Cebu H Ir 2014
Cebu H Ir 2014
Cebu H Ir 2014
build for
tomorrow's
generations
2014 Annual and
Sustainability Report
This is why we are looking closely at our environmental, social
and economic impacts today.
Build To Last.
033. Who We Are: Vision/Mission and Core Values
034. Ownership Structure/Membership in
Associations/Awards and Recognitions 2014
035. Subsidiaries and Affiliates
036. Business Review
186. Appendices
5
About this
Report
Scope and Coverage Data References and Assurance
Our 2014 Annual and Sustainability Report covers The references of each sector performance
the business operations and activities of Cebu are taken from the following documents
Holdings, Inc. (CHI) in Cebu, Philippines including or guidelines:
its subsidiaries and affiliates for the calendar year
Economic Performance
2014. G4-3, G4-5, G4-6, G4-28, G4-30
• Audited financial statements conforming with
The scope of our environmental data was generally accepted accounting principles in the
expanded. Data for 2013 was updated Philippines, and
accordingly for alignment. G4-22 • Internally-generated reports consolidated
from Finance, Commercial Business Group and
Purpose of Report
Corporate Communication and CSR Division
detailing our community investments for this
This Report is a valuable opportunity for us reporting period.
to assess and improve on our economic,
environmental and social performance.
Environmental Performance
This has been designed to provide our • Energy and water consumption from meter
stakeholders with relevant information about our readings by utility companies we subscribe to;
Company’s annual financial and sustainability
• Actual volume or weight of materials used as
initiatives, programs and progress. This was
shown in the records of our general contractor;
developed using the Global Reporting Initiative
(GRI) G4 reporting framework which we • Diesel consumption (generating sets) are from
pioneered in the country in 2014. characteristic fuel consumption given by the
manufacturer;
Included here are Construction and Real Estate • Greenhouse gas (GHG) emissions from
Sector disclosures. This report successfully direct energy; Computations derived using
completed GRI’s Materiality Disclosures Service. the GHG Protocol Corporate Standard and
See pages 211 to 214 for further information. Intergovernmental Panel for Climate Change
(IPCC) Reporting Guidelines; and
• Emission factor for the indirect energy
consumption is based on National Grid Emission
Factors by the Department of Energy (DOE).
6
Social Performance companies (PLCs). It helps us benchmark
against international best corporate governance
• Internally-generated reports on our labor
practices by publicly-listed companies and
and humtan rights aspects, health and safety,
encourages us to go beyond our national
product responsibility, and community
legislative requirements. See pages 214 for the
development programs.
ACGS Index.
• We benchmarked with Corporate Knights
The data assurance for non-financial data is
Capital’s 2015 Global 100 Index. This listing
conducted through the Company’s annual audits
is a ranking of the world's most sustainable
on Quality, Environmental, Occupational Health
corporations using 12 key performance
and Safety Management Systems (QEHS MS),
indicators. It allows us greater transparency and
which are held annually by our internal audit
a means to quantitatively compare to best in
and external certifying body. In between these
class global corporate practices. G4-15, G4-32
reviews, we also conduct data assurance through
our own Sustainability Technical Working Group
(STWG) assessments. G4-33 Additional Reference
7
01.
Envision.
Deliver.
OPERATIONAL
RETAIL SPACE LEASING
OFFICE SPACE LEASING
>> Ayala Center Cebu
>> eBloc Towers and The Walk
95%
61
thousand
average occupancy
129
thousand
sqm gross
leasable area
sqm gross
leasable area
95% average
lease out rate
772 thousand
924
number of sqm
residential total gross floor area
units sold
1,559 87.5%
expected GFA increase
number of units in five years (2019)
launched
(owned by CHI and ALI)
308,758 sqm total
under construction
AAA
PRS Credit
P2 billion
gross revenues
27%
P16.4 reaching
growth in
total assets
billion
Rating
1.63:1 current
P531 million
net income after tax 1.23:1
ratio
commercial
debt-to-equity
ratio
P2 billion
capital expenditure
ENVIRONMENT
82species
28%
of recyclables
increase
in volume 3,972 existing
trees nurtured
SOCIAL
8. 7
rendered a total of
3,353 total
out
79%
satisfaction
rating
employee participation
lost time
39 09 00
HRS MINS SECS
from work accidents
and injuries in
construction project
sites and in CHI offices
customer
satisfaction
rating
Cebu Holdings, Inc. (CHI) is proud to consider itself as a major partner in building
Cebu. Since the late eighties, it has worked to unlock the value of land in Cebu Park
District, an integrated mixed-use development comprised of Cebu Business Park, and
subsidiary Cebu Property Ventures and Development Corporation’s (CPVDC’s) Cebu
I.T. Park.
Twenty six years ago, when Ayala Land was looking for a next estate to develop into a
central business district after Makati, Cebu was the top choice. The city showed promise
as an ideal location where Ayala Land’s affiliate company, CHI, could set the stage for
even further growth.
Bernard Vincent O. Dy
Building to last
Our efforts to drive growth through positioning them for growth, enabling
sustainability was acknowledged strong relationships with local
through a Special Recognition at the government, and strengthening our
first Sustainable Business Awards (SBA) operating efficiency strategies and risk
Philippines 2014 for Best Practices in management approach.
Workforce Management with CHI being
the only Cebu-based company cited. We take great pride in what has been
achieved. We remain confident in
Our approach to sustainability has the capability of our organization
given us a number of benefits: creating to build on our success even
high-quality products, enhancing further. We will continue to build for
our market reputation as a trusted tomorrow’s generations.
brand, empowering our people and
The Philippine economy showed its continuing resilience despite adversity, ending 2014 with
the third highest gross domestic product (GDP) growth in the region, after Vietnam and China.
Though the yearend 6.1 percent GDP growth was lower than that of 2013, it was a strong
performance considering the effects of recent natural calamities, as well as the uncertainties
of the global economic environment.
Against this challenging backdrop, we at Cebu Holdings, Inc. (CHI), have continued to manage our
business prudently, aggressively seeking opportunities for further growth while keeping risks within
manageable levels. Our balance sheet remains strong, even stronger in fact as we actively managed our
debt profile in 2014 ensuring it remained long-dated yet cost effective.
Our Company’s principal strength lies in its involvement in highly diversified businesses including a range
of residential products that cater to various market segments. The various residential condominiums
we have launched bring in over 4,500 units upon completion, making us the biggest real estate group,
“... we have
continued to
manage our
business prudently,
aggressively seeking
opportunities for
further growth while
keeping risks within
manageable levels...”
Financial Ratios
2,000 2,169,510 department store. The mall now has over 500
merchants and a lease out rate of 95 percent.
1,633,034
1,500 1,521,870
1,442,701
With the IT and BPO industry being one of the
1,000 drivers of Cebu’s local economy, we continue to
build up our office leasing portfolio to cater to
2010 2011 2012 2013 2014 this demand. The first three towers of the eBloc
Net Income (in thousand pesos) G4-9 Total Assets (in thousand pesos) G4-9
700 19,000
17,000
16,384,951
500 530,877 15,000
501, 145
443, 640
436, 192 13,000
406, 200 12,950,353
300 11,000
9,000 9,749,063
100 7,000
7,131,313
6,038,390
5,000
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
6,000
6.00
5.73
5,500
5.00
5,466,232 5.16
5,000 5,174,518
4.00
4,942,684
4,704,483 4.00
4,500
3.00
4,415,142
2.70
4,000 2.50
2.00
Cebu Holdings, Inc.’s (CHI) P5-billion initial foray into the local debt market was fully subscribed to within
its first week of offering. Through the Philippine Dealing & Exchange Corp. (PDEx) platform last June 6,
2014. The entire subscription amount of P5 billion was raised. This is well and above the P3 billion initial
target forecast by CHI. The bonds were oversubscribed 1.6 times over, reflecting high investor confidence
and commitment in the Company. Both PDEx and the Philippine Rating Services Corporation (PhilRatings)
assigned a PRS AAA credit rating, a Cebu first, to CHI’s maiden bonds due in 2021. This rating is the
highest given which indicates minimal credit risk.
The bond issuance will help fund CHI’s projects and continuing landbanking initiatives.
We continue to rely on our sustainability All these are calibrated to capitalize on the
framework in growing the business. We have expanding market, diversify our product lines and
refined our strategy to drive three focus areas grow the business for you, our shareholders.
that will complement and boost our economic,
environmental and social capitals in the We will continue to deliver solid results from
years ahead. As we enter into a management our developments, further strengthen our
transitional phase for 2015, we will continue leasing capabilities, engage in smart, sound
to rely on strong corporate governance to new venture partnerships, and continue to trust
intensify delivery of operational and financial in our adaptability to meet changing market
performance. We also continue to look forward conditions for the benefit of our business and all
to enabling partnerships beyond those with our our shareholders.
parent company.
Cebu Holdings, Inc. (CHI) is a publicly-listed Company engaged in real property ownership, development,
marketing and management.
The Company was registered with the Securities and Exchange Commission (SEC) on December 9, 1988,
with an authorized capitalization of P1.0 billion. As of December 31, 2014, the Company’s capitalization is
at P3.0 billion. G4-7, G4-17, D.1
OWNERSHIP
STRUCTURE 10.7 5 - Aberdeen International Fund Managers Ltd.
1.58 - Others
Philippine Business for the Environment Ayala Center Cebu received the ‘Kasangga Award’ as an
Cebu Uniting for Sustainable Water Foundation Interruptible Load Program (ILP) Partner conferred by the
Visayan Electric Company (June 5, 2014)
EDUCATION AND TRANSFORMATIONAL AWARENESS Ayala Group of Companies (in Cebu) – ‘Tribute of Highest
Cebu Educational Development Foundation for Distinction’ Tourism and Investors’ Night, Cebu Business
Month, June 20, 2014.
Information Technology
34
Subsidiaries and Affiliates
100
CPVDC
76 CLCI
CEBU LEISURE COMPANY, INC.
CBDI
30 Formed as a joint venture
company with Ayala Land,
Inc. for the development
ASPI
35 CENTRAL BLOCK DEVELOPERS, INC.
BUSAY
NIVEL HILS
BANILAD AMAIA
STEPS
Mandaue PAKNAAN
MA
ND
AU
E CI
CEBU I.T. TY
PARK MANDAUE
GUADALUPE PROJECT
Subangdaku
CEBU
BUSINESS
PARK
TA
RRE MACTAN
CA INTERNATIONAL
AIRPORT
OSM
EÑA
CALAMBA
BLV
LABA
D
NGO
N
MACTAN
MAMBALING ISLAND
36
OBLACION
AMARA
Liloan, Cebu
OUR BUSINESS G4-4, G4-8, G4-9, G4-13
LILOAN
1 Strategic Land Management
Commercial Business
4 Operations and Management
- Retail space lease
- Office space lease
O
AÑ
G
EN
37
N
TA
AN
AB
NEW
POPE JOHN P.
C
CARD
XXIII SEMINARY
E RA
INA
LR
OSA
LES
N
N TA
AVE
BA
CA
P.
POCKET
NU
T
ES
QU
RO
E
SAN GREENS
ACC Corporate Center ST
N IÑO
Construction accomplishment: SAN
TO
A
O
SIQ
YR
E CEBU
NA
U
EN HOLDINGS
PA
AV
LUZ AO CENTER PO
AN CEBU CITY
ND GR
MI MARRIOTT
AYALA LIFE- HOTEL CITY SPORTS
FGU CENTER CLUB CEBU
AD
RO
BIL
IR AN 1016
RESIDENCES
P
O
THE TERRACES LO
Ayala Center Cebu AR
M
SA
CARD
AR
CH
IN A
AYALA
B
ISH
LR
CENTER
OP
O
CEBU
RE
SA
Y
LE
ES
PARK POINT
S
AV
ACC
AV
RESIDENCES N
E
E
UE
NU
CORPORATE
E
CENTER
PUV
PARKLANE
HOTEL TERMINAL SOLINEA
(CYAN)
UE
KAMAGONG
EN
MANDARIN
BO
HOTEL AV SOLINEA
HO
N
ZO (TURQUOISE)
L
QUEST HOTEL U
L
AV
E NU
SOLINEA
E
(LAZULI)
KAMPUTHAW
MOLAVE ST BPI
CORPORATE
NEGROS
TUNE HOTEL
CENTER ROAD
N. ESARIO STREET
POCKET
GREENS
TOJONG ST
Start of construction
ASILO DE LA
MILAGROSA
GOLDEN PEAK
HOTEL & SUITES
38
MP
O
S C
ZALE
GON
INA ST
C. BORCES
M. BORCES ST
H. BORGONIA ST
F. ARCILLA ST
Legend:
IN ST
JOAQU
H. JOAN
CA M commercial
OTE
S ROA
D
ONE residential
99.50% as of December 2014
SEDONA
PARC
retail
OCKET PARK
REENS TOWER
TWO
M
C
A
TA
ST
N
M. J.
OP
LEYTE LO
CUE
NCO
1016 Residences AV
EN
UE
Construction accomplishment:
OUR MOTHER OF PERPETUAL HELP
SAN ANTONIO
HIPODROMO
LAPU-LAPU ST
ST PAUL ROAD
FAITHFUL ST
SOR
SO GON R
TUGKARAN OA D
NURSERY
BANTAYAN ROAD
CARRETA
E
E NU
SORSOGON ROAD
Solinea 1 (Cyan) AV
OM IL
X
Construction MA accomplishment:
IMU
R AL
36.95% E
N as of December 2014
SA
GE
VE
NU
E
COLEGIO DE LA
Solinea 2 (Turquoise)
IMMACULADA CONCEPCION Construction accomplishment:
GORORDO AVENUE 16.23% as of December 2014
Solinea 3 (Lazuli)
Start of construction
G
EN
EC
H
AV
EZ
ST
39
CEBU BUSINESS PARK
Best of Cebu
Awards
Ayala Center Cebu was named Cebu's Best
Lifestyle Mall in Sun Star's Best of Cebu 2014
Awards. The mall likewise received citations as
the Best Customer Restrooms, Best Jeepney
Terminal and Best Park.
43
AYALA LAND PREMIER: 1016 RESIDENCES, PARK POINT RESIDENCES AND AMARA
Offering exclusive
and distinctive living
experiences
45
Solinea Lazuli
and BPI Cebu
Corporate Center
groundbreaking
ceremonies
Solinea Inc. marked another important milestone
with the groundbreaking ceremony of its two
signature projects in Cebu: Solinea Lazuli and the
BPI Cebu Corporate Center.
46
ALVEO: SEDONA PARC AND SOLINEA
Introducing vibrant
and cosmopolitan
communities
The urban
recreational and
sports resort
48
The urban recreational and sports resort located at the
heart of the metropolis offers a diverse range of amenities
for leisure, dining, health and fitness. Stepping up to
modernize its facilities, the club underwent a multi-million
peso renovation which started in 2013 to further enhance
its multitude of services to offer to club users.
49
50
CEBU CITY MARRIOTT HOTEL
Business and
leisure for the
discerning traveler
Located within the city’s premier business and lifestyle district,
Cebu City Marriott Hotel offers a quality experience for its guests.
The 299-room business hotel is beside Ayala Center Cebu offering
shopping, recreation and leisure activities at their doorstep.
51
RIVE
UN D
EN S
D
GOL
GOV. M
. CUEN
CO AV
E NUE CEBU COUNTRY CLUB
eBLOC
TOWER 4 eBLOC
J. M TOWER 1
.D
EL
M AR
S TRE POCKET
AVIDA TOWER ET
RIALA 1 GREENS
AVIDA TOWER
RIALA 2
AVIDA TOWER
Avida Tower Riala 1 RIALA 3
Construction accomplishment:
T
18.9% as of December 2014
R EE
ST
IA
Avida Tower Riala 2
ST
D
D
IN
2N
ET
Construction accomplishment:
ST
E
TR
T
1S
16.09% as of DecemberSA2014
S
N MIG
U
LA
EL RD
T
EZ
EE
IN
Grand Launch:
TR
AS
ST
EG
A
July 12, 2014 W.
IG
OM G EO
DR
NZ
PA
ON
ST
RE
CAMP LAPU-LAPU E T
CENTRAL COMMAND AVIDA
TOWER 1
AVIDA eBLOC
Avida Tower 1 TOWER 2
TOWER 2
Turnover: August, 2014
eBLOC
TOWER 3
Avida Tower 2
Construction accomplishment:
93.7% as of December 2014
LA
GU
AR
DIA
CEBU IT PARK
ST
T
EX
DIA
AR
ST
GU
CE
LA
EN
WR
ST
ON
LA
52
NS
ST
HE
EP
ST
GE
N.
L
IM
ST
eBloc Tower 4
ST
S
O
NT
Construction accomplishment:
SA
D
BA
23.30% as of December 2014
J. A
DRA
HIN
INTERNATIONAL
BAU
PHARMACEUTICALS, INC.
GO
V. M
. CU
ENC
O AVE
CEBU MEDICAL NU
SOCIETY E
E
Central Bloc E NU
AV
SAMANTABHADRA NA
Site preparation INSTITUTE NL
U
A
JU
J.
M.
D EL
M AR
ST TESDA
R EE REGION VII
T
BUREAU OF
INTERNAL REVENUE
POCKET
GREENS
ET
RE
ST
THE WALK
AD
WATERFRONT
AB
CEBU
POCKET
GREENS
W.
G EO
N ZO
N
E
ST
RIV
RE
ET
D
AS
Legend:
LIN
SA
commercial
UC
MA
office
ST
ISE
residential
T
ES
O
QU
D
JA
R
ST
TO
ST
ST
FIR
retail
LD
METROSPORTS
ERA
EM
ST
ND
MO
A
DI
ST
RE
HI
PP
53
SA
CEBU I.T. PARK
Strengthening the
investment climate
in Cebu
In its 2014 Grand Chamber Awards, the In a separate event, the Ayala group of
Cebu Chamber of Commerce and Industry companies, was lauded with the “Tribute of
gave a Special Citation to Cebu I.T. Park Highest Distinction” award during the Tourism
for its vision, development and continued and Investors Night of the Cebu Business Month.
support to Cebu’s emerging information and
communication technology and business process Signed by heads of the Cebu Chamber of
management industry. Commerce and Industry, the Province of Cebu,
and the City of Cebu, the award recognizes
The PEZA-accredited Cebu I.T. Park is home the Ayala group for its investment in Cebu
to over 70 percent of Cebu’s business process which could well be over P100 billion in
outsourcing (BPO) industry. It holds the largest economic value.
facilities of JP Morgan Chase and Co., NCR
Philippines, Accenture, Teletech IBM, Microsoft, “The Ayala group’s investment in the Cebu
Convergys and Aegis PeopleSupport and NEC Business Park and the Cebu I.T. Park are the
Telecom Software Phils, Inc. outside of Manila. most important components that determined
Ayala’s award of Highest Distinction. These two
To cater to the still growing workforce of over locations are hosting quite a number of foreign
35,000, the two-hectare superblock of Cebu I. T. direct investors, who are involved in a number
Park is set for redevelopment. The leasing portfolio of business ventures and endeavors, and the
will expand to include a regional mall, office most recent of which, are the BPOs and BPMs,”
buildings and a hotel, reinforcing Cebu I.T. Park as said Sabino Dapat, Chair of the Tourism and
the top BPO destination in the region. Investment Promotion Committee of the Cebu
Business Month 2014.
The panel of judges was led by Department of
Trade and Industry VII Director Asteria Caberte.
Cebu Holdings Inc. President (2014) Francis Monera receives the Tribute of Highest Distinction bestowed to the Ayala Group of Companies for its
contribution to Cebu’s development. The award was given by the Cebu Chamber of Commerce and Industry (CCCI). (L-R) Cebu City Mayor Michael
Rama, Cebu Governor Hilario Davide III, CCCI President Ma. Teresa Chan and Cebu Business Month Chairman Felix Tiukinhoy.
57
eBLOC TOWERS
Addressing the
continuing demand
for office space
Comfort and
function in a secure
investment
A refreshing new
hub for business
and leisure
MACTAN
PROJECT
MÖVENPICK HOTEL
MACTAN ISLAND CEBU
AD
RO
ÑO
GA
EN
N TA
PU
MACTAN
SHRINE
SHANGRI-LA'S MACTAN
RESORT AND SPA
CHI forged strong partnerships for its continuing expansion with new large-scale,
integrated, master planned mixed-use districts in key cities in Metro Cebu.
