1. No category

COVER SHEET
1 5 2 6 6 1
SEC Registration Number
C I T Y
&
L A N D
D E V E L O P E R S ,
I N C .
(Company’s Full Name)
1 5 6
H . V .
D E L A
C O S T A
S T . ,
,
S A L C E D O
V I L L A G E ,
MA K A T I
C I T Y
(Business Address: No. Street City/Town/Province)
1 2
Month
Rufina C. Buensuceso
893 – 6060
Contact Person
Company Telephone Number
3 1
Day
1 2 - 1 (A)
FORM TYPE
Month
Fiscal Year
Day
Annual Meeting
(Secondary License Type, If Applicable)
C F D
Dept. Requiring this Doc.
Amended Articles Number / Section
Total Amount of Borrowings
Total No. of Stockholders
Domestic
Foreign
----------------------------------------------------------------------------------------------------------------------To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAM PS
Remarks = pls. use black ink for scanning purposes
SECI]RITIES AIID EXCHANGE COMMISSION
sEcFoRM12-l(A)
REGISTRATION
STATEMENT
I]NDERTIIE SBflruTIES REGIJLATION
CODE
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SECIdentificationNumber
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152661
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2. CITY & LAND DEVELOPERS.
INCORPORATED
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Exactnameofregistrant as specifiedin its character
4. 000-44+u0
3. MAKATI CITY.PHILIPPINES
Province,country or otherjurisdiction of
incorporationor organization
BIR Tax IdentificationNumber
5. REALESTATEDEVELOPER
Generalcharacterofbusinessof reeistrant
6. Industry
Classification
Code:I II,
IlSeCUseonly)
7. 3F CitylandCondominium10Tower 1, 156H.V. DelaCostaStree! SalcedoVillage, MakariCity
1226
Telephone
No.: (632)893-6060
FAxNo.:(632)892-86s6
Address, including postal code, telephone number, FAX number including area code of
regisfaot'sprincipal office
If registrantis not residentin the Philippines,or its principal businessis outsidethe Philippines,
statename and addressincluding postal code, telephonenumber and FAX number, including
areacodeand email addressof residentagentin the Philippines.
9. FiscalYear Ending Date (Month and Day) : December31
COMPI'TATION OF REGISTRATION FEE
Title of eachclass.of securitiesto be Amormt to be resistered
registered
ShortTerm ComrnercialPapers
Php 200,000,000
l% Legal ResearchFee
Total
Amount of
registation feo
Php200,000
2.000
-----tbp292,9ao
NNALPROSPECTUS
CITY & TAITDDEVELOPERS,INCO
(A corporationorganizedunderPhilippine laws)
Registrationof PhilippinePesoPhp200,0Q0,000
Short-TermCommercialPapers
CW A, Land Developers, lncorporated
(hereinafter referred to as "CLDI", the
"Company" or
"Issuet') is offering for
public sale at face value, up to
Php200,000,000worth of its Short-Term
CommercialPapen (hereinafterr€ferredto as
"STCPs" or the "Ofiered STCPsl to be
tradedover-the-counter
Thedateof thisProspectus
is September
2, 2013
..ALL REGISTRAflON REQT]IREMENTS IIAVE BEEN MET
AND ALL INFORMAIION CONTTiUI\IEDHT]RENYARD TRUE
AI\[DCI'RRENT'
CITY & LAND DEVELOPERS, INCORPORATED
Registrant
By:
SLJBSCRIBED.AND
SWORNto beforeme irl\l,Wti/tity
on
sEP0 220tt
affiant personally appearedand orhibited his SSS ID with No. 3
competentevidenceof identification.
Doc. No. os :
PageNo. _..r09_;
BookNo, f :
Series
of 2013.
: FORMANILA
I/BER31.2014
44239
PTRNo.1401379/1-3-13/Manila
lBPNo,07884/Lifetirnerl-eguna
5'17-519
Parectes
QLrintin
Sf
Binondo,Maniia
Republic of the Philippines
Deparmentof Finance
Securities
and ExchangeCommission
SECBuilding,
EDSA,
Greenhills,
lrandaluyong
City
@RrcRATION FWENCEDEPARTMENT
SEC-C|DORDERNO.
5 .^ ' ' c o F
ts(
Joto
INTHEMATTER
OF
CITY& tAND DEVEI.OPERS.
INCORPORATED
Registrotion
of Securifies
- Registroni-
ORDER
Upon considerotionof the Registroiion
Slotemenlond olher popersond documents
oiiqched ihereto which were filed on beholf of CITY& LANDDEVEIOPERS,
|NCORPORATED,
lhe Commissionresolvedto render effeclive ihe some for the regisirolionof Two Hundred
Mllllon Pesos(P 200,000,000.00)
worlh of shod-fermcommerciol popers, in occordonce with
l2
the
Seciion of
Securities
RegulolionCode ond ilslmplemenlingRulesond Regulotions.
Let o Ceriificole of Permilto Offer Securitiesfor Solebe issuedin fovor of lhe subjeci
compony ouihorizingthe soleond dislribution
of lhe oforemenfionedsecurilies.
SOORDERED.
EDSA,
MondoluyongCity,Philippines,
September2. 2013.
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RISK DISCLOSURE STATEMENT
General Risk Warning
The price of securities can and does fluctuate, and any individual security may experience
upward or downward movements, and may even become valueless. There is an inherent risk that
losses may be incurred rather than profit made as a result of buying and selling securities.
Past performance is not a guide to future performance.
There is an extra risk of losing money when securities are bought from smaller companies.
There may be a big difference between the buying price and the selling price of these securities.
An investor deals in a range of investments each of which may carry a different level of risk.
Prudence Required
This risk disclosure does not purport to disclose all the risks and other significant aspects of
investing in these securities. An investor should undertake his or her own research and study on
the trading of securities before commencing any trading activity. He / she may request
information on the securities and the issuer thereof from the Commission which are available to
the public.
Professional Advice
An investor should seek professional advice if he or she is uncertain of, or has not understood
any aspect of the securities to invest in or the nature of risks involved in trading of securities
specially those high risk securities.
CITY & LAND DEVELOPERS, INCORPORATED
(A corporation organized under Philippine laws)
Registration of Php 200,000,000 worth of Short-Term Commercial Papers for public sale at face
value.
The Company is registering Php 200,000,000 worth of Short-Term Commercial Papers which it is
offering for public sale at face value. The gross proceeds that will be raised from the offering is
Php200,000,000 less registration fees, taxes, professional fees and other related expenses.
The net proceeds from the offering of the Short-Term Commercial Papers is Php 198,728,000 which
is intended to be used as follows (in order of priority):
1) Project – Related Costs
2) Payment of Maturing Loans / Notes
3) Interest Expense
Net Proceeds
Php
100,000,000
94,788,000
3,940,000
198,728,000
The Company is organized under the laws of the Republic of the Philippines. Its principal office is
located at 3rd Floor Cityland Condominium 10 Tower 1, 156 H.V. Dela Costa Street, Salcedo Village,
Makati City. Its telephone number is (632) 893-60-60.
Unless otherwise stated, the information contained in this document have been supplied by the
Company which accepts full responsibility for the accuracy of the information and confirms, after
having made all reasonable inquiries, that to the best of its knowledge and belief, there are no
material facts, the omission of which would make any statement in this document misleading in any
material respect. Neither the delivery of this document nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is correct as of any time
subsequent to the date hereof.
No dealer, salesman or any other person has been authorized by the Company to issue any
advertisement or to give any information or make any representation in connection with the sale of
the Short-Term Commercial Papers other than those contained in this document and, if issued, given
or made, such advertisement, information or representation must not be relied upon as having been
authorized by the Company.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE AND SHOULD BE REPORTED IMMEDIATELY TO THE SECURITIES
AND EXCHANGE COMMISSION.
TABLE OF CONTENTS
Page
Glossary……………………………………………………………………………………..
1
Summary Information ………………………………………………………………………
2
Risks Factors ………………………………………………………………………………..
4
Use of Proceeds ……………………………………………………………………………..
7
Determination of the Offering Price ………………………………………………………..
9
Offering Period……………………………………………………………………………...
10
Plan of Distribution ……………….……….……….……….……….……….……………..
11
Description of Registrant’s Securities ……….……….……….……….……….…………...
12
Market Information For Securities Other Than Common Equity ……….……….…………
15
Market For Issuer’s Common Equity and Related Stockholders’ Matters ……….………...
16
Interests of Named Experts and Independent Counsels ……….……….……….…………..
18
Information With Respect to the Registrant
Business ……….……….……….……….……….……….……….……….…………...
Properties ……….……….……….……….……….……….……….……….………….
Legal Proceedings……….……….……….……….……….……….……….………….
Management’s Discussion and Analysis or Plan of Operation ……….……….……….
Changes in and Disagreements With Accountants On Accounting and Financial
Disclosure ……….……….……….……….……….……….……….……….…………
Directors and Executive Officers……….……….……….……….……….……………
Executive Compensation ……….……….……….……….……….……….…………...
Security Ownership of Certain Record and Beneficial Owners and Management …….
Certain Relationships and Related Transactions ……….……….……….……………..
Corporate Governance ………………………………………………………………….
19
26
27
30
41
41
47
48
49
49
Other Expenses Of Issuance and Distribution ……….……….……….……….…………...
51
Financial Information ……….……….……….……….……….……….……….………….
52
Exhibits ……….……….……….……….……….……….……….……….……….……….
**
Signatures ……….……….……….……….……….……….……….……….……………...
**
1
GLOSSARY
In this prospectus, unless the context otherwise requires, the following words or expressions shall
have the following corresponding meanings:
“Articles”
The Articles of Incorporation of the Company
“Board”
The Incumbent Members of the Board of
Directors of the Company
“CLDI” or “City & Land” or “Company” or
“Issuer” or “Registrant”
City & Land Developers, Incorporated
“HLURB”
Housing and Land Use Regulatory Board
“IAS”
International Accounting Standards
“IFRS”
International Financial Reporting Standards
“Offer”
The offering for public sale of Php 200,000,000
worth of STCPs.
“Offering Period”
The offering period shall commence upon the
approval of the SEC permit to sell the STCPs
and shall end upon the expiry of the permit to
sell the STCPs.
“Offering Price”
The offering price is 100% of the face value of
the STCPs.
“PAS”
Philippine Accounting Standards
“PFRS”
Philippine Financial Reporting Standards
“Php”, “Pesos”
The Philippine currency
“SEC”
Securities and Exchange Commission
“SGV”
SyCip, Gorres, Velayo and Co.
“SRC”
Securities Regulations Code
“STCPs”, Offered “STCPs”
Short-Term Commercial Papers
2
SUMMARY INFORMATION
THE COMPANY
City & Land Developers, Incorporated (CLDI or the “Company”) is a domestic public
corporation registered with the Securities and Exchange Commission (“SEC”) on June 28, 1988
with the primary purpose of engaging in real estate development. CLDI was listed with the
Philippine Stock Exchange on December 1999. The Company has developed residential
subdivisions in Parañaque City and condominium projects in the cities of Manila and Pasig.
The condominium projects of CLDI which are fully completed and operational include
Manila Residences Bocobo, a 34-storey commercial, office and residential condominium project
located at 1160 Jorge Bocobo St., Ermita, Manila City; Grand Emerald Tower, a commercial, office
and residential condominium located along Emerald Avenue, Ortigas Center, Pasig City; and
Pacific Regency and Vito Cruz Towers , both commercial, office and residential condominium
projects located along Pablo Ocampo Sr. Avenue (formerly Vito Cruz), City of Manila.
The Company maintains four prime lots for future development. The latest acquisition is
located at 1939 Taft Avenue, Malate, Manila. The other lots are located along Roxas Boulevard,
Paranaque City, Samar Ave., Quezon City and EDSA, Quezon City.
CLDI is a member of Cityland Group, a trusted name in real estate industry with a track
record of developing prestigious condominiums in cities of Makati, Mandaluyong, Pasig, Manila
and Tagaytay; affordable houses in Pasig City, Tagaytay City and Parañaque City; and residential
subdivisions and farmlots in Bulacan, Cavite and Tagaytay City. The Group has been in property
development business for more than thirty (30) years.
These are discussed in detail under “Information with Respect to the Registrant”.
RISKS OF INVESTING
Investors should prudently assess all attendant risks, as well as other considerations
associated with an investment in this Offer. Such risks include the internal risks such as refinancing
risk, credit risk, interest rate risk, market risk and liquidity risk; and external ones arising from the
political and economic situation, real estate industry outlook and market competition. These are
discussed more extensively under “Risks Factors”.
SUMMARY FINANCIAL INFORMATION
The following selected financial information were derived from the audited financial
statements as of and for the years ended December 31, 2012, 2011 and 2010 and unaudited
financial statements as of and for the three months ended March 31, 2013. The financial statements
were audited by SyCip, Gorres, Velayo & Co., in accordance with the Generally Accepted
Accounting Principles in the Philippines. The information should be read in conjunction with, and
is qualified in its entirety by reference to such financial statements and related notes thereto and
"Management's Discussion and Analysis or Plan of Operation".
3
As of and for the years ended
December 31
(Audited)
2011
2012
June 30
(Unaudited)
2013
INCOME STATEMENT
Revenues
Expenses
Income before tax
Net Income
Php 1,115,696,076 Php
740,957,878
374,738,198
316,984,047
676,140,702 Php
369,665,260
306,475,442
255,986,579
174,539,990
93,916,300
80,623,690
64,673,616
BALANCE SHEET
Total Assets
Total Liabilities
Stockholders’ Equity
Php 2,221,425,308 Php 2,185,796,542 Php
777,444,193
586,639,445
1,443,981,115
1,599,157,097
2,269,659,535
695,058,503
1,574,601,032
PER SHARE (Php)
Earnings per share*
*
Php0.47
Php0.32
Php0.16*
After retroactive effect of 20% stock dividends distributed on October 04, 2012. (Annualized)
4
RISK FACTORS
The risk factors in the order of importance are as follows:
REFINANCING RISKS
The Company is primarily engaged in real estate development. Risk Factors are: the
moderately aggressive debt level of the Company's borrowings being short-term in nature
increase the possibility of refinancing risks. This debt mix in favor of short-term borrowings
is a strategy which the Company adopted to take advantage of lower cost of money for
short-term loans versus long-term loans. Because the Company has the flexibility to convert
its short-term loans to a long-term position by drawing down its credit lines with several
banks or sell its receivables, refinancing risk is greatly reduced.
The Company manages such refinancing risks by improving the current and acid-test ratios
at 3.02:1 and 2.64:1 as of March 31, 2013 from 2.77:1 and 2.32:1 as of December 31, 2012.
CREDIT RISK
This is defined as the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation.
The financial instruments which may be the subject of credit risk are the installment
contracts receivables and other financial assets of the Company. The corresponding
management strategies for the aforementioned risks are as follows:
1. The credit risk on the installment contracts receivables may arise from the buyers
who may default on the payment of their amortizations. The Company manages
this risk by dealing only with recognized, credit worthy third parties. Moreover, it
is the Company's policy to subject customers who buy on financing to credit
verification procedures. Also, receivable balances are monitored on an on-going
basis with the result that the Company's exposure to bad debts is insignificant.
2. The credit risk on the financial assets of the Company such as cash and cash
equivalents, short-term cash investments, financial assets at fair value through
profit or loss and available for sale investments may arise from default of the
counterparty. The Company manages such risks by its policy to enter into
transactions with a diversity of creditworthy parties to mitigate any significant
concentration of credit risks. As such, there are no significant concentrations of
credit risks in the Company.
INTEREST RATE RISK
This is the risk arising from uncertain future interest rates.
The Company's financial instruments are:
1. The Company's financial assets mainly consist of installment contract receivables,
cash and cash equivalents and short-term investments. Interest rates on these assets
are fixed at their inception and are therefore not subject to fluctuations in interest
rates.
5
2. For the financial liabilities, the Company only has short-term commercial papers
and notes which bear fixed interest rates, thus are not exposed to fluctuations in
interest rates.
MARKET RISK
This is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices. Financial instruments which rely their value on market
factors are subject to market risk.
The available-for-sale investments are exposed to market risk. There is a risk for a decline
in the value due to changes in the market. The exposure, however, is negligible because the
amount of the said investment is insignificant as compared to the financial assets of the
Company.
LIQUIDITY RISK
This is the current and prospective risk to earnings or capital from a company's inability to
meet its obligations when they come due without incurring unacceptable losses.
The Company's treasury has a well-monitored funding and settlement management plan.
The following is the liquidity risk management framework maintained by the Company:
a) Asset- Liability Management: Funding sources are combination of short and longterm. Funding sources are abundant and provide a competitive cost advantage. The
Company also holds financial assets for which there is a liquid market and are,
therefore, readily saleable to meet liquidity needs.
b) Conservative/ Liability Structure: Funding is widely diversified. There is little
reliance on wholesale funding services or other credit-sensitive fund providers. The
company accesses funding across a diverse range of markets and counter parties.
c) Excess Liquidity: The Company maintains considerable excess liquidity to meet a
broad range of potential cash outflows from business needs including financial
obligations.
d) Funding Flexibility: The Company has an objective to maintain a balance between
continuity of funding and flexibility through the use of loans from banks and
STCPs. As such, the Company already has committed borrowing facilities in the
form of bank lines and an established record in accessing these markets.
As such, the Company addresses risk on liquidity by maintaining committed borrowing
facilities in the form of bank lines and a established record in accessing these markets.
ECONOMIC FACTORS
The Company’s business consists mainly of providing office and housing units in the
Philippines and the results of the operations will be influenced by the general conditions of
the Philippine economy. Any economic instability or failure to register improved economic
performance in the future may adversely affect the Company’s operations and eventually its
financial performance.
6
POLITICAL STABILITY
The Company’s business like all other businesses may be influenced by the political
situation in the country. Any political instability in the future could have a material adverse
effect in the Company’s business and results of operations.
INDUSTRY OUTLOOK
The industry is characterized by boom-bust cyclical pattern exhibited in the past couple of
decades where the industry normally goes through years of robust growth following years
of slowdown. The industry is in the recovery stage from the economic slowdown brought
about by Asian crisis.
COMPETITION
The demand for housing especially in the medium-cost category has increased. The
situations has attracted both old and new players to develop projects that cater to this rising
demand. Given the number of projects available in the market, some competition is
expected. The Company believes that it is in a better position to cope with the competition
because of the affordability of the projects it offers in the market.
The following preventive measures are being undertaken by the Registrant to manage the
aforementioned risks:
a) Conducting assessments of the economic and political situations of the country as
well as new developments in the industry. The procedures involved in gathering of
information of economic indicators and political events as well as being aware of
the new developments in the industry is through media, business conferences,
economic briefings and other sources.
b) Maintaining our competitive edge by keeping up to date with the technological
advances in the construction industry, improving our marketing strategies and
continuously updating the skills of our personnel.
Note: STCPs are not insured with the Philippine Deposit Insurance Corporation (PDIC).
7
USE OF PROCEEDS
The gross proceeds that will be derived from the offering is Php 200,000,000 less
registration fees, taxes, professional fees and other related expenses.
The net proceeds from the offering of the Short-Term Commercial Papers is
Php 198,728,000 which is intended to be used as follows (in order of priority):
1) Project – Related Costs
2) Payment of Maturing Loans / Notes
3) Interest Expense
Net Proceeds
100,000,000
94,788,000
3,940,000
Php 198,728,000
The total actual and estimated expenses amounting to Php 1,272,000 is shown under “Other
Expenses of Issuance and Distribution on page 51.
1) Project-related costs
The proceeds from the offering will be used to partially finance the construction of
One Taft Residences, a future project of City and Land.
One Taft Residences is a 40-storey commercial and residential condominium located at
1939 Taft Avenue, Malate, Manila. Its amenities include multi-purpose room with children's
playset, adult / kiddie pool, gym and viewing deck. It is scheduled to be launched in the first (1 st )
quarter of 2014.
The utilization of the Php 100M project-related cost of One Taft Residences is as follows:
Period
Amount
st
1 Qtr 2013 (Jan-Mar. 2014)
Php
2nd Qtr 2013 (Apr.-June 2014)
30,000,000
30,000,000
rd
3 Qtr 2013 (July-Sept. 2014)
40,000,000
Total
Php
100,000,000
The P 100M project-cost of One Taft Residences represents the costs and expenses for the
permits, licenses and other pre-operating and pre-development costs and expenses.
Extent of financial commitment to complete the projects: The total credit line available for
the Company from banks is P 1.95B all of which is unavailed.
2) Payment of Maturing Loans/ Notes
The Php 94,788,000 proceeds for the payment of loans/ notes are all estimated to be
allocated for the payment of maturing STCPs and Home Guaranty Corporation (HGC) Promissory
Notes.
Breakdown of Outstanding Loans and Notes as of May 31, 2013:
Financial Institution
Short-Term Commercial Papers*
Short-Term Promissory Notes**
Amount
Interest Rate
140,700,000
166,992,479
Php 307,692,479
-various-various-
Maturity Date
-various-various-
8
* Short-term Commercial Papers amounting to Php 140,700,000 as of May 31, 2013 is
covered by the following permits to offer securities for sale:
Dated September 07, 2012:
P
140,700,000
** Short-term Promissory Notes are covered by a contract of guaranty with Home Guaranty
Corporation. The guaranty covers the unpaid principal due on the outstanding promissory notes and
unpaid interest thereon up to 10% per annum.
3) Interest expense
Interest expense pertains to this P200 million STCP issue computed on the average STCP
rate as of May 31, 2013 as shown below:
Lender
New STCP
Principal
P200,000,000
Rate
1.97%
Term
One year
Interest
P 3,940,000
In the event of any deviation/ adjustment in the planned uses of proceeds, the Company
shall inform the Commission and STCP investors within thirty (30) days prior to its
implementation.
If proceeds are substantially less than maximum proceeds, the Company will just opt to
renew the maturing obligations from the existing financial institutions which extended the loans.
If material amount of other funds are necessary to accomplish purpose(s), the Company
will avail from its existing lines with banks. The total credit line available for the Company from
banks is P1.95B, all of which is unavailed.
The total Php 1.95B credit line were all made available to the Company by the ff. banks:
Security Bank, Metrobank and United Coconut Planters Bank.
Proceeds from the offering will not be used to reimburse any officer, director, employee or
any shareholder.
Proceeds from the offering is not intended to acquire properties within the next twelve
months.
9
DETERMINATION OF THE OFFERING PRICE
The Offering Price is One Hundred Percent (100%) of the face value.
The interest rates are fixed and are determinable at the time of issuances of the STCPs. The
interest rates are based on the prevailing market rates at the time of issue.
10
OFFERING PERIOD
The offering period will commence upon approval of the SEC of the STCPs and will end
upon the expiry of the Permit to Sell of the STCPs.
11
PLAN OF DISTRIBUTION
The Short-Term Commercial Papers will be offered by the Company to local small
investors, institutional buyers and general public as follows:
Institutional Buyers
General Public
% to Total
30%
70%
Amount
60,000,000
140,000,000
Php
200,000,000
The projected STCPs to be offered within the offering period mentioned above is as
follows:
Within the First Quarter
Within the Second Quarter
Within the Third Quarter
Within the Fourth Quarter
Amount
50,000,000
50,000,000
50,000,000
50,000,000
Php
200,000,000
Php
The securities to be registered are to be offered through the Company's salesmen duly
licensed by the Commission. The Company's salesmen are registered and authorized to act as Fixed
Income Market Salesman with a Certificate of Registration issued by the SEC- Company
Registration and Monitoring Department (CRMD). Please see Exhibit 17 for the Certificate of
Registration of Salesmen.
The monthly compensation of these salesmen ranges from Php18,000.00 to Php65,000.00.
They are also entitled to mandatory benefits and bonuses such as the 13 th month pay; and bonuses
and incentives which are dependent on the Company's earnings as well as the salesman's
performance.
As in the previously approved issues, the Company requested for exemption from the
underwriting agreement as it has demonstrated its capability to sell the STCPs through its own
selling efforts as mentioned in the foregoing paragraph.
Upon approval of the Registration Statement and the request for exemptive relief, the
Company will provide a statement that its request for exemption from the submission of
underwriting agreement has been granted.
12
DESCRIPTION OF REGISTRANT'S SECURITIES
1. Total Issue Amount
The issue amount is TWO HUNDRED MILLION PESOS (200,000,000) outstanding
STCPs at any given time within the validity period granted by the SEC.
2. Provisions:
a) Instrument
The instrument is Short-Term Commercial Papers (STCPs). STCPs constitute direct,
unconditional and general obligations of the Issuer. The STCPs maybe in registered or
bearer form.
b) Issue Date
The issue dates can be one or more dates to commence within the validity period granted by
the Securities and Exchange Commission.
c) Term/ Maturity
The STCPs shall have a term not exceeding 365 days from issue date.
d) Interest Rates
The interest rate(s) will be fixed and payable in arrears either monthly, quarterly,
semi-annually or annually or at the end of the term based on the prevailing market interest
rates at the time of issuances. The average interest rate as of May 31, 2013 is 1.97%.
e) Redemption
Redemption shall be on a one-time payment at the end of each term.
f) Minimum Denomination Purchase
The minimum amount of STCP instruments shall not be lower than Php 300,000.
The Issuer shall cause the STCP certificates to be made available to the purchaser upon full
payment of the offering price.
g) Tax on the Interest on the STCPs
Interest income on the STCPs shall be subject to a twenty percent (20%) final withholding
tax or such rate that maybe provided by law or regulation. The tax shall be for the account
of the holder of the STCPs. Corporate and institutional purchasers who are exempt from or
are not subject to the said tax shall submit pertinent documents evidencing their tax exempt status.
h) Penalty Interest
Should any amount payable by the Issuer under the STCPs, whether for principal, interest
or otherwise, be not paid on due date, the Issuer shall pay in addition to the computed
interest, liquidated damages equivalent to one percent (1%) of the outstanding amount of
the note, plus attorney’s fees and cost of collection in case of suit, an amount equal to
Php 2,000 or 5% of the principal or interest whichever is higher. The Issuer further agrees
13
that any action for the STCPs shall be instituted in the proper court of Makati City or the
proper Regional Trial Court (RTC) of Metro Manila or the case maybe.
i)
Documentary Stamps on Original Issuance
The cost of documentary stamps on the original issues shall be for the account of the
Issuer. The documentary stamps by reason of the secondary sales/transfers involving the
change of the registered holdings shall be for the account of the secondary buyers.
j) Conversion, amortization, sinking fund, retirement
Conversion, amortization, sinking fund and retirement are not applicable in this STCP
issue.
3. Substitution
Substitution is not permitted with or without notice.
4. Material Provisions Giving or Limiting Rights of Debt Holders
a) STCPs are unsecured obligations; as such, STCP debt holders are subordinate to secure
creditors.
b) There is no limitation on the declaration of dividends; no restrictions on issuance of
additional debt; no maintenance of asset ratios; and no provisions on security (collateral).
5. Financial Ratios
Average
As of
June 30, 2013
2010
2011
2012
Current Ratio
2.10
2.00
2.77
2.23
1.97
Acid Test Ratio
1.20
1.26
2.32
1.50
1.78
Total Assets to Total Liabilities
2.71
2.86
3.73
3.05
3.27
Net Profit Margin
34.64%
33.66% 50.35% 37.83%
61.03%
Return on Equity
22.02%
21.95% 16.01% 19.74%
8.21%*
Debt – Equity Ratio
0.29
0.22
0.16
0.22
0.20
* Annualized
Manner of Calculation:
Current Ratio
= Current Assets / Current Liabilities
Acid- Test Ratio
= Cash & Cash Equivalents + Short-Term Investments + Available-for-sale Investments +
current portion of Installment Contracts Receivables + current portion of Other Receivables
Total Current Liabilities
Total Assets to Total
Liabilities
Net Profit Margin
= Total Assets / Total Liabilities
Return on Equity
= Net Income / Total Stockholders' Equity
Debt-Equity Ratio
=
= Net Income / Net Sales
Loans & Notes Payable
Total Stockholders' Equity (net of Net Changes in FV of Investments)
14
6. Track Record of Securities Registered under SRC
SEC Order No.
Date Issued
Nature of
Securities
Amount
Registered
Amount Outstanding
as of May 31, 2013
1. 144 Series of 2012 September 07, 2012
STCP
P 200,000,000
P 140,700,000
2. 255 Series of 2011 September 12, 2011
STCP
P 200,000,000
---
3. 219 Series of 2010 September 03, 2010
STCP
P 200,000,000
---
4. 133 Series of 2009 September 02, 2009
STCP
P 200,000,000
---
5. 091 Series of 2008 August 28, 2008
STCP
P 200,000,000
---
6. 142 Series of 2007 August 24, 2007
STCP
P 500,000,000
---
7. 112 Series of 2006 August 25, 2006
STCP
P 127,000,000
---
8. 150 Series of 2005 December 28, 2005
STCP
P 127,000,000
---
9. 180 Series of 2004 December 29, 2004
STCP
P 115,000,000
---
15
MARKET INFORMATION FOR SECURITIES OTHER THAN COMMON EQUITY
STCPs has no established public trading market from which market information for STCPs
can be obtained.
16
MARKET FOR ISSUER'S COMMON EQUITY AND RELATED
STOCKHOLDERS' MATTERS
1) Trading Market
The Company’s common equity is traded in the Philippine Stock Exchange.
2) Stock Prices
2013
First Quarter
High
2.60
Low
2.10
2012
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
1.88
2.38
3.00
2.84
1.25
1.51
1.96
2.00
2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
1.23
1.78
1.78
1.80
1.08
1.17
1.50
1.20
Note: Prices in 2012 took into account the 20% stock dividends declared to the
stockholders of record as of September 10, 2012.
3) Price Information on the Latest Practicable Date
The Company’s shares were last traded on June 20, 2013 at P 2.41 per share.
4) Dividends Policy
Dividends declared by the Company on its shares of stocks are payable in cash or in
additional shares of stock. The payment of dividends in the future will depend upon the
earnings, cash flow and financial condition of the Corporation and other factors.
5) Dividends
Cash
Stock
2013
Php 0.11 / share
20.00%
2012
Php 0.15 / share
20.00%
2011
Php 0.14 / share
20.00%
2010
Php 0.05/ share
20.00%
The Company declared Php 0.11 per share cash dividends on June 11, 2013. Record date of
the cash dividends is on June 26, 2013 and to be paid on July 22, 2013.
6) Holders
a. The number of shareholders of record as of March 31, 2013 was 802.
17
b. Top 20 Stockholders of record as of March 31, 2013
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Name
Cityland Development Corporation
Cityland, Inc.
PCD Nominee Corp.- Filipino
William T. Chua
Stephen C. Roxas
Cityplans, Incorporated
Henry Shao
Andrew I. Liuson
Credit and Land Holdings, Incorporated
Grace C. Liuson
Sharon Valerie Co
Stephanie Vanessa Co
Stephen Vincent Co
Josephine Lim
Ecclesiastes, Inc.
Josef C. Gohoc
Alice C. Gohoc
John Gohoc
Obadiah Incorporated
Jefferson C. Roxas
No. of Shares
403,436,321
239,625,410
41,088,482
16,997,713
11,057,961
7,052,900
6,286,062
4,360,084
4,177,952
3,817,243
3,245,016
3,245,016
3,245,016
2,317,869
2,092,126
1,652,171
1,622,500
1,622,500
1,421,755
1,359,766
% (Percent)
49.73%
29.54%
5.06%
2.10%
1.36%
0.87%
0.77%
0.54%
0.52%
0.47%
0.40%
0.40%
0.40%
0.29%
0.26%
0.20%
0.20%
0.20%
0.18%
0.17%
7) Any Restrictions that may Limit Ability to Pay Dividends or that are Likely to Do so in the
Future
Dividends declared on shares of stocks are payable in cash or in additional shares of stocks.
Future dividend payments, if any, will depend on the earnings, cash flow and financial
condition of the Corporation and other factors.
8) Recent Sales of Unregistered Securities or Exempt Securities (Including Recent Issuance of
Securities Constituting an Exempt Transaction)
The total number of shares issued and outstanding of the Company increased for the past
three (3) years as a result of stock dividends as follows:
Stock
Dividend
Outstanding Shares
From
To
Date Distributed
2010
20%
469,474,212
563,368,825
July 14, 2010
2011
20%
563,368,825
676,042,298 September 09, 2011
2012
20%
676,042,298
811,250,476
October 04, 2012
Stock dividends are exempted from registration under Section 10.1 (d) of the Securities
Regulation Code (SRC).
18
INTERESTS OF NAMED EXPERTS AND COUNSELS
The validity of the STCP offer and other matters concerning the registration and offering of
the STCPs was passed upon for the Company by Abaya Elias Law Firm.
The audited financial statements of the Company as of and for the years ended
December 31, 2012, 2011 and 2010, together with the notes thereto, were audited by SyCip, Gorres,
Velayo & Co., independent public accountants, as indicated in their reports which are included
herein, in recognition of the authority of SGV as experts in accounting and auditing in giving such
reports.
The above-named experts and counsels will not receive a direct or indirect interest in the
registrant nor was such expert and counsels is a promoter, underwriter, voting trustee, director,
officer or employee of the registrant.
19
INFORMATION WITH RESPECT TO THE REGISTRANT
Business
A. Background Information
1. Brief Company History
City and Land Developers, Inc. is a domestic public corporation registered with the
Securities and Exchange Commission on June 28, 1988 and started commercial operations
on August 1, 1992.
The Company is 49.73% owned by Cityland Development Corporation while the remaining
50.27% is owned by 801 various stockholders.
On December 13, 1999, the issued and outstanding capital stock of the Company were
listed in the Philippine Stock Exchange after the initial public offering on November
29,1999.
2. Nature of Operations
The Company's primary purpose is to acquire and develop suitable land sites for residential,
office, commercial, institutional, and industrial uses.
The Company developed residential units in Parañaque, Metro Manila, which include
single-detached, duplex, townhouse units and lots only as well as condominium projects in
the cities of Manila and Pasig. It recently completed the construction Manila Residences
Bocobo in June 2012 and Grand Emerald Tower in February 2011.
B. Development of Business for the past three (3) years (2010-2012)
1. We present herewith the status of sales and construction of our projects as of the end of the
following years:
Pacific Regency
Grand Emerald Tower
Manila Residences Bocobo
2010
99.67%
68.24
58.61
PERCENTAGE SOLD
2011
2012
March 31, 2013
Launched in 2004
99.79%
99.89%
99.78%*
Launched in 2006
86.50
95.22
97.09
Launched in 2009
72.52
90.85
91.76
•
The decrease in percentage sold as of March 31, 2013 as compared with the previous year 2012 was due to cancellation of
contracts to sell due to non-payment.
Pacific Regency
Grand Emerald Tower
Manila Residences Bocobo
PERCENTAGE OF COMPLETION
2010
2011
2012
March 31, 2013
100.00%
100.00%
100.00%
100.00%
97.52
100.00
100.00
100.00
38.10
96.36
100.00
100.00
20
The details of the above projects are as follows:
Pacific Regency
Pacific Regency is a 38-storey commercial, office, and residential condominium located at
Pablo Ocampo Sr. Ave. (formerly Vito Cruz Street) in front of Rizal Memorial Sports Complex in
Manila. Amenities and facilities include swimming pool, gymnasium, separate sauna for male and
female, function room, children’s playground, 24-hour association security, viewing area, and
jogging areas at the roof deck.
Grand Emerald Tower
Grand Emerald Tower , a 39-storey commercial, office and residential condominium
located along Emerald corner Ruby and Garnet Streets, Ortigas Center, Pasig City. Its amenities and
facilities include swimming pool, gymnasium, viewing deck, sauna, children’s playground, multi
purpose function room, and 24-hour association security. It is proximate to schools, hospitals,
shopping malls, banks, restaurants, hotels , churches and other leisure and business establishments.
Date Completed: February 2011 (completed 4 months in advance)
Manila Residences Bocobo
Manila Residences Bocobo is a 34-storey commercial, office and residential building
located at 1160 Jorge Bocobo St., Ermita, Manila City. Its amenities and features include swimming
pool, gymnasium, function room, multi-purpose deck, children's play area and 24-hour association
security.
Date Completed: June 2012 (completed 1 year in advance)
The future project of the Company is as follows:
One Taft Residences (scheduled to be launched in the first quarter of 2014)
One Taft Residences is a 40-storey commercial and residential condominium located at
1939 Taft Avenue, Malate, Manila. Its amenities include multi-purpose room with children's
playset, adult / kiddie pool, gym and viewing deck.
a) Any Material Reclassification, Merger, Consolidation, or Purchase of Sale of a Significant
Amount of Assets
There are no material reclassification, merger, consolidation, purchase, or sale of a significant
amount of asset not in the ordinary course of business.
b) Marketing
All projects are sold by direct company salesmen and independent brokers.
c) Revenue Contribution of Projects to Total Revenues on Sales of Real Estate
PERCENTAGE%
2010
a. City & Land Mega Plaza
b. Pacific Regency
0.42%
0.08
2011
0.04%
1.04
2012
0.00%
0.76
As of
March 31, 2013
0.00%
--
21
2010
c. Grand Emerald Tower
d. Manila Residences Bocobo
e. Others
71.72
27.78
-100.00%
2011
2012
39.05
59.42
0.45
100.00%
39.95
59.23
0.06
100.00%
As of
March 31, 2013
67.55
32.45
-100.00%
d) Domestic and Foreign Sales Contribution to Total Sales
2010
Sales
Filipino Citizens
Foreign Citizens
Total Sales
81.27%
18.73
100.00%
As of
March 31, 2013
2011
2012
86.55%
13.45
100.00%
85.14%
14.86
27.33
100.00%
100.00%
72.67%
e) Competition
The property development industry in the Philippines where the Registrant is selling its
products and services is characterized by boom-bust cyclical pattern exhibited in the past
couple of decades where the industry normally goes through years of robust growth following
years of slowdown. Currently, the industry is in the middle of this cycle.
The geographical area/ location of the Company's projects are in Manila, Pasig and Parañaque
cities. The Company builds high-rise condominium projects catering to middle and highincome groups.
Cityland's projects are offered at affordable prices and affordable payment schemes. The
Company has proven its track record in the timely turn-over or even advanced turn-over of its
projects in line with its, “We commit, we deliver” slogan.
In the property development industry, the principal methods of competition among the
developers are as follows:
a. price;
b. product or the type of development, i.e. high, middle or low-end; and
c. service or property management after the project is turned over to the buyers.
City & Land Developers, Inc. sells it products which consists of condominium projects, to both
end-users and investors. City & Land projects are offered at affordable prices. It foresees that
the demand for real estate products such as residential units will remain underserved due to: i)
continued shift from rural to urban areas; ii) continued increase in the number of Overseas
Filipino Workers (OFW) who have shown growing propensity for home purchase; and iii)
population growth.
Grand Emerald Tower, a commercial, office and residential condominium is located along
Emerald corner Ruby and Garnet Streets, Ortigas Center, Pasig City.
Other condominium project that is quite similar in terms and classifications is Eton Emerald
Lofts located at Emerald, Sapphire & Garnet Streets, Ortigas Center, Pasig City. It is a project
of Eton Properties Philippines, Inc. In terms of size, financial and market strengths, Eton
Properties Philippines, Inc. is one of the major developers in the country having launched
several projects. It is also part of the business conglomerate of Lucio Tan Group of Companies.
22
Manila Residences Bocobo is a 34-storey commercial, office and residential building located at
1160 Jorge Bocobo St., Ermita, Manila City.
Other condominium project that is quite similar in terms and classifications is 8 Adriatico
developed by Eton Properties Philippines, Inc. and located along Padre Faura corner Adriatico
St., Malate, Manila City. In terms of size, financial and market strengths, Eton Properties
Philippines, Inc. is one of the major developers in the country having launched several projects.
It is also part of the business conglomerate of Lucio Tan Group of Companies.
However, City and Land Developers, Inc. believes that it can effectively compete with other
companies with its competitive projects: Grand Emerald Tower and Manila Residences Bocobo
because of good location, affordable pricing and quality development.
f) Principal Terms and Expiration Dates of All Patents, Trademarks, Copyrights, Licenses,
Franchises, Concessions, and Royalty Agreements Held
The following table summarizes the registered trademarks of the Company:
TRADEMARK
Parkview
CLDI
City and Land Developer’s, Inc.
REGISTRATION No.
4-1999-007576
4-2008-002313
4-2008-000848
Expiry Date
June 26, 2013
July 14, 2018
September 8, 2018
g) Customers
City and Land Developers, Inc. has a broad market base and is not dependent upon a single or
few customers. It has no single customer that accounts for 20% or more of its sales. Likewise,
there are no major existing sales contracts.
h) Purchase of Raw Materials and Supplies
City & Land Developers, Inc. engaged the services of Millennium Erectors Corporation for the
civil and architectural works in the development of its on-going projects.
As to the construction materials, City and Land had no major existing supply contracts for its
projects. The major construction materials like steel bars, cement, etc. are sourced through
canvassing and bidding from its list of accredited suppliers. City and Land then bought the
materials from the lowest bidder.
i)
Number of Employees
City & Land Developers, Inc. has a total of 73 employees as of March 31, 2013 classified as
follows:
Managerial
2
Administrative 37
Rank & file
71
Operations
36
Total
73
Total
73
The number of employees is expected to increase by 15% within the next twelve (12) months.
The company maintains an organizational framework whereby important management
functions as well as administrative tasks are shared within the Cityland group. CLDI
compensates the group for the actual costs of these services. The Company gives incentives and
bonuses such as mid-year and year-end bonuses, as well as sick and vacation leaves.
All employees are not subject to collective bargaining agreement. There are no existing disputes
with the registrant's employees. The Company's employees are not on strike or are threatening
to strike nor they have been on strike in the past three (3) years.
23
j)
Government Approval of Projects
Status of Approval of On-going Projects
Government Agency:
Grand Emerald
Tower
Manila Residences
Bocobo
Approval Granted
Approval Granted
Approval Granted
Approval Granted
- Excavation, Civil Works
Approval Granted
Approval Granted
- Electrical, Sanitary, Fire, Sidewalk
Approval Granted
Approval Granted
- Mechanical
Approval Granted
Approval Granted
Approval Granted
Approval Granted
Approval Granted
Approval Granted
- Permit to Construct Sewage Treatment Plant (STP)
Approval Granted
On-going Application
- Permit to Operate STP
Approval Granted
On-going Application
a. Housing and Land Use Regulatory Board
- Certificate of Registration / License to Sell
b. City / Municipal Building Official / Department of Public
Works and Highways
1. Development Permit by HLRB / Location
2. Building Permit
3. Occupancy Permit (Electrical, Fire, Mechanical, Civil,
Sanitary)
c. Department of Environment and Natural Resources
- Environmental Compliance Certificate
d. Laguna Lake Development Authority
k) Effect of Existing Government Regulations on the Business
The Company has complied with all the appropriate government regulations prior to the
development and marketing of its Grand Emerald Tower and Manila Residences Bocobo
projects.
The effect of the various regulations on the business of the issuer are projects developed in
accordance with the high quality standards required by the various regulatory agencies of the
government.
l)
Amount Spent for Research/Development Activities
There is no amount spent for research and development activities.
m) Cost and Effect of Compliance with Environmental Laws
2012
No payments were made.
2011
No payments were made.
2010
Partial payment of 17,000 to LAQ Consulting for ECC of North Residences.
24
n) Transactions with and /or Dependence on Related Parties
Nature of transaction:
Significant transactions with related parties consist of interest bearing cash advances from/to its
affiliates.
The Registrant's affiliates are Cityland Development Corporation (CDC), its parent company,
Cityland, Inc. (CI), parent company of CDC and Cityplans, Inc., a subsidiary of CDC.
o) Major Risks Involved in Each of the Businesses of the Company
The Company is primarily engaged in real estate development. Risk factors are:
Refinancing Risk: The Company is primarily engaged in real estate development. Risk Factors
are: the moderately aggressive debt level of the Company's borrowings
being short-term in nature increase the possibility of refinancing risks. This
debt mix in favor of short-term borrowings is a strategy which the
Company adopted to take advantage of lower cost of money for short-term
loans versus long-term loans. Because the Company has the flexibility to
convert its short-term loans to a long-term position by drawing down its
credit lines with several banks or sell its receivables, refinancing risk is
greatly reduced.
The Company manages such refinancing risks by improving the current and
acid-test ratios at 3.02:1 and 2.64:1 as of March 31, 2013 from 2.77:1 and
2.32:1 as of December 31, 2012.
Credit Risk:
This is defined as the risk that one party to a financial instrument will
cause a financial loss for the other party by failing to discharge an
obligation.
The financial instruments which may be the subject of credit risk are the
installment contracts receivables and other financial assets of the Company.
The corresponding management strategies for the aforementioned risks are
as follows:
1. The credit risk on the installment contracts receivables may arise
from the buyers who may default on the payment of their
amortizations. The Company manages this risk by dealing only with
recognized, credit worthy third parties. Moreover, it is the
Company's policy to subject customers who buy on financing to
credit verification procedures. Also, receivable balances are
monitored on an on-going basis with the result that the Company's
exposure to bad debts is insignificant.
2. The credit risk on the financial assets of the Company such as cash
and cash equivalents, short-term cash investments, financial assets
at fair value through profit or loss and available for sale investments
may arise from default of the counterparty. The Company manages
such risks by its policy to enter into transactions with a diversity of
creditworthy parties to mitigate any significant concentration of
credit risks. As such, there are no significant concentrations of
credit risks in the Company.
25
Interest Rate Risk: This is the risk arising from uncertain future interest rates.
The Company's financial instruments are:
1. The Company's financial assets mainly consist of installment
contract receivables, cash and cash equivalents and short-term
investments. Interest rates on these assets are fixed at their inception
and are therefore not subject to fluctuations in interest rates.
2. For the financial liabilities, the Company only has short-term
commercial papers and notes which bear fixed interest rates, thus are
not exposed to fluctuations in interest rates.
Market Risk:
This is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Financial
instruments which rely their value on market factors are subject to market
risk.
The available-for-sale investments are exposed to market risk. There is a
risk for a decline in the value due to changes in the market. The exposure,
however, is negligible because the amount of the said investment is
insignificant as compared to the financial assets of the Company.
Liquidity Risk:
This is the current and prospective risk to earnings or capital from a
company's inability to meet its obligations when they come due without
incurring unacceptable losses.
The Company's treasury has a well-monitored funding and settlement
management plan. The following is the liquidity risk management
framework maintained by the Company:
1. Asset- Liability Management: Funding sources are combination of
short and long-term. Funding sources are abundant and provide a
competitive cost advantage. The Company also holds financial
assets for which there is a liquid market and are, therefore, readily
saleable to meet liquidity needs.
2. Conservative/ Liability Structure: Funding is widely diversified.
There is little reliance on wholesale funding services or other creditsensitive fund providers. The company accesses funding across a
diverse range of markets and counter parties.
3. Excess Liquidity: The Company maintains considerable excess
liquidity to meet a broad range of potential cash outflows from
business needs including financial obligations.
4. Funding Flexibility: The Company has an objective to maintain a
balance between continuity of funding and flexibility through the
use of loans from banks and STCPs. As such, the Company already
has committed borrowing facilities in the form of bank lines and an
established record in accessing these markets.
As such, the Company addresses risk on liquidity by maintaining
committed borrowing facilities in the form of bank lines and a established
record in accessing these markets.
26
Economic:
The Company’s business consists mainly of providing office and housing
units in the Philippines and the results of the operations will be influenced
by the general conditions of the Philippine economy. Any economic
instability or failure to register improved economic performance in the
future may adversely affect the Company’s operations and eventually its
financial performance.
Political:
The Company’s business like all other businesses may be influenced by the
political situation in the country. Any political instability in the future could
have a material adverse effect in the Company’s business and results of
operations.
The industry is characterized by boom-bust cyclical pattern exhibited in the
past couple of decades where the industry normally goes through years of
robust growth following years of slowdown. The industry is in the recovery
stage from the economic slowdown brought about by Asian crisis.
Industry:
The management manages the above risks by:
 Conducting assessments of the economic and political situations of the country as well
as new developments in the industry. The procedures involved in gathering of
information of economic indicators and political events as well as being aware of the
new developments in the industry is through media, business conferences, economic
briefings and other sources.
With this information, the Company is able to assess and manage the risks mentioned above.
Debt Issues
The registrant's net worth exceeds P 25 million and the registrant has been in business for
more than four (4) years.
Properties
Investments in real estate properties as of March 31, 2013 are as follows:
Type
1. Land
2. Land
3. Land
4. Land
Location
Area
Description
Roxas Blvd. Cor. Seaside
Drive, Brgy. Tambo,
Parañaque City
Samar Ave., cor Eugenio
Lopez Ave., Quezon City
EDSA cor. Lanutan
Alley, Quezon City
Taft Ave., Malate,
City of Manila
3,154
Lot is located along Roxas Blvd.
Mortgagee /
Limitation
---
3,096
Lot is located along Samar Ave.
---
1,661
Lot is located along EDSA, Brgy.
Veterans Village.
Lot is located along Taft Avenue.
---
2,038.10
---
Ownership
The Company has complete ownership of the above-mentioned property.
Plan to Purchase
The Company has intentions to acquire property(ies) in the next twelve (12) months within the
vicinity of Metro Manila. Actual acquisition is dependent on the outcome of negotiation with
prospective seller(s). The source of financing the Company expects to use is the unavailed credit
line of the Company amounting to P 1.95B.
27
Lease Contracts
Leased properties as of March 31, 2013 (1st Quarter 2013) are as follows:
Projects
Rental Income
Grand Emerald Tower- Units
707,996
Roxas Boulevard Property
25,222
Vito Cruz Properties
16,188
Ortigas Property
13,393
Total
762,799
Note: Term of lease contracts ranges from 1 month to 1 year.
Renewal Options
Lease contracts are renewable upon written agreement of the parties.
Legal Proceeding
The material legal proceeding/s to which the registrant is a party or of which any of its property is
the subject as of March 31, 2013 are as follows:
1. Registrant
Sta. Ana Village Homeowners’ Assoc. Inc. (SAVHA) vs. CLDI
Civil Case No. 12-009
Parañaque Regional Trial Court – Branch 274
Date Instituted: January 16, 2012
SAVHA filed a complaint dated January 16, 2012 which was received by CLDI on March
3, 2012, to enjoin defendant and all persons allowed by said defendant CLDI from using
Benedictine Street in Sta. Ana Village, Barangay Sun Valley, Parañaque City; and to order
the defendant by way of a writ of mandatory injunction to open another outlet to the main
road without cost or liability to plaintiff. CLDI stated in its answer that plaintiff has not
proven its claim over Benedictine Street because the Deed of Donation used by the plaintiff
is a falsified and/or spurious document. Trial of the case is on going.
