PHILIPPINE STOCK EXCHANGE, INC. - MacroAsia … 17-Q 2011...December 21, 2011 PHILIPPINE STOCK...

December 21, 2011 PHILIPPINE STOCK EXCHANGE, INC. Tower One and Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines Attention : Ms. JANET A. ENCARNACION

Head, Disclosure Department Re: Submission of Structured Report – SEC FORM 17-Q (Amended) Dear Ms. Encarnacion: We are furnishing the PSE a copy of the amended SEC Form17-Q for the third quarter and period ended September 30, 2011 for MacroAsia Corporation as filed in compliance with the directive of Securities and Exchange Commission. Very truly yours, Amador T. Sendin VP – Planning and Business Development CIO / Compliance Officer

12/F, Allied Bank Center, 6754 Ayala Avenue, Makati City ٠ Tel No. (+632) 840 2001 ٠ Fax No. (+632) 840 1892

4 0 5 2 4

SEC Registration Number M A C R O A S I A C O R P O R A T I O N

A N D S U B S I D I A R I E S

(Company’s Full Name)

1 2 t h F l o o r , A l l i e d B a n k C e n t e r ,

6 7 5 4 A y a l a A v e n u e , M a k a t i C i t y

(Business Address: No. Street City/Town/Province)

Reynaldo O. Munsayac 840-2001 (Contact Person) (Company Telephone Number)

0 9 3 0 17-Q (Amended) Month Day (Form Type) Month Day

(Calendar Year) (Annual Meeting)

NA (Secondary License Type, If Applicable)

Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings

874 Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

S T A M P S Remarks: Please use BLACK ink for scanning purposes.

COVER SHEET

3rd Quarter Report September 30, 2011

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MACROASIA CORPORATION September 30, 2011

SEC Form 17‐Q (Amended)

QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER

1. For the quarterly period ended September 30, 2011 2. Commission Identification Number 40524 3. BIR tax Identification No. 004‐666‐098 4. Exact name of issuer as specified in its charter MACROASIA CORPORATION 5. City of Makati, Metro Manila 6. Province, Country or other jurisdiction Industry Classification Code of incorporation or organization 7. 12th Floor Allied Bank Center, 6754 Ayala Avenue, Makati City 1226 Address of Issuer’s Principal office Postal Code 8. (632) 840‐2001______________________ Issuer’s telephone number including area code 9. N/A ___ Former name, former address, and former fiscal year, if changed since last report

a) Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA

Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding

Common Stock, P1 par value 1,241,953,000 Outstanding Shares as of September 30, 2011

b) Are any or all of the securities listed on a Stock Exchange?

Yes [ X ] No [ ] Name of Stock Exchange Class Philippine Stock Exchange Common Stock 12. Indicate by check mark whether the registrant: (a) has filed all reports required to be filed by Section 17 of the Code and RSA Rule 17 thereunder or

Sections 11 of the RSA and RSA Rule 11(a)‐1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding twelve (12) months (or for such shorter period the registrant was required to file such reports);

Yes [ X ] No [ ] b) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]


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MACROASIA CORPORATION AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

For the Third Quarter and Period Ended September 30, 2011


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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Our unaudited condensed consolidated financial statements include the accounts of MacroAsia Corporation and its subsidiaries, collectively referred to as the “the Group” in this report.

The unaudited condensed consolidated financial statements for the third quarter ended September 30, 2011 have been prepared in accordance with Philippine Accounting Standard 34, Interim Financial Reporting. Accordingly, the unaudited condensed consolidated financial statements which are filed as Annex 1 of this report, do not include all the information required by generally accepted accounting principles in the Philippines (Philippine GAAP) for complete financial statements as set forth in the Philippine Financial Reporting Standards (PFRS).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The main objective of this MD&A is to help the readers understand the dynamics of our Group’s businesses and the key factors underlying our financial results. Hence, our MD&A is comprised of discussion of our core business units and analysis of the results of operations. This section also focuses on key statistics from the unaudited condensed consolidated financial statements and discusses known risks and uncertainties relating to aviation industry in the Philippines where we operate during the stated reporting period. However, our MD&A should not be considered all inclusive, as it excludes unknown risks, uncertainties and changes that may occur in the general, economic, political and environmental conditions after the stated reporting period or after the date of this report.

Our MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes. All financial information is reported in the Philippine peso (P=) unless otherwise stated.

Any references in this MD&A to “we, us, our, MacroAsia and Group” means the MacroAsia Group and references to the “Company” means MacroAsia Corporation, not including its subsidiaries.

Additional information about the Group which includes annual and quarterly reports can be found in our corporate website www.macroasiacorp.com.


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BUSINESS OVERVIEW

MacroAsia Corporation

MacroAsia Corporation (MAC) (formerly known as Infanta Mineral and Industrial Corporation) is a publicly‐listed company incorporated on February 16, 1970 to primarily engage then in the business of geological exploration and development. On January 26, 1994, the Securities and Exchange Commission (SEC) approved the amendments to the Articles of Incorporation of Infanta Mineral and Industrial Corporation, changing its original purpose from geological exploration and development to that of a holding company, and its corporate name to Cobertson Holdings Corporation (Cobertson). In November 1995, the SEC further approved the change in the company’s name from Cobertson Holdings Corporation to its present name ‐ MacroAsia Corporation (MAC). MAC began commercial operations as a holding company under its amended charter in 1996.

MAC at present is engaged primarily in aviation‐related support businesses. It provides aircraft maintenance, repairs and overhaul (MRO) services, charter flight services, airport ground handling services and in‐flight catering services and operates a special economic zone at the Ninoy Aquino International Airport (NAIA). All subsidiaries and associated companies of MAC render services directly to the airline customers/locators at NAIA, Manila Domestic Airport, Diosdado Macapagal International Airport (DMIA), Mactan‐Cebu International Airport (MCIA) and Davao International Airport.

MAC continues to operate mainly through its four (4) subsidiaries and three (3) affiliates as of September 30, 2011, as fully discussed below.

Cebu Pacific Catering Services, Inc.

Cebu Pacific Catering Services, Inc. (CPCS) is MacroAsia’s first in‐flight catering venture which started commercial operations in October of 1996. MAC has 40% equity in this joint venture, while its partners: Cathay Pacific Catering Services of Hongkong and MGO Pacific Resources Corporation holds 40% and 20% equity, respectively.

CPCS is the first and presently still the only world‐class airline catering company at MCIA. Managed by Cathay Pacific Catering Services, it serves both domestic and international airlines. The bulk of its revenues in 2011 come from flights bound for international destinations.


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MacroAsia Air Taxi Services, Inc.

MacroAsia Air Taxi Services, Inc. (MAATS) is a wholly‐owned subsidiary of MAC which was incorporated in June of 1996. MAATS is a licensed non‐scheduled domestic flight operator providing helicopter chartering services from its base at the General Aviation Area, MDA to any point within the Philippines. MAATS is duly licensed by the Civil Aeronautics Board (CAB) and holds a current Air Carrier Operating Certificate (ACOC) (No. 4AN9800035) issued by the Air Transportation Office (ATO).

MAATS is greatly dependent on the two aforementioned licenses, without which the company cannot provide charter services to the public. Both licenses have to be renewed annually. The company ensures that its helicopter receives a year‐round preventive maintenance in accordance with the manufacturer’s specifications and complies with the stringent requirements of the CAB and ATO. The company’s pilot and mechanics continue to undergo year‐round training in the U.S. to maintain a record of safety and reliability.

MAATS started commercial operations in October 1996. It has since been leasing MAC’s Ecureuil AS350‐B2 5‐passenger helicopter for its chartering business. Revenues derived from chartering operations are 100% domestic, with majority of its customers being local businessmen.

MAATS strictly adheres to the stringent safety standards and procedures set by the local regulating agencies. It ensures that its staff undergoes continuous year‐round training with emphasis on safety and customer service, a practice that has lifted the company ahead of its competitors.

MacroAsia Properties Development Corporation

MacroAsia Properties Development Corporation (MAPDC), another wholly‐owned subsidiary, was incorporated on June 4, 1996 to primarily engage in the acquisition, development and sale of real properties. After it completed its first infrastructure project in 1997 and following the Asian economic crisis, the company suspended pursuing further property development projects as a core business and refocused its efforts on aviation‐support activities.

On September 1, 2000, MAPDC was registered as an Ecozone Developer/Operator with the PEZA, and as such, it enjoys tax incentives. It started commercial operations again on the same date, this time as the ecozone developer/operator of the MacroAsia Special Ecozone (Ecozone) at the NAIA, with Lufthansa Technik Philippines, Inc. (LTP) as its anchor locator for the next 25 years. LTP is an associated company of MAPDC as LTP is 49% owned by MAC.

MAPDC has a 25‐year lease covering the property occupied by the Ecozone with the Manila International Airport Authority (MIAA).


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MacroAsia Catering Services, Inc.

MacroAsia Catering Services, Inc. (MACS) was incorporated on November 5, 1996, then with a corporate name of MacroAsia‐Eurest Catering Services, Inc. (MECS), to primarily provide in‐flight catering services at the NAIA and the MDA. When MACS started commercial operations on September 1, 1998, it was a joint venture between MAC (67%) and two foreign partners: Singapore Airport Terminal Services (SATS, at 20%) and Compass Group International B.V. (then known as Eurest International B.V., at 13%). On June 28, 2006, by mutual agreement of the three JV partners, a sale and purchase agreement with Compass Group International B.V. was executed whereby MAC acquired the 13% shareholdings of the Compass Group in MACS. Thus, MACS continues now as a joint venture between MAC (80%) and SATS (20%).

