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ROXAS HOLDINGS, INC.

_____________________________________________________ (Companys Full Name)

6/F CG Building, 101 Aguirre St., Legaspi Village, Makati City _____________________________________________________ (Companys Address)

(632) 810-8901 __________________________________ (Telephone Number)

30 June ______________________ (Fiscal Year Ending) (Month & day)

_____________________ (Annual Meeting)

SEC Form 17 A ___________________________________ (Form Type)

________________________________________________ Amendment Designation (if applicable) June 30, 2010 ____________________________________ Period Ended Date

______________________________________________ (Secondary License Type, If any)

___________________ Cashier

_________________ LCU

____________________ Central Receiving Unit

_________________ DTU

15-A S.E.C. Reg. No. _________________ File Number _________________ Document I.D.

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE REVISED SECURITIES REGULATION CODE AND SECTION 141 OF CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended : 30 June 2010 2. SEC Identification Number : 15-A. 3. BIR Tax Identification No. : 000-290-538. 4. Exact name of issuer as specified in its charter : ROXAS HOLDINGS, INC. 5. Province/Country of Incorporation/Organization : Philippines. 6. Industry Classification Code : __________________ 7. Cacho-Gonzales Building, 101 Aguirre St., Legaspi Village, Makati City Address of principal office Postal Code 1200 8. (632) 810-8901 to 06 Registrants telephone number, including area code

9. CENTRAL AZUCARERA DON PEDRO


Former name, former address and former fiscal year, if changed since last report

10. Securities registered pursuant to Sections 4 and 8 of the RSA


Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding 1,500,000,000 909,552,236 None registered

Authorized Capital Stock (Common Shares) No. of shares of common stock outstanding Amount of debt outstanding as of 30 June 2010

11. Are any or all of these securities listed on the Philippine Stock Exchange? Yes [x] No [ ]

12. Check whether the issuer:

(a) has filed all reports required to be filed by Section 17 of the Securities Regulation Code (SRC) and Rule 17 (a)-1 thereunder and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that 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 [ ] No [x]

13. State the aggregate market value of the voting stock held by non-affiliates of the issuer. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of specified date within 60 days prior to the date of filing. If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided the assumptions are set forth in this Form. Assuming that the number of shares held by non-affiliates as of 30 September 2010 is 214,121,263 and assuming further that the closing market bid price on said date is P2.92 then the aggregate value of voting shares held by non-affiliates as of the above date is P625,234,088.00. 14. Documents incorporated by reference. (Briefly describe them and identify the part where they are incorporated by reference). (a) Incorporated by reference in Part III on Financial Information is the annual report to security holders as of the fiscal year ended 30 June 2010. PART I - BUSINESS 1. Business Development
Since 2007, the company has positioned itself in a new direction in light of the changes that have been happening in the sugar industry as well as in the global economy. It thus laid the groundwork for transformation from a commodity producer to a sugarcane-based solutions provider in preparation for the reduction of sugar tariffs to near zero levels in 2015 under the ASEAN Free Trade Agreement. To this end, the company implemented strategies to raise its revenue-generating capacity and enhance its cost-competitiveness through an integrated business model which will enable it to produce and sell raw sugar, refined sugar and bioethanol. Recently, the company embarked on a massive expansion of its milling and refinery operations in CADPI and CACI, which will significantly boost their production capacity and enhance product quality. At the same time, the expansion brings energy efficiency components with the capability of energy export to the grid. The company likewise ventured into the bioefuels business to take part in the buoyant prospects for the industry given the enactment of the Bioefuels Law of 2006. ROXOL, which construction of ethanol plant was completed in June 2010, will produce 100,000 liters of ethanol per day. The plant, which uses molasses as feedstock, started commissioning in July 2010 and is expected to go on full commercial operation by October 2010. ROXOLS plant is designed to produce not only fuel ethanol but also potable alcohol. Moreover, the plant has the flexibility to produce extra neutral alcohol and anhydrous industrial alcohol. ROXOL employs a wastewater and methane gas recovery project that will avoid air and water pollution and mitigate the impact of climate change. This earned a carbon finance deal with the World Bank, in which, part of the revenue from the purchase of the emission reductions will be used to finance ROXOLs community development projects in Negros Occidental. Likewise, in order to help planters produce high-yielding canes, RHI activated CADP Farm Services, Inc., which provides modern farming technology and services as well as nursery facilities to CADPI and CACI planters.

Business Units and Operations The companys wholly-owned sugar manufacturing subsidiaries are Central Azucarera Don Pedro, Inc. (CADPI) and Central Azucarera de la Carlota, Inc. (CACI). It likewise has a 45% equity investment in Hawaiian Philippine Company (HPCo.). Strategically situated in Luzon and the Visayas, the group is the biggest raw sugar producer, and the second biggest in refined sugar production, taking up 17% of total national production. Roxol Bioenergy Corporation (ROXOL) is also a wholly-owned subsidiary that was organized to engage in the bioethanol business while CFSI was activated to improve the supply and quality of canes in Batangas and Negros Occidental. The companys other subsidiaries are CADP Consultancy Services, Inc., CADP Insurance Agency, Inc., Najalin Agri-Ventures, Inc., Jade Orient Management Services, Inc., Roxas Power Corporation and CADP Port Services, Inc. Principal Products and Services Presently, the Group produces raw and refined sugar in different grades. Its premium refined sugar is accredited and preferred by big industrial customers. The Group also produces super granulated sugar (SGS) a high quality refined sugar of finer granules required by manufacturers of powdered juice drinks, infant milk formula, and pharmaceuticals. The Group also provides toll or refining services to raw sugar owners at its Nasugbu plant. Tolling or refining involves a process whereby raw sugar is converted or processed to refined sugar. As a major supplier of sugar, the Group works in partnership with its customers by providing not only sugar products but also total sugar-based solutions. As such, the Group delivers refined sugar by bulk and by megabags (one ton quantity per bag vs. the standard 50 Kg). These types of delivery/packing make its delivery system compatible to the receiving systems of most of its customers.

2. Business a. Description of the company.


Roxas Holdings, Inc. (RHI) was established in Nasugbu, Batangas in 1927 as a sugar milling company and was then known as Central Azucarera Don Pedro. Faced with rising global competition, it embarked on an expansion and modernization program in 1994 to become an integrated sugar manufacturing company with a state-of-the-art refinery. In 1995, it acquired a majority ownership in Central Azucarera de La Carlota, a sugar manufacturing company based in La Carlota City, Negros Occidental. Thereafter, it likewise acquired a 45% equity investment in Hawaiian Philippine Company (HPCo), another sugar milling company based in Silay City, Negros Occidental. The companys group is the largest producer of raw sugar and the second largest refiner in the country, taking up 17% percent of total national production in crop year 2009-2010. The complementary locations of its sugar mills enable the group to serve its customers in strategic parts of the country. In 2008, the company undertook a corporate reorganization. The reorganization eliminated the extra holding company and consolidated all sugar-related businesses under one listed company. This reduced redundancies and improved overall efficiency. With this, the company purchased all the operating subsidiaries of CADP Group Corporation (CADPGC). The shell company of CADPGC, in turn, was sold to its parent company, Roxas and Company, Inc. (RCI). As earlier mentioned, the company also entered into the bioethanol business through a subsidiary, Roxol Bioenergy Corporation (ROXOL). It also activated another wholly-owned subsidiary, CADP Farm Services, Inc. (CFSI), to improve the supply and quality of canes both in Batangas and Negros Occidental.

i) Principal products, markets, relative contribution to sales and revenues of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc.
CADPI a. b. c. d. Raw sugar Refined sugar Molasses Tolling 3% 84% 6% 7% CACI a. Raw sugar b. Refined sugar c. Molasses 90% 5% 5%

ii) Distribution methods.


CADPI and CACI distribute their sugar to local or domestic markets. Distribution is through direct selling to various traders and industrial users. They are not dependent on one or few major customers and/or related parties in the distribution of their products.

iii) Competition.
CADPI and CACI supply sugar to entities engaged in pharmaceutical, food and beverage businesses, among others. Both are top raw sugar producers in the industry and have the most modern sugar equipment/facilities in the country. Entities engaged in the same line of business are Batangas Sugar Central in Batangas and Victorias Milling Co., Binalbagan-Isabela Sugar Company and Hawaiian-Philippine Company in Negros. CADPI and CACI do not have records indicative of the relative sizes and financial and market strengths of the said companies.

iv) Sources and availability of raw materials and names of principal suppliers of CADPI and CACI.
CADPI secures its sugar cane principally from planters in Batangas. Its principal suppliers of other materials are: Allied Specialty Chemicals, DM Trading & Industrial Services, Inc., Fabcon Philippines, Inc., Guanzon Lime Development Corp., Philbless, Inc., Pilipinas Shell Petroleum Corp., Jimgem Mineral Resources, Goldhill Industrial Corp., Ingasco, Inc., Artemis Salt Corp., Arvin International Marketing, Falcon Yarn Mfg., GCH International Mercantile, Inc., Philko Peroxide, Prosperity Manufacturing Corp., Regan Industrial Sales, Remington Industrial Sales, Sanvil Industrial Supply, Severo Sy Ling, and Uptown Industrial Sales. CACI secures its sugar cane from various planters/traders in Negros Occidental. Its affiliates, Najalin Agri Ventures, Inc. and Jade Orient Management Systems, Inc. supply about 5% of the sugar cane requirements of the company. Its major suppliers of materials are: Bearing Center & Machinery, DM Trading & Industrial Sales, Agro Industrial & Mill Supplies Corp., Leeleng Commercial, Inc., Uptown Industrial Sales, Regan Industrial Sales, Inc., Edison Electric Integrated, Inc., GY Industrial Sales, Guan Yiac Hardware, Le Price, United Digital Remington Industrial Sales, Portalloy Industrial Supply, Newel Industrial Sales, Kentool Hardware, Associated Products, MB Marketing, LLT Generation, L-Trading, and Severo Syling.

v) Transactions with and/or dependence on related parties.


CADPI and CACI are not dependent on few customers or related parties in the distribution or sale of their products. They supply various industrial users and traders. Demand from these customers are evenly distributed.

vi) Patents, Trademarks and Copyrights. The company or CADPI and CACI do not have existing patents, trademarks, copyrights, licenses, franchises, concessions and royalty agreements. vii) Need for government approvals of principal products.
The sugar businesses of CADPI and CACI are principally regulated by the policies and the rules and regulations of the Sugar Regulatory Administration (SRA) while the business of ROXOL will be principally regulated by the Department of Energy (DOE).

viii) Effect of existing or probable governmental regulations on the business of CADPI and CACI. The sugar industry in the Philippines is governed by certain policies and rules and regulations issued by the government through the SRA. They are: 1. The U. S. Quota System The main goal of the US sugar policy is to support and stabilize the incomes of its own sugar farmers who grow cane and beet sugar. One major policy instrument employed to achieve this end is the import quota. From 1934 until the early 1980s, quota limitation governed Philippine sugar consumption. In 1946, the Philippine Trade Act fixed the sugar quota which could be exported to the US. This quota amounted to about 15% of the total US sugar requirements until 1974 when the quota was suspended. It was reinstated in 1982 and since then, the prices paid for sugar exported to the US have always been higher than the price at which sugar could otherwise be exported. 2. The SRA Quota System. The major regulating influence in the Philippine sugar industry is SRA Sugar Order Number 1 which was issued in August 1987. The order deals specifically with the allocation of Philippine sugar. Among others, the Order allocated the countrys total domestic sugar into the following categories: A for export to the US, B for domestic sugar, C for reserve sugar, and D for export to other foreign markets. These allocations are determined by the SRA Board at the beginning of every crop year and these ultimately affect the total amount of raw sugar available for domestic refineries. 3. Value Added Tax System The present value-added tax (VAT) system imposes a 12% tax on refined sugar. The manufacturer of refined sugar is allowed a presumptive input VAT of 3% on raw sugar purchases in addition to the 12% input tax on the value of materials and supplies used in the manufacture of refined sugar. These are creditable against the 12% output VAT. The tax consequence does not adversely affect the companys business because the tax is passed on to the buyer or consumer. 4. Executive Order 313. Executive Order No. 313 issued on 29 March 1996 modified the nomenclature and the rates of Import Duty on certain imported articles under Section 104 of the Tariff and Customs Code of 1978, as amended. For certain articles, two rates of import duties are provided. For these articles, a Minimum Access Volume (MAV) is provided. The MAV refers to the volume of a specific agricultural product that is allowed to be imported with a lower rate of duty. The In-Quota rate of duty applies to importation that is within the MAV provided for an agricultural product while the Out-Quota rate of duty applies when the importation is in excess of the MAV specified for an agricultural product. 5. Executive Order 420. Executive Order No. 420 issued on 17 June 1997 modified the rates of duty on sugar as provided under the Tariff and Customs Code of 1978, as amended, in order to implement the ASEAN preferential rates of duty on cane sugar and beet sugar, among others. Under the Order, the tariff on these products was placed at 65% from 1997 up to 1998; after which, sugar could be placed under the sensitive list allowing the gradual phase-down of tariffs. Additionally, it provided that the margins of preference (MOP) accorded under the ASEAN Preferential Trading Arrangements (PTA) will no longer be extended to any of the products covered under the same Order. Executive Order No. 313 was issued to modify the rates of duty on certain agricultural products, including sugar, while Executive Order No. 420 was issued to modify the rates of duty on sugar alone. Both orders are geared towards helping the Philippine sugar industry to be efficient and globally competitive.

6. Executive Order No. 431. Executive Order No. 431 issued on 05 August 1997 provides for the creation of the National Coordinating Council for the Philippine sugar industry. The Council is tasked to promote effective government and private sector coordination in pursuing the national efforts to enhance the development and global competitiveness of the local sugar industry. 7. Executive Order 268. Executive Order No. 268 issued on 09 January 2004 modified the rates of duty on other sugars (Heading 17.02) under Section 104 of the Tariff and Customs Code of 1978, as amended, in order to implement the commitment to reduce the tariff rates on sixty percent (60%) of the products in the inclusion list to zero percent (0%) under the Common Effective Preferential Tariff (CEPT) scheme for the Asean Free Trade Area (AFTA). 8. Executive Order 295. Executive Order No. 295 issued on 03 March 2004 modified the nomenclature and rates of import duty on sugar (Heading 17.01) under Section 104 of the Tariff and Customs Code of 1978, as amended. Under the Order, sugar which are entered and withdrawn from warehouses in the Philippines for consumption shall be levied the MFN (Most Favored Nation) rates of duty therein prescribed. Moreover, the Order provides that sugar which are entered and withdrawn from warehouses in the Philippines for consumption shall be imposed the ASEAN CEPT rates of duty therein prescribed subject to qualification under the Rules of Origin as provided for in the Agreement on the CEPT Scheme for the ASEAN Free Trade Area signed on 28 January 1992. ix) Estimated amount spent on research and development for the past three fiscal years; extent to which these costs are borne by customers, if applicable. CADPI contributes P2.00 per Lkg. of sugar produced to the Philippine Sugar Research Institute Foundation, Inc. (PHILSURIN) in compliance with SRA Sugar Order No. 2, series of 1995. During the last three (3) years, CADPI contributed about P16.77 million to research and development and this amount constitutes 0.14% of its revenues. Likewise, CACI also contributes P2.00 per Lkg. to PHILSURIN. During the last three (3) years, CACI contributed about P6.5 million to research and development and this amount constitutes 0.10% of its revenues. x) Costs and effects of compliance with environmental laws. CADPI was the first sugar factory in the country which volunteered in the Industrial Environmental Management Project (IEMP) funded by the United States Agency for Industrial Development (US-AID) under the supervision of the Department of Environment and Natural Resources (DENR). IEMP advocates waste minimization through Pollution Management Appraisals (PMA). Waste minimization implementation in CADPI began in 1993 with the activation of an Interior Pollution Management Appraisal Team. A significant reduction in wastewater needing treatment was achieved through segregation, characterization, and good housekeeping. An active PMA Team tasked to address the environmental concerns of the sugar factory complemented the expansion and modernization program of the company. It received the following recognition/awards for its pioneering efforts in waste management: 1. Zero Basura Olympics Master Award and Championship in Composting Award awarded by the Philippine Business for Social Progress (PBSP) ZBO for Business 2010 A Race to Conquer Garbage in 300 Days competition during the Earth Day celebration on April 22, 2010.

2. Plaque of Recognition awarded by Nestle Philippines on 23 November 2006 for having exemplified its commitment to Sustainable Development by its well-balanced approach in achieving excellence in its business, social and environmental responsibility. 3. Award of Recognition - awarded by the DENR on 29 June 1994 for its pioneering initiative in waste minimization in an industrial plant. 3. Most Environmental Friendly Sugar Mill Award - awarded by the Philippine Sugar Millers Association, Inc. (PSMA) and the Association of Integrated Millers (AIM) on 17-19 August 1994. 4. Plaque of Appreciation - for its pioneering efforts in Waste Minimization by the Pollution Control Association of the Philippines, Inc. (PCAPI) during the PCAPI Convention on 27 April 1995. 5. Mr. Jeffrey G. Mijares, a Pollution Control Officer IIII of the Company was adjudged as one of the recipients of the Ten Outstanding Pollution Control Officers (PCO) Award (TOPCO) for the year 1998. CADPI has also made substantial investments in the following pollution control facilities: 1. Totally close-loop cooling system for the sugar mill and refinery where 100% of cooling water is recycled. 2. Activated Sludge Wastewater Treatment System with Sessil Trickling Filter. 3. Wet Scrubbers for the steam boilers. For the fiscal year 2009-2010, CADPI spent about P20.2 million in its pollution management program. On the other hand, CACI has a Pollution Control Department tasked to handle its pollution control activities. The total involvement and concern of CACI in its pollution control has earned it the following awards: 1. Likas Yaman Award for Environmental Excellence, as Best Partner in the Industry (National Winner) awarded by the DENR on 10 June 1996. 2. Likas Yaman Award, Best Partner in the Industry in Western Visayas (Regional Winner) - awarded by the DENR on 28 June 1996. 3. Most Environment Friendly Company in Western Visayas, Region VI - awarded by the DENR on 30 June 1995. 4. Recipient of a Resolution of Appreciation from the Sanggunian Bayan of Pontevedra, Negros Occidental for a Zero-Pollution of Pontevedra River located at the downstream portion of the company's premises. For the fiscal year 2009-2010, CACI spent about P17.10 million for the maintenance and improvement of its pollution control program. xi) Total number of employees and number of full-time employees. As of 30 June 2010, RHI had ten (10) executive officers and sixty-four (64) regular employees. CADPI had 649 regular employees as of 30 June 2010. The company has a standing Collective Bargaining Agreement (CBA) with the Batangas Labor Union (BLU) for a period of five (5) years from 01 July 2006 to 30 June 2011. CACI, on the other hand, had 657 regular employees as of 30 June 2010. The company has a Collective Bargaining Agreement (CBA) with the Mag-Isa Mag-Ugyon Asosasyon Sang Mamumugon Sa Central Azucarera de la Carlota (MAMCAC) for a period of five (5) years from June 2005 to May 2010. Negotiations between the company and MAMCAC for a collective bargaining

agreement for the next five (5) years is on-going. For the past three (3) years, the labor unions of CADPI and CACI have not staged a strike. Roxol had 28 regular employees as of 30 June 2010. CFSI had 6 regular employees as of 30 June 2010. xii) Property. The company is the owner of a parcel of land located in Nasugbu, Batangas valued at One Billion Three Hundred Seventy Three Million Two Hundred Thirty Four Thousand Seven Hundred Fifty Pesos (P1,369,987,000), Philippine currency. The land is now currently leased to CADPI for a period of one (1) year from January 2010 to December 2010 subject to renewal on terms that are mutually agreeable to both parties. The land is also presently mortgaged to secure certain loan obligations. The company likewise invested in properties in Bacolod, Negros Occidental and in Barrio Remanente, Nasugbu Batangas with aggregate value of Nineteen Million Three Hundred Thirty-three Thousand Seven Hundred Fifty (P19,333,750.00) CADPI is the owner of sugar milling and refining facilities, machineries and furniture and fixtures, transportation equipment and tools located in Nasugbu, Batangas. As of 30 June 2010, these properties were valued, net of depreciation, at P4.485 billion. These properties are presently mortgaged with banking institutions to secure certain loan obligations. CACI is the owner of parcels land located in Barangay Consuelo, La Carlota City and in the Municipalities of La Castellana and Pontevedra in Negros Occidental including improvements machineries and installations, furniture and fixtures, transportation equipment and tools. As of 30 June 2010, these properties are valued, net of depreciation, at P3.985 billion. These properties are presently mortgaged with banking institutions to secure certain loan obligations. Roxol (Roxol Bioenergy Corp.) is the owner of parcels of land located at La Granja/Esperanza valued at Eleven Million Seven Hundred Fifty-four Seven Hundred Eighty (P11,754,780) and in Brgy. Cubay valued at One Million Six Hundred Thirty Nine Thousand One Hundred Fifty (P1,639,150.00) both in La Carlota City, Negros Occidental. Roxol is on the tail end of its plant construction as of 30 June 2010. Total construction in progress as of 30 June 2010 amounted to P1,202,192,562.00 CFSI (CADP Farm Services, Inc.) is the owner of parcel of land in Brgy. Cubay, La Carlota City, Negros Occidental including various farm implements and transportation equipment. As of 30 June 2010 these properties are valued, net of depreciation, at P21.1 million. xiii) Legal Proceedings. In the ordinary course of its business, the company is engaged in litigation either as complainant or defendant. In the opinion of the company, these cases do not have material adverse affects on the financial condition of the company. xiv) Submission of Matters to a Vote of Security Holders. No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.

PART II SECURITIES OF THE REGISTRANT (A) Market Price of and Dividends on Registrants Common Equity and Related Stockholder Matters. 1. Market information. RHIs shares are listed and traded in the Philippine Stock Exchange. (1) High and low of share price for the last two (2) fiscal years.

July 2008 through June 2009 Quarter st 1 nd 2 rd 3 th 4 July 2009 through June 2010 Quarter st 1 nd 2 rd 3 th 4 High 3.00 3.50 3.50 2.70 Low 2.80 2.80 2.55 2.55 High 3.50 2.90 2.40 3.00 Low 2.30 2.30 2.00 2.80

The companys shares were trading at P2.92 per share as of 30 September 2010. (2) Holders. There were about 2,351 holders of the companys common shares as of 30 September 2010. The top twenty (20) holders of the common shares as of such date were: TOTAL NO. OF SHARES 597,606,670 118,289,925 47,393,142 34,476,000 29,431,996 15,654,840 6,759,212 3,947,724 2,204,688 2,194,850 2,014,603 1,455,480 1,198,520 1,050,000 1,029,007 1,014,000 1,014,000 914,290 836,000 785,078 770,640

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

17. 18. 19. 20.

STOCKHOLDERS Roxas & Company, Inc. PCD Nominee Corp. Pesan Holdings, Inc. Rizal Commercial Banking Corp. Roxas Holdings, Inc. Retirement Fund PCD Nominee Corporation Marta Roxas Olgado Pan Malayan Mgmt. & Investment Corp. Maricarmen R. de Elizalde Anthony U. Que Pedro E. Roxas EBC Investments, Inc. Insular Life Assurance Co., Ltd. Peter Matuszak Jose A. Manzano Jr. Gilbert Liu Magnolia W. Antonio &/or Gaudencio Antonio, Jr. East West Banking Corporation Willington Chua Emilio Pantoja Armando M. Medina

NATIONALITY Filipino Filipino Filipino Filipino Filipino Other Alien Spanish Filipino Filipino Filipino Filipino Filipino Filipino New Zealander Filipino Filipino Filipino Filipino Filipino Filipino Filipino

% 65.70% 13.00% 5.21% 3.79% 3.24% 1.72% 0.74% 0.43% 0.24% 0.24% 0.22% 0.16% 0.13% 0.12% 0.12% 0.12% 0.11% 0.10% 0.09% 0.09% 0.08%

Sub total Other Stockholder TOTAL OUTSTANDING SHARES (3) Dividends. (a) History of dividends paid: Declaration Date 28 June 2006 27 September 2006 20 June 2007 19 September 2007 25 June 2008 3 October 2008 24 June 2009 Record Date 14 July 2006 12 October 2006 13 July 2007 15 October 2007 17 July 2008 15 October 2008 15 July 2009

870,040,665 39,571,953 909,552,236

95.65% 4.35% 100.00%

Type and Amount of Dividends Cash - P0.06 per share Cash - P0.06 per share Cash - P0.06 per share Cash - P0.05 per share Cash - P0.06 per share Cash P0.06 per share Cash P0.06 per share

(b) The ability of the company to declare and pay dividends on its common equity is generally restricted or limited by the pertinent provisions of the Corporation Code of the Philippines, i.e. the prohibition on capital impairment, and the limitation on the discretion of the Board of Directors to declare dividends based on their fiduciary duty, among others. (4) Recent Sales of Unregistered Securities. (a) Securities Sold There were no recent sale of unregistered or exempt securities. (b) Exemption from Registration Claimed. No applications for exemption from the registration requirements of the Securities Regulation Code were filed by the company during the fiscal year 2009-2010. (c) Description of Registrants Securities. The authorized capital stock of the company is One Billion Five Hundred Million Pesos (P1,500,000,000) consisting of One Billion Five Hundred Million (1,500,000,000) common shares with par value of One Peso (P1.00) per share. As of 30 June 2010, the company had repurchased a total of 259,424,189 common shares under its share buy-back program, as well as the tender offer conducted in February-April 2008. The shareholders do not have pre-emptive rights to subscribe to issues or disposition of the shares of stock of the company of any class unless the Board of Directors decides otherwise. There are no provisions in its charter or by-laws which would delay, defer or prevent a change in the control of the company. PART III FINANCIAL INFORMATION (A) Information on Independent Accountant. The Companys independent external auditor is the auditing firm of Sycip Gorres Velayo & Co. (SGV). The following presents the External Audit Fees required in SEC MC Circular No. 14 Series of 2004.

a) Aggregate fees filled for each of the last two (2) fiscal years for professional services rendered by external auditor for: 20008-09 2009-10 1. Audit of registrants annual financial statements: 2. Other assurance and related services 3. Aggregate fees billed for professional services for tax accounting, compliance and other tax services 4. All other fees P 650,000 none P 700,000 1,300,000

none none

none none

(b) The Audit Plan, including the corresponding audit fees, is submitted by the external auditor to the Board of Directors Audit Committeefor review and for approval. The committee evaluates and decides on the fees on the basis of reasonableness, the scope of work involved in the audit, inflationary increase in cost and the prevailing market price for such services in the audit industry. (B) Managements Discussion and Analysis or Plan of Operation. CORPORATE INFORMATION AND BUSINESS OPERATIONS Corporate Information Roxas Holdings, Inc. (formerly, Central Azucarera Don Pedro) was organized and registered with the Philippine Securities and Exchange Commission (SEC) on October 30, 1930 for the purpose of operating mill and refinery facilities to manufacture sugar and allied products. On November 1, 1980, Roxas Holdings, Inc.s (RHI or the Company) corporate life was extended for another 50 years until 2030. In July 1996, the Company offered its shares to the public through an initial public offering and on August 8, 1996, the Companys shares of stock were listed in the Philippine Stock Exchange (PSE). The Company is now 65.70% owned by Roxas & Company, Inc. (RCI), a company incorporated and domiciled in the Philippines. Corporate Reorganization Following the Reorganization Program approved by the Philippine SEC on December 11, 2001, RHI has been transformed into a holding and investment corporation, while its subsidiary, CADP Group Corporation (CADPGC), emerged as a holding and investment company with specific focus on sugar milling and refining business. The sugar milling and refinery business of the Company in Nasugbu, Batangas was spun-off to Central Azucarera Don Pedro, Inc. (CADPI) on December 1, 2002. Subsequently, the Company exchanged its shareholdings in CADPI, CADP Consultancy Services, Inc. (CCSI) and CADP Farm Services, Inc. (CFSI) for 1.3 billion CADPGCs common shares with par value of P1 per share. CADPI, CCSI and CFSI became 100% subsidiaries of CADPGC, while RHIs ownership interest in CADPGC increased from 73.17% to 95.78%. The 95.78% equity ownership of the Company in CADPGC has been reduced to 89.28% following a declaration of property dividends to its shareholders. On December 16, 2008, the Roxas Group undertook another corporate reorganization, which consisted of several corporate actions leading to the sale by CADPGC to the Company of its interest in all sugarrelated operating subsidiaries and associate of the Group. With the sale of all its operating assets and liabilities to the Company, CADPGC ended up as a shell company and was eventually sold by the Company to their ultimate parent, RCI. Thereafter, RCI and CADPGC merged with the latter as the surviving company. The name CADP Group Corporation was likewise changed to Roxas & Company, Inc.

RHI is now the listed company for all the sugar-related businesses of the Roxas Group while RCI will initially have interest in both sugar and property businesses of the Roxas Group. It is envisioned though that the two (2) listed companies, RHI and RCI, will eventually focus on their respective businesses sugar for RHI and real estate for RCI. Prior to June 2008 reorganization plan, RHI owned majority of CADPGC, whose financial statements were fully consolidated under that of the Sugar Group. RHI as parent company received management, consultancy, guarantee and lease income from CADPGC and subsidiaries. The financial statements of CADPGC, being its only major operating subsidiary, are synonymous to that of the Group except for certain items because RHI reports financial statements on full consolidation basis until January 2009. After which, CADPGC was deconsolidated and became a shell company until its merger with RCI in June 29, 2009. The discussion below provides an overview of the operation of RHI and subsidiaries. The Sugar Groups consolidated subsidiaries are as follows: Central Azucarera Don Pedro, Inc. (CADPI) CADPI, which is based in Nasugbu, Batangas, owns and operates an 11,000-tons-cane-per day sugar mill that manufactures raw sugar granular and light brown to yellowish in color, and molasses, a by-product. It also operates an 18,000 50-Kg. (Lkg.) bag per day refinery. This involves the processing of raw sugar (mill share and purchased) into refined sugar, a lustrous white-colored sugar. CADPIs refinery operations represent a significant portion of the revenues of the Group. To ensure maximum utilization of the refinery, CADPI also offers tolling or sugar refining services to various traders and planters. CADPI is the largest sugar manufacturer in the Luzon region in terms of capacity and production. It has a market share of over 45% with the remaining 55% market share held by six other mills. Central Azucarera de La Carlota, Inc. (CACI) CACI whose operations are located in La Carlota City, Negros Occidental, operates a 12,000-tons-caneper-day sugar mill producing raw sugar and molasses. Its primary purpose is to engage in the business of manufacturing sugar, molasses, syrups, sweeteners and other related products and by-products and to trade the same on wholesale/retail basis. The Company is formed primarily to operate the sugar milling facilities in Negros Occidental. In Negro Occidental, CACI, together with RHI associate, Hawaiian Philippine Company (HPCo), has the second largest market share of about 21% based on tons cane milled. Roxol Bioenergy Corporation (RBC) On February 29, 2008, RBC was incorporated to engage in the business of producing, marketing and selling of bioethanol fuel, which business will include the construction and operation of an integrated sugar mill and bioethanol distillery complex that will produce bioethanol fuel, both hydrous and anhydrous products from sugarcane and related raw materials, renewable and alternative energy resources, including but not limited to steam, electricity and power. On April 29, 2010, the Company amended the Articles of Incorporation which revised the Companys primary business objective to engage in the business of producing, marketing and selling of bio-ethanol fuel and industrial and potable ethanol including, but not limited to, anhydrous alcohol, rectified spirits and extra-neutral alcohol which business will include the construction and operation of an integrated sugar mill and bio-ethanol distillery complex that will produce bio-ethanol fuel, both hydrous and anhydrous and industrial and potable ethanol including, but not limited to, anhydrous alcohol, rectified spirits and extraneutral alcohol from sugarcane and related raw materials, renewable and alternative energy resources, including but not limited to steam, electricity and power.

RBC substantially completed its plant construction. Its plant facility located at Barangay La Granja/Esperanza, La Carlota City, Negros Occidental will cost approximately US$ 34 million or P1.4 billion. It is a stand-alone Bio-ethanol plant with a capacity of 100,000 liters of anhydrous alcohol per day. The anhydrous plant will also use molecular sieve technology that will produce fuel ethanol grade alcohol with 99.86% minimum purity. The Company has not yet started its commercial operations as of June 30, 2010 and testing and commissioning of the plant is ongoing and is expected to be completed in the last quarter of 2010. On October 24, 2008, the Board of Investments (BOI) approved its application for registration under EO No. 226 as New Producer of Bioethanol (Anhydrous) and Potable (Hydrous) Ethanol on a Pioneer Status and Non-Pioneer Status, respectively. As a registered entity, RBC is entitled to certain tax incentives such as income tax holiday (ITH) of six (6) years for its anhydrous ethanol and four (4) years for its hydrous ethanol, from January 2010 or actual start of commercial operations, whichever is earlier. In December 2009, due to delay in the construction of the plant, RBC filed a letter request extending its start of commercial operations to July 2010. However, the Company has yet to start its commercial operations in the last quarter of 2010. CADP Farm Services, Inc. (CFSI) CFSI was organized and registered principally to engage in the business of transporting sugar cane, sugar and its by-products including all kinds of commercial cargoes to and from sugar factories, sugar refineries, millsites or warehouses and or similar establishments by land with seconday purpose of engaging in various sugar farm services. It started to operate in Crop Year 2009-2010 both Batangas and Negros with the primary goal of helping existing cane areas increase their productivity per unit area at the least cost through farm mechanization and the use of proven and accepted technologies such as use of high yielding varieties of cane, proper timing and method of fertilizer application, use of can ripeners, use of bio-organic fertilizer, cane hauling, etc. Other Subsidiaries CCSI, Najalin Agri-Ventures, Inc. (NAVI), Jade Orient Management Services, Inc. (JOMSI) and CADP Insurance Agency, Inc. (CIAI) are engaged in various activities such as consulting, sugarcane farming, management services and insurance, respectively. Roxas Power Corporation (RPC) and CADP Port Services, Inc. (CPSI) were organized to engage in the business of buying, acquiring, leasing, constructing, maintaining and operating plants, work systems, poles, poles wire, conduit, ducts and subway for the production, supply, distribution and sale of electricity for light and power and any other use to which electricity may be applied and to engage in the general business of providing port ancillary services such as port cargo handling, arrastre and stevedoring, shoring, lashing, cleaning, shipping rebundling, rebugging and other related services on board vessels, respectively. The Companies have not yet started commercial operations. In Crop Year 2007-2008, the Sugar Group started to implement strategic projects to improve profitability and cash flows, through capacity expansion, farm services and ethanol venture. As of June 30, 2010, the expansion projects are substantially complete for both Batangas and Negros plant sites. However, refinery expansion was deferred for the meantime. Combined milling capacity will increase from 23,000 tons cane per day (TCD) to 31,000 TCD. CACI will have a heightened capacity to produce Direct Consumption Raw Sugar (DCRS) at 700,000 bags/year.

The Group continues to optimize production-marketing mix, with greater emphasis given on direct sales to industrial customers, manufacturing efficiencies through better management of production stream and usage of fuel and electricity and reducing manufacturing downtime, being prudent and cautious in capital investments and reduction of manufacturing and operating costs. RHI Group also remains committed to its corporate social responsibility to maintain the environmental integrity in areas where it operates and to contribute to the welfare of communities surrounding its facilities. It is a signatory to the United Nations Global Compact, which enlists the participation of private corporations in the protection of human rights of children and labor and advocates environmental commitment and the fight against corruption.

FULL FISCAL YEAR Financial Condition Roxas Holdings, Inc. and Subsidiaries (the Group) consolidated resources rose to P15.7 billion, 16% or P2.2 billion higher over June 30, 2009 balance of P13.5 billion. Current assets remained at P3.1 billion level in 2010 and 2009. Current liabilities slid to P3.2 billion in the current year from P3.9 billion in prior crop year. The Group achieved a current ratio of 0.96:1.00 in 2010 versus 0.79:1.00 in 2009. Leverage position stayed within the limits of certain loan covenant, debt to equity ratio this year is 1.61:1.00 and 1.37:1.00 last year. Maximum debt to equity ratio allowable is at 2.33:1.00. Debt service coverage ratio for the current crop year is within the minimum permissible level of 1.25:1.00. This years ratio is 1.97:1.00 and 1.84:1.00 in prior year. Unused working capital lines as at June 30, 2010 and 2009 from local banks amounted to P2.8 billion and P2.1 billion, respectively. Book value per share slightly increased to P6.58 per share from P6.29 per share in previous year. There are no: Known trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the Companys material liquidity problem; Known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations; Significant elements of income or loss that arose from continuing operations; and Seasonal aspects that had a material effect on the financial condition or results of operations.

Change in Financial Condition The 16% surge in the Groups total assets to P15.7 billion in 2010 from P13.5 billion in 2009 was substantially due to increased property, plant and equipment (PPE) that amounted to P11.8 billion, P2.1 billion or 22% higher than the P9.7 billion posted in June 2009. The increase was attributable to strategic projects of the Group (i.e. capacity expansion of sugar mills, construction of bioethanol plant and acquisition of farm tractors and implements).

Current assets remained the same from 2009 at P3.1 billion. The Groups cash balance decreased by P110 million or 38%. This was due to settlement of short-term obligations and the on going projects. Cash and cash equivalents was retained at its optimum level of P177 million from P267 million in prior year. Despite decrease in cash balance in 2010, collections improved, reducing trade receivables to P681 million from P757 million in previous period. Advances to related party significantly declined due to receipt of payment this year. Total advances to related party amounted to P49 million and P201 million in June 2010 and 2009, respectively. Total receivables as at crop year end amounted to P833 million versus P1.1 billion in prior year. Inventories went up to P1.9 billion, higher by 18% or P285 million from previous years P1.6 billion. The increase was due to high refined sugar inventory level as of the current period due to slow withdrawal by customers coupled with high inventory cost. Combined raw and refined sugar and molasses cost amounted to P1.5 billion this year versus P0.9 billion in prior crop year. Prepayments and other current assets went up to P229 million from P152 million in 2009. The surge was due to increase in input taxes substantially from RBC and unused creditable withholding taxes. Also, deferred tax asset of P5 million was set up due to NOLCO of a subsidiary this year. Other non current assets decreased to P27 million from P45 million. This was due to recognition of deferred charges amounting to P22.3 million as of June 30, 2009 pertaining to undrawn portion of credit facility and was considered as reduction from the outstanding loans upon full availments of the undrawn portion of the credit facility in 2010. Total current liabilities decreased to P3.2 billion from P3.9 billion as short term borrowings decreased to P2.4 billion compared to P2.9 billion in June 2009. This is due to payment, lower availment and transfer of bridge loans to long-term this year, consequently, increasing long-term borrowings. Current portion of long term liabilities amounted to P52 million in 2010. The Groups strategic loans were fully drawn as of June 30, 2010. Accounts payable and accrued expenses moved down to P609 million from previous years P780 million. The decrease was attributable to reduction in trade payables from P306 million to P131 million as a result of substantial completion of strategic projects and cost containment measures through reduction in materials inventory balance. Customers deposits also went down to P123 million from P186 million due to application. Dividends payable went down from P41 million to P16 million due to non-declaration of dividends in the current year versus declaration in 2009 which was paid in July 2010. While there was decrease in net pension benefit obligation to P41 million from P74 million due to payment. Non-current liabilities were up by 67% to P6.4 billion from P3.9 billion in prior period due to increased long term borrowings from P3.1 billion to P5.7 billion. Stockholders equity was recorded at P6.0 billion and P5.7 billion in June 30, 2010 and 2009, respectively. The increase was mainly due to income earned during the year. Production Performance Crop Year 2009-2010 versus 2008-2009 Batangas Operations CADPIs raw production for crop year 2009-2010 dropped to 2.466 million Lkg. from 2.702 million Lkg. in prior crop year due to low tons cane milled this year. Total tonnage for the period reached 1.238 million

tons cane compared to 1.467 million tons cane milled last year. However, sugar recovery improved from 1.85 Lkg/TC to 1.99 Lkg/TC. In addition to the effect in the decrease of 6% in national production, the decrease in tonnage was due to downtime resulting from breakdowns and commissioning of new equipment, thus canes were diverted to the other mill. Refined sugar production also went down to 3.324 million Lkg. versus 3.965 million Lkg. likewise due to frequent stoppages in the plant. Negros Operations Due to overall decline in cane tonnage and fierce competition in the Negros area, particularly on various incentive programs offered to planters by other sugar mills, CACIs share on cane supply declined. Canes were diverted mostly to other mills in the northern area, thus total tonnage for the year suffered and went down to 1.209 million from 1.584 million in 2009. Coupled with lower recovery this period of 2.06 Lkg/TC compared to 2.25 Lkg/TC last year, raw production this year dropped by 23% from 3.245 million Lkg to 2.497 million Lkg. in 2010.

Results of Operations The RHI Group generated consolidated total revenues of P6.2 billion for the year, 6% higher than last year. The growth is attributable to higher average selling prices of raw and refined sugar and molasses as sugar prices went up in the third quarter of crop year 2009-2010. Though sales volume was down this year due to lower production volume in the current period. Cost of sales increased by 7% or P347 million to P5.3 billion from P5.0 billion in 2009, due to frequent stoppages in the operations. Cost of production went up as bunker usage doubled from 4.8 million liters in 2009 to 8.9 million liters in 2010. Likewise, bagasse supply from production went down as tonnage decreased in the current period. Moreover, as the expansion projects were substantially completed this year and closed to corresponding PPE accounts, depreciation started, thus total charged to operations this year increased to P407 million versus P304 in previous year. Likewise, interest expenses went up as the related interest on loans used in the strategic projects closed to PPE were charged to expense. Total interest expense, net this period amounted to P314 million from P126 million in prior year. Gross profit rate for the period slightly decreased from 15.5% to 14.5% in 2010, while operating expenses were slightly up by P1 million to P621 million in the current year. Equity in net earnings of an associate increased to P132 million from P80 million due to higher operating results of HPCo. Other income was up this year due to recovery from insurance claim of CADPI amounting to P141 million and increased scrap sales of the two subsidiaries. The decrease in provision for taxes from P175 million to P84 million was due to sugar inventory write off in CADPI and high interest expense (capitalized and expensed out). The Group posted net income of P311 million higher by P168 million from P143million last year. This translated to earnings per share of P0.34 this year from last years P0.20. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to P984 million from P697 million in 2009.

Results of operations Crop Year 2008-2009 versus 2007-2008 Consolidated revenue decreased by P213 million or 4%, from P6.1 billion in 2008 to P5.9 billion in 2009. The decline was due to weak market brought about by the challenging global economic environment during this period. Raw and refined sugar sales, as well as tolling volume went down in the current year. Cost of sales amounted to P4.98 billion this year and P4.94 billion in previous year. The slight net increase was driven by the spillover of costly refinery operation in July and August 2008, which cost the Batangas operation P88 million in bunker consumption and P8.2 million in purchased bagasse. Consolidated gross profit margin fell from 17% in 2008 to 15% in 2009. Selling expenses amounted to P37 million and P34 million in 2009 and 2008, respectively. During the year, CADPI incurred marketing expense for selling D sugar abroad amounting to P3 million. General and administrative expenses rose to P560 million from P509 million in 2008. This was brought about by increased taxes and licenses due to corporate reorganization and assessment, insurance and transfer cost brought about by increased materials and supplies for expansion projects, rentals of communication leased lines and vehicles, and expenses incurred by the two new companies, RBC and CFSI. Equity in net earnings of an associate increased due to higher income P80 million for 2009 and P70 million for 2008. Net consolidated finance costs grew to P126 million in 2009 from P48 million in 2008 due to higher loan availments this year. Increase in net other income to P76 million from P53 million in 2008 was attributable to sale of scrap from discontinued railroad operations. Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to P669 million in the current crop year from P973 million in 2008 due to drop in operating income this year. Thus, the Group ended the crop year 2008-2009 with a significant slide in net income of 69% or P143 million from P455 million in 2008.
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INTERIM RESULTS 3 QUARTER 2009-2010 VS. CY 2008-2009 Financial Condition Consolidated total assets of Roxas Holdings, Inc. and subsidiaries (the Group) stood at P15.8 billion as at March 31, 2010 versus P13.5 billion for the crop year ended June 30, 2009. Current assets increased to P3.4 billion this period from P3.1 billion in June 2009. Current liabilities also went down to P3.4 billion in the current year from P3.9 billion in prior crop year. Current ratio improved to 0.99:1.00 in March 2010 compared to 0.79:1.00 at the end of crop year 2009. The Groups leverage position stayed within the limits of certain loan covenant. Debt to equity ratio is at 1.70:1.00 in the current period versus 1.37:1.00 in June 2009. Maximum debt to equity ratio allowable is at 2.33:1.00. Debt service coverage ratio is within the minimum permissible level of 1.25:1.00, registered at 1.28:1.00 this period while in June 30, 2009, ratio is 5.25:1.00.

Unused working capital lines as of March 31, 2010 and June 30, 2009 from local banks amounted to P2.3 billion and P938 million, respectively. Book value per share slightly increased to P6.42 from P6.28 in prior crop year. Change in Financial Condition The 17% upsurge in the Groups total assets is mainly attributable to increased property, plant and equipment (PPE) account this period. PPE balance as at March 2010 amounted to P11.6 billion, P1.9 billion or 20% higher than the P9.7 billion posted in June 2009. This was due to on-going expansion of milling and refining facilities of CADPI and CACI, the construction of ethanol plant in La Carlota City for RBC and acquisition of farm implements for the farm operations of CFSI. Current assets also increased to P3.4 billion from P3.1 billion due to increased inventories this period. Total inventories as of March 31, 2010 amounted to P2.1 billion, higher by 40% or P1.5 billion as of June 30, 2009. This was attributable to high sugar inventory level this year due to slow withdrawal of customers coupled with high inventory cost. Raw and refined sugar inventory amounted to P1.5 billion this year versus P925 million in prior crop year. On the other hand, cash and cash equivalents went down to P219 million compared to P287 million last year due to settlement of short-term borrowings this period. However, collections improved in the current year, reducing trade receivables to P631 million from P757 million in previous period. Advances to related parties significantly reduced due to settlement this year amounting to P48 million in March 2010 from prior years P201 million. Prepayments and other current assets, likewise decreased from P272 million to P235 million as deposits to suppliers went down to P46 million from P120 million in June 2009. Total current liabilities fell by P545 million or 14% from P3.9 billion in June 2009 to P3.4 billion in March 2010 as short term borrowings decreased to P2.4 billion compared to P2.9 billion in June 2009. This is due to payment, lower availment and transfer of bridge loans to long term this period, consequently, increasing long-term borrowings to P5.7 billion from P3.07 billion in June, thus, non-current liabilities were up by 69% to P6.5 billion versus P3.9 billion in prior period. Likewise, customers deposits moved down to P178 million from prior periods P186 million. Accounts payable and accrued expenses, also decreased by 3% as expansion project in CAC, Inc. were almost completed. Stockholders equity was recorded at P5.8 billion and P5.7 billion in March 31, 2010 and June 30, 2009, respectively. Results of Operations Batangas Operations CADPI started its mill operations on November 26, 2009, two (2) days delayed from last year. Total tonnage for the period reached 1.039 million versus 1.238 million last year. Recovery improved this period, 1.93 Lkg/tc compared to 1.81 Lkg/tc in prior year. Raw sugar production as of March 31, 2010 posted at 1.983 million Lkg versus 2.215 million Lkg same period last year. The decrease in tonnage was due to downtime resulting from breakdowns and commissioning of new equipment. Likewise, refined sugar production went down to 2.055 million Lkg compared to 2.635 million Lkg due to frequent stoppages.

Negros Operations With the decline in cane supply in Negros area and diversion of canes to other mills, CACIs tonnage this year went down to 1.209 million tons versus 1.494 million tons in prior year. Coupled with lower recovery this period of 2.066 Lkg/tc compared to 2.069 Lkg/tc last year, raw production this year decreased to 2.497 million Lkg from 3.075 million Lkg in previous year. Consolidated revenues increased by 15% from P3.7 billion in prior year to P4.3 billion this year due to higher refined sugar sales this year amounting to P2.6 billion from prior years P1.9 billion. Refined sales volume went up by 375,617 Lkg from 1.347 million Lkg last year. In addition, average selling prices increased to P1,524 per bag from P1,374 per bag in previous period. Cost of sales this year amounted to P3.8 billion from P3.1 billion last year. Gross profit margin decreased to 11% versus 15% in previous year. Unit cost this year increased due to low production and high bunker usage. Other operating income substantially increased from P47 million to P216 million due to gain from insurance claim of CADP, Inc. amounting to P141 million. Sales of scrap also increased from P9 million to P43 million this year. General and administrative expenses surged this year to P441 million versus P424 million last year or 4% higher due to higher transfer cost of materials from P6 million to P13 million, increased labor and labor related expenses due to CBA salary adjustments and additional light allowance, increased outside services due expansion. Equity in net earnings of an associate increased from P49 million to P70 million this year due to higher operating results of HPCo. Net financing cost this year went up to P146 million from P72 million due to expensing of borrowing costs related to expansion of CAC, Inc. as projects were substantially completed this period. The Group posted net income of 119 million versus P61 million in prior period due to higher other operating income recognized this year. This translated to earnings per share of P0.13 this year from last years of P0.08 Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to P510 million from P381 million. Top Five Performance Indicators As maybe concluded in the foregoing description of the business of the Group, the Companys financial performance is determined to a large extent by the following key results: Raw sugar production a principal determinant of consolidated revenues and computed as the gross amount of raw sugar output of CADPI and CACI as consolidated subsidiaries and HPCo. as an associate, and pertains to production capacity, ability to source sugar canes and the efficiencies and productivity of manufacturing facilities. Refined sugar production the most important determinant of revenues and computed as the gross volume of refined sugar produced by the CADPI refinery both as direct sales to industrial customers and traders or as tolling manufacturing service, limited by production capacity and by the ability of the Group to market its services to both types of customers. Raw sugar milling recovery a measure of raw sugar production yield compared to unit of input and is computed as the fraction of raw sugar produced (in Lkg bags) from each ton of sugar cane milled (Lkg/TC).

Earnings before interest, taxes, depreciation and allowances (EBITDA) the measure for cash income from operation and computed as the difference between revenues and cost of sales and operating and other expenses, but excluding finance charges from loans, income taxes and adding back allowances for depreciation and other cash amortization. Return on Equity denotes the capability of the Group to generate returns on the shareholders fund computed as a percentage of net income to total equity.

The table below, presenting the top five performance indicators of the Group in three (3) fiscal years, shows general improvement in the financial and operating results: Performance Indicator Raw sugar production Refined sugar production Milling recovery EBITDA Return on EQUITY 2010 6.947 M bags 3.324 M bags 2.09 Lkg/TC P984 million 5% 2009 8.123 M bags 3.965 M bags 2.02 Lkg/TC P669 million 3% 2008 9.002 M bags 3.659 M bags 1.83 LKg/TC P973 million 8%

Key Variable and Other Qualitative and Quantitative Factors 1. The company is not aware of any known trends, events or uncertainties that will result in or that are reasonably likely to result in any material cash flow or liquidity problem. 2. The company 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. 3. The company is not aware of any 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. 4. Description of material commitments for capital expenditures. The Group had an allocation of P442.6 million to complete the expansion project for crop year 2010-2011 of which P87 million for CADPI, P47 million for CACI, P27.6 million for CPSI and P281 million for RBC. An allocation of P92 million for regular capital expenditures in 2010-2011, broken down into P22 million for the CADPI integrated mill and refinery operations and P70 million for CACI. 5. The company is not aware of any known trend, events or uncertainties that will have material impact on sales. 6. The company is not aware of causes for any material changes from period to period in the financial statements.

(C) Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There were no changes in or disagreements with Sycip Gorres Velayo & Co. on accounting and financial disclosure. A copy of the companys financial reports for the fiscal year ending 30 June 2009 is attached as Annex A. PART IV MANAGEMENT AND CERTAIN SECURITY HOLDERS A. Directors and Executive Officers of the Issuer. Board of Directors.
Antonio J. Roxas is 68 years old and is a Filipino. Mr. Roxas is a member of the Compensation Committee. He has been a member of the Board of Directors since 1982 and is the Chairman Emeritus of the company. He is also a director of Roxas & Company, Inc. and Central Azucarera Don Pedro, Inc. Mr. Roxas graduated from the University of Notre Dame in Indiana, USA, where he obtained his degree in Bachelor of Science in Commerce. Mr. Roxas trained at the Standard Chartered Bank of London, the Shell Company in Paris, and the Olavarria and Co. and Lowry and Co., Inc. of New York, USA. Pedro E. Roxas is 54 years old and is a Filipino. Mr. Roxas is the Chairman of the Nomination Committee. He has been a member of the Board of Directors since 1982 and is the Chairman of the Board of Directors as well as the Executive Committee. He is also the Chairman and President & CEO of Roxas & Co., Inc., the Chairman of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc., and other subsidiaries of the company, Chairman of Hawaiian Philippine Company, 2nd Vice-Chairman of Batangas Assets Corporation, Chairman of Club Punta Fuego, President of Roxaco Land Corporation, President of Fundacion Santiago, Chairman & President of Roxas Foundation, Inc. and a director of Philippine Long Distance Telephone Company (PLDT), the Manila Electric Company (Meralco), Banco de Oro (BDO) Private Bank, Philippine Sugar Millers Association, Inc., Fuego Development Corporation, Philippine Business for the Environment and Philippine Business for Social Progress. Mr. Roxas was educated at Portsmouth Abbey School, USA and at the University of Notre Dame, USA where he obtained his degree in Business Administration. Mr. Roxas is married to Ms. Regina Tambunting and they have three (3) children. Santiago R. Elizalde is 45 years old and is a Filipino. He has been a member of the Board of Directors since 2000. Mr. Elizalde is a member of the Executive Committee as well as the Compensation and Nomination Committees. He is also the Chairman of the Board of Directors of Elro Trading and a director of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc. Mr. Elizalde obtained his Bachelor of Arts in Economics in Denison University. Ramon R. del Rosario, Jr. is 65 years old and is a Filipino. He has been a member of the Board of Directors since 2002. Mr. del Rosario, Jr. is the Chairman of the Compensation Committee and a member of the Nomination Committee. He is the President & CEO of Philippine Investment Management, Inc. (PHINMA), Inc., the President & Vice-Chairman of Phinma Corp. and the President of Atlas Holdings Corp. and Microtel Development Corp. Mr. del Rosario is also the Chairman of the Board of Directors of CIP II Power Corp., Trans-Asia Renewable Energy Corp., Araullo University, Cagayan de Oro College, University of Iloilo, University of Pangasinan, United Pulp and Paper Co., Inc., Microtel Inns and Suites (Pilipinas), Inc., Phinma A&E Outsource Corp., Phinma F&A Outsource Corp., Toon City Animation Inc. and Paramount Building Management & Services Corp. He is likewise the Vice-Chairman of Trans-Asia Oil & Energy Development Corp. and a director of Phinma Property Holdings Corp., Holcim (Phils.), Inc., TA Power Generation Corp., Union Galvasteel Corp. and Ayala Corporation. Mr. del Rosario graduated from Harvard Business School and De La Salle University and was a Ten Outstanding Young Men (TOYM) awardee in the field of Investment Banking and Finance in 1978. Mr. del Rosario, Jr. is an independent director and has possessed all the qualifications and none of the disqualifications of an independent director since he was first nominated and elected to the Board of Directors of the company on 5 July 2002 and when he was re-elected as an independent director on 25 March 2010. Raul M. Leopando is 58 years old and is a Filipino. He was elected to the Board of Directors on 25 March 2009 and is a member of the Audit Committee. Mr. Leopando is presently the President & CEO of RCBC Capital Corporation and the Chairman of RCBC Securities Inc. He was the President of the Investment

House Association of the Philippines (IHAP) in 1990, and a member of the Board of IHAP since 1986, a nominee of the Philippine Stock Exchange, a member of the Association of License Stock Brokers, Makati Sports Club Inc., and Eagle Ridge Golf Club. He became a member of the Board of Polar Mining Corporation, Fil Hispano Ceramics Inc. and Paxys, Inc. Mr. Leopnado is presently a member of the Board of Directors of Charter Land Inc., Intervest Co., Inc., RCBC Capital Corp. and Bankard, Inc. Mr. Leopando obtained his degree in AB Economics from the University of the Philippines, BSC Accounting in San Beda College and his Masters in Business Administration from the Ateneo de Manila University. Beatriz Roxas Olgado is 56 years old and a Spanish. She was elected to the Board of Directors on 25 March 2009. Ms. Olgado is presently a director of Roxas & Company, Inc. Geronimo C. Estacio is 63 years old and is a Filipino. He was elected to the Board of Directors on 25 March 2009 and is the Chairman of the Audit Committee. Mr. Estacio is a member of the Board of Directors of Forefront Academic & Technical Center. He was formerly the Dean of the College of Business Administration of the University of the East, a consultant to the Chairman and CEO and Vice-President for Finance of ABS-CBN Broadcasting Corporation, a director for Regional Controls for Asia of the Procter & Gamble Company, a member of the Board of Directors of P&G Australia, P&G New Zealand, Max Factor Australia, Max Factor New Zealand, Noxell, Shulton, Australia and Shulton, New Zealand, P&G Philippines, Norwich, Philippines and a Trustee of P&G Pension Plan, among others. He graduated Magna Cum Laude from the University of the East, College of Business Administration, and is a Certified Public Accountant. Mr. Estacio is an independent Director and he has possessed all the qualifications and none of the disqualifications of a director since he was first nominated and elected as a director of the company. Ramon A. Picornell, Jr. is 59 years old and is a Filipino. Mr. Picornell was elected as a member of the Board of Directors and as President & CEO of the corporation on 25 March 2009. He is also the President & CEO of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc. and other subsidiaries of the company and a director of Hawaiian-Philippine Company. Mr. Picornell was educated at the University of San Carlos and is a Mechanical Engineer. Renato C. Valencia is 68 years old and is a Filipino. He was elected to the Board of Directors on 29 September 2010. He was likewise elected by the Board of Directors as a member of the Executive Committee and the Audit Committee on 29 September 2010. Mr. Valencia is presently a director of Metropolitan Bank & Trust Company, a member of the Phil. Coca Cola System Council Chairman of iPeople, Inc., director of Anglo Philippine Holdings Corporation, Baord Adviser of Philippine Veterans Bank, Chairman of Hypercah Payment Systems, Inc., Chairman of Bation Payment Systems, Inc. and ViceChairman of Asia Pacific Network Holdings, Inc. Mr. Valencia obtained his degree in Bachelor of Science in General Engineering from the Philippine Military Academy in 1963 and his Master in Business Management from the Asian Institute of Management in 1971. Lorna Patajo-Kapunan is 57 years old and is a Filipino. Atty. Kapunan is the Corporate Secretary of the company. Atty. Kapunan is a Senior Partner at the Law Firm of Kapunan Lotilla Garcia & Castillo. She obtained her Bachelor of Laws degree at the University of the Philippines. The directors hold office for one (1) year until their successors are elected and qualified. Corporate Officers. Pedro E. Roxas is 54 years old and is a Filipino. Mr. Roxas is the Chairman of the Nomination Committee. He has been a member of the Board of Directors since 1982 and is the Chairman of the Board of Directors as well as the Executive Committee. He is also the Chairman and Presdient & CEO of Roxas & Co., Inc., the Chairman of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc., and other subsidiaries of the company, Chairman of Hawaiian Philippine Company, 2nd Vice-Chairman of Batangas Assets Corporation, Chairman of Club Punta Fuego, President of Roxaco Land Corporation, President of Fundacion Santiago, Chairman & President of Roxas Foundation, Inc., and a director of Philippine Long Distance Telephone Company (PLDT), the Manila Electric Company (Meralco), Banco de Oro (BDO) Private Bank, Philippine Sugar Millers Association, Inc., Fuego Development Corporation, Philippine Business for the Environment and Philippine Business for Social Progress. Mr. Roxas was educated at Portsmouth Abbey School, USA and at the University of Notre Dame, USA where he obtained

his degree in Business Administration. Mr. Roxas is married to Ms. Regina Tambunting and they have three (3) children. Ramon A. Picornell, Jr. is 59 years old and is a Filipino. Mr. Picornell was elected as a member of the Board of Directors and as President & CEO of the corporation on 25 March 2009. He is also the President & CEO of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc. and other subsidiaries of the company and a director of Hawaiian-Philippine Company. Mr. Picornell was educated at the University of San Carlos and is a Mechanical Engineer. Asuncion S. Aguilar is 50 years old and is a Filipino. Ms. Aguilar is the Senior Vice-President for Finance & Treasurer of the company since January 28, 1997. She is also Senior Vice-President for Finance & Treasurer of Central Azucarera Don Pedro, Inc., Central Azucarera de la Carlota, Inc. and the other subsidiaries of the company. She obtained her Master in Business Management from the Asian Institute of Management in Makati City and her Liberal Arts degree from the University of Santo Tomas. Florencio M. Mamauag, Jr. is 50 years old and is a Filipino. Atty. Mamauag, Jr. has been the Assistant Corporate Secretary, Vice-President for Legal Affairs and Compliance Officer of the company since September 25, 2002. He is also the Corporate Secretary and Vice-President for Legal Affairs of Central Azucarera Don Pedro, Inc., Central Azucarera de la Carlota, Inc. and the other subsidiaries of the company. Atty. Mamauag was educated at the San Beda College of Manila where he obtained his degrees in Accountancy and Law. Melchor A. Layson is 52 years old and is a Filipino. He was appointed as VP-Strategic Projects on 25 March 2009 and was later designated as VP-Operations & Management Services of the company on April 12, 2010. Mr. Layson holds a masteral degree in Business Administration from the Ateneo de Manila University and a BS Chemical Engineering from the Manuel L. Quezon University. Ma. Elizabeth D. Nasol is 51 years old and is a Filipino. She was appointed as VP-Human Resource Management & Services on 25 March 2009. She is also the VP for Human Resource Management & Services Division of Central Azucarera Don Pedro, Inc. and Central Azucarera de la Carlota, Inc. She graduated from the University of Santo Tomas with a Bachelor of Science degree in Psychology. Ms. Nasol was formerly the Head for Center for Excellence in Globe Telecommunications, Inc. before she joined the company. Dean L. Guevarra is 51 years old and is a Filipino. He was appointed as VP-Resident Manager of Central Azucarera Don Pedro, Inc. on 25 March 2009. He graduated from the University of the Philippines in Diliman with a Bachelor of Science degree in Metallurgical Engineering. Luis-Mari L. Zabaljauregui is 64 years old and is a Filipino. He was appointed as VP Ethanol Project on 25 March 2009. Mr. Zabaljauregui obtained his AB-BSBA degree from the De La Salle College in 1968 and his MBM degree from the Asian Institute of Management in 1971. Eduardo V. Concepcion is 54 years old and is a Filipino. He was appointed as VP-Resident Manager of Central Azucarera de la Carlota, Inc. on 25 March 2009. He obtained his BS Chemical Engineering degree from De La Salle University and completed his MBA in the University of San Agustin. Mr. Concepcion was formerly the Resident Manager of PASSI Sugar Central, Inc. in Iloilo. Ramon S. Reyes is 47 years old and is a Filipino. He was appointed as VP for Marketing on 25 March 2009. He obtained his Master in Business Administration at the Ateneo de Manila University and earned his degrees in BSBA major in Marketing and AB Philisophy at the Ateneo de Davao University and Xavier University in Cagayan. He also completed Management Development Program at the Asian Institute of Management. Mr. Reyes was formerly the Program Director for Sales at the Ateneo de Manila University before he joined the company. BOARD OF ADVISORS: Eduardo R. Areilza is 32 years old, married and a Spanish citizen. He was appointed by the Board of Directors as one of the members of the Committee of Advisors to the Board on 25 March 2009. Mr. Areilza obtained his degree in Business Administration in 1999 at the University of CUNEF Madrid, Spain.

