An Equity Origination Case

Grand Plaza Hotel Corporation

De La Salle University - Manila

Term 3, A.Y. 2018-2019
In partial fulfillment of the course
In INBAMFI K32

Submitted by:
Alivia, Dana Margaret
Carag, Vincent Adrianne
Gregorio, Kristine
Li, Senping
Ravelo, Princess
Siyang, Michaela Nicole

Submitted to:

Mr. James Lago

August 15, 2019
 I. Brief summary of the business

The following description of the company was obtained from the PSE edge.

Grand Plaza Hotel Corporation (GPH) was registered with the Securities and Exchange
Commission on August 9, 1989, primarily to own, lease or manage one or more hotels, inns or
resorts, and other tourist-oriented businesses. The company is 54% owned by The Philippine
Fund Limited. GPH owns The Heritage Hotel Manila, a deluxe class hotel which offers 450
rooms and amenities such as restaurants, function halls, and a coffee shop. The hotel opened
on August 2, 1994, and the Company has continued to own and operate the hotel since then.
The Company's main source of income is revenue from the hotel operations. The market for
hotel services varied. The bulk of the room guests are corporate clients from various countries.
The majority of the room guests are Americans, Japanese, Koreans, Filipinos and guests from
Southeast Asian nations, while food and beverage guests are mainly Filipinos.

II. Financial Information of the issuer/firm

The selected financial information set forth in the following tables has been derived from the
Company’s audited financial statements as of December 31, 2018, 2017, 2016, 2015, 2014.

