current Liabilities
Net income before tax + Interest Expense + Depreciation Expense
Interest Expense
Total Assets
Stockholder’s Equity (net of Net Changes in Fair Value of AFS Investment)
Loans & Notes Payable___________________
Total Stockholder’s Equity (net of Net Changes in FV of Investments)
Any issuances, repurchases, and repayments of debt and equity securities
The Parent Company and its subsidiary issued SEC-Registered Short-Term Commercial Papers during the
period with outstanding balance of =
P616.40 million and =
P171.65 million, respectively as of September 30, 2012.
Any Known Trends, Events or Uncertainties (material impact on liquidity)
There are no known trends, event and uncertainties that have a material effect on liquidity.
Any unusual items affecting assets, liabilities, equity, net income or cash flows in the current interim financial
statements
There are no unusual items affecting assets, liabilities, equity and net income or cash flows in the current interim
financial statements.
3
Any significant changes in estimates of amounts reported in prior interim periods of the current financial
year or changes in estimates of amounts reported in prior year financial years that have a material effect in
the current interim period
There are no significant changes in estimates of amounts reported in prior interim periods of the current
financial year or changes in estimates of amounts reported in prior year financial years that have a material
effect in the current interim period.
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.
Effects 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 significant effects 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.
Changes in contingent liabilities or contingent assets since the last balance sheet date
There are no changes in contingent liabilities or contingent assets since the last balance sheet date
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 have a material effect on the net sales or revenues or income
from continuing operations.
Any Significant Elements of Income or Loss that did not arise from Registrants Continuing Operations
There is no significant element of income or loss that did not arise from registrants continuing operations.
Causes for any Material Changes from Period to Period in One or More Line of the Registrant's Financial
Statements
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
Increase in Cash and Cash Equivalent was due to collections from sales of real estate properties, proceeds from
notes payable and maturity of short term investments.
Decrease in Short Term Cash Investments was due to maturity of placements.
Decrease in Investment in Trust Funds was due to maturity and termination of pension plans.
Decrease in Installment Contracts Receivable was due to collections.
Decrease in Other Receivables was due to collection.
Decrease in Real Estate Properties for Sale-net was due to sales of real estate properties.
Increase in Real Estate Properties Held for Future Development was due to purchase of a property.
Decrease in Investment Properties was due to reclass of lot cost to real estate properties for sale.
Decrease in Property and Equipment was due to depreciation.
Decrease in Accounts Payable and Accrued Expenses was due to payment of development cost, trade payables,
director’s fee and deposits.
Increase in Loans and Notes Payable was due to contracts payable from the purchase of a lot and increase in
notes payable.
Decrease in Income Tax Payable was due to payment.
Decrease in Pre-need and Other Reserves was due to maturity and termination of plans.
Decrease in Deferred Tax Liabilities was due to lower financial income as compared to taxable income.
Increase in Capital Stock was due to 10% stock dividends.
Decrease in Net Changes in Fair Value of AFS Financial Asset was due to decrease in market value of stocks.
Decrease in Retained Earnings was due to declaration of stock and cash dividends.
Decrease in Sales of Real Estate was primarily due to lower sales of Grand Emerald Tower due to lower
inventory of units available for sale.
Decrease in Financial Income was due to decrease in interest income from sale of real estate properties and
money market.
Increase in Rent Income was due to increase in units available for lease.