Senen C. Bacani is 63 years old and is a Filipino. Mr. Bacani was appointed by the Board of Directors as a member of the Committee of Advisors to the Board on 25 March 2009. Mr. Bacani holds key positions in a number of companies such as Ultrex Management & Investments, Corp., La Frutera, Inc., and Filipinas Palmoil Industries Holding, Inc., Tboli Agro-Industrial Development, Inc., Swift Foods, Inc. Philippine Chamber of Agriculture & Food, Inc. and several other companies. He was formerly the Secretary of the Department of Agriculture in 1990 until 1992. He was educated at the De La Salle University where he earned his degree in Commerce and at the University of Hawaii where he earned his Master in Business Administration. Miguel A. Gaspar is 70 years old and is a Filipino. Mr. Gaspar was appointed by the Board of Directors as a member of the Committee of Advisors to the Board on 25 March 2009. Mr. Gaspar was educated at the De La Salle College where he obtained his Bachelor of Science degree in Mechanical Engineering as well as his Diploma in Management Development. He is a licensed Mechanical Engineer and he held various responsible positions in a number of prestigious companies. Vincent S. Perez is 51 years old and is a Filipino. He was appointed by the Board of Directors as a member of the Committee of Advisors to the Board on 25 March 2009. He is presently the CEO of Alternergy Partners, a power company focused on renewable power projects in emerging Asian countries, and is a Chairman of Merritt Partners, an energy advisory firm to international energy companies in Asia. Mr. Perez was the youngest Philippine Energy Minister from June 2001 to March 2005. He served briefly in early 2001 as Undersecretary for Industry at the Department of Trade and Industry. He founded Next Century Partners in 1997, a private equity firm that invested in companies such as Smart Communications, Del Monte Pacific and Fastech and in 2000, he founded Asian Conservation Company which acquired El Nido Resort. He is also an independent director of Nido Petroleum, Energy Development Corporation, SM Investments and ST Telemedia. He is the chairman of WWF-Philippines and was a member of the National Council of WWF-US. Mr. Perez is on the advisory board of the Center for Business and the Environment at Yale University, and has consulted for ADB and IFC on renewable energy policy. Mr. Perez obtained his MBA at the Wharton Business School of the University of Pennsylvania in 1983 and a Bachelors Degree in Business Economics from the University of the Philippines in 1979.

Significant Employees.
While the company is not highly dependent on the services of an employee who is not an Executive Officer so as to be key in the business, the company values its human resources and expects them to do their share in achieving its objectives.

Family Relationships.
Messrs. Pedro E. Roxas, Antonio J. Roxas, Santiago R. Elizalde and Ms. Beatriz Roxas Olgado are related within the fourth degree of consanguinity.

Involvement in Legal Proceedings.


The company is not aware of the existence of any legal proceeding/s, during the last five (5) years up to the present, involving the members of its Board of Directors or Executive Officers or their property before any court of law or administrative body in the Philippines or elsewhere. Moreover, the company is not in possession of any information indicating that the above named persons have been convicted by final judgment of any offense punishable under the laws of the Philippines or of any other country.

B. Executive Compensation. 1. Compensation of Executive Officers.


Name and Principal Position Year Salary Bonus Other Annual Compensation

CEO Pedro E. Roxas Chairman A Francisco F. del Rosario, Jr. Vice Chairman B Ramon A. Picornell, Jr.-President & COO C Asuncion S. Aguilar-SVP Finance/Treas. D Florencio M. Mamauag, Jr.-VP Legal & Compliance Officer E CEO and top four executives F All officers & directors as group unnamed CEO Pedro E. Roxas Chairman A Francisco F. del Rosario, Jr. Vice Chairman B Ramon A. Picornell, Jr.- President & CEO C Asuncion S. Aguilar-SVP Finance/Treas. D Florencio M. Mamauag, Jr.-VP Legal & Compliance Officer E CEO and top four executives F All officers & directors as group unnamed Estimated Compensation of Executive Officers for the ensuing crop year. CEO Pedro E. Roxas Chairman A Ramon A. Picornell, Jr.- President & CEO B Asuncion S. Aguilar-SVP Finance/Treas. C Florencio M. Mamauag, Jr.-VP Legal & Compliance Officer D CEO and top four executives E All officers & directors as group unnamed

2008-09 2008-09 2008-09 2008-09 2008-09 2008-09 2008-09 2009-10 2009-10 2009-10 2009-10 2009-10 2009-10 2009-10 P 19,405,750 P 32,127,914 P 4,208,531 P 8,230,135 P 17,457,000 P 17,457,000 P 5,033,437 P 5,033,437

P 650,000*

P 1,550,000*

2010-11 2010-11 2010-11 2010-11 2010-11 2010-11 P 19,405,750 P 32,127,914 P 4,208,531 P 8,230,135

P 900,000*

* Directors Fees.
There are no employment contracts executed by the company with the above named executive officers. Neither are there any other arrangements or compensatory plans made between the company and the named executive officers. The companys fiscal year ends in June of every year.

2. Compensation of Directors.
Art. 19 of the By-Laws of the company provides that the Board of Directors shall be given 6% of the net income of the corporation before tax to be distributed as fees in the following manner: 2% to the Executive Committee and 4% to the Board of Directors. Presently, the Board of Directors receive a per diem of P25,000 for every meeting attended. A Director who attends all regular quarterly meetings of the corporation is paid a total of P100,000.00 annually. The members of the audit, compensation and nomination committees receive a per diem of P25,000 for every meeting attended. No warrants or options were granted by the corporation to the Directors and Officers within the past three (3) years.

There are no arrangements pursuant to which any director of the company was compensated, or is to be compensated, directly, or indirectly, during the registrants last completed fiscal year and the ensuing year for any service as a director. Likewise, there is no employment contract or any compensatory plan or arrangement between the company and an executive officer. C. Security Ownership of Certain Record and Beneficial Owners and Management. 1. Security Ownership of Certain Record and Beneficial Owners of more than 5% of registrant securities as of 30 June 2010.
Title of Class Name and Address of Owner/Relationship with Issuer Roxas & Company, Inc. 7/F CG Building, 101 Aguirre St., Legaspi Vill., Makati City Parent Company PCD Nominee Corp. 37F The Enterprise Centre Ayala Ave., cor. Paseo de Roxas, Makati City Pedro E. Roxas 7F CG Bldg., 101 Aguirre St., Legaspi Village, Makati City Name of Beneficial Ownership and Relationship with Record Owner Roxas & Company, Inc. Citizenship Number and Nature of Ownership Percent of Class

Common

Filipino

597,606,670 (r &b)

65.70 %

Common

Various Participants

Filipino

118,289,925 ( r)

13.00 %

Common

Pesan Holdings, Inc./ Pedro E. Roxas/ Pesan PCD Lodged Shares/ PCD Lodged Shares/ PCD Lodged Shares &/or Account

Filipino

61,030,940 ( r & b)

6.71%

The percentages of ownership of the above named shareholders were arrived at by dividing their shareholdings over the total shares issued and outstanding as of 31 August 2009 of 909,552,236.

The members of the Board of Directors of Roxas & Co., Inc. (RCI) are Antonio J. Roxas, Pedro E. Roxas, Beatriz Roxas, Senen C. Bacani, Ramon Y. Dimacali, Carlos R. Elizalde, Francisco Jose Elizalde, Jr., Eduardo R. Areilza and Francisco F. Del Rosario, Jr. Collectively, they have the power to decide how the shareholdings of Roxas & Co. in RHI shall be voted. Pedro E. Roxas is authorized to vote the shares of RCI in the annual meeting.

2. Security Ownership of Management as of 30 June 2010. The following are the number of shares owned of record by the directors, the Chief Executive Officer and each of the key officers of the Company and the percentage of shareholdings of each: Title of Class Common Common Common Common Common Common Common Common Common Common Common Common Common Name of Beneficial Owner Antonio J. Roxas Chairman Emeritus Pedro E. Roxas Chairman and CEO Geronimo C. Estacio Director Santiago R. Elizalde Director Raul M. Leopando Director Ramon del Rosario, Jr. Director Beatriz Olgado Roxas Director Renato C. Valencia Director Ramon A. Picornell, Jr. President & CEO Asuncion S. Aguilar SVP-Finance and Treasurer Melchor A. Layson VP Strategic Projects Dean L. Guevarra VP Resident Manager/CADPI Directors and officers as a Group Citizenship Filipino Filipino Filipino Filipino Filipino Filipino Spanish Filipino Filipino Filipino Filipino Filipino Number and Nature of Ownership 50,000 (r & b) 67,008,112 50,000 120,000 50,000 60,000 50,000 50,000 270,240 233,000 406,864 79,092 68,377,308 (r & b) (r) (r & b) (r) (r) (r) (r) (r & b) (r & b) (r & b) (r ) Percent of Class 0.00 % 6.72 % .01 % .01 % .01 % .01 % .01 % .01 % .03 % .03 % .04 % .01 % 7.12 %

The above named officers have no rights to acquire additional shares of the company within thirty (30) days hereof from or under any option, warrant, right, conversion privilege or similar obligations, or otherwise. Changes in Control. To the knowledge of the company, there are no voting trust or similar arrangements made by its shareholders in respect its shares or other arrangements which may result in a change in control. D. Certain Relationships and Related Transactions. There were no transactions or proposed transactions, during the last two (2) years, to which the company was or is to be a party in which any of its directors or executive officers; any nominee for election as a director; any security holder named in response to Part V, paragraph (c) thereof; any member of the immediate family of any of the persons named herein had or is to have direct or indirect material interest. Corporate Governance In compliance with SEC Memorandum Circular No. 2 dated 05 April 2002, the company submitted its Manual on Corporate Governance on 30 August 2002. Since its effectivity on 1 January 2003, the company has complied with the principles contained in the Manual insofar as they may be relevant to the companys business. The company likewise established an evaluation system to measure or determine the level of compliance of its Board of Directors and top-level management with the Manual. Measures are also being undertaken by the company to ensure full compliance with the leading practices it has

adopted in the Manual such as the constitution of the Audit, Compensation and Nomination Committees, the election of the required number of independent directors to its Board of Directors, the amendment of Article 13 of its By-Laws on the qualifications and disqualifications of its directors in order to adopt the provisions of the Manual. The company has not deviated from or violated the provisions of the Manual. The company undertakes to improve its corporate governance as may be required by law or the exigency of business. EXHIBITS AND SCHEDULES Exhibits and Reports on SEC Form 17-C. (a) Exhibits. Certified Consolidated Financial Statements With Supplementary Schedules.

(b) Reports on SEC Form 17-C.


1. On August 7, 2009, the company disclosed that Central Azucarera de la Carlota, Inc., a wholly owned subsidiary of Roxas Holdings, Inc. executed a Milling Contract with its sugar cane planters in Negros Occidental who belong to the Asosacion de agricultores de la Carlota Y Pontevedra, Inc. (AALPI). The Milling Contract which has a duration of fifteen (15) crop-years would commence in crop-year 2009-2010 and will expire in crop-year 2023-2024. 2. On 23 September 2009, the company disclosed: a) the approval of the Consolidated Financial Statements of the company as of 30 June 2009; b) the setting of the annual meeting of shareholders on 25 November 2009 and fixing 15 October 2009 as the record date of the annual meeting. 3. On 12 October 2009, the company disclosed :a) the approval of a resolution authorizing the corporation to amend Article 1 of the Articles of Incorporation of the corporation by the Board of the Directors, to read as follows: 1. The name of the Corporation is ROXAS HOLDINGS, INC. doing business under the name and style of CADP GROUP. 4. On 25 November 2009, the company disclosed: a) the election of the following persons to the Board of Directors of the corporation for the fiscal year 2009-2010: Pedro E. Roxas Antonio J. Roxas Santiago R. Elizalde Beatriz Roxas Olgado Ramon R. del Rosario, Jr. Francisco F. del Rosario, Jr. Geronimo C. Estacio Ramon A. Picornell, Jr. Raul M. Leopando

b) the shareholders of the corporation also elected the auditing firm of Sycip Gorres Velayo & Co. as external auditors for fiscal year 2009-2010. 5. On 9 December 2009, the company disclosed: a) The approval of the resignation of Mr. Ramon del Rosario, Jr. as member of the Board of Directors and as Chairman/Member of the Audit and Compensation Committees of the company; b) the election of the following: Officers: Pedro E. Roxas Francisco F. del Rosario, Jr. Ramon A. Picornell, Jr. Chairman Vice-Chairman President & CEO

Audit Committee: Geronimo C. Estacio Francisco F. del Rosario, Jr. Raul M. Leopando Eduardo R. Areilza Compensation Committee: Geronimo C. Estacio Antonio J. Roxas Santiago R. Elizalde Eduardo R. Areilza Nomination Committee: Pedro E. Roxas Santiago R. Elizalde Geronimo C. Estacio Chairman Member Member Chairman Member Member Member (non-voting) Chairman Member Member Member (non-voting)

c) The confirmation of the authority of the corporate officers of the company to act as authorized signatories to bank accounts namely: Pedro E. Roxas, Francisco F. del Rosario, Jr., Miguel A. Gaspar, Santiago R. Elizalde, Ramon A. Picornell, Jr., Asuncion S. Aguilar, Florencio M. Mamauag, Jr., Melchor A. Layson, Elizabeth D. Nasol, Dean L. Guevarra, Eduardo V. Concepcion, Ramon S. Reyes and Luis Mari L. Zabaljauregui; d) The approval of the Revised Manual on Corporate Governance; d) The authority of the corporation to apply for the registration of all its business/trade names, trademarks, logos and devices with the Intellectual Property Office; e) The authority of the corporation to register its business name CADP GROUP with the Department of Trade & Industry; f) The authority of the corporation to execute a second supplement to the second amended and restated Mortgage Trust Indenture (MTI) with BDO Unibank, Inc.-Trust & Investments Group and appoint the said entity as successor trustee; g) The authority of the corporation to establish a retirement and/or gratuity program for the purpose of providing retirement and other employee benefits for all eligible officers and employees of the corporation and appointing Rizal Commercial Banking Corporation as the investment manager of the retirement fund of the corporation under an Investment Management Agreement. 6. On 25 March 2010, the company disclosed: a) The re-election of Mr. Ramon R. del Rosario, Jr. as an independent director of the company; b) The re-organization of the audit, compensation and nomination committee as follows: Audit Committee: Geronimo C. Estacio Francisco F. del Rosario, Jr. Raul M. Leopando Eduardo R. Areilza Compensation Committee: Ramon R. del Rosario, Jr . Antonio J. Roxas Santiago R. Elizalde Eduardo R. Areilza Chairman Member Member Member (non-voting) Chairman Member Member Member (non-voting)

Nomination Committee: Pedro E. Roxas Santiago R. Elizalde Ramon R. del Rosario, Jr. Chairman Member Member

c) The approval of the authority of the company to obtain a Bills Purchase Line (BPL) from the Bank of the Philippine Islands; d) The authority of the company to lease a portion of its land in Brgy. Lumbangan, Nasugbu, Batangas to Digitel Mobile Phils., Inc.; e) The authority of the executive officers of the corporation to act as authorized signatories to the various bank accounts of the corporation; f) The authority of the executive officers of the corporation to act as authorized signatories of the corporation. 7. On 28 June 2010, the company disclosed: a) The approval of a resolution appointing Mr. Renato C. Valencia as an additional member of its Board of Advisors; In accordance with Art. 20.0 of the By-Laws of the corporation; b) The approval of resolutions i) confirming the creation of an Executive Committee composed of three (3) members of the Board of Directors; ii) electing Mr. Pedro E. Roxas, Mr. Francisco F. del Rosario, Jr. and Mr. Santiago R. Elizalde as members of the Executive Committee; and iii) delegating the following powers of the Executive Committee: i. Provide sound strategic policies and guidelines to the corporation on major capital expenditures. Establish programs that can sustain its long-term viability and strength. Periodically evaluate and monitor the implementation of such policies and strategies, including the business plans, operating budgets and managements overall performance. ii. Adopt a system of check and balance with the Board. A regular review of the effectiveness of such system shall be conducted to ensure the integrity of the decision-making and reporting processes at all times. iii. Identify key risk areas and performance indicators and monitor these factors with due diligence to enable the corporation to anticipate and prepare for possible threats to its operational and financial viability. iv. Formulate and implement policies and procedures that would ensure the integrity and transparency of related party transaction between and among the corporation and its parent company, joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children and dependent siblings and parents, and of interlocking director relationships by members of the Board. c) The appointment of Mr. Renato C. Valencia as Advisor to the Board of Directors and the Executive Committee; d) The authority of its stock transfer agent, Unionbank of the Philippines, to issue un-certificated shares of the company and the authority of the company to link with the electronic registry of PASTRA Net, Inc.; e) The approval of the budget for crop-year 2010-2011; and f) The confirmation of the authority of the company to lease a portion of the companys land in Brgy. Lumbangan, Nasugbu, Batangas to Digitel Mobile Phils., Inc.; g) The authority to open savings/current accounts with Land Bank of the Philippines Asia Tower Branch; and h) Confirmation of the various resolutions/decisions of the Executive Committee. 8. On 24 August 2010, the company disclosed: a) the resignation of Mr. Francisco F. del Rosario, Jr. as Vice Chairman from the company and as member of the Executive and Audit committees effective 1 September 2010. 9. On 29 September 2010, the company disclosed: a) The election of Mr. Renato C. Valencia as member of the Board of Directors, as member of the Executive Committee and a member of the Audit Committee of the company; b) The setting of the annual meeting of the shareholders on 24 November 2010 and fixing 15 October 2010 as the record date of the meeting; and c) The approval of the additional costs incurred in the expansion and strategic projects.

ROXAS HOLDINGS, INC. AND SUBSIDIARIES


CERTIFIED CONSOLIDATED FINANCIAL STATEMENTS WITH SUPPLEMENTARY SCHEDULES FOR THE SECURITIES AND EXCHANGE COMMISSION JUNE 30, 2010

TABLE OF CONTENTS

FIRST SECTION

Statement of Managements Responsibility for Consolidated Financial Statements Report of Independent Auditors Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements

SECOND SECTION

Supplementary Schedules Marketable Securities Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Affiliates) Non-Current Marketable Equity Securities, Other Long-Term Investments in Stocks and other Investments Indebtedness of Unconsolidated Subsidiaries and Related Parties Property, plant and equipment Accumulated depreciation Intangible Assets - Other Assets Long-Term Borrowings Indebtedness to Related Parties (Long-Term Loans from Related Companies) Guarantees of Securities of Other Issuers Share Capital

Schedule Reference A B C D E F G H I J K

FIRST SECTION

Roxas Holdings, Inc. and Subsidiaries

( AS u b s i d i a r yo f R o x a s a n dC o mp a n y , I n c . )

C o n s o l i d a t e dF i n a n c i a l S t a t e me n t s J u n e3 0 , 2 0 1 0a n d2 0 0 9 a n d I n d e p e n d e n t A u d i t o r s R e p o r t

S y C i pG o r r e s V e l a y o&C o .

S y C i pGo r r e sV e l a y o&Co . 6 7 6 0A y a l a A v e n u e 1 2 2 6Ma k a t i Ci t y P h i l i p p i n e s P h o n e :( 6 3 2 ) 8 9 10 3 0 7 F a x : ( 6 3 2 ) 8 1 90 8 7 2 w ww . s g v . c o m. p h B OA / P RCRe g . No . 0 0 0 1 S E CA c c r e d i t a t i o nNo . 0 0 1 2 F R 2

I N D E P E N D E N TA U D I T O R S R E P O R T

T h e S t o c k h o l d e r s a n d t h e B o a r d o f D i r e c t o r s R o x a s H o l d i n g s , I n c . We h a v e a u d i t e d t h e a c c o m p a n y i n g c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f R o x a s H o l d i n g s , I n c . ( a s u b s i d i a r y o f R o x a s a n d C o m p a n y , I n c . ) a n d s u b s i d i a r i e s , w h i c h c o m p r i s e t h e c o n s o l i d a t e d b a l a n c e s h e e t s a s a t J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , a n d t h e c o n s o l i d a t e d s t a t e m e n t s o f i n c o m e , c o n s o l i d a t e d s t a t e m e n t s o f c o m p r e h e n s i v e i n c o m e , c o n s o l i d a t e d s t a t e m e n t s o f c h a n g e s i n e q u i t y a n d c o n s o l i d a t e d s t a t e m e n t s o f c a s h f l o w s f o r e a c h o f t h e t h r e e y e a r s i n t h e p e r i o d e n d e d J u n e 3 0 , 2 0 1 0 , a n d a s u m m a r y o f s i g n i f i c a n t a c c o u n t i n g p o l i c i e s a n d o t h e r e x p l a n a t o r y n o t e s . T h e f i n a n c i a l s t a t e m e n t s o f H a w a i i a n P h i l i p p i n e C o m p a n y ( H P C o ) , 4 5 . 0 9 %o w n e d a s s o c i a t e a c c o u n t e d f o r u n d e r e q u i t y m e t h o d , w e r e a u d i t e d b y o t h e r a u d i t o r s w h o s e r e p o r t w a s f u r n i s h e d t o u s , a n d o u r o p i n i o n o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , i n s o f a r a s i t r e l a t e s t o t h e a m o u n t s i n c l u d e d f o r H P C o , i s b a s e d s o l e l y o n t h e r e p o r t o f t h e o t h e r a u d i t o r s . R o x a s H o l d i n g s , I n c . s i n v e s t m e n t i n H P C o r e p r e s e n t s 3 . 9 4 %a n d 4 . 1 2 % o f t h e c o n s o l i d a t e d t o t a l a s s e t s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , a n d i t s s h a r e i n H P C o s n e t i n c o m e i n 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 r e p r e s e n t s 2 . 1 3 %, 1 . 3 6 %a n d 1 . 1 5 %o f t h e c o n s o l i d a t e d r e v e n u e a n d 4 2 . 4 7 %, 5 5 . 8 2 %a n d 1 5 . 3 2 %o f t h e c o n s o l i d a t e d n e t i n c o m e , r e s p e c t i v e l y . Ma n a g e me n t s R e s p o n s i b i l i t y f o r t h e C o n s o l i d a t e dF i n a n c i a l S t a t e me n t s Ma n a g e m e n t i s r e s p o n s i b l e f o r t h e p r e p a r a t i o n a n d f a i r p r e s e n t a t i o n o f t h e s e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n a c c o r d a n c e w i t h P h i l i p p i n e F i n a n c i a l R e p o r t i n g S t a n d a r d s . T h i s r e s p o n s i b i l i t y i n c l u d e s : d e s i g n i n g , i m p l e m e n t i n g a n d m a i n t a i n i n g i n t e r n a l c o n t r o l r e l e v a n t t o t h e p r e p a r a t i o n a n d f a i r p r e s e n t a t i o n o f c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s t h a t a r e f r e e f r o mm a t e r i a l m i s s t a t e m e n t , w h e t h e r d u e t o f r a u d o r e r r o r ; s e l e c t i n g a n d a p p l y i n g a p p r o p r i a t e a c c o u n t i n g p o l i c i e s ; a n d m a k i n g a c c o u n t i n g e s t i m a t e s t h a t a r e r e a s o n a b l e i n t h e c i r c u m s t a n c e s . A u d i t o r s R e s p o n s i b i l i t y O u r r e s p o n s i b i l i t y i s t o e x p r e s s a n o p i n i o n o n t h e s e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s b a s e d o n o u r a u d i t s . We c o n d u c t e d o u r a u d i t s i n a c c o r d a n c e w i t h P h i l i p p i n e S t a n d a r d s o n A u d i t i n g . T h o s e s t a n d a r d s r e q u i r e t h a t w e c o m p l y w i t h e t h i c a l r e q u i r e m e n t s a n d p l a n a n d p e r f o r mt h e a u d i t t o o b t a i n r e a s o n a b l e a s s u r a n c e w h e t h e r t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a r e f r e e f r o mm a t e r i a l m i s s t a t e m e n t .

Am e m b e r f i r mo f E r n s t &Y o u n g Gl o b a l L i m i t e d

* S G V M C 3 1 0 9 6 2 *

2 A n a u d i t i n v o l v e s p e r f o r m i n g p r o c e d u r e s t o o b t a i n a u d i t e v i d e n c e a b o u t t h e a m o u n t s a n d d i s c l o s u r e s i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . T h e p r o c e d u r e s s e l e c t e d d e p e n d o n t h e a u d i t o r s j u d g m e n t , i n c l u d i n g t h e a s s e s s m e n t o f t h e r i s k s o f m a t e r i a l m i s s t a t e m e n t o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , w h e t h e r d u e t o f r a u d o r e r r o r . I n m a k i n g t h o s e r i s k a s s e s s m e n t s , t h e a u d i t o r c o n s i d e r s i n t e r n a l c o n t r o l r e l e v a n t t o t h e e n t i t y s p r e p a r a t i o n a n d f a i r p r e s e n t a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n o r d e r t o d e s i g n a u d i t p r o c e d u r e s t h a t a r e a p p r o p r i a t e i n t h e c i r c u m s t a n c e s , b u t n o t f o r t h e p u r p o s e o f e x p r e s s i n g a n o p i n i o n o n t h e e f f e c t i v e n e s s o f t h e e n t i t y s i n t e r n a l c o n t r o l . A n a u d i t a l s o i n c l u d e s e v a l u a t i n g t h e a p p r o p r i a t e n e s s o f a c c o u n t i n g p o l i c i e s u s e d a n d t h e r e a s o n a b l e n e s s o f a c c o u n t i n g e s t i m a t e s m a d e b y m a n a g e m e n t , a s w e l l a s e v a l u a t i n g t h e o v e r a l l p r e s e n t a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . We b e l i e v e t h a t t h e a u d i t e v i d e n c e w e h a v e o b t a i n e d a n d t h e r e p o r t o f t h e o t h e r a u d i t o r s a r e s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d e a b a s i s f o r o u r a u d i t o p i n i o n . O p i n i o n I n o u r o p i n i o n , b a s e d o n o u r a u d i t s a n d t h e r e p o r t o f t h e o t h e r a u d i t o r s , t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s p r e s e n t f a i r l y , i n a l l m a t e r i a l r e s p e c t s , t h e f i n a n c i a l p o s i t i o n o f R o x a s H o l d i n g s , I n c . a n d s u b s i d i a r i e s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , a n d t h e i r f i n a n c i a l p e r f o r m a n c e a n d t h e i r c a s h f l o w s f o r e a c h o f t h e t h r e e y e a r s i n t h e p e r i o d e n d e d J u n e 3 0 , 2 0 1 0 i n a c c o r d a n c e w i t h P h i l i p p i n e F i n a n c i a l R e p o r t i n g S t a n d a r d s . S Y C I PG O R R E SV E L A Y O&C O .

J o s e p h i n e H . E s t o m o P a r t n e r C P AC e r t i f i c a t e N o . 4 6 3 4 9 S E CA c c r e d i t a t i o n N o . 0 0 7 8 A R 2 T a x I d e n t i f i c a t i o n N o . 1 0 2 0 8 6 2 0 8 P T RN o . 2 0 8 7 5 3 4 , J a n u a r y 4 , 2 0 1 0 , Ma k a t i C i t y S e p t e m b e r 2 9 , 2 0 1 0

* S G V M C 3 1 0 9 6 2 *

R O X A SH O L D I N G S , I N C .

( AS u b s i d i a r y o f R o x a s a n dC o mp a n y , I n c . )

A N DS U B S I D I A R I E S C O N S O L I D A T E DB A L A N C ES H E E T S
( A m o u n t s i n T h o u s a n d s )

2 0 1 0 A S S E T S C u r r e n t A s s e t s C a s h a n d c a s h e q u i v a l e n t s ( N o t e s 4 a n d 2 6 ) R e c e i v a b l e s ( N o t e s 5 , 1 4 a n d 2 6 ) I n v e n t o r i e s ( N o t e 6 ) P r e p a y m e n t s a n d o t h e r c u r r e n t a s s e t s ( N o t e 7 ) T o t a l C u r r e n t A s s e t s N o n c u r r e n t A s s e t s P r o p e r t y , p l a n t a n d e q u i p m e n t ( N o t e s 9 a n d 1 3 ) : A t c o s t A t a p p r a i s e d v a l u e s I n v e s t m e n t i n s h a r e s o f s t o c k o f a n a s s o c i a t e ( N o t e 8 ) N e t p e n s i o n p l a n a s s e t s ( N o t e 1 5 ) D e f e r r e d i n c o m e t a x a s s e t s n e t ( N o t e 2 2 ) O t h e r n o n c u r r e n t a s s e t s ( N o t e s 5 a n d 1 3 ) T o t a l N o n c u r r e n t A s s e t s T O T A LA S S E T S L I A B I L I T I E SA N DE Q U I T Y C u r r e n t L i a b i l i t i e s S h o r t t e r mb o r r o w i n g s ( N o t e s 1 0 a n d 2 6 ) A c c o u n t s p a y a b l e a n d a c c r u e d e x p e n s e s ( N o t e s 1 1 a n d 2 6 ) C u s t o m e r s d e p o s i t s ( N o t e s 1 2 a n d 2 6 ) D i v i d e n d s p a y a b l e ( N o t e s 2 3 a n d 2 6 ) C u r r e n t p o r t i o n o f l o n g t e r mb o r r o w i n g s ( N o t e s 9 , 1 3 a n d 2 6 ) T o t a l C u r r e n t L i a b i l i t i e s N o n c u r r e n t L i a b i l i t i e s L o n g t e r mb o r r o w i n g s n e t o f c u r r e n t p o r t i o n ( N o t e s 9 , 1 3 a n d 2 6 ) N e t p e n s i o n b e n e f i t o b l i g a t i o n ( N o t e 1 5 ) D e f e r r e d i n c o m e t a x l i a b i l i t i e s n e t ( N o t e 2 2 ) T o t a N o n c u r r e n t L i a b i l i t i l e s T o t a l L i a b i l i t i e s ( F o r w a r d ) P = 2 , 4 4 9 , 9 0 4 6 0 8 , 6 7 3 1 2 3 , 1 0 9 1 6 , 0 6 9 5 1 , 7 2 4 3 , 2 4 9 , 4 7 9 P = 1 7 6 , 8 2 7 8 3 2 , 8 0 0 1 , 8 7 3 , 1 3 7 2 2 9 , 1 1 7 3 , 1 1 1 , 8 8 1

J u n e 3 0

2 0 0 9

= P 2 8 6 , 6 6 2 1 , 0 8 7 , 1 8 8 1 , 5 8 8 , 5 0 9 1 5 2 , 1 9 9 3 , 1 1 4 , 5 5 8

9 , 2 9 7 , 2 3 7 2 , 4 8 5 , 0 0 1 6 1 8 , 3 2 2 1 4 0 , 4 5 5 4 , 9 7 7 2 7 , 3 4 2 1 2 , 5 7 3 , 3 3 4 P = 1 5 , 6 8 5 , 2 1 5

7 , 1 4 4 , 7 1 1 2 , 5 1 7 , 6 6 0 5 5 7 , 4 3 2 1 4 2 , 5 5 2 4 4 , 7 5 6 1 0 , 4 0 7 , 1 1 1 = P 1 3 , 5 2 1 , 6 6 9

= P 2 , 9 3 7 , 0 0 0 7 7 9 , 5 3 0 1 8 5 , 8 1 3 4 1 , 0 7 4 3 , 9 4 3 , 4 1 7

5 , 6 8 2 , 5 8 4 4 1 , 0 9 7 7 2 5 , 1 5 0 6 , 4 4 8 , 8 3 1 9 , 6 9 8 , 3 1 0

3 , 0 7 5 , 9 7 3 7 4 , 2 1 0 7 1 1 , 4 6 5 3 , 8 6 1 , 6 4 8 7 , 8 0 5 , 0 6 5

* S G V M C 3 1 0 9 6 2 *

2 J u n e 3 0

2 0 1 0 E q u i t y ( N o t e 2 3 ) A t t r i b u t a b l e t o t h e e q u i t y h o l d e r s o f t h eP a r e n t C o m p a n y : S h a r e c a p i t a l S h a r e p r e m i u m E x c e s s o f c o n s i d e r a t i o n r e c e i v e d f r o mp a r e n t c o m p a n y o v e r c a r r y i n g a m o u n t o f d i s p o s e d s u b s i d i a r y ( N o t e 2 3 ) E f f e c t o f c h a n g e i n o w n e r s h i p i n t e r e s t s i n s u b s i d i a r i e s ( N o t e 2 3 ) R e v a l u a t i o n i n c r e m e n t o n p r o p e r t i e s ( N o t e 2 3 ) S h a r e i n r e v a l u a t i o n i n c r e m e n t o n l a n d o f a n a s s o c i a t e ( N o t e 8 ) R e t a i n e d e a r n i n g s ( N o t e 2 3 ) T r e a s u r y s h a r e s a t c o s t N o n c o n t r o l l i n g i n t e r e s t s ( N o t e 2 3 ) T o t a l E q u i t y T O T A LL I A B I L I T I E SA N DE Q U I T Y
S e e a c c o m p a n y i n g N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s .

2 0 0 9

P = 1 , 1 6 8 , 9 7 6 5 5 4 , 9 6 0 5 7 7 , 1 4 8 4 4 , 5 6 7 1 , 4 1 2 , 8 3 4 2 0 7 , 4 9 2 2 , 7 4 9 , 1 2 7 ( 7 6 8 , 8 6 0 ) 5 , 9 4 6 , 2 4 4 4 0 , 6 6 1 5 , 9 8 6 , 9 0 5 P = 1 5 , 6 8 5 , 2 1 5

= P 1 , 1 6 8 , 9 7 6 5 5 4 , 9 6 0 5 7 7 , 1 4 8 4 4 , 5 6 7 1 , 4 4 4 , 6 6 0 2 0 7 , 4 9 2 2 , 4 4 1 , 4 2 9 ( 7 6 8 , 8 6 0 ) 5 , 6 7 0 , 3 7 2 4 6 , 2 3 2 5 , 7 1 6 , 6 0 4 = P 1 3 , 5 2 1 , 6 6 9

* S G V M C 3 1 0 9 6 2 *

R O X A SH O L D I N G S , I N C .

( AS u b s i d i a r y o f R o x a s a n dC o mp a n y , I n c . )

A N DS U B S I D I A R I E S C O N S O L I D A T E DS T A T E ME N T SO FI N C O ME

( A m o u n t s i n T h o u s a n d s , E x c e p t B a s i c / D i l u t e dE a r n i n g s p e r S h a r e )

2 0 1 0 R E V E N U E( N o t e 1 7 ) C O S TO FS A L E S( N o t e 1 8 ) G R O S SP R O F I T S e l l i n g e x p e n s e s G e n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s ( N o t e 1 9 ) E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e ( N o t e 8 ) I n t e r e s t e x p e n s e ( N o t e s 1 0 a n d 1 3 ) I n t e r e s t i n c o m e ( N o t e 4 ) O t h e r i n c o m e n e t ( N o t e 2 1 ) I N C O MEB E F O R EI N C O MET A X P R O V I S I O NF O RI N C O MET A X( N o t e 2 2 ) C u r r e n t D e f e r r e d N E TI N C O ME A t t r i b u t a b l e t o : E q u i t y h o l d e r s o f t h e P a r e n t C o m p a n y N o n c o n t r o l l i n g i n t e r e s t s B A S I C / D I L U T E DE A R N I N G SP E RS H A R E ( N o t e 2 4 )


S e e a c c o m p a n y i n g N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s .

Y e a r s E n d e dJ u n e 3 0 2 0 0 9 2 0 0 8 = P 5 , 8 6 4 , 6 1 8 4 , 9 7 9 , 1 3 7 8 8 5 , 4 8 1 ( 3 6 , 7 0 0 ) ( 5 6 0 , 2 3 3 ) 7 9 , 5 6 4 ( 1 3 3 , 3 3 4 ) 7 , 4 3 8 7 5 , 7 0 3 3 1 7 , 9 1 9 1 3 8 , 5 2 5 3 6 , 8 6 5 1 7 5 , 3 9 0 = P 1 4 2 , 5 2 9 P = 1 8 0 , 2 4 9 ( 3 7 , 7 2 0 ) = P 1 4 2 , 5 2 9 = P 0 . 2 0 = P 6 , 0 7 7 , 5 4 4 4 , 9 4 2 , 5 7 3 1 , 1 3 4 , 9 7 1 ( 3 4 , 3 1 2 ) ( 5 0 8 , 6 6 4 ) 6 9 , 7 3 9 ( 6 0 , 0 8 0 ) 1 1 , 6 8 3 5 2 , 6 1 7 6 6 5 , 9 5 4 1 7 8 , 7 7 2 3 2 , 0 2 2 2 1 0 , 7 9 4 = P 4 5 5 , 1 6 0 = P 4 1 0 , 0 1 5 4 5 , 1 4 5 = P 4 5 5 , 1 6 0 = P 0 . 3 9

P = 6 , 2 0 2 , 9 6 7 5 , 3 0 2 , 7 4 0 9 0 0 , 2 2 7 ( 2 4 , 5 8 5 ) ( 5 9 5 , 6 9 0 ) 1 3 2 , 2 6 3 ( 3 1 9 , 4 8 0 ) 5 , 7 1 0 2 9 6 , 6 5 1 3 9 5 , 0 9 6 5 4 , 6 6 0 2 8 , 9 9 6 8 3 , 6 5 6 P = 3 1 1 , 4 4 0 P = 3 0 7 , 6 9 8 3 , 7 4 2 P = 3 1 1 , 4 4 0 P = 0 . 3 4

* S G V M C 3 1 0 9 6 2 *

R O X A SH O L D I N G S , I N C .

( AS u b s i d i a r y o f R o x a s a n dC o mp a n y , I n c . )

A N DS U B S I D I A R I E S C O N S O L I D A T E DS T A T E ME N T SO FC OMP R E H E N S I V EI N C O ME
( A m o u n t s i n T h o u s a n d s )

2 0 1 0 N E TI N C O ME O T H E RC O MP R E H E N S I V EI N C O ME( L O S S ) I n c r e a s e ( d e c r e a s e ) i n r e v a l u a t i o n i n c r e m e n t o n p r o p e r t y , p l a n t a n d e q u i p m e n t ( N o t e 9 ) I n c o m e t a x e f f e c t T O T A LC O MP R E H E N S I V EI N C O ME
A t t r i b u t a b l e t o : E q u i t y h o l d e r s o f t h e p a r e n t N o n c o n t r o l l i n g i n t e r e s t s

Y e a r s E n d e dJ u n e 3 0 2 0 0 9 2 0 0 8 = P 1 4 2 , 5 2 9 = P 4 5 5 , 1 6 0

P = 3 1 1 , 4 4 0

( 5 8 , 7 5 6 ) 1 7 , 6 2 7 ( 4 1 , 1 2 9 ) P = 2 7 0 , 3 1 1 P = 2 7 5 , 8 7 3 ( 5 , 5 6 2 ) P = 2 7 0 , 3 1 1

= P 1 4 2 , 5 2 9 P = 1 8 0 , 2 4 9 ( 3 7 , 7 2 0 ) = P 1 4 2 , 5 2 9

5 3 1 , 1 7 7 ( 1 5 9 , 3 5 3 ) 3 7 1 , 8 2 4 = P 8 2 6 , 9 8 4 = P 7 8 1 , 8 3 9 4 5 , 1 4 5 = P 8 2 6 , 9 8 4

S e e a c c o m p a n y i n g N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s .

* S G V M C 3 1 0 9 6 2 *

R O X A SH O L D I N G S , I N C .

( AS u b s i d i a r y o f R o x a s a n dC o mp a n y , I n c . )

A N DS U B S I D I A R I E S C O N S O L I D A T E DS T A T E ME N T SO FC A S HF L O WS
( A m o u n t s i n T h o u s a n d s )

Y e a r s E n d e dJ u n e 3 0 2 0 0 9 2 0 1 0 C A S HF L O WSF R O MO P E R A T I N GA C T I V I T I E S I n c o m e b e f o r e i n c o m e t a x A d j u s t m e n t s f o r : D e p r e c i a t i o n ( N o t e s 9 , 1 8 a n d 1 9 ) L o s s ( g a i n ) o n d i s p o s a l o f p r o p e r t y a n d e q u i p m e n t E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e ( N o t e 8 ) C h a n g e s i n f a i r v a l u e o f b i o l o g i c a l a s s e t s ( N o t e 7 ) I n t e r e s t i n c o m e ( N o t e s 4 a n d 5 ) I n t e r e s t e x p e n s e ( N o t e s 1 0 a n d 1 3 ) Mo v e m e n t i n n e t p e n s i o n p l a n a s s e t s N e t c a s h f r o mo p e r a t i o n s b e f o r e w o r k i n g c a p i t a l c h a n g e s D e c r e a s e ( i n c r e a s e ) i n : R e c e i v a b l e s I n v e n t o r i e s P r e p a y m e n t s a n d o t h e r c u r r e n t a s s e t s I n c r e a s e ( d e c r e a s e ) i n : A c c o u n t s p a y a b l e a n d a c c r u e d e x p e n s e s C u s t o m e r s d e p o s i t s C a s h g e n e r a t e d f r o mo p e r a t i o n s I n t e r e s t r e c e i v e d I n c o m e t a x e s p a i d , i n c l u d i n g c r e d i t a b l e w i t h h o l d i n g a n d f i n a l t a x e s N e t c a s h f r o mo p e r a t i n g a c t i v i t i e s C A S HF L O WSF R O MI N V E S T I N GA C T I V I T I E S A d d i t i o n s t o p r o p e r t y , p l a n t a n d e q u i p m e n t ( N o t e 9 ) P r o c e e d s f r o ms a l e o f p r o p e r t y , p l a n t a n d e q u i p m e n t D i v i d e n d s r e c e i v e d ( N o t e 8 ) D i s p o s a l o f ( a d d i t i o n s t o ) o t h e r n o n c u r r e n t a s s e t s N e t c a s h u s e d i n i n v e s t i n g a c t i v i t i e s ( F o r w a r d ) P = 3 9 5 , 0 9 6 4 0 7 , 0 2 5 ( 9 7 2 ) ( 1 3 2 , 2 6 3 ) ( 3 , 5 3 1 ) ( 5 , 7 1 0 ) 3 1 9 , 4 8 0 ( 3 1 , 0 1 6 ) 9 4 8 , 1 0 9 2 5 4 , 3 8 8 ( 2 8 4 , 6 2 8 ) ( 4 2 , 5 7 3 ) ( 2 7 1 , 1 3 3 ) ( 6 2 , 7 0 4 ) 5 4 1 , 4 5 9 5 , 7 1 0 ( 8 5 , 4 7 5 ) 4 6 1 , 6 9 4 = P 3 1 7 , 9 1 9 3 0 4 , 4 2 6 9 , 8 7 8 ( 7 9 , 5 6 4 ) 5 , 9 9 5 ( 7 , 4 3 8 ) 1 3 3 , 3 3 4 ( 1 2 , 0 8 9 ) 6 7 2 , 4 6 1 ( 2 8 4 , 5 7 6 ) ( 1 2 0 , 6 0 2 ) ( 7 8 , 8 2 2 ) 1 9 4 , 7 4 7 ( 2 9 , 5 0 0 ) 3 5 3 , 7 0 8 7 , 4 3 8 ( 2 7 2 , 0 6 1 ) 8 9 , 0 8 5

2 0 0 8

= P 6 6 5 , 9 5 4 3 2 8 , 1 0 3 ( 6 9 , 7 3 9 ) ( 5 , 9 4 0 ) ( 1 1 , 6 8 3 ) 6 0 , 0 8 0 ( 6 , 2 8 3 ) 9 6 0 , 4 9 2 2 1 8 , 6 9 7 2 7 , 8 5 8 ( 7 3 , 0 1 6 ) 8 7 , 7 3 8 1 3 0 , 0 2 9 1 , 3 5 1 , 7 9 8 1 1 , 6 8 3 ( 2 1 7 , 5 1 3 ) 1 , 1 4 5 , 9 6 8

3 , 4 1 8 , 7 2 8 ) ( 2 , 1 2 5 , 6 3 0 ) ( 2 , 5 3 8 , 6 2 8 ) ( 2 2 , 0 2 8 1 0 , 6 4 9 5 , 8 0 5 6 8 , 5 2 0 6 8 , 8 0 5 7 1 , 3 7 3 1 1 , 1 5 8 ( 9 , 6 1 4 ) ( 5 2 1 ) 3 , 3 1 7 , 0 2 2 ) ( 2 , 0 5 5 , 7 9 0 ) 2 , 4 6 1 , ( 9 7 1 ) (

* S G V M C 3 1 0 9 6 2 *

2 Y e a r s E n d e dJ u n e 3 0 2 0 0 9 2 0 1 0 C A S HF L O WSF R O MF I N A N C I N GA C T I V I T I E S N e t p r o c e e d s f r o m( p a y m e n t s o f ) s h o r t t e r mb o r r o w i n g s ( N o t e 1 0 ) P r o c e e d s f r o ml o n g t e r mb o r r o w i n g s ( N o t e 1 3 ) P a y m e n t s o f l o n g t e r mb o r r o w i n g s ( N o t e 1 3 ) I n t e r e s t p a i d D e b t c o m m i t m e n t f e e s p a i d D i v i d e n d s p a i d ( N o t e 2 3 ) R e a c q u i s i t i o n o f s h a r e s o f s t o c k b y t h e C o m p a n y ( N o t e 2 3 ) R e a c q u i s i t i o n o f s h a r e s o f s t o c k b y s u b s i d i a r i e s ( N o t e 2 3 ) N e t c a s h f r o mf i n a n c i n g a c t i v i t i e s N E TD E C R E A S EI NC A S HA N D C A S HE Q U I V A L E N T SF O RT H EY E A R C A S HA N DC A S HE Q U I V A L E N T SA T B E G I N N I N GO FY E A R C A S HA N DC A S HE Q U I V A L E N T SA T E N DO FY E A R( N o t e 4 )
S e e a c c o m p a n y i n g N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s .

2 0 0 8

P 2 , 2 3 4 , 4 4 8 ( P = 4 8 7 , 0 9 6 ) = 1 , 2 4 9 , 0 0 0 2 , 6 7 1 , 0 0 0 ( 1 3 , 3 3 3 ) ( 1 1 7 , 4 9 6 ) ( 2 6 8 , 4 4 7 ) ( 1 5 9 , 1 4 0 ) ( 2 5 , 0 0 5 ) ( 1 0 ) 1 , 8 9 0 , 4 4 2 ( 1 0 9 , 8 3 5 ) 2 8 6 , 6 6 2 P = 1 7 6 , 8 2 7 ( 2 9 , 1 4 3 ) ( 1 0 ) 3 , 1 6 4 , 3 2 6 ( 6 3 , 6 1 1 ) 3 5 0 , 2 7 3 = P 2 8 6 , 6 6 2

= P 3 9 7 , 0 0 0 1 , 8 5 0 , 0 0 0 ( 5 8 0 , 1 1 5 ) ( 5 7 , 7 8 3 ) ( 6 0 , 3 0 6 ) ( 1 5 1 , 7 4 4 ) ( 6 7 5 , 9 4 0 ) ( 3 , 9 3 8 ) 7 1 7 , 1 7 4 ( 1 9 2 , 6 4 8 ) 5 4 2 , 9 2 1 = P 3 5 0 , 2 7 3

* S G V M C 3 1 0 9 6 2 *

R O X A SH O L D I N G S , I N C .

( AS u b s i d i a r y o f R o x a s a n dC o mp a n y , I n c . )

A N DS U B S I D I A R I E S N O T E ST OC O N S O L I D A T E DF I N A N C I A LS T A T E ME N T S

1 .C o r p o r a t e I n f o r ma t i o n , S t a t u s o f O p e r a t i o n s a n dC o r p o r a t e R e o r g a n i z a t i o n s a n dA p p r o v a l o f t h e C o n s o l i d a t e dF i n a n c i a l S t a t e me n t s C o r p o r a t e I n f o r m a t i o n R o x a s H o l d i n g s , I n c . ( R H I o r t h e C o m p a n y ) w a s o r g a n i z e di nt h eP h i l i p p i n e s a n dr e g i s t e r e d w i t ht h eP h i l i p p i n eS e c u r i t i e sa n dE x c h a n g eC o m m i s s i o n( S E C ) o nO c t o b e r 3 0 , 1 9 3 0f o r t h e p u r p o s eo f o p e r a t i n gm i l l a n dr e f i n e r yf a c i l i t i e s t om a n u f a c t u r es u g a r a n da l l i e dp r o d u c t s .O n N o v e m b e r 1 , 1 9 8 0 , t h e C o m p a n y s c o r p o r a t e l i f e w a s e x t e n d e d f o r a n o t h e r 5 0 y e a r s u n t i l 2 0 3 0 . I nJ u l y 1 9 9 6 , t h e C o m p a n yo f f e r e di t s s h a r e s t o t h e p u b l i c t h r o u g h a ni n i t i a l p u b l i c o f f e r i n g .O n A u g u s t 8 , 1 9 9 6 , t h e C o m p a n y s s h a r e s o f s t o c k w e r e l i s t e d i n t h e P h i l i p p i n e S t o c k E x c h a n g e . A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , t h eC o m p a n yi s6 5 . 7 0 %o w n e db yR o x a sa n dC o m p a n y , I n c . ( R C I ) , ap u b l i c l yl i s t e dc o m p a n yi n c o r p o r a t e da n dd o m i c i l e di nt h eP h i l i p p i n e s .P r i o r t ot h e m e r g e r e f f e c t i v e J u n e 2 9 , 2 0 0 9 a s d i s c u s s e d b e l o w , t h e C o m p a n y w a s 6 5 . 1 2 %o w n e d b y R o x a s & C o m p a n y , I n c . , ac o m p a n yi n c o r p o r a t e da n dd o m i c i l e di nt h eP h i l i p p i n e s .T h eC o m p a n yh a s 2 , 3 3 0 , 2 , 3 5 6 a n d 2 , 3 9 3 e q u i t y h o l d e r s a s o f J u n e 3 0 , 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y . T h eC o m p a n y sc o r p o r a t eo f f i c ei sl o c a t e da tt h e6 t hF l o o r , C a c h o G o n z a l e sB u i l d i n g , 1 0 1 A g u i r r eS t r e e t , L e g a s p i V i l l a g e , Ma k a t i C i t y , w h i l et h em a n u f a c t u r i n gp l a n t so fi t so p e r a t i n g s u b s i d i a r i e s( s e eN o t e2 7 ) a r ei nB a r r i oL u m b a n g a n , N a s u g b u , B a t a n g a sa n dB a r r i oC o n s u e l o , L a C a r l o t a C i t y , N e g r o s O c c i d e n t a l . S t a t u s o f O p e r a t i o n s a n d C o r p o r a t e R e o r g a n i z a t i o n s F o l l o w i n gt h e R e o r g a n i z a t i o nP r o g r a ma p p r o v e db yt h e P h i l i p p i n e S E Co nD e c e m b e r 1 1 , 2 0 0 1 , R H Ih a sb e e nt r a n s f o r m e di n t oad i v e r s i f i e dh o l d i n ga n di n v e s t m e n tc o r p o r a t i o n ,w h i l ei t s s u b s i d i a r y , C A D PG r o u p C o r p o r a t i o n ( C A D P G C ) , e m e r g e d a s a h o l d i n g a n d i n v e s t m e n t c o m p a n y w i t hs p e c i f i cf o c u so ns u g a rm i l l i n ga n dr e f i n i n gb u s i n e s s .T h es u g a rm i l l i n ga n dr e f i n e r y b u s i n e s so f t h eC o m p a n yi nN a s u g b u , B a t a n g a s w a s s p u n o f f t oC e n t r a l A z u c a r e r aD o nP e d r o , I n c . ( C A D P I ) o nD e c e m b e r 1 , 2 0 0 2( s e e N o t e 2 3 b ) .S u b s e q u e n t l y , t h e C o m p a n ye x c h a n g e di t s s h a r e h o l d i n g s i nC A D P I , C A D PC o n s u l t a n c yS e r v i c e s , I n c . ( C C S I ) a n dC A D PF a r m s S e r v i c e s , I n c . ( C F S I ) f o r1 . 3b i l l i o no f C A D P G C sc o m m o ns h a r e sw i t hap a rv a l u eo f = P 1p e rs h a r e . C A D P I , C C S I a n d C F S I b e c a m e 1 0 0 %s u b s i d i a r i e s o f C A D P G C , w h i l e R H I s o w n e r s h i pi n t e r e s t i nC A D P G Ci n c r e a s e df r o m7 3 . 1 7 %t o9 5 . 7 8 %. T h e9 5 . 7 8 %e q u i t yo w n e r s h i po f R H I o v e r C A D P G Cr e d u c e d t o 8 9 . 2 8 %f o l l o w i n g t h e d e c l a r a t i o n o f p r o p e r t y d i v i d e n d s t o i t s s h a r e h o l d e r s . I n 2 0 0 8 , R H I i n c r e a s e d i t s e q u i t yo w n e r s h i pi n C A D P G Ct o 8 9 . 3 6 %w h e n C A D P G Cr e a c q u i r e d p o r t i o no f i t s s h a r e s ( s e eN o t e2 3 f ) .O nD e c e m b e r 1 6 , 2 0 0 8 , R H I a c q u i r e dC A D P G C s s u g a r r e l a t e d o p e r a t i n g s u b s i d i a r i e s [ C A D P I , C e n t r a l A s u c a r e r a d e l a C a r l o t a , I n c . ( C A C I ) , C F S I , C C S I , J a d eO r i e n tMa n a g e m e n tS e r v i c e s ,I n c .( J O MS I ) ,N a j a l i nA g r i V e n t u r e s ,I n c .( N A V I ) ]a n d a s s o c i a t e[ H a w a i i a n P h i l i p p i n eC o m p a n y( H P C o ) ] , a sw e l l a sc e r t a i na s s e t sa n dl i a b i l i t i e so f C A D P G Cf o rat o t a l c o n s i d e r a t i o no f= P 3 , 8 3 8 . 0m i l l i o n .O nJ a n u a r y2 3 , 2 0 0 9 , R H Is o l di t s i n v e s t m e n t i n C A D P G Ct o R o x a s &C o m p a n y , I n c . f o r = P 3 , 9 2 7 . 3 m i l l i o n ( s e e N o t e 2 3 c ) .

* S G V M C 3 1 0 9 6 2 *

2 E f f e c t i v e J u n e 2 9 , 2 0 0 9 , u p o na p p r o v a l o f P h i l i p p i n e S E Co nJ u n e 2 3 , 2 0 0 9 , C A D P G Cm e r g e d w i t h R C I , w i t h C A D P G Ca s t h e s u r v i v i n g e n t i t y , t h r o u g h a s h a r e s w a p w h e r e i n 1 1 . 7 1 C A D P G C s s h a r e s o f s t o c k w e r e e x c h a n g e d f o r e v e r y s h a r e o f s t o c k o f R C I . O n t h e s a m e d a t e , P h i l i p p i n e S E C a p p r o v e d t h e c h a n g e i n C A D P G C s c o r p o r a t e n a m e t o R o x a s a n d C o m p a n y , I n c . A p p r o v a l o f t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 a n d f o r e a c h o f t h e t h r e e y e a r s i n t h e p e r i o d e n d e d J u n e 3 0 , 2 0 1 0 h a v e b e e n a p p r o v e d a n d a u t h o r i z e d f o r i s s u e b y t h e C o m p a n y s B O Do n S e p t e m b e r 2 9 , 2 0 1 0 . 2 .S u mma r y o f S i g n i f i c a n t A c c o u n t i n g a n dF i n a n c i a l R e p o r t i n g P o l i c i e s B a s i s o f P r e p a r a t i o n a n d S t a t e m e n t o f C o m p l i a n c e T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e C o m p a n y a n d s u b s i d i a r i e s ( c o l l e c t i v e l y r e f e r r e d t o a s t h eG r o u p ) h a v eb e e np r e p a r e di na c c o r d a n c ew i t hP h i l i p p i n eF i n a n c i a l R e p o r t i n gS t a n d a r d s ( P F R S ) .T h et e r mP F R S ,i ng e n e r a l ,i n c l u d e sa l la p p l i c a b l eP F R S ,P h i l i p p i n eA c c o u n t i n g S t a n d a r d s( P A S ) ,a n di n t e r p r e t a t i o n so ft h eS t a n d i n gI n t e r p r e t a t i o n sC o m m i t t e e ,P h i l i p p i n e I n t e r p r e t a t i o n sC o m m i t t e ea n dI n t e r n a t i o n a lF i n a n c i a lR e p o r t i n gI n t e r p r e t a t i o n sC o m m i t t e e ( I F R I C ) w h i c hh a v e b e e na p p r o v e db yt h e P h i l i p p i n e F i n a n c i a l R e p o r t i n gS t a n d a r d s C o u n c i l a n d a d o p t e d b y t h e P h i l i p p i n e S E C . T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s h a v e b e e n p r e p a r e d u s i n g t h e h i s t o r i c a l c o s t b a s i s , e x c e p t f o r l a n d , w h i c hi s s t a t e da t r e v a l u e da m o u n t s a n dc o n s u m a b l e b i o l o g i c a l a s s e t s w h i c ha r e c a r r i e da t f a i r v a l u e , a n d a r e p r e s e n t e di n P h i l i p p i n e p e s o , t h e C o m p a n y s f u n c t i o n a l c u r r e n c y , a n d r o u n d e d t o t h e n e a r e s t t h o u s a n d s , e x c e p t w h e n o t h e r w i s e i n d i c a t e d . T h e p r e p a r a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n a c c o r d a n c e w i t h P F R Sr e q u i r e s t h e u s e o f c r i t i c a l a c c o u n t i n ge s t i m a t e s . I t a l s or e q u i r e s m a n a g e m e n t t oe x e r c i s e j u d g m e n t i nt h e p r o c e s s o f a p p l y i n gt h e G r o u p s a c c o u n t i n gp o l i c i e s . T h e a r e a s i n v o l v i n ga h i g h e r d e g r e e o f j u d g m e n t o r c o m p l e x i t y , o r a r e a s w h e r e a s s u m p t i o n s a n d e s t i m a t e s a r e s i g n i f i c a n t t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a r e d i s c l o s e d i n N o t e 3 . C h a n g e s i n A c c o u n t i n g P o l i c i e s T h e a c c o u n t i n gp o l i c i e s a d o p t e da r e c o n s i s t e n t w i t ht h o s e o f t h e p r e v i o u s f i n a n c i a l y e a r s e x c e p t f o r t h e a d o p t i o n o f t h e f o l l o w i n g n e wa n d r e v i s e d s t a n d a r d s , a m e n d m e n t s t o e x i s t i n g s t a n d a r d s a n d n e wa n d a m e n d m e n t s t o P h i l i p p i n e I n t e r p r e t a t i o n w h i c h b e c a m e e f f e c t i v e J u l y 1 , 2 0 0 9 .  A m e n d m e n t t o P A S1 , P r e s e n t a t i o no f F i n a n c i a l S t a t e m e n t s , s e p a r a t e s o w n e r a n dn o n o w n e r c h a n g e s i ne q u i t y .T h e s t a t e m e n t o f c h a n g e s i ne q u i t yi n c l u d e s o n l yd e t a i l s o f t r a n s a c t i o n s w i t ho w n e r s ,w i t hn o n o w n e rc h a n g e si ne q u i t yp r e s e n t e di nar e c o n c i l i a t i o no fe a c h c o m p o n e n t o f e q u i t y .I na d d i t i o n , t h es t a n d a r di n t r o d u c e st h es t a t e m e n t o f c o m p r e h e n s i v e i n c o m e ,w h i c hp r e s e n t sa l li t e m so fr e c o g n i z e di n c o m ea n de x p e n s e ,e i t h e ri nas i n g l e s t a t e m e n t ,o ri nt w ol i n k e ds t a t e m e n t s .T h eG r o u ph a se l e c t e dt op r e s e n ta l li t e m so f r e c o g n i z e d i n c o m e a n d e x p e n s e i n t w o l i n k e d s t a t e m e n t s .  P F R S8 , O p e r a t i n gS e g m e n t s , a d o p t saf u l lm a n a g e m e n ta p p r o a c ht or e p o r t i n gs e g m e n t i n f o r m a t i o n .P F R S8w i l l r e p l a c e P A S1 4 , S e g m e n t R e p o r t i n g , a n di s r e q u i r e d t o b e a d o p t e d o n l y b ye n t i t i e s w h o s e d e b t o r e q u i t yi n s t r u m e n t s a r e p u b l i c l y t r a d e d , o r a r e i n t h e p r o c e s s o f f i l i n gi t sf i n a n c i a l s t a t e m e n t sw i t has e c u r i t i e sc o m m i s s i o no rs i m i l a rp a r t y .O p e r a t i n g s e g m e n t i n f o r m a t i o nb a s e do nP F R S8i n c l u d i n gt h e r e l a t e dr e v i s e dc o m p a r a t i v e i n f o r m a t i o n i s p r e s e n t e d i n N o t e 2 7 .