Income Statement

In Million Pesos 2018 2017 2016 2015 2014

Sales/Revenue 413797 382786.2 368548 447351.7 466947.8

Cost of Goods Sold (COGS) incl. D&A 182933.3 89020 86633.3 94066.1 95150.2

COGS excluding D&A 146373.1 45696.6 46567.1 54507.2 56286

Depreciation & Amortization Expense 36560.1 43323.4 40066.2 39558.9 38864.2

Depreciation 36560.1 43323.4 40066.2 39558.9 38864.2

Gross Income 230863.7 293766.2 281914.7 353285.6 371797.6

SG&A Expense 270421.8 337230 310726.6 349842 362141.2

Other SG&A 270421.8 337230 310726.6 349842 362141.2

Other Operating Expense - 9743.6 9407.2 9809.2 21493.7

EBIT -39558.1 -53207.4 -38219.1 -6365.6 -11837.3

Unusual Expense - 34756.3 - - -14767.9

Non Operating Income/Expense 11205.8 1689.8 10705.6 13079.7 181

Non-Operating Interest Income 7535.4 5887.5 5349.5 8946.6 5344.6

Equity in Affiliates (Pretax) 1769.5 1988 2083.8 2372.5 1774.1

Interest Expense - - - 5632.8 6265.2

Gross Interest Expense - - - 5632.8 6265.2

Pretax Income -19047.3 -78398.4 -20080.1 12400.4 3965.1

Income Tax 4138.6 -3117.2 -6855.2 6628.3 3571.2

Income Tax - Current Domestic 2073.5 2267.3 2612.5 4358.7 9802.1

Income Tax - Deferred Domestic 2065.1 -5384.4 -9467.8 2269.5 -6230.9

Consolidated Net Income -23185.9 -75281.3 -13224.9 5772.1 393.9

Net Income -23185.9 -75281.3 -13224.9 5772.1 393.9

Net Income Available to Common -23185.9 -75281.3 -13224.9 5772.1 393.9

Statement of Financial Position

In Million Pesos 2018 2017 2016 2015 2014

Assets

Current Assets

Cash & Short Term Investments 259 242 261 239 237

Cash Only 53 242 261 239 237

Short-Term Investments 206 - - - -

Total Accounts Receivable 106 127 93 110 326

Accounts Receivables, Net 52 73 36 56 266

Accounts Receivables, Gross 68 90 50 69 279

Other Receivables 55 54 56 55 61
Inventories 9 8 32 29 14

Finished Goods 3 2 6 6 6

Raw Materials 6 6 7 6 8

Progress Payments & Other 0 0 19 17 1

Other Current Assets 11 11 10 8 6

Prepaid Expenses 10 10 9 8 5

Miscellaneous Current Assets 1 1 1 1 1

Total Current Assets 386 389 395 387 583

Net Property, Plant & Equipment 480 509 565 591 625

Property, Plant & Equipment - Gross 1,428 1,421 1,401 1,388 1,390

Buildings 1,028 1,026 1,021 1,014 1,009

Transportation Equipment 7 6 4 4 4

Other Property, Plant & Equipment 392 389 376 370 377

Accumulated Depreciation 947 912 837 797 765

Buildings 574 547 486 460 434

Transportation Equipment 5 4 4 4 4

Other Property, Plant & Equipment 369 361 346 333 327

Total Investments and Advances 128 128 129 131 50

LT Investment - Affiliate Companies 50 50 51 53 50

Other Long-Term Investments 78 78 78 78 -

Other Assets 11 15 10 10 84

Tangible Other Assets 11 15 10 10 84

Total Assets 1,033 1,069 1,123 1,133 1,356

Liabilities & Shareholders' Equity

All values PHP Millions. 2018 2017 2016 2015 2014

Accounts Payable 32 41 32 37 42
Income Tax Payable - - 1 3 2

Other Current Liabilities 108 116 103 93 297

Accrued Payroll 20 20 13 24 19

Miscellaneous Current Liabilities 88 96 89 69 277

Total Current Liabilities 141 157 135 133 341

Provision for Risks & Charges 21 26 26 25 27

Deferred Taxes -19 -23 -18 -9 -12

Deferred Taxes - Credit 9 5 7 6 2

Deferred Taxes - Debit 28 27 25 15 14

Other Liabilities 3 3 4 5 32

Other Liabilities (excl. Deferred Income) 3 3 4 5 32

Total Liabilities 174 191 172 170 401

Common Equity (Total) 859 878 951 963 955

Common Stock Par/Carry Value 873 873 873 873 873

Additional Paid-In Capital/Capital Surplus 15 15 15 15 15

Retained Earnings 1,637 -20 55 68 62

Other Appropriated Reserves 15 1,690 1,689 1,687 1,685

Treasury Stock -1,680 -1,680 -1,680 -1,680 -1,680

Total Shareholders' Equity 859 878 951 963 955

Total Equity 859 878 951 963 955

Liabilities & Shareholders' Equity 1,033 1,069 1,123 1,133

III. Offering summary in tabular form

Issuer Grand Plaza Hotel Corporation (GPH)

Rights Shares 93,023,256 Common Shares of the GPH with a par value
of ₱10.00 per share. The Rights Shares shall be issued
from the unissued capital stock of GPH and rank equally in
all respects with the existing Common Shares, including
the right to receive all dividends or distributions made,
paid or declared after a valid subscription agreement is
perfected between GPH and a buyer as evidenced by the
written acceptance by the Bank of the application to
subscribe (the “Application to Subscribe” or the
“Application”) of the buyer and other conditions, including
listing of the Rights Shares on the PSE. .

Joint Global Coordinators Deutsche Bank AG, Hong Kong Branch and J.P. Morgan
and Joint Bookrunners Securities plc

Sole Underwriter PNB Capital and Investment Corporation

Stock Transfer Agent and Philippine National Bank – Trust Banking Group
Receiving Agent

The Offer The Bank is offering Common Shares for subscription to

Eligible Shareholders on a pre-emptive rights basis.

Offer Price The Rights Shares are being offered at a price of ₱10.75
per share. The Offer Price was determined by computing
the volume-weighted average price of the GPH’s Common
Shares on the PSE for each of the fifteen (15) consecutive
trading days from February 27 to March 28, 2019 and
applying a discount of approximately 8.51%.The discount
of 8.51% was determined through discussions among the
Bank and the Sole Underwriter. The Offer Price is ₱10.75
per Rights Share

Offer Period The Offer Period shall commence on August 15, 2019 at
9:00 a.m.
(Manila time) and end on August 24, 2019 at 12:00 p.m.
(Manila
time). GPH reserves the right to extend or terminate the
Offer Period with the approval of the PSE.

