Beruflich Dokumente
Kultur Dokumente
principal amount from its relevant Issue Date. Tranche E Bonds will mature on May 16, 2021 or on the
fifth (5th) anniversary of the Initial Issue Date.
Tranche F Bonds will be issued one-time on the Initial Issue Date as a single upfront investment and payable
in lump sum. Tranche F Bonds will be issued in minimum denomination of 180,000 and in multiples of
10,000 thereafter. The minimum aggregate amount of a Tranche F Bond shall be 180,000. There will be
no maximum subscription, but priority will be given to subscriptions amounting to 7,000,000 and less.
Each Eligible Bondholder subscribing to a Tranche F Bond shall be required to effect payment for the entire
subscription not later than five (5) Business Days prior to the Initial Issue Date. Tranche F Bonds will earn
interest at the fixed rate of 4.75% per annum on the principal amount from the Initial Issue Date. Tranche
F Bonds will mature on May 16, 2019 or on the third (3rd) anniversary of the Initial Issue Date.
Tranche G Bonds will be issued one-time on the Initial Issue Date as a single upfront investment and
payable in lump sum. Tranche G Bonds will be issued in minimum denomination of 180,000 and in
multiples of 10,000 thereafter. The minimum aggregate amount of a Tranche G Bond shall be 180,000.
There will be no maximum subscription, but priority will be given to subscriptions amounting to 7,000,000
and less. Each Eligible Bondholder subscribing to a Tranche G Bond shall be required to effect payment
for the entire subscription not later than five (5) Business Days prior to the Initial Issue Date. Tranche G
Bonds will earn interest at the fixed rate of 5.25% per annum on the principal amount from the Initial Issue
Date. Tranche G Bonds will mature on May 16, 2021 or on the fifth (5th) anniversary of the Initial Issue
Date.
Interest will accrue annually but will not be compounded and will be payable on Maturity Date (depending
on choice of Payout Option) or on the Early Payment Application date, as may be applicable, less the
amount of any applicable withholding taxes. The other instances when interest shall be payable include
early redemption of the Bonds by the Issuer or an event of default, pursuant to the relevant clauses of the
section Description of Terms and Conditions of the Bonds. However, in case of termination arising as a
result of failure by the Bondholder to pay the amounts payable by it on the relevant Payment Date or within
the applicable Grace Periods, or termination at the instance of the Bondholder, the accrued interest on the
principal amount of the Bonds shall be forfeited as pre-termination penalty (Pre-Termination Penalty).
Please refer to the sections Summary of the Offer and Description of Terms and Conditions of the Bonds.
The Bonds are offered subject to receipt and acceptance of any order by the Company and subject to the
Companys right to reject (as may be exercised through the Underwriter) any order in whole or in part. For
the other terms and conditions of the Bonds, please see, among other sections, Summary of the Offer and
Description of Terms and Conditions of the Bonds.
SB Capital Investment Corporation (SB Capital or the Underwriter), pursuant to an Issue Management
and Underwriting Agreement entered into with the Issuer (the Underwriting Agreement), shall act as
Underwriter for the Second Offer and, as such, shall distribute, sell, and underwrite the 500,000,000.00
Bond issue on a best efforts basis, subject to the satisfaction of certain conditions and in consideration for
certain fees and expenses. For services rendered, the Underwriter will receive fees of up to 2.25% of the
aggregate issue amount, or up to 12,096,774.19 of the value of the Second Offer.
Since the underwriting commitment is on a best efforts basis, the amount that may be raised during the
Second Offer may be less than 500,000,000.00. Notwithstanding that the actual subscription based on
accepted Applications to Purchase is less than the size of the Second Offer of up to 500,000,000.00, Bonds
subscribed and actually paid for by applicants shall be issued by the Issuer on the relevant Issue Date
pursuant to the terms and conditions of the Bonds.
The Company is engaged in the development, management and selling of various real estate properties such
as condominium units, subdivision lots, buildings, resorts and others. The Company expects to raise
aggregate gross proceeds amounting to 500,000,000.00 from the Second Offer. After deducting expenses
relating to the issuance of the Bonds during the Second Offer, the net proceeds are estimated to be up to
477,488,225.82 for the gross proceeds of up to 500,000,000.00. Proceeds of the Second Offer will be
used by the Company for working capital and other general corporate purposes, such as marketing and
administrative expenses.
On September 24, 2015, the Securities and Exchange Commission (SEC) approved the registration
statement for the First Offer amounting to 500,000,000.00 and the Second Offer amounting to
500,000,000.00 pursuant to a shelf registration, subject to compliance by the Company with certain
conditions. Upon compliance by the Company with the conditions for the Second Offer, the SEC is expected
to issue the permit to offer securities for sale covering the Second Offer.
After the close of the Second Offer and within the period prescribed under relevant regulations, the
Company may, at its sole discretion, offer any or all of the remaining balance of the aggregate principal
amount of bonds covered by such registration statement in one or more offerings or tranches. Any decision
by the Company to offer such additional bonds will depend on a number of factors at the relevant time.
The Bonds shall not be listed or traded in any organized exchange and will be traded over-the-counter only.
On the ground that the bond issuance does not amount to more than twenty-five percent (25%) of the
Issuers net worth (among other reasons), the Company applied for exemption from the requirement of
being rated by a rating agency accredited by the SEC under SRC Rule 12-1(6)(c)(iii) of the Amended
Implementing Rules and Regulations of the Securities Regulation Code. In its meeting on June 2, 2015, the
SEC en banc resolved to grant the Companys request for relief from the submission of a credit rating report
relative to its intended issuance of 1,000,000,000.00 worth of bonds.
Before making an investment decision, prospective investors should carefully consider the risks associated
with an investment in the Bonds. These risks include:
See the section entitled Risk Factors in this Prospectus, which, while not intended to be an exhaustive
enumeration of all risks, must be considered in connection with a purchase of the Bonds.
The information contained in this Prospectus relating to the Company, its operations and those of its
subsidiary has been supplied by the Company, unless otherwise stated herein. To the best of its knowledge
and belief, the Company (which has taken all reasonable care to ensure that such is the case) confirms that
the information contained in this Prospectus relating to it, its operations and those of its subsidiaries is
correct, and that there is no material misstatement or omission of fact which would make any statement in
this Prospectus misleading in any material respect and that the Company hereby accepts full and sole
responsibility for the information contained in this Prospectus. Unless otherwise indicated, all information
in this Prospectus is as of the date of this Prospectus. Neither the delivery of this Prospectus nor any sale
made pursuant to this Prospectus shall, under any circumstances, create any implication that the information
contained herein is correct as of any date subsequent to the date hereof or that there has been no change in
the affairs of the Company since such date.
No person has been authorized to give any information or to make any representation not contained in this
Prospectus. If given or made, any such information or representation must not be relied upon as having been
authorized by the Company or the Underwriter. This Prospectus does not constitute an offer of any
securities, or any offer to sell, or a solicitation of any offer to buy any of the Companys securities in any
jurisdiction, to or from any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction.
In making an investment decision, investors must rely on their own examination of the Company and the
terms of the Offer, including the risks involved. The Offer is being made on the basis of this Prospectus
only.
Basis for Certain Industry Data. Market data and certain industry information used throughout this
Prospectus were obtained from internal surveys, market research, publicly available information and
industry publications. Industry publications generally state that the information contained therein has been
obtained from sources believed to be reliable, but that the accuracy and completeness of such information
is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be
reliable, have not been independently verified and neither the Company nor the Underwriter makes any
representation as to the accuracy and completeness of such information.
Forward-Looking Statements. This Prospectus includes forward-looking statements which the Company
has based largely on its current expectations and projections about future events and financial trends
affecting its business.
Words including, but not limited to, believes, may, will, estimates, continues, anticipates,
intends, expects and similar words are intended to identify forward-looking statements. In light of the
risks and uncertainties associated with forward-looking statements, investors should be aware that the
forward-looking events and circumstances discussed in this Prospectus might not occur. The Companys
actual results could differ substantially from those anticipated in the Companys forward-looking
statements.
Each investor in the Bonds must comply with all laws applicable to it and must obtain the necessary consent,
approvals or permission for its purchase, offer or sale under the laws and regulations in force in any
jurisdiction to which it is subject, and neither the Company nor the Underwriter shall have any responsibility
therefor.
Any inquiries regarding this Prospectus should be forwarded to the Company. Its principal office is at 2/F
DMCI Homes Corporate Center, 1321 Apolinario Street, Barangay Bangkal, Makati City, with telephone
number +632 555-7777.
TABLE OF CONTENTS
GLOSSARY OF TERMS ........................................................................................... 8
SUMMARY ............................................................................................................ 16
SUMMARY FINANCIAL AND OPERATING INFORMATION .................................... 19
SUMMARY OF THE OFFER .................................................................................... 21
RISK FACTORS ..................................................................................................... 33
USE OF PROCEEDS ............................................................................................... 43
DETERMINATION OF ISSUE PRICE ....................................................................... 45
PLAN OF DISTRIBUTION ....................................................................................... 46
DESCRIPTION OF TERMS AND CONDITIONS OF THE BONDS ............................... 50
BUSINESS OVERVIEW .......................................................................................... 75
MATERIAL LEGAL PROCEEDING ......................................................................... 94
BOARD AND MANAGEMENT ................................................................................ 96
CAPITALIZATION AND INDEBTEDNESS ............................................................. 102
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
FINANCIAL PERFORMANCE ............................................................................... 103
CHANGES IN AND DISAGREEMENTS W/ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURES ................................................................................. 110
RELATED PARTY TRANSACTIONS ..................................................................... 112
DESCRIPTION OF PROPERTIES ........................................................................... 114
MATERIAL CONTRACTS ..................................................................................... 116
RELATED STOCKHOLDER MATTERS ................................................................. 118
REGULATORY FRAMEWORK ............................................................................. 122
PHILIPPINE TAXATION ....................................................................................... 127
LEGAL MATTERS AND EXPERTS ........................................................................ 132
FINANCIAL STATEMENTS .................................................................................. 133
GLOSSARY OF TERMS
In this Prospectus, unless the context otherwise requires, the following terms shall have the
meanings set out below.
Application to
Purchase
BIR
Bond Agreements
Bondholder
A person whose name appears, at any time, as a holder of the Bonds in the
Register of Bondholders.
Bonds
Bonus Credit
BSP
Building Code
Business Day
Calculating Agent
Certificate of
Indebtedness
Collecting Agent
Company or the
Issuer or DMCI
Homes
Current Ratio
Custodian
Custodianship and
Registry Agreement
DAR
The ratio of the Issuers total liabilities to its total stockholders equity, as
reflected in the latest unaudited quarterly financial statements ending
September 30 and audited financial statements ending December 31.
Default Interest
Designated Account
DMCI
DMCI-HI
Early Payment
Application
Early Payment
Proceeds
The sum of the aggregate principal amount of the Bonds held plus accrued
interest thereon as of Early Payment Application, but net of applicable
withholding tax.
EBIT
EBITDA
ECC
Eligible Bondholders
The third Business Day after the sixty (60) day period allotted for the
Bondholder to select a DMCI Homes Unit to which to apply the Net Bond
Proceeds as full or partial payment thereof.
Financial Indebtedness
Grace period of four (4) days from the relevant Payment Date (other than
the first Payment Date where there will be no applicable First Grace Period)
wherein the Collecting Agent shall be authorized to debit from the
Bondholders Designated Account on any day of the First Grace Period the
amount representing the principal amount or any unpaid portion of the
Bondholders subscription for Tranche D or Tranche E plus Penalty
Interest
Forced Termination
Government
10
Grace Periods
First Grace Period and Second Grace Period. Failure to remit payment on
a Payment Date and within the Grace Periods shall result in the termination
of Subscriptions, without need of any further act or notice from the Issuer.
For the avoidance of doubt, the Grace Periods shall not apply to the first
Payment Date which will be on May 9, 2016.
HLURB
HRB
High-Rise Building.
May 16, 2016 or such other date as the Issuer and the Underwriter may
agree upon in writing.
Interest Rates
Issue Date
The date on which the Bond or a Series thereof, shall be issued by the
Issuer.
Issue Manager
Maceda Law
Majority Bondholders
Material Adverse
Effect
Maturity Dates
Tranche D Bonds: May 16, 2019 or on the third (3rd) anniversary of the
Initial Issue Date;
Tranche E Bonds: May 16, 2021 or on the fifth (5th) anniversary of the
Initial Issue Date; and
11
Tranche F Bonds: May 16, 2019 or on the third (3rd) anniversary of the
Initial Issue Date.
Tranche G Bonds: May 16, 2021 or on the fifth (5th) anniversary of the
Initial Issue Date.
Maturity Date shall mean any one (1) of the Maturity Dates, as the
context may require.
Maximum Bonus
Credit
The Bonus Credit limit equivalent to the lower of (a) ten percent (10%) of
the aggregate principal amount of the Bonds held by the Bondholder and
(b) four percent (4%) of the Net Selling Price of the DMCI Homes Unit
selected by the Bondholder.
Monthly Subscription
Payment
MRB
Medium-Rise Building.
NCR
The sum of the principal amount of the Bonds plus accrued interest
thereon, net of applicable withholding taxes payable on Maturity Date.
List price of the DMCI Homes Unit, less applicable discounts; it excludes
the value-added tax and other applicable charges on the sale of property.
Offer Period
The period commencing at 9:00 a.m. on March 22, 2016 and end at 5:00
p.m. on May 4, 2016 or such other date as may be determined by the Issuer
and the Underwriter.
PAS
Paying Agent
Payment Date
Payout Option 1
Payout Option 2
Penalty Interest
Amount equal to 0.70 per day for every 5,000, computed against any
remaining unpaid payment on the principal.
PFRS
Pre-Termination
Penalty
Register of Bondholders An electronic record of the issuances, sales and transfers of the Bonds to
be maintained by the Registrar pursuant to and under the terms of the
Custodianship and Registry Agreement.
Registrar
Registry Confirmation
Return on Assets or
ROA
Ratio obtained by dividing the Companys net income by its total assets.
Return on Equity or
ROE
Ratio obtained by dividing the Companys net income by its total equity.
SB Capital
SCB
SEC
Permit to Sell Securities issued by the SEC in connection with the Second
Offer.
Day immediately succeeding the First Grace Period up to the last day of
the month on which the relevant Payment Date falls wherein the
Collecting Agent shall be authorized to debit from the Bondholders
Designated Account on any day of the Second Grace Period the amount
representing the principal amount or any unpaid portion of the
Bondholders subscription for such Series plus Penalty Interest.
Second Offer or
Offer or Offering
Security
13
Serial or Serial Bonds Subscription of monthly issuance of serial bonds or collectively Tranche D
and Tranche E Bonds, as the context may require.
Series
SRC
Subscription
Subsidiary
Tax Code
Taxes
Any present or future taxes, including, but not limited to, documentary
stamp tax, levies, imposts, filing and other fees or charges imposed by the
Republic of the Philippines or any political subdivision or taxing authority
thereof, including surcharges, penalties and interests on said taxes, but
excluding final withholding tax, gross receipts tax, taxes on the overall
income of the Underwriter or of the Bondholders, value added tax, and
taxes on any gains realized from the sale of the Bonds.
Termination
14
Transfer File
Trust Agreement
The Trust Agreement to be entered into by the Issuer and the Trustee.
Trustee
Underwriter
Underwriting
Agreement
15
SUMMARY
The following summary is qualified in its entirety by the more detailed information, including the
Companys Audited Consolidated Financial Statements as of and for the years ended December 31, 2014,
2013 and 2012 and Unaudited Interim Consolidated Financial Statements as of and for the nine months
ended September 30, 2015, and notes relating thereto, all included elsewhere in this Prospectus. For a
discussion of certain matters that should be considered in evaluating an investment in the Bonds, see the
section of this Prospectus entitled Risk Factors. Investors are recommended to read carefully this entire
Prospectus, the Audited Consolidated Financial Statements and the Audited Consolidated Interim
Consolidated Financial Statements.
DMCI Project Developers, Inc. (the Company or DMCI Homes) is a wholly-owned subsidiary1 and
the housing arm of DMCI Holdings, Inc. (DMCI-HI), a company listed on the Philippine Stock Exchange
with a market capitalization of 169.95 billion as of September 30, 2015 and a leading conglomerate in the
Philippines with interests in construction, real estate, power, water, and mining. DMCI Homes is not a
publicly listed corporation.
D.M. Consunji, Inc. (DMCI) is an affiliate the Company and a wholly-owned subsidiary of DMCI-HI.
DMCI is one of the Philippines leading triple A rated general construction companies. Semirara Mining
and Power Corporation (Semirara), a listed company with a market capitalization of 145.46 billion as
of September 30, 2015, is also an affiliate of the Company. Semirara is a majority-owned subsidiary of
DMCI-HI and the countrys largest coal-producing company.
The Companys main activities include the development, management and selling of various real estate
properties such as condominium units, subdivision lots, buildings, resorts, and others. DMCI Homes target
market is composed of upper mid-income individuals, couples, and families. It also targets end-users who
are upgradersstart-up families and individualswho aspire to establish their homes independently by
moving out of the nest.
The Companys business goal is to provide best-in-class residential units in urban friendly, serviced
communities near places of work, study, and leisure. DMCI Homes endeavors to achieve objectives that
advance the proposition of profit with honor, namely, to ensure customer delight, sustainable investment
growth, mutually beneficial relationships with business partners, environmental compliance, and career
development of its people.
All of DMCI Homes more than fifty (50) residential community projects have distinctive elements and
strategies that enhance the experience of end-users. The Companys resort-inspired developments are not
typical of other developments in Metro Manila, and are provided to meet clients needs and lifestyle
aspirations. Key features include modern in-city living that guarantees easy access to transportation and
business/commercial centers, predominantly medium density developments via medium-rise residential
condominium buildings with single-loaded corridors, 60:40 open space-to-building footprint ratio, resort
living amenities, themed development, reliable property management, and ready-to-move-in housing.
DMCI Homes has also introduced a design innovation, the Lumiventt, that permits cross-ventilation within
its building through architectural features such as Sky Patios, breezeways, single-loaded corridors, and
Garden Atriums, which provide channels where air can flow freely. Developments are near and accessible
to central business districts, educational institutions, and shopping centers, but distant enough to avoid inner
city congestion. Typical resort style amenities are clustered around central clubhouses which host multiple
1 On April 7, 2014, the Board of Directors of DMCI approved the declaration by DMCI of property dividends in the form of
504,862,578 shares of stock in DMCI-PDI (representing 14.5% ownership) in favor of DMCI-HI. This transfer has not yet been
recorded in the stock and transfer book of DMCI-PDI pending issuance of the Certificate Authorizing Registration by the BIR.
16
function rooms, recreational facilities, gyms, laundry stations, water stations and convenience stores.
Clubhouses are surrounded by playgrounds, kiddie pools, leisure pools, and lap pools are surrounded by
wide expanses of landscaped gardens. Other amenities include: jogging paths, gazebos, picnic areas, and
basketball and badminton courts. All developments are gated communities with 24-hour security. In
selected developments, surveillance systems and electric perimeter fences are standard security measures.
The Company attributes its growing portfolio of projects to the core competencies in construction and
engineering of its mother brand, DMCI. Backed by the 60-year track record on quality of DMCI as a leader
in the Philippine construction industry, DMCI Homes is able to deliver quality crafted communities right
on time or even ahead of schedule, minimizing waiting time for home buyers.
DMCI Homes is committed to constant learning and continuous improvement in product and service
quality, making it a point that their last project is their best project yet. The Company is focused on seeking
growth and venturing in opportunities for expansion in the next years to come.
STRENGTHS
DMCI Homes takes pride in its products and services that have exceptional and superior value, its notable
design innovations, its timeless quality, its competent pool of in-house professionals, and the accessibility
of its real estate developments.
Exceptional and Superior Value. The Companys more than fifty (50) sought-after resort-inspired
developments have been the choice residences of thousands of Filipino families. The perfectly-sized and
sensible amenities that its customers enjoy, are not only beautiful but also easier to maintain. Offering twobedroom units averaging 56 sqm. in area, residents and investors enjoy larger floor areas, as compared to
those offered by competitors in the same segment.
Design Innovation. Even before the Green Movement, DMCI Homes has already been utilizing elements
of sustainable design for its residents. Design innovations have constantly been the thrust of the Company,
as its practical benefits have proven to reduce energy consumption and better customer experience, via
optimized light and air and physical/psychological well-being. The mid-rise buildings of DMCI Homes
feature breezeways, central garden atriums, single-loaded hallways, and abundant skylight. Its high-rise
buildings feature T-shaped/L-shaped/pinwheel structures that allow free-flowing ventilation, beautiful sky
patios, and its proud design innovation, the Lumiventt design technology.
Proven Quality. DMCI Homes units are subject to a proprietary quality management system, and comes
with a two-year limited warranty. While many property developers in the country provide a one-year
warranty, DMCI Homes two-year warranty covers most unit deliverables, except operable items subject
to daily wear and tear. The DMCI Homes quality management system not only checks individual units, but
also how each unit behaves in building-wide scenarios, ensuring that units have been tested for actual use.
In-House Professionals. Having a highly competent pool of in-house professionals allows the Company to
have full control and functionality over design and construction. While competitors rely on various
contractors, the Companys talented and industry-respected in-house design, engineering, and construction
experts cooperate in making quick and sound decisions for the success of project. Being a builderdeveloper, DMCI Homes is able to build at a faster rate and optimal cost. Cost savings are then passed on
to customers via highly competitive prices and best-in-class project features.
Accessible Locations. DMCI Homes projects are within a five-kilometer radius of central business districts
and commercial establishments. Families are able to enjoy the convenience of metropolitan living while
still living within a serene environment.
17
18
2,756,384,808
6,627,014,701
2,755,591,655
3,147,253,613
6,010,038,559
5,812,516,193
6,685,361,009
5,225,231,026
6,240,373,565
8,267,134,982
21,050,694,487
74,530,000
77,050,000
75,160,000
27,615,961,829
24,234,512,281
17,940,348,798
15,271,781,994
3,900,000
75,570,000
1,653,051,392
1,106,190,895
903,189,053
2,011,504,566
1,907,203,343
34,530,994,674
32,435,965,403
24,230,953,728
39,018,993,573
37,310,641,371
2,833,748,592
4,187,297,117
2,983,116,876
2,635,166,635
3,572,532,625
278,853,751
235,633,723
183,268,662
314,590,104
62,125,706
158,523,614
178,569,015
156,046,748
230,279,136
211,488,126
1,055,727,336
821,563,627
729,484,201
1,063,377,558
988,038,347
71,292,253
18,253,365
16,437,847
78,478,662
64,130,817
68,525,781
85,945,851
4,466,671,327
5,441,316,847
4,068,354,334
4,407,837,946
4,898,315,620
38,997,666,001
37,877,282,250
28,299,308,062
43,426,831,519
42,208,956,991
1,227,632,852
1,022,534,728
1,017,870,494
1,873,639,342
1,513,133,345
Customer's Deposits
5,410,773,015
4,589,700,318
4,332,929,889
5,489,120,192
7,927,961,631
Payable to Affiliates
530,440,645
1,053,340,634
174,543,563
395,468,505
259,006,953
461,490,757
1,223,149,483
1,294,904,244
5,363,701,108
497,914,053
1,865,351,506
884,182,229
928,473,311
3,281,411,772
2,804,815,828
Total assets
9,495,688,775
8,772,907,392
7,748,721,501
16,403,340,919
13,002,831,810
15,736,245,438
17,598,606,022
11,102,349,211
11,197,222,226
16,104,818,118
312,929,207
487,389,113
215,945,234
327,684,038
465,775,320
1,434,623,168
48,257,898
29,008,004
1,134,917,038
816,254,613
1,937,993,760
1,494,460,192
22,316,083
17,483,797,813
19,269,170,071
12,163,557,062
13,462,900,024
18,087,369,713
Total liabilities
26,979,486,588
28,042,077,463
19,912,278,563
29,866,240,943
31,090,201,523
Capital Stock
3,487,727,328
3,487,727,328
3,487,727,328
3,487,727,328
3,487,727,328
15,260,667
15,260,667
15,260,667
15,260,667
15,260,667
5,000,000,000
1,500,000,000
1,500,000,000
3,800,000,000
1,500,000,000
3,293,169,353
4,703,698,245
3,293,528,874
6,014,287,522
5,987,248,926
222,022,065
128,518,547
90,512,630
2,450,000
240,865,059
128,518,547
Total equity
12,018,179,413
9,835,204,787
8,387,029,499
13,560,590,576
11,118,755,468
38,997,666,001
37,877,282,250
28,299,308,062
43,426,831,519
42,208,956,991
19
Net Sales
12,332,036,293
11,863,451,511
9,437,110,662
11,053,452,856
10,103,675,601
Cost of Sales
(6,506,197,131)
(6,516,407,231)
(4,547,082,862)
(5,781,685,957)
(5,301,692,813)
5,825,839,162
5,347,044,280
4,890,027,800
5,271,766,899
4,801,982,788
(2,496,179,410)
(2,274,054,169)
(1,885,891,773)
(1,967,128,100)
(1,860,341,053)
Operating Income
3,329,659,752
3,072,990,111
3,004,136,027
3,304,638,799
2,941,641,735
Interest Income
270,950,963
282,102,730
473,557,065
235,974,558
160,861,851
Interest Expense
(127,604,628)
(511,956,739)
(649,791,474)
(153,663,620)
(288,754,795)
Gross Profit
Administrative and selling expenses
Dividend Income
Equity in net earnings of associate
Other income (charges)
Income Before Tax
Income Tax Expense
Net Income
9,887,500
4,200,000
5,600,000
4,287,500
7,087,500
69,113,137
82,070,387
76,622,451
54,336,353
51,395,615
1,011,140,639
596,884,495
299,649,369
422,167,259
842,174,055
4,563,147,363
3,526,290,984
3,209,773,438
(1,273,676,255)
(916,121,613)
(905,102,772)
3,867,740,849
3,714,405,961
(1,146,622,680)
(1,050,403,153)
2,664,002,808
3,289,471,108
2,610,169,371
2,304,670,666
2,721,118,169
93,503,518
38,005,917
47,547,977
18,842,994
18,842,994
3,382,974,626
2,648,175,288
2,352,218,643
2,739,961,163
2,682,845,802
0.943
0.748
0.661
0.780
0.764
3,487,727,328
3,487,727,328
3,487,727,328
3,487,727,328
3,487,727,328
(295,408,565)
(411,333,289)
(1,700,183,228)
Investing activities
223,797,500
(248,487,785)
(190,031,835)
Financing activities
(3,799,018,828)
4,531,244,120
(3,870,629,893)
3,871,423,046
6,627,014,701
2,755,591,655
2,771,664,487
2,756,384,808
6,627,014,701
2,756,384,808
6,627,014,701
2,755,591,655
3,147,253,613
6,010,038,559
EBITDA
4,910,177,774
4,199,500,340
4,028,348,080
4,287,214,398
4,154,310,279
EBIT
4,690,751,991
4,038,247,723
3,859,564,912
4,021,404,469
4,003,160,756
Capital Expenditure
424,436,314
241,169,157
236,367,698
241,942,941
61,916,336
219,425,783
161,252,617
168,783,168
265,809,929
151,149,523
1,874,142,231
(16,072,832)
1,261,483,748
2,124,935,485
(333,802,082)
377,111,707
(536,812,861)
(3,119,023,334)
390,868,805
(616,976,142)
47%
45%
52%
48%
48%
EBITDA margin
40%
35%
43%
39%
41%
EBIT margin
38%
34%
41%
36%
40%
20
Instrument
Use of Proceeds
The net proceeds of the Second Offer shall be used by the Issuer for working
capital and other general corporate purposes.
Offer Period
The Offer shall commence at 9:00 a.m. on March 22, 2016 and end at 5 p.m.
on May 4, 2016 or such other date as may be determined by the Issuer and
the Underwriter.
Issue Price
The date on which the first Series of Tranche D Bonds and Tranche E Bonds,
and the Tranche F and Tranche G Bonds, will be issued, which will be on
May 16, 2016, or such other date as the Issuer and the Underwriter may agree
in writing.
Subsequent Issues
Tranche D Bonds: On every sixteenth (16th) day each of the thirty-five (35)
months immediately following the Initial Issue Date or on the succeeding
Business Day if the Subsequent Issue Date is not a Business Day.
21
Tranche E Bonds: On every sixteenth (16th) day each of the fifty-nine (59)
months immediately following the Initial Issue Date or on the succeeding
Business Day if the Subsequent Issue Date is not a Business Day.
Tranche F and Tranche G Bonds: There shall be no Subsequent Issue Date
for Tranche F and Tranche G Bonds in view of the one-time or lump sum
investment at the start. For purposes of principal repayment by the Issuer to
the Bondholder in cases of Termination, Subsequent Issue Date or Second
Issue Date shall be the same as that of either Tranche D or Tranche E Bonds.
Maturity Dates
Tranche D Bonds: May 16, 2019 or on the third (3rd) anniversary of the Initial
Issue Date
Tranche E Bonds: May 16, 2021 or on the fifth (5th) anniversary of the Initial
Issue Date
Tranche F Bonds: May 16, 2019 or on the third (3rd) anniversary of the Initial
Issue Date
Tranche G Bonds: May 16, 2021 or on the fifth (5th) anniversary of the Initial
Issue Date
Form and
Denomination of the
Bonds
22
Maximum
Subscription
Eligible Bondholders
Interest Rate
Interest Payment
Terms of Payment
Bonds, not later than five (5) Business Days prior to the Initial Issue Date,
and to each Series thereafter on the relevant Subsequent Issue Date for such
Series. The Eligible Bondholder/Bondholder shall ensure that the Designated
Account contains, on each relevant Payment Date, clear, withdrawable, and
freely available funds in an amount not less than (a) in respect of Tranche D
and Tranche E Bonds, the Monthly Subscription Payment, and (b) in respect
of Tranche F and Tranche G Bonds, the Lump Sum.
To facilitate collection, payment by an Eligible Bondholder/Bondholder for
the principal amount of the Bondholders subscription shall be collected
from the Eligible Bondholder/Bondholder using the Collecting Agents
automatic debit arrangement facility. For this purpose, upon submission of
an Application to Purchase, each Eligible Bondholder shall be deemed to
have irrevocably authorized the Collecting Agent to debit payments for the
purchase of the Bonds (including the Monthly Subscription Payments and,
as applicable, the Penalty Interests), pursuant to the Description of Terms
and Conditions of the Bonds.
In the event the Eligible Bondholder is not a Security Bank accountholder,
such Bondholder shall be required to open an account with Security Bank
(the Designated Account) together with the submission of the Application
to Purchase. As a Security Bank accountholder, the Bondholder will also be
required to comply with the required minimum daily balance prescribed by
Security Bank depending on the type of account opened.
A Bondholder shall not be allowed to request for accelerated acceptance of
Monthly Subscription Payments. For this purpose, while any deposit (in
addition to the Monthly Subscription Payment) may be made at any time to
the Designated Account, no advance Monthly Subscription Payment (in
respect of Tranche D and Tranche E Bonds) shall be accepted in respect of
future Payment Dates, and the Collecting Agent shall not be authorized to
debit from the Designated Account such advance Monthly Subscription
Payments. The amount to be deducted from the Designated Account on every
Payment Date shall be equivalent to the Monthly Subscription Payment due
on such date as indicated in the Application to Purchase and, as applicable,
Penalty Interest.
Terminations
Bondholder to all the issued and unissued Series of the Bonds (in the
case of Tranche D and Tranche E) shall be deemed automatically
cancelled. In such case, the Bondholder shall be entitled to receive from
the Issuer, and the Issuer shall pay the Bondholder, through the Paying
Agent, the principal amount of the Bonds held by such Bondholder. Any
accrued interest on the principal amount of the Bonds shall be forfeited
as Pre-Termination Penalty. Payment shall be delivered by the Paying
Agent to the Bondholder by way of credit of payment to the
Bondholders Designated Account on the next Subsequent Issue Date.
This period may be extended should the Issuer or the Paying Agent be
unable to pay the principal amount of the Bonds held by the Bondholder
for causes not attributable to the Issuer or the Paying Agent, as the case
may be.
b. Death or cessation of the corporate existence of a Bondholder
The death or cessation of the corporate existence of a Bondholder shall
be treated in the same manner as a Forced Termination, unless otherwise
provided herein.
If the termination results from the death of the Bondholder, the accrued
interest on the principal amount of the Bonds shall be paid to the estate
of the deceased Bondholder; provided that, a claim for such interest is
made through the Trustee.
c. Termination at the Instance of the Bondholder
In case of termination at the instance of the Bondholder by giving written
notice of termination to the Underwriter at its principal office at least
five (5) Business Days prior to the next Subsequent Issue Date, the
holding of the Bonds by, and the registration of the Bonds in the name
of, the Bondholder shall be deemed automatically terminated and the
subscriptions of the Bondholder to all the unissued Series of the Bonds
(in the case of Tranches D and E) shall be deemed automatically
cancelled. The Bondholders Designated Account shall no longer be
debited for the payment of the amount corresponding to the
Bondholders subscription to the succeeding Series beginning on the
Payment Date immediately following the termination of the Bonds. The
principal amount of the Bonds shall be paid by the Issuer to the
Bondholder, through the Paying Agent, by way of credit of payment to
the Bondholders Designated Account on the second (2nd) Issue Date
from the Payment Date on which the Bonds held by the Bondholder were
terminated. This period may be extended should the Issuer or the Paying
Agent be unable to pay the principal amount of the Bonds held by the
Bondholder for causes not attributable to the Issuer or the Paying Agent,
as the case may be. The accrued interest on the principal amount of the
Bonds shall be forfeited as Pre-Termination Penalty.
In the event of a Termination, the Bondholder may, from the end of the Grace
Periods up to four (4) Business Days immediately preceding the next
25
Subsequent Issue Date, find a replacement Bondholder who will pay for the
total principal amount (and assume ownership) of the Bonds previously held
by the original Bondholder and subscribe to the remaining Series of the
Bonds held by the latter (in the case of Tranche D and Tranche E). Any
transfer of Bonds may be made either at a premium or a discount, depending
on the price negotiated between the transferring Bondholder and the
transferee. Any such transfer may be made, upon the request of the
transferring Bondholder, with the assistance of the Underwriter which shall
have the option, but not the obligation, to extend such assistance. Capital
gains tax, documentary stamp tax and other taxes, if any, arising from the
transfer of the Bonds pursuant to this subsection shall be for the account of
the transferring Bondholder or the transferee, as the case may be.
Should the Bondholder fail to find a replacement Bondholder within the
aforesaid period (with or without the assistance of the Underwriter), the
Bonds held by such Bondholder shall be automatically retired.
The Issuer, the Trustee, Collecting Agent and the Underwriter are not under
any obligation to inform any Bondholder of any due date for payment of any
subscription to a Series, or failure of the Bondholder to deliver payment on
the relevant due date thereof.
Pre-Termination
Penalty
26
If the Net Bond Proceeds covers only the partial payment of a DMCI
Homes Unit, the Bondholder may only avail of Payout Option 1 if
such Bondholder has reasonably demonstrated that he/she is able to
fully pay, or obtain firm bank or in-house financing on terms
acceptable to the Issuer, based on the independent credit evaluation
of the third party providing the financing, for the portion of the
purchase price of the DMCI Homes Unit not covered by the Net
Bond Proceeds at the time of the payment application.
Under this Payout Option 1, the Bondholder would be entitled to a
Bonus Credit, in addition to the aggregate accrued interest earned on
the Bonds.
The Bonus Credit is a notional credit given to the Bondholder in case
such Bondholder decides to apply the Net Bond Proceeds owned by
such Bondholder as payment for a DMCI Homes Unit. The Bonus
Credit shall be deducted from the Net Selling Price and shall be
subject to the Maximum Bonus Credit. A Bondholder shall be
entitled to the Bonus Credit equivalent to a percentage of the
aggregate principal amount of the Bonds held by the Bondholder at
the time of the payment application, subject to the following
conditions:
a. For Tranche D and E Bonds, five percent (5.0%) if availed less
than one (1) year from the Initial Issue Date, and ten percent
(10%) if availed at least one (1) year after the Initial Issue Date;
and
b. For Tranche F and G Bonds, ten percent (10%) regardless when
the Bonus Credit is availed of.
For the avoidance of doubt, the Bonus Credit shall not be based on
the Net Selling Price. The Bonus Credit shall in no case be more than
the Maximum Bonus Credit, which refers to the lower of (a) ten
percent (10%) of the aggregate principal amount of the Bonds held
by the Bondholder and (b) four percent (4%) of the Net Selling Price
of the DMCI Homes Unit selected by the Bondholder.
The Net Selling Price refers to the list price of the DMCI Homes
Unit, less applicable discounts; it excludes the value-added tax and
other applicable charges on the sale of property.
The Bondholder shall be given sixty (60) days from Maturity Date
to select a DMCI Homes Unit to which to apply the Net Bond
Proceeds. Interest shall accrue on the principal amount of the Bonds
during such sixty (60)-day period at the Interest Rate applicable to
the relevant Tranche of the Bond. In the event no DMCI Homes
Unit is selected on or before the end of the sixtieth (60th) day from
Maturity Date, the total principal plus interest earned until the
sixtieth (60th) day after Maturity Date, net of applicable withholding
27
No later than ninety (90) days prior to Maturity Date, a letter together with
reply forms requesting the Bondholders to express their preferred payout
option shall be sent to all Bondholders. In the event no reply is received by
the Trustee from the Bondholder on or before the last Subsequent Issue Date,
then it shall be assumed that the payout preference of the Bondholder is
Payout Option 1.
Early Payment
Application
At any time prior to Maturity Date, the Bondholder may opt to apply the sum
of the aggregate principal amount of the Bonds held by it plus accrued
interest thereon as of Early Payment Application, but net of applicable
withholding tax (the Early Payment Proceeds), as full or partial payment
of a DMCI Homes Unit of the Bondholders choice, such application of
payment to be made to the extent of such sum. In such an event, the Bonds
registered in such Bondholders name as well as the subscriptions by such
Bondholder to any and each Series of the Bonds that have been issued shall
be deemed terminated and cancelled. However, the Bondholder may avail
itself of this Early Payment Application only if (a) such Bondholder has
reasonably demonstrated that he/she is able to fully pay, or obtain firm bank
or in-house financing, subject to the independent credit evaluation of the
party providing the financing and on terms acceptable to the Issuer, for the
portion of such purchase price not covered by the aforesaid sum at time of
payment application; and (b) the DMCI Homes Unit of the Bondholders
choice is available on the effectivity of the Early Payment Application,
subject to the nationality restrictions on ownership of lands.
Should the Bondholder exercise this option, the Bondholder would be
entitled to a Bonus Credit, in addition to the accrued interest on the Bonds.
The Bonus Credit shall be deducted from the Net Selling Price and shall be
subject to the Maximum Bonus Credit.
The Bonds may be redeemed at the option of the Issuer in whole, but not in
part, at any time, upon giving not less than thirty (30) nor more than sixty
(60) days notice to the Bondholders, through the Trustee (which notice shall
be irrevocable), at their principal amount, subject to payment of accrued
interests by the Issuer, as will result in the receipt by the Bondholders, after
28
payment of the additional or increased taxes, if any, of the amount that would
have been received by them as of the date of redemption if such additional
or increased taxes had not been required, if:
(a)
prior to the giving of such notice, the Issuer determines and provides
the Trustee an opinion of legal counsel or written advice of a
qualified tax expert, reasonably acceptable to the Trustee, that it has
or will become obliged to pay additional taxes as a result of any
change in, or amendment to, the laws or regulations of the
Philippines or any political subdivision or any authority thereof or
therein having power to tax, or any change in the application or
official interpretation of such laws or regulations, which change or
amendment becomes effective on or after the Initial Issue Date, and
(b)
Prior to giving notice of redemption, the Issuer shall deliver to the Trustee a
certificate signed by two (2) directors of the Issuer stating that the obligation
referred to in (a) above cannot be avoided by the Issuer taking reasonable
measures available to it and the Trustee shall be entitled to accept such
certificate as sufficient evidence of the satisfaction of the condition precedent
set out in (b) above, in which event it shall be conclusive and binding on the
Bondholders.
For the avoidance of doubt, the right of the Issuer to redeem the Bonds may
be exercised prior to the Issuer becoming obliged to pay the additional or
increased taxes. Upon redemption, the Issuer shall not be liable for any
additional or increased taxes which it has not yet become obliged to pay on
or prior to the date of redemption.
Early Redemption Due
to Change in Law or
Circumstance
29
Taxation
Except for (a) tax on a Bondholders interest income on the Bonds which is
required to be withheld by the Issuer, and (b) capital gains tax, documentary
stamp tax and other taxes on the transfer of Bonds (whether by assignment
or donation), if any and as applicable, which are for the account of the
Bondholder, all payments of principal and interest shall be made free and
clear of any deductions or withholding for or on account of any present or
future taxes or duties imposed by or on behalf of the Republic of the
Philippines or any political subdivision, agency or instrumentality thereof,
including, but not limited to, issue, registration, or any similar tax or other
taxes and duties, including interest and penalties. In the event that such taxes
or duties are imposed, the same shall be for the account of the Issuer;
provided, however, that, the Issuer shall not be liable for, and will not grossup the payments of interest on the principal amount of the Bonds so as to
cover any final withholding tax applicable on interest earned on the Bonds
prescribed under the National Internal Revenue Code of 1997, as amended,
and its implementing rules and regulations.
Documentary stamp tax on the original issue of the Bonds shall be for the
Issuers account.
A Bondholder who is exempt from or is not subject to final withholding tax
on interest income may claim such exemption by submitting to the
Underwriter, together with its Application to Purchase: (i) pertinent
documents evidencing its tax-exempt status, duly certified as true copy by
the relevant office of the BIR; (ii) a letter addressed to the Issuer and the
Registrar, requesting both the Issuer and the Registrar not to make any
withholding on said Bondholders interest income; and (iii) an indemnity
undertaking wherein the Bondholder shall undertake to indemnify the Issuer
for any tax or charge that may later on be assessed against the Issuer on
account of the non-withholding of tax on the Bond held by such Bondholder.
The tax status of a Bondholder may vary depending upon such persons
particular situation and certain Bondholders may be subject to special rules
not discussed above. This summary does not purport to address all the
aspects that may be important and/or relevant to a Bondholder. Bondholders
are advised to consult their own tax advisers on the ownership and
disposition of the Bonds, including the applicability and effect of any state,
local or foreign tax laws.
The beneficial interest of each Bondholder in and to the Bonds will be shown
on and recorded in the Register of Bondholders maintained by the Registrar.
Transfers of the Bonds will also be effected through the Registrar, such that
any assignment or transfer of a beneficial interest in the Bonds will be
effective only upon the registration and recording by the Registrar of such
assignment or transfer in the Register of Bondholders.
The Bonds will not be listed or traded in any organized exchange, but may
be traded over-the-counter only.
Any transfer by a Bondholder (the Transferring Bondholder) of its
beneficial interest in the Bonds (whether by assignment or donation) shall be
30
allowed only if made in full and inclusive of: (i) the title and interest of the
Bondholder in and to each Series which have been issued as of the transfer
date, and (ii) subscription rights to each Series which will be issued
subsequent to the transfer date. A partial transfer of title, interest, and rights
of the Bondholder shall not be allowed.
Any and all taxes, as well as settlement fees, and other charges (other than
registration fees which shall be paid by the Issuer) that may be imposed by
the Registrar in respect of any transfer or change of beneficial title to the
Bonds, including the settlement of documentary stamps taxes, if any, shall
be for the account of the Transferring Bondholder, unless such cost is
otherwise assumed by the transferee in writing under the terms of the relevant
transfer agreement executed between the Transferring Bondholder and its
transferee.
Credit Rating
On the ground that the Bond issuance does not amount to more than twentyfive percent (25%) of the Issuers net worth (among other reasons), the
Company applied for exemption from the requirement of being rated by a
rating agency accredited by the SEC under SRC Rule 12-1(6)(iii) of the
Amended Implementing Rules and Regulations of the Securities Regulation
Code. In its meeting on June 2, 2015, the SEC en banc resolved to grant the
Companys request for relief from the submission of a credit rating report
relative to its intended issuance of 1,000,000,000.00 worth of bonds.
