Document 6527527

Transcription

Document 6527527

COVER SHEET
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S.E.C. Registration Number
A N G L O
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C O R P O R A
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(Company's Full Name)
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(Business Address : No. Street City / Town / Province)
Atty. Adrian S. Arias
+63(2)6315139
Contact Person
Company Telephone Number
SEC Form 20-IS
Definitive Information Statement
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FORM TYPE
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Annual Meeting
Secondary License
Type, If Applicable
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Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
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5
5
P100 Million
Total No. of Stockholders
Domestic
To be accomplished by SEC Personnel concerned
File Number
LCU
Document I.D.
Cashier
STAMPS
Remarks = pls. use black ink for scanning purposes
P2,016 Million
Foreign
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 20-IS
INFORMATION STATEMENT PURSUANT TO SECTION 20
OF THE SECURITIES REGULATION CODE
1.
Check the appropriate box:
__________
Preliminary Information Statement
____X_ ___
Definitive Information Statement
__________
Additional Materials
2.
Name of Registrant as specified in its charter ANGLO PHILIPPINE HOLDINGS
CORPORATION
3.
Province, country or other jurisdiction of incorporation or organization Philippines
4.
SEC Identification Number 14102
5.
BIR Tax Identification Code 041–000–175–630
6.
Address of principal office 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong
City 1550
7.
Registrant’s telephone number, including area code (632) 631-5139; 635-6130
8.
July 29, 2011 2:30 P.M. at the Kamia Room, Edsa Shangri-La Manila Ortigas Center
Mandaluyong City, Philippines
9.
Approximate date on which the Information Statement is first to be sent or given to security
holders July 08, 2011
10.
In case of Proxy Solicitation: N/A
11.
Securities registered pursuant to Section 8 and 12 of the Code (information on number of shares
and amount of debt is applicable only to corporate registrants):
Title of Each Class
Number of Shares of Common Stock
Outstanding or Amount of Debt Outstanding
Common Stock (P1.00 par value)
Loans Payable and Long Term Debt
12.
1,165,000,000 (excluding 13,000,000 shares in
Treasury stocks)
P2,116 Million
Are any or all of registrant’s securities listed on the Philippine Stock Exchange?
Yes ____X_____ No __________
ANGLO PHILIPPINE HOLDINGS CORPORATION
6th Floor, Quad Alpha Centrum
125 Pioneer, Mandaluyong City 1550, Philippines
Tel (632) 631-5139; 631-6530; Fax (632) 631-3113
INFORMATION STATEMENT
PART I
A.
General Information
Item 1. Date, time and place of meeting of stockholders
The 2011 Annual Meeting of Stockholders (the “Meeting”) of Anglo Philippine Holdings
Corporation (the “Company”) will be held on Friday, 29 July 2011, 2:30 pm, at the Kamia
Room, EDSA Shangri-La Manila, Ortigas Center, Mandaluyong City, Philippines. The complete
mailing address of the Company is 6th Floor, Quad Alpha Centrum, 125 Pioneer, Mandaluyong
City 1550, Philippines.
(a)
This Information Statement will be sent to stockholders at least fifteen (15) business days
prior to the date of the Meeting in accordance with existing rules and the Company’s ByLaws, or on or before 08 July 2011.
Item 2. Dissenters' Right of Appraisal
A stockholder has the right to dissent and demand payment of the fair market value of his shares
in case: (i) any amendment to the Company’s Articles of Incorporation has the effect of changing
or restricting the rights of any stockholder or class of shares, or of authorizing preferences over
the outstanding shares, or of extending or shortening the term of corporate existence; (ii) of any
sale, lease, mortgage or disposition of all or substantially all of the corporate property or assets;
and, (iii) of merger or consolidation.
At any time after this Information Statement has been sent out, any stockholder who voted
against a proposed action and wishes to exercise his right of appraisal must make a written
demand, within thirty (30) days after the date of the Meeting or when the vote was taken, for the
payment of the fair market value of his shares. Upon payment, he must surrender his stock
certificates. No payment shall be made to any stockholder unless the Company has unrestricted
retained earnings in its books to cover such payment.
NO corporate action is being proposed or submitted in the Meeting that may call for the exercise
of a stockholder’s right of appraisal.
Item 3. Interest or Opposition of Certain Persons in Matters to be Acted Upon
(a)
At any time since the beginning of the last fiscal year, NO director, officer, nominee for
election as director, or associate of such director, officer or nominee has any substantial
interest, direct or indirect, by security holdings or otherwise, in any of the matters to be
acted upon in the Meeting, other than election to office.
(b)
As of the date this Information Statement is given to stockholders of record, NO director
of the Company has informed the Company in writing that he intends to oppose any
action to be taken by the Company at the Meeting.
B.
Control and Compensation Information
Item 4.Voting Securities and Principal Holders Thereof
The Company’s capital stock is composed of common shares only which are issued and
transferable to both Philippine and non-Philippine nationals; provided, that the Company's
common shares shall not be issued to non-Philippine nationals in excess of forty percent (40%)
of the Company's outstanding capital stock.
(a)
Record Date. The Record Date with respect to this solicitation is 06 May 2011. Only
stockholders of record as at the close of business on 06 May 2011 are entitled to notice
of, and to vote at, the Meeting.
(b)
Outstanding Shares. As of Record Date, the Company has an outstanding capital stock
of 1,165,000,000 common shares owned by 3,155 stockholders. Each common share is
entitled to one (1) vote.
(c)
Cumulative Voting. A stockholder entitled to vote at the Meeting shall have the right to
vote in person or by proxy the number of shares registered in his name in the stock
transfer book of the Company for as many persons as there are directors to be elected.
Each stockholder shall have the right to cumulate said shares and give one nominee as
many votes as the number of directors to be elected multiplied by the number of his
shares shall equal, or he may distribute them on the same cumulative voting principle
among as many nominees as he shall see fit; provided, that the number of votes cast by a
stockholder shall not exceed the number of his shares multiplied by the number of
directors to be elected.
(d)
Stock Ownership of Certain Record and Beneficial Owners. The following persons
are known to the Company to be directly or indirectly the owner of more than 5% of the
Company’s voting securities as of Record Date:
Title of
Class
Common
Common
Common
Name and address of record
owner and relationship with
Issuer
PCD Nominee Corporation
Makati Stock Exchange Bldg.
6767 Ayala Avenue, Makati City
Stockholder
Alakor Securities Corporation **
125 Pioneer St., Mandaluyong City
Stockholder
Alakor Securities Corporation **
5th Floor Quad Alpha Centrum
125 Pioneer St. Mandaluyong City
Stockholder
Name of Beneficial
Owner and Relationship
with Record Owner
PCD Participants
(see note A)
Citizenship
No. of shares held
Percentage
Ownership
Filipino
378,532,128*
32.49%
National Book Store Inc.
Client
(see Note B)
Filipino
466,660,361**
40.05%
Alakor Corporation
Client
(see Note B)
Filipino
152,897,758**
13.12%
*Of the total 1,067,162,366 shares under the name of PCD Nominee Corp., 682,192,977 shares were under the name of
Alakor Securities Corporation (ASC).
**Of the total shares of 682,192,977 shares under the name of ASC, National Book Store Inc. owns 466,660,361 shares
(40.05%) while Alakor Corporation owns 152,897,758 shares (13.12%).
2
Note A: The shares registered under the name of PCD Nominee Corporation (PCD) are beneficially owned by its
participants. As of Record Date, there are 132 beneficial owners of the Company’s voting stock of which Alakor
Securities Corporation (ASC) is the record owner of more than 5% of the Company’s voting securities
Note B: Among the clients of ASC, National Book Store, Inc. (NBSI) and Alakor Corporation (AC) are the beneficial
owners of more than 5% of the Company’s voting securities.
Note C. As a matter of practice, PCD itself does not vote the number of shares registered in its name; instead, PCD
issues a general proxy constituting and appointing each of its participants as PCD’s proxy to vote for the number of
shares owned by such participant in PCD’s books as of Record Date.
The proxies of NBSI and AC are appointed by their Boards of Directors and the Company becomes aware of such
proxies only when the appointments are received by the Company. Based on previous practice, Mr. Alfredo C.
Ramos has been appointed proxy for NBSI and AC for the previous years. Mr. Ramos has direct/indirect
interest/shareholdings in NBSI and AC.
(e)
Voting Trust Holders of 5% or More. To the extent known to the Company, there is
NO person holding more than 5% of the Company’s voting stock under a voting trust or
similar agreement.
(f)
Stock Ownership of Management. The Company’s directors (D), Chief Executive
Officer (CEO), other officers (O) and nominees (N) own the following number of shares
as of Record Date (May 6, 2011, except for Mr. Anton S. Ramos who acquired his shares
on May 27, 2011):
/
Title of Class
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Amount and nature of
Beneficial ownership
Name of beneficial owner
Direct
11,000
110
22,110
373,866
400,000
55,000
18,000
1,100
1,100
0
0
0
22,000
Alfredo C. Ramos (D/CEO/N)
Christopher M. Gotanco (D/O/N)
Augusto B. Sunico (D/O/N)
Roberto V. San Jose (D/O/N)
Francisco A. Navarro (D/N)
Presentacion S. Ramos (D/N)
Adrian S. Ramos (D/N)
Renato C. Valencia (ID/N)
Ramoncito Z. Abad (ID/N)
Cecilia R. Licauco (N)
Anton S. Ramos (N)
Adrian S. Arias (O)
Iluminada P. Rodriguez (O)
Indirect
24,692,638
12,805,540
329,892
59,386
13,582
28,636,665
33,000
0
0
104,000
1,000
0
0
Citizenship
Percent
Of Class
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
2.12%
1.1.0%
0.03%
0.04%
0.04%
2.46%
<0.01%
<0.01%
<0.01%
<0.01%
<0.01%
0.00%
0.01%
The total number of shares owned by the Company’s directors, Chief Executive Officer,
other officers and nominees for election as directors is 67,579,989 shares, or
approximately 5.80% of the Company’s outstanding capital stock. Except for the shares
appearing on record in the names of the directors and officers above, the Company is not
aware of any shares which said persons may have the right to acquire beneficial
ownership of.
There has been NO change in the control of the Company since the beginning of the last
fiscal year.
Item 5. Directors and Executive Officers
(a)
Information. The names, ages, citizenship, positions and periods of service of directors,
executive officers and persons nominated to become such are as follows:
3
Name
Alfredo C. Ramos
Christopher M. Gotanco
Age
67
61
Citizenship
Filipino
Filipino
Augusto B. Sunico
82
Filipino
Roberto V. San Jose
69
Filipino
Presentacion S. Ramos
Francisco A. Navarro
Adrian S. Ramos
Renato C. Valencia
Ramoncito Z. Abad
Cecilia R. Licauco
Anton S. Ramos
Adrian S. Arias
68
68
32
69
64
60
40
48
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Iluminada P. Rodriguez
63
Filipino
Position
Chairman of the Board
Director
President
Director
Treasurer
Director
Corporate Secretary
Director
Director
Director
Independent Director
Director-nominee
Director-nominee
Executive Vice President
Assistant Corporate Secretary
VP-Finance and Administration
Period of
service
1989-present
1987-present
1988-present
1984-present
1986-present
1998-present
1979-present
1984-present
1984-present
2006-present
2006-present
2007-present
Period of service
Commiittee Membership
as such officer
Nominations
2004-present
Nomination/Compensation
2004-present
Compensation/Audit
Nomination/Audit
Compensation/Audit
2006-present
2006-present
2007-present
2005-present
1997-present
2005-present
Nomination(Non voting)
2004-present
Directors elected in the Annual Stockholders' Meeting have a term of office of one (1)
year and serve as such until their successors are elected in the next succeeding Annual
Stockholders' Meeting; provided, that a director elected to fill a vacancy in the Board
shall only serve the unexpired term of his predecessor.
The Company’s Nomination Committee is headed by Mr. Renato C. Valencia, Chairman,
and the members are Messrs. Alfredo C. Ramos and Christopher M. Gotanco, with Ms.
Iluminada P. Rodriguez (in her capacity as VP - Finance and Administration, as nonvoting member).
All the Company’s incumbent directors were elected in the 2010 Annual Stockholders'
Meeting held on 29 July 2010 and have since served in such capacity.
There are NO arrangements that may result in a change in control of the Company.
Independent Directors. Pursuant to Securities Regulation Code (SRC) Sec. 38 and Rule
38.1, the Company is required to have at least two (2) independent directors. The
Company's incumbent independent directors are Messrs. Renato C. Valencia and
Ramoncito Z. Abad.
The Company’s Amended By-Laws incorporating the provisions of SRC Rule 38 were
approved by the Securities and Exchange Commission on September 14, 2006.
In line with the guidelines set by the Nomination Committee and approved by the Board
of Directors, the Nomination Committee receives the names of nominees and screens
them based on the policies and parameters for screening nominees for independent
directorship. The final list of candidates, with the information required under Part IV(A)
and (C) of Annex C of SRC Rule 12, is herewith attached. Mr. Noel T. Del Castillo
nominated Mr. Renato C. Valencia, while Ms. Socorro M. Benavidez nominated Mr.
Ramoncito Z. Abad for election as independent directors of the Company for fiscal year
2010. Mr. Del Castillo and Ms. Benavidez are not related to either or both Messrs.
Valencia and Abad. Neither Mr. Del Castillo nor Ms. Benavidez has any business
relationship to either or both Messrs. Valencia and Abad.
Messrs. Valencia and Abad possess the qualifications and none of the disqualifications of
an independent director.
4
Business Experience of Executive Officers and Director-Nominees
Mr. Alfredo C. Ramos is the Chairman of the Board and Chief Executive Officer of the
Company. He serves as a director and/or executive officer, and maintains business
interests, in companies engaged in the printing, publication, sale and distribution of
books, magazines and other printed media (1962-present), mining (1988-present), oil and
gas exploration (1989-present), property development (1991-present), shopping center
(1992-present), financial services (1992-present), department store (1993-present),
transportation (1996-present), and retail (1999-present), among others.
Mr. Christopher M. Gotanco is a Director and the President/COO of the Company. He
serves as a director and/or executive officer in companies engaged in oil and gas
exploration (1982-present), mining (1993-present), investment holdings (1995-present),
transportation (1996-present), property development (1996-present), retail (1999-2004),
and financial services (2007-present), among others.
Mr. Augusto B. Sunico is a Director and the Treasurer of the Company. He has served as
a director and/or executive officer, and maintained business interests, in companies
engaged in education (1980-present), oil and gas exploration (1984-present), mining
(1991-present), property development (1991-present), financial services (1992-present),
shopping center (1992-present) and stock brokerage (1994-present), among others.
Atty. Roberto V. San Jose is a Director and the Corporate Secretary of the Company. He
has been in the active practice of law for more than forty (40) years.
Ms. Presentacion S. Ramos is a Director of the Company. She serves as a director and/or
executive officer, and maintains business interests, in companies engaged in the printing,
publication, sale and distribution of books, magazines and other printed media (1975present), oil and gas exploration (1984-present), department store (1993-present), mining
(1993-present) and stock brokerage (1996-present), among others.
Mr. Francisco A. Navarro is a Director of the Company. He serves as a director, and has
headed the exploration and development groups, of various companies involved in oil
and gas exploration (1982-present) and mining (1993-present), among others.
Mr. Adrian S. Ramos is a Director of the Company. He serves as a director and/or
executive officer in companies engaged in the printing, publication, sale and distribution
of books, magazines and other printed media (1996-present), investment holdings (2005present), securities (2005-present), property development and infrastructure (2006present), mining (2006-present) and bulk water supply (2006-present), among others.
Mr. Renato C. Valencia was elected independent director of the Company in December
2006. He is the former administrator of the Social Security System. He serves as director
and/or executive officer in companies engaged in banking (1998-present), investment
holdings (1998 to present), education and technology (2003 to present), realty (2005) and
insurance (2006).
Mr. Ramoncito Z. Abad was elected independent director of the Company in March
2007. He is the former president of Philippine National Construction Company (PNCC)
(1989-1996) and the former Chairman of the Development Bank of the Philippines
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(1998-2001). He serves as director and/or executive officer in companies engaged in
consumer distribution (1999-present) and construction (2000-present).
Ms. Cecilia R. Licauco is nominated for election as director. She serves as a director
and/or executive officer in companies engaged in the printing, publication, sale and
distribution of books, magazines and other printed media (1975-present), and stationery
distribution (1993-present), among others.
Mr. Anton S. Ramos is nominated for election as director. He serves as a director and/or
executive officer in companies engaged in the printing, publication, sale and distribution
of books, magazines and other printed media (1996-present), securities (1996-present),
property development and infrastructure (1996-present), investment holdings (2000present), and mining (2008-present), among others.
Atty. Adrian S. Arias is the Company’s Executive Vice President and Assistant
Corporate Secretary. He has been in active corporate law practice for more than twenty
(20) years and serves as a director of companies involved in financial services (2006present), merchandising (2009-present) and distribution support services (2011-present).
Ms. Iluminada P. Rodriguez is the Vice President for Finance and Administration of the
Company. She has served as an executive officer/director of companies involved in
garments manufacturing and exporting (1990-present), oil and gas exploration (19872006) and condominium corporation (1987 to 2010).
Directors with other directorship(s) held in reporting companies
Alfredo C. Ramos
Anglo Philippine Holdings Corporation
Atlas Consolidated Mining & Dev't. Corp
MRT Holdings, Inc.
MRT Dev’t Corp.
National Book Store, Inc.
North Triangle Depot Comm’l Corp.
Philippine Seven Corporation.
Shang Properties, Inc.
The Philodrill Corporation
United Paragon Mining Corp.
Vulcan Industrial & Mining Corp.
Boulevard Holdings, Inc.
MRT Holdings, Inc.
MRT Dev’t Corp..
North Triangle Depot Comm’l Corp
Penta Capital Investment Corp.
Penta Capital Finance Corp.
Augusto B. Sunico
Alakor Securities Corporation
Penta Capital Investment Corp.
Penta Capital Finance Corp
Shang Properties Inc.
Vulcan Industrial & Mining Corp
Presentacion S. Ramos
Zenith Holdings Corp.
Roberto V. San Jose
CP Group of Companies
CP Equities Corporation
MAA Consultants, Inc.
Mabuhay Holdings Corporation
Francisco A. Navarro
Adrian S. Ramos
Aquatlas Inc.
The Philodrill Corporation.
6
Renato C. Valencia
Bases Conversion & Dev. Authority
Hypercash Payment System, Inc.
Independent Insight, Inc.
Metropolitan Bank & Trust Company
Roxas Holdings, Inc.
Triple Top AIM, Inc.
Ramoncito Z. Abad
Monheim Group of Distributors
Cecilia R. Licauco
Anvil Publishing
Filstar Distributors Corp
Solar Publishing
Anton S. Ramos
Atlas Consolidtaed Mining & Dev’t. Corp
Zenith Holdings Corp.
Significant Employees. Other than its executive officers, the Company has not engaged
the services of any person who is expected to make significant contributions to the
business of the Company. The Company is not dependent on the services of certain key
personnel and there are no arrangements to ensure that these persons will remain with the
Company and not compete upon termination.
Family Relationships. Mr. Alfredo C. Ramos, Chairman of the Board, is the husband of
Ms. Presentacion S. Ramos, Director, the brother-in-law of Atty. Augusto B. Sunico,
Director, and the brother of director-nominee, Ms. Cecilia R. Licauco. Mr. Adrian S.
Ramos, Director, and Mr. Anton S. Ramos, nominee-director, are the sons of Mr. Alfredo
C. Ramos and Ms. Presentacion S. Ramos.
Involvement in Certain Legal Proceedings. For the past five (5) years up to the date
this Information Statement is sent to stockholders, the Company is not aware of:
(1)
Any bankruptcy petition filed by or against any business of which any director,
nominee for election as director, executive officer, underwriter or control person
of the Company was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(2)
Any conviction by final judgment, including the nature of the offense, in a
criminal proceeding, domestic or foreign, or being subject to a pending criminal
proceeding, domestic or foreign, excluding traffic violations and other minor
offenses involving any director, nominee for election as director, executive
officer, underwriter or control person of the Company;
(3)
Of any director, nominee for election as director, executive officer, underwriter or
control person of the Company being subject to any order, judgment, or decree,
not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities, commodities or banking activities; and,
(4)
Of any director, nominee for election as director, executive officer, underwriter or
control person of the Company being found by a domestic or foreign court of
competent jurisdiction (in a civil action), the Commission or comparable foreign
body, or a domestic or foreign Exchange or other organized trading market or self
regulatory organization, to have violated a securities or commodities law or
regulation, and the judgment has not been reversed, suspended, or vacated.
7
Related Party Transactions. There had been NO transaction during the last two years to
which the Company was or is to be a party in which any director or executive officer of
the Company, or nominee for election as director, or owner of more than 10% of the
Company’s voting stock, or voting trust holder of 10% or more of the Company’s shares,
or any member of the immediate family (including spouse, parents, children, siblings, and
in-laws) of any of these persons, had or is to have a direct or indirect material interest.
In the ordinary and regular course of business, the Company had transactions with related
parties (i.e. companies with shareholders common with the Company) which principally
consist of advances TO related parties and loans/advances FROM related parties. The
identities of these related parties, including the amounts and details of the transactions are
disclosed in Note 14 of the Company's 2010 Audited Financial Statements, a copy of
which is included in this Information Statement.
(1)
Business purpose of the arrangement. The business purpose of related party
transactions is to address immediate working capital requirements of related
parties (in the case of advances TO related parties) or of the Company (in the case
of loans/advances FROM related parties).
(2)
Identification of the related parties' transaction business with the registrant and
nature of the relationship. See Note 14 of the Company's 2010 Audited Financial
Statements.
(3)
How transaction prices were determined by parties. All transactions with related
parties are based on prevailing market/commercial rates at the time of the
transaction.
(4)
If disclosures represent that transactions have been evaluated for fairness, a
description of how the evaluation was made. There are NO disclosures
representing that the transactions with related parties have been evaluated for
fairness inasmuch as the bases of all transactions with related parties were the
prevailing market/commercial rates at the time of the transaction over which
neither the Company nor the related parties have any control or influence
whatsoever.
(5)
Any on-going contractual or other commitments as a result of the arrangement.
NONE, other than the repayment of money lent or advanced.
(6)
There were NO transactions with parties that fall outside the definition of "related
parties" under SFAS/IAS No. 24. Neither were there any transactions with
persons with whom the Company or its related parties have a relationship that
enabled the parties to negotiate terms of material transaction that may not be
available from other, more clearly independent parties on an arms' length basis.
Parent of the Company. NO person holds more than 50% of the Company’s voting
stock, and the Company has NO parent company.
(b)
Resignation or Declination to Stand for Re-Election. NO director elected in the 2010
Annual Stockholders' Meeting has resigned or declined to stand for re-election to the
Board of Directors.
8
Item 6. Compensation of Directors and Executive Officers
The aggregate compensation paid to the Company’s Chief Executive Officer and other officers
named below as a group for the two most recently completed fiscal years (2010 and 2009) and
the ensuing fiscal year (2011) are:
Name
Alfredo C. Ramos
Position
Chairman/CEO
President
Adrian S. Arias
EVP
Iluminada P. Rodriguez
VP-Finance
Admin
All officers and directors as
a group unnamed
Year
Salary
Bonus
Other Annual
Compensation
&
2009
P3,085,603
P3,002,907
-
2010
4,575,168
2,374,486
-
2011 (est)
5,032,684
2,611,935
-
2009
P3,800,603
P4,741,432
-
2010
7,264,654
3,436,598
-
2011 (est)
7,991.194
3,780,258
-
For the year 2009 and 2010, directors and executive officers were paid the 13th month pay and
corresponding bonuses.
For the most recently completed fiscal year and the ensuing fiscal year, directors received and
will receive a per diem of P5,000 per month to defray their expenses in attending board
meetings. There are no other arrangements for compensation of directors, as such, during the last
fiscal year and for the ensuing fiscal year.
The Company maintains standard employment contracts with Messrs. Alfredo C. Ramos and
Christopher M. Gotanco, both of which provide for their respective compensation and benefits,
including entitlement to health benefits, representation expenses and Company car plan. Other
than what is provided under applicable labor laws, there are no compensatory plans or
arrangements with executive officers entitling them to receive more than P2,500,000 as a result
of their resignation or any other termination of employment, or from a change in control of the
Company, or a change in the executive officers’ responsibilities following a change in control of
the Company.
The Company maintains a retirement plan pursuant to which an eligible employee will receive
one month's pay for every year of service for the first 10 years and two month's pay for every
year of service beyond 10 years. Based on this policy, the retirement pay of some officers of the
Company may exceed P2,500,000.
There are no warrants or options outstanding in favor of directors and officers of the Company.
The Company’s compensation and renumeration Committee is headed by Mr. Ramonzito Z.
Abad, as Chairman, and the members are Messrs. Christopher M. Gotanco and Adrian S. Ramos.
9
Item 7. Independent Public Accountants
In 2010, the auditing firm of Sycip Gorres Velayo and Co., with address at 6760 Ayala Avenue,
1226 Makati City, was appointed external auditor of the Company in the 2010 Annual
Stockholders' Meetings with Mr. John T. Villa as the partner-in-charge. In 2008 and 2007, the
auditing firm of KPMG Manabat Sanagustin & Company, with address at the 22nd floor,
Philamlife Tower, 8767 Paseo De Roxas, Makati City, was appointed external auditor of the
Company in the 2008 and 2007 Annual Stockholders' Meetings with Mr. Ricardo G. Manabat
being the partner-in-charge.
The fees of the external auditor in the past three (3) years are as follows:
Year
2008
2009
2010
Audit & Audit Related Fees
P286,000.00
P332,521.00
P412,870.00
Tax Fees
P34,320.00
P39,902.52
P49,544.42
Other Fees
0
0
0
For the past three (3) years, the Company has not engaged the services of the above-named
auditors except for the audit and review of the annual financial statements in connection with
statutory and regulatory filings for the years 2008, 2009 and 2010. The amounts under the
caption "Audit & Audit Related Fees" for the years 2008, 2009 and 2010 pertain to these
services. The Audit Committee has an existing policy prohibiting the Company from engaging
the external auditor to provide services that may adversely impact its independence, including
those expressly prohibited by regulations of the Securities & Exchange Commission (SEC).
Sycip Gorres Velayo and Co. became the independent auditor of the Company in 2009 with Mr.
John T. Villa as the partner-in-charge. Previously, KPMG Manabat Sanagustin & Co. was the
Company’s independent external auditor for the past ten (10) years up to 2008, with Mr. Ricardo
G. Manabat as the partner-in-charge for 2008. In compliance with SRC Rule 68 Paragraph
3(b)(iv) Rotation of External Auditors), Mr. Manabat was succeeded by Ms. Emerita H. Escueta
also of KPMG Manabat Sanagustin & Co. for 2004-2006.
