Document 6525913

COVER SHEET
4 4 0 9
SEC Registration Number
A B O I T I Z
T R A N S P O R T
S Y S T E M
( A T S C )
C O R P O R A T I O N
(Company’s Full Name)
1 2 T H
U. N.
F L O O R
T I M E S
A V E.
C O R N E R
E R M I T A
M A N I L A
P L A Z A
T A F T
B U I L D I N G
A V E.
(Business Address: No. Street City/Town/Province)
MA. LEAH B. TOPACIO
0202-5287516 / 0202-5287602
(Contract Person)
(Company Telephone Number)
1 2
3 1
Month
Day
1 7 - A
(Form Type)
(Fiscal Year)
0 5
2 7
Month
Day
(Annual Meeting)
DECEMBER 31, 2010
(Secondary License Type, If Applicable)
Corporation Finance Department
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
2,112
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
17--A
SEC FORM 17
ANNUAL 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 December 31, 2010
2.
SEC Identification Number 4409
4.
Exact name of issuer as specified in its charter Aboitiz Transport System (ATSC) Corporation
5.
6.
Philippines
Province, Country or other jurisdiction of incorporation
or organization
7.
12th Floor Times Plaza Bldg. United Nations Ave. corner Taft Ave., Ermita, Manila ______1000____
1000____
Address of principal office
Postal Code
8.
(02) 528.
528-7516 and (02) 528528-7602
Issuer's telephone number, including area code
9.
William Gothong and Aboitiz Inc., Serging Osmeña Blvd., North Reclamation Area, Cebu City
Former name, former address, and former fiscal year, if changed since last report.
3. BIR Tax Identification No. 000000-313313-401
(SEC Use Only)
Industry Classification Code:
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock Outstanding and
Amount of Debt Outstanding
Common stock, P 1 par value
Redeemable preferred stock, P 1 par value
2,446,136,400
4,560,417
11. Are any or all of these securities listed on a Stock Exchange.
Yes [X
X]
No [ ]
Philippine Stock Exchange - Common Stock and Redeemable Preferred Stock
12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 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
X]
No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [X
X]
No [ ]
13. Aggregate market value of the voting stock held by non-affiliates as of March 31, 2011:
2011
P 81,402,737
2
TABLE OF CONTENTS
PAGE NO.
PART I – BUSINESS AND GENERAL INFORMATION
Item 1
Item 2
Item 3
Item 4
Business
Properties
Legal Proceedings
Submission of Matters to a Vote of Security Holders
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18
19
20
PART II – OPERATIONAL AND FINANCIAL INFORMATION
Item 5
Item 6
Item 7
Item 8
Market for Registrant’s Common Equity and
Related Stockholder Matters
Management’s Discussion and Analysis of Financial Condition
& Results of Operations
Financial Statements
Information on Independent Accountant and Other Related
Matters
20
21
32
33
PART III – CONTROL AND COMPENSATION INFORMATION
Item 9
Item 10
Item 11
Item 12
Directors and Executive Officers of the Registrant
Executive Compensation
Security Ownership of Certain Beneficial Owners and
Management
Certain Relationships and Related Transactions
PART IV – CORPORATE GOVERNANCE
34
41
42
44
45
PART V – EXHIBITS AND SCHEDULES
Item 13
a. Exhibits
b. Reports on SEC Form 17-C
60
60
SIGNATURES
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
INDEX TO EXHIBITS
3
PART I – BUSINESS AND GENERAL INFORMATION
Item 1. Business
ABOITIZ TRANSPORT SYSTEM (ATSC) CORPORATION (“ATS”)
Business Development
Aboitiz Transport System (ATSC) Corporation (the “Registrant”, the “Company”, or “ATS”) was formed and
organized in May 26, 1949 under the corporate name William Lines, Inc.
Driven by the vision of providing the nation with the best shipping services, William Lines, Inc., Carlos A.
Gothong Lines, Inc. and Aboitiz Shipping Corporation consolidated their resources and expertise in
December 21, 1995 and marked the birth of William, Gothong & Aboitiz, Inc. (“WG&A”).
As a result of the buyout made by Aboitiz Equity Ventures, Inc. (“AEV”) of the Chiongbian and Gothong
holdings in WG&A in 2002, the Registrant amended its Articles of Incorporated to change its corporate
name from WG&A to ATS, which the Securities and Exchange Commission (“SEC”) approved last February
4, 2004.
During the past three (3) years, ATS and its subsidiaries have engaged into mergers, significant
purchases of shares of stocks. In August 2007, the Company acquired 100% of Supercat Fast Ferry
Corporation (SFFC) from Accuria. It also entered into a joint venture agreement with MCC Transport
Singapore Pte. Ltd and Mercantile Ocean Maritime Co. (Filipinas) Inc. to form MCC Transport Philippines
Inc. (“MCCP”).
In June 2008, one of the wholly owned subsidiaries of ATS, Aboitz One Inc. (“AONE”), purchased 100% of
Scanasia Overseas, Inc. (“SOI”) from Mr. Carsten Pedersen. In August 2009, AONE also formed a joint
venture with Kerry Logistics Network Limited of Hong Kong (KLN) for its international freight forwarding
business.
In July 2010, SEC approved the statutory merger of ATS with Zoom in Packages, Inc., a wholly owned
subsidiary. Further, in August 2010, the SEC also gave its approval on the statutory merger of the
Company with another wholly owned subsidiary – Reefer Van Specialists, Inc. The mergers are expected
to further improve the effectiveness and efficiency of freight services of ATS as well as reduce costs as
people, processes, systems are integrated.
On December 01, 2010, the major stockholders of ATS, Aboitiz Equity Ventures, Inc. (“AEV”) and Aboitiz
and Company, Inc. (“ACO”), informed the company of their joint decision to approve the sale of their
shareholdings in ATS to Negros Navigation Co., Inc. (“NENACO” or “NN”) at a selling price computed
based on ATS’ equity value of 105 million US dollars or equivalent to approximately US$0.043 per share.
The equity value includes all the logistics and shipping businesses of ATS except its interest in its joint
venture companies with the Jebsen Group of Norway.
AEV’s and ACO’s shareholdings in ATS represented 77.24% and 15.96% respectively of the total
outstanding common shares of ATS or equivalent to 1,889,489,607 and 390,322,384 common shares
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each. The sale of AEV’s and ACO’s respective shareholdings in ATS to NENACO was consummated last
December 28, 2010.
NENACO, before the closing of the sale, secured approval from the SEC to proceed with the crossing of
the 2,279,811,991 common shares of ATS provided that it will make a mandatory tender offer of the shares
owned by the public.
Lastly, prior to the closing of the above sale, AEV acquired 62.5% equity stake of ATS in the ship
management, manning and crew management, bulk transport businesses of the Aboitiz Jebsen Group.
Further, ACO will acquire the 50% equity stake of ATS in Aboitiz Jebsen’s chartering business. ATS’
Board approved the sale of the Company’s 62.5% equity in Aboitiz Jebsen Bulk Transport Corporation
(“ABOJEB”), Aboitiz Jebsen Manpower Solutions, Inc. (“AJMSI”) and Jebsen Maritime, Inc. (“JMI”) to AEV
at a total price of P355,908,432. It also approved the sale of ATS’ 50% interest in Jebsen Maritime (BVI)
Limited at a price of P44,000,000.
Many companies work together to bring the brands of ATS to life. They enable us to deliver on our brand
promises. There are instances when two or more companies work together to provide the products and
service offered by a single brand, such as the case of 2GO, which has evolved into a total supply chain
solutions provider.
ATS is the only integrated transport solutions provider in the country. Its principal business units are
engaged in the movement of people operating under brand names ‘SuperFerry’, ‘SuperCat’, and ‘Cebu
Ferries’ and the movement of cargos operating under the brand name ‘2GO’. ATS’ array of services
geared towards cargo movements includes containerization, RoRo services, logistics and supply chain
solutions.
It is majority-owned by Negros Navigation Co., Inc., one of the oldest domestic shipping companies in the
Philippines. NENACO was organized and registered with the SEC on July 26, 1932 for the purpose of
transporting passengers and cargoes at various ports of call in the Philippines. Further, its principal
office is located at Pier 2, North Harbor, Manila.
Vessel Fleet
As of December 31, 2010, ATS has a total fleet of 19 operating vessels, of which all are company-owned
ships. The fleet consists of 7 fast crafts under the brand name ‘SuperCat’, 10 RoRo/Pax vessels including
6 under the ‘SuperFerry’ brand, 4 vessels under ‘Cebu Ferries’ brand, and 2 freighters under the ‘2GO’
brand. ATS vessel fleet has a combined Gross Registered Tonnage of approximately 98,849 metric tons,
total passenger capacity of approximately 14,164 passengers and aggregate cargo capacity (including
those under ATS’ joint venture, MCCP) of approximately 4,168 twenty-foot equivalent units (TEUs).
SuperFerry and Manila Ferry vessels are passenger/cargo vessels that call on Manila as their homeport.
SuperFerry vessels are generally larger than the rest of the fleet of ferries. Cebu Ferries are standard
passenger/cargo vessels calling on the Visayas and Mindanao ports with Cebu as homeport. SuperCat
vessels are the fast craft passenger vessels of the Company that ply short distances.
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Ports of call
ATS’ extensive presence throughout the country is carried out through its branch operations and agency
networks. These are located primarily in Bacolod, Batangas, Butuan, Cagayan de Oro, Calapan, Cebu,
Cotabato, Davao, Dumaguete, General Santos, Iligan, Iloilo, Manila, Nasipit, Ormoc, Ozamis, Surigao, and
Zamboanga.
Market Share
As of December 31, 2010, ATS continues to dominate the Philippine Sea Travel with 63% market share in
the passage service specifically in ports that they serve. Freight market share is estimated at 44%.
Subsidiaries and Affiliate of ATS
In 2010, ATS has 9 operating subsidiaries and affiliates, AONE, Supercat Fast Ferry Corp. (SFFC), ZIP,
RVSI, ABOJEB, AJMSI, JMI, JMBVI, and MCC Transport Philippines, Inc (MCCP).
However, ZIP and RVSI were merged into ATS by way of a statutory merger in July and September 2010,
respectively.
Further, in December of the same period, the Board of ATS approved to sell its 62.5% equity stake in
ABOJEB, AJMSI and JMI to AEV. The Board also approved the sale 50% ownership in JMBVI to ACO. Both
sales were in connection with the execution of the sale of AEV’s and ACO’s shares in ATS to NENACO.
Product Lines and Markets
Briefly, the Company’s product lines and solutions are described as follows:
1. PASSAGE
ATS continues its course as a low-cost operator with unbundled price structure through its SuperFerry,
Cebu Ferries and SuperCat brands. These provide affordable, comfortable, safe and reliable travel
experience.
In order to drive passenger volume and sales, signature price promotions were offered, including ‘Tripid
Fares’, the year-round low price regular fare offering and ‘Todo Todo Sale Sail’, a special promo with
defined selling and sailing dates. In 2009 the ‘Todo Tawad Promo’ was introduced to targeted ports.
Promotions were complemented by offering customers the convenience and speed in dealing with us.
Ticketing systems were enhanced to be able to accept credit and ATM (automated teller machine) cards
through mobile phone and internet.
Further, customers who buy their tickets early will be able to enjoy larger discounts on their fares. A
ticket to the Visayas can be bought for as low as P750, while a ticket to Mindanao can be bought for as low
as P1,150. SuperFerry is the first domestic passenger ship to price its tickets based on availability of
accommodations. The software driven pricing system is similar to that of hotels and airlines automatically adjusting prices based on customer demand. Customers have the option of purchasing
tickets with or without meals.
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As of December 31, 2010, SuperFerry provided customers transportation to 14 ports of call, namely:
Manila, Bacolod, Cagayan de Oro, Cebu, Cotabato, Davao, Dumaguete, General Santos, Iligan, Iloilo,
Butuan, Ozamis, Surigao, and Zamboanga. Frequencies vary per destination. Customers had four (4) types
of accommodations to choose from, namely: stateroom, cabin, tourist, mega value, and super value.
Foreign sales do not constitute a significant percentage of total SuperFerry sales. SuperFerry has no
overseas branches, outlets, or agents. Customers based overseas may purchase a SuperFerry e-ticket
through the SuperFerry website.
SuperFerry sells tickets using three distribution channels: (1) over 600 online outlets nationwide
composed of corporate, network agencies, direct outlets; (2) an in-house call center; and (3) through the
SuperFerry website.
No new products were introduced in the past three years. Shuttle services continue to serve selected
routes, depending on market demand.
Lastly, SuperFerry brand’s commitment to passenger comfort and safety remain on top of ATS’ agenda.
On December 2009, the ISO 9001:2008 Quality Management System certification for its passenger services
team, passage terminal and vessel operations was awarded to SuperFerry. Both Cebu Ferries and
SuperCat has been ISO certified since 2004 and in October 2009, successfully passed the Surveillance
Audit by SGS for their ISO Certificate 9001:2008.
2. FREIGHT
2GO is the source of quality solutions that offer integrated services at a lower overall cost for customers
who need full supply chain solutions or any of its components. The brand was formally launched in
October 2004. In 2008, it refreshed its brand promise, with commitment to flexibility: “A passion to provide
flexible solutions to help your business grow”. With focus on providing solutions to its customers, the
redefined 2GO solutions architecture is categorized into delivery and transport, special services, customer
support, and supply chain management solutions.
2GO underwent major restructuring in 2010 with the integration of its frontline services and support
groups, and the merger of former subsidiaries, Zoom in Packages, Inc. and Reefer Van Specialists Inc.,
into ATS.
This resulted in manpower savings, alignment of standards and processes within the business unit,
consolidation of offices in the branches, seamless integration of backroom services nationwide, and
overall improvement in the efficiency and effectiveness in the delivery of 2GO services.
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The freight business grew by 14% year-on-year with volume increasing by more than 30,000 MT. This
could partly be attributed to a 21% increase in our vessel capacity to almost 300,000 MT with the
acquisition of three new ropax vessels. As a result, our market expanded by 10% during the period.
For domestic and international courier, 2GO introduced new products and services that helped boost
revenues, such as the Budget Box and International Budget Box, US Visa delivery, and expanded offerings
under its partnership with international logistics provider United Parcel Service (UPS).
Third party logistics remained robust with an increase in our warehouse capacity to nearly 39,000 pallets.
The same is also expected to further increase its warehouse capacity to 56,000 with the completion of new
warehouse by September 2011.
2GO has been bundling more value-added services and offering more flexible solutions for our customers
that would further strengthen our position as the country’s only integrated supply chain solutions
provider.
Competition
1. PASSAGE
The operating environment in 2010 for our passenger business was very challenging as we faced a
deflated market and stiff competition from the airlines. Our capacity was reduced with the sale of three
(3) of our vessels in 2010, Our Lady of Good Voyage, Our Lady of Rule and Our Lady of Mt. Carmel. Further,
Superferry 19 was tied-up starting the fourth quarter of the year.
However, sea transport will continue to be one of the primary means of inter-island transport in the
Philippines especially for travellers who wish to bring many baggages. In recent years also, the rise of
consumer preference for RoRo or land transport has become more evident. There is a growing passenger
market segment that is shifting to this alternative means of transportation because of its affordability,
frequency of trips and convenience for people who live in the outskirts.
SuperFerry ports of call are based in Central Visayas, Western Visayas, Northern Mindanao, and Southern
Mindanao.
SuperFerry competes with airlines and other domestic inter-island ferries principally in terms of price.
Cut throat competition is an effect of ‘fare diving’ to compensate for rising costs especially fuel. There is
no limit to competition in terms of pricing which can also be readily copied by any player. In terms of
service, the sea players compete by providing reliable service to passengers in the form of safety and ontime departures and arrivals. Customers also look for convenience in ticket purchases, frequency of
schedules, improved facilities on-board and entertainment.
In 2010, among the principal competitors of SuperFerry are Negros Navigation, Cebu Pacific, Philippine
Airlines, and various Bus Lines. Geographic areas of competition include Bacolod, Iloilo, Cagayan de Oro,
Iligan, Ozamis, Cebu, Cotabato, Davao, General Santos, Dumaguete, Surigao, Zamboanga, Butuan, Roxas
and Panay area (for the Bus Lines).
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In order to attract passengers to travel by sea, SuperFerry maintains a suitable gap between the price of
SuperFerry and airline fares. On top that, customers continue to have the benefit of a larger baggage
allowance.
The SuperFerry strategy to combat competing alternatives is to conduct aggressive marketing and
promotional activities to promote the SuperFerry Tripid Fares.
In 2009, SuperFerry intensified its low fare campaign called Biyaheng Bayan which focuses on the higher
benefits of SuperFerry’s Tripod Fares. Aside from developing new broadcast materials, a repeat of
SuperFerry's Biyaheng Bayan Caravan toured key areas in the country to talk about the low fare
campaign, holding pocket events in barangays and free concerts in key cities.
Despite the challenges, SuperFerry remains undaunted and focused to seek for better ways to deliver our
service consistently all the time and be a sought after alternative to move around the islands. SuperFerry
is committed to consistently provide a reliable, convenient and affordable sea service with a passion to
serve its entire customer.
2. FREIGHT
2GO is at the forefront of providing quality solutions and an integrated service offering to customers who
need full supply chain solutions or any of its components. It is the vision of the brand to be the leader in
the Supply Chain Management.
While growing and de-commoditizing the freight business of ATS, 2GO grows and bundles more value
added services to its existing and new customers. These value added services include 3PL (Third Party
Logistics), nationwide air, land and sea transport for lead time sensitive cargo, cold chain management for
temperature controlled goods, asset maintenance, money remittance, domestic and international courier.
Further, 2GO is the logistics and transport enabler of ScanAsia, a wholly owned subsidiary of AONE, which
handles the nationwide distribution of several FMCG (Fast Moving Consumer Goods) through various
channels.
The SuperFerry 9 accident was a major highlight in 2009. The suspension of the ATS fleet and subsequent
voyage cancellations due to Lloyds Register’s vessel inspections, not only resulted to huge revenue losses,
but also operational service issues, especially for the lead time sensitive cargo and supply chain
customers.
The onslaught of Ondoy and Peping during the last quarter also resulted to revenue losses due to a
temporary shortage of consumer goods moving out of Manila. Factories were either flooded or available
stocks were being prioritized and distributed to affected areas in Luzon.
