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FINANCIAL AND OPERATING HIGHLIGHTS

Management’s Discussion and Analysis of Financial Condition and Results of Operation

RESULTS OF OPERATIONS:

For the year ended December 31, 2019

Rockwell Land Corporation’s net income after tax (NIAT) in 2019 amounted to P3.0 billion, a growth of 18% compounded annually since 2017. As a percentage to revenues, net income was 19% for 2019, 16% for 2018 and 15% for 2017.

Total revenues grew to P15.7 billion in 2019, increasing at a compounded annual rate of 5% since 2017. Residential development accounted for 82% of the total revenues in 2019, slightly lower than its 86% in 2018 due to a higher contribution from commercial revenues.  The contribution of Hotel Operations continues from last year at 2% of total revenues.  

Earnings before interest, taxes, depreciation and amortization (EBITDA) in 2019 amounted to P6.0 billion representing 38% of total revenues and a 20% compounded annual growth since 2017.  EBITDA from Residential Development accelerated by 13% annually from 2017 mainly due to the strong performance of Proscenium and The Vantage development.  On the other hand, Commercial Development accelerated by 35% from P1.2B to P2.2B in 2 years due to additional leasable spaces of 90,000 sqm. Meanwhile, the Hotel Operations’ EBITDA grew to P105 million due to improved occupancy and room rates of Edades Serviced Apartments. 

Residential development, commercial development and hotel operations contributed 63%, 36% and 2% to total EBITDA in 2019, respectively. 

The ratio of cost of real estate to total revenues improved to 49% coming from 52% in 2018 and 57% in 2017. This is due to lower costs incurred for most residential projects.

Besides the recent acquisitions, the Company is not aware of any event that could materially affect the statement of comprehensive income reported in this Annual Report except for the impact to the financial statements of the full adoption of the PFRS 15 which took effect starting January 2018 and PFRS 16 which took effect starting January 2019.  

By the end of 2019 debt level was at P25.7 billion while the net-debt-to-equity ratio stands at 0.82. The debt is composed of the outstanding balances of P10.0 billion corporate notes drawn in portion from January to August 2013, P5.0 billion from bond issuance in November 2013 and P20.8 billion term and CTS loans drawn from 2017-2019.  About P2.3B or 9% of the total debt has a floating interest rate.   Below is a table showing the key performance indicators of the Company for 2017-2019.

KPI201920182017
EBITDA (P)6.0 billion5.4 billion4.2 billion
Current Ratio (x)2.472.172.85
Net DE Ratio (x)0.821.161.02
Asset to Equity Ratio (x)2.612.972.82
Interest coverage ratio (x)4.174.62 5.49 
ROA5.00%4.91%4.92%
ROE13.85%14.26%13.31%
EPS (P)0.48 0.420.36

Notes:

 (1) EBITDA [Net Income + (Interest Expense, Provision for Income Tax, Depreciation & Amortization)]

(2) Current ratio [Current assets/Current liabilities]

(3) Net debt to equity ratio [(Total Interest bearing debt)-(Cash and cash equivalents) / Total Equity]

(4) Assets to Equity Ratio [Total Assets/Total Equity]

(5) Interest coverage ratio [EBITDA/ Total interest payments]

(6) ROA [Net Income/Average Total Assets]

(7) ROE [Net Income/ Average Total Equity]

(8) EPS [Net Income/number of common shares outstanding]

RESULTS OF OPERATIONS

The following section provides information on the results of operations and financial condition for the periods 2017-2019. 

Review of 2019 versus 2018

The following table shows the breakdown of the revenues by business segment for the periods 2017-2019. 

 2019% to Total2018% to Total2017% to Total
Residential Development (1)12,93882%13,41186%12,56788%
Commercial Development (2)2,48216%1,99013%1,42410%
Hotel Operations(3)2902%2832%3132%
Total Consolidated Revenues15,709100%15,684100%14,303100%
Share in Net Income (Losses) in JV and associate (4)    323      271      265  

Notes:

  1. Revenues from this segment consist of the following projects in the years indicated: The Grove (2017 to 2019), The Proscenium Towers (2017 to 2019), 53 Benitez (2017 to 2019),32 Sanson (2017 to 2019), Vantage (2017-2019), Edades Suites (2017-2019), Stonewell (2017-2019), The Arton West (2017-2019, The Arton North (2018-2019), Aruga Resort and Residences -Mactan (2018-2019, Fordham (2019), and Terreno South (2019) .
  2. Revenues from this segment include leasing income, cinema revenues and revenue from sale of office units from 8 Rockwell and Proscenium projects. The amounts exclude revenues from RBC.  Under the Accounting policy for a jointly controlled entity, results of operations of RBC are not consolidated line by line. 
  3. Revenues from Hotel Operations come from the operations of Aruga Serviced Apartments in Edades Tower (2017-2019) and The Grove (2017).
  4. These amounts represent the Company’s share in the net income after tax of RBC (2017-2019) and RCDC (2019).

Below is another table showing the breakdown of revenues by type of revenue for the periods 2017-2019. 

 2019% to Total2018% to Total2017% to Total
Residential Sales(1)12,50480%13,09984%12,18485%
Office Sales(2)20%420%741%
Commercial Leasing1,84512%1,49910%1,0077%
Room Revenues2211%2201%2862%
Others(3)1,1377%8245%7535%
Total Consolidated Revenues15,709100%15,684100%14,303100%

Notes:

  1. Pertains only to sales of condominium units (at present value) and related interest income.
  2. Pertains to sale of office units (at present value) and related interest income.
  3. Includes income from Cinema, parking and other income.

Business Segments 

The details of the individual performance of each business segment, in terms of revenues and EBITDA, are as follows:

Residential Development contributed 82% of the total revenues of 2019.  Total revenues reported from the sale of condominium units, including accretion of interest income, amounted to P12.9 billion. The 4% decrease in this segment’s revenue was mainly due to lower project accomplishment of Proscenium and The Vantage (substantial completion in 2018).  EBITDA from this segment amounted to P3.8 billion, which represents 63% of the total EBITDA of P6.0 billion. 

Reservation sales reached P16.7 billion, 12% higher than last year’s P14.9 billion, driven by Rockwell South and Nara Residences, which were both launched in 2019.  

Commercial Development revenues amounted to P2.5 billion, higher by 25% than last year. Leasing Income, which accounts for bulk of the segment revenues, grew from P1.5 billion to P1.8 billion due mainly from the Mall Expansion, Santolan Town Plaza and RBC Sheridan. Overall, contribution from the Commercial segment improved from 13% to 16% of total revenues.  This excludes the share in the joint venture (RBC) as this is reported as “Share in Net Losses (Income) of JV” under Other Income (Expenses) and not consolidated line by line in the consolidated financial statements. 

