9 4 0 0 7 1 6 0 a r t h a l a n d c o r p o r a t i o n · (cashier) dtu aso-94-007160 (sec number)...
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9 4 0 0 7 1 6 0
SEC Registration Number
A R T H A L A N D C O R P O R A T I O N
(Company’s Full Name)
8 F P I C A D I L L Y S T A R B U I L D I N G
4 T H A V E N U E C O R N E R 2 7 T H S T R E E T
B O N I F A C I O G L O B A L C I T Y
T A G U I G C I T Y
(Business Address: No. Street City/Town/Province)
PONCIANO S. CARREON, JR 403-6910 (Contact Person) (Company Telephone Number)
0 3 3 1 1 7 - Q 0 6 Last Fri
Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting)
(Secondary License Type, If Applicable)
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number LCU
Document ID Cashier
COVER SHEET
ARTHALAND CORPORATION (Company’s Full Name)
8/F Picadilly Star Building, 4th Avenue corner 27th Street
Bonifacio Global City, Taguig City
(Company’s Address)
403-6910
(Telephone Number)
March 31 June 28
(Fiscal year ending) (Annual Meeting)
(month & day)
SEC FORM 17 – Q QUARTERLY REPORT (Form Type)
Amendment Designation (If applicable)
March 31, 2013 (Period Ended Date)
____________________________________ (Secondary License Type & File Number)
__________________
LCU
____________________ ___________________
(Cashier) DTU
ASO-94-007160 (SEC Number)
_____________________ ____________________
Central Receiving Unit File Number
____________________
Document I.D.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 11 OF THE
REVISED SECURITIES ACT AND RSA RULE 11(a)-1 (b)(2) THEREUNDER
1. For the quarterly period ended March 31 2013
2. Commission Identification No. ASO-94-007160
3. 3. BIR TIN 116-004-450-721
4. Exact name of registrant as specified in its character
ARTHALAND CORPORATION
5. Incorporated in Metro Manila, Philippines on August 10, 1994.
6. Industry Classification Code ___________________________.
7. Address of registrant’s principal office Postal Code
8/F Picadilly Star Building, 4th Avenue corner 27th Street,
Bonifacio Global City, Taguig City 1634
8. Registrant’s Telephone Number : 403-6910
9. Former name, former address and former fiscal year, if changed since last report: Not Applicable
10. Securities registered pursuant to Sections 4 and 8 of the RSA
Title of each class Number of shares common
stock outstanding or amount
of debt outstanding.
Common Shares 5,318,095,199 common shares
11. Are any or all of the securities listed on the Philippine Stock Exchange?
YES [ X ] NO [ ]
12. Indicate by check mark whether the registrant :
(a) has filed all reports required to be filed by Section 11 of the Revised Securities Act (RSA)
and RSA Rule (a)-1 thereunder and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding 12 months (or for such shorter period the registrant was
required to file such reports).
YES [ X ] NO [ ]
(b) has been subject to such filing requirements for the past 90 days.
YES [ X ] NO [ ]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
See attached.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
See attached.
PART II - OTHER INFORMATION
There are no other information for the period not previously reported in SEC Form 17-C
SIGNATURES
Pursuant to the requirements of the Revised Securities Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
Issuer : ARTHALAND CORPORATION
Signature and Title : ANGELA DE VILLA-LACSON President
Signature and Title : PONCIANO S. CARREON, JR
Chief Finance Officer
Date : ___________________________
ITEM 1. Financial Statements Required under SRC RULE 68.1
1. Basic and Diluted Earnings per Share (See attached Income Statement). 2. The accompanying consolidated interim financial statements of Arthaland Corporation
(ALCO) were prepared in accordance with accounting principles generally accepted in the Philippines as set forth in Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS).
3. Notes to Financial Statements:
a. The accompanying consolidated financial statements of ALCO were prepared in
accordance with PFRS. The financial statements have been prepared using the historical cost basis and are presented in Philippine Pesos.
b. There is no significant seasonality or cycle of interim operations.
c. There are no material events subsequent to the end of the interim period not previously reported in SEC form 17-C.
d. There are no changes in the composition of the issuer during the interim period
including business combinations, acquisition of subsidiaries and long-term investments, restructurings and discontinuing operations.
e. There are no material changes in the contingent liabilities or contingent assets since the
last annual balance sheet date. f. There are no material contingencies and any other events or transactions that are
material to an understanding of the current interim period. g. Except for the development cost of ARYA, there are no material commitments for capital
expenditures since the last annual balance sheet date. h. There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations. There is no foreseen event that will cause a material change in the relationship between costs and revenues.
i. There are no material off-balance sheet transactions, arrangements, obligations and
other relationship of the company with unconsolidated entities or other persons created during the reporting period.
