Post on 08-Nov-2014
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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 company. All internationally sourced equipment and services
STRONG CORE. SOLID GROWTH
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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
Alpine’s 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 now used only in
reclamation operations in the Panian stockyard. In 1999, the new management also
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installed a coal washing plant which improved the coal quality through a lower ash
content and consequently demand for the Company’s coal increased.
Following further financial difficulties experienced by the Company,
DMCI-HI 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 Company’s 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 Company’s target coal
production rates for at least 10 years. The Company’s reserve estimates have been
independently reviewed by Minarco Asia Pacific Pty Limited.
Consequently, in 2006 Australian consultants supervised additional
confirmatory drilling activities in the Panian Pit in accordance with the Joint Ore
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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
Company’s coal is characterized as sub-bituminous-B and is appropriate for use in a
wide range of combustion facilities.
CORPORATE GOVERNANCE
STRONG CORE. SOLID GROWTH
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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
Company’s 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 Board’s other mission is to maintain a sense of
responsibility to the Company’s 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 government’s 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
Company’s compliance with the ECC conditions and all other
applicable laws, rules and regulations. Consequently, the MMT issues
a Compliance Monitoring and Verification Report on a quarterly basis.
Safety
STRONG CORE. SOLID GROWTH
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Safety is a core value of the Company. It defines the Company’s
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 Company’s good governance initiatives aim to foster a
culture of compliance, performance, transparency and accountability
within the organization and to enhance shareholder value.
Code of Conduct
Full Business Interest Disclosure
Governance Training and Continuing Education
Recognition
Semirara Mining Corporation was among the Top 20 Philippine
Listed Companies which scored highly in the SEC’s 2007 Corporate
Governance Scorecard Project jointly conducted with the Institute of
Corporate Directors. This affirms the Company’s significant progress in
its overall corporate governance framework through the adoption of
global best practices promoting higher standards of performance,
transparency and accountability to all stakeholders.
Shareholder Rights And Relations
STRONG CORE. SOLID GROWTH
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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 Company’s organization structure, performance and significant
corporate information, including disclosures may be viewed at the Company’s
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 country’s 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 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.
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
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DAVID M. CONSUNJI
ISIDRO R. CONSUJI
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of Southwest Luzon Power Generation Corporation. He is also the Chairman and
CEO of DMCI Mining Corporation, and Vice-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,
PresidentAudit Committee, member
He is a graduate of A.B. Political Science at the Ateneo de Davao. He is currently
the President and COO of SEM-Calaca 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.
STRONG CORE. SOLID GROWTH
VICTOR A. CONSUNJI
11
Chairman of Audit Committee Independent Director
Compensation and renumeration; Nomination & Election,member
He is a
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.
STRONG CORE. SOLID GROWTH
VICTOR C. MACALINCAG
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Vice President for Operation Resident Manager
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 Vice-President of Semirara Training Center, Inc.
Vice-President for
AdministrationChaiman of the Renumeration and Compensation
CommitteeCompliance Officer
She is a
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 SEM-Calaca 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.
Director
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GEORGE C. SAN PEDRO
MA. CRISTINA C. GOTIANUM
JORGE A. CONSUJI
CESAR A. BUENAVENTURA
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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 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, Eco- Process & 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 Vice-President 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
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 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
STRONG CORE. SOLID GROWTH
HERBERT M. CONSUJI
FEDERICO E. PUNO
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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.
DirectorCompensation and Renumeration, member
He earned his degree of Bachelor of Science in Commerce
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 DirectorAudit and Nomination &Election Committees, member
He is a graduate of B.S. Civil
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. 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
STRONG CORE. SOLID GROWTH
MA. EDWINA C. LAPERAL
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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 Master’s Degree in
Business 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.
OTHER OFFICERS
VP for Special Projects
STRONG CORE. SOLID GROWTH
GEORGE B. BAQUIRAN
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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.
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.
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.
STRONG CORE. SOLID GROWTH
JAIME B. GARCIA
JUNALINA S. TABOR
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VPfor Business DevelopmentHe 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.
Corporate SecretaryLegal 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.
CONSOLIDATED FINANCIAL STATEMENTS
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31
2009 2010 2011
ASSETS
STRONG CORE. SOLID GROWTH
DENARDO M. CUAYO
JOHN R. SADULLO
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Current Assets
Cash and cash equivalents 481,920,935 3,813,283,517 5,005,240,275