In 2006, the Board of Directors of MACS decided to change the name of the company to MacroAsia Catering Services, Inc.

MACS continues to strictly comply with both international and local hygiene standards and environmental regulations. It has consistently passed all the regular audits conducted by the Bureau of Quarantine, the Medina Audit for Singapore Airlines, Japan Airlines, KLM, and ANA as well as the periodic audits by other airlines as part of their hygiene and quality enhancement programs. It has a fully‐equipped laboratory manned by in‐house microbiologists to ensure that high standards are maintained at all times.

MACS is the only airline caterer in the Philippines that holds an ISO certification, aside from HACCP and HALAL certificates from independent and professional certifying organizations. MACS also strictly complies with environmental regulations. One of the government agencies which closely monitor MACS is the Environmental Management Bureau of the Laguna Lake Development Authority. This government agency monitors the production area to ensure that waste disposal regulations are fully complied with to protect the environment.

MACS has received top awards for outstanding service, besting other service providers from all over the world for esteemed airlines like Cathay Pacific and Singapore Airlines.

MacroAsia Airport Services Corporation

MacroAsia Airport Services Corporation (MASCORP) was incorporated on September 12, 1997 to provide, manage, promote and/or service any and all ground handling requirements of military and/or commercial aircraft for passengers and cargo. MASCORP commenced its ground handling operations on April 19, 1999 at the NAIA, and has been generating both domestic and export sales.

On June 15, 1999 the Company originally signed a joint venture agreement with Ogden Aviation Philippines B.V. (formerly Ogden Water Systems of Muscat B.V.). Ogden Aviation Philippines B.V. was subsequently acquired by Menzies Aviation Group in 2001. By April 12, 2007, MAC acquired the 30% share of Menzies making MASCORP a wholly owned subsidiary of MAC.


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On July 2, 1999, a wholly‐owned subsidiary of MASCORP, Airport Specialists' Services Corporation (ASSC), was incorporated primarily to manage and to promote, service and/or provide manpower support for any and all ground handling requirements of private, military and/or commercial aircraft. ASSC commenced operations immediately after its incorporation but had ceased operations shortly thereafter. Toward the end of 2006, MAC acquired MASCORP’s 100% ownership in ASSC. The effective ownership of MAC in ASSC was thus increased from 70% to 100%. Through the restructuring, MAC effectively acquired the 30% minority interest of Menzies Aviation Group in ASSC. Consequently, ASSC became a direct subsidiary of MAC.

Lufthansa Technik Philippines, Inc.

Lufthansa Technik Philippines, Inc. (LTP) is a joint venture between MAC (49%) and Lufthansa Technik AG of Germany (51%). It is the only company which provides a wide range of aircraft maintenance, repairs and overhaul (MRO) services at the NAIA, DMIA, MCIA and Davao International Airport.

Following the signing of the joint venture agreement on July 12, 2000, and its subsequent registration with the PEZA as an economic zone locator on August 30, 2000, LTP started its commercial operations on September 01, 2000. It consistently generates both export and domestic revenues and enjoys tax incentives as a PEZA‐registered entity.

LTP also has a concession agreement with MIAA upon which the company’s business operations is highly dependent. The agreement grants the company the right to operate as a provider of aircraft MRO services at NAIA. LTP secures such right by yearly renewal of the agreement and paying the monthly CPF (7% of gross revenue) on time.

LTP is currently providing line maintenance to most airlines that flies in Manila and base maintenance services to airlines from Asia, Europe, Middle East and South America. Its base maintenance customers include PAL, Air Asia X, Asiana Airlines, Qantas Airways, Virgin Atlantic Airways, Lufthansa Airlines, Kuwait Airways and LAN Airlines to name a few.

Aviation authorities/agencies from the respective countries of origin of these airline clients issue licenses/certificates to LTP for the latter’s accreditation to provide MRO services to the formers’ associated airlines. The extent of LTP’s work/services largely depends on these certifications, which describe/specify that LTP’s services must be carried out in accordance with the respective countries’ aviation regulations. These certifications are renewed either annually or every two years.


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Toll‐MacroAsia Philippines, Inc.

Toll‐MacroAsia Philippines, Inc. (TMP) is a joint venture between MAC (49%) with Sembcorp Logistics Ltd. (Semblog, at 51%), Singapore’s leading supply chain provider. In 2006, Australia's biggest largest logistics company, Toll Holdings (Toll) acquired SembLog.

TMP was incorporated on October 18, 2005, whose primary purpose is to provide supply chain management, packing, sourcing, processing and/or assembling of products and logistics‐related consultancy services within the Philippines. TMP started commercial operations in April of 2006.

On October 26, 2011, MAC divested its 49% business interest in the third‐party logistics business to Toll (Asia) PTE Ltd of Singapore. This is in line with the Group’s corporate strategy to stay focused on its core business interests.

KEY PERFORMANCE INDICATORS

September 30, 2011 and 2010

Return on Net Sales

Return on Investment

Return on Equity Direct Cost Ratio Expense Ratio Company

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 Consolidated 16.01% 32.23% 4.40% 8.79% 4.69% 8.79% 73.81% 71.74% 25.46% 29.01% MAATS 19.79% 12.97% 16.53% 4.37% 16.53% 4.37% 59.22% 65.80% 12.51% 18.54% MAPDC 3.15% 3.18% 3.00% 2.94% 3.00% 2.94% 93.99% 93.71% 2.87% 2.95% MACS 4.69% 6.36% 7.04% 10.24% 9.19% 10.24% 68.96% 63.59% 23.15% 25.33% MASCORP 10.29% 3.29% 15.94% 5.11% 18.00% 5.11% 75.54% 83.39% 8.90% 11.14%


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Return on Net Sales (RNS)

RNS is the ratio of the Company’s net income attributable to equity holders of the parent to net sales computed by dividing net income attributable to equity holders of the parent by the total net revenues. This ratio measures the amount of income, after all costs and expenses, including taxes are deducted, for every peso of net revenue earned.

Consolidated RNS decreased by 16% from 2010 due to the decrease in net income primarily caused by the lower share in equity in net earnings of associates.

Return on Investment (ROI)

ROI is the ratio of the Company’s net income attributable to equity holders of the parent to interest bearing liabilities and total equity attributable to equity holders of the parent. This ratio is computed by dividing net income attributable to equity holders of the parent by the sum of total interest‐bearing liabilities plus equity attributable to equity holders of the parent. This ratio measures the amount of income earned on invested capital.

Consolidated ROI decreased by 4% due to lower share in equity in net earnings of associates compared to last year’s third quarter end.

Return on Equity (ROE)

ROE is the ratio of the Company’s net income attributable to equity holders of the parent to total equity attributable to equity holders of the parent, computed by dividing net income attributable to equity holders of the parent by the equity attributable to equity holders of the parent. This KPI is a measure of the owner’s return for every peso of invested equity.

Consolidated ROE decreased by 4% from last year as a result of the decrease in net income for the same period in 2010.

Direct Cost and Expense Ratio

Direct Cost ratio is computed by dividing total cost over total net revenues, while total expenses is divided by total net revenues to arrive at expense ratio. This ratio measures the average rate of direct costs and expense on products/services sold.

Direct cost ratio increased by 2% due to the combined effects of inflationary factor and a change in accounting estimates. Expense ratio favorably decreased by 4% resulting from the continuous enhancement of the Group’s administrative strategies.


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RESULTS OF OPERATION

The Group registered a consolidated net income after tax of P=151.4 million for the nine months ended September 30, 2011, a decrease of P=126 million or 45% as compared with P=277 million for the same period last year. The decrease is principally accounted by the lower share in the equity in net income of associates.

In‐flight catering revenues of P=551 million slightly decreased by less than 1% or P=2.5 million mainly due to the translation adjustments of foreign‐currency denominated sales since its revenues are invoiced and collected in US dollars. Ground handling revenues surged by P=60 million or 43% from last year’s P=138 million level, largely driven by the increase in number of flights serviced. Revenues from rental and administrative fees remained almost the same because lease rental is being accounted for on a straight‐line basis over the lease term, in compliance with Philippine Accounting Standards (PAS) 17. A 211% rise over last year’s P=7.7 million was achieved in charter flight revenues as a result of the increase in charter services in the mining sector. Overall, the Group registered a 9% growth (or P=76 million) in consolidated revenues from its operating subsidiaries for the first nine months of 2011 over last year’s P=837 million balance.

Direct cost ratio of 74% is 2% higher than the 2010 level due to the combined effect of higher cost of raw materials, increase in government‐mandated salaries and utility costs, and accelerated depreciation of building of MACS coming from the change in accounting estimates relative to the MIAA land lease agreement. General and administrative expenses of P=230 million is lower by 4% primarily due to limited exploration activities required to complete the initial seven phases of exploration activities initiated in 2010. Selling expenses of P=2.8 million is up by P=2 million due to more aggressive marketing and promotion activities this year.

