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SEMIRARA HISTORY

Semirara Mining Corporation is the only large-scale coal producer in the Philippines and is engaged in surface open cut mining of thermal coal from its Panian mine on Semirara Island, in the Antique Province. Semirara Island covers an area of 55 square kilometers and is located 350 km south of Manila.

On 11 July 1977, the Government through its former Energy Development Board, now the Department of Energy (DOE), awarded a 35-year coal operating contract to a consortium formed by three private companies. On incorporation of the Company, these companies subscribed equally to the Shares and, in exchange for the Shares, they assigned the Coal Operating Contract to the Company, which was then known as Semirara Coal Corporation. As a result of their financial difficulties, two of the three initial shareholders transferred their Shares, which had been provided as security for loans from Government financial institutions, to the National Development Corporation (NDC) after the lenders had foreclosed on the loans. In order to obtain control of the Company, NDC bought the Shares of the third initial shareholder to obtain a 95% interest in the Company. The Coal Operating Contract, which was amended by an agreement dated 8 June 1983, gives the Company the exclusive right to conduct exploration, development and coal mining operations on Semirara Island until 2012. The DOE has stated that the Company may apply for extension or renewal of the Coal Operating Contract one year before its expiry date. In return for the mining rights granted to the Company, the Government is entitled to receive annual royalty payments calculated on the basis of gross revenues less allowable expenses. The DOE is entitled to receive 30% of the resulting amount, or a minimum of 3% of gross revenue. Coal resources were initially discovered at two sites on Semirara Island, at Unong and Panian, with the Himalian resource remaining undiscovered until 1981. The development and opening of the first mine at Unong was a turnkey project contracted and funded through a credit facility provided by Voest Alpine, an Austrian state-owned

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company. All internationally sourced equipment and services were financed by the credit facility which was denominated in Austrian schillings. The Company had earlier entered into a coal supply agreement with the Government-owned National Power Corporation to provide coal to its Calaca plant and the CSA was used as collateral for the credit facility. Production at the Unong mine commenced in early 1984 with final acceptance of the project by the Company occurring in 1987 following the resolution of technical issues raised by the Company. The settlement with Voest Alpine included a restructuring of the terms of the loans provided under the facility. However, due largely to lower than anticipated coal prices and an increase in borrowing costs due to the depreciation of the Peso against the Austrian schilling, the Company incurred significant losses. The Company negotiated a second restructuring of the terms of the loans and Voest Alpine also agreed to a partial debt to equity conversion which gave it a 40% interest in the Shares. In February 1997, DMCI Holdings, Inc. (DMCI-HI), a PSE-listed holding company for construction and other businesses in the Philippines, purchased Voest Alpines 40% interest in the Shares, together with outstanding loans made by Voest Alpine to the Company amounting to P2.5 billion. A new management team consisting of local and expatriate staff was installed by DMCI-HI in August 1999 and operated at the Unong mine until it became uneconomical to continue mining the remaining coal reserves. In January 2000, as the Unong mine approached the end of its economic life, the Company closed the operation after 17 years of extraction, and proceeded with the development of the new Panian mine. Mining operations commenced at Panian in the third quarter of 1999 when the Environmental Clearance Certificate was obtained. The Company had employed a continuous mining system at Unong that relied on bucketwheel excavators supported by smaller equipment. However, a conventional mining system using trucks and shovels was employed at Panian. Given the suitability of this mining technique to the Panian mining conditions, the mining operations have proved to be more flexible and cost efficient for the Company. The bucketwheel excavators used at Unong are

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now used only in reclamation operations in the Panian stockyard. In 1999, the new management also installed a coal washing plant which improved the coal quality through a lower ash content and consequently demand for the Companys coal increased. Following further financial difficulties experienced by the Company, DMCIHI agreed to a debt to equity conversion in 1998, which gave it a total interest in the Company of 74%. The Company has consequently undergone a capital restructuring in 2004, pursuant to which it canceled P1,625.9 million of its outstanding share capital in order to eliminate an accumulated deficit of that amount which had accrued as a result of losses in previous years. In addition, in July 2004 the Company issued 19,657,388 Shares to DMCI-HI, taking its shareholding to the current 94.5%, and on 3 December 2004, the Company issued a stock dividend of P225 million consisting of 225 million Shares in favor of all holders of record as at 25 November 2004. In 4 February 2005, the Company etched a new milestone in its history when it successfully culminated an international public offering. This event reactivated the trading of Semirara stocks at the Philippine Stock Exchange under the ticker symbol SCC. The exercise generated P1.6 billion for the Company, providing sufficient liquidity to fully pay its restructured local and foreign debts and update trade accounts and royalties to the DOE. In addition, it enabled the Company to pay the required down payments for new mining equipment programmed for its modernization and expansion to augment production capacity. As a result of the Offering and the Domestic Placement, DMCI-HI reduced its shareholding to approximately 60.0%. The Company has significant resources and reserves which supply a growing demand for coal. As at 30 June 2004, the Companys in-situ coal resources at the Panian and Himalian sites were estimated at 210 million tones and 120 million tonnes, respectively. The estimated recoverable coal reserves at the Panian mine of 52.1 million tones are sufficient to support the Companys target coal production rates for at least 10 years. The Companys reserve estimates have been independently reviewed by Minarco Asia Pacific Pty Limited.

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Consequently, in 2006 Australian consultants supervised additional confirmatory drilling activities in the Panian Pit in accordance with the Joint Ore Reserve Committee (JORC) standards of Australia (an internationally recognized body for establishing mineable reserves). As at 31 December 2006, 62 million MTs of coal were classified as measured and confirmed, while additional 24.5 million MTs and 6 million MTs were categorized as indicated and inferred, respectively. The Compan ys coal is characterized as sub-bituminous-B and is appropriate for use in a wide range of combustion facilities.

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CORPORATE GOVERNANCE
Semirara Mining Corporation is committed to the principles and leading practices of good corporate governance that promote higher standards of accountability and transparency, provide effective oversight of the Companys business, and enhance shareholder value. The Board of Directors and Management support this continuing commitment in the performance of their fiduciary responsibilities and day-to-day operations. The Board The Board of Directors (Board) is responsible for the overall corporate governance of the Company. It establishes key policies, provides strategic guidelines and ensures adequate control mechanisms are in place to manage and conduct the affairs of the Company. The Boards other mission is to maintain a sense of responsibility to the Companys customers, employees, suppliers and the communities in which it operates. Environment Environmental stewardship and social responsibility are core values of the Company. The Philippine coal industry is subject to stringent regulations of the Philippine governments Department of Environment and Natural Resources (DENR). The Company is compliant with the conditionalities of its Environmental Compliance Certificate issued by the DENR relative to the development and opening of its Panian coal mine, and the closing and rehabilitation of its old mine. A Multi-Partite Monitoring Team (MMT) comprised of various government sector representatives and surrounding stakeholders, oversees the Companys compliance with the ECC conditions and all other applicable laws, rules

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and regulations. Consequently, the MMT issues a Compliance Monitoring and Verification Report on a quarterly basis. Safety Safety is a core value of the Company. It defines the Companys culture as a responsible energy company. The Company adopts the Australian standards and best practices in open-pit coal mining operation. It strictly adheres to safety procedures, health and safety standards and worker education and training which have resulted to reduced accidents and injury events. The Company is compliant with the regulatory and reporting requirements of various Philippine government agencies tasked to oversee health and safety, among others. Good Governance Program The Companys good governance initiatives aim to foster a culture of compliance, performance, transparency and accountability within the organization and to enhance shareholder value. Recognition Semirara Mining Corporation was among the Top 20 Philippine Listed Companies which scored highly in the SECs 2007 Corporate Governance Scorecard Project jointly conducted with the Institute of Corporate Directors. This affirms the Companys significant progress in its overall corporate governance framework through the adoption of global Code of Conduct Full Business Interest Disclosure Governance Training and Continuing Education

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best practices promoting higher standards of performance, transparency and accountability to all stakeholders.

Shareholder Rights And Relations Semirara Mining Corporation promotes a good governance culture of transparency and equal respect of shareholders rights embodied in its Amended Manual on Corporate Governance. It maintains a share structure that gives all shares equal voting rights. To sustain investor confidence, the Company maintains a policy of open and constant communication and disclosure of its activities, subject to insider information guidelines. It engages in conference calls and/or meets with institutional and prospective investors, analysts and the financial community, as appropriate. Corporate information is communicated to shareholders by timely and adequate disclosures to the SEC and Philippine Stock Exchange.

Website The Companys organization structure, performance and significant


corporate information, including disclosures may be viewed at the Companys website, www.semiraramining.com.

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MISSION / VISION
Coal Towards an Energy-Sufficient Philippines

In its quest to promote the use of coal as a major energy source, Semirara Mining Corporation will endeavor to be the undisputed leader in the coal mining industry in the Philippines:

Playing a vital role in the energy sector and working in harmony with the government to promote the use of coal Supplying its customers with quality coal that meets their stringent specification Providing reasonable economic returns to its investors and business partners Empowering its employees to prosper in a climate of integrity and excellence Working in partnership with its host communities to uplift their economic and social status while engaging in the judicious use and rational conservation of the countrys natural resources

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EXECUTIVE TEAM Chairman of the Board


He is a graduate of B.S. Civil Engineering at the University of the Philippines. He is currently the Chairman of the DAVID M. CONSUNJI Board of D.M. Consunji, Inc., Dacon Corporation, DMCI Holdings, Inc., Semirara Cement Corp., SEM-Calaca Power Corporation, Southwest Luzon Power Generation Corporation, and a director of Atlantic Gulf & Pacific Co., Inc. He was the former Secretary of the Department of Public Works, Transportation and Communications from August 23, 1971 to 1975, President of the Philippine Contractors Association, President of International Federation of Asian & Western Pacific Contractors Association, President of Philippine Institute of Civil Engineers, Vice-President of the Confederation of International Contractors Association. He also served as the Chairman of the Contractors Association, the Philippine Domestic Construction Board, the Philippine Overseas Construction Board, and the U.P. Engineering Research and Development Foundation, Inc.

