Belle Corporation ("Belle" or the "Company") was incorporated in' 1973 as Belle Mining and Oil Exploration, Incorporated ("Belle Resources") and, in 1976, was listed on the Philippine Stock Exchange. In 1989, Belle Resources developed a golf club named Tagaytay Highlands International Golf Club, Incorporated ("Tagaytay Highlands"), which became its initial foray into the property development sector. In 1994, Belle Resources changed its name to Belle Corporation to underscore the shift in its principal activity. In 1996, a publicly-listed affiliate, Dominion Asian Equities, Incorporated ("Dominion"), was merged into Belle, with Belle being the surviving entity. Dominion was Belle's partner in its gaming-related investments and selected property ventures. The merger resulted in the consolidation of the gaming and property development activities of Belle and Dominion. Belle then refocused its activities away from gaming and onto property development at that time.
In early 2001, Belle decided to spin-off some of its property development assets. The spin-off involved the transfer of approximately 534 hectares of undeveloped land, 70 developed subdivision lots and 25 finished residential units into a newly formed subsidiary, Highlands Prime, Incorporated ("Highlands Prime"). Highlands Prime was registered with the Securities and Exchange Commission on February 15, 2001, and its shares became listed on the Philippine Stock Exchange on April 23, 2002, at which time Belle sold approximately 64% of its interest in Highlands Prime to investors.
Development of the Business of the Registrant and its Subsidiaries/Affiliates during the Past 3 Years
Belle, the registrant, shifted its principal activity from mining and oil exploration to property development when it developed a golf course named Tagaytay Highlands Golf Club in 1989. Its property development projects are located in Tagaytay City and Batangas, and include the following: Alta Mira, Fairfield, Lakeside Fairways, Lakeview Heights, Pinecrest Village, Plantation Hills, Tagaytay Highlands Golf Club, Tagaytay Midlands Golf Club, The Belleview, The Country Club at Tagaytay Highlands, The Parks at Saratoga Hills, The Spa and Lodge at Tagaytay Highlands, The Verandas at Saratoga Hills, The Villas, and The Woodlands. Due to the overwhelming success of plantation Hills, Belle launched its fourth phase (named "The Heights") in 2005. The Heights was completed during the first quarter of 2007. Land development work for The Parks at Saratoga Hills ("The Parks"), a house and lot development north of Plantation Hills, was completed as of December 31, 2007. Construction of individual houses is ongoing, as units are sold. Land development for The Verandas at Saratoga Hills ("The Verandas") was also completed as of December 31, 2007. The Verandas was launched during the fourth quarter of 2006 as a subdivision lots project. Saratoga Hills follows an American Country theme. In October 2009, Belle launched a new subdivision project named Fairfield in Tanauan, Batangas, within The Saratoga Hills development area. Fairfield, located adjacent to The Verandas, was 97% complete as of December 31, 2011. In April 2010, Nob Hill, the second phase of Fairfield was launched and was 71% complete as of December 31, 2011.
Lakeside Fairways was introduced by Belle in April 2007. This project consists of subdivision lots located south of the existing 18-hole Tagaytay Midlands golf course in Talisay, Batangas. The construction of 9 more holes for the Tagaytay Midlands golf course also commenced after ground breaking for Lakeside Fairways, during the first half of 2008. As of December 31, 2011, the first four phases of Lakeside Fairways (Kew Gardens, Terrazas de Alava, Lakeside Enclave and Tivoli Place) average a completion rate of 99%. The fifth and sixth phases (Cotswold and Katsura, respectively) were both 96% and 97% complete, respectively, as of December 31, 2011. In April 2010, Belle launched the addition to its Katsura line of Japanese themed subdivision properties namely Yume, which was 14% complete as of December 31, 2011. In April 2011, Belle launched its latest phase in Lakeside Fairways, Sycamore Heights, with more than 23 hectares in gross land area and comprises 331 lots.' As of December 31, 2011, Sycamore heights was 28% complete.
