2016 results of operations guidance for 2017 · project location units to be delivered for 2016...

2016 RESULTS OF OPERATIONSGUIDANCE FOR 2017 THE PRESIDENT’S REPORTMedia/PSE Analysts BriefingFebruary 7, 2017Makati, Philippines

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2016RESULTSOFOPERATIONS

8990’s4Q16NETINCOMEGROWS12%

1Q16 2Q16 3Q16 4Q16 4Q15 GrowthRate

Gross Sales P 2,174 P 2,571 2,441 2,226 2,283 (2%)

Gross Profit 1,228 1,506 1,300 980 1,105 (11%)

Operating Expense 325 463 327 411 614 (33%)

Net Income Before Tax 1,094 1,183 1,099 674 673 0%

Net IncomeAfter Tax 1,032 1,150 1,008 620 556 12%

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4Q16 net income grew by 12% versus thesame quarter in 2015 despite flat grosssales.

A 5% increase in resale of cancelled unitsincreased cost of goods, resulting in an 11%decline in gross profit. There was a 33%decline in operating expenses, resultingfrom lower documentation and marketingexpenses.

After tax profit rose 12% because of a lowertax due on re-sold units and the tax-freestatus of more projects under the BOIInvestment Priority Program (IPP) comparedto last year.


2016 net income grows 2% in 2016.

While Deca Tower EDSA, UDH Tisa, DH Indangan, andDH Catalunan Grande over-performed their annualquotas, they failed to offset the loss of potentialrevenues from the eight unlaunched projects.

Worthwhile to note is that DECA Tower EDSA wasable to contribute P900 million ahead of its timeline.

Operating expenses decreased by 11% because oflower marketing and documentation expenses aswell as lower taxes and licenses paid.

Gross margin slipped to 53% because of the resaleaccounts. Net Margin remains steady at 40%.

8990GROWS2%in2016

2016 2015 GrowthRate

Gross Sales P 9,411 P 9,280 1%

Gross Profit 5,014 5,105 (2%)

Operating Expense 1,526 1,724 (11%)

Net Income Before Tax 4,050 4,114 (2%)

Net Income After Tax 3,809 3,723 2%

Gross Margin 53% 55%

NetMargin 40% 40%

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PERMITS PROCESSING AFFECTS 2016 PERFORMANCE

We wish to emphasize that these revenues arenot lost, but merely delayed.

8 projects, totaling 2,706 units with a gross value of P2.4Billion, did not get permits on time. Permits are about tobe finished and these are now part of the launches for2017. There were new requirements and permits askedin 2016 such as:

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Project LocationUnitstobeDeliveredfor2016

Value(inM Php)

DH Pavia RR 2 Iloilo 706 692

DH Sta. Barbara Iloilo 280 126

DH Mactan Prime Cebu 280 274

Urban DH Tisa 2 Cebu 400 440

DH South of Bacolod Bacolod 160 136

DH Toril Davao 80 76

DH Mulig 1 Davao 280 128

DH San Lorenzo Davao 520 510

Total 2,706 2,382

Davao : Certificate from Water Resource Task ForceCertificate from Floodway Mitigating Zone Task ForceAdditional Land Usage Certificate

Iloilo : Certificate from Provincial Assessor that land isclassified as residential by the local government

Cebu : Traffic Study and Detailed Drainage Study which arenew requirements for the ECC

2015RESULTSOFOPERATIONS 5

Unrealized Sales Reach 1,332 Units by End 2016

The Company has nationwide unrealized salesof 1,332 units ending 2016, amounting to P1.9Billion.

These unrealized sales were combination of soldunits with houses/buildings for construction likein UDH Marilao and UDH H. Cortes.

Of the total unrealized sales, 873 units will betaken out in 1Q17 and the remaining 459 unitsare scheduled in 2Q17.