Vice-Chairman of the Board


Chief executive officer Chairman of the Nomination & Election Committee , He is a graduate of B.S. ISIDRO R. CONSUJI

Civil Engineering at the University of the Philippines. He holds a Masters Degree in Business Economics from the Center for Research & Communication, and Business Management from the Asian Institute of Management. He also took an Advanced Management from IESE School in Barcelona, Spain. He is currently the CEO of SEM-Calaca Power Corporation and CEO of Southwest Luzon Power Generation Corporation. He is also the Chairman and CEO of DMCI Mining Corporation, and Vice-

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Chairman of DMCI Masbate Power Corporation. He is a Director of Dacon Corporation, M&S Company Inc., DMCI Projects Developers, Inc., Crown Equities, Inc., Semirara Cement Corporation, Universal Rightfield Property Holdings, Inc., and Maynilad Water Services. He is also the President of DMCI Holdings, Inc. He was the former President of the Philippine Constructors Association and Philippine Chamber of Coal Mines, Inc.

Chief Operating Officer, President


Audit Committee, member He is a graduate of A.B. Political Science at the Ateneo de Davao. He is currently the President and COO of SEMCalaca Power Corporation and Southwest Luzon Power Generation Corporation; Chairman, President & CEO of Semirara Training Center, Inc.; Chairman and CEO of DMCI Power Corporation; Chairman & President of Sirawai Plywood & Lumber Corp.; Chairman of One Network Bank and Divine Word School of Semirara Island, Inc.; President of Sirawai Plywood & Lumber Corp.; and Vice-President of Dacon Corporation. He is also a Director of D.M. Consunji, Inc., M&S Company, Inc., Dacon Corporation, Sodaco Agricultural Corporation, DMC Urban Property Developers, Inc., Ecoland Properties, Inc., DMCI Masbate Power Corporation, and DMCI Mining Corporation.

VICTOR A. CONSUNJI

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Chairman of Audit Committee


Independent Director Compensation and renumeration; Nomination & Election,member He is a VICTOR C. MACALINCAG

holder of a Bachelor of Business Administration (BBA) degree from the University of the East and a Certified Public Accountant (CPA). He completed his academic requirements for a Masteral Degree in Economics and is a fellow of the Economic Development Institute of the World Bank. Currently, he is an Independent Director of Ceres Property Ventures, Inc., Crown Equities, Inc., Republic Glass Holdings, Inc., and SEM-Calaca Power Corporation. He was formerly the Undersecretary of Finance from 1986 to 1991, Deputy Minister of Finance from 1981 to 1986, Treasurer of the Philippines from 1983 to 1987, President of Trade & Investment Development Corporation of the Philippines (PHILEXIM) from 1991 to 2001. He was also a director of the Home Guarantee Corporation from 1979 to 2001, the Philippine Overseas Construction Board from 1991 to 2001, the Philippine Long Distance Telephone Company from 1988 to 1995, the National Power Corporation from 1978 to 1986, Universal LRT-7 Corporation from 2003 to 2010, and Philippine Deposit Insurance Corporation from 1983 to 1991. He was Chairman of the Pilipinas Bank from 1984 to 1988 and Executive Vice-President of Land Bank of the Philippines from 1981 to 1982. He was also a director of Philippine Aerotransport, Inc., Paper Industries Corporation of the Philippines, Lumang Bayan Realty Corporation, and Manila Midtown Development Corporation.

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Vice President for Operation


Resident Manager

GEORGE C. SAN PEDRO

He is a graduate of B.S. Civil Engineering at University of the Philippines. He used to work for D.M. Consunji, Inc.,

Dacon Wood Based Companies, DMCCERI, and CONBROS Shipping Corporation. Currently, he is the President of Divine Word School of Semirara Island, Inc. and VicePresident of Semirara Training Center, Inc.

Vice-President for Administration


Chaiman of the Renumeration and Compensation Committee Compliance Officer She is a MA. CRISTINA C. GOTIANUM

graduate of B.S. Business Economics at the University of the Philippines and majored in Spanish at the Instituto de Cultura Hispanica in Madrid, Spain. She is currently a Director and Corporate Secretary of Dacon Corporation and Vice-President for Finance & Administration/CFO of D.M. Consunji, Inc. She is the Finance Director of DMC-Project Developers, Inc., and Director and Treasurer of SEMCalaca Power Corporation, Southwest Luzon Power Generation Corporation, DMCI Power Corporation, and DMCI Masbate Power Corporation. She is also the Assistant Treasurer of DMCI Holdings, Inc. and a Trustee, CFO and Corporate Secretary of Divine Word School of Semirara Island, Inc.

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Director
He is a graduate of B.S. Industrial Management Engineering at the De La Salle University. He is currently the Chairman of DMCI Masbate Power Corporation, and Director of DMCI JORGE A. CONSUJI Holdings, Inc., Dacon Corporation, DMCI Project Developers, Inc., SEM-Calaca Power Corporation, Southwest Luzon Power Generation Corporation, Cotabato Timberland Co., Inc., M&S Company, Inc., Sodaco Agricultural Corporation, DMCI Mining Corporation, DMCI Power Corporation, EcoProcess & Equipment Phils. Inc., and Maynilad Water Services, Inc. He is also the President & COO of D.M. Consunji, Inc., and Royal Star Aviation, Inc.; and VicePresident of Divine Word School of Semirara Island, Inc. He was the former Chairman of the Board of Contech Panel Mfg., Inc., and of Wire Rope Corp. of the Philippines. He was the former President of ACEL and Former First Vice-President of Phil. Constructors Association.

Director
He graduated from the University of the Philippines with a degree of Bachelor of CESAR A. BUENAVENTURA Science in Civil Engineering. He received his M.S. Civil Engineering as Fulbright Scholar at the Lehigh University, Bethlehem, Pennsylvania. In 1991, Mr. Buenaventura was made Honorary Officer of the Order of the British Empire (OBE) by Her Majesty Queen Elizabeth II. He is currently the Chairman of Maibarara Geothermal, Inc., and Vice-Chairman of Atlantic Gulf & Pacific Company of Manila (AG&P), DMCI Holdings, Inc., and Montecito Properties, Inc. He is a director of DMCI Holdings, Inc., iPeople, Inc., PetroEnergy Resources Corp, AG&P Company of Manila, Maibarara Geothermal, Inc., Montecito Properties, Inc., Pilipinas Shell Petroleum Corporation, Philippine American Life Insurance Company, and Manila International Airport Authority. He is the founding Chairman of

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Pilipinas Shell Foundation, Inc., and founding member of the Board of Trustees of the Makati Business Club. His former affiliations are: President of the Benigno S. Aquino Foundation; Member of the Board of Trustees of Asian Institute of Management; Chief Executive Officer of Shell Group of Companies; Member of the Monetary Board of the Central Bank of the Philippines; Member of the Board of Directors of the Philippine International Convention Center; Member of the Board of Regents of the University of the Philippines. He was also a former director of Ayala Corporation, First Philippine Holdings Corporation, Philippine Airlines, Philippine National Bank, Benguet Corporation, Asian Bank, Ma. Cristina Chemical Industries, and Paysetter International Inc.

Director
Compensation and Renumeration, member He earned his degree of Bachelor of Science in Commerce HERBERT M. CONSUJI Major in Accounting at De La Salle University. Currently, he is the Chairman, Subic Water & Sewerage Corp.; CFO,

Maynilad Water Services, Inc.; Vice-President & CFO, DMCI Holdings, Inc.; and Partner, H.F. Consunji & Associate. He is also a director of DMCI Holdings, Inc., DMCI Project Developers, Inc., DMCI Power Corporation, DMCI Mining Corporation, SEM-Calaca Power Corp., Southwest Luzon Power Generation Corporation, Maynilad Water Services, Inc. and Subic Water & Sewerage Corp.

Independent Director
Audit and Nomination &Election Committees, member He is a graduate of B.S. Civil FEDERICO E. PUNO

Engineering at the University of the Philippines. He took up his M.S. Industrial Administration at the Carnegie Mellon University, Pittsburgh, USA. He is President and Chief Executive Officer of Team Energy Corporation.

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He is also the Chairman of San Roque Power Corporation and ACI Philippines, Inc. Currently, he is a director of Republic Glass Holdings, Corp., Pampanga Sugar Development Corp., San Fernando Light & Power Company, and Lima Utilities. He was a Director of the Manila Electric Company, RGC Marine and Transport Corp., Nobel Philippines, Inc., Philippine National Oil Co. & Petrophil Corp., Luzon Stevedoring Corp., Philippine Resource Helicopters Inc., Philippine Dockyard Corp., and Union Savings Bank. He was also the President of National Power Corporation, San Roque Power Corp., Republic-Asahi Glass Corp., and Republic Glass Holdings, Corp.; Chief Financial and Management Services of the Ministry of Energy, Assistant Treasurer of the Ministry of Finance, and Ministry Energy Representative of the National Electrification Administration.

Director
She is a graduate of B.S. Architecture at the University of the Philippines. She also took her Masters Degree in Business MA. EDWINA C. LAPERAL Administration in the same University. She is currently the Director and Treasurer of DMCI Holdings, Inc., and DMCI Project Developers, Inc.; Director of SEM-Calaca Power Corporation; Treasurer of Dacon Corporation and DMC Urban Property Developers, Inc.; and D.M. Consunji, Inc.

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OTHER OFFICERS

GEORGE B. BAQUIRAN

VP for Special Projects

He is a graduate of B.S. Geology and also a holder of a Masters Degree in Geology at the University of the Philippines. He has held the position of Vice- President for Energy Exploration from June 1979 to January 1982; AVP, Exploration from April 1979 to June 1979; Manager, Exploration from February 1977 to March 1979 in Vulcan Industries and Mining Corporation.

JAIME B. GARCIA

VP for Procurement and Logistiscs

He is a graduate of B.S. Management and Industrial Engineering at Mapua Institute of Technology. He took also his Masters in Business Administration at De La Salle University in 1994 and Masters in Business Economics at the University of Asia & the Pacific in 1998. He is currently holding the position of Director of Royal Star Aviation, Inc., and Semirara Cement Corporation, Senior Manager-Purchasing of M&S Company, Inc., and DMC Construction Equipment Resources, Inc. He is an Industrial Engineer by profession.

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JUNALINA S. TABOR

Chief Finance Officer

She graduated with a degree of Bachelor in Science in Commerce, Major in Accounting at Saint Joseph College and is a Certified Public Accountant. She took her Masters in Public Administration at the University of the Philippines in 1993. Prior to joining the Company in 1997, she was the State Auditor I, II, & III of the Commission on Audit from 1993 to 1997, respectively.

DENARDO M. CUAYO

VPfor Business Development

He graduated with a degree of BS Electrical Engineering at the University of the Philippines in 1986 and placed 11th at the 1987 Electrical Engineering Board Examations. Prior to joining the Company, he was the Business Development Consultant of DMCI Power Corporation; Asst. Vice-President & Manager, Special Projects of San Miguel Corporation; and Cadet Engineer of Manila Electric Company.

