1. business and industrial
2. company
3. merger and acquisition

COVER SHEET
4 2 5 4 3
SEC Registration Number
A S I A B E S T
G R O U P
I N T E R N A T I O N A L
I N C.
(Company’s Full Name)
2 0 T H
L P
F L O O R
L E V I S T E
V I L L A G E
T H E
P E A K
S T R E E T
M A K A T I
T OW E R
1 0 7
S A L C E D O
C I T Y
(Business Address: No. Street City/Town/Province)
Venus L. Gregorio
(Contact Person)
1 2
3 1
Mont
Day
h
(Fiscal Year)
928-9246
(Company Telephone
Number)
20-IS
(Form Type)
Month
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
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
-1-
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 20-IS
INFORMATION STATEMENT of
ASIABEST GROUP INTERNATIONAL INC.
Pursuant to Section 20 of the Securities Regulation Code
1.
Check the appropriate box:
[ ] Preliminary Information Statement
[x] Definitive Information Statement
2.
Name of Registrant as specified in its charter: ASIABEST GROUP
INTERNATIONAL INC.
3.
Province,
country
or
other
jurisdiction
organization: MAKATI CITY, PHILIPPINES
4.
SEC Identification Number:
5.
BIR Tax Identification Code:
6.
Address of principal office:
7.
Registrant’s telephone number, including area code:
8.
Date, time and place of the meeting of security holders:
of
incorporation
or
42543
000-196-724-000
20TH Floor The Peak Tower Condominium
107 LP Leviste St., Salcedo Village
Makati City 1200
c/o (632) 928-9246
Date - 4 December 2013
Time - 2:00 P.M.
Place - The Lounge
Makati Sports Club, L.P. Leviste corner
Gallardo Streets, Salcedo Village
Makati City
9.
Approximate date on which the Information Statement is first to be sent or
given to security holders:
11 November 2013
10.
Securities registered pursuant to Sections 8 and 12 of the Code or Sections
4 and 8 of the RSA:
Authorized Capital Stock
Issued Shares
Number of Shares Outstanding as of 4 October
2013
a.
11.
P
= 200,000,000.00
200,000,000
200,000,000
Are any or all of registrant’s securities listed in a Stock Exchange?
Yes _X_
No ____
1
As of 4 October 2013, there are 17,170,348 common shares listed with the
Philippine Stock Exchange. All shares of stock are common.
2
INFORMATION REQUIRED IN THE INFORMATION STATEMENT
a. GENERAL INFORMATION
Item 1. Date, time and place of meeting of security holders
4 December 2013
2:00 P.M.
The Lounge
Makati Sports Club
L.P. Leviste corner Gallardo Streets
Salcedo Village, Makati City
20TH Floor The Peak Tower Condominium
LP Leviste St., Salcedo Village
Makati City 1200
a. Date
Time
Place
Principal
Office
b. Approximate date when the
Information Statement is first to
be sent to security holders:
11 November 2013
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
Item 2. Dissenter’s Right of Appraisal
Under the Corporation Code of the Philippines, a stockholder of a corporation shall
have the right to dissent and demand payment of the fair value of his shares in the
following instances:
(a) In case any amendment to the articles of incorporation has the effect of changing
or restricting the rights of any stockholder or class of shares, or of authorizing
preferences in any respect superior to those of outstanding shares of any class, or
of extending or shortening the term of corporate existence;
(b) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of
all or substantially all of the corporate property and assets as provided in the
Code;
(c) In case of merger or consolidation; and
(d) In case of investments in another corporation, business or purpose.
A dissenting stockholder may demand payment of the fair value of his shares by
voting against the proposed corporate action and making a written demand on the
Company within thirty (30) days after the date on which the vote was taken;
otherwise, the failure to make the demand within the said period shall be deemed a
waiver of the appraisal right of the dissenting stockholder. Within ten (10) days after
demanding payment of his shares, the dissenting stockholder shall submit to the
Company the certificate(s) of stock representing his shares for notation thereon that
the shares are dissenting shares; otherwise his failure to do so shall, at the option of
the Company, terminate his appraisal rights.
If the proposed corporate action is implemented or effected, the Company shall pay to
such stockholder, upon surrender of the certificate(s) of stocks representing his
shares, the fair value thereof as of the day prior to the date on which the vote was
taken, excluding any appreciation or depreciation in anticipation of such corporate
action. If within the period of sixty (60) days from the date the corporate action was
3
approved by the stockholders, the withdrawing stockholder and the Company cannot
agree on the fair value of the shares, it shall be determined and appraised by three (3)
disinterested persons, one of whom shall be named by the stockholder, another by
the Company, and the third, by the two (2) thus chosen. The findings of the majority
of the appraisers shall be final, and their award shall be paid by the Company within
thirty (30) days after the award is made, provided that the Company has unrestricted
retained earnings in its books to cover such payment and that upon payment by the
Company of the agreed or awarded price, the stockholder shall immediately transfer
his shares to the Company.
Any other right or action arising from the exercise of a dissenting stockholder of his
appraisal rights shall be governed by and in accordance with Title X of the
Corporation Code of the Philippines.
There are no matters or proposed corporate actions to be taken up during the Annual
Meeting which may give rise to a possible exercise by security holders of their
appraisal rights under Title X of the Corporation Code of the Philippines.
Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon
a. Substantial interest of directors / officers of the Registrant in any matter to be
acted upon other than election to office
Other than election to office, no director or executive officer, or associate of the
foregoing persons, has any substantial interest in the matters to be acted upon by the
stockholders at the Annual Meeting.
No director has informed the Company in writing of an intention 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
a. Number of Common Shares Outstanding as of
4 October 2013:
200,000,000
Number of Votes Entitled:
one (1) vote per share
b. Stockholders Entitled to Vote
All stockholders of record as of 8 November 2013 are entitled to notice of and to
vote at the Annual Stockholders’ Meeting.
c.
Manner of Voting
Article I, Sections 6 and 7 of the Amended By-Laws of the Company provide:
“Section 6. Voting. Except as otherwise provided by law, each
stockholder of record shall be entitled at every meeting of stockholders to
one vote for each common share of the capital stock standing in his name
on the stock books of the Company on the day fixed as the record date for
such meeting, which vote may be given personally or by proxy duly
appointed in writing by such stockholder or by his duly authorized
attorney.”
4
“Section 7 Proxies. Proxies on file with the Corporation and executed not
more than five (5) years before the date of the shareholders’ meeting, shall
be recognized and used unless specifically revoked or a new proxy is
received by the Corporation. Proxies shall be filed with and received by
the Corporate Secretary or the Transfer Agent not later than three (3)
working days prior to the date of the stockholders’ meeting. In the election
of directors, each stockholder entitled to vote may cumulate and distribute
his votes in accordance with the provisions of the Corporation Code.”
d. Security
Ownership of Certain Record and Beneficial Owners and
Management
i.
Security Ownership of Certain Record and Beneficial Owners (of more
than 5%) as of 4 October 2013.
The table below outlines the persons, as of 4 October 2013, who are known to the
Corporation to be directly or indirectly the record and / or beneficial owner of more
than 5 % of any class of the Corporation’s voting securities:
Title of
Class of
Shares
Name, address of
Name of Beneficial
Record Owner and Relationship Owner and Relationship
with Issuer
with Record Owner
No. of
Shares
Held
Percent
Filipino
98,078,651
49%
Antonio V.F. Gregorio III
Filipino
16,320,001
8.16%
Chi Ho Co
Filipino
14,000,001
7%
Citizenship
Sunplaza Development
Corporation
Sunplaza Centre, Shaw Blvd.,
corner Princeton St.,
Mandaluyong City
Common
Sunplaza Development
Corporation
Major Shareholder
Antonio V.F. Gregorio III
45 South Maya Philam Homes,
Quezon City
Common
Director
Chi Ho Co
1541 MH del Pilar cor Cuarteles
St., Ermita Manila
Common
Director
Garry Lincoln Taboso
No. 17 Kanlaon St., Quezon City
Common
No relationship with Issuer
Garry Lincoln Taboso
Filipino
14,000,00
7%
Various clients*
Filipino
12,756,122
6.38%
PCD Nominee Corporation
Common
37/F Tower I, Enterprise Center,
6766 Ayala Ave., Makati City
*No client of PCD holds more than 5% of the shares of stock of the Company, per the records of
Stock Transfer Service, Inc., the company’s stock and transfer agent.
Sunplaza Development Corporation is the major corporate investor of the Company
following its re-organization. It is a 100% Filipino owned corporation organized primarily
to carry on and engage in the realty business. It has an authorized capital stock of Ten
Million Pesos (P 10,000,000.00), divided into Ten Million (10,000,000) shares with a par
value of One (P 1.00) Peso per share. Subscribed capital stock and the amount of paidup capital are as follows:
5
Shares Subscribed
Name
Jerry C. Angping
Wilma C. Crisostomo
Ma. Rhodora V. Angping
Delfin S. Castro, Jr.
Engracio L. Sagcal, Jr.
TOTAL
Number
1,500,000
250,000
250,000
250,000
250,000
2,500,000
Amount (P)
1,500,000.00
250,000.00
250,000.00
250,000.00
250,000.00
2,500,000.00
% of
Ownership
60
10%
10%
10%
10%
100
Amount Paid
(P)
375,000.00
62,500.00
62,500.00
62,500.00
62,500.00
625,000.00
Sunplaza Development Corporation’s Board of Directors and Management / Key Officers,
are provided as follows:
Name
Jerry C. Angping
Wilma C. Crisostomo
Ma. Rhodora V. Angping
Delfin S. Castro, Jr.
Engracio L. Sagcal, Jr.
Name
Jerry C. Angping
Wilma C. Crisostomo
Delfin S. Castro, Jr.
Board of Directors
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Key Officers
Citizenship
Filipino
Filipino
Filipino
Position/Designation
Chairman
Member
Member
Member
Member
Position/Designation
President
Treasurer
Corporate Secretary
Mr. Delfin S. Castro, Jr. is a Director both of Sunplaza Development Corporation and
Asiabest Group International Inc. Mr. Jose M. Crisostomo, a Director of Asiabest Group
International Inc. is married to Ms. Wilma C. Crisostomo, who is currently a Director also
of Sunplaza Development Corporation.
ii.
Security Ownership of Directors and Management as of 4 October 2013
Title of Class
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Amount and Nature
of Beneficial
Percent
Ownership
Citizenship of All Class
Name of
Beneficial Owner
Antonio V.F. Gregorio III
16,320,001(Direct)
Filipino
8.16%
Jose M. Crisostomo
4,320,000(Direct)
Filipino
2.16%
Delfin S. Castro, Jr.
4,320,000(Direct)
Filipino
2.16%
Chi Ho Co
14,000,001(Direct)
Filipino
7%
Richard N. Palou
1(Direct)
Filipino
Nil
Jose Francisco E. Miranda
4,320,001 (Direct)
Filipino
2.16%
Manuel Acenas
100 (Direct)
Canadian
Nil
Helen G. Tiu
100 (Direct)
Filipino
Nil
Ramon Miguel Osmeña
1,000 (Direct)
Filipino
Nil
Filipino
NA
Venus L. Gregorio
16,320,001(Indirect)
All Directors and Officers as a Group
43,281,204
1
21.64%
Some of the Directors and management own 2% or more of the outstanding capital
stock of the Company as per above table.
1
The shares of Atty. Venus L. Gregorio are indirectly owned as they are in the name of her spouse
Atty. Antonio V.F. Gregorio III as reported.
6
iii. Voting Trust Holders of 5% or More
The Company knows of no person who holds more than 5% of a class under a voting
trust or similar agreement.
iv. Change in Control
Management is not aware of any change in control or arrangement that may result in a
change in control of the Registrant since the beginning of the calendar year.
Item 5. Directors and Executive Officers
Article II, Section I of the Company’s Amended By-Laws provides:
“Section 1. Number and Qualifications. The Board of Directors of the
Company shall be nine (9) in number and they shall be stockholders in their
own right, and elected in accordance with the Corporation Law at the annual
meeting of the stockholders for at term of one (1) year until their successors
are elected and qualified.”
Article II. Section I (B) of the Company’s Amended By-Laws provides:
“Section 1(B). As a corporation publicly listed in the Stock Exchange, the
Corporation shall conform with the requirement to have such number of
Independent Directors as may be required by law, possessed with such
qualifications as may be prescribed by law. An “Independent Director” is a person
who, apart from his fees and shareholdings, which shareholdings do not exceed
two (2%) of the shares of the Corporation and/or its related companies or any of
its substantial shareholders, is independent of management and free from any
business or other relationship which could, or could reasonably be perceived to,
materially interfere with his exercise of independent judgment in carrying out his
responsibilities as a director of the Corporation, including among others, any
person who:
i.
ii.
iii.
iv.
v.
vi.
Is not a director or officer or substantial stockholders of the Corporation or
of its related companies or any of its substantial shareholders (other than
as an Independent Director of any of the foregoing);
Is not a relative of any director, officer or substantial shareholder of the
Corporation, any of its related companies or any of its substantial
shareholders. For this purpose, relatives include spouse, parent, child,
brother, sister, and spouse of such child, brother or sister;
Is not acting as a nominee or representative of a substantial shareholder of
the Corporation, any of its related companied or any of its substantial
shareholders;
Has not been employed in any executive capacity by the Corporation, any
of its related companies or by any of its substantial shareholders within the
last five (5) years;
Is not retained as professional adviser by the Corporation, any of its
related companies or any of its substantial shareholders within the last five
(5) years, either personally of through his firm; and
Has not engaged and does not engage in any transaction with the
Corporation or with any of its related companies or with any of its
substantial shareholders, whether by himself or with other persons or
through a firm of which he is a partner or a company of which he is a
director or substantial shareholder, other than transactions which are
conducted at arms length and are immaterial or insignificant.
7
When used in relation to a company subject to the requirements above “related
company” shall mean another company which is (i) its holding company, (ii) its
subsidiary, or (iii) a subsidiary of its holding company; and “substantial
shareholder” shall mean any person who is directly or indirectly the beneficial
owner of more than ten percent (10%) of any class of its equity security.
The Independent Director shall have the following qualifications:
i.
He shall have at least one (1) share of stock of the Corporation
ii.
He shall be at least a college graduate or he shall have been engaged or
exposed to the business of the Corporation for at least five (5) years;
iii.
He shall possess integrity/probity; and
iv.
He shall be assiduous.
No person enumerated under Section II (5) of the code of Corporate Governance
shall qualify as an Independent Director. He shall likewise be disqualified during
his tenure under the following instances or causes:
i.
ii.
iii.
iv.
He becomes an officer or employee of the Corporation, or becomes any of
the persons enumerated under Section II (5) of the Code of Corporate
Governance;
His beneficial security ownership exceeds two percent (2%) of the
outstanding capital stock of the Corporation;
Fails, without any justifiable cause, to attend at least fifty percent (50%) of
the total number of Board meetings during his incumbency;
Such other disqualifications which the Manual of Corporate Governance of
the Company provides.
An independent director shall submit to the Corporate Secretary a letter of
confirmation stating that he holds no interests affiliated with the Corporation,
management or controlling shareholder at the time of his election or appointment
and/or re-election as a director. (Amended by majority vote of the Board of
Directors on 4 August 2008 and by 2/3 majority vote of stockholders on 28
October 2008) 2
a. Nominees for Directors and Independent Directors
The following have been nominated to the Board of Directors of the Company for
the year 2013 to 2014:
Name
Antonio V.F. Gregorio III
Delfin S. Castro, Jr.
Jose M. Crisostomo
Cho Ho Co
Richard William N. Palou
Jose Francisco Miranda
Manuel G. Acenas
Ramon Miguel V. Osmeña
(Independent Director)
Helen G. Tiu (independent Director)
Age
40
47
62
41
65
35
67
Nationality
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Canadian
28
53
Filipino
Filipino
Period Served
Since 2008
Since 2010
Since 2010
Since 2011
Since 2008
Since 2011
Since 2012
Since 2011
Since 2012
The aforementioned nominees have been recommended for nomination by the
Nomination Committee. There are no directors who declined to stand for reelection to the Board of Directors for any reason whatsoever.
2
The Company’s Certificate of Filing of Amended By-Laws was approved by the Securities and
Exchange Commission last 3 May 2011.
8
The above named nominees are expected to attend the scheduled Annual
Stockholders’ Meeting.
b. Nomination and Election of Independent Directors
The Nomination Committee is composed of Mr. Jose M. Crisostomo as Chairman
and Messrs. Antonio Victoriano F. Gregorio III and Atty. Helen Tiu as Members.
The Nomination Committee accepted and pre-screened nominees for
independent directors conformably with the criteria prescribed under existing SEC
rules and the Company’s Code of Corporate Governance.
The following are the details of the nominations for Independent Director received
and approved by the Nominations Committee:
Nominee for Independent
Director
Person Submitting the
Nomination
Relation of Nominee to the
Nominator
Helen G. Tiu
Jose M. Crisostomo
None
R. Miguel Osmeña
Antonio V. F. Gregorio III
None
Atty. Helen G. Tiu and Mr. R. Miguel Osmeña submitted their credentials to
support their qualifications for the positions of Independent Directors. The
Company has adopted the SRC Rule 38 (Requirements on Nomination and
Election of Independent Directors) and compliance therewith has been
made. The Company always undertakes to abide by the existing SRC Rule 38 on
the required number of independent directors subject to any revision that may be
prescribed by the SEC.
All nominees were pre-screened and included in the final list of candidates for
election to the Board of Directors. All nominees were found to possess all the
qualifications and none of the disqualifications for election to the positions of
regular and independent directors.
c. Significant Employees
There are no individuals who are not executive officers who are expected by the
Company to make a significant contribution to the Company’s business. Neither
is the business of the Company highly dependent on the services of certain key
personnel.
d. Family Relationships
Attys. Antonio V.F. Gregorio III, President and Chairman of the Board of Directors
and Venus L. Gregorio, Corporate Secretary, are spouses.
Aside from the above-mentioned, there are no family relationships up to the fourth
civil degree either by consanguinity or affinity existing among the Company’s
Directors, executive officers or persons nominated or chosen by the Company to
become directors or executive officers.
e. Involvement in Certain Legal Proceedings
Each of the director has certified that, during the past five years, they have not
been involved in any insolvency or bankruptcy proceeding nor has any of them
been convicted by final judgment in a criminal proceeding. Furthermore, none of
9
the directors has been subject to any order permanently enjoining, barring,
suspending or limiting their involvement in any type of business, securities,
commodities or banking activities, nor have they been found by any court in a civil
action to have violated any securities or commodities law or regulation.
To the best of the Company’s knowledge, there is no event listed below that
occurred during the last five years up to the latest date that are material to an
evaluation of the ability or integrity of any director or nominee for election as
director, executive officer or control person of the Company:
(a) Bankruptcy petition filed by or against any business of which a director or
executive officer of the Company was a general partner or executive
officer either at the time of bankruptcy or within two (2) years prior to that
time;
(b) Conviction by final judgment in a criminal proceeding, domestic or foreign,
excluding traffic violations and other minor offenses;
(c) 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 bargaining activities; and ;
(d) Being found by a domestic or foreign court of competent jurisdiction (in a
civil action), the Securities and Exchange 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.
f.
Relationships and Related Transactions
In the normal course of business, transactions with related parties include the
following:
a. On March 5, 2012, the Company gave its conformity to the execution of a
General Contractor Agreement between Geogen and NiHAO under which
NiHAO shall bear the management fees pursuant to the Management
Agreement with Option to Buy. Mining operations started during the year.
Management income recognized in 2012 amounted to ₱3.56 million.
Outstanding balance as at December 31, 2012 amounted to ₱3.56 million.
b. The Parent Company has advances from a stockholder for working capital
requirements amounting to ₱0.587 million and ₱13,946 as at December 31,
2012 and 2011, respectively.
c. On September 27, 2011, the Parent Company, NiHAO and Glencore executed
a HOA in Hong Kong to develop and operate mining claims of economically
feasible nickel deposits in the Philippines for purposes of direct shipping or
selling of ore and other related nickel mining business. In order to accomplish
the said purpose, the parties agreed to from within a period of two months
from the signing of the HOA, a JVC under the laws of Hong Kong. The JVC
was incorporated in Hong Kong on November 23, 2011. As at December 31,
2012, the JVC has not started its main business operation. NiHAO and the
Parent Company have interlocking directors.
10
The group avails of services rendered by lawyers of Gregorio Law Offices which
primarily consists of legal and back office work. One of the key management
personnel of Group is also a partner of this law firm. The related professional fees
amounted to ₱2.6 million and ₱4.4 million in 2012 and 2011, respectively.
Also, as disclosed, in 2011, the Company issued shares via private placements in
which three (3) Directors have direct material interests. Thus, as disclosed to the
SEC, PSE and the investing public, common shares stock of the Corporation were
issued in favor of Messrs. Antonio Victoriano F. Gregorio III, Jose M. Crisostomo
and Delfin S. Castro, Jr., all of whom are directors of the Corporation. Said
directors and officers executed the pertinent Subscription Agreements with the
Company on 16 May 2011.
On 17 June 2011, the Company issued One hundred thirty six million six hundred
seventy eight thousand six hundred fifty one (136,678,651) shares of the Company to
various Investors under private placements. Portions of said shares were subscribed
by Messrs. Antonio V.F. Gregorio III and Chi Ho Co, both of whom are current
directors of the Company.
In addition to the above directors, Sunplaza Development Corporation, the major
investor of the Company, subscribed to a total of 98,078,651 which made
Sunplaza Development Corporation the owner of 49% of the total outstanding
capital of Asiabest Group International Inc.
g. Ownership Structure
As of 4 October 2013, the following are the top 20 holders of the common shares
of the Company:
Stockholder’s Name
No. of Common
Shares Held
Percentage
to Total
Sunplaza Development Corporation
Antonio V.F. Gregorio III
Chi Ho Co
Garry Lincoln Taboso
PCD Nominee Corporation (Filipino)
Larry Angping
Nellie Esparaz
Jose Francisco Miranda
Delfin Castro, Jr.
Jose Crisostomo
Ma. Teresa Vergara
Trans-Philippines Investment Corporation
Rafael B. Zialcita
Job Adrian Ambrosio
Fernando Macatbag
Lawrence Tabije
Joan Ang
PCD Nominee Corporation (Non-Filipino)
Rizal Commercial Banking Corporation (T/A No. 75234-7
Asiatrust Bank – Trust Banking Sector
Total
98,078,651
16,320,001
14,000,001
14,000,000
12,756,122
4,500,000
4,500,000
4,320,001
4,320,000
4,320,000
4,320,000
4,063,214
4,000,000
3,000,000
2,025,000
1,993,500
1,981,500
389,130
175,600
155,686
199,218,406
49%
8.16%
7%
7%
6.38%
2.25%
2.25%
2.16%
2.16%
2.16%
2.16%
2.03%
2%
1.5%
1.01%
1%
.99%
.19%
.09%
.08%
99.57%
11
h. Resignation of Directors
No director has resigned or declined to stand for re-election to the Board of
Directors since the last annual meeting of the security holders due to any
disagreement with the Company relative to the Company’s operations, policies
and practices.
Item 6.
Compensation of Directors and Executive Officers
The following summarizes the compensation packages of the Directors and Executive
Officers of the Registrant during the last two (2) fiscal years.
The following summarizes the compensation packages of the Directors and Executive
Officers of the Registrant during the last three (3) fiscal years.
Name
Position
Antonio Victoriano F. Gregorio III
Chairman / President
Delfin S. Castro, Jr.
CFO / Treasurer
Venus L. Gregorio
Corporate Secretary / CIO
All other officers and directors as a
group unnamed
Year
2013
2012
2011
2013
2012
2011
2013
2012
2011
Salary
-
Bonus
-
Per Diem
11,111*
20,000
60,000
5,555*
12,500
25,000
11,111*
17,500
60,000
2013
2012
2011
-
-
22,222*
45,000
180,000
As of October 2013, the above names are the only executive officers of the Company.
*Balance as of 21 October 2013.
For 2013, the Directors get a per diem of P
= 5,000.00 to P 10,000.00 for attendance in
a Regular or Special Board Meeting.
There are no other arrangements, including consulting contracts, pursuant to which
any director of the Company was compensated, or is to be compensated, directly or
indirectly, for any service provided as a director.
No action is to be taken with regard to any bonus, profit sharing, pension, retirement
plan or the granting or extension of any option or warrant to directors and executive
officers.
The Company has no officers categorized as highly paid executives.
a. Employment Contracts and Termination of Employment and Change-inControl Arrangements
Pursuant to the Company’s By-Laws, each Director has a term of office of one year
from date of election or until his successor shall have been named, qualified and
elected.
At present, there is no employment contract between the Company and a named
executive officer as the Company has no employees.
Also, there is no compensatory plan or arrangement, including payments to be
received from the Company, with respect to any such officer, if such plan or
arrangement results or will result from the resignation or retirement or any other
termination of such officer’s employment with the Company or its subsidiary or from a
change-in-control of the Company or a change in such officer’s responsibilities
12
following a change-in-control and the amount, including all periodic payments or
installments, which exceeds P
= 2,500,000.00.
b. Warrants and Options
There are no officers of the Company who are holding any warrants or options.
Item 7.
Independent Public Accountants
a. For the year ended 31 December 2012, the external auditor of the Company was
the accounting firm of SGV & Co.
b. Pursuant to the General Requirements of SRC Rule 68, Par. 3 (Qualifications and
Reports of Independent Auditors), the Company has engaged SGV & Co. as
external auditor of the Company. Mr. Renato J. Galve was the Partner In-Charge
during the audit year 2012.
c. During the Annual Stockholders’ Meeting, approval is sought for the appointment
of SGV & Co. as the Company’s external auditor for 2013.
d. Representatives of the principal accountants for the current year and for the most
recently completed fiscal year:
(i) are expected to be present at the security holders' meeting;
(ii) will have the opportunity to make a statement if they desire to do so;
and
(iii) are expected to be available to respond to appropriate questions.
e. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
The Company has engaged the services of SGV & Co. for the year ended 31
December 2012. There has been no event where SGV and the Company had
any disagreement with regard to any matter relating to accounting principles or
practices, financial statement disclosure or accounting procedure.
Item 8.
Compensation Plans
There are no compensatory plans or arrangements granted to, or outstanding
stock warrants or options held by, directors or corporate/ executive officers of the
Company.
There will be no cash or non-cash compensation plans, or adjustments or
amendments in stock warrants or options that will be taken up during the special
stockholders’ meeting.
c. ISSUANCE AND EXCHANGE OF SECURITIES
Item 9. Authorization or Issuance of Securities Other than for Exchange
There are no matters to be taken up for the authorization or issuance of securities
other than for exchange.
13
Item 10.
Modification or Exchange of Securities
There are no matters to be proposed to Shareholders under Modification or Exchange
of Securities.
Item 11.
Financial and Other Information
1. The audited financial statements as of 31 December 2012, Annual Report
for 2012 and interim financial statements for the first and second quarters
of 2013 are hereto attached as Annexes “A”, “B” “C” and “D”, respectively.
2. Management’s Discussion and Analysis, market Price of Shares and
Dividends and other data related to the Company’s financial information
are discussed in a latter section.
3. The Company’s Plan of Operation is discussed in a latter section.
4. There are no changes in and disagreements with accountants on
accounting and financial disclosure; and
5. Representatives of the principal accountants for the current year and for
the most recently completed fiscal year:
(i) are expected to be present at the security holders' meeting;
(iii) will have the opportunity to make a statement if they desire to do so;
and
(iii) are expected to be available to respond to appropriate questions.
Item 12.
Mergers, Consolidations, Acquisitions and Similar Matters
There are no matters or actions to be taken up in the meeting with respect to merger,
consolidation, acquisition by, sale or liquidation of the Company.
Item 13.
Acquisition or Disposition of Property
There are no matters to be taken up proposing the acquisition or disposition of
property.
Item 14.
Restatement of Accounts
There are no matters or actions to be taken up in the meeting with respect to the
restatement of any asset, capital or surplus account of the Company.
d. OTHER MATTERS
Item 15.
Action with Respect to Reports
Stockholders’ approval and / or ratification is sought with respect to the following
reports of the Board of Directors and Management from December 2012 until the interim
period 1 January 2013 up to the date of the holding of the Annual Meeting of
Shareholders:
Date
13 December 2012
Report
Results of the Annual Stockholders’ Meeting held on 13 December 2012 on
the following:
- Approval of the minutes of the Annual Stockholders’ Meeting held
on
- President’s Report
- Adoption of the Audited Financial Statement for the Years Ended 31
December 2011
- Approval of all acts of the Board of Directors and Management from
14
13 December 2012
10 May 2013
20 June 2013
Item 16.
October 2011 to December 2012
- Election of Directors
Results of the Organizational Meeting of the Board of Directors on the
following:
- Appointment of Officers of the Company
- Appointment of members to the various Committees
Results of the Board Meeting of the Board of Directors on the following:
- Postponement of the annual stockholders’ meeting of the Company
Results of the Board Meeting of the Board of Directors on the following:
- Approval of the Manual on Corporate Governance
- Creation of the Executive Committee, Governance Committee, Risk
Management Committee and appointment of their members.
Matters not required to be Submitted
All matters or actions to be submitted in the meeting will require the vote of security
holders.
Item 17.
Amendment of Charter, By-Laws or Other Documents
There are no matters to be taken up or proposed regarding any amendment of
charter, by-laws of other documents.
Item 18.
Other Proposed Actions
There are no other proposed actions other than those discussed in the preceding
sections.
Item 19.
Voting Procedures
In all items for which stockholders’ approval is sought as described in this Information
Statement, each share of stock entitles its registered holder to one (1) vote.
All other matters subject to vote, except in cases where the law provides otherwise, shall
be decided by the majority vote of stockholders present in person or by his proxy, if there
be such proxy, and entitled to vote thereat, provided that a quorum is present.
In case of election of directors, each common stockholder may vote such number of
shares for as many person as there are directors to be elected or he may 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
principle among as many nominees as he shall see fit, provided that the whole number of
votes cast by him shall not exceed the number of shares owned by him multiplied by the
total number of directors to be elected.
Method by which votes will be counted
There is no manner of voting prescribed in the By-Laws of the Company. Hence,
voting may be done by viva voce, raising of hands or by balloting.
The external auditor of the Company, SGV & Co., will validate the ballots when
voting is done by secret ballot. Likewise, SGV & Co. will count the number of
hands raised when voting by show of hands is done.
15
UNDERTAKING TO PROVIDE ANNUAL REPORT & 3rd QUARTER FINANCIAL
STATEMENTS
THE COMPANY UNDERTAKES TO SUBMIT ITS 3RD QUARTER FINANCIAL
STATEMENT TO THE SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE
14 NOVEMBER 2013. UPON THE WRITTEN REQUEST OF THE STOCKHOLDER, THE
COMPANY UNDERTAKES TO FURNISH SECURITY HOLDERS WITHOUT CHARGE,
AND UPON THEIR WRITTEN REQUEST, COPIES OF THE COMPANY’S ANNUAL
REPORT (SEC FORM 17-A) AND 3RD QUARTER FINANCIAL STATEMENTS (SEC
FORM 17Q). COPIES OF OTHER EXHIBITS MAY BE PROVIDED UPON WRITTEN
REQUEST AND UPON THE PAYMENT OF NOMINAL CHARGES TO DEFRAY
ADMINISTRATIVE COSTS AND EXPENSES SUBJECT TO CONDITIONS AS THE
BOARD OF DIRECTORS MAY PROMULGATE.
SUCH WRITTEN REQUEST FOR A COPY OF SEC FORM 17-A & 3RD QUARTER
FINANCIAL STATEMENTS SHALL BE DIRECTED TO THE OFFICE OF THE
CORPORATE SECRETARY, 20TH FLOOR THE PEAK TOWER, 107 LP LEVISTE ST.,
SALCEDO VILLAGE MAKATI CITY.
ALL STOCKHOLDERS OF RECORD AND THOSE ACTING AS FIDUCIARIES,
NOMINEES, TRUSTEES OR SIMILAR CAPACITIES IN BEHALF OF BENEFICIAL
OWNERS WHO ARE NOT OF RECORD, MAY ALSO REQUEST IN WRITING TO THE
PERSON AND AT THE ADDRESS PROVIDED ABOVE, AS MANY COPIES OF THIS
INFORMATION STATEMENT AND/ OR SEC FORM 17-A FOR DISTRIBUTION TO
SUCH BENEFICIAL OWNERS, AND UPON RECEIPT OF SUCH WRITTEN REQUEST,
THE COMPANY UNDERTAKES TO SUPPLY THE REQUESTED MATERIALS IN A
TIMELY MANNER.
SUBMISSION OR PROXIES
PLEASE NOTE THE FOLLOWING BY-LAWS PROVISION OF THE COMPANY ON
SUBMISSION OF PROXIES
Proxies on file with the Corporation and executed not more than five (5) years before the
date of the shareholders’ meeting, shall be recognized and used unless specifically
revoked or a new proxy is received by the Corporation. Proxies shall be filed with and
received by the Corporate Secretary or the Transfer Agent not later than three (3) working
days prior to the date of the stockholders’ meeting. In the election of directors, each
stockholder entitled to vote may cumulate and distribute his votes in accordance with the
provisions of the Corporation Code. (Amended on June 21, 1984)
ADDRESS OF CORPORATE SECRETARY – 20TH FLOOR THE PEAK TOWER, 107 LP
LEVISTE ST., SALCEDO VILLAGE MAKATI CITY
ADDRESS OF STOCK TRANSFER AGENT TOWER, 6784 AYALA AVENUE, MAKATI CITY
16
34TH
FLOOR, RUFINO PACIFIC
Management Report and Plans of Operations
Current Operations
On 14 October 2011, the Company entered into a Management Agreement with Option to
Buy with Geogen Corporation (GEOGEN). GEOGEN is a mining company and is a
registered holder of a valid and existing mining claim in Dinapigue, Isabela (the “Mining
Area”). GEOGEN retained the services of ABG for the management of the exploration,
development and mining operations of the mining area. ABG thus undertakes to provide