2. Affiliates
a.) Cityland Inc.
Tagaytay Executive Village Homeowners’ Association, Inc. vs Cityland, Inc.
Case No. REM-A-11-01574
Housing and Land Use Regulatory Board – Board of Commissioners
Date Instituted: November 22, 2010
The case involves a petition to revoke the certificate of completion (“COC”) dated
March 10, 2010 issued by the Regional Office, HLURB, Southern Tagalog Region, in
favor of Cityland, Inc., owner and developer of Tagaytay Executive Village located at
Brgy. San Jose, Tagaytay City. TEVHAI wants the Court to recall/cancel the COC and that
Cityland be ordered to fully complete the alleged deficiencies in the amenities. The case
was dismissed by the HLURB Region IV office. Consequently, the TEVHAI filed an
appeal with the HLURB Board of Commissioners (which was dismissed in a Decision
dated February 2, 2012). The TEVHAI appealed this case before the Office of the
President.
28
Sps. Banson & Electra Cheng vs Cityland, Inc.
Case No. RIV-032013-3777
Housing and Land Use Regulatory Board
Southern Tagalog Region (Region IV)
Date Instituted: March 20, 2013
Spouses Cheng filed a complaint for Specific Performance with damages praying that
Cityland comply and continue with the sale of condominium unit no. 6017 and parking slot
no. B-104 and B-105 of Tagaytay Prime Residences. Cityland stated in its Answer that no
Deed of Absolute Sale or Contract to Sale was entered into by the parties. There were no
meeting of minds to consummate a contract because there was no consent made by the
seller (Cityland). Trial of the case is on going.
b.) Cityland Development Corporation
Esmeraldo Balosa vs. Cityland Development Corporation
(Civil Case No. MC08 – 3563)
Mandaluyong Regional Trial Court – Branch 208
Date Instituted: April 11, 2008
Esmeraldo Balosa filed a case for preliminary Mandatory Injunction with damages against
Cityland after the Business and License Department of Mandaluyong City closed his stalls
due to Balosa’s failure to secure the necessary permits. He alleged that he has not been
paying the lease because another entity is also claiming ownership of the leased property
and that property cannot be used for his business. Balosa claims Cityland illegally ejected
him. Trial of the case is on going.
Arthur M. Litonjua vs. Cityland Development Corporation
(LRC Case No. R-7442)
Pasig Regional Trial Court – Branch 161
Date Instituted: October 29, 2010
Arthur M. Litonjua filed a Petition dated October 29, 2010 and received by Cityland last
February 1, 2011, seeking an order to compel Cityland or any person in possession of the
owner’s duplicate copy of TCT No. 38762, to surrender the same to the Register of Deeds
of Pasig City. In the alternative, Litonjua prayed for the annulment of said owner’s
duplicate copy should the person holding the same refuses to surrender the same, and for
the Register of Deeds of Pasig City to issue a new certificate of title in the name of Litonjua
and possession of the subject property. Cityland commented that it had previously sold the
property to Roy L. Borbon way back in March 28, 1995 but Borbon never claimed the title
from Cityland to undertake the registration of the same. The case is still pending with the
admission of the Amended Petition of Litonjua.
Cristy Katsui vs. Cityland Development Corporation
(Case No. NCR REM-062612-14812)
HLURB – Expanded National Capital Region Field Office
Date Instituted: June 26, 2012
Cristy Katsui filed a complaint dated June 20, 2012 which was received by Cityland on
July 20, 2012, seeking an order for the rescission of the Contract to Sell over a commercial
unit no. G-11 in Makati Executive Tower IV and for the return of all the amortizations paid
by her in the total amount of P 1,634,000.00. Cityland stated in its answer that it cancelled
the above-mentioned Contract to Sell in compliance with the instruction of Katsui in her
letter, in behalf of all the buyers, dated June 21, 2011. She was informed that she is not
entitled to any cash surrender value under R.A. No. 6552 that requires a minimum payment
of 24 monthly installments. Katsui paid only 14 installments. Besides, the unit is a
29
commercial unit which is not covered by the law which only covers residential units. The
case is still pending with the HLURB.
3. Property
There was no case filed wherein any of the registrant's property/ies is the subject.
There are no cases involving unpaid real estate taxes which are material in amount.
The Company does not expect that the outcome of the above material legal proceeding
involving the registrant will have a material adverse effect on the financial condition of the
Company.
During the past five years up to present, there is no bankruptcy petition filed by or against
any business of which such person was a general partner or executive officer of the
Registrant either at a time of the bankruptcy or within two years prior to that time.
During the past five years up to present, the Registrant, any of its directors or executive
officers has no conviction by final judgment, domestic or foreign, or is not subject to a
pending criminal proceeding, domestic or foreign.
During the past five years up to present, the Registrant, any of its directors or executive
officers is not subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, domestic or foreign,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities, commodities or banking activities.
During the past five years up to present, the Registrant, any of its directors or executive
officers has not been found by a domestic or foreign court of competent jurisdiction (in
civil action), the Commission or comparable foreign body, or a domestic or foreign
exchange or other organized trading market or self- regulatory organization, to have
violated a securities or commodities law or regulation and the judgment has not been
reversed, suspended, or vacated.
30
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Financial Performance
For the six months ended June 30, 2013
The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium
located in Jorge Bocobo St., Ermita, Manila City is ready for occupancy by June 2012, a year
in advance from its promised date of turnover to clients.
Internal sources of liquidity come from sales of condominiums and real estate projects,
collection of installment receivables, maturing short-term investments while external sources
come from SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed
promissory notes.
The Company has four prime lots for future development. The latest acquisition is located
along Taft Avenue, Malate, Manila, and EDSA corner Lanutan Alley, Brgy. Veterans Village,
Quezon City. The other lots are located along Roxas Boulevard and Samar Avenue, Quezon
City.
For the year ended December 31, 2012
The Philippine economy as measured by the gross domestic product (GDP) grew dramatically
in 2012 by 6.6% from last year’s 3.7%. Economic recovery was evidenced by higher
international credit ratings as well as the continued appreciation of peso. The increase was
largely due to the government’s disbursement acceleration program as well as the continuous
speeding up for the implementation of various programs and projects. In addition, overseas
remittances of Filipinos continued to increase resulting to the appreciation of the peso. Amidst
the positive economic environment, sales of the Company for 2012 continued to remain stable
indicating a sustained demand for condominium projects. The surge in vertical developments
over the year was due to the expansion of the business outsourcing sector. Since Filipinos are
increasingly adopting to condominium living, the Company is optimistic that demand for
condominium projects will continue in the coming years.
On June 2012, the Company turned over, one year ahead of schedule, Manila Residences
Bocobo, a 34-storey office, commercial and residential condominium located in Jorge Bocobo
St., Ermita, Manila City. The Company is now selling its remaining unsold units.
Internal sources of liquidity come from sales of condominiums and real estate projects,
collection of installment receivables, maturing short-term investments while external sources
come from SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed
promissory notes.
The Company has four prime lots for future development. The latest acquisition is located at
1939 Taft Avenue, Malate, Manila. The other three lots are located along Roxas Boulevard,
Samar Avenue, Quezon City and EDSA corner Lanutan Alley, Brgy. Veterans Village,
Quezon City.
For the year ended December 31, 2011
The Philippine economy as measured by the gross domestic product (GDP) posted a modest 3.7
percent growth in 2011. The slowdown can be attributed to the typhoons and the decline in
foreign trade due to the poorly performing U.S economy, the European debt crisis and the Japan
earthquake. In addition, political tensions in the Middle East resulted to high oil prices. The
government is now pushing for a more robust growth rate in 2012 by increasing tax collection,
implementing sound monetary policies and pledging to boost public spending on infrastructure
31
development through public-private partnership. Amidst the economic slowdown, the
Company’s sales remained stable indicating a sustained demand for condominium projects. At
present, low interest rates encouraged availment of loans resulting to investments in real estate
properties. The Company projects that sales will further increase with the stable
macroeconomic environment and the gradual recovery of the world economy.
On February 2011, the Company completed four months ahead of schedule, Grand Emerald
Tower, a 39-storey office, residential and commercial condominium located along Emerald
Avenue corner Garnet and Ruby Roads, Ortigas Center, Pasig City. The Company is now
selling its remaining unsold units.
The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium
located in Jorge Bocobo St., Ermita City is nearing completion and is expected to be completed
on June 2013.
Internal sources of liquidity come from sales of condominiums and real estate projects,
collection of installment receivables, maturing short-term investments while external sources
come from SEC-registered commercial papers and Home Guaranty Corporation’s guaranteed
promissory notes.
The Company has three prime lots for future development. The latest acquisition is located at
EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City. The other lots are located
along Roxas Boulevard and Samar Ave, Quezon City.
For the year ended December 31, 2010
The country’s economy grew dramatically from 0.9% in 2009 to 7.3 % in 2010, the highest in
more than two decades. The high gross domestic product (GDP) rate came during a peaceful
political transition of a new administration. The strong growth can be attributed to improved
investor’s confidence, government and election expenditures, continued inflow of overseas
remittances, growth of the business outsourcing sector and the high rate of foreign trade due to
the improving global economy. At present, real estate sales remained strong as bank interest
rates remained low while inflation rate remained manageable at below 5%. The Company is
optimistic that the favorable political and business environment combined with the recovery of
the world economy will bring more investments in the real estate industry.
The Company launched last year, Manila Residences Bocobo, a 34-storey office, commercial
and residential condominium located in Jorge Bocobo St., Ermita City. This project was well
received and is currently under construction. Its other on-going condominium project, Grand
Emerald Tower located along Emerald Ave., Ortigas Center, Pasig City is nearing completion
as of December 31, 2010 and was turned over to the unit owners in February 2011.
Internal sources of liquidity come from sales of condominiums and real estate projects,
collection of installment receivables, maturing short-term investments while external sources
come from loans obtained from financial institutions.
The Company has two prime lots for future development. The latest acquisition is located at
Samar Avenue Corner Eugenio Lopez Avenue, Quezon City. The second lot is located at the
corner of Roxas Boulevard and Seaside Drive.
Financial Condition
June 30, 2013 vs. December 2012
Total assets amounted to 2.270B as of the first semester of 2013, as compared with the previous
year’s ending balance of 2.186B. Collections decreased installment contracts receivable account
while sales decreased real estate properties for sale-net. Excess funds from operations were
32
shifted to short-term cash investments resulting to the increase of the account.
Total liabilities increased by 18.48% due to accrual of dividends payable, higher notes and
contracts payable and accounts payable and accrued expenses.
Total stockholders’ equity stood at 1.574B as of June 2013, lower by 1.54% from 2012 year end
balance of 1.599B due to net income 64.67M less cash dividends of 89.23M.
As a result of the foregoing, the Company’s liquidity position registered an acid-test and current
ratio of 1.78 and 1.97 in June 2013 as compared to 2.32 and 2.77 in December 2012. Debt-equity
ratio was registered at 0.20 as of June 2013 as compared to 0.16 as of December 2012.
December 2012 vs December 2011
The Company’s balance sheet remained solid with total assets of 2.186 in 2012 as compared to
the previous level of 2.221B. The slight decrease can be attributed to the decrease in real estate
properties for sale by 61.18%. Sales, collection of receivables and re-investment of maturing
placements to shorter period increased cash and cash equivalents account by 93.33%. The
healthy cash position of the Company has allowed the purchase of lot increasing real estate
properties for future development by 52.97%. Moreover, it has allowed the payment of cash
dividends and reduction of accounts payable and accrued expenses and notes and contracts
payable.
Total stockholders’ equity stood at 1.599B, higher by 10.75% as compared 2011 of 1.444B.
The increase was due to net income of 256M less cash dividends of 101M.
As a result of the foregoing, the Company strengthened its liquidity position with current and
acid-test ratio of 2.77:1 and 2.32:1, as compared with 2011 of 2.00:1 and 1.26:1, respectively.
Asset-to-liability and debt-to-equity likewise improved to 3.73:1 and 0.16:1, from the previous
year of 2.86:1 and 0.22:1, respectively.
December 2011 vs December 2010
In 2011, total assets expanded by 16.24% to 2.221B, higher by 310.40M from the previous
year’s 1.911B. This can be attributed to increase in cash and cash equivalents, installment
contracts receivable and real estate property held for future development. Majority of the
Company’s funds were used for project development resulting to the high completion rates of
Manila Residences Bocobo and Grand Emerald Tower. This resulted to the reduction of
estimated development cost, consequently increasing installment contracts receivable (net of
estimated development cost). The stable cash flow has also enabled the Company to purchase a
prime lot and pay cash dividends. Excess funds were shifted to shorter period investments
resulting to a reclassification of account. Total liabilities, on the other hand, increased by
10.25% due to increase in accounts payable and accrued expenses.
Total stockholders' equity stood at 1.444B, 19.74% higher as compared with 2010 of 1.206B.
The increase was due to net income of 316.98M less cash dividends of 78.87.
As a result of the foregoing, the Company’s liquidity position remained stable with current and
acid test ratio of 2.00:1 and 1.26:1 as compared to 2010 of 2.10:1 and 1.20:1, respectively.
Asset and debt ratio improved to 2.86:1 and 0.22:1 as compared with the previous year of
2.71:1 and 0.29:1, respectively.
December 2010 vs December 2009
In 2010, total assets expanded by 26.61% to 1.911B, higher by 401.65M from the previous
year’s 1.509B. This can be attributed to increase in short term cash investments, installment
contracts receivable and real estate property held for future development. Majority of the
33
Company’s funds were used for project development resulting to high completion rates of
Grand Emerald Tower and Manila Residences Bocobo. This resulted to the reduction of
estimated development cost consequently increasing installment contracts receivable (net of
estimated development cost). The stable cash flow has also enabled the Company to purchase a
prime lot and pay cash dividends. Excess funds were channeled to short-term cash investments
increasing the account by 289.50M.
Total liabilities, on the other hand, increased by 30.14% due to increase in accounts payable
and accrued expenses and issuances of commercial paper. As a result of the foregoing, the
Company’s liquidity position remained stable with current and acid test ratio of 2.10:1 and
1.20:1 as compared to 2009 of 2.23:1 and 0.88:1, respectively. Asset and debt ratio were
recorded at 2.71:1 and 0.29:1 as compared with the previous year of 2.79:1 and 0.30:1,
respectively.
Total stockholders' equity stood at 1.206B, 24.64% higher as compared with 2009 of 967.54M.
The increase was due to net income of 265.60M less cash dividends of 28.17M plus 0.93M
adjustment in net changes in fair values of available-for-sale investments.
Results of Operation
June 30, 2013 vs. June 30, 2012
Net income for the first semester amounted to 64.67M, as compared to the same period last year
of 149.73M. The Company’s current projects, Manila Residences Bocobo and Grand Emerald
Tower were already sold at 90.85% and 95.22%, respectively as of December 31, 2012, resulting
to the limited available units for sale which accounted for the decrease in revenues. With the
latest acquisition of prime lots, the Company plans to launch new projects in the future to
increase inventory and consequently generate more sales.
On the cost side, cost of sale and operating expenses decreased by 68.25% and 44.19% as these
move in tandem with sales. Financial expenses decreased due to lower interest rates. On the other
hand, provision for income tax also decreased due to lower revenues. Altogether, net income
stood at 64.67M and translated to earnings per share and return on equity (both annualized) of
0.16 and 8.21% as compared to the same period of the previous year of 0.37 and 20.06%.
December 2012 vs December 2011
Total sales from real estate properties reached 508.38M from the previous year of 941.78M.
The decrease in sales is due to lower inventory level in 2012. The two condominium projects,
Grand Emerald Tower and Manila Residences Bocobo were already sold at 86.50% and
72.52% at the beginning of the year. Sales of the remaining inventory resulted to a sell out rate
of Grand Emerald Tower and Manila Residences Bocobo at 95.22% and 90.85%, respectively.
Revenue on sales of Grand Emerald Tower, which was completed in 2011, contributed 39.95%
to sales, while Manila Residences Bocobo accounted for 59.23% of sales.
On the cost side lower revenues decrease cost of sales and provision for income tax. Operating
expenses likewise decrease due to lower personnel and professional fees. Interest expense
remained fairly manageable at 11.06M as compared to the previous year at 11.25M.
Altogether, net income after tax stood at 255.99M and translated to earnings per share and
return on equity of 0.32 and 16.01% as compared with last year’s 0.39 and 21.95%.
December 2011 vs December 2010
The Company posted an increase of 19.35% in net income amounting to 316.98M in 2011,
from last year's figure of 265.60M, despite the economic slowdown during the year. Grand
Emerald Tower which was completed in the first quarter of 2011, generated sales of 366.55M,
while the fast construction of Manila Residences Bocobo at 96.36%, registered sales of
557.80M. In addition, financial income derived from interest from sales of real estate properties
34
reached 167.26M, increasing total revenues by 18.60%.
The Company remained prudent in managing costs and other disbursements during the year.
Cost of sales sales remained manageable at 595.38M in 2011, as compared to the previous year
of 513.31M. Operating expenses on the other hand, moved in tandem with sales, which
increased due to higher personnel and professional fees. Interest expense on the other hand,
increased due to lower capitalized interest resulting from the completion of a project. As a
result of the foregoing, the Company ended the year with a higher net income translating to an
earnings per share and return on equity of 0.47 and 21.95% in 2011, as compared to 0.39 and
22.02% last year.
December 2010 vs December 2009
Total revenues reached 940.72M exceeding last years’ figure of 714.45M. Revenue on sales of
real estate properties grew by 33.07 % from 576.19M in 2009 to 766.76M in 2010. Revenue
growth was driven by sales and high project completion rate of Grand Emerald Tower reaching
97.52%, while Manila Residences Bocobo, launched last year reached 38.10%. Revenue on
sales of Grand Emerald Tower continued to contribute a significant 71.72% to annual sales
since its launching in 2006. While Manila Residences Bocobo accounted for a bigger share of
27.78% as compared to the previous year of 5.99%. In addition, financial income which is
substantially composed of interest income from sale of real estate properties increased by
25.60% accounting for 17.76% of total revenues.
On the cost side, higher revenues increased cost of sales and provision for income tax.
Operating expenses on the other hand decreased due to lower personnel expenses. Altogether
net income for the year showed a significant improvement from 129.50M to 265.60M,
translating to a 105.09% increase. With a better net income reported, earnings per share and
return on equity improved dramatically from 0.23 and 13.38% in 2009 to 0.47 and 22.02% in
2010.
Top Five (5) Key Performance Indicators
Earnings per Share *
Return on Equity *
Debt-to-Equity Ratio
Current Ratio
Acid-Test Ratio
2010
0.33
22.02%
0.29
2.10
1.20
2011
0.39
21.95%
0.22
2.00
1.26
2012
0.32
16.01%
0.16
2.77
2.32
As of
June 30, 2013
0.16
8.21%
0.20
1.97
1.78
* annualized
Manner of Calculation
Earnings per Share
= Net Income / Average Number of Shares Issued and Outstanding
Return on Equity
= Net Income / Total Stockholders’ Equity
Debt-to-Equity Ratio =
Loans and Notes Payable
Total Stockholders’ Equity (net of Net Changes in Fair Value of Investments)
Current Ratio
= Total Current Assets / Total Current Liabilities
Acid-Test Ratio
= Cash & Cash Equivalents + Short-term Investments + Available for Sale Investment
+ current portion of Installment Contract Receivable + current portion of Other Receivables
Total Current Liabilities
1. Items affecting assets, liabilities, equity, net income, or cash flows that are unusual because
of their nature, size or incidents
There are no unusual items affecting assets, liabilities, equity, net income or cash flows.
2. Any changes in estimates of amounts reported in prior interim periods of the current
financial year or changes in estimates of amounts reported in prior financial years that have
35
a material effect in the current interim period
There are no changes in estimates of amounts reported in prior interim periods of the
current financial year or changes in estimates of amounts reported in prior financial years
that have a material effect in the current interim period.
3. Any issuances, repurchases, and repayments of debt and equity securities
The Company issued SEC-Registered Short-Term Commercial Papers during the period.
The outstanding balance is Php140.7M as of May 31, 2013.
4. Any material events subsequent to the end of the interim period that have not been reflected
in the financial statements for the interim period
There are no material events subsequent to the end of the interim period that have not been
reflected in the financial statements for the interim period.
5. Effect of changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
There are no changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
6. Any changes in contingent liabilities or contingent assets since the last annual balance sheet
date
There are no changes in the contingent liabilities or contingent assets since the last annual
balance sheet date.
7. Any Known Trends, Events or Uncertainties (Material impact on liquidity)
There is no known trends, events or uncertainties that has a material effect on liquidity.
8. Internal and External Sources of Liquidity
Internal sources come from sales of condominium and real estate projects, collection of
installment receivables and maturing short-term investments. External sources come from
bank loans.
9. Any Material Commitments for Capital Expenditures and Expected Sources of Funds of
such Expenditures
The estimated development costs representing the cost to complete the real estate projects
will be sourced through:
a.
b.
c.
d.
Sales of condominium and real estate projects
Collection of installment receivables
Maturing short-term investments
Proceeds from the sale of commercial papers
10. Any Known Trend or Events or Uncertainties (Material Impact on Net Sales or Revenues or
Income from Continuing Operations)
There is no known trend, event or uncertainties that has a material effect on the net sales,
revenues or income from continuing operations.
36
11. Any Significant Elements of Income or Loss that did not arise from Registrant’s Continuing
Operations
There are no significant elements of income or loss that did not arise from registrant’s
continuing operations.
12. Any Known Trends or Events or Uncertainties (Direct or Contingent Financial Obligation)
There are no events that will trigger direct or contingent financial obligation, including any
default or acceleration of an obligation that is material to the Company.
13. Any Known Trends or Events or Uncertainties (Material off-balance sheet transactions,
arrangements, obligations and other relationships)
There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the Company with unconsolidated entities
created during the reporting period.
14. Any Seasonal aspects that had a material effect on the financial condition or results of
operations.
There is no seasonal aspects that had a material effect on the financial condition or results of
operations.
Causes for any Material Changes from Period to Period in One or More Lines of the
Registrant's Financial Statements
Interim Periods:
June 30, 2013 vs. December 31, 2012
a) Decrease in Cash and Cash Equivalents was due to the shift of funds to short-term cash
investments.
b) Increase in Short-term Cash Investments was due to placements.
c) Increase in Available for Sale Financial Assets was due to increase in market value of
stocks.
d) Decrease in Installment Contracts Receivable was due to collection.
e) Increase in Other Receivables was due to increase in due from affiliates.
f) Decrease in Real Estate Properties for Sale (net) was due to sales of real estate properties.
g) Increase in Real Estate Properties for Future Development was due to development costs.
h) Decrease in Other Assets was due to input VAT and Meralco meter deposits.
i) Increase in Accounts Payable and Accrued Expenses was due to accrual of dividends
payable.
j) Decrease in Income Tax Payable was due to payment.
k) Decrease in Deferred Tax Liabilities was due to decrease in accounting income.
l) Increase in Net Changes in Fair Value of Available-for-sale Financial Assets was due to
increase in value of stocks.
m) Decrease in Retained Earnings was due to net income less cash dividends.
June 30, 2013 vs. June 30, 2012
a) Decrease in Sales of Real Estate was due to decrease in inventory available for sale.
b) Decrease in Financial Income was substantially due to lower interest income from sales of
real estate properties.
c) Decrease in Rent Income was due to decrease in real estate properties for lease.
d) Decrease in Other Revenues was due to lower miscellaneous income.
e) Decrease in Cost of Sales was due to lower sales.
f) Decrease in Operating Expenses was due to lower sales.
g) Decrease in Financial Expenses was due to decrease in interest rates.
37
h) Decrease in Provision for Income Tax was due to lower revenues.
i) Decrease in Net Income was due to lower revenues.
Full Fiscal Years:
December 31, 2012 vs. December 31, 2011
a) Increase in Cash and Cash Equivalents was due to sales, collection of receivables and reinvestment of maturing placements to shorter period of investments.
b) Decrease in Short-term Cash Investments was due to maturity.
c) Increase in Available-for-sale Investments was due to increase in value of stocks.
d) Decrease in Installment Contracts Receivable was due to collection.
e) Increase in Other Receivables was due to advances to customers for real estate tax.
f) Decrease in Real Estate Properties for Sale was due to sales.
g) Increase in Real Estate Properties Held for Future Development was due to purchase of a
lot.
h) Increase in Other Assets was due to input tax of the new property purchased.
i) Increase in Other Assets was due to input tax of the new property purchased.
j) Decrease in Accounts Payable and Accrued Expenses was due to payment of development
costs, director’s fees and refund of deposits.
k) Decrease in Notes and Contracts Payable was due to payment.
l) Increase in Income Tax Payable was due to higher taxable income.
m) Decrease in Deferred Tax Liabilities was due to lower financial income as compared to
taxable income.
n) Increase in Capital Stock was due to 20% stock dividends.
o) Increase in Net Changes in Fair Values of Available-for-sale Financial Assets was due to
increase in value of stocks.
p) Decrease in Appropriated Retained Earnings was due to reversal of appropriation for
Manila Residences Bocobo since it is 100% completed.
q) Increase in Unappropriated Retained Earnings was due to net income less cash and stock
dividends.
r) Decrease in Financial Income was due to decrease in interest income from sale of real
estate properties for sale.
s) Increase in Rent Income was due to increase in available units for lease.
t) Decrease in Cost of Sales was due to decrease in sales.
u) Decrease in Operating Expenses was due to lower personnel and professional fees.
v) Decrease in Provision for Income Tax was due to lower deferred income tax.
w) Decrease in Net Income was due to lower revenues.
December 31, 2011 vs. December 31, 2010
a) Increase in Cash and Cash Equivalents was due increase in net cash flows from operating
activities and re-investment of funds to shorter period.
b) Decrease in Short-term Cash Investments was due to maturity.
c) Increase in Installment Contracts Receivable (net) was due to lower estimated development
cost and unrealized gross profit of uncompleted units, which were deducted from this
account.
d) Increase in Other Receivables was due to real estate taxes and other expenses chargeable to
clients.
e) Decrease in Real Estate Properties for sale was due to sales.
f) Increase in Real Estate Properties held for future development was due to purchase of a lot.
g) Decrease in Other Assets was due to refund of electric meter deposits.
h) Increase in Accounts Payable and Accrued Expenses was due to accrual of development
costs and registration expenses.
i) Decrease in Notes and Loans Payable was due to maturity of commercial papers.
j) Decrease in Income Tax Payable was due to decrease in taxable income.
38
k) Increase in Deferred Tax Liabilities was due to higher accounting income as compared with
taxable income.
l) Increase in Capital Stock was due to 20% stock dividends.
m) Increase in Retained Earnings was due to net income net of dividends.
n) Increase in Sales of Real Estate was due to sales and high completion rate of the projects.
o) Increase in Rent Income was due to increase in available units for lease.
p) Decrease in Other Income was due to decrease in miscellaneous income.
q) Increase in Cost of Sales was due to increase in sales.
r) Increase in Operating Expenses was due to higher personnel expenses and professional
fees.
s) Increase in Financial Expenses was due to lower capitalized interest.
t) Decrease in Provision for tax was due to lower deferred income tax.
December 31, 2010 vs. December 31, 2009
a) Decrease in Cash and Cash Equivalents was due to purchase of property and investment in
short term cash investments.
b) Increase in Short-term Cash Investments was due to sales and collection of installment
contract receivables.
c) Increase in Available-for-sale Investments was due to increase in market value of stocks.
d) Increase in Installment Contracts Receivable (net) was due to lower estimated development
cost and unrealized gross profit of uncompleted units, which were deducted from this
account.
e) Increase in Other Receivables was due to higher accrued interest and retention from cash
sales.
f) Increase in Real Estate Properties held for future development was due to purchase of a lot.
g) Increase in Other Assets was due to increase in electric meter deposits.
h) Increase in Accounts Payable and Accrued Expenses was due to accrual of development
costs.
i) Increase in Notes and Loans Payable was due to issuance of commercial papers.
j) Increase in Income Tax Payable was due to increase in taxable income.
k) Increase in Deferred Tax Liabilities was due to higher accounting income as compared with
taxable income.
l) Increase in Capital Stock was due to 20% stock dividends.
m) Increase in Net Changes in Fair Value of Investments was due to recognition of impairment
loss on market value of stocks.
n) Increase in Retained Earnings was due to net income net of dividends.
o) Increase in Sales of Real Estate was due to the sales and high completion rate of the
projects.
p) Increase in Financial Income was due to increase in interest income from sale of real estate
properties.
q) Increase in Other Income was due to increase in other income from scrap and other
miscellaneous income.
r) Increase in Cost of Sales was due to increase in sales.
s) Decrease in Operating Expenses was due to lower personnel expenses.
t) Increase in Financial Expenses was due to higher loan balance.
u) Increase in Provision for Income Tax was due to higher revenues.
39
Required information by SEC-OGA on City & Land Developers, Inc.'s Audited Financial
Statements As of the Year Ended December 31, 2012 and Unaudited Interim Financial
Statements as of March 31, 2013
1.
Audited Financial Statements as of December 31, 2012:
Real Estate Properties for Sale
Reference
Dec. 31, 2012
Dec. 31, 2011
(In absolute amount; in Php)
Opening balance
Note 8
Dec. 31, 2012 Dec. 31, 2011
(Amount in millions as
disclosed in Note 8; in Php)
391,691,341
558,463,258
391.69
558.46
--
--
--
--
Land transferred from real
estate properties for future
development
Construction/development
costs
Note 8
26,868,357
426,498,420
26.87
426.50
Borrowing costs capitalized
Note 8
--
2,108,403
--
2.11
Disposal (recognized as
cost of sales in the income
statement)
Note 8
(246,531,779)
(595,378,740)
(246.53)
(595.38)
Write down of inventories
--
--
--
--
Transfer to
properties
--
--
--
--
(19,969,864)
--
(19.97)
--
152,058,055
391,691,341
152.06
391.69
investment
Other adjustments:
Excess of estimate over
actual development cost
Ending balance
Note 8
Real Estate Properties Held for Future Development
Reference
Dec. 31, 2012
Dec. 31, 2011
(In absolute amount; in Php)
Opening balance
Land acquisition during the
year
Dec. 31, 2012 Dec. 31, 2011
(Amount in millions as
disclosed in Note 8; in Php)
Note 8
236,780,497
125,711,244
236.78
125.71
Note 8
123,130,000
109,810,000
123.13
109.81
--
--
--
--
2,294,671
1,259,253
2.30
1.26
362,205,168
236,780,497
326.21
236.78
Land transferred from real
estate properties for future
development
Others:
Capitalizable costs
Ending balance
Note 8
40
2.
Unaudited Financial Statements as of March 31, 2013:
Real Estate Properties for Sale
Reference
Mar. 31, 2013
Dec. 31, 2012
(In absolute amount; in Php)
Opening balance
Note 8
Mar. 31, 2013 Dec. 31, 2012
(Amount in millions; in Php)
152,058,055
391,691,341
--
--
--
--
--
26,868,357
--
26.87
--
--
(21,299,652)
(246,531,779)
(21.30)
(246.53)
Write down of inventories
--
--
--
--
Transfer to
properties
--
--
--
--
8,013,755
(19,969,864)
8.01
(19.97)
138,772,158
152,058,055
138.77
152.06
Land transferred from real
estate properties for future
development
Construction/development
costs
Note 8
Borrowing costs capitalized
Disposal (recognized as
cost of sales in the income
statement)
Note 8
investment
152.06
391.69
Other adjustments:
Excess of estimate over
actual development cost
Ending balance
Note 8
Real Estate Properties Held for Future Development
Reference
Mar. 31, 2013
Dec. 31, 2012
(In absolute amount; in Php)
Opening balance
Land acquisition during the
year
Mar. 31, 2013 Dec. 31, 2012
(Amount in millions; in Php)
Note 8
362,205,168
236,780,497
362.21
236.78
Note 8
--
123,130,000
--
123.13
--
--
--
--
1,787,839
2,294,671
1.79
2.30
363,993,007
362,205,168
326.21
236.78
Land transferred from real
estate properties for future
development
Others:
Capitalizable costs
Ending balance
Note 8
41
13. Information On Independent Accountants
Audit and audit-related Fees
Tax Fees
All other fees
Total
2012
280,000
--280,000
2011
264,000
--264,000
SyCip, Gorres, Velayo & Co. is the Registrant's external auditor for the calendar year 2012
& 2011.
The Audit Committee’s approval policies and procedures consist of:
a) Discussion with the external auditors of the Audited Financial Statements.
b) Recommendation to the Board of Directors for the approval and release of the
Audited Financial Statements.
c) Recommendation to the Board of Directors of the appointment of external
auditor.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There is no change in and disagreements with accountants on accounting and financial
disclosures.
Directors and Executive Officers
1. Identify Directors and Executive Officers:
Names
Citizenship
Position
Period of Service
Term of
Office
Age
Sabino R. Padilla, Jr.
Stephen C. Roxas
Filipino
Filipino
Director / Chairman of the Board July 1990 to Present
Director / Chairman of the
06/28/88 to Present /
ExCom
07/01/97 to Present
1
1
77
71
Andrew I. Liuson
Filipino
Director / Vice-Chairman of the
Board
June 1988 to Present /
01/16/08 to Present
1
68
Grace C. Liuson
Filipino
Director / Deputy ViceChairman of the Board
06/28/88 to Present /
02/01/11 to Present
1
67
Josef C. Gohoc
Filipino
Director / President
01/04/11 to Present /
02/01/11 to Present
1
43
Cesar E.A. Virata
Peter S. Dee
Alice C. Gohoc
Filipino
Filipino
Filipino
Independent Director
Independent Director
Director
06/09/09 to Present
11/22/04 to Present
07/31/91 to Present
1
1
1
82
71
70
Helen C. Roxas
Rufina C. Buensuceso
Emma A. Choa
Eden F. Go
Rudy Go
Melita M. Revuelta
Romeo E. Ng
Josie T. Uy
Melita L. Tan
Emma G. Jularbal
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Director
Executive Vice President
Senior Vice President/ Treasurer
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President – Legal Affairs
& Corporate Secretary
06/28/88 to Present
02/01/11 to Present
02/01/11 to Present
01/16/08 to Present
08/16/07 to Present
01/16/08 to Present
01/10/05 to Present
02/16/04 to Present
02/21/04 to Present
01/01/13 to Present
1
1
1
1
1
1
1
1
1
1
63
63
52
60
53
54
51
58
53
57
Family Relationship
Husband of Helen Roxas,
brother of Grace Liuson &
Alice Gohoc
Husband of Grace Liuson
Wife of Andrew Liuson and
sister of Stephen Roxas &
Alice Gohoc
Nephew of Stephen Roxas
& Grace Liuson and son of
Alice Gohoc
Sister of Stephen Roxas &
Grace Liuson
Wife of Stephen Roxas
-
42
1.
Sabino R. Padilla, Jr.
Name of Office
Padilla Law Office
Partner
Position
Date Assumed
Past 5 years up to Present
Apostolic Nunciature to the Phils.
Legal Counsel
-do-
Catholic Bishops’ Conference of the Phils. Legal Counsel
(CBCP) and various archdioceses, dioceses
and prelatures
-do-
Association of Major Religious Superiors of Legal Counsel
the Phils.
Philippine Association of Religious Treasurers Legal Counsel
Grace Christian College
Legal Counsel
-do-
Various Catholic religious congregations, Legal Counsel
orders and societies for men and women
(Dominicans, Augustinians, Franciscans,
Columbans, Religious of the Virgin Mary,
Daughters of Charity, Sisters of St. Paul of
Chartres, Carmelite Sisters, Holy Spirit
Sisters, etc.)
-do-
Bank of the Philippine Islands and its
subsidiaries
Legal Counsel
-do-
Ayala Land, Inc.
Legal Counsel
-do-
Cityland Development Corporation
Director
-do-
State Investment Trust, Inc
Legal Counsel
-do-
Stateland Investment, Inc.
Chairman of the Board /
Legal Cousel
-do-
Mother Seton Hospital
Legal Counsel
-do-
Our Lady of Lourdes Hospital
Legal Counsel
-do-
St. Paul Hospital, Cavite
Legal Counsel / Trustee
-do-
Various Catholic universities, colleges,
schools and foundations
Trustee
2. Stephen C. Roxas
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Cityland Asset-Backed Securities (SPC) Inc.
MGC New Life Christian Academy
Center for Community Transformation
3.
Position
Director / Chairman of the
ExCom
Director / Chairman of the Board
Director / President
Director / Chairman
Chairman
Vice Chairman
Date Assumed
July 1997
July 1997
October 1988
December 2005
Andrew I. Liuson
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Cityland Asset-Backed Securities (SPC) Inc.
Febias College of Bible
Position
Director / Vice-Chairman of the
Board
Director / Vice-Chairman of the
Board
Director / Chairman of the Board
Director / President
Chairman
Date Assumed
January 16, 2008
January 16, 2008
September 2006
December 2005
43
International Graduate School of Leadership
Grace Christian College
Philippine Council of Evangelical Churches
Chairman
Chairman
Chairman
Past positions in other private institutions:
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Director / President
Director / President
Executive Vice President
1997 to January 2008
1997 to January 2008
1988 to Sept. 24, 2006
4. Grace C. Liuson
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Cityland Asset-Backed Securities (SPC) Inc.
Youth Gospel Church
Makati Gospel Church
Position
Director / Deputy Vice-Chairman
of the Board
Director / Deputy Vice-Chairman
of the Board
Director / Executive Vice
President / Treasurer
Director / Executive Vice
President/ Treasurer
Treasurer / Trustee
Treasurer
Date Assumed
February 1, 2011
February 1, 2011
September 2006
December 2005
Past positions in other private institutions:
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
5.
President / Executive Vice
President / Treasurer
President / Executive Vice
President / Treasurer
Senior Vice President
Feb. 14, 2008 to Jan. 31, 2011 /
1997 to Feb. 13, 2008
Feb. 14, 2008 to Jan. 31, 2011 /
1997 to Feb. 13, 2008
1988 to Sept. 24, 2006
Josef C. Gohoc
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityland Asset-Backed Securities (SPC) Inc.
Cityland Foundation Inc.
Asian Business Solutions, Inc.
Philippine Trading & Investment Corporation
Atlas Agricultural & Mercantile Development
Corp.
Position
Director / President
Director / President
Director
Director
Director
Director
Director
Date Assumed
February 1, 2011
February 1, 2011
December 2005
2002
1996
1997
1997
Past positions in other private institutions:
Cityland Development Corporation
Cityland, Inc.
Senior Vice President /
Treasurer /
First Vice President
Senior Vice President /
Treasurer /
First Vice President
Jan. 16, 2008 to Jan. 31, 2011 /
June 11, 2008 to Jan. 31, 2011 /
Sept. 2006 to Jan. 2008
Jan. 16, 2008 to Jan. 31, 2011 /
June 11, 2008 to Jan. 31, 2011 /
Sept. 2006 to Jan. 2008
44
6.
Cesar E.A. Virata
Present positions in other private institutions:
Name of Office
C. Virata & Associates, Inc.
Rizal Commercial Banking Corp.
Position
Chairman & President
Director & Corporate Vice
Chairman
Malayan Insurance Co., Inc.
Director
RCBC Realty Corporation
Director
RCBC Forex Broker Corp.
Chairman & Director
Luisita Industrial Park
Director
Business World Publishing Corp.
Director (Independent)
Belle Corporation
Director (Independent)
Malayan Colleges ( operating under the name of Director
Mapua Institute of Technology)
YGC Corporate Services, Inc.
Director
Pacific Fund, Inc.
Chairman & Director
RCBC Land, Inc.
President & Director
RCBC Savings Bank
Director
Bankard, Inc.
Vice Chairman & Director
AY Foundation, Inc.
Director
RCBC International Finance, Ltd. Hongkong
Director
Niyog Property Holdings, Inc.
Director
UEM- Mara Philippines Corp.
Director
Benpres Holdings Corporation
Director
Great Life Financial Assurance (ex Nippon Life
Director
Insurance)
Date Assumed
May 1986
October 1995
August 2005
February 1997
May 1998
March 1999
October 1999
May 1996
December 1999
May 2004
June 2001
September 1999
July 1999
May 1999
May 2001
June 1997
June 2000
October 2002
September 2005
Past positions in other private institutions:
JF Indonesia Fund, Inc.
JF Philippine Fund, Inc.
Power & Renewable Energy Corp.
Manila Electric Company
Chairman & Director
Chairman & Director
Director
Director
Pacific Plans, Inc.
LGU Guarantee Corporation
Phil. Dealing System Holding Corp.
Phil. Dealing & Exchange Corp.
Phil. Depository & Trust Corp.
Phil. Securities Settlement Corp.
Bankers Association of the Phils.
Rizal Equities, Inc.
RCBC Capital Corporation
Coastal Road Corporation
Director
Chairman & Director
Director
Director
Director
Director
President / Director
Director
Director
Director
7.
1996 to 2000
1996 to 2002
1999 to 2001
2000 to 2001
2004 to 2009
2001 to 2003
1998 to 2006
Up to 2006
Up to 2006
Up to 2006
Up to 2006
2002 to 2006
1998 to 2009
1995 to April 2010
2004 to February 2009
Peter S. Dee
Present positions in other private institutions:
Name of Office
Asean Finance Corporation Limited
Alpolac, Inc.
Bankers Association of the Philippines
China Banking Corp.
CBC Forex Corp.
CBC Insurance Brokers, Inc
CBC Properties & Computer Center, Inc.
Cityland, Inc.
Position
Director
Director
Director
Director / President & CEO
Director / Chairman of the
Board
Chairman of the Board
Director / President
Independent Director /
Chairman Compensation &
Audit Committee /
Member-Nomination
Date Assumed
1991
1994
2010
1977 / 1985
1997
1998
1984
2006
45
Cityplans, Incorporated
Cityland Development Corp.
GDSK Development Corp.
Hydee Management & Resources Corporation
Kemwerke, Inc.
Silver Falcon Insurance Agency
Makati Curbs Holdings Corporation
Great Expectation Holdings, Inc.
Commonwealth Foods, Inc.
The Big D Holdings Corp.
Committee
Independent Director /
Chairman Compensation &
Audit Committee /
Member-Nomination
Committee
Independent Director /
Chairman- Audit Committee
Director
Director
Director
Director
Director
Director / Chairman /
President
Director
Director / Chairman /
President
1991
2002
1982
2002
1990
1991
1994
1995
2012 to present
October 2012 to present
May 2013 to present
April 2013 to present
Past positions in other private institutions:
Can Lacquer, Inc. *
GPL Holdings, Inc. *
KK Converters Co. Ltd.
MSD Company Inc. *
Prochem, Inc.
Sinclair (Phils.) Inc. *
Sol Mar Y Tierra Resources *
Director
Director
Director
Director
Director
Director
Director
* ceased operations
8. Alice C. Gohoc
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Philippine Trading & Investment Corp.
Atlas Agricultural & Mercantile Development
Corp.
Asian Business Solutions, Inc.
Director
Director
Director
Director
Position
Date Assumed
September 6, 1996
September 2001
1997
1997
Director
1996
Past positions in other private institutions:
Cityland Development Corporation
Cityland, Inc.
9.
Vice President
Vice President
June 11, 2008 to Jan. 31, 2011
June 11, 2008 to Jan. 31, 2011
Helen C. Roxas
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Cityland Asset- Backed Securities (SPC), Inc.
Good Tidings Foundation, Inc.
MGC New Life Christian Academy
Position
Director
Director
Director
Director
Treasurer
Board of Trustee
Date Assumed
1978
1997
October 1988
December 2005
1992
1992
46
10. Rufina C. Buensuceso
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Cityplans, Incorporated
Position
Executive Vice President
Executive Vice President
Comptroller
Date Assumed
February 1, 2011
February 1, 2011
September 12, 1990
Past positions in other private institutions:
Cityland Development Corporation
Cityland, Inc.
11.
Senior Vice President
Senior Vice President
June 1997 to January 2011
June 1997 to January 2011
Emma A. Choa
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Position
Senior Vice President / Treasurer
Senior Vice President / Treasurer
Date Assumed
February 1, 2011
February 1, 2011
12. Eden F. Go
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Position
Vice President
Vice President
Date Assumed
January 16, 2008
January 16, 2008
13. Rudy Go
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc
Position
Vice President
Vice President
Date Assumed
August 16, 2007
August 16, 2007
14. Melita M. Revuelta
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
15.
Position
Vice President
Vice President
Date Assumed
January 16, 2008
January 16, 2008
Romeo E. Ng
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Position
Vice President
Vice President
Date Assumed
January 10, 2005
January 10, 2005
16. Josie T. Uy
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
Position
Vice President – Manila Branch
Vice President – Manila Branch
Date Assumed
February 2004
February 2004
47
17. Melita L. Tan
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Cityland, Inc.
18.
Position
Vice President
Vice President
Date Assumed
February 2004
February 2004
Emma G. Jularbal
Present positions in other private institutions:
Name of Office
Cityland Development Corporation
Position
Vice President- Legal Affairs /
Corporate Secretary
Cityland, Inc.
Vice President- Legal Affairs /
Corporate Secretary
Cityland Asset-Backed Securities (SPC), Corporate Secretary
Inc.
2.
Date Assumed
July 2011 /
July 1997
July 1997
December 2005
Identify Significant Employees
There is no identifiable significant employee because the Company expect each employee to do
his/her share in achieving the corporation’s set goal.
3. Involvement in Certain Legal Proceedings of Any of the Directors, Any Nominee for Election
as Director and Executive Officers, during the past five years up to the latest date
For the past five years up to the latest date, no order, judgment, or decree has been rendered
against the Company, its directors, any nominee for election as director, and executive officers
by any court or tribunal of competent jurisdiction, domestic or foreign.
4. Independent Directors
Cesar E.A. Virata and Peter S. Dee are the independent directors of the Company.
Executive Compensation
EXECUTIVE COMPENSATION SUMMARY TABLE
Name
Position
Josef C. Gohoc
President
Winefreda R. Go
AVP – Purchasing
Jocelyn F. Kwong
Senior Manager
Ireneo F. Javalera
Manager
Alrolnik M. Fernando
Manager
Salaries
Bonus
Others
Total (Top 5)
Salaries
Bonus
Others
Total all officers & directors as a group unnamed
2013 (estimate)
x
x
x
x
3,972,192
993,048
91,400
5,056,640
5,826,066
1,625,327
62,852
2012
x
x
x
x
x
3,801,944
13,187,546
1,201,777
18,191,267
5,595,439
3,607,974
11,815,975
7,514,245
21,019,388
2011
x
x
x
x
x
4,301,000
8,536,716
458,042
13,295,758
4,365,419
2,835,828
12,284,156
19,485,403
X= represents the top five (5) officers for the specific or given year
The Company has no standard arrangement with regards to the remuneration of its directors. In
2012 and 2011, the Board of Directors received a total of 10,861,612 and 10,945,379 respectively,
including a 14,400.00 per annum for each director for the board meetings attended as part of the
compensation under all officers and directors as a group unnamed. Moreover, the Company has no
standard arrangement with regards to the remuneration of its existing officers aside from the
compensation received nor any other arrangement with employment contracts, compensatory plan
and stock warrants or options.
48
Security Ownership Of Certain Beneficial Owners and Management
a. Security Ownership of Record and Beneficial Owners owning more than 5% of the
outstanding capital stock of the Registrant as of March 31, 2013:
Name, Address of Record
Owner & Relationship with
Issuer
Unclassified
Cityland Development Corp.
Common Shares 2F Cityland Condo 10 Tower 1
156 HV Dela Costa St., Makati
City
- Principal StockholderTitle of Class
Name of Beneficial
Owner & Relationship
with Record Owner
Cityland Development
Corporation
Unclassified
Cityland, Inc.
Cityland, Inc.
Common Shares 2F Cityland Condo 10 Tower 1,
156 H.V. Dela Costa St., Makati
City
- Principal Stockholder Unclassified
PCD Nominee Corp.- Filipino ** -Various- *
Common Shares 37F Tower 1, The Enterprise
Centre, 6766 Ayala Ave., cor.
Paseo de Roxas, Makati City
- Stockholder
Citizenship
No. of
Shares
Held
Percent
Filipino
403,436,321
49.73%
Filipino
239,625,410
29.54%
Filipino
41,088,482
5.06%
* PCD Nominee Corp.- Filipino is a wholly-owned subsidiary of the Philippine Central Depository. It is the registered
owner of the shares in the books of the Company's transfer agent and holds such shares in behalf of the beneficial
owners.
b. No change of control in the corporation has occurred since the beginning of its last fiscal
year.
c. Security Ownership of Management as of March 31, 2013
Title of Class
Name
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Unclassified
Common Shares
Sabino R. Padilla, Jr.
Director / Chairman of the Board
Stephen C. Roxas
Director / Chairman of Executive Committee
Andrew I. Liuson
Director / Vice- Chairman of the Board
Grace C. Liuson
Director / Deputy Vice-Chairman of the Board
Josef C. Gohoc
Director / President
Cesar E.A. Virata
Independent Director
Peter S. Dee
Independent Director
Alice C. Gohoc
Director
Helen C. Roxas
Director
Rufina C. Buensuceso
Executive Vice President
Emma A. Choa
Senior Vice President / Treasurer
Eden F. Go
Vice President
Amount and Nature
of Ownership
405,622
direct
13,289,915
direct/ indirect
10,258,846
direct/ indirect
3,817,243
direct
1,652,171
direct
55,835
direct
1,196,012
direct
3,245,000
direct/ indirect
81,120
direct
27,226
direct
333,480
direct/ indirect
166,600
direct
Citizenship Percent of Class
Filipino
0.050%
Filipino
1.638%
Filipino
1.265%
Filipino
0.471%
Filipino
0.204%
Filipino
0.007%
Filipino
0.147%
Filipino
0.400%
Filipino
0.010%
Filipino
0.003%
Filipino
0.041%
Filipino
0.021%
49
Title of Class
Name
Amount and Nature
of Ownership
Citizenship Percent of Class
Unclassified
Rudy Go
166,599
Filipino
0.021%
Common Shares Vice President
direct
Unclassified
Melita M. Revuelta
156,030
Filipino
0.019%
Common Shares Vice President
direct/ indirect
Unclassified
Romeo E. Ng
352,673
Filipino
0.043%
Common Shares Vice President
direct/ indirect
Unclassified
Josie T. Uy
69,251
Filipino
0.009%
Common Shares Vice President – Manila Branch
direct
Unclassified
Melita L. Tan
36,816
Filipino
0.005%
Common Shares Vice President
direct
Unclassified
Emma G. Jularbal
46,167
Filipino
0.006%
Common Shares Corporate Secretary
direct
Note: The above security ownership of management consists of Unclassified Common Shares amounting
to P 35,356,606 which is equivalent to 4.36%.
d. The Corporation knows no person holding more than 5% of common shares under a
voting trust or similar agreement.
Certain Relationships and Related Transactions
Statements)
(See Note 19 of Notes to Financial
1. Significant transactions with related parties consist of interest-bearing cash advances and
non- interest bearing advances for reimbursable expenses from and to the registrant which
the Company enters into with its affiliates in the regular course of its business.
The Registrant's affiliates are its parent company, Cityland Development Corporation
(CDC), and its subsidiary, Cityplans, Inc. (CPI) and Cityland, Inc. (CI), parent company of
CDC.
Interest rates used by the parties for the interest- bearing cash advances were the prevailing
market interest rates for loans averaged by the parties.
2. Parent of the Registrant
Cityland Development Corporation owns 49.73% of the outstanding capital of the
Registrant.
Corporate Governance
The evaluation system employed by the Corporation is thru a periodic self-rating system based on