The Company NEVER had any disagreement with its auditors, Sycip Gorres Velayo and Co.
and KPMG Manabat Sanagustin & Co., nor with Mr. Villa and Mr. Manabat, on any matter of
accounting principles or practices, financial statement disclosures or auditing scope or
procedures and the Company did not engage any new independent external auditor, either as
principal accountant to audit the Company’s financial statements or as an independent
accountant on whom the principal accountant has expressed or is expected to express reliance in
its report regarding a significant subsidiary, during the two most recent fiscal years or any
subsequent interim period.
NO independent accountant engaged by the Company as principal accountant, or an independent
accountant on whom the principal accountant expressed reliance in its report regarding a
significant subsidiary, has resigned, or has declined to stand for re-election after completion of
the current audit, or was dismissed. The auditor's representatives are expected to be present at the
Meeting and will have the opportunity to make a statement and respond to appropriate questions.
The Company’s audit committee is headed by Mr. Renato C. Valencia, as Chairman, and the
members are Messrs. Ramoncito Z. Abad and Adrian S. Ramos, with one seat vacant to be filled
up after the organizational meeting of the board of directors following the annual stockholders’
meeting.
10
The Audit Committee reviews and recommends to the Board and the stockholders the
appointment of the external auditor and the fixing of the audit fees for the Company.
For 2011, SyCip Gorres, Velayo and Co., is recommended to stockholders for appointment as
independent external auditor of the Company.
Item 8. Compensation Plans
NO action is to be taken with respect to any plan pursuant to which cash or non-cash
compensation may be paid or distributed.
C.
Issuance and Exchange of Securities
Items 9-10. Not applicable
Item 11. Financial and Other Information
See the Company’s 2010 Audited Financial Statements accompanying this Information
Statement.
Items 12-13. Not applicable
Item 14. Restatement of Accounts
In 2009, the Company restated its prior year financial statements with respect to accounting for
investments and financial liabilities in conformity with the provisions of PAS 39 and PAS 28.
The effects of the restatements are as follows:
(1)
Reclassification of investment in Atlas Consolidated and Mining Corporation (ACDMC)
from Investment in Associate to a quoted AFS Investment (see Notes 7 and 8, 2009
Audited Financial Statements).
(2)
Reclassification of investments in Shang Properties Inc. (SPI) and The Philodrill
Corporation (TPC) from Investments in Associates in 2008 to Financial Assets at Fair
Value through Profit and Loss (FVPL). In addition, the financial assets at FVPL were
revalued based on their bid market prices as of December 31, 2008, December 31, 2007
and January 1, 2007 (see Notes 5 and 8, 2009 Audited Financial Statements).
(3)
Recognition of gain on debt restructuring as a result of the loan restructuring and
conversion agreement entered into by the Company and Euronote Profits Limited (EPL)
in 2008 (see Note 12, 2009 Audited Financial Statements).
(4)
Recognition of day 1 difference arising from the off-market interest rate of the EPL loan
(see Note 12, 2009 Audited Financial Statements).
NO ACTION is to be taken with respect to the restatement of any asset, capital, or surplus
account of the Company.
11
D.
Other Matters
Item 15. Action With Respect to Reports
The following will be submitted to the stockholders for approval/ratification at the Meeting:
(a)
Minutes of the 2010 Annual Stockholders’ Meeting;
Approval of the Minutes of the 2010 Annual Stockholders’ Meeting constitutes a
ratification of the accuracy and faithfulness of the Minutes to the events that transpired
during the said meeting. This does not constitute a second approval of the matters taken
up at the 2010 Annual Stockholders’ Meeting, which have already been approved.
(b)
Management Report for the year ended 31 December 2010 (a copy containing the
information required by SRC Rule 20A is enclosed). Approval of the Management
Report constitutes a ratification of the Company’s performance during the previous fiscal
year as contained therein.
(c)
Acts and Resolutions of the Board of Directors and Management from the date following
the last Annual Stockholders’ Meeting (23 July 2010) to the present (29 July 2011)
including, but not limited to, the following:
1.
Authorizing the Company to renew/extend the US$11.5 Million loan of Atlas
Consolidated Mining and Development Corp. (ACMDC) by one (1) year from
July 9, 2010 to July 9, (23 July 2010);
2.
Authorizing the Company to designate ALFREDO C. RAMOS, as the proxy of
the Company to the Annual Stockholders’ Meeting of United Paragon Mining
Corp. (UPMC) to be held on 06 August 2010. (23 July 2010);
3.
Authorizing the Company to accept the offer of ACMDC to convert ACMDC
outstanding US$11.5M into shares of stock of ACMDC at the conversion price of
P10/share as full settlement of the loan principal.(11 November 2010);
3.
Authorizing the Company to discuss and negotiate the terms and conditions of the
possible disposition of the company’s direct and indirect equity interest in Metro
Rail Transit Holdings, Inc., Metro Rail Transit Holdings 2 Inc., Monumento Rail
Transit Corp., and Metro Rail Transit Corp., to interested parties. (17 December
2010);
4.
Approving the Company’s Revised Corporate Governance Manual in accordance
with SEC Memo Circular No 8 Series of 2009. (27 Jan. 2011);
5.
Authorizing the Company to designate Metro Pacific Investments Corporation
(MPIC) and its authorized representatives, as the Corporation’s continuing proxy
and attorney-in-fact to represent the Company and vote all its shares in any and all
stockholders’ meetings of Metro Rail Transit Holdings, Inc. and Monumento Rail
Transit Corporation, including postponements and adjournments thereof, and to
designate the persons to be nominated and elected as members of the board of
directors of the relevant MRT Companies, and exercise any and all rights pertaining
to the Company’s shareholdings in the MRT Companies, and authorizing the
12
President and Chief Operating Officer, Mr. Christopher M. Gotanco, to sign, execute
and deliver the Company’s proxies in MRTHI and MNRTC as well as other
documents, and perform such acts as may be necessary thereto in favor of MPIC.
(27 Jan 2011);
(d)
6.
Authorizing the Company to renew its P100 million Short Term Loan with Land
Bank of the Philippines to augment the Company’s working capital funds
(11March 2011).
7.
Authorizing the Company to nominate Mr. Manuel V. Pangilinan and Mr.
Augusto V. Palisoc to the Board of Directors of the Metro Rail Transit Corporation
(MRTC), to represent and vote for the Company in any and all meetings of MRTC,
including postponements and adjournments thereof, and authorizing the President
and Chief Operating Officer, Mr. Christopher M. Gotanco, to sign, execute and
deliver the Company’s nomination letter to MRTC as well as other documents, and
perform such acts as may be necessary thereto. (11 March 2011);
7.
Authorizing the Company to declare cash dividend equivalent to P0.05 per share
to stockholders of record as of April 08, 2011 and payable on April 29, 2011 (25
March 2011);
8.
Authorizing the setting of the Annual Stockholders Meeting on July 29, 2011 and
setting the record date therefor on May 06, 2011 (25 March 2011);
9.
Authorizing the Company to lease, borrow, seek financing and secure credit
accommodation from Orix Metro Leasing Corp. and to authorize Mr. Christopher
M. Gotanco and Atty. Adrian S. Arias to sign, execute and negotiate on behalf of
the Company (25 March 2011);
10.
Approving the Company’s audited financial statements for the year ended 2010
(11 April 2011).
Appointment of Sycip, Gorres Velayo and Company as the Company’s independent
external auditor for 2011.
Item 16. Matters Not Required to be Submitted
Proofs of transmittal to stockholders of the required Notice for the Meeting and of the presence
of a quorum at the Meeting form part of the Agenda for the Meeting and will not be submitted
for approval by the stockholders.
Item 17. Amendment of Articles of Incorporation and By-Laws
NO amendment to the Company’s articles of incorporation or by-laws is being proposed at the
Meeting.
Item 18. Other Proposed Action
NO action on any matter, other than those stated in the Agenda for the Meeting, is proposed to
be taken, except matters of incidence that may properly come at the Meeting.
13
Item 19. Voting Procedures
(a)
In the election of directors, the eleven (11) nominees with the greatest number of votes
will be elected directors.
(b)
If the number of nominees for election as directors does not exceed the number of
directors to be elected, the Secretary of the Meeting shall be instructed to cast all votes
represented at the Meeting equally in favor of all such nominees. However, if the number
of nominees for election as directors exceeds the number of directors to be elected, voting
shall be done by ballot, cumulative voting will be followed, and counting of votes shall
be done by two (2) election inspectors appointed by the stockholders present or
represented by proxy at the Meeting.
In accordance with SRC Sec. 38 and SRC Rule 38, only nominees whose names appear
in the Final List of Candidates for Independent Directors shall be eligible for election as
Independent Directors. No other nomination shall be entertained after the Final List of
Candidates shall have been prepared and no further nomination shall be entertained or
allowed on the floor during the actual annual stockholders' meeting.
Messrs. Renato C. Valencia and Ramoncito Z. Abad are nominated for election as
independent directors of the Company for fiscal year 2011.
(c)
For corporate matters that will be submitted for approval and for such other matters as
may properly come at the Meeting, a vote of the majority of the shares present or
represented by proxy at the Meeting is necessary for their approval. Voting shall be done
viva voce or by the raising of hands and the votes for or against the matter submitted shall
be tallied by the Secretary.
PART II
INFORMATION REQUIRED IN A PROXY FORM
Part II and its required disclosures are not relevant to the Company since the Company is not
requesting or soliciting proxies.
14
PART III
SIGNATURE PAGE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this report is true, complete and correct. This report is signed at Mandaluyong City on
June 10, 2011.
ADRIAN S. ARIAS
Assistant Corporate Secretary
Materials accompanying this Information Statement
1.
2.
3.
4.
5.
6.
Notice of the 2011 Annual Meeting of Stockholders with Agenda
Management Report on SEC Form 20A
Final List of Candidates for Independent Directors
Audited Financial Statements for 2010
Unaudited Financial Statements for the Interim Period 31 March 2011
Minutes of the Meetings of Stockholders – July 23, 2010
The Company undertakes to provide, without charge, upon the written request of a stockholder, a copy of the
Company's Annual Report on SEC Form 17-A. Such request should be addressed to the Corporate Secretary,
Anglo Philippine Holdings Corporation, 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City
1550, Philippines.
15
AN INFRASTRUCTURE AND PROPERTY DEVELOPMENT COMPANY
_____________________________________________________________________________________
NOTICE OF ANNUAL STOCKHOLDERS’ MEETING
The Annual Stockholders’ Meeting of Anglo Philippine Holdings Corporation will be held on the
following date and place:
FRIDAY, 29 JULY 2011, 2:30 P.M.,
Kamia Room, EDSA Shangri-La Manila
Ortigas Center Mandaluyong City, Philippines
The agenda for the Meeting shall be, as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Call to Order
Proof of Notice and Certification of Quorum
Approval of Minutes of Stockholders’ Meetings – July 23, 2010
Management Report
Approval of the Company’s Annual Report
Ratification of Corporate Acts and Resolutions
Election of Directors
Appointment of External Auditor
Other Matters
Adjournment
Registration for the Meeting begins at 1:30 p.m. For purposes of the Meeting, stockholders of record as of
06 May 2011 are entitled to notice of and to vote at the Meeting. If you will not be able to attend the
Meeting but would like to be represented thereat, you may submit your proxy form, duly signed and
accomplished, to the Corporate Secretary at the 6th Floor, Quad Alpha Centrum, 125 Pioneer Street,
Mandaluyong City, no later than 22 July 2011. Corporate stockholders should also provide a notarized
secretary’s certificate attesting to the appointment of the corporation’s proxy for the Meeting as well as
the execution and delivery of the proxy form.
THE COMPANY IS NOT SOLICITING PROXIES.
Makati City, Metro Manila, Philippines, 23 May 2011.
ROBERTO V. SAN JOSE
Corporate Secretary
“Helping Build the Filipino Future”
th
6 Floor, Quad Alpha Centrum, 125 Pioneer Street Mandaluyong City 1550, Philippines
Tel Nos.: (632)631-5139. (632)635-6120.Fax No.: (632)631-3113. E-mail: [email protected]
125 Pioneer Street, Mandaluyong City, Philippines
Tel (632) 631-5139; 635-6130; Fax (632) 631-3113
MANAGEMENT REPORT ACCOMPANYING INFORMATION STATEMENT
PURSUANT TO SRC RULE 20(4)
I.
Audited Financial Statements
The audited financial statements of Anglo Philippine Holdings Corporation (the “Company”) for
the fiscal year ended 31 December 2010 and the corresponding Statement of Management's
Responsibility are attached hereto.
The unaudited interim financial statements of the Company for the first semester ended 31
March 2011 are also attached hereto.
NONE
II.
Disagreements with Accountants on Accounting and Financial Disclosure.
III.
Management’s Discussion and Analysis or Plan of Operations
(a)
Full fiscal years
(1)
Financial Condition, Changes in Financial Condition and Results of Operations
Financial highlights for the years 2010, 2009 and 2008 are presented below:
Revenues
Net income/(loss)
Total assets
Total Liabilities
Net worth
Issued & subscribed
capital
2010
2009
689,489,995
560,774,028
5,172,806,310
2,398,233,254
2,774,573,056
1,165,000,000
444,372,686
294,071,143
3,619,848,502
2,387,089,380
1,232,759,122
1,165,000,000
2008
(as restated)
255,772,143
(236,936,198)
2,159,884,206
1,808,746,254
351,137,952
1,165,000,000
Changes in Financial Condition (2008-2010)
Revenues increased from 2008 to 2009 due to: (i) recovery of the market value of SPI shares
in 2009; (ii) gain in mark-to-market changes in derivative assets attributable to the loan
granted by the Company to Atlas in 2009; (iii) increase in interest income from P68.1
million in 2008 to P83.9 million in 2009; (iv) gain in foreign exchange attributable to the
Company’s dollar-denominated loan with EPL; and, (v) equity share in net earnings of
associates in 2009. On the other hand, net revenues increased from 2009 to 2010 due to: (i)
gains on mark-to-market changes in derivative assets arising from the conversion of Atlas’s
US$11.5 million loan into Atlas shares in 2010; (ii) increase in interest income from P83.9
million in 2009 to P122.8 million in 2010; and, (iii) increase in equity share in net earnings
of associates in 2010.
Cost and Expenses decreased from 2008 to 2009 mainly due to the absence of losses in fair
value changes of financial assets due to the rebound of the market price of SPI shares in
2009. No impairment losses were recognized in 2009. On the other hand, cost and expenses
slightly increased from P121.7 million in 2009 to P124.7 million in 2010.
Net Income increased from negative P236.9 million in 2008 to P294.0 million in 2009 due
to higher Net Revenues and lower Cost and Expenses. On the other hand, the Company
generated a higher net income of P560.8 in 2010.
Total Assets increased from P2.2 billion in 2008 to P3.6 billion in 2009 due to the rebound
of the market prices of Atlas and SPI shares. In 2010, Total assets is higher at P5.2 billion
due to the increase in AFS investment as a result of the conversion of the US$11.5 million
loan to Atlas into Atlas shares of stock.
Total Liabilities increased from P1.8 billion in 2008 to P2.4 billion in 2009 due to increase
in Long Term Debt. In 2010, Total Liabilities remain unchanged at P2.4 billion.
The Company’s Net Worth continuously increased from P351.1 million in 2008 to P1.2
billion in 2009 and to P2.8 billion in 2010 mainly due to Net Income generated and the
Unrealized Valuation Gain on AFS investments generated by the Company in 2009 and
2010.
Results of Operations - Full Year
Natural Resources
The Company owns 25.62% of United Paragon Mining Corporation (UPMC) after converting
its receivables into new UPMC equity. The listing application covering UPMC’s new shares
remains pending with the PSE. For 2010, UPMC posted a net loss of
P35.5 million.
As of December 31, 2010, the Company owns 14.42% of Atlas Consolidated Mining &
Development Corporation which has two (2) significant subsidiaries: (a) Berong Nickel
Corporation, which remains under “Care & Maintenance” following the temporary suspension
of direct shipping operations, and (b) Carmen Copper Corporation, which shipped 98,206 dmt of
copper concentrate at an average of 27.47% Cu in 2010. For 2010, Atlas posted a net loss of
P430.5 million.
Pending the transfer of its petroleum assets, the Company continues to participate in the
following Oil Exploration contracts:
Service Contract 6A
Service Contract 14D
Service Contract 41
Service Contract 53
SWAN Block
Octon, NW Palawan
Tara, NW Palawan
Sulu Sea
Onshore Mindoro
NW Palawan
2
11.11000 %
2.50000 %
1.67900 %
5.00000 %
33.57800 %
SC 6A (Octon), Vitol has decided not to pursue its farmin until the SC14 consortium finally
decides to undertake the Phase 2 development of the adjoining Galoc field. The Operator is now
seeking new farminees to the block.
SC 14 (Tara), the consortium is finalizing a farmin agreement with Peak Oil, Blade Petroleum
and Venturoil.
SC 41 (Sulu Sea) Tap Oil decided to drop the contract but expressed interest to participate in the
next contracting round if Sulu Sea is included among the areas offered for contracting. The
Company has been invited to participate with Tap Oil in the contracting round.
SC 53 (Mindoro), reprocessing of offshore 2D seismic data continues in Singapore while the
processing of the onshore 2D seismic data has been completed.
SWAN Block - PNOC continues to evaluate the merits of the consortium’s proposal to swap some
of their interests in other areas in exchange for equity in Service Contracts 57 and 58.
Aside from direct participation in various oil exploration contracts, the Company also owns
0.28% of The Philodrill Corporation, a publicly listed company engaged in oil exploration and
production with participating interests in various oil exploration and production contracts with
the Philippine Government. Philodrill posted a consolidated net income of P557 million in 2010.
Property Development
The Company owns 15.79% of the North Triangle Depot Commercial Corporation (NTDCC),
which posted an audited net income of P215.9 million in 2010 and recorded 98% occupancy rate
in the commercial center.
The Company continues to maintain a 15.79% interest in MRT Development Corp. (MRTDC),
which owns the development rights over the perimeter lot pads around the Trinoma commercial
center. MRTDC generates revenues from concessionaire rentals and advertising fees in the MRT
stations.
The Company owns 4.5% of Shang Properties, Inc. (SPI). For 2010, SPI posted a consolidated
net income of P1.29 billion and sold 98.3% of St. Francis Towers and 75.72% of One Shangri-La
Place. SPI has also finalized the Design Development drawings for Shangri-La at the Fort.
Infrastructure
The Company continues to maintain 18.6% equity in MRT Holdings, Inc., the indirect majority
owner of the Metro Rail Transit Corporation. As of end-2010, average ridership stood at about
530,000 passengers per day.
The Company's transfer of certain intellectual property rights and other assets over its water
supply projects to Aquatlas, Inc. (AAI) in exchange for shares of the latter remains pending.
AAI is a subsidiary of Atlas Consolidated Mining & Dev’t. Corp.
3
Other Investments
The Company has a minority investment in Brightnote Assets Corporation (formerly Batangas
Assets Corporation), a holding company organized for the purpose of investing in the
Calabarzon area.
The Company sold its 5,243,392 shares of Philippine Seven Corporation in February 2010 and
April 2010.
Filipinas Energy Corporation (FEC) has not undertaken any business operation since its
incorporation due to the deferment of the transfer of the Company’s petroleum and mineral
assets.
NO bankruptcy, receivership or similar proceeding has been filed by or against the Company
and/or its subsidiary during the last three (3) years.
NO material reclassification, merger, consolidation, or purchase/sale of a significant amount of
assets, not in the ordinary course of business, has been undertaken by the Company and/or its
subsidiary during the last three (3) years, EXCEPT that, in accordance with PAS 39, Financial
Instruments: Recognition and Measurements, and PAS 28, Investment in Associates, the
Company reclassified certain assets in 2009, as follows:
Asset
Atlas Consolidated Mining
& Development Corp.
From
Investment in Associate
Shang Properties Inc.
To
Available-forSale (AFS)
investment
Financial Assets
at Fair Value
through Profit or
Loss (FVPL)
Financial Assets
at FVPL
Amount
P1,089,000,000
P 376,896,506
P
4,515,730
Also in 2009, United Paragon Mining Corp. restated its prior year financial statements to
recognize unpaid cumulative dividends on redeemable preferred shares which were presented as
financial liability in its statement of financial position. UPMC also recognized the accrued
interest on bonds and dividends payable at their present values. Accordingly, net loss of UPMC
increased from P
=35.8 million to P
=55.2 million in 2008. As a result of the restatement, the
Company’s equity in net losses of associates increased from P
=0.7 million to P
=5.6 million in
2008.
4
The top five (5) key performance indicators of the Company and its majority-owned subsidiary
are as follows:
Current Ratio
Current Assets
Current Liabilities
Debt to Equity Ratio
Total Liabilities
Stockholders Equity
Equity to Debt Ratio
Stockholders Equity
Total Liabilities
Book Value per share
December 31, 2010
December 31, 2009
December 31, 2008
1.10: 1
2.65: 1
1.76: 1
912,626,763
829,091,620
1,278,349,109
482,482,730
542,615,983
308,050,538
0.86 : 1
1.94 : 1
5.15 : 1
2,398,233,254
2,774,573,056
2,387,089,380
1,232,759,122
1,808,746,254
351,137,952
1.16 : 1
0.52 : 1
0.19 : 1
2,774,573,056
2,398,233,254
1,232,759,122
2,387,089,380
351,137,952
1,808,746,254
2.38
1.06
0.30
Stockholders Equity
Total # of Shares
Outstanding
2,774,573,056
1,232,759,122
351,137,952
1,165,000,000
1,165,000,000
1,165,000,000
Earnings per share
0.48
0.25
(0.20)
Net Income (Loss)
Average Number of
shares outstanding
560,774,028
294,071,143
(236,936,198)
1,165,000,000
1,165,000,000
1,166,508,333
Current Ratio decreased in 2010 compared to 2009 due to decrease in Receivables resulting from
the conversion of Atlas’s US$11.5 million loan into Atlas shares of stock. On the other hand,
Current Ratio increased in 2009 compared to 2008 due to corresponding increases in: (a) Current
Assets, arising from the increase in the market value of SPI, TPC and PSC investments; and, (b)
the grant of US$11.5 million loan to Atlas with a term of one year.
Debt-to-Equity Ratio continuously decreased from 2008 to 2010 due to increases in
Stockholders’ Equity arising from the net income generated by the Company and unrealized
valuation gain on AFS investments recognized from 2008 to 2010. Conversely, Equity-to-Debt
ratio increased from 2008 to 2010.
Book Value per Share (BVPS) increased from 2008 to 2010 due to the increase in Stockholders
Equity arising from the rebound in the market prices of Atlas resulting in a higher net unrealized
gains in AFS investments and the constant increase in the net income of the Company from 2008
to 2010.
Earnings per Share (EPS) increased from 2009 to 2010 due to gains on mark-to-market changes
in derivative assets arising from the conversion of Atlas’s US$11.5 million loan into Atlas shares
5
in 2010. On the other hand, EPS from 2008 to 2009 increased mainly due to the rebound in the
share price of SPI in 2009.
(2)
Yearend Results
For the year ended 2010, the Company posted a Net Income of P560.8 million compared to a net
income of P294.0 million in 2009.
(3)
Future Prospects
The Company remains optimistic on its future prospects on account of: (i) the renewed vigor in
the natural resources-based sector, with new oil wells to be drilled in 2011 and Atlas sustaining
production in Berong and Carmen; and, (ii) a strong property development portfolio, with
NTDCC’s growing Trinoma operations and SPI’s strong condominium sales/rentals and
commencement of new high-rise developments.
(b)
Interim Periods
(1)
Financial Condition, Changes in Financial Condition and Results of Operation
Comparative financial highlights for the 1st quarters of fiscal years 2011 and 2010 are presented
below:
31 March 2011
14,744,741
(6,896,369)
4,795,104,840
2,346,326,086
2,448,778,754
1,165,000,000
Revenues
Net Income/(Loss)
Total Assets
Total Liabilities
Net Worth
Issued and Outstanding Capital
31 March 2010
113,932,904
88,765,159
3,835,799,435
2,363,025,156
1,472,774,279
1,165,000,000
Changes in Financial Condition – 1st Quarter 2011 vs, 1st Quarter 2010
The Company posted a lower revenue of P14.7 million for the first quarter of 2011 compared to
P113.9 million for the same period in 2010 due to: (i) decrease in fair value changes of financial
assets at FVPL arising from the decrease in market price of Shang Properties Inc.; and, (ii) lower
interest income from affiliates due to conversion of Atlas loan into Atlas shares of stock during
the 4th Quarter of 2010. As of end-March 2011, the Company has a net loss of P6.9 million
compared to a net income of 88.8 million in March 2010.
Total Assets increased from P3.8 billion in March 2010 to P4.8 billion as of March 2011 due to
increase in available-for-sale investment as a result of the increase in the number of Atlas shares
arising from the conversion of Atlas’s loan into additional Atlas shares in December 2010.
Total Liabilities remain unchanged at P2.3 billion, as of end-March 2010 and March 2011.
6
Net Worth is higher at P2.5 billion as of the 1st quarter of 2011 compared to P1.5 billion as of
the 1st quarter of 2010, due to the net income generated by the Company in 2010 and higher net
unrealized valuation gain on AFS investment arising from the increase in the market price of
Atlas shares.
Changes in Financial Condition – 1st Quarter 2011 vs. Full Year 2010
Comparative financial highlights for the 1st quarter, 2011 and yearend 2010 are presented below:
31 March 2011 31 December 2010
14,744,741
689,489,995
(6,896,369)
560,774,028
4,795,104,840
5,172,806,310
2,346,326,086
2,398,233,254
2,448,778,754
2,774,573,056
1,165,000,000
1,165,000,000
Revenues
Net Income/Loss
Total Assets
Total Liabilities
Net Worth
Issued and Outstanding Capital
As of the 1st quarter of 2011, the Company posted revenues of P14.7 million and a net loss of
P6.9 million, compared to revenues of P689.5 million and a net income of P560.8 during the year
2010. The Net Loss incurred during the 1st quarter of 2011 was mainly due to: (i) decrease in
fair value changes of financial assets at FVPL resulting from the decrease in market price of
Shang Properties Inc. (SPI); and, (ii) low interest income from affiliates due to conversion of
Atlas loan into Atlas shares in 2010.
The decrease in Total Assets as of end-March 2011 compared to end-December 2010 was due to
the decrease in the market price of SPI and Atlas shares, and the decrease in Accounts
Receivable arising from payment of accrued interests from Atlas.
Total Liabilities decreased from P2.4 billion as of end-2010 to P2.3 billion as of end-March 2011
due to the partial payment by the Company of its outstanding loans with LBP and other accrued
expenses payable.