The details of the performances per source of revenue stream are explained as follows:

  • Revenues from Retail operations amounted to P1.4 billion and accounted for 9% of total consolidated revenues.  This increased by 19% vs. last year’s revenues of P1.2 billion, mainly driven by the increased occupancy of the expansion of the Power Plant Mall, RBC Sheridan and Santolan Town Plaza in 2019.
  • Cinema Operations amounted to P278.4 million and comprised 2% of the total revenues.
  • Office Leasing accelerated to P602.9 million from P451.2 million last year due to increased occupancy from RBC Sheridan, Santolan Town Plaza and 8 Rockwell. The Rockwell-Meralco BPO Venture, generated gross revenues of P738.6 million, which grew by 5% from last year’s P701.2 million from the annual rent escalation. At its 70% share, the Company generated revenues of P517.0 million and a share in net income of P307.8 million.  To reiterate, only the P307.8 million share in net income of RBC is reflected in the Company’s consolidated statements of comprehensive income as “Share in Net Losses (Income) of JV”.

The Commercial segment’s EBITDA amounted to P2.2 billion, comprised of Retail and Office at 53% and 47%, respectively.  EBITDA increased by 45% from last year’s P1.5 billion due to higher occupancy in retail and office spaces and contributed 36% to the total EBITDA. 

Hotel Operations contributed 2% of the total consolidated revenues for 2019.  Revenues increased from P283.5 to P289.9 million and EBITDA grew by 42% to P105.0 million.

Costs and Expenses

Cost of real estate amounted to P7.7 billion in 2019, 5% lower than the P8.1 billion that was recorded in 2018 following the decrease in residential revenues.

General and administrative expenses (G&A) amounted to P2.1 billion which represents 13% of the total revenues. The level of expenses declined by 2% vs. last year’s P2.2 billion. This is mainly attributable to lower expenses incurred from taxes due to lower business taxes resulting from lower collections.

Interest Expense amounted to P1.4 billion, which is 17% higher than last year’s P1.2 billion. Interest incurred increased as loan balance increased from P24.3 billion to P25.8 billion at a higher interest rate per annum of 5.6% vs. 2017’s 5.4%. This is partially offset with the capitalization of interest on borrowing costs on construction costs spent to date for commercial and hotel developments. 

Share in Net Losses (Income) of JV and associate recorded at P322.7 million, a 19% growth from last year of P270.6 million due to higher share in RBC Ortigas and new contribution from RCDC. At 70% share in JV, the gross revenues increased by 5% to P517.0 million due to higher rental rate. At 14.7% share in associate, the profit or loss/total comprehensive income of the associate for the period ended November 20, 2019 amounted to P14.9 million. The share in net income is reported net of taxes and represents the Company’s share in the operations generated by RBC and RCDC.

Provision for Income Tax

Provision for income tax amounted to P1,018.9 million, which is 6% higher than last year’s provision of P965.7 million. The effective tax rate for 2019 is 25.3% lower than 2018’s 27.3% and lower than the statutory tax rate of 30.0% due to the Company’s share in the income of RBC and RCDC, which is no longer subject to income tax. 

Project and capital expenditures

The Company spent a total of P11.1 billion for project and capital expenditures in 2019. Bulk of the expenditures pertained to development costs of Proscenium, Aruga Hotel in Makati, Aruga Resort and Residences – Mactan and costs to acquire certain properties.  

FINANCIAL CONDITION

Total Assets as of December 31, 2019 amounted to P63.5 billion, which grew by 12% from last year’s P56.7 billion mainly due to completed and ongoing construction of residential development projects, Aruga Hotel in Makati and several investment properties, as well as recognition of Trade receivables following the completion progress of ongoing residential projects.

Total Liabilities as of December 31, 2019 amounted to P39.2 billion, higher than 2018’s P37.6 billion. The increase in liabilities was mainly from loans availed to fund construction of both residential and commercial projects.

Total Equity as of December 31, 2019 amounted to P24.3 billion. The 28% growth is mainly attributable to the P3.0 billion Net Income and the P2.8 billion non-controlling interests of RCDC in 2019.

Current ratio as of December 31, 2019 is 2.47x from 2.17x the previous year while Net debt to equity ratio decreased to 0.82 in 2019 from 1.16x in 2018.

Causes for any material changes (+/- 5% or more) in the financial statements

Statement of Comprehensive Income Items – 2019 vs. 2018

5% decrease in Sale of condominium units

Mainly driven by lower project completion of Proscenium and the Vantage projects.

23% increase in Lease income

Due to increased occupancy from the PPM expansion, RBC Sheridan and Santolan Town Plaza.   

50% increase in Other revenues

Primarily due to higher carpark income and gain from sale of an office unit.

5% decrease in Cost of Real Estate

Primarily due lower construction completion from Proscenium and Vantage.

10% increase in Selling Expenses

Primarily due to higher commissions for Rockwell South and Arton projects.

17% increase in Interest Expense

Mainly due to higher loan balance and interest rate per annum.

19% increase in Share in Net Income of Joint Venture and Associate

Attributable to higher rental rates of RBC Ortigas and first-time recognition of share in net income of associate (RCDC).

100% increase in Gain on bargain purchase

Due to higher fair values of the identifiable net assets of RCDC than the consideration given.

100% increase in Gain on remeasurement of previously held interest

Due to higher fair values of the identifiable net assets of RCDC than the book value of the initial investment.

105% decrease in Foreign Exchange Gain 

Due to the impact of weaker Peso on the US dollar collections.

18,567% increase in Other Comprehensive Loss

Mainly due to the remeasurement loss on employee benefits following the lower discount rate in 2019 vs. 2018. 

Balance Sheet items – 2019 vs. 2018

178% increase in Cash and Cash Equivalents

Primarily due to collections of upon turnover dues from Proscenium and 32 Sanson-Buri and proceeds from loan borrowings.

12% decrease in Receivables and contract assets (Current and Non-current)

Mainly due to collections of upon turnover dues from Proscenium and 32 Sanson-Buri.

15% increase in Real Estate Inventories

Due to ongoing construction and acquisitions.

10% decrease in Advances to Contractors

Due to recoupment of advances of Proscenium Sakura, Lincoln and Kirov, and 32 Sanson-Buri in 2019.

64% increase in Other Current Assets

Due to higher creditable withholding taxes, prepaid costs and input VAT.

15% increase in Investment properties

Due to recognition of right-of-use assets, driven by change in accounting standards of PFRS 16 on leases amounting to P524.5 million and investment properties in progress for One Proscenium.

