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Serving the Underserved

Filinvest Development Corporation (FDC), one of the leading conglomerates in the Philippines, maintains its strategic focus on the middle market. Fortifying its subsidiaries in real estate, banking, power, sugar, hotels, and airport infrastructure, FDC reaches out to this underserved market which holds tremendous potential for growth and positive social impact. Ever dynamic and responsive, the company will continue to set its sights on long termgrowth and making a difference in the lives of the customers it serves.

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Financial Highlights
as of Dec. 31, 2019

₱ 15.882 B
Consolidated Net Income

₱ 11.970 B
Net Income Attributable to Parent Equity Holder

₱ 84.317 B
Total Revenues

₱ 642.155 B
Total Assets

 

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Operational Highlights

FDC and its predecessors have been in the property business spanning more than 50 years and have developed over 200 projects across 3,000 hectares of land. FDC is currently one of the leading property developers in the Philippines with focus on three major areas. First is residential development, where real estate trading income is derived. Second is leasing, composed of office, retail and new concepts, and which forms the recurring income base. Third is large-scale master-planned townships, which allow synergies across the businesses to be harnessed and which significantly increase the value of the existing landbank of more than 2,500 hectares.
FDC entered the hospitality segment as a response to the accelerating tourism growth in the Philippines, driven by a combination of inbound tourists largely from the affluent Asian neighbors and domestic tourism pushed by rising disposable income of the growing middle-income population. The group’s hotel operations are carried out by Filinvest Hospitality Corporation (FHC), a wholly-owned subsidiary of FDC, and hotel management firm Chroma Hospitality, Inc. (CHI), a joint venture with Archipelago International.
Banking is another major pillar in the group’s entire portfolio. Consistent with the company’s vision of helping Filipinos attain their dreams, EastWest Bank is positioned as one of the most consumer-centric banks in the industry with focus on higher yielding retail and middle-market corporate segments. Consumer loans account for over 70 percent of its loan book which makes it unique compared to its peers. It ranked ninth largest among the listed universal banks in the Philippines by total assets as of year-end 2019 but holds leadership positions in consumer finance. It is estimated to be the second largest in auto loans, top three in personal loans and fifth largest in credit cards. It moved up a notch higher in auto loans following the acquisition of PBCom’s car loan portfolio in July 2019, particularly its dealer-generated auto lending book.
Power is a relatively new business for FDC that is proving to be a formidable and defensive play to the conglomerate’s portfolio. FDC re-entered the power industry in 2009 through the establishment of FDC Utilities, Inc. (FDCUI) and the construction of the largest baseload power plant within the PHIVIDEC Industrial Estate in the province of Misamis Oriental in Mindanao.
Sugar is a stable, self-sustaining and selffunding business for the Filinvest group. In 2019, sugar operations contributed P299 million to FDC’s net income, growing by 88 percent year-on-year. FDC entered the Mindanao sugar market in 2007 through the acquisition of Pacific Sugar Holdings Corporation (PSHC), the holding company of the group’s sugar subsidiaries.
Part of FDC’s diversification strategy is to pursue opportunities in the Philippine infrastructure sector that are complementary to its existing businesses and accretive to its recurring income stream. FDC’s interest in the infrastructure space is through its participation as a consortium member in two major airport redevelopments in Luzon. Its first foray is its participation in the consortium which won the bid to operate and maintain the Clark International Airport (CIA).

Real Estate

Hospitality

Banking

Power

Sugar

Infrastructure

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Financial Highlights
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Filinvest Development Corporation & Subsidiaries

((Amounts in Thousands of Pesos, Except Per Share and Dividends Data)

 20192018201720162015
OPERATING RESULTS (restated)  (restated)
Total Revenues and Other Income84,317,30974,152,35967,590,41458,575,16149,307,657
Net Income15,882,25513,433,19910,273,2788,476,0847,030,317
Net Income Attributable to Parent Equity Holder11,970,3029,768,6636,612,4435,502,7274,370,996
Return on Assets (ave.)2.6%2.4%2.0%1.8%1.8%
Return on Equity (ave.)12.6%11.7%9.6%8.4%7.5%
FINANCIAL POSITION     
Total Assets642,154,875589,788,999532,833,649498,639,070419,408,886
Total Long-term Debt130,221,265127,347,516125,816,419117,435,957100,636,220
Equity132,149,986119,690,474109,129,607103,954,85196,914,055
Equity Attributable to Parent Equity Holder100,515,90087,510,55379,397,32277,020,79372,136,305
No. of Shares Outstanding (‘000)8,648,4638,648,4638,648,4639,317,4749,317,474
Long-Term Debt to Equity*98.5%106.4%115.3%113.0%103.8%
Net Debt to Equity**59.1%49.5%46.3%51.9%48.2%
PER SHARE DATA***     
EPS - Total Net Income1.8361.5531.1030.9100.754
EPS - Net Income Attributable to Parent Equity Holder1.13841.1300.7100.5910.469
DIVIDENDS     
Dividend per share****0.10000.07650.05900.05160.0500
Dividend payout rate9%10%10%11%12%

 

* computed as long-term debt divided by equity
** computed as long-term debt less cash and cash equivalents divided by equity
*** computed based on weighted average number of shares outstanding
**** Dividend per share declared in 2020 amounts to P0.1384 equivalent to 10% of 2019 net income attributable
to parent equity holders, with a record date fixed on July 22, 2020 and payment date on August 17, 2020.

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Joint Message from the Chairman and the President & CEO
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To our fellow Shareholders,Filinvest Group graph

FDC grew focused on the underserved markets – the great majority of the Filipino population. Last year, we revisited our vision statement to better express what we have been doing all these years: To empower the Filipino to attain his dreams. This is the philosophy that guided us in entering markets early, whether it be housing, BPO offices, consumer loans or the Mindanao power market.

 

A Decade of Sustained Growth

The solid performance in 2019 caps a decade of consistent delivery of robust results built on this vision. Over the last 10 years, FDC achieved high double-digit growth in revenues and net income, riding on both the strong economic growth of the Philippines and in-house capabilities, registering a 10-year compounded annual growth rate (CAGR) of 19 percent and 21 percent in terms of revenues and net income, respectively.

The year 2019 was a banner year for FDC. We exceeded goals for our core businesses, gained further traction in the new businesses, and achieved record financial results. The Company hit a new milestone as it broke the double-digit mark in net income. Net income attributable to equity holders of the parent reached P12.0 billion in 2019, growing by 23 percent from the P9.8 billion in the previous year, while consolidated net income registered a growth of 18 percent to P15.9 billion. This was made possible by all businesses, old and new, registering notable increases.

The strong performance was underpinned by the solid underlying macroeconomic fundamentals. While the Philippine economic growth of 5.9 percent in 2019 fell below the above-6 percent growth that we witnessed over the past seven consecutive years, it continued to be buoyed by solid domestic consumption, driven by stable inflation, higher OFW remittances, and record-low unemployment. These factors benefited the performance of all our operating subsidiaries.

 

2020 Pandemic Response

It is against this backdrop that the 2020 pandemic crisis came upon your Company, the Philippines and the world. The outlook for the business environment has changed dramatically as a result of this unfortunate event. At FDC, we are revisiting our 2020 plans vis-à-vis their potential economic impact. Amidst the evolving nature of this outbreak, we are taking a cautious direction and adopting a more flexible short-term planning process while still being mindful of our medium-term strategy. The government declared an Enhanced Community Quarantine (ECQ) to give the Philippines time to build up its health care arsenal. Beyond financial and scenario planning, FDC and its subsidiaries answered the pandemic with clear protocols to safeguard the health and safety of the Filinvest family. This was coupled with a quick response to address our customers’ emerging needs and provide financial relief such as rental waivers, deferment or loan term extensions during the ECQ period.

We are confident that the Filinvest group is in a solid position to address the forthcoming challenges posed by the current global health and economic crisis. The resilience of our management teams and experience in surviving several global and local crises provide some invaluable insights.

 

Growing the Existing and Investing in New Markets

FDC’s property business, composed of the real estate and hospitality segments, provided a solid source of growth for the Filinvest group, contributing almost half of FDC’s bottom line in 2019. Meanwhile, FDC’s consumer-focused banking and financial services subsidiary, East West Banking Corporation (EastWest Bank), delivered a net income contribution to the group of P6.1 billion, growing by 45 percent. Power subsidiary, FDC Utilities, Inc. (FDCUI), contributed P2.5 billion in net income, rising by 20 percent from the previous year.

Consistent with our focus of serving the underserved middle market, which we believe has significant growth potential in the Philippines, Filinvest was once again a first mover in the highly progressive Clark corridor. Our property developments went full swing in our two major townships in 2019. The first is the 201-hectare Filinvest Mimosa+ Leisure City and the second is the 288-hectare Filinvest at New Clark City. We poured in investments in this area long before it has reached the progress it is seeing now. Filinvest Mimosa+ Leisure City currently has a 303-room Quest Plus Hotel and two championship 18-hole golf courses managed by FDC’s hospitality group. Filinvest Land, Inc. (FLI) has two fully-leased out BPO office buildings with two more ongoing construction, a lifestyle mall, a strip mall and a new leasing concept called dormitels. At New Clark City, the 64-hectare Phase 1 of the Filinvest Innovation Park is due for completion by the second half of 2020. Linking these two developments is the newly opened government-built access road from the Subic-Clark-Tarlac Expressway (SCTEX) to New Clark City that effectively cuts travel time between our two developments.

In 2019, FDC forged two major partnerships with two large Japanese conglomerates that are complementary to our current portfolio. In September 2019, we signed a joint venture agreement with Hitachi Aqua-Tech Engineering Pte. Ltd. to establish Filinvest- Hitachi Omni Waterworks, Inc. (FLOW) to provide processed water solutions across the Philippines. Soon, FLOW will be able to offer services in desalination, recycled water and sewage treatment facilities. In October 2019, Filinvest Alabang, Inc. signed a joint venture agreement with Mitsubishi Corporation for the development of a P15-billion multitower mixed-use complex within Filinvest City. Mitsubishi will have a 40 percent stake in the development of a 1.7-hectare prime lot that is seen to bolster mixed-use GLA by approximately 183,000 square meters. 

FDC has further expanded its strategic partnerships with Engie Services Philippines (Engie) through Filinvest-Engie Renewable Energy Enterprise, Inc. (FREE) which has been awarded contracts for a total of 5.4 megawatts of solar rooftop systems. In addition, another joint venture with Engie has increased Filinvest’s utilities infrastructure capabilities in district cooling, having completed the Philippines’ largest district cooling system in FLI’s Northgate Cyberzone in Filinvest City with a capacity of up to 12,000 tons of refrigerant. The group believes that the partnership’s initial projects with respect to renewable energy and district cooling will position it to take advantage of the global move towards greater sustainability.

