ANNUAL REPORT 2013 The Art of Success THE ART FINANCIAL HIGHLIGHTS OF SUCCESS 1 123,379 37,107 32,406 23,055 102,134 20,494 5,837 6,584 14,743 17,218 22,167 66,291 3,136 13,910 9,497 11,607 44,495 2,588 12,898 6,909 10 11 12 13 10 11 12 13 10 11 12 13 REVENUES EBITDA NET INCOME (In Million Pesos) (In Million Pesos) (In Million Pesos) Attributable to: Non-controlling Interest Owners of AGI ANNUAL REPORT 2 2013 MESSAGE FROM THE CHAIRMAN AGI’s total here is no single formula for success in business. Making it good revenues for in a highly competitive business arena requires considerable Tcreativity—creativity in making decisions that matter, creativity in 2013 grew planning projects that will make a difference, and creativity in managing by a hefty people effectively to allow them to live up to their potential. I am happy and proud to note that our leaders in Alliance Global Group, Inc. (AGI) 20.8 percent to not only have the requisite creativity to fulfill this mandate, but passion P123.38 billion and expertise to succeed in our line of businesses as well. Our numbers for 2013 speak for us in this regard. from P102.13 billion the The year 2013 was definitely a challenging one for the Philippines, as the country had to deal with a few strong typhoons and a huge previous year. earthquake. Despite these natural calamities, however, the country was able to register a gross domestic product (GDP) growth of 7.2 percent at the end of the year, even higher than the 6.8 percent growth rate in 2012. This largely unexpected economic upturn was boosted mainly by the services and industry sectors and by the record levels in OFW remittances. Mirroring the country’s impressive economic performance for 2013, AGI turned in another exceptional year in practically all areas of operations. Our five business segments—real estate through Megaworld Corporation (Megaworld) and Global-Estate Resorts, Inc. (GERI); tourism entertainment and gaming through Travellers International Hotel Group, Inc. (Travellers International); food and THE ART OF SUCCESS 3 beverage through Emperador Inc.; and quick-service Emperador Deluxe was well-received in the market restaurants through Golden Arches Development and in less than a year became one of the best- Corporation (GADC), which holds the local franchise selling brands in the imported liquor segment. for McDonald’s fast-food restaurants—all contributed to AGI’s robust growth for the year. With the impressive performance of its flagship project, Resorts World Manila, Travellers International AGI’s total revenues for 2013 grew by a hefty was able to register record revenues for 2013 driven 20.8 percent to P123.38 billion from P102.13 billion in by higher gaming volume. Moreover, the proceeds of the previous year. This record-breaking performance Travellers International’s IPO enabled the company’s was a result of the robust performances of assets to expand by a huge 27.6 percent to our subsidiaries. Out of the P123.38 billion P61.2 billion in 2013. This will allow the company to consolidated revenues, Megaworld contributed fast-track the latest phases of its expansion program. P35.12 billion, reflecting a 27.5 percent increase from P27.5 billion; Emperador Inc. saw its revenues GADC’s quick-service business, in turn, continued grow by 26.6 percent to P29.86 billion from to grow on the back of the company’s continuous P23.59 billion; Travellers International (through expansion and reimaging program. The company Resorts World Manila) contributed P33.4 billion, an opened 37 new restaurants in 2013 and reimaged increase of 7.4 percent; GADC and GERI contributed 36 existing ones. Also contributing to GADC’s revenues of P15.81 billion and P1.76 billion, respectively, revenue growth are the expansion of business showing year-on-year increases of 15.8 percent and extensions and the aggressive advertising and 26.5 percent. promotional campaigns to support new and existing products. Our net income for the year went up by 12.5 percent to P23.1 billion, from P20.5 billion in 2012, while the As the newest member of the AGI family, GERI, portion attributable to owners of the parent company our integrated tourism estate developer, showed a grew by 23.8 percent to P17.2 billion in 2013 from relatively strong perfomance in 2013, improving on its P13.9 billion the previous year, on the back of strong real estate sales and hotel operations by 32.3 percent revenues from our five subsidiaries. and 151.9 percent, respectively. The development of GERI’s two flagship projects—Boracay Newcoast and Megaworld, the biggest contributor to our revenues Twin Lakes in Tagaytay—is still ongoing with new for the year, sustained its strong performance in developments being initiated within the two master- the past years by posting a record P68.2 billion in planned resorts. reservations sales from new projects that it launched in 2013. In turn, real estate sales increased