Fuel prices dropped at the beginning of the year, and increased during the second half of 2009. The
increase in fuel prices and all other delivery related costs such as trucking and transhipment, resulted to
a further squeeze in margins.
However, despite of the above challenges, 2GO’s strategy of providing flexible capacity through short-term
charters of freighter vessels proved to be a good move. This allowed ATS to continue serving customers
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especially on port links lost, as a result of SuperFerry voyage cancellations. The short-term charters also
allowed ATS to start building the market in preparation for the deployment of 1,000 TEU freighters.
ATS has taken advantage of the low vessel prices and has purchased two (2) 1,000 TEU freighters, which
lowered the Company’s vessel slot cost in 2009. Both ships were fully operational in December 2009.
ATS target to have four (4) freighters running on a regular weekly run, covering all major ports of the
country.
During the past years, there has been a growth in the number of players in the domestic shipping industry.
Pricing is no longer regulated, thus allowing new entrants to compete with the existing operators. Barge
operators and chartered vessels are increasing in volume shipments as companies – both small and large
– continue to look for alternative shipping lines.
Major competitors of 2GO in the domestic shipping industry specifically in major areas of Visayas and
Mindanao regions include Sulpicio Lines, Lorenzo Shipping, Negros Navigation, CAGLI (Gothong Lines).
The company believes in providing the best in technology, service and people. By investing heavily in
modern systems, equipment, vessels and putting these in the hands of highly trained, competent and
efficient workforce, ATS Freight continues to elevate the service and safety standards of the shipping in
the country.
It has several systems running to support its complex business. It includes the Oracle and SAP systems
and several in-house developed systems that provide operational efficiency on every aspect of 2GO
business. Further, the Transport Management System from JDA Software Inc. (JDA) enabled the company
to plan more efficiently resulting to a higher truck and container utilization. In 2009, 2GO was awarded as
Best in Growth Market by JDA.
2GO remains committed to live up to the customer service goal of creating 2GO advocates by ensuring
availability, accessibility and accuracy, so that customers can continue to depend on 2GO for advise and
long term partnership. ATS has the ships, all the necessary terminal equipment, warehouse facilities,
land transportation equipment, a nationwide network, operating systems, and most of all a group of highly
energized and passionate team who will deliver 2GO’s brand promise of “Flexible Solutions”.
Safety,
Safety, Security and Quality Standards
ATS, in partnership Aboitiz Jebsens Bulk Transport Corporation, an international ship management
company with ISO 9001:2008 accreditation and certified as compliant to the International Safety
Management Code (ISM) and International Ship and Port Security Code (ISPS), maintains its fleet to
international standards of quality, safety, security and seaworthiness. The Company ensures each ship is
manned with qualified, certified, medically fit and suitably experienced seafarers and qualified and
competent shore-based staff to support the quality, safe, secure and efficient operation of vessels.
Various in-house and external training programs are instituted for all the onboard and landbased staff. to
upgrade their skills and to keep them abreast with developments in international shipping standards.
The Company and its entire fleet has to undergo a periodic ISM, ISPS and ISO external audits conducted by
American Bureau of Shipping to ensure continuous improvement of safety, security and quality on board.
The ISM and ISPS codes are IMO initiated mandatory requirement for all companies that operate ships.
The ISM’s objectives are to prevent maritime accidents, provide competent crews, emergency
10
preparedness, ensure a planned maintenance system and protection of the environment while the ISPS
Code ensures that security threats are recognized and security breaches are prevented. The Philippine
Maritime Industry (MARINA) and Office for Transportation Security (OTS) under the Department of
Transportation and Communications (DOTC) has issued a memorandum circular requiring all domestic
passenger vessels to comply with the ISM and/or NSM (National Safety Management) and the ISPS code.
In the strive to continually improve its Safety, Security and Quality Standards, the company in 2006,
implemented new procedures such as the amendment and categorization of safety inspection reports,
standardized the drill evaluation format and servicing procedures of fire extinguishers, fire suppression
system, and checking of cargoes during the loading and unloading operations, designated specific areas
as “smoking areas” on board the vessel, identified the restricted areas onboard, implemented K9
panelings and improved the tactical response trainings of security personnel onboard with emphasis on
customer satisfaction. In the last quarter of 2009, Abojeb initiated a per vessel team enhancement of
security situation response exercises focusing on immediate action drills and movements to address the
identified threat of onboard security incident. The last 2 years had been observed as having a drastic
decrease in cargo pilferage onboard due to the implementation of strict security access controls on the
cargo decks and the requirement of appropriate padlocks for all RRTS and rolling cargoes. In 2007,
seminars for "Leadership & Management" and "Job Hazard Analysis & Safety Awareness in the
Workplace" were conducted onboard. The company also developed safety and security procedures &
requirements in accepting RoRo and motor vehicles on RoRo/passenger ship. In 2009, the Company
initiated seminars on vessel stability and lashing procedures for 2GO personnel and ATI supervisors and
was scheduled to include the outports. In addition, frequent dialogues were conducted with involved
parties especially in the handling, carriage and unloading of approved fumigated cargoes. To prevent
pollution at sea, implemented procedures in handling Oily Water Separator (OWS) overboard discharge
and Emergency Bilge Suction valves.
In 2008, the Company has started to comply with ISO14001-Environmental Management System (EMS)
requirements onboard all managed vessels to further enhance its commitment to the protection and
preservation of the marine environment and had initiated an internal audit based on the EMS standards
with scheduled follow-ups
Customers
The Company has a wide customer base that includes manufacturers of consumer goods and finished
products, traders of commercial, industrial and agricultural goods as well as the general public. The
Company monitors its top 50 customers. No single customer accounts for 20% or more of the Company’s
freight revenue.
Purchases of Materials, Parts and Supplies
Materials, parts and supplies are obtained mostly from local suppliers at competitive rates. Fuel and lubes,
the biggest operating expense of the Company is purchased from a major fuel provider.
Selected Major Suppliers of the Registrant:
Items/Services Supplied
•
Fuel, diesel and lubricants
Major Supplier
1. Pilipinas Shell Corp.
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2. Petron Corp.
3. Chevron Phils., Inc.
•
Vessel repair and drydocking
1. Subic Shipyard
2. Keppel Philippines Marine Inc.
•
Stevedoring and Arrastre
1. Asian Terminal Inc.
•
Insurance
1. Pioneer Insurance and Surety Corp.
2. Steamship Mutual Management (Bermuda)
Limited
3. British Marine Luxembourg
4. Mapfre Insular Insurance Corporation
5. Philippine Charter Insurance Corporation
Contract for Distribution and Repair and General Services
ATS also contracts with more than 20 major trucking, forwarding and container repair companies in the
Philippines, including affiliated companies, to provide door to door, door to pier, pier to door distribution
services required by its customers, as well as stevedoring and arrastre services. These contracts are
conducted on an arms-length basis.
The Company’s passenger ticketing and cargo booking are principally conducted through its network of
branches and sales agents, most of which are situated at ports served by the Company. In addition,
independent agencies/outlets are also maintained in urbanized areas such as Manila, Cebu, and Cagayan
de Oro.
These Agencies and Outlets are covered by Agency Contracts renewable annually, subject to certain
conditions. Contracts with affiliated companies for agency and general services are conducted on an
arms-length basis.
General service contracts include contracts with engineering, repair and service companies, independent
concessionaires, and janitorial service providers.
Patents, Trademarks, Copyrights, Licenses, Franchises, Concessions and Royalty Agreement held
ATS’ vessels are duly registered with MARINA and subjected to regular survey and ISM audit to ascertain
its adherence to vessel and manning safety standards. The company is the holder of several Certificates of
Public Convenience (CPC), Provisional Authority (PA) and Special Permit (SP) issued by MARINA to service
domestic ports of call.
Related Party Transactions
Related party transactions with both customers and suppliers are discussed in the Note 23 to Consolidated
Financial Statements.
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Employees
ATS has a complement of 1,041 employees as of December 31, 2010, of which, 983 are regular, 55 are
probationary, and 3 are contractual.
The Company is not unionized. It has a Labor Management Council (LMC) that is a member of the
Philippine Association of Labor Management Council, wherein the labor and the management work hand in
hand to accomplish certain goals using mutually acceptable means. With this council, labor and
management representatives discuss and decide on issues of equal concern to both parties. They are
social partners sharing a common interest in the success and growth of the enterprise and the economy.
LMC aims to promote harmony among all the ATS employees, the officers, staff and other employees of the
Company and to establish an equally beneficial relationship.
ATS’ LMC holds a regular yearly convention to bring all chairmen and representatives to a forum with the
principals and officers of the Company. The convention seeks to promulgate resolutions most of which are
economic demands from the Labor sector and management; address all other concerns and issues; amend
the charter; and to hold elections for the officers of the national LMC.
The establishment of the LMC in September 23, 1986 has given rise to more benefits and privileges to the
employees. More significantly the merging of three of the most prominent and well respected shipping
lines in the country has seen a dramatic improvement in terms of employee benefits and privileges far
better than any other company in the industry offers. This includes among others, medical allowances,
group hospitalization plan, educational assistance for qualified dependents, mortuary assistance and
privilege pass for employees and their immediate family members.
Government Regulations
The Maritime Industry Authority (MARINA) through Memorandum Circular No. 79 requires all
owners/operators of inter-island vessels engaged in Public Transport Service to secure a certificate of
accreditation of domestic shipping enterprise / entities from the Authority before they can provide a water
transport service.
The Circular is intended to foster standards for domestic shipping operations in order to protect public
interest and to generate vital information that will enable MARINA to effectively supervise, regulate and
rationalize the organizational movement, ownership and operation of all inter-island water transport
utilities, and consequently, to prevent the proliferation of incompetent, inefficient, unreliable and fly-bynight operators.
Accreditation serves as a prerequisite to the granting of franchises for individual vessel operations. ATS
vessels have been issued Certificates of Public Convenience/Provisional Authorities to operate in specified
routes.
Research and Development Activities
Research and development (R&D) are the company’s activities to discover and create new lines of services
and/or make major improvements on the existing ones. During the year, the Company allocated and spent
reasonable amount on R&D activities. This is consistent with the Company's strategy to focus its efforts
13
on developing and maintaining its existing value-added businesses where it believes much of its future will
lie.
Costs and Effects of Compliance with Environmental Laws
With regard to environmental laws, ATS follows the regulations embodied in the International Convention
for the Prevention of Pollution from Ships, 1973, as modified by the protocol of 1978 (MARPOL 73/78). The
said Convention includes regulations aimed at preventing and minimizing pollution from ships - both
accidental pollution and that from routine operations - and currently includes, among others, Regulations
for the Prevention of Pollution by Oil, Prevention of Pollution by Harmful Substances Carried by Sea in
Packaged Form, Prevention of Pollution by Garbage from Ships to which the Company observes. During
the year, the Company incurred less than a million to comply with these rules and regulations.
The existing government regulations are intended to achieve the goal of the government to develop the
country’s water transport system. The goal is to provide adequate, safe, efficient, economical and shipping
services which are at par with the world’s best that will cater to the transport requirements of a growing
national economy and for regional development.
Major Risks Involved in the Business of ATS and its Subsidiaries
Major risks involved in the business of ATS and its subsidiaries are discussed under Part IV-Corporate
Governance in pages 54-69.
SIGNIFICANT OPERATING SUBSIDIARIES OF ATS
Aboitiz One , Inc.
Business Development
AONE was incorporated on July 20, 1978. It is 100% owned by ATS. It is in the business of offering supply
chain solutions in accordance with customers’ needs. A-One’s operation is supported by a logistical
backbone which comprises delivery vans, motorcycles, trucks and vans, refrigerated trucks and vans,
prime movers and trailers. The company has more than 237 retail outlets and agents at various strategic
locations nationwide, providing customers easy access and convenience.
Through AONE’s subsidiaries, it offers a whole range of 2GO supply chain solutions. Supply chain
solutions include warehousing services, transport and logistics, sales and merchandising and trade
marketing.
AONE Subsidiaries
HapagHapag-Lloyd Philippines, Inc. (HLP)
HLP was incorporated on April 23, 1992. It is 85% owned by AONE.
It is in the business of acting as an agent of Hapag-Lloyd AG, a global shipping container line
engaged in global door-to-door container transport. Hapag-Lloyd AG provides global shipping
services to major trade lanes such as Europe, Asia, North America, Canada, the Middle East and
the South American East Coast.
14
Aboitiz Projects T.S. Corporation (APTSC)
APTSC was incorporated on August 5, 1996. It is 50% owned by AONE.
It is in the business of project cargo transportation and management, which involves the haulage
and transportation of heavy and bulk-sized equipment such as those used in mining, power plants
and telecommunication infrastructure.
It is a joint venture between AONE and Hansameyer Global Transport Pte. Ltd., a transportation
company headquartered in Germany specializing in project transport logistics and engineering
project management consultancy.
Aboitiz One Distribution Inc. (AODI)
AODI was incorporated last January 15, 2007. It is 100% owned by AONE.
It is in business of providing complete supply chain management. It has two (2) state-of-the-art
warehouses Edan warehouse –
6,500 pallet positions
Elisco warehouse – 30,148 pallet positions
By the end of 2011, the warehouse capacity will increase by approximately 56,000 pallets with
completion of its third warehouse.
ScanAsia Overseas Inc. (SOI)
The 100%-purchase of ScanAsia Overseas, Inc., in June 2008 completes AONE’s portfolio for a full
supply chain solutions provider.
SOI was incorporated on September 13, 1985. It is in the business of sales, marketing,
warehousing and transportation of temperature-controlled and ambient food products to its
customers in the Philippines. It is the Philippines’ premier chilled distributor carrying
approximately 80% of the products in the chiller section in any supermarket today. It currently
represents 19 international principals carrying 46 brands and 4 domestic/local principals carrying
39 brands. SOI has nationwide coverage for both retail and foodservice segments. SOI is
considered as brand builders vs. regular trading companies.
Kerry – Aboitiz Logistics Inc. (KALI)
KALI was incorporated in March 30, 2009. It is 51% owned by AONE.
It is in the business that aims to offer innovative, cost effective and reliable services on
international air and sea freight and cargo forwarding, cargo consolidation, as a project cargo and
break bulk agent, warehousing and distribution, trucking and door-to-door delivery. With the
global clout of KLN and the domestic dominance of ATS, KALI is poised to provide better service to
its clients.
15
Participation in Bankruptcy, Receivership or Similar Proceedings
Neither AONE nor any of its subsidiaries has ever been the subject of any bankruptcy, receivership or
similar proceedings.
Merger or Purchase of Significant Amount of Assets Not in the Ordinary Course of Business
In December 2004, AONE acquired additional 12.59%, 15.55% and 9.50% ownership interest in shares of
stock of ALI, HLP and APTSC. Also, in October 2006, AONE acquired additional 809,782 common shares or
5.71% from Edelino Medina in ALI, thus resulting to a 100% ownership of AONE.
In March 2007, the respective Boards of AONE and ALI approved the merging of the two entities with AONE
being the surviving entity. The actual merger was effected mid of 2007.
In July 2007, the AONE Board approved the acquisition of additional 50% of the outstanding capital stock of
each of RVSI and RTSI making AONE now 100% owner t of both companies.
In September 2008, RTSI was sold to Mr. Ed Medina.
In June 2008, the AONE Board approved the acquisition of SOI to complement its existing services and
provide a full range of supply chain solutions.
In August 2009, AONE formed a joint venture with Kerry Logistics Network Limited of Hong Kong (KLN) for
the international freight forwarding business. KLN is the leading Asia-based provider of logistics services
and supply chain solutions. It operates in over 300 cities globally, 23 countries worldwide and serve over
127 cities throughout Mainland China.
Further, in June 2010, SEC approved the declaration of RVSI as property dividend by AONE to ATS.
However, effective September 2010, RVSI was consequently merged by way of a statutory merger to ATS.
Competition
As a full supply chain service provider, AONE does not have any competitor that can offer the same
breadth of services. However, AONE has different competitors on the various components of its portfolio.
And some of AONE’s competitors are also its customers.
Principal Suppliers
AONE loads with SuperFerry vessels of ATS and with Cebu Pacific Air to transport cargoes by sea and air
respectively. Some of its major truckers include Northern Luzon Trucking & Sungold Forwarders. Other
suppliers include Shell, Petron, & Zenshin.
We manage a pool of suppliers, mainly small to medium entrepreneurs:
Truckers
• Operate-To-Own – a scheme we provide to entrepreneur aspirants, where both parties undergo a
contract that 2GO will provide the vehicle under certain terms and conditions and the courier will own it
after a defined period.
16
• Sub-Contracted Truckers – small to medium truckers are outsourced either on a lock-in scheme or
variable trip basis per day.
Agents
AONE’s retail outlets is also composed of agents who accept documents, cargo and money for outbound
transactions, and deliver the same for inbound transactions. They are paid on commission scheme or fix
fee per day depending on the type of product, volume handled, and geographic location. Aside from
commission, agents are supported through advertising & promotional activities to direct customers to
their outlets. Incentive schemes are also in place to encourage sales and compliance to operating policies
and procedures.
Outsourced Functions
Certain functions are outsourced to third parties and are being paid either per piece, per head, per manhour or fix fee depending on the type of activity. The objective is to focus on business units core
competencies.
Service level agreements are drawn for each supplier. Regular performance reviews or evaluations are
conducted in order to ensure compliance and adherence to the contract as well as to all policies and
procedures set.
We look at our suppliers as partners, with a joint commitment that as we grow our business, we also grow
theirs.
Customer
AONE and its subsidiaries’ primary customers are manufacturers of high-value, fast moving consumer
goods, electronics and telecommunication companies who recognize the need to outsource parts of or
their entire supply chain. They are open to integrate, collaborate, and share information.
Currently, the industries that fall as our secondary customers are pharmaceuticals, branded apparels,
automobiles, retailers, distributors and financial institutions.
AONE thru its subsidiaries also offers on cold chain management solutions to deliver temperaturecontrolled goods right to its destination maintaining its best quality and freshness.
Transactions With and/or Dependence on Related Parties
Services to and from related parties consist mostly of cargo freight, handling and hauling, and
management services which are made at normal market price.
Effect of Existing or Probable Governmental Regulations
The passage of Republic Act 9337 last May 24, 2005 has abolished the franchise tax of AONE. It is now
subject to the corporate income tax.
