Annual Report 2015 - Discovery€¦ · accommodations and world-class amenities that combine efficiency and Filipino all-heart hospitality while adhering to the principles of sustainability

Annual Report 2015

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Contents01 Mission and Vision02 President’s Report04 Competitive Strengths08 Our Properties20 Corporate Social Responsibility24 Corporate Governance25 Independent Auditor’s Report26 Financial Statements31 Key Officers32 Board of Directors

2015 Integrated Annual & Sustainability Report 1

VisionTo provide the finest hospitality in strategically located tourist destinations in the Philippines

by providing premium accommodations and world-class amenities that combine

efficiency and Filipino all-heart hospitality while adhering to the principles of sustainability and environmental responsibility.

To be the most admired and preferred Filipino brand in the

global hospitality industry.

Mission

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Discovery World Corporation recognizes the contribution of all people who continue to work with passion

and loyalty.

Service with All HeartMy fellow shareholders,

The year 2015 was dedicated to further enhance the progress and prestige of Discovery World Corporation (DWC).

The economic and political issues that afflicted the international community had little effect on the Philippine economy. Our country was able to post a 5.8% growth in GDP, and was among the fastest-growing economies in East Asia and the Pacific. The tourism industry mirrored this growth, with an increase of 10% in arrivals compared to last year. Travellers from the East Asian region accounted for 50% of the total arrivals, followed by North America at 18% and ASEAN region at 9%. Travelers from Australasia and Europe also remain to be a potential market due to their substantial growth at 9.7%. Markets from the Middle-East, Africa, and Overseas Filipino Workers represent the remaining 15%.

This, ladies and gentlemen, is a manifestation of our country’s good standing in the tourism industry. And it is in this favorable climate that DWC achieved consolidated revenues of PhP509 million, a 12% increase from the previous year’s figures. Discovery Shores and Club Paradise were the main contributors, supplying 66% and 24% of the revenue respectively. Meanwhile, Discovery Fleet contributed 9% and Palawan Cove contributed 1%.

A consolidated net profit of PhP71.4 million was secured through the effective cost management of rooms and services despite intense competition. We also invested in enhanced digital marketing and partnered with “Preferred Hotels” to widen our market reach and sustain our targets. We recognized our employees’ calibre by scaling up their salaries and benefits. The company’s interest expense also increased substantially due to the additional loans that supported the development of our various resort projects.

DWC shall welcome even greater advancements in 2016. Discovery Shores Boracay will launch an 11-key Resort Villa where families and group travellers can enjoy the luxury of a private pool right in their own rooms.

Club Paradise finished the renovation of its 20-key Garden Suites, as well as Phase 1 of its Staff House. The clubhouse and new beachfront villas shall begin construction in 2016 and are slated for completion by 2018.

Discovery Fleet will continue providing awe-inspiring trips to Tubbataha and Northern Route via Discovery Palawan, while Discovery Adventure is set to have its maiden voyage in 2016. A beach club, retail center, and a 120-key hotel known as the Vanila Beach Club and Resort, under Cay Islands Inc., are set to rise on a five-hectare property in Sitio Merimegmeg, Corong Corong, El Nido, Palawan. DWC is also supporting the rehabilitation of the coral nursery in Daplac Cove in San Vicente, Palawan, and has applied to make it a Marine Protected Area. If successful, this shall be the third largest protected coral reef in the Philippines.

DWC has also successfully acquired Sonoran Corporation as a subsidiary, and now owns 96.5% of the company. Included here are a 1.6-hectare beachfront property in San Vicente, Palawan and a 5.7-hectare property in Trinidad, Benguet, where there are plans to put up a 180-key hotel, retail shops, and a residential community.

We remain committed to sustainable and eco-friendly business practices. We have initiated tree planting, school donations, feeding programs, and medical and dental missions at Brgy. Decalachao, Brgy. Cheey, Brgy. Decabobo, and Brgy. San Jose to name a few. Club Paradise and Discovery Fleet Corp. divers also participated in the clam seeding activity in Dimakya Island.

In light of a remarkable 2015, Discovery World Corporation recognizes with gratitude the contribution of everyone who continues to work with passion and loyalty in service of our stakeholders and the communities we serve.