Minimum Subscription Each Application must be for a minimum of one (1) Rights
Share..
Eligible Shareholders The Rights Shares are being offered to existing holders of
Common Shares as of the Record Date who are: (i)
holders located inside the Philippines and (ii) holders
located in jurisdictions outside the Philippines and the
United States where it is legal to participate in the Offer
under the securities laws of such jurisdiction. The
Common Shares of the Bank may be held by any person
or entity, regardless of nationality, subject to the right of
the Bank to reject an Application or reduce the number of
Rights Shares applied for subscription or purchase if the
same will cause the Bank to be in breach of the Philippine
ownership requirement under relevant Philippine laws.

Rights Entitlement Each eligible holder of Common Shares is entitled to

subscribe to one (1) Rights Share for every 0.939
Common Shares held as of the Record Date (the
“Entitlement Shares”). Fractions of the Rights Shares will
not be allotted to existing shareholders and fractional
entitlements will be rounded down to the nearest whole
number of Rights Shares. Such fractions will be
aggregated and sold for the benefit of the Bank.
Subscription to the Rights Shares in certain jurisdictions
may be restricted by law. Foreign investors interested in
subscribing or purchasing the Rights Shares should inform
themselves of the applicable legal requirements under the
laws and regulations of the countries of their nationality,
residence or domicile, and as to any relevant tax or foreign
exchange control laws and regulations affecting them
personally. Foreign investors, both corporate and
individual, warrant that their purchase of the Rights Shares
will not violate the laws of their jurisdiction and that they
are allowed to acquire, purchase and hold the Rights
Shares. The offer process in relation to the Entitlement
Shares shall also be known as the “First Round of the
Offer”.

Additional Subscription If an applicant fully subscribes to his Entitlement Shares

and subject to the availability of unsubscribed Rights
Shares arising from the failure of the other Eligible
Shareholders to fully exercise their Rights Shares
entitlement, the applicant may simultaneously apply for an
additional subscription of the unsubscribed Rights Shares
(the “Additional Rights Shares”). The Additional Rights
Shares are payable in full upon submission of the
Application. If the aggregate number of Additional Rights
 Shares available for subscription equals or exceeds the
aggregate number of Additional Rights Shares so
subscribed for, an applicant will be allocated the number of
Additional Rights Shares indicated in his Application. If the
aggregate number of Additional Rights Shares available
for subscription is less than the aggregate number of
Additional Rights Shares so subscribed for, the available
Additional Rights Shares will be allocated to applicants
who have applied to subscribe for such Additional Rights
Shares and such allocation shall be made at the discretion
of the Bank primarily 16 based on each applicant’s original
shareholding in the Bank as of the Record Date relative to
the original shareholding of all other applicants for
Additional Rights Shares as of such Record Date,
provided that no applicant for Additional Rights Shares
shall be allocated more Additional Rights Shares than the
number for which such applicant has applied. There can
be no guarantee made as to the number of Additional
Rights Shares an applicant may be allocated. A
subscription for Additional Rights Shares is irrevocable on
the part of the applicant and may not be cancelled or
modified by such applicant. The offer process in relation to
the Additional Rights Shares shall also be known as the
“Second Round of the Offer”.

Restrictions on Ownership The Philippine Constitution and related statutes set forth
restrictions on foreign ownership of companies engaged in
certain activities. The GPH is subject to Philippine
legislation restricting the aggregate foreign ownership to
40.0% of the outstanding Shares. Accordingly, GPH
cannot allow the issuance or the transfer of its Common
Shares which may result in GPH ceasing to be at least
60.0% owned by Philippine Nationals.

Procedure for Application All Applications shall be evidenced by the Application to

