1. business and industrial
2. company
3. annual report

COVER SHEET
1 2 9 4 2
SEC Registration Number
MA R C V E N T U R E S
( f o r m e r l y
H OL D I N GS , I N C .
A J O . N E T
HO L D I NG S , I N C . )
(Company’s Full Name)
1 6 t h
F l o o r
P a s e o
d e
C i t i b a n k
R o x a s
T o w e r
M a k a t i
C i t y
(Business Address: No. Street City/Town/Province)
1 2
3 1
Month
Day
Carlos C. Syquia
836-8609 or 856-7976
(Contract Person)
(Company Telephone Number)
2 0 -
I S
(Form Type)
0 6
2 9
Month
Day
(Fiscal Year)
(Annual Meeting)
Definitive Information
Statement
Secondary License Type, If Applicable)
N/A
Corporation Finance
Department
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
N/A
2183
Total No. of Stockholders
Domestic
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
INFORMATION STATEMENT
(SEC FORM 20-IS)
A. GENERAL INFORMATION
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
Item 1. DATE, TIME AND PLACE OF MEETING OF SECURITY HOLDERS
Marcventures Holdings, Inc. (the “Company”, the “Registrant” or “MARC”) will be holding its annual
stockholders meeting on June 29, 2012. The following are the details:
Date of meeting
Time of meeting
Place of meeting
:
:
:
Approximate date of mailing of this
Statement
:
Registrant’s Mailing Address
:
June 29, 2012
3:00 P.M.
Metropolitan Club, Inc., Estrella corner
Amapola Sts., Guadalupe Viejo, Makati
City.
June 1, 2012
th
16 Floor, Citibank Tower, Paseo de
Roxas, Makati City
Item 2. DISSENTERS’ RIGHT OF APPRAISAL
The Corporation Code limits the exercise of the appraisal right by any dissenting stockholder to the
following instances:
a. In case any amendment to the articles of incorporation has the effect of changing or
restricting the rights of any stockholder or class of shares, or of authorizing preferences in
respect superior to those of outstanding shares of any class, or of extending or shortening
the term of corporate existence (Section 81);
b. In case of the sale, lease, exchange, transfer, mortgage, pledge or other disposition of all
or substantially all of the corporate property and assets (Section 81);
c.
In case of merger or consolidation (Section 81);
d. In case of investments in another corporation, business or purpose (Section 42).
Since the matters to be taken up do not include any of the foregoing, the appraisal right will not be
available.
However, if at any time after this Information Statement has been sent out, an action which may
give rise to the right of appraisal is proposed at the meeting, any stockholder who voted against the
proposed action and who wishes to exercise such right must make a written demand, within thirty
(30) days after the date of the meeting or when the vote was taken, for the payment of the fair
market value of his shares. Upon payment, he must surrender his certificates of stock. No
payment shall be made to any dissenting stockholder unless the Company has unrestricted
retained earnings in its books to cover such payment.
Item 3.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE
ACTED UPON
No director or officer of the Company at any time since the beginning of the last fiscal year or any
nominee for election as a director of the Company or any associate of any of the foregoing persons
has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be
acted upon in the stockholders’ meeting other than their re-election to their respective positions.
No director has informed the Company in writing that he intends to oppose any action to be taken at
the meeting.
4
B. CONTROL & COMPENSATION INFORMATION
Item 4. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
(1)
The Registrant has 1,732,404,054 outstanding common shares as of April 30, 2012. Each
common share shall be entitled to one vote with respect to all matters to be taken up during the
annual stockholders’ meeting.
(2)
The record date for determining stockholders entitled to notice and to vote during the annual
stockholders meeting and also to this information statement is on May 21, 2012.
(3)
The election of the board of directors for the current fiscal year will be taken up and all
stockholders have the right to cumulate their votes in favor of their chosen nominees for
director in accordance with Section 24 of the Corporation Code. Section 24 provides that a
stockholder, may vote such number of shares registered in his name as of the record date for
as many persons as there are directors to be elected or he may cumulate said shares and give
one candidate as many votes as the number of directors to be elected multiplied by the number
of his shares shall equal, or he may distribute them on the same principle among as many
candidates as he shall see fit. The total number of votes cast by such stockholder should not
exceed the number of shares owned by him as shown in the books of the corporation multiplied
by the whole number of directors to be elected.
(4) Security ownership of certain record and beneficial owners and management.
(5) Security Ownership of Certain Record and Beneficial Owners and Management
Security ownership of certain record (“r”) and beneficial (“b”) owners of five percent (5%) or more
of the outstanding capital stock of the Registrant as of April 30, 21012:
Title of
Class
Name, address of
record owner and
relationship with
Issuer
Name of
Beneficial Owner
& Relationship
with Record
Owner
Citizenship
No. of Shares
Held
Percent
Common
Philippine
Depository and
Trust Corporation
37/F Tower I, The
Enterprise Center,
6766 Ayala Ave.
cor. Paseo de
Roxas, Makati City
The Company
has no knowledge
of other persons
with lodged
shares who are
the beneficial
owners of more
than 5% of its
outstanding
capital stock,
other than those
beneficial owners
listed below.
PDTC acts as
Nominee of the
Trading
Participants (of
the Philippine
Stock Exchange)
with whom the
beneficial owners
maintain
accounts.
Filipino
1,726,256,916
(r)
99.65%
(Registered OwnerNominee)
5
PDTC authorizes
the Trading
Participants to
vote the shares
registered in their
respective names.
Common
Mario G. Vijungco.
Chairman
Common
Dy Chi Hing
Common
Common
Mr. Vijunco is
currently the
Chairman of
Marcventures
Holdings, Inc.
Mr. Dy Chi Hing is
currently a
Director of the
Company
Filipino
600,000,000
(b)
34.63%
Filipino
218,500,000
(b)
12.61%
Sonia T. Techico
Filipino
7.50%
Arturo L. Tiu
Filipino
130,000,000
(b)
102,500,000
(b)
5.82%
Security Ownership of Management – Record “r” and Beneficial “b” (direct/indirect)
owners as of April 30, 2012:
Title of
Class
Common
Name of Beneficial
Owner
Mario G. Vijungco.
Chairman
Common
Ramon A. Recto
President
Common
Joel A. Banares
Common
(Independent Director)
Dy Chi Hing
Director
Common
Raul Ma.
(Director)
F.
Anonas
Amount and nature of
ownership (Indicate
record (“r”) and/or
beneficial (“b”)
600,000,000,– “b” (direct)
Citizenship
Percent of
Class
Filipino
34.63%
2.54 %
44,000,000 –“b” (indirect
thru Erlinda D. Vijungco)
1 – “r” (direct)
Filipino
0.00%
1 – “r” (direct)
Filipino
0.00%
218,500,000 – “b” (direct)
Filipino
12.61%
130,000,000 –“b” (indirect
thru Sonia T. Techico)
1 – “r” (direct)
7.50%
Filipino
0.5710
9,830,000 – “b”
(direct)
Common
Roberto A. Atendido
Director
1 – “r” (direct)
553,000 – “b” (indirect thru
AOB Management Corp.)
18,311,333– “b” (indirect
thru Asian Alliance
Investment Corp.)
0.00%
Filipino
0.00%
0.0321%
1.057%
6
Common
Rafael Yaptinchay
(Independent Director)
Common
Carlos C. Syquia
Treasurer
Common
Roberto V. San Jose
Corporate Secretary
TOTAL
1 – “r” (direct)
0.00%
100 – “r” (direct)
Filipino
0.00%
-0-
Filipino
0.00%
105 ”r”
58.94%
1,030,221,333 “b”
Voting trust holders of 5% or More
No person holds more than five per centum (5%) of a class under a voting trust agreement or
similar arrangement.
Changes in control
There are no arrangements which may result in a change in control of the registrant.
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors and Executive Officers
The names, ages, citizenship, position and business experience of all directors and executive
officers held for the past five (5) years (except those years stated otherwise) are as follows:
Name
Age Citizenship
Position
Mario G. Vijungco
Ramon A. Recto
Dy Chi Hing
Joel A. Bañares
Rafael G. Yaptinchay
Raul Ma. F. Anonas
Roberto A. Atendido
Carlos C. Syquia
Andres A. del Rosario
Roberto V. San Jose
Ana Maria A. Katigbak
61
79
66
54
61
49
64
69
48
70
43
Chairman
President
Director
Independent Director
Independent Director
Director
Director
Treasurer
Asst. Treasurer
Corporate Secretary
Asst. Corporate Secretary
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Filipino
Mario G. Vijungco was elected Chairman in March 2010. In the past 5 years, Mario G. Vijungco
has been a prominent entrepreneur with previous various business interests in logging, prawn
culture, copra trading, and retail/wholesale of heavy equipment spare parts. He owned and
operated a logging concession under Ventura Timber Corporation, the original owner of MPSA 01693-XI.
Ramon A. Recto was elected President in March 2010. In the past 5 years, Mr. Recto continues to
hold the position as Chairman of Ivanhoe Philippines, Inc. He is also Chairman and President of
CME Technologies, Inc. He was formerly the President of Lepanto Consolidated Mining
Corporation as well as Supply Oilfield Services, Inc. and its subsidiaries.
Dy Chi Hing was elected Director in March 2010. In the past 5 years, Mr. Dy Chi Hing has been
Chairman and CEO of So-Nice International Corporation, and has been in the import and trading
business since 1968. He is an Honorary member and financial consultant of the Filipino-Chinese
Chamber of Commerce and Industry, and is an active member and one of the co-founders of the
Meat Importer Traders Association (MITA).
7
Joel A. Bañares was elected as an Independent Director in February 2010. In the past 5 years, Mr.
Bañares has been Chief Finance Officer (“CFO”) of the National Grid Corporation, Managing
Director of St. Arnold Development Corporation, Advisor Infrastructure to SM Investments Corp.,
Board Director of Universal LRT Corporation, and Chairman of Synergia Cybercare, Inc. Apart from
his current positions, Mr. Banares is also a Fellow of the Australian Institute of Company Directors
(AICD) and of the Institute of Corporate Directors (ICD), Philippines (organizations that promote
good corporate governance). Mr. Banares was also Undersecretary of Finance from 1998 to 2001.
Rafael Yaptinchay was elected Independent Director in March 2010. In the past 5 years, Mr.
Yaptinchay has been President and Director of the Meridien Properties Group of Companies where
he has been connected since 1988. He is also Executive Vice President and Director of the
Century Properties Group of Companies.
Raul Ma. Anonas was elected Director in August 2010. In the past 5 years, Mr. Anonas has been
President of Rajawali Distributors Inc. and director of the following companies: New Marketlink
Pharmaceutical Corp, Megavia Motor Company, Megavia Corporation, Humabon Distributors Inc.
and Premiere Entertainment Philippines. Mr. Anonas was previously employed at Citibank
Philippines as Vice President of Corporate Finance.
Roberto Atendido was elected Director in March 2010. In the past 5 years, Mr. Atendido has been
a Director of Philippine Business Bank, Charter Land & Development Corp., Paxys Inc. (formerly
Fil Hispano Holdings Corporation), Export and Industry Bank, ValueGen Financial & Insurance
Company, Inc., Banclife Insurance Corp., PICOP, Export and Industry Savings Bank, Inc., GEM
Communications Holdings Corporation, Energy Management & Conservation Corp., Zest Air, Inc.,
Securities Clearing Corporation of the Philippines, Marcventures Holdings, Inc., and Beneficial Life
Insurance Co., Inc.. He is currently the Chairman of Green Energy Technology Solutions (Asia) Inc.
He was previously the President of Insular Investment & Trust Corporation, Managing Director of
Asian Oceanic Holdings (Phils.) Inc., Managing Director of PT Duta Perkasa Chandra Inti Leasing
(Indonesia), Vice President of PCI Capital Asia Ltd. (Hong Kong) and Bancom International, Ltd.
(Hong Kong). He has the distinction of being a former President of the Investment House
Association of the Philippines.
Carlos C. Syquia was elected Treasurer of the Company in November 2000. In the past 5 years,
Mr. Syquia has been chairman of the Board of Trustee of the Metropolitan Club, Inc., director of
ATC Securities Inc. and director of Gem Communications Holdings Corporation. Mr. Syquia holds a
BS degree in Commerce from De La Salle University and an MBA from the Wharton School of
Business- University of Pennsylvania.
Andres A. del Rosario was appointed as Assistant Treasurer in May 4, 2011. In the past 5 years,
Mr. del Rosario has been connected with Asian Alliance Investment Corporation. He was formerly
employed with Worldsec International Securities Philippines Inc. and Citibank N.A. He received his
Bachelor of Arts degree from Ateneo de Manila University.
Roberto V. San Jose serves as the Corporate Secretary of the Corporation. He received his
Bachelor of Arts degree from De La Salle University and his law degree from the University of the
Philippines. He is a member of the Philippine Bar and is a Consultant of the Castillo Laman Tan
Pantaleon and San Jose Law Offices. Aside from being a Corporate Secretary of the Corporation,
he serves as director or officer of other private and public corporations.
Ana A. Katigbak was elected Assistant Corporate Secretary in November 2000. In the past 5
years she has acted and continues to act as assistant corporate secretary in other public
companies such as Energy Development Corporation, Mabuhay Holdings Corporation, Paxys Inc.,
Premiere Horizon Alliance Corp. and Solid Group Inc. Ms. Katigbak is a partner in the Castillo
Laman Tan Pantaleon & San Jose Law Offices.
There are no family relationships either by consanguinity or affinity among the above named
directors and executive.
8
Nomination Committee and Nominees for Election as Members of the Board of Directors
The Nominations Committee has screened the Directors named above for re-election on June 29,
2012. The Nominations Committee determined that the candidates possess all the qualifations and
none the disqualifications as director or independent director.
None of the directors and executive officers named above is related.
Independent Directors
As of the date of this Information Statement, the Nominations Committee has received and
approved the nominations of the following nominees for independent directors of the Company:
1. Joel A. Bañares
Mr. Bañares possessed all the qualifications and none of the disqualifications as independent
director since his election in the year 2010.
2. Rafael Yaptinchay
Mr. Yaptinchay possessed all the qualifications and none of the disqualifications as
independent director since his election in the year 2010.
Both were nominated by Mr. Ramon Recto.
The nominator is not related to the persons he has nominated for independent director.
The nomination and election of independent director shall be in accordance with Section 38, as
amended of Republic Act 8799 or the Securities Regulation Code.
The Nomination Committee is composed of Mr. Mario G. Vijungco as Chairman and Messrs.
Ramon A. Recto and Joel A. Banares as members.
In compliance with SEC Notice dated October 20, 2006, the Company will submit updated
Certifications of Qualification for the Independent Directors within 30 days from their election.
Period in Which Directors and Executive Officers Should Serve
The directors and executive officers should serve for a period of one (1) year.
Term of Office of a Director
The seven (7) directors shall be stockholders and shall be elected annually by the stockholders
owning majority of the outstanding capital stock for a term of one (1) year and shall serve until the
election and qualification of their successors.
Any vacancy in the board of directors other than removal or expiration of term may be filled by a
majority vote of the remaining members thereof at a meeting called for that purpose if they still
constitute a quorum, and the director or directors so chosen shall serve for the unexpired term.
Significant Employees
The Registrant considers the contribution of every employee important to the fulfillment of its goals.
Involvement in Certain Legal Proceedings
As of December 31, 2011, the Company is not a party to any legal proceedings. It is not involved in
any pending legal proceedings with respect to any of its properties. It is not involved in any claims
or lawsuits involving damages that may materially affect it or its subsidiaries.
9
To the knowledge and/or information of the Company, none of its nominees for election as directors,
its present members of the Board of Directors or its executive officers, is presently or during the last
five (5) years been involved in any material legal proceeding in any court or government agency on
the Philippines or elsewhere which would put to question their ability and integrity to serve
Marcventures Holdings Inc. and its stockholders.
The Company is not aware of: (a) any bankruptcy petition filed by or against any business of which
a director or executive officer or person nominated to be become a director or executive officer was
a general partner or executive officer either at the time of the bankruptcy or within two years prior to
that time; (b) any conviction by final judgment, including the nature of the offense, in a criminal
proceeding, excluding traffic violations and other minor offenses; (c) being subject to any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities, commodities or banking
activities; and (d) being found by a domestic or foreign court of competent jurisdiction (in a civil
action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other
organized trading market or self-regulatory organization, to have violated a securities or
commodities law or regulation and the judgment has not been reversed, suspended, or vacated.
As of December 31, 2011, the Company’s wholly owned subsidiary, Marcventures Mining and
Development Corporation (MMDC), is currently involved in four (4) pending issues:
(a) Petition filed by Cantilan Irrigation System Federation of Irrigators Association (CISFIA)
Surigao del Sur Irrigators Federation Association (SURIF) Cabcant Irrigators Association,
Inc., Buyaan Irrigators Association, Inc., CarCanMadCarLan Baywatch Foundation, Inc.
(CBFI), Lovers of Nature Foundation, Inc. before the Office of the Secretary, Department of
Environment and Natural Resources.
This petition was filed on July 20, 2009 and seeks the cancellation of the MPSA of MMDC
and the issuance of a Temporary Restraining Order and Injunction. The Secretary,
however, is not vested with the power to cancel a Mineral Production Sharing Agreement
and issue a temporary restraining order or injunction as the powers belong solely to the
court, the MPSA being a contract constitutionally allowed and protected requiring judicial
process. Temporary restraining order and injunction are ancillary remedies to a case
pending in court. As of December 31, 2011, MMDC has not receive any order from the
Office of the Secretary.
(b) Case filed by Jaime “Datu Dagsaan” Bat-ao, Liquisa Irrigators Association represented by
Peter William Olan, Nagkahugpong Managatay Para sa Kalambuan (NAGMAKAAYO)
represented by Crisologo E. Aniono, Sr.; Lydia L. Lascano and Nick Matthew Q. Irriberi, a
minor represented by his father, Vicente Cirilo Irriberi, before the Regional Trial Court,
Branch 41, Cantilan, Surigao del Sur, docketed as Civil Case No. 224.
The case was filed on November 10, 2010. The Plaintiffs seek to stop the mining activities
but failed to present their evidence and convince the court to stop the mining operations
and extend the seventy two (72) hours temporary environmental protection order, hence it
expired. On May 26, 2011, however, the RTC issued an Order stating that the temporary
environmental protection order issued by the Court is still subsisting and effective until
there is an order lifting, revoking or dissolving the same. MMDC has filed a Motion for
Reconsideration of the above Order, which, to date, has not been resolved by the Court.
The court cannot cancel the MPSA not only because the DENR is not a party to the case
but it is contract sanctioned and protected by the Constitution, mining law and existing
laws. The mining activities of MMDC are authorized by the Environmental Compliance
Certificate and Partial Declaration of Mining Project Feasibility. Moreover, its operation has
not been stopped by the DENR and its bureaus which have jurisdiction and regulatory
functions over mining activities.
Equally important, MMDC has not been penalized for violations of environmental laws or its
corporate officers charged and convicted.
The case is set for hearing on July 20 to 22, 2011. This hearing was cancelled due to the
inhibition of the Presiding Judge and no date of hearing has been set.
10
(c) Opposition filed by the Cantilan Irrigation System Federation of Irrigators Association
[CISFIA] before the National Water Resources Board [NWRB] docketed as WPA No. XIIISDS-2009-02-036 relative to the application of Marcventures Mining and Development
Corporation for water rights.
This opposition has nothing to do with the present mining activities of MMDC. We were just
notified of an opposition of MMDC’s application for water rights. As of the date of this
Prospectus, it is still pending. Neither did we receive any order form the Board or pleadings
from the Oppositor.
(d) Petition for a Writ of Kalikasan filed before the Supreme Court on May 29, 2011 by Tribal
Coalition of Mindanao [TRICOM], Inc. Daging Manobo Sectoral Tribal Council, Urbiztondo
Manobo-Mamanwa Sectoral Tribal Council, Kinalablaban Sectoral Tribal Council,
Cabangahan Tribal Community –Manobo Tribe, Victoriano Vidal and Datu Willy Daging
against Taganito Mining Corporation, Platinum Group Metals Corp., Synergy Mining Corp.,
Shenzhou Mining Group Corp. and Marcventures Mining and Development Corp.
The said petition seeks the issuance of a temporary environmental protection order against
the above named companies, including MMDC. To date, MMDC has not received any
Order from the Supreme Court although it was furnished a copy of the Petition as required
by the rules governing environmental cases. The Supreme Court denied the application of
the Petitioners for Writ of Kalikasan and delegated to the Court of Appeals, Mindanao
Station, the reception of the evidence for Temporary Environmental Protection Order.
Other than the foregoing, MMDC and the Company have no other actual, pending or threatened
litigation. Likewise, MMDC and the Company are unaware of any involvement of their respective
executives, directors and/or officers in any legal proceeding for the past five (5) years.
Family Relationships
There are no family relationships either by consanguinity or affinity among the above named
directors and executive officers.
Certain Relationships and Related Transactions
The Company obtained non-interest bearing advances from stockholders which are payable on
demand. Such advances were used by the Company in day to day operations, general
administrative expenses, and for payroll.As of December 31, 2011, such advances from
stockholders amounted to Php 19,156,965
December 31, 2011
Advances to Affiliates
Marcventures Minerals Holdings, Inc.
Carac – an Development Corporation
Advances from stockholders
Advances from affiliates:
Marcventures Resources Holdings, Inc.
Marcventures Minerals Holdings. Inc.
June 30, 2011
P 6,596,294
281,183
P 6,596,294
144,249
P 6,877,477
P 6,740,543
P 19,034,402
P 22,571,772
105,209
17,354
P 19,156,965
105,209
17,354
P 22,694,335
Advances to Marcventures Minerals Holdings, Inc. and Carac-an Development Corporation pertain
to ventures entered into by MMDC and have been discontinued. These advances are deemed
worthless and MMDC has already provided an allowance for impairment losses in full. Advances
from stockholders represent cash advances made to the Group by Mario Vijungo, a majority
shareholder of the company.
11
The Company’s legal counsel is the law firm of Castillo Laman Tan Pantaleon and San Jose Law
Offices. Reasonable legal fees are paid to the firm for their legal services. Castillo Laman Tan
Pantaleon and San Jose Law Offices has no direct or indirect interest in the Company.
Other than the foregoing, there has been no transaction outside of the ordinary course of business
during the last two years, nor is any transaction presently proposed, to which the Company was or
is to be a party in which any director or executive officer of the Company, or owner of more than
10% of the Company’s voting securities or any member of the immediate family of any of the
foregoing persons had or is to have a direct or indirect material interest. In the ordinary and regular
course of business, the Company had or may have had transactions with other companies in which
some of the foregoing persons may have an interest.
Please refer to Note No.17, (notes to Audited Financial Statements)
Resignation or Refusal to Stand for Re-election by Members of the Board of Directors
The Board of Directors accepted the resignation of Mr. Cristino Panlilio who was appointed as
Undersecretary of the Dept. of Trade and Industry / Managing Head of the Board of Investments as
disclosed last August 13, 2011.
Item 6. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table summarizes certain information regarding compensation paid or accrued during
the last three fiscal years and to be paid in the ensuing fiscal year to the Company’s President and
each of the Company’s three other most highly compensated executive officers:
Table Summary of Compensation
SALARY
BONUS
OTHER
COMPENSATION
TOP FIVE HIGHLY
COMPENSATED
[1]
EXECUTIVES:
ANSELMO TRINIDAD, JR. –
FORMER CHAIRMAN
PRESIDENT, MARIO G.
VIJUNGCO – CURRENT
CHAIRMAN, RAMON A.
RECTO – CURRENT
PRESIDENT , CARLOS C.
SYQUIA – TREASURER, &
ROBERTO V. SAN JOSE –
CORPORATE SECRETARY
All above named officers as
a group
All officers and directors as
group unnamed
2010
1,000,000.00
2011
2012
Estimated
2010
2011
240,000.00
4,000,000.00
2012
Estimated
10,000,000.00
1,125,000.00
640,000.00
12
Note: [1] Aside from the officers and executives mentioned above, the Company does not employ
any other executive officers or directors.
The amounts reflected as compensation of the named executive officers represents have been
approved by the Company’s board of directors. There is no contract covering their managerial and
consultancy services with the Company and they hold office by virtue of their election to office. The
Company has no agreements with its named executive officers regarding a compensatory plan or
arrangement exceeding P10,000.00 resulting from the resignation, retirement, termination of
employment, or change-in-control of the Company.
The amount of other compensation includes per diems of directors at the rate of P10,000.00 per
director per meeting. Such per diems amounted to P 125,000 in 2010 and P 240,000.00 in 2011
and P 400,000.00 in 2012 (estimated). .
Item 7. INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Mendoza Querido & Co. (“MQC”)is currently the Company’s Independent
Public Accountant. Representatives of MQC will be present during the annual meeting and will be
given the opportunity to make a statement if they desire to do so. They are also expected to
respond to appropriate questions if needed.
Management will request the stockholders for authority to appoint the external auditors for the
current year in order that the review of compensation arrangements may be completed.
There was no event in the past years where MQC and the Corporation had any disagreements with
regard to any matter relating to accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
The 2010-2011 audit of the Corporation by MQCC is in compliance with SRC Rule 68, Paragraph
3(b)(iv) which provides that the external auditor should be rotated every five (5) years or earlier or
the handling partner shall be changed. At present, MQC’s account partner handling the
Corporation is Richard S. Querido and he has been the handling partner since June 2010. He is
due for rotation in 2015. A two yea-year cooling off period shall be observed in the re-engagement
of the same signing partner or individual.
The following are members of the Audit Committee:
Chairman: Joel A. Banares (Ind. Dir.)
Members: Mr. Rafael Yaptinchay (Ind. Dir.)
Ramon A. Recto
Item 8. COMPENSATION PLANS
No action is proposed to be taken during the stockholders’ meeting with regard to any bonus, profit
sharing, pension/retirement plan, granting of any extension of options, warrants or rights to
purchase any securities.
C. ISSUANCE AND EXCHANGE OF SECURITIES
No matter will be taken up involving any issuance or exchange of securities.
13
D. OTHER MATTERS
Item 11. ACTION WITH RESPECT TO REPORTS
The minutes of the last annual stockholders’ meeting held on September 16, 2010 and the Annual
Report of Management for the year ended December 31, 2011 will be submitted to the stockholders
for their approval. The minutes discuss the following matters taken up at the previous stockholders’
meeting held on September 16, 2010: (i) approval of minutes of previous stockholders’ meeting; (ii)
Amendment of Articles of Incorporation by way of: a. Increase in Authorized Capital Stock to Php
5.0 billion; and Increase in Par Value of Common Shares to Php 1.00 (iii) Authority of the Board to
Approve Subscriptions to the Increase in Authorized Capital Stock ; (iv) Amendment of By-laws to
change its fiscal year fiscal to coincide with the calendar year; (v) Executive/Employee Stock Option
Plan .
Approval of the Minutes of the Annual Stockholders’ Meeting held on September 16, 2010
constitutes a ratification of the accuracy and faithfulness of the Minutes to the events which
transpired during the meeting.
Approval of the Annual Report of Management constitutes a ratification of the Company’s
performance during the fiscal year as contained in the Annual Report. The acts of Management to
be ratified, include the following: (i) election of directors; ; (ii) appointment of auditors; (iii) issuance
of convertible notes and warrants; (iv) approval of corporate guaranty in favor of Phil-Exim in
relation to a loan application of subsidiary MMDC.
Item 12. MATTERS NOT REQUIRED TO BE SUBMITTED
All corporate actions to be taken up at the annual stockholders’ meeting this June 29, 2012 will be
submitted to the stockholders of the Registrant for their approval in accordance with the
requirements of the Corporation Code.
Matters not required to be submitted are the Call to Order and Certification of Notice and Quorum.
Item 13. VOTING PROCEDURES
As to each matter, which is to be submitted to a vote of security holders, the following information
will be furnished:
(a)
Vote required for Approval
The affirmative vote of stockholders representing at least a majority of the
outstanding voting common shares of the Registrant is required for the approval of
the following matters:
i.
Minutes of Previous Annual Stockholders’ Meeting;
ii.
Management Annual Reports for the preceding year;
iii. All Acts and Resolutions of the Board of Directors and Management since the
last Annual Stockholders’ Meeting;
iv. Amendment of the by-laws to change the date of the annual stockholders’
meeting from the month of November to the month of June of each year;;
v.
Appointment of External Auditors.
During the election of directors, every stockholder entitled to vote shall have the
right to vote the number of shares of stock standing, in his own name on the stock
books of the Corporation; and said stockholder may vote such number of shares
for as many persons as there are directors to be elected or he may cumulate said
shares and give one candidate as many votes as the number of directors to be
elected multiplied by the number of shares shall equal, or he may distribute them
on the same principle among as many candidates as he shall see fit: Provided,
14
2011 ANNUAL REPORT TO SECURITY HOLDERS
I.
Consolidated Audited Financial Statements
The Consolidated Audited Financial Statements of Marcventures Holdings, Inc. (the “Company”) for
the year ended as of December 31, 2011 and quarterly report on SEC form 17-Q for the period
ended March 31, 2012 are attached to this report.
II.
Disagreements with Accountants on Accounting and Financial Disclosures
There was no event in the past years where Mendoza Querido & Co. (‘MQC”) the Company’s
Independent Public Accountant and the Company had any disagreements with regard to any matter
relating to accounting principles or practices, financial statement disclosure or auditing scope or
procedure.
III.
Management’s Discussion and Analysis
Results of operations
As of December 31, 2011
Marcventures Mining and Development Corporation (“MMDC’), the Company’s mining subsidiary,
made its first shipment of nickel ore in August 2011 from its mining operations in Cantilan, Surigao
Del Sur. A total of 12 shipments containing 628,098 WMT of nickel ore were made for the year,
enabling MMDC to register a sale value of ₱842.90 million and a net income of ₱283.02 million.
Thus, the Company’s deficit of ₱73.87 million as of June 30, 2011 was eliminated and retained
earnings of ₱194,564 million was registered as of December 31, 2011.
The current assets of the Company increased to ₱443.65 as of December 31, 2011 from ₱176.72
as of June 30, 2011. The increase is attributable to the inventory which consist of nickel ore
stockpile amounting to ₱234.40 million, trade and other receivables in the amount of ₱22.09 million.
Property and equipment increased to ₱725.1 million in December 31, 2011 from ₱656.15 million in
June 30, 2011 or a 10.5% increase mainly due to the development of the camp site, purchases of
mining equipment, service vehicles and laboratory equipment
Furthermore, the income generating activities of MMDC resulted in total consolidated assets for the
Company amounting to ₱2,564.7 million as of Dec. 31, 2011, equivalent to an increase of 18.89%
or an additional ₱407.5 million increase from ₱2,157.3 million as of June 30, 2011.
Total Consolidated Liabilities increased from ₱461.9 million as of June 30, 2011 to ₱555.9 million
as of December 31, 2011 . The increase pertains to a loan from the Philippine Veterans Bank in the
amount of ₱75 million.
Consolidated Stockholders’ Equity increased by 18.49% to ₱2,008.8 million as of December 31,
2011 or an additional ₱313.4 million from ₱1,695.34 million as of June 30, 2011. The increase is
attributable to income g MMDC. Consolidated Retained Earnings in the amount of ₱194.6 million
as of December 31, 2011 or an increase of ₱268.4 million from a deficit of ₱73.9 million as of June
30, 2011. Furthermore, certain investors opted to convert their private placements to common
shares of the Company’s, thus raising its Capital Stock to ₱1,721.46 million and in Additional PaidIn Capital to ₱92.78 million.
On March 2, 2011, Securities and Exchange Commission approved the Company’s application .
for change of its accounting period from a fiscal year ending June 30 to a fiscal year ending
December 31 and Bureau of Internal Revenue approved such change on January 3, 2012. The
Compay adopted the change in accounting period effective December 31, 2011.
16
As of June 30, 2011
The Company’s subsidiary, MMDC had not yet started its commercial operation as of the fiscal year
ending June 30, 2011, Thus, the Company registered a consolidated net loss for the fiscal year
ending June 30, 2011 of ₱55.70 million inclusive of the net loss of ₱24.59 million incurred by
MMDC. Significant expenses incurred in 2011 included taxes and licenses (₱7.37million) which
mostly consisted of documentary stamps in connection with the issuance of new capital stock with
par value of ₱1.25 billion and convertible loan of ₱249.8 million, fees for advisory services
amounting to ₱8.47million and the realized loss ₱9.527 million on the 488 MetroClub shares which
the Company swapped for 76,923 shares of MMDC valued at ₱50 million assumption of the
Company’s liability of ₱17.5 million to Philtown by stockholders of MMDC. The aforesaid stock
swap the Company’s acquisition of all issued and outstanding shares of MMDC as part of its
corporate restructuring.
The current assets of the company increased to ₱ 195,866,352 as of June 30, 2011 from
₱65,162,260 as of June 30, 2010. The increase is attributable to inventory which consists of nickel
ore stockpile amounting to ₱96,409,802 and other current assets which includes prepayments and
advances to suppliers and contractors. Property and equipment increased to ₱599.163 million in
June 30, 2011 from ₱56.989 million in June 30, 2010, mainly due to reclassification of deferred
mine exploration cost, which were initially treated as Deferred Costs. These Deferred Costs are
charged to expense when the results of the exploration are determined to be negative or not
commercially viable. When the exploration results are positive or commercially viable, these
deferred costs are capitalized as part of the Mine Development Cost account classified under
Property and Equipment...
Land acquisition was undertaken by the company in view of the
planned Carrascal Causeway where several hectares of coastal property were purchased for the
purpose of road right of way and the construction site of the causeway. The company also
purchased mining equipment, service vehicles and laboratory equipment which caused the
Property and Equipment to increase by 1,051.37% as compared to June 30, 2010.
The increase in total liabilities is attributable to the proceeds generated from the convertible loans
amounting to ₱249.8 million obtained by the company to fund working capital and capital
expenditures of MMDC. Thus, total liabilities of the Company increased to ₱ 461,907 million as of
June 30, 2011 from ₱75.358 million as of June 30, 2010. The increase was composed principally of
convertible loans from certain stockholders and other parties.
Stockholders Equity decreased by ₱105.522 million due to additional deficit of ₱55.705 million
arising from total comprehensive loss for the period and the decrease in equity interest (Minority
interest) of 3.85% held by minority stockholders of MMDC amounting to Php 50 million
2010
The Company currently had no income generation from projects. Its mining subsidiary, MMDC was
still in its development phase. Total revenues for the period ended June 30, 2010 amounting to P
19,770,434 were generated from the sale of available-for-sale securities, sale of property, dividend
income, and interest income. Total loss for the year amounted to P 14,188,191. The Company’s
Basic Loss per Share amounted to P 0.0008.
Total assets of the Company increased to P1,778,551,583 from P 92,671,820 as of June 30, 2010.
This was largely brought about by the business combination of the Company and the investor
group, Marcventures Mining & Development Corporation. Explored mineral resources are valued at
P 1,294,766,157. Advances to MMDC amount to P 408,500,000. Property, Plant, and Equipment
likewise increased to P 56,988,589 from P 207,821 in the previous year.
Total Liabilities stood at P 16,220,881, comprised mainly of accrued expenses of MMDC.
Stockholders Equity increased to P 1,800,892,421 brought about by the business combination with
MMDC.
17
2009
The Company had no income generation from projects. Total revenues for 2009 were generated
from interest income amounting to P11,672. Administrative Expenses dropped by 51% to P4.5
million. In 2008, the Company incurred a P4.0 million one-time SEC charge for the extension of the
Company’s corporate life. Its corporate life expired on August 7, 2007. Marcventures Holdings Inc.
had other income in the form of foreign exchange gain of P60, 911. Total Loss for the year
amounted to P4.6 million as compared to P9.1 million losses in 2008. The Company’s Basic Loss
per Share amounted to P0.00134.
Total assets of the Company declined by 4% to P3.6 million. This wass largely brought about by
the P1.2 million overall decrease in current assets due to 36% lower cash position. Securities
available for sale also dropped by P2.0 million. Property and Equipment is also lower by P451
thousand versus last year mainly due to depreciation. The Company has had no material capital
expenditures.
Total Liabilities of the Company stood at P19.5 million, 20% higher versus June 30, 2008. The
increase in liabilities pertains to the advances by Philtown against the proceeds from the sale of
condominium units assigned to the Company under the share purchase agreement entered into by
Marcventures Holdings Inc. with Philtown. Interest bearing short term debt in the form of notes
payable stood at the same level as the previous year of P2.0 million.
Stockholders’ equity of P73.2 million is lower by 9% versus the previous year brought about by
higher deficit due to higher losses incurred and higher net unrealized loss on securities available for
sale.
18
Financial Changes
consolidated
December 31, 2011 June 30, 2011
A
B
June 30, 2010
C
parent
June 30, 2009
D
HORIZONTAL ANALYSIS
a vs b
Amount
a vs c
a vs d
a vs b
Percentage
a vs c
a vs d
Dec. 31,
2011
VERTICAL ANALYSIS
June 30, June 30, June 30,
2011
2010
2009
A S S ET S
Current Assets:
Cash and cash equivalent
Receivable - net
Inventory
Available for sale securities
Other current assets
Total Current Assets
Noncurrent Assets
Available for sale securities
Property and equipment
Deferred Mine exploration cost
Explored Mineral Resources
Other noncurrent assets
Total Noncurrent assets
TOTAL ASSETS
164,141,033.00
22,090,819.00
234,403,818.00
23,013,456.00
443,649,126.00
49,045,578.00
5,684,244.00
96,409,802.00
25,584,294.00
176,723,918.00
40,833,733.00
11,753,409.00
2,125.00
12,572,993.00
65,162,260.00
1,375,111.00
1,340,540.00
8,602.00
2,724,253.00
725,093,051.00
1,294,766,157.00
101,233,952.00
2,121,093,160.00
2,564,742,286.00
656,151,363.00
1,294,766,157.00
29,635,502.00
1,980,553,022.00
2,157,276,940.00
77,229,000.00
56,988,589.00
379,567,767.00
1,294,766,157.00
2,536,472.00
1,811,087,985.00
1,876,250,245.00
87,477,000.00
207,821.00
2,262,746.00
89,947,567.00
92,671,820.00
100,000,000.00
1,854,113.00
164,341,104.00
266,195,217.00
16,220,881.00
16,220,881.00
2,000,000.00
958,195.00
2,958,195.00
(73,680,000.00) 26,320,000.00
74,954,459.00
60,587,691.00
96,812,960.00 261,154,064.00
98,087,419.00 348,061,755.00
26,320,000.00
74,808,572.00
260,195,869.00
361,324,441.00
(73.68)
4,042.60
373.52
58.91
36.85 2,145.76
149,800,000.00
23,216,949.00
22,694,335.00
195,711,284.00
461,906,501.00
24,527,008.00
17,109,935.00
17,500,000.00
59,136,943.00
75,357,824.00
16,500,000.00
16,500,000.00
19,458,195.00
149,800,000.00
(518,107.00)
(1,828,166.00)
(3,537,370.00)
2,047,030.00
(17,500,000.00)
(4,055,477.00) 132,518,864.00
94,031,942.00 480,580,619.00
149,800,000.00
22,698,842.00
19,156,965.00
(16,500,000.00)
175,155,807.00
536,480,248.00
(2.23)
(7.45)
(15.59)
11.96
(100.00)
(2.07) 224.09
34.78 2,369.85
LIABILITIES AND EQUITY
Current Liabilities
Notes Payables
26,320,000.00
Interest-bearing loans
76,808,572.00
Trade and other payables
261,154,064.00
Total Current Liabilities
364,282,636.00
Noncurrent liabilities
Notes Payables-net of current portion 149,800,000.00
Interest-bearing loans
22,698,842.00
Related party payables
19,156,965.00
Advances from Philtown
Total NonCurrent Liabilities
191,655,807.00
TOTAL LIABILITIES
555,938,443.00
Equity
Capital Stock
1,721,460,874.00
Additional paid in capital
92,778,223.00
Minority Interest
Deposit for future subscription
Retained earnings (deficit)
194,564,746.00
Total Equity
2,008,803,843.00
TOTAL LIABILITIES AND STOCKHOLDERS'
2,564,742,286.00
EQUITY
115,095,455.00 123,307,300.00
16,406,575.00
10,337,410.00
137,994,016.00 234,403,818.00
(2,125.00)
(2,570,838.00) 10,440,463.00
266,925,208.00 378,486,866.00
162,765,922.00
22,090,819.00
234,403,818.00
(1,340,540.00)
23,004,854.00
440,924,873.00
234.67
288.63
143.13
(10.05)
151.04
301.97
11,836.57
87.95
(100.00)
(100.00)
83.04 267,436.11
580.84
16,185.17
6.40
0.86
9.14
0.90
17.30
2.27
0.26
4.47
1.19
8.19
2.18
0.63
0.00
0.67
3.47
1.48
1.45
0.01
2.94
(77,229,000.00)
(87,477,000.00)
68,941,688.00 668,104,462.00
724,885,230.00
(379,567,767.00)
1,294,766,157.00
71,598,450.00
98,697,480.00
98,971,206.00
140,540,138.00 310,005,175.00 2,031,145,593.00
407,465,346.00 688,492,041.00 2,472,070,466.00
10.51
241.60
7.10
158.14
(100.00)
(100.00)
1,172.35 348,802.69
(100.00)
3,891.13
4,373.94
17.12
2,258.14
36.70
2,667.55
28.27
50.48
3.95
82.70
100.00
30.42
60.02
1.37
91.81
100.00
4.12
3.04
20.23
69.01
0.14
96.53
100.00
94.39
0.22
2.44
97.06
100.00
1.03
2.99
10.18
14.20
4.64
0.09
7.62
12.34
0.86
0.86
2.16
1.03
3.19
5.84
0.89
0.75
7.47
21.68
6.94
1.08
1.05
9.07
21.41
1.31
0.91
0.93
3.15
4.02
17.80
17.80
21.00
1,701,006,329.00 1,700,822,843.00 509,879,811.00 20,454,545.00
68,232,769.00
68,232,769.00
273,037.00 24,545,454.00
50,000,000.00
7,500,000.00
(73,868,659.00)
(18,163,191.00) (444,439,223.00) 268,433,405.00
1,695,370,439.00 1,800,892,421.00
73,213,625.00 313,433,404.00
2,157,276,940.00 1,876,250,245.00
92,671,820.00 407,465,346.00
20,638,031.00 1,211,581,063.00
24,545,454.00
92,505,186.00
(50,000,000.00)
(7,500,000.00)
212,727,937.00
639,003,969.00
207,911,422.00 1,935,590,218.00
688,492,041.00 2,472,070,466.00
1.20
35.97
18.49
53.26
1.21
35.97
11.54
2,381.40
3,740.43
27,154.79
12,214.36
237.62
33,880.09
(100.00)
(143.78)
2,643.76
2,643.76
67.12
3.62
7.59
78.32
100.00
78.85
90.65 550.20
3.16
3.64
0.29
2.66
8.09
(3.42)
(0.97) (479.58)
78.59
95.98
79.00
100.00 100.00 100.00
19
Current assets as of December 31, 2012 were higher by 151.04% and 580.84% compared to fiscal
year ended June 30, 2011 and 2010 respectively. This was attributable to an increase of cash and
cash equivalent, accounts receivable and inventory which resulted from the income generating
activities by its subsidiary. There were no inventories recorded during the period June 30, 2010
since the MMDC started commercial operation only in August 2011.
Noncurrent assets as of the December 31, 2012 were higher by 7.10% and 17.12% compared to
fiscal year ended June 30, 2011 and 2010 respectively. The increase was due to the acquisition of
equipment and deposit to various suppliers. Thus, total assets as of December 31, 2012 increased
by 158.14% and 36.70% compared to period ended June 30, 2011 and 2010 respectively.
Total liabilities as of December 31, 2012 were higher by 34.78% and 2,369.85% compared to fiscal
period ended June 30, 2011 and 2010 respectively. The rise was mostly due to increase in interest
bearing bank loans, convertible promissory notes and f additional deposit from a customer.
Total equity as of December 31, 2012was 18.49 % and 11.54% higher than the comparable
amounts for the fiscal years ended June 30, 2011 and 2010, respectively. The income generating
activities of MMDC and the conversion of convertible notes held by certain investors lead to an
increase in Capital Stock and Additional Paid –In-Capital accounts. Thus, Total equity as of
December 31, 2012 was18.49 % and 11.54% higher than the comparable amounts for the fiscal
years ended June 30, 2011 and 2010 respectively.
Consolidated Cash Flow
2011
The proceeds generated from the convertible loans amounting to ₱249.8 million obtained by the
company was used for land acquisitionfor the planned Carrascal Causeway where several
hectares of coastal property were purchased for road right of way purposes and the construction
site of the Causeway. The Company also purchased mining equipment, service vehicles and
laboratory equipment and deployed funds for working capital and capital expenditures of MMDC.