Ranking
Underwriter
Trustee
Custodian and
Registrar
31
32
RISK FACTORS
GENERAL RISK WARNING
An investment in the Bonds involves a number of risks. Prospective investors should carefully consider the
risks described below, in addition to other information contained in this Prospectus, including the
Companys financial statements and notes relating thereto, before making any investment decision relating
to the Bonds. These factors, which have been arranged according to their level of importance, may be
summarized into those that pertain to the business and operations of the Company, those that pertain to the
overall political, economic, and business environment in the Philippines, and those that pertain to the
Bonds.
This section does not purport to disclose all of the risks and other significant aspects of investing in the
Bonds. Investors should seek professional advice regarding any aspect of the securities such as the nature
of the risks involved in the trading of the securities. Investors should undertake independent research
regarding the Company and the trading of securities before commencing any trading activity and may
request all publicly available information regarding the Company and the Bonds from the SEC.
The Companys past performance is not an indication of its future performance. The occurrence of any of
the events discussed below and any additional risks and uncertainties not presently known to the Company
or are currently considered immaterial could have a material adverse effect on the Companys business,
result of operations, financial condition and prospects, and could cause the market price of the Bonds to
fall significantly and investors may lose all or part of their investment.
1.
33
Competition for the acquisition of land for new projects could adversely affect the Companys
business.
The Companys future growth and development are dependent, in part, on its ability to acquire or enter into
agreements to develop additional tracts of land suitable for the Companys planned real estate projects.
When the Company and its competitors attempt to locate sites for development, the Company may
experience difficulty in locating parcels of land of suitable size in locations and at prices acceptable to the
Company. In the event the Company is unable to acquire suitable land at acceptable prices, with reasonable
returns, or at all, its growth prospects could be limited and its business and results of operations could be
adversely affected.
The Company focuses its property acquisitions on its niche market where it has the competitive advantage,
to avoid competition for parcels of property in higher demand with other developers.
The Philippine property market is cyclical.
The Company expects to derive a substantial portion of its revenue in the future from its current and future
portfolio of residential and mixed-use development projects. Accordingly, the Company is dependent on
the state of the Philippine property market. The Philippine property market has in the past been cyclical and
property values have been affected by the supply of and demand for comparable properties, the rate of
economic growth in the Philippines, and political and social developments.
While the Company has no control over the property market, this risk is mitigated by the fact that
construction for the Companys projects are completed in a fraction of the time taken for comparable-sized
projects by other developers. Construction normally begins immediately once properties have been acquired
in the normal course of business. Furthermore, the real estate segment targeted by the Company is the enduser from upper mid-income individuals, couples, and families market. There remains a significant backlog
of housing units in the segments in which the Company competes. Financing facilities for buyers in this
market segment has become widely available from financial institutions. Lastly, the Company believes that
its reputation as a quality home builder coupled with value for money project developments will help it
withstand the cut-throat competition in the Philippine property market.
Given the current geographic concentration of the Companys real estate sales, the Companys
results of operations would suffer if the residential housing and land development industry in the
Companys current markets should decline.
A significant portion of the Companys residential housing and land development business is located within
Metro Manila. As a consequence of this, any prolonged economic downturn in this market could have a
material adverse effect on the Companys business, results of operations, and financial condition.
The Company believes that the bulk of the countrys demand for housing is concentrated in the National
Capital Region (NCR), hence providing a significant buffer against any potential decline in over-all
market demand.
To further cushion the impact of stiff competition in the NCR, the Company is expanding project
developments to highly urbanized cities in the Northern Luzon area, starting with Outlook Ridge
Residences and Bristle Ridge located in Barangay Pacdal, Baguio City. The Company also plans to develop
projects in Bataan, Cavite, Davao, and Naga.
34
The Company might risk being exposed to housing price bubbles brought by historically low interest
rates, expansion in overall liquidity, and extensive construction of housing units.
With the aggressiveness in the real estate sector developments in the country, a steep rise in property prices
was observed. A housing price bubble occurs when demand for property suddenly decreases when the
supply on real estate property increases. The rapid upsurge in asset prices might result into an eventual
decline in prices as markets recalibrate. In addition, housing price bubble may also happen when speculative
investing is apparent which are ubiquitous in China, Hong Kong, and Singapore. To counter that, the
demand registered in the local sector is backed by demands from end-users rather than speculative buyers.
This, in turn, diminishes the probability of having the asset price bubbles since real estate properties are not
bought as investments but for the purpose of living.
Central banks worldwide have kept overall interest rates at historically low levels for an extended period
of time. Along with the sustained levels of domestic liquidity owing to strong and growing remittances
from OFWs, the expansion of consumer credit provided by banks, the expiry of the BSPs requirement for
banks to maintain special deposit accounts, and strong inflows of foreign investments, among other factors,
the real estate industry is expected to take advantage of the stronger purchasing power in the current
economic environment.
Moreover, the pace of real estate construction, particularly for housing in and surrounding Metro Manila
and other urban areas, has likewise been strong by historical standards. Due to a buoyant BPO sector, there
is an anticipation that strong demand in real estate sector will be sustained.
The Company is confident in the efforts of the BSP to control inflation and prevent the formation of asset
bubbles in real estate. In addition, the Company operates and competes in a market segment where there
remains a significant backlog of housing units which includes the end-user middle-income individuals,
couples and families. By doing so, the Company is catering to a market segment which has a particular and
real housing need.
Increased inflation, fluctuations in interest rates, changes in Government borrowing patterns and
Government regulations could have a material adverse effect on the Companys and its customers
ability to obtain financing.
Interest rates, the governments fiscal policy and lending regulations among others, could have a material
adverse effect on the Company and on the demand for its products.
With the bank lending cap imposed by the BSP to the real estate sector, the Companys access to capital
and its cost of financing become limited. Once the single borrower limit with respect to their current or
preferred bank or banks is met, the Company may encounter difficulty in obtaining financing on the same
or similar commercial terms from other banks.
A sustainable increase in inflation in the country might push the costs of raw materials upward, which the
Company may not be able to pass on to its customers as increased prices, or to its contractors by having the
Companys contractors absorb raw material cost increases.
In the event the Government substantially increases its borrowing levels in the domestic currency market,
the interest rates charged by banks and other financial institutions are likely to increase and effectively
reduce the amount of bank financing available to both prospective property purchasers and real estate
developers, including the Company. Since the Company believes that a substantial portion of its customers
avail themselves of financing, through either the developers in-house scheme or through the bank, to fund
35
their property purchases, higher interest is expected to be observed which make purchases of real estate
more expensive, and consequently affects demand for the Companys residential projects.
The existence of any of the abovementioned events, or any combination thereof, or of any similar events
could have an adverse effect on the Companys business, financial condition, and results of operations.
The government, specifically the BSP, has introduced measures to monitor the real estate sector. Its
interventions would help the market become resilient and sustainable.
The real estate sector is capital intensive, and might cause difficulty for the Company to readily raise
the necessary capital to acquire new land or complete existing projects.
The Philippines real estate sector requires a substantial amount of capital to acquire land for development,
complete existing projects, and commence construction on new developments. The Company has spent
236 million, 241 million and 424 million for the foregoing activities on years 2012, 2013 and 2014,
respectively.
The Company has relied on internally-generated funds and external financing for its land banking
expenditures and real estate development programs. Due to the capital intensive nature of the real estate
industry, it is inevitable that developers will need external support to finance their projects. Since 2011, the
Company has begun exploring capital-raising activities. Among them are the 5 billion fixed rate notes
facility in 2011 and 10 billion fixed rate notes facility in 2015. There is no guarantee that the Company
will be able to obtain sufficient funds at acceptable rates to fund its capital expenditure requirements, or
that it will be able to obtain sufficient funds at all. In order to complete its planned projects on schedule and
satisfy its other liquidity and capital resources requirements, the Company observes strong current ratios
which are at 3.13x, 3.70x and 3.64x, on years 2012, 2013 and 2014, respectively.
Failure to obtain the requisite funds could delay or prevent the acquisition of land, completion of ongoing
projects or commencement of new projects, which could materially and adversely affect the Companys
reputation, financial condition and results of operations.
To mitigate this risk, the Company cultivates strong relationships with its partner banks and has always
demonstrated caution in its financial management as it strives to be efficient and effective in utilizing its
capital. Moreover, the Company ensures a high sales turnover of its real estate projects. This would involve
the Company employing a value-for-money philosophy which creates a larger demand for its real estate
developments in comparison to its competitors.
Cancellation of sales involving the Companys projects could adversely affect its business, financial
condition, and results of operations.
As a developer and seller of residential real estate, the Companys business, financial condition, and results
of operations could be adversely affected in the event a material number of condominium unit sales are
cancelled. While the Company has never experienced a material number of cancellations to which the
Maceda Law has applied, there can be no assurance that it will not experience a material number of
cancellations in the future. Should it happen, it will have a material adverse effect on the Companys
business, financial condition, and results of operations.
The Company targets a prudent mix of clients, the bulk of which are employed professionals and employees.
Additionally, the Company markets its brand across several markets in several regions of the world. Its
international sales constitute 4% of its total sales, with the Company aiming to diversify its market further
in order to avoid excessive dependency on a particular geographic location of buyers.
36
The Companys reputation will be adversely affected if its projects are not completed on time or if
the projects do not meet customers requirements.
37
The Companys reputation will be negatively affected if any of its projects carry construction or
infrastructure failures, design flaws, significant project delays, or quality control issues. Any reputational
deterioration may consequently make it more difficult for the Company to attract new buyers to its future
projects, to command a higher selling price, or to presell its housing and land development projects.
The Company has inherent strengths in engineering, project planning, and execution. As a result of its
vertically-integrated operations, it is not dependent on third parties to provide the quality of project
management and execution required of its projects. Due to the Companys technical strengths, it is able to
properly control the quality and timely completion of its projects. The Company has historically completed
almost all of its projects on time or ahead of schedule.
Construction defects and other building-related claims may be asserted against the Company, and
the Company may be subject to liability for such claims.
Philippine law provides that property developers, such as the Company, warrant the structural integrity of
condominium units, buildings, resorts and other structures designed or built by them for a period of fifteen
(15) years from the date of completion of the house. The Company may also be held responsible for hidden
(i.e., latent or non-observable) defects in a housing unit sold by it when such hidden defects render the unit
unfit for the use for which it was intended or when its fitness for such use is diminished to the extent that
the buyer would not have acquired it or would have paid a lower price had the buyer been aware of the
hidden defect. This warranty may be enforced within six (6) months from the delivery of the unit to the
buyer. In addition, Presidential Decree No. 1096, or the National Building Code of the Philippines (the
Building Code), governs, among others, the design and construction of buildings, as well as certain
requirements and standards that must be complied with. The Company or its officials may be held liable
for administrative fines or criminal penalties in case of any violation of the Building Code.
There can be no assurance that the Company will not be held liable for damages, the cost of repairs, and/or
the expense of litigation surrounding possible claims or that claims will not arise out of uninsurable events,
such as landslides or earthquakes, or circumstances not covered by the Companys insurance and not subject
to effective indemnification agreements with the Companys contractors. Neither can there be any
assurance that the contractors hired by the Company will be able to either correct any such defects or
indemnify the Company for costs incurred by the Company to correct such defects. In the event a substantial
number of claims arising from structural or construction defects arise, this could have a material adverse
effect on the Companys reputation and on its business, financial condition, and results of operations.
The Company has inherent strengths in engineering, project planning, and execution. As a result of its
vertically-integrated operations, it is not dependent on third parties to provide the quality of project
management and execution required of its projects. Part of its land acquisition process involves the
determination of the technical suitability of potential properties to be acquired for its projects. This includes
the determination of any technical hindrances, via technical surveys and the determination of applicable
local government requirements, which may impair any development plans and such developments quality.
Due to the Companys technical strengths and its strict adherence to its own high development standards
and the requirements of the Building Code, it is able to properly control, and assure itself of, the quality
and timely completion of its projects.
All DMCI Homes developments bear the DMCI Homes Quality Seal, which represents the Companys
commitment to deliver homes that are built to last and free from defects. Every DMCI Homes unit is subject
to a two (2)- year warranty for its unit deliverables, except operable items that are subject to wear and tear
due to daily use
38
In addition to the above, the Company is also a respondent in legal proceedings arising from a petition for
injunction filed on September 12, 2014 by the Knights of Rizal, seeking to enjoin the construction of the
Companys Torre de Manila project on the claim that Torre de Manila will, once constructed, obstruct the
view surrounding the Rizal Park and the Rizal Monument. Please see discussion of this case under
Ongoing Projects and Material Legal Proceeding.
Although the Company believes that its legal position is strong, there can be no assurance that the decision
will be favorable to it. Considering that the case has already drawn significant public attention and wide
media coverage, an unfavorable decision against the Company may possibly have a negative impact on the
Companys brand or reputation, which could also have a negative effect on its business, financial condition
and results of operations. The Company believes, however, that its long-standing reputation as a quality
home builder coupled with value for money project developments will help it withstand the negative impact
of any such unfavorable decision.
2.
The growth and profitability of DMCI Homes will be influenced by the general political situation in, and
the state of the economy of, the Philippines. Any political or economic instability in the future may have a
negative effect on the financial results of DMCI Homes and its ability to perform its obligations in relation
to the Bonds.
Economic Considerations
In the past, the Philippines has experienced periods of slow or negative growth, high inflation, significant
devaluation of the Philippine currency, imposition of exchange controls, debt restructuring, and electricity
shortages and blackouts.
The regional Asian financial crisis in 1997 resulted in, among others, the depreciation of the Philippine
peso, higher interest rates, slower growth, and a reduction in the countrys credit ratings. Since the Asian
financial crisis, the country experienced a ballooning budget deficit, volatile exchange rates, and a relatively
weak banking sector.
The government instituted several reform measures in the fiscal and banking sectors, among others, that
strengthened the countrys economic fundamentals, resulting in improved investor confidence and
increased economic activities. As such, real gross domestic product (GDP) rose by 7.3% in 2010 versus a
1.1% growth registered in 2009 and was the fastest in over three decades, due to the robust performance of
the industrial and services sectors.
In 2012, the economy was said to have further grown by 7.1%, besting other countries in Southeast Asia.
This growth was attributed to the robust business process industry and good governance, among others.
However, in 2014, the Philippines economic growth decelerated to 6.1%. It is opined that a number of
external risks can pose further threats to the improvement of the domestic economy. These risks include
the political tensions in the Middle East and territorial disputes in the region.
While the current administration is pursuing rapid, broad-based, and sustainable economic growth, there is
no assurance that the future administrations will adopt economic policies conducive to sustaining economic
growth. Any future economic, political or social instability in the Philippines could adversely affect the
Companys business, financial condition or results of operations.
39
To mitigate the abovementioned risks, DMCI Homes shall continue to adopt what it considers conservative
financial and operational controls and policies within the context of the prevailing business, economic, and
political environments taking into consideration the interests of its customers, stakeholders, and creditors.
Political Considerations
The Philippines has from time to time experienced political and military instability. In February 1986, a
peaceful uprising ended the 21-year rule of Ferdinand Marcos and installed Corazon Aquino as President
of the Philippines. Between 1986 and 1989, there were a number of attempted coups detat, none of which
were successful. Political conditions in the Philippines were generally stable during the 1990s following
the election of Fidel V. Ramos as President in 1992.
In 2000, Ramos successor, Joseph Estrada, was subject to allegations of corruption, resulting in
impeachment proceedings, mass public protests, withdrawal of support of the military, and Estradas
removal from office. Then Vice President, Gloria Macapagal-Arroyo, was sworn in as President on January
20, 2001. In May 2001, violent clashes between government forces and Estrada loyalists occurred when
Estrada was imprisoned to face charges of plunder.
On July 23, 2003, a group of more than 200 armed soldiers took over and occupied the Oakwood Premier
Ayala Center, a serviced apartment project located at the Ayala Center in Makati City. The group accused
the Arroyo administration of corruption and terrorist acts. After hours of negotiations, the group agreed to
return to barracks. The soldiers have been demoted following their prosecution in the court martial
proceedings.
On May 10, 2004, national presidential elections were held and, on June 24, 2004, pursuant to the
Constitution, a joint session of Congress declared Gloria Macapagal-Arroyo as President-elect. President
Arroyo began her six (6)- year term on June 30, 2004. Certain opposition candidates including defeated
presidential candidate Fernando Poe, Jr. questioned the election results, alleging massive fraud and
disenfranchisement of voters. On July 23, 2004, Mr. Poe petitioned the Philippine Supreme Court, acting
as the Presidential Electoral Tribunal, to order a recount of votes cast in more than 118,000 precincts
nationwide. The petition was eventually dismissed following the death of Mr. Poe on December 14, 2004.
On November 29, 2007, a Philippine Senator and former lieutenant, Antonio Trillanes IV, led a group of
military officers in walking out of a trial for the occupation of the Oakwood Premier Ayala Center and
seizing a hotel in Makati to demand President Arroyos resignation. The group peacefully surrendered after
a six (6)- hour standoff with government forces.
In 2010, the country held its first automated elections under the supervision of the Commission on
Elections, where the son of former President Corazon C. Aquino, Senator Benigno S. Aquino III, won the
presidency by a wide margin over closest rival former President Joseph Estrada. Aquinos victory displayed
the highest electoral mandate for the winning president (post the 1987 Constitution) at 42% or more than
15 million votes. The vice-presidential race was won by former Makati City Mayor Jejomar S. Binay with
a tight margin over second running candidate Senator Mar Roxas.
In 2011, the impeachment of Renato Corona, the then Supreme Court Chief Justice of the Philippines,
ensued. Corona was later on found guilty by the Senate, which was then acting as an impeachment court,
for his failure to fully report his assets, liabilities, and net worth, which disclosure is mandated by law.
Consequently, he was removed from his post in 2012.
In 2013, a scam involving the alleged misuse of the Priority Development Assistance Fund (PDAF)
surfaced. The expos pointed out businesswoman Janet Napoles as the mastermind for the purported illegal
40
diversion of public funds to her, a number of members of the Congress, other government officials, and
private individuals. Accordingly, cases of plunder and malversation of public funds were instituted against
Napoles and other participants to the PDAF scam. In 2014, separate cases were filed before the
Sandiganbayan against three (3) senators. It is opined that the Philippine government was defrauded of
approximately 10 billion.
The Philippines has also experienced military tension in the past few years. In 2013, rebels from the Moro
National Liberation Front (MNLF) took over several villages in Zamboanga City, taking into hostage
civilian residents therein. This resulted to a standoff between the government forces and the MNLF. In the
aftermath, Nur Misuari, the founder of MNLF, along with other key lieutenants, was arrested and charged
with rebellion.
In 2015, a clash took place between the Special Action Force of the Philippine National Police (SAF) and
the Bangsamoro Islamic Freedom Fighters and MNLF in Mamasapano, Maguindanao. What was supposed
to be only a mission to serve warrants for the arrest of high-ranking terrorists turned into a violent assault
which led to the deaths of forty-four (44) SAF members. This incident in Mamasapano triggered numerous
investigations including one taken on by the Senate.
With the approach of the May 2016 national elections, the country may post robust economic growth but
the boost from election-related spending could be tempered by investor caution due an impending change
in national leadership.
3.
Liquidity Risk
The Bonds will not be traded or listed in any organized exchange, limiting its market liquidity. As with
other fixed income securities, the Bonds could sell at prices higher or lower than the Second Offering price
due to prevailing interest rates, the Companys operations, the overall market for debt securities, and the
political and economic developments in the Philippines and other regions, among others. It is possible that
a selling Bondholder would receive sales proceeds lower than his initial investment should a Bondholder
decide to sell his Bonds prior to Maturity Date.
Despite the Bonds not being listed on any exchange, the Bondholder can freely sell the Bonds over-thecounter, either at a premium or at a discount, depending on the price negotiated between the transferring
Bondholder and the transferee. Any such transfer may be made, upon the request of the transferring
Bondholder, with the assistance of the Underwriter which shall have the option, but not the obligation, to
extend such assistance.
Pre-Termination Risk
The Bondholder also has the option to terminate his Bond subscription at any time prior to its Maturity
Date, although there will be some delay in his actual receipt of the principal amount from the time of giving
notice of such termination. Should the Bondholder choose to do so, the Issuer shall return the Bondholders
aggregate principal amount, but without any accrued interest, which shall be paid by the Issuer to the
Bondholder, through the Paying Agent, by way of credit of payment to the Bondholders Designated
Account on the second (2nd) Issue Date from the Payment Date on which the Bond held by the Bondholder
was terminated (about one (1) to two (2) months from giving notice of termination). Accordingly, a
Bondholder who decides to terminate his Bond subscription should take into account that there will be a
delay in his actual receipt of the funds from the time of giving notice of such termination.
41
Reinvestment Risk
Upon the occurrence of certain events such as a change in Philippine tax or regulatory laws or their general
application or interpretation having an effect on the Company, the Bonds could be redeemed in whole but
not in part prior to the Maturity Date. There is no assurance that the Bondholders will be able to reinvest
in alternative securities with comparable yields.
However, the Bonds are marketed to retail investors with the primary objective of purchasing a DMCI
Homes Unit, with investment only as a secondary objective. These Bondholders will be holding the Bonds
in order to accumulate enough savings to be used as downpayment for a DMCI Homes Unit, which is still
subject to availability, and to avail of a discount in the form of the Bonus Credit. For Bondholders who treat
the Bonds as an investment instrument, the Philippines has a highly liquid government securities market
where the Bondholders can choose to reinvest their redemption proceeds in. Should the Bonds be redeemed
prior to maturity, the proceeds can be reinvested in government securities albeit at a likely lower yield.
There is also the risk that Bondholders who elect to apply the Net Bond Proceeds of the Bonds as full or
partial payment of a DMCI Homes Unit may have limited choices depending on the available units for sale
in the future, or no choice at all in case the units are fully sold or there are no ongoing projects for sale. For
instance, the Torre de Manila Project is already 90% sold to date. The One Castilla Place, one of the ongoing
projects of the Company, is 93% sold to date.
The Company believes though that this risk is minimal given that the Company is actively exploring
opportunities for diversification of its property developments in key urban centers in the Northern Luzon
and Mindanao regions.
Default Risk / Credit Risk
The Company will be required to redeem the Bonds on the relevant Maturity Dates. It might be that, on
Maturity Date, the Company does not have sufficient cash on hand or is not able to arrange the financing
to redeem the Bonds in time, or on acceptable terms, or at all. The Companys ability to redeem the Bonds
in such an event may also be limited by the terms of other debt instruments of the Company. The Companys
failure or inability to repay or redeem the Bonds would constitute an event of default under the Bonds,
which could lead to a default under the terms of DMCI-Homes other debt agreements and vice versa.
The issue size of the Bonds is small relative to the Companys total capital and the Company is confident
that it will have the ability to redeem the Bonds come maturity. Any event of default will be detrimental to
the Companys reputation and as such, the Company ensures that all the necessary prudential measures are
being taken to maintain its strong relationships with partner banks/financial institutions and avoid
deterioration in its credit profile or standing. The fact that the Company has not defaulted in any of its
existing financing agreements to date is a confirmation of its strong resolve to maintain its good credit
standing.
Cashflow Risk
Interest payment for the Bonds is accrued annually. However, accrued interest on the Bonds shall only be
remitted or credited to the Bondholders Designated Account at the relevant Maturity Date (depending on
the choice of Payout Option). Accordingly, a Bondholder should consider the opportunity cost that is
concomitant to the deferred payment of accrued interest on the Bonds, such as, for example, foregone
reinvestment opportunities. Bondholders can realize the accrued interest earned on the Bonds prior to the
relevant Maturity Date by applying the proceeds for the purchase of a DMCI Homes Unit.
42
USE OF PROCEEDS
The Offer is primarily targeted to benefit the middle-income market segment. With the Offer, the Company
aims to encourage this segment to save sufficient funds to enable them to own real estate property in the
future. The Company expects to raise aggregate gross proceeds amounting to 500,000,000.00 from the
Second Offer. For a 500,000,000.00 issuance, the Company expects that the net proceeds of the Offering
shall amount to approximately 477,488,225.81, after upfront fees and expenses.
The amounts of the Bonds per Tranche stated below are estimates and are not in any way indicative of the
final amounts of the Bonds per Tranche which will be issued. The actual size per Tranche will be
determined by market demand and will be finalized at the end of the Offer Period. On the basis of the
foregoing estimates, there will be approximately 545 Bondholders for Tranche D Bonds, 80 Bondholders
for Tranche E Bonds, 1,400 Bondholders for Tranche F Bonds and 700 Bondholders for Tranche G Bonds,
each Bondholder investing the minimum aggregate amounts applicable for each Tranche.
Initial Issue Date
Gross Proceeds
Tranche D
20%
Tranche E
5%
Tranche F
50%
Tranche G
25%
Gross Proceeds
at Maturity
Min. aggregate
investment
Max. Amount
of Bondholders
2,725,000.00
36
98,100,000.00
180,000
545
400,000.00
60
24,000,000.00
300,000
80
251,900,000.00
251,900,000.00
180,000
1400
126,000,000.00
126,000,000.00
180,000
700
500,000,000.00
381,025,000.00
The Bonds shall be offered, distributed and sold by the Underwriter on a best efforts basis. Considering the
amount of the proceeds of the Offer expected by the Company, which will be received in the course of sixty
months, such proceeds are not projected to fund any specific transaction but shall be used only for working
capital and general corporate purposes, such as the marketing and administrative expenses of the Company.
The Second Offer is primarily intended to assist retail investors in accumulating savings to be used as
downpayment for a DMCI Homes Unit. Capital raising is only secondary to the foregoing purpose. In the
event the Issuer is unable to raise the 500,000,000.00 Second Offer issue size, the Company shall finance
its working capital and general corporate expenses using internally generated funds.
Estimated total net proceeds from the Initial Offer, covering both the Serial Tranche A and B Bonds and
the Lump Sum Tranche C Bonds, are as follows:
Estimated proceeds from the sale of the Bonds
Less: Estimated expenses
SEC Registration
SEC Registration Fee
SEC Legal Fee
Underwriting and Other Related Fees
Underwriting Fee*
Issue Management Fee*
Selling Fee*
Professional Fees
Trustee, Registry, Collecting Agency Fees
4,032,258.06
4,032,258.06
4,032,258.06
5,000,000.00
915,000.00
2,500,000.00
4,000,000.00
500,000,000.00
812,500.00
8,125.00
43
25,332,399.18
474,667,600.82
Estimated total net proceeds from the Second Offer, covering both the Serial Tranche D and E Bonds and
the Lump Sum Tranche F and Tranche G Bonds, are as follows:
Estimated proceeds from the sale of the Bonds
Less: Estimated expenses
Underwriting and Other Related Fees
Underwriting Fee*
Issue Management Fee*
Selling Fee*
Professional Fees
Trustee, Registry, Collecting Agency Fees
500,000,000.00
4,032,258.06
4,032,258.06
4,032,258.06
5,000,000.00
915,000.00
2,500,000.00
2,000,000.00
22,511,774.18
477,488,225.82
Notes:
*
The Underwriting, Issue Management, and Selling Fees take into account the gross receipts taxes.
** Documentary Stamp Tax documentary stamp tax is imposed upon the issuance of debt instruments issued
by Philippine companies, such as the Bonds, at the rate of 1.00 for each 200.00.
All expenses incurred in connection with the issuance of the Bonds, including SEC registration fees,
documentary stamp tax, fees of the Trustee, Collecting and Paying Agent, Registrar and Calculating Agent,
the Issue Manager and Underwriter, auditors, legal counsels, and other fees and expenses, will be for the
account of the Company.
Documentary Stamp Tax and Underwriting and Other Related Fees are variable expenses which shall
change proportionately to the amount of the Bonds sold. All other expenses apart are considered fixed and
are independent of the amount Bonds sold.
Should there be any significant deviations or adjustments in the use of proceeds as disclosed above, the
Company shall inform the Bondholders, seek approval of the Commission and file an amended Prospectus
before its implementation.
44
PLAN OF DISTRIBUTION
SB Capital Investment Corporation pursuant to the Underwriting Agreement, shall act as the Underwriter
for the Offer and as such, distribute, sell, and underwrite the issue of the Bonds on a best efforts basis,
subject to the satisfaction of certain conditions and in consideration for certain fees and expenses. The
Issuer does not intend to appoint a syndicate or sub-underwriters.
Since the underwriting commitment is on a best efforts basis, the amount that may be raised during the
Second Offer may be less than 500,000,000.00. Notwithstanding that the actual subscription based on
accepted Applications to Purchase is less than the size of the Second Offer of up to 500,000,000.00, Bonds
subscribed and actually paid for by applicants shall be issued by the Issuer on the relevant Issue Date
pursuant to the Description of Terms and Conditions of the Bonds.
The Underwriter does not have the responsibility to take up any Bonds from terminated subscriptions as
described under Description of Terms and Conditions of the Bonds section of this Prospectus. The
Underwriting Agreement may be terminated or suspended by SB Capital under certain circumstances prior
to the issuance of the Bonds and payment being made to the Bondholders of the Net Bond Proceeds.
SB Capital is a Philippine corporation organized in October 1995 as a wholly-owned subsidiary of Security
Bank Corporation. It obtained its license to operate as an investment house in 1996 and is licensed by the
SEC to engage in underwriting and distribution of securities to the public, including the Bonds. SB Capital
provides a wide range of investment banking services including financial advisory, underwriting of equity
and debt securities, project finance, privatizations, mergers and acquisitions, loan syndications, and
corporate advisory services. As of December 31, 2014, its total assets amounted to 894.3 million and its
capital base amounted to 860.9 million. It has an authorized capital stock of 1.0 billion of which
approximately 350.0 million represents its paid-up capital.
The Underwriter may, from time to time, engage in transactions with and perform services in the ordinary
course of business of the Company or any of its subsidiaries. The Underwriter has no direct relations with
the Company in terms of ownership of its major stockholder/s, and has no right to designate or nominate
any member of the Board of Directors of the Company.
For services rendered, the Underwriter will receive fees of up to 2.25% of the aggregate amount of the
Bonds issued, or up to 12,096,774.19 for the value of the Second Offer of the Bonds. Such amount shall
be inclusive of underwriting and selling fees. The Issuer shall enter into separate agreements with the
Trustee, Registrar and Custodian, and the Collecting and Paying Agent, which will set out their respective
fees for this Bond issuance.
Sale and Distribution
The distribution and sale of the Bonds shall be undertaken by the Underwriter who shall sell and distribute
the Bonds to Eligible Bondholders. Nothing herein shall limit the rights of the Underwriter from purchasing
the Bonds for its own account.
No Bonds are designated to be sold to specified persons.
No discounts or commissions shall be paid to broker dealers, and no finders are involved in the distribution
of the Bonds.
46
Offer Period
The Offer Period shall commence at 9:00 a.m. on March 22, 2016 and end at 5:00 p.m. on May 4, 2016 or
such other date as may be determined by the Issuer and the Underwriter.
Application to Purchase
Investors may apply for subscription for the Bonds during the Offer Period by submitting to the Underwriter
a properly completed Applications to Purchase, together with the other documents listed in Clause 1(a) in
the section Description of Terms and Conditions of the Bonds of this Prospectus.
Completed Applications to Purchase must reach the Underwriter prior to the end of the Offer Period, or
such earlier date as may be specified by the Underwriter. Acceptance by the Underwriter of the completed
Application to Purchase shall be subject to the availability of the Bonds and the acceptance by the Issuer.
In the event that payment of the subscription is not made five (5) Business Days prior to Initial Issue Date,
the Application to Purchase shall be automatically canceled and any prior acceptance of the Application to
Purchase is deemed revoked.
An investor may choose to subscribe for any or a combination of Tranche D, Tranche E, Tranche F and
Tranche G Bonds. An investor can choose the investment option during the Offer Period only, and such
choice shall be indicated in the Application to Purchase. Once the Application to Purchase is accepted by
the Issuer, each Eligible Bondholder who subscribes for Tranche D Bonds or Tranche E Bonds shall be
bound to make the payment equivalent to the Monthly Subscription Payment as indicated in the Application
to Purchase, on each Subsequent Issue Date.
Purchase Limits
For the Tranche D Bonds, each Eligible Bondholder shall be required to subscribe to a minimum of 5,000
per monthly Series equivalent to an aggregate amount of 180,000 which shall be paid through monthly
payments over a period of three (3) years or thirty-six (36) months. Tranche D Bonds shall be issued in
multiples of 5,000 per month thereafter.
For the Tranche E Bonds, each Eligible Bondholder shall be required to subscribe to a minimum of 5,000
per monthly Series equivalent to an aggregate amount of 300,000 which shall be paid through monthly
payments over a period of five (5) years or sixty (60) months. Tranche E Bonds shall be issued in multiples
of 5,000 per month thereafter.
For Tranche F and Tranche G Bonds, each Eligible Bondholder shall be required to subscribe to a minimum
of 180,000 and in multiples of 10,000 thereafter.
Bonds subscription is not subject to a maximum amount but priority shall be given to subscriptions of
certain denominations as discussed below.
Allotment of the Bonds
If the Bonds are insufficient to satisfy all Applications to Purchase, the available Bonds shall be allotted in
accordance with the chronological order of submission of properly completed Applications to Purchase on
a first-come, first-served basis, subject to the Issuers right of rejection (as may be exercised through the
Underwriter).
47
For purposes of determining priority for allotment, the amount of the Bonds applied to be purchased by an
Eligible Bondholder in his individual capacity, and in conjunction with another Eligible Bondholder (i.e.,
under an and/or account), respectively, shall be aggregated.
Furthermore, subscriptions of up to 100,000 per monthly Series, or 3,600,000 over three (3) years in the
case of Tranche D Bonds and 6,000,000 over five (5) years in the case of Tranche E Bonds, shall be
prioritized for allotment. Subscriptions of over 100,000 per monthly Series shall be queued and awarded
fully or partially, after subscriptions of up to 100,000 per monthly Series have been awarded. The excess
over 100,000 shall be queued and awarded based on the (i) date and time of submission of the Applications
to Purchase and documentary requirements to the Underwriter, and (ii) original subscription amount as
indicated in the Applications to Purchase.
In the case of Tranche F and Tranche G Bonds, subscriptions of up to 7,000,000 per Eligible Bondholder
shall be prioritized. For subscriptions in excess of 7,000,000 per Eligible Bondholder, the excess shall be
queued and awarded fully or partially, after the subscriptions of up to 7,000,000 have been awarded. The
excess over 7,000,000 shall be queued and awarded based on the (i) date and time of submission of the
Applications to Purchase and documentary requirements to the Underwriter, and (ii) original subscription
amount as indicated in the Applications to Purchase.
Rejection / Refunds
The Issuer has vested unto the Underwriter full discretion to accept or reject any Application to Purchase
which, in the reasonable determination of the Underwriter, is not properly made under the circumstances,
including, but not limited to, the following causes: (i) in the reasonable opinion of the Underwriter, there
exists a legal restriction prohibiting the acceptance or consummation of transactions in respect of an
Application to Purchase; (ii) the Application to Purchase and/or the documentary requirements therefor are
not in order or are not in accordance with the form prescribed and the terms therein; (iii) the applicant
misrepresents or supplies false information in the Application to Purchase, or (iv) no payment is received
within the deadline set out in this Prospectus.
If any application is rejected or accepted in part only, the application money or the appropriate portion
thereof as may have been actually received shall be returned without interest to such applicant through the
Underwriter by way of credit to the applicants Designated Account.
Sale and Distribution
The distribution and sale of the Bonds shall be undertaken by the Underwriter who shall sell and distribute
the Bonds on a best efforts basis to Eligible Bondholders.
Manner of Distribution
The Issuer shall, in its sole discretion, determine the manner by which proposals for subscriptions to, and
issuances of, the Bonds shall be solicited. However, notwithstanding the method of origination selected by
the Issuer, the sale of the Bonds by the Issuer shall be effected only through the Underwriter.
Unclaimed Payments
Any payment for principal and, if applicable, interest, net of the applicable withholding tax, which cannot
be credited to the Designated Account due to dormancy, which Designated Account could not be made
active due to the unavailability of the Bondholder, shall be returned to the Issuer.
48
Secondary Market
The Bonds shall not be traded or listed on any organized exchange. Transfer of the Bonds shall be in its
entirety and may be done over-the-counter only.
Term of Appointment
The engagement of the Underwriter shall subsist so long as the SEC Permit to Sell remains valid, unless
otherwise terminated by the Issuer and the Underwriter.
Register of Bondholders
The Bonds shall be issued in scripless form. A Certificate of Indebtedness representing the Bonds or a
Series thereof shall be issued to and registered in the name of the Trustee on behalf of the Bondholders.
Beneficial title to the Bonds shall be shown in the Register of Bondholders to be maintained by the
Registrar. The names and addresses of the Bondholders and the particulars of the Bonds held by them and
of all transfers of Bonds shall be entered in the Register of Bondholders.
49
1.
a.
Eligible Bondholders
Only Filipino citizens or resident alien individuals, domestic corporations, and resident foreign corporations
are entitled to purchase the Bonds (each an Eligible Bondholder). In the event an Eligible Bondholder is
not a Security Bank accountholder, such Eligible Bondholder shall be required to open an account with
Security Bank prior to subscription. Foreign individuals and corporations shall be required to submit their
respective alien certificates of registration or license to do business in the Philippines, as the case may be,
as proof of residence in the Philippines.
Each Eligible Bondholder shall submit the following documents to the Underwriter:
A.
(2)
(3)
(4)
Photocopy of at least two (2) valid and subsisting identification cards issued by an official
authority, such as:
i.
(a) passport; (b) drivers license; (c) Social Security System identification card; (d)
Government Service and Insurance System (GSIS) e-Card; (e) Professional
Regulatory Commission identification card; (f) Company identification cards
issued by private entities or institutions registered with or supervised or regulated
by BSP, SEC or Insurance Commission (IC); and
ii.
*For existing clients of Security Bank, the Eligible Bondholder need not submit item 3 above.
B.
(2)
(3)
(4)
Photocopy of at least two (2) valid and subsisting identification cards of the authorized
signatory(ies) of the corporation issued by an official authority, such as:
i.
(a) passport; (b) drivers license; (c) Social Security System identification card; (d)
Government Service and Insurance System (GSIS) e-Card; (e) Professional
Regulatory Commission identification card; (f) Company identification cards
issued by private entities or institutions registered with or supervised or regulated
by BSP, SEC or Insurance Commission (IC); and
51
ii.
(5)
Certified true copy of the articles of incorporation and by-laws or equivalent charter or
constitutive documents of the Eligible Bondholder with the Certificate of Registration and
latest Certificate of Amendment of Articles of Incorporation and By-Laws issued by SEC
(if any);
(6)
For resident foreign corporations, certificate of registration or branch license of the Eligible
Bondholder issued by the SEC; and
(7)
Original notarized certificate issued by the corporate secretary or other authorized officer
of the Eligible Bondholder (a) attesting to the Eligible Bondholders authority to acquire
the Bonds (whether by original subscription, assignment or donation), and to execute, sign
and deliver any and all documents, and perform any and all acts, in relation to the Bonds,
and (b) certifying the names, titles, signing procedures and specimen signatures of its
authorized signatories for such Eligible Bondholder.
*For an existing client of Security Bank, the Eligible Bondholder need not submit item 3 above.
C.
pertinent documents (such as the letter, ruling or opinion of the BIR) evidencing its taxexempt status, duly certified as true copy by the relevant office of the BIR;
(ii)
a letter from the Eligible Bondholder addressed to the Issuer and the Registrar, requesting
both the Issuer and the Registrar not to make any withholding or to apply the applicable
lower withholding tax on said Eligible Bondholders interest income; and
(iii)
Notwithstanding the submission of the above documents upon application, the Issuer or the
Registrar may, at its own discretion, require the Bondholder to submit on or around the time of the
actual payment of interest an update of the documents described in (i) above to ensure the
continuing tax-exempt status of such Bondholder.
b.
For Tranche D Bonds, each Eligible Bondholder shall be required to subscribe to the Bonds at a minimum
amount of 5,000 monthly for thirty-six (36) consecutive months equivalent to the aggregate amount of
180,000, and in multiples of 5,000 per month thereafter.
For Tranche E Bonds, each Eligible Bondholder shall be required to subscribe to the Bonds at a minimum
amount of 5,000 monthly for sixty (60) months equivalent to the aggregate amount of 300,000, and in
multiples of 5,000 per month thereafter. The Serial Bonds shall not be subject to any maximum
52
subscription amount, however, priority shall be given to aggregate subscriptions amounting to 3,600,000
and less (equivalent to 100,000 per monthly Series and less) for Tranche D Bonds and aggregate
subscriptions amounting to 6,000,000 and less (equivalent to 100,000 per monthly Series and less) for
Tranche E Bonds.
For Tranche F and Tranche G Bonds, each Eligible Bondholder shall be required to subscribe to the Bonds
at a minimum amount of 180,000, and in multiples of 10,000 thereafter. The Lump Sum Bonds shall not
be subject to any maximum subscription amount but subscriptions of 7,000,000 and less shall be
prioritized for allocation.
For purposes of determining priority for allocation, the amount of the Bonds applied to be purchased by an
Eligible Bondholder in his individual capacity, and in conjunction with another Eligible Bondholder (i.e.,
under an and/or account), respectively, shall be aggregated.
An Eligible Bondholder may choose to subscribe for any or a combination of Tranche D, Tranche E,
Tranche F, and Tranche G Bonds. An investor can choose the investment option during the Offer Period
only, and such choice shall be indicated in the Application to Purchase. Once the Application to Purchase
is accepted by the Issuer, each Eligible Bondholder who subscribes for Tranche D Bonds or Tranche E
Bonds shall be bound to make the payment equivalent to the Monthly Subscription Payment as indicated in
the Application to Purchase, on each Payment Date.
2.
a.
The Bonds or each Series thereof in the case of Serial Bonds will be represented by a Certificate of
Indebtedness to be issued and registered in the name of the Trustee for the benefit of the Bondholders in an
amount equivalent to the aggregate principal amount of such Series. The Issuer shall deliver to the Trustee
for the authentication by the latter the duly executed Certificate of Indebtedness for the relevant Series of
the Bonds. The Trustee shall thereupon deliver to the Custodian, for the latters custody and on behalf of
the Bondholders, each duly executed and authenticated Certificate of Indebtedness.
b.
Title
The beneficial interest of each Bondholder in and to the Bonds or Series thereof will be shown on and
recorded in the Register of Bondholders maintained by the Registrar. The Registrar shall issue a Registry
Confirmation in respect of the Bonds or Series thereof to each Bondholder whose beneficial interest therein
is recorded in the Register of Bondholders. A Registry Confirmation shall be deemed cancelled upon the
registration of a transfer of the Bonds, in the event of Termination, Early Payment Application and other
instances of termination or redemption.
c.
Transfers
The Bonds will not be listed or traded in any organized exchange. Despite the Bonds not being listed on
any exchange, the Bondholder can freely sell the Bonds over-the-counter, either at a premium or a discount,
depending on the price negotiated with the transferee bondholder. Any such transfer may be made either
with or without the assistance of the Underwriter which shall have the option, but not the obligation, to
extend such assistance.
53
Any transfer of the Bonds will be effective only upon the registration and recording by the Registrar of such
assignment or transfer in the Register of Bondholders. Transfers shall be made in accordance with Clause
10 hereof.
3.
TERMS OF PAYMENT
The Eligible Bondholder/Bondholder shall be required to effect payment of its subscription to the first
Series of the Serial Bonds, or the Lump Sum Bonds not later than five (5) Business Days prior to the Initial
Issue Date, and to each Series thereafter on each Subsequent Issue Date (or each Payment Date) for such
Series. The Eligible Bondholder/Bondholder shall ensure that the Designated Account contains, on each
relevant Payment Date, clear, withdrawable, and freely available funds in an amount not less than (a) in
respect of Tranche D and Tranche E Bonds, the Monthly Subscription Payment, and (b) in respect of
Tranche F and Tranche G Bonds, the Lump Sum.
To facilitate collection, payment by an Eligible Bondholder/Bondholder for the principal amount of such
Eligible Bondholder/Bondholders subscription shall be collected from the Eligible
Bondholder/Bondholder using the Collecting Agents automatic debit arrangement facility.
In the event the Eligible Bondholder is not a Security Bank accountholder, such Eligible Bondholder shall
be required to open an account with Security Bank together with the submission of the Application to
Purchase (the Designated Account). As a Security Bank accountholder, the Eligible
Bondholder/Bondholder will also be required to comply with the required minimum daily balance
prescribed by Security Bank depending on the type of account opened.