Meanwhile, our foray into infrastructure through our interest in two airports gained traction in 2019. The O&M of Clark International Airport was officially handed over to us in August last year. As part of a consortium that was awarded the O&M contract for Clark International Airport, our role includes the fit-out of a new terminal with an estimated annual capacity of 8 million passengers. The growth of the Clark Airport has been quite impressive. In 2014, there were less than a million passengers served. As of end-2019, the number of passengers has crossed the four million mark. In addition to Clark Airport, Filinvest is also part of the “NAIA Consortium” alongside six other leading Philippine conglomerates to upgrade, expand, operate and maintain for 15-years the existing Ninoy Aquino International Airport.

 

Healthy Balance Sheet to Withstand Shocks

FDC-Hitachi joint venture signing
FDC-Hitachi joint venture signing

FDC’s share price reached P13.00 per share at year-end 2019. Last year, FDC paid out dividends of P0.10 per share, for a total payout of P865 million, equivalent to a payout rate of 9 percent. This represents a total shareholder return of 11 percent, outperforming the Philippine Stock Exchange index (PSEi) that rose by 4.7 percent in 2019. As of this writing, the market capitalization of FDC is among the top 35 of Philippine publicly-listed companies. However, the free float of FDC is barely 10 percent, which is the allowable minimum public ownership for listed companies by the Philippine Stock Exchange. In March 2019, the Board approved an equity offering to increase the public float of FDC in the hopes of increasing the trading volume of the shares. However, the exercise was put on hold due to unfavorable market conditions that prevailed in 2019, even before the worst crisis of our generation happened in 2020.

We are fortunate to have built a diversified portfolio of businesses in the last few years and a healthy balance sheet that can help absorb external shocks. FDC ended 2019 with total assets of P642.2 billion and consolidated equity of P132.1 billion, up 9 percent and 10 percent respectively. FDC is among the country’s top 10 publicly listed conglomerates in terms of asset size, based on the most recent available data. We ended 2019 with a debt-equity ratio of 0.99:1 and a net-debt-to-equity ratio of 0.59:1. Our long-term debt has an average maturity of 6.3 years where 98% of debt have fixed rates. Of the total debt, 89% is in local currency while the balance in foreign currency is fully hedged. Prudent financial management has enabled us to lock in our loans at attractive rates, averaging 5.15%. In April 2020, we retired all our foreign currency-denominated debt worth US$300 million using excess cash and refinancing from local banks. Our continued adherence to our financial commitments is aligned with the Filinvest group’s 60-year unblemished credit track record.

 

An Active Partner in the Fight Against COVID-19

Ventilator donation to the Lung Center of the Philippines
Ventilator donation to the Lung Center of the Philippines

In these unprecedented times, we at the Filinvest group are fully committed to fighting this pandemic hand in hand with the national and local governments. Together with the Filinvest City Foundation and Andrew Gotianun Foundation, we have identified high-impact areas for our donations. We have set aside P100 million for the provision of medical equipment, including complete personal protective equipment for front liners, and the distribution of ventilators and PCR-based testing machines. We are also lending our hand in the development of a COVID-19 digital dashboard, in cooperation with two government agencies and the academe, to aid decision makers in government by having relevant, timely and accurate data through data warehousing and data analytics. Food packages were also distributed for the vulnerable in the communities we serve, together with our partner local government units.

Filinvest Alabang, Inc. opened its doors for the use of The Filinvest Tent in Alabang as a temporary quarantine center. The Palms Country Club has also offered the use of its premises for the Research Institute for Tropical Medicine frontliners with Filinvest shouldering the food and operating expenses.

Through all these efforts, we hope to inspire the Filipino people with the bayanihan spirit of helping one another especially in trying times. The Filinvest group is fully supportive of our community and the country in our battle against COVID-19.

In closing, we thank our fellow board of directors, management and all our employees across the group for the hard work and malasakit they have demonstrated all this time. We also thank our shareholders, partners and customers for the continued trust and support in us. Together, we can surmount the challenges of these uncertain times and navigate the path back to our development plans.

 

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FDC-Chairman-and-President-CEO.jpg

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Operational Highlights
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Real Estate

FDC and its predecessors have been in the property business spanning more than 50 years and have developed over 200 projects across 3,000 hectares of land. FDC is currently one of the leading property developers in the Philippines with focus on three major areas. First is residential development, where real estate trading income is derived. Second is leasing, composed of office, retail and new concepts, and which forms the recurring income base. Third is large-scale master-planned townships, which allow synergies across the businesses to be harnessed and which significantly increase the value of the existing landbank of more than 2,500 hectares.

 

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Hospitality

FDC entered the hospitality segment as a response to the accelerating tourism growth in the Philippines, driven by a combination of inbound tourists largely from the affluent Asian neighbors and domestic tourism pushed by rising disposable income of the growing middle-income population. The group’s hotel operations are carried out by Filinvest Hospitality Corporation (FHC), a wholly-owned subsidiary of FDC, and hotel management firm Chroma Hospitality, Inc. (CHI), a joint venture with Archipelago International.

 

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Banking

Banking is another major pillar in the group’s entire portfolio. Consistent with the company’s vision of helping Filipinos attain their dreams, EastWest Bank is positioned as one of the most consumer-centric banks in the industry with focus on higher yielding retail and middle-market corporate segments. Consumer loans account for over 70 percent of its loan book which makes it unique compared to its peers. It ranked ninth largest among the listed universal banks in the Philippines by total assets as of year-end 2019 but holds leadership positions in consumer finance. It is estimated to be the second largest in auto loans, top three in personal loans and fifth largest in credit cards. It moved up a notch higher in auto loans following the acquisition of PBCom’s car loan portfolio in July 2019, particularly its dealer-generated auto lending book.

 

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Power

Power is a relatively new business for FDC that is proving to be a formidable and defensive play to the conglomerate’s portfolio. FDC re-entered the power industry in 2009 through the establishment of FDC Utilities, Inc. (FDCUI) and the construction of the largest baseload power plant within the PHIVIDEC Industrial Estate in the province of Misamis Oriental in Mindanao.

 

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Infrastructure

Part of FDC’s diversification strategy is to pursue opportunities in the Philippine infrastructure sector that are complementary to its existing businesses and accretive to its recurring income stream. FDC’s interest in the infrastructure space is through its participation as a consortium member in two major airport redevelopments in Luzon. Its first foray is its participation in the consortium which won the bid to operate and maintain the Clark International Airport (CIA).
 

 

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Sugar

Sugar is a stable, self-sustaining and self-funding business for the Filinvest group. In 2019, sugar operations contributed P299 million to FDC’s net income, growing by 88 percent year-on-year. FDC entered the Mindanao sugar market in 2007 through the acquisition of Pacific Sugar Holdings Corporation (PSHC), the holding company of the group’s sugar subsidiaries.

 

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Corporate Governance
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Filinvest Development Corporation was founded on the principles of good governance. It continues to abide by the core values of its founding father, Andrew L. Gotianun, of integrity, fairness and financial responsibility. These principles have been incorporated in the Company's Code of Ethics as well as in its Corporate Governance Manual. Today. FDC operates in a manner guided by its corporate core values of integrity, teamwork, professionalism, innovation, customer service and cost effectiveness.

For the year 2019, FDC complied with the Philippines Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) regulatory requirements. It is also in compliance with its Revised Manual for Corporate Governance. In particular, FDC wishes to highlight the following:

  1. the election of three (3) independent directors to the Board;

  2. the appointment of the members of the audit and risk management oversight, nomination, compensation, related-party transaction and corporate governance, and digital committees;

  3. the conduct of regular quarterly board meetings and special meetings, the faithful attendance of the directors at these meetings and their proper discharge of duties and responsibilities as such directors;

  4. the timely and accurate submission to the SEC and the PSE of reports and disclosures required under the Securities Regulation Code and the PSE Listing and Disclosure Rules;

  5. FDC's adherence to national and local laws pertaining to its operations;

  6. the observance of applicable accounting standards by FDC;

  7. the adoption of the Integrated ASEAN Corporate Governance Report (I-ACGR) in Corporate Governance Reporting;

  8. the adoption of the Related-Party Transaction Policy;

  9. the conduct of annual corporate governance seminar to its directors and senior management officers; and

  10. the enhancement of FDC's website to provide our shareholders and stakeholders with quicker reference to our corporate governance policies.

The company continuously reviews and updates its corporate governance manual, in compliance with SEC directives and to reflect current best practices. It filed a Revised Manual on Corporate Governance on 31 July 2014 and again on 31 May 2017.

In order to keep abreast of best practices on corporate governance, the members of the Board and key officers participated in the joint Annual Corporate Governance Training Program conducted by the Institute of Corporate Directors on 19 November 2019.

FDC, through its Board of Directors and in coordination with the Management, reviews its corporate governance practices annually and welcomes proposals, especially from institutions and entities such as the SEC, PSE and the Institute of Corporate Directors.

Leading the practice of good corporate governance is the Board of Directors.The Board of Directors of FDC is firmly committed to the adoption of and compliance with the best practices in corporate governance as well as the observance of all relevant laws, regulations and ethical business practices.

Nominations and Voting for the Board of Directors

The members of the Board are elected during the annual stockholders' meeting. The stockholders of FDC may nominate individuals to be members of the Board of Directors.

The Nominations Committee receives nominations for independent directors as may be submitted by the stockholders. After the deadline for the submission thereof, the Nomination Committee meets to consider the qualifications as well as the grounds for disqualification, if any, of the nominees based on the criteria set forth in FDC's Revised Manual on Corporate Governance and the Securities  Regulation Code. All nominations shall be signed by the nominating stockholders together with the acceptance and conformity by the would-be nominees. The Nomination Committee shall then prepare a Final List of Candidates enumerating the nominees who passed the screening. The name of the person or group of persons who recommended the nominees for independent directors shall be disclosed along with his or their relationship with such nominees.

Only nominees whose name appear on the Final List of Candidates shall be eligible for election as independent directors. No other nomination shall be entertained after the Final List of Candidates shall have been prepared. No further nomination shall be entertained or allowed on the floor during the annual meeting.