The Company’s Net Worth decreased from P2.8 billion as of end-2010 to P2.5 billion as of endMarch 2011 due to the net loss incurred by the Company during the interim period and the
decrease in market price of Atlas resulting in lower net unrealized valuation gain on AFS
investment as of end-March 2011.
Results of Operations – 1st Quarter, 2011
Natural Resources
The Company owns 14.42% of Atlas Consolidated Mining & Development Corporation
(hereafter, “Atlas”) which has two (2) significant subsidiaries: (a) Berong Nickel Corporation,
which remains under “Care & Maintenance”, and (b) Carmen Copper Corporation, which
shipped 98,206 dmt of copper concentrate at an average of 27.47% Cu in 2010.
7
The Company owns 25.62% of United Paragon Mining Corporation (UPMC) after converting
its receivables into new UPMC equity. The listing application covering UPMC’s new shares
remains pending with the PSE.
Pending the transfer of its petroleum assets, the Company continues to participate in the
following Oil Exploration contracts:
Service Contract 6A
Service Contract 14D
Service Contract 41
Service Contract 53
SWAN Block
Octon, NW Palawan
Tara, NW Palawan
Sulu Sea
Onshore Mindoro
NW Palawan
11.11000 %
2.50000 %
1.67900 %
5.00000 %
33.57800 %
SC 6A (Octon), the Operator, Philodrill, is actively seeking farminees into the block following
Vitol’s decision not to pursue its prior farmin.
SC 14 (Tara), Peak Oil, Blade Petroleum and Venturoil have signed the farm-in agreement and
has sent a team to look at available seismic and other technical data over the Tara Block.
SC 41 (Sulu Sea) Tap Oil decided to drop the contract but expressed interest to participate in the
next contracting round if Sulu Sea is included among the areas offered for contracting. The
Company has been invited to participate with Tap Oil in the contracting round.
SC 53 (Mindoro), reprocessing of offshore 2D seismic data continues in Singapore, as the
operator, Pitkin Petroleum, proceeds with the interpretation of the recently acquired onshore
seismic data.
SWAN Block - PNOC continues to evaluate the merits of the consortium’s proposal to swap some
of their interests in other areas in exchange for equity in Service Contracts 57 and 58.
Aside from direct participation in various oil exploration contracts, the Company also owns
0.28% of The Philodrill Corporation, a publicly listed company engaged in oil exploration and
production with participating interests in various oil exploration and production contracts with
the Philippine Government.
Property Development
The Company owns 15.79% of the North Triangle Depot Commercial Corporation (NTDCC)
which owns the Trinoma commercial center in Quezon City. As of the 3rd quarter 2010, NTDCC
generated a net income of P185.5 million with building average occupancy rate at 95%.
The Company owns 4.5% of Shang Properties, Inc. (SPI). As of end-January 2011, SPI has sold
out 98.3% of St. Francis Towers and 75.72% of One Shangri-La Place.
The Company continues to maintain 15.79% interest in MRT Development Corp. (MRTDC),
which owns the development rights over the perimeter lot pads around the Trinoma commercial
center. MRTDC generates revenues from concessionaire rentals and advertising fees in the MRT
stations.
8
Infrastructure
The Company continues to maintain 18.6% equity in MRT Holdings, Inc., the majority owner of
the Metro Rail Transit Corporation. As of end- 2010, average ridership stood at about 530,000
passengers per day.
The Company's transfer of certain intellectual property rights and other assets over its water
supply projects to Aquatlas, Inc. (AAI) in exchange for shares of the latter remains pending.
AAI is a subsidiary of ACMDC.
Other Investments
The Company has a minority investment in Brightnote Assets Corporation (formerly, Batangas
Assets Corporation), a holding company organized for the purpose of investing in the Calabarzon
area.
Filipinas Energy Corporation (FEC) has not undertaken any business operation since its
incorporation due to the deferment of the transfer of the Company’s petroleum and mineral
assets.
Key Performance Indicators
For the comparative interim periods (31 March 2011 and 31 March 2010), the top five (5) key
performance indicators of the Company are as follows:
31 March 2011
31 March 2010
Current Ratio
Current Assets
Current Liabilities
1.09 : 1
850,291,048
782,659,006
2.83 : 1
1,338,863,140
473,086,907
Total Liabilities
Stockholders Equity
0.96:1
2,346,326,086
2,448,778,754
1.60:1
2,363,025,156
1,472,774,279
Stockholders Equity
Total Liabilities
1.04:1
2,448,778,754
2,346,326,086
0.62:1
1,472,774,279
2,363,025,126
Stockholders Equity
2.10
2,448,778,754
1,165,000,000
1.26
1,472,774,279
1,165,000,000
(0.006)
(6,896,369)
1,165,000,000
0.08
88,765,159
1,165,000,000
Weighted Average Number of shares
Earnings per share
Net Income
Weighted Average Number of shares
9
Current ratio decreased from 2.83 as of end-March 2010 to 1.09 as of end-March 2011 due to the
decrease in current assets as a result of the conversion of Atlas loan into Atlas shares of stock in
2010 and the increase in Current Liabilities as a result of the reclassification of Long Term Debt
from EPL to Current Portion.
Debt-to-Equity and Book Value per share declined due to increase in Stockholders’ Equity
resulting from the increase in net income generated by the Company and the increase in the
market price of Atlas arising from higher net unrealized valuation gain on AFS investment. On
the contrary, Equity-to-Debt Ratio increased from 0.62:1 as of end March-2010 to 1.04:1 as of
end March 2011.
Book Value per Share increase from 1.26 as of end-March 2010 to 2.10 as of end March 2011
due to increase in Stockholders Equity as end March 2011.
Earnings per Share decreased to negative 0.006 as of end March 2011 from P0.08 as of endMarch 2010 due to the net loss incurred by the Company in March 2011.
Between end-2010 and end-March 2011, the top five (5) key performance indicators of the
Company are as follows:
31 March 2011
31 December 2010
1.09 : 1
850,291,048
782,659,006
1.10 : 1
912,626,763
829,091,620
Total Liabilities
Stockholders Equity
0.96 : 1
2,346,326,086
2,448,778,754
0.86 : 1
2,398,233,254
2,774,573,056
Stockholders Equity
Total Liabilities
1.04 : 1
2,448,778,754
2,346,326,086
1.16 : 1
2,774,573,056
2,398,233,254
Stockholders Equity
2.10
2,448,778,754
1,165,000,000
2.38
2,774,573,056
1,165,000,000
(0.006)
(6,896,369)
1,165,000,000
0.48
560,774,028
1,165,000,000
Current Ratio
Current Assets
Current Liabilities
Total Outstanding Shares
Earnings per share
Net Income/(Loss)
Weighted Average # of shares
Current Ratio slightly decreased from 1.10:1 as of end-2010 to 1.09:1 as of end-March 2011 due
to the decrease in accounts receivable as a result of the collection of accrued interest from Atlas
during the 1st quarter of 2011 and the decrease in current liabilities due to partial payment by
the Company of its outstanding loans with LBP and payment of other accrued expenses payable.
10
Debt-to-Equity Ratio increased from 0.86:1 as of end-2010 to 0.96:1 as of end-March 2011,
while Equity-to-Debt ratio correspondingly decreased from 1.16 as of end-2010 to 1.04:1 as of
end-March 2011, due to the decrease in Stockholders’ Equity resulting from the net loss incurred
by the Company during the interim period and the decrease in the market price of Atlas shares
resulting in net unrealized valuation loss on AFS investment.
Book Value per Share decreased due to the decrease in Stockholders’ Equity as of end-March
2011. The Company posted a P0.006 Loss per Share as of end-March 2011 compared to P0.48
EPS as of end-2010.
(c)
Discussion and Analysis of Material Events and Uncertainties
Except as discussed below, Management is not aware of any material event or uncertainty that
has affected the current interim period and/or would have a material impact on future operations
of the Company.
The Company will continue to be affected by the Philippine business environment as may be
influenced by any local/regional financial and political crises.
1.
There are NO known trends, demands, commitments, events or uncertainties that have or
are reasonably likely to have a material impact on the Company’s short-term or long-term
liquidity.
2.
The Company’s internal source of liquidity comes, primarily, from revenues generated
from operations. The Company’s external source of liquidity comes, primarily, from
loans/financing obtained from financial institutions and, alternatively, may also come
from the collection of its accounts receivables.
3.
The Company has NO material commitments for capital expenditures but is expected to
contribute its equity share in the capital expenditures of its investee companies. However,
the bulk of the funding for such expenditures will be sourced from project financing.
4.
There are NO known trends, events or uncertainties that have had or are reasonably
expected to have a material impact on the revenues or income from continuing
operations, save as stated in paragraph 1 above.
5.
There are NO significant elements of income or loss that did not arise from the
Company's continuing operations.
6.
There have been NO material changes from 2008-2010 in one or more line items of the
Company’s financial statements, EXCEPT as disclosed below:
a. Net Revenues increased from 2008 to 2009 due to: (i) recovery of the market value of
SPI shares in 2009; (ii) gain in mark-to-market changes in derivative assets
attributable to the loan granted by the Company to Atlas in 2009; (iii) increase in
interest income from P68.1 million in 2008 to P83.9 million in 2009; (iv) gain in
foreign exchange attributable to the Company’s dollar-denominated loan with EPL;
11
and, (v) equity share in net earnings of associates in 2009. On the Other hand, Net
Revenues On the other hand, net revenues increased from 2009 to 2010 due to: (i)
gains on mark-to-market changes in derivative assets arising from the conversion of
Atlas’s US$11.5 million loan into Atlas shares in 2010; (ii) increase in interest
income from P83.9 million in 2009 to P122.8 million in 2010; and, (iii) increase in
equity share in net earnings of associates in 2010.
b. Cost and Expenses decreased from 2008 to 2009 mainly due to the absence of losses
in fair value changes of financial assets due to the rebound of the market price of SPI
shares in 2009. In addition, no impairment losses were recognized in 2009. On the
other hand, cost and expenses slightly increased from P121.7 million in 2009 to
P124.7 million in 2010.
c. Income (Loss) Before Income Tax continue to increase in 2009 and 2010 due to
higher Net Revenues and lower Cost and Expenses which resulted in a positive
P322.7 million and P564.8 million, respectively. Consequently, from a Net Loss of
236.9 million in 2008, the Company generated a Net Income of
P294.1 million and P560.8 million in 2009 and 2010, respectively.
d. Basic and Diluted Earnings Per Share increased from negative P0.20 in 2008 to P0.25
in 2009 and P0.48 in 2010 due to higher Net Income generated by the Company in
2009 and 2010.
e. Capital Stock remains unchanged at P1.2 billion in 2008 to 2010.
f. Retained Earnings continue to increase from P13.0 million in 2008 to P132.3 million
in 2009 and P658.2 million in 2010 on account of the P294.1 million Net Income
posted in 2009 and P560.8 million in 2010.
g. Treasury Stock remains unchanged at P 27.6 million from 2008 to 2010.
h. Current Assets increased from P542.6 million in 2008 to P1.3 billion in 2009 due to
increase in receivables from Atlas and rebound in SPI shares. In 2010, Current assets
decreased to P912.6 million due to conversion of US$ 11.5 loan to Atlas into Atlas
shares of stock.
i. Non-Current Assets increased from P1.6 billion in 2008 to P2.3 billion in 2009 due to
the rebound in the market value of Atlas shares. In 2010, Non-Current Assets
increased to P4.3 billion due to conversion of US$ 11.5 loan to Atlas into Atlas shares
of stock.
j. Current Liabilities continue to increase from P308 million in 2008 to P482.5 million
in 2009 to P829 million in 2010 due to recognition of the EPL Current Portion of
Long Term Debt amounting to P196.8 million and P467.0 million in 2009 and 2010,
respectively.
k. Non-current Liabilities increased from P1.5 billion in 2008 to P1.9 billion in 2009
due to increase in Long Term Debt from EPL. On the other hand, Non-current
Liabilities decreased to P1.6 billion in 2010 due to the reclassification of P467.0
million in Non-Current Long Term Debt into Current Portion of Long Term Debt.
12
l. Stockholders’ Equity increased from P351.1 million in 2008 to P1.2 billion in 2009
due to the rebound of the market value of Atlas shares resulting in higher Net
unrealized valuation gain on AFS investments in 2009.
In 2010, Stockholders Equity increased to P2.8 billion due the increase in the
company’s AFS investment as a result of the conversion of US$ 11.5 million loan to
Atlas into Atlas shares and Net Income recognized in 2009 and 2010.
7.
8.
There have been NO material changes from 31 March 2010 to 31 March 2011 in one or
more line items of the Company’s financial statements, EXCEPT as disclosed below:
(a)
Cash and cash equivalents increased from P84.6 Million as of end-March 2010 to
P212.6 million as of end-March 2011 due to collection of accrued interest
receivable from Atlas during the 1st quarter 2011.
(b)
Financial assets at FVPL slightly decreased due to decrease in market value of
SPI shares as of end-March 2011.
(c)
Accounts receivable decreased from P729.1 Million as of end-March 2010 to
P197.8 Million as of end-March 2011 due to conversion of US$11.5 million loan
into Atlas shares in 2010.
(d)
The value of Available-for-Sale investments increased from P1.3 billion as of end
March 2010 to P2.7 billion as of end-March 2011 due to conversion of US$11.5
million loan into Atlas shares as of December 2010.
(e)
Short Term Loans payable decreased from P150 million as of end-March 2010 to
P100 million as of end-March 2011 due to partial payment of LBP loan.
(f)
Accounts Payable increased due to additional accrued interest payable booked by
the Company and advances received from Metro Pacific Investment Corp. in
relation to the potential acquisition of MRTHI shares, subject to completion of
certain closing requirements.
(g)
Income Tax Payable decreased due to low income tax payable as of end-March
2011.
(h)
Net unrealized valuation gain in AFS investments increased due to increase in
market value of Atlas shares.
(i)
Retained Earnings increased due to the net income generated by the Company
during the year 2010.
There have been NO material changes from 31 December 2010 to 31 March 2011 in one
or more line items of the Company’s financial statements, EXCEPT as disclosed below:
13
(a)
Cash and cash equivalents increased from P165.1 million as of end 2010 to
P212.6 million as of end-March 2011 due to collection of accrued interest
receivable from Atlas during the 1st quarter 2011.
(b)
Financial assets at FVPL decreased due to decrease in market prices of Shang
Properties Inc.
(c)
Accounts receivable decreased from P27.9 Million to P197.8 Million due to
collection of accrued interest receivable from Atlas.
(d)
The value of Available-for-Sale investments decreased from P3 billion to P2.7
billion due to a decrease in the market value of Atlas shares as of end-March
2011.
(e)
Short Term Loans payable decreased from P125 million to P100 million due to
partial payment of LBP loan.
(f)
Accounts Payable decreased due to payment of other accrued expenses.
(g)
Net unrealized valuation gain/(loss) decreased due to decrease in the market value
of Atlas shares.
(h)
Retained Earnings decreased due to net loss incurred by the Company during the
interim period.
9.
There are NO events that will trigger direct or contingent financial obligation that is
material to the Company, including any default or acceleration of an obligation.
10.
There are NO material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the Company with
unconsolidated entities or other persons created during the reporting period.
Employees
As of 31 December 2010 and 31 March 2011, the Company has twelve (12) full-time employees
(including officers) who are not subject to any collective bargaining agreement.
IV.
Brief Description of the General Nature and Scope of Business of the Company
The Company was incorporated in 1958 as an oil and mineral exploration company. In 1996, the
Company changed its primary purpose to investments holding focused on infrastructure, property
development and natural resources. Since then, the Company has maintained, and will continue
to maintain, investments in natural resources, property development, infrastructure and
diversified businesses.
Filipinas Energy Corporation, the Company’s wholly-owned subsidiary, is a petroleum and
mineral exploration company which began setting its business and organization in 2006.
14
V.
Market Price and Dividends
The Company’s shares are listed and traded in the Philippine Stock Exchange. As of May 23,
2011, the Company’s share traded at P1.88 per share. The high and low sale price of the
Company’s shares for each quarter during the last two (2) fiscal years 2009 and 2010 and the
first quarter of the current fiscal year 2011, expressed in Philippine Pesos, are as follows:
Stock Prices (Php)
2011 – 1st quarter
High
Low
2.11
1.01
2nd quarter
3rd quarter
4th quarter
1.44
1.34
1.78
2.47
1.06
1.14
1.16
1.58
2nd quarter
3rd quarter
4th quarter
1.10
1.34
1.44
1.38
0.58
0.95
1.12
1.10
Holders
As of 06 May 06, 2011 (the “Record Date”), common shares outstanding stood at 1,165,000,000
shares and shareholders of record totaled 3,155. The Company’s top 20 Stockholders as of
Record Date are as follows:
Rank
Stockholders
Total Share
1 PCD NOMINEE CORPORATION
2 ALAKOR SECURITIES CORPORATION
3 VULCAN INDUSTRIES CORP.
4 ALAKOR CORPORATION
5 JOSE D. SANGALANG
6 SAN JOSE OIL COMPANY, INC.
7 GONZALES, FERNANDO
8 ALYROM PROPERTY HOLDINGS, INC.
9 NAVARRO, SOLEDAD V.
10 NATIONAL BOOKSTORE, INC.
11 MARIANO GO BIAO
12 SANTIAGO TANCHAN III
13 JALANDONI, JAYME, ADAMS & Co., INC.
14 S.J. ROXAS & CO., INC. A/C # 2.19.038
15 CONSTANTINE TANCHAN
16 JACK F. CONLEY
17 ANSALDO, GODINEZ & CO, INC.
18 TRENDLINE SECURITIES CORP
19 JESSELYN CO
20 ANTONIO HENARES
15
1,067,162,366
20,939,000
10,266,666
9,494,767
7,392,000
4,693,332
2,933,330
2,924,900
1,375,550
1,275,445
990,000
972,398
964,700
935,000
881,466
825,000
819,845
730,000
715,732
660,000
Percentage
91.6019%
1.7973%
0.8813%
0.8150%
0.6345%
0.4029%
0.2518%
0.2511%
0.1181%
0.1095%
0.0850%
0.0835%
0.0828%
0.0803%
0.0757%
0.0708%
0.0704%
0.0627%
0.0614%
0.0567%
*Of the total 1,067,162,366 shares under the name of PCD Nominee Corp., 682,192,977 shares were under the name of
Alakor Securities Corporation (ASC). Of the total shares of 682,192,977 shares under the name of ASC, National Book Store
Inc. owns 466,660,361 shares (40.05%) while Alakor Corporation owns 152,897,758 shares (13.12%).
Dividend
Cash Dividend
2011 – CD 6
2010 – CD 5
2009 – CD 4
2008 - CD 3
2007 – CD 2
CD 1
Amount
P0.05/share
P0.03/share
P0.15/share
P0.05/share
P0.05/share
P0.10/share
Declaration Date
March 25, 2011
April 12, 2010
April 22, 2009
April 25, 2008
July 27, 2007
April 30, 2007
Stock Dividend
2008 - SD 1
Rate
10%
Declaration Date
Record Date
Sept. 19, 2008
October 31,2008
Record Date
April 08, 2011
April 30, 2010
May 08, 2009
May 30, 2008
October 15, 2007
May 17, 2007
Payment Date
April 29, 2011
May 24, 2010
May 29, 2009
June 25, 2008
November 8, 2007
June 8, 2007
Payment Date
Nov. 26, 2008
NO dividends were declared in 2006.
The Company’s ability to declare and pay dividends on common equity is restricted by the
availability of sufficient retained earnings.
Recent Sales of Unregistered Securities
NO unregistered securities were sold during the past three (3) years. All of the Company’s issued
and outstanding shares of stock are duly registered in accordance with the provisions of the
Securities Regulation Code (SRC).
(a)
(b)
(c)
(d)
Securities Sold – not applicable; NO securities were sold
Underwriters and Other Purchases – not applicable; NO securities were sold
Consideration – not applicable; NO securities were sold
Exemption from Registration Claimed – not applicable; NO securities were sold.
VI.
Corporate Governance
(a)
The Company uses the evaluation system established by the SEC in its Memorandum
Circular No. 5, series of 2003, including the accompanying Corporate Governance SelfRating Form (CG-SRF) to measure or determine the level of compliance of the Board of
Directors and top-level management with the Company’s Corporate Governance Manual.
(b)
The Company undertakes a self-evaluation process every semester and any deviation
from the Company’s Corporate Governance Manual is reported to the Management and
the Board together with the proposed measures to achieve compliance.
16
(c)
(d)
Except as indicated below, the Company is currently in full compliance with the leading
practices on good corporate governance embodied in the CG-SRF:
1.
The Company has prepared a draft Code of Conduct for the Board, CEO and staff,
which is still undergoing changes to cope with the dynamics of the business. In
the meantime, however, the Company has existing policies and procedures that
can identify and resolve potential conflicts of interest.
2.
Employees and officers undergo professional development programs subject to
meeting the criteria set by the Company. Succession plan for senior management
is determined by the Board as the need arises.
The Company shall adopt such improvement measures on its corporate governance as the
exigencies of its business will require from time to time.
The Company undertakes to provide, without charge, upon the written request of a stockholder, a copy of its
Annual Report on SEC Form 17-A. Such request should be addressed to the Corporate Secretary, Anglo
Philippine Holdings Corporation, 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City 1550,
Philippines.
17
FINAL LIST OF CANDIDATES
FOR ELECTION AS INDEPENDENT DIRECTOR
(A)
Candidates for Election as Independent Director
(1)
Identity, names and ages of candidates for election as Independent Director
Name
Renato C. Valencia.
Ramoncito Z. Abad
Age
69
64
Current Position
Period of service
2006
Present
2007
Present
Directors elected in the Annual Meeting of Stockholders have a term of office of one (1) year
and serve as such until their successors are elected and qualified in the next succeeding Annual
Meeting of Stockholders; provided, that a director who was elected to fill in a vacancy arising in
the Board shall only serve the unexpired portion of his predecessor.
Business Experience During the Past Five (5) Years of Candidates for Independent
Directors
Mr. Renato C. Valencia was elected independent director of the Company in December 2006.
He is the former administrator of the Social Security System and currently serves as a
director/executive officer of the Bases Conversion Development Authority, Civil Aeronautics
Board, Metropolitan Bank & Trust Company, among others.
Mr. Ramoncito Z. Abad was elected independent director of the Company in March 2007. He is
the former Chairman of the Development Bank of the Philippines and currently serves as a
director/executive officer of the Monheim Group of Distributors and Cybertech International
Builders.
Candidates for Independent Director with directorship(s) held in reporting companies
Renato C. Valencia
Bases Conversion Dev’t Authority
Hypercash Payment System, Inc.
Independent Insight, Inc.
Ramoncito Z. Abad
Monheim Group of Distributors
(3)
Metropolitan Bank & Trust Company
Roxas Holdings Inc.
Triple Top AIM Inc.
Family Relationships
The candidates for election as independent directors of the Company are NOT related by
consanguinity or affinity, either with each other or with any other member of the Company’s
Board of Directors.
(4)
Involvement in Certain Legal Proceedings
The Company is not aware of: (1) any bankruptcy petition filed by or against any business of
which an independent director, person nominated to become an independent director of the
Company was a general partner or executive officer either at the time of the bankruptcy or within
two (2) years prior that time; (2) any conviction by final judgment in a criminal proceeding,
domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign,
excluding traffic violations and other minor offenses of any independent director, person
nominated to become an independent director; (3) any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or
foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting the
involvement in any type of business, securities, commodities or banking activities an
independent director, person nominated to become an independent director of the Company; and,
(4) judgment against an independent director, person nominated to become an independent
director of the Company found by a domestic or foreign court of competent jurisdiction (in a
civil action), the Philippine Securities and Exchange Commission or comparable foreign body, or
a domestic or foreign exchange or electronic marketplace or self-regulatory organization, to have
violated a securities or commodities law, and the judgment has not been reversed, suspended, or
vacated.
There had been NO transaction during the last two years, nor is any transaction presently
proposed, to which the Company was or is to be a party in which any independent director of the
Company, or nominee for election as an independent director, or any member of the immediate
family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons
had or is to have a direct or indirect material interest. In the ordinary and regular course of
business, the Company had or may have transactions with other companies in which some of the
foregoing persons may have an interest.
(C)
Security Ownership of Candidates for Independent Directors
The candidates for independent directors own the following number of voting shares:
Type Name of beneficial owner
Common Renato C. Valencia
Common Ramoncito Z. Abad
Amount and nature of
Beneficial ownership
Direct
Indirect
Citizenship
1,100
0 Filipino
1,100
0 Filipino
Percent
Of Class
<0.01%
<0.01%
As of 06 May 2011 (the “Record Date”), the aggregate number of shares owned by the
candidates for election as independent director is 2,200 shares, or less than 0.01% of the
Company’s outstanding capital stock.
2
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AI\GLO PHILIPPINE HOLDINGS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Wlth ComparativeFiguresfor the Year EndedDecember31, 200E)
L Corpomte Information
with the Philippino
Anglo Philippine HoldingsCorporation(the Company),was incorporate.d
SecuritiesandExchangeCommission(SEC)on lune 25, 1958origina.llyasan oil andmineral
oxplorationcompanywith the corporatenameof "Anglo Philippine Oil Corp." In 1996,the
Companychangedits primary purposeto that of an investrnentsholding firm focusedon natural
resources-based
companies,infrastructureand propertydevelopment.The Companyis a public
companyunder Section17.2ofthe SecuritiesRegulationCodeand its sharesare listed on the
Philippine StockExchange(PSE).
The Company'sregisteredoffice addressis 6th Floor, QuadAlpha Centrum,125PioneerStreet,
MandaluyongCity.
The financial statementsofthe Companyas of and for tho yearsendedDecember31, 2010and
2009,including the comparativefinancial statementsfor the year endodDecember3 l, 2008,were
authodzedfor issueby the Board of Directors(BOD) on April I 1, 2011.
2. Summaryof SignilicantAccountingPolicies
Basisof Prenaration
The accompanyingfinancial statementshavobeenpreparedunderthe historical cost basisexcept
for financial assetsat fair valuethroughprofit or loss(FVPL), available-for-sale(AFS)
investnentsand derivativefinancial instruments,which arecarriodat fair value. The financial
statementsarepresentedin Philippine peso(F), which is the Company'sfunctional and
presentationcurrency. All valuesarerormdedoffto tle nearestP exceptwhen otherwise
indicated.
Statementof Comoliance
with
The accompanyingfinancial statementsofthe Companyhavebeenpreparedin aooordanoe
PhilippineFinancialReportingStandards(PFRS).