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5
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
September 2012
Dec. 2011
2,163,420,180
354,300,000
39,672,268
1,960,029,048
28,574,995
1,446,216,281
1,312,962,761
846,282,216
46,371,990
28,454,588
8,226,284,327
1,433,826,099
507,750,000
45,691,673
2,147,940,019
52,235,624
1,591,546,671
1,182,830,001
986,036,006
55,395,091
27,178,893
8,030,430,077
692,124,146
1,566,460,772
26,865,178
46,502,391
350,596,348
Total Liabilities
446,669,618
1,793,162,928
17,193,732
40,696,373
326,831,800
2,624,554,451
2,682,548,835
STOCKHOLDERS’ EQUITY
Capital Stock – P1 par value Authorized – 4,000,000,000 shares
Issued – 3,241,793,886 shares
Additional Paid-in Capital
Net Changes in Fair Values of Investments
Retained Earnings (Note 14)
Treasury Stock – 3,655,633shares
3,241,793,886
7,277,651
(85,995)
1,576,574,373
(32,339,737)
2,947,261,781
7,277,651
521,418
1,678,459,048
(32,405,913)
Minority Interest in Consolidated Subsidiaries
4,793,220,178
808,509,698
4,601,113,985
746,767,257
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
5,601,729,876
8,226,284,327
5,347,881,242
8,030,430,077
ASSETS
Cash and Cash Equivalents (Note 4)
Short-term Cash Investments
Investment in Trust Funds (Note 5)
Installment Contracts Receivable – net (Notes 6 & 23)
Other Receivables – net (Note 7 & 23)
Real Estate Properties for Sale – net (Note 8)
Real Estate Properties Held for Future Development
Investment Properties – net (Note 9)
Property & Equipment – net (Note 10)
Other Assets (Note 11)
Total Assets
LIABILITIES & STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses (Note 12)
Notes and Loans Payable (Note 13)
Income Tax Payable
Pre-need Reserves
Deferred Tax Liabilities
See accompanying Notes to Financial Statements
6
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
nd
nd
UNAUDITED
For the 9-month For the 9-month
ending Sept. ‘12 ending Sept. ‘11
3 Qtr
2012
3 Qtr
2011
294,144,263
108,849,692
6,958,676
5,044,075
414,996,706
336,520,748
119,734,997
6,736,403
6,400,995
469,393,143
1,007,526,356
333,263,044
20,804,958
15,270,558
1,376,864,916
1,076,397,975
363,874,702
17,078,339
15,652,693
1,473,003,709
176,449,060
74,681,949
10,997,922
212,810,458
79,135,554
14,761,505
616,406,745
261,853,743
34,848,294
660,951,093
290,826,253
42,538,957
262,128,931
306,707,517
913,108,782
994,316,303
152,867,775
162,685,626
463,756,134
478,687,406
23,776,448
27,095,890
80,199,203
73,777,309
129,091,327
135,589,736
383,556,931
404,910,097
271,820,577
303,171,559
111,736,354
101,738,538
0.084
0.094*
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
Attributable to:
Equity holders of the parent
Minority interests
EARNINGS PER SHARE
*After retroactive effect of 10% stock dividends in 2012.
7
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
nd
Net Income
Other comprehensive income (loss):
Changes in fair value of available-for-sale
financial assets
Total other comprehensive income (loss)
Total Comprehensive Income – net
Attributable to:
Equity holders of the parent
Minority interests
Earnings per share
*After retroactive effect of 10% stock dividends in 2012.