JOHN R. SADULLO

Corporate Secretary
Legal Counsel

He is a graduate of A.B. Major in Political Science at the University of Santo Tomas. He is a holder of a Bachelor of Laws Degree at the San Beda College of Law, took the BAR exam in 1996 and was admitted in 1997. He currently holds the position of Corporate Secretary of SEMCalaca Power Corporation, and Southwest Luzon Power Generation Corporation. He is also the Assistant Corporate Secretary of Semirara Training Center, Inc. and previously the Corporate Secretary of DMCI Mining Corporation, DMCI Masbate Power Corporation, and DMCI Concepcion Power Corporation.

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CONSOLIDATED FINANCIAL STATEMENTS


SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
2009 ASSETS Current Assets Cash and cash equivalents Receivables Inventories Other current assets Total Current Assets Noncurrent Assets Property, plant and equipment Investment and advances Pension Assets Deferred tax assets Other noncurrent assets Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Trade and other payables Short-term loans Current portion of Long-term debt Total Current Liabilities Noncurrent Liabilities Long-term debt - net of current portion Deferred tax liabilities Provision for decommissioning Pension liability Total Noncurrent Liabilities Total Liabilities EQUITY Capital stock Additional Paid-in capital Deposit for future stock subscriptions Retained Earnings Unappropriated Appropriated Cost of shares held in treasury Total Equity TOTAL LIABILITIES AND EQUITY 2,857,535,375 793,191,385 1,865,789,967 5,516,516,727 8,364,484,229 72,056,929 14,773,138 12,935,734 8,464,250,030 13,980,766,757 296,875,000 1,576,796,271 5,402,125,985 2,400,238,695 700,000,000 (528,891,260) 9,847,144,691 23,827,911,448 5,349,426,374 449,845,179 1,132,896,820 6,932,168,373 11,159,821,454 28,087,305 14,732,350 19,996,748 11,222,637,857 18,154,806,230 356,250,000 6,675,527,411 0 4,608,125,771 700,000,000 0 12,339,903,182 30,494,709,412 7,299,028,784 1,010,692,002 2,992,660,795 11,302,381,581 9,469,150,099 565,481 47,582,228 0 9,517,297,808 20,819,679,389 356,250,000 6,675,527,411 0 7,076,762,346 700,000,000 0 14,808,539,757 35,628,219,146 481,920,935 1,254,095,120 3,084,879,380 759,885,070 5,580,780,505 17,818,687,301 244,432,588 0 0 184,011,054 18,247,130,943 23,827,911,448 3,813,283,517 3,183,300,192 2,356,684,774 912,018,769 10,265,287,252 19,582,414,736 310,229,558 0 0 336,777,866 20,229,422,160 30,494,709,412 5,005,240,275 3,215,781,247 4,592,835,539 1,310,428,666 14,124,285,727 20,737,333,275 490,789,157 1,021,507 17,409,006 257,380,474 21,503,933,419 35,628,219,146 December 31 2010 2011

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SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


Year Ended December 31 2009 REVENUE Coal Power 11,500,192,811 443,492,763 11,943,685,574 COST OF SALES Coal Power 8,928,346,706 419,708,530 9,348,055,236 GROSS PROFIT OPERATING EXPENSES INCOME FROM OPERATIONS OTHER INCOME (CHARGES) Finance costs Finance income Foreign exchange gains (losses) - net Equity in net earnings (losses) of associates Other income (112,192,664) 52,752,896 47,703,017 (39,349,171) 107,935,222 56,849,300 INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred 5,362,577 57,931,775 63,294,352 NET INCOME OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME 1,845,984,707 0 1,845,984,707 8,808,092 (43,969,623) (35,161,531) 3,952,708,257 0 3,952,708,257 22,761,546 (44,930,831) (22,169,285) 6,031,136,575 0 6,031,136,575 1,909,279,059 (668,440,816) 57,667,764 199,487,633 76,825,789 65,427,012 (269,032,618) 3,917,546,726 (483,287,781) 134,876,680 (38,318,119) 0 99,905,297 (286,823,923) 6,008,967,290 2,595,630,338 (743,200,579) 1,852,429,759 10,222,626,729 5,767,407,484 15,990,034,213 6,907,814,262 (2,721,234,918) 4,186,579,344 10,263,535,800 6,397,083,662 16,660,619,462 9,152,965,327 (2,857,174,114) 6,295,791,213 14,242,224,629 8,655,623,846 22,897,848,475 16,201,880,411 9,611,704,378 25,813,584,789 2010 2011

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SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Year Ended December 31 2009 Common Stock Beginning Balance Additional Subscription through stock rights offering Common Stock, Ending Balance Additional Paid-in Capital Beginning Balance Reissuance of treasury shares Additional Subscription through stock rights offering Additional Paid-in Capital, Ending Balance Deposit on Future Stock Subscriptions Beginning Balance Reissuance of treasury shares Additional Subscription through stock rights offering Deposit on future stock subscriptions Deposit on Future Stock Subscriptions, Ending Balance Unappropriated Retained Earnings Beginning Balance Total comprehensive income Dividends declared Unappropriated Retained Earnings, Ending Balance Appropriated Retained Earnings Beginning Balance Appropriated Retained Earnings, Ending Balance Cost of Shares Held in Treasury Beginning Balance Reissuance of treasury shares Cost of Shares Held in Treasury, Ending Balance Total Ending Balance (528,891,260) 0 (528,891,260) 9,883,573,510 (528,891,260) 528,891,260 0 12,339,903,182 0 0 0 14,808,539,757 700,000,000 700,000,000 700,000,000 700,000,000 700,000,000 700,000,000 2,256,119,235 1,845,984,707 (1,665,436,428) 2,436,667,514 2,436,667,514 3,952,708,257 (1,781,250,000) 4,608,125,771 4,608,125,771 6,031,136,575 (3,562,500,000) 7,076,762,346 0 0 0 5,402,125,985 5,402,125,985 0 5,402,125,985 (1,293,247,400) (4,108,878,585) 0 0 0 0 0 1,576,796,271 0 0 1,576,796,271 1,576,796,271 764,356,140 4,334,375,000 6,675,527,411 6,675,527,411 0 0 6,675,527,411 296,875,000 0 296,875,000 296,875,000 59,375,000 356,250,000 356,250,000 0 356,250,000 2010 2011

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SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS


Year Ended December 31 2009 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization Finance costs Finance income Gain on sale of equipment Net unrealized foreign exchange losses (gains) Pension expense Provision for doubtful accounts Provision for impairment loss Equity in net (earnings) losses of associates Gain on sale of investment Negative goodwill Operating income before changes in working capital Changes in operating assets and liabilities Decrease (increase) in: Receivables Inventories Other current assets Increase in trade and other payables Cash generated from operations Interest received Interest paid Income taxes paid Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment Proceeds from sale of investment Additions to investments and advances Retirement fund contribution Decrease in other noncurrent assets Proceeds from sale of equipment Advance rental paid Acquisition of a business Net cash used in investing activities (2,853,983,593) 0 (60,550,001) 0 574,928,409 762,961,381 (150,568,000) (7,104,375,497) (8,831,587,301) (3,007,368,967) 327,086,632 (310,229,558) 0 13,203,852 53,000,798 0 (10,021,631,926) (12,945,939,169) (2,454,376,480) 0 (180,559,599) (28,464,526) 49,709,618 56,175,636 0 0 (2,557,515,351) 524,955,210 (629,152,442) (688,178,267) 1,561,087,211 3,702,099,983 86,501,617 (56,051,307) (63,423,038) 3,669,127,255 (1,947,398,569) 73,701,971 (337,872,065) 2,740,870,039 7,493,724,919 91,726,741 (852,363,965) (8,071,333) 6,725,016,362 (78,157,570) (3,704,727,490) (697,662,177) 2,205,941,337 6,989,226,108 134,757,554 (457,767,190) (22,761,547) 6,643,454,925 1,104,933,707 112,192,664 (52,752,896) (40,205,597) (168,563,289) 4,447,869 0 40,374,335 39,349,171 0 (15,666,752) 2,933,388,271 2,566,427,137 668,440,816 (57,667,764) (6,088,124) (67,308,294) 7,532,422 53,744,668 0 (76,825,789) (41,378,255) 0 6,964,423,543 2,909,610,888 483,287,781 (134,876,680) (53,547,507) 37,939,453 7,446,271 5,004,512 0 0 0 0 9,263,832,008 1,909,279,059 3,917,546,726 6,008,967,290 2010 2011

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CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from: Availments of: Long-term debt Short-term loans Notes payable Additional issuance of capital stocks Sale of shares held in treasury Payments of: Dividends Long-term debt Short-term loans Deposit on future stock subscriptions Net cash (used in) provided by financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (530,488,227) 1,012,409,162 481,920,935 3,331,362,582 481,920,935 3,813,283,517 1,191,956,758 3,813,283,517 5,005,240,275 (3,010,347) 1,880,000 7,652,845 (1,665,436,428) (1,469,859,178) 0 5,402,125,985 4,634,982,166 (1,781,250,000) (113,195,951) (3,665,439,966) (5,402,125,985) 9,550,405,389 (3,562,500,000) (2,789,633,990) (1,445,313,429) 0 (2,901,635,661) 1,626,006,970 0 742,144,817 0 0 11,554,776,302 3,270,643,589 0 4,393,750,000 1,293,247,400 2,884,618,498 2,011,193,260 0 0 0

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FINANCIAL STATEMENT ANALYSIS


SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, INCREASE (DECREASE) METHOD December 31 2010 ASSETS Current Assets Cash and cash equivalents Receivables Inventories Other current assets Total Current Assets Noncurrent Assets Property, plant and equipment Investment and advances Pension Assets Deferred tax assets Other noncurrent assets Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Trade and other payables Short-term loans Current portion of Long-term debt Total Current Liabilities Noncurrent Liabilities Long-term debt - net of current portion Deferred tax liabilities Provision for decommissioning Pension liability Total Noncurrent Liabilities Total Liabilities EQUITY Capital stock Additional Paid-in capital Retained Earnings Unappropriated Appropriated Total Equity TOTAL LIABILITIES AND EQUITY 4,608,125,771 700,000,000 12,339,903,182 30,494,709,412 7,076,762,346 700,000,000 14,808,539,757 35,628,219,146 2,468,636,575 0 2,468,636,575 5,133,509,734 53.57 0 20.01 16.83 356,250,000 6,675,527,411 356,250,000 6,675,527,411 0 0 0 0 11,159,821,454 28,087,305 14,732,350 19,996,748 11,222,637,857 18,154,806,230 9,469,150,099 565,481 47,582,228 0 9,517,297,808 20,819,679,389 (1,690,671,355) (27,521,824) 32,849,878 (19,996,748) (1,705,340,049) 2,664,873,159 (15.15) (97.99) 222.98 (100.00) (15.20) 14.68 5,349,426,374 449,845,179 1,132,896,820 6,932,168,373 7,299,028,784 1,010,692,002 2,992,660,795 11,302,381,581 1,949,602,410 560,846,823 1,859,763,975 4,370,213,208 36.45 124.68 164.16 63.04 19,582,414,736 310,229,558 0 0 336,777,866 20,229,422,160 30,494,709,412 20,737,333,275 490,789,157 1,021,507 17,409,006 257,380,474 21,503,933,419 35,628,219,146 1,154,918,539 180,559,599 1,021,507 17,409,006 (79,397,392) 1,274,511,259 5,133,509,734 5.90 58.20 100.00 100.00 (23.58) 6.30 16.83 3,813,283,517 3,183,300,192 2,356,684,774 912,018,769 10,265,287,252 5,005,240,275 3,215,781,247 4,592,835,539 1,310,428,666 14,124,285,727 1,191,956,758 32,481,055 2,236,150,765 398,409,897 3,858,998,475 31.26 1.02 94.89 43.68 37.59 2011 Increase (Decrease) % Increase (Decrease)

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SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, INCREASE (DECREASE) METHOD
Year Ended December 31 2010 REVENUE Coal Power 14,242,224,629 8,655,623,846 22,897,848,475 COST OF SALES Coal Power 10,222,626,729 5,767,407,484 15,990,034,213 GROSS PROFIT OPERATING EXPENSES INCOME FROM OPERATIONS OTHER INCOME (CHARGES) Finance costs Finance income Foreign exchange gains (losses) - net Equity in net earnings (losses) of associates Other income (668,440,816) 57,667,764 199,487,633 76,825,789 65,427,012 (269,032,618) INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred 8,808,092 (43,969,623) (35,161,531) NET INCOME OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME 3,952,708,257 0 3,952,708,257 22,761,546 (44,930,831) (22,169,285) 6,031,136,575 0 6,031,136,575 13,953,454 (961,208) 12,992,246 2,078,428,318 0 2,078,428,318 158.42 2.19 (36.95) 52.58 0 52.58 3,917,546,726 99,905,297 (286,823,923) 6,008,967,290 (483,287,781) 134,876,680 (38,318,119) 185,153,035 77,208,916 (237,805,752) (76,825,789) 34,478,285 (17,791,305) 2,091,420,564 (27.70) 133.89 (119.21) (100.00) 52.70 6.61 53.39 6,907,814,262 (2,721,234,918) 4,186,579,344 10,263,535,800 6,397,083,662 16,660,619,462 9,152,965,327 (2,857,174,114) 6,295,791,213 40,909,071 629,676,178 670,585,249 2,245,151,065 (135,939,196) 2,109,211,869 0.40 10.92 4.19 32.50 5.00 50.38 16,201,880,411 9,611,704,378 25,813,584,789 1,959,655,782 956,080,532 2,915,736,314 13.76 11.05 12.73 2011 Increase (Decrease) % Increase (Decrease)

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CURRENT ASSETS
6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 -

Cash and cash equivalents

Receivables

Inventories

Other current assets

2009

2010

2011

25,000,000,000 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 -

NONCURRENT ASSETS

Property, Investment plant and and equipment advances

Pension Assets

Deferred tax assets

Other noncurrent assets

2009

2010

2011

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TOTAL CURRENT ASSETS


2009
16,000,000,000 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 -

2010

2011

CURRENT ASSETS

TOTAL NONCURRENT ASSETS


2009
22,000,000,000 21,500,000,000 21,000,000,000 20,500,000,000 20,000,000,000 19,500,000,000 19,000,000,000 18,500,000,000 18,000,000,000 17,500,000,000 17,000,000,000 16,500,000,000

2010

2011

NONCURRENT ASSETS

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TOTAL ASSETS
2009
40,000,000,000 35,000,000,000 30,000,000,000 25,000,000,000 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 -

2010

2011

TOTAL ASSETS

TOTAL CURRENT LIABILITIES


2009
12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 -

2010

2011

CURRENT LIABILITIES

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TOTAL NONCURRENT LIABILITIES


2009
12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 -

2010

2011

NONCURRENT LIABILITIES

TOTAL LIABILITIES
2009 2010 2011

25,000,000,000 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 -

TOTAL LIABILITIES

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TOTAL EQUITY
2009
16,000,000,000 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 -

2010

2011

TOTAL EQUITY

NET SALES
2009
30,000,000,000 25,000,000,000 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 -

2010

2011

NET SALES

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COST OF SALES
2009
18,000,000,000 16,000,000,000 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 -

2010

2011

COST OF SALES

GROSS PROFIT
2009
10,000,000,000 9,000,000,000 8,000,000,000 7,000,000,000 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 -

2010

2011

GROSS PROFIT

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30

NET INCOME
2009
7,000,000,000 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 -

2010

2011

NET INCOME

CASH FLOWS
10,000,000,000

2009

2010

2011

5,000,000,000

Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities

(5,000,000,000)

(10,000,000,000)

(15,000,000,000)

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CASH AND CASH EQUIVALENTS


6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 -

2009

2010

2011

CASH AND CASH EQUIVALENTS

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32

Short-Term Solvency Analysis


The percentage increase in total current assets of 39.59% was lesser than the percentage increase in total current liabilities which is 63.04%. This shows that Semirara Mining Corporations liquidity has deteriorated by the extensive increase in total current assets by 3.859B and by 4.370B of its current liabilities. The substantial increase in total current liabilities is due to the recognition of a portion of the long-term debt as current and increase in short-term loans. This could bother short term creditors in extending credit to the company because Semirara might not meet its current obligations through the use of its current assets. Increase in cash and cash equivalents is due to the increase in cash from operating activities. This is favorable because it indicates that the company has improved working capital management. The increase in receivable of 1.02% and the increase in revenue of 12.37% may mean that management has extended more cash sales than credit sales or it could also indicate that there is fast receivable turnover which may be due to efficient credit and collection policies. This can be favorable since lesser amount of receivables means that the company has generated greater amount of cash from operating activities and opportunity cost is lessened. There is also an increase in inventories of 94.89% this could mean that the company became more productive during the 2011, that it had produced more inventories than in 2010. On the other hand, this great increase in inventories indicates that the inventories turnover is slow. This is unfavorable for it may mean that there is poor inventory planning and control. More inventories means there is increase in handling and spoilage costs. Moreover, too much money invested in inventories indicates more opportunity cost. The company must decrease the inventories through a better inventory planning and control such that handling and spoilage costs and opportunity cost could be avoided.

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About the solvency and liquidity of Semirara Mining Corporation as a whole, it has strong solvency and liquidity in 2010 compared in other years.

Long-Term Financial Position Analysis


Total equity increased by 20.01% which is higher than increase of total liabilities of 14.68%. This denotes that capital structure has shifted from debt financing to equity financing which means that a higher percentage of funds are provided by owners or generated by successful operations of the company during the year. This shift from debt to equity financing is favorable since strengthening of long-term financial position by the end of 2011 is evidenced by the lesser risk on capital structure due to lesser liability owing to creditors.

Operating Efficiency and Profitability Analysis


The increase in revenue in 2010 may be due to increase in unit volume or sales mix. Increase in revenue of 12.73% is greater than increase in cost of goods sold of 4.19%. This implies a favorable condition since this is a sign of efficient management of expenses and cost control. Return on sales increased which means that higher peso revenue was added to companys profit and fewer peso to cover Semiraras expenses. Net income has increased by 52.58% in 2011 which indicates that the current year is a more profitable year than the previous year after considering all revenues, gains, costs and expenses including interests and taxes.

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34

SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, TREND PERCENTAGES
December 31 2009 ASSETS Current Assets Cash and cash equivalents Receivables Inventories Other current assets Total Current Assets Noncurrent Assets Property, plant and equipment Investment and advances Pension Assets Deferred tax assets Other noncurrent assets Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Trade and other payables Short-term loans Current portion of Long-term debt Total Current Liabilities Noncurrent Liabilities Long-term debt - net of current portion Deferred tax liabilities Provision for decommissioning Pension liability Total Noncurrent Liabilities Total Liabilities 100.00 100.00 100.00 100.00 100.00 100.00 133.42 38.98 99.72 154.59 132.59 129.86 113.21 0.78 322.09 0 112.44 148.92 100.00 100.00 100.00 100.00 187.20 56.71 60.72 125.66 255.43 127.42 160.40 204.88 100.00 100.00 100.00 100.00 100.00 100.00 100.00 109.90 126.92 0 0 183.02 110.86 127.98 116.38 200.79 0 0 139.87 117.85 149.52 100.00 100.00 100.00 100.00 100.00 791.27 253.83 76.39 120.02 183.94 1,038.60 256.42 148.88 172.45 253.09 2010 2011

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EQUITY Capital stock Additional Paid-in capital Deposit for future stock subscriptions Retained Earnings Unappropriated Appropriated Cost of shares held in treasury Total Equity TOTAL LIABILITIES AND EQUITY 100.00 100.00 100.00 100.00 100.00 191.99 100.00 0 125.31 127.98 294.84 100.00 0 150.38 149.52 100.00 100.00 100.00 120.00 423.36 0 120.00 423.36 0

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36

SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, TREND PERCENTAGES
Year Ended December 31 2009 REVENUE Coal Power 100.00 100.00 100.00 COST OF SALES Coal Power 100.00 100.00 100.00 GROSS PROFIT OPERATING EXPENSES INCOME FROM OPERATIONS OTHER INCOME (CHARGES) Finance costs Finance income Foreign exchange gains (losses) - net Equity in net earnings (losses) of associates Other income 100.00 100.00 100.00 100.00 100.00 100.00 INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred 100.00 100.00 100.00 NET INCOME OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME 100.00 100.00 100.00 164.25 (75.90) (55.55) 214.12 100.00 214.12 424.45 (77.56) (35.03) 326.72 100.00 326.72 100.00 595.80 109.32 418.19 (195.24) 60.62 (473.24) 205.18 430.77 255.68 (80.33) 0 92.56 (504.53) 314.72 100.00 100.00 100.00 114.50 1,374.15 171.05 266.13 366.15 226.00 114.95 1,524.17 178.23 352.63 384.44 339.87 123.84 1,951.69 191.72 140.88 2,167.27 216.13 2010 2011