PRESIDENT’S REPORT

JOHN Y. TIU, JR.PRESIDENT

““


96.5%DWC’s share in ownership of newly-acquired subsidiary Sonoran Corporation at the end of 2015.

26%increase in operating expense, due in part to investments in enhanced digital marketing and our partnership with “Preferred Hotels” to widen our market reach and attain our targets

NET PROFIT (in Million PhP)

REVENUE TREND (in Million PhP)

REVENUE CONTRUBUTION

pcc

dwc

epri

dfc

66%

24%

9%

1%

20122011 2013 2014 2015

348366

380456

509

366 380 456

5% 4% 20% 12%

509

62.64

19.95

32.37

106.63

71.4

2011

2012

2013

2014

2015

-68%

62%

229%

33%

Euro-Pacific Resorts, Incorporated - Club Paradise

Discovery Fleet CorporationPalawan Cove Corporation

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10%increase in travellers arriving in the Philippines compared to 2014 figures.

50%travellers arriving in the Philippines from the East Asian region, by far the biggest share in arrivals.

509MILLIONconsolidated revenues achieved by DWC in 2015, a commendable 12% jump from last year’s performance.

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COMPETITIVE STRENGTHS


2015 World Luxury Hotel Awards Discovery Shores Boracay Luxury Island ResortLuxury Wedding Destination

TripExpert Discovery Shores Boracay Expert’s Choice Award August 2015

Trip Advisor Discovery Shores Boracay Hall of Fame 2015 Certificate of Excellence, 2015 Winner

Trip Advisor 2015 Travellers’ Choice Discovery Shores Boracay

No. 15 Top 25 Hotels in the Philippines http://www.tripadvisor.com.au/TravelersChoice-Hotels-cTop-g294245#15

No. 11 Top 25 Luxury Hotels in the Philippines http://www.tripadvisor.com.au/TravelersChoice-Hotels-cLuxury-g294245#11

No. 21 Top 25 Hotels for Service in the Philippines http://www.tripadvisor.com.au/TravelersChoice-Hotels-cBestService-g294245#21

Discovery World Corporation is a professionally managed company that develops, operates, and manages some of the most sought after luxury destinations in the Philippines.

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COMPETITIVE STRENGTHS


STRATEGIC LOCATIONDiscovery Shores BoracayDiscovery Shores Boracay has approximately 1-hectare of adjoining properties at the prime portion of Boracay Island’s Boat Station 1 beachfront, with a frontage of over 60 meters. Boracay Island, with its stunning white sand and wide array of leisure activities, is acclaimed as one of the best beaches in the world.

Club ParadiseClub Paradise is built on a 14-hectare property in Coron, Palawan. Its beach has 700 meters of white sand gently sloping into the renowned waters of Palawan. Coron is known for its pristine beaches and awe-inspiring dive sites, which include a dozen sunken Japanese warships.

Palawan CovePalawan Cove is located in Boayan Island, the largest island in San Vicente, Palawan. It is poised to become a major diving and snorkeling destination, especially with the company’s efforts in reef rehabilitation in the area.

Vanilla BeachVanilla Beach prides itself on its 5-hectare beachfront property located in Corong Corong, El Nido, Palawan. As its captivating charm allures more and more travellers, Vanilla Beach aims to be a shining example of tourism working hand-in-hand with environmental sustainability.

Sonoran CorporationLa Trinidad, the capital municipality of Benguet province, is home to Sonoran Corporation’s 5.7 hectare property where a unique, luxe mountain resort is set to rise. Here, travelers will experience a one-of-a-kind mountaintop sanctuary that offers first class amenities, while enjoying the area’s cool, refreshing climes and an unparalleled panoramic view of the breathtaking Cordillera Mountains.

Discovery FleetDiscovery Fleet offers a new way to experience the best of the Philippine islands in luxury. With two exciting programs that highlight the country’s most remarkable reefs, wrecks, and marine life, as well as full days of diving, kayaking, snorkeling, and island-hopping, both diving and non-diving guests are offered an unforgettable experience.

EXCELLENT FACILITIESThe company prides itself in carrying out a culture of caring that embodies the mantra “service that’s all heart” when it comes to addressing their guests’ every need and desire. Our resorts offer facilities and amenities that are the perfect combination of excitement, luxury, and relaxation.