2010
The proceeds from the issuance of common stock were used to fund the continuing exploration,
development, and mining operations of its subsidiary, MMDC. The Company ended its fiscal year
with ₱40,833,733 in cash.
2009
The increase in advances by Philtown was used to fund the negative cash flow of P3.7 million from
operating activities. The Company ended its fiscal year with ₱1.4 million in cash.
Interim Consolidated Balance Sheet
March 31, 2012 vs. December 31, 2011
The company’s total consolidated assets as of March 31, 2012 increased to ₱2,688 million from
₱2,565 million in Dec. 31, 2011. The increase was from the deposit to various suppliers in
connection with the purchase of heavy equipment. An increase in Inventory was also recorded due
to cost incurred in road and causeway rehabilitation in preparation for mining activities for the
coming months.
The total liabilities of the Company amounting to ₱680.398 million and ₱555.938 million as of
March 31, 2012 and December 31, 2011 respectively represent an increase of ₱124.460 million.
The increase in total liabilities is due to collection of additional deposit from a customer.
20
The stockholders’ equity decreased by 0.084% or decreased of ₱1,678 million from ₱2,009 million
as of December 31, 2011 to ₱2,007 million as of March 31, 2012. The company’s recorded a
consolidated net loss amounting to ₱24.798 million which resulted in decrease of the company’s
retained earnings to ₱169.767 million as of March 31, 2012, 12.75% lower from retained earnings
of ₱194.565 million as of December 31, 2011. Furthermore, investors who opted to convert their
private placement into equity resulted in an increase in Capital Stock to ₱1,732 million and an
increase in Additional Paid- In Capital account to ₱105.389 million.
March 31, 2012 vs. March 31, 2011
For the quarter ending March 31, 2012, intermittent weather conditions and heavy downpour
impeded the mining activities of MMDC. These weather-related delays decreased the number of
days for the company to operate; as a result the Company recorded a consolidated net loss of
₱24.798 million for the quarter ended March 31, 2012 and a net loss of ₱20.531 million for the
quarter ended March 31, 2011.
Administrative expenses increased to ₱21.482 million from ₱3.304 for the comparative period in
2011, equivalent to a 550.16% increase from the comparable period in 2011. It must be noted that
the financial statements of the subsidiary had not been incorporated in the quarterly report of the
Parent as of 2011. A considerable portion of expenses is attributable to payment of interest to
various lenders amounting to ₱10.638 million or equivalent to 49.52% of the total 2012 expenses.
As of March 31, 2012, the total assets of the Company increased to ₱2,688 million from ₱2,138
million as of March 31, 2011. The increase, equivalent to 25.73%, was mainly due to the increase
in the assets of its subsidiary.
The total liabilities of ₱680.398 million as of March 31, 2012 was ₱299.623 (55%) higher than the
amount of ₱381.075 as of March 31, 2011 due to the convertible loan amounting to ₱149.8 million
secured by the Company and recognition of liabilities relating to the deposit from customer, an
interest bearing loan and advances from related party transactions.
The stockholders’ equity amounting to ₱2,007 million is higher by 14.23% or ₱250 million from
₱1,757 million of as of March 31, 2011. The increase was on account of income generated from
the sale of nickel ore which resulted in an increase of the Company’s Retained Earnings to
₱169.767 million This represents an increase of ₱230.868 million from a deficit of ₱61.101 million
as of March 31, 2011. Certain investors who opted to convert their private placement into equity
resulted in an increase in Capital Stock to ₱1,732 million and an increase in Additional Paid- In
Capital account to ₱169.767 million.
The Company in its disclosure dated May 7, 2012 informed the Philippine Stock Exchange (PSE)
and Securities and Exchange Commission(SEC) that its wholly owned subsidiary MMDC made its
first shipment for 2012 a total of 55,517 WMT of nickel ores on April 28, 2012. MMDC is currently
loading for its next shipment and expects to ship regularly depending on weather conditions up to
November 2012, when the rainy season in the area usually sets in.
Furthermore, the Company also disclosed that MMDC will commence a major drilling and
exploration program this year that meets Philippine Mineral Reporting Code standards, is JORC
compliant, and covers its entire MPSA. This will enable the Company to secure an Environmental
Compliance Certificate for the entire property. Preparatory to this, MMDC is conducting an
extensive geologic mapping of 3 potentially laterite rich areas outside its current 120 hectare
ECC/mining area. The objective of the said exploration program is to significantly increase the ore
reserves of MMDC commensurate to a scaled-up mining program.
21
Financial Changes
a
Mar. 31, 2012
b
Mar. 31, 2011
c
Mar. 31, 2010
A S S ET S
Current Assets:
Cash and cash equivalent
Receivable - net
Inventory
Available for sale securities
Other current assets
Total Current Assets
Noncurrent Assets
Investment and Advances
Property and equipment
Explored Mineral Resources
Other noncurrent assets
Total Noncurrent assets
TOTAL ASSETS
d
Dec. 31, 2011
(Audited)
a vs b
HORIZONTAL ANALYSIS
Amount
Percentage ( %)
a vs c
a vs d
a vs b
a vs c
64,717,520
13,792,741
298,759,827
162,549,233
539,819,321
129,004,299
3,327,119
36,101,225
2,125
40,959,084
209,393,852
14,956,763
3,021,252
2,125
17,980,140
164,141,033
22,090,819
234,403,818
23,013,456
443,649,126
(64,286,779)
10,465,622
262,658,602
(2,125)
121,590,149
330,425,469
49,760,757
10,771,489
298,759,827
(2,125)
162,549,233
521,839,181
(99,423,513)
(8,298,078)
64,356,009
139,535,777
96,170,195
744,162,138
1,294,766,157
108,777,061
2,147,705,356
2,687,524,677
77,229,000
551,578,466
1,293,543,090
6,398,619
1,928,749,175
2,138,143,027
427,229,002
61,463
2,308,752
429,599,217
447,579,357
725,093,051
1,294,766,157
101,233,952
2,121,093,160
2,564,742,286
(77,229,000)
192,583,672
1,223,067
102,378,442
218,956,181
549,381,650
(427,229,002)
744,100,675
1,294,766,157
106,468,309
1,718,106,139
2,239,945,320
19,069,087
7,543,109
26,612,196
122,782,391
249,800,000
66,826,503
316,626,503
176,461
176,461
26,320,000
76,808,572
261,154,064
364,282,636
(249,800,000)
1,758,937
419,456,656
171,415,593
1,758,937
486,106,698
487,865,635
(26,320,000)
(75,049,635)
225,129,095
123,759,460
(100.00)
627.68
54.14
39,159,274
149,800,000
22,698,842
19,156,965
191,655,807
555,938,443
149,800,000
(905,628)
(3,487,369)
(17,500,000)
127,907,003
299,322,596
110,640,726
23,399,359
19,156,965
153,197,050
641,062,685
700,517
700,517
124,459,977
(3.73)
(15.40)
(100.00)
198.46
78.55
400,822,842 1,721,460,874
459,330,005
92,778,223
(3,975,000)
(447,934,225)
194,564,746
408,243,622 2,008,803,843
30,963,635
37,156,362
(48,929,233)
230,868,290
250,059,054
1,331,147,123
(353,940,874)
3,975,000
617,701,386
1,598,882,635
10,509,091
12,610,908
(24,797,585)
(1,677,586)
1.82
54.46
(100.00)
(377.85)
14.23
549,381,650
2,239,945,320
122,782,391
92.78
LIABILITIES AND EQUITY
Current Liabilities
Notes Payables
Interest-bearing loans
1,758,937
Trade and other payables
486,283,159
Total Current Liabilities
488,042,096
Noncurrent liabilities
Notes Payables-net of current portion
149,800,000
Interest-bearing loans
23,399,359
Related party payables
19,156,965
Advances from Philtown
Total NonCurrent Liabilities
192,356,324
TOTAL LIABILITIES
680,398,420
Equity
Capital Stock
1,731,969,965
Additional paid in capital
105,389,131
Minority Interest
Unrealized loss on available for sale securities
Retained earnings (deficit)
169,767,161
Total Equity
2,007,126,257
24,304,987
22,644,334
17,500,000
64,449,321
381,075,824
1,701,006,330
68,232,769
48,929,233
(61,101,129)
1,757,067,203
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY2,138,143,027
2,687,524,677
39,159,274
39,335,735
447,579,357
2,564,742,286
(49.83)
314.56
727.56
(100.00)
296.86
157.80
a vs d
VERTICAL ANALYSIS
Percentage ( %)
March 31 March 31 March 31 Dec. 31,
2012
2011
2010
2011
(Audited)
332.70
356.52
(100.00)
2,902.31
(21.41)
(84.94)
(52.80)
2.41
0.51
11.12
0.00
6.05
20.09
6.03
0.16
1.69
0.00
1.92
9.79
3.34
0.68
0.00
0.00
0.00
4.02
6.40
0.86
9.14
0.00
0.90
17.30
(100.00)
(100.00)
34.92 1,210,648.15
0.09
1,600.01
4,611.51
11.35
399.93
25.69
500.46
(23.93)
(93.68)
(9.07)
(16.63)
0.00
27.69
48.18
4.05
79.91
100.00
3.61
25.80
60.50
0.30
90.21
100.00
95.45
0.01
0.00
0.52
95.98
100.00
0.00
28.27
50.48
3.95
82.70
100.00
275,475.43
276,472.21
(74.41)
(13.08)
0.00
0.07
18.09
18.16
11.68
0.00
3.13
14.81
0.00
0.00
0.04
0.04
1.03
2.99
10.18
14.20
282.54
391.22
1,629.72
(100.00)
(66.37)
(31.45)
5.57
0.87
0.71
0.00
7.16
25.32
0.00
1.14
1.06
0.82
3.01
17.82
8.75
0.00
0.00
0.00
8.75
8.79
5.84
0.89
0.75
0.00
7.47
21.68
332.10
(1.19)
(77.06) (26.46)
(100.00)
(137.90) (131.40)
391.65
(12.53)
64.44
3.92
0.00
0.00
6.32
74.68
79.56
89.55
3.19
102.63
2.29
0.00
0.00
-0.89
(2.86) (100.08)
82.18
91.21
67.12
3.62
0.00
0.00
7.59
78.32
2,021.37
(43.99)
100.00
100.00
22
100.00
100.00
Current assets as of the end of the first quarter of 2012 was higher by 157.80% compared to first
quarter of 2011 and 2,902.31% higher compared to the first quarter of 2010. The increase in first
quarter ended March 31, 2012 and 2011 was due to the increase in receivable, inventories and
other current assets as a result of the consolidation of financial statements of the Parent
Companyand MMDC. No inventories were recorded during the first quarter of 2010 since the
Company had not acquired MMDC as of March 31, 2010.
Noncurrent assets as of March 31, 2012 were higher by 11.35% compared to March 31, 2011 This
is due to the acquisition of equipment and deposit to various suppliers. The 399.93% increase
against the first quarter of 2010 is mainly from additional property and equipment, explored mineral
resources and other noncurrent assets as a result of the consolidation of financial statements of the
Parent Company and MMDC. Consequently, total assets as of the end of the first quarter of 2012
increased by 25.69% and 500.46% over the comparable amounts for the first quarter of 2011 and
2010 respectively.
Total liabilities as of March 31, 2012 were higher by 78.55% compared to the level as of Mary 31
2011 due to the collection of additional deposit from a customer. Then increase of 1,629.72% over
total liabilities as of March 31, 2010 was attributable to the issuance of convertible promissory
notes, trade and other payables which included collection of deposit from a customer.
Total equity for the first quarter of 2012 is 14.23% higher than the first quarter of 2011 due to
conversion of convertible promissory notes held by some investors which resulted in an increase in
Capital Stock and Additional Paid –In-Capital..
Consolidated Cash Flow
March 31, 2012
Statement of Cash Flows:
The net cash generated from operating activities amounted to ₱21.65 million during the three
months ended March 31, 2012 compared to ₱21.12 million for the same period ending March 31,
2011. The net increase in cash was from deposit from a customer minus interest payment made
to various lenders.
Net cash used in investing activities amounted to ₱44.73 million and ₱87.40 million for the three
months ended March 31, 2012 and 2011 respectively which primarily consisted of acquisition of
property and equipment.
Net cash used in financing activities amounting to₱ 76.35 million for the three months period March
31, 2012 was primarily due to the settlement of a bank loan, partial settlement of convertible
promissory notes through the issuance of capital stock.. In 2011 of the same period , net cash
generated from financing activities amounted to ₱149.47 million due to availment of convertible
promissory notes amounting to ₱149.8 million.
For the quarter ended March 31, 2012 cash and cash equivalent decreased by ₱99.42 million and
had an ending balance of ₱641.72 million. For the quarter ended March 31, 2011 cash and cash
equivalent increased by ₱83.20 million had an ending balance of ₱ 129.00 million
Six-month period ended December 31, 2011, Fiscal years ended June 30 2011 and June 30,
2010
For the six months ended December 31, 2011 net cash provided by operating activities amounted
to ₱263.18 million. For the fiscal years ended June 30, 2011 and 2010 there were net operating
cash outflows amounting to ₱7.55 million and ₱21.29 million
.
23
Net cash used in investing activities which amounted to ₱190.30 million for the six months ended
December 31, 2011, primarily consisted of acquisition of property and equipment. For the year
ended June 30, 2011 cash used in investing activities amounted to ₱240.35 million, which is also
largely from acquisition of property and equipment. Net cash used in investing activities
amounting to ₱44.58 million for the year June 30, 2010 was mainly from the increased in deferred
mine exploration cost pertaining to MMDC,, sale of proprietary securities and additions to property
and equipment.
Net cash provided by financing activities amounting to ₱42.22 million for the six months ended
December 31, 2012 was primarily due to availment of bank loan and partial settlement of
convertible promissory notes. Cash inflows from financing activities of ₱256.11 million for the
period ended June 30, 2011 were principally from the proceeds of convertible [promissorynotes
oan) of ₱249.8 million while cash provided by financing activities for the period ended June 30,
2010 amounting to ₱77.58 million pertained to the proceeds from the collection of subscription
receivable, , net of payments of principal and interest on the bank loan and convertible promissory
note.
.
As of december 31, 2011, June 30, 2011 and June 30, 2010, cash and cash equivalent amounted
to ₱164.14 million, ₱49.05 million and ₱40.83 million respectively.
Key Performance Indicators (KPI’s)
Marcventures Holdings Inc.’s management uses the following KPIs to assess the Company’s
financial performance:
a) Current Ratio: Ratio of Current Assets to Current Liabilities; it indicates ability to meet short
term obligations.
b) Debt –to-Equity Ratio: Ratio of Total Liabilities to Stockholders’ Equity; it is a measure of
financial leverage, i.e., it indicates the proportion of debt and equity used to finance the
company’s assets.
c) Percentage Growth in Revenue: The percentage increase in the sale value of ore
shipments over the previous period.
d) Operating Profit Margin: The percentage of Operating Income to Sales; Operating Income
is computed as Sales less Cost of Sales and Operating Expenses; before general and
administrative expenses, interest expense and income tax. It indicates how much the
company makes per peso of sale and the operating efficiency or effectivity in controlling
costs and expenses associated with normal business operations.
e) Rate of Return on Equity: – The percentage of Net Income to Stockholders Equity. It
indicates how well the company reinvested stockholders' funds.
Comparative figures of the above KPIs for the fiscal years ended December 31, 2011 and June 30,
2011 are as follows:
24
Other Information
Any Known Trends, Events or Uncertainties (Material Impact on Liquidity)
In general, Management is not aware of any material event or uncertainty that has affected the
current interim period/or would have a material impact on future operations of the Company.
The company does not expect any liquidity or cash problem within the next twelve months.
Non-payment by a nickel ore buyer may lead to liquidity problems, but these risks are currently
minimized by a requirement of down payment or deposit on future deliveries to the buyer.
Lower nickel ore prices may also affect cash flows, but the presence of high grade saprolite nickel
ore reserves mitigate this as there is a continuous demand for the product.
Since the Company will earn its revenues in dollars, a significant depreciation in the dollar may
adversely affect the financial viability of mining operations. The company will take exchange rate
risk management measures under advisement from its financial advisors.
Discussion and Analysis of Material Events and Uncertainties
Other material events and uncertainties known to management that would address the past and
would have an impact on the Company’s future operations are discussed below.
1. Except as disclosed in the management discussion and notes to the financial statements,
25
there are no other known events that will trigger direct or contingent financial obligation that
is material to the company, including any default or acceleration of an obligation.
1.
There is no material off-balance sheet transaction, arrangement, obligation, and other
relationship of the company with unconsolidated entities or other persons created during
the reporting period.
2.
There are no material commitments for capital expenditures at the present time. Any
expenses that may occur are expected to be sourced from internally generated funds.
3.
Except as disclosed in the management discussion and notes to the financial statements,
there are no other known trends, events or uncertainties that have had or that are
reasonably expected to have a material favorable or unfavorable impact on revenues or
income from operations.
4.
All significant elements of income or loss from continuing operations are already discussed
in the management discussion and notes to financial statements. Likewise any significant
elements of income or loss that did not arise from the registrant’s continuing operations are
disclosed either in the management discussion or notes to financial statements.
5.
The operations of MMDC are constrained by the weather, with mining activities only during
the dry season.
Outlook
MMDC’s mineral property remained undeveloped for many years due to the relatively low price of
nickel which made production uneconomical. Since then, nickel prices have increased, and
together with new technologies in refining nickel limonite ore, created a strong demand for nickel
ores, especially from China. The economic viability of nickel limonite ore spurred the Company to
conduct further explorations of the mineral property, which led to the discovery of large volumes of
high-grade saprolite nickel ore.
The future of MMDC will largely be dictated by the demand for and price of nickel and the ability of
the Company to successfully develop and enlarge its ore body to enable it to continuously ship
larger quantities over time. Presently, MMDC’s work program covers an area of 120 hectares,
which is only about 2.5% of the total mineral property covered by its MPSA.
MMDC will commence a major drilling and exploration program this year that meets Philippine
Mineral Reporting Code standards, is JORC compliant, and covers the entire MPSA. This will
enable MMDC to secure an Environmental Compliance Certificate for the entire property.
Preparatory to this, MMDC is conducting an extensive geologic mapping of 3 potentially laterite rich
areas outside its current 120 hectare ECC/ mining area. With this exploration program, MMDC
expects to significantly increase its ore reserves for its future mining program.
FINANCIAL STATEMENTS
The consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules are filed as part of this Form 17-A. The management is
not aware of any significant or material events or transactions not included nor disclosed in the
consolidated financial statements in compliance with the SRC Rule 68.
INFORMATION ON INDEPENDENT ACCOUNTANT AND OTHER RELATED MATTERS
External Audit Fees and Services
Year Ended Dec.31, 2011
Audit Fees
Audit-Related Fees
Tax Fees
Total
Year Ended June 30, 2011
P134,400.00
10,000.00
P 134,400.00
11,378.34
P144,400.00
P 145,778.34
26
Audit Fees. Represents professional fees of the external auditor for the audit services rendered on
Company’s Annual Financial Statements for the year 2010.
Audit-Related Fees. Represents the out of pocket expenses of the individuals who will perform
the audit, it also includes postage and reproduction of Financial Statements as billed by the external
auditor.
Tax Fees. Represents professional fees for tax advisory/consultation services rendered.
Audit services provided to the Company by external auditor have been pre-approved by the Audit
Committee. The Audit Committee has reviewed the magnitude and nature of these services to
ensure that they are compatible with maintaining the independence of the external auditor.
Changes in and disagreements with Accountants on Accounting and Financial Disclosure
There was no event in the past years where the external auditor and the Registrant had any
disagreements with regard to any matter relating to accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
IV. BRIEF DESCRIPTION OF THE NATURE OF THE BUSINESS
Background
The Company was incorporated and registered with the Securities and Exchange Commission
(SEC) on August 7, 1957. In 1997, the stockholders and the SEC approved the extension of the
Company’s term of existence for another 50 years or until August 7, 2057.
Its primary purpose is to acquire by purchase, exchange, assignment, gift or otherwise, and to hold,
own and use for investment or otherwise, and to sell, assign, transfer, exchange, lease, let,
develop, mortgage, pledge, traffic, deal in, and with, and otherwise operate, manage, enjoy and
dispose of, any and all properties of every kind and description and wherever situated, including
land as and to the extent permitted by law, including but not limited to, buildings, tenements,
warehouses, factories, edifices and structures and other improvements and bonds, debentures,
promissory notes, shares of stock, or other securities or obligations, created, negotiated or issued
by any corporation, association or other entity, foreign or domestic and while the owner, holder or
possessors thereof, to exercise all rights, powers and privileges of ownership or any other interest
therein, including the right to receive, collect and dispose of, any and all rentals, dividends, interest
and income derived therefrom, and the right to vote on any proprietary or other interest, on any
shares of the capital stock, and upon any bonds, debentures or other securities having voting
power, so owned or held; and provided it shall not engage in the business of an open-end or closeend investment company as defined in the Investment Company Act (Republic Act 2629), or act as
a securities broker or dealer.
On December 15, 2009, the Company entered into a Memorandum of Agreement (MOA) between
the shareholders of Marcventures Mining and Development Corporation (MMDC) and their partners
to exchange their ownership of MMDC for a total value of P
= 1.3 billion consisting of: (i) new
Company shares worth P
= 100 million representing the full payment of the balance for the
subscription to the increase in authorized capital stock; (ii) additional Company shares worth P
= 1.15
billion to be issued from the authorized capital stock as increased, and the new par value of the
Company after its corporate restructuring; and (iii) 448 membership certificates of The Metropolitan
Club, Inc. (Metroclub Certificates) with an agreed net value of P
= 50 million together with the
Company’s rights, obligation and interests.
During the annual stockholders meeting held on February 10, 2010, the Company’s stockholders
approved the acquisition of 100% ownership of MMDC. In relation to the MMDC acquisition, the
stockholders approved the following specific transactions: (i) the subscription by the MMDC
shareholders, or their nominees or designees, to 450.0 million shares at the new par value of Php
0.01 per share or total par value of Php 45.0 billion out of the increase in authorized capital stock of
Php 1.8 billion, of which the amount of Php 350.0 million will be paid in cash, and the balance of
Php 100.0 million to be payable upon SEC approval of the increase by way of assignment of
27
153,846 MMDC shares; (ii) the subscription by the MMDC shareholders, or their nominees or
designees, to an additional 115.0 billion shares at a par value of Php 0.01 per share from the
authorized capital stock, as increased, in consideration for the assignment of 1,769,231 MMDC
shares at an agreed value of Php 1.15 billion; and (iii) the approval and ratification of the
assignment of the 488 Metroclub membership certificates together with all rights and obligations
under AJO’s contract with Philtown, including the assumption by the assignee of AJO’s liabilities to
Philtown in the amount of Php 17.5 million, in consideration for the assignment and transfer of
76,923 MMDC shares at an agreed value of Php 50.0 million.
On March 30, 2010, the SEC approved the change in corporate name from “AJO.net Holdings, Inc.”
to “Marcventures Holdings, Inc.,” and the amendment of the Company’s primary purpose to include
land ownership. The SEC also approved the equity restructuring of the Company by way of: (i) the
decrease of the authorized capital stock from P2,000,000,000.00 divided into 20,000,000,000
common shares to P200,000,000.00 divided into 20,000,000,000 common shares through the
reduction of the par value of the common shares from P0.10 to P0.01; followed by (ii) the increase
of the authorized capital stock from P200,000,000.00 divided into 20,000,000,000 common shares
to P2,000,000,000.00 divided into 200,000,000,000 common shares.
On September 6, 2010, the SEC issued the Confirmation of Valuation for the issuance of
115,000,000 new common shares in consideration of the assignment of 1,769,231 MMDC shares.
The SEC also approved the full payment of 101,000,000 shares subscribed by Mr. Mario G.
Vijungco to the increase in authorized capital stock (dated March 30, 2010) by way of assignment
of 153,846 MMDC shares.
On September 30, 2010, the SEC approved the change in par value of the shares from Php 0.01 to
Php 1.00 per share.
th
The Company’s registered office is located the 16 Floor Citibank Tower, 8741 Paseo de Roxas,
Makati City, Metro Manila
Business
Marcventures is a holding company primarily involved in nickel mining operations in Surigao del
Sur, Philippines, through its wholly-owned subsidiary, Marcventures Mining & Development
Corporation (MMDC). MMDC is primarily involved in exploration, mining, and development of a
nickel mine located in Surigao del Sur and covering an area of 4,799 hectares.
Products/Sales
The principal markets for nickel ore production from the Philippines are currently China and Japan.
In 2007, Philippine nickel ore shipments accounted for around 50% of China’s total imports of nickel
ore. The proximity of the Philippines to China results in lower freight costs, thus the preference by
Chinese companies of Philippine-sourced nickel ore. Currently, due to the high cost of freight,
Chinese importers are favoring higher grade nickel ore (at least 1.6% Ni) compared to past
shipments of low grade ore (1% Ni). The Company does not anticipate any problem meeting the Ni
grade content requirement of Chinese importers due to the high Ni grade of its reserves.
Japanese companies on the other hand have been in the past ten (10) years a consistent buyer of
Philippine saprolite ore which are used to produce primary nickel.
The Company relies 100% on foreign sales to Asian clients. It started shipments in August 2011.
Nickel ore is directly shipped to buyers. Other than the foregoing, the Company has no other
product or service.
Competition
The company is primarily engaged in shipping nickel ore in the Asian region - mainly to Chinese
and Japanese clients. The primary differentiator that will give an industry player a leg up on its
competitors is the nickel grade of its ore and the corresponding pricing. The market leader in nickel
ore shipments from the Philippines is Nickel Asia Corporation, which is several times larger than the
Company. The Company believes it is able to compete due to the quality of its ore, fair pricing, and
the high demand for nickel ore which exceeds the supply the Philippines is able to provide.
28
Sources and availability of Raw Materials
The Company’s nickel ore is extracted from MMDC’s mine in Surigao del Sur covered by Mineral
Production Sharing Agreement (MPSA) No. 016-93-XI.
Equipment, spare parts, and other operating supplies are readily available both locally and abroad.
Primary suppliers include Dyteban Hardware, Juchem Enterprises, Sungold Commercial, Datalan
Communications Services, Johnco Marketing, Caltex, and Jetty.
Sales Contracts
The company has entered into a 3-year off-take agreement with Dunfeng International (Phils.) Inc.
for the sale of 1 million Wet Metric Tons of nickel ore per year on a best effort basis starting on
2012. This will consist of both low grade and high grade nickel ore.
Properties
Office Space
The Company currently leases its office space located at Unit 16A Citibank Tower, 8741 Paseo de
Roxas, Makati City. The office space has a total area of 307.9 square meters. The lease of the
space is for three (3) years starting March 15, 2011 to March 14, 2014. The rent is Php 169,144.32
per month inclusive of twelve percent (12%) value-added taxes, less five percent (5%) withholding
tax.
MMDC Properties
Owned
The table below sets forth a summary of the properties owned by MMDC.
Payee
Joel Arreza
Heirs of Basillisa M. Petros
Isabel Bambina Angeles
William Agyan/ Calixtrato
Hunahunan
Alfonso Ascarez Jr
Virgilio Tuldanes
Romulo G. Urbiztondo
Tomasito Bat-ao
Venancio Ating Jr
Fabian Ating
Marlon Sumberan
Francisco Sumberan
Francisco Sumberan
Wenifredo Bat-ao
Calicstrato Hunahunan
Winefredo Bat-ao
Calicstrato Hunahunan
Cayetana Ampo
Felino Bat-ao
Rodrigo Tawide
Juanita Agyang
Bci
Area Size
(sq. m.)
238
38,856
26,000
12,460
Amount
Location
300,000.00
4,000,000.00
270,000.00
216,120.00
Magosilom, Cantilan
Consuelo, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
6,510
48,758
17,895
7,177
3,893.60
4,487.17
11,.692
13,463
12,696
2,855
6,762
2,855
6,762
4,341
3,538
10,962
2,487
House& lot
115,200.00
4,875,800.00
1,789,500.00
143,540.00
77872.00
89,743.40
146,920.00
134,630.00
126,960.00
28,550.00
67,620.00
28,550.00
67,620.00
43,410.00
35,380.00
109,620.00
24,870.00
180,000.00
Cabangahan, Cantilan
Bon-ot, Carrascal
Bon-ot, Carrascal
Cabangahan, Cantillan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabngahan, Cantilan
Cabanghan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Cabanghan, Cantilan
Cabangahan, Cantilan
Cabangahan, Cantilan
Bayogo, Madrid
Leased
The table below presents a summary of the properties currently being leased by MMDC.
29
Land/Owner/Payee
Juan Bucarile, Sr.
No. of
Years of
Contract
10
Area
Size (sq.
m)
3,703.00
Date Start
of
Contract
10/1/2010
Amount
of Rent
(PhP)
3,703.00
Year ln
Increase
(%)
None
Location
10
4,603.00
9/1/2010
4,603.00
None
Dioneto Cordita
Myrna Ortiz
10
50,000.00
9/1/2010
25,000.00
5%
Julian Cabadonga
10
1,565.00
9/1/2010
1.565.00
None
Charita Roculas
10
11,905.00
10/1/2010
11,905.00
10%
Alfredo Guiral
10
1,390.00
10/1/2010
2,000.00
None
Edelyn Huerte
10
2,5757.00
9/1/2010
2,575.00
None
Alberta Y. Jacobe
Agustin P. Luarez
Helenita
Younglove-Kyle
Allan D. Ajit
Decena A. Jubac
Alfredo Ajit
Fermin A. Ajit
Eladio Quajao
Emelia C. Moreno
Marcos Quajao
Arturo Buar
5
10
5
696.96
1,636.20
811.60
3/1/2011
3/1/2011
3/1/2011
1,000.00
1,636.20
1,000.00
10%
10%
10%
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Pili,
Panikian
Banban,
Panikian
Banban,
Panikian
Banban,
Panikian
Banban,
Panikian
Banban,
Panikian
Gamuton
Gamuton
Gamuton
5
5
5
5
5
5
5
5
1,103.26
1,852.86
746.64
1,490.86
825.12
1,119.54
2,742.69
1,288.91
3/1/2011
3/1/2011
3/1/2011
3/1/2011
3/1/2011
3/1/2011
3/1/2011
3/1/2011
1,103.26
1,852.86
1000.00
1490.86
1,000.00
1,119.54
2,724.69
1,288.91
10%
10%
10%
10%
10%
10%
10%
10%
Gamuton
Gamuton
Gamuton
Gamuton
Gamuton
Gamuton
Gamuton
Gamuton
Pablo B. Arpilleda,
Jr.
Punella Ilagan
10
4,848.00
9/1/2010
4,848.00
None
10
1,621.00
9/1/2010
1,621.00
None
Cosme Emboc
1
2,312.00
9/1/2010
2.312.00
None
Ryan Huniog
1
1,037.00
9/1/2010
1,037.00
None
Pablo Huniog
1
1,420.00
9/1/2010
1,420.00
None
Roberto Dagno
10
1,194.00
9/1/2010
1,194.00
None
Antonio Huniog Jr.
10
4,743.00
9/1/2010
4,743.00
None
Antonio Huniog Jr.
1
2,300.00
9/1/2010
2,300.00
None
Mike Bat-ao
10
345.00
9/1/2010
500.00
None
Jimmy Sandag
10
1,057.00
9/1/2010
1,057.00
None
Lucas Angeles
10
1,979.00
9/1/2010
1,979.00
None
Banjelito Sandag
10
462.00
9/1/2010
500.00
None
Lucas Angeles
1
561.00
9/1/2010
561.00
None
Danilo Hunahunan
10
281.00
9/1/2010
500.00
None
Polito Bat-ao
10
192.00
9/1/2010
500.00
None
Ronnie Huniog
10
1,934.00
9/1/2010
1,934.00
None
Jemelito Cordita
10
3,288.00
9/1/2010
3,288.00
None
30
Arturo Buar
Luna Y. Bobias
Alfredo
Comparativo
Annabelle A.
Yparragurre
Josefa C. Acedo
Diosdado Solejon
Librada C. Rafaila
Bernard Ardel
Bobias
Winefredo
Dagasdas
BenitoDagasdas
POrferio Bonani
Bisa Pebojot Rodilla
Robinson
M.Consad
Merlinita Sampinit
Bonifacio D. Ciez
Lolito Cotecson
Carmelita Ladroma
Galdo
Lolitao Cotecson
Charita Marzon
Rogelio C. Asupra
Richard Polida
Paz Cosmiano
Valeriano Aranas
Lolito Cotecson
Annabelle A.
Yparraguirre
Pablo B. Arpilleda,
Jr.
5
5
5
1,288.91
4,803.51
817.69
3/1/2011
3/1/2011
3/1/2011
1,288.91
4,803.51
1,000.00
10%
10%
10%
Gamuton
Gamuton
Gamuton
5
606.01
3/1/2011
1,000.00
10%
Gamuton
10
5
5
5
63.99
501.56
489.91
1,919.42
3/1/2011
3/1/2011
3/1/2011
3/1/2011
500.00
700.00
500.00
1,919.42
10%
10%
10%
10%
Gamuton
Bon-ot
Bon-ot
Bon-ot
5
400.32
3/1/2011
500.00
10%
Bon-ot
5
5
5
5
446.32
1,520.13
2,274.67
3,346.38
3/1/2011
3/1/2011
3/1/2011
3/1/2011
500.00
1,520.13
1,520.13
3,346.38
10%
10%
10%
10%
Bon-ot
Bon-ot
Bon-ot
Bon-ot
5
5
5
6 months
573.80
1,416.51
2,537.12
2,427.00
3/1/2011
3/1/2011
3/1/2011
3/21/2011
1,000.00
1,416.51
2,537.12
3,000.00
10%
10%
10%
10%
Bon-ot
Bon-ot
Bon-ot
Bon-ot
10
10
10
10
10
10
5
5
10,152.00
4,539.00
12,293.00
9,800.00
18,153
18,000.00
2,537.12
606.01
11/3/2010
3/8/2011
3/12/2011
10/16/2010
3/7/2011
3/7/2011
3/1/2011
3/1/2011
16,000.00
7,000.00
15,000.00
15,000.00
50,000.00
51,010.00
2,537.12
1,000.00
10%
10%
10%
10%
10%
10%
10%
10%
Bon-ot
Bon-ot
Bon-ot
Bon-ot
Bon-ot
Bon-ot
Bon-ot
Gamuton
10
4,848.00
9/1/2010
4,848.00
None
Pili,
Panikian
The renewals of the above leases are subject to agreement by the parties.
The above leased properties are used by MMDC for roads and stockpile areas.
MMDC will acquire and/or lease additional properties to be utilized for roads and stockpile areas
when needed for its operations. The cost of such acquisitions will depend on negotiations with
prospective owners and lessors. MMDC plans to finance such acquisitions from internally
generated funds.
Mining Properties
The Company’s wholly-owned subsidiary, MMDC was granted by the Department of Environment
and Natural Resources (DENR) of the Philippine National Government MPSA No. 016-93-XI
covering an area of approximately 4,799 hectares located in Cantilan, Surigao Del Sur. As the
holder of the said MPSA, MMDC has the exclusive right to conduct and develop mining operations
within the mineral property over a period of twenty five (25) years from July 1, 1993. MMDC has
identified Nickel Ore as the primary mineral that will be extracted from the mine and sold to third
parties due to the abundance and favorable characteristics of nickel within the mineral property.
Deed of Assignment to MMDC
MPSA No. 016-93-XI was originally granted to Ventura Timber Corporation (Ventura) on July 1,
1993. In January 1995, a Deed of Assignment was executed by and between Ventura and MMDC,
wherein Ventura assigned to MMDC all its rights, title and interest in and to MPSA No. 016-93-XI.
The Deed was duly registered with the Mines and Geosciences Bureau (MGB) Regional Office
(RO) No. XIII on February 9, 1995, and was subsequently approved on January 15, 2008, making
MMDC the official contractor of the mineral property. The Company’s Chairman, Mario Vijungco,
was the former owner of Ventura Timber Corporation, the original holder of MPSA 016-93-XI.
31
Note that MPSA 016-93-XIII and MPSA 016-93-XI refers to one and the same mining property. At
that time MMDC and Ventura executed abovementioned Deed of Assignment, Surigao del Sur was
still included as part of Region XI. On February 25, 1995, the CARAGA Region (Region XIII) was
created through Republic Act No. 7901, which included five provinces, namely: Agusan del Norte,
Agusan del Sur, Surigao del Norte, Surigao del Sur and Dinagat Islands. In this Prospectus, the
Company refers to the mining property as MPSA 016-93-XI to avoid confusion.
The Partial Declaration of Mining Project Feasibility of MMDC was approved by the MGB on
October 23, 2009 authorizing MMDC to proceed with the development and operating periods of the
MPSA, including extraction and commercial disposition of nickel ore and associated minerals within
the 300 hectare portion of its contract area. The remaining portion of the contract area is still under
exploration period.
Following is a summary of the major details covered by the Partial Declaration of Mining Project
Feasibility:
Project
Product
Production Rate
Ore Reserves
Mine Life
Cantilan Nickel Project
Nickel Laterite
1,200,000 WMT per year
11.60 million WMT @ 1.50%
10 years
Government Approvals; Effect of Existing or Probable Government Regulations on the
Business
The Company is already in possession of its Mineral Production Sharing Agreement, Environmental
Compliance Certificate, and has been given Notice to Proceed with its mining operations by the
Mines & Geosciences Bureau of the Department of Environment and Natural Resources.
Government regulations’ effect on the Company is primarily on the costs of compliance which are
appropriately reflected in the Company’s books either as an expense or as a capital asset under the
GAAP.
Determination of the effect of probable government regulations cannot be known until specific
provisions are made clear.
Exploration and Development
In April 2008, MMDC engaged Dr. Carlo A. Arcilla, a Competent Person in Geology, to study the
exploration data on the mineral property and verify its nickel resources. Dr. Arcilla is a director of
the National Institute of Geological Sciences of the University of the Philippines. Dr. Arcilla’s
preliminary geologic resource report showed Inferred Resources of 53 million WMT of nickel laterite
at an average Ni grade of 1.2% covering 400 hectares. In August 2010, he reported Indicated
Resources of 15.9 million DMT of laterite (equivalent to 22.7 million WMT) at an average Ni grade
of 1.5% covering 120 hectares. It should be noted that these 120 hectares represents about 3.5%
of the effective area for mining out of the total 4,799 hectares constituting the Mineral Property.
The Economic Assessment and Ore Reserve Technical Report was completed by Engr. Orlando S.
Cruz, a Competent Person - Mining Engineer, on March 2010 in accordance with the Philippine
Mineral Reporting Code. This report estimated Mineable Ore Reserve at 11.6 million WMT with
average grade of Ni grade of 1.5% is also based on 120 hectares.
Costs and Effects of Compliance with Environmental Laws
The Company is strongly committed to its policy of protecting and enhancing the environment. As of
December 2011, it spent Php 12,42 million in accordance with its Environmental Protection and
Enhancement Program. It has allocated a floor amount of Php 26.89 million in 2012 for its
environmental program.
Business Transactions with Related Parties
32
The Company obtained non-interest bearing advances from stockholders which are payable on
demand..Such advances were used by the Company in day to day operations, general
administrative expenses, and for payroll.
As of December 31, 2011, such advances from stockholders amounted to Php 9,621,255, broken
down as follows:
Name of Stockholder
Dy Chi Hing
Amount Advanced
Php 2,726,308
Mario Vijungco
Php 6,894,947
Total
Php 9,621,255
Development Activities
The Company has not spent any amount on development activities. However, its wholly owned
subsidiary, MMDC, spent a total of Php 413 million for mine development from 2008 to 2011.
There were no revenues for MMDC during that period.
Risks of Mining
Exploration, Development and Operations Risk
There are numerous hazards and risks normally encountered in the exploration, development, and
production of nickel. These include and are not limited to unusual and hindering geologic
formations, erosion, unfavorable weather conditions, flooding and other occurrences that may arise
out of the drilling and removal of material. Any such occurrence may cause damage to mines and
other production facilities, which may result in environmental damage, and legal liability. The
company has in place its Environmental Protection and Enhancement Plan which has resulted in
structures built to prevent siltation and untoward flooding of the minesite, a Safety and Health
Program, and a Crisis Management Team in place.
Risks in the Estimation of Ore Reserves and Mineral Resources
The evaluation of the Company’s ore reserves and mineral resources is established on the results
and estimates of several geological and exploration works as well as rigorous studies conducted by
competent geologists and mining engineers. Nonetheless, the reported figures for ore reserves are
only estimates and are therefore not precise calculations. The Company conducts in-fill drilling to
validate the estimates further, and conducts a continuous exploration program to continually
increase
its
estimated
mineral
reserves.
Volatility of Commodity Prices
Significant declines in the price of nickel may render exploration, development, and production
activity uneconomical until the price recovers. Life-of-mine estimates may have to be recalculated.
Such conditions may result in a material and adverse effect on the financial performance of the
Company. The Company can enter into longer term, fixed price contracts with buyers to mitigate
this risk.
Exchange Rate Risk
There can be no assurance that: (a) the Peso will not be subject to continued appreciation or
volatility; (b) the current exchange rate policy will remain the same; (c) the Government will act
when necessary to stabilize the value of the Peso, or that any such action, if taken, will be
successful. Since the Company will earn its revenues in dollars, a significant depreciation in the
dollar may adversely affect the financial viability of mining operations. The company will take
exchange rate risk management measures under advisement from its financial advisors.
Weather
Extended rainy seasons may limit extraction and haulage. The company has measures and plans
in place that can increase daily production rates when weather hampers extraction and haulage
33
activities. Buffer equipment is in place to increase the equipment complement of any particular shift.
Additional shifts will also be employed in order to meet production targets. However, these can only
mitigate the effects of the weather on production and haulage to a certain degree.
Employees
Company
The Company currently has a total of five (5) employees, consisting of two (2) in accounting, one
(1) in administrative, two (2) clerical/messenger personnel and two (2) consultants. For the
ensuing twelve (12) months, the Company anticipates it will have the same number of employees.
There is no employees’ union. There are no employees who are subject to any Collective
Bargaining Agreement (“CBA”). The Company was not threatened by any strike in the past three
years. The Company has not given any supplemental benefits or incentive arrangements with its
employees. The Company believes relations with the employees are good.
Marcventures Mining & Development Corporation:
As of December 31, 2011, MMDC has a total of 352 employees, of which 245 are regular, 107 are
contractual.
Of the 352 employees, a total of 34 employees perform administrative work and 318 employees are
involved directly in mine site operations.
There is no employees’ union nor is there a collective bargaining agreement with the employees.
There has not been a strike in MMDC’s history.
Mineral Reserves and Estimates
The Company, through its subsidiary MMDC, holds Mineral Production Sharing Agreement No.
016-93-XI which covers 4,799 hectares in the province of Surigao Del Sur. It is physiologically
located within the Diwata Mountain Range.
Owner
MMDC
Location
Cantilan,
Surigao
del Sur
Area
4,799
Mineral
Nickel
Permit / Application
MPSA No. 016-93-XI
Date
Permit
Granted
July 1,
1993
Status
In
commercial
operation.
Estimates of the MPSA’s mineral resources and reserves are as follows:
RESOURCES
Volume
Area
Indicated
15.9 million DMT laterite
(22.7 million WMT)
1.5% average Ni grade
120 hectares
The above estimates were prepared by Dr. Carlo A. Arcilla, a Competent Person in Geology, to
study the exploration data on the mineral property and verify its nickel resources. Dr. Arcilla is a
director of the National Institute of Geological Sciences of the University of the Philippines.
Ore Grade
RESERVES
11.6 million WMT
laterite ore
Average 1.5% Ni grade
Area
120 hectares
Volume
The above estimates were prepared by Engr. Orlando S. Cruz, a Competent Person – Mining
Engineer, on March 2010.
34
The said Competent Persons are accredited under the PMRC. The Competent Persons also
prepared the estimates in accordance with PMRC guidelines. The investor should read the Report
of Competent Persons found in Annex B for a complete and more detailed discussion of MMDC’s
mineral project.
Legal Proceedings
As of December 31, 2011, the Company is not a party to any legal proceedings. It is not involved in
any pending legal proceedings with respect to any of its properties. It is not involved in any claims
or lawsuits involving damages that may materially affect it or its subsidiaries.
As of December 31, 2011, the Company’s wholly owned subsidiary, MMDC, is currently involved in
four (4) pending issues:
(e) Petition filed by Cantilan Irrigation System Federation of Irrigators Association (CISFIA)
Surigao del Sur Irrigators Federation Association (SURIF) Cabcant Irrigators Association,
Inc., Buyaan Irrigators Association, Inc., CarCanMadCarLan Baywatch Foundation, Inc.
(CBFI), Lovers of Nature Foundation, Inc. before the Office of the Secretary, Department of
Environment and Natural Resources.