17
Item 2. Properties
ATS
Vessels
As of December 31, 2010, ATS has a total fleet of 19 company-owned operating vessels. The fleet consists
of 7 fast crafts under the brand name ‘SuperCat’, 10 RoRo/Pax vessels including 6 under the ‘SuperFerry’
brand, 4 vessels under ‘Cebu Ferries’ brand, and 2 freighters under the ‘2GO’ brand. ATS vessel fleet has
a combined Gross Registered Tonnage of approximately 98,849 metric tons, total passenger capacity of
approximately 14,164 passengers and aggregate cargo capacity (including those under MCCP, a joint
venture of the registrant) of approximately 4,168 twenty-foot equivalent units (TEUs).
Land, Buildings and Warehouses
The Company owns several pieces of land and a number of buildings and warehouses. These are used in
the normal course of business. For details of their location, please refer to Schedule E.1 and E.2.
Insurance Coverage
The ATS vessels are appropriately supported by the top Marine Insurance players throughout the world.
The Hull and Machinery insurance, which insures physical damage to the ships is being underwritten by
reputable local and foreign insurers and is fronted by Pioneer Insurance. Moreover, the War & Strikes
cover which protects the vessels against war and war-like operations is insured through Pioneer
Insurance.
The Protection and Indemnity (P&I) Insurance covering the legal liabilities of the shipowners such as but
not limited to pollution, wreck removal and damages to fixed and floating objects is placed with Scottish
Boatowners / British Marine Luxembourg Ltd. and The Steamship Mutual Underwriting Association
(Bermuda) Ltd.
The Marine Cargo insurance covering claims arising from losses and damages to cargoes is placed with
Mapfre Insular Insurance Corporation whilst the insurance cover specifically tailored to protect Bangko
Sentral ng Pilipinas (BSP) shipments is fronted by Pioneer Insurance.
The Commercial General Liability of all the company's owned, affiliated and associated offices are fully
insured by Chartis Insurance Philippines, Inc (formerly Philam Insurance Co., Inc).
Furthermore, all passengers boarding any ATS vessels are secured against injuries and/or loss of life with
Philippine Charter Insurance Corporation while for SFFC, passengers are insured through Pioneer
Insurance & Surety Corporation. On the other hand, non-technical crew of the ATS vessels are insured
with ACE Insurance Company of North while technical crew of SFFC vessels are covered by Chartis
Insurance Philippines, Inc.
The land-based employees on the other hand are covered by Chartis (formerly Philam Insurance Co., Inc).
The rest of the Company's properties nationwide, including the containers vans & the container handling
equipment are likewise fully covered with insurance policies issued by respectable insurance companies
in the country.
18
Container Yard and Warehousing Facilities
The Company has one of the most extensive networks of container yards and warehousing facilities
nationwide.
Most of the Company’s container yards have been cemented, whether in whole or in part, to achieve greater
efficiency in terminal operations, allow for shorter turnaround time in port, greater utilization in stacking of
containers and lower repair and maintenance costs for the operating equipment used at the container
yards.
The Company also has sufficient warehouse space. Warehouse are either owned or leased by the
Company. The Company’s warehouse network consists of warehouses at Bacolod, Butuan, Cebu, Davao,
Dumaguete, General Santos, Iligan, Iloilo, Ozamis, Zamboanga and Manila.
Containers and Other Equipment
ATS owns and leases a variety of containers and other equipment of various types and sizes for use in its
cargo operations including forklift, top loaders, yard tractors and trailers or chassis. Master lease
agreements entitle the Company to use the containers in exchange for a per diem rate for the duration of
the lease. Lease purchase agreements allow the Company to use the containers for a specified number of
years while it continues to pay the lessor a fixed per diem rate and gives the Company the option to acquire
the containers at the end of the lease. Installment purchase agreements allow the Company to pay the full
purchase price of the containers by installments in accordance to a fixed schedule.
Containers under capital leases as of December 31, 2010 are shown under the “Property and Equipment”
account in Note 14 of the consolidated balance sheets.
Liens and Encumbrances
In May 2010, ATS signed a Notes Facility Agreement with SB Capital Investment and BPI Capital
Corporation as Joint Lead Managers for the issuance of a 5-year peso-denominated corporate fixed rate
notes (the “Notes”) in the aggregate amount of 2 billion. The Notes were unsecured and bear an interest
rate of 8.55% per annum.
AONE
Leases
Major leases of AONE include rental offices, outlets and warehouses nationwide. The lease contracts for
its outlets nationwide are renewable every year.
Item 3. Legal Proceedings
There are certain legal cases filed against ATS and its subsidiaries in the normal course of business.
Management and its legal counsel believe that they have substantial legal and factual bases for their
position and are of the opinion that losses arising from these cases, if any, will not have a material adverse
impact on the consolidated financial statements.
19
Item 4. Submission of Matters to a Vote of Security Holders
Nothing was submitted during the fourth quarter of the fiscal year covered by this report to a vote of
security holders, through the solicitation of proxies or otherwise.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5.
A.
Market Price of and Dividends
Dividends on Registrant’s Common Equity and Related Stockholder
Matter.
Market Information
The Common Stock of the Corporation is listed at the Philippine Stock Exchange. As of latest market
date, March 31, 2011, the market price of the Company’s common stock is P1.77 per share.
Below is the range of high and low bid information for the Company’s common equity for each quarter
within the last two fiscal years and any subsequent interim period:
High
Low
2011
First Quarter
P
= 1.95
P
= 1.77
2010
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
P
= 1.18
1.16
1.34
1.18
P
= 1.02
1.08
1.16
1.12
2009
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
P
= 1.62
1.66
1.34
1.22
P
= 1.42
1.20
1.16
1.12
20
B.
Stockholders
The number of common shareholders of record as of March 31, 2011 was 2,112.
stockholders as of March 31, 2011 are as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Item 6.
Name
Negros Navigation Co., Inc.
PCD Nominee Corporation (Filipino)
Francis C. Zosa, Jr.
Union Properties, Inc.
Abacus Securities Corporation
Santiago Tanchan III
Constantine Tanchan
PCD Nominee Corporation (Foreign)
Harrison Abella Ong
Ramon Rivero
Fast Cargo Transport Corp.
Union Bank of the Philippines
Philips Multiemployer Retirement Plan
Prudential Guarantee & Ass Inc.
AMA Rural Bank of Mandaluyong, Inc.
Alexander J. Tanchan
Ramon R. Rivero
Elizabeth Chiu
Iker Aboitiz
Francisco Benedicto
The top 20 common
No. of Shares Held % to total
98.12
2,400,141,995
10,285,114
0.42
7,200,000
0.29
1,578,125
0.06
1,530,000
0.06
1,262,500
0.05
1,262,500
0.05
1,199,243
0.05
890,062
0.04
757,500
0.03
744,875
0.03
744,875
0.03
631,250
0.03
458,287
0.02
441,875
0.02
430,260
0.02
404,000
0.02
378,750
0.02
372,389
0.02
349,125
0.01
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Fiscal Year 2010 vs. 2009
Consolidated Income Statement
Aboitiz Transport System (ATS), for the most part of 2010, operated on limited capacity as most of its fleet
was on scheduled dry-docking and maintenance.
Consolidated revenues increased by P1.1 billion compared to the previous year to reach P11.6 billion.
Revenue from supply chain solutions, specifically trading, contributed to higher revenues overall. Local
freight business also registered an increase of 1%, contributing a total of P5.3 billon in 2010. The market
was being served by chartering freighter vessels in the absence of its own vessels that were on drydock
and maintenance. Freight utilization reached 94% on SuperFerry vessels.
2GO has fully integrated its total supply chain solutions business, the objective of which is to provide a
more seamless solution to clients. Both Zoom in Packages (ZIP) and Reefer Van Specialists (RVSI) have
been merged with ATS. ZIP’s business focus is on full container load (FCL) and loose container load (LCL)
cargo while RVSI focuses on the cold chain business, which involves the transport of frozen and perishable
goods. Merging these companies is seen to result in cost efficiencies and better synergies and ultimately
serving customers better.
21
Passenger business, inclusive of auxiliary revenues, reduced by P59 million or 3% to register at P2.18
billion revenues from P2.24 billion in 2009. It was able to however, maximize its limited operating capacity
achieving load factors of 79%.
Total cost and expenses reached P12.2 billion, 21% higher than 2009. This is largely brought about by
higher fuel expense as a result of rising average fuel prices. Given the uncertain fuel price behavior, ATS
continues to undertake various initiatives to mitigate its negative impact including the use of less
expensive type of fuel. Terminal expenses increased due higher outside services costs. The expanding
trading business also contributed to higher cost of sales.
ATS registered a P808.7 million Net Loss Attributable to Holders of the Parent. ATS booked a one-time
Impairment loss on ships in operation of P778.8 million. Finance costs of P228.8 million are substantially
higher versus last year from increased interest bearing loans. ATS borrowed funds to finance the
purchase of three roll-on roll-off passenger vessels and two fast crafts. ATS also benefited from deferred
income tax of P472.7 million.
In December 2010, ATS principal shareholders, Aboitiz Equity Ventures, Inc. (AEV) and Aboitiz and
Company (ACO), sold their combined shareholdings of 93.2% in ATS to Negros Navigation (NENACO) for a
price of P1.8813 per share or a total of P4.3 billion. The sale however excluded the Aboitiz Jebsen group of
companies, which includes international freight chartering, ship management and manpower businesses.
The Company sold its 62.5% equity stake in each of Aboitiz Jebsen Bulk Transport Corporation, Aboitiz
Jebsen Manpower Solutions, Inc. and Jebsen Maritime Inc. to AEV for a total price of P 355.9 million. .It
also sold its 50% equity stake in Jebsen Management (BVI) Limited to AEV for P 44.0 million. Buyers AEV
and ACO paid the full price last January 2011. ATS recognized a net gain of P213 million from this sale.
During the period, ATS recorded P305.4 million in net income from discontinued operations generated
from the Aboitiz Jebsen group.
Earnings Per Share
Earnings Per Share is computed by dividing Net Income Attributable to Equity Holders of the Parent over
weighted average number of common shares outstanding for the year. Earnings per share for 2010 stood
at (P0.33)/share. This is lower versus 2010 because of the net loss generated.
22
The figures above are in P’MM except otherwise indicated
Consolidated Balance Sheet and Cash Flow Statement
As of December 31, 2010, consolidated assets of ATS amounted to P12.4 billion, posting a 17% increase
from December 31, 2009 of P10.6 billion. Property plant & equipment registered a 27% increase from 4.8
billion to 6.1 billion from the acquisition of three ropax vessels and higher vessel refurbishments &
improvements. Assets of the company were being re-fleeted and modernized to increase operating
efficiencies. Higher deferred income taxes from 256 million to 717 million also contributed to the increase
in overall assets or 181% and higher other non-current assets from 263 million to 390 million or 48%.
Total current assets reflected a 2% decrease from P4.8 billion to P4.7 billion as of December 31, 2010.
The decrease was mainly attributed to lower cash and cash equivalents from 1.1 billion to 764 million. The
P332M decrease was offset by higher freight receivables and non-trade receivables relating to the sale of
the Aboitiz Jebsen group of companies. Receivables from service fees and insurance and other claims
however reflected a decrease as of the period.
Total liabilities amounted to P8.5 billion, a 55% increase from 2009. Total interest bearing loans stood at
P4.1 billion. This is inclusive of the P2 billion five-year corporate fixed rate note facility issued last May to
finance vessel acquisitions and maintenance. Trade and other payables also registered higher than last
23
year bought about by higher accrued expenses and dividends payable. ATS declared special cash
dividends equivalent to P0.15 per share to all stockholders on record as of December 15, 2010. The
special cash dividend represents the sales proceeds of the Aboitiz Jebsen companies, net of taxes and
other related costs. The dividend payment was made on January 12, 2011.
Stockholders’ Equity decreased by 24% to P3.9 billion from P5.2 billion as of December 31, 2009 mainly
due to lower retained earnings brought about by the net loss for the period.
Balance Sheet
The figures above are in P’MM except otherwise indicated
24
Cashflow Statement
Total capital expenditures reached P3.4 billion mainly because of vessel acquisitions and dry-docking of
five vessels to ensure their future reliability. These expenditures were financed by long-term debt. Cash
and cash equivalents at the end of the period stood at P764.2 million.
Fiscal Year 2009 versus 2008
Consolidated Income Statement
Aboitiz Transport System (ATS) ended the year 2009 with net income attributable to equity holders of
parent of P546.1 million, a 559% improvement over just P82.8 million in 2008.
Consolidated revenues increase P237 million, largely from the sale of goods and service fees.
In September 2009, ATS lost a ship and the Maritime Industry Authority thereafter temporarily suspended
the remainder of its fleet. This greatly affected freight and passenger business. All vessels ultimately
passed the Maritime Industry Authority’s audit and inspection and were cleared for sailing shortly after
the suspension. All ATS vessels, their cargo and passengers are fully insured to the extent mandated by
law. Devastating typhoons, affecting overall operations although ATS responded with speed and
resources, also plagued the last quarter of 2009.
Local freight business contributed P5.2 billon in 2009, an 8% or P148 million decrease from the same
period in 2008. Passenger business, inclusive of auxiliary revenues, reduced by P343 million or 13% to
register at P2.2 billion revenues from P2.6 billion in 2008.
On the other hand, ATS’ overall value added business, inclusive of supply chain, jumped P709 million to
reach P2.5 billion in 2009. ATS continues to build on this business with bright industry prospects.
Fuel costs and charter hire costs dropped in 2009 leading to a P353 million decline in operating expenses
and 48% improvement in earnings before interest, taxes, depreciation and amortization (EBITDA) to
register at P1.4 billion in 2009.
Earnings Per Share
Earnings Per Share is computed by dividing Net Income Attributable to Equity Holders of the Parent over
weighted average number of common shares outstanding for the year. Earnings per share for 2009 stood
at P0.22/share. This is higher versus 2008 because of higher net income.
Consolidated Balance Sheet and Cash Flow Statement
On April 30, 2009, the principal stockholders of ATS namely, Aboitiz Equity Ventures and Aboitiz and
Company, received a firm and final advice from KGLI-NM, that the proposed acquisition of ATS shares will
not come to fruition based on the terms agreed upon in the Memorandum of Agreement signed on
September 23, 2008. ATS and Negros Navigation however, agreed to continue to explore service and
process improvements for better margins and cost benefits to both companies.
As of December 31, 2009, consolidated assets of ATS amounted to P10.6 billion, posting a 13% increase
from December 31, 2008 of P9.4 billion.
25
Total current assets reflected a 15% increase from P4.2 billion to P4.8 billion as of December 31, 2009.
The increase was mainly attributed to higher Non-trade receivables by P266.6 million directly related to
the SuperFerry 9 incident and higher Inventories such as materials, parts and supplies by P164.8 million.
ATS’ net Property and Equipment increased by P580.3 million. Assets of the company were being refleeted
and modernized to increase operating efficiencies. Slowly, ATS is increasing its capacities after it sold
vessels in the past to capitalize on high market rates. In 2009, internally generated funds were used to
purchase two freighters, two fast crafts, and one roro-passenger vessel at very competitive rates. In
addition to asset purchases, funds were also use for the regular maintenance of its assets, including
drydocking and vessel improvements.
Total liabilities amounted to P5.5 billion, a 13% increase from 2008. Total interest bearing debt was up by
P100.1 million from P1.3 billion in 2008. ATS continued to be committed in gearing towards a more solid
financial position and delivering positive cash flows.
Trade and other payables showed a P177.5 million or 5% addition from 2008 mainly from the increase in
trade payables.
Stockholders’ Equity likewise increased by 12% to P5.2 billion from P4.6 billion as of December 31, 2008
due to higher net income of December 31, 2009.
Cash generated from operations amounted to P1.1 billion. Total capital expenditures for the period stood
at P1.9 billion. Cash and cash equivalents at the end of the year was at P1.1 billion.
Material Changes (+/-5% or more) in the financial statement
Income Statement
• 2% higher total revenues due to:
o 20% increase in service fees from higher warehousing revenue.
o 49% increase in sale of goods due to full year operation of Scanasia Overseas, Inc.,
(Scanasia) a supply chain company acquired by Aboitiz One, Inc. in June 2008.
• 2% lower costs and expenses as a result of:
o 6% lower operating expense primarily due to 34% lower fuel price, 19% lower food and
subsistence, 41% lower sales concessions and 32 percent lower commissions.
o 27% lower terminal costs due to lower transshipment fees.
Balance Sheet
• 13% higher total assets due to:
o 18% higher net receivable primarily due to increase in non-trade receivables.
26
•
•
o 52% increase of inventories because of higher merchandise inventory and higher materials,
parts and supplies of spare parts.
o 11% higher prepaid expenses
o 328% higher investment in associates from MCCP’s improved results of operations and
additional investment with Kerry-Aboitiz Logistics Inc. (KALI), the joint venture with Kerry
Logistics Network of Hong Kong or KLN.
o 14% higher property and equipment from additional vessels purchased.
68% higher loans payable from additional bank borrowings
12% higher stockholders’ equity from higher retained earnings
Balance Sheet
•
13% higher total assets due to:
o
o
o
o
o
18% higher net receivable primarily due to increase in non-trade receivables.
52% increase of inventories because of higher merchandise inventory and higher materials, parts
and supplies of spareparts.
11% higher prepaid expenses
328% higher investment in associates from MCCP’s improved results of operations and additional
investment with Kerry-Aboitiz Logistics Inc. (KALI), the joint venture with Kerry Logistics Network
of Hong Kong or KLN.
14% higher property and equipment from additional vessels purchased.
•
68% higher loans payable from additional bank borrowings.
•
12% higher stockholders’ equity from higher retained earnings.
Fiscal Year 2008 versus 2007
Consolidated Income Statement
Aboitiz Transport System (ATS) ended the year 2008 with consolidated revenues of P12.9 billion, a 16%
increase versus P11.1 billion in 2007.
Freight business contributed P7.6 billion in revenues in 2008, a 9% or P616.1 million increase from P7.0
billion in 2007. The Company’s freight rates per twenty-equivalent unit (TEU) rose 16% as freight capacity
is being filled up with its own supply chain and value added business. ATS has been reducing its reliance
on spot and market cargo which is more price driven. In 2008, capacity remained at the same level as last
year with close to 250,000 TEUs, at 88% utilization rate.