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Discovery Shores BoracayCentrally located in the internationally-renowned White Beach, the award-winning Discovery Shores Boracay is the preferred choice of leisure travelers seeking world-class service on the island. The 87-suite luxury resort was hailed as Luxury Island Resort and Luxury Wedding Destination by the World Luxury Hotel Awards in 2015.

OUR PROPERTIES


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Club ParadiseNestled in the untouched Dimakya Island, Club Paradise in Coron is situated along the protected UNESCO Biosphere Reserve, near world-class reef and wreck dive sites. The 19-hectare exclusive island resort is a haven for colorful flora and fauna, and is home to friendly sea turtles and the gentle dugong. The radiant beauty of the island makes it a choice location for intimate destination weddings.

OUR PROPERTIES


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Vanilla BeachVanilla Beach is on a 5-hectare beachfront property located in Corong Corong, El Nido, Palawan, which in turn is a major tourist destination known for its pristine beaches, water sports, and extraordinary ecological splendor.

As Vanilla Beach attracts more and more guests, the company aims to turn it into an environmentally-sustainable and tourist-friendly haven that features upscale amenities alongside nature’s wonders.

OUR PROPERTIES


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Palawan CovePalawan Cove Corporation’s (PCC) property is located in Boayan Island, the largest island in San Vicente, Palawan., where the company is maintaining a coral nursery as part of its reef rehabilitation efforts in Daplac Cove. The site is set to become a major diving and snorkeling destination. Palawan Cove is currently anticipating its declaration as a Marine Protected Area, making it the third largest protected coral reef in the country, next to Apo Reef and Tubbataha.

OUR PROPERTIES


Palawan Cove is home to a wide array of flora, including the white mangrove. Also known by its scientific name, Laguncularia racemosa, these flowering and fruit-bearing trees are normally found in West Africa, the Caribbean, and the Galapagos Islands, among others. The company hopes to preserve and propagate the white mangroves in the area as they only add to Palawan Cove’s rich biodiversity.

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OUR PROPERTIES

SonoranSonoran Corporation’s (SC) 5.7-hectare property situated on a mountain top in La Trinidad is the gem of the Benguet province. Located 10 minutes north of Baguio, the area mimics the cold, calm ambience of the nation’s summer capital. The area’s elevation also allows for a panoramic view of La Trinidad and the majestic Cordillera Mountains. Its lush vegetation, vibrant blossoms, and picturesque rivers and springs give the site a postcard-perfect appeal that will make it a mountain resort that is truly a sanctuary for travellers.

PCC, CIC and SC are currently in their pre-development phase, which entails permit acquisition, surveying, data gathering, and engagement of consultants, who will design the master plan of the area for the development of a resort hotel in the near future.


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OUR PROPERTIES

Discovery FleetA new style of cruising through the Philippine islands, the Discovery Fleet offers full diving and non-diving programs. Avid divers can expect a full day of scuba diving the spectacular coral reefs, wrecks, and marine life of this sun-kissed archipelago, while their non-diving companions can enjoy a full day of snorkeling, kayaking, and beach-hopping.


Discovery Fleet Corporation (DFC) offers two programs, namely Tubbataha and Northern Route.

The Tubbataha season is intended for scuba safari expeditions, which start in late March and end in mid-June. This tour encompasses the rich waters of the Philippines including the Tubbataha Reef, Coron, and Apo Reef, with options to go to Cagayancillo and Calusa. Guests can enjoy days of scuba diving in the Philippine’s renowned dive sites that feature reefs, wrecks, and marine life. They can snorkel above pristine reefs and kayak through hidden lagoons. Every year, DFC provides the highest number of divers to Tubbataha. Visitor fees help conserve this UNESCO World Heritage Site.

The Northern Route is bound for Pandan Island, Coron, and Apo Reef with the season starting mid-October and ending mid-March. They offer non-diving guests full days of snorkeling, kayaking, and beach hopping onboard a cruise ship.

DFC has two vessels, Discovery Palawan and Discovery Adventure. The M/V Discovery Palawan is a single-screw, pleasure boat passenger carrier, which made its maiden voyage in April 2013.