This petition was filed on July 20, 2009 and seeks the cancellation of the MPSA of
Marcventures Mining and Development Corporation and the issuance of a Temporary
Restraining Order and Injunction. The Secretary, however, is not vested with the power to
cancel a Mineral Production Sharing Agreement and issue a temporary restraining order or
injunction as the powers belong solely to the court, the MPSA being a contract
constitutionally allowed and protected requiring judicial process. Temporary restraining
order and injunction are ancillary remedies to a case pending in court. As of December
2011, we did not receive any order from the Office of the Secretary.
(f) Case filed by Jaime “Datu Dagsaan” Bat-ao, Liquisa Irrigators Association represented by
Peter William Olan, Nagkahugpong Managatay Para sa Kalambuan (NAGMAKAAYO)
represented by Crisologo E. Aniono, Sr.; Lydia L. Lascano and Nick Matthew Q. Irriberi, a
minor represented by his father, Vicente Cirilo Irriberi, before the Regional Trial Court,
Branch 41, Cantilan, Surigao del Sur, docketed as Civil Case No. 224.
The case was filed on November 10, 2010. The Plaintiffs seek to stop the mining activities
but failed to present their evidence and convince the court to stop the mining operations
and extend the seventy two (72) hours temporary environmental protection order, hence it
expired. On May 26, 2011, however, the RTC issued an Order stating that the temporary
environmental protection order issued by the Court is still subsisting and effective until
there is an order lifting, revoking or dissolving the same. MMDC has filed a Motion for
Reconsideration of the above Order, which, to date, has not been resolved by the Court.
The court cannot cancel the MPSA not only because the DENR is not a party to the case
but it is contract sanctioned and protected by the Constitution, mining law and existing
laws. The mining activities of MMDC are authorized by the Environmental Compliance
Certificate and Partial Declaration of Mining Project Feasibility. Moreover, its operation has
not been stopped by the DENR and its bureaus which have jurisdiction and regulatory
functions over mining activities.
Equally important, MMDC has not been penalized for violations of environmental laws or its
corporate officers charged and convicted.
The case is set for hearing on July 20 to 22, 2011. This hearing was cancelled due to the
inhibition of the Presiding Judge and no date of hearing has been set.
(g) Opposition filed by the Cantilan Irrigation System Federation of Irrigators Association
[CISFIA] before the National Water Resources Board [NWRB] docketed as WPA No. XIIISDS-2009-02-036 relative to the application of Marcventures Mining and Development
Corporation for water rights.
This opposition has nothing to do with the present mining activities of MMDC. We were just
notified of an opposition of MMDC’s application for water rights. As of the date of this
Prospectus, it is still pending. Neither did we receive any order form the Board or pleadings
from the Oppositor.
35
(h) Petition for a Writ of Kalikasan filed before the Supreme Court on May 29, 2011 by Tribal
Coalition of Mindanao [TRICOM], Inc. Daging Manobo Sectoral Tribal Council, Urbiztondo
Manobo-Mamanwa Sectoral Tribal Council, Kinalablaban Sectoral Tribal Council,
Cabangahan Tribal Community –Manobo Tribe, Victoriano Vidal and Datu Willy Daging
against Taganito Mining Corporation, Platinum Group Metals Corp., Synergy Mining Corp.,
Shenzhou Mining Group Corp. and Marcventures Mining and Development Corp.
The said petition seeks the issuance of a temporary environmental protection order against
the above named companies, including MMDC. To date, MMDC has not received any
Order from the Supreme Court although it was furnished a copy of the Petition as required
by the rules governing environmental cases. The Supreme Court denied the application of
the Petitioners for Writ of Kalikasan and delegated to the Court of Appeals, Mindanao
Station, the reception of the evidence for Temporary Environmental Protection Order.
Other than the foregoing, MMDC and the Company have no other actual, pending or threatened
litigation. Likewise, MMDC and the Company are unaware of any involvement of their respective
executives, directors and/or officers in any legal proceeding for the past five (5) years.
The Company has not made any announcements publicly with regards to any new product or
service (whether in the planning stage, or any existence of prototypes).
V.
Directors and Executive Officers of the Registrant
The Names and Business Background of the registrant’s directors and executive officers are
discussed in the information statement on page nos. 7-8.
VI.
Market Price Of And Cash Dividends On Registrant’s Common Equity
The principal market for the registrant’s common equity is the Philippine Stock Exchange
(“PSE”). The Company’s stock symbol is “MARC”.
Stock Prices – Common Shares
The following table sets forth the high and low closing sales prices per share of the Common
Shares listed on the PSE during the respective periods indicated as per published financial
sources.
Price per Share (In Pesos)
High
Low
2008-2009
Jul. – Sept.2008
Oct. – Dec. 2008
Jan. – Mar. 2009
April – June 2009
0.085
0.060
0.046
0.060
0.041
0.030
0.035
0.038
2009-2010
Jul. – Sept.2009
Oct. – Dec. 2009
Jan. – Mar. 2010
April – June 2010
July – Sept. 2010
Oct. – Dec. 2010*
0.065
0.070
0.050
0.042
0.026
2.50
0.046
0.043
0.038
0.032
0.017
1.83
2011
Jan. – Mar. 2011
Apr. – June 2011
Jul. – Sept. 2011
Oct. – Dec. 2011
2.37
2.00
2.51
2.25
1.86
1.73
1.79
1.87
36
2012
January 2012
February 2012
March 2012
April 2012
2.25
2.73
3.45
3.71
1.90
2.28
2.52
3.22
On October 1, 2010, the change in the par value of the Company’s common stock from P0.01 to
P1.00 became effective.
Thus, the market price for the Company’s shares adjusted
correspondingly, such that the trading price of the Company’s’ stock ranged from P1.83 to P2.50
during the month of October, 2010.
Latest Market Price
On April 10, 2012, the closing market price of the Company’s common stock was P 3.37 per share.
Stockholders
The number of shareholders of record as of April 30, 2012 was 2,183. The number of outstanding
shares as April 30, 2012 was 1,732,404,054 common shares.
The top 20 registered common stockholders as of April 30, 2012 follows:
STOCKHOLDER'S NAME
TOTAL
HOLDINGS
(SUBSCRIBED)
PCD NOMINEE CORPORATION (FILIPINO)
PCD NOMINEE CORP. (NON-FILIPINO)
ATC SECURITIES, INC.
MANUJ AMARNANI
ANSALDO GODINEZ & CO., INC.
ANTONIO RAMON C. LOPEZ
PACIFICO B. TACUB
TERESITA N. LIM
VICENTE GOQUIOLAY & CO., INC.
ALBERTO MENDOZA &/OR JEANIE MENDOZA
INDEPENDENT REALTY CORPORATION
ROSENDO LIM
RAMON SALVADOR
ROMEO B. MOLANO
CHIONG & CO., INC.
AO I LOK
YU & CO., INC.
TIONG SECURITIES, INC.
RAFAEL S. CAMUS III
SJG DEVELOPMENT, INC.
ROMAN T. YAP
MARIANO YU & CO., INC.
UY-TIOCO & CO., INC.
GRAND TOTAL
1,726,265,916
4,127,970
913,397
110,000
96,495
60,000
43,000
40,000
39,599
30,000
20,400
20,000
20,000
16,000
13,787
13,000
11,668
10,373
10,000
10,000
10,000
9,081
8,487
PERCENTAGE
TO
TOTAL
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
99.646%
0.238%
0.053%
0.006%
0.006%
0.003%
0.002%
0.002%
0.002%
0.002%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.001%
0.000%
1,731,899,173
The Company has no other class of registered securities outstanding aside from its common
shares.
Dividends Declared
Registrant: There are no dividends in arrears. Neither is there any default in principal or interest
with respect to any security of the Registrant. The Company has only one class of stock that is the
common shares. Common shareholders are not entitled to cumulative dividends.
MMDC: MMDC has no dividends in arrears. Neither is there any default in principal or interest with
respect to any security of MMDC. MMDC has only one class of stock, which are the common
shares. Common shareholders are not entitled to cumulative dividends.
37
Sales of Unregistered or Exempt Securities
The Company’s Board of Directors authorized Management to raise funds by way of private
placement of the Company’s Convertible Promissory Notes cum Warrants up to an amount of P250
million, with the following basic features:
• Term: One (1) to two years;
• Interest: 10% to 12% p.a.
•
Conversion Option: The lender shall have the option to convert all or a portion of
the Principal of the Promissory Note into fully paid shares of stock of the Company
(the "Conversion Shares") at any time prior to the maturity of the loan. The
conversion price shall be at P 2.20per share, equivalent to 8x estimated earnings per
share for 2011.
• Warrants: Upon conversion of all or a portion of the Promissory Note, the lender shall
be entitled to a warrant to subscribe to one (1) MHI share, for every four (4)
Conversion Shares at a price of P 2.20 per share. The warrants are subject to a two
(2) year exercise period.
• Prepayment: The Company has the option to prepay all or a portion of the Principal
of the Promissory Note at any time, exclusive of any Interest due at the time of
prepayment. In case of pre-payment, the lender is given fifteen (15) calendar days
from receipt of the Company's notice of prepayment within which to exercise the
Conversion Option.
• Default In case of default the lender shall be entitled to convert all or a portion of the loan
into fully paid and non-assessable shares of the common stock of the Company at a price
of P2.20 per share or at the prevailing market price at the Philippine Stock Exchange on
the conversion date, whichever is lower.
* Proceeds from the Convertible Promissory Notes were used to fund working capital
requirements and for the acquisition of necessary hauling, mining and other equipment.
* Registration and Listing of Underlying Shares: Registration with the Securities and
Exchange Commission and listing with the Philippine Stock Exchange will be effected
when practicable prior to the maturity of the Promissory Note or upon exercise of the
conversion option.
The Company raised P249.80 million through the placement of the aforesaid Convertible
Promissory Notes with selected institutional and individual lenders over a period of six months.
The outstanding amount of Promissory Notes amounted to P176.120 million as of December 31,
2011.
As of December 31, 2011, 20,454,545 new shares have been issued by the Company as a
result of the conversion of Promissory Notes
The number of common shares that may be issued as of December 31, 2011 as a result of
further conversion of the aforesaid Convertible Promissory Notes and exercise of the related
warrants is as follows:
- conversion of outstanding promissory notes
: 80,054,545
- warrant shares arising from possible conversion : 20,013,636
- Total
: 100,068,181
38
VII.
Corporate Governance
The Company uses the evaluation system established by SEC in its Memorandum Circular No. 5,
series of 2003, including the accompanying Corporate Governance Self-Rating Form (CG-SRF) to
measure or determine the level of compliance of the Board of Directors and top-level management
with the Company’s Corporate Governance Manual. The Company undertakes a self-evaluation
process every semester and any deviation from the Company’s Corporate Governance Manual is
reported to the Management and the Board together with the proposed measure to achieve
compliance. The Company did not materially deviate from its Corporate Governance Manual for
the last fiscal year. The Company is in compliance with the leading practices on good corporate
governance embodied in the CG-SRF. Employees and officers undergo professional development
programs subject to meeting the criteria set by the Company. The Board determines succession
plan for senior management as the need arises. The Company shall adopt such improvement
measure on its corporate governance, as it may be necessary from time to time.
VIII.
Name and Address – Request for SEC 17-A Annual Report
Any Stockholder, upon request, will be provided with a copy of the Company’s Annual
Report in SEC Form 17-A without charge. The name and address of the person to whom such
written request is to be directed is as follows:
Carlos C. Syquia
Corporate Information Officer
MARCVENTURES HOLDINGS, INC.
th
16 Floor, Citibank Tower, Paseo de Roxas, Makati City
39
Marcventures Holdings, Inc.
th
Head Office: 16 Floor, Citibank Tower, Paseo de Roxas, Makati City,
Telefax Nos. (02) 836-8609 or 856-7976
Common Stock:
The Company’s common stock are listed and traded at the Philippine Stock
Exchange.
Stockholders Services and Assistance
BANCO DE ORO-EPCI Inc. TRANSFER OFFICE serves as the Company’s stock
transfer agent registrar. For inquiries regarding dividend payments, change of
address and account status lost or damaged stock certificates please write or call:
Ms. Adora Yanga
Asst. Vice President Trust Services Group
BANCO DE ORO-EPCI Inc. TRANSFER OFFICE
th
Stock Transfer Unit Trust Banking 16 floor TPCI Bank Tower 1
Makati Avenue, corner HV dela Costa, Makati City
Tel No. (02) 840-7000
Fax No. (02) 878-40
40
MARCVENTU RE5
Ma,\ 22.2412
S'IATEMEN I OF MANACEMENT'S RESPONSIBILITY
IIOR }-IIiAN(]IAI, STATEMENTS
forth€ pr€paration an.l
tair presentrtion oi the rm€nded consolidated financial statements of MARCVENTURES
HOIDINGS NCANDSUBSDIARYtoftheyears€nded December31,2011 tndlune30,2011,
incllding the addition.l componentr attached there n, irr at{ordance with the pr€scrlbeo
firancal reportins framework indicated thereia. This r€slonsihility in.lUdes derignins 3nd
the irnpl€menting intern.l control relevant to the preparation -nd fair presentation ot
Iindncirl statements that are free from material misstat€rn€rt, wh€th€r due to fra!d or
error, selectifB and applying appropriate accounting polici€s and making acco!nting
I
he Mana8ement of MARCVENTURE5 HOLDINGS lNC. is r€sponsible
estimat€s lhat ar€ reasondble in the cir'rumstances.
nre
Board
of
Oar€ctors
or frustees
reviews dnd approves
the ammended
financial
st.tem€nte and subrnit the sarn€ to the stockholders or members.
M€ndola querido & co. ccrlilied Public Accountani , ihe independent zudiiors, appointed
bv the stockholdetu has exa'nined the ammended .onsolidated fi'ancial stat€ments of
HOLDINGS lNc AND SUBSIDIARY ln accordance with Philippine Standards
on Auditin& .nd in its repori to the stockholders or rnemb€rs, hzE expr€ssed opanion on tfre
fanness ol presentadon uporr complelion oi such examination.
Iv4ARCVENTURES
N/qRI
R-A,T,ION A. RECTO
Presidenl
t
n (\
' , fi.-
L_{.,t^
cmros
c
siq4F
:6F CltibankTo{er, 37i1 paseo deR.rae
'n.,,, :
(61:)816'4609
(5+)956
7976
; iiillF
SUBSCRIAED AND SWORN 10 before me this
day of
.t
.fliani(s)
me
exhibiting
to
lheit
Passpoft
as
--:ti*:+t+
2012
V
Name
Passport No
Date/Place Issued
Ma.io G Vljungco
Raffron A. Recto
Caros C. Syquia
xx0326658
xx2823977
xx4062851
01-24 0B/ DFA-CDO
01-19-09/DFA.rlrAN LA
06 29 Og/DFA-MANILA
Doc No
Page No.
Book No.
Series o12012
9,{
MOORE STEPHENS
M.-Q
llendoza Querido & Co'
S ocnh t,n at M@F tlcpl'els hle
dL,abl Lim'Es
lg'i Fl@r, The Sulcedo Torere
169HvdeaCostaSt
SalcedoVilage, MakaliCity 1?27 Philippines
'r
F
(632) 88?-1886
(€32) E87-1?64
INDEPENOENT AUDITORS' REPORT
ON SUPPLEMENTARY SCHEDULES
The Board of Directofs and Stockholders
Marcventurcs Hold ngs, Inc. and S!bs diary
16 " flmr Citibank Tower
8741 Paseo de rcxas
MakaticitY
We have audiled in accordance with Philippine Standafd on Auditifg, lhe amended consolldated financial
statements of lvlarcventures Holdings, Inc. and Subsidiary as at Oecember 31, 2011, June 30' 2011 and
2olOandforth€sixmonthsendeclDecember3l,20llandtheYearsendedJune3020lland20l0
included in this Form 17-A, and have issued our report thereon dated March 22 2012. Our audits were
made for the p!rpose offorming an op nion on lhe basic amended financia statemenls taken asa whole
The schedules lisGd if the lndex to consolidsied Financial Siatements and Suppler€ntarj Schedules
are the responsibility of the Company's management. These schedules are presented for the purpose of
cornplying with the Secudties Regulation Code Rule 68.1, As Arnended (2011) and SEC Memorandum
Circul;r No. 11, Series of2OOO and are not part oflhe t€sic amended financ al state ments These
schedules have been subiected to the auditing procedures appled in the audil ofthe basic amended
flnanc al slatements and,jn our opinion. fuirly stale n allmaterial.espects the fnancialdata required to
be get forth lherein in relation to the basic Emended financial statements taken as a whole
For the Firmi MENDOZA QUERIDO & Co.
RICH
S. OUERIDO
CPA Certificate No. 84807
PRC-BOA Accreditallon No. 0966
SEC Accreditation No. 0872-A
TtN 102 094 633
BIR Accfeditation No. 08-002617-2-2009
PTR No. 3184630, January 7.2012. Makati C ty
March 22, 2012
MOORE STEPHENS
Mr.Q
Mendoza Querido & CoA
Mhe.
fim .n M.Ne stephens lntenatianal Liniled
19" Floor, The Sal@do Torers
l6S U.V de ta CGia St.
Saloldo V llage, l\,lakali C,iy 1 ?27 Phi ippines
T (63a a87-1888
F
{632) 887 1264
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Marcventsrcs Holdings, lnc. a d Subsidiary
16h floor Citibank Tow€r
8741 Paseo de Roxas
[,4akatiCitv
We have audited the accompanylng amended conso idated financia statements of Mafcventures
Holdings Inc. and subsidiary which comprise lhe amended consolidated stalements of financial pos tion
as of December 31, 201 1 and June 30,2011 and the amended consolidated statements 0l
comp.ehens ve income. changes in equity and cash flows fof the aix months ended December 31' 2011
and vear ended June 30, 2011, and a summary of significant accountifig policies and other explanatory
noles
Man
agenent's Responsibilily for the Financial Statements
Management is responsible lor lhe prepal"ation and fair prcsentation ofthese amended financ al
siatements n accordance with Phrlppine Financlat Reportjng Standards, and for such internal contro as
management dele.rnines is necessary lo enable the preparation of financial statemenls that are kee fiom
maleial misstaiernenl, whether due io fraud or enor.
Auditors' Respansibility
Our responsibrlty is to express an opinion on lhese amended financlal statements based on our audits
We cond!cted our audits in accordance with Philippine Sbndards on Auditing. Those standerds requrre
thal we comply with ethic€l requirements and plan and perform the audil to obtaan reasonaDle assu.aoce
whether lhe amended financial stalemenls are free from material misstatement
An audit involves performjng pfocedures to obtain audit evidence about the amounls and disclosures in
the linancial statemenls. The procedures selecled depend on the audlto/s judgment including the
assessment of lhe risks of material m isstrle ment of th€ financie gtatemenis, wh ether due to fraud or
errot ln making those risk assessments, the audilor considers inlernal control relevant to the entity's
preparatiof and tair presentation of the inancial statements in order to deslgn audit procedur€s that are
appropriate in the c rcumstances but not for the purpose oi expressing an opinion on the effectiveness of
the eniity s internal control. An audlt also includes evallaling the approprieleness of accounting polc es
used and the reasonableness of accounting estimates made by flanagement as we I as evaluating the
ovB€ll presenlaton of ihe financial slalemenls.
beLieve that the audit evidence we have obtained is su{Jicient and aFpropdate to provide a basis for
ou. audit opinion
we
Opinian
In o!r opinion, the amended consoLidated financial statements present fa rly in a I material respects, the
amended llnancial posilion of Marcventures Hold ngs Inc and Subsidiary as of Decembea 3l 2011 and
June 30, 2011. and its amended financial performance and its amended cash flows for the pedods then
ended in accordance with Phi ippine Financial Repoding Standards
Emphasis of Matter
As discussed n Nole 31. the consolidated linancialstatements were reissued to cofiect ceftain
disclogures in the notes to amended consolidated iinancial statements
For the FiTm MENDOZA QUERIDO & CO.
_,""T*
Padner
CPA Certificate No. 84807
PRC-BOA Accredllat on No. 0966
No 0872-A
TIN 102-094,633
BIR Accfeditaton No. 08-002617 -2-2009
PTR No. 31M630, January 7,2012 MakatiClty
SEC Acoreditation
March 22,2012
MOORE STEPHENS
M-Q
Mendoza Que do & co.
A
@nber nrd of MooE Stephens lntenatiahal Liniled
1d' Floor, The Salcedo ToweG
169H]r' dela Cosia St
Salcedo \4lage, Mal(allCE 1227 Phi ppinet
T
F
(632) 887-1888
(632) 887 12€4
REPORT OF INDEPENDENT CERTIFIEO PUBLIC ACCOUNTANTS
The Board of Difectors and Stockholders
Marcventures Holdings, Inc. and Subsidiary
16" ioof Citibank Tower
8741 Paseo de Roxas
ft,lakati City
We have audited the amended consolldated financial slaternents of Marcventures Holdings, Inc. and
Subsidiary far the periods ended December 3l, 2011 and June 30, 2011, on which we have rendered the
attached reoo* dated March 22. ?012.
ln cornpliance with SRC Ru e 68, we are stating thal the said cornpany has a total number of nin€
hundred forlyJo!r (944) stockholders owning one hundred (100) or more sha.es €ach
Forlhe Flrn: MENOOZA OUERIDO & CO.
RICHARD S. QUERIDO
CPA Cert ficale No 84807
PRC-BOA Accreditation No. 0966
SEC Accreditation No. 0872-A
TtN 102-094-633
BIR Accreditatlon No. 08-002617-2-2003
PTR No.31a4630, January 7,2012 Mekati CLy
March 22, 2A12
JHAY
MARCVENTURES HOLDINGS. INC. AND SUB
2
(Fclrmerly: AJO.net Holdings, Inc.
AIIXNDI]D CONSOLIDATDD STATEMENTS OF
DI;CEMBER 11,201t AND JUNE 30,20ll
Dec€mber 31,
2011
2011
SSETS
Cash and cash equivalcflLr (Note 6)
Trade a|l(] orhcr receivables (I.\ote 7)
lnvenbry (Note 8)
Pr61,14r,033
22,090!8r9
234,101,818
21,013,456
l0)
Other curfeot a:s€ts (Note
Total Curent Asseis
14J,6!2rr?t
Noncurr€nt Assets
Properq, plant and cquipmcnt - net (Note I l )
?25,093,051
Explored min€ral resources - net (Notcs 4 and 5)
C)ther Doncurrcnl d:sets
{Note l3)
Tolal Nunc rrent Assets
I
P49.045,578
5,684,214
96,409.802
25.584,294
t76,?21,q r8
656,151.361
1,294,?66,157
J,94,766,r51
29,635,501
101,233,952
121,093,r60
*1,s64?{2,1!!
1.480,t51.022
llJ:MllL
LIABILITIf,S AND EQUIry
Current Liabitities
Notes payable (Note l4)
Interest bearirg loans 0{ole
T|lrde and othcr
P100.000,000
F26,320,000
l5)
Toxal Currenl Liabilitics
Noncurrent Liabilities
No c. laldln. - I(l of(un cnr pc'ni01(\ole l4)
lnteresl-beannfi loans [Note l5)
ote 1
R€lalcd
Toul Noncurrent Liabilities
Equity
Capitrl srock (N0re 18)
A.lditional paid-in capital (No1e l8)
R€taine.d eamings (deficit)
16,an&512
j,854,1ll
26l.ls4{J64
164.141.1rJ1
149,800,000
22,69$,841
l9,r 56,96s
149,800,000
361,?8!.61q r6!Jjl?!
23216.949
335
t95,7r 1.284
1,721,460,8?4
92,n4,223
1.701,006.:i?9
68,232,169
(73,868,659)
194,s64;t46
'fota,l E
F2,t51,216,940
Set
oqohpaatiflgtabs
ta
l ituicidl StatuheiB
MARCVENTURNS HOLDTNGS, INC. AND SL]BSIDIARY
{Formerl}: A lO.net Hoidrngs. lnc.)
AMN,NDf,D CONSOI,IDATED STATEMENTS Of,' COMPREIIENSTVE INCOITIE
FOR TIIE SIX MONTHS PERIOD I]NDED DICtrMIIER31.20I I ANI)
FISCAI, YDARS ENDED JUNE JO,2OI I AND 2O1O
Dcc€nbrr3l,
June 30,
20tl
2011
(Sir mooths)
(One year)
June 30,
2Crt 0
[One year)
RE}.trNUtrS
P842,901,957
Misceliancou! income
Di!idcnd income
F
60,836
842,901,957 60.E36
COST AND XXPfNSES
Cost ofsales (Note l9)
Shipping and loading (Note 20)
194,840,6s1
104,628,874
Excise oxes
RoJallies
Social devclopmenl and managemert
program
Ceneml and adninisr-ative (Norc
21)
INCOME (I,OSS) IROM OPERATIONS
oTHf, R INCOME (I,XPtrNSf ) NET (Note
422,000
422,000
?-3)
TNCOME (LOSS) BEFORTL TAXES
18,972,405
8,429,020
6,108,207
42,817J63
46,94_],000
11,704,096
575,796,520
46,943,000
33.?04,096
267,105.1J? (16.887,1641
1,13?,521 (9333,504)
268,342,9s8
(56.I15.66E1
(1i.282,0s6)
19,006250
(14,275.84o)
PROVISION FOI{ INCOME
TAX - DEIITIT.RED o{ore 26 )
NIT INCOME
(LOSS)
9u,441
2681433,40s
J10,200
87,655
(55,70-5,468) (r1,l88,l9rl
COMPREHENSIVtr LOSS
(6rJ,01r)
rOTAL COMPREIIENSIVE
INCOME
Sosic eotnines (Idss)
ter statc (Note 24)
F0. | 56
o!0.a3i)
(P0 0.1o)
9a:
:i*il
tsF:
qi vi,
:]
*lgll
lEril
Il
aa
h l.o
ll
i|q[
Etcl
t'tl
I
tt'
||l
I
l-ll
I
lll
I
l.
I
t-
IE
i-a
lell
t$
llll
E
!r
l^[
5
A
<:
z
s
ls
lR.
z
lFll
tl
t-
l
z
lEl
t:tl
"l
I
F
I
z
E.til
I
LJ
,n
z
F
a
Q
i
z
F
Irl
EE
i
lz
?
:'
c
za
z a1
(-)
r:111tt
I
zz
a
€lt
r lll
I
z7
):
i.!';.
:i
i.:8
t.t
E
a
.E
s
tt
l14
Fq
iel
lIl= E.
H
i
Ble
'e
Et1;3
E
e
O
-:=il
FJX.I
E
i:!
+ El!ll
aHt':tl
6
o 9l
-{ oll
9l
F
lEll
E
i
f!
!
i
a
3
c
i
MARCVENTURES IIOLDINGS, INC. AND SUBSIDIARY
(Fornr('ly: AJO.net Holdirgs, lnc.)
AMI,NDED CONSOLIDATBD STATI,I\{ENTS OF CASH FLOWS
FOR THE STX MONTHS PERIOT' I]NDtrD DtrC-EMBER 31.2O11AND
FISCAL YEARS ENDED JUNtr 30,2OIT AND 201O
Junc 30,
20ll
20ll
(Six
nonths)
(one
CASH FLOWS IiROM OPf,RATINC ACTTVITIES
Income (loss) belbrc in@me
Inrcrcat cxferse (Nole
tar
P258,34?,959
l4)
(P56,?r5,668)
(Pr4.275,8.16)
50,000
2 |
23t4.29'
2,490,544
301,4E9
1,909.432
)
(60,ro91
Losr (gain) oo sale ofarailabl*fbF$le
securities (Notc 9)
9,527,0E1
hDsimenl loss (Nole 2l)
crin on s!,le o{ ploleq (Note 23)
Operdtins incomc (Loss) betorc eorking capilalchanses
Vorkidg capital changes:
Decrerse (incr€ase) ;r:
'lrade add oth.r .cceivable, (No1c ?)
ln!e'$)r) (Nore E)
Otller cun€nt asscLs iNote l0)
Inc.ease in trade and other
Fyables (Noie 16)
protjded by (t|sed in) opcralioDs
Inu,m. rdr
Imdesr
9,79
964,97r
(16,.r{16575)
1&r,r'r1,tar)
2,570,838
proP€ny and equrpdent
A!ailable'lbFsale s€curilies
Decrcase (I'rcrease) in :
orh{r noncurrcnt asseis ( Nole l3)
tlcfcred sine explira'lion Gl
Additioos to prupcdt ed equipment (Nole I2)
Dilposalofinvestments
rritect oIacquisition ofsdbs;di r.0F1cosh acqui.ed)
Ner cash used ln
activities
'nv€lring
{16.258,6I1)
(61:r,0r)
t.19f
(.t2,76E,496)
12.961,521)
{14.091,552)
Q.9n2.127)
i232.931
(ri0,n]r.o56)
(4,940,265)
131.5?0,262)
t6,51t,4?0 t.+7,.22,r,8!5 ll,7l0f1I
2A6,467,a23
60,109
(23,349,7t11)
Nel.ash rrcvrdc,j b) (rsed in)opnatins act vjtie'
CASH FI.OWS FRO]IT INVESTINC ACTIVITIES
Prora€ds from sale ot:
(128,:]0ll
{l?,s:7)
247
I1rrd
paid
|ll.?41
(218,821)
-
(ia-sh
(oneleaf)
t7,066,3J1
D.prdiation (Nole 1l)
Provision for r€Lircmcnt benefits (Note
lnLcrcat income (Note 23)
2010
yetr) -
(6,?94.656)
128.101
(79,181)
1299.r72)
i9ll,215)
263,178,214 (7,548.231)
-
(2r,0?0,668)
:r62,E05
i5!r.(r00)
(21,291,439)
t,?70,000
1.045,t16
17,655,946
(74,4r3,00J) 13,636239\
(1,454,764)
(43,8:9,r03)
-
11,586'415
(r1s,888,737) (212985,625) (23.139,711)
-
(l-048 316)
-
(4.79S'l'101
(r90,J0r,?,10) (2{0,3ir,86+) (44.561,687)
FRONI FINANCINC ACI'IVTTIES
CASH
'II,OWS
InLer$l bcaring loans (Nolc l5)
Notes palable (Notc l4)
Collecrion of s bscriptioD rcceivablc
lssudnce of subsiptjon receivnble
75,000,000
1,200,000
lnt€resl bearing loans (Note lJ)
Noles paysble (Nolc l4)
(553,6s0j
(29,880,000)
544,054
249,800,000
lril,.rE6
ini
Rclt!cd pdr/ hansactions
-
450,00o,ijoo
(2A4-420,6'17)
Lncrease (decrcAse)
Advances from Phillom
Refund ofdeposlt fuf future sulscriplit'n
NeL !]sh orovi'.lL{ by tindcins lclivili(s
NET INCREA5I IN ('ASIt
AND CASTI EQUIVAI,ENTS
L-AsH AND (--ASII EQUIVALE]ITS AT
BEGINNIN(; OF YEAR
CASH AND (:ASH IQUIYALtrNTS AT END
qMaqlNor"
*?n
kpantnE\-ot$
6)
ta
Ftturrtul Sutenentr.
(3,537,369)
,
5,584,400 (16r,498,212)
-
42318,981 256,111,940
rr5,091455
1i,2 t
f.fi4J
49,045,5?8 40,833,733
Pt6a,tat,033
1,000,000
(7'500'0110)
71,sttr,1Al
|,707.775
?9,125.t58
MARCV[,NTUR"ES HOLDINGS, INC, AND SUBSIDIARY
(f orrncrly: AJO.net
Hq!qilSillll
NOTES fO AMENDIT]D CONSOLIDATDD FINANCLA.L STATEMf,NTS
Cr,roorate Intbrmatioo
Marcventuf€s Holdings. Inc. (!'omrerly: AJO.nct Holdings. Inc.). ihe Parent Company, lvas
incorporated and regislered $th lhc Sccurilies and Exchange Comrission (SEC) on August ?,
1957, with a primary purposc lr) acquire by puchase, exchange, assignnenl, gifi or ollcrvtise, and
to hold, own and tlse for investmefl o. otherwise, olld to scll, assign, lransf€t exchange, lease, let.
develop, mortgage, pldge, traffic. deal in, and with, and othefwise operatc, nurrdge, enioy and
ol
any and all propertics ofcvery kind and description and wherever situated, iDchding
laod as and to the extent pennittcd by law, including but not li.oited to, buildings, lenenents.
\{arehouses, factories, edifices and structures and other impfovcmcnts and bonds, debentures,
promissory notes, shares ofslock. orolher sec|rities or obligatlons, created, negotiated or issued by
any corpontior, associ{tion or other entity, foreign or donestic and v{h;le thc ownsr, holder or
posscssors th€reof, to exercise all rights, |]owcrs and privileges oiownership or any other interest
therein- includinglhc rig|1l.i receive, co tlect and dispose of, any and all reftals, dividcods, interest
aDd irrcomc derived therefrom, and the righi to votc on an) UroPrietary or other interesl, on any
shares ofthe capital stock, and upon any bonds, debentues or other securides having voting powcr.
so owned or held; and pruvided ir shall not engage in the business of aD open-end or cl('se-end
itlvcsment compcny as detined io the lnvestft\cnL ComFny Act (Republic Act ?629), or 3ct as a
dispose
securitLes broker or dealer.
Marcvenlurcs Mining & Development Corporation (MMDC), a lrtolry-olvned subsidiat]- of the
Parem LlomFan), and incorpordlcd iD thc PhLlippines is engaged primarit] 10 carry on the b8ine\s
of mining, smelting, extracting, smclling mineral orcs such as, but not limited !o nickeL, ciromites.
copper, golil, manganese and other similar ores and/naturxl metallic or non-metallic resou.cc f.om
th€ ea(h, to operate, nanage and/or engage ;n the bus;ncss of nnclllng, andror opcrale smelting
p)ant, to refine and/or donvcrt metals, ore, and olher precious melals into finished products $ir}i.
the commerce of man.
On March 30, 2010. fhe SEC approvcd lht Par€nl Company's change in name from AJO.net
Holdings. Inc. to Marcventures Holdings, lnc. and luflher spproved the Parent Companlrs clnngc
ii pdmary purpose 1{} includ€ hnd owneruhip
On July 19,2010, the Subsidiary was registercd with the Bo d ofltvcstmenrs (BOl) nr accordance
with the Drovis;ons of llle Omn;b s I nvcslmcnts C.t,1" .t1 1 9 37, 35 arncndcd, as a Ncw PfodLrcer of
Ni€kel Latcrite Ors. A5 a EOI registered enlily, the Subsidiary is entitled to an lncome Ta'( Ilolidav
(ITH) for four (4) years f,"om July 2010 or aclual stad oi commercial operations, whichever is
earlier but in no case earlier than dre date ofrcgistralion
Minine Claims and Propeniqs
MMDC hds becn granied by the Deparnneni of llnvilonmental and Natural Resources (DljNR) of
the Philippioe Nationxl Govemment a Mineral Produ,riion Sluring Agreenent (MPSA) No- 016'
93-XIII covcring an arca ofapproxinarery 4,799 hectares iocaled in Cnntilan Sur;8ao Del Sur' As
the hoLder of lhe said MPSA. MMDC has lhe exclusive right to conduct and develop lnLring
opc.alions within the mineral property over a period oi 25 years from July l, I 993 MIv1DC has
identifled Nickel Oie ts thc pTimnry mineml irlrl $rill be wtmcted a$d sold to thid pades dui lo
lhc nbLrndaacc and favorabl€ charrcteristics oinickel within lhe mineralprop€rty'
-2.
'lhe MPSA was originally gra'rtcd to Venlufa limber Corloration on July 1, 1993. In January
1995. a deed of aisigrunent (Deed) was exccutcd, wherein Ventula assigned to MMDC all its
rights, titlc and interest in and to MPSA No 016-93-Xllt. The Dccd was dulv regislered with the
Mires and Ceosciences Bur€au (I,ICB) Regional Officc (RO) No XIII on lebruary 9, 1995, and
was subsequently approved on January 15,2008, making the Subsidiary lhe officidl cont.actar of
the minerdl property.
On October 23, 2009 the PartiaL DeclaralioD of M'ning Feasibility ofthe Subsidiarl in co,nection
with tlle MPSA No. 016-93-XIII was appmved by the Director of MGB and the Subsidiary is
henceforlh authorized to proceed to ihe Development a d Operating Periods ofMPSA No.016-91XI[, including the exlractioD and connercial disposition oi nickel ore and associated minerals
wilhin lhe 100 hectare porlion ofthe conlract area subjecr to ccrlain conditions-
The Parcnt Comlany's registsred oil1ce is lorated x'l l6th floor Cilybank To\rer, 8J4l
de Roxas. Makati Ciry.
Pnseo
Thc consolidated finaD.ial slalcments as at December 31, 2011 and JLlne 30, 2011 lrere approved
and authorized for issue by the Bo8rd ofDireclols on March 15,2trl2.
2.
Summary ofSignilicant Accounting Policies
The significant accounl;ng policies that have been used in the preparation of th(: dmended
consolidated fi ancial statements are summarized belolv. These policics halc bs€n consistently
n0plicd to ?ll )€ars presented, uDless otherwisc statcd.
Basis of Preparation of Corsolidatqd EinaDciaL Statemenls
the amended consolidatcd financiai statements of the Croup have been prepared in accordance
w;lh Philippine linanciat Reporting Standards (PFRS). PFRS dc adopled by the financial
Reporting Standards Council (FRSC) frorfl lhe pronouncements issued by fhe lnternational
Accounling Slandards lJoard (IASB.).
The amended consolidated linansisl stalcmc !s haYe been prepared or lhe historical cost basis'
cxcLlpl for lhe revallation olcertain {inanciaL assets and explored mineral rcsources thar have heen
measured al a certain valuation melhod. The measurement bases are more fully described in the
accoutrting policies thar
lbllo$.
Elclelr1aliqtlI E{Elrr3ljtalLell!
Ihe amended consolidated finurcial statcnrc ts arc prcs"nted in acconlance with PAS | (Revi!,ed
2007), Presentation of Financial Stdtclnents- Ihe Group presenls all items of income and expenses
It a single sttement of comprehensive income. Two conpafalive periods ate prcsentt'd for lne
statemenls offinanciol position when the Group appLies an accounLing policy reirospectiveiy' make
a retrospective restatumcnt ofiterns in its flnancial statenents, or reclassifies items in the iinancial
Eunc!'urE!!41r9!srlt4ia!!u
These amended consolidated financial statcractrb arc prescntcd in Ph:liPPinc Pcsos. lh€ Group's
f-unctioml presentalion cuffency, and allvalues represent absolute amounts except when otherwLse
indicated.
-l
New Accountilre Policic!l\!aptq!
The Croup adopted lhe tbllowing new revisions and anlllldmcnls to PIRS that are relevaDt lo 1hc
Cror|p and eflective fbr firarcial slatements for the annual period beginning on ot aficr January I,
20t1:
FAS
PAs
24
27
PFRS 10
PFRS I2
FIRS
13
(Revised 2009)
(Revised 201l)
(Reviscd 2011)
(Revised 201
Vafious Slandads
l)
Related Party Disclosures
Separate Financial Stalerncnls
Consolidated Fin0ncial Statements
Disclosu-re of htcrest in olher Entities
Iair Value Measurement
201I Annual lmprove tcllls
1()
PFRS
Discussedbelorv are the effecls on the financial slatemefts oithe new and anrenddl slandards.
PAS 24 (Revised 200S). "Relaled Pafty Disclosures", amends the requiremeDts of thc prtliotrs
vcrsiorL oftAS 24 to (a) provide a partial exenrption from iclaled parly disclosure rcquirements for
govemmenl-related cntilie!, (b) chriq the definilion of a rel ed pn(y and (c) includc atr cxl ;cit
requirement to disclose commitnrents involving related paflies. The revision of this standard d;d
rot htrvc aoy significant effect in the 201I consolidaled linancial stalementsnow
PAS 27 (Revised 2011), "Separate Finrncial Stalenlents", amerded versiolr of PAS 2l
'vhich
onLy deals with thc rcquircments for separate financial statements, lvhich have been canied ovcr
l:rryely unamended from PAS 27 Consol;dated and Scparatc Fha c;al Slatcmenls Requiements
lbf coneol;daled financial statemenls are now conlained jn P!'Rs I0 consolidated Firrancial
Statements-
-]he
Standard requlfes that whon an entity preparcs sepat"te linancial statoments, investmen$ in
subsidiaries, associales, and iointly controlled entides ar€ accounted for cilhcr nt cosL. or in
accordaflce with PFRS 9 F;nancial Instnments.
The Standard also deals with lhc rccognilion of dividends. certain group r€organisations and
includcs a nurnber of disclosure requiremenls. the revision of this standard did not have an)
significant €fecl in the 20i I consolidated financialstalements.
l0
lRevised 2010), "Coflsolldated linmcial Stn(ementt, requires ir par€nt to presenl
consolidated financial stalemenls as those of a siqgle econonic entily. replaciDg the requirencnl_s
previously containcd in IAS 27 Consolidai.d and Separate Financial Siatemefts and SIC 12
Consolidation - Special Purpose Entities.
PFRS
The Slandard identifies the principies of control, determines how to identify whether ar inlesror
controls an investee and thercforc must consolidale the invcsteq and sels out the principles for the
prcparation of consolidated fi nancial stalemenls.
The Standard introduces a sLngle consolidriion model fbf sll entities based on control. irrcspeclivc
ol the natufe of ihe in\,cslec (i.e. whether an entiry is controlled through voting rights of investors
or tlrough other contraclual arangemenls as is cutnlon in'special purpose entitieJ) Undef PFRS
10, .:ontrol is based on whcthcr an inlcslor har (a) powcr ovcr the invcstcc, (b) cxposurc, or ights'
to .,ariirbk rctums from its invDlvement with rhe intestee. and (c) ihe abiliiy to r.!se iis poNer over
th€ investee to affect the amount of the retums. The revision ol this slandard did not have any
signiticant eiTecl in tbe 2011 comolidared fimncial slalenenls.
PFR! 12, "Disclosure oi lnterests in Dther Entities", requires dre extersivc disclosure of
inibrmation thal enables users oflinancial statcmcnls lo evaluale the nature of and risks associated
with, intercsts in orhcr cnthies and the effects oflhose interests on ils flrarcial posilion, financial
pcrformance and cash llows.
l" highlevel
.
ierms, the required disclosures arc groupcd irtlo lhc following broad categori€s:
Significant jtdgemenls and assumptior'$ - such as how cortrol, joint conlrol, significant
.
influence has bcen detcrrrined,
l$erests in subsid; ies. includnrg deEils of lhe struciure
wilh structurcd €ntities, changes in c.ontlol, and so on
.
ofthe grcup, risks
associated
Ifterests in.ioinl arrangemenls and associates the nature, extenl and linancial eflects of
intcresls in jojnt arrangemenls and associates (including nanEs, details a0d summansed
llnancial infonndion)
Interests in unconsoljdated structured enlities - inlomation to atlow an Mderslanding of
to evaluate lhe
the natwe and extent of interests in uNonsolidaq:d slruclured entities
^nd
naturc ol: and changes in, the risks associated \xilh ih interests in urlconsolldaled
.
struclured enlities
lhe Croup's adoplion of PFRS 12 did not result in any material
slalernsnls as the change in accounting policy only at_fects
adjustment
prcsentatiol$ aspects.
in ils
financial
PFRS 13. "Fair Value Veaswement", teplaces the guidance on fair value measurement in exisdrg
I|RS accounting literature with a single standard.
l
b] the IASB and FASB to derelop a converged lair value
framework. lhe IIRS det'Lnes lair valuc. pflxidcs guidance on how ro ddtermin€ fa;r t'alrle md
requjrcs disclosuros about lair value measurements l{oweler, PFRS 1l does not change tlle
hc PFRS is lhe rosull
ofjoint
effc,fis
requirements regarding wh;ch ilcn$ slLor d bc medsured or disclosed al fair va'uc
PFRS 13 applies wh€n another PFRS requires or pennits fair value measLrremenls or disclosure\
about fair value measuremefls (aid neasuremerts, such as lair value less costs to seLL, hased on
fair valuc or disclosures atroul ihose measuremenls). With some exceptions, the siandard reqLLires
entilies to classiry these neasurenenls into a 'fair value hierarch]' based on the nature of lhe
rnpuls:
.
Level | - quoted prices in active markets lbr identical assels or liabilities lhat the entity can
access at the fitcasurcrnenl ddlc
'
.
2-
inpuls othcr tlran quolcd markct priccs included wilhin
observable for the asset or liability, either directLy or indirectly
l.cvcl :l - unobservable inputs for lhe asset or liabilily
Level
l'evcl 1 thal
are
Entities are required to mske \'arioui disclosures dependiig upon l]rc nature of the lair vnhe
nerlurem€nt (e.g. wheth€r it is recognised in th€ financial statements or mereLv disclosed) and ihe
level in qhich it is classiiied.