Chansesin AccountingPoliciesandDisclosures
New, Revisedand AmendedStandordsand Interyretatlons and Improved PFRSAdoptedin
Calendm Yem 2010
RevisedPERS3, "RarinessCombinatiow, and Amendmentsto Philippine AccountingStandards
(PAS) 27, Consolidatedand SeparateFinancial Staternents
The revisedPFRS3 inhoducesa numberof changesin the accountingfor businesscombinations
that will impactthe amountof goodwill recognized,the reportedresultsin the period that an
acquisitionoccurs,and future reportedresults. The revisedPAS 27 requires,amongothers,that
(a) changein ownershipinterestsof a subsidiary(that do not result in lossof contol) will be
accountedfor asan equity transactionandwill haveno impact on goodwill nor will it give rise to
a gain or loss;(b) Iossesincurredby the subsidiarywill be allocatedbetweonthe controlling and
non-controllinginterests(previouslyreferredto as"minority interests"),evenif the lossesexceed
the non-controllingequity investmentin the subsidiary;and (c) on lossof oontrolofa subsidiary,
any retainedinterestwill be remeasuredto fair value andthis will impactthe gain or loss
reoognizedon disposal. The changesintroducedby the revissdPFRS3 and PAS 27 will affect
future acquisitionsandtransaotionswith non-controllinginterests.RevisedPFRS3 will be
applied prospectivelywhile PAS 27 will be appliedretrospectivolywith few exceptions.The
revisedstandardsareeffectivefor annualporiodsbeginningon or afterJuly 1, 2009.
Amendmentsto PFRS2, Share-basedPayment- Group Cash-sealedShare-basedPryment
Ttansactiots
The amendmentsto PFRS2, effective for annualperiodsbeginningon or after January1, 2010,
paymonttransactions.
clarifu the scopeand the aooountingfor groupoash-settledshare-based
Amendmentto PAS 39,Financial Insftuments:Recognitionand Measurement- Eligible
HedgedItems
Amendmentto PAS 39 will be effective for annualperiodsbeginningon or after July 1, 2009,
which addresses
only the designationofa one-sidedrisk in a hodgeditun, and the designationof
inflation as a hedgedrisk or portion in particularsituations. The amendmontclarifies that an
entity is permittadto designatea portion of the fair value ohangesor cashflow variability ofa
financial instnrmentasa hodgeditem.
Philippine hterpretation IFRIC 17,Distributions of Non-cashAssetsto Owners
This Interpretationis effectivefor annualperiodsbeginningon or afterJuly 1,2009 with early
applicationpennitted. It providesguidanceon how to accountfor non-cashdishibutionsto
owners, The Interpret4tionclarifies when to reoognizea liability, how to measureit andthe
associatedassets,and when to derecognizethe assetand liability,
Improvementsto PFRSEffective2010
Tte omnibusamendments
to PFRSissuedin 2009 were issuedprimarily with a view to removing
inconsistenciesand clarifuing wording. The following improvementsareeffootivefor armual
period financial yearsbeginningJanuary1, 2010 exceptif otherwisestated.
PFRS2, Slrare-based Payment
o Clarifies that the contributionofa businesson formationofajoint ventureand oombinations
undercommonconfol axenot within the scopoofPFRS 2 eventhoughthey are out of scope
ofPFRS3.
o The amendmentis effeotivefor financial yearsbeginningon or after July 1, 2009.
PFF:S5, Non-cwrent AtsetsHeldfor Saleand DiscontinuedOperatiow
o Clarifies that the disclosuresrequiredin respectofnon-surrent assetsand disposalgroups
classifiedasheld for saleor discontinuedoperationsareonly thoseset out in PFRS5. The
disclosurerequirementsof other PFRSonly apply if specificallyrequiredfor suchnon-current
assetsor discontinuedoperations.
PFRS8, OperatingSegnents
r Clarifies that segmentassetsand liabilities needonly bo reportedwhen thoseassetsand
liabilities areincludedin measuresthat arousedby tle chief operatingdecisionmaker.
PAS l, Presmtation of Financial Statements
r Clarifies thai the termsof a liability that could rssult, at anytime,in its sottlomentby the
issuanoeofequity instrumentsat the opion ofthe counterpartydo not affect its classification,
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PAS 7, Statementof CashFlows
r Explicitly statesthat only Expenditurethat resultsin a recogrized assetcanbe classifiodasa
cashflow from investingactivities.
PAS 17,treares
r Removesthe specific guidanceon classifing land as a lease. Prior to the amendmen!leases
of land were classifiedasoperatingleases.The amendmentnow requiresthat leasesof land
areolassifiedaseithor "ffnance" or "oporating" in accordancowith the generalprinciplesof
PAS 17. The amendmentswill be appliedretospectively.
PAS 36, Irnpainnentof Assets
r Clarifies that the largestunit permittedfor allocatinggoodwill, acquiredin a business
oombination,is the operatingsegmentasdefinedin PFRS8 before aggregationfor reporting
purposes.
PAS 38, IntangibleAssets
o Clarifies that if an intangibleassetacquiredin a businessoombinationis identifiableonly with
anotherintangibleasset,the acquirermay recognizethe group of intangibleassetsasa single
assetprovidedthe individual assetshavesimilar useful lives. Also clarifies that the valuation
techniquespresentedfor doterminingthe fair value of intangibleassetsacquiredin a business
combinationthat arenot fiaded in activemarketsar€ only examplesandars not restristiveon
the methodstlnt canbe used.
PAS 39,Finoncial Inst/uments:Recognitionand Measurement:olarifiesthe following:
. that a prepaymentoption is consideredcloselyrelatedto the hostcont?ct whenthe exercise
price of a prepaymentoption reimbursesthe lenderup to the approximatepresontvalue of lost
interestfor the remainingterm of the host contact.
r that tlte scopoexemptionfor qontractsbetweenan acquirerand a vendorin a business
combinationto buy or sell an acquireeat a future dateappliesonly to binding forward
contracts,and not derivativecontractswherefirtler actionsby eitherpalty are still to be
taken.
. tlat gainsor losseson cashflow hedgesof a forecasttransactionthat subsequentlyresultsin
the recognitionofa financial instrumentor on cashflow hedgesofrecognizedfinancial
instrumentsshouldbe reclassifiedin the psriod tllat the hedgedforeoastcashflows affect
profit or loss.
of EmbeddedDerh,atives
Philippine InterpretationIFRIC 9, Reassessment
o Clarifies that it doesnot apply to possiblereassessment
et the dateof acquisition,to ombodded
derivativesin ccntractsacquinsdin a businesscornbinationbetweenentitiosor businesses
undercommoncontrol or the formationofajoint venture.
Philippine krterpretationIFRIC 76,Eedgeof a Net Investmentin a Forcign Operation
r Statesthat, in a hodgeof a net investrnentin a foreign operation,qualiSing hodging
instrumentsmay be held by any entity or entitioswithin the group,including the foreign
operationitse$ as long asthe designation,documentationand effectivenessrequirementsof
PAS 39 that relateto a net investnent hedseare satisfied.
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New Accounling Standmds,Inrcrpretations and Amendmerrtsto Existing StandardsEffective
Subseqacd to December31,2010
The Companywill adopttle standardsand interpretationsenumeratedbelow whenthesebecome
effective. Exceptasotherwiseindicated,the Companydoesnot expectthe adoptionofthese new
and amendedPFRS,PAS andPhilippine Interprctationsfrom IFRIC to havesignificant impacton
its financial statements,
Effectivein 2011:
Amondmentto PAS 24, RelatedPmty Disclosures
The amendedstandardis efFectivefor annualperiodsbeginningon or after Januaryl, 201l. ft
clarified the definition of a relatedparty to simplifu the identificationof suchrelationshipsandto
eliminate inconsistenciesin its application. The revisedstandardinhoducesa partial exomptionof
disclosurerequirementsfor government-related
entities. Early adoptionis permittedfor eitherthe
partial exemptionfor government-related
entitiosor for the entire standard.
Amsndmentto PAS 32, Financial Instruments:Presentation- Classificationof Rightshsues
The amendmentto PAS 32 is efifectivefor annualperiodsbeginningon or aftor Februaryl, 2010
and amendedthe definition ofa financial liability in orderto classi! rights issues(andoertain
optionsor warrants)asequity instrumentsin oaseswheresuchrights aro given pro ratato all of the
existingownersofthe sameclassofan entity's nonderivative equity instrum€nts,orto aoquirea
fixed numberoft}e entity's own equity instrumentsfor a fixed amountin any currency.
Amendmentto Philippine hterpretation IFRIC 14,Prepaynenx of a MinimzonFmding
Requirement
The amendmentto Philippine InterpretationIFRIC 14 is effective for annualperiodsbeginningon
or after Januaryl, 2011, with retrospectiveapplication. The amendmentprovidesguidanceon
assessingthe recoverableamountof a not pensionasset.The amendmentpermitsan ontity to treat
the prepaymentof a minimum funding requiromentasan asset.
Philippine InterpretationIFNC 19,ExtinqaishingFinancial Liabilitiet utith EquW Insbuments
Philippine ftrterpretationIFRIC 19 is effective for annualperiodsbeginningon or after
July 1, 2010. The interpretationclarifies that oquity instrumentsissuedto a creditorto extinguish
a financial liability qualift asconsiderationpaid. The oquity instrumentsissuedaremeasuredat
their fair value. ln casethat this oannotbe reliably measured,the insFumentsaremeasuredat the
fair value of the liability extinguished.Any gain or loss is recognizedimmediatelyin profit or
loss.
Improvementsto PFRSEffective201I
The omnibusamendmentsto PFRSsissuedin 2010 wereissuodprimarily with a view to rernoving
inconsistenciesand clariffing wording. The amerdmentsareeffectivo for armualperiods
beginningon or after January1, 201I excep otherwisestated. The Companyhasnot yet adopted
the following amendmentsand anticipatesthat thesechangeswill havono materialeffect on the
finanoial statsments.
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RevissdPFRS3, BusinessCombinations
PFRS7, Financial Instruments:Disclosuret
PAS 7,Presentationo/ Financial Statements
PAS 27, Consolidaed and SeparateFinorcial Statements
Philippine InterpretationIFRIC 13,C?tstomerLoydlty Progranmes
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Efective in 2012:
Amendmentto PFRS7, Financial Instntments:Disclosures- Disclosures- Troufers of
Financial Assets
Tho amendmentsto PFRS7 are effectivefor annualperiodsbeginningon or after July 1, 2011.
The amendmentswill allow usersof financial statementsto improvothoir understandingof
hansfertransactionsof finanoial assets(for oxample,soouritizations),including understandingthe
possibleeffoctsof any risks that may remainwith the entity that tansferred the assets,The
amendmentsalso requireadditionaldisclosuresifa disproportionateamountoftransfer
transactionsareundertakenaroundthe endof a reportingpefiod.
Philippine InterpretationIFRIC 15,Agreements
for the Constluctionof Real Estate
This Interpretation,effective for annualperiodsbeginningon or after Januaryl, 2012,covers
accountingfor revenueandassooiatedexpensesby entitiesthat undertakethe constructionofreal
estatediroctly or through subcontractors.The Interpretationrequir€sthat revonu€on construction
ofreal estatebe recognizedonly uponoompletion,oxoep when suchcontraetquali{iesas
oonstruotioncontact to be accountedfor underPAS ll, ConstntctionContracts,or involves
renderingof servicesin whioh oaserevenueis recognizedbasedon stageof completion. Contraots
involving provision ofservices with the constructionmaterialsandwherethe risks andrewardof
ownershipaxetransferredto the buyeron a continuousbasiswill also be accountedfor basedon
stageof completion.
Amendmentto PAS 12,IncomeTm,es(Amendment)- Deferred Tn: Recoveryof Underlying
Assets
Tho amendmentto PAS 12 is effectivefor annualperiodsbeginningon or afterJanuaryl, 2012.
It providesa practical solutionto the problemof assessing
whetherrecoveryofan assetwill be
throughusoor sale. It infioducesa presumptionthat recoveryof tho carrying amountof an asset
will normallybe throughsale.
Eflective in 20Ij:
.
PFRS9, F nncial Instrunents: Classificationand Measuremmt
PFRS9, as issuedin 2010,reflectsthe frst phaseofthe work on the replacementofPAS 39
and appliesto olassiflcationand measurement
offlnancial assetsand financial liabilities as
defrnedin PAS 39. The standardis effective for armualperiodsbeginningon or after
January1, 2013, In subsequentphases,hedgeaccountfurg
and dorecognitionwill be addressed.
The completionofthis project is expectedin early 2011. The adoptionofthe lirst phaseof
PFRS9 will havean effect on the classificationand measurementofthe Company'sfinancial
assets.The Companywill quantiff the effoct in conjunctionwith the ottrerphases,when
issuod,to presenta comprehensivepicture.
RevenueRecomition
Revenuois recognizedto the ext€ntthat it is probablethat the economicbenefitswill flow to the
Companyandthe revenuecanbe reliably measured,The following specificrecognitioncriteria
mustbe met beforerevenueis recocnized:
Interett Income
Interestinoomefrom bank depositsand short-terminvestrrentsarerecognizedasthey accrue
usingthe effective interestrate (EIR) method.
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ManagementFees
Managementfees,whish axeincludedaspart of the "Other revenueso'
accountin the statementof
comprehensiveincome,arereoognize.d
when servicesarerenderedbasedon the oontractual
agreementbetweenthe parties.
Dividend Income
Dividend income,whioh is includedas part ofthe "Other revenuo"acaountin the statementof
comprehensiveincome,is recognizedwhenthe shareholder'sright to r@€ivepaymentis
established.
Costsand Expenses
Costsand expensesaredecreasesin economicbenefitsduring the accountingperiod in the form of
outflows or depletionsofassetsor incurencesof liabilities that result in desreas€sin equity,other
thanthoserelatingto distributionsto equity participants. Generaland administrativeexpensesare
generallyre.cognized
when the servicesareusedor the expensesarisewhile interestexpensesare
accruedin the appropriateperiod. Employee-relatedexpensesareprovidedin the period when
sefvicesarerEndered.
Cashand CashEquivalents
Cashincludescashon handandwith banks. Cashequivalentsare short-term,highly liquid
investrnentsthat arereadily convertibleto known amountsof cashwith original maturitiesofthree
monthsor lessandthat are subjectto an insignifioantrisk of changein value.
FinancialInstruments
Date of Recognition
Financialinstrumentsaxerecognizedin the balancesheetwhen the Companyb€comesa party to
the contractualprovisionsof tho insfument. In tho oaseof a regularway purchaseor saleof
financial assets,recognitionand derecognition,asapplicable,is donousingtradedateaccounting.
Initial Recognitionof Financial Instruments
Financialinstrumentsarerecognizedinitially at fair value. The initial measurement
offinancial
:
instruments,exceptfor thoseclassifiodat FVPL, includestansaction cost.
The Companyolassifiesits fmansialassetsin the following categorios:financial assetsat FVPL,
held-to-maturity(IIIM) financial assets,loansandrec€ivablesandA-FSfurancialassets.The
Companyolassifiesits financial liabilities asfinancial liabilities at FVPL and other finansial
liabilities. The classificationdependson the purposefor which the financial assetsworeacquired
or liabilities incurredandwhetherthey arequotedin an activemarket. Managementdetermines
the classificationof its financial assetsand liabilities at initial recognitionand,whereallowedand
appropriate,re-evaluatessuchdesignationat everybalanoesheetdate.As of December3 I , 2010 a
d 2009,the Companyhasno HTM investmentsand furancialliabilities at FVPL.
Financialinstrumentsaroclassifiedasliabilities or equity in aacordancewith the substanceofthe
contractualarrangement.lnterest,dividends,gainsand lossesrelatingto a financial insfument or
a componenttlat is a financial liability arereportedasoxpenseor income. Distributionsto
holdorsof financial instrumentsclassifiedasequity arechargeddirectly to equity, not of any
relatedincometax benefits.
Determinationof Fair Value
The fair value of financial instrumentstradedin activemarketat the reportingdateis basedon
their quotedmarketprice or dealermarketprice quotations(bid price for long positionsand ask
price for short positions),without any deductionfor tansaction costs. When ounantbid andask
pricesarenot available,the prico ofthe most rgcenttransactionprovidesevidenceof the current
fair value as long astherehasnot beena significantchangein economiccircumstancessincethe
time of the transaction.For all otherfinancial instuments not listed in an activemarket,the fair
valua is determinedby using appropriatevalualion teohniques.Valuation techniquesinoludenet
presentvalue techniques,comparisonto similar instrumentsfor which obsorvablepricesexist,
option pricing modelsandother relevantvaluationmodels,
Day I Difference
Wherethe transactionprice in a non-activemarketis different from the fair value from other
obs€rvableouffent markettransactionsin the sameinstrumentor basedon a valuationtechnique
whosevariablesinclude only datafrom observablemarket the Companyrecognizesthe difference
betweenthe tansaction price andfair value @ay I difference)in the statsmentof comprehensive
incomeunlessit qualifies for recognitionas someothertype of assetor liability. In caseswhere
fair value is determinedusing datawhich is not observablgthe differencebetweenthe transaction
price and model value is only recognizedin the statementof comprehensiveincomewhenthe
inputsbeoomeobservableor when the instrumentis derecopized. For eachtransaction,the
Companydeterminesthe appropriatemethodofrecognizing the Day I differenceamount.
Financial Assetsat FTPL
Financialassetsat FVPL includefinancial assetsheld for bading purposes,furancialassets
designatedupon initial recognitionasat FVPL and derivative instruments.
Financialassetsareclassifiedasheld for trading if they areacquiredfor the purposeof selling and
repurchasingin th€ neartefm. Derivatives,including separatedembeddedderivatives,arealso
classifiedasheld for fading unlessthey aredesignatedas effeotivehedginginstrume,nts
or a
financial guaranteegontraot. Fair value gainsor lossesarerecognizodin statementof
comprehensiveincome. Interestand dividend incomeor expenseis recognizedin the statementof
comprehonsiveincome,aooordingto the termsof the contract,or whenthe right to the payment
hasbeenestablished.
Financial assetsmay be designatedasat FVPL by managementon initial reoognitionwhen any of
the following criteria aremet:
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The designationsliminatesor significantly reduossthe inconsistentfeatrnent that would
otherwisearisefrom measuringthe assetsor recognizinggainsor losseson them on a different
basis;or
The assetsarepart ofa groupoffinancial assetswhich aromanagedandtheir performance
evaluatedon a fair value basis,in accordancewith a documentedrisk managemsntor
invostmentstrates/; or
The financial instrumentcontainsan embeddedderivativethat would needto be soparately
recorded.
As at December31, 2010,theCompany'sfinancialassetsat FVPL consistof investnentsin
quotedequity shares.
DerivativeFinancialInstruments
Derivative financial instuments (including bifurcatedembeddedderivatives)areinitially
recognizedat fair value on the datein which a derivativetransactionis enteredinto and are
subsequentlyre-measuredat fair value. Changesin fair value of derivativeinstrumentsnot
accountedfor ashedgesarerecognizodin the statementof comprehensiveincom'e.Derivatives
-8-
are carriedas asse$whsn the fair value is positive andas liabilities when the fair valuo is
negative.
EmbeddedDerivatives
An embeddedderivative is soparatedfrom hybrid or combinedcontractif all ofthe following
conditionsaremet:
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the eoonomiccharacteristicsand risks ofthe embeddedderivativearenot closelyrelatedto the
economiccharacteristiosofthe hostconhact
a separateinstrumentwith the sametermsasthe embeddedderivativewould meetthe
defurition of a derivative;and
the hybrid or combinedinstnrmentis not recogrizedat FVPL.
The Companyassesses
whetherembeddedderivativesarerequiredto be separatedfrom host
contractswhen the Companyfirst becomesa parly to the oontract. Reassessment
is only done
when therearechangesin the tenns of the contractthat significantly modifies the oontractualcash
flows.
Changesin fair valuesofbifirrcated derivativesarerscognizedin "Mark-to-marketchangesin
derivativeassef in the statementofcomprehensiveincome.
As of December31, 2009,the Companyhasbifurcatedembeddodderivativerelatingto its equity
oall option on the loan extendedto ACMDC (seeNote 22).
Loansand Receivables
Loansand receivablesarenon-derivativefinancial assetswith fixed or determinablepaymentsthat
arenot quotedin an activ€ maxkeL They arenot enteredinto with ths intentionofimmediate or
short-termresal€and arenot classifiedasfinancial assetsheld for trading, designatodasAFS
financial assetor designatedasat FVPL. This accountingpolicy relatesto the Company's"Cash
and cashequivalents"and"Receivables"accounts,which ariseprimarily from advancesto related
partiesand othertypes ofreceivables.
After initial measurement,loansandreceivablesaremeasuredat amortizedcost usingEIR
method,lessallowancefor doubtful accounts.Amortized cost is calculatedby taking into account
any discountor premiumon acquisitionandfeesthat arean integralpart of the EIR. The
amortizationis includedin the "krtercst income"accountin the statementof comprehensive
income. Lossesarising from impairmentof loansandreceivables,if any, arorgportedasprovision
for impairmentlosses.
Loansand receivablesaroclassifiedascurent ass€tswhon thoy are expectedto be realizedwithin
12 monthsafter the balancesheetdateor within the normaloperatingcyolq whicheveris longer.
Otherwise,they are classifiedasnoncurrentassgts.
AFS Investments
AFS invesfrnent$arothosenonderivativefinancial assetsdesignatedas suchor arenot classified
as at FVPL, IITM investmentsor loansand receivables.Thesearepurchasedandheld indeftnitely
and may be sold in responseto liquidity requirementsor changesin marketconditions.
After initial measurement,
AFS financial assetsaremeasuredat fair value, The unrealizedgains
and lossesarising from the fair valuationofAFS investmentsareexcludednet of tax from
reportedeamingsand arereportedas"Net unrealizedvaluationgain (loss) on AIS investments"in
the equity sectionofthe balanceshootand aspart of othercomprehensiveincome,net of deferred
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incometaxesin the statementof comprehensiveincome, Wlen the investnrentis disposedof, the
cumulativogainsor lossespreviouslyrecognizedin equity is recognizedas incomein the
statementof comprshensiveincome. Dividendseamedon holding A.FSinvesfinentsarc
recogrizedwhen the right of paymenthasbeenestablished.The lossesarising from impairment
of suchinvestmentsarc recognind asprovisionfor impairrnentlosses.
The fair value ofAFS investmentsthat are actively tradedin organizedfinancial marketsis
determinedby referonceto quotodmarketbid prioesat the closeofbusinesson the reportingdate.
AFS investrnentswhosefair value cannotbe reliably becauseoflack of reliable estimatesof future
cashflows and discountratesnecessaryto calculatethe fair value ofunquoted equity instfuments,
arecarriedat cost.
The Company'sAFS investnentsarepresentedasnoncurr€ntassotsin the balanc€sheets
(seeNote 7).
OtherFinancial Liabil ities
Issuedfinancial instrumentsor their components,which are not dosigttatedasat FVPL are
classifiedasother financial liabilities, wherethe substanceof the contraotualarrangementresults
in the Companyhaving an obligationeitherto deliver cashor anotherfinancial assetto the holder,
or to satis! the obligation otherthan by the exchangeofa fixed amountof cashor another
financial assetfor a fixed numberofown equity shares.The componentsofissued financial
instrumentsthat containboth liability and equity elementsare accountedfor separately,witJtthe
equity componentbeing assignedthe residualamountafter deductingfrom tho instument asa
whole the amountsepamtelydeterminedasthe fuir value of the liabilrty componenton the dateof
issue.
After initial measurement,
otherfinancial liabilities aremeasuredat amortizedcost usingthe EIR
method. Amortizod oostis caloulatodby taking into accountany discountot prerniumon the issue
and feestlat are an integralpart oftle EIR. Any offectsofrestatementofforeip currencydenominatedliabilities arerocognizedin the "Foreign exohangegains- net" and "Foreign
exchangelosses- net" accountin the statementofoomprehensiveincome.
Otherfinancial liabilities areclassifiedascurrentliabilities when they af,eexpectedto be settled
within twelve (12) monthsfrom the balancesheetdateor the Companydoesnot havoan
gnconditionalright to defer settlementfor at least 12 monthsfrom balanaesheetdatr. Otherwise,
they areclassifiedasnonouffentliabilities.
This accountingpolicy appliesprimarily to the Company's"Aocountspayableand accrued
expenses","Short-termloanspayable","Long-term debt" and other obligationsthat meetthe
abovedefinition (otherthan liabilities covgredby otherzrccountingst ndards,suchasretirement
bonofit plan obligetion and insometax payable).
Imoairmentof FinancialAssets
The Companyassesses
at oachbalancesheotdatewhetherthore is objectiveevidencethat a
financial assetor group of financial assetsis impaired. A financial assetor groupof finanoialasset
is deemedimpairedif, andonly if, thereis objectiveevidonceof impaiment asa result of oneor
mor€eventsthat hasor haveoccunedafter initial recognitionofthe asset(an incurred"loss
event") and that losshasan impacton the estimatedfirture cashflows ofthe fmancial assetor the
groupof financial assetttrat canbe reliably estimated.
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Objectivoevidenceincludesobservabledatathat comesto the attentionofthe Companyaboutloss
eventssuchasbut not limited to signifioantfinancial difficulty ofthe counterparty,a breachof
contract,suchas a default or delinquencyin interestor principal payments,probabilitythat
borrower will enterbankruptcyor other financial rcorganization.
Loansand Receivables
whetherobjective
For loansandroceivablesoarriedat amortizedcos! the Companyfirst assesses
individually
significant'and
that
are
widence of impairmentexistsindividually for financial assets
individually oicollectively for finanoial assetsthat arenot individually significatrt. If it is
financial
determinedthat no objectiveevidenceof impairmentexistsfor an individually assessed
asset,whethef signifieantor not, the assetis includedin a groupoffinanoial assetswith similaf
for impairmelt,
oredii risk charaJteristicsandthat groupof financial asseGis collectively assessed
is or
loss
an
impairment
for
which
ald
for impairment
Assetsthat axeindividually assessed
of
impairment'
assessment
continuesto be recogrrizedarenot includedin a collective
Ifthere is objectiveevidenoethat an impairmentlosson loansandreceivableshasbeenincurre4
the amounto:fthe loss is moasuredasths differencebetWeonthe asset'scarrying mount andthe
presentvalue of estimatedfuture oashflows (excludingfuture cfedit lossesfhat hovenot been
at initial
incurred) discountedat the financial assefs original EIR (i.e., the EIR comp-uted
allowance
acoountand
of
t}rough
use
is
roduced
asset
recognition). The carryingamountof the
recognized.
bo
to
continues
the airount of lossis ciarled to profit or loss. Interestincome
Receivables,togetherwiti the asiociatedallowanceaccounts,arewritten off whenthereis no
realistic prospe.ctof future recovery.