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TOTAL CURRENTS ASSET


1,200.00 1,000.00 800.00 600.00 400.00 200.00 2009 Cash and cash equivalents Inventories 2010 2011 Receivables Other current assets

TOTAL NONCURRENT ASSETS


250.00 200.00 150.00 100.00 50.00 2009 Property, plant and equipment Pension Assets Other noncurrent assets 2010 2011 Investment and advances Deferred tax assets

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TOTAL CURRENT LIABILITIES


300.00 250.00 200.00 150.00 100.00 50.00 2009 Trade and other payables 2010 Short-term loans 2011 Current portion of long-term debt

TOTAL NONCURRENT LIABILITIES


350.00 300.00 250.00 200.00 150.00 100.00 50.00 2009 2010 Long-term debt - net of current portion Provision for decommissioning 2011 Deferred tax liabilities Pension liability

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TOTAL CASH FLOWS


250.00 200.00 150.00 100.00 50.00 2009 (50.00) (100.00) Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities 2010 2011

TOTAL REVENUES, COST OF SALES AND GROSS PROFIT


500.00 400.00 300.00 200.00 100.00 2009 "Total Revenues" 2010 "Cost of Sales" 2011 "Gross Profit"

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NET INCOME
350.00 300.00 250.00 200.00 150.00 100.00 50.00 2009 2010 "Net Income" 2011

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Short-Term Solvency
In the three-year period, the current assets of Semirara Mining Company increased by 153% accompanied by a 105% increased in current liabilities. the present financial position of the company tend to be better in 2011 as reflected by the faster increase in current assets than in current liabilities. The favorable change in the financial position is also indicated by the fact that current assets were 1.01 times the current liabilities as of December 31, 2009 and 1.25 times in December 31, 2011. The trend reveals that cash, receivables and inventories had dramatically ascending percentages over the years. The upward tendencies are favorable to the company because sales increased at a fast rate. The favorable trending indicates that stronger credit position; and a more effective collection and merchandising or purchase policies could have been implemented.

Capital Structure and Long-term Solvency


The almost same increment in the trends of total liabilities and total equity was proven by the comparison. As a result, the margin of safety of creditors also increased. The analysis discloses that a greater reliance to equity funds than on borrowed funds is present. This increases the margin of safety of creditors and therefore strengthens the financial position of the company.

Operating Efficiency and Profitability


It is observed that both sales and cost of sales showed upward trends with sales increasing at a faster rate. These rates reflect a favorable situation because the company has a good managerial ability to control costs relative to the change in sales volume. The desirable change may have been a result of a better mark-up policy, a more efficient purchasing or a more improved way of controlling manufacturing costs.

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The overall favorable trading is reflected by the fact that the trend of net income consistently increased over the three-year period. However, management should still consider ways to reduce its high operating expenses because despite the fact that net income dramatically increased, a very high operating expenses can still be controlled to still have a better trend in net income.

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43

SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, VERTICAL ANALYSIS
December 31 2009 ASSETS Current Assets Cash and cash equivalents Receivables Inventories Other current assets Total Current Assets Noncurrent Assets Property, plant and equipment Investment and advances Pension Assets Deferred tax assets Other noncurrent assets Total Noncurrent Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Trade and other payables Short-term loans Current portion of Long-term debt Total Current Liabilities Noncurrent Liabilities Long-term debt - net of current portion Deferred tax liabilities Provision for decommissioning Pension liability Total Noncurrent Liabilities Total Liabilities 35.10 0.30 0.06 0.05 35.52 58.67 36.60 0.09 0.05 0.07 36.80 59.53 26.58 0.00 0.13 0 26.71 58.44 11.99 3.33 7.83 23.15 17.54 1.48 3.72 22.73 20.49 2.84 8.40 31.72 74.78 1.03 0 0 0.77 76.58 100.00 64.22 1.02 0 0 1.10 66.34 100.00 58.20 1.38 0.00 0.05 0.72 60.36 100.00 2.02 5.26 12.95 3.19 23.42 12.50 10.44 7.73 2.99 33.66 14.05 9.03 12.89 3.68 39.64 2010 2011

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EQUITY Capital stock Additional Paid-in capital Deposit for future stock subscriptions Retained Earnings Unappropriated Appropriated Cost of shares held in treasury Total Equity TOTAL LIABILITIES AND EQUITY 10.07 2.94 (2.22) 41.33 100.00 15.11 2.30 0 40.47 100.00 19.86 1.96 0 41.56 100.00 1.25 6.62 22.67 1.17 21.89 0 1.00 18.74 0

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45

SEMIRARA MINING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, VERTICAL ANALYSIS
Year Ended December 31 2009 REVENUE Coal Power 96.29 3.71 100.00 COST OF SALES Coal Power 74.75 3.51 78.27 GROSS PROFIT OPERATING EXPENSES INCOME FROM OPERATIONS OTHER INCOME (CHARGES) Finance costs Finance income Foreign exchange gains (losses) - net Equity in net earnings (losses) of associates Other income (0.94) 0.44 0.40 (0.33) 0.90 0.48 INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred 0.04 0.49 0.53 NET INCOME OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME 15.46 0 15.46 0.04 (0.19) (0.15) 17.26 0 17.26 0.09 (0.17) (0.09) 23.36 0 23.36 15.99 (2.92) 0.25 0.87 0.34 0.29 (1.17) 17.11 (1.87) 0.52 (0.15) 0 0.39 (1.11) 23.28 21.73 (6.22) 15.51 44.64 25.19 69.83 30.17 (11.88) 18.28 39.76 24.78 64.54 35.46 (11.07) 24.39 62.20 37.80 100.00 62.76 37.24 100.00 2010 2011

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Short-Term Solvency Analysis


Semirara's statement of financial position shows that there had been substantial changes in the proportions of current and non-current assets and current liabilities during the period from December 31, 2009 to December 31, 2011. The percentages show an increasing liquidity in the company's current assets but it was also accompanied by an increase in current liabilities over the three-year period. As a percentage of total assets, current assets increased by 39.64% and current liabilities only increased to 31.72% in 2011. The credit position of the company is still considered quite well because its current assets were 1.05 times its current liabilities in 2009, 1.48 in 2010, and 1.25 at the most recent date. However, the rule of thumb is that current assets must be twice as large as current liabilities. It can be observed that the cash and accounts receivable balances increased as a percentage of total assets from 2009 to 2011. On the other hand, investment in inventories decreased in 2010 but increased in 2011 (however, not reaching the level of percentage to total assets in 2009). Considering that the sales' volume was also increasing, these changes can be concluded as beneficial to the company.

Capital Structure and Long-Term Solvency


A comparison of the percentages in total liabilities and total equity reveals that the former declined a bit while the latter increased mildly. The greater percentage of total liabilities to total assets as compared to the percentage of total equity to total assets indicates that Semirara Mining Corp. has a greater reliance on borrowed funds than on equity funds. This, of course, is unfavorable as far as the long-term financial position of the company is concerned, because a lesser margin of safety is provided among creditors. This weakened the long-term financial position of the company.

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Operating Efficiency and Profitability


Favorable changes could be observed in the gross margin percentage in relation to net sales. This consistent increase over the years could be due to improvement in the company's mark-up policy, better procurement policy, or improved way of controlling manufacturing costs. Operating and other expenses in relation to sales consistently increased from 2009 to 2011, Semirara's management might consider as well to look into ways to control or reduce its operating and other expenses to further improve the profitability of the company. The overall favorable increase of the return on sales (net income over sales) indicates that the company is really a good earner of profits. This is good for the firm because it creates a good image or impression of the company which attracts potential investors.

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FINANCIAL RATIOS

LIQUIDITY RATIOS
2009 Current Ratio Quick Ratio Cash Ratio Cash Flow Ratio 1.01 0.45 0.09 0.67 2010 1.48 1.14 0.55 0.97 2011 1.25 0.84 0.44 0.59

Current Ratio
2009 Current Assets Cash and cash equivalents Receivables Inventories Other current assets Total Current Assets Total Current Liabilities Formula: Current Assets Current Liabilities 481,920,935 1,254,095,120 3,084,879,380 759,885,070 5,580,780,505 5,516,516,727 5,580,780,505 5,516,516,727 3,813,283,517 3,183,300,192 2,356,684,774 912,018,769 10,265,287,252 6,932,168,373 10,265,287,252 6,932,168,373 5,005,240,275 3,215,781,247 4,592,835,539 1,310,428,666 14,124,285,727 11,302,381,581 14,124,285,727 11,302,381,581 2010 2011

Current Ratio

1.01

1.48

1.25

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2009
Total Current Assets Total Current Liabilities

2010
Total Current Assets Total Current Liabilities

2011
Total Current Assets Total Current Liabilities

50% 50%

40% 60%

44% 56%

Semirara Mining Corporations current ratio improved from 2009 to 2010 but then deteriorated from 2010 to 2011. During 2009, the current ratio of 1.01 indicated that Semirara Mining Corporation had some difficulty in paying its current obligations as they mature. Hence, the firms liquidity by that time is generally low. However, the company is more liquid in 2010 compared with the other years as having in the current ratio of 1.48. This shows that the company had enough current assets to pay its current liabilities. In the end of 2011, the current ratio fell down from 1.48 to 1.25 due to the greater percentage of increase in current liabilities than the percentage of increase in current assets.

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Quick Ratio
2009 Quick Assets Cash and cash equivalents Receivables Other current assets Total Quick Assets 481,920,935 1,254,095,120 759,885,070 2,495,901,125 3,813,283,517 3,183,300,192 912,018,769 7,908,602,478 5,005,240,275 3,215,781,247 1,310,428,666 9,531,450,188 2010 2011

Total Current Liabilities

5,516,516,727

6,932,168,373

11,302,381,581

Formula:

Quick Assets___ Current Liabilities

2,495,901,125 5,516,516,727

7,908,602,478 6,932,168,373

9,531,450,188 11,302,381,581

Quick Ratio

0.45

1.14

0.84

2009
Total Quick Assets Total Current Liabilities

2010
Total Quick Assets Total Current Liabilities

2011
Total Quick Assets Total Current Liabilities

31% 47% 53% 69% 54% 46%

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The acid test or quick ratio is a more severe test of a firms immediate solvency. Inventories and prepaid expenses are excluded from its total current assets since inventory is not an immediate source of cash and may not even saleable in times of economic stress. It is generally felt that to be properly protected; each peso of currently maturing obligations should be backed by at least one (1) peso of quick assets. The quick ratio of Semirara Mining Corporation improved from 2009 to 2010 but then again, declined from 2010 to 2011but exceeding 2009 level. By the year-end of 2010, there had been an improvement in Semirara Mining Corporations immediate solvency as indicated by its quick asset ratio. With the increase in quick ratio, the company can meet its obligations without having to depend too heavily on its inventories. Obviously, the quick ratio in 2009 and 2011 shows the inability of the firm to pay its current obligations with the use of its liquid assets. This worsens the shortterm financial position of the company.