Annual improvements
PAS 12
PAs
19
(Revised
2011)
Income Taxes
Enployee Beneiils
:
PFRS 12, "lncome Taxes", arncnds IAS l2 lncome [a,\es to pmvide a prcsumption lhai recover] of
the carrying amounl ofan asset measurcd usirrg tfic fajr value model in IAS 40 Investmert Protefry
will, nomrall],
b€ through sale.
As a fesull Ltf the amendrnents, SIC-21 lncome Taxes Recovery of Revalued Non-Depreciable
Assets *'ould Do longer apply to investm€nt properlies carricd al fajr vah'e. The amendmenls also
ilrcofpoftte into IAS 12 lhe remaining guidance pr€vioudy contained in SIC-21, which is
accordjngly lyithdmwn.
IFRS 19,'Lrnployee Benefil", an amended version oFIAS 19 Employee Benefits wilh revised
rcquirencnls for pensions afld other poskctlrcmcrl bcnefils, lermination benefits and othef
cnangeS.
'lhe key amendments inchde:
.
.
.
.
tlc
rccognition of changes in ihe net defined benefit liabillry- (a!sct) including
ifimediate recognitior ol'dcfincd benelit cosi, disagFegation of defined beneflt cost inll
componerls, rccognition of remeasurements in other cornpreheDsile incornc, plan
amendmenas, curtailmenls and scttlcmcnts (eliminating the coridor approach' permitted by
lhe cxisting PAS 19)
Requiring
lntroducitg enhanced disclosures about definedberefil plans
Mdirying accounting for termination beneiils, including d;stinguishirrg bcncfiL! provided
in exchange tbr servicc and benefils provided in exchange for the termination of
er ployncnl ed affeci the recognition and measurement oilemlination benefits
Clariiing vunrus miscellaneous issres, including the classiticalion ofemployee benefils,
curent esrimatcs of rnorlality rdles, tax and administralion cosrs and dsk-sharing aDd
conditional indexation f-eatures
I but rot felevant to ttrc Group
following
The
amendments. interprelations and improvenents to published standards
Standards effeclive in 201
mandalory lbr accountiDg periods bcginning on ur after JanLrary
I , 20 1
are
I bul nol relewnl ro Croup's
consolidated Jinancial statements:
201l), "lnvestm€nts in Associalcs and Jo;nt Vcnturcs" lhis Slrfldard supersedes
PAS 28 lnvestrnenls in Assooiates and prescribes the accounting for invesonents in associates and
sets out the requircDrenls for thc appl;cation ot thc ctluity rnethod when accounling lbr investmenis
P,AS 28 (Revised
in arsociates
and
joint ventures.
'lhe Slandard delines 'significant influence' and providcs guidarc! on how tllc cquiLl mcthod of
accounting ls to bc applied (including exemplions from applying lhe equity method in some cases).
ft also prcscrlbes how invesiments in assoclates and joinl vertures should be lested for impalmleni.
-o
The siBnjlioant accounting policies and practices of thc croup afe set fbfth ro facilitale ihe
nnderstanding of thc oonsolidated linancisl slatemenrs:
Esiis ofConsolidadon
Ihe consolidated finarcial stalements include lhe financial statemenrs ofthe Parent Comparu and
its subsidiary, MMDC. The consolidat€d financial statements as oI December 31, 20ll and
June 30, 201 I comprisc the financiai statemenl wiLh the sane repoding period for the Parent
Company and Subsidiary. 'l hese staremcnts are prepared using unilbrm accounting policies lbr likc
tmnsactions and other events in similar circumstances. All sign;fica.nt intercompany accounts.
l|ansaclions and balances are eliminated in thcsc consolidaied financia' slatemeDts. The subsidiary
is consoli(laled from the date or which control is transferred to the Pffent Company and ceases to
be consoLidatcd frort1 the dole on which corrlrol is transfe ed out ofthe PreDt Conrpary.
The signilicanl accounting policies a d practices of the Group are set lbnh ft' facilitare
undeKtanding olthe consolidatcd financial siatements:
Ihe
Casbiud c!$!qdta!e$s
Carh and Cash Equivalcnti are defined as cash on hand, dcrnand deposirs and short-term, highly
liquid invcshents readily convc.tible !o known amounls of cash and which are subject to
insignificant risk olchanges in value.
Busines.s Combinations
The consolidated financial statedents accounted h$;ness combination by applying the purchaie
Drethod. This involves recognizing jdentifiable assets (including previously unrecognized
inhgibLe assels) and liabililies (includnr8 colllingent liabilities and excluding iuture .eshucturing)
ol acquired blrsiNss al fair value, including aJscts aDd liabililies not previoudy rccogniTed h the
SLrbsidiary or acquiree's financial statements. Any excess oflhe cost over the acquirer's inlerest in
the nel taif valle oflhe identifiable assets. liabilities and contlngeft liabililies so recognizrrl was
accounied for as 'txplored nrineral resources" in the slatemenl oiconsolidatcd financial posilion,
as this asset meels the (lefinilion of an intangible asset rhat is cont olled and provides ecoDomic
benefits, scparate and arises tiom ils mincrrl property rights and clalms, and its l-air value was
Incasured reasonably.
lflhc inilial
accorurting for business comlJination can be determined only provisionally by ihe end
of the period by which thc combinatiorl is effec(ed because either the fair vahrc.s 10 be assigned to
the acquircc's identifiable assets , liabiliti€s or cont;ngcnt liabilities or ihe cost ofcombinalion cdrl
be determined only provisiodaily, lhc Parcnl Company accounts the combinatiolr using provisional
values. AdjLrslments to lhose provisional valucs ar a rcsult of completing the initiaL accouning
shail be made within twelve (12) months fron the acquisitior datc. Thc ca!)-ing amount of an
identiliable a5sct. liability or condngent liabiliiy lhal is rccognizcrl as a result of completing the
initial accounting shall bc calcLrlated as if its fair value at the acquisition date had bccn recognized
lrom lhat datc and explored mingral resources or any ga;I recognized shall be adjusted fron lhe
hcqlisition date oi the ide ifiablc asset, liabiliry or contingent liabilily being rccogniT€d or
adjusled. A ll acquisition-related cosls on the business comhiiation are cxpensed.
ljxplored Mineml Resources
The Suhsidiary's finanoial statemenl did nol rc{ognizc ;n ;ts boots the rnineral r€sources from ;ts
rnineral properr,"- right but rl?s rccognizcd in lhe buiiness combination wilh the Parelt Conrpany
and conlbnls to rl'e PFRS
f.
This requircs the Parent Company lo use reco8rilion and mcasurcment Prdctices that are pan of
those accounting policies in PFRS 6. Exploration for and Evaluatian of Minerai Resources and
PAS 28, lntangible Assots. The measurement and recognition ofexptored mine|n) resource is based
on an indcpendent vahation ove. the mine|al properly of MMDC ar suptro.ted by ihe Mineral
Produetion ShsrinS Agreement (MPSA) and the expecred veluc ofihc rr;neable orc reserve in lhe
explorcd arca ;f the Mineral Propeny (see Nole 5 for thc discuss;on of the valualion of th;s
intansibLe ass€t). MPSA cnn be tmNferrcd for valuc and the mineable minelal ore reserve
idenliiied in the explorcd area ofthe Mineral Propeny can be extracted, produced and sold-
Measliemul afler rccagnitioti of Explored Mi eral Resaurces
After initial recognilioq the explored mineral rcsources sha11 b€ carried at jts cost lcss
any
accumulated impaifi nel1t losses.
Inpairnent oj Lxplored Minetdt Resources
Thc P,rren! Company s flnancial stalements reco{nized explomtioD aDd
e
luat;on 8-srcts to
suggest
that ihe carrying
perlorm an impairment test on lhose assels when facts and circumstances
recognition
ofimpairmenl
varies
the
amouff ofthe assets may exceed lheir rccolcEblc amounls.lt
once rhe
lhis
standard
From that in PAS 36, bul meast|res the impaiment in accordance with
imoairment is identitied.
lor
purposes of explorcd m;neral rcsources, whcn irlcntilylng explomlion and evallration assets
that may be impaired, one or morc ofthe tbllo\ring lacts and circumstancct ;ndicatc thal lh€ parent
cornp:!iy shoLld tc:t il- n.sfls fr'r impairmcn
.
.
.
.
lhe period for which ths ertity has thc r;ght to explorc in the specilic arcas has cxpired
duriDB the period or \'tlll cxpirD lr thc :ar iDrlnc, arrd is or L'rpectEd to be lE €vrctl
Subslantive expenditure on fi.n1her expLorarion for aDd evaluation of nineral rcsource\ i"
thc spccific drea is neith€r budgeted nor planned.
Exploration irr thc cvaluatior of rnincr,rl r€sources in lhlj sPccific arca have no! Led to lhe
discovery ofcommercially viable quantities ofmineral resources and the enlity has decided
to discontinue such aclivili€s in lhe specific arua;and
Sufficicnl dala €'iist to indicate that. allhough a dcleiopmeDl in thc spccific arcd i\ likely io
proceed, the carryin8 amount of the exploration and evaluation asset is unlikely to be
r€covered in full {iom succ€ssful development or by sale. ManaS€menl beli€ves thal ther€
is significant reason not to recotnize impainneflt in this asset
tutails of impairment testing
on explored mineral resources are discusscd in Nolc 5
FinancialAssets
Financial assets, which are recognized when the Group becomes a parq ro lhe contractral terms of
the financial instruments, include cash aDd oiher financial instrunents Financial assels' olher tban
hedging instruments, are classified into lhe following categories: finarlcial a-\scts at lai' valtre
drougb profit or loss, loans aDd receivables, held{o-matutity investmenls and avaiLabl€_for-sale
financial asseis. [inancial assels arc assigned to the different categories by managem€nt on iniiia]
recognition, depenrling oD the purpose forwhich the in\€strnents were acquired lhe designation of
fiDancial assets is re-valued at every reporting period at which datc a choicL of classification or
accounting trcalmcnt is available, subj.]ct lo cornpliance with specific provisions of applicable
ac.r'unring stnndards.
-&.
Regular purchases and sa.les of financial assels are recognized on their lrade date. All financial
trsscls tfat are not classified as al fiir value lhrougl prolit or loss are idtiall) recognir.d dt fair
value plus any directly attributablc lransaclion costs. All financial assets canied at fair value
thfough pr(rfit or losses are initially recorded at fair value and transaction cosls related to it are
recognized in profit or loss.
A rnore detailcd description oflhe
(a) I.inancial
Assets At
Fai
fou-r categories
offinancial
yalue thnugh PnJit or I
asseLs is as
folLows:
as.\
'Ihis category inclurle firancial assels that are either classilied as held for tnding or are
designated by lhe entily to be canled at fair value through proflt or loss upon inhial
recognilion. All derivatives fall into this calegory, except for lhose desLgnated and effeclive as
hedglng instrurneDts. Asscls ;n lhis catcgory arc cla-ss;ficd a! currc t ;fthcy are either hcld fi'
trading or are expected to be realized within 12 nonths ftom the end ofthe reponing penod.
IinaDcial assets al falr valLre through proil or loss arc nNaiurcd al fair vtrlue, and changcs
therein are recognized in profit or Loss. Financial asseis (except derivatives and financial
instrumcnts orig'nally designated as financial assets al tajr vaLuc thmugh proiir or lost nra] be
reclassified out of fair value through profit or loss cateSory if they are no longer held for lhe
purpose ofbcing sold or repurchascd in fre ncar tcrm.
(b) Lo.ns
Llnd Recei,nbtes
Loans and receivables are non dedvative linancial assets with fixed or determinable payments
lhal ate not quoted jn an nctive narket. They arise whe$ ihe Croup prorides monef' goods or
services direirly to a debtor wilh no intention oftrading the recc;vablcs They arc ;ncluded in
cunenl assets, ;xcepl for malurilies grealer than l2 montlls after the reporting period which are
classified as non-cufrent assefs
Loans and receivables are subsequently measurcd al amoaizcd cost using the elf*tive intcrcct
method. less impaimrenl toss. ifany. Any change in their value is recognized in profit or loss'
Impairment los;is provided when ihere is objective evidence that thc Group will not bc ablc to
'l'he
coilcct all arnounls due lo il ilt accordancc with $e original le|ms of the receivables
amount of ihe imFairment loss is detemined as thc diffcrcncc ben'veen the assets' ca ling
amount and the present value of estimated cash flows
(c) Hekl ro-natu !! Iweslmenls
and
This calegory iacludes non derivative ilnaflcial assets wilh ftx€d or deteminable paymenrs
to
maturity'
to
hold
posiliv.
and
ability
inlention
a fixed diie ofnaturity that the Croup has lhe
I'rveslrncnts intcndcd ro be held for an undcfincrl period are |lot included in this classification'
Ileldlomaiurittinvestmentsareiflcludedinnon-cunentassetsLrndc'F;namcialAsselsaccounl
ilr the sialemcnt of financ;al pos;l;on, except those maiuring raithin 12 months fmm ihe
reporting period, which are presented as part ofcunent assets
lo initial rccognition, the invcstnents are mcasurcd at amortized cost us;ng rhc
efibctivc interejt melhod, less impa;mrcnt losses, if anv- impatment loss, which is the
diflbrence bet*ecn Ihc carrying value and lhe present value ('f csljmated cash flows o[ dle
irveslrncnl, is r€cognized when therc;s obj$tive evidence that the inveshent has been
impaired. Any char€es to the carrying amount of the investnrcnl, i cluding impairment loss,
afe .ccogniz€d in profi! or loss.
Subsequent
@),4rai lable-l'or-.tile Financial Assets
Tlis uatcgory includes non{erivative filta,lcial assets that are either desrgnaled to lhis calcgory
or do not qualiry li,r inclusion in any of rhe other caleSories of fioancial lsscts- They are
ir
non-cu(en! assets under thc linancial Assets accormt in the slaiemeft of financlal
Fosirion unless mauagemNnt inlcnils to dispose ofthe investment $'irhin 12 moDths lrorn lhe
iDcluded
rcponang period.
All
availabLe-for-sale financiaL assets ar€ rncasured at fair valu€, Lrnless otherwise disclosed,
with changes in vdlre recognized in other compfehensivc income, rul of any eliects arising
from income tL\es. WhL'n the asset is disDosed of or is determined to be irrpdired lhe
cumulali!,e gain or loss recognized iD olhcr comprebensive income is reclassified fionr
revalualion reservc to profit or loss and presented as a reclassificatioD adjustrncnt wilhin other
compr€hensive income.
AII incomc and expenses, incllding
to financial assets that
are
recognized in profi! or loss are presented as paft of Finance Cosis or Firarcc Income in
lhe
inrpairmcnt losscs, relating
consolidated statement of comprehensive income.
Non-conrpounding interest, dividend income and otller cash ilo\Ys resulting front holding financial
assets are recognized in proflt or loss when earnci.! rcgardless of how lhc related caq'ing amount
offinancial
assets is measurcd-
Rev€$al of impairment loss is recognized in olhcr comprehensive income, except fo! ilnancial
assets thal are debf securitics which are rccognized in profil or Loss only if the rer€rtal can bc
objectivell rclatcd to an event occuningafterlhe impaiment loss was recognized.
D4e{r!i IL4t1!t!!.lIIltl{sl-ug
Th€ fair \,?lue for linancial instrumcnts tllal arc aclivcl] lra.led;n organ;7€d financial markels is
deternined by rcfcrcnce to quoted rnarket bid prices at lhe close of business on lhe stateme t of
financial position dale. For lnvestnrenh and all otheN financir instruments !'r'here there i5 no actlve
markct, fair value is determined using genenily acceptable valuaiion techn;que. Such lcclniques
inchde using arm'9 length market tmnsaclioDsi n:f€ren@ to the current market valLre ol another
insrrufienl, which are substantially rhe same; discoufied cash flow analysis and other lualion
models.
F{ir valLre me.asurements are disclosed by so rc€ of inputs us;rg lhree-lcvcl h;crarchy for each
clrss ol finoicial ins$u{ cflt. Fair vallr€ measuement under Lelel I is based on quoted prices in
active rnsJkcls for identical financial assets or financial liabilities; Level 2 is based on inputs olhe.
than quoted prices includcd in l-evcl 1 that are obsewable ior lhe fitranciaL ?ssel of financial
liability that are Dot based on obssrvable market dala.
l0
-
:l)at{ I ' Proht
Where the transaction pric€ in a non-active nlarkct is difierent lrom the fair value of the other
obse.lable cunent market lransacliom in the same instnfnent or blscd on d valuation lechnique
whose varixblcs include only data irom obscrlable rrarkel, the Croup recognizes thc difference
bLlwccn the transaction pri.e td fair value (a'Day l' prolit) in profit or loss urless il qualifies for
recognition as some other type of asset. ln coses whcrc use is nlad€ of data vhich are not
obsewablc, ll|c differcnoe beMeen the transacLion price and model value is only recogn;7fd in
profit or loss when the impuB hecome obsepable or when the instrurr€nt is .lerccognized. lor each
transaction, the Group determines the appropriate nrlh(xl ofrecognizing lhe 'Day 1' profit arnounl.
lnvenlon
Mine products inventory, which consisls ofnickel ore is staled at the lo$.er of cost or net realizable
\alue (NRV). NRV for the mine products is the scllilrg price in the ordinary courses ofthc
business. less the estimatcd cost ofcompletion and estimated cost necessrry to rnakc lhe sale
I4pqt Ti!&!at&r&l9
lnput ta\ recoverahle is stalcd at 12% stnrti$g Februa,ry 2006 ofthe apFlicable purchase of cost of
goods ard services, net of ourput tax liabililies and allowance lor prcbable losses. Input i i
recovemble rcprcscnl$ the lalue-added tax (VAD paid on Furchases of goods and services, net of
outpur tar liabilities, rvhich can bc rccovered as a tax credi! agajnst futue tax liabilidcs of the
Croup upon approval by the Bureau of lnternal rcvenuc (BIR) and/or lhe Philippine tsureau of
Customs.
Prepayrtc'!E
Prepayments include .xpenses already paid bul not yel incurrcd- Thcsc are measured al amortized
cost less imp_dirrncnl lDss, if any.
Defened Mine Erpla$liqlla$
Expenditures for exploralion works on mining properties (i.e., acquisitiou of righis to cxplore,
topographical, geoLogicaL, and geophysical studies, exDioGtory drilling, trelrching, sampting, sjtd
aclivities in relation to cvaluating the technjcal feasibilify and comnercial viability ofe\tracting a
minenrl rcsource) are deferred as incuned ard includcd under "Defened Nline BxpLoralion Cost"
account in the slatement ofinancial Dosilion. If and when recoverable reserves are deternilncd lo
be present in commercially prodrEible quantities, th€ detened exploratjon expdlrd;tur$ and
subsequenl mific d€velopment costs are caphalized as paJl of lhc rnine and mining properties
account classified under property and equipment.
A valurtion allowance is provided for M,.€covemble def-erfed minc cxploration cosls based on the
Parent Company's i$ies$re$i of rlrc fulure prospecls of the exploralion proiecl. Full pro!i"io', ir
made for the inpairmcnl uniess jt is pobable $al such costs are expected to bc rccouped through
successlLrl exploration and developmenl of drc area of interest, or altematively, by its saLe. If dlc
projecl does not prove to be viable, all revocable cost associated with fhc project and the related
inFirment provisions are wiitten off Wher a proiect is abandoned, lhe related deibrred rninc
exploradon costs arc wdttsn off.
Property. Pbnt
!!!LEqq!!p&!!
Propelty. plant and equipnent arc carrjed at cost, excluding the costs oFday-to-day serviciry, less
accumulated deDrccialjon and impairment losses, if any. Cost of dn henr of prcpedy, Plan! and
cquipmelrl comprises oi its purchese pricc and any cost atlributable in bringing Ue assei to its
interdcd location and lvofting condition. Cos! also ircludes aDy asset retirement obligadon and
interest on borrowcd fi|nds used.
Subsequenl costs are cnpilalized a5 pad oflhe properiy! plmt and equipment account, oni] wh€n it
is probable that fulure economic b€ncfits associated with the item will flow ln Ihe Croup and the
cost ollhe item can bc rncasured reliably. All other repaim and maint€nance are charged against
currcnt oDerations as inculled.
Forciglr cxchange diflereDtials arising from the acquisirion of property, plant and cquipment are
charged against clu renl opemlions and are no longer capitalized.
Deprrciation commences orce the property, planl and equipmeDi are 8lailab)€ for use and js
computed on the straight lino basis over lhe fbllowing cstimated useful lives of the assets
regardlcss ol utilization. lhe useful lifc oI each oflhe propefly, plant and equipmcnt is estrmaled
based on period ovcr which the asset js expected to bc available for use. Such estimatioD is bascd
on collccLile assessment ofindustry practice and experience with similar asscts.
'l he cairying value of property! plant and cquipment are reviewed for itlpairment wheo cv€nts or
changcs in circumstances indicatetllat the carryi|g valuc may not be r€covered.
ofnine
usirgthe unit-of. production ftethod based
cslimated
on dre cslimated recoverable reserr'es. Thc
recoverable reserves, useful liver, and
dcpreciarion and amoflization rrlhodr are revicwed periodically 1o ensure thst thc cstrinated
recoverable reserves. rcsidual vaiues period and methods of dcplction and deprecialion ar€
cons;stcnt with th€ expecled patterr ofeco onic benefits from the jtem of property and equitn(nr
The assels rcsidual values is reviered and adjusled, ilappropriate, at each reponing dale.
Depletion
s;te development costs are calculated
Conslruction in-progress is included in propcrfy and equipment and slated at cosl which includcs
cost of construclion ard olher direct costs. Consfuction in-progress is not dcprecialed until such
lilnc thc rcl€vant sssets are ready ibr o$cratiokl use.
An item of property, plant and cquipmeni is derecognized upon disposal or when no lulure
economic bene{its arc expected fiom its use or disposal. Any gain or loss arisilrg or derecognilion
ofthe asset (calculated as lhe d;fierencc hctwscn lhe net disposal pfoceeds and ihe cao!ing amount
of lhe asset) ls includcd in the consolidated statemml of conlprehens;ve inconrc i the year the
asset is derecognized,
The asset's residual values, usiiful lives and rnethods are reviewed, and adjusied ifappropriate. at
each limncial year cnd.
Mh1e Site
Devrlolltgqt llat!
Cost incuned lor exploration and developnrcnl of mining properties ar€ deferred as incurred. These
defened costs are charged to expense when the resulls of the exploration are delennincd to be
ne8ative or Dot cornmercially viabte. When exploration results arc p(xilivc or commercially viable.
these deferred cosls arc capitalized as pad of mine devolopment cosl account ciassified under
property and equipm€nt.
DePcclalion of mire site development cost is computcd baccd on orc exlr.lction over ltre eslimated
volume ol prov€d and probable ore reseNed as estimated by the Subsidiary's geoloBist.
- 12Mine developmeDt cosl! a.c derecdgnized upon disposal ar rvhen no future econonric hcnefits are
expected to nrisc from ihe contin,red use oflhe assets. An) gd$ or lors trrisi$g on the derecog$iiion
ofthc assut (calculaled ;s the dillerence beN_een thc ct dispolal proceeds and th€ canying amouni
ofthe assel) is included in pmfit or lo3s in the year the itern is derecognized.
Mine sile devetopment cost nlso includes thr csliinated costs of tei',abilitating the mine site, for
which the Subsidiary is legally and conslructively liable. These costs, included as part ofm;nc sjle
developncnl costs, are amonized using lhe unit-oi-produclion mcthod based on the esrlmated
rocoverable reserves.
Subsequent to lhe blrsiness combinalion and acquisilion date, the Parent Company recogDi/Lc
trdscd on the business combinalion to IVIMDC rcla1in8 t!' thl.j fajr value of proPeriy. plan and
equipment determired al lhc dale of acqlrisilion radler than lhe canling amount in the book5 of
MMDC prior to the date ol acquisitlon.
IDp4r{I|llnl qf Nonfi nancial Asse
The Slbsidiary's propeny, plant and equipmcnt, delened mine devclopment cosl, and olher assets
a-re sulrjcc! lo impainnent testing. Indlvidual assets are tesled for impaiment \r'hene\€| everrts or
changes in circumslarces indicate that the carrying amolrnt may nol be tecoverable-
For purposes of assessing impaiment. ossets are grouped al the lowest levels for which rhere are
separately id€Dtifiablc cash flows (cash-geDerating units). As a r€sult, assets are tested for
impairme either indi\,idualL] or al lhe cash-gercntirg unit level
lmpairment loss is recogniz-cd for lhc amorrnl by which lhe as$et's or ursh-generating unit's
carrying amount exceeds ils recoveralrLc amounl Thc recovcrablc amount ;s lhc higher of tai'
value, rellecting tnarkel conditions less costs to sell, and value in use' based on an intemal
evaluatim (rfdiscoLrnt.qd cash flow. lmpairment loss is charged pro_ram to olher assets in lhe c'shgenerating unit-
trsscls are subselluently reassessed for indications that an impairment loss previously
tecognized ma] no longer exist and tlrc caq/ing arlount ofthe arset is adjusted to the recoverablc
amornt rcsLrlling in lhe r€versalofthe impainnent loss.
AII
Rental DeposiB
Rental Depos;ts are mcasured at anoflizcd cost less any
i
pairmcnl loss'
ifary.
Ijlalrqial l.rab!l1l&s
Financial liabilities are initially recognized at fair value Financial liabjlities include interesi-
bearing loans and borrowiD& ts.de and olher palables and finance lease liabiliries, due to Ielateit
pariie;and other non
eot liabililies, !'/hich are measued at amortized cost using lhe effective
inlerest rate medlod,
{u
!inancial LiabiLities are recognized when lhe Croup becomes a parly to the contraclual lerms oftlle
jn
instrument. All hrtcrcsl-rclatcd chargcs are recognized {s an cxPcnsc
Profil or loss undcr the
caplion Finance C,osts in the consoLidated statement comprehensive ofircome'
IntereslbeariDg loats an'l bonowirrgs uc raiscd for suPFrn of long-term turding of opemtiorrs
Th€y are rccognized at proceeds received, nel oiditect issue costs.
-
ll
-
Tmde p.lvables are initially .ccognized ai their
fair
lue and subsequently measured al amo ized
Div;dcnd disiributions to shffcholders are recognized ai financial liabilities upon declarEtion by
the Parent Compa0y.
oll!ryElf\$sb
Irnpairnrcfl t
The Group assesses at cach rcporting date whether there is objective evidence that d financial assel
or group o[ financial atsets is irnpaircrl. A financial assel or a group of financial assets is deemed to
be impaired i1, aJld onL-v
there ]s objectivc evidence of impairnem as a result of one or more
€vents thal has occulred afler lhe iniiial recognition ofthe assct (an in(urred loss evenl') and dral
loss cvenl (or events) has an impacl on th€ estimaied future cash flows ofthe financial asset or the
group of ftnancial assct! that !a$ be reliably estinatcd. Evidence of impainnent n1ay iDclude
il
indicat:oN that ihe borrower or a gnrup o{ bormwers is experiencirg significant financial
difficull),, default or delinquenc] in interesl or principal payments. ihc probabilitJ thar lhey \!ill
€nter bankuptcy or olhcr financial reorganizaliorl and $.herc obscrvable data indicate thal there is
me;$urable decreasc in tie estimated f'uture cash fiows. such as changes in arream or cconomrc
condiliotrs that conelate with defadlt!.
Il, in a subsequent period, the amount of the impairment loss dccrc;rs€s zuld the deqease car bc
relatod ohjeotively to an event occLrring after lhe impaimlent war rccognized, the previously
recolnized impairment loss is recognized in the consolidaied staiements ofcol1prehellsive income,
lo lhe exlent that the carryin8 vahle of the asset does not ex$ed ilc nmoirized cost at the reversal
dale.
DcrecoSnition oiFinai€ia]
A!$b q4dlbbtltlleg
A financial asset (or, lvherc applicable a pali
assets) is derccognized where:
.
.
.
of a financial assel or part of a group of financial
the righl to receive cash flows lrom the asset has expired;
the Group retains lhe right to rcceive cash flows from the assel, bui has assumed as
obligatioD lo pay them in full without material delay to a third pttrty unde.r a "pass-through"
afirdngemenl: or
lhe Croup has transfened ils right to receive msh flows from the asset and eidrcr (a) has
transferred subslanlially all thc isk! and r€wards ofthe asset, or (b) has neither tra sferred
nor retained the risk and rewards ofthe asset but has transfened thc conlrol ofthe asset.
W}lere the Croup has imnsferred ils nghls lo receive cash llows from an assel or has cntcrcd into a
pass-through arrang€nErt, and has neither iransiened nor retained substanlially all the risks and
rewards of lhe asset nor transferred control of the asset. the asset is reoognized 1o the extcnl ofthe
Croup's contlnuing i|volvement in the assel. Contindng involvcrrrcnt lhat takes lhe form of a
guarantee over lhe lraisitrrcd asset is measured at the lower oitlrc original car.ying arnount ofthe
asset and lhe maximum amount ofconsidemtion that the Cruup could be required to repay.
A
financial liability is derecognized when thc obligation under ihe liability is dischargc.t,
liabili0 js rcplac€d by another frollt thc same
lender on substantially differcnl terms, or lhe teirs of an existi g liabiliry arc subslantially
rnodified, such an exchange or modification is lrealed as a derecognidon ofthe original liabiliryand the recognition of a new liabjlily, a.d the dit'Ierence in the respective carrying amounts is
cancelled, or has expircd. Where an exist;rg 6nancial
rccognized in lhe consolidated statenent ofcomprehensive income.
A$s{!i!S_li!ancillbslruDelt
Financial assets and financial liabllltics ar€ set otT and lhe net anrout is reported rr thc
consolidat€d statemcn$ of financial position if, and only ii there is a currently cnforc€able legal
rlght lo offscl th€ recognized amounl and th$e is an intentlon to sellle on a nel basis, or to rcaLize
lhe asset and scttle the liability silllultancously. This js not genemlly the ca\e wi$ master netting
agreemcrls, and the related assets and liabililies are prescnl.d gross in the consolldated srarement
offinancial pos;tio
.
Capital Stock
Capilal stock is detemincd using the nominal valuc ofshares
Rctained Ealnines
liat
have been issued.
(detcjo
Retained edmings (deficit) include
all curent and prjor pefiod rcsull,i as
disclosed
in
rhc
consolidated sBtements oI comprehensive income.
Rcvcnue Recoenition
Revenue is rccognized lo the exlenl drat it is probable that the economic bencfils will flow to the
Croup and 0rc .evenue can be reliably r'lcarured. The following specific recognitim crileria must
also be mel beforc revenuc is recognized.
.
.
.
.
Cos!
SElc of minerals - revenue amo nl from lhe sale of minerals such ils o.c!, met.ls
minerals, hydrocErbons, acids axd chemicals is recogn;zxl in lie coirsolidated slaten€nt
of comprehensive income on thc dal€ thiit minerals are deLivered to the cuslumer.
Relenue is the ltrir vahre ofthe consideraton recei\cd or rcccivable from gross inllow
ofcconomic benefits dwing the p€riod aising liom the course ofthe ordinary aclivities
of thc cntity and it is sholvn net of tElics such as \ft1|e added tax (if applicable),
estimated refums, discounB and volume rebates.
Inlerest income - interest is rccognized on a lime proportion basis using effcctive inlerest
rate thal takes iDlo accotrnt the effective yield on the asset.
Dividend income - dividend is recognized when the right to rcc€ive the payment is
estabiished.
Miscellaneous income - revenue is recoErized when earned,
a!dlE!!s!se
Cost and expens€ arc decreases in economic benefits dLrring the accolmting period in the form of
outflows or decreases oi assets or incurrcnce oi liabililies that result in decrease irl equ;ty, other
ftan those rclating to distributions to equily participa s Op€rati g cxpenscs are recognized in the
consolidated slatcmenl ofcomprehensive income in thc pcriod these are inclmed.
Sho -term lmplor€e Belcft!
'lhe Group rccognizes a liability net of amourts alread), paid and an expense for services rendercd
by enrployees dudng lhe accou ting period. Short-iern benelits gi\€n by the Croup to iis
cmplovees include srlarics and wages, social securiry, health insurance and horsing contriburrons.
shortlerm cornFnsaled absences. bonuscs and other non-monetary bencfils.
Pension Cost
Pension cost is actuarially deteonined usirg rhc projected Lmit credh medlod- This melhod reflects
se.viccs r€ndered by enuloyccs up to lhe date of valuation snd incorporates assumpt;ons
conceming employe*' projected salarjes. Actuarial vdluations are conducled wilh sumcient
regularitJ, \tilh option to accelerale when sjgnificant changes to undedying assumplions o.cur.
Pension sosl includes current service cost, jnlerest cost, expecled retum on any plan assets,
actunrial Sains and losses, past servicc cost and the effec! of any curtailmcnl or settlement.
Thc liabilitv recognized lry thc Group in respect ofthe delined benefit pcnsion plan is lhe present
value of the defined benefit obligation at thc reporting date less the fair value ofthe plan assets,
Iogether $'ith adjuslments for umecognized acruarial gajni or losses and past senice costs rhal
shall bc recognized in latcr p€riods. The defined benefit obliSation is calculated by independent
actuary using the projected unit crcdit mcthod. The present value ofthe deiined bencfil obligation
is dete nincd by diicounting lhe estlmatcd ft{ure cash outflows using risk-ftee i ercst mtes of
govemment bonds lhal havc terms !o maturily approximatirg dre lerms of the related pension
liab;lidcs.
if ihe cumuiative umecog i?cd
actuar;al gains and losses at the end oflhe previous reporting period exceeded the giI-aler of l0%
of the present value of dcfined benefit obligation or l0% of thc fa;r v5lrc of plan assets. 'Ihese
gains and losses are recognized ovcr thc sxpected avetage remaining working livcs of the
enpLoyees participating in the plans.
Actuarial gains and losses are recognized as ;ncomc o. expense
service cost is recogrrized as an expense on a strailC1t-l;n€ basis ovcr the average period
unail the bercfils become ve4ted. lf the bencfils are already vested immediately followiry thc
irl.oduLlion ol or changes to, a pcftion plan, pasi sewice cost is recognized inmediatcly.
The
pa51
Borrot'!ios Qq!t!
Bomowirg Costs ale expc scd in the consolidated statement o{ coDprehensivc ;rcome in the
period in which thcy are incuned, excepl to the extent thal they arc capitalized as being directly
auihutable to the acquisition or constrrclion of an asset which necessadly takes a substantial
period oftirne
r.o
ge. r.
".ly
ior irs intended urr.
The capitalization ofbo|row;ng costs as pan oithe qualilling asset commences whcn cxpenditures
for thc asset are being incured. borrowirg cosls are being incurred a.nd aclivities that are neccssary
to p.epafe the asset for its intended use are in progr.xs. Capitalization of borowing costs is
slspended or ceased when substantially all the activities necessary' to prepare the qualifying asset
fbr ils irtended use are interrupted or conpleled.
l,oreien Cunencv Tra!!@!ie4
tteNs Lncludqd in the consolidnled fina$cid stntcRcnrt are measured sing (he currency of thc
primary economio envircrurent i whi{h lhe Group op.rales ('the lunctionai prcsentation
currency') \tlich is thc Philippi0e Peso- Monelar] assets arrd liab;lities dcrrominated in foreign
curemy aru lrarslated at the exchange lale pre ilirgatlhc end oflhe reporting p€riod. Dxchange
gains and losses arising from ftrreign curency transacliotE are crediled 01 changed to curent
operations. Non-moncta4, items lhat ate measured in terms ofhlstorical cosl in a foreign curency
are translated using lhe exchaDgc ratee a1 lhe dates ofinitial imnsaciions.
Provis;ons aldtelllttirsgleies
Prov;s;ons ar€ recogn;zed |}.hen thc G.oup has a present legal or constructive obligslion as a result
of a past evenl, it is probable that an outflow of resources embadying economic benefits will be
required ld settle the obligation and a feliablc cslimate can be made ofthe amount ofthe obligdtjon.
Ilthe effect of thc tifirc value of tnoney is malerial, provisions are delcrmined by discounting tlrc
expcctcd future cash flows at a pre-tax mtc thal reflec'ts cur€nt market assessmenl ofthe lime
value of money and, r,,hcr€ appropriate, the risks specific lo fte liabiliq. \Yhcre discounting is
used, dre ;ncrij3se in the provision due to the passagc
oftinc
is r€cogniz€d as an interest expense.
Contingent liabilkies ar€ not recognized in the consolidated financial statcmertls. These are
discloscd unless the possibility olar outflow of resources 6mhrdying economic b€nefits is remote.
Cont;ngent ass€ts are not r ecogn;ztral in th€ consolidated financial statemerls but djsclosed whet an
intlow of ecoroinic h{ncfits is probable.
Income Taxes
Cur int inunrc t(E
Curent incornc tax dssets and liabilities for lhe current and prior periods are measured al the
amount expected io be reco\rlTcd lrom or paid lo rhe la.\dion aulhorities. '[he tax rates and tax laws
uscd to compute lhe amounl are those that arc cnacted or srbstantively enacted at the end oftlre
reportin€ period.
Dcfelrcd income ku
Dcfcncd income tax is provided, using the liability nrcthod, on all lemPorary differences at the end
oithe reporting period betwccn th€ la-\ base ol assets and liabilities and their carrying amounts for
fi nanciai reporting pumoses.
Dettncd income tax liabilities are recognized for all taxable remporary diflcrcnces. Deferred
income la\ assets a.e rccognized for all deduclible temporar) differenc€s, atd carryfbrwsrd
belcfils of the exc€ss ofminimum corporate income tax (MCIT) over the regular cdrporalc income
tax (RCIT) and net operaling loss .arryovcr (NoICO), lo !h€ exlent rhat it is PrDhable thar tulure
laxable prot'it \yi]l b€ a./aildblc against which the deduclible temporary dillerences' excess MCIT
and NoLCO can be utiiized.
Deferred;rcofic laK liabilities are not rrrovided on non+a-\abte te$rpor?ry ditierences assoclnttd
with investments in domestic subsidiaries, associates and intefesl in joirt ventures lYidr .caPecl Io
investments in othr subsidiarics, a-ss ates and irtcresle injoint ventures, deferred income tax
lirbilitios ar€ recognized e\cepl 'then the timing oflhe reversal ofthe temporary dillerence can bc
controLted and it is prubablc that re lemporary differcnce will not revetse in the foreseeable future.
Th€ carrying amount ofdcfcr€d incone tax assets is reviewed al end ofeach repofing p€riod and
rcduced to the extent that it is no longer pfobable tl1at sutlicieDt firturc ta{able profir !vi'l be
available 10 allow all of paf oflhc defcn€d income iax assets to be utilized.
Deferred income tax assets alrd l;abilitics are mcasurcd at th€ tax mtcs that are expecled lo apply to
thc pcri(xl when the asset is realized or the liabiliry is setlled, based on ta.\ rates (and t&\ laws) in
effect at the end oi the repoftirl8 pcriod.
-17L@ies
The deleminatior of whelher an arrangement is, or contains a lease is based on the substancc of
the arargenlcnl at inception date or whether the fulfilmcnt oflhe arrangement is dependent orr the
use ofa specific assel or asscts or lhe arcmgemenr conveys a righi to use thc asset. A reassessment
is ma.de elier the i$ception of the lease only ifone ofrhe followi$g alpliesl
r.
c.
There is a chanSe in conlractual rerms, olher than d renewd or exlension of the
afangemeni;
A r€neval option is cxcrcisrd ar extension gront€d, unless the ter$ o[ thc
extension was initially included in rc leasc tcnn;
There is a cbangc jn the determination of whelher fulfilnent is dcpcrrdenl on a specilled
d-
There is a substanlial changc to the asset.
b.
Where a reassessmenl ;s made, lease accounling shall commence or cease flom lhe dale when the
changc in circumstances gave fisr to the rcalsessment for scenarios a, c or d and at thc date of
renewal or extcnsion period for scenario b.
Opera{ing lease pa)rmenls are rccogniz€d as an expense in the $atement
compfehensive irconic on a straight line basis over rhe le 1 ofthe lease.
of
consolidate(l
Relaled Pariies
Panies $crc considered to be related ii one parly ha\ thc ability, directly or indirectly, to conrol
the other patty or exeici..€ significanl influence over the other pany making linancialand operuting
decisions- Parties were also @nsidered to b€ relaled if they are subjecl to con non control or
common slgnificant influerce. Related parlies may bc individuals or corporate entities.
Tmnsactions behveer rclatcd parlies are based on terms similar lo those ofl-er€d to non{clated
parties-
Eaminss aloss) oer Share
Basic earnings (loss) per stnr€ is calculated by dividing the net income (loss) for the year
attribulable to the common shareholdcr! of the Group by the \,eighted alerage number ofcomminr
shares outstanding during the year, after considering the rcrointive eftect of stock dividend
rlcclamtion. ifany.
Lliluted esmines floss) Per Sb4re
Di(uled eornings (loss) per share amounts arc calculaied by dividing the net incomc (loss) for the
year attributabte to the comnron stockholdcB of the Croup by the lveighted average number of
common shares outstsnding duing the year plus the weighted average number ofcomnor shares
lhai wouid b€ issued on the conversion ofalL dilutive potcntial ordinary shares jnlo ordinary shafe$
E!e!l1::
4!lqlhe&p9]]1!e-!9!pd
Pos! year-end everts thal provide addilional informalion about the Croup's position at the eDd of
the rcporting period (adiustirg events) are rellected in the consolidaicd financial slatcments when
nuterial. Post year- end cvenls that are not adiusting events are disclosed in the notes when
18
3.
Significant Accounting Judgm€nts ard Estimates
'I he preparatiori ofthe tinancial statenrerrs in accordance wjth PFRS requircs the Group to
exercise
judgment trake accounting estimalcs and use assumptions thal affect the reported nourts of
rrssets, iiabilities, incorDc and expenses aDd disclosure of contjngent assets and contingent
liBbililies. Fuure evenls may occ[r wlic]r wlll cause the assumptjons ussd in aniving at thc
accounling estimales 10 changc. The effects ofany changp in accounl;ng estimat€s are refleclcd in
the consolidatcd financial statements a.s thc] b€come reasonably determinablc.
Accountiig cstimates and judgments are continually eealuated and are basid on historjcal
experience and other fhctom, including expectations of fulure evenls that arc believed to be
reasonable under thc circt|mstances.
ludgments
In the proccss of applying the croup's accounting poLicies, managernenl has inade the following
jLdgments, apan fron those involving estinrations, which have the most sig0ificanl effcct$ on
amounts recognized in thc consolidated flnancial slatemenlsl
Det ern i ni ng F unctiandl Currencl
Based on dre cconomic substance of the undcrlying circumstances relevant to the Grou[ lhc
frnctional cuffency of lhe C.oup has been determined to be tl1e Philippim pcso. The Philippine
peso is the cufency of the primary economic enviroflrncnl in which the Group operales.
Deferred '1 oi Assets akd Liubilities
'l he Croup fevic$s its deferrp,C tax assets and liabililies dt cnd of sch reporiing period and rcduces
the carrying anrount k) th€ extenl that it is no longef probablc lhdt sufficient taxable profit will be
available to allow all or part of thc defbned ur-x asscl |o b€ ul;lized. As at Decernber 31, 2011 md
Junr 30, 201L, the Croup's deJbrred tax nssets recognized in the consolidated llnancial slatements
smounted to P1,078,946 and F98i,475, respectively (See Noic 26)-
P/o';siorL\
llLdgment
u d Cantinzehries
is exercised by managemoft to distinguish
between provisions and conlingencies.
Policies on recognition and disclosure olprovision and disclosue of contingencies are discusscd in
Note 2.
Accountina Estimalcs and Assumotions
Thc key assumptions concerning the futurc and olher k€y sources ofestimation unccrtaitties at ttxl
end of the reporting pcriod- lhat have a sig'niflcant risk ol causing a nnterial adjuslment to the
canying amounts of assets and liabililies wilhin lhe next linancial year are as follows:
lmpairnent offnancial as s et s
The croup r€views its lrade receivable and atailable-Ior-salc securiries at each reporling date lo
assess lyhether aD allowaDcc for impairmed should be recorded in the Group's co soli(lated
slatements of comprehcnsive jncome. In patticular, judgment by manageme l is rcquired in the
csliroation of amount and liming of futurc cash fios's lvhen determining $e level of allowance
requircd. Such estimales are based on assumptions about a nurber of laetors aid aclual results
may dilfer, rcsultin€i in tulure changes to lhc allowance.