If, in a subsequentperiod,the amountofthe impairmentlossdecreasesandthe decreaseoanbo
relatedobjectivelyto an eventoccurring aftet the tnputment was recognized,the previously
recogrieedimpairmentloss is reversed.Any subsequentreversalof an impairmentlossis
r""oftriod in itt" paxentcompanystatemeniofincome,to the extentthat the carryingvalue of the
assetdoesnot exceedits amortizedcostat the revelsaldate.
For the purposeof a collective evaluationof impairment,financial assetsaregfoupedon the basis
of suehcredit risk characteristicssuchascustomettype, paymenthistory, past-duestatusand
term. Futureoashflows in a group of financial assetsthat areoollectively evaluatedfor .
impairmentareestimatodon-thebasisof historical lossexperiencefor assetswith oreditrisk
characteristicssimilar to thosein the group. Historical lossexperienceis adjustedon.thebasisof
currentobservabledatato reflect the iffeits of cunent conditionsthat did not affect the pe od on
which the historical lossexperienceis basedand to removethe effectsof conditionsin the
historical periodthat do noi exist currently. The methodolory and assumptionsused.for
estimatingfuture cashflows arereviewedregularlyby the Companyto reduceany differenc,e
betweenloss estimatesandactuallossoxperierce.
AFS Inveshnents
at eachreportingdatewhetherthereis objoctive
For AFS investnents,the Companyassesses
evidencpthat anAFS investnent is impaired.
In the caseof an AFS equity investnent,this would include a significant or prolongeddeclinein
the fair value oftho investrnentbelow its cost, "Signifioant'' is to bo evaluatedagainstcostofthe
investmentand ,.prolonged"againstlho period in whicb the fair valuehasbeenbelow its original
cost.If an AFS investrnint is impaked,an amountcomprisingthe differencebetweenits costand
its currentfair value, lessany impairmentlosspreviouslyrecogniZedin net income' is transferred
from other comprehinsiveincorneto inoomein the statgmentof compfehensiveincome.
ffilllulilll
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- ll Impairment losseson oquity investmentsarenot reversedthroughthe consolidatedstatemeNrt
of
income. Increasesin fair value after impainnentarerecopized directly in equitytlrough the
consolidatedstatementof comprehensiveinoome,
If there is objectiveevidencethat an impairmentlosson an unquotedequity instument that is not
oarriedat fair value becauseits fair value cannotbe reliably measured,the amountof lossis
measuredasthe differenoebetweenthe asset'soarryingamountandthe presentvalue of estimated
future cashflows discountedat the cu ent marketrate ofreturn for a similar finauciat asset,
DerecoCnitionof FinancialInstruments
Financial Assets
A financial asset(or, whereapplicable,a part of a financial assstor part of a groupof similar
financial assets)is derecognizedwhen:
l . the rights to recoiveoashflows from the assethaveexpired;or
2 . the Companyretainsthe right to receivecashflows from the asset,but hasassumedan
obligation to pay them in full without materialdelayto a third parly undera'lass-through"
arrangement;or
the Companyhastransfenedits rights to receivesashflows from the assotandeither(a) has
transferredsubstantiallyall the risks andrewardsofthe asset,or (b) hasl6ither transfored nor
retainedsubstantiallyall the risks and rewardsofthe asset,but hashansferredcontrol ofthe
asset.
Wherethe Companyhastransferredits rights to receivesashflows from an assetor hasentered
into a "pass-through"arrangementand hasneithertransferrednor retainedsubstantiallyall the
risks and rewardsof the assetnor transferredcontrol ofthe asset,the assetis recognizedto the
extpntofthe Company'scontinuinginvolvementin the asset.Continuinginvolvsmentt}rattakos
the fotm of a guaranteeover the transferredassetis measuredat the lower ofthe original carrying
amountof tho assetandtho maximumamountof considerationthat the Companyoould be
requiredto repay.
Finfrtcial Lidbilities
A financial liability is derecopized when the obligationunderthe liability is dischargedor
canoellpdor hasexpirod. When an existingfinancial liability is replacedby anotlrerfrom the samo
lenderon substantiallydifferent terms,or the termsof an existing liability aresubstantially
modified, suchan exchangeor modification is treatedasa derecognitionofthe original liability
and the recognitionofa new liability, andthe differoncein the respectivecaxryingamountsis
recognizedin the statementof comprehensiveincome.
Offsetting FinancialInshuments
Financial assetsandfinancial liabilities areoffset and the net amountreportedin the balancosheet
if, and only if, thereis a currentlyenforceablelegal right to offset the recognizedamountsand
there is an intentionto settlothe liability simultaneously.This is not generallythe casewith
masternetting agreements,andthe relatedassetsand liabilities arepresentedgrossin the balance
sheet.
Investuents in Associates
The Company'sinvestrnentsin associatesareaccoudtEdfor using the equity method. An
associateis an entity in which the Companyhassignificant influenoe. Underthe equity method,
the investmentsin assooiates
af,eca.ffiedin the balancesheetat cost plus post acquisitionchanges
in the Company'sshareof net assetsof the associate.
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The statementof comprehonsiveincomereflectsthe shareof the resultsofoperationsofthe
associate.Wheretherehasbeena changerecognizeddirectly in tho equity ofthe associate,the
Companyrecognizesits shareof any ohangesand disclosesthis, when applicable,in the statement
of ohangesin equity. Unrealizedgainsand lossesresultingfrom transactionsbetweenthe
Companyand the associateare eliminatedto the extentofthe interestin the associate.
The shareofprofit ofassociatesis shownon the face ofthe statementof comprehensiveinoomo.
This i$ the profit attributableto equity holdetsof the assooiateand thereforeis profit aft€rtax and
non-conhollinginterestsin tlle subsidiariesofthe associates.
The financial stat€mentsof the associatearepreparodfor the samereportingperiod asthe
Company. rJy'here
necessary,adjustnentsaremadeto bring the acoountingpolicies in line with
thoseofthe Company.
After applicationof the equity method,the Companydotermineswhetherit is necessaryto
recognizean irnpairmentlosson the Company'sinvestmentin associates,The Company
determinesat eachreportingdatowhetherthero is any objectiveevidencethat th€ investnentin
the associateis impaired. If this is the case,t}le Companycalculatosthe amountof impainnentas
the differencebetweenthe recoverableamountof tl.reassociateandits carryingvalue and
rooognizesthe amountin tle statementof comprehensivoinoome,
Upon lossof significant influenceover tle assooiate,the Companymeasuresandrecognizesany
retaininginvestnent at its fair value. Any differencebetweenthg carrying amountof the associate
upon lossof signifioantinflusncoandthe fair value of the retaininginvestnent andproceedsfrom
disposalis rec.ognized
in profit or loss.
Prooertvand Equioment
Propertyand equipmentarecarriedat cost lessaccumulateddepreciationand any impairmentin
value.
The initial cost ofproperly and equipmentcomprisesits purchasepdce, including import duties,
nonrefundablepurchasetaxosand any directly attributablecostsof bringing the assetto its
working condition and location for its intendeduse. Expenditurosincuned afterthe propertyand
equipmenthavebeonput into operations,suchasrepairsandmaintenance,arenormally charged
to incomein the period when tlte costsare incurred. In situationswhereit canbe clearly
demonstratedthat the expenditureshaveresultedin an increasein the future economicbenefits
expect€dto be obtainedfiom the useofan item of propertyand equipmentbeyondits originally
assessed
standardof porformance,the expenditurosarecapitalizedasadditionalcostsof property
and equipment.
Eachpart ofan itern of properly andequipmentwith a cost that is significant in relationto the total
cost ofthe item is depreciatedsoparately.
Depreciationis computedusingthe straightJinemethodover the estimateduseful lives of the
assetor its significant components.The estimateduseful lives of propertyand equipmentareas
follows:
Category
Condominiumunits and improvements
Office equipment
Furnitureand fixtures
NumberofYears
20
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The assetsresidualvalues,useful lives and depreciationmethodarereviewedperiodicallyto
ensurethat the periodsand methodof depreciationareconsistentwith the expectedpatternof
economicbenefitsfiom itemsofproperty and equipment.
Whenassetsareretired or otherwisedisposedof, both the cost androlatedaccumulated
depreciationand any impairmontin value areramovedfrom the accountsand anyresultinggain or
loss is creditedto or chargedagainstcunent operations.
Fully depreciatedpropertyand equipmentareretainedin tho accountsuntil theseareno longer
in use.
Impairmentof hone4v andEguipment
Propettyand equipmentarefeviewedfor impairmentwhonevereventsor changesin
circumstanc€sindicatethat the carrying amountof an assetmay not be recoverable.If any such
indication existsand wheretho carryingamountof an assetexceedsits recoverableamount,the
assetor cash-generating
unit is written down to its recovefablgamount. The estimatedrecoverable
amountis the higherof an asset'snet sellingpriceandvaluein use. Thenet sellingpriceis the
amountobtainablefrom the saleofan assetin an arm's lengihfansaotion lessthe costsofdisposal
while valuo in useis the presentvalue of estimatedfuture oashflows expectedto arisefrom the
continuinguseof an assetand fiom its disposalat the end of its useful life, For an assetthat does
not generatelargely independentcashinflows, the remverableamountis determinedfor the cashgeneratingunit to which the assetbelongs. Impairmentlossesarerecognizedin the statementof
comprehensiveincome.
Recoveryof impaimrentlossesrecognizedin prior yearsis rccordedwhen thereis an indication
that the impairmentlossosreoognizedfor the assetno longerexist ot havedooreasod.The
recoveryis recordedin the statementof comprehensiveinoome, However,tlte increasedcatrying
amountof an assetdueto a rocoveryof an impairmentloss is recognizedto the extentit doesnot
exceedthe carrying amountthat would havebeendetermined(net of depreciation)had no
impairmentlossbeenreoognizedfor that assetin prior years.
DeferredExplorationCosts
Deferredexplorationcostsincludecostsincurreda.fterthe Companyhasobtainedlegal righb to
explorein a specific area,including the determinationofthe technicalfeasibility andoommercial
viability ofexnacting mineralresources.Deferredexplorationcostsinolude,amongothers,
aoquisitionof rights to explore,topographicaland geophysicalstudies,exploratorydrilling,
treNrching,
samplingand activitiesin relation to evaluatingthe technicalfeasibility and commercial
viability ofexhacting mineral resowces.All explorationcostsandrelatedexpensesaresarriedas
deferredexplorationcosts,net of impairmentlosses,if any.
The costsand expensesfor explorationactivitieswhich do not result in the discoveryofpetroleum
or mineral depositstiat axecommerciallyproductivoarorecognizedin the statementof
comprehensiveincomeafter the project is abandonedandwhen managementexpectsno further
recovery. Whenths resultsof explorationoostsaredeterminedto be negative,the accumulated
costsarewdtten off. fftlle resultsare positive,the defenedexplorationcostsshall be capitalized
and amortizedbasedon the unit ofproduction methodfrom the startof oommercialoperations.
Provisions
Provisionsarerecognizedwhon the Companyhasa presentobligation(legal or oonstnrctive)asa
result ofa pastevent,it is probablethat an outflow of resouroesembodyingeconomicbenefitswill
be requiredto settlethe obligation and a roliableestimatecan be madeofthe amountofthe
obligation. If the effect of the time value of moneyis material,provisionsaremadeby
discountingthe expectedfuture cashflows at a pre-taxamounttllat reflectJourent maxket
-14-
assessments
ofthe time value of moneyand,when appropriate,the risks specifioto the liability.
Wlere discountingis used,the increasein the provision dueto the passageof time is recognized
as interestexpgnse.
Wherethe Companyexpectsa provisionto be reimbursed,the reimbursementis recognizedas a
soparatoasset,but only when receip of reimbursementis virtually certain, The oxpenserelating
to any provision is presentodin the statementof comprehensiveincome,net of any
reimburselnent.
Capital Stockand Additional Paid-inCanital
The Companyhasissuedoapitalstockthat is classifiodasequity. Incrementalcostsdirectly
attibutable to the issueof new capital stockor optionsare shownin equity asa deduction,net of
tax, from the proceeds.Amount of contributionin excessof par value is accountedfor asan
additionalpaid-in capital.
Wherethe Companypurchasesthe Company'scapitalstock(treasuryshares),the consideration
paid, including any directly attibutable incrementalcosts(net of applicabletaxos)is deducted
from equity attributableto the Company'sstockholdersuntil the sharesme cancelledor reissued.
Wherc suchsharesare subsequentlyreissued,any considerationreceive4 net of any directly
athibutableincrementaltransactioncostsandthe relatedtax effects,is includedin equity
attributableto the Company'sstockholders.
RetainedEamings
The amountincludedin retainedeamingsinoludesprofit attributableto the Company's
stockholdorsand roducedby dividends. Dividendsarerocognizedas a liability anddeductedfrom
equity whenthey aredeclared. Interim dividendsaredeductedfrom equity whenthey arepaid.
Retainedeamingsare appropriatedfor the cost oftreasury sharesacquired. Whenthe
appropriationis no longerneede4 it is revorsed,Dividendsfor the year that areapprovedafter the
balancesheetdatearedealtwith asan eventafterthe balanoeshoetdate. Retainedearningsmay
also includeeffect of changesin accountingpolicy asmay be requiredby the standard's
transitionalprovisions.
Eamings(Loss)Per Share
Basiceamings(loss)per shareis computedbasedon the weightedaveragenumberof shares
outstandingandsubscribedfor eachrespectiveperiodwith retroactiveadjustnentsfor stock
dividendsdoolaredifany, Whensharesaredilutive, the unexercisedportion ofstock optionsis
includedasstockequivalentsin computingdiluted earningsper share.
Diluted eamings(loss)per shareamountsare calculatedby dividing the net profit (loss)by the
weightedaveragsnumberofordinary sharesoutstanding,adjustedfor any stockdividends
declaredduring the year plus weightedaveragenumberof ordinarysharesthat would be issuedon
the oonversionof all the dilutive ordinaw sharesinto ordinarvsharEs,
SeementReoortine
An operatingsep.ent is a componentof an entity that: (a) engagesin businessactivitiesfrom
which it may eam rwenues and incur expenses(including revenuesand expensesrelatingto
tansaotionswith othercomponentsof tlle sameentity); (b) whoseoporatingresultsareregularly
reviewedby the entity's chiefoperatingdecisionmakerto makedecisionsaboutresouroesto be
allooatedto the segnrentand assessits performance,and (c) for whioh discretefinancial
informationis available.
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-
The Company'ssegmentsparlainto its investmentsin associates.This segnent is carriedby
North Triangle DepotCommercialCorporation(NTDCC) and United ParagonMining
Corporation(UPMC), the Company'sassociates.The summarizedfinancial andotherrelevant
information ofthe Company'sassociatosaredisclosedin Notes 8 and 24 to tho financial
statements.
IncomeTaxes
Current Income Tm
Curront inoometax assetsand liabilities for the currentand prior periodsaremeasuredat the
amountexpestedto be recoveredfrom or paid to the tax authority. The tax ratesandtax laws used
to computethe amountarethosethat havebeenenactedor substantivelyenactedasat tho balance
sheetdate.
DeferredIncome Tm
Deferredincometax is providod,usingthe balancesheetliability method,on all temporary
differencesat the balancesheetdatebetweenthe tax bas€sofassetsand liabilities and th€ir
carrying amountsfor financial reportingpurposes.
Deferredincometax liabilities arerocognizedfor all taxabletemporarydifferences. Deferred
inoometax assetsarerecognizedfor all deductibletomporarydifferencesto tls oxtentthat it is
probablethat taxableprofit will be availableagainstwhich the deductibletemporarydifferences
canbo utilized.
The c.arryingamountof deferredincometax assetsis reviewedat oachbalancesheetdateand
reducedto the extentthat it is no longerprobablethat sufficient t xable profit will be availableto
allow all or part ofthe deferredincometax assetsto b€ utilized.
Deferredincometax assetsand liabilities aremeasuredat tho tax ratethat is expectedto apply to
the period when the assetis realizedor the liability is settled,basedon tax rates(andtax laws)that
havebeenenactedor substantivelyenactedat the balancesheetdate.
RetirementBenefit Plan
The Companyhasa definedretirementbenefit plan which requirescontributionsto be madeto a
soparatelyadministeredfund. The costofproviding benefitsunderthe definedbenefit plan is
determinedusing the projectedunit credit actuarialvaluationmethod. Actuarial gainsand losses
arerecognizedas incomeor expensewhenthe net curnulativeunrecognizedactuarialgainsand
lossesfor the planat the endof thepreviousreportingyearoxceeded10%ofthe higherofthe
definedbonefit obligation andthe fair value of plan assetsat t}tat date. Thesegainsor lossesate
recogrized over the expectedaverageremainingworking lives ofthe employeesparticipatingin
the plan.
The pastsorvioeoost is rocognizedas an oxpenseon a straight-linobasisover the averageperiod
until the benefitsbecomevested. Ifthe benefitsarc alreadyvestedimmediatelyfollowing the
introductionof, or changesto, a pensionplan, pastservicecost is recognizedimmediately.
The definedbenefit liability (asset)is the aggregateofthe prosentvalue ofthe definedbenefit
obligation and actuarialgainsand lossesnot reoognizedreducedby pastservisecost not yet
recognizedand the fair value ofplan assetsout of which tho obligationsareto be settloddireotly.
If suohaggregateis negative,the assetis measuredst the lorver of suchaggrogateor tle aggregate
of cumulativeunrecognizednet actuariallossesandpastservioecostand the presentvalue of any
economicbenefitsavailablein the form of refundsfrom the plan or reductionsin the future
conhibutionsto tlle plan.
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-16-
If the assetis measuredat the aggregateof cumulativeunrecognizednet aotuariallossesandpast
servicecost andthe presentvalue ofany economicbenefitsavailablein the form ofrefunds from
the plan or reductionsin the future contributionsto the plan, net actuariallossesof the curent
period andpast servicecost ofthe currentperiod arerecognizedimmediatelyto the extentthat
they exceedany reductionin the presentvalue ofthose economiobenefits. Ifthere is no changeor
an increasein the presentvalue ofthe economicbenefits,the entirenst actuariallossesofthe
currentperiod and pastservicecost ofthe currentperiod arerecogsizodimmedietely. Similarly,
net actuarialgains of the currontperiod afterthe deductionof pastservicecost of the cun€nt
period exceedingany increasein the presentvalue of the economiobonefitsavailablein the form
of rofundsfrom the plan or reductionsin the future contributionsto the plan. If thereis no change
or a decreasein the presentvalue ofthe economicbenefits,tlre entirenot aotuarialgainsof the
currentperiod aftor the deductionofpast serviceoostofthe currentperiod arerecognized
immediately.
OperatineLeases
Operatingleasesrepresentthoseleasesunderwhich substantiallyall risks andrewardsof
ownershipoftho leasedassetsremainwith the lessors.Leasepaymentsunderan operatinglease
arerecognizedas an expensein the statementof comprehensiveincomeon a straightJinebasis
over the leaseterm.
Foreisl CurrencvTransactions
Transaotionsin foreign curencies axeinitially recordedusing the exchangemte at the dateofthe
hansaEtion.Monetaryassetsand liabilities denominatedin foreign currenciesarerestatedusing
the rato ofexohangeat the balancesheetdate. Exchangegainsand lossesarisingfrom foroign
currencytransactionsand kanslationsofforeign cunency denominatedmonetaryassetsand
liabilities are creditedto or chargedagainstcurrentoperations.Nonmonetaryitemsthat are
msasuredin termsofhistorical cost in a foreign currencyaretranslatedusingthe exchangeratesas
at the dateof the initial transactions.
Continqencies
Contingentliabilities are not recognizedin the financial statern€nts.Thesearo disclosedin the
notesto the financial statementsunlessthe possibility ofan outflow of resourcesembodying
economicbenefitsis remote. Contingentassetsarenot recognizedin the financial statem€n$but
disclosedwhen an inflow of economicbenefitsis probable,
EventsAfter the BalanceSheetDate
Postyear-endeventsthat provideadditionalinformationaboutthe Company'sposition at the
balancesheetdate(adjustingevents)arerofloctedin the financial statements.Postyear-end
eventsthat axenot adjustingeventsare disclosedin the notesto financial statementswhen
material.
3. SignificantAccountingJudgmentsand f,stimates
to
The Company'sfinancial statementspreparedin accordancewith PFRSrequiremanagement
makejudgmentsand estimatesthat affect amountsreportedin the fnancial statementsandrelated
notes. Thejudgrnentsand estimatesusedin tlre financial statementsarebasedupon
management'sevaluationof relevantfacts and circumstancesasof the dateofthe Company's
finanoial statomsnts.Actual rcsultscould differ from suchestimates.
Judgrnentsand estimatesareoontinuallyevaluatedandarebasedon historical experiencesand
other factots, including expectationsof future eventsthat axebelievedto be reasonableundertho
circumstances.
Judprents
Detemining Functional Cunency
Basedon the economissubstanceofthe undedyingoircumstances
relevantto the Company,the
fimctional ourrencyof the Companyhasbeendeterminedto be the F. The P is the currencyof the
primary economicenvironrnentin which the Companyoperates.
DeterminingClassifieationof Leases
The Companyhasent€redinto variousleaseagreem€ntsaslessee.On certainleasecommitnents,
the Companyhasdeterminedthat the lessorretainsall significant risks and revr'ardsof ownership
ofthose properties. Theseleaseagreementsare accountedfor as operatingleases(seeNote l7).
The Company'sfinancial assetsand financial liabilities aredisclosedin Note 22 to the financial
statements.
Detemin@ Wether Signficant Influence Existsfor Purposesof Applying PAS 28,Invesfinentin
Associates
The Companyevaluatesvariousfactorsin determiningwhethersignificant influenceexists.
Under PAS 28, thereis a presumptionthat if ownershipis below 20%, significant influenoedoos
not exist unlessotherwisesupported.Among the faotorsbeing consideredby managementin the
in
assessment
are,degreeofrepresentationin the BOD ofthe investee,reprosentations
managementcommitteesofthe investee,corporategovernancearrangements,
and powgrto veto
significant operatingand frnancialdecisions.
Underthe exeroiseof this judgmen! the Companyclassifiodits 15.79%investrnentin NTDCC as
an.d
an inveshnentin associate.The carryingvalueofthis investne.nt
is F403,127,978
(seeNote 8).
F413,009,968
asof Deoomber
31, 2010and2009,respectively
The Companyhasinvestmentin UPMC whereownershipis 25.62%. This is classifiedasan
investmentin associate.The carryingvalue ofthis invsstmentis P648,582,444and*644,415,884
asof December3 1, 20I 0 and2009,respectively(seeNote 8).
Determining WhetherInvestmentuin AssociatesQnlify as OperatingSegments
for Pwposesof
Applying PFRS8
The Companyexercisesjudgment in determiningwhetherinvestnentJin associatesqualift as
operatingsegmentsasprescribedby PFRS8 althoughthe Companydoesnot control the investees.
Managementconsidersthe following factorsin its assessment:
review of operatingresultsand
performanceof an equity methodinvesteefor purposesof makingresourceallocations,evaluating
finanoial performanceor evaluatingwhetherto retainthe investor-investeerelationship. Basedon
judgment,the Companyconsidersits investmentsin IIPMC andNTDCC as
management
operatingsegmonts,The carrying value ofthe Company'sinvestmentsin associatesamountedto
(seeNote8).
FI,051,710,422
andF1,057,485,852
31,2010and2009,respectively
asof December
Estimates
EstimatingImpairmentof Receivables
The Companyassesses
at eachreportingdatewhetherthere is any objootiveovidencetlrat
receivablesare impaired. To determinewhotherthereis objectiveevidenceof impairmenqthe
Companyoonsidersfactorssuchasthe probability of insolvencyor signifioantfinancial
difFtcultiesof the affiliated companiesanddefault or significant delay in pa)'ments.Wherethere
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is objectiveevidenceof impairment,the amountandtiming of future cashflows areestimated
basedon ageand statusofthe financial asset,aswell ason historical lossexperienoe.Allowance
for impairmentloss is providedwhon managoment
beliovesthat the rec€ivablebalancecannotbe
collectedor realizedafter exhaustingall efforts andcoursesofaction.
As of Deoombor31, 2010and2009,no allowancefor impairmentlosseson receivables
was
recognizedby the Company.The receivables
and?696,481,904
asof
arc caniedatP277,946,757
December3 I , 20I 0 and 2009,respectively(seeNote 6).
EstimatingImpairmentof AFS Equity Investments
The Companyteats AFS equity investnentsas impairedwhen therehasbeena signifioantor
prolongoddoolinein fair value below its cost. This determinationof what is significantor
prolongedrequiresjudgnent. The Companytreats"significant" generallyas20% or moreof t}re
original oostofthe investne.nt,and "prolonged"asgxeaterthan 12 months. In makingthis
judgment,t}te Companyevaluatesamongother factors,the normal volatility ofquoted prices,
evidenceof deteriorationin the financial bealthofthe investee,industryor sectorperformance,
chaogesin t€chnologyand economicenvironment,For AFS investnentscarriodat oost,the
Companyestimatesthe expoctedfuture cashflows from the investnent andcalculatesthe amormt
of impairmentasthe differencebetweenthe presentvalue of expectedftturo oashflows from the
investrnentand its acquisitionoostandrecognizesths amountin the statementof comprehensive
income.
3 1,2010and
AFS invostnontsamourited
to F3,033,803,476
and?I,108,558,736 asof Decernber
in 2010and
2009,respectively.Thereareno impairmentlosseson AFS investments
recognized
2009(seeNote 7).
EstimatingFair ValuesofFinancial Assetsand Financial Liabilities
Wherethe fair valuesoffinancial assetsand liabilities rooordedin the balancesheetscannotbe
derivedfrom active markets,they are determinedusing generallyacceptedmarketvaluation
models. The inputs to thesomodelsaretakenfrom observablemarkets,wherepossiblebut where
this is not feasiblg estimatesareusedin establishingfair values. Theseestimatesmay include
considerationsof liquidity, volatility and correlation. Certainfinancial assetsand liabilities were
initially reoordodat its fair value (seeNote 22).
Estiinating Impairmentof Property at d Equipment
The Companyassesses
impairmenton propertyand equipmentand otler nonourrentassets
whenevereventsor ohangosin circumstancesindicatethat the carrying amountofan assetmay
not be recoverable.The factorsthat the Companyconsidersimportantwhich could trigger an
impairmentreview inoludethe following:
r
o
.
Sienificant underperformance
relativeto expectedhistorioalor projectedftture operating
fesults;
Significant changesin the mannerofuse ofthe aoquiredassetsortle statery for overall
business;and
Significant negativeindustrTor economictrends,
An impairmentloss is recognizodwheneverthe carryingamountofan assetexceedsits
recoverableamount. The recoverableamountis the higher ofan asset'snet selling price andvalue
in use. The net selling price is the amountobtainablefrom the saleof an assetin an arm's length
transactionwhile value in useis the presentvalue of estimatedfuture cashflows expectedto arise
from the continuinquseofan assetandfrom its disnosalat the end of its useful life. Recoverable
- 19amountsareastimatedfor individual assetsor, if it is not possible,for the cash-genorating
unit to
which the assetbelongs. For impairmentlosson specificassets,th€ rcooverableamount
representsthe net selling price.
h determiningthe presentvalue of estimatedfuture cashflows expectedto be generatedfrom
the continueduseof the assets,the Companyis requiredto makeostimatesand assumptionsthat
can materially affect the finarcial statements.