Our 13-hectare proposed development in Mactan, is a joint venture with Taft Property
Venture Development Corporation. Capitalizing on Cebu’s booming tourism industry, it
is envisioned to become the resort and leisure hotel, retail and residential development
of choice.
SUBANGDAKU
ELEMENTARY
VE
SCHOOL
LA
SQ
U
EZ
ST
RE
TE
M.
LOG
T
AL
E PEREZ STR
RE E.O.
ARTA
BA
EET
ST
NO
A
A
EN
AVENUE
JA
Z
DEPARTMENT OF PE
AGRICULTURE - CEBU LO
BUREAU OF
INTERNAL REVENUE
INNODATA KNOWLEDGE
SERVICES INCORPORATED MANDAUE
PROJECT NORTH BUS
TERMINAL
UE
EN
AV
UE
A
RT
EN
A
AV
OG
N O
.L
UA
M
O
F. CAB
AHU
GS
T.
UE
EN
AV
G
L LI
Z UE
E.
F.
RD
E VA
UL
BO
KA
A
EN in Subangdaku, Mandaue City. This
O
M
SI
OS
UN
G
O
GI commercial spaces having retail and
ST
ER
ET
CHI has a 10 percent stake in this partnership with Ayala Land, Inc., and AboitizLand, Inc.
CHI is a publicly listed company with the directors holding no more than two percent of
Philippine Stock Exchange (PSE) since 1994. the outstanding capital stock.
CHI is compliant to all the rules and regulations
of the PSE and the Securities and Exchange Each director is elected annually. As a rule, any
Commission (SEC), and in applicable rules and former partner or employee of CHI’s current
regulations relating to the development of the external auditor is excluded from election.
Philippine capital market. Rule exclusion applies only in cases of elapsed
termination of service reaching a minimum of
two years.
Composition G4-40, E.4, E.12
There is a balanced and diverse mix of
There are nine members of the Board of
competencies and experiences in business,
Directors and three are independent. CHI is
finance and law among the board. The profile
fully compliant to the SEC and PSE governance
of each director is found on pages 188 of 191
standards of a minimum of two independent
this Report.
Internal
AUDIT AND RISK COMMITTEE
Audit
RISK COMMITTEE
PRESIDENT
NOMINATION COMMITTEE
SUSTAINABILITY COMMITTEE
MANAGEMENT COMMITTEE
Customer Relations
Information Systems
Project Support /
Technical Asset
Management
In order to ensure that adequate time and It is CHI policy that the Chairman should not be
attention is given to the fulfillment of each an immediate past president. E.6
director’s duties, CHI imposes a limit of five board
seats in any group of publicly-listed companies.
and Processes G4-34, G4-35, G4-36, G4-42, G4-45, G4-46 • Promotion of a culture of ethics, social
responsibility and good governance.
CHI has adopted a Code of Corporate
CHI’s Board of Directors adopts clear and specific
Governance as mandated by the SEC. Specific
guidelines on internal Board processes, and
roles, duties and responsibilities of the Board
in particular, the types of decisions requiring
of Directors are clearly defined and aligned to
Board approval.
relevant Philippine laws, rules and regulations.
DIRECTOR'S NAME TYPE PRINCIPAL NOMINATOR DATE FIRST DATE LAST ELECTED WHEN NUMBER
aaaa aaaa IN THE LAST ELECTED ELECTED OF YEARS
ELECTION SERVED AS
DIRECTOR
BERNARD NED Ayala Land, Nomination August 15, August 15, Board Meeting new
VINCENT O. DY Inc. Committee 2014 2 2014
ANTONINO T. NED Ayala Land, Nomination April 2009 2 April 2014 Annual 5
AQUINO Inc. Committee Stockholders'
Meeting
FRANCIS O. ED Ayala Land, Nomination April 2006 3 April 2014 Annual 8
MONERA Inc. Committe Stockholders'
Meeting
ANICETO V. ED Ayala Land, Nomination January 1, January 1, Board Meeting new
BISNAR, JR. Inc. Committe 2015 3 2015 - Nov. 11, 2014
EMILIO J. NED Ayala Land, Nomination April 2008 April 2014 Annual 6
TUMBOCON Inc. Committe Stockholders'
Meeting
JAIME E. NED Ayala Land, Nomination April 2008 April 2014 Annual 6
YSMAEL Inc. Committe Stockholders'
Meeting
MA. THERESA M. NED BPI Capital Nomination July 2012 April 2014 Board 2
JAVIER Corp. - Committe Meeting
AMTG
ANTONIO S. NED First Metro Nomination November April 2014 Annual 21
ABACAN, JR. Investment Committe 1993 Stockholders'
Corp. Meeting
1
Pampio A. Abarintos replaced Mr. Hernando O. Streegan effective April 8, 2014.
2
Bernard Vincent O. Dy replaced Mr. Antonino T. Aquino effective August 15, 2014.
3
Aniceto V. Bisnar, Jr. replaced Francis O. Monera effective January 1, 2015.
Jaime E. Ysmael
Filipino, 53, has served as Director of CHI
since April 29, 2008. He has been the
Treasurer of CHI since August 2014.
74 The Board of Directors’ Profile is found in pages 188 - 191 of this Report.
Aniceto V. Bisnar, Jr.
Filipino, 51, has been the President of CHI since
January 1, 2015. He is also the President of
CPVDC, a publicly listed company. Concurrently,
he is the Vice President and Chief Operating
Officer of the Visayas-Mindanao Group of Ayala
Land, Inc. Prior to being appointed as President,
he was Executive Vice President of CHI and
CPVDC since March 17, 2014.
Francis O. Monera
Filipino, 60, served as director of CHI and
CPVDC, from April 28, 2006 until Dec. 31, 2014.
He served as President of CHI and CPVDC from
2006 to 2014. He was the Chief Operating
Officer of CHI before he was elected president of
the Company effective January 1, 2007.
Enrique L. Benedicto
Filipino, 73, has served as an Independent
Director of CHI since April 25, 2003. He is
currently the Honorary Consul of Belgium.
Pampio A. Abarintos
Filipino, 71, has served as an Independent
Director of CHI since April 8, 2014.
75
• Ensuring that at least one of its non- CHI requires of its directors, at least 75 percent
executive directors has prior working attendance of all Board meetings. Considerate
experience in the sector or broad industry provision for electronic presence is given.
group to which the Company belongs; Individual physical attendance is required in at
• Requiring all directors to undergo an least 50 percent of the Board meetings.
orientation program on corporate
The Board undergoes a formal self-rating
governance; and
system annually. Assessments are made on both
• Encouraging and supporting its directors to individual and collective capacities. Focus is given
attend continuing education programs on to level of compliance with leading practices
corporate directorship. E.8, E.9 and principles on good governance. Areas for
improvement are determined. Independence,
The Company’s Board of Directors also approves
experience, judgment, knowledge, time
and implements our vision/mission and core
commitment, and teamwork are factored in.
values. A Board calendar is also adopted to allow E.1, E.14, E.15, E.16
for periodic revisit and review of our governance
charter and of our corporate strategy map, along Group meetings, without the presence of any
with its related performance scorecards. E.1 executive director or management representative,
are supported and arranged for all non-executive
Board Performance G4-44 directors at least once annually. E.7, E.13
Attendance of Directors - for Board and Organizational Meetings held last February 27, April 8, August 15 and November 11, 2014
BOARD NAME OF DIRECTOR ELECTION DATE NUMBER OF NUMBER OF %
MEETINGS MEETINGS ATTENDANCE
HELD DURING ATTENDED
THE YEAR
August 15,
Chairman Bernard Vincent O. Dy 2 2 2 100%
2014
1
Pampio A. Abarintos replaced Hernando O. Streegan effective April 8, 2014.
2
Bernard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.
Board Committees and Functions G4-37, G4-40, G4-46, G4-47, G4-48, E.4, E.11, E.17, E.19
EXECUTIVE COMMITTEE
Exercises the powers and attributes of the Board Adopted resolutions pertaining to the strategic and
of Directors, and reports all resolutions adopted tactical objectives of the Company.
by this committee to the Board of Directors.
Oversees external audit, internal audit, financial Approved quarterly and annual audited financial
reporting and risk management through its statements, annual external and internal audit
regular quarterly and special meetings held plan, quarterly internal audit reports, quarterly risk
in 2014. management updates, improvements to Committee
and Internal Audit charter, quarterly and annual report
of the Committee to the Board of Directors.
NOMINATION COMMITTEE
Reviews and evaluates qualifications of all Considered and approved the final list of nominees for
persons nominated to positions in the Company directors for the year 2014-2015.
which require appointment by the Board.
REMUNERATION COMMITTEE
Oversees remuneration of senior management Considered and approved the 1) 2013 performance
and other key personnel. Ensures the conduct evaluation and promotion of associates, managers
of formal and transparent procedure for fixing and executives; 2) 2013 performance bonus for the
remuneration packages of corporate officers associates, managers and executives; 3) the salary
and directors. adjustments for the qualified managers and executives
for 2014.
SUSTAINABILITY COMMITTEE
Provides assistance to the Board of Directors Through the support of the Sustainability Technical
in its responsibility to the Company’s Working Group (STWG) headed by the Corporate
stakeholders that relate to the growth in Sustainability Officer (CSO), published the Company’s
the areas of economic, environmental, and Annual and Sustainability Report based on the GRI
social performance. G4 standard; In 2014, a joint executive session of the
Sustainability and the Audit and Risk Committee of the
board revisited the Company’s sustainability framework
and strategy, management approaches, targets,
programs and initiatives. The agenda also included
materiality assessment and stakeholder engagement
process and alignment of these initiatives to the
Company’s existing quality, environment, occupational
health and safety plans and programs.
CHAIRMAN (NED) Emilio J. (ID) Fr. Roderick (ED) Francis O. (NED) Bernard (ED) Francis O.
Tumbocon C. Salazar, Jr., Monera Vincent O. Dy 2 Monera
SVD
(NED)Antonino T.
Aquino 2
MEMBERS (NED) Bernard (ID) Enrique L. (NED) Emilio J. (ED) Francis O. (NED) Bernard
Vincent O. Dy 2 Benedicto Tumbocon Monera Vincent O. Dy 2
(NED) Antonino T. (ID) Pampio A. (ID) Pampio A. (NED) Ma. (NED) Antonino
Aquino 2 Abarintos 1 Abarintos 1 Theresa M. T. Aquino 2
Javier 3
(ED) Francis O. (ID) Hernando O. (ID) Hernando (ID) Enrique L.
Monera Streegan 1 O. Streegan 1 Benedicto
(ED) Jaime E.
Ysmael 3
1
Pampio A. Abarintos replaced Hernando O. Streegan, effective April 8, 2014.
2
Berndard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.
3
Resignation of Ma. Theresa M. Javier as Treasurer(ED) of the Company effective July 14, 2014.
3
Appointment of Mr. Jaime E. Ysmael as Company Treasurer., effective July 14, 2014.
Options Outstanding
The Company does not have stock options for its directors, executives, and employees.
(5) Stock options and other None for CHI None for CHI
financial instruments
Aggregate Remuneration
NON-EXECUTIVE DIRECTORS
REMUNERATION ITEM EXECUTIVE DIRECTORS (OTHER THAN INDEPENDENT INDEPENDENT DIRECTORS
DIRECTORS)
(c) Per diem allowance Ma. Theresa M. Javier - P600k for all board P760K for all board and
P120k meetings attended in 2014 committee meetings
attended in 2014
Ma. Theresa M. Javier - P600k for all board P760K for all board and
TOTAL P120k meetings attended in 2014 committee meetings
attended in 2014
The Company does not have stock rights, options or warrants of its shares for the Board of Directors.
Executive Officers
OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY
VARIABLE PAY
Francis O. Monera
President
Nerissa J. Mediano
Vice President and Head, Business Development
and Office Leasing Group
All above-named Officers as a group Actual 2013 P 18.2 million P 4.7 million
Actual 2014 P 26.1 million P 2.3 million
Projected 2015 P 27.4 million P 2.4 million
All other officers * as a group unnamed Actual 2013 P 17.1 million P 3.2 million
Actual 2014 P 19.1 million P 1.2 million
Projected 2015 P 20.1 million P 1.2 million
1 2
2 Francis O. Monera
1 1. Finance Division
(from left to right)
13,500
Jaime E. Ysmael 3,375 0.0009%
(PCD NOMINEE CORP.-FILIPINO)
1
Bernard Vincent O. Dy replaced Antonino T. Aquino effective August 15, 2014.
2
Aniceto V. Bisnar, Jr. replaced Francis O. Monera effective January 1, 2015.
The Board of Directors was able to attend Corporate Governance-related seminars and trainings
offered by the Institute of Corporate Directors (ICD) and those in coordination with Ayala Corporation’s
(AC) Corporate Governance working group for 2014. Training subjects are covered in the Corporate
Governance and Risk Management Summit (AC and ICD) and Distinguished Corporate Governance
Series (ICD).
Ayala Group
Francis O. Monera October 13, 2014 Incite
Sustainability Summit
Ayala Group
Aniceto V. Bisnar, Jr. October 13, 2014 Incite
Sustainability Summit
Ayala Group
Enrique B. Manuel, Jr. October 13, 2014 Incite
Sustainability Summit
Ayala Group
Noel F. Alicaya October 13, 2014 Incite
Sustainability Summit
Ayala Group
Vera R. Alejandria October 13, 2014 Incite
Sustainability Summit
We also conducted an in-house orientation program for our newly-elected director, Justice Pampio A.
Abarintos (Ret.) on May 15, 2014.
This in-house program is designed to give the Board member a better view and appreciation of the
Company in the discharge of his oversight functions and responsibilities.
91
Enterprise-wide Risk Management
G4-2, G4-14, G4-EC2, E.21
We continue to implement our Enterprise- Periodic reviews are done at all levels of the
wide Risk Management (ERM) Program to Organization, including the ERM Team lead by
manage key risks and safeguard shareholder the Audit and Risk Committee and the Chief
value in the face of our growing business and Risk Officer, to ensure that risks are effectively
evolving environment. managed and the Company is addressing
relevant key risks.
ERM Framework
Results of monitoring of the ERM process are
also presented to the Board of Directors by the
The ERM framework continues to achieve
Audit and Risk Committee, at least quarterly or
its objective of systematic approach in risk
more frequently if necessary, to update them of
management throughout the Company. The
the status of the Company’s key risks to serve as
framework embodies the policy, scope, process
inputs in executive decision-making.
methodology, and organizational structure of
the risk management program. We utilize an
all-encompassing risk framework covering A Driver of Key Strategic Actions
oversight, management and internal control.
This framework systematically guides us through The Company was able to direct the following
monitoring, identifying, analyzing and treating key strategic actions in 2014:
risks in a timely and proactive manner at both
corporate and business-group levels. 1. Protecting the Balance Sheet through
Financial Risk Management
RISK IDENTIFICATION RISK ANALYSIS RISK TREATMENT RISK MONITORING AND REVIEW
2. Monitoring of Leading Market Indicators of the Amaia brand, for affordable housing, and
We rely on close monitoring of leading market office condominiums for sale through our affiliate
indicators for guidance in current and future Solinea, Inc.
project investments. Forecasts, industry and
6. Proactive Management of Environmental Risks
sales reports are regularly monitored and
reported to the operating project teams and We continue to adapt measures to reinforce our
senior management from where direct inputs in fully-functional Business Continuity Plan (BCP).
decision-making are derived for strategic and on- Our Crisis Management Team (CMT) ensures
the-ground issues. continuous operations or minimal disruption
during calamities and unforeseen events.
3. Close Monitoring of Ongoing Projects Improvements on our services and facilities
Early identification and management of delivery have also been implemented to ensure safety
risk allows us to keep our projects on-track, meet of our stakeholders and enhance our readiness
our customers’ requirements and achieve our capacity in times of emergencies and calamities.
sales and turnover targets. These allow us to protect our assets, including
our employees, customers and locators in
4. Expanded Partnerships Beyond our facilities.
Parent Company
In 2014, our BCP and CMT enabled us to mobilize
Strong synergies diversify risk and create the
our team to conduct relief operations for the
opportunity for us to increase our reach and
typhoon victims in Borongan, Easter Samar in the
depth in the Cebu market.
wake of typhoon Ruby in December.
* The Company has no record on how the Government Service Insurance System exercises the power to decide how their shares in
the Company are to be voted.
With the view of creating a better world, a strong Our sustainability framework is our key to good
financial base is the foundation of all of our land development and operations management.
sustainability engagements. Our sustainability As a business model, an adaptive visionary
business model needs to deliver value aligned to design allows us to integrate sustainability in
the long-term viability and enhancement of our our operations.
environmental, financial and social capitals. This
is why it is essential that we embed sustainability We again commissioned the Philippine Business
into our Company culture with a clear alignment for the Environment (PBE), a non-profit
to our overall vision and mission. Stated in the organization, to conduct a sustainability strategy
simplest of terms, our sustainability strategy and forum with CHI employees as well as to facilitate
business model share intrinsic value. our stakeholder workshops for the review and
enhancement of our sustainability framework.
2014
CHILet’s Build
Annual
for Tomorrow's
and Sustainability
Generations
Report 107
SUSTAINABILITY FRAMEWORK G4-2, G4-18
1) IDENTIFICATION 2) PRIORITIZATION
3) VALIDATION 4) REVIEW
EXECUTIVE COMMITTEE
BOARD OF
DIRECTORS COMPENSATION COMMITTEE
NOMINATION COMMITTEE
MANAGEMENT COMMITTEE /
SUSTAINABILITY COUNCIL
Energy, Water and Mobility, Traffic, Business Model Materials Efficiency and
GHG Reduction Air Quality and Sustainability - Waste Management
CLUSTER 1 Pedestrianization Innovation, Solutions CLUSTER 4
CLUSTER 2 for Unserved Markets
CLUSTER 3
Project Support/ Project Support
Technical Asset Business /Technical Asset
Management Development Business Development Management
• APMC • MDC • APMC • MDC
Office Leasing Finance
Human Resources Business Development
Commercial Business Commercial Business
and Admin
Commercial Business
Project Support/
Information Systems Technical Asset Finance
Business Development Management
• APMC • MDC
Commercial Business
Audit Marketing
Economic Performance
Delivering returns for our shareholders is our Internal
top responsibility.
Customer Health and Safety We take steps to ensure that we are attuned Internal and
Product and Service Labeling and responsive to the needs of our customers External
Customer Privacy through service delivery and health and safety (shoppers and
Security Practices initiatives. They are given information for merchants, lot/unit
owners, security
Compliance (Product Responsibility) making educated decisions and at all times
personnel and
we ensure trust and confidentiality in keeping suppliers)
customer data safe.
In 2013, we viewed our Sustainability Framework against KPMG's identified Megaforces. In 2014, we
aligned it to Kate Rasworth's expansion of the Planetary Bounderies concept of Johan Rockström with
an inclusive view to social and environmental Boundaries.
While the business is geographically bound, we The knowledge that the causal effect of our
adapt our sustainability strategies within the actions today affect tomorrow's generations
conditions of our localized aspects vis-a-vis a makes us accountable. We go back to the basics
global context. To keep the business sustainable, of sound sustainable management, ethical
we endeavor to maintain healthy, secure, practice, and balance of capitals for solid triple
forward-looking communities and confine our bottom line performance to continue to shape
impacts within sensible limits of planetary and our envisioned future.
social boundaries.
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We underwent a series of focus group stakeholder In 2014, our engagement process moved beyond
engagements last 2013. It was the first time for clarifying perceptions and addressing issues to
us and our stakeholders to engage in meaningful planning for meaningful collaboration.
dialogue specifically identifying the positive
and negative impacts of CHI’s operations to the The diagram below and table found on the next
community and distilling the most important issues page identify our stakeholders, their concerns,
from the point of view of various stakeholders. and how we respond. These give a general view
of our engagement.