Receivables 1,254,095,120 3,183,300,192 3,215,781,247
Inventories 3,084,879,380 2,356,684,774 4,592,835,539
Other current assets 759,885,070 912,018,769 1,310,428,666
Total Current Assets 5,580,780,50510,265,287,25
214,124,285,72
7
Noncurrent Assets
Property, plant and equipment17,818,687,30
119,582,414,73
620,737,333,27
5
Investment and advances 244,432,588 310,229,558 490,789,157
Pension Assets 0 0 1,021,507
Deferred tax assets 0 0 17,409,006
Other noncurrent assets 184,011,054 336,777,866 257,380,474
Total Noncurrent Assets18,247,130,94
320,229,422,16
021,503,933,41
9
TOTAL ASSETS23,827,911,4
4830,494,709,4
1235,628,219,1
46
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables 2,857,535,375 5,349,426,374 7,299,028,784
Short-term loans 793,191,385 449,845,179 1,010,692,002
Current portion of Long-term debt 1,865,789,967 1,132,896,820 2,992,660,795
Total Current Liabilities 5,516,516,727 6,932,168,37311,302,381,58
1
Noncurrent Liabilities
Long-term debt - net of current portion 8,364,484,22911,159,821,45
4 9,469,150,099
Deferred tax liabilities 72,056,929 28,087,305 565,481
Provision for decommissioning 14,773,138 14,732,350 47,582,228
Pension liability 12,935,734 19,996,748 0
STRONG CORE. SOLID GROWTH
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Total Noncurrent Liabilities 8,464,250,03011,222,637,85
7 9,517,297,808
Total Liabilities13,980,766,75
718,154,806,23
020,819,679,38
9
EQUITY
Capital stock 296,875,000 356,250,000 356,250,000
Additional Paid-in capital 1,576,796,271 6,675,527,411 6,675,527,411
Deposit for future stock subscriptions 5,402,125,985 0 0
Retained Earnings
Unappropriated 2,400,238,695 4,608,125,771 7,076,762,346
Appropriated 700,000,000 700,000,000 700,000,000
Cost of shares held in treasury (528,891,260) 0 0
Total Equity 9,847,144,69112,339,903,18
214,808,539,75
7
TOTAL LIABILITIES AND EQUITY23,827,911,4
4830,494,709,4
1235,628,219,1
46
SEMIRARA MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31
2009 2010 2011
REVENUE
Coal 11,500,192,811 14,242,224,629 16,201,880,411
Power 443,492,763 8,655,623,846 9,611,704,378
11,943,685,574 22,897,848,475 25,813,584,789
COST OF SALES
STRONG CORE. SOLID GROWTH
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Coal 8,928,346,706 10,222,626,729 10,263,535,800
Power 419,708,530 5,767,407,484 6,397,083,662
9,348,055,236 15,990,034,213 16,660,619,462
GROSS PROFIT 2,595,630,338 6,907,814,262 9,152,965,327
OPERATING EXPENSES (743,200,579) (2,721,234,918) (2,857,174,114)
INCOME FROM OPERATIONS 1,852,429,759 4,186,579,344 6,295,791,213
OTHER INCOME (CHARGES)
Finance costs (112,192,664) (668,440,816) (483,287,781)
Finance income 52,752,896 57,667,764 134,876,680
Foreign exchange gains (losses) - net 47,703,017 199,487,633 (38,318,119)
Equity in net earnings (losses) of associates (39,349,171) 76,825,789 0
Other income 107,935,222 65,427,012 99,905,297
56,849,300 (269,032,618) (286,823,923)
INCOME BEFORE INCOME TAX 1,909,279,059 3,917,546,726 6,008,967,290
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 5,362,577 8,808,092 22,761,546
Deferred 57,931,775 (43,969,623) (44,930,831)
63,294,352 (35,161,531) (22,169,285)
NET INCOME 1,845,984,707 3,952,708,257 6,031,136,575
OTHER COMPREHENSIVE INCOME 0 0 0
TOTAL COMPREHENSIVE INCOME 1,845,984,707 3,952,708,257 6,031,136,575
STRONG CORE. SOLID GROWTH
21
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year Ended December 31
2009 2010 2011
Common Stock
Beginning Balance 296,875,000 296,875,000 356,250,000
Additional Subscription through stock rights offering 0 59,375,000 0
Common Stock, Ending Balance 296,875,000 356,250,000 356,250,000
Additional Paid-in Capital
Beginning Balance 1,576,796,271 1,576,796,271 6,675,527,411
Reissuance of treasury shares 0 764,356,140 0
Additional Subscription through stock rights offering 0 4,334,375,000 0
Additional Paid-in Capital, Ending Balance 1,576,796,271 6,675,527,411 6,675,527,411
Deposit on Future Stock Subscriptions
Beginning Balance 0 5,402,125,985 0
Reissuance of treasury shares 0(1,293,247,40
0) 0
Additional Subscription through stock rights offering 0
(4,108,878,585) 0
Deposit on future stock subscriptions’ 5,402,125,985 0
Deposit on Future Stock Subscriptions, Ending Balance 5,402,125,985 0 0
Unappropriated Retained Earnings
Beginning Balance 2,256,119,235 2,436,667,514 4,608,125,771
Total comprehensive income 1,845,984,707 3,952,708,257 6,031,136,575
STRONG CORE. SOLID GROWTH
22
Dividends declared(1,665,436,42
8)(1,781,250,00
0)(3,562,500,00
0)
Unappropriated Retained Earnings, Ending Balance 2,436,667,514 4,608,125,771 7,076,762,346
Appropriated Retained Earnings
Beginning Balance 700,000,000 700,000,000 700,000,000
Appropriated Retained Earnings, Ending Balance 700,000,000 700,000,000 700,000,000
Cost of Shares Held in Treasury
Beginning Balance (528,891,260) (528,891,260) 0
Reissuance of treasury shares 0 528,891,260 0
Cost of Shares Held in Treasury, Ending Balance (528,891,260) 0 0
Total Ending Balance9,883,573,51
012,339,903,1
8214,808,539,7
57
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31
2009 2010 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax 1,909,279,059 3,917,546,726 6,008,967,290
Adjustments for:
Depreciation and amortization 1,104,933,707 2,566,427,137 2,909,610,888
Finance costs 112,192,664 668,440,816 483,287,781
Finance income (52,752,896) (57,667,764) (134,876,680)
Gain on sale of equipment (40,205,597) (6,088,124) (53,547,507)
Net unrealized foreign exchange losses (gains) (168,563,289) (67,308,294) 37,939,453 Pension expense 4,447,869 7,532,422 7,446,271 Provision for doubtful accounts 0 53,744,668 5,004,512 Provision for impairment loss 40,374,335 0 0
Equity in net (earnings) losses of associates 39,349,171 (76,825,789) 0
Gain on sale of investment 0 (41,378,255) 0
STRONG CORE. SOLID GROWTH
23
Negative goodwill (15,666,752) 0 0
Operating income before changes in working capital 2,933,388,271 6,964,423,543 9,263,832,008
Changes in operating assets and liabilities
Decrease (increase) in:
Receivables 524,955,210 (1,947,398,569) (78,157,570)
Inventories (629,152,442) 73,701,971 (3,704,727,490)
Other current assets (688,178,267) (337,872,065) (697,662,177)
Increase in trade and other payables 1,561,087,211 2,740,870,039 2,205,941,337
Cash generated from operations 3,702,099,983 7,493,724,919 6,989,226,108
Interest received 86,501,617 91,726,741 134,757,554
Interest paid (56,051,307) (852,363,965) (457,767,190)
Income taxes paid (63,423,038) (8,071,333) (22,761,547)
Net cash provided by operating activities 3,669,127,255 6,725,016,362 6,643,454,925
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,853,983,593) (3,007,368,967) (2,454,376,480)
Proceeds from sale of investment 0 327,086,632 0
Additions to investments and advances (60,550,001) (310,229,558) (180,559,599)
Retirement fund contribution 0 0 (28,464,526)
Decrease in other noncurrent assets 574,928,409 13,203,852 49,709,618
Proceeds from sale of equipment 762,961,381 53,000,798 56,175,636