Highlands Prime, Inc. ("Highlands Prime"), incorporated in 2001, is a 36%-owned affiliate of Belle. Its properties are located mainly in the vicinity of the Tagaytay Highlands and Tagaytay Midlands golf clubs in Calamba, Tagaytay City and Batangas. In 2002, Highlands Prime started the development of The Woodridge, a high-end multi-family condominium complex with an environmentally-sensitive "highlands rustic" design, located in Tagaytay Highlands, which was completed and fully sold in 2006. In 2004, Highlands Prime started construction of another condominium project, called The Horizon at Tagaytay Midlands, a 220-unit condominium development beside the north fairways of the Tagaytay Midlands golf course. In 2007, Highlands Prime launched Woodridge Park, a 65-unit, 7-building condominium complex near The Woodridge, and The Hillside, a lots-only subdivision. In 2008, Woodlands Point, a subdivision of 60 log houses, was launched. In 2009, Highlands Prime launched Pueblo Real, a subdivision overlooking the Tagaytay Midlands golf course. Highlands Prime shares became listed on the Philippine Stock Exchange on April 23, 2002. For 2010, Highlands Prime launched two projects namely: Phase 2 of Woodridge Place, a mid rise condominium project with a total of 88 units; and Sierra Lago, a subdivision project with 187 lots. In 2011 Highlands Prime continued the development of previously launched projects namely Woodlands Point, Pueblo Real, Woodridge Place and Siera Lago. Highlands Prime is currently completing several homes at The Woodlands Point, its most luxurious project to date, located near Fairway 15 of the Tagaytay Highlands golf course. The community will have 60 North American log cabins with floor areas ranging from 250-330 square meters, highlighted by floor-to-ceiling glass windows, Western Red Cedar and stone accents. Highlands Prime is also finishing the site development of Pueblo Uno, the first phase of Pueblo Real, its Santa Fe-Mexican inspired village in Tagaytay Midlands with a total of 85 lots. Highlands Prime has launched Phase II of The Woodridge Place and Sierra Lago, the second phase of Pueblo Real this 2010. Woodridge Place Phase II is a two-tower condominium development comprising of a total of 88 residential units. Sierra Lago is a modern-Mediterranean-themed lot development with about 187 lots.
Belle Bay City Corporation ("BBCC"), incorporated in 1996, is a 35%-owned affiliate of Belle. BBCC was incorporated with originally about 19 hectares (gross) of reclaimed land located along Roxas Boulevard in Paranaque, part of which had been earmarked for future development into "Belle Bay Plaza", a mixed-use complex. Due to the Asian Financial Crisis and related economic reasons, the shareholders of BBCC decided to dissolve BBCC and distribute the property among the shareholders as a return of their investments. In January 2005, the Securities and Exchange Commission and the Bureau of Internal Revenue approved the dissolution of BBCC. Subdivision of the property is ongoing, with Belle to receive approximately 5 hectares of the property upon the dissolution of BBCC. Part of the said said property will be the future site of the integrated resort complex of PremiumLeisure & Amusement inc. named the "Belle Grande Manila Bay".
Metro Manila Turf Club, Inc. ("MMTC"), incorporated in 1993, has a congressional franchise for horseracing, which was granted in 1995, and is still in its pre-operating stage. Belle and Sinophil owned a combined 100% of MMTC as of December 31, 2007. During 2009, Belle and Sinophil had sold a combined 87.5% of MMTC for to a group of investors who are working towards the activation of MMTC's congressional horse racing franchise and seeking financing for the construction of a race track. Belle's ownership interest in MMTC was 8.75%, with Sinophil owning 3.75% as of December 31, 2011. Prior to 2006, MMTC had approximately 121 hectares of land in Tanauan, Batangas, which was originally intended as the site for a racetrack (the "Land"). However, the construction activity on the racetrack never commenced, and MMTC returned the Land pro-rata to Belle and Sinophil in 2006, as a return of their investments or deposits. Belle and Sinophil plan to use the land for real estate projects in the future. In 2010, the new majority shareholders of MMTC unveiled a plan to build a racetrack on another tract of land in Batangas, with construction to commence during the first half of 2011. This race track is targeted for launch in the first quarter of 2012.
Pacific Online Systems Corporation ("Pacific Online"), incorporated in 1993, leases on-line betting equipment to the Philippine Charity Sweepstakes Office (PCSO) for their lottery operations in the Visayas and Mindanao. Pacific Online has been consistently profitable since its fiscal year 2002. Pacific Online listed its shares on the Philippine Stock Exchange with a successful initial public offering on April 12, 2007. A total of 39.8 million shares were offered to the public at P8.88 per share. Because of high demand for Pacific Online shares, it opened in the market at 1313.25 per share on the listing date. Belle owned 35% of Pacific Online as of December 31, 2011.
Investment agreement on PremiumLeisure & Amusement, Inc. ("PLAT")
On November 10, 2009, Belle and certain entities under the SM Group (collectively, "SM") entered into a Memorandum of Agreement ("MOA") for the acquisition by Belle of all the outstanding capital stock of PLAI from SM in exchange for the 2.7 billion new common shares of Belle, to be issued out of its existing authorized but unissued shares of 7.6 billion.
PLAT is a grantee by the Philippine Amusement and Gaming Corporation (PAGCOR) of a Certificate of Affiliation and Provisional License (the "License") to operate integrated resorts, including casinos, in the vicinity of the Bagong Nayong Pilipino Manila Bay Entertainment City and the Newport City Integrated Resort. PLA1's License runs concurrent with PAGCOR's Congressional Franchise, which expires in 2033.