The Application to Purchase shall incorporate an automatic debit authority authorizing the Collecting Agent
to debit or cause the debit of the Eligible Bondholder/Bondholders payment for each Series of the Bonds
to be issued. For this purpose, upon submission of an Application to Purchase, each Eligible
Bondholder/Bondholder shall be deemed to have irrevocably authorized the Collecting Agent to debit
payments for the purchase of the Bonds (including the Monthly Subscription Payments and, as applicable,
the Penalty Interests), pursuant to the terms and conditions of the Bonds.
Upon acceptance by the Issuer of the Application to Purchase, the Designated Account shall be debited for
the payment of the Bonds in such amounts and in such times as indicated in the first paragraph of this
Clause 3.
In the event that the Collecting Agent is unable to debit / cause the debit of the Bondholders Designated
Account by reason of insufficiency of clear, withdrawable, and freely available funds for payment of the
Bondholders subscription to any Series (other than the first Series) on the relevant Payment Date thereof:
a.
the Bondholder shall be entitled to effect payment by way of automatic debit arrangement, but
subject to the payment of a penalty interest thereon in the amount equal to 0.70 per day for every
5,000.00, computed against any remaining unpaid payment on the principal (the Penalty
Interest) within a grace period of four (4) days from the relevant Payment Date other than the first
Payment Date (the First Grace Period). For this purpose, the Collecting Agent shall be authorized
to debit from the Bondholders Designated Account on any day of the First Grace Period the amount
representing the principal amount or any unpaid portion the Bondholders subscription for such
Series plus Penalty Interest; and
in the event that the Collecting Agent is unable to debit the Bondholders Designated Account by
reason of insufficiency of clear, withdrawable, and freely available funds for payment of the
Bondholders subscription to any Series (other than the first Series) up to the last day of the First
54
Grace Period, the Bondholder shall be entitled to effect payment from the day immediately
succeeding the First Grace Period up to the last day of the month on which the relevant Payment
Date falls (the Second Grace Period), provided that clear, withdrawable, and freely available
funds for payment hereunder should be available no later than 4:00 P.M. of the last day of the
Second Grace Period. For this purpose, the Collecting and Paying Agent shall be authorized to
debit from the Bondholders Designated Account on any day of the Second Grace Period the
amount representing the principal amount or any unpaid portion of the Bondholders subscription
for such Series plus Penalty Interest.
The First Grace Period and the Second Grace Period are also referred to herein as the Grace Periods.
In the event that the Collecting Agent is unable to receive payment from the Bondholder either on the
Payment Date or within the Grace Periods, the amount corresponding to the Bondholders subscription to
any Series on the relevant Payment Date thereof, plus Penalty Interest thereon as applicable, the holding of
the Bonds by, and the registration of the Bonds in the name of, the Bondholder shall be deemed terminated
and its subscription rights shall be deemed cancelled without need for any further act or notice.
A Bondholder shall not be allowed to request for accelerated acceptance of Monthly Subscription Payments.
For this purpose, while any deposit (in addition to the Monthly Subscription Payment) may be made at any
time to the Designated Account, no advance Monthly Subscription Payment (in respect of Tranche D and
Tranche E Bonds) shall be accepted, and the Collecting Agent shall not be authorized to debit from the
Designated Account such advance Monthly Subscription Payments in respect of future Payment Dates. The
amount to be deducted from the Designated Account on every Payment Date shall be equivalent to the
Monthly Subscription Payment due on such date as indicated in the Application to Purchase and, as
applicable, Penalty Interest.
4.
INTEREST
The Bonds or each Series thereof shall bear interest on its principal amount from and including the Issue
Date thereof at a fixed rate per annum as stipulated below.
Tranche D Bonds shall bear interest on its principal amount from and including the Issue Date thereof, at a
fixed rate of 4.75% per annum. Tranche E Bonds shall bear interest on its principal amount from and
including the Issue Date thereof, at a fixed rate of 5.25% per annum. Tranche F Bonds shall bear interest
on its principal amount from and including the Issue Date thereof, at a fixed rate of 4.75% per annum.
Tranche G Bonds shall bear interest on its principal amount from and including the Issue Date thereof, at a
fixed rate of 5.25% per annum. Interest will accrue annually but will not be compounded and shall be
payable only on Maturity Date, less the amount of any applicable withholding taxes.
Except as provided in Clause 5, the Bonds will cease to bear interest from and including the relevant
Maturity Date, unless: (a) payment of principal and interest then outstanding, net of applicable withholding
taxes, is not made; or (b) payment is improperly withheld or refused.
Interest shall be computed on the basis of a three hundred sixty (360)-day year consisting of twelve (12)
months of thirty (30) days each, and in the case of an incomplete month, the number of days elapsed on the
basis of a month of thirty (30) days. Interest shall not be compounded and shall be payable by the Issuer on
Maturity Date (depending on choice of Payout Option) or on the Early Payment Application, as may be
applicable, less the amount of any applicable withholding tax.
5.
Unless otherwise terminated or redeemed earlier, the Bonds shall be redeemed at par or 100% of face value
on their respective Maturity Dates.
The sum of the principal amount of the Bonds plus accrued interest thereon, net of applicable withholding
taxes payable on the Maturity Date (Net Bond Proceeds), shall be paid on Maturity Date either, at the
option of the Bondholder, (a) by application to the full or partial payment for the purchase by the
Bondholder of a DMCI Homes Unit (as defined below) of the Bondholders choice, or (b) by way of
delivery of the lump sum amount to the Bondholder (each a Payout Option), as follows:
a.
Payout Option 1 - Application as Payment for the Purchase of a DMCI Homes Unit
The Bondholder may opt to apply Net Bond Proceeds to the full or partial payment of a DMCI
Homes Unit, subject in any case to applicable nationality restrictions on ownership of lands and
availability of the DMCI Homes Unit at the time of payment application.
If the Net Bond Proceeds covers only the partial payment of a DMCI Homes Unit, the Bondholder
may only avail of Payout Option 1 if such Bondholder has reasonably demonstrated that he/she is
able to fully pay, or obtain firm bank or in-house financing on terms acceptable to the Issuer, based
on the independent credit evaluation of the third party providing the financing, for the portion of
the purchase price of the DMCI Homes Unit not covered by the Net Bond Proceeds at the time of
the payment application.
Under this Payout Option 1, the Bondholder would be entitled to a Bonus Credit, in addition to the
aggregate accrued interest earned on the Bonds.
The Bonus Credit is a notional credit given to the Bondholder in case such Bondholder decides to
apply the Net Bond Proceeds of the Bonds owned by such Bondholder as payment for a DMCI
Homes Unit. A Bondholder shall be entitled to the Bonus Credit equivalent to a percentage of the
aggregate principal amount of the Bonds held by the Bondholder at the time of the payment
application, subject to the following conditions:
(i)
For Tranche D and Tranche E Bonds, five percent (5.0%) if availed less than one (1) year
from the Initial Issue Date, and ten percent (10%) if availed at least one (1) year after the
Initial Issue Date; and
(ii)
For Tranche F and Tranche G Bonds, ten percent (10%) regardless when the Bonus Credit
is availed of.
For the avoidance of doubt, the Bonus Credit shall not be based on the Net Selling Price. The
Bonus Credit shall in no case be more than the Maximum Bonus Credit, which is the lower of (a)
ten percent (10%) of the aggregate principal amount of the Bonds held by the Bondholder and (b)
four percent (4%) of the Net Selling Price of the DMCI Homes Unit selected by the Bondholder.
The Net Selling Price refers to the list price of the DMCI Homes Unit, less applicable discounts; it
excludes the value-added tax and other applicable charges on the sale of property.
The Bondholder shall be given sixty (60) days from the relevant Maturity Date to select a DMCI
Homes Unit to which to apply the Net Bond Proceeds. Interest shall accrue on the principal amount
of the Bonds during such sixty (60)-day period at the Interest Rate applicable to the relevant
Tranche of the Bond. In the event that no DMCI Homes Unit is selected on or before the end of
56
the sixtieth (60th) day from Maturity Date, the total principal plus interest earned until the sixtieth
(60th) day after Maturity Date, net of applicable withholding taxes, shall be credited back to the
Bondholders Designated Account on (and no earlier than) the third (3rd) Business Day after the
said sixtieth (60th) day (the Final Settlement Date). A Bondholder may not, for the duration of
the sixty (60)- day period, redeem any amount on any date except on Final Settlement Date.
b.
No later than ninety (90) days prior to Maturity Date, a letter together with reply forms requesting the
Bondholders to express their preferred payout option shall be sent to all Bondholders. In the event no reply
is received by the Trustee from the Bondholder on or before the last Issue Date, then it shall be assumed
that the payout preference of the Bondholder is Payout Option 1.
The Bondholder shall coordinate with the Collecting Agent and the Trustee, who shall assist the Bondholder
in the settlement of all matters relating to both Payout Options after Maturity Date.
For purposes of communicating the Bondholders choice of Payout Option, upon submission of the
Application to Purchase, the Bondholder shall be deemed to have authorized the Issuer and the Trustee to
accept and act upon the Bondholders instructions indicating a payout option set out in an original or
facsimile document sent to the Trustee.
6.
At any time prior to Maturity Date, the Bondholder may opt to apply the sum of the aggregate principal
amount of the Bonds held by it plus accrued interest thereon as of Early Payment Application, but net of
applicable withholding tax (the Early Payment Proceeds), as full or partial payment of a DMCI Homes
Unit of the Bondholders choice, such application of payment to be made to the extent of such sum. In
such an event, the Bonds or a Series thereof, registered in such Bondholders name as well as the
subscriptions by such Bondholder to any and each Series of the Bonds that have been issued (in the case of
Serial Bonds) shall be deemed terminated and cancelled. However, the Bondholder may avail itself of this
Early Payment Application only if (a) such Bondholder has reasonably demonstrated that he/she is able to
fully pay, or obtain firm bank or in-house financing, subject to the independent credit evaluation of the
party providing the financing and on terms acceptable to the Issuer, for the portion of such purchase price
not covered by the aforesaid sum at time of payment application; and (b) the DMCI Homes Unit of the
Bondholders choice is available on the effectivity of the Early Payment Application, subject to the
nationality restrictions on ownership of lands.
Should the Bondholder exercise this option, the Bondholder would be entitled to a Bonus Credit, in addition
to the accrued interest on the Bonds. The Bonus Credit shall be deducted from the Net Selling Price and
shall be subject to the Maximum Bonus Credit.
7.
57
The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, upon giving
not less than thirty (30) nor more than sixty (60) days notice to the Bondholders, through the Trustee
(which notice shall be irrevocable), at their principal amount, subject to payment of accrued interests by the
Issuer, as will result in the receipt by the Bondholders, after payment of the additional or increased taxes,
if any, of the amount that would have been received by them as of the date of redemption if such additional
or increased taxes had not been required, if:
a.
prior to the giving of such notice, the Issuer determines and provides the Trustee an opinion of legal
counsel or written advice of a qualified tax expert, reasonably acceptable to the Trustee, that it has
or will become obliged to pay additional taxes as a result of any change in, or amendment to, the
laws or regulations of the Philippines or any political subdivision or any authority thereof or therein
having power to tax, or any change in the application or official interpretation of such laws or
regulations, which change or amendment becomes effective on or after the Initial Issue Date, and
b.
such obligation cannot be avoided by the Issuer taking reasonable measures available to it, provided
that no such notice of redemption shall be given earlier than ninety (90) days prior to the earliest
date on which the Issuer would be obliged to pay such additional amounts.
Prior to giving notice of redemption, the Issuer shall deliver to the Trustee a certificate signed by two (2)
directors of the Issuer stating that the obligation referred to in (a) above cannot be avoided by the Issuer
taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as
sufficient evidence of the satisfaction of the condition precedent set out in (b) above, in which event it shall
be conclusive and binding on the Bondholders.
For the avoidance of doubt, the right of the Issuer to redeem the Bonds may be exercised prior to the Issuer
becoming obliged to pay the additional or increased taxes. Upon redemption, the Issuer shall not be liable
for any additional or increased taxes which it has not yet become obliged to pay on or prior to the date of
redemption.
8.
If any provision of the Trust Agreement or any of the related documents is or shall become, for any reason,
invalid, illegal, or unenforceable, or to the extent that it shall become, for any reason, unlawful for the Issuer
to give effect to its rights or obligations hereunder, or to enforce any provisions of the Trust Agreement or
any of the related documents in whole or in part, or any law shall be introduced to prevent or restrain the
performance by the parties thereto of their obligations under the Trust Agreement or any other related
agreements, the Issuer shall provide the Trustee an opinion of a legal counsel reasonably acceptable to the
Trustee confirming the foregoing. Thereupon, the Trustee, upon notice to the Issuer, shall declare the
principal of the Bonds, including all accrued interest and other charges thereon, if any, to be immediately
due and payable, and upon such declaration, the same shall be immediately due and payable without any
pre-payment penalty, notwithstanding anything in the Trust Agreement or in the Bonds to the contrary.
9.
TAXATION
Except for (a) tax on a Bondholders interest income on the Bonds which is required to be withheld by the
Issuer, and (b) capital gains tax, documentary stamp tax, and other taxes on the transfer of Bonds (whether
by assignment or donation), if any and as applicable, which are for the account of the Bondholder, all
payments of principal and interest shall be made free and clear of any deductions or withholding for or on
account of any present or future taxes or duties imposed by or on behalf of the Republic of the Philippines
or any political subdivision, agency or instrumentality thereof, including, but not limited to, issue,
registration, or any similar tax or other taxes and duties, including interest and penalties. In the event that
58
such taxes or duties are imposed, the same shall be for the account of the Issuer; provided, however, that,
the Issuer shall not be liable for, and will not gross-up the payments of interest on the principal amount of
the Bonds so as to cover any final withholding tax applicable on interest earned on the Bonds prescribed
under the National Internal Revenue Code of 1997, as amended, and its implementing rules and regulations.
Documentary stamp tax on the original issue of the Bonds shall be for the Issuers account.
A Bondholder who is exempt from or is not subject to final withholding tax on interest income may claim
such exemption by submitting to the Underwriter, together with its Application to Purchase: (i) pertinent
documents evidencing its tax-exempt status, duly certified as true copy by the relevant office of the BIR;
(ii) a letter addressed to the Issuer and the Registrar, requesting both the Issuer and the Registrar not to
make any withholding on said Bondholders interest income; and (iii) an indemnity undertaking wherein
the Bondholder shall undertake to indemnify the Issuer for any tax or charge that may later on be assessed
against the Issuer on account of the non-withholding of tax on the Bond held by such Bondholder.
The tax status of a Bondholder may vary depending upon such persons particular situation and certain
Bondholders may be subject to special rules not discussed above. This summary does not purport to address
all the aspects that may be important and/or relevant to a Bondholder. Bondholders are advised to consult
their own tax advisers on the ownership and disposition of the Bonds, including the applicability and effect
of any state, local or foreign tax laws.
10.
a.
Register of Bondholders
The beneficial interest of each Bondholder in and to the Bonds will be shown on and recorded in the
Register of Bondholders maintained by the Registrar.
Any subsequent change to the information once recorded by the Registrar in its Register of Bondholders
on the Initial Issue Date shall require the written authorization of the relevant Bondholder. The Underwriter
shall receive from the Bondholders all notices relating to a change in any of the information set out in the
documents submitted under Clauses 1(a) and 10(b) of this section, and transmit such notices (endorsed by
the Trustee and the Underwriter) to the Paying Agent within five (5) Business Days from the Underwriters
receipt of notice thereof for appropriate action by the Paying Agent and thereafter the Custodian and
Registrar.
Transfers of the Bonds will also be effected through the Registrar, such that any assignment or transfer of
a beneficial interest in the Bonds will be effective only upon the registration and recording by the Registrar
of such assignment or transfer in the Register of Bondholders.
b.
Transfers
The Bonds will not be listed or traded in any organized exchange, but may be traded over-the-counter only.
Any transfer by a Bondholder (the Transferring Bondholder) of its beneficial interest in the Bonds
(whether by assignment or donation) shall be allowed only if made in full and inclusive of: (i) the title and
interest of the Bondholder in and to each Series which have been issued as of the transfer date, and (ii)
subscription rights to each Series which will be issued subsequent to the transfer date. A partial transfer of
title, interest and rights of the Bondholder shall not be allowed.
59
Any and all taxes, as well as settlement fees and other charges (other than registration fees which shall be
paid by the Issuer) that may be imposed by the Registrar in respect of any transfer or change of beneficial
title to the Bonds, including the settlement of documentary stamps taxes, if any, shall be for the account of
the Transferring Bondholder, unless such cost is otherwise assumed by the transferee in writing under the
terms of the relevant transfer agreement executed between the Transferring Bondholder and its transferee.
The following documents (constituting the Transfer File) shall be submitted to the Underwriter on or before
the seventh (7th) Business Day following the end of the month in which the transferee Bondholder last paid
for its subscription to the Bonds in order to effect the transfer of the Bonds (and avoid a Forced Termination)
on the Subsequent Issue Date:
A.
B.
11.
Written instructions from the Transferring Bondholder, in the form provided by the
Underwriter;
(2)
Written consent of the transferee to be bound by the terms and conditions of the Bonds, in
the form provided by the Underwriter;
(3)
Original or certified true copy of the notarized document evidencing the transfer of the
Bonds (whether by assignment or donation);
(4)
(5)
From the transferee, the documents listed in Part A and, if applicable, Part C of Clause 1(a)
of these Conditions.
(2)
Proof of acceptance of the donation; provided that, if the transferee is a minor, the
acceptance of the donation of the Bonds should be made by the transferees parents or legal
guardian on his or her behalf, in which case documents showing the relationship between
the transferee and his or her parents or guardians must likewise be submitted;
(3)
(4)
Undertaking of the transferee to hold the Registrar, the Issuer and the Underwriter free and
harmless from and against any liability whatsoever arising from or in connection with the
transfer of the Bonds pursuant to the donation, in the form provided by the Underwriter.
TERMINATION
60
The termination of the Bonds subscription by the occurrence of any of the following events, shall cause the
Issuer to pay the principal amount prior to the relevant Maturity Date to the Bondholder or to the estate of
the deceased Bondholder as the case may be:
a.
Forced Termination
In the event that the Collecting Agent fails to receive payment of the amount corresponding to a
Bondholders subscription to any Series, plus Penalty Interest thereon as applicable, on the relevant
Payment Date thereof or within the applicable Grace Periods, the holding of the Bonds by, and the
registration of the Bonds in the name of, the Bondholder shall be deemed automatically terminated
and the subscriptions of the Bondholder to all the unissued Series of the Bonds (in the case of
Tranches D and E) shall be deemed automatically cancelled. In such case, the Bondholder shall be
entitled to receive from the Issuer, and the Issuer shall pay the Bondholder, through the Paying
Agent, the principal amount of the Bonds held by such Bondholder. Any accrued interest on the
principal amount of the Bonds shall be forfeited as pre-termination penalty (Pre-Termination
Penalty). Payment shall be delivered by the Paying Agent to the Bondholder by way of credit of
payment to the Bondholders Designated Account on the next Subsequent Issue Date. This period
may be extended should the Issuer or the Paying Agent be unable to pay the principal amount of
the Bonds held by the Bondholder for causes not attributable to the Issuer or the Paying Agent, as
the case may be.
b.
c.
In the event of a Termination, the Bondholder may, from the end of the Grace Periods up to four (4)
Business Days immediately preceding the next Subsequent Issue Date, find a replacement Bondholder who
will pay for the total principal amount (and assume ownership) of the Bonds previously held by the original
61
Bondholder and subscribe to the remaining Series of the Bonds held by the latter (in the case of Tranches
D and E). Any transfer of Bonds may be made either at a premium or a discount, depending on the price
negotiated between the transferring Bondholder and the transferee. Any such transfer may be made, upon
the request of the transferring Bondholder, with the assistance of the Underwriter which shall have the
option, but not the obligation, to extend such assistance. Capital gains tax, documentary stamp tax and other
taxes, if any, arising from the transfer of the Bonds pursuant to this subsection shall be for the account of
the original Bondholder or the transferee Bondholder, as the case may be.
Should the Bondholder fail to find a replacement Bondholder within the aforesaid period (with or without
the assistance of the Underwriter), the Bonds held by such original Bondholder shall be automatically
retired.
The Issuer, the Trustee, the Collecting Agent and the Underwriter are not under any obligation to inform
any Bondholder of any due date for payment of any subscription to a Series, or failure of the Bondholder
to deliver payment on the relevant due date thereof.
12.
CREDIT RATING
On the ground that the Bond issuance does not amount to more than twenty-five percent (25%) of the
Issuers net worth (among other reasons), the Company applied for exemption from the requirement of
being rated by a rating agency accredited by the SEC under SRC Rule 12-1(6)(c)(iii) of the Amended
Implementing Rules and Regulations of the Securities Regulation Code. In its meeting on June 2, 2015, the
SEC en banc resolved to grant the Companys request for relief from the submission of a credit rating report
relative to its intended issuance of P1,000,000,000.00 worth of bonds.
13.
RANKING
The Bonds constitute direct, unconditional, unsecured, and unsubordinated Peso-denominated obligations
of the Issuer ranking pari passu in all respects and ratably without any preference or priority (except for
any statutory preference or priority applicable in the winding-up of the Issuer) amongst themselves and
with all other outstanding unsecured and unsubordinated obligations (contingent or otherwise, present and
future) of the Issuer.
14.
FINANCIAL COVENANTS
Until redemption or payment in full of the aggregate outstanding principal amount of the Bonds, the Issuer
hereby covenants and agrees with the Trustee that, unless the Majority Bondholders shall otherwise consent
in writing:
(a) its Debt to Equity Ratio shall not, at any time, exceed 3.2:1 as referenced from its balance sheet on
each Testing Date;
(b) its Current Ratio, shall not at any time, be less than 1.75:1 as referenced from its balance sheet on
each Testing Date.
Debt to Equity Ratio means the ratio of the Issuers total liabilities to its total stockholders equity, as
reflected in the latest unaudited semi-annual financial statements ending June 30 and audited financial
statements ending December 31.
62
Current Ratio means the Issuers current assets divided by the current liabilities as reflected in the
Issuers latest available audited semi-annual financial statements ending June 30 and audited financial
statements ending December 31.
Testing Date means (i) with respect to any December 31 audited financial statements of the Issuer, April
30 of the succeeding year, and (ii) with respect to any June 30 unaudited semi-annual financial statements
of the Issuer, August 30 of the same year.
15.
NEGATIVE PLEDGE
Until redemption or payment in full of the aggregate outstanding principal amount of the Bonds, the Issuer
covenants and agrees that it shall not, without the prior written consent of the Majority Bondholders, directly
or indirectly incur or suffer to exist any Security Interest other than any Permitted Security Interest upon
any of its assets, or enter in to any loan facility agreement secured by or to be secured by a Security Interest
other than a Permitted Security Interest upon any of its assets, unless it has made or will make effective
provision, whereby the Security Interest thereby created will secure, on an equal first ranking and ratable
basis, any and all the obligations of the Issuer hereunder and such other Financial Indebtedness which such
Security Interest purports to secure.
Security Interest means a mortgage, charge, pledge, lien, encumbrance, or preferential arrangement
creating preference in payment of any indebtedness whether or not creating or constituting a security
interest on or with respect to any asset or revenue of the Issuer.
Permitted Security Interest means the following:
(i)
Any Security Interest over any asset purchased, leased, or developed in the ordinary course of
business to secure the payment of the purchase price or the cost of leasehold rights of such asset or
the cost and expenses for the development of such asset pursuant to any development made or being
made by the Issuer in the ordinary course of business;
(ii)
Any Security Interest created for the purpose of paying current taxes, assessments, or other
governmental charges which are not delinquent or remain payable without any penalty unless the
Issuer is contesting the validity thereof in good faith by appropriate proceedings and adequate
reserves having been provided for the payment thereof;
(iii)
Any Security Interest to secure: (1) statutory obligations; (2) surety or appeal bonds; (3) bonds for
release of attachment, stay of execution or injunction; (4) performance of bids, tenders, contracts
(other than for the repayment of Financial Indebtedness) or leases in the normal course of the
Issuers business; or (5) judgment liens;
(iv)
Any Security Interest: (1) imposed by law, such as materialmens, carrier's, warehousemen's,
lessors and mechanics' liens and other similar liens arising in the ordinary course of business; (2)
under workmen's compensation laws, unemployment insurance, old age pensions or other social
security or retirement benefits or similar legislation; or (3) arising out of set-off provisions in other
agreements of the Issuer relating to its indebtedness;
(v)
Any Security Interest in favor of banks, insurance companies, other financial institutions, and
Philippine government agencies, departments, authorities, corporations or other juridical entities,
which secure a preferential financing obtained by the Issuer under a governmental program under
which creation of a security is a prerequisite in order to obtain such financing, and which cover
assets of the Issuer which have an aggregate appraised value, determined in accordance with PFRS
63
not exceeding six percent (6%) of the Issuers total assets based on the most recent interim financial
statements;
(vi)
Any Security Interest constituted for the purpose of guaranteeing a Subsidiary's obligation in
connection with any contract or agreement (other than for Financial Indebtedness) that has been
assigned to such Subsidiary by the Issuer as part of the Issuers ordinary course of business;
(vii)
Any Security Interest to be constituted on the assets of the Issuer after the date of the Trust
Agreement, which is disclosed in writing by the Issuer to the Bondholders prior to the execution of
the Trust Agreement and with the aggregate loan accommodation not exceeding the equivalent of
ten percent (10%) of the market value of the consolidated assets of the Issuer as reflected in the
latest appraisal report submitted by an independent and reputable appraiser;
(viii)
Zoning restrictions, easements, rights of way, licenses, reservations, restrictions on the use of real
property or minor irregularities incident thereto which do not in the aggregate materially detract
from the value or use of the property or assets of the Issuer or impair, in any material manner, the
use of such property for the purposes for which such property is held by the Issuer; and
(ix)
In relation to any instances not covered above, Security Interest created with the prior consent of
Majority Bondholders.
16.
EVENTS OF DEFAULT
The Issuer shall be considered in default under the Bonds and the Trust Agreement in case any of the
following events (each an Event of Default) shall occur and is continuing (whether or not caused by any
reason whatsoever outside the control of the Issuer):
a.
Payment Default
The Issuer fails to pay when due and payable any principal or interest in respect of the Bonds which
the Issuer is obliged to pay to the Bondholders under the Trust Agreement and the Bonds in the
manner, at the place, and in the currency in which it is expressed to be payable, and is not remedied
within five (5) Business Days from receipt by the Issuer of written notice of such non-payment
from the Trustee; provided, however, that, the amount due for payment during the foregoing
remedy period shall not be subject to the any interest.
The Issuer fails to pay when due and payable any other amount payable by the Issuer in respect of
the Bonds and under the Trust Agreement in the manner, at the place, and in the currency in which
it is expressed to be payable, and such non-payment continues for thirty (30) days from the date
such payment is due.
b.
Representation/Warranty Default
Any representation and warranty of the Issuer hereof and in the Trust Agreement or any certificate
or opinion submitted pursuant hereto proves to have been untrue, incorrect or misleading in any
material respect as and when made or deemed repeated and the failure of such representation,
warranty or statement to be true and accurate when made could reasonably be expected to have a
Material Adverse Effect.
64
c.
Other Default
The Issuer is in breach, or fails to perform, or violates any other provision or term of the Trust
Agreement and the Bonds, and such breach, failure or violation is not remediable or, if remediable,
continues to be unremedied after the applicable grace period, or in the absence of such grace period,
after thirty (30) days from the date of occurrence of the said violation and the breach, failure or
violation could reasonably be expected to have a Material Adverse Effect.
d.
Cross Default
Any obligation of the Issuer under a contract executed by it with any bank, financial institution, or
other person for the payment of Financial Indebtedness, with a principal amount of at least
500,000,000.00 (or its equivalent from time to time in other currencies), is not paid when due,
except obligations that are subject to dispute in good faith by the Issuer through appropriate
proceedings and for which adequate reserves have been provided for the payment thereof, or a
default shall have occurred in the performance or observance of any instrument or agreement
pursuant to which the foregoing obligations were created, the effect of which is to cause, entitle, or
permit such obligation to become due prior to its stated maturity.
e.
Expropriation Default
The Republic of the Philippines or any competent authority thereof takes any action to suspend all
or substantially all of the operations of the Issuer and to condemn, seize, nationalize, or appropriate
(either with or without compensation) the Issuer or all or substantially all its properties or assets,
unless disputed by the Issuer in good faith through appropriate action or proceeding and such action
or proceeding is dismissed or terminated within ninety (90) days from the filing thereof.
f.
Insolvency Default
(i)
Any step is taken by any person to obtain an order (other than steps taken by a third party
where such steps are frivolous or vexatious and the relevant application or petition is
dismissed within ninety (90) days), or any order is made by any competent court, or a
resolution is passed by the Issuer for the appointment of a liquidator, receiver or trustee of
the Issuer or of all or a substantial part of its assets, or the commencement of insolvency
proceedings by the Issuer, save for the purposes of amalgamation or reorganization not
involving insolvency the terms of which shall have received the prior written approval of the
Majority Bondholders;
(ii)
the Issuer admits in writing its inability to pay its Financial Indebtedness as they fall due or
makes a general assignment for the benefit of or composition with its creditors or is
adjudicated or found bankrupt or insolvent; and
(iii) the Issuer commences or concludes negotiations with any one or more of its creditors, with
a view to a general adjustment or rescheduling of its Financial Indebtedness (being Financial
Indebtedness which it will or might otherwise be unable to pay when due).
g.
Judgment Default
Any final judgment, decree or arbitral award for the sum of money, damages or for a fine or penalty
in excess of 500,000,000.00 or its equivalent in any other currency, to the extent not covered by
adequate insurance, is entered against the Issuer and the enforcement of which is not stayed, and is
65
not paid, discharged, or duly bonded within thirty (30) days after the date when payment of such
judgment, decree, or award is due under the applicable law or agreement.
h.
i.
Closure Default
The Issuer ceases or has announced its intention to cease to carry on its business or disposes or
indicates that it intends to dispose of a substantial part of its business, properties or assets except
as may be allowed in the Trust Agreement, or the Issuer changes or indicates that it intends to
change the nature of its business in a way which in the reasonable opinion of the Trustee would
have a Material Adverse Effect.
j.
Performance Default
Any event occurs or any circumstance arises which, in the reasonable determination of the Trustee,
may result in the Issuers failure or inability to perform or comply with any one or more of its
material obligations under the Trust Agreement or the Bonds, and such event or circumstance
remains unremedied for a period sixty (60) days after written notice thereof shall have been
received by the Issuer from the Trustee.
17.
CONSEQUENCES OF DEFAULT
a.
If any one or more of the Events of Default shall have occurred and be continuing, and has not been
waived by the Majority Bondholders (i) the Trustee shall, by notice in writing delivered to the
Issuer, or upon the written direction of the Majority Bondholders whose written
instructions/consents/letters shall be authenticated and summarized by the Registrar to the Trustee
and by notice in writing delivered to the Issuer, or (ii) the Majority Bondholders may, by notice in
writing delivered to the Issuer and the Trustee, declare the principal of the Bonds, including all
accrued interest and other charges thereon, if any, to be immediately due and payable, and upon
such declaration the same shall be immediately due and payable, without presentment, demand,
protest, or further notice of all kinds, all of which are hereby expressly waived by the Issuer.
b.
This provision, however, is subject to the condition that the Majority Bondholders may, by written
notice to the Issuer and the Trustee, during the prescribed curing period, if any, rescind and annul
such declaration made by the Trustee pursuant to paragraph (a) above, and the consequences of
such declaration, upon such terms, conditions, and agreement, if any, as they may determine,
provided that no such rescission and annulment shall extend to or shall affect any subsequent
default or shall impair any right consequent thereon.
c.
At any time after any Event of Default shall have occurred, the Trustee may:
i.
by notice in writing to the Issuer, the Paying Agent and the Custodian and Registrar, require
the Paying Agent and the Custodian and Registrar to:
66
ii.
aa.
act thereafter as agent of the Bondholders represented by the Trustee on the terms
provided in the Collecting and Paying Agency Agreement and in the Custodianship
and Registry Agreement (with consequential amendments as necessary and save
that the Trustees liability under any provisions thereof for the indemnification,
remuneration and payment of out-of-pocket expenses of the Paying Agent and the
Custodian and Registrar shall be limited to amounts for the time being held by the
Trustee on the trusts of the Trust Agreement in relation to the Bonds and available
to the Trustee for such purpose) and thereafter to hold all Certificates of
Indebtedness, all sums, documents and records held by them in respect of the
Bonds on behalf of the Trustee; and/or
ba.
by notice in writing to the Issuer, require the Issuer to make all subsequent payments in
respect of the Bonds to the order of the Trustee. With effect from the issue of any such
notice until such notice is withdrawn, provision (aa) above and the Issuers positive
covenant to pay principal plus interest on the Bonds, net of applicable withholding taxes,
more particularly set forth in the Trust Agreement, shall cease to have effect.
In case any amount payable by the Issuer under the Bonds, whether for the principal, interest, net
of applicable withholding taxes or otherwise, is not paid on due date, the Issuer shall, without
prejudice to its obligations to pay the said principal, interest, net of applicable withholding taxes,
and other amounts, pay Default Interest (as hereinafter defined) on the defaulted amount(s) from
the time the amount falls due until it is fully paid.
18.
NOTICE OF DEFAULT
The Trustee shall, through the Registrar, within thirty (30) days after the occurrence of an Event of Default
under any of the Bonds, give to the Bondholders written notice of such default known to it, unless the same
shall have been cured before the giving of such notice; provided that, in the case of payment default, as
described in Payment Default above, the Trustee, through the Registrar, shall immediately notify the
Bondholders upon the occurrence of such payment default. The existence of a written notice required to be
given to the Bondholders hereunder shall be published in a newspaper of general circulation in Metro
Manila for two (2) consecutive days, further indicating in the published notice that the Bondholders or their
duly authorized representatives may obtain an important notice regarding the Bonds at the principal office
of the Trustee upon presentment of sufficient and acceptable identification.
67
19.
DEFAULT INTEREST
In case any amount payable by the Issuer under the Bonds, whether for principal, interest, net of applicable
withholding taxes, or otherwise, is not paid on due date, the Issuer shall, without prejudice to its obligations
to pay the said principal, interest, net of applicable withholding taxes, and other amounts, pay interest on
the defaulted amount(s) at the rate of 12.0% per annum (the Default Interest), net of applicable
withholding taxes, from the time the amount falls due until it is fully paid.
20.
a.
Payment
The Issuer covenants that upon the occurrence of any Event of Default, then in any such case, the Issuer
will pay to the Bondholders, through the Paying Agent, the whole amount which shall then have become
due and payable on all such outstanding Bonds with interest at the rate borne by the Bonds on the overdue
principal, net of applicable withholding taxes, and with Default Interest thereon and, in addition thereto,
the Issuer will pay to the Trustee the actual amounts to cover the cost and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and any reasonable expenses or
liabilities incurred without negligence or bad faith by the Trustee hereunder.
b.
Any money collected or delivered to the Collecting and Paying Agent, and any other funds held by it,
subject to any other provision of the Trust Agreement and the Collecting and Paying Agency Agreement
relating to the disposition of such money and funds in the Event of Default, shall be applied by the
Collecting and Paying Agent in the order of preference as follows: (i) to the payment to the Trustee, the
Collecting and Paying Agent, the Custodian and Registrar, of the costs, expenses, fees and other charges
of collection, including reasonable compensation to them, their agents, attorneys and counsel, and all
reasonable expenses and liabilities incurred or disbursements made by them, without gross negligence or
bad faith, duly incurred or disbursed as of payment date in accordance with the Bond Agreements and
relevant fee letters or agreements; (ii) to the payment of the interest in default, in the order of the maturity
of such interest with Default Interest, which payment shall be made pro rata among the Bondholders; (iii)
to the payment of the whole amount then due and unpaid upon the Bonds for principal and interest, net of
applicable withholding taxes, with Default Interest, which payment shall be made pro rata among the
Bondholders; and (iv) the remainder, if any, shall be paid to the Issuer, its successors or assigns, or to
whoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.
For this purpose, the Paying Agent shall deliver to the Trustee a joint certification of the funds to be applied
for payment, and a schedule of payments to be made in accordance with the conditions.
21.
PRESCRIPTION
Claims in respect of principal and interest or other sums payable under the Bonds hereunder shall prescribe
unless made within ten (10) years (in the case of principal or other sums) or five (5) years (in the case of
interest) from the date on which payment becomes due.
22.
REMEDIES
All remedies conferred by the Trust Agreement to the Trustee and the Bondholders shall be cumulative and
not exclusive and shall not be so construed as to deprive the Trustee or the Bondholders of any legal remedy
by judicial or extra judicial proceedings appropriate to enforce the conditions and covenants of the Trust
Agreement, subject to the discussion below on Ability to File Suit.
68
No delay or omission by the Trustee or the Bondholders to exercise any right or power arising from or on
account of any default hereunder shall impair any such right or power, or shall be construed to be a waiver
of any such default or an acquiescence thereto; and every power and remedy given by the Trust Agreement
to the Trustee or the Bondholders may be exercised from time to time and as often as may be necessary or
expedient.
23.
No Bondholder shall have any right by virtue of or by availing of any provision of the Trust Agreement to
institute any suit, action or proceeding for the collection of any sum due from the Issuer hereunder on
account of principal, interest, and other charges, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (i) such Bondholder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof and the related request for the Trustee to
convene a meeting of the Bondholders to take up matters related to their rights and interests under the
Bonds; (ii) the Majority Bondholders shall have decided and made the written request upon the Trustee to
institute such action, suit, or proceeding in its own name; (iii) the Trustee for sixty (60) days after the receipt
of such notice and request shall have neglected or refused to institute any such action, suit, or proceeding;
and (iv) no directions inconsistent with such written request shall have been given under a waiver of default
by the Majority Bondholders, it being understood and intended, and being expressly covenanted by every
Bondholder with every other Bondholder and the Trustee, that no one or more Bondholders shall have any
right in any manner whatever by virtue of or by availing of any provision of the Trust Agreement to affect,
disturb or prejudice the rights of the holders of any other such Bonds or to obtain or seek to obtain priority
over or preference to any other such holder or to enforce any right under the Trust Agreement, except in
the manner herein provided and for the equal, ratable, and common benefit of all the Bondholders.
24.
The Trustee may direct the time, method, and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred upon the Trustee, or the Majority Bondholders
may decide, for and in behalf of the Bondholders, to waive any past default, except the events of default
defined as a payment default, cross default, expropriation default or insolvency default, and its
consequences. In case of any such waiver, the Issuer, the Trustee, and the Bondholders shall be restored to
their former positions and rights hereunder; provided, however, that no such waiver shall extend to any
subsequent or other default or impair any right consequent thereto. Any such waiver by the Majority
Bondholders shall be conclusive and binding upon all Bondholders and upon all future holders and owners
thereof, irrespective of whether or not any annotation of such waiver is made upon the certificate
representing the Bonds.
25.
NOTICES
a.
Documents required to be submitted to the Trustee pursuant to the Trust Agreement and this Prospectus
and all correspondence addressed to the Trustee shall be delivered to:
To the Trustee:
Attention:
Subject:
Address:
All documents and correspondence not sent to the above-mentioned address shall be considered as not to
have been sent at all.
Any requests for documentation or certification and other similar matters must be communicated by the
Bondholder to the Trustee in writing and shall be subject to review, acceptance and approval by the Trustee.
Upon such acceptance and approval, the Bondholder shall pay to the Trustee up front a fee of 1,500.00
(the Activity Fee) plus the costs of legal review, courier, and the like. The Activity Fee may be adjusted
from time to time, at the discretion of the Trustee. In the absence of any applicable period stated elsewhere
in these Conditions, written requests shall be reviewed and, if accepted and approved, addressed by the
Trustee within ninety (90) days from receipt. This period may be extended should the Trustee be unable to
review and address the requests for causes not attributable to the Trustee.
b.
The Trustee shall send, through the Registrar, all Notices to Bondholders to their mailing address as set
forth in the Register of Bondholders. Except where a specific mode of notification is provided for herein,
notices to Bondholders shall be sufficient when made in writing and transmitted in any one of the following
modes: (i) registered mail; (ii) surface mail; (iii) one-time publication in a newspaper of general circulation
in the Philippines; or (iv) personal delivery to the address of record in the Register of Bondholders. The
publication in a newspaper of general circulation in the Philippines of a press release or a news item about
a communication or disclosure made by the Issuer to the SEC on a matter relating to the Bonds shall be
deemed a notice to the Bondholders of said matter on the date of first publication. The Trustee shall rely on
the Register of Bondholders in determining the Bondholders entitled to notice. All notices shall be deemed
to have been received (i) ten (10) days from posting if transmitted by registered mail; (ii) fifteen (15) days
from mailing, if transmitted by surface mail; (iii) on date of publication; or (iv) on date of delivery, for
personal delivery.
c.
Except as provided in the Trust Agreement, all notifications, opinions, determinations, certificates,
calculations, quotations, and decisions given, expressed, made, or obtained by the Trustee for the purposes
of the provisions of the Trust Agreement shall (in the absence of willful default, bad faith or manifest error)
be binding on the Issuer and all Bondholders and (in the absence as referred to above) no liability to the
Issuer, the Paying Agent or the Bondholders shall attach to the Trustee in connection with the exercise or
non-exercise by it of its powers, duties, and discretions under the Trust Agreement.
26.
a.
The Trustee shall submit to the Bondholders on or before March 31 of each year from the Initial
Issue Date until the full payment of the Bonds a brief report dated as of December 31 of the
immediately preceding year with respect to:
(i)
the property and funds, if any, physically in the possession of the Paying Agent held in
trust for the Bondholders on the date of such report; and
70
(ii)
any action taken by the Trustee in the performance of its duties under the Trust Agreement
which it has not previously reported and which in its opinion materially affects the Bonds,
except action in respect of a default, notice of which has been or is to be withheld by it.
b.
The Trustee shall submit to the Bondholders a brief report within ninety (90) days from the making
of any advance for the reimbursement of which it claims or may claim a lien or charge which is
prior to that of the Bondholders on the property or funds held or collected by the Paying Agent with
respect to the character, amount, and the circumstances surrounding the making of such advance;
provided that such advance remaining unpaid amounts to at least 10% of the aggregate outstanding
principal amount of the Bonds at such time.
27.
INSPECTION OF DOCUMENTS
Upon at least one (1) Business Day prior written notice, Bondholders shall be allowed to inspect the
following documents at the principal office of the Trustee, at any time during regular business hours on any
Business Day:
1.
2.
3.
4.
5.
6.
7.
28.
Trust Agreement;
Custodianship and Registry Agreement;
Collecting and Paying Agency Agreement;
Underwriting Agreement;
Articles of Incorporation and By-Laws of the Issuer;
Registration Statement of the Issuer; and
Opinion of the legal counsel submitted to the SEC in connection with the Registration
Statement of the Issuer.
Meetings of the Bondholders may be called at any time for the purpose of taking any actions authorized to
be taken by or in behalf of the Bondholders of any specified aggregate principal amount of the Bonds under
any other provisions of the Trust Agreement or under the law and such other matters related to the rights
and interests of the Bondholders.
a.
Notice of Meetings
The Trustee may at any time call a meeting of the Bondholders, or the holders of at least 25% of the
aggregate outstanding principal amount of the Bonds may direct in writing through the Registrar, the
Trustee to call a meeting of the Bondholders, to take up any allowed action, to be held at such time and at
such place as the Trustee shall determine. Notice of every meeting of the Bondholders, setting forth the
time and the place of such meeting and the purpose of such meeting in reasonable detail, shall be sent by
the Trustee to each of the registered Bondholders, through the Registrar, and to the Issuer, as may be
necessary, not earlier than forty-five (45) days nor later than fifteen (15) days prior to the date fixed for the
meeting. All reasonable costs and expenses incurred by the Trustee for the proper dissemination of the
requested meeting shall be reimbursed by the Issuer within ten (10) days from receipt of the duly supported
billing statement.
b.
In case at any time the Issuer, pursuant to a resolution of its board of directors or executive committee, or
the holders of at least 25% of the aggregate outstanding principal amount of the Bonds shall have requested
the Trustee to call a meeting of the Bondholders by written request setting forth in reasonable detail the
purpose of the meeting, and the Trustee shall not have mailed in accordance with the notice requirements,
the notice of such meeting, then the Issuer or the Bondholders in the amount above specified may determine
the time and place for such meeting and may call such meeting by mailing and publishing notice thereof.
c.