44% increase in Property and equipment

Mainly due to increase in construction in progress for Aruga Hotel.

12% decrease in Investment in Joint Venture and Associate

Mainly due to dividend distribution from joint venture and reversal of investment in associate after acquiring controlling interests in RCDC which is now accounted as investment in subsidiary and fully consolidated with Parent FS.

78% increase in Investment in equity instruments at FVOCI

Due to additional equity instruments and fair value remeasurement.

83% decrease in Deferred Tax Asset

The decrease is primarily due to decrease NOLCO of subsidiaries and the restatement of 2018 balances for PFRS adjustments.

85% increase in Other Noncurrent Asset

Due to increase in Advances to Contractors related to One Proscenium and Aruga Hotel, and due from related parties. 

17% decrease in Trade and other payables

Mainly due to decrease in accrued project costs and deposits from preselling. 

6% increase in Interest Bearing Loan and Borrowings (Current + Non current)

Due to higher loan drawdown of P8.6B, mostly at term loan and CTS financing agreement versus repayment.

5% increase in Installment Payable – net of current portion (Current + Non current)

Due to accretion of interest expense.

17% increase in Deferred Tax Liabilities

Due to increase in revenue recognition from Proscenium Residences, Lorraine and The Vantage.  

100% increase in Lease liability

Mainly refers to lease payments discounted over the lease term for Santolan Town Plaza and RBC Sheridan, driven by the change in accounting standards of PFRS 16 on leases.

118% increase in Pension liability

Mainly due to remeasurement loss on plan assets for the year 2019.

26% increase in Deposits and other liabilities

Primarily due to the increase in deposits from preselling.

44% increase in Other comprehensive income

Due to market appreciation of investments.

22% increase in Retained Earnings

Due to net income after tax of P3.0 billion for 2019 net of dividends amounting to P504.9 million and impact on the adoption of IFRIC interpretation on capitalized borrowing costs and PFRS 16 on leases amounting to P65.8 million. 

466% increase in Non-controlling interests

Primarily due to recognition of non-controlling interests of RCDC.

RESULTS OF OPERATIONS

The following section provides information on the results of operations and financial condition for the periods 2016-2018.  

Review of 2018 versus 2017

The following table shows the breakdown of the revenues by business segment for the periods 2016-2018. 

 2018% to Total2017% to Total2016% to Total
Residential Development (1)13,41186%12,56788%11,04087%
Commercial Development (2)1,99013%1,42410%1,32410%
Hotel Operations(3)2832%3132%3473%
Total Consolidated Revenues15,684100%14,303100%12,711100%
Share in Net Income (Losses) in JV (4)    271     265      254  

Notes:

  1. Revenues from this segment consist of the following projects in the years indicated: 205 Santolan (2016), The Grove (2015 to 2018), The Proscenium Towers (2015 to 2018), 53 Benitez (2015 to 2017),32 Sanson (2015 to 2018), Vantage (2016-2018), Edades Suites (2016-2018), Stonewell (2016-2018), The Arton West (2017-2018),Aruga Resort and Residences -Mactan (2018).
  2. Revenues from this segment include leasing income, cinema revenues and revenue from sale of office units from 8 Rockwell and Proscenium projects. The amounts exclude revenues from RBC.  Under the Accounting policy for a jointly controlled entity, results of operations of RBC are not consolidated line by line. 
  3. Revenues from Hotel Operations come from the operations of Aruga Serviced Apartments in Edades Tower and The Grove (2016-2017).
  4. These amounts represent the Company’s share in the net income after tax of RBC.

Below is another table showing the breakdown of revenues by type of revenue for the periods 2016-2018. 

 2018% to Total2017% to Total2016% to Total
Residential Sales(1)13,09992%12,18485%10,83485%
Office Sales(2)420%741%771%
Commercial Leasing1,49910%1,0077%9157%
Room Revenues2202%2862%3263%
Others(3)8246%7535%5594%
Total Consolidated Revenues15,684110%14,303100%12,711100%

Notes:

  1. Pertains only to sales of condominium units (at present value) and related interest income.
  2. Pertains to sale of office units (at present value) and related interest income.
  3. Includes income from Cinema, parking and other income.

Business Segments 

The details of the individual performance of each business segment, in terms of revenues and EBITDA, are as follows:

Residential Development contributed 86% of the total revenues of 2018.  Total revenues reported from the sale of condominium units, including accretion of interest income, amounted to P13.4 billion. The 7% increase in this segment’s revenue was largely influenced by higher construction accomplishment for Edades Suites and Rockwell Primaries’ The Vantage as well as higher bookings of 32 Sanson, Grove and Vantage.  EBITDA from this segment amounted to P3.8 billion, which represents 71% of the total EBITDA of P5.4 billion. 

Reservation sales reached P14.9 billion, 30% higher than last year’s P11.6 billion, driven by Proscenium, Arton and Aruga Resort & Residences – Mactan, which was launched in 2018.  

Commercial Development revenues amounted to P2.0 billion, higher by 40% than last year. Leasing Income, which accounts for bulk of the segment revenues, grew from P1.0 billion to P1.5 billion due mainly from the mall expansion and RBC Sheridan. Overall, contribution from the Commercial segment improved from 10% to 13% of total revenues.  This excludes the share in the joint venture (RBC) as this is reported as “Share in Net Losses (Income) of JV” under Other Income (Expenses) and not consolidated line by line in the consolidated financial statements. 

The details of the performances per source of revenue stream are explained as follows:

  • Revenues from Retail operations amounted to P1.2 billion and accounted for 7% of total consolidated revenues.  This increased by 26% vs. last year’s revenues of P909.5 million, mainly driven by the opening of the expansion of the Power Plant Mall in 2018 which added 5,600 sqm of leasable area.
  • Cinema Operations amounted to P277.7 million and comprised 2% of the total revenues due to opening of six (6) new cinemas.
  • Office Leasing accelerated to P451.0 million from P198.8 million last year due to increased occupancy from RBC Sheridan and 8 Rockwell.  
  • Office Leasing, operated under the Rockwell-Meralco BPO Venture, generated gross revenues of P701.4 million, which grew by 2% from last year’s P689.0 million from the annual rent escalation. At its 70% share, the Company generated revenues of P491.0 million and a share in net income of P270.6 million.  To reiterate, only the P270.6 million share in net income of RBC is reflected in the Company’s consolidated statements of comprehensive income as “Share in Net Losses (Income) of JV”.

The Commercial segment’s EBITDA amounted to P1.5 billion, comprised of Retail and Office at 62% and 38%, respectively.  EBITDA increased by 26% from last year’s P1.2 billion due to the additional leasable spaces from new projects in retail and office. 