Our discussions elicited how they perceive us as a
Company in the conduct of our business and our
impacts to the environment and to society.
e nt
ag em
E ng
d er
ol Shoppers and Mall Merchants
eh Mall Merchants’ Employees
ak
Third-party Organizers/Exhibitors
St
CEBU
Property Buyers/Lessees
Brokers and Property Specialists
HOLDINGS, Institutional Investors
Homeowners Associations
Business Park Association
INC. Financial Analysts
Securities and Exchange
Commission/Philippine
I.T. Park Association
Stock Exchange
Condo Corporations
Employees
Business Partners
Suppliers
Business Organizations Service Contractors
Non-Government Organizations
Manpower Agencies
Civil Society Organizations
Socio-Civic/Charitable Institutions Banks and other Event and Talent Agencies
Educational Institutions Financial Institutions Utility Companies
Allied Industries Insurers/Insurance Brokers
CUSTOMERS: End users of real Text Feedback - On-time - Minimizing heavy - Offering discounts,
CUSTOMERS:
shoppers, estate products and and TCS-MS completion traffic promos and various
merchants, services (multimedia format of building payment terms
shoppers, - Extended market
locators helpline) integrated construction
merchants, services for C, D - Customer
locators marketing,
- One-day and E sectors satisfaction surveys,
office lessees customer surveys
resolution of complaints handling
and complaints - Ban on use of
complaints
handling plastic bags - Farmers' City Market
- Immediate or (weekends)
- TCS-MS
time-bound help - Venue for family
response - Text Feedback
activities
system
EMPLOYEES: Our important Townhall meetings, Adequate Wellness and work- Benefits upgrade;
EMPLOYEES:
organic and resource to climate survey, compensation and life balance merit increases;
outsourced
organic and achieve the volunteer programs benefits, health and wellness program
outsourced Company's goals safety, employee (CHI P.L.U.S.);
development competency
development
programs; health and
safety programs
Employment, Labor/
Management Relations,
Occupational Health
and Safety, Training
and Education, Diversity
and Equal Opportunity
Community Engagement
Economic Performance,
Indirect Economic Impacts
Procurement Practices
and Supplier Impact
Assessments
LEGEND:
(per GFA)
down by 36% 45,961 m3
at Ayala Center Cebu and CHI
at the CHI Corporate Office corporate office
EMISSIONS BIODIVERSITY
368 2%
reduction in
of CO2e reduced average GHG planted in
across Scopes 1-3 intensity 2014
at retail, office and at Ayala Center Cebu
tonnes estate developments and The Walk
17%
reduction in average
GHG intensity at Cebu Business
Park and Cebu I.T. Park
WASTES
24%
proper disposal, reuse,
reduction and recycling
ENERGY
4%
reduction in electricity 17%
reduction
in energy
intensity at
consumption at Ayala Center Cebu Business Park
Cebu, Cebu Business Park and and Cebu I.T. Park
Cebu I.T. Park (478,451 kwH)
10,697
2% reduction
in energy
intensity
at Ayala Center Cebu
57%
reduction in
diesel
consumption
liters
at The Walk and
eBloc Towers
and The Walk
right in the way that we As a check and balance for the continued
implementation of our environmental
manage and use our engagements, we ensure compliance to all
applicable laws and conduct timely impact and
resources directl re ecting risk assessments, monthly performance reviews,
and recurring up-to-date capacity building
value in the way we programs. We rely on our employees, our
partners, and our customers as contributors to
The materials management is a key component of our business practice. We have existing procedures for
handling and disposal of waste. DMA Materials
Materials Use
In 2014, Cebu Holdings, Inc. (CHI) completed four residential developments and one office building. This
added a total of 135,829 square meters to the Company’s portfolio of constructed projects. Below are the
details of each completed project:
RESIDENTIAL
OFFICE
In 2015, CHI looks forward to the turn-over of two more office buildings and four more residential
properties between 2016 and 2017. Strategically located in the city’s business districts, these
developments contribute to the growing demand for home and office spaces ably supported by retail
areas near project sites.
RESIDENTIAL
OFFICE
As part of our conservation efforts on resource Proper waste management is crucial to our
scarcity, CHI reports on materials intensity, environmental performance. It has the potential
computed as the total consumption of materials to affect our water supply, air quality, and
per square meter of constructed floor area. contribute to our greenhouse gas emissions.
We are committed to the proper handling of
Projects have varying intensities per type of our wastes and advocate to reduce, reuse and
material used. For cement, 1016 Residences recycle where applicable.
posted 7.38 bags per sqm, the highest for a
residential property. Sedona Parc reported an We have tapped our neighboring communities
intensity of 6.59 bags of sand and gravel per sqm, for increased awareness and support on this issue
the highest among the three residential projects.
8
7.38
7
6.59
Materials consumed per sqm of CFA
6.01
6
0.74
1
0.43
0.04 0.08 0.08 0.01 0.07 0.02
0.01
0
Cement Sand and Gravel Wood Rebars
25
Thousand tons
20
15
10
0
2013 2014
126
Wastes Generated at Ayala Center Cebu G4-EN23
Thousand kilos
4,000
3,000
CHI continued with its strong solid waste
management partnership with Barangay Luz 2,500
0
2013 2014
35 dry cartons
6 plastic cups
8 tin cans
3
metal sheets
wet cartons
8 assorted plastic
2 plastic galons
7 poly bag
2013 2014
100
Projects under 50
5,987.10 3,888.60
construction
As a response we will:
160
Energy Consumed (thousand Gigajoules)
140
120
100
80
60
40
20
0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office
2013 2014
CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE
PARK
Among the three residential projects, Sedona Parc is the most energy intensive.
Total Energy Consumption and Intensity per Completed Project G4-EN4, G4-EN5
4,000 0.18
Total energy consumed (GJ)
Intensity (GJ/sqm)
3,500 0.16
0.14
3,000
0.12
2,500
0.10
2,000
0.08
1,500
0.06
1,000
0.04
500 0.02
0 0.00
1016 Residences Avida Towers Sedona Parc eBloc Tower 3
RESIDENTIAL OFFICE
Development and construction projects are major sources of our emissions. We track and work with
our contractors to identify opportunities for reductions in fuel consumption while helping improve our
emissions performance. Achieving this not only delivers mutual cost benefits and maximised efficiencies,
it also leads to improved environmental outcomes that benefit the business for the longer term.
DMA Emissions
1.20
1.00
0.80
0.60
0.40
0.20
0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office
2013 2014
CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE OFFICE
PARK
*Denominator used to compute for intensity was the difference between gross floor area and gross leasable area to account for
consumption from common areas only.
The Company’s carbon emissions include direct In 2014, total carbon emission was 35,699 tonnes
emissions from fuel used in power generators of CO2 equivalent, 11 percent up from last year’s
and loss of refrigerant in air conditioning systems 32,211 tonnes. The largest contributor was
(Scope 1), indirect emissions due to purchased energy usage by mall merchants, office building
electricity consumed at common areas of locators and from our construction activities,
various properties (Scope 2) as well as other accounting for 26,564 tonnes or 74 percent
indirect emissions arising from fuel and electricity of the Company’s carbon footprint. Emissions
usage by our retail mall merchants, office from electricity use reached 8,843 tonnes or
building locators and from our construction 25 percent while Scope 1 emissions from diesel
activities (Scope 3). usage was at 293 tonnes or one percent of the
total emissions.
This is the first time that CHI expanded its data
collection system and report on Scope 3. We
consider these new measures as guidance for
40
30
Thousand tonnes of CO₂e
20
2013 2014
Projects under
456.3 380.7 10
construction
CHI monitors its carbon emissions per property Normalizing the carbon emissions by total floor
creating more opportunity to reduce its area per property, data shows GHG or carbon
environmental impacts. Communication via intensities having slight decreases for our
audio or video conferencing is encouraged operating developments. This observation is true
where possible, to minimize overseas travel. for Ayala Center Cebu, The Walk, eBloc Tower
1 and the two estates, Cebu Business Park and
Scope 3 emissions, retail and office properties, Cebu I.T. Park.
contributed the largest portion of our total
emissions: Ayala Center Cebu - 17,410 tonnes of Our goal in the future is to lower our properties’
CO2e, The Walk - 807 tonnes, eBloc Tower 1 - GHG intensity, especially for eBloc Tower 2 and
3,579 tonnes, and eBloc Tower 2 - 3,716 tonnes. our corporate offices.
GHG Emissions per Property: Estates and Corporate Offices' Common Areas
G4-EN15, G4-EN16, G4-EN17
0.3
Thousand tonnes of CO₂e
0.2
0.2
0.1
0.1
0.0
2013 2014 2013 2014 2013 2014 2013 2014
CBP CBP CITP CITP CHI Office CHI Office Mall Admin Office Mall Admin Office
Scope 2
0.200
0.180
0.160
Total GHG emissions per sqm of GFA
0.140
0.120
0.100
0.080
0.060
0.040
0.020
0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office Mall Admin
Cebu Park Park Office
2013 2014
AYALA CEBU
eBLOC eBLOC CEBU I.T. CHI MALL ADMIN
CENTER THE WALK BUSINESS
TOWER 1 TOWER 2 PARK OFFICE OFFICE
CEBU PARK
500 0.050
450 0.045
400 0.040
350 0.035
300 0.030
250 0.025
200 0.020
150 0.015
100 0.010
50 0.005
0 0.000
1016 Residences Avida Towers Sedona Parc eBloc Tower 3
Scope 3 Intensity
Water is a vital resource. We use water in the increase is due to higher water consumption
development and management of our projects generated by the mall expansion and from
at all phases. It is important that we source our completed projects.
water responsibly, use it efficiently and cost-
effectively, and manage its quality. We adhere Improving on last year’s data, we tracked water
to a strong focus of our water management and consumption of our retail merchants and
quality in our operations. We strive to effectively office building. We hope to use these numbers
manage our water consumption and quality per to advocate for over-all improved water
point of project life cycles. Where applicable, we use efficiency.
consider access to alternate water infrastructure
and support innovations promoting water On a per source basis, all properties of CHI
use efficiency. DMA Water located at Cebu Business Park withdraw
water from water utility providers. All Cebu
Our Water Usage I.T. Park developments (construction activities
included) source water from the ground. CHI
Water Consumption acknowledges the environmental impact of
this and is on an ongoing consultation with
In 2014, CHI’s total water consumption was experts and related parties for recourse to better
603,526 cubic meters (m3), 13 percent higher sustainable sourcing of water.
than the 532,362 m3 recorded in 2013. This
600
2013 2014
500
Thousand Cubic Meters
Operational
100 498,484.6 524,883.8
Properties
0
2013 2014
450
400
350
Thousand Cubic Meters
300
250
200
150
100
50
0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office
Cebu Park Park
2013 2014
CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE
PARK
5.0
Cubic meters per sqm
4.0
3.0
2.0
1.0
0
Ayala Center The Walk eBloc Tower 1 eBloc Tower 2 Cebu Business Cebu I.T. CHI Office
Cebu Park Park
2013 2014
CEBU
AYALA eBLOC eBLOC CEBU I.T. CHI
THE WALK BUSINESS
CENTER CEBU TOWER 1 TOWER 2 PARK OFFICE
PARK
Understanding a project life’s cycle, and using To read on additional data, refer to pages
project completion metrics as against a year-on- 201-203, 206 of this Report.
Total Water Consumption and Intensity per Completed Project G4-EN8, CRE2
Water consumed (thousand m³)
35 2.50
Intensity (m³/sqm)
30
2.00
25
1.50
20
15
1.00
10
0.50
5
0 0.00
1016 Residences Avida Towers Sedona Parc eBloc Tower 3
RESIDENTIAL OFFICE
We strive to maintain a delicate balance of Parallel to the development of the master plan is
biodiversity impacts to enhance the liveability and the rehabilitation and the protection of adjacent
vitality of our communities. mangrove site to enrich existing vegetation
and to eventually help protect the adjoining
We ensure that we are compliant with applicable community in the future.
laws. We invest heavily in the research, design,
planning and development of our projects. In 2014, we engaged an ecological specialist,
Site assessments are carried out, biodiversity Cebu Uniting for Sustainable Water Foundation,
management plans are developed and Inc. (CUSW) to conduct an initial site mapping
appropriate actions are delivered. We strive to and characterization of a portion of the property
better understand the value that biodiversity where planting, rehabilitation and enrichment
brings to our communities— making them can be done.
stronger and healthier, more resilient of natural
stressors by design, and with a higher quality of As a kick-off activity of our engagement, an initial
life as a result of being part of an area with high mangrove trial planting activity was conducted
biodiversity value. DMA Biodiversity, G4-EN12 in the last quarter of 2014. Participated ably by
27 employee volunteers from CHI and ten from
the community. The group was briefed on the
Current Development: Our Project proper way of planting propagules on varying
in Mactan surfaces. It is projected that further activities
will identify metrics to support and promote
This is a 13-hectare master planned mixed-use positive contribution.
development. This project is located in Barangay
Punta Engaño, Lapu-lapu City where mangroves
are found along the project coastline.
Trees planted
Tree count data
In 2014, CHI, through its employee volunteers
Existing trees in our areas for development and external partnerships planted 8,437 seedlings
are incorporated into our landscape design. and 700 propagules as part of the Company's
We conduct our inventory of trees grown and environmental initiatives.
nurtured in our estates.
CHI volunteers participated in a trial mangrove planting and coastal clean-up in Bgy. Punta Engaño.
Employee Engagement
60 45
39.92
40
50
35
27.59
40 30
25
30
20
13.32
20 15
10
10
5
#1 Pride in Working
with the Company #2 Teamwork / Work
Environment
Employees’ pride in working with the Employees’ workplace is a safe, dynamic
organization shows trust in our environment where a culture of positive
Corporate Governance, sustainability engagements and mutual respect are
initiatives and confidence in continued predominant among employees.
employee engagement initiatives
40%
CHI’s high score was in terms of employee
development program and other employee 20% 32% 29%
26%
engagement activities. The Company also
0%
supports off-hour capacity and diversity building 2012 2013 2014
MALE FEMALE
Board of Directors 8 8 8 1 1 1
Management Team 7 8 8 10 12 13
Supervisors 6 6 6 18 21 24
Associates 10 8 8 25 24 25
Leadership Diversity
Percentage of Women on Board of Directors
100%
6
60%
40%
4 40% 39%
38%
59% 20%
0%
2012 2013 2014
0% 10% 20% 30% 40% 50% 60% 70%
12 12
10 2 10
2
6
8 8
9
6 6 1
8 8
4
4 4
5
4
2 2
30-40 years old Below 20 - 30 years old 30-40 years old Below 20 - 30 years old
*Data includes 3 project hires absorbed in 2014. Note: Reason for turnover data in 2014 is all personal
such as marriage or full time pursuit of further education.
39 flu
40 headache
The Safety Organization of the Philippines presented awards of honor to our general
contractor, Makati Development Corporation (MDC). This is in recognition of achieving safe
man-hours without lost time accident in the following projects:
MDC was also recognized for their Perfect Safety Record in the two projects:
Exceed
expectations. Delivering on Our Commitment,
Continuing as a Trusted Brand
DMA Customer Health and Safety, DMA Product and Safety Labeling,
DMA Customer Privacy, DMA Security Practices
For us, the customer is first and quality is everyone’s job. We commit to:
We have a broad-based customer complaints Our regular reviews touch on the following
handling system, the Total Customer Satisfaction measures: customer acquisition, retention,
Management System (TCS-MS), managed by market leadership and internal and external
our Corporate Communication and Corporate customer satisfaction. Our customers’
Social Responsibility Division. This covers experiences help us strategize and deliver
documentation, management, investigation and on additional value for our customers in our
resolution of customers’ complaints, positive and operations, service delivery and facilities design.
negative feedback as well as inquiries. We empower them to share inputs for our overall
improvement, thus building mutual respect
We conduct internal customer satisfaction between them and our Company.
surveys twice a year. The Ayala Property
Management Corporation (APMC) interfaces We are committed to providing safe and healthy
with our Project Support / Technical Asset spaces for everyone engaging our business:
Management Unit on resolving concerns customers, visitors, contractors, employees and
of owners and tenants of our office neighboring communities. The measures we
building facilities.
EMERGENCY HELPLINES
Ayala Center Cebu
Ü-First Campaign
The Concierge at Ayala Center Cebu provides the The Concierge becomes an avenue for valuable
following services: 1) general information on store feedback for the mall’s continual improvement.
locations, merchants' contact details, events, Priority treatment is provided to the senior
promotions and mass schedules; 2) restaurant citizens and persons with disability (PWD) with
reservation; 3) hotel bookings 4) flight and travel the mall’s wheel-in service, dedicated parking
confirmation; 5) personal shopper assistance; slots and seating areas around the mall.
6) call-a-taxi assistance.
166
Exceeding Our Own Expectations
In July 2014 a series of activities promoting dignity and respect for Persons With Disabilities
(PWDs) was conducted in Ayala Center Cebu, for the PWD Awareness Month. This month-
long event was cited as Finalist in the International Council of Shopping Centers Asia Pacific
Shopping Center Awards 2014. This honor for excellence was given under category one of the
Asia Awards for Traditional Marketing on Cause-Related Marketing.
168
169
moting
y by pro
te diversit s this
Ce le b ra sivenes
p e c t a nd inclu
res onth
dignity, ability m
with Dis
Persons
Build
capacity. Helping Shape the Future
Empower At CHI, it is of importance that we help our
communities.
clients and our communities maneuver through
their own economic, environmental and
social challenges. We use our expertise, local
knowledge and partnerships to make positive
impacts in the cities and communities where we
do business.
how we partner with our When we grow and expand our business, we
have to ensure that our communities have the
capacity to grow with us for equitable economic
fenceline communities. prosperity. DMA Local Communities
The Cebu Business Park and Neighboring In addressing unemployment and promoting
Barangays Altruistic Alliance, Inc. (CBPNBAAI) inclusive growth among its neighboring
inducted a new set of officers last July 4 at communities, we partnered with neighboring
the City Sports Club Cebu. The induction of barangays surrounding Cebu Business Park and
officers was witnessed by the barangay captains Cebu I.T. Park in a job fair on August 8, 2014 at
of CBPNBAAI member barangays. CBPNBAAI Barangay Apas.
includes Cebu Business Park, Cebu I.T. Park
and neighboring barangays: Apas, Carreta,
Kamputhaw, Hipodromo, Luz and Mabolo. This
organization expanded to include Barangays
Lahug and Kasambagan.
There are 19 satellite markets which are with farmers selling vegetables, fruits and
organized and distributed in urban barangays ornamental plants. Farmers from barangays
Adlaon, Pamutan, Sirao and Tabunan get to sell
their crops at the Farmers' Market.
Residents from the member communities of bottles. The materials were collected from the
CBPNBAAI participated in a learning series mall's Material Recovery Facility (MRF) and from
conducted by Cebu Uniting for Sustainable the participants’ own household.
Water (CUSW) at Tugkaran, the tree nursery and
composting facility at Cebu Business Park. A single chair is made out of 150 PET bottles and
will take up to six to eight hours to produce. The
The participants from Barangays Luz, Apas and collection of the biodegradable material was also
Hipodromo spent six consecutive Mondays in maximized with the vertical gardening method
chair making and vertical gardening preparation. where PET bottles were utilized as pot hangers.
In the activity, the participants composed of In December, a culmination activity was held
nine representatives per barangay were able to where barangays were judged according to
produce three chairs made out of recycled PET the quality of the chairs and the volume of PET
bottles collected.
Cebu Holdings, Inc. (CHI) remains steadfast in In addition to the relief efforts for typhoon
helping improve the conditions by which children Yolanda-affected Northern towns in Cebu,
in communities receive basic education. In its two campaigns for children were supported by
Agbayay para sa Edukasyon program, CHI’s CHI employees.
support of DepEd’s Brigada Eskwela campaign
was threefold – Shoe boxes filled with school supplies were
given out to students of Tindog Elementary
(1) signage for Mabolo Elementary School and School in Medellin. The wrapped box donations
Kamputhaw Elementary School; replaced the traditional peer-to-peer yuletide gift
exchanges last Christmas.
(2) paint for classroom repainting of Barrio Luz
Elementary School and Camp Lapulapu Employees within companies of the Ayala
Elementary School; and Business Club Cebu, Inc. (ABCCI), including those
of CHI, were likewise engaged in the Northern
(3) an afternoon cleanup campaign by CHI
Cebu Milk Drive, a partnership with Children’s
employee volunteers at Mabolo Elementary
Hour and Tetra Pak, Inc.. Milk products worth
School on May 23, 2014.
P1.5 million were distributed to over 1,200
elementary students in Yolanda affected towns.
Beneficiaries are from Tindog Elementary School
in Medellin and Hagnaya Elementary School
in San Remegio.