Passage business reduced by P41.1 million to register at P2.99 billion revenues (inclusive of auxiliary
income) from P3.03 billion in 2007. The average rate per passenger had gone down by 5% as it continued
to offer year-round promotional rates to drive up demand and face stiff competition from the airlines.
Similar to the freight business, ropax passage capacity remained at the same level as the previous year
with over 3.3 million passengers but with a much higher utilization rate at 70%, the highest attained in 4
years.
27
For the year 2008, much of the Company’s efforts were geared towards developing its value-added
business where it believes much of its future will lie. Aboitiz One Distribution, Inc.’s new warehouse with
22,000 pallet positions located in Taguig City has been operational since the beginning of 2009. In addition,
Aboitiz One, Inc. purchased in June of 2008, Scanasia Overseas, Inc. (SOI), a company engaged in the
business of sales, marketing, warehousing and transportation of temperature-controlled and ambient
food products to its customers in the Philippines. These resulted in a 28% increase in service fees to
P1.01 billion and 418% increase in sale of goods to P1.2 billion in 2008.
Total costs and expenses jumped 14% with fuel, its single biggest expense, being the highest contributor
to the rise in costs. Average fuel price for the year jumped 43% from the previous year. ATS directed its
efforts in minimizing the impact of rising fuel costs by using less expensive type of fuel, lowering volume
consumption and increasing freight rates. Cost of sales directly related to the supply chain business also
registered an increase with the acquisition of SOI.
ATS’ other income totaling P190.4 million is much lower than last year’s of P842.8 million. In 2007, ATS
reflected a P748.9 million gain on disposal of property and equipment generated mainly from the sale of
three vessels.
Despite the rising costs, earnings before interest, taxes, depreciation and amortization (EBITDA) increased
to 4% or P36 million versus December 31, 2007.
ATS registered P99.4 million in net income from continuing operations. ATS ended the year with net
income attributable to equity holders of parent of P82.8 million. This is lower compared to P420.0 million
in 2007 since ATS registered after tax gain on disposal of three vessels of P405.0 million.
Earnings Per Share
Earnings per share for 2008 stood at P0.03/share. This is lower versus 2007 because of lower net income.
Consolidated Balance Sheet and Cash Flow
On December 19, 2008, the major shareholders of ATS namely, Aboitiz Equity Ventures, Inc. (AEV) and
Aboitiz & Company, Inc. (ACO) accepted the Terms Sheet offered by KGLI-NM for the acquisition by KGLINM of 49% equity stake in ATS instead of the total buy-out proposed in the Memorandum of Agreement
signed by the parties in September 2008. KGLI-NM is a domestic company, which is jointly owned by
Negros Holdings and Management Corporation and KGL Investment BV, which is beneficially owned by the
KGL Investment Company, a Kuwaiti company.
The 49% equity stake was to include the 7% equity stake of the public in ATS. Under said modified
agreement, which was expected to close on or before April 30, 2009, the purchase price would have been
based on a total equity value of ATS in the amount of P4.5 billion or equivalent to P1.84 per share. The
Agreement also provided for an option for KGLI-NM to acquire the remaining 51% equity stake of AEV and
ACO anytime between May 1, 2009 to September 30, 2009 at the same price plus a premium of nine and a
half percent (9.5%) annualized price per share calculated from 30 April 2009 to 30 September 2009, or to
date of acquisition, as applicable. It was agreed that KGLI-NM would have to make a tender offer for the
ATS shares held by the public in accordance with the rules under the Securities Regulation Code.
On March 31, 2009, AEV and ACO received a written notice that KGLI-NM will proceed with the acquisition
of US$ 30 million worth of ATS common shares owned by AEV and ACO. This was estimated to involve
28
approximately 655,382,609 common shares owned by AEV and 135,378,261 common shares owned by ACO
computed at the prevailing dollar exchange rate, or a total of approximately 32% of the outstanding
common shares. The actual number of shares to be acquired by KGLI-NM would have been determined
based on the dollar exchange rate on the expected closing date (i.e., April 30, 2009.) KGLI-NM’s intention
to proceed with the purchase of US$30 million worth of ATS shares from AEV and ACO was without
prejudice to KGLI-NM’s right under the Term Sheet to acquire the remaining ATS shares of AEV and ACO.
The planned acquisition excludes the Aboitiz Jebsen Group. Consequently, ATS posted P778.6 million of
assets and P697.2 million of liabilities directly associated with asset of disposal group classified as held
for sale.
Consolidated assets as of December 31, 2008, amounted to P9.4 billion. Its receivables of P2.0 billion
increased by 6% as a result of higher trade receivables by P113.6 million from last year. Property and
equipment is maintained at P4.2 billion. During the period in review, Goodwill of P256.5 million was
reflected in the books from the purchase of SOI.
Total liabilities reached P4.8 billion, 17% higher compared to 2007. The increase was a result of higher
Interest bearing debt amounted to P1.3 billion in 2008 versus P570.2 million in 2007. The funds were
utilized for the expansion of its supply-chain business, the purchase of a vessel under its Cebu Ferries
brand and fuel-efficient fast craft vessels under its SuperCat brand.
Stockholders’ Equity stood at P4.6 billion, a slight 2% increase over the previous year.
Cash generated from operations amounted to P1.1 billion. Total capital expenditures for the period stood
at P1.1 billion. The bulk of the capital expenditures were accounted for by the purchase of a vessel under
its Cebu Ferries brand and fuel-efficient fast craft vessels under its SuperCat brand. Cash and cash
equivalents at the end of the year was at P1.1 billion.
Material changes (+/(+/- 5% or more) in the financial
financial statements
Income Statement
• 9% increase in freight revenues is largely due to higher average freight rates and increased
revenues from its subsidiary companies Zoom in Packages and Aboitiz One, Inc.
• 4% decrease in passage revenues is due to lower volume and average passenger rates
• 418% higher revenues from sale of goods generated by its value added businesses, Scanasia
Overseas, Inc., a company purchased by Aboitiz One, Inc. in June 2008 and Aboitiz One Distribution,
Inc.
• 28% higher service fees revenues from logistics, warehousing and sales merchandise.
• 37% increase in other revenues is due to overall higher passage auxiliary revenues.
• 25% increase in total revenues largely from the increase in freight revenues.
• 8% increase in operating expenses primarily due to 28% rise in fuel costs
• 20% increase in terminal expenses largely due to the 125% increase in transportation and delivery
costs which comprises the bulk of the company’s terminal expenses.
• 414% increase in cost of sales because of Scanasia Overseas, Inc., a company acquired in June
2008.
• 88% reduction on gain on disposal of property and equipment primarily because of the sale of three
vessels in 2007.
29
•
•
•
•
•
•
•
654% reduction on gain on disposal of investment due to the disposal of its none core business such
as Cox Trucking and Refrigerated Transport Services, Inc.
18% lower net finance costs due to lower interest bearing debt for the year.
141% lower net foreign exchange gain is due to the weakening of the peso against the dollar
throughout the year.
1963% higher equity in net losses of associates is due to the Company’s share in MCC Philippines’
net loss.
42% higher other income is largely attributable to management fee income rendered to third party
entities.
74% lower income tax principally because of lower taxable income.
80% lower net income attributable to equity holders of parent largely because of vessel sales in
2007.
Balance Sheet
•
•
•
•
6% higher net receivables due to higher trade receivables
39% higher inventories because of higher materials, parts and supplies and higher fuel inventory.
220% increase in loans payable mainly to finance the expansion of its supply-chain business
5% higher accounts payable and other current liabilities largely due to higher trade payables
All of these material changes were explained in detail in the management’s discussion and analysis of
financial condition and results of operations stated above.
Key Performance Indicators (KPI)
The following KPI’s are used to evaluate the financial performance of ATS and its subsidiaries:
a.
Revenues – ATS revenues are mainly composed of freight and passage revenues and they are
recognized when the related services are rendered. Total Revenue in 2010 is P11.6 billion compared to
P10.5 billion in 2009.
b. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - is calculated by adding
back interest expense, amortization and depreciation into income before income tax, excluding
extraordinary gains or losses. The Company’s EBITDA for 2010 is P742million.
c.
Income before income tax (IBT) – – is the earnings of the company before income tax expense. The
Loss Before Income Tax for 2010 is P1.5 billion, 326% lower compared to P679.0 million in 2009. ATS
reflected close to P897 million other charges brought about by Impairment loss on ships in operation
and finance costs.
d. DebtDebt-toto-equity ratio – is determined by dividing total liabilities over stockholders’ equity. ATS’ debtto-equity ratio in 2010 is 2.14:1:00.
e. Current ratio – is measured by dividing total current assets by total current liabilities. The Company’s
current ratio in 2010 is 0.56:1:00.
The following table shows comparative figures of the Top Five key performance indicators (KPI) for 2010,
2009, and 2008 (amounts in millions except for the financial ratios) based on the consolidated financial
statements of ATS as well as each of its subsidiaries:
30
Consolidated ATS and Subsidiaries
Revenues
EBITDA (a)
IBT (b)
Debt-to-Equity Ratio (c)
Current Ratio (d)
Dec. 31, 2010
11,611
742
(1,536)
2.14:1.00
0.56:1.00
Consolidated Aboitiz One, Inc and Subsidiaries
Dec. 31, 2010
Revenues
EBITDA (a)
IBT (b)
Debt-to-Equity Ratio (c)
Current Ratio (d)
Dec. 31, 2009
10,510
1,394
679
1.05:1.00
0.9:1.00
Dec. 31, 2008
10,273
944
119
1.1:1.00
0.9:1.00
Dec. 31, 2009
2009
Dec. 31, 2008
4,770
317
216
3.34:1.00
0.9:1.00
3,876
210
191
4.0:1.0
0.9:1.0
2,987
219
139
3.9:1.0
0.9:1.0
Dec. 31, 2010
599
219
27
2.3:1.00
0.1:1.0
Dec. 31, 2009
443
147
79
4.9:1.0
0.1:1.00
Dec. 31, 2008
377
42
(19)
11.7:1.0
0.1:1.0
Dec. 31, 2010
2010
1050
126
137
2.20:1.00
1.46:1.00
Dec. 31, 2009
966
197
195
6.34:1.00
1.18:1.00
Dec. 31, 2008
863
(132)
(131)
-6.81:1.00
0.87:1.00
Supercat Fast Ferry Corporation
Revenues
EBITDA (a)
IBT (b)
Debt-to-Equity Ratio (c)
Current Ratio (d)
MCC Transport Philippines, Inc.
Revenues
EBITDA (a)
IBT (b)
Debt-to-Equity Ratio (c)
Current Ratio (d)
a) Earnings before interest, taxes, depreciation and amortization (calculated by adding back interest
expense and amortization and depreciation into income before income tax, excluding
extraordinary gains and losses).
b) Income before income tax
c) Total liabilities / total stockholders’ equity
d) Total current assets / total current liabilities
31
Other Information
Other material events and uncertainties known to management that would address the past and would
have an impact on ATS’ future operations are discussed below.
i.
ii.
iii.
iv.
v.
vi.
Total fuel/lubes expense is a major component of ATS’ total cost and expenses. ATS is
constantly looking for ways to reduce fuel consumption to lessen the impact of the increasing
fuel prices on the bottom line.
Except as disclosed in the management discussion and notes to the financial statements,
there are no other known events that will trigger direct or contingent financial obligation that
is material to ATS, including any default or acceleration of an obligation. There are also no
other known trends, events or uncertainties that have had or that are reasonably expected to
have a material favorable or unfavorable impact on revenues or income from operations.
All significant elements of income or loss from continuing operations are already discussed in
the management discussion and notes to financial statements. Likewise any significant
elements of income or loss that did not arise from ATS’ continuing operations are disclosed
either in the management discussion or notes to financial statements.
There is no material off-balance sheet transaction, arrangement, obligation, and other
relationships of ATS with unconsolidated entities or other persons created during the
reporting period.
Seasonal aspects of the business are considered in ATS’ financial forecast.
ATS does not expect any liquidity or cash problem within the next twelve months. Capital
expenditures are funded through cash generated from operations and additional borrowings.
Outlook
With its full fleet now in operation, focus will be on maximizing earnings. We aim to continue providing
value added services at the lowest cost. Super Ferry vessels, with lower cost per slot can command
higher service margins from its frequency, speed, reliability and overall better service. The strengthening
of the Peso will help keep the company competitive. We are experiencing a thriving economy, with freight
and passenger market growing at 9% and 14%
14 respectively during the period in review. With no scheduled
dry-docking in 2011, ATS is poised and ready to capitalize on the growth. Furthermore, ATS, jointly with
NENACO, is expected to result in a better and stronger company, creating greater value to shareholders.
Item 7. Financial Statements
The consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules are filed as part of this Form 17-A.
The management is not aware of any significant or material events or transactions not included nor
disclosed in the consolidated financial statements in compliance with the SRC Rule 68.
32
Item 8. Information on Independent Accountant and other Related Matters
(1) External Audit Fees and Services
Estimates
Estimates for
December 31, 2011
Audit Fees
Audit-Related Fees
P
1,000,000
Year ended
December 31, 2010
P
1,000,000
Year ended
December 31, 2009
P
1,000,000
All Other Fees
TOTAL
P 1,000,000
P 1,000,000
P 1,000,000
Audit Fees
This represents professional fees for financial assurance services rendered for the Company’s Annual
Financial Statements, review and opinion for SEC Annual Report.
Audit-Related Fees
This represents professional fees for technology and security risk services rendered by the external
auditor in connection with the Audit on Company’s Annual Financial Statements.
All Other Fees
This represents fees for services rendered in reviewing and issuing opinion with regards to the Company’s
annual reportorial requirement with Maritime Industry Authority (MARINA).
Audit services provided to the Company by external auditor, SGV & Co. have been pre-approved by the
Audit and Corporate Governance Committee. The Audit and Corporate Governance Committee has
reviewed the magnitude and nature of these services to ensure that they are compatible with maintaining
the independence of the external auditor.
(2) Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
There was no event in the past years where SGV and the Company had any disagreements with regard to
any matter relating to accounting principles or practices, financial statement disclosure or auditing scope
or procedure.
33
PART III - CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Registrant
The names, ages, citizenship, position and offices held or will hold, and brief description of business
experience during the past 5 years (except those years stated otherwise) and other directorships held in
reporting companies, including name of each company, of all directors and executive officers are as
follows:
DIRECTORS
Mr. Jon Ramon M. Aboitiz, 62 years old, Filipino, has served as Chairman of the Board since 2002 and
Director since 1996. His other positions include Chairman of the Board of Directors of Aboitiz Equity
Ventures, Inc., Aboitiz and Company. Inc., and Aboitiz Jebsen Bulk Transportation and, Inc., Vice Chairman
of the Board of Directors of Union Bank of the Philippines and Aboitiz Power Corporation; President of
Aboitiz Foundation, Inc. and Trustee of the Ramon Aboitiz Foundation, Inc. He graduated with a degree in
Commerce major in Management from the University of Santa Clara, California, U.S.A.
Mr.
Mr. Sulficio O. Tagud, Jr., 60 years old, Filipino, has served President, Chief Executive Officer, and Director
of ATS since December 2010. He has also served as the Chairman and President of KGLI-NM Holdings,
Inc. since July 2008; Chairman and Chief Executive Officer of NENACO since August 2004; and President of
One Urban Resource and Property Management Company since September 2003. He graduated Class
Valedictorian with a Bachelor of Science degree in Business Administration, major in Economics (Magna
Cum Laude) at Xavier University, Cagayan De Oro City. He also completed his Masters in Industrial
Economics at the Center for Research and Communication in Manila, and Masters in Business
Administration at the Ateneo de Manila University. He also completed Real Estate Development Program
at the Urban Land Institute at Washington, D.C., U.S.A.
Mr. Jeremias E. Cruzabra, 43 years old, Filipino, has served as Director of ATS since December 2010. He
has also served as the Chief Finance Officer of NENACO since March 2010; Chief Finance Officer and
Board Director of KGLI-NM Holdings, Inc. since July 2008; Court-Appointed Receiver of Selegna Holdings
Corporation since November 2006; and member of the Board of Trustees of Brunei Investment Agency. He
graduated with a Bachelor of Science degree in Commerce, major in Accounting (Magna Cum Laude), and
has completed his Masters in Business Administration (with distinction) at Murdoch University in Perth,
Western Australia.
Amb. Raul Ch. Rabe, 70 years old, Filipino, has been an Independent Director of ATS since December 2010.
He has also served as a member of the Board of Directors of KGLI-NM since 2008; Bancommerce
Investment Corporation since 2007; PET Plans, Inc. since 2007; Vivant Corporation since 2002; Bank of
Commerce since 2001; Corporate Secretary of Manila Economic and Cultural Office since 2001, and of
Counsel for Rodrigo, Berenguer and Guno since 1999. He graduated with a Bachelor of Arts degree at the
University of Santo Tomas, and Bachelor of Laws degree from the Ateneo de Manila Law School. He also
completed the Colombo Plan Scholarship on Diplomacy at the Australian Institute of Foreign Service in
Canberra, Australia.
Mr. Mark E. Williams, 37 years old, American, has served as Director of ATS since December 2010. He has
also served as Investment Director of KGLI-KSCC since 2008. He obtained his Bachelor of Science degrees
in Accounting, Business Administration, and Finance at the University of Akron in Akron, Ohio, U.S.A. He
34
completed his Juris Doctorate degree at Case Western Reserve University, Cleveland, Ohio, U.S.A., and
also obtained a Masters degree in Business Administration, concentration in Finance, from Weatherhead
School of Management of the same university.
Ms. Michelle Lu, 50 years old, Chinese, has served as Director of ATS since December 2010. She is the
Managing Director of the China-ASEAN Capital Advisory Company and advisor to the China-ASEAN
Investment Cooperation Fund. Prior to this role, Ms. Lu was Managing Director and Head of Infrastructure
China at Standard Chartered Bank, with responsibility for managing the Standard Chartered IL & FS Asia
Infrastructure Growth Fund. She has also held senior management roles at Macquarie Bank, Temasek
Holdings and Hutchison Port Holdings. Her extensive experience in private equity investment includes
shipping, ports, airports, toll roads, wastewater treatment, renewable energy, metal and mining, and
telecom. She graduated with a Bachelor of Science in Physics at the Beijing Normal University in China,
and obtained a Masters Degree in Business Administration from San Jose State University, California,
U.S.A.