Hotel Operations contributed 2% of the total consolidated revenues for 2018.  Revenues declined from P312.7 to P283.5 million but resulted only to a 2% drop in EBITDA from P75.4 million to P73.7 million in 2018 due to lower operating expenses with the discontinue Aruga at The Grove.

Costs and Expenses

Cost of real estate amounted to P8.1 billion in 2018, almost flat with P8.2 billion that was recorded in 2017 due to lower cost incurred.

General and administrative expenses (G&A) amounted to P2.2 billion which represents 14% of the total revenues. The level of expenses grew by 19% vs. last year’s P1.8 billion. This is mainly attributable to additional expenses incurred from taxes due to higher collections in 2017; higher manpower costs, depreciation expenses and occupancy and administrative costs with the opening of new projects, RBC Sheridan in July 2017 and the Power Plant Mall Expansion and Santolan Town Plaza both opened in early 2018.

Interest Expense amounted to P1,161.9 million, which is 62% higher than 2017’s P718.0 million. Interest incurred increased as loan balance increased from P20.0 billion to P24.3 billion at a higher interest rate per annum of 5.4% vs. 2017’s 5.3%.

Share in Net Losses (Income) of JV recorded at P270.6 million, a 2% growth from last year of P264.7 million. At 70% share, the gross revenues increased by 2% to P491.0 million due to higher rental rate. The share in net income is reported net of taxes and represents the Company’s share in the operations generated by RBC.

Provision for Income Tax

Provision for income tax amounted to P965.7 million, which is 16% higher than last year’s provision of P834.5 million. The effective tax rate for 2018 is 27.3%, slightly lower than 2017’s 27.8% and still lower than the statutory tax rate of 30.0% due to the Company’s share in the income of RBC, which is no longer subject to income tax. 

Project and capital expenditures

The Company spent a total of P12.7 billion for project and capital expenditures in 2018. Bulk of the expenditures pertained to development costs of Proscenium, Aruga Hotel in Makati, Aruga Resort and Residences – Mactan and final payments for new retail and office projects in 2018.  

FINANCIAL CONDITION

Total Assets as of December 31, 2018 amounted to P56.7 billion, which grew by 19% from last year’s P47.8 billion mainly due to completed and ongoing construction of residential development projects, Aurga Hotel in Makati and several investmet properties,  as well as recognition of Trade receivables following the completion progress of ongoing residential projects (Edades Suites and The Vantage).

Total Liabilities as of December 31, 2018 amounted to P37.6 billion, higher than 2017’s P30.8 billion. The increase in liabilities was mainly from loans availed to fund construction of both residential and commercial projects.

Total Equity as of December 31, 2018 amounted to P19.1 billion. The 13% acceleration is mainly attributable to the P2.6 billion Net Income in 2018.

Current ratio as of December 31, 2018 is 2.17x from 2.85x of the previous year while Net debt to equity ratio increased to 1.16x in 2018 from 1.02x in 2017.

Causes for any material changes (+/- 5% or more) in the financial statements

Statement of Comprehensive Income Items – 2018 vs. 2017

5% increase in Sale of condominium units

Mainly driven by higher sales bookings of 32 Sanson, Grove and the Vantage projects and higher construction completion from Edades Suites and Vantage

49% increase in Lease income

Due to increased leasable area from the mall expansion and RBC Sheridan.   

20% increase in Interest Income 

Mainly due to higher interest income accretion from sales bookings at The Arton, Vantage and Aruga Resort and Residences – Mactan, which launched 276 units in October 2018.  

31% increase in Cinema revenues

Primarily due to additional seating capacity from six (6) new cinemas 

23% decrease in Room revenues

Due the discontinuance of Aruga at the Grove serviced apartments

19% increase in General and Administrative Expenses 

Due to increase in expenses from higher taxes due to higher collection in 2017 and higher operating expense (manpower, occupancy and administrative expenses) and depreciation of the newly launched retail and office projects.  

10% increase in Selling Expenses

Primarily due to higher sales commission and marketing expenses, driven by change in accounting standards of PFRS 15 amounting to P132 million, which were previously classified as prepaid selling expenses which are amortized over the construction period.  Under the new standard, marketing expenses are now classified as period costs.

62% increase in Interest Expense

Mainly due to higher loan balance and interest rate per annum.

338% increase in Foreign Exchange Gain 

Due to the impact of weaker Peso on the US dollar collections

102% decrease in Other Comprehensive Income

Mainly due to the remeasurement loss on employee benefits following a drop in stock market performance in 2018 vs. 2017. 

Balance Sheet items – 2018 vs. 2017 

20% decrease in Cash and Cash Equivalents

Primarily due to construction activities for ongoing residential, commercial and hotel projects. 

45% increase in Receivables and contract assets

Mainly due to higher cumulative sales bookings and higher construction completion  

13% increase in Real Estate Inventories

Mainly due to ongoing construction completion

24% decrease in Advances to Contractors

Due to ongoing construction completion of Proscenium’s Kirov and Sakura which are nearly complete

16% decrease in Other Current Assets

Due to lower deferred selling expenses.

37% increase in Property and equipment

Mainly due to increase in construction in progress for Aruga Hotel.

17% increase in Joint Venture and Associate

Mainly due to new JV Agreement with Carmelray Property Holdings Inc.

19% increase in Investment in equity instruments at FVOCI/ Available-for-sale investments

Due to fair value remeasurement.

39,199% increase in Deferred Tax Asset

The increase is primarily due to NOLCO coming from Subsidiaries.

171% increase in Noncurrent Asset

Due to change in accounting treatment for Advances to Contractors related to Commercial Projects, which classifies advances on Investment Properties and PPE as long-term.  

11% increase in Trade and Other Payables

Mainly attributable to increase in deferred output VAT.

22% increase in Interest Bearing Loan and Borrowings (Current + Non current)

Due to loan drawdown of P7.2B, mostly at short-term and CTS financing agreement 

5% increase in Installment Payable – net of current portion

Due to accretion of interest expense.

104% increase in Deferred Tax Liabilities

Due to increase in revenue recognition from Edades Suites, Proscenium Residences and Vantage.  

5% decrease in Pension liability

Mainly due to remeasurement gain on plan assets for the year 2018.

53% increase in Deposits and other liabilities

Primarily due to the increase deposits in preselling for The Arton by Rockwell, and higher Security deposits resulting from higher occupancy from the mall expansion, RBC Sheridan and Santolan Town Plaza.

36% increase in Other comprehensive income

Due to market appreciation of investments.

