COVER SHEET 9 4 0 0 7 1 6 0 SEC Registration Number A R T H A L A N D C O R P O R A T I O N (Company’s Full Name) E X P O R t B A n k n u E , C O R . M A k A t i C i P l S e n t a Z a . , G i C h l i n o P u y a R O c e S t A v E A v e n u e , y (Business Address: No. Street City/Town/Province) 1 2 Month Froilan Q. Tejada 878-0793 (Contact Person) (Company Telephone Number) 3 1 Day 1 7 - Q (Form Type) Month (Fiscal Year) Day (Annual Meeting) (Secondary License Type, If Applicable) Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings Total No. of Stockholders Domestic To be accomplished by SEC Personnel concerned File Number LCU Document ID Cashier Foreign ARTHALAND, CORPORATION (Company’s Full Name) ExportBank Plaza, Chino Roces Avenue Cor. Gil Puyat Ave., Makati City (Company’s Address) 878-0390/878-0536 (Telephone Number) December 31 (Fiscal year ending) (month & day) Any Day in April (Annual Meeting) SEC FORM 17 – Q QUARTERLY REPORT (Form Type) Amendment Designation (If applicable) SEPTEMBER 30, 2009 (Period Ended Date) ____________________________________ (Secondary License Type & File Number) __________________ LCU ____________________ (Cashier) ___________________ DTU ASO-94-007160 (SEC Number) _____________________ Central Receiving Unit ____________________ File Number ____________________ Document I.D. 2 SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-Q QUARTERLY REPORT PURSUANT TO SECTION 11 OF THE REVISED SECURITIES ACT AND RSA RULE 11(a)-1 (b)(2) THEREUNDER 1. For the quarterly period ended September 30, 2009 2. Commission Identification No. AS94-007160 3. BIR TIN 116-004-450-721 4. Exact name of registrant as specified in its character ARTHALAND, CORPORATION 5. Incorporated in Metro Manila, Philippines on August 10, 1994. 6. Industry Classification Code ___________________________. 7. Address of registrant’s principal office Postal Code ExportBank Plaza, Chino Roces Avenue Cor. Gil Puyat Ave., Makati City 1200 8. Registrant’s Telephone Number : 878-0536/878-0548/878-0390/878-9100 9. Former name, former address and former fiscal year, if changed since last report: NA 10. Securities registered pursuant to Sections 4 and 8 of the RSA Title of each class Number of shares common stock outstanding or amount of debt outstanding. Common Shares 5,118,095,199 common shares 11. Are any or all of the securities listed on the Philippine Stock Exchange? YES [ X ] NO [ ] 12. Indicate by check mark whether the registrant : 3 4 ITEM 1. Financial Statements Required under SRC RULE 68.1 1. Basic and Diluted Earnings per Share (See attached Income Statement) 2. The accompanying consolidated interim financial statements of Arthaland, Corporation were prepared in accordance with accounting principles generally accepted in the Philippines as set forth in Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS). 3. Notes to Financial Statements: a. The accompanying financial statements of Arthaland Corporation and its subsidiaries Urban Property Holdings. Inc. (UPHI), Cazneau Inc., Technopod, Irmo. were prepared in accordance with PFRS. The financial statements have been prepared using the historical cost basis and are presented in Philippine Pesos. b. There is no significant seasonality or cycle of interim operations. c. There are no material events subsequent to the end of the interim period. d. There are no changes in the composition of the issuer during the interim period including business combinations, acquisition or disposal of subsidiaries and long-term investments, restructurings and discontinuing operations. e. There are no material changes in the contingent liabilities or contingent assets since the last annual balance sheet date. f. There are no material contingencies and any other events or transactions that are material to an understanding of the current interim period. 