The Spirit of Excellence Annual Report 2012 Contents
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THE SPIRIT OF EXCELLENCE ANNUAL REPORT 2012 CONTENTS 01 Financial Highlights 02 Chairman’s Message 04 Summary of Excellence 06 Emperador Distillers, Inc.: The Rewards Of Excellence 12 Megaworld: What Dreams Are Made Of 22 Travellers International: Redefining Leisure And Entertainment 28 Golden Arches Development Corp.: Modernizing the Restaurant Experience 34 Global-Estate Resorts, Inc.: Taking Philippine Tourism To New Heights 40 Board Of Directors Profile 43 Corporate Governance 44 Management’s Discussion And Analysis 49 Financials ABOUT THE COVER Much like the free flow of liquid, AGI’s fluidity sparkles with a golden dynamism in adapting to a changing economic environment. It reflects THE SPIRIT OF EXCELLENCE imbued in the Company to rise above the challenge in breaking through global standards to achieve a sterling performance in 2012. FINANCIAL HIGHLIGHTS FINANCIAL 2009 38,843 ( In Million Pesos ) ( InMillionPesos 2010 44,495 Revenue 2011 66,097 2012 102,718 2009 10,469 ( In Million Pesos ) ( InMillionPesos 2010 12,898 EBITDA 2011 19,608 2012 32,249 Attribute to: Attribute 2009 2,012 4,796 6,808 ( In Million Pesos ) ( InMillionPesos Net Income Net Income to MI to Net Income AGI to Net Income 2010 2,588 6,909 9,497 ALLIANCE GLOBAL 2011 3,136 11,608 14,744 2012 6,584 13,904 20,488 1 CHAIRMAN’S MESSAGE THE SPIRIT OF EXCELLENCE he year 2012 was a favorable one not only for your Company but Tfor the Philippines as a whole. The year saw the Philippine’s GDP growing by 6.6%, on the back of the active trade, services, real estate, and construction sectors, even exceeding expectations of economists and market analysts. 2 ANNUAL REPORT 2012 Contributing to the country’s sterling economic growth, been our best achiever and our biggest revenue contributor. AGI continues to improve on past record performances. Megaworld’s share in the achievement of our financial Our major business segments—real estate through objectives for 2012, however, remains substantial. Megaworld Corporation (Megaworld) and Global- Estate Resorts, Inc. (GERI); food and beverage through EDI remained a strong player in the local distilled spirits Emperador Distillers, Inc. (EDI); quick-service restaurants industry as Emperador Brandy and The BaR flavored through Golden Arches Development Corporation alcoholic drinks continued to benefit from continuously (GADC), which holds the local franchise for McDonald’s growing customer patronage. The demand for Emperador fast-food restaurants; and tourism-entertainment and Light also remained very strong. In 2012 alone, Emperador gaming through Travellers International Hotel Group, Inc. sold 31 million cases, making it the 2nd largest consumed (Travellers International)—all turned in exceptional figures brand spirit globally and the world’s largest-selling brandy. for the year. EDI expanded its production capacity and technical Our total revenues grew by a record 63.1% to P102.72 capabilities through the acquisition of the Sta. Rosa plant billion in 2012 from P62.97 billion the previous year, of Diageo Philippines Inc. that increased the total bottling primarily due to revenues contributed by Resorts World capacity of the company by about 20%. This acquisition Manila which amounted to P32.5 billion. Also contributing helps boost the company’s competitiveness in promoting substantially to our revenue growth are the 17% growth Emperador as a strong global brand. in the sale of goods such as consumer products and real estate and the 220% increase in the rendering of services In turn, GADC continued its strong showing in the quick-service due to revenues added from Travellers. restaurant business as its revenues substantially grew. As in previous years, the company owed its revenue growth With the consolidation of Travellers in 2012, AGI’s tourism- to the opening of new McDonald’s company-owned and entertainment and gaming business became the biggest franchised restaurants. contributor to total revenues for the year, putting in 31.6%. The real estate business, through Megaworld, was the GERI, our newest subsidiary, is now deep into the second highest contributor with 26.8%. This was followed development of two major projects—Boracay Newcoast by EDI’s food and beverage business with 23%, and GADC’s and Twin Lakes. We have allotted a total of P20 billion for quick-service restaurant business with 13.6%. these two flagship projects which will feature integrated master-planned layouts that include world-class resorts Our net income increased by 76% to P20.5 billion in 2012 and first-rate facilities and amenities. Moreover, through from P11.6 billion the previous year, before the P3.1 billion GERI, we will be developing over 1,300 hectares of prime non-recurring income from the acquisition of a subsidiary. land in Boracay, Tagaytay and Nasugbu, Batangas into The portion attributable to owners of the parent company world-class tourism estates. grew by 64% to P13.9 