COVER SHEET 1 4 1 0 2 S.E.C. Registration Number A N G L O P H C O R P O R A T I L I P P I I O N N E H O L D I N G S A l p h a C e n t r u m o n e e S t r e e t (Company's Full Name) 6 t h B u i M a n F l o o r L d i n g , D a l u y o , 1 n g Q u a d 2 5 P i C i t y r (Business Address : No. Street City / Town / Province) Atty. Adrian S. Arias +63(2)6315139 Contact Person Company Telephone Number SEC Form 20-IS Preliminary Information Statement 0 5 2 Month 7 Day Month FORM TYPE Day Annual Meeting Secondary License Type, If Applicable S E C Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings 3 1 5 5 P100 Million Total No. of Stockholders Domestic To be accomplished by SEC Personnel concerned File Number LCU Document I.D. Cashier STAMPS Remarks = pls. use black ink for scanning purposes P2,021 Million Foreign SECURITIES AND EXCHANGE COMMISSION SEC FORM 20-IS INFORMATION STATEMENT PURSUANT TO SECTION 20 OF THE SECURITIES REGULATION CODE 1. Check the appropriate box: ____X_____ Preliminary Information Statement __________ Definitive Information Statement __________ Additional Materials 2. Name of Registrant as specified in its charter ANGLO PHILIPPINE HOLDINGS CORPORATION 3. Province, country or other jurisdiction of incorporation or organization Philippines 4. SEC Identification Number 14102 5. BIR Tax Identification Code 041–000–175–630 6. Address of principal office 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City 1550 7. Registrant’s telephone number, including area code (632) 631-5139; 635-6130 8. July 29, 2011 2:30 P.M. at the Kamia Room, Edsa Shangri-La Manila Ortigas Center Mandaluyong City, Philippines 9. Approximate date on which the Information Statement is first to be sent or given to security holders July 08, 2011 10. In case of Proxy Solicitation: N/A 11. Securities registered pursuant to Section 8 and 12 of the Code (information on number of shares and amount of debt is applicable only to corporate registrants): Title of Each Class Number of Shares of Common Stock Outstanding or Amount of Debt Outstanding Common Stock (P1.00 par value) Loans Payable and Long Term Debt 12. 1,165,000,000 (excluding 13,000,000 shares in Treasury stocks) P2,121 Million Are any or all of registrant’s securities listed on the Philippine Stock Exchange? Yes ____X_____ No __________ ANGLO PHILIPPINE HOLDINGS CORPORATION 6th Floor, Quad Alpha Centrum 125 Pioneer, Mandaluyong City 1550, Philippines Tel (632) 631-5139; 631-6530; Fax (632) 631-3113 INFORMATION STATEMENT PART I A. General Information Item 1. Date, time and place of meeting of stockholders The 2011 Annual Meeting of Stockholders (the “Meeting”) of Anglo Philippine Holdings Corporation (the “Company”) will be held on Friday, 29 July 2011, 2:30 pm, at the Kamia Room, EDSA Shangri-La Manila, Ortigas Center, Mandaluyong City, Philippines. The complete mailing address of the Company is 6th Floor, Quad Alpha Centrum, 125 Pioneer, Mandaluyong City 1550, Philippines. (a) This Information Statement will be sent to stockholders at least fifteen (15) business days prior to the date of the Meeting in accordance with existing rules and the Company’s ByLaws, or on or before 08 July 2011. Item 2. Dissenters' Right of Appraisal A stockholder has the right to dissent and demand payment of the fair market value of his shares in case: (i) any amendment to the Company’s Articles of Incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences over the outstanding shares, or of extending or shortening the term of corporate existence; (ii) of any sale, lease, mortgage or disposition of all or substantially all of the corporate property or assets; and, (iii) of merger or consolidation. At any time after this Information Statement has been sent out, any stockholder who voted against a proposed action and wishes to exercise his right of appraisal must make a written demand, within thirty (30) days after the date of the Meeting or when the vote was taken, for the payment of the fair market value of his shares. Upon payment, he must surrender his stock certificates. No payment shall be made to any stockholder unless the Company has unrestricted retained earnings in its books to cover such payment. NO corporate action is being proposed or submitted in the Meeting that may call for the exercise of a stockholder’s right of appraisal. Item 3. Interest or Opposition of Certain Persons in Matters to be Acted Upon (a) At any time since the beginning of the last fiscal year, NO director, officer, nominee for election as director, or associate of such director, officer or nominee has any substantial interest, direct or indirect, by security holdings or otherwise, in any of the matters to be acted upon in the Meeting, other than election to office. (b) As of the date this Information Statement is given to stockholders of record, NO director of the Company has informed the Company in writing that he intends to oppose any action to be taken by the Company at the Meeting. B. Control and Compensation Information Item 4.Voting Securities and Principal Holders Thereof The Company’s capital stock is composed of common shares only which are issued and transferable to both Philippine and non-Philippine nationals; provided, that the Company's common shares shall not be issued to non-Philippine nationals in excess of forty percent (40%) of the Company's outstanding capital stock. (a) Record Date. The Record Date with respect to this solicitation is 06 May 2011. Only stockholders of record as at the close of business on 06 May 2011 are entitled to notice of, and to vote at, the Meeting. (b) Outstanding Shares. As of Record Date, the Company has an outstanding capital stock of 1,165,000,000 common shares owned by 3,155 stockholders. Each common share is entitled to one (1) vote. (c) Cumulative Voting. A stockholder entitled to vote at the Meeting shall have the right to vote in person or by proxy the number of shares registered in his name in the stock transfer book of the Company for as many persons as there are directors to be elected. Each stockholder shall have the right to cumulate said shares and give one nominee as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same cumulative voting principle among as many nominees as he shall see fit; provided, that the number of votes cast by a stockholder shall not exceed the number of his shares multiplied by the number of directors to be elected. (d) Stock Ownership of Certain Record and Beneficial Owners. The following persons are known to the Company to be directly or indirectly the owner of more than 5% of the Company’s voting securities as of Record Date: Title of Class Common Common Common Name and address of record owner and relationship with Issuer PCD Nominee Corporation Makati Stock Exchange Bldg. 6767 Ayala Avenue, Makati City Stockholder Alakor Securities Corporation ** 4th Floor, Quad Alpha Centrum 125 Pioneer St., Mandaluyong City Stockholder Alakor Securities Corporation ** 5th Floor Quad Alpha Centrum 125 Pioneer St. Mandaluyong City Stockholder Name of Beneficial Owner and Relationship with Record Owner PCD Participants (see note A) Citizenship No. of shares held Percentage Ownership Filipino 378,532,128* 32.49% National Book Store Inc. Client (see Note B) Filipino 466,660,361** 40.05% Alakor Corporation Client (see Note B) Filipino 152,897,758** 13.12% *Of the total 1,067,162,366 shares under the name of PCD Nominee Corp., 682,192,977 shares were under the name of Alakor Securities Corporation (ASC). **Of the total shares of 682,192,977 shares under the name of ASC, National Book Store Inc. owns 466,660,361 shares (40.05%) while Alakor Corporation owns 152,897,758 shares (13.12%). 2 Note A: The shares registered under the name of PCD Nominee Corporation (PCD) are beneficially owned by its participants. As of Record Date, there are 132 beneficial owners of the Company’s voting stock of which Alakor Securities Corporation (ASC) is the record owner of more than 5% of the Company’s voting securities Note B: Among the clients of ASC, National Book Store, Inc. (NBSI) and Alakor Corporation (AC) are the beneficial owners of more than 5% of the Company’s voting securities. Note C. As a matter of practice, PCD itself does not vote the number of shares registered in its name; instead, PCD issues a general proxy constituting and appointing each of its participants as PCD’s proxy to vote for the number of shares owned by such participant in PCD’s books as of Record Date. The proxies of NBSI and AC are appointed by their Boards of Directors and the Company becomes aware of such proxies only when the appointments are received by the Company. Based on previous practice, Mr. Alfredo C. Ramos has been appointed proxy for NBSI and AC for the previous years. Mr. Ramos has direct/indirect interest/shareholdings in NBSI and AC. (e) Voting Trust Holders of 5% or More. To the extent known to the Company, there is NO person holding more than 5% of the Company’s voting stock under a voting trust or similar agreement. (f) Stock Ownership of Management. The Company’s directors (D), Chief Executive Officer (CEO), other officers (O) and nominees (N) own the following number of shares: Title of Class Common Common Common Common Common Common Common Common Common Common Common Common Common Amount and nature of Beneficial ownership Name of beneficial owner Direct 11,000 110 22,110 373,866 400,000 55,000 18,000 1,100 1,100 0 0 0 22,000 Alfredo C. Ramos (D/CEO/N) Christopher M. Gotanco (D/O/N) Augusto B. Sunico (D/O/N) Roberto V. San Jose (D/O/N) Francisco A. Navarro (D/N) Presentacion S. Ramos (D/N) Adrian S. Ramos (D/N) Renato C. Valencia (ID/N) Ramoncito Z. Abad (ID/N) Cecilia R. Licauco (N) Anton S. Ramos (N) Adrian S. Arias (O) Iluminada P. Rodriguez (O) Indirect 24,692,638 12,805,540 329,892 59,386 13,582 28,636,665 33,000 0 0 104,000 1,000 0 0 Citizenship Percent Of Class Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino 2.12% 1.1.0% 0.03% 0.04% 0.04% 2.46% <0.01% <0.01% <0.01% <0.01% <0.01% 0.00% 0.01% The total number of shares owned by the Company’s directors, Chief Executive Officer, other officers and nominees for election as directors is 67,579,989 shares, or approximately 5.80% of the Company’s outstanding capital stock. Except for the shares appearing on record in the names of the directors and officers above, the Company is not aware of any shares which said persons may have the right to acquire beneficial ownership of. There has been NO change in the control of the Company since the beginning of the last fiscal year. Item 5. Directors and Executive Officers (a) Information. The names, ages, citizenship, positions and periods of service of directors, executive officers and persons nominated to become such are as follows: 3 Name Alfredo C. Ramos Christopher M. Gotanco Age 67 61 Augusto B. Sunico 82 Roberto V. San Jose 69 Presentacion S. Ramos Francisco A. Navarro Adrian S. Ramos Renato C. Valencia Ramoncito Z. Abad Cecilia R. Licauco Anton S. Ramos Adrian S. Arias 68 68 32 69 64 60 40 48 Iluminada P. Rodriguez 63 Citizenship Position Filipino Chairman of the Board Filipino Director President Filipino Director Treasurer Filipino Director Corporate Secretary Filipino Director Filipino Director Filipino Director Filipino Independent Director Filipino Independent Director Filipino Director-nominee Filipino Director-nominee Filipino Executive Vice President Assistant Corporate Secretary Filipino VP-Finance and Administration Period of service as such officer 1989-present 1987-present 1988-present 1984-present 1986-present 1998-present 1979-present 1984-present 1984-present 2006-present 2006-present 2007-present 2005-present 1997-present 2005-present Directors elected in the Annual Stockholders' Meeting have a term of office of one (1) year and serve as such until their successors are elected in the next succeeding Annual Stockholders' Meeting; provided, that a director elected to fill a vacancy in the Board shall only serve the unexpired term of his predecessor. The Company’s Nomination Committee is headed by Mr. Renato C. Valencia, Chairman, and the members are Messrs. Alfredo C. Ramos and Christopher M. Gotanco, with Ms. Iluminada P. Rodriguez (in her capacity as VP - Finance and Administration, as nonvoting member). All the Company’s incumbent directors were elected in the 2010 Annual Stockholders' Meeting held on 29 July 2010 and have since served in such capacity. There are NO arrangements that may result in a change in control of the Company. Independent Directors. Pursuant to Securities Regulation Code (SRC) Sec. 38 and Rule 38.1, the Company is required to have at least two (2) independent directors. The Company's incumbent independent directors are Messrs. Renato C. Valencia and Ramoncito Z. Abad. The Company’s Amended By-Laws incorporating the provisions of SRC Rule 38 were approved by the Securities and Exchange Commission on September 14, 2006. In line with the guidelines set by the Nomination Committee and approved by the Board of Directors, the Nomination Committee receives the names of nominees and screens them based on the policies and parameters for screening nominees for independent directorship. The final list of candidates, with the information required under Part IV(A) and (C) of Annex C of SRC Rule 12, is herewith attached. Mr. Noel T. Del Castillo nominated Mr. Renato C. Valencia, while Ms. Socorro M. Benavidez nominated Mr. Ramoncito Z. Abad for election as independent directors of the Company for fiscal year 2010. Mr. Del Castillo and Ms. Benavidez are not related to either or both Messrs. Valencia and Abad. Neither Mr. Del Castillo nor Ms. Benavidez has any business relationship to either or both Messrs. Valencia and Abad. Messrs. Valencia and Abad possess the qualifications and none of the disqualifications of an independent director. 4 Business Experience of Executive Officers and Director-Nominees Mr. Alfredo C. Ramos is the Chairman of the Board and Chief Executive Officer of the Company. He serves as a director and/or executive officer, and maintains business interests, in companies engaged in the printing, publication, sale and distribution of books, magazines and other printed media (1962-present), mining (1988-present), oil and gas exploration (1989-present), property development (1991-present), shopping center (1992-present), financial services (1992-present), department store (1993-present), transportation (1996-present), and retail (1999-present), among others. Mr. Christopher M. Gotanco is a Director and the President/COO of the Company. He serves as a director and/or executive officer in companies engaged in oil and gas exploration (1982-present), mining (1993-present), investment holdings (1995-present), transportation (1996-present), property development (1996-present), retail (1999-2004), and financial services (2007-present), among others. Mr. Augusto B. Sunico is a Director and the Treasurer of the Company. He has served as a director and/or executive officer, and maintained business interests, in companies engaged in education (1980-present), oil and gas exploration (1984-present), mining (1991-present), property development (1991-present), financial services (1992-present), shopping center (1992-present) and stock brokerage (1994-present), among others. Atty. Roberto V. San Jose is a Director and the Corporate Secretary of the Company. He has been in the active practice of law for more than forty (40) years. Ms. Presentacion S. Ramos is a Director of the Company. She serves as a director and/or executive officer, and maintains business interests, in companies engaged in the printing, publication, sale and distribution of books, magazines and other printed media (1975present), oil and gas exploration (1984-present), department store (1993-present), mining (1993-present) and stock brokerage (1996-present), among others. Mr. Francisco A. Navarro is a Director of the Company. He serves as a director, and has headed the exploration and development groups, of various companies involved in oil and gas exploration (1982-present) and mining (1993-present), among others. Mr. Adrian S. Ramos is a Director of the Company. He serves as a director and/or executive officer in companies engaged in the printing, publication, sale and distribution of books, magazines and other printed media (1996-present), investment holdings (2005present), securities (2005-present), property development and infrastructure (2006present), mining (2006-present) and bulk water supply (2006-present), among others. Mr. Renato C. Valencia was elected independent director of the Company in December 2006. He is the former administrator of the Social Security System. He serves as director and/or executive officer in companies engaged in banking (1998-present), investment holdings (1998 to present), education and technology (2003 to present), realty (2005) and insurance (2006). Mr. Ramoncito Z. Abad was elected independent director of the Company in March 2007. He is the former president of Philippine National Construction Company (PNCC) (1989-1996) and the former Chairman of the Development Bank of the Philippines 5 (1998-2001). He serves as director and/or executive officer in companies engaged in consumer distribution (1999-present) and construction (2000-present). Ms. Cecilia R. Licauco is nominated for election as director. She serves as a director and/or executive officer in companies engaged in the printing, publication, sale and distribution of books, magazines and other printed media (1975-present), and stationery distribution (1993-present), among others. Mr. Anton S. Ramos is nominated for election as director. He serves as a director and/or executive officer in companies engaged in the printing, publication, sale and distribution of books, magazines and other printed media (1996-present), securities (1996-present), property development and infrastructure (1996-present), investment holdings (2000present), and mining (2008-present), among others. Atty. Adrian S. Arias is the Company’s Executive Vice President and Assistant Corporate Secretary. He has been in active corporate law practice for more than twenty (20) years and serves as a director of companies involved in financial services (2006present), merchandising (2009-present) and distribution support services (2011-present). Ms. Iluminada P. Rodriguez is the Vice President for Finance and Administration of the Company. She has served as an executive officer/director of companies involved in garments manufacturing and exporting (1990-present), oil and gas exploration (19872006) and condominium corporation (1987 to 2010). Directors with other directorship(s) held in reporting companies Alfredo C. Ramos Anglo Philippine Holdings Corporation Atlas Consolidated Mining & Dev't. Corp MRT Holdings, Inc. MRT Dev’t Corp. National Book Store, Inc. North Triangle Depot Comm’l Corp. Philippine Seven Corporation. Shang Properties, Inc. The Philodrill Corporation United Paragon Mining Corp. Vulcan Industrial & Mining Corp. Christopher M. Gotanco Anglo Philippine Holdings Corporation Atlas Consolidated Mining & Dev't. Corp Boulevard Holdings, Inc. MRT Holdings, Inc. MRT Dev’t Corp.. North Triangle Depot Comm’l Corp Penta Capital Investment Corp. Penta Capital Finance Corp. The Philodrill Corporation Vulcan Industrial & Mining Corp. Augusto B. Sunico Alakor Securities Corporation Anglo Philippine Holdings Corporation Penta Capital Investment Corp. Penta Capital Finance Corp Shang Properties Inc. The Philodrill Corporation United Paragon Mining Corp. Vulcan Industrial & Mining Corp Presentacion S. Ramos Alakor Securities Corporation Anglo Philippine Holdings Corporation National Book Store Inc. The Philodrill Corporation Vulcan Industrial & Mining Corp. Zenith Holdings Corp. Roberto V. San Jose Anglo Philippine Holdings Corporation CP Group of Companies CP Equities Corporation MAA Consultants, Inc. Mabuhay Holdings Corporation Francisco A. Navarro Anglo Philippine Holdings Corporation The Philodrill Corporation Vulcan Industrial & Mining Corp. Adrian S. Ramos Alakor Securities Corporation Anglo Philippine Holdings Corporation Aquatlas Inc. Atlas Consolidated Mining & Dev't. Corp The Philodrill Corporation. United Paragon Mining Corp. Vulcan Industrial & Mining Corp. 6 Renato C. Valencia Bases Conversion & Dev. Authority Hypercash Payment System, Inc. Independent Insight, Inc. Metropolitan Bank & Trust Company Roxas Holdings, Inc. Triple Top AIM, Inc. Ramoncito Z. Abad Monheim Group of Distributors Cecilia R. Licauco Anvil Publishing National Book Store Inc. Filstar Distributors Corp Solar Publishing Anton S. Ramos Atlas Consolidtaed Mining & Dev’t. Corp United Paragon Mining Corp. Zenith Holdings Corp. Significant Employees. Other than its executive officers, the Company has not engaged the services of any person who is expected to make significant contributions to the business of the Company. The Company is not dependent on the services of certain key personnel and there are no arrangements to ensure that these persons will remain with the Company and not compete upon termination. Family Relationships. Mr. Alfredo C. Ramos, Chairman of the Board, is the husband of Ms. Presentacion S. Ramos, Director, the brother-in-law of Atty. Augusto B. Sunico, Director, and the brother of director-nominee, Ms. Cecilia R. Licauco. Mr. Adrian S. Ramos, Director, and Mr. Anton S. Ramos, nominee-director, are the sons of Mr. Alfredo C. Ramos and Ms. Presentacion S. Ramos. Involvement in Certain Legal Proceedings. For the past five (5) years up to the date this Information Statement is sent to stockholders, the Company is not aware of: (1) Any bankruptcy petition filed by or against any business of which any director, nominee for election as director, executive officer, underwriter or control person of the Company was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) Any conviction by final judgment, including the nature of the offense, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses involving any director, nominee for election as director, executive officer, underwriter or control person of the Company; (3) Of any director, nominee for election as director, executive officer, underwriter or control person of the Company being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and, (4) Of any director, nominee for election as director, executive officer, underwriter or control person of the Company being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated. 7 Related Party Transactions. There had been NO transaction during the last two years to which the Company was or is to be a party in which any director or executive officer of the Company, or nominee for election as director, or owner of more than 10% of the Company’s voting stock, or voting trust holder of 10% or more of the Company’s shares, or any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of these persons, had or is to have a direct or indirect material interest. In the ordinary and regular course of business, the Company had transactions with related parties (i.e. companies with shareholders common with the Company) which principally consist of advances TO related parties and loans/advances FROM related parties. The identities of these related parties, including the amounts and details of the transactions are disclosed in Note 14 of the Company's 2010 Audited Financial Statements, a copy of which is included in this Information Statement. (1) Business purpose of the arrangement. The business purpose of related party transactions is to address immediate working capital requirements of related parties (in the case of advances TO related parties) or of the Company (in the case of loans/advances FROM related parties). (2) Identification of the related parties' transaction business with the registrant and nature of the relationship. See Note 14 of the Company's 2010 Audited Financial Statements. (3) How transaction prices were determined by parties. All transactions with related parties are based on prevailing market/commercial rates at the time of the transaction. (4) If disclosures represent that transactions have been evaluated for fairness, a description of how the evaluation was made. There are NO disclosures representing that the transactions with related parties have been evaluated for fairness inasmuch as the bases of all transactions with related parties were the prevailing market/commercial rates at the time of the transaction over which neither the Company nor the related parties have any control or influence whatsoever. (5) Any on-going contractual or other commitments as a result of the arrangement. NONE, other than the repayment of money lent or advanced. (6) There were NO transactions with parties that fall outside the definition of "related parties" under SFAS/IAS No. 24. Neither were there any transactions with persons with whom the Company or its related parties have a relationship that enabled the parties to negotiate terms of material transaction that may not be available from other, more clearly independent parties on an arms' length basis. Parent of the Company. NO person holds more than 50% of the Company’s voting stock, and the Company has NO parent company. (b) Resignation or Declination to Stand for Re-Election. NO director elected in the 2010 Annual Stockholders' Meeting has resigned or declined to stand for re-election to the Board of Directors. 