Management Services to GEOGEN including management control and property
administration over the daily and medium term operations of the Mining Area for a period of
five (5) years.
The Company’s revenue for the year ended December 31, 2012 totaled to about P
= 3.56
million which was earned from Management Agreement with Geogen Corporation, and
interest income of P
= 1.72 an increase of P
= 0.64 million when compared to December 31, 2011
due mainly to the increase in the Company’s average short-term placements. The increase
in the short term placements was due to the payments of subscriptions receivable by the
stockholders which result to higher interest income.
For the next year, Management expects that the acquisition of various interests in the mining
sector will still be its main business concern. Still in line with the primary purpose of the
Company as a holdings corporation, business outlook for 2014 is geared towards expansion.
Thus, the Company may tap into various sources to look for opportunities in mining
acquisition and development, contracting, equipment leasing and ore selling. Specifics of
such future projects, if any, will be properly disclosed in accordance with the continuing
disclosure requirements of the SEC and the PSE. Financing requirements for said projects
will have to be first satisfied by the current cash flow of the Company consisting mainly of
funds raised by the Company from its concluded private placement transactions. Additional
funding will be further studied by the Board of Directors and may be subsidized by
shareholders’ advances, private placement share issuances, property or share for share
swap, stock rights offering or a combination of any or all of said fund raising activities.
Business Background
ABG came from a long period of dormancy following the revocation of its License to Sell
Securities by the Securities and Exchange Commission as well as the trading suspension
issued by the Philippine Stock Exchange in. In 2008, the Company received a total of
Fifteen Million Pesos (₱15,000,000.00) by way of deposit for future subscriptions from a
group of investors. This amount provided the seed capital to allow ABG to pay statutory fines
and penalties imposed by the SEC and PSE. It likewise allowed the Company to hire
professionals to work on the lifting of the SEC’s revocation order and the PSE’s trading ban.
On 3 May 2011, the SEC issued an Order Lifting the Order of Revocation of ABG’s Permit to
Sell Securities.
On 3 May 2011, the Securities and Exchange Commission (SEC) approved the proposed
quasi-reorganization and equity restructuring of the Company. The capital increase was
undertaken using the Fifteen Million Pesos (₱15,000,000.00) deposited for future
subscriptions by the Investors as partial payment for subscriptions to Forty Five Million
(45,000,000) Shares at the price of One Peso (P1.00) per share, which was the reduced par
value of the shares upon the approval by the SEC of its quasi-reorganization plan. After
approval of the capital increase, the Company’s issued and outstanding shares stood at
Sixty two million one hundred seventy thousand two hundred ninety three (62,170,293). The
1
corresponding Subscription Agreements with the subscribers were executed by the
Company on 16 May 2011 and the balances on the subscription price from the individual
investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private
placement, of an additional 136,678,651 shares of the Company at P
= 1 par value a share to
various investors.
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the
Company due its full compliance with the Exchange’s requirements, submission of
structured reports and payment of the Company’s obligations. ABG shares are again trading
in the Philippine Stock Market.
Considering the upward trend in real estate and BPO relevant real estate, the Company
tapped into possible investments into the real estate sector as its maiden project. An
opportunity presented itself for the Company to engage again in business and revive its
status as a publicly listed company with an offer for investments from investors who shall
provide the seed capital for the Company’s projects. Thus, Sun Plaza Development
Corporation, the Company’s major investor has subscribed to 92,678,651 shares of the
company for a total investment of ₱92,678,651.00. The Company, through a subsidiary, will
acquire several office condominium units comprising approximately two floors of Sunplaza
Centre, a commercial/office condominium building located along Shaw Blvd., Mandaluyong
City. The office condominium units are tenanted.
The Board of Directors also approved the creation of several subsidiaries via investment in
various corporations where the Company will own 100% of the outstanding capital stock of
the said subsidiaries. With the objective of expanding the business operations of ABG,
several subsidiaries were created with the authority to engage in the businesses of mining
development, mining sub-contracting and equipment leasing, and agriculture / palm oil
production and processing. The Company is currently studying, exploring, and evaluating
various proposed actions to expand its business interests and operations. These expansion
plans will be financed with the corporate funds raised from the private placement
transactions to enable the Company to acquire businesses and interests in the fields of real
estate, mining development, mining sub-contracting and equipment leasing, and agriculture /
palm oil production and processing.
On 27 September 2011, the Company executed a Heads of Agreement with NiHao and
Glencore to enter into a joint venture and technical partnership whereby each party shall
utilize its expertise in the mining industry for purposes of investigating, identifying, acquiring,
developing and operating mining claims of economically feasible nickel deposits in the
Philippines for purposes of Direct Shipping / Selling Ore and other nickel mining businesses.
On 28 October 2011, the Company signed an Addendum to the Heads of Agreement with
Glencore International AG (Glencore)providing, among others, that GNA shall have an initial
authorized share capital of One Hundred Thousand Hong Kong Dollars (HK$100,000.00)
with a par value of One Hong Kong Dollar (HK$1.00) per share with issued and paid up
capital of Ten Thousand Hong Kong Dollars (HK$10,000.00) equivalent to Ten thousand
shares of the JVC. At the current time, GNA has not gone into commercial operations and
maybe de-registered by the Parties subject to compliance with Philippine and Hong Kong
laws.
The Company will properly disclose additional information relating to any contracts,
agreements, board approvals and actions involving any of the above matters. In the
meantime and in the absence of any definitive act of management on the aforesaid, we
cannot report any expected purchase of any plant and significant equipment, or any
significant changes in the number of the Company’s employees.
2
The Company cannot yet determine specific cash or funds requirements for the next 12
months pending definitive contracts or projects that the Company will enter into.
Directors and Executive Officers
The following table sets forth certain information as to Directors and executive officers of the
Company as of 4 October 2013 for the last five (5) years:
Name
Antonio Victoriano F. Gregorio III
Delfin S. Castro, Jr.
Jose M. Crisostomo
Richard William N. Palou
Chi Ho Co
Jose Francisco E. Miranda
Manuel Acenas
Helen G. Tiu
Ramon Miguel V. Osmeña
Venus L Gregorio
Age
40
47
62
65
41
35
67
53
28
44
Nationality
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Canadian
Filipino
Filipino
Filipino
Present Position
Chairman
Director and Treasurer
Director
Director
Director
Director
Director
Independent Director
Independent Director
Corporate Secretary
Antonio Victoriano F. Gregorio III, 40 - Atty. Antonio Gregorio III graduated Second
Honors, with a Juris Doctor from the Ateneo de Manila University in 1998 and passed
the bar examinations of 1999. He also has a Bachelor of Science Major in
Management Engineering and a Bachelor of Arts, Major in Economics-Honors, both
from the Ateneo de Manila University, Magna Cum Laude. He was a valedictorian of
his high school class in the Ateneo. Atty. Gregorio is a Partner at Gregorio Law
Offices and sits as director and officer of various public and private companies,
including NiHAO Mineral Resources International, Inc., (President from 2011 to
present and Chairman since October 2012),
Dizon Copper-Silver Mines
(Treasurer/Director from 2012 to present), Abacus Consolidated Resources and
Holdings, Inc.,(Director, 2009 to present), Lodestar Investment Holdings Corporation
(Chairman since 2012, Director since 2008 and Corporate Secretary from 2008 to
2012) GNA Resources International Limited (2011 to present), Cuervo Far East,
Inc.(Corporate Secretary/Director, 2005 to present), Alta Minera, Inc., Breccia
Resources, Inc., and Millionaire’s Offices and Properties, Inc. (Chairman, 2011 to
present), Beaver Q Corporation ( Corporate Secretary, 2002 to present), Big Herald
Link International Corporation (Corporate Secretary/Treasurer/Director, 2004 to
present), Tajima Yakiniku, Inc. (Director, 2005 to present), 4A9T Scholarship
foundation, Inc. (Corporate Secretary/Trustee from 1999 to present), World Wide
Manpower Overseas, Inc. (President/Director, 2007 to present), and Director of Pride
Star Development Bank (2009 to present). He was formerly the Corporate
Secretary/Director of the following companies, Active Earnings, Inc. (2003 to 2011),
Buddybuds, Inc. (2003 to 2011), Cangoc, Inc. (2002 to 2011), Carellan, Inc. (2003 to
2011),
Cuisine Allurements, Inc. (2002 to 2011), Grand Pin Development
Corporation (2004 to 2011), Hobbiton, Inc. (2003 to 2011), Pinecrest Realty
Corporation (2003 to 2011); Treasurer/ Director of Carom, Inc. (2003 to 2011), Los
Boldos, Inc. (2003 to 2011) and Onion and Chives, Inc. (2003 to 2011), Corporate
Secretary of JMARR Realty, Inc. (2002 to 2011), PPARR Management and Holdings
Corporation (2004 to 2010) , Cuervo Appraisers, Inc. (2007 to 2009) and RF Cuervo,
Inc. (2003 to 2008); Asst. Corporate Secretary/Treasurer/Director of Weathertop, Inc.
from 2004 to 2011 and former Director of Musx Corporation from 2007 to 2010 and
Outsource Leverage Systems International, Inc. (Corporate Secretary/Director, 2004
to 2009).
3
Delfin S. Castro, Jr., Filipino, 47, has served as Director since 9 December
2010. He holds a Masters Degree in Business Administration and a Bachelor of
Science Degree in Business Administration from the University of the Philippines. He
is currently a Director/Treasurer/Corporate Information Officer of Geograce
Resources Philippines Incorporated, Director and Corporate Secretary of Sunplaza
Development Corporation and Treasurer of the Peak Condominium
Corporation. From June 2000 to April 2001, he was the Global Portfolio Manager for
Private Equities at United Resources Asset Management, Inc. He was formerly the
Engagement Director of Palo Alto Consultants Asia, Inc, and a Senior Assistant VicePresident at Asiatrust Bank.
Jose C. Crisostomo, Filipino, 62, has served as Director since 9 December
2010. He holds a Masters of Business Administration from the California State
University Hayward in Hayward, California, U.S.A. He is a member of Manila
Southwoods Golf and Country Club, Inc. and Riviera Golf and Country Club, Inc.
Chi Ho Co, Filipino, 41, has served as Director since 4 February 2011. He currently
serves as Director and Officer of various companies including Lodestar Investment
Holdings, Corporation (2008-present) Hightower, Inc., of which he is the President,
Glomedic Philippines, Inc. Banquets in Style, Inc. where he serves as Chairman for
both companies, Cavite, Apparel Corporation and Subic Bay Apparel Corporation,
among other companies.
Richard William N. Palou, Filipino, 65, has served as Director since 4 August
2008. He is an MBA candidate and a graduate of Business Management at the
Ateneo de Manila University. He is the Director for the University Athletics at the
Ateneo de Manila University (2004 to present). He currently serves as Director of
DENAGA Pawnshop, Inc. (2007 to present), Vantage Investigation and Security
Agency, Inc. (2007 to present), and First Philippine Wind Corporation (1997 to
present). He was the Finance Director of Philippine Basketball Association from
1999 to 2004.
Jose Francisco E. Miranda, 35– Mr. Miranda is a graduate of the University of the
Philippines, Diliman, Quezon City with a Bachelor of Science degree in Geodetic
Engineering. He has been President of Geograce Resources Philippines, Inc. since
2011 and is also currently Chief Operating Officer and Director of Nihao Mineral
Resources, Inc., Director of Dizon Copper-Silver Mines, Inc., and Chief Executive
Officer of GNA Resources (HK) Limited).
Manuel G. Acenas, 67 – Mr. Acenas is a Philippine registered geologist currently
working as a mineral exploration and geological consultant for various companies.
He was a Senior Geologist for Eldore Mining Corp (Phil) from 2008 to 2011 and
Eldore Mining Corp. Ltd (Australia) from 2005 to 2008. Mr. Acenas graduated with a
Bachelor of Arts Major in Geology from the Adamson University in 1969.
Helen G. Tiu, 53 – Atty. Helen G. Tiu received a Bachelor of Science degree in
Business Administration and Accountancy (cum laude) from the University of the
Philippines, Diliman in 1981 ranking in her graduating class and Bachelor of Laws
degree, also from the University of the Philippines, Diliman in 1987 ranking in her
graduating class. She received her Masters degree in Laws from the Harvard
University in 1991. She is a Certified Public Accountant and a member of the
Philippine Bar. She is currently Managing Director, Treasurer and Corporate
Secretary of Lazaro, Bernardo Tiu and Associates and owner and Manager of H.G.
Tiu Kaw Offices. She is currently a Director of Stratpoint Technologies, Inc. (since
2011), Trustee of the Harvard Law School Alumni Association of the Philippines
4
(since 2011), Corporate Secretary of Psi Technologies, Inc. (since 1999), Corporate
Secretary of PSi Technologies, Inc. (since 1997), PSi Technologies Laguna, Inc.,
PSitech Realty Inc. and Pacsem Realty Inc (since 1999). She also currently serves
as Corporate Secretary of Philstar.com Holdings, Inc., Philstar Global Corporation,
Igloo Supply Chain Philippines, Inc. and Assistant Corporate Secretary of Philstar
Daily Inc., Pilipino Star Ngayon, Inc. and Pilipino Star Printing Co., Inc.
Ramon Miguel V. Osmeña – 28, Filipino, is a graduate of the University of
California Los Angeles with the Bachelor of Arts degree in Philosophy and of West
Los Angeles College, with an Associate of Arts in Liberal Arts and Sciences. He is
concurrently President of Certified MOA Ammunition Corporation and Informal
Assistant to Congressman Tomas R. Osmena of the House of Representatives.
Venus L. Gregorio, 44, Filipino, Corporate Information Officer and Asst. Corporate
Secretary. graduated with a Juris Doctor from the Ateneo de Manila University in
1998 and passed the bar examinations in 1999. She has a Bachelor of Arts degree
major in Political Science from the University of the Philippines. Atty. Gregorio is a
Partner at Gregorio Law Offices and sits as Corporate Secretary and Corporate
Information Officer of Lodestar Investment Holdings Corporation (2012 to present)
and Assistant Corporate Information Officer and Assistant Corporate Secretary of
Dizon Copper-Silver Mines, Inc. She is also the Asst. Corporate Secretary/Director of
Cuervo Far East, Inc. (2005 to present), and Corporate Secretary of Tajima Yakiniku
Inc. (2005 to present). She was formerly a Director of Active Earnings Inc. (2003 to
2011), Carellan, Inc. (2003 to 2011), Carom, Inc. (2003 to 2011), Grand Pin
Development Corporation (2004 to 2011), Hobitton, Inc. (2003 to 2011) and
Weathertop, Inc. (2004 to 2011); Corporate Secretary of Cuisine Allurements, Inc.
(2002 to 2011), Los Boldos, Inc. (2003 to 2011), Onion and Chives, Inc. (2003 to
2011).
Financial Performance
Key Financial Indicator
Revenues
Interest Income
Cost and Expenses
Net Income (Loss)
Current Assets
Current Liabilities
Total Assets
Total Liabilities
Stockholders’ Equity
Current Ratio
Current Assets / Current Liabilities
Debt to Equity Ratio
Total Liabilities / Stockholders’ Equity
Return on Assets
Net Income / Total Assets
Asset to Equity
Total Assets / Stockholders’ Equity
Earnings (Loss) Per Share
Net Income (Loss) / Weighted Ave. Number of
Shares
5
Year 2012
Year 2011
₱3,560,045
1,724,208
4,051,611
816,599
68,971,394
4,272,449
68,985,340
4,272,449
64,712,891
16.14
68,971,394 /
4,272,449
.066
4,272,449 /
64,712,891
.012
816,599 /
68,985,340
1.066
68,985,340 /
64,712,891
₱0.01
816,599 /
200,000,000
₱0
₱1,085,781
8,235,583
(7,366,958)
66,766,179
2,883,833
66,780,125
2,883,833
63,896,292
23.15
66,766,179 /
2,883,833
.045
2,883,833 /
63,896,292
NA
1.045
66,780,125 /
63,896,292
(₱0.07)
(7,366,958) /
109,090,731
Full Fiscal Years
Financial Condition / Changes in Financial Condition
Calendar Year 2012
For the calendar year 2012, the Company has generated a management income of ₱3.56
million from its Management Agreement with Geogen Corporation. Net income/(loss) for the
year ended December 31, 2012 and 2011 amounted to ₱.82 million and (₱7.37) million,
respectively, which resulted to an accumulated deficit of ₱33.61 and ₱34.43 million. As of
December 31, 2012 and 2011, the Company’s equity amounted to ₱64.71 million and ₱63.90
million respectively.
On 5 March 2012, the Company gave its conformity to the execution of a General Contractor
Agreement between Geogen Corporation and NiHao Mineral Resources International, Inc.
The agreement provides for the terms and conditions of the contracting relationship between
Geogen, as the MPSA Holder of MPSA No. 258-2007-II dated 30 July 2007 and NiHao as
contractor for the mining and other services over the areas covered by the MPSA, located in
Dinapigue Isabela.
The Company’s revenue for the year ended December 31, 2012 totaled to about P
= 3.56
million which was earned from Management Agreement with Geogen Corporation, and
interest income of P
= 1.72 an increase of P
= 0.64 million when compared to December 31, 2011
due mainly to the increase in the Company’s average short-term placements. The increase
in the short term placements was due to the payments of subscriptions receivable by the
stockholders which result to higher interest income.
Total expenses for 2012 totaled about P
= 4 million, a decrease of about P
= 4.18 million when
compared to December 30, 2011. The decrease was attributed mainly to lower professional,
director, listing and filing fees, as well as lower taxes and licenses payment.
Cash and cash equivalents amounted to P
= 64.28 million as of December 31, 2012 as
compared to P
= 52.79 million as of December 31, 2011 or an increase of P
= 11.49 million. The
increase in cash and cash equivalents was due to the collection of receivables of the
Company.
Other current assets increased by P
= 0.587 million due mainly to additional creditable
withholding tax from management income, input value-added tax and deferred input value
added tax on professional fees and PSE annual maintenance fees incurred for the period
ended December 31, 2012.
Accounts and other payables increased by about P
= 1.39 million when compared to December
31, 2011 due mainly to additional advances from stockholders for additional short term
placements and deferred output value added tax from the management income.
There are no known trends or any known demands, commitments, events or uncertainties
that will result in or that are reasonably likely to result in the Company’s liquidity increasing
or decreasing in any material way.
There are no known events that will trigger direct or contingent financial obligation that is
material to the Company, including any default or acceleration of an obligation.
There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligation), and other relationships of the Company with unconsolidated entities
6
or other persons created during the year.
There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material favorable or unfavorable impact on net sales or revenues or
income from continuing operations.
There are no significant elements of income or loss that did not arise from the Company’s
continuing operations.
There are no seasonal aspects that had a material effect on the Company’s financial
condition or results of operations.
There are no material events and uncertainties known to management that would address
the past and would have an impact on future operations of the Registrant.
Calendar Year 2011
On 3 May 2011, the Securities and Exchange Commission (SEC) approved the quasireorganization and equity restructuring of the Company. The capital increase was
undertaken using the Fifteen Million Pesos (₱15,000,000.00) deposited for future
subscriptions by the Investors as partial payment for subscriptions to Forty Five Million
(45,000,000) Shares at the price of One Peso (P1.00) per share, which was the reduced par
value of the shares upon the approval by the SEC of its quasi-reorganization plan. Upon
approval of the capital increase, the Company’s issued and outstanding shares stood at
Sixty two million one hundred seventy thousand two hundred ninety three (62,170,293). The
corresponding Subscription Agreements with the subscribers were executed by the
Company on 16 May 2011 and the balances on the subscription price from the individual
investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private
placement, of 136,678,651 shares of the Company at P
= 1 par value a share to various
investors.
The Board of Directors also approved the creation of several subsidiaries via investment in
various corporations where the Company will own 100% of the outstanding capital stock of
the said subsidiaries.
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the
Company due its full compliance with the Exchange’s requirements, submission of
structured reports and payment of the Company’s obligations.
The Company executed a Heads of Agreement with NiHao and Glencore to enter into a joint
venture and technical partnership whereby each party shall utilize its expertise in the mining
industry for purposes of investigating, identifying, acquiring, developing and operating mining
claims of economically feasible nickel deposits in the Philippines for purposes of Direct
Shipping / Selling Ore and other nickel mining businesses. On 28 October 2011, the
Company signed an Addendum to the Heads of Agreement with Glencore International AG
(Glencore). The Addendum provides that the Joint Venture Corporation to be formed in
Hong Kong shall have an initial authorized share capital of One Hundred Thousand Hong
Kong Dollars (HK$100,000.00) with a par value of One Hong Kong Dollar (HK$1.00) per
share with issued and paid up capital of Ten Thousand Hong Kong Dollars (HK$10,000.00)
equivalent to Ten thousand shares of the JVC.
The Company also entered into a Management Agreement with Option to Buy with Geogen
Corporation (GEOGEN). GEOGEN is a mining company and is registered holder of a valid
7
and existing mining claim in Dinapigue, Isabela (the “Mining Area”). GEOGEN is in the
process of undertaking exploration, development and mining operations in the said mining
area and desires to retain the services of ABG for the management of the exploration,
development and mining operations of the mining area. ABG thus undertakes to provide
Management Services to GEOGEN including management control and property
administration over the daily and medium term operations of the Mining Area for a period of
five (5) years.
The Company’s revenue (interest income earned on short-term investments) for the year
ended December 31, 2011 totaled ₱1.086 million, an increase of P
= 0.682 million when
compared to the year ended December 31, 2010. The increase in revenue was due to
increase of short term investments because of the payments of subscriptions receivable by
stockholders.
Total expenses for 2011 totaled to about ₱8.235 million, an increase of about P
= 4.818 million
when compared to 2010. The increase was attributed mainly to the payment of accumulated
penalties imposed by the SEC, professional fees for various services incurred in the
Company’s quasi-reorganization and equity restructuring, taxes, licenses and directors’ fees.
Loss per share in 2011 amounted to ₱0.07 or a decrease of P
= 0.10 when compared to 2010
due to increase in net loss for the year.
Cash and cash equivalents amounted to ₱52.79 million in 2011 or an increase of ₱42.42
million when compared to 2010. The increase in cash and cash equivalents was due to
collection of subscriptions receivable totaling ₱65 million and partially offset by the payment
of accruals and expenses for the period.
Other current assets increased by ₱0.122 million due mainly to additional input value-added
tax on professional fees and PSE annual maintenance fees incurred in 2011.
Accounts and other payables decreased by about P
= 1.724 million due mainly to payment of
accrued professional fees and SEC penalties/fines incurred in prior years.
Calendar Year 2010
As of 2010, the Company continued to incur losses. Net Loss for the year ended December
31, 2010 amounted to ₱3.09 million which resulted into an accumulated deficit of ₱514.96
million.
To avert the further accumulation of deficit, in 2008, together with the Board of Directors of
ABG, minority shareholders took the initiative of reviving the Company’s status as a listed
company. They assessed and identified investment opportunities and weighed various
options geared towards finding a new investor. A group of investors pooled together a fund
to invest in the Company. Initial investments of Fifteen Million Pesos (P
= 15,000,000.00) from
the investors provided the Company’s with funds needed to pay off regulatory and statutory
penalties that accumulated during its period of non-operations.
To carry out the plan to revive and re-instate ABG, on 4 August 2008, the Board of Directors
of the Company approved the Company’s quasi-reorganization and accepted the
subscription by Investors, amounting to P
= 45 million (consisting of 45 million shares at One
Peso (P
= 1.00 par value a share) out of the Company’s increase in authorized capital stock.
On August 14, 2008 and September 9, 2008, the Company received a total amount of P
= 15
million from Investors as partial payment for subscriptions to the increase in the Company’s
8
authorized capital stock and is shown as Deposits on Subscriptions account in the balance
sheets and statements of changes in equity.
On 28 October 2008, the Stockholders, representing 75% of the issued and outstanding
shares of the Company, approved and ratified the following:
•
Quasi-reorganization plan consisting of the following:
•
•
Reduction in par value from Six Pesos (P
= 6.00) per share to One Peso (P
= 1.00)
per share.
• Decrease in the authorized capital stock of the Corporation from One Hundred
Thirty Two Million Pesos (P
= 132,000,000.00) divided into Twenty Two Million
(22,000,000) shares at Six Pesos (P
= 6.00) per share to Twenty Two Million Pesos
(P
= 22,000,000.00) divided into Twenty Two Million (22,000,000.00) shares at One
Peso (P
= 1.00) per share.
• Resulting surplus from the reduction in par value to be credited to additional paidin capital.
• Offset of the Company’s additional paid-in capital against the Company’s deficit.
• Reclassification of the Company’s Class A common shares and Class B common
shares into one class of common shares.
After the reduction in par value of the shares, amendment of the Company’s Articles
of Incorporation, as follows:
•
•
Increase in the Company’s authorized capital stock (after reduction in par value
of the shares) from P
= 22 million (divided into 22 million shares at P
= 1 par value a
share) to P
= 200 million (divided into 200 million shares at P
= 1 par value a share).
Denial of pre-emptive rights.
In the said meeting October 28, 2008 Stockholders Meeting, stockholders representing 75%
of the issued and outstanding shares of the Company, approved and ratified the plan of the
Company, to be implemented through the Board of Directors, to issue subscriptions to
investors, represented by HDI, via private placement. Stockholders representing the
majority of the minority likewise approved the same.
The Company’s revenue (interest income earned on short-term investments) for the year
ended December 31, 2010 totaled to about P
= 0.40 million, a decrease of ₱0.08 million when
compared to 2009.
Total expenses for 2010 totaled about P
= 3.42 million, an increase of about P
= 2.59 million
when compared to 2009. During the year 2010, the Company accrued the SEC fines and
penalties of ₱2.55 million assessed on the Company and were paid on 2011.
Loss per share in 2010 amounted to P
= 0.17 or an increase of P
= 0.15 compared to 2009 due to
increase in net loss for the year.
Cash and cash equivalents amounted to P
= 10.37 million in 2010 or a decrease of P
= 1.18
million when compared to 2009. The movements in cash and cash equivalents are
attributed to interest income of P
= 0.4 million (net of withholding tax of P
= 0.08 million) and
payments of prior year accruals and current operating expenses totaling P
= 1.5 million.
Other current assets increased by P
= 0.09 million due mainly to additional input value-added
tax on professional fees and PSE annual maintenance fees incurred in 2010.
9
Accounts and other payables increased by about P
= 2.01 million due mainly to SEC penalties
and fines of ₱2.55 million and offset by payments of accruals of professional fees.
For full reports, please refer to the audited financial statements as of 31 December 2012,
Annual Report for 2012 and interim financial statements for the first and second quarters of
2013.
Audit and Audit-Related Fees
As of 31 December 2012, 2011 and 2010, the Company accrued audit fees to its
external auditor amounting to P 250,000.00 P
= 240,000 and P
= 60,000, respectively.
There have been no other assurance and related services performed by the external
auditors as of 31 December 2012, 2011 and 2010.
Tax Fees
There have been no professional services rendered by the external auditors for tax
accounting, compliance, advice, planning and any other form of tax services for the
years ended 31 December 2012, 2011 and 2010.
All Other Fees
There have been no other services rendered by the external auditor for the last three
fiscal years.
The Board of Directors approved the audit of the Company’s financial statements as
of and for the year ended 31 December 2012.
Audit Committee
The Audit Committee of the Company is composed of the following:
Member
• Helen G. Tiu
• Chi Ho Co
• Jose M. Crisostomo
Position
Chairman
Member
Member
As provided under the Audit Committee Charter, the Audit Committee was created to
provide for the composition, powers and duties thereof. Among others, the Audit
Committee is tasked to:
•
•
•
•
•
Assist the Board of Directors in performing oversight responsibility for the
financial reporting processes;
Supervise management activities and responsibilities in maintaining a sound
system of internal control;
Monitor and evaluate the adequacy and effectiveness of the corporation’s
internal control system;
Coordinate, monitor and facilitate compliance with laws, rules and regulations
in financial reporting;
Review reports and financial statements before their submission to the Board
of Directors.
10
The Audit Committee is responsible for the preparation, review and approval and
issuance of the Company’s financial statements and reports. Among others, the Audit
Committee shall:
a. Review and approve audit scope and frequency and the annual internal audit plan;
b. Provide oversight over the senior management’s activities in managing credit, market
liquidity, operational. Legal and other risks of the Company. The function shall
include receiving from senior management periodic information on risk exposures
and risk management activities.
c. Review the quarterly, half year and annual financial statements before submission to
the Board, focusing particularly on any change/s in accounting policies and practices;
d. Determine and evaluate significant adjustment resulting from audit and going
concern assumptions
e. Ensure compliance with accounting standards and compliance with tax, legal, and
stock exchange requirements
f.
Be responsible for coordinating, monitoring and facilitating compliance with existing
laws, rules and regulations. It may also constitute a Compliance Unit for this
purpose.
g. Assist the Board in the performance of its oversight responsibility for the financial
reporting process, system of internal control, audit process, and monitoring of
compliance with applicable laws, rules and regulations;
h. Review and discuss with management and external auditor the quarterly, half-year
and annual financial statements before their submission to the Board, with particular
focus on the following:
•
•
•
•
•
•
Any change/s in accounting policies and practices;
Major judgmental areas;
Significant adjustments resulting from the audit;
Going concern assumptions;
Compliance with accounting standards;
Compliance with tax, legal and regulatory requirements;
i.
Review other relevant reports or financial information submitted by the company to
any governmental body or the public or financial report and relevant reports rendered
by the external auditor.
j.
Elevate to international standards the accounting and auditing processes, practices
and methodologies of the Corporation; and
k. Check all financial reports against its compliance with pertinent accounting
standards, including laws and regulatory requirements and review the management
representation letter to the external auditor.
The Audit Committee shall have overall responsibility over the external audit of the Company
from the selection process to the approval for issuance of financial statements for the
statutory periods. Among others, the Audit Committee shall be responsible for the following:
11
a. Recommend to the board of directors the selection of the external auditors
among qualified and reputable audit firms, considering independence,
effectiveness and professionalism.
b. Review the external auditors' proposed audit scope and approach, including
coordination of audit effort with internal audit.
c. Discuss with the external auditor before the audit commences the nature and
scope of the audit and ensure coordination where more than one audit firm is
involved;
d. Review the performance of the external auditors, and exercise final approval on
the appointment or discharge of the auditors. In performing this review, the
committee will:
1) At least annually, obtain and review a report by the independent auditor
describing: the firm's internal quality-control procedures; any material issues
raised by the most recent internal quality-control review, or per review of the
firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by the firm, and any steps taken to deal with
any such issues; and (to assess the auditor's independence) all relationships
between the independent auditor and the company.
2) Review and evaluate the lead partner of the independent auditor.
3) Present its conclusions with respect to the external auditor to the Board.
e. Ensure the rotation of the lead audit partner every five years and other audit
partners, and consider whether there should be regular rotation of the audit firm
itself.
f.
Periodically consult with the external auditors out of the presence of management
about internal controls and fullness and accuracy of the company’s financial
statements.
g. On a regular basis, meet separately with the external auditors to discuss any
matters that the committee or auditors believe should be discussed privately.
h. Receive and review reports of external auditors and regulatory agencies, where
applicable and ensure that management is taking appropriate corrective actions,
in timely manner in addressing control and compliance functions with regulatory
agencies.
i.
Pre-approve the engagement of the external auditor or other independent
accountant to conduct any non-audit services to be performed during the year.
j.
Evaluate and determine non-audit work by external auditor and keep under
review the non-audit fees paid to external auditor both in relation to their
significance to the auditor and in relation to the Company’s total expenditure on
consultancy. The non-audit work should be disclosed in the Annual Report
12
Market Price, Shareholders and Dividend Information
(1)
Market Price Information
The shares of stock of ABG are traded in the Philippine Stock Exchange.
The table below summarizes performance of the stock of the Corporation in the market for
each quarter for the past two calendar years prior to the date of the Annual Stockholders’
Meeting (based on closing prices of the shares with the PSE):
Month
Quarter 2011*
Quarter 2011*
Quarter 2011
Quarter 2011
Quarter 2012
Quarter 2012
Quarter 2012
Quarter 2012
Quarter 2013
Quarter 2013
Quarter 2013
High
NA
P 17.00
P 50.5
P 31.6
P 55.85
P 49.05
P 37.5
