2.00.00 Cover Sheet 2020.Docx
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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 , R O C K W E L L B U S I N E S S C E N T E R T O W E R 3 O R T I G A S A V E N U E , P A S I G C I T Y (Business Address: No. Street City/Town/Province) Maria Carmina Z. Ubaña (02) 8631-8024 (Contact Person) (Company Telephone Number) 1 2 3 1 1 7 - A 0 5 2 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 11,993 ₱ 113,003 million ₱21,478 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, 2020 2. SEC Identification Number 19073 3. BIR Tax Identification No. 000-288-698-000 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. 6th Floor Rockwell Business Center Tower 3 Ortigas Avenue, Pasig City 1604 Address of principal office Postal Code 8. (632) 8631-8024 Issuer’s telephone number, including area code 9. N/A 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 504,545,994 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: ₱17,738 million (as of December 31, 2020) TABLE OF CONTENTS Page No. PART I - BUSINESS AND GENERAL INFORMATION Item 1 Business (including Corporate Sustainability) 1-15 Item 2 Properties 16-22 Item 3 Legal Proceedings 23-31 Item 4 Submission of Matters to a Vote of Security Holders 32 PART II - OPERATIONALAND FINANCIAL INFORMATION Item 5 Market for Issuer’s Common Equity and Related Stockholders Matters 33-35 Item 6 Management’s Discussion and Analysis or Plan of Operation 36-65 Item 7 Financial Statements 66-67 Item 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 68 PART III – CONTROL AND COMPENSATION INFORMATION Item 9 Directors and Executive Officers of the Issuer 69-89 Item 10 Executive Compensation 90-91 Item 11 Security Ownership of Certain Beneficial Owners and Management 92-93 Item 12 Certain Relationships and Related Transactions 94-95 PART IV – CORPORATE GOVERNANCE (Item 13) 95-232 PART V – EXHIBITS AND SCHEDULES Item 14 Exhibits and Reports on SEC Form 17-C 233-237 SIGNATURE PAGE 238 EXHIBIT “A” AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND AUDITED PARENT COMPANY FINANCIAL STATEMENTS STAMPED RECEIVED BY THE BIR EXHIBIT “B” REVISED SRC RULE 68 (SCHEDULES) EXHIBIT “C” REPORT OF AUDIT COMMITTEE FOR 2020 ANNEX “A” SUMMARY OF OWNERSHIP OF SHARES PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business Description of Business of the Issuer and Selected Significant Subsidiaries (1) Business of Issuer First Philippine Holdings Corporation (the “Parent Company” or “FPH”), which was formed in 1961 with the primary purpose of purchasing and acquiring shares of stocks, bond issues, and notes of Meralco, has grown into a multi-billion company with diversified interests in power generation, real estate development, manufacturing, construction and other services. The Parent Company and its subsidiaries are collectively referred to as the “FPH Group” or “Group” in this report. The Group’s operating businesses are organized and managed according to the nature of the products and services, with each segment representing a strategic business unit that offers different products and serves different markets. The Group’s major business segments are in Power Generation, Real Estate Development, Manufacturing, Construction and Others. The relative contribution of each product or service to total sales/revenues for the year ended December 31, 2020 follows: (Php in Millions) Revenues % Contribution Sale of electricity ₱91,325 85% Real estate 7,214 7% Contracts and services 6,824 6% Sale of merchandise 1,918 2% Total ₱107,281 100% The Parent Company has no foreign sales. In the normal course of its operations, the Parent Company enters into transactions with affiliates and subsidiaries on an arm's-length basis. In the last three years, FPH’s significant equity transactions involved common stock buybacks totalling 49,660,575 common stocks at an average cost of ₱73.82 per share equivalent to ₱3,666 million. As at December 31, 2020, the Parent Company has bought back a total of 105,103,645 common stocks at an average cost of ₱66.71 per share equivalent to ₱7,011 million of treasury stocks. The Parent Company has a total of 123 employees as of December 31, 2020. The Parent Company does not engage in any speculative derivative transactions. 1 (2) Business Development and Discussion of Selected Significant Subsidiaries FPH was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on June 30, 1961. The 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, manufacturing and construction services and others. The common stocks of the Parent Company were listed on and traded in the Philippine Stock Exchange (PSE) beginning May 3, 1963. As of December 31, 2020, the Parent Company is 51.04%-owned by Lopez Holdings Corporation (Lopez Holdings), a publicly-listed Philippine-based entity. Majority of Lopez Holdings is owned by Lopez, Inc. The remaining shares are held by various shareholder groups and individuals. The Parent Company discloses in its annual report principal risks, if any have been noted as significant, associated with the identity of the controlling shareholders; the degree of ownership concentration; cross-holdings among company affiliates; and any imbalances between the controlling shareholders’ voting power and overall equity position in the Parent Company. The risks discussed in the report would affect all shareholders. In any event, the Parent Company has in place policies and safeguards to ensure transparency, disclosure and arms' length transactions, including on related party dealings and against conflicts of interest, among others. For the year ended December 31, 2020, the Group’s consolidated revenues totalled ₱107.3 billion and the consolidated net income amounted to ₱20.8 billion, with ₱9.9 billion of net income attributable to equity holders of the Parent. Significant transactions and information on certain investees per sector are as follows: Power Generation First Gen Corporation (First Gen) was incorporated in the Philippines and registered with the SEC on December 22, 1998. First Gen and its subsidiaries (collectively referred to as First Gen group) are involved in the power generation business. On February 10, 2006, First Gen successfully completed the Initial Public Offering (IPO) in the Philippines of 193,412,600 common stocks, including the exercised greenshoe option of 12,501,700 common stocks, at an IPO price of ₱47.00 per share. The common stocks of First Gen are currently listed and traded on the First Board of the PSE. First Gen is considered a public company under Section 17.2 of the Securities Regulation Code (SRC). In the last three years, First Gen’s significant equity transactions are as follows: In its meeting held on June 14, 2018, the BOD of First Gen approved a 2-year buyback program for its common stocks and Series “G” redeemable preferred stocks for the period June 15, 2018 to June 14, 2020. The common stocks buyback program covers up to 300 million of First Gen’s common stocks, while the Series “G” Perpetual Preferred Shares buyback program covers up to ₱10 billion worth of said redeemable preferred stocks. In the same meeting, the BOD of First Gen likewise approved the redemption of all outstanding Series “F” Perpetual Preferred Shares at the applicable Redemption Value of ₱100.00 per share.