billion from P8.5 billion in 2011, propelled by the strong results from our real estate, Taking into account everything that happened in 2012, tourism-entertainment and gaming, and food and beverage I am happy and proud to say that your Company outdid segments. itself again, and in grand fashion. Our efforts in building strong brands that will weather any kind of economic As the biggest contributor to our bottom line in 2012, storm or take advantage of beneficial socio-economic Travellers turned in an impressive performance for the year. climates paid off quite well. Travellers’ flagship project, Resorts World Manila, registered an average foot traffic of 17,200 per day and a total of 6.3 In the face of unpredictable global economic conditions, million visits by the year end, a 4% increase from 2011 we remain upbeat on our prospects for continued growth figures. The increase in foot traffic was due to a series of and increased profitability. Allow me to assure you that new promotional events and services and the production we will not rest on our laurels but will continually aspire of the award-winning musical The King and I. Moreover, to outdo ourselves every single year. We are committed to Resorts World Manila’s membership reached 1.7 million do even better than before, and to reach greater levels of by end-2012. achievement in the spirit of excellence. On the other hand, Megaworld continued to lead the real estate industry as it sold more than 12,000 residential units worth roughly P63.5 billion in 2012, maintaining its distinction as the biggest residential developer in the country. The company launched 11 new projects for the ANDREW L. TAN year while continuing its work on existing ones. Prior to Chairman & CEO the consolidation of Travellers, Megaworld had consistently ALLIANCE GLOBAL 3 SUMMARY OF EXCELLENCE Emperador Distillers, Inc. (EDI) Megaworld performed impressively remained a strong player in the in 2012 as demand for the company’s local distilled spirits industry as world-class townships and BPO Emperador Brandy, Emperador Light, office spaces continued to grow. and The BaR flavored alcoholic For the year, Megaworld sold more drinks continued to benefit from than 12, 000 residential units worth continuously growing customer roughly P63.5 billion, maintaining its patronage. In 2012 alone, Emperador distinction as the biggest residential sold 31 million cases, making it the developer in the Philippines. 2nd largest consumed brand spirit Megaworld also continued to be the globally and the world’s largest- biggest BPO office space provider in selling brandy. the country. In 2012, the company launched 11 new projects while continuing its work on existing ones. 4 ANNUAL REPORT 2012 Travellers International continued its Golden Arches Development Global-Estate Resorts, Inc. (GERI) is momentum of growth in 2012 as its Corporation (GADC) continued its currently deep into the development of flagship project, Resorts World Manila, fine showing in the quick-service two major projects—Boracay Newcoast remained a favorite leisure destination restaurant business as revenues once and Twin Lakes. The company has for the year. The complex registered again substantially grew in 2012. allotted a total of P20 billion for these an average foot traffic of 17,200 per As in previous years, the company two flagship projects which will feature day and a total of 6.3 million visits owed its revenue growth to the integrated master-planned layouts by the year-end, a 4% increase from opening of new McDonald’s that include world-class resorts and 2011 figures. The increase in foot restaurants, the increase in business first-rate facilities and amenities. GERI traffic was due to a series of new extensions, and the re-imaging of will be developing over 1, 300 hectares promotional events, new services, and company-owned outlets. A total of of prime land in Boracay, Tagaytay and the production of the award-winning 49 new restaurants were opened Nasugbu, Batangas into world-class musical The King and I. in key metropolitan areas in 2012, tourism estates. bringing the total number of stores nationwide to 376. ALLIANCE GLOBAL 5 6 ANNUAL REPORT 2012 EMPERADOR DISTILLERS, INC. THE REWARDS OF EXCELLENCE ALLIANCE GLOBAL 7 EMPERADOR DISTILLERS, INC. he quest for excellence has always been a challenging pursuit. Many people believe that T excellence is elusive. Emperador Distillers Inc. In 2012 alone, (EDI), the food and beverage arm of AGI, believed that excellence in operation and innovation are worthwhile pursuits and are attainable. This belief has propelled Emperador sold their flagship product Emperador Brandy, to become as the largest-selling brandy in the world by volume loved 31 million cases, by million of consumers in the country and compatriots living abroad. making it the 2nd largest As a brand, Emperador is one of the leaders in the international brandy market, carrying an outstanding consumed brand spirit track record in sales and several global distinctions under its belt.