2nd Quarter of Fiscal Year 03-12

SEC Number PW 15

File ________

ROXAS HOLDINGS, INC. (formerly CENTRAL AZUCARERA DON PEDRO)

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(Companys Full Name)

6/F Cacho Gonzales Bldg., 101 Aguirre St., Legaspi Village, Makati City

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(Companys Address)

(632) 810-8901 to 06

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(Companys Telephone Number)

September 30, 2012

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(Fiscal Year Ending)

SEC Form 17-Q

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(Form Type)

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Amended Designation (If Applicable)

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Period Ended Date

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SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17- Q

ANNUAL REPORT PURSUANT TO SECTION 11 OF THE SECURITIES REGULATION CODE

AND SRC RULE 17(2)(b) THEREUNDER

1. For the period ended: March 31, 2012

2. Commission Identification Number 15A 3. BIR Tax Identification No. 000-290-538

4. Exact name of registrant as specified in its charter ROXAS HOLDINGS, INC. (FORMERLY

CENTRAL AZUCARERA DON PEDRO)

5. Province, country or other jurisdiction of incorporation or organization

Philippines

6 Industry Classification Code:

7. Address of principal office Postal Code

6/F Cacho Gonzales Bldg., 101 Aguirre St., 1200

Legaspi Village, Makati City

8. Registrant's telephone number, including area code

(632) 810-8901 to 06

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

Not Applicable

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

Title of Each Class Number of Shares

and Amount of Debt Outstanding Authorized Capital Stock:

No. of common shares issued and outstanding 909,552,236

No. of preferred shares issued and outstanding -

Amount of debt outstanding as of March 31, 2012 P 8,833,597,830

11. Are any or all of these securities listed on the Philippine Stock Exchange.

Yes [ X ] No [ ]

12. Indicate by check mark whether the registrant:

(a) has filed all reports required to be filed by Section 11 of the Securities Revised Code (SRC) and SRC Rule 11(a)-1 thereunder and Sections 26 and 141 of the Corporation Code of the Philippines,

during the preceding 12 months (or for such shorter period the registrant was required to file such

reports)

Yes [ X ] No [ ]

(b) has been subject to such filing requirements for the past 90 days

Yes [ ] No [ X ]

FINANCIAL INFORMATION

Item 1. Financial Statements.

Please See Annex "A".

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Please See Annex "B".

OTHER INFORMATION

1. New projects or investments in another project, line of business or corporation;

None for the period.

2. Composition of Board of Directors;

PEDRO E. ROXAS Chairman

RENATO C. VALENCIA President and CEO

ANTONIO J. ROXAS Director

BEATRIZ O. ROXAS Director

SANTIAGO R. ELIZALDE Director

GERONIMO R. ESTACIO Director

RAMON R. DEL ROSARIO, JR. Director

DAVID L. BALANGUE Director

LORNA P . KAPUNAN Corporate Secretary

3. Performance of the corporation or result or progress of operations;

Required information are contained in Annexes "A" and "B".

4. Suspension of operations;


5. Declaration of dividends;


6. Contracts of merger, consolidation or joint venture; contract of management, licensing, marketing,

distributorship, technical assistance or similar agreements;


7. Financing through loans;

None for the period

8. Offering of rights, granting of Stock Options and corresponding plans therefore;


9. Acquisition of other capital assets or patents, formula or real estates;


10. Any other information, event or happening that may affect the market price of the company's shares;


11. Transferring of assets, except in the normal course of business;


Registrant ROXAS HOLDINGS, INC. (formerly CENTRAL AZUCARERA DON PEDRO)

Signature and Title:

FLORENCIO M. MAMAUAG, JR

Compliance Officer, Chief Information Officer, Asst. Corp. Secretary, VP Legal and HR

8 May 2012

ANNEX A Roxas Holdings, Inc. and Subsidiaries

CONSOLIDATED FINANCIAL STATEMENTS

Second Quarter Ending March 31, 2012 and 2011

Note March 31, 2012

(Unaudited)

September 30, 2011

(Audited)

CURRENT ASSETS

Cash and cash equivalents (Notes 4 and 27) 319,467 318,756

Receivables, net (Notes 5, 15 and 27) 862,708 558,872

Inventories, net (Note 6) 2,019,865 1,639,077

Prepayments and other current assets ( Note 7) 373,069 332,093

Total current assets 3,575,109 2,848,798

NON-CURRENT ASSETS

Property, plant and equipment, net (Notes 9 and 14) 11,133,138 11,488,142

Investment property (Note 10) 170,391 170,391

Investment in shares of stock of an associate (Note 8) 597,013 685,944

Net pension plan assets (Note 16) 127,697 127,697

Other noncurrent assets 20,141 24,829

Total non-current assets 12,048,380 12,497,003

Total assets 15,623,489 15,345,801

CURRENT LIABILITIES

Short-term borrowings (Notes 11and 27) 2,403,000 2,738,000

Current portion of long term debt (Notes 9, 14 and 27) - 827,683

Accounts payable and accrued expenses (Notes 12 and 27) 910,257 594,315

Income tax payable - 366

Dividends payable (Notes 24 and 27) 16,069 16,069

Customers' deposits (Note 13) 377,516 153,478

Non current portion of long term debt ( Notes 9, 14 and 27) - 5,599,282

Total current liabilities 3,706,841 9,929,193

NON-CURRENT LIABILITIES

Long-term borrowings, net (Notes 9, 14 and 27) 6,198,938 -

Net pension benefit obligation (Note 16 ) 2,074 -

Deferred income tax liabilities (Note 23) 784,378 776,606

Total non-current liabilities 6,985,390 776,606

Total liabilities 10,692,231 10,705,799

EQUITY 4,931,258 4,640,002

Total liabilities and equity 15,623,489 15,345,801

(0) -

Certified Correct:

MR. JOSE PACIFICO E. MARCELO

EVP and Chief Finance Officer

ROXAS HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(All Amounts in Thousands Philippine Peso)

A S S E T S

LIABILITIES AND EQUITY

2012 2011 2012 2011

(As restated)

REVENUES (Note 18) 1,671,301 2,210,855 3,526,810 4,073,614

COST OF SALES (Note 19) (887,656) (1,296,427) (2,509,417) (3,324,703)

GROSS PROFIT 783,644 914,428 1,017,393 748,911

OTHER OPERATING INCOME (Note 22) 10,714 20,310 62,541 51,484

794,358 934,739 1,079,934 800,395

OPERATING EXPENSES (Note 20) (250,806) (195,230) (441,166) (396,705)

OPERATING PROFIT 543,552 739,509 638,768 403,690

EQUITY IN NET EARNINGS OF AN ASSOCIATE (Note 8) (15,349) 30,519 (17,560) 58,208

FINANCE INCOME (COSTS)

Interest expense (122,819) (141,473) (269,272) (295,472)

Interest income (Note 4) 1,890 88 2,130 268

(120,929) (141,384) (267,142) (295,204)

INCOME BEFORE INCOME TAX 407,274 628,644 354,066 166,694

INCOME TAX (EXPENSE) BENEFIT

Current (14,835) (2,081) (29,115) (2,163)

Deferred 5,632 69,368 7,040 81,243

(9,203) 67,287 (22,075) 79,080

NET INCOME 398,071 695,931 331,991 245,774

Attributable to:

Equity holders of the Parent Company 397,022 696,701 331,091 246,544

Minority interest 1,050 (770) 900 (770)

398,072 695,931 331,991 245,774

EARNINGS PER SHARE

Basic 0.437 0.766 0.440 0.270

Diluted 0.437 0.766 0.440 0.270

Certified Correct:




INTERIM CONSOLIDATED STATEMENTS OF INCOME

For the Six Months Ending March 31, 2012 and 2011

(All Amounts in '000 Philippine Peso)

For the Quarter Ending March 31 For the Two Quarters Ending

March 31

2012 2011

Net income (loss) for the period 331,991 245,774

Other comprehensive income - -

Total comprehensive loss 331,991 245,774

Certified Correct:




INTERIM STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDING MARCH 31, 2012 AND 2011