Quorum
The presence of the Majority Bondholders, personally or by proxy, shall be necessary to constitute a quorum
to do business at any meeting of the Bondholders.
d.
The Trustee shall preside at all the meetings of the Bondholders unless the meeting shall have been called
by the Issuer or by the Bondholders, in which case the Issuer or the Bondholders calling the meeting, as the
case may be, shall in like manner move for the election of the chairman and secretary of the meeting. The
Trustee and Registrar shall initially and continually preside as chairman and secretary, respectively, until a
chairman and secretary are elected by the Majority Bondholders.
Any meeting of the Bondholders duly called may be adjourned for a period or periods not to exceed in the
aggregate of one (1) year from the date for which the meeting shall originally have been called and the
meeting so adjourned may be held without further notice to the Bondholders present or represented at the
original meeting. Any such adjournment may be ordered by persons representing a majority of the aggregate
principal amount of the Bonds represented at the meeting and entitled to vote, whether or not a quorum
shall be present at the meeting.
e.
Voting Rights
To be entitled to vote at any meeting of the Bondholders, a person shall be a registered holder of one or
more Bonds or a person appointed by an instrument in writing as proxy by any such holder as of the date
of the said meeting. Bondholders shall be entitled to one (1) vote for every 5,000 interest. The only persons
who shall be entitled to be present or to speak at any meeting of the Bondholders shall be the persons
entitled to vote at such meeting and any representatives of the Issuer and its legal counsel.
f.
Voting Requirement
All matters presented for resolution by the Bondholders in a meeting duly called for the purpose shall be
decided or approved by the affirmative vote of the Majority Bondholders present or represented in a meeting
at which there is a quorum, except as otherwise provided in the Trust Agreement. Any resolution of the
Bondholders, which has been duly approved with the required number of votes of the Bondholders as herein
provided, shall be binding upon all the Bondholders and the Issuer as if the votes were unanimous.
g.
Notwithstanding any other provisions of the Trust Agreement, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of the Bondholders, with regard to proof of ownership
of the Bonds, the appointment of proxies by registered holders of the Bonds, the election of the chairman
and the secretary, the appointment and duties of inspectors of votes, the submission and examination of
72
proxies, certificates, and other evidences of the right to vote, and such other matters concerning the conduct
of the meeting as it shall deem fit.
h.
Wherever in the Trust Agreement it is provided that the holders of a specified percentage of the aggregate
outstanding principal amount of the Bonds may take any action (including the making of any demand or
requests and the giving of any notice or consent or the taking of any other action), the fact that at the time
of taking any such action the holders of such specified percentage have joined therein may be evidenced
by: (i) any instrument executed by the Bondholders in person or by the agent or proxy appointed in writing,
or (ii) the duly authenticated record of voting in favor thereof at the meeting of the Bondholders duly called
and held in accordance herewith, or (iii) a combination of such instrument and any such record of meeting
of such Bondholders.
29.
CHANGE IN LAW
The following events shall be considered as changes in law or circumstances (Change of Law) as it refers
to the obligations of the Issuer and to the rights and interests of the Bondholders under the Trust Agreement
and the Bonds:
a.
b.
Any provision of the Trust Agreement or any of the related documents is or becomes, for any
reason, invalid, illegal or unenforceable to the extent that it becomes for any reason unlawful for
the Issuer to give effect to its rights or obligations hereunder, or to enforce any provisions of the
Trust Agreement or any of the related documents in whole or in part, or any law is introduced to
prevent or restrain the performance by the parties hereto of their obligations under the Trust
Agreement or any other related documents; and
c.
Any concessions, permits, rights, franchise or privileges required for the conduct of the business
and operations of the Issuer shall be revoked, cancelled or otherwise terminated, or the free and
continued use and exercise thereof shall be curtailed or prevented, in such manner as to have a
Material Adverse Effect.
If any one or more of the events enumerated as a Change of Law shall occur and be continuing for a period
of thirty (30) days, subject to Clause 17(c) (Other Default) above, the Majority Bondholders, by notice in
writing delivered to the Issuer through the Trustee, after the lapse of the said thirty (30) day period, may
declare the principal of the Bonds, including all accrued interest, net of applicable withholding taxes, and
other charges thereon, if any, to be immediately due and payable, and upon such declaration the same shall
be immediately due and payable, anything contained in the Trust Agreement or in the Bonds to the contrary
notwithstanding, subject to the procedural requirements discussed in these terms and conditions.
30.
GOVERNING LAW
The agreements relating to the Bonds are governed by and are construed in accordance with Philippine law.
73
31.
VENUE
Any legal action or proceeding arising out of, or connected with, the Bonds shall be brought exclusively in
the proper courts of Makati City, Philippines, each of the Issuer and the Bondholders expressly waiving
any other venue.
32.
MISCELLANEOUS
The Trustee is authorized under the Trust Agreement to appoint, on behalf of the Bondholders, a bank
authorized to act as a securities custodian by the Monetary Board of the Bangko Sentral ng Pilipinas, and
which has no subsidiary or affiliate relationship with the Issuer, to serve as Custodian for purposes of the
Offer.
33.
Except as otherwise provided and where context indicates otherwise, defined terms in this section
Description of Terms and Conditions of the Bonds have the meanings ascribed to them in the Trust
Agreement.
74
BUSINESS OVERVIEW
1.
COMPANY PROFILE
DMCI Homes is a company of innovative builders and engineering experts driven to develop contemporary
living solutions for urban families. Its residential projects enjoy the extra advantage of DM Consunji Inc.s
almost six (6) decades of expertise, translating to world-standard craftsmanship, efficiency that generates
savings for customers, and on-time delivery in the very competitive construction and development industry.
The Company understands that the home, aside from being a basic need, is also the familys greatest
investment. Its deep immersion and intuitive insight into the buyers needs and aspirations have resulted in
ideally located, amenity-rich developments that are priced within comfortable reach of young, upwardly
mobile Filipino families so they can lead more comfortable and balanced lives.
The Company was incorporated and registered with the SEC on April 27, 1995. The Companys original
name was DMCI Property Developers, Inc. On August 1, 1995, the Companys name was changed to DMCI
Project Developers, Inc. The Company was organized to carry out the business of a real estate developer.
DMCI Homes is wholly-owned by DMCI-HI2, a leading conglomerate in the Philippines with interests in
construction, real estate, power, water, and mining. DMCI-HI is listed at the PSE with a market
capitalization of 183.23 billion as of December 31, 2015. One of the Companys affiliates is DMCI, a
DMCI-HI wholly-owned subsidiary and one of the Philippines leading triple A rated general construction
companies. Another affiliate is PSE-listed and DMCI-HI majority-owned subsidiary Semirara Mining and
Power Corporation, the countrys largest coal-producing company, with a market capitalization of 145.88
billion as of December 31, 2015. The Companys main activities include the development, management
and selling of various real estate properties such as condominium units, subdivision lots, buildings, resorts
and others. DMCI Homes caters to a market segment that has been largely underserved in the local property
sector: young families with modest income that aspire for a quality lifestyle.
2 On April 7, 2014, the Board of Directors of DMCI approved the declaration by DMCI of property dividends in the form of
504,862,578 shares of stock in DMCI-PDI (representing 14.5% ownership) in favor of DMCI-HI. This transfer has not yet been
recorded in the stock and transfer book of DMCI-PDI pending issuance of the Certificate Authorizing Registration by the BIR.
75
The Companys commercial operations began in 1999 amid the Asian financial crisis, which strengthened
its resolve and efforts to explore previously untapped markets and offer property solutions that break new
ground. The Companys market agility has resulted in sustained phenomenal growth, such that the present
average is more than 250 new homes turned over to buyers every month.
The land resources of DMCI Homes are mostly in the Taguig City area of Metro Manila, consisting of
approximately 90 hectares. The companys first foray into real estate development was in 1999 with Lake
View Manors, a project consisting of four-storey walk-up medium-rise buildings, located in Taguig City.
This success was followed by the development of Hampstead Gardens in Sta. Mesa, Manila in 2002, which
is the Companys first joint venture project with Japanese companies Marubeni Corp. and Ohki Corp.
In 2002, the official brand DMCI Homes was launched, and since 2003, DMCI Homes has undertaken
larger and more elaborate projects with better amenities and facilities for the residents: introduction of
resort-inspired developments with generous amenities; mid-rise and high-rise building configurations
which factor in natural lighting and cross-ventilation to ensure resort ambience within condo units; and
property management service. As the Company continues to make headway in the industry, it will persist
in pioneering sensible and inspired engineering improvements to our residential communities that will
someday become benchmarks in their category.
Core Beliefs
Unlike its competitors, DMCI Homes constantly strives to provide the best living environment to young,
upwardly mobile, young Filipino families in Metro Manila who care about comfort and prestige apart from
and beyond monetary value. This is because only DMCI Homes can deliver genuine resort-inspired living
through a superior mix of location, size, amenities, and price.
The Company believes in the principle of Profit with Honor. This drives its teams in the field and at
headquarters to strive toward customer satisfaction, career development of its people, sustainable
76
investment growth, mutually beneficial relationships with business partners, and environmental
compliance.
Value Proposition
All of DMCI Homes residential community projects have distinctive elements that enhance the experience
of the end-users.
Lumiventt Design Technology
One of the Companys architectural innovations includes Lumiventt, from, lumen meaning light and
ventus meaning wind. This design technology for high-rise structures allows ambient light and fresh air
to permeate the building and all unit spaces. Sky Patios, 3-storey high openings located at the front and
back of every five floor levels, and breezeways, vent at both ends of the building, allow cross-ventilation.
Employing basic principles of airflow, Lumiventt design technology draws stale air out while letting in cool
breezes. DMCI Homes basically engineers building to breathe.
Resort-Inspired Living
The Company offers a wide array of developments located in urban central districts. The Company believes
that resort-inspired living is the way to go in the Philippines and that the countrys tropical climate is best
complemented by homes that feature sprawling landscapes and abundant natural lighting.
Themed Developments
DMCI Homes pioneering design for mid-rise community features architectural themes that range from
modern Polynesian to Balinese inspired developments, with at least 60:40 open spaces to enjoy the
outdoors. Inside the building are central garden atriums, single loaded hallways and breezeways for a
refreshing, resort-style ambience.
Vibrant Community Life
Aside from offering various resort-style amenities that serve as venue for families to spend quality time
together, DMCI Homes also fosters community relations by mounting community-building activities like
seminars, workshops and social events for its residents. The Company is still an integral part of the
neighborhood even after the construction and turnover of the residents homes.
Quality Management
DMCI Homes is a developer of proven quality product following high standard of workmanship, and timely
delivery of projects because of established quality management systems and processes.
All DMCI Homes projects bear the DMCI Homes Quality Seal, which represents the Companys
commitment to deliver homes that are built to last. Each of the homes the Company delivers is subject to
its proprietary quality management system, and comes with a 2-year limited warranty under certain terms
and conditions. Property developers typically provide a one-year warranty. DMCI Homes 2-year limited
warranty covers most unit deliverables, except operable items subject to daily wear and tear.
77
2.
The Companys business goal is to provide affordable residential units in urban friendly, serviced
communities near places of work, study, and leisure. DMCI Homes endeavors to achieve objectives that
advance the proposition of profit with honor, namely, to ensure customer satisfaction, sustainable
investment growth, mutually beneficial relationships with business partners, environmental compliance,
and career development of its people.
All of DMCI Homes residential community projects have distinctive elements and strategies that enhance
the experience of end-users. The Companys resort-inspired developments are not typical of other
developments in Metro Manila, and are provided to meet clients needs and lifestyle aspirations. Key
features include modern in-city living that guarantees easy access to transportation and
business/commercial centers, predominantly medium density developments via medium rise residential
condominium buildings with single-loaded corridors, 60:40 open space-to-building footprint ratio, resort
living amenities, themed development, reliable property management, and ready-to-move-in housing.
Developments are near and accessible to central business districts, educational institutions and shopping
centers, but distant enough to avoid inner city congestion. Typical resort style amenities are clustered
around central clubhouses which host multiple function rooms, recreational facilities, gyms, laundry
stations, water stations and convenience stores. Clubhouses are surrounded by playgrounds; kiddie pools,
leisure pools and lap pools are surrounded by wide expanses of landscaped gardens. Other amenities
include: jogging paths, gazebos, picnic areas, and basketball and badminton courts. All developments are
gated communities with 24-hour security. In selected developments, surveillance systems and electric
perimeter fences are standard security measures.
The Company attributes its growing portfolio of projects to DMCI-HIs core competencies in construction
and engineering. Backed by the 60-year track record of its affiliate, DMCI, as a leader in the Philippine
construction industry, DMCI Homes is able to deliver quality crafted communities right on time or even
ahead of schedule, minimizing waiting time for home buyers. DMCI Homes buyers can move into their
purchased units immediately after settling the prescribed purchase price downpayment. Home units in the
Companys projects are priced considerably lower, sometimes by as much as 20% to comparable
developments available in the market.
Despite persisting volatility in the prevailing economic environment resulting in cautious investment
activities in the property market, DMCI Homes is emerging as one of the Philippines top builderdevelopers of premier quality homes for young urban families.
Over a span of 20 years, DMCI Homes has become known as a builder of some of the most comfortable
resort-type communities for prospective homeowners seeking urban locations. Whether these are situated
in Quezon City, Taguig City, Mandaluyong City, Pasig City or Paraaque City, each of the Companys
developments integrates resort-type amenities and facilities such as wide open spaces all around the housing
structures, gardens with koi ponds, rows of trees and thick foliage. Throughout its more than a decade of
sustained high growth, the Company has developed highly successful communities such as Raya Gardens
in Merville, Paraaque City, Rosewood Pointe and Cedar Crest in Taguig City, Tivoli Gardens near the
Makati central business district, Illumina Residences in Manila and Magnolia Place and The Redwoods in
Quezon City. The Company continues to provide home seekers with breakthrough architectural designs in
its projects. The Company introduced its Lumiventt design in its Tivoli Gardens and Royal Palm HRBs and
has since made this a trademark feature for all of its succeeding HRB developments.
DMCI Homes rapid growth can be attributed to its thrust to consistently attract its customers to its valuefor-money philosophy. It intends to continue to create urban and destination housing featuring resort
amenities, at price ranges within comfortable reach of the average Filipino family.
78
3.
The Companys subsidiaries and associates and its ownership in these subsidiaries and associates are
summarized in the table below.
Company
Wholly-Owned Subsidiaries
Hampstead Gardens Corp.*
DMCI Homes, Inc.
DMCI Homes Property Management Corp.
DMCI-PDI Hotels, Inc.
Ownership
Date of
incorporation
100.00%
100.00%
100.00%
100.00%
51.00%
62.62% **
Associates
CSN Properties, Inc.
Contech Products South (Acotec)
Subic Water and Sewerage Company
45.00%
33.00%
40.00%
*
**
***
79
DMCI-PDI Hotels, Inc. was organized to engage in the hotel business, including but not limited to the
ownership of, establishment, maintenance and operation of hotels, condotels, apartelles, and similar
establishments, as well as to engage in the development of, design, and implementation of hotel
management systems or operations. DMCI-PDI Hotels, Inc. manages the Companys flagship condotel
project, the Alta Vista de Boracay, situated in Brgy. Yapak, Malay, Aklan.
Zenith Mobility Solutions Services, Inc. was organized to engage in the installation, operation, and
maintenance of elevators, escalators, moving walkways, and other similar equipment, including
appurtenants thereof, and the sourcing, purchase or trading of parts and supplies necessary thereto.
Riviera Land Corp. is a real estate company which owns the 0.90 hectare parcel of land which was
developed into the Manors at Celebrity Place. Launched in 2006 and located in Capitol Hills, Quezon City,
this development is an English-inspired exclusive community comprising seven MRBs with 158 units. It is
located near educational institutions and the country club facilities of Celebrity Sports Plaza. The project is
fully developed and completed, with at least 98% of the units sold and 96% turned over to homeowners.
Riviera Land Corp. owns a 30% interest in the project, while the Company holds 70.0%.
CSN Properties, Inc. was organized to be a vehicle for prospective condominium developments of the
Company. It has not commenced commercial operations.
Contech Products South (Acotec) was organized to engage in the manufacturing of concrete panels and
similar products. It has not commenced commercial operations.
Subic Water and Sewerage Company is a joint venture of the Company with Subic Bay Metropolitan
Authority, Olongapo City Water District, and Cascal Services, Ltd. Its primary purpose is to provide
potable water and sewerage services to residences of Olongapo City and Subic Bay Freeport.
The SEC has required the submission of certificates of good standing in respect of the Companys
subsidiaries. Certificates of good standing have been secured and filed for DMCI Homes, Inc., DMCI
Homes Property Management Corp., DMCI-PDI Hotels, Inc. and Zenith mobility Solution Services, Inc.
A certificate of good standing is in the process of being obtained in respect of Riviera Land Corp. The
audited financial statements for the period ended as of December 31, 2014 were completed and filed with
the SEC and the BIR. Upon compliance with certain other reportorial requirements and the payment of
penalties, which are not expected to be substantial, a certificate of good standing is expected to be secured
in due course.
Contribution of Subsidiaries to Net Income
Subsidiaries contributed 0.76% (24.9 million), 2.77% (72.3 million) and 3.01% (69.4 million) of the
consolidated net income of the Company in 2014, 2013 and 2012, respectively.
4.
a.
Medium-Rise Buildings
The development of mid-rise residential buildings in convenient locations is where the Company has
achieved and continues to attain significant success. These low-density, resort-inspired projects are made
up of three to seven storey MRBs with either walk-up or elevator facilities, and single-loaded corridor
designs with garden atriums for ample lighting and ventilation.
80
For the year 2014, MRB sales contributed 24.2% of the Companys revenues, amounting to 3 billion. For
the first nine months of 2015, it contributed 4,091 million which is 37.23% of the Companys revenues.
i.
Completed Projects
Lakeview Manors. Launched in 1999, this is DMCI Homes first medium-rise community development in
Taguig City. The project was owned by DMCI and developed and marketed by the Company. Lakeview
Manors consists of nine MRBs and a townhouse with a total of 497 units. Unit prices range from 1.9 to
5.2 million. The project is fully developed and completed, with 98% of units sold and 97% of units turned
over to homeowners.
Rainbow Ridge. Launched in 2002 with four MRBs consisting of a total of 197 residential condominium
units at price range of 1.9 millionto 2.3 million per unit, the development is situated in Taguig City.
Rainbow Ridge is fully developed and completed, with 95% of units sold and 90% of units turned over to
homeowners.
East Ortigas Mansions. A ten MRB condominium project near Ortigas Center and the Libis commercial
area, this development was launched in 2002 and unit prices ranging from 1.8 to 8.3 million each for its
539 units. East Ortigas Mansions is fully developed and completed, with 97% of units sold and 96% of
units turned over to homeowners.
Vista de Lago. A Mediterranean-inspired development comprising of eight MRBs with 460 units, the
project was owned by DMCI and developed and marketed by the Company. This residential condominium
in Taguig City was launched in 2002 and unit prices ranging from 2 to 6.3 million each . The project is
fully developed and completed, with 99% of units sold and turned over to homeowners.
Palm Grove. Located in Better Living Subdivision, considered the heart of Paraaque Citys prime
residential area, this development was launched in 2003 with 300 units at price range of 1.8 to 6.3 million
each distributed in ten MRBs . The project was owned by DMC Urban Property Developers, Inc., a
subsidiary of Dacon Corp., the major shareholder of DMCI-HI. The project was developed and marketed
by the Company. The project is fully developed and completed, with 94% and 93% of units sold and turned
over to homeowners, respectively.
Bonifacio Heights. Launched in 2004, this was the first off-base condominium Armed Forces of the
Philippines (AFP) Housing Project of DMCI Homes. This seven hectare community in a prime location
near Bonifacio Global City in Taguig City is composed of 17 MRBs with 1,370 units, with unit prices
ranging from 764,000 to 2.3 million. The project is owned by the Government and was developed by the
Company. It was marketed by the Company exclusively to officers of the AFP. The project is fully
developed and completed, with 99% of units sold and turned over to homeowners.
Mayfield Park Residences. This Zen-themed condominium complex in Cainta, Rizal was launched in 2004,
consisting of nine MRBs with 835 units at price range of 2 to 3.3 million. The project was owned by
DMCI and developed and marketed by the Company. The project is fully developed and completed, with
97% and 94% of units sold and turned over, respectively, to homeowners.
The Manors at Celebrity Place. Launched in 2006 and located in Capitol Hills, Quezon City, this
development is an English-inspired exclusive community comprising seven MRBs with 162 units at price
range at 2.1 to 10 million. The project is majority owned, developed and marketed by the Company. It
is located near educational institutions and the country club facilities of Celebrity Sports Plaza. The project
is fully developed and completed, with at least 98% of units sold and 96% turned over to homeowners.
81
Riverfront Residences. This two-phased development that was launched in 2007 has 1,045 units with two
and three bedroom options in 12 MRBs, with prices ranging from 2.5 to 5.3 million. Phase one of
development was a joint venture between the Company and Ivory Homes, Inc. Phase two was whollyowned by the Company. The Company developed and marketed both phases of the project. The community
is located along Dr. Sixto Antonio Avenue in Pasig City and is bordered by a linear park along the banks
of the Marikina River. The project is fully developed and completed, with 99% and 98% of units sold and
turned over, respectively, to homeowners.
East Raya Gardens. Launched in 2008, this development continues the success of the Companys earlier
developments in Pasig City. East Raya Gardens is a Balinese-inspired, mid-rise residential community
composed of seven MRBs with 778 units of two and three bedrooms units, with prices ranging from 2.5
to 4.9 million each. It has a central amenities area that provides active and passive leisure facilities. The
project is fully developed and completed with 99% and 97% of units sold and turned over, respectively, to
homeowners.
Ohana Place. This development provides a Hawaiian-resort ambience within its seven fivestorey MRBs
sprawling over 3.2 hectares of land in Alabang Zapote Road, Las Pias City. Ohana Place was launched in
2008 with 770 units of two and three bedroom options at prices ranging from 1.5 to 5.1 million each.
The project is fully developed and completed with 99% and 98% of units sold and turned over to
homeowners. There are pending cases in the various levels of the judiciary filed by persons claiming
ownership over the land where this project is situated. However, the Company believes that these cases
will not prosper on the merits since the Company has a strong legal claim to the land considering that it
holds registered titles under its name.
Magnolia Place. This is a 3.29 hectares project along Tandang Sora Avenue Extension in Quezon City.
Launched in 2008, it is composed of twelve 5storey MRBs with 857 units of studio, two and three bedroom
options at prices ranging 1.4 to 4.7 million , and open spaces dedicated to manicured landscapes and
amenities that make Magnolia Place suitable for young, growing families. The project is ready for
occupancy, with 99% and 98% of units sold and turned over to homeowners.
The Redwoods. This Neo-Asian residential community in Fairview, Quezon City is set on two hectares of
land with five 5storey MRBs composed of 521 units of studio, two and three bedroom options at prices
ranging from 2.3 to 5.7 million each. It was launched in 2010 and completed in December 2011.
Approximately 98% of units have been sold and 96% of units have been turned over to homeowners.
Cedar Crest. Launched in 2009, it is the only Neo-Asian Contemporary mid-rise residential community in
Taguig City. Cedar Crest has a 3.8 hectare allotment for ten6storey MRBs with 999 units of two and three
bedroom options at prices ranging from 3.6 to 5.9 million, as well as Zen-inspired amenity spaces. The
10 MRBs were fully constructed as of July 2012 with 100% of the units sold and turned over to
homeowners.
Accolade Place. Accolade Place is located on a 4,011 square meter property along P. Tuazon Street, Cubao,
Quezon City. The project is the Companys first boutique-inspired, single building development with resortlike ambiance similar to its existing MRB projects. All units are efficiently-spaced with alternating unit
configurations and gross sizes ranging from 68 to 126 square meters each at prices ranging from 4.1 to
8.3 million. The project is fully developed and completed with 100% sold and 98% of its 130 units turned
over to homeowners.
Maricielo Villas. Located on an 18.52 hectare property along Quirino and Casimiro Avenues in Las Pias,
this Spanish-inspired project will consist of five MRBs comprising of two and three bedroom units at prices
82
ranging from 2.3 to 4.8 million each. The project is fully developed and completed with 96% sold and
89% of its 516 units turned over to homeowners.
Siena Park Residences. Situated on a 3.1 hectare lot in the quiet side of West Service Road, Bicutan,
Paranaque, this modern tropical resort-inspired project has eleven 5-storey MRBs with gross floor area
measuring from between 48.5 to 94 square meters per unit. Prices of the 985 units range from 2.2 to 4.9
million each. Siena Park Residences was launched in 2010. The project is fully developed and completed
with 100% and 99% of units sold and turned over, respectively, to homeowners.
Arista Place. Arista Place is an Asian tropical-themed development situated on a 4.5 hectare property along
J.P. Rizal Street, Paraaque City. The project has eleven 6storey MRBs composed of 1,297 units, with
two and three bedroom units at a price range of 2.5 to 4.6 million each, and gross floor areas of 53 to
78.5 square meters per unit. The project was launched on August 2011, with 99% and 81% already sold
and turned over, respectively, to homeowners. The last building was completed on December 2015.
ii.
Ongoing Projects
Bristle Ridge. Launched in July 2015, Bristle Ridge is the companys second modern resort-styled
condominium community in the City of Pines. This project, located in Pacdal, Baguio City, will have three
6-storey buildings composed of two bedroom units with gross floor area of 56.5 sq. m. and three bedroom
units of 96 sq. m. Unit price ranges from 4.6 to 7.3 million. The project will be composed of 123 units
and 40% were already sold.
Maple Place. This project will rise on a 1.23 hectare lot in the community of Acacia Estates in Taguig. The
project will be made up of three 6-storey MRBs inspired by a Botique Hotel architecture. It will have 382
units of 2-bedroom and 3-bedroom types with price range of 3.7 million to 5.7 million and gross floor
area of 63.50 to 127 square meters per unit.
Verawood Residences. The project is the only modern Polynesian inspired, resort style community in
Acacia Estates, Taguig City. It consists of seven condominium buildings made up of four 7-storey and
three 8-storey MRBs. A total of 864 units, composed of a mix of 2-bedroom and 3-bedroom units are being
offered with price ranging from 4.0 million to 5.3 million. The first building was launched last October
2012 and the last building is expected to be completed by December 2016. To date, a total of 99% was
already sold and 17% of units turned over to homeowners.
Levina Place. Levina Place will rise on an expansive 14,244 sq.m. of premium space along Jennys Avenue
Extension, Pasig City. It has three Asian-inspired Boutique condo buildings with 376 two- and threebedroom units. The developments two-bedroom units has 64 to 72 sq.m. For growing families, its threebedroom units offer a premium space of 87 to 94.5 sq.m. Units are at best value prices from 2.1 million
to 4.5 million. The projects three buildings will be ready for turn over by July and October of 2016 and
February of 2017. To date, 36% were already sold.
Outlook Ridge Residences. Standing on a 4,005.7 sq.m. of land, this project will combine modern and
Asian-inspired architecture reflective of Baguio Citys rich heritage, as well as its dynamic urban landscape.
It will be built with only 150 units with price ranging from 2.1 million to 6.2 million. The south and
north wing will be ready for turn over by June of 2016. To date, 91% were already sold.
The Birchwood. Strategically located along Acacia Estates, in Cayetano Boulevard (formerly Levi Mariano
Avenue) Taguig City, The Birchwood is composed of five 6-storey medium rise residential buildings on a
16,909 sq.m. lot. It will offer 535 two to three-bedroom units with an area of 62 to71.5 sq.m. and 86 to 100
83
sq.m. respectively. Price of the units will range from 3.7 to 5.3 million each. The project is expected to
be turned over by December 2016 up to January 2018. To date, it was already 99% sold.
Asteria Residences. The projectwill be composed of seven 7-storey MRBs rising in a 2.7-hectare property
along San Pedro Street, San Antonio Valley 2 in Barangay San Isidro, Paranaque City. It will have 643
units. The first five buildings offer two and three-bedroom units with an approximate area of 64.5 sq.m. to
87.5 sq. m. and tandem unit with an approximate area of 107 sq.m. Unit are prices ranging from 2.6 million
to 4.3 million. The first two buildings are expected to be completed by April and July of 2017 while the
other three are expected to be completed by January, April, and June of 2018. To date, it was already 72%
sold.
Mirea Residences. Mirea Residences is aDMCI Homes condo community featuring six to seven-floor
residential buildings. The eight buildings are strategically positioned in a 3.9 hectare property, surrounding
a vast amenity area in its center. The project is designed to a Polynesian-inspired theme. Two-bedroom
units will range from 63.5 to 65 sq.m., while the three-bedroom units will have approximately 85 sq.m.
with unit prices ranging from 3.2 million to 5.2 million. This projects first two buildings are expected
to be completed by August 2017. Total units will be 1,216 and 38% of which was already sold.
Ivory Wood. This project launched in February 2015 is located in the township of Acacia Estates in Taguig
City with a Filipino-Spanish theme. It consists of seven 6-storey MRBs in a 3.3 hectare property with total
of 965 units, 87% of which were already sold. The units in Ivory Wood are designed for families, giving
the right amount of comfort and function. The two-bedroom units will have a floor area of 56.5 sq.m. while
the three-bedroom units will have 85 sq.m. Unit prices range from 3.7 million to 5.8 million.
b.
High-Rise Buildings
Combining successful elements of its mid-rise developments with new techniques in construction, the
Companys high-rise projects, ranging from 14 to 50 storey each building, possess attributes such as the
single-loaded corridor design and garden atrium, while offering design improvements from previous
projects, such as the installation of the Companys trademark Lumiventt design in all high-rise structures
beginning with the Tivoli project. The Lumiventt building feature is achieved by placing three-storey-high
openings called sky patios in front and behind HRB towers and through breezeways located on the left
and right wings of each floor to allow the free flow of natural light and ventilation. DMCI Homes highrise developments are located near business and commercial centers in Metro Manila.
For the year 2014, HRB sales contributed 50.2% of the Companys revenues, amounting to 6 billion. For
the first nine months of 2015, it contributed 6,050 million which is 55.04% of the Companys revenues.
i.
Completed Projects
Cypress Towers. This project redefines high-rise living with its intelligent use of space and design,
particularly the unique pinwheel architectural configuration that assures every unit a view of the Metro
Manila skyline, Antipolo City, and Manila Bay. The project is a joint venture between the Company and
Crown Equities, Inc., and was developed and marketed by the Company. Located in Taguig City, Cypress
Towers is a three-tower high-rise community with 947 units of studio, two and three bedroom options for
young urban professionals and families with prices ranging from 1.6 to 5.1 million. Launched in 2005,
the project is already completed with 93% of units sold and turned over to homeowners.
Sycamore Towers and Palo Verde at Dansalan Gardens. Launched in 2006, the Dansalan Gardens
community is comprised of two HRBs with 65% of the land area dedicated to open spaces and greenery. It
offers spacious one, two and three bedroom units, which feature unobstructed views of the Makati and
84
Ortigas skylines. The project is strategically located on the corner of Boni Avenue and M. Vicente St. in
Mandaluyong City. The project, consisting of 715 units at a price range of 2.6 to 11.4 million, is fully
developed and completed with 97% and 95% of units sold and turned over, respectively, to homeowners.
Illumina Residences. This 32-storey high-rise residential tower is located in Sta. Mesa, Manila and was
launched in 2008. The buildings T-shape design allows for unobstructed views, allowing residents to enjoy
the Metro Manila skyline. With 584 units, the HRB offers studio, two and three bedroom options with
prices ranging from 1.7 to 6.7 million each. The project is fully developed and completed with 91% of
units sold and 86% turned over, respectively, to homeowners.
Tivoli Garden Residences. Launched in 2006, this garden-oriented high-rise community in Mandaluyong
City is located on 2.7 hectares of land. It is the first of the Companys HRBs to utilize the Lumiventt design.
All 2,580 units in five HRBs, with price ranges at 1.8 to 10.5 million, provide easy access to lush Asian
tropical sky gardens and greeneries within the development. The complex has allotted 15,400 square meters
to well-landscaped open spaces that combine passive and active leisure areas. The project is fully developed
and completed with 97% and 93% of units sold and turned over, respectively, to homeowners.
La Verti Residences. Rising on a one hectare prime lot located on Donada St. along Taft Avenue, this
development will have two 41- storey HRBs, each with panoramic views of Manila Bay and the Makati
and Ortigas skyline. Launched in August 2010, the project has 1,475 residential units of studio, one, two
and three bedroom options with gross sizes ranging from 28 to 75 square meters each, and unit prices
ranging from 2.3 to 5.9 million. The project is fully developed and completed and all units have been
sold and 64% have been turned over to homeowners.The first building was turned over last March 2014
and the second building was completed last September 2015.
Flair Towers. Launched in November 2010, this tropical resort-inspired development is located on a 1.4
hectare property in Mandaluyong City, and will have two 41storey towers with a total of 2,093 units. Each
of the two towers has sky lounge and landscaped roof decks. Flair Towers offers studio, one, two and three
bedroom units, each equipped with a balcony. The units price ranges from 2.3 million to 7 million each,
with floor areas of 24 to 75.5 square meters per unit. The project is fully developed and completed with
99% and 97% of units sold and turned over, respectively, to homeowners.
Sorrel Residences. Located along Sociego Street near Sta. Mesa, Manila, Sorrel Residences is a 27-storey
HRB with 592 units. Sorrel Residences will have studio, one, two and three bedroom units ranging in size
from 38.3 to 77 square meters at a price range of 2.0 million to 5.6 million per unit. The project is fully
developed and completed, with 97% and 87% of units sold and turned over, respectively, to homeowners.
The Amaryllis. This 22-storey HRB development is on a 4,764 square meter property located along E.
Rodriguez Avenue, Quezon City. With efficiently planned spaces, the projects 450 units consisting of two,
three and four bedroom options will have gross unit sizes ranging from 48 to 86 square meters at a price
range of 4.4 million to 9.4 million per unit. Launched in September 2011, the project is fully developed
and completed, with 91% of the units sold and 88% turned over to homeowners.
ii.
Ongoing Projects
Fairway Terraces. Launched in August 2015, this Balinese-inspired development will offer additional
premium features such as low density atmosphere, and larger than usual units with upgraded turnover
finishes. Residents will enjoy an unobstructed view of the Villamor Golf course, and the city skylines of
Makati and Taguig. This project will be composed on one 17-storey HRB with 375 units and gross floor
area ranging from 32.5 sq.m. to 78 sq.m. Unit prices range from 2.6 million to 7.8 million. The project
is expected to be completed by February of 2019. To date, 43% of the units have been sold.
85
Zinnia Towers. Launched in December 2011, Zinnia Towers will rise on a two hectare lot in Muoz,
Quezon City and is easily accessible to key transportation hubs. Zinnia Towers will be comprised of two
HRBs, a 40-storey North Tower and a 45-storey South Tower, with a total of 1,792 units. This project will
offer studio, one, two and three bedroom units at a price range of 2.0 million to 6.4 million each unit.
The units will have gross sizes ranging from 25 to 82 square meters. To date, approximately 52% of the
units have been sold. North Tower is expected to be completed by May 2016 and the South Tower by
December 2017.
One Castilla Place. This 5,452 square meter residential project is located on Castilla Street, Barangay
Valencia, Quezon City. The 31-storey HRB will have a unique T-shape design, allowing natural lighting
and ventilation into the building. Prices for its 729 units, consisting of one, two and three bedroom options,
range from 2.3 to 6.3 million per unit. All units will have a balcony with gross unit sizes ranging from
40 to 81square meters. Launched in January 2012 and is expected to be turned over on January 2016, 93%
of the units have been sold.
Torre de Manila. Torre de Manila is situated on a 7,258 square meter lot on Taft Avenue, Manila, providing
proximity to leading universities, reputable hospitals, and key business and commercial centers. This
project will offer one, two and three bedroom options, ranging in size from 30.5 to 110 square meter gross
floor area per unit. Torre de Manilas license to sell was issued on September 25, 2012. To date, this project
is already 90% sold.
A petition for injunction was filed by the Knights of Rizal which sought to enjoin the construction of the
Companys Torre de Manila project on the claim that Torre de Manila will obstruct the view surrounding
the Rizal Park and the Rizal Monument. On January 5, 2015, the National Commission on Culture and the
Arts issued a cease and desist order directing that the construction of the project cease. The Company has
filed a petition for prohibition, injunction and damages against the NCCA before the Regional Trial Court
of Makati seeking, among others, that the cease and desist order be nullified. This petition is pending before
the Makati court. On June 16, 2015, the Supreme Court issued a temporary restraining order that
provisionally suspended the construction of the Torre de Manila, effective until further orders from the
Supreme Court. In view of this, on June 18, 2015, the HLURB issued an order suspending the License to
Sell of the Company in respect of Torre de Manila. The order covers the suspension and discontinuation of
selling and advertising of units in Torre de Manila and the collection of amortization payments from unit
buyers, until further orders from the HLURB. The Supreme Court has completed hearing the parties in oral
arguments in September 1, 2015. Pending resolution of the case, the Supreme Court allowed the Company
to conduct the necessary safety and maintenance works on Torre de Manila to prevent hazardous
deterioration of the building.
Viera Residences. Building on its heritage for construction innovation, the company is incorporating the
Lumiventt Advantage to Viera Residences, a 27-storey high-rise project that will soon rise right in the heart
of the City of Star, on a quiet side of Scout Tuason Ave., in Brgy. Obrero, Quezon City. A wide array of
open spaces shall occupy approximately 60 percent of 5,700 sq.m. of premium space. It will have one to
two-bedroom unit offerings with 29 to 67 sq. m. that will be price from 2.2 million to 5.5 million. Total
of 755 units, 66% of which was already sold. The project is expected to be turned over by March 2018.
Lumiere Residences. The three-tower condominium project will soon rise on a prime location along Shaw
corner Pasig Boulevard in Pasig City. The project is composed of two 37-storey and a 42-storey project in
a 1.2 hectare of prime land features modern tropical architecture and DMCI Homes building innovation,
Lumiventt. Lumiere Residences offers larger-than-usual unit spaces. Generously laid out Studio, 2-
86
bedroom and 3-bedroom unit with balcony with prices ranging from 2.1 million to 6.8 million. The
project has a total of 2,412 units, 54% of which was already sold.
Sheridan Towers. Sheridan Towers will rise on an 11-hectare property along landmark Sheridan Street,
with a mix of one and two-bedroom unit offerings perfect for start-up families and young urban achievers.
Prices starts at 2.1 million up to 5.6 million. The project will be composed of two HRBs and will have
a total of 2,204 units, 65% of which was already sold. The first tower is expected to be completed by
November 2018 and the second tower by May 2020.
Brio Tower. The 32-storey high-rise condo is DMCI Homes first development in the well-known business
capital of Metro Manila. It is set to rise on a prime 5,760-square meter property in Guadalupe Viejo, along
the major thoroughfare of EDSA. Home seekers can look forward to city refuge among its efficiently
planned one-, two- and three-bedroom unit offerings ranging from 24 sq.m. to 84 sq.m. Prices starts at 2.6
million up to 7.9 million. The project has a total of 746 units, 94% of which was already sold. The project
is expected to be completed by November 2019.
c.
Hybrid
A community built with the residents welfare in mind. Assembling its successful and iconic mid-rise
residential building configuration with picturesque and towering high-rise buildings, DMCI Homes hybrid
developments provide resort-inspired homes to a wide array of clients. Each building configuration offers
unique benefits, such as low-density and single-loaded corridor designs with garden atriums for mid-rise
buildings, and the innovative Lumiventt design technology for high-rise structures. Every DMCI Homes
hybrid development is adorned with lush landscapes and abundant amenities. These communities have
developed in different parts of the city.
For the year 2014, Hybrid sales contributed 24.3% of the Companys revenues, amounting to 3 billion.
For the first nine months of 2015, it has contributed 513 million which is 4.66% of the Companys
revenues.
Hampstead Gardens. Located in Sta. Mesa, Manila, the project was launched in 2000. The project was
developed and marketed by the Company. It has three MRBs and a HRB consisting of a total of 364
residential units, with prices ranging from 1.2 to 4.6 million per unit. The project is fully developed and
completed, with 95% of units sold and turned over to homeowners.
Rosewood Pointe. Launched in 2006 and situated in Taguig City just outside the Bonifacio Global City
central business district, this 3.9-hectare development has a Neo-Asian theme. It has 8,000 square meters
of amenity areas, one of the largest in the Companys project portfolio, with designated passive and active
areas, garden landscapes, and water features. It has two 21-storey HRBs and eight 5-storey MRBs with a
total of 1,366 units at a price range of 1.7 to 5.5 million. The project is fully developed and completed,
with 99% and 98% of units sold and turned over, respectively, to homeowners.
Royal Palm Residences. A Thai tropical-inspired residential community in Taguig City launched in 2008,
Royal Palm Residences is composed of eight 6storey MRBs and two 18-storey HRBs with a balanced
selection of active and passive leisure amenities across a one-hectare expanse. The project is fully developed
and completed with 100% of units sold and 98% turned over to homeowners. Prices of the units range from
2.6 to 7.5million.
Rhapsody Residences. Located just outside the Alabang Central Business District along East Service Road
in Muntinlupa City, this development will have eight 5-storey MRB and one 10-storey HRB comprising of
1,127 units of studio, two and three bedroom options with unit prices ranging from 2.3 to 4.7 million
87
each, and gross floor areas of 50 to 82.5 square meters per unit. The project is fully developed and completed
with 97% and 87% of units sold and turned over, respectively, to homeowners.
Raya Garden Condominiums. Located along West Service Road in Merville, Paraaque City near major
thoroughfares, the community provides a Balinese-inspired, resort-living environment. It was launched in
2005 and consists of two 15-storey HRBs and three 5-storey MRBs set in an efficiently planned space.
Prices for its 920 units, consisting of studio, two and three bedroom options, range from 1.5 to 6.6 million
each. The project is fully developed and completed, with 95% and 93% of units sold and turned over,
respectively, to homeowners.
Stellar Place. Launched in March 2011, Stellar Place is situated on a 0.9 hectare lot along Visayas Avenue,
Quezon City, with 470 units in a mixed development composed of two 6storey MRBs and one 15storey
HRB. The units will have a price range of 2.1 million to 7.0 million each, with floor areas of 24 to 99.5
square meters per unit. The project is fully developed and completed, with 99% and 96% of units sold and
turned over, respectively, to homeowners.
d.
Residential Subdivisions
For the horizontal development segment of the real estate market, DMCI Homes offers its target market the
choice of owning either open lots or house and lot properties. DMCI Homes subdivisions are located in
Taguig City, Cavite (Carmona) and Laguna (Cabuyao). Each development is designed with resort-inspired
amenities, lush greenery and wide avenues within safe and secure environments in close proximity to Metro
Manilas major business centers.
For the year 2014, residential subdivisions sales contributed 1.3% of the Companys revenues, amounting
to 158 million. For the first nine months of 2015, it has contributed 336 million which is 3.06% of the
companys revenues.
Morning Sun. Launched in 2000, this 122-unit Taguig City development is the first of DMCI Homes
residential subdivision projects. It is comprised of 101 house and lot packages and 21 lots. House and lot
packages in this development are priced at 791,000 to 3.6 million each. The project is fully completed,
with 100% and 99% of units sold and turned over, respectively, to homeowners.
Spring Lane. This pocket residential development in Taguig City with 74 units, comprised of 10 bundled
house and lots and 64 lots, was launched in 2002. House and lot packages in this development are priced at
1.9 million to 5.2 million each, while lots are sold at 813,000 to 4.2 million each. The project is fully
developed and completed, with 100% and 96% of units sold and turned over, respectively, to homeowners.
Villa Alegre. Situated in Carmona, Cavite with 218 units, comprised of 69 bundled house and lots and 149
lots, Villa Alegre was launched in 2003. House and lot packages in this development are priced at 1.8 to
4.8 million each, while lots are sold at 716,000 to 2.4 million each. Villa Alegre is fully developed and
completed, with 100% of units sold and 92% of units turned over to homeowners.
Mahogany Place Phases 1 and 2. This high-end subdivision, with 477 units, comprised of 40 duplexes, 22
single-attached, and 415 lots, is located in Taguig City and was launched in 2004. The projects design
includes manicured lawns, tree-lined walks, and old-world themed residences. Lots in this development are
priced at 4.5 to 11.4 million each. The project is fully developed and completed, with 100% of units
sold and 99% turned over to homeowners.