Branch TotalUnits

ValueMillions

North Luzon 462 716

South Luzon 64 66

NCR 527 738

Cebu 206 314

Iloilo 1 1

DavaoandGensan 72 68

Total 1,332 1,903

Status2016 2015 GrowthRate

Unit Value Unit Value Unit ValueTotalHDMFFolders 5,990 5,850 4,341 4,088 38% 43%

BreakdownPre-EvaluationwithHDMF 845 982 1,446 1,379

ForComplianceby8990Branches

2,240 2,015 285 292

ForTake-Out 290 308 0 0

2016TAKE-OUT 2,615 2,545 2,610 2,417 0% 5%

2016 HDMF TAKE-OUT VALUE INCREASES BY 5%

We experienced bottlenecks in thecompliance of requirements mainly dueto:

• Expiration of buyer’s proof of income;• Delayed release of titles;• Piecemeal release of findings;• Lack of HDMF manpower.• Slow processing by the Register ofDeeds

Take-out period is currently stretched to3 to 5 months


In Million pesos 2016 2015 Growth Rate

Cash, beginning balance 600 605 (0.8%)

Net Cash used for operations 541 2,215 (76%)

Total new borrowings 7,566 3,709 104%

Net Cash used for capital expenditure 6,636 1,499 343%

Cash balance at the end of the year 989 600 65%

8990ImprovesCashFlowin2016

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8990’s 2016 cash flow shows a significant76% decline in net cash used inoperations. Internally generated fundsfrom take-outs from Pag-IBIG Fund,purchase of receivables of banks, and thehigher levels of recurring income from theCTS Portfolio are the drivers for thisdecrease in net cash used in operations.

The substantial increase in newborrowings was the cash used for capitalexpenditure to purchase 191 hectares ofland bank, valued at P5.0 Billion.


8990CTSIncomeJumps18%byend2016For 2016, 8990’s CTS Portfolio yieldedP1.4 Billion in recurring income – an18% increase from last year.

Total value of 8990’s CTS Portfoliostands at P20 Billion, up 9% from 2015.This marks the smallest increase in CTSsince 2011.

In 2016, 8990 was able to sell P945Million of its CTS Portfolio to BDO andSBC, and a migration to HDMF of P865million.

2016 2015 GrowthRate

Units 20,863 20,093 4%

Value (in millions) P 20,425 P 18,767 9%

Interest Income from CTS P 1,439 P 1,204 18%

Performing Accounts Ratio 95% 96% (1%)

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CurrentLandBankis655.15Hectaresin2016

Location Area(inHA)

Cost(Millions)

EstimatedUnits

EstimatedValue

LUZON 117.90 5,000 76,000 P99B

VISAYAS 363.64 3,017 51,000 P56B

MINDANAO 173.61 844 18,000 P20B

GrandTotal 655.15 8,861 145,000 P175 B

In 2016, 8990 purchased 191 hectares of rawland, valued atabout P5 Billion, bringing the total landbank to 655.15today. These acquisitions are the following;

MetroManila• Alabang Zapote,LasPinas - 3.4ha• Litex Road,Commonwealth,QC– 2.0ha• Brgy.OldBalara,QC– 5.0ha• Mendiola/Otisproperty– 2.8ha

Provinces• Meycauyan,Bulacan – 44.0ha• ASFortuna,Banilad,Cebu– 1.8ha• Granada,Bacolod– 62.0ha• SanMiguel,Iloilo– 70.0ha

Thepresentlandbank willprovideanestimated145,000unitswithGrossSellingValueofP175Billion.


Ø Change the existing Organizational Structurefrom Centralized National to 3 Main Regions.

Ø Increase manpower nationwide from 287 to370, which includes personnel for HDMFdocumentation from 45 to 67 personnel,including the hiring of two experiencedexecutives to bring more leadership in theHDMF take-out operations.

Ø Identify projects for 100% HDMF take-out toraise HDMF level to as much as 70%.

Ø Increase the number of production from 58sets of casting forms to 103 sets, therebyincreasing annual capacity from 13,920 to24,720 housing units.

Ø Create a Central Document warehouse formore efficient storage and access of files anddocuments.

Ø Increase the engineering force from 27 to 39,and establish a Quality Assurance Group toprovide technical support at the site level.

OURADJUSTMENTSFOR2017Given the need to focus on strengthening the company’s balance sheet, in the wake of increasing interestrates, and a tougher permits and licensing environment, the goal for 2017 is cash generation to pare downshort-term and medium-term debt.