Subscribe, duly executed by the applicant or (where
applicable) an authorized signatory thereof and
accompanied by the corresponding payment for the Rights
Shares covered by the Application and all other required
documents. The duly executed Application and required
documents should be submitted during the Offer Period to
either the Receiving Agent or any designated branches of
the Bank. Eligible Shareholders of certificated shares that
are located outside the Philippines and the United States
may initially submit an Application (together with the other
required documents) to the Receiving Agent by email
and/or fax on or before the end of the Offer Period with the
original copies delivered via courier thereafter. Payment
for the Application shall be remitted to a designated PNB
bank account via wire transfer before the end of the Offer
Period. If the applicant is an eligible individual shareholder,
the applicant must submit the following supporting
documents: • a properly completed Application to
Subscribe; 17 • a copy of one (1) valid government-issued
identification document (ID) as prescribed by the BSP in
its Circular Nos. 608 (Series of 2008), 792 (Series of
2013), and 950 (Series of 2017) and in its Memorandum
No. M-2012-021 (e.g., SSS, GSIS, driver’s license,
passport, PRC ID, Senior Citizens ID or digital TIN ID) and
• the duly accomplished signature card. If the applicant is
a corporation, partnership, or trust account, the Application
to Subscribe must be accompanied by:: (1) a properly
completed Application to Subscribe; and (2) an original of
a duly notarized corporate secretary’s certificate: •
certifying that the corporation is duly incorporated under
the laws of the Philippines, in good standing and in full
compliance with all required regulatory filings and
submissions; • setting forth the resolution of the applicant’s
board of directors or equivalent body authorizing the
purchase of the Rights Shares indicated in the Application;
• identifying the designated signatory or signatories
authorized to sign the Application and any and all
documents in connection therewith; • certifying the
incumbency and specimen signature(s) of the authorized
signatory or signatories, including his, her or their
specimen signature(s); and • certifying to the percentage
of the applicant’s capital or capital stock held by Philippine
Nationals; (3) a copy of one (1) valid and unexpired
government-issued identification card of the authorized
signatory/signatories; and (4) the duly accomplished
signature card signed by the authorized signatory or
signatories. If the applicant is a non-Filipino (individual
shareholder or corporation, partnership or trust account),
the Application to Subscribe must also be accompanied by
a certification letter (in the form attached to the Application
to Subscribe) representing and warranting that: • the
applicant is not a resident in the United States; and • the
applicant’s purchase of the Rights Shares will not violate
the laws of his, her or its resident jurisdiction. 18
Applications, together with the required supporting
documents, and payment representing full payment of the
Rights Shares being subscribed for (i.e., Entitlement
Shares and Additional Rights Shares being applied for
 subscription) must be received by the Receiving Agent or
by designated branches of the Bank not later than 12:00
p.m., (Manila time) on August 24 2019, the last day of the
Offer Period. Applications received thereafter or without
the required documents will be rejected. Applications shall
be considered irrevocable upon submission to the
Receiving Agent, and shall be subject to the terms and
conditions of the Offer as stated in this Prospectus and in
the Application. The actual subscription and/or purchase
of the Rights Shares shall become effective only upon the
actual listing of the Rights Shares on the PSE

Payment Terms The Rights Shares must be paid for in full to the
designated “GPH Stock Rights Offer” settlement account
upon submission of the Application. Payment must be
made by (a) check drawn against any BSP-authorized
agent bank or any branch thereof in Metro Manila to the
order of “GPH Stock Rights Offer”; or (b) debit of an
existing PNB account owned (solely or jointly under an
“and/or” arrangement) by such applicant. Certificated
shareholders residing outside of the Philippines and
outside the United States may submit their payment by
way of remittance (telegraphic transfer) in favor of the
Bank for direct credit to “GPH Stock Rights Offer”. Check
payments must be dated as of the date of submission of
the Application and crossed “Payee’s Account Only”. All
bank charges (as applicable) shall be for the account of
the applicant. The payment for the subscription price must
be received by the Bank in full without any deduction

Acceptance/Rejection of The Bank has full discretion to accept or reject all or a

Applications portion of any Application under the terms and conditions
of the Offer. The actual number of Rights Shares to which
any applicant may be entitled is subject to the confirmation
of the Bank. Applications where checks are dishonored
upon first presentment and Applications which do not
comply with the terms of the Offer shall be rejected.
Moreover, payment received upon submission of an
Application does not constitute approval or acceptance by
the Bank of the Application. An Application, when
accepted, shall constitute an agreement between the
applicant and the Bank for the subscription to the Rights
Shares at the time, in the manner and subject to terms
and conditions set forth in the Application and those
described in this Prospectus. Notwithstanding the
 acceptance of any Application by the Bank, the actual
subscription and/or purchase by an applicant of the Rights
Shares will become effective only upon listing of the Rights
Shares on the PSE. If such condition is not fulfilled on or
before the periods provided above, all application
payments will be returned to the applicants without interest
and, in the meantime, the said application payments will
be held in a separate bank account with the Receiving
Agent.