2012 2011

SHARE CAPITAL (Note 24) 1,168,976 1,168,976

Authorized capital - 1,500,000,000 @ P1 per share

Issued - 1,168,976,425 shares

SHARE PREMIUM 554,959 554,959

EFFECTS OF CHANGE IN OWNERSHIP OF SUBSIDIARIES 44,567 44,567

SHARE IN REVALUATION INCREMENT IN PROPERTY 207,492 207,492

REVALUATION INCREMENT IN PROPERTY 1,573,210 454,242

EXCESS IN INVESTMENT COST 577,149 577,149

RETAINED EARNINGS (Note 24)

Beginning balance 1,204,588 3,431,576

Share of parent company in net income (loss) for the period 331,091 246,544

TREASURY STOCK (Note 24) (768,859) (768,859)

MINORITY INTEREST

Beginning balance 37,185 40,661

Share of minority interest for the period 900 (770)

4,931,258 5,956,536

Certified Correct:




CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



Total number of shares - 259,424,189

2012 2011

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax 354,066 166,694

Adjustments for:

Equity in net loss (earnings) of an associate 17,560 (58,208)

Depreciation and amortization 359,192 273,918

Interest expense 269,273 295,473

Gain on disposal of fixed assets (530) (182)

Provision on inventory losses and impairment 14,617 15,235

Interest income (2,130) (268)

Net cash before working capital change 1,012,048 692,662

(Increase) decrease in current assets

Receivables (303,836) 311,447

Inventories (380,788) (2,866,417)

Prepayments and other current assets (40,976) (63,788)

Increase (decrease) in current liabilities

Accounts payable and accrued expenses 324,389 349,367

Customers' deposit 224,038 59,851

Increase in net pension benefit obligation 1,296 (30,871)

Cash generated from (used in) operations 836,171 (1,547,749)

Income tax paid including final tax & application of creditable withholding tax (51,314) (11,560)

Net cash provided by (used in) operating activities 784,857 (1,559,309)

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment (30,037) (285,106)

Dividends received 71,373 -

Decrease in other assets 4,688 (3,197)

Interest received 2,130 268

Net cash provided by (used in) investing activities 48,154 (288,035)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from:

Long-term loans - -

Short-term loansShort-term loans 175,000 2,243,524

Payment of:

Short-term loans (510,000) (70,476)

Long-term loans (228,027) (1,731)

Interest paid (269,273) (295,473)

Net cash provided by (used in) financing activities (832,300) 1,875,844

NET DECREASE IN CASH AND

CASH EQUIVALENTS FOR THE PERIOD 711 28,500

CASH AND CASH EQUIVALENTS

Beginning 318,756 284,317

Ending 319,467 312,817

Certified Correct:




CONSOLIDATED STATEMENTS OF CASH FLOWS



ROXAS HOLDINGS, INC. (A Subsidiary of Roxas and Company, Inc.)

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Information, Corporate Reorganizations, Status of Operations and Approval of the Consolidated Financial Statements

Corporate Information Roxas Holdings, Inc. (RHI or the Company), doing business under the name and style of CADP Group, was organized in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on October 30, 1930 for the purpose of operating mill and refinery facilities to

manufacture sugar and allied products. The Companys corporate life is extended for another 50 years from November 1, 1980.

In July 1996, the Company offered its shares to the public through an initial public offering. On

August 8, 1996, the Companys shares of stock were listed in the Philippine Stock Exchange.

As of March 31, 2012 and September 30, 2011, the Company is 65.70% owned by Roxas and Company, Inc. (RCI), a publicly listed company incorporated and domiciled in the Philippines. Prior

to the merger effective June 29, 2009 as discussed below, the Company was 65.12% owned by Roxas

& Company, Inc., a company incorporated and domiciled in the Philippines. The Company has 2,299, 2,613 and 2,330 equity holders as of March 31, 2012 and September 30, 2011 respectively.

On February 2, 2011, the Board of Directors (BOD) of the Company and its subsidiaries (collectively referred to as the Group) approved the amendment on the Groups By-Laws changing the accounting period from fiscal year ending June 30 to September 30 of each year. The change in accounting period of the Company was approved by the Philippine SEC on

March 3, 2011. The change in accounting period of the Companys subsidiaries was approved by the Philippine SEC on various dates in fiscal year 2011.

The Companys corporate office is located at the 6th Floor, Cacho-Gonzales Building, 101 Aguirre Street, Legaspi Village, Makati City, while the manufacturing plants of its operating subsidiaries (see Note 28) are in Barrio Lumbangan, Nasugbu, Batangas and Brgy. R. S. Benedicto,

La Carlota City, Negros Occidental.

Status of Operations and Management Action Plans

For the fiscal year ended June 30, 2011, the Group was significantly affected by the volatility of the

prices of sugar, molasses and ethanol, impacting the Groups profitability and cash flows. Thus, the Group incurred a consolidated net loss of P=741.8 million and a net cash outflow from operating

activities of P=604.5 million. Consequently, the Group did not meet the minimum debt service coverage ratio (DSCR) required under its long-term loan agreements with certain creditor banks as of

June 30, 2011 (see Note 14). Considering that the losses were mainly driven by market reversals and

not by the Groups capacity to service its loans, the Group was able to obtain from the creditor banks in September and October 2011 a waiver of breach of covenant on the DSCR covering the fiscal year

ended June 30, 2011.

For the interim period ended September 30, 2011 where the Group is expected to record heavy

expenses in preparing its mills for the milling operations, the Group incurred a loss of

P=765.5 million as anticipated. Despite the losses however, the Groups net cash inflow from operating activities reached P=798.9 million, of which P=698.3 million was used to pay off short-term and long-term liabilities. Consequently, the creditor banks issued in December 2011 and January 2012 similar

waivers for possible violations of DSCR up to September 2012 (see Note 14).

In line with the continuing efforts to improve the profitability of the sugar operations, ensure the long-

term viability of the business and address the adverse effects of the volatility of the sugar and alcohol prices, the Group is implementing corporate restructuring, strategies and action plans to achieve

positive results for fiscal year 2012 to 2013. Among these are:

1. A new Management Team has taken over the helm with focus on clearly defining profit centers

with proper accountabilities. The new Management has decoupled trading operations from manufacturing, as well as milling from refinery operations to avoid cross-subsidies and enable

each profit center to stand on its own.

2. The new Management has also mandated the profit centers and other operating units to reduce overhead expenses by at least 10% to 20% compared to that of last year.

3. Term loans have been substantially restructured thus adjusting interest rates to current market rates, which have generally come down due to prevailing liquidity in the banking system.

4. The mills and plants have been mandated to achieve operating efficiencies by maximizing sugar recovery and reducing energy costs, hauling fees, and other manufacturing expenses.

5. Making sure that Roxol Bioenergy Corporation (RBC) is fully operational to avoid last years drag on profits due to its intermittent operations.

2. Summary of Significant Accounting and Financial Reporting Policies

Basis of Preparation and Statement of Compliance The interim condensed consolidated financial statements of the Company and its Subsidiaries

(collectively referred to as the Group) have been prepared in accordance with Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS) 34, Interim Financial Reporting.

The interim condensed consolidated financial statements have been prepared using the historical cost

basis, except for land, which is stated at revalued amounts and consumable biological assets which

are carried at fair value, and are presented in Philippine peso, the Companys functional currency, and rounded to the nearest thousands, except when otherwise indicated.

The unaudited interim condensed consolidated financial statements, which have been prepared by the Company to be filed with the SEC for its quarterly reporting to comply with Securities Regulation

Commission Rule 68.1, do not include all the information and disclosures required in the annual

financial statements, and should be read in conjunction with the Groups annual consolidated financial statements as at September 30, 2011.

Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial years except for

the adoption of the following new and revised standards, amendments to existing standards and new

and amendments to Philippine Interpretation which became effective July 1, 2010.

Amendments to PFRS 2, Share-based Payment - Group Cash-settled Share-based Payment Transactions, clarifies the scope and the accounting for group-settled share-based payment transactions.

PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations, clarifies that the disclosures required in respect of noncurrent assets and disposal groups classified as held for sale

or discontinued operations are only those set out in PFRS 5. The disclosure requirements of other PFRSs only apply if specifically required for such noncurrent assets or discontinued operations.

PFRS 8, Operating Segments, clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker.

PAS 1, Presentation of Financial Statements, clarifies that the terms of a liability that could result at anytime in its settlement by the issuance of equity instruments at the option of the counterparty do not affect its classification.