Cash Ratio
2009 Total Cash and Cash Equivalents Total Current Liabilities Formula: Cash Assets__ Current Liabilities 481,920,935 5,516,516,727 481,920,935 5,516,516,727 2010 3,813,283,517 6,932,168,373 3,813,283,517 6,932,168,373 2011 5,005,240,275 11,302,381,581 5,005,240,275 11,302,381,581

Cash Ratio

0.09

0.55

0.44

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2009
Total Cash and Cash Equivalents Total Current Liabilities

2010
Total Cash and Cash Equivalents Total Current Liabilities

2011
Total Cash and Cash Equivalents Total Current Liabilities

8% 35% 65% 92% 69% 31%

Cash ratio is a measure of the firms short term solvency using its cash and cash equivalents to cover its current liabilities. Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of changes in value and are free of any encumbrances. Semirara Mining Corporations cash ratio indicates that the company doesnt have enough cash and cash equivalents to pay its currently maturing obligations. This may be due to the greater percentage increase in current liabilities as compared to cash and cash equivalents. The cash ratio of 0.09 in 2009 increased to 0.55 in 2010 and then declined to 0.44 in 2011. Hence, the firms short term solvency in terms of cash assets is low as shown in the cash ratio.

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Cash Flow Ratio


2009 Total Operating Cash Flows Total Current Liabilities Formula: Operating Cash Flows__ Current Liabilities 3,669,127,255 5,516,516,727 3,669,127,255 5,516,516,727 2010 6,725,016,362 6,932,168,373 6,725,016,362 6,932,168,373 2011 6,643,454,925 11,302,381,581 6,643,454,925 11,302,381,581

Cash Flow Ratio

0.67

0.97

0.59

2009
Total Operating Cash Flows Total Current Liabilities

2010
Total Operating Cash Flows Total Current Liabilities

2011
Total Operating Cash Flows Total Current Liabilities

40% 60% 51%

49% 63%

37%

The cash flow ratio measures the short-term liquidity of a firm considering its cash flows from operations. The cash flow ratio of Semirara Corporation increased from 2009 to 2010 but then declined in 2011, landing to a lower ratio than in 2009. The decline in cash flow ratio is due to greater increase in current liabilities than the net cash flows from its operations.

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LEVERAGE RATIO
2009 Times Interest Earned Debt-Equity Ratio Debt Ratio Equity Ratio 18.02 1.42 0.59 0.41 2010 6.86 1.47 0.60 0.40 2011 13.43 1.41 0.58 0.42

Times Interest Earned Ratio


2009 Income Before Interests and Taxes Income before tax Finance Cost Total Income Before Interests and Taxes 1,909,279,059 112,192,664 2,021,471,723 3,917,546,726 668,440,816 4,585,987,542 6,008,967,290 483,287,781 6,492,255,071 2010 2011

Finance Cost

112,192,664

668,440,816

483,287,781

Formula:

Income Before Interests and Taxes Finance Cost

2,021,471,723 112,192,664

4,585,987,542 668,440,816

6,492,255,071 483,287,781

Times Interest Earned

18.02

6.86

13.43

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55

2009
Total Income Before Interests and Taxes Finance Cost 5%

2010
Total Income Before Interests and Taxes Finance Cost

2011
Total Income Before Interests and Taxes Finance Cost

13%

7%

95%

87%

93%

The times interest earned ratio measures the extent to which operating income can decline before the firm is unable to meet its annual interest costs. Failure to meet this obligation can bring legal action by the firms creditors, possibly resulting in bankruptcy. Semirara Mining Corporation is more profitable in 2009 compared to the other years for it can able to cover its interest payments up to 18.02 times by its earnings. The times interest earned ratio declined from 2009 to 2010 which could mean that the firm had a low margin of safety to cover interests that time. However, it was able to decrease borrowings which also decreased its interests charges in 2011 which made the company be able to cover its interest payments up to 13.43 times by its earnings.

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Debt-Equity Ratio
2009 Liabilities Current Liabilities Noncurrent Liabilities Total Liabilities 5,516,516,727 8,464,250,030 13,980,766,757 6,932,168,373 11,222,637,857 18,154,806,230 11,302,381,581 9,517,297,808 20,819,679,389 2010 2011

Equity Capital stock Additional Paid-in capital Deposit for future stock subscriptions Retained Earnings Unappropriated Appropriated Cost of shares held in treasury Total Equity 2,400,238,695 700,000,000 (528,891,260) 9,847,144,691 4,608,125,771 700,000,000 0 12,339,903,182 7,076,762,346 700,000,000 0 14,808,539,757 296,875,000 1,576,796,271 5,402,125,985 356,250,000 6,675,527,411 0 356,250,000 6,675,527,411 0

Formula:

Total Liabilities Total Equity

13,980,766,757 9,847,144,691

18,154,806,230 12,339,903,182

20,819,679,389 14,808,539,757

Debt-Equity Ratio

1.42

1.47

1.41

2009
Total Liabilities Total Equity

2010
Total Liabilities Total Equity

2011
Total Liabilities Total Equity

41% 59%

40% 60%

42% 58%

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The debt-equity ratio compares resources provided by creditors with resources provided by shareholders. Semirara Mining Corporations debt-equity ratio for the years 2009, 2010 and 2011 as shown above indicated higher risk on its capital structure because of the greater liability owing to outside creditors as compared to the investors. On the contrary, this greater reliance to outside creditors decrements the margin of safety of creditors since there has no wellbalanced level of borrowed and equity funds.

Debt Ratio
2009 Liabilities Current Liabilities Noncurrent Liabilities Total Liabilities 5,516,516,727 8,464,250,030 13,980,766,757 6,932,168,373 11,222,637,857 18,154,806,230 11,302,381,581 9,517,297,808 20,819,679,389 2010 2011

Assets Current Assets Noncurrent Assets Total Assets 5,580,780,505 18,247,130,943 23,827,911,448 10,265,287,252 20,229,422,160 30,494,709,412 14,124,285,727 21,503,933,419 35,628,219,146

Formula:

Total Liabilities Total Assets

13,980,766,757 23,827,911,448

18,154,806,230 30,494,709,412

20,819,679,389 35,628,219,146

Debt Ratio

0.59

0.60

0.58

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2009
Total Liabilities Total Asets

2010
Total Liabilities Total Asets

2011
Total Liabilities Total Asets

37% 63% 63%

37% 63%

37%

Total debt includes both current liabilities and long-term debt. Creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditors losses in the event of liquidation. Stockholders, on the other hand, may want more leverage because it magnifies expected earnings. Semirara Mining Corporations debt ratio in 2009 is 0.59 which increased to 0.60 in 2010 and then decreased to 0.58 in 2011. The debt ratios shown above indicated that creditors have supplied more than half the total financing of the company. If the debt ratio increases, it would make it costly for the company to borrow additional funds without first raising more equity capital. Creditors may be reluctant to lend the firm more money, and management would probably be subjecting the firm to the risk of bankruptcy if it sought to increase the debt ratio any further by borrowing additional funds.

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Equity Ratio
2009 Equity Capital stock Additional Paid-in capital Deposit for future stock subscriptions Retained Earnings Unappropriated Appropriated Cost of shares held in treasury Total Equity Assets Current Assets Noncurrent Assets Total Assets Formula: Total Equity__ Total Assets 5,580,780,505 18,247,130,943 23,827,911,448 9,847,144,691 23,827,911,448 10,265,287,252 20,229,422,160 30,494,709,412 12,339,903,182 30,494,709,412 14,124,285,727 21,503,933,419 35,628,219,146 14,808,539,757 35,628,219,146 2,400,238,695 700,000,000 (528,891,260) 9,847,144,691 4,608,125,771 700,000,000 0 12,339,903,182 7,076,762,346 700,000,000 0 14,808,539,757 296,875,000 1,576,796,271 5,402,125,985 356,250,000 6,675,527,411 0 356,250,000 6,675,527,411 0 2010 2011

Equity Ratio

0.41

0.40

0.42

2009
Total Equity Total Asets

2009
Total Equity Total Asets

2009
Total Equity Total Asets

29%

29%

29%

71%

71%

71%

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Creditors prefer higher equity ratios because the higher the ratio, the greater the cushion against creditors losses in the event of liquidation.

Semirara Mining Corporations equity ratio in 2009 is 0.41 which decreased to 0.40 in 2010 and then increased to 0.42 in 2011. The equity ratios shown above indicated that shareholders have a lower share in the total equity of the firm. If the equity ratio increases, it would make it easier for the company to borrow additional funds because it will not need to first raise more equity capital. Creditors will not be reluctant to lend the firm more money. On the other hand, management would probably be subjecting the firm to the risk of bankruptcy if it sought to decrease the equity ratio any further by borrowing additional funds.

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ASSET LIQUIDITY AND MANAGEMENT RATIOS


2009 Receivables Turnover Ratio Inventory Turnover Ratio Current Assets Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Trade Payables Turnover Ratio 7.88 6.16 2.00 1.26 0.80 4.95 2010 10.32 7.21 2.36 1.22 0.84 5.61 2011 8.07 5.21 1.60 1.28 0.78 5.44

Receivables Turnover Ratio


*Assumption: All sales were made on credit 2009 Net Credit Sales Receivables Beginning Balance Ending Balance Average Receivables Formula: Net Credit Sales__ Average Receivables 1,779,050,330 1,254,095,120 1,516,572,725 11,943,685,574 1,516,572,725 1,254,095,120 3,183,300,192 2,218,697,656 22,897,848,475 2,218,697,656 3,183,300,192 3,215,781,247 3,199,540,720 25,813,584,789 3,199,540,720 11,943,685,574 2010 22,897,848,475 2011 25,813,584,789

Receivable Turnover Ratio

7.88

10.32

8.07

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2009
Net Credit Sales Average Receivables

2010
Net Credit Sales Average Receivables

2011
Net Credit Sales Average Receivables

11%

9%

11%

89%

91%

89%

The accounts receivables turnover ratio (receivables turnover ratio) is a measure of how many times a companys accounts receivables have been turned into cash during a particular year. A high receivable ratio indicates an efficient collection and credit policies of the company. The year 2009 has the lowest turnover ratio while 2010 has the highest. This could have been brought by an enormous increase in sale while maintaining a low level of average accounts receivables. This also discloses that company may have been implemented a better credit and collection policy over the years.