The other vessel, M/V Discovery Adventure, also a pleasure boat, is currently under construction and will have four to five upper deck rooms and eight standard rooms. It is expected to set sail by mid 2016.

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CSR

Clam SeedingClub Paradise’s guests, together with some of the resort’s staff, sailed to Semirara Island, Antique for a clam seeding activity, where they toured the island’s clam hatchery and picked up clams from the area.

Upon gathering the clams, the guests brought them over to the packing station. The Styrofoam boxes, where the clams were placed, were then transported to the resort via Club Paradise’s ship. Subsequently, the clams were acclimated in the resort’s waters, and then were put in plastic crates. Finally, the guests placed them along the reef system, fronting the resort’s dive center and pool area.


Project Reach Out

Discovery Shores launched “Project Reach Out” last August 11, 2015 in Balay Discovery, the home of Discovery Shores’ associates in Boracay.

“Project Reach Out” was created to provide basic necessities such as water pails, dippers, towels, pillows, and bed sheets to the Manoc-Manoc fire victims. The victims included Discovery Shores staff, as well as local residents. The said fire originated from a house at Barangay Manoc-Manoc and razed some 200 residential and business establishments in Boracay Island last June 17, 2015.

The project was made possible through the assistance of the Department of Social Welfare and Development (DSWD), and the efforts of Discovery Shores’ Human Resource team, and its Hotel Manager, Mr. Erwin Lopez.

Attended by 100 local residents, the launch commenced with a Thanksgiving Mass, followed by snacks and the distribution of donation bags to the affected parties.

Christmas Gift-Giving

In celebration of the season of sharing, Discovery Shores Boracay Hotel Manager Erwin Lopez, together with the establishment’s 25 staff and trainees, brought smiles to the faces of 600 children last December 24, 2015 at the gift-giving event that the hotel organized at Barangay Balabag Plaza in Boracay. The kids happily received their Christmas presents, which consisted of toys and school supplies including notebooks, paper pads, pens, pencils, and pencil cases.

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CSR

Tree PlantingClub Paradise Palawan staff organized a tree planting activity at the Imelda Lot in Decalachao. Cashew and mango seedlings were planted during the event as the initial step to developing the area into an organic farm. The initiative was headed by the Housekeeping Department and was attended by Club Paradise staff.


Discovery Model Pupils (SY 2014-2015)

Club Paradise happily awarded cash and certificates to a total of eight valedictorians and salutatorians of the four elementary schools situated in Busuanga’s Barangay Cheey and Coron’s Barangays Decalachao, San Jose, and Decabobo. The special recognitions were given to the young achievers during their commencement exercises held last March 27, 2015. Mr. Joegil Magtanggol Escobar (Hotel Manager) and Camille Ann Bayot (Assistant HR Manager) presented the awards to the model pupils of Brgys. Decalachao and San Jose, while Mr. Denis Aguilar (Security Manager), Mr. CJ Pesigan (Guest Services Associate), and Ms. Chiqui Aquino (Chef de Partie) awarded the recognitions to the deserving students of Brgy. Cheey.

Feeding and Gift-Giving

Every year, the Discovery Shores Boracay family makes it a point to spread love, hope, and joy to the community through their community service activities, especially during the Christmas season.

In the spirit of sharing, the resort’s staff organized a feeding and gift-giving program for 50 families of the Ati community at Sitio Lugutan, Manoc-Manoc, Boracay Island last December 27, 2015. During the program, the Ati kids rendered a song-and-dance number as their way of showing gratitude to the Discovery Shores staff. The gathering was filled with laughter and thanksgiving. Much to the Ati tribe’s delight, the Discovery Shores family also gave them grocery bags filled with canned goods, noodles, rice, and other treats.

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CORPORATE GOVERNANCE

The company’s Chairman of the Board, assisted by our Chief Compliance Officer, oversees the implementation of our compliance efforts. Abiding by the law and setting appropriate rules and regulations will make our company a strong and stable organization.

The Corporation is in compliance with the Philippine Stock Exchange’s Amended Rule on Minimum Public Ownership under Section 3, Article XVIII on the Continuing Listing Requirements of the Listing and Disclosure Rules which prescribes that listed companies shall, at all times, maintain a minimum percentage of listed securities held by the public of ten percent (10%) of the listed companies’ issue and outstanding shares, exclusive of any treasury shares. As of December 31, 2015, the Corporation’s public ownership level is at 26.76%.