Financial and Operating Highlights

FINANCIAL AND OPERATING HIGHLIGHTS

Management’s Discussion and Analysis of Financial Condition and Results of Operation

RESULTS OF OPERATIONS:

For the year ended December 31, 2019

Rockwell Land Corporation’s net income after tax (NIAT) in 2019 amounted to P3.0 billion, a growth of 18% compounded annually since 2017. As a percentage to revenues, net income was 19% for 2019, 16% for 2018 and 15% for 2017.

Total revenues grew to P15.7 billion in 2019, increasing at a compounded annual rate of 5% since 2017. Residential development accounted for 82% of the total revenues in 2019, slightly lower than its 86% in 2018 due to a higher contribution from commercial revenues.  The contribution of Hotel Operations continues from last year at 2% of total revenues.  

Earnings before interest, taxes, depreciation and amortization (EBITDA) in 2019 amounted to P6.0 billion representing 38% of total revenues and a 20% compounded annual growth since 2017.  EBITDA from Residential Development accelerated by 13% annually from 2017 mainly due to the strong performance of Proscenium and The Vantage development.  On the other hand, Commercial Development accelerated by 35% from P1.2B to P2.2B in 2 years due to additional leasable spaces of 90,000 sqm. Meanwhile, the Hotel Operations’ EBITDA grew to P105 million due to improved occupancy and room rates of Edades Serviced Apartments. 

Residential development, commercial development and hotel operations contributed 63%, 36% and 2% to total EBITDA in 2019, respectively. 

The ratio of cost of real estate to total revenues improved to 49% coming from 52% in 2018 and 57% in 2017. This is due to lower costs incurred for most residential projects.

Besides the recent acquisitions, the Company is not aware of any event that could materially affect the statement of comprehensive income reported in this Annual Report except for the impact to the financial statements of the full adoption of the PFRS 15 which took effect starting January 2018 and PFRS 16 which took effect starting January 2019.  

By the end of 2019 debt level was at P25.7 billion while the net-debt-to-equity ratio stands at 0.82. The debt is composed of the outstanding balances of P10.0 billion corporate notes drawn in portion from January to August 2013, P5.0 billion from bond issuance in November 2013 and P20.8 billion term and CTS loans drawn from 2017-2019.  About P2.3B or 9% of the total debt has a floating interest rate.   Below is a table showing the key performance indicators of the Company for 2017-2019.

KPI201920182017
EBITDA (P)6.0 billion5.4 billion4.2 billion
Current Ratio (x)2.472.172.85
Net DE Ratio (x)0.821.161.02
Asset to Equity Ratio (x)2.612.972.82
Interest coverage ratio (x)4.174.62 5.49 
ROA5.00%4.91%4.92%
ROE13.85%14.26%13.31%
EPS (P)0.48 0.420.36

Notes:

 (1) EBITDA [Net Income + (Interest Expense, Provision for Income Tax, Depreciation & Amortization)]

(2) Current ratio [Current assets/Current liabilities]

(3) Net debt to equity ratio [(Total Interest bearing debt)-(Cash and cash equivalents) / Total Equity]

(4) Assets to Equity Ratio [Total Assets/Total Equity]

(5) Interest coverage ratio [EBITDA/ Total interest payments]

(6) ROA [Net Income/Average Total Assets]

(7) ROE [Net Income/ Average Total Equity]

(8) EPS [Net Income/number of common shares outstanding]

RESULTS OF OPERATIONS

The following section provides information on the results of operations and financial condition for the periods 2017-2019. 

Review of 2019 versus 2018

The following table shows the breakdown of the revenues by business segment for the periods 2017-2019. 

 2019% to Total2018% to Total2017% to Total
Residential Development (1)12,93882%13,41186%12,56788%
Commercial Development (2)2,48216%1,99013%1,42410%
Hotel Operations(3)2902%2832%3132%
Total Consolidated Revenues15,709100%15,684100%14,303100%
Share in Net Income (Losses) in JV and associate (4)    323      271      265  

Notes:

  1. Revenues from this segment consist of the following projects in the years indicated: The Grove (2017 to 2019), The Proscenium Towers (2017 to 2019), 53 Benitez (2017 to 2019),32 Sanson (2017 to 2019), Vantage (2017-2019), Edades Suites (2017-2019), Stonewell (2017-2019), The Arton West (2017-2019, The Arton North (2018-2019), Aruga Resort and Residences -Mactan (2018-2019, Fordham (2019), and Terreno South (2019) .
  2. Revenues from this segment include leasing income, cinema revenues and revenue from sale of office units from 8 Rockwell and Proscenium projects. The amounts exclude revenues from RBC.  Under the Accounting policy for a jointly controlled entity, results of operations of RBC are not consolidated line by line. 
  3. Revenues from Hotel Operations come from the operations of Aruga Serviced Apartments in Edades Tower (2017-2019) and The Grove (2017).
  4. These amounts represent the Company’s share in the net income after tax of RBC (2017-2019) and RCDC (2019).

Below is another table showing the breakdown of revenues by type of revenue for the periods 2017-2019. 

 2019% to Total2018% to Total2017% to Total
Residential Sales(1)12,50480%13,09984%12,18485%
Office Sales(2)20%420%741%
Commercial Leasing1,84512%1,49910%1,0077%
Room Revenues2211%2201%2862%
Others(3)1,1377%8245%7535%
Total Consolidated Revenues15,709100%15,684100%14,303100%

Notes:

  1. Pertains only to sales of condominium units (at present value) and related interest income.
  2. Pertains to sale of office units (at present value) and related interest income.
  3. Includes income from Cinema, parking and other income.

Business Segments 

The details of the individual performance of each business segment, in terms of revenues and EBITDA, are as follows:

Residential Development contributed 82% of the total revenues of 2019.  Total revenues reported from the sale of condominium units, including accretion of interest income, amounted to P12.9 billion. The 4% decrease in this segment’s revenue was mainly due to lower project accomplishment of Proscenium and The Vantage (substantial completion in 2018).  EBITDA from this segment amounted to P3.8 billion, which represents 63% of the total EBITDA of P6.0 billion. 

Reservation sales reached P16.7 billion, 12% higher than last year’s P14.9 billion, driven by Rockwell South and Nara Residences, which were both launched in 2019.  

Commercial Development revenues amounted to P2.5 billion, higher by 25% than last year. Leasing Income, which accounts for bulk of the segment revenues, grew from P1.5 billion to P1.8 billion due mainly from the Mall Expansion, Santolan Town Plaza and RBC Sheridan. Overall, contribution from the Commercial segment improved from 13% to 16% of total revenues.  This excludes the share in the joint venture (RBC) as this is reported as “Share in Net Losses (Income) of JV” under Other Income (Expenses) and not consolidated line by line in the consolidated financial statements. 