P 21.30
P 23.00
P 21.50
P 18.50
Low
NA
P 10.00
P 15.08
P 26.7
P 27.7
P 20.95
P 20.3
P 17.50
P 18.68
P 16.02
P 15.12
Weighted Average
NA
P 15.219
P 29.87
P 27.87
P 42.86
P 34.06
P 25.83
P 19.19
P 19.92
P 19.36
P 17.16
(*ABG shares were suspended from trading for this period)
(**ABG shares started trading again in the PSE on 22 June 2011)
On 14 October 2013, the stock of the Corporation opened at P 15.68 per share, had a high
of P 15.72 per share and a low of P 15.68 per share. The stock closed at P 15.72 per share
with a volume of 200 shares traded in the market.
(2)
Shareholders Information
The top shareholders (5% or more) of the Corporation as of 4 October 2013 are as follows:
Title of
Class of
Shares
Name, address of
Record Owner and
Relationship with Issuer
Name of Beneficial
Owner and
Relationship
with Record Owner
Citizenship
No. of
Shares
Held
Percent
Filipino
98,078,651
49%
Antonio V.F. Gregorio III
Filipino
16,320,001
8.16%
Chi Ho Co
Filipino
14,000,001
7%
Sunplaza Development
Corporation
Sunplaza Centre, Shaw Blvd.,
corner Princeton St.,
Mandaluyong City
Common
Sunplaza Development
Corporation
Major Shareholder
Antonio V.F. Gregorio III
45 South Maya Philam Homes,
Quezon City
Common
Director
Chi Ho Co
1541 MH del Pilar cor Cuarteles
St., Ermita Manila
Common
Director
13
Garry Lincoln Taboso
No. 17 Kanlaon St., Quezon
City
Common
No relationship with Issuer
Garry Lincoln Taboso
Filipino
14,000,00
7%
Various clients
Filipino
12,756,122 6.38%
PCD Nominee Corporation
Common
37/F Tower I, Enterprise Center,
6766 Ayala Ave., Makati City
No other shareholder as of said date owns more than five (5%) of the Corporation.
As of 30 September 2013 there are 424 shareholders of the Company. Common shares
outstanding as at 4 October 2013 are 200,000,000 shares per record of Stock Transfer
Service, Inc.
As of 4 October 2013, the Company’s biggest shareholder is Sunplaza Development
Corporation which holds 98,078,651 or 49% of the total issued and outstanding shares of the
Company.
Please find below the top 20 stockholders of the Company, including beneficial ownership
with the PCD Nominee Corporation, as of 4 October 2013:
Stockholder’s Name
No. of Common
Shares Held
Sunplaza Development Corporation
Antonio V.F. Gregorio III
Chi Ho Co
Garry Lincoln Taboso
PCD Nominee Corporation (Filipino)
Larry Angping
Nellie Esparaz
Jose Francisco Miranda
Delfin Castro, Jr.
Jose Crisostomo
Ma. Teresa Vergara
Trans-Philippines Investment Corporation
Rafael B. Zialcita
Job Adrian Ambrosio
Fernando Macatbag
Lawrence Tabije
Joan Ang
PCD Nominee Corporation (Non-Filipino)
Rizal Commercial Banking Corporation (T/A No. 75234-7
Asiatrust Bank – Trust Banking Sector
98,078,651
16,320,001
14,000,001
14,000,000
12,756,122
4,500,000
4,500,000
4,320,001
4,320,000
4,320,000
4,320,000
4,063,214
4,000,000
3,000,000
2,025,000
1,993,500
1,981,500
389,130
175,600
155,686
(3)
Percentage
to Total
49%
8.16%
7%
7%
6.38%
2.25%
2.25%
2.16%
2.16%
2.16%
2.16%
2.03%
2%
1.5%
1.01%
1%
.99%
.19%
.09%
.08%
Dividend Information
There are no dividends yet declared by the Corporation. Thus, for the last two (2)
fiscal years, no dividends, whether cash or property, were declared by the Company. There
are no provisions in the Articles of Incorporation nor is there any policy, board action or
approval that restricts or provides any restriction on, or limit the payment of dividend on
common shares.
14
(4)
Recent Sales of Unregistered or Exempt Securities Including recent
Issuance of Securities Constituting an Exempt Transaction
There have been no recent sale of unregistered securities or issuance of securities
constituting an exempt transaction for the last calendar year.
Compliance with Leading Practices on Corporate Governance
The Company observes and complies with the mandate of the SEC on matters
involving corporate governance. In 2013, the Company implemented a comprehensive
Manual on Corporate Governance allowing for the creation and mandating the functions,
responsibilities and duties of the Executive Committee, Governance Committee and Risk
Management Committee in addition to its standing committees namely the Nomination, Audit
and Compensation Committees. Their powers, duties and responsibilities, as provided for in
the By-laws as well as in the Manual on Corporate Governance, are compliant with and
consistent with the policies formulated under SEC memorandum Circular No. 6 Series of
2009.
15
ANNEX 'A'
ANNEX 'B'
COVER SHEET
4 2 5 4 3
SEC Registration Number
A S I A B E S T
A N D
G R O U P
I N T E R N A T I O N A L
I N C.
S U B S I A D I A R I E S
(Company’s Full Name)
2 0 / F
T h e
L e v i s t e
M a k a t i
P e a k
S t .
T o w e r,
S a l c e d o
1 0 7
L . P .
V i l l a g e ,
C i t y
(Business Address: No. Street City/Town/Province)
1 2
Venus L. Gregorio
9209306
(Contact Person)
(Company Telephone Number)
3 1
Month
Day
(Fiscal Year)
17A 2012 ‘A’
0 5
(Form Type)
Month
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
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
Foreign
The aggregate market value as at 31 March 2013 and 31 December 2012 of the voting stock
held by non-affiliates of the registrant is ₱1,161,074,831.40 and ₱1,137,618,774.20 respectively.
APPLICABLE ONLY TO ISSUERS INVOLVED IN
INSOLVENCY/SUSPENSION OF PAYMENTS PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
14. Check whether the issuer has filed all documents and reports required to be filed by Section 17
of the Code subsequent to the distribution of securities under a plan confirmed by a court or the
Commission.
Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
15. Briefly describe the documents incorporated by reference and identify the part of SEC
Form 17-A into which the document is incorporated:
(a) Any annual report to security holders;
None
(b) Any proxy or information statement filed pursuant to SRC Rule 20 and 17.1 (b);
None
(c) Any prospectus filed pursuant to SRC Rule 8.1-1.
None
3
PART I - BUSINESS AND GENERAL INFORMATION
Item 1.
a.
Business
Corporate History and Description of Business
Asiabest Group International Inc. (ABG) (formerly AGP Industrial Corporation) was registered as an investment
holdings corporation with the Securities and Exchange Commission on October 23, 1970 and was listed in the
Philippine Stock Exchange (then Makati Stock Exchange) on July 10, 1979. ABG became the holding company
for Atlantic Gulf and Pacific Company of Manila, Incorporated (AG&P), one of the largest diversified engineering
and general construction firms in the Philippines in the 1980’s.
In 1999, the Securities and Exchange Commission (SEC) issued an order temporarily suspending payment of
obligations of the Company’s major shareholder Trans-Phils Investment Corp. (TPIC). Thereafter, internal
difficulties arose between the Company’s majority and minority shareholders mainly on questions involving the
validity of contracts and agreements entered into by the Company with TPIC.
In 2003, the Securities and Exchange Commission issued an order revoking the effectivity of ABG’s Registration
of Securities and Permit to Sell Securities for its failure to submit some reportorial requirements. TPIC, ABG’s
former major stockholder, was undergoing temporary relief from payment of its obligations. To address this
financial difficulty, as early as 2003, the Company’s Board of Directors explored the possibility of looking for an
investor who will provide a new business direction for ABG, infuse fresh capital and finance its commercial
activities. Thus, the appropriate board resolutions were passed and approved by the stockholders in 2003 as
follows:
•
Sale of the Company’s investment in the shares of stock of Atlantic, Gulf and Pacific Company of
Manila, Incorporated (AG&P) to TPIC for P
= 66.2 million. The proceeds of the sale were applied against
the Company’s obligations to TPIC.
•
Conversion of the Company’s obligations to TPIC totaling P
= 228.7 million into additional paid-in capital in.
•
Quasi-reorganization plan consisting of the following:
•
Reduction in par value from Six Pesos (P
= 6.00) per share to One Peso (P
= 1.00) per share.
•
Decrease in the authorized capital stock of the Corporation from One Hundred Thirty Two Million
Pesos (P
= 132,000,000.00) divided into Twenty Two Million (22,000,000) shares at Six Pesos (P
= 6.00)
per share to Twenty Two Million Pesos (P
= 22,000,000.00) divided into Twenty Two Million
(22,000,000.00) shares at One Peso (P
= 1.00) per share.
•
Resulting surplus from the reduction in par value to be credited to additional paid-in capital.
•
Offset of the Company’s additional paid-in capital against the Company’s deficit.
•
Reclassification of the Company’s Class A common shares and Class B common shares into one
class of common shares.
Increase in the Company’s authorized capital stock (after reduction in par value of the shares) from P
= 22
million (divided into 22 million shares at One Peso (P
= 1.00) par value a share) to P
= 200 million (divided
into 200 million shares at One Peso (P
= 1.00) par value a share).
•
•
Delegation to the Board of Directors the authority to look for new investors.
Together with the Board of Directors of ABG, minority shareholders took the initiative of reviving the Company’s
status as a listed company. They assessed and identified investment opportunities and weighed various options
geared towards finding a new investor. In 2008, through HDI Securities, Inc., a group of investors pooled
together a fund to invest in the Company. Initial investments of Fifteen Million Pesos (P
= 15,000,000.00) provided
the Company with funds needed to pay off regulatory and statutory penalties that accumulated during its period
of non-operations.
To carry out the plan to revive and re-instate ABG, on August 4, 2008, the Board of Directors approved the
Company’s quasi-reorganization plan and approved the subscription by investors to 45 million shares at One
Peso (P
= 1.00) per share for a total investment of P
= 45 million.
On October 28, 2008, the Stockholders, representing 75% of the issued and outstanding shares of the Company,
approved and ratified the following:
•
Quasi-reorganization plan consisting of the following:
•
Reduction in par value from Six Pesos (P
= 6.00) per share to One Peso (P
= 1.00) per share.
•
Decrease in the authorized capital stock of the Corporation from One Hundred Thirty Two Million
Pesos (P
= 132,000,000.00) divided into Twenty Two Million (22,000,000) shares at Six Pesos (P
= 6.00)
4
•
•
•
•
per share to Twenty Two Million Pesos (P
= 22,000,000.00) divided into Twenty Two Million
(22,000,000.00) shares at One Peso (P
= 1.00) per share.
Resulting surplus from the reduction in par value to be credited to additional paid-in capital.
Offset of the Company’s additional paid-in capital against the Company’s deficit.
Reclassification of the Company’s Class A common shares and Class B common shares into one
class of common shares.
After the reduction in par value of the shares, amendment of the Company’s Articles of Incorporation, as
follows:
•
Increase in the Company’s authorized capital stock (after reduction in par value of the shares) from
P
= 22 million (divided into 22 million shares at P
= 1 par value a share) to
P
= 200 million (divided into 200 million shares at P
= 1 par value a share).
•
Denial of pre-emptive rights.
In the said meeting of October 28, 2008, stockholders representing 75% of the issued and outstanding shares of
the Company, approved and ratified the plan of the Company to issue subscriptions to its
investors. Stockholders representing the majority of the minority likewise approved the same.
The quasi-reorganization and equity restructuring of the Company were approved by the Securities and
Exchange Commission (SEC) on May 3, 2011. The capital increase was undertaken using the Fifteen Million
Pesos (P 15,000,000.00) deposit for future subscriptions as partial payment for subscriptions to Forty Five Million
(45,000,000) Shares at One Peso (P1.00) per share. After approval of the capital increase, the Company’s
issued and outstanding shares was increased to Sixty two million one hundred seventy thousand two hundred
ninety three (62,170,293). The corresponding Subscription Agreements with the investors were executed by the
Company on May 16, 2011 and the remaining balances were received by the Company on June 23, 2011.
On June 17, 2011, the Board of Directors approved the sale and issuance, via private placement, of 136,678,651
shares of the Company at P
= 1 par value a share to various investors.
On June 22, 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the Company due its full
compliance with the Exchange’s requirements, submission of structured reports and payment of the Company’s
obligations.
On March 26, 2012, the Securities and Exchange Commission (SEC) approved the amendment of the
Corporation’s Articles of Incorporation and By-Laws specifically the change in the name of the Company from
AGP Industrial Corporation to Asia Best Group International, Inc.
b.
Subsidiaries
On June 17 2011, the Board of Directors also approved the creation of several subsidiaries via investment in
various corporations where the Company will own 100% of the outstanding capital stock of the said subsidiaries.
The subsidiaries were all incorporated in anticipation of the projects that will be infused into the Group upon its reorganization. The real estate subsidiary of the Group may be used to acquire the Sunplaza office condominium
units currently owned by Sunplaza Development Corporation based on disclosures made by the Company. The
mining companies will be the vehicles for possible future acquisition of rights or interests in mining projects.
Subsidiaries
Alta Minera Inc.
Breccia Resources Inc.
Millionaire’s Offices and Properties Inc.
c.
Nature of
Business
Mining
Mining
Real Estate
Date of Incorporation
2 September 2011
23 September 2011
5 September 2011
Percentage of
Ownership
100
100
100
Affiliate
25% Equity in GNA Resources International Limited
On 12 December 2011, the Company together with NiHao Mineral Resources International Inc. (NiHao) and
Glencore International AG (Glencore) established GNA Resources International Limited (GNA) under the laws of
Hong Kong. GNA is the joint venture company of the three (3) parties agreed upon in the Heads of Agreement
dated 27 September 2011 and the Addendum to the Heads of Agreement dated 28 October 2011 entered into
among the parties.
d.
IT Development costs and its percentage to revenues during each of the last three (3) fiscal years:
Year
2012
Amount
₱ -
% to Revenues
-
5
2011
2010
e.
₱ ₱ -
-
Agreements
Heads of Agreement with Glencore International AG (Glencore) and NiHao Mineral Resources
International Inc. (NiHao)
On 27 September 2011, the Company executed a Heads of Agreement (“HOA”) with Glencore and NiHao. The
three Companies agreed form a Joint Venture Corporation to utilize their respective expertise in the mining
industry for purposes of investigating, identifying, acquiring, developing and operating mining claims of
economically feasible nickel deposits in the Philippines for purposes of Direct Shipping/ Selling Ore (DSO) and
other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel ores in the
world market as well as its network of various institutions internationally while NiHAO and ABG shall utilize their
expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant
Philippine laws, rules and regulations and issues.
Glencore is a company registered under the laws of Switzerland and is one of the world’s leading integral
producers and marketers of commodities with worldwide activities in the production, sourcing, processing,
refining, transporting, storage, financing and supply of metals and minerals, energy products and agricultural
products.
On 28 October 2011, Glencore, NiHAO and ABG executed an Addendum to Heads of Agreement. It was agreed
that the JVC shall be formed with an initial authorized share capital of One Hundred Thousand Hong Kong
Dollars (HK$ 100,000) and issued and paid-in capital of Ten Thousand Hong Kong Dollars (HK$ 10,000). Said
initial issued and paid-in capital shall be contributed equally by the PARTIES in proportion to their respective
shares. After formation of the JVC, the parties shall remit Two Million US Dollars (US$2,000,000.00) to constitute
the initial capitalization of the JVC by way of shareholders’ advances.
Management Agreement with Option to Buy with Geogen Corporation (Geogen)
On 14 October 2011, the company entered into a Management Agreement with Option to Buy with Geogen
Corporation (GEOGEN). GEOGEN is a mining company and is registered holder of a valid and existing mining
claim in Dinapigue, Isabela (the “Mining Area”).
GEOGEN is in the process of undertaking exploration, development and mining operations in the said mining
area and desires to retain the services of ABG for the management of the exploration, development and mining
operations of the mining area. ABG thus undertakes to provide Management Services to GEOGEN including
management control and property administration over the daily and medium term operations of the Mining Area
for a period of five (5) years.
Under the agreement, Geogen likewise grants ABG the First and Exclusive Option, at the election of the ABG, to
do any of the following:
• Acquire up to 100% of the shares of stock of Geogen
• Purchase its mining rights
• Secure participation interests
• Create a joint venture vehicle or consortium of investors-operators and/or
• Negotiate the acquisition of the entire or partial rights or participation of interest over the project on
behalf of local and foreign investors
The Option shall be for a period of one year upon signing the agreement, renewable for another period of one
year upon mutual agreement of the parties. As of 14 October 2012, no renewal was agreed between ABG and
GEOGEN.
f.
Employees
As of 31 December 2012, the Company and its subsidiaries have no employees. The management and finance
operations are handled by the directors of the company. For the year 2013, the Company will start hiring key
employees for purposes of commencing business operations as a holdings company with interests, through its
subsidiaries, in real estate and mining development.
Item 2.
Properties
The Company and its subsidiaries have no real properties as of December 31, 2012. For the year 2013, the
Company, will acquire several office condominium units comprising approximately one floor of Sunplaza Centre,
6
a commercial/office condominium building located along Shaw Blvd., Mandaluyong City. The plan will be
financed with the corporate funds raised from the private placement transactions implemented in 2011.
Item 3.
Legal Proceedings
The Company and its subsidiaries has never been a subject or a party to any legal proceeding, material or
otherwise. Neither is any property of the Company and its subsidiaries a subject to any legal proceeding,
material or otherwise.
Item 4.
Submission of Matters to a Vote of Security Holders
During the Annual Stockholders’ Meeting held on 13 December 2012, stockholders representing 91.06% of the
outstanding capital stock of the Company approved the following:
•
minutes of the annual stockholders’ meeting held on 7 October 2011
•
adoption of the audited financial statements for the year ended 31 December 2011
•
delegation to the Board of Directors the power to appoint the Company’s external auditor
The stockholders likewise approved all the acts of the Board of Directors and Management for the period 7
October 2011 to 13 December 2012 and elected a new set of directors for the year 2012 to 2013.
PART II - OPERATIONAL & FINANCIAL INFORMATION
Item 5.
Market for Issuer’s Common Equity and Related Stockholder Matters
Market Information
The principal market of the Company’s shares is the Philippine Stock Exchange (PSE).
Closing market price as at 20 May 2013 is pegged at ₱19.68.
The high and low sales prices of each quarter within the years 2011 to 2012 are as follows:
Year 2012
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
₱61.00
29.75
39.00
22.40
Low
₱27.95
20.75
19.96
17.80
Year 2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
trading of shares suspended
₱53.40
44.00
₱15.00
19.90
Source: Technistock
As of 30 April 2013 and 31 December 2012 there were 425 and 426 shareholders, respectively. Also, during
both the periods, the total outstanding common shares of the Company were 200,000,000, of which 199,560,553
shares were owned by Filipinos while 439,447 shares were foreign-owned.
On 16 May 2011, the company authorized the issuance of Forty Five Million (45,000,000) shares via private
placements at an issue price of One Peso (₱1.00) per share for a total consideration of Forty Five Million Pesos
(₱45,000,000.00). The shares were issued pursuant to the approvals by both the Board of Directors of the
Company during its meeting on 4 August 2008 and by the stockholders during its 28 October 2008 Stockholders’
Meeting. The subscriptions supported the capital increase undertaken by the Company as part of its equity
restructuring plans to revive the Company’s status as a listed company with the Philippine Stock Exchange. The
capital increase was approved by the SEC on 3 May 2011.
On 17 June 2011, the company issued One Hundred Thirty Six Million Six Hundred Seventy Eight Thousand Six
Hundred Fifty One (136,678,651) shares via private placements at an issue price of One Peso (₱1.00) per share
for a total consideration of One Hundred Thirty Six Million Six Hundred Seventy Eight Thousand Six Hundred
Fifty One Pesos (₱136,678,651). The shares were issued pursuant to the approvals by both Board of Directors of
the Company during its meeting on 17 June 2011 and by the stockholders during its 7 October 2011
Stockholders’ Meeting.
7
The following table presents the Company’s top 20 shareholders as at 31 March 2013.
Class of
Security
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Name of Shareholder
Sunplaza Development Corporation
Antonio Victoriano F. Gregorio III
Chi Ho Co
Garry Lincoln Taboso
PCD Nominee Corporation (Filipino)
Larry Angping
Nellie Esparaz
Jose Francisco Miranda
Delfin S. Castro, Jr.
Jose M. Crisostomo
Ma. Teresa Vergara
Trans-Philippines Investment Corporation
Rafael B. Zialcita
Job Adrian Ambrosio
Fernando Macatbag
Lawrence Tabije
Joan Ang
PCD Nominee Corporation (Non-Filipino)
Rizal Commercial Banking Corp.
Asiatrust Bank
Number of
Shares
98,078,651
16,320,001
14,000,001
14,000,000
12,756,122
4,500,000
4,500,000
4,320,001
4,320,000
4,320,000
4,320,000
4,063,124
4,000,000
3,000,000
2,025,000
1,993,500
1,981,500
384,330
175,600
155,686
Percentage
to Total
49.04%
8.16%
7.00%
7.00%
6.38%
2.25%
2.25%
2.16%
2.16%
2.16%
2.16%
2.03%
2.00%
1.50%
1.01%
1.00%
0.99%
0.19%
0.09%
0.08%
The following table presents the Company’s top 20 shareholder as at 31 December 2012.
Class of
Security
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Name of Shareholder
Sunplaza Development Corporation
Antonio Victoriano F. Gregorio III
Chi Ho Co
Garry Lincoln Taboso
PCD Nominee Corporation (Filipino)
Larry Angping
Nellie Esparaz
Jose Francisco Miranda
Delfin S. Castro, Jr.
Jose M. Crisostomo
Ma. Teresa Vergara
Trans-Philippines Investment Corporation
Rafael B. Zialcita
Job Adrian Ambrosio
Fernando Macatbag
Lawrence Tabije
Joan Ang
PCD Nominee Corporation (Non-Filipino)
Rizal Commercial Banking Corp.
Asiatrust Bank
Number of
Shares
98,078,651
16,320,001
14,000,001
14,000,000
12,752,624
4,500,000
4,500,000
4,320,001
4,320,000
4,320,000
4,320,000
4,063,124
4,000,000
3,000,000
2,025,000
1,993,500
1,981,500
384,330
175,600
155,686
Percentage
to Total
49.04%
8.16%
7.00%
7.00%
6.38%
2.25%
2.25%
2.16%
2.16%
2.16%
2.16%
2.03%
2.00%
1.50%
1.01%
1.00%
0.99%
0.19%
0.09%
0.08%
Dividends
No dividends were declared by the Company for the period covered by this report.
Recent Sale of Unregistered Securities
For the period ended 2012, the company has no sale of any unregistered securities.
Item 6.
Management’s Discussion and Analysis or Plan of Operations
ABG has been dormant for over a decade, has not gone into operations for about the same period of time and,
therefore, has not realized any revenue. Following an Order of Revocation of ABG’s Registration of Securities
and Permit to Sell Securities issued by the SEC and trading ban issued by the PSE, and without any financial
support from any sources, in the stockholders’ meeting of ABG for 2003, the Board of Directors of ABG explored
the possibility of looking for investors who will provide new business direction for ABG, infuse fresh capital and
8
finance its commercial activities. Thus, the appropriate board and stockholders’ resolutions were passed and
approved by the stockholders for the Company to undergo quasi-reorganization to substantially reduce its deficit.
The Board of Directors was likewise given the authority to look for new investors.
In 2008, the Company received a total of Fifteen Million Pesos (₱15,000,000.00) by way of deposit for future
subscriptions from a group of investors represented by HDI Securities. This amount provided the seed capital to
allow ABG to pay statutory fines and penalties imposed by the SEC and PSE. It likewise allowed the Company
to hire professionals to work on the lifting of the SEC’s revocation order and the PSE’s trading ban. On 3 May
2011, the SEC issued an Order Lifting the Order of Revocation of AGP’s Permit to Sell Securities. With this
order, the Company applied with the PSE for the lifting of the trading ban on ABG shares. The trading ban was
lifted on 22 June 2011 and ABG shares are again trading in the Philippine Stock Market.
In line with plans to revive the business operations of ABG, the Company underwent quasi-reorganization
thereby substantially wiping out its deficit. ABG likewise increased its capital from subscriptions received from
Investors and started to lay the groundwork to fully organize ABG as an investment and holdings company.
Considering the upward trend in real estate and BPO relevant real estate, the Company tapped into possible
investments into the real estate sector as its maiden project. Thus, Sun Plaza Development Corporation, the
Company’s major investor invested a total amount of ₱92,678,651.00 in exchange for 92,678,651 shares of the
company. In the immediate period, the Company, through a subsidiary will acquire several office condominium
units comprising approximately one floor of Sunplaza Centre, a commercial/office condominium building located
along Shaw Blvd., Mandaluyong City. The office condominium units are tenanted. After a long period of
inactivity, ABG will immediately become operational and receive a regular and steady stream of income derived
from the leasing of Sunplaza Centre condominium units.
With the objective of expanding the business operations of ABG, several subsidiaries were created with the
authority to engage in the businesses of mining development, mining sub-contracting and equipment leasing, and
agriculture / palm oil production and processing. The Company is currently studying, exploring, and evaluating
various proposed actions to expand its business interests and operations. These expansion plans will be
financed with the corporate funds raised from the private placement transactions to enable the Company to
acquire businesses and interests in the fields of real estate, mining development, mining sub-contracting and
equipment leasing, and agriculture / palm oil production and processing.
As part of the Company’s expansion in business operations, last October 2011, the Company executed a
Management Agreement with Option to Buy with Geogen Corporation. Geogen is a mining Company which holds
a valid and existing mining claim in Dinapigue, Isabela covered by MPSA No. 258-2007-11 duly approved on July
30, 2007.
Still in line with the primary purpose of the Company as a holdings corporation, business outlook for 2013 is
geared towards expansion. Thus, the Company may tap into various sources to look for opportunities in mining
acquisition and development, contracting, equipment leasing and ore selling. Specifics of such future projects, if
any, will be properly disclosed in accordance with the continuing disclosure requirements of the SEC and the
PSE. Financing requirements for said projects will have to be first satisfied by the current cash flow of the
Company consisting mainly of funds raised by the Company from its concluded private placement transactions.
Additional funding will be further studied by the Board of Directors and may be subsidized by shareholders’
advances, private placement share issuances, property or share for share swap, stock rights offering or a
combination of any or all of said fund raising activities.
The Company will properly disclose additional information relating to any contracts, agreements, board approvals
and actions involving any of the above matters. In the meantime and in the absence of any definitive act of
management on the aforesaid matters, we cannot report any expected purchase of any plant and significant
equipment, or any significant changes in the number of the Company’s employees.
The Company cannot yet determine specific cash or funds requirements for the next 12 months pending
definitive contracts or projects that the Company will enter into.
Financial Performance
Key Financial Indicator
Revenues
Interest Income
Cost and Expenses
Net Income (Loss)
Current Assets
Current Liabilities
Total Assets
Total Liabilities
Year 2012
₱3,560,045
1,724,208
4,051,611
816,599
68,971,394
4,272,449
68,985,340
4,272,449
9
Year 2011
₱0
₱1,085,781
8,235,583
(7,366,958)
66,766,179
2,883,833
66,780,125
2,883,833
Stockholders’ Equity
Current Ratio
Current Assets / Current Liabilities
Debt to Equity Ratio
Total Liabilities / Stockholders’ Equity
Return on Assets
Net Income / Total Assets
Asset to Equity
Total Assets / Stockholders’ Equity
Earnings (Loss) Per Share
Net Income (Loss) / Weighted Ave. Number of
Shares
64,712,891
16.14
68,971,394 /
4,272,449
.066
4,272,449 /
64,712,891
.012
816,599 /
68,985,340
1.066
68,985,340 /
64,712,891
₱0.01
816,599 /
200,000,000
63,896,292
23.15
66,766,179 /
2,883,833
.045
2,883,833 /
63,896,292
NA
1.045
66,780,125 /
63,896,292
(₱0.07)
(7,366,958) /
109,090,731
Calendar Year 2012
Before the company made investments after its reorganization and restructuring, it had no activities since 1998,
thus there have been no revenues from operations. The Company thru its Management Agreement with Option
to Buy with Geogen Corporation covering the Dinapigue Nickel Project located at Dinapigue, Isabela, has
generated a management income of ₱3.56 million. Net income/(loss) for the year ended December 31, 2012 and
2011 amounted to ₱.82 million and (₱7.37) million, respectively, which resulted to an accumulated deficit of
₱33.61 and ₱34.43 million. As of December 31, 2012 and 2011, the Company’s equity amounted to ₱64.71
million and ₱63.90 million respectively.
The Company’s quasi-reorganization and equity restructuring were approved by the Securities and Exchange
Commission (SEC) on May 3, 2011. The capital increase was undertaken using the Fifteen Million Pesos (₱
15,000,000.00) deposited for future subscriptions by certain investors as partial payment for subscriptions to
Forty Five Million (45,000,000) Shares at the price of One Peso (₱1.00) per share, which was the reduced par
value of the shares upon the approval by the SEC of its quasi-reorganization plan. Upon approval of the capital
increase, the Company’s issued and outstanding shares increased to Sixty two million one hundred seventy
thousand two hundred ninety three (62,170,293). The corresponding Subscription Agreements with the
subscribers were executed by the Company on 16 May 2011 and the balances on the subscription price from the
individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of 136,678,651
shares of the Company at P
= 1 par value a share to various investors. They also approved the creation of several
subsidiaries via investment in various corporations where the Company will own 100% of the outstanding capital
stock of the said subsidiaries. Moreover, the BOD approved the change of corporate name of the Parent
Company which consequently approved by the Securities and Exchange Commission on 26 March 2012. The
approved name was Asiabest Group International Inc.
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the Company due its full
compliance with the PSE’s requirements, submission of structured reports and payment of the Company’s
obligations.
On 27 September 2011, the Company together with NiHao executed a Heads of Agreement with Glencore. The
Heads of Agreement was executed to allow the Company, NiHao and Glencore to enter into a joint venture and
technical partnership whereby each party shall utilize its expertise in the mining industry for purposes of
investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel
deposits in the Philippines for purposes of Direct Shipping / Selling Ore and other nickel mining businesses. On
28 October 2011, the Company together with NiHao signed the Addendum to the Heads of Agreement with
Glencore. The Addendum provides that the Joint Venture Corporation to be formed in Hong Kong shall have an
initial authorized share capital of One Hundred Thousand Hong Kong Dollars (HK$100,000.00) and issued and
paid up capital of Ten Thousand Hong Kong Dollars (HK$10,000.00). On 10 December 2011, the Certificate of
Incorporation of GNA Resources International Limited (GNA) was approved under the Companies Ordinance of
the Laws of Hong Kong.
On 7 October 2011, the stockholders during its annual meeting ratified all acts of the Board of Directors from 28
October 2008 up to 7 October 2011. They also approved the proposed change of name of the corporation and
the delegation to the Board of Directors of the power to issue shares to various investors.
On 14 October 2011, the company entered into a Management Agreement with Option to Buy with GEOGEN.
GEOGEN is a mining company and is registered holder of a valid and existing mining claim in Dinapigue, Isabela.
10
GEOGEN retained the services of ABG for the management of the exploration, development and mining
operations of its mining area for a period of five (5) years.
On 5 March 2012, the Company gave its conformity to the execution of a General Contractor Agreement between
Geogen Corporation and NiHao Mineral Resources International, Inc. The agreement provides for the terms and
conditions of the contracting relationship between Geogen, as the MPSA Holder of MPSA No. 258-2007-II dated
30 July 2007 and NiHao as contractor for the mining and other services over the areas covered by the MPSA,
located in Dinapigue Isabela.
The Company’s revenue for the year ended December 31, 2012 totaled to about P
= 3.56 million which was earned
from Management Agreement with Geogen Corporation, and interest income of P
= 1.72 an increase of P
= 0.64
million when compared to December 31, 2011 due mainly to the increase in the Company’s average short-term
placements. The increase in the short term placements was due to the payments of subscriptions receivable by
the stockholders which result to higher interest income.
Total expenses for December 31, 2012 totaled about P
= 4 million, a decrease of about P
= 4.18 million when
compared to December 30, 2011. The decrease was attributed mainly to lower professional, director, listing and
filing fees, as well as lower taxes and licenses payment.
Cash and cash equivalents amounted to P
= 64.28 million as of December 31, 2012 as compared to P
= 52.79 million
as of December 31, 2011 or an increase of P
= 11.49 million. The increase in cash and cash equivalents was due
to the collection of receivables of the Company.
Other current assets increased by P
= 0.587 million due mainly to additional creditable withholding tax from
management income, input value-added tax and deferred input value added tax on professional fees and PSE
annual maintenance fees incurred for the period ended December 31, 2012.
Accounts and other payables increased by about P
= 1.39 million when compared to December 31, 2011 due
mainly to additional advances from stockholders for additional short term placements and deferred output value
added tax from the management income.
There are no known trends or any known demands, commitments, events or uncertainties that will result in or
that are reasonably likely to result in the Company’s liquidity increasing or decreasing in any material way.
There are no known events that will trigger direct or contingent financial obligation that is material to the
Company, including any default or acceleration of an obligation.
There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligation),
and other relationships of the Company with unconsolidated entities or other persons created during the year.
There are no known trends, events or uncertainties that have had or that are reasonably expected to have a
material favorable or unfavorable impact on net sales or revenues or income from continuing operations.
There are no significant elements of income or loss that did not arise from the Company’s continuing operations.
There are no seasonal aspects that had a material effect on the Company’s financial condition or results of
