First Philippine Holdings Corporation

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First Philippine Holdings Corporation A lopez Group Company April 4, 2013 SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA Greenhills Mandaluyong City, Metro Manila The management of First Philippine Holdings Corporation (the Company) is responsible for the preparation and fair presentation of the consolidated financial statements as of December 31, 2012 and 2011, and for each of the three years in the period ended December 31, 2012, in accordance with the Philippine Financial Reporting Standards, including the additional components attached therein. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. The Board of Directors reviews and approves the consolidated financial statements and submits the same to the stockholders of the Company. SyCip Gorres Velayo & Co., the independent auditors, appointed by the stockholders, has examined the consolidated financial statements of the Company in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such examination. Signed under oath by the following: ~~n ~ ~J FEDERICO R. LOPEZ / ELPIDIO L. m~~ FRANCIS GILES B. PUNO Chairman of the Board President & -rw Executive Vice President, Treasurer & Chief Executive Officer Chief Operating Officer & Chief Finance Officer l\PR ':G,~~ SUBSCRlBED AND SWORN to before me this,lth ayof Ap~il, 2013, affiants exhibited to me their Competent Evidence of Identity (CEI) and Community Tax Certificate (CTC) Nos. as follows: Name Details of CEI/CTC Issued On/Issued At Federico R. Lopez SSS#03-7278902-0/01720445 1-15-20 13IPasig City Elpidio L. Ibanez SSS#03-2S69048-3/0 1195294 1-14-2013/Mand. City Francis Giles B. Puno SSS#33-5536302-1101728482 1-16-2013/Pasig City Doc. No. fJ7Y; Page No. 1":F; ANA SO~A. mASON Book No. I Series of2013. First Philippine Holdings Corporation 4th Floor, Benpres Building, Exchange Road corner Meralco Avenue, Pasig City 1600, Philippines tel +63 2 631-8024 • fax +63 2 631-4089 • www.fphc.com COVER SHEET 1 9 0 7 3 SEC Registration Number F I R S T P H I L I P P I N E H O L D I N G S C O R P O R A T I O N A N D S U B S I D I A R I E S (Company’s Full Name) 6 t h F l o o r , B e n p r e s B u i l d i n g , E x c h a n g e R o a d c o r n e r M e r a l c o A v e n u e , P a s i g C i t y (Business Address: No. Street City/Town/Province) Ms. Perla R. Catahan 631-8024 (Contact Person) (Company Telephone Number) 1 2 3 1 1 7 - A 0 5 2 7 Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting) (Secondary License Type, If Applicable) Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings 12,560 P=16,580 million P=41,618 million Total No. of Stockholders Domestic Foreign To be accomplished by SEC Personnel concerned File Number LCU Document ID Cashier S T A M P S Remarks: Please use BLACK ink for scanning purposes. SECURITIES AND EXCHANGE COMMISSION SEC FORM 17- A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF CORPORATION CODE OF THE PHILIPPINES 1. For the year ended December 31, 2012 2. SEC Identification Number 19073 3. BIR Tax Identification No. 350-000-288-698 4. Exact name of registrant as specified in its charter: FIRST PHILIPPINE HOLDINGS CORPORATION 5. Philippines 6. (SEC Use Only) Province, Country or other jurisdiction Industry Classification Code: Of incorporation or organization 7. 4th Floor, Benpres Building Exchange Road corner Meralco Avenue Pasig City 1600 Address of principal office Postal Code 8. (632) 631-024 to 30 Issuer’s telephone number, including area code 9. Not Applicable Former name, former address, and former fiscal year, if changed since last report 10. Securities registered pursuant to Section 8 and 12 of the SRC, or Section 4 and 8 of the RSA Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding (in millions) Common shares 549,673,797 Preferred shares 43,000,000 11. Are any or all of these securities listed on the Philippine Stock Exchange. Yes [x] No [ ] 12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports): [Note: Sec. 26 of the CCP deals with reporting of election of directors or officers to the SEC; Sec. 141 with the submission of financial statements to the SEC.] Yes [x] No [ ] (b) has been subject to such filing requirements for the past ninety (90) days. Yes [x] No [ ] 13. Aggregate market value of the voting stock held by non-affiliates: P=26.628 billion (as of December 31, 2012) BUSINESS DISCUSSION TABLE OF CONTENTS Page No. PART I - BUSINESS AND GENERAL INFORMATION Item 1 Business ………………………………………………………………………………… 1-28 Item 2 Properties ………………………………………………………………………………. 