Mr. Enrique M. Aboitiz, Jr.,
Jr. 57 years old, Filipino, has served as Director of ATS since September 2002. He
is concurrently President and Chief Executive Officer of Aboitiz Equity Ventures, Inc., Aboitiz Power
Corporation, Aboitiz and Company, Inc. and Philippine Hydropower Corporation; Chairman of the Board of
Directors of Davao Light and Power Company, Inc., City Savings Bank, Subic EnerZone Corporation, San
Fernando Electric Light and Power Company, Mactan Enerzone Corporation, Subic Enerzone Corporation,
Balamban Enerzone Corporation and Pilmico Animal Nutrition Corporation (formerly Fil-Am Foods, Inc.);
Chairman and Chief Executive Officer of Hedcor, Inc. (formerly, Benguet Hydropower Corporation);
Director and Vice President of Pilmico Foods Corporation; Director of Aboitizland Inc., UnionBank of the
Philippines, Visayan Electric Company, Inc., Southern Philippine Power Corp., Aboitiz Energy Solutions,
Inc., and Cotabato Light and Power Company; and President and Trustee of Aboitiz Foundation, Inc. He
received a Bachelor of Science degree in Business Administration, major in Accounting and Finance from
Gonzaga University, Spokane, U.S.A.
Mr. Bob D. Gothong,
Gothong 55 years old, Filipino, has served as a Director of ATS since December 2010. He
served as Vice Chairman of the Board of ATS until December 2010. He is alsp the Chairman and Chief
Executive Officer of One Wilson Place Holdings, Inc.; Director of Philippine National Oil Co.; Ramon Aboitiz
Foundation, Inc., and Vice Chairman of Carlos A. Gothong Holdings, Inc. He graduated with a degree of
Bachelor of Science in Commerce Major in Transportation and Utilities and Minor in Finance from the
University of British Columbia, Vancouver, Canada.
Mr. Francis Chua, 60 years old, Filipino, has served as a Director of ATS since January 2011. His current
positions include Honorary Consulate General of the Republic of Peru in Manila; President and Eminent
Adviser of the Philippine Chamber of Commerce and Industry; Chairman of the Philippine Chamber of
Commerce and Industry Foundation, CLMC Group of Companies, and Green Army Philippines Network
Foundation; President of DongFeng Automotive, Inc. and Philippine Satellite Corporation; Director of
Philippine Stock Exchange, National Grid Corporation of the Philippines, Bank of Commerce, Basic
Energy, and Overseas Chinese University; and Trustee of Xavier School Educational Trust Fund, and
Adamson University. He graduated with a Bachelor of Science degree in Industrial Engineering the
University of the Philippines.
Mr. Erramon I. Aboitiz, 53 years old, Filipino, has served as Director of ATS since September 2002 upto
December 28, 2010.
35
Mr. Mikel A. Aboitiz, 55 years old, Filipino, nominated as Director of from May 2010 upto December 31,
2010.
Mr. Justo A. Ortiz, 52 years old, Filipino, has served as Director of ATS since September 2002 upto
December 28, 2010.
Mr. Sabin M. Aboitiz, 45 years old, Filipino, has been a Director of ATS since September 2002 upto
December 28, 2010.
Mr. Washington Z. Sycip,
Sycip 88 years old, American, has been an Independent Director of ATS since 1996 upto
December 28, 2010.
Ms. Emily A. Abrera, 62 years old, Filipino, has been an Independent Director of ATS since 2008 upto
December 28, 2010.
Atty. Helen G. Tiu, 49 years old, Filipino, has served as Corporate Secretary of ATS since September 2002
upto December 28, 2010.
Atty. Catherine R. Atay, 31 years old, Filipino, has served as Assistant Corporate Secretary of ATS since
2008 upto December 28, 2010.
Atty. Amado R. Santiago III, 43 years old, Filipino, has served as the Corporate Secretary of ATS since
December 2010. He is the Managing Partner of the Santiago & Santiago Law Offices and is engaged in the
general practice of law. He specializes in corporate litigation, which includes corporate rehabilitation
proceedings under the Securities and Exchange Commission Rules on Corporate Recovery, Interim Rules
of Procedure on Corporate Rehabilitation and the Rules of Procedure on Corporate Rehabilitation. He is
also engaged in the practice of taxation law. He received his Bachelor of Science degree in Management,
major in Legal Management (1988) from the Ateneo de Manila University. He graduated from the Ateneo
de Manila School of Law in 1992 and is a member of the Philippine Bar.
Atty. Manuel Eduardo C. Carlos, 35 years old, Filipino, has served as the Assistant Corporate Secretary
since December 2010. He is the Associate Lawyer of the Santiago & Santiago Law Offices. Under this law
firm, he specializes in corporate mergers and acquisitions and corporate housekeeping. He is also
engaged in the practice of taxation law. He acts as corporate counsel, director and/or corporate
secretary/assistant corporate secretary of various corporate clients. He received his Bachelor of Science
degree in Management, major in Legal Management (1997) from the Ateneo de Manila University. He
graduated from the Ateneo de Manila School of Law in 2002 and is a member of the Philippine Bar.
EXECUTIVE OFFICERS
Ms. Lilian P. Cariaso, 51 years old, Filipino, Treasurer, Executive Vice President – Chief Finance Officer,
Corporate Information Officer since 2004, and Chief Resource Officer since 2009. She has been with the
Aboitiz group since 1979. She is a Director of SuperCat Fast Ferry Corporation, Aboitiz One, Inc., and SQL
Wizard. She graduated with a Bachelor of Science degree in Commerce, major in Accounting (Summa
Cum Laude) from the University of San Carlos and earned her Masters degree in Business Management
from the University of the Philippines.
36
Ms. Susan V. Valdez, 50 years old, Filipino, Executive Vice President – Chief Executive Officer of the 2GO
Freight Division since 2004, and President and Chief Executive Officer of Aboitiz One, Inc. since 2009. She
has been with the Aboitiz group since 1981. She graduated with a Bachelor of Science degree in
Commerce, major in Accounting (Cum Laude) from St. Theresa’s College and earned her Masters degree
in Management, major in Business Management from the University of the Philippines. She also
completed the Program for Management Development from Harvard Business School, Boston, U.S.A.
Ms. Evelyn L. Engel, 58 years old, Filipino, Executive Vice President – Chief Executive Officer of the
Passage Division since 2004 and President and Chief Executive Officer of ScanAsia Overseas, Inc. since
2009. Her other positions include Director of Catena Services, Inc. and SQL Wizard, Inc. She has extensive
experience in General Management with solid background on Sales and Marketing, Human Resource and
Information Technology. She graduated with a Bachelor of Arts degree in Economics from St. Paul
University.
Mr. Rafael L. Sanvictores, 53 years old, Filipino, Senior Vice President for Passenger Services since 2006.
He has been with Aboitiz group since 1980. He graduated with a Bachelor of Arts degree in Economics
from San Beda College.
Mr. Ramon G. Villordon, Jr., 58 years old, Filipino, President and Chief Executive Officer of SuperCat Fast
Ferry Corporation and Cebu Ferries Corp. since 2002. He has been with the Aboitiz group since 1974. He is
currently Director of United Southdockhandlers, Inc. and a Commissioner of Cebu Ports Authority. He
graduated with a Bachelor of Science degree in Business Management from the University of San Carlos.
Mr. Wilmer A. Alfonso, 58 years old, Filipino, Vice President for Ports Services since 2006. He has been
with the Aboitiz group since 1971. Other positions include: Chairman of Catena Services, Inc,; Chief
Operating Officer of North Harbor Tugs Corp.; and President of United South Dockhandlers, Inc. Mr.
Alfonso is a Certified Public Accountant. He graduated with a Bachelor of Science degree in Accounting
from the University of San Carlos.
Ms. Magdalena A. Anoos, 54 years old, Filipino, Vice President for Materials Management since 2003. She
has been with the Aboitiz group since 1977. She graduated with a Bachelor of Science degree in
Commerce, major in Accounting (Cum Laude) from University of San Carlos. She also completed the
Senior Executive Program at Columbia Business School, New York, U.S.A. She received the ‘Division
Governor of the Year’ award from the Philippine Toastmasters District 75 in 2005 and Advanced
Toastmaster Gold award by Toastmasters International in 2006.
Ms. Charity Joyce S.D. Marohombsar, 44 years old, Filipino, Vice President for Customer Interaction
Center since 2003 and for RORO, and Vice President for Customer Management Group of ScanAsia
Overseas, Inc. since 2009. She graduated with a Bachelor of Arts degree from the Ateneo de Naga
University.
Ms. Norissa L. Ridgwell, 55 years old, Filipino, Senior Vice President and Chief Operating Officer of 2GO
Freight Operations since 2009. She has been with the Aboitiz group since 1994. She graduated with a
Bachelor of Science degree in Commerce, major in Management from Silliman University.
Ms. Shelley U. Rapes, 52 years old, Filipino, Vice President - Chief Information Officer since 2009. She
joined the Aboitiz Group of Companies in 1981 and has been with ATS since 1989. She graduated with a
37
Bachelor of Science degree in Mathematics (Cum Laude) from the University of San Carlos, and finished
the Management Development Program from the Asian Institute of Management
Ms. Annacel A. Natividad, 41 years old, Filipino, Vice President and Chief Finance Officer of the Passage
Division since 2005, and Chief Finance Officer of ScanAsia Overseas, Inc. since 2010. She has been
handling the Risk Management Division since 2007. She has been part of the Aboitiz group since 1998. She
graduated with a Bachelor of Science degree in Commerce, major in Accounting from the University of
Santo Tomas, and finished her Masters degree in Business Administration from De La Salle UniversityGraduate School of Business.
Mr. Oscar Y. Go, 58 years old, Filipino, Vice President for Sales-Special Accounts since 2002. He has been
with ATS since 2002. Prior to joining the company, he was Vice President of the Lorenzo Shipping
Company. He graduated with a Bachelor of Science degree in Business Management from Collegio de San
Juan de Letran.
Mr. Joel Jesus M. Supan, 53 years old, Filipino, Vice President for Security, Safety and Compliance. He has
been with ATS since 2004. He is the Founder and Proprietor of Stonewall Security Concepts; Director and
President of Ethics Call System, Inc., and Founder of Balikatan ng mga Tanod ng Ari-Arian at Yaman
(BANTAY). He graduated with a Bachelor of Science degree from the Philippine Military Academy in 1981.
Ms.
Ms. Ellen F. Bolus, 41 years old, Filipino, Vice President for 2GO Freight Operations since 2009. She has
been with ATS since 1995. She graduated with a Bachelor of Science degree in Tourism from the
University of the Philippines and earned her Masters degree in Business Administration from the Ateneo
Graduate School of Business in 2003.
Ms. Noemi G. Sebastian,
Sebastian 49 years old, Filipino, Vice President of Human Resources for Results and Quest
Consulting Group since 2009, and Vice President of Corporate Communications since 2010. She has been
with ATS since 2003. She graduated with a Bachelor of Science degree in Business Administration (Cum
Laude) from the University of the Philippines.
Mr. Andrew Jude D. Deyto, 39 years old, Filipino, Vice President for Sales and Marketing of the Passage
Division since 2010. He has been with ATS since 1994. He graduated with a Bachelor of Science degree in
Industrial Engineering from the Ateneo de Davao University, and completed the Masters degree in Business
Administration of the Ateneo Regis Program from the Ateneo Graduate School of Business in 2002.
Nomination Committee and Nominees for Election as Members of the Board of Directors
In January 2011, the new composition of the Company’s Board appointed the following as Chairman and
members of the Compensation/Remuneration and Nomination Committee:
Chairman:
Members:
Mr. Sulficio O. Tagud Jr.
Mr. Mark E. Williams
Ms. Michelle Lu
For the ensuing year 2011-2012, the Board will have to tackle yet who will be nominated as members of the
Board for the said period as well as the names of the individuals who will be nominees for the independent
directors of the same ensuing year.
38
Period in Which Directors and Executive Officers Should Serve
The directors and executive officers should serve for a period of one (1) year and until the election and
qualification of their successors.
Terms of Office of a Director
The nine (9) directors shall be stockholders and shall be elected annually by the stockholders owning a
majority of the outstanding common shares of the Registrant for a term of one (1) year and shall serve until
the election and qualification of their successors.
Any vacancy in the board of directors other than removal or expiration of term may be filled by a majority
vote of the remaining members thereof at a meeting called for that purpose if they still constitute a
quorum, and the director or directors so chosen shall serve for the unexpired term.
Significant Employees
The Corporation considers the contribution of every employee important to the fulfillment of its goals.
Family Relationships
Messrs. Jon Ramon Aboitiz and Roberto E. Aboitiz are brothers and are, thus, related to each other within
the fourth degree of consanguinity.
Messrs. Erramon Aboitiz, Enrique M. Aboitiz, Jr. and Sabin M. Aboitiz are brothers and are, thus, also
related to each other within the fourth degree of consanguinity. They are cousins to Messrs. Jon Ramon
Aboitiz and Roberto E. Aboitiz and are therefore related within the fourth degree of consanguinity.
Other than the ones that are disclosed above, there are no other family relationships within the fourth
degree of consanguinity known to the Registrant.
Involvement in Certain Legal Proceedings
To the knowledge and/or information of ATS, none of its nominees for election as directors, the present
members of its Board of Directors or its executive officers, is presently or during the last five (5) years been
involved in any legal proceeding in any court or government agency on the Philippines or elsewhere which
would put to question their ability and integrity to serve ATS and its stockholders.
With respect to its nominees for election as directors, the present members of its Board of Directors and
its executive officers, the Company is not aware that during the past five (5) years up to even date of: (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 of such person in a criminal proceeding, excluding traffic violations and other
minor offenses; (c) such person being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, by any court of competent jurisdiction, domestic or foreign, permanently
or temporarily enjoining, barring, suspending or otherwise limiting such person’s involvement in any type
of business, securities, commodities or banking activities; and (d) such person being found by a domestic
or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or
39
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.
Resignation or Refusal to Stand for ReRe-election by Members of the Board of Directors
No Director has declined to stand for re-election to the board of directors since the date of the last annual
meeting of the Registrant because of a disagreement with the Registrant on matters relating to the
Registrant operations, policies and practices.
In December 2010, as a result of NENACO’s purchase of AEV’s and ACO’s shares in ATS, the following
directors have tendered their resignations:
1. Mr. Jon Ramon M. Aboitiz, Chairman of the Board; Compensation/Remuneration and Nomination
Committee (but was re-appointed in January 2011 as director and Chairman of the
Board)
2. Mr. Enrique M. Aboitiz, Jr., Member, President and CEO; Risk Management Committee and
Compensation/Remuneration and Nomination Committee (but re-appointed as
director on the same date)
3. Mr. Mikel E. Aboitiz, Member; Risk Management Committee
4. Mr. Erramon I. Aboitiz, Member
5. Mr. Bob D. Gothong, Member; Risk Management Committee (but re-appointed as director on the same
date)
6. Mr. Justo A. Ortiz, Member; Audit and Corporate Governance Committee
7. Mr. Sabin M. Aboitiz, Member; Audit and Corporate Governance Committee
8. Mr. Washington Z. Sycip, Independent Director; Audit and Corporate Governance
Committee and Risk Management Committee
9. Ms. Emily A. Abrera, Independent Director; Compensation
40
Item 10. Executive Compensation
The following table summarizes certain information regarding compensation paid or accrued during the
last three fiscal years and to be paid in the ensuing fiscal year to the Registrant Chief Executive Officer
and each of the Registrant four other most highly compensated executive officers:
SUMMARY OF COMPENSATION TABLE
Amounts in Thousands of Pesos (‘000s)
SALARY
BONUS
(13th and
14th Months
Pay)
OTHER
COMPENSATION
22,372
29,640
21,955
3,729
4,960
3,659
-
23,911
25,938
25,213
25,213
2,545
4,830
4,202
-
TOP FIVE HIGHLY COMPENSATED
EXECUTIVES:
ENRIQUE M. ABOITIZ JR.*
JR.* – CHIEF
EXECUTIVE OFFICER
EVELYN L. ENGEL – CHIEF EXECUTIVE
OFFICER – PASSAGE AND
PRESIDENT-CEO SCANASIA,
INC.
SUSAN V. VALDEZ – CHIEF EXECUTIVE
OFFICER – FREIGHT AND
PRESIDENT-CEO OF ABOITIZ
ONE INC. GROUP
LILIAN P. CARIASO – CHIEF FINANCE
OFFICER, CORPORATE
INFORMATION OFFICER
AND CHIEF RESOURCE
OFFICER
NORISSA L. RIDGWELL – SVP-COO 2GO
FREIGHT (2010 ONLY)
CHARITY JOYCE MAROHOMBSAR –
CUSTOMER CARE
MANAGEMENT OF 2GO
SCANASIA (2011 ONLY)
All above named officers as a group
All officers and directors as group
unnamed
2009
2010
Projected
2011
2009
2010
Projected
2011
The Company has no significant or special arrangements of any kind as regard to the compensation of
all officers and directors other than the funded, noncontributory tax-qualified retirement plans covering
all regular employees.
41
Each director receives a monthly allowance of P80,000 except for the Chairman of the Board who receives
P120,000 a month. Further, a per diem of P30,000 is given to each Director and P45,000 for the Chairman
for every Board meeting attended.
Except for the regular company retirement plan, which by its very nature will be received by the officers
concerned only upon retirement from the Company, the above-mentioned directors and officers do not
receive any profit sharing nor any other compensation in the form of warrants, options, bonuses, etc.
Likewise, there are no standard arrangements that compensate directors directly or indirectly, for any
services provided to the Company either as director or as committee member or both or for any other
special assignments.
Item
Item 11. Security Ownership of Certain Beneficial Owners and Management
Security ownership of certain record and beneficial owners of five per centum (5%) or more of the
outstanding capital stock of the Registrant as of March 31, 2011:
Citizenship
No. of Shares
Held
Percent
of Class
Negros Navigation Co.,Inc.
Filipino
2,400,141,995
98.12%
Various Clients
Filipino
2,962,151
64.95%
Title of
Class
Name and Address of Record
Owner and Relationship with
ATS
Name of Beneficial Owner
and Relationship with Record
Owner
Common
1. Negros Navigation Co.,Inc.
Pier 2, North Harbor,
Manila
(PARE
PARENT
PARENT COMPANY)
COMPANY
Preferred
2. PCD Nominee
Corporation (Filipino)
37/f Enterprise Building
Ayala Avenue, Makati City
(STOCKHOLDER)
42
Security Ownership of Management – Record and Beneficial Owners as of March 31, 2011:
Title of
Class
Common
Name of Beneficial Owner and
Position
Jon Ramon Aboitiz
Chairman of the Board
Citizenship
Filipino
Amount and nature of ownership
(Indicate record and/or beneficial)
Percent
of Class
10 – “direct”
126,460 – “indirect”
0.01%
Record Owner: Lekeitio & Company. Inc.