Woodland Hills. Located in Carmona, Cavite, this community, with 530 units comprised of 65 bundled
house and lots and 465 lots, was launched in 2005. It is fully developed and completed, with 99% of units
88
sold and 94% turned over to homeowners. House and lot packages in this development are priced at 2.1
to 4.8 million each, while lots are sold at 322,000 to 1,641,000 each.
Mahogany Place Phase 3. Launched in 2008 to continue the success of its first two phases, this subdivision
in Taguig City covers 7.6 hectares of land area with a total of 418 units, comprised of 52 lots, 135
townhouses, 119 duplexes, 109 single-detached units and 3 single-attached units at a price range of 4.1 to
48.1 million. It features landscaped parks, country club-style amenities, and hotel-inspired concierge
services. Around 99% of Mahogany Place Phase 3 units have been sold and 85% turned over to
homeowners.
Willow Park Homes. A 12.7-hectare property in Cabuyao, Laguna, Willow Park Homes has Mount
Makiling as its backdrop. It was launched in 2009 with 597 units comprised of 54 townhouses, 41
bungalows, 40 single-detached units, and 462 lots in a development that features efficient space planning,
cross ventilation, natural lighting, and a modern-tropical architectural design. House and lot packages in
this development are priced at 2.5 to 5.3 million each, while lots are sold at 877,000 to 2.4 million
each. The project has sold 88% of its units and turned over 54% of its units to homeowners.
e.
Residential Leisure
Alta Vista de Boracay. Launched in 2007, it is the Companys first venture in leisure development, with
17 MRBs comprised of a total of 503 units, and is located in Brgy. Yapak, Boracay Island in Aklan. This
development provides recreational facilities in a premium vacation site offering residential condominiumhotel services. Alta Vista de Boracay represents a significant product and service expansion for the
Company. It is a 4-hectare property near Puca Beach on one side and the world-renowned White Beach on
the other. Alta Vista de Boracay is the biggest condominium hotel development in the area. All of its
operations, marketing, and management are handled by DMCI-PDI Hotels, Inc. The property is fully
developed and completed, with 28% of units sold and turned over.
f.
Acacia Estates. Acacia Estates is a master plan integrating the Companys completed and ongoing projects
in Taguig City into a township which provides residential areas, commercial areas, educational facilities,
police and fire stations, and places of worship. Envisioned as the flagship development of the Company,
this 100-hectare development will integrate mixed-residential communities of HRBs, MRBs, and sprawling
subdivisions. Within the development will rise a two-hectare commercial hub catering primarily to residents
of the Companys Taguig City projects and their guests.
Savemore. A 3,000-sqm. Savemore outlet was completed last 2013, which serves as anchor store in the
town center at Acacia Estates located at the heart of the 150-hectare development. Some 5,000 households
currently residing in the different villages within Acacia Estates will be catered by Savemore market. A
cluster of retail shops were situated across the grocery store to address the residents other lifestyle needs. It
is the first Savemore market to be built within a DMCI Homes development as part of the developers
commitment to offer modern-day living solutions.
Casa Real. The three-storey Casa Real along Acacia Avenue was formally launched on October 2, 2013,
which serves as Acacia Estates art centerpiece and showcases DMCI Homes' appreciation of history and
expertise in modern design and engineering. The Solariega Function Hall located at the upper ground,
measuring 250 sq. m, and the Cuadrilla Function Hall, located at the second floor with an area of 334 sq.
m, are ideal venues for celebrating lifes greatest moments. There are available kitchens for catering and
balconies on the second floor. Some of the Town Center commercial tenants include: Bite Central, offering
89
food options; Agantea, a milk tea shop; Wingman, a sports resto-bar; Brera Delicatessen, a deli shop; and
beauty and wellness shops such as Victor Ortega Salon, Skin Retreat and Solace Spa.
5.
DEVELOPMENT COSTS
The Company spent approximately 6 billion, 6 billion and 5 billion for construction development in
2014, 2013 and 2012 respectively.
6.
FOREIGN SALES
Accelerated globalization has resulted in the expansion of the number of OFWs and expatriate Filipinos
employed in foreign countries, creating increased demand from these sectors for superior quality, midincome housing projects in the Philippines. To facilitate property acquisition for clients outside the
Philippines, the Company has an international sales division based in Manila, which oversees global sales
offices located in Asia-Oceana, Europe, the Middle East, and North America. International country
managers and brokers market the Companys projects overseas through their respective marketing
networks.
The international sales division contributed 3%, 2%, and 4% of the Companys total sales by value in the
years ended 2014, 2013, and 2012, respectively.
7.
The Company maintains a network of sales coordinators that assist customers at various project sites during
the reservation process. Employees of DMCI Homes advise customers on financing options, documentation
requirements, and loan application. Once a unit is sold and delivered, the Companys Customer Service
Team is ready to respond to technical questions and implement solutions when needed.
The Companys marketing research unit is in charge of monitoring and researching on competitors latest
product developments and prices. Likewise, the marketing research unit conducts general research on target
markets and undertakes market testing to determine customer preferences and product concept viability.
The Company remains involved in the properties it develops and sells through its property management
division, DMCI Homes Property Management Corp., which provides property management and aftersales
services until such time the property is turned over to the homeowners, at which point they may choose to
retain DMCI Homes Property Management Corp. or switch to a third party property management firm. The
property management division is a vehicle for the Company to obtain feedback from its buyers and rental
tenants in order to provide solutions to their property needs, maintain the property, and develop long-term
relationships with its tenants. Furthermore, the property management division contributes to enhancing the
Companys brand and reputation in the aftersales market.
Marketing Strategy
Over the years the Company has built reputation based on dependability, innovativeness, high quality
workmanship and dedication.
DMCI Homes has sales force of about 1000 in-house sellers and 2,500 external broker/agents spread here
and abroad.
90
The main effort of the Companys sales and marketing team is focused on the upper middle class. They
are reached through traditional marketing strategies such as flyering and booth manning in malls and
supermarkets. Other traditional marketing tools such as international roadshows have also been employed
to reach a more international audience. Newer innovations thru social media marketing have also been used.
A DMCI Homes website and mobile app has been created to reach this tech-savvy generation. Many DMCI
sellers even have their own individual websites that promote its products.
A big part of their sales comes from a non-traditional form of marketing such as referrals and personal
selling. Satisfied DMCI unit owners who have joined its sales team to promote its products to their family
and circle of friends. Persons who once started out as customers have become ambassadors of the
Companys brand and have become a living testament of DMCI Homes commitment of delivering quality
products to every Filipino family.
Training and Recruitment support the sales force through various trainings: Foundations training,
Specialized training, Project Expertise Program, Skills upgrading and Digital marketing techniques.
Buyers Profile
The buyers profile of DMCI Homes project developments as of December 31, 2014 are shown in the table
below.
Occupation Type
1999-2013
2014*
Employed
30%
49.5%
Overseas Workers
16%
20.4%
Entrepreneur
6%
6.4%
Professional
6%
3.1%
Others
2%
0.4%
40%
20.3%
Not Indicated
Grand Total
The business of DMCI Homes is not dependent upon a single customer or a few customers, such that the
loss of any or more of which would not have a material adverse effect on the Company.
Financing Options for Buyers
DMCI Homes offers the following financing options to its homebuyers:
Cash/Deferred Cash. The Company offers attractive discounts to buyers who choose to pay in spot cash.
If the unit being purchased is still under construction, the Company allows the buyer to pay the equivalent
cash price in equal monthly installments during the construction period, interest free.
In-House Financing. DMCI Homes offers in-house financing for up to 90% of a units total purchase price
for a maximum term of ten years, with the 10% balance of the purchase price financed by a unit buyers
equity. The contract price financed by the Company is paid through equal monthly amortizations subject to
interest rates that range from 11.0% to 19.0% per annum, which are fixed for a maximum term of five years
and subject to repricing thereafter.
91
Bank Financing. Through tie ups with major banks, the Company offers bank financing for buyers who
meet the credit acceptance criteria set by each bank and who are able to comply with each banks
documentary requirements. Bank interest rates range from 6.0% to 10.0% per annum, which are fixed for
one to 15 years.
8.
COMPETITORS
The countrys middle income socio-economic group is emerging as the most promising real estate market,
and this has intensified competition in the property development business for that particular market
segment. The Companys significant sales growth in recent years has made it one of the dominant players
in the middle-income residential market category, and its pioneering construction and development methods
- specifically in mid-rise developments - have been used as model by some competitors due to the success
of these concepts.
To leverage against real estate groups positioned in the same market category, DMCI Homes maximizes
its investments by drawing on the Companys strengths and resources as both developer and builder,
enabling it to offer attractive, even lower prices than direct competition, and produce value for home buyers
without adversely affecting its profitability. Aside from offering competitively-priced, high-quality units,
DMCI Homes ensures good property location and on-time project completion.
For the same market category, the Company has several direct competitors with varying market strengths.
Ayala Land, Inc., for instance, through Avida Land, has been successful due to being one of the first players
in the middle income market segment. Megaworld Corporation and SM Development Corporation, own
the first and second largest market share in the residential market respectively.. Robinsons Land
Corporation and Cityland Development Corporation both possess a good track record of completed and
successful projects to attract business. Vista Land and Lifescapes, Inc., and Filinvest Land, Inc., along with
their completed projects in the Metro Manila area, have also ensured market presence in other areas with
their developments in areas such as Davao and Batangas. Rockwell Land Corporation focuses on the uppermid income level earners, while Century Properties Group has a diverse portfolio of completed projects,
ranging from office to medical properties.
9.
Product
Rebar
Rebar
Rebar
Rebar
Cement/ Ready Mix Concrete
Cement
Cement
Trade
Drywall Partitions and Ceiling Finishes
92
EMPLOYEES
The Company has 950 employees as of March 2, 2016. Employees of the Company can be classified based
on their positions.
Position
No. of
Employees
757
109
66
13
5
The Company expects to hire around 50 employees for different positions in 2016, so the total number of
employees is expected to reach around 1,000 in 2016.
The employees of the Company are non-unionized and are not covered by collective bargaining agreements.
They receive supplemental benefits such as health care benefit plan, dental care benefit plan, and group
accident insurance coverage.
93
post-oral argument briefs. Pending resolution of the case, the Supreme Court allowed the Company to
conduct the necessary safety and maintenance works on Torre de Manila to prevent hazardous deterioration
of the building.
95
BOARD OF DIRECTORS
The overall management and supervision of the Company is undertaken by the Board. The Companys
executive officers and management team cooperate with its Board by preparing appropriate information
and documents concerning the Companys business operations, financial condition and results of operations
for its review. Currently, the Board consists of nine (9) members. All of the directors were elected at the
Companys annual stockholders meeting on May 18, 2015 and will hold office until the next annual
stockholders meeting or until their successors have been duly elected and qualified.
The table below sets forth each member of the Companys Board of Directors as of February 29, 2016:
Name
Age
Position
Citizenship
Isidro A. Consunji
67
Filipino
Jorge A. Consunji
63
Director
Filipino
54
Filipino
Alfredo R. Austria
58
Filipino
Jose L. Merin
68
Director
Filipino
Elmer G. Civil
54
Filipino
Victor S. Limlingan
71
Director
Filipino
Evaristo T. Francisco
88
Independent Director
Filipino
68
Independent Director
Filipino
The business experience of each of the Companys directors covering the past five years are described
below.
Isidro A. Consunji, 67, Filipino, is the Chairman of the Board of Directors of the Company. He is a
graduate of B.S. Civil Engineering at the University of the Philippines. He obtained his Master in Business
Economics from the Center for Research and Communication and Masters in Business Management from
the Asian Institute of Management, and attended the Advanced Management Program at Instituto de
Estudios Superiores de la Empresa (IESE) in Barcelona, Spain. He is the President of DMCI-HI, Dacon
Corporation, and Asia Industries Inc. He is the Chairman of the Board of Directors of DMCI Mining Corp.,
DMCI Homes, and Beta Electric Corp. He is the Vice Chairman of Maynilad Water Services Inc., a
member of the board of directors of D.M. Consunji Inc., Semirara Mining and Power Corporation,
DMCI/MPIC Water Company Inc., Crown Equities, Inc., Atlas Consolidated Mining and Dev Corp.,
Carmen Copper Corp., Sem-Calaca Power Corp., Berong Nickel Corp., Toledo Mining Corp., ENK PLC
(London). He was the former President of the Philippine Constructors Association and Philippine Chamber
of Coal Mines, Inc. At present, he is the Chairman of the Board of the Philippine Overseas Construction
Board and a board member of Construction Industry Authority of the Philippines.
96
Alfredo R. Austria, 58, Filipino, is a Director, President and Chief Operating Officer of the Company. He
is a graduate of B.S. Civil Engineering, Cum Laude, at the University of the Philippines. He is a licensed
Civil Engineer and placed 2nd at the Philippine Civil Engineering Board Exam. He also obtained his Master
in Business Administration from the University of the Philippines. He has held various positions in different
construction companies domestically and internationally. He is a member of the Philippine Institute of
Civil Engineers - Manila Chapter.
Ma. Edwina C. Laperal, 54, Filipino, is a Director, Senior Vice-President and Treasurer of the Company.
She both graduated from B.S. Architecture and obtained her Masters Degree in Business Administration
from the University of the Philippines and an Executive Certificate for Strategic Business Economics
Program from the University of Asia & the Pacific (formerly the Center for Research and Communication).
She is a licensed architect in the Philippines. She is concurrently the Director and Treasurer of DMCI
Holdings, Inc., D.M. Consunji Inc. and Dacon Corporation and a Director in Semirara Mining and Power
Corporation, DMC Urban Property Developers, Inc., and Sem-Calaca Power Corporation.
Elmer G. Civil, 54, Filipino, is a Director of the Company and SVP for Design and Construction of the
Company. He is a graduate of B.S. Civil Engineering & B.S. Sanitary Engineering at the Mapua Institute
of Technology. He placed 12th in the Philippine Civil Engineering Board Examination and placed 5th in
the Philippine Sanitary Engineering Board Examination. He has held the position of Vice-President &
General Manager for Housing Business Unit of DMCI.
Jorge A. Consunji, 63, Filipino, is a Director of the Company. He is a graduate of B.S. Industrial
Management Engineering at the De La Salle University. He obtained his Masters in Business Economics
from University of Asia and the Pacific. He is the President and COO of D.M. Consunji Inc. He is also the
Chairman of DMCI Masbate Power Corporation and Wire Rope Corp. of the Philippines, Director of
DMCI-HI, Dacon Corporation, SEM-Calaca Power Corporation, DMCI Mining Corporation, DMCI Power
Corporation, DMCI Concepcion Power Corporation, Semirara Mining and Power Corporation ,Maynilad
Water Services Inc., Manila Herbal Corporation, and Beta Electric Corp. He was the former Chairman of
ASEAN Constructors Federation and former President of Phil. Constructors Association and ACEL. He is
currently a Director of Private Infrastructure Development Corp.
Jose L. Merin, 68, is a Director of the Company. He is currently the President of DMC Urban Property
Developers, Inc. and Celebrity Sports Plaza. He is also the Director of Universal Leisure Club, Inc. He
graduated from St. Louis University with a degree in Bachelor of Arts/Bachelor of Science in Education
and earned his Masters degree on Asian Studies at the U.P. Diliman. He is also a candidate for Master in
Business Administration from the De La Salle University.
Victor S. Limlingan, 71, is a Director of the Company. He is also the Director of D.M. Consunji, Inc.,
Berong Nickel Corporation and all other subsidiaries of DMCI Holdings, Inc. He is currently the Managing
Director of DMCI-HI. He also serves as the Chairman of Guagua National Colleges and member of the
Presidential Task Force on Education. He owns and manages Regina Capital Development Corporation.
He is also the Chairman and majority shareholder of Cristina Travel Corporation. Mr. Limlingan was a
Professor of Public Policy, Business Strategy, and Financial Management at the Asian Institute of
Management (AIM). He is a graduate of Bachelor of Arts Major in Engineering and received his Master in
Business Management and Bachelor of Arts Major in Engineering degrees from Ateneo de Manila
University. He also received his Doctorate Degree in Business Administration from Harvard University.
Evaristo T. Francisco, 88, is an Independent Director of the Company. He served as a member of the
Board of Directors of D.M. Consunji Inc. from 1988-2001 and held various positions in Pilipinas Shell
Petroleum Corporation as member of the Board of Directors, Vice President for Marketing, Personnel and
97
Public Affairs, Sales and other overseas work for Shell International Petroleum Co. Mr. Francisco has
served as a member of the Board of Directors of DMCI-HI from 2001-2010. He graduated from the
University of the Philippines with a degree in Mechanical Engineering and a Masters Degree in Business
Economics from Center for Research and Communication.
Francisco F. Del Rosario, Jr., 68, is an Independent Director of the Company. He is also an Independent
Director of Metrobank and Philab Industries, Inc., a Director of Mapfre Insular Insurance Corp. and
Omnipay Inc., a Cabinet Member of Habitat for Humanity Philippines, and a Trustee of ABS-CBN
Foundation Inc. Mr. del Rosario is a graduate of B.S. Commerce major in Accounting and Bachelor of Arts
Major in Economics from De La Salle College. He also obtained his Master in Business Management from
the Asian Institute of Management. He is also a candidate for Doctoral Program in Business Administration
from De La Salle University Professional Schools, Inc.
Resignation of Directors
To date, no director has resigned or declined to stand for re-election to the Board of Directors due to any
disagreement with the Company relative to the Companys operations, policies and practices.
2.
EXECUTIVE OFFICERS
The following are the names, ages and citizenship of the Companys executive officers (in addition to the
directors listed above) elected as of February 29, 2016:
Name
Age
Position
Citizenship
Florante C. Ofrecio
62
Filipino
49
Filipino
Noel A. Laman
75
Corporate Secretary
Filipino
39
Filipino
Evangeline H. Atchioco
41
Filipino
The business experience of each of the Companys executive officers covering the past five years are
described below.
Florante C. Ofrecio, 62, is the Senior Vice President for Sales of the Company and has been heading the
Sales Division since 2006. He is a graduate of B.S. Industrial Engineering from University of the
Philippines, Diliman. He obtained units for a degree in Master in Business Administration from the Ateneo
de Manila University and Certificate in Business Economics from University of Asia and the Pacific. He is
a licensed real estate broker since 1987. He has been involved in the realty business since 1981 in the areas
of sales and marketing, financial planning, project conceptualization and actual development, consultancy
and related advisory functions. He has been an active member of CREBA (Chamber of Real Estate Builders
Association Inc.) since 1990 having served in various positions as officer and member of the Board of
Directors. He is an active Rotarian and a past president of the Rotary Club of South Triangle, District 3780
for two terms RY2010-2011 and RY2012-2013.
Joseph Ramil B. Lombos, 49, is the Chief Finance Officer and Senior Vice President for Finance and
Operations of the Company. He holds a degree in Engineering Management from the University of
California Los Angeles (UCLA) and graduated with honors. He obtained his Master in Business
98
Management from the Asian Institute of Management (AIM). He was formerly a Vice President of SM
Development Corporation (SMDC) and Vice-President of Banco De Oro Universal Bank.
Noel A. Laman, 75, is the Corporate Secretary of the Company. He is a graduate of the University of the
Philippines College of Law (B.S. Juris 59, LLB 60) and pursued graduate law studies at the University of
Michigan Law School (LLM 63) as a DeWitt scholar. He began his practice as an intellectual property and
business lawyer after his studies in the United States and, after founding the law firm Castillo Laman Tan
& Pantaleon in 1981, he expanded his intellectual property/business law practice to foreign investments
and mergers and acquisitions. He is a name and senior partner of Castillo Laman Tan Pantaleon & San Jose.
He was a former president of the Intellectual Property Association of the Philippines and a former council
member of the Asian Patent Attorneys Association. He is a firm representative to the European Chamber
of Commerce and German Philippine Chamber of Commerce, Inc. and a rear admiral of the Philippine
Coast Guard Auxiliary aside from being its legal counsel and head of its board of discipline.
Ma. Pilar P. Gutierrez, 39, is the Assistant Corporate Secretary of the Company. She graduated from the
Ateneo de Manila University with Bachelor of Science degree in Legal Management in 1997. She is a
Deans medalist and a graduate of the University of the Philippines College of Law Class of 2001. After
taking the bar examinations in 2001, she joined the law firm Castillo Laman Tan Pantaleon & San Jose as
an Associate on November 5, 2001. She was promoted to Senior Associate in the same law firm on January
1, 2007, and was admitted as a Partner on January 1, 2010.
Evangeline H. Atchioco, 41, is the Chief Compliance Officer of the Company. She was appointed on
February 12, 2016. She graduated from the University of the East with a Bachelor of Science Degree in
Accountancy in 1994. She is a Certified Public Accountant. She was a Senior Auditor in SyCip Gorres
Velayo & Co. from 1994 to 1996 and thereafter joined the Company in 1997. She also occupies the position
of Vice President for Finance in the Company.
Reynaldo C. Salazar, 68, has resigned from the position of Senior Vice President for Business
Development effective as of February 29, 2016. As of the date of this Prospectus, no person has been
appointed to fill the said position in the Company.
3.
SIGNIFICANT EMPLOYEES
Each employee, whether executive or rank and file is considered important, and each makes a significant
contribution to the business of the Company.
4.
FAMILY RELATIONSHIPS
Messrs. Isidro A. Consunji, Jorge A. Consunji and Ms. Ma. Edwina C. Laperal are siblings. Other than the
foregoing, there are no other family relationships up to the fourth civil degree, either by consanguinity or
affinity, among directors, executive officers, or persons nominated or chosen by the Company to become
directors or executive officers, that is known to the Company.
5.
a.
Certain directors of the Company, namely, Isidro A. Consunji, Ma. Edwina C. Laperal, and Jose L.
Merin are involved in a case filed by certain members of the Universal Leisure Club, a joint venture
corporation established by Universal Rightfield Property Holdings, Inc. and the Company,
involving alleged fraud in the preparation of the registration statement for the clubs shares. The
Company believes that this case will not prosper on the merits. Apart from this case, none of the
99
Directors or Executive Officers is involved in any material pending legal proceedings in any court
or administrative agency of the government.
b.
None of the Directors or Executive Officers has been involved in any bankruptcy petition.
c.
Certain directors of the Company, namely, Isidro A. Consunji, Alfredo R. Austria, Jorge A.
Consunji, Ma. Edwina C. Laperal, and Victor S. Limlingan, as well as its Corporate Secretary and
Assistant Corporate Secretary, Noel A. Laman and Ma. Pilar P. Gutierrez, are named as respondents
in a preliminary investigation proceeding for syndicated estafa filed by a buyer of a house and lot
for the alleged failure of the Company to turn over the certificate of title over such property. The
Company believes that the abovenamed directors and officers of the Company have a valid defense
and that this case will not prosper. Apart from this case, none of the Companys Directors or
Executive Officers has been convicted by final judgment in a criminal proceeding or is subject to
a pending criminal proceeding, both domestic and foreign.
d.
None of the Directors or Executive Officers has been subject to any order, judgment or decree of
any court of competent jurisdiction (domestic or foreign) permanently or temporarily enjoining,
barring, suspending or otherwise limiting their involvement in any type of business, securities,
commodities or banking activities.
e.
None of Directors or Executive Officers has been found by a domestic or foreign court of competent
jurisdiction (in a civil action), the SEC or comparable foreign body, or a domestic or foreign
exchange or other organized trading market or self-regulatory organization, to have violated a
securities or commodities law or regulation.
6.
EXECUTIVE COMPENSATION
a.
Compensation of Directors
Under Article III, Section 10 of the Companys By-Laws, each director shall receive a reasonable per diem
for his attendance at every meeting of the Board. Furthermore, every member of the Board shall receive
such amounts, not to exceed 10% of the net income before income tax of the Corporation during the
preceding year, as may be determined by the Board of Directors, as compensation, subject to the approval
of the stockholders.
Each directors per diem per board meeting attended is 10,000. The total annual compensation received
by the directors amounted to 360,000 for 2014. For the current year, the projected total annual
compensation of directors is also 360,000.
b.
Executive Compensation
Under Article IV, Section 10 of the Companys By-Laws, the Board of Directors shall determine the
remuneration to be received by the executive officers designated therein.
The total annual compensation for the Companys Chief Executive Officer and five (5) most highly
compensated executive officers amounted to 12.9 million for 2014. For the current year 2015, the
projected total annual compensation is 13.6 million.
Names
Position
Alfredo R. Austria
President and
Chief Operating Officer
Ma. Edwina C. Laperal
Senior Vice-President and
Treasurer
Elmer G. Civil
Senior Vice-President for
Construction Division
Joseph Ramil B. Lombos
Chief Finance Officer and
Senior Vice-President for
Finance & Operations
Florante C. Ofrecio
Senior Vice-President for Sales
Total for five most highly compensated executive officers
Total for all other officers as a group unnamed*
12,918,533.00
40,804,498.00
11,954,482.04
36,281,383.96
The Board of Directors and Management of DMCI Homes commit themselves to the principles and best
practices contained in the Companys Manual on Corporate Governance (the Manual), and acknowledge
that the same shall serve as a guide in the attainment of their corporate goals. The Board of Directors and
Management believe that corporate governance is one of the necessary components of what constitute
sound business management, and therefore undertake the necessary effort to create corporate governance
awareness within the organization.
DMCI Homes Board of Directors is primarily responsible for the governance of the Company. Corollary
to setting the policies for the accomplishment of corporate objectives, the Board of Directors provides an
independent check on Management. An evaluation system to determine and measure compliance with the
Manual shall be established by the Companys compliance officer.
Compliance with the principles of good corporate governance starts with the Board of Directors. It is the
Board of Directors responsibility to foster the long-term success of the Company and secure its sustained
competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best
interest of the Company, its stockholders and other stakeholders.
There have been no deviations from the Manual. DMCI Homes has adopted the leading practices and
principles of good corporate governance as set out in the Manual.
The Company is taking further steps to enhance adherence to principles and practices of good corporate
governance.
101
Actual
Short-term Debt
16,743,674,456
Long-term Debt
13,055,611,986
Pro forma
Adjustment
Pro Forma
for the
Issuance of
Bonds
16,743,674,456
13,055,611,986
952,155,827
952,155,827
3,487,727,328
3,487,727,328
15,260,667
240,865,059
15,260,667
240,865,059
7,818,880,984
7,818,880,984
Total Equity
11,562,734,038
11,562,734,038
Total Capitalization
41,362,020,480
Retained Earnings
952,155,827
42,314,177,307
Notes: Adjusted amount as at September 30, 2015 includes proceeds of 1 billion principal amount of the Bonds offered net of
unamortized debt issuance cost. Total capitalization is the sum of long-term debt and equity.
102
103
104
Other non-current assets increased by 49% to 1.65 billion in 2014 from 1.11 billion during the previous
year primarily due to the increase in input VAT, creditable withholding tax and prepayments.
In 2014, the Companys total liabilities amounted to 26.98 billion, representing a decrease of 3.79% from
2013s 28.04 billion.
Customers advances and deposits increased by 17.89% to 5.41 billion in 2014 from 4.59 billion in 2013
attributed mainly to the increase in the sale of high-rise buildings (HRB) and medium-rise building (MRB)
projects (which were originally launched in 2013) such as the La Verti Residences, Verawood Residences,
Torre de Manila, Zinnia Tower, and Sorrel Residences.
Payables to related parties decreased by 49.64% from 1.05 billion at end-2013 to 530 million at end2014. Likewise, loans payable dropped by 14% to 16.20 billion in 2014 from 18.82 billion in the year
prior due to CTS buybacks and amortizations paid for the year as well as the partial repayment of corporate
notes.
Liabilities for purchased land increased by 59% or to 2.18 billion in 2014 from 1.37 billion in 2013.
DECEMBER 31, 2013 VS. DECEMBER 31, 2012
Results of Operations
Total income generated for 2013 was 12.8 billion, a 24.64% increase from 2012.
The Company managed to post a modest 13.26% growth in net income, from 2.30 billion in 2012 to 2.61
billion in 2013. The completion of Flair Tower, La Verti Residences, Siena Park Residences and Rhapsody
enabled the Company to recognize real estate sales in the amount of 11.70 billion in 2013, a 25.89%
increase from the previous years 9.29 billion. Gross profit for 2013 was at 5.3 billion, a 10.30% increase
from 2012 of 4.82 billion.
A decrease in finance income of 40.43% amounting to 282.1 million in 2013 compared to 473.6 million
in 2012 was an effect on conversion of buyers payment term to bank financing.
Other income increased by 99.2% from 299.6 million in 2012 to 596.9 million in 2013. This was mainly
composed of management fees to the Companys joint venture partners for sales and marketing, rental
income from leased-out units, forfeitures from cancelled sales during the year, and collection of penalty
charges, holdings fees, fees for change in ownership, transfer fees, restructuring fees, lease facilitation fees
and others. The income from cancellation of real estate sales were primarily responsible for the increase in
other income to 414.3 million in 2013, which resulted to a 98.32% increase, as against 208.9 million in
2012.
The Companys operating expense for 2013 was registered at 2.27 billion, an increase of 20.58% of the
prior years 1.88 billion. The upward movement was mainly due to an increase in commissions in 2013
by 73.7% or from prior years 385.3 million to 669.3 million.
Net income in 2013 grew 13.25% to 2.61 billion from 2.30 billion in 2012.
Financial Position
The Companys total assets stood at 37.87 billion on December 31, 2013, higher by 33.84% than the
28.30 billion total assets as of December 31, 2012.
105
In 2013, the Companys cash balance grew by 140.49%% to 6.63 billion from 2012s ending balance of
2.75 billion due to a loan entered into by the Company in October 2012. The loan is a seven-year pesodenominated corporate notes facility with an aggregate amount of 10 billion.
Receivables, primarily from instalment contracts, increased by 32.46% to 10.87 billion in 2013 from 8.21
billion in 2012. The increase was a result of increase in booked sales from Flair Tower, La Verti, Rhapsody
and Siena Park.
The Companys real estate inventories had a 17.47% increase from 15.27 billion in 2012 to 17.94 billion
on the following year. This increase is mainly explained by the construction and development cost incurred
which amounted to 5.77 billion and 5.13 billion in 2013 and 2012, respectively.
Other current assets increased by 22.48%, or from 0.90 billion in 2012 to 1.11 billion in 2013. The bulk
of other current assets was accounted for by prepayments for taxes, commissions and insurance, which
comprised 38.7% of the total other current assets.
The Company had total liabilities amounting to 28.04 billion in 2013, an increase of 40.83% from 2012s
19.91 billion.
In 2013, a significant growth in payables to related parties was observed, registering at 503.48% or to 1.05
billion from 174.5 million in 2012. This was primarily from the contract entered into by DMCI, Inc. for
the purchase of the latters remaining real estate inventories and assignment of receivables to DMCI-PDI.
As a result of the seven-year corporate notes facility that the Company entered into in October 2012, loans
payable increased by 51.82% to 18.8 billion in 2013 from 12.4 billion in 2012. Tranche 1 of the 10
billion corporate notes was issued on October 31, 2012 with an amount of 1.0 billion. Tranche 2 and
Tranche 3 were issued in April 2013 and July 2013 with an aggregate amount of 9.0 billion.
Liabilities for purchased land grew by 19.85% from 1.14 billion in 2012 to 1.37 billion in 2013 as a
result of new acquisitions during the year.
The Companys shareholdings in its subsidiaries and associates remained the same. Investment in
subsidiaries and associates comprised ownership of the following: DMCI Homes, Inc. (100%), DMCI
Homes Property Management Corp. or DPMC (100%), DMCI-PDI Hotels, Inc. (100%), Riviera Land Corp
(62.62%), Zenith Mobility Solutions Services, Inc. (51%), Contech Products Southor Acotec (33%), CSN
Properties, Inc. (45%) and Subic Water and Sewerage Company (40%). The Company also owned 100%
of Hampstead Gardens Corp (whose corporate term was shortened to February 28, 2014).
Performance Indicators
Financial
Data
Gross
Revenues
EBIT
13.69
billion
4.69 billion
12.83 billion
10.30 billion
4.04 billion
3.86 billion
EBITDA
4.91billion
4.20 billion
4.03 billion
Net Income
3.29 billion
2.61 billion
2.30 billion
0.94
0.75
0.66
Earnings per
share
2014
2013
2012
106
September 2015
11.77
billion
4.02
billion
4.28
billion
2.72
billion
0.78
September 2014
11.16
billion
4.00
billion
4.15
billion
2.66
billion
0.76
Financial
Data
Current ratio
Debt-toequity ratio
Return
on
Assets
Return
on
Equity
Solvency
Rate
Interest
Coverage
Ratio
Debt Service
Coverage
Ratio
2014
2013
2012
September 2015
September 2014
3.64:1
3.70:1
3.13:1
2.38:1
2.87:1
2.24:1
2.85:1
2.37:1
2.20:1
2.80:1
8.43%
6.89%
8.14%
6.60%
7.09%
27.37%
26.54%
27.48%
21.28%
25.60%
0.13:1
0.10:1
0.12:1
0.10:1
0.09:1
36.76:1
7.89:1
5.94:1
26.17:1
13.86:1
1.70:1
0.82:1
0.85:1
2.16:1
1.32:1
The manner by which the Company calculates the foregoing indicators is as follows:
Current Ratio means the Issuers current assets divided by the current liabilities as reflected in the Issuers
latest available audited semi-annual financial statements ending June 30 and audited financial statements
ending December 31. This ratio is used as a test of the Companys liquidity.
Debt to Equity Ratio means the ratio of the Issuers total liabilities to its total stockholders equity, as
reflected in the latest unaudited semi-annual financial statements ending June 30 and audited financial
statements ending December 31. The ratio reveals the proportion of liability and equity the Company is
using to finance its business. It also measures a Companys borrowing capacity.
Return on Assets means the ratio obtained by dividing the Companys net income by its total assets. This
measures the Companys earnings in relation to all of the resources it had at its disposal.
Return on Equity means the ratio obtained by dividing the Companys net income by its total equity. This
measures the rate of return on the ownership interest of the Companys stockholders.
Earnings per Share means the portion of the Companys profit allocated to each outstanding share of
common stock. Earnings per Share serves as an indicator of the Companys profitability.
Solvency Rate means the ratio obtained by dividing the Companys net income and depreciation and
amortization by its total liabilities. It measures the Companys ability to meet its short-term and long-term
obligations.
Interest Coverage Ratio means the ratio calculated by dividing the Companys earnings before interest and
taxes by interest expense. This ratio determines the Companys ability to pay interest on its outstanding
debt.
Debt Service Coverage Ratio means the ratio obtained by dividing the earnings before interest and taxes
(net operating income) by the total debt service costs which includes payment of loans and interest expense.
This ratio measures the Companys ability to maintain its current debt levels.
107
Current ratio
0.57:1
0.91:1
Solvency ratio
0.10:1
0.13:1
Debt-to-equity ratio
2.20:1
2.24:1
24.77%
26.67%
Return on equity
21.28%
27.37%
26.17:1
36.76:1
108
109
their respective audit functions. Prior to the commencement of an audit, the Audit Committee is tasked to
discuss with the external auditor the nature, scope and expenses of the audit, and ensure proper coordination
if more than one audit firm is involved in the activity to secure proper coverage and minimize duplication
of efforts.
The Committee reviews the reports submitted by the internal and external auditors, as well as the quarterly,
half-year and annual financial statements of the Company before their submission to the Board. In the
review of financial statements, the Committee focuses on any change/s in accounting policies and practices,
major judgmental areas, significant adjustments resulting from the audit, going concern assumptions,
compliance with accounting standards and compliance with tax, legal and regulatory requirements.
111
General and special management services rendered by DMCI-HI, the ultimate parent company, to
the Group for a fee. This is effective for a period of five (5) years and renewable for another five
(5) years upon mutual agreement of the contracting parties.
Total management fees charged against operations under this agreement amounted to 3.15 million
for the nine months ended September 30, 2015.
b.
Dividend income from investment in Subic Water and Sewerage Company recognized by the
Group in the interim consolidated statements of comprehensive income amounted to 32.00 million
and 25.89 million in 2015 and 2014, respectively.
c.
Contract billings by DMCI, an affiliate, amounting 79.19 million and 246.45 million as of
September 30, 2015 and December 31, 2014, respectively, for the construction of the real estate
projects included in the Payables to related parties account.
The Groups wholly owned subsidiary DMCI Homes Inc. provides general and special management
services. DMCI Homes Inc. receives remittances from Companys customers situated in other countries as
payment for real estate units. Transaction with other related parties represents advances made by the
Company for daily operation of related parties.
There have been no guarantees provided or received for any related party receivables or payables. The
Company has not recognized any impairment losses on amounts receivables from related parties for the
nine months ended September 30, 2015. This assessment is undertaken each financial year through a review
of the financial position of the related party and the market in which the related party operates.
Transactions between related parties are based on terms similar to those offered to non-related parties.
Related party transactions are made under the normal course of business.
Aside from the above, the Company also has cash and operating advances made to and received from related
parties. These advances are mostly made to subsidiaries for initial working capital requirements for
maintenance of completed projects. To ensure the proper upkeep of premises upon completion of projects,
the Company typically provides advances to each projects condominium corporation or homeowners
association as seed fund for maintenance purposes. Repayments of these advances are offset from
association dues of units owned by the Company in these projects.
Total outstanding receivables from related parties as of September 30, 2015 and December 31, 2014
amounted to 54.27 million and 91.86 million, respectively. Total outstanding payable to related parties
as of September 30, 2015 and December 31, 2014 amounted to 395.47 million and 530.44 million,
respectively.
112
To the best of the Companys knowledge, there are no parties that fall outside of the definition of related
parties under SFAS/IAS No. 24, but with whom the Company or its related parties have a relationship that
enables the parties to negotiate terms of material transactions that may not be available from other, more
clearly independent parties on an arms length basis.
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other
party in making financial and operating decisions or the parties are subject to common control or common
significant influence (referred herein as subsidiaries). Related parties may be individuals or corporate
entities.
113
DESCRIPTION OF PROPERTIES
Land Inventory
In line with its goal of providing well-located residential options, DMCI Homes purchases properties within
the Metro Manila area. The Companys land development begins one to two years from property acquisition
to avoid carrying costs, resulting in more competitive sales pricing. Potential land acquisitions are assessed
on the basis of strategic location, acquisition price relative to prevailing market prices, presence of
competition in the area, shape of the lot, potential legal and technical hindrances to development, and local
government requirements for development.
Based on the Companys development standards, the minimum land area required for the Companys fivestorey mid-rise developments is one hectare, with a zonal classification of R-2. Ten-storey and mid-rise
developments have a minimum land area requirement of 5,000 square meters, with a zonal classification of
R-3. High-rise developments require a minimum land area of 3,000 square meters and a zonal classification
of R-3.
The table below enumerates the Companys current land inventory available for development.
Location
Land area
(square meters)
754,925.80
44,351.00
40,998.00
29,170.00
20,632.00
16,689.00
15,094.00
12,795.00
11,055.00
10,281.80
Taguig City
Paraaque City
Quezon City
Pasig City
Makati City
Mandaluyong
Laguna
Cavite
Caloocan
Manila
4,000.54
959,992.14
Pasay City
Total
The Company is currently exploring opportunities for diversification of its property developments in key
urban centers in the Northern Luzon and Western Mindanao regions. Future land acquisitions will be
funded by debt financing and internally generated funds.
In addition to its land inventory, the Company owns its corporate headquarters, located at 1321 Apolinario
St. Bangkal, Makati City, Philippines, 1228. The property has a total land area of approximately one hectare,
upon which stands a six-storey building with annex, with a total floor area of approximately 35,000 square
meters.
Encumbrances
Certain parcel or parcels of land of the Company which are minor in size considering the total landholdings
of the Company are subject to proceedings arising out of claims of certain individuals. While the results of
litigation cannot be predicted with certainty, the Company believes that the final outcome of these
114
proceedings will not have a material adverse effect on the property, considering the nature of the claims
asserted in the proceedings.
Properties of the Company in which particular projects have been created are subject to restrictions arising
from the nature of the projects created over them. For instance, properties over which a condominium
building has been constructed would have restrictions annotated on the title of such property arising from
the master deed restrictions on the use of the property for condominium use.
Leased Properties
The Company has entered into leases of spaces in commercial areas in Metro Manila in which model units
for its projects are set-up. The leases may be renewed based on the marketing needs of the Company. Due
to the small space involved, the lease rental payments are not substantial. Further information on these
leases are provided in the table below.
Purpose
Leased
Area
(in sq.m.)
253
Term
Monthly rental
(in , inclusive of VAT)
172,267.60
110.6
55,742.40
210
188.8
186
144
121
99
362.9
85,377.60
61,600.00
116,992.51
69,845.97
102,926.50
96,300.00
130,000.00
115
MATERIAL CONTRACTS
The following are summaries of the material terms of the principal contracts related to the Companys
primary business and should not be considered to be a full statement of the terms and provisions of such
contracts. Accordingly, the following summaries are subject to the full text of each contract.
The Companys material contracts consist primarily of the following:
1.
The Company and DMCI Homes, Inc. entered into a Management Agreement December 12, 2011
whereby DMCI Homes, Inc., as manager, will provide general and overall sales and marketing
services to the Company for the Companys subdivision and condominium projects. Under this
agreement, DMCI Homes, Inc. shall be primarily responsible for the project definition and theme,
development and implementation of marketing and selling programs, conceptualization and
execution of advertising and promotional plans, development and production of marketing
brochures/sales kits, organization of regional/international roadshows and exhibits and conducting
sales briefing and training. This agreement will subsist unless mutually pre-terminated by both
parties.
2.
The Company and DMCI-HI entered into a Management Agreement dated December 10, 2012.
Under this agreement, DMCI-HI shall render general and special management services which shall
involve the coordination and utilization of the Companys resources and personnel toward the
attainment of the overall policies and goals of the Company, in line with the more basic objectives
of conducting the operations of the Company to achieve profitability, stability, and progressive
growth and development. The agreement is effective for a period of five years and is renewable for
another five years upon mutual agreement.
3.
The Company has entered into contracts with various subcontractors, such as SC Estolano
Construction Group, Seapac Philippines Inc., Gold Peak Construction and Development
Corporation, Hongdrill Philippines, Inc., Rich-Free Trading and Development Corporation, Jomsar
Construction and Development Corporation, DMCI Mayapa Joinery, JBLS Trading &
Construction Aesthetics, South Pacific International Marble Development Corp., and Alpa
Plumbing Works, Inc.
4.
The Company has entered into a Memorandum of Agreement with BPI Family Savings Bank, Inc.
dated March 9, 2015. Under the agreement, the Company agrees to sell to the bank the amounts
which the Company is entitled to receive from certain purchasers of units in projects sold by the
Company under contracts to sell (Receivables). The sale of the Receivables shall be with
recourse, and as a consequence of the execution of the Deed of Absolute Sale, the bank shall be
deemed to be the absolute owner of the Receivables so sold, assigned and conveyed. The purchase
limit of the Receivables by the bank is up to 2,000,000,000.00.
5.
The Company entered into a Credit Line Agreement dated July 4, 2014 with the Land Bank of the
Philippines, and has been renewed up to June 30, 2017. The credit line extended by the bank is
usable as Letter of Credit/Trust Receipt/Stand-by Letter of Credit for up to 400,000,000.00 and
short-term loan line of up to 200,000,000.00. The Company has also entered into a Purchase of
Receivables Agreement with the Land Bank of the Philippines dated October 15, 2014 with the
bank for a CTS Financing Facility of up to 2,400,000,000.00. The facility is available for one year
and has subsequently been renewed, and the latest renewal extends the availability of the facility
until August 23, 2016. In consideration for the facility, the Company assigns its ownership rights
and interests over amounts owing to the Company by certain buyers of units in its projects.
116
6.
The Company has entered into a Notes Facility Agreement dated January 14, 2011 whereby BDO
Unibank, Inc., China Banking Corporation, Bank of the Philippine Islands, BDO Leasing and
Finance, Inc., Land Bank of the Philippines, Security Bank Corporation, and United Coconut
Planters Bank agree to grant to the Company a corporate notes facility of up to 5,000,000,000.00.
7.
The Company has entered into a Corporate Notes Facility Agreement dated October 22, 2012
whereby BDO Unibank, Inc., Bank of the Philippine Islands, Land Bank of the Philippines,
Security Bank Corporation, BDO Leasing and Finance, Inc., United Coconut Planters Bank, ALFM
Peso Bond Fund, Inc., Eastwest Banking Corporation, and Bank of the Philippine Islands Asset
Management and Trust Group agree to grant to the Company a corporate notes facility of up to
10,000,000,000.00.