The conduct of the election of independent directors shall be in accordance with FDC's Manual on Corporate Governance. In 2008, FDC filed with the SEC its application for the amendment of the by-laws to include the procedure that will govern the nomination and election of the independent directors. This procedure is consistent with FDC's Revised Manual on Corporate Governance and Rule 38 of the Securities Regulation Code. The approval by the Commission on said application was issued on April 8, 2009. The power to amend the By-Laws has been delegated to the Board by the stockholders representing two-thirds (2/3) of FDC's outstanding capital stock in an annual meeting of said stockholders on 27 May, 1994.

It shall be the responsibility of the Chairman of the annual meeting to inform all stockholders in attendance of the mandatory requirement of electing independent directors. He shall ensure that independent directors are elected during the annual meeting. Specific slots for independent directors shall not be filled up by unqualified nominees. In case of failure of election for independent directors, the Chairman of the meeting shall call a separate election during the same meeting to fill up the vacancy.

A stockholder may vote such number of shares for as many persons as there are directors to be elected. He may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares, or he may distribute them on the same principle among as many candidates as he shall see fit; Provided, that the total number of votes cast by him shall not exceed the umber of shares owned by him as shown in the books fo FDC multiplied by the whole number of directors to be elected.

The directors of FDC are elected at the annual stockholders' meeting, to hold office until their respective successors have been duly appointed or elected and qualified. Vacancies in the Board occurring mid-term are filled as provided in the Revised Corporate Code and FDC's Revised Manual on Corporate Governance. Officers and committee members are appointed or elected by the Board of Directors typically at its first meeting following the annual stockholders' meeting, each to hold office until his successor shall have been duly elected or appointed and qualified.

Independent Directors

Before the annual meeting, a stockholder of FDC may nominate individuals to be independent directors, taking into account the following guidelines:

  1.  "Independent director" means a person who, apart from his feet and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgement in carrying out his responsibilities as director in any corporation that meets the requirements of Section 17.2 of the Securities Regulation Code and includes, among others, any person who:

    1. Is not a director or officer or substantial stockholder of FDC or of its related companies or any of its substantial shareholders (other than as an independent director of any of the foregoing);

    2. Is not a relative of any director, officer or substantial stockholder of FDC, any of its related companies or any of its substantial shareholders. For this purpose, "relative" includes spouse, parent, child, brother, sister, and the spouse of such child, brother or sister;

    3. Is not acting as a nominee or representative of a substantial shareholder of FDC, any of its related companies or any of its substantial shareholders;

    4. Has not been employed in an executive capacity by FDC, any of its related companies or any of the substantial shareholders within the last two (2) years;

    5. Is not related as a professional adviser by FDC, any of its related companies or any of its substantial shareholders within the last two (2) years, either personally or through his firm;

    6. Has not engaged and does not engage in any transaction with FDC or any of its related companies or any of its substantial shareholders, whether by himself or with other persons or through a firm of which he is a partner or a company of which he is a director or substantial shareholder, other than transactions which are conducted at arms-length and are immaterial or insignificant.

  2. When used in relation to FDC subject to the requirement above:

    1. "Related company" means another company which is: (a) its holding company, (b) its subsidiary, or (c) a subsidiary of its holding company; and

    2. "Substantial shareholder" means any person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of its equity security.

  3. An independent director of FDC shall have the following qualifications:

    1. He shall have at least one (1) share of stock of FDC;

    2. He shall be at least a college graduate or he shall have been engaged in or exposed to the business of FDC for at least five (5) years;

    3. He shall possess integrity/probity; and

    4. He shall be assiduous.

  4. No person enumerated under Section II (5) of the Revised Manual of Corporate Governance shall qualify as an independent director. He shall likewise be disqualified during his tenure under the following instances or causes:

    1. He becomes an officer or employee of FDC, or becomes any of the persons enumerated under items (A) hereof:

    2. His beneficial security ownership exceeds 10% of the outstanding capital stock of FDC;

    3. He fails, without any justifiable cause, to attend at least 50% of the total number of board meetings, during his incumbency unless such absences are due to grave illness or death of an immediate family member;

    4. If he becomes disqualified under any of the grounds stated in FDC's Revised Manual on Corporate Governance.

  5. Pursuant to SEC Memorandum Circular No. 09, Series of 2011, which took effect on January 2, 2012, the following additional guidelines shall be observed in the qualification of individuals to serve as independent directors.

    1. There shall be no limit in the number of covered companies that a person may be elected as independent director, except in business conglomorates where an independent director can be elected to only five (5) companies of its conglomerate, i.e., parent company, subsidiary or affiliate;

    2. Independent directors can serve as such for five (5) consecutive years, provided that service for a period of at least six (6) months shall be equivalent to one (1) year, regardless of the manny by which the independent director position was relinquished or terminated;

    3. After completion of the five-year period, an independent director shall be ineligible for election as such in the same company unless the independent director has undergone a “cooling off” period, provided, that during such period, the independent director concerned has not engaged in any activity that under existing rules disqualifies a person from being elected as independent director in the same company;

    4. An independent director re-elected as such in the same company after the “cooling off” period can serve for another five (5) consecutive years under the conditions mentioned in paragraph (ii) above;

    5. After serving as independent director for ten (10) years, the independent director shall be perpetually barred from being elected as such in the same company, without prejudice to being elected as an independent director in other companies outside the business conglomerate;

    6. All previous terms served by existing independent directors shall not be included in the application of the term limits.

  6. Pursuant to SEC Memorandum Circular No. 9, Series of 2011, as amended by SEC Memorandum Circular No. 4, Series of 2017, the following additional guidelines shall be observed in the qualifications fo individuals to serve as independent directors;

    1. There shall be no limit in the number of covered companies that a person may be elected as Independent Directors, except in business conglomerates where an ID can be elected to only five (5) companies of the conglomerate, i.e., parent company, subsidiary or affiliate;

    2. The independent director shall serve for a maximum cumulative term of nine (9) years;

    3. After this, the independent director shall be perpetually barred from re-election as such in the same company, but may continue to qualify as non-independent director.

    4. In the instance that a company wants to retain an independent director who has served for nine (9) years, the Board should provide the meritorious justification/s and seek shareholders’ approval during the annual shareholders’ meeting; and

    5. The reckoning of the cumulative nine-year term is from 2012.

Members of the Board of Directors, Attendance and Committee Memberships

The following table lists down the members of the Board of Directors and their attendance in Board Meetings in 2019

Board Member

Name of Director

Date of Election

No. of Meetings Held During the Year

No. of Meetings Attended

% Attendance

Chairman

Jonathan T. Gotianun

April 26, 2019

7

7

100%

Member

L. Josephine Gotianun-Yap

April 26, 2019

7

7

100%

Member

Andre T. Gotianun, Jr.

April 26, 2019

7

6

86%

Member

Micheal Edward T. Gotianun

April 26, 2019

7

7

100%

Independent

Val Antonio B. Suarez

April 26, 2019

7

7

100%

Independent

Virginia T. Obcena

April 26, 2019

7

7

100%

Independent

Claire A. Huang*

April 26, 2019

3

3

100%

*Ms. Claire A. Huang was elected as member of the Board of Directors on April 26, 2019

 

The following table lists down the attendance of the Board of Directors during the April 26, 2019 Annual Stockholders’ Meeting and their memberships in the different comittees:

Name of Director

Attendend May 4, 2018 Annual Stockholders’ Meeting

Committee Membership

Jonathan T. Gotianun

Yes

Executive Committee (Chairman), Audit & Risk Management Oversight Committee, Compensation Committee, Nomination Committee, Digital Committee

L. Josephine Gotianun-Yap

Yes

Executive Committee, Audit & Risk Management Oversight Committee, Compensation Committee, Nomination Committee, Digital Committee

Andrew T. Gotianun, Jr.

Yes

Executive Committee, Related-Party Transaction & Corporate Governance Committee

Michael Edward T. Gotianun

Yes

Executive Committee

Val Antonio B. Suarez
Independent Director

Yes

Audit & Risk Management Oversight Committee, Compensation Committee (Chairman), Nomination Committee (Chairman), Related-Party Transaction & Corporate Governance Committee (Chairman)

Virginia T. Obcena
Lead Independent Director

Yes

Audit & Risk Management Oversight Committee (Chairman), Compensation Committee, Nomination Committee, Related-Party Transaction & Corporate Governance Committee

Claire A. Huang
Independent Director

No

Related-Party Transaction & Corporate Governance Committee, Digital Committee (Chairman)

*Ms. Claire A. Huang was elected as member of the Board of Directors on April 26, 2019

 

Duties and Responsibilities of the Different Board Committees

Committee Members

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee

Chairman

Jonathan T. Gotianun

April 26, 2019

7

7

100%

1 year

Member (ED)

L. Josephine Gotianun-Yap

April 26, 2019

7

7

100%

1 year

Member (NED)

Andrew T. Gotianun, Jr.

April 26, 2019

7

4

57%

1 year

Member (ED)

Michael Edward T. Gotianun

April 26, 2019

7

5

71%

1 year

(*) The Committee members are elected annually

The function, duties and responsibilities of the Board of Directors may be delegated, to the fullest extent permitted by law, to an Executive Committee to be established by the Board of Directors. The Executive Committee shall consist of five (5) members, and least three (3) of whom shall be members of the Board of Directors. All members of the Executive Committee shall be appointed by and under the control of the Board if Directors.

The Executive Committee may act on such specific matters within the competence of the Board of Directors as may be delegated to it by a majority vote of the Board of Directors, except with respect to:

  1. approval of any action for which shareholders’ approval is required;

  2. the filing of vacancies in the Board of Directors;

  3. the amendment or repeal of these by-laws or the adoption of new by-laws;

  4. the amendement or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable; and

  5. the distribution of cash dividends to shareholders.

The act of the Executive Committee on any matter within its competence shall be valid if (i) it is approved by the majority vote of all its members in attendance at a meeting duly called wher a quorum is present and acting throughout, or (ii) it bears the written approval for conformity of all its incubment members without necessity for a formal meeting.

The Executive Committee shall hold its regular meeting at least once a month or as often as it may determine, in the principal office of the corporation or at such other place as may be designated in the notice. Any member of the Executive Committee may, likewise, call a meeting of the Executive Committee at any time. Notice of any meeting of the Executive Committee shall be given at least seven (7) business days prior to the meeting or such shroter notice period as may be mutually agreed. The notice shall be accompanied by (i) a propsed agenda or statement of purpose and (ii) where possible, copies of all documents, agreements and information to be considered at such meeting.

Committee Members

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee (*)

Chairman (ID)

Virginia T. Obcena

April 26, 2019

4

4

100%

1 year

Member (ED)

L. Josephine Gotianun-Yap

April 26, 2019

4

4

100%

1 year

Member (NED)

Jonathan T. Gotianun

April 26, 2019

4

3

75%

1 year

Member (ID)

Val Antonio B. Suarez

April 26, 2019

4

4

100%

1 year

(*) The committee members are elected annually.