Catalyze
economic ECONOMIC
Ayala Land Sales, Inc. (ALSI) Outsourced company handling marketing and
sales for residential projects
45
• Stimulate and enable foreign
direct investments
Employee Wages and Benefits Personnel costs less expenses incurred for in-house training
Payments to Providers of Capital Sum of dividends and interest expense paid for the year
Payments to Government Sum of provision for current and final taxes, including taxes
and licenses paid
Community Investments Total donations made and direct cost of social programs
and activities conducted for the year
7.8% 0.6%
Influence.
Set SUPPLY CHAIN
CHI VALUE
DELIVERY CHAIN
Commericial Center Operations and Project Conceptualization
Management / Office Space Leasing / Design Development
Residential Business
Punchlisting /
Project Turnover Construction
process documented in our QEHS Management Through capacity building and partnership,
System manual. As a check and balance of their we enable our suppliers to be industry leaders
alignment to our sustainability goals, we conduct in their own right. In this light, local suppliers
supplier performance evaluations and make comprise a fair share of our spending. This
assessments based on the following criteria— is in line with our general contractor, Makati
environment, labor, human rights, and societal Development Corporation’s practice of favoring
impacts. Labor compliance audits are done on a local subcontractors in our projects. In 2014,
quarterly basis. In 2014, there were no reports of local suppliers were paid a total of P1.5 billion.
violations to labor laws.
We comply and protect the environment by meeting We are guided by our QEHS manual in the procedural
applicable regulatory requirements. Our Pollution handling of internal communications coursed through
Control Officers (PCOs) submit consolidated results the Human Resources (HR) and Admin Division.
of departmental monthly performance reviews to HR policies and the Company’s Code of Ethics and
the Management Committee. This reporting is done employee handbook are found on the website (www.
at a minimum of twice a year and is facilitated by cebuholdings.com/corporategovernance/manuals-
the Company’s Project Support/Technical Asset and-policies). Sources of information and channels
Management Unit (PTAMU) in coordination with Ayala of communication include the Inside CHI, HR
Property Management Corporation (APMC) and Makati e-Bulletin, and CHI Intranet and directives from the
Development Corporation (MDC). management team.
We consistently monitor our energy efficiency, water We have a clear mandate for the handling of labor
consumption (water catchment and reuse), green related grievances as defined in our Code of Ethics.
design and landscaping, and waste management Full confidentiality is observed throughout the process.
(solid and hazardous wastes) to help us further Managers are open and trained for the proper handling
develop sound strategies to drive and improve our and procedure of related concerns. CHI observes an
environmental performance. (See pages 192-206 of open communications culture. We have not received
this Report). any grievance concerns pertaining to our labor
practices to date.
We refer to our organizational Impact and Risk
Assessment procedure in our QEHS manual as We continually streamline our processes to proactively
procedure PM-EHS-01-001. A summarized flowchart eliminate injury, accident or illness incidents relating
is uploaded on our website, www.cebuholdings. to, or concerning, our employees. We implement and
com. Compliance with all applicable legal, regulatory follow clear rules and standards aligned to local and
and statutory requirements follows the procedure national health and safety regulations.
PM-EHS-01-002 of the QEHS manual. We have not
We have no current engagement with indigenous We respect our customers’ right to privacy. We apply
peoples or developments on land they inhabit. the same rigor of integrity and accountability in the
handling and protection of sensitive information –
Regulatory, Market and personal, financial and otherwise – given to us in the
Community Practices course of our day-to-day engagements. We have no
incidents of breach of customer privacy and/or loss of
We comply with all legal, consumer, and financial
customer information.
reporting requirements working against corruption,
including extortion and bribery. We have clear policies Compliance - Product Responsibility
to address and investigate thoroughly any and all
allegations of misconduct relating to the Company. We take shareholder and consumer concerns
Direct and indirect references are found on pp.14-22 seriously from land acquisition, design development,
Code of Ethics; pp.1-3 (Conflict of Interest Policy), construction to operations and property management.
pp.1-3 (Related Party Transactions Policy); and pp. 1-4 We implement a comprehensive risk management
(Insider Trading Policy). approach throughout our processes extending to our
supply chain, to ensure our product delivery is of the
We adhere to free competition principles and non- highest of standards. We fully comply with all safety,
restrictive practices that foster an open market and fair quality and regulatory requirements relating to our
trade policies. business. To ensure continuity of high quality service
delivery we conduct regular reviews on the following
We recognize that policy changes may have significant
measures: customer acquisition, retention, market
impact to our operations, revenues and development
leadership, internal and external customer satisfaction.
costs. We lend our expertise especially on long term
We align, adopt and adjust accordingly to customer
land design and development to policy makers upon
and market needs.
their invitation. We do not participate in lobbying and/
or political contributions. Our stakeholder engagement
with regulators and local government units are detailed
on pages 115-118 of this Report. Our memberships in
associations is listed on page 34 of this Report as well.
A. Environment
A.1 Year-on-Year Comparative Data
OPERATIONAL PROPERTIES
COMPLETED PROJECTS
Sedona Parc 13 0
eBloc Tower 3 0 0
OPERATIONAL PROPERTIES
Retail
Office
Estates
Corporate Office
COMPLETED PROJECTS
Residential
Office
Residential
Office
OPERATIONAL PROPERTIES
OPERATIONAL PROPERTIES
COMPLETED PROJECTS
OPERATIONAL PROPERTIES
COMPLETED PROJECTS
OPERATIONAL PROPERTIES
OPERATIONAL PROPERTIES
Retail
Office
Estates
Corporate Office
OPERATIONAL PROPERTIES
The Walk
eBloc Tower 1
eBloc Tower 2
CHI Office
OPERATIONAL PROPERTIES
OPERATIONAL PROPERTIES
COMPLETED PROJECTS
OPERATIONAL PROPERTIES
eBloc Tower 3 56
Materials Intensity13
Cement
Wood
Rebars
Direct Energy
Indirect Energy
Scope 1
Scope 2
Scope 3
B. SOCIAL
B.1 Human Capital
TOTAL17 10 11
TOTAL 6 6
TURNOVER RATE 7% 7%
External Hires18 2 1
Internal Movements19 5 13
TOTAL MOVEMENTS 7 14
18
Data includes SPs/Officers only
19
Data includes promotions and movements of SPs/Officers
Fever 16 35
Flu 38 39
Headache - 40
Stomach ache - 21
Male 23 22
Female 56 62
TOTAL20 79 84
Probationary/Regular MTs 20 21
Supervisors 27 30
Associates 32 33
TOTAL20 79 84
18
Data excludes project hires
MALE
Board of Directors 8 8
Management Team 8 8
Supervisors 6 6
Associates 8 8
TOTAL 30 30
FEMALE
Board of Directors 1 1
Management Team 12 13
Supervisors 21 24
Associates 24 25
TOTAL 58 63
Number of fatalities 0 0
22
Data presented is the average of results from 16 divisions/departments surveyed.
23
2014 data is the average of results from APMC and Office Leasing surveys
Sustainability - 921
General Standard
Section or Sub-section, Page/s External Assurance
Disclosures
STRATEGY AND ANALYSIS
Message from the Chairman and the President, 12-19;
G4-1 not assured
Message from the Chief Finance Officer, 22-29
Message from the Chief Finance Officer, 22-29; Enterprise-wide Risk Management, 92-
G4-2 not assured
93; Our Sustainability Performance, 108, 112
ORGANIZATIONAL PROFILE
G4-3 About This Report, 6 not assured
G4-4 Our Business, 36-65 not assured
G4-5 About This Report, 6 not assured
G4-6 About This Report, 6 not assured
G4-7 Ownership Structure not assured
G4-8 Our Business, 36-65; Our 2014 Stakeholder Engagement, 115-116 not assured
Message from the Chief Finance Officer, 24-27; Our Business, 36-65;
G4-9 not assured
Employee Profile by Employee Category, 156
Employee Profile by Employee Category, 158; Total Workforce at Cebu Park District, 181;
G4-10 not assured
Human Capital Data Annex, 206-207
G4-11 Legal and Compliance, 186-187 not assured
G4-12 Supply Chain, 182-183 not assured
G4-13 Our Business, 36-65. No significant changes in supply chain. not assured
G4-14 Enterprise-wide Risk Management, 92-93; Sustainability Policy, 107 not assured
G4-15 About This Report, 7 not assured
G4-16 Membership in Organizations, 34 not assured
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
G4-17 Ownership Structure, 34 not assured
G4-18 Materiality Process, 108-109, 111 not assured
G4-19 Table of Material Aspects, 111 not assured
G4-20 Table of Material Aspects, 111 not assured
G4-21 Table of Material Aspects, 111 not assured
G4-22 About This Report, 6 not assured
G4-23 Table of Material Aspects, 111 not assured
STAKEHOLDER ENGAGEMENT
G4-24 Our 2014 Stakeholder Engagement, 113-117 not assured
Stakeholders were chosen based on their level of influence and interest in our
G4-25 not assured
organization as well as the extent of our impact of operations on them.
G4-26 Our 2014 Stakeholder Engagement, 113-117 not assured
G4-27 Our 2014 Stakeholder Engagement, 113-117 not assured
REPORT PROFILE
G4-28 About This Report, 6 not assured
G4-29 Our latest report covers our 2013 performance which was published in 2014. not assured
G4-30 About This Report, 6 not assured
G4-31 About This Report, 7 not assured
G4-32 About This Report, 7; GRI Content Index, 210-213 not assured
About This Report, 7; No external assurance for the Sustainability Report sections was
G4-33 not assured
conducted.
GOVERNANCE
G4-34 Governance Structure, 70; Key Roles and Responsibilities, 72, 76 not assured
G4-35 Key Roles and Responsibilities, 72, 76 not assured
G4-36 Key Roles and Responsibilities, 72, 76 not assured
G4-37 Board Committees and Functions, 78 not assured
G4-38 Composition of the Board, 73 not assured
G4-39 Mr. Bernard Vincent O. Dy, in his sole executive capacity, serves as Chairman of the Board. not assured
G4-40 Composition, 69; Independent Directors, 71; Board Committees and Functions, 78 not assured
G4-41 Code of Ethical Behavior, 95; Financial Reporting, 101 not assured
G4-42 Key Roles and Responsibilities, 72, 76 not assured
G4-43 Records of Trainings - Board and Management Levels, 86-87 not assured
G4-44 Board Performance, 76 not assured
G4-45 Key Roles and Responsibilities, 72, 76 not assured
G4-46 Key Roles and Responsibilities, 72, 76; Board Committees and Functions, 78 not assured
G4-47 Board Committees and Functions, 78 not assured
G4-48 Board Committees and Functions, 78 not assured
G4-51 Director and Senior Executive Compensation, 80-81 not assured
G4-52 Director and Senior Executive Compensation, 80-81 not assured
G4-53 This is not applicable. not assured
ETHICS AND INTEGRITY
G4-56 Core Values and Mission and Vision Statement, 33; Code of Ethical Behavior, 96 not assured
G4-57 Whistle-blowing Policy, 96 not assured
G4-58 Whistle-blowing Policy, 96 not assured
ENVIRONMENT
• G4-DMA – 120-122, 129
Materials • G4-EN1 – 123, 203 not applicable not assured
• G4-EN2 – 124, 192
• G4-DMA – 120-121, 128-129
• G4-EN3 – 130, 132, 194-196, 204-205
Energy • G4-EN4 – 130, 132-133, 194-196 not applicable not assured
• G4-EN5 – 134, 197, 205
• G4-EN6 – 131, 197
• G4-DMA – 120-121, 129, 139
Water not applicable not assured
• G4-EN8 – 141-144, 201-202, 206
• G4-DMA - 120-121, 130, 145
Biodiversity not applicable not assured
• G4-EN12 - 145
• G4-DMA – 120
Overall not applicable not assured
• G4-EN31 – 171, 209
Supplier Environmental • G4-DMA – 182
not applicable not assured
Assessment • G4-EN32 - 182-183
The Board of Directors reviews and approves the consolidated financial statements and submits the same to the
stockholders.
SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has examined the consolidated
financial statements of the Company and its subsidiaries in accordance with Philippine Standards on Auditing, and in its
report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such examination.
BERNARD VINCENT O. DY
Chairman, Board of Directors
That SGV & Co. is responsible for expressing the opinion on the conformity of the
Company’s consolidated audited financial statements with the Philippine Financial
Reporting Standards;
We reviewed and approved the management representation letter before submission to the Company’s
independent external auditors;
We discussed and approved the overall scope and the respective audit plans of the Company’s
Internal Auditors and SGV & Co. We have also discussed the results of their audits and their
assessment of the Company’s internal controls and the overall quality of the financial
reporting process;
We reviewed and approved all audit services provided by SGV & Co. to the Company and have
concluded that such services do not impair their independence;
We reviewed the reports of the Internal Auditors, ensuring that management is taking
appropriate corrective actions in a timely manner, including addressing internal control and
compliance with legal and regulatory issues. All the activities performed by Internal Audit
were conducted in conformity with the International Standards for the Professional Practice of
Internal Auditing;
We reviewed and discussed the adequacy of the Company’s Enterprise-wide Risk
Management (ERM) Process, including the major risk exposures, the related risk mitigation
efforts and initiatives, and the status of risk mitigation plans. The review was undertaken in
the context that management is primarily responsible for the risk management process.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and
responsibilities referred to above, the Audit & Risk Committee recommended to the Board of Directors the
inclusion of the Company’s consolidated financial statements as of and for the year ended December 31,
2014 in the Company’s Annual Report to the Stockholders and for filing with the Securities and Exchange
Commission.
We have audited the accompanying consolidated financial statements of Cebu Holdings, Inc. and its
subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2014 and
2013, and the consolidated statements of income, consolidated statements of comprehensive income,
consolidated statements of changes in equity and consolidated statements of cash flows for each of the three
years in the period ended December 31, 2014, and a summary of significant accounting policies and other
explanatory information.
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Philippine Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Cebu Holdings, Inc. and its subsidiaries as at December 31, 2014 and 2013, and their financial
performance and their cash flows for each of the three years in the period ended December 31, 2014 in
accordance with Philippine Financial Reporting Standards.
Jessie D. Cabaluna
Partner
CPA Certificate No. 36317
SEC Accreditation No. 0069-AR-3 (Group A),
February 14, 2013, valid until February 13, 2016
Tax Identification No. 102-082-365
BIR Accreditation No. 08-001998-10-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 4751262, January 5, 2015, Makati City
December 31
2014 2013
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 24) P
= 2,895,215 P
= 765,151
Financial assets at fair value through profit or loss
(Notes 5 and 24) 204,077 426,604
Accounts receivable (Notes 6, 16 and 24) 1,282,039 1,044,920
Inventories (Note 7) 1,177,799 1,247,248
Other current assets (Notes 8 and 24) 278,922 194,933
Total Current Assets 5,838,052 3,678,856
Noncurrent Assets
Noncurrent accounts receivable (Notes 6 and 24) 106,048 473,810
Property and equipment (Note 9) 71,954 70,266
Investments in associates and a joint venture (Note 10) 1,058,281 428,106
Investment properties (Note 11) 9,210,770 8,230,593
Deferred tax assets - net (Note 21) 16,238 13,968
Other noncurrent assets (Notes 12 and 24) 83,608 54,754
Total Noncurrent Assets 10,546,899 9,271,497
P
= 16,384,951 P
= 12,950,353
STATEMENTS
CEBU HOLDINGS, INC.OF
AND CHANGES
SUBSIDIARIES IN EQUITY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in Thousands, except Par Value and Cash Dividends Per Share Figures)
STATEMENTS
CEBU HOLDINGS, INC.OF CASH FLOWS
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
1. Group Information
Cebu Holdings, Inc. (the Parent Company) is domiciled and was incorporated on December 9, 1988 in the
Republic of the Philippines. The Parent Company is a 49.80%-owned subsidiary of Ayala Land, Inc.
(ALI), a publicly listed company. ALI is a subsidiary of Ayala Corporation (AC), a publicly listed company
which is 49.03%-owned by Mermac, Inc., 10.18%-owned by Mitsubishi Corporation and the rest by public.
The registered office address of the Parent Company is at 7th Floor, Cebu Holdings Center, Cebu
Business Park, Cebu City, Philippines. The Parent Company is engaged in real estate development, sale
of subdivided land, residential and office condominium units, sports club shares, and lease of commercial
spaces.
The Parent Company’s shares of stock are publicly traded in the Philippine Stock Exchange (PSE).
Cebu Leisure Company, Inc. (CLCI), a wholly owned subsidiary, is engaged in subleasing of commercial
spaces, food courts and entertainment facilities. The registered office address of CLCI is at 7th Floor
Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.
CBP Theatre Management Company, Inc. (CBP Theatre), a wholly owned subsidiary, is engaged in all
aspects of the theatrical and cinematographic entertainment business, including theatre management and
other related undertakings. The registered office address of CBP Theatre is at 7th Floor, Cebu Holdings
Center, Cebu Business Park, Cebu City, Philippines. CBP Theatre has not yet started its operations as of
December 31, 2014.
Cebu Property Ventures and Development Corporation (CPVDC), a subsidiary, is engaged in real estate
development and sale of subdivision land and residential units. The registered office address of CPVDC
is at 7th Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.
Asian I-Office Properties, Inc. (AiO) is wholly owned by CPVDC and is engaged in all aspects of real
estate development and in leasing of corporate spaces. The registered office address of AiO is at 7th
Floor, Cebu Holdings Center, Cebu Business Park, Cebu City, Philippines.
Taft Punta Engaño Property Inc. (TPEPI) was incorporated on September 8, 2011, a wholly owned
subsidiary of Taft Property Venture Development Corporation (TPVDC), the real estate arm of VICSAL
Development Corporation. TPEPI’s primary purpose is to create a mixed-use commercial and residential
district within a 12-hectare property in Lapu-Lapu City. A joint venture agreement was entered into last
April 26, 2013 between TPVDC and ALI. Under the agreement, ALI will own 55% of TPEPI and TPVDC
will own the remaining 45% of TPEPI. ALI’s rights to the venture were subsequently transferred to the
Parent Company on September 18, 2013 to enhance the latter’s portfolio and operations. It is consistent
with the thrust of the Parent Company to expand its business. The registered office address of TPEPI is
at Vicsal Building, Corner of C.D. Seno & W.O. Seno Streets, San Miguel Extension, Barangay Guizo,
North Reclamation Area, Mandaue City, Cebu, Philippines.
The consolidated financial statements of Cebu Holdings Inc. and its subsidiaries (the Group) as of
December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014
were endorsed for approval by the Audit and Risk Committee on February 12, 2015 and were approved
and authorized for issue by the Board of Directors (BOD) on March 11, 2015.
Basis of Preparation
The accompanying consolidated financial statements of the Group have been prepared using the
historical cost basis, except for financial assets at fair value through profit or loss (FVPL) which have been
measured at fair value. The consolidated financial statements are presented in Philippine Peso (P = ), which
is also the functional currency of the Parent Company. All values are rounded to the nearest thousand
(P
= 000) except when otherwise indicated.
Statement of Compliance
The consolidated financial statements of the Group have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and the
following wholly owned and majority-owned subsidiaries as of December 31, 2014 and 2013 and for each
of the three years in the period ended December 31, 2014:
Percentage of ownership
December 31
2014 2013
CLCI 100% 100%
CBP Theatre 100 100
CPVDC 76 76
AiO* 76 76
TPEPI 55 55
* wholly owned by CPVDC
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically,
the Group controls an investee if and only if the Group has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
• The contractual arrangement with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the date the Group gains control until the
date the Group ceases to control the subsidiary.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial
statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using
consistent accounting policies. All intra-group balances and transactions, including income, expenses
and dividends relating to transactions between members of the Group, are eliminated in full on
consolidation.
Non-controlling interests (NCI) represent the portion of profit or loss and net assets in subsidiaries not
wholly owned by the Parent Company and are presented separately in the consolidated statement of
income, consolidated statement of comprehensive income, consolidated statement of changes in equity
and within equity in the consolidated statement of financial position, separately from the equity attributable
to the Parent Company.
The excess of the Parent Company’s cost of investment in CPVDC over its proportionate share in the
underlying net assets at the date of acquisition was allocated to the “Inventories” and “Investment
properties” accounts in the consolidated statement of financial position. The purchase premium is
amortized in proportion to the area of lots (in square meters) sold by CPVDC.
The excess of the Parent Company’s cost of investment in TPEPI over its proportionate share in the
underlying net assets at the date of acquisition was allocated to the “Investment properties” account in the
consolidated statement of financial position. The purchase premium shall be amortized in proportion to
the area of lots (in square meters) sold by TPEPI.