The details of the performances per source of revenue stream are explained as follows:

  • Revenues from Retail operations amounted to P1.4 billion and accounted for 9% of total consolidated revenues.  This increased by 19% vs. last year’s revenues of P1.2 billion, mainly driven by the increased occupancy of the expansion of the Power Plant Mall, RBC Sheridan and Santolan Town Plaza in 2019.
  • Cinema Operations amounted to P278.4 million and comprised 2% of the total revenues.
  • Office Leasing accelerated to P602.9 million from P451.2 million last year due to increased occupancy from RBC Sheridan, Santolan Town Plaza and 8 Rockwell. The Rockwell-Meralco BPO Venture, generated gross revenues of P738.6 million, which grew by 5% from last year’s P701.2 million from the annual rent escalation. At its 70% share, the Company generated revenues of P517.0 million and a share in net income of P307.8 million.  To reiterate, only the P307.8 million share in net income of RBC is reflected in the Company’s consolidated statements of comprehensive income as “Share in Net Losses (Income) of JV”.

The Commercial segment’s EBITDA amounted to P2.2 billion, comprised of Retail and Office at 53% and 47%, respectively.  EBITDA increased by 45% from last year’s P1.5 billion due to higher occupancy in retail and office spaces and contributed 36% to the total EBITDA. 

Hotel Operations contributed 2% of the total consolidated revenues for 2019.  Revenues increased from P283.5 to P289.9 million and EBITDA grew by 42% to P105.0 million.

Costs and Expenses

Cost of real estate amounted to P7.7 billion in 2019, 5% lower than the P8.1 billion that was recorded in 2018 following the decrease in residential revenues.

General and administrative expenses (G&A) amounted to P2.1 billion which represents 13% of the total revenues. The level of expenses declined by 2% vs. last year’s P2.2 billion. This is mainly attributable to lower expenses incurred from taxes due to lower business taxes resulting from lower collections.

Interest Expense amounted to P1.4 billion, which is 17% higher than last year’s P1.2 billion. Interest incurred increased as loan balance increased from P24.3 billion to P25.8 billion at a higher interest rate per annum of 5.6% vs. 2017’s 5.4%. This is partially offset with the capitalization of interest on borrowing costs on construction costs spent to date for commercial and hotel developments. 

Share in Net Losses (Income) of JV and associate recorded at P322.7 million, a 19% growth from last year of P270.6 million due to higher share in RBC Ortigas and new contribution from RCDC. At 70% share in JV, the gross revenues increased by 5% to P517.0 million due to higher rental rate. At 14.7% share in associate, the profit or loss/total comprehensive income of the associate for the period ended November 20, 2019 amounted to P14.9 million. The share in net income is reported net of taxes and represents the Company’s share in the operations generated by RBC and RCDC.

Provision for Income Tax

Provision for income tax amounted to P1,018.9 million, which is 6% higher than last year’s provision of P965.7 million. The effective tax rate for 2019 is 25.3% lower than 2018’s 27.3% and lower than the statutory tax rate of 30.0% due to the Company’s share in the income of RBC and RCDC, which is no longer subject to income tax. 

Project and capital expenditures

The Company spent a total of P11.1 billion for project and capital expenditures in 2019. Bulk of the expenditures pertained to development costs of Proscenium, Aruga Hotel in Makati, Aruga Resort and Residences – Mactan and costs to acquire certain properties.  

FINANCIAL CONDITION

Total Assets as of December 31, 2019 amounted to P63.5 billion, which grew by 12% from last year’s P56.7 billion mainly due to completed and ongoing construction of residential development projects, Aruga Hotel in Makati and several investment properties, as well as recognition of Trade receivables following the completion progress of ongoing residential projects.

Total Liabilities as of December 31, 2019 amounted to P39.2 billion, higher than 2018’s P37.6 billion. The increase in liabilities was mainly from loans availed to fund construction of both residential and commercial projects.

Total Equity as of December 31, 2019 amounted to P24.3 billion. The 28% growth is mainly attributable to the P3.0 billion Net Income and the P2.8 billion non-controlling interests of RCDC in 2019.

Current ratio as of December 31, 2019 is 2.47x from 2.17x the previous year while Net debt to equity ratio decreased to 0.82 in 2019 from 1.16x in 2018.

Causes for any material changes (+/- 5% or more) in the financial statements

Statement of Comprehensive Income Items – 2019 vs. 2018

5% decrease in Sale of condominium units

Mainly driven by lower project completion of Proscenium and the Vantage projects.

23% increase in Lease income

Due to increased occupancy from the PPM expansion, RBC Sheridan and Santolan Town Plaza.   

50% increase in Other revenues

Primarily due to higher carpark income and gain from sale of an office unit.

5% decrease in Cost of Real Estate

Primarily due lower construction completion from Proscenium and Vantage.

10% increase in Selling Expenses

Primarily due to higher commissions for Rockwell South and Arton projects.

17% increase in Interest Expense

Mainly due to higher loan balance and interest rate per annum.

19% increase in Share in Net Income of Joint Venture and Associate

Attributable to higher rental rates of RBC Ortigas and first-time recognition of share in net income of associate (RCDC).

100% increase in Gain on bargain purchase

Due to higher fair values of the identifiable net assets of RCDC than the consideration given.

100% increase in Gain on remeasurement of previously held interest

Due to higher fair values of the identifiable net assets of RCDC than the book value of the initial investment.

105% decrease in Foreign Exchange Gain 

Due to the impact of weaker Peso on the US dollar collections.

18,567% increase in Other Comprehensive Loss

Mainly due to the remeasurement loss on employee benefits following the lower discount rate in 2019 vs. 2018. 

Balance Sheet items – 2019 vs. 2018

178% increase in Cash and Cash Equivalents

Primarily due to collections of upon turnover dues from Proscenium and 32 Sanson-Buri and proceeds from loan borrowings.

12% decrease in Receivables and contract assets (Current and Non-current)

Mainly due to collections of upon turnover dues from Proscenium and 32 Sanson-Buri.

15% increase in Real Estate Inventories

Due to ongoing construction and acquisitions.

10% decrease in Advances to Contractors

Due to recoupment of advances of Proscenium Sakura, Lincoln and Kirov, and 32 Sanson-Buri in 2019.

64% increase in Other Current Assets

Due to higher creditable withholding taxes, prepaid costs and input VAT.

15% increase in Investment properties

Due to recognition of right-of-use assets, driven by change in accounting standards of PFRS 16 on leases amounting to P524.5 million and investment properties in progress for One Proscenium.