MARCH 31 2013 DECEMBER 31 2012
Notes (Unaudited) (Audited)
ASSETS
Cash and cash equivalents 4 705,899,707 P 335,727,042 P
Trade and other receivables 5 1,209,374,709 801,278,453
Real estate for sale 6 1,979,960,883 2,050,130,223
Investment properties 7 149,816,377 149,816,377
Property and equipment 8 21,062,917 24,251,797
Deferred tax assets - net 41,149,166 83,960,641
Other Assets 9 182,345,958 196,224,071
4,289,609,717 3,641,388,604
LIABILITIES AND EQUITY
Liabilities
Loans payable 10 1,742,317,206 1,503,210,516
Accounts payable and other liabilities 11 713,449,333 367,295,752
Customers' deposits 386,789,574 429,164,393
Retirement benefit obligation 19,911,082 19,911,082
Total Liabilities 2,862,467,195 2,319,581,743
Equity
Capital stock 12 830,181,736 830,181,736
Additional paid-in capital 54,575,400 54,575,400
Retained earnings (deficit) 542,385,386 437,049,725
Total Equity 1,427,142,522 1,321,806,861
4,289,609,717 P 3,641,388,604 P
See accompanying Notes to Consolidated Financial Statements.
ARTHALAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
MARCH 31, 2013 AND DECEMBER 31, 2012
MARCH 31 2013 MARCH 31 2012
Notes (Unaudited) (Unaudited)
REVENUE FROM REAL ESTATE SALES 858,573,454 P 178,199,572 P
COST OF REAL ESTATE SOLD (612,075,365) (115,829,722)
GROSS INCOME 246,498,089 62,369,850
OPERATING EXPENSES 13 82,293,789 51,274,424
INCOME FROM OPERATIONS 164,204,300 11,095,426
FINANCE COSTS 14 (20,279,243) (20,751,048)
OTHER INCOME - net 15 6,337,829 4,857,972
INCOME BEFORE INCOME TAX 150,262,886 (4,797,650)
INCOME TAX EXPENSE (BENEFIT) 17 44,927,225 (9,708,349)
NET INCOME 105,335,661 4,910,699
OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME 105,335,661 P 4,910,699 P
EARNINGS PER SHARE - Basic and Diluted 0.020 P 0.001 P
See accompanying Notes to Consolidated Financial Statements.
ARTHALAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED MARCH 31, 2013 AND 2012
MARCH 31 2013 MARCH 31 2012Note (Unaudited) (Unaudited)
CAPITAL STOCK
Issued and outstanding 12 773,435,736 P 773,435,736 P
Subscribed capital - net
of subscriprions receivable 12 56,746,000 56,746,000
830,181,736 830,181,736
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period 54,575,400 54,575,400
Collection of old subscription - -
54,575,400 54,575,400
RETAINED EARNINGS Balance at beginning of period 437,049,725 171,055,768 Net profit for the period 105,335,661 4,910,697 Balance at end of period 542,385,386 175,966,465
TOTAL EQUITY 1,427,142,522 P 1,060,723,601 P
See accompanying Notes to Consolidated Financial Statements.
ARTHALAND CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE PERIOD ENDED MARCH 31, 2013 AND 2012
MARCH 31 2013 MARCH 31 2012
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Income (Loss) before tax 150,262,886 P 4,797,652 )( P Adjustments for:
Finance costs 20,279,243 17,434,149 Interest income (2,300,258) (1,426,283)
Depreciation and amortization 3,289,479 3,924,705
Operating income before working capital changes 171,531,350 15,134,919 Decrease (increase) in:
Trade and other receivables (408,133,663) 520,103,560 Real estate for sale 70,169,340 (315,022,555)
Other assets 13,878,114 (93,309,130)
Increase (decrease) in:Accounts payable and other liabilities 337,685,441 25,278,628
Customers' deposits (42,374,819) (321,448,660)
Cash generated from (used in) operations 142,755,763 (169,263,238) Interest paid (13,635,723) (28,858,721)
Interest received 2,337,665 1,426,283 Income taxes paid (291,131) (237,714)
Net Cash From (Used in) Operating Activities 131,166,574 (196,933,390)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (1,757,679) (1,275,041) Proceeds from disposals of property and equipment 1,657,080 -
Net Cash Used in Investing Activities (100,599) (1,275,041)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from borrowings 239,106,690 39,208,620
Net Cash From Financing Activities 239,106,690 39,208,620
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 370,172,665 (158,999,811)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 335,727,042 237,156,538
CASH AND CASH EQUIVALENTS AT END OF PERIOD 705,899,707 P 78,156,727 P
See accompanying Notes to Consolidated Financial Statements.