the criteria on the leading practices and principles on good governance.
1. Measures Being Undertaken by the Company to fully comply with the adopted Leading
Practices on Good Corporate Governance.
We have started implementing the periodic self-rating system.
2. Any Deviation from the Company’s Manual of Corporate Governance (including a
disclosure of the name and position of the persons involved and sanctions imposed on said
individual).
There were no major deviations that require sanctions.
50
3. Any Plan to Improve Corporate Governance of the Company.
Based on the outcome of the periodic self-rating, we will come up with necessary actions /
procedures to improve the corporate governance of the Company.
In compliance with SEC Memorandum Circular No. 6, Series of 2009, the Company has
started implementing the applicable rules of the Revised Code of Corporate Governance in
its aim to continually improve its corporate governance system.
51
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Actual Fees and Expenses:
Registration Fee:
Filing Fee
Legal Research Fee
Legal and Accounting Fees
Publication Fee
Php 200,000
2,000
Php
202,000
30,000
30,000
Estimated Fees and Expenses:
Printing Costs of STCPs (estimate)
Documentary Stamps (estimate)
Total
10,000
1,000,000
Php
1,272,000
There is no insurance premium paid by the Registrant in connection with this offering.
52
CITY & LAND DEVELOPERS, INCORPORATED
INDEX TO THE FINANCIAL STATEMENTS AND
SUPPLEMENTARY SCHEDULES
Audited For Year 2012, 2011 and 2010 and
Unaudited As of the Six Months Ended June 30, 2013
Financial Statements
Statement of Management’s Responsibility for Financial Statements
Report of Independent Public Accountant
Balance Sheets as of December 31, 2012 and 2011
Statements of Income for the Years Ended December 31, 2012, 2011 and 2010
Statements of Changes in Stockholders’ Equity for the Years Ended
December 31, 2012, 2011 and 2010
Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010
Notes to Financial Statements
Balance Sheets as of June 30, 2013 and December 31, 2012
Statements of Income for the Six Months Ended June 30, 2013 and June 30, 2012
Statements of Comprehensive Income for the Six Months Ended June 30, 2013 and
June 30, 2012
Statements of Changes in Stockholders’ Equity as of June 30, 2013 and June 30, 2012
Statements of Cash Flows as of June 30, 2013 and June 30, 2012
Notes to Financial Statements
Index to the Audited Financial Statements and Supplementary Schedules
Schedule I:
Schedule of all the effective standards and interpretations (Part 1, 4J)
Schedule II:
Reconciliation of Retained Earnings Available for Dividend Declaration
(Part 1, 4C; Annex 68-C)
Schedule III: Supplementary schedule of financial soundness indicators
Schedule IV: Supplementary schedule required by Annex 68-E
Schedule V:
Schedule of Gross and Net Proceeds of Short-term Commercial Papers
( STCPs) Issued
CITY & LAND
DEVELOPERS.INC.
STATEMEN'IOF
MAI\IAGEMENT5
RESPONgIBILITYFORFINANCIALSTATEMENIS
The d3i6c€mtrr ol city a &nd B€rerop€Bi In4 js Esponsibler.r lho pEparalionand ran
pEsenrdjon
orth6nnancialnaGmentsforth€
yeaEendedDecembe.31,
2012and2011,hcluding
th8 €ddrfonar
mmponedlsaraoh€dthercin in acedane wirhPhilippine
FtianciatReponina
Slandalds.Thls Bsponsrbiliry
includesdesiqninqand tmpt€ment
nq i emat@nrob €teva lo lhe
pGpaElionandtslr prcsarnafion
of rhefnanciatsratemenrs
lhai arcr€e frch materiatmissrai€nefl.
.coununo osllmalesliat aF easonablein the ctrcumsrances.
ThaBoadof Dieclo6EVM.nd spprcves
lhe fnan.ial$alemenls
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sycip Gdtr6 v€l€yo & c!., the lndependedaudno€,appoirredby rhesto*notdeB has qamtn€d
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RI'FINAC.BUENSUCESO
I
Eieonivevi@ Prcsident/ chr€rFinand
Signed
rhis20' d.y orMamh,
2013
sUBscRIBED
ANDsWoRNto beroremelhis dayor APR0 2 201Lria' (s)ernibidno
to merheir
soolalsocudy Numb€6,astolrM:
N3oe
.
afty. s€binoR. P€diti.,Jr
Socrar
SeturitvNumber
Rufin. C. Buoreu6o
DocNo. j.lg
No.
!
c0 Box5ooo
1401n79/f
3-li/Mania
oqliSd$Rt{te8o
8tu'dGfr
SyCip Gorres Velayo & Co.
6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891 0307
Fax:
(632) 819 0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001,
December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015
INDEPENDENT AUDITORS’ REPORT
The Stockholders and the Board of Directors
City & Land Developers, Incorporated
Report on the Financial Statements
We have audited the accompanying financial statements of City & Land Developers, Incorporated,
which comprise the balance sheets as at December 31, 2012 and 2011, and the statements of income,
statements of comprehensive income, statements of changes in equity and statements of cash flows for
each of the three years in the period ended December 31, 2012, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatements, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
*SGVMG300370*
A member firm of Ernst & Young Global Limited
-2Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
City & Land Developers, Incorporated as at December 31, 2012 and 2011, and its financial
performance and its cash flows for each of the three years in the period ended December 31, 2012 in
accordance with Philippine Financial Reporting Standards.
Report on the Supplementary Information Required Under Revenue Regulations 19-2011
and 15-2010
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary information required under Revenue Regulations 19-2011
and 15-2010 in Notes 26 and 27 to the financial statements, respectively, is presented for purposes of
filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements.
Such information is the responsibility of the management of City & Land Developers, Incorporated.
The information has been subjected to the auditing procedures applied in our audit of the basic
financial statements. In our opinion, the information is fairly stated, in all material respects, in relation
to the basic financial statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Aileen L. Saringan
Partner
CPA Certificate No. 72557
SEC Accreditation No. 0096-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 102-089-397
BIR Accreditation No. 08-001998-58-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 3670024, January 2, 2013, Makati City
March 20, 2013
*SGVMG300370*
CITY & LAND DEVELOPIRS INCORPORATE
BALANCE SMETS
,0t2
ASSETS
cash ard CasnEqdvlhnll 0lote 4)
short-t rb clsh Invcstnent (Not 4)
Avauable-for-s'1erirrb.ial A$cb (Nore5)
Insrarlncnt contactr Receturbte(Notc6)
oin.. R€celvables0,{o1$? dd 19)
Rerl *tate Properti6 lo. Sale(Nole3)
aJok 3
Re'l Erbr € Propdies B.ld for FutoreDselopm?trr
(Nole
e)
InYsrrDentProperdes
2At1
183,r60,682
5,t74:222
!I.r35.796.s42 P2221,j25303
LIABILITIES AND EQIJTIY
accounGPalcbt.td Acmed ErPone€s
Not6 rnd ConE ct ?syrbL (Norel1)
Del€ded Td Lilbild6
20335,173
7,952,956
- net
celt l *fk-Pl pd valueO{ok I2l
in ?012ud
Authodln. 1.200,000,000sh46
20r
l
slm it
?00,000,000
lssued- 311J5O3?6sh&s neldbv 3l0 equ'tvholdeaiid
shda heldbt 769.quitv ioldd3
2ot2 ;d 6?6,042,298
in2oll
Additionalpaid-i! capnal
Netches6 ir fan vab€ of availablefoHale
6ndcialsetso{otct
Rebinedeanines(Nols 9 md 12):
Appropnakd
u;ppopnated
81r,x0'4?6
105,136
\ra6'739
?36.sr1,746
105,136
690'?10
100000,000
66?,142,e71
[mil|trllllililll|llll
CITY & LAND DEVELOPERS, INCORPORATED
STATEMENTS OF INCOME
Years Ended December 31
2011
2010
2012
REVENUE
Sales of real estate properties
Financial income (Notes 15 and 19)
Rent income (Note 9)
Other income
EXPENSES
Cost of real estate sales
Operating expenses (Notes 13 and 19)
Financial expenses (Notes 16 and 19)
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX (Note 18)
NET INCOME
BASIC/DILUTED EARNINGS PER SHARE
(Note 23)
P941,779,900 =
P766,761,471
P
=508,378,077 =
167,256,666
167,054,747
158,579,078
1,116,231
746,874
3,758,583
5,543,279
6,156,566
5,424,964
940,719,658
676,140,702 1,115,696,076
246,531,779
112,070,421
11,063,060
369,665,260
595,378,740
134,327,786
11,251,352
740,957,878
513,310,116
93,306,413
1,966,856
608,583,385
306,475,442
374,738,198
332,136,273
50,488,863
57,754,151
66,540,046
=316,984,047 =
P265,596,227
P
=255,986,579 P
P
=0.32
=0.39
P
=0.33
P
See accompanying Notes to Financial Statements.
*SGVMG300370*
CITY & LAND DEVELOPERS, INCORPORATED
STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31
2011
2010
2012
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Changes in fair value of available-for-sale
financial assets (Note 5)
Loss on impairment of available-for-sale financial
assets recognized in the statements of income
(Note 16)
TOTAL COMPREHENSIVE INCOME
=316,984,047 =
P265,596,227
P
=255,986,579 P
596,029
(21,248)
244,357
–
596,029
–
(21,248)
682,118
926,475
=316,962,799 =
P266,522,702
P
=256,582,608 P
See accompanying Notes to Financial Statements.
*SGVMG300370*
CITY & LAND DEVELOPERS, INCORPORATED
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
Capital Stock
(Note 12)
Net Changes
in Fair Values
of AvailableAdditional
for-Sale
Paid-in Financial Assets
Capital
(Note 5)
Retained Earnings
(Notes 9 and 12)
Appropriated Unappropriated
Total
BALANCES AT DECEMBER 31, 2009
Net income
Other comprehensive income
Total comprehensive income
Stock dividends - 20%
Fractional shares of stock dividends
Cash dividends - P
=0.050 per share
P
=469,474,212
–
–
–
93,894,613
–
–
P
=105,136
–
–
–
–
–
–
(P
=214,517)
–
926,475
926,475
–
–
–
P
=100,000,000
–
–
–
–
–
–
P
=398,171,380
265,596,227
–
265,596,227
(93,894,613)
(229)
(28,168,441)
P
=967,536,211
265,596,227
926,475
266,522,702
–
(229)
(28,168,441)
BALANCES AT DECEMBER 31, 2010
Net income
Other comprehensive loss
Total comprehensive income
Stock dividends - 20%
Fractional shares of stock dividends
Cash dividends - P
=0.140 per share
563,368,825
–
–
–
112,673,473
–
–
105,136
–
–
–
–
–
–
711,958
–
(21,248)
(21,248)
–
–
–
100,000,000
–
–
–
–
–
–
541,704,324
316,984,047
–
316,984,047
(112,673,473)
(292)
(78,871,635)
1,205,890,243
316,984,047
(21,248)
316,962,799
–
(292)
(78,871,635)
BALANCES AT DECEMBER 31, 2011
Net income
Other comprehensive income
Total comprehensive income
Stock dividends - 20%
Fractional shares of stock dividends
Cash dividends - P
=0.150 per share
Reversal of appropriation
676,042,298
–
–
–
135,208,178
–
–
–
105,136
–
–
–
–
–
–
–
690,710
100,000,000
–
–
–
–
–
–
(100,000,000)
667,142,971
255,986,579
–
255,986,579
(135,208,178)
(282)
(101,406,344)
100,000,000
1,443,981,115
255,986,579
596,029
256,582,608
–
(282)
(101,406,344)
–
BALANCES AT DECEMBER 31, 2012
P
=811,250,476
P
=105,136
P
=1,286,739
–
596,029
596,029
–
–
–
–
P
=–
P
=786,514,746
P
=1,599,157,097
See accompanying Notes to Financial Statements
*SGVMG300370*
CITY & LAND DEVELOPERS, INCORPORATED
STATEMENTS OF CASH FLOWS
Years Ended December 31
2011
2010
2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Interest income (Note 15)
Interest expense - net of amounts capitalized (Note 16)
Depreciation (Notes 9 and 13)
Retirement benefits cost (income) (Note 17)
Dividend income (Note 15)
Loss on impairment of available-for-sale financial
assets (Notes 5 and 16)
Operating income before working capital changes
Decrease (increase) in:
Installment contracts receivable
Other receivables
Real estate properties for sale
Real estate properties held for future development
Deposits and others
Increase (decrease) in accounts payable
and accrued expenses
Cash generated from (used in) operations
Interest received
Income taxes paid, including creditable and final
withholding taxes
Contributions to the retirement fund (Note 17)
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from matured short-term cash investments
Additions to investment properties (Note 9)
Dividends received
Purchases of short-term cash investments (Note 4)
Purchases of available-for-sale investments
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of short-term notes
Availment of short-term notes
Dividends paid
Interest paid
Payment of long-term loans
Availments of long-term loans
Net cash flows from (used in) financing activities
=374,738,198
P
=332,136,273
P
(158,562,451)
10,583,460
2,714,862
699,272
(16,627)
(167,240,788)
10,499,479
2,714,864
(83,184)
(15,878)
(167,035,773)
679,492
2,714,864
136,892
(18,974)
–
161,893,958
–
220,612,691
682,118
169,294,892
68,274,114
(5,048,405)
239,633,286
(108,043,421)
(13,643,157)
(302,196,399)
(1,124,075)
166,771,917
(111,069,253)
473,733
(143,658,031)
(1,403,743)
20,708,839
(125,711,244)
(3,137,852)
(124,522,932)
218,543,443
158,656,415
103,361,662
76,830,276
167,902,948
82,259,200
(1,647,939)
165,098,510
(47,212,774)
(646,921)
329,340,163
(60,190,861)
(118,683)
184,423,680
(44,865,147)
(128,669)
118,456,755
160,500,000
(157,865)
16,627
–
–
160,358,762
151,500,000
–
15,878
–
–
151,515,878
(114,956)
18,974
(289,500,000)
(227)
(289,596,209)
P
=306,475,442
(1,103,339,685) (1,288,753,467) (1,192,652,273)
1,016,257,319 1,265,689,640 1,305,965,151
(78,778,036)
(28,099,325)
(101,159,825)
(11,147,084)
(751,093)
(10,687,050)
–
(5,000,000)
(58,949,203)
–
–
5,000,000
30,513,256
(198,929,241) (117,988,947)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
290,769,684
217,950,611
(140,626,198)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR (Note 4)
311,540,443
93,589,832
234,216,030
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 4)
P
=602,310,127
=311,540,443
P
=93,589,832
P
See accompanying Notes to Financial Statements.
*SGVMG300370*
CITY & LAND DEVELOPERS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
1. Corporate Information
City & Land Developers, Incorporated (the Company) was incorporated in the Philippines on
June 28, 1988. Its primary purpose is to establish an effective institutional medium for acquiring
and developing suitable land sites for residential, office, commercial, institutional and industrial
uses primarily, but not exclusively, in accordance with the subdivision, condominium, and
cooperative concepts of land-utilization and land-ownership. The Company’s registered office
and principal place of business is 3rd Floor, Cityland Condominium 10, Tower I, 156 H. V. de la
Costa Street, Ayala North, Makati City.
The Company is 49.73% owned by Cityland Development Corporation (CDC), a publicly listed
company incorporated and domiciled in the Philippines. The Company’s ultimate parent is
Cityland, Inc. (CI), a company incorporated and domiciled in the Philippines, which prepares
consolidated financial statements and that of its subsidiaries.
The financial statements of the Company were authorized for issuance by the Board of Directors
(BOD) on March 20, 2013.
2. Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The financial statements of the Company have been prepared using the historical cost basis, except
for available-for-sale financial assets which are carried at fair values. The financial statements are
presented in Philippine peso (Peso), which is the Company’s functional currency, and rounded to
the nearest Peso except when otherwise indicated.
Statement of Compliance
The financial statements have been prepared in compliance with Philippine Financial Reporting
Standards (PFRS).
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for
the following amended Philippine Financial Reporting Standards (PFRS) and Philippine
Accounting Standards (PAS) effective as of January 1, 2012. The following amended PAS and
PFRS have no significant impact on the Company’s financial statements:
·
PAS 12, Income Taxes - Recovery of Underlying Assets. The amendment clarified the
determination of deferred tax on investment property measured at fair value and introduces a
rebuttable presumption that deferred tax on investment property measured using the fair value
model in PAS 40, Investment Property, should be determined on the basis that its carrying
amount will be recovered through sale. It implies the requirement that deferred tax on nondepreciable assets that are measured using the revaluation model in PAS 16, Property, Plant
and Equipment, always be measured on a sale basis of the asset. The amendment has no effect
on the entity’s performance or in its disclosures because the tax rate for these assets in the
jurisdictions in which they are located does not differ if they are recovered by sale or use.
*SGVMG300370*
-2·
PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure
Requirements. The amendment requires additional disclosures about financial assets that have
been transferred but not derecognized to enable the user of the Company’s financial
statements to understand the relationship with those assets that have not been derecognized
and their associated liabilities. In addition, the amendment requires disclosures about
continuing involvement in derecognized assets to enable the user to evaluate the nature of, and
risks associated with, the entity’s continuing involvement in those derecognized assets. The
entity did not have any assets with these characteristics, so there has not been any effect in the
presentation of its financial statements.
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of three
months or less from dates of acquisition, and are subject to an insignificant risk of change in value.
Short-term Cash Investments
Short-term cash investments are investments with maturities of more than three months but not
exceeding one year from dates of acquisition.
Financial Assets and Financial Liabilities
Date of recognition
The Company recognizes a financial asset or a financial liability in the balance sheet when it
becomes a party to the contractual provisions of the instrument. In the case of a regular way
purchase or sale of financial assets, recognition and derecognition, as applicable, is done using
settlement date accounting.
Initial recognition of financial instruments
Financial instruments are recognized initially at fair value, which is the fair value of the
consideration given (in case of an asset) or received (in case of a liability). The initial
measurement of financial instruments, except for those designated at fair value through profit or
loss, includes directly attributable transaction cost.
Classification of financial instruments
Subsequent to initial recognition, the Company classifies its financial instruments in the following
categories: financial assets and financial liabilities at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets and other financial
liabilities. The classification depends on the purpose for which the instruments are acquired and
whether they are quoted in an active market. Management determines the classification at initial
recognition and, where allowed and appropriate, re-evaluates this classification at each end of
reporting period.
a. Financial Assets or Financial Liabilities at Fair Value through Profit or Loss
A financial asset or financial liability is classified in this category if acquired principally for
the purpose of selling or repurchasing in the near term or upon initial recognition, it is
designated by the management as at fair value through profit or loss.
*SGVMG300370*
-3Financial assets or financial liabilities classified in this category are designated as at fair value
through profit or loss by management on initial recognition when the following criteria are
met:
·
·
·
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on
them on a different basis; or
The assets or liabilities are part of a group of financial assets or financial liabilities, or
both financial assets and financial liabilities, which are managed and their performance is
evaluated on a fair value basis, in accordance with a documented risk management or
investment strategy; or
The financial instrument contains an embedded derivative, unless the embedded
derivative does not significantly modify the cash flows or it is clear, with little or no
analysis, that it would not be separately recorded.
Financial assets or financial liabilities classified under this category are carried at fair value in
the balance sheet. Changes in the fair value of such assets and liabilities are recognized in the
statement of income.
The Company has no financial assets and financial liabilities at fair value through profit or
loss as of December 31, 2012 and 2011.
b. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise when the Company provides money, goods
or services directly to a debtor with no intention of trading the receivables. Loans and
receivables are carried at amortized cost in the balance sheet. Amortization is determined
using the effective interest rate method. Loans and receivables are included in current assets if
maturity is within 12 months from the end of reporting period. Otherwise, these are classified
as non-current assets.
The Company’s loans and receivables consist of cash in banks and cash equivalents, shortterm cash investments, installment contracts receivable and other receivables.
c. Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities wherein the Company has the positive intention and ability to
hold to maturity. Held-to-maturity investments are carried at amortized cost in the balance
sheet. Amortization is determined using the effective interest rate method. Assets under this
category are classified as current assets if maturity is within 12 months from the end of the
reporting period and noncurrent if maturity is more than a year.
The Company has no held-to-maturity investments as of December 31, 2012 and 2011.
d. Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. Available-for-sale financial assets are
carried at fair value in the balance sheet. Changes in the fair value of such assets are
accounted in the statement of comprehensive income and in equity. These financial assets are
*SGVMG300370*
-4classified as noncurrent assets unless the intention is to dispose such assets within 12 months
from the end of reporting period.
The Company’s available-for-sale financial assets consist of investments in quoted equity
securities that are traded in liquid markets, held for the purpose of investing in liquid funds
and not generally intended to be retained on a long-term basis.
e. Other Financial Liabilities
Other financial liabilities are non-derivative financial liabilities with fixed or determinable
payments that are not quoted in an active market. They arise when the Company owes money,
goods or services directly to a creditor with no intention of trading the payables. Other
financial liabilities are carried at cost or amortized cost in the balance sheet. Amortization is
determined using the effective interest rate method. Other financial liabilities are included in
current liabilities if maturity is within 12 months from the end of the reporting period,
otherwise, these are classified as non-current.
The Company’s other financial liabilities consist of accounts payable and accrued expenses
and notes and contracts payable.
Determination of fair value
The fair value of financial instruments traded in active markets at the end of reporting period is
based on their quoted market price or dealer price quotations (bid price for long positions and ask
price for short positions), without any deduction for transaction costs. When current bid and
asking prices are not available, the price of the most recent transaction provides evidence of the
current fair value as long as there has not been a significant change in economic circumstances
since the time of the transaction.
For all other financial instruments not traded in an active market, the fair value is determined
using appropriate valuation techniques. Valuation techniques include net present value
techniques, comparison to similar instruments for which market observable prices exist, option
pricing models and other relevant valuation models.
“Day 1” difference
Where the transaction price in a non-active market is different from the fair value of other
observable current market transactions in the same instrument or based on a valuation technique
whose variables include only data from observable market, the Company recognizes the difference
between the transaction price and fair value (a “Day 1” difference) in the statement of income
unless it qualifies for recognition as some other type of asset. In cases where inputs are made of
data which are not observable, the difference between the transaction price and model value is
only recognized in the statement of income when the inputs become observable or when the
instrument is derecognized. For each transaction, the Company determines the appropriate
method of recognizing the “Day 1” difference.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if, and only if, there is currently enforceable legal right to offset the recognized amounts and
there is an intention to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
*SGVMG300370*
-5Derecognition of Financial Assets and Financial Liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when:
·
·
·
the rights to receive cash flows from the asset have expired; or
the Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a “pass-through”
arrangement; or
the Company has transferred its right to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
Where the Company has transferred its right to receive cash flows from a financial asset and has
neither transferred nor retained substantially all the risks and rewards of the financial asset nor
transferred control of the financial asset, the asset is recognized to the extent of the Company’s
continuing involvement in the financial asset. Continuing involvement that takes the form of a
guarantee over the transferred financial asset is measured at the lower of the original carrying
amount of the financial asset and the maximum amount of consideration that the Company could
be required to repay.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has expired.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognized in the statement of
income.
Impairment of Financial Assets
The Company assesses at each end of the reporting period whether a financial asset or a group of
financial assets is impaired.
Assets carried at amortized cost
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. Objective evidence includes observable data that
comes to the attention of the Company about loss events such as, but not limited to significant
financial difficulty of the counterparty, a breach of contract, such as default or delinquency in
interest or principal payments, probability that the borrower will enter bankruptcy or other
financial reorganization. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in the group
of financial assets with similar credit risk and characteristics and that group of financial assets is
collectively assessed for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is recognized are not included in a collective assessment of impairment.
The impairment assessment is performed at each end of reporting period. For the purpose of
collective evaluation of impairment, financial assets are grouped on the basis of such credit risk
characteristics such as customer type, payment history, past-due status and term.
*SGVMG300370*
-6If there is an objective evidence that an impairment loss on loans and receivables carried at
amortized cost has been incurred, the amount of loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rates (i.e., the effective interest rate computed at initial recognition). The carrying amount
of the asset shall be reduced either directly or through the use of an allowance account. The
amount of loss, if any, is recognized in the statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed by adjusting the allowance account. The amount of the
reversal is recognized in the statement of income. Interest income continues to be accrued on the
reduced carrying amount based on the original effective interest rate of the asset. Loans together
with the associated allowance are written off when there is no realistic prospect of future recovery
and all collateral, if any, has been realized or has been transferred to the Company. If in a
subsequent year, the amount of the estimated impairment loss increases or decreases because of an
event occurring after the impairment was recognized, the previously recognized impairment loss is
increased or reduced by adjusting the allowance for impairment losses account. If a future
write off is later recovered, the recovery is recognized in the statement of income under “Other
income” account. Any subsequent reversal of an impairment loss is recognized in the statement of
income to the extent that the carrying value of the asset does not exceed its amortized cost at
reversal date.
Assets carried at cost
If there is an objective evidence that an impairment loss of an unquoted equity instrument that is
not carried at fair value because its fair value cannot be reliably measured, or a derivative asset
that is linked to and must be settled by delivery of such an unquoted equity instrument has been
incurred, the amount of loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows discounted at the current market rate of return for
a similar financial asset.
Available-for-sale financial assets
In the case of debt instruments classified as available-for-sale financial assets, impairment is
assessed based on the same criteria as financial assets carried at amortized cost. Future interest
income is based on the reduced carrying amount and is accrued based on the rate of interest used
to discount future cash flows for the purpose of measuring impairment loss. Such accrual is
recorded as part of “Financial income” account in the statement of income. If, in subsequent year,
the fair value of a debt instrument increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in the statement of income, the impairment
loss is reversed through the statement of income.
In case of equity investments classified as available-for-sale financial asset, this would include a
significant or prolonged decline in the fair value of the investments below its cost. Where there is
evidence of impairment, the cumulative loss - measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously
recognized in the statement of income - is removed from equity and recognized in the statement of
income. Increases in fair value after impairment are recognized in the statement of comprehensive
income and directly in the statement of changes in equity.
Real Estate Properties for Sale and Real Estate Properties Held for Future Development
Property acquired or being constructed for sale in the ordinary course of business and held for
future development, rather than to be held for rental or capital appreciation, is classified as real
*SGVMG300370*
-7estate properties for sale and real estate properties held for future development and are measured
at the lower of cost and net realizable value (NRV).
Cost includes:
· Land cost
· Amounts paid to contractors for construction
· Borrowing costs, planning and design costs, costs of site preparation, professional fees,
property transfer taxes, construction overheads and other related costs of sale
NRV is the estimated selling price in the ordinary course of the business, based on market prices
at the reporting date, less estimated costs of completion and the estimated costs of sale.
Upon commencement of development, the real estate properties held for future development is
transferred to real estate properties for sale.
Investment Properties
Investment properties which represent real estate properties for lease are measured initially at cost,
including transaction costs. The carrying amount includes the cost of replacing part of an existing
real estate property for lease at the time that cost is incurred if the recognition criteria are met, and
excludes the costs of day-to-day servicing of the property. The carrying values of revalued
properties transferred to real estate properties for lease on January 1, 2004 were considered as the
assets’ deemed cost as of said date.
Subsequent to initial measurement, real estate properties for lease, except land, are carried at cost
less accumulated depreciation and amortization and any impairment in value. Land is carried at
cost less any impairment in value. Buildings for lease are depreciated over their useful life of 25
years using the straight-line method.
Investment properties are derecognized when either they have been disposed of or when the
property is permanently withdrawn from use and no future economic benefit is expected from its
disposal.
Any gains or losses on the retirement or disposal of investment properties are
recognized in the statement of income in the year of retirement or disposal.
Transfers are made to investment properties when, and only when, there is a change in use,
evidenced by ending of owner-occupation, commencement of an operating lease to another party,
or ending of construction or development. Transfers are made from investment properties when,
and only when, there is a change in use, evidenced by commencement of owner-occupation or
commencement of development with a view to sale.
Transfers between investment properties, owner-occupied property and inventories do not change
the carrying amount of the property transferred and they do not change the cost of that property for
measurement or disclosure purposes.
Impairment of Nonfinancial Assets
The carrying values of investment properties are reviewed for impairment when events or changes
in circumstances indicate that the carrying values may not be recoverable. If any such indication
exists and where the carrying value exceeds the estimated recoverable amount, the assets are either
written down to their recoverable amount or provided with valuation allowance. The recoverable
amount of the assets is the greater of fair value less costs to sell and value-in-use. Valuation
allowance is provided for the carrying amount of assets which is not expected to be recovered.
Impairment losses, if any, are recognized in the statement of income.
The Company assesses at each reporting period whether there is an indication that previously
recognized impairment losses may no longer exist or may have decreased. The Company
*SGVMG300370*
-8considers external and internal sources of information in its assessment of the reversal of
previously recognized impairment losses. A previously recognized impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognized. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognized for
the asset in prior years. Such reversal is recognized in the statement of income. After such a
reversal, the depreciation is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
Value-added Tax (VAT)
Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where
the VAT incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable.
The net amount of VAT recoverable from or payable to, the taxation authority is included as part
of “Other assets” or “Accounts payable and accrued expenses,” respectively, in the balance sheet.
Capital Stock
Capital stock is measured at par value for all shares issued and outstanding. When the Company
issues more than one class of stock, a separate account is maintained for each class of stock and
the number of shares issued. Incremental costs incurred directly attributable to the issuance of
new shares are shown in equity as a deduction from proceeds, net of tax.
The Company’s shares which are reacquired (treasury shares) are recognized at cost and deducted
from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or
cancellation of the Company’s own equity instruments. Any difference between the carrying
amount and the consideration, if reissued is recognized as additional paid-in capital.
Retained Earnings
Retained earnings represent the cumulative balance of net income or loss, dividend distributions,
effects of the changes in accounting policy and other capital adjustments.
Unappropriated retained earnings represent that portion of retained earnings which is free and can
be declared as dividends to stockholders. Appropriated retained earnings represent that portion of
retained earnings which has been restricted and therefore is not available for any dividend
declaration.
Dividend Distributions
Dividends on common shares are deducted from retained earnings when declared. Dividends for
the year that are declared after the end of the reporting period but before the approval for issuance
of financial statements are dealt with as an event after the reporting period.
Revenue and Costs Recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the
Company and the amount of revenue can be reliably measured. Revenue is measured at the fair
value of the consideration received excluding VAT. The Company assesses its revenue
arrangements against specific criteria in order to determine if it is acting as principal or agent. The
Company has concluded that it is acting as a principal in all of its revenue arrangements.
*SGVMG300370*
-9The following specific recognition criteria must also be met before revenue is recognized:
Sales of real estate properties
Sales of condominium units and residential houses where the Company has material obligations
under the sales contract to provide improvements after the property is sold are accounted for under
the percentage of completion method. Under this method, revenue on sale is recognized as the
related obligations are fulfilled.
Revenue from sales of completed residential lots and housing units, where a sufficient down
payment has been received, the collectability of the sales price is reasonably assured, the refund
period has expired, the receivables are not subordinated and the seller is not obliged to complete
improvements, is accounted for under the full accrual method. If the criterion of full accrual
method was not satisfied, any cash received by the Company is included in “Accounts payable and
accrued expenses” in the balance sheet until all the conditions for recording a sale are met.
Cost of real estate sales
Cost of real estate sales is recognized consistent with the revenue recognition method applied.
Cost of subdivision land and condominium units sold before the completion of the development is
determined on the basis of the acquisition cost of the land plus its full development costs, which
include estimated costs for future development works, as determined by the Company’s in-house
technical staff.
The cost of inventory recognized in profit or loss on disposal is determined with reference to the
specific costs incurred on the property, allocated to saleable area based on relative size and takes
into account the percentage of completion used for revenue recognition purposes.
Interest income
Interest income from cash in banks, cash equivalents, short-term cash investments and installment
contracts receivable is recognized as the interest accrues taking into account the effective yield on
interest.
Dividend income
Dividend income is recognized when the Company’s right to receive the payment is established.
Operating Leases
Operating leases represent those leases under which substantially all the risks and rewards of
ownership of the leased assets remain with the lessors. Rent income from operating leases is
recognized as income when earned on a straight-line basis over the term of the lease agreement.
Initial direct costs incurred specifically to earn revenue from an operating lease are recognized as
an expense in the statement of income in the period in which they are incurred.
Operating expenses
Operating expenses constitute costs of administering the business. These costs are expensed as
incurred.
Financial expenses
Financial expenses consist of interest incurred from notes and contracts payable. Interest
attributable to a qualifying asset is capitalized as part of the cost of the property while others are
expensed as incurred.
Interest costs are capitalized if they are directly attributable to the acquisition, development and
construction of real estate projects as part of the cost of such projects. Capitalization of interest
cost (1) commences when the activities to prepare the assets for their intended use are in progress
*SGVMG300370*
- 10 and expenditures and interest costs are being incurred, (2) is suspended during extended periods in
which active development is interrupted, and (3) ceases when substantially all the activities
necessary to prepare the assets for their intended use are complete. If the carrying amount of the
asset exceeds its recoverable amount, an impairment loss is recorded.
Other Comprehensive Income
Other comprehensive income comprises items of income and expense that are not recognized in
the statement of income for the year in accordance with PFRS. Other comprehensive income of
the Company includes gains and losses on remeasuring available-for-sale financial assets.
Retirement Benefits Cost
Retirement benefits cost is actuarially determined using the projected unit credit method.
Actuarial gains and losses are recognized as income or expense when the net cumulative
unrecognized actuarial gains and losses for the plan at the end of the previous reporting year
exceeded 10% of the higher of the present value of the defined benefit obligation and the fair
value of plan assets at that date. These gains or losses are recognized over the expected average
remaining working lives of the employees participating in the plan.
Past service cost is recognized as an expense on a straight-line basis over the average period until
the benefits become vested. If the benefits are already vested immediately following the
introduction of, or changes to, a retirement plan, past service cost is recognized immediately.
The retirement plan liability is the aggregate of the present value of the defined benefit obligation
and actuarial gains and losses not recognized, reduced by past service cost not yet recognized, and
the fair value of plan assets out of which the obligations are to be settled directly. If such
aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of
cumulative unrecognized net actuarial losses and past service cost and the present value of any
economic benefits available in the form of refunds from the plans or reductions in the future
contributions to the plan.
If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past
service cost and the present value of any economic benefits available in the form of refunds from
the plan or reductions in the future contributions to the plan, net actuarial losses of the current
period and past service cost of the current period are recognized immediately to the extent that
they exceed any reduction in the present value of those economic benefits. If there is no change or
increase in the present value of economic benefits, the entire net actuarial losses of the current
period and past service cost of the current period are recognized immediately. Similarly, net
actuarial gains of the current period after the deduction of past service cost of the current period
exceeding any increase in the present value of the economic benefits stated above are recognized
immediately if the asset is measured at the aggregate of cumulative unrecognized net actuarial
losses and past service cost at the present value of any economic benefits available in the form of
refunds from the plan or reductions in the future contributions to the plan. If there is no change or
decrease in the present value of the economic benefits, the entire net actuarial gains of the current
period after the deduction of past service cost of the current period are recognized immediately.
Provisions and Contingencies
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. If the effect of the time value of money is material, provisions are determined by
discounting the effective future cash flows at a pre-tax rate that reflects current market assessment
of the time value of money and, where appropriate, the risks specific to the liability. Where
*SGVMG300370*
- 11 discounting is used, the increase in the provisions due to the passage of time is recognized as an
interest expense.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets
are not recognized in the financial statements but disclosed in the notes to financial statements
when an inflow of economic benefits is probable.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted at the end of
reporting period.
Current income tax for current and prior periods shall, to the extent unpaid, be recognized as a
liability under “Income tax payable” account in the balance sheet. If the amount already paid in
respect of current and prior periods exceeds the amount due for those periods, the excess shall be
recognized as an asset under “Other assets” account in the balance sheet.
Deferred income tax
Deferred income tax is recognized on all temporary differences at the end of reporting period
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences to the extent that it is
probable that sufficient future taxable profits will be available against which the deductible
temporary differences can be utilized. Deferred income tax assets and deferred income tax
liabilities are not recognized when it arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each end of reporting period and
reduced to the extent that it is no longer probable that sufficient future taxable profits will be
available to allow all or part of the deferred income tax assets to be utilized. Unrecognized
deferred income tax assets are reassessed at each end of reporting period and are recognized to the
extent that it has become probable that sufficient future taxable profit will allow the deferred
income tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively enacted at the end of the reporting
period.
Income tax relating to items recognized directly in equity is recognized in the statement of
comprehensive income and in the statement of changes in equity and not in the statement of
income.
Earnings Per Share
Basic earnings per share is computed by dividing the net income for the year by the weighted
average number of ordinary shares issued and outstanding after considering the retrospective
effect, if any, of stock dividends declared during the year.
*SGVMG300370*
- 12 Diluted earnings per share is calculated by dividing the net income for the year by the weighted
average number of ordinary shares outstanding during the year, excluding treasury shares, and
adjusted for the effects of all dilutive potential common shares, if any. In determining both the
basic and diluted earnings per share, the effect of stock dividends, if any, is accounted for
retrospectively.
Segment Reporting
The Company’s operating businesses are organized and managed separately according to the
nature of the products and services provided, with each segment representing a strategic business
unit that offers different products and serves different markets. Financial information on business
segments is presented in Note 24 in the financial statements. The Company’s asset-producing
revenues are located in the Philippines (i.e., one geographical location). Therefore, geographical
segment information is no longer presented.
Events After the Reporting Period
Post year-end events that provide additional information about the Company’s position at the end
of reporting period (adjusting events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to the financial statements when
material.
New Accounting Standards, Interpretations and Amendments to
Existing Standards Effective Subsequent to December 31, 2012
The Company will adopt the standards and interpretations enumerated below when these become
effective. Except as otherwise indicated, the Company does not expect the adoption of these new
changes in PFRS to have a significant impact on the financial statements. The relevant disclosures
will be included in the notes to the financial statements when these become effective.
Effective in 2013
· PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive
Income. The amendments to PAS 1 change the grouping of items presented in other
comprehensive income. Items that could be reclassified (or “recycled”) to profit or loss at a
future point in time (for example, upon derecognition or settlement) would be presented
separately from items that will never be reclassified. The amendment becomes effective for
annual periods beginning on or after July 1, 2012. The amendment affects presentation only
and has therefore no impact on the Company’s financial position and performance.
·
Amendments to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and
Financial Liabilities, require an entity to disclose information about rights of offset and related
arrangements (such as collateral agreements).
The new disclosures are required for all recognized financial instruments that are offset in
accordance with PAS 32. These disclosures also apply to recognized financial instruments
that are subject to an enforceable master netting arrangement or ‘similar agreement’,
irrespective of whether they are offset in accordance with PAS 32. The amendments require
entities to disclose, in a tabular format unless another format is more appropriate, the
following minimum quantitative information.
This is presented separately for financial assets and financial liabilities recognized at the end
of the reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
b) The amounts that are offset in accordance with the criteria in PAS 32 when determining
the net amounts presented in the balance sheet;
*SGVMG300370*
- 13 c) The net amounts presented in the balance sheet;
d) The amounts subject to an enforceable master netting arrangement or similar agreement
that are not otherwise included in (b) above, including:
i. Amounts related to recognized financial instruments that do not meet some or all of
the offsetting criteria in PAS 32; and
ii. Amounts related to financial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (i) above.
The amendments to PFRS 7 are to be applied retrospectively for annual periods beginning on
or after January 1, 2013. The amendment affects disclosures only and will have no impact on
the Company’s financial position and performance.
·
PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27, Consolidated
and Separate Financial Statements, that addresses the accounting for consolidated financial
statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose
Entities. PFRS 10 establishes a single control model that applies to all entities including
special purpose entities. The changes introduced by PFRS 10 will require management to
exercise significant judgment to determine which entities are controlled, and therefore, are
required to be consolidated by a parent, compared with the requirements that were in PAS 27.
This standard becomes effective for annual periods beginning on or after January 1, 2013. This
standard will not impact the Company’s financial position and performance.
·
PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13,
Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the
option to account for jointly controlled entities (JCEs) using proportionate consolidation.
Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity
method. This standard becomes effective for annual periods beginning on or after
January 1, 2013. This standard will not impact the Company’s financial position and
performance.
·
PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were
previously included in PAS 27 related to consolidated financial statements, as well as all of the
disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to
an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A
number of new disclosures are also required. This standard becomes effective for annual
periods beginning on or after January 1, 2013. This standard will not impact the Company’s
financial position and performance.
·
PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all
fair value measurements. PFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under PFRS when fair value
is required or permitted. This standard becomes effective for annual periods beginning on or
after January 1, 2013. The Company is currently assessing the impact that this standard will
have on the financial position and performance.
·
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface
Mine, applies to waste removal costs that are incurred in surface mining activity during the
production phase of the mine (“production stripping costs”) and provides guidance on the
recognition of production stripping costs as an asset and measurement of the stripping activity
asset. This interpretation becomes effective for annual periods beginning on or after
January 1, 2013. This interpretation will not impact the Company’s financial position and
performance.
*SGVMG300370*
- 14 ·
Amendments to PAS 19, Employee Benefits, range from fundamental changes such as
removing the corridor mechanism and the concept of expected returns on plan assets to simple
clarifications and rewording. The revised standard also requires new disclosures such as,
among others, a sensitivity analysis for each significant actuarial assumption, information on
asset-liability matching strategies, duration of the defined benefit obligation, and
disaggregation of plan assets by nature and risk. The amendment becomes effective for
annual periods beginning on or after January 1, 2013. Once effective, the Company has to
apply the amendments retroactively to the earliest period presented.
The Company obtained the services of an external actuary to compute the retirement benefits
cost and liability based on the amended PAS 19. The impact to the financial statements upon
adoption of the standard are detailed below:
Increase (decrease) in:
Balance sheet
Net retirement plan asset
Deferred tax liability
Other comprehensive income
Retained earnings
As of
December 31,
2012
As of
December 31,
2011
(P
=1,649,202)
(494,761)
(1,150,115)
(4,326)
(P
=2,568,386)
(770,516)
(1,734,982)
(62,888)
As of
January 1,
2011
(P
=320,633)
(96,190)
(269,866)
45,423
2012
2011
Statement of Income
Net retirement benefits cost
Income tax expense
Profit for the year
2010
P83,660
=
(25,098)
58,562
(P
=154,730)
46,419
(108,311)
64,890
(19,467)
45,423
Statement of comprehensive income
Other comprehensive income,
net of deferred income tax
584,867
(1,465,116)
(39,667)
·
PAS 27, Separate Financial Statements (as revised in 2011). As a consequence of the new
PFRS 10 and PFRS 12, what remains of PAS 27 is limited to accounting for subsidiaries,
jointly controlled entities, and associates in separate financial statements. The Company does
not present separate financial statements. The amendment becomes effective for annual
periods beginning on or after January 1, 2013.
·
PAS 28, Investments in Associates and Joint Ventures (as revised in 2011). As a consequence
of the new PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in
Associates and Joint Ventures, and describes the application of the equity method to
investments in joint ventures in addition to associates. The amendment becomes effective for
annual periods beginning on or after January 1, 2013. The Company expects that this
amendment will not have any impact on the Company’s financial position and performance.
Annual Improvements to PFRSs (2009-2011 cycle)
The Annual Improvements to PFRSs (2009-2011 cycle) contain non-urgent but necessary
amendments to PFRS. The amendments are effective for annual periods beginning on or after
January 1, 2013 and are applied retrospectively. Earlier application is permitted.
·
PFRS 1, First-time Adoption of PFRS - Borrowing Costs, clarifies that, upon adoption of
PFRS, an entity that capitalized borrowing costs in accordance with its previous generally
*SGVMG300370*
- 15 accepted accounting principles, may carry forward, without any adjustment, the amount
previously capitalized in its opening statement of financial position at the date of transition.
Subsequent to the adoption of PFRS, borrowing costs are recognized in accordance with
PAS 23, Borrowing Costs. The amendment does not apply to the Company as it is not a firsttime adopter.
·
PAS 1, Presentation of Financial Statements - Clarification of the Requirements for
Comparative Information, clarify the requirements for comparative information that are
