Industry Sector: Property
Listing Date: September 16, 1996

Financial Highlights

Financial performance summary and key ratios1,2,3,4

Ever-Gotesco Resources and Holdings, Inc. (EVER/ “the company”) was initially registered with Securities and Exchange Commission (SEC) as a holding company and eventually started its commercial operations on December 1, 1995. EVER is into building shopping malls and leasing out to commercial tenants. The company’s malls are primarily leased out to Ever Department Store and Supermarket, Cinemas, banks, amusement centers, food shops, specialty stores, boutiques, drug store, service shops, gym and sporting facilities.

Below is EVER’s revenue from its investment properties:

Revenues of Ever-Gotesco Resources and Holdings, Inc. (EVER) and its subsidiary Gotesco Tyan Ming Development, Inc. (GTMDI) prior to 2015 were generated principally from its leasing operations and other income are derived from recovery (excess) of reimbursable expenses from tenants, cinema operations, interest and penalties from late payments and service requests of tenants.

In June 2015 its subsidiary (GTMDI) ceased its mall and cinema operations, the company plans to look at other business opportunities outside of the mall operation as industry competition has become capital-intensive and being dominated by few big players, this market environment is not expected to change this year or in the next years.

Philippine Shopping Mall Industry 2016

Despite the growing market base, there is stiff competition among the different shopping centers because of the growing sophistication of consumers and continuous construction of shopping malls causing a thinner market to spread. The Shopping Mall Industry is dominated by SM Malls with other big shopping mall chains such as Robinsons, and Ayala Center.

EVER has the following corporate structure:8

EVER owns 100% of the outstanding capital stock of Gotesco Tyan Ming Development, Inc. (GTMDI), owner of the Ever Gotesco Ortigas Complex. GTMDI was registered with the SEC on September 21, 1994 to engage in real estate and related business. GTMDI started its commercial operations on December 1, 1995.

The Company has two operational malls namely Ever Gotesco Commonwealth Center (EGCC) and one named Ever Gotesco Ortigas Complex (EGOC) by its subsidiary company.

The Company’s management team are as follows:

Table of Ownership9

Table of directors and executive officers10,11

Some members of the Board of Directors are involved in some criminal proceedings emanating from the closure of the Orient Commercial Banking Corporation. These criminal proceedings include violation of Batas Pambansa Bldg. 22, violation of the General Banking Acts, and particularly on DOSRI loans and falsification cases. Some depositors of the Orient Commercial Banking Corporation (OCBC) filed criminal cases against some of the bank officers and directors including Jose C. Go, George C. Go (director until December 10, 2004), and Vicente C. Go (director until May 31, 2004), who are also directors of this company, for failure of said depositors to withdraw their respective money deposits with OCBC. Some of these cases have already been dismissed.12

Dividend Policy

As of 31st of December 2016, ending balance of Retained earnings available for dividend declaration was
-P2,907,039,724.13

The company and its subsidiary GTMDI, have not declared any dividend since the start of its commercial operation. This is due to binding syndicated loan agreements signed with their respective lenders that stipulates that EVER and GTMDI shall not declare or pay any dividend to their respective stockholders without the written consent of their respective syndicate lenders until the termination of commitments there under and the full payments of debt obligations and other amounts due them.14

Business considerations:

  • Ever – Gotesco Laguna Plaza, a reacquired property through compromise agreement with creditors Bank which was fully paid and settled with Development Bank of the Philippine (DBP), Security Bank Corporation (SCB) and Philippine National Bank (PNB) in January 2013, August 2013 and August 2016 accordingly was assigned to Primeworld Management Services, Inc in 2016. The transaction contributed to the 90% decline of EVER’s non current asset at the end of 2016. The property is 59.02% completed and has an appraised value of 1.94 billion on January 16, 2014 by Vitale Valuation Services. It was initially a proposal of 5-level complex with a floor area of about 91,000 sq. m. project which construction was halted in 1998 due to economic crisis.15
  • Ever Gotesco Commonwealth Center 25-year contract at a monthly rate of Php 525,000 with 5% annual escalation rate had expired last March 31, 2017. Absolute ownership of the Building shall automatically be transferred to the Lessor without the need of any further act on the part of EGRHI after the expiration or termination of the term of the contract of lease. The transfer of ownership resulted to an eventual ceasing of mall operation which resulted to a 19% or Php 73.28 million decline of the company’s 2016 annual revenue.16
  • The company, as of 31st of December 2016 listed its involvement in 7 legal proceedings which has the following status:17

As EVER and its subsidiary is currently involved in certain legal, contractual and regulatory matters that require the recognition of provisions for related probable claims against the Group. Management and its legal counsel reassess its estimates on an annual basis to consider new relevant information. In 2016, the company recognized provision for probable loss amounting to Php 132.9 million as of December 31, 2016. The disclosure of additional details beyond the present disclosures may seriously prejudice the Group’s position and negotiation strategies with respect to these matters. Thus, as allowed by PAS 37, Provisions, Contingent Liabilities and Contingent Assets, only a general description is provided.

  • The company completely ceased its cinema operations in June 2016 which is an automatic of at least 2% reduction to the company’s revenue since historically it contributed around 2-3% to its annual revenue.

References:

1. EVER SEC Form 17-Q for the 1st quarter pages 4-8
2. EVER SEC Form 17-Q for the 2nd quarter pages 4-8
3. EVER SEC Form 17-Q for the 3rd quarter pages 4-8
4. EVER 2015 and 2016 annual report
5. SM Prime Holding Corporation 2016 Annual report page 9
6. Robinsons Land Corporation 2016 Annual report page 9
7. Ayala Land 2016 Annual report page 32
8. EVER 2016 annual report part 4 page 12
9. EVER 2016 annual report part 1 page 14
10. EVER 2016 annual report part 1 page 40
11. EVER Annual Corporate Governance Report 2016 page 20
12. EVER 2016 annual report part 1 page 43
13. EVER 2016 annual report part 4 page 11
14. EVER 2016 annual report part1 page 15
15. EVER 2016 annual report part1 page 10
16. EVER 2016 annual report part1 page 17
17. EVER 2016 annual report part1 page 11

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