Common
Common
Common
Common
Common
Common
Common
Common
Sulfico O. Tagud, Jr.
President and CEO
Filipino
Jeremias E.
E. Cruzabra
Director
Filipino
Mark E. Williams
Director
American
Michelle Lu
Director
Chinese
Enrique M. Aboitiz, Jr.
Jr
Director
Bob D. Gothong
Director
Amb. Raul C. Rabe
Independent Director
Filipino
10 – “direct”
Filipino
148 – “direct”
Francis Chua
Filipino
TOTAL
1,000 – “indirect”
Record Owner: PCD Nominee Corporation
(Filipino)
1,000 – “indirect”
Record Owner: PCD Nominee Corporation
(Filipino)
0.00%
1,000 – “indirect”
Record Owner: PCD Nominee Corporation
(Non-Filipino)
0.00%
1,000 – “indirect”
Record Owner: PCD Nominee Corporation
(Non-Filipino
Filipino
0.00%
0.00%
0.00%
0.00%
1,000 – “indirect”
Record Owner: PCD Nominee Corporation
(Filipino)
0.00%
10 ,000–
,000– “direct”
0.00%
10,168”direct”;
131,460“indirect”b”
Security Ownership of the Directors and Officers in the Registrant as a Group: Common is 141,628
common shares.
Voting trust holders of 5% or More
No person holds more than five per centum (5%) of a class under a voting trust agreement or similar
arrangement.
Changes in Control
In September 2008, the major shareholders of ATS, AEV and ACO, accepted the unsolicited offer of KGLINM Holdings, Inc. (KGLI-NM) to purchase all of the shareholdings of AEV and ACO in ATS on a per share
purchase price to be computed based on an ATS equity value of P5 billion or equivalent to P2.044 per
share. AEV owns 1,889,489,607 common shares of ATS while ACO owns 390,322,384 common shares of
ATS, representing 77.24% and 15.96 % respectively of the total outstanding ATS capital stock. This
planned acquisition will include all of the shipping and logistics businesses of ATS except the Aboitiz
Jebsen Group.
ACO is the private holding company of the Aboitiz family and is AEV’s largest shareholder. KGLI-NM is a
domestic company, which is jointly owned by Negros Holdings and Management Corporation (NHMC) and
43
KGL Investment BV (KGLIBV), which is beneficially owned by the KGL Investment Company, a Kuwaiti
company.
On December 19, 2008, AEV and ACO, accepted the Term Sheet offered by KGLI-NM for the acquisition by
KGLI-NM of 49% equity stake in ATS instead of the total buy-out proposed in the Memorandum of
Agreement signed by the parties in September 2008. The 49% equity stake was to include the 7% equity
stake of the public in ATS. Under said modified agreement, which was expected to close on or before April
30, 2009, the purchase price would have been based on a total equity value of ATS in the amount of P4.5
billion or equivalent to P1.84 per share, the adjusted value after KGLI-NM conducted a due diligence
examination. The Agreement also provided for an option for KGLI-NM to acquire the remaining 51% equity
stake of AEV and ACO anytime between May 1, 2009 to September 30, 2009 at the same price plus a
premium of nine and a half percent (9.5%) annualized price per share calculated from 30 April 2009 to 30
September 2009 or to date of acquisition, as applicable.
On March 31, 2009, AEV and ACO received notice from KGLI-NM that it will exercise its option to acquire at
least US$ 30 million worth of common shares of ATS owned by AEV and ACO. Based on the Term Sheet,
the sale was estimated to involve approximately 655,382,609 common shares of ATS owned by AEV and
135,378,261 common shares of ATS owned by ACO computed at the prevailing dollar exchange rate, or a
total of approximately 32% of the outstanding common shares of ATS. However, the actual number of
shares to be acquired by KGLI-NM would have been determined based on the dollar exchange rate on the
expected closing date (i.e., April 30, 2009.)
KGLI-NM was going to be entitled to such number of board seats as would have been proportionate to the
number of shares that they would have eventually acquired in ATS in accordance with the regulations of
the Securities and Exchange Commission and the Philippine Stock Exchange.
However on April 30, 2009 ATS received a written advice from AEV and ACO that KGLI-NM will not proceed
with the purchase. KGLI-NM cited the then constraints in the debt markets as the reason for its decision
not to push through with its planned purchase of the ATS shares owned by AEV and ACO.
In view of KGLI-NM’s decision not to close pursuant to the Term Sheet and to its notice dated March 31,
2009, the Term Sheet dated December 19, 2008 as well as the Memorandum of Agreement dated
September 23, 2008 between AEV and ACO, on one hand, and KGLI-NM, on the other hand, were deemed
terminated. Likewise, the P100 million option money paid by KGLI-NM to AEV and ACO (P82.88 million for
AEV and P17.12 million for ACO) was forfeited in accordance with the terms of the Term Sheet.
In December 2010, NENACO purchased AEV’s shareholdings in ATS comprising of 1,889,489,607 with a
purchase price of approximately PhP3.55 billion and ACO’s 390,322,384 common shares for approximately
PhP734 million.
Further in February 2011, as a result of the mandatory Tender Offer, NENACO purchased additional
120,330,004 common shares. NENACO now owns ATS 98.12%, equivalent to 2,400,141,995 common
shares.
Item 12. Certain Relationships and Related Transactions
In the ordinary course of business, the Registrant has transactions with fellow subsidiaries, associates, and
other related companies consisting of shipmanagement services, charter hire, management services,
44
courier services, purchases of steward supplies, availment of stevedoring, arrastre, trucking, rental and
repair services. The Registrant needs these services to complement its services to the freight and passage
customers.
The identification of the related parties transacting business with the Registrant and how the transaction
prices were determined by the parties are discussed in the Note 23 of the consolidated financial
statements. The Registrant will continue to engage the services of these related parties as long as it is
economically beneficial to both parties.
The Corporation has no transaction during the last two years or proposed transaction to which it was or is
to be a party in which any of its directors, officers, or nominees for election as directors or any member of
the immediate family of any of the said persons had or is to have a direct or indirect material interest.
Moreover, ATS and its subsidiaries do not have existing or proposed transactions with parties that are
considered outside of the definition of "related parties" but have the influence of negotiating the terms of
material transactions that may not be available to other, more clearly independent parties on an arm's
length basis.
PART IV – CORPORATE GOVERNANCE
There have been studies relating managerial behaviour and organizational performance to good corporate
governance. While academic research and institutional studies have very limited explanatory power to
draw substantive conclusions about the impact of corporate governance on corporate performance, there
are plenty of hard evidence to show that investors pay more for well-governed companies. There is also
widespread recognition on the importance of transparency and accountability both in government and in
the business community.
As businesses continue to open up to the global market and liberalization happens, the decision-making
process becomes more diffused. This brings up the level of accountability of corporate leaders to all their
stakeholders, including employees, customers and in particular, their shareholders.
In ATS, no less than the Board of Directors, at the top of the company’s corporate governance structure,
who takes the lead. It is the Board who is tasked to strike a balance between conformance and
performance; long-term strategy and day-to-day operations; form and substance.
The Board is the key to the success of any corporate governance directive.
BOARD STRUCTURE
They say that the Board is only as good as the people who form it. Up until the ATS buyout in December 28,
2010, the ATS Board was composed of nine (9) members, two (2) of which are independent directors highly
respected in the industry.
Jon Ramon M. Aboitiz, Chairman
Bob D. Gothong
Enrique M. Aboitiz, Jr.
Erramon I. Abotiz
Roberto E. Aboitiz / Mikel A. Aboitiz
Justo A. Ortiz
45
Sabin M. Aboitiz
Washington Z. Sycip, Independent Director
Emily A. Abrera, Independent Director
Roberto E. Aboitiz was officially replaced by Mikel A. Aboitiz as Director during the Board meeting held
May 27, 2010.
A new board was formed upon the completion of the ATS sale to Nenaco.
John Ramon M. Aboitiz, Chairman
Sulficio O. Tagud, Jr.
Jeremias E. Cruzabra
Mark E. Williams
Michelle Lu
Endika M. Aboitiz, Jr.
Bob D. Gothong
Francis Chua, Independent Director
Amb. Raul C. Rabe, Independent Director
BOARD MEETINGS
In the January 27, 2011 report to the SEC, the ATS Corporate Secretary’s Certification on Directors’
Attendance in Board Meetings summarized the attendance record of the members of the Board of
Directors of the corporation for the period January 1, 2010 to December 28, 2010.
Director
Jon Ramon M. Aboitiz
Bob D. Gothong
Enrique M. Aboitiz, Jr,
Erramon I. Aboitiz
Roberto E. Aboitiz
Justo A. Ortiz
Sabin M. Aboitiz
Washington Z. Sycip
Emily A. Abrera
Mikel A. Aboitiz
Sulficio O. Tagud, Jr
Jeremias E. Cruzabra
Raul C. Rabe
Michelle Lu
Mark E. Williams
William Moses
Jan
21
P
P
P
P
P
P
P
P
P
NA
NA
NA
NA
NA
NA
NA
Feb
10
X
P
P
P
X
X
P
X
P
NA
NA
NA
NA
NA
NA
NA
Feb
26
P
X
P
P
P
P
P
P
P
NA
NA
NA
NA
NA
NA
NA
Mar
25
P
P
P
P
P
P
P
X
P
NA
NA
NA
NA
NA
NA
NA
Meetings Held in 2010
May Jul Sep
Nov
27
29
14
11
P
P
P
P
P
P
X
P
P
P
P
P
X
P
X
P
NA
NA NA
NA
P
P
P
P
P
P
P
P
X
P
P
P
P
P
P
P
NA
P
X
P
NA
NA NA
NA
NA
NA NA
NA
NA
NA NA
NA
NA
NA NA
NA
NA
NA NA
NA
NA
NA NA
NA
Dec
1
X
P
X
X
NA
P
P
P
P
X
NA
NA
NA
NA
NA
NA
Dec
28
P
P
P
P
NA
X
P
X
X
P
P
P
P
P
P
X
P/M
8/10
8/10
9/10
7/10
3/4
8/10
10/10
6/10
9/10
3/5
1/1
1/1
1/1
1/1
1/1
0/1
P = Present
X = Absent
M = Maximum Number of Meetings that the relevant Board Member could have attended during the period January 1 to December
28, 2010
NA = “Not Applicable” because the Board Member was not a member of the Board during the relevant meeting date.
46
BOARD COMMITTEES
The Board has three (3) committees—the Nomination and Compensation Committee, the Audit and
Corporate Governance Committee, and the Risk Management Committee. The Board and its committees
oversee and advise management in developing the company’s financial and business goals, oversee its
public disclosures and the processes behind them, and evaluate management's performance in pursuing
and achieving those goals.
NOMINATION AND COMPENSATION COMMITTEE
The Nomination and Compensation Committee is mainly responsible for
•
Establishing the criteria for the selection of directors and senior management and
recommend Board nominees and committee membership.
•
Establishing the overall compensation philosophy of the company including directors and
employee compensation, benefits and incentive plans.
This committee is likewise is responsible in reviewing the management development and succession
policies.
In 2010, the committee membership was as follows:
Chairman
Members
: Jon Ramon M. Aboitiz
: Enrique M. Abotiz, Jr.
Emily. A. Abrera, Independent Director
Xavier Jose Aboitiz, Ex-Officio member
Lilian P. Cariaso, Ex-Officio member
Mr. Xavier Jose Aboitiz is the Senior Vice President for Human Resources of Aboitiz Equity Ventures, Inc.
(AEV). Ms. Lilian P. Cariaso is the Executive Vice President, Chief Financial Officer and Chief Resource
Officer of ATS.
Starting January 2011, the appointed members of the committee are as follows:
Chairman
Members
: Sulficio O. Tagud, Jr.
: Michelle Lu
Mark E. Williams
AUDIT AND CORPORATE GOVERNANCE COMMITTEE
COMMITTEE
The Board Audit and Corporate Governance Committee has oversight function over the audit activities
performed by the company’s internal auditors and the nominated external auditor for the year. The
committee oversees internal and disclosure controls and procedures.
47
The committee also takes the lead in promulgating and overseeing the principles of corporate governance
by reviewing committee charters, directors’ independence as well as code of ethics for executives,
employees and directors.
Composition
Composition
The Board Audit and Corporate Governance Committee is composed of three (3) board members, one (1)
of which is an independent director and two (2) ex-officio members.
Chairman
Members
: Washington Z. Sycip, Independent Director
: Justo A. Ortiz
Sabin M. Aboitiz
Stephen G. Paradies, Ex-Officio member
Lilian P. Cariaso, Ex-Officio member
Stephen G. Paradies is Senior Vice President and Chief Finance Officer of Aboitiz Equity Ventures.
For 2011, the new Board Audit and Corporate Governance Committee is as follows:
Chairman
Members
: Francis C. Chua, Independent Director
: Michelle Lu
Mark E. Williams
Geoffrey Seeto, Ex-Officio member
Evan C.McBride, Ex-Officio member
Committee Meetings
The Audit and Corporate Governance Committee met three (3) times in 2010. All three meetings were duly
attended by the committee members.
In its meetings, the committee tables for discussion the audit master plan for the year; the highlights of
internal audit results and the corresponding action plans; the performance of the internal audit team; the
selection and approval of the external auditor for the year and their audit timetable; and the presentation
and endorsement for Board approval of the prior year’s audited financial statements.
In the presentation of the audit master plan for the year, the committee reviews and assesses the
robustness of the audit risk assessment methodology used by internal audit as this becomes the basis in
allocating its limited manpower resources to auditable units that are rated to be comparatively riskier
than others.
A detailed Audit Committee Report for 2010 is presented in a subsequent section.
RISK MANAGEMENT COMMITTEE
The ultimate accountability over risk oversight and risk management in the organization rests with the
Board. However, the Risk Management Committee, as a Board subcommittee, is responsible in leading
the organization’s strategic direction in the management of material business risks such that leaders are
48
able to make informed decisions. The committee also provides oversight for the establishment,
implementation, and effectiveness review and assessment of the company’s risk management framework.
The ATS Risk Management Committee in 2010 was composed of the following:
Chairman
Members
: Bob D. Gothong
: Enrique M. Aboitiz, Jr.
Mikel A. Aboitiz (pls check with Anne)
Washington Z. Sycip, Independent Director
Rolando C. Cabrera, Ex-Officio member
Lilian P. Cariaso, Ex-Officio member
Annacel A. Natividad, Ex-Officio member
For 2011, the composition of the Risk Management Committee has been nominated as follows:
Chairman
Members
: Amb. Raul C. Rabe, Independent Director
: Enrique M. Aboitiz, Jr.
Michelle Lu
EXECUTIVE COMPENSATION POLICY
POLICY
Meritocracy based. This is the corporate compensation philosophy for executive remuneration in ATS.
Commensurate compensation is given based on the annual performance evaluation of its executives. Any
change in compensation is subject to full discussion and concurrence by the Board upon the review and
recommendation of its Board Nomination and Compensation Committee.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
The table of the monthly fixed allowance and per diem per meeting attendance of the ATS Board of
Directors in 2010 is shown below.
Compensation
Monthly Fixed Allowance
Board Meeting Per Diem
Committee Meeting Per
Diem
Director
P80,000
P30,000
P30,000
Chairman of the
Board
P120,000
P45,000
BOARD SELFSELF-ASSESSMENT
In 2009, ATS adopted another corporate governance measure—the Board Self-Assessment Survey. The
goal of the self-assessment survey is to further enhance board performance and thereby strengthen
corporate management. The survey allows the Board and its committees to assess their effectiveness in
governance both as individuals and as a group. The self-assessment also helps the Board to meet
standards and expectations imposed on them by the people they are supposed to serve—investors,
shareholders—as well as regulatory bodies.
49
This year, the same survey was conducted. The results are as follows.
Directors who Participated in
the Survey (9 of 9)
% Participation
Individual
Assessment
Group
Assessment
9
9
100%
100%
The results of the Individual Assessment survey revealed, among others, that all board members have
formally attended the corporate governance seminar and each ensure that principles of good corporate
governance are complied at all times. The board members act in the best interest of the company and its
stakeholders in a manner characterized by transparency, accountability and fairness. They also keep
themselves informed of industry developments and business trends. Each member thinks they have
contributed in formulating the overall strategic direction of the company but believes it can be further
improved.
The results of the Board Performance Assessment survey showed overall satisfaction in board
performance. The board has been described to have an open atmosphere, with members always willing to
discuss any issue that comes up. Within its satisfaction are frequency of board meetings, relevancy of the
agenda and discussion points and the well-prepared, clear, concise and accurate materials that members
receive five days before the scheduled meeting.
Most members of the board have shown preference in a yearly evaluation of the Board, CEO and officers.
They also wish to visit company facilities and encourage managers and line leaders (vs management
executives) to present to the Board for additional insight.
Moving forward, the Board's time and attention should be more focused on the sustainability of each
subsidiary and the Group. This includes cost effectiveness and future profitability, strengthening of
balance sheet and lowering debt as well as the competitive advantages of both the company and the
various industry segments it operates. Discussion should also be centered on risk management, overall
strategic direction and corporate social responsibility.
PRESENTATION OF RESULTS AND ANALYSTS MEETING
The company’s Financial Results is presented to its investors and other interested parties during the
Annual General Stockholders Meeting. This year, it was held at the Mandarin Oriental Hotel in Makati City
on May 27, 2010.
Also, the ATS Investor Relations Office together with selected finance leaders hold Quarterly Briefings
with analysts from various financial institutions to keep them abreast on the performance of the company.
Advance announcements for both these meetings are done through a regulatory release as well as
through the web.
The ATS website www.atsc.com.ph serves as the venue to release the results of business operations that
include the Annual Financial Report, Quarterly Analysts Briefing, SEC filings and PSE disclosures.
Information in the web provides equal access opportunity to all ATS stakeholders and the general public.