Refunds In the event that the number of Rights Shares to be

received by an applicant is less than the number covered
by its Application, or if an Application is rejected by the
Bank, then the Bank shall refund, without interest, via
check payable to the relevant applicant, within five
Banking Days from the end of the Offer Period, the
amount corresponding to the number of Rights Shares not
issued to such applicant. Such refund check shall be
made available for pickup at the offices of Philippine
National Bank – Trust Banking Group within five Banking
Days following the end of the Offer Period. Refund checks
that remain unclaimed after 30 days from the date such
checks are made available for pickup shall be mailed at
the Applicant’s risk to the address indicated in the
Application.

Documentary Stamp Tax All documentary stamp taxes applicable to the original
issuance of the Rights Shares shall be for the sole
account of the Bank.

Registration and Lodgment Rights Shares are required to be lodged with the
of Shares with the Philippine Philippine Depository & Trust Corporation (the “PDTC”).
Depository & Trust Corp Applicants must provide the required information in the
Application to effect the lodgment. Applicants may request
their shares to be issued in certificated form and to receive
stock certificates evidencing their investment in the Rights
Shares through their respective brokers after full payment,
lodgment and listing of the Rights Shares and in
accordance with existing procedures. Any expense
incurred in connection with such issuance of stock
certificates shall be for the account of the applicant, except
for expenses to be incurred by Philippine National Bank –
Trust Banking Group, in its capacity as the stock transfer
agent, which shall be borne by the Bank provided, a
request and submission of completed documents and
 requirements to the Philippine National Bank – Trust
Banking Group is made within 90 calendar days from the
Listing Date

Registration of Foreign The BSP requires that investments in the Rights Shares
Investments funded
by inward remittance of foreign currency be converted to
Philippine Pesos and registered with the BSP if the foreign
exchange needed to service capital repatriation or
dividend
remittance is to be sourced from the domestic banking
system.
The registration with the BSP of all foreign investments in
the
Rights Shares shall be the responsibility of the foreign
investor
and all costs therefore borne by such foreign investor.

Lock-up The Bank has agreed with the Joint Global Coordinators
and Joint Bookrunners that, other than in connection with
the issuance of Rights Shares for purposes of the Offer,
neither the Bank nor any person acting on its behalf will,
for a period of 90 days after the Listing Date, without the
prior written consent of the Joint Global Coordinators and
Joint Bookrunners, issue, offer, sell, contract to sell,
pledge, charge, grant options over or otherwise dispose
of, directly or indirectly (or publicly announce any such
issuance, offer, sale, pledge, charge, options or disposal
of), or enter into a transaction which would have the same
effect (or publicly announce the entry into any such
transaction), or enter into any swap, hedge or other
arrangement (or publicly announce the entry in any such
swap, hedge or other arrangement) that transfers in whole
or in part, any of the economic consequences of
ownership of the Common Shares, whether any such
aforementioned transaction is to be settled by delivery of
the Common Shares or securities convertible or
exchangeable into or exercisable for Common Shares or
warrants or other rights to purchase Common Shares or
any security or financial product whose value is
determined directly or indirectly by reference to the price
of the Common Shares, including equity swaps, forward
sales and options.

Listing and Trading The Bank’s application for the listing of the Rights Shares
was approved by the PSE on May 29, 2019. All of the
 Rights Shares are expected to be listed on the PSE on
September 03, 2019. Trading is expected to commence on
the same date that the relevant Rights Shares are listed
on the PSE.

Timetable The timetable of the Offer is scheduled as follows:

Pricing Date August 26, 2019
Ex-Date August 30, 2019
Record Date September 02, 2019
Offer Period August 15, 2019 9:00 a.m. (Manila time) to
August 24, 2019 12:00 p.m. (Manila time)
Listing Date September 03, 2019 The dates listed above
are subject to market and other conditions and may be
changed at the discretion of the Bank and the Joint Global
Coordinators and Joint Bookrunners, subject to the
approval of the PSE.