Guidance – 2017 EARNINGS

Gross Revenue P10.0BilliontoP13.5Billion60%grossmargin

NetIncome P4.0BilliontoP 5.4Billion40%grossmargin

GROWTHTARGETSGross Revenue 43%NetIncome 41%

CASHFLOWTARGETS

HDMFTake-out P6.0BillionSecuritization P3.0BillionPurchaseofCTS P3.0BillionPreferredShares P5.0Billion


8990toLaunch11NewProjectsfor2017 Project Type Total

Units LocationUnitstobeDeliveredfor2017

Value(inM Php)

LaunchDate

DH Marilao MRB MRB 3,788 Bulacan 320 288 March

DH Pavia RR 2 Horizontal 2,967 Iloilo 875 963 March

DH Mactan Prime Horizontal 6,828 Cebu 400 480 March

DH Sta. Barbara Horizontal 10,189 Iloilo 515 232 April

DH South of Bacolod Horizontal 9,044 Bacolod 520 416 April

UDH Mactan MRB 3,507 Cebu 80 76 April

DH Mulig Horizontal 7,005 Davao 380 342 June

DH Lorenzo Horizontal 3,749 Davao 340 323 June

DH Ignatius Horizontal 6,800 Davao 220 209 August

Leganes Horizontal 3,085 Iloilo 220 220 September

Urban DH Tisa 2 MRB 3,803 Cebu 124 149 September

Total 60,765 3,994 3,698

This year, 8990 will start elevennew projects, adding 60,765 unitsto the inventory.

We expect to launch threeprojects in the first quarter,followed by 5 in the second andclosing the third with 3 more.

For 2017, 3,994 units will form34% of this year’s performance,with a value totaling P 3.7 Billion.

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11On-GoingProjectsContribute66%toRevenue

in2017

Project Type Location TotalUnits

UnitstobeDeliveredfor2017

Value(inM Php)

DCRR (Economic) Horizontal Angeles 3,145 690 621

DH Marilao TH Horizontal Bulacan 6,378 700 945

UDH Hampton MRB Cavite 1,988 408 490

UDH Mahogany MRB Cavite 546 182 218

DH BT3 Horizontal Cebu 730 221 287

UDH H. Cortez MRB Cebu 1,596 584 730

UDH Manila MRB Manila 13,308 3,924 5,473

UDT EDSA HRB Mandaluyong 1,142 400 440

UDH Campville MRB Muntinlupa 1,068 276 359

DH GenSan(Socialized) Horizontal General Santos 2,531 480 216

DH GenSan(Economic) Horizontal General Santos 249 29 26

Total 32,681 7,894 9,805

In addition to new projects,8990’s eleven ongoing projectsprovide for this year, 7,894 unitsnationwide, with a gross value ofalmost P 10 Billion.

In sum, both new and ongoingprojects will provide a total of11,888 housing units and a grossvalue of P13.5 Billion for 2017.

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M A N A G E M E N T O P E R A T I O N S C O N F E R E N C E 4 Q 1 6 14

Branch Units ValueS.Luzon 1,965 1,825

N.Luzon 561 653

Cebu 1,836 1,802

Iloilo 2,288 2,415

Bacolod 270 216

Davao 1,648 1,721

Gensan 1,416 884

Total 9,984 9,517

All 8990 branches nationwide havecommitted to hit P9.5 Billion HDMFtake-out for 2017.

At least P6 Billion of the target will befresh accounts, and 40% will comefrom the backlog of 2016 and 2015accounts that are scheduled formigration this year.

9.5BillionHDMFTake-OutTargetfor2017

Dividend Pay-Out

Date Amount Pay-Out

December 12, 2014 275,899,536.00 0.05 / share

March 30, 2015 993,238,329.60 0.18 / share

September 06, 2015 275,899,536.00 0.05 / share

February 18, 2016 1,379,497,680.00 0.25 / share

November 28, 2016 275,899,536.00 0.05 / share

March 06, 2017 1,379,497,680.00 0.25 / share

Total 4,579,932,297.60 0.83 / share

8990 Board approved the declaration of cash

dividends in the amount of Twenty five

centavos (Php0.25) per share to

stockholders of record of the Company as of

February 20, 2017. The cash dividends shall

be paid on March 6, 2017.