PAS 7, Statement of Cash Flows, explicitly states that only expenditure that results in a recognized asset can be classified as a cash flow from investing activities.

PAS 17, Leases, removes the specific guidance on classifying land as a lease. Prior to the amendment, leases of land were classified as operating leases. The amendment now requires that

leases of land are classified as either finance or operating in accordance with the general principles of PAS 17. The amendments will be applied retrospectively.

Amendment to PAS 32, Classification of Rights Issues, this amendment to PAS 32, Financial Instruments: Presentation, addresses the accounting for rights issues (rights, options or warrants)

that are denominated in a currency other than the functional currency of the issuer. Previously such rights issues were accounted for as derivative liabilities. However, the amendment issued

today requires that, provided certain conditions are met, such rights issues are classified as equity

regardless of the currency in which the exercise price is denominated.

PAS 36, Impairment of Assets, clarifies that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in PFRS 8 before

aggregation for reporting purposes.

PAS 39, Financial Instruments: Recognition and Measurement, provides clarification on prepayment option, scope exemption for contracts between an acquirer and a vendor in a business

combination, and gains or losses on cash flow hedges of a forecast transaction.

Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments, provides guidance on how to account for the extinguishment of a financial liability by the issue of equity instruments. These transactions are often referred to as debt for equity swaps. It clarifies

the requirements of PFRSs when an entity renegotiates the terms of a financial liability with its

creditor and the creditor agrees to accept the entitys shares or other equity instruments to settle the financial liability fully or partially. It clarifies that: (a) the entitys equity instruments issued to a creditor are part of the consideration paid to extinguish the financial liability; (b) the equity

instruments issued are measured at their fair value. If their fair value cannot be reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability

extinguished and (c) the difference between the carrying amount of the financial liability extinguished and the initial measurement amount of the equity instruments issued is included in

the entitys profit or loss for the period.

Adoption of these changes in PFRS did not have any impact on the Groups interim condensed consolidated financial statements.

New Accounting Standards, Interpretations and Amendments to Existing Standards Effective Subsequent to June 30, 2011

The Group will adopt the following standards and interpretations enumerated below when these

become effective. Except as otherwise indicated, the Group does not expect the adoption of these new changes in PFRS to have a significant impact on the consolidated financial statements. The

relevant disclosures will be included in the notes to the consolidated financial statements when these

become effective.

Effective 2012

Amendment to Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding Requirement, applies in the limited circumstances when an entity is subject to minimum funding

requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset.

Philippine Interpretation IFRIC 16, Hedges of a Net Investment in a Foreign Operation, states that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may be

held by any entity or entities within the group, including the foreign operation itself, as long as the designation, documentation and effectiveness requirements of PAS 39 that relate to a net

investment hedge are satisfied.

PAS 24, Related Party Disclosures (Revised) was revised in response to concerns that the previous disclosure requirements and the definition of a related party were too complex and difficult to apply in practice, especially in environments where government control is pervasive.

It addresses these concerns by providing a partial exemption for government-related entities and

by simplifying the definition of a related party and removing inconsistencies.

Effective 2013

Philippine Interpretation IFRIC 15, Agreements for Construction of Real Estate, covers accounting for revenue and associated expenses by entities that undertake the construction of real

estate directly or through subcontractors.

Effective 2014

PFRS 9, Financial Instruments, introduces new requirements on the classification and measurement of financial assets. It uses a single approach to determine whether a financial asset

is measured at amortized cost or fair value, replacing the many different rules in

PAS 39, Financial Instruments: Recognition and Measurement. The approach in this new standard is based on how an entity manages its financial instruments (its business model) and the

contractual cash flow characteristics of the financial assets. It also requires a single impairment method to be used, replacing the many different impairment methods in PAS 39.

The Group continues to assess the impact of the above new and amended accounting standards and interpretations effective subsequent to 2011 on the consolidated financial statements prior to period of

initial application. The effects and required revised disclosures, if any, will be included in the

consolidated financial statements when the relevant accounting standards and interpretation are adopted subsequent to September 30, 2011.

Consolidation

The interim condensed consolidated financial statements include the financial statements of the

Company and the following subsidiaries (all incorporated in the Philippines):

Percentage of

Ownership

CADPGC(1) CADPI 100.00

CACI 100.00

CADP Insurance Agency,Inc. (CIAI)(2) 100.00

CCSI 100.00

CFSI 100.00

JOMSI 99.99

NAVI 77.38

Roxol Bioenergy Corporation (RBC)(3) 100.00

CADP Port Services, Inc. (CPSI)(4) 100.00

Roxas Power Corporation (RPC)(4) 50.00

(1) The loss of ownership interest in CADPGC is the result of the restructuring undertaken by the Group through sale of all its equity interest in CADPGC to RCI effective January 23, 2009 (see Note 1). As a result, the Company has now a direct ownership interest in the sugar-related operating subsidiaries which were previously owned by CADPGC. Results of operation of CADPGC are included in the consolidated financial statements until January 23, 2009, the date on which the Companys control ceased.

(2) CIAI was incorporated on August 19, 2009 and has not yet started commercial operations. (3) RBC was incorporated on February 29, 2008 and has completed the construction of its plant facility as of June 30, 2010 but has not yet started commercial operations. (4) CPSI and RPC were incorporated on July 17, 2008 and have not yet started commercial operations. The

Company has control on RPC since it has the power to cast the majority of votes at the BODs meetings and the power to govern the financial and reporting policies of RPC.

The interim condensed consolidated financial statements are prepared using uniform accounting

policies for like transactions and other events in similar circumstances. Adjustments, where necessary, are made to ensure consistency with the policies adopted by the Group.

3. Significant Judgments, Accounting Estimates and Assumptions

The preparation of the interim condensed consolidated financial statements in accordance with PFRS

requires the Group to exercise judgment, make estimates and use assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures. The Group makes

estimates and uses assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Future events may occur which will cause the

assumptions used in arriving at the estimates to change. The effects of any change in estimates are

reflected in the interim condensed consolidated financial statements as they become reasonably determinable.

Judgments, estimates and assumptions are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

The Group believes the summary of significant judgments, accounting estimates and assumptions

disclosed in the Groups annual consolidated financial statements as at December 31, 2011 represent a summary of judgments, estimates and assumptions that have a significant risk of causing a material

adjustment to the carrying amount of assets and liabilities, as well as to the related revenues and

expenses, within the next fiscal year, and related impact and associated risk in the interim consolidated financial statements.

4. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and in banks amounting to P=319.5 Million and P= 318.8 Million as at March 31, 2012 and September 30, 2011.

Interest income earned on cash in banks amounted to P= 2.13 million and P= 0.27 million in March 31,

2012 and 2011, respectively.

5. Receivables

Receivables consist of:

March 31, 2012 September 30,2011

(In Thousands)

Trade P=690,606 P=334,571 Advances to: Raw sugar purchases

Related parties (Note 14) 89,882 51,597 Employees 40,811 39,115 Planters and cane haulers 48,477 85,151 Others 14,181 69,687

883,957 580,121 Less allowance for impairment of receivables (21,249) (21,249)

P=862,708 P=558,872

Advances to employees pertain to advances for the Groups expenses which are subsequently liquidated. These advances also include noninterest-bearing salary, housing and educational loans

that are collected through salary deduction.

Other receivables include advances to suppliers for the purchase of local and imported materials and supplies. The account also includes outstanding receivable from the 2002 sale of a portion of the

Companys land in Barrio Bilaran, Nasugbu, Batangas to its employees. Due to the Reorganization Program discussed in Note 1, the employees were transferred to CADPI, whereas, the receivable

remained with the Company. These loans bear annual interest of 12% and are payable over 10 years

until 2012.

6. Inventories

Inventories consist of:


(In Thousands)

At cost:

Refined sugar P=147,967 P=55,825

Materials in transit 46,428 13,280 At NRV:

Raw sugar 1,129,555 1,037,443

Molasses 61,788 48,984 Alcohol

Materials and supplies 317,748

316,379

149,911

333,634

2,019,865 P=1,639,077

7. Prepayments and Other Current Assets

Prepayments and other current assets consist of:


(In Thousands)

Input VAT and other prepaid taxes P=209,519 P=137,155 Creditable withholding taxes, net of allowance

of P=13.7 million

156,102

153,442 Consumable biological assets

Others 7,448 41,496

P=373,069 P=332,093

Input value-added taxes arise from purchases of equipment and services relating to the Expansion Project and RBC Plant construction (see Note 9). Other current assets consist of prepaid insurance

and rentals and advanced input VAT for refined sugar sales.