operations.
There are no material events and uncertainties known to management that would address the past and would
have an impact on future operations of the Registrant.
Calendar Year 2011
On 3 May 2011, the Securities and Exchange Commission (SEC) approved the quasi-reorganization and equity
restructuring of the Company. The Company increased its authorized capital stock with a subscription to Forty
Five Million (45,000,000) Shares at the price of One Peso (P1.00) per share. Upon approval of the capital
increase, the Company’s issued and outstanding shares increased to Sixty two million one hundred seventy
thousand two hundred ninety three (62,170,293). The corresponding Subscription Agreements with the
subscribers were executed by the Company on 16 May 2011 and the balances on the subscription price from the
individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of 136,678,651
shares of the Company at P
= 1 par value a share to various investors.
The Board of Directors also approved the creation of several subsidiaries via investment in various corporations
where the Company will own 100% of the outstanding capital stock of the said subsidiaries.
11
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the Company due its full
compliance with the Exchange’s requirements, submission of structured reports and payment of the Company’s
obligations.
The Company executed a Heads of Agreement with NiHao and Glencore for purposes of forming a Joint Venture
Corporation whereby each party shall utilize its expertise in the mining industry for purposes of investigating,
identifying, acquiring, developing and operating mining claims of economically feasible nickel deposits in the
Philippines for purposes of Direct Shipping / Selling Ore and other nickel mining businesses. On 28 October
2011, the Company signed an Addendum to the Heads of Agreement with Glencore International AG (Glencore)
providing that the Joint Venture Corporation shall have an initial authorized share capital of One Hundred
Thousand Hong Kong Dollars (HK$100,000.00) with issued and paid up capital of Ten Thousand Hong Kong
Dollars (HK$10,000.00).
The Company also entered into a Management Agreement with Option to Buy with Geogen Corporation
(GEOGEN). GEOGEN is a mining company and is registered holder of a valid and existing mining claim in
Dinapigue, Isabela. GEOGEN retained the services of the Company for the management of the exploration,
development and mining operations of the mining area.
The Company’s revenue (interest income earned on short-term investments) for the year ended December 31,
2011 totaled ₱1.086 million, an increase of P
= 0.682 million when compared to the year ended December 31,
2010. The increase in revenue was due to increase of short term investments because of the payments of
subscriptions receivable by stockholders.
Total expenses for 2011 totaled to about ₱8.235 million, an increase of about P
= 4.818 million when compared to
2010. The increase was attributed mainly to the payment of accumulated penalties imposed by the SEC,
professional fees for various services incurred in the Company’s quasi-reorganization and equity restructuring,
taxes, licenses and directors’ fees.
Loss per share in 2011 amounted to ₱0.07 or a decrease of P
= 0.10 when compared to 2010 due to increase in net
loss for the year.
Cash and cash equivalents amounted to ₱52.79 million in 2011 or an increase of ₱42.42 million when compared
to 2010. The increase in cash and cash equivalents was due to collection of subscriptions receivable totaling ₱65
million and partially offset by the payment of accruals and expenses for the period.
Other current assets increased by ₱0.122 million due mainly to additional input value-added tax on professional
fees and PSE annual maintenance fees incurred in 2011.
Accounts and other payables decreased by about P
= 1.724 million due mainly to payment of accrued professional
fees and SEC penalties/fines incurred in prior years.
Calendar Year 2010
Net Loss for the year ended December 31, 2010 amounted to ₱3.09 million which resulted into an accumulated
deficit of ₱514.96 million.
To address this financial difficulty, as early as 2003, the Company’s Board of Directors explored the possibility of
looking for investors who will provide a new business direction for ABG, infuse fresh capital and finance its
commercial activities. Thus, the appropriate board resolutions were passed and approved by the stockholders in
2003 as follows:
•
Sale of the Company’s investment in the shares of stock of Atlantic, Gulf and Pacific Company of
Manila, Incorporated (AG&P) to TPIC for P
= 66.2 million. The proceeds of the sale were applied against
the Company’s obligations to TPIC.
•
Conversion of the Company’s obligations to TPIC totaling P
= 228.7 million into the Company’s additional
paid-in capital.
Quasi-reorganization plan consisting of the following:
•
•
•
Reduction in par value from Six Pesos (P
= 6.00) per share to One Peso (P
= 1.00) per share.
Decrease in the authorized capital stock of the Corporation from One Hundred Thirty Two Million
Pesos (P
= 132,000,000.00) divided into Twenty Two Million (22,000,000) shares at Six Pesos (P
= 6.00)
per share to Twenty Two Million Pesos (P
= 22,000,000.00) divided into Twenty Two Million
= 1.00) per share.
(22,000,000.00) shares at One Peso (P
Resulting surplus from the reduction in par value to be credited to additional paid-in capital.
12
•
•
•
Offset of the Company’s additional paid-in capital against the Company’s deficit.
Reclassification of the Company’s Class A common shares and Class B common shares into one
class of common shares.
Increase in the Company’s authorized capital stock (after reduction in par value of the shares) from P
= 22
million (divided into 22 million shares at One Peso (P
= 1.00) par value a share) to P
= 200 million (divided
into 200 million shares at One Peso (P
= 1.00) par value a share).
•
Delegation to the Board of Directors the authority to look for new investors.
Together with the Board of Directors of ABG, minority shareholders took the initiative of reviving the Company’s
status as a listed company. They assessed and identified investment opportunities and weighed various options
geared towards finding a new investor. In 2008, through HDI Securities, Inc., a group of investors pooled
together a fund to invest in the Company’s. Initial investments of Fifteen Million Pesos (P
= 15,000,000.00) from the
investors provided the Company’s with funds needed to pay off regulatory and statutory penalties that
accumulated during its period of non-operations.
To carry out the plan to revive and re-instate ABG, on 4 August 2008, the Board of Directors approved the
Company’s quasi-reorganization. On 14 August 2008 and September 9, 2008, the Company received a total
amount of P
= 15 million from investors, as partial payment for subscriptions shown as Deposits on Subscriptions
account in the balance sheets and statements of changes in equity.
The Company’s revenue (interest income earned on short-term investments) for the year ended December 31,
2010 totaled to about P
= 0.40 million, a decrease of ₱0.08 million when compared to 2009.
Total expenses for 2010 totaled about P
= 3.42 million, an increase of about P
= 2.59 million when compared to
2009. During the year 2010, the Company accrued the SEC fines and penalties of ₱2.55 million assessed on the
Company and were paid on 2011.
Loss per share in 2010 amounted to P
= 0.17 or an increase of P
= 0.15 compared to 2009 due to increase in net loss
for the year.
Cash and cash equivalents amounted to P
= 10.37 million in 2010 or a decrease of P
= 1.18 million when compared to
2009. The movements in cash and cash equivalents are attributed to interest income of P
= 0.4 million (net of
withholding tax of P
= 0.08 million) and payments of prior year accruals and current operating expenses totaling P
=
1.5 million.
Other current assets increased by P
= 0.09 million due mainly to additional input value-added tax on professional
fees and PSE annual maintenance fees incurred in 2010.
Accounts and other payables increased by about P
= 2.01 million due mainly to SEC penalties and fines of ₱2.55
million and offset by payments of accruals of professional fees.
Item 7.
Financial Statements and Supplementary Schedules
The Company’s consolidated financial statements together with the notes thereto are incorporated and attached
to this report in its entirety.
Item 8.
Information of Independent Accountants
The external auditor of the group is Sycip Gorres Velayo & Co. (“SGV”) for the years ended 2012 and 2011. For
the years ended 2008 to 2010 MG Madrid & Co. was the external auditor appointed by the company.
Audit and Other Related Fees
As of 31 December 2012, 2011 and 2010, the group’s audit fees to its external auditor amounted to P
= 505,000, P
=
465,000, and P
= 60,000, respectively. The significant increase in the audit fee was due to the incorporation of three
(3) subsidiaries of the group.
Except for the annual audit of financial statements, SGV was not commissioned to perform any other assurance
and related services for the group.
There have been no professional services rendered by the external auditors for tax accounting, compliance,
advice, planning and any other form of tax services for the years ended 31 December 2012, 2011 and 2010.
Audit Committee’s Approval Policies and Procedures
The Audit Committee and SGV meet to discuss audit plans, new accounting standards for adoption by the group,
timetable, and professional staff assigned to perform the engagement service and service fees to be charged by
13
the auditor, among others. Before the audit report is finalized, SGV presents the results of the audit to the Audit
Committee and secure approval for release of the audited financial statements of the parent, subsidiaries and
consolidated reports.
Item 9.
Changes in and Disagreements with Accountants and Financial Disclosure
The Group appointed SGV as External Auditor for the years ended 31 December 2012 and 2011. There has
been no event where SGV and the Company had any disagreement with regard to any matter relating to
accounting principles or practices, financial statement disclosure or accounting procedure.
Pursuant to the General Requirements of SRC Rules 68, As Amended Section 3.b.ix (Qualifications of
Independent Auditors), the external auditors shall be rotated every five (5) years of engagement. In case of a
firm, the signing partner shall be rotated every after said period. The Group is in compliance with SRC Rule 68,
As Amended Section 3.b.ix.
PART III - CONTROL AND COMPENSATION INFORMATION
Item 10.
Directors and Executive Officers of the Registrant
The Company’s Board of Directors and Officers are responsible for the overall management and direction of the
Company. They meet to review and monitor the Company’s future plans. They have been nominated to serve
as directors and officers until the next annual meeting of stockholders or until their successors, if any, are
elected.
Below are the present members of the Board and Officers of the Company:
Office
Name
Chairman of the Board/President
Antonio Victoriano F. Gregorio III
Director/CFO/Treasurer
Delfin S. Castro, Jr.
Independent Director
Helen G. Tiu
Independent Director
Ramon Miguel V. Osmeña
Director
Richard N. Palou
Director
Jose M. Crisostomo
Director
Chi Ho Co
Director
Manuel G. Acenas
Director
Jose Francisco E. Miranda
Corporate Secretary/CIO
Venus L. Gregorio
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Canadian
Filipino
Filipino
Age
40
47
52
28
64
62
40
67
34
44
ANTONIO VICTORIANO F. GREGORIO III, 40, Filipino, Director, Chairman and President. Atty. Antonio
Gregorio III graduated Second Honors, with a Juris Doctor from the Ateneo de Manila University in 1998 and
passed the bar examinations in of 1999. He finished both his Bachelor of Science Degree, Major in Management
Engineering and a Bachelor of Arts, Major in Economics-Honors, from the Ateneo de Manila University, Magna
Cum Laude. He was the valedictorian of his high school class in the Ateneo. Atty. Gregorio is a Partner at
Gregorio Law Offices and sits as director and officer of various public and private companies, including, NiHao
Mineral Resources International, Inc. (Chairman and President), Lodestar Investment Holdings Corporation
(Chairman), Dizon Copper-Silver Mines (Director and CFO), Abacus Consolidated Resources and Holdings, Inc.,
Minerales Industrias Corporation, and GNA Resources International Limited, among other companies
Delfin S. Castro, Jr., Filipino, 46, has served as Director since 9 December 2010. He holds a Masters in
Business Administration and a Bachelor of Science in Business Administration from the University of the
Philippines. He is currently Director/Treasurer/Corporate Information Officer of Geograce Resources Philippines
Incorporated, CFO of NiHao Mineral Resources International, Inc. and Chairman/President of Dizon CopperSilver Mines, Inc.
Helen G. Tiu, Filipino, 52 has served as Independent Director since 13 December 2012. Atty. Helen G. Tiu
received a Bachelor of Science degree in Business Administration and Accountancy (cum laude) from the
University of the Philippines ranking 5th in her graduating class. She finished her Bachelor of Laws degree, also
from the University of the Philippines in 1987 ranking 6th in her graduating class. She received her Masters
degree in Laws from the Harvard University in 1991. She is a Certified Public Accountant and a member of the
Philippine Bar. She is currently Managing Director, Treasurer and Corporate Secretary of Lazaro, Bernardo Tiu
and Associates and owner and Manager of H.G. Tiu Kaw Offices. She is currently a Director of Stratpoint
Technologies, Inc., Trustee of the Harvard Law School Alumni Association of the Philippines, Corporate
Secretary of Psi Technologies, Inc., Corporate Secretary of PSi Technologies, Inc., PSi Technologies Laguna,
Inc., PSitech Realty Inc. and Pacsem Realty Inc. She also currently serves as Corporate Secretary of
14
Philstar.com Holdings, Inc., Philstar Global Corporation, Igloo Supply Chain Philippines, Inc. and Assistant
Corporate Secretary of Philstar Daily Inc., Pilipino Star Ngayon, Inc. and Pilipino Star Printing Co., Inc.
Ramon Miguel V. Osmeña, Filipino, 27, has served as Director since 7 October 2011. He received his Bachelor
of Arts degree major in Philosophy from the University of California Los Angeles and Associate of Arts in Liberal
Arts and Sciences from the West Los Angeles College. He is the President of Certified MOA Ammunition
Corporation since May 2010 and Informal Assistant to Congressman Osmeña since June 2010.
Richard William N. Palou, Filipino, 63, has served as Director since 4 August 2008. He is an MBA candidate
and a graduate of Business Management at the Ateneo de Manila University. He is the Director for the University
Athletics at the Ateneo de Manila University (2004 to present). He is also a Director of DENAGA Pawnshop, Inc.
(2007 to present), Vantage Investigation and Security Agency, Inc. (2007 to present), and First Philippine Wind
Corporation (1997 to present).
Jose C. Crisostomo, Filipino, 61, has served as Director since 9 December 2010. He holds a Masters of
Business Administration from the California State University Hayward in Hayward, California, U.S.A. He is
currently the Treasurer of Global Tech Mobile Online Corporation. He was the Motorpool Maintenance Manager
of Peaksun Enterprises & Export Corporation (1996-1997), Maintenance Procedure Planner, Logistics Controller,
Station Control Center Operations and Ramp Service Operations of San Francisco International Airport (19861995), Structural and Project Engineer of Bechtel Engineering Corporation (1978-1986), Senior Airways
Communicator and Search and Rescue Coordinator of Civil Aeronautics Administration Domestic Airport (19721978), and Surveyor of Phil-rock Construction Company (1970-1972). He is a member of Manila Southwoods
Golf and Country Club, Inc., Riviera Golf and Country Club, Inc., and Sherwood Hills Golf and Country Club.
Chi Ho Co, Filipino, 39, has served as Director since 4 February 2011. He currently serves as Director and
Officer of various companies including Lodestar Investment Holdings Corporation (President) Hightower, Inc.
(President), Glomedic Philippines, Inc. Banquets in Style, Inc., Cavite Apparel Corporation and Subic Bay
Apparel Corporation, among other companies.
Manuel G. Acenas, Canadian, 67, has served as Director since 13 December 2012. Mr. Acenas is a Philippine
registered geologist currently working as a mineral exploration and geological consultant for various companies.
He was a Senior Geologist for Eldore Mining Corp (Phil) from 2008 to 2011 and Eldore Mining Corp. Ltd
(Australia) from 2005 to 2008. Mr. Acenas graduated with a Bachelor of Arts Major in Geology from the
Adamson University in 1969.
Jose Francisco E. Miranda, Filipino, 33, has served as Director since 7 October 2011. He holds a Masters of
Business Administration from the De La Salle University and a Bachelor of Science in Geodetic Engineering from
the University of the Philippines. He is also the President of Geograce Resources Philippines, Inc., and Director
of Lodestar Investment Holdings Corporation and Nihao Mineral Resources International Inc.
Venus L. Gregorio, Filipino, 44, has served as Corporate Secretary and Corporate Information Officer since 5
May 2011. She graduated with a Juris Doctor from Ateneo de Manila University and passed the bar
examinations in 1999. She holds a Bechelor of Arts in Political Science from the University of the Philippines. She
is currently a partner at Gregorio Law Offices, Asst. Corporate Secretary and Corporate Information Officer of
Lodestar Investment Holdings Corporation.
Significant Employees
No person, who is not a director or an executive officer, is expected to make a significant contribution to the
business of the Company. Neither is the business highly dependent on the services of certain key personnel.
Family Relationships
Atty. Antonio Victoriano F. Gregorio III and Atty. Venus L. Gregorio are spouses.
Other than the relationship disclosed above, the company is not aware of any other family relationships up to
fourth civil degree, either by consanguinity or affinity, among directors and officers of the Company.
Involvement in Certain Legal Proceedings
The Company is not aware of:
(a) any bankruptcy petition filed by or against any business or which any director or member of senior
management was a general partner or executive officer either at the time of bankruptcy or within two years
prior to that time;
(b) any conviction by final judgment, of any director or member of senior management, 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;
(c) of any director or member of senior management being subject to any order, judgment, or decree, not
15
subsequently reversed, suspended or vacated of any court of competent jurisdiction, domestic or foreign,
permanently or temporarily enjoining, barring, suspending or otherwise limiting such director’s or member of
senior management’s involvement in any type of business, securities, commodities or bargaining activities;
and
(d) any director or member of senior management 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 electronic marketplace or self regulatory organization, to have violated a securities or commodities law
and the judgment has not been reversed, suspended or vacated.
Disagreement with a Director
No director has declined to stand for re-election to the Board of Directors since the date of the last annual
stockholders’ meeting because of a disagreement with the Company on any matter relating to the Company’s
operations, policies or practices.
Item 11.
Executive Compensation
The following summarizes the compensation packages of the Directors and Executive Officers of the Registrant
during the last three (3) fiscal years.
Name
Position
Antonio Victoriano F. Gregorio III
Chairman / President
Delfin S. Castro, Jr.
CFO / Treasurer
Venus L. Gregorio
Corporate Secretary / CIO
All other officers and directors as a
group unnamed
Year
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
Salary
-
Bonus
-
Per Diem
20,000
60,000
12,500
25,000
17,500
60,000
45,000
180,000
-
As of 31 December 2012, the above names are the only executive officers of the Company.
Compensation of Directors and Chairman
Other than the minimal per diem received by the directors for attendance in a Regular or Special Board Meeting,
executive officers and directors do not receive any salaries and bonuses for any services provided such as
committee participation or any special assignments.
There are no other arrangements, including consulting contracts, pursuant to which any director of the Company
was compensated, or is to be compensated, directly or indirectly, for any service provided as a director.
Employment Contracts and Termination of Employment and Change-in-Control Arrangements
There are no special arrangements as to the employment contract of any executive officer such that said officer
will be compensated upon his resignation, retirement or other termination from the Company or its subsidiaries,
or as may result from a change-in-control except as provided by law.
Warrants and Options Outstanding
There are no outstanding warrants and options outstanding held by the Company’s President, the named
executive officers and directors as a group.
Item 12.
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Record and Beneficial Owners
The following are the owners of record of more than five percent (5%) of the Company’s outstanding capital
stock, the number of shares and percentage of shareholdings of each of them, as of 31 March 2013.
Type of
Class
Common
Name, address of owner
and relationship with
Owner on
issuer
Record
Sunplaza Development Corporation(a)
Substantial Stockholder of ABG
16
Citizenship
Filipino
Amount of
Ownership
98,078,651
Percent
49.04%
Common
Common
Common
Common
Antonio Victoriano F. Gregorio III
Chairman, President & Director of ABG
Chi Ho Co
Director of ABG
Garry Lincoln Taboso
Stockholder of ABG
PCD Nominee Corporation(b)
Filipino
16,320,001
8.16%
Filipino
14,000,0001
7%
Filipino
14,000,000
7%
Filipino
12,756,122
6.38%
(Note: Except in the case of the PCD Nominee Corporation, the record owners are also the beneficial owners and vice versa. The shares of
the PCD Nominee Corporation are beneficially owned by various shareholders but their identities cannot be determined due to the scripless
nature of their shares)
(a)
Sunplaza Development Corporation was incorporated on 6 March 2008 for the purpose of engaging
in the realty business. It currently owns about fifteen (15) floors of Sun Plaza Centre, a commercial /
office condominium building located at Shaw Blvd., Mandaluyong City. It has an authorized capital
stock of Ten Million Pesos (₱10,000,000.00), divided into Ten Million (10,000,000) shares with par value
of One (₱1.00) peso per share. Out of the subscribed capital stock of Two Million Five Hundred
Thousand (2,500,000) shares of the corporation, sixty percent (60%) of which is owned by Jerry C.
Angping, and ten percent (10%) each are owned by Wilma C. Crisostomo, Ma. Rhodora V. Angping,
Delfin S. Castro, Jr. and Engracio L. Sagcal, Jr.
(b)
PCD Nominee Corporation (PCD) is a wholly owned subsidiary of the Philippine Depository and Trust
Corporation (PDTC), a corporation established to improve operations in securities transactions and to
provide fast, safe and highly efficient system for securities settlement in the Philippines. PCD acts as
trustee-nominee for all shares lodged in the PCD system where trades effected on the Philippine Stock
exchange are settled with PCD. PCD has an authorized capital stock of ₱2,000,000.00 divided into
20,000 shares with a par value of ₱100.00 per share. It has a subscribed capital stock of 5,000 shares
paid up of ₱500,000.00.
The following are the owners of record of more than five percent (5%) of the Company’s outstanding capital
stock, the number of shares and percentage of shareholdings of each of them, as of 31 December 2012.
Type of
Class
Common
Common
Common
Common
Common
Name, address of owner
and relationship with
Owner on
issuer
Record
Sunplaza Development Corporation(a)
Substantial Stockholder of ABG
Antonio Victoriano F. Gregorio III
Chairman, President & Director of ABG
Chi Ho Co
Director of ABG
Garry Lincoln Taboso
Stockholder of ABG
PCD Nominee Corporation(b)
Citizenship
Amount of
Ownership
Percent
49.04%
Filipino
Filipino
98,078,651
16,320,001
8.16%
Filipino
14,000,0001
7%
Filipino
14,000,000
7%
Filipino
12,752,624
6.38%
(Note: Except in the case of the PCD Nominee Corporation, the record owners are also the beneficial owners and vice versa. The shares of
the PCD Nominee Corporation are beneficially owned by various shareholders but their identities cannot be determined due to the scripless
nature of their shares.)
Security Ownership of Management as of 31March 2013
Type of
Class
Common
Amount & Nature of
beneficial ownership
Name of Beneficial Owner
Antonio Victoriano F. Gregorio III
Delfin S. Castro, Jr.
Helen G. Tiu
Ramon Miguel V. Osmeña
Richard N. Palou
Jose M. Crisostomo
Chi Ho Co
Manuel G. Acenas
Jose Francisco E. Miranda
Venus L. Gregorio
D
D
D
D
D
D
D
D
D
I
All Directors and executive officers as a group
17
16,320,001
4,320,001
100
1,000
1
4,320,001
14,000,001
100
4,320,001
16,320,001
(indirect)
43,281,206
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Canadian
Filipino
Filipino
Percent
8.16%
2.16%
0.00005%
0.0005%
2.16%
7%
0.00005%
2.16%
-21.64%
Security Ownership of Management as of 31 December 2012
Type of
Class
Common
Amount & Nature of
beneficial ownership
Name of Beneficial Owner
Antonio Victoriano F. Gregorio III
Delfin S. Castro, Jr.
Helen G. Tiu
Ramon Miguel V. Osmeña
Richard N. Palou
Jose M. Crisostomo
Chi Ho Co
Manuel G. Acenas
Jose Francisco E. Miranda
Venus L. Gregorio
D
D
D
D
D
D
D
D
D
I
All Directors and executive officers as a group
Item 13.
16,320,001
4,320,001
100
1,000
1
4,320,001
14,000,001
100
4,320,001
16,320,001
(indirect)
43,281,206
Citizenship
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Canadian
Filipino
Filipino
Percent
8.16%
2.16%
0.00005%
0.0005%
2.16%
7%
0.00005%
2.16%
-21.64%
Certain Relationships and Related Transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled
by or under common control with the Group, including holding companies, subsidiaries and fellow subsidiaries,
are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting
power of the Group that gives them significant influence over the enterprise, key management personnel,
including directors and officers of the Group and close members of the family of these individuals, and companies
associated with these individuals also constitute related parties. In considering each possible related entity
relationship, attention is directed to the substance of the relationship and not merely the legal form.
Terms and Conditions of Transactions with Related Parties
Outstanding balances of transactions with related parties are unsecured, noninterest bearing, payable on
demand and settlements are made in cash. There have been no guarantees provided or received for any related
party receivables or payables.
Transactions with Related Parties
In the normal course of business, transactions with related parties include the following:
a.
On March 5, 2012, the Company gave its conformity to the execution of a General Contractor Agreement
between Geogen and NiHAO under which NiHAO shall bear the management fees pursuant to the
Management Agreement with Option to Buy. Mining operations started during the year. Management income
recognized in 2012 amounted to ₱3.56 million. Outstanding balance as at December 31, 2012 amounted to
₱3.56 million.
b.
The Parent Company has advances from a stockholder for working capital requirements amounting to
₱0.587 million and ₱13,946 as at December 31, 2012 and 2011, respectively.
c.
On September 27, 2011, the Parent Company, NiHAO and Glencore executed a HOA in Hong Kong to
develop and operate mining claims of economically feasible nickel deposits in the Philippines for purposes of
direct shipping or selling of ore and other related nickel mining business. In order to accomplish the said
purpose, the parties agreed to from within a period of two months from the signing of the HOA, a JVC under
the laws of Hong Kong. The JVC was incorporated in Hong Kong on November 23, 2011. As at December
31, 2012, the JVC has not started its main business operation. NiHAO and the Parent Company have
interlocking directors.
Transaction with Key Management Personnel
The group avails of services rendered by lawyers of Gregorio Law Offices which primarily consists of legal and
back office work. One of the key management personnel of Group is also a partner of this law firm. The related
professional fees amounted to ₱2.6 million and ₱4.4 million in 2012 and 2011, respectively.
PART IV - CORPORATE GOVERNANCE
Item 14.
Corporate Governance
The Company observes and complies with the mandate of the SEC on matters involving corporate
governance. The Company has yet to fully put up an evaluation system to measure or determine the level of
compliance of the Board of Directors and top level management with its Manual of Corporate Governance. The
18
Board of Directors and Management will study the implementation of a system to determine compliance by the
Board and Management with Rules on Good Governance.
The Company will allocate funds for the purpose of conducting a workshop or seminar to operationalize a Manual
of Corporate Governance. Also, the Company requires that each director be trained on leading practices and
principles of Corporate Governance. However, while these measures have been adopted in principle, they have
not yet been implemented.
As earlier stated, due to the Company’s non-operational status, the Company has yet to come up with additional
measures, if necessary, to fully implement a Manual of Corporate Governance.
The incumbent Board of Directors will evaluate and determine whether certain measures should be taken to fully
comply with the Corporate Governance, if needed.
PART V - EXHIBITS AND SCHEDULES
Item 15.
Exhibits and Reports on SEC Form 17-C
(a) Exhibits
None.
(b) Reports on SEC Form 17-C
Date of Event
Reported
10 January 2012
17 May 2012
•
•
•
•
•
16 October 2012
•
13 December
2012
•
•
•
•
•
Event Reported
Appointment of SGV & Co. as external auditor for 2011
Resignation of David dela Cruz as Chief Financial Officer and Director
Election of Jose Francisco Miranda as Director
Appointment of Delfin S. Castro, Jr. as Chief Financial Officer
Postponement of the annual stockholders’ meeting to a date to be determined by the
Board of Directors
Calling of the Annual Stockholders’ meeting on December 2012 at a day and venue
to be determined by the Chairman
Appointment of SGV & Co. as external auditor for 2012
Election of Directors
Organizational Board Meeting of the Board of Directors
Election of Officers
Appointment of members of the various committees of the Corporation
19
Asiabest Group International Inc. and Subsidiaries
SEC Supplementary Schedules
December 31, 2012
Table of Contents
Schedule
A
B
C
D
E
F
G
H
Description
Financial Assets
1. Financial Assets at Fair Value Through Profit or Loss
2. Held-to-Maturity Investments
3. Available-for-sale Financial Assets
Amounts Receivable from Directors, Officers, Employees, Related
Parties, and Principal Stockholders (Other than Affiliates)
Amounts Receivable from Related Parties which are Eliminated
during the Consolidation of Financial Statements
Intangible Assets – Other Assets
Long Term Debt
Indebtedness to Related Parties
Guarantees of Securities of Other Issues
Capital Stock
Page
1
2
3
4
5
6
7
8
Other Required Information
Financial Performance Indicators
9
Reconciliation of Retained Earnings Available for Dividend
Declaration
Summary of Philippine Financial Reporting Standards Effective as of
December 31, 2012
Map Showing the Relationship Between the Company and its Related
Entities
10
11-15
16
Asiabest Group International Inc. and Subsidiaries
Schedule A – Financial Assets
December 31, 2012
Name of issuing entity and association of each
issue
SHORT TERM INVESTMENTS
Number of shares
or principal
amount of bonds
or notes
Amount shown in the
balance sheet
Valued based on the
market quotation at
the balance sheet date
₱60,773,309
₱60,773,309
Income received
and accrued
Asiabest Group International Inc. and Subsidiaries
Schedule B – Amounts Receivable from Directors, Officers, Employees, Related Parties and
Principal Stockholders (Other than Related Parties)
December 31, 2012
Name and Designation of
Debtor
Balance at
Beginning of
Period
Advances to officers and
employees
₱265,916
Additions
Amounts
Collected
Amounts
Written Off
₱265,916
Current
Not Current
Balance at
End of Period
₱0
Asiabest Group International Inc.
Schedule C – Amounts Receivable from Related Parties which are Eliminated during the
Consolidation of Financial Statements
December 31, 2012
Name of Related Party
Alta Minera Inc.
Breccia Resources Inc.
Millionaire’s Offices and
Properties Inc.
Total
Balance at
Beginning of
Period
Additions
Amounts
Collected
Amounts
Written
Off
Current
NonCurrent
Balance at End
of Period
₱213,555
213,475
213,102
₱ 144,083
143,573
140,594
₱ 357,638
357,048
353,695
₱ 357,638
357,048
353,695
₱ 640,132
₱ 428,250
₱ 1,068,381
₱ 1,068,381
Asiabest Group International Inc. and Subsidiaries
Schedule D – Intangible Assets
December 31, 2012
Deduction
Description
Beginning
Balance
Additions at cost
Ending Balance
Charged to cost
and expenses
N/A
Charged to other
accounts
Other changes
additions
(deductions)
Asiabest Group International Inc. and Subsidiaries
Schedule E – Long Term Debt
December 31, 2012
Amount authorized by indenture
Title of issue and type of obligation
N/A
Amount shown under caption
“Current portion of long-term
debt” in related balance sheet
Amount shown under caption
“Long Term Debt” in related
balance sheet
Asiabest Group International Inc. and Subsidiaries
Schedule F – Indebtedness to Related Parties (Long Term Loans from Related Parties)
December 31, 2012
Name of related party
Balance at beginning of period
N/A
Balance at end of period
Asiabest Group International Inc. and Subsidiaries
Schedule G – Guarantees of Securities of Other Issuers
December 31, 2012
Name of issuing entity of
securities guaranteed by the
company for which this
statement is filed
Title of issue of each class
of securities guaranteed
Total amount guaranteed
and outstanding
N/A
Amount owned by person
for which statement is filed
Nature of Guarantee
Asiabest Group International Inc. and Subsidiaries
Schedule H – Capital Stock
December 31, 2012
Title of Issue
Common shares –
₱1 par value
Number of
authorized shares
200,000,000
Number of shares
issued and
outstanding as shown
under the related
statement of financial
position caption
200,000,000
Number of
shares
reserved for
options,
warrants,
conversion and
other rights
Number of shares held by
Related Parties
Directors, officers
and employees
Others
98,078,651
43,281,206
58,640,143
Asiabest Group International Inc. and Subsidiaries
Financial Performance Indicators
December 31, 2012
2012
2011
16.14
68,971,394 ÷
4,272,449
23.15
66,766,179 ÷
2,883,833
NA
NA
0.062
4,272,449 ÷
68,985,340
0.043
2,883,833 ÷
66,780,125
0.066
4,272,449 ÷
64,712,891
0.045
2,883,833 ÷
63,896,292
1.066
68,985,340 ÷
64,712,891
1.045
66,780,125 ÷
63,896,292
0.012
816,599 ÷
68,985,340
(0.11)
(7,366,958) ÷
66,780,125
0.013
816,599 ÷
64,712,891
(0.115)
(7,366,958) ÷
63,896,292
Total Sales / Income
0.155
816,599 ÷
5,284,253
(6.785)
(7,366,958) ÷
1,085,781
Income (Loss) per share
₱0.01
Net Income (Loss) ÷
816,599 ÷
200,000,000
(₱0.07)
(₱7,366,958) ÷
109,090,731
Current Ratio
Current Assets ÷
Current Liabilities
Interest Coverage Ratio**
EBIT ÷
Interest Expense
Debt Ratio
Total Liabilities ÷
Total Assets
Debt to Equity Ratio
Total Liabilities ÷
Stockholders’ Equity
Asset to Equity Ratio
Total Assets ÷
Stockholders’ Equity
Return on Asset
Net Income (Loss) ÷
Total Assets
Return on Equity
Net Income (Loss) ÷
Stockholders’ Equity
Net Profit Margin
Net Income (Loss) ÷
Weighted Ave. No. of shares
*The reported revenues for 2011 are purely interests earned from bank deposits and short term placements.
**The Company did not incur any interest on its advances.
Asiabest Group International Inc. and Subsidiaries
Reconciliation of Retained Earnings Available for Dividend Distribution
December 31, 2012
DEFICIT AT BEGINNING OF YEAR
Total Comprehensive income (loss)
DEFICIT AT END OF YEAR
( ₱
34,425,057 )
816,599
( ₱ 33,608,458 )
ASIABEST GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(Formerly AGP Industrial Corporation)
SCHEDULE OF THE EFFECTIVE STANDARDS AND INTERPRETATIONS
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as at December 31, 2012
Adopted
Not
Adopted
Not
Applicable
Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative characteristics
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1
(Revised)
PFRS 2
First-time Adoption of Philippine Financial Reporting
Standards