Advance rental paid (150,568,000) 0 0
Acquisition of a business (7,104,375,497) (10,021,631,926) 0
Net cash used in investing activities(8,831,587,301
)(12,945,939,16
9)(2,557,515,35
1)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Availments of:
Long-term debt 1,626,006,970 11,554,776,302 2,884,618,498
Short-term loans 0 3,270,643,589 2,011,193,260
Notes payable 742,144,817 0 0
Additional issuance of capital stocks 0 4,393,750,000 0
Sale of shares held in treasury 0 1,293,247,400 0
Payments of:
Dividends (1,665,436,428) (1,781,250,000) (3,562,500,000)
Long-term debt (1,469,859,178) (113,195,951) (2,789,633,990)
Short-term loans 0 (3,665,439,966) (1,445,313,429)
Deposit on future stock subscriptions 5,402,125,985 (5,402,125,985) 0Net cash (used in) provided by financing activities 4,634,982,166 9,550,405,389
(2,901,635,661)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
STRONG CORE. SOLID GROWTH
24
AND CASH EQUIVALENTS (3,010,347) 1,880,000 7,652,845
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (530,488,227) 3,331,362,582 1,191,956,758CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,012,409,162 481,920,935 3,813,283,517CASH AND CASH EQUIVALENTS AT END OF YEAR 481,920,935 3,813,283,517 5,005,240,275
FINANCIAL STATEMENT ANALYSIS
SEMIRARA MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, INCREASE (DECREASE) METHOD
December 31
2010 2011
Increase (Decrea
se)
% Increase
(Decrease)
ASSETS
Current Assets
STRONG CORE. SOLID GROWTH
25
Cash and cash equivalents
3,813,283,517
5,005,240,275
1,191,956,758 31.26
Receivables3,183,30
0,1923,215,781
,24732,481,0
55 1.02
Inventories2,356,68
4,7744,592,835
,5392,236,15
0,765 94.89
Other current assets912,018,
7691,310,428
,666398,409,
897 43.68
Total Current Assets
10,265,287,252
14,124,285,727
3,858,998,475 37.59
Noncurrent Assets
Property, plant and equipment
19,582,414,736
20,737,333,275
1,154,918,539 5.90
Investment and advances
310,229,558
490,789,157
180,559,599 58.20
Pension Assets 0 1,021,5071,021,50
7100.0
0
Deferred tax assets 017,409,00
617,409,0
06100.0
0
Other noncurrent assets336,777,
866257,380,4
74(79,397,
392)(23.58
)
Total Noncurrent Assets
20,229,422,160
21,503,933,419
1,274,511,259 6.30
TOTAL ASSETS30,494,7
09,41235,628,2
19,1465,133,509,734 16.83
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables5,349,42
6,3747,299,028
,7841,949,60
2,410 36.45
Short-term loans449,845,
1791,010,692
,002560,846,
823124.6
8
Current portion of Long-term debt
1,132,896,820
2,992,660,795
1,859,763,975
164.16
Total Current Liabilities
6,932,168,373
11,302,381,581
4,370,213,208 63.04
Noncurrent Liabilities
Long-term debt - net of current portion
11,159,821,454
9,469,150,099
(1,690,671,355)
(15.15)
Deferred tax liabilities28,087,3
05 565,481(27,521,
824)(97.99
)
Provision for decommissioning
14,732,350
47,582,228
32,849,878
222.98
Pension liability19,996,7
48 0(19,996,
748)(100.0
0)
Total Noncurrent Liabilities
11,222,637,857
9,517,297,808
(1,705,340,049)
(15.20)
STRONG CORE. SOLID GROWTH
26
Total Liabilities18,154,8
06,23020,819,6
79,3892,664,873,159 14.68
EQUITY
Capital stock356,250,
000356,250,0
00 0 0
Additional Paid-in capital6,675,52
7,4116,675,527
,411 0 0
Retained Earnings
Unappropriated4,608,12
5,7717,076,762
,3462,468,63
6,575 53.57
Appropriated700,000,
000700,000,0
00 0 0
Total Equity12,339,9
03,18214,808,5
39,7572,468,636,575 20.01
TOTAL LIABILITIES AND EQUITY
30,494,709,412
35,628,219,146
5,133,509,734 16.83
SEMIRARA MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, INCREASE (DECREASE) METHOD
Year Ended December 31
2010 2011
Increase
(Decrease)
% Increa
se (Decrease)
REVENUE
Coal14,242,22
4,62916,201,88
0,4111,959,65
5,782 13.76
Power8,655,623
,8469,611,704
,378956,080,
532 11.05
22,897,84
8,47525,813,58
4,7892,915,73
6,314 12.73
COST OF SALES
Coal10,222,62
6,72910,263,53
5,80040,909,0
71 0.40
Power5,767,407
,4846,397,083
,662629,676,
178 10.92
15,990,03
4,21316,660,61
9,462670,585,
249 4.19
GROSS PROFIT6,907,814
,2629,152,965
,3272,245,15
1,065 32.50
OPERATING EXPENSES(2,721,23
4,918)(2,857,17
4,114)(135,939
,196) 5.00
STRONG CORE. SOLID GROWTH
27
INCOME FROM OPERATIONS
4,186,579,344
6,295,791,213
2,109,211,869 50.38
OTHER INCOME (CHARGES)
Finance costs(668,440,
816)(483,287,
781)185,153,
035(27.70
)
Finance income57,667,76
4134,876,6
8077,208,9
16 133.89
Foreign exchange gains (losses) - net
199,487,633
(38,318,119)
(237,805,752)
(119.21)
Equity in net earnings (losses) of associates
76,825,789
(76,825,789)
(100.00)
Other income65,427,01
299,905,29
734,478,2
85 52.70
(269,032,
618)(286,823,
923)(17,791,
305) 6.61
INCOME BEFORE INCOME TAX
3,917,546,726
6,008,967,290
2,091,420,564 53.39
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 8,808,09222,761,54
613,953,4
54 158.42
Deferred(43,969,6
23)(44,930,8
31)(961,208
) 2.19
(35,161,531)
(22,169,285)
12,992,246
(36.95)
NET INCOME3,952,70
8,2576,031,13
6,5752,078,428,318 52.58
OTHER COMPREHENSIVE INCOME 0 0 0 0
TOTAL COMPREHENSIVE INCOME
3,952,708,257
6,031,136,575
2,078,428,318 52.58
STRONG CORE. SOLID GROWTH
28
Cash and cash equivalents
Receivables Inventories Other current assets
-
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
CURRENT ASSETS
2009 2010 2011
Prop
erty
, plan
t a...
Inves
tmen
t and
...
Pens
ion A
sset
s
Defer
red t
ax as
...
Other
nonc
urre
nt...
-
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000 NONCURRENT ASSETS
2009 2010 2011
STRONG CORE. SOLID GROWTH
29
CURRENT ASSETS -
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
TOTAL CURRENT ASSETS2009 2010 2011
NONCURRENT ASSETS 16,000,000,000
17,000,000,000
18,000,000,000
19,000,000,000
20,000,000,000
21,000,000,000
22,000,000,000
TOTAL NONCURRENT ASSETS2009 2010 2011
STRONG CORE. SOLID GROWTH
30
TOTAL ASSETS -
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
35,000,000,000
40,000,000,000
TOTAL ASSETS2009 2010 2011
CURRENT LIABILITIES -
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
TOTAL CURRENT LIABILITIES2009 2010 2011
STRONG CORE. SOLID GROWTH
31
NONCURRENT LIABILITIES -
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
TOTAL NONCURRENT LIABILITIES2009 2010 2011
TOTAL LIABILITIES -
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
TOTAL LIABILITIES
2009 2010 2011
STRONG CORE. SOLID GROWTH
32
TOTAL EQUITY -
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
TOTAL EQUITY2009 2010 2011
NET SALES -
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
NET SALES
2009 2010 2011
STRONG CORE. SOLID GROWTH
33
COST OF SALES -
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
18,000,000,000
COST OF SALES
2009 2010 2011
GROSS PROFIT -
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
7,000,000,000
8,000,000,000
9,000,000,000
10,000,000,000
GROSS PROFIT2009 2010 2011
STRONG CORE. SOLID GROWTH
34
NET INCOME -
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
7,000,000,000
NET INCOME
2009 2010 2011
Net ca
sh p
rovi
ded
by o
pera
ting ac
...