5 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2009 & DECEMBER 31, 2008 (Amounts in Philippine Pesos) SEPTEMBER 30, 2009 DECEMBER 31, 2008 UNAUDITED AUDITED INCREASE (DECREASE) % A S S ETS CURRENT ASSETS Cash Receivables- net Other current assets Total Current Assets NON-CURRENT ASSETS Investment properties - net Property and equipment - net Other non-current assets - net Total Non-current Assets TOTAL ASSETS 15,263,371 392,692,761 57,066,447 6,268,100 253,745,842 15,201,995 8,995,271 138,946,919 41,864,452 144% 55% 275% 465,022,579 275,215,937 189,806,641 69% 3,184,554,142 11,814,677 187,605,746 3,174,560,787 12,732,787 186,497,330 9,993,355 -918,110 1,108,416 0% -7% 1% 3,383,974,565 3,373,790,904 10,183,659 0% 3,848,997,144 3,649,006,841 199,990,301 5% 150,000,000 214,720,025 -64,720,025 -30% 3,211,820,233 2,891,721,498 320,098,735 11% 3,361,820,233 3,106,441,523 255,378,710 8% 433,757,136 122,596,436 -73,457,405 415,037,518 122,424,123 172,313 4,280,744 4,931,364 487,176,912 542,565,318 -55,388,408 -10% 3,848,997,144 3,649,006,841 199,990,303 5% LIABILITIES AND EQUITY CURRENT LIABILITIES Loans payable Accounts payable, accrued expenses and other liabilities Total Liabilities EQUITY Capital stock Retained earnings Net Income Minority Interest Total Equity TOTAL LIABILITIES AND EQUITY 18,719,618 5% 172,313 0% -73,629,718 -42730% 0 -650,620 -13% 6 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) UNAUDITED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2009 & SEPTEMBER 30, 2008 (Amounts in Philippine Pesos) SEPTEMBER 30, 2009 SEPTEMBER 30, 2008 INCREASE (DECREASE) % A S S E T S CURRENT ASSETS Cash Receivables- net Other current assets Total Current Assets NON-CURRENT ASSETS Investment properties - net Property and equipment - net Other non-current assets - net Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES Loans payable Accounts payable, accrued expenses and other liabilities Total Liabilities 15,263,371 392,692,761 57,066,447 62,098,800 404,542,731 -46,835,429 -11,849,970 57,066,447 -75% -3% 465,022,579 466,641,531 -1,618,952 0% 3,184,554,142 11,814,677 187,605,746 3,129,899,278 6,888,872 6,456,061 54,654,864 4,925,805 181,149,685 2% 72% 2806% 3,383,974,565 3,143,244,211 240,730,354 8% 3,848,997,145 3,609,885,742 239,111,402 7% 150,000,000 150,000,000 0 3,211,820,233 2,902,811,791 309,008,442 11% 3,361,820,233 3,052,811,791 309,008,442 10% 433,757,136 122,596,436 -73,457,405 246,257,136 168,780,382 54,000,000 122,424,123 -38,517,675 187,500,000 -168,780,382 -54,000,000 172,313 -34,939,730 76% -100% -100% 0% 91% 4,280,744 4,129,985 150,759 4% 487,176,910 557,073,951 -69,897,039 -13% 3,848,997,144 3,609,885,742 239,111,402 7% EQUITY Capital stock Deposits on subscription Advances from a stockholder with Retained earnings Net Income Minority interest Total Equity TOTAL LIABILITIES AND EQUITY 7 NOTES TO FINANCIAL STATEMENTS Cash and Cash Equivalents Petty Cash Fund Cash in Bank Investment in Special Savings Account 13,000 8,300,371 6,950,000 15,263,371 Receivables Accounts Receivable - Tenants Accounts Receivable - PAS 17 Accounts Receivable - EIB Accounts Receivable-OTHERS 8,344,683 37,817,739 325,974,896 20,555,443 392,692,761 Other Current Assets Creditable Withholding Taxes Deferred Charges Prepayments 16,851,639 4,005,252 36,209,556 57,066,447 Investment Property Building Land and developmental cost Asset Under Construction 2,509,073,194 605,232,149 70,248,799 3,184,554,142 Property and Equipment Transportation equipment Furniture, Fixture & Equipment Leasehold Rights & Improvements 7,983,261 3,038,276 793,140 11,814,677 Accounts payable and accrued expenses Accounts Payable Unearned rental Accrued Expenses Payable Loans Payable Non trade Payables Accounts Payable - EIB Security deposit Advance Rental 28,466,694 1,674,091 214,037,113 150,000,000 189,507,862 2,693,521,067 45,209,854 39,403,552 3,361,820,233 8 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) CONSOLIDATED STATEMENTS OF INCOME JANUARY TO SEPTEMBER 30, 2009 UNAUDITED JANUARY TO DECEMBER 2008 AUDITED REVENUES Rental Recovery of impairment loss Reversal of provision Interest Others 204,709,720 557,674 114,997 235,189,678 52,700,000 15,000,000 453,348 6,034,478 TOTAL INCOME OPERATING EXPENSES 205,382,391 309,377,504 Depreciation and amortization Taxes and licenses Salaries and Wages Management and professional fees Representation Insurance Brokerage fees Association dues Power, light and water Transportation and