 

The Board constituted an Audit and Risk Management Oversight Committee composed of at least three (3) director-members with accounting and financial background, one of whome mus be an independent director and another must have related audit experience.

The Chairman of this Committee should an independent director. He is responsible for inculcating in the minds of the Board members the importance of management responsiblities in maintaining a sound system of internal control and the Boards’ oversight responsibility.

Duties and Responsibilities:

  • Provide oversight financial management functions specifically in areas of managing credit, market, liquidity, operational, legal and other risks of the Company, and crisis management;

  • Provide oversight of the Company’s internal and external auditors;

  • Review and approve audit scope and frequency, and the annual internal audit plan;

  • Discuss with the external auditor before the audit commences the nature and scope of the audit, and ensure coordination where more than one (1) audit firm is involved;

  • Set up an internal audit department and consider the appointment of an internal auditor as well as an independent external auditor, the audit fee and any question of resignation or dismissal;

  • Monitor and evaluate the adequacy and effectiveness of the Company’s internal control system;

  • Receive and review reports of internal and external auditors, and regulatory agencies, where applicable, and ensure that management is taking appropriate corrective actions, in a timely manner, in addressing control and compliance functions with regulator agencies;

  • Review the quarterly, half-year and annual financial statements before submission to the Board with particular focus on the following matters:

    • Any change/s in accounting policies and practices

    • Major judgemental areas

    • Significant adjustments resulting from the audit

    • Going concern assumptions

    • Compliance with accounting standards

    • Compliance with tax, legal and regulatory requirements

  • Coordinate, monitor and facilitate compliance with existing laws, rules and regulations;

  • Evaluate and determine non-audit work by external auditor and keep under review the non-audit fees paid to the external auditor both in relation to their significance to the auditor and in relation to the Company’s total expenditure on consultancy. The non-audit work should be disclosed in the Annual Report; and

  • Establish and identify the reporting line of the chief audit executive so the the reporting level allows the internal audit activity to fulfill its responsibilities. The chief audit executive shall report directly to the Audit Committee functionally. The Audit Committee shall ensure that the internal auditors shall have free and full access to the Company’s records, properties and personnel relevant to the internal audit activity, and that the internal audit activity should be free from interference in determining the scope of internal auditing examinations, performing work, and communicating results, and shall provide a venue for the Audit Committee to review and approve the annual internal audit plan.

Committee Members

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee (*)

Chairman (ID)

Val Antonio B. Suarez

April 26, 2019

4

4

100%

1 year

Member (ED)

L. Josephine Gotianun-Yap

April 26, 2019

4

4

100%

1 year

Member (NED)

Jonathan T. Gotianun

April 26, 2019

4

4

100%

1 year

Member (ID)

Virginia T. Obcena

April 26, 2019

4

4

100%

1 year

(*) The committee members are elected annually.

The Board constituted a Compensation Committee composed of at least three (3) directors-members, one of whom must be an independent director.

Duties and Responsibilities:

  • Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors, and provide oversight over remuneration of senior management and other key personnel ensuring that compensation is consistent with the Company’s culture, strategy and control environment;

  • Designate amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the Company successfully;

  • Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of individual directors, if any, and officers;

  • Develop a form on Full Business Interest Disclosure as part of the pre-employment requirements for all incoming officers, which, among others, compel all officers to declare under the penalty of perjury all their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired;

  • Disallow any director to divide his or her own remuneration;

  • Provide in the Company’s annual reports, information and proxy statements a clear, concise and understandable disclosure of compensation of its executive officers for the previous fiscal year and ensuing year; and

  • Review the existing Human Resources Development or Personnel Handbook, to the strengthen provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in there respective posts.

Committee Members

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee (*)

Chairman (ID)

Val Antonio B. Suarez

April 26, 2019

2

2

100%

1 year

Member (ED)

L. Josephine Gotianun-Yap

April 26, 2019

2

2

100%

1 year

Member (NED)

Jonathan T. Gotianun

April 26, 2019

2

2

100%

1 year

Member (ID)

Virginia T. Obcena

April 26, 2019

1

1

100%

1 year

Member (Ex officio)

Rizalangela L. Reyes

April 26, 2019

2

2

100%

1 Year

*Ms. Virginia T. Obcena was elected as member of the Nomination Committee on April 26, 2019

** The Committee members are elected annually


 

The Board constituted a Nomination Committee consisting of at least three (3) director-members, one of whom shall be an independent director. The Head of the Human Resources Department shall be a non-voting ex-officio member.

The Nomination Committee may review and evaluate the qualifications of all persons nominated to the Board, as well as those nominated to other positions requiring appointment by the Board, and provide assessment on the Boards’ effectiveness in directing the process of renewing and replacing the Boards’ members.

The Nomination Committee may consider the following guidelines in the determination of the number of directorships for the Board:

  • The nature of the business of the corporations in which he is a director;

  • Age of the director;

  • Number of directorships/active memberships and officerships in other corporations or organizations; and

  • Possible conflicts of interest

The Chief Executive Office and other executive directors shall submit themselves to a low indicative limit on memberships in other corporate boards. The same low limit shall apply to independent, non-executive directors who serve as full-time executives in other corporations. In any case, the capacity of directors to serve with diligence shall not be compromised.

The Nomination Committee may pre-screen and shortlist all candidates nominated to become a member of the Board of Directors, taking into account the qualifications and the grounds for disqualifications as set forth in FDC’s Manual of Corporate Governance and the Securities Regulation Code.

The Nomination Committee shall promulgate the guidelines or criteria to govern the conduct of the nomination for members of the Board of Directors. The same shall be properly disclosed in the Company’s information or proxy statement or such other reports required to be submitted to the Securities and Exchange Commission (SEC)

The Nomination of independent directors shall be conducted by the Committee before the stockholders’ meeting. All recommendations shall be signed by the nomination stockholders together with the acceptance and conformity by the would-be nominees.

The Committee shall pre-screen the qualifications and prepare a final list of all candidates and put in place screening policies and parameters to enable it to effectively review the qualifications of the nominees for independent directors as set forth in the Company’s Manual on Corporate Governance.

After the nomination, Committee shall prepare a Final List of Candidates which shall contain all the information about all the nominees for independent directors, which shall be made available to the SEC and all stockholders’ through the filing and distribution of the Information Statement, or in such reports the Company is required to submit to the SEC. The name of the person or group of persons who recommended the nomination of the independent director shall be identified in such report, including any relationship with the nominee.

Committee

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee (*)

Chairman (ID)

Val Antonio B. Suarez

April 26, 2019

2

2

100%

1 year

Member (NED)

Andrew T. Gotianun, Jr.

April 26, 2019

2

2

100%

1 year

Member (ID)

Virginia T. Obcena

April 26, 2019

2

2

100%

1 year

Member (ID)

Claire A. Huang

April 26, 2019

1

1

100%

1 year

(*) The committee members are elected annually

 

The Related Party Transaction Committee is composed of at least three (3) non-executive directors, two (2) of whom must be independent, including the Chairman of the Committee.

The Related Party Transaction Committee has the following duties and responsibilities:

  • Conduct continuous evaluation and monitoring of existing relations among counterparties to ensure that all related parties are identified, RPTs are monitored, and subsequent changes in relationship with counterparties, should be reflected in the relevant reports to the Board and the SEC;

  • Evaluate all material RPTs to ensure that these are transacted on an arm’s length basis and that no corporate or business resources of the company are misappropriated or misapplied, and to determine any potentials reputational risk issues that may arise as a result of or in connection with the transactions.

In evaluating RPTs, the Committee may take into account the following:

  • The related party’s relationship to the Company and interest in the transaction;

  • The material facts of the proposed RPT, including the proposed aggregate value of such transaction;

  • The benefits to the Company of the proposed RPT;

  • The availability of other sources of comparable products or services;and

  • An assessment of whether the proposed RPT is on terms and conditions that are comparable to the terms generally available to an unrelated party under similar circumstances. The company should have an effective price discovery system in place and exercise due diligence in determining a fair price for RPTs.

  • Ensure that appropriate disclosures is made to the regulating and supervising authorities relating to the Corporation’s RPT exposures, and policies on conflicts of interest or potential conflicts of interest;

  • Report to the Board, on a regular basis, the status and aggregate exposures to each related party, as well as the total amountof exposures to all related parties; and

  • Oversee the implementation of the system for identifying, monitoring, measuring, controlling, and reporting RPTs, including a periodic review of RPT policies and procedures.

Committee Members

Office

Name

Date of Appointment

No. of Meetings Held

No. of Meetings Attended

% Attendance

Length of Service in the Committee (*)

Chairman (ID)

Claire A. Huang

April 26, 2019

2

2

100%

1 year

Member (ED)

L. Josephine Gotianun-Yap

April 26, 2019

2

2

100%

1 year

Member(ED)

Jonathan T. Gotianun

April 26, 2019

2

2

100%

1 year

(*) The Committee members are elected annually

Compensation of the Board of Directors and Officers

Except for a per diem being paid to each non-executive director of Php50,000 for every Board committee meeting attended and Php100,000 for every Board meeting attended, there are no other arrangements for the payment of compensation or remuneration to the directors in their capacity as such. There are no outstanding warrants or options held by the Company’s CEO, the above-named executive officers, and all officers and directors as a group.

Meanwhile, the aggregate compensation incurred or paid during the last two fiscal years to the non-independent directors and top officers of FDC are as follows:

Name and Principal Position

Year

Salary

Bonus

Other Annual Compensation

Total

Josephine G. Yap
(President/CEO)

Jonathan T. Gotianun
(Chairman)

Nelson M. Bona
(EVP, CFO, Treasurer and Compliance Officer)

Daniel Ang Tan Chai
(SVP/Deputy CFO)

Michael T. Gotianun
(Director/VP)

 

 

 

 

 

CEO and top 4 highest compensated officers

2020-Estimated

2019

2018

P66.1M

P62.9M

P54.8M

P8.8M

P8.4M

P7.5M

 

P74.9M

P71.3M

P62.3M

All officers and directors as a group unnamed

2020-Estimated

2019

2018

P87.2M

P83.0M

P66.8M

P12.0M

P11.4M

P9.3M

 

P99.2M

P94.4M

P76.1M

Mr. Andrew T. Gotianun Jr., Mr. Jonathan T. Gotianun, Mr. Michael Edward T. Gotianun and Ms. Lourdes Josephine Gotianun Yap are siblings.

