Audited Financial Statements of

Century Properties Group, Inc.

and Subsidiaries

Corporate Information
 Century Properties Group Inc. (the Parent Company or CPGI), a publicly-listed company,
was incorporated and registered with the Philippine Securities and Exchange Commission (SEC)
on May 6, 1975. The Parent Company is a 63.59%-owned subsidiary of Century Properties Inc.
(the Ultimate Parent or CPI) and the rest by the public. CPGI and its subsidiaries (collectively
referred to hereinafter as the Group) are primarily engaged in the development and
construction of residential and commercial real estate projects.
The registered office address of the Parent Company is 21st Floor, Pacific Star Building,
Sen. Gil Puyat corner Makati Avenue, Makati City.
Launch of Affordable Housing Unit: Partnership with Mitsubishi Corporation
In line with its Century 2020 blueprint, the Group is proceeding with its diversification into
affordable housing to tap the first homebuyer market in high growth areas in the peripheries of
Metro Manila. As its initial foray, the Group has secured a 26-hectare property in Tanza, Cavite
to develop around 3,000 homes.
On May 16, 2018, CPGI signed a subscription agreement with Mitsubishi Corporation
(Mitsubishi) to establish a company for affordable housing which will be named PHirst Park
Homes, Inc. (PPHI). PPHI has secured clearance from the Philippine Competition Commission on
July 24, 2018.
Under the terms of the agreement, CPGI will subscribe to 60% and Mitsubishi to 40% of
the authorized capital stock equivalent to Php. 5.0 billion over a 5-year horizon.
PPHI aims to launch about 15 projects within the next 5 years with a total of roughly
33,000 units. Each site will be 15 to 20 hectares and it is currently in various stages of land
banking. This is equivalent to around Php. 57.0 billion in project sales value, with capital
expenditures estimated at around Php. 24.0 billion over the next 5 years.
For the year ended December 31, 2018, the Group’s affordable housing segment
contributed Php. 1,170.46 million of the Group’s real estate revenue.
The accompanying consolidated financial statements as at December 31, 2018 and 2017
and for each of the three years in the period ended December 31, 2018 were approved and
authorized for issue by the Board of Directors (BOD) on March 18, 2019.
 Liquidity
Ratios

Current Ratio
 Through the current ratio, the Century Properties Group Inc. and Subsidiaries measures
the ability of the company to pay its short-term obligations as they fall due.

Formula:

Current Assets
Current Ratio=
Current Liabilities

Solution:
28 ,251 , 689 , 918
2017 Current Ratio ¿
11,224,580,053
¿ 2.5

2018
31,997,110,107
Current Ratio ¿
15,050,236,472
¿ 2.1

Summary:
December 2018 December 2017 (Restated)
Current Assets 31,997,110,107 28,251,689,918

Current Liabilities 15,050,236,472 11,224,580,053

Current Ratios 2.1 2.5

Analysis
a. Current ratio for 2017 is 2.5 to 1 while that of 2018 is 2.1 to 1. This means that for 2017,
the company has Php. 2.5 of current assets that can be converted to cash to pay every
peso of current liability while for 2018, the company has Php. 2.1 of current assets to
cover every peso of current liability that will fall due.
 b. Current Ratio for 2018 decreased slightly signifying less liquidity for the company than
that of 2017, however, it is still satisfactorily liquid.

Quick Ratio
Quick Ratio, otherwise known as the acid test ratio, measures immediate liquidity with
the ability to pay current liabilities with the most liquid assets. Through this, the Century
Properties Group Inc. and Subsidiaries will have an indicator of most readily available current
assets to pay off short-term obligations. It is particularly useful in assessing liquidity situation of
companies in a crunch situation, i.e. when they find it difficult to sell inventories.

Formula:

Current Assets−Inventory
Quick Ratio=
Current Liabilities

Solution:
28 ,251 , 689 , 918−15,845,868,208
2017 Quick Ratio ¿
11,224,580,053
12,405,821,710
¿
11,224,580,053
¿ 1.1
2018
31,997,110,107−17,257,481,436
Quick Ratio ¿
15,050,236,472
14,739,628,671
¿
15,050,236,472
¿ 1.0
Summary:
December 2018 December 2017 (Restated)
Current Assets 31,997,110,107 28,251,689,918
Inventory 17,257,481,436 15,845,868,208

Quick Assets 14,739,628,671 12,405,821,710

Current Liabilities 15,050,236,472 11,224,580,053

Quick Ratios 1.0 1.1

Analysis
The quick ratio of Century Properties Group Inc and subsidiaries is 1.1 to 1 for 2017 and
1.0 to 1 for 2018. This means that for 2017, the company has Php. 1.1 of quick assets for every
Php. 1 of current liability and Php. 1 of quick assets for every Php. 1 of current liability for 2018.
The quick ratio of the company slightly decreased in 2018 however it is still acceptable that the
company is still financially secure and still have enough cash to cover its short-term obligations
when they come due since it did not decrease quickly during these years.