nd
UNAUDITED
For the 9-month For the 9-month
ending Sept. ‘12 ending Sept. ‘11
3 Qtr
2012
3 Qtr
2011
129,091,327
135,589,736
383,556,931
404,910,097
(124,950)
(3,315,577)
(505,970)
(3,287,839)
(124,950)
128,966,377
(3,315,577)
132,274,159
(505,970)
383,050,961
(3,287,839)
401,622,258
271,213,163
111,837,798
300,219,411
101,402,847
0.084
0.093*
8
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Balance, January 1, 2012
Cash dividends
Stock dividends
Fractional Shares
Dividends received by CPI from CDC
Parent Company shares of stocks held
by CPI’s Inv in trust fund
Transfer of rev. inc. through sale &
depreciation
Total comprehensive income
Balance as of September 30, 2012
Balance, January 1, 2011
Cash dividends
Stock dividends
Fractional Shares
Dividends received by CPI from CDC
Parent Company shares of stocks held
by CPI’s Inv in trust fund
Transfer of rev. inc. through sale &
depreciation
Total comprehensive income
Balance as of September 30, 2011
Capital stock
2,947,261,781
Additional
paid-in capital
7,277,651
Net changes
in fair value
of investments
521,418
294,532,105
Retained
earnings
1,678,459,048
(88,359,715)
(294,532,105
(278)
51,531
Treasury
stock
(32,405,913)
Minority
interests
746,767,257
(50,095,357)
66,176
3,241,793,886
7,277,651
(607,413)
(85,995)
Capital stock
2,456,374,741
Additional
paid-in capital
7,277,651
Net changes
in fair value
of investments
512,786
490,887,040
9,135,316
271,820,576
1,576,574,373
Retained
earnings
1,844,992,886
(122,721,840)
(490,887,040)
(318)
71,570
(32,339,737)
Treasury
stock
(32,259,775)
66,176
111,837,798
808,509,698
Minority
interests
625,244,685
(38,962,926)
(292)
234,372
2,947,261,781
7,277,651
(2,952,148)
(2,439,362)
4,476,247
303,171,559
1,539,103,064
(32,025,403)
Total
5,347,881,242
(138,455,072)
-(278)
51,531
9,135,316
383,050,961
5,601,729,876
Total
4,902,142,974
(161,684,766)
-(610)
71,570
234,372
101,402,847
687,684,314
4,476,247
401,622,258
5,146,862,045
9
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
As of
Sept. 2012
3rd Qtr
2012
3rd Qtr
2011
152,867,775
162,685,626
463,756,134
478,687,406
9,943,744
4,687,782
(108,848,281)
(556,633)
(1,411)
(2,348,301)
14,433,379
4,624,926
(119,733,759)
(652,659)
(1,238)
(2,544,120)
33,794,116
14,000,489
(333,242,258)
(1,918,623)
(20,786)
(6,121,516)
41,275,937
14,217,832
(363,851,130)
(1,735,147)
(23,572)
(5,163,802)
73,836,310
4,817,114
16,603,315
(128,270,883)
100,406,296
4,630,025
37,081,209
(129,980,701)
187,910,971
22,035,256
282,712,571
(130,132,760)
184,187,781
3,684,479
205,316,684
(130,774,906)
(31,662,523)
(8,931,992)
107,843,043
(31,779,620)
67,131,431
15,312,062
86,261,046
118,977,231
(36,807,472)
168,430,805
(246,184,027)
286,589,567
334,867,631
(104,499,876)
516,957,322
(38,070,304)
387,751,258
367,473,046
(132,427,217)
622,797,087
1,411
-(354,300,000)
2,531
1,944,251
(85,239)
1,238
-(219,150,000)
-2,571,435
(104,285)
20,786
(1,257,143)
153,450,000
-7,526,118
(614,912)
23,572
-884,500,028
-6,546,923
(318,690)
1,019,259
(905,470)
(352,323,257)
(1,572,566)
2,400,315
(215,853,863)
-(788,666)
158,336,183
(2,195,326)
8,667,218
897,223,725
254,061,748
(10,846,661)
(139,336,963)
103,878,124
133,876,628
(12,357,704)
(160,997,213)
(39,478,289)
226,702,156
(33,785,909)
(138,615,671)
54,300,576
(96,901,474)
(41,896,735)
(161,016,000)
(299,814,209)
(181,313,702)
(86,901,347)
729,594,081
1,220,206,603
2,344,733,882
1,898,100,514
1,433,826,099
590,992,564
2,163,420,180
1,811,199,167
2,163,420,180
1,811,199,167
As of
Sept. 2011
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax
Adjustments for:
Interest expense – net of amounts capitalized
Depreciation and amortization
Interest income
Trust fund income
Dividend income
Decrease in pre-need reserves
Changes in operating assets and liabilities
Decrease (increase) in:
Installment contracts receivable – net
Other receivables
Real estate properties for sale
Real estate properties for future development
Increase (decrease) in:
Accounts payable and accrued expenses
Net cash from (used in) operation
Interest received
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received
Additions to property and equipment
Proceeds from (purchase of) short-term cash inv.