disclosed voluntarily and those that are mandatory due to retrospective application of an
accounting policy, or retrospective restatement or reclassification of items in the financial
statements. An entity must include comparative information in the related notes to the
financial statements when it voluntarily provides comparative information beyond the
minimum required comparative period. The additional comparative period does not need to
contain a complete set of financial statements. On the other hand, supporting notes for the
third balance sheet (mandatory when there is a retrospective application of an accounting
policy, or retrospective restatement or reclassification of items in the financial statements) are
not required. The amendments affect disclosures only and have no impact on the Company’s
financial position or performance.
·
PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment, clarifies that
spare parts, stand-by equipment and servicing equipment should be recognized as property,
plant and equipment when they meet the definition of property, plant and equipment and
should be recognized as inventory if otherwise. The Company is currently assessing impact of
the amendments to PAS 16.
·
PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity
Instruments, clarifies that income taxes relating to distributions to equity holders and to
transaction costs of an equity transaction are accounted for in accordance with PAS 12,
Income Taxes. The Company expects that this amendment will not have any impact on its
financial position and performance.
·
PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information
for Total Assets and Liabilities, clarifies that the total assets and liabilities for a particular
reportable segment need to be disclosed only when the amounts are regularly provided to the
chief operating decision maker and there has been a material change from the amount
disclosed in the entity’s previous annual financial statements for that reportable segment. The
amendment affects disclosures only and has no impact on the Company’s financial position
and performance.
Effective in 2014
· PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities, clarifies the meaning of “currently has a legally enforceable right to offset” and
also the application of the PAS 32 offsetting criteria to settlement systems (such as central
clearing house systems) which apply gross settlement mechanisms that are not simultaneous.
The amendments to PAS 32 are to be retrospectively applied for annual periods beginning on
or after January 1, 2014.
Effective in 2015
· PFRS 9, Financial Instruments - Classification and Measurement, as issued, reflects the first
phase on the replacement of PAS 39 and applies to the classification and measurement of
financial assets and liabilities as defined in PAS 39, Financial Instruments: Recognition and
Measurement. Work on impairment of financial instruments and hedge accounting is still
ongoing, with a view to replacing PAS 39 in its entirety. PFRS 9 requires all financial assets
*SGVMG300370*
- 16 to be measured at fair value at initial recognition. A debt financial asset may, if the fair value
option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a
business model that has the objective to hold the assets to collect the contractual cash flows
and its contractual terms give rise, on specified dates, to cash flows that are solely payments of
principal and interest on the principal outstanding. All other debt instruments are
subsequently measured at fair value through profit or loss. All equity financial assets are
measured at fair value either through other comprehensive income or profit or loss. Equity
financial assets held for trading must be measured at fair value through profit or loss. For
FVO liabilities, the amount of change in the fair value of a liability that is attributable to
changes in credit risk must be presented in other comprehensive income. The remainder of
the change in fair value is presented in profit or loss, unless presentation of the fair value
change in respect of the liability’s credit risk in other comprehensive income would create or
enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and
measurement requirements for financial liabilities have been carried forward into PFRS 9,
including the embedded derivative separation rules and the criteria for using the FVO.
The Company has made an evaluation of the impact of the adoption of this standard. The
Company decided not to early adopt PFRS 9 for its 2012 reporting ahead of its effectivity date
on January 1, 2015 and therefore the financial statements and as of December 31, 2012 and
2011 do not reflect the impact of the said standard. Based on this evaluation, loans and
receivables and other financial liabilities, both carried at amortized cost, will not be
significantly affected.
The Company shall conduct another impact assessment at the end of the 2013 reporting period
using the financial statements as of and for the year ended December 31, 2012. Given the
amendments on PFRS 9, the Company at present, does not plan to early adopt in 2013
financial reporting. It plans to reassess its current position once the phases of PFRS 9 on
impairment and hedge accounting become effective.
Deferred Effectivity
· Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers
accounting for revenue and associated expenses by entities that undertake the construction of
real estate directly or through subcontractors. This Interpretation requires that revenue on
construction of real estate be recognized only upon completion, except when such contract
qualifies as construction contract to be accounted for under PAS 11, Construction Contracts,
or involves rendering of services in which case revenue is recognized based on stage of
completion. Contracts involving provision of services with the construction materials and
where the risks and reward of ownership are transferred to the buyer on a continuous basis will
also be accounted for based on stage of completion. The SEC and the Financial Reporting
Standards Council have deferred the effectivity of this interpretation until the final Revenue
standard is issued by the International Accounting Standards Board and an evaluation of the
requirements of the final Revenue standard against the practices of the Philippine real estate
industry is completed. The Company will quantify the effect when the final Revenue standard
is issued.
3. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements requires management to make judgments, estimates
and assumptions that affect the amounts reported in the financial statements and accompanying
notes. In the opinion of management, these financial statements reflect all adjustments necessary
to present fairly the results for the periods presented. Actual results could differ from such
estimates.
*SGVMG300370*
- 17 Judgments
In the process of applying the Company’s accounting policies, management has made the
following judgments, apart from those involving estimations, which has the most significant effect
on the amounts recognized in the financial statements:
Determination of the Company’s functional currency
The Company, based on the relevant economic substance of the underlying circumstances, has
determined its functional currency to be Peso. It is the currency that influences the sale of real
estate properties and services and the costs of selling the same.
Classification of financial instruments
The Company classifies a financial instrument, or its component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the Company’s balance sheet (see Note 20).
The Company determines the classification at initial recognition and, where allowed and
appropriate, re-evaluates this designation at every reporting date.
Classification of leases - Company as lessor
The Company has entered into the property leases of its investment properties where it has
determined that the risks and rewards of ownership are retained with the Company. As such, these
lease agreements are accounted for as operating leases.
Classification of real estate properties
The Company determines whether a property is classified as for lease or for sale or for future
development and for capital appreciation.
Real estate properties which are not occupied substantially for use by, or in the operations of, the
Company, nor for sale in the ordinary course of business, but are held primarily to earn rental
income and capital appreciation are classified as investment properties. Investment properties
amounted to =
P180.60 million and P
=183.16 million as of December 31, 2012 and 2011,
respectively (see Note 9).
Real estate properties which the Company develops and intends to sell before or on completion of
construction are classified as real estate properties for sale and for future development. Real estate
properties for sale and for future development amounted to =
P514.26 million and P
=628.47 million
as of December 31, 2012 and 2011, respectively (see Note 8).
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the
end of reporting period that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below:
Determination of fair value of financial instruments
Financial assets and financial liabilities, on initial recognition, are accounted for at fair value. The
fair values of financial assets and financial liabilities, on initial recognition, are normally the
transaction prices. In the case of those financial assets and financial liabilities that have no active
markets, fair values are determined using an appropriate valuation technique.
*SGVMG300370*
- 18 As of December 31, 2012 and 2011, the total carrying value of financial assets amounted to
=1,471.85 million and P
P
=1,404.23 million, respectively, while the total fair values of financial
liabilities amounted to =
P500.24 million and P
=693.88 million, respectively (see Note 20). The
carrying values of financial assets and liabilities are equal to fair values.
Estimation of allowance for impairment of receivables
The level of this allowance is evaluated by management based on past collection history and other
factors which include, but are not limited to the length of the Group’s relationship with the
customer, the customer’s payment behavior and known market factors that affect the collectability
of the accounts. As of December 31, 2012 and 2011, installment contracts receivable and other
receivables aggregated to =
P817.30 million and =
P880.62 million, respectively. There was no
impairment of receivables in 2012 and 2011 (see Notes 6 and 7).
Impairment of available-for-sale financial assets
An impairment issue arises when there is an objective evidence of impairment, which involves
significant judgment. In making this judgment, the Company evaluates the financial health of the
issuer, among others. The Company treats available-for-sale equity investments as impaired when
there has been a significant or prolonged decline in the fair value below its cost or where other
objective evidence of impairment exists. The Company treats “significant” generally as 20% or
more of cost and “prolonged” as greater than 12 months for quoted equity securities. In addition,
the Company evaluates other factors, including normal volatility in share price for quoted equities
and the future cash flows and the discount factors for unquoted equities.
In 2010, the Company recognized impairment loss amounting to =
P0.68 million on available-forsale financial assets. No impairment loss was recognized in 2012 and 2011 (see Notes 5 and 16).
Available-for-sale financial assets amounted to =
P1.56 million and =
P0.96 million as of
December 31, 2012 and 2011, respectively (see Note 5).
Estimation of percentage of completion of projects
The Company estimates the percentage of completion of ongoing projects for purposes of
accounting for the estimated costs of development as well as revenue to be recognized. The
percentage of completion is based on the technical evaluation of the independent project engineers
as well as management’s monitoring of the costs, progress and improvements of the projects.
Gross profit on sales of real estate properties amounted to =
P261.85 million, =
P346.40 million and
=253.45 million in 2012, 2011 and 2010, respectively.
P
Determination of net realizable value of real estate properties for sale
and held for future development
The Company’s estimates of the net realizable value of real estate properties are based on the most
reliable evidence available at the time the estimates are made, or the amount that the inventories
are expected to be realized. These estimates consider the fluctuations of price or cost directly
relating to events occurring after the end of the period to the extent that such events confirm
conditions existing at the end of the period. A new assessment is made of net realizable value in
each subsequent period. When the circumstances that previously caused inventories to be written
down below cost no longer exist or when there is a clear evidence of an increase in net realizable
value because of changes in economic circumstances, the amount of the write-down is reversed so
that the new carrying amount is the lower of the cost and the revised net realizable value. The
Company’s real estate properties for sale and held for future development as of
December 31, 2012 and 2011 amounted to =
P514.26 million and =
P628.47 million, respectively
(see Note 8).
*SGVMG300370*
- 19 Estimation of useful lives of investment properties
The Company estimates the useful lives of investment properties based on the internal technical
evaluation and experience with similar assets. Estimated lives of investment properties are
reviewed periodically and updated if expectations differ from previous estimates due to wear and
tear, technical and commercial obsolescence and other limits on the use of the assets. As of
December 31, 2012 and 2011, net book value of depreciable investment properties amounted to
nil and P
=2.71 million, respectively (see Note 9).
Impairment of investment properties
The Company determines whether its investment properties are impaired when impairment
indicators exist such as significant underperformance relative to expected historical or projected
future operating results and significant negative industry or economic trends. When an
impairment indicator is noted, the Company makes an estimation of the value-in-use of the cashgenerating units to which the assets belong. Estimating the value-in-use requires the Company to
make an estimate of the expected future cash flows from the cash-generating unit and also to
choose an appropriate discount rate in order to calculate the present value of those cash flows. No
impairment indicator was noted as of December 31, 2012 and 2011. Net book values of
investment properties as of December 31, 2012 and 2011 amounted to =
P180.60 million and
=183.16 million, respectively (see Note 9).
P
Estimation of retirement benefits cost
The determination of the Company’s obligation and costs for retirement benefits depends on
management’s selection of certain assumptions used by actuaries in calculating such amounts.
The assumptions for retirement benefits cost include, among others, discount rates, expected
annual rates of return on plan assets and rates of salary increase. Actual results that differ from
assumptions are accumulated and amortized over future periods and therefore, generally affect the
Company’s recognized expenses and recorded obligation in such future periods. While
management believes that the assumptions are reasonable and appropriate, significant differences
in actual experience or significant changes in management assumptions may materially affect the
Company’s retirement obligations.
Net retirement benefits cost amounted to =
P0.70 million and =
P0.14 million in 2012 and 2010,
respectively, while net retirement benefits income amounted to =
P0.08 million in 2011. Retirement
plan assets amounted to =
P0.67 million and =
P0.72 million as of December 31, 2012 and 2011,
respectively (see Note 17).
Recognition of deferred income tax assets
The Company reviews the carrying amounts of deferred income tax assets at the end of each
reporting period and reduces deferred income tax assets to the extent that it is no longer probable
that sufficient future taxable profits will be available to allow all or part of the deferred income tax
assets to be utilized.
As of December 31, 2012 and 2011, deferred income tax assets amounted to =
P3.24 million and
=4.54 million, respectively (see Note 18).
P
4. Cash and Cash Equivalents and Short-term Cash Investments
Cash and cash equivalents consist of:
Cash on hand and in banks
Cash equivalents
2012
P
=3,210,127
599,100,000
P
=602,310,127
2011
P6,040,443
=
305,500,000
=311,540,443
P
*SGVMG300370*
- 20 Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are made for
varying periods of up to three months depending on the immediate cash requirements of the
Company, and earn interest at the respective short-term investment rates.
Short-term cash investments amounting to =
P51.00 million and P
=211.50 million as of
December 31, 2012 and 2011, respectively, are placed with banks with maturities of more than
three months to one year from the dates of acquisition and earn interest at the prevailing market
rates.
Interest income earned from cash and cash equivalents and short-term cash investments amounted
to =
P29.78 million, P
=26.45 million and =
P18.23 million in 2012, 2011 and 2010, respectively
(see Note 15).
5. Available-for-sale Financial Assets
Available-for-sale financial assets consist of investments in quoted equity securities amounting to
=1.56 million and =
P
P0.96 million as of December 31, 2012 and 2011, respectively. The fair values
of available-for-sale financial assets were determined based on published prices in the active
market.
The movements in “Net changes in fair values of available-for-sale financial assets” presented in
the equity section of the balance sheets are as follows:
Balances at beginning of year
Changes in fair value
Balances at end of year
2012
P
=690,710
596,029
P
=1,286,739
2011
=711,958
P
(21,248)
=690,710
P
6. Installment Contracts Receivable
Installment contracts receivable arise from sale of real estate properties.
The installment contracts receivable on sale of real estate properties are collectible in monthly
installments for periods ranging from one to 10 years and bear monthly interest rates of 0.67% to
2.00% in 2012, 2011 and 2010 computed on the diminishing balance.
Interest income earned from an installment contracts receivable amounted to =
P128.71 million,
=140.63 million and =
P
P148.71 million in 2012, 2011 and 2010, respectively (see Note 15).
The portion due within one year amounted to =
P232.07 million and P
=150.22 million as of
December 31, 2012 and 2011, respectively (see Note 21).
The Company, CDC, and CI entered into a contract of guaranty under Retail Guaranty Line in the
amount of =
P1.00 billion with Home Guaranty Corporation (HGC) in 2012. The contract entered
into by the Company, CDC, CI and CPI (collectively referred as the Group) amounted to
=2.00 billion in 2010. The amount of installment contracts receivable enrolled by the Company
P
amounted to =
P556.0 million and P
=651.00 million in 2012 and 2011, respectively. The Company
paid a guarantee premium of 1.00% based on the outstanding principal balance of the installment
contract receivable enrolled in 2012 and 2011 (see Note 13).
*SGVMG300370*
- 21 -
7.
Other Receivables
Other receivables consist of:
Advances to customers
Accrued interest
Retention
Others (Note 19)
2012
P
=8,664,698
2,007,615
150,200
3,394,778
P
=14,217,291
2011
=3,821,367
P
2,101,579
920,200
2,419,704
=9,262,850
P
Advances to customers are receivables of the Company for the real estate property taxes of sold
units. Other receivables include receivables from customers relating to registration initially paid
by the Group and employees’ advances. Other receivables due within one year amounted to
=13.90 million and P
P
=8.07 million as of December 31, 2012 and 2011, respectively (see Note 21).
8. Real Estate Properties for Sale and Real Estate Properties Held for Future Development
Real estate properties for sale consist of cost incurred in the development of condominium units
and residential houses for sale amounting to =
P152.06 million and =
P391.69 million as of
December 31, 2012 and 2011, respectively.
Construction and development costs incurred amounted to =
P26.87 million and =
P426.50 million
while cost of disposal of real estate properties charged to cost of real estate sales amounted to
=246.53 million and =
P
P595.38 million in 2012 and 2011, respectively.
Real estate properties for sale account includes capitalized interest costs incurred during each year
in connection with the development of the properties amounting to nil in 2012, =
P2.11 million in
2011 and =
P12.60 million in 2010 (see Notes 11 and 16). The average capitalization rate used to
determine the amount of borrowing costs eligible for capitalization were nil in 2012, 3.86% in
2011 and 4.07% in 2010.
In 2012 and 2011, the Company acquired a parcel of land amounting to =
P123.13 million and
=109.81 million, respectively, for future development. Real estate properties held for future
P
development amounted to =
P362.21 million and =
P236.78 million as of December 31, 2012 and
2011, respectively.
9. Investment Properties
Investment properties represent real estate properties for lease which consist of:
Land - at cost
Balances at beginning of year
Additions during the year
Building - at cost
Balances at beginning and end of year
2012
2011
P
=180,445,820
157,865
180,603,685
=180,445,820
P
–
180,445,820
13,574,318
13,574,318
(Forward)
*SGVMG300370*
- 22 -
Accumulated Depreciation
Balances at beginning of year
Depreciation (Note 13)
Balances at end of year
Net Book Values
2012
2011
P
=10,859,456
2,714,862
13,574,318
−
P
=180,603,685
=8,144,592
P
2,714,864
10,859,456
2,714,862
=183,160,682
P
Investment properties include deemed cost adjustment amounting to =
P16.90 million
as of December 31, 2012 and 2011 (see Notes 12 and 18). The deemed cost adjustment arose
when the Company transitioned to PFRS in 2005.
Investment properties are rented out at different rates generally for a one-year term renewable
every year. Rent income from real estate properties for lease amounted to =
P3.76 million,
=1.12 million and P
P
=0.75 million in 2012, 2011 and 2010, respectively.
Based on the appraisal reports by independent firms of appraisers using market data approach at
various dates in 2012 and 2011, the appraised values of these investment properties amounted to
=282.91 million and =
P
P280.71 million as of dates of appraisal.
Direct operating expenses on investment properties amounted to =
P3.48 million, P
=3.72 million and
=4.11 million pertaining to real estate taxes, depreciation and other expenses in 2012, 2011 and
P
2010, respectively.
10. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of:
Trade payables
Deposits
Accrued expenses:
Development costs
Director’s fee (Note 19)
Interest
Taxes, premiums, others
Withholding taxes payable
Dividends payable
Others (Note 19)
2012
P
=34,657,142
2,714,128
2011
=28,764,654
P
10,062,434
195,675,109
10,405,196
1,240,098
464,915
1,826,338
1,307,578
1,528,053
P
=249,818,557
311,228,188
14,841,537
1,343,688
769,561
2,279,132
1,060,777
3,848,307
=374,198,278
P
Trade payables consist of payables to contractors and other counterparties, whereas deposits
consist of rental deposits and collected deposits for water and electric meters of the sold units.
Accrued expenses represent various accruals of the Company for its expenses and real estate
projects. Accrued development costs represent the corresponding accrued expenses for the sold
and completed real estate projects of the Company. Other payables consist of customers’
reservation and employees’ payable.
Accounts payable and accrued expenses due within one year amounted to =
P114.59 million and
=209.90 million as of December 31, 2012 and 2011, respectively (see Note 21).
P
*SGVMG300370*
- 23 -
11. Notes and Contracts Payable
The details of notes and contracts payable are as follows:
Notes payable:
Short-term promissory notes with varying
maturities and annual interest rates ranging
from 2.37% to 4.61% in 2012 and
3.5% to 4.77% in 2011
Short-term promissory notes enrolled with HGC
with varying maturities and annual interest
rates ranging from 1.85% to 2.75% in 2012
and 1.70% to 3.40% in 2011
Contracts payable
2012
2011
P
=83,650,000
=139,450,000
P
151,288,195
234,938,195
17,381,250
P
=252,319,445
182,570,561
322,020,561
–
=322,020,561
P
On September 7, 2012 and September 12, 2011, the Philippine Securities and Exchange
Commission (SEC) authorized the Company to issue =
P200.00 million worth of short-term
commercial papers (STCP) registered with the SEC in both years, in accordance with the
provision of the Securities Regulation Code and its implementing rules and regulations, the Code
of Corporate Governance and other applicable laws and orders. Outstanding STCP issued by the
Company as of December 31, 2012 and 2011 aggregated to =
P83.65 million and P
=139.45 million,
respectively.
In 2012 and 2011, the Company entered into a contract of guaranty under a Revolving Cash
Guaranty Line with HGC in the amount of =
P200.00 million coverage on the Company’s STCP.
The guaranty covers the unpaid principal due on the outstanding STCP and unpaid interest thereon
of 10% per annum. The guaranty premium paid was 0.90% per annum based on enrolled
commercial papers in 2012 and 2011. Outstanding STCP covered by the guaranty amounted to
=151.29 million and =
P
P182.57 million as of December 31, 2012 and 2011, respectively.
Interest expense related to short-term notes amounted to =
P10.55 million, =
P12.17 million and
=12.31 million in 2012, 2011 and 2010, respectively, while interest expense related to long-term
P
loans amounted to =
P0.08 million and =
P0.79 million in 2011 and 2010, respectively (see Note 16).
Capitalized interest in 2011 and 2010 amounted to =
P2.11 million and =
P12.60 million, respectively
(see Notes 8 and 16). No interest expense related to long-term loans and capitalized interest were
incurred in 2012.
The Group has omnibus credit line with financial institutions aggregating to about
=2,515.00 million as of December 31, 2012 and 2011, respectively, which is available for drawing
P
by any of the companies of the Group. The Company has no specific credit lines with financial
institutions as of December 31, 2012 and 2011.
Carrying values of collaterals for omnibus credit line as of December 31 follow (amounts in
millions):
Real estate properties for sale and lease:
Group
Company
2012
2011
P
=316.24
–
P
=316.24
=418.39
P
–
=418.39
P
*SGVMG300370*
- 24 No loans were availed from omnibus credit line in 2012 and 2011.
Contracts payable represent liabilities arising from contracts to purchase land for future
development. Notes and contracts payable due within one year amounted to =
P252.32 million and
=322.02 million as of December 31, 2012 and 2011, respectively (see Note 21).
P
12. Equity
Capital stock consists of:
Shares
Common stock - =
P1 par value:
Authorized
Beginning of year
Increase during the year
End of year
Issued and outstanding:
Beginning of year
Stock dividends
End of year
Amount
2012
2011
2012
2011
700,000,000
500,000,000
1,200,000,000
700,000,000
–
700,000,000
P
=700,000,000
500,000,000
P
=1,200,000,00
=
P700,000,000
–
=
P700,000,000
676,042,298
135,208,178
811,250,476
563,368,825
112,673,473
676,042,298
676,042,298
135,208,178
P
=811,250,476
563,368,825
112,673,473
=
P676,042,298
The Company registered 175,000,000 shares with SEC on April 21, 1989 with an initial offer price
of P
=1.00.
On August 10, 2012, the SEC approved the increase in authorized capital stock from 700,000,000
shares to 1,200,000,000 shares. As of December 31, 2012 and 2011, the Company has
811,250,476 shares held by 810 equity holders and 676,042,298 shares held by 769 equity holders,
respectively.
Dividends declared and issued/paid by the Company in 2012, 2011 and 2010 follow:
Dividends
Cash
Stock
Date Approved
May 25, 2012
June 3, 2011
June 7, 2010
May 15, 2012
May 2, 2011
April 30, 2010
Per Share
=0.150
P
0.140
0.050
20.0%
20.0%
20.0%
Stockholders of
Record Date
June 22, 2012
June 17, 2011
July 7, 2010
September 10, 2012
July 14, 2011
June 18, 2010
Date Issued/Paid
July 18, 2012
July 13, 2011
August 2, 2010
October 4, 2012
September 9, 2011
July 14, 2010
Fractional shares of stock dividends were paid in cash based on the par value.
On August 9, 2012, the Board of Directors authorized the reversal of appropriated retained
earnings amounting to =
P100.00 million for the development cost of Manila Residences Bocobo to
unappropriated retained earnings because the said project was already completed.
As of December 31, 2012 and 2011, the unappropriated retained earnings include the impact of the
remaining balance of deemed cost adjustment of investment properties amounting to
=11.83 million, net of related deferred tax of =
P
P5.07 million, which arose when the Company
transitioned to PFRS in 2005 (see Notes 9 and 18). This amount has yet to be realized through
sales. The balance of unappropriated retained earnings is restricted for the payment of dividends
to the extent of the balance of the deemed cost adjustment.
*SGVMG300370*
- 25 -
13. Operating Expenses
Operating expenses consist of:
Personnel (Note 14)
Taxes and licenses
Professional fees
Insurance (Notes 6 and 11)
Membership dues
Depreciation (Note 9)
Brokers’ commission
Advertising and promotions
Outside services
Rent
Postage, telephone and telegraph
Repairs and maintenance
Power, light and water
Others
2012
P
=59,346,148
17,609,047
9,919,994
5,519,104
4,666,711
2,714,862
2,168,855
2,049,413
1,878,579
1,400,935
766,631
416,084
195,307
3,418,751
P
=112,070,421
2011
=67,519,545
P
15,109,116
21,401,583
6,416,956
5,147,677
2,714,864
3,103,102
2,257,001
1,867,395
1,755,859
806,773
518,324
274,479
5,435,112
=134,327,786
P
2010
=48,766,555
P
13,951,939
8,630,480
7,433,276
477,270
2,714,864
3,535,183
1,758,751
1,276,912
877,552
606,063
304,073
92,921
2,880,574
=93,306,413
P
2012
P
=24,013,291
2011
=27,539,074
P
2010
=17,737,537
P
21,197,940
14,134,917
P
=59,346,148
23,702,057
16,278,414
=67,519,545
P
15,481,364
15,547,654
=48,766,555
P
2012
2011
2010
P
=128,710,733
=140,629,814
P
=148,713,513
P
29,754,575
28,291
68,852
16,627
P
=158,579,078
26,414,581
38,064
158,329
15,878
=167,256,666
P
18,171,305
55,472
95,483
18,974
=167,054,747
P
14. Personnel Expenses
Personnel expenses consist of:
Salaries and wages
Bonuses and other employee
benefits (Note 17)
Commissions
15. Financial Income
Financial income consists of:
Interest income from:
Installment contracts
receivable relating to sales
of real estate (Note 6)
Cash equivalents and shortterm investments (Note 4)
Cash in bank (Note 4)
Others (Note 19)
Dividend income
*SGVMG300370*
- 26 -
16. Financial Expense
Financial expense consists of:
2012
Interest expense on:
Notes payable (Note 11)
Loans payable (Notes 8
and 11)
Capitalized interest (Notes 8
and 11)
Others (Note 19)
Finance charges and others
Impairment loss on available-forsale financial assets
2011
2010
P
=10,553,181
=12,169,937
P
=12,313,740
P
−
10,553,181
83,488
12,253,425
793,350
13,107,090
−
10,553,181
30,279
479,600
(2,108,403)
10,145,022
354,457
751,873
(12,598,616)
508,474
171,018
605,246
−
P
=11,063,060
−
=11,251,352
P
682,118
=1,966,856
P
17. Retirement Benefits Cost
The Company, jointly with affiliated companies, has a funded, noncontributory defined benefit
retirement plan, administered by a trustee, covering all of its permanent employees.
The latest actuarial valuation report is as of December 31, 2012. The following tables summarize
the components of the net retirement benefits cost (income) from retirement plan assets recognized
in the statements of income and the funded status and amounts recognized in the balance sheets.
The details of net retirement benefits cost (income), which is included in “Personnel expense”
account (see Note 14), are as follows:
Current service cost
Interest cost on defined benefit
obligation
Expected return on plan assets
Net actuarial loss
Effect of asset limit
Net retirement benefits cost
(income )
Actual return on plan assets
2011
=93,875
P
2010
=94,331
P
104,385
(130,381)
7,046
(158,109)
84,596
(106,831)
8,223
56,573
P
=699,272
(P
=83,184)
=136,892
P
P
=93,083
=24,285
P
=106,831
P
2012
P
=504,051
199,091
(86,807)
82,937
–
The details of the retirement plan assets, which are included in “Other Assets” account in the
balance sheets, are as follows:
Defined benefit obligation
Fair value of plan assets
Unfunded obligation
Unrecognized net actuarial losses
Retirement plan assets
2012
P
=3,163,939
2,186,780
977,159
(1,649,202)
(P
=672,043)
2011
=3,290,768
P
1,446,776
1,843,992
(2,568,386)
(P
=724,394)
*SGVMG300370*
- 27 Changes in present value of defined benefit obligation are as follows:
Defined benefit obligation, January 1
Current service cost
Interest cost on defined benefit obligation
Actuarial loss (gain) on obligation
Defined benefit obligation, December 31
2012
P
=3,290,768
504,051
199,091
(829,971)
P
=3,163,939
2011
=943,805
P
93,875
104,385
2,148,703
=3,290,768
P
2012
P
=1,446,776
86,807
646,921
6,276
P
=2,186,780
2011
=1,303,808
P
130,381
118,683
(106,096)
=1,446,776
P
Changes in fair value of plan assets are as follows:
Fair value of plan assets, January 1
Expected return on plan assets
Contributions to the plan
Actuarial gain (loss) on plan assets
Fair value of plan assets, December 31
The major categories of plan assets of the Company with its affiliated companies as a percentage
of the fair value of net plan assets are as follows:
2012
83.95%
10.01%
6.04%
100.00%
Cash and cash equivalents
Investments in securities
Receivables
2011
81.94%
8.35%
9.71%
100.00%
Cash and cash equivalents consists of saving deposits and short-term time deposits with maturities
of less than 3 months. Investment in securities consists of investment in shares of stocks of
private corporations. Loans and receivables include loans to individuals and accrued interest
income.
The overall expected return on the plan assets is determined based on the market prices prevailing
on the date applicable to the period over which the obligation is to be settled.
The principal assumptions used in determining retirement benefits cost for the Company’s plan as
of January 1 are as follows:
Discount rate per annum
Expected annual rate of return on
plan assets
Future annual increase in salary
2012
6.05%
2011
11.06%
2010
11.06%
6.00%
6.00%
10.00%
6.00%
10.00%
6.00%
As of December 31, 2012, the discount rate is 5.32%, the future increase in salary is 4.50% and
expected return on plan assets in 2012 is 6.00%.
There are 72, 68 and 65 employees covered by the plan as of December 31, 2012, 2011 and 2010,
respectively.
*SGVMG300370*
- 28 Amounts for the current and previous four years are as follows:
Defined benefit obligation
Fair value of plan assets
Surplus (deficit)
Experience adjustment on plan
liabilities - loss
Experience adjustment on plan
assets - gain (loss)
2012
P
=3,163,939
2,186,780
(977,159)
193,317
6,276
2011
=3,290,768
P
1,446,776
(1,843,992)
(106,096)
2010
P943,805
=
1,303,808
360,003
2009
P764,878
=
1,068,308
303,430
2008
P10,858
=
749,956
739,098
-
255
11,516
-
4,836
(421,925)
The Company expects to contribute =
P0.65 million to the retirement fund in 2013.
18. Income Taxes
a. Provision for income tax consists of:
Current
Deferred
Final tax on interest income
2012
P
=53,588,418
(9,056,128)
44,532,290
5,956,573
P
=50,488,863
2011
=48,401,096
P
4,062,526
52,463,622
5,290,529
=57,754,151
P
2010
=49,740,274
P
13,154,417
62,894,691
3,645,355
=66,540,046
P
b. The components of the net deferred tax liabilities are as follows:
Deferred tax assets:
Accrued expenses
Unamortized past service cost
Deferred tax liabilities:
Unrealized gain on real estate transactions
Deemed cost adjustment in real estate properties
(Notes 9 and 12)
Capitalized interest
Retirement plan assets
Net deferred tax liabilities
2012
2011
P
=3,121,559
114,090
3,235,649
=4,452,461
P
89,929
4,542,390
60,422,079
66,603,598
5,068,019
1,760,208
201,613
67,451,919
P
=64,216,270
5,068,019
5,925,853
217,318
77,814,788
=73,272,398
P
c. The reconciliation of income tax computed at the statutory tax rates to the provision for
income tax follows:
Income tax at statutory tax rates
Additions to (reductions in)
income tax resulting from:
Income entitled to tax holiday
(Note 25)
Tax-exempt interest income
Interest income subjected to
final tax
2012
P
=91,942,633
2011
=112,421,460
P
2010
=99,640,882
P
(28,536,092)
(12,882,906)
(39,598,044)
(15,039,060)
(16,414,077)
(16,884,176)
(8,934,859)
(7,935,794)
(5,468,033)
(Forward)
*SGVMG300370*
- 29 -
Final tax on interest income
Nondeductible interest
expense
Others
Provision for income tax
2012
P
=5,956,573
2011
=5,290,529
P
2010
=3,645,355
P
2,948,503
(4,989)
P
=50,488,863
2,618,812
(3,752)
=57,754,151
P
1,804,451
215,644
=66,540,046
P
19. Related Party Transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control
or are controlled by or under common control with the Company, including holding companies,
subsidiaries and fellow subsidiaries, are related parties of the Company. Associates and
individuals owning, directly or indirectly, an interest in the voting power of the Company that
gives them significant influence over the enterprise, key management personnel, including
directors and officers of the Company and close members of the family of these individuals, and
companies associated with these individuals also constitute related parties. In considering each
possible related entity relationship, attention is directed to the substance of the relationship and not
merely the legal form.
The Company discloses the nature of the related party relationship and information about the
transactions and outstanding balances necessary for an understanding of the potential effect of the
relationship on the financial statements, including, as a minimum, the amount of outstanding
balances and its terms and conditions including whether they are secured, and the nature of the
consideration to be provided in settlement.
Refer to page 30 for the transactions and account balances with related parties.
*SGVMG300370*
- 30 The Company, in the normal course of business, has transactions and account balances with related parties consisting mainly of the following:
Nature of Transaction
Ultimate parent (CI)
Sharing of expenses
charged by (to) the
Company
Interest income
Interest expense
Parent Company (CDC)
Sharing of expenses
charged by (to) the
Company
Interest income
Interest expense
Affiliate (CPI)
Sharing of expenses
charged by (to) the
Company
Total
2012
P
=954,663
23,345
(1,202)
2,680,517
45,507
(29,077)
403,737
Amount of transactions
2011
(P
=954,663)
60,112
(29,551)
(316,564)
98,217
(72,204)
(26,366)
2010
=
P3,025,109
50,674
(36,371)
4,164,324
42,191
(122,320)
5,611
Outstanding Balances
Receivable (Note 6)
Payable (Note 10)
2011
2011
2012
2012
P
=–
23,345
–
1,620,482
45,507
–
426,919
P
=2,116,253
=
P–
60,112
–
–
98,217
–
23,182
=
P181,511
P
=–
–
1,202
–
–
29,077
–
P
=30,279
=
P954,663
30-day, unsecured,
non-interest bearing
to be settled in cash;
–
Due and demandable;
non-interest bearing;
to be received in cash;
no impairment
29,551
Due and demandable;
non-interest bearing;
to be settled in cash
1,060,034
30-day, unsecured,
non-interest bearing
to be settled in cash;
–
Due and demandable;
non-interest bearing;
to be received in cash;
72,204
Due and demandable;
non-interest bearing;
to be settled in cash
–
=
P2,116,452
30-day, unsecured,
non-interest bearing
to be settled in cash;
*SGVMG300370*
- 31 a. Shares of stock of the Company held by members of the BOD aggregated to =
P34.00 million
and =
P28.33 million as of December 31, 2012 and 2011, respectively.
b. The Company, jointly with affiliated companies under common control, has a trust fund for
the retirement plan of their employees. The trust fund is being maintained by a trustee bank.
The Company’s share on the fair value of plan assets amounted to =
P2.19 million and
=1.45 million as of December 31, 2012 and 2011, respectively. The Company’s share on the
P
carrying value of plan assets amounted to =
P2.13 million and =
P2.36 million as of
December 31, 2012 and 2011, respectively.
The major categories of plan assets are cash and cash equivalents, investments in securities
and loans and receivables (see Note 17). Loans and receivables of plan assets include
installment contracts receivable purchased from the Company amounting to =
P0.54 million.
Contributions to the fund amounted to P
=0.65 million and P
=0.12 million in 2012 and 2011,
respectively (see Note 17).
d. Compensation of key management personnel are as follows:
Salaries
Bonuses
Other benefits
2012
P
=9,397,383
16,795,520
13,017,752
P
=39,210,655
2011
P8,666,419
=
11,372,544
12,742,198
=32,781,161
P
2010
=8,016,434
P
7,485,786
6,256,425
=21,758,645
P
The Company has no standard arrangements with regards to remuneration of its directors. In
2012, 2011 and 2010, the BOD received as remuneration a total of =
P10.86 million,
=10.95 million and P
P
=4.16 million, respectively. Moreover, the Company has no standard
arrangement with regards to the remuneration of its existing officers aside from the
compensation received or any other arrangements in the employment contracts and
compensatory plan. The Company does not have any arrangements for stock warrants or
options offered to its employees.
20. Financial Instruments
Financial Risk Management Objectives and Policies
The Company’s principal financial instruments comprise of cash and cash equivalents, short-term
cash investments and notes and loans payable. The main purpose of these financial instruments is
to finance the Company’s operations. The Company’s other financial instruments consist of
available-for-sale financial assets, which are held for investing purposes. The Company has
various other financial instruments such as installment contracts receivable, other receivables and
accounts payable and accrued expenses, which arise directly from its operations.
It is, and has been throughout the year under review, the Company’s policy that no trading in
financial instruments shall be undertaken.
*SGVMG300370*
- 32 The main risks arising from the Company’s financial instruments are market risk (i.e., cash flow
interest rate risk and equity risk), credit risk and liquidity risk. The BOD reviews and approves
policies for managing these risks and they are summarized as follows:
Market risk
Cash flow interest rate risk
Cash flow interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Company’s exposure to
the risk of changes in market interest rates relates primarily to the Company’s notes payable, with
repriced interest rates.
The Company’s policy in addressing volatility in interest rates includes maximizing the use of
operating cash flows to be able to fulfill principal and interest obligations even in periods of rising
interest rates.
The following table demonstrates the sensitivity of the Company’s income before income tax to a
reasonable change in interest rates (with all other variables held constant):
2012
2011
Change in
Basis Points (bps)
-/+ 11 bps
-/+ 6 bps
Effect on Income
before Income Tax
+/- P
=277,551
+/- =
P193,212
There is no impact on the Company’s equity other than those already affecting income before
income tax.
Equity price risk
Equity price risk is the risk that the fair values of investments in equity securities will decrease as
a result of changes in the market values of individual shares of stock. The Company is exposed to
equity price risk because of investments held by the Company classified as available-for-sale
financial assets in the balance sheets. The Company employs the service of a third-party
stockbroker to manage its investments in shares of stock.
The following table demonstrates the sensitivity analysis of the Company’s equity to a reasonably
possible change in equity price based on forecasted and average movements of the equity prices
(with all other variables held constant):
2012
2011
Change in
Equity Price
+/-0.24
+/-0.04
Effect on Equity
+/-P
=375,429
+/-P
=41,052
Credit risk
The Company trades only with recognized, creditworthy third parties. Credit risk arises when the
Company will incur a loss because its customers, clients or counterparties fail to discharge their
obligations. It is the Company’s policy that all customers who wish to trade on credit terms are
subject to credit verification procedures. In addition, receivable balances are monitored on an
on-going basis with the objective that the Company’s exposure to bad debts is not significant. The
Company’s policy is to enter into transactions with a diversity of credit-worthy parties to mitigate
any significant concentration of credit risk. There are no significant concentrations of credit risk
within the Company.
*SGVMG300370*
- 33 The tables below show the Company’s exposure to credit risk for the components of the balance
sheet. The exposure as of December 31, 2012 and 2011 is shown at gross, before taking the effect
of mitigation through the use of collateral agreements and credit enhancements, and at net, after
taking the effect of mitigation through the use of collateral agreements and other credit
enhancements.
December 31, 2012:
Fair value of
Gross maximum collaterals/credit
exposure
enhancements
Loans and receivables:
Cash and cash equivalents, excluding
cash on hand
Short-term cash investments
Installment contracts receivable
Other receivables:
Accrued interest
Retention
Advances to customers
Others
Total credit risk exposure
1,674,773,359
P
=602,289,127
51,000,000
–
P
=–
–
803,080,536
2,007,615
150,200
8,664,698
3,078,924
P
=1,470,271,100
–
–
–
–
P
=1,674,773,359
2,007,615
150,200
8,664,698
3,078,924
P
=667,190,564
–
–
–
–
P
=803,080,536
Gross maximum
exposure
Fair value of
collaterals/credit
enhancements
Financial effect of
collaterals/credit
Net exposure
enhancements
=311,519,443
P
211,500,000
871,354,650
=–
P
–
1,941,897,070
=311,519,443
P
211,500,000
–
2,101,579
920,200
3,821,367
2,030,722
=1,403,247,961
P
–
–
–
–
=
P1,941,897,070
P
=602,289,127
51,000,000
803,080,536
P
=–
Financial effect of
collaterals/credit
Net exposure
enhancements
December 31, 2011:
Loans and receivables:
Cash and cash equivalents, excluding
cash on hand
Short-term cash investments
Installment contracts receivable
Other receivables:
Accrued interest
Retention
Advances to customers
Others
Total credit risk exposure
2,101,579
920,200
3,821,367
2,030,722
=531,893,311
P
=–
P
–
871,354,650
–
–
–
–
=871,354,650
P
The Company holds the title to the real estate properties with outstanding installment contracts
receivable balance and the Company can repossess such real estate properties upon default of the
customer in paying the outstanding balance.
The following tables summarize the aging analysis of receivables:
December 31, 2012:
Past Due But Not Impaired
Current
Installment contracts
receivable
Other receivables:
Accrued interest
Advances to customers
Retention
Others**
< 30 days 31- 60 days 61- 90 days
Over
90 days > One Year*
Total
P
=225,228,768
P
=3,373,406
P
=781,391
P
=673,021
P
=2,016,515
P
=571,007,435 P
=803,080,536
2,007,615
6,738,538
50,000
2,970,073
P
=236,994,994
−
−
100,200
108,851
P
=3,582,457
−
2,316
−
−
P
=783,707
−
196,953
−
−
P
=869,974
−
1,726,891
−
−
P
=3,743,406
−
2,007,615
−
8,664,698
−
150,200
−
3,078,924
P
=571,007,435 P
=816,981,973
* Classified as neither past due nor impaired.
** Excludes nonfinancial assets amounting to =
P 315,854.
*SGVMG300370*
- 34 December 31, 2011:
Past Due But Not Impaired
Current
Installment contracts
receivable
Other receivables:
Accrued interest
Advances to customers
Retention
Others**
< 30 days 31- 60 days
Over
90 days > One Year*
61- 90 days
Total
=143,690,415
P
=2,694,780
P
=547,838
P
=449,406
P
=2,839,685
P
=
P721,132,526 P
=871,354,650
2,101,579
1,793,873
–
1,942,770
=149,528,637
P
–
–
120,200
87,952
=2,902,932
P
–
4,692
–
–
=552,530
P
–
197,299
–
–
=646,705
P
–
–
2,101,579
1,825,503
–
3,821,367
–
800,000
920,200
–
–
2,030,722
=4,665,188 =
P
P721,932,526 P
=880,228,518
* Classified as neither past due nor impaired.
** Excludes nonfinancial assets amounting to =
P 388,982.
The tables below show the credit quality by class of asset for loan-related balance sheet lines
based on the Company’s credit rating system:
December 31, 2012:
Loans and receivables:
Cash and cash equivalents,
excluding cash on hand
Short-term cash investments
Installment contracts
receivable
Other receivables:
Advances to customers
Accrued interest
Retention
Others
High Grade*
Medium
Grade**
Past due But
Not Impaired
Total
P
=602,289,127
51,000,000
P
=–
–
P
=–
–
P
=602,289,127
51,000,000
796,236,203
–
6,844,333
803,080,536
6,738,538
2,007,615
50,000
2,900,661
P
=1,461,222,144
–
–
–
69,412
P
=69,412
1,926,160
–
100,200
108,851
P
=8,979,544
8,664,698
2,007,615
150,200
3,078,924
P
=1,470,271,100
* High Grade - financial assets with reputable counterparties and which management believes to be reasonably
assured to be recoverable.
** Medium Grade - financial assets for which there is low risk of default of counterparties.
December 31, 2011:
Loans and receivables:
Cash and cash equivalents,
excluding cash on hand
Short-term cash investments
Installment contracts
receivable
Other receivables:
Accrued interest
Advances to customers
Retention
Others
High Grade*
Medium
Grade**
Past due But
Not Impaired
Total
=311,519,443
P
211,500,000
=–
P
–
=–
P
–
=311,519,443
P
211,500,000
864,822,941
–
6,531,709
871,354,650
2,101,579
1,793,873
800,000
1,898,318
=1,394,436,154
P
–
–
–
44,452
=44,452
P
–
2,027,494
120,200
87,952
=8,767,355
P
2,101,579
3,821,367
920,200
2,030,722
=1,403,247,961
P
* High Grade - financial assets with reputable counterparties and which management believes to be reasonably
assured to be recoverable.
** Medium Grade - financial assets for which there is low risk of default of counterparties.
*SGVMG300370*
- 35 The main considerations for impairment assessment include whether any payments are overdue or
if there are any known difficulties in the cash flows of the counterparties. The Company assesses
impairment into two areas: individually assessed allowances and collectively assessed allowances.
The Company determines allowance for each significant receivable on an individual basis. Among
the factors that the Company considers in assessing impairment is the inability to collect from the
counterparty based on the contractual terms of the receivables. The Company also considers the
fair value of the real estate collateralized in computing the impairment of the receivables.
Receivables included in the specific assessment are those receivables under the installment
contracts receivable accounts.
For collective assessment, allowances are assessed for receivables that are not individually
significant and for individually significant receivables where there is no objective evidence of
individual impairment. Impairment losses are estimated by taking into consideration the age of
the receivables, past collection experience and other factors that may affect collectability.
No impairment has been recognized because the Company holds the title to the real estate
properties with outstanding installment contracts receivable balance and the Company can
repossess such real estate properties upon default of the customer in paying the outstanding
balance.
Liquidity risk
Liquidity risk is defined as the risk that the Company would not be able to settle or meet its
obligations on time or at a reasonable price.
The Company’s objective is to maintain a balance between continuity of funding and flexibility
through the use of STCPs and bank loans.
The tables below summarize the maturity analysis of the Company’s financial assets and financial
liabilities:
December 31, 2012:
Financial Assets
Cash and cash equivalents
Short-term cash investments
Installment contracts
receivable
Financial Liabilities
Accounts payable and
accrued expenses *
Notes payable**
Contracts payable
30 days
31-90 days
91-180 days
181-360 days
Above 1 year
Total
P
=3,210,127
–
P
=599,100,000
51,000,000
P
=–
–
P
=–
–
P
=–
–
P
=602,310,127
51,000,000
25,024,054
28,234,181
40,272,053
690,372,053
55,299,104
55,299,104
111,477,891
111,477,891
571,007,434
571,007,434
803,080,536
1,456,390,663
16,608,963
72,972,874
17,381,250
106,963,087
(P
=51,663,983)
65,078,224
–
–
65,078,224
P
=46,399,667
133,925,098
–
–
133,925,098
P
=437,082,336
247,925,045
243,868,900
17,381,250
509,175,195
P
=947,215,468
32,129,961
182,799
117,966,153
52,929,873
–
–
150,096,114
53,112,672
(P
=121,861,933) P
=637,259,381
* Excludes statutory liabilities amounting to =
P 1,893,512.
** Includes interest expense to maturity amounting to =
P 8,930,705.
December 31, 2011:
Financial Assets
Cash and cash equivalents
Short-term cash investments
Installment contracts
receivable
30 days
31-90 days
91-180 days
181-360 days
Above 1 year
Total
=203,040,443
P
55,000,000
=108,500,000
P
156,500,000
=–
P
–
=–
P
–
=–
P
–
=311,540,443
P
211,500,000
22,552,671
=280,593,114
P
32,524,848
=297,524,848
P
15,713,412
=15,713,412
P
86,452,264
=86,452,264
P
724,643,061
881,886,256
=724,643,061 =
P
P1,404,926,699
(Forward)
*SGVMG300370*
- 36 30 days
Financial Liabilities
Accounts payable and
accrued expenses *
Notes payable**
=42,251,916
P
90,633,123
132,885,039
=147,708,075
P
31-90 days
91-180 days
P26,127,606
=
=61,302,283
P
153,263,631
90,553,800
179,391,237
151,856,083
=118,133,611 (P
P
=136,142,671)
181-360 days
Above 1 year
Total
=77,878,845
P
–
77,878,845
=8,573,419
P
=164,294,523
P
–
164,294,523
=560,348,538
P
=371,855,173
P
334,450,554
706,305,727
=698,620,972
P
* Excludes statutory liabilities amounting to =
P 2,343,105.
** Includes interest expense to maturity amounting to =
P 12,429,993.
Fair Values
The carrying amounts of recorded financial assets and financial liabilities as of
December 31, 2012 and 2011 are as follows:
2011
2012
Financial Assets
Cash on hand
Loans and receivables:
Cash in banks and cash
equivalents
Short-term cash investments
Installment contracts
receivable
Other receivables:
Customers
Accrued interest
Retention
Others*
Available-for-sale financial
assets
Financial Liabilities
Other financial liabilities:
Accounts payable and
accrued expenses**
Notes and contracts payable
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
P
=21,000
P
=21,000
=21,000
P
=21,000
P
602,289,127
51,000,000
602,289,127
51,000,000
311,519,443
211,500,000
311,519,443
211,500,000
803,080,536
803,080,536
871,354,650
871,354,650
8,664,698
2,007,615
150,200
3,078,924
1,470,271,100
8,664,698
2,007,615
150,200
3,078,924
1,470,271,100
3,821,367
2,101,579
920,200
2,030,722
1,403,247,961
3,821,367
2,101,579
920,200
2,030,722
1,403,247,961
960,623
960,623
1,556,652
1,556,652
=1,404,229,584 P
=1,404,229,584
P
=1,471,848,752 P
=1,471,848,752 P
P
=247,925,045
252,319,445
P
=500,244,490
P
=247,925,045
252,319,445
P
=500,244,490
P
=371,855,173
322,020,561
=693,875,734
P
P
=371,855,173
322,020,561
=693,875,734
P
*Excludes non financial assets amounting to =
P 315,854 and =
P 388,982 as of December 31, 2012 and 2011,
respectively.
**Excludes statutory liabilities amounting to =
P 1,893,512 and =
P2,343,105 as of December 31, 2012 and 2011,
respectively.
Cash and cash equivalents, short-term cash investments, other receivables,
accounts payable and accrued expenses and contracts payable
Due to the short-term nature of the transactions, the fair values of cash and cash equivalents,
short-term cash investments, other receivables and accounts payable and accrued expenses
approximate their carrying amounts.
Available-for-sale financial assets
Available-for-sale financial assets are stated at fair value based on quoted market prices.
Installment contracts receivable
The fair value of installment contracts receivable cannot be reasonably estimated due to the
significant volume of transactions and the varied terms and maturities.
*SGVMG300370*
- 37 Notes payable