8.
The Company has entered into a Corporate Notes Facility Agreement dated December 3, 2015
whereby ALFM Peso Bond Fund Inc., BDO Leasing & Finance, Inc., BDO Private Bank, Inc.,
BDO Unibank, Inc., Bank of the Philippine Islands, BPI Asset Management and Trust Group as
Trustee for Bank of the Philippine Islands Employees Retirement Plan, China Banking
Corporation, Development Bank of the Philippines, Land Bank of the Philippines, and Security
Bank Corporation agree to grant to the Company a corporate notes facility up to
10,000,000,000.00.
9.
The Company has entered into a Deed of Absolute Sale dated November 13, 2015 with DMC
Urban Property Developers, Inc. for the acquisition of certain properties in Brgy. Matina, Davao
City, with an aggregate area of 29,775 sq. m. parcels of land. The Company intends to utilize the
said properties as part of a condominium project.
117
Shares
Subscribed
Amount
Subscribed
Amount Paid
% of
Ownership*
2,982,861,744
2,982,861,744
2,982,861,744
85.52%
Isidro A. Consunji
(Filipino)
1,000
1,000
1,000
<0.01%
Jorge A. Consunji
(Filipino)
1,000
1,000
1,000
<0.01%
1,000
1,000
1,000
<0.01%
Victor S. Limlingan
(Filipino)
<0.01%
Evaristo T. Francisco
(Filipino)
<0.01%
<0.01%
Alfredo R. Austria
(Filipino)
<0.01%
Jose L. Merin
(Filipino)
<0.01%
Elmer G. Civil
(Filipino)
<0.01%
504,862,578
504,862,578
504,862,578
14.48%
118
Name of
Citizenship
beneficial owner
& relationship
with record
owner
DMCI Holdings, Filipino
Inc.; it is also the
record owner
DMCI Holdings,
Inc.; parent
company of the
record owner
Filipino
No. of shares
held
Percentage
of
Ownership
2,982,861,744 85.52%
504,862,578 14.48%
* On April 7, 2014, D.M. Consunji, Inc. declared its shares in the Company as property dividends in the
amount of 504,862,578.00 in favor of DMCI Holdings, Inc. The SEC approved the property dividend
declaration on September 9, 2014. The Certificate Authorizing Registration for the transfer of shares is still
119
pending with the Bureau of Internal Revenue. D.M. Consunji, Inc. is a wholly-owned subsidiary of DMCI
Holdings, Inc.
As of February 29, 2016, the following are the number of shares owned of record and/or beneficially by the
Issuers directors and key executive officers:
Title of
Class
Name of
Director/Officer
Name of
Beneficial
Owner
DMCI
Holdings, Inc.
DMCI
Holdings, Inc.
DMCI
Holdings, Inc.
DMCI
Holdings, Inc.
Evaristo T.
Francisco
Francisco F. Del
Rosario, Jr.
DMCI
Holdings, Inc.
DMCI
Holdings, Inc.
DMCI
Holdings, Inc.
Amount and
Nature of
Beneficial
Ownership
1,000;
pursuant to a
deed of trust
1,000;
pursuant to a
deed of trust
1,000;
pursuant to a
deed of trust
1; pursuant to
a deed of trust
1; record
owner is also
the beneficial
owner
1; record
owner is also
the beneficial
owner
1; pursuant to
a deed of trust
1; pursuant to
a deed of trust
1; pursuant to
a deed of trust
Citizenship
Percent
of Class
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
Filipino
<0.01%
The aggregate number of shares of common stock directly and indirectly owned by the directors and
executive officers listed above, as of December 31, 2015 was 3,006 or approximately 0.000086% of the
Companys outstanding shares of common stock.
Voting Trusts
The Company is not aware of any person holding 5% or more of the Companys outstanding voting shares
under a voting trust or any similar agreement.
Changes in Control
On April 7, 2014, D.M. Consunji, Inc. declared its shares in the Company as property dividends in the
amount of 504,862,578.00 in favor of DMCI Holdings, Inc. The SEC approved the property dividend
declaration on September 9, 2014. The Certificate Authorizing Registration for the transfer of shares is still
120
pending with the Bureau of Internal Revenue. D.M. Consunji, Inc. is a wholly-owned subsidiary of DMCI
Holdings, Inc.
Other than the foregoing, there has been no change in control of the Company since the beginning of 2015
and the Company is not aware of any existing, pending, or potential transaction which may result in such a
change in control.
Certain Relationships and Related Transactions
The Company, in the ordinary course of business, engages in transactions with it stockholders, subsidiaries
and affiliates and directors and officers and their close family members. These are described in the Related
Party Transactions section in this Prospectus.
Apart from the foregoing, there are no related party transactions other than as disclosed in the Material
Contracts section in this Prospectus.
121
REGULATORY FRAMEWORK
Laws on housing and land projects
Presidential Decree No. 957, or the Subdivision and Condominium Buyers Protective Decree (PD 957),
as amended, is the principal statute which regulates the development and sale of real property as part of a
condominium project or subdivision. PD 957 covers condominium and subdivision projects for residential,
commercial, industrial and recreational areas as well as open spaces and other community and public areas
in the project. The Housing and Land Use Regulatory Board (HLURB) is the administrative agency of
the government which, together with local government units, enforces the said law and has jurisdiction to
regulate the real estate trade and business.
All subdivision and condominium plans for residential, commercial, industrial and other development
projects are required to be filed with and approved by the HLURB and the relevant local government unit
of the area where the project is situated. Approval of such plans is conditional on, among other things, the
developers financial, technical and administrative capabilities. Alterations of approved condominium plans
which affect significant areas of the project, such as infrastructure and public facilities, also require the
prior approval of the HLURB and the city or municipal engineer. In the case of alteration of subdivision
plans, PD 957 requires the written conformity or consent of the duly organized homeowners association,
or in the absence of the latter, by the majority of the lot buyers in the subdivision.
The development of subdivision and condominium projects can commence only after the relevant
government body has issued the required development permit, as well as the necessary building or
construction permits in accordance with the requirements of the city or municipality where the property
lies. The issuance of a development permit is dependent on, among other things: (i) compliance with
required project standards and technical requirements which may differ depending on the nature of the
project; and (ii) issuance of the barangay clearance, the locational clearance, permits issued by the
Department of Environment and Natural Resources (DENR) (such as the Environmental Compliance
Certificate (ECC) or Certificate of Non-Coverage (CNC)), conversion order or exemption clearance
from the Department of Agrarian Reform (DAR), permit to drill from the National Water Resources
Board, and such other permits and approvals. In cases where the property involved is located in an area
already classified as residential, commercial, industrial or other similar development purposes, a DAR
conversion order shall no longer be required as a precondition for issuance of certificate of registration and
license to sell.
Developers who sell lots or units in a subdivision or a condominium project are required to register the
project with and obtain a license to sell from the HLURB. Subdivision or condominium units may be sold
or offered for sale only after a license to sell has been issued by the HLURB. Furthermore, to ensure that
the owner or developer of a proposed subdivision or condominium project shows firm commitment to
proceed with a project, current HLURB regulations require minimum developments prior to the issuance
of a license to sell: (a) for subdivision projects, proof of land clearing and grubbing, road tracing and
entrance gate if included in the brochure or advertisement; and (b) for condominium projects, excavation
per approved plan/excavation permit are required.
As a requisite for the issuance of a license to sell by the HLURB, developers are required to file with the
HLURB any of the following to guarantee the construction and maintenance of the roads, gutters, drainage,
sewerage, water system, lighting systems, and full development of the subdivision or condominium project
and compliance with the applicable laws, rules and regulations:
122
1.
a surety bond equivalent to 20% of the development cost of the unfinished portion of the approved
plan, issued by a duly accredited bonding company (whether private or government), and
acceptable to the HLURB; or
2.
a real estate mortgage executed by the applicant developer as mortgagor in favor of the Republic
of the Philippines, as represented by the HLURB, as mortgagee, over property other than that
subject of the application, free from any liens and encumbrance and provided that the value of the
property, computed on the basis of the zonal valuation of the Bureau of Internal Revenue, shall be
at least 20% of the total development cost; or
3.
other forms of security equivalent to 10% of the development cost of the unfinished portion of the
approved plan which may be in the form of the following:
a)
b)
c)
d)
e)
a cash bond;
a fiduciary deposit made with the cashier and/or disbursing officer of the HLURB;
a certificate of guaranty deposit issued by any bank or financing institution of good
standing in favor of the HLURB for the total development cost;
a letter from any bank of recognized standing certifying that so much has been set aside
from the bank account of the developer in favor of the HLURB, which amount may be
withdrawn by the HLURB at any time the developer fails or refuses to comply with its
duties and obligations under the bond contract; or
any irrevocable credit line to be utilized in the development of the project from any bank
of recognized standing and a refinancing re-structuring program indicating sources of
funding from duly accredited funding institutions.
There are essentially two different types of residential subdivision developments which are distinguished
by different development standards issued by the HLURB. The first type of subdivision, aimed at low-cost
housing, must comply with Batas Pambansa Blg. 220 (BP 220), which allows for a higher density of
building and relaxes some construction standards. Other subdivisions must comply with PD 957, which
sets out standards for lower density developments. Both types of development must comply with standards
regarding the suitability of the site, road access, necessary community facilities, open spaces, water supply,
the sewage disposal system, electrical supply, lot sizes, the length of the housing blocks and house
construction.
Project permits and licenses to sell may be suspended, cancelled or revoked by the HLURB, by itself or
upon a verified complaint from an interested party, for reasons such as involvement in fraudulent
transactions, misrepresentation, and/or failure to conduct business in accordance with law or sound business
principles. A license or permit to sell may only be suspended, cancelled or revoked after a written notice to
the developer has been served and all parties have been given an opportunity to be heard in compliance
with the HLURBs rules of procedure and other applicable laws.
Under current regulations, a developer of a residential subdivision is required to reserve at least 30% of the
gross land area of such subdivision for open space for common uses, which include roads, parks,
playgrounds and recreational facilities.
Further, Republic Act No. 7279, or the Urban Development and Housing Act of 1992, requires developers
of proposed subdivision projects to develop an area for socialized housing equivalent to at least 20% of the
total subdivision area or total subdivision project cost, at the option of the developer, within the same city
or municipality, whenever feasible, and in accordance with the standards set by the HLURB and other
existing laws. Alternatively, the developer may opt to buy socialized housing bonds issued by various
123
accredited government agencies or enter into joint venture arrangements with other developers engaged in
socialized housing development.
Real estate dealers, brokers and salesmen are also required to register with the HLURB before they can sell
lots or units in a registered subdivision or condominium project. Furthermore, no person shall practice or
offer to practice real estate service in the Philippines, unless he/she has satisfactorily passed the licensure
examination given by the Professional Regulatory Board of Real Estate Service. Under Republic Act No.
9646, or the Real Estate Service Act, the real estate service practitioners required to take the licensure
examination are:
1.
Real estate consultants duly registered and licensed natural persons who, for a professional fee,
compensation or other valuable consideration, offer or render professional advice and judgment on:
(i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements
thereon; and (ii) the conception, planning, management and development of real estate projects;
2.
Real estate appraisers duly registered and licensed natural persons who, for a professional fee,
compensation or other valuable consideration, perform or render, or offer to perform services in
estimating and arriving at an opinion of or act as an expert on real estate values, such services of
which shall be finally rendered by the preparation of the report in acceptable written form; or
3.
Real estate brokers duly registered and licensed natural persons who, for a professional fee,
commission or other valuable consideration, act as an agent of a party in a real estate transaction to
offer, advertise, solicit, list, promote, mediate, negotiate or effect the meeting of the minds on the
sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real
estate or any interest therein.
To pay, without additional interest, the unpaid installments due within the total grace period earned
by him, which is fixed at the rate of one month for every one year of installment payments made.
However, the buyer may exercise this right only once every five years during the term of the
contract and its extensions, if any.
2.
If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to 50% of the total payments made, and in cases where five
years of installments have been paid, an additional 5% every year (but with a total not to exceed
90% of the total payments); Provided, that the actual cancellation of the contract shall take place
after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission
of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.
Downpayments, deposits, or options on the contract shall be included in the computation of the total number
of installment payments made.
In the event that the buyer has paid less than two years of installments, the seller shall give the buyer a grace
period of not less than sixty (60) days from the date the installment became due. If the buyer fails to pay
124
the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days
from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act.
Zoning and land use
Under Republic Act No. 6657, as amended, or the Comprehensive Agrarian Reform Law of 1988, and such
other rules and regulations currently in effect in the Philippines, land classified for agricultural purposes as
of or after June 1, 1988 cannot be converted to non-agricultural use without the prior approval of the DAR.
Land use may also be limited by zoning ordinances enacted by provinces, cities or municipalities. Once
enacted, land use may be restricted in accordance with a comprehensive land use plan approved by the
relevant local government unit. Lands may be classified under zoning ordinances as commercial, industrial,
residential or agricultural. Lands may also be further re-classified based on a local government units future
projection of needs.
Environmental laws and safety standards
Development projects that are classified by law as environmentally critical or projects within statutorily
defined environmentally critical areas are required to obtain an Environmental Compliance Certificate
(ECC) prior to commencement. The DENR, through its regional offices or through the Environmental
Management Bureau (EMB), determines whether a project is environmentally critical or located in an
environmentally critical area. As a requisite for the issuance of an ECC, an environmentally critical project
is required to submit an Environmental Impact Statement (EIS) to the EMB while a project in an
environmentally critical area is generally required to submit an Initial Environmental Examination (IEE)
to the proper DENR regional office. In the case of an environmentally critical project within an
environmentally critical area, an EIS is required. The construction of major roads and bridges are considered
environmentally critical projects for which an EIS and ECC are mandatory.
The EIS refers to both the document and the study of a projects environmental impact, including a
discussion of the direct and indirect consequences to human welfare and ecological as well as environmental
integrity. The IEE refers to the document and the study describing the environmental impact, including
mitigation and enhancement measures, for projects in environmentally critical areas.
While the EIS or an IEE may vary from project to project, as a minimum, it contains all relevant information
regarding the projects environmental effects. The entire process of organization, administration and
assessment of the effects of any project on the quality of the physical, biological and socio-economic
environment as well as the design of appropriate preventive, mitigating and enhancement measures is
known as the EIS System. The EIS System successfully culminates in the issuance of an ECC. The issuance
of an ECC is a government certification that the proposed project or undertaking will not cause a significant
negative environmental impact, that the proponent has complied with all the requirements of the EIS System
and that the proponent is committed to implement its approved Environmental Management Plan in the EIS
or, if an IEE was required, that it shall comply with the mitigation measures provided therein.
Project proponents that prepare an EIS are required to establish an Environmental Guarantee Fund (EGF)
when the ECC is issued for projects determined by the DENR to pose a significant public risk to life, health,
property and the environment or where the project requires rehabilitation or restoration. The EGF is
intended to meet any damages caused by such a project as well as any rehabilitation and restoration
measures. Project proponents that prepare an EIS are required to include a commitment to establish an
Environmental Monitoring Fund (EMF) when an ECC is eventually issued. In any case, the establishment
of an EMF must not be later than the initial construction phase of the project. The EMF shall be used to
125
support the activities of a multi-partite monitoring team which will be organized to monitor compliance
with the ECC and applicable laws, rules and regulations.
While a development project may not fall under the categories wherein an ECC is required, it is still required
to obtain a CNC from the EMB or the DENR Regional Office. The applicant must submit a Project
Description to the EMB which will then evaluate whether or not an ECC is required for the project. If an
ECC is not required, then the EMB will issue a CNC which will be submitted to the HLURB.
Aside from the EIS and IEE, engineering, geological and geo-hazard assessment are also required for ECC
applications covering subdivisions, housing and other land development and infrastructure projects.
All development projects, installations and activities that discharge liquid waste into and pose a threat to
the environment of the Laguna de Bay Region are also required to obtain a discharge permit from the
Laguna Lake Development Authority.
All buildings or structures as well as accessory facilities thereto shall conform in all respects to the
principles of safe construction under Presidential Decree No. 1096, or the National Building Code. Every
applicant for a building permit under the National Building Code is likewise required to secure a Height
Clearance Permit from the Civil Aviation Authority of the Philippines.
Property registration and nationality restrictions
The Philippines has adopted a system of land registration that conclusively confirms land ownership which
is binding on all persons, including the government. Once registered, title to registered land becomes
indefeasible after one year from the date of entry of the decree of registration except with respect to claims
noted on the certificate of title. Title to registered lands cannot be lost through adverse possession or
prescription. Presidential Decree No. 1529, as amended, or the Property Registration Decree, codified the
laws relative to land registration and is based on the generally accepted principles underlying the Torrens
System.
After proper surveying, application, publication, service of notice and hearing, unregistered land may be
brought under the system by virtue of judicial or administrative proceedings. In a judicial proceeding, the
Regional Trial Court within whose jurisdiction the land is situated confirms title to the land. Persons
opposing the registration may appeal the judgment to the Court of Appeals and ultimately to the Supreme
Court within 15 days from receiving notice of judgment. Upon finality of judgment, the Register of Deeds
may issue an Original Certificate of Title. The decree of registration may be annulled on the ground of
actual fraud within one year from the date of entry of the decree of registration. Similarly, in an
administrative proceeding, the land is granted to the applicant by the DENRs issuance of a patent. The
patent becomes the basis for issuance of the Original Certificate of Title by the Register of Deeds. All land
patents (i.e. homestead, sales and free patent) must be registered with the appropriate Registry of Deeds
since the conveyance of the title to the land covered thereby takes effect only upon such registration.
Any subsequent transfer or encumbrance of the land must be registered in the system in order to bind third
persons. Subsequent registration and a new Transfer Certificate of Title in the name of the transferee will
be granted upon presentation of certain documents and payment of fees and taxes.
All documents evidencing conveyances of subdivision and condominium units should also be registered
with the Register of Deeds. Title to the subdivision or condominium unit must be delivered to the purchaser
upon full payment of the sales price. In the event a mortgage over the lot or unit is outstanding at the time
of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such issuance in order that the title over any fully
126
paid lot or unit may be secured and delivered to the buyer. To evidence ownership of condominium units,
the Register of Deeds issues a Condominium Certificate of Title.
While the Philippine Constitution prescribes nationality restrictions on land ownership, there is generally
no prohibition against foreigners owning buildings and other permanent structures. However, with respect
to condominium developments, the ownership of condominium units where the common areas in the
condominium project are co-owned by the owners of the separate units or owned by a corporation is limited
to up to 40% foreign equity.
Property taxation
Real property taxes are payable annually or quarterly based on the propertys assessed value. Assessed
values are determined by applying the assessment levels (fixed by ordinances of the concerned Sanggunian)
against the fair market values of real property. Under the LGC, the assessed value of property and
improvements varies depending on the location, use and nature of the property. Land is ordinarily assessed
at 20% to 50% of its fair market value; buildings may be assessed up to 80% of their fair market values;
and machinery may be assessed at 40% to 80% of its fair market value. Real property taxes may not exceed
2% of the assessed value in municipalities and cities within Metro Manila or in other chartered cities and
1% in all other areas. A province or city, or a municipality within Metro Manila may also levy and collect
an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the
basic real property tax to accrue exclusively to the Special Education Fund (SEF) of the local government
unit where the property is located.
Construction License
A regular contractor's license is required to be obtained from the Philippine Contractors Accreditation
Board (PCAB). In applying for and granting such license, the PCAB takes into consideration the
applicant-contractor's qualifications and compliance with certain minimum requirements in the following
criteria: (i) financial capacity, (ii) equipment capacity, (iii) experience of the firm, and (iv) experience of
technical personnel. Philippine laws also require a contractor to secure construction permits and
environmental clearances from appropriate government agencies prior to actually undertaking each project.
Compliance
The Company regularly secures all material government mandated permits and licenses for the conduct of
its business, including but not limited to (a) the approvals, permits and licenses issued by the Housing and
Land Use Regulatory Board, and (b) the environmental compliance certificate issued by the Department of
Environment and Natural Resources.
The Company and its subsidiaries do not incur significant costs for compliance with mandated permits and
licenses for the conduct of its business, including those required under environmental laws and regulations.
Costs of compliance vary from project to project depending on various factors, such as project size and
local conditions. Nevertheless, none of such costs have been material in respect of the finances of the
Company and its subsidiaries.
PHILIPPINE TAXATION
The following is a discussion of the material Philippine tax consequences of the acquisition, ownership and
disposition of the Bonds. This general description does not purport to be a comprehensive description of
the Philippine tax aspects of the Bonds and no information is provided regarding the tax aspects of
acquiring, owning, holding or disposing of the Bonds under applicable tax laws of other applicable
jurisdictions and the specific Philippine tax consequence in light of particular situations of acquiring,
127
owning, holding and disposing of the Bonds in such other jurisdictions. This discussion is based upon laws,
regulations, rulings, and income tax conventions (treaties) in effect at the date of this Prospectus. The tax
treatment of a holder of Bonds may vary depending upon such holders particular situation, and certain
holders may be subject to special rules not discussed below. This summary does not purport to address all
tax aspects that may be important to a Bondholder.
PROSPECTIVE PURCHASERS OF THE BONDS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF A BOND, INCLUDING THE APPLICABILITY AND EFFECT OF ANY LOCAL OR
FOREIGN TAX LAWS.
As used in this section, the term resident alien refers to an individual whose residence is within the
Philippines and who is not a citizen thereof; a non-resident alien is an individual whose residence is not
within the Philippines and who is not a citizen of the Philippines. A non-resident alien who is actually
within the Philippines for an aggregate period of more than 180 days during any calendar year is
considered a non-resident alien doing business in the Philippines, otherwise, such non-resident alien
who is actually within the Philippines for an aggregate period of 180 days or less during any calendar year
is considered a non-resident alien not doing business in the Philippines. A resident foreign
corporation is a non-Philippine corporation engaged in trade or business within the Philippines; and a
non-resident foreign corporation is a non-Philippine corporation not engaged in trade or business
within the Philippines.
TAXATION OF INTEREST
The Tax Code provides that income from interest-bearing obligations of Philippine residents are Philippine
sourced income subject to Philippine income tax. Interest income derived by Philippine resident individuals
from the Bonds is thus subject to income tax, which is withheld at source, at the rate of 20% based on the
gross amount of interest. Generally, interest on the Bonds received by non-resident aliens engaged in trade
or business in the Philippines is subject to a 20% final withholding tax while that received by non-resident
aliens not engaged in trade or business is subject to a final withholding tax rate of 25%. Interest income
received by domestic corporations and resident foreign corporations from the Bonds is subject to a final
withholding tax rate of 20%. Interest income received by non-resident foreign corporations from the Bonds
is subject to a 30% final withholding tax.
The foregoing rates are subject to further reduction by any applicable tax treaties in force between the
Philippines and the country of residence of the non-resident owner. Most tax treaties to which the
Philippines is a party generally provide for a reduced tax rate of 15% in cases where the interest which
arises in the Philippines is paid to a resident of the other contracting state. However, most tax treaties also
provide that reduced withholding tax rates shall not apply if the recipient of the interest who is a resident
of the other contracting state, carries on business in the Philippines through a permanent establishment and
the holding of the relevant interest-bearing instrument is effectively connected with such permanent
establishment.
128
5%
1%
Non-bank financial intermediaries not performing quasi-banking functions doing business in the
Philippines are likewise subject to gross receipts tax. Gross receipts of such entities derived from sources
within the Philippines from interests, commissions and discounts from lending activities are taxed in
accordance with the following schedule based on the remaining maturities of the instruments from which
129
5%
1%
In case the maturity period of the instruments held by banks, non-bank financial intermediaries performing
quasi-banking functions and non-bank financial intermediaries not performing quasi-banking functions is
shortened through pre-termination, then the maturity period shall be reckoned to end as of the date of pretermination for purposes of classifying the transaction and the correct rate shall be applied accordingly.
Net trading gains realized within the taxable year on the sale or disposition of the Bonds by banks and nonbank financial intermediaries performing quasi-banking functions shall be taxed at 7%.
DOCUMENTARY STAMP TAX
A documentary stamp tax is imposed upon the issuance of debt instruments issued by Philippine companies,
such as the Bonds, at the rate of 1.00 for each 200, or fractional part thereof, of the issue price of such
debt instruments; provided that, for debt instruments with terms of less than one year, the documentary
stamp tax to be collected shall be of a proportional amount in accordance with the ratio of its term in number
of days to 365 days.
The documentary stamp tax is collectible wherever the document is made, signed, issued, accepted, or
transferred, when the obligation or right arises from Philippine sources, or the property is situated in the
Philippines. Any applicable documentary stamp taxes on the original issue shall be paid by the Issuer for
its own account.
TAXATION ON SALE OR OTHER DISPOSITION OF THE BONDS
Income Tax
Any gain realized from the sale, exchange or retirement of bonds will, as a rule, form part of the gross
income of the sellers, for purposes of computing the relevant taxable income subject to the regular rates of
30%, 25%, or the progressive rates of 5% to 32%, as the case may be. If the bonds are sold by a seller, who
is an individual and who is not a dealer in securities, who has held the bonds for a period of more than 12
months prior to the sale, only 50% of any capital gain will be recognized and included in the sellers gross
taxable income.
However, under the Tax Code, any gain realized from the sale, exchange or retirement of bonds, debentures
and other certificates of indebtedness with an original maturity date of more than five years (as measured
from the date of issuance of such bonds, debentures or other certificates of indebtedness) shall not be subject
to income tax.
Moreover, any gain arising from such sale, regardless of the original maturity date of the bonds, may be
exempt from income tax pursuant to various income tax treaties to which the Philippines is a party, and
subject to procedures prescribed by the BIR for the availment of tax treaty benefits.
130
The transfer by a deceased person, whether a Philippine resident or a non-Philippine resident, to his heirs
of the Bonds shall be subject to an estate tax which is levied on the net estate of the deceased at progressive
rates ranging from 5% to 20%, if the net estate is over 200,000. A Bondholder shall be subject to donors
tax based on the net gift on the transfer of the Bonds by gift at either (i) 30%, where the donee or beneficiary
is a stranger, or (ii) at progressive rates ranging from 2% to 15% if the net gifts made during the calendar
year exceed 100,000 and where the donee or beneficiary is not a stranger. For this purpose, a stranger
is a person who is not a: (a) brother, sister (whether by whole or half-blood), spouse, ancestor or lineal
descendant; or (b) relative by consanguinity in the collateral line within the fourth degree of relationship.
The estate or donors taxes payable in the Philippines may be credited with the amount of any estate or
donor's taxes imposed by the authority of a foreign country, subject to limitations on the amount to be
credited, and the tax status of the decedent or donor.
The estate tax and the donors tax, in respect of the Bonds, shall not be collected (a) if the deceased, at the
time of death, or the donor, at the time of the donation, was a citizen and resident of a foreign country
which, at the time of his death or donation, did not impose a transfer tax of any character in respect of
intangible personal property of citizens of the Philippines not residing in that foreign country; or (b) if the
laws of the foreign country of which the deceased or donor was a citizen and resident, at the time of his
death or donation, allows a similar exemption from transfer or death taxes of every character or description
in respect of intangible personal property owned by citizens of the Philippines not residing in the foreign
country.
In case the Bonds are transferred for less than an adequate and full consideration in money or money's
worth, the amount by which the fair market value of the Bonds exceeded the value of the consideration may
be deemed a gift and may be subject to donors taxes.
Documentary Stamp Tax
No documentary stamp tax is imposed on the subsequent sale or disposition of the Bonds, trading the Bonds
in a secondary market or through an exchange. However, if the transfer constitutes a renewal of the Bonds,
documentary stamp tax is payable anew.
131
132
FINANCIAL STATEMENTS
ANNEX A
Interim Consolidated Financial Statements
as of and for the Nine Months Ended September 30, 2015 and 2014
ANNEX B
Consolidated Financial Statements
as of and for the Years Ended December 31, 2014, 2013 and 2012
NOTE: The same auditing firm has been engaged by the Company to audit its financial statements as of
and for the years ended December 31, 2015, 2014 and 2013.
133
COVER SHEET
for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number
A S 0 9 5 - 0 0 4 1 3 7
Company Name
D M C I
A N D
P R O J E C T
D E V E L O P E R S ,
I N C .
S U B S I D I A R I E S
H o m e s
C o r p o r a t e
3 2 1
A p o l
i n a r i o
a k a t
t y
C i
S t
Form Type
A A F S
C R M D
C e n t e r ,
B a n g k a l
1
M
COMPANY INFORMATION
Companys Email Address
Mobile Number
N/A
555-7777
N/A
No. of Stockholders
Annual Meeting
Month/Day
Fiscal Year
Month/Day
11
May 13
December 31
Email Address
Telephone Number/s
Mobile Number
rblombos@dmcihomes.com
555-7777
N/A
DMCI Homes Corporate Center, 1321 Apolinario St., Bangkal, Makati City
Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission
within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated
*SGVFS013783*
*SGVFS013783*
A member firm of Ernst & Young Global Limited
-2Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of DMCI Project Developers, Inc. and its subsidiaries as at December 31, 2014,
2013 and 2012, and their financial performance and their cash flows for the years then ended in
accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Michael C. Sabado
Partner
CPA Certificate No. 89336
SEC Accreditation No. 0664-AR-2 (Group A),
March 26, 2014, valid until March 25, 2017
Tax Identification No. 160-302-865
BIR Accreditation No. 08-001998-73-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751320, January 5, 2015, Makati City
June 29, 2015
*SGVFS013783*
A member firm of Ernst & Young Global Limited
2014
December 31
2013
2012
P2,756,384,808
=
5,812,516,193
24,234,512,281
P6,627,014,701
=
6,685,361,009
17,940,348,798
P2,755,591,655
=
5,225,231,026
15,271,781,994
74,530,000
1,653,051,392
34,530,994,674
77,050,000
1,106,190,895
32,435,965,403
75,160,000
903,189,053
24,230,953,728
2,833,748,592
68,525,781
278,853,751
158,523,614
1,055,727,336
71,292,253
4,466,671,327
=38,997,666,001
P
4,187,297,117
235,633,723
178,569,015
821,563,627
18,253,365
5,441,316,847
=37,877,282,250
P
2,983,116,876
183,268,662
156,046,748
729,484,201
16,437,847
4,068,354,334
=28,299,308,062
P
=1,227,632,852
P
=1,022,534,728
P
=1,017,870,494
P
5,410,773,015
530,440,645
4,589,700,318
1,053,340,634
4,332,929,889
174,543,563
461,490,757
1,223,149,483
1,294,904,244
1,865,351,506
9,495,688,775
884,182,229
8,772,907,392
928,473,311
7,748,721,501
ASSETS
Current Assets
Cash and cash equivalents (Notes 6, 30 and 31)
Receivables (Notes 7, 16, 28, 30 and 31)
Real estate inventories (Notes 8, 29 and 30)
Financial assets at fair value through profit or loss
(FVPL) (Notes 10, 30 and 31)
Other current assets (Notes 11, 30 and 31)
Total Current Assets
Noncurrent Assets
Noncurrent receivables (Notes 7, 30 and 31)
Net pension asset (Notes 24 and 30)
Investments in associates (Note 12)
Investment properties (Notes 5, 13 and 30)
Property and equipment (Notes 5, 15 and 30)
Software cost (Notes 5, 14 and 30)
Total Noncurrent Assets
*SGVFS013783*
-2-
Noncurrent Liabilities
Loans payable - net of current portion (Notes 7, 16,
30 and 31)
Liabilities for purchased land - net of current
portion (Notes 17, 30 and 31)
Net pension liability (Notes 24 and 30)
Deferred tax liabilities - net (Notes 26 and 30)
Total Noncurrent Liabilities
Total Liabilities
Equity (Note 20)
Capital stock
Additional paid-in capital
Appropriated retained earnings
Unappropriated retained earnings
Remeasurement gains on defined benefit plans
(Note 24)
Total Equity
2014
December 31
2013
2012
P
=15,736,245,438
P
=17,598,606,022
P
=11,102,349,211
312,929,207
1,434,623,168
17,483,797,813
26,979,486,588
487,389,113
48,257,898
1,134,917,038
19,269,170,071
28,042,077,463
215,945,234
29,008,004
816,254,613
12,163,557,062
19,912,278,563
3,487,727,328
15,260,667
5,000,000,000
3,293,169,353
3,487,727,328
15,260,667
1,500,000,000
4,703,698,245
3,487,727,328
15,260,667
1,500,000,000
3,293,528,874
222,022,065
12,018,179,413
=38,997,666,001
P
128,518,547
9,835,204,787
=37,877,282,250
P
90,512,630
8,387,029,499
=28,299,308,062
P
*SGVFS013783*
2014
INCOME
Real estate sales (Note 8)
Revenue from hotel services
Finance income (Notes 6, 7 and 21)
Dividend income (Note 10)
Equity in net earnings of associate
Other income (Notes 10 and 22)
2012
P
=12,232,699,569
99,336,724
270,950,963
9,887,500
69,113,137
1,011,140,639
13,693,128,532
P
=11,698,113,046
165,338,465
282,102,730
4,200,000
82,070,387
596,884,495
12,828,709,123
P
=9,292,378,044
144,732,618
473,557,065
5,600,000
76,622,451
299,649,369
10,292,539,547
6,394,763,025
111,434,106
2,496,179,410
127,604,628
9,129,981,169
6,379,204,666
137,202,565
2,274,054,169
511,956,739
9,302,418,139
4,470,060,174
77,022,688
1,885,891,773
649,791,474
7,082,766,109
4,563,147,363
3,526,290,984
3,209,773,438
1,273,676,255
916,121,613
905,102,772
NET INCOME
3,289,471,108
2,610,169,371
2,304,670,666
125,805,793
(32,302,275)
93,503,518
P
=3,382,974,626
P
=0.943
47,624,322
(9,618,405)
38,005,917
P
=2,648,175,288
P
=0.748
67,925,682
(20,377,705)
47,547,977
=
P2,352,218,643
P
=0.661
*SGVFS013783*
93,503,518
93,503,518
P
=15,260,667
P
=222,022,065
Retained Earnings
Unappropriated
Appropriated
(Note 20)
(Note 20)
P
=4,703,698,245
P
=1,500,000,000
3,289,471,108
3,289,471,108
(3,500,000,000)
3,500,000,000
(1,200,000,000)
P
=3,293,169,353
P
=5,000,000,000
Common Stock
(Note 20)
P
=3,487,727,328
P
=3,487,727,328
=
P3,487,727,328
=
P3,487,727,328
=
P15,260,667
=
P15,260,667
=
P90,512,630
38,005,917
38,005,917
=
P128,518,547
=
P3,293,528,874
2,610,169,371
2,610,169,371
(1,200,000,000)
=
P4,703,698,245
=
P1,500,000,000
=
P1,500,00,000
=
P8,387,029,499
2,610,169,371
38,005,917
2,648,175,288
(1,200,000,000)
=
P9,835,204,787
=
P3,487,727,328
=
P3,487,727,328
=
P15,260,667
=
P15,260,667
=
P42,964,653
47,547,977
47,547,977
=
P90,512,630
=
P3,103,746,117
2,304,670,666
2,304,670,666
(2,114,887,909)
=
P3,293,528,874
=
P1,500,000,000
=
P1,500,000,000
=
P8,149,698,765
2,304,670,666
47,547,977
2,352,218,643
(2,114,887,909)
=
P8,387,029,499
Total
P
=9,835,204,787
3,289,471,108
93,503,518
3,382,974,626
(1,200,000,000)
P
=12,018,179,413
*SGVFS013783*
2014
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization (Notes 13, 14, 15
and 23)
Finance costs (Note 25)
Unrealized market loss (gain) on financial asset
at FVPL (Notes 10 and 22)
Loss on sale of available-for-sale financial asset
Unrealized foreign exchange losses (gains)
Dividend income (Note 10)
Equity in net income of associates (Note 12)
Finance income (Notes 6, 7 and 21)
Gain on sale of undeveloped land (Note 22)
Operating income before working capital changes
Decrease (increase) in:
Receivables
Pension asset
Other current assets
Real estate inventories
Increase (decrease) in:
Accounts and other payables
Liabilities for purchased land
Customers advances and deposits
Payables to related parties
Net cash provided by (used in) operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash used in operating activities
2012
=4,563,147,363
P
=3,526,290,984
P
=3,209,773,438
P
220,415,572
127,604,628
161,775,901
511,956,739
169,923,440
649,791,474
2,520,000
(23,059)
(9,887,500)
(69,113,137)
(270,950,963)
(284,287,321)
4,279,425,583
(1,890,000)
(780,884)
(4,200,000)
(82,070,387)
(282,102,730)
3,828,979,623
140,000
1,411,734
1,430,664
(5,600,000)
(76,622,451)
(282,102,730)
3,668,145,569
2,226,393,341
(23,280,161)
(514,558,162)
(5,759,009,269)
(2,664,310,224)
57,255,811
(203,001,842)
(1,323,403,136)
(2,365,800,680)
(40,676,489)
258,156,009
(2,838,149,424)
205,098,124
806,709,371
821,072,696
(522,899,989)
1,518,951,534
270,950,963
9,887,500
(1,088,949,162)
(1,006,272,459)
(295,431,624)
(126,593,137)
227,152,797
256,770,428
878,797,071
931,647,391
282,102,730
4,200,000
(1,025,505,156)
(604,559,138)
(412,114,173)
(493,428,293)
214,344,524
1,374,089,482
(139,831,400)
(363,150,702)
282,102,730
5,600,000
(884,369,140)
(738,935,452)
(1,698,752,564)
(Forward)
*SGVFS013783*
-2-
2014
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of undeveloped land (Note 8)
Dividend from an associate (Note 12)
Additions to:
Investment properties (Note 13)
Software cost (Note 14)
Property and equipment (Note 15)
Disposal of AFS financial assets
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loans (Note 16)
Dividends paid (Note 20)
Payments of loans
Net cash provided by (used in) financing activities
2012
P
=747,639,403
25,893,109
P
=
29,705,327
P
=
19,708,957
(49,007,756)
(76,290,942)
(424,436,314)
223,797,500
(25,938,621)
(11,085,334)
(241,169,157)
(248,487,785)
(104,872,600)
(10,167,161)
(236,367,698)
141,666,667
(190,031,835)
39,800,000
(1,200,000,000)
(2,638,818,828)
(3,799,018,828)
10,126,990,884
(1,200,000,000)
(4,395,746,764)
4,531,244,120
8,088,517,019
(2,314,887,909)
(3,899,486,879)
1,874,142,231
780,884
(1,430,664)
(3,870,629,893)
3,871,423,046
(16,072,832)
6,627,014,701
2,755,591,655
2,771,664,487
P
=2,756,384,808
P
=6,627,014,701
=
P2,755,591,655
23,059
SGVFS013783*
1. Corporate Information
DMCI Project Developers, Inc. (the Parent Company) was incorporated and domiciled in the
Republic of the Philippines and registered with the Securities and Exchange Commission (SEC)
on April 27, 1995. The Company is organized to deal and engage in the development of
residential subdivisions and construction of condominium and housing units. The Company offers
range of products from middle-income to high-end housing and condominium projects.
The Parent Company is majority-owned by DMCI Holdings, Inc. (DMCI-HI), its ultimate parent
company, partially-owned by D.M. Consunji, Inc. and the rest by its directors and officers.
The Parent Company has five (5) subsidiaries, namely: DMCI Homes, Inc., DMCI PDI Hotels,
Inc., Hampstead Gardens Corporation, DMCI Property Management Corporation and Riviera
Land Corporation.
The Parent Companys registered office and principal place of business is at DMCI Homes
Corporate Center, 1321 Apolinario St., Bangkal, Makati City.
2. 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 financial statements are presented in Philippine Peso (P
=),
which is also the Parent Companys functional currency. All amounts are rounded off to the
nearest peso unless otherwise indicated.
Statement of Compliance
The Parent Company financial statements have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS). The Parent Company did not prepare consolidated
financial statements to include the financial statements of its wholly owned subsidiaries namely:
Hampstead Gardens Corporation, DMCI Homes, Inc., Riviera Land Corporation, DMCI Homes
Property Management Corporation and DMCI-PDI Hotels, Inc. because it availed of the
exemption from preparation of consolidated financial statements allowed under PAS 27,
Consolidated and Separate Financial Statements. DMCI Holdings, Inc., ultimate parent company,
prepares the consolidated financial statements which may be obtained from 3rd Floor, Dacon
Buildings, 2281 Don Chino Roces Avenue, Makati City. However, the consolidated financial
statements of the Group as of and for the years ended December 31, 2014, 2013 and 2012, has
been prepared specifically for the purpose of filing with the SEC in relation to the initial bond
offering of the Parent Company.
The consolidated financial statements of the Group have been prepared in compliance with PFRS.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Group as of and for
the years ended December 31, 2014, 2013 and 2012.
*SGVFS013783*
-2The consolidated financial statements are prepared for the same reporting year as the Parent
Company, using consistent accounting policies. All significant intercompany balances and
transactions, including income, expenses and dividends, are eliminated in full. Profits and losses
resulting from intercompany transactions that are recognized in assets are eliminated in full.
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
Group controls an entity when it is exposed, or has rights, to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of the subsidiaries are prepared for the same reporting period as the Parent
Company, using consistent accounting policies. All intra-group balances, transactions, unrealized
gains and losses resulting from intra-group transactions and dividends are eliminated in full.
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:
Percentage of ownership
2013
2014
100.00%
100.00%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
2012
100.00%
100.00
100.00
100.00
100.00
The financial statements of the subsidiaries are prepared for the same reporting year as the Parent
Company, using consistent accounting policies.
SGVFS013783*
-3-
Investment Entities (Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12,
Disclosure of Interests in Other Entities, and PAS 27, Separate Financial Statements)
These amendments provide an exception to the consolidation requirement for entities that
meet the definition of an investment entity under PFRS 10. The exception to consolidation
requires investment entities to account for subsidiaries at fair value through profit or loss. The
amendments must be applied retrospectively, subject to certain transition relief. The
amendments had no financial impact on the Groups consolidated financial statements.
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities
These amendments to PAS 32 clarify the meaning of currently has a legally enforceable right
to set-off and also clarify the application of the PAS 32 offsetting criteria to settlement
systems (such as central clearing house systems) which apply gross settlement mechanisms
that are not simultaneous. The amendments affect disclosures only and had no impact on the
Groups financial position or performance.
PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
These amendments remove the unintended consequences of PFRS 13 on the disclosures
required under PAS 36. In addition, these amendments require disclosure of the recoverable
amounts for the assets or cash-generating units (CGUs) for which impairment loss has been
recognized or reversed during the period. These amendments are effective retrospectively for
annual periods beginning on or after January 1, 2014 with earlier application permitted,
provided PFRS 13 is also applied. The amendments affect disclosures only and had no impact
on the Groups financial position or performance.
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. The amendments had no
financial impact in the Groups consolidated financial statements.
SGVFS013783*
-4
SGVFS013783*
-5PFRS 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).
This amendment does not apply to the Group as it has no share-based payments.
SGVFS013783*
-6
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.
The amendments affect disclosures only and have no impact on the Groups financial position
or performance.
PAS 16, Property, Plant and Equipment - Revaluation Method - Proportionate Restatement of
Accumulated Depreciation
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the asset
may be revalued by reference to the observable data on either the gross or the net carrying
amount. In addition, the accumulated depreciation or amortization is the difference between
the gross and carrying amounts of the asset. The amendment will have no impact on the
Groups financial position or performance.
SGVFS013783*
-7The amendment will have no impact on the Groups financial position or performance.
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 will have no significant impact on the Group given
that the Group 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 annual periods beginning on or
after January 1, 2016, with early adoption permitted. The amendment will have no significant
impact on the Groups financial position or performance.
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
SGVFS013783*
-8electing 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. These amendments are not expected to
have any impact to the Group.
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 1 January 2016. The amendment will
have no significant impact on the Groups financial position or performance.
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.
SGVFS013783*
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 disposal, rather it is a continuation of the original plan. There is, therefore, no
interruption of the application of the requirements in PFRS 5. The amendment also clarifies
that changing the disposal method does not change the date of classification. The amendment
will have no significant impact on the Groups financial position or performance.
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. The
amendment will have no significant impact on the Groups financial position or performance.
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). The amendment will
have no significant impact on the Groups financial position or performance.