Net ca
sh u
sed in
inve
sting
activ
...
Net ca
sh (u
sed in
) pro
vide
d by
fina
n...
(15,000,000,000)
(10,000,000,000)
(5,000,000,000)
-
5,000,000,000
10,000,000,000
CASH FLOWS2009 2010 2011
STRONG CORE. SOLID GROWTH
35
CASH AND CASH EQUIVALENTS -
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
CASH AND CASH EQUIVALENTS
2009 2010 2011
Short-Term Solvency Analysis
STRONG CORE. SOLID GROWTH
36
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 Corporation’s 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.
About the solvency and liquidity of Semirara Mining Corporation as a
whole, it has strong solvency and liquidity in 2010 compared in other years.
STRONG CORE. SOLID GROWTH
37
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 company’s
profit and fewer peso to cover Semirara’s 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.
SEMIRARA MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, TREND PERCENTAGES
STRONG CORE. SOLID GROWTH
38
December 31
2009 2010 2011
ASSETS
Current Assets
Cash and cash equivalents 100.00 791.271,038.6
0
Receivables 100.00 253.83 256.42
Inventories 100.00 76.39 148.88
Other current assets 100.00 120.02 172.45
Total Current Assets 100.00 183.94 253.09
Noncurrent Assets
Property, plant and equipment 100.00 109.90 116.38
Investment and advances 100.00 126.92 200.79
Pension Assets 100.00 0 0
Deferred tax assets 100.00 0 0
Other noncurrent assets 100.00 183.02 139.87
Total Noncurrent Assets 100.00 110.86 117.85
TOTAL ASSETS 100.00 127.98 149.52
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables 100.00 187.20 255.43
Short-term loans 100.00 56.71 127.42
Current portion of Long-term debt 100.00 60.72 160.40
Total Current Liabilities 100.00 125.66 204.88
Noncurrent Liabilities
STRONG CORE. SOLID GROWTH
39
Long-term debt - net of current portion 100.00 133.42 113.21
Deferred tax liabilities 100.00 38.98 0.78
Provision for decommissioning 100.00 99.72 322.09
Pension liability 100.00 154.59 0
Total Noncurrent Liabilities 100.00 132.59 112.44
Total Liabilities 100.00 129.86 148.92
EQUITY
Capital stock 100.00 120.00 120.00
Additional Paid-in capital 100.00 423.36 423.36
Deposit for future stock subscriptions 100.00 0 0
Retained Earnings
Unappropriated 100.00 191.99 294.84
Appropriated 100.00 100.00 100.00
Cost of shares held in treasury 100.00 0 0
Total Equity 100.00 125.31 150.38
TOTAL LIABILITIES AND EQUITY 100.00 127.98 149.52
STRONG CORE. SOLID GROWTH
40
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME,
TREND PERCENTAGES
Year Ended December 31
2009 2010 2011
REVENUE
Coal 100.00 123.84 140.88
Power 100.00 1,951.69 2,167.27
100.00 191.72 216.13
COST OF SALES
Coal 100.00 114.50 114.95
Power 100.00 1,374.15 1,524.17
100.00 171.05 178.23
GROSS PROFIT 100.00 266.13 352.63
OPERATING EXPENSES 100.00 366.15 384.44
INCOME FROM OPERATIONS 100.00 226.00 339.87
OTHER INCOME (CHARGES)
Finance costs 100.00 595.80 430.77
Finance income 100.00 109.32 255.68
STRONG CORE. SOLID GROWTH
41
Foreign exchange gains (losses) - net 100.00 418.19 (80.33)
Equity in net earnings (losses) of associates 100.00 (195.24) 0
Other income 100.00 60.62 92.56
100.00 (473.24) (504.53)
INCOME BEFORE INCOME TAX 100.00 205.18 314.72
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 100.00 164.25 424.45
Deferred 100.00 (75.90) (77.56)
100.00 (55.55) (35.03)
NET INCOME 100.00 214.12 326.72
OTHER COMPREHENSIVE INCOME 100.00 100.00 100.00
TOTAL COMPREHENSIVE INCOME 100.00 214.12 326.72
TOTAL CURRENTS ASSET
2009 2010 2011 -
200.00
400.00
600.00
800.00
1,000.00
1,200.00
Cash and cash equivalents Receivables InventoriesOther current assets
TOTAL NONCURRENT ASSETS
STRONG CORE. SOLID GROWTH
42
2009 2010 2011 -
50.00
100.00
150.00
200.00
250.00
Property, plant and equipmentInvestment and advancesPension Assets
TOTAL CURRENT LIABILITIES
2009 2010 2011 -
50.00
100.00
150.00
200.00
250.00
300.00
Trade and other payables Short-term loans
Current portion of long-term debt
STRONG CORE. SOLID GROWTH
43
TOTAL NONCURRENT LIABILITIES
2009 2010 2011 -
50.00
100.00
150.00
200.00
250.00
300.00
350.00
Long-term debt - net of current portion Deferred tax liabilities
Provision for decommissioning Pension liability
TOTAL CASH FLOWS
STRONG CORE. SOLID GROWTH
2009 2010 2011
(100.00)
(50.00)
-
50.00
100.00
150.00
200.00
250.00
Net cash provided by operating activitiesNet cash used in investing activitiesNet cash (used in) provided by financing activities
44
TOTAL REVENUES, COST OF SALES AND GROSS PROFIT
2009 2010 2011 -
100.00
200.00
300.00
400.00
500.00
"Total Revenues" "Cost of Sales"
"Gross Profit"
NET INCOME
2009 2010 2011 -
50.00
100.00
150.00
200.00
250.00
300.00
350.00
"Net Income"
STRONG CORE. SOLID GROWTH
45
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.
STRONG CORE. SOLID GROWTH
46
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.
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.