In consideration of the License, the SM Consortium, of which PLAI is a member, had committed to PAGCOR that the Consortium shall invest US$1.0 billion (the "Investment Commitment') over twenty-three years, comprised of the value of land used for the projects and the construction costs of various facilities and infrastructure within the site of the project, provided that 40% of the Investment Commitment is spent within two years from the date of approval of the License. Belle and PLAI do not expect any problem in meeting the investment commitment, with total capital expenditures on the project by Belle and its operating partners (including the value of its land deployed for the project) anticipated to exceed Q28 billion by 2014.
On October 6, 2010, the transfer and valuation of Belle and PLAT shares was approved by the SEC. The approval of the Certificate Authorizing Registration ("CAR") from the Bureau of Internal Revenue ("BIR"), which triggered the completion of the transfer, has been approved on October 4, 2011.
On January 14, 2011, the Operating Agreement between PLAI and AB Leisure Global, Inc. ("ABLGI"), a 100% subsidiary of Leisure and Resorts World Corporation ("LRWC"), whereby ABLGI shall operate PLAI's casino with the help of a management partner and the Lease Agreements between Belle and LRWCIABLGI for the land and building owned by Belle which will be used for the casino operations and to be leased to LRWCIABLGI, were both signed and executed. Belle has since recognized a total of P62.1 million in rental revenues from ABLGI as of December 31, 2011.
Construction of Belle's Integrated resort (Belle Grande Manila Bay) located along Roxas Boulevard and Aseana Avenue in Paranaque City is currently in full swing, and the Belle Grande casino is expected to hold its Grand Opening during the first quarter of 2013.
Belle is principally engaged in real estate development, particularly the development of golf courses, country clubs, residential properties and other leisure and resort facilities. Since 2010, Belle has allocated significant resources to the development of its mixed-use gaming facility, The Belle Grande Manila Bay integrated resort, which is scheduled to soft launch in the first quarter of 2013. Aside from the formerly mentioned business lines, Belle is indirectly engaged in other gaming-related activities through its investments in various subsidiaries and affiliates.
The Company's other subsidiaries/affiliates in real estate development are:
1. Highlands Prime, Incorporated ("Highlands Prime"), whose properties are located around the vicinity of Tagaytay Highlands and Tagaytay Midlands in Tagaytay City and Batangas.
2. Belle Bay City Corporation ("BBCC"), which was formed in 1995 to hold and develop 19 hectares of reclaimed property located along Roxas Boulevard in the City of Manila. In January 2005, the Securities and Exchange Commission and the Bureau of Internal Revenue approved the eventual dissolution of BBCC, which is presently still in process.
Belle also has investments in companies engaged in gaming and gaming-related activities: In the Philippines, the gaming industry is largely untapped by other companies in the private sector, creating opportunities for experienced leisure operators. Belle's gaming businesses are undertaken, or will be undertaken, mainly by the following subsidiaries/affiliates:
1. Premium Leisure & Amusement, Inc. ("PLAT"), a wholly-owned subsidiary of Belle acquired from SM in 2010 in exchange for 2.7 billion new common shares of Belle, to be issued out of its existing authorized but unissued shares of 7.6 billion. PLAI is a grantee by Philippine Amusement and Gaming Corporation (PAGCOR) of a Certificate of Affiliations and Provisional Licenses (the "License") to operate integrated resorts, including casinos, in the vicinity of the Bagong Nayong Pilipino Manila Bay Entertainment City and the Newport City Integrated Resort. The License runs concurrent with PAG.COR's Congressional Franchise, which expires in 2033.
2. Pacific.Online Systems Corporation ("Pacific Online"), a 35%-owned affiliate of Belle that leases on-line betting equipment to the Philippine Charity Sweepstakes Office ("PCSO") for their lottery operations in the Visayas and Mindanao regions.
3. Metro Manila Turf Club, Incorporated ("MMTC"), which has a congressional franchise to engage in horse racing related gaming activities, and for build and operate a racetrack. Belle owned 8.75% of MMTC as of December 31, 2011.
The following are the major revenue items in 2011 and 2010:
|% to Total|
|% to Total|
|Sale of real estate and club shares||P520.0||60.1%||P1,164.0||81.7%|
|Interest and investment income||28.5||3.3%||3.6||0.3%|
|Equity in net earnings of associates||140.3||3.2%||99.1||7.0%|
|Other Revenues and Income||114.3||3.2%||99.1||7.0%|
Number of Employees
As of December 31, 2011, Belle had 167 employees, all of whom were full-time employees. Belle employees are not subject to Collective Bargaining Agreements. Belle's management had generally not encountered any significant difficulties with its labor force, and no major strikes had been staged in the past.
The following are the breakdown of Belle employees according to type:
Officers 16Managers 24Supervisors and Rank and File 124Total 167
Aside from the basic salary and 13th month pay, other supplemental benefits or incentives that are being provided by Belle to its employees include: service car for executives, medical and dental benefits, life and accident insurance, medical allowance and various loan facilities, 'among others.