50
SOCIAL RESPONSIBILITY
In the pursuit of the mission to become more responsible corporate citizens, efforts of ATS on corporate
social responsibility programs for 2010 were geared towards three (3) main areas: education, social
advocacy and environmental protection and rehabilitation.
CODE OF BUSINESS CONDUCT
The ATS Code of Business Conduct serves to guide employees actions aligned with the company’s
corporate values. The Code consists of policies relating to ethical and legal standards of behaviour that
ATS expects of its employees. Its applicability extends to all the business units in the organization. The
Code explicitly states the corresponding disciplinary actions that include suspension and termination for
violations committed against company policies and the Code.
WHISTLEBLOWING
For several years now, ATS has given its employees the opportunity to access in good faith, thru its
intranet-based Bureaucracy site, key leaders in management when they observe unethical and improper
practices or any wrongful conduct in the organization.
Unethical and improper practices shall mean any act or manner of behaviour that does not conform to the
approved standard of social and professional behaviour covered in the company’s Code of Conduct.
Confidentiality of the whistleblower is maintained to the greatest extent possible to ensure, not just the
integrity of the employee and but of the intranet site as well.
A separate channel is open to employees who want to report observations related to unlawful and/or
criminal acts as well as health and safety violations that pose a threat to the well-being of an employee or
to the security and reputation of the business. This channel is also available in the corporate intranet as
the Security, Safety and Compliance Office Incident Report System (IRS).
CORPORATE GOVERNANCE SCORECARD
While companies are not expressly mandated to comply with recommended best practices on corporate
governance, the “comply-or-explain” approach employed by the SEC and PSE through its Corporate
Governance scorecard and disclosures definitely exerted pressure for companies to comply.
For the past 4 years, ATS has participated in the assessment of corporate governance standards and
practices of publicly listed companies. This is an annual appraisal conducted by the Institute of Corporate
Directors in partnership with the Securities and Exchange Commission.
ATS corporate governance scorecard has improved from its 70% rating in 2007 to 90.3% in 2009 or from a
second quartile ranking up to the Silver Category. The company is waiting for its 2010 scorecard.
The improvement is a testimony of the company’s unwavering pursuit of systemic corporate governance
reforms within the organization.
51
OUTLOOK
For any company, more so for publicly listed companies such as ATS, the practice of good corporate
governance is believed to bring about added shareholder value. Thus, there is a willingness to pay a
premium for well-governed companies.
Under the new management, there is assurance to uphold the same level of commitment to the standards
and principles of good corporate governance. The direction is to lead the business to a healthy and robust
future as businesses become more complex and as markets become more open and global.
FURTHER INFORMATION
The following are available on www.atsc.com.ph/IR/governance
• ATS Corporate Governance
• ATS Articles of Incorporation
• ATS Code of Business Conduct
• ATS By-Laws
• ATS Anti-Money Laundering Statement of Policies & Procedures
INFORMATION TECHNOLOGY GOVERNANCE
The use of Information Technology continues to play a strategic role in the different businesses of ATS. In
2009, new system capabilities were rolled out both the passage and freight business to help maximize
vessel capacity and improve pricing and promotion. A new ticketing channel was also launched for outlets
and partners, allowing them to do book-and-buy and other services via the Internet. For the value-added
business, Radio Frequency scanning was implemented to facilitate cargo tracking and a Disaster Recovery
facility for the SAP system was established. The latter is to boost the confidence level of ATS customers
and principals that business will continue in case of any untoward incident.
Focus was also given to standardize the backroom support processes and systems. All business units
using the Oracle Financial and Human Resource Management modules are now standardized on the 11i
version. Additional Human Resource self-service facilities were also deployed that make services to
employees more efficient and reduce the use of paper forms. This simplifies and improves the backroom
management and support and at the same time contributes to the ‘Green Initiatives’ of ATS.
As changes in technology are constant, ATS adapts to these changes based on the needs of the
organization. Substantial efforts were invested to upgrade the IT infrastructures, which include network,
data center and databases. This is to ensure the high availability of all ATS business applications as well
as to address technology obsolescence.
IT Governance remains a strategic focus area of the organization. Improvements done on the IT Planning
Process, one of the identified priority improvement areas of IT Governance, resulted in a more meaningful
output in 2009. Six (6) high level IT Goals and supporting objectives were outlined in the 2009 Strategic IT
Plan that showed alignment to the corporate strategies. More IT process improvements are underway
that will further benefit the business. This includes the areas of IT Service Delivery, Information Security,
Software Quality Assurance, IT Continuity Management and Innovations that will create new revenue
channels for the business.
52
To further strengthen the governance structure, the newly formed Strategy Committee will serve as a
venue to discuss the effective use of technology and major IT investments. This will ensure that all future
IT initiatives and directions are consistently aligned to the business and, thus, deliver their maximum
value to the organization.
ENTERPRISE WIDE RISK MANAGEMENT PROGRAM
To be able to carry on contributing to a resilient ATS, management and employees need a deeper
understanding of precisely what the key threats are to our stability.
We carry on to raise risk awareness in ATS through the cascade of Enterprise Risk Management (ERM)
program and concepts, across the company from the vessel officers and crew down to the boarding
officers and container yard personnel. ERM is also part of the training program and corporate orientation
for the new employees to make sure that risk management is embedded into the culture of ATS.
In 2009, we continued to focus on addressing operational risks. We have identified the following as the
Top 20 Risks of ATS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Crew Shortage
Improper handling of dangerous goods
Economic downturn
New competition and capacity influx
Business loss or interruption
Loss of network and IT systems
Sabotage
Theft of sensitive information
Loss of key equipment
Loss of key facilities
Workplace safety
Fire
Health epidemic
Delay during drydocking
Hijacking
Terrorist activities
Lack of security culture
Passenger safety
Vessel Engine Breakdown
Misdeclaration of Cargoes
Risk awareness is not enough unless it results in tangible action. In 2009, Risk response and mitigation
programs were implemented focusing on the top 20 risks.
Preparedness also means business must have the right systems and processes in place. We continue to
focus on improving our Emergency Response and Disaster Recovery Plans that we have implemented in
passage and freight business units. In 2010, we will embark on Business Continuity Management.
53
Putting in place effective business continuity management will help ATS get back to business following
disruptions that are beyond our control. At present, we have a contingency plan in place to cover
interruption that could hit bottom line profits.
The ATS ERM approach focuses on approaching risk as an opportunity. It is all about seizing the
opportunity to grow, develop and maintain our foothold in the industry by being prepared for most
uncertainties. Whether it is to Avoid, Mitigate, Transfer, Hedge, Retain or Share in risks.
ATS maintains its direction that ERM is a firm wide responsibility with all employees expected to
contribute their share thereby creating a "risk culture" in ATS. All employees are expected to have high
levels of risk awareness ensuring that everyone is proactive in identifying and managing risks within their
responsibilities as well as those affecting the department and corporate objectives. Using this approach,
ATS embeds into the ATS culture that Risk Management is not just the responsibility of Top Management
or specialist but it is a shared responsibility of every ATS employee.
In 2009, the ERM program has already put into place Policies, Procedures and Projects to mitigate risks
bringing the program closer to the Established Phase of the ERM Model. The approved and implemented
Risk Management Policy Statement now covers:
1. Policy on who is responsible for managing risks and support available
2. Strategic Business Unit (SBU) Accountabilities and Responsibilities
3. Employees Training
4. Risk Management as part of CBS / KRA / KPI (employee performance assessment tools)
5. Risk Communication
6. Risk Reporting
7. Guidelines on what maybe considered as Acceptable Risks
8. Guidelines in closure of Risks
9. Risk Analysis
10. Review of Contracts
Risk Management is also incorporated as part of the Competency Based System of ATS employees. We
have implemented the guidelines as to the level of competency required for each employee level and
corresponding trainings and activities said employee should attend and focus on.
We have also launched the Risk Management Portal as part of the company’s Intranet system.
The next phase for 2010 shall focus on monitoring and addressing the identified Top 20 risks. Each
Business Unit will continue to monitor their own respective risks and the corresponding programs and
projects identified as Risk Response. The Risk Management Committee on the other hand will monitor the
ATS-wide ultra risks with each SBU providing quarterly updates. Implementation of the ERM program will
also be implemented across the Transport Group. Thus by end of 2010, it is expected that ERM be fully
established.
The ERM program has provided ATS with the necessary tools to be more resilient in the face of a very
difficult 2009. Though unfortunate, past events have opened the eyes of the Company to possible risks and
uncertainties in the future and the ERM program shall be one of the guides that will empower ATS to full
recovery.
54
Continued focus and attention on raising risk awareness, encouraging tangible risk management action
and engaging through greater risk partnership by embedding risk management into the culture of the
Company will make ATS more resilient and more confident about facing the future.
AUDIT COMMITTEE REPORT
The Board Audit Committee (AudCom) is an independent operating body directly reporting to the Board of
Directors. It assists the Board in the carrying out its functions by providing an oversight role in ensuring
the integrity of the company’s financial reports, its compliance with regulatory requirements, and the
performance of the company’s internal audit function.
The AudCom maintains an effective working relationship with the Board by providing them information
necessary in making good governance and audit-related decisions.
MEMBERSHIP
The Board Audit Committee is composed of three (3) Directors and two (2) Ex-Officio members. Prior to
the ATS buyout by Negros Navigation Company on December 28, 2010, the Board AudCom members are
as follows:
Washington Z. Sycip, Chairman, Independent Director
Sabin M. Aboitiz, Director
Justo A. Ortiz, Director
Stephen G. Paradies, Ex-Officio
Lilian P. Cariaso, Ex-Officio
55
Under the new ownership, the Board AudCom for 2011 has been appointed and named as follows:
Francis C. Chua, Chairman, Independent Director
Michelle Lu, Director
Mark Williams, Director
Geoffrey Seeto, Ex-Officio
Evan McBride, Ex-Officio
MEETINGS
The Board AudCom held three (3) meetings in 2010. All meetings were attended by the AudCom members.
Committee
Member
Washington Z. Sycip
Sabin M. Aboitiz
Justo A. Ortiza
Feb 25
July 29
Nov 25
In its first meeting for the year, the AudCom reviews, discusses and endorses for Board approval the
previous year’s Audited Financial Statements of ATS presented by the company’s external auditing firm.
The following are likewise presented to the AudCom in February—the general assessment of the
company’s internal control system and the internal audit plans and programs for the year.
In subsequent meetings, internal audit reports are presented and discussed extensively. For 2010,
discussion highlights were focused in the areas of vessel and passenger safety and security as well as
new systems-related audits particularly the implementation of SAP in its supply chain businesses.
The selection and approval of the external auditor for the year is agreed upon and endorsed to the Board
during the AudCom’s midyear meeting.
GENERAL ASSESSMENT OF INTERNAL CONTROLS
The framework of control, risk management and governance processes is generally sound, adequate and
working effectively within the ATS group of companies.
The culture of accountability is apparent with the general adherence of employees to management
policies and directives in order to achieve company objectives.
The internal control system is effectively designed to safeguard assets; to secure the relevance, reliability
and integrity of information and as far as possible the completeness and accuracy of records; and to
ensure compliance with statutory requirements.
For 2010, while most business units posted increases in their audit ratings compared to the previous year,
the less-than-satisfactory results of the supply chain finance and SAP systems audits pulled down the
total group average rating.
Various measures are being undertaken by management including organizational restructuring across all
business units to allow streamlining of functions for the effective execution of responsibilities.
56
Continuous enhancement of performance metrics, strict implementation of KPI monitoring, and speedy
resolution of audit issues raised are likewise given focus to assure company objectives are met.
Moving forward, ATS management is responsible in maintaining the internal control system and ensuring
that resources are properly applied in the manner and to the activities intended.
The AudCom is pleased to note that the business units have been proactive in addressing
recommendations with regards to the enhancement of the internal control environment.
RISK MANAGEMENT
Risk management is fast becoming an ingrained concept and way-of-life in the organization. However, the
establishment of a comprehensive Business Continuity Plan remains a major area that needs top
management support and directive to see it to fruition.
CORPORATE GOVERNANCE
Good corporate governance is practiced not because it is required by law but because it promotes ATS
core values of transparency, openness, and accountability. For ATS, corporate governance and a valueoriented management are pillars of business resilience.
ATS’ adherence to good business practices is evidenced by the results of the annual nationwide corporate
governance scorecard conducted by the Institute of Corporate Directors. From a 70% rating in 2007, the
ATS score has improved to 90.3% (Silver Category).
EXTERNAL AUDIT
In July 2010, the AudCom endorsed for Board approval the renewal of SGV and Company (SGV) as the
company’s external auditor for the year 2010.
SGV and Co, the external auditor of ATS, provided an overview of the audit work to be conducted for the
2010 statutory audit during the November AudCom meeting. The audit work focused mainly on audits of
internal controls and how these safeguard the financial reporting including the financial statements of the
company.
Noteworthy, in compliance with corporate governance policy, SGV reported during the November 2010
meeting, that it will be replacing its Lead Financial Audit Partner, Ladislao Z. Avila, in 2011 as it is his fifth
year as SGV partner assigned to ATS.
2010 FINANCIAL RESULTS
During the period covered by this report, the new Board AudCom concurred with the opinions expressed
by ATS’ external Auditor, SGV and Company, on the overall presentation of the financial statements of the
company.
The audit also included an evaluation of the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management.
57
The audit concluded that the balance sheets and the related statement of income and expenses, cash
flows, changes in capital and reserves present fairly, in all material aspects, the financial position of ATS.
Based on the judgment about quality of accounting principles, SGV disclosed that the accounting
principles used by ATS are in compliance with the Philippine Financial Reporting Standards. Significant
accounting principles are disclosed in the notes to the financial statements, as required by the standards.
INTERNAL AUDIT
In accordance with established Standards and Code of Ethics of the profession, the Internal Audit
Department (IAD) continually strives to improve the proficiency, effectiveness and quality of the Internal
Audit activities.
The IAD reported to the Board AudCom, in its meeting held February 25, 2011, the annual general
assessment of the company’s compliance and procedures. Highlights on the validation of the operational
effectiveness of key activities and controls within these policies and procedures were likewise presented.
The assessment focused on policies and procedures relating to processes in finance, operations, and IT
systems. A summary update on management action plans for audit issues raised requiring follow-up was
also presented.
The accomplishments realized by IAD in 2010 were not without difficulties. There were a number of
constraints and limiting factors such as unfilled manpower plantilla and underestimated number of
mandays to cover engagements for first-time audits and new auditable units.
Despite above operational challenges and with available resources at hand, IAD continued to deliver its
value-adding services to help improve operations; to serve the shareholders and management of ATS; to
partner with the business units in enhancing current performance and future competitiveness, and to
supply a source of future management talent and be an active participant in the improvement of ATS.
APPROVAL
Approved by the ATS Board Audit Committee and signed on its behalf by:
Mr. Washington Z. Sycip
Chairman, ATS Board Audit Committee
58
PART V - EXHIBITS AND SCHEDULES
Item 13. Exhibits and Reports on SEC Form 1717-C
a) Exhibits - See accompanying Index to Exhibits
The exhibits, as indicated in the Index to Exhibits are either not applicable to the Company or require
no answer.
b) Reports
Reports on SEC Form 1717-C
During the last six months of CY 2010, the Company filed the SEC 17-C report. The list of the reports
submitted to the Commission is as follows:
Date of
Report
Dec 28
Dec 28
Title of Report
Closing of AEV and ACO sale of ATS shares to
NENACO
Closing ATS sale of shares in ABOJEB group to AEV
and ACO
Item No.
1
2
Dec 28
Resignation and appointment of BOD and Officers
4
Dec 01
Sale of AEV and ACO shares in ATS to NENACO
BOD approval on the sale of ATS shares in ABOJEB
group to AEV/ACO and cash dividend declaration
BOD approval on ATS’ additional subscription to
SFFC
Results of Operation for the quarter ended
September 30, 2010
SEC approval of ATS’ Amended AOI
SEC approval on ATS-RVSI merger
Results of Operation for the quarter ended June 30,
2010
Appointment of new OIC
Stockholders approval on ATS-RVSI merger
SEC approval on ATS-RVSI merger
1
Dec 01
Nov 12
Nov 03
Sep 03
Aug 18
Aug 04
Jul 22
July 15
July 12
2
Item Title
Changes in Control
Acquisition or disposition of
assets
Resignation, removal of
registrants directors
Changes in Control
Acquisition or disposition of
assets
9
Other events
9
Other events
9
9
Other events
Other events
9
Other events
9
9
9
Other events
Other events
Other events
59
ABOITIZ TRANSPORT SYSTEM (ATSC) CORPORATION
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
FORM 17 - A, Item 7
Consolidated Financial Statements
Statement of Management’s Responsibility for Financial Statements
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 2010 and 2009
Consolidated Statements of Income for the years ended December 31, 2010,
2009 and 2008
Consolidated Statements of Changes in Stockholders’ Equity for the years
ended December 31, 2010, 2009and 2008
Consolidated Statements of Cash Flows for the years ended December 31,
2010, 2009 and 2008
Notes to Consolidated Financial Statements
Supplementary Schedules
Report of Independent Public Accountants on Supplementary
Schedules
Marketable Securities - (Current Marketable Equity Securities and Other
Short-Term Cash Investments)
B. Amounts Receivable from Directors, Officers, Employees, Related
Parties and Principal Stockholders (Other than Affiliates)
C. Non-Current Marketable Equity Securities, Other Long-Term
Investments, and Other Investments
D. Indebtedness to Unconsolidated Subsidiaries and Affiliates
E. Property, Plant and Equipment – at cost
E.1. Land
E.2. Buildings & Warehouses
F. Accumulated Depreciation – at cost
G. Other Noncurrent Assets
H. Long - Term Debt
I. Indebtedness to Affiliates and Related Parties (Long - Term Loans
from Related Companies)
J. Guarantees of Securities of Other Issuers
K. Capital Stock
L. Dividendable Retained Earnings as of December 31, 2009
A.
•
*
*
*
These schedules, which are required by Part IV(e) of SRC Rule 68, have been omitted because they
are either not required, not applicable or the information required to be presented is included in the
Company’s consolidated financial statements or the notes to consolidated financial statements.
1
60
EXHIBIT 18. SUBSIDIARY OF THE REGISTRANT
ABOITIZ TRANSPORT SYSTEM (ATSC) CORPORATION has consolidated subsidiaries that are wholly-owned
namely:
Name
Jurisdiction
Aboitiz One, Inc.