STRONG CORE. SOLID GROWTH
47
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION,
VERTICAL ANALYSIS
December 31
2009 2010 2011
ASSETS
Current Assets
Cash and cash equivalents 2.02 12.50 14.05
Receivables 5.26 10.44 9.03
Inventories 12.95 7.73 12.89
Other current assets 3.19 2.99 3.68
Total Current Assets 23.42 33.66 39.64
Noncurrent Assets
STRONG CORE. SOLID GROWTH
48
Property, plant and equipment 74.78 64.22 58.20
Investment and advances 1.03 1.02 1.38
Pension Assets 0 0 0.00
Deferred tax assets 0 0 0.05
Other noncurrent assets 0.77 1.10 0.72
Total Noncurrent Assets 76.58 66.34 60.36
TOTAL ASSETS 100.00 100.00 100.00
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables 11.99 17.54 20.49
Short-term loans 3.33 1.48 2.84
Current portion of Long-term debt 7.83 3.72 8.40
Total Current Liabilities 23.15 22.73 31.72
Noncurrent Liabilities
Long-term debt - net of current portion 35.10 36.60 26.58
Deferred tax liabilities 0.30 0.09 0.00
Provision for decommissioning 0.06 0.05 0.13
Pension liability 0.05 0.07 0
Total Noncurrent Liabilities 35.52 36.80 26.71
Total Liabilities 58.67 59.53 58.44
EQUITY
Capital stock 1.25 1.17 1.00
Additional Paid-in capital 6.62 21.89 18.74
Deposit for future stock subscriptions 22.67 0 0
STRONG CORE. SOLID GROWTH
49
Retained Earnings
Unappropriated 10.07 15.11 19.86
Appropriated 2.94 2.30 1.96
Cost of shares held in treasury (2.22) 0 0
Total Equity 41.33 40.47 41.56
TOTAL LIABILITIES AND EQUITY 100.00 100.00 100.00
STRONG CORE. SOLID GROWTH
50
SEMIRARA MINING CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME,
VERTICAL ANALYSIS
Year Ended December 31
2009 2010 2011
REVENUE
Coal 96.29 62.20 62.76
Power 3.71 37.80 37.24
100.00 100.00 100.00
COST OF SALES
Coal 74.75 44.64 39.76
Power 3.51 25.19 24.78
78.27 69.83 64.54
GROSS PROFIT 21.73 30.17 35.46
OPERATING EXPENSES (6.22) (11.88) (11.07)
INCOME FROM OPERATIONS 15.51 18.28 24.39
OTHER INCOME (CHARGES)
Finance costs (0.94) (2.92) (1.87)
Finance income 0.44 0.25 0.52
Foreign exchange gains (losses) - net 0.40 0.87 (0.15)
Equity in net earnings (losses) of associates (0.33) 0.34 0
Other income 0.90 0.29 0.39
0.48 (1.17) (1.11)
INCOME BEFORE INCOME TAX 15.99 17.11 23.28
PROVISION FOR (BENEFIT FROM) INCOME TAX
STRONG CORE. SOLID GROWTH
51
Current 0.04 0.04 0.09
Deferred 0.49 (0.19) (0.17)
0.53 (0.15) (0.09)
NET INCOME 15.46 17.26 23.36
OTHER COMPREHENSIVE INCOME 0 0 0
TOTAL COMPREHENSIVE INCOME 15.46 17.26 23.36
STRONG CORE. SOLID GROWTH
52
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.
Operating Efficiency and Profitability
STRONG CORE. SOLID GROWTH
53
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.
FINANCIAL RATIOS
STRONG CORE. SOLID GROWTH
54
Current Ratio
2009 2010 2011
Current Assets
Cash and cash equivalents 481,920,935 3,813,283,517
5,005,240,275
Receivables 1,254,095,120
3,183,300,192
3,215,781,247
Inventories 3,084,879,380
2,356,684,774
4,592,835,539
Other current assets 759,885,070 912,018,769 1,310,428,666
Total Current Assets 5,580,780,505
10,265,287,252
14,124,285,727
Total Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Formula: Current Assets 5,580,780,505
10,265,287,252
14,124,285,727
Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Current Ratio 1.01 1.48 1.25
STRONG CORE. SOLID GROWTH
LIQUIDITY RATIOS2009 2010 2011
Current Ratio 1.01 1.48 1.25
Quick Ratio 0.45 1.14 0.84
Cash Ratio 0.09 0.55 0.44
Cash Flow Ratio 0.67 0.97 0.59
55
Semirara Mining Corporation’s 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 firm’s 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.
Quick Ratio
STRONG CORE. SOLID GROWTH
60%
40%
2010
Total Current Assets Total Current Liabilities
50%50%
2009
Total Current Assets Total Current Liabilities
56%
44%
2011
Total Current Assets Total Current Liabilities
56
2009 2010 2011
Quick Assets
Cash and cash equivalents 481,920,935
3,813,283,517
5,005,240,275
Receivables 1,254,095,120
3,183,300,192
3,215,781,247
Other current assets 759,885,070
912,018,769
1,310,428,666
Total Quick Assets 2,495,901,125
7,908,602,478
9,531,450,188
Total Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Formula: Quick Assets ___ 2,495,901,125
7,908,602,478
9,531,450,188
Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Quick Ratio 0.45 1.14 0.84
STRONG CORE. SOLID GROWTH
31%
69%
2009
Total Quick Assets Total Current Liabilities
53%
47%
2010
Total Quick Assets Total Current Liabilities
46%
54%
2011
Total Quick Assets Total Current Liabilities
57
The acid test or quick ratio is a more severe test of a firm’s 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 Corporation’s 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 short- term financial position of the company.
Cash Ratio
2009 2010 2011
Total Cash and Cash Equivalents 481,920,935 3,813,283,517
5,005,240,275
Total Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Formula: Cash Assets__ 481,920,935 3,813,283,517
5,005,240,275
Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Cash Ratio 0.09 0.55 0.44
STRONG CORE. SOLID GROWTH
58
Cash ratio is a measure of the firm’s 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 Corporation’s cash ratio indicates that the company
doesn’t 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
firm’s short term solvency in terms of cash assets is low as shown in the cash
ratio.
Cash Flow Ratio
STRONG CORE. SOLID GROWTH
31%
69%
2011
Total Cash and Cash Equivalents Total Current Liabilities
8%
92%
2009
Total Cash and Cash Equivalents Total Current Liabilities
35%
65%
2010
Total Cash and Cash Equivalents Total Current Liabilities
59
2009 2010 2011
Total Operating Cash Flows 3,669,127,255
6,725,016,362
6,643,454,925
Total Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Formula: Operating Cash Flows__
3,669,127,255
6,725,016,362
6,643,454,925
Current Liabilities
5,516,516,727
6,932,168,373
11,302,381,581
Cash Flow Ratio 0.67 0.97 0.59
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.