8. Investment in Shares of Stock of an Associate

The details of the investment in HPCo, 45.09%-owned associate, and incorporated in the Philippines, follow:


(In Thousands)

Acquisition cost P=127,933 P=127,933

Accumulated equity in net earnings

Beginning of year 350,519 322,830 Equity in net earnings (loss) for the

period

(17,558)

27,689

332,961 350,519 Less dividend received (71,373) -

End of year 261,588 350,519

Share in revaluation increment 207,492 207,492

P=597,013 P=685,944

HPCo is primarily engaged in the manufacturing and trading of raw and refined sugar, molasses and other sugar by-products.

The summarized financial information of HPCo follows:

( In Thousands)

Current assets 688,417

Noncurrent assets 931,682 Current liabilities 749,919

Noncurrent liabilities Net Assets

116,400

Revenue 672,791 Net income

(38,944)

9. Property, Plant and Equipment

Details and movements of property, plant and equipment, which are valued at cost basis, are shown below:

September 30, 2011

Machinery

Office

Furniture,

Buildings and and Transportation Fixtures and Construction

Improvements Equipment Equipment Equipment in Progress Total

(In Thousands)

Cost

Beginning balances P=2,536,461 P=10,978,436 P=32,935 P=76,852 P=1,243,966 P=14,868,650

Additions 3 - - - 8,560 8,563

Disposals (5,837) (114,401) - (14,795) - (135,033)

Reclassification 221,905 974,089 5,252 (1201,246)

Ending balances 2,752,532 11,838,124 32,935 67,309 51,280 14,742,180

Accumulated depreciation

Beginning balances 827,215 4,832,257 16,146 59,907 5,735,525

Depreciation 28,598 136,822 1,287 3,728 170,435

Disposals (3,143) (93,592) (11,468) (108,203)

Reclassification

Ending balances 852,670 4,875,487 17,432 52,167 5,797,757

Net Book Value P=1,899,862 P=6,962,637 P=15,502 P=15,142 P=51,280 P=8,944,423

Land is carried at appraised values as at March 31, 2012 follows:

(In Thousands)

Beginning balance at appraisal values P=2,517,341

Transfer to investment property 0

Ending balance at appraisal values P=2,517,341

At cost P=48,847

a. Construction in progress

Construction in progress as of March 31, 2012 pertains mainly to the foregoing milling plant improvement project, refinery plant installation of sieving facilities, as well as construction and

improvement of waste and pollution facilities of the Group.

Milling plant improvement project (the Expansion Project)

With the intent of improving its revenue generating capability, the Group purchased second-hand mills and related equipment from Bryant, Florida, United States of America (USA) and Fairy

mead, Australia.

In August 2007, CADPGC entered into a purchase agreement, for and on behalf of its then

wholly-owned subsidiaries, CADPI and CACI, with a foreign corporation to buy certain sugar

March 31, 2012

Machinery

Office

Furniture,

Buildings and and Transportation Fixtures and Construction

Improvements Equipment Equipment Equipment in Progress Total

(In Thousands)

Cost 2,753,188 11,682,728 74,784 188,199 62,736 14,761,636

Accumulated depreciation (908,171) (5,106,569) (49,390) (81,708) - (6,145,838)

Net book value 1,845,017 6,576,159 25,394 106,491 62,736 8,615,797

mill equipment for a total purchase price of US$19.5 million. The purchase pertains to different

pieces of disassembled equipment that originated from Bryant Sugar House, a sugar mill located in Bryant, Florida, USA, of which the sellers had purchased from United States Sugar

Corporation through a purchase and removal agreement executed on April 30, 2007. To complement the mills from Bryant Sugar House, mill components and shredder were purchased

from Australia in March 2008.

The Group obtained short and long-term borrowings from various local banks to finance the

Expansion Project (see Notes 10 and 13).

RBC Plant Construction Project

On June 27, 2008, in line with the Group Expansion Project, RBC entered into an agreement to construct its bioethanol plant in La Carlota City, Negros Occidental for a total contracted amount

of US$20.9 million. As of December 31, 2011 the company has started its commercial

operation.

Capitalization of borrowing costs

Interests from short and long-term borrowings, incurred to finance the Expansion Project were capitalized to property, plant and equipment. The Group amortizes such capitalized interest over

the useful life of the qualifying asset. For the three months ended December 31, 2011 no borrowing cost were capitalized due to substantial completion of the projects.

Noncash additions to property, plant and equipment The Group has outstanding liabilities for purchase of equipment relating to the Expansion Project

and RBC Plant construction amounting to P=45.6 million and 69.0 million as of March 31, 2012

and September 30, 2011, respectively.

b. Depreciation

Depreciation charged to operations as of March 31 follows:

2012 2011

(In Thousands) Cost of sales (Note 19) P=332,931 P=251,992

General and administrative expenses (Note 20) 26,261 21,926

P=359,192 P=273,918

c. Property, plant and equipment as collateral

Some property, plant and equipment of the Group are mortgaged to secure the Groups loan obligations with creditor banks (see Note 14).

10. Investment Property

In December 22, 2010, NAVI entered into a memorandum of agreement with an agricultural

company for the lease of NAVIs agricultural land effective July 1, 2011 until fiscal year ending September 30, 2015. The lessee shall deliver to NAVI its share in sugar production in the amount of 18 50-kilogram (Lkg) bags of raw sugar per hectare of plantable area per annum. As a result, NAVI

ceased its farm operations in crop year ended June 30, 2011. The land property previously used for

NAVI farm operations was reclassified to investment property effective July 1, 2011.

As of September 30, 2011, the fair value of the investment property amounting to P=170.4 million is based on the appraised value of the property using a market comparison approach, as determined by a

professionally qualified independent appraiser. There was no movement in fair value of the

investment property for the six months ended March 31, 2012.

11. Short-term Borrowings

At various dates in period ending September 30, 2011 and June 30, 2011, CACI and CADPI obtained

unsecured short-term loans from various local banks to meet their working capital requirements. The loans, which are payable in lump sum on various dates, are subject to annual interest rates ranging

from 4.0% to 5.25 % and 4.7% to 7.0 % and have terms ranging from 29 to 32 days, and 30 to 32 days in 2011 and 2010, respectively.

As at March 31, 2012 and September 31, 2011, the balance of the short-term loans amounted to P=2,403.0 million and P=2,738.0 million, respectively.

12. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of:

March 31, 2012 September 30, 2011

(In Thousands) Trade suppliers P=308,330 P=84,003

Accrued expenses: Interest (Notes 10 and 13) 104,338 95,863

Contractors 48,465 4,055

Payroll and other benefits 5,074 37,404 Purchases and others accrued expenses 235,938 89,704

Due to planters 84,668 13,633

Payable to government agencies for taxes and contributions

113,516

82,101

Others 9,115 187,552

P=909,444 P=594,315

Other payables include liabilities to third parties for sugar liens, and other related fees, and purchases

of equipment relating to the Expansion Project (see Note 9).

13. Customers Deposits Customers deposits represent noninterest-bearing cash deposits from buyers of the Groups sugar and molasses. These deposits will be applied against future deliveries of sugar and molasses which are expected to be completed in the next 12 months. Customers deposits amounted to P=377.5 million and P=153.4 million as at March 31, 2012 and September 30, 2011, respectively.