ARTHALAND CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31, 2013 AND 2012
ARTHALAND CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Matters Arthaland Corporation (“ALCO” or the Parent Company) was incorporated in the Philippines and registered with the Securities and Exchange Commission (SEC) on August 10, 1994. ALCO’s shares of stocks are listed for trading in the Philippine Stock Exchange (PSE). It is primarily engaged in real estate development and sales, with Arya Residences (the Project) located and currently rising in Global City, Taguig as its first major development. The Project is the first residential high-rise in the Philippines to be registered with US Green Building Council’s Leadership in Energy and Environmental Design program with the certification goal of Gold. The Parent is a former subsidiary of AO Capital Holdings, Inc. (AOC), a company domiciled in the Philippines and was incorporated primarily as a holding company, on account of its 58% ownership interest in ALCO in 2010 and 2009. In 2011, AOC sold its 31% stake in ALCO to CPG Holdings, Inc. (CPG), a holding company of leading food manufacturers domiciled in the Philippines. In addition to the acquisition by CPG of ALCO’s shares from AOC, CPG infused additional capital to ALCO in consideration of 200 million unissued shares giving it an effective ownership interest of 33.85% in ALCO. The ownership interest of AOC was diluted to 26.02%.
2. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Group have been prepared on a historical cost basis and are presented in Philippine peso (P) which is the Group’s functional currency. All values are stated in absolute amounts, unless otherwise indicated. Moreover, the consolidated financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRS) issued by the Philippine Financial Reporting Standards Council (FRSC) and adopted by the SEC. This financial reporting framework includes PFRS, Philippine Accounting Standards (PAS), Philippine interpretations from International Financial Reporting Interpretations Committee (IFRIC) and SEC provisions.
3. SUMMARY OF CHANGES IN PFRS a. Effective for annual periods beginning on or after January 1, 2013:
i. The Group is currently in the process of assessing the impact of the following
applicable new and revised PFRS effective January 1, 2013 in its consolidated financial statements based on audited figures as at December 31, 2012:
Title Subject
PAS 27 (Amended) Separate Financial Statements
PAS 28 (Amended) Investments in Associates and Joint Venture
Amendments to PFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities
PFRS 10 Consolidated Financial Statements
PFRS 11 Joint Agreements
PFRS 12 Disclosure of Interests in Other Entities
PFRS 13 Fair Value Measurement
ii. The following amended PFRS is not applicable to the Group, therefore will have no
impact on the financial statements:
Title Subject
Amendments to PFRS 1 Government Loans
b. Effective for annual periods beginning on or after January 1, 2015:
PFRS 9, Financial Instruments Classification and Measurement (Effective for Jan. 1, 2015)
The group does not expect to implement and adopt PFRS 9 until its effective date or until all chapters of this new standard have been published. In addition, management is currently assessing the impact of PFRS 9 on the consolidated financial statements of the Group and is committed to conduct a comprehensive study of the potential impact of this standard early in 2014 to assess the impact of all changes.
4. CASH AND CASH EQUIVALENTS Cash includes the following components as of:
March 2013 December 2012
Petty Cash Fund
P 30,000 P 30,000
Cash in Bank
217,135,351 45,467,992
Short term placements
488,734,356 290,229,050
P 705,899,707 P 335,727,042
Cash in bank account generally earn interest at rates based on daily bank deposit rates. Short-term placements represents excess cash temporarily lodged with banks under special deposit accounts.
5. TRADE AND OTHER RECEIVABLES
The details of receivables are shown below:
March 2013 December 2012
Accounts receivable – trade
P 1,029,966,490 P 657,274,281 Advances for project development 169,308,082 133,597,388 Advances to employees
4,592,421 5,645,368
Other receivables 5,876,008 5,129,708
1,209,745,014 801,648,757
Allowance for impairment losses
(368,292) (368,292)
P 1,209,376,722 P 801,280,465
The aging analysis of trade and other receivables are shown below:
March 2013 December 2012
Current
P 2,136,635,248 P 2,254,542,262 Past due
Within 6 months
- - 7 months to 1 year
- -
More than 1 year - -
Percentage of completion
(927,260,539) (1,453,263,809)
P 1,209,374,709 P 801,278,453
Accounts receivable – trade represents receivables from buyer of condominium units. Starting January 2012, receivables arising from the sale of real estate are recognized in the books only to the extent of completion of the project.