* S G V M C 3 1 0 9 6 2 *

3  R e v i s e dP F R S3 , B u s i n e s sC o m b i n a t i o n sa n dr e v i s e dP A S2 7 , C o n s o l i d a t e da n dS e p a r a t e F i n a n c i a lS t a t e m e n t s ,i n t r o d u c e san u m b e ro fc h a n g e si nt h ea c c o u n t i n gf o rb u s i n e s s c o m b i n a t i o n s t h a t w i l l i m p a c t t h e a m o u n t o f g o o d w i l l r e c o g n i z e d , t h e r e p o r t e dr e s u l t s i nt h e p e r i o dt h a t a na c q u i s i t i o no c c u r s , a n df u t u r e r e p o r t e dr e s u l t s .T h e r e v i s e dP A S2 7r e q u i r e s , a m o n g o t h e r s , t h a t ( a ) c h a n g e i n o w n e r s h i pi n t e r e s t s o f a s u b s i d i a r y ( t h a t d o n o t r e s u l t i n l o s s o f c o n t r o l ) w i l l b e a c c o u n t e d f o r a s a n e q u i t y t r a n s a c t i o n a n d w i l l h a v e n o i m p a c t o n g o o d w i l l n o r w i l l i t g i v e r i s e t oag a i no r l o s s ; ( b ) l o s s e s i n c u r r e db yt h e s u b s i d i a r yw i l l b e a l l o c a t e d b e t w e e nt h ec o n t r o l l i n ga n dn o n c o n t r o l l i n gi n t e r e s t s( p r e v i o u s l yr e f e r r e dt oa s m i n o r i t y i n t e r e s t s ) ; e v e ni f t h e l o s s e s e x c e e dt h e n o n c o n t r o l l i n ge q u i t yi n v e s t m e n t i nt h e s u b s i d i a r y ; a n d ( c ) o n l o s s o f c o n t r o l o f a s u b s i d i a r y , a n y r e t a i n e d i n t e r e s t w i l l b e r e m e a s u r e d t o f a i r v a l u e a n dt h i s w i l l i m p a c t t h e g a i no r l o s s r e c o g n i z e do nd i s p o s a l .T h e c h a n g e s i n t r o d u c e db yt h e r e v i s e dP F R S3m u s t b e a p p l i e dp r o s p e c t i v e l ya n dP A S2 7m u s t b e a p p l i e dr e t r o s p e c t i v e l y , e x c e p t f o rs o m es c e n a r i o s , a n dw i l l a f f e c t f u t u r ea c q u i s i t i o n sa n dt r a n s a c t i o n sw i t hn o n c o n t r o l l i n g i n t e r e s t s .  A m e n d m e n t st oP A S2 7 , C o n s o l i d a t e da n dS e p a r a t eF i n a n c i a lS t a t e m e n t s-C o s to f a n I n v e s t m e n t i naS u b s i d i a r y , J o i n t l y C o n t r o l l e dE n t i t y o r A s s o c i a t e , h a s c h a n g e s i nr e s p e c t o f t h e h o l d i n g c o m p a n i e s s e p a r a t e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n c l u d i n g ( a ) t h e d e l e t i o n o f c o s t m e t h o d , m a k i n gt h e d i s t i n c t i o nb e t w e e np r e a c q u i s i t i o na n dp o s t a c q u i s i t i o np r o f i t s n o l o n g e r r e q u i r e d , a n d( b ) i nc a s e s o f r e o r g a n i z a t i o n s w h e r e an e wp a r e n t i s i n s e r t e da b o v e a n e x i s t i n gp a r e n to ft h eg r o u p( s u b j e c tt om e e t i n gs p e c i f i cr e q u i r e m e n t s ) , t h ec o s to ft h e s u b s i d i a r y i s t h e p r e v i o u s c a r r y i n g a m o u n t o f i t s s h a r e o f e q u i t y i t e m s i n t h e s u b s i d i a r y r a t h e r t h a n i t s f a i r v a l u e .A l l d i v i d e n d s w i l l b e r e c o g n i z e di nt h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . H o w e v e r , t h e p a y m e n t o f s u c hd i v i d e n d s r e q u i r e s t h ee n t i t yt oc o n s i d e r w h e t h e r t h e r ei s a n i n d i c a t o r o f i m p a i r m e n t .  A m e n d m e n t s t oP F R S7 , F i n a n c i a l I n s t r u m e n t s :D i s c l o s u r e s I m p r o v i n gD i s c l o s u r e s a b o u t F i n a n c i a lI n s t r u m e n t s ,r e q u i r ea d d i t i o n a ld i s c l o s u r e sa b o u tf a i rv a l u em e a s u r e m e n ta n d l i q u i d i t yr i s k .F a i rv a l u em e a s u r e m e n t sr e l a t e dt oi t e m sr e c o r d e da t f a i rv a l u ea r et ob e d i s c l o s e d b y s o u r c e o f i n p u t s u s i n g a t h r e e l e v e l f a i r v a l u e h i e r a r c h y , b y c l a s s , f o r a l l f i n a n c i a l i n s t r u m e n t s r e c o g n i z e da t f a i r v a l u e .I na d d i t i o n , r e c o n c i l i a t i o nb e t w e e nt h eb e g i n n i n ga n d e n d i n gb a l a n c ef o r l e v e l 3f a i r v a l u em e a s u r e m e n t si sn o wr e q u i r e d , a sw e l l a ss i g n i f i c a n t t r a n s f e r sb e t w e e nl e v e l si nt h ef a i rv a l u eh i e r a r c h y .T h ea m e n d m e n t sa l s oc l a r i f yt h e r e q u i r e m e n t s f o r l i q u i d i t y r i s k d i s c l o s u r e s w i t h r e s p e c t t o d e r i v a t i v e t r a n s a c t i o n s a n d f i n a n c i a l a s s e t s u s e d f o r l i q u i d i t y m a n a g e m e n t . T h e a d d i t i o n a l d i s c l o s u r e s a r e p r e s e n t e d i n N o t e 2 6 .  A m e n d m e n t t oP A S3 9 , F i n a n c i a l I n s t r u m e n t s :R e c o g n i t i o na n dMe a s u r e m e n t -E l i g i b l e H e d g e dI t e m s , a d d r e s s e s o n l yt h ed e s i g n a t i o no f ao n e s i d e dr i s ki nah e d g e di t e m , a n dt h e d e s i g n a t i o no f i n f l a t i o na s ah e d g e dr i s ko r p o r t i o ni np a r t i c u l a r s i t u a t i o n s . T h e a m e n d m e n t c l a r i f i e s t h a t a n e n t i t y i s p e r m i t t e d t o d e s i g n a t e a p o r t i o n o f t h e f a i r v a l u e c h a n g e s o r c a s h f l o w v a r i a b i l i t y o f a f i n a n c i a l i n s t r u m e n t a s a h e d g e d i t e m .  P h i l i p p i n eI n t e r p r e t a t i o nI F R I C1 7 ,D i s t r i b u t i o n so fN o n c a s hA s s e t st oO w n e r s ,c o v e r s a c c o u n t i n gf o ra l l n o n r e c i p r o c a l d i s t r i b u t i o no fn o n c a s ha s s e t st oo w n e r s .I tp r o v i d e s g u i d a n c eo nw h e nt or e c o g n i z eal i a b i l i t y , h o wt om e a s u r e i t a n dt h e a s s o c i a t e da s s e t s , a n d w h e nt od e r e c o g n i z et h ea s s e ta n dl i a b i l i t ya n dt h ec o n s e q u e n c e so fd o i n gs o . T h i s i n t e r p r e t a t i o n w i l l b e a p p l i e d o n f u t u r e d i s t r i b u t i o n o f n o n c a s h a s s e t s t o s h a r e h o l d e r s .

* S G V M C 3 1 0 9 6 2 *

4 T h e f o l l o w i n g c h a n g e s i n P F R Sa r e e i t h e r n o t a p p l i c a b l e o r d i d n o t h a v e a n y s i g n i f i c a n t i m p a c t o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s .  R e v i s e d P A S2 3 , B o r r o w i n g C o s t s , r e q u i r e s c a p i t a l i z a t i o n o f b o r r o w i n g c o s t s w h e n s u c h c o s t s r e l a t e t oa q u a l i f y i n ga s s e t .Aq u a l i f y i n ga s s e t i s a na s s e t t h a t n e c e s s a r i l yt a k e s a s u b s t a n t i a l p e r i o do f t i m e t og e t r e a d yf o r i t s i n t e n d e du s eo r s a l e .T h i s d i dn o t h a v e a ni m p a c t t ot h e G r o u p a s i t s p o l i c y h a s b e e n t o c a p i t a l i z e b o r r o w i n g c o s t s o n q u a l i f y i n g a s s e t s .  A m e n d m e n t st oP A S3 2 , F i n a n c i a l I n s t r u m e n t s : P r e s e n t a t i o na n dP A S1 , P r e s e n t a t i o no f F i n a n c i a l S t a t e m e n t s P u t t a b l e F i n a n c i a l I n s t r u m e n t s a n d O b l i g a t i o n s A r i s i n g o n L i q u i d a t i o n  A m e n d m e n t t o P F R S2 , S h a r e b a s e d P a y m e n t V e s t i n g C o n d i t i o n s a n d C a n c e l l a t i o n s  P A S3 8 , I n t a n g i b l e A s s e t s  P h i l i p p i n e I n t e r p r e t a t i o n I F R I C9 , R e a s s e s s m e n t o f E m b e d d e d D e r i v a t i v e s  P h i l i p p i n e I n t e r p r e t a t i o n I F R I C1 3 , C u s t o m e r L o y a l t y P r o g r a m m e s  P h i l i p p i n e I n t e r p r e t a t i o n I F R I C1 6 , H e d g e s o f a N e t I n v e s t m e n t i n a F o r e i g n O p e r a t i o n  P h i l i p p i n e I n t e r p r e t a t i o n I F R I C1 8 , T r a n s f e r s o f A s s e t s f r o mC u s t o m e r s I m p r o v e m e n t s t o P F R S s T h e o m n i b u s a m e n d m e n t s t o P F R S s i s s u e d i n 2 0 0 9 w e r e i s s u e d p r i m a r i l y w i t h a v i e wt o r e m o v i n g i n c o n s i s t e n c i e sa n dc l a r i f y i n gw o r d i n g s .T h e r ea r es e p a r a t et r a n s i t i o n a l p r o v i s i o n sf o re a c h s t a n d a r d .  A m e n d m e n t t ot h eA p p e n d i xt oP A S1 8 , R e v e n u e , s p e c i f i e sn ot r a n s i t i o n a l p r o v i s i o n s , t h e a m e n d m e n t i se f f e c t i v ei m m e d i a t e l ya n dr e t r o s p e c t i v e l y .T h ea m e n d m e n t a d d sg u i d a n c e ( w h i c h a c c o m p a n i e s t h e s t a n d a r d ) t o d e t e r m i n e w h e t h e r a n e n t i t y i s a c t i n g a s a p r i n c i p a l o r a s a na g e n t .T h ef e a t u r e si n d i c a t i n ga ne n t i t yi sa c t i n ga s ap r i n c i p a l a r ew h e t h e r t h ee n t i t y : ( a ) h a s p r i m a r yr e s p o n s i b i l i t yf o r p r o v i d i n gt h eg o o d s o r s e r v i c e s ; ( b ) G r o u ph a s i n v e n t o r y r i s k ; ( c ) h a s d i s c r e t i o n i n e s t a b l i s h i n g p r i c e s ; a n d ( d ) b e a r s t h e c r e d i t r i s k . T h e G r o u p a s s e s s e d i t s r e v e n u e a r r a n g e m e n t s a g a i n s t t h e s e c r i t e r i a ; a n dc o n c l u d e dt h a t i t i s a c t i n ga s p r i n c i p a l i n a l l a r r a n g e m e n t s . A c c o r d i n g l y , n oc h a n g ew a sm a d ei nt h eG r o u p sr e v e n u er e c o g n i t i o n p o l i c y .  P F R S2 , S h a r e b a s e dP a y m e n t , c l a r i f i e s t h a t t h e c o n t r i b u t i o no f a b u s i n e s s o n f o r m a t i o no f a j o i n t v e n t u r ea n dc o m b i n a t i o n s u n d e r c o m m o nc o n t r o l a r en o t w i t h i nt h es c o p eo f P F R S2 e v e n t h o u g h t h e y a r e o u t o f s c o p e o f P F R S3 . N e wA c c o u n t i n g S t a n d a r d s , I n t e r p r e t a t i o n s a n d A m e n d m e n t s t o E x i s t i n g S t a n d a r d s E f f e c t i v e S u b s e q u e n t t o J u n e 3 0 , 2 0 1 0 T h e G r o u pw i l l a d o p t t h e f o l l o w i n gs t a n d a r d s a n di n t e r p r e t a t i o n s e n u m e r a t e db e l o ww h e nt h e s e b e c o m e e f f e c t i v e .E x c e p t a s o t h e r w i s e i n d i c a t e d , t h e G r o u p d o e s n o t e x p e c t t h e a d o p t i o n o f t h e s e n e wc h a n g e s i nP F R St oh a v e a s i g n i f i c a n t i m p a c t o nt h e c o n s o l i d a t e df i n a n c i a l s t a t e m e n t s .T h e r e l e v a n t d i s c l o s u r e s w i l l b ei n c l u d e di nt h en o t e s t ot h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n t sw h e n t h e s e b e c o m e e f f e c t i v e . E f f e c t i v e 2 0 1 1  A m e n d m e n t s t oP F R S2 , S h a r e b a s e dP a y m e n t G r o u pC a s h s e t t l e dS h a r e b a s e dP a y m e n t T r a n s a c t i o n s , c l a r i f i e st h es c o p ea n dt h ea c c o u n t i n gf o r g r o u p s e t t l e ds h a r e b a s e dp a y m e n t t r a n s a c t i o n s .

* S G V M C 3 1 0 9 6 2 *

5  P F R S5 , N o n c u r r e n t A s s e t sH e l df o rS a l ea n dD i s c o n t i n u e dO p e r a t i o n s , c l a r i f i e st h a t t h e d i s c l o s u r e s r e q u i r e di nr e s p e c t o f n o n c u r r e n t a s s e t s a n dd i s p o s a l g r o u p s c l a s s i f i e da s h e l df o r s a l e o r d i s c o n t i n u e d o p e r a t i o n s a r e o n l y t h o s e s e t o u t i n P F R S5 .T h e d i s c l o s u r e r e q u i r e m e n t s o f o t h e r P F R S s o n l ya p p l yi f s p e c i f i c a l l yr e q u i r e df o r s u c hn o n c u r r e n t a s s e t s o r d i s c o n t i n u e d o p e r a t i o n s .  P F R S8 ,O p e r a t i n gS e g m e n t s ,c l a r i f i e st h a ts e g m e n ta s s e t sa n dl i a b i l i t i e sn e e do n l yb e r e p o r t e dw h e nt h o s e a s s e t s a n dl i a b i l i t i e s a r e i n c l u d e di nm e a s u r e s t h a t a r e u s e db yt h e c h i e f o p e r a t i n g d e c i s i o n m a k e r .  P A S1 , P r e s e n t a t i o no f F i n a n c i a l S t a t e m e n t s , c l a r i f i e s t h a t t h e t e r m s o f al i a b i l i t yt h a t c o u l d r e s u l t a t a n y t i m ei ni t s s e t t l e m e n t b yt h e i s s u a n c eo f e q u i t yi n s t r u m e n t s a t t h eo p t i o no f t h e c o u n t e r p a r t y d o n o t a f f e c t i t s c l a s s i f i c a t i o n .  P A S7 , S t a t e m e n t o f C a s hF l o w s , e x p l i c i t l ys t a t e st h a t o n l ye x p e n d i t u r et h a t r e s u l t si na r e c o g n i z e d a s s e t c a n b e c l a s s i f i e d a s a c a s h f l o wf r o mi n v e s t i n g a c t i v i t i e s .  P A S1 7 , L e a s e s , r e m o v e s t h es p e c i f i cg u i d a n c eo nc l a s s i f y i n gl a n da s al e a s e .P r i o r t ot h e a m e n d m e n t , l e a s e s o f l a n dw e r e c l a s s i f i e d a s o p e r a t i n gl e a s e s .T h e a m e n d m e n t n o wr e q u i r e s t h a t l e a s e so f l a n da r ec l a s s i f i e da se i t h e r f i n a n c e o r o p e r a t i n g i na c c o r d a n c ew i t ht h e g e n e r a l p r i n c i p l e s o f P A S1 7 . T h e a m e n d m e n t s w i l l b e a p p l i e d r e t r o s p e c t i v e l y .  A m e n d m e n t t o P A S3 2 , C l a s s i f i c a t i o n o f R i g h t s I s s u e s , t h i s a m e n d m e n t t o P A S3 2 , F i n a n c i a l I n s t r u m e n t s :P r e s e n t a t i o n ,a d d r e s s e st h ea c c o u n t i n gf o rr i g h t si s s u e s( r i g h t s ,o p t i o n so r w a r r a n t s ) t h a t a r e d e n o m i n a t e di n a c u r r e n c yo t h e r t h a n t h e f u n c t i o n a l c u r r e n c yo f t h e i s s u e r . P r e v i o u s l ys u c hr i g h t si s s u e sw e r ea c c o u n t e df o ra sd e r i v a t i v el i a b i l i t i e s .H o w e v e r ,t h e a m e n d m e n t i s s u e dt o d a y r e q u i r e s t h a t , p r o v i d e dc e r t a i n c o n d i t i o n s a r e m e t , s u c hr i g h t s i s s u e s a r e c l a s s i f i e d a s e q u i t y r e g a r d l e s s o f t h e c u r r e n c y i n w h i c h t h e e x e r c i s e p r i c e i s d e n o m i n a t e d .  P A S3 6 , I m p a i r m e n t o f A s s e t s , c l a r i f i e s t h a t t h e l a r g e s t u n i t p e r m i t t e d f o r a l l o c a t i n g g o o d w i l l , a c q u i r e di nab u s i n e s sc o m b i n a t i o n , i st h eo p e r a t i n gs e g m e n t a sd e f i n e di nP F R S8b e f o r e a g g r e g a t i o n f o r r e p o r t i n g p u r p o s e s .  P A S3 9 , F i n a n c i a l I n s t r u m e n t s :R e c o g n i t i o na n dMe a s u r e m e n t , p r o v i d e sc l a r i f i c a t i o no n p r e p a y m e n t o p t i o n , s c o p ee x e m p t i o nf o r c o n t r a c t sb e t w e e na na c q u i r e r a n dav e n d o ri na b u s i n e s s c o m b i n a t i o n , a n d g a i n s o r l o s s e s o n c a s h f l o wh e d g e s o f a f o r e c a s t t r a n s a c t i o n .  P h i l i p p i n eI n t e r p r e t a t i o nI F R I C 1 9 ,E x t i n g u i s h i n gF i n a n c i a lL i a b i l i t i e sw i t hE q u i t y I n s t r u m e n t s , p r o v i d e sg u i d a n c eo nh o wt oa c c o u n t f o rt h ee x t i n g u i s h m e n to faf i n a n c i a l l i a b i l i t y b y t h e i s s u e o f e q u i t y i n s t r u m e n t s . T h e s e t r a n s a c t i o n s a r e o f t e n r e f e r r e d t o a s d e b t f o r e q u i t y s w a p s . I t c l a r i f i e s t h e r e q u i r e m e n t s o f P F R S s w h e n a n e n t i t y r e n e g o t i a t e s t h e t e r m s o f a f i n a n c i a l l i a b i l i t y w i t h i t s c r e d i t o r a n d t h e c r e d i t o r a g r e e s t o a c c e p t t h e e n t i t y s s h a r e s o r o t h e r e q u i t yi n s t r u m e n t st os e t t l et h ef i n a n c i a l l i a b i l i t yf u l l yo r p a r t i a l l y . I t c l a r i f i e st h a t : ( a ) t h e e n t i t y s e q u i t y i n s t r u m e n t s i s s u e d t o a c r e d i t o r a r e p a r t o f t h e c o n s i d e r a t i o n p a i d t oe x t i n g u i s h t h e f i n a n c i a l l i a b i l i t y ; ( b ) t h e e q u i t y i n s t r u m e n t s i s s u e d a r e m e a s u r e d a t t h e i r f a i r v a l u e . I f t h e i r f a i r v a l u e c a n n o t b e r e l i a b l ym e a s u r e d , t h e e q u i t yi n s t r u m e n t s s h o u l db e m e a s u r e dt or e f l e c t t h e f a i r v a l u e o f t h e f i n a n c i a l l i a b i l i t y e x t i n g u i s h e d a n d ( c ) t h e d i f f e r e n c e b e t w e e n t h e c a r r y i n g a m o u n t o f t h e f i n a n c i a l l i a b i l i t y e x t i n g u i s h e d a n d t h e i n i t i a l m e a s u r e m e n t a m o u n t o f t h e e q u i t y i n s t r u m e n t s i s s u e d i s i n c l u d e d i n t h e e n t i t y s p r o f i t o r l o s s f o r t h e p e r i o d .

* S G V M C 3 1 0 9 6 2 *

6 E f f e c t i v e 2 0 1 2  A m e n d m e n tt oP h i l i p p i n eI n t e r p r e t a t i o nI F R I C1 4 , P r e p a y m e n t so faMi n i m u mF u n d i n g R e q u i r e m e n t , a p p l i e si nt h el i m i t e dc i r c u m s t a n c e sw h e na ne n t i t yi ss u b j e c t t om i n i m u m f u n d i n gr e q u i r e m e n t sa n dm a k e sa ne a r l yp a y m e n to fc o n t r i b u t i o n st oc o v e rt h o s e r e q u i r e m e n t s . T h ea m e n d m e n t p e r m i t ss u c ha ne n t i t yt ot r e a t t h eb e n e f i t o f s u c ha ne a r l y p a y m e n t a s a n a s s e t .  P h i l i p p i n e I n t e r p r e t a t i o n I F R I C1 6 , H e d g e s o f a N e t I n v e s t m e n t i n a F o r e i g n O p e r a t i o n , s t a t e s t h a t , i n a h e d g e o f a n e t i n v e s t m e n t i n a f o r e i g n o p e r a t i o n , q u a l i f y i n g h e d g i n g i n s t r u m e n t s m a y b eh e l db ya n ye n t i t yo r e n t i t i e sw i t h i nt h eg r o u p , i n c l u d i n gt h ef o r e i g no p e r a t i o ni t s e l f , a s l o n g a s t h e d e s i g n a t i o n , d o c u m e n t a t i o n a n d e f f e c t i v e n e s s r e q u i r e m e n t s o f P A S3 9 t h a t r e l a t e t o a n e t i n v e s t m e n t h e d g e a r e s a t i s f i e d .  P A S2 4 , R e l a t e dP a r t yD i s c l o s u r e s ( R e v i s e d ) w a s r e v i s e di nr e s p o n s et oc o n c e r n s t h a t t h e p r e v i o u s d i s c l o s u r e r e q u i r e m e n t s a n d t h e d e f i n i t i o no f a r e l a t e d p a r t y w e r e t o o c o m p l e xa n d d i f f i c u l tt oa p p l yi np r a c t i c e ,e s p e c i a l l yi ne n v i r o n m e n t sw h e r eg o v e r n m e n tc o n t r o li s p e r v a s i v e . I t a d d r e s s e st h e s ec o n c e r n sb yp r o v i d i n gap a r t i a l e x e m p t i o nf o rg o v e r n m e n t r e l a t e de n t i t i e sa n db ys i m p l i f y i n gt h ed e f i n i t i o no fa r e l a t e dp a r t ya n dr e m o v i n g i n c o n s i s t e n c i e s . E f f e c t i v e 2 0 1 3  P h i l i p p i n eI n t e r p r e t a t i o nI F R I C1 5 ,A g r e e m e n t sf o rC o n s t r u c t i o no fR e a lE s t a t e ,c o v e r s a c c o u n t i n gf o r r e v e n u e a n da s s o c i a t e de x p e n s e s b ye n t i t i e s t h a t u n d e r t a k e t h e c o n s t r u c t i o no f r e a l e s t a t e d i r e c t l y o r t h r o u g h s u b c o n t r a c t o r s .
 P F R S9 ,F i n a n c i a lI n s t r u m e n t s ,i n t r o d u c e sn e wr e q u i r e m e n t so nt h ec l a s s i f i c a t i o na n d

E f f e c t i v e 2 0 1 4

m e a s u r e m e n t o f f i n a n c i a l a s s e t s . I t u s e s as i n g l ea p p r o a c ht od e t e r m i n ew h e t h e r af i n a n c i a l a s s e t i s m e a s u r e d a t a m o r t i z e d c o s t o r f a i r v a l u e , r e p l a c i n g t h e m a n y d i f f e r e n t r u l e s i n P A S3 9 , F i n a n c i a l I n s t r u m e n t s : R e c o g n i t i o na n dMe a s u r e m e n t .T h e a p p r o a c hi nt h i s n e ws t a n d a r di s b a s e do nh o wa ne n t i t ym a n a g e si t sf i n a n c i a li n s t r u m e n t s( i t sb u s i n e s sm o d e l )a n dt h e c o n t r a c t u a lc a s hf l o wc h a r a c t e r i s t i c so ft h ef i n a n c i a la s s e t s . I ta l s or e q u i r e sas i n g l e i m p a i r m e n t m e t h o d t o b e u s e d , r e p l a c i n g t h e m a n y d i f f e r e n t i m p a i r m e n t m e t h o d s i n P A S3 9 .

T h e G r o u pc o n t i n u e s t oa s s e s s t h ei m p a c t o f t h ea b o v en e wa n da m e n d e da c c o u n t i n gs t a n d a r d s a n di n t e r p r e t a t i o n s e f f e c t i v e s u b s e q u e n t t o2 0 1 0o nt h e c o n s o l i d a t e df i n a n c i a l s t a t e m e n t s p r i o r t o p e r i o d o f i n i t i a l a p p l i c a t i o n .T h e e f f e c t s a n d r e q u i r e d r e v i s e dd i s c l o s u r e s , i f a n y , w i l l b e i n c l u d e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s w h e n t h e r e l e v a n t a c c o u n t i n g s t a n d a r d s a n d i n t e r p r e t a t i o n a r e a d o p t e d s u b s e q u e n t t o J u n e 3 0 , 2 0 1 0 . C o n s o l i d a t i o n T h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n t s i n c l u d et h ef i n a n c i a l s t a t e m e n t so f t h eC o m p a n ya n dt h e f o l l o w i n g s u b s i d i a r i e s ( a l l i n c o r p o r a t e d i n t h e P h i l i p p i n e s ) :
P e r c e n t a g e o f O w n e r s h i p 2 0 0 9 2 0 0 8 2 0 1 0 D i r e c t D i r e c t 8 9 . 2 2 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 9 9 . 9 9 9 9 . 9 9

( 1 ) C A D P G C C A D P I C A C I ( 2 ) C A D P I n s u r a n c e A g e n c y , I n c . ( C I A I ) C C S I C F S I J O MS I

I n d i r e c t 8 9 . 2 2 8 9 . 2 2 8 9 . 2 2 8 9 . 2 2 8 9 . 2 2 8 9 . 2 1

( F o r w a r d )

* S G V M C 3 1 0 9 6 2 *

7 P e r c e n t a g e o f O w n e r s h i p 2 0 0 9 2 0 0 8 2 0 1 0 D i r e c t D i r e c t 7 7 . 2 7 7 7 . 3 8 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 1 0 0 . 0 0 5 0 . 0 0 5 0 . 0 0

N A V I ( 3 ) R o x o l B i o e n e r g y C o r p o r a t i o n ( R B C ) ( 4 ) C A D PP o r t S e r v i c e s , I n c . ( C P S I ) ( 4 ) R o x a s P o w e r C o r p o r a t i o n ( R P C )
( 1 )

I n d i r e c t 6 3 . 9 6

( 2 ) ( 3 ) ( 4 )

T h e l o s s o f o w n e r s h i p i n t e r e s t i n C A D P G Ci s t h e r e s u l t o f t h e r e s t r u c t u r i n g u n d e r t a k e n b y t h e G r o u p t h r o u g h s a l e o f a l l i t s e q u i t y i n t e r e s t i n C A D P G Ct o R C I e f f e c t i v e J a n u a r y 2 3 , 2 0 0 9 ( s e e N o t e 1 ) . A s a r e s u l t , t h e C o m p a n y h a s n o wa d i r e c t o w n e r s h i p i n t e r e s t i n t h e s u g a r r e l a t e d o p e r a t i n g s u b s i d i a r i e s w h i c h w e r e p r e v i o u s l y o w n e d b y C A D P G C . R e s u l t s o f o p e r a t i o n o f C A D P G Ca r e i n c l u d e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s u n t i l J a n u a r y 2 3 , 2 0 0 9 , t h e d a t e o n w h i c h t h e C o m p a n y s c o n t r o l c e a s e d . C I A I w a s i n c o r p o r a t e d o n A u g u s t 1 9 , 2 0 0 9 a n d h a s n o t y e t s t a r t e d c o m m e r c i a l o p e r a t i o n s . R B Cw a s i n c o r p o r a t e d o n F e b r u a r y 2 9 , 2 0 0 8 a n d h a s c o m p l e t e d t h e c o n s t r u c t i o n o f i t s p l a n t f a c i l i t y a s o f J u n e 3 0 , 2 0 1 0 b u t h a s n o t y e t s t a r t e d c o m m e r c i a l o p e r a t i o n s . C P S I a n d R P Cw e r e i n c o r p o r a t e d o n J u l y 1 7 , 2 0 0 8 a n d h a v e n o t y e t s t a r t e d c o m m e r c i a l o p e r a t i o n s . T h e C o m p a n y h a s c o n t r o l o n R P Cs i n c e i t h a s t h e p o w e r t o c a s t t h e m a j o r i t y o f v o t e s a t t h e B O D s m e e t i n g s a n d t h e p o w e r t o g o v e r n t h e f i n a n c i a l a n d r e p o r t i n g p o l i c i e s o f R P C .

S u b s i d i a r i e s a r e a l l e n t i t i e s o v e r w h i c ht h e C o m p a n yh a s t h e p o w e r t og o v e r nt h ef i n a n c i a l a n d o p e r a t i n gp o l i c i e sg e n e r a l l ya c c o m p a n y i n gas h a r e h o l d i n go f m o r et h a no n e h a l f o f t h ev o t i n g r i g h t s .T h ee x i s t e n c ea n de f f e c to fp o t e n t i a l v o t i n gr i g h t st h a ta r ec u r r e n t l ye x e r c i s a b l eo r c o n v e r t i b l ea r ec o n s i d e r e dw h e na s s e s s i n gw h e t h e rt h eC o m p a n yc o n t r o l sa n o t h e re n t i t y . S u b s i d i a r i e s a r e f u l l y c o n s o l i d a t e df r o mt h e d a t e o nw h i c h c o n t r o l i s t r a n s f e r r e d t o t h e C o m p a n y . T h e y a r e d e c o n s o l i d a t e d f r o mt h e d a t e o n w h i c h c o n t r o l c e a s e s . N o n c o n t r o l l i n g i n t e r e s t r e p r e s e n t s a p o r t i o n o f p r o f i t o r l o s s a n d n e t a s s e t s o f s u b s i d i a r i e s n o t h e l d b y t h e G r o u p , d i r e c t l yo r i n d i r e c t l y , a n d a r e p r e s e n t e ds e p a r a t e l yi n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e a n d w i t h i n t h e e q u i t y s e c t i o n o f t h e c o n s o l i d a t e d b a l a n c e s h e e t a n d c o n s o l i d a t e d s t a t e m e n t o f c h a n g e s i n e q u i t y , s e p a r a t e l y f r o mC o m p a n y s e q u i t y . T o t a l c o m p r e h e n s i v e i n c o m e i s a t t r i b u t e d t ot h ep o r t i o nh e l db yt h eG r o u pa n dt ot h en o n c o n t r o l l i n gi n t e r e s t se v e ni f t h i sr e s u l t si nt h e n o n c o n t r o l l i n g i n t e r e s t s h a v i n g a d e f i c i t b a l a n c e . C o n s o l i d a t e df i n a n c i a ls t a t e m e n t sa r ep r e p a r e du s i n gu n i f o r ma c c o u n t i n gp o l i c i e sf o rl i k e t r a n s a c t i o n s a n d o t h e r e v e n t s i n s i m i l a r c i r c u m s t a n c e s . A d j u s t m e n t s , w h e r e n e c e s s a r y , a r e m a d e t o e n s u r e c o n s i s t e n c y w i t h t h e p o l i c i e s a d o p t e d b y t h e G r o u p . I n t e r c o m p a n yt r a n s a c t i o n s ,b a l a n c e sa n du n r e a l i z e dg a i n so nt r a n s a c t i o n sb e t w e e ng r o u p c o m p a n i e sa r ee l i m i n a t e d .U n r e a l i z e dl o s s e sa r ea l s oe l i m i n a t e db u ta r ec o n s i d e r e da sa n i m p a i r m e n t i n d i c a t o r o f t h e a s s e t s t r a n s f e r r e d . C h a n g e s i n t h e c o n t r o l l i n g o w n e r s h i pi n t e r e s t , i . e . , a c q u i s i t i o n o f n o n c o n t r o l l i n g i n t e r e s t o r p a r t i a l d i s p o s a l o f i n t e r e s t o v e r as u b s i d i a r yt h a t d on o t r e s u l t i nal o s s o f c o n t r o l , a r e a c c o u n t e df o r a s e q u i t y t r a n s a c t i o n s . B u s i n e s s C o m b i n a t i o n s T h e p u r c h a s em e t h o do f a c c o u n t i n gi s u s e dt oa c c o u n t f o r t h e a c q u i s i t i o no f s u b s i d i a r i e s b yt h e C o m p a n y .T h ec o s t o f a na c q u i s i t i o ni sm e a s u r e da t t h ef a i r v a l u eo f t h ea s s e t sg i v e n , e q u i t y i n s t r u m e n t s i s s u e da n dl i a b i l i t i e s i n c u r r e do r a s s u m e da t t h e d a t e o f e x c h a n g e , p l u s c o s t s d i r e c t l y a t t r i b u t a b l et ot h ea c q u i s i t i o n . I d e n t i f i a b l ea s s e t sa c q u i r e da n dl i a b i l i t i e sa n dc o n t i n g e n t l i a b i l i t i e sa s s u m e di nab u s i n e s sc o m b i n a t i o na r em e a s u r e di n i t i a l l ya t t h e i r f a i rv a l u e sa t t h e a c q u i s i t i o n d a t e , i r r e s p e c t i v e o f t h e e x t e n t o f a n y n o n c o n t r o l l i n g i n t e r e s t . T h e e x c e s s o f t h e c o s t o f a c q u i s i t i o no v e r t h ef a i r v a l u eo f t h eC o m p a n y s s h a r eo f t h ei d e n t i f i a b l en e t a s s e t s a c q u i r e di s r e c o r d e d a s g o o d w i l l .I f t h e c o s t o f a c q u i s i t i o ni s l e s s t h a n t h e f a i r v a l u e o f t h e C o m p a n y s s h a r e o ft h en e ta s s e t so ft h es u b s i d i a r ya c q u i r e d ,t h ed i f f e r e n c ei sr e c o g n i z e dd i r e c t l yi nt h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e .

* S G V M C 3 1 0 9 6 2 *

8 C o m m o n c o n t r o l t r a n s a c t i o n s Wh e r e t h e r e a r e b u s i n e s s c o m b i n a t i o n s i nw h i c ha l l t h e c o m b i n i n ge n t i t i e s w i t h i nt h e G r o u pa r e u l t i m a t e l yc o n t r o l l e db yt h e s a m e u l t i m a t e p a r e n t b e f o r e a n da f t e r t h e b u s i n e s s c o m b i n a t i o na n d t h a t t h ec o n t r o l i sn o t t r a n s i t o r y( b u s i n e s sc o m b i n a t i o n su n d e rc o m m o nc o n t r o l ) , t h eG r o u p a c c o u n t s s u c h b u s i n e s s c o m b i n a t i o n s u n d e r t h e p u r c h a s e m e t h o do f a c c o u n t i n g , i f t h e t r a n s a c t i o n w a sd e e m e dt oh a v es u b s t a n c ef r o mt h ep e r s p e c t i v eo ft h er e p o r t i n ge n t i t y .I nd e t e r m i n i n g w h e t h e r t h eb u s i n e s sc o m b i n a t i o nh a s s u b s t a n c e , f a c t o r s s u c ha s t h eu n d e r l y i n gp u r p o s eo f t h e b u s i n e s s c o m b i n a t i o n a n d t h e i n v o l v e m e n t o f p a r t i e s o t h e r t h a n t h e c o m b i n i n g e n t i t i e s s u c h a s t h e n o n c o n t r o l l i n g i n t e r e s t , s h a l l b e c o n s i d e r e d . I nc a s e sw h e r et h eb u s i n e s sc o m b i n a t i o nh a s n os u b s t a n c e , t h eC o m p a n ys h a l l a c c o u n t f o r t h e t r a n s a c t i o n s i m i l a r t o a p o o l i n go f i n t e r e s t s .T h e a s s e t s a n dl i a b i l i t i e s o f t h e a c q u i r e de n t i t i e s a n d t h a t o f t h e G r o u pa r e r e f l e c t e da t t h e i r c a r r y i n gv a l u e s .T h e d i f f e r e n c e i nt h e a m o u n t r e c o g n i z e d a n dt h ef a i r v a l u eo f t h ec o n s i d e r a t i o ng i v e n , i s a c c o u n t e df o r a s a ne q u i t yt r a n s a c t i o n , i . e . , a s e i t h e r a c o n t r i b u t i o n o r d i s t r i b u t i o n o f e q u i t y . F u r t h e r , w h e n a s u b s i d i a r y i s d i s p o s e d i n a c o m m o n c o n t r o l t r a n s a c t i o n , t h ed i f f e r e n c ei nt h ea m o u n t r e c o g n i z e da n dt h ef a i rv a l u ec o n s i d e r a t i o n r e c e i v e d , i sa l s oa c c o u n t e df o ra sa ne q u i t yt r a n s a c t i o n .A sd i s c u s s e di nN o t e1 , t h eG r o u p r e c o r d e dt h ed i f f e r e n c ea s e x c e s so f c o n s i d e r a t i o no v e r c a r r y i n ga m o u n t o f d i s p o s e ds u b s i d i a r y a n d p r e s e n t e d a s s e p a r a t e c o m p o n e n t o f e q u i t y i n t h e c o n s o l i d a t e d b a l a n c e s h e e t . C o m p a r a t i v e ss h a l l b er e s t a t e dt oi n c l u d eb a l a n c e sa n dt r a n s a c t i o n sa si f t h ee n t i t i e sh a db e e n a c q u i r e da t t h eb e g i n n i n go f t h ee a r l i e s t p e r i o dp r e s e n t e da s i f t h ec o m p a n i e sh a da l w a y s b e e n c o m b i n e d . I n v e s t m e n t i n S h a r e s o f S t o c k o f a n A s s o c i a t e A s s o c i a t e s a r e a l l e n t i t i e s o v e r w h i c h t h e G r o u p h a s s i g n i f i c a n t i n f l u e n c e b u t n o t c o n t r o l , g e n e r a l l y a c c o m p a n y i n gas h a r e h o l d i n go f b e t w e e n2 0 %a n d5 0 %o f t h ev o t i n gr i g h t s .I n v e s t m e n t si n a s s o c i a t e s a r e a c c o u n t e d f o r u s i n g t h e e q u i t ym e t h o do f a c c o u n t i n g a n d a r e i n i t i a l l y r e c o g n i z e d a t c o s t . T h eG r o u p ss h a r eo fi t sa s s o c i a t e sp o s t a c q u i s i t i o np r o f i t so rl o s s e si sr e c o g n i z e di nt h e c o n s o l i d a t e ds t a t e m e n t o fi n c o m e , a n di t ss h a r eo fp o s t a c q u i s i t i o nm o v e m e n t si nr e s e r v e si s r e c o g n i z e di ne q u i t y .T h ec u m u l a t i v ep o s t a c q u i s i t i o nm o v e m e n t sa r ea d j u s t e da g a i n s tt h e c a r r y i n ga m o u n t o f t h ei n v e s t m e n t .Wh e nt h e G r o u p s s h a r e o f l o s s e s i na na s s o c i a t e e q u a l s o r e x c e e d s i t s i n t e r e s t i n t h e a s s o c i a t e , i n c l u d i n g a n y o t h e r u n s e c u r e d r e c e i v a b l e s , t h e G r o u p d o e s n o t r e c o g n i z ef u r t h e r l o s s e s , u n l e s si t h a si n c u r r e do b l i g a t i o n so r m a d ep a y m e n t so nb e h a l f o f t h e a s s o c i a t e . U n r e a l i z e dg a i n s o n t r a n s a c t i o n s b e t w e e nt h e G r o u pa n di t s a s s o c i a t e a r e e l i m i n a t e d t ot h e e x t e n t o ft h eG r o u p si n t e r e s ti nt h ea s s o c i a t e .U n r e a l i z e dl o s s e sa r ea l s oe l i m i n a t e du n l e s st h e t r a n s a c t i o n p r o v i d e s e v i d e n c e o f a ni m p a i r m e n t o f t h e a s s e t t r a n s f e r r e d .T h e f i n a n c i a l s t a t e m e n t s o f t h e a s s o c i a t e a r e p r e p a r e df o r t h e s a m e r e p o r t i n gp e r i o do f t h e C o m p a n y . A d j u s t m e n t s , w h e r e n e c e s s a r y , a r e m a d e t o e n s u r e c o n s i s t e n c y w i t h t h e p o l i c i e s a d o p t e d b y t h e G r o u p . S e g m e n t R e p o r t i n g O p e r a t i n gs e g m e n t sa r ec o m p o n e n t so f t h eG r o u p : ( a ) t h a t e n g a g ei nb u s i n e s sa c t i v i t i e sf r o m w h i c ht h e ym a ye a r nr e v e n u ea n di n c u r e x p e n s e s ( i n c l u d i n gr e v e n u e s a n de x p e n s e s r e l a t i n gt o t r a n s a c t i o n sw i t ho t h e rc o m p o n e n t so ft h eG r o u p ) ;( b )w h o s eo p e r a t i n gr e s u l t sa r er e g u l a r l y r e v i e w e db yt h eG r o u p ss e n i o rm a n a g e m e n t ,i t sc h i e fo p e r a t i n gd e c i s i o nm a k e r ,t om a k e d e c i s i o n s a b o u t r e s o u r c e s t ob e a l l o c a t e dt ot h e s e g m e n t a n da s s e s s i t s p e r f o r m a n c e ; a n d( c ) f o r w h i c h d i s c r e t e f i n a n c i a l i n f o r m a t i o n i s a v a i l a b l e . F o rp u r p o s e so fm a n a g e m e n tr e p o r t i n g , t h eG r o u p so p e r a t i n gb u s i n e s s e sa r eo r g a n i z e da n d m a n a g e d s e p a r a t e l y o n a p e r c o m p a n y b a s i s , w i t he a c hc o m p a n y r e p r e s e n t i n g a s t r a t e g i c b u s i n e s s s e g m e n t .

* S G V M C 3 1 0 9 6 2 *

9 C a s h a n d C a s h E q u i v a l e n t s C a s h a n d c a s he q u i v a l e n t s i n c l u d e c a s ho n h a n d , d e p o s i t s h e l d a t c a l l w i t h b a n k s a n do t h e r s h o r t t e r mh i g h l y l i q u i d i n t e r e s t b e a r i n g f u n d p l a c e m e n t s w i t h o r i g i n a l m a t u r i t i e s o f t h r e e m o n t h s o r l e s s f r o mt h e d a t e o f a c q u i s i t i o n a n d s u b j e c t t o i n s i g n i f i c a n t r i s k i n f l u c t u a t i o n s i n v a l u e . F i n a n c i a l A s s e t s a n d F i n a n c i a l L i a b i l i t i e s C l a s s i f i c a t i o n a n d r e c o g n i t i o n T h eG r o u pr e c o g n i z e s af i n a n c i a l a s s e t o r af i n a n c i a l l i a b i l i t yi nt h ec o n s o l i d a t e db a l a n c e s h e e t w h e ni tb e c o m e sap a r t yt ot h ec o n t r a c t u a l p r o v i s i o n so ft h ei n s t r u m e n t .A l l r e g u l a rw a y p u r c h a s e sa n ds a l e so f f i n a n c i a l a s s e t sa r er e c o g n i z e do nt h et r a d ed a t e , i . e . , t h ed a t et h a t t h e G r o u pc o m m i t s t op u r c h a s e t h e a s s e t .R e g u l a r w a yp u r c h a s e s o r s a l e s a r e p u r c h a s e s o r s a l e s o f f i n a n c i a l a s s e t st h a t r e q u i r ed e l i v e r yo ft h ea s s e t sw i t h i nt h ep e r i o dg e n e r a l l ye s t a b l i s h e db y r e g u l a t i o n o r c o n v e n t i o n i n t h e m a r k e t p l a c e . F i n a n c i a l i n s t r u m e n t s a r e c l a s s i f i e d a s l i a b i l i t i e s o r e q u i t yi n a c c o r d a n c e w i t h t h e s u b s t a n c e o f t h e c o n t r a c t u a l a r r a n g e m e n t .I n t e r e s t , d i v i d e n d s , g a i n s a n d l o s s e s r e l a t i n g t o a f i n a n c i a l i n s t r u m e n t o r ac o m p o n e n t t h a t i saf i n a n c i a l l i a b i l i t y , a r er e p o r t e da se x p e n s eo r i n c o m e .D i s t r i b u t i o n st o h o l d e r so f f i n a n c i a l i n s t r u m e n t sc l a s s i f i e da se q u i t ya r ec h a r g e dd i r e c t l yt oe q u i t y , n e t o f a n y r e l a t e di n c o m e t a xb e n e f i t s .F i n a n c i a l i n s t r u m e n t s a r e o f f s e t w h e nt h e r e i s al e g a l l ye n f o r c e a b l e r i g h t t oo f f s e t a n di n t e n t i o nt os e t t l ee i t h e r o nan e t b a s i s o r t or e a l i z et h ea s s e t a n ds e t t l et h e l i a b i l i t y s i m u l t a n e o u s l y . F i n a n c i a l a s s e t s a n d f i n a n c i a l l i a b i l i t i e s a r e r e c o g n i z e d i n i t i a l l y a t f a i r v a l u e . T r a n s a c t i o n c o s t s a r e i n c l u d e di nt h ei n i t i a l m e a s u r e m e n t o fa l l f i n a n c i a l a s s e t sa n df i n a n c i a l l i a b i l i t i e s , e x c e p t f o r f i n a n c i a l i n s t r u m e n t sm e a s u r e da t f a i r v a l u et h r o u g hp r o f i t o r l o s s . F a i r v a l u ei sd e t e r m i n e db y r e f e r e n c et ot h et r a n s a c t i o np r i c eo r o t h e r m a r k e t p r i c e s .I f s u c hm a r k e t p r i c e s a r en o t r e a d i l y d e t e r m i n a b l e , t h ef a i rv a l u eo ft h ec o n s i d e r a t i o ni se s t i m a t e da st h es u mo fa l l f u t u r ec a s h p a y m e n t so rr e c e i p t s ,d i s c o u n t e du s i n gt h ep r e v a i l i n gm a r k e tr a t e so fi n t e r e s tf o rs i m i l a r i n s t r u m e n t s w i t h s i m i l a r m a t u r i t i e s . F i n a n c i a l a s s e t s a r e c l a s s i f i e d i n t o t h e f o l l o w i n g c a t e g o r i e s : a .F i n a n c i a l a s s e t s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s b .L o a n s a n d r e c e i v a b l e s c .H e l d t o m a t u r i t y i n v e s t m e n t s d .A v a i l a b l e f o r s a l e f i n a n c i a l a s s e t s F i n a n c i a l l i a b i l i t i e s , o n t h e o t h e r h a n d , a r e c l a s s i f i e d i n t o t h e f o l l o w i n g c a t e g o r i e s : a .F i n a n c i a l l i a b i l i t i e s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s b .O t h e r f i n a n c i a l l i a b i l i t i e s T h e c l a s s i f i c a t i o no f f i n a n c i a l i n s t r u m e n t s d e p e n d s o nt h e p u r p o s e f o r w h i c ht h e yw e r e a c q u i r e d a n d w h e t h e r t h e y a r e q u o t e d i n a n a c t i v e m a r k e t . T h e G r o u p d e t e r m i n e s t h e c l a s s i f i c a t i o n a t i n i t i a l r e c o g n i t i o n a n d , w h e r e a l l o w e d a n d a p p r o p r i a t e , r e e v a l u a t e s t h i s c l a s s i f i c a t i o n a t e v e r y r e p o r t i n g d a t e . a .F i n a n c i a l a s s e t s o r f i n a n c i a l l i a b i l i t i e s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s F i n a n c i a la s s e t so rf i n a n c i a ll i a b i l i t i e sc l a s s i f i e di nt h i sc a t e g o r ya r ef i n a n c i a la s s e t so r f i n a n c i a l l i a b i l i t i e s t h a t a r e h e l d f o r t r a d i n go r f i n a n c i a l a s s e t s a n d f i n a n c i a l l i a b i l i t i e s t h a t a r e d e s i g n a t e db ym a n a g e m e n t a s a t f a i r v a l u e t h r o u g hp r o f i t o r l o s s o ni n i t i a l r e c o g n i t i o nw h e n a n y o f t h e f o l l o w i n g c r i t e r i a a r e m e t :  T h e d e s i g n a t i o ne l i m i n a t e s o r s i g n i f i c a n t l yr e d u c e s t h e i n c o n s i s t e n t t r e a t m e n t t h a t w o u l d o t h e r w i s e a r i s e f r o mm e a s u r i n gt h e a s s e t s o r l i a b i l i t i e s o r r e c o g n i z i n gg a i n s o r l o s s e s o n t h e mo n a d i f f e r e n t b a s i s , o r  T h ea s s e t s a n dl i a b i l i t i e s a r ep a r t o f ag r o u po f f i n a n c i a l a s s e t s a n df i n a n c i a l l i a b i l i t i e s , r e s p e c t i v e l y , o r b o t h f i n a n c i a l a s s e t s a n d f i n a n c i a l l i a b i l i t i e s , w h i c h a r e m a n a g e d a n d t h e i r p e r f o r m a n c ei se v a l u a t e do naf a i r v a l u eb a s i s , i na c c o r d a n c ew i t had o c u m e n t e dr i s k m a n a g e m e n t o r i n v e s t m e n t s t r a t e g y , o r

* S G V M C 3 1 0 9 6 2 *

1 0  T h e f i n a n c i a l i n s t r u m e n t c o n t a i n s a n e m b e d d e d d e r i v a t i v e , u n l e s s t h e e m b e d d e d d e r i v a t i v e d o e s n o t s i g n i f i c a n t l y m o d i f y t h e c a s h f l o w s o r i t i s c l e a r , w i t h l i t t l e o r n o a n a l y s i s , t h a t i t w o u l d n o t b e s e p a r a t e l y r e c o r d e d . F i n a n c i a l a s s e t s a r e c l a s s i f i e d a s h e l d f o r t r a d i n g i f t h e s e a r e a c q u i r e d f o r t h e p u r p o s e o f s e l l i n g i n t h e n e a r t e r m .D e r i v a t i v e s , i n c l u d i n g s e p a r a t e d e m b e d d e d d e r i v a t i v e s , a r e a l s o c l a s s i f i e d a s h e l d f o r t r a d i n g u n l e s s t h e y a r e d e s i g n a t e d a s e f f e c t i v e h e d g i n g i n s t r u m e n t s . F i n a n c i a l a s s e t s a n d f i n a n c i a l l i a b i l i t i e s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s a r e r e c o r d e di n t h e c o n s o l i d a t e d b a l a n c e s h e e t a t f a i r v a l u e .S u b s e q u e n t c h a n g e s i n f a i r v a l u e a r e r e c o r d e d i n t h e c o n s o l i d a t e ds t a t e m e n to fi n c o m e .I n t e r e s te a r n e di sr e c o r d e da si n t e r e s ti n c o m e , w h i l e d i v i d e n di n c o m e i s r e c o r d e di no t h e r i n c o m e a c c o r d i n gt ot h e t e r m s o f t h e c o n t r a c t , o r w h e n t h er i g h to ft h ep a y m e n th a sb e e ne s t a b l i s h e d .I n t e r e s ti n c u r r e di sr e c o r d e da si n t e r e s t e x p e n s e . T h e G r o u ph a s n o t d e s i g n a t e d a n y f i n a n c i a l a s s e t o r f i n a n c i a l l i a b i l i t y a s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 . E m b e d d e d D e r i v a t i v e s A ne m b e d d e dd e r i v a t i v ei sa c o m p o n e n to fa c o m b i n e di n s t r u m e n tt h a ti n c l u d e sa n o n d e r i v a t i v e h o s t c o n t r a c t w i t h t h e e f f e c t t h a t s o m e o r a l l o f t h e c a s h f l o w s o f t h e c o m b i n e d i n s t r u m e n t v a r yi naw a ys i m i l a r t oas t a n d a l o n ed e r i v a t i v e .I t i s s e p a r a t e df r o mt h eh o s t f i n a n c i a l o r n o n f i n a n c i a l c o n t r a c t i f a l l t h e f o l l o w i n g c o n d i t i o n s a r e m e t :  T h e e c o n o m i c c h a r a c t e r i s t i c s a n d r i s k s o f t h e e m b e d d e dd e r i v a t i v e a r e n o t c l o s e l y r e l a t e d t o t h e e c o n o m i c c h a r a c t e r i s t i c o f t h e h o s t c o n t r a c t ;  As e p a r a t ei n s t r u m e n t w i t ht h es a m et e r m s a s t h ee m b e d d e dd e r i v a t i v ew o u l dm e e t t h e d e f i n i t i o n o f a d e r i v a t i v e ; a n d  T h e h y b r i d o r c o m b i n e d i n s t r u m e n t i s n o t r e c o g n i z e d a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s . T h eG r o u pa s s e s s e sw h e t h e re m b e d d e dd e r i v a t i v e sa r er e q u i r e dt ob es e p a r a t e df r o mh o s t c o n t r a c t w h e nt h e G r o u pf i r s t b e c o m e s ap a r t yt ot h e c o n t r a c t .R e a s s e s s m e n t o n l yo c c u r s i f t h e r ei sc h a n g ei nt h et e r m so f t h ec o n t r a c t t h a t s i g n i f i c a n t l ym o d i f i e st h ec a s hf l o w st h a t w o u l d o t h e r w i s e b e r e q u i r e d . E m b e d d e d d e r i v a t i v e s t h a t a r e b i f u r c a t e d f r o mt h e h o s t c o n t r a c t s a r e a c c o u n t e d f o r a s f i n a n c i a l a s s e t s o r f i n a n c i a l l i a b i l i t i e s a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s .C h a n g e s i n t h e f a i r v a l u e s a r e i n c l u d e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . A s o f J u n e 3 0 , 2 0 1 0a n d2 0 0 9 , t h e G r o u ph a s e m b e d d e dp r e p a y m e n t o p t i o no ni t s l o n g t e r m b o r r o w i n g s , t h e v a l u e o f w h i c h i s i m m a t e r i a l . b .L o a n s a n d r e c e i v a b l e s L o a n s a n d r e c e i v a b l e s a r e n o n d e r i v a t i v e f i n a n c i a l a s s e t s w i t h f i x e d o r d e t e r m i n a b l e p a y m e n t s t h a t a r e n o t q u o t e d i n a n a c t i v e m a r k e t . T h e y a r i s e w h e n t h e G r o u p p r o v i d e s m o n e y , g o o d s o r s e r v i c e sd i r e c t l yt oad e b t o rw i t hn oi n t e n t i o no ft r a d i n gt h er e c e i v a b l e s .L o a n sa n d r e c e i v a b l e s a r e c a r r i e da t a m o r t i z e dc o s t i nt h ec o n s o l i d a t e db a l a n c e s h e e t .A m o r t i z a t i o ni s d e t e r m i n e du s i n gt h ee f f e c t i v e i n t e r e s t r a t e m e t h o d .G a i n s a n dl o s s e s a r e r e c o g n i z e di nt h e c o n s o l i d a t e ds t a t e m e n to fi n c o m ew h e nt h el o a n sa n dr e c e i v a b l e sa r ed e r e c o g n i z e da n d i m p a i r e d , a sw e l l a st h r o u g ha m o r t i z a t i o np r o c e s s .L o a n sa n dr e c e i v a b l e sa r ei n c l u d e di n c u r r e n t a s s e t si f m a t u r i t yi sw i t h i n1 2m o n t h sf r o mt h ee n do f r e p o r t i n gp e r i o d , o t h e r w i s e , t h e s e a r e c l a s s i f i e d a s n o n c u r r e n t a s s e t s . T r a d e r e c e i v a b l e s w i t ha v e r a g e c r e d i t t e r m s o f 3 0d a y s a r e r e c o g n i z e d a n dc a r r i e da t o r i g i n a l i n v o i c e a m o u n t l e s s a n y a l l o w a n c e f o r i m p a i r m e n t .

* S G V M C 3 1 0 9 6 2 *

1 1 C l a s s i f i e da s l o a n s a n dr e c e i v a b l e s a r e t h e G r o u p s c a s hi nb a n k s a n dc a s he q u i v a l e n t s , t r a d e r e c e i v a b l e s , a d v a n c e s t or e l a t e dp a r t i e s , a d v a n c e s t oe m p l o y e e s a n do t h e r r e c e i v a b l e s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 ( s e e N o t e 2 6 ) . c .H e l d t o m a t u r i t y i n v e s t m e n t s H e l d t o m a t u r i t yi n v e s t m e n t sa r eq u o t e dn o n d e r i v a t i v ef i n a n c i a la s s e t sw i t hf i x e do r d e t e r m i n a b l e p a y m e n t s a n df i x e dm a t u r i t i e s w h e r e i n t h e G r o u ph a s t h e p o s i t i v e i n t e n t i o n a n d a b i l i t y t o h o l d t h e mt o m a t u r i t y .Wh e r e t h e G r o u p s e l l s o t h e r t h a n a n i n s i g n i f i c a n t a m o u n t o f h e l d t o m a t u r i t yi n v e s t m e n t s ,t h ee n t i r ec a t e g o r yw o u l db et a i n t e da n dr e c l a s s i f i e da s a v a i l a b l e f o r s a l e i n v e s t m e n t s f o r a t l e a s t t h e t w of i n a n c i a l y e a r s .A f t e r i n i t i a l m e a s u r e m e n t , h e l d t o m a t u r i t yi n v e s t m e n t s a r es u b s e q u e n t l yc a r r i e da t a m o r t i z e dc o s t i nt h ec o n s o l i d a t e d b a l a n c e s h e e t .A m o r t i z a t i o ni s d e t e r m i n e du s i n gt h ee f f e c t i v ei n t e r e s t r a t em e t h o d .A s s e t s u n d e r t h i s c a t e g o r y a r e c l a s s i f i e d a s c u r r e n t a s s e t s i f m a t u r i t y i s w i t h i n 1 2 m o n t h s f r o mt h e e n d o f r e p o r t i n g p e r i o d , o t h e r w i s e , t h e s e a r e c l a s s i f i e d a s n o n c u r r e n t a s s e t s . T h e G r o u ph a s n o t d e s i g n a t e d a n y f i n a n c i a l a s s e t a s h e l d t o m a t u r i t y a s o f J u n e 3 0 , 2 0 1 0a n d 2 0 0 9 . d .A v a i l a b l e f o r s a l e f i n a n c i a l a s s e t s A v a i l a b l e f o r s a l e f i n a n c i a l a s s e t s a r e n o n d e r i v a t i v e f i n a n c i a l a s s e t s t h a t a r e e i t h e r d e s i g n a t e d i n t h i s c a t e g o r yo r n o t c l a s s i f i e di na n yo f t h e o t h e r c a t e g o r i e s .T h e y a r e p u r c h a s e da n dh e l d i n d e f i n i t e l y , a n dm a yb es o l di nr e s p o n s et ol i q u i d i t yr e q u i r e m e n t so rc h a n g e si nm a r k e t c o n d i t i o n s . T h e yi n c l u d ee q u i t yi n v e s t m e n t s ,m o n e ym a r k e tp a p e r sa n do t h e rd e b t i n s t r u m e n t s . T h e u n r e a l i z e dg a i n s a n dl o s s e s a r i s i n gf r o mt h e f a i r v a l u a t i o no f a v a i l a b l e f o r s a l ef i n a n c i a l a s s e t s , e x c e p t f o r t h ef o r e i g ne x c h a n g ef l u c t u a t i o n so na v a i l a b l e f o r s a l ed e b t s e c u r i t i e s a n dt h e r e l a t e de f f e c t i v e i n t e r e s t , a r e e x c l u d e d , n e t o f t a x , f r o mr e p o r t e de a r n i n g s , a n da r e r e c o g n i z e di nt h e s t a t e m e n t o f c o m p r e h e n s i v e i n c o m e a n da r e r e p o r t e di nt h e e q u i t y s e c t i o no f t h ec o n s o l i d a t e db a l a n c es h e e t .T h e s ec h a n g e si nf a i r v a l u e sa r er e c o g n i z e di n e q u i t y u n t i l t h e i n v e s t m e n t i s s o l d , c o l l e c t e d , o r o t h e r w i s e d i s p o s e do f o r u n t i l t h e i n v e s t m e n t i s d e t e r m i n e d t o b e i m p a i r e d , a t w h i c h t i m e t h e c u m u l a t i v e g a i n o r l o s s p r e v i o u s l y r e p o r t e d i n e q u i t y a r e i n c l u d e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . Wh e r e t h e G r o u p h o l d s m o r e t h a n o n e i n v e s t m e n t i n t h e s a m e s e c u r i t y , t h e s e a r e d e e m e d t o b e d i s p o s e do f o n a f i r s t i n f i r s t o u t b a s i s .I n t e r e s t e a r n e do r p a i d o n t h e i n v e s t m e n t s i s r e p o r t e d a s i n t e r e s t i n c o m e o r e x p e n s e u s i n gt h e e f f e c t i v e i n t e r e s t r a t e m e t h o d .D i v i d e n d s e a r n e do n i n v e s t m e n t s a r e r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e w h e n t h e r i g h t o f p a y m e n t h a sb e e ne s t a b l i s h e d .T h e s ef i n a n c i a l a s s e t sa r ec l a s s i f i e da sn o n c u r r e n t a s s e t su n l e s st h e i n t e n t i o n i s t o d i s p o s e s u c h a s s e t s w i t h i n 1 2 m o n t h s f r o mt h e e n d o f r e p o r t i n g p e r i o d . T h e G r o u ph a s n o t d e s i g n a t e da n yf i n a n c i a l a s s e t s a s a v a i l a b l e f o r s a l e a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 . e .O t h e r f i n a n c i a l l i a b i l i t i e s O t h e r f i n a n c i a l l i a b i l i t i e s p e r t a i n t o f i n a n c i a l l i a b i l i t i e s t h a t a r e n o t h e l d f o r t r a d i n g a n d a r e n o t d e s i g n a t e d a t f a i r v a l u e t h r o u g h p r o f i t o r l o s s u p o n t h e i n c e p t i o n o f t h e l i a b i l i t y . T h e s e i n c l u d e l i a b i l i t i e s a r i s i n g f r o mo p e r a t i n g ( e . g . , a c c o u n t s p a y a b l e a n d a c c r u e de x p e n s e s ) a n df i n a n c i n g ( e . g . ,s h o r ta n dl o n g t e r mb o r r o w i n g s ,a d v a n c e st or e l a t e dp a r t i e s ,d i v i d e n d sp a y a b l e ) a c t i v i t i e s . B o r r o w i n g s a r e r e c o g n i z e d i n i t i a l l y a t f a i r v a l u e , n e t o f t r a n s a c t i o n c o s t s i n c u r r e d . B o r r o w i n g s a r es u b s e q u e n t l ys t a t e da ta m o r t i z e dc o s t ;a n yd i f f e r e n c eb e t w e e nt h ep r o c e e d s( n e to f t r a n s a c t i o nc o s t s ) a n dt h er e d e m p t i o nv a l u ei sr e c o g n i z e di nt h ec o n s o l i d a t e ds t a t e m e n t o f i n c o m e o v e r t h e p e r i o d o f t h e b o r r o w i n g s u s i n g t h e e f f e c t i v e i n t e r e s t r a t e m e t h o d .