14. Long-term Borrowings

Long-term borrowings as consist of:


(In Thousands)

Banco de Oro Unibank, Inc. (BDO) P=4,354,110 P=4,530,413 Syndicated Loan Agreement:

Bank of the Philippine Islands (BPI) 896,552 931,035

Rizal Commercial Banking Corporation (RCBC)

448,276

465,517

BPI Asset Management and Trust Group (AMTG)

500,000

500,000

6,198,938 6,426,965

Unamortized debt commitment fee - -

6,198,938 6,426,695

Current portion - (827,683) Noncurrent portion presented as current - (5,599,282)

P=6,198,938 P=-

On February 8, 2008, RHI availed the loan facility from BDO with an aggregate amount of P=6,189.0 million. The principal amount of debt accommodation is shared by RHI and

CADPI/CACI amounting to P=1,570.0 million and P=4,619.0 million, respectively. In addition, on

February 14, 2008, CADPI and CACI entered into a Syndicated Loan Agreement with BPI and RCBC (with BPI as the lead bank) for a total credit line of P=1,500.0 million. On the same date,

CADPI also signed a loan facility with BPI-AMTG amounting to P=500.0 million. On March 12,

2008, CADPI and CACI signed an amendment to the Syndicated Loan Agreement and loan facility with BPI-AMTG clarifying certain provisions of the original agreements

RHI On May 5, 2008, RHI availed loans from BDO amounting to P=143.3 million to finance its Shares Buy

Back Program. The principal of the loan is payable quarterly starting on the 4th year of the 10-year

term.

Short-term loans availed from BDO on May 5, 2008 and October 29, 2008 amounting to P=400.0 million and P=175.0 million, respectively, were rolled over to long-term borrowings.

As such, the principal of the loan will be payable quarterly starting on the 4th year of the original 10-

year term.

The original interest rates of the long-term loans are subject to quarterly repricing as agreed by the

parties. In fiscal year 2010, the Company exercised its option to fix the quarterly interest rate of the loans at 8.93% beginning August 5, 2009 until the end of the loan terms. On January 31, 2011, RHI,

CADPI and CACI entered into an agreement with BDO for the interest rate reduction on long-term loans to 6.5%, subject to certain conditions.

In August 2011, RHI paid loans from BDO amounting to P31.4 million. For the quarter ending December 31, 2011, RHI paid P25.7 million of BDO loans.

CADPI

On February 14, 2008, CADPI entered into a loan agreement with BPI to avail loans in two tranches with an aggregate principal amount of P=500.0 million. Tranche A of the loan amounting to P=300.0 million bears fixed annual interest of 8.00% and payable on the 5th anniversary date of the borrowing. On the other hand, Tranche B of the loan amounting to P=200.0 million bears fixed annual interest of 8.40% and payable on an installment basis, P=2.0 million on the 5th and 6th

anniversary date of the borrowing and the balance on the 7th anniversary date of the borrowing.

On May 5, 2008, CADPI availed loans from BPI and RCBC amounting to P=167.2 million and

P=83.6 million, respectively, which bear interest of 6.50% and 6.60%, respectively. As of June 30, 2009, interest rates were 5.80% and 5.90% for BPI and RCBC loan, respectively.

Promissory notes issued by CADPI to the banks are under the terms set forth in the Syndicated Loan Agreement. Loans availed are with 10-year terms and will all mature on May 5, 2018.

On October 29, 2008, additional loans were availed by CADPI from BDO, BPI and RCBC amounting to P459.0 million, P143.6 million and P71.4 million, respectively, with interest rates subject to

quarterly repricing as agreed by the parties.

In fiscal year 2010, CADPI also exercised its option to fix the quarterly interest rates of the floating

rate loans availed in May 2008 and October 2008. Interest rate was fixed to 8.79% for BPI loans and 8.93% for BDO and RCBC loans, which became effective beginning August 5, 2009 until the end of

the loan terms.

On February 12, 2010, CADPI availed additional loans from the undrawn portion of the total credit

facility from BPI, BDO and RCBC amounting to P=329.3 million, P=1,050.5 million and

P=166.2 million, respectively. Loans availed from BPI and RCBC with fixed interest rates of 8.70% and 8.84%, respectively, are payable in 29 equal quarterly installments beginning May 2011, which is

the end of the three years grace period from initial drawdown dated May 2008. Loans availed from BDO carries fixed interest rate of 8.84% and are payable in 28 monthly installments beginning

August 5, 2011.

In May 2011, CADPI paid loans from BPI and RCBC amounting to P22.1 million and P11.1 million,

respectively. In August 2011, CADPI paid loans from BDO, BPI and RCBC amounting to P81.7

million, P22.1 million and P11.1 million, respectively. For the quarter ending March 31, 2012, CADPI paid P88.2 million, P44.1 million and P22.2 million of loans from BDO, BPI and RCBC,

respectively.

CACI

On May 5, 2008, CACI availed loans from BPI, BDO and RCBC amounting to P=129.8 million, P=395.3 million and P=64.9 million, respectively, and with interest rates subject to

quarterly repricing. Loans availed are with 10-year terms and payable in 29 and 28 quarterly

installments beginning May 2011 for BPI and RCBC and August 2011 for BDO, respectively.

In fiscal year 2010, CACI exercised its option to fix the quarterly interest rates of its floating rate loans. Interest rates were fixed to 8.79% for BPI loans and 8.93% for BDO and RCBC beginning

August 5, 2009 until the end of the loan terms.

On August 12, 2009, CACI availed additional loans from BPI and RCBC amounting to

P=230.2 million and P=113.9 million, respectively. On August 10, 2009, CACI also obtained additional loan from BDO amounting to P=781.0 million. Loans availed from BPI and RCBC with fixed interest

rate of 8.74% and 8.88%, respectively, are payable in 29 equal quarterly installments beginning May

2011. Loans availed from BDO, on the other hand, carries fixed interest rate of 8.94% and are

payable in 28 quarterly installments beginning August 5, 2011.

In May 2011, CACI paid loans from BPI and RCBC amounting to P12.4 million and P6.2 million, respectively. In August 2011, CACI paid loans from BDO, BPI and RCBC amounting to P51.5

million, P12.4 million and P6.2 million, respectively. For the quarter ending March 31, 2012, CACI

paid P55.6 million, P24.8 million and P12.3 million in loans from BDO, BPI and RCBC, respectively.

RBC On June 17, 2011, RBC availed long-term loan with BDO amounting to P925.0 million to finance

working capital requirements. Loan availed carries quarterly repricing interest rate and is payable quarterly starting on the 3

rd year of the 10-year term from drawdown date.

Debt arrangement fees As part of the Syndicated Loan Agreement with BPI/RCBC, the Group incurred debt arrangement

fees amounting to P=59.4 million in 2008. Amortization of debt arrangement fees included under

interest expense amounted to P35.7 million, P3.4 million and P1.3 million for the years ended June 30, 2011, 2010 and 2009, respectively. As of June 30, 2010, unamortized debt arrangement fees,

which are presented as deduction from long-term loans, amounted to P35.7 million.

Suretyship agreement, mortgage trust indenture and debt covenants

In relation with the BDO Loan Facility executed on February 8, 2008, RHI, CADPI and CACI, entered into a Continuing Suretyship Agreement with BDO. Under this Agreement, BDO shall have

the right to set-off the secured obligations in solidarity against all the borrowers properties.

On February 14, 2008, RHI, CADPI, CACI and RBC, entered into a separate suretyship agreement

arising out of the Syndicated Loan Agreement which warrants the due and faithful performance by the borrowers of all obligations due to the creditor banks, BPI and RCBC. The suretyship shall

remain in full force and effect until full and due payment of the indebtedness under the Syndicated

Loan Agreement. In addition, all liens of the creditor banks shall have rights of set-off in solidarity against the borrowers properties.

Further in 2009, RHI, CADPI and CACI executed a Mortgage Trust Indenture (MTI) to secure the loans obtained from BDO, BPI and RCBC. The MTI covers properties in Nasugbu, Batangas which

consist mainly of RHIs land and CADPIs properties with an aggregate carrying value of P=2.1 billion and P=4.25 billion, respectively, as of September 30, 2011 and CACIs properties in La Carlota, Negros Occidental with an aggregate carrying value of P=3.8 billion as of September 30,

2011.

In 2011, RBC executed an MTI to secure the loans obtained from BDO. The MTI covers RBCs properties in La Carlota, Negros Occidental with an aggregate carrying value of P1.5 billion as of September 30, 2011.

Loan covenants

The above loan agreements stipulate certain covenants, which include the following:

maintenance of DSCR of at least 1.25 times and debt to equity ratio of not more than 70:30;

prohibition on purchase of additional equipments except in pursuance of its sugar expansion and ethanol project;

prohibition on any material change in ownership or control of its business or capital stock or in the composition of its top level management; and

prohibition on declaration or payment of dividends or any other capital or other asset distribution to its stockholders, unless the required financial ratios are maintained.