Compliance Program

Management Committee (left to right): Erwin Peter Z. Lopez, Rupert Terence C. Sykat, Yvette C. Lee, John Y. Tiu, Leslie T. Yapkianwee, Anna May B. Nieva,

Odette A. Huang and Joegil M. Escobar


INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors Discovery World Corporation and Subsidiaries

Station 1, Balabag, Malay, Aklan

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Discovery World Corporation and Subsidiaries, which comprise the consolidated statements of the financial position as at December 31, 2015 and 2014, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2015, 2014, 2013, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making the risks assessment, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design the audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Discovery World Corporation and Subsidiaries as at December 31, 2015 and 2014, and their financial performance and their cash flows for the years ended December 31, 2015, 2014, and 2013 in accordance with Philippine Financial Reporting Standards.

REYES TACANDONG & CO.

CAROLINA P. ANGELESPartnerCPA Certificate No. 86981Tax Identification No. 205-067-976-000BOA Accreditation No. 4782; Valid until December 31, 2018 SEC Accreditation No. 0658-AR-2 Group A

Valid until April 14, 2017BIR Accreditation No. 08-005144-7-2013

Valid until November 26, 2016 PTR No. 4748327

Issued January 5, 2016, Makati City

April 7, 2015Makati City, Metro Manila

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FINANCIAL STATEMENTS

Discovery World Corporation And SubsidiariesCONSOLIDATED STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2015(With Comparative Figures for 2014)

Note 2015 2014

ASSETS

Current Assests

Cash and cash equivalents 7 Php 88,847,060 Php 79,053,910

Trade and other receivables 8 17,493,502 71,695,849

Due from related parties 24 70,770,768 216,781,118

Inventories 9 22,915,130 20,678,661

Financial assets at fair value through profit or loss (FVPL) 10 70,000,000 95,732,000

Other current assets 10 45,518,043 40,409,274

Total Current Assets 315,544,503 524,350,812

Noncurrent Assets

Property and equipment 11 1,872,856,262 1,501,203,702

Investment properties 12 48,778,885 12,719,918

Available-for-sale (AFS) financial assets 13 21,070,400 -

Goodwill 6 151,877,118 151,877,118

Deferred tax assets 25 31,585,774 27,831,492

Other noncurrent assets 14 86,513,754 86,233,685

Total Noncurrent Assets 2,212,692,193 1,779,865,915

Php 2,528,236,696 Php2,304,216,727

LIABILITIES AND EQUITY

Current Liabilities

Trade and other payables 15 Php 243,277,755 Php 184,428,631

Current portion of loans payable 16 570,686,877 654,500,000

Due to related parties 24 142,254,254 143,157,766

Current portion of obligation under finance lease 26 296,785 -

Income tax payable 3,892 20,540,857

Total Current Liabilities 956,519,563 1,002,627,254

Noncurrent Liabilities

Loans payable - net of current portion 16 240,000,000 46,875,000

Obligation under finance lease - net of current portion 26 1,172,270 -

Net retirement benefit liability 23 7,816,622 5,156,812

Deferred tax liability 25 90,068,273 63,769,199

Total Noncurrent Liabilities 339,057,165 115,801,011

Total Liabilities 1,295,576,728 1,118,428,265

Equity

Capital stock 17 626,000,000 626,000,000

Additional paid-in capital 353,538,678 353,538,678

Other equity reserves 17 (36,565,198) (27,750,565)

Retained earnings 283,294,309 227,290,177

1,226,267,789 1,179,078,290

Non-controlling interest 6,392,179 6,710,172

Total Equity 1,232,659,968 1,185,788,462

Php 2,528,236,696 Php 2,304,216,727


Discovery World Corporation And SubsidiariesCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2015(With Comparative Figures for 2014 and 2013)

Note 2015 2014 2013

REVENUES

Room services Php 411,742,863 Php 373,201,594 Php 323,413,315

Food, beverages, and others 96,963,415 82,868,387 57,082,315

508,706,278 456,079,981 380,495,630

COST OF SALES AND SERVICES 18

Room services 205,208,076 185,373,781 136,367,021

Food, beverages and others 66,731,248 63,120,927 47,474,584

271,939,324 248,494,708 183,841,605

GROSS PROFIT 236,766,954 207,575,273 196,654,025

OPERATING EXPENSES (INCOME)