travel Security services Supplies Communications Advertising Annual dues and fees Others 50,256,884 29,081,659 23,987,183 10,500,738 3,598,122 2,472,384 750,868 3,082,798 3,293,896 1,619,658 1,192,682 1,204,357 703,713 225,497 493,263 1,458,107.30 64,828,479 37,391,265 23,569,341 17,476,366 8,004,320 2,616,360 2,328,652 1,985,856 1,969,893 1,379,726 1,065,120 931,185 676,612 599,231 519,548 4,160,657 TOTAL EXPENSES 133,921,809 169,502,611 OPERATING INCOME (LOSS) FINANCE COSTS INCOME (LOSS) BEFORE TAX TAX EXPENSE NET INCOME (LOSS) 71,460,583 145,568,609 (74,108,027) (74,108,027) 139,874,893 140,358,922 (484,029) 125,701 (609,730) Equity holders of Parent Minority interest (73,457,405) (650,621) 172,313 (782,043) -0.01 -0.0004 EARNINGS (LOSS) PER SHARE 9 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) CONSOLIDATED STATEMENTS OF INCOME JANUARY TO SEPTEMBER 30, 2009 UNAUDITED JANUARY TO SEPTEMBER 2008 UNAUDITED REVENUES Rental Recovery of impairment loss Reversal of provision Interest Others 204,709,720 170,322,277 557,674 114,997 244,027 4,622,447 TOTAL INCOME OPERATING EXPENSES 205,382,391 175,188,751 50,256,884 29,081,659 23,987,183 10,500,738 3,598,122 2,472,384 750,868 3,082,798 3,293,896 1,619,658 1,192,682 1,204,357 703,713 225,497 493,263 1,458,107 48,268,300 24,074,023 14,235,100 17,405,179 5,144,987 4,419,739 1,905,096 1,719,912 1,209,707 494,697 727,923 93,196 354,245 14,850 866,363 1,551,572 TOTAL EXPENSES 133,921,809 122,484,889 OPERATING INCOME (LOSS) FINANCE COSTS INCOME (LOSS) BEFORE TAX TAX EXPENSE NET INCOME (LOSS) 71,460,583 145,568,609 (74,108,027) 52,703,862 91,810,802 (39,106,939) (74,108,027) (39,106,939) Equity holders of Parent Minority interest (73,457,405) (650,621) (38,517,675) (589,264) -0.01 -0.0286 Depreciation and amortization Taxes and licenses Salaries and Wages Management and professional fees Representation Insurance Brokerage fees Association dues Power, light and water Transportation and travel Security services Supplies Communications Advertising Annual dues and fees Others EARNINGS (LOSS) PER SHARE 10 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) CONSOLIDATED STATEMENTS OF INCOME JULY 1 TO SEPTEMBER 30, 2009 UNAUDITED JULY 1 TO SEPTEMBER 30, 2008 UNAUDITED Increase (Decrease) % REVENUES Rental Recovery of impairment loss Reversal of provision Interest Others 64,712,396 58,093,895 207,066 33,824 6,618,500 0 0 277,820 69,932 484,886 103,756 TOTAL INCOME OPERATING EXPENSES 134% 207% 65,301,038 58,334,785 6,966,252 12% Depreciation and amortization Taxes and licenses Salaries and Wages Management and professional fees Representation Insurance Brokerage fees Association dues Power, light and water Transportation and travel Security services Supplies Communications Advertising Annual dues and fees Others 16,792,789 8,656,385 8,307,073 7,156,185 1,865,486 282,097 154,352 1,136,479 1,687,183 1,207,786 400,854 505,406 225,461 144,729 115,300 663,736 16,229,544 7,786,958 8,725,277 8,586,195 3,162,147 1,460,930 423,556 28,260 466,808 160,808 (35,092) 57,329 109,940 0 978,719 974,228 TOTAL EXPENSES 49,301,300 49,115,608 OPERATING INCOME (LOSS) FINANCE COSTS INCOME (LOSS) BEFORE TAX TAX EXPENSE NET INCOME (LOSS) 15,999,737 47,512,093 (31,512,355) 9,219,177 33,863,477 (24,644,300) 6,780,560 13,648,616 (6,868,055) (31,512,355) (24,644,300) (6,868,055) Equity holders of Parent Minority interest (31,339,686) (172,669) (24,182,087) (462,213) (7,157,599) 289,544 (0.01) (0.02) EARNINGS (LOSS) PER SHARE 11% 563,246 3% 869,427 11% (418,204) -5% (1,430,011) -17% (1,296,660) -41% (1,178,833) -81% (269,204) -64% 1,108,219 3922% 1,220,375 261% 1,046,978 651% 435,945 -1242% 448,077 782% 115,521 105% 144,729 (863,419) -88% (310,492) -32% 185,692 0% 74% 40% 0.01 11 ARTHALAND CORPORATION ANDS SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE PERIODS JANUARY 01 TO SEPTEMBER 30, 2009 & 2008 2009 CASH FLOW FROM OPERATING ACTIVITIES Income (Loss) Before Income T ax Adjustments to reconcile income (loss) before income tax to net cash generated from (used in) operations: Interest Expense Provision for Probable Losses Depreciation and Amortization Interest Income Changes in