Proceeds from available-for-sale investments
Withdrawals from trust funds
Contributions to trust funds
Decrease (increase) in:
Investment properties
Other assets
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceeds from (payment to) availment of loans
Interest paid
Cash dividends paid
Net cash flows used in financing activities
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD
10
CITYLAND DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Corporate Information
City land Development Corporation (the Parent Company) was incorporated in the Philippines on January 31, 1978.
It has two domestic subsidiaries, Cityplans, Incorporated (CPI) and City & Land Developers, Incorporated (CLDI).
The Parent Company’s and its subsidiaries’ (the Group) primary business purpose 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 is engaged in the business of
establishing, organizing, developing, maintaining, conducting, operating, marketing and selling educational
assistance and pension plans. The Company is 50.40% owned by Cityland, Inc. (CI), the ultimate parent company
incorporated in the Philippines, which also prepares consolidated financial statements.
The average number of employees of the Group was 215 as of September 30, 2012 and 220 as of December 31,
2011. The Group’s registered office and principal place of business is at 2nd floor, 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 September 30, 2012 and December 31, 2011,
CPI has sold about P 297M worth of securities, respectively.
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
investments in trust fund 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, and 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 relationships 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 IFRIC 14, Prepayments of a Minimum Funding Requirement
11
•
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 statement of changes in equity or in the notes
to the financial statements.
•
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.
The subsidiaries and the percentage of ownership are as follows:
CPI
CLDI
Percentage of
Ownership
90.81
49.73
Nature of
Activity
Pre-need pension plans
Real estate
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 accounts of CLDI were consolidated since the Parent Company, some of its stockholders and affiliates (whose
stockholders also own equity ownership in the Parent Company) collectively own more than 50% of the equity of
CLDI, thereby giving the Parent Company effective control over the financial and operating policies of CLDI.
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.
12
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.
Cost of real estate sales
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.
13
•
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.
•
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 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 September 30, 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 interpretation requires that revenue on construction of real estate be recognized only upon
completion, except when such contract qualifies as construction contract to be accounted for under PAS 11,
Construction Contracts, or involves rendering of services in which case revenue is recognized based on stage of
completion. 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 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.
14
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 and Estimates
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.
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:
4.
Cash and Cash Equivalents
Cash on hand and in banks
Cash equivalents
September 2012
9,158,606
2,154,261,574
2,163,420,180
Dec. 2011
14,849,936
1,418,976,163
1,433,826,099
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 =
P354.30 million and P
=507.75 million as of September 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.
Investment 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 plan
holders, contributions to the trust funds of cancelled plans and final taxes on investment income of the trust funds.
6.
Installment Contracts Receivable - Net
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% 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 P
=509.65 million in September 2012 and P
=426.08 million in December 2011.
15
The Group and CI entered into a contract of guaranty under Retail Guaranty Line in the amount of P
=1,000.00 million
in 2012 with Home Guaranty Corporation (HGC). The Group paid a guarantee premium of 1%, based on
outstanding principal balance of the receivables enrolled in 2012 and 2011.
7.
Other Receivables
This account consists of:
Customers
Contractors
Accrued interest
Others
September 2012
14,328,483
1,091,409
5,533,420
7,621,683
28,574,995
Dec. 2011
32,255,888
4,289,589
7,158,793
8,531,354
52,235,624
The portion due within one year amounted to =
P25.66 million in September 2012 and P
=46.17 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 3.91% and
3.86% as of September 2012 and December 2011, respectively.
Cost of real estate sales include all direct materials and labor cost and those indirect costs related to contract
performance. 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, cost of real estate sales of the sold unit is
multiplied by the percentage of completion. The percentage of completion is based on the technical evaluation of the
project engineers as well as management’s monitoring of costs, progress and improvements of the projects.