* S G V M C 3 1 0 9 6 2 *

1 2 B o r r o w i n g s a r e c l a s s i f i e da s c u r r e n t l i a b i l i t i e s u n l e s s t h e G r o u ph a s a nu n c o n d i t i o n a l r i g h t t o d e f e r s e t t l e m e n t o f t h e l i a b i l i t y f o r a t l e a s t 1 2 m o n t h s a f t e r t h e e n d o f r e p o r t i n g p e r i o d . A c c o u n t s p a y a b l e , a c c r u e de x p e n s e s , d i v i d e n d s p a y a b l e a n do t h e r l i a b i l i t i e s a r e r e c o g n i z e d i n t h ep e r i o di nw h i c ht h er e l a t e dm o n e y , g o o d so rs e r v i c e sa r er e c e i v e do rw h e nal e g a l l y e n f o r c e a b l ec l a i ma g a i n s t t h eG r o u pi se s t a b l i s h e d .T h e s ea r em e a s u r e da t a m o r t i z e dc o s t , n o r m a l l y e q u a l t o n o m i n a l a m o u n t . O t h e r f i n a n c i a l l i a b i l i t i e s a r e r e c o g n i z e di n i t i a l l y a t f a i r v a l u e a n d a r e s u b s e q u e n t l y c a r r i e da t a m o r t i z e d c o s t , t a k i n g i n t o a c c o u n t t h e i m p a c t o f a p p l y i n g t h e e f f e c t i v e i n t e r e s t r a t e m e t h o d o f a m o r t i z a t i o n ( o r a c c r e t i o n ) f o r a n y r e l a t e d p r e m i u m( o r d i s c o u n t ) a n d a n y d i r e c t l y a t t r i b u t a b l e t r a n s a c t i o n c o s t s . D e r e c o g n i t i o n o f F i n a n c i a l A s s e t s a n d F i n a n c i a l L i a b i l i t i e s a .F i n a n c i a l a s s e t s Af i n a n c i a l a s s e t ( o r , w h e r e a p p l i c a b l e , a p a r t o f a f i n a n c i a l a s s e t o r p a r t o f a g r o u po f s i m i l a r f i n a n c i a l a s s e t s ) i s d e r e c o g n i z e d w h e n :  t h e r i g h t s t o r e c e i v e c a s h f l o w s f r o mt h e a s s e t h a v e e x p i r e d ;  t h eG r o u pr e t a i n st h er i g h t t or e c e i v ec a s hf l o w sf r o mt h ea s s e t , b u t h a sa s s u m e da n o b l i g a t i o nt op a yt h e mi nf u l l w i t h o u t m a t e r i a l d e l a yt oat h i r dp a r t yu n d e ra p a s s t h r o u g h a r r a n g e m e n t ; o r  t h e G r o u ph a s t r a n s f e r r e di t s r i g h t s t o r e c e i v e c a s h f l o w s f r o mt h e a s s e t a n de i t h e r ( a ) h a s t r a n s f e r r e d s u b s t a n t i a l l y a l l t h e r i s k s a n d r e w a r d s o f t h e a s s e t , o r ( b ) h a s n e i t h e r t r a n s f e r r e d n o r r e t a i n e d s u b s t a n t i a l l y a l l t h e r i s k s a n d r e w a r d s o f t h e a s s e t , b u t h a s t r a n s f e r r e d c o n t r o l o f t h e a s s e t . Wh e r e t h e G r o u ph a s t r a n s f e r r e d i t s r i g h t s t o r e c e i v e c a s h f l o w s f r o ma n a s s e t a n d h a s n e i t h e r t r a n s f e r r e dn o r r e t a i n e ds u b s t a n t i a l l ya l l t h er i s k sa n dr e w a r d so f t h ea s s e t n o r t r a n s f e r r e d c o n t r o lo ft h ea s s e t ,t h ea s s e ti sr e c o g n i z e dt ot h ee x t e n to ft h eG r o u p sc o n t i n u i n g i n v o l v e m e n t i nt h e a s s e t .C o n t i n u i n gi n v o l v e m e n t t h a t t a k e s t h e f o r mo f a g u a r a n t e e o f o v e r t h e t r a n s f e r r e d a s s e t i s m e a s u r e d a t t h e l o w e r o f o r i g i n a l c a r r y i n g a m o u n t o f t h e a s s e t a n d t h e m a x i m u ma m o u n t o f c o n s i d e r a t i o n t h a t t h e G r o u p c o u l d b e r e q u i r e d t o p a y . b .F i n a n c i a l l i a b i l i t i e s Af i n a n c i a l l i a b i l i t yi sd e r e c o g n i z e dw h e nt h eo b l i g a t i o nu n d e r t h el i a b i l i t yi sd i s c h a r g e d , c a n c e l l e d o r h a s e x p i r e d . Wh e r ea ne x i s t i n gf i n a n c i a ll i a b i l i t yi sr e p l a c e db ya n o t h e rf r o mt h es a m el e n d e ro n s u b s t a n t i a l l yd i f f e r e n t t e r m s , o r t h e t e r m s o f a ne x i s t i n gl i a b i l i t ya r e s u b s t a n t i a l l ym o d i f i e d , s u c h a n e x c h a n g e o r m o d i f i c a t i o n i s t r e a t e d a s a d e r e c o g n i t i o n o f t h e o r i g i n a l l i a b i l i t y a n d t h e r e c o g n i t i o no fan e wl i a b i l i t y , a n dt h ed i f f e r e n c ei nt h er e s p e c t i v ec a r r y i n ga m o u n t si s r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . I m p a i r m e n t o f F i n a n c i a l A s s e t s T h eG r o u pa s s e s s e s a t t h ee n do f e a c hr e p o r t i n gp e r i o dw h e t h e r af i n a n c i a l a s s e t o r ag r o u po f f i n a n c i a l a s s e t s i s i m p a i r e d . a .F i n a n c i a l a s s e t s c a r r i e d a t a m o r t i z e d c o s t I f t h e r ei so b j e c t i v ee v i d e n c et h a t a ni m p a i r m e n t l o s so nl o a n sa n dr e c e i v a b l e sc a r r i e da t a m o r t i z e d c o s t h a s b e e n i n c u r r e d , t h e a m o u n t o f l o s s i s m e a s u r e d a s t h e d i f f e r e n c e b e t w e e n t h e a s s e t s c a r r y i n g a m o u n t a n d t h e p r e s e n t v a l u e o f e s t i m a t e d f u t u r e c a s h f l o w s ( e x c l u d i n g f u t u r e

* S G V M C 3 1 0 9 6 2 *

1 3 c r e d i t l o s s e s t h a t h a v e n o t b e e ni n c u r r e d ) d i s c o u n t e d a t t h e f i n a n c i a l a s s e t s o r i g i n a l e f f e c t i v e i n t e r e s t r a t e( i . e . , t h ee f f e c t i v ei n t e r e s t r a t ec o m p u t e da t i n i t i a l r e c o g n i t i o n ) . T h ec a r r y i n g a m o u n t o f t h e a s s e t s h a l l b e r e d u c e d t h r o u g h t h e u s e o f a n a l l o w a n c e a c c o u n t . T h e a m o u n t o f l o s s , i f a n y , i s r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . T h eG r o u pf i r s t a s s e s s e sw h e t h e ro b j e c t i v ee v i d e n c eo f i m p a i r m e n t e x i s t si n d i v i d u a l l yf o r f i n a n c i a l a s s e t s t h a t a r e i n d i v i d u a l l ys i g n i f i c a n t , a n di n d i v i d u a l l yo r c o l l e c t i v e l yf o r f i n a n c i a l a s s e t s t h a t a r e n o t i n d i v i d u a l l ys i g n i f i c a n t . O b j e c t i v ee v i d e n c ei n c l u d e s o b s e r v a b l ed a t at h a t c o m e s t ot h e a t t e n t i o no f t h e G r o u pa b o u t l o s s e v e n t s s u c ha s , b u t n o t l i m i t e dt o , s i g n i f i c a n t f i n a n c i a l d i f f i c u l t yo f t h e c o u n t e r p a r t y , a b r e a c ho f c o n t r a c t , s u c ha s a d e f a u l t o r d e l i n q u e n c y i ni n t e r e s t o r p r i n c i p a l p a y m e n t s , p r o b a b i l i t yt h a t t h e b o r r o w e r w i l l e n t e r b a n k r u p t c yo r o t h e r f i n a n c i a l r e o r g a n i z a t i o n . I f i t i s d e t e r m i n e d t h a t n o o b j e c t i v e e v i d e n c e o f i m p a i r m e n t e x i s t s f o r a n i n d i v i d u a l l y a s s e s s e d f i n a n c i a l a s s e t , w h e t h e r s i g n i f i c a n t o r n o t , t h e a s s e t i s i n c l u d e di n t h e g r o u po f f i n a n c i a l a s s e t s w i t h s i m i l a r c r e d i t r i s k a n d c h a r a c t e r i s t i c s a n d t h a t g r o u p o f f i n a n c i a l a s s e t si sc o l l e c t i v e l ya s s e s s e df o ri m p a i r m e n t .A s s e t st h a ta r ei n d i v i d u a l l ya s s e s s e df o r i m p a i r m e n t a n df o r w h i c ha ni m p a i r m e n t l o s s i s r e c o g n i z e da r en o t i n c l u d e di nac o l l e c t i v e a s s e s s m e n t o fi m p a i r m e n t .T h ei m p a i r m e n t a s s e s s m e n t i sp e r f o r m e da t t h ee n do fe a c h r e p o r t i n g p e r i o d . F o r t h e p u r p o s e o f a c o l l e c t i v e e v a l u a t i o n o f i m p a i r m e n t , f i n a n c i a l a s s e t s a r e g r o u p e d o n t h e b a s i s o f s u c h c r e d i t r i s k c h a r a c t e r i s t i c s s u c h a s c u s t o m e r t y p e , p a y m e n t h i s t o r y , p a s t d u e s t a t u s a n d t e r m . L o a n s a n dr e c e i v a b l e s , t o g e t h e r w i t ht h e r e l a t e da l l o w a n c e , a r e w r i t t e no f f w h e nt h e r e i s n o r e a l i s t i c p r o s p e c t o f f u t u r e r e c o v e r ya n da l l c o l l a t e r a l h a s b e e nr e a l i z e d .I f , i nas u b s e q u e n t p e r i o d ,t h ea m o u n to ft h ei m p a i r m e n tl o s sd e c r e a s e sa n dt h ed e c r e a s ec a nb er e l a t e d o b j e c t i v e l yt oa ne v e n to c c u r r i n ga f t e rt h ei m p a i r m e n tw a sr e c o g n i z e d ,t h ep r e v i o u s l y r e c o g n i z e di m p a i r m e n t l o s si s r e v e r s e d .A n ys u b s e q u e n t r e v e r s a l o f a ni m p a i r m e n t l o s si s r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e , t o t h e e x t e n t t h a t t h e c a r r y i n g v a l u e o f t h e a s s e t d o e s n o t e x c e e d i t s a m o r t i z e d c o s t a t t h e r e v e r s a l d a t e . b .F i n a n c i a l a s s e t s c a r r i e d a t c o s t I f t h e r e i s a n o b j e c t i v e e v i d e n c e t h a t a n i m p a i r m e n t l o s s o f a n u n q u o t e d e q u i t y i n s t r u m e n t t h a t i s n o t c a r r i e da t f a i r v a l u e b e c a u s e i t s f a i r v a l u e c a n n o t b e r e l i a b l ym e a s u r e d , o r a d e r i v a t i v e a s s e t t h a t i s l i n k e dt oa n dm u s t b e s e t t l e db yd e l i v e r yo f s u c ha nu n q u o t e de q u i t yi n s t r u m e n t h a s b e e ni n c u r r e d , t h e a m o u n t o f t h el o s s i s m e a s u r e da s t h e d i f f e r e n c e b e t w e e nt h e a s s e t s c a r r y i n g a m o u n t a n d t h e p r e s e n t v a l u e o f e s t i m a t e d f u t u r e c a s h f l o w s d i s c o u n t e d a t t h e c u r r e n t m a r k e t r a t e o f r e t u r n f o r a s i m i l a r f i n a n c i a l a s s e t . c .A v a i l a b l e f o r s a l e f i n a n c i a l a s s e t s I nt h e c a s e o f e q u i t yi n v e s t m e n t s c l a s s i f i e da s a v a i l a b l e f o r s a l e f i n a n c i a l a s s e t s , i m p a i r m e n t w o u l di n c l u d eas i g n i f i c a n t o r p r o l o n g e dd e c l i n ei nt h ef a i r v a l u eo f t h ei n v e s t m e n t s b e l o w t h e i r c o s t .Wh e r e t h e r e i s e v i d e n c e o f i m p a i r m e n t l o s s , t h e c u m u l a t i v e l o s s m e a s u r e d a s t h e d i f f e r e n c e b e t w e e n t h e a c q u i s i t i o n c o s t a n d t h e c u r r e n t f a i r v a l u e , l e s s a n y i m p a i r m e n t l o s s o n t h a t f i n a n c i a l a s s e t p r e v i o u s l y r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e i s r e m o v e d f r o me q u i t y a n d r e c o g n i z e d i n c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . I m p a i r m e n t l o s s e s o n e q u i t y i n v e s t m e n t sa r en o t r e v e r s e dt h r o u g hc o n s o l i d a t e ds t a t e m e n t o f i n c o m e .I n c r e a s e si nf a i r v a l u e a f t e r i m p a i r m e n t a r e r e c o g n i z e d d i r e c t l y i n t h e c o n s o l i d a t e d s t a t e m e n t o f c o m p r e h e n s i v e i n c o m e a n d p r e s e n t e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f c h a n g e s i n e q u i t y . I nt h e c a s e o f d e b t i n s t r u m e n t s c l a s s i f i e da s a v a i l a b l e f o r s a l e , i m p a i r m e n t i s a s s e s s e db a s e d o nt h e s a m ec r i t e r i aa s f i n a n c i a l a s s e t s c a r r i e da t a m o r t i z e dc o s t .F u t u r e i n t e r e s t i n c o m ei s b a s e do nt h er e d u c e dc a r r y i n ga m o u n t a n di s a c c r u e db a s e do nt h er a t eo f i n t e r e s t u s e dt o d i s c o u n t c a s h f l o w s f o r t h e p u r p o s e o f m e a s u r i n g i m p a i r m e n t l o s s .I f , i n s u b s e q u e n t y e a r , t h e f a i r v a l u e o f a d e b t i n s t r u m e n t i n c r e a s e s a n d t h e i n c r e a s e c a n b e r e l a t e d o b j e c t i v e l y t o a n e v e n t o c c u r r i n g a f t e r t h e i m p a i r m e n t l o s s w a s r e c o g n i z e d i n i n c o m e , t h e i m p a i r m e n t l o s s i s r e v e r s e d t h r o u g h i n c o m e .

* S G V M C 3 1 0 9 6 2 *

1 4 D e t e r m i n a t i o n o f f a i r v a l u e T h e f a i r v a l u e o f f i n a n c i a l i n s t r u m e n t s t r a d e di na c t i v e m a r k e t s a t t h e e n do f r e p o r t i n gp e r i o di s b a s e do n t h e i r q u o t e d m a r k e t p r i c e o r d e a l e r p r i c e q u o t a t i o n s ( b i d p r i c e f o r l o n g p o s i t i o n s a n d a s k p r i c ef o r s h o r t p o s i t i o n s ) , w i t h o u t a n yd e d u c t i o nf o r t r a n s a c t i o nc o s t s . Wh e nc u r r e n t b i da n d a s k i n gp r i c e s a r e n o t a v a i l a b l e , t h e p r i c e o f t h e m o s t r e c e n t t r a n s a c t i o np r o v i d e s e v i d e n c e o f t h e c u r r e n t f a i r v a l u e a s l o n ga s t h e r eh a s n o t b e e nas i g n i f i c a n t c h a n g ei ne c o n o m i cc i r c u m s t a n c e s s i n c e t h e t i m e o f t h e t r a n s a c t i o n . F o r a l l o t h e r f i n a n c i a l i n s t r u m e n t s n o t t r a d e d i n a n a c t i v e m a r k e t , t h e f a i r v a l u e i s d e t e r m i n e d b y u s i n g a p p r o p r i a t e v a l u a t i o n t e c h n i q u e s . D a y 1 d i f f e r e n c e Wh e r et h et r a n s a c t i o np r i c ei nan o n a c t i v em a r k e t i sd i f f e r e n t f r o mt h ef a i r v a l u ef r o mo t h e r o b s e r v a b l e c u r r e n t m a r k e t t r a n s a c t i o n s i nt h e s a m e i n s t r u m e n t o r b a s e do nav a l u a t i o nt e c h n i q u e w h o s ev a r i a b l e s i n c l u d eo n l yd a t af r o mo b s e r v a b l em a r k e t , t h e G r o u pr e c o g n i z e s t h ed i f f e r e n c e b e t w e e nt h e t r a n s a c t i o n p r i c e a n d f a i r v a l u e ( a D a y 1d i f f e r e n c e ) i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e u n l e s s i t q u a l i f i e s f o r r e c o g n i t i o na s s o m e o t h e r t y p e o f a s s e t .I nc a s e s w h e r e t h e i n p u t s a r e m a d e o f d a t a w h i c h i s n o t o b s e r v a b l e , t h e d i f f e r e n c e b e t w e e n t h e t r a n s a c t i o n p r i c e a n dm o d e l v a l u ei so n l yr e c o g n i z e di nt h ec o n s o l i d a t e ds t a t e m e n to fi n c o m ew h e nt h ei n p u t sb e c o m e o b s e r v a b l e o r w h e nt h e i n s t r u m e n t i s d e r e c o g n i z e d .F o r e a c ht r a n s a c t i o n , t h e G r o u pd e t e r m i n e s t h e a p p r o p r i a t e m e t h o d o f r e c o g n i z i n g a D a y 1 d i f f e r e n c e a m o u n t . O f f s e t t i n g f i n a n c i a l i n s t r u m e n t s F i n a n c i a l a s s e t s a n d f i n a n c i a l l i a b i l i t i e s a r e o f f s e t a n d t h e n e t a m o u n t r e p o r t e d i n t h e c o n s o l i d a t e d b a l a n c e s h e e t i f , a n do n l yi f , t h e r e i s ac u r r e n t l ye n f o r c e a b l e l e g a l r i g h t t oo f f s e t t h e r e c o g n i z e d a m o u n t s a n dt h e r ei s a ni n t e n t i o nt os e t t l eo nan e t b a s i s , o r t or e a l i z et h ea s s e t a n ds e t t l et h e l i a b i l i t ys i m u l t a n e o u s l y .T h i s i s n o t g e n e r a l l yt h ec a s ew i t hm a s t e r n e t t i n ga g r e e m e n t s , a n dt h e r e l a t e df i n a n c i a l a s s e t sa n df i n a n c i a l l i a b i l i t i e sa r ep r e s e n t e dg r o s si nt h ec o n s o l i d a t e db a l a n c e s h e e t . I n v e n t o r i e s R a wa n dr e f i n e ds u g a r i n v e n t o r yi s v a l u e da t t h el o w e r o f c o s t a n dn e t r e a l i z a b l ev a l u e ( N R V ) , c o s t b e i n gd e t e r m i n e du s i n gt h ew e i g h t e da v e r a g em e t h o d .T h ec o s t o f a l c o h o l i n c l u d e sd i r e c t m a t e r i a l s a n dl a b o r a n dap r o p o r t i o no f m a n u f a c t u r i n go v e r h e a dc o s t s w i t hu n i t c o s t d e t e r m i n e d u s i n gt h e m o v i n ga v e r a g e m e t h o d .Mo l a s s e s i n v e n t o r yi s c a r r i e da t t h e l o w e r o f c o s t a n dN R V . P r o d u c t i o nc o s t i s a l l o c a t e du s i n gt h e r e l a t i v e s a l e s v a l u e o f e a c ho f t h e j o i n t p r o d u c t s , i . e . , r a w a n dr e f i n e ds u g a r a n dm o l a s s e s .T h e c o s t s o f m o l a s s e s i n c l u d ei t s p u r c h a s e c o s t w i t hu n i t c o s t d e t e r m i n e du s i n gm o v i n ga v e r a g em e t h o d .N R Vi st h ee s t i m a t e ds e l l i n gp r i c ei nt h eo r d i n a r y c o u r s e o f b u s i n e s s l e s s v a r i a b l e s e l l i n g e x p e n s e . Ma t e r i a l s a n ds u p p l i e s i n v e n t o r yi s v a l u e da t t h e l o w e r o f c o s t a n dN R V , c o s t b e i n gd e t e r m i n e d u s i n g t h e m o v i n g a v e r a g e m e t h o d .Ap r o v i s i o n f o r i n v e n t o r y l o s s e s i s p r o v i d e d f o r s l o wm o v i n g , o b s o l e t e ,d e f e c t i v ea n dd a m a g e di n v e n t o r i e sb a s e do np h y s i c a li n s p e c t i o na n dm a n a g e m e n t e v a l u a t i o n . C o n s u m a b l e B i o l o g i c a l A s s e t s C o n s u m a b l e b i o l o g i c a l a s s e t i s m e a s u r e do ni n i t i a l r e c o g n i t i o na n da t t h ee n do f e a c hr e p o r t i n g p e r i o da t i t sf a i rv a l u el e s se s t i m a t e dc o s t st os e l l , u n l e s st h ef a i rv a l u ec a n n o t b em e a s u r e d r e l i a b l y .T h e f a i r v a l u e h a s b e e n a r r i v e d a t b y d i s c o u n t i n g t h e p r e s e n t v a l u e o f e x p e c t e dn e t c a s h f l o w s f r o ms t a n d i n gc a n e s d i s c o u n t e da t t h e r e l e v a n t m a r k e t d e t e r m i n e dp r e t a xr a t e .E x p e c t e d c a s h f l o w s h a v e b e e n c o m p u t e d b y e s t i m a t i n g t h e e x p e c t e d c r o p a n d t h e s u g a r e x t r a c t i o n r a t e a n d t h e f o r e c a s t s o f s u g a r p r i c e s w h i c hw i l l p r e v a i l i nt h e c o m i n gy e a r . C o s t s t os e l l , w h i c hi n c l u d e s f e r t i l i z i n g , c u l t i v a t i o n a n do t h e r d i r e c t e x p e n s e s , a r e e s t i m a t e d b a s e do n t h e y e a r l y b u d g e t s o f t h e G r o u p . Ag a i no r l o s s a r i s i n go ni n i t i a l r e c o g n i t i o no f ac o n s u m a b l eb i o l o g i c a l a s s e t a t f a i r v a l u el e s s e s t i m a t e d c o s t s t o s e l l a n d f r o ma c h a n g e i n f a i r v a l u e l e s s e s t i m a t e d c o s t s t o s e l l i s r e c o g n i z e di n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e f o r t h e p e r i o d i n w h i c h i t a r i s e s .

* S G V M C 3 1 0 9 6 2 *

1 5 P r o p e r t y , P l a n t a n d E q u i p m e n t P r o p e r t y , p l a n t a n d e q u i p m e n t a r e c a r r i e d a t h i s t o r i c a l c o s t l e s s a c c u m u l a t e d d e p r e c i a t i o n a n d a n y i m p a i r m e n t , e x c e p t f o r l a n dw h i c hi s s t a t e da t r e v a l u e da m o u n t l e s s a n yi m p a i r m e n t .H i s t o r i c a l c o s t i n c l u d e se x p e n d i t u r et h a t i sd i r e c t l ya t t r i b u t a b l et ot h ea c q u i s i t i o no f t h ea s s e t , i n c l u d i n g b o r r o w i n g c o s t s o n q u a l i f y i n g a s s e t s . S u b s e q u e n t c o s t s a r e i n c l u d e di n t h e a s s e t s c a r r y i n g a m o u n t o r r e c o g n i z e d a s a s e p a r a t e a s s e t , a s a p p r o p r i a t e , o n l yw h e ni t i s p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t s a s s o c i a t e dw i t ht h e i t e mw i l l f l o wt ot h eG r o u pa n dt h ec o s t o f t h ei t e m sc a nb em e a s u r e dr e l i a b l y .A l l o t h e r r e p a i r sa n d m a i n t e n a n c e a r e c h a r g e d t o t h e s t a t e m e n t o f i n c o m e d u r i n g t h e f i n a n c i a l p e r i o d , i n w h i c h t h e y a r e i n c u r r e d . C o n s t r u c t i o ni np r o g r e s sw h i c hr e p r e s e n t sp r o p e r t i e su n d e rc o n s t r u c t i o ni ss t a t e da t c o s t a n d d e p r e c i a t e d o n l y f r o ms u c h t i m e a s t h e r e l e v a n t a s s e t s a r e c o m p l e t e d a n d p u t i n t oo p e r a t i o n a l u s e . U p o nc o m p l e t i o n , t h e s e p r o p e r t i e s a r e r e c l a s s i f i e dt ot h e r e l e v a n t p r o p e r t y , p l a n t a n de q u i p m e n t a c c o u n t . T h e n e t a p p r a i s a l i n c r e m e n t r e s u l t i n g f r o mt h e r e v a l u a t i o n o f l a n d i s p r e s e n t e d u n d e r R e v a l u a t i o n i n c r e m e n t o np r o p e r t i e s , n e t o f r e l a t e dd e f e r r e di n c o m e t a xl i a b i l i t y , i nt h e c o n s o l i d a t e db a l a n c e s h e e t a n dc o n s o l i d a t e ds t a t e m e n t o f c h a n g e si ne q u i t y .T h eC o m p a n y ss h a r ei nn e t a p p r a i s a l i n c r e a s e r e s u l t i n gf r o mt h e r e v a l u a t i o no f l a n do f a na s s o c i a t e i s s h o w na s S h a r e i nr e v a l u a t i o n i n c r e m e n t o n l a n d o f a n a s s o c i a t e i n t h e c o n s o l i d a t e d b a l a n c e s h e e t a n d c o n s o l i d a t e d s t a t e m e n t o f c h a n g e si ne q u i t y .I n c r e a s e si nt h ec a r r y i n ga m o u n t a r i s i n go nr e v a l u a t i o no f p r o p e r t i e sa r e r e c o g n i z e di nt h ec o n s o l i d a t e ds t a t e m e n t o f c o m p r e h e n s i v ei n c o m ea n dc r e d i t e dt or e v a l u a t i o n i n c r e m e n t i nt h e c o n s o l i d a t e ds t a t e m e n t o f c h a n g e s i ne q u i t y , n e t o f r e l a t e dd e f e r r e dt a xl i a b i l i t y . A n yr e s u l t i n gd e c r e a s e i s d i r e c t l yc h a r g e da g a i n s t t h e r e l a t e dr e v a l u a t i o ni n c r e m e n t t ot h e e x t e n t t h a t t h e d e c r e a s e d o e s n o t e x c e e d t h e a m o u n t o f t h e r e v a l u a t i o n i nr e s p e c t o f t h e s a m e a s s e t .A l l o t h e r d e c r e a s e s a r e c h a r g e dt ot h e c o n s o l i d a t e ds t a t e m e n t o f i n c o m e .V a l u a t i o n s a r e p e r f o r m e d f r e q u e n t l ye n o u g ht oe n s u r e t h a t t h e f a i r v a l u e o f p r o p e r t i e s d o e s n o t d i f f e r s i g n i f i c a n t l yf r o mi t s c a r r y i n g a m o u n t . T h e G r o u pu s e dt h e c a r r y i n ga m o u n t o f C A D P I s d e p r e c i a b l e a s s e t s a s o f J u l y1 , 2 0 0 4 , w h i c hi s t h e r e v a l u e d a m o u n t l e s s a c c u m u l a t e d d e p r e c i a t i o n f r o mt h e G r o u p s p e r s p e c t i v e , a s t h e i r d e e m e d c o s t s a t t h a t d a t ew h e nt h e G r o u pa d o p t e dP F R S1 , F i r s t t i m e A d o p t i o no f P h i l i p p i n e F i n a n c i a l R e p o r t i n g S t a n d a r d s . A n a n n u a l t r a n s f e r f r o mt h e a s s e t r e v a l u a t i o n r e s e r v e t o r e t a i n e d e a r n i n g s i s m a d e f o r t h e d i f f e r e n c e b e t w e e n d e p r e c i a t i o n b a s e d o n t h e r e v a l u e d c a r r y i n g a m o u n t o f t h e a s s e t s a n d d e p r e c i a t i o n b a s e d o n t h e a s s e t s o r i g i n a l c o s t . L a n di s n o t d e p r e c i a t e d .D e p r e c i a t i o no no t h e r p r o p e r t y , p l a n t a n de q u i p m e n t i s c a l c u l a t e d u s i n g t h e s t r a i g h t l i n e m e t h o d t o a l l o c a t e t h e i r c o s t l e s s t h e i r r e s i d u a l v a l u e s o v e r t h e i r e s t i m a t e d u s e f u l l i v e s , a s f o l l o w s : N u m b e r o f Y e a r s B u i l d i n g a n d i m p r o v e m e n t s 1 0 t o 2 5 Ma c h i n e r y a n d e q u i p m e n t : F a c t o r y m a c h i n e r y a n d i n s t a l l a t i o n s 1 7 t o 2 5 L o c o m o t i v e s a n d o t h e r e q u i p m e 5 t n t o 2 0 S a f e t y e q u i p m e n t 5 S e r v i c e v e h i c l 5 t o e s 6 R a i l r o a d e q u i p m e 1 0 t o n t 2 0 O f f i c e f u r n i t u r e , f i x t u r e s a n d e q u i p m e t o n t 3 1 0

* S G V M C 3 1 0 9 6 2 *

1 6 D e p r e c i a t i o n c o m m e n c e s w h e n a n a s s e t i s i n i t s l o c a t i o n o r c o n d i t i o n c a p a b l e o f b e i n g o p e r a t e d i n t h e m a n n e r i n t e n d e d b y m a n a g e m e n t . D e p r e c i a t i o n c e a s e s a t t h e e a r l i e r o f t h e d a t e t h a t t h e i t e mi s c l a s s i f i e da s h e l df o r s a l e ( o r i n c l u d e di nad i s p o s a l g r o u pt h a t i s c l a s s i f i e da s h e l df o r s a l e ) i n a c c o r d a n c e w i t h P F R S5 , N o n c u r r e n t A s s e t s H e l df o r S a l e a n dD i s c o n t i n u e dO p e r a t i o n s , a n d t h e d a t e t h e a s s e t i s d e r e c o g n i z e d . Ma j o r r e n o v a t i o n s t h a t q u a l i f i e d f o r c a p i t a l i z a t i o n a r e d e p r e c i a t e d o v e r t h e r e m a i n i n g u s e f u l l i f e o f t h e r e l a t e d a s s e t o r t o t h e d a t e o f t h e n e x t m a j o r r e n o v a t i o n , w h i c h e v e r i s s o o n e r . T h e a s s e t s r e s i d u a l v a l u e , u s e f u l l i f e a n d d e p r e c i a t i o n m e t h o d a r e r e v i e w e d p e r i o d i c a l l y t o e n s u r e t h a t t h e r e s i d u a l v a l u e s , p e r i o d a n d m e t h o d o f d e p r e c i a t i o n a r e c o n s i s t e n t w i t h t h e e x p e c t e d p a t t e r n o f e c o n o m i c b e n e f i t s f r o mi t e m s o f p r o p e r t y , p l a n t a n d e q u i p m e n t . T h e a s s e t s c a r r y i n ga m o u n t i s w r i t t e nd o w ni m m e d i a t e l yt oi t s r e c o v e r a b l e a m o u n t i f t h e a s s e t s c a r r y i n g a m o u n t i s g r e a t e r t h a n i t s e s t i m a t e d r e c o v e r a b l e a m o u n t . G a i n s a n dl o s s e s o nd i s p o s a l a r e d e t e r m i n e db yc o m p a r i n gp r o c e e d s w i t hc a r r y i n ga m o u n t o f t h e a s s e t a n d a r e r e f l e c t e d a s o t h e r i n c o m e i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . T h e p o r t i o no f r e v a l u a t i o ni n c r e m e n t i nl a n d , n e t o f r e l a t e dd e f e r r e d i n c o m e t a xl i a b i l i t y , r e a l i z e d u p o n d i s p o s a l o f t h e p r o p e r t y i s t r a n s f e r r e d t o u n r e s t r i c t e d r e t a i n e d e a r n i n g s . I m p a i r m e n t o f N o n f i n a n c i a l A s s e t s T h e c a r r y i n g v a l u e s o f p r o p e r t y , p l a n t a n d e q u i p m e n t , i n v e s t m e n t i n s h a r e s o f s t o c k o f a n a s s o c i a t e a n do t h e rn o n c u r r e n ta s s e t sa r er e v i e w e df o ri m p a i r m e n tw h e n e v e re v e n t so rc h a n g e si n c i r c u m s t a n c e s i n d i c a t e t h a t t h e c a r r y i n ga m o u n t m a yn o t b e r e c o v e r a b l e .A ni m p a i r m e n t l o s s i s r e c o g n i z e df o r t h e a m o u n t b yw h i c ht h e a s s e t s c a r r y i n ga m o u n t e x c e e d s i t s r e c o v e r a b l e a m o u n t . T h e r e c o v e r a b l e a m o u n t i s t h eh i g h e r o f a na s s e t s f a i r v a l u e l e s s c o s t s t os e l l a n dv a l u e i n u s e . F o r t h e p u r p o s e s o f a s s e s s i n gi m p a i r m e n t , a s s e t s a r e g r o u p e da t t h e l o w e s t l e v e l s f o r w h i c ht h e r e a r es e p a r a t e l yi d e n t i f i a b l ec a s hf l o w s( c a s h g e n e r a t i n gu n i t s ) .N o n f i n a n c i a l a s s e t so t h e rt h a n g o o d w i l l t h a t s u f f e r e di m p a i r m e n t a r e r e v i e w e df o r p o s s i b l er e v e r s a l o f t h ei m p a i r m e n t a t e a c h r e p o r t i n g d a t e . I m p a i r m e n t l o s s e s o f c o n t i n u i n g o p e r a t i o n s a r e r e c o g n i z e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e i nt h o s ee x p e n s e c a t e g o r i e s c o n s i s t e n t w i t ht h e f u n c t i o no f t h ei m p a i r e da s s e t .I m p a i r m e n t l o s s r e c o g n i z e dd u r i n gi n t e r i mp e r i o di nr e s p e c tt og o o d w i l lo ra ni n v e s t m e n t ,e i t h e ra ne q u i t y i n s t r u m e n t o r a f i n a n c i a l a s s e t c a r r i e d a t c o s t , s h o u l d n o t b e r e v e r s e d a t y e a r e n d . A n a s s e s s m e n t i s m a d e a t e a c h r e p o r t i n g d a t e a s t o w h e t h e r t h e r e i s a n y i n d i c a t i o n t h a t p r e v i o u s l y r e c o g n i z e di m p a i r m e n t l o s s e sm a yn ol o n g e r e x i s t o r m a yh a v ed e c r e a s e d .I f s u c hi n d i c a t i o n e x i s t s , t h e r e c o v e r a b l e a m o u n t i s e s t i m a t e d .Ap r e v i o u s l y r e c o g n i z e di m p a i r m e n t l o s s i s r e v e r s e d o n l yi f t h e r e h a s b e e n a c h a n g e i n t h e e s t i m a t e s u s e d t od e t e r m i n e t h e a s s e t s r e c o v e r a b l e a m o u n t s i n c e t h e l a s t i m p a i r m e n t l o s s w a s r e c o g n i z e d .I f t h a t i s t h e c a s e , t h e c a r r y i n g a m o u n t o f t h e a s s e t i s i n c r e a s e d t o i t s r e c o v e r a b l e a m o u n t .T h a t i n c r e a s e d a m o u n t c a n n o t e x c e e d t h e c a r r y i n g a m o u n t t h a t w o u l d h a v e b e e n d e t e r m i n e d , n e t o f d e p r e c i a t i o n , h a d n o i m p a i r m e n t l o s s b e e n r e c o g n i z e d f o r t h ea s s e t i np r i o r y e a r s .S u c hr e v e r s a l i sr e c o g n i z e di nt h ec o n s o l i d a t e ds t a t e m e n t o f i n c o m e u n l e s s t h e a s s e t i s c a r r i e d a t r e v a l u e d a m o u n t , i n w h i c h c a s e t h e r e v e r s a l i s t r e a t e d a s a r e v a l u a t i o n i n c r e a s e .A f t e r s u c h a r e v e r s a l , t h e d e p r e c i a t i o n c h a r g e i s a d j u s t e d i n f u t u r e p e r i o d s t o a l l o c a t e t h e a s s e t s r e v i s e dc a r r y i n ga m o u n t , l e s s a n yr e s i d u a l v a l u e , o na s y s t e m a t i c b a s i s o v e r i t s r e m a i n i n g u s e f u l l i f e . S h a r e C a p i t a l a n d S h a r e P r e m i u m C o m m o n s h a r e s a r e c l a s s i f i e d a s e q u i t y . I n c r e m e n t a l c o s t s d i r e c t l y a t t r i b u t a b l e t o t h e i s s u e o f n e w s h a r e s o r o p t i o n s a r e s h o w ni ne q u i t ya s ad e d u c t i o nf r o mp r o c e e d s , n e t o f t a x .T h ee x c e s s o f p r o c e e d s f r o mt h e i s s u a n c e o f s h a r e s o v e r t h e p a r v a l u e o f s h a r e s i s c r e d i t e d t o s h a r e p r e m i u m .

* S G V M C 3 1 0 9 6 2 *

1 7 T r e a s u r y S h a r e s Wh e r e a n ym e m b e r o f t h e G r o u pp u r c h a s e s t h e C o m p a n y s e q u i t y s h a r e c a p i t a l ( t r e a s u r y s h a r e s ) , t h e c o n s i d e r a t i o n p a i d , i n c l u d i n g a n yd i r e c t l y a t t r i b u t a b l e i n c r e m e n t a l c o s t s ( n e t o f r e l a t e d t a x e s ) , i s d e d u c t e d f r o me q u i t y u n t i l t h e s h a r e s a r e c a n c e l l e d , r e i s s u e d o r d i s p o s e d o f .Wh e r e s u c h s h a r e s a r es u b s e q u e n t l ys o l do rr e i s s u e d , a n yc o n s i d e r a t i o nr e c e i v e d , n e t o fa n yd i r e c t l ya t t r i b u t a b l e i n c r e m e n t a l t r a n s a c t i o n s c o s t s a n dt h e r e l a t e di n c o m e t a xe f f e c t , i s i n c l u d e di ne q u i t y a t t r i b u t a b l e t o t h e C o m p a n y s e q u i t y h o l d e r s . R e t a i n e d E a r n i n g s R e t a i n e de a r n i n g s r e p r e s e n t t h e c u m u l a t i v e b a l a n c e o f n e t i n c o m e o r l o s s , d i v i d e n dd i s t r i b u t i o n s , e f f e c t s o f t h e c h a n g e s i n a c c o u n t i n g p o l i c y a n d o t h e r c a p i t a l a d j u s t m e n t s . U n a p p r o p r i a t e d r e t a i n e d e a r n i n g s r e p r e s e n t t h a t p o r t i o nw h i c hi s f r e ea n dc a nb ed e c l a r e da s d i v i d e n d s t os h a r e h o l d e r s . A p p r o p r i a t e dr e t a i n e de a r n i n g s r e p r e s e n t t h a t p o r t i o nw h i c hh a s b e e nr e s t r i c t e da n dt h e r e f o r ei s n o t a v a i l a b l e f o r a n y d i v i d e n d d e c l a r a t i o n . D i v i d e n d D i s t r i b u t i o n D i v i d e n dd i s t r i b u t i o nt ot h eC o m p a n y ss h a r e h o l d e r sa n dt h en o n c o n t r o l l i n gi n t e r e s t si s r e c o g n i z e da sal i a b i l i t yi nt h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n ti nt h ep e r i o di nw h i c ht h e d i v i d e n d s a r e a p p r o v e d b y t h e C o m p a n y s B O Da n d s h a r e h o l d e r s . R e v e n u e R e c o g n i t i o n R e v e n u e c o m p r i s e s t h e f a i r v a l u e o f t h e s a l e o f g o o d s a n ds e r v i c e s i nt h e o r d i n a r yc o u r s e o f t h e G r o u p s a c t i v i t i e s . R e v e n u e i s s h o w n n e t o f v a l u e a d d e d t a x , r e t u r n s a n d d i s c o u n t s . T h eG r o u pr e c o g n i z e sr e v e n u ew h e nt h ea m o u n to fr e v e n u ec a nb er e l i a b l ym e a s u r e d , i t i s p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t s w i l l f l o wi n t o t h e e n t i t y a n d s p e c i f i c c r i t e r i a h a v e b e e n m e t f o r e a c h o f t h e G r o u p s a c t i v i t i e s a s d e s c r i b e d b e l o w .T h e a m o u n t o f r e v e n u e i s n o t c o n s i d e r e d t o b e r e l i a b l y m e a s u r e d u n t i l a l l c o n t i n g e n c i e s r e l a t i n g t o t h e s a l e h a v e b e e n r e s o l v e d . S a l e o f r a wa n d r e f i n e d s u g a r S a l e o f r a ws u g a r i s r e c o g n i z e du p o ne n d o r s e m e n t a n dt r a n s f e r o f q u e d a n s , w h i l e s a l e o f r e f i n e d s u g a r i s r e c o g n i z e d u p o n s h i p m e n t o r d e l i v e r y . S a l e o f m o l a s s e s S a l e o f m o l a s s e s i s r e c o g n i z e d u p o n t r a n s f e r o f m o l a s s e s w a r e h o u s e r e c e i p t s . R e v e n u e f r o mt o l l i n g s e r v i c e s R e v e n u e f r o mt o l l i n gs e r v i c e s i s r e c o g n i z e dw h e nt h ee q u i v a l e n t r e f i n e ds u g a r i s p r o d u c e df r o m r a ws u g a r o w n e d b y t o l l e e s . F a r mi n c o m e F a r mi n c o m e i s r e c o g n i z e d w h e n t h e r e l a t e d s e r v i c e i s r e n d e r e d . I n t e r e s t i n c o m e I n t e r e s t i n c o m eo nc a s hi nb a n k sa n do t h e rs h o r t t e r mi n v e s t m e n t si sr e c o g n i z e do nat i m e p r o p o r t i o n b a s i s u s i n g t h e e f f e c t i v e i n t e r e s t r a t e m e t h o d . O t h e r i n c o m e O t h e r i n c o m e i s r e c o g n i z e d w h e n e a r n e d . O t h e r C o m p r e h e n s i v e I n c o m e O t h e r c o m p r e h e n s i v e i n c o m e c o m p r i s e s i t e m s o f i n c o m e a n d e x p e n s e s ( i n c l u d i n g i t e m s p r e v i o u s l y p r e s e n t e d u n d e r t h e s t a t e m e n t o f c h a n g e s i n e q u i t y ) t h a t a r e n o t r e c o g n i z e d i n p r o f i t o r l o s s f o r t h e y e a r i n a c c o r d a n c e w i t h P F R S .

* S G V M C 3 1 0 9 6 2 *

1 8 C o s t a n d E x p e n s e s C o s t o f s a l e s C o s t o f s a l e s i n c l u d e d i r e c t m a t e r i a l s a n d l a b o r c o s t s , a n d t h o s e r e l a t e d i n d i r e c t c o s t i n c u r r e d .I t i s r e c o g n i z e d a s e x p e n s e w h e n r e l a t e d g o o d s a r e s o l d . S e l l i n g , g e n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s S e l l i n ge x p e n s e sa r ec o s t si n c u r r e dt os e l lo rd i s t r i b u t eg o o d s .G e n e r a l a n da d m i n i s t r a t i v e e x p e n s e s c o n s t i t u t e c o s t s o f a d m i n i s t e r i n g t h e b u s i n e s s . T h e s e c o s t s a r e e x p e n s e d w h e n i n c u r r e d . E m p l o y e e B e n e f i t s T h e C o m p a n y a n d i t s s u b s i d i a r i e s h a v e i n d i v i d u a l a n d s e p a r a t e d e f i n e d b e n e f i t p l a n i n a c c o r d a n c e w i t h l o c a l c o n d i t i o n s a n d p r a c t i c e s i n t h e P h i l i p p i n e s . Ad e f i n e d b e n e f i t p l a n i s a p e n s i o n p l a n t h a t d e f i n e s a n a m o u n t o f p e n s i o n b e n e f i t t o b e p r o v i d e d , u s u a l l y a s a f u n c t i o no f o n e o r m o r e f a c t o r s s u c h a s a g e , y e a r s o f s e r v i c e o r c o m p e n s a t i o n .T h e p l a n s a r e g e n e r a l l yf u n d e d t h r o u g h p a y m e n t s t o t r u s t e e a d m i n i s t e r e d f u n d s a s d e t e r m i n e d b y p e r i o d i c a c t u a r i a l c a l c u l a t i o n s . P e n s i o n p l a n a s s e t T h e a s s e t s o f t h e G r o u p r e c o g n i z e di n t h e c o n s o l i d a t e d b a l a n c e s h e e t i n r e s p e c t o f d e f i n e d b e n e f i t p e n s i o n p l a n s i s t h e l o w e r o f ( a ) t h e e x c e s s o f t h e f a i r v a l u e o f p l a n a s s e t s o v e r t h e p r e s e n t v a l u e o f t h ed e f i n e db e n e f i to b l i g a t i o na tt h ee n do fr e p o r t i n gp e r i o dt o g e t h e rw i t ha d j u s t m e n t sf o r u n r e c o g n i z e da c t u a r i a l g a i n s o r l o s s e s a n dp a s t s e r v i c e c o s t s a n d( b ) t h e t o t a l o f a n yc u m u l a t i v e u n r e c o g n i z e dn e t a c t u a r i a l l o s s e sa n dp a s t s e r v i c ec o s t a n dt h ep r e s e n t v a l u eo f a n ye c o n o m i c b e n e f i t s a v a i l a b l e i n t h e f o r mo f r e f u n d s f r o mt h e p l a no r r e d u c t i o n s i n f u t u r e c o n t r i b u t i o n s t o t h e p l a n . I n c a s e s w h e n t h e a m o u n t d e t e r m i n e d r e s u l t s i n a s u r p l u s ( b e i n g t h e e x c e s s o f t h e f a i r v a l u e o f t h e p l a na s s e t so v e rt h ep r e s e n t v a l u eo f t h ed e f i n e db e n e f i t o b l i g a t i o n ) , t h eG r o u pm e a s u r e st h e r e s u l t i n g a s s e t a t ( a ) t h e l o w e r o f t h e e x c e s s o f t h e f a i r v a l u e o f p l a n a s s e t s o v e r t h e p r e s e n t v a l u e o f t h ed e f i n e db e n e f i t o b l i g a t i o na t t h ee n do f r e p o r t i n gp e r i o dt o g e t h e rw i t ha d j u s t m e n t sf o r u n r e c o g n i z e da c t u a r i a l g a i n s o r l o s s e s a n dp a s t s e r v i c e c o s t s a n d( b ) t h e t o t a l o f a n yc u m u l a t i v e u n r e c o g n i z e dn e t a c t u a r i a l l o s s e sa n dp a s t s e r v i c ec o s t a n dt h ep r e s e n t v a l u eo f a n ye c o n o m i c b e n e f i t s a v a i l a b l e i n t h e f o r mo f r e f u n d s f r o mt h e p l a no r r e d u c t i o n s i n f u t u r e c o n t r i b u t i o n s t o t h e p l a n . P l a n a s s e t s r e p r e s e n t a s s e t s t h a t : ( a ) a r e h e l d b y a n e n t i t y ( a f u n d ) t h a t i s l e g a l l y s e p a r a t e f r o mt h e G r o u p ; ( b ) a r ea v a i l a b l et ob eu s e do n l yt op a yo rf u n de m p l o y e e sb e n e f i t s ; a n d( c ) a r en o t a v a i l a b l et ot h eG r o u p so w nc r e d i t o r s , a n dc a n n o t b er e t u r n e dt ot h eG r o u pu n l e s s : ( i )t h e r e m a i n i n g a s s e t s o f t h e f u n d a r e s u f f i c i e n t t om e e t a l l t h e r e l a t e de m p l o y e e b e n e f i t o b l i g a t i o n s o f t h e p l a no r t h e G r o u p ; o r ( i i ) t h ea s s e t s a r e r e t u r n e dt ot h eG r o u pt or e i m b u r s e i t f o r e m p l o y e e b e n e f i t s a l r e a d y p a i d . P e n s i o n c o s t s a n d o b l i g a t i o n s T h el i a b i l i t yr e c o g n i z e di nt h ec o n s o l i d a t e db a l a n c es h e e t i nr e s p e c t o f d e f i n e db e n e f i t p e n s i o n p l a n i s t h e p r e s e n t v a l u e o f t h e d e f i n e d b e n e f i t o b l i g a t i o n a t t h e e n d o f r e p o r t i n g p e r i o d l e s s t h e f a i r v a l u e o f p l a n a s s e t s , t o g e t h e r w i t h a d j u s t m e n t s f o r a c t u a r i a l g a i n s a n d l o s s e s a n d p a s t s e r v i c e c o s t s . T h ep r e s e n t v a l u eo f t h ed e f i n e db e n e f i t o b l i g a t i o ni s d e t e r m i n e db yd i s c o u n t i n gt h ee s t i m a t e d f u t u r e c a s ho u t f l o wu s i n gi n t e r e s t r a t e s o f d e b t s e c u r i t i e s t h a t a r e d e n o m i n a t e di n P h i l i p p i n e p e s o ( c u r r e n c yi nw h i c ht h e b e n e f i t s w i l l b e p a i d ) a n dt h a t h a v e t e r m s t om a t u r i t ya p p r o x i m a t i n gt h e t e r m s o f t h e r e l a t e d p e n s i o n l i a b i l i t y . P e n s i o nc o s t s a r e a c t u a r i a l l yd e t e r m i n e du s i n gt h e p r o j e c t e du n i t c r e d i t m e t h o d .A c t u a r i a l g a i n s a n dl o s s e s a r e r e c o g n i z e da s i n c o m eo r e x p e n s e w h e nt h e n e t c u m u l a t i v e u n r e c o g n i z e da c t u a r i a l g a i n s a n d l o s s e s f o r t h e p l a n a t t h e e n d o f t h e p r e v i o u s r e p o r t i n g y e a r e x c e e d e d 1 0 %o f t h e h i g h e r o f t h ep r e s e n t v a l u eo f d e f i n e db e n e f i t o b l i g a t i o na n dt h ef a i r v a l u eo f p l a na s s e t s a t t h a t d a t e .

* S G V M C 3 1 0 9 6 2 *

1 9 T h e s eg a i n s o r l o s s e s a r e r e c o g n i z e do v e r t h ee x p e c t e da v e r a g e r e m a i n i n gw o r k i n gl i v e s o f t h e e m p l o y e e s p a r t i c i p a t i n g i n t h e p l a n . P a s t s e r v i c e c o s t s a r e r e c o g n i z e di m m e d i a t e l yi ni n c o m e , u n l e s s c h a n g e s t ot h e p e n s i o np l a na r e c o n d i t i o n a l o nt h ee m p l o y e e sr e m a i n i n gi ns e r v i c ef o r as p e c i f i e dp e r i o do f t i m e( t h ev e s t i n g p e r i o d ) .I n t h i s c a s e , t h e p a s t s e r v i c e c o s t s a r e a m o r t i z e d o n a s t r a i g h t l i n e b a s i s o v e r t h e v e s t i n g p e r i o d . G a i n s o r l o s s e s o n t h e c u r t a i l m e n t o r s e t t l e m e n t o f a d e f i n e d b e n e f i t p l a n a r e r e c o g n i z e d w h e n t h e c u r t a i l m e n t o r s e t t l e m e n t o c c u r s . T r a n s i t i o n a l l i a b i l i t y r e s u l t i n g f r o mt h e G r o u p s i n i t i a l a d o p t i o no f P A S1 9i s b e i n g a m o r t i z e d f o r ap e r i o do f f i v ey e a r s f r o mJ u l y1 , 2 0 0 5 .O u t s t a n d i n gt r a n s i t i o n a l l i a b i l i t ya s o f J u n e 3 0 , 2 0 0 9 a m o u n t e d t o = P 3 2 . 6 m i l l i o n w a s f u l l y a m o r t i z e d i n 2 0 1 0 ( s e e N o t e 1 5 ) . T e r m i n a t i o n b e n e f i t s T e r m i n a t i o nb e n e f i t s a r ep a y a b l ew h e ne m p l o y m e n t i s t e r m i n a t e db e f o r et h en o r m a l r e t i r e m e n t d a t e , o r w h e na ne m p l o y e ea c c e p t sv o l u n t a r yr e d u n d a n c yi ne x c h a n g ef o r t h e s eb e n e f i t s .T h e G r o u pr e c o g n i z e s t e r m i n a t i o nb e n e f i t s w h e ni t i s d e m o n s t r a b l yc o m m i t t e dt oe i t h e r : t e r m i n a t i n g t h e e m p l o y m e n t o f c u r r e n t e m p l o y e e s a c c o r d i n gt oad e t a i l e df o r m a l p l a nw i t h o u t p o s s i b i l i t yo f w i t h d r a w a l ; o r p r o v i d i n g t e r m i n a t i o n b e n e f i t s a s a r e s u l t o f a n o f f e r m a d e t oe n c o u r a g e v o l u n t a r y r e d u n d a n c y .B e n e f i t sf a l l i n gd u em o r et h a n1 2m o n t h sa f t e re n do fr e p o r t i n gp e r i o da r e d i s c o u n t e d t o p r e s e n t v a l u e . B o r r o w i n g C o s t s B o r r o w i n gc o s t s t h a t a r e d i r e c t l ya t t r i b u t a b l e t ot h ea c q u i s i t i o n , c o n s t r u c t i o no r p r o d u c t i o no f a q u a l i f y i n g a s s e t w h i c h n e c e s s a r i l y t a k e s a s u b s t a n t i a l p e r i o d o f t i m e t o p r e p a r e f o r i t s i n t e n d e d u s e a r e i n c l u d e d i n t h e c o s t o f t h a t a s s e t . S u c h b o r r o w i n g c o s t s a r e c a p i t a l i z e d a s p a r t o f t h e c o s t o f t h e a s s e t w h e ni t i s p r o b a b l e t h a t t h e yw i l l r e s u l t i nf u t u r ee c o n o m i cb e n e f i t s t ot h eG r o u pa n dt h e c o s t s c a n b e m e a s u r e d r e l i a b l y . D e b t c o m m i t m e n t f e e s r e l a t i n gt ot h ed r a w na m o u n t a r ea m o r t i z e du s i n ge f f e c t i v ei n t e r e s t r a t e m e t h o da n da r ep r e s e n t e da sr e d u c t i o ni nt h ep r i n c i p a l l o a nb a l a n c e .D e b t c o m m i t m e n t f e e s r e l a t i n gt ot h e u n d r a w nl o a n s a r e r e c o r d e da s d e f e r r e dc h a r g e s a n da r e a m o r t i z e du s i n gs t r a i g h t l i n em e t h o d .A m o r t i z a t i o no fd e b tc o m m i t m e n tf e e si sr e c o g n i z e da si n t e r e s te x p e n s ea n d p r e s e n t e d i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . L e a s e s T h e d e t e r m i n a t i o n o f w h e t h e r t h e a r r a n g e m e n t i s , o r c o n t a i n s a l e a s e i s b a s e do n t h e s u b s t a n c e o f t h e a r r a n g e m e n t a t i n c e p t i o nd a t e o f w h e t h e r t h e f u l f i l l m e n t o f t h e a r r a n g e m e n t i s d e p e n d e n t o n t h eu s eo fas p e c i f i ca s s e t o ra s s e t so rt h ea r r a n g e m e n t c o n v e y sar i g h t t ou s et h ea s s e t . A r e a s s e s s m e n t i s m a d e a f t e r i n c e p t i o n o n t h e l e a s e o n l y i f o n e o f t h e f o l l o w i n g a p p l i e s : ( a ) t h e r e i s a c h a n g e i nc o n t r a c t u a l t e r m s , o t h e r t h a na r e n e w a l o r e x t e n s i o no f t h e a r r a n g e m e n t ; ( b ) a r e n e w a l o p t i o ni s e x e r c i s e do r e x t e n s i o n g r a n t e d , u n l e s s t h e t e r mo f t h e r e n e w a l o r e x t e n s i o nw a s i n i t i a l l y i n c l u d e di nt h el e a s et e r m ; ( c ) t h e r ei s ac h a n g ei nt h ed e t e r m i n a t i o no f w h e t h e r f u l f i l l m e n t i s d e p e n d e n t o n a s p e c i f i e d a s s e t ; o r ( d ) t h e r e i s s u b s t a n t i a l c h a n g e t o t h e a s s e t . Wh e r e a r e a s s e s s m e n t i s m a d e , l e a s e a c c o u n t i n g s h a l l c o m m e n c e o r c e a s e f r o mt h e d a t e w h e n t h e c h a n g e i nc i r c u m s t a n c e s g a v e r i s e t or e a s s e s s m e n t f o r s c e n a r i o s ( a ) , ( c ) , o r ( d ) a n da t t h e d a t e o f r e n e w a l o r e x t e n s i o n p e r i o d f o r s c e n a r i o ( b ) . L e a s e s w h e r e a s i g n i f i c a n t p o r t i o n o f t h e r i s k s a n d r e w a r d s o f o w n e r s h i p a r e r e t a i n e d b y t h e l e s s o r a r ec l a s s i f i e da so p e r a t i n gl e a s e s .P a y m e n t sm a d eu n d e ro p e r a t i n gl e a s e sa r ec h a r g e dt ot h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e o n a s t r a i g h t l i n e b a s i s o v e r t h e p e r i o d o f t h e l e a s e . C o n t i n g e n t r e n t i s r e c o g n i z e da s i n c o m eo r e x p e n s ei nt h ep e r i o d s i nw h i c ht h e ya r ee a r n e do r i n c u r r e d .