8 Item 6. Compensation of Directors and Executive Officers The aggregate compensation paid to the Company’s Chief Executive Officer and other officers named below as a group for the two most recently completed fiscal years (2010 and 2009) and the ensuing fiscal year (2011) are: Name Alfredo C. Ramos Christopher M. Gotanco Adrian S. Arias Iluminada P. Rodriguez Position Year Salary Bonus Other Annual Compensation Chairman/CEO President EVP VP-Finance & Admin All officers and directors as a group unnamed 2009 2010 2011 (est) P3,085,603 4,575,168 P5,032,684 P3,002,907 2,374,486 2,611,935 - 2009 2010 2011 (est) P3,800,603 7,264,654 P7,991.194 P4,741,432 3,436,598 3,780,258 - For the year 2009 and 2010, directors and executive officers were paid the 13th month pay and corresponding bonuses. For the most recently completed fiscal year and the ensuing fiscal year, directors received and will receive a per diem of P5,000 per month to defray their expenses in attending board meetings. There are no other arrangements for compensation of directors, as such, during the last fiscal year and for the ensuing fiscal year. The Company maintains standard employment contracts with Messrs. Alfredo C. Ramos and Christopher M. Gotanco, both of which provide for their respective compensation and benefits, including entitlement to health benefits, representation expenses and Company car plan. Other than what is provided under applicable labor laws, there are no compensatory plans or arrangements with executive officers entitling them to receive more than P2,500,000 as a result of their resignation or any other termination of employment, or from a change in control of the Company, or a change in the executive officers’ responsibilities following a change in control of the Company. The Company maintains a retirement plan pursuant to which an eligible employee will receive one month's pay for every year of service for the first 10 years and two month's pay for every year of service beyond 10 years. Based on this policy, the retirement pay of some officers of the Company may exceed P2,500,000. There are no warrants or options outstanding in favor of directors and officers of the Company. Item 7. Independent Public Accountants In 2010, the auditing firm of Sycip Gorres Velayo and Co., with address at 6760 Ayala Avenue, 1226 Makati City, was appointed external auditor of the Company in the 2010 Annual Stockholders' Meetings with Mr. John T. Villa as the partner-in-charge. In 2008 and 2007, the auditing firm of KPMG Manabat Sanagustin & Company, with address at the 22nd floor, Philamlife Tower, 8767 Paseo De Roxas, Makati City, was appointed external auditor of the Company in the 2008 and 2007 Annual Stockholders' Meetings with Mr. Ricardo G. Manabat being the partner-in-charge. 9 The fees of the external auditor in the past three (3) years are as follows: Year 2008 2009 2010 Audit & Audit Related Fees Tax Fees P286,000.00 P34,320.00 P332,521.00 P39,902.52 P412,870.00 P49,544.42 Other Fees 0 0 0 For the past three (3) years, the Company has not engaged the services of the above-named auditors except for the audit and review of the annual financial statements in connection with statutory and regulatory filings for the years 2008, 2009 and 2010. The amounts under the caption "Audit & Audit Related Fees" for the years 2008, 2009 and 2010 pertain to these services. The Audit Committee has an existing policy prohibiting the Company from engaging the external auditor to provide services that may adversely impact its independence, including those expressly prohibited by regulations of the Securities & Exchange Commission (SEC). Sycip Gorres Velayo and Co. became the independent auditor of the Company in 2009 with Mr. John T. Villa as the partner-in-charge. Previously, KPMG Manabat Sanagustin & Co. was the Company’s independent external auditor for the past ten (10) years up to 2008, with Mr. Ricardo G. Manabat as the partner-in-charge for 2008. In compliance with SRC Rule 68 Paragraph 3(b)(iv) Rotation of External Auditors), Mr. Manabat was succeeded by Ms. Emerita H. Escueta also of KPMG Manabat Sanagustin & Co. for 2004-2006. The Company NEVER had any disagreement with its auditors, Sycip Gorres Velayo and Co. and KPMG Manabat Sanagustin & Co., nor with Mr. Villa and Mr. Manabat, on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedures and the Company did not engage any new independent external auditor, either as principal accountant to audit the Company’s financial statements or as an independent accountant on whom the principal accountant has expressed or is expected to express reliance in its report regarding a significant subsidiary, during the two most recent fiscal years or any subsequent interim period. NO independent accountant engaged by the Company as principal accountant, or an independent accountant on whom the principal accountant expressed reliance in its report regarding a significant subsidiary, has resigned, or has declined to stand for re-election after completion of the current audit, or was dismissed. The auditor's representatives are expected to be present at the Meeting and will have the opportunity to make a statement and respond to appropriate questions. The Company’s audit committee is headed by Mr. Renato C. Valencia, as Chairman, and the members are Messrs. Ramoncito Z. Abad and Adrian S. Ramos, with one seat vacant to be filled up after the organizational meeting of the board of directors following the annual stockholders’ meeting. The Audit Committee reviews and recommends to the Board and the stockholders the appointment of the external auditor and the fixing of the audit fees for the Company. For 2011, SyCip Gorres, Velayo and Co., is recommended to stockholders for appointment as independent external auditor of the Company. Item 8. Compensation Plans NO action is to be taken with respect to any plan pursuant to which cash or non-cash compensation may be paid or distributed. 10 C. Issuance and Exchange of Securities Items 9-10. Not applicable Item 11. Financial and Other Information See the Company’s 2010 Audited Financial Statements accompanying this Information Statement. Items 12-13. Not applicable Item 14. Restatement of Accounts In 2009, the Company restated its prior year financial statements with respect to accounting for investments and financial liabilities in conformity with the provisions of PAS 39 and PAS 28. The effects of the restatements are as follows: (1) Reclassification of investment in Atlas Consolidated and Mining Corporation (ACDMC) from Investment in Associate to a quoted AFS Investment (see Notes 7 and 8, 2009 Audited Financial Statements). (2) Reclassification of investments in Shang Properties Inc. (SPI) and The Philodrill Corporation (TPC) from Investments in Associates in 2008 to Financial Assets at Fair Value through Profit and Loss (FVPL). In addition, the financial assets at FVPL were revalued based on their bid market prices as of December 31, 2008, December 31, 2007 and January 1, 2007 (see Notes 5 and 8, 2009 Audited Financial Statements). (3) Recognition of gain on debt restructuring as a result of the loan restructuring and conversion agreement entered into by the Company and Euronote Profits Limited (EPL) in 2008 (see Note 12, 2009 Audited Financial Statements). (4) Recognition of day 1 difference arising from the off-market interest rate of the EPL loan (see Note 12, 2009 Audited Financial Statements). NO ACTION is to be taken with respect to the restatement of any asset, capital, or surplus account of the Company. D. Other Matters Item 15. Action With Respect to Reports The following will be submitted to the stockholders for approval/ratification at the Meeting: (a) Minutes of the 2010 Annual Stockholders’ Meeting; Approval of the Minutes of the 2010 Annual Stockholders’ Meeting constitutes a ratification of the accuracy and faithfulness of the Minutes to the events that transpired during the said meeting. This does not constitute a second approval of the matters taken up at the 2010 Annual Stockholders’ Meeting, which have already been approved. 11 (b) Management Report for the year ended 31 December 2010 (a copy containing the information required by SRC Rule 20A is enclosed). Approval of the Management Report constitutes a ratification of the Company’s performance during the previous fiscal year as contained therein. (c) Acts and Resolutions of the Board of Directors and Management from the date following the last Annual Stockholders’ Meeting (23 July 2010) to the present (29 July 2011) including, but not limited to, the following: 1. Authorizing the Company to renew/extend the US$11.5 Million loan of Atlas Consolidated Mining and Development Corp. (ACMDC) by one (1) year from July 9, 2010 to July 9, (23 July 2010); 2. Authorizing the Company to designate ALFREDO C. RAMOS, as the proxy of the Company to the Annual Stockholders’ Meeting of United Paragon Mining Corp. (UPMC) to be held on 06 August 2010. (23 July 2010); 3. Authorizing the Company to accept the offer of ACMDC to convert ACMDC outstanding US$11.5M into shares of stock of ACMDC at the conversion price of P10/share as full settlement of the loan principal.(11 November 2010); 3. Authorizing the Company to discuss and negotiate the terms and conditions of the possible disposition of the company’s direct and indirect equity interest in Metro Rail Transit Holdings, Inc., Metro Rail Transit Holdings 2 Inc., Monumento Rail Transit Corp., and Metro Rail Transit Corp., to interested parties. (17 December 2010); 4. Approving the Company’s Revised Corporate Governance Manual in accordance with SEC Memo Circular No 8 Series of 2009. (27 Jan. 2011); 5. Authorizing the Company to designate Metro Pacific Investments Corporation (MPIC) and its authorized representatives, as the Corporation’s continuing proxy and attorney-in-fact to represent the Company and vote all its shares in any and all stockholders’ meetings of Metro Rail Transit Holdings, Inc. and Monumento Rail Transit Corporation, including postponements and adjournments thereof, and to designate the persons to be nominated and elected as members of the board of directors of the relevant MRT Companies, and exercise any and all rights pertaining to the Company’s shareholdings in the MRT Companies, and authorizing the President and Chief Operating Officer, Mr. Christopher M. Gotanco, to sign, execute and deliver the Company’s proxies in MRTHI and MNRTC as well as other documents, and perform such acts as may be necessary thereto in favor of MPIC. (27 Jan 2011); 6. Authorizing the Company to renew its P100 million Short Term Loan with Land Bank of the Philippines to augment the Company’s working capital funds (11March 2011). 7. Authorizing the Company to nominate Mr. Manuel V. Pangilinan and Mr. Augusto V. Palisoc to the Board of Directors of the Metro Rail Transit Corporation (MRTC), to represent and vote for the Company in any and all meetings of MRTC, 12 including postponements and adjournments thereof, and authorizing the President and Chief Operating Officer, Mr. Christopher M. Gotanco, to sign, execute and deliver the Company’s nomination letter to MRTC as well as other documents, and perform such acts as may be necessary thereto. (11 March 2011); (d) 7. Authorizing the Company to declare cash dividend equivalent to P0.05 per share to stockholders of record as of April 08, 2011 and payable on April 29, 2011 (25 March 2011); 8. Authorizing the setting of the Annual Stockholders Meeting on July 29, 2011 and setting the record date therefor on May 06, 2011 (25 March 2011); 9. Authorizing the Company to lease, borrow, seek financing and secure credit accommodation from Orix Metro Leasing Corp. and to authorize Mr. Christopher M. Gotanco and Atty. Adrian S. Arias to sign, execute and negotiate on behalf of the Company (25 March 2011); 10. Approving the Company’s audited financial statements for the year ended 2010 (11 April 2011). Appointment of Sycip, Gorres Velayo and Company as the Company’s independent external auditor for 2011. Item 16. Matters Not Required to be Submitted Proofs of transmittal to stockholders of the required Notice for the Meeting and of the presence of a quorum at the Meeting form part of the Agenda for the Meeting and will not be submitted for approval by the stockholders. Item 17. Amendment of Articles of Incorporation and By-Laws NO amendment to the Company’s articles of incorporation or by-laws is being proposed at the Meeting. Item 18. Other Proposed Action NO action on any matter, other than those stated in the Agenda for the Meeting, is proposed to be taken, except matters of incidence that may properly come at the Meeting. Item 19. Voting Procedures (a) In the election of directors, the eleven (11) nominees with the greatest number of votes will be elected directors. (b) If the number of nominees for election as directors does not exceed the number of directors to be elected, the Secretary of the Meeting shall be instructed to cast all votes represented at the Meeting equally in favor of all such nominees. However, if the number of nominees for election as directors exceeds the number of directors to be elected, voting shall be done by ballot, cumulative voting will be followed, and counting of votes shall be done by two (2) election inspectors appointed by the stockholders present or represented by proxy at the Meeting. 13 In accordance with SRC Sec. 38 and SRC Rule 38, only nominees whose names appear in the Final List of Candidates for Independent Directors shall be eligible for election as Independent Directors. No other nomination shall be entertained after the Final List of Candidates shall have been prepared and no further nomination shall be entertained or allowed on the floor during the actual annual stockholders' meeting. Messrs. Renato C. Valencia and Ramoncito Z. Abad are nominated for election as independent directors of the Company for fiscal year 2011. (c) For corporate matters that will be submitted for approval and for such other matters as may properly come at the Meeting, a vote of the majority of the shares present or represented by proxy at the Meeting is necessary for their approval. Voting shall be done viva voce or by the raising of hands and the votes for or against the matter submitted shall be tallied by the Secretary. PART II INFORMATION REQUIRED IN A PROXY FORM Part II and its required disclosures are not relevant to the Company since the Company is not requesting or soliciting proxies. 14 PART III SIGNATURE PAGE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this report is true, complete and correct. This report is signed at Mandaluyong City on May 23, 2011. ADRIAN S. ARIAS Assistant Corporate Secretary Materials accompanying this Information Statement 1. 2. 3. 4. 5. 6. Notice of the 2011 Annual Meeting of Stockholders with Agenda Management Report on SEC Form 20A Final List of Candidates for Independent Directors Audited Financial Statements for 2010 Unaudited Financial Statements for the Interim Period 31 March 2011 Minutes of the Meetings of Stockholders – July 23, 2010 The Company undertakes to provide, without charge, upon the written request of a stockholder, a copy of the Company's Annual Report on SEC Form 17-A. Such request should be addressed to the Corporate Secretary, Anglo Philippine Holdings Corporation, 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City 1550, Philippines. 15 ANGLO PHILIPPINE HOLDINGS CORPORATION AN INFRASTRUCTURE AND PROPERTY DEVELOPMENT COMPANY _____________________________________________________________________________________ NOTICE OF ANNUAL STOCKHOLDERS’ MEETING The Annual Stockholders’ Meeting of Anglo Philippine Holdings Corporation will be held on the following date and place: FRIDAY, 29 JULY 2011, 2:30 P.M., Kamia Room, EDSA Shangri-La Manila Ortigas Center Mandaluyong City, Philippines The agenda for the Meeting shall be, as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Call to Order Proof of Notice and Certification of Quorum Approval of Minutes of Stockholders’ Meetings – July 23, 2010 Management Report Approval of the Company’s Annual Report Ratification of Corporate Acts and Resolutions Election of Directors Appointment of External Auditor Other Matters Adjournment Registration for the Meeting begins at 1:30 p.m. For purposes of the Meeting, stockholders of record as of 06 May 2011 are entitled to notice of and to vote at the Meeting. If you will not be able to attend the Meeting but would like to be represented thereat, you may submit your proxy form, duly signed and accomplished, to the Corporate Secretary at the 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City, no later than 22 July 2011. Corporate stockholders should also provide a notarized secretary’s certificate attesting to the appointment of the corporation’s proxy for the Meeting as well as the execution and delivery of the proxy form. THE COMPANY IS NOT SOLICITING PROXIES. Makati City, Metro Manila, Philippines, 23 May 2011. ROBERTO V. SAN JOSE Corporate Secretary “Helping Build the Filipino Future” th 6 Floor, Quad Alpha Centrum, 125 Pioneer Street Mandaluyong City 1550, Philippines Tel Nos.: (632)631-5139. (632)635-6120.Fax No.: (632)631-3113. E-mail: [email protected] ANGLO PHILIPPINE HOLDINGS CORPORATION 6th Floor, Quad Alpha Centrum 125 Pioneer Street, Mandaluyong City, Philippines Tel (632) 631-5139; 635-6130; Fax (632) 631-3113 MANAGEMENT REPORT ACCOMPANYING INFORMATION STATEMENT PURSUANT TO SRC RULE 20(4) I. Audited Financial Statements The audited financial statements of Anglo Philippine Holdings Corporation (the “Company”) for the fiscal year ended 31 December 2010 and the corresponding Statement of Management's Responsibility are attached hereto. The unaudited interim financial statements of the Company for the first semester ended 31 March 2011 are also attached hereto. NONE II. Disagreements with Accountants on Accounting and Financial Disclosure. III. Management’s Discussion and Analysis or Plan of Operations (a) Full fiscal years (1) Financial Condition, Changes in Financial Condition and Results of Operations Financial highlights for the years 2010, 2009 and 2008 are presented below: Revenues Net income/(loss) Total assets Total Liabilities Net worth Issued & subscribed capital 2010 2009 689,489,995 560,774,028 5,172,806,310 2,398,233,254 2,774,573,056 1,165,000,000 444,372,686 294,071,143 3,619,848,502 2,387,089,380 1,232,759,122 1,165,000,000 2008 (as restated) 255,772,143 (236,936,198) 2,159,884,206 1,808,746,254 351,137,952 1,165,000,000 Changes in Financial Condition (2008-2010) Revenues increased from 2008 to 2009 due to: (i) recovery of the market value of SPI shares in 2009; (ii) gain in mark-to-market changes in derivative assets attributable to the loan granted by the Company to Atlas in 2009; (iii) increase in interest income from P68.1 million in 2008 to P83.9 million in 2009; (iv) gain in foreign exchange attributable to the Company’s dollar-denominated loan with EPL; and, (v) equity share in net earnings of associates in 2009. On the other hand, net revenues increased from 2009 to 2010 due to: (i) gains on mark-to-market changes in derivative assets arising from the conversion of Atlas’s US$11.5 million loan into Atlas shares in 2010; (ii) increase in interest income from P83.9 million in 2009 to P122.8 million in 2010; and, (iii) increase in equity share in net earnings of associates in 2010. Cost and Expenses decreased from 2008 to 2009 mainly due to the absence of losses in fair value changes of financial assets due to the rebound of the market price of SPI shares in 2009. No impairment losses were recognized in 2009. On the other hand, cost and expenses slightly increased from P121.7 million in 2009 to P124.7 million in 2010. Net Income increased from negative P236.9 million in 2008 to P294.0 million in 2009 due to higher Net Revenues and lower Cost and Expenses. On the other hand, the Company generated a higher net income of P560.8 in 2010. Total Assets increased from P2.2 billion in 2008 to P3.6 billion in 2009 due to the rebound of the market prices of Atlas and SPI shares. In 2010, Total assets is higher at P5.2 billion due to the increase in AFS investment as a result of the conversion of the US$11.5 million loan to Atlas into Atlas shares of stock. Total Liabilities increased from P1.8 billion in 2008 to P2.4 billion in 2009 due to increase in Long Term Debt. In 2010, Total Liabilities remain unchanged at P2.4 billion. The Company’s Net Worth continuously increased from P351.1 million in 2008 to P1.2 billion in 2009 and to P2.8 billion in 2010 mainly due to Net Income generated and the Unrealized Valuation Gain on AFS investments generated by the Company in 2009 and 2010. Results of Operations - Full Year Natural Resources The Company owns 25.62% of United Paragon Mining Corporation (UPMC) after converting its receivables into new UPMC equity. The listing application covering UPMC’s new shares remains pending with the PSE. For 2010, UPMC posted a net loss of P35.5 million. As of December 31, 2010, the Company owns 14.42% of Atlas Consolidated Mining & Development Corporation which has two (2) significant subsidiaries: (a) Berong Nickel Corporation, which remains under “Care & Maintenance” following the temporary suspension of direct shipping operations, and (b) Carmen Copper Corporation, which shipped 98,206 dmt of copper concentrate at an average of 27.47% Cu in 2010. For 2010, Atlas posted a net loss of P430.5 million. Pending the transfer of its petroleum assets, the Company continues to participate in the following Oil Exploration contracts: Service Contract 6A Service Contract 14D Service Contract 41 Service Contract 53 SWAN Block Octon, NW Palawan Tara, NW Palawan Sulu Sea Onshore Mindoro NW Palawan 2 11.11000 % 2.50000 % 1.67900 % 5.00000 % 33.57800 % SC 6A (Octon), Vitol has decided not to pursue its farmin until the SC14 consortium finally decides to undertake the Phase 2 development of the adjoining Galoc field. The Operator is now seeking new farminees to the block. SC 14 (Tara), the consortium is finalizing a farmin agreement with Peak Oil, Blade Petroleum and Venturoil. SC 41 (Sulu Sea) Tap Oil decided to drop the contract but expressed interest to participate in the next contracting round if Sulu Sea is included among the areas offered for contracting. The Company has been invited to participate with Tap Oil in the contracting round. SC 53 (Mindoro), reprocessing of offshore 2D seismic data continues in Singapore while the processing of the onshore 2D seismic data has been completed. SWAN Block - PNOC continues to evaluate the merits of the consortium’s proposal to swap some of their interests in other areas in exchange for equity in Service Contracts 57 and 58. Aside from direct participation in various oil exploration contracts, the Company also owns 0.28% of The Philodrill Corporation, a publicly listed company engaged in oil exploration and production with participating interests in various oil exploration and production contracts with the Philippine Government. Philodrill posted a consolidated net income of P557 million in 2010. Property Development The Company owns 15.79% of the North Triangle Depot Commercial Corporation (NTDCC), which posted an audited net income of P215.9 million in 2010 and recorded 98% occupancy rate in the commercial center. The Company continues to maintain a 15.79% interest in MRT Development Corp. (MRTDC), which owns the development rights over the perimeter lot pads around the Trinoma commercial center. MRTDC generates revenues from concessionaire rentals and advertising fees in the MRT stations. The Company owns 4.5% of Shang Properties, Inc. (SPI). For 2010, SPI posted a consolidated net income of P1.29 billion and sold 98.3% of St. Francis Towers and 75.72% of One Shangri-La Place. SPI has also finalized the Design Development drawings for Shangri-La at the Fort. Infrastructure The Company continues to maintain 18.6% equity in MRT Holdings, Inc., the indirect majority owner of the Metro Rail Transit Corporation. As of end-2010, average ridership stood at about 530,000 passengers per day. The Company's transfer of certain intellectual property rights and other assets over its water supply projects to Aquatlas, Inc. (AAI) in exchange for shares of the latter remains pending. AAI is a subsidiary of Atlas Consolidated Mining & Dev’t. Corp. 3 Other Investments The Company has a minority investment in Brightnote Assets Corporation (formerly Batangas Assets Corporation), a holding company organized for the purpose of investing in the Calabarzon area. The Company sold its 5,243,392 shares of Philippine Seven Corporation in February 2010 and April 2010. Filipinas Energy Corporation (FEC) has not undertaken any business operation since its incorporation due to the deferment of the transfer of the Company’s petroleum and mineral assets. NO bankruptcy, receivership or similar proceeding has been filed by or against the Company and/or its subsidiary during the last three (3) years. NO material reclassification, merger, consolidation, or purchase/sale of a significant amount of assets, not in the ordinary course of business, has been undertaken by the Company and/or its subsidiary during the last three (3) years, EXCEPT that, in accordance with PAS 39, Financial Instruments: Recognition and Measurements, and PAS 28, Investment in Associates, the Company reclassified certain assets in 2009, as follows: Asset Atlas Consolidated Mining & Development Corp. From Investment in Associate Shang Properties Inc. Investment in Associate The Philodrill Corporation Investment in Associate To Available-forSale (AFS) investment Financial Assets at Fair Value through Profit or Loss (FVPL) Financial Assets at FVPL Amount P1,089,000,000 P 376,896,506 P 4,515,730 Also in 2009, United Paragon Mining Corp. restated its prior year financial statements to recognize unpaid cumulative dividends on redeemable preferred shares which were presented as financial liability in its statement of financial position. UPMC also recognized the accrued interest on bonds and dividends payable at their present values. Accordingly, net loss of UPMC increased from P =35.8 million to P =55.2 million in 2008. As a result of the restatement, the Company’s equity in net losses of associates increased from P =0.7 million to P =5.6 million in 2008. 