Amendments to PFRS 1 and PAS 27: Cost of an Investment in
a Subsidiary, Jointly Controlled Entity or Associate

Amendments to PFRS 1: Additional Exemptions for First-time
Adopters

Amendment to PFRS 1: Limited Exemption from Comparative
PFRS 7 Disclosures for First-time Adopters

Amendments to PFRS 1: Severe Hyperinflation and Removal
of Fixed Date for First-time Adopters

Amendments to PFRS 1: Government Loans

Share-based Payment

Amendments to PFRS 2: Vesting Conditions and Cancellations

Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions


PFRS 3
(Revised)
Business Combinations
PFRS 4
Insurance Contracts

Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

PFRS 5
Non-current Assets Held for Sale and Discontinued Operations

PFRS 6
Exploration for and Evaluation of Mineral Resources

PFRS 7
Financial Instruments: Disclosures

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets - Effective Date and Transition

Amendments to PFRS 7: Improving Disclosures about
Financial Instruments

Amendments to PFRS 7: Disclosures - Transfers of Financial
Assets

Amendments to PFRS 7: Disclosures - Offsetting Financial
Assets and Financial Liabilities
Not early adopted
Amendments to PFRS 7: Mandatory Effective Date of PFRS 9
Not early adopted
-2-
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as at December 31, 2012
Adopted
Not
Adopted
Not
Applicable
and Transition Disclosures

PFRS 8
Operating Segments
PFRS 9
Financial Instruments
Not early adopted
Amendments to PFRS 9: Mandatory Effective Date of PFRS 9
and Transition Disclosures
Not early adopted
PFRS 10
Consolidated Financial Statements
Not early adopted
PFRS 11
Joint Arrangements

PFRS 12
Disclosure of Interests in Other Entities

PFRS 13
Fair Value Measurement
Not early adopted
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements

Amendment to PAS 1: Capital Disclosures


Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income
Not early adopted

PAS 2
Inventories
PAS 7
Statement of Cash Flows

PAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors

PAS 10
Events after the Balance Sheet Date

PAS 11
Construction Contracts
PAS 12
Income Taxes

Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets

PAS 16
Property, Plant and Equipment

PAS 17
Leases
PAS 18
Revenue
PAS 19
Employee Benefits

Amendments to PAS 19: Actuarial Gains and Losses, Group
Plans and Disclosures

Employee Benefits
PAS 19
(Amended)



Not early adopted
PAS 20
Accounting for Government Grants and Disclosure of
Government Assistance

PAS 21
The Effects of Changes in Foreign Exchange Rates

Amendment: Net Investment in a Foreign Operation

Borrowing Costs

PAS 23
(Revised)
-3-
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as at December 31, 2012
PAS 24
(Revised)
Related Party Disclosures
PAS 26
Accounting and Reporting by Retirement Benefit Plans
PAS 27
Consolidated and Separate Financial Statements
Adopted
Not
Applicable



Separate Financial Statements
PAS 27
(Amended)
PAS 28
Not
Adopted
Not early adopted

Investments in Associates
Investments in Associates and Joint Ventures
PAS 28
(Amended)
Not early adopted

PAS 29
Financial Reporting in Hyperinflationary Economies
PAS 31
Interests in Joint Ventures

PAS 32
Financial Instruments: Disclosure and Presentation

Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation

Amendment to PAS 32: Classification of Rights Issues

Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities
Not early adopted

PAS 33
Earnings per Share
PAS 34
Interim Financial Reporting
PAS 36
Impairment of Assets

PAS 37
Provisions, Contingent Liabilities and Contingent Assets

PAS 38
Intangible Assets
PAS 39
Financial Instruments: Recognition and Measurement

Amendments to PAS 39: Transition and Initial Recognition of
Financial Assets and Financial Liabilities



Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions

Amendments to PAS 39: The Fair Value Option

Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets – Effective Date and Transition

Amendments to Philippine Interpretation IFRIC-9 and PAS 39:
Embedded Derivatives

Amendment to PAS 39: Eligible Hedged Items

PAS 40
Investment Property

PAS 41
Agriculture

Philippine Interpretations
-4-
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as at December 31, 2012
Adopted
Not
Adopted
Not
Applicable
IFRIC 1
Changes in Existing Decommissioning, Restoration and
Similar Liabilities

IFRIC 2
Members' Share in Co-operative Entities and Similar
Instruments

IFRIC 4
Determining Whether an Arrangement Contains a Lease

IFRIC 5
Rights to Interests arising from Decommissioning, Restoration
and Environmental Rehabilitation Funds

IFRIC 6
Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment

IFRIC 7
Applying the Restatement Approach under PAS 29 Financial
Reporting in Hyperinflationary Economies

IFRIC 8
Scope of PFRS 2

IFRIC 9
Reassessment of Embedded Derivatives

Amendments to Philippine Interpretation IFRIC-9 and PAS 39:
Embedded Derivatives

IFRIC 10
Interim Financial Reporting and Impairment

IFRIC 11
PFRS 2- Group and Treasury Share Transactions

IFRIC 12
Service Concession Arrangements

IFRIC 13
Customer Loyalty Programmes

IFRIC 14
The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction

Amendments to Philippine Interpretations IFRIC- 14,
Prepayments of a Minimum Funding Requirement

IFRIC 16
Hedges of a Net Investment in a Foreign Operation

IFRIC 17
Distributions of Non-cash Assets to Owners

IFRIC 18
Transfers of Assets from Customers

IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments

IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine

SIC-7
Introduction of the Euro

SIC-10
Government Assistance - No Specific Relation to Operating
Activities

SIC-12
Consolidation - Special Purpose Entities

Amendment to SIC - 12: Scope of SIC 12

SIC-13
Jointly Controlled Entities - Non-Monetary Contributions by
Venturers

SIC-15
Operating Leases - Incentives

SIC-25
Income Taxes - Changes in the Tax Status of an Entity or its
Shareholders

SIC-27
Evaluating the Substance of Transactions Involving the Legal
Form of a Lease

-5-
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as at December 31, 2012
Adopted
Not
Adopted
Not
Applicable
SIC-29
Service Concession Arrangements: Disclosures.