* S G V M C 3 1 0 9 6 2 *

2 0 P r o v i s i o n s a n d C o n t i n g e n c i e s P r o v i s i o n f o r e n v i r o n m e n t a l r e s t o r a t i o n , r e s t r u c t u r i n g c o s t s a n d l e g a l c l a i m s a r e r e c o g n i z e dw h e n : t h e G r o u ph a s a p r e s e n t l e g a l o r c o n s t r u c t i v e o b l i g a t i o n a s a r e s u l t o f p a s t e v e n t s ; i t i s m o r e l i k e l y t h a nn o t t h a t a n o u t f l o wo f r e s o u r c e s w i l l b e r e q u i r e d t o s e t t l e t h e o b l i g a t i o n ; a n d t h e a m o u n t h a s b e e nr e l i a b l ye s t i m a t e d .R e s t r u c t u r i n gp r o v i s i o n sc o m p r i s el e a s et e r m i n a t i o np e n a l t i e sa n d e m p l o y e e t e r m i n a t i o n p a y m e n t s . P r o v i s i o n s a r e n o t r e c o g n i z e d f o r f u t u r e o p e r a t i n g l o s s e s . Wh e r e t h e r e a r e a n u m b e r o f s i m i l a r o b l i g a t i o n s , t h e l i k e l i h o o d t h a t a n o u t f l o ww i l l b e r e q u i r e d i n s e t t l e m e n t i sd e t e r m i n e db yc o n s i d e r i n gt h ec l a s so fo b l i g a t i o n sa saw h o l e .Ap r o v i s i o ni s r e c o g n i z e d e v e ni f t h e l i k e l i h o o do f a n o u t f l o ww i t h r e s p e c t t o a n y o n e i t e mi n c l u d e d i n t h e s a m e c l a s s o f o b l i g a t i o n s m a y b e s m a l l . P r o v i s i o n s a r e m e a s u r e d a t t h e p r e s e n t v a l u e o f t h e e x p e n d i t u r e s e x p e c t e d t o b e r e q u i r e dt os e t t l e t h eo b l i g a t i o nu s i n gap r e t a xr a t e t h a t r e f l e c t s c u r r e n t m a r k e t a s s e s s m e n t s o f t h e t i m ev a l u eo f m o n e ya n dt h e r i s k s s p e c i f i ct ot h eo b l i g a t i o n .T h e i n c r e a s ei nt h e p r o v i s i o nd u e t op a s s a g e o f t i m e i s r e c o g n i z e d a s i n t e r e s t e x p e n s e . P r o v i s i o n s a r e r e v i e w e d a t t h e e n d o f e a c h r e p o r t i n g p e r i o d a n d a d j u s t e d t o r e f l e c t t h e c u r r e n t b e s t e s t i m a t e . C o n t i n g e n t l i a b i l i t i e sa r en o t r e c o g n i z e di nt h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n t s .T h e s ea r e d i s c l o s e du n l e s st h ep o s s i b i l i t yo fa no u t f l o wo fr e s o u r c e se m b o d y i n ge c o n o m i cb e n e f i t si s r e m o t e . Ac o n t i n g e n t a s s e t i s n o t r e c o g n i z e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s b u t d i s c l o s e d w h e n a n i n f l o wo f e c o n o m i c b e n e f i t s i s p r o b a b l e . F o r e i g n C u r r e n c y D e n o m i n a t e d T r a n s a c t i o n s a n d T r a n s l a t i o n s I t e m s i n c l u d e di nt h e f i n a n c i a l s t a t e m e n t s o f e a c ho f t h e G r o u p s e n t i t i e s a r e m e a s u r e du s i n gt h e f u n c t i o n a l c u r r e n c y . T r a n s a c t i o n s d e n o m i n a t e d i n f o r e i g n c u r r e n c i e s a r e r e c o r d e d u s i n g t h e e x c h a n g e r a t e a t t h e d a t e o f t h e t r a n s a c t i o n .O u t s t a n d i n gm o n e t a r y a s s e t s a n d l i a b i l i t i e s d e n o m i n a t e di n f o r e i g n c u r r e n c i e s a r e t r a n s l a t e du s i n gt h ec l o s i n gr a t eo f e x c h a n g ea t t h ee n do f r e p o r t i n gp e r i o d .F o r e i g ne x c h a n g e d i f f e r e n c e s a r e c r e d i t e d o r c h a r g e d d i r e c t l y i n t h e c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . I n c o m e T a x e s C u r r e n t t a x C u r r e n t t a xa s s e t sa n dl i a b i l i t i e sf o r t h ec u r r e n t a n dp r i o r p e r i o d sa r em e a s u r e da t t h ea m o u n t e x p e c t e dt ob e r e c o v e r e df r o mo r p a i dt ot h e t a x a t i o na u t h o r i t i e s .T h e t a xr a t e s a n dt h e t a xl a w s u s e dt oc o m p u t et h ea m o u n t a r et h o s et h a t a r ee n a c t e do r s u b s t a n t i v e l ye n a c t e da t t h ee n do f r e p o r t i n g p e r i o d . D e f e r r e d t a x D e f e r r e di n c o m et a xi sp r o v i d e d , u s i n gt h eb a l a n c es h e e t l i a b i l i t ym e t h o d , o na l l t e m p o r a r y d i f f e r e n c e s a t t h e e n do f r e p o r t i n gp e r i o db e t w e e nt h e t a xb a s e s o f a s s e t s a n dl i a b i l i t i e s a n dt h e i r c a r r y i n g a m o u n t s f o r f i n a n c i a l r e p o r t i n g p u r p o s e s . D e f e r r e di n c o m et a xl i a b i l i t i e sa r er e c o g n i z e df o ra l l t a x a b l et e m p o r a r yd i f f e r e n c e s , i n c l u d i n g a s s e t r e v a l u a t i o n s .D e f e r r e di n c o m e t a xl i a b i l i t yi s n o t r e c o g n i z e dw h e ni t a r i s e s f r o mt h e i n i t i a l r e c o g n i t i o no f a na s s e t o r l i a b i l i t yi nat r a n s a c t i o nt h a t i s n o t ab u s i n e s s c o m b i n a t i o na n d , a t t h e t i m eo f t h et r a n s a c t i o n , a f f e c t sn e i t h e r t h ea c c o u n t i n gp r o f i t o r l o s sn o r t a x a b l ep r o f i t o r l o s s . H o w e v e r , d e f e r r e d t a x l i a b i l i t i e s a r e n o t p r o v i d e d o n n o n t a x a b l e t e m p o r a r y d i f f e r e n c e s a s s o c i a t e d w i t h i n v e s t m e n t s i n d o m e s t i c s u b s i d i a r i e s , a s s o c i a t e s a n d i n t e r e s t s i n j o i n t v e n t u r e s .

* S G V M C 3 1 0 9 6 2 *

2 1 D e f e r r e di n c o m e t a xa s s e t s a r e r e c o g n i z e df o r a l l d e d u c t i b l e t e m p o r a r yd i f f e r e n c e s , c a r r y f o r w a r d b e n e f i t s o f u n u s e dt a xc r e d i t s ( e x c e s s o f m i n i m u mc o r p o r a t e i n c o m e t a x e s o r MC I To v e r r e g u l a r c o r p o r a t e i n c o m e t a x e s o r R C I T ) a n d u n u s e d t a x l o s s e s ( n e t o p e r a t i n g l o s s c a r r y o v e r o r N O L C O ) , t o t h e e x t e n t t h a t i t i s p r o b a b l e t h a t s u f f i c i e n t f u t u r e t a x a b l e p r o f i t w i l l b e a v a i l a b l e a g a i n s t w h i c h t h e d e d u c t i b l e t e m p o r a r yd i f f e r e n c e s a n dc a r r y f o r w a r db e n e f i t s o f u n u s e dt a xc r e d i t s a n du n u s e d t a x l o s s e s c a n b e u t i l i z e d . T h e c a r r y i n g a m o u n t o f d e f e r r e d i n c o m e t a x a s s e t s i s r e v i e w e d a t t h e e n d o f e a c h r e p o r t i n g p e r i o d a n dr e d u c e dt ot h e e x t e n t t h a t i t i s n ol o n g e r p r o b a b l e t h a t s u f f i c i e n t f u t u r e t a x a b l e p r o f i t w i l l b e a v a i l a b l et oa l l o wa l l o r p a r t o f t h ed e f e r r e di n c o m et a xa s s e t st ob eu t i l i z e d .U n r e c o g n i z e d d e f e r r e di n c o m e t a xa s s e t s a r e r e a s s e s s e d a t t h e e n do f e a c h r e p o r t i n gp e r i o d a n da r e r e c o g n i z e d t o t h e e x t e n t t h a t i t h a s b e c o m e p r o b a b l e t h a t s u f f i c i e n t f u t u r e t a x a b l e p r o f i t w i l l a l l o wt h e d e f e r r e d t a x a s s e t t o b e r e c o v e r e d . D e f e r r e di n c o m e t a xa s s e t s a n dl i a b i l i t i e s a r e m e a s u r e d a t t h e t a xr a t e s t h a t a r e e x p e c t e dt oa p p l y t o t h e p e r i o dw h e n t h e a s s e t i s r e a l i z e d o r t h e l i a b i l i t yi s s e t t l e d , b a s e do n t a x r a t e s ( a n d t a xl a w s ) t h a t h a v e b e e n e n a c t e d o r s u b s t a n t i v e l y e n a c t e d a t t h e e n d o f r e p o r t i n g p e r i o d . D e f e r r e di n c o m e t a xa s s e t s a n dd e f e r r e di n c o m e t a xl i a b i l i t i e s a r e o f f s e t i f al e g a l l ye n f o r c e a b l e r i g h t e x i s t s t os e t o f f t h ed e f e r r e di n c o m et a xa s s e t sa g a i n s t t h ed e f e r r e dt a xl i a b i l i t i e s a n dt h e d e f e r r e d i n c o m e t a x r e l a t e t o t h e s a m e t a x a b l e e n t i t y a n d t h e s a m e t a x a t i o n a u t h o r i t y . D e f e r r e d i n c o m e t a x r e l a t i n g t o i t e m s r e c o g n i z e d o u t s i d e p r o f i t o r l o s s i s r e c o g n i z e d o u t s i d e p r o f i t o r l o s s . D e f e r r e di n c o m et a xi t e m sa r er e c o g n i z e di nc o r r e l a t i o nt ot h eu n d e r l y i n gt r a n s a c t i o n e i t h e r i n o t h e r c o m p r e h e n s i v e i n c o m e o r d i r e c t l y i n e q u i t y . R e l a t e d P a r t y R e l a t i o n s h i p s a n d T r a n s a c t i o n s R e l a t e dp a r t yr e l a t i o n s h i pe x i s t s w h e no n e p a r t yh a s t h e a b i l i t yt oc o n t r o l , d i r e c t l y , o r i n d i r e c t l y t h r o u g ho n eo rm o r ei n t e r m e d i a r i e s , o re x e r c i s es i g n i f i c a n t i n f l u e n c eo v e rt h eo t h e rp a r t yi n m a k i n gf i n a n c i a l a n do p e r a t i n gd e c i s i o n s .S u c hr e l a t i o n s h i p s a l s oe x i s t b e t w e e na n d / o r a m o n g e n t i t i e s w h i c h a r e u n d e r c o m m o nc o n t r o l w i t h t h e r e p o r t i n ge n t e r p r i s e , o r b e t w e e n , a n d / o r a m o n g t h er e p o r t i n ge n t e r p r i s ea n di t sk e ym a n a g e m e n t p e r s o n n e l , d i r e c t o r so ri t ss t o c k h o l d e r s .I n c o n s i d e r i n ge a c hp o s s i b l e r e l a t e dp a r t yr e l a t i o n s h i p , a t t e n t i o ni s d i r e c t e dt ot h e s u b s t a n c eo f t h e r e l a t i o n s h i p , a n d n o t m e r e l y t o t h e l e g a l f o r m . E a r n i n g s p e r S h a r e B a s i ce a r n i n g s p e r s h a r ei s c a l c u l a t e db yd i v i d i n gt h ep r o f i t a t t r i b u t a b l e t oe q u i t yh o l d e r o f t h e C o m p a n yb yt h e w e i g h t e da v e r a g e n u m b e r o f o r d i n a r y s h a r e s i ni s s u e d u r i n gt h e y e a r , e x c l u d i n g o r d i n a r yo r c o m m o ns h a r e sp u r c h a s e db yt h eC o m p a n ya n dh e l da st r e a s u r ys h a r e s .D i l u t e d e a r n i n g sp e r s h a r ei sc o m p u t e db ya d j u s t i n gt h ew e i g h t e da v e r a g en u m b e ro f o r d i n a r ys h a r e s o u t s t a n d i n g t o a s s u m e c o n v e r s i o n o f a l l t h e d i l u t i v e p o t e n t i a l o r d i n a r y s h a r e s i n t o o r d i n a r y s h a r e s . E v e n t s a f t e r t h e R e p o r t i n g P e r i o d P o s t y e a r e n de v e n t s t h a t p r o v i d e a d d i t i o n a l i n f o r m a t i o n a b o u t t h e G r o u p s p o s i t i o n a t t h e e n do f r e p o r t i n gp e r i o d( a d j u s t i n ge v e n t s ) a r er e f l e c t e di nt h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n t s .P o s t y e a r e n de v e n t st h a ta r en o ta d j u s t i n ge v e n t sa r ed i s c l o s e di nt h en o t e st ot h ec o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s w h e n m a t e r i a l . 3 .S i g n i f i c a n t J u d g me n t s , A c c o u n t i n g E s t i ma t e s a n dA s s u mp t i o n s T h ep r e p a r a t i o no f t h ec o n s o l i d a t e df i n a n c i a l s t a t e m e n t si na c c o r d a n c ew i t hP F R Sr e q u i r e s t h e G r o u p t o e x e r c i s e j u d g m e n t , m a k e e s t i m a t e s a n d u s e a s s u m p t i o n s t h a t a f f e c t t h e r e p o r t e d a m o u n t s o f a s s e t s , l i a b i l i t i e s , i n c o m e a n d e x p e n s e s a n d r e l a t e d d i s c l o s u r e s . T h e G r o u p m a k e s e s t i m a t e s a n d

* S G V M C 3 1 0 9 6 2 *

2 2 u s e sa s s u m p t i o n sc o n c e r n i n gt h ef u t u r e . T h er e s u l t i n ga c c o u n t i n ge s t i m a t e sw i l l , b yd e f i n i t i o n , s e l d o me q u a l t h e r e l a t e d a c t u a l r e s u l t s . F u t u r e e v e n t s m a y o c c u r w h i c h w i l l c a u s e t h e a s s u m p t i o n s u s e d i n a r r i v i n g a t t h e e s t i m a t e s t o c h a n g e .T h e e f f e c t s o f a n y c h a n g e i n e s t i m a t e s a r e r e f l e c t e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s t h e y b e c o m e r e a s o n a b l y d e t e r m i n a b l e . J u d g m e n t s , e s t i m a t e sa n da s s u m p t i o n sa r ec o n t i n u o u s l ye v a l u a t e da n da r eb a s e do nh i s t o r i c a l e x p e r i e n c ea n do t h e rf a c t o r s , i n c l u d i n ge x p e c t a t i o n so ff u t u r ee v e n t st h a t a r eb e l i e v e dt ob e r e a s o n a b l e u n d e r t h e c i r c u m s t a n c e s . T h e G r o u pb e l i e v e s t h e f o l l o w i n gr e p r e s e n t a s u m m a r yo f j u d g m e n t s , e s t i m a t e s a n da s s u m p t i o n s t h a t h a v e a s i g n i f i c a n t r i s ko f c a u s i n ga m a t e r i a l a d j u s t m e n t t ot h e c a r r y i n ga m o u n t o f a s s e t s a n d l i a b i l i t i e s , a s w e l l a s t o t h e r e l a t e d r e v e n u e s a n de x p e n s e s , w i t h i n t h e n e x t f i s c a l y e a r , a n d r e l a t e d i m p a c t a n d a s s o c i a t e d r i s k i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . J u d g m e n t s I nt h e p r o c e s s o f a p p l y i n gt h e G r o u p s a c c o u n t i n gp o l i c i e s , m a n a g e m e n t e x e r c i s e dj u d g m e n t o n t h e f o l l o w i n gi t e m s , a p a r t f r o mt h o s e i n v o l v i n ge s t i m a t i o n s , w h i c hh a s t h e m o s t s i g n i f i c a n t e f f e c t o n t h e a m o u n t s r e c o g n i z e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . D e t e r m i n a t i o n o f t h e C o m p a n y s f u n c t i o n a l c u r r e n c y B a s e do nt h ee c o n o m i c s u b s t a n c e o f t h e u n d e r l y i n gc i r c u m s t a n c e s r e l e v a n t t ot h e C o m p a n y , t h e f u n c t i o n a l c u r r e n c yi s d e t e r m i n e dt ob e P h i l i p p i n e p e s o .A l s o , i t i s t h e c u r r e n c yo f t h e p r i m a r y e c o n o m i c e n v i r o n m e n t i n w h i c h i t s s u b s i d i a r i e s a n d a s s o c i a t e o p e r a t e . C l a s s i f i c a t i o n o f f i n a n c i a l i n s t r u m e n t s T h eG r o u pc l a s s i f i e saf i n a n c i a l i n s t r u m e n t , o r i t sc o m p o n e n t p a r t s , o ni n i t i a l r e c o g n i t i o na sa f i n a n c i a l a s s e t , a f i n a n c i a l l i a b i l i t y o r a n e q u i t y i n s t r u m e n t i n a c c o r d a n c e w i t h t h e s u b s t a n c e o f t h e c o n t r a c t u a l a r r a n g e m e n t a n dt h e d e f i n i t i o n s o f af i n a n c i a l a s s e t , af i n a n c i a l l i a b i l i t yo r a ne q u i t y i n s t r u m e n t .T h es u b s t a n c eo faf i n a n c i a l i n s t r u m e n t , r a t h e rt h a ni t sl e g a l f o r m , g o v e r n si t s c l a s s i f i c a t i o n i n t h e G r o u p s c o n s o l i d a t e d b a l a n c e s h e e t . T h ec l a s s i f i c a t i o n so ft h ev a r i o u sf i n a n c i a la s s e t sa n df i n a n c i a ll i a b i l i t i e so ft h eG r o u pa r e d i s c l o s e di nN o t e 2 6 .T h e a g g r e g a t e c a r r y i n gv a l u e o f t h e G r o u p s f i n a n c i a l a s s e t s a n df i n a n c i a l l i a b i l i t i e s a m o u n t e d t oP = 9 6 9 . 5 m i l l i o n a n d = P 8 , 7 3 5 . 3 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 , r e s p e c t i v e l y , a n d = P 1 , 3 2 3 . 7 m i l l i o n a n d P = 6 , 7 7 6 . 9 m i l l i o n , r e s p e c t i v e l y , a s o f J u n e 3 0 , 2 0 0 9 ( s e e N o t e 2 6 ) . C l a s s i f i c a t i o n o f l e a s e s Ma n a g e m e n t e x e r c i s e s j u d g m e n t i nd e t e r m i n i n gw h e t h e r s u b s t a n t i a l l y a l l t h e s i g n i f i c a n t r i s k s a n d r e w a r d s o f o w n e r s h i p o f t h e a s s e t s h e l d f o r l e a s e a r e r e t a i n e d b y t h e G r o u p . L e a s e c o n t r a c t s w h i c h t h e G r o u pr e t a i n s s u b s t a n t i a l l y a l l t h e r i s k s a n dr e w a r d s i n c i d e n t a l t oo w n e r s h i po f t h e l e a s e i t e m a r ea c c o u n t e df o r a s o p e r a t i n gl e a s e s .O t h e r w i s e , t h e s ea r ec o n s i d e r e da s f i n a n c el e a s e s .T h e G r o u p , a s al e s s e e , h a se n t e r e di n t op r o p e r t yl e a s e sw h e r ei t h a s d e t e r m i n e dt h a t t h er i s k s a n d r e w a r d s r e l a t e d t o t h o s e p r o p e r t i e s a r e r e t a i n e dw i t h t h e l e s s o r s .A s s u c h , t h e s e l e a s e a g r e e m e n t s a r e a c c o u n t e d f o r a s o p e r a t i n g l e a s e . A l l o c a t i o n o f c o s t t o m o l a s s e s i n v e n t o r y Ma n a g e m e n t u s e s j u d g m e n t t om e a s u r e a n da l l o c a t e v a l u e t ot h e m o l a s s e s i n v e n t o r y .Wh e nt h e c o s t s o f c o n v e r s i o no f e a c hp r o d u c t a r e n o t s e p a r a t e l yi d e n t i f i a b l e , t h e ya r e a l l o c a t e da m o n gt h e p r o d u c t s o n a r a t i o n a l a n d c o n s i s t e n t b a s i s .T h e a l l o c a t i o n i s b a s e d o n r e l a t i v e s a l e s v a l u e o f c a n e p r o d u c t a t t h e c o m p l e t i o n o f p r o d u c t i o n .Wh e n t h e c o s t o f m o l a s s e s i s d e e m e d i m m a t e r i a l , t h i s i s m e a s u r e d a t N R Va n d t h e v a l u e i s d e d u c t e d f r o mt h e c o s t o f t h e r a wa n d r e f i n e d s u g a r .

* S G V M C 3 1 0 9 6 2 *

2 3 Ap o r t i o no fm o l a s s e si n v e n t o r ya m o u n t i n gt oP = 2 5 . 3m i l l i o na n dP = 1 9 . 9m i l l i o np e r t a i n st o a l l o c a t e d c o s t f r o mt h et o t a l p r o d u c t i o n c o s t s o f m i l l e d r a wa n d r e f i n e d s u g a r a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e s p e c t i v e l y ( s e e N o t e 6 ) . E s t i m a t e s a n d A s s u m p t i o n s T h e k e y a s s u m p t i o n s c o n c e r n i n g t h e f u t u r e a n do t h e r k e y s o u r c e s o f e s t i m a t i o n u n c e r t a i n t y a t t h e e n d o f r e p o r t i n g p e r i o d t h a t h a v e a s i g n i f i c a n t r i s k o f c a u s i n g a m a t e r i a l a d j u s t m e n t t o t h e c a r r y i n g a m o u n t s o f a s s e t s a n d l i a b i l i t i e s w i t h i n t h e n e x t f i s c a l y e a r s a r e d i s c u s s e d b e l o w . D e t e r m i n a t i o n o f p r o v i s i o n f o r i m p a i r m e n t o f r e c e i v a b l e s T h ep r o v i s i o nf o r i m p a i r m e n t o f r e c e i v a b l e s i s e s t i m a t e db a s e do nt w om e t h o d s .T h ea m o u n t s c a l c u l a t e d u s i n g e a c h o f t h e s e m e t h o d s a r e c o m b i n e d t o d e t e r m i n e t h e t o t a l a m o u n t t o b e p r o v i d e d . F i r s t , s p e c i f i c a c c o u n t s a r e e v a l u a t e db a s e do ni n f o r m a t i o nt h a t c e r t a i nc u s t o m e r s m a yb e u n a b l e t om e e t t h e i r f i n a n c i a l o b l i g a t i o n s .I nt h e s e c a s e s , j u d g m e n t i s u s e d , b a s e do nt h e b e s t a v a i l a b l e f a c t s a n d c i r c u m s t a n c e s , i n c l u d i n g b u t n o t l i m i t e d t o , t h e l e n g t h o f r e l a t i o n s h i pw i t h t h e c u s t o m e r a n dt h ec u s t o m e r sc u r r e n tc r e d i ts t a t u sb a s e do nt h i r dp a r t yc r e d i tr e p o r t sa n dk n o w n m a r k e t f a c t o r s , t or e c o r ds p e c i f i ca l l o w a n c e s a g a i n s t a m o u n t s d u e t or e d u c e r e c e i v a b l e a m o u n t s e x p e c t e dt ob e c o l l e c t e d .T h e s e s p e c i f i ca l l o w a n c e s a r e r e e v a l u a t e da n da d j u s t e da s a d d i t i o n a l i n f o r m a t i o n r e c e i v e d i m p a c t s t h e a m o u n t s e s t i m a t e d . S e c o n d , a c o l l e c t i v e a s s e s s m e n t o f h i s t o r i c a l c o l l e c t i o n , w r i t e o f f , e x p e r i e n c ea n dc u s t o m e rp a y m e n t t e r m si sd e t e r m i n e d . T h ea m o u n t a n d t i m i n go f r e c o r d e de x p e n s e sf o ra n yp e r i o dc o u l dt h e r e f o r ed i f f e rb a s e do nt h ej u d g m e n t so r e s t i m a t e sm a d e .A ni n c r e a s ei nt h eG r o u p sa l l o w a n c ef o ri m p a i r m e n t o f r e c e i v a b l e sw o u l d i n c r e a s e i t s r e c o r d e d g e n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s a n d d e c r e a s e i t s c u r r e n t a s s e t s . A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , t h ec a r r y i n ga m o u n t o f t h eG r o u p sr e c e i v a b l e sa m o u n t e dt o = P 8 3 2 . 8m i l l i o na n d= P 1 , 0 8 7 . 2m i l l i o n ,n e to fa l l o w a n c ef o ri m p a i r m e n to fr e c e i v a b l e so f = P 2 0 . 6 m i l l i o n a n d = P 2 3 . 9 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 5 ) . D e t e r m i n a t i o n o f N R Vo f i n v e n t o r i e s T h e G r o u p s e s t i m a t e s o f t h e N R Vo f i n v e n t o r i e s a r e b a s e d o n t h e m o s t r e l i a b l e e v i d e n c e a v a i l a b l e a t t h e t i m e t h e e s t i m a t e s a r e m a d e , o f t h e a m o u n t t h a t t h e i n v e n t o r i e s a r e e x p e c t e d t o b e r e a l i z e d . T h e s e e s t i m a t e s c o n s i d e r t h e f l u c t u a t i o n s o f p r i c e o r c o s t d i r e c t l y r e l a t i n g t o e v e n t s o c c u r r i n g a f t e r t h e e n do f t h e p e r i o dt ot h e e x t e n t t h a t s u c he v e n t s c o n f i r mc o n d i t i o n s e x i s t i n ga t t h e e n do f t h e p e r i o d . An e wa s s e s s m e n t i s m a d eo f N R Vi ne a c hs u b s e q u e n t p e r i o d . Wh e nt h e c i r c u m s t a n c e s t h a t p r e v i o u s l y c a u s e d i n v e n t o r i e s t o b e w r i t t e n d o w n b e l o wc o s t n o l o n g e r e x i s t o r w h e n t h e r e i s a c l e a r e v i d e n c e o f a ni n c r e a s e i nN R Vb e c a u s e o f c h a n g e i ne c o n o m i c c i r c u m s t a n c e s , t h e a m o u n t o f t h ew r i t e d o w ni s r e v e r s e ds ot h a t t h en e wc a r r y i n ga m o u n t i s t h el o w e r o f t h ec o s t a n dt h e r e v i s e dN R V . T h eG r o u p si n v e n t o r i e sa so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9a m o u n t e dt o = P 1 , 8 7 3 . 1 m i l l i o n a n d = P 1 , 5 8 8 . 5 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 6 ) . D e t e r m i n a t i o n o f f a i r v a l u e l e s s e s t i m a t e d c o s t s t o s e l l o n c o n s u m a b l e b i o l o g i c a l a s s e t Ma n a g e m e n t d e t e r m i n e s t h ea g eo f t h es u g a r c a n ea n db a s e s t h ef a i r v a l u eo f t h es u g a r c a n eo n o b s e r v a b l em a r k e t d a t a .C o s t st os e l l , w h i c hi n c l u d e sf e r t i l i z i n g , c u l t i v a t i o na n do t h e rd i r e c t e x p e n s e s , a r e e s t i m a t e d b a s e d o n t h e y e a r l y b u d g e t s o f t h e G r o u p . A so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9 ,t h eG r o u p sc o n s u m a b l eb i o l o g i c a la s s e t sa m o u n t e dt o = P 2 4 . 3 m i l l i o n a n d = P 1 4 . 8 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 7 ) . D e t e r m i n a t i o n o f p r o v i s i o n f o r u n r e c o v e r a b l e c r e d i t a b l e w i t h h o l d i n g t a x e s P r o v i s i o nf o ru n r e c o v e r a b l ec r e d i t a b l ew i t h h o l d i n gt a x e si sm a i n t a i n e da t al e v e l c o n s i d e r e d a d e q u a t et op r o v i d ef o rp o t e n t i a l l yu n r e c o v e r a b l ec l a i m s .T h eG r o u p , o nac o n t i n u i n gb a s i s , m a k e s ar e v i e wo f t h es t a t u s o f t h ec l a i m s , d e s i g n e dt oi d e n t i f yt h o s et ob ep r o v i d e dw i t ha n y i m p a i r m e n t l o s s e s .I nt h e s e c a s e s , m a n a g e m e n t u s e s j u d g m e n t b a s e do nt h e b e s t a v a i l a b l e f a c t s a n dc i r c u m s t a n c e s .T h e a m o u n t a n dt i m i n go f r e c o r d e de x p e n s e s f o r a n yp e r i o dw o u l d t h e r e f o r e d i f f e r b a s e d o n t h e j u d g m e n t s o r e s t i m a t e s m a d e .

* S G V M C 3 1 0 9 6 2 *

2 4 A s o f J u n e 3 0 , 2 0 1 0a n d2 0 0 9 , t h e c a r r y i n ga m o u n t o f t h e G r o u p s c r e d i t a b l e w i t h h o l d i n gt a x e s a m o u n t e dt o= P 8 4 . 3m i l l i o na n d= P 5 3 . 5m i l l i o n ,n e to fa l l o w a n c ef o rl o s s e sa m o u n t i n gt o = P 1 3 . 7 m i l l i o n a n d = P 9 . 8 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 7 ) . V a l u a t i o n o f l a n d u n d e r r e v a l u a t i o n b a s i s T h e G r o u p s l a n d i s c a r r i e d a t r e v a l u e d a m o u n t , w h i c h a p p r o x i m a t e i t s f a i r v a l u e a t t h e d a t e o f t h e r e v a l u a t i o n , l e s sa n ya c c u m u l a t e di m p a i r m e n t l o s s e s .T h ev a l u a t i o no f l a n di sp e r f o r m e db y p r o f e s s i o n a l l yq u a l i f i e di n d e p e n d e n t a p p r a i s e r s .T h e f a i r v a l u ew a s a r r i v e da t u s i n gt h e Ma r k e t D a t a A p p r o a c h f o r l a n d b a s e d o n t h e g a t h e r e d a v a i l a b l e m a r k e t e v i d e n c e s . R e v a l u a t i o n s a r e m a d e o nar e g u l a r b a s i s t oe n s u r e t h a t t h e c a r r y i n ga m o u n t s d on o t d i f f e r m a t e r i a l l yf r o mt h o s e w h i c h w o u l db ed e t e r m i n e du s i n gf a i rv a l u e sa t e n do fr e p o r t i n gp e r i o d .L a n dc a r r i e da t r e v a l u e d a m o u n t s a s o f J u n e 3 0 , 2 0 1 0a n d2 0 0 9a m o u n t e dt o= P 2 , 4 8 5 . 0m i l l i o na n dP = 2 , 5 1 7 . 7m i l l i o n( s e e N o t e 9 ) . T h e r e s u l t i n gi n c r e a s e i nt h ev a l u a t i o no f t h e s e a s s e t s b a s e do nt h e 2 0 0 8a n d2 0 0 6v a l u a t i o n s i s p r e s e n t e du n d e r R e v a l u a t i o ni n c r e m e n t o np r o p e r t i e s , n e t o f t h er e l a t e dd e f e r r e di n c o m et a x l i a b i l i t ya n d S h a r e i nr e v a l u a t i o ni n c r e m e n t o nl a n do f a na s s o c i a t e , r e s p e c t i v e l y , i nt h e e q u i t y s e c t i o n o f t h e c o n s o l i d a t e d b a l a n c e s h e e t s a n d i n t h e c o n s o l i d a t e d s t a t e m e n t s o f c h a n g e s i n e q u i t y . E s t i m a t i o n o f u s e f u l l i v e s a n d r e s i d u a l v a l u e s o f p r o p e r t y , p l a n t a n d e q u i p m e n t T h e u s e f u l l i f e o f e a c ho f t h e G r o u p s i t e m s o f p r o p e r t y , p l a n t a n de q u i p m e n t i s e s t i m a t e db a s e d o n t h e p e r i o d o v e r w h i c h t h e a s s e t i s e x p e c t e d t o b e a v a i l a b l e f o r u s e . S u c h e s t i m a t i o n i s b a s e d o n ac o l l e c t i v ea s s e s s m e n to fp r a c t i c e so fs i m i l a rb u s i n e s s e s ,i n t e r n a lt e c h n i c a le v a l u a t i o na n d e x p e r i e n c e w i t h s i m i l a r a s s e t s . T h e e s t i m a t e d u s e f u l l i f e o f e a c h a s s e t i s r e v i e w e d p e r i o d i c a l l y a n d u p d a t e di f e x p e c t a t i o n s d i f f e r f r o mp r e v i o u s e s t i m a t e s d u e t o p h y s i c a l w e a r a n d t e a r , t e c h n i c a l o r c o m m e r c i a l o b s o l e s c e n c e a n d l e g a l o r o t h e r l i m i t s o n t h e u s e o f t h e a s s e t .I t i s p o s s i b l e , h o w e v e r , t h a t f u t u r e r e s u l t s o f o p e r a t i o n s c o u l d b e m a t e r i a l l y a f f e c t e d b y c h a n g e s i n t h e a m o u n t s a n d t i m i n g o f r e c o r d e de x p e n s e s b r o u g h t a b o u t b yt h e c h a n g e s i nt h e f a c t o r s m e n t i o n e da b o v e .Ac h a n g e i n t h e e s t i m a t e d u s e f u l l i f e o f a n yi t e mo f p r o p e r t y , p l a n t a n de q u i p m e n t w o u l di m p a c t t h e r e c o r d e d o p e r a t i n ge x p e n s ea n dn o n c u r r e n t a s s e t s .T h et o t a l c a r r y i n gv a l u eo f t h eG r o u p sd e p r e c i a b l e p r o p e r t y , p l a n t a n de q u i p m e n t a s o f J u n e 3 0 , 2 0 1 0a n d2 0 0 9a m o u n t e dt oP = 9 , 2 9 7 . 2m i l l i o na n d = P 7 , 1 4 4 . 7 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 9 ) . I m p a i r m e n t o f n o n f i n a n c i a l a s s e t s T h e G r o u pa s s e s s e s a t e a c hr e p o r t i n gd a t ew h e t h e r t h e r e i s a n yi n d i c a t i o nt h a t ap r o p e r t y , p l a n t a n de q u i p m e n t a n di n v e s t m e n t i ns h a r e so fs t o c ko fa na s s o c i a t em a yb ei m p a i r e d .I fs u c h i n d i c a t i o n e x i s t s , t h e e n t i t y s h a l l e s t i m a t e t h e r e c o v e r a b l e a m o u n t o f t h e a s s e t , w h i c h i s t h e h i g h e r o f a n a s s e t s f a i r v a l u e l e s s c o s t s t o s e l l a n d i t s v a l u e i n u s e .E s t i m a t i n g t h e v a l u e i n u s e r e q u i r e s t h e G r o u p t o m a k e a n e s t i m a t e o f t h e e x p e c t e d f u t u r e c a s h f l o w s f r o mt h e c a s h g e n e r a t i n g u n i t a n d a l s ot oc h o o s e a na p p r o p r i a t e d i s c o u n t r a t e i no r d e r t oc a l c u l a t e t h e p r e s e n t v a l u eo f t h o s ec a s h f l o w s .T h eG r o u pd e t e r m i n e dt h a t t h ec a r r y i n gv a l u e so f p r o p e r t y , p l a n t a n de q u i p m e n t a n d i n v e s t m e n t i n s h a r e s o f s t o c k o n a n a s s o c i a t e a r e r e c o v e r a b l e . T h e t o t a l c a r r y i n gv a l u eo f t h e G r o u p s p r o p e r t y , p l a n t a n de q u i p m e n t a s o f J u n e3 0 , 2 0 1 0a n d 2 0 0 9 a m o u n t e d t o = P 1 1 , 7 8 2 . 2 m i l l i o n a n d = P 9 , 6 6 2 . 4 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 9 ) . T h ec a r r y i n gv a l u eo f t h eG r o u p si n v e s t m e n t i ns h a r eo f s t o c ko f a na s s o c i a t ea m o u n t e dt o = P 6 1 8 . 3 m i l l i o n a n d = P 5 5 7 . 4 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e s p e c t i v e l y ( s e e N o t e 8 ) .

* S G V M C 3 1 0 9 6 2 *

2 5 E s t i m a t i o n o f r e t i r e m e n t b e n e f i t s c o s t T h e d e t e r m i n a t i o n o f t h e o b l i g a t i o n a n d c o s t f o r p e n s i o n a n d o t h e r r e t i r e m e n t b e n e f i t s i s d e p e n d e n t o nt h es e l e c t i o no f c e r t a i na s s u m p t i o n s d e t e r m i n e db ym a n a g e m e n t a n du s e db yt h ea c t u a r yi n c a l c u l a t i n g s u c h a m o u n t s . T h o s e a s s u m p t i o n s a r e d e s c r i b e d i n N o t e 1 5 a n d i n c l u d e , a m o n g o t h e r s , d i s c o u n t r a t e , e x p e c t e d r a t e o f r e t u r n o n p l a n a s s e t s a n d r a t e o f s a l a r y i n c r e a s e .A c t u a l r e s u l t s t h a t d i f f e rf r o mt h eG r o u p sa s s u m p t i o n sa r ea c c u m u l a t e da n da m o r t i z e do v e rf u t u r ep e r i o d sa n d t h e r e f o r e , g e n e r a l l y a f f e c t t h e r e c o g n i z e d e x p e n s e a n d r e c o r d e d o b l i g a t i o n i n s u c h f u t u r e p e r i o d s . N e tp e n s i o np l a na s s e t sa so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9a m o u n t e dt o= P 1 4 0 . 5m i l l i o na n d = P 1 4 2 . 6m i l l i o n , r e s p e c t i v e l y .O nt h eo t h e r h a n d , n e t p e n s i o nb e n e f i t o b l i g a t i o na so f J u n e3 0 , 2 0 1 0 a n d 2 0 0 9 a m o u n t e d t o P = 4 1 . 1 m i l l i o n a n d P = 7 4 . 2 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e 1 5 ) . P r o v i s i o n s T h e G r o u pp r o v i d e s f o r p r e s e n t o b l i g a t i o n s ( l e g a l o r c o n s t r u c t i v e ) w h e r e i t i s p r o b a b l e t h a t t h e r e w i l l b e a no u t f l o wo f r e s o u r c e s e m b o d y i n ge c o n o m i cb e n e f i t s t h a t w i l l b e r e q u i r e dt os e t t l e s a i d o b l i g a t i o n s . A ne s t i m a t e o f t h e p r o v i s i o ni s b a s e do nk n o w ni n f o r m a t i o na t t h e e n do f r e p o r t i n g p e r i o d , n e t o f a n y e s t i m a t e d a m o u n t t h a t m a y b e r e i m b u r s e d t o t h e G r o u p . I f t h e e f f e c t o f t h e t i m e v a l u e o f m o n e yi s m a t e r i a l , p r o v i s i o n s a r e d i s c o u n t e du s i n g a c u r r e n t p r e t a xr a t e t h a t r e f l e c t s t h e r i s k s s p e c i f i c t ot h e l i a b i l i t y .T h e a m o u n t o f p r o v i s i o ni s b e i n gr e a s s e s s e da t l e a s t o na na n n u a l b a s i s t o c o n s i d e r n e wr e l e v a n t i n f o r m a t i o n . N o p r o v i s i o n i s d e e m e d n e c e s s a r y a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 . C o n t i n g e n c i e s T h e G r o u p i s i n v o l v e d i n v a r i o u s o t h e r l a b o r d i s p u t e s , l i t i g a t i o n s , c l a i m s , a n d t a x a s s e s s m e n t s t h a t a r e n o r m a l t o i t s b u s i n e s s . B a s e d o n t h e o p i n i o n o f t h e G r o u p s l e g a l c o u n s e l s o n t h e p r o g r e s s a n d l e g a l g r o u n d s o f t h e s e c a s e s , t h e G r o u pb e l i e v e s t h a t i t d o e s n o t h a v e a p r e s e n t o b l i g a t i o n a r i s i n g f r o m ap a s t e v e n t a n d / o rt h el i k e l yo u t c o m ea n de s t i m a t e dp o t e n t i a l c a s ho u t f l o wc a n n o t b e r e a s o n a b l yd e t e r m i n e da so ft h i st i m e . A ss u c h ,n op r o v i s i o nw a sm a d ef o rt h e s eo t h e r c o n t i n g e n c i e s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 ( s e e N o t e 1 6 ) . R e c o g n i t i o n o f d e f e r r e d i n c o m e t a x a s s e t s T h eG r o u pr e v i e w st h ec a r r y i n ga m o u n t sa t t h ee n do f e a c hr e p o r t i n gp e r i o da n dr e d u c e st h e a m o u n t o f d e f e r r e di n c o m et a xa s s e t s t ot h ee x t e n t t h a t i t i sn ol o n g e r p r o b a b l et h a t s u f f i c i e n t t a x a b l e p r o f i t i nt h e f u t u r ew i l l b e a v a i l a b l e t oa l l o wa l l o r p a r t o f t h ed e f e r r e dt a xa s s e t s t ob e u t i l i z e d .T h e G r o u ph a s d e d u c t i b l e t e m p o r a r yd i f f e r e n c e s a n dc a r r y f o r w a r db e n e f i t s o f N O L C O a n dMC I Ta m o u n t i n gt o= P 1 1 7 . 4m i l l i o na n d= P 1 0 1 . 4m i l l i o na so fJ u n e3 0 , 2 0 1 0a n d2 0 0 9 , r e s p e c t i v e l y ( s e e N o t e 2 2 ) . 4 .C a s ha n dC a s h E q u i v a l e n t s C a s h a n d c a s h e q u i v a l e n t s a t J u n e 3 0 c o n s i s t o f : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) 2 8 0 , = P 9 5 7 1 7 6 , P = 8 2 7 5 , 7 0 5 = P 2 8 6 , 6 6 2 P = 1 7 6 , 8 2 7

C a s h o n h a n d a n d i n b a n k s S h o t e r mp l a c e m e n r t t s

S h o r t t e r mp l a c e m e n t s e a r n i n t e r e s t r a n g i n gf r o m1 . 3 %t o 2 . 5 %, 1 . 5 %t o 3 . 0 %a n d 1 . 5 %t o 5 . 1 % p e r a n n u mi n2 0 1 0 , 2 0 0 9a n d2 0 0 8 , r e s p e c t i v e l y .T h ea v e r a g em a t u r i t i e so f t h e s ep l a c e m e n t s i s3 0d a y st o6 0d a y s .I n t e r e s t i n c o m ee a r n e do nc a s hi nb a n k sa n ds h o r t t e r mp l a c e m e n t s a m o u n t e d t o = P 5 . 7 m i l l i o n , = P 7 . 4 m i l l i o n a n d = P 1 1 . 7 m i l l i o n i n 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y .

* S G V M C 3 1 0 9 6 2 *

2 6 5 .R e c e i v a b l e s R e c e i v a b l e s a t J u n e 3 0 c o n s i s t o f : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) P = 6 8 1 , 2 1 6 = P 7 5 6 , 6 8 0 4 9 , 0 2 2 3 8 , 7 6 2 3 8 , 5 4 7 1 5 , 1 9 2 3 0 , 7 0 5 8 5 3 , 4 4 4 2 0 , 6 4 4 P = 8 3 2 , 8 0 0 2 0 1 , 4 2 3 5 0 , 4 8 1 2 7 , 6 6 4 1 6 , 9 6 2 5 7 , 8 7 1 1 , 1 1 1 , 0 8 1 2 3 , 8 9 3 = P 1 , 0 8 7 , 1 8 8

T r a d e A d v a n c e s t o : R e l a t e d p a r t i e s ( N o t e 1 4 ) E m p l o y e e s P l a n t e r s a n d c a n e h a u l e r s A d v a n c e s f o r r a ws u g a r p u r c h a s e s O t h e r s L e s s a l l o w a n c e f o r i m p a i r m e n t o f r e c e i v a b l e s

A d v a n c e st oe m p l o y e e sp e r t a i nt oa d v a n c e sf o r t h eG r o u p se x p e n s e sw h i c ha r es u b s e q u e n t l y l i q u i d a t e d .T h e s e a d v a n c e s a l s o i n c l u d e n o n i n t e r e s t b e a r i n g s a l a r y , h o u s i n g a n d e d u c a t i o n a l l o a n s t h a t a r e c o l l e c t e d t h r o u g h s a l a r y d e d u c t i o n . O t h e r r e c e i v a b l e s i n c l u d e a d v a n c e s t os u p p l i e r s f o r t h e p u r c h a s e o f l o c a l a n di m p o r t e dm a t e r i a l s a n d s u p p l i e s .T h e a c c o u n t a l s o i n c l u d e s o u t s t a n d i n g r e c e i v a b l e f r o mt h e 2 0 0 2 s a l e o f a p o r t i o n o f t h eC o m p a n y sl a n di nB a r r i oB i l a r a n ,N a s u g b u ,B a t a n g a st oi t se m p l o y e e s . D u et ot h e R e o r g a n i z a t i o n P r o g r a md i s c u s s e d i n N o t e 1 , t h e e m p l o y e e s w e r e t r a n s f e r r e d t o C A D P I , w h e r e a s , t h er e c e i v a b l er e m a i n e dw i t ht h eC o m p a n y .T h e s el o a n sb e a r a n n u a l i n t e r e s t o f 1 2 %a n da r e p a y a b l e o v e r 1 0 y e a r s u n t i l 2 0 1 2 . A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e m a i n i n g b a l a n c e o n t h e c u r r e n t p o r t i o n o f s u c h r e c e i v a b l e a m o u n t e d t o = P 4 . 1 m i l l i o n , n e t o f u n e a r n e d i n t e r e s t i n c o m e ( p r e s e n t e d a s a d e d u c t i o n f r o ms u c h r e c e i v a b l e ) a m o u n t i n g t o = P 0 . 8 m i l l i o n a n d P = 0 . 4 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e s p e c t i v e l y . N o n c u r r e n t p o r t i o no f l o a n s t oC A D P I e m p l o y e e s a so f J u n e3 0 , 2 0 1 0a n d2 0 0 9a m o u n t i n gt o = P 3 . 2m i l l i o n a n d = P 6 . 6m i l l i o n , r e s p e c t i v e l y , i s p r e s e n t e du n d e r O t h e r n o n c u r r e n t a s s e t s a c c o u n t n e t o f u n e a r n e d i n t e r e s t i n c o m e o f = P 0 . 8 m i l l i o n a n d P = 2 . 2 m i l l i o n , r e s p e c t i v e l y . D e t a i l sa n dm o v e m e n t o fa l l o w a n c ef o ri m p a i r m e n t o fr e c e i v a b l e s , d e t e r m i n e du s i n gs p e c i f i c a s s e s s m e n t , a s o f J u n e 3 0 f o l l o w :
A d d i t i o n s A d d i t i o n s ( N o t e 1 9 )Wr i t e o f f s 2 0 0 9 ( N o t e 1 9 ) Wr i t e o f f s 2 0 1 0 ( I n T h o u s a n d s ) P = 6 , 5 0 2 P = 2 3 0 P = P = 6 , 7 3 2 P = ( P = 3 , 8 1 7 ) P = 2 , 9 1 5 2 0 0 8 6 , 0 4 4 1 , 2 7 6 9 , 7 1 8 P = 2 3 , 5 4 0 1 0 3 2 3 P = 3 5 6 ( 3 ) 6 , 1 4 4 1 , 2 7 6 9 , 7 4 1 ( = P 3 ) P = 2 3 , 8 9 3 1 , 8 9 1 1 5 0 P = 2 , 0 4 1 8 , 0 3 5 1 , 2 7 6 ( 1 , 4 7 3 ) 8 , 4 1 8 ( P = 5 , 2 9 0 ) P = 2 0 , 6 4 4

T r a d e A d v a n c e s t o p l a n t e r s a n d c a n e h a u l e r s A d v a n c e s t o e m p l o y e e s O t h e r s

* S G V M C 3 1 0 9 6 2 *

2 7 6 .I n v e n t o r i e s I n v e n t o r i e s a t J u n e 3 0 c o n s i s t o f : 2 0 1 0 ( I n T h o u s a n d s ) P = 7 3 2 , 0 9 2 2 1 , 2 7 8 1 9 , 5 3 2 5 8 4 , 0 7 6 1 3 5 , 0 2 5 3 8 1 , 1 3 4 P = 1 , 8 7 3 , 1 3 7 2 0 0 9

A t c o s t : R e f i n e d s u g a r A l c o h o l Ma t e r i a l s i n t r a n s i t A t N R V : R a ws u g a r Mo l a s s e s Ma t e r i a l s a n d s u p p l i e s

= P 3 1 0 , 5 9 3 1 3 2 , 0 8 4 6 1 4 , 4 3 7 1 9 , 8 6 9 5 1 1 , 5 2 6 = P 1 , 5 8 8 , 5 0 9

D e t a i l sa n dm o v e m e n t so fa l l o w a n c e sf o ri n v e n t o r yl o s s e so fr a ws u g a ra n di n v e n t o r y o b s o l e s c e n c e o f m a t e r i a l s a n d s u p p l i e s a s o f J u n e 3 0 f o l l o w :
R a wS u g a r 2 0 1 0 B e g i n n i n g P r o v i s i o n s R e c o v e r y Wr i t e o f f s E n d i n g P = 2 1 , 9 9 5 1 2 , 3 6 5 ( 2 , 6 0 1 ) ( 3 1 , 7 5 9 ) = P Ma t e r i a l s a n d S u p p l i e s 2 0 0 9 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 1 0 , 7 6 1 = P 2 5 , 6 6 6 = P 3 0 , 9 7 6 1 1 , 2 3 4 5 , 3 1 0 2 , 6 8 5 ( 4 , 5 4 5 ) = P 2 1 , 9 9 5 = P 3 0 , 9 7 6 = P 2 9 , 1 1 6

R e c o v e r yo f i n v e n t o r yl o s s e s o f r a ws u g a r p e r t a i n s t ot h e i n c r e a s e i nt h en e t r e a l i z a b l e v a l u eo f i n v e n t o r y d u e t o h i g h e r s e l l i n g p r i c e . C o s to fi n v e n t o r i e sr e c o g n i z e da se x p e n s ea n di n c l u d e di n C o s to fs a l e s a m o u n t e dt o = P 3 , 0 7 1 . 3m i l l i o n , = P 3 , 1 1 8 . 7m i l l i o na n d= P 3 , 1 1 1 . 8m i l l i o ni n2 0 1 0 , 2 0 0 9a n d2 0 0 8 , r e s p e c t i v e l y ( s e e N o t e 1 8 ) . 7 .P r e p a y me n t s a n dO t h e r C u r r e n t A s s e t s P r e p a y m e n t s a n d o t h e r c u r r e n t a s s e t s a t J u n e 3 0 c o n s i s t o f : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 6 3 , 2 3 6 P = 1 1 1 , 3 9 0 8 4 , 2 6 7 2 4 , 3 2 2 9 , 1 3 8 P = 2 2 9 , 1 1 7 5 3 , 4 5 2 1 4 , 7 9 6 2 0 , 7 1 5 = P 1 5 2 , 1 9 9

I n p u t V A Ta n d o t h e r p r e p a i d t a x e s C r e d i t a b l e w i t h h o l d i n g t a x e s , n e t o f a l l o w a n c e o f P = 1 3 . 7 m i l l i o n i n 2 0 1 0 a n d P = 9 . 8 m i l l i o n i n 2 0 0 9 ( N o t e 1 9 ) C o n s u m a b l e b i o l o g i c a l a s s e t s O t h e r s

C o n s u m a b l e b i o l o g i c a l a s s e t s p e r t a i n t o s t a n d i n g s u g a r c a n e s o f N A V I . I n p u t v a l u e a d d e d t a x e s a r i s e f r o mp u r c h a s e s o f e q u i p m e n t a n d s e r v i c e s r e l a t i n g t o t h e E x p a n s i o n P r o j e c t a n d R B CP l a n t c o n s t r u c t i o n ( s e e N o t e 9 ) .

* S G V M C 3 1 0 9 6 2 *

2 8 O t h e r c u r r e n t a s s e t s c o n s i s t o f p r e p a i di n s u r a n c e a n dr e n t a l s , a d v a n c e p a y m e n t s m a d e t oa s u g a r m i l l i n g c o m p a n y f o r t o l l i n g s e r v i c e s a n d a d v a n c e d i n p u t V A Tf o r r e f i n e d s u g a r s a l e s . 8 .I n v e s t me n t i n S h a r e s o f S t o c k o f a n A s s o c i a t e A s a t J u n e 3 0 , 2 0 1 0a n d2 0 0 9 , d e t a i l s o f t h e i n v e s t m e n t i nH P C o , 4 5 . 0 9 %o w n e da s s o c i a t e , a n d i n c o r p o r a t e d i n t h e P h i l i p p i n e s , f o l l o w : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 1 2 7 , 9 3 3 P = 1 2 7 , 9 3 3 2 2 2 , 0 0 7 1 3 2 , 2 6 3 3 5 4 , 2 7 0 7 1 , 3 7 3 2 8 2 , 8 9 7 2 0 7 , 4 9 2 P = 6 1 8 , 3 2 2 2 1 0 , 9 6 3 7 9 , 5 6 4 2 9 0 , 5 2 7 6 8 , 5 2 0 2 2 2 , 0 0 7 2 0 7 , 4 9 2 = P 5 5 7 , 4 3 2

A c q u i s i t i o n c o s t A c c u m u l a t e d e q u i t y i n n e t e a r n i n g s B e g i n n i n g o f y e a r E q u i t y i n n e t e a r n i n g s f o r t h e y e a r L e s s d i v i d e n d r e c e i v e d E n d o f y e a r S h a r e i n r e v a l u a t i o n i n c r e m e n t

H P C oi s p r i m a r i l ye n g a g e di nt h e m a n u f a c t u r i n ga n dt r a d i n go f r a wa n dr e f i n e ds u g a r , m o l a s s e s a n d o t h e r s u g a r b y p r o d u c t s . T h e s u m m a r i z e d f i n a n c i a l i n f o r m a t i o n o f H P C o a s o f a n d f o r t h e y e a r s e n d e d J u n e 3 0 , 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 a r e a s f o l l o w s : 2 0 1 0 C u r r e n t a s s e t s N o n c u r r e n t a s s e t s C u r r e n t l i a b i l i t i e s N o n c u r r e n t l i a b i l i t i e s N e t a s s e t s R e v e n u e N e t i n c o m e 9 .P r o p e r t y , P l a n t a n dE q u i p me n t D e t a i l s a n d m o v e m e n t s o f p r o p e r t y , p l a n t a n d e q u i p m e n t , v a l u e d a t c o s t b a s i s , f o r t h e y e a r s e n d e d J u n e 3 0 a r e s h o w n b e l o w :
O f f i c e Ma c h i n e r y F u r n i t u r e , a n d R a i l r o a d F i x t u r e s a n d C o n s t r u c t i o n E q u i p me n t E q u i p me n t E q u i p me n t i n P r o g r e s s ( I n T h o u s a n d s ) P = 5 , 1 6 5 , 3 6 1 1 , 3 4 6 , 6 7 0 ( 1 0 , 8 2 0 ) 2 , 3 0 7 , 4 7 7 8 , 8 0 8 , 6 8 8 = P 1 2 3 , 1 4 4 2 3 , 5 9 7 ( 1 1 8 , 4 4 9 ) 4 , 6 4 3 3 2 , 9 3 5 2 0 1 0

P = 5 2 7 , 2 5 5 8 0 0 , 4 1 4 3 1 9 , 2 0 4 9 2 , 0 4 4 9 1 6 , 4 2 1 1 , 7 2 0 , 2 2 5 2 9 3 , 3 3 1

2 0 0 9 ( I n T h o u s a n d s ) = P 4 3 3 , 8 8 0 7 5 0 , 1 0 3 3 0 5 , 9 5 3 9 6 , 4 3 5 7 8 1 , 5 9 5 1 , 5 6 7 , 8 7 4 1 7 6 , 4 5 7

2 0 0 8 P = 4 3 6 , 9 8 2 7 3 1 , 0 5 2 3 8 6 , 5 3 9 1 4 , 9 8 6 7 6 6 , 5 0 9 1 , 3 0 4 , 3 4 6 1 5 4 , 6 6 7

B u i l d i n g s a n d I mp r o v e me n t s C o s t B e g i n n i n g b a l a n c e s A d d i t i o n s D i s p o s a l s R e c l a s s i f i c a t i o n E n d i n g b a l a n c e s ( F o r w a r d ) = P 1 , 2 2 4 , 7 9 8 1 2 9 , 4 0 8 6 8 6 , 8 8 9 2 , 0 4 1 , 0 9 5

T o t a l

P = 6 0 5 , 6 4 6 = P4 , 9 6 7 , 3 3 4 = P 1 2 , 0 8 6 , 2 8 3 2 6 7 , 5 6 3 7 9 7 , 1 4 6 2 , 5 6 4 , 3 8 4 ( 9 8 2 ) ( 1 3 0 , 2 5 1 ) ( 8 0 3 , 5 5 7 ) ( 2 , 2 1 7 , 3 6 3 ) ( 2 1 , 9 1 1 ) 6 8 , 6 7 0 3 , 5 4 7 , 1 1 7 1 4 , 4 9 8 , 5 0 5

* S G V M C 3 1 0 9 6 2 *

2 9 -

B u i l d i n g s a n d I mp r o v e me n t s A c c u mu l a t e dd e p r e c i a t i o n B e g i n n i n g b a l a n c e s D e p r e c i a t i o n D i s p o s a l s R e c l a s s i f i c a t i o n E n d i n g b a l a n c e s N e t B o o kV a l u e = P 6 9 7 , 4 4 2 6 7 , 0 3 7 ( 2 8 , 1 1 8 ) 7 3 6 , 3 6 1 = P 1 , 3 0 4 , 7 3 4

O f f i c e Ma c h i n e r y F u r n i t u r e , a n d R a i l r o a d F i x t u r e s a n d C o n s t r u c t i o n E q u i p me n t E q u i p me n t E q u i p me n t i n P r o g r e s s ( I n T h o u s a n d s ) = P 3 , 6 0 7 , 3 1 0 3 2 1 , 0 5 1 ( 6 , 7 4 8 ) 4 7 7 , 9 4 1 4 , 3 9 9 , 5 5 4 = P 4 , 4 0 9 , 1 3 4 = P 1 2 1 , 3 2 6 8 , 0 6 6 ( 1 1 8 , 0 3 0 ) ( 3 6 2 ) 1 1 , 0 0 0 = P 2 1 , 9 3 5 2 0 0 9 = P 5 1 5 , 4 9 4 1 0 , 8 7 1 ( 6 4 0 ) ( 4 7 1 , 3 7 2 ) 5 4 , 3 5 3 = P 1 4 , 3 1 7 P = = P 3 , 5 4 7 , 1 1 7

2 0 1 0

T o t a l = P 4 , 9 4 1 , 5 7 2 4 0 7 , 0 2 5 ( 1 2 5 , 4 1 8 ) ( 2 1 , 9 1 1 ) 5 , 2 0 1 , 2 6 8 = P 9 , 2 9 7 , 2 3 7

B u i l d i n g s a n d I m p r o v e m e n t s C o s t B e g i n n i n g b a l a n c e s A d d i t i o n s D i s p o s a l s E n d i n g b a l a n c e s A c c u mu l a t e dd e p r e c i a t i o n B e g i n n i n g b a l a n c e s D e p r e c i a t i o n D i s p o s a l s E n d i n g b a l a n c e s N e t B o o kV a l u e = P 1 , 0 5 3 , 0 3 4 1 8 3 , 9 9 5 ( 1 2 , 2 3 1 ) 1 , 2 2 4 , 7 9 8 6 5 9 , 8 6 1 4 2 , 9 7 5 ( 5 , 3 9 4 ) 6 9 7 , 4 4 2 = P 5 2 7 , 3 5 6

Ma c h i n e r y a n d E q u i p m e n t = P 5 , 0 5 3 , 6 6 3 1 4 1 , 1 0 8 ( 2 9 , 4 1 0 ) 5 , 1 6 5 , 3 6 1 3 , 3 7 7 , 1 7 9 2 3 5 , 6 1 4 ( 5 , 4 8 3 ) 3 , 6 0 7 , 3 1 0 = P 1 , 5 5 8 , 0 5 1

O f f i c e F u r n i t u r e , R a i l r o a d F i x t u r e s a n d C o n s t r u c t i o n E q u i p m e n t E q u i p m e n t i n P r o g r e s s ( I n T h o u s a n d s ) = P 1 2 1 , 1 5 8 3 , 1 4 7 ( 1 , 1 6 1 ) 1 2 3 , 1 4 4 1 2 1 , 1 5 8 1 8 7 ( 1 9 ) 1 2 1 , 3 2 6 = P 1 , 8 1 8 = P 5 6 3 , 8 5 5 4 1 , 7 9 1 6 0 5 , 6 4 6 4 8 9 , 8 4 4 2 5 , 6 5 0 5 1 5 , 4 9 4 = P 9 0 , 1 5 2 P = 1 , 9 8 3 , 9 3 0 2 , 9 8 3 , 4 0 4 4 , 9 6 7 , 3 3 4 = P 4 , 9 6 7 , 3 3 4

T o t a l P = 8 , 7 7 5 , 6 4 0 3 , 3 5 3 , 4 4 5 ( 4 2 , 8 0 2 ) 1 2 , 0 8 6 , 2 8 3 4 , 6 4 8 , 0 4 2 3 0 4 , 4 2 6 ( 1 0 , 8 9 6 ) 4 , 9 4 1 , 5 7 2 = P 7 , 1 4 4 , 7 1 1

L a n d a t a p p r a i s e d v a l u e s a n d h a d i t b e e n c a r r i e d a t c o s t a t t h e b e g i n n i n g a n d e n d o f J u n e 3 0 a r e a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 2 , 5 1 7 , 6 6 0 P = 2 , 5 1 7 , 6 6 0 2 6 , 0 9 7 ( 5 8 , 7 5 6 ) = P 2 , 5 1 7 , 6 6 0 P = 2 , 4 8 5 , 0 0 1 3 2 , = P 6 2 0 5 8 , P = 7 1 5

B e g i n n i n g b a l a n c e a t a p p r a i s a l v a l u e s A d d i t i o n s R e v a l u a t i o n d e c r e a s e E n d i n g b a l a n c e a t a p p r a i s a l v a l u e s A t c o s t a .C o n s t r u c t i o n i n p r o g r e s s

C o n s t r u c t i o ni np r o g r e s sa so fJ u n e3 0 , 2 0 1 0a n d2 0 0 9p e r t a i n sm a i n l yt ot h ef o r e g o i n g m i l l i n gp l a n t i m p r o v e m e n t p r o j e c t , r e f i n e r yp l a n t i n s t a l l a t i o no f s i e v i n gf a c i l i t i e s , a s w e l l a s c o n s t r u c t i o n a n d i m p r o v e m e n t o f w a s t e a n d p o l l u t i o n f a c i l i t i e s o f t h e G r o u p . Mi l l i n g p l a n t i m p r o v e m e n t p r o j e c t ( t h e E x p a n s i o n P r o j e c t ) Wi t ht h e i n t e n t o f i m p r o v i n gi t s r e v e n u e g e n e r a t i n gc a p a b i l i t y , t h e G r o u pp u r c h a s e ds e c o n d h a n dm i l l s a n d r e l a t e de q u i p m e n t f r o mB r y a n t , F l o r i d a , U n i t e d S t a t e s o f A m e r i c a ( U S A ) a n d F a i r y m e a d , A u s t r a l i a . I nA u g u s t 2 0 0 7 , C A D P G Ce n t e r e di n t oap u r c h a s e a g r e e m e n t , f o r a n do nb e h a l f o f i t s t h e n w h o l l y o w n e d s u b s i d i a r i e s , C A D P I a n d C A C I , w i t h a f o r e i g n c o r p o r a t i o n t o b u y c e r t a i n s u g a r m i l l e q u i p m e n t f o rat o t a l p u r c h a s ep r i c eo fU S $ 1 9 . 5m i l l i o n .T h ep u r c h a s ep e r t a i n st o d i f f e r e n t p i e c e so f d i s a s s e m b l e de q u i p m e n t t h a t o r i g i n a t e df r o m B r y a n t S u g a r H o u s e , a

* S G V M C 3 1 0 9 6 2 *

3 0 s u g a r m i l l l o c a t e di nB r y a n t , F l o r i d a , U S A , o f w h i c ht h e s e l l e r s h a dp u r c h a s e df r o mU n i t e d S t a t e sS u g a rC o r p o r a t i o nt h r o u g hap u r c h a s ea n dr e m o v a la g r e e m e n te x e c u t e do n A p r i l 3 0 , 2 0 0 7 . T oc o m p l e m e n t t h em i l l sf r o mB r y a n t S u g a rH o u s e , m i l l c o m p o n e n t sa n ds h r e d d e rw e r e p u r c h a s e d f r o mA u s t r a l i a i n Ma r c h 2 0 0 8 . T h e G r o u po b t a i n e ds h o r t a n dl o n g t e r mb o r r o w i n g s f r o mv a r i o u s l o c a l b a n k s t of i n a n c e t h e E x p a n s i o n P r o j e c t ( s e e N o t e s 1 0 a n d 1 3 ) . R B CP l a n t C o n s t r u c t i o n P r o j e c t O n J u n e 2 7 , 2 0 0 8 , i nl i n e w i t h t h e G r o u pE x p a n s i o n P r o j e c t , R B Ce n t e r e di n t oa n a g r e e m e n t t oc o n s t r u c t i t s b i o e t h a n o l p l a n t i nL aC a r l o t aC i t y , N e g r o s O c c i d e n t a l f o r at o t a l c o n t r a c t e d a m o u n t o f U S $ 2 0 . 9 m i l l i o n .A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , t h e b a l a n c e i n t h e c o n s t r u c t i o n i n p r o g r e s s r e l a t i n g t o R B Cp l a n t a m o u n t e d t o P = 1 , 2 0 2 . 2 m i l l i o n a n d = P 5 8 4 . 8 m i l l i o n , r e s p e c t i v e l y . C a p i t a l i z a t i o n o f b o r r o w i n g c o s t s I n t e r e s t s f r o ms h o r t a n dl o n g t e r mb o r r o w i n g s a m o u n t i n gt o= P 1 7 4 . 6m i l l i o n , = P 2 7 7 . 9m i l l i o n a n dP = 4 5 . 5m i l l i o ni n2 0 1 0 , 2 0 0 9a n d2 0 0 8 , r e s p e c t i v e l y , i n c u r r e dt of i n a n c et h eE x p a n s i o n P r o j e c tw e r ec a p i t a l i z e dt op r o p e r t y ,p l a n ta n de q u i p m e n t .T h eG r o u pa m o r t i z e ss u c h c a p i t a l i z e d i n t e r e s t o v e r t h e u s e f u l l i f e o f t h e q u a l i f y i n g a s s e t t o w h i c h i t r e l a t e s .U n a m o r t i z e d c a p i t a l i z e di n t e r e s ta so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9a m o u n t e dt oP = 5 2 4 . 2m i l l i o na n d = P 3 7 0 . 4m i l l i o nw i t hc o r r e s p o n d i n gd e f e r r e di n c o m et a xl i a b i l i t yo fP = 1 5 7 . 2m i l l i o na n d = P 1 1 1 . 1m i l l i o n , r e s p e c t i v e l y( s e eN o t e2 2 ) . T h er a t e su s e dt od e t e r m i n et h ea m o u n to f b o r r o w i n g c o s t s e l i g i b l e f o r c a p i t a l i z a t i o n w e r e 8 . 8 %, 6 . 7 %a n d 6 . 6 %i n 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y , w h i c h a r e t h e a v e r a g e e f f e c t i v e i n t e r e s t r a t e s o f t h e b o r r o w i n g s . N o n c a s h a d d i t i o n s t o p r o p e r t y , p l a n t a n d e q u i p m e n t T h eG r o u ph a so u t s t a n d i n gl i a b i l i t i e sf o r p u r c h a s eo f e q u i p m e n t r e l a t i n gt ot h eE x p a n s i o n P r o j e c ta n dR B CP l a n tc o n s t r u c t i o na m o u n t i n gt o= P 5 4 . 7m i l l i o n ,= P 2 . 8m i l l i o na n d = P 6 8 . 1 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y . b .D e p r e c i a t i o n D e p r e c i a t i o n c h a r g e d t o o p e r a t i o n s a r e a s f o l l o w s : 2 0 0 9 ( I n T h o u s a n d s ) = P 2 7 4 , 2 0 4 P = 3 8 1 , 9 6 1 2 0 1 0 2 5 , 0 6 4 P = 4 0 7 , 0 2 5 3 0 , 2 2 2 = P 3 0 4 , 4 2 6 2 0 0 8 = P 3 0 1 , 8 5 8 2 6 , 2 4 5 = P 3 2 8 , 1 0 3

C o s t o f s a l e s ( N o t e 1 8 ) G e n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s ( N o t e 1 9 )

A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , f u l l yd e p r e c i a t e dp r o p e r t y , p l a n t a n de q u i p m e n t , w i t ha n a g g r e g a t e c o s t o f = P 1 , 4 0 0 . 6m i l l i o na n dP = 1 , 4 0 4 . 1m i l l i o n , r e s p e c t i v e l y , a r e s t i l l b e i n gu s e di n o p e r a t i o n s .