As a result of the significant drop in sugar prices in the last quarter of fiscal year 2011, among other

factors, as discussed in Note 1, the Group incurred losses on the disposal of sugar inventories. In fiscal year ended June 30, 2011 and three months ended September 30, 2011, the Group did not meet

the minimum DSCR required under the long-term loan agreements with certain creditor banks, which

constitutes an event of default on such loans. In view of this, the noncurrent portion of long-term debt amounting to P=5.6 billion and P=5.8 billion is presented as current liabilities as of September 30,

2011 and June 30, 2011, respectively.

As discussed in Notes 1 and 3, in September and October 2011, the Group obtained from

the creditor banks a waiver of breach of covenant on the DSCR covering fiscal year ended

June 30, 2011 and interim period ended September 30, 2011. In December 2011 and January 2012, a similar waiver was obtained by the Group from these creditor banks covering the

period October 2011 to September 2012. The Group continues to present the noncurrent portion of long-term debt amounting to P=5.6 billion as current as of September 30, 2011 since the

Group does not have an unconditional right to defer settlement for at least 12 months from

September 30, 2011. However, as at December 31, 2011, the noncurrent portion of the long-term debt amounting to P5.6 billion is presented as long-term liability. On February 5, 2012, the Group

and the creditor banks, BDO and BPI/RCBC, agreed that the outstanding balance shall be paid over a

7-year amortization period on an equal quarterly basis, commencing on November 5, 2014, in accordance with the amortization schedule provided by the latter.

As of June 30, 2010, the Group is in compliance with these loan covenants.

The maturities of the long-term borrowings are as follows:


(In Thousands)

Between one and two years P= 0 P=6,626,965

Between two and five years 4,690,000 Over five years 1,508,938

P=6,198,938 P=6,626,965

15. Related Party Transactions

In the normal course of business, the Group has transactions with related parties as follows:

a. As of March 31, 2012 and September 30, 2011, the Groups outstanding advances to RCI amounted to P=89.8 million and P=49.0 million, respectively. RHI granted the advances to RCI in

2009 which were used to defray cost and expenses relating to the restructuring activities undertaken by the Group during the year.

b. As of June 30, 2010 and 2009, the Company as a lessee, has a one-year lease agreement with CADP Retirement Fund, Inc. (CADPRFI), which is renewable annually at the option of the

Company, CADPI and CACI under such terms and conditions mutually acceptable to all parties.

c. In December 2005, the Company also entered into a lease agreement with CADPRFI, for the lease of its office space.

d. Key management compensation amounted to P16.6 million and P25.5 million for the period ending March 31, 2012 and 2011, respectively.

16. Retirement Benefit Plans

Net Pension Plan Assets

Prior to Restructuring in fiscal year 2009 (see Note 1), the Company and CADPGC maintain an

individual and separately funded, non-contributory defined benefit plan (the Plan) covering all eligible employees. On December 16, 2008, the Company assumed the transferred employees

covered by the Plan and acquired the related net pension plan assets from CADPGC. The acquired net

pension plan assets, including the related deferred income tax liabilities, were part of the total consideration received from the acquisition of CADPGCs investments in shares of stock and certain assets and liabilities (see Note 1).

Under the Plan, the normal retirement age is 65. A participant may opt to retire at age 60 or after rendering 20 years of continuous service. Retirement benefit for both normal retirements is

equivalent to two months average basic salary for each year of service rendered.

The amounts recognized in the consolidated balance sheets at September 30, 2011 follow:

(In thousands)

Present value of obligation P=155,425 Fair value of plan assets 231,694

Surplus 76,269 Unrecognized actuarial gain (loss) 51,428

Net pension plan assets P=127,697

Plan assets cannot be returned to RHI unless on circumstances discussed in Note 2. The net pension

plan assets amounting to P127.7 million as of March 31, 2012 will be used to reduce future contributions to the retirement fund. Consequently, a portion of the Groups 2010 retained earnings related to pension plan asset, net of deferred income tax liability, is not available for dividend

declaration (see Note 23).

Net Pension Benefit Obligation

CACI maintains a funded, non-contributory defined benefit plan covering all its eligible employees. Under the plan, the normal retirement age is 65 irrespective of years of service. A participant may, at

his option, elect to retire or CACI may, at its option, retire any participant at any time after attaining

the age of 50 regardless of number of years in service or upon completion of 20 years of continuous service to CACI even if below 50 years of age. Normal and early retirement benefits are equivalent

to one month latest salary for every year of service. CADPI also maintains funded, non-contributory defined benefit plan covering all its regular

employees. Under the plan, the normal retirement age is 65 irrespective of years of service. A

participant may opt to retire at age 60 regardless of number of years in service or upon completion of 20 years of continuous service to CADPI even if below 60 years of age. Normal retirement benefits

consist of an amount equivalent to two times the employees latest monthly salary multiplied by the number of years of service.

The amounts recognized as net pension benefit obligation in the condensed consolidated balance

sheets as at September 30, 2011 is determined as follows:

(In Thousands)

Present value of obligations P=421,509 Fair value of plan assets (356,957)

Deficit 64,522 Unrecognized actuarial loss (64,522)

Net pension benefit obligation P=-

17. Commitments and Contingencies

a. CACI and CADPI (the Mills) have milling contracts with the planters which provide for a 65% and 35% sharing between the planters and the Mills, respectively, of sugar, molasses and other

sugar cane by-products, except bagasse, produced every crop year.

b. As of September 30, 2011, the Group has in its custody the following sugar owned by quedan

holders:

Total volume

(In thousands)

(Lkg*)

Estimated

market value

(In Millions)

Raw sugar 550 P=744 Refined sugar 309 675

859 P=1,419

*Equivalent to 50 kilogram bag unit.

The above volume of sugar is not reflected in the consolidated balance sheets since these are not

assets of the Group. The Group is accountable to quedan holders for the value of trusteed sugar or their sales proceeds.

c. CADPI entered into sales contracts with principal customers for the sale of raw and refined sugar and molasses. As of March 31, 2012, CADPI has outstanding sales contracts for refined sugar

with a total value of P=457 million equivalent to 148,722 Lkg.

CADPI received cash deposits from customers for the above transactions as of December 31,

2011, which will be applied against future deliveries of sugar and molasses. These deposits are classified as current liabilities (see Note 13).

d. CADPI entered into agreements as follows:

(i) Lease of offsite warehouse for a period of one year renewable at the option of the lessee through notification in writing not later than 90 days prior to the expiration of the agreement.

Related rent expense charged to operations amounted to P=0.1 million in December 2011 and

P=0.1 million in September 2011. The lease was no longer renewed last January 2012.

(ii) Contract for hauling services for the transport of sugarcane from the plantation to the mill.

Related hauling expense charged to operations in March 31, 2012, and 2010 amounted to P=201.7 million and P=176.1 million, respectively.

e. CADPI entered into an indemnity and guarantee fee agreement with RHI to continue to be a mortgage trust indenture (MTI) between and among CADPI, RHI and BPI. RHI conveyed unto

BPI as mortgage trustee its land located in Nasugbu, Batangas (mortgaged property) (see Note 14). RHI agreed to continue to subject the mortgaged property to the MTI on the following

conditions:

(i) CADPI shall protect the property and reimburse RHI with all expenses in case the mortgaged

property is attached to satisfy the obligations of CADPI secured by the MTI; and

(ii) A guarantee/mortgage fee of P=3.0 million shall be paid annually by CADPI to compensate

RHI for the continuance of the mortgage. This guarantee fee agreement expired in April 2009.

This guarantee fee agreement expired in April 2009.

f. On January 14, 2009, Roxol and World Bank signed a $3.2 million Emission Reduction Purchase

Agreement (ERPA) for the purchase of carbon emission credits under the Clean Development Mechanism of the Kyoto Protocol. The ERPA will also avoid at least 50,000

metric tons of carbon dioxide each year and has a crediting period of 10 years starting 2010.

As part of the ERPA, part of the revenue for the purchase of the credits will be used to finance

RBCs community development projects.

g. There are pending legal cases in the ordinary course of the Groups business as at March 31, 2012 and 2010, but in the opinion of management and legal counsel, the ultimate outcome of these cases will not have a material impact on the financial position and results of operations of the

Group. Consequently, no provision related to these legal cases was made in the 2012 and 2011.

h. As of March 31, 2012 and September 30, 2011, the Group has unused lines of credit from local

banks amounting to P= 1,102.0 million and P=862.0 million, respectively. (see Notes 11 and 14).