Underwriter’s Firm The Sole Underwriter shall purchase, or procure qualified

Commitment to Purchase buyers to purchase, any unsubscribed Rights Shares,
after the mandatory Second Round of the Offer, to ensure
that the Rights Shares covered by the Offer are fully
subscribed.

IV. List/brief of risk factors

Credit Risk
Risk that the company would incur if credit customers and counterparties fail to
perform their contractual obligations. This also arises principally from the Company’s
trade receivables.

Liquidity Risk
Risk that the company will not be able to meet its financial obligations as they fall
due. This type of risk if managed by the company by forecasting projected cash flows
and maintaining a balance between continuity of funding and flexibility in operations. The
company also ensures that sufficient cash is maintained in order to cover operational
and working capital requirements by making sure that treasury controls and procedures
are in place.

Market Risk
Risk that changes in the market such as foreign exchange rates, interest rates
and other market prices that would affect the company’s income. The company is
subjected to different market risks such as:
a. Room Rates
 - Risk from room rates affects the company’s ability to recover high
operating costs through the price increase. However, this is limited
due to the competitive pricing environment in the Philippines.
Furthermore, the company manages this type of risk by signing
contracts with a short period of expiry to give them more time to
adjust its room rates in accordance with market conditions.

b. Interest Rate Risk

- The company has minimal interest rate risk because the company
has no interest-bearing debt obligations.

c. Foreign Currency Risk

- The company’s foreign currency risk is minimal because the
financial assets and financing facilities extended to the company
were mainly Philippine Peso and not foreign currencies.
Compliance Risk
A risk that involves a company to comply to new rules that is set by the government or
other governing body. To run a business the company needs to follow certain legislation that is
implemented on them. If a company is unable to follow those regulations it would be difficult for
the business to continue existing longer.

Operational Risk
A risk that involves internal failures like the business’ system or process. The business’
processes, people or system fail unexpectedly, therefore there is no return in operational risk if it
does happen. It can also result to unforeseen external events that are out of the company’s
control. Any kind of event that interrupts the company’s core operation falls under this kind of
risk.

Reputational Risk
A risk that is a threat to the good standing of the business. It can occur directly as the
result of the action of the company, or indirectly due to the actions of the employees. It can also
happen through peripheral parties, like joint ventures partners or suppliers. The company needs
to be socially responsible and environmentally conscious to avoid or minimize any reputational
risk.

V. Use of proceeds

The Company intends to use the proceeds it receives from this Offer to build a new
casino and to renovate the building of the Grand Plaza Hotel, in the amount of
approximately ₱1.0 billion based on an Offer Price of ₱10.75 per Rights Share. Part of
the proceeds will also be used to cover the expenses for the Offer. After deducting the
estimated expenses related to the Offer of approximately ₱224.2 million, net proceeds to
the Company from the Offer are expected to be approximately ₱774.8 million.
 Breakdown of Proceeds to Grand Plaza Hotel:

Amount

Gross Proceeds ₱ 999,999,999.96

Estimated Offer expenses ₱224,187,500.00

Estimated net proceeds ₱775,812,499.96

Breakdown of Offer Expenses of the Bank:

Amount

Estimated PSE Listing and Processing

Fees (exclusive of 12% value-added tax)

PSE Listing and Processing Fee ₱ 13,440,000

SEC Filing Fee ₱ 12,120,000

Estimated Legal, Professional and Other ₱ 198,627,500

Expenses

Estimated Offer Expenses ₱ 224,187,500

In the event that the actual expenses relating to the Offer are different from the above
estimates, the actual net proceeds to the Company from the Offer may be higher or
lower than the expected net proceeds set forth above. Any increase or decrease in the
net proceeds to the company shall be addressed by using internal generated funds to
finance the shortfall in case of a decrease.

No amount of proceeds will be used to finance other projects undertaken by Grand

Plaza Hotel or will be redirected to other expenses not related to the building of the
casino and renovation of the building. Moreover, the proceeds will not be used for
unlawful gain of of any officer, director, employee or shareholder.