* S G V M C 3 1 0 9 6 2 *

3 1 c .P r o p e r t y , p l a n t a n d e q u i p m e n t a s c o l l a t e r a l S o m e p r o p e r t y , p l a n t a n de q u i p m e n t o f t h e G r o u pa r e m o r t g a g e dt os e c u r e t h e G r o u p s l o a n o b l i g a t i o n s w i t h c r e d i t o r b a n k s ( s e e N o t e 1 3 ) . d .C a p i t a l e x p a n s i o n c o m m i t m e n t s T h e G r o u p h a s o u t s t a n d i n g c a p i t a l e x p a n s i o n c o m m i t m e n t s a m o u n t i n g t o = P 1 , 0 5 3 . 5 m i l l i o n a n d = P 1 , 5 4 2 . 8 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e s p e c t i v e l y . 1 0 . S h o r t t e r mB o r r o w i n g s A t v a r i o u s d a t e s i n 2 0 1 0 , 2 0 0 9a n d 2 0 0 8 , C A C I a n d C A D P I o b t a i n e du n s e c u r e d s h o r t t e r ml o a n s f r o mv a r i o u sl o c a l b a n k st om e e t t h e i rw o r k i n gc a p i t a l r e q u i r e m e n t s .T h el o a n s , w h i c ha r e p a y a b l e i nl u m ps u mo nv a r i o u s d a t e s , a r e s u b j e c t t oa n n u a l i n t e r e s t r a t e s r a n g i n gf r o m4 . 7 %t o 7 . 0 %, 5 . 0 %t o 9 . 7 5 %a n d 4 . 7 %t o 8 . 1 %a n d h a v e t e r m s r a n g i n g f r o m2 9 t o 3 2d a y s , 3 0 t o 3 2 d a y s a n d 2 8 t o 1 7 9 d a y s i n 2 0 1 0 , 2 0 0 9 , 2 0 0 8 , r e s p e c t i v e l y . A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , t h e b a l a n c e o f t h e s h o r t t e r ml o a n s , n e t o f r e l a t e d u n a m o r t i z e d d e b t c o m m i t m e n t f e e s , a m o u n t e d t o = P 2 , 4 4 9 . 9 m i l l i o n a n d = P 2 , 9 3 7 . 0 m i l l i o n , r e s p e c t i v e l y . T o t a li n t e r e s te x p e n s er e c o g n i z e df r o ms h o r t t e r mb o r r o w i n g sa m o u n t e dt oP = 1 5 9 . 3m i l l i o n , = P 7 6 . 4m i l l i o na n d= P 5 3 . 2m i l l i o ni n2 0 1 0 , 2 0 0 9a n d2 0 0 8 , r e s p e c t i v e l y , e x c l u d i n gi n t e r e s t o f = P 4 2 . 0 m i l l i o n i n 2 0 1 0 a n d = P 3 6 . 0 m i l l i o n i n 2 0 0 9 w h i c h w e r e c a p i t a l i z e d ( s e e N o t e 9 ) . 1 1 . A c c o u n t s P a y a b l e a n dA c c r u e dE x p e n s e s A c c o u n t s p a y a b l e a n d a c c r u e d e x p e n s e s a t J u n e 3 0 c o n s i s t o f : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 3 0 5 , 7 0 4 P = 1 3 1 , 4 8 8 8 0 , 9 9 9 4 3 , 7 5 2 1 7 , 7 3 8 9 , 8 3 4 6 4 , 1 1 9 1 8 , 8 5 7 7 3 , 6 8 1 5 8 , 5 5 5 1 0 9 , 6 5 0 P = 6 0 8 , 6 7 3 3 5 , 2 3 4 1 0 , 7 1 4 1 3 , 5 2 3 6 , 6 8 9 1 1 5 , 1 4 1 4 7 , 8 7 4 5 6 , 6 3 8 3 1 , 7 3 1 1 5 6 , 2 8 2 = P 7 7 9 , 5 3 0

T r a d e s u p p l i e r s A c c r u e d e x p e n s e s : I n t e r e ( N o t e s 1 0 a n d s t 1 3 ) C o n t r a c t o r s O u t s i d e s e r v i c e s P a y r o l l a n d o t h e r b e n e f i t s P u r c h a s e s a n d o t h e r s D u e t o p l a n t e r s P a y a b l e t o g o v e r n m e n t a g e n c i e s f o r t a x e s a n d c o n t r i b u t i o n s P a y a b l e t r e t i r e m e n t f u n ( N o t e o d 1 4 ) O t h e r s

O t h e rp a y a b l e si n c l u d el i a b i l i t i e st ot h i r dp a r t i e sf o rs u g a rl i e n s , a n do t h e rr e l a t e df e e s , a n d p u r c h a s e s o f e q u i p m e n t r e l a t i n g t o t h e E x p a n s i o n P r o j e c t ( s e e N o t e 9 ) .

* S G V M C 3 1 0 9 6 2 *

3 2 1 2 . C u s t o me r s D e p o s i t s C u s t o m e r s d e p o s i t s r e p r e s e n t n o n i n t e r e s t b e a r i n g c a s h d e p o s i t s f r o mb u y e r s o f t h e G r o u p s s u g a r a n dm o l a s s e s .T h e s ed e p o s i t sw i l l b ea p p l i e da g a i n s t f u t u r ed e l i v e r i e so f s u g a r a n dm o l a s s e s w h i c ha r ee x p e c t e dt ob ec o m p l e t e di nt h en e x t 1 2m o n t h s . C u s t o m e r s d e p o s i t sa m o u n t e dt o = P 1 2 3 . 1 m i l l i o n a n d P = 1 8 5 . 8 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , r e s p e c t i v e l y . 1 3 . L o n g t e r mB o r r o w i n g s L o n g t e r mb o r r o w i n g s a t J u n e 3 0 c o n s i s t o f : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 1 , 9 3 8 , 4 9 4 P = 3 , 7 7 0 , 0 0 0 1 , 5 0 0 , 0 0 0 5 0 0 , 0 0 0 5 , 7 7 0 , 0 0 0 ( 3 5 , 6 9 2 ) 5 , 7 3 4 , 3 0 8 5 1 , 7 2 4 P = 5 , 6 8 2 , 5 8 4 9 4 0 , 5 6 2 2 1 9 , 9 4 4 3 , 0 9 9 , 0 0 0 ( 2 3 , 0 2 7 ) 3 , 0 7 5 , 9 7 3 = P 3 , 0 7 5 , 9 7 3

B a n c o d e O r o U n i b a n k , I n c . ( B D O ) S y n d i c a t e d L o a n A g r e e m e n t : B a n k o f t h e P h i l i p p i n e I s l a n d s ( B P I ) R i z a l C o m m e r c i a l B a n k i n g C o r p o r a t i o n ( R C B C ) U n a m o r t i z e d d e b t c o m m i t m e n t f e e L e s s c u r r e n t p o r t i o n

O nF e b r u a r y8 , 2 0 0 8 , R H I a v a i l e dt h el o a nf a c i l i t yf r o mB D Ow i t ha na g g r e g a t ea m o u n t o f = P 6 , 1 8 9 . 0m i l l i o n . T h ep r i n c i p a la m o u n to fd e b ta c c o m m o d a t i o ni ss h a r e db yR H Ia n d C A D P I / C A C I a m o u n t i n gt oP = 1 , 5 7 0 . 0m i l l i o na n d = P 4 , 6 1 9 . 0m i l l i o n , r e s p e c t i v e l y .I na d d i t i o n , o n F e b r u a r y1 4 , 2 0 0 8 , C A D P I a n dC A C I e n t e r e di n t oaS y n d i c a t e dL o a nA g r e e m e n t w i t hB P I a n d R C B C( w i t h B P I a s t h e l e a d b a n k ) f o r a t o t a l c r e d i t l i n e o f P = 1 , 5 0 0 . 0 m i l l i o n . R H I O n Ma y 5 , 2 0 0 8 , R H I a v a i l e dl o a n s f r o mB D Oa m o u n t i n g t o = P 1 4 3 . 3 m i l l i o n t o f i n a n c e i t s S h a r e s B u yB a c k P r o g r a m .T h e p r i n c i p a l o f t h e l o a ni s p a y a b l e q u a r t e r l y s t a r t i n go n t h e 4 t hy e a r o f t h e 1 0 y e a r t e r m . S h o r t t e r ml o a n sa v a i l e df r o mB D Oo nMa y5 ,2 0 0 8a n dO c t o b e r2 9 ,2 0 0 8a m o u n t i n gt o = P 4 0 0 . 0m i l l i o na n dP = 1 7 5 . 0m i l l i o n , r e s p e c t i v e l y ,w e r er o l l e do v e rt ol o n g t e r mb o r r o w i n g s . A s s u c h , t h e p r i n c i p a l o f t h e l o a n w i l l b e p a y a b l e q u a r t e r l y s t a r t i n g o n t h e 4 t h y e a r o f t h e o r i g i n a l 1 0 y e a r t e r m . A so f J u n e3 0 , 2 0 0 9 , t h ei n t e r e s t r a t eo f t h el o n g t e r ml o a n sw a s5 . 9 %p e r a n n u m , s u b j e c t t o q u a r t e r l y r e p r i c i n g a s a g r e e d b y t h e p a r t i e s .I n 2 0 1 0 , t h e C o m p a n ye x e r c i s e di t s o p t i o n t o f i xt h e q u a r t e r l yi n t e r e s t r a t e o f t h el o a n s a t 8 . 8 4 %b e g i n n i n gA u g u s t 5 , 2 0 0 9u n t i l t h ee n do f t h el o a n t e r m s . C A D P I O nF e b r u a r y1 4 , 2 0 0 8 , C A D P I e n t e r e di n t oal o a na g r e e m e n t w i t hB P I t oa v a i l l o a n si nt w o t r a n c h e sw i t ha na g g r e g a t ep r i n c i p a la m o u n to f= P 5 0 0 . 0m i l l i o n .T r a n c h e A o ft h el o a n a m o u n t i n gt o= P 3 0 0 . 0m i l l i o nb e a r sf i x e da n n u a li n t e r e s to f8 . 0 0 %a n dp a y a b l eo nt h e5 t h

* S G V M C 3 1 0 9 6 2 *

3 3 a n n i v e r s a r yd a t eo f t h eb o r r o w i n g .O nt h eo t h e r h a n d , T r a n c h e B o f t h el o a na m o u n t i n gt o = P 2 0 0 . 0m i l l i o nb e a r sf i x e da n n u a li n t e r e s to f8 . 4 0 %a n dp a y a b l eo na ni n s t a l l m e n tb a s i s , = P 2 . 0m i l l i o no nt h e5 t ha n d6 t ha n n i v e r s a r yd a t eo ft h eb o r r o w i n ga n dt h eb a l a n c eo nt h e 7 t ha n n i v e r s a r y d a t e o f t h e b o r r o w i n g . O nMa y5 , 2 0 0 8 , C A D P I a v a i l e dl o a n s f r o mB P I a n dR C B Ca m o u n t i n gt oP = 1 6 7 . 2m i l l i o na n d = P 8 3 . 6m i l l i o n ,r e s p e c t i v e l y ,w h i c hb e a ri n t e r e s to f6 . 5 0 %a n d6 . 6 0 %,r e s p e c t i v e l y .A so f J u n e3 0 , 2 0 0 9 , i n t e r e s t r a t e sw e r e5 . 8 0 %a n d5 . 9 0 %f o rB P Ia n dR C B Cl o a n , r e s p e c t i v e l y . P r o m i s s o r yn o t e s i s s u e db yC A D P I t ot h e b a n k s a r e u n d e r t h e t e r m s s e t f o r t hi nt h e S y n d i c a t e d L o a n A g r e e m e n t . L o a n s a v a i l e d a r e w i t h 1 0 y e a r t e r m s a n d w i l l a l l m a t u r e o n Ma y 5 , 2 0 1 8 . L i k e w i s e ,o n Ma y5 ,2 0 0 8 ,C A D P Ia v a i l e da d d i t i o n a ll o a nf r o m B D O a m o u n t i n gt o = P 3 6 5 . 9m i l l i o n .T h e p r i n c i p a l o f t h e l o a ni s p a y a b l e q u a r t e r l ys t a r t i n go nt h e 4 t hy e a r o f t h e 1 0 y e a r t e r m .A s o f J u n e 3 0 , 2 0 0 9 , t h e i n t e r e s t r a t e w a s 5 . 9 0 %s u b j e c t t or e p r i c i n gb a s e do nl o a n a g r e e m e n t s . O nO c t o b e r2 9 , 2 0 0 8 , a d d i t i o n a l l o a n sw e r ea v a i l e db yC A D P If r o mB D O , B P Ia n dR C B C a m o u n t i n g t o P = 4 5 9 . 0 m i l l i o n , = P 1 4 3 . 5 m i l l i o n a n d = P 7 1 . 4 m i l l i o n , r e s p e c t i v e l y , w i t h i n t e r e s t r a t e s o f 6 . 6 0 %, 6 . 5 0 %a n d 6 . 6 0 %, r e s p e c t i v e l y .A s o f J u n e 3 0 , 2 0 0 9 , t h e i n t e r e s t r a t e s o f t h e a v a i l e d l o a n s f r o mB D O , B P I a n dR C B Cw e r e5 . 9 0 %, 5 . 8 0 %a n d5 . 9 0 %, r e s p e c t i v e l y , s u b j e c t t oq u a r t e r l y r e p r i c i n g a s a g r e e d b y t h e p a r t i e s . I n 2 0 1 0 , C A D P I a l s o e x e r c i s e d i t s o p t i o n t o f i x t h e q u a r t e r l y i n t e r e s t r a t e s o f t h e f l o a t i n g r a t e l o a n s a v a i l e d i n Ma y 2 0 0 8 a n d O c t o b e r 2 0 0 8 . I n t e r e s t r a t e w a s f i x e d t o 8 . 7 9 %f o r B P I l o a n s a n d 8 . 9 3 % f o r B D Oa n d R C B Cl o a n s , w h i c h b e c a m e e f f e c t i v e b e g i n n i n g A u g u s t 5 , 2 0 0 9 u n t i l t h e e n d o f t h e l o a n t e r m s . O nF e b r u a r y1 2 , 2 0 1 0 , C A D P I a v a i l e da d d i t i o n a l l o a n sf r o mt h eu n d r a w np o r t i o no f t h et o t a l c r e d i t f a c i l i t yf r o mB P I , B D Oa n dR C B Ca m o u n t i n gt o= P 3 2 9 . 3m i l l i o n , P = 1 , 0 5 0 . 5m i l l i o na n d = P 1 6 6 . 2m i l l i o n , r e s p e c t i v e l y . L o a n sa v a i l e df r o mB P Ia n dR C B Cw i t hf i x e di n t e r e s t r a t e so f 8 . 7 0 %a n d8 . 8 4 %, r e s p e c t i v e l y , a r ep a y a b l ei n2 9e q u a l q u a r t e r l yi n s t a l l m e n t sb e g i n n i n gMa y 2 0 1 1 , w h i c hi s t h ee n do f t h e t h r e ey e a r s g r a c e p e r i o df r o mi n i t i a l d r a w d o w nd a t e dMa y2 0 0 8 . L o a n sa v a i l e df r o mB D Oc a r r i e sf i x e di n t e r e s t r a t eo f 8 . 8 4 %a n da r ep a y a b l ei n2 8m o n t h l y i n s t a l l m e n t s b e g i n n i n g A u g u s t 5 , 2 0 1 1 . C A C I O n Ma y5 ,2 0 0 8 ,C A C Ia v a i l e dl o a n sf r o m B P I ,B D O a n dR C B C a m o u n t i n gt o = P 1 2 9 . 8m i l l i o n , P = 3 9 5 . 3m i l l i o na n dP = 6 4 . 9m i l l i o n , r e s p e c t i v e l y , a n dw i t hi n t e r e s t r a t e s o f 6 . 5 0 %, 6 . 6 0 %a n d6 . 6 0 %, r e s p e c t i v e l y .L o a n s a v a i l e da r e w i t h1 0 y e a r t e r m s a n dp a y a b l e i n2 9a n d2 8 q u a r t e r l yi n s t a l l m e n t sb e g i n n i n gMa y2 0 1 1f o rB P Ia n dR C B Ca n dA u g u s t 2 0 1 1f o rB D O , r e s p e c t i v e l y .A s o f J u n e 3 0 , 2 0 0 9 , i n t e r e s t r a t e s o f t h e a v a i l e dl o a n s w i t hB D O , B P I a n dR C B C w e r e 5 . 8 0 %, 5 . 9 0 %a n d 5 . 9 0 %, r e s p e c t i v e l y . I n 2 0 1 0 , C A C I e x e r c i s e d i t s o p t i o n t o f i x t h e q u a r t e r l y i n t e r e s t r a t e o f r e p r i c i n g B P I l o a n s a t 8 . 7 9 % a n d B D Oa n d R C B Cl o a n s a t 8 . 8 4 %b e g i n n i n g A u g u s t 5 , 2 0 0 9 u n t i l t h e e n d o f t h e l o a n t e r m s . O nA u g u s t1 2 ,2 0 0 9 ,C A C Ia v a i l e da d d i t i o n a ll o a n sf r o mB P Ia n dR C B Ca m o u n t i n gt o = P 2 3 0 . 2m i l l i o na n dP = 1 1 3 . 9m i l l i o n , r e s p e c t i v e l y .O nN o v e m b e r 5 , 2 0 0 9 , C A C I a l s oo b t a i n e d a d d i t i o n a l l o a n f r o mB D Oa m o u n t i n g t o P = 7 8 1 . 0 m i l l i o n . L o a n s a v a i l e d f r o mB P I a n d R C B Cw i t h f i x e d i n t e r e s t r a t e o f 8 . 7 4 %a n d 8 . 8 8 %, r e s p e c t i v e l y , a r e p a y a b l e i n 2 9 e q u a l q u a r t e r l y i n s t a l l m e n t s b e g i n n i n g Ma y 2 0 1 1 , w h i c h i s t h e e n d o f t h e t h r e e y e a r s g r a c e p e r i o d f r o mi n i t i a l d r a w d o w n d a t e d Ma y2 0 0 8 .L o a n s a v a i l e df r o mB D O , o nt h e o t h e r h a n d , c a r r i e s f i x e di n t e r e s t r a t e o f 8 . 9 4 %a n d a r e p a y a b l e i n 2 8 q u a r t e r l y i n s t a l l m e n t s b e g i n n i n g A u g u s t 5 , 2 0 1 1 .

* S G V M C 3 1 0 9 6 2 *

3 4 D e b t c o m m i t m e n t f e e s A s p a r t o f t h e S y n d i c a t e d L o a n A g r e e m e n t w i t h B P I / R C B C , t h e G r o u p i n c u r r e d d e b t c o m m i t m e n t f e e s a m o u n t i n g t o P = 5 9 . 4 m i l l i o n i n 2 0 0 8 . O f t h e t o t a l a m o u n t o f d e b t c o m m i t m e n t f e e s p a i d , = P 2 9 . 8 m i l l i o np e r t a i n s t o t h e d r a w np o r t i o no f t h e t o t a l c r e d i t f a c i l i t y( r e f e r r e d t o a s U n a m o r t i z e dd e b t c o m m i t m e n t f e e s a n dp r e s e n t e da sar e d u c t i o nf r o mt h ep r i n c i p a l l o a nb a l a n c e ) , w h i l et h e r e m a i n i n g= P 2 9 . 6m i l l i o np e r t a i n s t ot h e u n d r a w np o r t i o n( p r e s e n t e da s D e f e r r e dc h a r g e s u n d e r O t h e rn o n c u r r e n t a s s e t s ) .I n2 0 1 0 , t h ed e f e r r e dc h a r g e sa m o u n t i n gt oP = 1 6 . 3m i l l i o na so f J u n e 3 0 , 2 0 0 9w a s a l l r e c o g n i z e da s r e d u c t i o nf r o mt h e o u t s t a n d i n gl o a n s u p o nf u l l a v a i l m e n t o f t h eu n d r a w np o r t i o no f t h ec r e d i t f a c i l i t y .A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , u n a m o r t i z e dd e b t c o m m i t m e n t f e e s o n l o n g t e r ml o a n s a m o u n t e d t o = P 3 5 . 7 m i l l i o n a n d = P 2 3 . 0 m i l l i o n , r e s p e c t i v e l y . B o r r o w i n g c o s t s I n t e r e s t sf r o m l o n g t e r m b o r r o w i n g sr e c o g n i z e da se x p e n s ea m o u n t e dt o= P 1 6 0 . 2m i l l i o n , = P 5 6 . 9m i l l i o n a n d = P 6 . 9m i l l i o n , n e t o f c a p i t a l i z e d a m o u n t s o f = P 1 3 6 . 6m i l l i o n , = P 2 4 1 . 9m i l l i o n a n d = P 4 5 . 5 m i l l i o n i n 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y . S u r e t y s h i p a g r e e m e n t , m o r t g a g e t r u s t i n d e n t u r e a n d d e b t c o v e n a n t s I nr e l a t i o nw i t ht h e B D OL o a nF a c i l i t ye x e c u t e do nF e b r u a r y8 , 2 0 0 8 , R H I , C A D P I a n dC A C I , e n t e r e di n t oaC o n t i n u i n gS u r e t y s h i pA g r e e m e n t w i t hB D O .U n d e r t h i s A g r e e m e n t , B D Os h a l l h a v e t h e r i g h t t o s e t o f f t h e s e c u r e d o b l i g a t i o n s i n s o l i d a r i t y a g a i n s t a l l t h e b o r r o w e r s p r o p e r t i e s . O nF e b r u a r y1 4 ,2 0 0 8 ,R H I ,C A D P I ,C A C Ia n dR B C ,e n t e r e di n t oas e p a r a t es u r e t y s h i p a g r e e m e n t a r i s i n go u t o f t h eS y n d i c a t e dL o a nA g r e e m e n t w h i c hw a r r a n t st h ed u ea n df a i t h f u l p e r f o r m a n c e b yt h e b o r r o w e r s o f a l l o b l i g a t i o n s d u e t ot h e c r e d i t o r b a n k s , B P I a n dR C B C . T h e s u r e t y s h i ps h a l l r e m a i ni nf u l l f o r c ea n de f f e c t u n t i l f u l l a n dd u ep a y m e n t o f t h ei n d e b t e d n e s s u n d e r t h e S y n d i c a t e d L o a n A g r e e m e n t . I n a d d i t i o n , a l l l i e n s o f t h e c r e d i t o r b a n k s s h a l l h a v e r i g h t s o f s e t o f f i n s o l i d a r i t y a g a i n s t t h e b o r r o w e r s p r o p e r t i e s . F u r t h e r , R H I , C A D P I a n dC A C I e x e c u t e da Mo r t g a g e T r u s t I n d e n t u r e ( MT I ) t os e c u r e t h e l o a n s o b t a i n e df r o mB D O , B P I a n dR C B C . T h eMT I c o v e r s p r o p e r t i e si nN a s u g b u , B a t a n g a sw h i c h c o n s i s tm a i n l yo fR H I sl a n da n dC A D P I sp r o p e r t i e sw i t ha na g g r e g a t ec a r r y i n gv a l u eo f = P 1 . 9b i l l i o na n d= P 4 . 5b i l l i o n ,r e s p e c t i v e l y ,a n dC A C I sp r o p e r t i e si nL aC a r l o t a ,N e g r o s O c c i d e n t a l a m o u n t i n g t o = P 4 . 0 b i l l i o n a s o f J u n e 3 0 , 2 0 1 0 . T h e a b o v e l o a n a g r e e m e n t s s t i p u l a t e c e r t a i n c o v e n a n t s , w h i c h i n c l u d e t h e f o l l o w i n g :  m a i n t e n a n c e o f a r e a s o n a b l e a m o u n t o f d e p o s i t w i t h t h e c r e d i t o r b a n k s ;  r e g i s t r a t i o n o f a l l c o l l a t e r a l s , w h i c h m u s t b e f r e e f r o ml i e n s a n d l i a b i l i t i e s ;  m a i n t e n a n c e o f d e b t s e r v i c e c o v e r a g e r a t i o a n d d e b t t o e q u i t y r a t i o ;  p r o h i b i t i o no np u r c h a s eo fa d d i t i o n a le q u i p m e n t se x c e p ti np u r s u a n c eo fi t ss u g a r e x p a n s i o n a n d e t h a n o l p r o j e c t ; a n d  p r o h i b i t i o n o n a n y m a t e r i a l c h a n g e i n o w n e r s h i p o r c o n t r o l o f i t s b u s i n e s s o r c a p i t a l s t o c k o r i n t h e c o m p o s i t i o n o f i t s t o p l e v e l m a n a g e m e n t . A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , t h e G r o u p i s i n c o m p l i a n c e w i t h t h e s e l o a n c o v e n a n t s .

* S G V M C 3 1 0 9 6 2 *

3 5 T h e m a t u r i t i e s o f t h e n o n c u r r e n t p o r t i o n o f t h e l o n g t e r mb o r r o w i n g s a s o f J u n e 3 0 i s a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P P = 7 9 7 , 1 9 2 1 , 4 4 5 , 0 3 8 2 , 7 3 6 , 4 0 4 1 , 6 3 0 , 9 3 5 2 , 2 0 0 , 7 1 2 = P 3 , 0 7 5 , 9 7 3 P = 5 , 7 3 4 , 3 0 8

B e t w e e n o n e a n d t w o y e a r s B e t w e e n t w o a n d f i v e y e a r s O v e r f i v e y e a r s

1 4 . R e l a t e dP a r t y T r a n s a c t i o n s I n t h e n o r m a l c o u r s e o f b u s i n e s s , t h e G r o u p h a s t r a n s a c t i o n s w i t h r e l a t e d p a r t i e s a s f o l l o w s : a .A so fJ u n e3 0 , 2 0 1 0a n d2 0 0 9 , t h eG r o u p so u t s t a n d i n ga d v a n c e st oR C Ia m o u n t e dt o = P 4 9 . 0m i l l i o na n d= P 2 0 1 . 4m i l l i o n , r e s p e c t i v e l y . R H I g r a n t e dt h ea d v a n c e st oR C I i n2 0 0 9 w h i c h w e r e u s e d t o d e f r a y c o s t a n d e x p e n s e s r e l a t i n g t o t h e r e s t r u c t u r i n g a c t i v i t i e s u n d e r t a k e n b y t h e G r o u p d u r i n g t h e y e a r . b . A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , t h e C o m p a n y a s a l e s s e e , h a s a o n e y e a r l e a s e a g r e e m e n t w i t h C A D PR e t i r e m e n t F u n d , I n c . ( C A D P R F I ) , w h i c hi s r e n e w a b l e a n n u a l l ya t t h e o p t i o no f t h e C o m p a n y , C A D P I a n dC A C I u n d e rs u c ht e r m sa n dc o n d i t i o n sm u t u a l l ya c c e p t a b l et oa l l p a r t i e s . R e l a t e dr e n t e x p e n s ec h a r g e dt oo p e r a t i o n sa m o u n t e dt o= P 3 . 0m i l l i o ni n2 0 1 0a n d = P 2 . 8 m i l l i o n i n 2 0 0 9 . c .I nD e c e m b e r 2 0 0 5 , t h e C o m p a n y a l s oe n t e r e di n t o a l e a s e a g r e e m e n t w i t h C A D P R F I , f o r t h e l e a s e o f i t s o f f i c e s p a c e .T h e c o n t r a c t , w h i c h i s r e n e w a b l e a n n u a l l y , r e q u i r e s a m o n t h l y r e n t a l o f = P 5 6 , 1 8 3 .R e l a t e d r e n t e x p e n s e c h a r g e d t oo p e r a t i o n s i n 2 0 1 0 , 2 0 0 9a n d 2 0 0 8a m o u n t e d t o = P 0 . 6 m i l l i o n . d .K e y m a n a g e m e n t c o m p e n s a t i o n f o r t h e y e a r s e n d e d J u n e 3 0 f o l l o w s : 2 0 1 0 S a l a r i e s a n d w a g e s E m p l o y e e a n d o t h e r b e n e f i t s ( i n c o m e ) P = 3 2 , 1 2 8 8 , 2 3 0 P = 4 0 , 3 5 8 2 0 0 9 ( I n T h o u s a n d s ) = P 3 3 , 1 2 9 3 3 , = P 1 2 9 2 0 0 8 P = 3 3 , 2 5 2 ( 3 , 0 5 7 ) 3 0 , = P 1 9 5

T h e r e a r e n o o t h e r l o n g t e r mb e n e f i t s , t e r m i n a t i o n b e n e f i t s a n d s h a r e b a s e d p a y m e n t . 1 5 . R e t i r e me n t B e n e f i t P l a n s N e t P e n s i o n P l a n A s s e t s P r i o r t oR e s t r u c t u r i n gi nf i s c a l y e a r 2 0 0 9( s e e N o t e 1 ) , t h e C o m p a n ya n dC A D P G Cm a i n t a i na n i n d i v i d u a l a n ds e p a r a t e l yf u n d e d , n o n c o n t r i b u t o r yd e f i n e db e n e f i t p l a n( t h eP l a n ) c o v e r i n ga l l e l i g i b l ee m p l o y e e s .O nD e c e m b e r 1 6 , 2 0 0 8 , t h eC o m p a n ya s s u m e dt h et r a n s f e r r e de m p l o y e e s c o v e r e d b y t h e P l a n a n d a c q u i r e d t h e r e l a t e d n e t p e n s i o n p l a n a s s e t s f r o mC A D P G C . T h e a c q u i r e d n e t p e n s i o n p l a n a s s e t s , i n c l u d i n g t h e r e l a t e dd e f e r r e di n c o m e t a xl i a b i l i t i e s , w e r e p a r t o f t h e t o t a l c o n s i d e r a t i o nr e c e i v e df r o mt h ea c q u i s i t i o no f C A D P G C si n v e s t m e n t si ns h a r e so f s t o c ka n d c e r t a i n a s s e t s a n d l i a b i l i t i e s ( s e e N o t e 1 ) . U n d e r t h e P l a n , t h e n o r m a l r e t i r e m e n t a g e i s 6 5 .Ap a r t i c i p a n t m a y o p t t o r e t i r e a t a g e 6 0o r a f t e r r e n d e r i n g2 0y e a r so fc o n t i n u o u ss e r v i c e .R e t i r e m e n t b e n e f i t f o rb o t hn o r m a l r e t i r e m e n t si s e q u i v a l e n t t o t w o m o n t h s a v e r a g e b a s i c s a l a r y f o r e a c h y e a r o f s e r v i c e r e n d e r e d .

* S G V M C 3 1 0 9 6 2 *

3 6 T h e a m o u n t s r e c o g n i z e d i n t h e c o n s o l i d a t e d b a l a n c e s h e e t s a t J u n e 3 0 , a r e d e t e r m i n e d a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 1 0 9 , 1 4 2 P = 1 6 9 , 8 9 9 ( 2 5 2 , 4 4 5 ) ( 2 4 8 , 5 4 4 ) ( 1 4 3 , 3 0 3 ) ( 7 8 , 6 4 5 ) 7 5 1 ( 6 1 , 8 1 0 ) ( = P 1 4 2 , 5 5 2 ) ( P = 1 4 0 , 4 5 5 )

P r e s e n t v a l u e o f o b l i g a t i o n F a i r v a l u e o f p l a n a s s e t s S u r p l u s U n r e c o g n i z e d a c t u a r i a l g a i n ( l o s s ) N e t p e n s i o n p l a n a s s e t s

P l a na s s e t sc a n n o t b er e t u r n e dt oR H I u n l e s so nc i r c u m s t a n c e sd i s c u s s e di nN o t e2 .T h en e t p e n s i o np l a na s s e t sa so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9o fP = 1 4 0 . 5m i l l i o na n dP = 1 4 2 . 6m i l l i o n , r e s p e c t i v e l y , w i l l b e u s e dt or e d u c e f u t u r e c o n t r i b u t i o n s t ot h e r e t i r e m e n t f u n d .C o n s e q u e n t l y , a p o r t i o n o f t h e G r o u p s 2 0 0 9 r e t a i n e d e a r n i n g s r e l a t e d t o p e n s i o n p l a n a s s e t , n e t o f d e f e r r e d i n c o m e t a x l i a b i l i t y , i s n o t a v a i l a b l e f o r d i v i d e n d d e c l a r a t i o n ( s e e N o t e 2 3 ) . T h e m o v e m e n t s i n t h e d e f i n e d b e n e f i t o b l i g a t i o n d u r i n g t h e y e a r s f o l l o w : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 1 1 6 , 7 8 8 P = 1 0 9 , 1 4 2 1 2 , 0 2 0 1 1 , 3 5 0 4 , 5 5 4 5 , 8 9 3 ( 1 , 7 6 8 ) ( 2 2 , 4 5 2 ) 4 3 , 5 1 4 = P 1 0 9 , 1 4 2 P = 1 6 9 , 8 9 9

B e g i n n i n g o f y e a r I n t e r e s t c o s t C u r r e n t s e r v i c e c o s t B e n e f i t s p a i d A c t u a r i a l l o s s ( g a i n ) E n d o f y e a r

T h e m o v e m e n t s i n t h e f a i r v a l u e o f p l a n a s s e t s d u r i n g t h e y e a r a r e a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 2 3 3 , 3 7 0 P = 2 5 2 , 4 4 5 2 1 , 0 0 3 1 5 , 1 4 6 ( 1 , 7 6 8 ) ( 1 6 0 ) ( 1 9 , 0 4 7 ) 2 5 2 , = P 4 4 5 P = 2 4 8 , 5 4 4

B e g i n n i n g o f y e a r E x p e c t e d r e t u r n o n p l a n a s s e t s B e n e f i t s p a i d A c t u a r i a l l o s s E n d o f y e a r T h e C o m p a n y s p l a n a s s e t s a t J u n e 3 0 c o n s i s t o f :
2 0 1 0 P e r c e n t a g e 7 3 % 2 7 % 1 0 0 %

2 0 0 9 A mo u n t P e r c e n t a g e ( I n T h o u s a n d s ) = P 1 8 6 , 8 0 9 7 4 % 2 6 % 6 5 , 6 3 6 1 0 0 % = P 2 5 2 , 4 4 5

S t o c k s a n d g o v e r n m e n t s e c u r i t i e s C a s h a n d r e c e i v a b l e s

A mo u n t ( I n T h o u s a n d s ) P = 1 8 1 , 7 6 2 6 6 , 7 8 2 P = 2 4 8 , 5 4 4

T h e C o m p a n y h a s n o e x p e c t e d c o n t r i b u t i o n s f o r t h e f i s c a l y e a r e n d i n g J u n e 3 0 , 2 0 1 1 . A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , p e n s i o np l a na s s e t s , w h i c ha r em a n a g e db yat r u s t e e , i n c l u d e i n v e s t m e n t s i n e q u i t y s e c u r i t i e s o f R H I w i t h a f a i r v a l u e a m o u n t i n g t o = P 1 0 4 . 8 m i l l i o n .

* S G V M C 3 1 0 9 6 2 *

3 7 N e t P e n s i o n B e n e f i t O b l i g a t i o n C A C Im a i n t a i n sa f u n d e d ,n o n c o n t r i b u t o r yd e f i n e db e n e f i tp l a nc o v e r i n ga l li t se l i g i b l e e m p l o y e e s .U n d e r t h e p l a n , t h e n o r m a l r e t i r e m e n t a g e i s 6 5i r r e s p e c t i v e o f y e a r s o f s e r v i c e .A p a r t i c i p a n t m a y , a t h i s o p t i o n , e l e c t t or e t i r e o r C A C I m a y , a t i t s o p t i o n , r e t i r e a n yp a r t i c i p a n t a t a n y t i m e a f t e r a t t a i n i n g t h e a g e o f 5 0 r e g a r d l e s s o f n u m b e r o f y e a r s i n s e r v i c e o r u p o n c o m p l e t i o n o f 2 0y e a r so f c o n t i n u o u ss e r v i c et oC A C I e v e ni f b e l o w5 0y e a r so f a g e .N o r m a l a n de a r l y r e t i r e m e n t b e n e f i t s a r e e q u i v a l e n t t o o n e m o n t h l a t e s t s a l a r y f o r e v e r y y e a r o f s e r v i c e . C A D P Ia l s om a i n t a i n sf u n d e d , n o n c o n t r i b u t o r yd e f i n e db e n e f i t p l a nc o v e r i n ga l l i t sr e g u l a r e m p l o y e e s .U n d e r t h e p l a n , t h e n o r m a l r e t i r e m e n t a g e i s 6 5i r r e s p e c t i v e o f y e a r s o f s e r v i c e .A p a r t i c i p a n t m a y o p t t o r e t i r e a t a g e 6 0 r e g a r d l e s s o f n u m b e r o f y e a r s i n s e r v i c e o r u p o n c o m p l e t i o n o f 2 0y e a r s o f c o n t i n u o u s s e r v i c e t oC A D P I e v e ni f b e l o w6 0y e a r s o f a g e .N o r m a l r e t i r e m e n t b e n e f i t sc o n s i s to fa na m o u n te q u i v a l e n t t ot w ot i m e st h ee m p l o y e e sl a t e s tm o n t h l ys a l a r y m u l t i p l i e d b y t h e n u m b e r o f y e a r s o f s e r v i c e . T h ea m o u n t s r e c o g n i z e da s n e t p e n s i o nb e n e f i t o b l i g a t i o ni nt h ec o n s o l i d a t e db a l a n c es h e e t s a t J u n e 3 0 a r e d e t e r m i n e d a s f o l l o w s : 2 0 1 0 2 0 0 9 ( I n T h o u s a n d s ) P = 4 2 3 , 9 2 0 = P 3 7 6 , 5 3 7 ( 3 3 4 , 2 7 3 ) ( 2 6 1 , 7 8 0 ) 8 9 , 6 4 7 1 1 4 , 7 5 7 ( 3 2 , 6 2 7 ) ( 4 8 , 5 5 0 ) ( 7 , 9 2 0 ) P = 4 1 , 0 9 7 = P 7 4 , 2 1 0

P r e s e n t v a l u e o f o b l i g a t i o n s F a i r v a l u e o f p l a n a s s e t s D e f i c i t U n r e c o g n i z e d n e t t r a n s i t i o n o b l i g a t i o n U n r e c o g n i z e d a c t u a r i a l l o s s N e t p e n s i o n b e n e f i t o b l i g a t i o n

T h e m o v e m e n t s i n t h e p r e s e n t v a l u e o f t h e d e f i n e d b e n e f i t o b l i g a t i o n o v e r t h e y e a r a r e a s f o l l o w s : 2 0 1 0 2 0 0 9 ( I n T h o u s a n d s ) P = 3 7 6 , 5 3 7 = P 3 6 4 , 8 9 0 3 9 , 4 4 3 3 7 , 5 5 4 1 9 , 0 9 3 1 9 , 0 9 8 ( 6 4 , 4 8 1 ) ( 4 1 , 6 0 6 ) ( 2 , 7 0 4 ) 5 3 , ( 3 2 8 6 9 5 ) 4 2 3 , 3 7 6 , P = 9 2 0 = P 5 3 7

B e g i n n i n g o f y e a r I n t e r e s t c o s t C u r r e n t s e r v i c e c o s t B e n e f i t s p a i d C u r t a i l m e n t g a i n A c t u a r i a l o s s g a l ( i n ) E n d o f y e a r

T h e m o v e m e n t s i n t h e f a i r v a l u e o f p l a n a s s e t s d u r i n g t h e y e a r a r e a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) 2 4 4 , = P 0 2 1 2 6 1 , P = 7 8 0 1 7 , 8 4 2 1 6 , 9 0 1 5 6 , 5 3 1 1 0 6 , 8 7 7 ( 4 1 , 6 0 6 ) ( 6 4 , 4 8 1 ) ( 1 5 , 0 0 8 ) 1 3 , 1 9 6 2 6 1 , = P 7 8 0 3 3 4 , P = 2 7 3

B e g i n n i n g o f y e a r E x p e c t e d r e t u r n o n p l a n a s s e t s C o n t r i b u t i o n s B e n e f i t s p a i d A c t u a r i a l l o s s ( g a i n ) E n d o f y e a r

* S G V M C 3 1 0 9 6 2 *

3 8 T h e s u b s i d i a r i e s p l a n a s s e t s a t J u n e 3 0 c o n s i s t o f :
2 0 1 0 A mo u n t P e r c e n t a g e ( I n T h o u s a n d s ) 6 3 % P = 2 1 1 , 2 4 5 3 8 % 1 2 6 , 9 2 7 ( 1 %) ( 3 , 8 9 9 ) 1 0 0 % P = 3 3 4 , 2 7 3 2 0 0 9 A mo u n t P e r c e n t a g e ( I n T h o u s a n d s ) 7 3 % = P 1 9 1 , 0 9 9 2 7 % 7 0 , 6 8 1 1 0 0 % = P 2 6 1 , 7 8 0

S t o c k s a n d g o v e r n m e n t s e c u r i t i e s C a s h a n d r e c e i v a b l e s P a y a b l e a n d a c c r u e d l i a b i l i t i e s

C A D P I a n d C A C I a r e e x p e c t e d t o c o n t r i b u t e a t o t a l o f = P 1 0 7 . 0 m i l l i o n t o t h e i r r e s p e c t i v e f u n d f o r t h ey e a re n d i n gJ u n e3 0 , 2 0 1 1 .A so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , n e t p e n s i o np l a no b l i g a t i o n a m o u n t e d t o P = 4 1 . 1 m i l l i o n a n d P = 7 4 . 2 m i l l i o n , r e s p e c t i v e l y . P e n s i o n C o s t T h e c o n s o l i d a t e d p e n s i o n c o s t s r e c o g n i z e d f o r t h e y e a r s e n d e d J u n e 3 0 f o l l o w : 2 0 0 9 ( I n T h o u s a n d s ) = P 2 3 , 6 5 2 P = 2 4 , 9 8 6 4 9 , 5 7 4 5 0 , 7 9 3 ( 3 8 , 8 4 5 ) ( 3 2 , 0 4 7 ) ( 2 , 1 9 0 ) ( 4 9 9 ) 2 0 1 0 3 2 , 6 2 7 P = 7 5 , 8 6 0 3 2 , 6 2 7 ( 2 , 7 0 4 ) = P 6 2 , 1 1 4 2 0 0 8 = P 3 1 , 1 2 7 4 7 , 0 7 2 ( 3 6 , 9 6 2 ) 5 , 8 9 8 3 2 , 6 2 7 6 , 4 3 0 ( 9 , 6 2 4 ) = P 7 6 , 5 6 8

C u r r e n t s e r v i c e c o s t I n t e r e s t c o s t R e t u r n o n p l a n a s s e t s A c t u a r i a l l o s s ( g a i n ) r e c o g n i z e d A m o r t i z a t i o n o f n e t t r a n s i t i o n a l l i a b i l i t y C u r t a i l m e n t l o s s ( g a i n ) A s s e t c e i l i n g a d j u s t m e n t

T h ea c t u a l r e t u r no np l a na s s e t sw a s= P 2 6 . 2m i l l i o n , = P 2 6 . 8m i l l i o na n d= P 8 . 9m i l l i o ni n2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y . T h e e x p e c t e d r e t u r n o n p l a n a s s e t s w e r e d e t e r m i n e d b a s e do n a r e p u t a b l e f u n d t r u s t e e s y i e l d r a t e f o r r i s k p o r t f o l i o s i m i l a r t o t h a t o f t h e f u n d w i t h c o n s i d e r a t i o n t o t h e f u n d s p a s t p e r f o r m a n c e . T h e p r i n c i p a l a c t u a r i a l a s s u m p t i o n s u s e d i n d e t e r m i n i n g r e t i r e m e n t b e n e f i t s a n d g r a t u i t i e s c o s t f o r t h e G r o u p s p l a n s a s o f J u l y 1 o f e a c h y e a r : D i s c o u n t r a t e E x p e c t e d r e t u r n o n p l a n a s s e t s F u t u r e s a l a r y i n c r e a s e s 2 0 0 9 8 . 5 %t o 1 0 . 7 % 5 %t o 7 % 5 % 2 0 0 8 1 0 . 2 9 % 7 %t o 9 % 8 % 2 0 0 7 8 % 7 %t o 9 % 8 %

A s o f J u n e 3 0 , 2 0 1 0 , t h e f o l l o w i n g a r e t h e a s s u m p t i o n s : d i s c o u n t r a t e p e r a n n u mo f 8 . 8 %t o 9 . 2 %, e x p e c t e d r e t u r n o n p l a n a s s e t s o f 5 %t o 7 %, a n d f u t u r e a n n u a l i n c r e a s e o n s a l a r y o f 5 %. A s s u m p t i o n sr e g a r d i n gf u t u r em o r t a l i t ya n dd i s a b i l i t ya r eb a s e do na d v i c ef r o mp u b l i s h e d s t a t i s t i c s a n d e x p e r i e n c e i n t h e P h i l i p p i n e s .

* S G V M C 3 1 0 9 6 2 *

3 9 T h e G r o u p s c o n s o l i d a t e d a m o u n t s f o r t h e c u r r e n t a n d p r e v i o u s y e a r s a r e a s f o l l o w s :
2 0 0 9 2 0 0 8 2 0 0 7 ( I n T h o u s a n d s ) = 4 8 5 , 6 7 9 P = 4 8 1 , 6 7 8 = P 5 8 8 , 4 0 1 = P 5 9 3 , 8 1 9 P 5 1 4 , 2 2 5 4 7 7 , 3 9 1 4 6 7 , 5 1 6 5 8 2 , 8 1 7 2 8 , 5 4 6 ( 4 , 2 8 7 ) ( 1 2 0 , 8 8 5 ) ( 1 1 , 0 0 2 ) 2 0 1 0 ( 2 5 , 0 2 5 ) 2 3 , 0 0 5 ( 4 , 9 1 0 ) ( 2 , 6 5 4 ) ( 2 9 , 3 5 4 ) 5 1 , 5 2 1 2 0 0 6 P = 5 0 6 , 2 6 8 4 3 2 , 1 8 7 7 4 , 0 8 1 2 , 5 0 0 ( 4 , 2 8 2 )

P r e s e n t v a l u e o f o b l i g a t i o n s P l a n a s s e t s S u r p l u s ( d e f i c i t ) E x p e r i e n c e a d j u s t m e n t s o n p l a n a s s e t s l o s s ( g a i n ) E x p e r i e n c e a d j u s t m e n t s o n p l a n o b l i g a t i o n g a i n ( l o s s )

T r a n s i t i o n a l L i a b i l i t y U p o nt h eG r o u p sa d o p t i o no fP A S1 9i n2 0 0 5 , C A D P I , C A C Ia n dN A V Ic o m p u t e dt h e i r t r a n s i t i o n a ll i a b i l i t yf o rd e f i n e db e n e f i tp l a na so fJ u l y1 ,2 0 0 5 ,t o t a la m o u n tf o l l o w s( I n t h o u s a n d s ) : P r e s e n t v a l u e o f t h e o b l i g a t i o n a t t h e d a t e o f a d o p t i o n F a i r v a l u e o f p l a n a s s e t s a t t h e d a t e o f a d o p t i o n T r a n s i t i o n a l l i a b i l i t y P e n s i o n l i a b i l i t y a l r e a d y r e c o g n i z e d I n c r e a s e i n n e t p e n s i o n l i a b i l i t y P = 3 3 3 , 6 4 5 ( 1 5 3 , 3 0 3 ) 1 8 0 , 3 4 2 ( 1 7 , 2 0 7 ) = P 1 6 3 , 1 3 5

T h e G r o u pr e c o g n i z e s t h e i n c r e a s e i nn e t p e n s i o nl i a b i l i t ya s a ne x p e n s eo nas t r a i g h t l i n e b a s i s o v e rap e r i o do f f i v ey e a r sf r o mJ u l y1 , 2 0 0 5 , a sa l l o w e du n d e rP A S1 9 .T h ea m o r t i z a t i o n r e c o g n i z e d a m o u n t s t o = P 3 2 . 6 m i l l i o n e a c h y e a r u n t i l 2 0 1 0 . C A C I s R i g h t s i z i n g P r o g r a m C A C Ii m p l e m e n t e dar i g h t s i z i n gp r o g r a mw h i c hi n v o l v e dt w op h a s e s .T h ef i r s t i sa ne a r l y r e t i r e m e n t p a c k a g ea n dt h es e c o n di s t h ep h a s i n go u t o r a b o l i t i o no f d e p a r t m e n t s , s e c t i o n s a n d p o s i t i o n s w h i c h h a v e b e e n i d e n t i f i e d a s r e d u n d a n t o r n o l o n g e r n e c e s s a r y t o C A C I s c o r e b u s i n e s s . O nJ u l y2 0 , 2 0 0 7 , C A C I a n n o u n c e di t se a r l yr e t i r e m e n t p r o g r a mt oe m p l o y e e s , w h e r e b yt h e b e n e f i t i s e q u i v a l e n t t o 1 . 2t i m e s o f t h e m o n t h l y s a l a r y f o r e v e r yy e a r o f s e r v i c e .T o t a l p a y m e n t s m a d e i n 2 0 0 8 a m o u n t e d t o = P 4 3 . 2 m i l l i o n . 1 6 . C o mmi t me n t s a n dC o n t i n g e n c i e s a .C A C I a n dC A D P I ( t h e Mi l l s ) h a v e m i l l i n gc o n t r a c t s w i t ht h e p l a n t e r s w h i c hp r o v i d e f o r a 6 5 %a n d 3 5 %s h a r i n g b e t w e e n t h e p l a n t e r s a n d t h e Mi l l s , r e s p e c t i v e l y , o f s u g a r , m o l a s s e s a n d o t h e r s u g a r c a n e b y p r o d u c t s , e x c e p t b a g a s s e , p r o d u c e d e v e r y c r o p y e a r . b .A s o f J u n e 3 0 , t h e G r o u p h a s i n i t s c u s t o d y t h e f o l l o w i n g s u g a r o w n e d b y q u e d a n h o l d e r s :


2 0 0 9 2 0 1 0 o t a l v o l u E s t i m a t m e e d T o t a l v o l u E s t i m a t me e d T I n t h o u s a n d s ) m a r k e t v a l u e ( I n t h o u s a n d s ) ma r k e t v a l u e ( ( L k g * ) ( I n Mi l l i o n s ) ( L k g * ) ( I n Mi l l i o n s ) 9 4 2 = P 9 9 8 3 8 7 P = 7 0 7 1 , 0 1 4 1 , 3 8 4 5 0 6 1 , 2 6 4 1 , 9 5 6 = P 2 , 3 8 2 8 9 3 P = 1 , 9 7 1

R a ws u g a r R e f i n e d s u g a r * E q u i v a l e n t t o 5 0 k i l o g r a mb a g u n i t .

* S G V M C 3 1 0 9 6 2 *

4 0 T h e a b o v e v o l u m e o f s u g a r i s n o t r e f l e c t e di nt h e c o n s o l i d a t e db a l a n c e s h e e t s s i n c e t h e s e a r e n o t a s s e t s o f t h e G r o u p .T h e G r o u p i s a c c o u n t a b l e t o q u e d a n h o l d e r s f o r t h e v a l u e o f t r u s t e e d s u g a r o r t h e i r s a l e s p r o c e e d s . c .C A D P I e n t e r e di n t os a l e s c o n t r a c t s w i t hp r i n c i p a l c u s t o m e r s f o r t h e s a l e o f r a wa n dr e f i n e d s u g a r a n d m o l a s s e s . A s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , C A D P I h a s o u t s t a n d i n g s a l e s c o n t r a c t s f o r r e f i n e ds u g a rw i t hat o t a l v a l u eo fP = 1 , 4 4 1 . 6m i l l i o na n d= P 1 , 2 7 9 . 6m i l l i o n , e q u i v a l e n t t o 7 4 4 , 3 8 2L k ga n d8 1 7 , 0 9 1L k g , r e s p e c t i v e l y .N ol o s s e sa r ee x p e c t e dt oa r i s ef r o mt h e s e c o n t r a c t u a l o b l i g a t i o n s . C A D P I r e c e i v e dc a s h d e p o s i t s f r o mc u s t o m e r s f o r t h e a b o v e t r a n s a c t i o n s a s o f J u n e 3 0 , 2 0 1 0 a n d2 0 0 9 , w h i c hw i l l b ea p p l i e da g a i n s t f u t u r ed e l i v e r i e so fs u g a ra n dm o l a s s e s . T h e s e d e p o s i t s a r e c l a s s i f i e d a s c u r r e n t l i a b i l i t i e s ( s e e N o t e 1 2 ) . d .C A D P I e n t e r e d i n t o a g r e e m e n t s a s f o l l o w s : ( i )L e a s e o f o f f s i t e w a r e h o u s e f o r a p e r i o do f o n e y e a r r e n e w a b l e a t t h e o p t i o no f t h e l e s s e e t h r o u g hn o t i f i c a t i o ni nw r i t i n gn o tl a t e rt h a n9 0d a y sp r i o rt ot h ee x p i r a t i o no ft h e a g r e e m e n t .R e l a t e d r e n t e x p e n s e c h a r g e d t o o p e r a t i o n s a m o u n t e d t o = P 0 . 4 m i l l i o n i n 2 0 1 0 a n d = P 3 . 5 m i l l i o n e a c h i n 2 0 0 9 a n d 2 0 0 8 . ( i i ) C o n t r a c t f o r h a u l i n g s e r v i c e s f o r t h e t r a n s p o r t o f s u g a r c a n e f r o mt h e p l a n t a t i o n t o t h e m i l l . R e l a t e dh a u l i n ge x p e n s ec h a r g e dt oo p e r a t i o n si n2 0 1 0 , 2 0 0 9a n d2 0 0 8a m o u n t e dt o = P 1 0 5 . 5 m i l l i o n , = P 1 1 2 . 0 m i l l i o n a n d = P 1 7 2 . 3 m i l l i o n , r e s p e c t i v e l y . e .C A D P I e n t e r e di n t oa ni n d e m n i t ya n dg u a r a n t e e f e e a g r e e m e n t w i t hR H I t oc o n t i n u e t ob e a m o r t g a g e t r u s t i n d e n t u r e ( MT I ) b e t w e e na n da m o n gC A D P I , R H I a n dB P I .R H I c o n v e y e d u n t o B P I a s m o r t g a g e t r u s t e e i t s l a n d l o c a t e d i n N a s u g b u , B a t a n g a s ( m o r t g a g e d p r o p e r t y ) ( s e e N o t e1 3 ) .R H I a g r e e dt oc o n t i n u et os u b j e c t t h em o r t g a g e dp r o p e r t yt ot h eMT I o nt h e f o l l o w i n g c o n d i t i o n s : ( i )C A D P Is h a l l p r o t e c tt h ep r o p e r t ya n dr e i m b u r s eR H Iw i t ha l le x p e n s e si nc a s et h e m o r t g a g e dp r o p e r t yi s a t t a c h e dt os a t i s f yt h e o b l i g a t i o n s o f C A D P I s e c u r e db yt h e MT I ; a n d ( i i ) Ag u a r a n t e e / m o r t g a g e f e e o f P = 3 . 0 m i l l i o n s h a l l b e p a i d a n n u a l l y b y C A D P I t o c o m p e n s a t e R H I f o r t h e c o n t i n u a n c e o f t h e m o r t g a g e .T h i s g u a r a n t e e f e e a g r e e m e n t e x p i r e di nA p r i l 2 0 0 9 . f .O nJ a n u a r y1 4 , 2 0 0 9 , R o x o l a n dWo r l dB a n ks i g n e da$ 3 . 2m i l l i o nE m i s s i o nR e d u c t i o n P u r c h a s eA g r e e m e n t ( E R P A ) f o r t h ep u r c h a s eo f c a r b o ne m i s s i o nc r e d i t su n d e r t h eC l e a n D e v e l o p m e n t Me c h a n i s mo f t h e K y o t oP r o t o c o l .T h e E R P Aw i l l a l s oa v o i da t l e a s t 5 0 , 0 0 0 m e t r i c t o n s o f c a r b o n d i o x i d e e a c h y e a r a n d h a s a c r e d i t i n g p e r i o d o f 1 0 y e a r s s t a r t i n g 2 0 1 0 . A s p a r t o f t h e E R P A , p a r t o f t h e r e v e n u e f o r t h e p u r c h a s e o f t h e c r e d i t s w i l l b e u s e d t o f i n a n c e R B C s c o m m u n i t y d e v e l o p m e n t p r o j e c t s ( s e e N o t e 2 8 ) . g .T h e r e a r e p e n d i n gl e g a l c a s e s i nt h eo r d i n a r yc o u r s eo f t h e G r o u p s b u s i n e s s a s a t J u n e 3 0 , 2 0 1 0a n d 2 0 0 9 , b u t i n t h e o p i n i o no f m a n a g e m e n t a n dl e g a l c o u n s e l , t h e u l t i m a t e o u t c o m e o f t h e s e c a s e s w i l l n o t h a v e a m a t e r i a l i m p a c t o n t h e f i n a n c i a l p o s i t i o n a n d r e s u l t s o f o p e r a t i o n s o f t h e G r o u p . C o n s e q u e n t l y , n op r o v i s i o nr e l a t e dt ot h e s e l e g a l c a s e s w a s m a d e i nt h e 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s .