SIC-31
Revenue - Barter Transactions Involving Advertising Services

SIC-32
Intangible Assets - Web Site Costs

Asiabest Group International Inc. and Subsidiaries
Map Showing the Relationship Between the Company and its Related Entities
December 31, 2012
Alta Minera Inc.
100%
Asiabest
Group
International
Inc.
Breccia Resources Inc.
100%
Millionaire’s Offices and Properties Inc.
100%
GNA Resources International Limited
25%
ANNEX 'C'
COVER SHEET
4 2 5 4 3
SEC Registration Number
A S I A B E S T
A N D
G R O U P
I N T E R N A T I O N A L
I N C.
S U B S I D I A R I E S
[ F o r m e r l y : A G P
I n d u s t r i a l
C o r p. ]
(Company’s Full Name)
2 0 T H
L P
F L O O R
T H E
L E V I S T E
V I L L A G E
P E A K
S T R E E T
M A K A T I
T OW E R
1 0 7
S A L C E D O
C I T Y
(Business Address: No. Street City/Town/Province)
1 2
Venus L. Gregorio
928-9246
(Contact Person)
(Company Telephone Number)
3 1
Month
Day
(Fiscal Year)
17Q1 2013
0 5
(Form Type)
Month
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
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF
THE SECURITIES REGULATION CODE (SRC) AND SRC 17 (2) (b)
THEREUNDER
1. For the quarterly period ended March 31, 2013
2. SEC Identification Number 0000042543
3. BIR Tax Identification No. 000-196-724
4. Exact name of issuer as specified in its charter ASIABEST GROUP INTERNATIONAL INC.
5. Republic of the Philippines
Province, Country or other jurisdiction of
incorporation or organization
6.
(SEC use only)
Industry Classification Code
TH
7. 20 Floor, The Peak Tower,
107 LP Leviste St., Salcedo Village, Makati City
Address of principal office
1227
Postal Code
8. (632) 9289246
Issuer’s telephone number, including are code
9. N/A
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock
Issued and Outstanding
Common stock
200,000,000
Amount of debt outstanding as of March 31, 2013:
P
= NIL
11. Are any or all of these securities listed on a Stock Exchange.
Yes [ X ]
No [
]
If yes, state the name of such stock exchange and the classes of securities listed therein:
Philippine Stock Exchange, Inc.
Common stock
12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26
and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months
(or for such shorter period that the registrant was required to file such report);
Yes [ X ]
No [
]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ X ]
No [
]
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
The Company’s consolidated financial statements have been prepared in accordance with Philippine
Financial Reporting Standards (PFRS).
This Financial Statements meeting the requirements of SRC Rule 68, is furnished as specified therein.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
March 31, 2013 and December 31, 2012 and
Three Months Ended March 31, 2013 and 2012
Financial Performance and Results of Operation
Current Assets
Total Assets
Current Liabilities
Equity
March 31, 2013
(Unaudited)
₱67,824,048
67,837,994
3,161,905
64,676,089
December 31, 2012
(Audited)
₱68,971,394
68,985,340
4,272,449
64,712,891
Three Months Ended March 31
(Unaudited)
2013
2012
₱392,805
₱447,158
351,046
1,551,720
(36,802)
(1,193,993)
Interest Income
Expenses
Net Loss
The Company thru its Management Agreement with Option to Buy with Geogen Corporation covering the
Dinapigue Nickel Project located at Dinapigue, Isabela has generated management income in 2012. During
the prior years, owing to its long period of non-operations since 1998, it had no income to declare.
For the three months ended March 31, 2013 and 2012 net loss amounted to ₱0.037 million and ₱1.19 million,
respectively, which resulted to an accumulated deficit of ₱33.65 and ₱35.62 million as of March 31, 2013 and
2012, respectively. As of March 31, 2013 and December 31, 2012, the Company’s equity amounted to
₱64.68 million and ₱64.71 million, respectively.
The Company’s quasi-reorganization and equity restructuring were approved by the Securities and Exchange
Commission (SEC) on May 3, 2011. The capital increase was undertaken using the Fifteen Million Pesos (₱
15,000,000.00) deposited for future subscriptions by certain investors as partial payment for subscriptions to
Forty Five Million (45,000,000) Shares at the price of One Peso (₱1.00) per share. Upon approval of the
capital increase, the Company’s issued and outstanding shares stood at Sixty two million one hundred
seventy thousand two hundred ninety three (62,170,293). The corresponding Subscription Agreements with
the subscribers were executed by the Company on 16 May 2011 and the balances on the subscription price
from the individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of
136,678,651 shares of the Company at P
= 1 par value a share to various investors. They also approved the
creation of several subsidiaries via investment in various corporations where the Company will own 100% of
the outstanding capital stock of the said subsidiaries. Moreover, the BOD approved the change of corporate
name of the Parent Company and approved by the Securities and Exchange Commission on 26 March 2012,
the new name of the Company is Asiabest Group International Inc.
2
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the Company due its
full compliance with the Exchange’s requirements, submission of structured reports and payment of the
Company’s obligations.
On 2, 5 and 23 September 2011, the SEC approved the issuance of the Certificate of Incorporation of Alta
Minera Inc. (Mining), Breccia Resources Inc. (Mining) and Millionaire’s Offices and Properties Inc (Real
estate) where the Company owns 100% of their outstanding capital stock.
On 22 September 2011, the Board of Directors authorized the Chairman to evaluate, negotiate and enter on
behalf of the Company into contracts, agreements, joint-venture, partnership, co-development and coinvestment with any third party for the Company’s business expansion. As a result, last 27 September 2011,
the Company together with NiHao Mineral Resources Inc. (NiHao) executed a Heads of Agreement with
Glencore International AG (Glencore). The Heads of Agreement was executed to allow the Company, NiHao
and Glencore to enter into a joint venture and technical partnership whereby each party shall utilize its
expertise in the mining industry for purposes of investigating, identifying, acquiring, developing and operating
mining claims of economically feasible nickel deposits in the Philippines for purposes of Direct Shipping /
Selling Ore and other nickel mining businesses. On 28 October 2011, the Company together with NiHao
Mineral Resources, Inc. (NiHao) signed, in counterpart, the Addendum to the Heads of Agreement with
Glencore International AG (Glencore). The Addendum provides that the Joint Venture Corporation to be
formed in Hong Kong shall have an initial authorized share capital of One Hundred Thousand Hong Kong
Dollars (HK$100,000.00) with a par value of One Hong Kong Dollar (HK$1.00) per share with issued and paid
up capital of Ten Thousand Hong Kong Dollars (HK$10,000.00) equivalent to Ten thousand shares of the
JVC. On 10 December 2011, the Certificate of Incorporation of GNA Resources International Limited (GNA)
was approved under the Companies Ordinance of the Laws of Hong Kong.
On 7 October 2011, the stockholders during its annual meeting ratified all acts of the Board of Directors and
management for the years 2008 to 2011. They also approved the proposed change of name of the
corporation and the delegation to the Board of Directors of the power to issue shares to various investors.
On 14 October 2011, the company entered into a Management Agreement with Option to Buy with Geogen
Corporation (GEOGEN). GEOGEN is a mining company and is the registered holder of a valid and existing
mining claim in Dinapigue, Isabela (the “Mining Area”). GEOGEN is in the process of undertaking exploration,
development and mining operations in the said mining area and desires to retain the services of AGP for the
management of the exploration, development and mining operations of the mining area. AGP thus undertakes
to provide Management Services to GEOGEN including management control and property administration
over the daily and medium term operations of the Mining Area for a period of five (5) years.
On 5 March 2012, the Company gave its conformity to the execution of a General Contractor Agreement
between Geogen Corporation and NiHao Mineral Resources International, Inc. The agreement provides for
the terms and conditions of the contracting relationship between Geogen, as the MPSA Holder of MPSA No.
258-2007-II dated 30 July 2007 and NiHao as contractor for the mining and other services over the areas
covered by the MPSA, located in Dinapigue Isabela.
The accompanying financial statements have been prepared assuming the Company will continue operating
as a going concern, and do not include any adjustments relating to the recoverability of asset carrying
amounts and the amounts of liabilities that might result should the Company be unable to continue as going
concern. The Company’s management continues to assess investment opportunities and various options
regarding operations that the Company may undertake in the future.
The Company’s revenue (interest income earned on short-term investments) for the three months ended
March 31, 2013 totaled to about P
= 0.393 million, a decrease of P
= 0.054 million when compared to March 31,
2012 due mainly to the decrease of interest rate and in the Company’s average short-term placements.
Total expenses for March 31, 2013 totaled about P
= 0.351 million, a decrease of about P
= 1.2 million when
compared to March 31, 2012. The decrease was attributed mainly to lower professional and legal fees for the
period.
Cash and cash equivalents amounted to P
= 63.10 million as of March 31, 2013 as compared to P
= 64.28 million
as of December 31, 2012 or a decrease of P
= 1.17 million. The decrease in cash and cash equivalents was
due to the payment of the Company’s accounts and other payables and various operating expenses.
3
Other current assets increased by P
= 0.042 million due mainly to additional input value-added tax and deferred
input value added tax on professional fees and PSE annual maintenance fees incurred for the period ended
March 31, 2013.
Accounts and other payables decreased about P
= 1.111 million when compared to March 31, 2012 due mainly
to payment of accrued professional fees and other current liabilities.
Key Performance Factors:
Net Income (Loss)
Current Assets
Current Liabilities
Total Liabilities
Stockholders’ Equity
Debt to Equity Ratio
P
= 3,161,905/P
= 64,676,089
P
= 2,875,073/P
= 62,702,299
Current Ratio
P
= 67,824,048/P
= 3,161,905
P
= 65,563,426/P
= 2,875,073
Income (Loss) per share
(P
= 36,802)/63,321,349
(P
= 1,193,993)/63,321,349
March 2013
(P
= 36,802)
P
= 67,824,048
P
= 3,161,905
P
= 3,161,905
P
= 64,676,089
March 2012
(P
= 1,193,993)
P
= 65,563,426
P
= 2,875,073
P
= 2,875,073
P
= 62,702,299
0.049
0.046
21.45
22.80
P
= (0.0006)
P
= (0.019)
Debt to Equity Ratio:
This ratio is determined by dividing the total liabilities by the total stockholders’ equity.
This ratio measures the leverage on borrowed capital.
Current Ratio:
This ratio is computed by dividing the current assets by the current liabilities.
The ratio measures the company’s ability to pay maturing obligations.
Income (Loss) Per Share:
Income (Loss) per share is computed by dividing the net income (loss) by weighted average number of
common shares outstanding.
Investment in Shares of Stock
100% ownership in various companies
On 17 June 2011, the Board of Directors approved the creation of several subsidiaries via investment in
various corporations where the Company will own 100% of the outstanding capital stock of the said
subsidiaries.
On 2 September 2011, the Security and Exchange Commission approved the issuance of Alta Minera Inc.’s
(‘Alta Minera’) Certificate of Registration. Alta Minera was incorporated as a mining company.
On 5 September 2011, the Security and Exchange Commission approved the issuance of the Certificate of
Registration of Millionaire’s Offices and Properties Inc. (‘Millionaire’s’). Millionaire’s was incorporated as a
realty company.
On 23 September 2011, the Security and Exchange Commission approved the issuance of the Certificate of
Registration of Breccia Resources Inc. (‘Breccia’) which was also incorporated as a mining company.
Investment in Joint Venture
On 27 September 2011, the Company, NiHAO and Glencore executed a HOA in Hong Kong. Under the
HOA, the parties agreed to utilize their respective expertise in the mining industry for purposes of
investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel
deposits in the Philippines for purposes of direct shipping or selling of ore and other related nickel mining
4
business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its
network of various institutions internationally. On the other hand, the Company and NiHAO shall utilize their
expertise in mining, contracting and developing mines in the Philippines and their knowledge of relevant
Philippine laws, rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form within a period of two months from the
signing of the HOA, a joint venture company (JVC) under the laws of Hong Kong. Pursuant to the Addendum
to HOA dated 28 October 2011, the JVC will have an initial authorized capital of HK$100,000 with a par value
of HK$1/share. The JVC should have an initial issued and paid-in capital of HK$10,000 to be contributed by
the parties as follows: (1) 50% from Glencore; and (2) 25% each for the Parent Company and NiHAO.
Moreover, the parties agreed to execute the following implementing agreements of the HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the JVC and
market and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the
implementation and operation of the JVC.
The JVC under the name of GNA Resources International Limited was incorporated in Hong Kong on
November 23, 2011. As of March 31, 2013, the JVC has not started its main business operation.
In this interim period:
(a) There are no known trends or any known demands, commitments, events or uncertainties that
will result in or that are reasonably likely to result in the Company’s liquidity increasing or
decreasing in any material way.
(b) There are no known events that will trigger direct or contingent financial obligation that is material
to the Company, including any default or acceleration of an obligation.
(c) There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligation), and other relationships of the Company with unconsolidated entities or
other persons created during the year.
(d) There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material favorable or unfavorable impact on net sales or revenues or income
from continuing operations.
(e) There are no significant elements of income or loss that did not arise from the Company’s
continuing operations.
(f) There are no seasonal aspects that had a material effect on the Company’s financial condition or
results of operations.
(g) There are no material events and uncertainties known to management that would address the
past and would have an impact on future operations of the Company.
PART II – OTHER INFORMATION
There are no contingent liabilities or contingent assets or known trend and events that may materially
affect the company’s operation nor are there estimates of amounts reported in prior periods that may have
material effect on the attached financial statements.
5
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
AGING OF RECEIVABLES
AS OF MARCH 31, 2013
(Based on Unaudited Figures)
Up to 3
months
Other Receivables
Interest Receivables
Less: Allowance for doubtful
accounts
Net Receivables
₱
Over 3 Months
to One Year
Over One
Year
Past Due
₱3,453,244
₱
₱
-
Total
₱
18,424
18,424 ₱3,453,244
₱ -
₱
-
₱3,453,244
18,423
₱3,471,667
₱
18,424 ₱3,453,244
₱ -
₱
-
₱3,471,667
7
ANNEX A
ASIABEST GROUP INTERNATIONAL INC. & SUBSIDIARIES
FINANCIAL STATEMENTS
AS AT MARCH 31, 2013(UNAUDITED) AND
DECEMBER 31, 2012 (AUDITED)
AND
FOR THE THREE MONTHS ENDED
MARCH 31, 2013 AND 2012 (UNAUDITED)
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Consolidated
March 31, 2013
Audited
Consolidated
December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents (Notes 4, 13 & 14)
Receivables (Notes 5,13 & 14)
Other current assets (Note 6)
P
63,103,260
3,471,667
1,249,121
67,824,048
P
64,275,119
3,488,679
1,207,596
68,971,394
Noncurrent Assets
Investment in Joint Venture (Notes 7 & 10)
P
13,946
Total Assets
P
67,837,994
P
68,985,340
P
3,161,905
3,161,905
P
4,272,449
4,272,449
13,946
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts & other payables (Notes 8, 10 & 14)
Total Liabilities
Stockholders' Equity
Capital Stock (Note 9)
Deficit
Total Stockholders' Equity
98,321,349
(33,645,260)
64,676,089
P
See accompanying Notes to Consolidated Financial Statements
67,837,994
98,321,349
(33,608,458)
64,712,891
P
68,985,340
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months
January 1 to
March 31, 2013
REVENUES
P
January 1 to
March 31, 2012
P
EXPENSES
(351,046)
(1,551,720)
OTHER INCOME
Interest Income
392,805
447,158
INCOME (LOSS) BEFORE INCOME TAX
41,759
(1,104,562)
PROVISION FOR INCOME TAX
(78,561)
(89,432)
NET LOSS
WEIGHTED AVERAGE NUMBER
OF COMMON SHARE
Net Income (Loss) Per Share
P
(36,802)
P
(1,193,993)
63,321,349
63,321,349
(0.001)
(0.019)
See accompanying Notes to Consolidated Financial Statements
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
Three Months
Audited
CONSOLIDATED
January 1 to
March 31, 2013
(Note 9)
CAPITAL STOCK - P 1 par value in 2012
and P 6 par value in 2011
ISSUED
Balance at the beginning of the year
Issuance
Effect of Restructuring
P
SUBSCRIBED
Balance at the beginning of the year
Issuance
Subscription Receivable
63,321,349
63,321,349
January 1 to
March 31, 2012
P
63,321,349
63,321,349
January 1 to
December 31, 2012
P
63,321,349
63,321,349
January 1 to
December 31, 2011
P
109,928,094
45,000,000
(91,606,745)
63,321,349
35,000,000
35,000,000
98,321,349
35,000,000
35,000,000
98,321,349
35,000,000
35,000,000
98,321,349
ADDITIONAL PAID IN CAPITAL
Balance at the beginning of the year
Effect of restructuring
Balance at the end of year
-
-
-
396,291,984
(396,291,984)
0
DEPOSIT ON SUBSCRIPTIONS
Balance at the beginning of the year
Issuance
Balance at the end of year
-
-
-
15,000,000
(15,000,000)
0
(33,608,458)
(34,425,057)
(34,425,057)
(36,802)
(33,645,260)
(1,193,993)
(35,619,050)
816,599
(33,608,458)
(514,956,828)
487,898,729
(7,366,958)
(34,425,057)
DEFICIT
Balance at the beginning of the year
Effect of restructuring
Total Comprehensive Loss
Balance at the end of year
P
64,676,089
See accompanying Notes to Consolidated Financial Statements
P
62,702,299
P
64,712,891
136,678,651
(101,678,651)
35,000,000
98,321,349
P
63,896,292
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months
January 1 to
March 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income (Loss) before income tax
Adjustment for Interest Income
Operating income before working capital changes
(Increase) Decrease in Receivables
(Increase) Decrease in Other Current Assets
Increase (Decrease) in Accounts & Other payables
Cash required by operations
Interest Income
Final Tax Paid on Interest
Net Cash Provided by operating activities
P
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT
END OF PERIOD
See accompanying Notes to Consolidated Financial Statements
P
41,759
(392,805)
(351,046)
17,012
(41,525)
(1,110,544)
(1,486,103)
392,805
(78,561)
(1,171,859)
January 1 to
March 31, 2012
P
(1,104,562)
(447,158)
(1,551,720)
1,101,470
(34,800)
(8,760)
(493,810)
447,158
(89,432)
(136,083)
(1,171,859)
(136,083)
64,275,119
52,789,990
63,103,260
P
52,653,907
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information, Status of Operations and Authorization for the Issuance of the Consolidated
Financial Statements
Corporate Information
ASIABEST GROUP INTERNATIONAL, INC. formerly AGP Industrial Corporation (Parent Company) and its
subsidiaries, Alta Minera, Inc. (AMI), Breccia Resources, Inc. (BRI) and Millionaire’s Offices and Properties,
Inc. (MOPI) (collectively referred to as the Group) were incorporated in the Philippines. On March 26, 2012,
the Philippine Securities and Exchange Commission (SEC) approved the change of name of the Parent
Company to Asiabest Group International, Inc. The Group’s registered office address is 20th Floor The Peak
Tower, 107 LP Leviste Street, Salcedo Village, Makati City.
The Parent Company was incorporated and registered with the SEC on October 23, 1970 as an investment
holding corporation. It was listed in the Philippine Stock Exchange (PSE) on July 10, 1979 and became the
holding company for Atlantic Gulf and Pacific Company of Manila, Incorporated (AG&P), one of the largest
diversified engineering and general construction firms in the Philippines in the 1980’s. However, in October
10, 1996, the Parent Company reduced its ownership and control in AG&P. As discussed below, the
investment in AG&P was disposed of in 2003.
On May 3, 2011, the SEC approved the quasi-reorganization and equity restructuring of the Parent Company.
On June 17, 2011, the BOD approved the sale and issuance, via private placement, of 136,678,651 shares of the
Company at P
=1 par value a share to various investors. The BOD also approved the creation of several
subsidiaries via investment in various corporations where the Company will own one hundred percent (100%)
of the outstanding capital stock of the said subsidiaries.
The following are the subsidiaries of the Parent Company:
AMI
BRI
MOPI
Nature of Business
Mining
Mining
Real estate
Percentage of Ownership
100
100
100
The Parent Company funded the incorporation of the above subsidiaries in 2011.
Status of Operations
The Parent Company has not been in operations from 2003 to 2011. On June 9, 2003, the SEC revoked the
Parent Company’s registration of securities and permit to sell securities for its failure to submit reportorial
requirements.
To address the financial difficulties of the Parent Company, the stockholders approved the following matters
on November 13, 2003:
a.
b.
c.
d.
Sale of the Parent Company’s investment in the shares of stock of AG&P to Trans-Philippines Investment
Corporation (TPIC) for P
=66.2 million in 2003. The proceeds of the sale were applied against the
Company’s obligations to TPIC.
Conversion of the Parent Company’s remaining obligations to TPIC totaling P
=228.7 million into additional
paid-in capital in 2003.
Quasi-reorganization plan.
Delegation to the BOD the authority to look for new investors.
On May 3, 2011, SEC lifted the order of revocation of the Parent Company’s permit to sell securities. The SEC
also approved the Parent Company’s application for quasi-reorganization and equity restructuring as
previously discussed.
Upon approval of the increase in authorized capital stock by the SEC, the Parent Company executed
subscription agreements with various investors as previously represented by HDI Securities Inc. (HDI) on
May 16, 2011. The agreements covered the subscription of 45 million shares at P
=1 par value or equivalent to P
=
45.0 million.
-2On June 17, 2011, the Parent Company executed subscription agreements with various investors for the
remaining unissued portion of its authorized capital stock. The agreements covered the subscription of
136,678,651 shares at P
=1 par value or equivalent to P
=136.7 million. The Parent Company received P
=35.0 million
from various investors as partial payment for the subscriptions. On the same date, the BOD also authorized
the Parent Company to incorporate several subsidiaries which will engage in the businesses of real estate,
mining development, mining sub-contracting and equipment leasing and agricultural/palm oil production
and processing. Pursuant to this authorization, the Parent Company invested in the incorporation of AMI, BRI
and MOPI as previously discussed.
To enable the Parent Company to further finance the new businesses, the BOD approved the increase in
authorized capital stock of the Parent Company from P
=200.0 million divided into 200.0 million shares at P
=1 par
value to P
=2.0 billion divided into 2.0 billion shares at P
=1 par value on June 17, 2011 subject to the approval of
SEC.
On June 22, 2011, the PSE lifted the trading suspension of the Parent Company due to its full compliance with
the PSE’s requirements, submission of structured reports and payment of the Parent Company’s obligations.
In September 2011, the SEC approved the Certificate of Incorporation of AMI, BRI and MOPI as companies
wholly owned by the Parent Company.
On September 22, 2011, the BOD authorized the Chairman of the Board to evaluate, negotiate
and enter, on behalf of the Parent Company, into contracts, agreements, joint-venture, partnership,
co-development and co-investment with any third party for the Parent Company’s business expansion. As a
result, on September 27, 2011, the Parent Company together with NiHAO Mineral Resources International,
Inc. (NiHAO) executed a Heads of Agreement (HOA) with Glencore International AG (Glencore). The HOA
was signed in Hong Kong and named as GNA Resources International Limited. The HOA was executed to
allow the Parent Company, NiHAO and Glencore to enter into a joint venture and technical partnership
whereby each party shall utilize its expertise in the mining industry for purposes of investigating, identifying,
acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines
for purposes of direct shipping/selling ore and other nickel mining businesses. On October 3, 2011, the HOA
was ratified and resolved to allocate funds necessary for the Parent Company to comply with its undertaking
under the HOA (see Note 7).
On October 7, 2011, the stockholders during the annual meeting ratified all acts of the BOD and management
for the period 2008 to 2011. They also approved the proposed change of name of the Parent Company and the
delegation to the BOD of the power to issue shares to various investors.
As part of the Parent Company’s expansion in business operations, last October 14, 2011, the Parent Company
executed a Management Agreement with Option to Buy with Geogen Corporation (Geogen), a mining
Company which holds a valid and existing mining claim in Dinapigue, Isabela covered by MPSA No. 2582007-11 duly approved on July 30, 2007. Geogen is in the process of undertaking exploration, development
and operations in this mine. Pursuant to the agreement, the Company will provide management services to
Geogen including management control and property administration over the daily and medium term
operations of the Mining Area for a period of five (5) years (see Note 12).
On March 5, 2012, the Parent Company gave its conformity to the execution of a General Contractor
Agreement between Geogen and NiHAO under which NiHAO shall bear the management fees pursuant to
the Management Agreement with Option to Buy (see Note 12). The agreement provides for the terms and
conditions of the contracting relationship between Geogen, as the MPSA Holder of MPSA No. 258-2007-II
dated July 30, 2007 and NiHAO as contractor for the mining and other services over the areas covered by the
MPSA, located in Dinapigue Isabela.
Mining operations started in the third quarter of 2012. In relation to the said agreement, the Parent Company
earned P
=3.6 million in 2012.
Status of Operations of Subsidiaries
The subsidiaries were incorporated in 2011 in anticipation of the projects that will be infused into the Group
upon re-organization following the lifting of its Revocation Order from the SEC and trading ban from the PSE.
MOPI, the real estate subsidiary of the Group may be used to acquire the office condominium units currently
-3owned by Sunplaza Development Corporation as per disclosures made by the Company. The mining
companies, AMI and BRI, will be the vehicles for possible future acquisition of rights or interests in mining
projects.
As at March 31, 2013, the subsidiaries have not yet started their operations.
As shown in the accompanying consolidated financial statements, the Group had a deficit of
=33.65 million and P
P
=35.62 million as at March 31, 2013 and 2012, respectively. The gradual improvement in
the financial position of the Group is due to the activities they are currently undertaking.
Authorization for the Issuance of the Consolidated Financial Statements
The consolidated financial statements for the three months ended March 31, 2013 and 2012 were authorized for
issue in accordance with a resolution of the BOD on May 14, 2013.
2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting Policies
Basis of Preparation
The accompanying consolidated financial statements have been prepared on a historical cost basis. The
consolidated financial statements are presented in Philippine peso (Peso), which is the Group’s functional and
presentation currency. Amounts are rounded off to the nearest Peso unit, except when otherwise indicated.
Statement of Compliance
The accompanying consolidated financial statements have been prepared in compliance with accounting
principles generally accepted in the Philippines as set forth in Philippine Financial Reporting Standards
(PFRS). PFRS includes statements named PFRS, Philippine Accounting Standards (PAS), and Standing
Interpretations Committee/International Financial Reporting Interpretations Committee (IFRIC) which have
been approved by the Financial Reporting Standards Council (FRSC) and adopted by SEC, including SEC
pronouncements.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and its
subsidiaries as of March 31, 2013.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial statements of
the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent
accounting policies. All intra-group balances, transactions, income and expenses and unrealized gains and
losses resulting from intra-group transactions are eliminated in full.
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for the
adoption of the following amendments to previously issued PAS and PFRS which became effective on January
1, 2012:
•
•
Amendment to PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets
Amendment to PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets
The adoption of the new and amended standards and interpretations above did not have an impact on the
accounting policies, financial position or performance of the Group.
Future Changes in Accounting Policies
The Group did not early adopt the following standards and Philippine Interpretations that will become
effective subsequent to December 31, 2012:
Effective in 2013
•
Amendment to PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income
(OCI), effective for annual periods beginning or after July 1, 2012, changes the grouping of items presented
-4in OCI. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time would be
presented separately from items that will never be reclassified.
•
Revised PAS 19, Employee Benefits, effective for annual periods beginning on or after January 1, 2013,
includes changes such as removing the corridor mechanism and the concept of expected returns on plan
assets to simple clarifications and re-wording.
•
Revised PAS 27, Separate Financial Statements, effective for annual periods beginning on or after January 1,
2013, establishes that as a consequence of the new PFRS 10, Consolidated Financial Statements and PFRS 12,
Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries,
jointly controlled entities, and associates in separate financial statements.
•
PAS 28, Investments in Associates and Joint Ventures, effective for annual periods beginning on or after
January 1, 2013, explains that as a consequence of the new PFRS 11, Joint Arrangements and PFRS 12,
Disclosure of Interests in Other Entities, PAS 28 has been renamed PAS 28, Investments in Associates and Joint
Ventures, and describes the application of the equity method to investments in joint ventures in addition
to associates.
•
PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, effective for
annual periods beginning on or after January 1, 2013, requires an entity to disclose information about
rights of set-off and related arrangements (such as collateral agreements). The new disclosures are
required for all recognized financial instruments that are set off in accordance with PAS 32. These
disclosures also apply to recognized financial instruments that are subject to an enforceable master
netting arrangement or ‘similar agreement’, irrespective of whether they are set-off in accordance with
PAS 32.
•
PFRS 10, Consolidated Financial Statements, effective for annual periods beginning on or after January 1,
2013, replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the
accounting for consolidated financial statements. It also includes the issues raised in Standards
Interpretation Committee (SIC) -12, Consolidation - Special Purpose Entities. It establishes a single control
model that applies to all entities including special purpose entities. The changes introduced by PFRS 10
will require management to exercise significant judgment to determine which entities are controlled, and
therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS
27.
•
PFRS 11, Joint Arrangements, effective for annual periods beginning on or after January 1, 2013, replaces
PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by
Venturers. It removes the option to account for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the
equity method.
•
PFRS 12, Disclosure of Interests with Other Entities, effective for annual periods beginning on or after
January 1, 2013, includes all of the disclosures that were previously in PAS 27 related to consolidated
financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28.
These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and
structured entities.
•
PFRS 13, Fair Value Measurement, effective for annual periods beginning on or after January 1, 2013,
establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not
change when an entity is required to use fair value, but rather provides guidance on how to measure fair
value under PFRS when fair value is required or permitted.
•
Annual improvements to PFRSs (2009-2011 cycle), effective for annual periods beginning on or after
January 1, 2013 and are applied retrospectively. Earlier application is permitted. These disclosures
contain non-urgent but necessary amendments to PFRSs.
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, effective for
annual periods beginning on or after January 1, 2013. This interpretation applies to waste removal
•
-5(stripping) costs incurred in surface mining activity, during the production phase of the mine. The
interpretation addresses the accounting for the benefit from the stripping activity.
Effective in 2014
•
Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities, effective for annual periods beginning on or after January 1, 2014, these amendments clarify the
meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS
32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross
settlement mechanisms that are not simultaneous.
Effective in 2015
•
PFRS 9, Financial Instruments: Classification and Measurement, effective for annual periods beginning on or
after January 1, 2015, reflects the first phase on the replacement of
PAS 39, Financial Instruments: Recognition and Measurement and applies to classification and measurement
of financial assets and financial liabilities as defined in PAS 39.
To be Determined
•
Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate, this interpretation covers
accounting for revenue and associated expenses by entities that undertake the construction of real
estate directly or through subcontractors. The interpretation requires that revenue on construction
of real estate be recognized only upon completion, except when such contract qualifies as
construction contract to be accounted for under PAS 11 or involves rendering of services in which
case revenue is recognized based on stage of completion. Contracts involving provision of services
with the construction materials and where the risks and reward of ownership are transferred to the
buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and
the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is
issued by the International Accounting Standards Board and an evaluation of the requirements of the
final Revenue standard against the practices of the Philippine real estate industry is completed
The Group does not expect any significant impact on the consolidated financial statements when it adopts the
above standards and interpretations. The revised and additional disclosures provided by the standards and
interpretations will be included in the consolidated financial statements when these are adopted in the future,
if applicable.
Summary of Significant Accounting and Financial Reporting Policies
Cash and Cash Equivalents
Cash includes cash in banks. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, with original maturities of up to three months or less from dates of
acquisition and are subject to an insignificant risk of change in value.
Financial Instruments - Initial Recognition and Subsequent Measurement
Date of Recognition
Financial instruments within the scope of PAS 39 are classified as financial assets or financial liabilities at fair
value through profit or loss (FVPL), loans and receivables, held-to-maturity investments, available-for-sale
(AFS) financial assets and other financial liabilities, as appropriate. The Group determines the classification of
its financial instruments at initial recognition.
All financial instruments are recognized initially at fair value plus transaction costs, except in the case of
financial assets and financial liabilities at FVPL.
Purchases or sales of financial instruments that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the
date that the Group commits to purchase or sell the asset.
-6Subsequent Measurement
The subsequent measurement of the Group’s financial instruments depends on their classification as described
below. The Group had no financial assets or financial liabilities at FVPL, held-to-maturity investments and
AFS financial assets as at March 31, 2013 and 2012.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement, such financial assets are subsequently measured at
amortized cost using the effective interest rate (EIR) method, less any impairment. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are integral
part of the EIR. The EIR amortization, if any, is included in the “interest income” account in the consolidated
profit or loss. The losses arising from impairment of receivables, if any, are recognized in the “expenses”
account in the consolidated profit or loss. This category includes the Group’s cash and cash equivalents and
receivables.
Other Financial Liabilities
This category pertains to financial liabilities that are not held for trading or not designated as at FVPL upon
inception of the liability. These include liabilities arising from operations and noninterest-bearing loans and
borrowings.
After initial recognition, other financial liabilities are subsequently measured at amortized cost using the EIR
method. Gains and losses are recognized in the consolidated profit or loss when the liabilities are
derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into
account any premium or discount on acquisition and fees and costs that are an integral part of the EIR. The
EIR amortization, if any, is included in “interest income” account in the consolidated profit or loss.
This classification includes the Group’s accounts payable and other liabilities.
Determination of Fair Value
The fair value for financial instruments traded in active markets at reporting date is based on their quoted
market prices or dealer price quotations (bid price for long positions and ask price for short positions), without
any deduction for transaction costs. When current bid and asking prices are not available, the price of the
most recent transaction provides evidence of the current fair value as long as there has not been a significant
change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by using
appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to
similar instruments for which market observable prices exist, options pricing models, and other relevant
valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are
provided in Note 14.
Day 1 difference
When the transaction price in a non-active market is different from the fair value from other observable
current market transactions in the same instrument or based on a valuation technique whose variables include
only data from observable market, the Group recognizes the difference between the transaction price and fair
value (a Day 1 difference) in the consolidated profit or loss unless it qualifies for recognition as some other
type of asset. In cases where use is made of data which is not observable, the difference between the
transaction price and model value is only recognized in the consolidated profit or loss when the inputs become
observable or when the instrument is derecognized. For each transaction, the Group determines the
appropriate method of recognizing the Day 1 difference.
Derecognition of Financial Instruments
Financial Assets
-7A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognized when:
•
the rights to receive cash flows from the asset have expired;
•
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in
the asset. In that case, the Group also recognizes an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has
expired.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognized in the consolidated profit or loss.
Impairment of Financial Assets
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired if,
and only if, there is objective evidence of impairment as a result of one or more events that has occurred after
the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of
impairment may include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganization and when observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
Assets Carried at Amortized Cost
For financial assets carried at amortized cost, the Group first assesses whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets
that are individually or assessed for impairment and for which an impairment loss is, or continues to be,
recognized are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as
the difference between the assets carrying amount and the present value of estimated future cash flows
(excluding future expected credit losses that are not yet incurred). The present value of the estimated future
cash flows is discounted at the financial assets’ original EIR. If a loan has a variable interest rate, the discount
rate for measuring any impairment loss is the current EIR.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the
loss is recognized in the consolidated profit or loss. Interest income continues to be accrued on the reduced
carrying amount and is accrued using the rate of interest used to discount the future cash flows for the
purpose of measuring the impairment loss. The interest income is recorded under interest income account in
-8the consolidated profit or loss. Loans together with the associated allowance are written off when there is no
realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an
event occurring after the impairment was recognized, the previously recognized impairment loss is increased
or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited
to the other income account in the consolidated profit or loss.
In relation to trade receivables, a provision for impairment is made when there is objective evidence (the
probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to
collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is
reduced through the use of an allowance account. Impaired receivables are derecognized when they are
assessed as uncollectible.
Offsetting of Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of
financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.
This is generally not the case with master netting agreements, and the related assets and liabilities are
presented at gross amounts in the consolidated statement of financial position.
Investment in a Joint Venture
The Parent Company has an interest in a joint venture, which is a jointly controlled entity, whereby the
venturers have a contractual agreement that establishes joint control over the economic activities of the entity.
The agreement requires unanimous agreement for financial and operating decisions among the venturers.
Impairment of Nonfinancial Assets
The Group assesses at each reporting date whether there is an indication that a nonfinancial asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group
makes an estimate of the asset’s recoverable amount. The recoverable amount is the higher of an asset’s or
cash-generating units (CGU) fair value less costs to sell or its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
group of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pretax discount rate that reflects current market assessment
of the time value of money and the risks specific to the asset. In determining the fair value less cost to sell, an
appropriate valuation model is used. Any impairment loss is recognized in the consolidated profit or loss in
those expense categories consistent with the function of the impaired asset.
Earnings (loss) per Common Share
Basic earnings (loss) per common share is determined by dividing net income by the weighted average
number of common shares outstanding, after retroactive adjustment for any stock dividends and stock splits
declared during the year.
Diluted earnings (loss) per common share amounts is calculated by dividing the net income for the year
attributable to the ordinary equity holders of the parent by the weighted average number of common shares
outstanding during the year plus the weighted average number of ordinary shares that would be issued for
outstanding common stock equivalents.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured.
Service income
Revenue is recognized when the related services have been rendered.
-9Interest income
Interest income from bank deposits and short-term cash placements is recognized on a time proportion basis
on the principal outstanding and at the rate applicable. Revenue is recognized as the interest accrues taking
into account the effective yield of the asset.
General and Administrative Expenses
General and administrative expenses constitute cost of administering the business and are recognized as
incurred.
Income Taxes
Current Income Tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date.
Deferred Income Tax
Deferred income tax assets are recognized for all deductible temporary differences, carryforward benefits of
unused net operating loss carryover (NOLCO) and unused tax credits from excess minimum corporate income
tax (MCIT), to the extent that it is probable that sufficient future taxable income will be available against which
the deductible temporary differences and carryforward benefits of unused NOLCO and MCIT can be utilized,
except:
•
where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
•
in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred income tax assets are recognized only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable income will be available
against which the temporary differences can be utilized.
Deferred income tax is provided, using the liability method, on temporary differences at the end of the
reporting period between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences,
except:
•
•
where deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting income nor taxable income or loss; and
in respect to taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax liabilities are recognized for all taxable temporary differences. The carrying amount of
deferred income tax assets is reviewed at each end of the reporting period and reduced to the extent that it is
no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred
income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each end of the
reporting period and are recognized to the extent that it has become probable that sufficient future taxable
profit will allow the deferred income tax assets to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to
offset current income tax assets against current income tax liabilities and deferred income taxes related to the
same taxable entity and the same taxation authority.
- 10 Provisions
Provisions, if any, are recognized when the Group has a present obligation (legal or constructive) as a result of
a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligations; and a reliable estimate can be made of the amount of the obligation. If the effect of the time
value of money is material, provision is determined by discounting the expected future cash flows at a pre-tax
discount rate that reflects current market assessment of the time value of money and, where appropriate, the
risks specific to the liability. When discounting is used, the increase in provision due to passage of time is
recognized as interest expense.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed in the
notes to consolidated financial statements unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but
are disclosed in the notes to consolidated financial statements when inflows of economic benefits are probable.
Events after the Reporting Date
Post year-end events that provide additional information on the Group’s financial position at the reporting
date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to consolidated financial statements when material.