Foreign exchange gains arising from translation adjustments of monetary assets and liabilities of P=0.68 million is down by 76.52% from last year’s P=2.9 million on account of the limited level of appreciation of the Philippine peso relative to the US dollar. The availment of external loans by the operating subsidiaries resulted to higher financing charges of P=2 million during the first nine months of the year. Interest income of P=0.84 million is lower by P=3.9 million (or 82%) as compared to last year due to lower interest rates in 2011. Other expenses grew by P=2.9 million from its P=0.35 million balance in 2010 as a combined result of higher discounts given during the period and bank charges on numerous importations and telegraphic transfers.

Equity in net income of associates represents MAC’s share in the net income/loss of its associated companies. While LTP’s business was heavily affected by the cut down in the services of its major client, growth in catering business was noted in CPCS as a result of higher share on its net earnings, a 25% rise from last year’s comparable nine month period. Changes in equity shares from period to period are dependent upon the results of operations of the associated companies.

Estimated provision for income tax of P=22 million is up by P=4.4 million or 25% due to higher taxable income of the operating subsidiaries.


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Despite the challenges in the aviation industry, the management team will continue to work hard to strengthen its existing core business and pursue new viable opportunities. On‐going strategies will be further improved as we endeavor to maximize our consolidated revenues and profits.

FINANCIAL POSITION

Consolidated total assets for the first nine months of 2011 have reached P=3.61 billion, a P=188 million growth compared to P=3.42 billion as of 2010 year end. This is primarily due to the increase in cash dividends received and trade income generated by the company.

Cash and cash equivalents of P=1.19 billion increased significantly by P=394 million (or 50%) from last year’s P=792 billion principally due to dividends received from a subsidiary and affiliated companies.

Receivables (net) and inventories grew by P=83 million (or 40%) and by P=12.6 million (or 38%), respectively, due to additional flight volumes of airline clients and higher food production requirements, respectively.

Other current assets consist of input taxes, tax credit certificates, creditable withholding taxes, and prepayments for rent and insurance covers for the building, equipment and the staff. The 0.09% drop is due to the combined effects of the increased creditable withholding taxes and prepayments for insurance covers and the decreased in input taxes which were assessed to remain unutilized in the next twelve months.

The Group has maintained current ratios of 5.02:1 and 5.88:1 as of September 30, 2011 and December 31, 2010, respectively, which demonstrates the Group’s ability to meet its current liabilities and obligations as they mature.

Investments in associates amounting to P=1.36 billion as of the end of last year decreased by P=320 million to P=1.04 billion by the end of the first three quarters of 2011. The 23% decrease over 2010’s year end balance is mainly a result of higher cash dividends received during the current reporting period.

Property and equipment (net) of P=300 million was down by P=3 million due to the effect of accelerated depreciation coming from the change in estimated useful life of the building of MACS relative to the MIAA land lease, partially offset by additional investments resulting from the continued expansion of the operating subsidiaries. Accrued rental receivable and payable of P=117 million stayed almost unchanged due to the accrual of rental income and expense in compliance with PAS 17, which requires the recognition of rentals on a straight‐line basis (average) over the lease term. Available‐for‐sale investments amounting to P=27 million pertains to club shares acquired in 2007. This amount is net of change in fair value amounting to P=3.4 million. Goodwill of P=17.5 million remained the same, arising from the Company’s acquisition of the 13% minority interest of Compass (formerly Eurest International B. V.) in MECS in 2007. Deferred tax assets of P=11.9 million was lower by P=0.15 million due to reversal of timing differences pertaining to unrealized foreign exchange losses and accrual of expenses in the previous year.


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Deferred mine exploration costs of P=218 million is slightly higher by 1% from P=216 million last year as mine exploration activities were almost completed by the end of 2010. Deposits and other non current assets (net) increased by P=20 million (or 33%) to P=79 million as compared with P=59 million last year due to the additional input taxes arising from acquisition of property and equipment and other assets.

Accounts payable and accrued liabilities increased by P=31 million (or 16%) due to higher requirements for raw materials, acquisition of assets, and additional accrual of expenses for the period. Income tax liability went up by P=13 million over last year’s balance for the accrual of income taxes to be paid within the year. Notes payable represents loans of MACS and MASCORP obtained from local banks to support its operating expansion. Accrued rental payable and unearned rent income are contra‐accounts for accrued rental receivable and deferred rent assets, resulting from compliance with PAS 17. Accrued retirement benefits payable of P=5.7 million was lower by P=2.6 million as compared to that of 2010 year‐end after recalculation based on last year’s actuarial valuation.

The Company’s share in cumulative translation adjustment of an associate (LTP) amounting to P=155 million was greater by P=1.7 million (or 1%) due to the required foreign currency translation adjustments of the said associate to reflect the appreciation of the Philippine peso against the US dollar for the first nine months of 2011.

Minority interest represents the 20% equity share of SATS in MACS. Changes in minority interest are dependent on the results of operations of the joint venture companies concerned.

Year‐on‐year, debt‐to‐equity ratio remained within acceptable level at 0.15:1. Book values per share as of September 30, 2011 and December 31, 2010 continued their monthly swing at P=2.52 and P=2.47, respectively.

RECENT DEVELOPMENTS

The Company holds two Mineral Production Sharing Agreements (MPSA), MPSA‐220‐2005‐IVB and MPSA‐221‐2005‐IVB, both located in Brooke’s Point, Palawan. MPSA‐220 or the Infanta Nickel Project covers a total land area of 1,114 hectares with nickel in the form of laterite ore as the primary commodity. This area was the source of ore shipments to Japan in the 1970’s.

The MPSA runs for a term not exceeding 25 years from the date of the grant of the MPSA, and is renewable for another term not exceeding 25 years under the same terms and conditions, without prejudice to changes that will be mutually agreed upon by the Government and the Company.

On September 13, 2010, the Company received the environmental compliance certificate (ECC) for operations of the Project. The ECC was granted by the Department of Environment and Natural Resources (DENR), after a thorough project review and a series of consultations conducted principally under the supervision of the Environmental Management Bureau.


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Exploration Updates

The total extent of the laterite area within the MPSA is around 536 hectares with the deposits comprised of limonite and saprolite ores. Within this delineated nickel ore envelope, 2,751 drill holes were done, resulting into 47,273.9 meters drilled. There were also 480 test pits that were dug, yielding 2,568.2 meters more for sampling. The resulting samples collected numbered 54,412, and these were analyzed for nickel (Ni), iron (Fe) and 12 other elements/oxides, including the loss in ignition (LOI), using fused bead X‐Ray Fluorescence (XRF) technique at Intertek Laboratories. The Company has completed an exploration report that is compliant to the Philippine Mineral Reporting Code. A mining plan has also been drafted.

In 2010, the exploration efforts of the Company resulted in the delineation of 10.8 million dry metric ton of measured mineral resource with average grade of 1.30% nickel (Ni) and 31.28% Fe at 1% Ni cut‐off. The reserves calculation has been validated by the Mines and Geosciences Bureau (MGB). MGB’s independent calculation however revealed a measured mineral resource of 12.8 million dry metric ton with average grade of 1.29% Ni and 32.20% Fe at 1.0% Ni cut‐off.

The operation of the Mining Project has already been endorsed by the three impact baranggays, including the indigenous people in the area. The Company is presently completing the acquisition of the last few remaining permits needed to operate the mines.

NUMBER OF STOCKHOLDERS

The number of stockholders as of September 30, 2011 and December 31, 2010 are 874 and 882, respectively.


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OTHER MATTERS

1. Passenger loads and flight frequencies of airlines are the two most important factors that affect the revenue levels of the Group’s operating units. The Group constantly monitors these two factors to efficiently manage its costs.

2. Management is not aware of any known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on net sales/revenues/income from continuing operations.

3. There are no unusual items or incidents affecting the issuer’s assets, liabilities, equity, net income or cash flows.

4. The Group has not issued, repurchased or repaid any debt or equity securities during the current interim reporting period.

5. No material events have occurred subsequent to the end of the current interim period that should be reflected in the financial statements for the interim period.

6. There have been no significant elements of income or loss that did not arise from the Group’s continuing normal operations.

7. The Group is not aware of any future event that will cause a material change in the relationship between cost and revenues.

8. The Group is not aware of any events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

9. There are no material off‐balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Group with unconsolidated entities or other persons created during the reporting period.