Debt Ratio
Debt Ratio measures the company’s liabilities as a percentage of total assets. It
measures the extent of total assets financed by liabilities. Generally, a lower ratio is favorable
since it means that more funds are provided by the owner.

Formula:

Total Liabilities
Debt Ratio=
Total Assets

Solution:
26,300,029,158
2017 Debt Ratio ¿
42,555,650,621
 ¿ 0.618 x 100

¿ 61.8%

2018
31,903,216,270
Debt Ratio ¿
49,366,682,829
¿ 0.646 x 100

¿ 64.6%

Summary:
December 2018 December 2017 (Restated)
Total Liabilities 31,903,216,270 26,300,029,158

Total Assets 49,366,682,829 42,555,650,621

Debt-to-total-assets ratio 64.6% 61.8%

Analysis
In 2017, 61.8% of the Century Properties Group Inc. and Subsidiaries’ assets was already
financed by its creditors. This went slightly higher in 2018 as the debt ratio is 64.6%. It means
that more than half of the company’s finances were sourced from its creditors. This implies
reduced solvency and reduced ability to repay outstanding obligations over the long term of the
company. However, since it only increased slightly, it is still acceptable although the company
have to take into account the industry and the payment history of the company.

Working Capital
Working Capital measures the short term liquidity of the company. This represents a
company's ability to pay its current liabilities with its current assets. Working capital is an
important measure of financial health since creditors can measure a company's ability to pay
off its debts within a year.

Formula:

WorkingCapital=Current Assets−Current Liabilities

Solution:
2017 Working Capital ¿ 28,251,689,918−11,224,580,053
¿ 17,027,109,865

2018
Working Capital ¿ 31,997,110,107−15,050,236,472
¿ 16,946,837,635

Summary:
December 2018 December 2017 (Restated)
Current Assets 31,997,110,107 28,251,689,918

Current Liabilities 15,050,236,472 11,224,580,053

Working Capital 16,946,837,635 17,027,109,865

Analysis
The working capital for Century Properties Group Inc. and Subsidiaries is Php.
17,027,109,865 in 2017 and Php. 16,946,837,635 in 2018. This means that for 2018, the
company is less liquid in meeting its short-term obligations during the year 2018.
 Profitability
Ratios

Return on Sales Ratio

 Return on sales ratio or profit margin measures the percentage of income earned by the
Century Properties Group Inc. and Subsidiaries. This is an indication of how the company is
effectively and efficiently managing its expenses at its sales level.

Formula:

Net income
Return on sales ratio=
Net Sales

Solution:
630,312,072
2017 Return on sales ratio ¿
6,705,771,898
¿ 0.094 x 100

¿ 9.4%

2018
985,915,365
Return on sales ratio ¿
10,701,878,291
¿ 0.092 x 100

¿ 9.2%
Summary:
December 2018 December 2017 (Restated)
Net Income Attributable

to Equity holders of the

Parent Company 985,915,365 630,312,072

Revenue 10,701,878,291 6,705,771,898

Net Income Margin 9.2% 9.4%

Analysis
 The net profit margin decreased slightly. From 9.4% in 2017, it went down to 9.2% in
2018. This indicates that the company is not efficiently managing its expenses slightly during
this year. The company should find a way to stop the decreasing percentage of net profit
margin and exert effort to increase the sales to improve net income for future operations. If this
upward trend in operating expenses will continue, it follows that operating margin will continue
its downward trend. If this will be the case, the company will end up incurring losses.

Return on Assets
Through return on assets, the Century Properties Inc. and Subsidiaries identify that the
management has earned a reasonable return with the assets under its control.