The auditing firm SyCip Gorres Velayo & Co. (SVG) is the current independent auditor of FDC. There have been no disagreements with SVG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

FDC, in compliance with SRC Rule 68(3)(b)(iv) relative to the five-year rotation requirement of its external auditors has designated Mr. Michael C. Sabado as its engagement partner starting CY 2018. The representatives of SVG were present at the annual meeting held last April 26, 2018 to respond to appropriate questions at the meeting.

  1. Audit and Audit-Related Fees
    In consideration for the following professional services rendered by SVG as the independent auditor of FDC:

    1. The audit of FDC’s annual financial statements and such services normally provided by an external auditor in connection with statutory and regulatory filings or engagements for those fiscal years;

    2. Other assurance and related services by SVG that are reasonably related to the performance of the audit or review of FDC’s financial statements.

    The aggregate fees billed to the Group of professional services rendered by the external auditor for the examination of the annual financial statements amounted to Php11.2 million and Php9.3 million, net of VAT in 2019 and 2018, respectively.

    In 2019 and 2018, additional fees for other services which pertained to compliance review amounted to Php27.9 million and Php24.0 million, respectively.

  2. Tax Fees
    The fees billed to the Group for tax services which pertained to compliance review amounted to Php8.6 million and Php6.8 million in 2019 and 2018, respectively.

  3. All Other Fees
    There are no other fees bill in each of the last two (2) years for products and services provided by the external auditor, other than services reported under items mentioned above.

  4. Approval Policies and Procedures for Independent Accountant’s Services of Management/ Audit and Risk Management Oversight Committee

  5. In giving its stamp of approval to the audit services rendered by the independent accountant and the rate of the professional fees to be paid, the Audit and Risk Management Oversight Committee, with inputs from the management of FDC, makes a prior independent assessment of the quality of audit services previously rendered by the accountant, the complexity of the transactions subject of the audit, and the consistency of the work output with generally accepted accounting standards.

The Company recognizes that the most cogent proof of good corporate governance is that whihc is visible to the eyes of its investors. Therefore, the following provisions are issued for the guidance of all internal and external parties concerned, as governance covenant between the Company and all its investors:

The Board shall be committed to respect the following rights to the stockholders:

  1. Voting Right

    • Shareholders shall have the right to elect, remove and replace directors and vote on certain corporate acts in accordance with the Revised Code.

    • Cumulative voting is mandatory in the election of directors.

    • A director shall not be removed without cause if it will deny minority shareholders representation in the board.

  2. Power of Inspection
    All shareholders shall be allowed to inspect corporate books and records including minutes of Board meetings and stock registries, in accordance with the Revised Corporation Code, during business hours and upon prior written notice to the Company, for legal purposes.

    All shareholders shall be furnished with annual reports, including financial statements, without cost or restrictions.

  3. Right to information

    • The shareholders shall be provided, upon request, with periodic reports which disclose personal and professional information about the directors and officers and certain other matters such as their holdings of the Company’s shares, dealings with the Company, relationships among directors and key officers, and the aggregate compensation of directors and officers.

    • The minority shareholders shall be granted the right to propose the holding of a meeting, and the right to propose items in the agenda of the meeting, provided the items are for legitimate business purposes.

    • The minority shareholders shall have access to any and all information relating to matters for which the management is accountable for and to those relating to matters for which the management shall include such information and, if not included, then the minority shareholders shall be allowed to propose to include such matters in the agenda of stockholders’ meeting, being within definition of “legitimate purposes”.

  4. Right to Dividends

    • Shareholders shall have the right to receive dividends subject ot the discretion of the Board.

    • The commission may direct the Company to declare dividends when its retained earnings shall be in excess of 100% of its paid-in capital stock, except: i) when justified by definite corporate expansion projects or programs approved by the board; or ii) when the Company is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its consent, and such consent has not been secured; or iii) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the Company, such as when there is a need for special reserve for probable contingencies.

  5. Appraisal Right
    The shareholders shall have appraisal right or the right to dissent and demand payment of the fair value of their shares in the manner provided for under the Revised Corporation Code of the Philippines, under any of the following circumstances:

    • In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence.

    • In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all substantially all of the corporate property and assets as provided in the Revised Corporation Code;

    • In case of investment of corporate funds in any other corporation or business or for any purpose other than the Company’s primary purpose; and

    • In case of merger or consolidation

  6. The Board should be transparent and fair in the conduct of the annual and special shareholders’ meeting of the corporation.

    The shareholders should be encouraged to personally attend such meetings. If they cannot attend, they should be apprised ahead of time of their right to appoint a proxy. Subject to the requirements of the By-Laws, the exercise of that right shall not be unduly restricted and any doubt about the validity of a proxy should be resolved in the shareholders’ favor.

  7. It shall be the duty of the directors to promote shareholder rights, remove impediments to the exercise of shareholders’ rights and allow possibilities to seek redress for violation of their rights. They shall encourage the exercise of shareholders’ voting rights and the solution of collective action problems through appropriate mechanisms. They shall be instrumental in removing excessive costs and other administrative or practical impediments to shareholders participating in meetings and/or voting in person. The directors shall pave the way for the electronic filing and distribution of shareholder information necessary to make informed decisions subject to legal constraints.

While the Board endeavors to declare dividends each year, the payment of cash dividends depends upon the Company’s earnings, cash flow, financial condition, capital investment requirements and other factors (including certain restrictions on dividends imposed by the terms of loan agreements).

On July 2, 2015, FDC paid cash dividends of Php0.0500 per share or a total of Php465.87 million to all shareholders on record as of June 10, 2015. This is equivalent to 12.4% of the Php3.744 billion in net income attributable to parent generated in 2014.

On June 21, 2016, FDC paid cash dividends of Php0.0516 per share or a total of P480.78 million to all shareholders on record as of May 27, 2016. This is equivalent to 11.0% of the P4.37 billion net income attributable to parent generated in 2015

On June 21, 2017, FDC paid cash dividends of Php0.059 per share or a total of Php550.27 million to all stockholders on record as of May 28, 2017. This is equivalent to 10.0% of the Php5.50 billion net income attributable to parent generated in 2016.

On June 28, 2018, FDC paid cash dividends of Php0.0765 per share or a total of Php661.62 million to all stockholders on record as of June 3, 2018. This is equivalent to 10.0% of the Php6.6 billion net income attributable to parent generated in 2017.

On June 19, 2019, FDC paid cash dividends of Php0.10 per share or a total of Php864.85 million to all stockholders on record as of May 26, 2019. This is equivalent to 8.9% of the Php9.8 billion net income attributable to parent generated in 2018.

Notice of Annual Stockholders’ Meeting

On January 23, 2019, FDC disclosed to the Philippine Stock Exchange that its Board of Directors had fixed the date of the Annual Stockholders’ Meeting on April 26, 2019 with the record date set on March 20, 2019.

Stockholders were informed that the Annual Stockholders’ Meeting for 2019 would be held at 9:00 a.m at Ballrooms 1& 2, Crimson Hotel Filinvest City, Manila, Entrata Urban Complex, 2609 Civic Drive, Filinvest City, Alabang, Muntinlupa City.

Procedures During the Annual Stockholders’ Meeting

The following was the agenda of the Annual Stockholders’ Meeting last April 26, 2018:

  1. Call to order

  2. Proof of Notice of Meeting

  3. Certification of Quorum

  4. Approval of the Minutes of the Annual Stockholders’ Meeting held on May 4, 2018

  5. Presentation of the President’s Report

  6. Ratification of the Audited Financial Statements for the year ended December 31, 2018

  7. Ratification of the Acts and Resolutions of the Board of Directors, Board Committees and Management from the Date of the Last Annual Stockholders’ Meeting up to April 26, 2019

  8. Election of the Members of the Board of Directors, including three (3) Independent Directors for 2019-2020

  9. Appointment of the External Auditor

  10. Approval by the stockholders of the grant of authority to the Board of Directors to conduct an equity offering by FDC (such as, but not limited to, a placing and subscription transaction and in such instance, waiver by all its stockholders of the Philippine Stock Exchange (PSE) requirement to conduct a rights or public offering for shares issued by FDC pursuant to such equity offering) under such terms and conditions that the Board of Directors may determine, inclusive of: (i) authority to fix the number of shares for such equity offering in such number of shares as may be required by FDC for funding its projects; (ii) delegation of authority to the President to appoint advisers, consultants, underwriters, lead managers, arrangers, global coordinators, stabilization agent, and other relevant parties for the equity offering; (iii) determination of the offering price based on generally accepted pricing formulas such as but not limited to publicly traded comparables (e.g. Enterprise Value/EBITDA/ Price/ Earnings), discounted cash flow or net asset value, and any discount.premium thereto, as may be appropriate or relevant per prevailing market conditions; and (iv) authority to list the shares issued in connection with the equity offering with the PSE

  11. Other Matters

  12. Adjournment

Only stockholders of record as of March 20, 2019 were entitled to attend and vote in the said meeting.

On the same day, right after the stockholders’ meeting, FDC disclosed to the Philippine Stock Exchange the results of the annual stockholders’ meeting which included the following:

  1. Approval of the Minutes of the Annual Stockholders’ Meeting held on May 4, 2018;

  2. Ratification of the Audited Financial Statements for the year ended December 31, 2018;

  3. Declaration of cash dividends in the amount of Php0.10 per share to all stockholders of record as of May 26, 2019, with payments due on June 19, 2019;

  4. Ratification of all the acts, resolutions and proceedings of the Board of Directors, Board Committees and Management from the date of the last annual stockholder’s meeting up to April 26, 2019;

  5. Appointment of Sycip Gorres Velayo & Co. As the independent external auditor of FDC for the year 2019; and

  6. Approval by the stockholders of the grant of authority to the Board of Directors to conduct an equity offering by FDC (such as, but not limited to, a placing and subscription transaction and in such instance, waiver by all its stockholders of the Philippine Stock Exchange (PSE) requirement to conduct a rights or public offering for shares issued by FDC pursuant to such equity offering) under such terms and conditions that the Board of Directors may determine, inclusive of: (i) authority to fix the number of shares for such equity offering in such number of shares as may be required by FDC for funding its projects; (ii) delegation of authority to the President to appoint advisers, consultants, underwriters, lead managers, arrangers, global coordinators, stabilization agent, and other relevant parties for the equity offering; (iii) determination of the offering price based on generally accepted pricing of formulas such as but not limited to publicly traded comparables (e.g. Enterprise Value/ EBITDA/ Price/ Earnings), discounted cash flow or net asset value, and any discount/premium thereto, as may be appropriate or relevant per prevailing market conditions; and (iv) authority to list the shares issued in connection with the equity offering with the PSE.