Advances for project development pertain to advances made to contractors for the construction of condominium units. These advances are noninterest-bearing and are being recouped against contractors’ monthly progress billings.
Advances to employees represent salary and other loans granted to Parent Company’s employees which are noninterest-bearing and collectible through salary deduction. This also includes various cash advances used for immediate expenses not covered by petty cash fund and subject to liquidation. The carrying amount of the receivables is considered a reasonable approximation of fair value. All of the Group’s receivables have been reviewed for indicators of impairment. As of March 31, 2013 and December 31, 2012, no receivables were found to be impaired. Thus, management believes that the entire carrying amount of the receivable portfolio is fully recoverable.
6. REAL ESTATE FOR SALE The details of real estate assets are shown below.
March 2013 December 2012
Raw land inventory
P 517,116,617 P 517,116,617
Assets under construction
1,462,844,266 1,533,013,606
P 1,979,960,883 P 2,050,130,223
Raw land inventory consist of parcels of land located at Bonifacio Global City (BGC), Tagaytay and Batangas. Asset under construction represents the accumulated construction costs of Arya Residences, net of amount charged to Cost of Real Estate Sold. Management believes that the value of the land inventory has substantially improved and is higher than its carrying value as of March 31, 2013 and December 31, 2012.
7. INVESTMENT PROPERTIES
This account consists of:
March 2013 December 2012
Land
P 138,513,560 P 138,513,560
Development cost
11,302,817 11,302,817
P 149,816,377 P 149,816,377
Investment Properties consists of an agricultural land with an area of 33 hectares located at Barangay Gonzalo-Bontog, Calamba City and Barangay Calabuso, Tagaytay City. Based on the independent appraisal report dated March 4, 2013, the fair value of the land amounted to P384.0 million.
8. PROPERTY AND EQUIPMENT
The gross carrying amounts and accumulated depreciation of property and equipment are shown below.
Accumulated Net Carrying
Cost Depreciation Amount
March 31 2013 Office equipment
P 11,646,864 P (8,334,745 ) P 3,312,119
Furniture and fixture
6,851,673 (5,965,368) 886,305
Leasehold improvements
43,887,472 (35,597,928) 8,289,544
Transportation equipment
15,410,964 (6,836,014) 8,574,950
77,796,973 (56,734,055) 21,062,918
December 31, 2012 Office equipment
11,423,153 (7,864,769) 3,558,384
Furniture and fixture
6,496,740 (5,773,609) 723,131
Leasehold improvements
43,844,266 (33,739,069) 10,105,197
Transportation equipment
16,890,500 (7,025,415) 9,865,085
P 78,654,659 P (54,402,862 ) P 24,251,797
All depreciation charges for the year were reported as depreciation and amortization expense presented as part of the Administrative Expenses in the consolidated statements of comprehensive income.
9. OTHER ASSETS
Other assets consist of the following:
March 2013 December 2012
Creditable withholding taxes P 88,848,502 P 80,519,150 Amounts held in escrow
57,907,986 57,857,382
Input VAT
4,462,482 27,219,106 Deposits
22,262,114 22,262,114
Prepayments
5,573,814 2,786,879 Deferred input VAT
1,472,361 2,669,524
Others 2,763,733 3,854,950
183,290,992 197,169,105
Allowance for impairment
(945,034) (945,034)
P 182,345,958 P 196,224,071
The creditable withholding tax consists of withholding taxes remitted for real estate sales while the input taxes pertain mostly to unapplied portion of VAT paid to suppliers and contractors of Arya Residences.
Amounts held in escrow pertain to security for the payment of claims for breach of representations and warranties in the contract which the Parent Company has entered into.
Deposits consist mainly of guarantee deposits paid to Fort Bonifacio Development Corporation (FBDC) for the construction of Arya Residences project.
Prepayment consists of real property taxes, insurance and advance rentals.