SGVFS013783*
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 will have an effect on the classification and measurement of the
Groups financial assets but will have no impact on the classification and measurement of the
Groups financial liabilities. The adoption will also have an effect on the Groups application
of hedge accounting. 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
IFRS 15, Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to
revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an
amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The principles in IFRS 15 provide a more
structured approach to measuring and recognizing revenue. The new revenue standard is
applicable to all entities and will supersede all current revenue recognition requirements under
IFRS. Either a full or modified retrospective application is required for annual periods
SGVFS013783*
- 11 beginning on or after January 1, 2017 with early adoption permitted. The Group is currently
assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective
date once adopted locally.
SGVFS013783*
- 12 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
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
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 financial reporting date.
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.
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 markets, the Group recognizes the difference
between the transaction price and fair value (Day 1 difference) in the consolidated statement of
comprehensive income. In cases where use is made of data which is not observable, the difference
between the transaction price and model value is only recognized in the consolidated statement of
comprehensive income when the inputs become observable or when the instrument is
derecognized. For each transaction, the Group determines the appropriate method of recognizing
the Day 1 difference amount.
Financial assets at FVPL
Financial assets at FVPL include financial assets held for trading and financial assets designated
upon initial recognition as at FVPL.
SGVFS013783*
- 13 Financial assets are classified as held for trading if they are acquired for the purpose of selling in
the near term. Changes in fair value relating to the held for trading positions are recognized in
Other income account in the consolidated statement of comprehensive income. Interest earned
or incurred is recorded in interest income or expense, respectively, while dividend income is
recorded when the right to receive payment has been established.
Financial assets may be designated at initial recognition as at 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, 2013 and 2012, the Group holds its quoted equity securities for trading
purposes and classifies them as financial assets at FVPL.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments and
fixed maturities that are not quoted in an active market. These are not entered into with the
intention of immediate or short-term resale and are not designated as AFS financial assets or
financial assets at FVPL. After initial measurement, the loans and receivables are subsequently
measured at amortized cost using the effective interest rate (EIR) 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 EIR. The amortization is included in profit or loss. The losses
arising from impairment of such loans and receivables are recognized in profit or loss.
Receivables from sale of real estate inventories relate to Installment contracts receivable account
under statement of financial position caption Receivables. The Group entered with various
purchase agreements with financial institutions whereby the related installment contract
receivables are sold on a with recourse basis. The risk and rewards associated with the asset
retains with the Group.
This accounting policy relates to the consolidated statement of financial position captions Cash
and cash equivalents, Receivables and Other current assets.
AFS financial assets
AFS financial assets are those which are designated as such or do not qualify to be classified or
designated as financial assets at FVPL, HTM investments or loans and receivables.
Financial assets may be designated at initial recognition as AFS if they are purchased and held
indefinitely, and may be sold in response to liquidity requirements or changes in market
conditions. These include government securities, equity investments and other debt instruments.
After initial measurement, AFS financial assets are measured at fair value. The unrealized gains
and losses arising from the fair valuation of AFS financial assets are excluded from reported
earnings and are reported in other comprehensive income. When the investment is disposed of,
the cumulative gain or loss previously recognized in equity is recognized in Other income
SGVFS013783*
- 14 account in the consolidated statement of comprehensive income. Where the Group holds more
than one investment in the same security, these are deemed to be disposed of on a first-in first-out
basis. Interest earned on holding AFS debt investments are reported as interest income using the
EIR. Dividends earned on holding AFS equity investments are recognized in the consolidated
statement of comprehensive income as Other income account when the right to receive payment
has been established. The losses arising from impairment of such investments are recognized as
Provisions on impairment losses under operating expenses in the consolidated statement of
comprehensive income.
Investments in unquoted equity securities are carried at cost net of impairment losses, if any. The
Groups AFS financial assets pertain to unquoted equity securities included under Available-forsale (AFS) financial assets account in the consolidated statement of financial position.
This accounting policy relates to the consolidated statement of financial position caption
Available-for-sale financial assets. The Groups financial assets include its investments in
equity securities. As of December 31, 2012, all available-for-sale financial assets have been
disposed.
Other financial liabilities
Other financial liabilities pertain to issued financial instruments that are not classified or
designated at FVPL and contain contractual obligations to deliver cash or another financial asset to
the holder or to settle the obligation other than through the exchange of a fixed amount of cash.
After initial measurement, other financial liabilities are subsequently measured at amortized cost
using the EIR method. Amortized cost is calculated by taking into account any discount or
premium on the issue and fees that are an integral part of the EIR. Gains and losses are recognized
in profit or loss when the liabilities are derecognized, as well as through the amortization process.
This accounting policy applies primarily to Accounts and other payables, Payables to related
parties, Loans payable and Liabilities for purchased land.
As of December 31, 2014, 2013 and 2012, loans payable and liabilities for purchased land are
financial liabilities recognized at fair value.
Debt Issuance Costs
Debt issuance costs are deducted against loans payable and are amortized over the terms of the
related borrowings using the EIR method.
Classification of Financial Instruments Between Debt and Equity
A financial instrument is classified as debt, if it provides for a contractual obligation to:
If the Group does not have an unconditional right to avoid delivering cash or another financial
asset to settle its contractual obligation, the obligation meets the definition of a financial liability.
SGVFS013783*
- 15 The components of issued financial instruments that contain both liability and equity elements are
accounted for separately, with the equity component being assigned the residual amount, after
deducting from the instrument as a whole the amount separately determined as the fair value of the
liability component on the date of issue.
Impairment of Financial Assets
The Group assesses at each financial reporting date whether there is objective evidence that a
financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events that has occurred after the
initial recognition of the asset (an incurred loss event) and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or the group of financial assets that
can be reliably estimated. Evidence of impairment may include indications that the borrower or a
group of borrowers is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganization and where observable data indicate that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate with
defaults.
Loans and receivables
For loans and receivables carried at amortized cost, the Group first assesses whether objective
evidence of impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant. If the Group determines that
no objective evidence of impairment exists for individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses for impairment. Those characteristics are relevant to the
estimation of future cash flows for groups of such assets by being indicative of the debtors ability
to pay all amounts due according to the contractual terms of the assets being evaluated. Assets
that are individually assessed for impairment and for which an impairment loss is, or continues to
be recognized, are not included in a collective assessment for impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of loss is
measured as the difference between the assets 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 profit or loss. Interest income continues to be recognized based on the original
EIR of the asset. Loans, together with the associated allowance accounts, are written off when
there is no realistic prospect of future recovery and all collateral has been realized. If, in a
subsequent year, the amount of the estimated impairment loss decreases because of an event
occurring after the impairment was recognized, the previously recognized impairment loss is
reversed. Any subsequent reversal of an impairment loss is recognized in profit or loss, 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 selling price of the lots and residential houses, 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
SGVFS013783*
- 16 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.
Derecognition of Financial Assets and Financial Liabilities
Financial asset
A financial asset (or, where applicable a part of a financial asset or part of a group of financial
assets) is derecognized when:
a. the right to receive cash flows from the asset has expired;
b. the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a pass-through arrangement;
or
c. the Group has transferred its right to receive cash flows from the asset and either: (i) has
transferred substantially all the risks and rewards of the asset; or (ii) has neither transferred nor
retained the risk and rewards of the asset but has transferred the control of the asset.
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
Groups continuing involvement in the asset. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of 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 or
cancelled or has expired. Where an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in the consolidated statement of comprehensive income.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated
statement of financial position if, there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously. This is not generally the case with master netting agreement
where the related assets and liabilities are presented at gross amounts in the consolidated statement
of financial position.
Real Estate Inventories
Real estate inventories consist of condominium units and subdivision land for sale and
development.
Condominium units and subdivision land for sale are carried at the lower of aggregate cost and net
realizable value (NRV). Costs include acquisition costs of the land plus costs incurred for the
construction, development and improvement of residential units. Borrowing costs are capitalized
while the development and construction of the real estate projects are in progress, and to the extent
that these are expected to be recovered in the future. NRV is the estimated selling price in the
ordinary course of business, less estimated costs of completion and the estimated costs necessary
to make the sale.
SGVFS013783*
SGVFS013783*
Years
20
3
3
5
5
The EUL and the depreciation method are reviewed at each financial reporting date to ensure that
the period and the method of depreciation is consistent with the expected pattern of economic
benefits from items of property and equipment.
An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the item) is included in the consolidated statement of comprehensive income in
the year the item is derecognized.
Intangible Assets
Software cost
Costs that are directly associated with identifiable and unique software controlled by the Group
and will generate economic benefits exceeding costs beyond one (1) year, are recognized as
intangible assets to be measured at cost less accumulated amortization and accumulated
impairment, if any. Otherwise, such costs are recognized as expense as incurred.
Expenditures which enhance or extend the performance of computer software programs beyond
their original specifications are recognized as capital improvements and added to the original cost
of the software. System development costs, recognized as assets, are amortized using the straightline method over five (5) years. Where an indication of impairment exists, the carrying amount of
computer system development costs is assessed and written down immediately to its recoverable
amount.
Impairment of Nonfinancial Assets
The Group assesses at each financial reporting date whether there is an indication that its
nonfinancial asset (e.g., investment properties, property and equipment, software costs, investment
in subsidiaries and associates) may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of the assets recoverable
SGVFS013783*
- 19 amount. An assets recoverable amount is calculated as the higher of the assets or cashgenerating units fair value less costs to sell and its value in use or its net selling price and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those assets or groups of assets. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessment of the time value of
money and the risks specific to the asset. Impairment losses of continuing operations are
recognized in the profit or loss in those expense categories consistent with the function of the
impaired asset.
An assessment is made at each financial reporting date as to whether there is an 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 assets 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 profit or loss
unless the asset is carried at revalued amount, in which case the reversal is treated as revaluation
increase. After such reversal, the depreciation and amortization charge is adjusted in future
periods to allocate the assets revised carrying amount, less any residual value, on a systematic
basis over its remaining useful life.
Customers Advances and Deposits
Customers advances and deposits represent payment from the buyers which have not yet reached
the minimum required percentage for recording real estate transaction. When the level of required
payment is reached and the revenue recognition criteria is met, sales are recognized and these
deposits and down payments will be applied against the related receivable.
Liabilities for Purchased Land
Liabilities for purchased of land represents unpaid portion of the acquisition costs of raw land for
future development, including other costs and expenses incurred to effect the transfer of title of the
property. Noncurrent portion of the carrying amount is discounted using the applicable interest
rate for similar type of liabilities at the inception of the transactions.
Provisions
Provisions are recognized only when the Group has: (a) a present obligation (legal or constructive)
as a result of a past event; (b) it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and (c) a reliable estimate can be made of the
amount of the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as an interest expense. Provisions are reviewed at each financial reporting date and
adjusted to reflect the current best estimate.
Equity
The Group records capital stock at par value and additional paid-in capital in excess of the total
contributions received over the aggregate par values of the equity share. Incremental costs
incurred directly attributable to the issuance of new shares are deducted from proceeds.
SGVFS013783*
- 20 Retained earnings represent accumulated earnings of the Group less dividends declared.
Revenue and Cost Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
Real estate sales
Real estate sales are generally accounted for under the full accrual method. Under this method,
the revenue is recognized when: (a) the collectibility of the sales price is reasonably assured;
(b) the earnings process is virtually complete; and (c) the seller does not have a substantial
continuing involvement with the subject properties. The collectibility of the sales price is
considered reasonably assured when: (a) the buyers have actually confirmed their acceptance of
the related loan applications after the same have been delivered to and approved by either the
banks or other financing institutions for externally financed accounts; and (b) the down payment
comprising a substantial portion of the contract price is received and the capacity to pay and credit
worthiness of buyers have been reasonably established for sales under the deferred cash payment
arrangement.
If the above criterion 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
Customers advances and deposits account in the consolidated statement of financial position.
Cancellation of real estate sales
Income from cancellation of real estate sales is recognized once the sale has been cancelled and
the related refundable portions of paid amortizations have been paid to the buyer. This is included
in the Other income account under the consolidated statement of comprehensive income. Such
is also recognized, subject to the provisions of Republic Act 6552, Realty Installment Buyer Act,
upon prescription of the period for the payment of required amortizations from defaulting buyers.
Revenue from hotel services
Revenue from hotel services such as room rentals, food and beverage sales and other departments
are recognized when the related sales and services are rendered.
Finance income
Interest income is recognized as it accrues (using the EIR method i.e, the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument to the
net carrying amount of the financial asset).
Dividend income
Revenue is recognized when the Groups right to receive payment is established.
Management fees
Revenue from management fees is recognized when earned and is included in the Other income
account under the consolidated statement of comprehensive income.
Rental income
Rental income on investment properties is recognized in profit or loss on a straight-line basis over
the lease term for non-cancellable lease or based on the terms of the lease contract for cancellable
lease. This is included in the Other income account under the consolidated statement of
comprehensive income.
SGVFS013783*
- 21 Other income
Revenue is recognized when earned.
Operating Expenses
Operating expenses are expenses that arise in the course of the ordinary operations of the Group.
These usually take the form of an outflow or depletion of assets such as cash and cash equivalents,
supplies, and depreciation of property and equipment. Expenses are recognized in the profit or
loss in the period they are incurred.
Pension Costs
Defined benefit plan
The defined benefit liability is the aggregate of the present value of the defined benefit obligation
and actuarial gains and losses not recognized reduced by past service cost not yet recognized and
the fair value of plan assets out of which the obligations are to be settled directly. If such
aggregate is negative, the asset is measured at the lower of such aggregate and the aggregate of
unrecognized net actuarial losses and past service cost and the present value of any economic
benefits available in the form of refunds from the plan or reductions in the future contributions to
the plan.
Defined benefit costs on the Groups defined benefit retirement plan are actuarially computed
using the projected unit credit (PUC) valuation method. Under this method, the current service
cost is the present value of retirement benefits payable in the future with respect to the services
rendered in the current period.
Defined benefit costs comprise the following:
(a) service cost;
(b) net interest on the net defined benefit liability or asset; and
(c) remeasurements of net defined benefit liability or asset.
Service costs which include current service costs, past service costs and gains or losses on nonroutine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs.
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 high quality corporate 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 profit or loss.
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 OCI in the period in which they arise. Remeasurements are not reclassified to
profit or loss in subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance
policies. Plan assets are not available to the creditors of the Group, nor can they be paid directly
to the Group. Fair value of plan assets is based on market price information. When no market
price is available, the fair value of plan assets is estimated by discounting expected future cash
flows using a discount rate that reflects both the risk associated with the plan assets and the
maturity or expected disposal date of those assets (or, if they have no maturity, the expected period
until the settlement of the related obligations).
SGVFS013783*
- 22 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production 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 Real estate inventories. All
other borrowing costs are expensed in the period 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 Groups 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. Capitalization of borrowing costs commences when the activities to prepare the asset
for its intended use or sale are in progress and expenditures and borrowing costs are being
incurred. Capitalization of borrowing costs ceases when substantially all the activities necessary
to prepare the asset for its intended use or sale are complete. If the carrying amount of the asset
exceeds its recoverable amount, an impairment loss is recorded. The capitalization of finance
costs is suspended if there are prolonged periods when development activity is interrupted.
Interest is also capitalized on the purchased cost of a site property acquired specially for
development but only where activities necessary to prepare the asset for development are in
progress.
Commission
The Group recognizes commission expense for the services rendered by the broker. The
commission expense is recognized upon receipt of down payment from the buyer comprising a
substantial portion of the contract price and the capacity to pay and credit worthiness of buyers
have been reasonably established for sales under the deferred cash payment arrangement.
Commission expense is recorded under Operating expense account in the consolidated statement
of comprehensive income.
Income Taxes
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 tax authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at the end of the financial
reporting date.
Deferred tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at
the reporting date between the tax bases of assets and liabilities and their 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, to the
extent that it is probable that taxable profit will be available against which the deductible
temporary differences can be utilized.
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. 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 rate (and tax laws) that have been enacted or substantively enacted at the financial
reporting date.
SGVFS013783*
- 23 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 income taxes relate to the same taxable
entity and the same tax authority.
Foreign Currency Translations and Transactions
The Groups consolidated financial statements are presented in Philippine Peso, which is its
functional and presentation currency. The Group determines its own functional currency and
items included in the consolidated financial statements are measured using that functional
currency. Transactions in foreign currencies are initially recorded at the functional currency rate
ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency rate of exchange ruling at the financial reporting date. All differences are taken to the
consolidated statement of comprehensive income for the year.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement and requires an assessment of whether the fulfillment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset. 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).
Company as lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly against income.
Operating lease payments are recognized as an expense in profit or loss on a straight-line basis
over the lease term.
Company as lessor
Leases where the Group retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Lease payments received are recognized as income in profits or loss
on a straight-line basis over the lease term. Initial direct costs incurred in negotiating an operating
lease are added to the carrying amount of the leased asset and recognized over the lease term on
the same bases as rental income.
SGVFS013783*
SGVFS013783*
SGVFS013783*
- 26 Group reviews the age and status of receivables, and identifies accounts that are to be provided
with allowances on a continuous basis. The Group provides full allowance for receivables that it
deems uncollectible.
The amount and timing of recorded expenses for any period would differ if the Group made
different judgments or utilized different estimates. An increase in the allowance for impairment
losses on receivables would increase recorded operating expenses and decrease current assets.
There is no impairment of loans and receivables for the years ended December 31, 2014, 2013 and
2012.
Estimation of useful lives of property and equipment and investment properties
The Group estimates the useful lives of its property and equipment and investment properties
based on the period over which the assets are expected to be available for use. The EUL of
investment property and property and equipment are reviewed at least annually and are updated if
expectations differ from previous estimates due to physical wear and tear and technical or
commercial obsolescence on the use of these assets. It is possible that future results of operations
could be materially affected by changes in these estimates brought about by changes in factors
mentioned above. A reduction in the EUL of investment properties and property and equipment
would increase the recorded depreciation and amortization expense and decrease the related asset
accounts.
The carrying value of the Groups property and equipment amounted to P
=1,055.73 million,
P
=821.56 million and =
P729.48 million as of December 31, 2014, 2013 and 2012, respectively
(Note 15). The carrying value of investment properties amounted to P
=158.52 million,
P
=178.57 million and =
P156.05 million as of December 31, 2014, 2013 and 2012, respectively
(Note 13).
Evaluation of NRV of real estate inventories
The Group reviews real estate inventories for probable impairment in value. The managements
judgment in determining if real estate inventories are impaired is based on the assessment of the
assets estimated net selling price and the managements plan in discontinuing the real estate
projects. Estimated selling price is derived from publicly available market data and historical
experience, while estimated selling costs are basically commission and advertising expenses
based on historical experience, respectively. The carrying value of real estate inventories
amounted to =
P24,234.51 million, =
P17,940.35 million and =
P15,271.78 million as of
December 31, 2014, 2013 and 2012, respectively (Note 8).
Impairment of nonfinancial assets
The Group assesses the impairment of its nonfinancial assets (e.g. investments in subsidiaries and
associates, investment properties, property and equipment and software cost) whenever events or
changes in circumstances indicate that the carrying amount of these assets may not be recoverable.
The factors that the Group considers important which could trigger an impairment review include
the following:
SGVFS013783*
- 27 An impairment loss is recognized whenever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the higher of an assets net selling price and value
in use. The net selling price is the amount obtainable from the sale of an asset in an arms length
transaction while value in use is the present value of estimated future cash flows expected to arise
from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable
amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to
which the asset belongs.
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 can
materially affect the consolidated financial statements.
As of December 31, 2014, 2013 and 2012, the balances of the Groups nonfinancial assets, net of
accumulated depreciation and amortization and accumulated provisions for impairment losses
follow:
Property and equipment (Note 15)
Investments in associates (Note 12)
Investment properties (Note 13)
Software cost (Note 14)
2014
=1,055,727,336
P
278,853,751
158,523,614
71,292,253
2013
=821,563,627
P
235,633,723
178,569,015
18,253,365
2012
=729,484,201
P
183,268,662
156,046,748
16,437,847
SGVFS013783*
2014
=2,174,964,411
P
581,420,397
=2,756,384,808
P
2013
P2,322,177,311
=
4,304,837,390
=6,627,014,701
P
2012
P1,483,019,218
=
1,272,572,437
=2,755,591,655
P
Cash in banks earn interests 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 prevailing short-term
investment rates ranging from 0.750% to 2.250% in 2014, 0.125% to 2.500% in 2013 and 0.5% to
4.13% in 2012.
Interest income earned on bank deposits amounted to P
=54.48 million, P
=57.62 million and
P
=37.40 million for the years ended December 31, 2014, 2013 and 2012, respectively (Note 21).
7. Receivables
This account consists of:
Installment contracts receivable
Advances to contractors and
suppliers
Receivables from related parties
(Note 28)
Receivables from:
Condominium corporations
Employees
Rental
Others
Less noncurrent portion of
installment contract receivables
Less allowance for impairment losses
2014
=7,327,141,399
P
2013
=9,815,986,578
P
2012
=7,181,460,401
P
470,038,952
652,572,107
555,124,943
91,863,316
58,911,312
270,071,429
173,717,706
95,025,902
3,724,081
302,756,995
8,646,801,506
128,255,334
65,598,230
3,672,554
245,645,896
10,873,194,847
122,044,430
66,328,049
1,562,797
97,378,565
8,208,884,623
2,833,748,592
5,813,052,914
536,721
=5,812,516,193
P
4,187,297,117
6,685,897,730
536,721
=6,685,361,009
P
2,983,116,876
5,225,767,747
536,721
=5,225,231,026
P
SGVFS013783*
SGVFS013783*
- 30 For the terms and conditions of related party transactions, refer to Note 28.
2014
2013
2012
P
=15,370,838,971
8,863,673,310
=24,234,512,281
P
P
=14,193,875,429
3,746,473,369
=17,940,348,798
P
P
=11,495,006,187
3,776,775,807
=15,271,781,994
P
2013
=15,271,781,994
P
2012
=12,436,703,967
P
5,765,913,140
2,510,256,637
672,581,834
5,126,787,553
1,925,631,880
314,336,966
99,019,859
(6,379,204,666)
=17,940,348,798
P
(61,618,198)
(4,470,060,174)
=15,271,781,994
P
SGVFS013783*
- 31 -
2014
=677,235,007
P
619,188,604
266,804,712
67,724,876
22,098,193
=1,653,051,392
P
2013
=427,886,497
P
344,396,915
256,848,869
36,007,556
41,051,058
=1,106,190,895
P
2012
=390,979,121
P
76,268,380
323,558,076
78,522,768
33,860,708
=903,189,053
P
Prepaid expenses consist mainly of prepayments for taxes, commissions and insurance.
Input VAT represents taxes imposed to the Group by its suppliers and contractors for the
acquisition of goods and services required under Philippine taxation laws and regulations. This
will be used against future output VAT liabilities or will be claimed as tax credits. Management
has estimated that all input VAT are recoverable at its full amount.
Recoverable deposits pertain to bill deposits and guaranty deposits for utilities that will be
recovered within one (1) year.
SGVFS013783*
- 32 Creditable withholding tax is attributable to taxes withheld by third parties arising from the real
estate sales and will be applied against future taxes payable. The amounts as of December 31,
2014, 2013 and 2012 represent the residual after application as credit against income tax payable.
Others include deposits for escrow funds and various types of advances which will be recovered
within 1 year.
2012
45.00%
40.00%
33.00%
SGVFS013783*
- 33 The following table summarizes the significant financial information of the Groups associates:
CSN
Assets
Current assets
Noncurrent
assets
Liabilities
Current
liabilities
Noncurrent
liabilities
P
=369,704
2014
Acotec
Total
CSN
P
=368,489,391 P
=5,702,495
P
=374,561,590
P
=369,704
Subic Water
1,256,630,753
1,256,630,753
P
=369,704 P
=1,625,120,144 P
=5,702,495 P
=1,631,192,343
2012
Acotec
Total
P
=369,704
P
=499,670,666 P
=5,702,495
P
=505,742,865
P
=369,704
853,363,284
P
=1,353,033,950 P
=5,702,495
853,363,284
P
=1,359,106,149
2013
Acotec
Total
CSN
P
=391,403,667 P
=5,702,495
P
=397,475,866
1,016,357,887
1,016,357,887
P
=369,704 P
=1,407,761,554 P
=5,702,495 P
=1,413,833,753
Subic Water
Subic Water
P
=7,530
P
=290,547,279
P
=11,690
P
=290,566,499
P
=7,530
P
=172,609,196
P
=11,690
P
=172,628,416
P
=7,530
P
=199,164,391
P
=11,690
P
=199,183,611
P
=7,530
328,020,186
P
=618,567,465
P
=11,690
328,020,186
P
=618,586,685
P
=7,530
379,854,937
P
=552,464,133
P
=11,690
379,854,937
P
=552,483,353
P
=7,530
383,408,608
P
=582,572,999
P
=11,690
383,408,608
P
=582,592,219
Revenue
P
=
P
=564,694,496
P
=
P
=564,694,496
P
=
=
P520,268,786
P
=
=
P520,268,786
P
=
P
=600,231,689
P
=
P
=600,231,689
Net income
P
=
P
=172,782,842
P
=
P
=172,782,842
P
=
=
P205,175,968
P
=
=
P205,175,968
P
=
P
=191,556,127
P
=
P
=191,556,127
*SGVFS013783*
P
=1,752,265
1,752,265
P
=1,752,265
1,752,265
2013
Subic Water
P
=36,623,200
36,623,200
146,645,462
82,070,387
(29,705,326)
199,010,523
1,752,265
235,633,723
(1,752,265)
P
= =
P235,633,723
CSN
Acquisition cost:
Balance at beginning of year
Additions
Balance at end of year
P
=36,623,200
36,623,200
199,010,523
69,113,137
(25,893,109)
242,230,551
1,752,265
278,853,751
(1,752,265)
P
= P
=278,853,751
CSN
Acquisition cost:
Balance at beginning of year
Additions
Balance at end of year
2014
Subic Water
P
=1,752,265
1,752,265
2012
Subic Water
P
=36,623,200
36,623,200
89,731,968
76,622,451
(19,708,957)
146,645,462
1,752,265
183,268,662
(1,752,265)
P
= =
P183,268,662
Acotec
P
=4,485,715
4,485,715
Total
P
=42,861,180
42,861,180
199,010,523
69,113,137
(25,893,109)
242,230,551
4,485,715
285,091,731
(4,485,715)
(6,237,980)
P
= P
=278,853,751
Acotec
Total
P
=4,485,715
4,485,715
P
=42,861,180
42,861,180
146,645,462
82,070,387
(29,705,326)
199,010,523
4,485,715
241,871,703
(4,485,715)
(6,237,980)
=
P P
=235,633,723
Acotec
Total
P
=4,485,715
4,485,715
P
=42,861,180
42,861,180
89,731,968
76,622,451
(19,708,957)
146,645,462
4,485,715
189,506,642
(4,485,715)
(6,237,980)
=
P P
=183,268,662
*SGVFS013783*
- 35 The reconciliation of the net assets of Subic Water to the carrying amount of the interests in an
associate recognized in the consolidated financial statements is as follows:
Net assets of an associate
Proportionate ownership in the
associate
Share in net identifiable assets of
common control
Notional goodwill
2014
=1,006,552,679
P
2013
=855,297,421
P
2012
=770,460,951
P
40%
40%
40%
402,621,072
(123,767,321)
=278,853,751
P
342,118,968
(106,485,245)
=235,633,723
P
308,184,380
(124,915,718)
=183,268,662
P
2012
=199,138,281
P
49,007,756
(62,162,244)
185,983,793
=173,199,660
P
25,938,621
199,138,281
P68,327,060
=
104,872,600
173,199,660
20,569,266
6,890,913
27,460,179
=158,523,614
P
17,152,912
3,416,354
20,569,266
=178,569,015
P
13,736,559
3,416,353
17,152,912
=156,046,748
P
2014
Cost
At January 1
Additions
Reclassification of land
At December 31
Accumulated Depreciation
At January 1
Depreciation (Note 23)
At December 31
Net Book Value
Investment properties mostly consist of condominium units and office space for rent.
Rental income on investment properties amounted to P
=62.54 million, =
P31.26 million and
P
=32.40 million for the years ended December 31, 2014, 2013 and 2012, respectively (Note 22).
Depreciation expense charged to operations amounted to =
P6.89 million, P
=3.42 million and
P
=3.42 million for the years ended December 31, 2014, 2013 and 2012, respectively (Note 23).
Undeveloped land with cost amounting P
=62.16 million were reclassified to real estate inventory in
2014.
The fair value of investment properties, which has been determined using discounted cash flow
model with discount rates ranging from 3.63% to 7.85%, exceeds its carrying cost. The fair value
represents the amount at which the assets could be exchanged between knowledgeable, willing
buyer and a knowledgeable, willing seller in an arms length transaction at the date of valuation.
The aggregate fair value at the date of valuation amounted to P
=178.86 million, P
=181.71 million
and =
P175.61 million as of December 31, 2014, 2013 and 2012, respectively.
There are no investment properties as of December 31, 2014, 2013 and 2012 that are pledged as
security to secure liabilities.
SGVFS013783*
- 36 -
2014
2013
2012
P40,854,938
=
76,290,942
117,145,880
P29,769,604
=
11,085,334
40,854,938
P19,602,443
=
10,167,161
29,769,604
22,601,573
23,252,054
45,853,627
=71,292,253
P
13,331,757
9,269,816
22,601,573
=18,253,365
P
7,781,904
5,549,853
13,331,757
=16,437,847
P
Land, building
and building
improvements
Office
machines and
equipment
Office
Construction
furniture Transportation machinery and
and fixtures
equipment
equipment
P
= 552,591,361
12,665,150
565,256,511
P
= 90,217,536
59,072,115
149,289,651
P
= 94,808,922
9,206,751
104,015,673
P
= 108,128,482
29,331,798
137,460,280
P
= 499,736,822 P
= 1,345,483,123
314,160,500
424,436,314
813,897,322 1,769,919,437
120,217,075
27,037,068
147,254,143
P
= 418,002,368
68,732,108
16,056,122
84,788,230
P
= 64,501,421
84,484,660
8,239,749
92,724,409
P
= 11,291,264
64,343,036
17,446,963
81,789,999
P
= 55,670,281
186,142,617
523,919,496
121,492,703
190,272,605
307,635,320
714,192,101
P
= 506,262,002 P
= 1,055,727,336
Land, building
and building
improvements
Office
machines and
equipment
Office
furniture
and fixtures
Transportation
equipment
=
P535,296,729
17,294,632
552,591,361
=
P78,412,981
11,804,555
90,217,536
=
P85,667,397
9,141,525
94,808,922
=
P96,857,250
11,271,232
108,128,482
=
P308,079,609 P
=1,104,313,966
191,657,213
241,169,157
499,736,822 1,345,483,123
93,964,053
26,253,022
120,217,075
=
P432,374,286
53,144,877
15,587,231
68,732,108
=
P21,485,428
66,154,129
18,330,531
84,484,660
=
P10,324,262
49,936,823
14,406,213
64,343,036
=
P43,785,446
111,629,883
74,512,734
186,142,617
=
P313,594,205
374,829,765
149,089,731
523,919,496
=
P821,563,627
Land, building
and building
improvements
Office
machines and
equipment
Office
furniture
and fixtures
Transportation
equipment
Construction
machinery and
equipment
Total
=
P486,494,512
48,802,217
535,296,729
=
P62,286,971
16,126,010
78,412,981
=
P63,637,719
22,029,678
85,667,397
=
P66,276,009
30,581,241
96,857,250
=
P190,594,420
117,485,189
308,079,609
=
P869,289,631
235,024,335
1,104,313,966
69,791,194
24,172,859
93,964,053
=
P441,332,676
37,759,151
15,385,726
53,144,877
=
P25,268,104
51,374,331
14,779,798
66,154,129
=
P19,513,268
37,626,698
12,310,125
49,936,823
=
P46,920,427
17,321,157
94,308,726
111,629,883
=
P196,449,726
213,872,531
160,957,234
374,829,765
=
P729,484,201
Total
2013
Cost
Balance at beginning of year
Additions
Balance at end of year
Accumulated Depreciation and amortization
Balance at beginning of year
Depreciation and amortization (Note 23)
Balance at end of year
Net Book Value
Construction
machinery and
equipment
Total
2012
Cost
Balance at beginning of year
Additions
Balance at end of year
Accumulated Depreciation and amortization
Balance at beginning of year
Depreciation and amortization (Note 23)
Balance at end of year
Net Book Value
SGVFS013783*
2013
=14,790,505,500
P
2012
=5,864,829,403
P
4,031,250,005
18,821,755,505
1,223,149,483
=17,598,606,022
P
6,532,424,052
12,397,253,455
1,294,904,244
=11,102,349,211
P
SGVFS013783*
- 38 Tranche 1 of the =
P10,000.00 million Series C was issued on October 31, 2012 in the aggregate
amount principal amount of P
=1,000.00 million. Tranche 2 (Series D) and 3 (Series E) were issued
on April 10, 2013 and July 30, 2013 in the aggregate principal amount of P
=4,000.00 million and
=
P5,000.00 million, respectively.
The note is issued in registered form in the minimum denominations of P
=100.00 million and
multiples of P
=10.00 million each. Corporate notes shall bear interest 3 months after date of issue
and every 3 months thereafter.
In January 2011, the Group signed a corporate notes facility agreement with local banks relating
on the issuance of 5-year peso denominated notes in the aggregate amount of P
=5,000.00 million.
Proceeds of the said notes facility will be used to fund land acquisition, general operations and
project development and construction. The notes have been issued in two tranches, redeemable in
whole at the end of third year following the issue date of the second tranche note. Payments shall
be made in each tranche is equal to 1% every year from the issue date and the balance payable at
maturity.
Tranche 1 (Series A) of =
P5,000.00 million corporate notes was issued on January 28, 2011, in the
aggregate principal amount of =
P2,000.00 million while Tranche 2 (Series B) were issued on
March 17, 2011, in the aggregate principal amount of =
P3,000.00 million. They were issued in
registered form in the minimum denominations of P
=100.00 million and multiples of
=
P10.00 million each.
Corporate notes shall bear interest from Tranche 1 and 2 PDST-F Issue Date and ending 3 months
after such Issue Date, and every 3 months thereafter. The annual interest rate shall initially be the
PDST-F benchmark yield for five-year treasury securities (Base Rate) on banking day
immediately preceding an Issue Date plus the Margin (125 basis points) for each of the Tranche,
gross of any applicable withholding taxes. Interest is payable quarterly.
Unamortized debt issuance costs included in fixed rate corporate notes as of December 31, 2014,
2013 and 2012 amounted to =
P84.71 million, P
=109.50 million and P
=85.17 million, respectively.
The rollforward analysis of unamortized debt issuance cost follows:
Balance at beginning of year
Availments
Amortization of debt issue cost
Balance at end of year
2014
=109,494,500
P
(24,786,511)
=84,707,989
P
2013
P85,170,597
=
45,000,000
(20,676,097)
=109,494,500
P
2012
P47,890,562
=
48,660,513
(11,380,478)
=85,170,597
P
In 2014, 2013 and 2012, interest expense incurred and capitalized interest related to long-term
debt amounted to =
P1,029.62 million, =
P936.34 million and =
P366.03 million and =
P936.32 million,
P
=672.58 million and =
P314.34 million, respectively. The average capitalization rates used are
5.89%, 6.44% and 6.88% of the average expenditures in 2014, 2013 and 2012, respectively.
The =
P10,000.00 million and =
P5,000.00 million corporate notes facility agreement requires the
Group to ensure that debt-to-equity ratio will not exceed 3.2 times and 2.0 times, respectively, and
current ratio is at least 1.75 times. As of December 31, 2014, 2013 and 2012, the Group is fully
compliant with these requirements.
As of December 31, 2014, 2013 and 2012, corporate notes recognized are unsecured.
SGVFS013783*
2014
=1,865,351,506
P
312,929,207
=2,178,280,713
P
2013
P884,182,229
=
487,389,113
=1,371,571,342
P
2012
P928,473,311
=
215,945,234
=1,144,418,545
P
Liabilities for purchased land were recorded at fair value. These liabilities for purchased land are
payable over a period of two (2) to four (4) years. The fair value is derived using discounted cash
flow model using the discount rate ranging from 1.02% to 3.32% based on applicable rates for
similar types of liabilities.
Movements in the unamortized discount are as follows:
Balance at beginning of the year
Addition
Accretion for the year (Note 25)
2014
P
=11,502,453
(1,119,524)
P
=10,382,929
2013
=
P
11,764,707
(262,254)
=11,502,453
P
SGVFS013783*
- 40 -
2014
P332,566,862
=
307,761,599
260,905,792
175,623,413
98,246,999
2,381,826
50,146,361
=1,227,632,852
P
2013
P230,709,697
=
292,302,030
248,742,958
169,143,291
32,710,251
2,548,030
46,378,471
=1,022,534,728
P
2012
=627,227,123
P
42,336,512
202,507,106
94,969,297
2,056,505
48,773,951
=1,017,870,494
P
Accounts payable - trade are mostly composed of payable to suppliers of materials. These are
noninterest-bearing and are normally settled within 1 year.
Accrued expenses pertain to SSS, Pag-IBIG, Philhealth, withholding tax payables and accrual of
other expenses and are expected to be settled within one (1) year.
Retention payable consists of amounts withheld from every progress billing per subcontract
agreement and is expected to be settled within 1 year.
Payable to contractors pertains to unpaid progress billings for the construction and development of
real estate projects and residential units, and is expected to be settled within 1 year.
Refundable deposits are deposits made by unit owners upon turnover of the unit which will be
remitted by the Group to Meralco.
Deferred charges pertain to deferred rentals and other deferrals which are chargeable within 1
year.
Others include refundable amount for cancelled sales and are to be settled within 1 year.
SGVFS013783*
- 41 -
20. Equity
Capital Stock
Common stock - P
=1 par value
Authorized - 5,000,000,000 shares
Issued and outstanding - 3,487,727,328 shares
Additional paid-in capital
=5,000,000,000
P
3,487,727,328
15,260,667
Retained Earnings
Appropriated
On April 25, 2011, the Parent Companys BOD approved the appropriation in the amount of
P
=1,500.00 million out of the Groups unappropriated retained earnings to fund the Groups future
dividend declarations.
The BOD approved the additional appropriation of =
P1,500.00 million and =
P2,000.00 million out of
the Parent Companys unappropriated retained earnings on February 17, 2014 and December 23,
2014, respectively, to fund the Groups future land acquisition. The Group plans to release the
appropriation within the next financial year.
Unappropriated
On August 26, 2014, the Parent Companys BOD approved the declaration of cash dividends
amounting =
P1,200.00 million to stockholders of record as of December 31, 2013. As of
December 31, 2014, the entire dividends declared have been paid.
On September 2, 2013, the Parent Companys BOD approved the declaration of cash dividends
amounting =
P1,200.00 million to stockholders of record as of December 31, 2012. As of
December 31, 2013, the entire dividends declared have been paid.
On September 24, 2012, the Parent Companys BOD approved the declaration of cash dividends
amounting =
P2,114.89 million to stockholders of record as of December 31, 2011. As of
December 31, 2012, the entire dividends declared have been paid.
Capital Management
The primary objective of the Groups capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder
value.
The Group manages its capital structure and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return of capital to shareholders or issue new shares. As of
December 31, 2014, 2013 and 2012, the Group had the following rates:
Current Ratio
Debt to Equity Ratio
Asset to Equity Ratio
2014
3.64:1
2.24:1
3.24:1
2013
3.70:1
2.85:1
3.85:1
2012
3.13:1
2.37:1
3.37:1
SGVFS013783*
- 42 -
2014
2013
2012
P
=216,466,539
54,484,424
=270,950,963
P
P
=224,483,232
57,619,498
=282,102,730
P
P
=436,152,622
37,404,443
=473,557,065
P
2014
2013
2012
P
=496,641,202
P
=414,337,638
P
=208,925,276
284,287,321
62,536,158
45,045,373
44,651,723
21,271,672
31,256,765
35,923,261
42,775,521
31,177,524
32,403,532
24,633,411
23,268,685
(2,520,000)
59,227,190
=1,011,140,639
P
1,890,000
39,523,786
=596,884,495
P
(140,000)
10,558,465
=299,649,369
P
Others include holding fees, fees for change in ownership, transfer fees, restructuring fees, lease
facilitation fees and others.
23. Operating Expenses
This account consists of:
Commissions
Salaries, wages and employee
benefits (Note 24)
Taxes and licenses
Marketing
Depreciation and amortization
(Notes 13, 14 and 15)
Repairs and maintenance
Professional fees
Association dues
Outside services
Communication, light and water
Retirement expense (Note 24)
2014
=602,031,004
P
2013
=669,318,814
P
2012
=385,262,152
P
378,343,118
298,962,426
277,449,304
310,390,450
314,104,884
274,579,100
275,243,245
267,389,421
276,000,052
219,425,783
121,711,003
114,666,978
112,297,040
105,183,312
98,578,331
46,354,486
161,252,617
51,048,483
112,167,837
36,593,338
86,991,074
74,408,929
66,874,217
168,783,168
68,747,912
83,309,852
40,027,304
122,042,873
48,120,065
45,650,797
(Forward)
SGVFS013783*
- 43 -
Supplies
Entertainment, amusement and
recreation
Fuel and oil
Transportation and travel
Management fees (Note 28)
Insurance
Food and beverages
Rental
Miscellaneous
2014
=34,980,798
P
2013
=21,857,093
P
2012
=22,796,531
P
20,663,594
12,207,276
11,266,303
4,200,000
3,447,941
3,338,128
3,128,731
27,943,854
=2,496,179,410
P
20,118,280
13,226,450
14,213,372
4,200,000
6,125,193
3,002,799
33,581,239
=2,274,054,169
P
13,253,343
13,168,563
11,922,599
4,200,000
4,591,195
4,182,908
3,864,724
27,335,069
=1,885,891,773
P
2013
=48,257,898
P
66,874,217
2012
=29,008,004
P
45,650,797
2014
=44,517,456
P
2013
=65,090,005
P
2012
=42,248,022
P
1,837,030
=46,354,486
P
1,784,212
=66,874,217
P
3,402,775
=45,650,797
P
2014
(P
=68,525,781)
46,354,486
2013
2012
P
=248,822,829
(324,028,308)
P
=257,293,376
(209,035,478)
P
=217,698,077
(188,690,073)
(75,205,479)
6,679,698
(P
=68,525,781)
48,257,898
=48,257,898
P
29,008,004
=29,008,004
P
SGVFS013783*
2014
P48,257,898
=
46,354,486
(125,805,793)
(37,332,372)
(P
=68,525,781)
2013
P29,008,004
=
66,874,217
(47,624,323)
=48,257,898
P
2012
P50,661,945
=
45,650,797
(67,304,738)
=29,008,004
P
2014
=68,001,200
P
2013
=38,379,567
P
2012
=37,015,418
P
9,244,756
30,289,320
P
=47,624,323
P
=67,304,738
64,484,291
(6,679,698)
P
=125,805,793
2014
=173,824,361
P
2013
=126,200,038
P
2012
=58,895,300
P
68,001,200
64,484,291
(6,679,698)
=299,630,154
P
38,379,567
9,244,756
=173,824,361
P
37,015,418
30,289,320
=126,200,038
P
The reconciliation of the present value of the defined benefit obligation follows:
Balance at beginning of year
Current service cost
Interest cost
Benefits paid
Actuarial gains
Remeasurement
Balance at end of year
2014
=257,293,376
P
44,517,456
15,834,598
(720,072)
(68,001,200)
(101,329)
=248,822,829
P
2013
=217,698,077
P
65,090,005
13,309,108
(417,125)
(38,379,567)
(7,122)
=257,293,376
P
2012
=199,546,833
P
42,248,022
13,342,382
(400,000)
(37,039,160)
=217,698,077
P
2013
=188,690,073
P
11,524,896
(417,125)
(7,122)
9,244,756
=209,035,478
P
2012
=148,884,888
P
9,939,607
(400,000)
30,265,578
=188,690,073
P
2014
=209,035,478
P
13,997,568
37,332,372
(720,072)
(101,329)
64,484,291
=324,028,308
P
SGVFS013783*
- 45 As of December 31, 2014, 2013 and 2012, the major categories of the Groups plan assets as
percentage of the fair value of total plan assets follow:
2013
2014
Investments in equity
Debt instruments
Cash and cash equivalents
Other assets
Amount
P
= 242,085,301
72,384,171
8,435,627
1,123,209
P
= 324,028,308
%
74.71%
22.34
2.60
0.35
100.00%
Amount
P
=151,682,683
46,232,107
6,501,003
4,619,685
P
=209,035,478
2012
%
72.56%
22.12
3.11
2.21
100.00%
Amount
P
=147,638,576
39,165,610
1,885,887
P
=188,690,073
%
78.24%
20.76
1.00
100.00%
The carrying amounts disclosed above reasonably approximate fair values at year-end.