operating assets and liabilities: Decrease (increase) in: Receivables Investment Properties Property and Equipment Other Assets Increase (decrease) in: Accounts Payable and Accrued Expenses Net Cash Generated from (used in) Operations Interest Received Interest Paid (74,108,027) 50,256,884 2008 (39,106,939) 48,263,621 - (138,946,919) (60,250,239) 918,110 (42,972,866) (350,493,055) (56,219,957) - 255,378,709 277,241,078 (9,724,347) (120,315,252) Net Cash Provided by (used in) Operating Activities CASH FLOWS FROM INVESTING ACTIVITY 168,780,382 Increase in Deposits in Subscription Increase in Capital 18,719,618 Decrease in Equity Investments and Advances CASH FLOWS FROM FINANCING ACTIVITIES Increase/(Decrease) in Notes Payable Net Cash Provided by Financing Activities 8,995,271 48,465,130 6,268,100 13,633,670 15,263,371 62,098,800 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR 12 ARTHALAND CORPORATION AND SUBSIDIARIES (Formerly, EIB Realty Developers, Inc.) UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE PERIODS JANUARY 01 TO SEPTEMBER 30, 2009 & 2008 Sept 30, 2009 Sept 30, 2008 CAPITAL STOCK Common Shares Authorized - 16,368,095,199 shares in 2008, 1,368,095,199 shares in 2007 Issued - 1,368,095,199 Subscribed during the year 2008 - 3,750,000,000 Total 5,118,095,199 Capital Stock Deposit on Subscription Advances from Stochholder with Indefinite Repayment Term Retained Earnings (Deficit) Net Income (Loss) Minority Interest in a Consolidated Subsidiary TOTAL EQUITY 433,757,136 122,596,436 (73,457,405) 246,257,135.82 168,780,381.97 54,000,000.00 122,424,122.85 (38,517,675.07) 482,896,167 552,943,966 4,280,744 4,129,984.54 487,176,910 557,073,950 13 ARTHALAND CORPORATION AGING OF ACCOUNTS RECEIVABLE AS OF September 30, 2009 Type of Accounts Receivable Total Within Within 6 Mos. 6 Mos. - 1 year a) TRADE RECEIVABLE 1. Tenants 2. ____________________ 3. ____________________ Sub Total Less: Allow. For Doubtful Accounts NET TRADE RECEIVABLE 8,344,683.12 0.00 0.00 8,344,683.12 0.00 8,344,683.12 5,985,710.84 b) NON TRADE RECEIVABLES 1. Others 2. Suppliers Sub Total Less: Allow. For Doubtful Accounts NET NON-TRADE RECEIVABLE NET RECEIVABLES (A+B) 2,358,972.24 5,985,710.84 2,358,972.24 5,985,710.84 2,358,972.24 9,916,530.94 10,638,912.09 20,555,443.03 20,555,443.03 5,289,688.11 10,638,912.09 15,928,600.20 15,928,600.20 4,626,842.83 4,626,842.83 4,626,842.83 28,900,126.15 21,914,311.04 6,985,815.07 ACCOUNTS RECEIVABLE DESCRIPTION: Type of Receivable Nature / Description Colletion Period 1. Tenants Rentals Regular billings are made 2. Others Advances and Working Fund for daily & emergency exp. Regular billings are made / monthly reimbursement / replenishment. 14 ARTHALAND, CORPORATION ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation Comparable Discussion of Interim Period as of 30 September 2009 The consolidated net loss of the Group as of the September 2009 increased by P 35.132 Mn to P 74.108 Mn from a net loss of P 39.106 Mn for the same period in 2008. This is primarily due to an increase in expenditures related to increase in manpower and interest charges incurred to finance operations. As of September 2009, total expenses increased by P 65.195 Mn. This increase in expenses is primarily due to salaries and wages, P 9.752 Mn , Taxes and Licenses which increased by P 5.256Mn and finance charges by P53.758 Mn. As of September 30, 2009, ALCO has 27 employees compared to 14 during the same period in 2008. ALCO posted a 17.23% increase in revenues as of September 2009 against the same period in 2008 due to a rental escalation recognized in 2009. FINANCIAL CONDITION The Group’s aggregate resources was P 3.848 Bn as of 30 September 2009. Impact of New Amendments and Interpretations to Existing Standards (a) Effective in 2008 There are standards and interpretations to published standards that are mandatory for accounting periods beginning on or after 01 January 2008. These standards and interpretations, however, are not currently relevant to the Group’s operations. Philippine Interpretation Financial Reporting Interpretations Committee (IFRIC) 14: PAS 39 and PFRS 7 (Amendments): Philippine