STRONG CORE. SOLID GROWTH
37%
63%
2011
Total Operating Cash Flows Total Current Liabilities
49%51%
2010
Total Operating Cash Flows Total Current Liabilities
40%
60%
2009
Total Operating Cash Flows Total Current Liabilities
60
Times Interest Earned Ratio
2009 2010 2011
Income Before Interests and Taxes
Income before tax 1,909,279,059
3,917,546,726
6,008,967,290
Finance Cost 112,192,664
668,440,816
483,287,781
Total Income Before Interests and Taxes
2,021,471,723
4,585,987,542
6,492,255,071
Finance Cost 112,192,664
668,440,816
483,287,781
Formula: Income Before Interests and Taxes
2,021,471,723
4,585,987,542
6,492,255,071
Finance Cost
112,192,664
668,440,816
483,287,781
Times Interest Earned 18.02 6.86 13.43
STRONG CORE. SOLID GROWTH
LEVERAGE RATIO2009 2010 2011
Times Interest Earned 18.02 6.86 13.43
Debt-Equity Ratio 1.42 1.47 1.41
Debt Ratio 0.59 0.60 0.58
Equity Ratio 0.41 0.40 0.42
61
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
firm’s 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
interest’s charges in 2011 which made the company be able to cover its interest
payments up to 13.43 times by its earnings.
STRONG CORE. SOLID GROWTH
87%
13%
2010
Total Income Before Interests and Taxes Finance Cost
93%
7%
2011
Total Income Before Interests and Taxes Finance Cost
95%
5%
2009
Total Income Before Interests and Taxes Finance Cost
62
Debt-Equity Ratio
2009 2010 2011
Liabilities
Current Liabilities 5,516,516,727 6,932,168,373 11,302,381,581
Noncurrent Liabilities 8,464,250,030 11,222,637,857 9,517,297,808
Total Liabilities 13,980,766,757 18,154,806,230 20,819,679,389
Equity
Capital stock 296,875,000 356,250,000 356,250,000
Additional Paid-in capital 1,576,796,271 6,675,527,411 6,675,527,411
Deposit for future stock subscriptions
5,402,125,985 0 0
Retained Earnings
Unappropriated 2,400,238,695 4,608,125,771 7,076,762,346
Appropriated 700,000,000 700,000,000 700,000,000
Cost of shares held in treasury
(528,891,260) 0 0
Total Equity 9,847,144,691 12,339,903,182 14,808,539,757
Formula: Total Liabilities
13,980,766,757 18,154,806,230 20,819,679,389
Total Equity 9,847,144,691 12,339,903,182 14,808,539,757
Debt-Equity Ratio 1.42 1.47 1.41
The debt-equity ratio compares resources provided by creditors with
resources provided by shareholders. Semirara Mining Corporation’s 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 well- balanced level of borrowed and equity funds.
STRONG CORE. SOLID GROWTH
63
Debt Ratio
2009 2010 2011
Liabilities
Current Liabilities 5,516,516,727
6,932,168,373
11,302,381,581
Noncurrent Liabilities 8,464,250,030
11,222,637,857
9,517,297,808
Total Liabilities 13,980,766,757
18,154,806,230
20,819,679,389
Assets
Current Assets 5,580,780,505
10,265,287,252
14,124,285,727
Noncurrent Assets 18,247,130,943
20,229,422,160
21,503,933,419
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
Formula: Total Liabilities
13,980,766,757
18,154,806,230
20,819,679,389
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
Debt Ratio 0.59 0.60 0.58
STRONG CORE. SOLID GROWTH
58%
42%
2011
Total Liabilities Total Equity
60%
40%
2010
Total Liabilities Total Equity
59%
41%
2009
Total Liabilities Total Equity
64
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 Corporation’s 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.
STRONG CORE. SOLID GROWTH
37%
63%
2010
Total Liabilities Total Asets
37%
63%
2011
Total Liabilities Total Asets
37%
63%
2009
Total Liabilities Total Asets
65
Equity Ratio
2009 2010 2011
Equity
Capital stock 296,875,000 356,250,000 356,250,000
Additional Paid-in capital 1,576,796,271 6,675,527,411 6,675,527,411
Deposit for future stock subscriptions
5,402,125,985 0 0
Retained Earnings
Unappropriated 2,400,238,695 4,608,125,771 7,076,762,346
Appropriated 700,000,000 700,000,000 700,000,000
Cost of shares held in treasury
(528,891,260) 0 0
Total Equity 9,847,144,691 12,339,903,182
14,808,539,757
Assets
Current Assets 5,580,780,505 10,265,287,252
14,124,285,727
Noncurrent Assets 18,247,130,943
20,229,422,160
21,503,933,419
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
Formula: Total Equity__ 9,847,144,691 12,339,903,182
14,808,539,757
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
Equity Ratio 0.41 0.40 0.42
Creditors prefer higher equity ratios because the higher the
ratio, the greater the cushion against creditors’ losses in the event of
liquidation.
Semirara Mining Corporation’s 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
STRONG CORE. SOLID GROWTH
66
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.
STRONG CORE. SOLID GROWTH
29%
71%
2009
Total Equity Total Asets
29%
71%
2009
Total Equity Total Asets
29%
71%
2009
Total Equity Total Asets
67
Receivables Turnover Ratio
*Assumption: All sales were made on credit
2009 2010 2011
Net Credit Sales 11,943,685,574
22,897,848,475
25,813,584,789
Receivables
Beginning Balance 1,779,050,330
1,254,095,120
3,183,300,192
Ending Balance 1,254,095,120
3,183,300,192
3,215,781,247
Average Receivables 1,516,572,725
2,218,697,656
3,199,540,720
Formula: Net Credit Sales__
11,943,685,574
22,897,848,475
25,813,584,789
Average Receivables
1,516,572,725
2,218,697,656
3,199,540,720
STRONG CORE. SOLID GROWTH
ASSET LIQUIDITY AND MANAGEMENT RATIOS2009 2010 2011
Receivables Turnover Ratio 7.88 10.32 8.07
Inventory Turnover Ratio 6.16 7.21 5.21
Current Assets Turnover Ratio 2.00 2.36 1.60
Fixed Assets Turnover Ratio 1.26 1.22 1.28
Total Assets Turnover Ratio 0.80 0.84 0.78
Trade Payables Turnover Ratio 4.95 5.61 5.44
68
Receivable Turnover Ratio
7.88 10.32 8.07
The accounts receivables turnover ratio (receivables turnover ratio) is
a measure of how many times a company’s 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.