The fair value of floating rate borrowings is estimated by discounting future cash flows using rates
currently available for debt or similar terms and remaining maturities. The fair values approximate
their carrying values gross of unamortized transaction costs.
Fair Value Hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
· Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities;
· Level 2 - other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly; and
· Level 3 - techniques which use inputs which have a significant effect on the recorded fair
value that are not based on observable market data.
As of December 31, 2012 and 2011, the Company’s financial assets measured at fair value under
the Level 1, which consists of available-for-sale financial assets amounted to =
P1.56 million and
=0.96 million, respectively. There are no available-for-sale financial assets that are measured at
P
Level 2 and 3. The Company does not have transfers of financial instruments from Level 1 to
Level 2 and Level 2 to Level 3 in 2012 and 2011.
21. Current Assets and Current Liabilities
The Company’s current assets and current liabilities are as follows:
Current Assets
Cash and cash equivalents (Note 4)
Short-term cash investments (Note 4)
Available-for-sale financial assets (Note 5)
Installment contracts receivable (Note 6)
Other receivables (Note 7)
Real estate properties for sale (Note 8)
Other assets
Current Liabilities
Accounts payable and accrued expenses (Note 10)
Notes and contracts payable (Note 11)
Income tax payable
2012
2011
P
=602,310,127
51,000,000
1,556,652
232,073,101
13,901,437
152,058,055
18,089,485
P
=1,070,988,857
=311,540,443
P
211,500,000
960,623
150,222,124
8,073,868
391,691,341
4,163,768
=1,078,152,167
P
P
=114,586,856
252,319,445
20,285,173
P
=387,191,474
=209,903,755
P
322,020,561
7,952,956
=539,877,272
P
22. Capital Management
The primary objective of the Company’s capital management is to ensure that it maintains a strong
credit and healthy capital ratios in order to support its business and maximize shareholder value.
The Company manages its capital structure and makes adjustments to it, in the light of changes in
economic conditions. It monitors its use of capital using leverage ratios on both gross debt and net
debt basis. Debt consists of short-term and long-term debt. Net debt includes short-term and
long-term debt less cash and cash equivalents and short-term cash investments.
*SGVMG300370*
- 38 The Company considers as capital the total equity less net changes in fair values of available-forsale financial assets. As of December 31, 2012 and 2011, the Company had the following ratios:
Notes and contracts payable
Total equity
Less: net changes in fair values of availablefor-sale financial assets
Debt to equity ratio
Notes and contracts payable
Less:
Cash and cash equivalents
Short-term cash investments
Total equity
Less: net changes in fair values of availablefor-sale financial assets
2012
P
=252,319,445
2011
=322,020,561
P
P
=1,599,157,097
=1,443,981,115
P
1,286,739
P
=1,597,870,358
0.16
P
=252,319,445
690,710
=1,443,290,405
P
0.22
=322,020,561
P
311,540,443
602,310,127
211,500,000
51,000,000
=201,019,882)
(P
=400,990,682) (P
P1,443,981,115
P
=1,599,157,097 =
1,286,739
P
=1,597,870,358
690,710
=1,443,290,405
P
(0.25)
(0.14)
Net debt to equity ratio
As of December 31, 2012 and 2011, the Company has no externally-imposed capital requirements.
23. Basic/Diluted Earnings Per Share
Basic/diluted earnings per share amounts were computed as follows:
Net income
Weighted average number of
shares
Basic/diluted earnings per share
2012
P
=255,986,579
2011
=316,984,047
P
2010
=265,596,227
P
811,250,476
P
=0.32
811,250,476
=0.39*
P
811,250,476
=0.33*
P
*After retroactive effect of 20% stock dividends in 2012.
The Company has no dilutive common shares as of December 31, 2012, 2011 and 2010. Thus, the
basic and diluted earnings per share are the same as of those dates.
*SGVMG300370*
- 39 24. Business Segments
The Company derives its revenues primarily from the sale and lease of real estate properties.
The Company does not have any major customers and all sales and leases of real estate properties
are made to external customers.
Segment Revenue and Expenses
Revenue:
Sales of real estate
Financial income
Rent income
Other income
Cost of real estate sales
Operating expenses:
Personnel
Professional fees
Taxes and licenses
Insurance
Depreciation
Others
Financial expenses
Provision for income tax
Net income
Revenue:
Sales of real estate
Financial income
Rent income
Other income
Cost of real estate sales
Operating expenses:
Personnel
Professional fees
Taxes and licenses
Insurance
Depreciation
Others
Financial expenses
Provision for (benefit from)
income tax
Net income (loss)
Revenue:
Sales of real estate
Financial income
Rent income
Other income
Cost of real estate sales
2012
Sales of Real Estate Lease of Real Estate
Properties
Properties
Total
P
=508,378,077
158,579,078
–
5,424,964
246,531,779
P
=–
–
3,758,583
–
–
P
=508,378,077
158,579,078
3,758,583
5,424,964
246,531,779
59,346,148
9,919,994
17,025,060
5,519,104
–
16,607,722
11,063,060
50,457,006
255,912,246
–
–
583,987
–
2,714,863
353,543
–
31,857
74,333
59,346,148
9,919,994
17,609,047
5,519,104
2,714,863
16,961,265
11,063,060
50,488,863
255,986,579
Sales of Real Estate
Properties
2011
Lease of Real Estate
Properties
Total
=
P941,779,900
167,256,666
–
5,543,279
595,378,740
=
P–
–
1,116,231
–
–
=
P941,779,900
167,256,666
1,116,231
5,543,279
595,378,740
67,519,545
21,401,583
15,018,400
6,416,956
–
21,141,282
11,251,352
–
–
90,716
–
2,714,864
24,440
–
67,519,545
21,401,583
15,109,116
6,416,956
2,714,864
21,165,722
11,251,352
58,268,288
318,183,699
(514,137)
(1,199,652)
57,754,151
316,984,047
Sales of Real Estate
Properties
2010
Lease of Real Estate
Properties
Total
=
P766,761,471
167,054,747
6,156,566
513,310,116
=
P746,874
–
=
P766,761,471
167,054,747
746,874
6,156,566
513,310,116
(Forward)
*SGVMG300370*
- 40 -
Sales of Real Estate
Properties
2010
Lease of Real Estate
Properties
Total
=
P48,766,555
13,951,939
8,630,480
7,433,276
11,595,933
1,966,856
=
P2,714,864
213,366
-
=
P48,766,555
13,951,939
8,630,480
7,433,276
2,714,864
11,809,299
1,966,856
67,194,452
267,123,177
(654,406)
(1,526,950)
66,540,046
265,596,227
Operating expenses:
Personnel
Taxes and licenses
Professional fees
Insurance
Depreciation
Others
Financial expenses
Provision for (benefit from)
income tax
Net income (loss)
Segment Assets and Liabilities
December 31, 2012:
Total assets
Total liabilities
Sales of Real
Lease of Real
Estate Properties Estate Properties
P
=2,005,192,857
P
=180,603,685
585,696,611
942,834
Total
P
=2,185,796,542
586,639,445
December 31, 2011:
Sales of Real
Estate Properties
=2,038,264,626
P
776,730,604
Total assets
Total liabilities
Lease of Real
Estate Properties
=183,160,682
P
713,589
Total
=2,221,425,308
P
777,444,193
25. Income Subject to Income Tax Holiday
The Company has been duly registered by the Board of Investments (BOI) as a New Developer of
Low-Cost Mass Housing Project (Manila Residences Bocobo - 1160 Jorge Bocobo St., Ermita,
Manila) on a Non-Pioneer Status under the Omnibus Investments Code of 1987 (Executive Order
No. 226) with Registration No. 2008-246 dated August 26, 2008. The Company shall be entitled
to Income Tax Holiday (ITH) for a period of four (4) years from August 2008 or actual start of
commercial operations, whichever is earlier. The ITH shall be limited only to revenue generated
from this registered project. Revenue from units with selling price exceeding =
P3.00 million shall
not be covered by ITH.
The income of Manila Residences Bocobo in 2012 which is entitled to the ITH is presented as
follows:
BOI Registered Activities
Adjustment
Income
due to
based on
Income
Subject to
Percentage of
Percentage of
Tax Holiday
Completion
Completion
Revenues from sale of
condominium units
Cost of sales
Gross profit
=
P164,147,803
(52,447,081)
111,700,722
=
P17,154,200
(10,724,442)
6,429,758
=
P181,302,003
(63,171,523)
118,130,480
Non-BOI
Registered
Activities
=
P327,076,074
(183,360,256)
143,715,818
Amounts as
Shown in
Statement of
Income
=
P508,378,077
(246,531,779)
261,846,298
(Forward)
*SGVMG300370*
- 41 BOI Registered Activities
Adjustment
Income
Income
due to
based on
Subject to
Percentage of
Percentage of
Tax Holiday
Completion
Completion
Other income:
Interest income
Rent income
Dividend income
Others
Expenses:
Operating expenses
Financial expenses
Income before income tax
Provision for income tax
Net income
Non-BOI
Registered
Activities
Amounts as
Shown in
Statement of
Income
=
P–
–
–
–
–
=
P–
–
–
–
–
=
P–
–
–
–
–
=
P158,562,451
3,758,583
16,627
5,424,964
167,762,625
=
P158,562,451
3,758,583
16,627
5,424,964
167,762,625
22,954,083
56,092
23,010,175
88,690,547
–
=
P88,690,547
–
–
–
6,429,758
–
=
P6,429,758
22,954,083
56,092
23,010,175
95,120,305
–
=
P95,120,305
89,116,338
11,006,968
100,123,306
211,355,137
50,488,863
=
P160,866,274
112,070,421
11,063,060
123,133,481
306,475,442
50,488,863
=
P255,986,579
All common operating expenses not specifically identifiable to the project, except for brokers’
commission, depreciation and advertising, are shared based on sales.
26. Supplementary Information Required Under Revenue Regulations (RR) 19-2011
RR 19-2011 prescribes the new income tax forms to be used effective calendar year 2011. In the
case of corporations using BIR Form 1702, the taxpayer is now required to include as part of its
Notes to the Audited Financial Statements, which will be attached to the income tax return (ITR),
the schedules and information on taxable income and deductions to be taken.
Below is the additional information required by RR No. 19-2011. This information is presented
for purposes of filing with the BIR and is not a required part of the basic financial statements.
a. The Company’s revenue reflected in 2012 ITR consists of:
Sales of properties
Lease of properties
Regular rate
=178,262,453
P
3,758,583
=182,021,036
P
Exempt
=111,700,722
P
–
=111,700,722
P
b. The details of deductible cost of service in 2012 in ITR are as follows:
Salaries, wages and benefits
Outside services
Others
Regular rate
=5,517,602
P
379,423
732,727
=6,629,752
P
Exempt
=2,667,537
P
–
282,616
=2,950,153
P
c. The Company has the following other non-operating and taxable other income in 2012 ITR:
Interest income
Others
Regular rate
P85,836,566
=
5,424,964
=91,261,530
P
Exempt
=–
P
–
=–
P
*SGVMG300370*
- 42 d. The details of deductible of itemized deduction under regular rate in 2012 in ITR is as follows:
Salaries and allowances
Taxes and licenses
Professional fees
Insurance
Director’s Fees
Depreciation
Commissions
Miscellaneous
Advertising and promotions
Interest
Janitorial and Messengerial services
Rental
SSS, GSIS, Philhealth, HDMF and other contributions
Charitable contributions
Communication, light and water
Repairs and maintenance-materials/supplies
Transportation and travel
Office supplies
Representation and entertainment
Others:
Membership and subscription dues
Association dues
Regular rate
=34,357,956
P
15,508,573
9,281,149
5,514,387
4,436,341
2,714,863
2,129,978
1,915,498
1,484,317
1,234,715
1,010,581
848,100
863,483
710,000
669,572
289,488
226,962
120,274
59,444
Exempt
=15,389,224
P
1,073,521
638,845
4,718
–
–
38,877
237,707
565,096
56,092
488,575
552,835
417,459
–
292,366
138,206
109,727
10,399
28,739
15,488
4,633,586
=88,024,755
P
7,488
10,148
=20,060,022
P
27. Supplementary Information under RR 15-2010
On November 25, 2010, the BIR issued RR 15-2010 amending certain provisions of RR 21-2002,
as amended and implementing Section 6 (H) of the Tax Code of 1997, which authorizes the
Commissioner of Internal Revenue to prescribe additional procedural and/or documentary
requirements in connection with the preparation and submission of financial statements
accompanying the tax returns.
The following information reflects the taxes, duties and license fees paid or accrued by the
Company during 2012.
a. Net sales/receipts and output VAT declared in the Company’s VAT returns filed in 2012:
Vatable sales
Exempt
Net sales/receipt
=283,377,383
P
265,572,773
=548,950,156
P
Output VAT
=34,005,286
P
=34,005,286
P
The Company does not have zero-rated sales/receipts in 2012. The Company’s net
sales/receipts are based on actual collections received, hence, may not be the same as the
amounts accrued/reflected in the “Sales of real estate properties” account in the Company’s
statement of income.
There is no outstanding output VAT as of December 31, 2012.
*SGVMG300370*
- 43 b. Input VAT
The following table shows the sources of input VAT claimed:
Purchases of:
Goods for resale
Goods other than for resale
Services lodged under other accounts
Total available input VAT during the period
Less input VAT applied against output VAT
and other adjustments
Balance at end of the year
P399,231
=
4,176,198
5,316,638
9,892,067
(9,540,146)
=351,921
P
c. There are no importations during the year 2012.
d. Details of taxes and licenses are shown below:
Business permit and registration
Documentary stamps
Real estate taxes
Premium on HGC
Other taxes
Under
Real Estate
for Future
Development
=P
1,706,010
=1,706,010
P
Under
Cost of Real
Estate Sales
=P
256,017
–
1,519,895
=1,775,912
P
Under
Operating
Expenses
=13,093,302
P
2,072,854
1,026,954
1,396,328
19,609
=17,609,047
P
In 2012, the Company incurred documentary stamp taxes amounting to =
P1.71 million for the
purchase of land property, =
P1.40 million for loan instruments and P
=0.68 million for shares of
stock.
e. Withholding taxes
The following are the categories of the Company’s withholding taxes in 2012:
Compensation and benefits
Expanded taxes
Final taxes:
Interest expense
Cash dividends
=12,896,172
P
4,598,250
1,037,548
1,873,451
=20,405,421
P
The outstanding balance of withholding taxes as of December 31, 2012, which amounted to
=1.83 million, is recorded under “Accounts payable and accrued expenses” account in the
P
balance sheet.
f.
Tax contingencies:
i.
The Company has no deficiency tax assessments as of December 31, 2012.
ii.
The Company has no tax cases, litigation and/or prosecution in courts or bodies outside the
BIR.
*SGVMG300370*
l
'
SGVgCo
ll l i lllllltrt",'"
ZflrAsr.rYoL^a;
I\IDEPENDENTAI'DITORS' REPORT
ON SI'PPLEMENTARYSCMDI'LES
The SllcLlold4 od rh. Bodd ofDirccron
Clq & I,sd Daelope6, Incdloated
3rd Fl@!, Ci9md Cdnrioniniu t0. Tows I
156 H.V. de la Cost Srd
w. naveaudi&d i! acodmce witn Phnippinesldlddds oDAlditins, the fhdcid dtu4ls
of
ciq & I,bd Ddelopes, lncorloated 6 ot De.dbd I, zO12bd 2011 &d fn @h ot tnc tkee
yd i! lle perioi md.d D*nb6
31, 2012, includedin tnis Fom I7 A. ud hav. isen ou EDon
$lmn d.lcd Va"h )0, 20ll. Ou do6*ffidad.foJ
lhr DUJp6.or r*c
- op,n,ooo. d"
baic 6@oial slstdhb bker 6 a whole. Tbe scidula lisrn i! lne ]!d* to rh.lituial
Slatedor, dd Supplemdtary Schedulg e lh! respoDibilit ot rle Conpay s nmgddr.
Th6e
scb.dJs @ prutur.d for plrposd ofmno.yrs wrrhS€s 6 Fesl&o! Cod. RLI;63, Aj
Ar6d.d(20lllDduenorpdoflheo&i,
hMcrolsffimb.
ftH*bcduleba.ebeo
$bjeld b rheauditilg pbcedls rpptied in th. audirof rheb6ic f'ftciat shats
md, in ou
opinion, fairly 3b1., in all @terial reDe6, rhei.fomatiob €qliied ro te set fonh $d€id il Etatio;
to th. bsic fitucisl sllrdmb bt 4 6 avhot .
SYCIPGOIRES\IEIAYO & CO.
tX"4;
SECAcft{tit lion No. 0O96,AR-3
(C6up A),
Judy 18,2013,valid util Jduary I7, 2016
Tu Iddlifiation No. 102-039-397
BIR Aoc€dittion No. 08-001993,53-2012,
Apnl I l, 2012,validutil April 10,2015
PTRNo, 367002.4,
JN.ry 2, 2011,Malati City
mfiillilriltuilltilil
CITY & LAND DEVELOPERS, INCORPORATED
INDEX TO THE FINANCIAL STATEMENTS AND
SUPPLEMENTARY SCHEDULES
Schedule I:
Schedule of all the effective standards and interpretations (Part 1, 4J)
Schedule II:
Reconciliation of Retained Earnings Available for Dividend Declaration
(Part 1, 4C; Annex 68-C)
Schedule III:
Supplementary schedule of financial soundness indicators
Schedule IV:
Supplementary schedules required by Annex 68-E
Schedule V:
Schedule of Gross and Net Proceeds of Short-Term Commercial Papers
(STCPs) Issued
SCHEDULE I
CITY & LAND DEVELOPERS, INCORPORATED
SUPPLEMENTARY SCHEDULE OF ALL EFFECTIVE
STANDARDS AND INTERPRETATIONS (PART 1, 4J)
List of Philippine Financial Reporting Standards (PFRSs) [which consist of PFRSs, Philippine
Accounting Standards (PASs) and Philippine Interpretations] and Philippine Interpretations
Committee (PIC) Q&As effective as of December 31, 2012:
PHILIPPINE FINANCIAL REPORTING STANDARDS
AND INTERPRETATIONS
Effective as of December 31, 2012
Framework for the Preparation and Presentation of
Financial Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics
Adopted
Not Early
Adopted
Not
Applicable
ü
ü
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1
(Revised)
First-time Adoption of Philippine Financial
Reporting Standards
ü
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled
Entity or Associate
ü
Amendments to PFRS 1: Additional Exemptions
for First-time Adopters
ü
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time
Adopters
ü
Amendments to PFRS 1: Severe Hyperinflation
and Removal of Fixed Date for First-time
Adopters
ü
Amendments to PFRS 1: Government Loans
ü
Share-based Payment
ü
Amendments to PFRS 2: Vesting Conditions and
Cancellations
ü
Amendments to PFRS 2: Group Cash-settled
Share-based Payment Transactions
ü
PFRS 3
(Revised)
Business Combinations
ü
PFRS 4
Insurance Contracts
ü
Amendments to PAS 39 and PFRS 4: Financial
Guarantee Contracts
ü
PFRS 2
*SGVMG300370*
-2PHILIPPINE FINANCIAL REPORTING STANDARDS
AND INTERPRETATIONS
Effective as of December 31, 2012
Adopted
PFRS 5
Non-current Assets Held for Sale and
Discontinued Operations
PFRS 6
Exploration for and Evaluation of Mineral
Resources
PFRS 7
Financial Instruments: Disclosures
ü
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets
ü
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets - Effective
Date and Transition
Not Early
Adopted
Not
Applicable
ü
ü
ü
Amendments to PFRS 7: Improving Disclosures
about Financial Instruments
ü
Amendments to PFRS 7: Disclosures - Transfers
of Financial Assets
ü
Amendments to PFRS 7: Disclosures - Offsetting
Financial Assets and Financial Liabilities
ü
Amendments to PFRS 7: Mandatory Effective
Date of PFRS 9 and Transition Disclosures
ü
ü
PFRS 8
Operating Segments
PFRS 9
Financial Instruments
ü
Amendments to PFRS 9: Mandatory Effective
Date of PFRS 9 and Transition Disclosures
ü
PFRS 10
Consolidated Financial Statements
ü
PFRS 11
Joint Arrangements
ü
PFRS 12
Disclosure of Interests in Other Entities
ü
PFRS 13
Fair Value Measurement
ü
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements
ü
Amendment to PAS 1: Capital Disclosures
ü
Amendments to PAS 32 and PAS 1: Puttable
Financial Instruments and Obligations Arising on
Liquidation
ü
Amendments to PAS 1: Presentation of Items of
Other Comprehensive Income
PAS 2
Inventories
ü
ü
*SGVMG300370*
-3PHILIPPINE FINANCIAL REPORTING STANDARDS
AND INTERPRETATIONS
Effective as of December 31, 2012
Adopted
PAS 7
Statement of Cash Flows
ü
PAS 8
Accounting Policies, Changes in Accounting
Estimates and Errors
ü
PAS 10
Events after the Reporting Date
ü
PAS 11
Construction Contracts
PAS 12
Income Taxes
ü
Amendment to PAS 12 - Deferred Tax:
Recovery of Underlying Assets
ü
PAS 16
Property, Plant and Equipment
ü
PAS 17
Leases
ü
PAS 18
Revenue
ü
PAS 19
Employee Benefits
ü
Amendments to PAS 19: Actuarial Gains and
Losses, Group Plans and Disclosures
ü
PAS 19
(Amended)
Accounting for Government Grants and
Disclosure of Government Assistance
PAS 21
The Effects of Changes in Foreign Exchange
Rates
Not
Applicable
ü
ü
Employee Benefits
PAS 20
Not Early
Adopted
ü
ü
ü
Amendment: Net Investment in a Foreign
Operation
PAS 23
(Revised)
Borrowing Costs
ü
PAS 24
(Revised)
Related Party Disclosures
ü
PAS 26
Accounting and Reporting by Retirement
Benefit Plans
PAS 27
Consolidated and Separate Financial
Statements
ü
PAS 27
(Amended)
Separate Financial Statements
ü
PAS 28
Investment in Associates
ü
PAS 28
(Amended)
Investments in Associates and Joint Ventures
ü
Financial Reporting in Hyperinflationary
Economies
ü
PAS 29
ü
*SGVMG300370*
-4PHILIPPINE FINANCIAL REPORTING STANDARDS
AND INTERPRETATIONS
Effective as of December 31, 2012
PAS 31
Interests in Joint Ventures
PAS 32
Financial Instruments: Disclosure and
Presentation
Adopted
Not Early
Adopted
Not
Applicable
ü
ü
Amendments to PAS 32 and PAS 1: Puttable
Financial Instruments and Obligations Arising
on Liquidation
ü
Amendment to PAS 32: Classification of Rights
Issues
ü
Amendments to PAS 32: Offsetting Financial
Assets and Financial Liabilities
ü
PAS 33
Earnings per Share
ü
PAS 34
Interim Financial Reporting
ü
PAS 36
Impairment of Assets
ü
PAS 37
Provisions, Contingent Liabilities and
Contingent Assets
ü
PAS 38
Intangible Assets
PAS 39
Financial Instruments: Recognition and
Measurement
ü
ü
Amendments to PAS 39: Transition and Initial
Recognition of Financial Assets and Financial
Liabilities
ü
Amendments to PAS 39: Cash Flow Hedge
Accounting of Forecast Intragroup Transactions
ü
Amendments to PAS 39: The Fair Value Option
ü
Amendments to PAS 39 and PFRS 4: Financial
Guarantee Contracts
ü
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets
Amendments to PAS 39 and PFRS 7:
Reclassification of Financial Assets – Effective
Date and Transition
ü
ü
Amendments to Philippine Interpretation
IFRIC–9 and PAS 39: Embedded Derivatives
ü
Amendment to PAS 39: Eligible Hedged Items
ü
PAS 40
Investment Property
PAS 41
Agriculture
ü
ü
Philippine Interpretations
IFRIC 1
Changes in Existing Decommissioning,
Restoration and Similar Liabilities
ü
*SGVMG300370*
-5PHILIPPINE FINANCIAL REPORTING STANDARDS
AND INTERPRETATIONS
Effective as of December 31, 2012
Adopted
Not Early
Adopted
Not
Applicable
IFRIC 2
Members' Share in Co-operative Entities and
Similar Instruments
IFRIC 4
Determining Whether an Arrangement Contains
a Lease
IFRIC 5
Rights to Interests arising from
Decommissioning, Restoration and
Environmental Rehabilitation Funds
ü
IFRIC 6
Liabilities arising from Participating in a
Specific Market - Waste Electrical and
Electronic Equipment
ü
IFRIC 7
Applying the Restatement Approach under PAS
29 Financial Reporting in Hyperinflationary
Economies
ü
IFRIC 8
Scope of PFRS 2
ü
IFRIC 9
Reassessment of Embedded Derivatives
ü
Amendments to Philippine Interpretation
IFRIC–9 and PAS 39: Embedded Derivatives
ü
ü
ü
IFRIC 10
Interim Financial Reporting and Impairment
ü
IFRIC 11
PFRS 2- Group and Treasury Share Transactions
ü
IFRIC 12
Service Concession Arrangements
ü
IFRIC 13
Customer Loyalty Programmes
ü
IFRIC 14
The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
Amendments to Philippine Interpretations
IFRIC- 14, Prepayments of a Minimum Funding
Requirement
ü
ü
IFRIC 16
Hedges of a Net Investment in a Foreign
Operation
ü
IFRIC 17
Distributions of Non-cash Assets to Owners
ü
IFRIC 18
Transfers of Assets from Customers
ü
IFRIC 19
Extinguishing Financial Liabilities with Equity
Instruments
ü
IFRIC 20
Stripping Costs in the Production Phase of a
Surface Mine
ü
SIC-7
Introduction of the Euro
ü
SIC-10
Government Assistance - No Specific Relation
to Operating Activities
ü
SIC-12
Consolidation - Special Purpose Entities
ü
Amendment to SIC - 12: Scope of SIC 12
ü
*SGVMG300370*
-6PHILIPPINE FINANCIAL REPORTING
STANDARDS AND INTERPRETATIONS
Effective as of December 31, 2012
Adopted
Not Early
Adopted
Not
Applicable
SIC-13
Jointly Controlled Entities - Non-Monetary
Contributions by Venturers
ü
SIC-15
Operating Leases - Incentives
ü
SIC-25
Income Taxes - Changes in the Tax Status of an
Entity or its Shareholders
ü
SIC-27
Evaluating the Substance of Transactions
Involving the Legal Form of a Lease
ü
SIC-29
Service Concession Arrangements: Disclosures.
ü
SIC-31
Revenue - Barter Transactions Involving
Advertising Services
ü
SIC-32
Intangible Assets - Web Site Costs
ü
*SGVMG300370*
SCHEDULE II
CITY & LAND DEVELOPERS, INCORPORATED
SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
DECEMBER 31, 2012
Unappropriated retained earnings, beginning
Deemed cost adjustment on real estate properties, net of tax
Deferred income tax asset, beginning
Unappropriated retained earnings, as adjusted to
available for dividend declaration, beginning
Add: Net income actually earned/realized during the year
Net income during the year closed to retained earnings
Movement in deferred income tax assets
Less: Dividends declared during the year
Stock dividends - 20%
Cash dividends
Fractional shares of stock dividends
Reversal of unappropriated retained earnings
Total retained earnings available for dividend declaration, end
=667,142,971
P
(11,825,377)
(4,542,390)
650,775,204
255,986,579
1,306,741
908,068,524
135,208,178
101,406,344
282
236,614,804
100,000,000
=771,453,720
P
*SGVMG300370*
SCHEDULE III
CITY & LAND DEVELOPERS, INCORPORATED
SUPPLEMENTARY SCHEDULE OF
FINANCIAL SOUNDNESS INDICATORS
Ratio
Current
Asset-to-equity
Debt-to-equity
Asset-to-liability
Solvency
Interest rate coverage
Acid-test ratio
Return on equity (%)
2012
2.77
1.37
0.16
3.73
0.44
30.21
2.32
16.01%
December 31
2011
2.00
1.54
0.22
2.86
0.41
36.95
1.26
21.95%
2010
2.10
1.58
0.29
2.71
0.38
493.80
1.20
22.02%
*SGVMG300370*
SCHEDULE IV
CITY & LAND DEVELOPERS, INC.
DECEMBER 31, 2012
Schedule A.
FINANCIAL ASSETS
Name of Issuing Entity and Description of Each Issue
Number of Shares or Principal
Amount of Bonds and Notes
CASH AND CASH EQUIVALENTS
Cash on hand and in banks
Temporary Investments
Rizal Commercial Banking Corporation
Banco De Oro
UCPB Savings Bank
Philippine Savings Bank
Amalgamated Bancorporation
China Bank Corporation
Philippine National Bank
Philippine Commercial Capital Inc.
Planters Development Bank
Security Bank
From maturities during the year
Name of Issuing Entity and Description of Each Issue
SHORT-TERM CASH INVESTMENTS
Maybank
Philippine Savings Bank
Bank of Commerce
UCPB Savings Bank
From maturities during the year
Number of Shares or Principal
Amount of Bonds and Notes
Amount Shown in the
Balance Sheet
Value Based on Market
Quotations at Balance
Sheet Date
Income Received and
Accrued
3,210,127
28,291
177,600,000
164,500,000
78,500,000
53,500,000
44,500,000
20,000,000
19,000,000
16,500,000
16,000,000
9,000,000
-602,310,127
3,818,043
3,737,846
3,174,700
2,023,205
2,947,286
1,075,598
400,094
820,116
1,499,462
3,184,945
4,320,527
27,030,113
Amount Shown in the
Balance Sheet
25,000,000
15,000,000
9,500,000
1,500,000
-51,000,000
Value Based on Market
Quotations at Balance
Sheet Date
Income Received and
Accrued
227,778
384,274
61,304
137,996
1,941,401
2,752,753
Name of Issuing Entity and Description of Each Issue
Number of Shares or Principal
Amount of Bonds and Notes
AVAILABLE FOR SALE INVESTMENTS
First Holding “B”
Ayala Land “B” Common
Ayala Corporation “B” Common
Empire East
Ayala Land “B” Preferred
Swift
Ayala Corporation “B” Preferred
Schedule H.
Amount Shown in the
Balance Sheet
5,126
16,875
676
300,301
16,875
1,866
227
341,946
461,340
446,344
349,492
297,298
1,687
263
227
1,556,652
Value Based on Market
Quotations at Balance
Sheet Date
Income Received and
Accrued
461,340
446,344
349,492
297,298
1,687
263
227
1,556,652
CAPITAL STOCK
Title of Issue
Common Stock – P1 par value
Number of
shares
Authorized
Number of
Shares Issued
and
Outstanding
Number of Shares
Reserved for Options,
Warrants, conversion
and Other Rights
1,200,000,000
811,250,476
--
Number Shares Held By
Affiliates
Directors, Officers
and Employees
Others
654,292,583
43,559,043
113,398,850
SCHEDULE V
CITY & LAND DEVELOPERS, INCORPORATED
SCHEDULE OF GROSS AND NET PROCEEDS OF SHORT-TERM
COMMERCIAL PAPERS ISSUED
As of December 31, 2012
Description
As disclosed in the
Final Prospectus*
Total Issued Notes within the period
Actual
As of December 31, 2012**
Php
Less: Total Terminated Notes within the period
(i)
Total Outstanding Notes / Gross Proceeds
104,500,000
24,950,000
Php
200,000,000
79,550,000
202,000
202,000
Legal and Accounting Fees
30,000
30,000
Publication Fees
30,000
29,792
1,000,000
146,845
10,000
2,050
198,728,000
79,139,313
100,000,000
22,270,993
90,768,000
56,808,431
7,960,000
59,889
198,728,000
79,139,313
Less: Expenses
Registration Fees
Documentary Stamps Tax
Printing costs
(ii)
Total Net Proceeds
(iii)
Use of Proceeds
Project-related Costs
Payment of maturing loans/ notes
Interest expense
Total
(iv)
Balance of proceeds as of December 31, 2012
Php
--
Php
--
* SEC-CFD Order No. 144, Series of 2012 dated September 07, 2012.
Use of Proceeds as disclosed in the Final Prospectus is estimated for the Twelve (12)-month Period
September 2012 to August 2013.
** For the Four (4)-month Period September 1, 2012 to December 31, 2012.
ANNEX “A”
CITY AND LAND DEVELOPER’S, INCORPORATED
MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP
CITYLAND, INC. (CI)
(ultimate parent)
100.00%
↓
100.00%
↓
CREDIT & LAND HOLDINGS,
INCORPORATED (CLHI)
(subsidiary of CI)
CITYADS, INC. (CAI)
(subsidiary of CI)
50.42%
CITYLAND DEVELOPMENT CORPORATION (CDC)
(subsidiary of CI)
29.54%
CITY & LAND DEVELOPERS,
INCORPORATED (CLDI)
(subsidiary of CDC)
9.18%
49.73%
90.81%
CITYPLANS, INCORPORATED (CPI)
(subsidiary of CDC)
INDEX TO EXHIBITS
FORM 17-A
No.
Page No.
(3)
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
(5)
Instrument Defining the Rights of Security Holders, Including Indentures
ARTICLE IV
ARTICLE V
ARTICLE VII
ARTICLE VIII
*
Certificate of Stock
Transfer of Shares of Stock
Stockholders Meeting
Amendments
(8)
Voting Trust Agreement
*
(9)
Material Contracts
*
(10)
Annual Report to Security Holders, Form 11-Q or Quarterly Report to Security Holders
*
(13)
Letters re Change in Certifying Accountant
*
(16)
Report Furnished to Security Holders
*
(18)
Subsidiaries of the Registrant
*
(19)
Published Report Regarding Matters Submitted to Vote of Security Holders
*
(20)
Consent of Experts and Independent Counsel
*
(21)
Power of Attorney
*
(29)
Additional Exhibits
*
_______________
* These exhibits are either not applicable to the Company or require no answer.
ARTICLE IV
CERTIFICATE OF STOCK
Each stockholder whose share of stock has been paid in full shall be entitled to a stock certificate or certificates
for such shares of stock.
The certificate of stock shall be in such form and design as may be determined by the Board of Directors.
Every certificate shall be signed by the President and countersigned by the Secretary and shall be sealed with
the Corporate seal and shall state on its face its number, the date of issue, the number of shares for which it was
issued, and the name of the person in whose favor it was issued.
Each share of stock will represent a pro-rate equity in the assets of the Corporation and the rights represented in
each and every share of stock shall be identical in all respects and shall be stated herein.
The stockholders shall have no pre-emptive right to subscribe to any issue or disposition of shares of any class
and all the stockholders, their transferees and/or assignees take the shares subject to this condition.
ARTICLE V
TRANSFER OF SHARES OF STOCK
Shares of stock shall be transferred by delivery of the certificate endorsed by the owner or his attorney-in-fact
or other person legally authorized to make the transfer, but no transfer shall be valid except as between the
parties until the transfer is annotated in the books of the Corporation.
No surrendered certificate shall be cancelled by the Secretary before a new certificate in lieu thereof is issued,
and the Secretary shall keep the cancelled certificate as a proof of substitution. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit of that fact and shall advertise the same in
such manner as the Board may require, and shall give the Corporation a bond of indemnity, in the form and with
the sureties satisfactory to the Board, in the sum at least double the par value of such certificate in lieu of the
one alleged to be lost or destroyed, always subject to the approval of the Board, and provided further that the
requirements of Republic Act No. 201 are first complied with.
ARTICLE VII
STOCKHOLDERS’ MEETING
1.
Place – All meetings of the stockholders shall be held at the principal office of the Corporation, unless
written notices of such meetings should fix another place within the City of Manila.
2.
Proxy – Stockholders may vote at all meetings either in person or by proxy. All proxies, voting trusts, and
other voting arrangements must be received by the Corporate Secretary or the Assistant Corporate
Secretary at the corporation's head office not later than five (5) working days before the date of the
meeting. Before the deadline such proxies, voting trusts and other voting arrangements may be accepted or
rejected by a special committee of inspectors if they do not have the appearance of prima facie
authenticity.
3.
Quorum – No stockholders’ meeting shall be competent to decide any matter or to transact any business
unless a majority of the subscribed capital stock is present or represented thereat, except in those cases in
which the Corporation law requires the affirmative vote of a greater proportion.
4.
Vote – Voting upon all questions at all meetings of the stockholders shall be by shares of stock and not per
capital.
5.
Annual Meeting – The annual meeting of the stockholders shall be held on the first Tuesday of June of each
calendar year, when the Board of Directors shall be elected by plurality of votes by ballot system or viva
voce.
Written notice of the annual meeting of the Corporation shall be sent to each registered stockholder at least
fifteen (15) working days prior to the date of such meeting. Waiver of such notice may only be made in
writing.
Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of
such meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.
6.
Special Meeting – Special meetings of the stockholders may be called by the President at his discretion, or
on demand of stockholders holding the majority of the subscribed capital stock of the Corporation.
A written notice stating the day and place of the meeting and the general nature of the business to be
transacted shall be sent to each stockholder at least fifteen (15) working days before the date of such
special meeting; provided, that this requisite may be waived in writing by the stockholders.
Only stockholders of record at the close of business hours thirty (30) calendar days prior to the date of such
meeting shall be entitled to receive the notice of said meeting and to vote and be voted thereat.
7.
Minutes – Minutes of all meeting of the stockholders shall be kept and carefully preserved as a record of
the business transacted at such meetings. The minutes shall contain such entries as may be required by law.
ARTICLE VIII
AMENDMENTS
The provisions of these By-Laws may be amended or repealed by a majority vote of the Board of Directors and
the owners of at least a majority of the outstanding capital stock at a regular or special meeting called for the
purpose.
The power to amend or repeal these By-Laws may be delegated to the Board of Directors in the manner
provided by law.
COVER SHEET
1 5 2 6 6 1
SEC Registration Number
C I T Y
&
L A N D
D E V E L O P E R S ,
I N C .
(Company’s Full Name)
1 5 6
H . V .
D E L A
C O S T A
S T .
,
,
S A L C E D O
V I L L A G E ,
M A K A T I
C I T Y
(Business Address: No. Street City/Town/Province)
893 – 6060
Rufina C. Buensuceso
Contact Person
1 2
3 1
Month
Day
Company Telephone Number
1 7 - Q
FORM TYPE
Fiscal Year
0 6
1 1
Month
Day
Annual Meeting
(Secondary License Type, If Applicable)
C F D
Dept. Requiring this Doc.
Amended Articles Number / Section
Total Amount of Borrowings
Total No. of Stockholders
Domestic
Foreign
----------------------------------------------------------------------------------------------------------------------To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks = pls. use black ink for scanning purposes
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17- Q
QUARTERLY REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended June 30, 2013
2. SEC Identification Number 152661
3. BIR Tax Identification No. 000-444-840
4. Exact name of issuer as specified in its charter CITY & LAND DEVELOPERS, INC.
5. Makati City, Philippines
Province, country or other jurisdiction
of incorporation
6.
(SEC Use Only)
Industry Classification Code
7. 3/F Cityland Condominium 10 Tower 1,
#156 H.V. Dela Costa St., Salcedo Village, Makati City
Address of Principal Office
1226
Postal Code
8. 632-893-6060
Issuer's telephone number, including area code
9. Former name, former address and former fiscal year, if changed since last report N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Title of Each Class
Unclassified Common Shares
Number of shares of
common stock outstanding
811,250,476
11. Are any or all of these securities listed on a Stock Exchange.
Yes [ x ]
No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein:
Stock Exchange
Philippine Stock Exchange
Title of Each Class
Unclassified Common Shares
12. Check whether the issuer:
(a) Has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or
Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the
Corporation Code of the Philippines; during the preceding twelve (12) months (or for such shorter
period that the registrant was required to file such reports):
Yes [ x ]
No [ ]
(b) Has been subject to such filing requirements for the past 90 days.
Yes [ x ]
No [ ]
1
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements and accompanying notes are filed as part of this form (pages 7 to 36).
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
The Manila Residences Bocobo, a 34-storey office, commercial and residential condominium located in
Jorge Bocobo St., Ermita, Manila City is ready for occupancy by June 2012, a year in advance from its
promised date of turnover to clients.
Internal sources of liquidity come from sales of condominiums and real estate projects, collection of
installment receivables, maturing short-term investments while external sources come from SEC-registered
commercial papers and Home Guaranty Corporation’s guaranteed promissory notes.
The Company has four prime lots for future development. The latest acquisition is located along Taft
Avenue, Malate, Manila, and EDSA corner Lanutan Alley, Brgy. Veterans Village, Quezon City. The
other lots are located along Roxas Boulevard and Samar Avenue, Quezon City.
Financial Condition (June 30, 2013 vs. December 31, 2012)
Total assets amounted to P
=2.270B as of the first semester of 2013, as compared with the previous year’s
ending balance of =
P2.186B. Collections decreased installment contracts receivable account while sales
decreased real estate properties for sale-net. Excess funds from operations were shifted to short-term cash
investments resulting to the increase of the account.
Total liabilities increased by 18.48% due to accrual of dividends payable, higher notes and contracts
payable and accounts payable and accrued expenses.
Total stockholders’ equity stood at P
=1.574B as of June 2013, lower by 1.54% from 2012 year end balance
of P
=1.599B due to net income =
P64.67M less cash dividends of P
=89.23M.
As a result of the foregoing, the Company’s liquidity position registered an acid-test and current ratio of
1.78 and 1.97 in June 2013 as compared to 2.32 and 2.77 in December 2012. Debt-equity ratio was
registered at 0.20 as of June 2013 as compared to 0.16 as of December 2012.
Results of Operation (June 30, 2013 vs. June 30, 2012)
Net income for the first semester amounted to P
=64.67M, as compared to the same period last year of P
=
149.73M. The Company’s current projects, Manila Residences Bocobo and Grand Emerald Tower were
already sold at 90.85% and 95.22%, respectively as of December 31, 2012, resulting to the limited
available units for sale which accounted for the decrease in revenues. With the latest acquisition of prime
lots, the Company plans to launch new projects in the future to increase inventory and consequently
generate more sales.
On the cost side, cost of sale and operating expenses decreased by 68.25% and 44.19% as these move in
tandem with sales. Financial expenses decreased due to lower interest rates. On the other hand, provision
for income tax also decreased due to lower revenues. Altogether, net income stood at P
=64.67M and
translated to earnings per share and return on equity (both annualized) of P
=0.16 and 8.21% as compared to
the same period of the previous year of P
=0.37 and 20.06%.
2
Key Performance Indicators
June 2013
=0.16
P
8.21%
1.97
28.52
1.44
1.78
0.20
Earnings per share *
Return on equity *
Current ratio
Interest rate coverage ratio
Asset to equity ratio
Acid-test ratio
Debt-equity ratio
December 2012
=0.32
P
16.01%
2.77
30.21
1.37
2.32
0.16
June 2012
=0.37
P
20.06%
1.68
31.39
1.54
1.38
0.21
*annualized
Note: Earnings per share is after retroactive effect of 20% stock dividends in 2012.
Manner of calculations:
Earnings per share
Return on equity
Current ratio
Interest rate coverage ratio
=
=
=
=
Asset to equity ratio
=
Acid – test ratio
=
Debt- Equity ratio
=
Net Income/ Average Number of Shares Issued and Outstanding
Net Income/ Total Stockholders' Equity
Total Current Assets / Total Current Liabilities
Net Income before tax + Interest Expense + Depreciation Expense
Interest Expense
Total Assets
Stockholder’s Equity (net of Net Changes in Fair Value of AFS Investment)
Cash and cash equivalents + Short-term Cash Investments + Available-for- Sale
Investments +Installment Contracts Receivable + Other Receivables
Total Current Liabilities
Notes and Contracts Payable
Total Stockholders' Equity (net of Net Changes in FV of Investments)
1. Any known trends or any known demands, commitments, events, or uncertainties that will
result in or that are reasonably likely to result in the registrant’s liquidity increasing or
decreasing in any material way.
There are no trends or any demands, commitments, events, or uncertainties that will result in or
that are reasonably likely to result in the registrant’s liquidity increasing or decreasing in any
material way.
1.1 Internal and External Sources of Liquidity
Internal sources come from sales of condominiums and real estate projects, collection of installment
receivables, maturing short-term investments and other sources such as rental income, interest income
and dividend income. External sources come from SEC-registered commercial papers and Home
Guaranty Corporation’s promissory notes.
2. Any events that will trigger direct or contingent financial obligation that is material to
the company, including any default or acceleration of an obligation.
There are no any events that will trigger direct or contingent financial obligation that is
material to the company, including any default or acceleration of an obligation.
3. All material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the company with unconsolidated
entities or other persons created during the reporting period.
There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships of the company with unconsolidated entities or
other persons created during the reporting period.
3
4. Any material commitments for capital expenditures and the expected sources of funds for
such expenditures.
The eaccrued development cost of =
P174.47 million as of June 30, 2013 be sourced through:
a.
b.
c.
d.
Sales of condominium and real estate projects
Collection of installment receivables
Maturing short-term investments
Issuance of commercial papers
5. Any known trends, events or uncertainties that have had or reasonably expected to have
a material favourable or unfavourable impact on net sales or revenues or income from
continuing operations.
The Company projects that sales of real estate properties and net income for this year will
experience a lull due to the limited available condominium units for sale since Manila
Residences Bocobo and Grand Emerald Tower were already sold last year at 90.85% and
95.22%, respectively. However, with the latest acquisition of attractive prime lots, the
Company plans to launch new projects soon to increase inventory and consequently generate
more sales.
6. Any significant elements of income or loss that did not arise from registrant’s Continuing
operations.
There are no significant elements of income or loss that did not arise from registrant’s
continuing operations.
7. Causes for any Material Changes from Period to Period in One or More Line of the
Registrants Financial Statements.
FINANCIAL CONDITION (June 30, 2013 vs. December 31, 2012)
a. Decrease in Cash and Cash Equivalents was due to the shift of funds to short-term cash
investments.
b. Increase in Short-term Cash Investments was due to placements.
c. Increase in Available for Sale Financial Assets was due to increase in market value of
stocks.
d. Decrease in Installment Contracts Receivable was due to collection.
e. Increase in Other Receivables was due to increase in due from affiliates.
f. Decrease in Real Estate Properties for Sale (net) was due to sales of real estate properties.
g. Increase in Real Estate Properties for Future Development was due to development costs.
h. Decrease in Other Assets was due to input VAT and Meralco meter deposits.
i. Increase in Accounts Payable and Accrued Expenses was due to accrual of dividends
payable.
j. Decrease in Income Tax Payable was due to payment.
k. Decrease in Deferred Tax Liabilities was due to decrease in accounting income.
l. Increase in Net Changes in Fair Value of Available-for-sale Financial Assets was due to
increase in value of stocks.
m. Decrease in Retained Earnings was due to net income less cash dividends.
4
RESULTS OF OPERATIONS (June 30, 2013 vs. June 30, 2012)
a. Decrease in Sales of Real Estate was due to decrease in inventory available for sale.
b. Decrease in Financial Income was substantially due to lower interest income from sales of
real estate properties.
c. Decrease in Rent Income was due to decrease in real estate properties for lease.
d. Decrease in Other Revenues was due to lower miscellaneous income.
e. Decrease in Cost of Sales was due to lower sales.
f. Decrease in Operating Expenses was due to lower sales.
g. Decrease in Financial Expenses was due to decrease in interest rates.
h. Decrease in Provision for Income Tax was due to lower revenues.
i. Decrease in Net Income was due to lower revenues.
8. Any seasonal aspects that had a material effect on the financial condition or results of
operations.
There are no seasonal aspects that had a material effect on the financial condition or results of
operations.
9. Items affecting assets, liabilities, equity, net income, or cash flows that are unusual
because of their nature, size or incidents
There are no unusual items affecting assets, liabilities, equity, net income or cash flows.
10. Any changes in estimates of amounts reported in prior interim periods of the current
financial year or changes in estimates of amounts reported in prior financial years that
have a material effect in the current interim period
There are no changes in estimates of amounts reported in prior interim periods of the current
financial year or changes in estimates of amounts reported in prior financial years that have a
material effect in the current interim period.
11. Any issuances, repurchases, and repayments of debt and equity securities
The Company issued SEC-Registered Short-Term Commercial Papers during the period. The
outstanding balance is P
=178.05 million as of June 30, 2013.
12. Any material events subsequent to the end of the interim period that have not been
reflected in the financial statements for the interim period
There are no material events subsequent to the end of the interim period that have not been
reflected in the financial statements for the interim period.
13. Effect of changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
There are no changes in the composition of the issuer during the interim period, including
business combinations, acquisition or disposal of subsidiaries and long-term investments,
restructuring, and discontinuing operations.
6
CITY & LAND DEVELOPERS, INC.
BALANCE SHEETS
ASSETS
Cash and Cash Equivalents (Note 4)
Short-term Cash Investments
Available-for-sale Financial Assets (Note 5)
Installment Contracts Receivable (Note 6)
Other Receivables (Note 7)
Real Estate Properties for Sale (Note 8)
Real Estate Properties for Future Development (Note 8)
Investment Properties (Note 9)
Other Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Liabilities
Accounts Payable and Accrued Expenses (Note 10)
Notes and Contracts Payable (Note 11)
Income Tax Payable
Deferred Tax Liabilities
Total Liabilities
Equity
Capital stock – 1 par value
Authorized – 1,200,000,000 shares
Issued – 811,250,476 shares
Additional paid-in capital
Net changes in fair value of available-for-sale
financial assets
Retained earnings (Note 13)
Total Equity
TOTAL LIABILITIES & EQUITY
See accompanying Notes to Financial Statements.
UNAUDITED
June 2013
December 2012
P
=219,917,750
680,500,000
1,564,523
678,733,755
17,550,683
105,268,008
367,318,157
180,603,685
18,202,974
P
=2,269,659,535
=602,310,127
P
51,000,000
1,556,652
803,080,536
14,217,291
152,058,055
362,205,168
180,603,685
18,765,028
=2,185,796,542
P
P
=312,148,186
315,814,677
11,021,498
56,074,142
695,058,503
=249,818,557
P
252,319,445
20,285,173
64,216,270
586,639,445
811,250,476
105,136
811,250,476
105,136
1,294,610
761,950,810
1,574,601,032
P
=2,269,659,535
1,286,739
786,514,746
1,599,157,097
=2,185,796,542
P
7
CITY & LAND DEVELOPERS, INC.
STATEMENTS OF INCOME
UNAUDITED
For the 6-month For the 6-month
ending June ‘13 ending June ‘12
2nd Qtr
2013
2nd Qtr
2012
=59,700,438
P
31,799,745
760,584
607,009
92,867,776
=159,743,024
P
39,944,501
1,056,332
700,023
201,443,880
P
=105,970,648
66,168,591
1,523,383
877,368
174,539,990
=322,214,155
P
81,431,476
2,209,625
2,030,131
407,885,387
30,181,119
11,990,432
1,393,389
43,564,940
63,772,154
30,667,644
3,482,322
97,922,120
51,480,771
39,398,485
3,037,044
93,916,300
162,132,414
70,593,906
5,796,927
238,523,247
INCOME BEFORE INCOME TAX
49,302,836
103,521,760
80,623,690
169,362,140
PROVISION FOR INCOME TAX
(Note 19)
10,852,721
12,183,369
15,950,074
19,630,882
=38,450,115
P
=91,338,391
P
P
=64,673,616
=149,731,258
P
P
=0.080
=0.185*
P
REVENUES
Sales of real estate
Financial income (Note 14)
Rent income
Other income
EXPENSES
Cost of real estate sales
Operating expenses (Note 15)
Financial expenses (Note 17)
NET INCOME
BASIC/DILUTED EARNINGS PER
SHARE
* After retroactive effect of 20% stock dividends in 2012.
8
CITY & LAND DEVELOPERS, INC.
STATEMENT OF COMPREHENSIVE INCOME
Net Income
Other comprehensive income
Recovery (decline) on market
value of stocks
Total other comprehensive income
Total Comprehensive Income – net
2nd Qtr
2013
=38,450,115
P
2nd Qtr
For the 6-month For the 6-month
2012
ending June 2013 ending June 2012
=91,338,391
P
=149,731,258
P
P
=64,673,616
(231,633)
147,768
7,871
338,964
(231,633)
=38,218,482
P
147,768
=91,486,159
P
7,871
P
=64,681,487
338,964
=150,070,222
P
P
=0.080
=0.185
P
Basic/Diluted Earnings per share
* After retroactive effect of 20% stock dividends in 2012.
9
CITY & LAND DEVELOPERS, INC
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Capital Stock
Beginning balance, January 1, 2013 P
=811,250,476
Cash dividends
–
Total comprehensive income
–
Ending balance, June 30, 2013
P
=811,250,476
Beginning balance, January 1, 2012
Cash dividends
Total comprehensive income
Ending balance, June 30, 2012
Capital Stock
P
=676,042,298
–
–
P
=676,042,298
Additional
Paid-in
Capital
P
=105,136
–
–
P
=105,136
Net Changes in
Fair Values of
Available-for-Sale
Retained earnings
Financial Assets Unappropriated
Appropriated
P
=–
P
=1,286,739
P
=786,514,746
–
(89,237,552)
–
7,871
64,673,616
–
P
=–
P
=1,294,610
P
=761,950,810
Net Changes in
Additional
Fair Values of
Paid-in Available-for-Sale
Retained earnings
Capital
Financial Assets Unappropriated
Appropriated
P
=105,136
P
=670,710
P
=667,142,971 P
=100,000,000
–
–
(101,406,344)
–
–
338,964
149,731,258
–
P
=105,136
P
=1,029,674
P
=715,467,885 P
=100,000,000
Total
P
=1,599,157,097
(89,237,552)
64,681,487
P
=1,574,601,032
Total
P
=1,443,981,115
(101,406,344)
150,070,222
P
=1,492,644,993
10
CITY & LAND DEVELOPERS, INC.
STATEMENTS OF CASH FLOWS
2nd Qtr
2013
CASH FLOW FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Interest expense – net of amounts capitalized
Interest income
Dividend income
Depreciation
Changes in operating assets and liabilities
Decrease (increase) in:
Installment contracts receivable
Other receivables
Real estate properties for sale
Real estate properties for future development
Other assets
Increase (decrease) in accounts payable and accrued
expenses
Cash from (used in) operations
Interest received
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received
Proceeds from (purchase of) available-for-sale inv.
Proceeds from (purchase of) short-term cash investment
Decrease (increase) in real estate properties for lease
Net cash from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid
Cash dividends and fractional shares paid
Net proceeds from (payments of) notes payable
Net cash flows from financing activities
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS
AT END OF THE PERIOD
2nd Qtr
2012
Unaudited
As of
June 2013
As of
June 2012
P
=49,302,836
P
=103,521,760
P
=80,623,690
=169,362,140
P
1,355,139
(31,789,481)
(10,264)
2,930,043
(66,154,480)
(14,111)
–
3,328,672
(39,939,362)
(5,139)
678,715
–
5,618,377
(81,423,138)
(8,338)
1,357,431
58,505,051
2,682,369
17,476,640
(3,325,150)
167,539
(30,314,869)
109,412
100,111,024
(356,598)
(466,125)
124,346,781
(2,291,459)
46,790,047
(5,112,989)
562,054
(15,219,830)
(373,930)
177,026,685
(1,861,876)
(1,747,782)
(9,714,839)
84,649,840
30,906,312
(29,403,592)
86,152,560
(55,319,892)
81,347,598
39,480,578
(16,856,572)
103,971,604
(26,750,388)
154,929,188
65,112,547
(33,355,878)
186,685,857
(67,033,818)
185,695,921
81,932,128
(23,221,828)
244,406,221
10,264
5,139
(1,687)
14,111
8,338
(1,687)
211,500,000
(11,082)
211,495,569
–
(325,500,000)
–
(325,489,736)
(1,311,867)
(1,880)
80,960,610
79,646,863
(159,690,313)
379,608,063
P
=219,917,750
–
– (629,500,000)
–
(11,082)
(7,630) (629,485,889)
(3,690,966)
(3,422,293)
334,716
63,495,232
60,407,655
(5,675,691)
262,555
(2,412,265)
(7,825,401)
100,778,107 (382,392,377)
448,076,389
658,838,725
602,310,127
311,540,443
P
=759,616,832 P
=219,917,750
=759,616,832
P
–
505,099
(3,185,867)
11
CITY & LAND DEVELOPERS, INC.
NOTES TO FINANCIAL STATEMENTS
1.
Corporate Information
City & Land Developers, Incorporated (the Company) was incorporated in the Philippines on June 28, 1988.
Its primary purpose is to establish an effective institutional medium for acquiring and developing suitable
land sites for residential, office, commercial, institutional and industrial uses primarily, but not exclusively,
in accordance with the subdivision, condominium, and cooperative concepts of land-utilization and landownership. The average number of employees was 79 as of June 30, 2013 and 72 as of December 31,
2012. The Company’s registered office and principal place of business is 3 rd Floor, Cityland Condominium
10, Tower I, 156 H. V. de la Costa Street, Ayala North, Makati City.
The Company is 49.73% owned by Cityland Development Corporation (CDC), a publicly listed company
incorporated and domiciled in the Philippines. The Company’s ultimate parent is Cityland, Inc. (CI), a
company incorporated and domiciled in the Philippines, which prepares consolidated financial statements
and that of its subsidiaries.
2.
Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The financial statements of the Company have been prepared using the historical cost basis, except for
available-for-sale financial assets which are carried at fair values. The financial statements are presented in
Philippine peso (Peso), which is the Company’s functional currency, and rounded to the nearest Peso except
when otherwise indicated.
Statement of Compliance
The financial statements have been prepared in compliance with Philippine Financial Reporting Standards
(PFRS).
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for the
following amended Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards
(PAS) effective as of January 1, 2012. The following amended PAS and PFRS have no significant impact
on the Company’s financial statements:

PAS 12, Income Taxes - Recovery of Underlying Assets. The amendment clarified the determination of
deferred tax on investment property measured at fair value and introduces a rebuttable presumption that
deferred tax on investment property measured using the fair value model in PAS 40, Investment
Property, should be determined on the basis that its carrying amount will be recovered through sale. It
implies the requirement that deferred tax on non-depreciable assets that are measured using the
revaluation model in PAS 16, Property, Plant and Equipment, always be measured on a sale basis of
the asset. The amendment has no effect on the entity’s performance or in its disclosures because the tax
rate for these assets in the jurisdictions in which they are located does not differ if they are recovered
by sale or use.

PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements. The
amendment requires additional disclosures about financial assets that have been transferred but not
derecognized to enable the user of the Company’s financial statements to understand the relationship
with those assets that have not been derecognized and their associated liabilities. In addition, the
amendment requires disclosures about continuing involvement in derecognized assets to enable the user
to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those
derecognized assets. The entity did not have any assets with these characteristics, so there has not been
any effect in the presentation of its financial statements.
12
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash with original maturities of three months or less from dates
of acquisition, and are subject to an insignificant risk of change in value.
Short-term Cash Investments
Short-term cash investments are investments with maturities of more than three months but not exceeding
one year from dates of acquisition.
Financial Assets and Financial Liabilities
Date of recognition
The Company recognizes a financial asset or a financial liability in the balance sheet when it becomes a
party to the contractual provisions of the instrument. In the case of a regular way purchase or sale of
financial assets, recognition and derecognition, as applicable, is done using settlement date accounting.
Initial recognition of financial instruments
Financial instruments are recognized initially at fair value, which is the fair value of the consideration given
(in case of an asset) or received (in case of a liability). The initial measurement of financial instruments,
except for those designated at fair value through profit or loss, includes directly attributable transaction
cost.
Classification of financial instruments
Subsequent to initial recognition, the Company classifies its financial instruments in the following
categories: financial assets and financial liabilities at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets and other financial liabilities.
The classification depends on the purpose for which the instruments are acquired and whether they are
quoted in an active market. Management determines the classification at initial recognition and, where
allowed and appropriate, re-evaluates this classification at each end of reporting period.
a.
Financial Assets or Financial Liabilities at Fair Value through Profit or Loss
A financial asset or financial liability is classified in this category if acquired principally for the
purpose of selling or repurchasing in the near term or upon initial recognition, it is designated by the
management as at fair value through profit or loss.
Financial assets or financial liabilities classified in this category are designated as at fair value through
profit or loss by management on initial recognition when the following criteria are met:



The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a
different basis; or
The assets or liabilities are part of a group of financial assets or financial liabilities, or both
financial assets and financial liabilities, which are managed and their performance is evaluated on
a fair value basis, in accordance with a documented risk management or investment strategy; or
The financial instrument contains an embedded derivative, unless the embedded derivative does
not significantly modify the cash flows or it is clear, with little or no analysis, that it would not be
separately recorded.
Financial assets or financial liabilities classified under this category are carried at fair value in the
balance sheet. Changes in the fair value of such assets and liabilities are recognized in the statement of
income.
The Company has no financial assets and financial liabilities at fair value through profit or loss as of
June 30, 2013 and December 31, 2012.
13
b.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They arise when the Company provides money, goods or services
directly to a debtor with no intention of trading the receivables. Loans and receivables are carried at
amortized cost in the balance sheet. Amortization is determined using the effective interest rate
method. Loans and receivables are included in current assets if maturity is within 12 months from the
end of reporting period. Otherwise, these are classified as non-current assets.
The Company’s loans and receivables consist of cash in banks and cash equivalents, short-term cash
investments, installment contracts receivable and other receivables.
c.
Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities wherein the Company has the positive intention and ability to hold to maturity.
Held-to-maturity investments are carried at amortized cost in the balance sheet. Amortization is
determined using the effective interest rate method. Assets under this category are classified as current
assets if maturity is within 12 months from the end of the reporting period and noncurrent if maturity is
more than a year.
The Company has no held-to-maturity investments as of June 30, 2013 and December 31, 2012.
d.
Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. Available-for-sale financial assets are carried at fair value in
the balance sheet. Changes in the fair value of such assets are accounted in the statement of
comprehensive income and in equity. These financial assets are classified as noncurrent assets unless
the intention is to dispose such assets within 12 months from the end of reporting period.
The Company’s available-for-sale financial assets consist of investments in quoted equity securities
that are traded in liquid markets, held for the purpose of investing in liquid funds and not generally
intended to be retained on a long-term basis.
e. Other Financial Liabilities
Other financial liabilities are non-derivative financial liabilities with fixed or determinable payments
that are not quoted in an active market. They arise when the Company owes money, goods or services
directly to a creditor with no intention of trading the payables. Other financial liabilities are carried at
cost or amortized cost in the balance sheet. Amortization is determined using the effective interest rate
method. Other financial liabilities are included in current liabilities if maturity is within 12 months
from the end of the reporting period, otherwise, these are classified as non-current.
The Company’s other financial liabilities consist of accounts payable and accrued expenses and notes
and contracts payable.
Determination of fair value
The fair value of financial instruments traded in active markets at the end of reporting period is based on
their quoted market price or dealer price quotations (bid price for long positions and ask price for short
positions), without any deduction for transaction costs. When current bid and asking prices are not
available, the price of the most recent transaction provides evidence of the current fair value as long as there
has not been a significant change in economic circumstances since the time of the transaction.
For all other financial instruments not traded in an active market, the fair value is determined using
appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to
similar instruments for which market observable prices exist, option pricing models and other relevant
valuation models.
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“Day 1” difference
Where the transaction price in a non-active market is different from the fair value of other observable
current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Company recognizes the difference between the transaction
price and fair value (a “Day 1” difference) in the statement of income unless it qualifies for recognition as
some other type of asset. In cases where inputs are made of data which are not observable, the difference
between the transaction price and model value is only recognized in the statement of income when the
inputs become observable or when the instrument is derecognized. For each transaction, the Company
determines the appropriate method of recognizing the “Day 1” difference.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and
only if, there is currently enforceable legal right to offset the recognized amounts and there is an intention
to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Derecognition of Financial Assets and Financial Liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognized when:



the rights to receive cash flows from the asset have expired; or
the Company retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a “pass-through” arrangement; or
the Company has transferred its right to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Company has transferred its right to receive cash flows from a financial asset and has neither
transferred nor retained substantially all the risks and rewards of the financial asset nor transferred control
of the financial asset, the asset is recognized to the extent of the Company’s continuing involvement in the
financial asset. Continuing involvement that takes the form of a guarantee over the transferred financial
asset is measured at the lower of the original carrying amount of the financial asset and the maximum
amount of consideration that the Company could be required to repay.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has
expired.
Where an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference in
the respective carrying amounts is recognized in the statement of income.
Impairment of Financial Assets
The Company assesses at each end of the reporting period whether a financial asset or a group of financial
assets is impaired.
Assets carried at amortized cost
The Company first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are not
individually significant. Objective evidence includes observable data that comes to the attention of the
Company about loss events such as, but not limited to significant financial difficulty of the counterparty, a
breach of contract, such as default or delinquency in interest or principal payments, probability that the
borrower will enter bankruptcy or other financial reorganization. If it is determined that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant or not, the
asset is included in the group of financial assets with similar credit risk and characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is recognized are not included in a collective assessment of
impairment.
15
The impairment assessment is performed at each end of reporting period. For the purpose of collective
evaluation of impairment, financial assets are grouped on the basis of such credit risk characteristics such as
customer type, payment history, past-due status and term.
If there is an objective evidence that an impairment loss on loans and receivables carried at amortized cost
has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rates (i.e., the effective interest rate computed at
initial recognition). The carrying amount of the asset shall be reduced either directly or through the use of
an allowance account. The amount of loss, if any, is recognized in the statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognized
in the statement of income. Interest income continues to be accrued on the reduced carrying amount based
on the original effective interest rate of the asset. Loans together with the associated allowance are written
off when there is no realistic prospect of future recovery and all collateral, if any, has been realized or has
been transferred to the Company. If in a subsequent year, the amount of the estimated impairment loss
increases or decreases because of an event occurring after the impairment was recognized, the previously
recognized impairment loss is increased or reduced by adjusting the allowance for impairment losses
account If a future write off is later recovered, the recovery is recognized in the statement of income under
“Other income” account. Any subsequent reversal of an impairment loss is recognized in the statement of
income to the extent that the carrying value of the asset does not exceed its amortized cost at reversal date.
Assets carried at cost
If there is an objective evidence that an impairment loss of an unquoted equity instrument that is not carried
at fair value because its fair value cannot be reliably measured, or a derivative asset that is linked to and
must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of loss is
measured as the difference between the asset’s carrying amount and the present value of estimated future
cash flows discounted at the current market rate of return for a similar financial asset.
Available-for-sale financial assets
In the case of debt instruments classified as available-for-sale financial assets, impairment is assessed based
on the same criteria as financial assets carried at amortized cost. Future interest income is based on the
reduced carrying amount and is accrued based on the rate of interest used to discount future cash flows for
the purpose of measuring impairment loss. Such accrual is recorded as part of “Financial income” account
in the statement of income. If, in subsequent year, the fair value of a debt instrument increases and the
increase can be objectively related to an event occurring after the impairment loss was recognized in the
statement of income, the impairment loss is reversed through the statement of income.
In case of equity investments classified as available-for-sale financial asset, this would include a significant
or prolonged decline in the fair value of the investments below its cost. Where there is evidence of
impairment, the cumulative loss - measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognized in the statement of income
- is removed from equity and recognized in the statement of income. Increases in fair value after
impairment are recognized in the statement of comprehensive income and directly in the statement of
changes in equity.
Real Estate Properties for Sale and Real Estate Properties Held for Future Development
Property acquired or being constructed for sale in the ordinary course of business and held for future
development, rather than to be held for rental or capital appreciation, is classified as real estate properties
for sale and real estate properties held for future development and are measured at the lower of cost and net
realizable value (NRV).
Cost includes:
 Land cost
 Amounts paid to contractors for construction
 Borrowing costs, planning and design costs, costs of site preparation, professional fees, property
transfer taxes, construction overheads and other related costs of sale
16
NRV is the estimated selling price in the ordinary course of the business, based on market prices
at the reporting date, less estimated costs of completion and the estimated costs of sale.
Upon commencement of development, the real estate properties held for future development is transferred
to real estate properties for sale.
Investment Properties
Investment properties which represent real estate properties for lease are measured initially at cost,
including transaction costs. The carrying amount includes the cost of replacing part of an existing real
estate property for lease at the time that cost is incurred if the recognition criteria are met, and excludes the
costs of day-to-day servicing of the property. The carrying values of revalued properties transferred to real
estate properties for lease on January 1, 2004 were considered as the assets’ deemed cost as of said date.
Subsequent to initial measurement, real estate properties for lease, except land, are carried at cost less
accumulated depreciation and amortization and any impairment in value. Land is carried at cost less any
impairment in value. Buildings for lease are depreciated over their useful life of 25 years using the straightline method.
Investment properties are derecognized when either they have been disposed of or when the property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains
or losses on the retirement or disposal of investment properties are recognized in the statement of income in
the year of retirement or disposal.
Transfers are made to investment properties when, and only when, there is a change in use, evidenced by
ending of owner-occupation, commencement of an operating lease to another party, or ending of
construction or development. Transfers are made from investment properties when, and only when, there is
a change in use, evidenced by commencement of owner-occupation or commencement of development with
a view to sale.
Transfers between investment properties, owner-occupied property and inventories do not change the
carrying amount of the property transferred and they do not change the cost of that property for
measurement or disclosure purposes.
Impairment of Nonfinancial Assets
The carrying values of investment properties are reviewed for impairment when events or changes in
circumstances indicate that the carrying values may not be recoverable. If any such indication exists and
where the carrying value exceeds the estimated recoverable amount, the assets are either written down to
their recoverable amount or provided with valuation allowance. The recoverable amount of the assets is the
greater of fair value less costs to sell and value-in-use. Valuation allowance is provided for the carrying
amount of assets which is not expected to be recovered. Impairment losses, if any, are recognized in the
statement of income.
The Company assesses at each reporting period whether there is an indication that previously recognized
impairment losses may no longer exist or may have decreased. The Company considers external and
internal sources of information in its assessment of the reversal of previously recognized impairment losses.
A previously recognized impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognized for the asset in prior years. Such reversal is recognized in the statement of income. After
such a reversal, the depreciation is adjusted in future periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its remaining useful life.
Value-added Tax (VAT)
Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where the VAT
incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the
VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable.
The net amount of VAT recoverable from or payable to, the taxation authority is included as part of “Other
assets” or “Accounts payable and accrued expenses,” respectively, in the balance sheet.
17
Capital Stock
Capital stock is measured at par value for all shares issued and outstanding. When the Company issues
more than one class of stock, a separate account is maintained for each class of stock and the number of
shares issued. Incremental costs incurred directly attributable to the issuance of new shares are shown in
equity as a deduction from proceeds, net of tax.
The Company’s shares which are reacquired (treasury shares) are recognized at cost and deducted from
equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the
Company’s own equity instruments. Any difference between the carrying amount and the consideration, if
reissued is recognized as additional paid-in capital.
Retained Earnings
Retained earnings represent the cumulative balance of net income or loss, dividend distributions, effects of
the changes in accounting policy and other capital adjustments.
Unappropriated retained earnings represent that portion of retained earnings which is free and can be
declared as dividends to stockholders. Appropriated retained earnings represent that portion of retained
earnings which has been restricted and therefore is not available for any dividend declaration.
Dividend Distributions
Dividends on common shares are deducted from retained earnings when declared. Dividends for the year
that are declared after the end of the reporting period but before the approval for issuance of financial
statements are dealt with as an event after the reporting period.
Revenue and Costs Recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company
and the amount of revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received excluding VAT. The Company assesses its revenue arrangements against specific
criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is
acting as a principal in all of its revenue arrangements.
The following specific recognition criteria must also be met before revenue is recognized:
Sales of real estate properties
Sales of condominium units and residential houses where the Company has material obligations under the
sales contract to provide improvements after the property is sold are accounted for under the percentage of
completion method. Under this method, revenue on sale is recognized as the related obligations are
fulfilled.
Revenue from sales of completed residential lots and housing units, where a sufficient down payment has
been received, the collectability of the sales price is reasonably assured, the refund period has expired, the
receivables are not subordinated and the seller is not obliged to complete improvements, is accounted for
under the full accrual method. If the criterion of full accrual method was not satisfied, any cash received by
the Company is included in “Accounts payable and accrued expenses” in the balance sheet until all the
conditions for recording a sale are met.
Cost of real estate sales
Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of
subdivision land and condominium units sold before the completion of the development is determined on
the basis of the acquisition cost of the land plus its full development costs, which include estimated costs
for future development works, as determined by the Company’s in-house technical staff.
The cost of inventory recognized in profit or loss on disposal is determined with reference to the specific
costs incurred on the property, allocated to saleable area based on relative size and takes into account the
percentage of completion used for revenue recognition purposes.
Interest income
Interest income from cash in banks, cash equivalents, short-term cash investments and installment contracts
receivable is recognized as the interest accrues taking into account the effective yield on interest.
18
Dividend income
Dividend income is recognized when the Company’s right to receive the payment is established.
Operating Leases
Operating leases represent those leases under which substantially all the risks and rewards of ownership of
the leased assets remain with the lessors. Rent income from operating leases is recognized as income when
earned on a straight-line basis over the term of the lease agreement. Initial direct costs incurred specifically
to earn revenue from an operating lease are recognized as an expense in the statement of income in the
period in which they are incurred.
Operating expenses
Operating expenses constitute costs of administering the business. These costs are expensed as incurred.
Financial expenses
Financial expenses consist of interest incurred from notes and contracts payable. Interest attributable to a
qualifying asset is capitalized as part of the cost of the property while others are expensed as incurred.
Interest costs are capitalized if they are directly attributable to the acquisition, development and
construction of real estate projects as part of the cost of such projects. Capitalization of interest cost (1)
commences when the activities to prepare the assets for their intended use are in progress and expenditures
and interest costs are being incurred, (2) is suspended during extended periods in which active development
is interrupted, and (3) ceases when substantially all the activities necessary to prepare the assets for their
intended use are complete. If the carrying amount of the asset exceeds its recoverable amount, an
impairment loss is recorded.
Other Comprehensive Income
Other comprehensive income comprises items of income and expense that are not recognized in the
statement of income for the year in accordance with PFRS. Other comprehensive income of the Company
includes gains and losses on remeasuring available-for-sale financial assets.
Retirement Benefits Cost
Retirement benefits cost is actuarially determined using the projected unit credit method. Actuarial gains
and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and
losses for the plan at the end of the previous reporting year exceeded 10% of the higher of the present value
of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are
recognized over the expected average remaining working lives of the employees participating in the plan.
Past service cost is recognized as an expense on a straight-line basis over the average period until the
benefits become vested. If the benefits are already vested immediately following the introduction of, or
changes to, a retirement plan, past service cost is recognized immediately.
The retirement plan liability is the aggregate of the present value of the defined benefit obligation and
actuarial gains and losses not recognized, reduced by past service cost not yet recognized, and
the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is
negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized
net actuarial losses and past service cost and the present value of any economic benefits available in the
form of refunds from the plans or reductions in the future contributions to the plan.
If the asset is measured at the aggregate of cumulative unrecognized net actuarial losses and past service
cost and the present value of any economic benefits available in the form of refunds from the plan or
reductions in the future contributions to the plan, net actuarial losses of the current period and past service
cost of the current period are recognized immediately to the extent that they exceed any reduction in the
present value of those economic benefits. If there is no change or increase in the present value of economic
benefits, the entire net actuarial losses of the current period and past service cost of the current period are
recognized immediately. Similarly, net actuarial gains of the current period after the deduction of past
service cost of the current period exceeding any increase in the present value of the economic benefits
stated above are recognized immediately if the asset is measured at the aggregate of cumulative
unrecognized net actuarial losses and past service cost at the present value of any economic benefits
available in the form of refunds from the plan or reductions in the future contributions to the plan. If there
19
is no change or decrease in the present value of the economic benefits, the entire net actuarial gains of the
current period after the deduction of past service cost of the current period are recognized immediately.
Provisions and Contingencies
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are determined by discounting the effective future cash flows at
a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the
risks specific to the liability. Where discounting is used, the increase in the provisions due to the passage of
time is recognized as an interest expense.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not
recognized in the financial statements but disclosed in the notes to financial statements when an inflow of
economic benefits is probable.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at the end of reporting period.
Current income tax for current and prior periods shall, to the extent unpaid, be recognized as a liability
under “Income tax payable” account in the balance sheet. If the amount already paid in respect of current
and prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset under
“Other assets” account in the balance sheet.
Deferred income tax
Deferred income tax is recognized on all temporary differences at the end of reporting period between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax
assets are recognized for all deductible temporary differences to the extent that it is probable that sufficient
future taxable profits will be available against which the deductible temporary differences can be utilized.
Deferred income tax assets and deferred income tax liabilities are not recognized when it arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each end of reporting period and reduced
to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or
part of the deferred income tax assets to be utilized. Unrecognized deferred income tax assets are
reassessed at each end of reporting period and are recognized to the extent that it has become probable that
sufficient future taxable profit will allow the deferred income tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the end of the reporting period.
Income tax relating to items recognized directly in equity is recognized in the statement of comprehensive
income and in the statement of changes in equity and not in the statement of income.
Earnings Per Share
Basic earnings per share is computed by dividing the net income for the year by the weighted average
number of ordinary shares issued and outstanding after considering the retrospective effect, if any, of stock
dividends declared during the year.
Diluted earnings per share is calculated by dividing the net income for the year by the weighted average
number of ordinary shares outstanding during the year, excluding treasury shares, and adjusted for the
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effects of all dilutive potential common shares, if any. In determining both the basic and diluted earnings
per share, the effect of stock dividends, if any, is accounted for retrospectively.
Segment Reporting
The Company’s operating businesses are organized and managed separately according to the nature of the
products and services provided, with each segment representing a strategic business unit that offers
different products and serves different markets. Financial information on business segments is presented in
Note 23 in the financial statements. The Company’s asset-producing revenues are located in the Philippines
(i.e., one geographical location). Therefore, geographical segment information is no longer presented.
Events After the Reporting Period
Post year-end events that provide additional information about the Company’s position at the end of
reporting period (adjusting events) are reflected in the financial statements. Post year-end events that are
not adjusting events are disclosed in the notes to the financial statements when material.
New Accounting Standards, Interpretations and Amendments to
Existing Standards Effective Subsequent to December 31, 2012
The Company will adopt the standards and interpretations enumerated below when these become effective.
Except as otherwise indicated, the Company does not expect the adoption of these new changes in PFRS to
have a significant impact on the financial statements. The relevant disclosures will be included in the notes
to the financial statements when these become effective.
Effective in 2013
 PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income. The
amendments to PAS 1 change the grouping of items presented in other comprehensive income. Items
that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon
derecognition or settlement) would be presented separately from items that will never be reclassified.
The amendment becomes effective for annual periods beginning on or after July 1, 2012. The
amendment affects presentation only and has therefore no impact on the Company’s financial position
and performance.

Amendments to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and
Financial Liabilities, require an entity to disclose information about rights of offset and related
arrangements (such as collateral agreements).
The new disclosures are required for all recognized financial instruments that are offset in accordance
with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an
enforceable master netting arrangement or ‘similar agreement’, irrespective of whether they are offset
in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless
another format is more appropriate, the following minimum quantitative information.
This is presented separately for financial assets and financial liabilities recognized at the end of the
reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
b) The amounts that are offset in accordance with the criteria in PAS 32 when determining the net
amounts presented in the balance sheet;
c) The net amounts presented in the balance sheet;
d) The amounts subject to an enforceable master netting arrangement or similar agreement that are
not otherwise included in (b) above, including:
i. Amounts related to recognized financial instruments that do not meet some or all of the
offsetting criteria in PAS 32; and
ii. Amounts related to financial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (i) above.
The amendments to PFRS 7 are to be applied retrospectively for annual periods beginning on or after
January 1, 2013. The amendment affects disclosures only and will have no impact on the Company’s
financial position and performance.
21

PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27, Consolidated and
Separate Financial Statements, that addresses the accounting for consolidated financial statements. It
also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10
establishes a single control model that applies to all entities including special purpose entities. The
changes introduced by PFRS 10 will require management to exercise significant judgment to determine
which entities are controlled, and therefore, are required to be consolidated by a parent, compared with
the requirements that were in PAS 27. This standard becomes effective for annual periods beginning
on or after January 1, 2013. This standard will not impact the Company’s financial position and
performance.

PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointlycontrolled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to
account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet
the definition of a joint venture must be accounted for using the equity method. This standard becomes
effective for annual periods beginning on or after January 1, 2013. This standard will not impact the
Company’s financial position and performance.

PFRS 12, Disclosure of Interests with Other Entities, includes all of the disclosures that were
previously included in PAS 27 related to consolidated financial statements, as well as all of the
disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an
entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of
new disclosures are also required. This standard becomes effective for annual periods beginning on or
after January 1, 2013. This standard will not impact the Company’s financial position and
performance.

PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all fair
value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather
provides guidance on how to measure fair value under PFRS when fair value is required or permitted.
This standard becomes effective for annual periods beginning on or after January 1, 2013. The
Company is currently assessing the impact that this standard will have on the financial position and
performance.

Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, applies
to waste removal costs that are incurred in surface mining activity during the production phase of the
mine (“production stripping costs”) and provides guidance on the recognition of production stripping
costs as an asset and measurement of the stripping activity asset. This interpretation becomes effective
for annual periods beginning on or after January 1, 2013. This interpretation will not impact the
Company’s financial position and performance.