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Inventory Turnover Ratio


2009 Cost of Sales 9,348,055,236 2010 15,990,034,213 2011 16,660,619,462

Inventory Beginning Balance Ending Balance Average Inventory 1,383,220,166 3,084,879,380 2,234,049,773 3,084,879,380 2,356,684,774 2,720,782,077 2,356,684,774 4,592,835,539 3,474,760,157

Formula:

_ Cost of Sales__ Average Inventory

9,348,055,236 1,516,572,725

15,990,034,213 2,218,697,656

16,660,619,462 3,199,540,720

Inventory Turnover Ratio

6.16

7.21

5.21

2009
Cost of Sales Average Inventory

2010
Cost of Sales Average Inventory

2011
Cost of Sales Average Inventory

14%

12%

16%

86%

88%

84%

The inventory turnover ratio shows how a company is managing its inventories. It is calculated by dividing the cost of sales by the average inventory held during a period of one year. Generally, the higher the turnover ratio, the better it is for the company. It could mean an efficient inventory management and profit for the firm. On the other hand, a low turnover ratio could mean that the company is carrying too much or obsolete, sluggish or substandard inventory

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stocks. The inventory turnover ratio in 2010 was 7.21 times, the highest from the three-year period. The decreased turnover ratio can be therefore a result of the above-stated reasons - a poor management of inventories.

Current Assets Turnover Ratio


2009 Operating Requirements Cost of Sales Operating expenses Total Current Assets Beginning Balance Ending Balance Average Current Assets Formula: Cost of Sales + Operating Expenses Average Current Assets 4,498,411,591 5,580,780,505 5,039,596,048 10,091,255,815 5,039,596,048 5,580,780,505 10,265,287,252 7,923,033,879 18,711,269,131 7,923,033,879 10,265,287,252 14,124,285,727 12,194,786,490 19,517,793,576 12,194,786,490 9,348,055,236 743,200,579 10,091,255,815 15,990,034,213 2,721,234,918 18,711,269,131 16,660,619,462 2,857,174,114 19,517,793,576 2010 2011

Current Assets Turnover Ratio

2.00

2.36

1.60

2009
Total Operating Requirements Average Current Assets

2010
Total Operating Requirements Average Current Assets

2011
Total Operating Requirements Average Current Assets

33%

30%

38% 70% 62%

67%

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The current assets turnover ratio is another way to assess the companys ability to manage its current resources to meet its operating requirements. A high turnover ratio is good because it shows that a low level of current assets is enough to sustain the operations of the business. This could mean a wise management and utilization of its current assets to meet the requirements of operations. Again, 2010s turnover ratio is the highest with 2.36 times, a 0.36 times increase from 2009. But in 2011, this ratio decreased to 1.60 which gives a not so beneficial effect to the company.

Fixed Assets Turnover Ratio


2009 Net Sales 11,943,685,574 2010 22,897,848,475 2011 25,813,584,789

Net Fixed Assets (Property, Plant and Equipment) Beginning Balance Ending Balance Average Net Fixed Assets 1,106,064,258 17,818,687,301 9,462,375,780 17,818,687,301 19,582,414,736 18,700,551,019 19,582,414,736 20,737,333,275 20,159,874,006

Formula:

Net Sales_____ Average Net Fixed Assets

11,943,685,574 9,462,375,780

22,897,848,475 18,700,551,019

25,813,584,789 20,159,874,006

Fixed Assets Turnover Ratio

1.26

1.22

1.28

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2009
Net Sales Average Net Fixed Assets

2010
Net Sales Average Net Fixed Assets

2011
Net Sales Average Net Fixed Assets

44% 56%

45% 55%

44% 56%

The fixed assets turnover is an approach of assessing a companys effectiveness in generating sales from investment in its fixed assets. In 2011, P1 of Semiraras fixed assets is able to contribute P1.28 of its net sales, an increase from the previous years ratios of 1.26 and 1.22. This consistent increasing ratio indicates that the firms management has been more efficient in managing their fixed assets as years goes by.

Total Assets Turnover Ratio


2009 Net Sales Total Assets Beginning Balance Ending Balance Average Total Assets Formula: Net Sales_____ Average Total Assets 6,111,456,918 23,827,911,448 14,969,684,183 11,943,685,574 14,969,684,183 23,827,911,448 30,494,709,412 27,161,310,430 22,897,848,475 27,161,310,430 30,494,709,412 35,628,219,146 33,061,464,279 25,813,584,789 33,061,464,279 11,943,685,574 2010 22,897,848,475 2011 25,813,584,789

Total Assets Turnover Ratio

0.80

0.84

0.78

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2009
Net Sales Average Total Assets

2010
Net Sales Average Total Assets

2011
Net Sales Average Total Assets

44% 56% 54%

46% 56%

44%

The assets turnover ratio is used to measure how a firm manages its assets to generate sales. Generally, a high ratio means that assets are utilized efficiently to generate higher sales. However, a low ratio during the year doesn't mean inefficiency on the part of the management. Some firms invest large capital assets on research projects for new products or to improve their products, thus generating low sales during that year but may effect to high sales in the next years. Semirara experienced the highest asset turnover ratio of the three-year period in 2010 with 0.84 times. The other two years come from not from behind with 0.8 times in 2009 and 0.78 times in 2011. This indicates that Semirara has an almost consistent asset turnover ratio.

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Trade Payables Turnover Ratio


*Assumption: All purchases were made on account. 2009 Credit Purchases Cost of Sales Ending Inventory Beginning Inventory Net Credit Purchases Inventory Beginning Balance Ending Balance Average Inventory Formula: Net Credit Purchases Average Inventory 1,383,220,166 3,084,879,380 2,234,049,773 11,049,714,450 2,234,049,773 3,084,879,380 2,356,684,774 2,720,782,077 15,261,839,607 2,720,782,077 2,356,684,774 4,592,835,539 3,474,760,157 18,896,770,227 3,474,760,157 9,348,055,236 3,084,879,380 1,383,220,166 11,049,714,450 15,990,034,213 2,356,684,774 3,084,879,380 15,261,839,607 16,660,619,462 4,592,835,539 2,356,684,774 18,896,770,227 2010 2011

Trade Payables Turnover Ratio

4.95

5.61

5.44

2009
Net Credit Purchases Average Inventory

2010
Net Credit Purchases Average Inventory

2011
Net Credit Purchases Average Inventory

17%

15%

16%

83%

85%

84%

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The trade payable turnover ratio is a measure of how many times per period a company settles its payables. A higher turnover ratio is favorable, since this means a faster rate of payment to outside suppliers. In 2010, the turnover ratio was 5.61 times, which means Semirara Company maintained small average payables with respect to its credit purchases. This figure is higher and better than in 2009 and 2011, with turnover ratios of 4.95 and 5.44 times respectively. However, Semiraras management should still look into ways to increase their trade payables turnover ratio.

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OPERATING EFFICIENCY AND PROFITABILITY


2009 Gross Profit Margin Operating Profit Margin Net Profit Margin Cash Flow Margin Rate of Return on Investment in Assets Rate of Return on Current Assets Rate of Return on Investment in Equity 0.22 0.16 0.15 0.31 0.08 0.33 0.19 2010 0.30 0.18 0.17 0.29 0.13 0.39 0.32 2011 0.35 0.24 0.23 0.26 0.17 0.43 0.41

Gross Profit Margin


2009 Gross Profit Net Sales 2,595,630,338 11,943,685,574 2010 6,907,814,262 22,897,848,475 2011 9,152,965,327 25,813,584,789

Formula:

Gross Profit Net Sales

2,595,630,338 11,943,685,574

6,907,814,262 22,897,848,475

9,152,965,327 25,813,584,789

Gross Profit Margin

0.22

0.30

0.35

2009
Gross Profit Net Sales

2010
Gross Profit Net Sales

2011
Gross Profit Net Sales

18%

23%

26%

82%

77%

74%

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The gross profit margin is one indicator of a business's financial health. It shows how efficiently a firm is utilizing its cost of production in the process. The higher the gross profit margin, the better it is. It is because more pesos of sales are retained to cover the operating expenses of the company. Semirara Company can be noted for its increasing gross profit margin, which means the company is in a good financial disposition. The year 2011 has the highest, with 35%, compared to 22% and 30% of 2009 and 2010 respectively. This shows that the company may have been greater sales while lowering their cost of production.

Operating Profit Margin


2009 Operating Profit Net Sales Formula: Operating Profit Net Sales Operating Profit Margin 1,852,429,759 11,943,685,574 1,852,429,759 11,943,685,574 0.16 2010 4,186,579,344 22,897,848,475 4,186,579,344 22,897,848,475 0.18 2011 6,295,791,213 25,813,584,789 6,295,791,213 25,813,584,789 0.24

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2009
Operating Profit Net Sales

2010
Operating Profit Net Sales

2011
Operating Profit Net Sales

13%

15%

20%

87%

85%

80%

The operating profit margin is an indicator of how efficient a firm is utilizing its operating expenses in the operating cycle. The higher the operating profit margin, the healthier it is for the companys financial position. It is because more pesos of sales are earned to cover the finance and tax expenses of the company and to contribute to the companys retained earnings. Semirara Company has an improved operating profit margin, which means the company is in a good financial position. The year 2011 has the highest, with 24%, compared to 16% and 18% of 2009 and 2010 respectively. This discloses that the company may have been greater sales while lowering their cost of production and operating expenses.

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Net Profit Margin


2009 Net Income Net Sales Formula: Net Income Net Sales 1,845,984,707 11,943,685,574 1,845,984,707 11,943,685,574 2010 3,952,708,257 22,897,848,475 3,952,708,257 22,897,848,475 2011 6,031,136,575 25,813,584,789 6,031,136,575 25,813,584,789

Net Profit Margin

0.15

0.17

0.23

2009
Net Income Net Sales

2010
Net Income Net Sales

2011
Net Income Net Sales

13%

15%

19%

87%

85%

81%

Net profit margin, like the other two margins, is also a measurement of the business financial health. It is a profitability ratio calculated on the basis of net profit after considering all operating, interest and taxes, etc. Again, the higher, the better it is. Semirara experienced an increase in the net profit margin over the three year. The year 2011 was seen with a great increase from the previous year's 17% to 23% margin. This may have been the result of higher sales, lower costs incurred and a more efficient management of production processes.