4 The top five (5) key performance indicators of the Company and its majority-owned subsidiary are as follows: Current Ratio Current Assets Current Liabilities Debt to Equity Ratio Total Liabilities Stockholders Equity Equity to Debt Ratio Stockholders Equity Total Liabilities Book Value per share December 31, 2010 December 31, 2009 December 31, 2008 1.10: 1 2.65: 1 1.76: 1 912,626,763 829,091,620 1,278,349,109 482,482,730 542,615,983 308,050,538 0.86 : 1 1.94 : 1 5.15 : 1 2,398,233,254 2,774,573,056 2,387,089,380 1,232,759,122 1,808,746,254 351,137,952 1.16 : 1 0.52 : 1 0.19 : 1 2,774,573,056 2,398,233,254 1,232,759,122 2,387,089,380 351,137,952 1,808,746,254 2.38 1.06 0.30 Stockholders Equity Total # of Shares Outstanding 2,774,573,056 1,232,759,122 351,137,952 1,165,000,000 1,165,000,000 1,165,000,000 Earnings per share 0.48 0.25 (0.20) Net Income (Loss) Average Number of shares outstanding 560,774,028 294,071,143 (236,936,198) 1,165,000,000 1,165,000,000 1,166,508,333 Current Ratio decreased in 2010 compared to 2009 due to decrease in Receivables resulting from the conversion of Atlas’s US$11.5 million loan into Atlas shares of stock. On the other hand, Current Ratio increased in 2009 compared to 2008 due to corresponding increases in: (a) Current Assets, arising from the increase in the market value of SPI, TPC and PSC investments; and, (b) the grant of US$11.5 million loan to Atlas with a term of one year. Debt-to-Equity Ratio continuously decreased from 2008 to 2010 due to increases in Stockholders’ Equity arising from the net income generated by the Company and unrealized valuation gain on AFS investments recognized from 2008 to 2010. Conversely, Equity-to-Debt ratio increased from 2008 to 2010. Book Value per Share (BVPS) increased from 2008 to 2010 due to the increase in Stockholders Equity arising from the rebound in the market prices of Atlas resulting in a higher net unrealized gains in AFS investments and the constant increase in the net income of the Company from 2008 to 2010. Earnings per Share (EPS) increased from 2009 to 2010 due to gains on mark-to-market changes in derivative assets arising from the conversion of Atlas’s US$11.5 million loan into Atlas shares 5 in 2010. On the other hand, EPS from 2008 to 2009 increased mainly due to the rebound in the share price of SPI in 2009. (2) Yearend Results For the year ended 2010, the Company posted a Net Income of P560.8 million compared to a net income of P294.0 million in 2009. (3) Future Prospects The Company remains optimistic on its future prospects on account of: (i) the renewed vigor in the natural resources-based sector, with new oil wells to be drilled in 2011 and Atlas sustaining production in Berong and Carmen; and, (ii) a strong property development portfolio, with NTDCC’s growing Trinoma operations and SPI’s strong condominium sales/rentals and commencement of new high-rise developments. (b) Interim Periods (1) Financial Condition, Changes in Financial Condition and Results of Operation Comparative financial highlights for the 1st quarters of fiscal years 2011 and 2010 are presented below: 31 March 2011 14,744,741 (6,896,369) 4,795,104,840 2,346,326,086 2,448,778,754 1,165,000,000 Revenues Net Income/(Loss) Total Assets Total Liabilities Net Worth Issued and Outstanding Capital 31 March 2010 113,932,904 88,765,159 3,835,799,435 2,363,025,156 1,472,774,279 1,165,000,000 Changes in Financial Condition – 1st Quarter 2011 vs, 1st Quarter 2010 The Company posted a lower revenue of P14.7 million for the first quarter of 2011 compared to P113.9 million for the same period in 2010 due to: (i) decrease in fair value changes of financial assets at FVPL arising from the decrease in market price of Shang Properties Inc.; and, (ii) lower interest income from affiliates due to conversion of Atlas loan into Atlas shares of stock during the 4th Quarter of 2010. As of end-March 2011, the Company has a net loss of P6.9 million compared to a net income of 88.8 million in March 2010. Total Assets increased from P3.8 billion in March 2010 to P4.8 billion as of March 2011 due to increase in available-for-sale investment as a result of the increase in the number of Atlas shares arising from the conversion of Atlas’s loan into additional Atlas shares in December 2010. Total Liabilities remain unchanged at P2.3 billion, as of end-March 2010 and March 2011. 6 Net Worth is higher at P2.5 billion as of the 1st quarter of 2011 compared to P1.5 billion as of the 1st quarter of 2010, due to the net income generated by the Company in 2010 and higher net unrealized valuation gain on AFS investment arising from the increase in the market price of Atlas shares. Changes in Financial Condition – 1st Quarter 2011 vs. Full Year 2010 Comparative financial highlights for the 1st quarter, 2011 and yearend 2010 are presented below: 31 March 2011 31 December 2010 14,744,741 689,489,995 (6,896,369) 560,774,028 4,795,104,840 5,172,806,310 2,346,326,086 2,398,233,254 2,448,778,754 2,774,573,056 1,165,000,000 1,165,000,000 Revenues Net Income/Loss Total Assets Total Liabilities Net Worth Issued and Outstanding Capital As of the 1st quarter of 2011, the Company posted revenues of P14.7 million and a net loss of P6.9 million, compared to revenues of P689.5 million and a net income of P560.8 during the year 2010. The Net Loss incurred during the 1st quarter of 2011 was mainly due to: (i) decrease in fair value changes of financial assets at FVPL resulting from the decrease in market price of Shang Properties Inc. (SPI); and, (ii) low interest income from affiliates due to conversion of Atlas loan into Atlas shares in 2010. The decrease in Total Assets as of end-March 2011 compared to end-December 2010 was due to the decrease in the market price of SPI and Atlas shares, and the decrease in Accounts Receivable arising from payment of accrued interests from Atlas. Total Liabilities decreased from P2.4 billion as of end-2010 to P2.3 billion as of end-March 2011 due to the partial payment by the Company of its outstanding loans with LBP and other accrued expenses payable. The Company’s Net Worth decreased from P2.8 billion as of end-2010 to P2.5 billion as of endMarch 2011 due to the net loss incurred by the Company during the interim period and the decrease in market price of Atlas resulting in lower net unrealized valuation gain on AFS investment as of end-March 2011. Results of Operations – 1st Quarter, 2011 Natural Resources The Company owns 14.42% of Atlas Consolidated Mining & Development Corporation (hereafter, “Atlas”) which has two (2) significant subsidiaries: (a) Berong Nickel Corporation, which remains under “Care & Maintenance”, and (b) Carmen Copper Corporation, which shipped 98,206 dmt of copper concentrate at an average of 27.47% Cu in 2010. 7 The Company owns 25.62% of United Paragon Mining Corporation (UPMC) after converting its receivables into new UPMC equity. The listing application covering UPMC’s new shares remains pending with the PSE. Pending the transfer of its petroleum assets, the Company continues to participate in the following Oil Exploration contracts: Service Contract 6A Service Contract 14D Service Contract 41 Service Contract 53 SWAN Block Octon, NW Palawan Tara, NW Palawan Sulu Sea Onshore Mindoro NW Palawan 11.11000 % 2.50000 % 1.67900 % 5.00000 % 33.57800 % SC 6A (Octon), the Operator, Philodrill, is actively seeking farminees into the block following Vitol’s decision not to pursue its prior farmin. SC 14 (Tara), Peak Oil, Blade Petroleum and Venturoil have signed the farm-in agreement and has sent a team to look at available seismic and other technical data over the Tara Block. SC 41 (Sulu Sea) Tap Oil decided to drop the contract but expressed interest to participate in the next contracting round if Sulu Sea is included among the areas offered for contracting. The Company has been invited to participate with Tap Oil in the contracting round. SC 53 (Mindoro), reprocessing of offshore 2D seismic data continues in Singapore, as the operator, Pitkin Petroleum, proceeds with the interpretation of the recently acquired onshore seismic data. SWAN Block - PNOC continues to evaluate the merits of the consortium’s proposal to swap some of their interests in other areas in exchange for equity in Service Contracts 57 and 58. Aside from direct participation in various oil exploration contracts, the Company also owns 0.28% of The Philodrill Corporation, a publicly listed company engaged in oil exploration and production with participating interests in various oil exploration and production contracts with the Philippine Government. Property Development The Company owns 15.79% of the North Triangle Depot Commercial Corporation (NTDCC) which owns the Trinoma commercial center in Quezon City. As of the 3rd quarter 2010, NTDCC generated a net income of P185.5 million with building average occupancy rate at 95%. The Company owns 4.5% of Shang Properties, Inc. (SPI). As of end-January 2011, SPI has sold out 98.3% of St. Francis Towers and 75.72% of One Shangri-La Place. The Company continues to maintain 15.79% interest in MRT Development Corp. (MRTDC), which owns the development rights over the perimeter lot pads around the Trinoma commercial center. MRTDC generates revenues from concessionaire rentals and advertising fees in the MRT stations. 8 Infrastructure The Company continues to maintain 18.6% equity in MRT Holdings, Inc., the majority owner of the Metro Rail Transit Corporation. As of end- 2010, average ridership stood at about 530,000 passengers per day. The Company's transfer of certain intellectual property rights and other assets over its water supply projects to Aquatlas, Inc. (AAI) in exchange for shares of the latter remains pending. AAI is a subsidiary of ACMDC. Other Investments The Company has a minority investment in Brightnote Assets Corporation (formerly, Batangas Assets Corporation), a holding company organized for the purpose of investing in the Calabarzon area. Filipinas Energy Corporation (FEC) has not undertaken any business operation since its incorporation due to the deferment of the transfer of the Company’s petroleum and mineral assets. Key Performance Indicators For the comparative interim periods (31 March 2011 and 31 March 2010), the top five (5) key performance indicators of the Company are as follows: 31 March 2011 31 March 2010 Current Ratio Current Assets Current Liabilities 1.09 : 1 850,291,048 782,659,006 2.83 : 1 1,338,863,140 473,086,907 Debt to Equity Ratio Total Liabilities Stockholders Equity 0.96:1 2,346,326,086 2,448,778,754 1.60:1 2,363,025,156 1,472,774,279 Equity to Debt Ratio Stockholders Equity Total Liabilities 1.04:1 2,448,778,754 2,346,326,086 0.62:1 1,472,774,279 2,363,025,126 Book Value per share Stockholders Equity 2.10 2,448,778,754 1,165,000,000 1.26 1,472,774,279 1,165,000,000 (0.006) (6,896,369) 1,165,000,000 0.08 88,765,159 1,165,000,000 Weighted Average Number of shares Earnings per share Net Income Weighted Average Number of shares 9 Current ratio decreased from 2.83 as of end-March 2010 to 1.09 as of end-March 2011 due to the decrease in current assets as a result of the conversion of Atlas loan into Atlas shares of stock in 2010 and the increase in Current Liabilities as a result of the reclassification of Long Term Debt from EPL to Current Portion. Debt-to-Equity and Book Value per share declined due to increase in Stockholders’ Equity resulting from the increase in net income generated by the Company and the increase in the market price of Atlas arising from higher net unrealized valuation gain on AFS investment. On the contrary, Equity-to-Debt Ratio increased from 0.62:1 as of end March-2010 to 1.04:1 as of end March 2011. Book Value per Share increase from 1.26 as of end-March 2010 to 2.10 as of end March 2011 due to increase in Stockholders Equity as end March 2011. Earnings per Share decreased to negative 0.006 as of end March 2011 from P0.08 as of endMarch 2010 due to the net loss incurred by the Company in March 2011. Between end-2010 and end-March 2011, the top five (5) key performance indicators of the Company are as follows: 31 March 2011 31 December 2010 1.09 : 1 850,291,048 782,659,006 1.10 : 1 912,626,763 829,091,620 Debt to Equity Ratio Total Liabilities Stockholders Equity 0.96 : 1 2,346,326,086 2,448,778,754 0.86 : 1 2,398,233,254 2,774,573,056 Equity to Debt Ratio Stockholders Equity Total Liabilities 1.04 : 1 2,448,778,754 2,346,326,086 1.16 : 1 2,774,573,056 2,398,233,254 Book Value per share Stockholders Equity 2.10 2,448,778,754 1,165,000,000 2.38 2,774,573,056 1,165,000,000 (0.006) (6,896,369) 1,165,000,000 0.48 560,774,028 1,165,000,000 Current Ratio Current Assets Current Liabilities Total Outstanding Shares Earnings per share Net Income/(Loss) Weighted Average # of shares Current Ratio slightly decreased from 1.10:1 as of end-2010 to 1.09:1 as of end-March 2011 due to the decrease in accounts receivable as a result of the collection of accrued interest from Atlas during the 1st quarter of 2011 and the decrease in current liabilities due to partial payment by the Company of its outstanding loans with LBP and payment of other accrued expenses payable. 10 Debt-to-Equity Ratio increased from 0.86:1 as of end-2010 to 0.96:1 as of end-March 2011, while Equity-to-Debt ratio correspondingly decreased from 1.16 as of end-2010 to 1.04:1 as of end-March 2011, due to the decrease in Stockholders’ Equity resulting from the net loss incurred by the Company during the interim period and the decrease in the market price of Atlas shares resulting in net unrealized valuation loss on AFS investment. Book Value per Share decreased due to the decrease in Stockholders’ Equity as of end-March 2011. The Company posted a P0.006 Loss per Share as of end-March 2011 compared to P0.48 EPS as of end-2010. (c) Discussion and Analysis of Material Events and Uncertainties Except as discussed below, Management is not aware of any material event or uncertainty that has affected the current interim period and/or would have a material impact on future operations of the Company. The Company will continue to be affected by the Philippine business environment as may be influenced by any local/regional financial and political crises. 1. There are NO known trends, demands, commitments, events or uncertainties that have or are reasonably likely to have a material impact on the Company’s short-term or long-term liquidity. 2. The Company’s internal source of liquidity comes, primarily, from revenues generated from operations. The Company’s external source of liquidity comes, primarily, from loans/financing obtained from financial institutions and, alternatively, may also come from the collection of its accounts receivables. 3. The Company has NO material commitments for capital expenditures but is expected to contribute its equity share in the capital expenditures of its investee companies. However, the bulk of the funding for such expenditures will be sourced from project financing. 4. There are NO known trends, events or uncertainties that have had or are reasonably expected to have a material impact on the revenues or income from continuing operations, save as stated in paragraph 1 above. 5. There are NO significant elements of income or loss that did not arise from the Company's continuing operations. 6. There have been NO material changes from 2008-2010 in one or more line items of the Company’s financial statements, EXCEPT as disclosed below: a. Net Revenues increased from 2008 to 2009 due to: (i) recovery of the market value of SPI shares in 2009; (ii) gain in mark-to-market changes in derivative assets attributable to the loan granted by the Company to Atlas in 2009; (iii) increase in interest income from P68.1 million in 2008 to P83.9 million in 2009; (iv) gain in foreign exchange attributable to the Company’s dollar-denominated loan with EPL; 11 and, (v) equity share in net earnings of associates in 2009. On the Other hand, Net Revenues On the other hand, net revenues increased from 2009 to 2010 due to: (i) gains on mark-to-market changes in derivative assets arising from the conversion of Atlas’s US$11.5 million loan into Atlas shares in 2010; (ii) increase in interest income from P83.9 million in 2009 to P122.8 million in 2010; and, (iii) increase in equity share in net earnings of associates in 2010. b. Cost and Expenses decreased from 2008 to 2009 mainly due to the absence of losses in fair value changes of financial assets due to the rebound of the market price of SPI shares in 2009. In addition, no impairment losses were recognized in 2009. On the other hand, cost and expenses slightly increased from P121.7 million in 2009 to P124.7 million in 2010. c. Income (Loss) Before Income Tax continue to increase in 2009 and 2010 due to higher Net Revenues and lower Cost and Expenses which resulted in a positive P322.7 million and P564.8 million, respectively. Consequently, from a Net Loss of 236.9 million in 2008, the Company generated a Net Income of P294.1 million and P560.8 million in 2009 and 2010, respectively. d. Basic and Diluted Earnings Per Share increased from negative P0.20 in 2008 to P0.25 in 2009 and P0.48 in 2010 due to higher Net Income generated by the Company in 2009 and 2010. e. Capital Stock remains unchanged at P1.2 billion in 2008 to 2010. f. Retained Earnings continue to increase from P13.0 million in 2008 to P132.3 million in 2009 and P658.2 million in 2010 on account of the P294.1 million Net Income posted in 2009 and P560.8 million in 2010. g. Treasury Stock remains unchanged at P 27.6 million from 2008 to 2010. h. Current Assets increased from P542.6 million in 2008 to P1.3 billion in 2009 due to increase in receivables from Atlas and rebound in SPI shares. In 2010, Current assets decreased to P912.6 million due to conversion of US$ 11.5 loan to Atlas into Atlas shares of stock. i. Non-Current Assets increased from P1.6 billion in 2008 to P2.3 billion in 2009 due to the rebound in the market value of Atlas shares. In 2010, Non-Current Assets increased to P4.3 billion due to conversion of US$ 11.5 loan to Atlas into Atlas shares of stock. j. Current Liabilities continue to increase from P308 million in 2008 to P482.5 million in 2009 to P829 million in 2010 due to recognition of the EPL Current Portion of Long Term Debt amounting to P196.8 million and P467.0 million in 2009 and 2010, respectively. k. Non-current Liabilities increased from P1.5 billion in 2008 to P1.9 billion in 2009 due to increase in Long Term Debt from EPL. On the other hand, Non-current Liabilities decreased to P1.6 billion in 2010 due to the reclassification of P467.0 million in Non-Current Long Term Debt into Current Portion of Long Term Debt. 12 l. Stockholders’ Equity increased from P351.1 million in 2008 to P1.2 billion in 2009 due to the rebound of the market value of Atlas shares resulting in higher Net unrealized valuation gain on AFS investments in 2009. In 2010, Stockholders Equity increased to P2.8 billion due the increase in the company’s AFS investment as a result of the conversion of US$ 11.5 million loan to Atlas into Atlas shares and Net Income recognized in 2009 and 2010. 7. 8. There have been NO material changes from 31 March 2010 to 31 March 2011 in one or more line items of the Company’s financial statements, EXCEPT as disclosed below: (a) Cash and cash equivalents increased from P84.6 Million as of end-March 2010 to P212.6 million as of end-March 2011 due to collection of accrued interest receivable from Atlas during the 1st quarter 2011. (b) Financial assets at FVPL slightly decreased due to decrease in market value of SPI shares as of end-March 2011. (c) Accounts receivable decreased from P729.1 Million as of end-March 2010 to P197.8 Million as of end-March 2011 due to conversion of US$11.5 million loan into Atlas shares in 2010. (d) The value of Available-for-Sale investments increased from P1.3 billion as of end March 2010 to P2.7 billion as of end-March 2011 due to conversion of US$11.5 million loan into Atlas shares as of December 2010. (e) Short Term Loans payable decreased from P150 million as of end-March 2010 to P100 million as of end-March 2011 due to partial payment of LBP loan. (f) Accounts Payable increased due to additional accrued interest payable booked by the Company and advances received from Metro Pacific Investment Corp. in relation to the potential acquisition of MRTHI shares, subject to completion of certain closing requirements. (g) Income Tax Payable decreased due to low income tax payable as of end-March 2011. (h) Net unrealized valuation gain in AFS investments increased due to increase in market value of Atlas shares. (i) Retained Earnings increased due to the net income generated by the Company during the year 2010. There have been NO material changes from 31 December 2010 to 31 March 2011 in one or more line items of the Company’s financial statements, EXCEPT as disclosed below: 13 (a) Cash and cash equivalents increased from P165.1 million as of end 2010 to P212.6 million as of end-March 2011 due to collection of accrued interest receivable from Atlas during the 1st quarter 2011. (b) Financial assets at FVPL decreased due to decrease in market prices of Shang Properties Inc. (c) Accounts receivable decreased from P27.9 Million to P197.8 Million due to collection of accrued interest receivable from Atlas. (d) The value of Available-for-Sale investments decreased from P3 billion to P2.7 billion due to a decrease in the market value of Atlas shares as of end-March 2011. (e) Short Term Loans payable decreased from P125 million to P100 million due to partial payment of LBP loan. (f) Accounts Payable decreased due to payment of other accrued expenses. (g) Net unrealized valuation gain/(loss) decreased due to decrease in the market value of Atlas shares. (h) Retained Earnings decreased due to net loss incurred by the Company during the interim period. 9. There are NO events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation. 10. There are NO material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons created during the reporting period. Employees As of 31 December 2010 and 31 March 2011, the Company has twelve (12) full-time employees (including officers) who are not subject to any collective bargaining agreement. IV. Brief Description of the General Nature and Scope of Business of the Company The Company was incorporated in 1958 as an oil and mineral exploration company. In 1996, the Company changed its primary purpose to investments holding focused on infrastructure, property development and natural resources. Since then, the Company has maintained, and will continue to maintain, investments in natural resources, property development, infrastructure and diversified businesses. Filipinas Energy Corporation, the Company’s wholly-owned subsidiary, is a petroleum and mineral exploration company which began setting its business and organization in 2006. 