* S G V M C 3 1 0 9 6 2 *

4 1 h .A so fJ u n e3 0 , 2 0 1 0a n d2 0 0 9 , t h eG r o u ph a su n u s e dl i n e so fc r e d i t f r o ml o c a l b a n k s a m o u n t i n g t o = P 2 , 8 1 4 . 0 m i l l i o n a n d P = 2 , 1 2 4 . 0 m i l l i o n , r e s p e c t i v e l y ( s e e N o t e s 1 0 a n d 1 3 ) . 1 7 . R e v e n u e T h e c o m p o n e n t s o f r e v e n u e a r e a s f o l l o w s : 2 0 1 0 R e f i n e d s u g a r R a ws u g a r Mo l a s s e s T o l l i n g f e e s O t h e r s P = 3 , 7 1 6 , 2 0 6 1 , 8 5 3 , 9 4 9 3 1 8 , 2 3 5 2 9 0 , 2 6 8 2 4 , 3 0 9 P = 6 , 2 0 2 , 9 6 7 2 0 0 9 2 0 0 8 ( I n T h o u s a n d s ) = P 3 , 3 0 4 , 3 0 0 P = 3 , 4 8 1 , 4 8 9 1 , 9 0 9 , 1 1 0 1 , 9 5 8 , 1 3 5 2 9 3 , 4 5 0 2 6 8 , 6 1 1 3 5 6 , 4 6 4 3 6 0 , 6 8 7 1 , 2 9 4 8 , 6 2 2 = P 5 , 8 6 4 , 6 1 8 = P 6 , 0 7 7 , 5 4 4

O t h e r si n c l u d ef a r m i n c o m ea n dc h a n g e si nf a i rv a l u eo fc o n s u m a b l eb i o l o g i c a la s s e t s ( s e e N o t e 7 ) . 1 8 . C o s t o f S a l e s T h e c o m p o n e n t s o f c o s t o f s a l e s a r e a s f o l l o w s : 2 0 0 9 2 0 0 8 ( I n T h o u s a n d s ) P = 2 , 7 7 6 , 8 7 5 = P 2 , 8 0 8 , 9 2 7 P = 2 , 2 1 6 , 7 6 2 6 4 1 , 9 7 9 ( 3 4 7 , 5 4 7 ) 3 7 3 , 0 2 7 1 2 , 0 8 6 4 0 8 , 9 0 0 3 8 1 , 9 6 1 3 7 2 , 4 0 1 2 6 6 , 5 6 0 1 2 0 , 5 6 6 1 1 3 , 0 8 9 7 3 , 7 4 8 5 8 , 4 6 1 1 2 , 4 4 9 3 8 , 1 8 5 3 0 2 , P = 5 , 7 4 0 6 1 8 , 2 0 5 ( 3 0 8 , 4 6 9 ) 3 4 7 , 9 0 7 2 2 , 0 4 1 1 , 5 2 5 2 5 0 , 9 6 3 2 7 4 , 2 0 4 3 5 8 , 4 3 3 2 5 6 , 8 0 5 1 0 4 , 2 4 3 1 0 3 , 1 0 7 5 0 , 3 9 9 4 4 , 4 7 2 1 6 , 5 4 4 2 9 , 8 3 1 4 7 9 , = P , 9 1 3 7 7 1 4 , 5 7 3 1 8 0 , 5 1 0 3 8 4 , 7 2 8 1 , 3 1 3 3 1 , 0 4 7 1 7 4 , 4 1 6 3 0 1 , 8 5 8 3 6 5 , 6 9 6 2 2 9 , 5 2 9 1 4 1 , 4 8 7 6 4 , 2 2 4 3 8 , 7 2 3 5 5 , 3 4 2 1 7 , 2 1 9 2 5 , 1 4 6 4 , 9 4 2 , = P 5 7 3 2 0 1 0

P u r c h a s e d s u g a r ( N o t e 6 ) C o s t o f t r a n s p o r t i n g c a n e s t o m i l l ( N o t e s 6 a n d 1 6 ) N e t c h a n g e s i n i n v e n t o r i e s ( N o t e 6 ) D i r e c t l a b o r ( N o t e 2 0 ) T o l l i n g f e e s T r a d i n g c o s t Ma n u f a c t u r i n g o v e r h e a d : F u e l a n d o i l D e p r e c i a t i o n ( N o t e 9 ) R e p a i r s a n d m a i n t e n a n c e Ma t e r i a l s a n d c o n s u m a b l e s T a x e s a n d l i c e n s e s O u t s i d e s e r v i c e s R e n t ( N o t e s 1 4 a n d 1 6 ) C o m m u n i c a t i o n , l i g h t a n d w a t e r I n v e n t o r y l o s s e s a n d o b s o l e s c e n c e ( N o t e 6 ) O t h e r s

* S G V M C 3 1 0 9 6 2 *

4 2 1 9 . G e n e r a l a n dA d mi n i s t r a t i v e E x p e n s e s T h e c o m p o n e n t s o f g e n e r a l a n d a d m i n i s t r a t i v e e x p e n s e s a r e a s f o l l o w s : 2 0 1 0 E m p l o y e e b e n e f i t s ( N o t e 2 0 ) T a x e s a n d l i c e n s e s O u t s i d e s e r v i c e Ma t e r i a l s a n d c o n s u m a b l e s I n s u r a n c e D e p r e c i a t i o n ( N o t e 9 ) T r a v e l a n d t r a n s p o r t a t i o n R e n t ( N o t e s 1 4 a n d 1 6 ) R e p a i r s a n d m a i n t e n a n c e C o m m u n i c a t i o n , l i g h t a n d w a t e r C o r p o r a t e s o c i a l r e s p o n s i b i l i t y P r o v i s i o n f o r i m p a i r m e n t o f r e c e i v a b l e s a n d c r e d i t a b l e w i t h h o l d i n g t a x e s ( N o t e s 5 a n d 7 ) R e p r e s e n t a t i o n a n d e n t e r t a i n m e n t O t h e r s P = 2 3 7 , 5 1 4 6 9 , 6 7 3 4 1 , 2 6 1 3 8 , 4 8 4 2 5 , 3 0 2 2 5 , 0 6 4 2 0 , 1 3 1 1 8 , 4 0 4 1 4 , 5 4 6 8 , 2 5 9 7 , 3 3 4 5 , 9 4 5 1 , 7 4 4 8 2 , 0 2 9 P = 5 9 5 , 6 9 0 2 0 0 9 ( I n T h o u s a n d s ) = P 1 9 6 , 8 0 8 7 6 , 0 7 9 3 7 , 8 6 1 3 1 , 1 5 8 3 0 , 3 9 8 3 0 , 2 2 2 2 2 , 3 5 5 2 6 , 0 9 5 1 7 , 9 1 3 1 0 , 0 3 6 7 , 8 2 2 3 5 3 1 , 5 2 8 7 1 , 6 0 5 = P 5 6 0 , 2 3 3 2 0 0 8 = P 2 0 1 , 8 8 8 6 2 , 5 3 1 5 2 , 3 5 0 1 4 , 9 5 8 1 6 , 0 4 3 2 6 , 2 4 5 3 1 , 5 5 8 2 2 , 7 9 9 9 , 8 3 9 8 , 6 4 0 8 , 9 8 4 6 9 8 3 , 4 9 6 4 8 , 6 3 5 = P 5 0 8 , 6 6 4

2 0 . E m p l o y e e B e n e f i t s T h e c o m p o n e n t s o f e m p l o y e e b e n e f i t s a r e a s f o l l o w s : 2 0 0 9 ( I n T h o u s a n d s ) = P 3 5 2 , 2 9 9 P = 3 7 3 , 3 6 2 2 0 1 0 1 6 1 , 3 1 9 7 5 , 8 6 0 P = 6 1 0 , 5 4 1 1 3 0 , 3 0 2 6 2 , 1 1 4 5 4 4 , = P 7 1 5 2 0 0 8 = P 3 7 9 , 7 6 9 1 3 0 , 2 7 9 7 6 , 5 6 8 5 8 6 , = P 6 1 6

S a l a r i e s a n d w a g e s ( N o t e s 1 8 a n d 1 9 ) A l l o w a n c e s a n d o t h e r e m p l o y e e b e n e f i t s ( N o t e s 1 8 a n d 1 9 ) P e n s i o n c o s t s ( N o t e 1 5 )

2 1 . O t h e r I n c o me N e t T h e c o m p o n e n t s o f o t h e r i n c o m e a r e a s f o l l o w s : 2 0 1 0 R e c o v e r f r n s u r a n c e c l a y o mi i m S a l e o f s c r a p S u g a r a n d m o l a s s e s h a n d l i n g f e e s F o r e i g n e x c h a n g e g a i n s ( l o s s e s ) n e t O t h e r s 1 4 1 , P = 3 4 1 5 8 , 0 1 3 2 0 , 4 8 1 2 , 8 2 4 7 3 , 9 9 2 9 6 , P = 2 6 5 1 2 0 0 9 ( I n T h o u s a n d s ) = P 2 0 , 6 3 2 8 , 2 1 6 8 , 8 3 6 3 8 , 0 1 9 = P 7 5 , 7 0 3 2 0 0 8 = P 4 3 , 6 2 0 9 , 8 0 1 ( 7 , 2 4 5 ) 6 , 4 4 1 = P 5 2 , 6 1 7

* S G V M C 3 1 0 9 6 2 *

4 3 R e c o v e r yf r o mi n s u r a n c ec l a i mp e r t a i n st ot h ea m o u n tc o l l e c t e df r o mt h ei n s u r e r ,w h i c h r e p r e s e n t s r e c o v e r yf r o mi r r e p a r a b l e e q u i p m e n t w i t hc a r r y i n gv a l u e o f = P 1 . 8m i l l i o n a t t h e t i m e o f d a m a g ei n2 0 0 9 . A so f J u n e3 0 , 2 0 0 9 , n oa c c r u a l w a s m a d eo nt h ei n s u r a n c ec l a i ms i n c e m a n a g e m e n t a s s e s s e d t h a t t h e c o l l e c t a b i l i t y o f s u c h c l a i mw a s n o t v i r t u a l l y c e r t a i n . 2 2 . I n c o me T a x e s a .C o m p o n e n t s o f t h e G r o u p s r e c o g n i z e d d e f e r r e d i n c o m e t a x a s s e t s a n d l i a b i l i t i e s a t J u n e 3 0 r e p r e s e n t t h e t a x e f f e c t s o f t h e f o l l o w i n g t e m p o r a r y d i f f e r e n c e s :
2 0 0 9 2 0 1 0 N e t D e f e r r e d N e t D e f e r r e d N e t D e f e r r e d I n c o m e T a x I n c o me T a x I n c o me ( 1 ) ( 1 ) ( 2 ) T a x L i a b i l i t i e s L i a b i l i t i e s A s s e t s ( I n T h o u s a n d s ) P = 7 8 3 4 , 1 9 4 4 , 9 7 7 = P 4 , 9 7 7 = P 5 , 7 7 2 7 , 9 5 1 1 1 , 3 3 2 6 0 , 5 9 1 3 8 1 9 , 8 6 2 6 , 8 9 5 1 1 2 , 4 4 1 ( 6 2 7 , 4 9 8 ) ( 1 5 7 , 2 4 8 ) ( 4 2 , 1 3 7 ) ( 1 0 , 7 0 8 ) ( 8 3 7 , 5 9 1 ) ( = P 7 2 5 , 1 5 0 ) P = 6 , 7 4 7 6 , 5 9 8 9 , 2 9 4 2 1 , 3 7 7 4 4 , 8 2 5 1 0 , 8 6 9 1 , 6 6 6 1 0 1 , 3 7 6 ( 6 4 2 , 8 7 1 ) ( 1 1 1 , 1 1 5 ) ( 4 2 , 7 6 6 ) ( 1 , 3 9 5 ) ( 1 4 , 6 9 4 ) ( 8 1 2 , 8 4 1 ) ( = P 7 1 1 , 4 6 5 )

D e f e r r e di n c o me t a x a s s e t s o n : A l l o w a n c e f o r : I m p a i r m e n t o f r e c e i v a b l e s ( N o t e 5 ) S u g a r i n v e n t o r y l o s s e s ( N o t e 6 ) I n v e n t o r y o b s o l e s c e n c e ( N o t e 6 ) P e n s i o n b e n e f i t o b l i g a t i o n ( N o t e 1 5 ) U n a m o r t i z e d p a s t s e r v i c e c o s t U n r e a l i z e d f o r e i g n e x c h a n g e l o s s N O L C O E x c e s s MC I T D e f e r r e di n c o me t a x l i a b i l i t i e s o n : R e v a l u a t i o n i n c r e m e n t o n p r o p e r t i e s ( N o t e 2 3 ) U n a m o r t i z e d c a p i t a l i z e d i n t e r e s t ( N o t e 9 ) P e n s i o n p l a n a s s e t s ( N o t e 1 5 ) U n r e a l i z e d f o r e i g n e x c h a n g e g a i n U n a m o r t i z e d d e b t c o m m i t m e n t f e e s N e t d e f e r r e d i n c o me t a x a s s e t s ( l i a b i l i t i e s )
( 1 ) ( 2 )

P e r t a i n t o R H I , C A D P I , C A C I , R o x o l a n d N A V I . P e r t a i n t o C F S I .

b .D e t a i l s o f b e n e f i t s a r i s i n g f r o mN O L C Oa n d MC I Ta n d t h e c o r r e s p o n d i n g a n a l y s i s o f d e f e r r e d i n c o m e t a x a s s e t s a s o f J u n e 3 0 f o l l o w : N O L C O
I n c u r r e d i n 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 A m o u n t P = 5 , 2 1 3 1 8 , 0 7 8 5 0 , 9 8 5 4 4 , 1 2 8 = P 1 1 8 , 4 0 4 A p p l i e d ( P = 4 , 5 3 0 ) ( P = 4 , 5 3 0 ) B a l a n c e s a s o f J u n e 3 0 , E x p i r e d 2 0 1 0 ( I n T h o u s a n d s ) ( = P 6 8 3 ) = P 1 8 , 0 7 8 5 0 , 9 8 5 4 4 , 1 2 8 ( = P 6 8 3 ) P = 1 1 3 , 1 9 1

T a x E f f e c t = P 5 , 4 2 3 1 5 , 2 9 6 1 3 , 2 3 8 = P 3 3 , 9 5 7

A v a i l a b l e U n t i l 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

* S G V M C 3 1 0 9 6 2 *

4 4 MC I T
I n c u r r e d i n 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 A m o u n t = P 4 , 8 5 6 5 1 5 1 , 5 1 7 5 , 3 8 3 = P 1 2 , 2 7 1 A p p l i e d P = = P E x p i r e d ( I n T h o u s a n d s ) ( P = 4 , 8 5 6 ) ( P = 4 , 8 5 6 ) B a l a n c e s a s o f J u n e 3 0 = P 5 1 5 1 , 5 1 7 5 , 3 8 3 = P 7 , 4 1 5 A v a i l a b l e U n t i l 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3

T h e C o m p a n ya n di t s s u b s i d i a r i e s a r e s u b j e c t t oMC I To f 2 %b a s e do ni t s g r o s s i n c o m e a s d e f i n e d u n d e r t h e P h i l i p p i n e T a x C o d e , i f n o r m a l i n c o m e t a x i s l e s s t h a n t h e c o m p u t e d MC I T . T h ee x c e s s o f MC I To v e r t h en o r m a l i n c o m et a xi s c a r r i e df o r w a r do na na n n u a l b a s i s a n d c r e d i t e da g a i n s t t h en o r m a l i n c o m et a xp a y a b l ef o rt h r e ei m m e d i a t e l ys u c c e e d i n gt a x a b l e y e a r s .A n yb a l a n c e o f e x c e s s MC I Tw h i c hh a s n o t b e e na p p l i e da g a i n s t t h e n o r m a l i n c o m e t a xp a y a b l e f o r t h e t h r e e y e a r p e r i o dw i l l b e c l o s e dt op r o v i s i o nf o r i n c o m e t a xf o r f i n a n c i a l r e p o r t i n g p u r p o s e s . c .D e t a i l so f N O L C O , e x c e s s MC I Ta n do t h e r d e d u c t i b l et e m p o r a r yd i f f e r e n c e s f o r w h i c hn o d e f e r r e d i n c o m e t a x a s s e t s w e r e r e c o g n i z e d a s o f J u n e 3 0 f o l l o w : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) = P 3 8 , 0 4 3 P = 3 3 , 0 0 8 5 , 2 2 0 5 2 0 1 , 4 0 5 1 , 4 0 5 2 , 9 5 4 3 , 3 2 5

N O L C O E x c e s s MC I T A l l o w a n c e f o r i m p a i r m e n t o f r e c e i v a b l e s P e n s i o n b e n e f i t o b l i g a t i o n

D e f e r r e di n c o m et a xa s s e t sp e r t a i n i n gt oN O L C O , MC I Ta n do t h e rd e d u c t i b l et e m p o r a r y d i f f e r e n c e sa m o u n t i n gt oP = 1 1 . 8m i l l i o na n dP = 1 7 . 9m i l l i o na so f J u n e3 0 , 2 0 1 0a n d2 0 0 9 , r e s p e c t i v e l y , w e r en o t r e c o g n i z e da s m a n a g e m e n t b e l i e v e s t h a t i t m a yn o t b ep r o b a b l et h a t f u t u r et a x a b l ep r o f i t sw i l l b ea v a i l a b l ea g a i n s t w h i c ht h eN O L C O , e x c e s s MC I Ta n do t h e r d e d u c t i b l e t e m p o r a r y d i f f e r e n c e s c a n b e u t i l i z e d . d .T h e r e c o n c i l i a t i o n b e t w e e nt h e p r o v i s i o nf o r i n c o m e t a xc o m p u t e da t t h e a p p l i c a b l e s t a t u t o r y t a x r a t e s a n d p r o v i s i o n f o r i n c o m e t a xp r e s e n t e di n t h e c o n s o l i d a t e d s t a t e m e n t s o f i n c o m e f o r t h e y e a r s e n d e d J u n e 3 0 f o l l o w s : 2 0 1 0 P r o v i s i o n f o r i n c o m e t a x a t s t a t u t o r y r a t e s A d j u s t m e n t s r e s u l t i n g f r o m : C a p i t a l g a i n s t a x o n s a l e o f s u b s i d i a r i e s ( N o t e 1 ) R e a l i z a t i o n o f r e v a l u a t i o i n c r e m e n n t A p p l i c a t i o n o f t e m p o r a r y d i f f e r e n c e s a n d N O L C Of o r w h i c h n o d e f e r r e d i n c o m e t a x a s s e t w a s p r e v i o u s l y r e c o g n i z e d E x p i r a t i o n o f e x c e s s MC I Tc r e d i t s ( F o r w a r d ) P = 1 1 8 , 5 2 9 2 0 0 9 ( I n T h o u s a n d s ) = P 1 0 3 , 3 2 4 1 0 6 , 3 2 8 ( 3 5 , 1 1 9 ) 2 0 0 8 = P 2 3 3 , 0 8 4

( 1 , 3 5 9 )

( 2 , 6 9 5 )

( 1 4 , 3 7 3 ) 4 , 8 2 7

* S G V M C 3 1 0 9 6 2 *

4 5 2 0 1 0 U n r e c o g n i z e d d e f e r r e d i n c o m e t a x a s s e t s a r i s i n g f r o m t e m p o r a r y d i f f e r e n c e s a n d N O L C O E f f e c t o f c h a n g e i n i n c o m e t a x r a t e s a p p l i e d o n d e f e r r e d i n c o m e t a x a s s e t s a n d l i a b i l i t i e s T a x e f f e c t s o f : E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e ( N o t e 8 ) I n t e r e s t a n d d i v i d e n d i n c o m e s u b j e c t e d t o f i n a l t a x D e p r e c i a t i o n o n a p p r a i s a l i n c r e a s e U n a l l o w a b l e i n t e r e s t e x p e n s e O t h e r s P r o v i s i o n f o r i n c o m e t a x 2 0 0 9 ( I n T h o u s a n d s ) 2 0 0 8

P = 7 , 3 5 2 ( 3 9 , 6 7 9 ) ( 3 8 1 ) 9 5 2 3 2 3 ( 2 , 0 8 1 ) P = 8 3 , 6 5 6

= P 1 8 , 7 7 0 9 5 ( 2 5 , 8 5 8 ) ( 1 , 2 5 3 ) 6 , 1 9 0 7 0 1 4 , 9 0 7 = P 1 7 5 , 3 9 0

= P 4 , 6 8 2 ( 3 , 2 7 7 ) ( 2 4 , 4 0 8 ) ( 1 , 5 5 6 ) 6 , 6 6 6 1 , 4 1 1 3 , 7 3 8 = P 2 1 0 , 7 9 4

e .U n d e r R e p u b l i c A c t 9 3 3 7 , t h e E x p a n d e dV a l u e A d d e d T a x A c t o f 2 0 0 5 , w h i c h t o o k e f f e c t o n N o v e m b e r 1 , 2 0 0 5 , t h e c o r p o r a t ei n c o m et a xr a t e s h a l l b e 3 5 %f o r t h r e ey e a r s e f f e c t i v eo n N o v e m b e r 1 , 2 0 0 5 , a n d3 0 %s t a r t i n go nJ a n u a r y1 , 2 0 0 9a n dt h e r e a f t e r ; a n dt h e u n a l l o w a b l e d e d u c t i o nf o ri n t e r e s te x p e n s es h a l l b e4 2 %o ft h ei n t e r e s ti n c o m es u b j e c t t of i n a l t a x , e f f e c t i v e N o v e m b e r 1 , 2 0 0 5 a n d 3 3 %e f f e c t i v e J a n u a r y 1 , 2 0 0 9 . T h e P r e s i d e n t s i g n e di n t ol a wo nJ u n e 1 7 , 2 0 0 8R A9 5 0 4a m e n d i n gp r o v i s i o n s o f t h e 1 9 9 7 T a xC o d e .R A9 5 0 4b e c a m e e f f e c t i v e o nJ u l y7 , 2 0 0 8 , f i f t e e n( 1 5 ) d a y s a f t e r i t s p u b l i c a t i o n l a s t J u n e 2 2 , 2 0 0 8i n m a j o r n e w s p a p e r s o f g e n e r a l c i r c u l a t i o n . T h e n e wl a ws h a l l b e e f f e c t i v e s t a r t i n gt a x a b l ey e a r 2 0 0 8 .T h en e wl a wi n c l u d e sp r o v i s i o n sr e l a t i n gt ot h ea v a i l m e n t o f o p t i o n a ls t a n d a r d d e d u c t i o n s( O S D ) . C o r p o r a t i o n s ,e x c e p tf o rn o n r e s i d e n tf o r e i g n c o r p o r a t i o n s , m a yn o we l e c t t oc l a i ms t a n d a r dd e d u c t i o ni n a n a m o u n t n o t e x c e e d i n g4 0 %o f t h e i r g r o s s i n c o m e .Ac o r p o r a t i o n m u s t s i g n i f y i n t h e r e t u r n i t s i n t e n t i o n t o a v a i l t h e O S D .I f n o i n d i c a t i o n i s m a d e , i t s h a l l b e c o n s i d e r e d a s h a v i n g a v a i l e d o f t h e i t e m i z e d d e d u c t i o n s . T h e a v a i l m e n t o f t h e O S Ds h a l l b e i r r e v o c a b l e f o r t h e t a x a b l e y e a r f o r w h i c ht h e r e t u r ni s m a d e . O nS e p t e m b e r2 4 , 2 0 0 8 , t h eB u r e a uo fI n t e r n a l R e v e n u ei s s u e dR e v e n u eR e g u l a t i o nN o . 1 0 2 0 0 8 f o r t h e i m p l e m e n t i n g g u i d e l i n e s o f t h i s l a w . 2 3 . E q u i t y a .S h a r e c a p i t a l a n d t r e a s u r y s h a r e s D e t a i l s o f s h a r e c a p i t a l a n d t r e a s u r y s h a r e s a t J u n e 3 0 f o l l o w :
2 0 1 0 N u mb e r o f A mo u n t s h a r e s( I nT h o u s a n d s ) A u t h o r i z e d c o m m o n s h a r e s C a p i t a l A a t = P 1 p a r v a l u e e a c h 1 , 5 0 0 , 0 0 0 , 0 0 0 ( F o r w a r d ) 2 0 0 9 N u m b e r o f A m o u n t s h a r e s ( I n T h o u s a n d s ) 2 0 0 8 N u m b e r o f A m o u n t s h a r e s ( I n T h o u s a n d s )

, 5 0 0 , 0 0 0 , 0 0 0 = P 1 , 5 0 0 , 0 0 0 1

= P 1 , 5 0 0 , 0 0 0 1 , 5 0 0 , 0 0 0 , 0 0 0

= P 1 , 5 0 0 , 0 0 0

* S G V M C 3 1 0 9 6 2 *

4 6 2 0 1 0 N u mb e r o f A mo u n t s h a r e s( I nT h o u s a n d s ) I s s u e d c o m m o n s h a r e s C l a s s A ` T r e a s u r y s h a r e s I s s u e d a n d o u t s t a n d i n g 1 , 1 6 8 , 9 7 6 , 4 2 5 ( 2 5 9 , 4 2 4 , 1 8 9 ) 9 0 9 , 5 5 2 , 2 3 6 2 0 0 9 N u m b e r o f A m o u n t s h a r e s ( I n T h o u s a n d s ) 2 0 0 8 N u m b e r o f A m o u n t s h a r e s ( I n T h o u s a n d s ) P = 1 , 1 6 8 , 9 7 6 ( 7 3 9 , 7 0 7 ) = P 4 2 9 , 2 6 9

, 1 6 8 , 9 7 6 , 4 2 5 P = 1 , 1 6 8 , 9 7 6 1 2 5 9 , 4 2 4 , 1 8 9 ) ( 7 6 8 , 8 6 0 )( 0 9 , 5 5 2 , 2 3 6 = P 4 0 0 , 1 1 6 9

P = 1 , 1 6 8 , 9 7 6 1 , 1 6 8 , 9 7 6 , 4 2 5 ( 7 6 8 , 8 6 0 )( 2 5 1 , 3 3 0 , 1 8 9 ) = P 4 0 0 , 1 1 6 9 1 7 , 6 4 6 , 2 3 6

R e a c q u i s i t i o n o f s h a r e s b y t h e P a r e n t C o m p a n y o n i t s S h a r e B u y B a c k P r o g r a mf o l l o w : Y e a r R e a c q u i r e d N u m b e r o f S h a r e s 8 , 0 9 4 , 0 0 0 1 9 6 , 3 2 2 , 9 4 9 5 5 , 0 0 7 , 2 4 0 2 5 9 , 4 2 4 , 1 8 9 C o s t ( I n T h o u s a n d s ) = P 2 9 , 1 5 3 6 7 5 , 9 4 0 6 3 , 7 6 7 = P 7 6 8 , 8 6 0

2 0 0 9 2 0 0 8 2 0 0 7 a n d p r e v i o u s y e a r s

b .S h a r e p r e m i u ma n d r e v a l u a t i o n i n c r e m e n t A sd i s c u s s e di nN o t e1 , i n2 0 0 2 , t h eG r o u ph a s u n d e r t a k e nm a j o r a c t i v i t i e s r e l a t i n gt ot h e R e o r g a n i z a t i o n P r o g r a m .A s p a r t o f t h i s , t h e s u g a r m i l l i n g a n d r e f i n e r y b u s i n e s s i n N a s u g b u , B a t a n g a s w a s s p u n o f f t oC A D P I ( s e e N o t e 1 ) .T h e a s s e t s a n dl i a b i l i t i e s , e x c l u d i n gt h e l a n d i nN a s u g b u , w e r et r a n s f e r r e db yt h eC o m p a n ya sc a p i t a l c o n t r i b u t i o nt oC A D P I .S u c h p r o p e r t i e st r a n s f e r r e di n c l u d er e v a l u a t i o ni n c r e m e n to nd e p r e c i a b l ep r o p e r t y ,p l a n ta n d e q u i p m e n t a m o u n t i n g t o P = 1 5 0 . 6 m i l l i o n .T h u s , t h e c a r r y i n g v a l u e o f t h e n e t a s s e t s t r a n s f e r r e d t oC A D P I , i n c l u d i n gt h er e v a l u a t i o ni n c r e m e n t , w a sd e e m e da st h eh i s t o r i c a l c o s t o f s u c h a s s e t s f o r C A D P I . O n D e c e m b e r 1 , 2 0 0 2 , t h e C o m p a n ye x c h a n g e di t s s h a r e h o l d i n g s i n C A D P I , C C S I a n d C F S I f o r1 , 3 0 2 . 8m i l l i o no fC A D P G C sc o m m o ns h a r e sw i t hap a rv a l u eo fP = 1p e rs h a r ef o r = P 2 , 0 5 0 . 2m i l l i o n , t h ec o s t o f i n v e s t m e n t si nt h eC o m p a n y sb o o k si m m e d i a t e l yb e f o r et h e t r a n s f e r . C A D P G Cr e c o r d e dap r e m i u mo f = P 5 9 6 . 8m i l l i o na n ds e t u ps h a r ei nr e v a l u a t i o n i n c r e m e n ti np r o p e r t i e so fs u b s i d i a r ya m o u n t i n gt o= P 1 5 0 . 6m i l l i o n .C o n s e q u e n t l y ,t h e C o m p a n y s o w n e r s h i pi n t e r e s t i nC A D P G Ci n c r e a s e da n dC A D P I , C C S I a n dC F S I b e c a m e 1 0 0 %o w n e d s u b s i d i a r i e s o f t h e C A D P G C . O n J u l y 1 , 2 0 0 4 , C A D P G C s N e g r o s s u g a r m i l l i n g b u s i n e s s w a s s p u n o f f , w h i c hw a s t h e l a s t p h a s e o f t h e R e o r g a n i z a t i o nP r o g r a m .T h e s a i ds p i n o f f , a s a p p r o v e db yt h e P h i l i p p i n e S E C o nF e b r u a r y1 0 ,2 0 0 4 ,i n v o l v e dt h et r a n s f e ro fC A D P G C sn e ta s s e t sa g g r e g a t i n gt o = P 1 . 4 b i l l i o n i n e x c h a n g e f o r C A C I s 2 0 0 m i l l i o n c o m m o n s h a r e s a t P = 1 p e r s h a r e . T h e b a s i s o f v a l u a t i o n o f t h e C A C I s h a r e s r e c e i v e d b y C A D P G Cw a s t h e c a r r y i n gv a l u e o f t h e t r a n s f e r r e d n e t a s s e t s , w h i c h i n c l u d e d t h e l a n d a t a p p r a i s e d v a l u e . c .E x c e s so fc o n s i d e r a t i o nr e c e i v e df r o mp a r e n t c o m p a n yo v e rc a r r y i n ga m o u n t o fd i s p o s e d s u b s i d i a r y a n d e f f e c t o f c h a n g e i n o w n e r s h i p i n t e r e s t i n s u b s i d i a r i e s A s d i s c u s s e d i n N o t e 1 , t h e G r o u ph a s u n d e r t a k e n a c o r p o r a t e r e s t r u c t u r i n g . O n D e c e m b e r 1 6 , 2 0 0 8 , R H I a c q u i r e dt h e s u g a r r e l a t e do p e r a t i n gs u b s i d i a r i e s a n da na s s o c i a t e f r o mC A D P G C f o rat o t a lc o n s i d e r a t i o no f= P 3 , 8 3 8 . 0m i l l i o n ,w h i c hr e p r e s e n t st h ec o s to fC A D P G C s i n v e s t m e n t s i n s h a r e s o f s t o c ki n s u b s i d i a r i e s a n d a n a s s o c i a t e a m o u n t i n g t o = P 4 , 1 0 1 . 0m i l l i o n r e d u c e db yt h en e t l i a b i l i t i e st r a n s f e r r e db yC A D P G Ca m o u n t i n gt oP = 2 6 3 . 0m i l l i o n .A sa r e s u l t ,R H Ii n c r e a s e di t se f f e c t i v eo w n e r s h i pi n t e r e s ti nt h es u g a r r e l a t e do p e r a t i n g s u b s i d i a r i e s a n dr e c o g n i z e dt h e e f f e c t o f t h e c h a n g e i no w n e r s h i pi n t e r e s t i ns u b s i d i a r i e s a n d a n a s s o c i a t e a s a r e s u l t o f r e d u c t i o n o f n o n c o n t r o l l i n g i n t e r e s t s i n s u b s i d i a r i e s o f = P 4 4 . 5 m i l l i o n a n d p r e s e n t e d a s a s e p a r a t e c o m p o n e n t o f t h e G r o u p s t o t a l c o n s o l i d a t e d e q u i t y .

* S G V M C 3 1 0 9 6 2 *

4 7 O n J a n u a r y 2 3 , 2 0 0 9 , f o l l o w i n g t h e a c q u i s i t i o n o f t h e s u g a r r e l a t e d o p e r a t i n g s u b s i d i a r i e s a n d a na s s o c i a t e f r o mC A D P G C , R H I s o l di t s i n v e s t m e n t i nC A D P G Ct oR C I o na c c o u n t f o r a t o t a l c o n s i d e r a t i o no f = P 3 , 9 2 7 . 3m i l l i o n .T h e e x c e s s o f c o n s i d e r a t i o n r e c e i v e df r o mR C I o v e r t h ec a r r y i n ga m o u n t so f s h a r eo f t h eC o m p a n yi nt h en e t a s s e t so f C A D P G Ca m o u n t e dt o = P 5 7 7 . 1 m i l l i o n . U p o nm e r g e r o f C A D P G Ca n dR C I e f f e c t i v eJ u n e2 9 , 2 0 0 9 , t h en o t er e c e i v a b l ef r o mR C I a m o u n t i n gt oP = 3 , 9 2 7 . 3m i l l i o nw a s s e t o f f t ot h e e x t e n t o f t h e = P 3 , 8 3 8 . 0m i l l i o nn o t e p a y a b l e f r o mC A D P G Ca n dP = 3 5 . 8m i l l i o ns h a r eo f R C I i nt h ed i v i d e n d s d e c l a r e db yt h e C o m p a n y ( s e e N o t e 1 ) . d .R e t a i n e d e a r n i n g s R e s t r i c t e d r e t a i n e d e a r n i n g s T h ef o l l o w i n ga m o u n t so f r e t a i n e de a r n i n g sa so f J u n e3 0a r en o t a v a i l a b l ef o rd i v i d e n d d e c l a r a t i o n : 2 0 0 9 ( I n T h o u s a n d s ) = P 7 6 8 , 8 6 0 P = 7 6 8 , 8 6 0 2 0 1 0 9 8 , 3 1 9 P = 8 6 7 , 1 7 9 9 9 , 7 8 6 = P 8 6 8 , 6 4 6 2 0 0 8 = P 7 3 9 , 7 0 7 6 3 , 3 7 7 = P 8 0 3 , 0 8 4

T r e a s u r y s h a r e s P e n s i o n p l a n a s s e t n e t o f d e f e r r e d i n c o m e t a x l i a b i l i t y ( N o t e 1 5 )

F u r t h e r ,u n r e s t r i c t e dr e t a i n e de a r n i n g si n c l u d ea c c u m u l a t e de a r n i n g so fc o n s o l i d a t e d s u b s i d i a r i e s a n du n c o n s o l i d a t e da s s o c i a t e a m o u n t i n gt oP = 1 , 0 2 6 . 4m i l l i o n , = P 6 3 4 . 1m i l l i o na n d = P 1 , 1 3 1 . 2 m i l l i o n a s o f J u n e 3 0 , 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 , r e s p e c t i v e l y , w h i c h a r e n o t a v a i l a b l e f o r d i s t r i b u t i o n t o t h e C o m p a n y s s h a r e h o l d e r s u n l e s s r e c e i v e d a s c a s h d i v i d e n d s f r o mi n v e s t e e s . D i v i d e n d d e c l a r a t i o n C a s hd i v i d e n d sd e c l a r e db yt h eC o m p a n yf r o mr e t a i n e de a r n i n g sd u r i n gt h ey e a r se n d e d J u n e 3 0 , 2 0 0 9 a n d 2 0 0 8 f o l l o w :
D a t e A p p r o v e d J u n e 2 4 , 2 0 0 9 O c t o b e r 3 , 2 0 0 8 J u n e 2 5 , 2 0 0 8 S e p t e m b e r 1 9 , 2 0 0 7 P e r S h a r e = P 0 . 0 6 0 . 0 6 0 . 0 6 0 . 0 5 T o t a l A m o u n t S t o c k h o l d e r s o f ( I n T h o u s a n d s ) R e c o r d D a t e = P 5 4 , 5 7 5 J u l y 1 5 , 2 0 0 9 5 4 , 5 7 5 O c t o b e r 1 5 , 2 0 0 8 5 5 , 0 5 8 J u l y 1 5 , 2 0 0 8 5 5 , 7 0 0 O c t o b e r 1 5 , 2 0 0 7 D a t e P a i d / I s s u e d J u l y 3 1 , 2 0 0 9 O c t o b e r 3 1 , 2 0 0 8 J u l y 3 1 , 2 0 0 8 N o v e m b e r 8 , 2 0 0 7

N o d i v i d e n d s w e r e d e c l a r e d b y t h e C o m p a n y i n 2 0 1 0 . e .S h a r e p r i c e s T h ep r i n c i p a l m a r k e t f o r t h eC o m p a n y s s h a r e so f s t o c ki st h eP h i l i p p i n eS t o c kE x c h a n g e . T h eh i g ha n dl o wt r a d i n gp r i c e s o f t h eC o m p a n y s s h a r e s f o r e a c hq u a r t e r w i t h i nt h et h r e e f i s c a l y e a r s a r e a s f o l l o w s : Q u a r t e r J u l y 2 0 0 9 t h r o u g h J u n e 2 0 1 0 F i r s t S e c o n d T h i r d F o u r t h ( F o r w a r d ) H i g h P = 3 . 0 0 3 . 5 0 3 . 5 0 2 . 7 0 L o w P = 2 . 8 0 2 . 8 0 2 . 5 5 2 . 5 5

* S G V M C 3 1 0 9 6 2 *

4 8 Q u a r t e r J u l y 2 0 0 8 t h r o u g h J u n e 2 0 0 9 F i r s t S e c o n d T h i r d F o u r t h J u l y 2 0 0 7 t h r o u g h J u n e 2 0 0 8 F i r s t S e c o n d T h i r d F o u r t h f .S h a r e B u y B a c k P r o g r a m I n2 0 0 8 , C A D P G Cr e a c q u i r e dp o r t i o no f i t ss h a r e sa m o u n t i n gt oP = 2 . 9m i l l i o n( 1 , 5 0 6 , 0 0 0 s h a r e s ) . A s a r e s u l t , t h e C o m p a n y s e f f e c t i v e o w n e r s h i p i n t e r e s t h a s i n c r e a s e d f r o m8 9 . 2 8 %t o 8 9 . 3 6 %. T h e d i f f e r e n c e b e t w e e n t h e r e a c q u i s i t i o n c o s t a n d t h e b o o k v a l u e o f s h a r e s a c q u i r e d b yt h eC o m p a n y( t h r o u g hC A D P G C )f r o m t h en o n c o n t r o l l i n gi n t e r e s ta m o u n t e dt o = P 1 . 4m i l l i o na n dw a sr e c o g n i z e di ne q u i t yu n d e r E f f e c t o f c h a n g ei no w n e r s h i pi n t e r e s t a c c o u n t . 2 4 . E a r n i n g s P e r S h a r e E a r n i n g s p e r s h a r e ( E P S ) f o r t h e y e a r s e n d e d J u n e 3 0 i s c o m p u t e d a s f o l l o w s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s , e x c e p t E P S ) P = 3 0 7 , 6 9 8 9 0 9 , 5 5 2 P = 0 . 3 4 = P 1 8 0 , 2 4 9 9 0 9 , 6 4 8 = P 0 . 2 0 2 0 0 8 H i g h P = 3 . 5 0 2 . 9 0 2 . 4 0 3 . 0 0 3 . 1 0 2 . 9 5 3 . 6 0 3 . 6 0 L o w P = 2 . 3 0 2 . 3 0 2 . 0 0 2 . 8 0 2 . 0 6 2 . 4 8 2 . 6 0 2 . 2 0

N e t i n c o m e f o r t h e y e a r a t t r i b u t a b l e t o t h e e q u i t y h o l d e r s o f t h e P a r e n t C o m p a n y We i g h t e d a v e r a g e n u m b e r o f c o m m o n s h a r e s o u t s t a n d i n g B a s i c / d i l u t e d E P S

= P 4 1 0 , 0 1 5 1 , 0 6 3 , 6 4 5 = P 0 . 3 9

T h e r e a r e n o p o t e n t i a l d i l u t i v e c o m m o n s h a r e s a s a t J u n e 3 0 , 2 0 1 0 , 2 0 0 9 a n d 2 0 0 8 . 2 5 . C a p i t a l Ma n a g e me n t T h ep r i m a r yo b j e c t i v eo f t h eG r o u p s c a p i t a l m a n a g e m e n t i s t oe n s u r et h a t i t m a i n t a i n s s t r o n g c r e d i t a n d h e a l t h y c a p i t a l r a t i o s i n o r d e r t o s u p p o r t i t s b u s i n e s s a n d m a x i m i z e s h a r e h o l d e r v a l u e . T h eG r o u p sd i v i d e n dd e c l a r a t i o ni sd e p e n d e n to na v a i l a b i l i t yo fe a r n i n g sa n do p e r a t i n g r e q u i r e m e n t s .T h eG r o u pm a n a g e si t s c a p i t a l s t r u c t u r ea n dm a k e sa d j u s t m e n t t oi t , i nl i g h t o f c h a n g e s i n e c o n o m i c c o n d i t i o n s . T o m a i n t a i n o r a d j u s t c a p i t a l s t r u c t u r e , t h e G r o u p m a y a d j u s t t h e d i v i d e n d p a y m e n t t o s h a r e h o l d e r s , r e t u r n c a p i t a l t o s h a r e h o l d e r s o r i s s u e n e ws h a r e s . N o c h a n g e s w e r e m a d e i n t h e o b j e c t i v e s , p o l i c i e s o r p r o c e s s e s i n 2 0 1 0 a n d 2 0 0 9 .

* S G V M C 3 1 0 9 6 2 *

4 9 T h e G r o u p m e t i t s o b j e c t i v e s , p o l i c i e s o r p r o c e s s e s i n 2 0 1 0 a n d 2 0 0 9 . Ma n a g e m e n t c o n s i d e r s t h e t o t a l c o n s o l i d a t e d e q u i t y r e f l e c t e d i n t h e c o n s o l i d a t e d b a l a n c e s h e e t s a s i t s c a p i t a l .T h e G r o u pm o n i t o r s i t s u s e o f c a p i t a l u s i n g l e v e r a g e r a t i o s , s p e c i f i c a l l y , d e b t r a t i o a n d d e b t t o e q u i t y r a t i o .I t a l s o m o n i t o r s i t s d e b t s s e r v i c e c o v e r a g e r a t i o t o e n s u r e t h a t t h e r e w o u l d b e s u f f i c i e n t a m o u n t o f c a s hf l o wa v a i l a b l e t om e e t a n n u a l i n t e r e s t a n dp r i n c i p a l p a y m e n t s o nd e b t . T h e G r o u pi s r e q u i r e dt om a i n t a i nam a x i m u md e b t t o e q u i t yr a t i oo f 2 . 3 3 : 1a n dm i n i m u md e b t s e r v i c e c o v e r a g e r a t i oo f 1 . 2 5 : 1b yi t s b a n kc r e d i t o r s .A s o f J u n e 3 0 , 2 0 1 0a n d2 0 0 9 , t h e G r o u p h a s t h e f o l l o w i n g f i n a n c i a l r a t i o s : 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s , e x c e p t r a t i o ) = P 7 , 8 0 5 , 0 6 5 P = 9 , 6 9 8 , 3 1 0 5 , 7 1 6 , 6 0 4 5 , 9 8 6 , 9 0 5 = P 1 3 , 5 2 1 , 6 6 9 P = 1 5 , 6 8 5 , 2 1 5 0 . 6 2 : 1 . 0 0 1 . 6 2 : 1 . 0 0 0 . 5 8 : 1 . 0 0 1 . 3 7 : 1 . 0 0

T o t a l l i a b i l i t i e s T o t a l e q u i t y T o t a l l i a b i l i t i e s a n d e q u i t y D e b t r a t i o D e b t t o e q u i t y r a t i o 2 6 . F i n a n c i a l I n s t r u me n t s

F i n a n c i a l R i s k Ma n a g e m e n t O b j e c t i v e s a n d P o l i c i e s T h eG r o u p sp r i n c i p a lf i n a n c i a li n s t r u m e n t sc o m p r i s eo fc a s ha n dc a s he q u i v a l e n t s ,t r a d e r e c e i v a b l e s , a n d a c c o u n t s p a y a b l e a n d a c c r u e de x p e n s e s , w h i c h a r i s e d i r e c t l yf r o mi t s o p e r a t i o n s . T h eG r o u ph a so t h e r f i n a n c i a l i n s t r u m e n t ss u c ha s a d v a n c e s t oe m p l o y e e sa n dar e l a t e dp a r t y , d i v i d e n d s p a y a b l e a n d s h o r t a n d l o n g t e r mb o r r o w i n g s . T h em a i nr i s k sa r i s i n gf r o mt h eG r o u p sf i n a n c i a l i n s t r u m e n t sa r el i q u i d i t yr i s k , c r e d i t r i s k , i n t e r e s t r a t e r i s k a n d f o r e i g n c u r r e n c y r i s k . T h e G r o u p m o n i t o r s t h e m a r k e t p r i c e r i s k a r i s i n g f r o m a l l f i n a n c i a l i n s t r u m e n t s .T h e G r o u pi s a l s oe x p o s e d t o c o m m o d i t y p r i c e r i s k .R i s km a n a g e m e n t i sc a r r i e do u t b yt h eP r e s i d e n t a n dS e n i o r V i c eP r e s i d e n t f o r F i n a n c ea n dT r e a s u r e r u n d e r t h e d i r e c t i o n o f t h e B O Do f t h e C o m p a n y . L i q u i d i t y r i s k L i q u i d i t y r i s k a r i s e s f r o mt h e p o s s i b i l i t y t h a t t h e G r o u pm a y e n c o u n t e r d i f f i c u l t i e s i n r a i s i n g f u n d s t o m e e t m a t u r i n g o b l i g a t i o n s . T h e G r o u p s o b j e c t i v e i s t om a i n t a i ns u f f i c i e n t c a s ha n dc a s he q u i v a l e n t s a n dt h e a v a i l a b i l i t yo f f u n d i n g t h r o u g h a n a d e q u a t e a m o u n t o f c o m m i t t e d c r e d i t f a c i l i t i e s .D u e t o t h e d y n a m i c n a t u r e o f t h eb u s i n e s s , t h eG r o u pa i m st om a i n t a i nf l e x i b i l i t yi nf u n d i n gb yk e e p i n gt r a c ko f d a i l yc a s h f l o w s a n d m a i n t a i n i n g c o m m i t t e d c r e d i t l i n e s a v a i l a b l e .

* S G V M C 3 1 0 9 6 2 *

5 0 T h et a b l e sb e l o ws u m m a r i z et h em a t u r i t yp r o f i l eo f t h eG r o u p sf i n a n c i a l l i a b i l i t i e sb a s e do n c o n t r a c t u a l u n d i s c o u n t e d p a y m e n t s a n d t h e r e l a t e d f i n a n c i a l a s s e t s u s e d f o r l i q u i d i t y m a n a g e m e n t : J u n e 3 0 , 2 0 1 0
A c c o u n t s p a y a b l e a n d a c c r u e de x p e n s e s * D i v i d e n d s p a y a b l e S h o r t t e r mb o r r o w i n g s * * C u r r e n t p o r t i o n o f l o n g t e r mb o r r o w i n g s L o n g t e r mb o r r o w i n g s n e t o f c u r r e n t p o r t i o n * * C a s h i n b a n k s a n d c a s h e q u i v a l e n t s T r a d e r e c e i v a b l e s A d v a n c e s t o r e l a t e d p a r t i e s A d v a n c e s t o e m p l o y e e s * * * O t h e r r e c e i v a b l e s * * * * O nd e ma n d P = 4 9 4 , 9 6 1 1 6 , 0 6 9 < 1 y e a r P = 4 0 , 0 3 1 2 , 4 6 0 , 9 3 5 5 1 , 7 2 4 > 1 < 2 y r s > 2 < 4 y r s > 4 < 5 y r s ( I n T h o u s a n d s ) P = P = P = > 5 y r s P = T o t a l P = 5 3 4 , 9 9 2 1 6 , 0 6 9 2 , 4 6 0 , 9 3 5 5 1 , 7 2 4

4 8 2 , 3 4 6 1 , 3 7 9 , 3 2 6 2 , 5 0 6 , 7 8 2 1 , 0 6 0 , 1 4 6 2 , 5 3 7 , 9 0 6 7 , 9 6 6 , 5 0 6 P = 5 1 1 , 0 3 0 P = 3 , 0 3 5 , 0 3 6 P = 1 , 3 7 9 , 3 2 6 P = 2 , 5 0 6 , 7 8 2 P = 1 , 0 6 0 , 1 4 6 P = 2 , 5 3 7 , 9 0 6 P = 1 1 , 0 3 0 , 2 2 6 P = 1 7 4 , 8 9 0 1 1 6 , 5 5 3 4 9 , 0 2 2 7 , 2 7 1 P = 3 4 7 , 7 3 6 P = 5 6 1 , 7 4 8 3 5 , 8 8 7 1 3 , 3 6 1 P = 6 1 0 , 9 9 6 P = 4 , 8 2 3 4 , 0 3 2 P = 8 , 8 5 5 P = P = P = P = P = P = P = 1 7 4 , 8 9 0 6 7 8 , 3 0 1 4 9 , 0 2 2 4 0 , 7 1 0 2 4 , 6 6 4 P = 9 6 7 , 5 8 7

*E x c l u d e s p a y a b l e t o g o v e r n m e n t a g e n c i e s a m o u n t i n g t o = P 7 3 . 7 m i l l i o n * *I n c l u d e s e x p e c t e d i n t e r e s t p a y m e n t s f o r s h o r t t e r ma n d l o n g t e r mb o r r o w i n g s o f = P 1 1 . 0 m i l l i o n a n d = P 2 , 2 8 3 . 9 m i l l i o n , r e s p e c t i v e l y . * * *I n c l u d e s n o n c u r r e n t p o r t i o n o f a d v a n c e s t o e m p l o y e e s a m o u n t i n g t o = P 4 . 8 m i l l i o n a n d e x c l u d e s a d v a n c e s t o e m p l o y e e s s u b j e c t t o l i q u i d a t i o n a m o u n t i n g t o = P 1 . 6 m i l l i o n . * * * * I n c l u d e s n o n c u r r e n t p o r t i o n o f o t h e r r e c e i v a b l e s a m o u n t i n g t o = P 4 . 0 m i l l i o n a n d e x c l u d e s n o n f i n a n c i a l a s s e t s a m o u n t i n g t o = P 1 . 7 m i l l i o n .

J u n e 3 0 , 2 0 0 9

O n d e m a n d

< 1 y e a r P = 8 3 , 6 3 0 4 1 , 0 7 4 3 , 1 3 9 , 9 0 5 2 6 7 , 3 0 7 = P 3 , 5 3 1 , 9 1 6 = P 6 5 3 , 3 0 4 3 2 , 0 0 7 4 8 , 1 3 0 = P 7 3 3 , 4 4 1

> 1 < 2 y r s P = 4 1 1 , 8 6 3 P = 4 1 1 , 8 6 3 P = 5 , 5 3 5 = P 5 , 5 3 5

A c c o u n t s p a y a b l e a n d a c c r u e de x p e n s e s * P = 6 3 9 , 2 6 2 D i v i d e n d s p a y a b l e S h o r t t e r mb o r r o w i n g s * * C u r r e n t p o r t i o n o f l o n g t e r mb o r r o w i n g s L o n g t e r mb o r r o w i n g s n e t o f c u r r e n t p o r t i o n * * = P 6 3 9 , 2 6 2 C a s h i n b a n k s a n d c a s h e q u i v a l e n t s = P 2 8 3 , 2 8 0 T r a d e r e c e i v a b l e s 9 6 , 6 4 4 A d v a n c e s t o r e l a t e d p a r t i e s 2 0 1 , 4 2 3 A d v a n c e s t o e m p l o y e e s * * * O t h e r r e c e i v a b l e s = P 5 8 1 , 3 4 7

> 2 < 4 y r s > 4 < 5 y r s ( I n T h o u s a n d s ) P = P =

> 5 y r s P =

T o t a l = P 7 2 2 , 8 9 2 4 1 , 0 7 4 3 , 1 3 9 , 9 0 5 4 , 5 8 4 , 1 6 6 P = 8 , 4 8 8 , 0 3 7 P = 2 8 3 , 2 8 0 7 4 9 , 9 4 8 2 0 1 , 4 2 3 3 7 , 5 4 2 4 8 , 1 3 0 = P 1 , 3 2 0 , 3 2 3

6 6 5 , 5 8 5 1 , 3 1 2 , 0 2 5 1 , 9 2 7 , 3 8 6 P = 6 6 5 , 5 8 5 = P 1 , 3 1 2 , 0 2 5 = P 1 , 9 2 7 , 3 8 6 P = = P P = = P P = = P

* E x c l u d e s p a y a b l e t o g o v e r n m e n t a g e n c i e s a m o u n t i n g t o = P 5 6 . 6 m i l l i o n * *I n c l u d e s e x p e c t e d i n t e r e s t p a y m e n t s f o r s h o r t t e r ma n d l o n g t e r mb o r r o w i n g s o f = P 6 9 0 . 0 m i l l i o n a n d = P 1 , 5 0 8 . 2 m i l l i o n , r e s p e c t i v e l y . * * * E x c l u d e s a d v a n c e s t o e m p l o y e e s s u b j e c t t o l i q u i d a t i o n a m o u n t i n g t o = P 1 1 . 7 m i l l i o n .

C r e d i t r i s k C r e d i t r i s ki s t h e r i s k t h a t t h e G r o u pw i l l i n c u r f i n a n c i a l l o s s t h r o u g hd e f a u l t b y c o u n t e r p a r t i e s i n p e r f o r m i n g t h e i r o b l i g a t i o n s . C o n c e n t r a t i o n o f c r e d i t r i s kw i t h r e s p e c t t o t r a d e r e c e i v a b l e s i s l i m i t e d d u e t o t h e l a r g e n u m b e r o f c u s t o m e r s c o m p r i s i n g t h e G r o u p s c u s t o m e r b a s e a n dt h e i r d i s p e r s i o n a c r o s s d i f f e r e n t g e o g r a p h i c a r e a s .I t h a sp o l i c i e si np l a c et oe n s u r et h a t s a l e so f p r o d u c t sa r em a d et oc u s t o m e r sw i t ha n a p p r o p r i a t e c r e d i t h i s t o r y .

* S G V M C 3 1 0 9 6 2 *

5 1 T h eG r o u ph a se s t a b l i s h e dac r e d i t q u a l i t yr e v i e wp r o c e s st op r o v i d ee a r l yi d e n t i f i c a t i o no f p o s s i b l e c h a n g e s i nt h e c r e d i t w o r t h i n e s s o f c o u n t e r p a r t i e s , i n c l u d i n gr e g u l a r c o l l a t e r a l r e v i s i o n s . C o u n t e r p a r t y l i m i t s a r e e s t a b l i s h e d b y t h e u s e o f a c r e d i t r i s k c l a s s i f i c a t i o n s y s t e m , w h i c h a s s i g n s e a c hc o u n t e r p a r t yar i s kr a t i n g .R i s kr a t i n g s a r e s u b j e c t t or e g u l a r r e v i s i o n .T h e c r e d i t q u a l i t y r e v i e wp r o c e s s a l l o w s t h e G r o u pt oa s s e s s t h e p o t e n t i a l l o s s a s a r e s u l t o f t h e r i s k s t ow h i c hi t i s e x p o s e d a n d t a k e c o r r e c t i v e a c t i o n . Ma x i m u me x p o s u r e t o c r e d i t r i s k w i t h o u t t a k i n g a c c o u n t o f a n y c o l l a t e r a l a n d o t h e r c r e d i t e n h a n c e m e n t s T h e t a b l e b e l o ws h o w s t h e m a x i m u me x p o s u r e t o c r e d i t r i s k a s o f J u n e 3 0f o r t h e c o m p o n e n t s o f t h ec o n s o l i d a t e db a l a n c es h e e t . T h em a x i m u me x p o s u r ei ss h o w ng r o s sb e f o r et h ee f f e c t o f m i t i g a t i o n t h r o u g h t h e u s e o f m a s t e r n e t t i n g a n d c o l l a t e r a l a g r e e m e n t s . 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) P = 1 7 4 , 8 9 0 6 7 8 , 3 0 1 4 9 , 0 2 2 4 0 , 7 1 0 2 4 , 6 6 4 P = 9 6 7 , 5 8 7 = P 2 8 3 , 2 8 0 7 4 9 , 9 4 8 2 0 1 , 4 2 3 3 7 , 5 4 2 4 8 , 1 3 0 = P 1 , 3 2 0 , 3 2 3

C a s h i n b a n k s a n d t i m e d e p o s i t s , e x c l u d i n g c a s h o n h a n d T r a d e r e c e i v a b l e s A d v a n c e s t o r e l a t e d p a r t i e s A d v a n c e s t o e m p l o y e e s O t h e r r e c e i v a b l e s

C o l l a t e r a l s a n d o t h e r c r e d i t e n h a n c e m e n t s T h ea m o u n t a n dt y p eo f c o l l a t e r a l r e q u i r e dd e p e n d so na na s s e s s m e n t o f t h ec r e d i t r i s ko f t h e c o u n t e r p a r t y .G u i d e l i n e s a r ei m p l e m e n t e dr e g a r d i n gt h e a c c e p t a b i l i t yo f t y p e so f c o l l a t e r a l a n d v a l u a t i o n p a r a m e t e r s . C r e d i t q u a l i t y p e r c l a s s o f f i n a n c i a l a s s e t s T h ec r e d i t q u a l i t yo f r e c e i v a b l e si sm a n a g e db yt h eG r o u pt h r o u g hi t sMa r k e t i n gD e p a r t m e n t . H i g hg r a d ea c c o u n t sa r et h o s er e c e i v a b l e sf r o mc o u n t e r p a r t i e sw i t hw h o mc o l l e c t i o n sa r em a d e w i t h o u tm u c hc o l l e c t i o ne f f o r t . S t a n d a r dg r a d ea c c o u n t sc o n s i s to fr e c e i v a b l e sf r o m i t s d i s t r i b u t o r sw i t hg o o df i n a n c i a l c o n d i t i o na n dw i t hr e l a t i v e l yl o wd e f a u l t s . S u b s t a n d a r dg r a d e a c c o u n t s o nt h eo t h e r h a n d , a r er e c e i v a b l e s f r o mo t h e r c o u n t e r p a r t i e sw i t hh i s t o r yo f d e f a u l t e d p a y m e n t s . T h e t a b l e s b e l o ws h o wt h e c r e d i t q u a l i t yo f f i n a n c i a l a s s e t s a n d a n a g i n g a n a l y s i s o f p a s t d u e b u t n o t i m p a i r e d a c c o u n t s : J u n e 3 0 , 2 0 1 0
N e i t h e r p a s t d u e n o r i mp a i r e d H i g h S t a n d a r dS u b s t a n d a r d G r a G r a d G r a d e d e e P = 2 , 5 8 1 = P 2 , 5 8 1 P a s t d u e b u t n o t i mp a i r e d I mp a i r e d O v e r 3 0 O v e r 9 0 O v e r 1 8 0 F i n a n c i a l D a D a D a A s s e t y s y s y s s ( I n T h o u s a n d s ) P = 2 5 , 6 3 9 5 , 9 9 7 = P 3 1 , 6 3 6 P = 3 9 , 2 5 2 3 1 2 = P 3 9 , 5 6 4 P = 5 , 4 0 2 5 0 0 = P 5 , 9 0 2

T o t a l

C a s h i n b a n k a n d t i m e d e p o s i t s * T r a d e r e c e i v a b l e s A d v a n c e s t o r e l a t e d p a r t i e s A d v a n c e s t o e m p l o y e e s * * O t h e r r e c e i v a b l e s T o t a l

* * E x c l u d e s a d v a n c e s t o e m p l o y e e s s u b j e c t t o l i q u i d a t i o n a m o u n t i n g t o = P 1 . 6 m i l l i o n .

P = 1 7 4 , 5 = P 8 9 3 0 1 1 4 2 , 8 0 3 4 6 5 , 2 0 5 4 9 , 0 2 2 4 0 , 7 1 0 1 3 , 1 , 3 1 3 9 6 1 = P 3 7 9 , 7 = 5 0 8 , 1 2 7 P 7 7 *E x c l u d e s c a s h o n h a n d a m o u n t i n g t o = P 1 . 9 m i l l i o n .

P P 1 7 4 , 8 = = 9 0 2 , 9 1 5 6 8 1 , 2 1 6 4 9 , 0 2 2 1 , 2 7 6 4 1 , 9 8 6 8 , 3 3 , 4 1 8 0 8 2 = P 1 2 , = 9 8 0 , 1 6 0 9 P 9 6

* S G V M C 3 1 0 9 6 2 *

5 2 J u n e 3 0 , 2 0 0 9

N e i t h e r p a s t d u e n o r i m p a i r e d H i g h S t a n d a r dS u b s t a n d a r d G r a d e G r a d e G r a d e = P 3 0 , 4 0 0 1 , 1 6 8 3 3 , 8 0 8 = P 6 5 , 3 7 6

C a s h i n b a n k a n d t i m e d e p o s i t s * = P 2 8 3 , 2 8 0 = P T r a d e r e c e i v a b l e s 1 7 6 , 1 8 8 5 0 6 , 1 6 7 A d v a n c e s t o r e l a t e d p a r t i e s 2 0 1 , 4 2 3 A d v a n c e s t o e m p l o y e e s * * 3 6 2 3 6 , 0 1 2 O t h e r r e c e i v a b l e s 8 , 3 6 6 8 8 6 T o t a l = P 6 6 9 , 6 1 9 = P 5 4 3 , 0 6 5

P a s t d u e b u t n o t i m p a i r e d O v e r 3 0 O v e r 9 0 O v e r 1 8 0 D a y s D a y s D a y s ( I n T h o u s a n d s ) = P = P = P 1 5 , 0 8 2 2 , 9 2 6 1 9 , 1 8 5 4 , 3 0 9 2 6 1 5 0 0 = P 1 9 , 3 9 1 = P 3 , 1 8 7 P = 1 9 , 6 8 5

I m p a i r e d F i n a n c i a l A s s e t s

T o t a l

= P P = 2 8 3 , 2 8 0 6 , 7 3 2 7 5 6 , 6 8 0 2 0 1 , 4 2 3 1 , 2 7 6 3 8 , 8 1 8 9 , 7 4 1 5 7 , 8 7 1 = P 1 7 , 7 4 9P = 1 , 3 3 8 , 0 7 2

* E x c l u d e s c a s h o n h a n d a m o u n t i n g t o = P 3 . 3 m i l l i o n . * * E x c l u d e s a d v a n c e s t o e m p l o y e e s s u b j e c t t o l i q u i d a t i o n a m o u n t i n g t o = P 1 1 . 7 m i l l i o n .