10. LOANS PAYABLE
This account consists of the following:
March 2013 December 2012
Local creditor banks
P 1,650,107,565 P 1,413,658,550
Private funders
92,209,641 89,551,966
P 1,742,317,206 P 1,503,210,516
Local creditor banks
Loans from local banks consist of interest-bearing secured loans obtained to finance the Parent Company’s working capital requirements, project development and acquisition of property from GPDC. These loans have interest rates ranging from 5.85% to 6.125% in 2013 and 5.00% to 7.20% in 2012 with maturities of 120 days to 3.5 years from value date.
Private funders Loans from private funders represent unsecured borrowings with maturities of 30 to 180 days from balance sheet date. These loans have interest rates ranging from 5.00% to 6.5% in 2013 and 6.00% to 6.50% in 2012.
11. ACCOUNTS PAYABLE AND OTHER LIABILITIES
This account consists of:
March 2013 December 2012
Accounts payable
P 403,417,650 P 215,258,196 Accrued expenses
308,920,886 148,752,832
Other liabilities
1,110,797 3,284,724
P 713,449,333 P 367,295,752
Accounts payable and accrued expenses pertains to contractors’ progress billings that are normally settled within 30 days. This also include retention payable or the amount withheld from the progress billings of contractors expected to be paid after the lapse of warranty period from date of turn-over of project to the Company. Management believes that the carrying values of Accounts Payable, Accrued Expenses and Other Liabilities are reasonable approximation of their fair value due to their short durations.
12. CAPITAL STOCK The account consists of:
Shares
March 2013 December 2012 March 2012 Common shares - P0.18 par value
Authorized - 16,368,095,199 Issued: Balance at the beginning of
period
4,296,865,199 4,296,865,199 4,296,865,199 Issued during the period
- - -
Subscribed and issued during the period - - -
Balance at end of period 4,296,865,199 4,296,865,199 4,296,865,199
Subscribed: Balance at the beginning of
period
1,021,230,000 1,021,230,000 1,021,230,000 Issued during the period
-
Balance at end of period 1,021,230,000 1,021,230,000 1,021,230,000
5,318,095,199 5,318,095,199 5,318,095,199
Amount
March 2013 December 2012 March 2012
Issued: Balance at the beginning of
period
P 773,435,736 P 773,435,736 P 773,435,736
Issued during the period
- - - Subscribed and issued during the period
- - -
Balance at end of period 773,435,736 773,435,736 773,435,736
Subscribed: Balance at the beginning of
period
183,821,400 183,821,400 183,821,400 Issued during the period
- - -
Balance at end of period 183,821,400 183,821,400 183,821,400
Subscription receivable: Balance at the beginning of
period
127,075,400 127,075,400 127,075,400 Collected during the period
-
Balance at end of period
(127,075,400)
(127,075,400)
(127,075,400)
Subscribed - net 56,746,000 56,746,000 56,746,000
P 830,181,736 P 830,181,736 P 830,181,736
13. OPERATING EXPENSES
The details of operating expenses presented by nature are as follows:
March 2013 March 2012
(Three Months) (Three Months)
Salaries and other employee benefits
P 24,036,022 P 15,968,023
Brokers’ commissions
17,534,668 7,969,465
Advertising
8,693,063 7,240,350
Taxes and licenses
5,661,075 2,704,485
Rental
5,137,462 3,081,130
Transportation and travel
1,329,723 578,179
Depreciation and amortization
3,289,479 3,924,705
Management and professional fees
2,220,359 2,154,464
Supplies
312,358 310,927
Insurance
998,109 1,301,344
Security services
974,118 811,570
Power, light and water
772,094 494,844
Annual dues and fees
682,355 571,842
Representation
588,886 111,842
Communications
560,670 656,597
Janitorial and clerical services
351,665 412,423
Miscellaneous
9,151,683 2,982,234
P 82,293,789 P 51,274,424
14. FINANCE COSTS
Finance costs relate to the following:
March 2013 March 2012
(Three Months) (Three Months)
Loans payables P 20,206,678 P 20,258,240 Others 72,565 92,808
P 20,279,243 P 20,751,048
15. OTHER OPERATING INCOME
Presented below are the details of other income.
March 2013 March 2012
(Three Months) (Three Months)
Interest income P 2,300,258 P 1,426,283 Rental - 461,825 Others 4,037,571.00 2,969,864
P 6,337,829 P 4,857,972
16. SALARIES AND OTHER EMPLOYEE BENEFITS Details of salaries and employee benefits are presented below.
March 2013 March 2012
(Three Months) (Three Months)
Salaries and wages P 23,410,892 P 14,517,953 Bonuses and allowances - 1,218,689 SSS, Pag-ibig, PHIC contributions 240,256 215,353 Others benefits 384,874 16,028
P 24,036,022 P 15,968,023
17. TAXES
The components of tax expense are as follows:
18. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group is exposed to certain financial risks which result from both its operating and financing activities. The Group’s risk management is overseen by the BOD through the Executive Committee and focuses on ensuring that short-term and long-term- liquidity requirements are met. The Group does not engage in trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed to are described below and in the succeeding pages.