Real estate properties held for future development includes land properties reserved by the Group for its future
condominium projects. During 2012, the Company transferred portion of its real estate properties held for future
development to its newly launched projects accounted for under real estate properties for sale. Also, in 2012, the
Company’s subsidiary CLDI acquired a parcel of land amounting to P
=127.94 for future development.
9.
Investment Properties
In November 2011, the Company entered into a non-cancellable operating lease with third party that permits the
lessee to use the property as a fast food outlet. Other lease agreements with third parties are generally for a one-year
term renewable every year.
The future minimum lease payments for this non-cancellable operating lease as of September 30, 2012 are as
follows:
Within one year
After one year but not more than five years
Later than five years
4,098,600
25,082,386
20,253,549
49,434,535
These investment properties were appraised by independent firms of appraisers at various dates. Some investment
properties of the Group were used as collateral for loans availed from the omnibus credit line.
16
10. Property and Equipment
Office
Premises
At cost
Beginning balances
Additions (disposals)
Ending balances
Accumulated depreciation
Beginning balances
Depreciation for the year
Disposals
Ending balances
Net Book Value
At Deemed Cost
Beginning balances
Ending balances
Accumulated depreciation
Beginning balances
Depreciation for the year
Ending balances
Net Deemed Cost
Total
Furniture,
Fixtures and Transportation
Office Equip.
Equipment
Total
Sept. 2012
Total
Dec. 2011
----
28,530,802
-28,530,802
5,715,606
1,257,143
6,972,749
34,246,408
1,257,143
35,503,551
34,246,408
-34,246,408
------
27,914,576
312,120
-28,226,696
304,106
4,258,122
489,400
-4,747,522
2,225,227
32,172,698
801,520
-32,974,218
2,529,333
30,928,568
1,244,130
-32,172,698
2,073,710
259,448,852
259,448,852
---
---
259,448,852
259,448,852
259,448,852
259,448,852
206,127,471
9,478,724
215,606,195
43,842,657
43,842,657
----304,106
----2,225,227
206,127,471
9,478,724
215,606,195
43,842,657
46,371,990
193,489,171
12,638,300
206,127,471
53,321,381
55,395,091
As of September 30, 2012 the balances at cost of the office premises above are as follows:
Office premises
Less: Accumulated depreciation
September 2012
61,858,970
48,971,991
12,886,979
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 P
=29.74 million as of September 30, 2012.
11. Other Assets
Available-for-sale financial assets
Retirement plan assets
Deposits and others
September 2012
1,841,758
10,887,820
15,725,010
28,454,588
Dec. 2011
1,354,728
10,887,820
14,936,345
27,178,893
September 2012
59,764,360
17,818,314
Dec. 2011
63,810,250
24,469,238
307,927,718
18,735,694
7,805,887
14,914,038
3,914,029
7,022,957
2,392,919
6,373,702
446,669,618
542,275,766
30,879,836
7,794,265
3,119,398
6,426,370
6,301,664
414,822
6,632,537
692,124,146
12. Accounts Payable and Accrued Expenses
Trade payables
Deposits
Accrued expenses:
Development costs
Director’s fee
Interest payable
Taxes, premiums, others
Withholding taxes
Dividends
VAT payable
Others
17
13. Loans and Notes Payable
Short-term commercial papers (STCP) with various maturities
and interest rate ranging from 2.63% to 5.31% in
September 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 3.00% in
September 2012 and from 1.70% to 3.40% in Dec. 2011
Contracts Payable
September 2012
Dec. 2011
788,050,000
967,050,000
887,731,678
599,410,772
117,381,250
1,793,162,928
-1,566,460,772
On various dates in 2012 and 2011, the SEC authorized the Group to issue P
=1,200.00 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.
In 2012 and 2011, the Group entered a contract of guaranty under a Revolving Cash Guaranty Line with HGC in the
amount of P
=1,200.0 million. The guaranty covers the unpaid principal due on the outstanding STCP and unpaid
interest thereon of 10.00% per annum.