Amendments to PAS 19, Employee Benefits, range from fundamental changes such as removing the
corridor mechanism and the concept of expected returns on plan assets to simple clarifications and
rewording. The revised standard also requires new disclosures such as, among others, a sensitivity
analysis for each significant actuarial assumption, information on asset-liability matching strategies,
duration of the defined benefit obligation, and disaggregation of plan assets by nature and risk. The
amendment becomes effective for annual periods beginning on or after January 1, 2013. Once
effective, the Company has to apply the amendments retroactively to the earliest period presented.

PAS 27, Separate Financial Statements (as revised in 2011). As a consequence of the new PFRS 10
and PFRS 12, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled
entities, and associates in separate financial statements. The Company does not present separate
financial statements. The amendment becomes effective for annual periods beginning on or after
January 1, 2013.

PAS 28, Investments in Associates and Joint Ventures (as revised in 2011). As a consequence of the
new PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint
Ventures, and describes the application of the equity method to investments in joint ventures in addition
to associates. The amendment becomes effective for annual periods beginning on or after January 1,
2013. The Company expects that this amendment will not have any impact on the Company’s financial
position and performance.
22
Annual Improvements to PFRSs (2009-2011 cycle)
The Annual Improvements to PFRSs (2009-2011 cycle) contain non-urgent but necessary amendments to
PFRS. The amendments are effective for annual periods beginning on or after January 1, 2013 and are
applied retrospectively. Earlier application is permitted.

PFRS 1, First-time Adoption of PFRS - Borrowing Costs, clarifies that, upon adoption of PFRS, an
entity that capitalized borrowing costs in accordance with its previous generally accepted accounting
principles, may carry forward, without any adjustment, the amount previously capitalized in its opening
statement of financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing
costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not apply to
the Company as it is not a first-time adopter.

PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative
Information, clarify the requirements for comparative information that are disclosed voluntarily and
those that are mandatory due to retrospective application of an accounting policy, or retrospective
restatement or reclassification of items in the financial statements. An entity must include comparative
information in the related notes to the financial statements when it voluntarily provides comparative
information beyond the minimum required comparative period. The additional comparative period
does not need to contain a complete set of financial statements. On the other hand, supporting notes for
the third balance sheet (mandatory when there is a retrospective application of an accounting policy, or
retrospective restatement or reclassification of items in the financial statements) are not required. The
amendments affect disclosures only and have no impact on the Company’s financial position or
performance.

PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment, clarifies that spare
parts, stand-by equipment and servicing equipment should be recognized as property, plant and
equipment when they meet the definition of property, plant and equipment and should be recognized as
inventory if otherwise. The Company is currently assessing impact of the amendments to PAS 16.

PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity
Instruments, clarifies that income taxes relating to distributions to equity holders and to transaction
costs of an equity transaction are accounted for in accordance with PAS 12, Income Taxes. The
Company expects that this amendment will not have any impact on its financial position and
performance.

PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information for Total
Assets and Liabilities, clarifies that the total assets and liabilities for a particular reportable segment
need to be disclosed only when the amounts are regularly provided to the chief operating decision
maker and there has been a material change from the amount disclosed in the entity’s previous annual
financial statements for that reportable segment. The amendment affects disclosures only and has no
impact on the Company’s financial position and performance.
Effective in 2014
 PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities,
clarifies the meaning of “currently has a legally enforceable right to offset” and also the application of
the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which
apply gross settlement mechanisms that are not simultaneous. The amendments to PAS 32 are to be
retrospectively applied for annual periods beginning on or after January 1, 2014.
Effective in 2015
 PFRS 9, Financial Instruments - Classification and Measurement, as issued, reflects the first phase on
the replacement of PAS 39 and applies to the classification and measurement of financial assets and
liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. Work on
impairment of financial instruments and hedge accounting is still ongoing, with a view to replacing
PAS 39 in its entirety. PFRS 9 requires all financial assets to be measured at fair value at initial
recognition.
The Company has made an evaluation of the impact of the adoption of this standard. The Company
decided not to early adopt PFRS 9 for its 2012 reporting ahead of its effectivity date on January 1, 2015
and therefore the financial statements and as of December 31, 2012 and 2011 do not reflect the impact
23
of the said standard. Based on this evaluation, loans and receivables and other financial liabilities, both
carried at amortized cost, will not be significantly affected.
The Company shall conduct another impact assessment at the end of the 2013 reporting period using
the financial statements as of and for the year ended December 31, 2012. Given the amendments on
PFRS 9, the Company at present, does not plan to early adopt in 2013 financial reporting. It plans to
reassess its current position once the phases of PFRS 9 on impairment and hedge accounting become
effective.
Deferred Effectivity
 Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers accounting
for revenue and associated expenses by entities that undertake the construction of real estate directly or
through subcontractors. This Interpretation requires that revenue on construction of real estate be
recognized only upon completion, except when such contract qualifies as construction contract to be
accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case
revenue is recognized based on stage of completion. Contracts involving provision of services with the
construction materials and where the risks and reward of ownership are transferred to the buyer on a
continuous basis will also be accounted for based on stage of completion. The SEC and the Financial
Reporting Standards Council have deferred the effectivity of this interpretation until the final Revenue
standard is issued by the International Accounting Standards Board and an evaluation of the
requirements of the final Revenue standard against the practices of the Philippine real estate industry is
completed. The Company will quantify the effect when the final Revenue standard is issued.
Additional disclosures required by these amendments will be included in the consolidated financial
statements when these amendments are adopted.
3.
Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements requires management to make judgments, estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. In
the opinion of management, these financial statements reflect all adjustments necessary to present
fairly the results for the periods presented. Actual results could differ from such estimates.
Judgments
In the process of applying the Company’s accounting policies, management has made the following
judgments, apart from those involving estimations, which has the most significant effect on the
amounts recognized in the financial statements:
Determination of the Company’s functional currency
The Company, based on the relevant economic substance of the underlying circumstances, has
determined its functional currency to be Peso. It is the currency that influences the sale of real estate
properties and services and the costs of selling the same.
Classification of financial instruments
The Company classifies a financial instrument, or its component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the Company’s balance sheet.
The Company determines the classification at initial recognition and, where allowed and appropriate,
re-evaluates this designation at every reporting date.
Classification of leases - Company as lessor
The Company has entered into the property leases of its investment properties where it has determined
that the risks and rewards of ownership are retained with the Company. As such, these lease
agreements are accounted for as operating leases.
24
Classification of real estate properties
The Company determines whether a property is classified as for lease or for sale or for future
development and for capital appreciation.
Real estate properties which are not occupied substantially for use by, or in the operations of, the
Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income
and capital appreciation are classified as investment properties. Real estate properties which the
Company develops and intends to sell before or on completion of construction are classified as real
estate properties for sale and for future development.
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of reporting period that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below:
Determination of fair value of financial instruments
Financial assets and financial liabilities, on initial recognition, are accounted for at fair value. The fair
values of financial assets and financial liabilities, on initial recognition, are normally the transaction
prices. In the case of those financial assets and financial liabilities that have no active markets, fair
values are determined using an appropriate valuation technique.
The carrying values of financial assets and liabilities are equal to fair values.
Estimation of allowance for impairment of receivables
The level of this allowance is evaluated by management based on past collection history and other
factors which include, but are not limited to the length of the Group’s relationship with the customer,
the customer’s payment behavior and known market factors that affect the collectability of the accounts
Impairment of available-for-sale financial assets
An impairment issue arises when there is an objective evidence of impairment, which involves
significant judgment. In making this judgment, the Company evaluates the financial health of the
issuer, among others. The Company treats available-for-sale equity investments as impaired when
there has been a significant or prolonged decline in the fair value below its cost or where other
objective evidence of impairment exists.
Estimation of percentage of completion of projects
The Company estimates the percentage of completion of ongoing projects for purposes of accounting
for the estimated costs of development as well as revenue to be recognized. The percentage of
completion is based on the technical evaluation of the independent project engineers as well as
management’s monitoring of the costs, progress and improvements of the projects.
Determination of net realizable value of real estate properties for sale
and held for future development
The Company’s estimates of the net realizable value of real estate properties are based on the most
reliable evidence available at the time the estimates are made, or the amount that the inventories are
expected to be realized. These estimates consider the fluctuations of price or cost directly relating to
events occurring after the end of the period to the extent that such events confirm conditions existing at
the end of the period. A new assessment is made of net realizable value in each subsequent period.
When the circumstances that previously caused inventories to be written down below cost no longer
exist or when there is a clear evidence of an increase in net realizable value because of changes in
economic circumstances, the amount of the write-down is reversed so that the new carrying amount is
the lower of the cost and the revised net realizable value.
Estimation of useful lives of investment properties
The Company estimates the useful lives of investment properties based on the internal technical
evaluation and experience with similar assets. Estimated lives of investment properties are reviewed
periodically and updated if expectations differ from previous estimates due to wear and tear, technical
and commercial obsolescence and other limits on the use of the assets.
25
Impairment of investment properties
The Company determines whether its investment properties are impaired when impairment indicators
exist such as significant underperformance relative to expected historical or projected future operating
results and significant negative industry or economic trends. When an impairment indicator is noted,
the Company makes an estimation of the value-in-use of the cash-generating units to which the assets
belong. Estimating the value-in-use requires the Company to make an estimate of the expected future
cash flows from the cash-generating unit and also to choose an appropriate discount rate in order to
calculate the present value of those cash flows.
Estimation of retirement benefits cost
The determination of the Company’s obligation and costs for retirement benefits depends on
management’s selection of certain assumptions used by actuaries in calculating such amounts. The
assumptions for retirement benefits cost include, among others, discount rates, expected annual rates of
return on plan assets and rates of salary increase. Actual results that differ from assumptions are
accumulated and amortized over future periods and therefore, generally affect the Company’s
recognized expenses and recorded obligation in such future periods. While management believes that
the assumptions are reasonable and appropriate, significant differences in actual experience or
significant changes in management assumptions may materially affect the Company’s retirement
obligations.
Recognition of deferred income tax assets
The Company reviews the carrying amounts of deferred income tax assets at the end of each reporting
period and reduces deferred income tax assets to the extent that it is no longer probable that sufficient
future taxable profits will be available to allow all or part of the deferred income tax assets to be
utilized.
4.
Cash and Cash Equivalents and Short-Term Cash Investments
Cash and cash equivalents consist of:
Cash on hand and in banks
Cash equivalents
June 2013
P2,417,750
=
217,500,000
=219,917,750
P
Dec. 2012
P3,210,127
=
599,100,000
=602,310,127
P
Cash in banks earn interest at the respective bank deposit rates. Short-term investments are made for
varying periods of up to three months depending on the immediate cash requirements of the Company, and
earn interest at the respective short-term investment rates.
Short-term cash investments amounting to =
P680.50 million as of June 30, 2013 and P
=51.00 million as of
December 31, 2012, respectively, are investments in banks with maturities of more than three months to
one year from the dates of acquisition and earn interest at the prevailing market rates.
5.
Available-for-sale Financial Assets
Available-for-sale financial assets consist of investments in quoted equity securities amounting to =
P1.56
million as of June 30, 2013 and December 31, 2012, respectively.
The movements in “Net changes in fair values of available-for-sale financial assets” presented in equity
section of the balance sheets are as follows:
Balances at beginning of year
Changes in fair value
Balances at end of the period
June 2013
P1,286,739
=
7,871
=1,294,610
P
Dec. 2012
=690,710
P
596,029
=1,286,739
P
26
6.
Installment Contracts Receivable
This account consists of installment contracts receivable arising from the sale of real estate properties.
The installment contracts receivable on sales of real estate are collectible in monthly installments for
periods ranging from one (1) to ten (10) years and bear monthly interest rates of 0.67% to 2% computed on
the diminishing balance.
The portion due within one year (net of current portion of unrealized gross profit, estimated development
costs for unsold units, and deferred vat) amounted to P
=210.57 million in June 30, 2013 and P
=232.07 million
in December 31, 2012.
7.
Other Receivables
Other receivables consist of:
Advances to customers
Accrued interests
Retentions
Advances to affiliates
Others
Dec. 2012
P8,664,698
=
2,007,615
150,200
127,857
3,266,921
=14,217,291
P
June 2013
P3,708,214
=
3,049,548
120,000
8,942,644
1,730,277
=17,550,683
P
Advances to customers are receivables of the Company for the real estate property taxes of sold units.
Accrued interests are receivables arising from interest on cash equivalents and short-term cash investments.
Retentions are receivables from cash sales arising from sale of real estate properties. Advances to affiliates
represent intercompany advances. Other receivables include receivables from customers relating to processing
of titles initially paid by the Company and employees advances.
The portion due within one year amounted to P
=17.06 million in June 30, 2013 and P
=13.90 million in
December 31, 2012.
8.
Real Estate Properties for Sale and Held for Future Development
Real estate properties for sale consist of cost incurred in the development of condominium units and
residential houses for sale amounting to =
P105.27 million and =
P152.06 million as of June 30, 2013 and
December 30, 2012, respectively.
A summary of the movement in real estate properties for sale is set out below:
Opening balances, January 1
Land cost transferred from land for future development
Construction/development cost
Borrowing costs capitalized
Disposal (recognized as cost of sales)
Write-down of inventories/reversals
Transfer to investment properties
Other adjustments/reclassifications:
Excess of estimate over actual development costs
Cancelled contracts to sell
Closing balances
June 2013
Dec. 2012
P
=152,058,055
–
–
–
=391,691,341
P
–
(51,480,771)
(246,531,779
–
–
–
–
(2,139,766)
6,830,490
(19,969,864)
P
=105,268,008
26,868,357
–
–
=152,058,055
P
27
In 2012, the Company acquired a parcel of land amounting to P
=123.13 million for future development.
Real estate properties held for future development amounted to P
=367.32 million and P
=362.21 million as of
June 30, 2013 December 31, 2012, respectively.
A summary of the movement in real estate properties held for future development is set out below:
Opening balances, January 1
Additions
Reclassifications to investment properties
Transfers to real estate properties for sale
Closing balances
9.
June 2013
Dec. 2012
P
=362,205,168
=236,780,497
P
5,112,989
125,424,671
–
–
P
=367,318,157
–
–
=362,205,168
P
Investment Properties
Investment properties represent real estate properties for lease which consists of:
Land - at cost
Balances at beginning of year
Additions during the year
Buildings – at cost
Balances at beginning and end of year
Accumulated Depreciation
Balances at beginning of year
Depreciation
Balances at end of year
Net Book Values
June 2013
Dec. 2012
P
=180,603,685
–
180,603,685
=180,445,820
P
157,865
180,603,685
13,574,318
13,574,318
13,574,318
–
13,574,318
–
P
=180,603,685
10,859,456
2,714,862
13,574,318
–
=180,603,685
P
Investment properties include deemed cost adjustment amounting to P
=16.90 million
as of June 30, 2013 and December 31, 2012.The deemed cost adjustment arose when the Company
transitioned to PFRS in 2005.
Investment properties are rented out at different rates generally for a one-year term renewable every year.
Based on the appraisal reports by independent firms of appraisers using market data approach at various
dates in 2012 and 2011, the appraised values of these investment properties amounted to P
=282.91 million
and P
=280.71 million as of dates of appraisal.
10. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of:
Trade payables
VAT payable
Deposits
Accrued expenses:
Development costs
Director’s fee
Interest
Taxes, premiums, others
Withholding taxes payable
Dividends payable
Others
June 2013
=22,004,423
P
1,495,522
3,003,566
Dec. 2012
=34,657,142
P
174,471,730
12,923,865
747,848
2,972,785
1,874,422
90,879,846
1,774,179
=312,148,186
P
195,675,109
10,405,196
1,240,098
464,915
1,826,338
1,307,578
1,528,053
=249,818,557
P
–
2,714,128
28
Trade payables consist of payables to contractors and other counterparties, whereas deposits consist of
rental deposits and collected deposits for water and electric meters of the sold units. Accrued expenses
represent various accruals of the Company for its expenses and real estate projects. Accrued development
costs represent the corresponding accrued expenses for the sold and completed real estate projects of the
Company. Other payables consist of customers’ reservation and employees’ payable.
Accounts payable and accrued expenses due within one year amounted to =
P309.17 million in June 30, 2013
and P
=114.59 million in December 31, 2012.
11. Notes and Contracts Payable
The details of notes and contracts payable are as follows:
Short-term commercial papers (STCP) with various
maturities and interest rate ranging from 1.25% to
3.906% as of June 2013 and 2.37% to 4.61% in
December 2012
Short-term promissory notes enrolled with HGC with
various maturities and interest rate ranging from
1.20% to 1.65% as of June 2013 and 1.85% to 2.75%
in December 2012
June 2013
=178,050,000
P
Dec. 2012
=83,650,000
P
137,764,677
151,288,195
315,814,677
234,938,195
17,381,250
=252,319,445
P
–
Contracts payable
=315,814,677
P
On September 7, 2012 and September 12, 2011, the Philippine Securities and Exchange Commission
(SEC) authorized the Company to issue P
=200.00 million worth of STCP registered with the SEC in both
years, in accordance with the provision of the Securities Regulation Code and its implementing rules and
regulations, the Code of Corporate Governance and other applicable laws and orders.
In 2012 and 2011, the Company entered into a contract of guaranty under a Revolving Cash Guaranty Line
with HGC in the amount of P
=200.00 million. The guaranty covers the unpaid principal due on the outstanding
promissory notes and unpaid interest thereon of 10% per annum. The guaranty premium paid was 0.90% per
annum based on enrolled commercial papers in 2012 and 2011.
12. Related Party Transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are
controlled by or under common control with the Company, including holding companies, subsidiaries and
fellow subsidiaries, are related parties of the Company. Associates and individuals owning, directly or
indirectly, an interest in the voting power of the Company that gives them significant influence over the
enterprise, key management personnel, including directors and officers of the Company and close members
of the family of these individuals, and companies associated with these individuals also constitute related
parties. In considering each possible related entity relationship, attention is directed to the substance of the
relationship and not merely the legal form.
The Company discloses the nature of the related party relationship and information about the transactions
and outstanding balances necessary for an understanding of the potential effect of the relationship on the
financial statements, including, as a minimum, the amount of outstanding balances and its terms and
conditions including whether they are secured, and the nature of the consideration to be provided in
settlement.
Refer to page 29 for the transactions and account balances with related parties.
29
The Company, in the normal course of business, has transactions and account balances with related parties consisting mainly of the following:
Amount of transactions
Nature of Transaction
Ultimate parent (CI)
Sharing of expenses
charged by (to) the
Company
Interest income
Interest expense
Parent Company (CDC)
Sharing of expenses
charged by (to) the
Company
Interest income
Interest expense
Affiliates
(CPI)
Sharing of expenses
charged by (to) the
Company
Total
June 2013
P
=3,383,263
50,152
–
3,575,047
58,667
–
122,273
December 2012
954,663
23,345
(1,202)
2,680,517
45,507
(29,077)
403,737
Outstanding Balances
Receivable (Note 7)
Payable (Note 10)
December
December
2012
2012
June 2013
June 2013
P
=3,384,363
50,152
–
5,195,529
58,667
–
304,646
P
=8,993,357
–
23,345
–
1,620,482
P
=1,100
–
–
–
45,507
–
426,919
=2,116,253
P
–
–
P
=1,100
–
30-day, unsecured,
non-interest bearing
to be settled in cash;
–
Due and demandable;
non-interest bearing;
to be received in cash;
no impairment
1,202
Due and demandable;
non-interest bearing;
to be settled in cash
–
30-day, unsecured,
non-interest bearing
to be settled in cash;
–
Due and demandable;
non-interest bearing;
to be received in cash;
29,077
Due and demandable;
non-interest bearing;
to be settled in cash
–
=30,279
P
30-day, unsecured,
non-interest bearing
to be settled in cash;
30
a.
The Company, jointly with affiliated companies under common control, has a trust fund for the retirement plan
of their employees. The trust fund is being maintained by a trustee bank.
b.
The Company has no standard arrangements with regards to remuneration of its directors. Moreover, the
Company has no standard arrangement with regards to the remuneration of its existing officers aside from the
compensation received or any other arrangements in the employment contracts and compensatory plan. The
Company does not have any arrangements for stock warrants or options offered to its employees.
13. Stockholders’ Equity
Capital stock consists of:
Shares
Common stock - P
=1 par value:
Authorized
Beginning of year
Increase during the year
End of year
Issued and outstanding:
Beginning of year
Stock dividends
End of year
Amount
June 2013
June 2013
Dec 2012
Dec 2012
1,200,000,000
–
1,200,000,000
700,000,000
500,000,000
1,200,000,000
P
=1,200,000,000
–
P
=1,200,000,000
P700,000,000
=
500,000,000
=1,200,000,00
P
811,250,476
–
811,250,476
676,042,298
135,208,178
811,250,476
811,250,476
–
P
=811,250,476
676,042,298
135,208,178
=811,250,476
P
The Company registered 175,000,000 shares with SEC on April 21, 1989 with an initial offer price of 1.00.
On August 10, 2012, the SEC approved the increase in authorized capital stock from 700,000,000 shares to
1,200,000,000 shares. As of December 31, 2012 and 2011, the Company has 811,250,476 shares held by 810 equity
holders and 676,042,298 shares held by 769 equity holders, respectively.
Dividends declared and issued/paid by the Company from retained earnings were as follows:
Dividends
Cash
Stock
Date Approved
June 11, 2013
May 25, 2012
June 03, 2011
June 11, 2013
May 15, 2012
May 2, 2011
Per Share
=0.11
P
0.15
0.14
20%
20%
20%
Stockholders of
Record Date
June 26, 2013
June 22, 2012
June 17, 2011
July 11, 2013
September 10, 2012
July 14, 2011
Date Issued/Paid
July 22, 2013
July 18, 2012
July 13, 2011
August 6, 2013
October 4, 2012
September 9, 2011
Fractional shares of stock dividends were paid in cash based on the par value.
On August 9, 2012, the Board of Directors authorized the reversal of appropriated retained earnings amounting to
100.00 million for the development cost of Manila Residences Bocobo to unappropriated retained earnings because
the said project was already completed.
As of June 30, 2013, the unappropriated retained earnings include the remaining balance of deemed cost adjustment
amounting to =
P11.83 million, net of related deferred tax of P
=5.07 million, related to real estate properties for lease
which rose when the Company transitioned to PFRS in 2005. This amount has yet to be absorbed through sales and
is restricted for the payment of dividends.
The Company’s objectives in capital management is to maintain an optimal capital structure by ensuring that debt
and equity capital are mobilized efficiently and to provide returns for stockholders and benefit for other
stakeholders.
31
The Company manages its capital structure and makes adjustments to it, in the light of changes in economic
conditions. It monitors capital using leverage ratios on both gross debt and net debt basis.
14. Financial Income
Financial income consists of:
Interest income from:
Installment contracts receivable relating to sale of
real estate properties
Cash equivalents and short-term investments
Cash in bank
Others
Dividend income
June 2013
June 2012
P53,975,250
=
12,061,125
9,286
108,819
14,111
=66,168,591
P
P69,972,006
=
14,409,923
10,458
30,751
8,338
=81,431,476
P
June 2013
P13,760,061
=
12,263,344
3,875,943
3,340,663
1,732,620
1,060,228
727,401
509,590
474,661
316,680
237,830
153,705
75,502
64,594
June 2012
P15,124,503
=
35,996,326
3,461,349
5,815,324
2,302,015
898,268
21,405
1,537,671
962,827
762,834
15. Operating Expenses
Operating expenses consist of:
Taxes and licenses
Personnel (see Note 16)
Insurance Expense
Professional fees
Membership dues
Advertising and promotion
Repairs and Maintenance
Brokers’ commission
Outside services
Rent
Office supplies
Postage, telephone and telegraph
Transportation
Power, light and water
Depreciation
Donations
Others
–
805,663
=39,398,485
P
401,461
203,646
109,196
1,357,431
710,000
929,650
=70,593,906
P
June 2013
P6,906,196
=
4,644,336
712,812
=12,263,344
P
June 2012
P21,070,159
=
13,114,208
1,811,959
=35,996,326
P
–
–
16. Personnel Expenses
Personnel expenses consist of:
Employee benefits and commissions
Salaries and wages
Benefits and other social expenses
32
17. Financial Expense
Financial expense consists of:
Interest expense on:
Notes payable
Finance charge
June 2013
June 2012
2,930,043
107,001
=3,037,144
P
5,618,377
178,550
=5,796,927
P
18. Retirement Plan
The Company, jointly with affiliated companies, has a funded, noncontributory defined benefit retirement plan
covering all of its permanent employees.
19. Income Taxes
Provision for income tax consists of:
Current
Deferred
Final tax on interest income
June 2013
P21,678,121
=
(8,142,129)
2,414,082
=15,950,074
P
June 2012
P19,483,757
=
(2,736,951)
2,884,076
=19,630,882
P
20. Basic/Diluted Earnings Per Share
Basic/diluted earnings per share amounts were computed as follows:
a. Net income
b. Weighted average number of shares
c. Earnings per share (a/b)
June 2013
P64,673,616
=
811,250,476
=0.080
P
June 2012
P149,731,258
=
811,250,476
=0.185*
P
*After retroactive effect of 20% stock dividends in 2012.
The Company has no dilutive common shares as of June 30, 2013 and June 30, 2012. Thus, the basic and diluted
earnings per share are the same as of those dates.
21. Financial Instruments
Financial Risk Management Objectives and Policies
The Company’s principal financial instruments comprise of loans and notes payable, cash and cash equivalents, and
short-term cash investments. The main purpose of these financial instruments is to finance the Company’s
operations. The Company’s other financial instruments, which include available-for-sale investments, are held for
investing purposes. The Company has various other financial assets and liabilities such as trade receivables and
trade payables, which arise directly from its operations.
It is, and has been throughout the year under review, the Company’s policy that no trading in financial instruments
shall be undertaken. The Company has no investment in foreign securities.
The main risks arising from the Company’s financial instruments are cash flow interest rate risks, credit risk,
foreign currency risks, equity price risk and liquidity risk. The Board of Directors is mainly responsible for the
overall risk management approach and for the approval of risk strategies and principles of the Company and they
are summarized as follows:
33
Cash flow interest rate risk
The Company’s exposure to the risk for changes in market interest rates relates primarily to the Company’s shortterm and long-term loans payable all with floating interest rates. This means that the Company assumes the
concurrent movements in interest rates and parallel shift in the yield curves.
The Company manages its interest rate risk by maintaining credit lines with financial institutions and limiting
borrowings to the Company’s cash requirements.
A sensitivity analysis to a reasonable change in the interest rates (with all other variables held constant) of 0.8070%
higher or lower, would increase or decrease the Groups’ income before income tax of P
=2,548,730.
Credit risk
The Company trades only with recognized, creditworthy third parties. It is the Company’s policy that all customers
that wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an on-going basis with the result that the Company’s exposure to bad debts is not significant.
The table below shows the Company exposure to credit risk for the components of the balance sheet. The exposure
as of June 30, 2013 is shown at gross, before taking the effect of mitigation through the use of and collateral
agreements and at net, after taking the effect of mitigation through the use of collateral agreements and other credit
enhancements.
Financial effect of
collaterals/credit
enhancements
Gross Exposure
Fair Value of
Collaterals
Net Exposure
P219,897,431
=
680,500,000
P–
=
–
P219,897,431
=
680,500,000
P–
=
–
678,733,755
1,512,241,757
–
678,733,755
3,049,548
3,708,214
120,000
10,554,545
= 1,596,563,493
P
–
–
–
–
= 1,512,241,757
P
3,049,548
3,708,214
120,000
10,554,545
= 917,829,738
P
–
–
–
–
= 678,733,755
P
Loans and receivables:
Cash and cash equivalents,
excluding cash on hand
Short-term cash investments
Installment contract
receivables
Other receivables:
Accrued interest
Customers
Retention
Others
Total credit risk exposure
The Company holds the title to the real estate properties with outstanding installment contracts receivable balance
and the Company can repossess such real estate properties upon default of the customer in paying the outstanding
balance.
The following table summarizes the aging analysis of receivables as of June 30, 2013:
> One Year*
= 468,162,130
P
< 30days
= 1,876,068
P
3,049,548
–
1,631,884
–
30,000
90,000
10,194,376
286,153
= 220,140,371 P
P
= 468,538,283
* Classified as neither past due nor impaired.
**Excludes nonfinancial assets amounting to =
P118,376.
–
–
–
74,016
= 1,950,084
P
Installment contracts rec.
Other receivables:
Accrued interest
Customers
Retention
Others**
Current
= 205,234,563
P
Past Due But Not Impaired
31 - 60 days 61 – 90 days
= 590,380
P
= 407,456
P
–
4,002
–
–
= 594,382
P
–
373,346
–
–
= 780,802
P
> 90 days
P2,463,158
=
Total
= 678,733,755
P
–
1,698,982
–
–
= 4,162,140
P
3,049,548
3,708,214
120,000
10,554,545
= 696,166,062
P
34
The table below shows the credit quality by class of asset for loan-related balance sheet lines as of June 30, 2013,
based on the Company’s credit rating system.
High Grade*
Cash and cash equivalents
(excluding cash on hand)
Short-term cash investments
Installment contract
receivables
Other receivables***
P219,897,431
=
680,500,000
673,396,693
14,865,088
=1,588,659,212
P
Medium**
Grade
Past due but
not impaired
Total
=–
P
=–
P
–
–
P219,897,431
=
680,500,000
–
5,337,062
2,150,346
=7,487,408
P
678,733,755
17,432,307
=1,596,563,493
P
416,873
=416,873
P
*
**
High Grade - financial assets with reputable counterparties and which management believes to be reasonably assured to be recoverable.
Medium Grade - financial assets for which there is low risk on default of counterparties.
*** Excludes nonfinancial assets amounting to =P118,376.
The main considerations for impairment assessment include whether any payments are overdue or if there are any
known difficulties in the cash flows of the counterparties. The Company assesses impairment into two areas:
individually assessed allowances and collectively assessed allowances.
The Company determines allowance for each significant receivable on an individual basis. Among the items that
the Company considers in assessing impairment is the inability to collect from the counterparty based on the
contractual terms of the receivables. The Company also considers the fair value of the real estate collateralized in
computing the impairment of the receivables. Receivables included in the specific assessment are those receivables
under the installment contracts receivable accounts.
Because the Company holds the title to the real estate properties with outstanding installment contracts receivable
balance and can repossess such real estate properties upon default of the customer in paying the outstanding
balance, the Company does not provide for allowance for impairment of its installment contracts receivable.
For collective assessment, allowances are assessed for receivables that are not individually significant and for
individually significant receivables where there is not yet objective evidence of individual impairment. Impairment
losses are estimated by taking into consideration the age of the receivables, past collection experience and other
factors that may affect collectibility.
Concentration Risk
The Company’s policy is to enter into transactions with a diversity of creditworthy parties to mitigate any
significant concentration of risk.
Foreign currency risk
The Company’s transactional currency exposures arise from purchases in currencies other than its functional
currency. However, the Company’s exposure to foreign currency risk is minimal. There are no outstanding foreign
currency-denominated assets and liabilities.
Equity Price Risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in the market value of
individual stock. The Company is exposed to equity securities price risk because of investments held by the
Company, which are classified on the balance sheets as available-for-sale investments.
A sensitivity analysis to a reasonable change in the equity price (with all other variables held constant) of 0.24
higher or lower, would increase or decrease the equity by P
=377,328.
Liquidity risk
Liquidity is defined as the risk that the Company could not be able to settle or meet its obligations on time or at a
reasonable price.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of
bank loans.
35
The table below summarizes the maturity analysis of the Company’s financial assets and liabilities as of June 30,
2013:
Financial Assets
Cash and cash equivalents
Short-term cash investments
Installment contracts
receivable
30 days
31-90 days
91-180 days
181-360 days
Above 1 year
Total
P
=158,397,431
77,500,000
P
=61,500,000
161,000,000
P
=–
442,000,000
P
=–
P
=–
–
–
P
=219,897,431
680,500,000
26,457,612
262,355,043
37,910,955
260,410,955
58,713,398
500,713,398
87,489,659
87,489,659
468,162,131
468,162,131
678,733,755
1,579,131,186
117,925,849
99,687,838
217,613,687
P
=44,741,356
137,243
154,800,437
154,937,680
P
=105,473,275
174,856,485
69,846,766
244,703,251
P
=256,010,147
12,875,840
2,982,825
–
–
12,875,840
P
=74,613,819
2,982,825
P
=465,179,306
308,778,242
324,335,041
633,113,283
P
=946,017,903
Financial Liabilities
Accounts payable and
accrued expenses *
Notes payable **
Liquidity Position
* Excludes statutory liabilities amounting to =
P3,369,944 as of June 2013.
** Includes interest expense to maturity amounting to =
P8,520,364.
Fair Values
The carrying amounts of recorded financial assets and liabilities as of June 30, 2013 and December 31, 2012 are as
follows.
June 30, 2013
Carrying value
Fair value
Financial Assets
Cash on hand
Loans and receivables:
Cash and cash equivalents
Short-term cash investments
Installment contracts
receivable
Other receivables
Customers
Accrued interest
Retention
Others*
Available-for-sale financial
assets
Financial liabilities
Other financial liabilities:
Accounts payable
& accrued expenses**
Notes and contracts payable
December 31, 2012
Carrying value
Fair value
=20,319
P
=20,319
P
=21,000
P
=21,000
P
219,897,431
680,500,000
219,897,431
680,500,000
602,289,127
51,000,000
602,289,127
51,000,000
678,733,755
678,733,755
803,080,536
803,080,536
3,708,214
3,049,548
120,000
10,554,545
1,596,563,493
3,708,214
3,049,548
120,000
10,554,545
1,596,563,493
8,664,698
2,007,615
150,200
3,078,924
1,470,271,100
8,664,698
2007,615
150,200
3,078,924
1,470,271,100
1,564,523
=1,598,148,335
P
1,564,523
=1,598,148,335
P
1,556,652
=1,471,848,752
P
1,556,652
=1,471,848,752
P
P308,778,242
=
315,814,677
=624,592,919
P
P308,778,242
=
315,814,677
=624,592,919
P
P247,925,045
=
252,319,445
=500,244,490
P
P247,925,045
=
252,319,445
=500,244,490
P
*Excludes non financial assets amounting to =
P118,376 and =
P315,854 as of June 2013 and December 2012, respectively.
** Excludes statutory liabilities amounting to =
P3,369,944 and =
P1,893,512 as of June 2013 and December 2012, respectively.
Cash and cash equivalents, short-term cash investments, other receivables, and accounts payable and accrued
expenses
Due to the short-term nature of the transactions the fair value of cash and cash equivalents, short-term cash
investments, other receivables, and accounts payable and accrued expenses, approximate amount of consideration
at the time of initial recognition.
Available-for-sale investments
Available-for-sale investments are stated at fair value based on quoted market prices.
36
Installment contracts receivable
The fair value of installment contracts receivable cannot be reasonably estimated due to the significant volume of
transactions and the varied terms and maturities.
Notes and contracts payable
Due to the monthly/quarterly repricing of interest, loans and notes payable are stated at fair value.
22. Current Assets and Current Liabilities
The Company’s current assets and current liabilities are as follows:
Current Assets
Cash and cash equivalents
Short-term cash investments
Available-for-sale financial assets
Installment contracts receivable
Other receivables
Real estate properties for sale
Other assets
Current Liabilities
Accounts payable and accrued expenses
Notes and contracts payable
Income tax payable
June 2013
December 2012
P219,917,750
=
680,500,000
1,564,523
210,571,625
17,056,154
105,268,008
17,530,931
=1,252,408,991
P
=602,310,127
P
51,000,000
1,556,652
232,073,101
13,901,437
152,058,055
18,089,485
=1,070,988,857
P
P309,165,362
=
315,814,677
11,021,498
=636,001,537
P
P114,586,856
=
252,319,445
20,285,173
=387,191,474
P
23. Business Segments
The Company derives its revenues primarily from the sale and lease of real estate properties.
The Company does not have any major customers and all sales and leases of real estate properties are made to
external customers.
Segment Revenues:
Sales of real estate
Rental income
Others
June 2013
=159,945,898
P
1,523,383
13,070,709
=174,539,990
P
91.64%
0.87%
7.49%
100.00%
June 2012
=389,186,160
P
2,209,625
16,489,602
=407,885,387
P
95.41%
0.05%
4.54%
100.00%
The Company’s real estate projects, investments, and properties under lease are primarily located in Metro Manila.
37
CITY AND LAND DEVELOPER’S, INCORPORATED
SUPPLEMENTARY SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS
FINANCIAL RATIOS
Current
Asset-to-equity
Debt-to-equity
Asset-to-liability
Solvency
Interest rate coverage
Acid-test ratio
Return on equity (%)
June 30, 2013
(Unaudited)
December 31, 2012
June 30, 2012
1.97
1.44
0.20
3.27
0.19
28.52
1.78
8.21%
2.77
1.37
0.16
3.73
0.44
30.21
2.32
16.01%
1.68
1.54
0.21
2.85
0.37
31.39
1.38
20.06%
Manner of calculation:
Current ratio
=
Total Current Assets / Total Current Liabilities
Asset-to-equity ratio
=
Debt-to-equity ratio
=
Stockholder's Equity (net of Net Changes in Fair Value of
Investments)
Asset-to-liability ratio
=
Total Assets / Total Liabilities
Solvency ratio
=
Total Assets
Stockholder's Equity (net of Net Changes in Fair Value of
Investments)
Notes and Contracts Payable
Net Income after Tax + Depreciation Expense
Total Liabilities
Interest rate coverage
ratio
=
Net Income Before Tax + Depreciation Expense + Interest Expense
Interest Expense
Cash and Cash Equivalents + Short-term Cash Investments +
Acid-test ratio
=
Installment Contracts Receivable, current +
Other Receivables, current
Total Current Liabilities
Return on equity ratio
=
Net Income after Tax
Stockholder's Equity
38
CITY AND LAND DEVELOPER’S, INCORPORATED
SCHEDULE OF GROSS AND NET PROCEEDS OF SHORT-TERM
COMMERCIAL PAPERS ISSED
As of June 30, 2013
DESCRIPTION
(i)
As disclosed in the
Actual
Final Prospectus*
As of June 30, 2013**
P
=200,000,000
P
=178,050,000
202,000
202,000
Legal and Accounting Fees
30,000
30,000
Publication Fees
30,000
29,792
1,000,000
487,193
10,000
10,550
198,728,000
177,290,465
100,000,000
42,095,286
90,768,000
108,921,600
7,960,000
1,144,713
198,728,000
152,161,599
P
=--
P
=25,128,866
Total Outstanding Notes / Gross Proceeds
Less: Expenses
Registration Fees
Documentary Stamps Tax
Printing costs
(ii)
Total Net Proceeds
(iii)
Use of Proceeds
Project-related Costs
Payment of maturing loans/ notes
Interest expense
Total
(iv)
Balance of proceeds as of June 30, 2013
* SEC-CFD Order No. 144, Series of 2012 dated September 07, 2012.
Use of Proceeds as disclosed in the Final Prospectus is estimated for the Twelve (12)-month Period September 2012 to
August 2013.
** For the Ten (10)-month Period September 1, 2012 to June 30, 2013.
39
CITY AND LAND DEVELOPER’S, INCORPORATED
MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP
CITYLAND, INC. (CI)
(ultimate parent)
100.00%
↓
100.00%
↓
CREDIT & LAND HOLDINGS,
INCORPORATED (CLHI)
(subsidiary of CI)
CITYADS, INC. (CAI)
(subsidiary of CI)
50.42%
CITYLAND DEVELOPMENT CORPORATION (CDC)
(subsidiary of CI)
29.54%
CITY & LAND DEVELOPERS,
INCORPORATED (CLDI)
(subsidiary of CDC)
9.18%
49.73%
90.81%
CITYPLANS, INCORPORATED (CPI)
(subsidiary of CDC)