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Annex 1

MACROASIA CORPORATION AND SUBSIDIARIES Interim Condensed Consolidated Financial Statements September 30, 2011 and 2010 (Unaudited) and December 31, 2010 (Audited)


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GENERAL INFORMATION

Directors (as of September 30, 2011) Washington Z. SyCip (Chairman) Harry C. Tan (Vice Chairman) Joseph T. Chua (President and CEO) Lucio K. Tan, Jr. Jaime J. Bautista (Treasurer) George Y. SyCip Jose Ngaw Enrique M. Aboitiz, Jr. (Independent Director) Johnip G. Cua (Independent Director)

Corporate Secretary Atty. Marivic Moya

Compliance Officer/ Corporate Information Officer Amador T. Sendin

Stock and Transfer Agent Trust and Investment Division Allied Banking Corporation 4th Floor, Allied Bank Center 6754 Ayala Avenue, Makati City

Banks Allied Banking Corporation 6754 Ayala Avenue, Makati City

Unionbank of the Philippines Tektite Towers, Ortigas Center, Pasig City

Philippine National Bank 6722 Ayala Avenue, Makati City

Banco de Oro Universal Bank EBC Building, Paseo de Roxas cor. Gil Puyat Ave., Makati City China Banking Corporation Paseo De Roxas cor. Villar St., Makati City

Auditors SyCip Gorres Velayo & Co. 6760 Ayala Avenue, Makati City


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INTERIM CONSOLIDATED BALANCE SHEET As of September 30, 2011 and December 31, 2010 In Thousand Pesos 30 September 2011

(UNAUDITED) 31 December 2010

(AUDITED) ASSSETS Current Assets Cash and cash equivalents P=1,185,939 P= 791,590Receivables – net 288,446 205,534Inventories 46,222 33,596Derivative assets 1,976 1,976Other current assets 134,230 134,347

Total Current Assets 1,656,813 1,167,043Non‐current Assets Investment in associates 1,043,762 1,364,124Property and equipment – net 300,376 302,983Deferred mine exploration costs 218,040 216,061Investment property – net 126,592 126,592Accrued rental receivable 116,792 116,505Available‐for‐sale investments 27,056 27,056Deferred rent expense 13,387 14,104Goodwill 17,531 17,531Deferred tax assets 11,943 12,094Deposits and other non current assets 78,673 59,002

Total Non current Assets 1,954,152 2,256,052TOTAL ASSETS P=3,610,965 P=3,423,095

LIABILITIES AND EQUITY Current Liabilities Current portion of notes payable P= 87,029 P= ‐ Accounts payable and accrued liabilities 220,973 190,332Dividends payable 8,206 7,976Income tax payable 13,528 22

Total Current Liabilities 329,736 198,330Non current Liabilities Notes payable 13,333 ‐ Accrued rental payable 116,792 116,505Unearned rent income 13,387 14,104Rental deposit 3,356 3,017Accrued retirement benefits payable 5,745 8,325Deferred tax liability 1,095 839

Total Non‐current Liabilities 153,708 142,790TOTAL LIABILITIES 483,444 341,120

Equity Capital stock 1,250,000 1,250,000Additional paid in capital 281,437 281,437Share in foreign currency translation adjustment of an associate (154,778) (156,464)Available‐for‐sale investments reserve 3,385 3,385Treasury shares (25,066) (8,784)Retained earnings 1,720,142 1,665,167

Total equity attributable to equity holders of the parent 3,075,120 3,034,741Non‐controlling interests 52,401 47,234TOTAL EQUITY 3,127,521 3,081,975TOTAL LIABILITIES AND EQUITY P=3,610,965 P=3,423,095


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INTERIM CONSOLIDATED STATEMENTS OF INCOME For the periods ended September 30, 2011 and September 30, 2010 In Thousand Pesos except Earnings Per Share UNAUDITED JULY TO SEPTEMBER JANUARY TO SEPTEMBER 2011 2010 2011 2010 SERVICE REVENUES In‐flight catering P= 179,589 P= 175,486 P= 551,333 P= 553,814Ground handling and aviation 68,465 50,154 197,482 137,816Rental and administrative 46,883 46,569 140,651 138,027Charter flights 901 2,265 24,008 7,730Total Service Revenues 295,838 274,474 913,474 837,387 DIRECT COSTS 227,384 196,802 674,263 600,744 GROSS PROFIT 68,454 77,672 239,211 236,643 Equity in net income of associates 31,492 69,461 170,026 291,459General and administrative expenses (77,104) (85,399) (229,731) (240,252)Foreign exchange gain (loss) – net 4,912 2,610 685 2,918Selling expenses (549) (181) (2,796) (791)Interest income (1,112) 2,411 839 4,793Financing charges (765) 438 (1,982) (295)Others – net 118 1,744 (2,603) 346 INCOME BEFORE INCOME TAX 25,446 68,756 173,649 294,821 PROVISION FOR INCOME TAX (4,895) (6,291) (22,258) (17,852) NET INCOME FOR THE PERIOD P= 20,551 P= 62,465 P= 151,391 P= 276,969

Attributable to: Equity holders of the parent 19,630 60,178 146,224 269,917Non‐controlling interests 921 2,278 5,167 7,052NET INCOME FOR THE PERIOD 20,551 62,465 151,391 276,969

NUMBER OF WEIGHTED AVERAGE SHARES 1,229,658 1,247,669 1,226,739 1,247,669 BASIC EARNINGS PER SHARE* P= 0.0160 P= 0.0482 P= 0.1192 P= 0.2163`

*Earnings per share is computed as net income attributable to equity holders of the parent divided by the weighted average number of shares.


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INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Periods Ended September 30, 2011 and 2010 In Thousand Pesos Attributable to Equity Holders of the Parent

Capital Stock

Additional Paid‐In Capital

Share in Foreign Currency Translation Adjustment

of an Associate

Net Change in FV of

Available for Sale

Investment

Treasury Shares

Retained Earnings

Total Minority Interest

Total

BALANCES AT DECEMBER 31, 2010 P=1,250,000 P=281,437 (P=156,464) P=3,385 (P= 8,784) P=1,665,168 P=3,034,742 P=47,234 P=3,081,976 Total comprehensive income (loss) for the period ‐ ‐ 1,686 ‐ ‐ 146,224 147,910 5,167 153,077

Acquisition of treasury shares during the period ‐ ‐ ‐ ‐ (16,282) ‐ (16,282) ‐ (16,282)

Cash dividends ‐ ‐ ‐ ‐ ‐ (91,250) (91,250) ‐ (91,250) BALANCES AT SEPTEMBER 30, 2011 (UNAUDITED) P=1,250,000 P=281,437 (P=154,778) P=3,385 (P=25,066) P=1,720,142 P=3,075,120 P=52,401 P=3,127,521

BALANCES AT DECEMBER 31, 2009 P=1,250,000 P=281,437 (P=66,114) P= ‐ P= ‐ P=1,345,291 P=2,810,614 P=42,286 P=2,852,900 Total comprehensive income for the period ‐ ‐ (2,353) ‐ ‐ 269,917 267,564 7,052 274,616

Acquisition of treasury shares during the period (4,300) (4,300) (4,300)

Cash dividends at P=0.065 per share ‐ ‐ ‐ ‐ ‐ (81,250) (81,250) ‐ (81,250)

BALANCES AT SEPTEMBER 30, 2010 (UNAUDITED) P=1,250,000 P=281,437 (P=68,467) P= ‐ (P=4,300) P=1,533,958 P=2,992,628 P=49,338 P=3,041,966


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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS For the Periods Ended September 30, 2011 and 2010 In Thousand Pesos JANUARY TO SEPTEMBER (UNAUDITED) 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=173,649 P= 294,821 Adjustments for: Equity in net income of associates (170,026) (291,459) Depreciation and amortization 48,053 41,873 Provision for losses 4,500 1,200 Loss on sale of asset 3,019 1,319 Movements in accrued retirement benefits payable (2,580) (7,115) Financing charges 1,982 (295) Unrealized foreign exchange loss (gain) – net 1,001 (2,918) Interest income (839) (4,794)

Operating income before working capital changes 58,759 32,632 Decrease (increase) in : Receivables (87,412) (57,516) Inventories (12,627) 10,075 Other current assets 117 (98,021) Increase in accounts payable and accrued liabilities 30,210 (5,900) Cash used in operations (10,953) (118,730) Interest received 839 4,794 Financing charges paid (3,230) (240) Income taxed paid, including creditable withholding taxes (8,345) (3,237) Net cash used in operating activities (21,689) (117,413) CASH FLOWS FROM INVESTING ACTIVITIES Dividends received 495,379 328,280 Acquisitions of property and equipment (45,446) (35,834) (Increase) decrease in other non current assets (22,260) 83,547 Payments for deferred mine exploration cost (1,979) (39,848) Proceeds from sales of other non current assets 340 294 Purchase of investment in bond ‐ (104,393) Net cash from investing activities 426,034 232,046 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from availment of notes payable 137,369 ‐ Dividends paid (81,020) (76,926) Payment of notes payable (48,352) ‐ Acquisition of treasury shares (16,283) (4,300) Net cash used in financing activities (8,286) (81,226) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,710) (17,293)

NET INCREASE IN CASH AND CASH EQUIVALENTS 394,349 16,114 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 791,590 667,897 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD P=1,185,939 P=684,011


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SUMMARIZED INCOME STATEMENT INFORMATION FOR UNCONSOLIDATED SUBSIDIARY LUFTHANSA TECHNIK PHILIPPINES, INC. For the Periods Ended September 30, 2011 and 2010 In Thousand Pesos JANUARY TO SEPTEMBER (UNAUDITED) 2011 2010 Revenues P=4,517,405 7,414,476 Less: Direct Costs 1,718,444 4,213,715 Gross Profit 2,798,961 3,200,761 Less: Operating Expenses 2,460,161 2,562,892 Income from Operations 338,800 637,869 Less: Other Charges (Income) (24,574) (26,239) Income before Income Tax 363,374 664,108 Less: Provision for Income Tax 36,904 85,751 Net Income for the Period P= 326,470 578,357