As of December 31, 2014, 2013 and 2012, the actual return on plan assets amounted to
P
=78.48 million, P
=20.77 million and P
=40.21 million, respectively.
The assumptions used to determine pension benefits of the Group follow:
Discount rates
Salary rate increase
2014
4.60%
6.00%
2013
6.15%
10.00%
2012
6.11%
10.00%
Each year, an Asset-Liability Matching Study (ALM) is performed with the result being analyzed
in terms of risk-and-return profiles. It is the policy of the Trustee that immediate and near-term
retirement liabilities of the Groups Retirement Fund are adequately covered by its assets. As
such, due considerations are given that portfolio maturities are matched in accordance with due
benefit payments. The Retirement Funds expected benefits payments are determined through the
latest actuarial reports.
The sensitivity analysis that follows has been determined based on reasonably possible changes of
each significant assumption on the retirement benefit obligation as of the end of reporting period,
assuming all other assumptions were held constant.
Discount rate
Salary rate
Increase
(Decrease)
9.6%
11.9%
10.8%
9.0%
-100bps
+100bps
+100bps
-100bps
Effect on defined
benefit obligation
(P
=21,933,185)
27,037,423
24,600,070
(20,502,770)
Staff costs and other employee benefit related costs follow (Note 23):
Salaries and wages
Social security costs and PAG-IBIG
contributions
Defined benefit pension costs
Others
2014
=276,960,678
P
2013
=249,557,637
P
2012
=214,296,753
P
13,256,434
41,723,657
38,378,914
=370,319,683
P
12,575,373
61,082,749
28,442,712
=351,658,471
P
11,037,391
42,347,955
31,198,755
=298,880,854
P
SGVFS013783*
- 46 -
2014
=97,759,285
P
2013
=500,131,170
P
2012
=612,085,243
P
25,906,035
3,939,308
=127,604,628
P
9,173,642
2,651,927
=511,956,739
P
34,729,451
2,976,780
=649,791,474
P
2014
=995,515,861
P
10,756,598
267,403,796
=1,273,676,255
P
2013
=595,892,990
P
11,181,407
309,047,216
=916,121,613
P
2012
=1,072,892,278
P
7,447,376
(175,236,882)
=905,102,772
P
The current provision for income tax in 2014, 2013 and 2012 represents regular corporate income
tax.
The reconciliation of the provision for income tax computed at the statutory income tax rate to the
provision for income tax shown in profit or loss follows:
Income tax at statutory income tax
rate
Adjustments for:
Nondeductible expenses and
others
Nondeductible interest expense
Change in deferred taxes
NOLCO
MCIT
Dividend income
Interest income subject to final
tax
Equity in net earnings of
associates
Nontaxable income
Income tax rate
2014
2013
2012
30.00%
30.00%
30.00%
0.95
0.12
0.03
0.01
0.01
(0.06)
1.95
0.16
0.05
(0.07)
0.02
(0.03)
1.39
0.12
0.04
(0.05)
0.01
(0.05)
(0.12)
(0.18)
(0.12)
(0.45)
(2.57)
27.92%
(0.70)
(5.22)
25.98%
(0.72)
(2.42)
28.20%
SGVFS013783*
2014
2013
2012
=
P
21,420,700
P10,332,092
=
21,420,700
P3,396,324
=
21,420,700
7,648,174
3,216
7,648,174
3,216
7,648,174
3,216
125,836
24,691
29,072,090
39,404,182
413,635
33,032,576
3,045,408
2,709,550
6,238,962
(1,129,400,778)
(301,241,689)
(25,333,721)
(10,571,993)
(189,000)
(922,470,161)
(220,815,469)
(32,769,674)
(945,000)
(692,213,398)
(137,383,574)
(25,551,179)
(378,000)
(3,485)
(1,463,695,258)
(P
=1,434,623,168)
(30,466)
(1,174,321,220)
(P
=1,134,917,038)
(849,287,189)
(P
=816,254,613)
As at December 31, 2014, the Groups NOLCO and MCIT that can be claimed as deduction from
future taxable income follows:
Year Incurred
2012
2013
2014
NOLCO
=
P
985,968
=985,968
P
Amount
P
=985,968
1,579,443
P
=2,565,411
Applied
=
P
1,579,443
P
=1,579,443
Expired
=
P
=
P
Balance
P
=985,968
P
=985,968
Year of
Expiration
2017
2014
SGVFS013783*
- 48 MCIT
Year Incurred
2014
2013
2012
2011
Amount
P
=533,287
588,924
536,460
13,327
P
=1,671,998
Expired
=
P
13,327
P
=13,327
Balance
P
=533,287
588,924
536,460
P
=1,658,671
Year of
Expiration
2017
2016
2015
2014
SGVFS013783*
DMCI Mining
Condominium
Corporations
Other related parties
Relationship
Under common
control
Under common
control
Under common
control
Relationship
Under common
control
Under common
control
DM Consunji, Inc.
DMCI Urban Property
Developers
Other Related parties
Condominium
Corporations
Relationship
Under common
control
Under common
control
Under common
control
Under common
control
Terms
Transaction
Construction
services
P
= 5,634,563
P
= 5,634,562
1-30 days
Advances
77,752,400
86,228,754
1-30 days
P
= 91,863,316
1-30 days
Remittances
Transaction
Advances
Advances
Advances
Under common
control
2014
Outstanding
Balance
Amount
(1,627,464)
P
= 81,759,499
2013
Outstanding
Amount
Balance
(P
=160,572,546)
1,489,324
(157)
P
=561,138
18,407,325
(601,143)
Management fees
22,743,389
16,880,063
Reimbursable fees
52,206,938
22,036,465
Remittances
Transaction
450,420
(P
=83,682,632)
1,627,464
P
=58,911,312
2012
Outstanding
Amount
Balance
Terms
1-30 days
Non interest
bearing
Non interest
bearing
Non interest
bearing
Non interest
bearing
1-30 days
Terms
Remittances
P
=33,016,534
P
=37,794,099
1-30 days
Advances
25,584,631
1-30 days
161,133,684
1-30 days
Advances
(567,763)
Consultancy fee
1,127,337
1,177,044
1-30 days
Advances
3,670,188
16,579,876
1-30 days
Management fees
22,657,677
14,971,151
1-30 days
Reimbursable fees
21,296,310
P
=81,200,283
12,830,944
P
=270,071,429
1-30 days
Conditions
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Conditions
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Conditions
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
Unsecured,
unimpaired
SGVFS013783*
- 50 The table below summarizes the total transactions of the Group with related parties in 2014, 2013
and 2012 and outstanding payable as of December 31, 2014, 2013 and 2012:
2014
DM Consunji Inc.
Relationship
Stockholder
Dacon Corporation
DMCI Urban Property
Developers
Ultimate parent
Under common
control
Condominium
Corporation
Under common
control
Under common
control
Under common
control
Outstanding
Balance
=
P246,449,739
(96,424,422)
351,286,388
318,252
Transaction
Trade
Advances
Assignment of assets
Remittances
Advances
Amount
P
= 196,638,026
(333,598,132)
(215,518)
Terms Conditions
1-30 days Unsecured
1-30 days Unsecured
1-30 days Unsecured
1-30 days Unsecured
1-30 days Unsecured
Advances
Trade
143,744
(4,065,182)
12,341,480
1-30 days
1-30 days
Unsecured
Unsecured
Advances
(4,118,148)
1-30 days
Unsecured
Remittances
(1,479,078)
1-30 days
Unsecured
(P
= 146,694,288)
16,469,208
P
= 530,440,645
1-30 days
Unsecured
Terms
1-30 days
Conditions
Unsecured
1-30 days
Unsecured
1-30 days
Unsecured
1-30 days
Unsecured
1-30 days
Unsecured
Terms
1-30 days
1-30 days
1-30 days
1-30 days
Conditions
Unsecured
Unsecured
Unsecured
Unsecured
694,426
1-30 days
1-30 days
Unsecured
Unsecured
2013
DM Consunji, Inc.
Dacon Corporation
M&S Company
DMCI Urban Property
Developers
Condominium
Corporation
Other related parties
Relationship
Stockholder
Ultimate parent
Under common
control
Under common
control
Under common
control
Under common
control
Outstanding
Balance
P
=443,087,765
(96,424,422)
684,884,520
215,518
318,252
Transaction
Trade
Advances
Assignment of assets
Remittances
Advances
Amount
P
=244,952,673
(66,903,177)
684,884,520
215,518
Advances
(694,426)
Advances
120,472
16,262,918
Advances
2,678,732
3,517,005
Remittances
993,830
P
=866,248,142
1,479,078
P
=1,053,340,634
2012
DM Consunji Inc.
Dacon Corporation
M&S Company
DMCI Holdings, Inc.
Condominium
Corporations
DMC Urban Property
Developers, Inc.
M&S Company
Relationship
Stockholder
Ultimate parent
Under common
control
Parent
Entity under
common
control
Under common
control
Under common
control
Transaction
Trade
Advances
Advances
Receivable Discounting
Amount
(P
=5,095,132)
(7,090,651)
(8,675,831)
Advances
Advances
(120,219,387)
Outstanding
Balance
P
=198,135,092
(29,521,245)
318,252
(12,549,086)
Advances
354,101
838,430
1-30 days
Unsecured
Advances
90,725
16,142,446
1-30 days
Unsecured
485,248
P
=174,543,563
1-30 days
Unsecured
Remittances
485,248
(P
=140,150,927)
e. The key management personnel of the Group include all directors, executive and nonexecutive, and senior management. The short-term employee benefits of key management
personnel amounted to P
=32.94 million, P
=32.10 million and P
=27.03 million in 2014, 2013 and
2012, respectively.
SGVFS013783*
- 51 -
2014
=18,020,871
P
2013
=19,972,114
P
2012
=9,319,955
P
69,834,480
71,360,028
=159,215,379
P
67,154,228
79,985,262
=167,111,604
P
6,590,550
797,812
=16,708,317
P
Legal Claims
The Group is contingently liable for lawsuits or claims filed by third parties (substantially labor
related and civil cases) which are pending decision by the courts or are under negotiation, the
outcome of which are not presently determinable. In the opinion of the management and its legal
counsel, the eventual liability under these lawsuits or claims, if any, will not have a material effect
on the financial statements. The information usually required by PAS 37, Provisions, Contingent
Liabilities and Contingent Assets, is not disclosed on the grounds that it can be expected to
prejudice the outcome of these lawsuits, claims and assessments. No provisions were made in
2014, 2013 and 2012 for these lawsuits and claims.
On June 16, 2015, the Supreme Court (SC) issued a temporary restraining order (TRO) that
provisionally suspends the construction of the Torre de Manila, effective until further orders from
the SC. Subsequently, on June 18, 2015, the Housing and Land Use Regulatory Board
(HLURB) issued an order suspending the License to Sell of the Group in respect of Torre de
Manila. The order covers the suspension and discontinuation of selling and advertising of units in
Torre de Manila and the collection of amortization payments from unit buyers, until further orders
from the HLURB. The Supreme Court has ordered oral arguments for this case to be held on
July 21, 2015.
SGVFS013783*
- 52 -
Hotels
Others
Assets
Current assets
Noncurrent assets
P
= 34,340,669,419
4,395,089,651
P
= 62,628,311
3,634,747
P
= 653,228,393
16,377,056
(P
=525,531,449)
51,569,873
P
= 34,530,994,674
4,466,671,327
Total Assets
P
= 38,735,759,070
P
= 66,263,058
P
= 669,605,449
(P
=473,961,576)
P
= 38,997,666,001
P
= 9,559,097,275
17,483,287,401
P
= 70,042,337
3,485
P
= 395,778,489
506,927
(P
=529,229,326)
P
= 9,495,688,775
17,483,797,813
(P
=529,229,326)
P
= 26,979,486,588
Liabilities
Current liabilities
Noncurrent liabilities
Elimination
Consolidated
Total liabilities
P
= 27,042,384,676
P
= 70,045,822
P
= 396,285,416
Revenue
Direct cost
Operating expenses
Finance income - net
Other income
Dividend income
Equity in net earnings of associate
P
= 12,238,012,543
(6,411,214,342)
(2,436,487,041)
142,233,920
937,057,271
59,680,610
P
= 99,336,724
(74,487,038)
(29,989,705)
76,229
1,724,527
(P
=5,312,974)
(33,849,526)
(121,115,527)
1,036,186
177,125,479
4,529,282,961
(1,264,672,682)
(3,339,263)
(521,206)
17,883,638
(8,482,367)
Net income
P
= 3,264,610,279
(P
=3,860,469)
P
= 9,401,271
P
= 19,320,027
P
= 3,289,471,108
(P
=203,372,204)
176,598,611
(3,799,018,828)
(P
=8,106,287)
(1,668,074)
(P
=28,685,383)
22,973,854
(P
=55,267,750)
25,893,109
(P
=295,431,624)
223,797,500
(3,799,018,828)
P
= 214,450,691)
62,162,244
P
= 1,682,914
P
= 4,281,967
Noncash items:
Depreciation and amortization
Transfer of land
=
P
13,353,775
86,408,265
(99,762,040)
(49,793,110)
69,113,137
19,320,027
=
P
P
= 12,332,036,293
(6,506,197,131)
(2,501,184,008)
143,346,335
1,016,145,237
9,887,500
69,113,137
4,563,147,363
(1,273,676,255)
P
= 220,415,572
62,162,244
SGVFS013783*
- 53 -
Hotels
Others
Assets
Current assets
Noncurrent assets
=
P32,277,978,823
5,390,345,421
=
P58,705,489
3,649,587
=
P669,667,855
13,996,995
(P
=570,386,765)
33,324,844
=
P32,435,965,402
5,441,316,847
Total Assets
=
P37,668,324,244
=
P62,355,076
=
P683,664,850
(P
=537,061,921)
=
P37,877,282,249
P
=8,859,744,427
19,255,187,677
=
P38,346,905
30,466
=
P448,900,702
13,951,928
(P
=574,084,642)
P
=8,772,907,392
19,269,170,071
=
P462,852,630
Liabilities
Current liabilities
Noncurrent liabilities
Elimination
Consolidated
Total liabilities
=
P28,114,932,104
=
P38,377,371
(574,084,642)
=
P28,042,077,463
Revenue
Direct cost
Operating expenses
Finance income (cost)
Other income
Dividend income
Equity in net earnings of associate
=
P11,702,270,374
(6,404,773,759)
(2,214,414,037)
(232,359,442)
535,341,957
50,545,326
=
P165,338,465
(103,555,165)
(30,012,586)
420,161
2,046,224
(P
=4,157,328)
(31,452,227)
(67,034,132)
2,085,272
120,276,820
=
P
23,373,920
37,406,586
(60,780,506)
(46,345,326)
82,070,387
=
P11,863,451,511
(6,516,407,231)
(2,274,054,169)
(229,854,009)
596,884,495
4,200,000
82,070,387
3,436,610,419
(898,774,461)
P
=2,537,835,958
34,237,099
(10,381,447)
=
P23,855,652
19,718,405
(6,965,705)
=
P12,752,700
35,725,061
=
P35,725,061
3,526,290,984
(916,121,613)
P
=2,610,169,371
(P
=1,326,178,717)
(273,159,229)
4,531,244,120
=
P12,075,224
(2,671,154)
(16,640,000)
=
P864,966,598
(2,362,728)
=
P37,022,722
29,705,326
16,640,000
(P
=412,114,173)
(248,487,785)
4,531,244,120
Noncash items:
Depreciation and amortization
=
P152,363,148
P
=1,136,331
P
=8,276,422
=
P
=
P161,775,901
Developer
Hotels
Others
Assets
Current assets
Noncurrent assets
Elimination
Consolidated
=
P24,124,087,617
4,056,468,470
=
P57,102,345
2,114,764
=
P820,545,076
28,811,316
(P
=770,781,310)
(19,040,216)
=
P24,230,953,728
4,068,354,334
Total Assets
=
P28,180,556,087
=
P59,217,109
=
P849,356,392
(P
=789,821,526)
=
P28,299,308,062
P
=7,841,418,972
12,146,023,879
=
P42,479,747
(24,691)
=
P639,301,968
17,557,874
(P
=774,479,186)
P
=7,748,721,501
12,163,557,062
(P
=774,479,186)
=
P19,912,278,563
Liabilities
Current liabilities
Noncurrent liabilities
Total liabilities
Revenue
Direct cost
Operating expenses
Finance income (cost)
Other income
Dividend income
Equity in net earnings of associate
Income before tax
Provision for income tax
=
P19,987,442,851
=
P42,455,056
=
P656,859,842
P
=9,305,605,975
(4,477,209,656)
(1,842,322,252)
(180,799,706)
293,086,887
31,808,957
=
P144,732,618
(92,139,271)
(30,931,703)
270,876
2,011,837
(P
=13,227,931)
5,416,980
(56,047,647)
4,294,421
61,111,684
3,130,170,205
(894,932,688)
23,944,357
(7,263,346)
Net income
P
=2,235,237,517
(P
=1,642,474,857)
(192,742,510)
1,874,142,231
Noncash items:
Depreciation and amortization
=
P158,041,680
=
P
16,849,085
43,409,829
(56,561,039)
(26,208,957)
76,622,451
P
=9,437,110,662
(4,547,082,862)
(1,885,891,773)
(176,234,409)
299,649,369
5,600,000
76,622,451
1,547,507
(2,906,738)
54,111,369
3,209,773,438
(905,102,772)
(P
=1,359,231)
=
P54,111,369
P
=2,304,670,666
P
=7,017,086
(2,024,449)
(6,500,000)
(P
=78,637,134)
(14,973,833)
=
P15,342,341
19,708,957
6,500,000
(P
=1,698,752,564)
(190,031,835)
1,874,142,231
P
=1,619,615
=
P10,262,145
=
P16,681,011
=
P
=
P169,923,440
The Group has no revenue from transactions with a single external customer amounting 10% or
more of the Groups revenue.
SGVFS013783*
- 54 -
2013
Fair Value
Carrying Value
Fair Value
P
= 7,327,141,399 P
= 10,012,557,381
P
=9,815,986,578
=
P13,776,862,436
P18,821,755,505
P
= 16,197,736,195 P
= 20,430,789,902 =
1,371,571,342
2,178,280,713
2,118,947,668
P20,193,326,847
P
= 18,376,016,908 P
= 22,549,737,570 =
2012
Carrying Value
Fair Value
=
P7,181,460,401
=
P10,015,735,451
=
P20,700,746,909 =
P12,397,253,455
1,286,856,492
1,144,418,545
=
P21,987,603,401 =
P13,541,672,000
=
P15,964,788,743
1,096,727,734
=
P17,061,516,477
The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value:
Due to the short-term nature of the transactions, the carrying amounts of cash and cash
equivalents, receivables from related parties, other receivables, recoverable deposits, other
current assets, accounts and other payables, and payables to related parties approximate their
fair values.
The fair values of installment contracts receivable, loans payable and liabilities for purchased
land are based on the discounted value of future cash flows using the applicable rates for
similar types of loans and receivables. The discount rates used for installment contracts
receivable range from 19.00% to 14.61% in 2014, 9.51% to 14.65% in 2013 and 13.29 to
16.50% in 2012.
The discount rates used for loans payable range from 5.00% to 5.25% in 2014, 5.25% to
5.75% in 2013 and 5.00% to 6.50% in 2012. Liabilities for purchased land were discounted at
2.02% to 2.03% in 2014, 2.48% to5.28% in 2013 and 3.28% to 3.62% in 2012.
Financial asset at FVPL - The fair values are based on quoted market prices.
The following table provides the fair value measurement hierarchy of the Groups assets and
liabilities recognized as of December 31, 2014, 2013 and 2012:
Level 1
Assets
Financial asset measured at fair value:
Financial asset at FVPL
Assets for which fair values are disclosed:
Installment contract receivables
Investment properties
Total
P
=74,530,000
P
=
P
=
P
=74,530,000
10,012,557,381
178,856,153
10,012,557,381
178,856,153
SGVFS013783*
- 55 -
Level 1
Liabilities
Other financial liabilities for which fair
values are disclosed:
Loans payable
Liabilities for purchased land
P
=
Level 1
Assets
Financial assets measured at fair value:
Financial asset at FVPL
Assets for which fair values are disclosed:
Installment contract receivables
Investment properties
Liabilities
Other financial liabilities for which fair
values are disclosed:
Loans payable
Liabilities for purchased land
P
=
Total
P
=20,430,789,902 P
=20,430,789,902
2,118,947,668
2,118,947,668
Total
P
=77,050,000
=
P
=
P
P
=77,050,000
13,776,862,436
181,714,913
13,776,862,436
181,714,913
=
P
P
=
Level 1
Assets
Financial asset measured at fair value:
Financial asset at FVPL
Assets for which fair values are disclosed:
Installment contract receivables
Investment properties
Liabilities
Other financial liabilities for which fair
values are disclosed:
Loans payable
Liabilities for purchased land
=
P20,700,746,909 P
=20,700,746,909
1,286,856,492
1,286,856,492
Total
P
=75,160,000
=
P
=
P
P
=75,160,000
10,015,735,451
175,610,000
10,015,735,451
175,610,000
=
P
P
=
=
P15,964,788,743 P
=15,964,788,743
1,096,727,734
1,096,727,734
There were no transfers among Levels 1, 2 and 3 for the years ended December 31, 2014, 2013
and 2012. Financial asset determined under Level 3 pertains to installments contracts receivables.
No transfers between any levels of the fair value hierarchy took place in the equivalent
comparative period.
Description of significant unobservable inputs to valuation:
Account
Installment contract
receivables
Valuation Technique
Discounted cash flow analysis
Significant Unobservable
Inputs
Discount rate
Investment properties
Discount rate
Discount rate
Discount rate
Loans payable
Liabilities for purchased land
Significant increases (decreases) in discount rate would result in significantly higher (lower) fair
value of the installment contracts receivables.
SGVFS013783*
The rate at which cash flows are discounted back to the value at
measurement date.
1 to < 2 years
2 to < 3 years
3 to < 5 years
> 5 years
Total
=
P
=
P
=
P
=
P
= 2,752,617,357
P
521,494,183
447,632,862
401,010,816
1,455,903,283
7,327,141,399
= 521,494,183
P
= 447,632,862
P
= 401,010,816 P
P
= 1,455,903,283
91,863,316
173,717,706
3,724,081
95,025,902
302,756,995
266,804,712
74,530,000
= 11,088,181,468
P
= 674,508,198 P
P
= 1,559,715,609 P
= 8,121,051,939
92,021,871
91,179,751
81,185,695
= 16,197,736,195
P
2,178,280,713
= 461,490,757 P
P
= 5,380,969,692
1,865,351,506
48,541,890
332,566,862
260,905,792
332,566,862
260,905,792
(Forward)
SGVFS013783*
- 57 -
Payable to contractors
Others
Accrued expenses
Payables to related parties
Other financial liabilities
307,761,599
526,503,145
= 4,078,596,434 =
P
P5,429,511,582
= 766,530,069 =
P
P1,650,895,360 P
= 8,202,237,634
Total
= 175,623,413
P
148,393,360
307,761,599
526,503,145
= 20,127,771,079
P
2013
< 1 year
Financial assets
Loans and receivables
Cash and cash equivalents
P
=6,623,464,121
Receivables:
Installment contracts receivable 5,628,689,462
Receivables from:
Related parties
58,911,312
Condo corporations
128,255,334
Rental
3,672,554
Employees
65,598,230
Others
245,645,896
Recoverable deposits
256,848,869
Management fees
Financial asset at FVPL
73,150,000
Total financial assets
P
=13,084,235,778
Other financial liabilities
Loans payable
Liabilities for purchased land
Accounts and other payables
Accounts payable - trade
Retention payable
Payable to contractors
Others
Accrued expenses
Payables to related parties
Other financial liabilities
1 to < 2 years
2 to < 3 years
3 to < 5 years
> 5 years
Total
=
P
=
P
=
P
=
P
P
=6,623,464,121
688,133,440
570,127,766
532,909,240
2,396,126,670
9,815,986,578
58,911,312
128,255,334
3,672,554
65,598,230
245,645,896
256,848,869
P
=688,133,440
P
=570,127,766
P
=532,909,240 P
=2,396,126,670
73,150,000
P
=17,271,532,894
P
=1,223,149,483
884,182,229
P
=684,079,398 P
=5,602,828,314 P
=1,822,482,808 P
=9,489,215,502
86,907,412
91,179,751
98,796,495
210,505,455
P
=18,821,755,505
1,371,571,342
230,709,697
248,742,958
169,143,291
81,636,751
292,302,030
1,053,340,634
P
=4,183,207,073
P
=894,584,853 P
=5,689,735,726 P
=1,913,662,559 P
=9,588,011,997
230,709,697
248,742,958
169,143,291
81,636,751
292,302,030
1,053,340,634
P
=22,269,202,208
2012
< 1 year
Financial assets
Loans and receivables
Cash and cash equivalents
P
=2,755,591,655
Receivables:
Installment contracts receivable 4,199,958,543
Receivables from:
Related parties
270,071,429
Condo corporations
122,044,430
Rental
1,562,797
Others
97,378,565
Recoverable deposits
323,558,076
Financial asset at FVPL
75,160,000
Total financial assets
P
=7,845,325,495
Other financial liabilities
Loans payable
Liabilities for purchased land
Accounts and other payables
Accounts payable - trade
Retention payable
Payable to contractors
Others
Accrued expenses
Payables to related parties
Other financial liabilities
1 to < 2 years
2 to < 3 years
3 to < 5 years
> 5 years
Total
=
P
=
P
=
P
P
=
P
=2,755,591,655
572,199,538
409,705,749
345,402,327
1,654,194,244
7,181,460,401
P
=572,199,538
P
=409,705,749
P
=345,402,327 P
=1,654,194,244
270,071,429
122,044,430
1,562,797
97,378,565
323,558,076
75,160,000
P
=10,826,827,353
P
=910,224,883
145,934,501
P
=773,230,481 P
=6,178,636,720 P
=3,240,257,127
38,245,631
1,695,394
30,069,708
P
=12,397,253,455
1,144,418,545
627,227,123
94,969,297
50,830,456
42,336,512
174,543,563
P
=3,213,284,506 P
=1,056,159,384
P
=811,476,112 P
=6,180,332,114 P
=3,270,326,835
627,227,123
94,969,297
50,830,456
42,336,512
174,543,563
P
=14,531,578,951
P
=1,294,904,244
928,473,311
SGVFS013783*
- 58 Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market prices. The Groups financial instruments affected by
market risk include loans payable, cash and cash equivalents and financial asset at FVPL.
a.) Interest rate risk
The Groups exposure to the risk for changes in market interest rates relates primarily to the
Groups bank loans with floating interest rate.
The Groups policy is to manage its interest cost using a mix of fixed and variable debt rate
debts. Out of the total bank loans, those with floating interest rates are 8.91% in 2014,
21.42% in 2013 and 52.69% in 2012.
The terms of the interest-bearing financial assets and financial liabilities, together with its
corresponding nominal amounts and carrying values are shown in the following table:
2014
Effective
Interest Rate
Amount
2013
Effective
Interest Rate
2012
Effective
Interest Rate
Amount
Amount
Loans payable
7.49%, 8.17%,
6.08%, 5.34%
Fixed rate corporate notes
and 5.09% P
= 14,755,292,010
Liabilities on installment
contracts receivable
sold to banks
5.00% to 5.25%
1,442,444,185
7.49%, 8.17%,
6.08%, 5.34%
7.49%, 8.17%,
and 5.09% P
=14,790,505,500
and 6.08%
5.25% to 5.75%
P
= 16,197,736,195
4,031,250,005
P
=5,864,829,403
5.00% to 6.50%
P
=18,821,755,505
6,532,424,052
P
=
12,397,253,455
The following table demonstrates the sensitivity to a reasonably possible change in interest
rates, with all other variables held constant of the Groups profit before tax as of
December 31, 2014, 2013 and 2012. There is no other impact on the Groups equity.
Loans payable
+0.25 bps
-0.25 bps
2013
(P
=1,007,813)
1,007,813
2014
(P
=360,611)
360,611
2012
(P
=1,633,106)
=1,633,106
P
The assumed movement in basis points for interest rate sensitivity analysis is based on the
Groups historical changes in market interest rates on unsecured bank loans.
The terms and maturity profile of the interest-bearing financial assets and liabilities, together
with their corresponding nominal amounts and carrying values are shown in the following
table:
2014
Interest terms (p.a.)
Cash and cash Fixed at the date of
equivalents
investment
Loans payable
Peso
Floating at 8.12% to
11.23% over the
remaining term
Rate Fixing
Period
Nominal
Amount
< 1 year
1 to 5 years
> 5 years
Carrying Value
Various
P
=2,629,007,005
P
=2,629,007,005
P
=
P
=
P
=2,629,007,005
Annually
1,442,444,185
P
=4,071,451,190
248,993,887
P
=2,878,000,892
1,193,450,298
P
=1,193,450,298
P
=
1,442,444,185
P
=4,071,451,190
SGVFS013783*
- 59 2013
Interest terms (p.a.)
Cash and cash Fixed at the date of
equivalents
investment
Loans payable
Peso
Floating at 8.12% to
11.23% over the
remaining term
Nominal
Amount
< 1 year
1 to 5 years
> 5 years
Carrying Value
Various
=
P6,627,014,700
=
P6,627,014,700
=
P
=
P
=
P6,627,014,700
Annually
4,031,250,004
=
P10,658,264,704
1,178,624,341
=
P7,805,639,041
1,810,076,829
=
P1,810,076,829
1,042,548,835
4,031,250,005
=
P1,042,548,835 =
P10,658,264,705
2012
Interest terms (p.a.)
Cash and cash Fixed at the date of
equivalents
investment
Loans payable
Peso
Floating at 8.12% to
11.23% over the
remaining term
Nominal
Amount
< 1 year
1 to 5 years
> 5 years
Carrying Value
Various
=
P2,755,591,655
=
P2,755,591,655
=
P
=
P
=
P2,755,591,655
Annually
6,532,424,052
=
P9,288,015,707
1,260,098,642
=
P4,015,690,297
2,801,012,266
=
P2,801,012,266
2,471,313,144
=
P2,471,313,144
6,532,424,052
=
P9,288,015,707
P1
=
(1)
2014
P222,801
=
(222,801)
2013
P218,495
=
(218,495)
2012
P275,362
=
(275,362)
The assumed movement in basis points for US Dollar exchange rate sensitivity analysis is
based on the Groups historical changes in US Dollar exchange rates on the Groups cash and
cash equivalents.
c.) Equity price risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in the
levels of equity indices and the value of individual stocks.
The effect on equity (as a result of a change in fair value of quoted equity instruments held as
financial asset at FVPL as of December 31, 2014, 2013 and 2012 due to a reasonably possible
change in equity indices, with all other variables held constant, will have an increase on equity
by P
=0.71 million, P
=0.73 million and =
P0.71 million if equity indices will increase by 1%,
respectively. An equal change in the opposite direction would have decreased equity by the
same amount.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Groups exposure to credit risk arises from
default of the counterparties which include certain financial institutions, real estate buyers and
related parties. Credit risk management involves dealing only with institutions or individuals for
which credit limits have been established, and with suppliers whose paying and performance
SGVFS013783*
- 60 capabilities are rigorously screened. The Treasury Departments policy sets a credit limit for each
counterparty.
The credit risk is concentrated to the following customers:
2013
88.59%
11.41%
100.00%
2014
83.43%
16.57%
100.00%
2012
84.41%
15.59%
100.00%
The table below shows the maximum exposure to credit risk for the components of the statement
of financial position. The maximum exposure is shown gross, before the effect of mitigation
through the use of master netting or collateral agreements.
Cash and cash equivalents
Financial asset at FVPL
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Employees
Rental
Others
Recoverable deposits
2014
=2,756,384,808
P
74,530,000
7,327,141,399
2013
=6,627,014,701
P
77,050,000
9,815,986,578
2012
=2,755,591,655
P
75,160,000
7,181,460,401
91,863,316
173,717,706
95,025,902
3,724,081
302,756,995
266,804,712
=11,091,948,919
P
58,911,312
128,255,334
65,598,230
3,672,554
245,645,896
256,848,869
=17,278,983,474
P
122,044,430
138,624,306
66,328,049
1,562,797
97,378,565
323,558,076
=10,761,708,279
P
As of December 31, 2014, 2013 and 2012, the aging analyses per class of loan-related financial
assets follow:
2014
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
Neither Past
Due Nor
Impaired
= 6,535,713,553
P
>90 days
= 537,217,574
P
Impaired
Financial
Assets
=
P
<30 days
= 215,994,741
P
Total
=7,327,141,399
P
(37,959,539)
173,717,706
3,724,081
94,489,181
299,563,502
= 7,069,248,484
P
= 215,994,741
P
5,368,362
293,456
= 38,697,443
P
4,583,682
250,562
= 542,051,818
P
115,992,455
536,721
2,437,469
= 118,966,645
P
91,863,316
173,717,706
3,724,081
95,025,902
302,756,995
=7,994,229,399
P
Neither Past
Due Nor
Impaired
=8,611,015,439
P
<30 days
=216,944,045
P
>90 days
=903,780,316
P
Impaired
Financial
Assets
=
P
Total
=9,815,986,578
P
(12,491,022)
128,255,334
65,598,230
3,672,554
243,722,976
=9,039,773,511
P
107,020
=217,051,065
P
75,653
=54,208,658
P
1,212,316
=904,992,632
P
71,402,334
111,806
=71,514,140
P
58,911,312
128,255,334
65,598,230
3,672,554
245,645,896
=10,318,069,904
P
212,006
= 9,270,268
P
2013
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
416,125
=30,529,898
P
SGVFS013783*
- 61 2012
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
Neither Past
Due Nor
Impaired
= 4,374,737,186
P
<30 days
=1,136,821,692
P
>90 days
=1,620,555,608
P
Impaired
Financial
Assets
=
P
Total
=7,181,460,401
P
198,669,095
122,044,430
1,562,797
96,956,594
=4,793,970,102
P
=1,136,821,692
P
=22,509,856
P
310,165
=1,620,865,773
P
71,402,334
111,806
=71,514,140
P
270,071,429
122,044,430
1,562,797
97,378,565
=7,672,517,622
P
=26,836,059
P
The repossessed lots and residential houses are recorded back to inventory under the Real estate
inventories account and are held for sale in the ordinary course of business. The total of these
inventories is =
P592.04 million and =
P700.77 million and =
P204.57 million as of December 31, 2014,
2013 and 2012, respectively. The Group performs certain repair activities on the said repossessed
assets in order to put their condition at a marketable state. Costs incurred in bringing the
repossessed assets to its marketable state are included in their carrying amounts.
The table below shows the credit quality of the Groups loan-related financial assets as of
December 31, 2014, 2013 and 2012.
2014
Cash and cash equivalents
Financial asset at FVPL
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
Recoverable deposits
3,104,340,172
2,731,317,663
700,055,719
Past Due or
Impaired
P
=
791,427,845
Total
P
= 2,756,384,808
74,530,000
7,327,141,399
P
= 700,055,719
536,721
P
= 791,964,566
91,863,316
173,717,706
3,724,081
95,025,902
302,756,995
266,804,712
P
= 11,091,948,919
Past Due or
Impaired
P
=
1,204,971,139
Total
=
P6,627,014,701
73,150,000
9,815,986,578
71,402,334
1,922,919
P
=1,278,296,392
58,911,312
128,255,334
3,672,554
65,598,230
245,645,896
256,848,869
P
=17,275,083,474
91,863,316
173,717,706
3,724,081
92,777,856
302,737,093
264,835,237
P
= 6,864,910,269
1,711,325
19,902
1,969,475
P
= 2,735,018,365
2013
Cash and cash equivalents
Financial asset at FVPL
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
Recoverable deposits
(12,491,022)
128,255,334
3,672,554
65,598,230
243,722,977
254,702,156
P
=11,058,853,552
2,146,713
P
=3,237,937,060
P
=1,699,996,470
SGVFS013783*
- 62 2012
Cash and cash equivalents
Financial asset at FVPL
Installment contracts receivable
Receivables from:
Related parties
Condo corporations
Rental
Employees
Others
Recoverable deposits
97,378,565
323,558,076
P
=8,758,057,812
P
=704,016,953
P
=558,944,858
Past Due or
Impaired
P
=
734,405,396
Total
=
P2,755,591,655
75,160,000
7,181,460,401
71,402,334
P
=805,807,730
270,071,429
122,044,430
1,562,797
97,378,565
323,558,076
P
=10,826,827,353
2014
2013
2012
P
=3,289,471,108
P
=2,610,169,371
P
=2,304,670,666
3,487,727,328
=0.943
P
3,487,727,328
=0.748
P
3,487,727,328
=0.661
P
SGVFS013783*
17
Michael C. Sabado
Partner
CPA Certificate No. 89336
SEC Accreditation No. 0664-AR-2 (Group A),
March 26, 2014, valid until March 25, 2017
Tax Identification No. 160-302-865
BIR Accreditation No. 08-001998-73-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751320, January 5, 2015, Makati City
June 29, 2015
*SGVFS013783*
A member firm of Ernst & Young Global Limited
Content
Page No.
1
2-6
7
8
9
10
11
12
13
14
15
16
*SGVFS013783*
-1SCHEDULE I
RECONCILIATION OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
DECEMBER 31, 2014
DMCI Project Developers, Inc. and Subsidiaries
DMCI Homes Corporate Center
1321 Apolinario St., Bangkal
Makati City
P
=4,703,698,245
3,289,471,108
(3,500,000,000)
(1,200,000,000)
=3,293,169,353
P
*SGVFS013783*
Adopted
Not
Adopted
Not
Applicable
Share-based Payment
PFRS 3
(Revised)
Business Combinations
PFRS 4
Insurance Contracts
PFRS 5
PFRS 6
PFRS 7
PFRS 1
(Revised)
PFRS 2
*SGVFS013783*
-3-
Adopted
Not
Adopted
PFRS 8
Operating Segments
PFRS 9
Financial Instruments*
PFRS 10
PFRS 11
Joint Arrangements
PFRS 12
PFRS 13
Not
Applicable
PAS 2
Inventories
PAS 7
PAS 8
PAS 10
PAS 11
Construction Contracts
PAS 12
Income Taxes
PAS 17
Leases
*SGVFS013783*
-4-
Adopted
PAS 18
Revenue
PAS 19
Employee Benefits
PAS 19
(Amended)
Employee Benefits
PAS 20
PAS 21
Not
Adopted
Not
Applicable
PAS 23
(Revised)
Borrowing Costs*
PAS 24
(Revised)
PAS 26
PAS 27
PAS 27
(Amended)
PAS 28
Investments in Associates
PAS 28
(Amended)
PAS 29
PAS 31
PAS 32
PAS 33
PAS 34
PAS 36
Impairment of Assets
PAS 37
PAS 38
Intangible Assets
PAS 39
*SGVFS013783*
-5-
Adopted
Not
Adopted
Not
Applicable
Investment Property
PAS 41
Agriculture
Philippine Interpretations
IFRIC 1
IFRIC 2
IFRIC 4
IFRIC 5
IFRIC 6
IFRIC 7
IFRIC 8
Scope of PFRS 2
IFRIC 9
IFRIC 10
IFRIC 11
IFRIC 12
IFRIC 13
IFRIC 14
*SGVFS013783*
-6-
Adopted
Not
Adopted
Not
Applicable
IFRIC 16
IFRIC 17
IFRIC 18
IFRIC 19
IFRIC 20
IFRIC 21
Levies
SIC-7
SIC-10
SIC-12
SIC-13
SIC-15
SIC-25
SIC-27
SIC-29
SIC-31
SIC-32
*SGVFS013783*
DMCI Project
Developers, Inc.
100%
100%
100%
Hampstead Gardens
Corporation
Riviera Land
Corporation
100%
100%
40%
*CSN Properties, Inc. (45%) and Contech Products South (33%) which are both associates of DMCI PDI are provided with allowance for impairment loss
*SGVFS013783*
Current ratio
Acid test ratio
Solvency ratio
Debt-to-equity ratio
Net Profit Margin
Return on Equity
Interest Service Coverage
December 31,
2014
3.64:1
0.91:1
0.13:1
2.24:1
26.67%
27.37%
36.76:1
December 31,
2013
3.70:1
1.53:1
0.10:1
2.85:1
22.00%
26.54%
7.89:1
____________________________________________________
(i) Current Ratio [Current Assets/Current Liabilities]
(ii)
Acid Test Ratio [(Cash + Accounts Receivable + Short-term investments) /Current Liabilities]
(iii)
Solvency Ratio [(Net Income + Depreciation)/Total Liabilities]
(iv)
Debt to Equity Ratio [Total Liabilities/Total Equity]
(v)
Net Profit Margin [Net Income/Revenue]
(vi)
ROE [Net Income/Total Equity]
(vii)
Interest Service Coverage [EBIT/Interest Expense]
*SGVFS013783*
Number of shares or
principal amount of
bonds or notes
=
P2,756,384,808
70,039
74,530,000
74,530,000
Income accrued
=
P
*SGVFS013783*
Name of Debtor
Balance at
beginning of
period
Additions
Amounts
Collected
Amounts
Writtenoff
Current
NonCurrent
Balance at end
of period
None to Report.
Receivables from Directors, Officers, Employees, Related Parties and Principal Stockholders are subject to usual terms in the normal course of business.
*SGVFS013783*
Balance at
beginning of
period
Amounts Paid
/(Collected) (i)
Additions
=
P284,288,111
=
P
(12,174,193)
50,096,773
3,462,018
(75,880,220)
(86,000,628)
(P
=68,805,566)
61,040
(14,791,504)
Amounts
Writtenoff (ii)
=
P
Current
=
P215,482,545
NonCurrent
Balance at end of
period
P
=
=
P215,482,545
37,922,580
37,922,580
3,462,018
3,462,018
(75,819,180)
(100,792,132)
_______________________________________________
(i)
(ii)
*SGVFS013783*
Description (i)
Software costs
Beginning
Balance
=
P18,253,365
Additions at Cost
(ii)
=
P76,290,942
Charged to cost
and expenses
(P
=23,252,054)
Charged to other
accounts
P
=
Other changes
additions
(deductions) (iii)
P
=
Ending Balance
=
P71,292,253
_______________________________________________
(i)
(ii)
For each change representing other than an acquisition, clearly state the nature of the change and the other accounts affected. Describe cost of additions representing other
than cash expenditures.
If provision for amortization of intangible assets is credited in the books directly to the intangible asset account, the amounts shall be stated with explanations, including
the accounts charged. Clearly state the nature of deductions if these represent anything other than regular amortization.
*SGVFS013783*
(i)
Amount
authorized by
indenture
P
=
=
P461,490,757
=
P14,293,801,253
1,442,444,185
Interest
Rate
%
Maturity
Date
October
2019
5% - 8%
__________________________________________________
(i)
(ii)
(iii)
*SGVFS013783*
None to Report
__________________________________________________
(i)
(ii)
The related parties named shall be grouped as in Schedule D. The information called shall be stated for any persons whose investments shown separately in such related
schedule.
For each affiliate named in the first column, explain in a note hereto the nature and purpose of any material increase during the period that is in excess of 10 percent of
the related balance at either the beginning or end of the period.
*SGVFS013783*
- 15 -
None to Report
_____________________________________________________
(i)
(ii)
Indicate in a note any significant changes since the date of the last balance sheet file. If this schedule is filed in support of consolidated financial statements, there shall be
set forth guarantees by any person included in the consolidation except such guarantees of securities which are included in the consolidated balance sheet.
There must be a brief statement of the nature of the guarantee, such as Guarantee of principal and interest, Guarantee of Interest, or Guarantee of Dividends. If the
guarantee is of interest, dividends, or both, state the annual aggregate amount of interest or dividends so guaranteed.
*SGVFS013783*
- 16 -
Common
Number of shares
authorized
5,000,000,000
Number of shares
issued and
outstanding as
shown under the
related balance
sheet caption
3,487,727,328
Number of shares
reserved for
options, warrants,
conversion and
other rights
Number of shares
held by related
parties (ii)
Directors, officers
and employees
None to Report
None to Report
3,006
Others (iii)
None to Report
____________________________________________________
(i)
(ii)
(iii)
*SGVFS013783*