Administrative expenses 19 184,344,125 145,976,133 148,980,676

Selling and marketing expenses 19 23,677,605 21,058,198 13,192,839

Other operating income 21 (21,074,019) (19,002,842) (16,696,357)

186,947,711 148,031,489 145,477,158

OPERATING PROFIT 49,819,243 59,543,784 51,176,867

OTHER INCOME (CHARGES) - Net

Finance costs 16 (18,220,987) (8,715,286) (14,049,975)

Finance income 22 1,150,120 413,636 3,755,012

Gain from insurance claims 168,676 35,235,110 -

Others 22 667,783 1,007,979 (70,516)

(16,234,408) 27,941,439 (10,365,479)

GAIN ARISING FROM BUSINESS COMBINATION 6 49,093,362 45,333,857 -

INCOME BEFORE INCOME TAX 82,678,197 132,819,080 40,811,388

INCOME TAX EXPENSE 25 (11,263,993) (26,194,071) (7,542,905)

NET INCOME 71,414,204 106,625,009 33,268,483

OTHER COMPREHENSIVE INCOME (LOSS)

Not to be reclassified subsequently to profit or loss

Unrealized loss on AFS financial assets 13 (13,952,040) - -

Remeasurement gains (losses) on retirement benefit liability 23 (1,243,383) (1,144,480) 4,452,448

Income tax expense (benefit) 25 343,344 (1,362,734)

(14,822,408) (801,136) 3,179,714

TOTAL COMPREHENSIVE INCOME Php 56,591,796 Php 105,823,873 Php 36,448,197

Net income attributable to:

Shareholders of the Parent Company Php 71,654,132 Php 101,722,453 Php33,494,551

Non-controlling interest (239,928) 4,902,556 (226,068)

Php 71,414,204 Php 106,625,009 Php 33,268,483

Total comprehensive income attributable to:

Shareholders of the Parent Company Php 56,831,724 Php100,921,317 Php36,710,508

Non-controlling interest (239,928) 4,902,556 (262,311)

Php 56,591,796 Php 105,823,873 Php36,448,197

Basic/Diluted Earnings Per Share 30 Php 0.11 Php 0.16 Php 0.10

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Discovery World Corporation And SubsidiariesCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Note 2015 2014 2013

CAPITAL STOCK 17

Common Stock:

Balance at beginning of year Php 626,000,000 Php626,000,000 Php 45,400,000

Issuance of shares - - 470,600,000

Conversion of shares - - 110,000,000

Balance at end of year 626,000,000 626,000,000 626,000,000

Preferred Stock:

Balance at beginning of year - - 110,000,000

Conversion of shares - - (110,000,000)

Balance at end of year - - -

626,000 626,000 626,000

ADDITIONAL PAID-IN CAPITAL

Balance at beginning of year 352,538,678 353,538,678 -

Issuance of shares - - 353,538,678


DEPOSIT FOR STOCK SUBSCRIPTION 17

Balance at beginning of year - - 302,600,000

Application of deposit - - (302,600,000)

Balance at end of year - - -

RETAINED EARNINGS

Balance at begining of year 227,290,177 125,567,724 92,073,173

Net income 71,654,132 101,722,453 33,494,551

Dividends declared 17 (15,650,000) - -


NON-CONTROLLING INTEREST

Balance at beginning of year 6,710,172 22,910,633 -

Acquisition of subsidiaries 6 5,929,710 6,259,745 23,172,944

Comprehensive income (loss) (239,928) 4,902,556 (262,311)

Acquisition of non-controlling interest 17 (6,007,775) (27,362,762) -


OTHER EQUITY

Balance at beginning of year (27,750,565) 1,691,577 (1,524,380)

Fair value changes in AFS financial assets 13 (13,952,040) - -

Remeasurement gains (losses) on retirement benefit liability 23 (870,368) (801,136) 3,215,957

