Presidents Report 2010
PRESIDENT'S REPORT - 2010
It is my distinctive pleasure to welcome our valued shareholders to this annual gathering of Mabuhay Holdings Corporation.
As usual, let us take a quick look at the global and Philippine economic situation, before I report to you the operational developments of our Company over the past year.
When we met last year, we talked about the global financial tsunami that started in Wall Street. At that time, the international financial market was experiencing chaos and confusion. We saw world leaders then rushing into summits for dialogues, trying to save the global economy from debacle.
Luckily, through the joint efforts of the international community, and also with the contributions from countries less affected by the crisis, the international economic crisis was placed under control, and a worldwide recession similar to that of the Great Depression in the 1930’s was avoided.
However, the crisis is not over yet. As the economic troubles in the United States eased, a financial volcano in Europe erupted. Not too long ago, banks in Iceland defaulted, putting even sovereign obligations in question. Then Greece also went into trouble, and the European Union had to rush to her rescue. European countries like Portugal, Spain, Hungary, and many others were highly indebted and they encountered difficulties in servicing their loans. The European Central Bank had to establish an emergency fund to defend the Euro Currency from being raided by international hedge fund managers. The economic turmoil in Europe is still far from being over.
As I pointed out in my last year’s report, our country is a blessed land. The Philippines is least affected by this global financial tsunami . The structure of our economy enables the country to stand firm against the odds in the international crisis. The Filipino overseas workers have immensely contributed to the economic stability of our country. In the year 2009, our Central Bank registered a total remittance of more than 17.3 billion U.S. dollars from 9 million OFW’s in 206 countries and territories. This amount was another record high despite the global recession. From January to April this year, remittances amounted to P US$5.9B, representing an increase of 6.6% as compared to the same period last year. At the same time, our export also rose 38.9%d to the amount of US$14.9B during these 4 months, resulting in a surplus of our balance of payment (BOP) in the amount of US$2.733B. Incidentally, our BOP in 2009 also registered a big surplus of US$5.3B. The conservative estimate puts our BOP surplus for this year at US$3.7B and the current account surplus at US$8.1B.
All these figures indicate that our economy is in a healthy condition, albeit the surge in our budget deficits. The World Bank has recently amended its forecast on the growth of the Philippine economy, raising its estimate of our GDP growth from the original 3.5% to 4.4%. In fact, our actual GDP growth in the first quarter of this year was registered at an impressive 7.3%.
As we are conducting our stockholders’ meeting now, our country also has a new government starting its operation today. We hope that under the new leadership, our country will enjoy political stability, and more domestic and foreign investors will have confidence to put more investments in our country. We believe that our economy will continue to develop at a fast pace and our countrymen will be able to enjoy greater prosperity. With this in mind, we anticipate good prospects also for our company in the forthcoming year.
You will notice from our financial statements that the total assets of our company had increased by 3.3% or P8.8M last year. This is a result of the increase in notes and other receivables, and the recovery in market value of our investments in listed shares, although we registered a net loss in our investment in associated companies. Total liabilities increased by P 4.4M or 5.3% due the increase in trade and other payables. The total equity of our company increased by P4.5M or 1.7%. Our operating revenue increased by P2.3M or 64% due to the increase in rental income, while our operating expenses decreased by P21.5M or 62.2% due to the decrease in impairment losses, professional fees and other expenses. The net income of our company in 2009 was registered at P4.5M, which was 94.3% reduction from the P79.2M we made in 2008. Please bear in mind though that the bulk of the income in 2008 was due to the extraordinary gains realized from the liquidation of our Taiwan investment.
Following the plan of actions I reported to you in our last shareholders’ meeting, we concentrated our efforts last year in supporting our affiliated company, Interport Resources Corporation, in the consolidation of its land holdings in the Province of Rizal. Interport had a successful Rights Offering recently and generated additional capital in the amount of P400M. Our company and its subsidiary are now holding about 44% of the total equity of Interport. For the year to come, we will continue to assist and supervise the development projects of Interport, including a condominium project insided the Eastridge and Golf Course, and a low-cost residential subdivision to cater to the demands of the overseas workers and their families. As Interport is going into these real property development projects with full speed, we anticipate to share the fruits of its achievements in the near future.
The management of Mabuhay Holdings Corporation will diligently monitor the changing conditions in the domestic and international business communities and continue to explore growth opportunities for the group.
Allow me to reiterate our gratitude and appreciation for the continued support and trust that you have given us. Let us look forward to a better year for all the shareholders of Mabuhay Holdings Corporation.
Esteban G. Peña Sy
July 1, 2010