44% increase in Property and equipment

Mainly due to increase in construction in progress for Aruga Hotel.

12% decrease in Investment in Joint Venture and Associate

Mainly due to dividend distribution from joint venture and reversal of investment in associate after acquiring controlling interests in RCDC which is now accounted as investment in subsidiary and fully consolidated with Parent FS.

78% increase in Investment in equity instruments at FVOCI

Due to additional equity instruments and fair value remeasurement.

83% decrease in Deferred Tax Asset

The decrease is primarily due to decrease NOLCO of subsidiaries and the restatement of 2018 balances for PFRS adjustments.

85% increase in Other Noncurrent Asset

Due to increase in Advances to Contractors related to One Proscenium and Aruga Hotel, and due from related parties. 

17% decrease in Trade and other payables

Mainly due to decrease in accrued project costs and deposits from preselling. 

6% increase in Interest Bearing Loan and Borrowings (Current + Non current)

Due to higher loan drawdown of P8.6B, mostly at term loan and CTS financing agreement versus repayment.

5% increase in Installment Payable – net of current portion (Current + Non current)

Due to accretion of interest expense.

17% increase in Deferred Tax Liabilities

Due to increase in revenue recognition from Proscenium Residences, Lorraine and The Vantage.  

100% increase in Lease liability

Mainly refers to lease payments discounted over the lease term for Santolan Town Plaza and RBC Sheridan, driven by the change in accounting standards of PFRS 16 on leases.

118% increase in Pension liability

Mainly due to remeasurement loss on plan assets for the year 2019.

26% increase in Deposits and other liabilities

Primarily due to the increase in deposits from preselling.

44% increase in Other comprehensive income

Due to market appreciation of investments.

22% increase in Retained Earnings

Due to net income after tax of P3.0 billion for 2019 net of dividends amounting to P504.9 million and impact on the adoption of IFRIC interpretation on capitalized borrowing costs and PFRS 16 on leases amounting to P65.8 million. 

466% increase in Non-controlling interests

Primarily due to recognition of non-controlling interests of RCDC.

RESULTS OF OPERATIONS

The following section provides information on the results of operations and financial condition for the periods 2016-2018.  

Review of 2018 versus 2017

The following table shows the breakdown of the revenues by business segment for the periods 2016-2018. 

 2018% to Total2017% to Total2016% to Total
Residential Development (1)13,41186%12,56788%11,04087%
Commercial Development (2)1,99013%1,42410%1,32410%
Hotel Operations(3)2832%3132%3473%
Total Consolidated Revenues15,684100%14,303100%12,711100%
Share in Net Income (Losses) in JV (4)    271     265      254  

Notes:

  1. Revenues from this segment consist of the following projects in the years indicated: 205 Santolan (2016), The Grove (2015 to 2018), The Proscenium Towers (2015 to 2018), 53 Benitez (2015 to 2017),32 Sanson (2015 to 2018), Vantage (2016-2018), Edades Suites (2016-2018), Stonewell (2016-2018), The Arton West (2017-2018),Aruga Resort and Residences -Mactan (2018).
  2. Revenues from this segment include leasing income, cinema revenues and revenue from sale of office units from 8 Rockwell and Proscenium projects. The amounts exclude revenues from RBC.  Under the Accounting policy for a jointly controlled entity, results of operations of RBC are not consolidated line by line. 
  3. Revenues from Hotel Operations come from the operations of Aruga Serviced Apartments in Edades Tower and The Grove (2016-2017).
  4. These amounts represent the Company’s share in the net income after tax of RBC.

Below is another table showing the breakdown of revenues by type of revenue for the periods 2016-2018. 

 2018% to Total2017% to Total2016% to Total
Residential Sales(1)13,09992%12,18485%10,83485%
Office Sales(2)420%741%771%
Commercial Leasing1,49910%1,0077%9157%
Room Revenues2202%2862%3263%
Others(3)8246%7535%5594%
Total Consolidated Revenues15,684110%14,303100%12,711100%

Notes:

  1. Pertains only to sales of condominium units (at present value) and related interest income.
  2. Pertains to sale of office units (at present value) and related interest income.
  3. Includes income from Cinema, parking and other income.

Business Segments 

The details of the individual performance of each business segment, in terms of revenues and EBITDA, are as follows:

Residential Development contributed 86% of the total revenues of 2018.  Total revenues reported from the sale of condominium units, including accretion of interest income, amounted to P13.4 billion. The 7% increase in this segment’s revenue was largely influenced by higher construction accomplishment for Edades Suites and Rockwell Primaries’ The Vantage as well as higher bookings of 32 Sanson, Grove and Vantage.  EBITDA from this segment amounted to P3.8 billion, which represents 71% of the total EBITDA of P5.4 billion. 

Reservation sales reached P14.9 billion, 30% higher than last year’s P11.6 billion, driven by Proscenium, Arton and Aruga Resort & Residences – Mactan, which was launched in 2018.  

Commercial Development revenues amounted to P2.0 billion, higher by 40% than last year. Leasing Income, which accounts for bulk of the segment revenues, grew from P1.0 billion to P1.5 billion due mainly from the mall expansion and RBC Sheridan. Overall, contribution from the Commercial segment improved from 10% to 13% of total revenues.  This excludes the share in the joint venture (RBC) as this is reported as “Share in Net Losses (Income) of JV” under Other Income (Expenses) and not consolidated line by line in the consolidated financial statements. 

The details of the performances per source of revenue stream are explained as follows:

  • Revenues from Retail operations amounted to P1.2 billion and accounted for 7% of total consolidated revenues.  This increased by 26% vs. last year’s revenues of P909.5 million, mainly driven by the opening of the expansion of the Power Plant Mall in 2018 which added 5,600 sqm of leasable area.
  • Cinema Operations amounted to P277.7 million and comprised 2% of the total revenues due to opening of six (6) new cinemas.
  • Office Leasing accelerated to P451.0 million from P198.8 million last year due to increased occupancy from RBC Sheridan and 8 Rockwell.  
  • Office Leasing, operated under the Rockwell-Meralco BPO Venture, generated gross revenues of P701.4 million, which grew by 2% from last year’s P689.0 million from the annual rent escalation. At its 70% share, the Company generated revenues of P491.0 million and a share in net income of P270.6 million.  To reiterate, only the P270.6 million share in net income of RBC is reflected in the Company’s consolidated statements of comprehensive income as “Share in Net Losses (Income) of JV”.

The Commercial segment’s EBITDA amounted to P1.5 billion, comprised of Retail and Office at 62% and 38%, respectively.  EBITDA increased by 26% from last year’s P1.2 billion due to the additional leasable spaces from new projects in retail and office. 