Acquisition of non-controlling interest 17 6,007,775 (28,641,006) -

Balance at end of year (36,565,198) (27,750,565) 1,691,577

Php 1,232,659,968 Php 1,185,788,462 Php1,129,708,612


Discovery World Corporation And SubsidiariesCONSOLIDATED STATEMENT OF CASH FLOWS


Note 2015 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax Php 82,678,197 Php 132,819,080 Php40,811,388

Adjustments for:

Depreciation and amortization 11 58,926,760 55,888,775 29,708,293

Gain arising from business combination 6 (49,093,362 (45,333,857) -

Finance costs 16 18,220,987 8,715,286 14,049,975

Retirement benefits cost 23 3,141,017 2,417,028 2,621,488

Provision for doubtful accounts 8 1,691,801 - -

Net unrealized foreign currency losses (gain) 1,676,649 456,387 (2,572,348)

Interest income 7 (493,839) (870,023) (1,182,664)

Gain from insurance claims 22 (168,676) (35,235,110) -

Gain on disposal of assets 22 (159,500) (858,170) -

Write-off of trade and other receivables 618,673 962,015 -

Unrealized gain on financial assets at FVPL 10 - (149,809)

Operating profit before working capital changes 117,038,707 118,811,602 82,436,132

Decrease (increase) in:

Trade and other receivables 51,891,873 47,910,149 10,999,423

Inventories (2,236,469) 670,002 80,240,626

Other current assets (3,390,728) 23,647,022 (75,890,138)

Other noncurrent assets (280,069) (54,823,994) 454,874

Increase in trade and other payables 58,844,078 19,269,782 (4,462,229)

Net cash generated from operations 221,867,392 155,484,563 94,778,688

Interest received 493,839 870,023 1,182,664

income taxes paid (32,788,935) (23,065,298) (8,042,900)

Contributions paid 23 (1,724,590) (1,883,832) (1,886,832)

Net cash provided by operating activities 187,847,706 131,405,456 86,031,620

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of:

Property and equipment 11 (283, 719,876) (268,123,302) (41,291,042)

AFS financial assests 13 (9,290,440) - -

Investment properties 12 (10,068,967) - -

Financial assets at FVPL 10 - (33,082,191) -

Proceeds from insurance claims 168,676 10,285,766 -

Proceeds from disposal of assets 11 159,500 858,170 -

Acquisition of subsidiaries, gross of cash required 6 - (86,000,000) (175,071,000)

Net cash used in investing activities (302,751,107) (376,061,557) (216,362,042)

Discovery World30

Discovery World Corporation And SubsidiariesCONSOLIDATED STATEMENT OF CASH FLOWS



Note 2015 2014 2013

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of stocks - - Php 521,538,678

Repayments of loans payable (973,440,271) (148,500,000) (502,500,000)

Proceeds from availments of loans payable 1,082,752,148 501,000,000 365,000,000

Increase in due from related parties 146,010,350 26,975,466 (178,724,221)

Finance costs paid (23,927,931) (7,935,420) (14,049,975)

Dividends paid 17 (15,650,000) - -

Decrease in due to related parties (8,648,302) (188,847,510) (35,658,539)

Payments of obligations under finance lease (164,445) - -

Net cash provided by financing activities 125,931,549 182,692,536 155,605,943

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,676,649) (456,387) 2,572,348

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,351,499 (62,419,952) 27,847,869

CASH AND CASH EQUIVALENTS OF NEWLY-ACQUIRED SUBSIDIARIES 441,651 6,143,103 10,496,234

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7 79,053,910 135,330,759 96,986,656

CASH AND CASH EQUIVALENTS AT END OF YEAR Php 88,847,060 Php 79,053,910 Php 135,330,759

NONCASH FINANCIAL INFORMATION

Reclassification of financial assets at FVPL to AFS financial assets Php 23,600,000 - -

Conversion of deposit on stock subscription, due from related parties and escrow account to investment in a subsidiary

6,250,000 111,000,768 -

Conversion of deposit on stock subscriptions to financial asset at FVPL - 62,500,000 -