Total comprehensive income within a subsidiary is attributed to the NCI even if that results in a deficit
balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
The Parent Company considers a subsidiary as a subsidiary with material NCI if its net assets exceed 5%
of the total consolidated net assets of the Group as of the reporting period. There are no significant
restrictions on the Parent Company’s ability to use assets and settle liabilities of the Group.
The Group has two subsidiaries with material NCI. Additional information regarding the subsidiaries is as
follows:
Accumulated Balances
of Non-controlling Profit (Loss) Allocated to Non-
Interest controlling Interest
Subsidiary 2014 2013 2014 2013 2012
(In Thousands) (In Thousands)
CPVDC P
= 311,030 P
= 302,167 P
= 35,658 P
= 32,472 P
= 31,364
TPEPI 444,467 445,148 (681) (3,821) −
The summarized financial information of CPVDC and TPEPI is provided below. This information is based
on amounts before intercompany eliminations.
The nature and impact of each new standards and amendments are described below:
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities
(Amendments)
These amendments clarify the meaning of ‘currently has a legally enforceable right to set-off’ and the
criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and
are applied retrospectively. These amendments have no impact on the Group, since none of the
entities in the Group has any offsetting arrangements.
PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (Amendments)
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria and retrospective application is required.
These amendments have no impact on the Group as the Group does not have derivatives during the
current or prior periods.
PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13, Fair Value Measurement, on
the disclosures required under PAS 36. In addition, these amendments require disclosure of the
recoverable amounts for assets or cash-generating units (CGUs) for which impairment loss has been
recognized or reversed during the period. The application of these amendments has no material
impact on the disclosure in the Group’s financial statements.
The nature and impact of each new standard and amendment are described below:
PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, 2015. This
mandatory adoption date was moved to January 1, 2018 when the final version of PFRS 9 was
adopted by the Philippine Financial Reporting Standards Council (FRSC). Such adoption, however, is
still for approval by the Board of Accountancy (BOA).
Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate
This interpretation covers accounting for revenue and associated expenses by entities that undertake
the construction of real estate directly or through subcontractors. The interpretation requires that
revenue on construction of real estate be recognized only upon completion, except when such
contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts
or involves rendering of services in which case revenue is recognized based on stage of completion.
Contracts involving provision of services with the construction materials and where the risks and
reward of ownership are transferred to the buyer on a continuous basis will also be accounted for
based on stage of completion. The SEC and the FRSC have deferred the effectivity of this
interpretation until the final Revenue standard is issued by the International Accounting Standards
Board (IASB) and an evaluation of the requirements of the final Revenue standard against the
practices of the Philippine real estate industry is completed.
The following new standards and amendments issued by the IASB were already adopted by the FRSC
but are still for approval by BOA.
Effective 2015
PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions (Amendments)
PAS 19 requires an entity to consider contributions from employees or third parties when accounting
for defined benefit plans. Where the contributions are linked to service, they should be attributed to
periods of service as a negative benefit. These amendments clarify that, if the amount of the
contributions is independent of the number of years of service, an entity is permitted to recognize
such contributions as a reduction in the service cost in the period in which the service is rendered,
instead of allocating the contributions to the periods of service. This amendment is effective for
annual periods beginning on or after January 1, 2015. It is not expected that this amendment would
be relevant to the Group, since none of the entities within the Group has defined benefit plans with
contributions from employees or third parties.
PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of
the Reportable Segments’ Assets to the Entity’s Assets
The amendments are applied retrospectively and clarify that:
An entity must disclose the judgments made by management in applying the aggregation criteria
in the standard, including a brief description of operating segments that have been aggregated
and the economic characteristics (e.g., sales and gross margins) used to assess whether the
segments are ‘similar’.
The reconciliation of segment assets to total assets is only required to be disclosed if the
reconciliation is reported to the chief operating decision maker, similar to the required disclosure
for segment liabilities.
Effective 2016
PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of Acceptable
Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part) rather
than the economic benefits that are consumed through use of the asset. As a result, a revenue-
based method cannot be used to depreciate property, plant and equipment and may only be used in
very limited circumstances to amortize intangible assets. The amendments are effective prospectively
for annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group given that it has not used a revenue-
based method to depreciate its non-current assets.
PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants (Amendments)
The amendments change the accounting requirements for biological assets that meet the definition of
bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will
no longer be within the scope of PAS 41. Instead, PAS 16 will apply. After initial recognition, bearer
plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost
model or revaluation model (after maturity). The amendments also require that produce that grows on
bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. For
government grants related to bearer plants, PAS 20, Accounting for Government Grants and
Disclosure of Government Assistance, will apply. The amendments are retrospectively effective for
PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities already
applying PFRS and electing to change to the equity method in its separate financial statements will
have to apply that change retrospectively. For first-time adopters of PFRS electing to use the equity
method in its separate financial statements, they will be required to apply this method from the date of
transition to PFRS. The amendments are effective for annual periods beginning on or after January
1, 2016, with early adoption permitted. These amendments will not have any impact on the Group’s
financial statements.
PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
These amendments address an acknowledged inconsistency between the requirements in PFRS 10
and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor and
its associate or joint venture. The amendments require that a full gain or loss is recognized when a
transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognized when a transaction involves assets that do not constitute a business, even if these assets
are housed in a subsidiary. These amendments are effective from annual periods beginning on or
after January 1, 2016.
PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an interest
in a joint operation, in which the activity of the joint operation constitutes a business must apply the
relevant PFRS 3 principles for business combinations accounting. The amendments also clarify that
a previously held interest in a joint operation is not remeasured on the acquisition of an additional
interest in the same joint operation while joint control is retained. In addition, a scope exclusion has
been added to PFRS 11 to specify that the amendments do not apply when the parties sharing joint
control, including the reporting entity, are under common control of the same ultimate controlling
party.
The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments are not expected to have any impact to the Group.
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods of
Disposal
The amendment is applied prospectively and clarifies that changing from a disposal through sale to a
disposal through distribution to owners and vice-versa should not be considered to be a new plan of
PAS 19, Employee Benefits - regional market issue regarding discount rate
This amendment is applied prospectively and clarifies that market depth of high quality corporate
bonds is assessed based on the currency in which the obligation is denominated, rather than the
country where the obligation is located. When there is no deep market for high quality corporate
bonds in that currency, government bond rates must be used.
PAS 34, Interim Financial Reporting - disclosure of information ‘elsewhere in the interim financial
report’
The amendment is applied retrospectively and clarifies that the required interim disclosures must
either be in the interim financial statements or incorporated by cross-reference between the interim
financial statements and wherever they are included within the greater interim financial report (e.g., in
the management commentary or risk report).
Effective 2018
PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS
39 (2013 version)
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge accounting
model of PAS 39 with a more principles-based approach. Changes include replacing the rules-based
hedge effectiveness test with an objectives-based test that focuses on the economic relationship
between the hedged item and the hedging instrument, and the effect of credit risk on that economic
relationship; allowing risk components to be designated as the hedged item, not only for financial
items but also for non-financial items, provided that the risk component is separately identifiable and
reliably measurable; and allowing the time value of an option, the forward element of a forward
contract and any foreign currency basis spread to be excluded from the designation of a derivative
instrument as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires
more extensive disclosures for hedge accounting.
PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of January 1,
2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC. The adoption
of the final version of PFRS 9, however, is still for approval by BOA.
The adoption of PFRS 9 is not expected to have any significant impact on the Group’s consolidated
financial statements.
The adoption of PFRS 9 will have an effect on the classification and measurement of the Group’s
financial assets and impairment methodology for financial assets but will have no impact on the
classification and measurement of the Group’s financial liabilities. The Group is currently assessing
the impact of adopting this standard.
The following new standard issued by the IASB has not yet been adopted by the FRSC:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial
statements are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole.
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis,
the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
The Group’s management determines the policies and procedures for recurring fair value measurement of
financial assets at FVPL and investment properties.
External valuers are involved for valuation of significant assets, such as investment properties.
Involvement of external valuers is decided upon annually by management after discussion with and
approval by the Group’s audit committee. Selection criteria include market knowledge, reputation,
independence and whether professional standards are maintained. The management decides, after
discussions with the Group’s external valuers, which valuation techniques and inputs to use for each
case.
At each reporting date, the Group analyses the movements in the values of assets and liabilities which are
required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the
Group verifies the major inputs applied in the latest valuation by agreeing the information in the valuation
computation to contracts and other relevant documents.
The Group, in conjunction with its external valuers, also compares each of the changes in the fair value of
each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy
as explained above.
Initial recognition
Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are
included in the initial measurement of all financial assets and liabilities, except for financial instruments
measured at FVPL.
Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans and
receivables, held-to-maturity financial assets, or available-for-sale (AFS) financial assets, as appropriate.
Financial liabilities are classified as either financial liabilities at FVPL or other financial liabilities. The
classification depends on the purpose for which the investments were acquired or liabilities were incurred
and whether they are quoted in an active market. Management determines the classification of its
financial instruments at initial recognition and, where allowed and appropriate, re-evaluates such
designation at every reporting date.
As of December 31, 2014 and 2013, the Group’s financial assets are of the nature of loans and
receivables and financial assets at FVPL.
“Day 1” difference
Where the transaction price in a non-active market is different to the fair value from other observable
current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Group recognizes the difference between the transaction
price and fair value (a “Day 1” difference) in the consolidated statement of income under “Interest income”
and “Interest and other financing charges” accounts unless it qualifies for recognition as some other type
Financial assets and financial liabilities are classified as held for trading if they are acquired for the
purpose of selling and repurchasing in the near term. Derivatives, including separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging
instruments or a financial guarantee contract. Fair value gains or losses on investments held for trading,
net of interest income accrued on these assets, are recognized in the consolidated statement of income
under “Other income” or “Other charges”.
Financial assets may be designated at initial recognition as FVPL if any of 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 are part of a group of financial assets which are managed and their performance evaluated
on a fair value basis, in accordance with a documented risk management or investment strategy; or
the financial instrument contains an embedded derivative that would need to be separately recorded.
As of December 31, 2014 and 2013, the Group holds its investment in Unit Investment Trust Fund (UITF)
BPI Short-term fund as held for trading and classified these as financial assets at FVPL. Management
takes the view that it is held for trading and is a portfolio of diversified short-term fixed income instruments
invested and managed by professional managers.
After initial measurement, the loans and receivables are subsequently measured at amortized cost using
the effective interest method, less allowance for impairment. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees that are an integral part of the effective interest
rate (EIR). The amortization is included in “Interest income” account in the consolidated statement of
income. The losses arising from impairment of such loans and receivables are recognized under
“General and administrative expenses” account in the consolidated statement of income.
Loans and receivables are included in current assets if maturity is within twelve months from the reporting
date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2014 and 2013, the Group’s loans and receivables include cash and cash
equivalents, receivables except ‘advances to contractors’ and ‘dividends receivable’ included under ‘other
current assets’.
After initial measurement, other financial liabilities are subsequently measured at amortized cost using the
effective interest method. Amortized cost is calculated by taking into account any discount or premium on
As of December 31, 2014 and 2013, the Group’s other financial liabilities include accounts and other
payables, long-term debt, deposits and other liabilities except for ‘advance rent’ and ‘customers deposits’
and other obligations that meet the above definition (other than liabilities covered by other accounting
standards, such as income tax payable).
Where the Group has transferred its right to receive cash flows from an asset or has entered into a “pass-
through” arrangement, and has neither transferred nor retained substantially all the risks and rewards of
the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s
continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration that the Group could be required to repay.
Financial liability
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or
expired. Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognized in the consolidated statement of income.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of the estimated
future cash flows (excluding future credit losses that have not been incurred). The carrying amount of the
asset is reduced through use of an allowance account and the amount of loss is charged to the
consolidated statement of income under the “General and administrative expenses” account. Interest
income continues to be recognized based on the original effective interest rate (EIR) of the asset. Loans
and receivables, together with the associated allowance accounts, are written off when there is no realistic
prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss
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 account. Any
subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the
extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of such
credit risk characteristics as customer type, credit history, past-due status and term.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of historical loss experience for assets with credit risk characteristics similar to
those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect
the effects of current conditions that did not affect the period on which the historical loss experience is
based and to remove the effects of conditions in the historical period that do not exist currently. The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group
to reduce any differences between loss estimates and actual loss experience.
Input Value-Added-Tax
Input value-added-tax (VAT) represents taxes due or paid on purchases of goods and services subjected
to VAT that the Group can claim against any future liability to the Bureau of Internal Revenue (BIR) for
output VAT received from sale of goods and services subjected to VAT. The input VAT can also be
recovered as tax credit against future income tax liability of the Group upon approval of the BIR. A
valuation allowance is provided for any portion of the input tax that cannot be claimed against output tax
or recovered as tax credit against future income tax liability.
Prepaid Expenses
Prepaid expenses are carried at cost less the amortized portion. These typically comprise prepayments
for commissions, marketing fees, advertising and promotion, taxes and licenses, rentals and insurance.
Inventories
Property acquired or being constructed for sale in the ordinary course of business, rather than to be held
for rental or capital appreciation, is held as inventory and is valued at the lower of cost or net realizable
value (NRV). NRV is the estimated selling price in the ordinary course of business, less estimated costs
to complete and sell.
Cost includes:
Land cost
Land improvement cost
Amount paid to contractors for construction and development
Borrowing costs, planning and design costs, cost of site preparation, professional fees, property
transfer taxes, construction overheads and other related costs
The cost of inventory recognized in the consolidated statement of income as disposal is determined with
reference to the specific costs incurred on the property sold and is allocated to saleable area based on
relative size.
Club shares are valued at the lower of cost or NRV. Cost is determined on the basis mainly of the actual
development cost incurred plus the estimated development cost to complete the project based on the
estimates as determined by in-house engineers, adjusted with the actual cost incurred as the
development progresses. NRV is the estimated selling price in the ordinary course of business, less
estimated costs to sell.
Major repairs are capitalized as property and equipment only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the items can be measured reliably.
All other repairs and maintenance are charged against current operations as incurred.
Depreciation and amortization of assets commence once the property and equipment are available for
their intended use and are computed on a straight-line basis over the estimated useful lives of the
property and equipment as follows:
Years
Buildings and improvements 40
Furniture, fixtures and equipment 3 - 10
Transportation equipment 3-5
The useful lives and depreciation and amortization method are reviewed periodically to ensure that the
period and method of depreciation and amortization are consistent with the expected pattern of economic
benefits from items of property and equipment.
When property and equipment are retired or otherwise disposed of, the cost of the related accumulated
depreciation and amortization and accumulated provision for impairment losses, if any, are removed from
the accounts and any resulting gain or loss is credited or charged against current operations.
Fully depreciated property and equipment are retained in the accounts while still in use although no
further depreciation is credited or charged to current operations.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary
to determine control over subsidiaries.
The Group’s investments in associates and a joint venture is accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognized at cost.
The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net
assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or
joint venture is included in the carrying amount of the investment and is not tested for impairment
individually.
The consolidated statement of income reflects the Group’s share of the results of operations of the
associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI.
In addition, when there has been a change recognized directly in the equity of the associate or joint
venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement
of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the
associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the
face of the consolidated statement of income outside operating profit and represents profit or loss after tax
and non-controlling interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as
the Group. When necessary, adjustments are made to bring the accounting policies in line with those of
the Group.
After application of the equity method, the Group determines whether it is necessary to recognize an
impairment loss on its investment in its associate or joint venture. At each reporting date, the Group
determines whether there is objective evidence that the investment in associates and a joint venture is
impaired. If there is such evidence, the Group calculates the amount of impairment as the difference
between the recoverable amount of the associate and its carrying value, then recognizes the loss as
‘Equity in net earnings of associates and a joint venture’ in the statement of income.
Upon loss of significant influence over the associate or joint control over the joint venture, the Group
measures and recognizes any retained investment at its fair value. Any difference between the carrying
amount of the associate or joint venture upon loss of significant influence or joint control and the fair value
of the retained investment and proceeds from disposal is recognized in the consolidated statement of
income.
Investment Properties
Investment properties consist of completed properties and properties under construction or re-
development that are held to earn rentals and for capital appreciation or both and that are not occupied by
the companies in the Group. The Group uses the cost model in measuring investment properties since
this represents the historical value of the properties subsequent to initial recognition. Investment
properties, except for land, are carried at cost less accumulated depreciation and amortization and any
impairment in value. Land is carried at cost less any impairment in value. The initial cost of investment
properties consists of any directly attributable costs of bringing the investment properties to their intended
location and working condition, including borrowing costs.
Expenditures incurred after the investment property has been put in operation, such as repairs and
maintenance costs, are normally charged against income in the period in which the costs are incurred.
Depreciation and amortization is computed using the straight-line method over its useful life. The
estimated lives of investment properties under buildings and improvements are 5 to 40 years.
Construction in progress is stated at cost. This includes cost of construction and other direct costs.
Construction in progress is not depreciated until such time that the relevant assets are available for their
intended use.
Investment properties are derecognized when either they have been disposed of or when they are
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains
or losses on the retirement or disposal of an investment property are recognized in the consolidated
statement of income in the year of retirement or disposal.
Transfers are made to investment properties when, and only when, there is a change in use, evidenced
by ending of owner-occupation and commencement of an operating lease to another party. 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 properties and inventories do not change the carrying
amount of the property transferred and they do not change the cost of that property for measurement or
disclosure purposes.
The financial information in the consolidated financial statements are not restated for periods prior to the
combination of the entities under common control as allowed by the Philippine Interpretations Committee
(PIC) Q&A No. 2012-01.
Asset Acquisitions
If the assets acquired and liabilities assumed in an acquisition transaction do not constitute a business,
the transaction is accounted for as an asset acquisition. The Group identifies and recognizes the
individual identifiable assets acquired (including those assets that meet the definition of, and recognition
criteria for, intangible assets) and liabilities assumed. The acquisition cost is allocated to the individual
identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a
transaction or event does not give rise to goodwill. Where the Group acquires a controlling interest in an
entity that is not a business, but obtains less than 100% of the entity, after it has allocated the cost to the
individual assets acquired, it notionally grosses up those assets and recognizes the difference as non-
controlling interests.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the consolidated statement of income unless the asset is
carried at revalued amount, in which case, the reversal is treated as a revaluation increase. After such
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
The following criteria are also applied in assessing impairment of specific assets:
Equity
Capital stock and additional paid-in capital
Capital stock is measured at par value for all shares issued. When the shares are sold at premium, the
difference between the proceeds at the par value is credited to “Additional paid-in capital” account. Direct
costs incurred related to equity issuance are chargeable to “Additional paid-in capital” account. If
additional paid-in capital is not sufficient, the excess is charged against retained earnings. When the
Group issues more than one class of stock, a separate account is maintained for each class of stock and
the number of shares issued.
Retained earnings
Retained earnings represent the cumulative balance of net income or loss, dividend distributions, prior
period adjustments, effects of the changes in accounting policy and other capital adjustments.
Dividend distributions
Dividends on common shares are recognized as a liability and deducted from equity when approved by
the BOD of the Group. Dividends for the year that are approved after the reporting date are dealt with as a
non-adjusting event after the reporting date.
Equity reserves
Equity reserves pertain to the difference between the consideration transferred and the equity acquired in
common control business combination.
NCI
NCI represents the portion of profit or loss and the net assets not held by the Parent Company and are
presented separately in the consolidated statement of income, consolidated statement of comprehensive
income and within equity in the consolidated statement of financial position separate from the equity
attributable to the stockholders of the Parent Company.
Rental income
Rental income from noncancellable and cancellable leases are recognized in the consolidated statement
of income on a straight-line basis and the terms of the lease, respectively, or based on a certain
percentage of the gross revenue of the tenants, as provided for under the terms of the lease contract.
Revenue from sales of completed real estate projects is accounted for using the full accrual method. In
accordance with PIC No. Q&A 2006-01, the percentage-of-completion method is used to recognize
income from sales of projects where the Group has material obligations under the sales contract to
complete the project after the property is sold, the equitable interest has been transferred to the buyer,
construction is beyond preliminary stage (i.e., engineering, design work, construction contracts execution,
site clearance and preparation, excavation and the building foundation are finished), and the costs
incurred or to be incurred can be measured reliably. Under this method, revenue is recognized as the
related obligations are fulfilled, measured principally on the basis of the estimated completion of a
physical proportion of the contract work.