No impairmentlosseswerereoognized
in 2010and2009for propertyandequipment.As of
December3 1, 20I 0 and2009,the net book valuesof propefy and equipmentamountedto
Fl8,047,144andF19,465,931,
(seeNote9).
respootivoly
EstimatingImpairmentof Deferred Exploration Costs
The Companyassesses
impairmenlon deferredexplorationcostswhen facts and ciroumstanoes
suggestthat the carrying amountofthe assetmay exceedits recoverableamount. Until the
Companyhassufficient datato detemine technioalfeasibility and commeroialviability, defened
explorationcostsneednot be assessed
for impairme,nt.Factsand cicumstancesthat would
requirean impairmentassessment
as setforth ifi PFF.S6, Erplorationfor and Evalaationof
Mineral Resources,areas follows:
o
o
r
r
The period for which the Companyhasthe right to explorein the specific areahasexpired
during the period or will oxpire in the nearfuture, and is not expectedto be renewed;
Substantiveexpenditureon further explorationfor and evaluationof mineralresourcesin the
specificareais neitherbudgeted
nor planned;
Explorationfor andevaluationofmineral resourcesin the specific areahavenot led to the
discoveryof commerciallyviable quantitiesof mineralresourcesandthe ontity hasdecidedto
discontinuesuchactivities in the specific areq and
Suffioiontdataexist to indioatothat, althougha developmentin the specific areais likely to
proceed,the carryingamountof the explorationand evaluationassetis unlikely to be
recoveredin full from successfuldevelopmentor by sale.
The carryingvalueofdefenedexplorationcostsamountedto Fl56,519,409andF155,988,874
as
of Dooombor3 I , 20I 0 and2009,respectively.As of Decembor3 I , 20I 0 and2009,no allowanoo
for impairmentlosseson deferredexplorationcostswasrecognizedby the Company(seenote 10).
Estimating UsefuILives of Propefiy @d Equipment
The Companyestimatesthe useful livos ofproperly and equipmentbasedon the period over
which the assetsare expectedto be availablefor uso. The estimateduseful lives of propertyand
equipmentarereviewedperiodically and are updatedif expoctationsdiffer from previous
estimatesdueto physicalwear and tear,technicalor commercialobsolescsnce
and legal or other
limits on the useof the assets.In addition"estimationof the useful lives is basedon tho oollective
assessment
of intemal technicalevaluationand experiencewith similar assets.It is possiblg
however,tbat future rezultsof operationscould be materially affectedby changesin estimates
broughtaboutby ohangesin factorsmentionedabove. The amountsand timing of recorded
expensesfor any period would be affectedby changosin thesefactorsand circumstances.
As of December3 I , 2010 and 2009,the net book valuosof propertyand equipmentamountedto
Fi8,047,144andF19"465,931,
(seeNote 9). The esthnated
respectively
usofullivesaredisclosed
in Note 2 to the financial statements.
|iltiltilfi
lilltiltililillllillilfl
|mililffi
-20 -
EstimatingRealizability of DeferredIncomeTaxAssets
The Companyreviewsthecarryingamountsof defenedinoometax assetsat eachbalancebheei
dateandreducesthe amountsto theextentthatit is no longerprobablethatsufficienttaxable
profit will bo availableto allow all or partofthe deferredincometax assets
to be utilized.
profrtto allow all
generate
taxable
However,thereis no assurance
the
can
sufficient
that Company
part
or
of its deferredinoometax ass€ts
to be utilized,
asof
andF20,170,329
TheCompanyhasdeferredincometax assets
amountingto Fl 1,881,759
(seeNote 20).
Deoember
31, 2010and2009,respectively
Estimating RetirernentBenefitsExpense
on the
The determination
oftle Company'sobligationandcostfor retirementis dependent
These
in calculatingsuchamounts,
selectionofcertainassumptions
usedby actuaries
Actualresultsthatdiffer from
assumptions
aredescribedin Note l9 to the financialstatoments.
the Company'sassumptionsareaccumulatedand amodizedover future periodsandtherefore,
generallyaffectthe Company'srecognized
expenseandrecordedobligarionin suohfuture
andappropriate,
periods.While management
arereasonable
believesthatits assumptions
may
significantdifferencesin actualexperience
or signifioantchangesin theassumptions
materiallyaffeotthe Company'sretirementobligations.
to
As of December31, 2010and2009,the retirementbenefrtplanobligation(asset)amounted
for the yearsended
(F99,096)andF4,467,909,
respectively.Net retirementbenefitexpense
F2,389,463andP2,273,300,
to F3,053,129,
December31, 2010,2009and2008amounted
(seeNote l9).
respectively
4. Cashand CashEquivalents
Cashon handand with banks
deposits
short-term
2009
2010
P64,383,119
P3,708,565
15,204,923
161,420,448
Cashwith bankseam interestat tleir respectivebank depositrates. Short-termdepositsaremade
ofthe
on the immediatecashrequiremonts
for varyingperiodsofup to threemonthsdepending
Companyand earninterestat the respectiveshort-termdepositrates.
compdsethe following
of cashflows,cashandcashequivalonts
For the purposeofthe statement
asat Januaxy1:
Cashon handandwith banks
Short-term
deposits
2009
F4,919,358 F15,987,341
15,000,000
6,156,052
F19,919,3s8 P22,1$;tn
ilillllillillll
ll||
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illI
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5. FinancialAssetsat FVPL
This accountconsistsof investmentsin sharesof stockof the following companies:
2010
ShangProperties,Inc. (SPf
Vulcan Industrial and Mining Corporation(VIMC)
The Philodrill Corporation(TPC)
Philippine SevenCorporation
Manila Water Company
Oriental Pettoleum
2009
P,{51tr47,514 F376,896,506
9922,500
4,838!300
4,5t5,730
31,984,697
4,650,000
I
sharesof vIMC for F0.52per shareandsoldall of
In 2010,the companypurchased12,250,000
its sharesof stocli in ithilippine SevenCorporation,Manila Wat€r Comp&nyand Oriental
Petroleum.
Gains(losses)on fait value changesof financial assetsat FvPl-recognized in 2010' ZOOfanj .
respectively'Unrealizodgain
2008amountedto Pg3,183,O42,izlo,ll+Jqo,and(F293,737,133),
and
to F281,509'353
on fair valuechangesoffinancialassetsat FVPL amounted
respectively'
2009,
31,2010and
aso1Decembor
F203,412,074
6. Receivables
Due from telatedparties(seeNote 14)
Others
F166,329,686
2009
P652,026,615
r 11.617
455
*277.946J57
481
Thefollowingaret}resignificanttransactionsenteredintobytheCompanyinrelationtoits
receivables:
($l l'500'000)!o ACIvqC' a
a. On July 9,2009,the Companyextendoda loanof F531,300'000
365 daysafterJuly 9' .
collectible
is
loan
publiciyJisted entity undercommoncontrol. The
in arrears.Basedon the
serni-annually
).009and bearsinterestof l5oi per aanum,collectiblo
repaymentof loan
demand
early
termsof the loan agreoment,the Companyhasthe option to
and accruedinterest180daysafter July 9,20A9.
Inaddition,theCompanyhastheoptiontoeffectpaymentofprincipalandinteresttlrrough
any one or combinationof the following:
1. Cashpaymontequalto amountof loan and interest'either in $ or P or a combination
of both currencies;
2. Dolivery of oommonsharcsof Aquatlas,Inc' (AI), a subsidiaryof ACMDC' at a
conversionprice which shall be mutually agreedupon by the partieq and/or
3. Delivery ofiommon sharesof ACMDC at a oonversionprice of F10 per share'
to
The embeddedoquity call option was accountedfor separatelysinceit is not closelyrelated
and
F
to
amounted
the host debtcnnfuact'Derivative assetrelatingto the option
flilll
tffirililxlfllilhltillil
-zz-
gainon dsrivativeasset
?7g,7gg,174,in2010and2009,respectively.The mark-to-market
and
tecognizedin the statement
incomeamountedto F307,718,166
of comprehensive
*3 | ,052,472in 20I 0 and2009,respectively.
The net movementin the discountrecognizedon the receivablearising from the bifurcationof
the embeddedequity call option is asfollows:
2010
Balanceat beginningofyear
Discormton receivable
Accretion of discounton receivable(seeNote 18)
"25374p9s
2009
F48,746,701
(25
F2537499s
Accrued interestreceivable,which is presentedas"Others" underthe "Receivables"accormt
asof Deoember
in thebalancesheet,amounted
3 1, 2010
to F 110,723,7
65 andF44,448,250
and2009,respectively.
On December29, 2010,the Companyconvededinto sharosof stockofACMDC the entire
principalof the loanamountingto $11.5million whichthe Companyextendedto ACMDC
pursuantto the Agreement('the Conversion'). The conversionof advancesconsistof
entitlementto 50,450,000
sharesof ACMDC at the priceof F10.00per share.The'fairvalue
in
ACMDC's
of
shareasof December29, 2010is F17.68per share.Additionalinvestrnent
as
of
December
29,
2010
ACMDC, classifiedasAFS investment,
amounted
to F891,964,840
(seeNote 7).
b. On Decernber16,2009,the Companyassignedwithout recoursoits receivablesfrom Europhil
Textiles Co., Inc. (ETCI), an entiry undercommonoontrol, amountingto F277,529,288to
Euonote hofrts Limited (EPL). Suchamountwasconsidoredaspartial paymentof the
outstandingloans from EPL (seeNote 12).
c, The Companyprovidedadvancesto its relatedparties,namely,Alakor Corporation(Alakor)
andNationalBookstore(NBS). As ofDecember31, 2010and2009,theseadvanoes
(seeNote 14).
amountedto P96,885,118
respectively
andF91,869,996
d. In 2009,advancesto Filipinas Enerry Corporation(FEC), a relatedparty, amountingto
F16,908,435
werecollectedin tull.
e. As ofDecombet 31,2010 and2009,the Companyhasadvancesto VIMC amountingto
(seeNote l4).
F2,130,186
are
Therewereno impairedreceivables
asof December31,2010and2009. Thereceivables
assessed
to be colleotibleandin goodstandingasofDecernber31, 2010and2009(seeNote22).
llllilll
lilfr
]ilililrilililffiililt
||]
7. AFS Investments
20to
Quotedshares- at fair value
shaxes- at cost
2009
*2,996,959J40 F1,089,000,000
19.558.736
736
F3,033,803,476P1,108,558,736
QuotedAFS invesunentsrepresentinvestrrentin ACMDC. As disoussedin Note 6, the Company
convertedits advancesto additionalsharesof stockof ACMDC on December29, 2010.
from 11.6'l%in2009to 14.42%n
Aocordingly,the Company'sownershipin ACMDC increased
2010.
P1,161,865,557
asof
to
costofthe AFS investments
amountod
The aggregate
"2,07l,t20,397and
Decernber
31, 2010and2009,respectively.
In 2010,the CompanyadvancedF15,790,000for future subscriptionto Rail Transit and
Development,Inc. andmadeadditionaladvancesto MRT DevelopmentCorporationamountingto
F1,500,000.
Thesoaroinoludedin unquotedshares.
in 2010,2009and2008for the Company'sinvestnontin
No impairmentlosswasrecognized
ACMDC quotedshares,dueto the volatitity of the fair marketvalue of ACMDC's shares.
Movementsin the unrealizedvaluationgain (loss)on AFS investmentsreoognizedasa separate
componontof equityareasfollows:
Balancesat beginningofyear
Changesin fair value of AFS
invostments
Balancesat endof
2009
2008
2010
P491,193,179
(Ps3,306f,21)(F815,606,821)
(1,306,800,000)
weresoldin 2010,2009and2008.
No AFS invesfinents
8. Investments in Associates
2010
Acquisitioncost:
Balancrsat beginningofyear
Redemption*
Balancesat endofvear
Aocumulatedequity in net eamings(losses):
Equity in net eamingsduring the year
received
Divide,nds
F1,068$06,080F1,100,086,080
(31,s80O00) (3t,!!!'999)
f,036'926'080
(11,020t28)
38,199,720
l'068'506'080
(s,630,984)
z,4J |,J LO
*The redemption has no impact on
ilutilililililmiltfl
Iiltffi
ililililfl[]fliltl
'ln
The carryingvaluesof investments
in associates
areasfollows:
Percontage
of
UPMC
NTDCC
25.62
t5.79
2010
2009
?648F82,444 P644,475
413.009
710,422F1.057.485
Theinvesffiontin NTDCCincludes
investrnent
in votingandredeemable
preferred
shares
amounting
to F361,338,276
andP392,918,276
asof Declmber31,2010*a zoos,respeciively.
Thesummarized
financialinformation
oftheassociates
asofandfor thevearsended
December
31,2010and2009areasfollows(inthousands):
{JPMC
Totalassets
Totalliabilities
Revenue
Netloss
2010
P1,112,092
599,015
35,502
2009
?1,112,244
374,332
45,052
NTDCC
Total asseb
Total liabilities
Reyenues
Net income
2010
*907,57E
1,673,805
1,7E2,891
215,916
2009
P7,665,524
5,029,584
1,626,241
87.267
Investment
in UPMC
UPMC'smainbusiness
istheexploration,
development,
exploitation,
recovery
andsaleof gold.
UPMCbecame
anassociate
onAugustl, 2008withtheconversion
of thecompany's
recei;able
fromUPMCto thelatter'scommon
shares.
Investment
in NTDCC
NTDCCownsandoperates
theTriangleNorthof Manila(TriNoma)
commerialcenterwhichis
built adjacentto theMetroRailrransit (MRT)Depot.Thedevelopment
rightsoverthe
8.3-hectare
portionof theMRTDepotwereaoquirldfromMRTDCin 2002.
rilffi
ililtffi
tililril
ililtflililililui
ill
-25 -
9. Property and Equipment
2010
Furniture
Cost:
Balancesat begirning ofYear
Additions
Accumulateddeprecirtion:
Brlancesat beginningof Year
Cost:
atbeginningof Year
Balances
Additions
Balancesat endo
AccumulateddePreciation:
Balancesat beginningofYear
'
P"r*tu9i,,
.,,,=Balancesat €nd of
Net book wlues
r42,091,616 F1,968,186
3,529,683
1.105.211
1234,,779
|475229 F24,53s,031
2E5,138
5,069,r00
?22,091,616 Ft,691,107 P4'.15,229 ?24,257,952
277.079
277.079
1.968,186
2,424,472
946.8?0
190,092
3'561'434
l;19*;?ll
';11'x93
r3;:ffiFl9l:;t;:ff8
J
F190.091
10. Deferred Exploration Costs
Surveyand
Geophy-sical
Tho Companyis a participantin oertainSorvicesContracts(SC) and
of Enerry
Department
the
through
g"pf"*dit 6-u*ts
1c'SnCi wittr ttrePhilippine Govemmont
in
situated
areas
ofthe contract
in-6e), ro. tt "tploraiion, Jevelopmentand exploitation
"
Island'
and
Mindoro
ilorthwest Palawan,Sulu Sea
expendituroobligationsand
The aforemontionedSC and GSEC,which providefor minimum work
operating.agreT:l:^*T:l
by
the drilling of the sp""ified nu-boof wells, arecovered
::l^f"ttr
The deferred
*e pJicifi"tiog ini.r".tr, .ight* ;doutigations of tte participantsto the contract^s..
tte Company;ssharein thejointlY controlledassets:l^T:,-^.*,
explorationcostsrepresent
in
costs_incurred
aforementionodsci and GSECs. Ti," full *oou"ry of the deferredexploration
is
depeudent
areas
conneotionwith th" co*panyt purticipationin thi explorationof the oontract
the successof the
and
areas
oontact
respective
the
from
uponthe discoveryor miner;l ,e'sour"es
future develoomontthereof.
illl]|m
illlffi
ilfifiilllilililllllllllillil
-26 -
The percentageofparticipation andthe balancesof tfte deferredexplorationcostsas of
December31 areasfollows:
Percentageof
SC 6 (Offshore NoflIwest Palawan)
Block A (Octon)
SaddleRookProspect
EsperanzaProspect
SC41 (SuluSea)
SWAN Block (NorthwestPalawan)
SC 39 @usuanga,/Calaui$
. GSEC 86 (NorthwestMalampaya)
GSEC 83 (I.loilh CalamianProject)
SC 53 (OnshoreMindoro)
Palawan"
SC 14CNorthwest
TaraBlock)
11.11
1.68
33.58
5.00
?.50
P54,938,245 F54,407,710
7,325,361
7$25,361
823,1
18
823,1r8
47,376,414
47,376414
15,891,445
10,345,190
s33,923
15,090,930
4,194,783
4,194,783
?156,s19y'09 Fl55,988,874
15,891,445
10"345,190
533,923
15,090,930
SC 6 Block A
In July 2009, the DOE approvedthe extensionof tJIeterm of ServiooContract6, OctonBlock to
be reckonedfrom March l, 2009.The ls-year term extensionshall be for a soriesofthree fiveyeartenns, subjectto compliancowith certainconditions,including the annualsubmissionof
and training fund to the DOE.
work programand budgetandpaymentoftechnical assistance
With the commercialityof the OctonField beingtied up to Phase2 of the Galocdsvelopment,
Vitol GPC undertookthe roprocessingofabout 75 square-kilometersof Octon 3D seismicdatain
conjunctionwith the reprocessingof the adjoiningGaloo3D dataaspart of the GalooPhase2
evaluationactivities. Reprocessingof the 3D datasetwas completedat the end of2009'
kr October2010,Vitol GPCprcsentrdto the consortiumthe resultsof thoir evaluationof tle
reprocesseddatawhich showeda much improvedimageof the Octonreservoir.However,in
November2010,siting the protractedPhase2 work in the Galoc Field, GPC(formerly, Vitol
GPC) declinedto exercisetheir farmin option.
With exit of GPC from thejoint venture,the consortiumsubmitted,andthe DOE approvedthe
201I work programandbudgetfor the Octon block consistingofthe PST}vI/PSDMreprocessing
of some400 square-kilometers
of3D dataat a costofabout USD546,000.
SC 14
Since2008,the Tara Block andthe SC l4D RetentionBlock remainunderevaluationby
Ventur0il as part of their due diligenceleadingto a possiblefarmin. The TaraField is cunently
shut-in.The consortiumcontinuesto await notice ofreadinessto negotiatea farmin from the
potentialfarminee,who had indicatedthat they arenegotiatingto bring in a new partnerin tleir
evaluationof the potentialof tlese argas.
In late 2009, however,VenturOil lost their exclusiveright to farmin over thesearoasdueto tlle
long period to completetheir technicaldue diligonce.VenturOil requesteda further extensionbut
the consortiumsuggestedthat VenturOil mustfirst seoureaccreditationfrom the DOE asa
qualified servicecontractorbeforethey cannegotiatewith tho consortium,
sc 41
drilling of the LumbaLumbal/1A well in 2008,TapOil requested
Followingthe unsuccessful
and
*J',our f,uotua - extensionof th-eterm of SC 14to undertakeseismicdatareprocessing
prospects
inversiorito rectify seismicdataquality issueswhich will help in de-riskingnumerous
and inversion
and in the seleotionofthe next drilling prospect.In July 2009,the roproc.essing
at
sametime,
the
and,
fesults
the
*ork, *"r" oo.pleted, Tap oil then froc""ded to eualuate
promotethe block to potentialfarminees'
docidedto
In August 2010,after failing to securean extensionofthe sc term, the consoltium
re'apply fot a new
suiritter the oontractto tb;DOE. The consortiumparfirershaveagreedto
DOE'
oontractoverthe areaat the openingof a new contractinground by the
sc 53
Pitkin to acquiroits onshore
In April 2009,Pitkin requestodfor the extensionof Sub-PhaseI for
foi SC 53. ln re"ponseto Pitkin's request,the DOE mergedthe fust 2^sub,"Gi"
of
f"". t tew Sub-Phasei (July zoos to Marctr.20i t) with the work comfr'lrtment
pit*.t t""o*.itoent
2 will
Thenew sub-Phase
minimum200 line-tm zo seismicacquisiiionanddrilling of onswell.
likewise
drill 2 wells. The DOE
ilu io, tft. poi"a ftlarch 20I 1 to iuf' iO f Z *itft commitm-entto
to 734,000hestares'
hectares
inrreur"Oitr" On.hore Mindoro Block areafrom 600,000
to commenooin April was
Pitkin's seismicacquisitionprogramwhich was originally scheduled
aremore favorablefor onshoreseismic
deferredto November200g wh;n weatherconditionsgt"a
in lateNovember2009' The survey
ectual recordingstartedat G Sanfose
*q"itiri*.
wascompletedin MaY2010.
end of2010' whilo reprocessingof
Processingof the new land seismicdatawas completedat the
the offshoreseismiodatacontinuesin Singapore'
SWAN Block
their technicaland
^data (ED-C)advisedTPC that
In November2009,Energr DevelopmentCorporation
that TPC had providedEDC to assessthe
i"goigoup, .*tiou" to ildu"t" *t" relenant
in SC 57 andSC 58 blocks'
block'spotentialunatrre.".iiolf ilC;s ptposea purticipation
pll6C-'gC'r 6n"fuationof the merits of the TPC's offer'
For 2010,TpC continueclto wJ for
l l. Short-termLoansPaYable
to Fl25'000'000 and
Short-termloanspayablerepresentsloan obtainedfrom LBP amounting
asoru*"*utt lilZoio*a zooO,
Pl?5,000,000
"tpeclivelr.'.Thel1are,ryry::Y1i:*
ratesperannumwith ratesof
loanswhichmature.urry ,o *oott" *a bearinieresiat variible
rnadeby the
;i009, subjectto monthlyrepricing'Payments
8.25%in 2010anat.zs to s.'a17.
The
in 20io and2009'respectively-'
*a pzs,ooo,ooo
to pso,oib,oOo
companyamountea
'
of thel-BPioan,'*ge fro- heb* aty l6'2011toApril 20'201I
maturities
exDected
lffirflilffi|il|Ilmm
_ 2 8_
Fl6,113,549and
Interestexpense
relatingto the aboveloansamountedio F11,901,771,
(seeNote 18).
respectively
years
P23,068,584
for the
endedDecember31,2010,2009and2008,
12. Long-term Debt .
The long-termdebt ofthe Companypertainsto loansavailedfrom EPL which are summarizedas
follows:
2010
EPL loans,net of discountof F6I ,075,521in 2010
in 2009
andF81,306,819
Lesscurrentportion
Noncurrentportion
2009
1,795
P:t,021,058/55 P2,060,97
196,834,798
467,027'152
F1,554,031J03 F1,!!4Jl!p97
Relatedinterestexpenseamountedto F33,283,076,
P34,157,959,
andFl7,175,528for theyears
(seeNoto l8).
endedDecember31,2010,2009and2008,respectively
whichbears
a. In 2007,EPL grantedthe Companywith a loanamountingto F846,105,746
interestof 1% payablequarterlyand is scheduledto matureon October23, 2012. The
unamortizeddiscounton the said loan amountedto F3'I,360,592andF50,011,93?asof
(seeNote23).
December31, 2009and2008,respectively
On various datesin 2007 and2008,EPL grantodvarious loansto the Companywith maturity
everyyeax.
datesin 2008. Theseloansbearinterestof 10lo
On June27, 2008, EPL andthe Companyentoredinto a loan restruchring andconversion
agreement.All restructuredloansbearinterestof 1.5%per armumand may be prepaid
anytimewithout penalty. Accodingly, theseloanswere reolassifiedas long-termdebt' The
restrustured
loanshavematuritydatesfiom 2010and2011.
The substantialmodificationsof termsofthe existingloanswere acoountodfor asan
extinguishmentofthe original financial liability andrecognitionofa new frnancialliability.
In 2009,the Companyrestatedits prior year financial statementsto rccognizethe gain on detrt
restructuringas a result ofthe derecognitionofa portion of EPL loan andto recognizethe day
I differenceaxisingfrom the off-market interestrateofthe EPL loan (seeNote 23)'
b. In 2009, EPL extendedloansto the Companywith an aggregateamountof F900,900,000
($19,500,000).As mentionedin Note 6 to the financial statements,the Companyassignedits
receivablesfrom ETCI on December16,2009 amountingto F277"529,288to EPL, wherein
fiom EPL andthe remainingF8,940,205
F268,589,082
wasappliedagainstthe advances
rcpresentedinterestand financecharg€sincurrodby tho Company. As a result ofthe
assignment,PN 09-01was issuedby the Companyto EPL on the samedat€for tho remaining
31,2013
to matureon December
($13,686,383),
amountofP632,310,918
whichis scheduled
and is subjectto interestof L5% per annum.
matured.Uponmaturity,the loan
c. In 2010,the originalEPL loanamountingto P169,452,079
was extendedfor anotler 5 years. The new loan bearsinterestof L5% per annum,subjectto
adjustnent upon mutual agreementof both parties(sameasoriginal [oan).
-29 The old loan was derecognizedas it alreadymatued, and a new loan wasrecognizedat its
presentvalue using 10.2i% aseffectiveinterestrato. This resultedifl a Day I differenoeof
u;Zg,036,ZZ1.