14. Stockholders' Equity
Dividends declared by the Parent Company from retained earnings were as follows:
Cash dividends:
Date Approved
May 18, 2012
May 30, 2011
May 31, 2010
Per Share
0.03000
0.05000
0.06000
Stockholders of
Record Date
Date Paid
June 15, 2012
July 11, 2012
June 13, 2011
July 08, 2011
June 30, 2010
July 26, 2010
Percentage
10%
20%
20%
Stockholders of
Record Date
Distribution Date
August 27, 2012
September 20, 2012
July 07, 2011
August 2, 2011
June 11, 2010
July 8, 2010
Stock dividends:
Date Ratified
June 05, 2012
June 07, 2011
June 01, 2010
On July 27, 2012, the Securities and Exchange Commission (SEC) approved the Amended Articles of Incorporation
on the application for increase in capital stock from P
=3,000,000,000 to =
P4,000,000,000 with a par value of P
=1 each.
The SEC also authorized the issuance of 10% stock dividends declared by the BOD last May 7, 2012 and ratified by
the stockholders on June 5, 2012.
As of September 30, 2012, the unappropriated retained earnings include the remaining balance of deemed cost
adjustment amounting to =
P301.30 million, net of related deferred tax of P
=129.13 million, 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.
15. Operating Expenses
Personnel expenses (Note 16)
Taxes and licenses
Professional fees
Insurance
Depreciation (Note 17)
(Forward)
September 2012
130,491,217
38,312,357
16,180,245
15,291,885
14,000,489
September 2011
121,708,134
42,670,178
38,487,523
17,704,379
14,217,832
18
Membership dues
Outside services
Advertising and promotions
Brokers’ commission
Light, power and water
Postage, telephone and telegraph
Stationery and office supplies
Donations
Repairs and maintenance
Others
10,581,053
7,654,063
4,363,004
4,319,258
3,017,915
1,854,443
725,545
710,000
282,713
14,069,557
261,853,744
14,389,589
6,459,317
4,873,340
5,443,951
2,809,350
1,616,944
1,230,827
5,003,000
3,423,151
10,788,738
290,826,253
September 2012
73,149,946
50,293,153
7,048,118
130,491,217
September 2011
69,272,122
46,046,728
6,389,284
121,708,134
September 2012
3,720,245
10,280,244
14,000,489
September 2011
3,720,246
10,497,586
14,217,832
September 2012
September 2011
333,242,258
20,786
333,263,044
363,851,130
23,572
363,874,702
33,794,116
1,054,178
34,848,294
298,414,750
41,275,937
1,263,020
42,538,957
321,335,745
16. Personnel Expenses
Employee benefits and commissions
Salaries and wages
Other social charges
17. Depreciation
This consists of depreciation pertaining to the following:
Investments in real estate properties under lease
Property and equipment
18. Financial Income (Expenses)
Financial Income
Interest income
Dividend income
Financial Expenses
Interest expense
Finance charges
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
Final tax on interest income
September 2012
80,307,286
(14,629,227)
14,521,144
80,199,203
September 2011
95,523,932
(34,831,946)
13,085,323
73,777,309
19
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.
In the normal course of business, the Group has the following transactions with related parties:
1) Interest-bearing cash advances, which are always settled in full on the subsequent month, and non-interestbearing advances for reimbursable expenses.
Related Party
CI (Parent)
CLDI (Subsidiary)
CPI (Subsidiary)
Others (Affiliates)
Totals
Totals
Sept. 2012
Dec. 2011
Sept. 2012
Dec. 2011
Sept. 2012
Dec. 2011
Sept. 2012
Dec. 2011
Sept. 2012
Dec. 2011
Interest
Income on
Advances to
Related Parties
150,138
66,266
29,077
72,204
---146
179,215
138,616
Interest
Expense on
Advances from
Related Parties
232
209,143
19,503
98,217
----19,735
307,360
Amounts
Owed by Related
Parties
628,894
-1,598,427
1,060,034
41,460
-23,639
-2,292,420
1,060,034
Amounts
Owed to Related
Parties
196,834
-10,612
-5,507
---212,953
--
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. Earnings Per Share
Basic earnings per share amounts were computed as follows:
a. Net income
b. Weighted average number of shares
c. Earnings per share (a/b)
September 2012
271,820,577
3,239,855,939
0.084
September 2011
303,171,559
3,239,855,939
0.094*
*After retroactive effect of 10% stock dividends in 2012.