by I am happy to note that the past year has been a 16.9 percent year-on-year while rental income from highly successful one for AGI. Not only were we office developments and lifestyle malls grew by able to achieve our profit and growth objectives 21 percent from 2012. The company also realized a for the year with lots to spare, we were able to set gain of P763.8 million on the acquisition of a wholly the foundation for even better things to come in owned subsidiary. Megaworld remains the biggest the future. residential developer and BPO office space landlord in the country today. As we look into the future, we believe that we are armed with strong brands that have weathered Emperador Inc. continued its strong showing in the diverse challenges to come up better and even distilled spirits industry for the year with Emperador stronger. We assure you that we will not let our Brandy registering a higher sales volume of past successes lull us into complacency. Instead, 33 million cases sold as compared to 31 million cases we will forge ahead with an even firmer resolve sold in 2012. Emperador Light and The BaR flavored to do better than ever, with the confidence of alcoholic drinks, in turn, maintained their good sales knowing that we have, after all, mastered the art performance with the latter even adding a new of success. variant during the year. Emperador Inc.’s acquisition of Bodega San Bruno in Spain in January 2013 also allowed the company to offer Emperador ANDREW L. TAN Deluxe just a couple of months after. Chairman & CEO ANNUAL REPORT 4 2013 OPERATIONAL HIGHLIGHTS Megaworld was the biggest contributor to AGI revenues in 2013, sustaining its strong performance in the past years by posting a record P68.2 billion in reservations sales from 18 projects that it launched in 2013. Real estate sales increased by 16.9 percent and rental income from office developments and lifestyle malls grew by 20.9 percent. Megaworld remains the biggest residential developer and BPO office space landlord in the country today. Emperador Inc. continued its strong showing in the distilled spirits industry with Emperador Brandy registering a higher sales volume of 33 million cases sold in 2013 as compared to 31 million cases in 2012. Emperador Inc.’s acquisition of Bodega San Bruno in Spain allowed the company to offer Emperador Deluxe in 2013. Emperador Deluxe was well-received in the market and in less than a year became one of the best-selling brands in the imported liquor segment. THE ART OF SUCCESS 5 The impressive performance of Resorts World Manila helped Travellers International to register a significant increase in revenues for 2013. Total gross revenues reached a record P33.4 billion in 2013, an increase of 7.4 percent from the previous year’s figure. The proceeds of Travellers International’s IPO, in turn, enabled the company’s assets to expand by a huge 27.6 percent and arm the company with what it needs to fast-track the latest phases of its expansion program. Global-Estate Resorts, Inc. (GERI) showed a strong showing in 2013, improving on its real estate sales and hotel operations by 32.3 percent and 151.9 percent, respectively. The development of GERI’s two flagship projects—Boracay Newcoast in Boracay and Twin Lakes in Tagaytay—is still ongoing with new developments being initiated within the two master-planned resorts. Golden Arches Development Corporation (GADC) continued to grow on the back of the company’s continuous expansion and re-imaging program. The company opened 37 new restaurants in 2013 and re-imaged 36 existing ones. Also contributing to GADC’s revenue growth are the expansion of business extensions and the aggressive advertising and promotional campaigns to support new and existing products. CREATING PERFECT COMMUNITIES Since its inception in 1989, Megaworld has always been firm in its resolve to create communities that matter. Project after project, the company has seen to it that the communities it develops not only provide tenants with the comfort and convenience they need but also contribute substantially to the enhancement and beautification of the metropolitan landscape. For 24 years, the company has striven to create perfect townships and mixed-use developments while successfully building its own reputation as the largest township and residential condominium developer, and BPO office developer and landlord in the country. THE ART OF SUCCESS 7 13.84 36.24 9.03 25.84 30.60 11.30 7.41 21.51 28.63 9.36 19.08 5.98 7.65 5.09 20.54 15.40 14.57 17.76 6.43 4.07 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 CONSOLIDATED REAL ESTATE EBITDA NET INCOME REVENUES REVENUE (in Billion Pesos) (in Billion Pesos) (in Billion Pesos) (in Billion Pesos) ANNUAL REPORT 8 2013 MEGAWORLD CORPORATION One Eastwood Avenue Eastwood City The heart of In 2013, the company continued on its growth track as it ventured into new locations and tapped new markets.