19-
The level of lhis allowance is evaluated by management on the brsis of factors that affecr the
coLlcct;vily ofthe accounls. Thcse factofs include, but are not limitcd to age ofbalances, firancial
status ofcounte4)arlics, pajmeni behavior, legal opinion on recaverability in case oi legal disputes
and knotlrr market fartors. The Crcup reviees the age and status of legal disputes and known
faclors The Group reviews the age and status ofreceivables, and klentifies accounts ihat arc to be
provided with allowancc on a reguiar basis.
ln addition to specific allowance against individual sign;ficant lrade ard other receivabllrs, the
Group alsrJ makes a collective impairmrnl zilowance agaiDst exposures which, although nor
spccifically identified as requiring a specific allorvance. have a grcaler risk of default than whcn
orig;nally granted. lhis collccr;vc alLoe"nce is generaLLy based on the age and rtatus of the
accoufts,
The amount and dming ol rccorded expenses for an]r period would d;ffcr if the Group made
different iudgments or utilized diflerent estimates. An incrcasc in allo\rance for impainnenl losscs
would hcrease recorded expenscs and dec.ease in net income. lotai carying value ofre@ivables
and other cunenl assets al|rounted to F45,104,2?5 and P31,268,538 as at Dcccmber 31,2011 ard
june 10,2011, rcsp€ctive1y. Allowance ibr inpairment on financial assets recognized in lhe
consolidaled tiDarcial statements as at Deoember 31.2011 and June 30.2011 amounted to
P9.791.791 (See Notes 7 and l0).
hipairnent
oJ
Inwfiary
The Subsidiary recogrlizes impairmenl on inventoies whenever net rcalizeble valuc of inventories
become Lower ihan cost due to damaSc, physical delerioralion, obsolescence, changes in flicc
levels or other causes. The impairment is reviewed oD a monthly basis 10 rcllccl the accurate
valuation iD rhe financial records. The carrying vahLe of inv€nlories in the consolidalcd financial
stateDrc ls xmounted lo F2:14,403,8 I 8 and P96,409,802 as at Dcccnbcr
(See Notc 8).
3 I,
20 I I and June :10. 20 1 I
EstimaEa Useful Live! ofProperiy, Pldnt ond Equipnent
The Gfoup cslimates the useful lives of propefy. plart and equipmcnt bascd 0n lhe period over
which the properry. plarl and €quipment are expected to be available fbr use. The estimated usefi.l'
livcs ofthc prop€fi.v, plaft and equipment arc rcvicwed periodically al dre updated ifexpeclations
differ lionl previous cslimates due io physical lvear and tear, technicii or commercial obsolcscence
and lega1 or other limits on the use of the propertl, plad and €quipment. ln addition, the eslimation
of lhe uselul lives of propcrly, planl and equipne is bosed on the colleclive assessmenl of
induslry practice, intemal technical evalualion and cxpcricncc with similar assets- It is possible;
howerer, that fulu.€ financial performanc€ could be maieriaLLy affecied by changes in the estlmdlcs
bfought about by chaiges in faclors mentioned above. Tlte anounts arrd limirg of recorded
expenies for a.rly period would be affectcd b] changes in these factors and circumstances. The
carrying value of pmp€fly and equipment in the consolidated financial stalenEnts as at
December3l.20llandJunel0.20llarnoLrnledtofr725,093,05Iand?656,15l,16l,respectivelv
(See Notc 1 l)-
A reduction in the estimated uselul lives oi l}te property, planr a|ld equipmenl woukl
recoded cxpenses and decrease fie noncuncnl a-5s€1s,
increase the
-20Th€ estimated useful Lives are as follows:
Buildiig
5-10 ycars
HeaW and Mobil€ Equipment
Equipment, lumiturc and Fixture
5-7 ]ears
3 l€a$
Thc carrying amounts of property, plant and equipmeni are analyzed in Nole 12. Based on
managemeot asscssment as at December ll,20l I ard llrne 30, 2011, therc is no change in ihc
estinaled uselul lives ofproperly. plani and equipn1ent. Aclual resulis, however, may var! due lo
change in estjnates brought about by changes in fadors mdntioned above.
Recovrability a d Estimates ofE plared Minerul Resauftes
luinc.al reserves and fesourccs esiimates for developnent pmjects are, &r a large exlent, bascd on
the interpretaiion of geoLogical dates obiained from drill holes and other sanpling lechniquer and
feasibility studies which derivc estimates ofcosts based on allticipaterl tonDage and grades oforcs
to be mined and pr,:xjesse4 lhe conligll|lltion oflhe ore body, expected rccovery ratcs lrom the ore,
esijrnaling operating costs! estimaled clirnatic coDditior and o1h0r faclors. Proven rescrvcs
esdmates arc attributed to future devclopment projects only where drcrc js a signilicant
c(nmitmen lo project furding and extraclions and lbr which applicable goverrmlental and
regulatorl, approvals have been secured or are reasonabl-v c.erlain to be securcd. All proven reserv€
cslimates are sub.jecl to revision, either upward or downr€.d, based on new information, srch as
block grading and producrion aclivitic! or from changes in econonrjc factors including product
prices, mntracl terms of dcvelopment plans.
Lstimates
of rcscrves for underdeveloped or partially developed area are subjecl to grcater
over reir luture lile than estimales of feserves ior areas lhat are substantially
rncenaimy
developed and depleted. As an area goes inro pr(xluction, rhe amo$t of plovei feservcs will be
subject to future revision once additional inforulation becomes artsihblc. As thoso areas are futhef
devclopcd, new information ntay led to revisions.
Estinatiryl Impairmcnl af Non-I'inarx ial As\els
The Croup assess at cach r€porting period \dhether ther€ is sn irdicalior that lhe carrying nnounl
ofall non-financial as$els maybe inpaircd o. that previously recognized impairmen losses nuy no
longer exist or may havc decreased. l{ any such indicaiion cxlsts. rr when annual impainnent
lesthrg for an asset is required, lhe Group makes an estimatc of the asset's recovemble amor|nt.
Thcrc was no impairment loss on on-financial assets recogriz€d dunng the year, exccl'l for the
Parent Company's inpul la\cs where a valuaiion aLlowanc€ was provided anrcunting lo F607,616
as at Ilecember I1,20 | I and J(me 30, 201I (See N$te 13).
Rcali.obilit.v
oJ
Def.rft.l
Tay Assats
Deitned tax assets are established ibf lax benefits relate.d lo deduclible temporary diffcrcnces,
carry iorwirrd of u(lusljd MCIT and NOLCO. These nss€ts arc p.ciodically revie'red for reali?rtio .
P€riodic rcliews covered the naturc and amormt of deferred income and expense ilerns, expecled
timing when assets \,/ill bc used or liabilities will be required to be reponed, rcliabilily ofhistortcal
profilab;lity ofbusinesses expected to pfovidc future €arning and tax planning stralegies wHch can
be utilized to incEase lhe lik€lihood that tax assets uill be reatiz€d. As of December 3 I , 20 L t and
Junc i0, 201 l, lhe Group did not rccognize Lhe defened 1a-\ effect ofNOLCO in the consoiidalB.l
financial statemcnls. The tax effect of MCIT ofthe Parent Company rccogrri/cd in lhe consolidaled
financial statefienls amounted to P165,619 as at Decenber 31,2011 and June 30. 20il
(See Notc 26).
- ?l -
Is timat irlg Contingefl eic s
The Group evaluotes legal and administrative pnrceed;ngs to which it is involved based on anajysis
ofpolentjal resuhs- l\'lanagement and its legal counsels do not believe that an) curent proceedings
will have malerial adverse efTecte on its financial positioDs md.esults ofoperltion. It is possible,
how€ver, lhat l'uturc rcsrlts ofoperation could bc materiaLly affected by changes jn the esiirnates of
in the effectiveness of strategies rclaling to lhese proceedilrgs-
4.
[,xDlDrcd Min€ral ResourRr
i lbe consolidated frnancial sutcmcnts of financiaL
position anrounling to F 1,294,766, I 57 as at Decernber I 1 , 20 I I aid June 3 0, 20 I I represenr lhe
excess of shar$ issu,id by ihe PaGnt Conpatry lu atquire 100% o\mershiD i[ MMm which meets
the definition ofan intangible asset that is controlLed and provide economic beDelirs, separable and
arises from mineml plopefty rights and claims lor which l-air \,alu€ lvas measured reasonablyThe explored rnircrdl resou.rces repoted
Vuluatio of intangible e-,tsets orising on c.]mhittutkrl
Valuat iolr of sxplored mineral resourccs on acquisition ol MM DC's 1 00% ownership is prim;rrilv
attached on the targcl commencement of MMDC'S mine production actiyities by the ?"d quitrter of
2010 which ',r'i11 in lum sta( the cash flory generation ofthe initi8l explored atea of about 120
hectares which is 2.5ol" of lhe area covered by thc MPSA. Cost from the exploration pemits are
substantially irnrnaterial and charged 1o opcr.rlion. In addilion, rhis valuation does not include any
Asigrunenl to the Parefi Company and/or MMDC of opemlirg agccmenl an additional miJri g
tenement thal may contain other mincrals.
l he Parent Cornpany commissioned Multiradonal Investment Bancomoration (MIB) to prcpare a
rhird party faimess opinion {or thc acquisjiion of 10070 of MMDC and to irsue ils opinion
regarding a liir and reffonable value for MMDC. The tmnsactior valLrc ofPl.l biliion has a ll9i,
discount to lhe fair value of P1.49 biilion ai co.tained in the third party lilimess opinion daied
F.bn,dry 1,2010.
ln the said rcporl, MIB lrsed the discount€d cash flow m€lhod based on a lo-year pro.jection pcriod
wilh the foLlowing assumptiors: (i) discount rate of 25%; (ii) cofflant Dickcl pdce of US$ 11,000
per metric ovcx the l0 year projection peliod vhich is al a 5l% discouni to lhe prevailinB rickel
prics of US$25.635 per MT as ol May 4, 2010; (iii) no terminal vaiue was arsurned al lhe end of
the l0-ycar projection period; (iv) tolal pmduclion volume of 11.6 million wet MT based on a
mining plan approvcd by the Mines and ceosciences Burcau covering 120 hectares.
ln lhe books ofthe Pareni Company, the intangibls a$et aising from combinalion is recogni?ed as
"explored mineraL resourccs" a1 this asset meels the delinition of an inttuBibLc asset thnt is
controLled and provides cconomic benefils, separable and arises fiom its minc.al proPefy right and
claims, and its fair value \|as measured reasonably.
-12
5. llnpairment'l
esting of Explored Mineral Reso'rrces
'I he GroLrp recognizes explorcd mineaal resources and performs an
impairnent test on ihose assets
when facts and circumslances suggest that the carrling amount of the assets |ay €xceed rheir
tecoverirble alnoLmts.Il varies the recognilion ofimpairment tioln that iri?AS 16, blt measures thc
impairmenl in accordance \vith thc standard once the ill1paiflnenl is ideniified. On top of those
|llcnlioned in P!RS 6, irrpainneni tests are pedbrmcd lvith the key indications as discLrssed belorv:
.
.
Uncertaints/ in cstimation oJ mineml resr)urces - ledlnical, geologic and mafket date on the
Mincral Resources are eslimirles and there is no assurance that lhe anticipated tonnages and
grades will be achieved, neilller is it ascertained that the indicated recovcry rale will be
Discounted
ccsh ow
srethod
- for
the purposes of coll]puilng net present ralue !-\hg
discounted cash llow method, the vcluallon of intangible assels involves the exnaction ofnonfeplaccable resource, a tcnninal value was not assig ed to reprGonl cash flolrs to be ea rcd
beyond the prcjcctcd period.
Markel risk - Therc are risks arising fiom thc possibility that the value of an invcs1,.nent lvill
declcas€ due to movene ;n mrdrket faclors. lhe standnrd ntarkct risk factors relevanr to th€
valualion of the intangible asscts are: (a) co rmodily risk, or risk commodiry priccs will change.
Currcnl surphs demend for th€
has caused Dickcl priccs lo reach r€cord leyeh irr thc
past few nonths, and is cunently'rornmodily
in a revcrsion/ curreclioo phase. Any sustained decrease in nickel
prices may decrease revcnues and eamings, and (b) cuffenc) risk, or the risk ihat foreign exchhnge
lates ltill change. The subsidiary's rcvcnues are dominated in US dollar. Any suslained Peso
appreciatio|l .rLa! derria,e re!enues and ecming,.
Manag€ment believes lhal lherc is a significant reason not to recogrizc impairme
at December 31. 201 I and June 30. 201 l.
6.
t in this
assel as
Cash ard Cash EquiY|lenh
This account conslsts of:
Dcccmb€r
ll,
20ll
Cash in bant
Cnsh on hand
Petty
cash
P164084,330
Jnne.]0,
20t l
34,7t)3
F49,007,851
25,-t21
22,W0
P164,14t,03f,
f49,045,i78
12,000
Cash with banks earns inlcresl at the respeclile bank deposit mlec atrourtirg lo F60,ltl9 and
P238.821 for lhe periods ended December 31. 2011 and June 10,2011, respecdvely. Short"term
investments are made for varying periods LF to three months depeDding on the ;mmediale cash
requirements ofthc Group and ealn interesl at the respcctivc shorlierm deposit raies.
Foreign exchange gain re'cognized for the period ended Dec€nrber 31, 2011 amounted lo
F],177,412, wHle forLign exchange losses anounted to P86,415 ard P:92,184 lot the years ended
June 30, 2011 and 20l0,resDectively (SeeNotc23).
23
7.'lrade
and Other Receivsbles
This accourt corBists of:
Deccn|b€r f,1,
June 30-
20tl
20tI
AccouDls rcceivable - trade
Advance.s to related parties 0rloie 17)
Accounts receivable - employecs
AccoLnts receivables - others
PI8,582,380
6,817,117
6,140.543
3,t 1s"554
:],14?,751
7,666
28,58t,077
Less allowance for impoiiment
9,881,291
8,23s,423
8,235,423
20,347,654
Cash advance 1'or liquida(ion
Cash advancc - others
1,647,87 |
674,661
3,361,712
F5,684,244
1,231,121
512,044
P22,090,819
lhere wcrc no asseB urder this category that were Llsed as a collateral or pledge on any loans
D€ember:]1, 2011 and Junc 30, 201l.
advances as at
As of tlecenber I l,
f0l l,
the aging anal),sis ollrade receivables is as follow!:
CLrrrcnt
Iro30
P 000
60
P'000
Pasr due
3L to
6l io 90
120+
dals pas! due days pasr duc days past due
P'A0A
P 0()0
l.ess than 30
P
Pt8,582
Total
P'400
P-
F_
P
'1aa
P18,582
The caffying amount of lradc and olher receivables, which are cxpcclcd lo b€ settled ryithin rlrc
next 12 months from repofting period, is a rcasonable approximation of fair value
(see Note 28).
Movemclls Df allowance lbr iDlpairnrent losses as at December 31. 2011 snd June 30, 2011 are as
folltiwsr
Decenrbcr 31.2011
BalaDcE ar
I rade
hrly I
Provjsions for the ycar
Balance at December
3l
lune 30.2011
Balance al July I
ProvisiorN for the year
Bahnce at Jrne
3t)
Otllers
Tolal
F
F8,235,423F8,235,421
P
P8,215,421FS,235,423
P
F8,215,421P8,235,423
P-
P8.235.423 P8,235.421
Orhers
Total
8.
lnvcrta.y
As at December 31. 2011 and June 30, 201l, thc Subsidiary's iN€ntory consists ofnicLel ore
slocktilc a'n'unling to F234,403,818 a d P96,409.802, rspectively. The invenlorics are canied al
Movcmcnls ofinvenlory are
as
fbllows:
Balairce al beginning ofyear
Additions durins drc
lNentory availa.blc for sa.le
Cost ofsales (Note
Balanca a! end oi
period
19)
Thcft w$e no items
9.
under this calcgoty that was used
December3l,
Jlrlrc 3Q.
20tl
2011
F96,,109,802
532,834,667
629p44,469
96,1q9,802
96,409,802
394,840,651
at a pledge ol sec|uiry to an) lotls or
Ayrihble-for-Srle Serurities
This account consists of:
\!et{Ktub
On March 9, 2004, a "Shate Puchase AEecment" ivas executed between the Parent Comptury a d
the PhilippiDe Towflsh;ps, Inc. C'Philtown"). The ssid agreement covered tl1e salc of lhe Parenl
Company's 488 regular nembe$hip sharcs of Melruclub to thilto$n. Subsequenlly, lhe Parcnt
Company agreed to assign the aforemenlioned 488 membenhip shares of Metroclub to oertaln
shareholders in exchange lbr slarcs in MMDC under a Memorandum of Agreement dated
Deccnbcr 15,2009.
ln Junc 201 t, tlrc Parent Compa$y assigoed the said Metro cluh shdes valued al P6?-5 Million ilr
exchange for 769,21I shares of MMDC vahlcd at P50 Million and lhc assumption by lhe astignee
of the Parent Compan)'s liability to Philtown in the anount of Fl7 5 Million. The transacln,!
resultcd to a nei loss ofts9.525 Million.
-25
10. Other Curr€nt Aisets
This account consists of:
Dcceml'er3l,
June 30,
201 I
1011
F1s,709,101
Advances to suppliers and cortraclor
Prepaid expenses and others
Dcfcned lax assel ' MCIT (Notc 26)
Prepaid lax
ts14,607.t54
11.64:.958
7,969,An
3$5,619
sU,l,gJl
5U4,933
2'l.l 40,6ti4
24,51t9,826
Less a lowancc for impairment loss
l85,6lr)
1,556,170
1,556,370
F23,013,456
!25,584,294
Movetuents ofallowance for impairnrent losse! as at December 31, 2011 and June 30. 201 I are
as
follows:
Dec€mber3l,
Juft ll0,
20lt
201|
FI,556,370
Balance at begirmi g ofyear
Fr,556,370
Provisions
Balanc€ at end
I
l-
of
Property, Plant and l,:quipm.nt
This aoco[nt consisls ofthe fbllowing:
Brgi@4ofr6
Enq_!!a
i6Lri3r4t3t
r223,rld,2ra
{,?ca.1m
1,704,11: 1t,2rD,l1t |tr!$t737
z,eor.qe
? q0r.q99
Ir.0% r31J)
406-3l].7'? ?0.17r,er 116r,l.14r ,r,r:ri.?'l :p?.?:
3407,4uev'2 Pr5,0?340t 31.,j&r493 PI1.595,935
rjJu?q
End
ory.s
-
r,5r&,604
7,rre,re8 41,9t ra
d
Ft:llq!
r4,!!1,F
PiF0aFl
.
26-
lqllnle
E4l@d
F
_
FnJr?rer
f4,9r1,310
r?6,ri)?.333 ?r.520,653 2t0.l,uJ:0
'r,J5X03:
(1,725,0)0)
4D1.4tt,971
4o7,40912
r5.0?s,40r 1.639,1qr
(r,725,000)
.-
107.40997r
lcr.q1l!L
|,591.935
127,:ilr 4.3:t0,r91
.
(43r,3r?)
21,744,s2+
F,10r.75r,:r0r tsr5.07r,405 F1.2d2,r56 F6,765,191 F205771.75: P21,5r1,653
Thcrc were no alsets under ploperl], plant and equipment thal lvere used as collalertl lo any loan
excep! for traniporlntion equipments that $€re obtai..xl by the subsidiary tkough United Coco Lrt
Plant€rs Bant (UCPB) in 2011 which have a carrying value oi F4,855:06 a|ld P5.498,?96 as a!
December 31. 201 | and June 10, 2011 (See Nole l5).
The Pare t Company recognized a gain on the sale of a prope(y and equiprnent amounling to
F12,8:7 fm rhe I-ear endEd June :t0. 20 | 1.
Deplel;on and depreciation expense amourti'rg
ended Deceurber
I l, 2011
10 P60.315,188 and F17,153,475
for the periods
and Jlne 30, 2011, respectively were distfibuted as follo$'s:
D€ccmber 31,
20ll
lnvcrtury
General and administmtive expcnse
Detbred mine exDIor.rlion cost
]47,537,150
1,;t4,299
Ju.1e 10,
201
I
F12,417,042
2,490,544
2.245,889
12. Def€r.ed ]lIiD€ trxoloration Cost
Defbned nrine cxploralion cosls rlate to nining projecls that are curentl)' on_going The recovery
of thcse cosls depends upon lhe success of cxplor,rtion activilies and fuiue development of the
.\,ritl bD provided
cofiesponding lninh8 propErties producible ifl commelcial quanlfties. AllolaNes
lor those delerred costs that arc specifically idcnlifie(l to be uffecov€rable
Dclclred mine expLoration cost includcs Napilalized borolting costs amounting to F0 223 million
as at June 30. 2011 and deprecialion amounting to P2 246 million as at Jure 10, 2011. The
capilali,.ation mtes used to deternine thc arnount of trcrrowing costs eligible for capilalization
ranees lion 6.25% lo ?.5% in 201l.
the
Sulrsid:ar]'s
dcfcrred mine explordtion cost iunounled
to
P407,409,972
as
a!
Dccember I L, 2010. 'i hese wem reclassificd lo property, planl and equipment on the same d:rtc
(See Nore l1).
13. Other NoncurrEnt Assets
This acrounl consists
ot
Input value-added tax - net
Mine rehabrlilaiion lund
Dcfcrfcd tax asset (Note 24)
Rental deposit
Monitoring trust nlnd
Fr)reiBntax cr€dir
I)ecemberJI,
June 30,
2011
20tl
p93,470,137
?t9,142,434
5,000,000
688,102
317,25n
5,tro0,000
597,856
232,000
150,000
150,000
r6,95s
16855
4,496,25'l
1.591.258
Others
*l0l
TItc Parcirt Comlran)'s inpDl iax ?mounling 1t) P5,121,169 and P438?,321 as ,rt Delcmber
20i I and June 10, 201 I, respectively, is net ofa valuation allowance amounting to ts607'616
ll'
Rchabiliration Cash Fund
Rehabilitatior Cash Fund fRCFi is a
fu'd desislraled to eDsure conpli ce with the apProved
rehabililation activities and schdules fbr specitic nining project phase, includmg researclr
programs ai defined in lhe Environmental Protection and tnhancemenl Program @PAP) Th€ RCI
;hai1 be equivaled to l0o/o oi thc total amount rceded to impleme the EPEP or Five Million (F
5.000.000) whichever is lower. in the event of $ithdrawals fmm the RCf' the Subsidiary shall
annually replcnish lhe RCF so as to mninlajn Lhe mininun rcqui.cd amount thereol'
Mdnrlorrtrs I ru:t funo
ftloniro,in; f.*i nuna (M1!) is a fund exclusiveiy used in the moniloring program approved by
Ihe Mine Rehabllitsrion Funrl (MRF) Co|nmittee lt stLall be in iash and in amour to be
determined by the MRI'Committee which shall not b€ lers ihan Fl50,000 Replenjshment ofthe
anouDt shall be done monthl] lo correspofld
1o
the expenses incurred by the monrlonng team tor
the mon|n.
Others pr;rnaril] p€rta;n 1() d;cscl fuel dePosits of the subsidiar] aod rental, urilitv and oftice
rcnovalion deposils oflhe Parent Company.
-28 -
14.
Not6 Payabt€
-Ihis
account consists of:
June 10,
2011
D€cember 31,
Unitcd C.ronul Planters Life lnsurance
(tlCPLl)
20ll
F100,000,000
Fl00,000,000
30,000,000
t9,800,000
30,000,000
Asian Alliance lnvedment Corp. (dA.lC)
OrlEr private placemenls
Less cunent
portion
rq800,000
26,310,000
--rre,r:or'ooo
100,000,000
26J10,0qQ
100,000,000
Fl49.800.000
P149,800,000
All of the ?arent Cofiptu1y's unsccurcd noles as at December.ll,2011 and June 30,2011
amounting to P176.2 milLion and F249.8 million lmve aDlual irterest l"tes rangirrg from l0% to
I2% a|l(] with maturilies of2 years fiom llrc dale ofdrawdow& palable in full upon maturity
All ofthe above notes havc the option 10 oonvert all or ! portion of the pridcipal amount ofthc loan
iflo fully paid shares oi stock priced at P2.20 pcr share of N1HI at any time prior to the .oalurity of
tlrc loan. ijpofl converting all or pofiion oi the loan, the lender shall be enlilled 10 a warant to
subscribe to one (l) Parcnt Company share, lor every lbur (4) converted shares at a price ofP2:0
plrf sharc. The wanants are subiect to a two (2) year exercise period.
As of June 30. 2011, the Parent Cc'mpany has applicd rhu convusion of the prilale Plac€rnenrs
amounting ro P100 million into 45,454,545 shares of the Parent Company rvith the SEC and is
waiting for its approval.
August 2011, thc SEC approved ihe c,rnversion of 20,454,545 shares of lhe Parent Contptrny
pcrtdining to pivale placements amounting to P45,000,000.
h
Intercst er.tens€ charged
Decernber I1,2011.
to
oFerations smou\ted
to
+11,066331
tbr the period crxle{l
I5. Intcrcst-bearing Loans
The Conpany's intcrcsl-bcaring loans are as follows:
Junc:]0,
20ll
Philippine Vctcrdns Bank (PVB)
As an A I ance Investnenl (orporalion (AAl( )
Unrted coconut Plane$
Brk
P?5,000,000
22,094,961
201
I
22,094,96r
1:,453
2.916,101
99,507,414
?5,0? 1,062
(UCP
'7
r.854.111
P2z:f4!j!4____p4!2y
_19_
The Subsidiary's loalrs frum AAIC as at Decenrbcr ll, ?0ll and June 30, 2011;nlended {br
working capital rcquirements anouuted to P22,094,961 wilh annual avemge inlcrest rate of 5%
above thc 160-day t-bill rate. As ol Dccemb€r I l, ztrl I and June 30, 2011 no intercsl lvas charged
lo Lhc Subsidiary. The loan lrom AAIC is unsecured and ha.i no i]-xed palment terms.
Tlc
Subsidiary's loan fiom ITCPB amountirg to ts2,432,047 was;nlcndcd lor the acquisilion of
transpoflation equiprrcnts in June 2010 payable in two (2) ycars starting June 2010 untjl July 2012
(Nore 1 I )
Tho Subsidiary's unsecurcd lodn lrom PVB as at l)ecember 31.
P?5,000.000 \,rilh annual inlerest ol 4.95i9/o ar)d wilh
inrended fbr workiDg capiial requircmefts.
nalurily
20ll
date of March
l,
arnornted ro
2012. Thrs \,,'as
16. Trade and Oth€r Payables
'Ihis accourl consisls of,
June 30,
201 |
Decemb€r31,
20ll
l
P143,J40,648
mde payables
Deposils payable
A-"url
"*pen"e-
101,515,855
ana orner
P134,116,413
21,739,614
p.
P!6r,1
P
l6.l_311.104
Trade payables include payables to conlmclors and dre noninteresl_bearing and have dlfferent
credil terms. Othcr payables include SSS, tlDMl, Phil health \\idrholding ta\es and olher accr.Hls
p€rtaining to recufting expenses; arrd accrued relircmcnt cxpcnsc dm.Junling lo P2,210'921 and
ts1,909,432 as at Deccmber i1, 201 I and Jme 30, 20l l (See Nole 25).
Deposits payable pertain to advancc paymcnl nade by various customers for lhe purcbase and
shiFment of (he Sub:ididry's nickcl Frod{cts.
As at December 11, 201 l, the aging anarysis oftEde payahlcs is as follows:
Cuffc l
Less
ihri
30
I
to
l0
31 to
60
6l
to 90
120+
days current days past due dals past due days plst duc days pasl due
Tolal
P 0a0
P'00u
P',000
P7
P'
Pt43,341
P'U|A
F
P',Aa
P141,295
P 0a0
ts19
'lhe carrying amounl of accounls payable and other payables, *hich are fipected lo be setiled
within ihe nex.t 12 months iionl reponing per;od. is a res-sonablc approximation of fair ralue
(see Note 28).
-3017. Relatcd Party Transactions
lhis
represerts non-interest bearing adrturcor to and from the $ockholdeF ald its affiiiates for
',\orking capital requiremenls. Such adlances are payable on denard wilh no guarantees attached
and with no fixed payment ternls-
Signilicant tra saclions lyith related paftics include lhe following:
December 31,
June 30,
201t
?01t
Advances to affiliatcs
Marcventu.es Minerals Hold;ngs, Irtc. (MMHI)
( xdc -:,I DclrlopmenlCorD.
F6,596,294
(!irac)
Advances from stockholder
Advances tiom affi liates:
P6,596,:94
l8l.l8j
144)4t)
*6,81',t,4',t7
F6,740,543
tst9,011,402
P22.51 | ,',7',72
Marcventues Resources Holdings. hc.
Marcventurcs Mincrals lloldings, lnc.
r05109
l'l'354
t05,209
P19.156.965
P27,694335
l?$4
Advanc€s to MMHI ard Carac pcrlain lo v€ntures ent€red into by the Subsidiary and han bsen
discontilued. Th€se advaoces are deemed to be worrhless and thc Subsidiary hds already provided
ao allowance for impa;ane losses in full (Se. Note ?).
Advanccs lrom stockholder and advances iio MHI rcprcscrt cash advanocs made to the Croup by
Mario J. Viiungco, a majority stockholder of the Parent Company.
to F2215,000 and ?4,4'10,000 tor
managemert pcriorlncl
^mounled
periods ended Dcccmb|.r 3t, 2011 and Jtlne 10, ?01l, rcspectively.
Salades paid
to key
18. Oquity
Capital Stock
DctaiLs
ofthe Parent Company's crpital stock are
as
follows:
June 10,
20ll
?ato
Cornr|on Stock - Pl parvalu€
Blldn(( at bce nnidgotlcar
lrcrc6e in luthorizLd $pitalstork
2,000,000,000
2,000,000,000
2.000,000,000
tlir
-31
20ll
2010
lssued and outstandh8;
1,701,006,329 170,100,632,980
tsalece at b.gimlng otyea.
Itrc(ease ie par valuc {ron e0.01 tc 9l .00
( onrcGion ol p,i!dl. uo@mer l'
Brl,, ,. e Jr end ofr@
(161r.r99,626,651J
20'.{54.545
1,72t,4b0,8?4 l./01.00b
i2r)
Movements of trdditlonal paid-irL capilal:
Decemb€r31,
June 10,
2011
2011
F68,232,769
F68JJZ;769
Balance at b€ginning year
Additions
8"1,,'.".
"'
14.545.45,1
."J
"f
On Seplember 6. 20 0. llrc SEC approvcd thc Parcnl Company's application on the valu ionof
'
in the amount of ts1.25 billion as consideration for the additional
shares of stock of MMIXj
issLrarce of shares worlh P1.15 billion and unpairl subscriplion of P100 million of thc farent
eompany.
On September 29,2010, the subs$iption leceivable amounting ro F181,486 equivalent to
1,091,280 shares were fully paid by ATC Securilies,lnc
par
On September 10,2010,lhe SEC npprorsd lhe Palent Company's applicalion on the incr€ase ln
oi
stock
shares
value of lhc cornmon sfurss from tq).01 ro P I , lhereby decr€asirg the aulhorized
lrom 200 biLlion to 2 bilLion shares.
On August 2011, the SEC approved the conversion of20.454,545 shares of ihe Pareft Company
penalning to prlvalc placemcnts amounting to P45,000,U00.
19. Cost of Soles
This account consrsts ot:
Outside ser!ices
Produclion overhead
and
Junc 30.
?011
2011
*271,337.320
46,659,68s
43,rr4i70x
r8,766J99
Clontract lees
DlIlerion
Dec€mber 31,
qel
eciation
14.962.145
June 10,
2010
Oe
P.
-12Oulside services pertaln to scwices offered by the contmctors rclaled to the mining acti t;cs of
the Subsidiary. Thcsc services include, but not l;mited to hauling, stevedorjrg, janiiorial,
nraiDterance, security and blffting cquipment renlal.
20. Shippitrg and Loading
This accounl consisls
oi
30.
(Six mo(thsi (one yeao
P88,79O180 F
December 31,
June
10ll
Outsid€ sc.vices
C0ntract iees
Other scrvices and fees
20U
Jxne 30,
20t0
(One yctrr)
F
t3,191,921
2,046.773
F10,1,62&874
21. c€nertl AdmiristratiYe
This account consisls of:
Dcccmbsr 31,
Jurc 10,
June 10,
20ll
?011
2010
6,366,200
9,003.362
2,490,544
|,136.861
9,842.995
I t3,741
P17,066J33
Representalion
Taxes and lisenses
13,610,181
3?64,217
Depreciaiion
2ir4J99
Prolissional fees
Rc.nl expense (Note 22)
Membership and cotrtr;bulion
Comrrunicntions, lighl and water
Reirement expense (Note 25)
1,?98,86,t
916'tr67
6t4,714
I01.913
458,221
938,852
r,909,412
4?1,105
8,606,667
719,867
398,510
i,108.380
1,18S,3;
68,854
9$91
1,960,000
61,380
1.580
9.016
8.9',79
828,5sr
3,187
55,854
158,853
l0lr489
100,656
280,000
Advertisirg expeosc
144,151
Salarjcs and wages
10
r,75{)
99,984
30,690
Misccllancous
12]L,240
9,19t.793
CNote 7 and l0)
Losses from sde ofinvcsmrcnt
Inrpainnert loss
Dirccto.'s fees
Comfiission
19,-548,314
101,3,19
6001,1v,
0t1ice supplies
Outside services
Legal expenses
SSS, Philhealth and HDMt'
Repairs and maintenarce
l3u' Ronth ald othcr be$efil:
Transportation and tmvel
'734.O16
1t9,822
827,086
r25,000
89,341
1.417,603
?42.817J63
1,009,384
70,182
ts46.94J.000 P3J,r04,U"6
f
'll22. L€asc Commitments
Thc Croup leases all of the premises occup;cd by fheir ofiices. The lease contracts provide for
annualreDtalsamountingtoP2,l54.660asalDecembef3l,20llandJunel0,20ll. Thc srardard
Ieascprriodsaretromtwololiveyears.'lhelealeconlractscontainrere$rloptions,$hichgivc
lhe Group dle right to extend tbe leasc on terms mutually agreed upon by both parties.
Thc Group's minimuln lcase payments on nonrdrccllable lease are a5 iollowsl
Decemberf,I,
June:]0,
20ll
20t l
P2,154,660
4,584,671
P6,139,334
Less than one year
Betwccn one year to fivc ]ears
!2,154,660
4,584,614
F6,739J14
Rental c\pense cbaqed to opcrations amoun(ed 10 P9?6.167 and F?34,016
December 31,2011 and Jtme30, 2011, rcspcclively(SeeNole 2l).
isf d}r pcriods
eDded
23. Oth€r Irrome (Expense)
'I
his account consists ofi
December
Jl,
June 30.
20t
201I
June 30,
2010
1
o'9.y93I)
One
Foreign cuffency gain (loss)
P1,111,412
60,109
Cain on sale of pfoperty and
cquipmenl
Cain (loss) on $alc of
ava;lable-foFsale secudties
lnterest expense
Miscelldncous
(F86,4r5)
(P292,184)
238,821
128,301
2,96r,s22
32,85?
(9,527,081)
16,2s8.61r
(s0.000)
8,314
24. Basic/Dilut€d Earlings (Loss) Pcr Sh:rre
The computatjiJn oithe e6|nings (loss) pcr share is as fbllows:
De(ember 31,
lune 30,
June 10,
20ll
201|
2010
(Six
Net income (loss)
Divkl€d by weighled ar€ragc
l1!r!U!cr9l-!9!lrn9!_!!!f9s
moDths) lP4e ye3!L
lqlle )e4I)
P268,4JJ,405 (855.t0:.468) tP14.821.2{J)
l,?21,460,874 1,701,006,319 101,006,l2e
F{,156
(Fir.0l3)
(P0 04',1
-t4The computdron
ofthe diluted enmings
(los.c) per share is as
iblloss:
Decedbcr3l,
2011
Jun€ 30,
I
2010
201
(On! year) (One yead
P268!433!40s (P55,705,468) (Pr4,82r,204)
(Sir
Net income (lo5s)
Divrdc.i by weight€rl ave'sge
number c,l common
shtues
rnontb)
11826,642,693 1,842,9?8,147 301,006,329
(ffr
f0,147
De{eor hcr
3l,
0r0)
Jlrne 30,
2U1l
201I
(onF y€ar)
(SL motrthsl
lverghtcd average number
June 30.
(P0 04o)
June 10,
2010
(onc yrd)
of
common shmes for
basic esmings per share
1,?21,460.8t4 1,701,006,129 301, 006, 129
llffecl ofcxscise of coNcrsion
80,054.545
oplions
|
t.{45.45i
Elfecl of cxercise oi cornerston
25,121J,13
W€ighred aael?gc number of
common shafes adiustcd for
the e.ffect oi excrcise of
con vc,$on lElions and wa,
r|lllt
-Lq?q642'693
28.186.161
1,842,938,147 301,006.:]29
'I'he Parent Company consrdeed the efiect
of its potentlalty drh'live convertible promissory notes
and wsrsnts The assuned excrcise of these slock optrons would have resulted rn addillonal
105,181,818 $d 14l,4'17,2'/1 m.nmon shares aB 3,i December 31, 20ll and Jtll1e 30, 2011.
rcspecirvely (SecNote 14 and 18)
25
Pension Costs
The Subsidiary has an rjnfoded and non-contribulory delined bcnefit rerirement plan coven'g
subslantiaLly all oi its regular employees. The beneils arc based on a c€nain percentage of fir|al
moathb bLcic salary for evenj year of crcdhed sertice of ihe emplole€s Discount lalc of 1 00/' was
used to gei the pres€nt valLLe of thc defined beflelit obligatron and a 5% ycs.rly salaty rncr€se was
he
principal aciuarial assut)lplioll' 6cd to delerrn;ne lhe pension berefits with respeci to the
discount rale, salary incrcascs lnd rctum on plan assets *ere based on historical and prolected
The Subsidigry's retrremcni plan was only recognizeJ in rts 2010 financial siaiements ihus resulhng
to a prior period adjuslmeni Thrs \eas only lEken by lhe larent Company in its June 30, 20i l
consoLidated ff nancial statemen|s.
lotal
pension cosi
It
P2,210.921, P1,909,432
th€ consoldaled strtemdts of comFehensive income tunounred to
artd Pl,60?,942 for lhe periods erded Dec€mbcr 31.201I lune30,2011
and June 30,2010, r(:Bpsli!€ly
-lJDelails oflhe Subsidiary's reriirmenl plan arc as follows:
31,
20ll
Decembcr
Jqne 30,
2011
June 30,
20 t0
months) (One year) (One year)
P22r,092 P221,092 P401,986
(Six
Crm€nt service cosf
Iirlrre{
__,
cosr on beircfr ob.
Aarion
____
80,J97 80.iq8
riq!,t!2__-__r4!4e0
l0q.otl
4.!.1 q4
Changes in lhc presenl value ofthe defined bercfil obligation are a5 follows:
31, June 30,
lune 10,
20lr
20l l
2010
(six nonths) (oncy9!4 19!!re4
December
Opening delined bcndfit obligation
Ctxrcrrl scrvice
(
cosr
rojg9E4l!!!Eq@jl _
Fr,909,432 P],607,942
Fl,096,121
80J9? 80,398
2tl,O92
109,63:
221.092 401.986
Fz:!!J4 _!L9q9l,l?__ Lq! e+)
26. Incomc Trxes
Provision for income tax consists ofl
ll0,
2011
31,
2011
D€cember
(Sir
Inonrhs)
P-
Current
(90,417)
Def-ered
(*90,,147)
b. -The Croup's
June
dei€rred income tax assets coDsist of:
31,
201t
of:
Accrued letirement
Uffealized foreign exchtulge loss
MCIT
2010
(one Year) (Onc reao
({179,181)
Pl,2 i 7
(8.874)
f5r 1.417)
(?87,65s)
(Fr1o:00)
Derernber
Tax effects
June 30,
fsix
months)
*668J02
25,02s
J85,619
30,
201|
June
(One
year)
P572,8:]r
25,425
J85,619
P1,078,946 F983,475
Ju.c 30,
2010
tonc vear)
F
87,655
184,103
P472,058
The Ctoup did nol rFDognize the deterred tax effect on NDLC0 as of December I I, 201l,
because managemenl does not expect the ca.rr) fbrward tax benefit ofsuch to be rcalized prior
.J6
Details oiNOLCO and MCIT ofthe Parent nfe
Y<ar
D€tai1s
incuried
as
follows:
NL]LCO
Availabie
(lntil
2009 June 10, 2012
2010 June 30, 2013
2011 June J0,2014
20ll December 30,2014
Ta)\ effect
MCIT
19,516,570
t4.483,96:l
31,030,950
22,q17,107
F5,854,9?l
P-
4.1.15,189
384,401
9,309,285
6,881,112
t,216
F8?,968,590
F26,390,51',7
P3Rs,6r9
P
ofNOLCO and N{CIT ofSubsidiary are as foUows:
NOLCO
Year
incLfred
Ta\ cffedt
Available Until
20t2
2009
2010
2013
MCIT
f6,020,56r
P1,806,168
l1J0?.765 3,.]92,329
Fr7,328,326 P5,198,497
The reconc;lialion of the incona tax expense conputed 3t lhe slatutory lax rdtc to the actuat
income tax expeme shown in the statements ofcomprchensive income is as tbllows:
31,
2011
D€cemb€r
Due to incomc rax hnliday
Non - recognidon of NOLC0
Intcrest income subject to final lax
and othet nonta.(able incomc
Nondcducdblc nrter€st expense
and orher nonded-ct.ble
(86898,84r)
6,881,F2 8,633.595
(87trs8,666) (71,646)
expeffe
27. Risk Management Objcctivcs
a
June 30,
2010
(One
year)
months)
9161,9tO,296 (PI6,861.700) (F4,282,754)
(Six
hcomc tax at statltory mte
Additiolls lo (deductions in) incorne
rcsulling fiom the ta\ effect ol
J0,
2011
(One year)
June
76.526
4,145.189
(165,090)
15.000
(F5lc!?gq) 1q!zJ!l
(Pe0,447)
-7.rs2.551
d Policiec
General
'Ihe Group ha.s risk naiagefile polioies that slstematically view the risks that could prevent lhe
Croup ftom achieving its objectives. Tllese policies are intended lo malragc risks idcntific(l in srr'h
a lvay tl|at opponunities to deli\er the Crcup's objectives are achieved. lhe Group's r]sk
management lakes placc itr thc conlexl of day{o-day opentions and normal busifless processes
such as st ategic planning and btrsiness planning. Management has identilled each isk and is
responsible for coordinatiog and continuously improving r;sk stratcg;es, processes and u)ca\ures
accordancc wilh the Gro[p's esisblished business obiectives.
ir
37Firancial Risk Mamgeircnl Obiectives and Poliqies
The Cfout's principaL linancial inst.urflents consisa of cash and cash equivalents and loans
pa-leble. Ihe primary prrpose ofthese financial instrrments is to finance the Group's opcr:r1ions.
'I he Gmup har othcr financial insarunents such ai r€cei!"dblq trade and olher payables and related
parly payableg, B'hich st;sc direclly fiom its operations. Thc majn risks arising from the use of
these financial iDslrumcnts are credjr risk, interesl mte risk, liqujdily risk, currency risk, atd ln kel
risk. MarBgedent (eviews afld apFroves ihe policies fot managing each of thcse tisks
are
"'rhich
surnmarized below.
Credit Risk
C.edil fisk represents the loss thdr
the Croup would incur
iicounterya(y lailed ro pellorm urder rls
contractual obligations.
'lhe Group's exposure to credit risk arises liorrl dcfault of c.ornlerFlrty, with a maximum exposurc
equal to the canying amomt of its financial aJsets. Ihe (houp assessed its receivablc as collectible
and in good slanding as at Decembcr 31, 2011 and lune 10, 201l.
(Amounts in
f'000)
On
tts.t
thM lto6 6t.'12 1to5 thdl
5
denand 3 no,tLl nat ht ,'ortr6 yeats redrc lll9l
Advnoc$ lo rehted pr.tiq
Accounti recoivabl6 emPloyeet
Crsh rdvore ror llquidtaion
Casl adv€rce ' otteB
Juoc 10, ?011
AdvaEes 1lJ related
p{ties
Accounts reccivabl$- emplolees
Cash advence
tu
-
6377
_
-
6,E77
11116
1,231
J,116
1,211
--51L
6,711
6,741
I,l,t3
3,14i
Liquidation
C.sh {tdEnce ollErs
62
1,362
ll,20tl
and June 30,2011, lhe Croup's loans aie bnscd on fixed rates.
Managenent belicvcs that cash generated ftom futwe operatioos is suflicient to pay for its
As at December
obligations under lhe loan agreement
as
they f-all due.
Thc following table sels out the rnalurity profile and the ell'ective intercst rate of the Group's
Iir]|rncial assels and fmanciai liabilities that are exposed'!o interesl lrte risk:
-18(Amuun$ In F 0{r0)
6 Monttu
EXe.tiw
6 tti
12
I
PAA0 PN0
l64,l.ll
Crsh rod crsh eqdvllents
lnt rest-b€arirg lo{Ds
l0-\2./.
Relded p|rty
.lune:10. ?01I
alash And lash
equilale$tl
Interes!-b€aring loans
Notes prFbLe
to 2
yeo$
P0A0
99,50?