Hotel Operations contributed 2% of the total consolidated revenues for 2018.  Revenues declined from P312.7 to P283.5 million but resulted only to a 2% drop in EBITDA from P75.4 million to P73.7 million in 2018 due to lower operating expenses with the discontinue Aruga at The Grove.

Costs and Expenses

Cost of real estate amounted to P8.1 billion in 2018, almost flat with P8.2 billion that was recorded in 2017 due to lower cost incurred.

General and administrative expenses (G&A) amounted to P2.2 billion which represents 14% of the total revenues. The level of expenses grew by 19% vs. last year’s P1.8 billion. This is mainly attributable to additional expenses incurred from taxes due to higher collections in 2017; higher manpower costs, depreciation expenses and occupancy and administrative costs with the opening of new projects, RBC Sheridan in July 2017 and the Power Plant Mall Expansion and Santolan Town Plaza both opened in early 2018.

Interest Expense amounted to P1,161.9 million, which is 62% higher than 2017’s P718.0 million. Interest incurred increased as loan balance increased from P20.0 billion to P24.3 billion at a higher interest rate per annum of 5.4% vs. 2017’s 5.3%.

Share in Net Losses (Income) of JV recorded at P270.6 million, a 2% growth from last year of P264.7 million. At 70% share, the gross revenues increased by 2% to P491.0 million due to higher rental rate. The share in net income is reported net of taxes and represents the Company’s share in the operations generated by RBC.

Provision for Income Tax

Provision for income tax amounted to P965.7 million, which is 16% higher than last year’s provision of P834.5 million. The effective tax rate for 2018 is 27.3%, slightly lower than 2017’s 27.8% and still lower than the statutory tax rate of 30.0% due to the Company’s share in the income of RBC, which is no longer subject to income tax. 

Project and capital expenditures

The Company spent a total of P12.7 billion for project and capital expenditures in 2018. Bulk of the expenditures pertained to development costs of Proscenium, Aruga Hotel in Makati, Aruga Resort and Residences – Mactan and final payments for new retail and office projects in 2018.  

FINANCIAL CONDITION

Total Assets as of December 31, 2018 amounted to P56.7 billion, which grew by 19% from last year’s P47.8 billion mainly due to completed and ongoing construction of residential development projects, Aurga Hotel in Makati and several investmet properties,  as well as recognition of Trade receivables following the completion progress of ongoing residential projects (Edades Suites and The Vantage).

Total Liabilities as of December 31, 2018 amounted to P37.6 billion, higher than 2017’s P30.8 billion. The increase in liabilities was mainly from loans availed to fund construction of both residential and commercial projects.

Total Equity as of December 31, 2018 amounted to P19.1 billion. The 13% acceleration is mainly attributable to the P2.6 billion Net Income in 2018.

Current ratio as of December 31, 2018 is 2.17x from 2.85x of the previous year while Net debt to equity ratio increased to 1.16x in 2018 from 1.02x in 2017.

Causes for any material changes (+/- 5% or more) in the financial statements

Statement of Comprehensive Income Items – 2018 vs. 2017

5% increase in Sale of condominium units

Mainly driven by higher sales bookings of 32 Sanson, Grove and the Vantage projects and higher construction completion from Edades Suites and Vantage

49% increase in Lease income

Due to increased leasable area from the mall expansion and RBC Sheridan.   

20% increase in Interest Income 

Mainly due to higher interest income accretion from sales bookings at The Arton, Vantage and Aruga Resort and Residences – Mactan, which launched 276 units in October 2018.  

31% increase in Cinema revenues

Primarily due to additional seating capacity from six (6) new cinemas 

23% decrease in Room revenues

Due the discontinuance of Aruga at the Grove serviced apartments

19% increase in General and Administrative Expenses 

Due to increase in expenses from higher taxes due to higher collection in 2017 and higher operating expense (manpower, occupancy and administrative expenses) and depreciation of the newly launched retail and office projects.  

10% increase in Selling Expenses

Primarily due to higher sales commission and marketing expenses, driven by change in accounting standards of PFRS 15 amounting to P132 million, which were previously classified as prepaid selling expenses which are amortized over the construction period.  Under the new standard, marketing expenses are now classified as period costs.

62% increase in Interest Expense

Mainly due to higher loan balance and interest rate per annum.

338% increase in Foreign Exchange Gain 

Due to the impact of weaker Peso on the US dollar collections

102% decrease in Other Comprehensive Income

Mainly due to the remeasurement loss on employee benefits following a drop in stock market performance in 2018 vs. 2017. 

Balance Sheet items – 2018 vs. 2017 

20% decrease in Cash and Cash Equivalents

Primarily due to construction activities for ongoing residential, commercial and hotel projects. 

45% increase in Receivables and contract assets

Mainly due to higher cumulative sales bookings and higher construction completion  

13% increase in Real Estate Inventories

Mainly due to ongoing construction completion

24% decrease in Advances to Contractors

Due to ongoing construction completion of Proscenium’s Kirov and Sakura which are nearly complete

16% decrease in Other Current Assets

Due to lower deferred selling expenses.

37% increase in Property and equipment

Mainly due to increase in construction in progress for Aruga Hotel.

17% increase in Joint Venture and Associate

Mainly due to new JV Agreement with Carmelray Property Holdings Inc.

19% increase in Investment in equity instruments at FVOCI/ Available-for-sale investments

Due to fair value remeasurement.

39,199% increase in Deferred Tax Asset

The increase is primarily due to NOLCO coming from Subsidiaries.

171% increase in Noncurrent Asset

Due to change in accounting treatment for Advances to Contractors related to Commercial Projects, which classifies advances on Investment Properties and PPE as long-term.  

11% increase in Trade and Other Payables

Mainly attributable to increase in deferred output VAT.

22% increase in Interest Bearing Loan and Borrowings (Current + Non current)

Due to loan drawdown of P7.2B, mostly at short-term and CTS financing agreement 

5% increase in Installment Payable – net of current portion

Due to accretion of interest expense.

104% increase in Deferred Tax Liabilities

Due to increase in revenue recognition from Edades Suites, Proscenium Residences and Vantage.  

5% decrease in Pension liability

Mainly due to remeasurement gain on plan assets for the year 2018.

53% increase in Deposits and other liabilities

Primarily due to the increase deposits in preselling for The Arton by Rockwell, and higher Security deposits resulting from higher occupancy from the mall expansion, RBC Sheridan and Santolan Town Plaza.

36% increase in Other comprehensive income

Due to market appreciation of investments.