14 V. Market Price and Dividends The Company’s shares are listed and traded in the Philippine Stock Exchange. As of May 23, 2011, the Company’s share traded at P1.88 per share. The high and low sale price of the Company’s shares for each quarter during the last two (2) fiscal years 2009 and 2010 and the first quarter of the current fiscal year 2011, expressed in Philippine Pesos, are as follows: Stock Prices (Php) 2011 – 1st quarter High Low 2.11 1.01 2010 – 1st quarter 2nd quarter 3rd quarter 4th quarter 1.44 1.34 1.78 2.47 1.06 1.14 1.16 1.58 2009 – 1st quarter 2nd quarter 3rd quarter 4th quarter 1.10 1.34 1.44 1.38 0.58 0.95 1.12 1.10 Holders As of 06 May 06, 2011 (the “Record Date”), common shares outstanding stood at 1,165,000,000 shares and shareholders of record totaled 3,155. The Company’s top 20 Stockholders as of Record Date are as follows: Rank Stockholders Total Share 1 PCD NOMINEE CORPORATION 2 ALAKOR SECURITIES CORPORATION 3 VULCAN INDUSTRIES CORP. 4 ALAKOR CORPORATION 5 JOSE D. SANGALANG 6 SAN JOSE OIL COMPANY, INC. 7 GONZALES, FERNANDO 8 ALYROM PROPERTY HOLDINGS, INC. 9 NAVARRO, SOLEDAD V. 10 NATIONAL BOOKSTORE, INC. 11 MARIANO GO BIAO 12 SANTIAGO TANCHAN III 13 JALANDONI, JAYME, ADAMS & Co., INC. 14 S.J. ROXAS & CO., INC. A/C # 2.19.038 15 CONSTANTINE TANCHAN 16 JACK F. CONLEY 17 ANSALDO, GODINEZ & CO, INC. 18 TRENDLINE SECURITIES CORP 19 JESSELYN CO 20 ANTONIO HENARES 15 1,067,162,366 20,939,000 10,266,666 9,494,767 7,392,000 4,693,332 2,933,330 2,924,900 1,375,550 1,275,445 990,000 972,398 964,700 935,000 881,466 825,000 819,845 730,000 715,732 660,000 Percentage 91.6019% 1.7973% 0.8813% 0.8150% 0.6345% 0.4029% 0.2518% 0.2511% 0.1181% 0.1095% 0.0850% 0.0835% 0.0828% 0.0803% 0.0757% 0.0708% 0.0704% 0.0627% 0.0614% 0.0567% *Of the total 1,067,162,366 shares under the name of PCD Nominee Corp., 682,192,977 shares were under the name of Alakor Securities Corporation (ASC). Of the total shares of 682,192,977 shares under the name of ASC, National Book Store Inc. owns 466,660,361 shares (40.05%) while Alakor Corporation owns 152,897,758 shares (13.12%). Dividend Cash Dividend 2011 – CD 6 2010 – CD 5 2009 – CD 4 2008 - CD 3 2007 – CD 2 CD 1 Amount P0.05/share P0.03/share P0.15/share P0.05/share P0.05/share P0.10/share Declaration Date March 25, 2011 April 12, 2010 April 22, 2009 April 25, 2008 July 27, 2007 April 30, 2007 Stock Dividend 2008 - SD 1 Rate 10% Declaration Date Record Date Sept. 19, 2008 October 31,2008 Record Date April 08, 2011 April 30, 2010 May 08, 2009 May 30, 2008 October 15, 2007 May 17, 2007 Payment Date April 29, 2011 May 24, 2010 May 29, 2009 June 25, 2008 November 8, 2007 June 8, 2007 Payment Date Nov. 26, 2008 NO dividends were declared in 2006. The Company’s ability to declare and pay dividends on common equity is restricted by the availability of sufficient retained earnings. Recent Sales of Unregistered Securities NO unregistered securities were sold during the past three (3) years. All of the Company’s issued and outstanding shares of stock are duly registered in accordance with the provisions of the Securities Regulation Code (SRC). (a) (b) (c) (d) Securities Sold – not applicable; NO securities were sold Underwriters and Other Purchases – not applicable; NO securities were sold Consideration – not applicable; NO securities were sold Exemption from Registration Claimed – not applicable; NO securities were sold. VI. Corporate Governance (a) The Company uses the evaluation system established by the SEC in its Memorandum Circular No. 5, series of 2003, including the accompanying Corporate Governance SelfRating Form (CG-SRF) to measure or determine the level of compliance of the Board of Directors and top-level management with the Company’s Corporate Governance Manual. (b) The Company undertakes a self-evaluation process every semester and any deviation from the Company’s Corporate Governance Manual is reported to the Management and the Board together with the proposed measures to achieve compliance. 16 (c) (d) Except as indicated below, the Company is currently in full compliance with the leading practices on good corporate governance embodied in the CG-SRF: 1. The Company has prepared a draft Code of Conduct for the Board, CEO and staff, which is still undergoing changes to cope with the dynamics of the business. In the meantime, however, the Company has existing policies and procedures that can identify and resolve potential conflicts of interest. 2. Employees and officers undergo professional development programs subject to meeting the criteria set by the Company. Succession plan for senior management is determined by the Board as the need arises. The Company shall adopt such improvement measures on its corporate governance as the exigencies of its business will require from time to time. The Company undertakes to provide, without charge, upon the written request of a stockholder, a copy of its Annual Report on SEC Form 17-A. Such request should be addressed to the Corporate Secretary, Anglo Philippine Holdings Corporation, 6th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong City 1550, Philippines. 17 FINAL LIST OF CANDIDATES FOR ELECTION AS INDEPENDENT DIRECTOR (A) Candidates for Election as Independent Director (1) Identity, names and ages of candidates for election as Independent Director Name Renato C. Valencia. Ramoncito Z. Abad Age 69 64 Current Position Independent Director Independent Director Period of service 2006 Present 2007 Present Directors elected in the Annual Meeting of Stockholders have a term of office of one (1) year and serve as such until their successors are elected and qualified in the next succeeding Annual Meeting of Stockholders; provided, that a director who was elected to fill in a vacancy arising in the Board shall only serve the unexpired portion of his predecessor. Business Experience During the Past Five (5) Years of Candidates for Independent Directors Mr. Renato C. Valencia was elected independent director of the Company in December 2006. He is the former administrator of the Social Security System and currently serves as a director/executive officer of the Bases Conversion Development Authority, Civil Aeronautics Board, Metropolitan Bank & Trust Company, among others. Mr. Ramoncito Z. Abad was elected independent director of the Company in March 2007. He is the former Chairman of the Development Bank of the Philippines and currently serves as a director/executive officer of the Monheim Group of Distributors and Cybertech International Builders. Candidates for Independent Director with directorship(s) held in reporting companies Renato C. Valencia Bases Conversion Dev’t Authority Hypercash Payment System, Inc. Independent Insight, Inc. Ramoncito Z. Abad Monheim Group of Distributors (3) Metropolitan Bank & Trust Company Roxas Holdings Inc. Triple Top AIM Inc. Family Relationships The candidates for election as independent directors of the Company are NOT related by consanguinity or affinity, either with each other or with any other member of the Company’s Board of Directors. (4) Involvement in Certain Legal Proceedings The Company is not aware of: (1) any bankruptcy petition filed by or against any business of which an independent director, person nominated to become an independent director of the Company was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior that time; (2) any conviction by final judgment in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses of any independent director, person nominated to become an independent director; (3) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement in any type of business, securities, commodities or banking activities an independent director, person nominated to become an independent director of the Company; and, (4) judgment against an independent director, person nominated to become an independent director of the Company found by a domestic or foreign court of competent jurisdiction (in a civil action), the Philippine Securities and Exchange Commission or comparable foreign body, or a domestic or foreign exchange or electronic marketplace or self-regulatory organization, to have violated a securities or commodities law, and the judgment has not been reversed, suspended, or vacated. There had been NO transaction during the last two years, nor is any transaction presently proposed, to which the Company was or is to be a party in which any independent director of the Company, or nominee for election as an independent director, or any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons had or is to have a direct or indirect material interest. In the ordinary and regular course of business, the Company had or may have transactions with other companies in which some of the foregoing persons may have an interest. (C) Security Ownership of Candidates for Independent Directors The candidates for independent directors own the following number of voting shares: Type Name of beneficial owner Common Renato C. Valencia Common Ramoncito Z. Abad Amount and nature of Beneficial ownership Direct Indirect Citizenship 1,100 0 Filipino 1,100 0 Filipino Percent Of Class <0.01% <0.01% As of 06 May 2011 (the “Record Date”), the aggregate number of shares owned by the candidates for election as independent director is 2,200 shares, or less than 0.01% of the Company’s outstanding capital stock. 2 CO\tr.RSHIf,T fft iB.d;l t-ft Frlltrm;l [l tflIItnt utl CORPORFTIOlT FIIGLOPIIILIPPINE ]IOLDINGS l r rii !, rt{r ei!.( 4 n Le & 5 i ! , o ! li llil llllllilrl SGU&Co thdda$bFIiPPh!nddiscoFdld djhFMfubanq'ttn{tonh!trs rtuntedqt t A6plrliqlot tk tuq.iottkntulj e'iuddo'4esuecfuoavdl[li! mn'.dj6P|ysidj{!a|rcNNDotNd! hd eFod o d! &drq\j!dFd! iddhs se lmFrthd.ondfuB!h!mlhld tslttssd&i6qEqsh$dE{'{ mefu.F!tsjlEoldd.6'j6| ""-N'ft tmMflml lllt lll lilill r'" SGVaCo A.Co nitr'Ph! rbrDs lrMgb siiDiq c!edt!!i $ db Hdii$.qtsFdo rd c! r& dd D{ed!6 n, rd $s! ldid by nRNq'n'5'J&!ryr,IL],Nj'kdciry i*?jl !!-: l.lii!: ;'j kY.dS+1ti" [nffi![[[|l[tm]l c6h{d.6hqrndqrod6lmdr) Fhe.nlad!IliutjwdouglFi!dh$ h!6bdc P4rhdi i q5si4 ldri 0{d5 i. r 3.r d P]g1E!l!!ta $ort t@ hp5 Fy6L (l{ds 5. r i, a 0i ,t {drho' !di' dd obLt&i 0{d! F) - iiii:!r:!ij *11'!'friiil!"ii !-i:il , fi tfiu[ufltflt t! l Icldiddd@p!tre) af s alsci! ' kYt'r*+ 6 F J q 2 tp,z H : E c 5 E A € . :! t I ? .. i .E Eazt t F 6 -,., ilriffiiffi rrrr rrrrllr 8llqryq44i n! !!6r?t! - i:{[lgs,EE ;,f,9lP,t,ii"'i.' |[tnmmfr[flll[ AI\GLO PHILIPPINE HOLDINGS CORPORATION NOTES TO FINANCIAL STATEMENTS (Wlth ComparativeFiguresfor the Year EndedDecember31, 200E) L Corpomte Information with the Philippino Anglo Philippine HoldingsCorporation(the Company),was incorporate.d SecuritiesandExchangeCommission(SEC)on lune 25, 1958origina.llyasan oil andmineral oxplorationcompanywith the corporatenameof "Anglo Philippine Oil Corp." In 1996,the Companychangedits primary purposeto that of an investrnentsholding firm focusedon natural resources-based companies,infrastructureand propertydevelopment.The Companyis a public companyunder Section17.2ofthe SecuritiesRegulationCodeand its sharesare listed on the Philippine StockExchange(PSE). The Company'sregisteredoffice addressis 6th Floor, QuadAlpha Centrum,125PioneerStreet, MandaluyongCity. The financial statementsofthe Companyas of and for tho yearsendedDecember31, 2010and 2009,including the comparativefinancial statementsfor the year endodDecember3 l, 2008,were authodzedfor issueby the Board of Directors(BOD) on April I 1, 2011. 2. Summaryof SignilicantAccountingPolicies Basisof Prenaration The accompanyingfinancial statementshavobeenpreparedunderthe historical cost basisexcept for financial assetsat fair valuethroughprofit or loss(FVPL), available-for-sale(AFS) investnentsand derivativefinancial instruments,which arecarriodat fair value. The financial statementsarepresentedin Philippine peso(F), which is the Company'sfunctional and presentationcurrency. All valuesarerormdedoffto tle nearestP exceptwhen otherwise indicated. Statementof Comoliance with The accompanyingfinancial statementsofthe Companyhavebeenpreparedin aooordanoe PhilippineFinancialReportingStandards(PFRS). Chansesin AccountingPoliciesandDisclosures New, Revisedand AmendedStandordsand Interyretatlons and Improved PFRSAdoptedin Calendm Yem 2010 RevisedPERS3, "RarinessCombinatiow, and Amendmentsto Philippine AccountingStandards (PAS) 27, Consolidatedand SeparateFinancial Staternents The revisedPFRS3 inhoducesa numberof changesin the accountingfor businesscombinations that will impactthe amountof goodwill recognized,the reportedresultsin the period that an acquisitionoccurs,and future reportedresults. The revisedPAS 27 requires,amongothers,that (a) changein ownershipinterestsof a subsidiary(that do not result in lossof contol) will be accountedfor asan equity transactionandwill haveno impact on goodwill nor will it give rise to a gain or loss;(b) Iossesincurredby the subsidiarywill be allocatedbetweonthe controlling and non-controllinginterests(previouslyreferredto as"minority interests"),evenif the lossesexceed the non-controllingequity investmentin the subsidiary;and (c) on lossof oontrolofa subsidiary, any retainedinterestwill be remeasuredto fair value andthis will impactthe gain or loss reoognizedon disposal. The changesintroducedby the revissdPFRS3 and PAS 27 will affect future acquisitionsandtransaotionswith non-controllinginterests.RevisedPFRS3 will be applied prospectivelywhile PAS 27 will be appliedretrospectivolywith few exceptions.The revisedstandardsareeffectivefor annualporiodsbeginningon or afterJuly 1, 2009. Amendmentsto PFRS2, Share-basedPayment- Group Cash-sealedShare-basedPryment Ttansactiots The amendmentsto PFRS2, effective for annualperiodsbeginningon or after January1, 2010, paymonttransactions. clarifu the scopeand the aooountingfor groupoash-settledshare-based Amendmentto PAS 39,Financial Insftuments:Recognitionand Measurement- Eligible HedgedItems Amendmentto PAS 39 will be effective for annualperiodsbeginningon or after July 1, 2009, which addresses only the designationofa one-sidedrisk in a hodgeditun, and the designationof inflation as a hedgedrisk or portion in particularsituations. The amendmontclarifies that an entity is permittadto designatea portion of the fair value ohangesor cashflow variability ofa financial instnrmentasa hodgeditem. Philippine hterpretation IFRIC 17,Distributions of Non-cashAssetsto Owners This Interpretationis effectivefor annualperiodsbeginningon or afterJuly 1,2009 with early applicationpennitted. It providesguidanceon how to accountfor non-cashdishibutionsto owners, The Interpret4tionclarifies when to reoognizea liability, how to measureit andthe associatedassets,and when to derecognizethe assetand liability, Improvementsto PFRSEffective2010 Tte omnibusamendments to PFRSissuedin 2009 were issuedprimarily with a view to removing inconsistenciesand clarifuing wording. The following improvementsareeffootivefor armual period financial yearsbeginningJanuary1, 2010 exceptif otherwisestated. PFRS2, Slrare-based Payment o Clarifies that the contributionofa businesson formationofajoint ventureand oombinations undercommonconfol axenot within the scopoofPFRS 2 eventhoughthey are out of scope ofPFRS3. o The amendmentis effeotivefor financial yearsbeginningon or after July 1, 2009. PFF:S5, Non-cwrent AtsetsHeldfor Saleand DiscontinuedOperatiow o Clarifies that the disclosuresrequiredin respectofnon-surrent assetsand disposalgroups classifiedasheld for saleor discontinuedoperationsareonly thoseset out in PFRS5. The disclosurerequirementsof other PFRSonly apply if specificallyrequiredfor suchnon-current assetsor discontinuedoperations. PFRS8, OperatingSegnents r Clarifies that segmentassetsand liabilities needonly bo reportedwhen thoseassetsand liabilities areincludedin measuresthat arousedby tle chief operatingdecisionmaker. PAS l, Presmtation of Financial Statements r Clarifies thai the termsof a liability that could rssult, at anytime,in its sottlomentby the issuanoeofequity instrumentsat the opion ofthe counterpartydo not affect its classification, |ililil| ilflfl |[il]ililililrililr|[fl -J- PAS 7, Statementof CashFlows r Explicitly statesthat only Expenditurethat resultsin a recogrized assetcanbe classifiodasa cashflow from investingactivities. PAS 17,treares r Removesthe specific guidanceon classifing land as a lease. Prior to the amendmen!leases of land were classifiedasoperatingleases.The amendmentnow requiresthat leasesof land areolassifiedaseithor "ffnance" or "oporating" in accordancowith the generalprinciplesof PAS 17. The amendmentswill be appliedretospectively. PAS 36, Irnpainnentof Assets r Clarifies that the largestunit permittedfor allocatinggoodwill, acquiredin a business oombination,is the operatingsegmentasdefinedin PFRS8 before aggregationfor reporting purposes. PAS 38, IntangibleAssets o Clarifies that if an intangibleassetacquiredin a businessoombinationis identifiableonly with anotherintangibleasset,the acquirermay recognizethe group of intangibleassetsasa single assetprovidedthe individual assetshavesimilar useful lives. Also clarifies that the valuation techniquespresentedfor doterminingthe fair value of intangibleassetsacquiredin a business combinationthat arenot fiaded in activemarketsar€ only examplesandars not restristiveon the methodstlnt canbe used. PAS 39,Finoncial Inst/uments:Recognitionand Measurement:olarifiesthe following: . that a prepaymentoption is consideredcloselyrelatedto the hostcont?ct whenthe exercise price of a prepaymentoption reimbursesthe lenderup to the approximatepresontvalue of lost interestfor the remainingterm of the host contact. r that tlte scopoexemptionfor qontractsbetweenan acquirerand a vendorin a business combinationto buy or sell an acquireeat a future dateappliesonly to binding forward contracts,and not derivativecontractswherefirtler actionsby eitherpalty are still to be taken. . tlat gainsor losseson cashflow hedgesof a forecasttransactionthat subsequentlyresultsin the recognitionofa financial instrumentor on cashflow hedgesofrecognizedfinancial instrumentsshouldbe reclassifiedin the psriod tllat the hedgedforeoastcashflows affect profit or loss. of EmbeddedDerh,atives Philippine InterpretationIFRIC 9, Reassessment o Clarifies that it doesnot apply to possiblereassessment et the dateof acquisition,to ombodded derivativesin ccntractsacquinsdin a businesscornbinationbetweenentitiosor businesses undercommoncontrol or the formationofajoint venture. Philippine krterpretationIFRIC 76,Eedgeof a Net Investmentin a Forcign Operation r Statesthat, in a hodgeof a net investrnentin a foreign operation,qualiSing hodging instrumentsmay be held by any entity or entitioswithin the group,including the foreign operationitse$ as long asthe designation,documentationand effectivenessrequirementsof PAS 39 that relateto a net investnent hedseare satisfied. I||]|Iilillilllil||il]ililr New Accounling Standmds,Inrcrpretations and Amendmerrtsto Existing StandardsEffective Subseqacd to December31,2010 The Companywill adopttle standardsand interpretationsenumeratedbelow whenthesebecome effective. Exceptasotherwiseindicated,the Companydoesnot expectthe adoptionofthese new and amendedPFRS,PAS andPhilippine Interprctationsfrom IFRIC to havesignificant impacton its financial statements, Effectivein 2011: Amondmentto PAS 24, RelatedPmty Disclosures The amendedstandardis efFectivefor annualperiodsbeginningon or after Januaryl, 201l. ft clarified the definition of a relatedparty to simplifu the identificationof suchrelationshipsandto eliminate inconsistenciesin its application. The revisedstandardinhoducesa partial exomptionof disclosurerequirementsfor government-related entities. Early adoptionis permittedfor eitherthe partial exemptionfor government-related entitiosor for the entire standard. Amsndmentto PAS 32, Financial Instruments:Presentation- Classificationof Rightshsues The amendmentto PAS 32 is efifectivefor annualperiodsbeginningon or aftor Februaryl, 2010 and amendedthe definition ofa financial liability in orderto classi! rights issues(andoertain optionsor warrants)asequity instrumentsin oaseswheresuchrights aro given pro ratato all of the existingownersofthe sameclassofan entity's nonderivative equity instrum€nts,orto aoquirea fixed numberoft}e entity's own equity instrumentsfor a fixed amountin any currency. Amendmentto Philippine hterpretation IFRIC 14,Prepaynenx of a MinimzonFmding Requirement The amendmentto Philippine InterpretationIFRIC 14 is effective for annualperiodsbeginningon or after Januaryl, 2011, with retrospectiveapplication. The amendmentprovidesguidanceon assessingthe recoverableamountof a not pensionasset.The amendmentpermitsan ontity to treat the prepaymentof a minimum funding requiromentasan asset. Philippine InterpretationIFNC 19,ExtinqaishingFinancial Liabilitiet utith EquW Insbuments Philippine ftrterpretationIFRIC 19 is effective for annualperiodsbeginningon or after July 1, 2010. The interpretationclarifies that oquity instrumentsissuedto a creditorto extinguish a financial liability qualift asconsiderationpaid. The oquity instrumentsissuedaremeasuredat their fair value. ln casethat this oannotbe reliably measured,the insFumentsaremeasuredat the fair value of the liability extinguished.Any gain or loss is recognizedimmediatelyin profit or loss. Improvementsto PFRSEffective201I The omnibusamendmentsto PFRSsissuedin 2010 wereissuodprimarily with a view to rernoving inconsistenciesand clariffing wording. The amerdmentsareeffectivo for armualperiods beginningon or after January1, 201I excep otherwisestated. The Companyhasnot yet adopted the following amendmentsand anticipatesthat thesechangeswill havono materialeffect on the finanoial statsments. o r t o o RevissdPFRS3, BusinessCombinations PFRS7, Financial Instruments:Disclosuret PAS 7,Presentationo/ Financial Statements PAS 27, Consolidaed and SeparateFinorcial Statements Philippine InterpretationIFRIC 13,C?tstomerLoydlty Progranmes ill ||ltfr ilfl fi]flilfr ililtilil1iltilIi -)- Efective in 2012: Amendmentto PFRS7, Financial Instntments:Disclosures- Disclosures- Troufers of Financial Assets Tho amendmentsto PFRS7 are effectivefor annualperiodsbeginningon or after July 1, 2011. The amendmentswill allow usersof financial statementsto improvothoir understandingof hansfertransactionsof finanoial assets(for oxample,soouritizations),including understandingthe possibleeffoctsof any risks that may remainwith the entity that tansferred the assets,The amendmentsalso requireadditionaldisclosuresifa disproportionateamountoftransfer transactionsareundertakenaroundthe endof a reportingpefiod. Philippine InterpretationIFRIC 15,Agreements for the Constluctionof Real Estate This Interpretation,effective for annualperiodsbeginningon or after Januaryl, 2012,covers accountingfor revenueandassooiatedexpensesby entitiesthat undertakethe constructionofreal estatediroctly or through subcontractors.The Interpretationrequir€sthat revonu€on construction ofreal estatebe recognizedonly uponoompletion,oxoep when suchcontraetquali{iesas oonstruotioncontact to be accountedfor underPAS ll, ConstntctionContracts,or involves renderingof servicesin whioh oaserevenueis recognizedbasedon stageof completion. Contraots involving provision ofservices with the constructionmaterialsandwherethe risks andrewardof ownershipaxetransferredto the buyeron a continuousbasiswill also be accountedfor basedon stageof completion. Amendmentto PAS 12,IncomeTm,es(Amendment)- Deferred Tn: Recoveryof Underlying Assets Tho amendmentto PAS 12 is effectivefor annualperiodsbeginningon or afterJanuaryl, 2012. It providesa practical solutionto the problemof assessing whetherrecoveryofan assetwill be throughusoor sale. It infioducesa presumptionthat recoveryof tho carrying amountof an asset will normallybe throughsale. Eflective in 20Ij: . PFRS9, F nncial Instrunents: Classificationand Measuremmt PFRS9, as issuedin 2010,reflectsthe frst phaseofthe work on the replacementofPAS 39 and appliesto olassiflcationand measurement offlnancial assetsand financial liabilities as defrnedin PAS 39. The standardis effective for armualperiodsbeginningon or after January1, 2013, In subsequentphases,hedgeaccountfurg and dorecognitionwill be addressed. The completionofthis project is expectedin early 2011. The adoptionofthe lirst phaseof PFRS9 will havean effect on the classificationand measurementofthe Company'sfinancial assets.The Companywill quantiff the effoct in conjunctionwith the ottrerphases,when issuod,to presenta comprehensivepicture. RevenueRecomition Revenuois recognizedto the ext€ntthat it is probablethat the economicbenefitswill flow to the Companyandthe revenuecanbe reliably measured,The following specificrecognitioncriteria mustbe met beforerevenueis recocnized: Interett Income Interestinoomefrom bank depositsand short-terminvestrrentsarerecognizedasthey accrue usingthe effective interestrate (EIR) method. ilililililffi r[ffi tfl util1ilfr ilil t[ilfl il$ -6- ManagementFees Managementfees,whish axeincludedaspart of the "Other revenueso' accountin the statementof comprehensiveincome,arereoognize.d when servicesarerenderedbasedon the oontractual agreementbetweenthe parties. Dividend Income Dividend income,whioh is includedas part ofthe "Other revenuo"acaountin the statementof comprehensiveincome,is recognizedwhenthe shareholder'sright to r@€ivepaymentis established. Costsand Expenses Costsand expensesaredecreasesin economicbenefitsduring the accountingperiod in the form of outflows or depletionsofassetsor incurencesof liabilities that result in desreas€sin equity,other thanthoserelatingto distributionsto equity participants. Generaland administrativeexpensesare generallyre.cognized when the servicesareusedor the expensesarisewhile interestexpensesare accruedin the appropriateperiod. Employee-relatedexpensesareprovidedin the period when sefvicesarerEndered. Cashand CashEquivalents Cashincludescashon handandwith banks. Cashequivalentsare short-term,highly liquid investrnentsthat arereadily convertibleto known amountsof cashwith original maturitiesofthree monthsor lessandthat are subjectto an insignifioantrisk of changein value. FinancialInstruments Date of Recognition Financialinstrumentsaxerecognizedin the balancesheetwhen the Companyb€comesa party to the contractualprovisionsof tho insfument. In tho oaseof a regularway purchaseor saleof financial assets,recognitionand derecognition,asapplicable,is donousingtradedateaccounting. Initial Recognitionof Financial Instruments Financialinstrumentsarerecognizedinitially at fair value. The initial measurement offinancial : instruments,exceptfor thoseclassifiodat FVPL, includestansaction cost. The Companyolassifiesits fmansialassetsin the following categorios:financial assetsat FVPL, held-to-maturity(IIIM) financial assets,loansandrec€ivablesandA-FSfurancialassets.The Companyolassifiesits financial liabilities asfinancial liabilities at FVPL and other finansial liabilities. The classificationdependson the purposefor which the financial assetsworeacquired or liabilities incurredandwhetherthey arequotedin an activemarket. Managementdetermines the classificationof its financial assetsand liabilities at initial recognitionand,whereallowedand appropriate,re-evaluatessuchdesignationat everybalanoesheetdate.As of December3 I , 2010 