Any excess of collections over the recognized receivables are included in the “Deposits and other current
liabilities” account in the liabilities section of the consolidated statement of financial position.
If any of the criteria under the full accrual or percentage-of-completion method is not met, the deposit
method is applied until all the conditions for recording a sale are met. Pending recognition of sale, cash
received from buyers are presented under the “Deposits and other current liabilities” account in the
liabilities section of the consolidated statement of financial position.
Cost of real estate sales is recognized consistent with the revenue recognition method applied. Cost of
residential and commercial lots and units sold before the completion of the development is determined on
the basis of the acquisition cost of the land plus its full development costs, which include estimated costs
for future development works, as determined by the Group’s in-house technical staff.
Theater income
Theater income is recognized when earned.
Interest income
Interest income is recognized as it accrues using the effective interest method.
Other income
Recoveries are recognized as they accrue. Service income is recognized when the services are
rendered.
Cost and expenses are recognized in the consolidated statement of comprehensive income:
On the basis of a direct association between the costs incurred and the earning of specific items of
income;
On the basis of systematic and rational allocation procedures when economic benefits are expected
to arise over several accounting periods and the association can only be broadly or indirectly
determined; or
Immediately when expenditure produces no future economic benefits or when, and to the extent that,
future economic benefits do not qualify or cease to qualify, for recognition in the consolidated
statement of financial position as an asset.
Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the
respective assets (included in “Investment properties” account in the consolidated statement of financial
position). All other borrowing costs are expensed in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
The interest capitalized is calculated using the Group’s weighted average cost of borrowings after
adjusting for borrowings associated with specific developments. Where borrowings are associated with
specific developments, the amounts capitalized is the gross interest incurred on those borrowings less
any investment income arising on their temporary investment. Interest is capitalized from the
commencement of the development work until the date of practical completion. The capitalization of
borrowing costs is suspended if there are prolonged periods when development activity is interrupted. If
the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date whether the fulfillment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not
explicitly specified in an arrangement. A reassessment is made after inception of the lease only if one of
the following applies:
(a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
(b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was
initially included in the lease term;
(c) There is a change in the determination of whether fulfillment is dependent on a specified asset; or
(d) There is substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c), or (d) and at the date of
renewal or extension period for scenario (b).
Group as lessor
Leases where the Group does not transfer substantially all the risk and benefits of ownership of the assets
are classified as operating leases. Lease payments received are recognized as an income in the
consolidated statement of income on a straight-line basis over the lease term. Initial direct costs incurred
in negotiating operating leases are added to the carrying amount of the leased asset and recognized over
the lease term on the same basis as the rental income. Contingent rents are recognized as revenue in
the period in which they are earned.
Group as lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Fixed lease payments are recognized as an expense in the consolidated
statement of income on a straight-line basis while the variable rent is recognized as an expense based on
terms of the lease contract.
Pension Cost
The Group maintains a defined contribution (DC) plan that covers all regular full-time employees. Under
its DC plan, the Group pays fixed contributions based on the employees’ monthly salaries. The Group,
however, is covered under Republic Act (RA) No. 7641, The Philippine Retirement Law, which provides
for its qualified employees a defined benefit (DB) minimum guarantee. The DB minimum guarantee is
equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age
with the required credited years of service based on the provisions of RA No. 7641.
In accordance with PIC Q&A No. 2013-03, the obligation for post-employment benefits of an entity that
provides a defined contribution plan as its only post-employment benefit plan, is not limited to the amount
it agrees to contribute to the fund, if any. In this case, therefore, the Group’s retirement plan shall be
accounted for as a defined benefit plan. Accordingly, the Group accounts for its retirement obligation
under the higher of the DB obligation relating to the minimum guarantee and the obligation arising from
the DC plan.
The DC liability is measured at the fair value of the DC assets upon which the DC benefits depend, with
an adjustment for margin on asset returns, if any, where this is reflected in the DC benefits.
For the DB minimum guarantee plan, the liability is determined based on the present value of the excess
of the projected DB obligation over the projected DC obligation at the end of the reporting period. The DB
obligation is calculated annually by a qualified independent actuary using the projected unit credit method.
Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognized as expense in profit or loss. Past service costs are recognized when plan
amendment or curtailment occurs. These amounts are calculated periodically by independent qualified
actuaries.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the discount
rate based on government bonds to the net defined benefit liability or asset. Net interest on the net
defined benefit liability or asset is recognized as expense or income in consolidated statement of income.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the
effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in
other comprehensive income in the period in which they arise. Remeasurements are not reclassified to
profit or loss in subsequent periods.
The liability recognized in the consolidated statement of financial position in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the reporting date less fair value of
the plan assets. The present value of the defined benefit obligation is determined by using risk-free
interest rates of long-term government bonds that have terms to maturity approximating the terms of the
related pension liabilities or applying a single weighted average discount rate that reflects the estimated
timing and amount of benefit payments.
Income Tax
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated statement of income. Management periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences with certain
exceptions, at the reporting date between the tax bases of assets and liabilities and its carrying amounts
for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences with certain exceptions.
Deferred tax assets are recognized for all deductible temporary differences and carryforward benefits of
unused tax credits from excess of minimum corporate income tax (MCIT) over the regular corporate
income tax and unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable
income will be available against which the deductible temporary differences and carryforward benefits of
unused MCIT and NOLCO can be utilized.
Deferred tax liabilities are not provided on nontaxable temporary differences associated with investments
in associates and a joint venture.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date
and are recognized to the extent that it has become probable that future taxable income will allow the
deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted as of reporting date. Movements in the deferred income tax assets and
liabilities arising from changes in tax rates are charged against or credited to income for the period.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.
Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in
equity.
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
Segment Reporting
The Group’s operating businesses are organized and managed separately according to the nature of the
products and services provided, with each segment representing a strategic business unit that offers
different products and serves different markets. Financial information on business segments is presented
in Note 26 of the consolidated financial statements.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent
assets are not recognized in the consolidated financial statements but disclosed when an inflow of
economic benefits is probable.
The preparation of the accompanying consolidated financial statements of the Group in conformity with
PFRS requires management to make judgments and estimates that affect the amounts reported in the
consolidated financial statements and accompanying notes. The judgments and estimates used in the
consolidated financial statements are based upon management’s evaluation of relevant facts and
circumstances as of the date of the consolidated financial statements. Actual results could differ from
such estimates.
Management believes the following represent a summary of these significant judgments, estimates and
assumptions:
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the amounts
recognized in the consolidated financial statements:
A number of the Group’s operating lease contracts are accounted for as non-cancellable operating leases
and the rest are cancellable. In determining whether a lease contract is cancellable or not, the Group
considered, among others, the significance of the penalty, including economic consequence to the lessee.
The Group has entered into lease contracts with various parties for certain properties. The Group has
determined based on an evaluation of the terms and conditions of the arrangements, that all significant
The Group classifies such shares as inventories when the Group acts as the developer and its intent is to
sell a developed property together with the club share.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of services or for administrative purposes. If these
portions cannot be sold separately as of reporting date, the property is accounted for as investment
property only if an insignificant portion is held for use in the supply of services or for administrative
purposes. Judgment is applied in determining whether ancillary services are so significant that a property
does not qualify as investment property. The Group considers each property separately in making its
judgment.
When the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of
a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities
acquired based upon their relative fair values, and no goodwill or deferred tax is recognized. See Note 23
for the acquisitions made by the Group.
The Group applies judgment when assessing whether a joint arrangement is a joint operation or a joint
venture. In making this judgment, the Group determines the type of joint arrangement in which it is
involved by considering its rights and obligations arising from the arrangement. The Group assesses its
rights and obligations by considering the structure and legal form of the arrangement, the terms agreed by
Contingencies
The Group is contingently liable for various claims. The estimate of the probable costs for the resolution
of these claims has been developed in consultation with the legal counsels and based upon an analysis of
potential results. The Group currently does not believe these proceedings will have a material adverse
effect on the Group’s financial position. It is possible, however, that the results of operations could be
materially affected by changes in the estimates. As of December 31, 2014, the Group has a pending
litigation disclosed in Note 30.
As described in the accounting policy, the Group estimates the recoverable amount as the higher of an
asset’s fair value less costs to sell and value in use. In determining the present value of estimated future
cash flows expected to be generated from the continued use of the assets, the Group is required to make
estimates and assumptions that may affect investments in associates and a joint venture, investment
properties, property and equipment and other noncurrent assets. See Notes 9, 10, 11 and 12 for the
related balances.
In determining the appropriate discount rate, management considers the interest rates of government
bonds that are denominated in the currency in which the benefits will be paid, with extrapolated maturities
corresponding to the expected duration of the defined benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific country and is modified
accordingly with estimates of mortality improvements. Future salary increases and pension increases are
based on expected future inflation rates.
While the Group believes that the assumptions are reasonable and appropriate, significant differences in
actual experience or significant changes in assumptions could materially affect retirement obligations.
See Note 20 for the related balances.
2014 2013
(In Thousands)
Cash on hand and in banks P
= 156,967 P
= 468,782
Cash equivalents 2,738,248 296,369
P
= 2,895,215 P
= 765,151
Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are short-term, highly
liquid investments that are made for varying periods of up to three (3) months depending on the
immediate cash requirements of the Group, and earn interest at the respective short-term rates.
Total interest income earned from cash and cash equivalents amounted to P
= 31.1 million, P
= 23.2 million
and P
= 51.7 million in 2014, 2013 and 2012, respectively (see Note 18).
This account pertains to investments in BPI Short Term Fund (the Fund), a money market unit investment
trust fund which the Group holds for trading and is a portfolio of funds invested and managed by
professional managers. The Fund aims to generate liquidity and stable income by investing in a
diversified portfolio of primarily short-term fixed income instruments. This is measured at fair value with
gains or losses arising from changes in fair value recognized in the consolidated statement of income
under “Other income” or “Other charges”. Realized and unrealized gains recognized from changes in fair
value through profit or loss amounted to P = 3.5 million and P
= 4.3 million in 2014 and 2013, respectively
(see Note 18).
The fair value of the investment in UITF is based on net asset value per unit determined by using
valuation techniques and is classified under Level 2 of the fair value hierarchy. These valuation
techniques maximize the use of observable market data where it is available such as quoted market
prices or dealer quotes for similar instruments.
6. Accounts Receivable
2014 2013
(In Thousands)
Trade:
Residential development P
= 311,340 P
= 475,576
Shopping centers 145,964 102,199
Corporate business 68,083 96,055
Commercial development 30,617 102,508
Others 1,626 30
Advances to contractors (Note 16) 415,098 403,317
Receivables from related parties (Note 16) 345,236 276,604
(Forward)
Residential development pertains to receivables arising from sale of residential lots and condominium
units.
Shopping centers pertain to receivables arising from lease of retail space and land therein, movie
theaters, food courts, entertainment facilities and carparks.
Corporate business pertains to receivables arising from lease of office buildings and accrued rent
receivable arising from the difference between the amounts of rental revenue earned based on the
straight-line computation for noncancellable leases per PAS 17, Leases and the amount of actual rent
collected.
Commercial development pertains to receivables arising from sale of commercial lots and club
shares.
Sales contract receivables, included under residential development, are noninterest-bearing and are
collectible in monthly installments over a period of one to two years. Titles to real estate properties
are transferred to the buyers only once full payment has been made.
Leases of retail space and land therein, included under shopping centers, are noninterest-bearing and
are collectible monthly based on the terms of the lease contracts.
Leases of office spaces, included under corporate business, are noninterest-bearing and are
collectible monthly based on the terms of the lease contracts.
Receivables from sale of commercial lots, included under commercial development are noninterest-
bearing and are collectible in monthly or quarterly installments over a period ranging from two to four
years. Titles to real estate properties are not transferred to buyers until full payment has been made.
Advances to contractors are recouped upon every progress billing payment depending on the
percentage of accomplishment.
Receivables from related parties are noninterest-bearing and collectible within one year.
Receivables from employees are composed of both interest and noninterest-bearing advances and
are collectible over a period of one year through salary deduction.
Other receivables are due and demandable.
As of December 31, 2014 and 2013, residential development trade receivables with a nominal amount of
P
= 317.6 million and P
= 493.5 million, respectively, were initially recorded at fair value. The fair value of the
receivables was obtained by discounting future cash flows using the applicable rates of similar types of
instruments.
Movements in the unamortized discount on trade receivables as of December 31, 2014 and 2013,
respectively are as follows:
2014 2013
(In Thousands)
Balance at January 1 P
= 17,968 P
= 17,844
Additions 28,401 49,807
Accretion (Note 18) (40,111) (49,683)
Balance at December 31 P
= 6,258 P
= 17,968
The Group has not recognized provision for impairment losses for the years ended December 31, 2014,
2013 and 2012. Gross amount of receivables individually determined to be impaired amounted to
P
= 13.6 million as of December 31, 2014 and 2013.
7. Inventories
2014 2013
(In Thousands)
Subdivision lot for sale and development P
= 582,830 P
= 636,728
Club shares 355,654 355,092
Condominium units under development 239,315 255,428
P
= 1,177,799 P
= 1,247,248
2014
Subdivision
lot for Condominium
sale and units under
development development Club shares Total
(In Thousands)
Balance at January 1 P
= 636,728 P
= 255,428 P
= 355,092 P
= 1,247,248
Construction/development costs incurred 5,813 79,623 − 85,436
Disposals (recognized as cost of sales) (25,721) (129,726) 562 (154,885)
Transfers (33,990) 33,990 − −
Balance at December 31 P
= 582,830 P
= 239,315 P
= 355,654 P
= 1,177,799
2013
Subdivision
lot for Condominium
sale and units under
development development Club shares Total
(In Thousands)
Balance at January 1 P
= 729,660 P
= 170,763 P
= 357,340 P
= 1,257,763
Construction/development costs incurred 79,288 307,225 − 386,513
Disposals (recognized as cost of sales) (90,717) (276,379) (2,248) (369,344)
Acquisition through business combination 53,819 53,819
Transfers from (to) investment property (81,503) − − (81,503)
Balance at December 31 P
= 636,728 P
= 255,428 P
= 355,092 P
= 1,247,248
For the years ended December 31, 2014 and 2013, the Group did not record any provision for
impairment.
2014 2013
(In Thousands)
Input VAT - net P
= 133,178 P
= 175,550
Prepaid expenses 115,663 18,005
Dividends receivable 29,858 −
Others 223 1,378
P
= 278,922 P
= 194,933
Input VAT is applied against output VAT. The remaining balance is recoverable in future periods.
Prepaid expenses consist of advance payments for project management fees, business taxes, office
supplies, rentals, advertising and promotions, commissions and other expenses.
2014
Buildings Furniture,
and Fixtures and Transportation
Improvements Equipment Equipment Total
(In Thousands)
Cost
At January 1 P
= 108,499 P
= 113,464 P
= 18,633 P
= 240,596
Additions 7,506 7,255 5,281 20,042
Disposals (5,805) (9,852) (2,672) (18,329)
Transfer to investment property
(Note 11) − (28) − (28)
At December 31 110,200 110,839 21,242 242,281
Accumulated Depreciation
At January 1 77,601 81,182 11,547 170,330
Depreciation and amortization (Note 19) 6,600 8,494 2,973 18,067
Disposals (5,805) (9,844) (2,410) (18,059)
Transfer to investment property
(Note 11) − (11) − (11)
At December 31 78,396 79,821 12,110 170,327
Net Book Value P
= 31,804 P
= 31,018 P
= 9,132 P
= 71,954
2013
Buildings Furniture,
and Fixtures and Transportation
Improvements Equipment Equipment Total
(In Thousands)
Cost
At January 1 P
= 89,354 P
= 98,103 P
= 32,985 P
= 220,442
Acquisitions through business
combination (Note 23) − 1,474 − 1,474
Additions 20,354 9,900 1,496 31,750
Disposals (1,209) (1,442) (15,848) (18,499)
Transfers (Notes 11 and 29) – 5,429 – 5,429
At December 31 108,499 113,464 18,633 240,596
Accumulated Depreciation
At January 1 77,343 71,691 22,143 171,177
Acquisitions through business
combination (Note 23) − 510 − 510
Depreciation and amortization (Note 19) 1,467 9,353 3,044 13,864
Disposals (1,209) (372) (13,640) (15,221)
At December 31 77,601 81,182 11,547 170,330
Net Book Value P
= 30,898 P
= 32,282 P
= 7,086 P
= 70,266
As of December 31, 2014 and 2013, there are no capital commitments related to the Group’s property and
equipment.
2014 2013
Cost
Balance at January 1 P
= 967,626 P
= 416,052
Accumulated equity in net income
Balance at January 1 12,054 (39,123)
Equity in net income for the year 79,679 47,050
Equity in realized profit from downstream sales − 4,127
Balance at December 31 91,733 12,054
Accumulated equity in other comprehensive loss
Balance at January 1 − −
Equity in other comprehensive loss for the year (1,078) −
Balance at December 31 (1,078) −
P
= 1,058,281 P
= 428,106
There were no dividends for the years ended December 31, 2014, 2013 and 2012.
The Group’s equity in net assets of associates and a joint venture and the related percentages of
ownership are shown below.
The significant transactions affecting the Group’s investments in associates and a joint venture are as
follows:
2014
In 2014, a joint venture agreement was made and executed between ALI and Aboitiz Land, Inc. to
incorporate with 50% interest each, a new company (CDPEI) which will take the development and
operation of mixed-use developments with residential, commercial and retail components within the
parcels of land located in the City of Mandaue, Province of Cebu and other areas. ALI subsequently
assigned 10% and 5% interests to the Parent Company and CPVDC, respectively for a consideration of
P
= 300.0 million and P
= 150.0 million, respectively. For the year ended December 31, 2014, the Group
recognized equity in net loss amounting to P = 2.4 million.
The Parent Company also acquired 35% interest in SPI for a consideration of P
= 60.2 million. The other
65% interest was acquired by ALI.
The Parent Company also made additional capital infusion to ASPI amounting to P = 40.6 million in relation
to the latter’s increase in authorized capital stock. The transaction did not change the Parent Company’s
ownership interest in ASPI.
2013
In 2013, the Parent Company acquired a 35% interest in ASPI for a consideration of P
= 52.5 million from
Amaia Land, Inc. (Amaia), a subsidiary of ALI.
The following tables present the summarized financial information of the associates and a joint venture
based on their PFRS financial statements, as of December 31, 2014 and 2013 and for the years ended
December 31, 2014, 2013 and 2012:
CIHCI
The Group has a 37% interest in CIHCI, a company incorporated on April 6, 1995 with principal place of
business at Cebu City Marriott Hotel, Cardinal Rosales Avenue, Cebu Business Park, Cebu City. CIHCI’s
summarized financial information follows:
2014 2013
(In Thousands)
Current assets P
= 257,044 P
= 182,470
Noncurrent assets 662,460 702,542
Total assets P
= 919,504 P
= 885,012
Current liabilities P
= 172,730 P
= 188,049
Noncurrent liabilities 163,436 155,338
Equity 583,338 541,625
Total liabilities and equity P
= 919,504 P
= 885,012
Solinea
The Group has a 35% interest in Solinea, a company incorporated on April 2, 2007 with principal place of
business at 7th Floor, Cebu Holdings Center, Cardinal Rosales Avenue, Cebu Business Park, Cebu City.
Solinea’s summarized financial information follows:
2014 2013
(In Thousands)
Current assets P
= 1,875,332 P
= 1,024,900
Noncurrent assets 892,439 850,977
Total assets P
= 2,767,771 P
= 1,875,877
Current liabilities P
= 2,243,360 P
= 1,575,682
Noncurrent liabilities 207,510 149,778
Equity 316,901 150,417
Total liabilities and equity P
= 2,767,771 P
= 1,875,877
CDPEI
The Group has a 14% interest in CDPEI, a company incorporated on February 20, 2014 with principal
place of business at Aboitiz Corporate Center, Gov. Manuel Cuenco Ave., Kasambagan, Cebu City.