AoJretionof Day 1 differencefor 2010amounedto F6,122,111.Theloffeclive
I
interestrate appliedon the originaJloanwas 7'1U/o'
13. AccountsPayableand AccruedExpenses
Accnred interest(se€Notes I 1 and 12)
Deposit
Accrued guaranteefoe (seeNote 14)
Dividendspayable
Others
2009
2010
P94,203,406 F71,844,209
89,419,081
10,293,035
t6,154,146
4,688,303
6,512F55
084
..Deposit"pertainsto advancesreoeivedfrom Metro Pacilic Investrnentscofpofation (MPIC) in
Me$o Rsil
,e-t"io' to'*t" potontialacquisitionby MPIC of the shaxesownedby the Companyin
requiremonts.
olosing
certain
ii*rii ffofainir, fnc. (nmfffD, subjectto the completionof
"Othors" consistmainly of accruedtaxesandvariousaocruedexpenses'amongothers'
14, RelatedPartY Transactions
tho companyhas
In addition to thosementionedin Notes 5, 6, 7 and 8 to the financial statements'
the following relatedparty transactionsin the normal oourseofbusiness:
advanc€s i!:,!:l
a. The Company
-thangrantsinterest-bearingandnoninterest-bearing
:o retareo!::l'gs
pames'
duetrom
amounts
are
the
one year creilit term. The following
with less
(soe
Noto
6):
sheets
balance
in
the
which are includedaspart of tho "Receivables"aicount
2010
Entities undercommoncontrol:
Alakor
NBS
VIMC
2009
P94B85,314 F76,951313
67,020'011
69214,186
2,130,186
2,130,186
in
of P25'314'996
ACMDC,netof discount
-
505'925'005
-
party is
Advancesto Alakor havevarioustermsof not more than one year. lfthe related
15Yo
not ubt" to settleat matrjr.itydate,the outstandingbalanceis subjectedto l7o/ond
intefestper annum.
ll.
to ACMDC for the
On July 9,2009,the CompanyextendedF53i,300,000($11,500,000)
2010'
tho Compatry
futt"t;J*o*ing'""pital tequire-ents (seeNote 6)' On Decembor29'
convertedits aivancesto ACMDC with a oarryittgamountof F504,447,500to 50'450'500
sharesof ACMDC at Fl0'00 per sharein accordancewith "the Conversion"'
l$ll$llll
rillltfr
flffillllNlxlllllllff
-30-
iii. The Companyalsoprovidedadvances
to Alakor andNBS amountingto F96,885,118
and
prior
years,
F91,869,996
the
asofDecember31,2010and2009,respectively.Also, in
Companymadoadvancesto VIMC which is still outstandingas of December3 1, 2010
amountingto F2,130,I86 (seeNote 6).
b. On January1,2002, the Companyenteredinto a GuaranteeAgreementv/ith Alakor to have
the lattor's Chairmanof the BOD asa guarantorofthe Company'slong-termdebt. The
guaranteefee is equivalentto 4oloand 50loper annumof the amountguaranteedwithout
collateraland amountguaranteedwith real estat€or othert)?es of collateral,respectively,
Accruedguarantee
feeamountedto F16,154,146
andF10,293,035
asof December31,2010,
and 2009,respectively(seeNote l3). Guarantoefees,which arerecognizedas part of
"Interest and other financecharges"accountin the statementsof comprehensiveincome,
amountedto P5,861,111,F7,741,667,
in 2010,2009and2008,respectively
andF8,788,470
(seeNote l8).
Compensationofkey managementpersonnelareasfollows:
Short-termemployoebenefits
Postemplo)mentbenefits
2010
P6,949,654
3,789,573
P10,139227
2009
P6,510,290
2,236,005
?8,746,29s
2008
F2,990,718
3,786,527
?6,777,245
15. Equity
of cashdividends
a. On April 12,2010,the Company'sBOD approvedthe declaration
amountingto F34,949,994
ofrecordasof April 30,2010.
at F0.03persharoto stockholders
The cashdividendswerepaidon May 24,2010.
b. On April22,2009, the Company'sBOD approvodthe declarationof cashdividends
amountingto P174,749,973at F0.I 5 per shareto stockholdersof reoordas of May 8, 2009.
The cashdividendswerepaid on M ay 29, 2009.
c. On September19,2008,the stockholdersapprovedthe declarationofa 10%stookdividendto
stockholders
ofrecord asof October31,2008. Thestockdividendsamountingto
F106,000,000
wereissuedin Novsmber2008.
d. On April25, 2008,theBOD approvedthe declaration
ofa cashdividondamountingto
F53,037,500
at F0.05pershareto stockholders
of recordasof May 30, 2008. Thecash
dividendswerepaidon June25, 2008.
e. Treasuryshares,totalling 13 million commonsharesin 2008 arc statodat acquisitioncost, In
2007,the BOD approvedto reacquire. The retainedearningsarerestrictedin the amountof
?27,566,07
5 asofDecember31, 2010and2009,representing
the costof sharesheldin
treasury.
ilffi
mtiluflilililililili
- 3 1-
f
The movementsin capital stock ofthe Companyare as follows:
2008
20t0
lssued and outstanding:
Balances at beginning of year
Stock dividends
Issuance
Balances
at endof year
Subsuibed:
Balances at begiuring ofyear
Issuance
Balances
at endofyear
receivable:
Subscriptions
Balanccsat
and end of
r,r70,6rt,e7o
t,ffl:3s:313
r,r7o,6rr,e7o
5.000
I,17o,616mO
7,38&030
(s,000)
7,383,030
l,170,6ll,970
1,170,611,970
7,388,030
7,388,030
7,388,030
7,388,030
The par value ofthe share$ofstock is P l.
16. Other Revenues
20r0
Management fe€s
Dividend income
2009
P67,687,s00 P91,059,2t2
2008
F89,523,503
l3.1
The Companysigned an agreementwith EPL wherebyit providesgeneraladministrdion and risk
managernentservicesto the latter for the efficient managementand supervisionofEPL's
Philippine investrnentop€rations. In considerationfor such services,the Companyis paid a
monthly managementfe€ for a p€riod of 3.5 yearsfrom July 2007 to Decernber2010, subjec'tto
renewalthereafteras may be mutually agre€dupon by the parties.
Dividend income pertainsto dividendsreceivedAom SPI, TPC and Manila Water Company
(seeNote 5).
17.Generaland Administrativc Expetrsos
2010
Pension{seeNote I 9)
R€nt
Outsideservices
Depr€ciation(seeNote 9)
Communicati
on, light and water
Insurance
Repairsand maintenance
Ofrce supplies
Representalion
andentertainment
Tmnsportationandtravel
Taxesandlicenses
3,053,129
2J,72,198
r,949,978
r552,698
r,2rs,549
r97t,754
51s,623
382,690
28r,572
200,845
823,Xrl
2009
2,389,463
2,048,622
960,720
r,s07,666
1,251,742
1,0s8,303
202242
454,974
213,156
332,393
862,303
2008
2,2?33Ao
2,044540
869983
1,476,694
1,30?,820
r,r34Jrs
462,49r
656,678
840'973
sn235
7,105,694
Miscellaneousexpensesconsistmainly of mernbershipfeesand gasaudoil expenses,among
others.
18. Interest Income,InterestExpenseand Other FinanceCharges
Interestincomeconsistofi
2009
2010
Lrterestincomeon bankdepositsand
receivables
Aooretionof discounton receivable
(seeNote 6)
2008
F60,504,161 P68,140,181
*97441,758
23,371,706
25374995
P122,816,753 F83,875,867 F68,140,181
Interostand other financecharqesconsistof:
2008
2010
Amortization of discounton long-term
debt (s€eNotes 12 and23)
Interestexpense(seeNotes1l and 12)
Guarantee
fee(seeNotes12, 13and 14)
Bankcharsesandotlers
P48,267,526
44,459,435
5,861,110
12,147
p98,600,218
P39,513,764 P26,670,1s3
50,271,508 40,244,t12
8,788,470
7,'t41,667
105,288
720,092
P97,632,227 P76,422,827
19. PensionBenefitsCosts
The Companyhasa funded,noncontributorydefinedponsionplan coveringall its regular
employees.The retirementbenefit plan obligation is determinedusing the projectedunit credit
method. Therewas no plan of terminationor curtailmontfor the yearsendedDeoember3I , 2010,
2009and2008.
The following tablessummarizethe fundedstatusandthe amountsrecognizedin the balanoo
shoets,the componentsofnet retirementbenefit expenserecognizedin the statementsof
comprehensiveincomeand the changesin tlle presontvalue of the definedbenofit obligationand
the fair valueofplan assets,
RetirementBenefitPlan Obligation (Asset)
Presentvalue of definedbenefit oblieation
Fair value of plan assets
Fundodstatus
Unrecogrrizedactuarialgains
Retiromentbenefitplanoblisation(asset
2010
F44,010,909
52,793?24
(8,782Jrt
8,683'219
2009
F38,548,974
43,021,990
(4,473,016)
8,940,925
P4-467
-33Components
of NetRetirement
Benelithcpense
Curr€ntservicocost
Interestcost
Expectedretum on plan assets
gainrecognized
Netactuarial
Netretirement
benefitexpense
actuatreturnonptanassets
2009
2010
F1,568,4E9 ?1,424,604
3,251,024
3,893,446
(2,151,100) (1"85s,1l6)
(431,049)
(257,700
F3,053,129 ?2,389,463
2008
F1,581,691
2,765,039
(2,073,430)
?2,273,300
PZ,
P
in theBalanceSheets
Mo'vements
in theRetiretnent
BenefitPlan Obligation(Asset)Recognized
2010
Net retirementbenefit exDense
Contributionspaid
Balancesat e'rdof year
*4,4fi,9A9
3,0$,129
(7,620,134)
G99,09O
2009
F9,698,580
2,389,463
(7,620,134)
P4,467,909
Changesin the PresentValueof the Defned BenefitObligation
2010
P38,548,974
1,568y'89
3,893,446
Current sorvicecost
Interestcost
Actuariallosses
Balancesat endofyear
P44,010,909
Fi1,471,674
1,424,604
3,251,024
2,401,672
F38,548,974
Changesin the Fair Yalueof PIan Assets
2009
2010
P43,021,990 ?33,292,255
7,620,134
7,620,134
1,855,116
2,15r,1fi)
_
254,485
Contributionspaid
Expectedreturn on plan assets
Actuarial gains
Balancesat endofyear
*52,793,224
F43,021,990
The major categoriesof plan assetsasa peraentageofthe fair valus oftotal plan assetsareas
follows:
2010
Governmentsecurities
Others
91.0o/o
3,0"/o
2009
97.0%
3.0%
2008
97.0%
3.0%
tffi1ililil]ffi
ltililtfrl]|flilti
-J+-
The principal assumptionsusedto determineretirementbenefit plan obligation aroasfollows:
2008
1033%
5.00%
5.00%
2009
10.10%
5.00%
5.00%
2010
10.r0%
5.00%
5.00V"
Discountrates
Expoctedrofurn on plan assets
Wageand salaryincreases
Averageexpectedfuture service
yearsof activeplan members
t 7. 5
r6.5
18.5
Amounts for the current and previous four years are as follows:
2010
2009
2006
2007
2008
Present
valueofdefinedbcnefit
+44,010,909?38,548,914?31,411,674F38,350,057t30,183,323
obligation
Fair valueof plan assets
52,793,224 43,021,990 33,292,255 15,151,443 1,48S,049
(s,7s2,3rt (4,473,016) (1,820,581) 23,198,614 28,695,284
Untunded(funded)status
Experisnccadjustrnentson plan
2,40t,672 (1r,225,113) 4,034,068
liabilities
294,048
254,484
Experienceadjushnentson plan asscts
20. IncomeTaxes
The provision for currentincometax in 2010,2009 and 2008representsthe regularcorporate
incometax.
The components
ofthe Company'snet deferredincometax liabilitiesareasfollows:
2009
2010
Defened incometax assets:
Unamortizedpastservicecost
Nondeductibleaccruedexpenses
Unamortizeddiscountof receivable
Retirementbenefit
*8,173A41
3,708F1E
1,340"373
Lt,881,759
Deferredincometax liabilities:
Unamortizeddiscountof long-tem debt
Gain on debtrestructuring
Unrealizedforeign exchangegains
Retirementbenefit plan asset
Unrealizedmark-to-marketgainson derivative
assets
F7,509,139
3,708,318
7,612,499
9,336,650
8,986,007
8,639,704
29,729
-
20,170,329
1l,509982
12,882,064
7,840,275
23,939,7s2
I
Pls,r10331
F36,001,744
-35-
The reconciliationof incometax computedat statutorytax rat€sto provisionfor incometax
follows:
2009
2010
2008
Incomotax at statutoryratesof
30% in 20i0 and2009and
35%in 2008
P169444,522 w6,8r3,752 (F74,090,760)
Additions to (reductionsin)
incometax resultingfrom:
63,569
235,438
Nondeductibleinterestexpense
il4,195
Mark-to-marketchangesin
derivativeassetrelatingto
(116,255302)
receivableconvertedto equity
Fair valuechanges
of financiaassetsat FVPL
(28,134,913) (63,232,422) 102,807,997
Equity in net losses(eamings)
(671,198) 1,970,844
(11,459816)
ofassociates
Dividendincomesubjectto zero(3,9s3,067) (s,292,294)
(5,904,55O
rated incometax
(3,470,020)
Incomesubjectedto tmnsfertax
2,369,359
Effects ofchange in tax rates
hterest incomesubjectedto
551.140
final tax and others
*4,041,045
P28,641.,163 P25p48,313
In accordancewitl RA No, 9337,ths statutoryincometax rate andunallowableint€restexpe,nse
rate axereducedfrom 35o/oto 30Voand42o/oto 33Yo,respectively,beginningJanuaryI, 2009.
2l. Basicand Diluted EPS
Basic and diluted eamings(loss)per shareare computedasfollows:
Not inoomo(loss) for the year
Divided by weightedaverage
numberofcommonshares
Basic and diluted earnings(loss)
per sttare
2008
2009
2010
?560,774,028 P294,071,r43(F236,936,198)
1,165,000'000 1,165,000,000 1,166,508,333
O.lg
P0.25
(F0.20)
The resultingper shareamountsarethe samefor both basicand diluted earnings(loss)per sharein
2010,2009 and 2008 sincethe Companydoesnot haveany debt or equity securitiesthat will
potentially oausean eamings(loss) per sharedilution.
22. FinancialRisk Managementand Capital Management
The main purposeof the Company'sfinancial liabilities is to fmancethe Company'soperations
and capital expenditures.The Companyhasvariousfmancial assetssuchascashandcash
equivalents,receivablesandfinancial assetsat FVPL and AFS investnentswhich arisedirectly
from its ooerations.
tlutffi
liltfl
lilrililtffi
ilill|til
nil
|ilr
- 3 6-
The BOD hasoverall responsibilityfor the establishmentand oversightof the Compafly'srisk
managementframework. The Company'srisk managementpolicies areestablishedto identifu
and managethe Company'sexposureto financial risks, to set appropriatetransactionlimits and
controls,and to monitor andassessrisks andcomplianoeto internal control policies. Risk
managementpolicies and struoturearoreviewodregularlyto reflect changesin marketconditions
andthe Company'sactivities.
The Companyhasexposureto credit risk, liquidity rislq interestratedslq foreign currencyrisk
and equity price risk from the useof its finansial inshments. The Boardreviewsand approves
below.
the policiesfor managingeachoftheserisksandtheyaresummarized
Credit Risk
Credit risk is the risk of financial lossto the Companyifa customeror oounterpadyto a financial
instrumentfails to meetits contractualobligations.Credit risk arisesprincipally from the
Company'scashwith ba*s, shortterm depositsandreceivables.
The Companyensuresthat its financial assetsareconsideredhigh gradeby tansacting only with
top banksin the Philippinesand maintaininggoodrelationshipswith relatedparties,key
employees,debtorsand lessorswho arehighly reputableand with goodcredit standing.
Cashwith banksaredepositsmadewith reputablebanksduly approvedby the BOD.
Reoeivablebalanoesare monitoredon an ongoingbasiswith the result that the Company's
exposureto credit risk is not significant. Therewereno impairedreoeivablesas of
to be
December3 I , 20 I 0, 2009 and2008, The receivablesaxenot pastdue and are assessed
oollectibleandin goodstandingasof December31,2010,2009and2008.
The Company'smaximumexposureto crodit risk is equalto the aggregatecarrying amountof its
financial assets.
Liquidity Risk
Liquidity risk is the risk that the Companywill.not be ableto meetits financial obligationsasthey
fall due. The Company'sobjectivesto managingliquidity risk is to ensure,as far as possiblo,that
it will alwayshavesufficient liquidity to meetits liabilities when due,underboth normaland
stressed
conditions,
The Companymanagesliquidity risk by maintaininga balancebetweencontinuity of fundingand
flexibility in operations,Treasurycontrolsand proceduresare in placeto ensurotlrat suffrciont
cashis rnaintainedto cover daily operationaland working capitalrequirements.Management
closelymonitorstlte Company'sfuture andcontingontobligationsand setsup requirodcash
reservesasnecessaryin accordancewith intemal policies.
The Company'sfinancial assetsusedfor liquidity managementare its cashand cashequivalents,
financial assetsat FVPL andAIS inv€stments.
maybo withdrawn
As ofDecember31,2010and2009,the Company'scashandcashequivalents
anytimg while its financial assetsat FVPL andAFS inveshnentsaretradedin the stockexchange
and may be convertedto cashby selling them during the normal trading hourson any business
day.
ililililrililil||]ff
til|ilffi
ffitilffi
[]
-Jt
-
basedon theirmaturitiesarcas
The Company'sfinancialassetsusedfor liquidity management
follows:
20t0
Cashand cashequivrlents
FiDancirlrssetr .t FVPL
Receivrbles
Within 6
months 6 to 12 molths
P
*165,119,0t3
466.608J14
113,747,251
I to 2 verrs
P164,199,500
2 to 4 yesrs
P
-
Totrl
PI65,1r9,013
466,608,314
177946,751
H
Within 6
months 6 to 12mon(hs
Fina'cial assetsat FVpL
Receivables
AIS investments
I to 2 years
418,048,226
2,137,225 550,373,255 t43,971,424
- t.l
2 to 4 years
-
Tot'l
418,048,226
696,481,904
736 I,108,558,736
The Company'sfinancial liabilities basedon contractualundiscountedpaymentsareasfollows:.
Within 6
Accountspayablcand
accru€doxpe||ses
Short-termloars pryrblc!
Prircipal
Future interest
Long-term dcbt:
Principsl
P26,0E4,878*105,57t,227
P23l,5d5,909
P99,887,804
t25,000,000
5,156J50
125,000,000
5,156,250
846,105,746 769,00t,0782,082,133,976
701
467,027,152
2009
Within6
ffi
aoctucdexpcnses
Short-termloanspayable:
?rincipal
Futurc interest
Long-term debt:
Principal
F13,804,771 F10,293,035 ?84,491,783
+108,595,5E9
175,000,000
7,2t8,750
175,000,000
7,2t8,750
t96,834,798
F
-
467,A27,152 1,478A16,664 2,142,278,614
087
Market Risks
Market risk is the risk that changesin marketprices,suchasforeign exchangerates,interestrates,
income
andothermarketvariableswhichwill adverselyaffectthe Company'stotal comprehensive
or value of its finangial instruments.The objectiveofthe Cornpany'smalket risk managementis
to
parameters.
The exposures
within acceptable
to rnanageandcontrolmarketrisk exposures
specificmarketrisksareasfollows:
-38-
InterestRate Risk
The Company'sexposureto interestraterisk pertainsto its short-termand long-termdebt
obligations.Floating rate instrumentsexposethe Companyto cashflow interestrate risk, whereas,
fixod interestrate instrumentsexposethe Companyto fair value risk. The Companyregularly
monitorsthe marketinterestrate movementsandmanagesits intercstrate risks by using a mix of
fixed and variablerates.
The following tablesset out the carryingamounts,by maturity, of the Company'sshort-termand
long-termdebtobligetions:
Floating rate short-termloanspayablewith LBP (subjectto monthly repricing):
Coupon rale yo
2010
2009
Within6
months
6 to 12 months
8.25o/o ?125,000,000
8.25%
175,000,000
P
1 io 2 years
F
2 to 4 y€€rs
P-
Total
f12s00o,oo0
175,000,000
Fixed rate long-term debt with EPL:
Within6
Total
2 to 4 yea$
months 6 to 12months I to 2 years
F- f1,61s,106824 *2,082,133976
1.50o/o ?467,027'152
F
1.50%
r96.834.798
467,027,152 r,478,416,664 2,142,278,614
CouDonratEyo
2010
2009
The table below demonstrates
the sensitivityto a reasonablypossiblechangein prevailinginterest
rates,with all variablesheld constant,of the Company'sincomebeforeinoometax (tlrough the
impaoton floating-rateborrowingswith LBP). Thereis no other impact on the Company'sequity
otherthanthosealreadyaffectingthe statementof comprehensiveincome,
1o4appreciation lyr lgprectatlgq
in incomebeforeincometax
lncrease(decreeise)
andin equity
2010
2009
2008
G1r9,0r8)
(161,l3s)
(230,686)
1119,018
161,135
230,686
Foreign Exchange Risk
The Companyusesthe F as its funotionalourrencyand is thereforeexposedto foreigt exchange
movements,primarily in $ currencies.The Companyfollows a policy to manageits ourroncyrisk
by closelymonitoring its cashflow position andby providing forecaston all otherexposuresin
non-Pcurrencies.
Information on the Company's$-denominatedmonetaryassetsand liabilities andtheir F
equivalentareasfollows:
Cash and cash equialents
FinancialLiabilities:
52,2fi,743
1,300,804 50,097,156
-Jv-
ratesofthe Philippinepesoto theUSD are
As of December31, 2010and2009,the exchange
P43.84andF46.20,tespectively.
the sensitivityto a reasonablypossiblechangein PhilippineF/$'
The following table demonstrates
with all other variablesheld constan! ofthe Company'sincomebeforeincometax.
Thereis no other impact on tle Company'sequity otherthan thoseaffectingthe statementsof
income.
oomprehensive
Increase(
) in incomebefore incometax and in
equity
2010
2009
2008
(*22329;23r)
176,724
'11,817
P22,329p3r
(t76J24',)
Qr,8t7l
Equity Price Risk
Equity prioe risk is ths risk that the fair valuosof equitiesdecreaseasa result of changesin the
levelJof equity indicesandthe value ofthe listed shares'The non-tradingequity price risk
exposurearisesfrom th€ Company'sinvostrnentin financial assetsat FVPL and quotedAFS
investments.
The effectson oquity and incomebeforeincometax (asa result ofa changein the fairralue of
at December31,2010,2009
andfinancialassetsat FVPL, respectively,
A_FSequityinstruments
price,
with
all otler variablesheld
market
in
possiblechange bid
and2008dueto a reasonably
constant),are asfollows:
Financial Assetsal FWL
Changein fair marlglYqlggIncreasein markotIncreasein market
Increase(decrease)in incomebeforeincometax
and in equity
2010
2009
2008
AFS Investments
F10t71,590 (P10,27r,590)
11,725,409 (11,725,409)
10,256,866 (10,256,866)
Chansein fair marketvalue
Increasein marketlncreasein market
indicesbY 5%
indicesbv 5%
(decrease)
income
Increase
in othercomprehensive
andin equity
2010
2009
2008
*149,847,987 (*149,U7pBt)
54,450,000 (54,450,000)
16,335,000 (16,335,000)
The impact on the Company'sequity alreadyexcludesthe impact on transactionsaffectingthe net
incomein the statementof comprehensiveincome.
-40-
Fair Valuesof FinansialInstruments
Fair value is definedasthe amountat which the fmancial instuments could be exchangedin a
currenttransactionbetweenknowledgeablewitling partiesin an arm's lengthtransaction,other
than in a forced liquidation or sale, Fair valuesareobtainedfrom quotedmarketprices,
discountedcashflow modelsand option pricing models,asappropriate.
The table below presentsa comparisonby categoryof carrying amountsand estimatedfair values
ofthe Company'sfinancialassetsandliabilitiesasof December31, 2010and2009:
Finuxlal rsrdls at FVPL:
l$e,rtrn€nt in sharccofstock
AFS iNcstments
QuotEd
F466.608Jr4
Acaourfspayableandacoruedexpense
Short-temloanspoyable
F418,04&226 F418,048,226
p2,996J59,740 P2,996p59,740 F1,089,000,000 F1,089,000,000
t166,129,013
Othcr linancial lirbilitid:
*466.606J14
+165,129$13
F?9,588,042
F79,s88,042
l3
?232$1425o *232,674,250 P108,909,913 * I 08,909,9
125,000,000 125,000,000 t75,000,000 l?5,000,000
The following methodsand assumptionswereusedto estimatethe fair valuo of eachclassof
financial instrumentsfor which it is practicabloto estimatesuchvalue:
Cashand CashEquivalents,Receivables,AccountsPayableand AccruedE4tewes and Shortterm LoansPayable
The carrying amountof cashand cashequivalents,receivables,accountspayableand accrued
expensesand short-termloanspayableapproximatetlreir fair valuesdueto their short-term
maturities.
Financial Assetsat FVPL andAFS Irwestments
The fair valuesof publicly tradedinstumonts and similar investmentsaredeteminod basodon
quotedbid marketpricesat the balancesheetdat€. For unquotedequity seouritiesfor which no
reliable basisof fair value measurementis available,thesearecarriedat cost, lessimpaiment loss,
Derivative Instruments
The fair valuesofderivative instrumentsarecatculatedby using the Black-Soholesoptionpricing
modelwith market observableinputs zuchasshareprice and volatility.
Long+ermDebt
Theiair value ofthe long-termdobt is basedon the discountedvalue of future cashflows usingfhe
applioableratesfor similar types of loans.
-41-
Fair Value Hierarchy
The Companyusesthe following hierarchyin doterminingthe fair value of financial insFuments
by valuationtechnique:
Level l: quotod(unadjusted)prices in activemarkotsor identical assetsor liabilities
Level 2: other techniquesfor which all inputswhich havesignificantoffect on the recordedfair
value areobservable,eitherdirectly or indirectly
Level 3: techniqueswhich useinputswhioh havesignificanteffect on the rsoordedfair valuethat
are not basedon observablemarketdata
2010
Level I
Financial Assets
Financialassetsat FVPL
AFS investments- quoted
Level2
F
F466,608,313
2,996,959,740
Level 3
F-
L
P3,463"568,053
2009
Level 1
FinancialAssets
Financialassetsat FVPL
Derivative asset
AFS investnents- quoted
Level 2
P79,799,174
P79,799,174
?1.507.048.226 P79.799.174
?418,048,226
1,089,000,000
Level 3
F.
-
F-
For the yearsendedDecember31, 2010,and2009therewereno transfersbtwe€n level 1 and
level 2 fair value measufements
and no hansfersinto andout ofthe level 3 measurements.
DerivativeAsset
The Companyhasbifiucated the embeddedequity call option on the loan extendedto ACMDC in
2009, The Company'sderivativefinancial instuments axeaccountedfor astransactionsnot
designate.d
as hedges.The gainsor losseson theseinstrumontsareaccountedfor directly in the
statementsof comprehensiveinsome, As of December3 I , 2010 and 2009,the derivativeassetis
canied at F and F79,799,174, rcspectively. Fair value changesofthe derivativoasset,which are
presentedin the statementofcomprohonsiveincomeas"Mark-to-marketchangesin derivative
asset",amountedto P307,718,166
in 2010and2009,respectively.
and?31,052,472
On December29, 2010,the Companyoonvertedits advancesto ACMDC with a carryingamount
ofP504,447,500
into 50,450,500
sharesof ACMDC at F10.00per share(seeNote 6).