I m p a i r m e n t a s s e s s m e n t T h e m a i nc o n s i d e r a t i o nf o r i m p a i r m e n t a s s e s s m e n t i n c l u d e s w h e t h e r t h e r e a r e k n o w nd i f f i c u l t i e s i nt h e c a s hf l o wo f t h e c o u n t e r p a r t i e s . T h e G r o u pa s s e s s e s i m p a i r m e n t i nt w ow a y s : i n d i v i d u a l l y a n d c o l l e c t i v e l y . F i r s t , t h eG r o u pd e t e r m i n e sa l l o w a n c ef o re a c hs i g n i f i c a n t r e c e i v a b l eo na ni n d i v i d u a l b a s i s . A m o n g t h e i t e m s t h a t t h e G r o u pc o n s i d e r s i n a s s e s s i n gi m p a i r m e n t i s t h e i n a b i l i t y t o c o l l e c t f r o m t h ec o u n t e r p a r t yb a s e do nt h ec o n t r a c t u a l t e r m so f t h er e c e i v a b l e s . R e c e i v a b l e si n c l u d e di nt h e s p e c i f i c a s s e s s m e n t a r e t h e a c c o u n t s t h a t h a v e b e e ne n d o r s e d t o t h e l e g a l d e p a r t m e n t , n o n m o v i n g a c c o u n t s r e c e i v a b l e a n d o t h e r a c c o u n t s o f d e f a u l t e d c o u n t e r p a r t i e s . F o rc o l l e c t i v ea s s e s s m e n t ,a l l o w a n c e sa r ea s s e s s e df o rr e c e i v a b l e st h a ta r en o ti n d i v i d u a l l y s i g n i f i c a n t a n df o r i n d i v i d u a l l ys i g n i f i c a n t r e c e i v a b l e s w h e r et h e r ei sn o t o b j e c t i v ee v i d e n c eo f i n d i v i d u a l i m p a i r m e n t . I m p a i r m e n t l o s s e s a r e e s t i m a t e d b y t a k i n g i n t o c o n s i d e r a t i o n t h e a g e o f t h e r e c e i v a b l e s , p a s t c o l l e c t i o n e x p e r i e n c e a n d o t h e r f a c t o r s t h a t m a y a f f e c t t h e i r c o l l e c t i b i l i t y . T h e G r o u ph a s r e c o g n i z e da ni m p a i r m e n t l o s s o ni t s f i n a n c i a l a s s e t s u s i n gs p e c i f i c a s s e s s m e n t i n 2 0 0 8 a m o u n t i n g t o P = 8 . 9 m i l l i o n . N o i m p a i r m e n t l o s s w a s r e c o g n i z e d i n 2 0 1 0 a n d 2 0 0 9 . C o m m o d i t y p r i c e r i s k T h e G r o u pi s e x p o s e dt oc o m m o d i t yp r i c e r i s kf r o mc o n v e n t i o n a l p h y s i c a l s a l e s a n dp u r c h a s e o f s u g a r m a n a g e d t h r o u g h v o l u m e , t i m i n g a n d r e l a t i o n s h i p s t r a t e g i e s .T h e G r o u p d o e s n o t e n t e r i n t o c o m m o d i t y d e r i v a t i v e s . T h eG r o u p ss a l e sc o m m i t m e n t sa r ec o n t r a c t e da tf i x e dp r i c e s , t h u s , h a sn oi m p a c to nt h e c o n s o l i d a t e d c a s h f l o w s i n t h e n e x t t w e l v e m o n t h s . I n t e r e s t r a t e r i s k I n t e r e s t r a t e r i s ki s t h e r i s kt h a t t h e f a i r v a l u e o r f u t u r e c a s hf l o w s o na f i n a n c i a l i n s t r u m e n t w i l l f l u c t u a t e b e c a u s e o f c h a n g e s i n m a r k e t i n t e r e s t r a t e s . A s o f J u n e 3 0 , 2 0 1 0 , t h e G r o u p i s e x p o s e d t o f a i r v a l u e i n t e r e s t r a t e r i s k a r i s i n g f r o mi t s f i x e d r a t e s l o n g t e r mb o r r o w i n g s , w h i c hw e r e o r i g i n a l l yi s s u e da t v a r i a b l e r a t e s ( s e e N o t e 1 3 ) .B o r r o w i n g s i s s u e d a t f i x e d r a t e s e x p o s e t h e G r o u p t o f a i r v a l u e i n t e r e s t r a t e r i s k .

* S G V M C 3 1 0 9 6 2 *

5 3 T h e G r o u ph a s l o n g t e r mb o r r o w i n g s a s o f J u n e 3 0 , 2 0 0 9 a r e s u s c e p t i b l e t o c a s h f l o wi n t e r e s t r a t e r i s k .T h e f o l l o w i n gt a b l e d e m o n s t r a t e s t h e s e n s i t i v i t yt oa r e a s o n a b l e p o s s i b l e c h a n g e i ni n t e r e s t r a t e s , w i t h a l l o t h e r v a r i a b l e s h e l d c o n s t a n t , o f t h e G r o u p s c o n s o l i d a t e d s t a t e m e n t o f i n c o m e . T h e s e n s i t i v i t yo f t h e c o n s o l i d a t e ds t a t e m e n t o f i n c o m ei s t h ee f f e c t o f t h e a s s u m e dc h a n g e s i n i n t e r e s t r a t e s o n t h e c o n s o l i d a t e d i n c o m e b e f o r e i n c o m e t a x f o r o n e y e a r , b a s e d o n t h e f l o a t i n g r a t e n o n t r a d i n g f i n a n c i a l l i a b i l i t i e s h e l d a t J u n e 3 0 , w i t h o t h e r v a r i a b l e s h e l d c o n s t a n t : C h a n g e i n i n t e r e s t r a t e s ( i n p e r c e n t a g e ) F o r m o r e t h a n a y e a r F o r l e s s t h a n a y e a r + 1 7 % 1 7 % + 1 0 % 1 0 % E f f e c t i n i n c o m e b e f o r e i n c o m e t a x 2 0 0 9 2 0 1 0 ( I n T h o u s a n d s ) ( = P 2 1 , 7 9 5 ) P = 2 1 , 7 9 5 ( 1 1 5 , 1 4 5 ) 1 1 5 , 1 4 5 ( 1 2 , 8 2 1 ) 1 2 , 8 2 1

T h e r e i s n oo t h e r i m p a c t o nt h e G r o u p s e q u i t yo t h e r t h a nt h o s e a l r e a d ya f f e c t i n gt h e p r o f i t a n d l o s s . F o r e i g n c u r r e n c y r i s k F o r e i g nc u r r e n c yr i s ki s t h e r i s kt h a t t h e f a i r v a l u e o r f u t u r e c a s hf l o w s o f a f i n a n c i a l i n s t r u m e n t w i l l f l u c t u a t e b e c a u s e o f c h a n g e s i n f o r e i g n e x c h a n g e r a t e s . T h eG r o u p sf o r e i g nc u r r e n c yr i s kr e l a t e st oi t sU S $ d e n o m i n a t e dc a s ha n dc a s he q u i v a l e n t s . Ma n a g e m e n t c l o s e l ym o n i t o r s t h e f l u c t u a t i o n s i ne x c h a n g e r a t e s s oa s t oa n t i c i p a t e t h e i m p a c t o f f o r e i g nc u r r e n c yr i s k s a s s o c i a t e dw i t ht h ef i n a n c i a l i n s t r u m e n t s .T h eG r o u pc u r r e n t l yd o e s n o t e n t e r i n t o d e r i v a t i v e t r a n s a c t i o n s t o h e d g e i t s c u r r e n c y e x p o s u r e . T h e G r o u p s f o r e i g nc u r r e n c yd e n o m i n a t e da s s e t c o n s i s t o f c a s hi nb a n k s i nU S $a m o u n t i n gt o U S $ 0 . 3m i l l i o ni n 2 0 1 0a n d $ 0 . 8m i l l i o ne a c hi n 2 0 0 9a n d 2 0 0 8 .A s o f J u n e 3 0 , 2 0 1 0 , 2 0 0 9a n d 2 0 0 8 , t h e e x c h a n g e r a t e s w e r e = P 4 6 . 3 , = P 4 8 . 1 a n d = P 4 4 . 9 p e r U S $ 1 . 0 0 , r e s p e c t i v e l y . N e tf o r e i g ne x c h a n g eg a i n so rl o s s e sr e c o g n i z e di nt h ec o n s o l i d a t e ds t a t e m e n t so fi n c o m e a m o u n t e dt oP = 2 . 8m i l l i o ng a i n , = P 8 . 8m i l l i o ng a i na n d= P 7 . 2m i l l i o nl o s s i n2 0 1 0 , 2 0 0 9a n d2 0 0 8 , r e s p e c t i v e l y . S h o w nb e l o wi st h ei m p a c t o nt h eG r o u p si n c o m eb e f o r ei n c o m et a xo f r e a s o n a b l yp o s s i b l e c h a n g e s i n e x c h a n g e r a t e o f t h e U S $ a g a i n s t t h e P h i l i p p i n e p e s o a s o f J u n e 3 0 : Mo v e m e n t i N e t e f f e c n t U S $ P h i l i p p i n i n c o m e b e f o r e n e i p e s o e x c h a n g e r a t i n c o m e t a e s x ( I n T h o u s a n d s ) + 8 . 3 8 , 5 % ( P = 9 2 4 ) 8 . 3 8 , 5 % 9 2 4 + 5 . ( 2 , 0 0 % 6 1 4 ) 5 . 0 0 % 2 , 6 1 4

2 0 1 0 2 0 0 9

T h e r e i s n oo t h e r i m p a c t o nt h e G r o u p s e q u i t yo t h e r t h a nt h o s e a l r e a d ya f f e c t i n gt h e p r o f i t a n d l o s s .

* S G V M C 3 1 0 9 6 2 *

5 4 F a i r V a l u e s T h ef o l l o w i n gi s ac o m p a r i s o nb yc a t e g o r yo f c a r r y i n ga m o u n t s a n df a i r v a l u e s o f t h e G r o u p s f i n a n c i a l i n s t r u m e n t s t h a t a r e r e f l e c t e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f J u n e 3 0 :
C a r r y i n g V a l u e F i n a n c i a l a s s e t s : C a s h o n h a n d L o a n s a n d r e c e i v a b l e s : C a s h i n b a n k s a n d t i m e d e p o s i t s T r a d e r e c e i v a b l e s A d v a n c e s t o r e l a t e d p a r t i e s A d v a n c e s t o e m p l o y e e s O t h e r r e c e i v a b l e s F i n a n c i a l l i a b i l i t i e s : O t h e r f i n a n c i a l l i a b i l i t i e s : A c c o u n t s p a y a b l e a n da c c r u e d e x p e n s e s : T r a d e p a y a b l e s A c c r u e d a n d o t h e r l i a b i l i t i e s D u e t o p l a n t e r s O t h e r l i a b i l i t i e s D i v i d e n d s p a y a b l e S h o r t t e r mb o r r o w i n g s C u r r e n t p o r t i o n o f l o n g t e r mb o r r o w i n g s L o n g t e r mb o r r o w i n g s n e t o f c u r r e n t p o r t i o n P = 1 , 9 3 7 1 7 4 , 8 9 0 6 7 8 , 3 0 1 4 9 , 0 2 2 4 0 , 7 1 0 2 4 , 6 6 4 P = 9 6 9 , 5 2 4 2 0 1 0 C a r r y i n g F a i r V a l u e V a l u e ( I n T h o u s a n d s ) = P 3 , 3 8 2 2 8 3 , 2 8 0 7 4 9 , 9 4 8 2 0 1 , 4 2 3 3 7 , 5 4 2 4 8 , 1 3 0 = P 1 , 3 2 3 , 7 0 5 2 0 0 9 F a i r V a l u e = P 3 , 3 8 2 2 8 3 , 2 8 0 7 4 9 , 9 4 8 2 0 1 , 4 2 3 3 7 , 5 6 1 4 8 , 1 3 0 = P 1 , 3 2 3 , 7 2 4

P = 1 , 9 3 7 1 7 4 , 8 9 0 6 7 8 , 3 0 1 4 9 , 0 2 2 4 0 , 6 1 6 2 4 , 6 6 4 P = 9 6 9 , 4 3 0

P = 1 3 1 , 4 8 8 2 1 6 , 4 4 2 1 8 , 8 5 7 1 6 8 , 2 0 5 1 6 , 0 6 9 2 , 4 4 9 , 9 0 4 5 1 , 7 2 4 5 , 6 8 2 , 5 8 4 P = 8 , 7 3 5 , 2 7 3

P = 1 3 1 , 4 8 8 2 1 6 , 4 4 2 1 8 , 8 5 7 1 6 8 , 2 0 5 1 6 , 0 6 9 2 , 4 4 9 , 9 0 4 5 1 , 7 2 4 5 , 6 9 0 , 6 9 3 P = 8 , 7 4 3 , 3 8 2

P = 3 0 5 , 7 0 4 1 8 1 , 3 0 1 4 7 , 8 7 4 1 8 8 , 0 1 3 4 1 , 0 7 4 2 , 9 3 7 , 0 0 0 3 , 0 7 5 , 9 7 3 P = 6 , 7 7 6 , 9 3 9

P = 3 0 5 , 7 0 4 1 8 1 , 3 0 1 4 7 , 8 7 4 1 8 8 , 0 1 3 4 1 , 0 7 4 2 , 9 3 7 , 0 0 0 3 , 0 6 7 , 6 2 0 P = 6 , 7 6 8 , 5 8 6

T h ef o l l o w i n gm e t h o d sa n da s s u m p t i o n sa r eu s e dt oe s t i m a t et h ef a i rv a l u eo fe a c hc l a s so f f i n a n c i a l i n s t r u m e n t s : C a s ha n dc a s he q u i v a l e n t s , t r a d er e c e i v a b l e s , a d v a n c e s t oe m p l o y e e s a n dr e l a t e dp a r t i e s , o t h e r r e c e i v a b l e s , a c c o u n t s p a y a b l e a n da c c r u e de x p e n s e s , d i v i d e n d s p a y a b l e , s h o r t t e r mb o r r o w i n g s , a n dc u r r e n tp o r t i o no fl o n g t e r mb o r r o w i n g s .T h ec a r r y i n ga m o u n t so ft h e s ei n s t r u m e n t s a p p r o x i m a t e f a i r v a l u e s d u e t o t h e i r s h o r t t e r mm a t u r i t i e s . L o n g t e r mb o r r o w i n g s f i x e di n t e r e s t b e a r i n gl o a n s .T h ef a i r v a l u e s a r eb a s e do nt h ee x p e c t e d c a s h f l o w s o n t h e i n s t r u m e n t s , d i s c o u n t e d u s i n gt h e p r e v a i l i n gi n t e r e s t r a t e s o f 7 . 8 %a n d6 . 9 %a t J u n e 3 0 , 2 0 1 0a n d2 0 0 9r e s p e c t i v e l y , f o r c o m p a r a b l e i n s t r u m e n t s i nt h e m a r k e t .T h e r a t e s w e r e o b t a i n e df r o mB a n g k oS e n t r a l n gP i l i p i n a s , r e p r e s e n t i n gb a n ka v e r a g e l e n d i n gr a t e s i n2 0 1 0a n d 2 0 0 9 . L o n g t e r mb o r r o w i n g s v a r i a b l ei n t e r e s tb e a r i n gl o a n s .T h ec a r r y i n gv a l u eo ft h ef i n a n c i a l i n s t r u m e n t a p p r o x i m a t e s t h e f a i r v a l u e a t J u n e 3 0 , 2 0 0 9 d u e t o q u a r t e r l y r e p r i c i n g o f i n t e r e s t r a t e s . T h e G r o u p s f i n a n c i a l i n s t r u m e n t s r e c o r d e d a t f a i r v a l u e h a v e t h e f o l l o w i n g h i e r a r c h y l e v e l s :  L e v e l 1 a t q u o t e d p r i c e s i n a c t i v e m a r k e t s ;  L e v e l 2 a t i n p u t s o t h e r t h a n q u o t e d p r i c e s i n c l u d e dw i t h i n L e v e l 1 t h a t a r e o b s e r v a b l e f o r t h e a s s e t o r l i a b i l i t y , e i t h e r d i r e c t l y o r i n d i r e c t l y ; a n d  L e v e l 3 a t i n p u t s t h a t a r e n o t b a s e d o n o b s e r v a b l e m a r k e t d a t a . T h e G r o u p d i d n o t h o l d a n y f i n a n c i a l i n s t r u m e n t s c a r r i e d a t f a i r v a l u e .

* S G V M C 3 1 0 9 6 2 *

5 5 2 7 . S e g m e n t R e p o r t i n g T h e G r o u p s i d e n t i f i e d o p e r a t i n g s e g m e n t s , w h i c h a r e c o n s i s t e n t w i t h t h e s e g m e n t s r e p o r t e d t o t h e s e n i o r m a n a g e m e n t , a r e a s f o l l o w s : a .R H I , a d i v e r s i f i e d h o l d i n g a n d i n v e s t m e n t c o r p o r a t i o n w i t h s p e c i f i c f o c u s o n s u g a r m i l l i n g a n d r e f i n i n gb u s i n e s s . I t p r o v i d e sm a n a g e m e n t s e r v i c e st oi t ss u b s i d i a r i e s , p a r t i c u l a r l yC A D P I , C A C I a n d R B C . b .C A D P I , w h i c h i s e n g a g e d i n t h e b u s i n e s s o f p r o d u c i n g , m a r k e t i n g a n d s e l l i n g r a wa n d r e f i n e d s u g a r , m o l a s s e s a n d o t h e r r e l a t e d p r o d u c t s o r b y p r o d u c t s a n d o f f e r s t o l l i n g s e r v i c e s t o t r a d e r s a n d p l a n t e r s . I t h a s a r a ws u g a r m i l l i n g a n dr e f i n e r y p l a n t l o c a t e di n N a s u g b u , B a t a n g a s w i t h d a i l yc a n ec a p a c i t yo f1 3 , 0 0 0m e t r i ct o n sa so fJ u n e3 0 ,2 0 1 0a n d2 0 0 9 ,r e s p e c t i v e l y . C A D P I s r a ws u g a r m i l l i n g i s i n v o l v e d i n t h e e x t r a c t i o n o f j u i c e s f r o mt h e c a n e s t o f o r ms w e e t g r a n u l a rs u g a r w h i c hi sl i g h t b r o w nt oy e l l o w i s hi nc o l o r .C a n e sa r es o u r c e df r o mb o t h d i s t r i c ta n dn o n d i s t r i c tp l a n t e r sa n da r em i l l e db yC A D P Iu n d e rap r o d u c t i o ns h a r i n g a g r e e m e n t ( s e e N o t e 1 6 ) . T h e r e f i n e r y o p e r a t i o n , o n t h e o t h e r h a n d , i n v o l v e s t h e p r o c e s s i n g o f r a ws u g a r ( m i l l s h a r e a n dp u r c h a s e d ) i n t or e f i n e ds u g a r , al u s t r o u s w h i t e c o l o r e ds u g a r .T o e n s u r em a x i m u mu t i l i z a t i o no ft h er e f i n e r y ,C A D P Ia l s oo f f e r st o l l i n gs e r v i c e s ,w h i c h c o n v e r t s r a ws u g a r o w n e db yp l a n t e r s a n dt r a d e r s i n t or e f i n e ds u g a r i nc o n s i d e r a t i o nf o r a t o l l i n g f e e . c .C A C I , w h i c h p r o d u c e s r a ws u g a r a n d m o l a s s e s a n d t o t r a d e t h e s a m e o n w h o l e s a l e / r e t a i l b a s i s . I t a l s os e l l s r e f i n e ds u g a r u p o nt o l l i n gi t s r a ws u g a r w i t ho t h e r s u g a r m i l l s . I t s s u g a r m i l l i n g p l a n t , w h i c h h a s a s i m i l a r p r o c e s s w i t h C A D P I a n d h a s a d a i l y c a n e c a p a c i t y o f 1 3 , 0 0 0 m e t r i c t o n s a s o f J u n e 3 0 , 2 0 1 0 a n d 2 0 0 9 , i s l o c a t e d i n L a C a r l o t a , N e g r o s O c c i d e n t a l . d .R B C , e s t a b l i s h e d t o e n g a g e i n t h e b u s i n e s s o f p r o d u c i n g , m a r k e t i n g a n d s e l l i n g o f b i o e t h a n o l f u e l , b o t h h y d r o u s a n d a n h y d r o u s p r o d u c t s f r o ms u g a r c a n e a n d r e l a t e d r a wm a t e r i a l s . I t s p l a n t f a c i l i t y i s l o c a t e d i n L a C a r l o t a , N e g r o s O c c i d e n t a l . e .C F S I , e s t a b l i s h e dt oe n g a g ei nt h eb u s i n e s so f t r a n s p o r t i n gs u g a rc a n e , s u g a ra n di t sb y p r o d u c t si n c l u d i n ga l lk i n d so fc o m m e r c i a lc a r g o e st oa n df r o ms u g a rf a c t o r i e s ,s u g a r r e f i n e r i e s , m i l l s i t e so rw a r e h o u s e sa n d / o rs i m i l a re s t a b l i s h m e n t sb yl a n d .C F S Ic u r r e n t l y c a t e r sv a r i o u sp l a n t e r si nB a t a n g a s ,N e g r o s ,a n do t h e rp r o v i n c i a la r e a si nV i s a y a sa n d S o u t h e r n L u z o n . O t h e r s e g m e n t so f t h eG r o u pw h i c ha r en o t r e p o r t e ds e p a r a t e l yp e r t a i nm a i n l yt oc o n s u l t a n c y b u s i n e s s , d e a l e r a n d t r a d e r o f a g r i c u l t u r a l p r o d u c t s a n d p r e o p e r a t i n g c o m p a n i e s . T h e G r o u ph a s o n l yo n eg e o g r a p h i c a l s e g m e n t a s a l l o f i t s a s s e t s a r e l o c a t e di nt h e P h i l i p p i n e s . T h eG r o u po p e r a t e sa n dd e r i v e sp r i n c i p a l l ya l l o f i t sr e v e n u ef r o md o m e s t i co p e r a t i o n s . T h u s , g e o g r a p h i c a l b u s i n e s s i n f o r m a t i o n i s n o t r e q u i r e d . T h e C o m p a n y s s e n i o r m a n a g e m e n t r e g u l a r l y r e v i e w s t h e o p e r a t i n g r e s u l t s o f t h e b u s i n e s s u n i t s t o m a k ed e c i s i o n so nr e s o u r c ea l l o c a t i o na n da s s e s s p e r f o r m a n c e .S e g m e n t r e v e n u ea n ds e g m e n t e x p e n s e s a r e m e a s u r e di n a c c o r d a n c e w i t h P F R S .T h e p r e s e n t a t i o n a n d c l a s s i f i c a t i o no f s e g m e n t r e v e n u e sa n ds e g m e n te x p e n s e sa r ec o n s i s t e n tw i t ht h ec o n s o l i d a t e ds t a t e m e n to fi n c o m e . F i n a n c i n g c o s t s ( i n c l u d i n g i n t e r e s t e x p e n s e ) a n d i n c o m e t a x e s a r e m a n a g e d o n p e r c o m p a n y b a s i s a n d a r e n o t a l l o c a t e d t o o p e r a t i n g s e g m e n t s .

* S G V M C 3 1 0 9 6 2 *

5 6 F u r t h e r , t h em e a s u r e m e n t o f t h es e g m e n t si st h es a m ea st h o s ed e s c r i b e di nt h es u m m a r yo f s i g n i f i c a n ta c c o u n t i n ga n df i n a n c i a l r e p o r t i n gp o l i c i e s ,e x c e p tf o rR H Ii n v e s t m e n tp r o p e r t i e s w h i c ha r ec a r r i e da t d e e m e dc o s t i nt h ep a r e n t c o m p a n yf i n a n c i a l s t a t e m e n t s s i n c ea d o p t i o no f P A S4 0 , I n v e s t m e n t P r o p e r t y .R H I si n v e s t m e n t p r o p e r t y , w h i c hi sb e i n gl e a s e do u t t oi t s s u b s i d i a r y , i s r e c l a s s i f i e dt op r o p e r t y , p l a n t a n de q u i p m e n t a n da d j u s t e da t t h e c o n s o l i d a t e dl e v e l t o r e f l e c t i t s f a i r v a l u e . a .S e g m e n t r e v e n u e a n d e x p e n s e s T h eG r o u p sm a i nr e v e n u es t r e a mc o m e s f r o mt h es a l eo f r a ws u g a r , m o l a s s e s a n dr e f i n e d s u g a r .I t s c u s t o m e r s c o n s i s t l a r g e l yo f s u g a r t r a d e r s , w h o l e s a l e r s a n db e v e r a g ec o m p a n i e s , w h i c ha r e s i t u a t e di nv a r i o u s p a r t s o f t h e P h i l i p p i n e s , w i t hc o n c e n t r a t i o ni nt h e V i s a y a s a n d Me t r o Ma n i l a . R e v e n u e f r o mt w o m a j o r c u s t o m e r s a m o u n t e d t o = P 1 , 0 0 5 . 0 m i l l i o n a n d = P 6 7 6 . 0 m i l l i o n i n 2 0 1 0 a n d = P 1 , 0 0 4 . 0 m i l l i o n a n d P = 6 2 6 . 0 m i l l i o n i n 2 0 0 9 , w h i c h p e r t a i n t o s a l e s o f C A D P I . b .S e g m e n t a s s e t s a n d l i a b i l i t i e s S e g m e n t a s s e t si n c l u d ea l l o p e r a t i n ga s s e t su s e db yas e g m e n t a n dc o n s i s t p r i n c i p a l l yo f o p e r a t i n gc a s h , r e c e i v a b l e s , i n v e n t o r i e s , p r e p a y m e n t s a n dp r o p e r t y , p l a n t a n de q u i p m e n t , n e t o f r e l a t e da c c u m u l a t e dd e p r e c i a t i o n .S e g m e n t l i a b i l i t i e s i n c l u d e a l l o p e r a t i n gl i a b i l i t i e s a n d c o n s i s t p r i n c i p a l l yo f t r a d e p a y a b l e s , a c c r u a l s a n dc u s t o m e r s d e p o s i t s .S e g m e n t s a s s e t s a n d l i a b i l i t i e s d o n o t i n c l u d e d e f e r r e d i n c o m e t a x e s . c .I n t e r s e g m e n t t r a n s f e r s S e g m e n t r e v e n u e , e x p e n s e s a n dr e s u l t si n c l u d et r a n s f e r s b e t w e e nb u s i n e s s s e g m e n t s .S u c h t r a n s f e r s a r e a c c o u n t e df o r a t c o m p e t i t i v e m a r k e t p r i c e s c h a r g e d t o u n r e l a t e d c u s t o m e r s o r b y s u p p l i e r s f o r s i m i l a r g o o d s o r s e r v i c e s . T h e f o l l o w i n g t a b l e s p r e s e n t i n f o r m a t i o n a b o u t t h e G r o u p s o p e r a t i n g s e g m e n t s : A s o f a n d f o r t h e y e a r e n d e d J u n e 3 0 , 2 0 1 0 :
E l i mi n a t i o n s A l l a n d O t h e r s A d j u s t me n t sC o n s o l i d a t e d

R H I R e v e n u e E x t e r n a l c u s t o m e r s R e f i n e d s u g a r R a ws u g a r T o l l i n g f e e s Mo l a s s e s O t h e r s I n t e r s e g m e n t C o s t s a n de x p e n s e s I n t e r e s t i n c o m e I n t e r e s t e x p e n s e O t h e r s I n c o m e ( l o s s ) b e f o r e i n c o m e t a x P r o v i s i o n f o r i n c o m e t a x S e g me n t p r o f i t ( l o s s ) E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e C o n s o l i d a t e d p r o f i t ( l o s s ) ( F o r w a r d )

C A D P I

C A C I

R B C C F S I ( I n T h o u s a n d s ) P = ( 3 1 , 5 0 3 ) 6 8 4 ( 5 , 7 0 3 ) 1 , 2 1 9 ( 3 5 , 3 0 3 ) ( 1 9 ) ( 3 5 , 3 2 2 ) ( P = 3 5 , 3 2 2 ) P = 2 1 , 3 0 2 2 1 , 3 0 2 2 1 , 3 0 2 ( 3 6 , 5 6 9 ) 1 4 ( 1 , 3 9 7 ) 7 0 ( 1 6 , 5 8 0 ) 4 , 9 7 4 ( 1 1 , 6 0 6 ) ( P = 1 1 , 6 0 6 )

P = = P 3 , 5 9 3 , 6 2 9 = P 1 2 2 , 5 7 7 1 4 2 , 9 2 7 1 , 6 9 0 , 7 8 7 2 9 0 , 2 6 8 2 5 8 , 7 6 8 5 7 , 5 9 6 3 , 0 0 0 4 , 2 8 8 , 5 9 2 1 , 8 7 0 , 9 6 0 2 3 5 , 4 5 4 6 2 , 6 7 6 6 6 6 , 1 6 0 2 3 5 , 4 5 4 4 , 3 5 1 , 2 6 8 2 , 5 3 7 , 1 2 0 ( 1 3 5 , 6 5 5 4 , 1 3 6 , 0 7 9 2 , 4 5 6 , 5 9 6 ) ( ) ( ) 1 , 2 1 7 6 9 2 3 , 5 7 7 ( 6 1 , 4 5 4 1 2 1 , 7 5 7 1 3 5 , 5 3 6 ) ( ) ( ) 4 6 2 2 0 7 , 3 6 9 7 9 , 7 6 4 4 0 , 0 2 4 3 0 1 , 4 9 3 2 8 , 3 2 9 9 , 4 0 5 ( 9 1 , 3 5 9 ) ( 8 , 4 9 4 ) 4 9 , 4 2 9 2 1 0 , 1 3 4 1 9 , 8 3 5 = P 4 9 , 4 2 9 = P 2 1 0 , 1 3 4 = P 1 9 , 8 3 5

= P 2 0 , 2 3 5 1 , 8 7 1 7 2 2 , 1 1 3 4 , 5 3 8 2 6 , 6 5 1 ( 2 4 , 4 7 9 ) 2 0 7 ( 6 8 9 ) 1 4 , 5 3 7 1 6 , 2 2 7 ( 2 8 8 ) 1 5 , 9 3 9 = P 1 5 , 9 3 9

P = P = 3 , 7 1 6 , 2 0 6 1 , 8 5 3 , 9 4 9 2 9 0 , 2 6 8 3 1 8 , 2 3 5 2 4 , 3 0 9 6 , 2 0 2 , 9 6 7 ( 9 6 8 , 8 2 8 ) ( 9 6 8 , 8 2 8 ) 6 , 2 0 2 , 9 6 7 8 9 7 , 8 6 6 ( 5 , 9 2 3 , 0 1 5 ) ( 6 8 1 5 , 7 1 0 ) 7 , 0 5 6 ( 3 1 9 , 4 8 0 ) ( 6 , 7 7 0 ) 2 9 6 , 6 5 1 ( 7 1 , 3 5 7 ) 2 6 2 , 8 3 3 2 , 1 2 5 ( 8 3 , 6 5 6 ) ( 6 9 , 2 3 2 1 7 9 , 1 7 7 ) 1 3 2 , 2 6 3 1 3 2 , 2 6 3 = P 6 3 , 0 3 1 = P 3 1 1 , 4 4 0

* S G V M C 3 1 0 9 6 2 *

5 7 E l i mi n a t i o n s A l l a n d O t h e r s A d j u s t me n t sC o n s o l i d a t e d

R H I O t h e r I n f o r ma t i o n Ma j o r c o s t s a n d e x p e n s e s D e p r e c i a t i o n a n d a m o r t i z a t i o n F u e l a n d o i l Ma t e r i a l s a n d c o n s u m a b l e s R e p a i r s a n d m a i n t e n a n c e A d d i t i o n s t o n o n c u r r e n t a s s e t s P r o p e r t y , p l a n t a n d e q u i p m e n t O t h e r n o n c u r r e n t a s s e t s I n v e s t m e n t i n a s s o c i a t e A s s e t s a n dL i a b i l i t i e s C u r r e n t a s s e t s N o n c u r r e n t a s s e t s T o t a l a s s e t s C u r r e n t l i a b i l i t i e s N o n c u r r e n t l i a b i l i t i e s T o t a l l i a b i l i t i e s

C A D P I

C A C I

R B C C F S I ( I n T h o u s a n d s ) = P 2 , 5 8 1 = P 4 , 4 2 9 4 3 0 6 4 1 , 7 0 3 6 3 , 6 5 5 = P 5 7 2 = P 1 1 , 9 3 2 8 , 5 9 1 2 1 , 1 2 6 P = 5 1 , 0 4 3 2 6 , 0 8 6 = P 7 7 , 1 2 9 = P 9 0 , 1 4 4 = P 9 0 , 1 4 4

= P 3 , 7 2 3 = P 5 , 3 0 8 1 , 1 5 6 2 9 , 2 0 4 3 , 3 7 2 = P 3 6 0 , 2 6 9 5 , 7 2 6 , 9 8 4 = P 6 , 0 8 7 , 2 5 3 = P 3 6 8 , 6 5 7 1 , 1 5 9 , 4 5 3 = P 1 , 5 2 8 , 1 1 0

P = 2 0 7 , 8 7 7 3 8 5 , 9 0 6 = P 2 0 3 , 9 8 2 2 0 7 , 1 6 4 1 , 2 8 5 , 9 8 9

= P 1 9 1 , 9 4 3 2 2 , 9 9 4 = P 7 9 , 3 2 8 1 6 9 , 5 4 0 1 , 4 8 8 , 3 0 3 9 , 3 8 5

= P 3 2 9 = P 6 5 6 6 1 4 3 P = 4 4 , 9 2 9 1 7 3 , 6 3 6 = P 2 1 8 , 5 6 5 = P 7 2 , 7 0 1 5 1 , 4 8 1 = P 1 2 4 , 1 8 2

P = = P ( 9 0 2 , 0 8 4 ) ( 5 8 , 9 9 7 )

P = 4 0 7 , 0 2 5 4 0 8 , 9 0 0 = P 3 0 5 , 0 4 4 3 8 6 , 9 4 7 2 , 5 6 4 , 3 8 4 1 7 , 4 1 5 6 1 8 , 3 2 2

P = 3 , 7 3 0 , 0 4 7 = P 9 0 6 , 9 0 5 = P 2 9 4 , 4 3 3 4 , 4 9 0 , 2 2 5 3 , 9 9 4 , 7 8 8 1 , 2 3 3 , 2 5 8 = P 8 , 2 2 0 , 2 7 2 = P 4 , 9 0 1 , 6 9 3 = P 1 , 5 2 7 , 6 9 1 = P 2 , 1 5 4 , 7 1 3 P = 1 , 3 2 6 , 6 6 6 P = 1 , 5 1 2 , 2 7 3 3 , 3 6 1 , 8 8 6 1 , 7 2 4 , 6 0 5 = P 5 , 5 1 6 , 5 9 9 P = 3 , 0 5 1 , 2 7 1 P = 1 , 5 1 2 , 2 7 3

( = P 2 , 2 7 5 , 7 4 5 )P = 3 , 1 1 1 , 8 8 1 ( 3 , 0 7 1 , 6 4 3 ) 1 2 , 5 7 3 , 3 3 4 ( = P 5 , 3 4 7 , 3 8 8 )P = 1 5 , 6 8 5 , 2 1 5 ( P = 2 , 2 7 5 , 6 7 5 ) P = 3 , 2 4 9 , 4 7 9 1 5 1 , 4 0 6 6 , 4 4 8 , 8 3 1 ( P = 2 , 1 2 4 , 2 6 9 ) P = 9 , 6 9 8 , 3 1 0

A s o f a n d f o r t h e y e a r e n d e d J u n e 3 0 , 2 0 0 9 :
R H I R e v e n u e E x t e r n a l c u s t o m e r s R e f i n e d s u g a r R a ws u g a r T o l l i n g f e e s Mo l a s s e s O t h e r s I n t e r s e g m e n t C A D P G C C A D P I C A C I R B C ( I n T h o u s a n d s ) P = ( 1 9 , 7 7 6 ) 2 3 5 ( 4 , 3 1 4 ) ( 2 3 , 8 5 5 ) ( 4 , 4 1 2 ) ( 2 8 , 2 6 7 ) ( = P 2 8 , 2 6 7 ) C F S I

E l i m i n a t i o n s A l l a n d O t h e r s A d j u s t m e n t s C o n s o l i d a t e d

C o s t s a n d e x p e n s e s I n t e r e s t i n c o m e I n t e r e s t e x p e n s e O t h e r s I n c o m e ( l o s s ) b e f o r e i n c o m e t a x 1 2 1 , 4 6 1 P r o v i s i o n f o r i n c o m e t a x 8 , 2 2 0 2 9 , 6 8 1 S e g me n t p r o f i t ( l o s s ) 1 E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e C o n s o l i d a t e d p r o f i t = P 1 2 9 , 6 8 1 ( l o s s ) O t h e r I n f o r ma t i o n Ma j o r c o s t s a n d e x p e n s e s D e p r e c i a t i o n a n d a m o r t i z a t i o n = P 1 , 0 8 3 F u e l a n d o i l Ma t e r i a l s a n d c o n s u m a b l e s 3 , 6 9 7 R e p a i r s a n d m a i n t e n a n c e 5 1 4 A d d i t i o n s t o n o n c u r r e n ta s s e t s P r o p e r t y , p l a n t a n d e q u i p m e n t 1 0 , 8 2 4 O t h e r n o n c u r r e n t a s s e t s 4 , 6 3 3 I n v e s t m e n t i n a s s o c i a t e A s s e t s a n d L i a b i l i t i e s C u r r e n t A s s e t s = P 3 5 1 , 0 8 9 N o n c u r r e n t A s s e t s 5 , 7 0 7 , 6 8 3 T o t a l A s s e t s = P 6 , 0 5 8 , 7 7 2 C u r r e n t L i a b i l i t i e s = P 3 7 8 , 6 6 6 N o n c u r r e n t L i a b i l i t i e s 1 , 1 7 0 , 3 9 3 T o t a l L i a b i l i t i e s = P 1 , 5 4 9 , 0 5 9

P = 2 6 8 , 8 1 6 2 6 8 , 8 1 6 ( 9 4 , 8 6 9 ) 1 , 1 7 7 ( 5 6 , 9 0 8 ) 3 , 2 4 5

P = = P 2 , 9 4 5 , 3 5 2 = P 3 5 8 , 9 4 8 2 2 7 , 2 9 5 1 , 6 6 2 , 3 4 6 3 5 6 , 4 6 4 1 9 7 , 1 6 6 9 4 , 7 7 5 3 , 7 2 6 , 2 7 7 2 , 1 1 6 , 0 6 9 1 2 4 , 7 7 4 1 7 8 , 4 6 4 1 5 7 , 9 6 7 1 2 4 , 7 7 4 3 , 9 0 4 , 7 4 1 2 , 2 7 4 , 0 3 6 ( 3 8 , 9 1 6 ) ( 3 , 6 6 0 , 7 5 5 ) ( 2 , 2 0 0 , 9 6 0 ) 8 2 2 1 , 2 2 5 3 , 6 7 2 ( 4 5 , 0 7 3 ) ( 3 2 , 8 8 0 ) 1 6 7 3 5 , 4 8 5 3 8 , 7 6 9 8 6 , 8 4 7 ( 6 7 , 2 0 4 ) 1 9 , 6 4 3 = P 1 9 , 6 4 3 2 3 5 , 6 2 3 ( 8 3 , 5 7 0 ) 1 5 2 , 0 5 3 = P 1 5 2 , 0 5 3 8 2 , 6 3 7 ( 2 6 , 6 1 5 ) 5 6 , 0 2 2 = P 5 6 , 0 2 2

P = 1 , 2 6 8 1 , 2 6 8 1 , 2 6 8 ( 2 , 9 0 3 ) 1 ( 1 7 ) ( 1 ) ( 1 , 6 5 2 ) ( 1 , 6 5 2 ) ( = P 1 , 6 5 2 )

= P 1 9 , 4 6 9 1 , 5 0 9 2 6 2 1 , 0 0 4 6 , 3 8 8 2 7 , 3 9 2 ( 4 2 , 9 2 2 ) 3 0 6 ( 1 , 4 9 1 ) 8 , 9 9 2 ( 7 , 7 2 3 ) 3 1 6 ( 7 , 4 0 7 ) ( = P 7 , 4 0 7 )

P = = P 3 , 3 0 4 , 3 0 0 1 , 9 0 9 , 1 1 0 3 5 6 , 4 6 4 2 9 3 , 4 5 0 1 , 2 9 4 5 , 8 6 4 , 6 1 8 ( 7 3 6 , 4 0 9 ) ( 7 3 6 , 4 0 9 ) 5 , 8 6 4 , 6 1 8 4 8 5 , 0 3 1 ( 5 , 5 7 6 , 0 7 0 ) 7 , 4 3 8 3 , 0 3 5 ( 1 3 3 , 3 3 4 ) ( 6 , 6 4 0 ) 7 5 , 7 0 3 ( 2 5 4 , 9 8 3 ) ( 2 , 1 2 5 ) ( 2 5 7 , 1 0 8 ) 7 9 , 5 6 4 ( = P 1 7 7 , 5 4 4 ) 2 3 8 , 3 5 5 ( 1 7 5 , 3 9 0 ) 6 2 , 9 6 5 7 9 , 5 6 4 = P 1 4 2 , 5 2 9

= P 1 0 2 5 , 3 5 5 6 7 0

P = 1 7 8 , 2 0 3 2 3 0 , 2 8 2 2 0 2 , 8 2 1 2 2 6 , 7 1 1

= P 1 2 3 , 4 6 0 2 0 , 6 8 1 7 2 , 5 7 1 1 4 7 , 6 0 6

= P 1 , 3 6 1 3 , 3 9 9 8 1 8

P = 7 8 2

= P 2 1 7 4 2 2 5

P =

P = 3 0 4 , 4 2 6 2 5 0 , 9 6 3 2 8 7 , 9 6 3 3 7 6 , 3 4 6

P = = P = P P =

1 , 6 8 9 , 7 5 9 3 , 5 1 8 P = 3 , 5 3 1 , 2 9 1 3 , 4 2 1 , 0 6 7 = P 6 , 9 5 2 , 3 5 8 = P 2 , 6 3 5 , 9 3 1 1 , 8 2 2 , 8 8 8 = P 4 , 4 5 8 , 8 1 9

1 , 0 2 5 , 8 9 2 1 0 , 1 4 5 P = 1 , 0 4 9 , 3 9 6 2 , 7 0 0 , 2 3 0 = P 3 , 7 4 9 , 6 2 6 = P 1 , 2 7 3 , 1 2 8 6 4 6 , 1 0 0 = P 1 , 9 1 9 , 2 2 8

5 3 2 , 9 6 9 P = 6 9 , 3 6 9 6 1 5 , 4 1 3 = P 6 8 4 , 7 8 2 = P 6 3 4 , 0 4 3 4 , 3 7 9 = P 6 3 8 , 4 2 2

= P 2 , 4 6 4 5 5 5 = P 3 , 0 1 9 = P 4 , 4 2 8 = P 4 , 4 2 8

1 8 , 2 9 6

9 4 , 0 0 1

3 , 3 5 3 , 4 4 5 3 6 , 5 9 2 5 5 7 , 4 3 2

P = 1 2 3 , 5 4 4 ( = P 2 , 0 1 2 , 5 9 5 ) P = 3 , 1 1 4 , 5 5 8 2 2 9 , 9 1 3 ( 2 , 2 6 7 , 7 5 0 ) 1 0 , 4 0 7 , 1 1 1 = P 3 5 3 , 4 5 7 ( = P 4 , 2 8 0 , 3 4 5 )P = 1 3 , 5 2 1 , 6 6 9 = P 1 6 5 , 1 5 1 ( = P 1 , 1 4 7 , 9 3 0 ) = P 3 , 9 4 3 , 4 1 7 6 8 , 7 3 6 = P 2 3 3 , 8 8 7 1 4 9 , 1 5 2 3 , 8 6 1 , 6 4 8 ( = P 9 9 8 , 7 7 8 ) = P 7 , 8 0 5 , 0 6 5

* S G V M C 3 1 0 9 6 2 *

5 8 A s o f a n d f o r t h e y e a r e n d e d J u n e 3 0 , 2 0 0 8 :
R H I C A D P G C R e v e n u e E x t e r n a l c u s t o m e r s R e f i n e d s u g a r R a ws u g a r Mo l a s s e s T o l l i n g f e e s O t h e r s I n t e r s e g m e n t C A D P I C A C I R B C C F S I ( I n T h o u s a n d s ) P = ( 3 7 3 ) ( 3 7 3 ) ( 3 7 3 ) ( = P 3 7 3 ) P = ( 3 8 ) ( 3 8 ) ( 3 8 ) ( = P 3 8 ) ( = P 4 , 1 8 0 )

E l i m i n a t i o n s A l l a n d O t h e r s A d j u s t m e n t sC o n s o l i d a t e d

C o s t s a n d e x p e n s e s I n t e r e s t i n c o m e I n t e r e s t e x p e n s e O t h e r s I n c o m e ( l o s s ) b e f o r e i n c o m e t a x 1 6 2 , 9 8 9 2 7 2 , 6 7 0 4 7 5 , 3 0 3 6 9 , 1 0 5 P r o v i s i o n f o r i n c o m e t a x ( 8 , 9 0 5 ) ( 1 0 , 3 1 8 ) ( 1 7 1 , 4 8 5 ) ( 1 7 , 7 9 3 ) 1 5 4 , 0 8 4 2 6 2 , 3 5 2 3 0 3 , 8 1 8 5 1 , 3 1 2 S e g me n t p r o f i t ( l o s s ) E q u i t y i n n e t e a r n i n g s o f a n a s s o c i a t e C o n s o l i d a t e d p r o f i t = P 1 5 4 , 0 8 4 P = 2 6 2 , 3 5 2 = P 3 0 3 , 8 1 8 = P 5 1 , 3 1 2 ( l o s s ) O t h e r I n f o r ma t i o n Ma j o r c o s t s a n d e x p e n s e s D e p r e c i a t i o n a n d a m o r t i z a t i o n = P 5 2 8 = P 1 9 8 =1 P 6 9 , 2 9 3 = P 1 5 7 , 7 6 7 F u e l a n d o i l 1 6 2 , 7 9 7 1 1 , 6 1 9 Ma t e r i a l s a n d c o n s u ma b l e s 5 6 2 , 0 7 8 1 7 0 , 6 5 7 7 1 , 6 0 1 R e p a i r s a n d m a i n t e n a n c e 7 5 9 3 7 2 1 7 , 0 5 8 1 5 7 , 3 6 1 A d d i t i o n s t o n o n c u r r e n t a s s e t s P r o p e r t y , p l a n t a n d e q u i p m e n t 7 3 2 4 5 9 1 , 5 7 5 , 8 3 6 6 1 1 , 4 7 2 O t h e r n o n c u r r e n t a s s e t s 1 , 7 3 1 1 7 , 0 0 3 1 8 , 0 7 2 I n v e s t m e n t i n a s s o c i a t e A s s e t s a n dL i a b i l i t i e s C u r r e n t A s s e t s = P 1 8 1 , 1 8 4 P = 1 7 7 , 8 6 5 = P 1 , 7 0 4 , 7 8 4 = P 9 9 0 , 0 2 5 N o n c u r r e n t A s s e t s 4 , 0 8 5 , 1 9 7 4 , 1 2 4 , 2 9 0 2 , 8 1 5 , 6 9 3 1 , 8 2 3 , 9 8 3 T o t a l A s s e t s = P 4 , 2 6 6 , 3 8 1 P = 4 , 3 0 2 , 1 5 5 P = 4 , 5 2 0 , 4 7 7 = P 2 , 8 1 4 , 0 0 8 C u r r e n t L i a b i l i t i e s = P 4 7 1 , 1 2 5 P = 4 7 5 , 2 8 7 = P 9 7 5 , 8 4 8 = P 3 9 3 , 3 8 8 N o n c u r r e n t L i a b i l i t i e s 5 9 9 , 9 6 4 4 2 , 9 8 9 1 , 1 0 3 , 0 9 2 6 4 6 , 0 7 8 T o t a l L i a b i l i t i e s = P 1 , 0 7 1 , 0 8 9 P = 5 1 8 , 2 7 6 P = 2 , 0 7 8 , 9 4 0 P = 1 , 0 3 9 , 4 6 6

P = = P = P 3 , 2 4 1 , 7 1 7 = P 2 3 9 , 7 7 2 3 1 2 , 8 5 3 1 , 6 2 9 , 1 4 6 1 5 0 , 3 3 4 1 1 6 , 9 0 1 3 6 0 , 6 8 7 4 , 0 6 5 , 5 9 1 1 , 9 8 5 , 8 1 9 1 8 1 , 4 9 9 3 7 6 , 2 7 2 3 1 , 0 2 0 1 2 7 , 8 2 5 1 8 1 , 4 9 9 3 7 6 , 2 7 2 4 , 0 9 6 , 6 1 1 2 , 1 1 3 , 6 4 4 ( 1 9 , 1 0 8 ) ( 8 4 , 3 6 9 ) ( 3 , 6 1 9 , 7 7 1 ) ( 2 , 0 1 7 , 9 4 9 ) 5 , 4 5 4 1 , 6 8 2 1 0 , 4 8 7 3 , 2 2 6 ( 6 , 8 5 1 ) ( 2 0 , 8 8 1 ) ( 1 4 , 9 3 7 ) ( 7 7 , 4 6 2 ) 1 , 9 9 5 ( 3 4 ) 2 , 9 1 3 4 7 , 6 4 6

= P 1 6 , 1 3 6 1 , 3 7 6 8 , 6 2 2 2 6 , 1 3 4 9 , 5 7 4 3 5 , 7 0 8 ( 3 6 , 1 9 5 ) 2 2 4 ( 1 , 7 2 1 ) 9 7 ( 1 , 8 8 7 ) ( 2 , 2 9 3 ) ( 4 , 1 8 0 )

P = = P 3 , 4 8 1 , 4 8 9 1 , 9 5 8 , 1 3 5 2 6 8 , 6 1 1 3 6 0 , 6 8 7 8 , 6 2 2 6 , 0 7 7 , 5 4 4 ( 7 2 6 , 1 9 0 ) ( 7 2 6 , 1 9 0 ) 6 , 0 7 7 , 5 4 4 2 9 2 , 2 5 5 ( 5 , 4 8 5 , 5 4 8 ) ( 9 , 3 9 1 ) 1 1 , 6 8 2 6 1 , 7 7 2 ( 6 0 , 0 8 0 ) 5 2 , 6 1 7 ( 3 8 1 , 5 5 4 ) ( 3 8 1 , 5 5 4 ) 6 9 , 7 3 9 ( = P 3 1 1 , 8 1 5 ) 5 9 6 , 2 1 5 ( 2 1 0 , 7 9 4 ) 3 8 5 , 4 2 1 6 9 , 7 3 9 = P 4 5 5 , 1 6 0

P = 2 P = 6 7 1 0 0 = P 1 6 7 = P 4 7 8 = P 4 7 8

P = = P 2 8 9 = P 2 8 9 = P 4 7 = P 4 7

= P 3 1 7 9 3 1 0 4

P =

P = 3 2 8 , 1 0 3 1 7 4 , 4 1 6 2 4 4 , 4 8 7 3 7 5 , 5 3 5

5 , 2 3 9 3 , 6 4 2

2 , 1 9 3 , 7 3 8 4 0 , 4 4 8 5 4 6 , 3 8 8 P = 2 , 4 4 8 , 4 0 6 7 , 4 1 8 , 7 7 8 = P 9 , 8 6 7 , 1 8 4 = P 1 , 7 5 0 , 8 0 1 2 , 6 1 5 , 4 8 8 = P 4 , 3 6 6 , 2 8 9

P = 3 2 , 5 5 9 ( = P 6 3 8 , 3 6 7 ) 2 4 8 , 7 8 0 ( 5 , 6 7 9 , 2 6 5 ) = P 2 8 1 , 3 3 9 ( = P 6 , 3 1 7 , 6 3 2 ) = P 7 2 , 9 9 6 ( P = 6 3 8 , 3 6 8 ) 7 2 , 0 9 6 1 5 1 , 2 6 9 = P 1 4 5 , 0 9 2 ( = P 4 8 7 , 0 9 9 )

2 8 . O t h e r Ma t t e r R e g i s t r a t i o n w i t h t h e B o a r d o f I n v e s t m e n t s ( B O I ) O n O c t o b e r 2 4 , 2 0 0 8 , t h e B O I a p p r o v e d t h e r e g i s t r a t i o n o f R o x o l a s N e wP r o d u c e r o f B i o e t h a n o l ( A n h y d r o u s ) a n dP o t a b l e ( H y d r o u s ) E t h a n o l o na P i o n e e r S t a t u s u n d e r t h e O m n i b u s I n v e s t m e n t s C o d e o f 1 9 8 7 o r E x e c u t i v e O r d e r ( E . O . ) 2 2 6 . U n d e r t h e t e r m s o f i t s r e g i s t r a t i o n , R o x o l i s r e q u i r e d t oa c h i e v ec e r t a i np r o d u c t i o na n ds a l e s v o l u m ef o r b o t ha n h y d r o u s a n dh y d r o u se t h a n o l .A s a r e g i s t e r e de n t e r p r i s e , R o x o l i se n t i t l e dt oc e r t a i nt a xi n c e n t i v e s , w h i c hi n c l u d e , a m o n go t h e r s : ( 1 ) i n c o m et a xh o l i d a y( I T H ) o f s i xy e a r sf o r i t sa n h y d r o u se t h a n o l a n df o r f o u r y e a r sf o r i t s h y d r o u s e t h a n o l , f r o mJ a n u a r y 2 0 1 0 o r a c t u a l s t a r t o f c o m m e r c i a l o p e r a t i o n s , w h i c h e v e r i s e a r l i e r ; ( 2 ) e x t e n s i o no f I T Hp r o v i d e dt h a t t h ea g g r e g a t e dI T Ha v a i l m e n t d o e sn o t e x c e e de i g h t y e a r s , s u b j e c t t oc e r t a i nc o n d i t i o n s ; ( 3 ) f o r t h e f i r s t f i v ey e a r s f r o mt h ed a t eo f r e g i s t r a t i o n , a d d i t i o n a l d e d u c t i o nf r o mt a x a b l ei n c o m eo f5 0 %o ft h ew a g e sa r i s i n gf r o ma d d i t i o n a l w o r k e r sh i r e d , p r o v i d e dt h a t i t i s n o t s i m u l t a n e o u s l ya v a i l e dw i t ht h e I T H ; ( 4 ) t a xc r e d i t f o r t a x e s a n dd u t i e s o n r a wm a t e r i a l s a n d s u p p l i e s a n d s e m i m a n u f a c t u r e d p r o d u c t s u s e d i n p r o d u c i n g i t s e x p o r t p r o d u c t ; ( 5 ) e x e m p t i o n f r o mw h a r f a g e d u e s , a n y e x p o r t t a x , d u t i e s i m p o s t s a n d f e e s f o r t e n y e a r s f r o md a t e o f r e g i s t r a t i o n ; ( 6 ) m a y q u a l i f y t o i m p o r t c a p i t a l e q u i p m e n t , s p a r e p a r t s a n d a c c e s s o r i e s a t 0 %d u t y f r o md a t e o f r e g i s t r a t i o n u p t o J u n e 1 6 , 2 0 1 1 p u r s u a n t t o E . O . 5 2 8 a n d i t s I m p l e m e n t i n g R u l e s a n d R e g u l a t i o n s a n d ( 7 ) t a x a n d d u t y f r e e i m p o r t a t i o n o f e q u i p m e n t .

* S G V M C 3 1 0 9 6 2 *

ROXAS HOLDINGS, INC.


(A Subsidiary of Roxas and Company, Inc.)

SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION


FOR THE YEAR ENDED JUNE 30, 2010 (Amounts in Thousands)

Unrestricted retained earnings, as adjusted to available for dividend declaration, beginning Add: Net income actually earned/realized during the year Net income during the year closed to retained earnings Less: Movement of deferred income tax assets Add: Reversal of appropriation of retained earnings during the year Total unrestricted retained earnings available for dividend declaration, end

=390,805 P

49,429 (9,878) 39,551 1,468 =431,824 P

SECOND SECTION

SCHEDULE A ROXAS HOLDINGS, INC. AND SUBSIDIARIES MARKETABLE SECURITIES (Current Marketable Equity Securities and Other Short-term Cash Investments) JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)

Name of issuing entity and description of each issue

Number of shares or principal amount of bonds and notes

Amount shown in the balance sheet NONE

Value based on market quotation at balance sheet date

Income received and accrued

SCHEDULE B ROXAS HOLDINGS, INC. AND SUBSIDIARIES AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS, EMPLOYEES, RELATED PARTIES AND PRINCIPAL STOCKHOLDERS (OTHER THAN AFFILIATES) JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)

Name and designation of debtor Various employees (educational loans/advances)

Balance at beginning of year =264,705 P

Additions =3,500 P

Amounts collected =180,421 P

Amounts written off = P

Current =87,784 P

Non current = P

Balance at end of year =87,784 P

SCHEDULE C ROXAS HOLDINGS, INC. AND SUBSIDIARIES NON-CURRENT MARKETABLE EQUITY SECURITIES, OTHER LONG-TERM INVESTMENTS IN STOCK AND OTHER INVESTMENTS JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS, EXCEPT NUMBER OF SHARES)
Beginning balance Number of shares or principal amount of bonds Amount and notes in Pesos 28,549,365 =557,432 P Net additions (deductions) Share in an associates negative goodwill upon adoption Dividend of PFRS income = P (P =71,373) Ending balance Number of shares or principal amounts of bonds Amount and notes in Pesos 28,549,365 =618,322 P

Name of issuing entity and description of investment Hawaiian -Philippine Company (45.09%)

Equity in net earnings of investee for the period =132,263 P

Other = P

Dividends received from investments not accounted for by the equity method = P

SCHEDULE D ROXAS HOLDINGS, INC. AND SUBSIDIARIES INDEBTEDNESS OF UNCONSOLIDATED SUBSIDIARIES AND RELATED PARTIES JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Name of Affiliates Balance at beginning of year NONE Balance at end of year

SCHEDULE E ROXAS HOLDINGS, INC. AND SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Other chargesAdditions (deductions) (P =58,756) 686,889 2,307,477 4,643 (803,557) (2,217,363) =33,506 P

Classification Land Buildings and improvements Machinery and equipments Railroad equipments Office furnitures, fixtures and equipment Construction in progress

Beginning balance =2,517,660 P 1,224,798 5,165,361 123,144 605,646 4,967,334 =14,603,943 P

Additions at cost =26,097 P 129,408 1,346,670 23,597 267,563 797,146 =2,590,481 P

Retirements = P (10,820) (118,449) (982) (P =80,667)

Ending balance =2,485,001 P 2,041,095 8,808,688 32,935 68,670 3,547,117 =16,983,506 P

SCHEDULE F ROXAS HOLDINGS, INC. AND SUBSIDIARIES ACCUMULATED DEPRECIATION JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Other charges-Additions (deductions) Classification Land Buildings and improvements Machinery and equipments Railroad equipments Office furnitures, fixtures and equipment Construction in progress Beginning balance = P 697,442 3,607,310 121,326 515,494 =4,941,572 P Additions at cost = P 67,037 321,051 8,066 10,871 =407,025 P Charged to other accounts = P 28,118 477,941 (362) (471,372) (P =21,911) Ending balance = P 736,361 4,399,554 11,000 54,353 =5,201,268 P

= P (6,748) (118,030) (640) (P =125,418)

SCHEDULE G ROXAS HOLDINGS, INC. AND SUBSIDIARIES INTANGIBLE ASSETS - OTHER ASSETS JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Charged to costs and expenses = P Other changesadditions (deductions) = P

Description Goodwill

Beginning balance =9,796 P

Additions = P

Charged to other accounts = P

Ending Balance =9,796 P

SCHEDULE H ROXAS HOLDINGS, INC. AND SUBSIDIARIES LONG-TERM BORROWINGS JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Amount shown under caption Current portion of long-term borrowings in related consolidated balance sheets = P 17,241 34,483 =51,724 P

Title of issue and type of obligation Loans payable to local banks: Banco De Oro Unibank, Inc. Rizal Commercial Banking Corporation Bank of the Philippine Islands

Amount shown under caption Long-term borrowings in related consolidated balance sheets =3,770,000 P 493,836 1,454,440 =5,718,276 P

Remarks

Refer to Note 13 of the 2010 consolidated financial statements for additional information on long-term borrowings.

SCHEDULE I ROXAS HOLDINGS, INC. AND SUBSIDIARIES INDEBTEDNESS TO RELATED PARTIES (LONG-TERM LOANS FROM RELATED COMPANIES) JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)
Name of Affiliate Balance at beginning of year NONE Balance at end of year

SCHEDULE J ROXAS HOLDINGS, INC. AND SUBSIDIARIES GUARANTEES OF SECURITIES OF OTHER ISSUERS JUNE 30, 2010 (AMOUNTS IN THOUSAND PHILIPPINE PESOS)

Name of issuing entity of securities guaranteed by the Company for which this statement is filed

Title of issues of each class of securities guaranteed

Total amount guaranteed and outstanding

Amount owed by person for which statement is filed

Nature of guarantee

NONE

SCHEDULE K ROXAS HOLDINGS, INC. AND SUBSIDIARIES SHARE CAPITAL JUNE 30, 2010
Number of shares issued and outstanding shown under related consolidated balance sheets caption

Title of issue Common shares (P1 par value)

Number of shares authorized

Number of shares reserved for options, warrants conversion, and other rights

Number of shares held by related parties

Directors and officers

Others

1,500,000,0000

909,552,236

627,038,666

65,403,721

217,109,849

Please refer to Note 23 of the 2010 consolidated financial statements for additional information on share capital.