-
L76,ttn
26,320
t9,157
-
Ydious {9.046
25.071
49.046
l0-t2% 249.800
l00,Lrljtr
- patabl€s
76,809
22,699
r49!1t00
-
19,157
I,E5'l
149,800
22.694
22.6911
lnlerest on financial assets classified as floating rate is repriced at intcruals of less lhan on€ yearlnterest on flnar\cial assets a$d fii,a$cial liatrilitic$ cld$sified as fixed lar€ is frxed \nhl lhe Ina1uri!*
of the instrument. The other financial instrumenls olthe Group thal are not included intheabove
lablcs are noninierest-bearing or have no fixed o. dctcn i&blc matuily
Liquidilt
Ri5L
'i he Croup mana8cs Uqddily risk by rnaintaining a balance between continuLty of funding and
flcxibilily. Treasury controls and procedures are in place to ensure thal su{Ticient cash is
rnainlained to cover dail] operal;onal and lvorking capital requiremenls, including debt pincipal
and irfterest payncnls. Management closely monitors lhe Crolp's future and contingent obligltions
and s.-ts up required cash reserves and reserve borrowing lacilities ar necessary in accordance wrlh
intemal policles.
The tables below suiunaiize the matutlt) pmfilc ol thc Group's fimnclal )labiiilies as at
December31.20ll an(l June 10,20ll based on contraclual undiscounted paymefts. Notes and
loans payable consist ofprincipal and ettimated future inierest payments.
aAmounts in F'000)
than I to6 6 to !2 | ta 5
nontb nontht nonths tears
Less
3
DsemberJl,201I
Trldc lDd otbe. payrhl.s
lntercst-bcnring lonN
Relrl.d Irarty pry{bk
June
l
30.201l
Ede and other
l!$erest-bearir,g
Not.s piyalq
puJBblcs
loa$s
16'1911 24;1,E56
ii.4ll5
?63?0
5
laktl
Yeurs
z6t,t54
22,699 99,507
?6,1i09
- t9,15? * lt,r5?
149,Aoo 1t6.120
li5,lt56
164,341
23,21?
- 149'800
1,854
-
thah
- 100,000
-
25,011
249'800
-19-
Thc Grolrp has transactional currency exposufes. Such cxposufc arises from cash and cash
equivalents, accounts rccc;vablc and cuslomer doposits in US$. !or its forei$ curr(jrcydenominalcd trade receivables, lhe I'arent Company eDsures timely lbllot!-up dnd collection to
mitigaie the impacr of forcign c\charge iructuatjons.
To mitigte the effects ofibreign curency risk, lhe CtouP will scck to accclente the collection ol'
foreign clllrency'lenorninated rcccilahles and the settlement of foreign currency_denomiDated
payables, v,henrver prdcticshle. Aiso, forcign exchange movernen$ 3ie monitored on a daily basis.
The Croup's tbreign cur|ency-dcml'inat€d financial assels and liabiiilies and their Philippine peso
cqu;vals'nls as at December 31, ?0I I and June 30,201I me as lbllowsi
(Amounis io ?'000)
Decernbcr31,20ll
lor€igt
FiDancial AssEt
Cash in bank
Accounts rcceivl|blc
Financial Liabilities
Customer
deDosit
Peso
JuI1e
30' 2011
loreign
AccouDl
Peso
Accounl
€quivalent
$?,148
423
+94,3?8
$2,571 e 2,960
$ __- l_
$2jlt
F101,516
$-
18,582
$
Equivalert
F-
P-
The exchange rates used lbr conve$ion of USSI.00 to peso eqltivalenl were P43 928 as at
Decenrber 31,201
l.
Marker Risk
Market dsk is rhe risk of Ioss lo fulure eaflings, 1o liir values o. 10 future cash flows thal ma)
jnslrumenl may
rcsult f.o'rl change! in the price ofa financial instrument The value ofa financ;al
prices,
interesl rates,
change as a result of changes in ibreign cunency exchanges mtes, c4mmodity
equity prices ard other market chanSes.
28. Cal€gories ard Fsir Values of Finamial Arsets and Liabiliti€s
T]rc following methods an'l arsutrlPtions wcrc rscd to esllmate the lair value of each class of
financial instrumenls for which it is practicabie to estimate that value:
Thc carrying amounls ofcash and cash cquiv.tlenls. rcceilablc. ava;lable'for-sale securitics' lrade
and other piyables, interest beadng loans, noles payable and relaled party lalables apFoximate
thelr canyinS arnounls due to r€lalivell short-term naturc ofthcse tjnancial instrumcnts-
Thc fair values ol lhe lo.ins were based on the discoun(€d valuc of futwc cash flows using th€
applitable tales for s.mi{ar types of lo$\..
-
40-
(Amounis in P'000)
:0 r0
2011
Categor] ofF;ndncial
Carrying
Inslruments
Fair
Vrluc
!'alu€
F'air
Carrying Value
*164141 Fl64J41
Cash and cesh equi\,?le1l1s
Trade and olher receivables
22,09t 22,091
P186.232 t186.232
Fr9,046
P4r),0,16
5,684
P54.710
5,68,1
P54,?10
Fina cial liabilities cifried at
P26r,rs4
Trdde and other payables
Interest'bearing loans
Nolcs payable
Related parly
F261,151
99,507
176,11,[
payables
991507
176,120
19,157 19J57
P555.938
P555.938
Pi64,311
P16,1.341
25,01t
249,800
25.07|
249,800
22,tJ91 22.69!
F461,906 P461.906
During the perioals cnded De're(ber I I , 20 | I &nd June 10,2nl . rh.rL \\ere no rrrn\fels be$ee..
Levcl 1 and Level 2 fair value mcasurements, and no rransfers into ano out oiIetel 1 fa:r va.r
29. Capital Manrgement Objc€rives, Policies and Procedur€s
The Crouf's capital management objeclives rre to eruurc the Group s ability lo continue a! J golng
concem and lo proyide 6Ir adequnlc
Govemance fmmework
The Group has established a
rctm to
shareholders.
managemeflt functions uilh clear lerms ofretirence and with the
rBsponsibilily for developing on market crcdil d'|d liquidity and operalional risk. lt also tuppons
the elfective implcrn€nlalion of policies.
The policies define the Group's ide ificatio of.isk md ;ts interPretation, limii strrclure to ensure
the appropdate qudity and dilersification of assets to the coDorate goals and speciry |Eporling
isk
elp;d La!4p!rq!L&89!ia4
The Group's risk maragcmenl fLrnction has deleloped and implemented certain minilllun slrcss
and scenario tests for idcnliry-rng lhe risks 10 lvhich the Group is lhe exposed, quaniifyinB their
imDact on the volatilily ofeconoldc capital. The rcsults of fr{jsc tcab. particularly, the anticipaled
impacr on lhe realislic slatenenr of fi arrcisl position and rcvenue accornt, are reponed to the
Croup's risk management function. The risk oanagement funcliofl lhen considers the aggrcgale
impact ofthc overall capital requiremenl reviewed by the sress lestinS to asscsshow much capitai
is needed to mitigate the risk ofiflsolvency lo a selecied remote level.
Debt to Equity Ratio
Totalliabilities
Share holders Equiry
Dec€mber f,1,
iune30.
201r
201l
P555,93&443
P2,008,803,8{3
0.28:r
P461,906,501
P1,695,t70,439
0.27:l
-41
Reeulato[, fraraer{ork
yare also suhj*t io the regulatory requiremenrs of SEC, Bursu of
Inlemal Revenue and DENR. Such regulations not only prescribe approval and monitoring of
The operations ofthe subsidi
activities but also ;mpose certain reslrictiv€ t-unctions.
30. Others
Commilments
On October 28. 2009, tle Subsidlary eniered into a Mining Operalions Conlracl (MOC) wilh
Fr$scc VenrLr.es Corporation (the conlrclor) to exclusively operrlc, urdcrlake and conduct mining
opcrations over the Subsidiary's minerdl propert), consisting of One Hundred l*ent) (120)
hectares, cove'ed by MPSA no. 016 93 XIll.
Among the relevanl provisions ofihe MOC ale:
a)
The Contraclor is required to mine a guamllccd lninimuln prodLclion volume of 600,000
WMT amually for eight (8) dry working months fiom April lo November' per veaf or arl
avemge of75,000 WMT per monlh.
b)
While in cases \,'trcrc produotion is low during the dry working months and no shipment
for any reason and lvithoul fault on thc parl of thc conlr,rltor, the Subsidiary agrees to pay
lhe Conrractor F3,000,000 per month to cover the Contractor's fixed costs.
s4b!4crgr@
Japanes€ finn to st'pplv the lattel
with Nickel Orc. Th€ contract covers a period of 5 years and extendable for another p€riod subjecr
lo mulual age€ment of both parties. The Subs;diar) d€livered its ii$l shipment in August 201 1
ln July 2009. lhe Subsidialy er ered ifllo an agreement with a
changc oflinancial year from liscal to caleldllygq!
On Nlarch 2, 20ll. lhe SEC approved the Parent Cornpany's application for lhe change offin8ncial
yedr from fiscal yearJune 30lo caleMaf ycar Dcccmtrrr 31.
31. Approval of Amendad Finlncial Ststemcrts
Thc anrcnded qrnsolidated financial statements were approved bv the Board of Direct{)rs and
aulhorized for issue on Ma) 22, 2011. The consolids'ied iinnnclal slall'rnctt\ D$c origirall) is$ed
on March 15,2012.
'lhe amendmenl pertains to thc changc in lh€ dilut€d eamings p€t share The lotal number of
dihrllvc shrares w-.rs increased by 5,113,636 shares on lhe wamnts to be exercised wlthin a fu'o-Jear
period upon conversion of thc 20,454,54.5 shares, which was not tecognized in ihe preeously
issued consolidated financial statements (See Note
l4).
MOORE STEPHENS
M,.Q
Mendota Querido & Co.
A f,En'f, tn\ at Mo e S'eqnens lnlendrondl L;ntct1
19" F oor, The salc€doTo@B
t69 H V. de lr Corl. Sl
Sal6dDvrllale, Makal C*y 122? Phrr'F!'ner
T (632)887-1888
F
(632) 887-126.4
INDEPENDENT AUDITORS' REPORT
ON SUPPLEMENTARY SCHEDULES
The Board of Directors and Stockholders
[.4arcventures Ho dings, Inc.
16'n floor c tibank Tower
8741 Paseo de Roxas
Makati Crly
We have audited in accordance with Philippine Standard on Audit ng, the amended financial stalements
of ll/arcventures Holdings, Inc.asatDecember31,2011.June30,2011 and20l0andforth€slxmonths
ended Deoember 31, 2d11 and lhe yearended June 30,2011 and included our report thefeon daled
Mafch 22, 2012. Our audits were rnade for the pumose ol lormrnq an oplnlon on the basic amended
financial statements taken as a whoie. The accompanying schedule of Reta ned earn ngs available for
dlvidend declaration as at Decernber 31, 201 1 is the responsibility of the Company's management These
schedules are presented for the purpose ofcomplying with the Securilies Regulatjon. code Rule 68 1, As
pad ol ihe basic
Amended (201i)and SEC Memorandum Circular'No. 1'l Series of 2008 and are not
procedures applied
amended linancial statements. These schedules have been subjected to the auditing
in all matenal
fairly
state
in the audit of the basic amended linancial statements and, in our opinlon
financral
basic
amended
io
the
in
relatlon
r€spects the financial data required to be set forth lherein
statements iaken as a whole.
For the Firrn: MENDozA OuERlDo & cO.
S, QUERIDO
Panner
CPA Certificate No 84807
PRC-BOA Accreditation No. 0966
SEC Accreditation No. 0872-A
TIN 102-094433
BtR Accreditation No. 08_002617_2_2009
PTR No.3184630, January 7,2012, MakatiCity
March 22.2412
MARC\TXNTURf, S HOI,DINGS, INC.
R.ATATNED BARNINCS AVALARLE FOR DIVIDEND DDCLARATION
PURSUANT TO SIC MDMOR{NDIJM CIRCULAR NO.
DECEMBER3I,20II
Deficir
as
oflune 30,2011
(e71,868.65q1
Add:NcL income actLrally e1x tred during the p€riod
Nei incolne during the perjod closed to rcrained earninqs
Net income durins the lcriod
L6ssi Non'aclual./unrel;zcd income fl et of tax
Shsre in net incorre ofsubsidiary
Net loss *duallr camed duringihe pefiod
Add: Divideod received from srbsidiiry
Toial retained eam;Dss, end available for
II
dividend
168,196,59
1
291,6E?,E90
l2J,t9I.29J)
?91,68?.E90
_
?69,496,591
P194,627,93E
MOORE STEPHENS
M.'Q
lrendoza Querido & Co,
fin ot lt @c Steplens htlettulio
A tunber
at
Ltntted
19'" Floor The salc€do Towefs
169 N.V de la Cosla St
Salcedo v llaq€, Makail City
T (632) E€7 1EE8
Ga4 A87-1264
1
227 Ph ipplnes
F
INDEPENOENT AUDITORS' REPORT
ON SUPPLEMENTARY SCHEDULES
The Board of Directors and Siockholders
Marcventures Holdings, Inc. and Subsidiary
'16'n floor Citabank Tower
8741 Paseo de roxas
Makali City
We have audited n accordance with Philippine Standard on Audiung, the amended consolidated financial
statements of lrarcvenlures Hold ngs, Inc,andSubsidaryasatDecember3'1,2011 June30,2011and
20lo and for the six months ended December 31. 2011 and the vears ended Ju.e 30, 2011 and 2010
and included our report thereon dated March 22, 2012. Our audits were made for lhe purpose of forming
an opinlon on the basic amended finEncial statemenls laken as e whole. The accompanying schedules of
Conilomerate Map, Financjal Assets, Amounts Receivablefrom Dheclors, Offlcels, Employees' Relaled
Partes, and Pr ncipal Slockholders (Other than Related parties), Amounts Receivable from Related
Pa(eswhich are Elimlflated during the Consolidaton of F nanoial Statements, Intangibe Asset Long
Term Debt, lndebtedness to Related Pafties, Guarantees of Securities of Othea lssuers Capital Stock'
and Lists of Standards and interpfetations as at December 31,2011 are the responsib lity ofthe
Compafy s management. These schedules are presented lor the purpose of complyifg wilh the
Securitles Regulation Code Rule 68.1 , As Arnend€d (201 1) and SEC Memo€ndum Clrcular No l 1
Sefies of2O08 and are nol pad of the basio amended financialstalements These schedules have beel
subjected to the auditing procedures applied in the audit ofthe basic amended financialstater.ents and
in o!r opinion, fairly state in all material respects the financial data required to be set forth thereln In
relaiion lo the ba5ic amended financ al staternents taken as a whole.
For the Firn: MENOOZA OUERIDO & CO.
RICH RD S. QUERIDO
Parlner
cPA Ceruficate No. 84807
PRC-BOA Accreditation No. 0966
SEC Accreditation No. 0872 A
TIN t02-094-633
BIR Accreditation No. 08-002617 2 2009
PTR No. 3184630, January 7, 2012, MakatiClty
Merch
22,2012
]IL,IRCVENTURES HOT,DNGS, INC.
CONCLO}lf,lLA.Ttr MAP
PURSTJANT TO SEC I}IEMORANDI]M CIRCLTLAR NO. TI
DECETIIBER .)1,
20 r
r
Marcvenlures Mining & Drvct(ipncnt CorFo|alion (MMDC), a whotly-owned Subsidiary of the
Parent Company, ard incorporated in lhe Philippines is engaged prinlarily to carry or the busiress
of mi ing, snelting, cxtracling, smclting mineral ores such as, but not limited to nickel, chrom;tes,
copper, gold, manganese and othcr similar ores and/natuml metallic ot non-metallic resource tiom
thc cd1h. to opemte, manage and/or engage in the business of smelting, ard/'or operatc smelting
plarl, to refine andor convert metals, ore, and other prccious melals into finished prodrtcls silhin
lhe cominerce of ll1an,
MARCVtrN'I'U Rf, S T{OLDINGS, INC.
LIST Of STANDAR)S AND IN'ItrR"PIIETATIONS
PURSUANT TO SEC ME]UORANDUM CIRCULAR NO,
D[Cf,Nt8trR 31. 2011
II
New Alcqunling Policies Adooted
I (Revised 2007) Presentation ofFinancial Statenents
l? (Amendment) Leases
PAS 18 (Amendneno Revc uc
PAS 19 (Revisq:1201i) lmployee tsenefits
(Revised 2007) Boffowirg Costs
PAS 2l
fAS ?4 (Rcvised 2009) Related Pany Disclosurcs
IAS 2i (Revised 20I 1) Sepante Financial Stalementt
PFRS 7 (Am€ndrnena) -financial Instrumenls: Ilisclosur€
PIRS l0 (Revised 2011) Consolidsted linancial Slateflenis
PFRS 12
Discl$ure ofllltercst in oth€r Entities
PAS
IAS
PFRS
IFRIC
13
19
(Revised
201l)
FafValue Measurement
Extinguishing fioancial Liability rvilh equity inslrumcntr
I&!4ccoupling Policv Nol Adopted
2 Amcndment
(Revis€d 201l)
PAS 2E
MIC l l
IFRIC 16
PFRS 2
Amendment
PAS 32
Amendment
PtRS
PAS
39
Amendmcnt
Croup Ca-th-settled Sharc-based Paydcnt Tramactions
Inveslments in Associatcs and Joint vent'rres
Customer Loyalty Programmes
Hedges
ofNel Investnents in a Foreigl Operalion
Group Cash-sc1t1cd Shar€ based Payment Transactions
FinatuiaL lnstruments: Preseffation _ Classification of
Rights lssues
Fin,rncial Instruments; Recognition and Measurernent
tlligible Hedge ltenrs
ftIARCVENTTJRES HOLDINGSI TNC.
MEASURE OF FTNANCIAL SOUNDNESS
PURSUANT TO SEC MtrMORANDUIIT CIRCULAR NO.
DI,CE}IBER 3T,2OI
11
I
Thc Group Liquidily Ratiosi
a.
Cun€nt Ratio
Dec€mb.r3l'
Tolal Current Assets
Toul Current Liabilities
June 30,
20tl
20t I
P443,64t,r26 F176,723,918
P364,282,636 P25,071,062
0.66:1
b.
Quick Ralio
Qujck alset
Tolal Current Liabilities
DccemberJll
20r1
June 30,
P 186J231'E52
P54.',t29,822
P364J82,636
F25,0? 1,062
I
0.2 | :1
December 31,
June 30,
20t I
0.51:
z0
tl
Th€ Croup Solvency Ratios:
a.
lrcbr Ratio
2011
Total liabililies
Total ,{ssets
*2,561,142,186
P2,
0.22tt
b.
l
tsl ,276,940
0.21:l
P46 | ,906,50
P 555,9t8,441
D.-l.r( Ra{io
2011
Total liabilirics
Sllrrc holdcF.
l-quir)
*sss938,443
Jrlne 10,
?011
P461,906,501
F2,0o8,803.8{3 F l.6l!!l!.411
0.28:l
0.27:l
The Group Profirability Rarios:
a.
Rclur
on Equity
December 31,
2011
N€t lncome (Loss)
Aveiage shfi eholdcrs' eq$ily
b.
201
1
3268,433,405 (P55,705,468)
F1$52$E7,14r P1t23,131,430
0.14: I
(0.01):l
December 31,
June 10,
Rctum on Assets
Net Incorne (Loss)
Ave. Total Assels
20ll
P268,433,405
201
1
(F55,705,468)
f.2,361,009,613 FI,967,914,262
0.U:t
c,
June 10,
(0.01):1
Fixcd ass€t tumover mtio
Dcccnbcr 31,
Revenue
Propen! and
Lquipment
T"..ru,r
JLme
10,
20tl
201t
ts842,90r,957
P60,816
___!]f1!!!-{!.1--___t!M.'61
l
c:
.ns 7
o
3
\
I
c
9l
I
l
I
5
E
\
I
!:
llll
--ft
E i;ll
+ F Al
illl ! o qt
!li
6d_
I
I
;i
ii'I
t:
I
I
]ilt
1
l'il
lt
3361
llll
fiil
6l
sti
?c)
lax
5t
6
x!
n
X-
:
9.
t-
le"
l3
ii+
i
g
1=
I
I
o
I
f
1r
l6
;
5
9
I
+
i
c
I
a
:
o
.a
6
il
a,
1
o
d
6
g
f-o
t!
I
o
<ll
ll
ll
;t
6ril
Lll
;
l;
l
z
l=
!
ll
*l
I
f --oll
e
ll
n ll 3
L
ll
It
11 oi
q
IT
itt6iie
ll-Ll
\\
L
ll
I
ll
l[-a ll -_r_ll
s l;is
ts\
; qI
;3 ll9Ie;:
s'li
'll
+LL
r
I
I
\,\
6'
ll
di
lll--l
-1l g\\
f\\
rli 3
li ;
II
=3
--l
;5
fl ll
iif
- '_tl
=L
---l
S
['r
1
t
LlI
c'n
It
-o
=
-- -_llll
3
.J
1l
ii
r
tr
lll r
L
q
'a
ar
"-ll
11"_11
ild i
llr ;
ltq ;
LL
1l
ll
I
tr-ll
ll trll
=
rLl
9l
1[
tL=-ll
Tra
qI
tl ill
:
iI
lli,
P
]i 5
5lt;l
[€
t'o1
Ij
ql
\g
il.
=
1
D
L
l
:
ll
tF-
A'
lai
E
E
s
'o
llo - tu
;i4
I
-.)
d<
36
5r
-o
u't
ltd
l1
F
!l
T
T
P
T
P
T
P
-s
;
u
-
> !i
-'* -f
o
=-
> 5
!
e D !.j!.i
l-=:
'J
tq:;3
!!
<i
z !: a x.:
i-
e '
r
>
C Z
-:
Ti
: !
Hif o Y
aPt
s
:::
t:
-n -! 1 +'
-:
3-<:l! 6(ll
69 t: : d
H =:
*:-j:- !
i6 3-;
::o
::
o<
6
8fi
h
z
ln
o
u+
=
o
:
q
I
f
.
2
:
6i
6
!l
:
o
e
- :
d{
a
a
'F 'o
a
i: g 3
i: !?
-99
:=
6-
3
;o
II
io<
f7a
9d
tlj
Po
tsq
7
nt
\l
--n
ftz
tr
\t
o.
E\
il
\\
\,\
fl
I
I
a
\r
F\
a;
I:: Es[
B
o;9ll*:
:
6 *
ll
1l;
f
\r
rr
i;
6
a
-9
c
fr
ll
:r
o
lll:
6 n ot
!!a
L;i q f
\\* a;.i\\
F- :
\
ll
ll?
o
-tuil
I
sll
P;ll
lll
19 s r
I
ll
'+tl
-Lt
\
\
t
9
lr-L
nr!l
l{--Ll
ll i
ll3;
ll
I
lle:
it [
I
||3ii
li rl
]l
li"ll
ll€ o
ll+:.
'j
lls
L};
[dt
ll;
ll
I
I
E
ltds
ail \
F.
o
-
It 3"ll'll
I
!
z
.111
\\
2
-l
lli "tJ q
lli :
11
l
ll
2
l
.
3
9"
!
hi
tl
2
a.
o-
n
z
3
l-
!
I
I
2 9
2
SEC Rcs,slrulron Numbcr
!t
R
r
0
U
J
E
H
:) I
j
)
(Company's Full Name)
U N
I T
1
T
o
E R
B
1
I
(r
P
L
s
o
6
th
E
Llo (l
R
t) E
R
oX
S
lBu\rn(s Add($r No
Street
I T
M
N
B
T
K
c I
I
't'
CiO'Io*n/Provin.e)
02-8368609
(C0npuy e ephonc Numbcr)
Carlos C. Svquia
Mffi
K
T
-T-l
t'f'l-hn
Lll
N.A.
S..ordlry Lilense I )Tc. lfAplllcabLd)
March
Financc Dcpartment
I
L, 2012
DeIr Rr4rninErhL Doc
l!bl An0utrtuf Botruwings
t-N/Al [ve-l
'f.rrl No nf St .kloLde6
To b6 r.ompLisIcd
ty SEc
PdsonneL uo0cdrcd
L'U
Rc
arts: Pleatc ust BLACK inr
ftr sun
ng
lu(,os:
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17.Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATION CODE AND SRC RULE 17(2Xb) THEREUNDER
1.
Forlhe quarterly period ended: March 31,2012
2.
Commission idenlificatlon number 12942
3.
BIR Tax ldentification No. 470-000-104-320
4.
Exact name of registrant as specified ln its charter: MARCVENTURES HOLDINGS INC'
5.
Province, country or other iurisdiction of incorporation or organization; PHILIPPINES
6.
Industry classi',caton
7.
Address of regislrant's principal office:
coce{i:lill
lSEc Use onlyl
Unit 16A'16'Floor Cilibank Tower
8741 Paseo de Roxas , Makati City
L
Registrant's telephone number, including area code: (63 2)
9.
Former name, former address and former flscal year lf changed since last report N A'
10. Securities €gistered pursuant to Sections 4 and
Tille ofeach
Class
Common Slock (P1.00
par
I
836{6{9
of the RSA
Number of Shares of Common Stook
Outslandinq and Amount of Debt
Outsland nq
1,731,969'964 shares
varue)
Totaldebtoutstanding
F174,958'296.00
11. Are any or all of the securities listed on the Philippine Stock Exchange?
Note: only 1,721,460,874 are listed with PSE
Yes. The common shares are llsled on the Phllippine Stock Exchange'
12. Indicate by check mark whether the registrant:
(a) has filed al reports requ red lo be filed by Section '17 of the Code and SRC Rule 17
thereunder or Seclions 11 of the RSA and RSA Rule (11(a)-1 thereunder' and
Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding
12 monlhs (or Ior such shorler period the reg shant was required to li e such reports)
Yes
(b) has been slbject to such filing requirements lor the past 90 days'
Yes
SEC FORM I7-Q
MARCVENTURES HOLDING9 INC.
TABLE OF CONTENTS
Paqe
PART 1
-
Financial Information
Statements
ttem 1: Financial
Item 2: Management's Discussion and Analysis
Canditian and Results of Opefations
4
af
Financial
5
PART 2
-
Other Intormation
Developments
llem 4: Other Notes to 2A12 Operations and Financials
Item 5: Key Peiormance lndiaators
Signaturcs
llen 3: lQtr2011-2o12
Unaudiled Financial Statem€nls
.
.
.
.
.
6
B
I
11
Balance Sheet as of March 31, 2012 and December
31,2011
12
Statement of Operation and Deficit for the three
months ended l\4arch 31, 20'12 and March 31, 2011
13
slatement of Changes in Stockholders' Equity For
lhree months ended March 31,2012 and March 31,
2011.
Statements of Cash Ftov\s for the three months
ended lMarch 31, 2012 and March 31, 201 1
15
Noles to Unaudited Financial Staternents
16
PART I . FINANCIAL INFORMATION
It€rn 1- Financial Statements
The unaud terl financiat statement of Marcventures Holdings Inc as of March 31, 2012 with comparative
audited figure as of December 31, 201.1 15 ln compliance wlth generally accepted accountihE printiples
and there were no changes rnade in accounting policies and methods of computation in the preparahon
of the interim financial statenents.
5ummary of consolidated Ba ance Sheet for the p€riod ending Mar.h 31, 2012 and Dec 31, 2011'
Unaudlied
Oec.31,2011
March 31,2012
Non Cufl€nt Liab lilies
443,649,126 00
539 819,321 P
2.147 705,356
2121,093,160-00
2 687 ,524,677
2,584,f42,2A6.O0
488,042,096
364,282,636
191,655,807
192,356,324
Total StockholdeE Eqlity
2,OD7
Toial Lablities and Stc.kh.ders'Equ ly
2.687.524,677
2,008,803,843
,126,247
?
2,564,742 246
5ummary of Consolidated Income statement for the three months March 31, 2o12 and 2011
For the Three Monlhs Ending
March
2012
2011
REVENUES
Adm nislralive expenses
TOTAL
Add: Other Income ( Less Expenses )
TOTAL NET LOSS FOR THE PERIOD
SHARE N LOSSES OF SUBSIOIARY
COI\4PREHFNS VF I OSS FOR THE OTRIOD
21,4A1,918
3,304,106
1.481 918
,304,106
(3,315,667)
(24,197,585
1,313
17,249,392
(24,797,585JP
(20,530,705)
SEC FORM 17.Q
ihARCVENTURES HOLDINGS INC.
Item 2.
-
Management'5 Discussion and Analysis
of
F,nancial Condition and Results of
Operatioh
to seasonal heavy
rains in the area. opelations focused on preparatory activities for the beglnning of its rYrininB s€ason that
coincides with the relatively drier morths of April-November. Preparatory activities consisted primrrilY
of maintenance operations for the various mountain roads that lorm part of th€ haulag€ network, as
well as the Company's causeway. Rehabilitation works w€re a so perforrned on the company's fleet of
For the perlod J.nuary'March 2012, MMDC had no mining or extraction activities due
neavy equ pmenr-
first
31,
December
and
quater of 2012 with comparutlve fiSures for the quarler ending March 21,2072
The followihB discussion is bas€d on the unaudited lnterim consolidated financia statements for the
2011.
FINANCIAL CONDITION AND RESUTIS OF OPERATION
M.r(h
31. 2012 v5. December 31, 2011
p2,688 mi lion from F2,565
The companv's total consolidated assets as of March 31, 2012 increased to
rnilljon in Dec. 31, 2011. The increase was from the deposit to various suppllers in connection w th the
cost incurred in
purchase of heavy equipments. An ihcrease in tnventory was also recorded due
to
road and cause\iraY rehabilitaion in prepararion for mininB activlties for the .ominB mon1hs'
The total liabilit es of the company amounting
2012 and Dec€nrb€r 31, 2011 respectively or
to
P680.398 mllllon and P555 938 rni!llon for March 31,
ncrease of F124-460 rnillion. Th€ increased in loial
an
custonrer.
of
addirional
depDsitfrom
liabilties is duetothe collectlon
The stockholders' equity decreased by 0.084% or . decrease of ?1.678 million from F2,009 million as of
December 31, 2011 to P2,007 miljon as of March 31, 2012 . The cornpany recorded a (onsolidat€d net
loss amounting to F24-798 rnillion which resulted ina decrease ofthe companys retalned earnings to
P169.767 milion as ol March 31, 2012, !2.'l5yo lower from retained earnings of P194 565 milion ,s of
December 31,2011. Furthermore, investors who opt€d to.onvert their private placerfent into equrty
resulted n an increase in Capital Stock to F1,732 million and ar increase i. Additional Paid In Capital
acco!nt to F105.389 mrllion.
Three
montht ended Mdrch 37.2072 compoted with thrce months ended Morch 37.2077
Results of operations:
tor the quarter ending March 11, 2012, intermittent weather conditions and heavy downpoul"
impeded th€ mining activities of MMDC . Thes€ weather related delaYs decrease the number of days
for the companv to operate. As a result the company recorded a total cofsolidated net lois of
P24.798 million, equivalent to 12.75% decrease in retained earnings and a net loss ofF20 531 mi lion in
in March 2011.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
Admin strative expenses increased to P21.482 million from p3.304forthecomparatveperiod in2O11,
equivialent to a 550.16% rncrease from the comparable period jn 20:L1 lt must be noted that the
financlal statementsofrhe s!bsidiary had not been incorporated in the quarterly report of the Parent
a5 of 201,1. A considerab e portion of expenses is attributable to payrnent of interest to various lenders
amountingto F10.638mllionor equivalent to 49.52% ofthe tota 2012 expenses.
BdlonceSheet os of Mdrch 37.2072
Assets
As of March 31, 2012, the total assets of the Company increased to P2,688 rnillion from P2,138 million
as of March 31, 2011, 25.73% hi8her due to thp con5olidation of assets of ths subsidiary to the financia
stat€ment of the Parent Comoanv in 2012.
Liabilitios
The t tal liahilities o{ P680.198 cnillion as of March 31, 2012 was P299.623 (55%l hieher than the
amount of P381.O75 as if March 31, 2011 due to the conveftible loan amounting to P149 8 million
secured bV the company end recognition of iabiliti€s arlsing frorn the acquisition of the sobsjdiary
company, such as deposit from cLrstomer, an interest bearing loan and advances from related party
tran5actton5,
Stockholders'Eouitv
The stockho ders' equity amounting to l2,OO7 milion is higher by 14.23% or P250 milion frcmP!,757
millior o{ as of March 31, 2O11..The increase was on account of incorne 8en€rated from the sale of
nick€l ore which resulted to the cornpany's retain€d eamings in the amount of ?169-767 mi lion This
defitit of F61.101 million of the same period lastvearpLacement into equity resu t€d to arl increase in
prvate
C€rtain investofs who opted to convert their
p1,732
nailllon and an incleased in AdditionaL Paid In Capital account to P169 767
Capital Stock to
indicates an increased o{P230.858 milljon from a
rnillion.
PART II
-
OTHER INFORMATION
Itern 3. Thaee Months Ending Mar.h 31, 2012 Developments
A. New proiect or tnvestments in dnother lin€ otbusiness or corporotion
none
B.
composition oJ Boord af Directors ond Olfices (qs oJ Morch31, 2072)
Name
Mario G. Vijungco
Ramon A. Recto
Dy Chi Hing
Positron
Chairman
President
Director
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
Atendido
Raul Ma. F. Anonas
Diredor
Diredor
Rafael G.
lndependent Dircctor
Independent0irector
Treasurer
Asst. Treasurer
Corporate Secretary
Asst. Corporate Secretary
Roberto A.
Yaptinchay
loelA.Banares
carlos c. Syquia
Andres A. del Rosario
Roberto san
Ana fvlaria A. Katigbak
Jose
c. Perfomance of the carpototion or result/prcgress of operctions
Please see unaudited consolidated financial statements and managemenfs disctrssion on
results of operations.
D. Declatotion of dividends
None
meryer, consalidation or joint ventute; controct of monagement, licensing,
mo*eting/ di5tributorship, technicdl ossistonce or 5imilor ogteements
E. Contrdcts of
None.
F. Offering
of riqhts, grunting ol stock Optians ond corrcspanding plans therefore
None.
G.
N
Acquisition of ddditional minlng clqims or other capitol assets or patents, formulo, reol estote
one.
othe/ inJormstion, moteriol events or boppeningsthat moy hove ofJected or moy dfJect
mo*et price of secutity.
H.
None.
L Tronsfer ng
None,
of
dssets, except in normol course ol business
SEC FORM 1?.O
MARCVENTURES HOLOIHGS INC.
Item 4. Other Notes to three months endin€ March 2012 Op€rations and Finan.ials
J. Naturc and dmount of items offecting ossets, Iidbilitie5, equity, net income, or cash flaw5 that
ore urusuolberouse ottheir totute, sEe, or incidents
N
one.
K. Noture dnd omount of changes in estimdtes ol amounts reported in ptiot
mate oleffect in the cuuent periad
pe
ods and their
None.
L.
Newlinoncing thtough loons
/
lssudhces, repurchqse, dnd rcpdyments of debt ond equity
securities
Therc orc cenain lende$ who apted ta exercise the convettible lodn and corresponding
wononts into equity resulting in additiondl issuonce oJ 10,5A9,09a shores for the 1st Qudrter
2012.
M. Mote dl events subseq,entto the end of the interim pefiod thot hove not been rcflected in
the finonciol stdtementsfor the intetim period
There dre no mat€rial €vents sLrbsequent to the end of rhe interim PEriod that hdve not heen reflected in the
Financial Statementt for the lfterlm Period.
elfect oJ changes in the compasitian of the issuer du ng the inte m period including
business combinotions, acquisition or disposal oJ subsidid es dnd long'term investments,
N.
The
restructurings, ond discontinuing operdtions
None.
o. Chdnges in contingent liabilities ot contingent assets since the lost onnuql balonce sheet ddte
N
One.
P. Existence of materiol contingencies qnd other mate ol events or trcnsdctions
inteim petiod
(lu ng the
None.
q. Events thot will trigger direst ot contihge nt finonciol obligotion thot is moteriol to th€
compony, including any det'ault ot o.celetotian of on obligotQn
None.
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC.
R.
Mate
ol off-bolance sheet ttonsdctions, otdngements, obligotions (including contingent
obligotlon5), ond other rclationships ol the compony with unconsoliddted entities or other
persons cteated during the reporting period.
None.
Mdterial commitments for capitol expenditures, general purpose ond expected sources of
funds
S.
All expenditures wlil be sourced trom internally generated funds. At present, there are no
majot expenditure programs.
T. Known trends, events or uncertointies
fhot hove bod or thot ot€ reosondb,y expected to hote
impoct on soles/rcvenues/ income
N one.
U.
significont elements ol income ot loss thot did nat ori5e from continuing aperctions
None.
v. causes
lor
ony
mdte
al chonge/s
frofi period to period
in one ot more Iine items of the
financiolstatements
None.
W. Seosonel ospects
that hdd motetiol effect on
the t'inanciol
condition or results of operdtians
Not applicable.
X. Dir.Josute5
N
,ot Ddde
underSEC Form 77-C
one
Item 5. Key Perfo.mance Indiaators
Marcventures' rnanagement uses the following KPls for l\4arcventures'and its subsidiaries:
SEC FORM 17.Q
Il|IARCVENTURES HOLDINGS ING.
quaner Enq€q
Ended
Mar.3'1.20{2
Ouarter
P
78,510 261
P
Net Loss
Mar. 31, 2011
(2o,s3o,7os)
i24,7s7,s8s)
Quick asset
132,331,418
539,819,321
744,162,138
Current asset$
Property and Equipment
?,6&1,524,677
Total assets
Total liablities
551,578,466
2138,143,028
488,042,096
680,398,420
Current liabilities
209,393,8s2
316.626,503
381,075,824
Stockholders' equity
2,007,126,257'1,757,067,204
Number of common shs. Outsianding
1,724!88j47
quarter
Mar.31,
Ended
?012
T,701,006,330
Quarter Encled
Mar.31. 1011
Liquidity ratios:
1.'11:1
016:1
Current ratidl)
Qulck ratid2)
0.66:1
0.42:1
Solvency Ratios:
Debi ratio(3)
Debt to Equity rat
0.25:1
A.34 1
da)
018:1
0.2211
Profitability ratios:
(0
Earn ng ( loss) per shar#)
Notet
1
Current assets / Current liabi il es
2. Quick assel / Curfent liabililies
3
Total liabililies / Total assats
4. Total Liabilties / Shareholders'equity
5. Net income ( loss
) / mrn$on
shares outstanding
014)
\0.012,
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
SIGNATURES
Plrsuant to th€ requirements of the Securities Regulatjon Code, the lssuer has dury causeo
this report to be signed on its behalf by the !ndersigned thereufto duly a utharized.
lssuefi
MARCVENTURES HOLDINGS INC.
Signature and Tit el
t,4r
/'/<lF'
,/i;
r,.-v r^)
/-r/tr!
U{r-/L'"
RAMON A. RECTO
President
ANDRES DEL ROSARIO
Date: May 18,2012
Dater Mey 18, 2012
Asst. Treasurer
tl
SEC FORIV 17-Q
MARCVEIITURES HOLDINGS INC.
(Formerly: AJO.nel Holdings, Inc.)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
unaudited
AS S E T S
March3t,2012
Current Assets:
Cash and cash i banK
Invenlories
164,141,033
13,792,741
298,759,827
22,090,819
234,403,8'18
16?,s49
539,819,321
443,64{',I 26
24013156
Asets:
Explored Mne|al Resources
Propedy and Equlpment - net
1
108.777.062
Totalnon cufiect assels
TOTAL ASSETS
LIABILITIES
,294,766,1 57
744,162,138
Other non currenl asEets
1,294,766,157
725,093,O51
'101,233,952
2,147 ,705,356
2,121,093,160
2,6A7,524,677 P
2,56/.,142,286
AlD STOCKHOLDER'S EQUITY
current Liabililies
F.P
Notes pay€ble
Trade and olher pa!€ble
lnterest bearing
Total Culrent lLab rties
1,758,937
26,320,000
261,154,0M
76,808,572
488,042,096
364,282,636
149,800,000
23,39S,359
19,156,965
149,800,000
486,283,159
loans
Non
64,717,520 P
233
curent assels
Total Current Assets
OtheT
Non Cuffeht
Ardited
Dec.31,2011
cur.ni Liabilities
Noles Payables net of cunenl portion
lnieresi bear ng loans
IranSacton
Related
Total Non current I abilities
22,698,U2
19.156,965
191,655,807
192,356,324
Stockholders' Equity
Capital stock
Paid in capital in excess of par
Retained Earninqs (Dellcit)
1,731,969,965
lalue
Total Stockholders' Equity
TOTAL LIABILITIES AI'ID STOCKHOLDERS' EQUITY
See accompany,ng Noles lo Financral Slalements.
I
,721 ,460,87 4
105,389,13',l
92,778223
169,76/,161
2,001,126,251
194,564,746
2,008,803,843
2,687,524,677 ?
2,564,742,286
MARCVENTURES HOLDINGS. INC. AND SUBSIDIARY
(Formerlyi AJO.net Holdings, Inc.)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Monlhs Endlng
March
20'12
2011
P
REVENUES:
EXPENSES:
Administrative expenses
3,3M,106
21,481,918
roTAL
(21,481.918)
Add:( Less )Othef Income (Exp6nses)
(3,315,667)
TOTAL NET LOSS FOR IHE PERIOD
(24,797,s85)
(3,281,313)
SHARE IN LOSSES OF SUBSIDIP,RY
17,249,392
(24,797
COI\,IPREHENSIVE LOSS FOR THE PERIOD
ADD: Retained Earnings/(Deficil)
-
beginning
Retained Earnings/(Defi cit) -end
rNco[/E(Loss) pER
SHARE
to hnancial Statemenls.
See accompanying
^lote$
(9,304.106L
P
,585) P
(20,530,705)
194,564,746
(40.570324)
169,767,161 P
(61,101,129)
(0.0144)
P
(0.0121)
MARCVENTURES HOLDINGS, INC. AND SUBSIDIARY
(Formedy: AJO.net Holdings, lnc.)
CONSOLIDATED STATEMENTS OF CHANGES IN EOUIry
For the Three I'donths Ending
March 31
2012
Authorized Capiial slock -P2 billion conslsling
with par value oi P1.00.
of2 bilion shares
lssued and Ouistanding - 1,721,460,874 shares
6ubscribed capital stock
-
10,509,090 shares
Additional paid in capilal in excess of par
1,721,460,875 1,701,006,330
10,509,0s0
10s,380,131
68,232 769
48,929 233
Non conlroling inlerest
Retained Earning ( Deficil ) :
Relained earning { defict )- beginning
Net income ( loss) for lhe period
Rela ned Earning ( deficlt
20fi
)-
end
TOIAL STOCKHOLDERS' EOUITY
See accompanying Notes to Financial Statements.
f94,564746.00
(24,797,585\
169,767,161
140,574,424)
(20,530,705)
(61,101,129)
2,0a7,126,257 1,757,067,243
MARCVENTURES HOLDINGS, INC. AND SUBSIDIARY
(Formedy: AJO.net Holdings, lnc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Endinq
March
31
2011
2012
GASH FLOIIS FROIT4 OPERATING ACTIVITIES
Nel loss for lhe period
Adjuslrir enls for:
Depreciation (Ilote )
Ga n on
salcol
(2d,797,585)
(20,530705)
1,734,891
2,74s 051
(382,6s9)
Equrprn6nt
Interest Expense
10,638.000
147,465
Relir€menl
(60,0zl)
Interest Income
Ope?ling incom e before worki rg cap tar changes
Changes in operatifg assets and liabilides:
tI
p?le3L
1
709.799) I I
B
298,078
(
8
1
8,60
/)
Decrease (increase) in:
Receivab es (Note
)
Othef current assels (Note )
lncr€ase (decrease) in rlade and other
paryables
Total
Nel cash used in operaling activities
nterest received
lnterest
Net Cash Generated hom {L.lsed in) ooeratrn,l
Daid
60,071
aclivities
la slocks
-
from con',€rs on
,ncrcase in addilrona Dard in cdoilal
Net cash urovided bv financino
aclivities
NET INCREASE IN CASH AND CASH EAUIVALENT
CASH AND CASH EOUIVALENTS AT BEGINNING OF
21,653,131
(38084.414)
aclirilies
ubscr plion to rncreas e cap
2r,096,486
22,793
(13 683 488)
Collection of advaoces to affiliates
Sale ol Equipment
lncrease in other non-cunent asset
Net casl uscd |r investrng
CASH FLOWS FROM FINANCING ACTIVITIES
No|r controlling intorest co|1 tribulion
Proceeds from { Payment of ) in felaled party payables (Note )
Proceeds from (Payment of) convertibleloan
Proc€eds from (payments o0 interesl beaaing loans
Convefsion {rom debt to EquW
s
223,781,634 51,652,621
46,986,347 39,9tpq3
35,276,544
CASH FLOWS FROM INVESTII.]G ACTIVITIES
Explored lvlnelal resources
Acquisition of property and equipment (Nole )
Add rionar
7,25r),498
(45,557,586) {s6,101.225)
(r39,535,779) 17,113,199
YEAR
CASH AND GqSH EAUIVALENTS AT ENO OF YE^R
See accompanying Noles lo Financial Slatenenls.