18.1 Credit Risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments like the receivables from customers and placing of deposits with banks. The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. The Group’s policy is to deal only with creditworthy counterparties. In addition, for a significant proportion of sales, advance payments are received to mitigate credit risk.
March 2013 March 2012
(Three Months) (Three Months)
RCIT
P 44,636,094 P - MCIT - 931,489 Final taxes 291,131 237,714
44,927,225 1,169,203
Deferred income taxes - (10,877,552)
P 44,927,225 P (9,708,349)
Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown in the consolidated statements of financial position. Credit risk, therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial asset’s carrying amount. The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognized as of March 31, 2013, December 31, 2012 and March 31, 2012. None of Group’s financial assets are secured by collateral or other credit enhancements. a. Cash in Bank
The credit risk for cash in bank is considered negligible, since the counterparties are reputable universal banks with high quality external credit ratings. Cash in banks are insured by the Philippine Deposit Insurance Corporation up to a maximum coverage of P0.5 million per depositor per banking institution.
b. Receivables
In respect of receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Receivables consist of a large number of customers. Based on historical information about customer default rates, management considers the credit quality of receivables that are not past due or impaired to be good.
The Group has no past due or impaired accounts as of March 31, 2013, December 31, 2012 and March 31, 2012.
18.2 Liquidity Risk
Liquidity risk is the risk that there are insufficient funds available to adequately meet the credit demands of the Group’s customers and repay liabilities on maturity. The Group closely monitors the current and prospective maturity structure of its resources and liabilities and the market condition to guide pricing and asset/liability allocation strategies to manage its liquidity risks.
19. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern and to provide an adequate return to shareholders by pricing products and services commensurate with the level of risk.
The Group monitors capital on the basis of the carrying amount of equity as presented in the statements of financial position. Capital for the reporting periods under review is summarized as follows:
March 2013 December 2012
Total liabilities
P 2,862,467,195 P 2,319,581,743 Total equity
1,427,142,522 1,321,806,861
2.01:1 1.75:1
The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.
20. EARNINGS (LOSS) PER SHARE
Basic and diluted earnings per share is computed as follows:
March 2013 December 2012 March 2012
Net income
P 105,335,661 P 265,993,957 P 4,910,699
Divided by number of outstanding common shares
5,318,095,199
5,318,095,199
5,318,095,199
P 0.020 P 0.050 P 0.001
Diluted earnings per share equals the basic earnings (loss) per share as the Parent does not have any dilutive potential common shares at the end of each of the three years.
21. FINANCIAL RATIOS
March 2013 December 2012 March 2012 Current/Liquidity Ratio (Current Assets over Current Liabilities) 2.10:1 1.89:1 3.09:1 Solvency Ratio (Net income (Loss) before depreciation over total liabilities) 0.04:1 0.12:1 0.02:1 Debt-to-equity Ratio (Total debt to total equity) 2.01:1 1.75:1 3.24:1 Asset-to-equity Ratio (Total assets over total equity) 3.01:1 2.75:1 3.24:1 Interest Rate Coverage Ratio (Pretax income before Interest over interest expense) 8.41:1 5.54:1 0.77:1 Profitability Ratio* (Net income over total equity) 0.30:1 0.20:1 0.019:1
* Annualized the three months ending March 31, 2013 and 2012.
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL POSITION March 2013 vs March 2012
Mar. 31 2013 Mar. 31 2012 %
Change
Cash and cash equivalents P 705,899,707 P 78,156,727 803%
Trade and other receivables 1,209,374,709 261,278,713 363%
Real estate for sale 1,979,960,883 2,641,992,808 -25%
Investment properties 149,816,377 149,816,377 0%
Property and equipment 21,062,917 28,610,126 -26%
Deferred tax assets - net 41,149,166 106,380,033 -61%
Other Assets 182,345,958 173,849,198 5%
Total Assets 4,289,609,717 3,440,083,982 25%
Loans payable 1,742,317,206 1,678,973,830 4%
Accounts payable and other liabilities 713,449,333 152,319,593 368%
Customers' deposits 386,789,574 533,429,716 -27%
Other liabilities 19,911,082 14,637,242 36%
Total Liabilities 2,862,467,195 2,379,360,381 20%
Capital stock 830,181,736 830,181,736 0%
Additional paid-in capital 54,575,400 54,575,400 0%
Retained earnings (deficit) 542,385,386 175,966,465 208%
Total Equity 1,427,142,522 1,060,723,601 35%
Total Liabilities and Equity P 4,289,609,717 P 3,440,083,982 25%
The Company’s total resources as of March 31, 2013 increased by 25% to P4.3 billion from March 31, 2012 level of P3.4 billion. Due to the following:
803% increase in Cash and Cash Equivalents The increase was primarily attributable to high collection rate on trade receivables.