CDPEI’s summarized financial information follows:
2014
(In Thousands)
Current assets P
= 432,481
Noncurrent assets 2,552,883
Total assets P
= 2,985,364
2014
(In Thousands)
Current liabilities P
= 1,346
Equity 2,984,018
Total liabilities and equity P
= 2,985,364
2014
(In Thousands)
Revenue P
= 3,700
Costs and expenses 19,682
Net loss (P
= 15,982)
The aggregate financial information on associates with immaterial interest (ASPI and SPI) follows:
2014 2013
(In Thousands)
Carrying amount P
= 158,636 P
= 51,928
Share in net income (loss) from continuing
operations 5,548 (572)
Share in total comprehensive income − −
2014
(Forward)
2013
The Group’s investment properties are currently used for commercial leasing. Construction-in-progress
includes cost of eBloc 3, eBloc 4, ACC Corporate Center commercial buildings.
The fair values of the investment properties were determined by independent professionally qualified
appraisers.
The fair values of the land and buildings were arrived at using the Market Data Approach and Cost
Approach, respectively. In Market Data Approach, the value of the land is based on sales and listings of
comparable property registered within the vicinity. The technique of this approach requires the
establishment of comparable property by reducing reasonable comparative sales and listings to a
common denominator. This is done by adjusting the differences between the subject property and those
actual sales and listings regarded as comparable. The properties used as basis of comparison are
situated within the immediate vicinity of the subject property. In the Cost Approach, the value of the
buildings is determined by the cost to reproduce or replace in new condition the assets appraised in
accordance with current market prices for similar assets, with allowance for accrued depreciation based
on physical wear and tear, and obsolescence plus an estimate of developers’ profit margin.
For Market Data approach, the higher the price per sqm., the higher the fair value. For Cost Approach,
whose unobservable inputs include estimated costs to complete and estimated profit margin and hold and
develop property to completion, the higher these costs and required profit margin, the lower the fair value.
2014 2013
(In Thousands)
Deposits P
= 64,764 P
= 2,205
Deferred input tax 17,103 19,262
Dividends receivable (Note 16) − 32,734
Others 1,741 553
P
= 83,608 P
= 54,754
Deposits include advance payments made by the Group for future land and building developments.
Deferred input tax arises from purchase of capital goods and is recoverable in future periods.
Dividends receivable represents dividends declared by CIHCI which are due to be received by the Parent
Company in installment until December 31, 2015.
2014 2013
(In Thousands)
Payable to related parties (Note 16) P
= 893,611 P
= 127,695
Accrued project costs 832,472 1,209,562
Retentions payable 258,454 261,787
Accrued expenses 257,230 176,665
Taxes payable 71,463 48,010
Interest payable 34,414 4,968
Dividends payable 11,957 1,858
Others 17,785 993
P
= 2,377,386 P
= 1,831,538
Payable to related parties generally are due and demandable and are settled in cash at market prices.
Retentions payable pertains to the portion of the progress billings of constructions retained by the Group
which will be released after the completion of the contractor’s projects. The retention serves as a security
from the contractor in case of defects in the project.
Accrued expenses consist mainly of direct operating and administrative expenses, payroll, systems cost
and marketing expenses.
Taxes payable pertains to amusement taxes, net output VAT and expanded withholding taxes.
Accrued project costs and accrued expenses are noninterest-bearing and are normally settled on 30 to
180-day terms.
Other payables are noninterest-bearing and are normally settled within one year.
This account consists of long-term bonds and bank loans of the Group as follows:
2014 2013
(In Thousands)
Bonds:
Due 2021 P
= 5,000,000 P
=−
Bank Loans:
At 0.60% per annum spread over the floating
rate of average 91-day treasury bill rate − 2,550,000
At 0.65% per annum spread over the average
floating rate of 91-day treasury bill rate 540,000 607,500
Fixed rate corporate notes with interest rate of
4.75% per annum 420,000 420,000
At 0.38% per annum spread over the average
floating based on Mart 1 rate 400,000 400,000
At 0.50% per annum spread over the fixed rate
based on PDST-R1 rate 296,050 299,150
At 0.50% per annum spread over the fixed rate
based on PDST-R2 rate 85,950 86,850
At 0.50% per annum spread over the fixed rate
of average 5-year treasury bond rate 4,000 4,500
At 0.88% per annum spread over the average
floating rate of 91-day treasury bill rate 23,875 24,125
6,769,875 4,392,125
Less unamortized debt issue cost 50,395 14,148
6,719,480 4,377,977
Less current portion 492,561 669,225
P
= 6,226,919 P
= 3,708,752
In October 2010, loans were availed amounting to P = 680.0 million which are due on 2017. In respect with
the fixed rated portion of these loans, fixed interest is the weighted average yield of the 7-year treasury
bonds based on PDST-R2 plus a spread of 50 basis points per annum. In respect of the floating interest
In March 2011, the Group obtained loans with a maximum principal amount of P = 2.8 billion from Bank of
the Philippine Islands. The loan shall be paid for a maximum term of five years from and after the initial
drawdown date. In respect with the fixed rated portion of these loans, the fixed interest shall be the
interpolated yield for treasury bills based on PDST-R2 plus a spread of 60 basis points per annum. In
respect of the floating interest portion, floating interest rate is based on the weighted average yield for the
91-day treasury bills based on PDST-R2 plus a spread of 60 basis points per annum. The loans were
pre-terminated and fully paid in 2014.
In December 2012 and February 2013, the Group obtained loans with a maximum principal amount of
P
= 400.0 million. These loans are expected to mature on 2018 and 2019, respectively. The loan bears a
floating interest rate based on the average yield for the 91-day treasury bills on PDST-R2 plus a spread of
80 basis points per annum or Bangko Sentral ng Pilipinas Overnight Reverse Repurchase Agreement rate
plus a spread of 37.5 basis points, whichever is higher.
The loans which were availed from local banks in 2013, are used to finance the construction of eBloc 3
and eBloc 4 commercial buildings and are included under “Investment properties” (see Note 11).
The loan agreements provide for certain restrictions and requirements with respect to, among others,
major disposal of property, pledge of assets, liquidation, merger or consolidation and maintenance of ratio
between debt and the tangible net worth not to exceed 3:1. These restrictions and requirements were
complied with by the Group as of December 31, 2014 and 2013.
On June 6, 2014, the Parent Company issued P = 5.0 billion fixed rate bonds. These bonds have a term of
7 years, payable in 2021, with a fixed rate of 5.32% per annum. The proceeds will be used to fund the
Group’s projects in the pipeline, including on-going projects within the Cebu Business Park and Cebu I.T.
Park and land banking initiatives.
Interest on long-term debt recognized in the consolidated statement of comprehensive income amounted
to P
= 182.4 million and P
= 51.7 million for the year ended December 31, 2014 and 2013, respectively (see
Note 19). Interest rates range from 2.15% to 4.75% and 3.88% to 4.75% per annum for the years ended
December 31, 2014 and 2013, respectively.
For the years ended December 31, 2014 and 2013, the Group has capitalized interest from borrowed
funds as part of the investment properties account amounting to P = 67.7 million and P
= 33.4 million,
respectively. Capitalization rate used for general borrowings is at 4.75%.
2014 2013
(In Thousands)
At January 1 P
= 14,148 P
= 4,938
Additions through business combination − 3,351
Additions 49,342 8,100
Amortization (Note 19) (13,095) (2,241)
At December 31 P
= 50,395 P
= 14,148
2014 2013
(In Thousands)
Due in:
2014 P
=− P
= 72,250
2015 493,875 493,875
2016 168,000 168,000
2017 508,000 508,000
2018 420,000 420,000
2019 80,000 80,000
2020 80,000 80,000
2021 20,000 20,000
P
= 1,769,875 P
= 1,842,125
December 31
2014 2013
(In Thousands)
Tenants’ deposits P
= 610,375 P
= 465,891
Customers’ deposits 183,775 145,291
Advance rent 74,382 51,396
Retentions payable 16,297 −
Construction bond 10,828 8,188
895,657 670,766
Less noncurrent portion 225,891 182,701
P
= 669,766 P
= 488,065
2014 2013
At January 1 P
= 13,591 P
= 15,117
Additions 3,868 3,258
Amortization (Note 19) (7,251) (4,785)
At December 31 P
= 10,208 P
= 13,590
Tenants’ deposits consist of rental security deposits to be refunded by the Group at the end of the lease
contracts. These are initially recorded at fair value, which was obtained by discounting its future cash
flows using the applicable rates for similar types of instruments.
Customers’ deposits include customers’ downpayments related to real estate sales and excess of
collections over the recognized receivables based on percentage of completion. The Group requires
buyers of condominium units to pay a minimum percentage of the total selling price before the two parties
enter into a sale transaction. In relation to this, the customers’ deposits represent payment from buyers
which have not reached the minimum required percentage. When the level of required payment is
reached by the buyer, a sale is recognized and these deposits and downpayments are considered as
payments to the total contract price.
Advance rent pertains to tenants’ advances which are to be applied by the Group against the rent and
service due at the end of the lease terms.
Retention payable pertains to the portion of the progress billings of contractors retained by the Group to
be released after the guarantee period, usually within one year after the completion of projects. The
retention serves as security from the contractor against potential defects in the projects.
The Group does not provide any allowance relating to receivable from related parties. This assessment is
undertaken each financial year through examining the financial position of the related parties and the
markets in which the related parties operate.
The following tables provide the total amount of transactions that have been entered into with related
parties for the relevant financial year:
Revenue
2014 2013 2012
(In Thousands)
Associate
AiO P
=− P
=− P
= 15,812
Parent Company
ALI 3,855 12,098 –
Subsidiries of ALI
LAIP 2,084 − −
Alveo 811 − −
Total P
= 6,750 P
= 12,098 P
= 15,812
Costs/Expenses
2014 2013 2012
(In Thousands)
Parent Company
ALI P
= 122,322 P
= 73,461 P
= 57,317
Subsidiaries of ALI
Alveo 5,201 10,475 –
ALC 1,568 7,523 –
Ayala Property Management
Corp. (APMC) 7,860 8,346 –
Total P
= 136,951 P
= 99,805 P
= 57,317
Receivables from/payables to Solinea, Avida and Alveo pertain mostly to advances for and
reimbursements of operating expenses, development costs and land acquisitions. Other related party
receivables and payables pertain to advances and reimbursements arising from the Group’s ordinary
course of business. These are generally trade-related, unsecured with no impairment, noninterest-
bearing and payable within one year. The loans from DPSI, MDC and Serendra, Inc. bear interest
ranging from 2.3% to 2.5% and are due and demandable as of December 31, 2014.
Included under accrued project costs in accounts and other payables are construction costs payable to
MDC amounting to P = 572.6 million and P= 295.5 million as of December 31, 2014 and 2013, respectively.
Advances to MDC, which are included under advances to contractors in accounts receivable amounted to
P
= 324.6 million and P
= 358.6 million as of Dec. 31, 2014 and 2013, respectively.
The nature and amounts of material transactions with related parties as of December 31, 2014 and 2013
are as follows:
Expenses to ALI pertain to management fees, professional fees and systems costs.
Included in the Group’s other current assets is a dividend receivable from CIHCI amounting to
P
= 29.9 million as of December 31, 2014. This is collectible in installment until 2015. This was previously
included under other noncurrent assets with carrying amount of P = 32.7 million as of December 31, 2013.
As of December 31, 2014 and 2013, the Group has entered into transactions with Bank of the Philippine
Islands (BPI), an affiliate, consisting of cash and cash equivalents, financial assets at FVPL and long-term
debt with carrying amounts as follows:
2014 2013
(In Thousands)
Cash and cash equivalents (Note 4) P
= 564,726 P
= 697,125
Financial assets at FVPL (Note 5) 204,077 426,604
Long-term debt (Note 14) 1,359,513 4,387,875
P
= 2,128,316 P
= 5,511,604
Recoveries pertain to income from sewer, light and power and water charges from its rental operations.
These are recognized when earned.
Service income pertains to various management fees charged by the Group to various parties.
Penalties represent payments made by a lot buyer in relation to certain construction violations. The lot
buyer has agreed to comply with the specified restrictions. Penalties are based on the contractual terms of
the agreement.
As discussed in Note 2, the Group maintains a defined contribution (DC) plan which is accounted for as a
defined benefit (DB) plan with minimum guarantee due to the requirements of RA No. 7641.
The asset allocation of the plan is set and reviewed from time to time by the Plan Trustees taking into
account the membership profile, the liquidity requirements of the Plan and the risk appetite of the Plan
sponsor.
The principal actuarial assumptions used to determine retirement benefits with respect to the discount
rate, salary increases and return on plan assets were based on historical and projected normal rates.
Actuarial valuations are made annually. The Group’s annual contributions are agreed between the Plan
Trustees and the Group, in consideration of the contribution advice from the Plan Actuary.
The Group’s fund is in the form of a trust fund being maintained by BPI Asset Management. The primary
objective of the Retirement Fund is to achieve the highest total rate of return possible, consistent with a
prudent level of risk. The investment strategy articulated in the asset allocation policy has been
developed in the context of long-term capital market expectations, as well as multi-year projections of
actuarial liabilities. Accordingly, the investment objectives and strategies emphasize a long-term outlook,
and interim performance fluctuations will be viewed with the corresponding perspective.
The components of pension expense (included in manpower costs under “General and administrative
expenses”) in the consolidated statements of income are as follows:
The remeasurement effects recognized in other comprehensive income (included in Equity under
“Remeasurement loss on defined benefit plan”) in the consolidated statements of financial position follow:
The amounts recognized under pension liability in the consolidated statements of financial position for the
pension plan are as follows:
2014 2013
(In Thousands)
Defined benefit obligation P
= 63,403 P
= 39,323
Fair value of plan assets (7,669) –
Liability recognized in the statements of financial
position P
= 55,734 P
= 39,323
Changes in the present value of the defined benefit obligation are as follows:
2014 2013
(In Thousands)
Balance at January 1 P
= 39,323 P
= 27,910
Remeasurement loss arising from changes in
financial assumptions 10,429 7,581
Current service cost 12,442 2,297
Interest expense 2,233 1,535
Benefits paid (1,024) −
Balance at December 31 P
= 63,403 P
= 39,323
2014 2013
(In Thousands)
Balance at January 1 P
=– P
=–
Interest income on plan assets 958 –
Contributions 8,272 –
Benefits paid (1,024)
Return on plan assets less than discount rate (537) –
Balance at December 31 P
= 7,669 P
=–
The cost of defined benefit pension plans and other post-employment medical benefits as well as the
present value of the pension obligation are determined using actuarial valuations. The actuarial valuation
involves making various assumptions. The principal assumptions used in determining pension and post-
employment medical benefit obligations for the defined benefit plans are shown below:
2014 2013
Discount rate 4.50% 4.50%
Salary increase rate 7.00 7.00
The sensitivity analysis below has been determined based on reasonably possible changes of each
significant assumption on the defined benefit obligation as of the end of the reporting period, assuming all
other assumptions were held constant:
Effect on DBO
December 31, December 31,
2014 2013
Discount rate 1.0% increase (10.20%) (17.7%)
Discount rate 1.0% decrease 12.18 21.3
Rate of salary increase 1.0% increase 11.75 20.9
Rate of salary increase 1.0% decrease (10.07) (17.7)
The weighted average duration of the defined benefit obligation at the end of the reporting period is 15.12
years.
The following table shows the maturity profile of the Group’s defined benefit obligation based on
undiscounted benefit payments:
2014 2013
(In Thousands)
Within 1 year P
= 1,722 P
= 723
More than 1 year to 5 years 19,714 7,537
More than 5 years to 10 years 25,462 14,061
More than 10 years 426,930 366,947
P
= 473,828 P
= 389,268
Reconciliation between the statutory income tax rate and the effective income tax rate follows:
The components of net deferred tax assets as of December 31, 2014 and 2013 follow:
2014 2013
(In Thousands)
Deferred tax assets on:
Unapplied NOLCO P
= 21,642 P
= 11,303
Advance rent 6,267 4,104
Difference between tax and book basis of
accounting for real estate transactions 2,269 3,603
Allowance for impairment losses 2,102 2,102
Interest accretion 1,104 755
Unrealized foreign exchange loss 923 923
Accrued expenses − 295
Others 515 411
34,822 23,496
Deferred tax liabilities on:
Capitalized interest 12,982 6,120
Accrued rental income 2,033 2,163
Difference between tax and book basis of accounting
for real estate transactions 1,357 –
Deferred credits 1,100 762
Others 1,112 483
18,584 9,528
P
= 16,238 P
= 13,968
The components of net deferred tax liabilities as of December 31, 2014 and 2013 are as follows:
2014 2013
(In Thousands)
Deferred tax assets on:
Accrued expenses P
= 4,454 P
= 11,970
Retirement benefits 10,273 9,743
Allowance for probable losses 2,983 3,032
Unrealized foreign exchange loss 800 756
18,510 25,501
Deferred tax liabilities on:
Difference between tax and book basis of accounting
for real estate transactions 24,572 41,559
Unamortized capitalized interest 53,732 25,773
Excess of acquisition cost over the net assets of a
subsidiary 15,272 15,368
Others 2,770 2,120
96,346 84,820
P
= 77,836 P
= 59,319
The table below shows the details of NOLCO that may be used by the Group as deductions against future
income tax liabilities:
April 16,
2013
(In Thousands)
Assets:
Cash and cash equivalents P
= 59,993
Accounts receivable 411,183
Inventories 53,819
Other current assets 12,630
Property and equipment* 964
Investment properties* 2,192,588
Deferred tax assets 2,575
Total assets 2,733,752
Liabilities:
Accounts and other payables 531,465
Income tax payable 5,515
Other liabilities 120,813
Long-term debt 1,364,700
Total liabilities 2,022,493
Total net assets 711,259
Acquisition cost (720,733)
Equity reserves (P
= 9,474)
*net of accumulated depreciation
December 31,
2013
(In Thousands)
Total revenue P
= 326,200
Total costs and expenses 229,640
Net income P
= 96,560
October 31,
2013
(In Thousands)
Cash in bank P
= 217,858
Input VAT 14
Investment properties 332,128
Net assets acquired 550,000
Acquisition cost 550,000
Excess of cost over net assets acquired P
=–
The methods and assumptions used by the Group in estimating the fair value of the financial instruments
are as follows:
Financial assets at FVPL - The fair value estimates are based on net asset value as of the reporting
dates.
Cash and cash equivalents, current accounts and dividends receivable - The carrying amounts
approximate fair values due to the relatively short-term maturities of these instruments.
Noncurrent accounts and dividends receivable. - The fair values are estimated based on the discounted
cash flow methodology using the applicable discount rates for similar types of instruments. The discount
rates used ranged from 2.4% to 3.8% and 2.8% to 3.2% as of December 31, 2014 and 2013, respectively.
Accounts and other payables and current portion of deposits and other liabilities and long-term debt - The
fair values approximate the carrying amounts due to the short-term nature of these accounts.
Noncurrent portion of deposits and other liabilities and long-term debt - The fair value of fixed rate
instruments are estimated using the discounted cash flow methodology using the Group’s current
incremental borrowing rates for similar borrowings with maturities consistent with those remaining for the
liability being valued. The discount rates used ranged from 1.8% to 3.8% and 2.2% to 3.7% as of
December 31, 2014 and 2013, respectively.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for assets or
liabilities, either directly or indirectly
Level 3: inputs for the asset or liability that are not based on observable market data
The Group categorized the fair value of long-term debt and deposits and other noncurrent liabilities under
Level 3 as of December 31, 2014. The fair value of these financial instruments was determined by
discounting future cash flows using the applicable rates of similar types of instruments plus a certain
spread. This spread is the unobservable input and the effect of changes to this is that the higher the
spread, the lower the fair value.
There have been no reclassifications from Level 1 to Level 2 or 3 categories in 2014 and 2013.
Exposure to credit risk, liquidity risk and market risk (i.e., foreign currency risk and interest rate risk) arises
in the normal course of the Group’s business activities. The main objectives of the Group’s financial risk
management are as follows:
The Group’s financing and treasury function operates as a centralized service for managing financial risks
and activities as well as providing optimum investment yield and cost-efficient funding for the Group. The
Group’s BOD reviews and approves policies for managing each of these risks.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party
by failing to discharge an obligation. The Group’s credit risks are primarily attributable to financial assets
such as cash and cash equivalents, financial assets and FVPL and accounts receivables. To manage
credit risk, the Group maintains defined credit policies and monitors on a continuous basis the Group’s
exposure to credit risks.