Equity Share in Net Income (49%) P= 159,970 283,395


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SUMMARIZED INCOME STATEMENT INFORMATION FOR UNCONSOLIDATED SUBSIDIARY CEBU PACIFIC CATERING SERCVICES, INC. For the Periods Ended September 30, 2011 and 2010 In Thousand Pesos JANUARY TO SEPTEMBER (UNAUDITED) 2011 2010 Revenues P=83,867 P=75,518 Less: Direct Costs 50,965 45,765 Gross Profit 32,902 29,753 Less: Operating Expenses 5,818 5,505 Income from Operations 27,084 24,248 Less: Other Charges (Income) 235 2,448 Income before Income Tax 26,849 21,800 Less: Provision for Income Tax 1,709 1,639 Net Income for the Period P=25,140 P=20,161

Equity Share in Net Income (40%) P=10,056 P= 8,064


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SUMMARIZED INCOME STATEMENT INFORMATION FOR UNCONSOLIDATED SUBSIDIARY TOLL‐MACROASIA PHILIPPINES, INC. For the Periods Ended September 30, 2011 and 2010 In Thousand Pesos JANUARY TO SEPTEMBER (UNAUDITED) 2011 2010 Revenues P=6,651 P=6,018 Less: Cost of Sales 3,775 4,295 Gross Profit 2,876 1,723 Less: Operating Expenses 2,781 4,142 Loss from Operations 95 (2,419) Less: Other Charges (Income) 175 (536) Loss before Income Tax (80) (1,883) Less: Provision for Income Tax 97 33 Net Loss for the Period (P= 177) (P=1,916)

Equity Share in Net Loss (49%) (P= 87) (P= 939)


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NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate information

MacroAsia Corporation (“the Company”) was incorporated in the Philippines on February 16, 1970 under the name Infanta Mineral & Industrial Corporation to engage in the business of geological exploration and development. On January 26, 1994, its Articles of Incorporation was amended to change its primary purpose from exploration and development to that of engaging in the business of a holding company, and change its corporate name to Cobertson Holdings Corporation. On November 6, 1995, the Company’s Articles of Incorporation was again amended to change its corporate name to its present name. Its registered office address is 12th Floor, Allied Bank Center, 6754 Ayala Avenue, Makati City.

The principal activities of the Company and its subsidiaries (collectively referred to as the Group) are described in Note 4. The Company, through its subsidiaries and associates (see Note 4), is presently engaged in aviation‐support businesses at the Ninoy Aquino International Airport (NAIA), Manila Domestic Airport (MDA), Mactan‐Cebu International Airport (MCIA), and the General Aviation Areas. It provides in‐flight catering services, ground handling services for passenger and cargo aircraft, and helicopter charter flight services, and it operates/develops the sole economic zone within the NAIA.

Through Lufthansa Technik Philippines, Inc. (LTP), an associate, which has a maintenance, repairs and overhaul facility in the Philippines, the Company provides globally competitive heavy maintenance and engineering services for specific models of Airbus and Boeing aircraft for airline clients all over the world.

In 2006, the Company ventured into the third party logistics business, through Toll‐MacroAsia (TMP), with Toll Asia Pte., Ltd. (Toll Asia), a company incorporated in Singapore on January 24, 2005. It divested its 49% share holding in the joint venture on October 26, 2011. Further, with the recent developments in the Philippine mining industry, the Company is reviving its mining business.

2. Summary of Significant Accounting Policies and Financial Reporting Practices

Basis of Financial Statements Presentation and Preparation

The interim condensed consolidated financial statements have been prepared on a historical cost basis, except for available‐for‐sale (AFS) investments and derivative financial instruments, which are carried at fair value. The interim condensed consolidated financial statements are presented in Philippine peso, the Company’s functional and presentation currency.


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Statement of Compliance

The interim condensed consolidated financial statements for the nine‐month ended September 30, 2011 have been prepared in accordance with Philippine Accounting Standard (PAS) 34, Interim Financial Reporting. This does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as of December 31, 2010.

Changes in Accounting Policies and Disclosures

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended December 31, 2010.

The Group decided not to early adopt either PFRS 9 (2009) or PFRS 9 (2010) for its 2011 financial reporting. The Group will conduct in early 2012 another impact evaluation using the outstanding balances of financial statements as of December 31, 2011. Its decision whether to early adopt PFRS 9 (2009) or PFRS 9 (2010) for the 2012 financial reporting will be disclosed in the Group’s interim financial statements as of March 31, 2012.

Should the Group decide to early adopt PFRS 9 (2009) or PFRS 9 (2010) for its 2012 financial reporting, its reports as of March 31, 2012 will already be compliant to the requirements of the said standards and will contain a qualitative and quantitative discussion of the results of the Group’s impact evaluation.

Basis of consolidation

The accompanying interim condensed consolidated financial statements comprise the financial statements of the Company and the following subsidiaries: Percentage of ownership Direct Indirect

MacroAsia Air Taxi Services, Inc. (MAATS) 100 –

MacroAsia Properties Development Corp. (MAPDC) 100 –

MacroAsia Airport Services Corporation (MASCORP), formerly

MacroAsia‐Menzies Airport Services Corporation* 100 –

Airport Specialists’ Services Corporation (ASSC)** 100 –

MacroAsia Catering Services, Inc. (MACS)*** 80 –

MacroAsia Mining Corporation (MMC)**** 67 –

* In 2007, the Company bought the 30% minority interest of Menzies Aviation Group (Menzies) in MASCORP

** A wholly‐owned subsidiary of the Company; prior to 2006, ASSC is a wholly‐owned subsidiary of MASCORP; has ceased commercial operations effective May 1, 2001.

*** In 2006, the Company bought the 13% minority interest of Compass Group International B.V. (Compass) in MACS.

**** Incorporated on September 25, 2000; has not started commercial operations.

The consolidated financial statements comprise the financial statements of the Company and the above subsidiaries as of September 30, 2011 and December 31, 2010. The financial statements of the subsidiaries are prepared using accounting policies, consistent with those


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of the Company. All significant intra‐group balances, transactions, income and expenses, profits and losses resulting from intra‐group transactions are eliminated in full in the consolidation.

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Consolidation of subsidiaries ceases when control is transferred out of the Group. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate.

Non‐controlling Interests

Non‐controlling interest (previously referred to as a “minority interests”) represents the portion of the net assets of consolidated subsidiaries not held by the Group, and is presented separately in the consolidated statements of income and within the equity section of the consolidated balance sheets, separate from the Company’s equity. The losses applicable to the minority in a consolidated subsidiary may exceed the non‐controlling interest’s equity in the subsidiary even if the losses exceed the non‐controlling equity investment in the subsidiary.

Prior to January 1, 2010, the excess, and any further losses applicable to the non‐controlling interest, are charged against the majority interest, except to the extent that the non‐controlling interest has a binding obligation to and is able to make good the losses. If the subsidiary subsequently reports profits, the majority interest is allocated all such profits until the non‐controlling interest’s share of losses previously absorbed by the majority is recovered. The acquisition of non‐controlling interests is not considered a business combination under PFRS 3, Business Combinations, and therefore, the re‐measurement of the net assets acquired is not permissible and is not performed. Acquisitions of non‐controlling interests are accounted for using the parent entity extension concept method, wherein any excess of the consideration given up over the book value of the net assets acquired is recognized as goodwill. Any excess of the book value of the net assets acquired over the consideration given up is recognized as negative goodwill referred to as “Excess of net book value of non‐controlling interest acquired over acquisition cost” in the consolidated statement of income.

The goodwill recognized by the Group amounting to P=17.5 million as of September 30, 2011 and December 31, 2010 resulted from the Company’s acquisition of non‐controlling interest (13%) from a previous stockholder of MACS in 2006. There has been no restatement with respect to the changes in the standard.


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Acquisition of non‐controlling interest of Menzies in MASCORP in 2007

On April 30, 2007, the Company acquired the 30% minority interest of Menzies in MASCORP, increasing the Company’s ownership from 70% to 100%. The acquisition was made for a consideration of US$162,698 (or about P=7.8 million). The book value of the net assets acquired at acquisition date was about P=18.2 million, and the excess of such net book value over the acquisition cost, amounting to P=10.4 million was accounted for as a negative goodwill recognized in the 2007 consolidated statement of income.

3. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the interim condensed consolidated financial statements in compliance with Philippine Financial Reporting Standards (PFRS) requires the Group to exercise judgments, make estimates and use assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. The estimates and assumptions used in the accompanying interim condensed consolidated financial estimates are based upon management’s evaluation of relevant facts and circumstances as of the date of the interim condensed consolidated financial statements. Future events may occur which will cause the assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in the interim condensed consolidated financial statements as they become reasonably determinable.

Judgments

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on amounts recognized in the interim condensed consolidated financial statements.

Determination of the Company’s functional currency

Judgment is exercised in assessing various factors in determining the functional currency of each entity within the Group. These include the prices of goods and services, competition, cost and expenses, and other factors including the currency in which financing is primarily undertaken. Additional factors are considered in determining the functional currency of a foreign operation, including whether its activities are carried as an extension of that of the Company rather than being carried out with significant autonomy.

The Company, based on the relevant economic substance of the underlying circumstances, has determined its functional currency to be Philippine peso. It is the currency of the primary economic environment in which the Company operates. The functional currency of LTP, one of the Company’s associated companies has been determined to be United States (US) dollar.

Classification of financial instruments

The Group classifies a financial instrument, or its components, on initial recognition as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement and the definition of a financial liability, a financial asset or


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an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the Group’s consolidated balance sheet.