Segment Reporting
An operating segment is a component of an entity:
a)
b)
that engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity);
whose operating results are regularly reviewed by the entity’s chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance; and for which discrete
financial information is available.
3. Significant Accounting Judgments and Estimates
The preparation of the accompanying consolidated financial statements in accordance with PFRS requires the
Group to make judgments, estimates and assumptions that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Future events may occur which will cause the judgments,
estimates and assumptions used in arriving the estimates to change the effects of any change in judgments and
estimates are reflected in the consolidated financial statements as they become reasonably determinable.
The judgments, estimates and assumptions used in the accompanying consolidated financial statements are
based upon management’s evaluation of relevant facts and circumstances as at the date of the consolidated
financial statements. However, actual results could differ from such estimates.
Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have the most significant effect on the amounts recognized in
the consolidated financial statements. The judgments are based upon management’s evaluation of relevant
facts and circumstances as of the date of the consolidated financial statements:
Determining Functional Currency
Based on the economic substance of the underlying circumstances relevant to the Group, the functional
currency of the Group has been determined to be the Peso. The Peso is the currency of the primary economic
environment in which the Group operates.
Classification of Financial Instruments
The Group classifies a financial instrument or its component parts, on initial recognition as a financial asset, a
financial liability or an equity instrument in accordance with the substance of the contractual arrangement and
the definitions of financial asset, financial liability and equity instrument. The substance of a financial
instrument, rather than its legal form, governs its classification in the consolidated statements of financial
position.
- 11 The classification of financial instruments is disclosed in Note 14 to the consolidated financial statements.
Legal Contingencies
The estimate of the probable costs for the resolution of possible claims has been developed in consultation
with outside counsel handling the Group’s defense in these matters and is based upon an analysis of potential
results. As at March 31, 2013, the Group is not contingently liable, thus did not accrue any provision for legal
contingencies.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty as of reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
Estimating Allowance for Impairment Losses on Receivables
The Group has set up allowance for impairment losses on receivables at a level considered adequate to
provide for potential uncollectible receivables. The level of this allowance is evaluated by management on the
basis of factors that affect the collectability of the accounts. These factors include, but are not limited to, the
length of the Group’s relationship with the clients, the clients’ payment behavior and known market factors.
The amount and timing of recorded expenses for any period would differ if the Group made different
judgment or utilized different estimates. An increase in the Group’s allowance for impairment losses on trade
and other receivables would increase the Group’s recorded operating expenses and decrease current assets.
The Group did not recognize any provision for impairment loss in 2012, 2011 and 2010. As at March 31, 2013
and
2012,
the
carrying
values
receivables
amounted
to
=3.47
P
million
and
=13.35 million, net of allowance for allowance for impairment loss amounting to nil and
P
=0.3 million, respectively (see Note 5).
P
Fair Value of Financial Instruments
PFRS requires that financial assets and financial liabilities (including derivative financial instruments) be
carried or disclosed at fair value, which requires the use of accounting estimates and judgment. While
significant components of fair value measurement are determined using verifiable objective evidence (i.e.,
foreign exchange rates, interest rates, and volatility rates), the timing and amount of changes in fair value
would differ using a different valuation methodology.
When Level 2 of the fair value hierarchy is used to determine the fair value of financial instruments, inputs and
assumptions are based on market observable data and conditions, and reflect appropriate risk adjustments
that market participants would make for credit and liquidity risks existing for each of the periods indicated.
Any change in the fair values of financial assets and financial liabilities (including derivative instruments)
directly affects the consolidated statement of comprehensive income and equity and related disclosure.
The fair values of financial assets and liabilities by category and the fair value hierarchy are set out in Note 14
of the consolidated financial statements.
Impairment of Nonfinancial Assets
An impairment review is performed when certain impairment indicators are present.
Determining the value in use of nonfinancial assets requires the determination of future cash flows expected to
be generated from the continued use and ultimate disposition of such assets and requires the Group to make
estimates and assumptions that can materially affect its consolidated financial statements. Future events could
cause the Group to conclude that the nonfinancial assets are impaired. Any resulting additional impairment
loss could have a material adverse impact on the Group’s financial condition and results of operations. The
preparation of the estimated future cash flows involves significant judgment and estimations.
There were no impairment losses recognized in 2012, 2011 and 2010.
As at March 31, 2013 and 2012, the carrying values of the Group’s other current assets amounted to P
=1.2
million and P
=0.6 million, respectively (see Note 6). The carrying value of the Group’s investment in joint venture
amounted to P
=13,946 as at March 31, 2013 and 2012 (see Notes 7 and 10).
- 12 Recognition of Deferred Income Tax Assets
The Group’s assessment on the recognition of deferred income tax assets on nondeductible temporary
differences is based on forecasted taxable income. This forecast is based on the Group’s past results and future
expectations on revenues and expenses.
Deferred income tax assets on temporary differences were not recognized because the Group did not expect to
have sufficient future taxable profit against which this can be applied.
4. Cash and Cash Equivalents
Cash and cash equivalents consist of:
March 31, 2013
(Unaudited)
₱3,128,116
59,975,144
₱63,103,260
Cash in bank
Cash equivalents
December 31, 2012
(Audited)
₱3,501,810
60,773,309
₱64,275,119
Cash in bank earns interest at the respective bank deposit rates. Cash equivalents are made for varying period
of up to three months depending on the Group’s immediate cash requirements and earn interest at the
respective short-term deposit rates. Interest Income amounted to ₱392,805 and ₱447,158 for the period ended
March 31, 2013 and 2012, respectively.
5. Receivables
March 31, 2013
(Unaudited)
₱3,453,244
18,423
₱3,471,667
Trade Receivables
Interest Receivable
December 31, 2012
(Audited)
₱3,453,244
35,435
₱3,488,679
Trade Receivables consist of uncollected management income arising from the Management Agreement with
Option to Buy of the Parent Company with Geogen. NiHAO shall bear the management fees pursuant to a
separate General Contractor Agreement executed between NiHAO and Geogen to which the Parent Company
conformed (see Note 12). Trade receivables are non-interest bearing and are normally settled upon demand.
Interest receivable pertains to amount of interest accrued on the Group’s short-term deposits.
6. Other Current Assets
Other current assets consist of:
March 31, 2013
(Unaudited)
₱1,439,407
752,707
65,400
2,257,514
1,008,393
=1,249,121
P
Creditable withholding tax
Input value-added tax
Deferred Input value-added tax
Less: Allowance for probable losses
December 31, 2012
(Audited)
₱1,439,407
663,182
113,400
2,215,989
1,008,393
=1,207,596
P
Creditable withholding taxes represent amounts withheld from income subject to withholding tax which the
Company expects to utilize as payment for future income taxes.
Input VAT represents VAT imposed by the Group’s suppliers for the acquisition of goods and services as
required by the Philippine taxation laws and regulations. Input VAT will be used to offset against the Group’s
current output VAT liability.
There was no movement in the
March 31, 2013 and December 31, 2012.
allowance
for
impairment
losses
for
the
periods
ended
- 13 The allowance for impairment losses as of March 31, 2013 and December 31, 2012 consists of:
Balances, March 31, 2013 and
December 31, 2012
Creditable
Withholding
Tax
Input
Value-Added
Tax
Total
=976,601
P
=31,792
P
=1,008,393
P
7. Investment in Joint Venture
On 27 September 2011, the Company, NiHAO and Glencore executed a HOA. Under the HOA, the parties
agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying,
acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines
for purposes of direct shipping or selling of ore and other related nickel mining business. Glencore shall
contribute its expertise in marketing of nickel ores in the world market as well as its network of various
institutions internationally. On the other hand, the Company and NiHAO shall utilize their expertise in
mining, contracting and developing mines in the Philippines and their knowledge of relevant Philippine laws,
rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form within a period of two months from the
signing of the HOA, a joint venture company (JVC) under the laws of Hong Kong. Pursuant to the Addendum
to HOA dated October 28, 2011, the JVC will have an initial authorized capital of HK$100,000 with a par value
of HK$1/share. The JVC should have an initial issued and paid-in capital of HK$10,000 to be contributed by
the parties as follows: (1) 50% from Glencore; and (2) 25% each for the Parent Company and NiHAO.
Moreover, the parties agreed to execute the following implementing agreements of the HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the JVC and market
and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the implementation
and operation of the JVC.
The JVC under the name of GNA Resources International Limited was incorporated in Hong Kong on
November 23, 2011. The Parent Company’s contribution of P
=13,946 to the JVC was advanced by a stockholder.
As of March 31, 2013, the JVC has not started its main business operation.
8. Accounts and other payables
Accounts and other payables consist of:
Accrued professional fees
Others
March 31, 2013
(Unaudited)
=2,400,700
P
761,205
=3,161,905
P
December 31, 2012
(Audited)
=2,846,700
P
1,425,749
=4,272,449
P
Accounts and other liabilities are noninterest bearing and have an average term of 30-60 days but may go
beyond depending on the agreement of the involved parties. This represents accruals of professional fees for
administrative, audit and other services, and are payable on demand
9. Equity
The details of the number of shares follow:
Common stock - P
=1 par value
Number of Shares
December 31, 2012
March 31, 2013
(Audited)
(Unaudited)
- 14 Authorized
Balance at beginning of year
Issuance of shares of stocks
200,000,000
200,000,000
Issued
Balance at beginning of year
Issuance of shares of stocks
200,000,000
200,000,000
63,321,349
63,321,349
63,321,349
63,321,349
136,678,651
200,000,000
136,678,651
200,000,000
Subscribed (net of Subscription
Receivable of 101,678,651)
On May 3, 2011, the Securities and Exchange Commission (SEC) approved the decrease in the Company’s
authorized capital stock from P
=132,000,000 (divided into 16,500,000 Class A and 5,500,000 Class B common
shares both with par value of P
=6 a share) to P
=22,000,000 (divided into 22,000,000 common shares with a par
value of P
=1 a share). On the same date, the SEC also approved the increase in the Company’s authorized
capital stock from P
=22,000,000 (divided into 22,000,000 shares with a par value of P
=1 a share) to P
=200,000,000
(divided into 200,000,000 shares with par value of P
=1 a share).The capital increase was undertaken using the
Fifteen Million Pesos (P 15,000,000.00) deposited for future subscriptions by the Investors as partial payment
for subscriptions to Forty Five Million (45,000,000) Shares at the price of One Peso (P1.00) per share, which was
the reduced par value of the shares upon the approval by the SEC of its quasi-reorganization plan. Upon
approval of the capital increase, the Company’s issued and outstanding shares stood at Sixty two million one
hundred seventy thousand two hundred ninety three (62,170,293). The corresponding Subscription
Agreements with the subscribers were executed by the Company on 16 May 2011 and the balance on the
subscription price from the individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of 136,678,651
shares of the Company at P
=1 par value a share to various investors.
10. Related Party Transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are
controlled by or under common control with the Group, including holding companies, subsidiaries and fellow
subsidiaries, are related parties of the Group. Associates and individuals owning, directly or indirectly, an
interest in the voting power of the Group that gives them significant influence over the enterprise, key
management personnel, including directors and officers of the Group and close members of the family of these
individuals, and companies associated with these individuals also constitute related parties. In considering
each possible related entity relationship, attention is directed to the substance of the relationship and not
merely the legal form.
Terms and Conditions of Transactions with Related Parties
Outstanding balances of transactions with related parties are unsecured, noninterest bearing, payable on
demand and settlements are made in cash. There have been no guarantees provided or received for any
related party receivables or payables.
Transactions with Related Parties
In the normal course of business, transactions with related parties include the following:
a.
On March 5, 2012, the Company gave its conformity to the execution of a General Contractor Agreement
between Geogen and NiHAO under which NiHAO shall bear the management fees pursuant to the
Management Agreement with Option to Buy. Mining operations started during the year. Management
income recognized in 2012 amounted to ₱3.56 million. Outstanding balance as at March 31, 2013
amounted to ₱3.56 million.
b.
The Parent Company has advances from a stockholder for working capital requirements amounting to
₱13,946 as at March 31, 2013 and 2012.
- 15 c.
On September 27, 2011, the Parent Company, NiHAO and Glencore executed a HOA in Hong Kong to
develop and operate mining claims of economically feasible nickel deposits in the Philippines for
purposes of direct shipping or selling of ore and other related nickel mining business. In order to
accomplish the said purpose, the parties agreed to from within a period of two months from the signing of
the HOA, a JVC under the laws of Hong Kong. The JVC was incorporated in Hong Kong on November 23,
2011. As at December 31, 2012, the JVC has not started its main business operation. NiHAO and the Parent
Company have interlocking directors.
Transaction with Key Management Personnel
The group avails of services rendered by lawyers of Gregorio Law Offices which primarily consists of legal
and back office work. One of the key management personnel of Group is also a partner of this law firm. The
related professional fees amounted to ₱-0- and ₱1.1 million in March 31, 2013 and 2012, respectively.
11. Loss Per Share
Net Loss
Weighted Average Number of Common Shares
Loss Per Share
Three Months Ended March 31
(Unaudited)
2013
2012
=1,193,993
P
=36,802
P
63,321,349
63,321,349
=0.001
P
=0.019
P
12. Commitments
On October 14, 2011, the Parent Company executed a Management Agreement with Option to Buy with
Geogen, a mining company and the registered holder of a valid and existing mining claim in Dinapigue,
Isabela (the Mining Area) covered by Mineral Production Sharing Agreement (MPSA) No. 258-2007-11, duly
approved on July 30, 2007. Geogen is in the process of undertaking exploration, development and mining
operations in the said Mining Area and desires to retain the services of the Parent Company for the
management of the exploration, development and mining operations of the Mining Area. The Parent
Company undertakes to provide management services to Geogen including management control and property
administration over the daily and medium term operations of the Mining Area for a period of five (5) years.
The Parent Company’s management fees shall include (1) reimbursement of all salaries and benefits of the
officers and employees plus all direct costs related to the services; (2) management/administration fees
equivalent to twenty percent (20%) of salaries and benefits paid to employees including all direct costs; and (3)
management commission/profit share of five percent (5%) of gross income from the operations of the Mining
Area.
Under the agreement, Geogen likewise grants the Parent Company the First and Exclusive Option (Option), at
the election of the Parent Company, to do any of the following acts:
a. Acquire up to one hundred percent (100%) of the shares of stock of Geogen
b. Purchase its mining rights
c. Secure participation interests
d. Create a joint venture vehicle or consortium of investors-operators and/or
e. Negotiate the acquisition of the entire or partial rights or participation of interests over the project on
behalf of local and foreign investors
The Option was for a period of one (1) year upon signing the agreement, renewable for another period of one
(1) year upon mutual agreement of the parties. The Parent Company has not exercised its option even after
the lapse of the option period.
On March 5, 2012, the Parent Company gave its conformity to the execution of a General Contractor
Agreement between Geogen and NiHAO under which NiHAO (as the General Contractor of Geogen) shall
bear the management fees pursuant to the Management Agreement with Option to Buy. The mining
operations in Isabela started in 2012.
- 16 -
13. Financial Risk Management, Objectives and Policies and Capital Management
The Group’s principal financial instruments comprise cash and cash equivalents, receivables and accounts
payable and other liabilities. The main purpose of these financial instruments is to finance the Group’s
operations.
The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The BOD
reviews and approves policies for managing each of these risks and they are summarized below:
Credit Risk
The Group’s credit risk is the risk that counterparty will not meet its obligations under a financial instrument
leading to a financial loss. The Group is exposed to credit risk from its deposits with banks. The Group’s
maximum exposure to credit risk is equal to the carrying amount of these instruments as summarized below:
December 31, 2012
March 31, 2013
(Audited)
(Unaudited)
=63,103,260
P
Cash and cash equivalents
=64,275,119
P
3,471,667
Receivables
3,488,679
=66,574,927
P
=67,763,798
P
Cash and cash equivalents are classified as high grade since these are deposited and invested with a reputable
bank and can be withdrawn anytime.
Receivables are also classified as high grade since these consisted of interest receivable related to cash deposits
and receivables to a related party which pertained to cash deposited to a local bank on behalf of the Group.
Liquidity Risk
The Group’s exposure to liquidity risk relate to raising funds. The Group manages its liquidity profile to be
able to finance capital expenditures and service maturing debts. To cover its financing requirements, the
Group intends to use internally generated funds and available short-term credit facilities.
As part of its liquidity risk management, the Group regularly evaluates its projected and actual cash flows. It
also continuously assesses conditions in the financial markets for opportunities to pursue fund raising
activities, in case any requirements arise.
March 31, 2013
December 31, 2012
(Unaudited)
(Audited)
Accrued Professional Fees
=2,846,700
P
=2,400,700
P
Accrual and other payables
1,330,737
725,939
=3,126,639
P
=4,177,437
P
Accounts and other payables are normally settled within 30-60 days. As of March 31, 2013 and December 31,
2012, the Group’s financial assets amounting to ₱66,574,927 and ₱67,763,798, respectively, were determined by
management to be realizable within one year.
Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains strong and healthy
capital ratios in order to support its business and maximize shareholder value.
The Group monitors capital on the basis of the debt-to-equity ratio. This ratio is calculated as total debt
divided by equity. Total debt is equal to accounts payable and other liabilities. Equity comprises all
components of equity.
The Group’s debt-to-equity ratio as of March 31, 2013 and December 31, 2012 are as follows:
2012
March 31, 2013
(Audited)
(Unaudited)
=4,257,248
P
=3,161,905
P
Accounts payable and other liabilities (a)
Total equity (b)
64,773,092
64,676,089
Debt to Equity Ratio (a/b)
0.07:1
0.05:1
- 17 -
14. Financial Instruments
Fair Value
The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and
liabilities recognized as of March 31, 2013 and December 31, 2012:
Financial Assets Loans and receivables:
Cash and cash equivalents
Receivables
Total Financial Assets
Financial Liabilities Other financial liabilitiesAccounts payable and other
liabilities*
*excluding statutory liabilities
December 31, 2012
(Audited)
Carrying
Value
Fair Value
March 31, 2013
(Audited)
Carrying
Value
Fair Value
=63,103,260
P
3,471,667
=66,574,927
P
=63,103,260
P
3,471,667
=66,574,927
P
=64,275,119
P
3,488,679
=67,763,798
P
=64,275,119
P
3,488,679
=67,763,798
P
=2,687,946
P
=2,687,946
P
=3,709,632
P
=3,709,632
P
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate such value:
Cash and cash equivalents, Interest receivable and Accounts payable and other liabilities
The fair values of these financial instruments approximate their carrying amounts due to the relatively shortterm maturities of these financial instruments.
Fair Value Hierarchy
As of March 31, 2013 and 2012, the Group has no financial instruments carried at fair value using the threelevel fair value hierarchy.
15. Segment Information
As of March 31, 2013 and 2012, the Group has a single reporting segment, which is the investment holding
activity. Financial information with regards to the Group’s reporting segment is as follows:
Net loss
Other information:
Segment assets
Segment liabilities
2013
(P
=36,802)
2012
(P
=1,193,993)
67,837,994
3,161,905
65,577,372
2,875,073
SCHEDULE ‘A’
Financial Soundness Indicators
March 2013
March 2012
Current Ratio
Current Assets ÷
Current Liabilities
P
= 67,824,048/P
= 3,161,905
P
= 65,563,426/P
= 2,875,073
21.45
P
= (36,802)/P
= -0P
= (1,193,993)/P
= -0-
NA
P
= 3,161,905/P
= 67,837,994
P
= 2,875,073/P
= 65,577,372
0.047
P
= 3,161,905/P
= 64,676,089
P
= 2,875,073/P
= 62,702,299
0.049
P
= 67,837,994/P
= 64,676,089
P
= 65,577,372/P
= 62,702,299
1.049
P
= (36,802)/P
= 67,837,994
(P
= 1,193,993)/P
= 65,577,372
(0.001)
P
= (36,802)/P
= 64,676,089
(P
= 1,193,993)/P
= 62,702,299
(0.001)
P
= (36,802)/P
= 392,805
(P
= 1,193,993)/P
= 447,158
(0.094)
P
= (36,802)/63,321,349
(P
= 1,193,993)/63,321,349
(P
= 0.001)
22.80
Interest Coverage Ratio**
EBIT ÷
Interest Expense
NA
Debt Ratio
Total Liabilities ÷
Total Assets
0.044
Debt to Equity Ratio
Total Liabilities ÷
Stockholders’ Equity
0.046
Asset to Equity Ratio
Total Assets ÷
Stockholders’ Equity
1.046
Return on Asset
Net Income (Loss) ÷
Total Assets
(0.018)
Return on Equity
Net Income (Loss) ÷
Stockholders’ Equity
(0.019)
Net Profit Margin
Net Income (Loss) ÷
Total Sales
(2.670)
Income (Loss) per share
Net Income (Loss) ÷
Weighted Ave. No. of shares
*The reported revenues are purely interests earned from bank deposits and short term placements.
**The Company did not incur any interest on its advances.
(P
= 0.019)
ANNEX 'D'
COVER SHEET
4 2 5 4 3
SEC Registration Number
A S I A B E S T
A N D
G R O U P
I N T E R N A T I O N A L
I N C.
S U B S I D I A R I E S
[ F o r m e r l y : A G P
I n d u s t r i a l
C o r p. ]
(Company’s Full Name)
2 0 T H
L P
F L O O R
T H E
L E V I S T E
V I L L A G E
P E A K
S T R E E T
M A K A T I
T OW E R
1 0 7
S A L C E D O
C I T Y
(Business Address: No. Street City/Town/Province)
1 2
Venus L. Gregorio
928-9246
(Contact Person)
(Company Telephone Number)
3 1
Month
Day
(Fiscal Year)
17Q2 2013
0 5
(Form Type)
Month
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
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF
THE SECURITIES REGULATION CODE (SRC) AND SRC 17 (2) (b)
THEREUNDER
1. For the quarterly period ended June 30, 2013
2. SEC Identification Number 0000042543
3. BIR Tax Identification No. 000-196-724
4. Exact name of issuer as specified in its charter ASIABEST GROUP INTERNATIONAL INC.
5. Republic of the Philippines
Province, Country or other jurisdiction of
incorporation or organization
6.
(SEC use only)
Industry Classification Code
TH
7. 20 Floor, The Peak Tower,
107 LP Leviste St., Salcedo Village, Makati City
Address of principal office
1227
Postal Code
8. (632) 9289246
Issuer’s telephone number, including are code
9. N/A
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock
Issued and Outstanding
Common stock
200,000,000
Amount of debt outstanding as of June 30, 2013:
P
= NIL
11. Are any or all of these securities listed on a Stock Exchange.
Yes [ X ]
No [
]
If yes, state the name of such stock exchange and the classes of securities listed therein:
Philippine Stock Exchange, Inc.
Common stock
12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26
and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months
(or for such shorter period that the registrant was required to file such report);
Yes [ X ]
No [
]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ X ]
No [
]
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
The Company’s consolidated financial statements have been prepared in accordance with Philippine
Financial Reporting Standards (PFRS).
This Financial Statements meeting the requirements of SRC Rule 68, is furnished as specified therein.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
June 30, 2013 and December 31, 2012 and
Six Months Ended June 31, 2013 and 2012
Financial Performance and Results of Operation
June 30, 2013
(Unaudited)
Current Assets
₱72,246,832
Total Assets
72,260,778
Current Liabilities
3,623,238
Equity
68,637,540
December 31, 2012
(Audited)
₱68,971,394
68,985,340
4,272,449
64,712,891
Six Months Ended June 30
(Unaudited)
2013
2012
₱3,778,566
₱-0779,446
879,435
477,474
1,677,040
3,924,649
(973,492)
Revenue
Interest Income
Expenses
Net Loss
The Company thru its Management Agreement with Option to Buy with Geogen Corporation covering the
Dinapigue Nickel Project located at Dinapigue, Isabela has generated management income for the year
ended 2012. During the prior years, owing to its long period of non-operations since 1998, it had no income to
declare.
For the six months ended June 30, 2013, the company’s net income was ₱3.925 million and in 2012 net loss
was ₱0.973 million, which resulted to an accumulated deficit of ₱29.68 and ₱35.40 million as of June 30, 2013
and 2012, respectively. As of June 30, 2013 and December 31, 2012, the Company’s equity amounted to
₱68.64 million and ₱64.71 million, respectively.
The Company’s quasi-reorganization and equity restructuring were approved by the Securities and Exchange
Commission (SEC) on May 3, 2011. The capital increase was undertaken using the Fifteen Million Pesos (₱
15,000,000.00) deposited for future subscriptions by certain investors as partial payment for subscriptions to
Forty Five Million (45,000,000) Shares at the price of One Peso (₱1.00) per share. Upon approval of the
capital increase, the Company’s issued and outstanding shares stood at Sixty two million one hundred
seventy thousand two hundred ninety three (62,170,293). The corresponding Subscription Agreements with
the subscribers were executed by the Company on 16 May 2011 and the balances on the subscription price
from the individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of
136,678,651 shares of the Company at P
= 1 par value a share to various investors. They also approved the
creation of several subsidiaries via investment in various corporations where the Company will own 100% of
the outstanding capital stock of the said subsidiaries. Moreover, the BOD approved the change of corporate
name of the Parent Company and as now approved by the Securities and Exchange Commission on 26
March 2012, the Company is Asiabest Group International Inc.
On 22 June 2011, the Philippine Stock Exchange (PSE) lifted the trading suspension of the Company due its
full compliance with the Exchange’s requirements, submission of structured reports and payment of the
Company’s obligations.
2
On 2, 5 and 23 September 2011, the SEC approved the issuance of the Certificate of Incorporation of Alta
Minera Inc. (Mining), Breccia Resources Inc. (Mining) and Millionaire’s Offices and Properties Inc (Real
estate) where the Company owns 100% of their outstanding capital stock.
On 22 September 2011, the Board of Directors authorized the Chairman to evaluate, negotiate and enter on
behalf of the Company into contracts, agreements, joint-venture, partnership, co-development and coinvestment with any third party for the Company’s business expansion. As a result, last 27 September 2011,
the Company together with NiHao Mineral Resources Inc. (NiHao) executed a Heads of Agreement with
Glencore International AG (Glencore). The Heads of Agreement was executed to allow the Company, NiHao
and Glencore to enter into a joint venture and technical partnership whereby each party shall utilize its
expertise in the mining industry for purposes of investigating, identifying, acquiring, developing and operating
mining claims of economically feasible nickel deposits in the Philippines for purposes of Direct Shipping /
Selling Ore and other nickel mining businesses. On 28 October 2011, the Company together with NiHao
Mineral Resources, Inc. (NiHao) signed, in counterpart, the Addendum to the Heads of Agreement with
Glencore International AG (Glencore). The Addendum provides that the Joint Venture Corporation to be
formed in Hong Kong shall have an initial authorized share capital of One Hundred Thousand Hong Kong
Dollars (HK$100,000.00) with a par value of One Hong Kong Dollar (HK$1.00) per share with issued and paid
up capital of Ten Thousand Hong Kong Dollars (HK$10,000.00) equivalent to Ten thousand shares of the
JVC. On 10 December 2011, the Certificate of Incorporation of GNA Resources International Limited (GNA)
was approved under the Companies Ordinance of the Laws of Hong Kong.
On 7 October 2011, the stockholders during its annual meeting ratified all acts of the Board of Directors and
management for the years 2008 to 2011. They also approved the proposed change of name of the
corporation and the delegation to the Board of Directors of the power to issue shares to various investors.
On 14 October 2011, the company entered into a Management Agreement with Option to Buy with Geogen
Corporation (GEOGEN). GEOGEN is a mining company and is the registered holder of a valid and existing
mining claim in Dinapigue, Isabela (the “Mining Area”). GEOGEN is in the process of undertaking exploration,
development and mining operations in the said mining area and has retained the services of AGP for the
management of the exploration, development and mining operations of the mining area. AGP thus undertakes
to provide Management Services to GEOGEN including management control and property administration
over the daily and medium term operations of the Mining Area for a period of five (5) years from 15 October
2011 to 14 October 2016.
On 5 March 2012, the Company gave its conformity to the execution of a General Contractor Agreement
between Geogen Corporation and NiHao Mineral Resources International, Inc. The agreement provides for
the terms and conditions of the contracting relationship between Geogen, as the MPSA Holder of MPSA No.
258-2007-II dated 30 July 2007 and NiHao as contractor for the mining and other services over the areas
covered by the MPSA, located in Dinapigue Isabela.
The accompanying financial statements have been prepared assuming the Company will continue operating
as a going concern, and do not include any adjustments relating to the recoverability of asset carrying
amounts and the amounts of liabilities that might result should the Company be unable to continue as a going
concern. The Company’s management continues to assess investment opportunities and various options
regarding operations that the Company may undertake in the future.
The Company’s revenue (total of revenue and interest income from short term placement) for the six months
ended June 30, 2013 totaled to about P
= 4.558 million, an increase of P
= 3.679 million when compared to June
30, 2012 due mainly to the revenue earned from the company’s Management Agreement with Option to Buy
with Geogen Corporation.
Total expenses for June 30, 2013 totaled about P
= 0.477 million, a decrease of about P
= 1.2 million when
compared to June 30, 2012. The decrease was attributed mainly to lower professional and legal fees for the
period.
Cash and cash equivalents amounted to P
= 63.28 million as of June 30, 2013 as compared to P
= 64.28 million as
of December 31, 2012 or a decrease of P
= 1 million. The decrease in cash and cash equivalents was due to
the payment of the Company’s accounts and other payables and various operating expenses.
3
Other current assets increased by P
= 1.15 million due mainly to additional input value-added tax and deferred
input value added tax on professional fees and PSE annual maintenance fees incurred for the period ended
June 30, 2013 when compared to June 30, 2012.
Accounts and other payables increased about P
= 1.29 million when compared to June 30, 2012 due mainly to
the deferred output vat from the revenue earned from the Management Agreement with Option to Buy with
Geogen Corporation.
Key Performance Factors:
Net Income (Loss)
Current Assets
Current Liabilities
Total Liabilities
Stockholders’ Equity
Debt to Equity Ratio
P
= 3,623,238/P
= 68,637,540
P
= 2,332,533/P
= 62,922,800
Current Ratio
P
= 72,246,832/P
= 3,623,238
P
= 65,241,388/P
= 2,332,533
Income (Loss) per share
P
= 3,924,649/63,321,349
(P
= 973,492)/63,321,349
June 2013
P
= 3,924,649
P
= 72,246,832
P
= 3,623,238
P
= 3,623,238
P
= 68,637,540
June 2012
(P
= 973,492)
P
= 65,241,388
P
= 2,332,533
P
= 2,332,533
P
= 62,922,800
0.053
0.037
19.94
27.97
P
= 0.062
P
= (0.015)
Debt to Equity Ratio:
This ratio is determined by dividing the total liabilities by the total stockholders’ equity.
This ratio measures the leverage on borrowed capital.
Current Ratio:
This ratio is computed by dividing the current assets by the current liabilities.
The ratio measures the company’s ability to pay maturing obligations.
Income (Loss) Per Share:
Income (Loss) per share is computed by dividing the net income (loss) by weighted average number of
common shares outstanding.
Investment in Shares of Stock
100% ownership in various companies
On 17 June 2011, the Board of Directors approved the creation of several subsidiaries via investment in
various corporations where the Company will own 100% of the outstanding capital stock of the said
subsidiaries.
On 2 September 2011, the Security and Exchange Commission approved the issuance of Alta Minera Inc.’s
(‘Alta Minera’) Certificate of Registration. Alta Minera was incorporated as a mining company.
On 5 September 2011, the Security and Exchange Commission approved the issuance of the Certificate of
Registration of Millionaire’s Offices and Properties Inc. (‘Millionaire’s’). Millionaire’s was incorporated as a
realty company.
On 23 September 2011, the Security and Exchange Commission approved the issuance of the Certificate of
Registration of Breccia Resources Inc. (‘Breccia’) which was also incorporated as a mining company.
Investment in Joint Venture
On 27 September 2011, the Company, NiHAO and Glencore executed a HOA in Hong Kong. Under the
HOA, the parties agreed to utilize their respective expertise in the mining industry for purposes of
4
investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel
deposits in the Philippines for direct shipping or selling of ore and other related nickel mining business.
Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its network of
various institutions internationally. On the other hand, the Company and NiHAO shall utilize their expertise in
mining, contracting and developing mines in the Philippines and their knowledge of relevant Philippine laws,
rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form a joint venture company (JVC) under the
laws of Hong Kong. Pursuant to the Addendum to HOA dated 28 October 2011, the JVC had an initial
authorized capital of HK$100,000 with a par value of HK$1/share. With an initial issued and paid-in capital of
HK$10,000 to be contributed by the parties as follows: (1) 50% from Glencore; and (2) 25% each for the
Parent Company and NiHAO.
Moreover, the parties agreed to execute the following implementing agreements of the HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the JVC and
market and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the
implementation and operation of the JVC.
The JVC under the name of GNA Resources International Limited was incorporated in Hong Kong on
November 23, 2011. As of June 30, 2013, the JVC has not started its main business operation.
In this interim period:
(a) There are no known trends or any known demands, commitments, events or uncertainties that
will result in or that are reasonably likely to result in the Company’s liquidity increasing or
decreasing in any material way.
(b) There are no known events that will trigger direct or contingent financial obligation that is material
to the Company, including any default or acceleration of an obligation.
(c) There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligation), and other relationships of the Company with unconsolidated entities or
other persons created during the year.
(d) There are no known trends, events or uncertainties that have had or that are reasonably
expected to have a material favorable or unfavorable impact on net sales or revenues or income
from continuing operations.
(e) There are no significant elements of income or loss that did not arise from the Company’s
continuing operations.
(f) There are no seasonal aspects that had a material effect on the Company’s financial condition or
results of operations.
(g) There are no material events and uncertainties known to management that would address the
past and would have an impact on future operations of the Company.
PART II – OTHER INFORMATION
There are no contingent liabilities or contingent assets or known trend and events that may materially
affect the company’s operation nor are there estimates of amounts reported in prior periods that may have
material effect on the attached financial statements.
5
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
AGING OF RECEIVABLES
AS OF JUNE 30, 2013
(Based on Unaudited Figures)
Up to 3
months
Other Receivables
Interest Receivables
Less: Allowance for doubtful
accounts
Net Receivables
₱
Over 3 Months
to One Year
Over One
Year
Past Due
₱7,118,452
₱
₱
-
Total
₱
20,685
20,685 ₱7,118,452
₱ -
₱
-
₱7,118,452
20,685
₱7,139,137
₱
20,685 ₱7,118,452
₱ -
₱
-
₱7,139,137
7
ANNEX A
ASIABEST GROUP INTERNATIONAL INC. & SUBSIDIARIES
FINANCIAL STATEMENTS
AS AT JUNE 30, 2013(UNAUDITED) AND
DECEMBER 31, 2012 (AUDITED)
AND
FOR THE SIX MONTHS ENDED
JUNE 30, 2013 AND 2012 (UNAUDITED)
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Consolidated
June 30, 2013
Audited
Consolidated
December 31, 2012
ASSETS
Current Assets
Cash and cash equivalents (Notes 4, 13 & 14)
Receivables (Notes 5,13 & 14)
Other current assets (Note 6)
Noncurrent Assets
Investment in Joint Venture (Notes 7 & 10)
P
63,283,207
7,139,137
1,824,487
72,246,832
P
64,275,119
3,488,679
1,207,596
68,971,394
P
13,946
P
72,260,778
P
68,985,340
P
3,623,238
3,623,238
P
4,272,449
4,272,449
13,946
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts & other payables (Notes 8, 10 & 14)
Total Liabilities
Stockholders' Equity
Capital Stock (Note 9)
Deficit
Total Stockholders' Equity
98,321,349
(29,683,809)
68,637,540
P
See accompanying Notes to Consolidated Financial Statements
72,260,778
98,321,349
(33,608,458)
64,712,891
P
68,985,340
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months
April 1 to
June 30, 2013
REVENUES
P
3,778,566
Six Months
April 1 to
June 30, 2012
P
January 1 to
June 30, 2013
P
3,778,566
January 1 to
June 30, 2012
P
EXPENSES
(126,428)
(125,321)
(477,474)
(1,677,040)
OTHER INCOME
Interest Income
386,642
432,277
779,446
879,435
4,038,780
306,957
4,080,538
(797,605)
(77,328)
(86,455)
(155,889)
(175,887)
INCOME (LOSS) BEFORE INCOME TAX
PROVISION FOR INCOME TAX
NET INCOME (LOSS)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARE
Net Income (Loss) Per Share
P
3,961,451
P
220,501
P
3,924,649
P
(973,492)
63,321,349
63,321,349
63,321,349
63,321,349
0.063
0.003
0.062
(0.015)
See accompanying Notes to Consolidated Financial Statements
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited
January 1 to
June 30, 2013
(Notes 9 &11)
CAPITAL STOCK - P 1 par value in 2012
and P 6 par value in 2011
ISSUED
Balance at the beginning of the year
Issuance
Effect of Restructuring
P
SUBSCRIBED
Balance at the beginning of the year
Issuance
Subscription Receivable
63,321,349
63,321,349
Audited
January 1 to
June 30, 2012
P
63,321,349
63,321,349
January 1 to
December 31, 2012
P
63,321,349
63,321,349
January 1 to
December 31, 2011
P
109,928,094
45,000,000
(91,606,745)
63,321,349
35,000,000
35,000,000
98,321,349
35,000,000
35,000,000
98,321,349
35,000,000
35,000,000
98,321,349
136,678,651
(101,678,651)
35,000,000
98,321,349
ADDITIONAL PAID IN CAPITAL
Balance at the beginning of the year
Effect of restructuring
Balance at the end of year
-
-
-
396,291,984
(396,291,984)
0
DEPOSIT ON SUBSCRIPTIONS
Balance at the beginning of the year
Issuance
Balance at the end of year
-
-
-
15,000,000
(15,000,000)
0
(33,608,458)
(34,425,057)
(34,425,057)
3,924,649
(29,683,809)
(973,492)
(35,398,549)
816,599
(33,608,458)
(514,956,828)
487,898,729
(7,366,958)
(34,425,057)
DEFICIT
Balance at the beginning of the year
Effect of restructuring
Total Comprehensive Income (Loss)
Balance at the end of year
P
68,637,540
See accompanying Notes to Consolidated Financial Statements
P
62,922,800
P
64,712,891
P
63,896,292
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months
April 1 to
June 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income (Loss) before income tax
P
Adjustment for Interest Income
Operating income before working capital changes
(Increase) Decrease in Receivables
(Increase) Decrease in Other Current Assets
Increase (Decrease) in accounts & other payables
Cash required by operations
Interest Income
Final Tax Paid on Interest
Net Cash Provided by operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital stock
Net Cash Provided (Used) in Investing Activities
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT
END OF PERIOD
See accompanying Notes to Consolidated Financial Statements
P
4,038,780
(386,642)
3,652,138
(3,667,470)
(575,367)
461,332
(129,366)
386,642
(77,328)
179,947
Six Months
April 1 to
June 30, 2012
P
306,957
(432,277)
(125,321)
12,247,907
(14,587)
(542,540)
11,565,459
432,277
(86,455)
11,911,281
January 1 to
June 30, 2013
P
4,080,538
(779,446)
3,301,092
(3,650,458)
(616,891)
(649,211)
(1,615,469)
779,446
(155,889)
(991,912)
January 1 to
June 30, 2012
P
(797,605)
(879,435)
(1,677,040)
13,349,377
(49,388)
(551,299)
11,071,650
879,435
(175,887)
11,775,198
0
0
0
0
179,947
11,911,281
(991,912)
11,775,198
63,103,260
52,653,907
64,275,119
52,789,990
63,283,207
P
64,565,188
P
63,283,207
P
64,565,188
ASIABEST GROUP INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information, Status of Operations and Authorization for the Issuance of the Consolidated
Financial Statements
Corporate Information
ASIABEST GROUP INTERNATIONAL, INC. formerly AGP Industrial Corporation (Parent Company) and its
subsidiaries, Alta Minera, Inc. (AMI), Breccia Resources, Inc. (BRI) and Millionaire’s Offices and Properties,
Inc. (MOPI) (collectively referred to as the Group) were incorporated in the Philippines. On March 26, 2012,
the Philippine Securities and Exchange Commission (SEC) approved the change of name of the Parent
Company to Asiabest Group International, Inc. The Group’s registered office address is 20th Floor The Peak
Tower, 107 LP Leviste Street, Salcedo Village, Makati City.
The Parent Company was incorporated and registered with the SEC on October 23, 1970 as an investment
holding corporation. It was listed in the Philippine Stock Exchange (PSE) on July 10, 1979 and became the
holding company for Atlantic Gulf and Pacific Company of Manila, Incorporated (AG&P), one of the largest
diversified engineering and general construction firms in the Philippines in the 1980’s. However, in October
10, 1996, the Parent Company reduced its ownership and control in AG&P. As discussed below, the
investment in AG&P was disposed of in 2003.
On May 3, 2011, the SEC approved the quasi-reorganization and equity restructuring of the Parent Company.
On June 17, 2011, the BOD approved the sale and issuance, via private placement, of 136,678,651 shares of the
Company at P
=1 par value a share to various investors. The BOD also approved the creation of several
subsidiaries via investment in various corporations where the Company will own one hundred percent (100%)
of the outstanding capital stock of the said subsidiaries.
The following are the subsidiaries of the Parent Company:
AMI
BRI
MOPI
Nature of Business
Mining
Mining
Real estate
Percentage of Ownership
100
100
100
The Parent Company funded the incorporation of the above subsidiaries in 2011.
Status of Operations
The Parent Company has not been in operations from 2003 to 2011. On June 9, 2003, the SEC revoked the
Parent Company’s registration of securities and permit to sell securities for its failure to submit reportorial
requirements.
To address the financial difficulties of the Parent Company, the stockholders approved the following matters
on November 13, 2003:
a.
b.
c.
d.
Sale of the Parent Company’s investment in the shares of stock of AG&P to Trans-Philippines Investment
Corporation (TPIC) for P
=66.2 million in 2003. The proceeds of the sale were applied against the
Company’s obligations to TPIC.
Conversion of the Parent Company’s remaining obligations to TPIC totaling P
=228.7 million into additional
paid-in capital in 2003.
Quasi-reorganization plan.
Delegation to the BOD the authority to look for new investors.
On May 3, 2011, SEC lifted the order of revocation of the Parent Company’s permit to sell securities. The SEC
also approved the Parent Company’s application for quasi-reorganization and equity restructuring as
previously discussed.
Upon approval of the increase in authorized capital stock by the SEC, the Parent Company executed
subscription agreements with various investors on May 16, 2011. The agreements covered the subscription of
45 million shares at P
=1 par value or equivalent to P
=45.0 million.
-2On June 17, 2011, the Parent Company executed subscription agreements with various investors for the
remaining unissued portion of its authorized capital stock. The agreements covered the subscription to
136,678,651 shares at P
=1 par value or equivalent to P
=136.7 million. The Parent Company received P
=35.0 million
from various investors as partial payment for the subscriptions. On the same date, the BOD also authorized
the Parent Company to incorporate several subsidiaries which will engage in the businesses of real estate,
mining development, mining sub-contracting and equipment leasing and agricultural/palm oil production
and processing. Pursuant to this authorization, the Parent Company invested in the incorporation of AMI, BRI
and MOPI as previously discussed.
To enable the Parent Company to further finance the new businesses, the BOD approved the increase in
authorized capital stock of the Parent Company from P
=200.0 million divided into 200.0 million shares at P
=1 par
value to P
=2.0 billion divided into 2.0 billion shares at P
=1 par value on June 17, 2011 subject to the approval of
SEC.
On June 22, 2011, the PSE lifted the trading suspension of the Parent Company due to its full compliance with
the PSE’s requirements, submission of structured reports and payment of the Parent Company’s obligations.
In September 2011, the SEC approved the Certificate of Incorporation of AMI, BRI and MOPI as companies
wholly owned by the Parent Company.
On September 22, 2011, the BOD authorized the Chairman of the Board to evaluate, negotiate
and enter, on behalf of the Parent Company, into contracts, agreements, joint-venture, partnership,
co-development and co-investment with any third party for the Parent Company’s business expansion. As a
result, on September 27, 2011, the Parent Company together with NiHAO Mineral Resources International,
