President's Message

President's Report 2009
2009 Regular Annual Stockholders’ Meeting

Mr. Chairman, honorable members of the Board, fellow stockholders, colleagues, ladies and gentlemen: good afternoon.

With the onslaught of the current financial crisis the general sentiment has been one of caution, or even fear of its effects which even the major economies are experiencing.

Nevertheless, Cebu maintained a strong economy in 2008 fueled by intensified tourism, IT and IT-enabled services, retail and real estate sectors. These have become the balancing factors in the region's economy.

In fact, Cebu's continued advancement has caught the interest of the international market. Cebu ranked number one among the Top 50 Emerging Outsourcing Cities in a worldwide survey conducted by Tholons, a strategic advisory firm for global outsourcing and investments.

At CPVDC's Asiatown I.T. Park, this is also evidenced by the sale of the six remaining available commercial lots last year. This was a total of  9,737 square meters, contributing P233.6 million to your Company's income.

The demand for office space is also evidenced by the continuing build-up at the I.T. Park. In 2008, construction was bullish with the completion of i3, TG Tower, Skyrise 2, and our own eBloc Tower. Currently under construction is Skyrise 3. Together this will add over 61,400 square meters of office leaseable space at Asiatown. Today, we host majority of Cebu's office supply for BPOs, with 53 percent located in Asiatown I.T. Park, with Cebu Holdings' Cebu Business Park.

Over 60 local and multi-national companies have located Asiatown, including some of the biggest names in IT and related services like Microsoft, IBM, NEC Telecom Software, National Cash Register and Epson to name a few. With our continued efforts, and the strengths of Cebu as a preferred IT destination, the number of investors in the areas will continue to grow.

Today, over 12,500 people are employed in IT and IT-related jobs at Asiatown. Average starting salary of this relatively young workforce is at P15,000 a month. This is perhaps one of the biggest benefits of the growing IT industry in the Cebu.

We are now able to generate more jobs for higher value services. This translates to higher spending power among the working population, providing the much needed impetus in a time of economic challenge.

These numbers tell the story of a confident stance your Company holds despite the global economic backdrop. And though we are not discounting that these will be challenging times ahead, we will not be held hostage by it. Instead, we choose to play on our strengths and carefully calibrated our strategies to be able to ride and even prosper within this economic cycle.

To help stabilize the Company's cash flows and net income during difficult periods, we have made a deliberate effort to grow our recurring income base by further expanding our leasing operations.

Last year, income from space leasing at eOffice contributed P67.6 million to your Company's revenue, 19 percent higher than that of the previous year's.

To expand our leasing portfolio, the eBloc Tower was completed in 2008. This 12-storey office condominium is the maiden project of Asian I-Office Properties, a special purpose vehicle created with the partnership between CPVDC and the Ayala Land Inc. Corporate Business Group. This mid-rise office condominium provides an additional 21,000 square meters of office leasable space and 1,700 square meters of retail space. eBloc Tower is envisioned to meet the needs of the occupants by providing them round-the-clock services and facilities specifically suited to the needs of IT and IT-enabled firms.

In August of 2008, construction of the eBloc Tower was able to log and document over one million manhours of zero lost time due to accidents, as a result of effective worker safety management.

Like all other buildings located in the I.T. Park, the eBloc Tower will have redundant power and water supply, optimum telecommunications facilities, centralized sewage and a secure location within the heart of the city.

Complementing the build-up and growing workforce at Asiatown I.T. Park is the newest retail landmark, The Walk. It offers highly specialized concepts of affordable dining, shops and services to cater to the evolving lifestyle needs of the growing workforce at this IT hub. It was well received by the market with high patronage and visits as shown in the sales performance of the outlets. With an 89 percent lease occupancy and 75 percent operational, this development of approximately 3,000 in gross leaseable area now serves as the converging hub which provides affordable dining and convenient services in a relaxed environment.

In all, higher average prices generated from lot sales and lower direct operating expenses resulted in favorable margins in 2008. CPVDC posted a total revenue of P349 million derived from commercial lot sales and rental from e-office and The Walk and from interest and other income. Net income for the year reached P176.0 million.

During the year, CPVDC continued to maintain a strong asset base, with total assets reaching P1.35 billion. Cash and cash equivalents amounted to P453.8 million, increasing by 32 percent from the previous level. Total liabilities were slightly lower than last year's at P119.4 million. Regular cash dividends helped manage total stockholders' equity at P1.228 billion. Return on equity is at 14.8 percent.

With this performance, your Company was able to declare cash dividends of P0.10 per share amounting to P94 million in November of last year.

Your Company was also recognized as the first among the top seven highest paying PEZA-registered enterprises of Cebu City in terms of revenue contribution.

Your Company's systems, aligned with that of mother company CHI, continue to be certified to the three international standards on Quality, Environment and Occupational Health and Safety Management Systems. We periodically conduct surveillance audits to ensure that the system is deployed, maintained and continually improved to conform with international standards.
Despite the current global economic woes, the BPO industry is considered as one of the sunshine industries of the country. Although business outlook in general may not be as rosy as in previous years, investors are still bullish on the IT-enabled industry, particularly BPOs. We will continue with our planning to prepare for the increase in demand that is expected to happen as companies shake off the uncertainties of the global recession and move to further lower costs by outsourcing BPO activity overseases.

Being a pioneer in the ICT industry, CPVDC is in an optimum position to remain strong and even flourish despite the global crisis.

As we gear up for more challenging times ahead, we will be strengthening our competencies in leasing and property management, while continuing to market Asiatown I.T. Park as the ICT and BPO address this side of the globe.

We are also excited about the horizontal development of phase two of Asiatown I.T. Park covering five hectares of raw land. This will be a source of future growth in office leasing revenues as CPVDC turns its strategy towards building offices to cater to more IT and IT-enabled services locators while keeping ownership of the land for future value appreciation.

I would like to thank our employees for their dedication and constant drive for innovation, the market and our partners in the industry for their continued support and our board of directors for their continued guidance. I would like to take this opportunity to especially thank our chairman, Mr. Jim Ayala, for the wisdom with which he has guided the company for the past five years.

We also express our utmost gratitude to our shareholders for their trust and confidence in us as we bring this Company to even greater heights in the years ahead.

Thank you and good afternoon.