a d 2009,the Companyhasno HTM investmentsand furancialliabilities at FVPL. Financialinstrumentsaroclassifiedasliabilities or equity in aacordancewith the substanceofthe contractualarrangement.lnterest,dividends,gainsand lossesrelatingto a financial insfument or a componenttlat is a financial liability arereportedasoxpenseor income. Distributionsto holdorsof financial instrumentsclassifiedasequity arechargeddirectly to equity, not of any relatedincometax benefits. Determinationof Fair Value The fair value of financial instrumentstradedin activemarketat the reportingdateis basedon their quotedmarketprice or dealermarketprice quotations(bid price for long positionsand ask price for short positions),without any deductionfor tansaction costs. When ounantbid andask pricesarenot available,the prico ofthe most rgcenttransactionprovidesevidenceof the current fair value as long astherehasnot beena significantchangein economiccircumstancessincethe time of the transaction.For all otherfinancial instuments not listed in an activemarket,the fair valua is determinedby using appropriatevalualion teohniques.Valuation techniquesinoludenet presentvalue techniques,comparisonto similar instrumentsfor which obsorvablepricesexist, option pricing modelsandother relevantvaluationmodels, Day I Difference Wherethe transactionprice in a non-activemarketis different from the fair value from other obs€rvableouffent markettransactionsin the sameinstrumentor basedon a valuationtechnique whosevariablesinclude only datafrom observablemarket the Companyrecognizesthe difference betweenthe tansaction price andfair value @ay I difference)in the statsmentof comprehensive incomeunlessit qualifies for recognitionas someothertype of assetor liability. In caseswhere fair value is determinedusing datawhich is not observablgthe differencebetweenthe transaction price and model value is only recognizedin the statementof comprehensiveincomewhenthe inputsbeoomeobservableor when the instrumentis derecopized. For eachtransaction,the Companydeterminesthe appropriatemethodofrecognizing the Day I differenceamount. Financial Assetsat FTPL Financialassetsat FVPL includefinancial assetsheld for bading purposes,furancialassets designatedupon initial recognitionasat FVPL and derivative instruments. Financialassetsareclassifiedasheld for trading if they areacquiredfor the purposeof selling and repurchasingin th€ neartefm. Derivatives,including separatedembeddedderivatives,arealso classifiedasheld for fading unlessthey aredesignatedas effeotivehedginginstrume,nts or a financial guaranteegontraot. Fair value gainsor lossesarerecognizodin statementof comprehensiveincome. Interestand dividend incomeor expenseis recognizedin the statementof comprehonsiveincome,aooordingto the termsof the contract,or whenthe right to the payment hasbeenestablished. Financial assetsmay be designatedasat FVPL by managementon initial reoognitionwhen any of the following criteria aremet: r . o The designationsliminatesor significantly reduossthe inconsistentfeatrnent that would otherwisearisefrom measuringthe assetsor recognizinggainsor losseson them on a different basis;or The assetsarepart ofa groupoffinancial assetswhich aromanagedandtheir performance evaluatedon a fair value basis,in accordancewith a documentedrisk managemsntor invostmentstrates/; or The financial instrumentcontainsan embeddedderivativethat would needto be soparately recorded. As at December31, 2010,theCompany'sfinancialassetsat FVPL consistof investnentsin quotedequity shares. DerivativeFinancialInstruments Derivative financial instuments (including bifurcatedembeddedderivatives)areinitially recognizedat fair value on the datein which a derivativetransactionis enteredinto and are subsequentlyre-measuredat fair value. Changesin fair value of derivativeinstrumentsnot accountedfor ashedgesarerecognizodin the statementof comprehensiveincom'e.Derivatives -8- are carriedas asse$whsn the fair value is positive andas liabilities when the fair valuo is negative. EmbeddedDerivatives An embeddedderivative is soparatedfrom hybrid or combinedcontractif all ofthe following conditionsaremet: . . r the eoonomiccharacteristicsand risks ofthe embeddedderivativearenot closelyrelatedto the economiccharacteristiosofthe hostconhact a separateinstrumentwith the sametermsasthe embeddedderivativewould meetthe defurition of a derivative;and the hybrid or combinedinstnrmentis not recogrizedat FVPL. The Companyassesses whetherembeddedderivativesarerequiredto be separatedfrom host contractswhen the Companyfirst becomesa parly to the oontract. Reassessment is only done when therearechangesin the tenns of the contractthat significantly modifies the oontractualcash flows. Changesin fair valuesofbifirrcated derivativesarerscognizedin "Mark-to-marketchangesin derivativeassef in the statementofcomprehensiveincome. As of December31, 2009,the Companyhasbifurcatedembeddodderivativerelatingto its equity oall option on the loan extendedto ACMDC (seeNote 22). Loansand Receivables Loansand receivablesarenon-derivativefinancial assetswith fixed or determinablepaymentsthat arenot quotedin an activ€ maxkeL They arenot enteredinto with ths intentionofimmediate or short-termresal€and arenot classifiedasfinancial assetsheld for trading, designatodasAFS financial assetor designatedasat FVPL. This accountingpolicy relatesto the Company's"Cash and cashequivalents"and"Receivables"accounts,which ariseprimarily from advancesto related partiesand othertypes ofreceivables. After initial measurement,loansandreceivablesaremeasuredat amortizedcost usingEIR method,lessallowancefor doubtful accounts.Amortized cost is calculatedby taking into account any discountor premiumon acquisitionandfeesthat arean integralpart of the EIR. The amortizationis includedin the "krtercst income"accountin the statementof comprehensive income. Lossesarising from impairmentof loansandreceivables,if any, arorgportedasprovision for impairmentlosses. Loansand receivablesaroclassifiedascurent ass€tswhon thoy are expectedto be realizedwithin 12 monthsafter the balancesheetdateor within the normaloperatingcyolq whicheveris longer. Otherwise,they are classifiedasnoncurrentassgts. AFS Investments AFS invesfrnent$arothosenonderivativefinancial assetsdesignatedas suchor arenot classified as at FVPL, IITM investmentsor loansand receivables.Thesearepurchasedandheld indeftnitely and may be sold in responseto liquidity requirementsor changesin marketconditions. After initial measurement, AFS financial assetsaremeasuredat fair value, The unrealizedgains and lossesarising from the fair valuationofAFS investmentsareexcludednet of tax from reportedeamingsand arereportedas"Net unrealizedvaluationgain (loss) on AIS investments"in the equity sectionofthe balanceshootand aspart of othercomprehensiveincome,net of deferred illffi tf, fi||ilil]ilil|||ilililil -9- incometaxesin the statementof comprehensiveincome, Wlen the investnrentis disposedof, the cumulativogainsor lossespreviouslyrecognizedin equity is recognizedas incomein the statementof comprshensiveincome. Dividendseamedon holding A.FSinvesfinentsarc recogrizedwhen the right of paymenthasbeenestablished.The lossesarising from impairment of suchinvestmentsarc recognind asprovisionfor impairrnentlosses. The fair value ofAFS investmentsthat are actively tradedin organizedfinancial marketsis determinedby referonceto quotodmarketbid prioesat the closeofbusinesson the reportingdate. AFS investrnentswhosefair value cannotbe reliably becauseoflack of reliable estimatesof future cashflows and discountratesnecessaryto calculatethe fair value ofunquoted equity instfuments, arecarriedat cost. The Company'sAFS investnentsarepresentedasnoncurr€ntassotsin the balanc€sheets (seeNote 7). OtherFinancial Liabil ities Issuedfinancial instrumentsor their components,which are not dosigttatedasat FVPL are classifiedasother financial liabilities, wherethe substanceof the contraotualarrangementresults in the Companyhaving an obligationeitherto deliver cashor anotherfinancial assetto the holder, or to satis! the obligation otherthan by the exchangeofa fixed amountof cashor another financial assetfor a fixed numberofown equity shares.The componentsofissued financial instrumentsthat containboth liability and equity elementsare accountedfor separately,witJtthe equity componentbeing assignedthe residualamountafter deductingfrom tho instument asa whole the amountsepamtelydeterminedasthe fuir value of the liabilrty componenton the dateof issue. After initial measurement, otherfinancial liabilities aremeasuredat amortizedcost usingthe EIR method. Amortizod oostis caloulatodby taking into accountany discountot prerniumon the issue and feestlat are an integralpart oftle EIR. Any offectsofrestatementofforeip currencydenominatedliabilities arerocognizedin the "Foreign exohangegains- net" and "Foreign exchangelosses- net" accountin the statementofoomprehensiveincome. Otherfinancial liabilities areclassifiedascurrentliabilities when they af,eexpectedto be settled within twelve (12) monthsfrom the balancesheetdateor the Companydoesnot havoan gnconditionalright to defer settlementfor at least 12 monthsfrom balanaesheetdatr. Otherwise, they areclassifiedasnonouffentliabilities. This accountingpolicy appliesprimarily to the Company's"Aocountspayableand accrued expenses","Short-termloanspayable","Long-term debt" and other obligationsthat meetthe abovedefinition (otherthan liabilities covgredby otherzrccountingst ndards,suchasretirement bonofit plan obligetion and insometax payable). Imoairmentof FinancialAssets The Companyassesses at oachbalancesheotdatewhetherthore is objectiveevidencethat a financial assetor group of financial assetsis impaired. A financial assetor groupof finanoialasset is deemedimpairedif, andonly if, thereis objectiveevidonceof impaiment asa result of oneor mor€eventsthat hasor haveoccunedafter initial recognitionofthe asset(an incurred"loss event") and that losshasan impacton the estimatedfirture cashflows ofthe fmancial assetor the groupof financial assetttrat canbe reliably estimated. lilul |ilHffi ilt[ilt|ililililttrill -10- Objectivoevidenceincludesobservabledatathat comesto the attentionofthe Companyaboutloss eventssuchasbut not limited to signifioantfinancial difficulty ofthe counterparty,a breachof contract,suchas a default or delinquencyin interestor principal payments,probabilitythat borrower will enterbankruptcyor other financial rcorganization. Loansand Receivables whetherobjective For loansandroceivablesoarriedat amortizedcos! the Companyfirst assesses individually significant'and that are widence of impairmentexistsindividually for financial assets individually oicollectively for finanoial assetsthat arenot individually significatrt. If it is financial determinedthat no objectiveevidenceof impairmentexistsfor an individually assessed asset,whethef signifieantor not, the assetis includedin a groupoffinanoial assetswith similaf for impairmelt, oredii risk charaJteristicsandthat groupof financial asseGis collectively assessed is or loss an impairment for which ald for impairment Assetsthat axeindividually assessed of impairment' assessment continuesto be recogrrizedarenot includedin a collective Ifthere is objectiveevidenoethat an impairmentlosson loansandreceivableshasbeenincurre4 the amounto:fthe loss is moasuredasths differencebetWeonthe asset'scarrying mount andthe presentvalue of estimatedfuture oashflows (excludingfuture cfedit lossesfhat hovenot been at initial incurred) discountedat the financial assefs original EIR (i.e., the EIR comp-uted allowance acoountand of t}rough use is roduced asset recognition). The carryingamountof the recognized. bo to continues the airount of lossis ciarled to profit or loss. Interestincome Receivables,togetherwiti the asiociatedallowanceaccounts,arewritten off whenthereis no realistic prospe.ctof future recovery. If, in a subsequentperiod,the amountofthe impairmentlossdecreasesandthe decreaseoanbo relatedobjectivelyto an eventoccurring aftet the tnputment was recognized,the previously recogrieedimpairmentloss is reversed.Any subsequentreversalof an impairmentlossis r""oftriod in itt" paxentcompanystatemeniofincome,to the extentthat the carryingvalue of the assetdoesnot exceedits amortizedcostat the revelsaldate. For the purposeof a collective evaluationof impairment,financial assetsaregfoupedon the basis of suehcredit risk characteristicssuchascustomettype, paymenthistory, past-duestatusand term. Futureoashflows in a group of financial assetsthat areoollectively evaluatedfor . impairmentareestimatodon-thebasisof historical lossexperiencefor assetswith oreditrisk characteristicssimilar to thosein the group. Historical lossexperienceis adjustedon.thebasisof currentobservabledatato reflect the iffeits of cunent conditionsthat did not affect the pe od on which the historical lossexperienceis basedand to removethe effectsof conditionsin the historical periodthat do noi exist currently. The methodolory and assumptionsused.for estimatingfuture cashflows arereviewedregularlyby the Companyto reduceany differenc,e betweenloss estimatesandactuallossoxperierce. AFS Inveshnents at eachreportingdatewhetherthereis objoctive For AFS investnents,the Companyassesses evidencpthat anAFS investnent is impaired. In the caseof an AFS equity investnent,this would include a significant or prolongeddeclinein the fair value oftho investrnentbelow its cost, "Signifioant'' is to bo evaluatedagainstcostofthe investmentand ,.prolonged"againstlho period in whicb the fair valuehasbeenbelow its original cost.If an AFS investrnint is impaked,an amountcomprisingthe differencebetweenits costand its currentfair value, lessany impairmentlosspreviouslyrecogniZedin net income' is transferred from other comprehinsiveincorneto inoomein the statgmentof compfehensiveincome. ffilllulilll illwil[ffi tililillllilllllilffi - ll Impairment losseson oquity investmentsarenot reversedthroughthe consolidatedstatemeNrt of income. Increasesin fair value after impainnentarerecopized directly in equitytlrough the consolidatedstatementof comprehensiveinoome, If there is objectiveevidencethat an impairmentlosson an unquotedequity instument that is not oarriedat fair value becauseits fair value cannotbe reliably measured,the amountof lossis measuredasthe differenoebetweenthe asset'soarryingamountandthe presentvalue of estimated future cashflows discountedat the cu ent marketrate ofreturn for a similar finauciat asset, DerecoCnitionof FinancialInstruments Financial Assets A financial asset(or, whereapplicable,a part of a financial assstor part of a groupof similar financial assets)is derecognizedwhen: l . the rights to recoiveoashflows from the assethaveexpired;or 2 . the Companyretainsthe right to receivecashflows from the asset,but hasassumedan obligation to pay them in full without materialdelayto a third parly undera'lass-through" arrangement;or the Companyhastransfenedits rights to receivesashflows from the assotandeither(a) has transferredsubstantiallyall the risks andrewardsofthe asset,or (b) hasl6ither transfored nor retainedsubstantiallyall the risks and rewardsofthe asset,but hashansferredcontrol ofthe asset. Wherethe Companyhastransferredits rights to receivesashflows from an assetor hasentered into a "pass-through"arrangementand hasneithertransferrednor retainedsubstantiallyall the risks and rewardsof the assetnor transferredcontrol ofthe asset,the assetis recognizedto the extpntofthe Company'scontinuinginvolvementin the asset.Continuinginvolvsmentt}rattakos the fotm of a guaranteeover the transferredassetis measuredat the lower ofthe original carrying amountof tho assetandtho maximumamountof considerationthat the Companyoould be requiredto repay. Finfrtcial Lidbilities A financial liability is derecopized when the obligationunderthe liability is dischargedor canoellpdor hasexpirod. When an existingfinancial liability is replacedby anotlrerfrom the samo lenderon substantiallydifferent terms,or the termsof an existing liability aresubstantially modified, suchan exchangeor modification is treatedasa derecognitionofthe original liability and the recognitionofa new liability, andthe differoncein the respectivecaxryingamountsis recognizedin the statementof comprehensiveincome. Offsetting FinancialInshuments Financial assetsandfinancial liabilities areoffset and the net amountreportedin the balancosheet if, and only if, thereis a currentlyenforceablelegal right to offset the recognizedamountsand there is an intentionto settlothe liability simultaneously.This is not generallythe casewith masternetting agreements,andthe relatedassetsand liabilities arepresentedgrossin the balance sheet. Investuents in Associates The Company'sinvestrnentsin associatesareaccoudtEdfor using the equity method. An associateis an entity in which the Companyhassignificant influenoe. Underthe equity method, the investmentsin assooiates af,eca.ffiedin the balancesheetat cost plus post acquisitionchanges in the Company'sshareof net assetsof the associate. ffiffimil|[!|ilililtt|i The statementof comprehonsiveincomereflectsthe shareof the resultsofoperationsofthe associate.Wheretherehasbeena changerecognizeddirectly in tho equity ofthe associate,the Companyrecognizesits shareof any ohangesand disclosesthis, when applicable,in the statement of ohangesin equity. Unrealizedgainsand lossesresultingfrom transactionsbetweenthe Companyand the associateare eliminatedto the extentofthe interestin the associate. The shareofprofit ofassociatesis shownon the face ofthe statementof comprehensiveinoomo. This i$ the profit attributableto equity holdetsof the assooiateand thereforeis profit aft€rtax and non-conhollinginterestsin tlle subsidiariesofthe associates. The financial stat€mentsof the associatearepreparodfor the samereportingperiod asthe Company. rJy'here necessary,adjustnentsaremadeto bring the acoountingpolicies in line with thoseofthe Company. After applicationof the equity method,the Companydotermineswhetherit is necessaryto recognizean irnpairmentlosson the Company'sinvestmentin associates,The Company determinesat eachreportingdatowhetherthero is any objectiveevidencethat th€ investnentin the associateis impaired. If this is the case,t}le Companycalculatosthe amountof impainnentas the differencebetweenthe recoverableamountof tl.reassociateandits carryingvalue and rooognizesthe amountin tle statementof comprehensivoinoome, Upon lossof significant influenceover tle assooiate,the Companymeasuresandrecognizesany retaininginvestnent at its fair value. Any differencebetweenthg carrying amountof the associate upon lossof signifioantinflusncoandthe fair value of the retaininginvestnent andproceedsfrom disposalis rec.ognized in profit or loss. Prooertvand Equioment Propertyand equipmentarecarriedat cost lessaccumulateddepreciationand any impairmentin value. The initial cost ofproperly and equipmentcomprisesits purchasepdce, including import duties, nonrefundablepurchasetaxosand any directly attributablecostsof bringing the assetto its working condition and location for its intendeduse. Expenditurosincuned afterthe propertyand equipmenthavebeonput into operations,suchasrepairsandmaintenance,arenormally charged to incomein the period when tlte costsare incurred. In situationswhereit canbe clearly demonstratedthat the expenditureshaveresultedin an increasein the future economicbenefits expect€dto be obtainedfiom the useofan item of propertyand equipmentbeyondits originally assessed standardof porformance,the expenditurosarecapitalizedasadditionalcostsof property and equipment. Eachpart ofan itern of properly andequipmentwith a cost that is significant in relationto the total cost ofthe item is depreciatedsoparately. Depreciationis computedusingthe straightJinemethodover the estimateduseful lives of the assetor its significant components.The estimateduseful lives of propertyand equipmentareas follows: Category Condominiumunits and improvements Office equipment Furnitureand fixtures NumberofYears 20 tilil[[ilililtilffiilil]ti n - tJ - The assetsresidualvalues,useful lives and depreciationmethodarereviewedperiodicallyto ensurethat the periodsand methodof depreciationareconsistentwith the expectedpatternof economicbenefitsfiom itemsofproperty and equipment. Whenassetsareretired or otherwisedisposedof, both the cost androlatedaccumulated depreciationand any impairmontin value areramovedfrom the accountsand anyresultinggain or loss is creditedto or chargedagainstcunent operations. Fully depreciatedpropertyand equipmentareretainedin tho accountsuntil theseareno longer in use. Impairmentof hone4v andEguipment Propettyand equipmentarefeviewedfor impairmentwhonevereventsor changesin circumstanc€sindicatethat the carrying amountof an assetmay not be recoverable.If any such indication existsand wheretho carryingamountof an assetexceedsits recoverableamount,the assetor cash-generating unit is written down to its recovefablgamount. The estimatedrecoverable amountis the higherof an asset'snet sellingpriceandvaluein use. Thenet sellingpriceis the amountobtainablefrom the saleofan assetin an arm's lengihfansaotion lessthe costsofdisposal while valuo in useis the presentvalue of estimatedfuture oashflows expectedto arisefrom the continuinguseof an assetand fiom its disposalat the end of its useful life, For an assetthat does not generatelargely independentcashinflows, the remverableamountis determinedfor the cashgeneratingunit to which the assetbelongs. Impairmentlossesarerecognizedin the statementof comprehensiveincome. Recoveryof impaimrentlossesrecognizedin prior yearsis rccordedwhen thereis an indication that the impairmentlossosreoognizedfor the assetno longerexist ot havedooreasod.The recoveryis recordedin the statementof comprehensiveinoome, However,tlte increasedcatrying amountof an assetdueto a rocoveryof an impairmentloss is recognizedto the extentit doesnot exceedthe carrying amountthat would havebeendetermined(net of depreciation)had no impairmentlossbeenreoognizedfor that assetin prior years. DeferredExplorationCosts Deferredexplorationcostsincludecostsincurreda.fterthe Companyhasobtainedlegal righb to explorein a specific area,including the determinationofthe technicalfeasibility andoommercial viability ofexnacting mineralresources.Deferredexplorationcostsinolude,amongothers, aoquisitionof rights to explore,topographicaland geophysicalstudies,exploratorydrilling, treNrching, samplingand activitiesin relation to evaluatingthe technicalfeasibility and commercial viability ofexhacting mineral resowces.All explorationcostsandrelatedexpensesaresarriedas deferredexplorationcosts,net of impairmentlosses,if any. The costsand expensesfor explorationactivitieswhich do not result in the discoveryofpetroleum or mineral depositstiat axecommerciallyproductivoarorecognizedin the statementof comprehensiveincomeafter the project is abandonedandwhen managementexpectsno further recovery. Whenths resultsof explorationoostsaredeterminedto be negative,the accumulated costsarewdtten off. fftlle resultsare positive,the defenedexplorationcostsshall be capitalized and amortizedbasedon the unit ofproduction methodfrom the startof oommercialoperations. Provisions Provisionsarerecognizedwhon the Companyhasa presentobligation(legal or oonstnrctive)asa result ofa pastevent,it is probablethat an outflow of resouroesembodyingeconomicbenefitswill be requiredto settlethe obligation and a roliableestimatecan be madeofthe amountofthe obligation. If the effect of the time value of moneyis material,provisionsaremadeby discountingthe expectedfuture cashflows at a pre-taxamounttllat reflectJourent maxket -14- assessments ofthe time value of moneyand,when appropriate,the risks specifioto the liability. Wlere discountingis used,the increasein the provision dueto the passageof time is recognized as interestexpgnse. Wherethe Companyexpectsa provisionto be reimbursed,the reimbursementis recognizedas a soparatoasset,but only when receip of reimbursementis virtually certain, The oxpenserelating to any provision is presentodin the statementof comprehensiveincome,net of any reimburselnent. Capital Stockand Additional Paid-inCanital The Companyhasissuedoapitalstockthat is classifiodasequity. Incrementalcostsdirectly attibutable to the issueof new capital stockor optionsare shownin equity asa deduction,net of tax, from the proceeds.Amount of contributionin excessof par value is accountedfor asan additionalpaid-in capital. Wherethe Companypurchasesthe Company'scapitalstock(treasuryshares),the consideration paid, including any directly attibutable incrementalcosts(net of applicabletaxos)is deducted from equity attributableto the Company'sstockholdersuntil the sharesme cancelledor reissued. Wherc suchsharesare subsequentlyreissued,any considerationreceive4 net of any directly athibutableincrementaltransactioncostsandthe relatedtax effects,is includedin equity attributableto the Company'sstockholders. RetainedEamings The amountincludedin retainedeamingsinoludesprofit attributableto the Company's stockholdorsand roducedby dividends. Dividendsarerocognizedas a liability anddeductedfrom equity whenthey aredeclared. Interim dividendsaredeductedfrom equity whenthey arepaid. Retainedeamingsare appropriatedfor the cost oftreasury sharesacquired. Whenthe appropriationis no longerneede4 it is revorsed,Dividendsfor the year that areapprovedafter the balancesheetdatearedealtwith asan eventafterthe balanoeshoetdate. Retainedearningsmay also includeeffect of changesin accountingpolicy asmay be requiredby the standard's