21,119279
1,223,067
{88,617,703)
900,000
{7,543,109)
(44.727,523)
'
(7,500,000)
(87 3g4 6Jli)
1u1,720J
1114,332)
149,800,000
(74,349,118)
424,629
(17,620,0O0)
10,509,090
06,3491201 149,472577
(99,423513) 83,197,221
033
64,717 520
164,141
45,807,078
129,004,299
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC.
MARCVENTURES HOLDINGS, INC. AND SUBSIDIARY
(Formerly: AJO.net Hold nqs, Inc.)
NOTES TO CONSLIDATED FINANCIAL STATEMENTS
1
Corporate lnformation
Marcventures Holdings, nc. (Form€rly: AJO.net Holdings, Inc.), the Parenl Company,
was incorporated and registered wilh the Securilies and Exchange Commission (SEC)
on August 7, 1957, with a primary pufpose to acquire by purchase, exchange,
assignment, gifl or otherwise, and lo hold, own and u$e for irvestmerrt or atherwise
and to sell, assign, transfer, exchange, lease, let, develop, mortgage, pledge, lraffic,
deal in, and with, and olherwise operater manage, enjoy and dispose of, any and all
properties of every kind and description and wherever situaled, including land as and
to the exlent permitted by iaw, including but not limiled to, buildings, tenements,
warehouses, lactories, edifices and structures and olher improvements and bonds,
debentures, promissory notes, shares of stock, or othet securties or obligalions,
created, negstiated or issued by any corporalion, association or olher entity, fofeign or
domestic and while the owner, holder or possessors thereof, to exercise all rghts,
powers and privileges of own€rship or any other interest therein, including the right to
receive, coilect and dispose of, any and all rentais, dividends, interest and income
derived therefrom, and the nght to vote on any proprietary or other interest, on any
shares of the capital stock, and upon any bonds, debentures or other securities having
voling power, so owned or held; and provided rt shall not engage in the business of an
open-end or close end investment company as defifed in the lnvestrnent Company
Act (Repub ic Act 2629), or act as a securities broker or dealer.
&
a
Marcventures Mining
wholy-owned
Development Corporation (MMDC),
Subsidiary of the Parenl Company, and incorporated in lhe Philippines is engaged
primarily to carry on the business ot mining, smelt ng, extracling, smelting mineral ores
such as, but not limiled to nickel, chromites, copper, gold, manganese and olher
simiJaf ores andlnatural metiallic or non-metallic resource from the earth, to opelate,
manage and/or engage in the business of smelling, afd/or operale smelting plant, to
reline and/or convert metals, ore, and olher p|ecious metals into finished products
within the commerce of man.
On March 30, 2010, the SEC approved the Parenl Company s change in name from
AJO.net Holdings, lnc. lo l\,,larcventures Holdings, Inc. and furlher approved the Parent
Company's change in primary purpose to include land ownership.
On July 19, 2010, the Subsidiary was registered with the Board of lnvestments (BOl)
in accordance with the provsions of the omnibus Investments code of 1987, as
amended, as a New Produaer of Nickel Laterite Ore. As a BOI regislered entity, the
Subsidiary is entitled lo an ncome Tax Holiday (lTH)forfour (4) years from July 2010
or actual start of commercial operations, wh chever is eaflier bul in no case earller
than lhe dale of registratlon.
Minino Claims and Properlles
NIMoC has been granled by the Departmenl oi Environmental and Nalural Resources
(DENR) of the Philppine Nalional Government
l\,4ineral Production Sharing
Agreement (|\,4PSA) No. 016-93-Xlll covering an afea of approximately 4,799 hecrares
located in Cantilan Surigao Del Sur. As the holder of the said MPSA, ]\4MDC has the
a
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
exclusive right to cooduct and develop mining operations within lhe mineral property
over a period of 25 years from July 1, 1993. MMDC has idertified Nickel Ore as lhe
primary mineral that will be extracted and sold to third parties due to lhe abundance
and favorable characterislics of nicke within lhe mineral property.
The MPSA was originally granted to Ventura Timber Corporation on July 1, 1993. In
January 1995, a deed of assignment (Deed) was execulcd, wherein Ventura assigned
lo N4MDC al its rights, title and interest in and lo MPSA No. 016-93-Xlll. The Deed
was duly registered wilh the Mines and Geosciences Bureau (n4GB) Regional Oflce
(RO) No. Xlll on February 9, 1995, and was subsequeotly approved on January 15,
2008, making the Subsidiary the official contractor of the mineral property.
On October 23, 2009 lhe Partial Declaration oI l\'linlng Feasibility of the Subsidiary in
connection with the N4PSA No. 016-93-Xlll wa$ approved by the Direclor of MGB and
the Subsidiary is henceforth authorized to proceed lo the Development and Operating
Periods ot MPSA No. 016-93-Xll), including the extraction and commercial disposition
of nickel ore and associated minerals within the 30o-heclare portion of the contract
area subjecl to certain conditions.
The Parent Company's registered office is located at 16lh floor Citybank Tower, 8741
Paseo do Roxas . l\4akati City.
The consolidated financial statements as at December 3'1, 2011 and June 30, 2011
were approved and authorized for issue by the Board of Directors on March 15, 2012.
2.
Summary of Significant Accounting Policies
The significant accounting policies lhat have been used in the preparation of the
consolidated financial stalements are summarized below. These palicies have been
consislently applied to all years presented, unless otherwise stated.
Easis of Pregaration of Consolidated F nancial Stalemenls
The consolidated financial stalements of the Group have been prepared
in
aacordance with Philippine Flnancial ReporUng Standards (PFRS). PFRS ate adopted
by the Financial Reporting Standards Council (FRSC) trom the pronouncements
issued by lhe lnternatronal Accounting Standards Board (IASB).
The consolidaled financial statements have been prepared on the historical cost basis,
except for the revaluation of certain tinancial assets and explored mineral .esources
thal have been measured at a certain valuation method. The measuremenl bases are
more iully describ€d in the accounting policies thatfollow.
Presentation of Financial Statemenls
The consolidated financial statements are presenled in accordance with PAS
1
(Revised 2007), Ptesenlation of Financial Statements. The Group presents all items of
income and expenses in a single slatement of comprehensive ircome. Two
comparative periods are presenled for the slatements ol financial position wl]en the
Group applies an accounling policy retrospectlvely, make a rctrospective reslatement
of items in its finallcial statements, or reclassifies items in the finanaial gtatements'
sEc FoRM 17-O
MARGVENTURES HOLDINGS INC.
Functional and Presenlation Currencv
These consoiidated financlal statements are presenled
ir
Philippine pesos, the
Group's functional presentation cuffency. and all values represent absolute amounls
except when olherwise jndicated.
New Accountino Policies Adooted
The Group adopted lhe following new revisions and amendmenls ta PFRS thal are
relevant to the Group and effective for fi|ancial slatements fot the annllal period
beginning on or after January 1, 2011:
PAS 24
PAS 27
PFRS
10
(Revlsed
200s)
(Revised
2011)
(Revised
20111
PFRS
Related Party Drsclosures
Separate Financial Statements
Consolidated Fif ancial Statemenls
Disclosure of lnterest in other Entities
12
PFRS
{Revised
2011)
Various Standards
Fair Value [4easuremenl
13
2011
Annlal mprovements to PFRS
Discussed below are the effecis on the financial staternents of the new and amended
standards.
PAS 24 (Revised 2009), "Related Party Disclosures', amends the requirements of the
previaus version of IAS 24 to (a) provide a partial exemplion from related party
disclosure requirements for government-relaled entities (b) clarify the deflnition of a
related parly and (c) include an explicit requirement 10 disclose cornmltments involving
related parties. The revision of this standard did nol have any slgnificanl effect in the
20'1 1 consolidated financial statements.
PAS 27 (Revised 20'11), "Separate Financial Statements", amended version of PAS
27 which now only deals with the requifemenls for separale financial statements,
which f'ave been carried over largely unarnended from PAS 27 Consolidated and
Separate Financial Statements. Requirements for consolidated financial slatements
are now conlained in PFRS 10 Consolidated Financial Staternent$.
The Standard requLres that when an entily prepares separate flnancial stalements,
investments in subsidiarles, assocraies, and jointly contro ied entities are accounted
for eilher at cost or in accordance with PFRS g Financial lnstruments.
The Standard also deals wi'lh the recognitlon
ol
dlvidends, certain group
reorganisations and includss a number of disclosure requiremenls. The revision of this
standard did nol have any signilicant etfect ifl the 2011 consolidated financlal
statements.
PFRS 10 (Revised 2010), "Consolidated Financal Statements', requires a parert to
present consolidated financial stalements as those of a single economic entily,
replacing the requirements previously contained in PAS 27 Consolldaled and
Separate Financial Stalements and SIC-12 Consolidation - Special Purpose Entities.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
The Standard identifies the principles of contrq{, deiermines ho$/ to identify whether an
investor controls an investee and therefo.e musl consolidate the invest;e, and sets
out the principles for the preparation of consolidated financial siatements.
The Standard inlroduces a single consolidation rnodel for all enlities based on control,
irrespeclive of the nature oF the inveslee (ie. whelher an entity is controlled trrrougn
voting rights of investors or through other contractual arrangements as is common in
special purpose entilies'). Under PFRS '10, control is based on whether an investor
has (a) power over the investee, (b) exposure, or righls, to varjable retums from its
involvement with the investee, and (c) the ability to use its power over the invesree.to
afiect the amounl of the retums. The revision of thjs slandard did not have any
signif cant eftect ln the 2011 consolidated iinancial statements.
PFRS 12, "Oisclosure o{ lnteresls in Other Entities,,, reouites the extensive disclosure
of information lhat enables users of financia statemenls to evaluate lhe nature of, and
risks associaled with, inleresls in other entities and the efFects of those jnterests on |ls
financial posilion, financial performance and cash flows.
In
high-level terms,
the required disclosures are grouped into the following
broad
calegonesi
.
.
'
.
Significant l'udgements and assumptions - such as how conttol, joinl conrrot,
significant influence has been determined,
Interests in subsidiarjes - including details of lhe structure of the group, risks
associated \yith struclured entities, changes in control, and so on
lnterests in joint arrangements and associates - lhe nature, extent and flnancial
elfects of interesls in jont arrangements and associates (incuding names,
detalls and surrmarised financial informationJ
in unconsolidated slructured entities information to ailovv an
'nterests
underslanding
of the nature and extent of interests in unconsotidated
structured entitjes and to evaluate lhe nature of, and changes in, the risks
associated with its intercsts in unconsolidaled struclured entities
-
The G|oup's adoption oi PFRS 12 did nol result in any materiat adjustment in ils
flnancial statemenls as the change in accounting policy only aJfects presentattons
aspecls.
PFRS 13, 'Fair Value Measurement", replaces the guidance on Jair value
measuremer]t in existing IFRS accounting literalure wilh a single stardard.
The PFRS is the resuil of joint efforts by the LASB aod FASB (o develop a cofrr'erged
lair value framework lhe IFRS defines fair value, provides guidance on how to
delermine fai. value and tequires disclosufes about fair value measurements.
However, PFRS 13 does not change the requiTements regarding which items should
be measured or disclosed al fair value.
PFRS '13 appliBs when another pFRS requires or permits fair value measurements or
drsclosures about Jair value measuremenls (and measurements. such as falr value
less costs to seli, based on fair value or disclosUres about those measurements). Wilh
s-ome exceptions, the standard requires entities to cLassify these measuremgnts into a
'fair value hierarchy' based on the nature of lhe i|puls:
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
.
.
.
Level 'l - quoted prices in active markets for identical assets or liabilities that
the entity can access al the measurcment date
Level 2 - inputs other lhan quoted market prices included within Level 1 that
3re observable for the asset or liability, either direcltly or indirecUy
Level 3 - unobservable inputs for the asset or liabilily
Entitles are required lo make various disclosures depending upon the nature of lhe fair
valUe measurement (e.9. whether it is recognised in the flnancial statements or merely
disc osed) and the level in which it is classified.
Anfual improvedments
PAS 12
PAS 19
(Revised
2O11)
Income Taxes
Employee Benefits
PFRS 12, "lncome Taxes", amends AS 12 Income Taxes to provide a presumption
that recovery of lhe carrying amounl of an asset measured using the fair value model
in IAS 40 Investment Property will, normally, be through sale.
As a result of the amendments. SIC-21 Income Taxes - Recoverv of Revalued NonDepreciable Assels would no longel apply to investment propefties carried at fair
value. The amendmenls also inco.pofate inlo IAS 12 the femalning guldance
previously contained in SIC-21, which is accordingly withdrawn.
PFRS 19, "Employee Beneft", an amended version of IAS '19 Employee Benefils with
revised requiremenls ior pensions and other postrelirement benefits, lermination
benefits and other changes.
The key amendments include:
Requiring the recognition of changes in the nel defined benefit liability (asset)
including immediate fecognition of deFined benefit cost, disaggregatlon ol
defined benefit cosl into components recognition of re measurements in other
comprehensive income, plan amendments, curtailments and setllements
(eliminating lhe'corridor appfoach' permitted by the existing PAS 19)
lnlroducing enhanced disclosures about define.l benefit plans
l\,4odiiying accounting for termination benefits, including distinguish ng benefits
provided in exchange for service and benefits provided in o(change for the
terminaton of employment and affect the recognition and measurernent of
termination benefits
Clarifying various mtscelaneous issues, ncluding
the
classifcation of
ernployee benefits, currenl estimates of mortality rales, tax and adminislration
costs and risk sharing and conditional indexation fealures PFRS I, Financial
lnslruments: Classifiaation and Measurement The Standard, as issued ir
20'10, r€flects the first phase of the woft on the replacement of PAS 39 and
applies to classification and measurement of financial assets and financial
llabililies as delined in PAS 39. lt is effective for annual pedods beginning on or
'
afterJanuarv 1.2013.
SEC FORM 17"Q
MARCVENTURES HOLDINGS INC.
Slandards effective in 2010 but not relevanl to the crouo
The Company did nol early adopt PFRS 9 and Philippine Interpretations that
have
been approved but are not yet effective. The Company does not expect that the
adoption of these new and amended PFRS and Philippine Interpretation to have
a signjficant impact on the linancial statements.
)
After consideration of the result of ts irnpact evaluation, lhe compafy has
decided not lo eady adopt either PFRS 9 (2009) or PFRS 9 (2010) for its 2012
interim finaf cial reporlinQ.
(
(ii)
lt shall conduct in early 2012 another impact evaluation using the
otdstanding balances of financial statements as of 31 December 2011 for the
company lo check if lhe impact is material enough to adopl or not to adopt.
PFRS I (2009) or PFRS 9 ( 2010)
(ii)
lhe company believes t will be loo early to adopt the subject slandard for
its 2013 financial repoding, The company will evaluate if the impact is material
enough to adopt or notto adopt PFRS I (2009)or PFRS I (2010).
Standards effective in 20'11 but not relevant to the Group
The following amendments, interpfetations and improvements to published standards
are mandatory for accounting periods beglnnlng on or after January 1, 201'1 but not
relevant to Grouo s consoldated financial statements:
PAS 28 (Revised 2Q111, "lnvestments in Associates and Joint Ventures' this Standard
supersedes PAS 28 Investmenfs in Associales and prescribes lhe accounting for
investments in associates and sets oul the requirements for the application of lhe
equity method when accounting for investments in assocjates and joint ventufes-
The Standard defines 'significant influence' and provides guidance on haw the equity
melhod of accounling is to be applied (including exemptions from applying the equrty
method in some cases). lt also presc bes hovr inveslmenis in associates and Joinl
ventures shou d be tested for impairment.
The significanl accounting policies and practices of the Group are set forth lo facilitate
the understanding of the consolidated financial stalements:
Efrective 2013
.
FRS 9, Financ a Instruments: Classificalion and l\-4easurement - The Standard, as
issued in 2010, reflects the first phase of the work on the replacement of PAS 39
and applies lo classification and measurernenl of financial assets and {ina.cial
liabilities as defined in PAS 39. lt is effective for annual periods beginning on or
aiter Januarv 1. 2013.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
The significant aocounting poliaies that have been used in the preparation of the
accornpanying financial stalements afe summarized below. The same accounting
policies were applied to previous year, unless otherwise stated.
Basis of Consolidalion
The conso idated financial stalements include the financial statements of the Parent
Company and its sLbsidiary, MMDC. The consolidated financial slatements as of
December 31, 2011 and June 30, 2011 comprise the linancial statement with the
same reporling period for lhe Parent Company and Subsidiary. These statements are
prepared using uniform accounting policies for like transactions and other events in
smllar circumstances, All significant intercompany accounls, transactions and
balances are eljminated in these consolidated linancial stalements. The subsidiary is
consolidaled from the date on which control is lransferred to lhe Parent Company and
ceases to be consolidated lrom the date on whlch control is transfeffed out of the
Parent Company.
The significart account ng po icies and practices of the Group are set forth to facilitate
the understanding of the consolidated financlal statements:
Cash and Cash Eouivalents
Cash and Cash Equivalents are defined as cash on hand, demand deposits and short'
lem, highly liquid
investments readily conve ible 10 known amounts
which are subject lo insignificant risk of changes in value.
oi cash
an.1
Business Combinations
The consolidated financial statements accounled business combination by applying
the purchase method. This involves recognizlng identfiabe assets (includrng
previously unrecognized intangible assets) and liabilities (inoluding contingent
liabilities and exclud ng future restrucluring) of acquired busiiless al fair value'
includng assets and liabilities not previously recogaized in the Subsidiary or
acqliree's financial slatements. Any excess of the cost over the acqu rer's interesl n
the net fair value o{ the identifiable as$els, liabililies and continger,t liabilities so
rec4gnized was accounted for as 'explored mineral resources" in the slatement of
consolidaled financial position, as this asset meets the definition of an intangible asset
that is controlled and provides econom c benefits, separate and arises from its mineral
p'openy rigl'ts and claims, ?nd its 'air !alue was rreasJred reasordbly.
lf the initial accounllng for business combination can be determined only provisionally
by the end o{ lhe period by which the combination is efected because ejther the fair
values to be assigned to the acqu ree's identifiable assets , liabilities or contingent
lab lities or the cost of combjnaiion can be determ ned only provisionally, lhe Parent
Company accounts the combinalion usng provisional values. Adjuslmenls to those
provisional values as a .esult of compleling the initial accounting shall be made within
twelve (12) months from the acquisition date. The carrying amount of an idenliflable
asset, liability or conlingenl liabili9 that js recognized as a result of completing the
initial accountlng shall be calculated as if its fair value at the acquisition date had been
recognjzed from that date and explored mineral resources of any gain recognzed
shall be adiusted from the acquisiton date of the identfiable asset, liability or
't1
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
contingent liability being .ecognized or adju$ted. All acquisition-related costs on lhe
business combination are expensed.
Explored [,,lineral Resources
The Subsidiary's financial slatement did not recognize in its books lhe mrneral
resources fron its mineral prope y right but was recognized in lhe business
combination with the Parent Company and conforms to the PFRS 3.
This requires the Parent Company to use recognilion and measurernenl practices that
are part of those accounting policies in PFRS 6, Exploration for and Evaluation oJ
Mineral Resources and PAS 28, Intangible Assets. The measurement and recognition
of explored mineral resource is based
on an independent vatuation over lhe mineral property of MMDC as supported by the
Mineral Ppduction Sharing Agreemenl (MPSA) and the expected value oi the
mineable ore reserve in lhe explored area if the N,4ineral Propedy (see Note 5 fof lhe
discussion of the valuation oJ this intangible asset). MPSA can be transferred for value
and the m neable mineral ore reserve identified in the explored area ofthe l\,4ineral
Property gan be extracted, produced and sold.
Measurcment aftet recogtitlon of ExpJorcd Minerat Fesou.ces
After initial recognition, the explored mineral resources shall be carried at its cost less
any accumulated impairment losses.
lmDairment of Explored Mineral Resources
The Parent Company's flnanqal slatements recognized exploration and evaluation
assets to Derform an impairment test on those assets when facls and circumstances
guggest that the carrying arrount of the assets may exceed lheir recoverable
amounts. lt varies the recognilion of impairment from that in PAS 36, but measures
lhe jmpairmenl in accordance with this standard once the impairment is identified
For purposes of explored minera tesources. when idenlifying exploration
evalualion assets that may be impaired, one or more oI the tollowing facls
and
and
clrcumstances indjcate that lhe parenl company should test its assets for impairment
.
.
.
.
The perod for which lhe entity has the rght to explore in the specitic areas has
expired during the period or will expire in the near future, and s not expecleo
to be renewed.
Substantive expenditure on furlher exploratlon lof and evaluation oi mirerai
resources n the spec fic area js neither budgeted nor planned
Exoloration for the evaluation ol mineral resources in the Specific area have
not led lo lhe discovery of commerdally viable quantities of mineral resources
and the enlity has decided to discontinue such aclivities in the specilic area;
and
Sutficlenl data exisi to indicate lhat, allhough a development in the specific
afea is llkely to proceed, the carrying amount of the exploration and evaluatlon
asset is unlike y to be fecovered in full from successful development or by sale
MaDagement believes that there is significant reason r]ot to rccognize
impaifment in this asset-
Details of impairment testing on explored mineral resources are discussed in Note 5.
sEc FoRM r7-o
IIIARCVENTURES HOLDINGS INC.
ulln!9ry
invenlory which cons]sts of nickel ore ls stated at the lower of cost or
nel realizable value (NRVI. NRV for th€ mine prcducts is (he selling price ln the
ordinary courses of the business, less the estimated cost of completion and estimated
6ost necessary to inake the sale.
[.4ine producls
FinancialAssets
Financial assets, which are recognized when the Group becornes a party to the
contraclual tenis of the financial lnstrumenls, incude cash and other Iinancial
instrumefts. Financial assets, qther than hedging instruments, are classified inlo the
following categories: financial assels at fair value through profit or oss, loans and
receivables, held-to-malurity investmenis and availabiefor-sale linancial assets
Firancial assets are assioned to the different categories by management on initia
recognition, depending on the purpose for which the lnvestmetrts were acquircd The
designation of financiai assets is re-valued at every reporting period at which dale a
choiae of classification or accounting treatment is available, subiectto compliance vjlth
spec fic provisions of applicable accounting standards.
Regular purchases and sales of financ al assets are recognized on their trade date' All
financial assels that are not classified as at fair value thrcugh profit ot loss are inilially
recognzed at fair value plus any directly attributable transaction cosls. All financial
assets carried al fair value through profit or losses are ini'ijally recorded at fair value
and kansaction costs related to it are recogn zed n profit or oss.
A more deta led description of the four categories of linancial assets is as followsl
(a) Financial Assets At Fat Value through Ptofit ot Loss
This category nclude financial assets that are either classified as held for trading
or are desig ated by the entity to be carried at fair value throwh profit or loss upon
initial recognition. Al derivatives fa I into lhis category, excepl for those designated
and effective as hedging instrument!. Assets in this category are classi{ied as
'12
currenl if they are either held for trading or are expected to be realized within
months from the end of the reporting period.
Financial assets at fair value thfough profit or loss are rneasured at fair value' ard
changes therein are recognzed in proft or loss. Financial assets {except
derivatives and financial in$truments originally designaled as ilnancial assels at
fair value lhrough profit or loss) may be reclassifled out of fa r value thrcugh profit
or loss cat€gort if they are no lorger held for the purpose ot oelng solq or
rePurchased in the near lerm.
(b) Loans and Receivables
are non-derivative financial assets wth tixed or
paynlents
that
are not quoted in an active ma*et. They arise wnen
determinable
goods
or serv ces directly to a debtor with no intention
the Group provides money,
of trading lhe receivablis. They are included in current assets, except for
maturilies" greater than 12 month$ after the reporting period which are classified as
non-cilffent assets.
Loans and receivables
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
Loans and receivables are subsequenlly measured at amortized cost using the
efFective inlerest method, less impairment loss, if any. Any change in their va ue is
recognized in profit or loss. lmpaitment loss is provided when there is objective
evidence that the Group will not be able to collecl all amounls due to it in
accordan@ with the original terms of the receivables. The amount oJ the
impairment loss is determined as the diflerence belween the assets'carrying
amount and the present value of estimated cash flows.
(c)
Hel d-to- m atu rity I nv e stm e
nts
This category incudes non-derlvative financial assets wilh fixed or determinable
payments and a fixed date of maturlty thal the Group has the pos tive intention and
ability to hold to maturity. Investments intended to be held for an undefined period
are not included in this classificat on. Held-to-maturity inveslmenls are included in
non-ourrent assets under Financial Assets account n the statement of financial
posit on, except those maturing wjth n 12 months from the reporting per od, which
are oresented as Dart of current assets.
Subsequent to in tial recognition, the investments are measured at amortized cost
using the effecllve interest method, less impairment losses, if any. lmpalrmenl
loss, which is the difference between the carrying value and the present value ol
estimated cash flows of the ifvestment, is recognized when there is obiective
evidence that the investment has been impaired. Any changes to the carrying
amount of the investment, including impakmenl loss, are recognized in prolit or
loss.
(d) AvailableJar-sale Fna,tcial Assets
This calegory includes non-derivalive financial assets that are either designated to
this category o[ do not qualify fqr incusion in any of the oiher categories ol
financial assets. They are lncluded in non-curent assets under the Flnancia
Assels accourt in the statemenl of financial position unless management inlends
to d spose of the inveslment within 12 months from the repofting period,
All availablejoFsale linancial assets are measured al fair value, urlless otherwise
disclosed wilh changes in value recognized in other cornprehensjve income, net of
ary eltecls arising {rom income taxes. When the assel is disposed ol or is delermined
to be irnpa red the cumulative gain or loss recognized in olher c'omprehenslve lncome
is reclassified from revaluation rcserve to ptolit or loss and presented as a
reclassification adjustment within other comprehensive income
All income and expenses, including mpairment losses, relating to financial assets that
are recognized in profit or loss are presented as part of Finance Costs or Finance
Income in the corsolidated stateTent oI complehensive 'ncome
Non-compounding interest, dividend income and other cash flows resulting from
holding linancial issets are recognized irl profit or loss when earned, regard ess of
how the related carrying amount ofiinancial assets s measured.
Reversal ol impairment loss is recognized in other comprehensive ncome, except for
financial assels that are debl securities which are recognzed in profit or oss only if
SEC FORM 17.Q
MARCVENTURESHOLOINGS INC.
the reversal can be objectively related to an event occurring after the lmpairment loss
was recognized.
Determination of Fair Value
The fair value for financial inslruments thal are aclive y traded in organized flnanc al
markets s determined by reference to quoted market bid prices at the close of
business on the slatement of financlal position date. For investments and all others
fnancal instrumenls where there is no active market, fair value i5 determined uslng
generally acceptable valuation technique. Such techniques include using arm's length
market transactions; reference to lhe cunent market value of another lnstrumenl,
which are substantiaily lhe same; dlscounted cash flow analysis and other valualion
mo0ets,
Fak val!.le measurements are disolosed bY source of inputs using lhree-level hlerarcny
for each class of financial instrument. Fair va ue measurement under Leve 1 is based
on quoted prices in aclive markels for ldentical financial assets or financjal liabilities;
Level 2 is based on nputs other than quoted prices included in Leve thal are
observable iot the financial asset or financial liability that are not ilased on observable
rnarket data .
I
'Dav
l
Profit
Where the transaction price in a non-active market is different trom the fair value ot
the other observable current market lransactions in lhe sarne instrument or ba$ed on
a valuation technique whose variabies include only dala frorn observable market' the
Group recognizes the difference belween lhe transaction price and fair value (a Day
'1' proflt) in proiit or loss unless it qualilies for recognilion as some othef type ol assei
ln cases where use is made of data which are nol observable the difference between
the transaction price and model value is only recognized in profit or loss when the
inputs become observable or when the inslrument is derecognized. For each
transaction, the Group determines the appropriate method of recognizing the 'Day 1'
p.otit amount.
lnvenlorv
Mine products inventory, which consists of n ckel ore is stated at the lower of cost or
net realizable value (NRV). NRV for the mine producls is lhe selling price In the
ordinary courses of the business, less the estimated cost of completion and eslimated
cosl necessary lo make the sale.
lnoul Tax Recoverab e
Inpul tax recoverable is stated at 1270 slartng February 2006 of the applicable
purchase of cosl of goods and services, nel of output tax liabilities a[]d a lolvance for
probable losses. Input tax recoverable represents ihe value-added tax (VAT) paid on
purchases of goods and services, net of output tax labilities, which can be recovered
as a tax credil against futute tax liabilities of the Group upon approval by (he Bureau
of nlernal revenue (BlR)and/orthe Philippine Bureau of Customs
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
Preoavments
Prepayments include expenses already paid but noi yet incurred, These are measufed
at amortlzed cost less lmpairment loss, if any.
De{ened Mine ExDloration Cost
Expenditures for exploration works on mining properties {i.e., acquisition of rights to
ex;lore, topographical, geological, and geophysical studies, exploratory drilling'
trenching, sampling, and activities in re{airon to evaluating the technical feasibility and
commercia viabiiay of extracting a mineTal resource) are defefed as incurred and
included under "Deferred Mine Exploration Cosf' account in the statement of financiaL
If and when recoverable reseryes are determined to be present In
commercia ly producbe quantilies, the deferred exploration expenditures and
oositon.
subsequent'rrine development costs afe capitalized as part of the m ne and mining
0rcperties account classi{ied under property and equipment
A valuation allowance is provided for urlrecoverable deferred mine exploration costs
based on the Parent Company's assessment of the future prospects of the exPloralion
project. Full provision is made fol the impairment unless it is probable that such costs
are expected to be recouped through successful exploration and developrnent ol lhe
area oi interest, or alternat vely, by its sale. lf lhe project does not prove to be viable'
all revooable cost associated with the proiect and the related impairment provlsions
are written ofi. When a project is abandoned, the related deferred mine exploration
co6ts are written off.
Prooertv. Plant and EouiDment
Property, plant and equipment are carried at cost, exc uding the costs of day{o-day
ser.vicing, less accumu ited depreciation and impairment losses' if any cost of an
item of property, panl and equipment comprses of its purchase price and-any cosl
att.ibutable n bringing the asset to ils intended location and worklng condition Cosl
also includes any Jss;t retirement obligatlon and inleresl on borrowed funds used
Subsequenl costs are capitalized as parl of the property, planl and equipmenl
accouni, only when it is piobable thai future economic benefts asgoc ated with the
item willtlowlo the Group arld the cosl o{ the ilem can be measured rellably Allolher
repairs and mainlenance are charged aga nst current operalions as incurred'
Foregn exchange differentials arising from the acquisition of property,. pant and
equipment are cha(ged against currenl oFeratians aod are no longer capitatizecl
Depreciation cornmences once the propedy, plant and equipmenl are available for use
ancl is computed on the straight line basis over the folowlng estimated useful ives of
the assets ;egard less of utijitalion. The useful life of each of the property, plant and
eouome|t is estimated based on period over which the asset is expected to be
avaiiable for use. Slch eslimation s based on colective agsessment of industry
practice and experienca with slmilar assets.
The carrying value ot property, plant and equipment are reviewed for impairment when
events or Changes in crcumstances indicate thal the carrying value may not oe
recovered.
SEC FORM 17.Q
MARCVENTURESHOLDINGS INC.
Depletion of mine site development costs are calculated using the unit-of' produclion
method based on the estimated recovemble reseryes. The estimated recoverat,le
reserves. useful lives, and deoreclat on and amortization methods are feviewed
periodically to ensu.e that the estimated recoverable reseryes, residual values period
and meihods o{ depletiorr and deprcciation are consigtenl with the expected pattem of
economic benefits f.om the item of properly and equipment. The assets residual
values is reviewed and adjusted, if appropriate, at each reporling dale
Constructjon in-progress is ncluded n property and equiprnenl and stated at cosi
whlch includes cost ol construclion and other direct costs. Construction ln-progress is
not deprecialed until such tirne the relevant assets are ready for oPerational use'
An ilem of properiy, plant and equipment is derecognazed upon disposal or when no
future economic benefils are expecled from its use or disposal. Any gain or loss
arising on derecognition of lhe assel (calculated as lhe difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
consolidated stalernent of comprehensve income in lhe year lhe asset is
0erecognrzeo.
The asset's residual values, useful ives and methods are reviewed, and adjusted if
appropriale, al each financial year end.
Mine Site Oevelopment Cost
Cost incuffed for exploration and deveopment of mining properties are deferred as
incurred. These deferred costs are charged to expense when the resulls of the
exploraion are determined to be negative or not commercia ly viable When
exploration results ate posilive or commercially viable, these defened cosls are
caoitalzed as part of mine development cost account classified under property anc
equrpmenl.
te development cost is computed based on ore extraction over
lhe estlmaled volume of proved and probable ore reseryed as estimated by the
Subsidiary's geologist.
Depreciation of mine
5
l\4ine development costs are derecognized upon disposal or when no future econornlc
berefts are exoected to arise from the continued use of the assels. Any gain or loss
arising on the derecognilion of the asset (calculated as lhe difference between the net
dispo;al proceeds and the carrying amount of lhe asset) is included n profit or oss in
the year the item is derecognized.
Mine site development cost also includes the estirnated costs of rehabiltaling the mine
site, for which the Subsidiary is legaly and constructively liab e. These cosls, included
as part of mine site development costs, are amortized using the unit-of-production
method based on the estimaled recoverable reserves.
Subsequent to lhe business combination and ailqulsition date, the Parent Company
recognzes based on the business combination to MMDC relaling to the fair value of
property, plant and equipment determined at the date of acquisition rather than the
carrying amount in the books of M[.'lDC prlor to the dale of acquisition.
SEC FORM 17,Q
MARCVENTURES HOLDINGS INC,
lmoairment of Nonfinancial Assets other than Explored Mineral Resources
The Subsidlary's property, pianl and equiprnent, deferred mine development cost, and
other assets are subject to impairment testing. Individua assets are tested for
impaitment whenever events or changes ln circumslanceg indicate that lhe ca.rving
amount may not be recoverable.
Fof purposes of assessing lmpairment, assets are grouped at the owest levels for
which there are separately identifiable cash flows (cash-generating units). A5 a result
assets are lested for impairment either individually or at the cash-generating un t evel.
lmpairrnent loss is reqognized for the amount by which the asset's or cash-generating
unit's caffying arnount exceeds its fecoverable amount. The recoverable amounl is the
higher of fair value, reflecting market condiuons less cosls to sell' and value in Llse,
based on an inlernal evaluation of discounted cash flow. lmpairnrenl loss is charged
pro-ra(a to olher assets in the cash generating unit.
All assets are subsequently reassessed fof indicalions lhat an impairment Loss
pfeviously recognized may no longer exist and the carrying arnounl oi the €sset is
adiusted to the recoverable amounl result ng in lhe reversal of the impairment loss.
Rental Deposits
Rental Deposits are measured at amortized cost less any impairment loss, if any.
Financial Liabiities
Financial liabilit es are intially fecognized at far value. Financial liabilities include
interest-bearing loans and bor.owing, trade and other payables and finance lease
liabilities. due io related parties and other non'current ljabilities, which are measured
at amorlized cost using the effective inlerest rate rrethod.
Financia liabilities are recognized when the Group becomes a party to the conlradual
terms of the instrument. All interesl-related charges are recognized as an expense in
profil or loss under lhe caption Finance Cosls in the consolidated statement
cornprehensive of income.
Interest-bearing loans and borrowings are raised for support of long-term funding of
operations. They are recognized at proceeds received, ret of d rect issue costs.
Trade payables are initially recognized at their fair value and subsequently measured
at amortized cosl.
Dividend distribut ons to shareholders are recognized as financial liabilities upon
declaration by the Parent Company.
lmoalrment of Financial Assets
The Group assesses at each reporting date whelher there is objecuve evidence that a
financial ;sset or group ol financial a;sets is impaifed. A linancial assel or a group o'l
financial assets is deemed to be impaired if, and on y if there is objeotive evidence oi
impairment as a result of one or mofe events that has oacurred after lhe initial
recognition of the asset (an incurred 'loss event') and thal lcss event (or events) has
SEC FORM 17.Q
MARCVENTURES HOLOINGS INC.
an impact on the estimated future cash tlows of the financial asset or the group of
financial assets lhat can be re iably estimated. Evidence of impailment may include
indications that the bonower or a group of borrowers is experjenc ng significant
flnancal dlffculty, default or delinquency in interest or principal payments, thc
probabiity that they will enter bankruptcy or otfier financial reorganizalion and where
observable data indicate that there is measurable decrease in the estimated fu(ure
cash flows, such as changes in arrears or economic conditions lhat correlate with
defaults.
lf, irl a subsequenl perlod, the amount of the impairment loss decTeases and the
decrease can be related obiective y to an event occurring after the impaiTment was
recognized, the previously recognized irnpairrnenl loss is recognized in the
consoliclated statements of comprehensive income, to the extent that the carrying
value of lhe assel does not exceed ils amodized cost at the reversat date.
Derecoqnition of Financ al Assets and Liabilit es
Financial asset
A financia asset (or, where applicable a part of a financial asset or part of a group of
tinanoal assets) is derecognized where:
.
.
.
the right to receive cash flows from the asset has explred:
lhe Gfoup retains the right to receive cash flows trom the asset, but
nas
assumed as obligation to pay lhem in full without matetial delay 10 a thkd party
under a 'pass-thtough" arrangement; or
lhe Group has transferred iis right to receiv€ cash flo$/s from the asset and
either (a) has transferred substa;trally all the rishs and rewards of lhe asset, or
(b) has neither transferred nor retained the risk and rewards of lhe asset but
has transferred the control ofthe asset.
Whe-e the G'oup has transfe"red ts 4ghts to receive casl' flows lror an asset or has
entered into a pass-through arrangement, and has nelther translerred nor retalned
substantially allihe rlsks and rewards of the asset nor transferred control of the asset,
the asset i; recognized to the extenl ofthe Group s continuing involvemenl ln the
asset. Continuing Involvement that takes the form of a guarantee over lhe ltansferred
asset i5 measur;d at the lower of lhe original carrying amount of the asset and the
rnaximum amount o{ considetatiqn lhatthe Group could be requiled to repay'
Financial Iiability
derecognized when the obligation under the liability is
discharged, cancelled, or has exp red. Where an existing financial liability is replaced
by another from the sarne lender on substantlally different terms, or-.the lerms of an
eiisting liability are substantially modified, such an exchange or modificalion is keated
as a direcognltion of lhe or g nal liab lity and the recognition of a new liabilily and the
difference ii lhe respective carrying amounts is recognized in the consolidated
statement of comprehensive income.
A
tinancial liability
is
Offsettinq Financial lnstrument
in
Financial assets and financial liabllities are set off and the net amount is reported
cLlrrently
is
a
lhe consolidated statements of financial position if. and only if, there
?0
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC,
enforceable legal right to offset the recogfized amount and there is an inlention to
settle on a net basis, or 1o realize the asset and settle the liabilily slmuhaneously. This
is not generally the case with mastef netting agreements, and the related assets and
liabilities are pre$ented gross in the consolidated slatement of financial positlon.
Capilal Stook
Capital slock ls determined using the nominal value of shares thal have been issued.
Retained Earninqs ldeficit)
Retained earnings (deficit) include all current and prior period results as disclosed in
lhe consolidated statements of comorehensive income.
Revenue Recoanition
Revenue is recognized to the extent that il is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured. The following specffic
recognitron crilera nust a so oe met befo'e revenue is 'ecoglized.
.
.
.
.
Sale of minerals - revenue amount from the sale of minerals such as ores,
rnelals minerals, hydrocarbons, acids ar1d chemicals is lecognized in the
consolidated statement of comprehensive income on the date that mineralg are
delivered to the cusiomer. Revenue ls the fall value of the consideration
recelved or receivabe from gross inflow of economic benefils during the
perjod arising trom the course ot the ordinary activities ot the enlity and it is
shown nel of taxes such as value added tax (if applcab e), estimated returns
discounls and volume rebates.
Interest in@me - interest is recognized on a time proportion basis using
eflective interest rate that takes into account lhe effeclive y eld on the asset
Dividend income - dividend is recognized when lhe right to receive lhe
payment is established.
M scellaneous incorne - revenue is recognized when earned.
Cost and Exoense
Cosl and expense are decteases in economic benefits during the accounting period in
the form of outflows or decfeases of assets or incurrence of liabililies thal result in
decrease in equity, other than those relating to dislributions to equity Participants'
Operating expenses are recogn zed irl the consoldaled stalement of comprehenslve
lncorre 'n the period lhese are incurrec.
Short-term Emolovee Benef its
The Gfoup recognizes a liabillty net of amounis already paid and an expense for
services rendered by employees dudng the accounting period. Short-term benefils
given by the Group to ils employees include salaries and wages, gocial seclrity,
health insurance and housing contrbulions, short-lerm compensated absences,
bonuses and olher non-monetary benefils.
Pension Cost
Penson cost is actuarially determined using the projected unit credt melhod This
melhod |eflects services rendered by employees up to the date of valuat on and
?l
sEc FoRM
17"O
MARCVENTURES HOLDINGS INC,
incorporates assumptions concernlng employees' projecled salaries. Actuarial
va uations are conducted with sufficient regularity, wth option to accelerate when
signiflcant ahanges to underying assumptions occut. Pension cosl includes current
seryice cost, nterest cost, expected relurn on any plan assets, actuarial gains and
losses, pasi service cost and the effect of any curtailment or settlement.
The liabiliiy recognized by the Group in respect of the deflned benefit pension plan is
the pfesent value ol the defired bene{it obligation at the reportinq date less the fair
value of lhe plan assets, togelher with adiustments for unre@gnized actuanal galns or
losses and past service costs that shall be recognized in laler periods. The defined
benelit obligalion is calculated by independenl acluary using the projected unit credil
method. The present value of the defned benefit obligation is determined by
discounting the estimated future cash oumows using riskjree interest rates of
government bonds that have iefms to maturity approximating the terms oi the related
pension liabilities.
Actuarial gans and losses are recogrrized as income or expense if the cumulativ€
unrecogniied actuarial gans and losses at the end of the previous reporting period
exceedLd the grealer of 10% of the present va ue of defifed benefit oblgation or 10%
of the fair value of plan assets. These gains and losses are recognized over the
expected average remaining working lives of the employees participating in lhe plans.
The pasl service cost is fecognized as an expense on a straight-line basis.over the
average period until the benefils becorne vested. lf lhe benelits are already vested
immediately following the introduction of, or changes lo, a pension plan' past service
cost is recognized immediately.
Borrowinq Costs
Borrowing Costs are expensed n the consoldaled statement of comprehensive
income i; the period in which they are incurred, except to the extent that they are
capitalized as bejng directly attributable to the acquisltion or construclion of an asset
whlch necessaily t;kes a substanUal period of tlme lo gel ready for its lntended use'
The capltalization of borrowing costs as part of the qualifying asset commences when
expenditures for the asset are being incurred, borrowing costs are being incurred and
activities that are necessary to prepare the assei for its intended use are in pfogress
Capitalization of borrowing costs is suspended or ceased when substantially all the
activities necessary to prepare the qualifying asset for its intended use are interrupted
or completed.
Fore qn Currencv Transaction
Items included in the conso idated financial statements are measured usjng the
curfency of the primary economic environment in whlch the Group operates ('the
functonil preseniation iurrency') '/vh ch is lhe Philippine Peso Monetary assets and
liabilities ;enoDlinated in foteigf currency are translated at lhe exchange ra(e
prevailing at the end of the reporting period. Exchange gains and losses ar sing frorr
foreign Currency transaclions are credited or changed lo current operations Non
monetary items that are measured in terms of hlstorical cost in a foreign currency arc
translated using the exchange rates at the dates of inltial transactions
1)
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC.
Provisions and Continaencies
Provisions are reaognized when lhe Group has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of lhe amounl of the obtigation. lf the effect ofthe tirne value of
money is material, provisions are determlned by dlscount ng the expected future c€sh
flovrs at a pre-tax rate ihal rellects curenl market assessment of the time value ol
noney and, where appropriate, the fisks specific to the liability. Where discounling is
used, the inclease in the provision due to the passage of time is recqgrized as an
interest expense.
Contingenl liabilities arq not recognized in the consolidated financlal $tatements.
These are disclosed unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not reoognized in the consolidated
financial statements but disclosed when an inflow of econornic benefits is probable
lncome Taxes
Current income tax
Cunent income tax assets and liabillties for lhe cuffent and prior perlods are
measu.ed at the amount expected to lle recovered from or paid to the taxatlon
authsrities. The lax rate$ and lax laws used to compute the amounl are those that are
eracted or sJbstanlively enacleo al lhe end o'the reporting perrod.