Impairment of AFS equity investments

Management exercised judgment in assessing whether the quoted market price at the reporting date indicated an impairment vis‐à‐vis the cost. Management assesses that impairment is sustained once the decline in value reaches 30% of cost or that the decline in value persisted for more than 12 months. As of September 30, 2011, management did not recognize impairment on its AFS investments costing P=25.9 million with fair value of P=27.1 million.

Classification of lease arrangements – the Group as Lessee and Lessor

The Group has property leases where it has determined that the risks and rewards related to such property are retained with the lessor (e.g., no transfer of ownership of leased assets by the end of the lease term). Both the lease and sub‐lease agreements are accounted for as operating leases. Operating lease income and expenses are recognized on a straight line basis over the lease term unless another systematic basis is representative of the time pattern of the Company’s benefit.

Determination of indicators of impairment of non financial assets

The Group assesses at each reporting date whether there is any indication that investment in associates, property and equipment and investment property may be impaired. Also, the Group assesses whether facts and circumstances suggest that the carrying amount of deferred mined exploration costs may exceed its recoverable amount.

The factors that the Group considers important which could trigger an impairment review included the following, among others:

• Significant underperformance relative to expected historical of projected operating results;

• Significant changes in the manner of use of the acquired assets or the overall business strategy; and

• Significant negative industry or economic trends.

As of September 30, 2011 and December 31, 2010, management believes there are no impairment indicators on its investment in associates (except for investment in TMP), property and equipment, investment property and deferred mine exploration costs. Further, considering the recent developments on and the status of the Company’s mining projects, there are no facts and circumstances which indicate that the carrying amount of its deferred mine exploration costs exceeds its recoverable amount.

Contingencies

The Group in its normal course of business is involved in various legal cases. Based on management’s assessment, the Group will be able to defend its position on these cases and that the ultimate outcome will not have a significant impact on the Group’s consolidated financial statements. Accordingly, no provisions has been recognized for these contingencies.


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Estimates and Assumptions

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects that period or in the period of revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing material adjustment to the carrying amounts of the Group’s assets and liabilities follow:

Determination of fair value of financial instruments

The Company carries certain financial instruments at fair value, which require use of accounting estimates and judgment. The significant components of fair value measurement were determined using verifiable objective evidence (i.e., interest and foreign exchange rates and quoted market prices). In the case of financial instruments that have no active markets, fair values are determined using an appropriate valuation technique. Any change in the fair value of these financial instruments would affect the results of operations and equity.

Estimation of allowance for doubtful accounts

Allowance for doubtful accounts is provided for accounts that are specifically identified to be doubtful of collection. The level of allowance is evaluated by management on the basis of factors that affect the collectability of the accounts, such as historical performance of counterparties, among others.

In addition to specific allowance against individually significant receivables primarily from airline customers, the Group also assesses, at least on an annual basis, a collective impairment allowance against credit exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when the receivables were originally granted to customers. This collective allowance is based on various factors such as historical performance of the counterparties within the collective group, deterioration in the markets in which the customers operate, various country or area risks, overall performance of the airline industry, and technological obsolescence which affects the confidence of the air transport market, as well as identified structural weaknesses or deterioration in the cash flows of counterparties.

The carrying value of the Group’s receivables amounted to P=288.4 million and P=205.5 million as of September 30, 2011 and December 31, 2010, respectively. Related allowance for doubtful accounts amounted to P=9.9 million and P=8.1 million as of September 30, 2011 and December 31, 2010, respectively.

Determination of net realizable value (NRV) of inventories

The Group estimates the NRV of inventories based on the most reliable evidence available at the time the estimates are made. These estimates consider the fluctuations of prices or costs directly relating to events occurring after the balance sheet date to the extent that such events affect the value of inventories. Other factors include the age and status of the inventories and the Group’s experience on write‐off and expirations.


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The carrying value of inventories amounted to P=46.2 million and P=33.6 million as of September 30, 2011 and December 31, 2010, respectively.

Estimating allowances for probable losses on input taxes and tax credit certificates (TCC)

The Group estimates the level of provision for probable losses on input taxes and TCC based on the experience of the Group and assessment of counsels assisting the Group in processing the claims and negotiating the sale of TCC. As of September 30, 2011 and December 31, 2010, the carrying amount of input taxes and TCC amounted to P=144 million and P=144.8 million, respectively.

Estimation of useful lives and number of flying hours of property and equipment

The Group estimates the useful lives, number of flying hours and residual values of property and equipment based on the internal technical evaluation and experience with similar assets. Estimated lives of property and equipment are reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical and commercial obsolescence and other limits on the use of the assets. In 2010, MACS changed the estimated useful life of its building and certain equipment (from remaining average of 13 years to five years) in view of its ongoing negotiations with MIAA.

The carrying value of property and equipment as of September 30, 2011 and December 31, 2010 amounted to P=300.4 million and P=303 million, respectively.

Estimation of retirement benefits cost

The Group’s retirement benefits cost is actuarially computed. This entails using estimation of the present value of the Group’s obligation and fair value of plan assets using certain assumptions such as annual salary increases, rate of return on plan assets and discount rates. The net accrued retirement benefits payable amounted to P=5.75 million and P=8.32 million as of September 30, 2011 and December 31, 2010.

Recognition of deferred income tax assets

The Group reviews the carrying amounts of deferred income tax assets at each reporting date and adjusts the balance of deferred income tax assets to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized. The determination of future taxable income, which will establish the amount of deferred income tax assets that can be recognized, requires the estimation and use of assumptions about the Group’s future income and timing of reversal of temporary differences, unused NOLCO and excess MCIT.

Net deferred income tax assets recognized amounted to P=11.9 million and P=12.1 million as of September 30, 2011 and December 31, 2010, respectively.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires the estimation of value‐in‐use of the cash generating unit to which goodwill relates. Estimating the value‐in‐use requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The following describes each key


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assumption on which management has based its cash projections to undertake impairment testing on goodwill:

Projected income before interest and income taxes – The basis used is the most recent financial forecasts that represents management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the cash generating unit.

Discount rate – pre‐tax rate that reflects the weighted average cost of capital of listed entities with similar assets or similar in terms of service potential and risks.

Based on management’s assessment, the recoverable amount of the goodwill is higher than the carrying value, thus no impairment loss was noted on the carrying amount of goodwill of P=17.5 million as of September 30, 2011 and December 31, 2010.

4. Segment Information

The Group’s operating businesses are organized and managed separately according to the nature of the aviation‐support services provided by the four operating subsidiaries, MMC and ASSC, which is the basis on which the Group reports its primary segment information. The Group also monitors its share in the results of operations of its associates (LTP, CPCS and TMP) that are accounted for using the equity method.

The operating subsidiaries include MACS (in‐flight and other catering services), MASCORP (ground handling and aviation services), MAATS (helicopter chartering), and MAPDC (economic zone development/operation). The operations of these subsidiaries are further described as follows:

• MACS provides the servicing of meal requirement of certain foreign and domestic passenger airlines. It operates an in‐flight catering business at the NAIA and the MDA.

• MASCORP provides both ramp and passenger handling and aviation services to foreign airlines and a domestic carrier at NAIA and MCIA.

• MAATS, through alliances with other helicopter owners, provides international and domestic chartered flights from its base at the General Aviation Area, MDA to any point within the Philippines, though alliances with other helicopter owners.

• MAPDC is the economic zone developer/operator of the MacroAsia Ecozone at NAIA, with LTP as the anchor locator and to whom MAPDC has sub‐leased the property it leases from MIAA.

• The Group’s investments in associates are accounted for using the equity method.

On the other hand, the Group’s non‐operating subsidiaries consist of:

• MMC serves as the institutional vehicle through and under which the business of a mining enterprise may be established, operated and maintained. It has not yet started commercial operations.


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• ASSC provides manpower support for any and all ground handling requirements of aircraft passenger and cargo.

The Group has only one geographic segment. There were no inter‐segment sales in September 30, 2011 and December 31, 2010.

Segment assets include the operating assets used by a segment and consist principally of cash and cash equivalents, receivables, inventories, other current assets and property and equipment, net of allowances, depreciation and any impairment in value. Segment liabilities include all operating liabilities and consist principally of notes payable, accounts payable and accrued liabilities. Segment assets and liabilities do not include deferred income taxes. Segment results pertain to operating income.