363% increase in Trade and Other Receivables The significant increase was due to higher sales take-up and higher percentage of completion of on-going project construction.
25% decrease in Real Estate for Sale The decrease was mainly attributable to amount charged to cost of sales corresponding to realized revenues.
26% Decrease in Property and Equipment The decrease was due to normal provision for depreciation.
61% Decrease in Deferred Tax Assets - net The decrease was due to application of deferred tax asset against the current year’s taxable liability.
5% Increase in Other Assets The increase was primarily due to additional of creditable withholding taxes arising real estate sales and input taxes on construction costs incurred for the period. 368% Increase in Accounts payable and Other Liabilities The increase was attributable to higher monthly progress billings from contractors as a result of simultaneous development of Tower 1 and 2 starting the 3rd quarter of 2012. These progress billings are normally settled within 30 days. 27% Decrease in Customers’ Deposits The decrease was due to amount recognized as realized revenues from the end of 1Q 2012 to 1Q 2013. 36% Increase in Other Liabilities The increase was due to additional provision for retirement obligation for the year. 208% Increase in Retained Earnings The increase represents the net income for the year. FINANCIAL RATIO March 2013 vs March 2012
March 2013 March 2012 % Change
Current/Liquidity Ratio (Current Assets over Current Liabilities) 2.10 3.09 -32%
Solvency Ratio (Net income (Loss) before depreciation over total liabilities) 0.04:1 0.02:1 1,687%
Debt-to-equity Ratio (Total equity to total assets) 2.00:1 2.24:1 -11%
Asset-to-equity Ratio (Total assets over total equity) 3.00:1 3.24:1 -7%
Interest Rate Coverage Ratio (Pretax income before Interest over interest expense) 8.41:1 0.77:1 994%
Profitability Ratio* (Net income over total equity) 0.07:1 0.005:1 1,494%
* Annualized the three months ending March 31, 2013 and 2012.
FINANCIAL POSITION March 2013 vs December 2012
Mar. 31 2013 Dec. 31 2012 %
Change
Cash and cash equivalents P 705,899,707 P 335,727,042 110%
Trade and other receivables 1,209,374,709 801,278,453 51%
Real estate for sale 1,979,960,883 2,050,130,223 -3%
Investment properties 149,816,377 149,816,377 0%
Property and equipment 21,062,917 24,251,797 -13%
Deferred tax assets - net 41,149,166 83,960,641 -51%
Other Assets 182,345,958 196,224,071 -7%
Total Assets 4,289,609,717 3,641,388,604 18%
Liabilities
Loans payable 1,742,317,206 1,503,210,516 16%
Accounts payable and other liabilities 713,449,333 367,295,752 94%
Customers' deposits 386,789,574 429,164,393 -10%
Other liabilities 19,911,082 19,911,082 0%
Total Liabilities 2,862,467,195 2,319,581,743 23%
Equity
Capital stock 830,181,736 830,181,736 0%
Additional paid-in capital 54,575,400 54,575,400 0%
Retained earnings (deficit) 542,385,386 437,049,725 24%
Total Equity 1,427,142,522 1,321,806,861 8%
Total Liabilities and Equity P 4,289,609,717 P 3,641,388,604 18%
The Company’s total resources as of March 31, 2013 increased by 18% to P4.3 billion from December 31, 2012 level of P3.6 billion. Due to the following:
110% increase in Cash and Cash Equivalents The increase was primarily attributable to high collection rate on trade receivables.
51% increase in Trade and Other Receivables The significant increase was due to higher sales take-up and higher percentage of completion of on-going project construction.
13% Decrease in Property and Equipment The decrease was due to normal provision for depreciation.
51% Decrease in Deferred Tax Assets - net The decrease was due to application of deferred tax asset against the current year’s taxable liability.