(Incorporated on January 28, 1988)
Philippines
Aboitiz Jebsen Bulk Transport Corporation
(Incorporated on May 12, 1966)
Philippines
Jebsens Maritime, Inc.
(Incorporated on January 02, 1970)
Philippines
Aboitiz Jebsens Manpower Solutions, Inc.
(Incorporated on May 31, 1994)
Philippines
Jebsen Management (BVI) Limited
(Incorporated on August 27, 1999)
British Virgin Islands
Supercat Fast Ferry Corporation
(Incorporated on June 20, 2001)
Philippines
Zoom In Packages, Inc.
(Incorporated on June 06, 2002)
Philippines
61
62
50,636
50,636
Advances to officers and employees P
P
Name and Designation of Debtor
(in thousands)
Balance at
Beginning of
Year
P
P
421,658
421,658
(in thousands)
Additions
P
P
(432,880)
(432,880)
P
P
(11,649,341)
(11,649)
Deductions
(in thousands)
(in thousands)
Amounts
Amounts
Collected
Written-Off
P
P
27,764
27,764
(in thousands)
Current
P
P
-
(in thousands)
Noncurrent
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule B - Amounts Receivable from Directors, Officers, employees, Related Parties and Principal Stockholders (Other than Affiliates)
DECEMBER 31, 2010
P
P
27,764
27,764
(in thousands)
Balance at
End of
Year
P
117,531
26,673
116
At FMV:
Aboitiz Equity Ventures
PLDT
11,000
5,500
34
24,440
4,894
44,873
P
Amount in
Pesos
At Equity:
ABOITIZ PROJECTS TS CORP.
HAPAG LLOYD
MCCP
At Cost:
Harbor Center
Manial Polo Club
Others
Name of Issuing Entity and
Description of Investment
BEGINNING BALANCE
P
P
40,207
0
7,596
0
32,611
0
Equity in
Earnings (Losses)
of Investees
for the Year
P
P
ADDITIONS
0
5,428
5,428
Others
P
P
0
0
0
0
Distribution of
Earnings by
Investees
P
P
DEDUCTIONS
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule C - Noncurrent Marketable Securities, Other Long-term Investments in Stock and Other Investments
DECEMBER 31, 2010
(18,379) P
(6,739)
(45)
(4,894)
0
(1,200)
(5,500)
0
Others
0
0
0
P
P
Number
Shares
of Principal
Amount of
Bonds and Notes
2
ENDING BALANCE
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule D - Indebtedness of Unconsolidated Subsidiaries and Affiliates
DECEMBER 31, 2010
(in thousands)
Beginning
Balance
Name of Affiliate
Aboitiz & Co.
(in thousands)
Ending
Balance
P
P
Aboitiz Construction Group, Inc. - Metaphil Div..
Aboitiz Construction Group, Inc. - Gorones Division
Aboitiz Container Services Incorporated
Aboitiz Equity Ventures
21
Aboitiz Haulers Inc.
Aboitiz Marketing/T.S
Aboitiz Project/T.S. Corporation
554
14,738
Aboitiz Sea Forwarding Corporation
Abotrans Brokerage Corporation
Aboitiz Transaport System
Davao Light Power
Fil-Am Foods, Inc.
-
J&A Services
Jardine Aboitiz Int'l Forwarders Inc.
Pilmico Foods
Pilmico/Prosperity
Pilmico - Mauri Foods Corporation
-
Reefer Van Specialist, Incorporated
Refrigerated Transport Services Inc.
Cox Trucking
Supercat Fast Ferry Corp.
Total Distribution Logistics, Inc.
-
Zip Inc.
Aboitiz One Inc.
Hapag-Llyod Philippines, Inc.
Kerry - Aboitiz Logistics Inc.
1,348
5,120
AJFE-HLB
Brinkness SA-HLB
Phil Fast Ferry Corporation
362
STI
2,523
4,211
Jebsen Maritime Inc.
Jebsen Management (BVI) Limited
Others
2,059
P
6,867
P
24,070
Ships in operation and improvements
Containers
Handling equipment
Flight equipment
Furniture and equipment
Land and improvements
Buildings and warehouses
Leasehold improvements
Transportation equipment
Ships under refurbishment and construction in progress
Classification
P
P
5,811,314
1,473,737
1,232,955
50,623
741,088
448,538
211,873
369,539
268,238
72,190
10,680,095
P
P
Beginning
Balance
(in thousands)
3,695,332
3,300,429
35,670
97,450
150
65,897
1,298
33,972
4,073
43,813
112,579
Additions at
Cost
(in thousands)
P
P
(632,322)
(482,614)
(57,077)
(279)
(1,561)
(25,046)
0
(2,358)
(1,387)
(62,000)
0
Retirements/
Disposals
(in thousands)
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule E - Property, Plant and Equipment
DECEMBER 31, 2010
P
P
(358,682)
(62,032)
112,443
(55,887)
13,598
(163,417)
(18,984)
(75,291)
54,523
(49,643)
(113,991)
Other ChangesAdditions
(Deductions)
(in thousands)
P
P
13,384,425
8,567,097
1,564,774
1,274,239
62,810
618,522
430,852
168,197
426,747
200,409
70,777
Ending
Balance
(in thousands)
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
SCHEDULE E.1 - LAND
DECEMBER 31, 2010
Classification
Lot No.
Location
Bacolod City
Pulupandan, Negros Occ.
TCT
No.
Area in
Sq. m.
T-264558
T-264548
T-264559
7562
4200
1298
T-82859
3000
J.Pacana St.Macabalan
District Cagayan de Oro City
1982-B-6-B-2 LRC
Psd-82986
T-21618
10000
NHA Road Macabalan District
Cagayan De Oro
3,Block 5
Pcs-104305-001062
T-80254
9010
Capicor
Puntod, Cagayan de Oro City
Lot 1827-A-3 & Lot 1831
Sasa, Davao City
14-B-2-C-B-LRC
Psd-261654
14-B-2-C-B-LRC
Psd-248042
14-B-2-C-4 LRC
Psd-240842
14-B-2-C-5-C-1
Psd-004359
14-B-2-C-5-D-2
Psd-11-004293
14-B-2-C-5-C-2
Psd-0004359
14-B-2-C-5-B-4-B
Psd-11-005045
14-B-2-C-5-B-4-B
Psd-11-005045
14-B-2-C-5-C-3
Psd-11-004359
14-B-2-C-5-B-2
Psd-11-004056
14-B-2-C-5-B-6
Psd-11-004056
14-B-2-C-5-B-3
Psd-11-004056
14-B-2-C-5-B-5
Psd-11-004056
14-B-2-C-5-A-2
Psd-11-003907
14-B-2-C-5-A-3-B
Psd-11-013667
14-B-2-C-5-A-3-C
Psd-11-013667
14-B-2-C-5-A-3-D
14-B-2-C-5-A-3-A
Psd-11-013667
14-B-2-C-5-A-5-B
Psd-11-023550
14-B-2-C-5-A-4
Psd-11-003907
5th Avenue, Davao City
P
45,172,379.48
24,575,376.06
7,594,961
P
Ending
Balance
45,172,379
24,575,376
7,594,961
1
1
735,717
735,717
8,486,810
8,486,810
10000
117,058,211
(20,100)
117,038,111
T-65709
2,204
192,243
192,243
T-65711
2,938
256,265
256,265
T-65710
4,424
385,881
385,881
T-71658
881
76,845
76,845
T-65708
11,566
1,008,838
1,008,838
T-71659
885
77,194
77,194
T-141876
431
37,594
37,594
T-141921
431
37,594
37,594
T-110115
905
78,938
78,938
T-110117
334
29,133
29,133
T-141877
879
76,670
76,670
T-141875
853
74,402
74,402
T-146983
884
77,106
77,106
T-142956
858
74,839
74,839
T-141841
218
19,015
19,015
T-141842
217
18,928
18,928
T-141843
216
18,840
18,840
T-141840
219
19,102
19,102
T1-142957
743
64,808
64,808
T-142955
272
30,358
23,725
23,725
562-B-2-B-3-B2
T-899506
2,844
248,066
248,066
449-A
Psd-8634
T-134459
2,249
196,168
196,168
T-18397
750
36,201
65,418
65,418
Lot C-1
Psd-11-000485
T-90486
1000 sq.m.
#
1,151,438
1,151,438
Lot C-4
Psd-11-000485
T-90487
1000 sq.m.
#
1,151,438
1,151,438
Lot C-5-a
Psd-11-000812
T-90488
1000 sq.m.
#
1,151,438
1,151,438
449-B
Barrio Lagao,General Santos
Other ChargesAdditions
(Deductions)
Acquisition
Cost
Sabayle St., Port Area
Iligan City
Lot C-5-b
Psd-11-000812
T-90850
562 sq.m.
#
647,108
647,108
Lot C-5-c
Psd-11-000812
T-90851
5000 sq.m.
#
5,757,191
5,757,191
Lot C-2
Psd-11-000485
T-91172
1000 sq.m.
10,562 sq.m
#
1,151,438
1,151,438
Lot 1A
Psd-2-007978
T-59710
200 sq.m.
1,726,684
1,726,684
Lot 1B
Psd-2-007978
T-59709
275 sq.m.
475 sq.m.
2,374,191
2,374,191
2808-A
Psd-12-004501
T-22713
1410
197,872
197,872
2808-B
Psd-12-004502
T-22712
1410
197,872
197,872
2808-C
Psd-12-004503
T-23111
1410
197,872
197,872
T-22714
1410
5640
197,872
197,872
86,727
20,910
86,727
20,910
6,927,243
6,927,243
24,832
24,832
Cabili Avenue Extension,Saray
Iligan City
2808-D
Psd-12-004504
Port Area, Poblacion iligan City
Psd-39445
Psu-123817
T-18018
T-18019
618
149
767
Lapuz La Paz District Iloilo
1 LRC
Pcs-24506
T-53107
10000
Anselmo Bernad Ave.Manabay
Maningcol, Ozamis City
667-C LRC
Psd-248564
T-8805
609
666-A LRC
Psd-223707
T-8804
4878
198,900
198,900
Pcs-10-000118
T-8934
1406
6893
57,330
57,330
220-A LRC
Psd-30811
T-55806
2000
68,575
68,575
253-B-2
Psd-09-014468
T-94-204
7791
9791
267,133
267,133
Libertad, Butuan City
1-A
Psd-10-005088
RT-15911
7000
700,661
700,661
Gen.Maxilom Cor.1st Ave. P-4
Cebu Port,Cebu City
Consist of 4 contiguous lots
T-4039
T-4040
T-1353
T-4041
1702
1610
1610
1619
6541
1,962,563
1,856,478
1,856,478
1,866,856
1,962,563
1,856,478
1,856,478
1,866,856
T-2134
T-2137
3034
480
3514
813,751
813,751
Pier 4 ATS
1506
29,737,500
Cebu City 1,506 SQM. LAND-PIER 4 ATS CEBU PROPERTY ACQUIRED FROM ABOITIZLAND BY WAY OF ASS
29,737,500
Baliwasan District
Zamboanga City
P-4,Reclamation Area
Cebu City (Gothong)
AONE LAND
TOTAL
9,762,943
P
280,043,799
9,762,943
P
P
(20,100)
P
280,023,699
2
Iligan City
Gen. Santos
Cebu
Location
77
Warehouse No. 2
Sabayle St. Port Area
Cabili Avenue Extension
Barrio Saray, Iligan City
Cabili Avenue Extension
Barrio Saray, Iligan City
440
197
Shop
Warehouse
53
1050
1000
Office Building
Warehouse
Office Building
Warehouse
Barrio Labangal, Nat'l Highway
7
Generator House
From Aboitiz
19
Storeroom / Comfort Room
Makar Wharf
703
Warehouse & Office Bldg
221
Covered Shed
Labangal, Gen San
30
CY Office Building
2184
487
Warehouse
Warehouse
139
Office Building
Makar Wharf
Barrio Labangal, Makar
General Santos City
1,025,218.80
121,393.43
1,683,341.71
756,233.07
7,579,645.69
4,775,830.00
3,175,083.47
5,941.75
16,127.60
596,721.17
1,853,825.09
187,589.44
25,464.63
413,375.83
117,986.12
-
Motorpool Building and Warehouse at CY1 Premises
203,631.36
7,657,929.36
20,454.55
1.00
128,776.57
2,399,060.87
Beginning
Balance
-
Cebu Port Center
Gothong Bldg
216
Floor
Area
sq.m.
Warehouse No. 1
Description
ATS Building Renovation/Office
conversion to Container office
asset swapped w/ Acoland
P4, Reclamation Area
Gen. Maxilom cor 1st Avenue
Pier 4, Cebu Port, Cebu City
Address
44,708.48
48,665.18
553,125.00
2,866,448.23
Additional
Cost
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
SCHEDULE E.2 - BUILDINGS AND WAREHOUSES
DECEMBER 31, 2010
-
Retirements
-
109,212.25
(109,212.25)
148,023.35
1,670,842.05
(152,984.91)
Other ChargesAdditions
(Deductions)
Ships in Operation and Improvements
Containers
Handling Equipment
Flight equipment
Furniture and Equipment
Land and Improvements
Buildings and Warehouses
Leasehold Improvements
Transportation Equipment
Ships under Refurbishment and Construction In Progress
Description
2,220,007
1,331,612
1,127,309
50,623
578,843
76,927
145,779
211,984
119,455
0
5,862,538
P
P
Beginning
Balance
(in thousands)
P
P
1,281,755
1,034,920
21,316
48,509
666
79,721
12,854
14,404
37,442
31,923
0
Additions
Charged to Costs
and Expenses
(in thousands)
P
(460,778)
(354,192)
(32,040)
(197)
(1,553)
(25,177)
0
(1,717)
0
(45,902)
0
Retirements/
Disposals
(in thousands)
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule F - Accumulated Depreciation
DECEMBER 31, 2010
P
566,641
616,554
74,556
(37,645)
12,528
(106,726)
0
(38,953)
15,984
30,344
0
Other ChangesAdditions
(Deductions)
(in thousands)
P
P
3
7,250,156
3,517,288
1,395,444
1,137,976
62,264
526,661
89,780
119,513
265,410
135,820
0
Ending
Balance
(in thousands)
Software development costs
Deposits receivable and others
Pension assets
A.
B.
C.
Description
DECEMBER 31, 2010
P
P
375,030
67,589
195,314
112,127
Beginning
Balance
(in thousands)
P
138,932
134,533
4,399
Additions
At Cost
(in thousands)
P
(78,718)
(7,292)
(71,426)
P
-
Deductions
Charged to
Charged to
Costs
Other
and Expenses
Accounts
(in thousands)
(in thousands)
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule G - Other Noncurrent Assets
P
-
Other ChangesAdditions
(Deductions)
(in thousands)
P
4
435,244
60,297
329,847
45,100
Ending
Balance
(in thousands)
Obligation under capital lease (Interpool)
Bank loans (Various banks)
Title of Issue and
Type of Obligation
P
P
1,987,336
P
2,024,793
1,979,107
8,229
P
Amount Shown Under Caption
"Current portion of long-term debt"
in Related Balance Sheet
(in thousands)
45,686
1,979,107
Amount
Authorized by
Indenture
P
P
37,457
37,457
Amount Shown Under Caption
"Long-term Debt" in Related
Balance Sheet
(in thousands)
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule H - Long-term debt
DECEMBER 31, 2010
`
5
ABOITIZ TRANSPORT SYSTEM CORPORATION (FORMERLY WILLIAM, GOTHONG & ABOITIZ, INC.) AND SUBSIDIARIES
Schedule I - Container Lease
DECEMBER 31, 2010
Batch
In US ($) Purchase
Option Per Unit
In US ($)
Rate/Day
Period of
Lease
1.00
$8.96
7 years
Jun 2015
1.00
$5.00
2 years
Feb 2011
7 years
Jul 2017
Units
Van Size
Lease 1
47
20ft
$
Lease 2
22
20ft
$
Lease 3
30
20ft
$
1.00
$
8.93
Lease End
Date
ABOITIZ TRANSPORT SYSTEM (ATSC) CORP.
12/F Times Plaza Bldg., cor. Taft, UN. Ave., Ermita Manila
STATEMENTS OF RETAINED EARNINGS AVAILABLE
FOR DIVIDEND DECLARATION
DECEMBER 31, 2010 and DECEMBER 31, 2009
(Amount in Philippine Currency )
2010
Unappropriated Retained Earnings, Beginning, as adjusted to available for
dividends distribution
Add: Net income actually earned/realized during the period
Net income (loss) during the period closed to Retained Earnings
Less: Non-actual/unrealized income net of tax for the period/accumulated
Tax benefit (Deferred Tax Asset) during the period
Other unrealized gains or adjustments to the retained earnings as a result of certain
transactions accounted for under the PFRS, negative goodwill
Sub-total
Non-actual losses
Accretion of interest on RPS under PAS 39
Unrealized foreign exchange gain - net (except those attributable to Cash and Cash
Equivalents) in 2004 realized in 2008
Sub-total
2009
1,288,642,944.67
677,710,280.89
(1,073,359,294.51)
479,544,768.19
(271,568,241.86)
117,875,882.40
(1,344,927,536.37)
597,420,650.59
Add:
Add(Less): Movement during the period
Treasury shares
TOTAL RETAINED EARNINGS, END, AVAILABLE FOR DIVIDEND
13,512,013.19
13,512,013.19
13,512,013.19
13,512,013.19
(42,772,578.51)
1,288,642,944.67
3
4
SyCip Go rres 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
SEC Accreditation No. 0012-FR-2
INDEPENDENT AUDITORS’ REPORT
REPORT
ON SUPPLEMENTARY SCHEDULES
The Stockholders and the Board of Directors
Aboitiz Transport System (ATSC) Corporation
12th Floor, Times Plaza Building
United Nations Avenue corner Taft Avenue
Ermita, Manila
We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Aboitiz Transport System (ATSC) Corporation and Subsidiaries for the years ended
December 31, 2010 and 2009 included in this Form 17-A and have issued our report thereon dated
March 2, 2011. 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 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 68.1 and SEC
Memorandum Circular No. 11, Series of 2008 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 financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Ladislao Z. Avila, Jr.
Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-2
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2009,
June 1, 2009, Valid until May 31, 2012
PTR No. 2641503, January 3, 2011, Makati City
March 2, 2011
5
A member firm of Ernst & Young
Global Limited