Formula:

Net income
Return on assets ratio=
Average Total Asset

Assets at the Beginning of theYear + Assets at the Ending of the year

Average Total Assets=
2

Solution:
649,925,140
2017 Return on Assets ¿
42,555,650,621+ 41,308,524,254 /2
649,925,140
¿
41,932,087,438
¿ 0.015 x 100

¿1.5%

2018
1,118,186,619
Return on Assets ¿
49,366,682,829+42,555,650,621/2
 1,118,186,619
¿
45,961,166,725
¿ 0.024 x 100

¿2.4%

Summary:
December 2018 December 2017 (Restated)
Total Net Income after tax 1,118,186,619 649,925,140

Total Asset CY 49,366,682,829 42,555,650,621

Total Asset PY 42,555,650,621 41,308,524,254

Average total asset 45,961,166,725 41,932,087,438

Return on Asset 2.4% 1.5%

Analysis

The return on assets was 1.5% in 2017, this increased to 2.4% in 2018. It means that
Century Properties Group Inc. and Subsidiaries were utilized to generate income.

Return on Equity
Equity is defined as the sum of the common stock, the additional paid-in capital, and the
retained earnings. This measures the company’s the return the firm is earning on its
stockholders’ investment. It shows how the Century Properties Group Inc. and Subsidiaries
management has utilized the assets under its control.

Formula:
Net income
Return on Equity=
Average total Shareholder s' Equity
 Equity at the Beginning of theYear + Equity at the Ending of the year
Average Total Shareholder s ' Equity=
2

Solution:
649,925,140
2017 Return on Equity ¿
16,255,621,463+15,346,420,286 /2
649,925,140
¿
15,801,020,875
¿ 0.041 x 100

¿4.1%

2018
1,118,186,619
Return on Equity ¿
17,463,466,559+16,255,621,463 /2
1,118,186,619
¿
16,859,544,011
¿ 0.066 x 100

¿6.6%
Summary:
December 2018 December 2017 (Restated)
Total Net Income after tax 1,118,186,619 649,925,140

Total Equity CY 17,463,466,559 16,255,621,463

Total Equity PY 16,255,621,463 15,346,420,286

Average total equity 16,859,544,011 15,801,020,875

Return on Equity 6.6% 4.1%

Analysis

The return on Equity was 4.1% in 2017, this increased to 6.6% in 2018. This indicates
that the Century Properties Group Inc. and Subsidiaries utilizes its investments to stockholders
efficiently and effectively to generate profits during this year.
Free Cash Flow
Through Free cash flow, the Century Properties Group Inc. and Subsidiaries will be able
to indicate its ability to expand operations, repay lenders or pay shareholders’ dividend after
replacing the value of any property, plant and equipment used in operations.

Formula:

FreeCash Flow=Cash Provided by operations−Capital Expenditures

Solution:
2017 Free Cash flow ¿(183,598,440)−(2,232,855,642)
¿ (2,049,257,202)

2018
Free Cash Flow ¿( 2,155,514,473)−(2,277,319,337)
¿ (121,804,864)

Summary:
December 2018 December 2017 (Restated)
Cash Flow provided by operations (2,155,514,473) (183,598,440)

Capital Expenditures (2,277,319,337) (2,232,855,642)

Free Cash Flow (121, 804, 864) (2,049,257,202)

Analysis
The free cash flow was (Php. 121, 804, 864) in 2018 and (Php. 2, 049,257,202) for the
year 2017. Compared to the previous year, the free cash flow shows improvements in the year
2018 than that of 2017 but the free cash flow of the company is still negative which means that
the Century Properties Group Inc. and Subsidiaries indicate that they need some improvement
in their investments. However, this is normal due to their company's industry which is real
estate.

Summary of Findings
Century Properties Group Inc. and Subsidiaries financial statements are both
comparative financial statements and classified financial statements. It is a comparative
financial statement because the company’s financial statements reveal information for more
than one reporting period. It is also a classified financial statement because the amount of each
account is presented in distinct groupings. The format of the Financial Position of the company
is in report form because it presents asset, liability, and equity accounts in a vertical format.
The Statement of Comprehensive Income of the company follows a three-step process to
calculate net income, separating operational from non-operational revenues and expenses
thus, it is a multi-step income statement.
The company’s liquid ratio analysis, the year 2017 shows better liquidity overall than
that of the year 2018 but the difference between the consecutive years in terms of their
liquidity is not that high and the present year still shows satisfactory results despite it having
lower liquidity than the previous year. In terms of profitability, the year 2018 shows better
results than its previous year of operations. This indicates that the company is stable and can
still generate income.
For the three consecutive years of the company’s operations (2016, 2017 and 2018), in
the company’s consolidated statement of comprehensive income shows that 2018 got the
highest net income compared to its previous years of operations and it is significantly higher.
This shows great improvements of the company’s ability to generate net income.