Capital Management
The Company'sobjectiveswhen managingcapital is to maintaina capital structuretlat providesa
balancebetweenthe risk associatedwith higher level of borrowingsand the advantagesand
securityofa soundoapitalposition,
The BOD hasoverall responsibilityin monitoringof capital in proportionto risk. Profiles for
capital ratios areset in the light of changesin tle Company'sexternalenvironmentandthe risls
underlyingthe Company'sbusinessoperationsand industry.
ililriltilil||ililil1uti
The Companymonitots capitalon the basisofthe debt-equityratio which is calculatedastotal
debt divided by total equity. Total debt is equivalentto accountspayableand aocruedexpenses,
incometax payable,short-termloanspayable,long-termdebt, pensionliability anddeferred
incometax liability. Total equity comprisesall componentsofequity including capitalstocks,
additionalpaid-in capital, wrealized,valuationgains(losses)on AFS investments,relained
eamings,reducedby treasuryshares.
Therewere no changesin the Company'sapproachto capital managementduringthe year. The
Companyis also not subjectto any extemally-imposedcapital requirements.
The debt-to-equityratio asof Deoomber3 1, 2010 and2009 is asfollows:
Total liabilities
Total
2009
2010
*2,398,233?54 F2,387,089,380
1.232.759.122
77
|,94
The followingtablepertainsto the accountbalancethe Companyconsidersasits corecapital:
Capital stock
Additional paid-in capital
Retainedearnines
Treasury
stock
2009
2010
6,632,3
12
*t,176,632312
4,658,460 "1,174,658,460
658,165,280 132,341,246
(27,566,0?0 (27,566,075)
F1.286"065.943
23. Restatements
In 2009,the Coqrany restatedits priot yet finaneialstatementswith respeotto accountingfor
investmontsand financial liabilities to oonformwith the provisionsof PAS 39 andPAS 28. The
effectsof the restatemontsareasfollows:
(l) Reclassificationof investmentsin SPI and TPC from investrnentsin associates
to fmancial
assetsat FVPL. In addition,the financial assetsat FVPL were revaluedbasedon their bid
marketprioes(seeNotes 5 and 8).
a. Recognitionof dividsnd incomeamountingto P5,996,082in 2008;rooognitionof loss
on fair value changesof financial assetsat FVPL amountia9ti ?282,927,498in 2008;
derecognitionof equity in net eamingsof associatesamountingto F21,262,212in
in 2008;and
in net incomeby F298,193,629
2008;decrease
b. Roductionin retainedeamingsby F302,730,761
asofDecember31, 2008.
(2) Recognitionofgain on debtrestructuringas a result of the loan restruoturingand conversion
agreemententeredinto by the CompanyandEPL (seeNote l2).
a. Recognitionof gainon debtrestructuring
ofF82,987,619in 2008;
b, Increasein interestexpense
in 2008for the acoretionofthe imputed
by F13,184,984
discounton the new loan:
-43-
c. Net increasein deferredincometax liability andprovisionfor defenodincometan
amountingto F20,940,790;
and
d. Increasein retainedeamingsandnet incomeasofand for the yearended
December
31,2008by F48,861,845.
(3) Recognitionofday I differencearisingfrom the off-marketinterestrateofth€ EPL loan
(seeNote 12).
a. Increasein interestexpense
in 2008for the amodizationofthe gain
by P13,485,168
on discountof long-termdebt; increasein provisionfor deferredinoometax by
in 2008;and
F4,045,550in 2008;decrease
in net incomeby P9,439,618
b. Increasein retainedearningsby F35,712,564
asof Decernber
31, 2008.
The table below summarizesthe accountsaffectedby tte restatementsmentionedaboveasofand
for the yearsendedDecember3 l, 2008:
As Previously
Reported
Statementof ComprehensiveIncome
Equiryin n€teamings(losses)of
(seeNote 8)
associates
Gains(losses)on:
Fair valuechangesoffinancial assetsat
FVPL
Debt restructuring
Othor revenues
Interestard otherfinancecharges
Provisionfor incometax
Net income(loss)
Basicand diluted earnings(loss)per
share
Restatements
Aj Restated
F20,s08,894 (F26,139,878) (F5,630,9E4)
(10,809,63s) (282,9?7,498) (293,737,t33)
82,987,619
82,987,619
5,996,082 104,644,343
98,648,261
(49,752,674)
(26,670,i53)
(76,422,827)
(8,353,073) (16,89s,240) (2s,248,3r3)
26,712,870 (263,649,068) (236,936,198)
0.03
(0.23)
(0.20)
24. SegmentReporting
As discussedin Note 2 the financial statements,the CompanyhasadoptedPFRS8 with effect
from Januaryl, 2009. PFRS8 requiresoperatingsegmentsto be identified on the basisof internal
reports,which is similar to manag€mentbasis,aboutcomponentsof the Companythat are
regularlyreviewedby the ohiefoperatingdecisionmaker.
purposes,
pertainto its investmonts
For management
the Company'soperatingsegments
in
NTDCC andUPMC,associates.
in associates
Investments
amountedto FI,051,710,422and
PI,057,485,852
the
asofDecember
NTDCCownsandoperates
31,2010and2009,respectively,
TrinomaCommercialCenter,while UPMC'smainbusiness
is the exploration,developmenl
exploitation,recoveryand salesof gold.
-44-
Managementmonitorsthe operatingresultsof ib investmentsin associatessepaxatelyfor the
Segment
purposeofmaking decisionsaboutresourceallocationandperfornanceassessment'
porformanceis evaluatedbasedon total revenues.
(in thousands)
I'PMC
NTDCC
2010
2010
Revenue
Externalcustomers
Interestincome
Other income
Ft,607,807
78,555
?l,459,677
71,207
v ) 57
41
T
Costsand Expenses
Direct operating
Depreciation
Interestexpense
andadministativeGeneral
fotat coitsandexoe,r,res
incometax
Income
Provisionfor insometax
income
*1,020
I
84r,971
345,,437
244,4rs
42,618
1,414,441
783,47
5
340,466
320,563
57,073
1,501,5'17
30E.450
t24,664
37
29,6;
14'263
43'99q
(3s,461)
(40)
F_
3,0t2
127
139
24,55;
! 1,1?l
iqflO
0,491
o.J
+2rs.916
Other disclosure:
Capitalexpendituresconsistofadditions to propertyand equipment.
Otherrequiredinformation for both segrnentsare disclose.din Note 8 to the financial statements.
25. Note to Statementsof CashFlows
NoncashOperatingand InvestingActivities in 2010:
to ACMDC to AFS investmentamountingto F504'447'500.
Conversionof advances
26. SupplementaryTax Information under RevenueRegulations(RR) No. 1$2010
authorizingthe
RRNo. 15-2010amendscertainprovisionsof RRNo.21-2002'asamended,
Commissionerof Internal Revenueto prescribeadditionalproceduraland/ordooumentary
offinanoialstatements
andsubmission
with the preparation
requirements
in oonnection
the
aooompanying tax retums.
ililfllthrilrilllfrllllil
-45-
The Company'sreportedand/orpaidthe followingtypesof taxesin 2010:
Value-addedtax (VAT)
saleson servioesamountingto P67,687,500
a. TheCompanyhaszero-rated/exempt
pursuantto the provisionsof Section108(B) ofthe NationalIntemalRevenueCode'
b. Ths amountof inputVAT claimedarebrokendown asfollows:
Balanceat beginningof year
Goodsothert]ranresaleof manufacture
Servicodlodeedunderotheraceounts
Balanceat endofvear
P9t7,t 65
32,738
382,998
F1,332,901
WithholdingTaxes
The belowsummarizes
thetotal witlrholdingtaxespaidor ac€ruedby the Company:
Finalwithholdingtaxes
andbenefits
Withholdingtaxeson compensation
P1,608,727
2,078,109
71
P4,460,906
OtherTaxesandLicensesfor 2010
Taxesand licenses,local andnational,includeroal propertytaxes,licensesand permitfeesas
follows:
Docum;ntary stamptaxes
Real propertytaxes
BusinessDermitsandothers
F689,512
37,783
95'926
F823.221
lll
llllillllillllllilffil
|ilfl
lililffi
Unaudited Financial Statement
for the Interim Period
31 March 2011
BALANCE SHEET
March 2011
Unaudited
ASSETS
Current Assets
Cash & cash equivalents
Financial assets at fair value through profit or loss (FVPL)
Accounts Receivable - net
Derivative Assets
Prepaid expenses and other current assets
Total Current Assets
December-10
AUDITED
212,620,678
437,711,814
197,792,427
2,166,129
850,291,048
165,129,012
466,608,314
277,946,758
2,942,679
912,626,763
2,713,405,546
1,056,937,503
17,670,020
156,701,628
99,096
3,944,813,793
4,795,104,840
3,033,803,476
1,051,710,422
18,047,144
156,519,409
99,096
4,260,179,547
5,172,806,310
Non-current Assets
Available-for-sale investments
Investment in associates
Property and equipment-net
Deferred exploration costs
Retirement benefit plan asset
Total Noncurrent Assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS EQUITY
LIABILITIES:
Current Liabilities
Short term loan payable
Current portion of long-term debt
100,000,000
125,000,000
467,027,152
467,027,152
Accounts Payable and accrued expenses
Income tax payable
Total Current Liabilities
Non-Current Liabilities
Long-term debt-net of current portion
Retirement benefit obligation
Deferred income tax liabilities-net
211,924,900
3,706,954
782,659,006
232,674,250
4,390,218
829,091,620
1,548,556,750
15,110,330
1,554,031,303
15,110,331
Total Noncurrent Liabilities
TOTAL LIABILITIES
1,563,667,080
2,346,326,086
1,569,141,634
2,398,233,254
1,176,632,312
4,658,460
643,785,149
651,268,908
2,476,344,829
1,176,632,312
4,658,460
962,683,079
658,165,280
2,802,139,131
(27,566,075)
2,448,778,754
4,795,104,840
(27,566,075)
2,774,573,056
5,172,806,310
STOCKHOLDERS' EQUITY
Capital stock-P1 par value
Authorized - 2,000,000,000 shares
Issued - 1,170,616,970 shares as of March 2011
and December 2010
Subscribed - 7,383,030 shares as of March 2011
and December 2010 (net of
subscriptions receivable amounting to P1,367,688)
Additional paid-in-capital
Net unrealized valuation gain/(loss) on AFS investments
Retained Earnings
Cost of 13,000,000 shares in March 2011
and December 2010
Total Stockholders' Equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
STATEMENTS OF COMPREHENSIVE INCOME
Jan to March 2011
REVENUES
Gains on:
Fair value changes of financial assets at FVPL
Sale of investment
Interest income
Foreign Exchange gains - net
Equity share in net/(loss) earnings of associates
Other revenues
COST AND EXPENSES
Interest expenses and bank charges
General and administrative expenses
INCOME/(LOSS) BEFORE INCOME TAX
PROVISION FOR (BENEFIT FROM) INCOME TAX
Provision for income tax - Current
Provision for income tax - Deferred
NET INCOME/(LOSS)
OTHER COMPREHENSIVE INCOME(LOSS)
Unrealized valuation gain (loss) on AFS investments
TOTAL COMPREHENSIVE INCOME (LOSS)
Basic and Diluted Earnings/(Loss) Per Share
Jan to March 2010
(28,896,500)
5,197,534
5,415,233
5,227,080
27,801,394
14,744,741
39,610,453
16,599,544
24,102,006
280,135
4,573,400
28,767,366
113,932,904
11,657,411
8,736,725
20,394,136
(5,649,395)
12,653,033
5,785,014
18,438,047
95,494,857
1,246,974
1,246,974
(6,896,369)
6,729,698
6,729,698
88,765,159
(318,897,930)
(325,794,299)
(0.006)
151,250,000
240,015,159
0.08
STATEMENTS OF CASH FLOWS
FOR THE PERIOD
Jan. 1 to March 31 Jan. 1 to March 31
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss/incidental income
Adjustment to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
Decrease (increase) in:
Receivables
Prepayments and other current assets
Increase (decrease) in:
Accounts payable and accrued expenses
Income Taxes Payable
Pension Liability
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in:
Financial assets at FVPL
Investment in associates
Deferred exploration
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of borrowings
Net cash provided by financing activities
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING
CASH AND CASH EQUIVALENTS, END
(6,896,369)
377,124
88,765,159
386,498
81,654,331
776,551
(32,653,498)
1,864,358
(20,749,353)
(683,264)
54,479,018
8,874,477
6,729,697
(2,342,957)
71,623,734
28,896,500
(5,227,080)
(182,219)
23,487,201
(24,688,045)
(4,573,399)
(29,261,444)
(30,474,553)
(30,474,553)
(37,325,444)
(37,325,444)
47,491,666
5,036,846
165,129,012
212,620,678
79,588,042
84,624,888
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
March 31, 2011
Capital stock
Issued
Balances at January 1, 2011
Net Income as of first quarter 2011
Other Comprehensive as of first quarter 2011
Subscribed
Subscriptions
Receivable
Add'tl Paid-in
Capital
1,170,616,970
-
7,383,030
-
(1,367,688)
-
4,658,460
-
1,170,616,970
7,383,030
(1,367,688)
4,658,460
Total Comprehensive Income, as of first quarter 2011
Cash Dividends
Balances at March 31, 2011
Net Unrealized Valuation
Gain/(Loss)
on AFS Investments
962,683,079
(318,897,930)
(318,897,930)
643,785,149
Retained
Earnings
Treasury
Stock
Total
658,165,277
(6,896,369)
(27,566,075)
(6,896,369)
651,268,908
(27,566,075)
2,774,573,053
(6,896,369)
(318,897,930)
(325,794,299)
2,448,778,754
March 31, 2010
Capital stock
Issued
Balances at January 1, 2010
Net Income as of first quarter 2010
Other Comprehensive as of first quarter 2010
Subscribed
1,170,611,970
-
7,388,030
-
Subscriptions
Receivable
(1,367,688)
-
Add'tl Paid-in
Capital
4,658,460
-
Total Comprehensive Income, as of first quarter 2010
Cash Dividends
Balances at March 31, 2010
1,170,611,970
7,388,030
(1,367,688)
4,658,460
Net Unrealized Valuation
Gain/(Loss)
on AFS Investments
(53,306,821.00)
151,250,000
151,250,000
97,943,179
Retained
Earnings
Treasury
Stock
132,341,244
88,765,159
88,765,159
221,106,403
Total
(27,566,075)
(27,566,075)
1,232,759,120
88,765,159
151,250,000
240,015,159
1,472,774,279
NOTES TO FINANCIAL STATEMENTS
1. Basis of Preparation and Significant Accounting Policies
Basis of Preparation
The accompanying financial statements have been prepared under the historical cost basis
except for financial assets at fair value through profit or loss (FVPL), available-for-sale (AFS)
investments and derivative financial instruments, which are carried at fair value. The
financial statements are presented in Philippine peso (P
=), which is the Company’s functional
and presentation currency. All values are rounded off to the nearest P
= except when otherwise
indicated.
Significant Accounting Policies
The Accounting policies and methods used in the preparation of the financial statements for
the period ended March 31, 2011 are the same as those used in the preparation of the
financial statements for the year ended December 31, 2010, and NO policies or methods have
been changed.
The Company as an investments holding firm, has NO seasonal or cyclical aspects that had a
material effect on the financial condition or results of interim operations of the Company.
The Company does not generate revenues from any particular segment and its business
(investment holding) is not delineated into any segment, whether by business or geography.
The Company is not required to disclose segment information in its financial statements.
2. Receivables
The Company grants interest-bearing and noninterest-bearing advances to its related parties
with less than one year credit term. The following are the amounts due from related parties,
which are included as part of the “Receivables” account in the balance sheets.
Due from related parties
Others
Total
March 31, 2011
176,327,903
21,464,524
197,792,427
“Others” consist mainly of accrued management fees.
There were no impaired receivables as of March 31, 2011. The receivables are assessed to be
collectible and in good standing as of March 31, 2011.
3. Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and any impairment
in value.
1
March 31, 2011
PROPERTY AND EQUIPMENT
Classification
Condominium Units and
Improvements
Beginning Balance
Office Equipment
Furnitures and Fixtures
Additions
Retirements
22,091,617
-
2,102,096
475,229
24,668,941
Ending Balance
-
22,091,617
-
-
2,102,096
-
-
475,229
-
-
24,668,941
ACCUMULATED DEPRECIATION
Classification
Beginning Balance
Additions
Retirements
Ending Balance
Condominium Units and
Improvements
4,634,894
276,303
-
4,911,197
Office Equipment
1,606,721
77,059
-
1,683,780
380,183
23,761
6,621,797
377,124
Furnitures and Fixtures
403,944
-
6,998,921
4. Accounts Payable and Accrued Expenses
Accrued interest Payable
Accrued guarantee fee
Dividends Payable
Deposit
Others
March 31, 2011
91,261,726
17,284,702
6,512,855
89,419,081
7,446,536
211,924,900
“Deposit” pertains to advances received from Metro Pacific Investments Corporation (MPIC)
in relation to the potential acquisition by MPIC of the shares owned by the Company in
Metro Rail Transit Holdings, Inc. (MRTHI), subject to the completion of certain closing
requirements.
“Others” consist mainly of accrued taxes and various accrued expenses, among others.
5. Short Term Loans Payable and Long Term Debt
Short term loans Payable
Long Term Debt
Current Portion
Non-current portion
Total
March 31, 2011
100,000,000
467,027,152
1,548,556,750
2,115,583,902
Short-term loans payable represent loans obtained from Land Bank of the Philippines. As of
March 31, 2011 the Company paid P25 million from the P125 million balance as of
December 31, 2010.
Long-term debt of the Company pertains to loans availed from Euronote Profits Limited.
2
6. Basic and Diluted EPS
Basic and diluted earnings (loss) per share are computed as follows:
March 31, 2011
Net income (loss) for the quarter
ended March 31, 2011
Divided by weighted average
number of common shares
Basic and diluted earnings (loss)
per share
(P6,896,369)
1,165,000,000
(0.006)
The resulting per share amounts are the same for both basic and diluted earnings (loss) per
share as of March 31, 2011 since the Company does not have any debt or equity securities
that will potentially cause an earnings (loss) per share dilution.
7. Management’s Assessment and Evaluation of Financial Risk Exposures
Financial Risk Exposures
The Company has exposure to credit risk, liquidity risk, market risk, interest rate risk, foreign
exchange risk and equity price risk from the use of its financial instruments. The Board
reviews and approves the policies for managing each of these risks and they are summarized
below.
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations and arises principally from the
Company’s cash and cash equivalents and receivables.
Receivables balances are monitored on an ongoing basis with the result that the Company’s
exposure to credit risk is not significant. There were no impaired receivables as of March 31,
2011 and December 31, 2010. No receivables are past due and all receivables are assessed to
be collectible and in good standing as of March 31, 2011 and December 31, 2010.
The Company’s maximum exposure to credit risk is equal to the aggregate carrying amount
of its financial assets.
Cash with banks are deposits made with reputable banks duly approved by the Company’s
Board of Directors.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as
they fall due. The Company’s objectives to managing liquidity risk is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when they fall due,
under both normal and stressed conditions, without incurring unacceptable losses or risking
adverse effect to the Company’s credit standing.
The Company manages liquidity risk by maintaining a balance between continuity of funding
and flexibility in operations. Treasury controls and procedures are in place to ensure that
sufficient cash is maintained to cover daily operational and working capital requirements.
Management closely monitors the Company’s future and contingent obligations and sets up
required cash reserves as necessary in accordance with internal policies.
3
As of March 31, 2011, the Company’s cash and cash equivalents may be withdrawn anytime
while its financial assets at FVPL and AFS investments are traded in the stock exchange and
may be converted to cash by selling them during the normal trading hours on any business
day.
The tables below summarize the maturity profile of the company’s financial liabilities as of
March 31, 2011 and December 31, 2010 based on contractual undiscounted payments:
31 March 2011
Within 6 months
6 to 12 months
1 to 2 years
2 to 4 years
Total
8,274,991
106,703,783
96,946,126
-
211,924,900
Accounts payable and
accrued expenses
Short-term loans payable
Principal
Future Interest
Long-term debt
Principal
Future Interest
P100,000,000
-
-
P100,000,000
4,125,000
-
-
4,125,000
467,027,152
846,105,746
763,526,525
2,076,659,423
11,452,898
66,747,273
15,575,972
15,575,972
24,146,537
P595,003,115
P122,279,755
P967,198,409
31 December 2010 Within 6 months
6 to 12 months
1 to 2 years
2 to 4 years
Total
P26,084,878
P105,573,227
P99,887,804
-
P231,545,909
125,000,000
5,156,250
-
-
-
P155,000,000
5,156,250
467,027,152
-
846,105,746
769,001,078
2,082,133,976
5,069,701
68,560,626
accrued expenses
Principal
Future interest
Long-term debt
Principal
Future interest
15,616,005
12,113,301
P638,884,285
P117,686,528
35,761,619
P981,755,169
P775,118,339 P2,459,456,596
P774,070,779 P2,512,396,761
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and other market prices will affect the Company’s income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
Interest Rate Risk
The Company’s exposure to the risk for changes in market interest rate relates primarily to its
shot-term loans payable and long-term debt obligations with fixed interest rates. Most of the
Company’s existing debt obligations are based on fixed interest rates with relatively small
component of the debts that are subject to interest rate fluctuation. Interest on financial
instruments classified as fixed rate is fixed until the maturity of the instrument.
The short-term loans payable with LBP are subject to monthly repricing.
Foreign Exchange Risk
The Company’s exposure to foreign exchange risk results from its business transactions
denominated in foreign currencies. It is the Company’s policy to ensure that capabilities exist
for active and prudent management of its foreign exchange.
4
Equity Price Risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in
the levels of equity indices and the value of the listed shares. The non-trading equity price
risk exposure arises from the Company’s investment in financial assets at FVPL and quoted
AFS investments.
Fair Values of Financial Instruments
Fair value is defined as the amount at which the financial instruments could be exchanged in
a current transaction between knowledgeable willing parties in an arm’s length transaction,
other than in a forced liquidation or sale. Fair values are obtained from quoted market prices,
discounted cash flow models and option pricing models, as appropriate.
The table below represents a comparison by category of carrying amounts and estimated fair
values of the Company’s financial assets and liabilities as of March 31, 2011 and December
31, 2010, follows:
31 March 2011
Carrying Amount Fair Value
Cash and cash equivalents
Financial Assets at FVPL
Receivables
Available-for-sale
investments
accrued expenses
Long-term debt
31 December 2010
Carrying Amount Fair Value
P212,620,678
437,711,814
197,792,427
P212,620,678
437,711,814
197,792,427
P165,129,013
466,608,314
277,946,757
P165,129,013
466,608,314
277,946,757
2,713,405,546
2,713,405,546
3,033,803,476
3,033,803,476
211,924,900
125,000,000
2,015,583,902
211,924,900
125,000,000
2,015,583,902
232,674,250
125,000,000
2,021,058,455
232,909,915
125,000,000
2,033,715,887
Estimation of Fair Values
The following summarizes the major methods and assumptions used in estimating the fair
values of financial instruments reflected in the table:
Cash and Cash Equivalents, Receivables, Accounts Payable, Short Term Loans Payable and
Accrued Expenses
The carrying amount cash and cash equivalents, receivables, accounts payable and accrued
expenses and short-term loans payable approximate their fair values due to short-term
maturities.
Financial Assets at FVPL and AFS Investments.
The fair values of publicly traded instruments & similar investments are estimated based on
quoted bid market prices at the balance sheet date. Unquoted AFS equity investments are
carried at cost since their fair values cannot be determined reliably.
Long-term Debt
The fair value of the long term-debt is based on the discounted value of future cash flows
using the applicable rates for similar types of loans. The discounted rates were $ and P risk
free rates plus appropriate credit spread.
5
MINUTES OF THE ANNUAL MEETING OF STOCKHOLDERS
of
Held on July 23, 2010, 3:00 PM
At the Kamia Room, EDSA Shangri-La Hotel
Ortigas Center, Mandaluyong City
1. Call to Order
Mr. Alfredo C. Ramos acted as Chairman of the Meeting, called the
meeting to order and presided over the same. Atty. Roberto V. San Jose was
Secretary of the Meeting and recorded the minutes of the proceedings.
2. Certification of Quorum
The Secretary announced that notices of the meeting had been sent out to
the stockholders in accordance with the By-Laws and, in addition, published in
the July 17 and 21, 2010 issues of the Philippine Daily Inquirer. He also certified
that there were present in person or by proxy, stockholders owning at least
64.26% of the issued capital stock (the list of attendees is available at the office of
the Corporation). He therefore certified to the presence of a quorum for the
transaction of corporate business.
3. Approval of the Minutes of the Last Stockholders’ Meetings
Upon motion duly made and seconded, the minutes of the last
stockholders’ meeting held on July 31, 2009, copies of which were earlier
distributed to the stockholders, were unanimously approved.
4. Management Report
2
Upon motion duly made and seconded, the Management Report and the
Corporation’s financial statements for the previous year, which were presented
by the Corporation’s President, were noted and approved.
5. Ratification of the Acts of the Board of Directors and Management
The stockholders then reviewed the acts and decisions of the Board of
Directors and the Management of the Corporation from the last annual
stockholders’ meeting to date. After discussion and on motion made and duly
seconded, the following resolution was approved:
“RESOLVED, That all contracts, acts,
proceedings, elections and appointments heretofore
made or taken by the Board of Directors and the
Management of Anglo Philippine Holdings
Corporation (the “Corporation”) for the year 2009 to
date be, and the same are, hereby approved, ratified
and confirmed.”
6. Election of Directors
The Chairman announced that the meeting would proceed to the election
of directors. Upon nominations made and duly seconded, the following persons
were elected by the stockholders present as Directors of the Corporation for the
current year and until their successors shall have been duly elected and qualified:
ALFREDO C. RAMOS
CHRISTOPHER M. GOTANCO
FRANCISCO A. NAVARRO
PRESENTACION S. RAMOS
AUGUSTO B. SUNICO
ADRIAN S. RAMOS
PATRICK V. CAOILE
VICTOR V. BENAVIDEZ
ROBERTO V. SAN JOSE
RAMONCITO Z. ABAD
RENATO C. VALENCIA
The Chairman acknowledged that the independent directors were Messrs.
Ramoncito Z. Abad and Renato C. Valencia.
3
7. Appointment of External Auditors
Thereafter, the meeting proceeded with the appointment of the external
auditors of the Corporation for the current year. Upon motion made and duly
seconded, the following resolution was unanimously adopted:
“RESOLVED, That the stockholders of Anglo
Philippine Holdings Corporation (the “Corporation”)
approve, ratify and confirm, as they do hereby, the
appointment of Sycip Gorres Velayo & Co. as the
external auditors of the Corporation for the current
year.”
8. Adjournment
There being no further business to transact, the meeting was thereupon
adjourned.
ATTEST:
(SGD.) ALFREDO C. RAMOS
Chairman of the Stockholders’ Meeting
(SGD.) ROBERTO V. SAN JOSE
Secretary of the Stockholders’ Meeting

Document 6527527

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