7% Decrease in Other Assets The increase was primarily due to application of input tax against the output tax for the first quarter of 2013.
16% increase in Loans Payable The increase in Loans Payable was due to additional bank loans availed in 1Q 2013.
94% Increase in Accounts payable and Other Liabilities The increase was attributable to higher monthly progress billings from contractors as a result of simultaneous development of Tower 1 and 2 starting the 3rd quarter of 2012. These progress billings are normally settled within 30 days. 10% Decrease in Customers’ Deposits The decrease was due to the amount recognized as realized revenues for the first quarter of 2013. 24% Increase in Retained Earnings The increase was due to the 1Q of 2013 net income. FINANCIAL RATIO March 2013 vs December 2012
March 2013 December 2012 % Change
Current/Liquidity Ratio (Current Assets over Current Liabilities) 2.10 1.89:1 11%
Solvency Ratio (Net income (Loss) before depreciation over total liabilities) 0.04:1 0.12:1 -69%
Debt-to-equity Ratio (Total equity to total assets) 2.01:1 1.75:1 14%
Asset-to-equity Ratio (Total assets over total equity) 3.01:1 2.75:1 9%
Interest Rate Coverage Ratio (Pretax income before Interest over interest expense) 8.41:1 5.54:1 52%
Profitability Ratio* (Net income over total equity) 0.30:1 0.20:1 47%
* Annualized the three months ending March 31, 2013.
RESULTS OF OPERATIONS March 2013 vs March 2012
Mar. 31 2013 Mar. 31 2012
% Change
Realized revenues from real estate sales P 858,573,454 P 178,199,572 382%
Cost of real estate sold (612,075,365) (115,829,722) 428%
Gross Profit 246,498,089 62,369,850 295%
OPERATING EXPENSES
Administrative expenses 56,066,058 36,064,609 55%
Selling and marketing expenses 26,227,731 15,209,815 72%
82,293,789 51,274,424 60%
OPERATING PROFIT 164,204,300 11,095,426 1380%
OTHER OPERATING EXPENSES (INCOME)
Finance costs 20,279,243 20,751,048 -2%
Other operating income (6,337,829) (4,857,972) 30%
3,941,414 15,893,076 -12%
PROFIT (LOSS) BEFORE TAX 150,262,886 (4,797,650) 3,232%
TAX EXPENSE (INCOME) 44,927,225 (9,708,349) 563%
NET PROFIT P 105,335,661 P 4,910,699 2,045%
The Company’s net income in the first (1st) quarter was at P105.3 million or 2,045% higher for the year-on-year due to the following: 382% Increase in Revenue from Real Estate Sales Increase were attributable to additional sales take-up and higher construction progress as of end of 1Q 2013. 428% Increase in Cost of Real Estate Sold The cost of Real Estate Sold grew with the realized revenue for the period. 55% increase in Administrative Expenses The increase were mainly due to higher manpower-related expenses. 72% increase in Selling and Marketing Expenses The increase was due to heightened sales and marketing activities to support the target sales take-up. 30% increase in Other Income - net The increase was due to higher interest income earned from short-term placements during the first
quarter of 2013 compared with the same period last year.
563% increase in Tax Expense The significant increase was due to higher taxable income during the first quarter of 2013 compared with the same period last year.
RESULTS OF OPERATIONS March 2013 vs December 2012
Mar. 31 2013 Dec. 31 2012
% Change
Realized revenues from real estate sales P 858,573,454 P 1,453,263,809 -41%
Cost of real estate sold (612,075,365) (1,167,802,556) -48%
Gross Profit 246,498,089 285,461,253 -14%
OPERATING EXPENSES
Administrative expenses 56,066,058 203,410,797 -72%
Selling and marketing expenses 26,227,731 100,468,319 -74%
82,293,789 303,879,116 -73%
OPERATING PROFIT 164,204,300 (18,417,863) 992%
OTHER OPERATING EXPENSES (INCOME)
Finance costs 20,279,243 71,275,593 -72%
Other operating income (6,337,829)
(413,027,859) -98%
13,941,414
(341,752,266) 104%
PROFIT (LOSS) BEFORE TAX 150,262,886 23,334,403 -54%
TAX EXPENSE (INCOME) 44,927,225 57,340,446 -22%
NET PROFIT P 105,335,661 P 265,993,957 -60%
The Company posted a net income of P105.3 million in 1Q 2013 as compared with 2012 the full year net income of P266.0 million.