7BranchesNorthLuzon 3

NCR 3

SouthLuzon 2

Cebu 5

Iloilo 3

Davao 3

GeneralSantos 2

Bacolod 116

ProjectStatusUpdateWehave2FinishedProjects

Wehave11On-GoingProjectsWehave11ProjectsforLaunching

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DECAHOMESBELLAVISTA SOUTHLUZON

TotalNo.ofUnits: 3,881UNITSPercentofCompletion: 100%DatetoFinish: DECEMBER2016

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DECAHOMESTANZA

TotalNo.ofUnits: 632UNITSPercentofCompletion: 100%DatetoFinish: DECEMBER2016

SOUTHLUZON


DECACLARKRESORTANDRESIDENCES NORTHLUZON

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ON-GOING

DECAHOMESMARILAO/URBANDECAHOMESMARILAO(MIXEDMRBANDTOWNHOUSES) NORTHLUZON

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ON-GOING

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URBANDECATOWER- EDSA NCR

TotalNo.ofUnits: 1,148UNITSPercentofCompletion: 86%DatetoFinish: JULY2017

ON-GOING

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URBANDECAHOMESCAMPVILLE NCR

TotalNo.ofUnits: 1,024UNITSPercentofCompletion: 85%DatetoFinish: September2017

ON-GOING

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URBANDECAHOMESMANILA NCR

TotalNo.ofUnits: 13,212UNITS(Totalof13Buildings)PercentofCompletion: 12%DatetoFinish: DECEMBER2020

ON-GOING

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URBANDECAHOMESHAMPTON SOUTHLUZON

ON-GOING

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TotalNo.ofUnits: 548UNITSPercentofCompletion: 1%DatetoFinish: DECEMBER2018

URBANDECAHOMESMAHOGANY SOUTHLUZON

ON-GOING

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URBANDECAHOMESH.CORTES VISAYAS

TotalNo.ofUnits: 1,400UNITSPercentofCompletion: 23%DatetoFinish: December2018

ON-GOING

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DECAHOMESPAVIARESORTANDRESIDENCESPHASE1 VISAYAS


ON-GOING

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DECAHOMESPAVIARESORTANDRESIDENCESPHASE2 VISAYAS

TotalNo.ofUnits: 2,982UNITSPercentofCompletion: 37%DatetoFinish: November2019

ON-GOING

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URBANDECAHOMESMACTAN VISAYAS


FOR LAUNCHING

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DECAHOMESMACTANPRIME VISAYAS

TotalNo.ofUnits: 6,828UNITSPercentofCompletion: 0%DatetoFinish: March2020

FOR LAUNCHING

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URBANDECAHOMESTISAPHASE2 VISAYAS

TotalNo.ofUnits: 3,803UNITSPercentofCompletion: 0%DatetoFinish: June2021

FOR LAUNCHING

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URBANDECAHOMESTISAPHASE1 VISAYAS

TotalNo.ofUnits: 976UNITSPercentofCompletion: 96%DatetoFinish: March2017

ON-GOING

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DECAHOMESBAYWALKTALISAY3

TotalNo.ofUnits: 729UNITSPercentofCompletion: 61%DatetoFinish: December2017

VISAYAS

ON-GOING

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STA.BARBARA

TotalNo.ofUnits: 10,187UNITSPercentofCompletion: 3%DatetoFinish: July2021

VISAYAS

FOR LAUNCHING

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DECAHOMESSOUTHBACOLOD


VISAYAS

FOR LAUNCHING

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LEGANES


VISAYAS

FOR LAUNCHING


DECAHOMESIGNATIUS MINDANAO

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FOR LAUNCHING

TotalNo.ofUnits: 7,005UNITSPercentofCompletion: 0%DatetoFinish: July2019

DECAHOMESMULIG MINDANAO

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FOR LAUNCHING

TotalNo.ofUnits: 3,239UNITSPercentofCompletion: 98%DatetoFinish: May2017

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DECAHOMESINDANGAN MINDANAO

ON-GOING

TotalNo.ofUnits: 649UNITSPercentofCompletion: 98%DatetoFinish: May2017

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DECAHOMESCATALUNANGRANDE MINDANAO

ON-GOING


DECAHOMESGENSAN1 MINDANAO

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ON-GOING

2016 results of operations guidance for 2017 · project location units to be delivered for 2016...

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