FDC likewise disclosed that the following were elected as directors to serve for the period 2019-2020 and until their successors shall have been duly elected and qualified:

  1. Andrew T. Gotianun, Jr.

  2. Jonathan T. Gotianun

  3. 3. L. Josephine Gotianun-Yap

  4. Michael Edward T. Gotianun

  5. Val Antonio B. Suarez (as independent director)

  6. Virginia T. Obcena (as independent director)

  7. Claire A. Huang (as independent director)

FDC made another disclosure to the Philippine Stock Exchange regarding the delcaration of the Board of Directors of a cash dividend for all stockholders on record as of May 26, 2019 in the amount of Php0.10 per share. The payment date was set on June 19, 2019.

FDC full complied with the Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC) regulatory requirements. Below is the Company’s Reportorial Compliance report:

Type of Report

Number of Filings

Financials

 

Annual Report (17-A)

1

Quarterly Report (17-Q)

3

2018 Audited Financail Statements

1

Request for extension in filing 17-A, 17-Q

None

 

 

Ownership

 

Annual List of Stockholders – for Annual Stockholders’ Meeting

1

Foreign Ownership Monitoring Report

14

Public Ownership Report

12

Report on Number of Shareholders and Board Lot

12

Statement of Changes in Beneficial Ownership of Securities (23-B)

4

Top 100 Stockholders’ List

4

 

 

Notices – Stockholders’ Meeting/Briefings/Dividends

None

Notice of Annual/Special Stockholders’ Meeting

1

Dividend Notice (part of disclosure on Results of Stockholders’ Meeting)

1

 

 

Other Disclosures

 

Certification – Qualifications of Independent Directors

1

Clarifications of News Articles

2

Definitive Information Statement (20-IS)

1

General Information Sheet

1

Preliminary Information Statement (20IS)

1

SEC Form 17-C (Current Report)

Which includes the following:

 

a) Results of Annual Stockholders Meeting/Board Meetings

b) Press Release

c) Other Matters

23


 

FDC’s website, www.filinvestgroup.com, makes available to the public current information on the Company, including details of its operations.

The Investor Relations section of the website provides information on financial statements, press releases, declaration of dividends, ownership structure and any changes in the ownership of major shareholders and officers, a notice of analysts’ briefings, other reportorial requirements by the Philippine Stock Exchange.

The contact details of the Investor Relations Department are available on the website.

Copy Tab ID: #paragraph-item-41
Consolidated Financial Statements

(Amounts in Thousands of Pesos)

(Amounts in Thousands of Pesos, Except Earnings Per Share Figures)

(Amounts in Thousands of Pesos)

 

(Amounts in Thousands of Pesos)

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Board of Directors and Senior Management

Board of Directors

Top from Left:
Mercedes T. Gotianun
Chairperson Emerita

Jonathan T. Gotianun
Chairman

Josephine Gotianun Yap
Director
President & CEO


Andrew T. Gotianun, Jr.
Director
Bottom from Left:
Michael Edward T. Gotianun
Director

Claire A. Huang
Independent Director

Virginia T. Obcena
Independent Director

Val Antonio B. Suarez
Independent Director

Mercedes T. Gotianun

Chairperson Emerita

Jonathan T. Gotianun

Chairman

Josephine Gotianun Yap

Director / President & CEO

Andrew T. Gotianun

Director

Michael Edward T. Gotianun

Director

Claire A. Huang

Independent Director

Virginia T. Obcena

Independent Director

Val Antonio B. Suarez

Independent Director

Subsidiary Heads

Top from Left:

Josephine Gotianun Yap
President & CEO
Filinvest Land, Inc. (FLI)
Filinvest Hospitality Corporation (FHC)

President
Luzon International Premier Airport
Development Corporation (LIPAD)
Philippine DCS Development Corporation
(PDDC)

Jonathan T. Gotianun President & CEO
Pacific Sugar Holdings Corporation (PSHC)

Antonio C. Moncupa, Jr.
Vice Chairman, President & CEO
EastWest Banking Corporation (EWBC)

Catherine A. Ilagan
President & COO
Filinvest Alabang, Inc. (FAI)

Bottom from Left:

Juan Eugenio L. Roxas
President & CEO
FDC Utilities, Inc. (FDCUI)
Filinvest-Hitachi Omni Waterworks, Inc. (FLOW)
Countrywide Water Services, Inc. (CWSI)


President
Filinvest-Engie Renewable Energy Enterprise, Inc. (FREE)

Emerlindo S. Andal, Jr.
President & COO, Corporate Technologies, Inc. (CTI)

Josephine Gotianun Yap

President & CEO, Filinvest Land, Inc (FLI), Filinvest Hospitality Corporation (FHC)

Jonathan T. Gotianun

President & CEO, Pacific Sugar Holdings Corporation (PSHC)

Antonio C. Monucupa, Jr.

Vice Chairman, President & CEO, EastWest Banking Corporation (EWBC)

Catherine A. Ilagan

President & COO, Filinvest Alabang, Inc. (FAI)

Juan Eugenio L. Roxas

President & CEO, FDC Utilities, Inc. (FDCUI)

Emerlindo S. Andal, Jr.

President & COO, Corporate Technologies, Inc. (CTI)

Senior Management

Top from Left:

Nelson M. Bona
EVP - Group CFO, Treasurer and
Compliance Officer

Daniel L. Ang Tan Chai
SVP - Deputy CFO

Renato Rex Xavier G. Marzan
SVP - Group Chief Digital Officer
& Chief Innovation Officer

Michael Edward T. Gotianun
Vice President

Bottom from Left:

Bernadette M. Ramos
VP - Group Real Estate Marketing

Virginia A. Cayanga
VP - Risk Management

Nelson M. Bona

EVP - Group CFO, Treasurer and Compliance Officer

Daniel L. Ang Tan Chai

SVP - Deputy CFO

Renato Rex Xavier G. Marzan

SVP - Group Chief Digital Officer & Chief Innovation Officer

Michael Edward T. Gotianun

Vice President

Bernadette M. Ramos

VP - Group Real Estate Marketing

Virginia A. Cayanga

VP - Risk Management

Real Estate Group

Top  from Left:

Josephine Gotianun Yap
President & CEO, FLI

Catherine A. Ilagan
President & COO, FAI

Ma. Carmen M. Rosal
President, ProExcel
Property Managers, Inc. (PPMI)

Arnulfo N. delos Reyes
President, Dreambuilders Pro, Inc. (DPI)

Middle from Left:

Maricel B. Lirio
EVP and COO - Cyberzone Properties, Inc. (CPI)

Tristaneil D. Las Marias
EVP - Chief Strategy Officer, FLI

Ana Venus A. Mejia
FSVP - Chief Finance Officer,
FLI & FAI

Vince Lawrence L. Abejo
FSVP - Chief Sales and Marketing Officer, FLI

Bottom from Left:
Francis V. Ceballos
SVP - Business Group Head, FLI

Winnifred H. Lim
SVP – Chief Technical Planning Officer, FLI & FAI

Romeo T. Bautista
SVP - Bids & Awards Head, FLI & FAI

Joselito F. Santos
SVP - Business Group Head, FLI

Josephine Gotianun Yap

President & CEO, FLI

Catherine A. Iligan

President & COO, FAI

Ma. Carmen M. Rosal

President, ProExcel Property Managers, Inc. (PPMI)

Arnulfo N. delos Reyes

President, Dreambuilders Pro, Inc. (DPI)

Maricel B. Lirio

EVP and COO - Cyberzone Properties, Inc. (CPI)

Tristaneil D. Las Marias

EVP - Chief Strategy Officer, FLI

Ana Venus A. Mejia

FSVP - Chief Finance Officer, FLI & FAI

Vince Lawrence L. Abejo

FSVP - Chief Sales and Marketing Officer, FLI

Francis V. Ceballos

SVP - Business Group Head, FLI

Winnifred H. Lim

SVP - Chief Technical Planning Officer, FLI & FAI

Romeo T. Bautista

SVP - Bids & Awards Head, FLI & FAI

Joselito F. Santos

SVP - Business Group Head, FLI

Banking Group

EASTWEST BANKING CORPORATION

 

Antonio C. Moncupa, Jr.
Vice Chairman, President & CEO

Rafael S. Algarra, Jr.
Senior Executive VP – Treasury, Markets and Off-Balance Sheet Head 

Gerardo Susmerano
Senior Executive VP - Retail Banking Head

Jacqueline S. Fernandez
Senior Executive VP – Chief Lending Officer

Antonio C. Moncupa, Jr.

Vice Chairman, President & CEO

Rafael S. Algarra, Jr.

Senior Executive VP – Treasury, Markets and Off-Balance Sheet Head

Gerardo Susmerano

Senior Executive Vp - Retail Banking Head

Jacqueline S. Fernandez

Senior Executive VP – Chief Lending Officer

Power and Utilities Group

 

Juan Eugenio L. Roxas
President & CEO
FDCUI, FLOW & CWSI

President
FREE

Daniel L. Ang Tan Chai
Chief Finance Officer
FDCUI

Juan Eugenio L. Roxas

President & CEO FDCUI, FLOW & CWSI

Daneil L. Ang Tan Chai

SVP – Chief Finance Officer, FDCUI

Hospitality Group

 

Charles E. Brookfield
President & COO,
Chroma Hospitality, Inc. (CHI)

James M. Montenegro
Country Manager, CHI

Francis C. Gotianun
SVP, FHC

Charles E. Brookfield

President & COO, Chroma Hospitality, Inc. (CHI)

James M. Montenegro

Country Manager, CHI

Francis C. Gotianun

SVP, FHC

Sugar Group

PACIFIC SUGAR HOLDINGS CORPORATION

 

Jonathan T. Gotianun
President & CEO

Constancio B. Galinato
EVP - COO
 

Jonathan T. Gotianun

President & CEO

Constancio B. Galinato

EVP - COO

Information Technology Group

 

Emerlindo S. Andal, Jr.
President & COO, CTI

Emerlindo S. Andal, Jr.

President & COO, CTI
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Downloads
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Presentations

November 21, 2019

Investor Presentation - November 2019

April 26, 2019

President’s Report 2018 Annual Stockholders’ Meeting

May 04, 2018

President’s Report 2017 Annual Stockholders’ Meeting

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Real Estate
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FDC and its predecessors have been in the property business for more than 50 years and have developed over 200 projects and 3,000 hectares of land.

