However, the Kevin Tan-led conglomerate, whose assets span real estate, liquor, gaming and fast food, confirmed this is not the case.
“This mistake is purely a result of unintentional human error, and the company acknowledges this oversight and commits to correcting it in future reports,” AGI said in a stock exchange filing days after the Philippine Stock Exchange (PSE) sought an explanation.
Emperador remains compliant
The discrepancy, noticed by a stock market analyst, caused EMI’s stock to temporarily drop, but shares quickly recovered.
AGI also clarified that the encoding mistake has no impact on EMI’s actual public float, which it said was just above 20 percent.
“This unintentional mistake was attributed to several possibilities, such as a typing or encoding error, a rounding-up mistake, incorrect reference data, or a mathematical error in the computation itself,” AGI explained.
Analysts’ view
Nicky Franco, head of research at Abacus Securities, said misstatement was likely an honest mistake but questioned why AGI’s recognized income from EMI seemed disproportionate to its ownership in the brandy and whisky giant.
“We’ve been consistent in saying we’re giving EMI the benefit of the doubt,” Franco said.
“The problem is that AGI has been consistently recognizing 85 percent to 87 percent of EMI’s net income since 2023," he added.
AGI explains what happened
Meanwhile, the error stems from how treasury shares were counted.
Treasury shares are shares that a company buys back but does not sell or cancel, meaning they don’t count as publicly available shares. Since treasury shares reduce the total number of shares in the market, they affect how ownership percentages are calculated.
AGI and EMI counted shares differently
EMI’s official public ownership reports (POR) subtract only the shares EMI itself holds from its total issued shares, which is the standard method for calculating the public float.
However, AGI also includes 65.48 million shares held by EMI’s subsidiary, Emperador International Ltd. (EIL), as treasury shares, further reducing the number of shares counted as publicly available.
AGI does this because it reports on a consolidated level, meaning it treats EMI and its subsidiaries as one unit. Since EMI controls Emperador International, AGI considers EIL’s shares in EMI as part of EMI’s own treasury shares, affecting ownership calculations.
Rounding errors
At first, this difference in calculation did not cause issues. However, after June 30, 2021, a 1 percent gap appeared due to a rounding or encoding mistake in AGI’s reports.
As a result, AGI mistakenly reported 86 percent ownership instead of 85 percent and 81 percent instead of 80 percent.
The conglomerate said the mistake likely resulted from rounding up too aggressively, either by converting decimal points into whole numbers or accidentally adding EIL’s ownership twice in AGI’s calculations.
Rest of the reports accurate
AGI maintains that this error does not materially impact its financial reports.
“The company, together with EMI, strives to faithfully comply with the regulations of the Exchange and is fully intent on further expanding our respective public float to increase our shares’ tradability in the market,” AGI said.