18. Revenue

The components of revenue as of March 31, 2012 are as follows:

2011 2010

(In Thousands) Refined sugar P=1,583,658 P=1,996,827

Raw sugar 1,680,770 1,766,771

Molasses 140,761 213,191 Tolling fees

Alcohol 79,215

25,024

81,703

- Others 17,382 15,122

P=3,526,810 P=4,073,614

____________________________________________________________________________________

19. Cost of Sales

The components of cost of sales as of March 31 are as follows:

2012 2011 (In Thousands)

Purchased of sugar (Note 6) Purchased of Molasses

P=856,583 0

3,804,655 63,938

Net changes in inventories ( Note 6) (376,265) (3,112,333) Direct Labor 174,845 195,204 Cost of transporting cane to mill 509,722 591,312 Tolling fees 10,017 11,517 Manufacturing overhead Repair and Maintenance 119,506 154,053 Depreciation 332,931 251,992 Energy cost 217,293 412,744 Outside services 61,025 71,421 Taxes and licenses Material and consumables

56,663 192,593

40,826 190,468

Rent Provision for inventory loss

47,297 43,501

40,453 15,235

PDPA 225,972 340,784 Professional fee Others

2,227 35,507

1,569 250,865

P= 2,509,417 P=3,324,703

20. Operating Expenses

The components of general and administrative and selling expenses as of March 31 are as follows:

2012 2011 (In Thousands)

Employee benefits (Note 20)

Outside service P=97,023

41,673

P=141,510

35,927 Taxes and licenses 120,996 32,464

Insurance Depreciation

Materials and consumables

Rental Provision for inventory loss

Professional fee

Gasoline and oil Travel and transportation

Corporate social responsibility Repair and maintenance

Corporate and stockholder expenses

Communication, Lights and Water Representation

Allocated cost

Training and development Transfer cost

Others Selling

15,582 26,261

11,216

8,948 6,737

6,639

5,957 5,792

2,344 3,992

2,148

5,447 844

1,240

141 30,804

34,573 12,807

22,550 21,926

14,770

12,932 18,906

8,655

6,618 6,810

4,058 4,423

2,275

4,132 1,213

(1,210)

907 22,800

33,003 2,027

P=441,166 P=396,705

21. Personnel Costs

The components of employee benefits as of March 31 are as follows:

2012 2011

(In Thousands) Salaries and wages (Notes 19 and 20) P=220,341 P=253,288

Allowances and other employee

benefits (Notes 19 and 20) 32,446

57,615

Pension costs (Note 19 and 20) 19,081 25,811

P=271,868 P=336,714

22. Other Operating Income - Net

The components of other operating income as of December 31 are as follows:

2011 2010

(In Thousands)

Recovery from Insurance and performance bond 39,446 18,896

Sale of scrap 6,618 22,839 Foreign exchange gains (losses) net (5,619) 441

Sugar and molasses handling fee

Storage fee and penalty Others

6,997

4,449 10,650

3,031

452 5,826

P=62,541 P=51,484

In 2010 recovery from insurance claim pertains to the amount collected from the insurer, which represents recovery from irreparable equipment.

In November 2011, CADPI was able to refund the performance bond relative to sugar importation

from National Food Authority amounting to P=28.4 million.

23. Income Taxes


(In Thousands)

Deferred income tax assets on:

Allowance for: Impairment of receivables (Note 5) P=4,793 P=5,772

Sugar inventory losses (Note 6) 4,021 Inventory obsolescence (Note 6) 20,712 12,603 Pension benefit obligation (Note 16) Unamortized past service cost 56,371 Unrealized foreign exchange loss 726 NOLCO 7,364 Unrealized gross profit on inventory 14,657 Excess MCIT 4,254 30,252 101,021

Deferred income tax liabilities on:

Revaluation increment on properties (Note 24)

(696,231) (696,231)

Unamortized capitalized interest (Note 9) (80,090) (143,087) Pension plan assets (Note 16) (38,309) (38,309)

(814,630) (877,627)

Net deferred income tax assets (liabilities) (P=784,378) (P=776,606)

24. Equity

a. Share capital and treasury shares

Details of share capital and treasury shares as at March 31, 2012 and September 30, 2011:

Number of Shares

Amounts in 000

Authorized common shares Capital A at P= 1 par value each

1,500,000,000

P= 1,500,000

Issued common shares Class A 1,168,976,425 P= 1,168,976 Treasury shares (259,424,189) (768,860)

Issued and outstanding 909,552,236 P= 400,116

As of June 30, 2009, reacquired shares of the Parent Company under its Share Buy Back Program totaled to 259,424,189 shares at cost of P768.9 million. There were no reacquisition of shares as of

March 31, 2012 and September 30, 2011.

Reacquisition of shares by the Parent Company on its Share Buy Back Program follow:

Number of Cost Year Reacquired Shares (In Thousands)

2009 8,094,000 P=29,153

2008 196,322,949 675,940 2007 and previous years 55,007,240 63,767

259,424,189 P=768,860

b. Retained earnings

Restricted retained earnings The following amounts of retained earnings as at March 31, 2012 and September 30, 2011 are not

available for dividend declaration:

(In Thousands) Treasury shares P=768,860 Pension plan asset - net of deferred income tax liability (Note 15)

98,319

P=867,179

Dividend declaration

Cash dividends declared by the Company from retained earnings during the years ended

June 30, 2009 and 2008 follow:

Date Approved

Per

Share

Total Amount

(In Thousands)

Stockholders of

Record Date

Date Paid/Issued

June 24, 2009 P=0.06 P=54,575 July 15, 2009 July 31, 2009

October 3, 2008 0.06 54,575 October 15, 2008 October 31, 2008

No dividends were declared by the Company in 2010.

c. Share prices

The principal market for the Companys shares of stock is the Philippine Stock Exchange. The high and low trading prices of the Companys shares for each quarter within the two fiscal years are as follows:

25 Income per Share

Income per share as of March 31 is computed as follows:

2012 2011

(In Thousands, except EPS)

Net Income for the year attributable to the

equity holders of the Parent Company

P=331,091

P= 246,544

Weighted average number of common shares outstanding

909,552

909,552

Basic/diluted Loss per Share P=364.02 P=271.06

There are no potential dilutive common shares as at March 31, 2012 and 2011.

26. Seasonality of Operations

Demand for raw and refined sugar products are significantly influenced by seasons of the year. The

seasonality also influences production and inventory levels and product prices. Annual repairs and maintenance are performed before the start of the milling, which is normally in the first and second

quarter of the crop/financial year.

27. Financial Instruments

Quarter High Low

January 2012 through March 2012

October 2011 through December 2011

P=3.85

3.10

P=3.40

2.35

July 2011 through September 2011 3.49 2.39

The Groups principal financial instruments comprise of cash and cash equivalents, trade receivables, and accounts payable and accrued expenses, which arise directly from its operations. The Group has other financial instruments such as advances to employees and a related party, dividends payable and

short and long-term borrowings.

The main risks arising from the Groups financial instruments are liquidity risk, credit risk, interest rate risk and foreign currency risk. The Group monitors the market price risk arising from all financial instruments. The Group is also exposed to commodity price risk. Risk management is

carried out by the President and Chief Finance Officer under the direction of the BOD of the

Company.