Php 29,850,000 Php 173,503,768 -


KEY OFFICERS

Anna May B. NievaCHIEF FINANCIAL OFFICER AND CHIEF COMPLIANCE OFFICER

Irene J. BubanCOMPTROLLER AND CHIEF INFORMATION OFFICER

Mary Jean D. CodiñeraINVESTOR RELATIONS OFFICER

Rupert Terence C. SykatVICE PRESIDENT — PROJECT DEVELOPMENT

Erwin Peter Z. Lopez*DIRECTOR OF OPERATIONS

Maria Catherine Michelle V. VerangaINTERNAL AUDITOR

Jose C. Parreno, Jr.*CHIEF OPERATING OFFICER (TDLCI)

Anna Francesca C. RespicioASSISTANT CORPORATE SECRETARY

*NOT IN PICTURE

Discovery World32

Board of Directors


Ruben C. TiuCHAIRMAN OF THE BOARD

Mr. Ruben C. Tiu is concurrently the Chairman and President of Star Equities, Inc., President of JTKC Realty Corporation, Pan Asean Multi Resources Corp., Aldex Realty Corporation, Oakridge Properties, Inc., Hotel Systems Asia, Inc., JTKC Land, Inc., TDLCI, and Discovery Country Suites, Inc., Executive Vice President of JTKC Equities, Inc., and Union Pacific Ace Industries, Inc., and a Director of Palawan Cove Corporation, Vanilla Beach Corporation, Tera Investments, Inc., Sonoran Corporation and I-Remit, Inc. He holds a Bachelor of Science degree in Business Administration from De La Salle University.

John Y. TiuDIRECTOR AND PRESIDENT

Mr. John Y. Tiu, Jr. is concurrently the Chairman and President of Tera Investments, Inc., Vanilla Beach Corporation, Palawan Cove Corporation, Sonoran Corporation, JT Perle Corporation, and One Cerrada Corporation. He holds a Bachelor of Science degree in Electrical Engineering, Minor in Mathematics from University of Washington in Seattle, Washington, USA.

Lamberto R. VillenaDIRECTOR

Atty. Lamberto R. Villena is the former President and CEO and current Director of Sterling Bank of Asia. He holds a Masters degree in Business Administration and Bacehelor of Laws from the University of the Philippines and a Bachelor of Arts degree from Ateneo de Manila University.

Bayani K. TanDIRECTOR AND CORPORATE SECRETARY

Atty. Bayani K. Tan is a Director and Corporate Secretary of the Company. Atty. Tan holds a Master of Laws degree from New York University USA and earned his Bachelor of Laws degree from the University of the Philippines. He has a Bachelor of Arts degree in Political Science from San Beda University, where he graduated Class Valedictorian and was awarded the medal for Academic Excellence.

Romualdo C. MacasaetDIRECTOR, CHIEF FINANCIAL OFFICER, AND TREASURER

Mr. Romualdo C. Macasaet is concurrently the Managing Director and stockholder of JTKC Land, Inc. He holds a Bachelor of Science degree in Commerce from De La Salle University and a Bachelor of Science degree in Architecture from University of Santo Tomas.

Elizabeth Ann C. ParpanINDEPENDENT DIRECTOR

Ms. Elizabeth Ann C. Parpan is concurrently the Treasurer of BISCOM, Inc., and Park Haven, Inc. She was the valedictorian of the Hospitality Administration Program of Centre International De Glion en Gruyere (Glion Hotel School) in 1994. She has a Bachelor of Science degree in Management Honors from Ateneo de Manila University, where she graduated with honors.

Chun Bing G. UyINDEPENDENT DIRECTOR

Mr. Chun Bing G. Uy is concurrently a consultant to the Rizal Banking Corporation and Director and Stockholder of FBIA Insurance Agency and Strategic Equities Corp. He was the Head of the Corporate Banking Group as Senior Executive Vice President (2012) and as Executive Vice President (1997-2012) of Rizal Commercial Banking Corporation. He holds a Bachelor of Science degree in Management Engineering from Ateneo de Manila University.

Principal Office: Station 1, Balabag, Malay, AklanCorporate Office: 2/F JTKC Centre 2155 Pasong Tamo Street, Makati City

Telephone number: (+632) 813-8857 / (+632) 519-5674Telefax number: (+632) ) 519-5625

Documents

Annual Report 2015 - Discovery€¦ · accommodations and world-class amenities that combine efficiency and Filipino all-heart hospitality while adhering to the principles of sustainability