23. Financial Instruments
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise of bank loans and notes payables, cash and cash equivalents
and short-term cash investments. The main purpose of these financial instruments is to finance the Company’s
operations. The Group has other financial instruments such as available-for-sale investments, held-to-maturity
investments and financial assets at fair value through profit or loss, 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.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall
be undertaken. The Group has no investments in foreign securities.
20
The main risks arising from the Group’s financial instruments are cash flow interest rate risks, credit risk, foreign
currency risks 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 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.
A sensitivity analysis to a reasonable change in the interest rates (with all other variables held constant) of 0.0547%
higher or lower, would increase or decrease the Groups’ income before income tax of P
=980,860.
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 result 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 is no significant concentration of credit risk within the Group.
The table below shows the Group’s exposure to credit risk for the components of the balance sheets. The exposure
as of September 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.
Loans and receivables:
Cash and cash equivalents, excluding cash on hand
Short-term cash investments
Installment contract receivables
Other receivables
Available-for-sale financial assets
Investment in trust funds
Total credit risk exposure
Gross
Net
2,163,238,224
354,300,000
1,960,029,048
27,483,586
1,841,758
39,672,268
4,546,564,884
660,298,328
258,700,000
-12,136,253
-931,134,581
The following table summarizes the aging analysis and credit quality of the receivables as of September 30, 2012:
Current
Installment contracts
receivable
Other receivables:
Accrued interest
Customers
Retention
Others
Past due But Not
Impaired
31 - 60 days 61 - 90 days
>One Year
<30 days
Over 90 days
Total
494,159,232 1,450,378,977
4,289,186
2,315,479
1,808,747
7,077,427 1,960,029,048
5,533,420
2,912,159
-1,120,974
5,081,381
699,399
507,686,192 1,452,199,350
456,195
4,745,381
1,047,585
3,363,064
455,010
2,263,757
5,533,420
9,913,729
14,328,483
263,734
1,384,708
6,236,975
17,254,890 1,987,512,634
The table below shows the credit quality by class of asset for loan-related balance sheet lines, based on the Group’s
credit rating system as of September 30, 2012:
Financial asset 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
Installment contract receivables
Other receivables:
TOTAL
*
**
High Grade*
Medium Grade**
Past due but
not impaired
Total
39,672,268
--
--
39,672,268
15,490,839
12,136,253
27,627,092
2,163,238,224
354,300,000
1,960,029,048
27,483,586
4,544,723,126
2,163,238,224
354,300,000
1,944,538,209
14,748,608
4,516,497,309
-598,725
598,725
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.
21
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 items that the
Group 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. Receivables included in the specific assessment are those receivables under the
installment contracts receivable accounts.
Because the Group holds the title to the real estate properties with outstanding installment contracts receivable
balance and 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.
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 collectibility.
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.
A sensitivity analysis to a reasonable change in the equity price (with all other variables held constant) of =
P0.05,
higher or lower, would increase or decrease the equity by P
=89,373.
Foreign currency risk
The Group’s transactional currency exposure arises from sales and 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.