STRONG CORE. SOLID GROWTH
89%
11%
2009
Net Credit Sales Average Receivables
89%
11%
2011 Net Credit Sales Average Receivables
91%
9%
2010 Net Credit Sales Average Receivables
69
Inventory Turnover Ratio
2009 2010 2011
Cost of Sales 9,348,055,236
15,990,034,213
16,660,619,462
Inventory
Beginning Balance 1,383,220,166
3,084,879,380
2,356,684,774
Ending Balance 3,084,879,380
2,356,684,774
4,592,835,539
Average Inventory 2,234,049,773
2,720,782,077
3,474,760,157
Formula: _ Cost of Sales__
9,348,055,236
15,990,034,213
16,660,619,462
Average Inventory 1,516,572,725
2,218,697,656
3,199,540,720
Inventory Turnover Ratio
6.16 7.21 5.21
STRONG CORE. SOLID GROWTH
84%
16%
2011
Cost of Sales Average Inventory
88%
12%
2010
Cost of Sales Average Inventory
86%
14%
2009
Cost of Sales Average Inventory
70
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 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 2010 2011
Operating Requirements
Cost of Sales 9,348,055,236
15,990,034,213
16,660,619,462
Operating expenses 743,200,579 2,721,234,918
2,857,174,114
Total 10,091,255,815
18,711,269,131
19,517,793,576
Current Assets
Beginning Balance 4,498,411,591
5,580,780,505
10,265,287,252
Ending Balance 5,580,780,505
10,265,287,252
14,124,285,727
Average Current Assets 5,039,596,048
7,923,033,879
12,194,786,490
Formula: Cost of Sales + Operating Expenses
10,091,255,815
18,711,269,131
19,517,793,576
Average Current Assets
5,039,596,048
7,923,033,879
12,194,786,490
Current Assets Turnover Ratio
2.00 2.36 1.60
STRONG CORE. SOLID GROWTH
71
The current assets turnover ratio is another way to assess the
company’s 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, 2010’s 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 2010 2011
Net Sales 11,943,685,574
22,897,848,475
25,813,584,789
Net Fixed Assets (Property, Plant and Equipment) Beginning Balance 1,106,064,2
5817,818,687,
30119,582,414,
736 Ending Balance 17,818,687,
30119,582,414,
73620,737,333,
275
STRONG CORE. SOLID GROWTH
70%
30%
2010
Total Operating Requirements Average Current Assets
62%
38%
2011
Total Operating Requirements Average Current Assets
67%
33%
2009
Total Operating Requirements Average Current Assets
72
Average Net Fixed Assets 9,462,375,780
18,700,551,019
20,159,874,006
Formula: Net Sales_____
11,943,685,574
22,897,848,475
25,813,584,789
Average Net Fixed Assets 9,462,375,780
18,700,551,019
20,159,874,006
Fixed Assets Turnover Ratio
1.26 1.22 1.28
The fixed assets turnover is an approach of assessing a company’s
effectiveness in generating sales from investment in its fixed assets. In 2011,
P1 of Semirara’s 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 firm’s management has been more
efficient in managing their fixed assets as years goes by.
STRONG CORE. SOLID GROWTH
56%
44%
2009
Net Sales Average Net Fixed Assets
55%
45%
2010
Net Sales Average Net Fixed Assets
56%
44%
2011
Net Sales Average Net Fixed Assets
73
Total Assets Turnover Ratio
2009 2010 2011
Net Sales 11,943,685,574
22,897,848,475
25,813,584,789
Total Assets
Beginning Balance 6,111,456,918
23,827,911,448
30,494,709,412
Ending Balance 23,827,911,448
30,494,709,412
35,628,219,146
Average Total Assets 14,969,684,183
27,161,310,430
33,061,464,279
Formula: Net Sales_____ 11,943,685,574
22,897,848,475
25,813,584,789
Average Total Assets 14,969,684,183
27,161,310,430
33,061,464,279
Total Assets Turnover Ratio
0.80 0.84 0.78
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
STRONG CORE. SOLID GROWTH
44%
56%
2011
Net Sales Average Total Assets
46%
54%
2010
Net Sales Average Total Assets
44%
56%
2009
Net Sales Average Total Assets
74
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.
Trade Payables Turnover Ratio
*Assumption: All purchases were made on account.
2009 2010 2011
Credit Purchases
Cost of Sales 9,348,055,236
15,990,034,213
16,660,619,462
Ending Inventory 3,084,879,380
2,356,684,774
4,592,835,539
Beginning Inventory 1,383,220,166
3,084,879,380
2,356,684,774
Net Credit Purchases 11,049,714,450
15,261,839,607
18,896,770,227
Inventory
Beginning Balance 1,383,220,166
3,084,879,380
2,356,684,774
Ending Balance 3,084,879,380
2,356,684,774
4,592,835,539
Average Inventory 2,234,049,773
2,720,782,077
3,474,760,157
Formula: Net Credit Purchases
11,049,714,450
15,261,839,607
18,896,770,227
Average Inventory 2,234,049,773
2,720,782,077
3,474,760,157
Trade Payables Turnover 4.95 5.61 5.44
STRONG CORE. SOLID GROWTH
75
Ratio
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, Semirara’s management should still look into ways to
increase their trade payables turnover ratio.
STRONG CORE. SOLID GROWTH
84%
16%
2011
Net Credit Purchases Average Inventory
85%
15%
2010
Net Credit Purchases Average Inventory
83%
17%
2009
Net Credit Purchases Average Inventory
OPERATING EFFICIENCY AND PROFITABILITY2009
Gross Profit Margin 0.22
Operating Profit Margin 0.16
Net Profit Margin 0.15
Cash Flow Margin 0.31
Rate of Return on Investment in Assets
0.08
Rate of Return on Current Assets 0.33
Rate of Return on Investment in Equity
0.19
76
Gross Profit Margin
2009 2010 2011
Gross Profit 2,595,630,338
6,907,814,262
9,152,965,327
Net Sales 11,943,685,574
22,897,848,475
25,813,584,789
Formula: Gross Profit 2,595,630,33 6,907,814,26 9,152,965,32
STRONG CORE. SOLID GROWTH
77
8 2 7 Net Sales 11,943,685,5
7422,897,848,4
7525,813,584,7
89
Gross Profit Margin 0.22 0.30 0.35
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
STRONG CORE. SOLID GROWTH
23%
77%
2010
Gross Profit Net Sales
26%
74%
2011
Gross Profit Net Sales
18%
82%
2009
Gross Profit Net Sales
78
2009 2010 2011
Operating Profit 1,852,429,75
9
4,186,579,34
4
6,295,791,21
3
Net Sales 11,943,685,5
74
22,897,848,4
75
25,813,584,7
89
Formula: Operating
Profit
1,852,429,75
9
4,186,579,34
4
6,295,791,21
3
Net Sales 11,943,685,5
74
22,897,848,4
75
25,813,584,7
89
Operating Profit Margin 0.16 0.18 0.24
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 company’s 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 company’s
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
STRONG CORE. SOLID GROWTH
20%
80%
2011
Operating Profit Net Sales
15%
85%
2010
Operating Profit Net Sales
13%
87%
2009
Operating Profit Net Sales
79
2010 respectively. This discloses that the company may have been greater
sales while lowering their cost of production and operating expenses.
Net Profit Margin
2009 2010 2011
Net Income 1,845,984,707 3,952,708,25
7
6,031,136,57
5
Net Sales 11,943,685,57
4
22,897,848,4
75
25,813,584,7
89
Formula: Net Income 1,845,984,707 3,952,708,25
7
6,031,136,57
5
Net Sales 11,943,685,57
4
22,897,848,4
75
25,813,584,7
89
Net Profit Margin 0.15 0.17 0.23
STRONG CORE. SOLID GROWTH
80
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.