Accounting Standards (PAS) 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction PAS 39, Financial Instruments: Recognition and Measurement and PFRS 7, Financial Instruments: Disclosures 15 Philippine Interpretation IFRIC 11: Philippine Interpretation IFRIC 12: Group and Treasury Share Transactions Service Concession Arrangements The first time application of the standard and the amendment has not resulted in any prior period adjustments of cash flows, net income or balance sheet line items. (b) Effective Subsequent to 2008 There are new and amended standards that are effective for periods subsequent to 2008. The following new standards, effective for annual periods beginning on or after 01 January 2009 are relevant to the Group, and which the Group will apply in accordance with their transitional provisions. PAS 1 (Revised 2007): PAS 40 (Amendment): Presentation of Financial Statements PAS 40, Investment Property Below is a discussion of the possible impact of these accounting standards. (i) PAS 1 (Revised 2007), Presentation of Financial Statements (effective from January 1, 2009). The amendment requires an entity to present all items of income and expense recognized in the period in a single statement of comprehensive income or in two statements: a separate income statement and a statement of comprehensive income. The income statement shall disclose income and expense recognized in profit and loss in the same way as the current version of PAS 1. The statement of comprehensive income shall disclose profit or loss for the period, plus each component of income and expense recognized outside of profit and loss classified by nature (e.g., gains or losses on available for-sale assets or translation differences related to foreign operations). Changes in equity arising from transactions with owners are excluded from the statement of comprehensive income (e.g., dividends and capital increase). An entity would also be required to include in its set of financial statements a statement showing its financial position (or balance sheet) at the beginning of the previous period when the entity retrospectively applies an accounting policy or makes a retrospective restatement. The Group will apply PAS 1 (Revised 2007) in its 2009 financial statements. (ii) PAS 40 (Amendment), Investment Property. This standard is amended to include property under construction or development for future use as investment property in its definition of investment property. This results in such property being within the scope of PAS 40; previously, it was within the scope of PAS 16. Also, if an entity’s policy is to measure investment property at fair value, but during construction or development of an investment property the entity is unable to reliably measure its fair value, then the entity would be permitted to measure the investment property at cost until construction or development is complete. At such time, the entity would be able to measure the investment property at fair value. Minor amendments are made to several other standards; however, those amendments are not expected to have any material impact on the Company’s financial statements 16 RISK MANAGEMENT OBJECTIVES AND POLICIES The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The Group’s risk management is coordinated with its Parent, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short- to medium-term cash flows by minimizing the exposure to financial markets. Long-term financial investments are managed to generate lasting returns. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed to as described below. Credit Risk Analysis The Group and the Parent’s exposure to credit risk is limited to the carrying amount of financial assets recognized as of 30 September 2009. Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the balance sheet. Credit risk, therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial asset’s carrying amount. For advances to subsidiaries and associate, the Group is not exposed to significant risk more than the carrying amount of the advances since such net assets of the subsidiary and associate are sufficient to cover the Group’s investments and advances. Liquidity Risk Liquidity risk is the risk that there are insufficient funds available to adequately meet the credit demands of the Group’s customers and repay liabilities on maturity. The Group closely monitors the current and prospective maturity structure of its resources and liabilities and the market condition to guide pricing and asset/liability allocation strategies to manage its liquidity risks. 17 Key Performance Indicators September 2009 December 2008 13.38% 13.16% 0.40% 0.17% -14.39% 0.13% Capital Adequacy Ratio Total Equity to Total Assets Ratio Liquidity Liquid to Total Assets Ratio Profitability Return on Average Equity The Group’s Capital Adequacy Ratio (CAR) stood at 13.38%, a minimal increase of .22% compared to last year’s level of 13.16% . CAR is computed by dividing the Total Average Stockholder’s Equity over the Total Assets: Capital Adequacy Ratio Total Equity to Total Assets Ratio September 30, 2009 514,871,115 December 31, 2008 13.38% 3,848,997,144 480,147,867 13.16% 3,649,006,841 Liquidity ratio indicates the proportion of total assets which can be readily converted into cash. It also measures the extent to which the assets can be converted into cash to meet its liquidity requirements. Liquid assets include cash and other cash items. Below is the computation for the Liquidity Ratio: Liquidity Liquid to Total Assets Ratio September 30, 2009 15,263,371 3,848,997,144 December 31, 2008 6,268,100 0.40% 3,649,006,841 0.17% The ratio of the Group’s return on average equity (ROE) decreased from negative 0.13% in December 2008 to negative 14.39 % in September 2009. The Return on Average Equity Ratio is calculated as follows: Profitability Return Equity on September 30, 2009 Average (74,108,027) 514,871,115 December 31, 2008 -14.39% (629,209) -0.13% 480,147,867 18 Discussion and Analysis of Materials Events (1) i. The proposed increase in ALCO’s authorized capital stock was approved on 24 December 2008. This gave way to additional capital infusion by investors which will enable the Company to generate the liquidity required for future developments. Additional paid in capital was noted at P18 Mn in May 2009. ii. There are no other known trends, commitments, events or uncertainties that will have a material impact on ALCO’s liquidity within the next twelve (12) months except for those mentioned above. (2) i. There are no material commitments as of the date of this Report for capital expenditures. ii. There are no events that will trigger any direct or contingent financial obligation that is material to the Group or any default or acceleration of an obligation for the period. (3) There is nothing to disclose regarding any material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of ALCO with unconsolidated entities or other persons created during the reporting period. (4) There are no other significant elements of income or loss that did not arise from ALCO’s operations or borrowings for its projects. (5) The causes of the material changes of 5% or more from period to period of the following accounts are as follows: Balance Sheet Accounts – September 30, 2009 versus end 2008 (i) 144% increase in Cash and Cash Equivalent –due to proceeds from short term notes payable and additional paid in capital (ii) 55% increase in Receivables due to Advances to Suppliers and Contractor as a result of the start of Project in Fort Bonifacio and Receivables from Tenants that increased in value as a result of lease rate escalation. (iii) 275% increase in Other Current Assets – mainly due to Creditable Withholding Taxes, Rental Deposits, Meter Deposits (iv) 8% increase in total liabilities is due to loans acquired from various lenders 19 Income statement - Q2 2009 versus Q2 2008 (i) 11% increase in Gross Income is due to renewal of Lease Contracts at higher lease rates (ii) 8 % increase in taxes and licenses is due to the taxes related to the processing of various loan agreements. (iii) Increase in Power, Light and Water, Annual Dues and Fees, Transportation, Communication and Supplies is related to the increase in manpower compliment form 14 to 27 - nothing follows - 20