FDC is currently one of the leading property developers in the Philippines with focus on three major areas. First is residential development, where real estate trading income is derived. Second is leasing, composed of office, retail and new concepts, and which forms the recurring income base. Third is large-scale master-planned townships, which allow synergies across the businesses to be harnessed and which significantly increase the value of the existing landbank of more than 2,500 hectares.


The property business is carried out through two key subsidiaries – listed company Filinvest Land, Inc. (FLI) and Filinvest Alabang, Inc. (FAI). Meanwhile, construction and property management services are led by its subsidiaries, Dreambuilders Pro, Inc. and Pro Excel Property Managers, Inc., respectively. In 2019, the property group delivered revenues of P31.0 billion and P8.4 billion in net income (net of liminations), contributing over half to FDC’s consolidated net income.

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Residential

Real Estate Trading

Filinvest is well-positioned in the middlemarket housing segment. Through FLI, the group is one of the first movers into affordable and middle-income housing, having identified it as a fast growing but underserved market early on. In a country with an estimated population of 109 million and where housing backlog persists and a population growth rate of 1.7 percent annually, FLI has the advantage of benefiting from this shortage.

 

Operational Highlight Data

 

Futura Plains, Rizal
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Operational Highlight data

To date, the group has over 100 projects across 48 cities and towns throughout the Philippines. Between FLI and FAI are residential housing brands such as Pabahay, Futura, Aspire, Prestige and Filigree. The brands cater to different market segments ranging from socialized to affordable to upscale, and product offerings ranging from horizontal to mid-rise to high-rise buildings. The focus, however, is on FLI’s Futura brand that caters to the affordable housing and mid-rise building communities, and the dynamic lifestyle Aspire brand with its selection of themed horizontal, resort-inspired mid-rise and highly accessible communities catering to the middle-income segment. Both brands target the end-user buyers.

Sale of lots, condominium and residential units rose by 5 percent to P21.5 billion in 2019 led by higher residential sales reported by FLI. This was boosted by the launch of P13.1 billion worth of residential projects in greater Metro Manila such as Manila, Valenzuela City, Taguig City, Cainta and Muntinlupa, as well as in the provinces of Cavite, Rizal, Laguna, Pampanga, Cebu and Davao. To ensure that demand for housing across the country is addressed, the group maintains a large and valuable residential landbank of over 2,500 hectares. Coupled with continuous land acquisition of developable and strategically-located properties in key areas, sufficient inventory in the medium term is ensured.

 

Leasing

Office and Retail Rental

The group’s focus over the past few years has been to increase the recurring income business. It is fortunate that FLI was one of the pioneers in the BPO segment in the early 2000s, and was one of three developers with special incentives in the BPO office space. Since then, the BPO industry has grown tremendously in the Philippines, driving the strong gross leasable area (GLA) growth over the last decade. On a net income contribution basis for the property segment, rental income share has increased from 30 percent in 2014 to 45 percent in 2019.

At the end of 2019, the group’s total building and land lease portfolio stood at almost 1.1 million square meters of gross leasable area (GLA). In addition to FLI’s 33 rental properties, FAI also has retail and commercial lot leases  in Filinvest City. There are about 210,000 square meters of additional rental space under construction and originally scheduled for delivery in 2020 but 72,000 of which are affected by construction delays brought about by the COVID-19 pandemic and will be delivered in 2021.

Rental revenues amounted to P7.46 billion in 2019, growing by 21 percent compared to the previous year. This was on the back of the completion of two new office buildings that brought FLI’s total to 524,000 square meters of GLA, and the full-year effect of rentals for buildings completed in 2018. The office buildings are concentrated in three major PEZA hubs in Filinvest City, Alabang, Filinvest Mimosa+ in Clark Special Economic Zone and Cebu Cyberzone. Other office developments spread around Metro Manila are found in strategic locations in Makati, Bay City and Ortigas complex, many of which are along the MRT and major highways. The office segment is expected to continue to grow in the medium term driven by demand from traditional offices, BPOs, co-working spaces, and emerging technology and e-commerce companies.

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Filinvest Innovation Park at New Clark City
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New Leasing Concepts

In anticipation of the demand for big land parcels and ready-built factories to address the needs of the growing logistics and e-commerce industry, FLI ventured into the logistics space through the launch of the Filinvest Innovation Park at New Clark City in 2019 to further boost the leasing business. Aside from the lease of big lot parcels, FLI is also looking at constructing high-specification structures for lease to customers. Land development of Phase 1, totaling 64 hectares, of the Filinvest Innovation Park is almost complete and will be ready to receive locators by the second half of 2020 for the locators’ respective building and warehouse construction. Another logistics park is set for launch in Calamba, Laguna beside the fully sold Filinvest Technology Park.

FLI also developed a new leasing product called “dormitels” to address the needs of office workers who wish to live near their workplace. The first project called Lodgeplus, located within the Filinvest Mimosa+ Leisure City, is under construction and due for completion in 2020. Its target market includes employees of the office buildings within the estate.

Lodgeplus at Filinvest Mimosa+
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Master-planned Townships

Filinvest City in Alabang 

Filinvest has built a track record of developing large-scale, master-planned townships, the first of which was Filinvest City in Alabang. In a joint venture formed in 1992 together with the government, FAI transformed what used to be a largely undeveloped 244-hectare property into a CBD in southern Metro Manila. To this day, Filinvest City is developed by FAI, which is 80% owned by FDC and 20% by FLI.

Filinvest City is a fully-integrated, selfcontained and master-planned urban development that is divided into districts to provide a balanced mix of developments. Development in Filinvest City has grown tremendously, with its gross floor area (GFA) increasing by approximately 73 percent from 994,000 square meters to 1,717,000 square meters in the last seven years, of which one-third of the increase was brought about by third-party developments.

Filinvest subsidiaries have contributed to the growth of the township. The township project brings together a complete mix of residential developments spanning from its high-end Filigree brand represented by Botanika and Bristol projects to its Aspire mid-income brands such as Studio N and The Levels. FLI’s Northgate Cyberzone, the pioneer campus-style IT park, has the largest aggregation of BPO buildings in south Metro Manila. Most of the big box retailers and almost all of the car dealerships have chosen Filinvest City with FLI’s Festival Mall, the largest mall in south Metro Manila, at its heart. Most hotels in the area are located in Filinvest City, including the group’s Crimson Hotel. Filinvest City is also home to three hospitals, a university and other healthcare and educational facilities, enhancing support services to the community.

Given the success of the township project,  land prices in Filinvest City have risen significantly over the years. At the end of 2019, the highest land price in Filinvest City was recorded at P450,000 per square meter. FAI and Mitsubishi Corporation signed a joint venture in October 2019 to develop almost 17,000 square meters of prime land in one of Filinvest City’s finest blocks. The project will be jointly developed as a multi-tower, mixed-use complex, which is expected to add approximately 183,000 square meters of mixed-use GLA to the already-booming Alabang CBD.

Filinvest City Creekside Park
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Notwithstanding the Mitsubishi transaction, the group has a remaining 86 hectares of prime commercial land in Filinvest City, net of roads, that it beneficially owns. Filinvest City’s strategic location is expected to be further enhanced in the next few years as new infrastructures are built aside from the five major roads already traversing Filinvest City, including both Skyway and SLEX. The North-South Commuter Railway project, which is currently being developed, will connect Filinvest City all the way from Clark in the north to Bicol in the south, and increase the access points at the perimeter of the property. This urban rail transit line will seamlessly connect Philippine National Railways lines in Clark, Pampanga to Calamba, Laguna, and connect from Central Luzon to Calabarzon. The new NLEX-SLEX Connector Road will reduce travel time from Filinvest City to Quezon City and Clark significantly, improving accessibility, and will connect Filinvest City all the way to New Clark City and Clark International Airport. There is also a Fast Train to Clark being considered that will emanate from Alabang.

Clark Corridor

In 2016, Filinvest was one of the first developers to identify Clark, Pampanga as a significant growth area, and was the sole bidder to both the 200-hectare Mimosa Leisure Estate (now known as Filinvest Mimosa+ Leisure City) and the 288-hectare New Clark City developments. In the last three years, a range of announced new projects, such as the expansion of Clark International Airport (CIA), the declaration of Clark, Pampanga as a new government center, and the signing of the initial agreements with the Japanese government for the development of a high speed-train linking Manila to Clark, have resulted in significant interest in developments in the area. After winning the bids, the group set in motion the development of these projects, bringing with it the deep master-planning and township  experience from Filinvest City in Alabang.

Filinvest at New Clark City groundbreaking rites

Excellent progress has been made on Filinvest Mimosa+, where land development and rehabilitation of the Mimosa+ Township have been substantially completed and two office buildings under FLI are operational and fully leased out. Two more office buildings under FLI are under construction while another six are in the planning stages. Other plans include building four dormitels, one of which is already under construction, and six residential buildings to support the workforce. A 33,000-square meter lifestyle mall is also in the pipeline to complement the strip mall that is currently under construction. On the hospitality side, renovation of the existing 303-room Quest Hotel and Conference Center-Clark and two championship golf courses and villas are ongoing. In the pipeline is a 400-room expansion.

On the other hand, the plan for Filinvest at New Clark City is to develop a future-ready and environment-friendly mixed-use township. It is envisioned to bring together top international locators and investors within a sustainable business and industrial community, supported by retail and residential developments. As of this writing, Phase 1 of the Filinvest Innovation Park, covering an area of 64 hectares, is nearing completion. The first phase is targeted to serve as the economic base of the development comprising an industrial zone for logistics, tech and light industrial companies. Phase 1 is targeted to start receiving locators by the second half of 2020, upon which the locators may immediately start their building and warehouse construction. Depending on market demand, the second phase may be launched immediately after. The newly-completed government-built access road from the Subic-Clark-Tarlac Expressway (SCTEX) to New Clark City has substantially improved travel and transportation to and from the Filinvest Innovation Park hence spurring further interest in the property.

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Hospitality
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Crimson Resort & Spa Boracay
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Quest Hotel and Conference Center Cebu
Quest Hotel and Conference Center Cebu

FDC entered the hospitality segment as a response to the accelerating tourism growth in the Philippines, driven by a combination of inbound tourists largely from the affluent Asian neighbors and domestic tourism pushed by rising disposable income of the growing middle-income population. The group’s hotel operations are carried out by Filinvest Hospitality Corporation (FHC), a wholly-owned subsidiary of FDC, and hotel management firm Chroma Hospitality, Inc. (CHI), a joint venture with Archipelago International.