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Cash Flow Profit Margin


2009 Cash Flow from Operations Net Sales Formula: Cash Flow from Operations Net Sales 3,669,127,255 11,943,685,574 3,669,127,255 11,943,685,574 2010 6,725,016,362 22,897,848,475 6,725,016,362 22,897,848,475 2011 6,643,454,925 25,813,584,789 6,643,454,925 25,813,584,789

Cash Flow Profit Margin

0.31

0.29

0.26

2009
Cash Flow from Operations Net Sales

2010
Cash Flow from Operations Net Sales

2011
Cash Flow from Operations Net Sales

24%

23%

20%

76%

77%

80%

Every company needs cash to pay dividends, suppliers, service and debts, invest in new capital assets and most importantly to operate. This ratio expresses the relationship between cash generated from operations and sales. The larger the ratio, the better, as more operating cash was earned to from the generated sales level, vice versa. Semirara experienced a decreasing margin. To contemplate, take a look at the net sales, they increased in faster rates than the operating cash flows. Thus the overall increased in the net profit margin may

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have been a result of more gains accrued from other cash flow activities such as investing and financing.

Rate of Return on Investment in Assets


2009 Net Income Total Assets 1,845,984,707 23,827,911,448 2010 3,952,708,257 30,494,709,412 2011 6,031,136,575 35,628,219,146

Formula:

Net Income Total Assets

1,845,984,707 23,827,911,448

3,952,708,257 30,494,709,412

6,031,136,575 35,628,219,146

Rate of Return on Investment in Assets

0.08

0.13

0.17

2009
Net Income Total Assets

2010
Net Income Total Assets

2011
Net Income Total Assets

7%

11%

14%

93%

89%

86%

The rate of return on investment in assets is a measure of how well employed the total assets are to generate income. The greater return means management has become more efficient in using total assets. Over the threeyear period, there was an increasing rate of return which is beneficial to the company. Having a rate of return in 2009 of 0.08 and 0.17 in 2011, there is a 112.5% increase. Thus, for every peso of asset in 2011, generates P0.17 income.

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Rate of Return on Current Assets


2009 Net Income Total Current Assets 1,845,984,707 5,580,780,505 2010 3,952,708,257 10,265,287,252 2011 6,031,136,575 14,124,285,727

Formula:

Net Income Total Current Assets

1,845,984,707 5,580,780,505

3,952,708,257 10,265,287,252

6,031,136,575 14,124,285,727

Rate of Return on Current Assets

0.33

0.39

0.43

2009
Net Income Total Current Assets

2010
Net Income Total Current Assets

2011
Net Income Total Current Assets

25%

28%

30%

75%

72%

70%

The rate of return on current assets is an indicator of how well the current assets are used to earn income without depending to fixed assets. The greater return means there was a more efficient usage of current assets. As displayed in the table, there was an increasing rate of return which is favorable for the companys financial position. Having a rate of return in 2009 of 0.33 and 0.47 in 2011, there is an increased up to 0.10. Thus, for every peso of current asset in 2011, generates P0.43 income.

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Rate of Return on Investment in Equity


2009 Net Income Net Sales 1,845,984,707 9,847,144,691 2010 3,952,708,257 12,339,903,182 2011 6,031,136,575 14,808,539,757

Formula:

Net Income Total Equity

1,845,984,707 9,847,144,691

3,952,708,257 12,339,903,182

6,031,136,575 14,808,539,757

Rate of Return on Investment in Equity

0.19

0.32

0.41

2009
Net Income Total Equity

2010
Net Income Total Equity

2011
Net Income Total Equity

16%

24%

29%

84%

76%

71%

The rate of return on investment in equity indicates the earnings of every peso of equity employed during the accounting period. The greater return is better for the image of the company because it attracts more investors. There was a consistent increase in the rate of return over the years. In 2011, the highest in the three-year period, has 0.41 rate of return which means for every peso of equity in the company, earns P0.41.

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GROWTH RATIOS
2009 Basic Earnings per Shares Earnings Yield Cash Flow per Share Dividend Payout Ratio Dividend Yield Ratio of Operating Cash Flows to Cash Dividends 6.22 0.11 12.36 0.96 0.11 2.06 2010 12.10 0.07 20.59 0.50 0.03 3.43 2011 16.93 0.08 18.65 0.59 0.05 1.86

Basic Earnings per Share


2009 Net Income Outstanding Shares Beginning Balance Ending Balance Average Outstanding Shares Formula: Net Income Average Outstanding Shares 296,875,000 296,875,000 296,875,000 1,845,984,707 296,875,000 296,875,000 356,250,000 326,562,500 3,952,708,257 326,562,500 356,250,000 356,250,000 356,250,000 6,031,136,575 356,250,000 1,845,984,707 2010 3,952,708,257 2011 6,031,136,575

Basic Earnings per Share

6.22

12.10

16.93

The earnings per share is the peso return on each ordinary share. It indicates the ability of the company to pay dividends to its stockholders. Semiraras basic EPS increased from P6.22 in 2009 to P16.93 in 2011, an almost 300% increase. This is a clear indication in the improvement on the investment return of ordinary shareholders.

STRONG CORE. SOLID GROWTH

79

Earnings Yield
2009 Earnings per Share Market Price per Share Formula: Earnings per share Market price per share 6.22 55 6.22 55 2010 12.10 185 12s.10 185 2011 16.93 221 16.93 221

Earnings Yield

0.11

0.07

0.08

The earnings yield is a comparison of earnings per share and its market price. Semiraras earnings yield decreased from 0.11 in 2009 to 0.08 in 2011, a 27% decrease.

Cash Flow per Share


2009 Cash Flow from Operations Average Outstanding Shares Formula: Cash Flow from Operations Average Outstanding Shares Cash Flow per Share 3,669,127,255 296,875,000 3,669,127,255 296,875,000 12.36 2010 6,725,016,362 326,562,500 6,725,016,362 326,562,500 20.59 2011 6,643,454,925 356,250,000 6,643,454,925 356,250,000 18.65

The cash flow per share is the peso earned from operating activities on each ordinary share. It indicates the ability of the company to pay dividends to its stockholders using its cash flows from operations. Semiraras basic EPS increased from P12.36 in 2009 to P18.65 in 2011, an almost 150% increase. This is a clear indication in the improvement on the cash flow return to ordinary shareholders.

STRONG CORE. SOLID GROWTH

80

Dividend Payout Ratio


2009 Cash Dividend per Common Share Earnings per Share Formula: Cash Dividend per Common Share Earnings per Share 6 6.22 6 6.22 2010 6 12.10 6 12.10 2011 10 16.93 10 16.93

Dividend Payout Ratio

0.96

0.50

0.59

This growth ratio shows the portion of the earnings that is paid as dividends to shareholders. The higher it is the better on the point of view of shareholders. However, the company experienced a decreasing dividend payout ratio from 2009 to 2011. One possible explanation t this is that the company adopted new policies to increase availability of funds that may be used for expansion purposes, thus lowering the dividend payments.

Dividend Yield
2009 Cash Dividend per Common Share Market Price per Share 6 55 2010 6 185 2011 10 221

Formula:

Cash Dividend per Common Share Market Price per Share

6 55

6 185

10 221

Dividend Yield

0.11

0.03

0.05

If we observe, the company have a very low dividend yield, and the year 2010 is the lowest in congruence with having the lowest dividend payout ratio for the three years. It is therefore disclosing that investors would choose Semirara as an investment more for its long-term capital appreciation than for dividend yields.

STRONG CORE. SOLID GROWTH

81

Rate of Operating Cash Flows to Cash Dividends


2009 Cash Flow from Operations Cash Dividends Formula: Cash Dividend per Common Share Market Price per Share Ratio of Operating Cash flows to Cash Dividends 3,669,127,255 1,781,250,000 3,669,127,255 1,781,250,000 2.06 2010 6,725,016,362 1,959,375,000 6,725,016,362 1,959,375,000 3.43 2011 6,643,454,925 3,562,500,000 6,643,454,925 3,562,500,000 1.86

The rate of operating cash flows to cash dividends shows the relationship of the two. It indicates the ability of the company to pay dividends to its stockholders using its cash flows from operations. Semiraras rate of operating cash flows to cash dividends decreased from 2.06 in 2009 to 1.86 in 2011.

STRONG CORE. SOLID GROWTH

82

VALUATION RATIOS
2009 Book Value per Share Price-Earnings Ratio Market to Book Ratio 33.29 8.85 1.65 2010 34.64 15.28 5.34 2011 41.57 13.05 5.32

Book Value per Share


2009 Total Equity Shares Outstanding Formula: ____Total Equity___ Shares Outstanding 296,875,000 2010 356,250,000 2011 356,250,000 9,883,573,510 12,339,903,182 14,808,539,757

9,883,573,510 12,339,903,182 14,808,539,757 296,875,000 356,250,000 356,250,000

Book Value per Share

33.29

34.64

41.57

The book value per share is the peso amount on each ordinary share. It indicates the value of every share registered in the corporate books. Semiraras Book Value per share increased from 33.29 in 2009 to 41.57 in 2011, having an increase of P8.28. This is a clear indication in the improvement on the book value of every common share.

STRONG CORE. SOLID GROWTH

83

Price-Earnings Ratio
2009 Market Price per Share Earnings per Share Formula: Market Price per Share Earnings per Share 55 6.22 55 6.22 2010 185 12.10 185 12.10 2011 221 16.93 221 16.93

Price-Earnings Ratio

8.85

15.28

13.05

This ratio relates earnings per ordinary share to the market price. Semiraras price-to-earnings ratio increased from 8.85 in 2009 to 15.28 in 2010 can be a result of favorable reaction of the market to firms standing.

Market to Book Ratio


2009 Market Price per Share Book Value per Share Formula: Market Price per Share Book Value per Share 55 33.29 55 33.29 2010 185 34.64 185 34.64 2011 221 41.57 221 41.57

Market to Book Ratio

1.65

5.34

5.32

The market to book ratio is the relationship of the market price and book value on each ordinary share. Semiraras market to book ratio increased from 1.65 in 2009 to 5.32 in 2011, an almost 325% increase.

STRONG CORE. SOLID GROWTH

84