Financial information on the Group’s business segments as of and for the quarters ended September 30, 2011, 2010 and 2009 are as follows:

In Thousand Pesos July to September January to September 2011 2010 2009 2011 2010 2009 REVENUE – External In‐flight catering services 179,589 175,486 178,028 551,333 553,814 524,860 Ground handling and aviation 68,465 50,154 53,788 197,482 137,815 167,004 Rental and administrative fees 46,883 46,569 45,733 140,651 138,027 137,178 Charter flights 901 2,265 612 24,008 7,731 10,005 Total segment and consolidated

revenue 295,838 274,474 276,161 913,474 837,387 839,047

RESULT – Segment result In‐flight catering services 8,124 16,270 28,492 43,494 61,338 79,757 Ground handling and aviation 11,482 4,204 5,379 30,723 7,126 18,743 Rental and administrative fees 1,533 (1,553) (1,466) 4,406 4,444 6,387 Charter flights (2,650) 509 (1,021) 6,788 1,209 2,090 Mining (17,492) (28,342) 2,422 (37,193) (50,426) (4,805)Equity in net income of associates 31,492 69,461 98,960 170,026 291,459 336,827 Total segment result 32,489 60,549 132,766 218,244 315,150 438,999 Unallocated corporate expenses and

eliminations (7,043) 8,207 (17,690) (44,595) (20,329) (65,127)

Provision for income tax (4,895) (6,291) (7,847) (22,258) (17,852) (23,524)Consolidated net income 20,551 62,465 107,229 151,391 276,969 350,348 OTHER INFORMATION September 2011 December 2010 September 2010 Segment assets In‐flight catering services 601,774 579,949 630,577 Rental and administrative fees 203,226 155,938 156,738 Ground handling and aviation 153,122 137,687 135,614 Charter flights 38,645 26,536 24,808 Mining 223,824 221,845 216,633 Total segment assets 1,220,591 1,121,955 1,164,370 Investments in associates 1,043,762 1,364,124 1,251,125 Investment properties – net 126,592 126,592 128,629 Unallocated corporate assets 1,211,020 810,424 855,344 Consolidated total assets 3,610,965 3,423,095 3,399,468


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September 2011 December 2010 September 2010 Segment liabilities In‐flight catering services 321,764 314,685 355,202 Rental and administrative fees 144,155 139,913 164,553 Ground handling and aviation 38,863 45,332 46,885 Charter flights 4,179 2,536 2,230 Mining 351 351 309 Total segment liabilities 504,312 502,817 569,179 Eliminations (105,943) (215,754) (242,079)Unallocated corporate liabilities 85,075 54,057 31,341 Consolidated total liabilities 483,444 341,120 358,441 July to September January to September 2011 2010 2009 2011 2010 2009 Capital expenditures In‐flight catering services 21,233 4,408 2,714 35,586 12,910 10,584 Rental and administrative fees (468) ‐ 2 1,822 56 13 Ground handling and aviation 4,693 2,676 ‐ 7,509 10,224 ‐ Charter flights 382 62 ‐ 1,631 141 287 Total 25,840 7,146 2,714 46,548 23,331 10,884 Depreciation & amortization In‐flight catering services 11,569 5,654 14,600 30,281 16,741 18,484 Rental and administrative fees (2,047) 392 211 1,630 986 245 Ground handling and aviation 3,189 4,183 4,540 9,497 12,716 12,521 Charter flights (393) 111 146 667 316 358 Total 12,318 10,340 19,497 42,075 30,759 31,608 Non‐cash expenses other than

depreciation & amortization

In‐flight catering services 1,500 1,500 750 4,500 4,500 2,500

5. Basic/Diluted Earnings per Share

Basic/diluted earnings per share are computed as follows:

January to September (in Thousand Pesos except earnings per share) 2011 2010

Net income attributable to equity holders of the parent 146,224 269,917 Divided by weighted average number of common shares outstanding 1,226,739 1,247,669 P= 0.1192 P= 0.2163

6. Retained Earnings and Dividends

a. The undistributed earnings of subsidiaries and associates amounting to P=295 million and P=702.6 million as of September 30, 2011 and December 31, 2010, which are included as part of retained earnings, are not available for declaration as dividends until declared by such subsidiaries and associates.


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b. Cash dividends declared by the Company from the retained earnings are as follows:

Date Approved Per Share Stockholder of Record Date Date Paid/Issued March 30, 2010 P=0.065 April 23, 2010 May 19, 2010 April 1, 2009 P=0.060 April 24, 2009 May 19, 2009 April 2, 2008 P=0.050 April 24, 2008 May 19, 2008

c. On March 21, 2011, the Board of Directors approved the declaration of cash dividends of P=0.065 per share to stockholders of record as of April 25, 2011 to be paid on or before May 19, 2011.

d. The retained earnings include the accumulated equity in net earnings of associates accounted for under the equity method totaling P=295 million and P=702.6 million as of September 30, 2011 and December 31, 2010, respectively, which are not available for dividend declaration until received in the form of dividends from subsidiaries and associates. As of September 30, 2011, MacroAsia has reacquired 8,047,000 shares amounting to P=25 million. The retained earnings are also restricted for dividend declaration for the portion equivalent to the cost of treasury shares.

7. Capital Management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit and healthy capital ratios in order to support its existing businesses and potential new businesses and maximize shareholder value as well.

The Group manages its capital structure and initiates adjustments to it as maybe necessary in light of changes in economic conditions. To maintain or adjust capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the periods ended September 30, 2011 and December 31, 2010.

The Group monitors capital vis‐à‐vis after tax profit. The Group’s policy is to achieve a return on equity ratio of 10% or more. Equity considered by the Group is total assets less total liabilities. The return on equity ratio is equal to after tax profit divided by total capital.

The following table summarizes the total capital considered by the Group:

(in Philippine Peso) September 30, 2011 December 31, 2010 Capital stock P=1,250,000,000 P=1,250,000,000 Additional paid in capital 281,437,118 281,437,118 Treasury shares (25,066,980) (8,784,050) Retained earnings 1,720,142,059 1,665,167,346 3,226,512,197 3,187,820,414 Net income after tax P=151,392,218 P= 406,074,010 Return on equity 4.69% 12.74%


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8. Financial Risk Management Objectives and Policies

Risk Management Structure

Audit Committee

The Committee performs oversight role on financial management functions especially in the areas of managing credit, market, liquidity, operational, legal and other risks of the Group.

Board of Directors

The Board of Directors is responsible for the overall risk management approach and for approval of risk strategies and principles of the Group.

Financial Risk Management

The Group’s principal financial instruments comprise of its cash and cash equivalents and some external liabilities which were availed of primarily to fund operations. The Group has other financial assets and liabilities such as trade receivables and payables which arise directly from operations.

It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken. No such trading occurred during the reporting period.

The main risks arising from the Group’s financial instruments are foreign currency risk, credit risk, interest rate risk and liquidity risk. The BOD reviews and approves policies for managing these risks and they are summarized as follows:

Foreign currency risk

The Group’s transactional currency exposure arises from sales in currencies other than its functional currency and retaining its cash substantially in currency other than its functional currency. Approximately 97% of the MACS and 73% of MASCORP sales are denominated in US dollar. Starting in 2009, the Company and MACS enter into forward contracts to mitigate this risk. On the other hand, MASCORP does not enter into forward contracts to mitigate this risk as most of the receivables are current. However, MASCORP closely monitors the foreign exchange rates fluctuations and regularly assess the impact of future foreign exchange movements on its operations.


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The Group’s foreign currency‐denominated monetary assets and liabilities as of September 30, 2011 and December 31, 2010 are as follows:

September 30, 2011 December 31, 2010 US Dollars Peso Equivalent US Dollars Peso Equivalent

Assets Cash and cash equivalents $14,355,154 P=627,607,340 $6,660,596 P=292,000,529 Receivables: 3,722,657 162,754,559 3,191,651 139,921,980 18,077,811 790,361,899 9,852,247 431,922,509

Liabilities Accounts payable and accrued

liabilities $ 750,576 P= 32,815,181 $ 478,209 P= 20,964,683 Net foreign currency‐denominated

monetary assets $17,327,235 P=757,546,718 $9,374,038 P=410,957,826

As of September 30, 2011 and December 31, 2010, the exchange rates of the Philippine peso to US dollar were P=43.72 and P=43.84 to US$1, respectively.

The following table demonstrates the impact on the Company’s income before tax and equity of reasonably possible changes in the US dollar, with all other variables held constant (amounts in million):

Net Effect on Movement in US Dollar Income before Tax

Increase of 5% P=37.88 Decrease of 5% (37.88)

Credit and concentration risk

Credit risk is the risk that the Group will incur a loss because its customers or counterparties failed to discharge their contractual obligations. The Group manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

The Group trades only with related parties and duly evaluated and approved creditworthy third parties. It is the Group’s policy that all customers and counterparties that wish to trade with the Group, particularly on credit terms, are subjected to credit verification procedures. In addition, receivable balances are monitored on a continuous basis with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from other financial assets of the Group, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying values of these instruments. The Group only deals with financial institutions that have been approved by the BOD of the Company and those of its subsidiaries.


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Maximum exposure to credit risk without taking account of any collateral and other credit enhancements

The table below shows the maximum exposure to credit risk of the financial assets of the Group.

September 30,2011 December 31, 2010 Cash and cash equivalents, excluding cash on hand P=1,185,162,020 P=790,963,772 Receivables Trade 223,050,403 186,548,581 Advances to officers and employees 9,202,714 5,569,959 Accrued interest and others 6,686,256 12,121,166 Deposits 17,376,946 16,961,322 Derivative assets 1,976,388 1,976,388 Total credit risk exposure P=1,443,454,727 P=1,014,141,188

Where financial instruments are recorded at fair values the amounts shown above represent the current credit risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values.

Credit quality per class of financial assets

The credit quality of financial assets is managed by the Group using internal credit ratings. The table below shows the credit quality by class of asset for loan‐related balance sheet lines, based on the Group credit rating system.


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The table below shows the credit quality of the Group’s financial assets and an aging analysis of past due but not impaired financial assets.