Filinvest opened its first hotel in 2010 through Crimson Resort and Spa Mactan and has since grown its portfolio to six managed hotels totaling almost 1,800 rooms plus two golf courses at the end of 2019. The six hotels carry the group’s homegrown brands, namely Crimson and Quest, which cater to different target markets. The Crimson brand caters to the high-end market segment while the Quest and Quest Plus brands target middle-market families and business lodging with emphasis on the MICE segment. The jewel in the group’s hospitality portfolio is Crimson Resort and Spa Boracay, which opened its doors in November 2018, coinciding with the Boracay island’s reopening. Another property under the Crimson brand is Crimson Hotel Filinvest City. The rest of the existing hotels are under the Quest brand located in Cebu, Clark and the newest one in Tagaytay that opened in April 2019.

The hospitality group’s thrust is to further expand the homegrown brands it has established both geographically and through new product offerings. Soon, a third brand called Grafik will be launched that will cater to millennials and other younger guests.

The hospitality group is targeting to grow its portfolio to reach 5,000 keys by 2023. The new developments within Luzon are in Cubao, Filinvest City and Puerto Princesa, while those in Visayas-Mindanao are in Cebu City, Mactan, Dumaguete and Zamboanga.

 

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Banking
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Banking is another major pillar in the group’s entire portfolio. Consistent with the company’s vision of helping Filipinos attain their dreams, EastWest Bank is positioned as one of the most consumer-centric banks in the industry with focus on higher-yielding retail and middle-market corporate segments. Consumer loans account for over 70 percent of its loan book which makes it unique compared to its peers. It ranked ninth largest among the listed universal banks in the Philippines by total assets as of yearend 2019 but holds leadership positions in consumer finance. It is estimated to be the second largest in auto loans, top three in personal loans and fifth largest in credit cards. It moved up a notch higher in auto loans following the acquisition of PBCom’s car loan portfolio in July 2019, particularly its dealer-generated auto lending book.Filinvest Group graph

On a stand-alone basis, EastWest Bank reported a net income of P6.2 billion in 2019, 38 percent higher than the previous year. The income was driven by the growth of its consumer loans portfolio as well as an improvement in low cost deposit-taking from its network of 467 branches. Net revenues rose 13 percent to P28.7 billion while operating expenses, excluding provisions for losses, increased at a slower rate of 8 percent to end at P16.4 billion. The bank’s discipline around cost controls allowed it to trim its cost-to-income ratio to 57 percent from the previous year’s 60 percent. All told, EastWest Bank recorded its Eastwest bankmost profitable year in 2019 and maintained its top-tier position in profitability with a return on equity (ROE) of 14 percent.

EastWest Bank’s continuing thrust is to invest in its operations to improve network productivity and share of wallet of customers. The bank believes there is still a lot of room for optimization of the branch network, product suite, as well as increasing cross-selling opportunities to its customers.  

Over the years, EastWest Bank has implemented various technology initiatives to improve efficiencies and become a leader in customer service. The IT initiatives have included risk management initiatives for business continuity planning, improvements to the core banking system, e-training for employees, internet banking for customers and security enhancements to IT networks. Some of these initiatives have also allowed the bank to manage costs and optimize business efficiency. EastWest’s size allows it to be more nimble and flexible than its larger competitors to adapt to changing technology.

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Power
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FDC Misamis power plant
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Power is a relatively new business for FDC that is proving to be a formidable and defensive play to the conglomerate’s portfolio. FDC re-entered the power industry in 2009 through the establishment of FDC Utilities, Inc. (FDCUI) and the construction of the largest baseload power plant within the PHIVIDEC Industrial Estate in the province of Misamis Oriental in Mindanao. The plant was inaugurated in 2016 at a time when Mindanao was underserved and was crippled by brownouts since the region was heavily dependent on derated hydro plants.

FDCUI operates an aggregate 405-megawatt plant that uses the latest circulating fluidized bed (CFB) clean coal technology. The plant operates efficiently, posting a high availability factor of 91 percent in 2019, that allows it to serve its dispersed customer base of 15 distribution utilities and a private company. Of the 405-megawatt capacity, 302 megawatts are contracted under mostly long-term power purchase agreements (PPAs). In 2019, FDCUI’s revenues rose by 17 percent to P10.1 billion as a result of higher sales volume brought about by increased demand from its customers and the sale of replacement power to other power generators.

Demand for power in Mindanao is anticipated to continue to grow, with significant demand coming from investments in the PHIVIDEC Industrial Estate where FDCUI’s power plant is located. On the supply side, power in Mindanao is expected to tighten as planned rehabilitation of the hydro plants in Mindanao will have an impact in terms of the ability to contribute to baseload capacity. When this happens, supply will have to be mitigated by the stability of the large coal-fired baseload plants such as that of FDCUI.

The plant remains compliant with environmental standards and has been performing better than minimum standards imposed by DENR and the World Bank. The plant’s emissions are well within the guidelines of the Clean Air Act and the World Bank’s Environmental Health and Safety Guidelines for Thermal Power Plants. In addition, the CFB plant has similar efficiencies as pulverized coal-fired plants under identical steam conditions but with lower NOx emissions. The technology allows for the removal of sulfur dioxide in the combustion process thus eliminating the need for an external desulphurization process and the problem of sulfur disposal. 

Retail Electricity Supply

FDCUI obtained its retail electricity supply (RES) license in 2016 which allows it to source and sell power to contestable customers or those with electricity demand of more than one megawatt. The RES operations of FDCUI commenced in 2017 and has since entered into contracts for 34 megawatts with 12 contestable customers.

New Ventures in Renewable Energy and Sustainable Solutions

To complement the power generation and trading operations, FDC has entered into strategic partnerships with Engie Services Philippines (Engie) to develop potential renewable energy solutionsOperational Highlight Data and district cooling services in the Philippines. Engie is a global energy services provider with focus on low-carbon power generation mainly based on natural gas and renewable energy.

One joint venture with Engie is the FilinvestEngie Renewable Energy Enterprise, Inc. (FREE) for renewable energy solutions. FREE entered the solar power industry in late2018 and has since gained rapid success, having been awarded three contracts for a total of 5.4 megawatts of solar rooftop systems. In addition, another joint venture with Engie has increased Filinvest’s utilities infrastructure capabilities in district cooling, having completed the Philippines’ largest district cooling system in FLI’s Northgate Cyberzone in Filinvest City with a capacity of up to 12,000 tons of refrigerant.

Apart from solar power and district cooling, a joint venture agreement with Japanese company Hitachi Aqua-Tech Engineering Pte. Ltd. (HAQT) was signed in September 2019 to establish Filinvest-Hitachi Omni Waterworks, Inc. (FLOW) to provide processed water solutions across the Philippines. Soon, FLOW will be able to offer services in desalination, recycled water and sewage treatment facilities. FLOW is seen to complement the operations of another wholly-owned subsidiary, Countrywide Water Services, which provides water and wastewater services for internal customers within the Filinvest group as well as external parties.

 

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Sugar
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Sugar is a stable, self-sustaining and self-funding business for the Filinvest group. In 2019, sugar operations contributed P299 million to FFDC Sugar industryDC’s net income, growing by 88 percent year-on-year. FDC entered the Mindanao sugar market in 2007 through the acquisition of Pacific Sugar Holdings Corporation (PSHC), the holding company of the group’s sugar subsidiaries. PSHC owns a vertically integrated sugar business, which includes sugar mills and refineries, and in-house corporate sugarcane farming operations to enhance productivity and efficiency through innovation. Over the years, the sugar group has been able to adapt its business model, including its products and output, to meet the changing demands of the competitive sugar industry and market.

While sugar prices tend to be volatile since it is a commodity, global demand for sugar has consistently grown at two percent per annum. Food consumption as well as biodiesel use have increased the demand for sugar. The constraint in the sugar business, however, is from the limited cane supply in the Philippines, which results in the mills and refineries running at suboptimal capacity utilization. As such, the future growth strategies include increasing the supply of sugarcane, improving farm and factory productivity and efficiency through the use of automation and technology to streamline operations, and exploring opportunities in the renewable power sector such as developing biomass plants to support operations at its facilities and to possibly sell excess power capacity to third parties.

 

 

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Infrastructure
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Ceremonial turnover of Clark International Airport

Ceremonial turnover of Clark International Airport

 

Part of FDC’s diversification strategy is to pursue opportunities in the Philippine infrastructure sector that are complementary to its existing businesses and accretive to its recurring income stream. FDC’s interest in the infrastructure space is through its participation as a consortium member in two major airport redevelopments in Luzon. Its first foray is its participation in the consortium which won the bid to operate and maintain the Clark International Airport (CIA). In January 2019, the consortium signed a concession agreement with the Bases Conversion and Development Authority for the O&M of CIA for a period of 25 years. The consortium members then incorporated Luzon International Premier Airport Development Corporation (LIPAD) in February 2019 to act as the consortium’s joint venture entity. FDC’s ownership interest in LIPAD is 42.5 percent, whose other owners include JG Summit, Changi Airports Philippines (I) Pte., Ltd. and Philippine Airport Ground Support Solutions, Inc. The contract for CIA includes the O&M of the existing passenger terminal and the development, fit-out and O&M of a new modern terminal building with an estimated annual capacity of eight million passengers, including the related commercial assets and project facilities. The O&M of the old terminal of CIA was officially handed over to LIPAD in August 2019. Meanwhile, the turnover of the new terminal is expected sometime in the middle of 2020, after which LIPAD has a year to fit it out. Once completed, the old terminal that is currently being used will be decommissioned and will be moved to the new terminal.

The growth of CIA has exceeded expectations. From less than a million passengers served in 2014, the number of passengers has crossed the four million mark by the end of 2019. CIA covers 20 domestic and 16 international destinations serving about 700 weekly flights from a total of 20 airlines. With the impact of the COVID-19 pandemic, air travel is expected to be greatly affected particularly during the construction period of the new terminal. The consortium is committed to working towards expanding this network, connecting Clark to more domestic and international points and cementing its position as the premier international gateway for Central and Northern Luzon. For Filinvest, the investment in CIA is part of the wider and longer-term plan of developing the Clark region and improving the Clark corridor’s connectivity in the north all the way down to the south.

In addition to Clark Airport, Filinvest is also part of the NAIA Consortium alongside six other leading Philippine conglomerates that was granted an original proponent status to transform the Ninoy Aquino International Airport (NAIA) into a regional airport hub with adequate capacity to meet passenger traffic demand. The expansion of the airport is intended to increase the annual capacity of the existing airport from approximately 31 million passengers per annum to approximately 47 million passengers per annum by the end of the second year of the project, and to approximately 65 million passengers per annum after the project’s fourth year. The project is awaiting government approval.

 

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