VI. Determination of Offer Price

The Rights Shares are being offered at a price of ₱10.75 per share. The Offer Price was
determined by computing the volume-weighted average price of the GPH’s Common Shares on
the PSE for each of the fifteen (15) consecutive trading days from February 27 to March 28,
2019 and applying a discount of approximately 8.51%.The discount of 8.51% was determined
through discussions among the Bank and the Sole Underwriter. The Offer Price is ₱10.75 per
Rights Share

VII. Key Valuation Ratios

A. Current Ratio

2018 2017 2016 2015 2014

Current Ratio 2.74x 2.48x 2.93x 2.91x 1.71x

The slight increase in the current ratio is due to the decrease in the short-term debts to its
suppliers or creditors.

B. Debt to Equity

2018 2017 2016 2015 2014

Debt to 20% 22% 18% 18% 42%

Equity

The debt to equity ratio is decreased by 2% due to the decrease in the current liabilities.

C. Net Profit Margin

2018 2017 2016 2015 2014

Net Profit -6% -20% -4% 1% 0%

Margin

The net profit margin ratio decreased over the year but improved in the year 2018 due to the
increase in net income.

D. Return on Assets

2018 2017 2016 2015 2014

Return on -2,245% -7,042% -1,178% 509% 29%

Assets
Improved Return on Assets from 2018 is due to the increase in net income.

E. Return on Equity

2018 2017 2016 2015 2014

Return on -2,699% -8,574% -1,391% 599% 41%

Equity

Improved Return on Equity despite negative values due to a decrease in net loss.

F. Supplementary Schedule of Financial Soundness Indicators

a. Liquidity Ratios

Liquidity Ratios 2018 2017 2016 2015 2014

Current Ratio 2.74x 2.48x 2.93x 2.91x 1.71x

Quick Ratio 2.67x 2.43x 2.69x 2.69x 1.67x

Cash Conversion Cycle 0.05 -0.01 0.09 0.06 0.15

(CCC)

b. Asset Management Ratios

Asset MGT Ratios 2018 2017 2016 2015 2014

Inventory Turnover 20,325.92 11,127.50 2,707.29 3,243.66 6,796.44

Ratio

Days Inventory 0.02 0.03 0.13 0.11 0.05

Outstanding (DIO)

Days Sales 0.09 0.12 0.09 0.09 0.25

Outstanding (DSO)

Total Asset Turnover 400.58 358.08 328.18 394.84 344.36

(TAT)

c. Debt Management Ratios

 Debt MGT Ratios 2018 2017 2016 2015 2014

Debt Ratio 17% 18% 15% 15% 30%

Debt to Equity 20% 22% 18% 18% 42%

Days Payable 0.06 0.17 0.13 0.14 0.16

Outstanding (DPO)

Interest Coverage 0 0 0 -1.13 -1.89

(Times Interest Earned)

d. Profitability Ratios

Profitability Ratios 2018 2017 2016 2015 2014

Profit Margin on Sales -6% -20% -4% 1% 0%

Gross Margin 56% 77% 76% 79% 80%

Basic Earning Power -3,829% -4,977% -3,403% -562% -873%

Return on Assets -2,245% -7,042% -1,178% 509% 29%

(ROA)

Return on Equity (ROE) -2,699% -8,574% -1,391% 599% 41%

VIII. Versus Comparables (2018 Data)

1. Grand Plaza Hotel versus Travellers International Hotel Group

a. Liquidity Ratios

Liquidity Ratios GPH RWM

Current Ratio 2.74x 1.00

Quick Ratio 2.67x 1.00

Cash Conversion Cycle 0.05 0.78

(CCC)

b. Asset Management Ratios

Asset MGT Ratios GPH RWM

Inventory Turnover Ratio 20,325.92 0.21

Days Inventory 0.02 2.78

Outstanding (DIO)

Days Sales Outstanding 0.09 14.61

(DSO)

Total Asset Turnover (TAT) 400.58 0.21

c. Debt Management Ratios

Debt MGT Ratios GPH RWM

Debt Ratio 17% 39%

Debt to Equity 20% 20.89

Days Payable Outstanding 0.06 125.72

(DPO)

Interest Coverage (Times 0 -0.03

Interest Earned)

d. Profitability Ratios

Profitability Ratios GPH RWM

Profit Margin on Sales -6% 7%

Gross Margin 56% 37%

Basic Earning Power -3,829% -0.0006%

Return on Assets (ROA) -2,245% 1.49%

Return on Equity (ROE) -2,699% 3.23%