The table below summarizes the maturity analysis of the Group’s financial liabilities as of September 30, 2012:
Accounts payable and accrued expenses*
Notes payable**
Contracts Payable
Up to One Year
194,737,488
1,741,321,500
117,381,250
2,053,440,238
Above One Year
245,625,182
245,625,182
Total
440,362,670
1,741,321,500
117,381,250
2,299,065,420
Fair Values
As defined in PAS 39, fair value approximates the carrying amounts of recorded financial assets and liabilities as of
September 30, 2012 and December 31, 2011:
September 2012
Carrying value
Fair Value
Financial Assets
Cash and cash equivalents
Short-term cash investments
Installment contracts receivables
Other receivables
Investment in trust funds
Available-for-sale investments
Financial Liabilities
Accounts payable and accrued
expenses *
Notes payable
*
**
December 2011
Carrying value
Fair value
2,163,420,180
354,300,000
1,960,029,048
27,483,586
39,672,268
1,841,758
4,546,746,840
2,163,420,180
354,300,000
1,960,029,048
27,483,586
39,672,268
1,841,758
4,546,746,840
1,433,826,099
507,750,000
2,147,940,019
47,946,035
45,691,673
1,354,728
4,184,508,554
1,433,826,099
507,750,000
2,147,940,019
47,946,035
45,691,673
1,354,728
4,184,508,554
440,362,670
1,793,162,928
2,233,525,598
440,362,670
1,793,162,928
2,233,525,598
685,106,482
1,566,460,772
2,251,567,254
685,106,482
1,566,460,772
2,251,567,254
Excludes statutory liabilities amounting to =
P 6,306,948 and =
P 7,017,664 as of September 30, 2012 and December 2011, respectively.
Includes interest expense amounting to =
P65,539,822.
22
Cash and cash equivalents, short-term cash investments, other receivables and accounts payable and accrued
expenses
Due to the short-term nature of the transactions, the fair value of cash and cash equivalents, short-term cash
investments, other receivables and accounts payable and accrued expenses approximate amount of consideration at
the time of initial recognition.
Financial assets at fair value through profit or loss and available-for-sale investments
Financial assets at fair value through profit or loss and available-for-sale investments are stated at fair value based on
quoted market prices.
Installment contracts receivable
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. 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:
Sales of real estate
Rental income
Others
September 2012
1,266,540,080
20,804,958
89,519,878
1,376,864,916
91.99%
1.51%
6.50%
100.00%
September 2011
1,373,296,182
17,078,339
82,629,188
1,473,003,709
93.23%
1.16%
5.61%
100.00%
Except for expenses directly relating to the leasing and pension plan operations, operating expenses pertain primarily
to the real estate sales.
25. 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.
23
CITYLAND DEVELOPMENT CORPORATION
SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS
As of and for the Period Ending September 30, 2012, December 31, 2011 & September 30, 2011
Financial Ratios
Earnings per share*
Return on Equity*
Interest Rate Coverage Ratio
September 30, 2012
(Unaudited)
P 0.11
7.56%
December 31, 2011
P 0.14
9.59%
September 30, 2011
P0.12
9.07%
15.14
14.14
13.21
Asset-to-equity Ratio
1.72
1.75
1.78
Debt-to-equity Ratio
0.37
0.34
0.42
Current ratio
2.26
2.01
1.95
Acid-test Ratio
1.53
1.21
1.24
* annualized
CITYLAND DEVELOPMENT CORPORATION
SCHEDULE OF GROSS AND NET PROCEEDS OF SHORT-TERM
COMMERCIAL PAPERS ISSUED
As of September 30, 2012
Description
(i)
As disclosed in
Actual
the Final
As of September 30,
Prospectus*
2012**
Total Gross Proceeds
1,000,000,000
591,100,000
820,625
820,625
Legal and Accounting Fees
30,000
30,000
Publication Fees
29,000
29,792
5,000,000
2,961,029
30,000
51,500
994,090,375
3,892,946
Project-related Costs
473,000,000
330,000,000
Payment of maturing loans/ notes
480,090,375
244,413,250
41,000,000
12,793,804
994,090,375
587,207,054
Less: Expenses
Registration Fees
Documentary Stamps Tax
Printing costs
(ii)
Total Net proceeds
(iii)
Use of Proceeds
Interest expense
Total
(iv)
Balance of proceeds as of September 30, 2012
* SEC-CFD Order No. 344, Series of 2011 dated November 25, 2011.
** For the Ten-month Period December 2011 to September 30, 2012.
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--