Cash and cash equivalents and financial assets at FVPL. The Group adheres to fixed limits and
guidelines in its dealing with counterparty banks and its investment in financial instruments. Bank limits
are established on the basis of the Group’s rating that covers the area of liquidity, capital adequacy and
financial stability. Given the high credit standing of its accredited counterparty banks, management does
not expect any of these financial institutions to fail in meeting their obligation. The Group’s exposure to
credit risk from these financial assets arise from the default of the counterparty, with a maximum exposure
equal to the carrying amounts of these instruments.
Commercial development and residential development trade receivables. With respect to trade
receivables from the sale of real estate properties, credit risk is managed primarily through credit reviews
and monitoring of receivables on a continuous basis. The Group undertakes supplemental credit review
procedures to ensure the adequacy of provisioning for certain installment payment structures. Customer
payments are facilitated through various collection modes including the use of post-dated checks and
auto-debit arrangements. Exposure to bad debts is not significant and the requirement for remedial
procedures is minimal given the profile of buyers. As for the sale of lots, the Group includes in the
contract to sell provisions that the title to the properties will only be transferred to the buyers upon full
payment of the contract price.
Corporate business and shopping center trade receivables. Credit risk arising from rental income from
leasing properties is primarily managed through a tenant selection process. Prospective tenants are
evaluated on the basis of payment track record and other credit information. In accordance with the
provisions of the lease contracts, the lessees are required to deposit with the Group security deposits and
advance rentals which help reduce the Group’s credit risk exposure in case of defaults by the tenants.
For existing tenants, the Group has put in place a monitoring and follow-up system. Receivables are
aged and analyzed on a continuous basis to minimize credit risk associated with these receivables.
Regular meetings with tenants are also undertaken to provide opportunities for counseling and further
assessment of paying capacity.
As for the receivables from related parties, receivable from employees, dividends receivable and other
receivables, the maximum exposure to credit risk from these financial assets arise from the default of the
counterparty with a maximum exposure equal to their carrying amounts.
An analysis of the maximum exposure to credit risk from the Group’s trade receivables and the fair values
of the related collaterals are shown below:
The table below shows the credit quality by class of the Group’s financial assets (gross of allowance for
impairment losses):
Others includes non-trade receivables from sewer and management fees, receivable from SSS and
accrued interest receivable from money market placements.
Cash and cash equivalents and financial assets at FVPL - based on the nature of the counterparty and
the Group’s rating procedure. These are held by counterparty banks with minimal risk of bankruptcy and
are therefore classified as high grade.
Accounts and dividends receivables - high grade pertains to receivables with no default in payment;
medium grade pertains to receivables with up to 3 defaults in payment; and low grade pertains to
receivables with more than 3 defaults in payment.
As of December 31, 2014 and 2013, the Group does not have restructured financial assets.
Given the Group’s diverse base of counterparties, it is not exposed to large concentration of credit risk.
As of December 31, 2014 and 2013, the aging analyses of receivables presented per class, is as follow:
Neither
Past Past Due but not Impaired
Due nor 30-60 60-90 90-120 Individually
Impaired <30 days days days days >120 days Impaired Total
(In Thousands)
Trade
Residential development P
= 294,570 P
=– P
= 7,756 P
= 988 P
= 4,930 P
= 3,096 P
=− P
= 311,340
Shopping centers 106,952 9,296 2,894 4,113 2,681 6,451 13,577 145,964
Corporate business 59,213 – 1,015 – – 7,855 – 68,083
Commercial
development 30,617 – – – – – – 30,617
Others 1,626 – – – – – – 1,626
Receivable from related
parties 345,236 – – – – – – 345,236
Dividends receivable 29,858 – – – – – – 29,858
Receivable from employees 15,452 – – – – – – 15,452
Accrued receivable 14,958 – – – – – – 14,958
Others 53,290 – – – – – – 53,290
Total P
= 951,772 P
= 9,296 P
= 11,665 P
= 5,101 P
= 7,611 P
= 17,402 P
= 13,577 P
= 1,016,424
Neither
Past Past Due but not Impaired
Due nor 30-60 60-90 90-120 Individually
Impaired <30 days days days days >120 days Impaired Total
(In Thousands)
Trade
Residential development P
= 475,576 P
=− P
=− P
=− P
=− P
=− P
=− P
= 475,576
Commercial
development 102,508 − − − − − − 102,508
Shopping centers 26,839 46,893 3,813 5,474 5,431 172 13,577 102,199
Corporate business 96,055 − − − − − − 96,055
Others 30 − − − − − − 30
Receivable from employees 10,770 − − − − − − 10,770
Dividends receivable 32,734 − − − − − − 32,734
Receivable from related
parties 285,998 − − − − − − 276,604
Accrued receivable 4,693 − − − − − − 14,087
Others 51,161 − − − − − − 51,161
Total P
= 1,086,364 P
= 46,893 P
= 3,813 P
= 5,474 P
= 5,431 P
= 172 P
= 13,577 P
= 1,161,724
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments
associated with financial instruments. Liquidity risk may result from either the inability to sell financial
assets quickly at their fair values; or the counterparty failing on repayment of a contractual obligation; or
inability to generate cash inflows as anticipated.
The Group monitors its cash flow position, debt maturity profile and overall liquidity position in assessing
its exposure to liquidity risk. The Group maintains a level of cash and cash equivalents deemed sufficient
to finance operations and to mitigate the effects of fluctuation in cash flows. Accordingly, its loan maturity
profile is regularly reviewed to ensure availability of funding through an adequate amount of credit facilities
with financial institutions.
As of December 31, 2014, current ratio is 1.6:1.0, with cash and cash equivalents and financial assets at
FVPL of P = 3,099.3 million accounting for 53.1% of the total current assets, and resulting in a net working
capital of P
= 2.3 million.
As of December 31, 2013, current ratio is 1.2:1.0, with cash and cash equivalents and financial assets at
FVPL of P = 1,191.8 million accounting for 32.4% of the total current assets, and resulting in a net working
capital of P
= 0.6 million.
The table below summarizes the maturity profile of the Group’s financial assets and financial liabilities at
December 31, 2014 and 2013 based on the contractual undiscounted payments.
Cash and cash equivalents, financial assets at FVPL, accounts receivable and dividends receivable are used
for the Group's liquidity requirements. Please refer to the terms and maturity profile of these financial assets
under the maturity profile of the interest-bearing financial assets and liabilities disclosed under interest rate
risk section.
Majority of the Group’s transactions are denominated in Philippine Peso. There are only minimal placements
in foreign currencies and the Group does not have any foreign currency denominated debt. As such, the
Group’s foreign currency risk is minimal.
The following table shows the Group’s consolidated foreign currency-denominated monetary assets and their
peso equivalents as of December 31, 2014 and 2013:
December 31, 2014 December 31, 2013
Php Php
US Dollar Equivalent US Dollar Equivalent
(In Thousands)
In translating the foreign currency-denominated monetary assets into peso amounts, the exchange rates
used were P = 44.72 to US$1.00 and P= 44.40 to US$1.00, the Philippine Peso-US Dollar exchange rates as
at December 31, 2014 and 2013, respectively.
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar rate,
with all variables held constant, of the Group’s profit before tax (due to changes in the peso equivalent of
the dollar denominated cash and cash equivalents and short-term investments). There is no other impact
on the Group’s equity other than those already affecting the profit or loss.
Increase (Decrease) Effect on Profit
in exchange rate Before Tax
(In Thousands)
December 31, 2014 P
= 1.00 P
= 990
(1.00) (990)
December 31, 2013 1.00 110
(1.00) (110)
The Group’s interest rate exposure management policy centers on reducing the Group’s overall interest
expense and exposure to changes in interest rates. Changes in market interest rates relate primarily to
the Group’s interest-bearing debt obligations with floating interest rate as it can cause a change in the
amount of interest payments.
The Group manages its interest rate risk by leveraging on its premier credit rating and maintaining a debt
portfolio mix of both fixed and floating interest rates. The portfolio mix is a function of historical, current
trend and outlook of interest rates, volatility of short term interest rates, the steepness of the yield curve
and degree of variability of cash flows.
The following tables demonstrate the sensitivity of the Group’s profit before tax and equity to a reasonably
possible change in interest rates on December 31, 2014 and 2013 with all variables held constant,
(through the impact on floating rate borrowings):
Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value
Group
Cash and cash equivalents Fixed at the date of investment Various P
= 2,882,693 P
= 2,882,693 P
=− P
= 2,882,693
Accounts receivable Fixed at the date of sale Date of sale 1,385,475 1,282,427 103,048 1,385,475
P
= 4,268,168 P
= 4,165,120 P
= 103,048 P
= 4,268,168
Parent Company
Long-term debt
Fixed
Peso Fixed rate of average 5-year treasury bond
+ 0.60% spread Maturity date P
= 4,954,092 P
=– P
= 4,954,092 P
= 4,954,092
Floating
Peso Floating rate of average 91-day treasury
bill rate + 0.60% spread Maturity date 1,765,388 492,561 1,275,827 1,768,388
P
= 6,719,480 P
= 492,561 P
= 6,229,919 P
= 6,722,480
Interest terms (p.a.) Rate Fixing Period Nominal Amount < 1 year 1 to 5 years Carrying Value
Group
Cash and cash equivalents Fixed at the date of investment Various P
= 764,746 P
= 764,746 P
=− P
= 764,746
Accounts receivable Fixed at the date of sale Date of sale 974,628 783,022 191,606 974,628
P
= 1,739,374 P
= 1,547,768 P
= 191,606 P
= 1,739,374
Parent Company
285
CEBU HOLDINGS, INC. AND SUBSIDIARIES
The Group measures the sensitivity of its investment securities based on the average historical
fluctuation of the investment securities’ net asset value per unit (NAVPU). All other variables held
constant, with a duration of 0.05 year and 0.04 year for 2014 and 2013, respectively, a 1.0%
change in NAVPU will increase/decrease net income and equity by P = 0.1 million and P
= 0.2 million
for the year ended December 31, 2014 and 2013, respectively.
25. Equity
Capital Stock
The details of the Parent Company’s common shares are as follows:
2014 2013
Authorized shares 3,000,000,000 3,000,000,000
Par value per share P
= 1.0 P
= 1.0
Shares issued and outstanding 1,920,073,623 1,920,073,623
In accordance with SRC Rule 68, as Amended (2011), Annex 68-D, below is a summary of the
Parent Company’s track record of registration of securities.
2014 2013
Number of Number of
Number of holders of holders of
shares Issue/offer Date of securities as of securities as of
registered price approval December 31 December 31
Common shares 3,000,000,000 P
= 1.00 par value February 14, 1994 4,350 4,508
P
= 4.00 issue price
Retained Earnings
The retained earnings available for dividend distribution amounted to P = 1,147.4 million and
P
= 868.2 million as of December 31, 2014 and 2013, respectively. Retained earnings include
undistributed net earnings of subsidiaries and associates amounting P = 701.0 million and
P
= 551.6 million as of December 31, 2014 and 2013, respectively. These amounts are not available
for dividend declaration until declared by the subsidiaries and affiliates.
On November 11, 2014, the Parent Company’s BOD declared P = 0.12 per share cash dividends
from unappropriated retained earnings to all its issued and outstanding shares as of record date
November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the Parent
Company’s BOD declared P = 0.11 per share cash dividends from unappropriated retained earnings
to all its issued and outstanding shares as of record date November 5, 2013, and paid on
November 29, 2013.
On November 11, 2014, the CPVDC’s BOD declared P = 0.12 per share cash dividends from
unappropriated retained earnings to all its issued and outstanding shares as of record date
November 25, 2014, and paid on December 09, 2014. On October 9, 2013, the CPVDC’s BOD
declared P
= 0.12 per share cash dividends from unappropriated retained earnings to all its issued
and outstanding shares as of record date November 5, 2013, and paid on November 29, 2013.
Dividends payable amounting to P = 12.0 million and P
= 1.9 million remained outstanding as of
December 31, 2014 and 2013, respectively.
Capital Management
The primary objective of the Group’s capital management policy is to ensure that debt and equity
capital are mobilized efficiently to support business objectives and maximize shareholder value.
The Group establishes the appropriate capital structure for each business line that properly
reflects its premier credit rating and allows it the financial flexibility, while providing it sufficient
cushion to absorb cyclical industry risks.
The Parent Company is not subject to externally imposed capital requirements. No changes were
made in the objectives, policies and processes from the previous years.
The Group monitors its capital structure using leverage ratios on both a gross and net basis, and
makes adjustments to it in light of economic conditions. Debt consists of long-term debt. Net debt
includes long-term debt less cash and cash equivalents and financial assets at FVPL. The Group
considers as capital the equity attributable to equity holders of the Parent Company.
As of December 31, 2014 and 2013, the Group had the following ratios:
2014 2013
(In Thousands)
Long-term debt P
= 6,719,480 P
= 4,377,977
Less:
Cash and cash equivalents 2,895,215 765,151
Financial assets at fair value through profit or loss 204,077 426,604
Net debt 3,620,188 3,186,222
Equity attributable to equity holders of Cebu Holdings, Inc. P
= 5,467,310 P
= 5,174,518
Debt to equity 122.90% 84.61%
Net debt to equity 66.22% 61.58%
Core business:
Commercial development - sale of commercial lots and club shares
Residential development - sale of residential lots and condominium units
Shopping centers - development of shopping centers and lease to third parties of retail space
and land therein; operation of movie theaters, food courts, entertainment facilities and
carparks in these shopping centers; management and operation of malls
Corporate business - development and lease of office buildings
Others - other investing activities such as investment in joint ventures and sale of non-core
assets
No business segments have been aggregated to form the reportable business segments.
Management monitors the operating results of its business units separately for the purpose of
making decisions about resource allocation and performance assessment. The accounting and
measurement policies used are consistent with the policies used in preparing general-purpose
financial statements.
Sales, costs and expenses include amounts that are directly attributable to each segment. Items
that are not directly identified are allocated based on the segment’s proportionate share on the
total revenue.
The following tables regarding business segments present assets and liabilities as of December 31, 2014, 2013 and 2012 and revenue and expense information for the
three-year period ended December 31, 2014.
2014
Eliminations
Commercial Residential Shopping Corporate and
Development Development Centers Business Others Adjustments Total
(In Thousands)
Revenue
Sales to external customers P
= 747 P
= 238,042 P
= 1,250,299 P
= 291,661 P
= 865 (P= 27,140) P
= 1,754,474
Equity in net earnings of associates and a joint venture − − − − 238,401 (158,722) 79,679
Total revenue 747 238,042 1,250,299 291,661 239,266 (185,862) 1,834,153
Operating expenses (6,070) (210,308) (576,430) (233,571) (355,859) 25,223 (1,357,015)
Operating profit (loss) (5,323) 27,734 673,869 58,090 (116,593) (160,639) 477,138
Interest income − 35,560 2,915 − 32,693 − 71,168
Other income − 36,949 180,364 128,767 42,178 − 388,258
Interest and other financing charges − − − − (205,654) − (205,654)
Provision for income tax − (8,320) (71,511) (17,427) (67,798) − (165,056)
Net income (loss) (P
= 5,323) P
= 91,923 P
= 785,637 P
= 169,430 (P
= 315,174) (P
= 160,639) P
= 565,854
Net income (loss) attributable to:
Equity holders of Cebu Holdings, Inc, (P
= 5,323) P
= 90,008 P
= 783,777 P
= 155,639 (P
= 332,585) (P
= 160,639) P
= 530,877
Non-controlling interests − 1,915 1,860 13,791 17,411 − 34,977
(P
= 5,323) P
= 91,923 P
= 785,637 P
= 169,430 (P
= 315,174) (P
= 160,639) P
= 565,854
Other Information
Segment assets P
= 158,078 P
= 1,200,286 P
= 6,242,584 P
= 2,182,047 P
= 5,286,393 P
= 241,044 P
= 15,310,432
Investments in associates and a joint venture − − − − 3,291,473 (2,233,192) 1,058,281
289
290
2012
27. Leases
Future minimum rentals receivable under non-cancellable operating leases of the Group are as
follows:
December 31
2014 2013
(In Thousands)
Within one year P
= 379,046 P
= 320,772
After one year but not more than five years 970,450 671,573
More than five years 1,358,094 2,090,119
P
= 2,707,590 P
= 3,082,464
CPVDC was registered with PEZA on April 6, 2000 as an Information Technology (IT) Park
developer or operator and was granted approval by PEZA on October 10, 2001. The PEZA
registration entitled CPVDC to a four-year tax holiday from the start of approval of registered
activities. At the expiration of its four-year tax holiday, CPVDC pays income tax at the special rate
of 5% on its gross income earned from sources within the PEZA economic zone in lieu of paying
all national and local income taxes.
Transfers from property and equipment to investment properties amounting to P = 0.02 million in
2014,
Transfers from inventories to investment properties amounting to P = 81.5 million in 2013;
Transfers from investment properties to property and equipment amounting to
P
= 5.4 million in 2013;
Transfers from investment properties to inventories amounting to P = 14.1 million in 2012;
Equity in realized profit from an associate amounting to P
= 4.1 million and P
= 9.0 million in 2013
and 2012, respectively;
Acquisitions through business combinations (Note 24);
30. Contingencies
CPVDC is currently involved in a legal case related to property restriction violation. The outcome
of this legal proceeding is not presently determinable.
In the opinion of management and its legal counsel, the eventual liability under this case, if any,
will not have a material or adverse effect on the Group’s financial position and results of
operations. Accordingly, no provision for any liability has been made in the consolidated financial
statements. Further, disclosure of additional details beyond the present disclosures may affect the
Group’s position and strategy. Thus, as allowed by PAS 37, Provisions, Contingent Liabilities and
Contingent Assets, only general descriptions were provided.
Publication Team
ADVISER
Aniceto V. Bisnar, Jr. President
EDITORIAL TEAM
Noel F. Alicaya Finance and Control Officer
Vera R. Alejandria Corporate Communication and Corporate Social Responsibility Manager
Jeanette A. Japzon Corporate Communication and Media Relations Manager
Cecil T. Urbina Corporate Services Group / Human Resources and Admin Head
Jennifer G. Sia Audit Manager
Jonjay O. Camson Analyst
Archie T. Obeso Analyst
Christine M. Estrella Corporate Communication Assistant
CONTRIBUTORS
CHI Sustainability Technical Working Group:
Business Development, Finance, Commercial Business and Corporate Services
Makati Development Corporation
Ayala Property Management Corporation
PHOTOGRAPHY
Portraiture Raul V. Arambulo
Francisco "Paco" Guerrero
Landscape Paul Gotiong
Events/Activities Hiede L. Mantilla
Christine M. Estrella
Grace V. Carino
FINAL ART
Publicis JimenezBasic
Shareholder Information
CORPORATE HEADQUARTERS
Unit 701, 7/F Cebu Holdings Center
Cardinal Rosales Avenue
Cebu Business Park
Cebu City, Cebu 6000 Philippines
Tel (6332) 231 5301
Fax (6332) 231 5300
STAKEHOLDER INFORMATION
For inquiries from institutional investors, analysts, the financial and
business community on the financial report and feedback from our various
stakeholder groups on the sustainability report, please write or call:
Cebu Holdings, Inc. Unit 4C1, 4/F Tower One and Exchange Plaza
Unit 701, 7/F Cebu Holdings Center Ayala Triangle, Ayala Avenue
Cardinal Rosales Avenue Makati City 1226 Philippines
Cebu Business Park Tel (632) 908 3575 / 759 4894
Cebu City, Cebu 6000 Fax (632) 750 6647
Philippines
Tel (6332) 231 5301
Fax (6332) 231 5300
www.cebuholdings.com
customer_care@cebuholdings.com
Post-consumer
Recycled Fiber
Cebu Holdings, Inc. 2014 Annual Report cover is printed on Naturalis which is made from 50%
Post Consumer Waste (PCW) and contains 100% Elemental Chlorine Free wood pulps from
well-managed forests certified in accordance with the rules of the Forest Stewardship Council.
Naturalis is fully recyclable and is manufactured to precise and controlled standards. Tullis Russel
is registered under the BS EN ISO 9001 - 2000 quality assurance scheme and the ISO1400
environmental standard.
The main pages of this report are printed on woodfreepaper produced with pulps from
PEFC certified (Programme for the Endorsement of Forest Certification) sourced from a
sustainably-managed forest.
The Financial Statements of this report are printed on 9Lives Offset recycled
which is made of 100% post consumer waste.
Unit 701, 7/F Cebu Holdings Center,
Cebu Business Park
Cebu City 6000
Cebu, Philippines