28-31 Item 3 Legal Proceedings ……………………………………………………………………… 31-38 Item 4 Submission of Matters to a Vote of Security Holders …………………………………. 38 PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5 Market for Issuer‟s Common Equity and Related Stockholders Matters ……………………………………………………… 39-42 Item 6 Management‟s Discussion and Analysis or Plan of Operation ………………………… 42-72 Item 7 Financial Statements …………………………………………………………………… 72-83 Item 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ………………………………………………….. 83 PART III - CONTROL AND COMPENSATION INFORMATION Item 9 Directors and Executive Officers of the Issuer ………………………………………… 83-94 Item 10 Executive Compensation ……………………………………………………………….. 95-96 Item 11 Security Ownership of Certain Beneficial Owners and Management ……………………………………………………………………….. 96-100 Item 12 Certain Relationships and Related Transactions ………………………………………. 100-101 PART IV – CORPORATE GOVERNANCE …………………………………………………….. 102-104 PART V – EXHIBITS AND SCHEDULES Item 13 a. Exhibits ……………………………………………………………………………. 104 b. Reports on SEC Form 17-C (Current Report) …………………………………….. 105-107 SIGNATURES ………………………………………………………………………………………. 108 EXHIBIT “A” AUDITED CONSOLIDATED FINANCIAL STATEMENTS EXHIBIT “B” SRC RULE 68, AS AMENDED (SCHEDULES) EXHIBIT “C” AUDIT COMMITTEE REPORT ANNEX “A” SUMMARY OF OWNERSHIP OF SHARES PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business (A) Description of Business of the Issuer and Selected Significant Subsidiaries (1) Business Development Describe the development of the business of the registrant and its significant subsidiaries during the past three (3) years, or such shorter period as the registrant may have been engaged in business. If the registrant has not been in business for three years, give the same information for predecessor (s) of the registrant, if there is any. This business development description should include, for the registrant and its subsidiaries, the following: (a) form and date of organization; (b) any bankruptcy, receivership or similar proceeding; and, (c) any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of business. First Philippine Holdings Corporation (the Parent Company or FPH) was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on June 30, 1961. Extension of its corporate life was approved by the SEC on June 29, 2007 for another 50 years from June 30, 2011. Under its amended articles of incorporation, its principal activities consist of investments in real and personal properties including, but not limited to, shares of stocks, notes, securities and entities in the power generation, real estate development, roads and tollways operations, manufacturing and construction, financing and other service industries. The Parent Company and its subsidiaries are collectively referred to as the “Group.” The common shares of the Parent Company were listed on and traded in the Philippine Stock Exchange (PSE) beginning May 3, 1963. The Parent Company is 46.20%-owned by Lopez Holdings Corporation [Lopez Holdings and formerly Benpres Holdings Corporation (Benpres), a publicly-listed Philippine-based entity] as of December 31, 2012. Majority of Lopez Holdings is owned by Lopez, Inc. The remaining shares are held by various shareholder groups and individuals. The consolidated net income for the year ended December 31, 2012 amounted to P=12.4 billion. Its net income attributable to equity holders of the Parent amounted to P=9.6 billion. Consolidated revenues amounted to P=78.0 billion. Significant transactions and information on certain investees: Manila Electric Company (Meralco) On March 12, 2009, the Group entered into an Investment and Cooperation Agreement (ICA) with Philippine Long Distance Telephone (PLDT). The ICA, subject to certain conditions and approvals, contemplated the sale for P=20,070 million of a total of 223 million common shares or approximately 20% of the outstanding capital stock of Meralco in favor of PLDT or its affiliates. On the same date, the Group entered into an Exchangeable Note Agreement (the Note) with Pilipino Telephone Corporation (Piltel), a subsidiary of PLDT, amounting to P=2 billion, exchangeable into 22,222,222 shares of voting common stock of Meralco owned by the Group. The Note, at the option of Piltel, may be exchanged into shares which will have a value equal to P=90 per share.
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