Blurb-25 File-300 Sec 17A Dec 2009 Ver Finalv2.Pdf
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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 631-80-24 (Contact Person) (Company Telephone Number) 1 2 3 1 1 7 - A 0 5 3 1 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 13,019 P30,973 million P43,686 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, 2009 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 594,326,513 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=16.330 billion (as of December 31, 2009) BUSINESS DISCUSSION TABLE OF CONTENTS Page No. PART I - BUSINESS AND GENERAL INFORMATION Item 1 Business 1-26 Item 2 Properties 26-28 Item 3 Legal Proceedings 28-33 Item 4 Submission of Matters to a Vote of Security Holders 33 PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5 Market for Issuer’s Common Equity and Related Stockholders Matters 33-36 Item 6 Management’s Discussion and Analysis or Plan of Operation 37-47 Item 7 Financial Statements 47-57 Item 8 Changes in and Disagreements with Accountants on 57 Accounting and Financial Disclosure PART III - CONTROL AND COMPENSATION INFORMATION Item 9 Directors and Executive Officers of the Issuer 58-70 Item 10 Executive Compensation 70-71 Item 11 Security Ownership of Certain Beneficial Owners and Management 72-76 Item 12 Certain Relationships and Related Transactions 76 PART IV – CORPORATE GOVERNANCE 77-79 PART V - EXHIBITS AND SCHEDULES Item 13 a. Exhibits 80 b. Reports on SEC Form 17-C (Current Report) 80-83 SIGNATURES 84 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES 85-217 ANNEX A SUMMARY OF OWNERSHIP OF SHARES 218-221 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 (“FPHC”, “First Holdings” or the “Company”) is a holding company registered and incorporated on June 30, 1961. 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, manufacturing and construction, and other service industries. The common shares of FPHC were listed on and traded in the Philippine Stock Exchange beginning May 3, 1963. The Company is 42.79% owned by Benpres Holdings Corporation (Benpres), also a publicly-listed, Philippine-based entity, majority of which is owned by privately held corporations of the Lopez family through Lopez, Inc. The right to vote the shares of Benpres was transferred to Lopez, Inc. through a voting trust agreement. The remaining shares are held by various shareholder groups and individuals. FPHC’s net income for the year ended December 31, 2009 amounted to P12.9 billion. Its net income attributable to equity holders of the Parent amounted to P8.5 billion. Consolidated revenues amounted to P58.9 billion. Significant transactions and information on certain investees: FPII In September 2007, FPHC transferred all of its 15,043,635 shares in FPIDC, representing 51% equity interest in FPIDC, to FPII, in exchange for 2,534,991,020 unissued shares in FPII. The issuance of shares to FPHC was based on the unaudited net book value of FPIDC amounting to P4.97 billion as of December 31, 2007. The goodwill from the exchange transaction was provisionally determined as the difference between fair value of the 15,043,635 FPIDC shares and fair value of the 2,534,991,020 FPII shares. The fair value of the FPII shares included the book value of shares of FPIDC, which became a subsidiary of FPII after the exchange of shares. The final goodwill amounted to P6.9 million. On November 13, 2008, Metro Pacific Investment Corporation (MPIC) completed the purchase of the 48.08% and 50.04% interest of Benpres and the First Holdings Group, respectively in FPII. The transaction resulted in the acquisition of MPIC of the 67.1% effective interest in MNTC and 46% effective interest in Tollways Management Corporation (TMC). First Holdings Group recognized a gain on sale of investment in subsidiary amounting to P2.8 billion. Meralco On December 22, 2007, FPHC acquired the 6.6% interest in the outstanding common stock of Meralco from Meralco Pension Fund for a total consideration of P8.3 billion. On July 5, 2007, FPHC and Union Fenosa Internacional, S.A. (Union Fenosa) signed a Memorandum of Agreement, whereby FPHC agreed to purchase all of Union Fenosa’s 40% economic and voting interest in First Philippine Utilities Corp. (FPUC, formerly First Philippine Union Fenosa, Inc.) for a total consideration of P11.2 billion (US$250 million). FPHC currently owns 100% of FPUC. With the foregoing completed acquisitions, the total direct and indirect interest of FPHC in Meralco as of December 31, 2008 is 33.39%. On March 12, 2009, the Company entered into an Investment and Cooperation Agreement with Philippine Long Distance Telephone (PLDT) designed to allow both companies, directly or indirectly, to vote their shares in Meralco based on mutuality of interest and proportionate allocation of voting rights. The agreement, subject to certain conditions and approvals, contemplates the sale for P20.07 billion of a total of 223,000,000 common shares or approximately 20% of the outstanding capital stock of Meralco in favor of PLDT or its affiliates. The Company and PLDT agreed on certain corporate governance principles such as nomination of directors to the Meralco Board. The sale was completed on July 14, 2009. This reduced the Company’s total direct and indirect ownership in Meralco to 13.38% approximately as of June 30, 2009. On November 5, 2009, FPHC and MPIC entered into an agreement covering, among other things, certain agreed enhanced cooperation stipulations between FPHC and MPIC as shareholders of Meralco and the extension of a short-term loan of P11.2 billion to FPHC or its designated subsidiaries. On November 20, 2009, FPUC, a wholly-owned subsidiary of the Company, was granted a short-term loan by MPIC in the amount of approximately P11.205 billion. The loan was evidenced by a promissory note which was to mature on June 30, 2010 with an interest of 5% per annum.