Defefted income tax
Deferred income tax is provded, using the Jiability method, on all temporary
differences a1 the end of the reportng period between the tax base of assets and
iabilities and their carrying amounls for flnancial reporting purposes.
Deferred lncome tax liabilitles are recognized for all taxable lemporary differences'
Defered income tax assets are recognized for al deductible temporary differences,
and carMorward benefits ol the excess ol miniTnum corporate income tax (MCIT) over
the regular corporate incorne tax (RCIT) and net operating loss carryover (NoLCO)' to
the extent that ii is ptobable that future taxable profil will be available against which
the deductib e lemporary diflerences, excess MC T and NOLCO c€n be ulilized
Deferred lncome tax liabilities are not prov ded on non-taxable temporary difforences
associated with investments n domeEtic subsid aries, associates and interest in joint
veftures. Witn resoect to inveshenls in other subsidiaries, associales and interests in
joint ventures, deferred income tax liabilities are recognized except when the timing oI
the reversal of the temporary difference can be contro led and it is probable lhat the
temporary difference will not reverse in the foreseeable iuttlre.
The carrying amount of deferred income tax assets is reviewed at end of each
reporiing peilod and reduced to the extent that it is no onger probable that suffic enl
fuiure tixable profil will be available to allow all or part of the deferred income tax
assets to be utillzed.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
Deferred income tax assets and liabilities are measured at the tax tates thal ale
expected lo apply to the perlod when the asset is realized or the liability is settled,
based on tax rates (and tax laws) in efiecl at the end of the reporling period.
Leases
The determination of whether an arrangement s, or contains a lease is based on lhe
substance of the arrangemenl at inception date or whether lhe fulfilment of lhe
aaranqement is dependenl on the use ol a gpecific asset or assels or the a(angement
conveys a right to use the assel. A reassessment is made after the inception of lhe
lease only t one ol the lollowing applies:
a.
b.
c.
d.
There is a change in contractLal terms, other lhan a renewal or extension of
the arrangement;
A renewal option is exercised or extension granted, unless the term of the
renewal or extension was initially included n the lease lerm;
There is a change in the determinalion of whether fulfilment is dependent on a
specified asset; or
There is a substantial change to the asset.
Where a reassessment is made, ease accqunling shall commence or cease from'lhe
date when the change in circumstances gave rise to the reassessment for scenarios
a, c or d and at the date of renewal or extension period for scenario b.
Group as a Lessee
operating ease paymerts are recognized as an expense in the statement of
consolidated camprehensive income on a straight line basls over the term of the
lease.
Related Parties
Parties were considered to be related if one party has the ability, directly or indirectly'
to control the olher party or exercise significant influence over the other party making
financial and operat ng decisions. Parlies were also considered to be relaled ifthey
are subject lo common conlrol or common significant nfluence. Reiated pariies may
be individuals or corporate entities. Transactions between related pafties are based on
terms similar to those offered to non-relaled parties.
Earninos llossl Der Share
Basic earnings (loss) per share is calculated by dividing the net income ( oss) for the
year attributable to the common shareholders of the Group by the welghted average
number of common shares outstanding during the year, after consldering the
retroactive e{ieat of stock dividend declaratior, if any.
Diluted earnlnqs (loss) Per Share
Diluted earnifgs (loss) per share amounts are calculated by divlding lhe net income
(loss) for lhe year attributab e lo the common stockholders of the Group by the
weighted average number ol cqmmon shares oulstanding during the year plus the
weighled average numbel o1 common shares thal would be issued on the conlerslon
of all dilulive potenlial ordinary shares jnlo ordinary shares.
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
Events after lhe Rerlortinq Period
Post year-end events that provide additional information about the Group's position at
the end of the reporting period (adjusling events) are reflected in lhe consolidated
financial statements when material. Post year- end events that are not adjusiing
events are disclosed in the notes when material.
3.
Signiticant Accounting Judgments and Estimates
The preparatioB of the firlancial $latements in accordance with PFRS requires the
Gloup to exercise judgment, make accounting eslirnates and use assumptlons lhat
affect the reported amounts of assets, iabilities, income and expenses and disclosure
of contingent assels and contingent liabilities. Future events may occur which wil
cause the assumptons used in arriving al the accounting estimates 1o change. The
effects of any change in accounting estimates are refLected in the consolidated
finanoial statements as they become reasonably determinable.
Accounling estimates afd judgments are coniinually evaluated and are based on
h storica exper ence and other factors, including expectalions of future events that are
believed lo be reasonable under ihe circumstances.
Judoments
n the process of applying the Groups accounting policies, management has made
the follqwing judgments, apad from those involving estimations, which have the most
signilicanl effects on amounts re@gnized in the consolldaled financial slatements:
D
ete rm in ing F u nct io nal C u(ency
Based on the economic subslance of the underlying circumstances relevanl to the
Group, the lunctional curency oT the Group has been determined to be lhe Philipplne
peso. The Philipplne peso is the currency of the primary economic envronment in
wh ch the GrouD operates.
Delerrcd Tax Aasets and Liabilities
The Group reviews its deferred tax assets and liabillties at end of each feporting
period and reduces the carrying amounl to the extent that il is no longer probab e that
sullicient taxable profit wil be available to allow all or part of lhe deierred tax assel to
be utllized.
P rov i si o n6 a
nd
Co
n
ti nge nci es
Judgment is exercised by management to distnguish between provisions and
contingencies. Policies on recognition and disclosure of provision and disclosure of
contingencies are discussed if] Note 2Accountinq Estimales and Assumptions
SEC FORM {7.Q
MARCVENTURES HOLDINGS INC.
The key as$umplions concerning the futule and othel key sources of €slimation
uncertainlies at the end of the repo*ing perod, that have a s gnificanl fisk of causing a
material adjustment 10 the carrying amounts of assets and llabilities within the next
financia year are as follows:
lmpairment of financial assets
The Group reviews ils trade receivable and available for-sale securities at each
reporting dale lo assess whether an alowance for impairment should be recorded in
the Group's consolidated statements of cornprehensive incqme ln partLcula''
judgment by management s required in the est malion o{ amount and liming of future
casi flows'when deierrnining the level o{ allowance required. Such eslimates are
based on assumplions about a numbef of factors and actual resulls may differ,
resulUng in future changes to the allowance.
The level ol lhis allowance ls €valuated by management on the basis of factors that
affect the collectivily of the accounls. These factors include' but are not limited to age
of balances finaniial status of counterparties' payment behavior, Iegal opinion on
recoverability in case of legal disputes and known market faclors The Group reviews
the age and status of iegal dispute$ and knowf factors. The Group revews tne age
and itatus of receivables, and identifies accounts that are to be provided with
allowance on a regular basis.
In addition to specific allowance againsl individual significarlt trade and other
receivables, the Gro!p also makes a collective impairment allowance agalnst
exposures which, although not specifically identded as requiring a specif c.allotryance'
ls
have a greater risk of default than when orgina ly granted This collective allowance
generally based on the age and stalus ofthe accounts
The amount and timing of recorded expenses fo. any Feriod wolld differ rf the Group
made different judgme-nts or ut lized diilerent eslimates An inclease in alowance for
mpairment losies would increase recorded expenses and decrease in'ret income'
Toial carrying value of receivables and other curreft assels amounted to F76,341'974
and F45,10i4,275 as at March 31, 2012 and December 31, 2011, respectively'
Allowance'for impairment on financia assets recognized in the consolidated financial
statements as ai March 31, 2012 and December 31' 2011 amounted to Bs'791'793
(See Notes 7 and 10).
lmpahment of Inventory
The Subsidiary recognizes mpairment oD inventories whenever net fealizable value of
inventodes become lower than cosl due to damage, physical deterioration'
obso escence, changes in price levels or other causes The impairment is revlewed on
a moclhly basis to Eflect the accurate valuation in the financial records The carrying
value of inventories in lhe consolidated financial statements amounled loP
2g8.75s,827 and F234,403,818 as at March 31,2012 and December 31,2011 (See
Nole 8).
Estimated tlseful Lives of Propefty, Planl and Equipment
The Group estimates the useful lives of property, plant and equ pment based on lhe
period over which the property, plant and equipment are expected to be availab e for
SEC FORM 17.Q
IIIARCVENTURES HOLDINGS INC.
use. The estimated useful lives ofthe property, pant and equipment are rcvlewed
periodically and are updaled if expec,tations differ from previous eslimates due to
physica wear and tear, technical or commercia obsolescence and legal or other limits
on-the use of the propedy, plant and equipment. In addition, the estimation ol the
useful ives of propert]./, plJnt and equipment s based on the co lective assessment of
industry practice, internal technlcal eva ualion and experience with similar assets ll is
possible; however. that luture financial perfo(maoce could be materially affected by
changes ln the estimates brought about hy changes ln factors mentloned above. The
amo\rnts and liming of reeorded expenses for any petiod would be affected by
changes in lhese factors and circumstances. The carrying value ot property and
equiphent in the consolidated tinancial statements as ol March 31.2a12 and
December 31 , 20'1 1 amounted to F744,162,1 38 and F725,093,051 respective y (See
Note 11).
A reduction in ihe estimated useful lives of the property, plant and equipmeFt !'rould
rrcfease the recorded expenses and decrease the no'-tcu'rent aSsets
The est maled Jseful lives are as follows.
Building
5-10 years
Heavy and Mohile Equipment
Equipmenl, Furniture and Fixlure
5-7 years
3 yea|^s
Based on management assessment as al March 31 2012 and December 3'l' 201 I '
thefe is no change in the estirnated useiul llves of property, plant and equipment'
Actual resulls, however, may vary due to change in estimates brought about by
changes in factors menlioned above.
Recoverubility and Estimates of Explared Mineral Resources
Mineral reseNes and resources est males for develoPment projects are, to a large
exteri, based on the interpretallon ol geologrcal dates obtained from drill holes and
other sampling techniquei and feasibllrty sludres which derive estimales of costs
based on antiaipated tonnage and grades of ores to be mined and processed, the
configuration of th" ore body, erpected recovery rates lrom lhe,ore, eslimat'ng
operating costs, estimated cimaic condition aird other factors. Proven reseryes
estimatei .l.e attributed to futu{e development projects only where there is a
siqnlficart comrnilment to project funding a!1d extractions and for whGh applicable
golvernmental and regulatory approvals have been secured or arc reasonably cenaln
either upward or
fo be secured. All proven reserye estimates are Subject to
'evision,
activit es
production
grading
and
downward, based on new iflormation, such as btock
or
prices,
terms
product
@nlract
or from changes n economic factors including
develoomenl plans.
Estimates of reserves for underdeveloped or padially developed area are subjecl to
g;ater uncertainty over their future life than estimaies oJ reserues for a(eas that are
iubstanlially deveioped and depleted. As an area goes inlo production, tlre amount of
proven reserves wili be subject to future revision once additional informalion becomes
available. As those areai are fufiher developed' new informaton may lead to
revsions.
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC.
Estimating Impairment af Nan-Financial Assets
The Group assess at each repo(ing period whether lhere is an indication that lhe
carrying amount of all non-financial assets maybe impaired or lhat previously
recogn zed impairment losses may no longer exist or may have decreased lf any
such indiaation exists, or when annual impairment testing for an asset is r€quired, the
croup makes an estirnate of the assets recoverable amount. There was no
impairrnent lqss on non-financial assets recognized duting the year, except for the
Parent Company's input taxes where a valuation allowance was provided amounting
to F607,636 as al lvlarch 31 , 2012 and December 31 2011 {SeeNote13)
Reafizabilitv af Deferrcd fax Assets
Deferred tax assets are established for lax benefils related to deductible temporary
differences, carry foMard of unused MclT and NOLCO. These assets are perlodically
reviewed for re;ization. Periodic reviews covered lhe nature and amount of deferred
income and expense item5, expected timing when assels will be used or liabiliiies will
be required to be reported, reliabiity of historical profitability of businesses expected to
provide future earning and tax planning strategie$ which can be utilized to ncrease
ihe likelihood thal taxissets will be realtzed. As of [,4arch 31, 2012 and December3l,
2011 the Group did not recognize the deferred tax etfect of NOLCO in the
consolidated financial statements. The tax effect of MCII of lhe Parenl Company
recognized in the aonsolidated financial statements arnounted to F385'619 as at
March 31, 2012 and December 31, 201 1.
E stimatin g Co ntinge ncies
The Group evaluates legal and administrative proceedlngs to which it s involved
based on analysis of potential results. Management and ilS legal counsels do nol
believe that any current proceedings wil have material adverse effects on its financial
positions and iesults oi operatlon. t is possible, however, thal future results ol
operation could be materially affected by changes in the eslimates o' in the
effectlveness of slralegies relating to these proceedings.
4.
Exolored Mineral Resources
The exolored mineral esources reported in the consolidaled Jinancial statements o{
financial postion amounting to P1294,766,157 as at [,4arch 31, 20'12 and December
31, 201 1 represent the excess of shares issued by the Parent Company to acquire
'100o/" ownership in MMDC which meets the definitlon of an inlangible asset that is
controljed and provide economic benefits, separable and arises from rnineral prcperly
rights and claims for whlch fair value was measured reasoFably
Valuation of intangible assets aising on combination
Valuation of explored mineral resources on acquisit on of M|\'4DC s 100% ownershlp ls
primarily attached on the target commencement of MNy'DC's mine produclion activties
Lvthe j"d ouarter of 2010wiichwill n turn start lhe cash flow generation of the inital
eiplored area of about '120 hectares which is 2 5% of lhe area covered by the MPSA'
Cost from the exploration permits ate substanlhlly irnmaterial and charged to
operation. In addition, this valuation does not include any assignment to the Parent
sEc FoR[{
17-Q
MARCVENTURES HOLDINCS INC.
Company and/gr |\4MDC ol operating agreement an add tional mining tenement that
may conlain othet minerals.
The Parent Company commissioned l\,'lultinational lnvestrnent Bancorporalion ([,1iB)to
prepare a third party iaimess opinion for the acquisition of 1007o of M|\'4DC and to
issue its opiniofl regarding a fair and (easonabLe value for M['4DC. The transaction
value of Fi.3 billion has a 13% d scount to the fair value of F1.49 billon as contained in
the third party {akness opinion dated February 3, 2010.
ln the said reDort, MIB used the discounted cash flow method based on a 1o-year
projection period wilh lhe following assumptons: (l) d scount rate of 2570; (ii) constant
niciel price ot US$ 1l,000 per metric over the 1o-year projection period whlci is at a
57% discounl to the prevailing nickel price oI US$25,635 per MT as of N'4ay 4,.20j0; (iii)
no terminal value was assumed at lhe end of the 1O-year projection periodl (v) total
oroduclon volume of 11.6 million wet l\4T ba$ed on a mining plan approved by the
l\,4ines
and Geosciences Bureau covering 120 hectares.
the books of the Parent cornpany, the intangible asset arising from comb nalion s
recognized as "explored mineral resources" as lhis asset meets the definition of an
intangible asset that is controlled and provides econornic benefils, separable and
arisei from its mineral property right and claims, and its fair value was measured
In
reasonaoly.
5.
lmpairmeni Tesiing of Explored Mineral Resources
The Group recognizes explored m neral resources and performs an impairment lest
on those assets-when facts and circumstances suggest lhat lhe carrying amount ol
the assets may exceed thelr recoverab e amounts. lt varies the recognition of
imDairment from that in PAS 36, but measures the impairment in accoldance with the
stjndard once the impairment s idenlified. On top of lhose mentioned in PFRS 6,
imoairment tests are performed with lhe key indications as discussed below:
a. Uncertainty in estimation of m neral resources - techn cal, geologic and marKet
dat? on lhe Mineral Resources are estimates and there is no assurance that the
anticipaled tonnages and gr€des wi I be achieved, ne ther is it ascertained that the
indicated recovery rate will be realized.
b. Discounted cash ilow method - For the purposes of computing net present value
using discounled cash flo\rY method,lhe valuation of intangible assets involves the
extraction of non-replaceable resource, a term na value was not assigned to
represent cash flows'to be earned beyond the projected perrod.
Markel rlsk - There are risks arising lrom lhe possibility that the value ol an investment
will decrease due to movemenl i; market factors. The standard rnarket risk factors
relevant to the valuation of the intangible assets are: (a) comrnodiiy risk, or risk
commodity prices wil change. Current surplus demand for the commodlty has causeo
nickel priies to reach record levels in the past few months' and is currently in a
reversion/ correctlon phase. Any sustained decrease in nickel prices may decrease
revenues and earnings, and (b) currency risk, or the risk lhat foreign exchange rates
will change. The subsidiary's revenues are dominated in US dolar' Any sustained
Peso appfeciation ray decrease revenues ard earnings.
in
l\,4anagement believes that there is a significant reason rol to recognize impairment
this aaset as at March 31, 2012 and oecember 31, 201'l
SEC FORM 17-Q
II4ARCVENTURES HOLOINGS INC.
6.
Cash and Cash Equivalenls
This accounl consistg of:
Oec.
2011
2012
164,084,329
Cash n banK
64,133,328 P
Cash on hand
47,189
19,703
Petty cash
37,000
37,000
64,217.511
?
164,141,O32
Cash with banks earns lnterest at the respective bank deposit rates amounting to P
64,133,328 ard F'164,084,329 for the periods ended March 3'1, 2012 and December
31, 2011, respectively. Shori-term inveslments ate made lor varying periods up io
three months depending on lhe immediale cash requirements of the Group and earn
interest at the respectlve short-term deposit rates.
Foreign exchange losses recognized for the period March 31 ,
4,186,215. (See Note 2O).
7
2012 amounted to
P
Trade and Other Receivables
Thrs account consists of:
Dec.
2012
Ad\ances lo related Padies
Trade Accounts Recei,,/able
Cash advance lor liquidstion
6,891,566 P
Cash ad\ance (o efirph,lrees
Cash adEnce - olh€rs
6,477,477
9,514,480
18,582,380
1,635.204
1,231 121
3,356,548
3,',l15 554
630,361
2202a.165 F
A lowance tut imPa rmenl losses
2011
8,235,423
13./92742 ?
519 710
30 326 242
1235 423
22 090,819
There were no assets under th s category thal were used as a collateral or pledge on
any loans or advances as at [,'larch 3'1,2012 a d December 31 , 201 1 .
As of [,4arch 31, 20'12, the aging analysis of trade receivab es is as folows:
sEc FoRM 17-A
MARCVENTURES HOLDINGS INC.
PAST OUE
BUI NOT IMPAREO
Ova
1-30
9l daF
fPP9514436f
/.counls r46ivatrl6 lrado
A.cls ec€iEbl€s oihe6
3 356,548
liqlidatii
74,083
1.635,204
22
ots,166
618 494
200
.
3,065 2a1 143
241 199 144,832 ?.890.434
41,913 1232,421
360 S70
1S9,810 14,537 018
61? 269
4
630.361
11,O25
Advarces subjecf to
&'6 31'6Ddays 61 90daF
85108
Ne8.c€ lq imoalm€.i
7,6e'6
6 536,294
6,6D3,960
1671
The carrying amount of lrade and other recelvables, which are expecled to be gettled
within the nexl 12 months lrom reporling period, is a reasonable approxlmation ot lair
value
8.
lnventory
As at l\,4arch 31 , 2012 and December 31 , 201 1 , lhe Subsidiary's inventory consists of
nickel ore stockpile amounting toP2g8,75g,B27 and F234,403 818, re$pectively. The
inventories are carried at cost.
Movements of inventory afe as iollows:
December 31.
March 31,
2012
Balance al beginnifg of year
F
Add tions d!ring the period
lNentory a\,ailable for sale
2011
2M,403,816 P
64,356,009
532 834 667
298,753,827
623 244,46S
Cost of sales (Nole 19)
Balance al end ofyear
s6 409 802
394,840,651
F
29A.759,a27
F
234,403,818
There were no ltems under this category that was used as a pledge or secunty to any
oans or aovances.
L
Olher Current Assets
This accouft consists o{:
)11
sEc FoRM t7-a
MARCVENTURES HOLDINGS INC.
Dec.
2011
l\Jlarch
2012
Other Current Assets
Advances 1o contraclot
19,912
Ad\dnces to supplier
765 F
15,347,436
129,947,978
n\entories
12670.210
7,142,465
1,574,649
2,079,925
164,105,602 P
Total
Allowance for impainnenl losses
1 556,370.10
162,543,232 F
24,569,826.16
1,556,370.10
23,0't3 456
of prepaid rent and prepaid in$urance. lnventodes consist o{
parts
spare
supplies, lubricants, electrical and laboratory supplies. Advances to
conlractors pertain to advance payment made lo conlractors for fulure mining related
Prepayments consist
services
.
10. Properly, Planl and Equipment
Ih s account consisls of the following:
ENP
3!
f-,@
dno
aid
llqs: z7
Etryar
iurn
@a
-
lilmsk
annfrilion rh34,idMobire
r\1,1*,tn ! t.t3t5
-i55Er ---
6
-3zr6r.dE
61.5633$
01ta6iir
egJ0..0e4
5396]704
latl!.246113D]4|?3:o0s''3
19103,366
3
Naab.a €rG
ro,.R
5inr9
eer lt,rr:61
nt.vr
ro,ar',r?1
There were no assels under properly, planl and equipment that were used as
collateral to af]y loao excepl for transpodalion equipments that were obtained by the
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
subsidiary through United Coconut Planters Bank (UCPB)
carrying value of F4,855,206 as oi Decernber3'1,2011.
in 2011 which have
a
Depetion and depreciation expense amounting to F19,789,419 and F60,412.109 for
lhe Deriods ended March 31. 2012 and December 31,2011. respectively w€re
distributed as
follows:
March
Dec.
2041
2012
14,352,934 P
47,537,750
12,874,3s9
1,436,484
Gen and adm n expenses
15,789,418 P
11. Deferred Mine
60,412,'109
Exploralion Cost
Deferred mine exploratiqn costs relale to mining projects lhat are currently on-going'
'The recovery of these costs depends upon the success oi exploralion activities and
future development of the corresponding mining properties pfoducible in commerclal
ouantities. Allowanaes wlll be provided tor those deierred costs lhat are specitically
identified to be unrecoverable.
12. Other Noncurrent Assets
This account cons sts ofl
March
2012
Mine €habilitation iund
5,000,000 P
20't1
s,000,000
l\,4onitoring tru9t tund
150,000
't50,000
Renla deposil
795,886
795,886
1,112,621
1,1,12,621
101,013,2S7
93,470,188
705,258
705,258
101 233 952
ln\estments
hput vAT
other
108,777,061 P
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
March
2011
2012
N,line
rehabil lation fund
Moniloring trust fund
n\estments
5 000
000 F
150,000
150,000
795,886
795,886
1,112,621
'|,112,621
101,0'13,2S7
93,470,188
705,258
Qthe.
5,000,000
108,771,061
705,258
?
1A1 233
952
The Parent Company's input tax amouot ng lo F5232,328 and P5,127.369 as at
March 31, 2012 and December 31, respectively, is net of a valuation allqwance
amounling to F607,636.
Rehabililation Cash Fund
Rehabilitation Cash Fund (RCF) is a fund designated lo ensure compliance with the
aoproved rehabilitation dctivities and schedues for specifc mining project phase,
iniluding research plogmms as defined in the Eavironmenlal Protection and
Enhanciment Program (EPEP). The RCF shall be equivalent to 10% of the total
implerDent the EPEP or Five Million (F5,000'000) whichever is
amount needed
lower. In the event of withdrawals from the RCF, the Subsidiary shal annually
reDlenish the RCF so as to maintain the mlnimum requited amoun{lhereo{'
i;
Monitorinq Trust Fund
l,lonitoring Trust Fund (MTF) is a fund exclusively used in the monitoring program
approved by the N.4ine Rehabilitation Fund (MRF) Committee. lt shall be in Gash and in
amount to te determined by the MRF committee which shall not be less than F
150,000. Rep enishment oflhe amounl shall be done monthly to correspond lo the
expenses incuffed by ihe monitoring team for the month.
Others primarily pertain to dieselfuel deposils of the subsidiary and rental, utility and
office renovation deposits of the Parent Company.
13. Notes Payable
Th s account consists of:
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC,
Unlted Coconul Planters Lilb Ass!rance Corp
March
Dec.
20't2
20',t1
100,000,000.00 F
100 000,000.00
Weallh Secudtles
30,000,000.00
30,co0,000.00
Asian A liance In\eslmenl Corporation
19,800,000.00
29,120,000.00
Luis MoralBs
5,000,000.00
Araparc de Leon
2,000,000.00
10,000,000.00
SJ Roxas & Co., Inc.
ToKL
149,800,000.00
76,1 20,000.00
26,320,000 00
Less: Curenl portion
Mtes Payables-net ot cunent podion
'I
r49,800,000
00 P
149,800 000 00
All of the Parenl Company's unsecured notes as at [,'larch 31,2012 and December 31,
2011 amounting to F149.8 million and F176.1 milLion have annual intelest rates ranging
from 1O% to 12% and with malurities of 2 vears frorn the date of drawdown, payable in full
upon maturity.
All of the above notes have the oplion to conved all or a portion of the principal amount of
the loan into lully paid shares of stock priced at F2.20 per share oi MHI at any time prior to
the maturity of the loan. t-Jpon converting all or porton oi the loan, the lender shall be
entitled to a warrant to subscribe to one (1) Parent Company share, for every four (4)
converted shares at a p ce of F2.20 per share The warrants are subject to a two (2) year
exercise period.
As o1 June 30,2011, the Pareft Company has applied the converslon of tne private
placements amounting lo F100 milion inlo 45,454,545 shares ofthe Parent Company with
the SEC and is waiiing for hs approlal.
ln August 2011, the SEC approved the cqnversion ol 20,454,545 shares oJ the Parent
Company pertaining to private placements amounting to F45,000,000
Interest expense charged to operations amounled to F10,638,000 and F17,066,333 for the
Deriqd ended lllarch 31, 2012 and December 31, 2011 respedively.
'14.
Interest-bearingLoans
The Company's interest-bearing loans are as follows:
SEC FORM I7.Q
MARCVENTURESHOLDINGS INC.
Mrrch
2012
Corporallon P
United Coconul Plonters Bank (UCFB )
Phil. vetemns Eank
Asian Allience Inleslment
P
Less: Crnent pottion
Dec.
20'11
?
3 063,335
-
22,094,961
P
1,758,937
23,39S,353
25,158,296
22,A94,961
2,412,453
75,o0o,ooo
99,507,414
76,808,572
22,698,842
The Subs diary'E loans from MIC as at Mafch 31, 2012 and December 31, 2011
wasinlended for working capilal requirements amounted to P22,094,961 with annual
aveTage interest rate of 5o/o above the 360-day T-bill rate. As ot December 31, 2011
and June 30, 2011 no interest was charged tq the Subsidiary. The loan from AAIC is
unsecured and has no fixed payment terms.
The Sulrsdiary's loan from UCPB amountinq to e2,432,047 was intended for the
acquisilion of transportation equ pment in June 2010 payable in two (2) years starting
June 20'10 until July 2012.
The Subsidiary's unsecured loaf from PVB as at December 3'1,2011 amounled 1o
F75,000,000 with annual interest of 4.9579% and uilh maturiiy date of March 1 2012.
Ihis was intended for working capital requ remenls which was settled on February
13,
2012.
15. Trade and Other Payables
This accounl consisls of:
March
2012
payable
AccoLrnts
CLrslomer Deposil
"
Other payables
P
140 792,275
340
Dec.
2011
?
033,178
s,457,706
486,283,159 P
143,424,737
10T,515,855
16,213,471
Zet,ts.t,oeg
Trade payables include payables to contraclors and are noninterest-bearing and have
different credit lerms Other payables include SSS, HDMF, Phil heallh wlthholding
taxes and other accruals pertaining to recurring expenses; and accrued relirement
expense.
Deposits payable pertain to advance payrnenl made by various cuslomers for the
purchase and shipmentof the Subsidiary's nickei products,
As at March 31, 2012, the aging analysis of trade payables is as fo lows:
SEC FORM 17.Q
MARCVENTURES HOLOINGS INC.
Total
payabc P
Custoneroeposil
Cu.rent
1-30
daF
31{0
days
61-90
da}rs Over
F 483,971 F 20,493 599 ? 20555,853 P 99,258851 P
033,178
55976,451 117685,552 106,371 175
Orh€r payrbles
5,457,706 t6A,O00 1 4e1,111
F 486283,159 P 651,971 P 77951,161 P 138241,4!6 P 265,630026 F
Accounts
91 da}
14A192,27a
340
3 @8,595
3.808,595
The carrying amourt of accounts payable and other payables, which are expected lo
be settled within the nexl 12 months from reporting period, is a reasonable
approximation of fair
{see Note 23).
value
16. Related
Pa(y Transactions
Thjs represenlrs non-interest bearing advances tq and from lhe $tockhglders and its
affiliates for working capital requirernents. Such advances are payable on demand
with no guarantees attached and witix no fixed payment terms.
Significant transactions with related parties nclude the following:
Oec.
20't1
March
2012
Advances lo af{illates
Marc\eflures Mlnerals Holdings
lnc
P
6,536,294
P
295,272
Carac'an De\elipment Corporalion
6,891,5M
Advances from
Stockholders F
19,034,402
F
6,596,?94
281 183
6,877,477
19,034,402
Advances from affiliates:
Inc
l!4inerals Holdings Inc.
105,209
17,354
19,156,965 P
l\4arc\entures Resoufces Holdings
Marc\enlures
P
105,209
'11,354
19,1s6,965
Advances to N4MHI and Carac-an pertain to venlures entered into by the Subsidiary
and has been discontinued. These advances are deemed to be worlhless and the
S!bsidiary has already provided an allowance for lmpairment losses in full (See Note
Advances lrom stockholder represenl cash advances made to the Group
Vijungco, a majofity stockholder of the Pa.eft Company.
A1
ty
ft4ario J.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
17. Equity
Capital Slock
Detai s of lhe Parent Cornpany's capital stock are as folows:
Nurnber. of shares
Mat.31.2012 Dec.3'l,2011
Common Stock - 1 par value
Authorized:
Ba ance at beg nning of y€ar
2,000,000,000
2,000,000,000
lncrease in authorized caoltal stock
Ba ance at end of year
2,000,000,000
2,000,000,000
Movements of addil iona
I pa id-
in captul:
Mar.3'1,2012
Balance ai begfnng year
Addrtl('$
Balarce al cnd
ofyear
Dec, 31,201
e),118221
r2,6!qlql- _____105,389'l3t
92'778
On July 21, 201I-SEC approved lhe registratlon ol 45,454,545 Common Shares
underlying the Convertible Loan, and 11,363,636 common shares underlying the
Wa[ants of the Parent Company. on July 27, 2011 PSE approved the applicetion io
list the said Shares to cover the underying common shares of the convertible loan'
subject to the actLtal oonversion of the corlvertibl€ loans' to be issued to vanous
lenders at a converslon price of P2.20 per share.
Some of the lenders opted to exercise the conversion oi their convertible loan and on
September 19, 2011 and November 4, 201'1 the PSE approved the listing of ther
shares a total of 10, 000,000 and 10,454,545 tespectively
1
8-
General Administrativs
Th s account consists of:
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC.
March 31,2012
three months
Salanes and allowancds
Depreciatlon
349,552.00 P
Oulside seNices
Offce supplies
Communlca|on, light and w"1ar
2,314,29S.00
79,958.00
144,151.00
577,474.68
13,640,383.00
24,000.00
280,000.00
1S8,S00.00
1,7S8,864.00
65,332.40
300,656.00
458,227.00
Renlal
180,882 96
518 715 67
Relirement expense
147 465.00
301,489.00
Bank charges
522,825.88
477,498.00
10,638,000.00
17 066,333.00
Taxes and licenses
976,367.00
5,311,411.02
3,2M,217.00
1,330,917.02
1,693,129.00
21_481,919.06 F
'19.
T01,7s0.00
1 436,484 43
r
Represenlation
Dec.31,2012
6 months
42 817,363 00
L€ase Commitments
The Group eases all of the premises occupied by their offices. The lease conhacls
provide for annual rentals amounting loF2,636,78g and F2,154,660 asat lvlarch 31
2012 December 31,2011. The standard lease perods are from two to five years
The lease c,ontracls con'tain renewal options, vlhich give the Group lhe right to extend
lhe lease on terms mutually agreed upon by both parties.
The Group's minimum lease payments on non-cancellable iease are as follows'
Less than one year
Between one vear to five
March 31,
2'012
F2,636,789
FS,437,725
Dec.3l ne 30,
2011
F2,154,660
4.584.674
F6,739,334
Rental expense charged to operations amounted to F518,715.67 and F976,367 for
the periods ended March 31, 2012 and December 31, 201 1, respectively (See Nole
18).
SEC FORM
174
MARCVENTURES HOLDINGS INC,
20. Other Income (Exp€nse)
Thls account consists of:
31,
2012
(three
March
F
qs'rcur.",r"ysaffi
income
equipment
Dec.31,
2011
(six months)
60,071
Interest
cain on sa e of property and
60,109
382,659
Gain (loss) on sale of
ava lab e-for-sale
securilies
Inlerest expense
427,818
Miscellaneous
(F3,315,667)
-
P1,237,521
21. BasictDiluted Earnings [Loss) Per Share
The computatisn of the earnings (loss) per share is as follows:
l0l2
monu's)
Dec.31, 2012
(dx months)
lvlerch 31
(lhreo
F
(t+.zsz.ses)
P
260,433,405
Divricd by wciglted dvcBge
1,8'11.110,874
nunb(r of comlrll}n lhalcs
(o
lveigked avc.agc t'mtrr ot'
connon sburcs for basic crmnrgt per !hrrc
Ereci of erercisc of contcrion optlrr
Werdted averagc numher of
cormr
aad
wamnts
ni4)
|
2012
nonths)
I
82r,529,056
e,t4l
Ma.!h 31,
Dec, 31,2012
(thre.
(ex months)
OA1J4T
a1022,727
1,724
1,721,464,474
100,0€€,1S?
thare s
adiuted I()r thc cffectofexercise otconlcnion
181r,110,874
1.821,5?9,050
The Parent Company considered the eflect of its potenlialiy dilutive convertible
prqm ssory notes and warrants. The assumed exercise of these stock opt ons would
have resulted in additional 87,022,727 and 100,068,182 common shares as at March
31, 2012 and December 31, 2011, respective y (See Note'17).
SEC FORM 17.Q
I\4ARCVENTURES HOLDINGS INC.
22. Risk Management Obiectlves and Policies
Genera
The Group has risk managernent policies thal systenratlcally v ew the risks that could
prevent the Group from achieving its objectives. These policies are intended to
manage risks identified in such a way that opportunities to deliver lhe Group's
obiectives are achieved. The Group's risk management takes place in the contexl of
day-to-day operal ons and normal business processes such as strategic plannlng and
business planning- Managemenl has idenlified each risk and is responslble for
coordinaling and conlinuously improving risk slrategies, processes and measures in
accordance with lhe Group'$ eslablished busiress objectives.
Financial Risk Manaqement Obieclives and Policies
The Group's princ pal financial ins(rumenls consist of cash and cash equivalents and
loans payable. The primary purpose of these financ al inslrurnenls is to tinance the
Group's operations. The Group has other financial lnstruments such as receivabe,
trade and other payables and related party payables, which arise directly from ils
operations. The rran risks arising from lhe use of these financial instruments are
credit risk, interest rate risk, liquidity risk currency r sk, and market risk Management
rsv ews and approves the policies for managing each of these risks which ale
summaized below.
Credil Risk
Credit risk represenis the loss that the Group would irlcur if gounterparty lailed to
perform under its contractual ob igations.
The Grouo's exposure to credil risk arises from defaull of counterpany wth a
maximum exposure equal to the carrying amount of its financia assels The Group
assessed ils receivable as collectible and ln good standing as at l\,'larch 31,2012 and
December 31. 201 1.
fAmounts in F 000)
L$s than
onneii,and 3monhs 3-6 modhs !
Advane3l. r.l.t
12non
B r5t99l!
---!-!!3i:-----!l!L
d Padies
A.co!.ts ecelvaFl.s4nVkry€es
cash.dvo.. ror llquld.lon
Aavance to rer rd pa'1e3
A.counb rtraivibEs' employee3
Cashad@mdfor
qu
dir0l
/rleresi Rafe Rlsk
As at March 31, 2012 and Decemher 31, 2011, the Group s loans are based on lixed
rates. Managemenl believes that cash generated from fulure operations is sufficienl
to pay for its ob igations under the loan agreem€nt as they fall due.
SEC FORM 17.Q
MARCVENTURES HOLDINGS INC,
The follow ng table sets out the malurity profile and lhe effective inlerest rate of the
Group's financial assets and financlal liabilities that are exposed to interest rate rlsk:
(Arnounts in P'000)
6 uqrths
qle
f0@
6to
l2mo l lo2ycaE
t000
P000
Cdh rnd cah.qutvtlenh
'9157
76
99,50€
1c 12%
176,124
26320
809
,
.
-
22,6S9
149800
]q15l
,_____
lnterest on financial assets classifjed as lloating rate is repriced at intervals of less
than one vear. Intetesl on linancial assets and financial tiabililies classified as fixed
rale is fixed until the maturity of the instrument. The other financial instruments of the
GrouD that afe not included in the above tables are nonlnterest-bearlng or have no
fixed or determinable maturitv.
Liquidily Risk
The Group manages liquidily risk by maintaining a balance between continuity of
funding and flexibility. Treasury controls and procedures are in place to ensure that
sufficient cash is maintained to cover daiy operational and working capital
requirements, including debt principal and lnterest payments. l\4anagement cosely
moritorg the Group's future and contingent obligalions and sels up required cash
reserves ancl reserye borowing facillties as necessary ln accordance with internal
policies.
The tables below summarize the matu ty profile oi the Group's financial liabilties as
at March 31,2012 and December 31,2011 based on conlractual undiscounted
payments. Notes and loans payable consist of principal and estimated future interest
oavments.
SEC FORM 17-Q
MARCVENTURES HOLDINGS INC.
(Arnounts in F 000)
L€s.lhar
ondemand 3manihs 16 honlht 612munhs
Trdc rnd orh.rpryrbl.r
133,?41
1-5
446,233
269,13S
23
1,759
Nor.5
odrib!
3S9
25158
19,r57
19151
149,800
149 800
25.320
Cuffency Risk
The Group has transacional currency exposlrres- Such exposure arises from cash
and cash equivalents, accouDts receivable and cuslomer deposits in US$- For lts
forcign currency-denominated trade receivables, the Parent Company ensures tlme y
follow-up and collection to mitigate lhe impact of loreign exchange fluctuat'ons.
To mitigate the effects of forelgn cunency risk, the Group will seel{ to accelerate the
colleciion of foreig$ currencyienolninated receivables and the se(ement of foreign
currency-denominated payables, whenever practicable. Aso, foreign exchange
rrovenenls are mon tored on a daily bas.s.
The Groop's foreign currency-denominated financial assets and liabllitles and their
PhiLippine peso equivalents as at March 31, 2012 and December 3'1, 2011 are as
follows:
(Amounts in F 000i
fi,larch
31 2012
Foreign
Accounl
Cash in bank
Accounis recei!able
Financial L abilities
Cuslomefdeposrt
$110,462
P
Peso
Equivalent
4743 OO
December 31,2011
Peso
Foreign
Account
s2,148
543
?
Equivalenl
94.378
14,542
g2.1r1 " Mll!_
The exchange rates used for convers on of US$1.00 to peso equiva ent were F43.928
as at December 31, 2011.
Market Risk
lvarket risk is the risk of loss to future earnings, to fair values or tq future cash flows
that may result from changes in the price of a financial instrument The value ot a
financiai instrurnenl may change as a result ot changes in foreign currency exchanges
rales, commodity prices, interest rales, equity prices and other markel change$.
SEC FORM
t?-q
MARCVENTURES HOLDINGS INC.
23. Calegories and Fair Values of Financial Assets and Liabilities
The follow ng methods and assumptions were used to estimale lhe fair value of each
class of flnancial nstruments for which it is practicable to eslimate lhat value:
The carrying amounts of cash and cash equivalents, receivable, available-ior-sale
sec!rities, irade and other payables, interest bearing loans, noles payable and related
party payables approxirn"te their carrying amoltnts due to relatively short-term nature
of these financial instruments.
Thg fair values of the loans were based on the discounted value oJ fulure cash fows
using the applicable rates for similar types of loans.
(Amounts in F'000)
Dec€mbe.2011
March 2012
Cateooruol Financral
lnslrufients
Carruir q
6d718
8
13,793 13,793
64,/
Cash and cash equilalents
Trade and other receivablos
78,511
78,511
Financialliabi liss ca.r ed al amorlzed cost
Tfacle and o(her payaties
lnteresfbearing loans
Related Farty payab es
ue F.k Value
1o4 141 '64.'41
2".091 22,091
186,232 186 232
value la I valJe Carryirg
446,243
25,159
486.283
149,900
143304
1S 157
25,159
19,157
680,39S
va
261,154
?61,1!4
116,120
176,120
99,507
99.507
19.157 19,157
55593e 5s5,938
During the periods ended [,4arch 31. 2012 and oecember 31, 2011, (heae were no
transfeE between Level 1 and Leve 2 fair value tneasurements, and no transfers into
and out of Level 3 fair value measu(ernenls.
24. Capital Management Obiectives, Policies and Procedures
The Group's cap tal managemenl objectives are to ensure the Group's ab lity to continue
as a going concern and to provide an adequate relurn to shareholders.
<A
sEc FoRM 17-A
MARCVENTURES HOLDINGS INC.
Governance f€mework
The Group has establshed a risk management functions with clear terms of reference
and with the responsibility for developing on narket credit and liquidity and operational
risk. ll also supports the etfective implernenlation ol policies.
The policies deflne the Group's identificalion of risk and lts interpretation, limt
struclure to ensure the apprqpriate quality and diversilicalion oJ assets to the
corporate goals and specify reporting requirements.
Caoital manaqement f ramework
The Group's risk management functlon has deveoped and implemenled cerlain
rrinimum stress and scenari'r tests for identifying lhe risks lo which the Group is the
exposed, quantifying their impact on the volatilily of econornic capilal. The results of
these tests, particularly, the anticipaled impact on the realistic statement of finarcial
position and revenue accounl, are reported to lhc Group's risk management function.
The risk managemenl lunctiolr then cof,siders the aggregate impact of the overall
capital requirement reviewed by the stress testlng to assess how much capital is
needed to mitigate the risk of insolvency to a selec(ed remote level.
lvbrch 2012
Trade and olher payables
hterest bearing loans
F
486,283,153 ?
2s,158,296
'149,800 000
Related Darlv Davables
Total debl
Capilalstock
Aidlional pald- n capih
Relaned erm ngs (delicil)
Totalequly
oebt-to-equlty ratio
Decembsr 2011
m1,154,064
9S,507 414
176,120,000
19.156,965
19,'156.965
680,398,420
s55,938,443
1,731,969,965
1,121,460,814
105,389,131
92,7i8,223
169,767,161
19d,564,746
2,007,126,257
2 008,803.843
0.34:1
0.28i1
Requlatory framework
The operalions ol the subsidiary are also sulljecl to the regulatory requirements of
SEC, Bureau of Internal Revenue and DENR. Such regulations not only prescrrbe
approval and rnoniioring of activities but also impose cerlain testrictive functions
25. Others
Comnritments
On October 28, 2009, the Suhsid ary entered inlo a [,4ining Operations Contract (MOC)
with Frasec Ventures Corporation (the contractor) to exclusively operate, under'lake and
conduct mining opeEtions over the Subsidiary's mineral property, consisling oI One
Hundred T, €nty (120) hectares, covered by MPSA no. 0'16 93-Xlll.
Arnong the relevant provisions of the MOC are:
sEc FoRM 17-O
MARCVENTURES HOLDINGS INC.
a)
b)
The Contractor is required lo mine a guaranteed minimum produclion volurne
of 600,000 WMT annually for eight (8) dry working months from April to
November, per year or an average of 75,000 Wl\4T per month.
While in cases where production is low during the dry worKng months and no
shipment for any reason and without fault on the part of the contractor, the
Subsidiary agfees tq pay the Contractor F3,000,000 per month to cover the
Contractor's fixed costs.
Sales aoreement
On December 5, 2011, the Company inforrned the investing public that l\y'arcvenlures
[, ning and Development Corporatlon (l\,4MDC), the subsidiary,has completed the
signing of a Sales contract wth Dunfeng International (Phils.) for 3 million wet metric
tons of Nickel Laterite Ore within a period of 3 years.
Chanqe of financial year from fiscal to calendar vear
On March 2 201 1 , the SEC approved lhe Parent Company's application for lhe change of
financial vear from fiscalvear June 30 to