2011 Annual Report Financial Supplements - BDO

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19.02 Capital AllocationThe allocation of capital between specific operations and activities is, to a large extent, drivenby optimization of the return achieved on the capital allocated. The amount of capitalallocated to each operation or activity is based primarily upon the regulatory capital, but insome cases the regulatory requirements do not reflect fully the varying degree of riskassociated with different activities. In such cases the capital requirements may be flexed toreflect differing risk profiles subject to the overall level of capital to support a particularoperation or activity not falling below the minimum required for regulatory purposes.The process of allocating capital to specific operations and activities is undertakenindependently of those responsible of the operation and is subject to review by the ALCO.Although maximization of the return on risk-adjusted capital is the principal basis used indetermining how capital is allocated within BDO Unibank Group to particular operations oractivities, it is not the sole basis used for decision making. Account also is taken of synergieswith other operations and activities, the availability of management and other resources andthe fit of the activity with the longer term strategic objectives. The policies in respect ofcapital management and allocation are reviewed regularly by the BOD.19.03 Capital StockCapital stock consists of the following:Number of Shares2011 2010Common shares – P10 par valueAuthorized – 4,500,000,000 sharesIssued, fully paid and outstandingBalance at beginning of year 2,607,437,907 2,339,768,510Issued during the year - 267,669,397Balance at end of year 2,607,437,907 2,607,437,907Preferred shares – P10 par valueAuthorized – 2,000,000,000 sharesIssued, fully paid and outstanding 500,000,000 500,000,000Amount2011 2010Common sharesBalance at beginning of year P 26,074 P 23,397Issued during the year - 2,677Balance at end of year P 26,074 P 26,074Preferred shares – Issued, fully paid and outstanding P 5,000 P 5,000The Parent Bank’s application for listing of its common stock was approved by the PSE onApril 24, 2002. The application is for the initial listing of up to 952,708,650 common shares,with par value of P10 per share, at an offer price range of P17.80 to P23.8 per share. Theproceeds from the sale of the Bank’s listed shares amounted to about P2,200.www.bdo.com.ph 117
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)The history of shares issuances from the initial public offering (IPO) and subsequently,private placements exempt from registration pursuant to Section 10.1 of the SecuritiesRegulation Code, is as follows:Transaction Subscriber Issue DateNumber of SharesIssuedIPO VariousMay 21, 2002 908,189,550Private placement International FinanceCorporation (IFC) June 21, 2005 31,403,592Private placement UOBPFebruary 8, 2006 22,429,906BDO-EPCIB Merger BDO-EPCIB Merger May 31, 2007 1,308,606,021Private placementPrivate placementIFCGE Capital InternationalHoldings Corporation(GE Capital)August 23, 2007August 20, 200931,403,59237,735,849Private placement Multi Realty DevelopmentCorporation April 23, 2010 107,320,482Private placement IFCApril 26, 2010 24,033,253Private placement IFC Capitalization(Equity) Fund, L.P.(IFC Equity Fund) April 26, 2010 136,315,6622,607,437,907As of December 31, 2011, there are 13,517 holders of the listed shares equivalent to 100% ofthe Parent Bank’s total outstanding shares. Such listed shares closed at P59 per share as ofDecember 29, 2011.On March 19, 2010, the Bank’s BOD approved a capital raising program that would allow theBank to raise between US$250 million to US$300 million worth of common shares, with theIFC and the IFC Equity Fund, as anchor investors. Subsequently, on April 26, 2010, the Bankissued 24,033,253 shares to the IFC and 136,315,662 shares to the IFC Capitalization Fund atP41.50 per share for a total subscription price of P997 and P5,657, respectively. Foreigninstitutional investors participated in this capital raising through a top-up offering, resulting inthe issuance of an additional 107,320,482 common shares at the same offer price. The Bankwas able to raise a total of P10,994 from this capital raising exercise.In 2009, the Parent Bank issued to GE Capital 37,735,849 common shares worth P377 in linewith the latter’s strategic investment in the Parent Bank (see Note 26.02).On August 30, 2008, the BOD approved the issuance of up to 500,000,000 perpetual, voting,non-cumulative, convertible, non-participating, peso-denominated Series A preferred sharesqualifying as Tier 1 capital of BDO Unibank Group. The conversion right is at the option ofthe holder after three years from the issue date or at the option of BDO Unibank Group atany time after issue date upon the occurrence of certain trigger events such as: (i) a change intax status of the preferred shares; or, (ii) the preferred shares do not qualify as Tier 1 capital ofBDO Unibank Group as determined by the BSP or other applicable laws and regulations.Dividend rate is at 6.5% per annum of the par value. Subsequently, on September 30, 2008,the Parent Bank issued 500,000,000 preferred shares at P10 per share or a total value ofP5,000.
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REPORT OFINDEPENDENT AUDITORSReport
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STATEMENTS OFINCOMEFOR THE YEARS EN
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BALANCE AT JANUARY 1, 2009 P 23,020
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FOR THE YEARS ENDED DECEMBER 31, 20
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1.02 Approval of Financial Statemen
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(ii) Philippine Interpretation IFRI
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PFRS 7 (Amendment), Financial Instr
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(v)PFRS 9, Financial Instruments: C
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BDO Unibank Group accounts for its
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Regular purchases and sales of fina
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Subsequent to initial recognition,
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Certain derivatives may be designat
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NOTES TOFINANCIAL STATEMENTSDECEMBE
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Page 67 and 68: NOTES TOFINANCIAL STATEMENTSDECEMBE
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Page 149: COMPANY HEADQUARTERSBDO Unibank, In
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2011 Annual Report Financial Supplements - BDO

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