transitionalprovisions. Eamings(Loss)Per Share Basiceamings(loss)per shareis computedbasedon the weightedaveragenumberof shares outstandingandsubscribedfor eachrespectiveperiodwith retroactiveadjustnentsfor stock dividendsdoolaredifany, Whensharesaredilutive, the unexercisedportion ofstock optionsis includedasstockequivalentsin computingdiluted earningsper share. Diluted eamings(loss)per shareamountsare calculatedby dividing the net profit (loss)by the weightedaveragsnumberofordinary sharesoutstanding,adjustedfor any stockdividends declaredduring the year plus weightedaveragenumberof ordinarysharesthat would be issuedon the oonversionof all the dilutive ordinaw sharesinto ordinarvsharEs, SeementReoortine An operatingsep.ent is a componentof an entity that: (a) engagesin businessactivitiesfrom which it may eam rwenues and incur expenses(including revenuesand expensesrelatingto tansaotionswith othercomponentsof tlle sameentity); (b) whoseoporatingresultsareregularly reviewedby the entity's chiefoperatingdecisionmakerto makedecisionsaboutresouroesto be allooatedto the segnrentand assessits performance,and (c) for whioh discretefinancial informationis available. rlffi rNililrfiflilfl il]iltffi ffit[fr]ill - l) - The Company'ssegmentsparlainto its investmentsin associates.This segnent is carriedby North Triangle DepotCommercialCorporation(NTDCC) and United ParagonMining Corporation(UPMC), the Company'sassociates.The summarizedfinancial andotherrelevant information ofthe Company'sassociatosaredisclosedin Notes 8 and 24 to tho financial statements. IncomeTaxes Current Income Tm Curront inoometax assetsand liabilities for the currentand prior periodsaremeasuredat the amountexpestedto be recoveredfrom or paid to the tax authority. The tax ratesandtax laws used to computethe amountarethosethat havebeenenactedor substantivelyenactedasat tho balance sheetdate. DeferredIncome Tm Deferredincometax is providod,usingthe balancesheetliability method,on all temporary differencesat the balancesheetdatebetweenthe tax bas€sofassetsand liabilities and th€ir carrying amountsfor financial reportingpurposes. Deferredincometax liabilities arerocognizedfor all taxabletemporarydifferences. Deferred inoometax assetsarerecognizedfor all deductibletomporarydifferencesto tls oxtentthat it is probablethat taxableprofit will be availableagainstwhich the deductibletemporarydifferences canbo utilized. The c.arryingamountof deferredincometax assetsis reviewedat oachbalancesheetdateand reducedto the extentthat it is no longerprobablethat sufficient t xable profit will be availableto allow all or part ofthe deferredincometax assetsto b€ utilized. Deferredincometax assetsand liabilities aremeasuredat tho tax ratethat is expectedto apply to the period when the assetis realizedor the liability is settled,basedon tax rates(andtax laws)that havebeenenactedor substantivelyenactedat the balancesheetdate. RetirementBenefit Plan The Companyhasa definedretirementbenefit plan which requirescontributionsto be madeto a soparatelyadministeredfund. The costofproviding benefitsunderthe definedbenefit plan is determinedusing the projectedunit credit actuarialvaluationmethod. Actuarial gainsand losses arerecognizedas incomeor expensewhenthe net curnulativeunrecognizedactuarialgainsand lossesfor the planat the endof thepreviousreportingyearoxceeded10%ofthe higherofthe definedbonefit obligation andthe fair value of plan assetsat t}tat date. Thesegainsor lossesate recogrized over the expectedaverageremainingworking lives ofthe employeesparticipatingin the plan. The pastsorvioeoost is rocognizedas an oxpenseon a straight-linobasisover the averageperiod until the benefitsbecomevested. Ifthe benefitsarc alreadyvestedimmediatelyfollowing the introductionof, or changesto, a pensionplan, pastservicecost is recognizedimmediately. The definedbenefit liability (asset)is the aggregateofthe prosentvalue ofthe definedbenefit obligation and actuarialgainsand lossesnot reoognizedreducedby pastservisecost not yet recognizedand the fair value ofplan assetsout of which tho obligationsareto be settloddireotly. If suohaggregateis negative,the assetis measuredst the lorver of suchaggrogateor tle aggregate of cumulativeunrecognizednet actuariallossesandpastservioecostand the presentvalue of any economicbenefitsavailablein the form of refundsfrom the plan or reductionsin the future conhibutionsto tlle plan. ililffi fl[]ilililililfl$il flilililu1Iil -16- If the assetis measuredat the aggregateof cumulativeunrecognizednet aotuariallossesandpast servicecost andthe presentvalue ofany economicbenefitsavailablein the form ofrefunds from the plan or reductionsin the future contributionsto the plan, net actuariallossesof the curent period andpast servicecost ofthe currentperiod arerecognizedimmediatelyto the extentthat they exceedany reductionin the presentvalue ofthose economiobenefits. Ifthere is no changeor an increasein the presentvalue ofthe economicbenefits,the entirenst actuariallossesofthe currentperiod and pastservicecost ofthe currentperiod arerecogsizodimmedietely. Similarly, net actuarialgains of the currontperiod afterthe deductionof pastservicecost of the cun€nt period exceedingany increasein the presentvalue of the economiobonefitsavailablein the form of rofundsfrom the plan or reductionsin the future contributionsto the plan. If thereis no change or a decreasein the presentvalue ofthe economicbenefits,tlre entirenot aotuarialgainsof the currentperiod aftor the deductionofpast serviceoostofthe currentperiod arerecognized immediately. OperatineLeases Operatingleasesrepresentthoseleasesunderwhich substantiallyall risks andrewardsof ownershipoftho leasedassetsremainwith the lessors.Leasepaymentsunderan operatinglease arerecognizedas an expensein the statementof comprehensiveincomeon a straightJinebasis over the leaseterm. Foreisl CurrencvTransactions Transaotionsin foreign curencies axeinitially recordedusing the exchangemte at the dateofthe hansaEtion.Monetaryassetsand liabilities denominatedin foreign currenciesarerestatedusing the rato ofexohangeat the balancesheetdate. Exchangegainsand lossesarisingfrom foroign currencytransactionsand kanslationsofforeign cunency denominatedmonetaryassetsand liabilities are creditedto or chargedagainstcurrentoperations.Nonmonetaryitemsthat are msasuredin termsofhistorical cost in a foreign currencyaretranslatedusingthe exchangeratesas at the dateof the initial transactions. Continqencies Contingentliabilities are not recognizedin the financial statern€nts.Thesearo disclosedin the notesto the financial statementsunlessthe possibility ofan outflow of resourcesembodying economicbenefitsis remote. Contingentassetsarenot recognizedin the financial statem€n$but disclosedwhen an inflow of economicbenefitsis probable, EventsAfter the BalanceSheetDate Postyear-endeventsthat provideadditionalinformationaboutthe Company'sposition at the balancesheetdate(adjustingevents)arerofloctedin the financial statements.Postyear-end eventsthat axenot adjustingeventsare disclosedin the notesto financial statementswhen material. 3. SignificantAccountingJudgmentsand f,stimates to The Company'sfinancial statementspreparedin accordancewith PFRSrequiremanagement makejudgmentsand estimatesthat affect amountsreportedin the fnancial statementsandrelated notes. Thejudgrnentsand estimatesusedin tlre financial statementsarebasedupon management'sevaluationof relevantfacts and circumstancesasof the dateofthe Company's finanoial statomsnts.Actual rcsultscould differ from suchestimates. Judgrnentsand estimatesareoontinuallyevaluatedandarebasedon historical experiencesand other factots, including expectationsof future eventsthat axebelievedto be reasonableundertho circumstances. Judprents Detemining Functional Cunency Basedon the economissubstanceofthe undedyingoircumstances relevantto the Company,the fimctional ourrencyof the Companyhasbeendeterminedto be the F. The P is the currencyof the primary economicenvironrnentin which the Companyoperates. DeterminingClassifieationof Leases The Companyhasent€redinto variousleaseagreem€ntsaslessee.On certainleasecommitnents, the Companyhasdeterminedthat the lessorretainsall significant risks and revr'ardsof ownership ofthose properties. Theseleaseagreementsare accountedfor as operatingleases(seeNote l7). The Company'sfinancial assetsand financial liabilities aredisclosedin Note 22 to the financial statements. Detemin@ Wether Signficant Influence Existsfor Purposesof Applying PAS 28,Invesfinentin Associates The Companyevaluatesvariousfactorsin determiningwhethersignificant influenceexists. Under PAS 28, thereis a presumptionthat if ownershipis below 20%, significant influenoedoos not exist unlessotherwisesupported.Among the faotorsbeing consideredby managementin the in assessment are,degreeofrepresentationin the BOD ofthe investee,reprosentations managementcommitteesofthe investee,corporategovernancearrangements, and powgrto veto significant operatingand frnancialdecisions. Underthe exeroiseof this judgmen! the Companyclassifiodits 15.79%investrnentin NTDCC as an.d an inveshnentin associate.The carryingvalueofthis investne.nt is F403,127,978 (seeNote 8). F413,009,968 asof Deoomber 31, 2010and2009,respectively The Companyhasinvestmentin UPMC whereownershipis 25.62%. This is classifiedasan investmentin associate.The carryingvalue ofthis invsstmentis P648,582,444and*644,415,884 asof December3 1, 20I 0 and2009,respectively(seeNote 8). Determining WhetherInvestmentuin AssociatesQnlify as OperatingSegments for Pwposesof Applying PFRS8 The Companyexercisesjudgment in determiningwhetherinvestnentJin associatesqualift as operatingsegmentsasprescribedby PFRS8 althoughthe Companydoesnot control the investees. Managementconsidersthe following factorsin its assessment: review of operatingresultsand performanceof an equity methodinvesteefor purposesof makingresourceallocations,evaluating finanoial performanceor evaluatingwhetherto retainthe investor-investeerelationship. Basedon judgment,the Companyconsidersits investmentsin IIPMC andNTDCC as management operatingsegmonts,The carrying value ofthe Company'sinvestmentsin associatesamountedto (seeNote8). FI,051,710,422 andF1,057,485,852 31,2010and2009,respectively asof December Estimates EstimatingImpairmentof Receivables The Companyassesses at eachreportingdatewhetherthere is any objootiveovidencetlrat receivablesare impaired. To determinewhotherthereis objectiveevidenceof impairmenqthe Companyoonsidersfactorssuchasthe probability of insolvencyor signifioantfinancial difFtcultiesof the affiliated companiesanddefault or significant delay in pa)'ments.Wherethere rililtililil ||il|ililil |il|il ilil ilil ilil lililil] -i8- is objectiveevidenceof impairment,the amountandtiming of future cashflows areestimated basedon ageand statusofthe financial asset,aswell ason historical lossexperienoe.Allowance for impairmentloss is providedwhon managoment beliovesthat the rec€ivablebalancecannotbe collectedor realizedafter exhaustingall efforts andcoursesofaction. As of Deoombor31, 2010and2009,no allowancefor impairmentlosseson receivables was recognizedby the Company.The receivables and?696,481,904 asof arc caniedatP277,946,757 December3 I , 20I 0 and 2009,respectively(seeNote 6). EstimatingImpairmentof AFS Equity Investments The Companyteats AFS equity investnentsas impairedwhen therehasbeena signifioantor prolongoddoolinein fair value below its cost. This determinationof what is significantor prolongedrequiresjudgnent. The Companytreats"significant" generallyas20% or moreof t}re original oostofthe investne.nt,and "prolonged"asgxeaterthan 12 months. In makingthis judgment,t}te Companyevaluatesamongother factors,the normal volatility ofquoted prices, evidenceof deteriorationin the financial bealthofthe investee,industryor sectorperformance, chaogesin t€chnologyand economicenvironment,For AFS investnentscarriodat oost,the Companyestimatesthe expoctedfuture cashflows from the investnent andcalculatesthe amormt of impairmentasthe differencebetweenthe presentvalue of expectedftturo oashflows from the investrnentand its acquisitionoostandrecognizesths amountin the statementof comprehensive income. 3 1,2010and AFS invostnontsamourited to F3,033,803,476 and?I,108,558,736 asof Decernber in 2010and 2009,respectively.Thereareno impairmentlosseson AFS investments recognized 2009(seeNote 7). EstimatingFair ValuesofFinancial Assetsand Financial Liabilities Wherethe fair valuesoffinancial assetsand liabilities rooordedin the balancesheetscannotbe derivedfrom active markets,they are determinedusing generallyacceptedmarketvaluation models. The inputs to thesomodelsaretakenfrom observablemarkets,wherepossiblebut where this is not feasiblg estimatesareusedin establishingfair values. Theseestimatesmay include considerationsof liquidity, volatility and correlation. Certainfinancial assetsand liabilities were initially reoordodat its fair value (seeNote 22). Estiinating Impairmentof Property at d Equipment The Companyassesses impairmenton propertyand equipmentand otler nonourrentassets whenevereventsor ohangosin circumstancesindicatethat the carrying amountofan assetmay not be recoverable.The factorsthat the Companyconsidersimportantwhich could trigger an impairmentreview inoludethe following: r o . Sienificant underperformance relativeto expectedhistorioalor projectedftture operating fesults; Significant changesin the mannerofuse ofthe aoquiredassetsortle statery for overall business;and Significant negativeindustrTor economictrends, An impairmentloss is recognizodwheneverthe carryingamountofan assetexceedsits recoverableamount. The recoverableamountis the higher ofan asset'snet selling price andvalue in use. The net selling price is the amountobtainablefrom the saleof an assetin an arm's length transactionwhile value in useis the presentvalue of estimatedfuture cashflows expectedto arise from the continuinquseofan assetandfrom its disnosalat the end of its useful life. Recoverable - 19amountsareastimatedfor individual assetsor, if it is not possible,for the cash-genorating unit to which the assetbelongs. For impairmentlosson specificassets,th€ rcooverableamount representsthe net selling price. h determiningthe presentvalue of estimatedfuture cashflows expectedto be generatedfrom the continueduseof the assets,the Companyis requiredto makeostimatesand assumptionsthat can materially affect the finarcial statements. No impairmentlosseswerereoognized in 2010and2009for propertyandequipment.As of December3 1, 20I 0 and2009,the net book valuesof propefy and equipmentamountedto Fl8,047,144andF19,465,931, (seeNote9). respootivoly EstimatingImpairmentof Deferred Exploration Costs The Companyassesses impairmenlon deferredexplorationcostswhen facts and ciroumstanoes suggestthat the carrying amountofthe assetmay exceedits recoverableamount. Until the Companyhassufficient datato detemine technioalfeasibility and commeroialviability, defened explorationcostsneednot be assessed for impairme,nt.Factsand cicumstancesthat would requirean impairmentassessment as setforth ifi PFF.S6, Erplorationfor and Evalaationof Mineral Resources,areas follows: o o r r The period for which the Companyhasthe right to explorein the specific areahasexpired during the period or will oxpire in the nearfuture, and is not expectedto be renewed; Substantiveexpenditureon further explorationfor and evaluationof mineralresourcesin the specificareais neitherbudgeted nor planned; Explorationfor andevaluationofmineral resourcesin the specific areahavenot led to the discoveryof commerciallyviable quantitiesof mineralresourcesandthe ontity hasdecidedto discontinuesuchactivities in the specific areq and Suffioiontdataexist to indioatothat, althougha developmentin the specific areais likely to proceed,the carryingamountof the explorationand evaluationassetis unlikely to be recoveredin full from successfuldevelopmentor by sale. The carryingvalueofdefenedexplorationcostsamountedto Fl56,519,409andF155,988,874 as of Dooombor3 I , 20I 0 and2009,respectively.As of Decembor3 I , 20I 0 and2009,no allowanoo for impairmentlosseson deferredexplorationcostswasrecognizedby the Company(seenote 10). Estimating UsefuILives of Propefiy @d Equipment The Companyestimatesthe useful livos ofproperly and equipmentbasedon the period over which the assetsare expectedto be availablefor uso. The estimateduseful lives of propertyand equipmentarereviewedperiodically and are updatedif expoctationsdiffer from previous estimatesdueto physicalwear and tear,technicalor commercialobsolescsnce and legal or other limits on the useof the assets.In addition"estimationof the useful lives is basedon tho oollective assessment of intemal technicalevaluationand experiencewith similar assets.It is possiblg however,tbat future rezultsof operationscould be materially affectedby changesin estimates broughtaboutby ohangesin factorsmentionedabove. The amountsand timing of recorded expensesfor any period would be affectedby changosin thesefactorsand circumstances. As of December3 I , 2010 and 2009,the net book valuosof propertyand equipmentamountedto Fi8,047,144andF19"465,931, (seeNote 9). The esthnated respectively usofullivesaredisclosed in Note 2 to the financial statements. |iltiltilfi lilltiltililillllillilfl |mililffi -20 - EstimatingRealizability of DeferredIncomeTaxAssets The Companyreviewsthecarryingamountsof defenedinoometax assetsat eachbalancebheei dateandreducesthe amountsto theextentthatit is no longerprobablethatsufficienttaxable profit will bo availableto allow all or partofthe deferredincometax assets to be utilized. profrtto allow all generate taxable However,thereis no assurance the can sufficient that Company part or of its deferredinoometax ass€ts to be utilized, asof andF20,170,329 TheCompanyhasdeferredincometax assets amountingto Fl 1,881,759 (seeNote 20). Deoember 31, 2010and2009,respectively Estimating RetirernentBenefitsExpense on the The determination oftle Company'sobligationandcostfor retirementis dependent These in calculatingsuchamounts, selectionofcertainassumptions usedby actuaries Actualresultsthatdiffer from assumptions aredescribedin Note l9 to the financialstatoments. the Company'sassumptionsareaccumulatedand amodizedover future periodsandtherefore, generallyaffectthe Company'srecognized expenseandrecordedobligarionin suohfuture andappropriate, periods.While management arereasonable believesthatits assumptions may significantdifferencesin actualexperience or signifioantchangesin theassumptions materiallyaffeotthe Company'sretirementobligations. to As of December31, 2010and2009,the retirementbenefrtplanobligation(asset)amounted for the yearsended (F99,096)andF4,467,909, respectively.Net retirementbenefitexpense F2,389,463andP2,273,300, to F3,053,129, December31, 2010,2009and2008amounted (seeNote l9). respectively 4. Cashand CashEquivalents Cashon handand with banks deposits short-term 2009 2010 P64,383,119 P3,708,565 15,204,923 161,420,448 Cashwith bankseam interestat tleir respectivebank depositrates. Short-termdepositsaremade ofthe on the immediatecashrequiremonts for varyingperiodsofup to threemonthsdepending Companyand earninterestat the respectiveshort-termdepositrates. compdsethe following of cashflows,cashandcashequivalonts For the purposeofthe statement asat Januaxy1: Cashon handandwith banks Short-term deposits 2009 F4,919,358 F15,987,341 15,000,000 6,156,052 F19,919,3s8 P22,1$;tn ilillllillillll ll|| ]fr illI rililtilIilil1[fl 5. FinancialAssetsat FVPL This accountconsistsof investmentsin sharesof stockof the following companies: 2010 ShangProperties,Inc. (SPf Vulcan Industrial and Mining Corporation(VIMC) The Philodrill Corporation(TPC) Philippine SevenCorporation Manila Water Company Oriental Pettoleum 2009 P,{51tr47,514 F376,896,506 9922,500 4,838!300 4,5t5,730 31,984,697 4,650,000 I sharesof vIMC for F0.52per shareandsoldall of In 2010,the companypurchased12,250,000 its sharesof stocli in ithilippine SevenCorporation,Manila Wat€r Comp&nyand Oriental Petroleum. Gains(losses)on fait value changesof financial assetsat FvPl-recognized in 2010' ZOOfanj . respectively'Unrealizodgain 2008amountedto Pg3,183,O42,izlo,ll+Jqo,and(F293,737,133), and to F281,509'353 on fair valuechangesoffinancialassetsat FVPL amounted respectively' 2009, 31,2010and aso1Decembor F203,412,074 6. Receivables Due from telatedparties(seeNote 14) Others F166,329,686 2009 P652,026,615 r 11.617 455 *277.946J57 481 Thefollowingaret}resignificanttransactionsenteredintobytheCompanyinrelationtoits receivables: ($l l'500'000)!o ACIvqC' a a. On July 9,2009,the Companyextendoda loanof F531,300'000 365 daysafterJuly 9' . collectible is loan publiciyJisted entity undercommoncontrol. The in arrears.Basedon the serni-annually ).009and bearsinterestof l5oi per aanum,collectiblo repaymentof loan demand early termsof the loan agreoment,the Companyhasthe option to and accruedinterest180daysafter July 9,20A9. Inaddition,theCompanyhastheoptiontoeffectpaymentofprincipalandinteresttlrrough any one or combinationof the following: 1. Cashpaymontequalto amountof loan and interest'either in $ or P or a combination of both currencies; 2. Dolivery of oommonsharcsof Aquatlas,Inc' (AI), a subsidiaryof ACMDC' at a conversionprice which shall be mutually agreedupon by the partieq and/or 3. Delivery ofiommon sharesof ACMDC at a oonversionprice of F10 per share' to The embeddedoquity call option was accountedfor separatelysinceit is not closelyrelated and F to amounted the host debtcnnfuact'Derivative assetrelatingto the option flilll tffirililxlfllilhltillil -zz- gainon dsrivativeasset ?7g,7gg,174,in2010and2009,respectively.The mark-to-market and tecognizedin the statement incomeamountedto F307,718,166 of comprehensive *3 | ,052,472in 20I 0 and2009,respectively. The net movementin the discountrecognizedon the receivablearising from the bifurcationof the embeddedequity call option is asfollows: 2010 Balanceat beginningofyear Discormton receivable Accretion of discounton receivable(seeNote 18) "25374p9s 2009 F48,746,701 (25 F2537499s Accrued interestreceivable,which is presentedas"Others" underthe "Receivables"accormt asof Deoember in thebalancesheet,amounted 3 1, 2010 to F 110,723,7 65 andF44,448,250 and2009,respectively. On December29, 2010,the Companyconvededinto sharosof stockofACMDC the entire principalof the loanamountingto $11.5million whichthe Companyextendedto ACMDC pursuantto the Agreement('the Conversion'). The conversionof advancesconsistof entitlementto 50,450,000 sharesof ACMDC at the priceof F10.00per share.The'fairvalue in ACMDC's of shareasof December29, 2010is F17.68per share.Additionalinvestrnent as of December 29, 2010 ACMDC, classifiedasAFS investment, amounted to F891,964,840 (seeNote 7). b. On Decernber16,2009,the Companyassignedwithout recoursoits receivablesfrom Europhil Textiles Co., Inc. (ETCI), an entiry undercommonoontrol, amountingto F277,529,288to Euonote hofrts Limited (EPL). Suchamountwasconsidoredaspartial paymentof the outstandingloans from EPL (seeNote 12). c, The Companyprovidedadvancesto its relatedparties,namely,Alakor Corporation(Alakor) andNationalBookstore(NBS). As ofDecember31, 2010and2009,theseadvanoes (seeNote 14). amountedto P96,885,118 respectively andF91,869,996 d. In 2009,advancesto Filipinas Enerry Corporation(FEC), a relatedparty, amountingto F16,908,435 werecollectedin tull. e. As ofDecombet 31,2010 and2009,the Companyhasadvancesto VIMC amountingto (seeNote l4). F2,130,186 are Therewereno impairedreceivables asof December31,2010and2009. Thereceivables assessed to be colleotibleandin goodstandingasofDecernber31, 2010and2009(seeNote22). llllilll lilfr ]ilililrilililffiililt ||] 7. AFS Investments 20to Quotedshares- at fair value shaxes- at cost 2009 *2,996,959J40 F1,089,000,000 19.558.736 736 F3,033,803,476P1,108,558,736 QuotedAFS invesunentsrepresentinvestrrentin ACMDC. As disoussedin Note 6, the Company convertedits advancesto additionalsharesof stockof ACMDC on December29, 2010. from 11.6'l%in2009to 14.42%n Aocordingly,the Company'sownershipin ACMDC increased 2010. P1,161,865,557 asof to costofthe AFS investments amountod The aggregate "2,07l,t20,397and Decernber 31, 2010and2009,respectively. In 2010,the CompanyadvancedF15,790,000for future subscriptionto Rail Transit and Development,Inc. andmadeadditionaladvancesto MRT DevelopmentCorporationamountingto F1,500,000. Thesoaroinoludedin unquotedshares. in 2010,2009and2008for the Company'sinvestnontin No impairmentlosswasrecognized ACMDC quotedshares,dueto the volatitity of the fair marketvalue of ACMDC's shares. Movementsin the unrealizedvaluationgain (loss)on AFS investmentsreoognizedasa separate componontof equityareasfollows: Balancesat beginningofyear Changesin fair value of AFS invostments Balancesat endof 2009 2008 2010 P491,193,179 (Ps3,306f,21)(F815,606,821) (1,306,800,000) weresoldin 2010,2009and2008. No AFS invesfinents 8. Investments in Associates 2010 Acquisitioncost: Balancrsat beginningofyear Redemption* Balancesat endofvear Aocumulatedequity in net eamings(losses): Balancesat beginningofyear Equity in net eamingsduring the year received Divide,nds F1,068$06,080F1,100,086,080 (31,s80O00) (3t,!!!'999) f,036'926'080 (11,020t28) 38,199,720 l'068'506'080 (s,630,984) z,4J |,J LO *The redemption has no impact on ilutilililililmiltfl Iiltffi ililililfl[]fliltl 'ln The carryingvaluesof investments in associates areasfollows: Percontage of UPMC NTDCC 25.62 t5.79 2010 2009 ?648F82,444 P644,475 413.009 710,422F1.057.485 Theinvesffiontin NTDCCincludes investrnent in votingandredeemable preferred shares amounting to F361,338,276 andP392,918,276 asof Declmber31,2010*a zoos,respeciively. Thesummarized financialinformation oftheassociates asofandfor thevearsended December 31,2010and2009areasfollows(inthousands): {JPMC Totalassets Totalliabilities Revenue Netloss 2010 P1,112,092 599,015 35,502 2009 ?1,112,244 374,332 45,052 NTDCC Total asseb Total liabilities Reyenues Net income 2010 *907,57E 1,673,805 1,7E2,891 215,916 2009 P7,665,524 5,029,584 1,626,241 87.267 Investment in UPMC UPMC'smainbusiness istheexploration, development, exploitation, recovery andsaleof gold. UPMCbecame anassociate onAugustl, 2008withtheconversion of thecompany's recei;able fromUPMCto thelatter'scommon shares. Investment in NTDCC NTDCCownsandoperates theTriangleNorthof Manila(TriNoma) commerialcenterwhichis built adjacentto theMetroRailrransit (MRT)Depot.Thedevelopment rightsoverthe 8.3-hectare portionof theMRTDepotwereaoquirldfromMRTDCin 2002. rilffi ililtffi tililril ililtflililililui ill -25 - 9. Property and Equipment 2010 Furniture Cost: Balancesat begirning ofYear Additions Accumulateddeprecirtion: Brlancesat beginningof Year Cost: atbeginningof Year Balances Additions Balancesat endo AccumulateddePreciation: Balancesat beginningofYear ' P"r*tu9i,, .,,,=Balancesat €nd of Net book wlues r42,091,616 F1,968,186 3,529,683 1.105.211 1234,,779 |475229 F24,53s,031 2E5,138 5,069,r00 ?22,091,616 Ft,691,107 P4'.15,229 ?24,257,952 277.079 277.079 1.968,186 2,424,472 946.8?0 190,092 3'561'434 l;19*;?ll ';11'x93 r3;:ffiFl9l:;t;:ff8 J F190.091 10. Deferred Exploration Costs Surveyand Geophy-sical Tho Companyis a participantin oertainSorvicesContracts(SC) and of Enerry Department the through g"pf"*dit 6-u*ts 1c'SnCi wittr ttrePhilippine Govemmont in situated areas ofthe contract in-6e), ro. tt "tploraiion, Jevelopmentand exploitation " Island' and Mindoro ilorthwest Palawan,Sulu Sea expendituroobligationsand The aforemontionedSC and GSEC,which providefor minimum work operating.agreT:l:^*T:l by the drilling of the sp""ified nu-boof wells, arecovered ::l^f"ttr The deferred *e pJicifi"tiog ini.r".tr, .ight* ;doutigations of tte participantsto the contract^s.. tte Company;ssharein thejointlY controlledassets:l^T:,-^.