The qualitative and quantitative disclosures on risks associated with the Groups financial instruments and the related risk management processes and procedures are disclosed in the annual consolidated

financial statements as at September 31, 2011

28. Segment Information

The Groups identified operating segments, which are consistent with the segments reported to the senior management, are as follows:

a. RHI, a diversified holding and investment corporation with specific focus on sugar milling and

refining business. It provides management services to its subsidiaries, particularly CADPI, CACI

and RBC.

b. CADPI, which is engaged in the business of producing, marketing and selling raw and refined

sugar, molasses and other related products or by-products and offers tolling services to traders and planters. It has a raw sugar milling and refinery plant located in Nasugbu, Batangas with daily

cane capacity of 13,000 metric tons as of March 31, 2012. CADPIs raw sugar milling is involved in the extraction of juices from the canes to form sweet granular sugar which is light

brown to yellowish in color. Canes are sourced from both district and non-district planters and

are milled by CADPI under a production sharing agreement (see Note 16). The refinery operation, on the other hand, involves the processing of raw sugar (mill share and purchased) into refined

sugar, a lustrous white-colored sugar. To ensure maximum utilization of the refinery, CADPI

also offers tolling services, which converts raw sugar owned by planters and traders into refined sugar in consideration for a tolling fee.

c. CACI, which produces raw sugar and molasses and to trade the same on wholesale/retail basis. It also sells refined sugar upon tolling its raw sugar with other sugar mills. Its sugar milling plant,

which has a similar process with CADPI and has a daily cane capacity of 18,000 metric tons as of

March 31, 2012 and 2011, is located in La Carlota City, Negros Occidental.

d. RBC, established to engage in the business of producing, marketing and selling of bio-ethanol

fuel, both hydrous and anhydrous products from sugarcane and related raw materials. Its plant facility is located in La Carlota City, Negros Occidental.

e. CFSI, established to engage in the business of transporting sugar cane, sugar and its by-products including all kinds of commercial cargoes to and from sugar factories, sugar

refineries, millsites or warehouses and/or similar establishments by land. CFSI currently caters various planters in Batangas, Negros, and other provincial areas in Visayas and Southern Luzon.

The segment information of the Group is disclosed in the annual consolidated financial statements

as at September 30, 2011.

29. The Nature and Amount of Items Affecting Assets, Liabilities, Equity, Net Income, or Cash

Flows that are Unusual Because of their Nature, Size or Incidence

Other than those disclosed in the each notes to the unaudited interim condensed consolidated financial statements, if any, there are no assets, liabilities, equity, net income or cash flows that are unusual

because of their nature, size or incidents.

30. The Nature and Amount of Changes in Estimates of Amounts Reported in Prior Interim Period

of the Current Year or Changes in Estimates of Amounts Reported in Prior Years, if those Changes Have a Material Effect in the Current Interim Period

There are no significant changes in estimates reported in prior interim periods of the current year or changes in estimates reported in prior years, which are considered to have material effect on the

unaudited interim condensed consolidated financial statements.


AGING OF TRADE AND OTHER RECEIVABLES

MARCH 31, 2012

1 - 30 days 31 - 60 days 60 - 90 days 91 days over Total

Trade 336,532,306 212,882,365 14,461,000 126,730,043 690,605,713

Advances to platers, trucker and contractors 5,466,924 2,605,927 423,013 39,981,244 48,477,108

Advances to related parties 3,115 - 57,175 89,821,306 89,881,596

Advances to laborers and employees 3,527,394 9,894,041 11,481,038 15,908,700 40,811,172

Others 55,526 3,918,431 10,207,274 14,181,231

Total 345,529,739 225,437,859 30,340,657 282,648,566 883,956,821

Allowance for impairment (21,248,898)

Trade and other receivables, net 862,707,923

ANNEX B Roxas Holdings, Inc. and Subsidiaries

MANAGEMENT DISCUSSION AND ANALYSIS

OR PLAN OF OPERATIONS

Second Quarter Ending March 31, 2012 and 2011

MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

INTERIM RESULTS 2ND QUARTER CY 2011-2012 versus CY 2010-2011

Change in Crop Year

On February 02, 2011, the Board of Directors (BOD) of Roxas Holdings, Inc. and subsidiaries (the

Group or Company) approved the amendment on the Groups By-Laws changing the accounting period from fiscal year ending June 30 to September 30 of each year. The change was intended to align

the fiscal year of the Group with the normal crop year of the sugar business. The change was

subsequently approved by the Securities and Exchange Commission (SEC) on March 03, 2011, while the

Companys subsidiaries were approved by the SEC on various dates in 2011.

Results of Operations

Batangas Operations

On November 17, 2011, the mill operations of Central Azucarera Don Pedro, Inc. (CADPI) started 21

days ahead from last year. Thus, increasing cane tonnage by 13% as of March 31, 2012. Total tonnage

went up to 1,349,943 MT from last years 1,189,849 MT, accordingly increasing raw sugar production to 2,366,622 Lkg. from 2,112,208 Lkg. despite decrease in recovery to 1.75 Lkg/TC from 1.78 Lkg/TC.

Refined production this year is lower by 4% from 1,861,958 Lkg. to 1,791,160 Lkg, due to shorter

operating period this year.

Negros Operations

Central Azucarera de La Carlota, Inc. (CACI) had a good start in its milling operations in October 2011.

Cane tonnage was up this year with 1,714,987 MT, a 6% increase from 1,619,933 MT last year. Coupled

with higher production yield this period at 1.99 Lkg/TC, raw production likewise surge to 3,409,034 Lkg.

from previous years 3,051,228 Lkg. at 1.90 Lkg/TC.

Revenues

The Group ended its second half with consolidated total revenues of P3.527 billion, 13% lower from

previous years P4.074 billion, as restated, on the account principally of high sugar prices in prior year. Average sugar prices in the current period amounted to P2,116 and P1,342 for refined and raw sugar,

respectively as against P2,339 for refined and P2,210 for raw sugar in the previous year.

In spite of the decrease in total revenues and average selling prices of sugar, consolidated raw sales

volume went up from 800,000 Lkg in 2011 to 933,000 Lkg in 2012. Sometime in 2011, the Sugar

Regulatory Administration (SRA) allowed the exportation of raw sugar to help the mills recover a bit in

the sudden drop in sugar prices due to unexpected overflow of cane supply in previous crop year. The

Group was able to sell raws to Japan and Korea during the crop year.

The Group benefited from the remaining high priced forward contracts from last crop year, as it contained

the negative impact of slow withdrawal and lower selling prices this period. Refined sales volume

dropped to 749,000 Lkg. from 854,000 Lkg. in prior year.

Cost of Sales

High tonnage and raw production this period combined with cost containment measures brought higher

margins for the Roxas Group at 29% as of March 2012 versus 18% same period last year.

The Group posted a reduction of P816 million or 25% in Cost of Sales, which pertains to substantial drop

in energy cost, hauling expense, labor and labor related costs, repairs and maintenance, etc.

Energy cost went down to P217 million from P413 million in previous year due to reduction in bunker

usage. Energy imbalance caused by the increased capacity of the mills, low cane fiber and slow start in

milling operation in prior period contributed to high bunker usage in CY 2010-2011. The use of more

cost efficient bio fuels this year contained bunker usage.

Moreover, the Group reduced its costs of repairs and maintenance, labor and labor related expenses due to

retirement of employees and hauling expenses. Fierce competition over canes in Negros last year, pushed

hauling expenses up by providing higher incentives.

Total Cost of Sales in 2012 amounts to P2.509 billion compared to P3.325 billion in 2011.

Other Operating Income

Consolidated Other Operating Income increased by 24% to P63 million in 2012 from P51 million in 2011

due to refund of performance bond from sugar importation in 2010 by CADPI amounting to P28 million

and gain from insurance claim of P8 million from a damaged turbo generator of CACI.

Operating Expenses

Despite cost containment measures of the Group, total operating expenses went up by 11% to P441

million from P397 million in prior year. The increase was brought about by the accrual of P85 million in

potential tax deficiency of CADPI due to a BIR assessment which the Group believes has no basis.

Equity in Net Earnings (Loss) of an Associate

The Group shared in the net loss of an associate, Hawaiian-Philippines Company (HPCo) for the first half

of the crop year. This amounts to P18 million in equity in net loss as compared to P58 million in earnings

in prior year. HPCo.s cane tonnage and sales went down this year.

Financing Costs, net

The slight decrease in consolidated financing costs, net was due to lower loan principal this year due to

payment of maturing obligations. Consolidated financing costs, net amounted to P267 million from P295

million in last year.

Provision for Taxes, net

Provision for taxes this period amounted to P22 million due minimum corporate income tax of sugar

subsidiaries. In 2011, the subsidiaries recognized NOLCO as deferred tax asset.

Consolidated Net Income

The Group ended the period with a consolidated net income of P332 million, a 35% improvement from

prior years P246 million as restated. The year to date March 2012 net income is equivalent to an Earnings Per Share (EPS) of P0.44 versus P0.27 in 2011 as restated.

Earnings before interest, taxes, depreciation and amortization

Documents

2nd Quarter of Fiscal Year 03-12