Cash Flow Profit Margin
2009 2010 2011
Cash Flow from Operations 3,669,127,25
5
6,725,016,36
2
6,643,454,92
5
Net Sales 11,943,685,574
22,897,848,475
25,813,584,789
Formula: Cash Flow from Operations
3,669,127,255
6,725,016,362
6,643,454,925
Net Sales 11,943,685,574
22,897,848,475
25,813,584,789
Cash Flow Profit 0.31 0.29 0.26
STRONG CORE. SOLID GROWTH
15%
85%
2010
Net Income Net Sales
19%
81%
2011
Net Income Net Sales
13%
87%
2009
Net Income Net Sales
81
Margin
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 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 2010 2011
Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
Formula: Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Total Assets 23,827,911,448
30,494,709,412
35,628,219,146
STRONG CORE. SOLID GROWTH
20%
80%
2011
Cash Flow from Operations Net Sales
23%
77%
2010
Cash Flow from Operations Net Sales
24%
76%
2009
Cash Flow from Operations Net Sales
82
Rate of Return on Investment in Assets
0.08 0.13 0.17
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 three-
year 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.
Rate of Return on Current Assets
2009 2010 2011
Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Total Current Assets 5,580,780,505
10,265,287,252
14,124,285,727
Formula: Net Income 1,845,984,707
3,952,708,257
6,031,136,575
STRONG CORE. SOLID GROWTH
11%
89%
2010
Net Income Total Assets
14%
86%
2011
Net Income Total Assets
7%
93%
2009
Net Income Total Assets
83
Total Current Assets 5,580,780,505
10,265,287,252
14,124,285,727
Rate of Return on Current Assets
0.33 0.39 0.43
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 company’s 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.
Rate of Return on Investment in Equity
2009 2010 2011
Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Net Sales 9,847,144,691
12,339,903,182
14,808,539,757
STRONG CORE. SOLID GROWTH
30%
70%
2011
Net Income Total Current Assets
28%
72%
2010
Net Income Total Current Assets
25%
75%
2009
Net Income Total Current Assets
GROWTH RATIOS2009
2010
2011
Basic Earnings per Shares 6.22 12.10
16.93
Earnings Yield 0.11 0.07 0.08
Cash Flow per Share 12.36
20.59
18.65
Dividend Payout Ratio 0.96 0.50 0.59
Dividend Yield 0.11 0.03 0.05
Ratio of Operating Cash Flows to Cash 2.06 3.43 1.86
84
Formula: Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Total Equity 9,847,144,691
12,339,903,182
14,808,539,757
Rate of Return on Investment in Equity
0.19 0.32 0.41
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.
STRONG CORE. SOLID GROWTH
29%
71%
2011
Net Income Total Equity
24%
76%
2010
Net Income Total Equity
16%
84%
2009
Net Income Total Equity
85
Basic Earnings per Share
2009 2010 2011
Net Income 1,845,984,707
3,952,708,257
6,031,136,575
Outstanding Shares
Beginning Balance 296,875,000 296,875,000 356,250,000
Ending Balance 296,875,000 356,250,000 356,250,000
Average Outstanding Shares 296,875,000 326,562,500 356,250,000
Formula: Net Income
1,845,984,707
3,952,708,257
6,031,136,575
Average Outstanding Shares
296,875,000 326,562,500 356,250,000
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.
Semirara’s 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.
Earnings Yield
2009 2010 2011
Earnings per Share 6.22 12.10 16.93
Market Price per Share 55 185 221
STRONG CORE. SOLID GROWTH
86
Formula: Earnings per share
6.22 12s.10 16.93
Market price per share 55 185 221
Earnings Yield 0.11 0.07 0.08
The earnings yield is a comparison of earnings per share and its
market price. Semirara’s earnings yield decreased from 0.11 in 2009 to 0.08
in 2011, a 27% decrease.
Cash Flow per Share
2009 2010 2011
Cash Flow from Operations 3,669,127,255
6,725,016,362
6,643,454,925
Average Outstanding Shares 296,875,000 326,562,500 356,250,000
Formula: Cash Flow from Operations
3,669,127,255
6,725,016,362
6,643,454,925
Average Outstanding Shares
296,875,000 326,562,500 356,250,000
Cash Flow per Share 12.36 20.59 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. Semirara’s 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.
Dividend Payout Ratio
2009 2010 2011
Cash Dividend per Common Share 6 6 10
Earnings per Share 6.22 12.10 16.93
STRONG CORE. SOLID GROWTH
87
Formula: Cash Dividend per Common Share
6 6 10
Earnings per Share 6.22 12.10 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 2010 2011
Cash Dividend per Common Share 6 6 10
Market Price per Share 55 185 221
Formula: Cash Dividend per Common Share
6 6 10
Market Price per Share 55 185 221
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.
Rate of Operating Cash Flows to Cash Dividends
2009 2010 2011
Cash Flow from Operations 3,669,127,2 6,725,016,3 6,643,454,9
STRONG CORE. SOLID GROWTH
88
55 62 25 Cash Dividends 1,781,250,0
001,959,375,0
003,562,500,0
00
Formula: Cash Dividend per Common Share
3,669,127,255
6,725,016,362
6,643,454,925
Market Price per Share 1,781,250,000
1,959,375,000
3,562,500,000
Ratio of Operating Cash flows to Cash Dividends
2.06 3.43 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. Semirara’s
rate of operating cash flows to cash dividends decreased from 2.06 in 2009 to
1.86 in 2011.
STRONG CORE. SOLID GROWTH
VALUATION RATIOS2009
2010
2011
Book Value per Share 33.29
34.64
41.57
Price-Earnings Ratio 8.85 15.28
13.05
Market to Book Ratio 1.65 5.34 5.32
89
Book Value per Share
2009 2010 2011
Total Equity 9,883,573,510
12,339,903,182
14,808,539,757
Shares Outstanding 296,875,000
356,250,000 356,250,000
Formula: ____Total Equity___
9,883,573,510
12,339,903,182
14,808,539,757
Shares Outstanding
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.
Semirara’s 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
90
Price-Earnings Ratio
2009 2010 2011
Market Price per Share 55 185 221
Earnings per Share 6.22 12.10 16.93
Formula: Market Price per Share
55 185 221
Earnings per Share
6.22 12.10 16.93
Price-Earnings Ratio 8.85 15.28 13.05
This ratio relates earnings per ordinary share to the market price.
Semirara’s 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 firm’s standing.
Market to Book Ratio
2009 2010 2011
Market Price per Share 55 185 221
Book Value per Share 33.29 34.64 41.57
Formula: Market Price per Share
55 185 221
Book Value per Share
33.29 34.64 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. Semirara’s market to book ratio increased
from 1.65 in 2009 to 5.32 in 2011, an almost 325% increase.
STRONG CORE. SOLID GROWTH
91STRONG CORE. SOLID GROWTH