*, explorationcostsrepresent in costs_incurred aforementionodsci and GSECs. Ti," full *oou"ry of the deferredexploration is depeudent areas conneotionwith th" co*panyt purticipationin thi explorationof the oontract the successof the and areas oontact respective the from uponthe discoveryor miner;l ,e'sour"es future develoomontthereof. illl]|m illlffi ilfifiilllilililllllllllillil -26 - The percentageofparticipation andthe balancesof tfte deferredexplorationcostsas of December31 areasfollows: Percentageof SC 6 (Offshore NoflIwest Palawan) Block A (Octon) SaddleRookProspect EsperanzaProspect SC41 (SuluSea) SWAN Block (NorthwestPalawan) SC 39 @usuanga,/Calaui$ . GSEC 86 (NorthwestMalampaya) GSEC 83 (I.loilh CalamianProject) SC 53 (OnshoreMindoro) Palawan" SC 14CNorthwest TaraBlock) 11.11 1.68 33.58 5.00 ?.50 P54,938,245 F54,407,710 7,325,361 7$25,361 823,1 18 823,1r8 47,376,414 47,376414 15,891,445 10,345,190 s33,923 15,090,930 4,194,783 4,194,783 ?156,s19y'09 Fl55,988,874 15,891,445 10"345,190 533,923 15,090,930 SC 6 Block A In July 2009, the DOE approvedthe extensionof tJIeterm of ServiooContract6, OctonBlock to be reckonedfrom March l, 2009.The ls-year term extensionshall be for a soriesofthree fiveyeartenns, subjectto compliancowith certainconditions,including the annualsubmissionof and training fund to the DOE. work programand budgetandpaymentoftechnical assistance With the commercialityof the OctonField beingtied up to Phase2 of the Galocdsvelopment, Vitol GPC undertookthe roprocessingofabout 75 square-kilometersof Octon 3D seismicdatain conjunctionwith the reprocessingof the adjoiningGaloo3D dataaspart of the GalooPhase2 evaluationactivities. Reprocessingof the 3D datasetwas completedat the end of2009' kr October2010,Vitol GPCprcsentrdto the consortiumthe resultsof thoir evaluationof tle reprocesseddatawhich showeda much improvedimageof the Octonreservoir.However,in November2010,siting the protractedPhase2 work in the Galoc Field, GPC(formerly, Vitol GPC) declinedto exercisetheir farmin option. With exit of GPC from thejoint venture,the consortiumsubmitted,andthe DOE approvedthe 201I work programandbudgetfor the Octon block consistingofthe PST}vI/PSDMreprocessing of some400 square-kilometers of3D dataat a costofabout USD546,000. SC 14 Since2008,the Tara Block andthe SC l4D RetentionBlock remainunderevaluationby Ventur0il as part of their due diligenceleadingto a possiblefarmin. The TaraField is cunently shut-in.The consortiumcontinuesto await notice ofreadinessto negotiatea farmin from the potentialfarminee,who had indicatedthat they arenegotiatingto bring in a new partnerin tleir evaluationof the potentialof tlese argas. In late 2009, however,VenturOil lost their exclusiveright to farmin over thesearoasdueto tlle long period to completetheir technicaldue diligonce.VenturOil requesteda further extensionbut the consortiumsuggestedthat VenturOil mustfirst seoureaccreditationfrom the DOE asa qualified servicecontractorbeforethey cannegotiatewith tho consortium, sc 41 drilling of the LumbaLumbal/1A well in 2008,TapOil requested Followingthe unsuccessful and *J',our f,uotua - extensionof th-eterm of SC 14to undertakeseismicdatareprocessing prospects inversiorito rectify seismicdataquality issueswhich will help in de-riskingnumerous and inversion and in the seleotionofthe next drilling prospect.In July 2009,the roproc.essing at sametime, the and, fesults the *ork, *"r" oo.pleted, Tap oil then froc""ded to eualuate promotethe block to potentialfarminees' docidedto In August 2010,after failing to securean extensionofthe sc term, the consoltium re'apply fot a new suiritter the oontractto tb;DOE. The consortiumparfirershaveagreedto DOE' oontractoverthe areaat the openingof a new contractinground by the sc 53 Pitkin to acquiroits onshore In April 2009,Pitkin requestodfor the extensionof Sub-PhaseI for foi SC 53. ln re"ponseto Pitkin's request,the DOE mergedthe fust 2^sub,"Gi" of f"". t tew Sub-Phasei (July zoos to Marctr.20i t) with the work comfr'lrtment pit*.t t""o*.itoent 2 will Thenew sub-Phase minimum200 line-tm zo seismicacquisiiionanddrilling of onswell. likewise drill 2 wells. The DOE ilu io, tft. poi"a ftlarch 20I 1 to iuf' iO f Z *itft commitm-entto to 734,000hestares' hectares inrreur"Oitr" On.hore Mindoro Block areafrom 600,000 to commenooin April was Pitkin's seismicacquisitionprogramwhich was originally scheduled aremore favorablefor onshoreseismic deferredto November200g wh;n weatherconditionsgt"a in lateNovember2009' The survey ectual recordingstartedat G Sanfose *q"itiri*. wascompletedin MaY2010. end of2010' whilo reprocessingof Processingof the new land seismicdatawas completedat the the offshoreseismiodatacontinuesin Singapore' SWAN Block their technicaland ^data (ED-C)advisedTPC that In November2009,Energr DevelopmentCorporation that TPC had providedEDC to assessthe i"goigoup, .*tiou" to ildu"t" *t" relenant in SC 57 andSC 58 blocks' block'spotentialunatrre.".iiolf ilC;s ptposea purticipation pll6C-'gC'r 6n"fuationof the merits of the TPC's offer' For 2010,TpC continueclto wJ for l l. Short-termLoansPaYable to Fl25'000'000 and Short-termloanspayablerepresentsloan obtainedfrom LBP amounting asoru*"*utt lilZoio*a zooO, Pl?5,000,000 "tpeclivelr.'.Thel1are,ryry::Y1i:* ratesperannumwith ratesof loanswhichmature.urry ,o *oott" *a bearinieresiat variible rnadeby the ;i009, subjectto monthlyrepricing'Payments 8.25%in 2010anat.zs to s.'a17. The in 20io and2009'respectively-' *a pzs,ooo,ooo to pso,oib,oOo companyamountea ' of thel-BPioan,'*ge fro- heb* aty l6'2011toApril 20'201I maturities exDected lffirflilffi|il|Ilmm _ 2 8_ Fl6,113,549and Interestexpense relatingto the aboveloansamountedio F11,901,771, (seeNote 18). respectively years P23,068,584 for the endedDecember31,2010,2009and2008, 12. Long-term Debt . The long-termdebt ofthe Companypertainsto loansavailedfrom EPL which are summarizedas follows: 2010 EPL loans,net of discountof F6I ,075,521in 2010 in 2009 andF81,306,819 Lesscurrentportion Noncurrentportion 2009 1,795 P:t,021,058/55 P2,060,97 196,834,798 467,027'152 F1,554,031J03 F1,!!4Jl!p97 Relatedinterestexpenseamountedto F33,283,076, P34,157,959, andFl7,175,528for theyears (seeNoto l8). endedDecember31,2010,2009and2008,respectively whichbears a. In 2007,EPL grantedthe Companywith a loanamountingto F846,105,746 interestof 1% payablequarterlyand is scheduledto matureon October23, 2012. The unamortizeddiscounton the said loan amountedto F3'I,360,592andF50,011,93?asof (seeNote23). December31, 2009and2008,respectively On various datesin 2007 and2008,EPL grantodvarious loansto the Companywith maturity everyyeax. datesin 2008. Theseloansbearinterestof 10lo On June27, 2008, EPL andthe Companyentoredinto a loan restruchring andconversion agreement.All restructuredloansbearinterestof 1.5%per armumand may be prepaid anytimewithout penalty. Accodingly, theseloanswere reolassifiedas long-termdebt' The restrustured loanshavematuritydatesfiom 2010and2011. The substantialmodificationsof termsofthe existingloanswere acoountodfor asan extinguishmentofthe original financial liability andrecognitionofa new frnancialliability. In 2009,the Companyrestatedits prior year financial statementsto rccognizethe gain on detrt restructuringas a result ofthe derecognitionofa portion of EPL loan andto recognizethe day I differenceaxisingfrom the off-market interestrateofthe EPL loan (seeNote 23)' b. In 2009, EPL extendedloansto the Companywith an aggregateamountof F900,900,000 ($19,500,000).As mentionedin Note 6 to the financial statements,the Companyassignedits receivablesfrom ETCI on December16,2009 amountingto F277"529,288to EPL, wherein fiom EPL andthe remainingF8,940,205 F268,589,082 wasappliedagainstthe advances rcpresentedinterestand financecharg€sincurrodby tho Company. As a result ofthe assignment,PN 09-01was issuedby the Companyto EPL on the samedat€for tho remaining 31,2013 to matureon December ($13,686,383), amountofP632,310,918 whichis scheduled and is subjectto interestof L5% per annum. matured.Uponmaturity,the loan c. In 2010,the originalEPL loanamountingto P169,452,079 was extendedfor anotler 5 years. The new loan bearsinterestof L5% per annum,subjectto adjustnent upon mutual agreementof both parties(sameasoriginal [oan). -29 The old loan was derecognizedas it alreadymatued, and a new loan wasrecognizedat its presentvalue using 10.2i% aseffectiveinterestrato. This resultedifl a Day I differenoeof u;Zg,036,ZZ1. AoJretionof Day 1 differencefor 2010amounedto F6,122,111.Theloffeclive I interestrate appliedon the originaJloanwas 7'1U/o' 13. AccountsPayableand AccruedExpenses Accnred interest(se€Notes I 1 and 12) Deposit Accrued guaranteefoe (seeNote 14) Dividendspayable Others 2009 2010 P94,203,406 F71,844,209 89,419,081 10,293,035 t6,154,146 4,688,303 6,512F55 084 ..Deposit"pertainsto advancesreoeivedfrom Metro Pacilic Investrnentscofpofation (MPIC) in Me$o Rsil ,e-t"io' to'*t" potontialacquisitionby MPIC of the shaxesownedby the Companyin requiremonts. olosing certain ii*rii ffofainir, fnc. (nmfffD, subjectto the completionof "Othors" consistmainly of accruedtaxesandvariousaocruedexpenses'amongothers' 14, RelatedPartY Transactions tho companyhas In addition to thosementionedin Notes 5, 6, 7 and 8 to the financial statements' the following relatedparty transactionsin the normal oourseofbusiness: advanc€s i!:,!:l a. The Company -thangrantsinterest-bearingandnoninterest-bearing :o retareo!::l'gs pames' duetrom amounts are the one year creilit term. The following with less (soe Noto 6): sheets balance in the which are includedaspart of tho "Receivables"aicount 2010 Entities undercommoncontrol: Alakor NBS VIMC 2009 P94B85,314 F76,951313 67,020'011 69214,186 2,130,186 2,130,186 in of P25'314'996 ACMDC,netof discount - 505'925'005 - party is Advancesto Alakor havevarioustermsof not more than one year. lfthe related 15Yo not ubt" to settleat matrjr.itydate,the outstandingbalanceis subjectedto l7o/ond intefestper annum. ll. to ACMDC for the On July 9,2009,the CompanyextendedF53i,300,000($11,500,000) 2010' tho Compatry futt"t;J*o*ing'""pital tequire-ents (seeNote 6)' On Decembor29' convertedits aivancesto ACMDC with a oarryittgamountof F504,447,500to 50'450'500 sharesof ACMDC at Fl0'00 per sharein accordancewith "the Conversion"' l$ll$llll rillltfr flffillllNlxlllllllff -30- iii. The Companyalsoprovidedadvances to Alakor andNBS amountingto F96,885,118 and prior years, F91,869,996 the asofDecember31,2010and2009,respectively.Also, in Companymadoadvancesto VIMC which is still outstandingas of December3 1, 2010 amountingto F2,130,I86 (seeNote 6). b. On January1,2002, the Companyenteredinto a GuaranteeAgreementv/ith Alakor to have the lattor's Chairmanof the BOD asa guarantorofthe Company'slong-termdebt. The guaranteefee is equivalentto 4oloand 50loper annumof the amountguaranteedwithout collateraland amountguaranteedwith real estat€or othert)?es of collateral,respectively, Accruedguarantee feeamountedto F16,154,146 andF10,293,035 asof December31,2010, and 2009,respectively(seeNote l3). Guarantoefees,which arerecognizedas part of "Interest and other financecharges"accountin the statementsof comprehensiveincome, amountedto P5,861,111,F7,741,667, in 2010,2009and2008,respectively andF8,788,470 (seeNote l8). Compensationofkey managementpersonnelareasfollows: Short-termemployoebenefits Postemplo)mentbenefits 2010 P6,949,654 3,789,573 P10,139227 2009 P6,510,290 2,236,005 ?8,746,29s 2008 F2,990,718 3,786,527 ?6,777,245 15. Equity of cashdividends a. On April 12,2010,the Company'sBOD approvedthe declaration amountingto F34,949,994 ofrecordasof April 30,2010. at F0.03persharoto stockholders The cashdividendswerepaidon May 24,2010. b. On April22,2009, the Company'sBOD approvodthe declarationof cashdividends amountingto P174,749,973at F0.I 5 per shareto stockholdersof reoordas of May 8, 2009. The cashdividendswerepaid on M ay 29, 2009. c. On September19,2008,the stockholdersapprovedthe declarationofa 10%stookdividendto stockholders ofrecord asof October31,2008. Thestockdividendsamountingto F106,000,000 wereissuedin Novsmber2008. d. On April25, 2008,theBOD approvedthe declaration ofa cashdividondamountingto F53,037,500 at F0.05pershareto stockholders of recordasof May 30, 2008. Thecash dividendswerepaidon June25, 2008. e. Treasuryshares,totalling 13 million commonsharesin 2008 arc statodat acquisitioncost, In 2007,the BOD approvedto reacquire. The retainedearningsarerestrictedin the amountof ?27,566,07 5 asofDecember31, 2010and2009,representing the costof sharesheldin treasury. ilffi mtiluflilililililili - 3 1- f The movementsin capital stock ofthe Companyare as follows: 2008 20t0 lssued and outstanding: Balances at beginning of year Stock dividends Issuance Balances at endof year Subsuibed: Balances at begiuring ofyear Issuance Balances at endofyear receivable: Subscriptions Balanccsat and end of r,r70,6rt,e7o t,ffl:3s:313 r,r7o,6rr,e7o 5.000 I,17o,616mO 7,38&030 (s,000) 7,383,030 l,170,6ll,970 1,170,611,970 7,388,030 7,388,030 7,388,030 7,388,030 The par value ofthe share$ofstock is P l. 16. Other Revenues 20r0 Management fe€s Dividend income 2009 P67,687,s00 P91,059,2t2 2008 F89,523,503 l3.1 The Companysigned an agreementwith EPL wherebyit providesgeneraladministrdion and risk managernentservicesto the latter for the efficient managementand supervisionofEPL's Philippine investrnentop€rations. In considerationfor such services,the Companyis paid a monthly managementfe€ for a p€riod of 3.5 yearsfrom July 2007 to Decernber2010, subjec'tto renewalthereafteras may be mutually agre€dupon by the parties. Dividend income pertainsto dividendsreceivedAom SPI, TPC and Manila Water Company (seeNote 5). 17.Generaland Administrativc Expetrsos 2010 Pension{seeNote I 9) R€nt Outsideservices Depr€ciation(seeNote 9) Communicati on, light and water Insurance Repairsand maintenance Ofrce supplies Representalion andentertainment Tmnsportationandtravel Taxesandlicenses 3,053,129 2J,72,198 r,949,978 r552,698 r,2rs,549 r97t,754 51s,623 382,690 28r,572 200,845 823,Xrl 2009 2,389,463 2,048,622 960,720 r,s07,666 1,251,742 1,0s8,303 202242 454,974 213,156 332,393 862,303 2008 2,2?33Ao 2,044540 869983 1,476,694 1,30?,820 r,r34Jrs 462,49r 656,678 840'973 sn235 7,105,694 Miscellaneousexpensesconsistmainly of mernbershipfeesand gasaudoil expenses,among others. 18. Interest Income,InterestExpenseand Other FinanceCharges Interestincomeconsistofi 2009 2010 Lrterestincomeon bankdepositsand receivables Aooretionof discounton receivable (seeNote 6) 2008 F60,504,161 P68,140,181 *97441,758 23,371,706 25374995 P122,816,753 F83,875,867 F68,140,181 Interostand other financecharqesconsistof: 2008 2010 Amortization of discounton long-term debt (s€eNotes 12 and23) Interestexpense(seeNotes1l and 12) Guarantee fee(seeNotes12, 13and 14) Bankcharsesandotlers P48,267,526 44,459,435 5,861,110 12,147 p98,600,218 P39,513,764 P26,670,1s3 50,271,508 40,244,t12 8,788,470 7,'t41,667 105,288 720,092 P97,632,227 P76,422,827 19. PensionBenefitsCosts The Companyhasa funded,noncontributorydefinedponsionplan coveringall its regular employees.The retirementbenefit plan obligation is determinedusing the projectedunit credit method. Therewas no plan of terminationor curtailmontfor the yearsendedDeoember3I , 2010, 2009and2008. The following tablessummarizethe fundedstatusandthe amountsrecognizedin the balanoo shoets,the componentsofnet retirementbenefit expenserecognizedin the statementsof comprehensiveincomeand the changesin tlle presontvalue of the definedbenofit obligationand the fair valueofplan assets, RetirementBenefitPlan Obligation (Asset) Presentvalue of definedbenefit oblieation Fair value of plan assets Fundodstatus Unrecogrrizedactuarialgains Retiromentbenefitplanoblisation(asset 2010 F44,010,909 52,793?24 (8,782Jrt 8,683'219 2009 F38,548,974 43,021,990 (4,473,016) 8,940,925 P4-467 -33Components of NetRetirement Benelithcpense Curr€ntservicocost Interestcost Expectedretum on plan assets gainrecognized Netactuarial Netretirement benefitexpense actuatreturnonptanassets 2009 2010 F1,568,4E9 ?1,424,604 3,251,024 3,893,446 (2,151,100) (1"85s,1l6) (431,049) (257,700 F3,053,129 ?2,389,463 2008 F1,581,691 2,765,039 (2,073,430) ?2,273,300 PZ, P in theBalanceSheets Mo'vements in theRetiretnent BenefitPlan Obligation(Asset)Recognized 2010 Balancesat beginningofyear Net retirementbenefit exDense Contributionspaid Balancesat e'rdof year *4,4fi,9A9 3,0$,129 (7,620,134) G99,09O 2009 F9,698,580 2,389,463 (7,620,134) P4,467,909 Changesin the PresentValueof the Defned BenefitObligation 2010 P38,548,974 1,568y'89 3,893,446 Balancesat beginningofyear Current sorvicecost Interestcost Actuariallosses Balancesat endofyear P44,010,909 Fi1,471,674 1,424,604 3,251,024 2,401,672 F38,548,974 Changesin the Fair Yalueof PIan Assets 2009 2010 P43,021,990 ?33,292,255 7,620,134 7,620,134 1,855,116 2,15r,1fi) _ 254,485 Balancesat beginningofyear Contributionspaid Expectedreturn on plan assets Actuarial gains Balancesat endofyear *52,793,224 F43,021,990 The major categoriesof plan assetsasa peraentageofthe fair valus oftotal plan assetsareas follows: 2010 Governmentsecurities Others 91.0o/o 3,0"/o 2009 97.0% 3.0% 2008 97.0% 3.0% tffi1ililil]ffi ltililtfrl]|flilti -J+- The principal assumptionsusedto determineretirementbenefit plan obligation aroasfollows: 2008 1033% 5.00% 5.00% 2009 10.10% 5.00% 5.00% 2010 10.r0% 5.00% 5.00V" Discountrates Expoctedrofurn on plan assets Wageand salaryincreases Averageexpectedfuture service yearsof activeplan members t 7. 5 r6.5 18.5 Amounts for the current and previous four years are as follows: 2010 2009 2006 2007 2008 Present valueofdefinedbcnefit +44,010,909?38,548,914?31,411,674F38,350,057t30,183,323 obligation Fair valueof plan assets 52,793,224 43,021,990 33,292,255 15,151,443 1,48S,049 (s,7s2,3rt (4,473,016) (1,820,581) 23,198,614 28,695,284 Untunded(funded)status Experisnccadjustrnentson plan 2,40t,672 (1r,225,113) 4,034,068 liabilities 294,048 254,484 Experienceadjushnentson plan asscts 20. IncomeTaxes The provision for currentincometax in 2010,2009 and 2008representsthe regularcorporate incometax. The components ofthe Company'snet deferredincometax liabilitiesareasfollows: 2009 2010 Defened incometax assets: Unamortizedpastservicecost Nondeductibleaccruedexpenses Unamortizeddiscountof receivable Retirementbenefit *8,173A41 3,708F1E 1,340"373 Lt,881,759 Deferredincometax liabilities: Unamortizeddiscountof long-tem debt Gain on debtrestructuring Unrealizedforeign exchangegains Retirementbenefit plan asset Unrealizedmark-to-marketgainson derivative assets F7,509,139 3,708,318 7,612,499 9,336,650 8,986,007 8,639,704 29,729 - 20,170,329 1l,509982 12,882,064 7,840,275 23,939,7s2 I Pls,r10331 F36,001,744 -35- The reconciliationof incometax computedat statutorytax rat€sto provisionfor incometax follows: 2009 2010 2008 Incomotax at statutoryratesof 30% in 20i0 and2009and 35%in 2008 P169444,522 w6,8r3,752 (F74,090,760) Additions to (reductionsin) incometax resultingfrom: 63,569 235,438 Nondeductibleinterestexpense il4,195 Mark-to-marketchangesin derivativeassetrelatingto (116,255302) receivableconvertedto equity Fair valuechanges of financiaassetsat FVPL (28,134,913) (63,232,422) 102,807,997 Equity in net losses(eamings) (671,198) 1,970,844 (11,459816) ofassociates Dividendincomesubjectto zero(3,9s3,067) (s,292,294) (5,904,55O rated incometax (3,470,020) Incomesubjectedto tmnsfertax 2,369,359 Effects ofchange in tax rates hterest incomesubjectedto 551.140 final tax and others *4,041,045 P28,641.,163 P25p48,313 In accordancewitl RA No, 9337,ths statutoryincometax rate andunallowableint€restexpe,nse rate axereducedfrom 35o/oto 30Voand42o/oto 33Yo,respectively,beginningJanuaryI, 2009. 2l. Basicand Diluted EPS Basic and diluted eamings(loss)per shareare computedasfollows: Not inoomo(loss) for the year Divided by weightedaverage numberofcommonshares Basic and diluted earnings(loss) per sttare 2008 2009 2010 ?560,774,028 P294,071,r43(F236,936,198) 1,165,000'000 1,165,000,000 1,166,508,333 O.lg P0.25 (F0.20) The resultingper shareamountsarethe samefor both basicand diluted earnings(loss)per sharein 2010,2009 and 2008 sincethe Companydoesnot haveany debt or equity securitiesthat will potentially oausean eamings(loss) per sharedilution. 