Neither past due nor impaired Past due or September 30, 2011 High

Grade Standard

Grade Sub‐standard

Grade individually

impaired

Total Cash in bank and cash equivalents

P=1,185,162,020

P= –

P= –

P= –

P=1,185,162,020

Receivables Trade 171,246,017 9,788,623 42,015,763 9,905,341 232,955,744 Advances to officers &

employees 9,202,714 – – – 9,202,714 Accrued interest and

others 6,662,801 23,455 – –

6,686,256 Deposits 17,376,946 – – – 17,376,946 Derivative assets 1,976,388 – – – 1,976,388

P=1,391,626,886 P=9,812,078 P=42,015,763 P=9,905,341 P=1,453,360,068

Neither past due nor impaired Past due or December 31, 2010 High

Grade Standard

Grade Sub‐standard

Grade individually impaired

Total

Cash in bank and cash equivalents

P=790,963,772

P= –

P= –

P= –

P=790,963,772

Receivables Trade 85,314,305 3,921,996 6,880,830 98,536,791 194,653,922 Advances to officers &

employees 1,591,439 – – 3,978,520 5,569,959 Accrued interest and

others 462,914 3,528,740 1,160,011 6,969,501 12,121,166 Deposits 16,961,322 – – – 16,961,322 Derivative assets 1,976,388 – – – 1,976,388

P=897,270,140 P=7,450,736 P=8,040,841 P=109,484,812 P=1,022,246,529

The Group’s financial assets are categorized based on the Group’s collection experience with affiliates and third parties.

a. High Grade – settlements are obtained from counterparty following the terms of the counterparty.

b. Standard Grade – some reminder follow‐ups are performed to obtain settlement from the counterparty.

c. Sub‐standard Grade – constant reminder follow‐ups are performed to collect accounts from counterparty.

d. Impaired – difficult to collect with some uncertainty as to collectability of the accounts.

Overall, the Group considers its high grade and standard grade accounts of good quality and it expects to collect all receivables except for impaired accounts where credit losses may be incurred.


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The aging analysis of past due but not impaired financial assets per class of financial assets

Neither past due Less than 31 to 60 61‐90 More than September 30, 2011 nor impaired 30 days Days days 90 days Total

Accounts receivable P=122,813,581 P=64,151,758 P=3,799,821 P=6,012,257 P=42,161,956 P=238,939,373Add: Individually impaired receivables

9,905,341

P=248,844,714

Neither past due Less than 31 to 60 61‐90 More than December 31, 2010 nor impaired 30 days Days days 90 days Total

Accounts receivable P=102,860,235 P=13,506,218 P=38,016,527 P=9,487,193 P=40,369,533 P=204,239,706Add: Individually impaired receivables

8,105,341

P=212,345,047

Impairment assessment

The main considerations for impairment assessment include whether any payments are overdue or if there are any known difficulties in the cash flows of the counterparties. In view of the limited counterparties of the Group, the Group assesses impairment on an individual account basis.

Items considered when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve performance once a financial difficulty has arisen, projected receipts and the expected dividend payout should bankruptcy ensue, the availability of other financial support and the realizable value of collateral, and the timing of the expected cash flows. The impairment losses are evaluated at each reporting date, unless unforeseen circumstances require more careful attention even at interim.

Interest rate risk

The Group’s exposure to the risk for changes in market interest rates relates primarily to the Group’s note payable with floating interest rates. The Group has a practice of keeping its interest‐bearing liabilities to third parties within a threshold that can readily be serviced through operating cash flows. Management closely monitors the behavior of interest rates to ensure that cash flow interest rate risk is kept within management’s tolerable level. Finally, interest‐bearing liabilities are ordinarily incurred on a short‐term basis only.

Liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress circumstances. The Group’s obligations comprise mainly of accounts payable and accrued liabilities, notes payable, dividends payable and rental deposit aggregating to P=332.9 million and P=201.3 million as of September 30, 2011 and December 31, 2010, respectively. To limit this risk, management manages assets with liquidity in mind, and monitors future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows which could be used to secure additional funding if required.


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The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of operating cash flows, advances from related parties and short‐term bank loans.

The table below summarizes the maturity profile of the Group's financial liabilities at September 30, 2011 and December 31, 2010 based on contractual and undiscounted repayment obligations. Repayments which are subject to notice are treated as if notice were to be given immediately. The table also analyses the maturity profile of the Group’s financial assets in order to provide complete view of the Group’s contractual commitments and liquidity.

Financial liabilities

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date.

Financial assets

The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected dates the assets will be realized.

As of September 30, 2011 < 1 year >1‐2 years >2‐3 years >3‐4 years >4‐5 years >5 years Total Cash and cash equivalents P=1,185,938,441 P= ‐ P= ‐ P= ‐ P= ‐ P= ‐ P=1,185,938,441

Receivables ‐ ‐ ‐ ‐ ‐

Trade 232,955,744 ‐ ‐ ‐ ‐ ‐ 232,955,744 Advances to officers

and employees 9,202,714 ‐ ‐ ‐ ‐ ‐ 9,202,714 Accrued interest

and others 6,686,256 ‐ ‐ ‐ ‐ ‐ 6,686,256

Deposits ‐ 12,000 ‐ ‐ ‐ 27,044,552 27,056,552

1,434,783,155 12,000 ‐ ‐ ‐ 27,044,552 1,461,839,707Accounts payable and accrued liabilities* 204,598,355 ‐ ‐ ‐ ‐ ‐ 204,598,355

Dividends payable 8,205,924 ‐ ‐ ‐ ‐ ‐ 8,205,924

Deposit ‐ ‐ ‐ ‐ ‐ 24,588,996 24,588,996

212,804,279 ‐ 24,588,996 237,393,275

Liquidity position P=1,221,978,876 P=12,000 P= ‐ P= ‐ P= ‐ P= 2,455,556 P=1,224,446,432

*Exclusive of non financial liabilities of P=16,374,768.


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As of December 31, 2010 < 1 year >1‐2 years >2‐3 years >3‐4 years >4‐5 years >5 years Total Cash and cash equivalents P=791,590,193 P= ‐ P= ‐ P= ‐ P= ‐ P= ‐ P=791,590,193

Receivables

Trade 194,653,922 ‐ ‐ ‐ ‐ ‐ 194,653,922 Advances to officers

and employees 5,569,959 ‐ ‐ ‐ ‐ ‐ 5,569,959 Accrued interest and

others 12,121,166 ‐ ‐ ‐ ‐ ‐ 12,121,166

Deposits ‐ 12,000 ‐ ‐ ‐ 27,044,552 27,056,552

1,003,935,240 12,000 27,044,552 1,030,991,792Accounts payable and accrued liabilities* 174,779,806 ‐ ‐ ‐ ‐ ‐ 174,779,806

Dividends payable 7,975,690 ‐ ‐ ‐ ‐ ‐ 7,975,690

Deposit ‐ ‐ ‐ ‐ ‐ 24,588,996 24,588,996

182,755,496 24,588,996 207,344,492

Liquidity position P= 821,179,744 P=12,000 P= ‐ P= ‐ P= ‐ P= 2,455,556 P= 823,647,300

*Exclusive of non financial liabilities of P=15,552,839.

9. Fair Value of Financial Instruments

The following is a comparison by category of carrying amounts and fair values of the Group’s financial instruments that are reflected in the consolidated financial statements as of September 30, 2011 and December 31, 2010:

September 30, 2011 December 31, 2010 Carrying amount Fair value Carrying amount Fair value

Financial assets Loans and receivables Cash and cash equivalents P=1,185,162,020 P=1,185,162,020 P=790,963,772 P=790,963,772 Receivables: Trade 223,050,403 223,050,403 186,548,581 186,548,581 Advances to officers and

employees 9,202,714 9,202,714 5,569,959 5,569,959 Accrued interest and others 6,686,256 6,686,256 12,121,166 12,121,166 Deposits 17,376,946 18,143,558 16,961,322 17,949,390 1,441,478,339 1,442,244,951 1,012,164,800 1,013,152,868 Available‐for‐sale investments 27,055,800 27,055,800 27,055,800 27,055,800 FVPL: Derivative Assets 1,976,388 1,976,388 1,976,388 1,976,388 P=1,470,510,527 P=1,471,277,139 P=1,041,196,988 P=1,042,185,056

Financial liabilities Other financial liabilities Accounts payable and accrued

liabilities P= 204,598,355 P= 204,598,355 P=174,779,806 P=174,779,806 Dividends payable 8,205,924 8,205,924 7,975,690 7,975,690 Rental deposit 3,356,199 4,072,811 3,016,575 4,004,643 P= 216,160,478 P= 216,877,090 P=185,772,071 P=186,760,139

*Exclusive of non financial liabilities of P=16,374,768 and P=15,552,839 as of September 30, 2011 and December 31, 2010, respectively.


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The carrying amounts of the Group’s financial assets and financial liabilities shown in the above table approximate their fair values because of their short‐term nature, except for AFS investments where the fair value is based on quoted market prices, rental deposits where the fair value is determined using the future cash flows using the current market rates as of balance sheet date, and derivative assets where fair value is calculated by reference to current exchange rates for contracts with similar maturity and risk profiles as of December 31, 2010. No amounts of revaluation gain/loss were recognized for September 30, 2011.

PHILIPPINE STOCK EXCHANGE, INC. - MacroAsia … 17-Q 2011...December 21, 2011 PHILIPPINE STOCK...

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Transcript of PHILIPPINE STOCK EXCHANGE, INC. - MacroAsia … 17-Q 2011...December 21, 2011 PHILIPPINE STOCK...