Inc. (NiHAO) executed a Heads of Agreement (HOA) with Glencore International AG (Glencore). The HOA
was signed in Hong Kong and named as GNA Resources International Limited. The HOA was executed to
allow the Parent Company, NiHAO and Glencore to enter into a joint venture and technical partnership
whereby each party shall utilize its expertise in the mining industry for purposes of investigating, identifying,
acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines
for purposes of direct shipping/selling ore and other nickel mining businesses. On October 3, 2011, the HOA
was ratified and resolved to allocate funds necessary for the Parent Company to comply with its undertaking
under the HOA (see Note 7).
On October 7, 2011, the stockholders during the annual meeting ratified all acts of the BOD and management
for the period 2008 to 2011. They also approved the proposed change of name of the Parent Company and the
delegation to the BOD of the power to issue shares of stock to various investors.
As part of the Parent Company’s expansion in business operations, last October 14, 2011, the Parent Company
executed a Management Agreement with Option to Buy with Geogen Corporation (Geogen), a mining
Company which holds a valid and existing mining claim in Dinapigue, Isabela covered by MPSA No. 2582007-11 duly approved on July 30, 2007. Geogen is in the process of undertaking exploration, development
and operations in this mine. Pursuant to the agreement, the Company will provide management services to
Geogen including management control and property administration over the daily and medium term
operations of the Mining Area for a period of five (5) years (see Note 12).
On March 5, 2012, the Parent Company gave its conformity to the execution of a General Contractor
Agreement between Geogen and NiHAO under which NiHAO shall bear the management fees pursuant to
the Management Agreement with Option to Buy (see Note 12). The agreement provides for the terms and
conditions of the contracting relationship between Geogen, as the MPSA Holder of MPSA No. 258-2007-II
dated July 30, 2007 and NiHAO as contractor for the mining and other services over the areas covered by the
MPSA, located in Dinapigue Isabela.
Mining operations started in the third quarter of 2012. In relation to the said agreement, the Parent Company
earned P
=3.6 million in 2012.
Status of Operations of Subsidiaries
The subsidiaries were incorporated in 2011 in anticipation of the projects that will be infused into the Group
upon re-organization following the lifting of its Revocation Order from the SEC and trading ban from the PSE.
MOPI, the real estate subsidiary of the Group may be used to acquire the office condominium units currently
-3owned by Sunplaza Development Corporation as per disclosures made by the Company. The mining
companies, AMI and BRI, will be the vehicles for possible future acquisition of rights or interests in mining
projects.
As at June 30, 2013, the subsidiaries have not yet started their operations.
As shown in the accompanying consolidated financial statements, the Group had a deficit of
=29.68 million and P
P
=35.40 million as at June 30, 2013 and 2012, respectively. The gradual improvement in the
financial position of the Group is due to the activities they are currently undertaking.
Authorization for the Issuance of the Consolidated Financial Statements
The consolidated financial statements for the six months ended June 30, 2013 and 2012 were authorized for
issue in accordance with a resolution of the Audit Committee on August 12, 2013.
2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting Policies
Basis of Preparation
The accompanying consolidated financial statements have been prepared on a historical cost basis. The
consolidated financial statements are presented in Philippine peso (Peso), which is the Group’s functional and
presentation currency. Amounts are rounded off to the nearest Peso unit, except when otherwise indicated.
Statement of Compliance
The accompanying consolidated financial statements have been prepared in compliance with accounting
principles generally accepted in the Philippines as set forth in Philippine Financial Reporting Standards
(PFRS). PFRS includes statements named PFRS, Philippine Accounting Standards (PAS), and Standing
Interpretations Committee/International Financial Reporting Interpretations Committee (IFRIC) which have
been approved by the Financial Reporting Standards Council (FRSC) and adopted by SEC, including SEC
pronouncements.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Parent Company and its
subsidiaries as of June 30, 2013.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial statements of
the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent
accounting policies. All intra-group balances, transactions, income and expenses and unrealized gains and
losses resulting from intra-group transactions are eliminated in full.
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for the
adoption of the following amendments to previously issued PAS and PFRS which became effective on January
1, 2012:
•
•
Amendment to PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets
Amendment to PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets
The adoption of the new and amended standards and interpretations above did not have an impact on the
accounting policies, financial position or performance of the Group.
Future Changes in Accounting Policies
The Group did not early adopt the following standards and Philippine Interpretations that will become
effective subsequent to December 31, 2012:
Effective in 2013
•
Amendment to PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income
(OCI), effective for annual periods beginning or after July 1, 2012, changes the grouping of items presented
-4in OCI. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time would be
presented separately from items that will never be reclassified.
•
Revised PAS 19, Employee Benefits, effective for annual periods beginning on or after January 1, 2013,
includes changes such as removing the corridor mechanism and the concept of expected returns on plan
assets to simple clarifications and re-wording.
•
Revised PAS 27, Separate Financial Statements, effective for annual periods beginning on or after January 1,
2013, establishes that as a consequence of the new PFRS 10, Consolidated Financial Statements and PFRS 12,
Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries,
jointly controlled entities, and associates in separate financial statements.
•
PAS 28, Investments in Associates and Joint Ventures, effective for annual periods beginning on or after
January 1, 2013, explains that as a consequence of the new PFRS 11, Joint Arrangements and PFRS 12,
Disclosure of Interests in Other Entities, PAS 28 has been renamed PAS 28, Investments in Associates and Joint
Ventures, and describes the application of the equity method to investments in joint ventures in addition
to associates.
•
PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, effective for
annual periods beginning on or after January 1, 2013, requires an entity to disclose information about
rights of set-off and related arrangements (such as collateral agreements). The new disclosures are
required for all recognized financial instruments that are set off in accordance with PAS 32. These
disclosures also apply to recognized financial instruments that are subject to an enforceable master
netting arrangement or ‘similar agreement’, irrespective of whether they are set-off in accordance with
PAS 32.
•
PFRS 10, Consolidated Financial Statements, effective for annual periods beginning on or after January 1,
2013, replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the
accounting for consolidated financial statements. It also includes the issues raised in Standards
Interpretation Committee (SIC) -12, Consolidation - Special Purpose Entities. It establishes a single control
model that applies to all entities including special purpose entities. The changes introduced by PFRS 10
will require management to exercise significant judgment to determine which entities are controlled, and
therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS
27.
•
PFRS 11, Joint Arrangements, effective for annual periods beginning on or after January 1, 2013, replaces
PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by
Venturers. It removes the option to account for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the
equity method.
•
PFRS 12, Disclosure of Interests with Other Entities, effective for annual periods beginning on or after
January 1, 2013, includes all of the disclosures that were previously in PAS 27 related to consolidated
financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28.
These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and
structured entities.
•
PFRS 13, Fair Value Measurement, effective for annual periods beginning on or after January 1, 2013,
establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not
change when an entity is required to use fair value, but rather provides guidance on how to measure fair
value under PFRS when fair value is required or permitted.
•
Annual improvements to PFRSs (2009-2011 cycle), effective for annual periods beginning on or after
January 1, 2013 and are applied retrospectively. Earlier application is permitted. These disclosures
contain non-urgent but necessary amendments to PFRSs.
•
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, effective for
annual periods beginning on or after January 1, 2013. This interpretation applies to waste removal
-5(stripping) costs incurred in surface mining activity, during the production phase of the mine. The
interpretation addresses the accounting for the benefit from the stripping activity.
Effective in 2014
•
Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities, effective for annual periods beginning on or after January 1, 2014, these amendments clarify the
meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS
32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross
settlement mechanisms that are not simultaneous.
Effective in 2015
•
PFRS 9, Financial Instruments: Classification and Measurement, effective for annual periods beginning on or
after January 1, 2015, reflects the first phase on the replacement of
PAS 39, Financial Instruments: Recognition and Measurement and applies to classification and measurement
of financial assets and financial liabilities as defined in PAS 39.
To be Determined
•
Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate, this interpretation covers
accounting for revenue and associated expenses by entities that undertake the construction of real
estate directly or through subcontractors. The interpretation requires that revenue on construction
of real estate be recognized only upon completion, except when such contract qualifies as
construction contract to be accounted for under PAS 11 or involves rendering of services in which
case revenue is recognized based on stage of completion. Contracts involving provision of services
with the construction materials and where the risks and reward of ownership are transferred to the
buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and
the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is
issued by the International Accounting Standards Board and an evaluation of the requirements of the
final Revenue standard against the practices of the Philippine real estate industry is completed
The Group does not expect any significant impact on the consolidated financial statements when it adopts the
above standards and interpretations. The revised and additional disclosures provided by the standards and
interpretations will be included in the consolidated financial statements when these are adopted in the future,
if applicable.
Summary of Significant Accounting and Financial Reporting Policies
Cash and Cash Equivalents
Cash includes cash in banks. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, with original maturities of up to three months or less from dates of
acquisition and are subject to an insignificant risk of change in value.
Financial Instruments - Initial Recognition and Subsequent Measurement
Date of Recognition
Financial instruments within the scope of PAS 39 are classified as financial assets or financial liabilities at fair
value through profit or loss (FVPL), loans and receivables, held-to-maturity investments, available-for-sale
(AFS) financial assets and other financial liabilities, as appropriate. The Group determines the classification of
its financial instruments at initial recognition.
All financial instruments are recognized initially at fair value plus transaction costs, except in the case of
financial assets and financial liabilities at FVPL.
Purchases or sales of financial instruments that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the
date that the Group commits to purchase or sell the asset.
-6Subsequent Measurement
The subsequent measurement of the Group’s financial instruments depends on their classification as described
below. The Group had no financial assets or financial liabilities at FVPL, held-to-maturity investments and
AFS financial assets as at June 30, 2013 and 2012.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement, such financial assets are subsequently measured at
amortized cost using the effective interest rate (EIR) method, less any impairment. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are integral
part of the EIR. The EIR amortization, if any, is included in the “interest income” account in the consolidated
profit or loss. The losses arising from impairment of receivables, if any, are recognized in the “expenses”
account in the consolidated profit or loss. This category includes the Group’s cash and cash equivalents and
receivables.
Other Financial Liabilities
This category pertains to financial liabilities that are not held for trading or not designated as at FVPL upon
inception of the liability. These include liabilities arising from operations and noninterest-bearing loans and
borrowings.
After initial recognition, other financial liabilities are subsequently measured at amortized cost using the EIR
method. Gains and losses are recognized in the consolidated profit or loss when the liabilities are
derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into
account any premium or discount on acquisition and fees and costs that are an integral part of the EIR. The
EIR amortization, if any, is included in “interest income” account in the consolidated profit or loss.
This classification includes the Group’s accounts payable and other liabilities.
Determination of Fair Value
The fair value for financial instruments traded in active markets at reporting date is based on their quoted
market prices or dealer price quotations (bid price for long positions and ask price for short positions), without
any deduction for transaction costs. When current bid and asking prices are not available, the price of the
most recent transaction provides evidence of the current fair value as long as there has not been a significant
change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value is determined by using
appropriate valuation techniques. Valuation techniques include net present value techniques, comparison to
similar instruments for which market observable prices exist, options pricing models, and other relevant
valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are
provided in Note 14.
Day 1 difference
When the transaction price in a non-active market is different from the fair value from other observable
current market transactions in the same instrument or based on a valuation technique whose variables include
only data from observable market, the Group recognizes the difference between the transaction price and fair
value (a Day 1 difference) in the consolidated profit or loss unless it qualifies for recognition as some other
type of asset. In cases where use is made of data which is not observable, the difference between the
transaction price and model value is only recognized in the consolidated profit or loss when the inputs become
observable or when the instrument is derecognized. For each transaction, the Group determines the
appropriate method of recognizing the Day 1 difference.
-7Derecognition of Financial Instruments
Financial Assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognized when:
•
the rights to receive cash flows from the asset have expired;
•
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in
the asset. In that case, the Group also recognizes an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has
expired.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognized in the consolidated profit or loss.
Impairment of Financial Assets
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired if,
and only if, there is objective evidence of impairment as a result of one or more events that has occurred after
the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of
impairment may include indications that the debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganization and when observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
Assets Carried at Amortized Cost
For financial assets carried at amortized cost, the Group first assesses whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the Group determines that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets
that are individually or assessed for impairment and for which an impairment loss is, or continues to be,
recognized are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as
the difference between the assets carrying amount and the present value of estimated future cash flows
(excluding future expected credit losses that are not yet incurred). The present value of the estimated future
cash flows is discounted at the financial assets’ original EIR. If a loan has a variable interest rate, the discount
rate for measuring any impairment loss is the current EIR.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the
loss is recognized in the consolidated profit or loss. Interest income continues to be accrued on the reduced
-8carrying amount and is accrued using the rate of interest used to discount the future cash flows for the
purpose of measuring the impairment loss. The interest income is recorded under interest income account in
the consolidated profit or loss. Loans together with the associated allowance are written off when there is no
realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an
event occurring after the impairment was recognized, the previously recognized impairment loss is increased
or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited
to the other income account in the consolidated profit or loss.
In relation to trade receivables, a provision for impairment is made when there is objective evidence (the
probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to
collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is
reduced through the use of an allowance account. Impaired receivables are derecognized when they are
assessed as uncollectible.
Offsetting of Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of
financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.
This is generally not the case with master netting agreements, and the related assets and liabilities are
presented at gross amounts in the consolidated statement of financial position.
Investment in a Joint Venture
The Parent Company has an interest in a joint venture, which is a jointly controlled entity, whereby the
venturers have a contractual agreement that establishes joint control over the economic activities of the entity.
The agreement requires unanimous agreement for financial and operating decisions among the venturers.
Impairment of Nonfinancial Assets
The Group assesses at each reporting date whether there is an indication that a nonfinancial asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group
makes an estimate of the asset’s recoverable amount. The recoverable amount is the higher of an asset’s or
cash-generating units (CGU) fair value less costs to sell or its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
group of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pretax discount rate that reflects current market assessment
of the time value of money and the risks specific to the asset. In determining the fair value less cost to sell, an
appropriate valuation model is used. Any impairment loss is recognized in the consolidated profit or loss in
those expense categories consistent with the function of the impaired asset.
Earnings (loss) per Common Share
Basic earnings (loss) per common share is determined by dividing net income by the weighted average
number of common shares outstanding, after retroactive adjustment for any stock dividends and stock splits
declared during the year.
Diluted earnings (loss) per common share amounts is calculated by dividing the net income for the year
attributable to the ordinary equity holders of the parent by the weighted average number of common shares
outstanding during the year plus the weighted average number of ordinary shares that would be issued for
outstanding common stock equivalents.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured.
Service income
Revenue is recognized when the related services have been rendered.
-9Interest income
Interest income from bank deposits and short-term cash placements is recognized on a time proportion basis
on the principal outstanding and at the rate applicable. Revenue is recognized as the interest accrues taking
into account the effective yield of the asset.
General and Administrative Expenses
General and administrative expenses constitute cost of administering the business and are recognized as
incurred.
Income Taxes
Current Income Tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date.
Deferred Income Tax
Deferred income tax assets are recognized for all deductible temporary differences, carryforward benefits of
unused net operating loss carryover (NOLCO) and unused tax credits from excess minimum corporate income
tax (MCIT), to the extent that it is probable that sufficient future taxable income will be available against which
the deductible temporary differences and carryforward benefits of unused NOLCO and MCIT can be utilized,
except:
•
where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
•
in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred income tax assets are recognized only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable income will be available
against which the temporary differences can be utilized.
Deferred income tax is provided, using the liability method, on temporary differences at the end of the
reporting period between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences,
except:
•
•
where deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting income nor taxable income or loss; and
in respect to taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax liabilities are recognized for all taxable temporary differences. The carrying amount of
deferred income tax assets is reviewed at each end of the reporting period and reduced to the extent that it is
no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred
income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each end of the
reporting period and are recognized to the extent that it has become probable that sufficient future taxable
profit will allow the deferred income tax assets to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the end of the reporting period.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to
offset current income tax assets against current income tax liabilities and deferred income taxes related to the
same taxable entity and the same taxation authority.
- 10 Provisions
Provisions, if any, are recognized when the Group has a present obligation (legal or constructive) as a result of
a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligations; and a reliable estimate can be made of the amount of the obligation. If the effect of the time
value of money is material, provision is determined by discounting the expected future cash flows at a pre-tax
discount rate that reflects current market assessment of the time value of money and, where appropriate, the
risks specific to the liability. When discounting is used, the increase in provision due to passage of time is
recognized as interest expense.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed in the
notes to consolidated financial statements unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but
are disclosed in the notes to consolidated financial statements when inflows of economic benefits are probable.
Events after the Reporting Date
Post year-end events that provide additional information on the Group’s financial position at the reporting
date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to consolidated financial statements when material.
Segment Reporting
An operating segment is a component of an entity:
a)
b)
that engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity);
whose operating results are regularly reviewed by the entity’s chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance; and for which discrete
financial information is available.
3. Significant Accounting Judgments and Estimates
The preparation of the accompanying consolidated financial statements in accordance with PFRS requires the
Group to make judgments, estimates and assumptions that affect the amounts reported in the consolidated
financial statements and the accompanying notes. Future events may occur which will cause the judgments,
estimates and assumptions used in arriving the estimates to change the effects of any change in judgments and
estimates are reflected in the consolidated financial statements as they become reasonably determinable.
The judgments, estimates and assumptions used in the accompanying consolidated financial statements are
based upon management’s evaluation of relevant facts and circumstances as at the date of the consolidated
financial statements. However, actual results could differ from such estimates.
Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have the most significant effect on the amounts recognized in
the consolidated financial statements. The judgments are based upon management’s evaluation of relevant
facts and circumstances as of the date of the consolidated financial statements:
Determining Functional Currency
Based on the economic substance of the underlying circumstances relevant to the Group, the functional
currency of the Group has been determined to be the Peso. The Peso is the currency of the primary economic
environment in which the Group operates.
Classification of Financial Instruments
The Group classifies a financial instrument or its component parts, on initial recognition as a financial asset, a
financial liability or an equity instrument in accordance with the substance of the contractual arrangement and
the definitions of financial asset, financial liability and equity instrument. The substance of a financial
instrument, rather than its legal form, governs its classification in the consolidated statements of financial
position.
- 11 The classification of financial instruments is disclosed in Note 14 to the consolidated financial statements.
Legal Contingencies
The estimate of the probable costs for the resolution of possible claims has been developed in consultation
with outside counsel handling the Group’s defense in these matters and is based upon an analysis of potential
results. As at June 30, 2013, the Group is not contingently liable, thus did not accrue any provision for legal
contingencies.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty as of reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
Estimating Allowance for Impairment Losses on Receivables
The Group has set up allowance for impairment losses on receivables at a level considered adequate to
provide for potential uncollectible receivables. The level of this allowance is evaluated by management on the
basis of factors that affect the collectability of the accounts. These factors include, but are not limited to, the
length of the Group’s relationship with the clients, the clients’ payment behavior and known market factors.
The amount and timing of recorded expenses for any period would differ if the Group made different
judgment or utilized different estimates. An increase in the Group’s allowance for impairment losses on trade
and other receivables would increase the Group’s recorded operating expenses and decrease current assets.
The Group did not recognize any provision for impairment loss in 2012, 2011 and 2010. As at June 30, 2013
and
2012,
the
carrying
values
receivables
amounted
to
=7.14
P
million
and
=0.006 million (see Note 5).
P
Fair Value of Financial Instruments
PFRS requires that financial assets and financial liabilities (including derivative financial instruments) be
carried or disclosed at fair value, which requires the use of accounting estimates and judgment. While
significant components of fair value measurement are determined using verifiable objective evidence (i.e.,
foreign exchange rates, interest rates, and volatility rates), the timing and amount of changes in fair value
would differ using a different valuation methodology.
When Level 2 of the fair value hierarchy is used to determine the fair value of financial instruments, inputs and
assumptions are based on market observable data and conditions, and reflect appropriate risk adjustments
that market participants would make for credit and liquidity risks existing for each of the periods indicated.
Any change in the fair values of financial assets and financial liabilities (including derivative instruments)
directly affects the consolidated statement of comprehensive income and equity and related disclosure.
The fair values of financial assets and liabilities by category and the fair value hierarchy are set out in Note 14
of the consolidated financial statements.
Impairment of Nonfinancial Assets
An impairment review is performed when certain impairment indicators are present.
Determining the value in use of nonfinancial assets requires the determination of future cash flows expected to
be generated from the continued use and ultimate disposition of such assets and requires the Group to make
estimates and assumptions that can materially affect its consolidated financial statements. Future events could
cause the Group to conclude that the nonfinancial assets are impaired. Any resulting additional impairment
loss could have a material adverse impact on the Group’s financial condition and results of operations. The
preparation of the estimated future cash flows involves significant judgment and estimations.
There were no impairment losses recognized in 2012, 2011 and 2010.
As at June 30, 2013 and 2012, the carrying values of the Group’s other current assets amounted to P
=1.8 million
and P
=0.67 million, respectively (see Note 6). The carrying value of the Group’s investment in joint venture
amounted to P
=13,946 as at June 30, 2013 and 2012 (see Notes 7 and 10).
- 12 Recognition of Deferred Income Tax Assets
The Group’s assessment on the recognition of deferred income tax assets on nondeductible temporary
differences is based on forecasted taxable income. This forecast is based on the Group’s past results and future
expectations on revenues and expenses.
Deferred income tax assets on temporary differences were not recognized because the Group did not expect to
have sufficient future taxable profit against which this can be applied.
4. Cash and Cash Equivalents
Cash and cash equivalents consist of:
June 30, 2013
(Unaudited)
₱3,003,181
60,280,026
₱63,283,207
Cash in bank
Cash equivalents
December 31, 2012
(Audited)
₱3,501,810
60,773,309
₱64,275,119
Cash in bank earns interest at the respective bank deposit rates. Cash equivalents are made for varying period
of up to three months depending on the Group’s immediate cash requirements and earn interest at the
respective short-term deposit rates. Interest Income amounted to ₱779,446 and ₱879,435 for the period ended
June 30, 2013 and 2012, respectively.
5. Receivables
June 30, 2013
(Unaudited)
₱7,118,452
20,685
₱7,139,137
Trade Receivables
Interest Receivable
December 31, 2012
(Audited)
₱3,453,244
35,435
₱3,488,679
Trade Receivables consist of uncollected management income arising from the Management Agreement with
Option to Buy of the Parent Company with Geogen. NiHAO shall bear the management fees pursuant to a
separate General Contractor Agreement executed between NiHAO and Geogen to which the Parent Company
conformed (see Note 12). Trade receivables are non-interest bearing and are normally settled upon demand.
Interest receivable pertains to amount of interest accrued on the Group’s short-term deposits.
6. Other Current Assets
Other current assets consist of:
June 30, 2013
(Unaudited)
₱2,006,192
759,906
66,782
2,832,880
1,008,393
=1,824,487
P
Creditable withholding tax
Input value-added tax
Deferred Input value-added tax
Less: Allowance for probable losses
December 31, 2012
(Audited)
₱1,439,407
663,182
113,400
2,215,989
1,008,393
=1,207,596
P
Creditable withholding taxes represent amounts withheld from income subject to withholding tax which the
Company expects to utilize as payment for future income taxes.
Input VAT represents VAT imposed by the Group’s suppliers for the acquisition of goods and services as
required by the Philippine taxation laws and regulations. Input VAT will be used to offset against the Group’s
current output VAT liability.
There was no movement in the
June 30, 2013 and December 31, 2012.
allowance
for
impairment
losses
for
the
periods
ended
- 13 The allowance for impairment losses as of June 30, 2013 and December 31, 2012 consists of:
Balances, June 30, 2013 and
December 31, 2012
Creditable
Withholding
Tax
Input
Value-Added
Tax
Total
=976,601
P
=31,792
P
=1,008,393
P
7. Investment in Joint Venture
On 27 September 2011, the Company, NiHAO and Glencore executed a HOA. Under the HOA, the parties
agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying,
acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines
for purposes of direct shipping or selling of ore and other related nickel mining business. Glencore shall
contribute its expertise in marketing of nickel ores in the world market as well as its network of various
institutions internationally. On the other hand, the Company and NiHAO shall utilize their expertise in
mining, contracting and developing mines in the Philippines and their knowledge of relevant Philippine laws,
rules and regulations and issues.
In order to accomplish the said purpose, the parties agreed to form within a period of two months from the
signing of the HOA, a joint venture company (JVC) under the laws of Hong Kong. Pursuant to the Addendum
to HOA dated October 28, 2011, the JVC will have an initial authorized capital of HK$100,000 with a par value
of HK$1/share. The JVC should have an initial issued and paid-in capital of HK$10,000 to be contributed by
the parties as follows: (1) 50% from Glencore; and (2) 25% each for the Parent Company and NiHAO.
Moreover, the parties agreed to execute the following implementing agreements of the HOA:
 Marketing agreement whereby Glencore will act as the exclusive marketing agent for the JVC and market
and sell all material produced by the JVC;
 Management agreement;
 Contractor(s) agreement; and,
 Any other agreements agreed by the parties as being necessary or useful to facilitate the implementation
and operation of the JVC.
The JVC under the name of GNA Resources International Limited was incorporated in Hong Kong on
November 23, 2011. The Parent Company’s contribution of P
=13,946 to the JVC was advanced by a stockholder.
As of June 30, 2013, the JVC has not started its main business operation.
8. Accounts and other payables
Accounts and other payables consist of:
Accrued professional fees
Others
June 30, 2013
(Unaudited)
=2,400,700
P
1,222,538
=3,623,238
P
December 31, 2012
(Audited)
=2,846,700
P
1,425,749
=4,272,449
P
Accounts and other liabilities are noninterest bearing and have an average term of 30-60 days but may go
beyond depending on the agreement of the involved parties. This represents accruals of professional fees for
administrative, audit and other services, and are payable on demand
9. Equity
The details of the number of shares follow:
Common stock - P
=1 par value
Number of Shares
December 31, 2012
June 30, 2013
(Audited)
(Unaudited)
- 14 Authorized
Balance at beginning of year
Issuance of shares of stocks
200,000,000
200,000,000
Issued
Balance at beginning of year
Issuance of shares of stocks
200,000,000
200,000,000
63,321,349
63,321,349
63,321,349
63,321,349
136,678,651
200,000,000
136,678,651
200,000,000
Subscribed (net of Subscription
Receivable of 101,678,651)
On May 3, 2011, the Securities and Exchange Commission (SEC) approved the decrease in the Company’s
authorized capital stock from P
=132,000,000 (divided into 16,500,000 Class A and 5,500,000 Class B common
shares both with par value of P
=6 a share) to P
=22,000,000 (divided into 22,000,000 common shares with a par
value of P
=1 a share). On the same date, the SEC also approved the increase in the Company’s authorized
capital stock from P
=22,000,000 (divided into 22,000,000 shares with a par value of P
=1 a share) to P
=200,000,000
(divided into 200,000,000 shares with par value of P
=1 a share).The capital increase was undertaken using the
Fifteen Million Pesos (P 15,000,000.00) deposited for future subscriptions by the Investors as partial payment
for subscriptions to Forty Five Million (45,000,000) Shares at the price of One Peso (P1.00) per share, which was
the reduced par value of the shares upon the approval by the SEC of its quasi-reorganization plan. Upon
approval of the capital increase, the Company’s issued and outstanding shares stood at Sixty two million one
hundred seventy thousand two hundred ninety three (62,170,293). The corresponding Subscription
Agreements with the subscribers were executed by the Company on 16 May 2011 and the balance on the
subscription price from the individual investors were received by the Company on 23 June 2011.
On 17 June 2011, the Board of Directors approved the sale and issuance, via private placement, of 136,678,651
shares of the Company at P
=1 par value a share to various investors.
10. Related Party Transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are
controlled by or under common control with the Group, including holding companies, subsidiaries and fellow
subsidiaries, are related parties of the Group. Associates and individuals owning, directly or indirectly, an
interest in the voting power of the Group that gives them significant influence over the enterprise, key
management personnel, including directors and officers of the Group and close members of the family of these
individuals, and companies associated with these individuals also constitute related parties. In considering
each possible related entity relationship, attention is directed to the substance of the relationship and not
merely the legal form.
Terms and Conditions of Transactions with Related Parties
Outstanding balances of transactions with related parties are unsecured, noninterest bearing, payable on
demand and settlements are made in cash. There have been no guarantees provided or received for any
related party receivables or payables.
Transactions with Related Parties
In the normal course of business, transactions with related parties include the following:
a.
On March 5, 2012, the Company gave its conformity to the execution of a General Contractor Agreement
between Geogen and NiHAO under which NiHAO shall bear the management fees pursuant to the
Management Agreement with Option to Buy. Mining operations started during the year. Management
income recognized in 2012 amounted to ₱3.56 million. Outstanding balance as at June 30, 2013 amounted
to ₱7.12 million.
b.
The Parent Company has advances from a stockholder for working capital requirements amounting to
₱13,946 as at June 30, 2013 and 2012.
- 15 c.
On September 27, 2011, the Parent Company, NiHAO and Glencore executed a HOA in Hong Kong to
develop and operate mining claims of economically feasible nickel deposits in the Philippines for
purposes of direct shipping or selling of ore and other related nickel mining business. In order to
accomplish the said purpose, the parties agreed to from within a period of two months from the signing of
the HOA, a JVC under the laws of Hong Kong. The JVC was incorporated in Hong Kong on November 23,
2011. As at June 30, 2013, the JVC has not started its main business operation. NiHAO and the Parent
Company have interlocking directors.
Transaction with Key Management Personnel
The group avails of services rendered by lawyers of Gregorio Law Offices which primarily consists of legal
and back office work. One of the key management personnel of Group is also a partner of this law firm. The
related professional fees amounted to ₱-0- and ₱1.1 million in June 30, 2013 and 2012, respectively.
11. Loss Per Share
Net Income (Loss)
Weighted Average Number of Common Shares
Income (Loss) Per Share
Six Months Ended June 30
(Unaudited)
2013
2012
=(973,492)
P
=3,924,649
P
63,321,349
63,321,349
=0.062
P
=(0.015)
P
12. Commitments
On October 14, 2011, the Parent Company executed a Management Agreement with Option to Buy with
Geogen, a mining company and the registered holder of a valid and existing mining claim in Dinapigue,
Isabela (the Mining Area) covered by Mineral Production Sharing Agreement (MPSA) No. 258-2007-11, duly
approved on July 30, 2007. Geogen is in the process of undertaking exploration, development and mining
operations in the said Mining Area and desires to retain the services of the Parent Company for the
management of the exploration, development and mining operations of the Mining Area. The Parent
Company undertakes to provide management services to Geogen including management control and property
administration over the daily and medium term operations of the Mining Area for a period of five (5) years.
The Parent Company’s management fees shall include (1) reimbursement of all salaries and benefits of the
officers and employees plus all direct costs related to the services; (2) management/administration fees
equivalent to twenty percent (20%) of salaries and benefits paid to employees including all direct costs; and (3)
management commission/profit share of five percent (5%) of gross income from the operations of the Mining
Area.
Under the agreement, Geogen likewise grants the Parent Company the First and Exclusive Option (Option), at
the election of the Parent Company, to do any of the following acts:
a. Acquire up to one hundred percent (100%) of the shares of stock of Geogen
b. Purchase its mining rights
c. Secure participation interests
d. Create a joint venture vehicle or consortium of investors-operators and/or
e. Negotiate the acquisition of the entire or partial rights or participation of interests over the project on
behalf of local and foreign investors
The Option was for a period of one (1) year upon signing the agreement, renewable for another period of one
(1) year upon mutual agreement of the parties. The Parent Company has not exercised its option even after
the lapse of the option period.
On March 5, 2012, the Parent Company gave its conformity to the execution of a General Contractor
Agreement between Geogen and NiHAO under which NiHAO (as the General Contractor of Geogen) shall
bear the management fees pursuant to the Management Agreement with Option to Buy. The mining
operations in Isabela started in 2012.
- 16 -
13. Financial Risk Management, Objectives and Policies and Capital Management
The Group’s principal financial instruments comprise cash and cash equivalents, receivables and accounts
payable and other liabilities. The main purpose of these financial instruments is to finance the Group’s
operations.
The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The BOD
reviews and approves policies for managing each of these risks and they are summarized below:
Credit Risk
The Group’s credit risk is the risk that counterparty will not meet its obligations under a financial instrument
leading to a financial loss. The Group is exposed to credit risk from its deposits with banks. The Group’s
maximum exposure to credit risk is equal to the carrying amount of these instruments as summarized below:
December 31, 2012
June 30, 2013
(Audited)
(Unaudited)
=63,283,207
P
Cash and cash equivalents
=64,275,119
P
7,139,137
Receivables
3,488,679
=70,422,344
P
=67,763,798
P
Cash and cash equivalents are classified as high grade since these are deposited and invested with a reputable
bank and can be withdrawn anytime.
Receivables are also classified as high grade since these consisted of interest receivable related to cash deposits
and receivables to a related party which pertained to cash deposited to a local bank on behalf of the Group.
Liquidity Risk
The Group’s exposure to liquidity risk relate to raising funds. The Group manages its liquidity profile to be
able to finance capital expenditures and service maturing debts. To cover its financing requirements, the
Group intends to use internally generated funds and available short-term credit facilities.
As part of its liquidity risk management, the Group regularly evaluates its projected and actual cash flows. It
also continuously assesses conditions in the financial markets for opportunities to pursue fund raising
activities, in case any requirements arise.
June 30, 2013
December 31, 2012
(Unaudited)
(Audited)
Accrued Professional Fees
=2,846,700
P
=2,400,700
P
Accrual and other payables
1,330,737
1,182,273
=3,582,973
P
=4,177,437
P
Accounts and other payables are normally settled within 30-60 days. As of June 30, 2013 and December 31,
2012, the Group’s financial assets amounting to ₱70,422,344 and ₱67,763,798, respectively, were determined by
management to be realizable within one year.
Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains strong and healthy
capital ratios in order to support its business and maximize shareholder value.
The Group monitors capital on the basis of the debt-to-equity ratio. This ratio is calculated as total debt
divided by equity. Total debt is equal to accounts payable and other liabilities. Equity comprises all
components of equity.
The Group’s debt-to-equity ratio as of June 30, 2013 and December 31, 2012 are as follows:
2012
June 30, 2013
(Audited)
(Unaudited)
=4,257,248
P
=3,623,238
P
Accounts payable and other liabilities (a)
Total equity (b)
64,773,092
68,637,540
Debt to Equity Ratio (a/b)
0.07:1
0.05:1
- 17 -
14. Financial Instruments
Fair Value
The following tables set forth the carrying values and estimated fair values of the Group’s financial assets and
liabilities recognized as of June 30, 2013 and December 31, 2012:
Financial Assets Loans and receivables:
Cash and cash equivalents
Receivables
Total Financial Assets
Financial Liabilities Other financial liabilitiesAccounts payable and other
liabilities*
*excluding statutory liabilities
June 30, 2013
(Audited)
Carrying
Value
Fair Value
December 31, 2012
(Audited)
Carrying
Value
Fair Value
=63,283,207
P
7,139,137
=70,422,344
P
=63,283,207
P
7,139,137
=70,422,344
P
=64,275,119
P
3,488,679
=67,763,798
P
=64,275,119
P
3,488,679
=67,763,798
P
=2,702,339
P
=2,702,339
P
=3,709,632
P
=3,709,632
P
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate such value:
Cash and cash equivalents, Interest receivable and Accounts payable and other liabilities
The fair values of these financial instruments approximate their carrying amounts due to the relatively shortterm maturities of these financial instruments.
Fair Value Hierarchy
As of June 30, 2013 and 2012, the Group has no financial instruments carried at fair value using the three-level
fair value hierarchy.
15. Segment Information
As of June 30, 2013 and 2012, the Group has a single reporting segment, which is the investment holding
activity. Financial information with regards to the Group’s reporting segment is as follows:
Net Income (Loss)
Other information:
Segment assets
Segment liabilities
2013
=3,924,649
P
2012
(P
=973,492)
72,260,778
3,623,238
65,255,333
2,332,533
SCHEDULE ‘A’
Financial Soundness Indicators
June 2013
June 2012
Current Ratio
Current Assets ÷
Current Liabilities
P
= 72,246,832/P
= 3,623,238
P
= 65,241,388/P
= 2,332,533
19.94
P
= 3,924,649/P
= -0P
= (973,492)/P
= -0-
NA
P
= 3,623,238/P
= 72,260,778
P
= 2,332,533/P
= 65,255,333
0.050
P
= 3,623,238/P
= 68,637,540
P
= 2,332,533/P
= 62,922,800
0.053
P
= 72,260,778/P
= 68,637,540
P
= 65,255,333/P
= 62,922,800
1.053
P
= 3,924,649/P
= 72,260,778
(P
= 973,492)/P
= 65,255,333
0.054
P
= 3,924,649/P
= 68,637,540
(P
= 973,492)/P
= 62,922,800
0.057
P
= 3,924,649/P
= 4,558,012
(P
= 973,492)/P
= 879,435
0.861
P
= 3,924,649/63,321,349
(P
= 973,492)/63,321,349
P
= 0.062
27.97
Interest Coverage Ratio**
EBIT ÷
Interest Expense
NA
Debt Ratio
Total Liabilities ÷
Total Assets
0.036
Debt to Equity Ratio
Total Liabilities ÷
Stockholders’ Equity
0.037
Asset to Equity Ratio
Total Assets ÷
Stockholders’ Equity
1.037
Return on Asset
Net Income (Loss) ÷
Total Assets
(0.015)
Return on Equity
Net Income (Loss) ÷
Stockholders’ Equity
(0.015)
Net Profit Margin
Net Income (Loss) ÷
Total Sales
*(1.107)
Income (Loss) per share
Net Income (Loss) ÷
Weighted Ave. No. of shares
*The reported revenues for 2012 purely interests earned from bank deposits and short term placements.
**The Company did not incur any interest on its advances.
(P
= 0.015)