22. FinancialRisk Managementand Capital Management The main purposeof the Company'sfinancial liabilities is to fmancethe Company'soperations and capital expenditures.The Companyhasvariousfmancial assetssuchascashandcash equivalents,receivablesandfinancial assetsat FVPL and AFS investnentswhich arisedirectly from its ooerations. tlutffi liltfl lilrililtffi ilill|til nil |ilr - 3 6- The BOD hasoverall responsibilityfor the establishmentand oversightof the Compafly'srisk managementframework. The Company'srisk managementpolicies areestablishedto identifu and managethe Company'sexposureto financial risks, to set appropriatetransactionlimits and controls,and to monitor andassessrisks andcomplianoeto internal control policies. Risk managementpolicies and struoturearoreviewodregularlyto reflect changesin marketconditions andthe Company'sactivities. The Companyhasexposureto credit risk, liquidity rislq interestratedslq foreign currencyrisk and equity price risk from the useof its finansial inshments. The Boardreviewsand approves below. the policiesfor managingeachoftheserisksandtheyaresummarized Credit Risk Credit risk is the risk of financial lossto the Companyifa customeror oounterpadyto a financial instrumentfails to meetits contractualobligations.Credit risk arisesprincipally from the Company'scashwith ba*s, shortterm depositsandreceivables. The Companyensuresthat its financial assetsareconsideredhigh gradeby tansacting only with top banksin the Philippinesand maintaininggoodrelationshipswith relatedparties,key employees,debtorsand lessorswho arehighly reputableand with goodcredit standing. Cashwith banksaredepositsmadewith reputablebanksduly approvedby the BOD. Reoeivablebalanoesare monitoredon an ongoingbasiswith the result that the Company's exposureto credit risk is not significant. Therewereno impairedreoeivablesas of to be December3 I , 20 I 0, 2009 and2008, The receivablesaxenot pastdue and are assessed oollectibleandin goodstandingasof December31,2010,2009and2008. The Company'smaximumexposureto crodit risk is equalto the aggregatecarrying amountof its financial assets. Liquidity Risk Liquidity risk is the risk that the Companywill.not be ableto meetits financial obligationsasthey fall due. The Company'sobjectivesto managingliquidity risk is to ensure,as far as possiblo,that it will alwayshavesufficient liquidity to meetits liabilities when due,underboth normaland stressed conditions, The Companymanagesliquidity risk by maintaininga balancebetweencontinuity of fundingand flexibility in operations,Treasurycontrolsand proceduresare in placeto ensurotlrat suffrciont cashis rnaintainedto cover daily operationaland working capitalrequirements.Management closelymonitorstlte Company'sfuture andcontingontobligationsand setsup requirodcash reservesasnecessaryin accordancewith intemal policies. The Company'sfinancial assetsusedfor liquidity managementare its cashand cashequivalents, financial assetsat FVPL andAIS inv€stments. maybo withdrawn As ofDecember31,2010and2009,the Company'scashandcashequivalents anytimg while its financial assetsat FVPL andAFS inveshnentsaretradedin the stockexchange and may be convertedto cashby selling them during the normal trading hourson any business day. ililililrililil||]ff til|ilffi ffitilffi [] -Jt - basedon theirmaturitiesarcas The Company'sfinancialassetsusedfor liquidity management follows: 20t0 Cashand cashequivrlents FiDancirlrssetr .t FVPL Receivrbles Within 6 months 6 to 12 molths P *165,119,0t3 466.608J14 113,747,251 I to 2 verrs P164,199,500 2 to 4 yesrs P - Totrl PI65,1r9,013 466,608,314 177946,751 H Within 6 months 6 to 12mon(hs Fina'cial assetsat FVpL Receivables AIS investments I to 2 years 418,048,226 2,137,225 550,373,255 t43,971,424 - t.l 2 to 4 years - Tot'l 418,048,226 696,481,904 736 I,108,558,736 The Company'sfinancial liabilities basedon contractualundiscountedpaymentsareasfollows:. Within 6 Accountspayablcand accru€doxpe||ses Short-termloars pryrblc! Prircipal Future interest Long-term dcbt: Principsl P26,0E4,878*105,57t,227 P23l,5d5,909 P99,887,804 t25,000,000 5,156J50 125,000,000 5,156,250 846,105,746 769,00t,0782,082,133,976 701 467,027,152 2009 Within6 ffi aoctucdexpcnses Short-termloanspayable: ?rincipal Futurc interest Long-term debt: Principal F13,804,771 F10,293,035 ?84,491,783 +108,595,5E9 175,000,000 7,2t8,750 175,000,000 7,2t8,750 t96,834,798 F - 467,A27,152 1,478A16,664 2,142,278,614 087 Market Risks Market risk is the risk that changesin marketprices,suchasforeign exchangerates,interestrates, income andothermarketvariableswhichwill adverselyaffectthe Company'stotal comprehensive or value of its finangial instruments.The objectiveofthe Cornpany'smalket risk managementis to parameters. The exposures within acceptable to rnanageandcontrolmarketrisk exposures specificmarketrisksareasfollows: -38- InterestRate Risk The Company'sexposureto interestraterisk pertainsto its short-termand long-termdebt obligations.Floating rate instrumentsexposethe Companyto cashflow interestrate risk, whereas, fixod interestrate instrumentsexposethe Companyto fair value risk. The Companyregularly monitorsthe marketinterestrate movementsandmanagesits intercstrate risks by using a mix of fixed and variablerates. The following tablesset out the carryingamounts,by maturity, of the Company'sshort-termand long-termdebtobligetions: Floating rate short-termloanspayablewith LBP (subjectto monthly repricing): Coupon rale yo 2010 2009 Within6 months 6 to 12 months 8.25o/o ?125,000,000 8.25% 175,000,000 P 1 io 2 years F 2 to 4 y€€rs P- Total f12s00o,oo0 175,000,000 Fixed rate long-term debt with EPL: Within6 Total 2 to 4 yea$ months 6 to 12months I to 2 years F- f1,61s,106824 *2,082,133976 1.50o/o ?467,027'152 F 1.50% r96.834.798 467,027,152 r,478,416,664 2,142,278,614 CouDonratEyo 2010 2009 The table below demonstrates the sensitivityto a reasonablypossiblechangein prevailinginterest rates,with all variablesheld constant,of the Company'sincomebeforeinoometax (tlrough the impaoton floating-rateborrowingswith LBP). Thereis no other impact on the Company'sequity otherthanthosealreadyaffectingthe statementof comprehensiveincome, 1o4appreciation lyr lgprectatlgq in incomebeforeincometax lncrease(decreeise) andin equity 2010 2009 2008 G1r9,0r8) (161,l3s) (230,686) 1119,018 161,135 230,686 Foreign Exchange Risk The Companyusesthe F as its funotionalourrencyand is thereforeexposedto foreigt exchange movements,primarily in $ currencies.The Companyfollows a policy to manageits ourroncyrisk by closelymonitoring its cashflow position andby providing forecaston all otherexposuresin non-Pcurrencies. Information on the Company's$-denominatedmonetaryassetsand liabilities andtheir F equivalentareasfollows: Cash and cash equialents FinancialLiabilities: 52,2fi,743 1,300,804 50,097,156 -Jv- ratesofthe Philippinepesoto theUSD are As of December31, 2010and2009,the exchange P43.84andF46.20,tespectively. the sensitivityto a reasonablypossiblechangein PhilippineF/$' The following table demonstrates with all other variablesheld constan! ofthe Company'sincomebeforeincometax. Thereis no other impact on tle Company'sequity otherthan thoseaffectingthe statementsof income. oomprehensive Increase( ) in incomebefore incometax and in equity 2010 2009 2008 (*22329;23r) 176,724 '11,817 P22,329p3r (t76J24',) Qr,8t7l Equity Price Risk Equity prioe risk is ths risk that the fair valuosof equitiesdecreaseasa result of changesin the levelJof equity indicesandthe value ofthe listed shares'The non-tradingequity price risk exposurearisesfrom th€ Company'sinvostrnentin financial assetsat FVPL and quotedAFS investments. The effectson oquity and incomebeforeincometax (asa result ofa changein the fairralue of at December31,2010,2009 andfinancialassetsat FVPL, respectively, A_FSequityinstruments price, with all otler variablesheld market in possiblechange bid and2008dueto a reasonably constant),are asfollows: Financial Assetsal FWL Changein fair marlglYqlggIncreasein markotIncreasein market Increase(decrease)in incomebeforeincometax and in equity 2010 2009 2008 AFS Investments F10t71,590 (P10,27r,590) 11,725,409 (11,725,409) 10,256,866 (10,256,866) Chansein fair marketvalue Increasein marketlncreasein market indicesbY 5% indicesbv 5% (decrease) income Increase in othercomprehensive andin equity 2010 2009 2008 *149,847,987 (*149,U7pBt) 54,450,000 (54,450,000) 16,335,000 (16,335,000) The impact on the Company'sequity alreadyexcludesthe impact on transactionsaffectingthe net incomein the statementof comprehensiveincome. -40- Fair Valuesof FinansialInstruments Fair value is definedasthe amountat which the fmancial instuments could be exchangedin a currenttransactionbetweenknowledgeablewitling partiesin an arm's lengthtransaction,other than in a forced liquidation or sale, Fair valuesareobtainedfrom quotedmarketprices, discountedcashflow modelsand option pricing models,asappropriate. The table below presentsa comparisonby categoryof carrying amountsand estimatedfair values ofthe Company'sfinancialassetsandliabilitiesasof December31, 2010and2009: Finuxlal rsrdls at FVPL: l$e,rtrn€nt in sharccofstock AFS iNcstments QuotEd F466.608Jr4 Acaourfspayableandacoruedexpense Short-temloanspoyable F418,04&226 F418,048,226 p2,996J59,740 P2,996p59,740 F1,089,000,000 F1,089,000,000 t166,129,013 Othcr linancial lirbilitid: *466.606J14 +165,129$13 F?9,588,042 F79,s88,042 l3 ?232$1425o *232,674,250 P108,909,913 * I 08,909,9 125,000,000 125,000,000 t75,000,000 l?5,000,000 The following methodsand assumptionswereusedto estimatethe fair valuo of eachclassof financial instrumentsfor which it is practicabloto estimatesuchvalue: Cashand CashEquivalents,Receivables,AccountsPayableand AccruedE4tewes and Shortterm LoansPayable The carrying amountof cashand cashequivalents,receivables,accountspayableand accrued expensesand short-termloanspayableapproximatetlreir fair valuesdueto their short-term maturities. Financial Assetsat FVPL andAFS Irwestments The fair valuesof publicly tradedinstumonts and similar investmentsaredeteminod basodon quotedbid marketpricesat the balancesheetdat€. For unquotedequity seouritiesfor which no reliable basisof fair value measurementis available,thesearecarriedat cost, lessimpaiment loss, Derivative Instruments The fair valuesofderivative instrumentsarecatculatedby using the Black-Soholesoptionpricing modelwith market observableinputs zuchasshareprice and volatility. Long+ermDebt Theiair value ofthe long-termdobt is basedon the discountedvalue of future cashflows usingfhe applioableratesfor similar types of loans. -41- Fair Value Hierarchy The Companyusesthe following hierarchyin doterminingthe fair value of financial insFuments by valuationtechnique: Level l: quotod(unadjusted)prices in activemarkotsor identical assetsor liabilities Level 2: other techniquesfor which all inputswhich havesignificantoffect on the recordedfair value areobservable,eitherdirectly or indirectly Level 3: techniqueswhich useinputswhioh havesignificanteffect on the rsoordedfair valuethat are not basedon observablemarketdata 2010 Level I Financial Assets Financialassetsat FVPL AFS investments- quoted Level2 F F466,608,313 2,996,959,740 Level 3 F- L P3,463"568,053 2009 Level 1 FinancialAssets Financialassetsat FVPL Derivative asset AFS investnents- quoted Level 2 P79,799,174 P79,799,174 ?1.507.048.226 P79.799.174 ?418,048,226 1,089,000,000 Level 3 F. - F- For the yearsendedDecember31, 2010,and2009therewereno transfersbtwe€n level 1 and level 2 fair value measufements and no hansfersinto andout ofthe level 3 measurements. DerivativeAsset The Companyhasbifiucated the embeddedequity call option on the loan extendedto ACMDC in 2009, The Company'sderivativefinancial instuments axeaccountedfor astransactionsnot designate.d as hedges.The gainsor losseson theseinstrumontsareaccountedfor directly in the statementsof comprehensiveinsome, As of December3 I , 2010 and 2009,the derivativeassetis canied at F and F79,799,174, rcspectively. Fair value changesofthe derivativoasset,which are presentedin the statementofcomprohonsiveincomeas"Mark-to-marketchangesin derivative asset",amountedto P307,718,166 in 2010and2009,respectively. and?31,052,472 On December29, 2010,the Companyoonvertedits advancesto ACMDC with a carryingamount ofP504,447,500 into 50,450,500 sharesof ACMDC at F10.00per share(seeNote 6). Capital Management The Company'sobjectiveswhen managingcapital is to maintaina capital structuretlat providesa balancebetweenthe risk associatedwith higher level of borrowingsand the advantagesand securityofa soundoapitalposition, The BOD hasoverall responsibilityin monitoringof capital in proportionto risk. Profiles for capital ratios areset in the light of changesin tle Company'sexternalenvironmentandthe risls underlyingthe Company'sbusinessoperationsand industry. ililriltilil||ililil1uti The Companymonitots capitalon the basisofthe debt-equityratio which is calculatedastotal debt divided by total equity. Total debt is equivalentto accountspayableand aocruedexpenses, incometax payable,short-termloanspayable,long-termdebt, pensionliability anddeferred incometax liability. Total equity comprisesall componentsofequity including capitalstocks, additionalpaid-in capital, wrealized,valuationgains(losses)on AFS investments,relained eamings,reducedby treasuryshares. Therewere no changesin the Company'sapproachto capital managementduringthe year. The Companyis also not subjectto any extemally-imposedcapital requirements. The debt-to-equityratio asof Deoomber3 1, 2010 and2009 is asfollows: Total liabilities Total 2009 2010 *2,398,233?54 F2,387,089,380 1.232.759.122 77 |,94 The followingtablepertainsto the accountbalancethe Companyconsidersasits corecapital: Capital stock Additional paid-in capital Retainedearnines Treasury stock 2009 2010 6,632,3 12 *t,176,632312 4,658,460 "1,174,658,460 658,165,280 132,341,246 (27,566,0?0 (27,566,075) F1.286"065.943 23. Restatements In 2009,the Coqrany restatedits priot yet finaneialstatementswith respeotto accountingfor investmontsand financial liabilities to oonformwith the provisionsof PAS 39 andPAS 28. The effectsof the restatemontsareasfollows: (l) Reclassificationof investmentsin SPI and TPC from investrnentsin associates to fmancial assetsat FVPL. In addition,the financial assetsat FVPL were revaluedbasedon their bid marketprioes(seeNotes 5 and 8). a. Recognitionof dividsnd incomeamountingto P5,996,082in 2008;rooognitionof loss on fair value changesof financial assetsat FVPL amountia9ti ?282,927,498in 2008; derecognitionof equity in net eamingsof associatesamountingto F21,262,212in in 2008;and in net incomeby F298,193,629 2008;decrease b. Roductionin retainedeamingsby F302,730,761 asofDecember31, 2008. (2) Recognitionofgain on debtrestructuringas a result of the loan restruoturingand conversion agreemententeredinto by the CompanyandEPL (seeNote l2). a. Recognitionof gainon debtrestructuring ofF82,987,619in 2008; b, Increasein interestexpense in 2008for the acoretionofthe imputed by F13,184,984 discounton the new loan: -43- c. Net increasein deferredincometax liability andprovisionfor defenodincometan amountingto F20,940,790; and d. Increasein retainedeamingsandnet incomeasofand for the yearended December 31,2008by F48,861,845. (3) Recognitionofday I differencearisingfrom the off-marketinterestrateofth€ EPL loan (seeNote 12). a. Increasein interestexpense in 2008for the amodizationofthe gain by P13,485,168 on discountof long-termdebt; increasein provisionfor deferredinoometax by in 2008;and F4,045,550in 2008;decrease in net incomeby P9,439,618 b. Increasein retainedearningsby F35,712,564 asof Decernber 31, 2008. The table below summarizesthe accountsaffectedby tte restatementsmentionedaboveasofand for the yearsendedDecember3 l, 2008: As Previously Reported Statementof ComprehensiveIncome Equiryin n€teamings(losses)of (seeNote 8) associates Gains(losses)on: Fair valuechangesoffinancial assetsat FVPL Debt restructuring Othor revenues Interestard otherfinancecharges Provisionfor incometax Net income(loss) Basicand diluted earnings(loss)per share Restatements Aj Restated F20,s08,894 (F26,139,878) (F5,630,9E4) (10,809,63s) (282,9?7,498) (293,737,t33) 82,987,619 82,987,619 5,996,082 104,644,343 98,648,261 (49,752,674) (26,670,i53) (76,422,827) (8,353,073) (16,89s,240) (2s,248,3r3) 26,712,870 (263,649,068) (236,936,198) 0.03 (0.23) (0.20) 24. SegmentReporting As discussedin Note 2 the financial statements,the CompanyhasadoptedPFRS8 with effect from Januaryl, 2009. PFRS8 requiresoperatingsegmentsto be identified on the basisof internal reports,which is similar to manag€mentbasis,aboutcomponentsof the Companythat are regularlyreviewedby the ohiefoperatingdecisionmaker. purposes, pertainto its investmonts For management the Company'soperatingsegments in NTDCC andUPMC,associates. in associates Investments amountedto FI,051,710,422and PI,057,485,852 the asofDecember NTDCCownsandoperates 31,2010and2009,respectively, TrinomaCommercialCenter,while UPMC'smainbusiness is the exploration,developmenl exploitation,recoveryand salesof gold. -44- Managementmonitorsthe operatingresultsof ib investmentsin associatessepaxatelyfor the Segment purposeofmaking decisionsaboutresourceallocationandperfornanceassessment' porformanceis evaluatedbasedon total revenues. (in thousands) I'PMC NTDCC 2010 2010 Revenue Externalcustomers Interestincome Other income Ft,607,807 78,555 ?l,459,677 71,207 v ) 57 41 T Costsand Expenses Direct operating Depreciation Interestexpense andadministativeGeneral fotat coitsandexoe,r,res incometax Income Provisionfor insometax income *1,020 I 84r,971 345,,437 244,4rs 42,618 1,414,441 783,47 5 340,466 320,563 57,073 1,501,5'17 30E.450 t24,664 37 29,6; 14'263 43'99q (3s,461) (40) F_ 3,0t2 127 139 24,55; ! 1,1?l iqflO 0,491 o.J +2rs.916 Other disclosure: Capitalexpendituresconsistofadditions to propertyand equipment. Otherrequiredinformation for both segrnentsare disclose.din Note 8 to the financial statements. 25. Note to Statementsof CashFlows NoncashOperatingand InvestingActivities in 2010: to ACMDC to AFS investmentamountingto F504'447'500. Conversionof advances 26. SupplementaryTax Information under RevenueRegulations(RR) No. 1$2010 authorizingthe RRNo. 15-2010amendscertainprovisionsof RRNo.21-2002'asamended, Commissionerof Internal Revenueto prescribeadditionalproceduraland/ordooumentary offinanoialstatements andsubmission with the preparation requirements in oonnection the aooompanying tax retums. ililfllthrilrilllfrllllil -45- The Company'sreportedand/orpaidthe followingtypesof taxesin 2010: Value-addedtax (VAT) saleson servioesamountingto P67,687,500 a. TheCompanyhaszero-rated/exempt pursuantto the provisionsof Section108(B) ofthe NationalIntemalRevenueCode' b. Ths amountof inputVAT claimedarebrokendown asfollows: Balanceat beginningof year Goodsothert]ranresaleof manufacture Servicodlodeedunderotheraceounts Balanceat endofvear P9t7,t 65 32,738 382,998 F1,332,901 WithholdingTaxes The belowsummarizes thetotal witlrholdingtaxespaidor ac€ruedby the Company: Finalwithholdingtaxes andbenefits Withholdingtaxeson compensation P1,608,727 2,078,109 71 P4,460,906 OtherTaxesandLicensesfor 2010 Taxesand licenses,local andnational,includeroal propertytaxes,licensesand permitfeesas follows: Docum;ntary stamptaxes Real propertytaxes BusinessDermitsandothers F689,512 37,783 95'926 F823.221 lll llllillllillllllilffil |ilfl lililffi Unaudited Financial Statement for the Interim Period 31 March 2011 ANGLO PHILIPPINE HOLDINGS CORPORATION BALANCE SHEET March 2011 Unaudited ASSETS Current Assets Cash & cash equivalents Financial assets at fair value through profit or loss (FVPL) Accounts Receivable - net Derivative Assets Prepaid expenses and other current assets Total Current Assets December-10 AUDITED 212,620,678 437,711,814 197,792,427 2,166,129 850,291,048 165,129,012 466,608,314 277,946,758 2,942,679 912,626,763 2,713,405,546 1,056,937,503 17,670,020 156,701,628 99,096 3,944,813,793 4,795,104,840 3,033,803,476 1,051,710,422 18,047,144 156,519,409 99,096 4,260,179,547 5,172,806,310 Non-current Assets Available-for-sale investments Investment in associates Property and equipment-net Deferred exploration costs Retirement benefit plan asset Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS EQUITY LIABILITIES: Current Liabilities Short term loan payable Current portion of long-term debt 100,000,000 125,000,000 467,027,152 467,027,152 Accounts Payable and accrued expenses Income tax payable Total Current Liabilities Non-Current Liabilities Long-term debt-net of current portion Retirement benefit obligation Deferred income tax liabilities-net 211,924,900 3,706,954 782,659,006 232,674,250 4,390,218 829,091,620 1,548,556,750 15,110,330 1,554,031,303 15,110,331 Total Noncurrent Liabilities TOTAL LIABILITIES 1,563,667,080 2,346,326,086 1,569,141,634 2,398,233,254 1,176,632,312 4,658,460 643,785,149 651,268,908 2,476,344,829 1,176,632,312 4,658,460 962,683,079 658,165,280 2,802,139,131 (27,566,075) 2,448,778,754 4,795,104,840 (27,566,075) 2,774,573,056 5,172,806,310 STOCKHOLDERS' EQUITY Capital stock-P1 par value Authorized - 2,000,000,000 shares Issued - 1,170,616,970 shares as of March 2011 and December 2010 Subscribed - 7,383,030 shares as of March 2011 and December 2010 (net of subscriptions receivable amounting to P1,367,688) Additional paid-in-capital Net unrealized valuation gain/(loss) on AFS investments Retained Earnings Cost of 13,000,000 shares in March 2011 and December 2010 Total Stockholders' Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ANGLO PHILIPPINE HOLDINGS CORPORATION STATEMENTS OF COMPREHENSIVE INCOME Jan to March 2011 REVENUES Gains on: Fair value changes of financial assets at FVPL Sale of investment Interest income Foreign Exchange gains - net Equity share in net/(loss) earnings of associates Other revenues COST AND EXPENSES Interest expenses and bank charges General and administrative expenses INCOME/(LOSS) BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Provision for income tax - Current Provision for income tax - Deferred NET INCOME/(LOSS) OTHER COMPREHENSIVE INCOME(LOSS) Unrealized valuation gain (loss) on AFS investments TOTAL COMPREHENSIVE INCOME (LOSS) Basic and Diluted Earnings/(Loss) Per Share Jan to March 2010 (28,896,500) 5,197,534 5,415,233 5,227,080 27,801,394 14,744,741 39,610,453 16,599,544 24,102,006 280,135 4,573,400 28,767,366 113,932,904 11,657,411 8,736,725 20,394,136 (5,649,395) 12,653,033 5,785,014 18,438,047 95,494,857 1,246,974 1,246,974 (6,896,369) 6,729,698 6,729,698 88,765,159 (318,897,930) (325,794,299) (0.006) 151,250,000 240,015,159 0.08 ANGLO PHILIPPINE HOLDINGS CORPORATION STATEMENTS OF CASH FLOWS FOR THE PERIOD Jan. 1 to March 31 Jan. 1 to March 31 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Net loss/incidental income Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization Decrease (increase) in: Receivables Prepayments and other current assets Increase (decrease) in: Accounts payable and accrued expenses Income Taxes Payable Pension Liability Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in: Financial assets at FVPL Investment in associates Deferred exploration Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payment of borrowings Net cash provided by financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, END (6,896,369) 377,124 88,765,159 386,498 81,654,331 776,551 (32,653,498) 1,864,358 (20,749,353) (683,264) 54,479,018 8,874,477 6,729,697 (2,342,957) 71,623,734 28,896,500 (5,227,080) (182,219) 23,487,201 (24,688,045) (4,573,399) (29,261,444) (30,474,553) (30,474,553) (37,325,444) (37,325,444) 47,491,666 5,036,846 165,129,012 212,620,678 79,588,042 84,624,888 ANGLO PHILIPPINE HOLDINGS CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY March 31, 2011 Capital stock Issued Balances at January 1, 2011 Net Income as of first quarter 2011 Other Comprehensive as of first quarter 2011 Subscribed Subscriptions Receivable Add'tl Paid-in Capital 1,170,616,970 - 7,383,030 - (1,367,688) - 4,658,460 - 1,170,616,970 7,383,030 (1,367,688) 4,658,460 Total Comprehensive Income, as of first quarter 2011 Cash Dividends Balances at March 31, 2011 Net Unrealized Valuation Gain/(Loss) on AFS Investments 962,683,079 (318,897,930) (318,897,930) 643,785,149 Retained Earnings Treasury Stock Total 658,165,277 (6,896,369) (27,566,075) (6,896,369) 651,268,908 (27,566,075) 2,774,573,053 (6,896,369) (318,897,930) (325,794,299) 2,448,778,754 March 31, 2010 Capital stock Issued Balances at January 1, 2010 Net Income as of first quarter 2010 Other Comprehensive as of first quarter 2010 Subscribed 1,170,611,970 - 7,388,030 - Subscriptions Receivable (1,367,688) - Add'tl Paid-in Capital 4,658,460 - Total Comprehensive Income, as of first quarter 2010 Cash Dividends Balances at March 31, 2010 1,170,611,970 7,388,030 (1,367,688) 4,658,460 Net Unrealized Valuation Gain/(Loss) on AFS Investments (53,306,821.00) 151,250,000 151,250,000 97,943,179 Retained Earnings Treasury Stock 132,341,244 88,765,159 88,765,159 221,106,403 Total (27,566,075) (27,566,075) 1,232,759,120 88,765,159 151,250,000 240,015,159 1,472,774,279 MINUTES OF THE ANNUAL MEETING OF STOCKHOLDERS of ANGLO PHILIPPINE HOLDINGS CORPORATION Held on July 23, 2010, 3:00 PM At the Kamia Room, EDSA Shangri-La Hotel Ortigas Center, Mandaluyong City 1. Call to Order Mr. Alfredo C. Ramos acted as Chairman of the Meeting, called the meeting to order and presided over the same. Atty. Roberto V. San Jose was Secretary of the Meeting and recorded the minutes of the proceedings. 2. Certification of Quorum The Secretary announced that notices of the meeting had been sent out to the stockholders in accordance with the By-Laws and, in addition, published in the July 17 and 21, 2010 issues of the Philippine Daily Inquirer. He also certified that there were present in person or by proxy, stockholders owning at least 64.26% of the issued capital stock (the list of attendees is available at the office of the Corporation). He therefore certified to the presence of a quorum for the transaction of corporate business. 3. Approval of the Minutes of the Last Stockholders’ Meetings Upon motion duly made and seconded, the minutes of the last stockholders’ meeting held on July 31, 2009, copies of which were earlier distributed to the stockholders, were unanimously approved. 4. Management Report 2 Upon motion duly made and seconded, the Management Report and the Corporation’s financial statements for the previous year, which were presented by the Corporation’s President, were noted and approved. 5. Ratification of the Acts of the Board of Directors and Management The stockholders then reviewed the acts and decisions of the Board of Directors and the Management of the Corporation from the last annual stockholders’ meeting to date. After discussion and on motion made and duly seconded, the following resolution was approved: “RESOLVED, That all contracts, acts, proceedings, elections and appointments heretofore made or taken by the Board of Directors and the Management of Anglo Philippine Holdings Corporation (the “Corporation”) for the year 2009 to date be, and the same are, hereby approved, ratified and confirmed.” 6. Election of Directors The Chairman announced that the meeting would proceed to the election of directors. Upon nominations made and duly seconded, the following persons were elected by the stockholders present as Directors of the Corporation for the current year and until their successors shall have been duly elected and qualified: ALFREDO C. RAMOS CHRISTOPHER M. GOTANCO FRANCISCO A. NAVARRO PRESENTACION S. RAMOS AUGUSTO B. SUNICO ADRIAN S. RAMOS PATRICK V. CAOILE VICTOR V. BENAVIDEZ ROBERTO V. SAN JOSE RAMONCITO Z. ABAD RENATO C. VALENCIA The Chairman acknowledged that the independent directors were Messrs. Ramoncito Z. Abad and Renato C. Valencia. 3 7. Appointment of External Auditors Thereafter, the meeting proceeded with the appointment of the external auditors of the Corporation for the current year. Upon motion made and duly seconded, the following resolution was unanimously adopted: “RESOLVED, That the stockholders of Anglo Philippine Holdings Corporation (the “Corporation”) approve, ratify and confirm, as they do hereby, the appointment of Sycip Gorres Velayo & Co. as the external auditors of the Corporation for the current year.” 8. Adjournment There being no further business to transact, the meeting was thereupon adjourned. ATTEST: (SGD.) ALFREDO C. RAMOS Chairman of the Stockholders’ Meeting (SGD.) ROBERTO V. SAN JOSE Secretary of the Stockholders’ Meeting
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