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Table of Contents Message from the Chairperson......................................................... 2 Message from ACCU.......................................................................... 3 CORDAID............................................................................................. 4 Message from CDA............................................................................. 5 COOP NATCCO Party List.................................................................6-7 IYC and About the Theme...............................................................8-9 Central Fund............................................................................... 10-11 ICT............................................................................................... 12-13 FICSICS....................................................................................... 14-15 Hostel and Properties......................................................................16 Gender and Development...............................................................17 Coop Youth.......................................................................................18 Environmental Management Systems............................................19 Highlights of the BOD Resolutions............................................ 20-21 Strategic Plan...................................................................................22 Audit Committee Report............................................................ 23-24 New Members..................................................................................25 Statement of Management Responsibilities..................................26 Audit Report................................................................................ 27-80 MICMA......................................................................................... 81-86 Awardees..........................................................................................87 2012 Action Plan.............................................................................88 MASS-SPECC Officers......................................................................89 2012 Budget....................................................................................90

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MASS-SPECC COOPERATIVE DEVELOPMENT CENTER

Message from the Chairperson Greetings of Cooperativism! Nowadays, the Cooperative Sector is being recognized as a vital partner in the country’s socio-economic development, not only by the Philippine government but by various governments worldwide. It is because the Sector creates jobs, generates employment, and more importantly, meets the needs of the member-owners. This year, as the global cooperative community observes the International Year of the Cooperatives with the slogan “Cooperative Enterprises Build a Better World,” it is but fitting that MASS-SPECC celebrates its 38th General Assembly with a theme, adopting the theme as that of the IYC. The accomplishments of MASS-SPECC over the years are testaments of “cooperatives building a better world,” especially in the Philippines where majority is poor. With a membership base of more than 300 primary cooperatives in the county, the Federation takes pride to have become the largest federation in Mindanao. We are so blessed to have been given the opportunity to have contributed much towards the local government’s goal in achieving sustainable development in the region. It is thus the commitment of the MASS-SPECC Board of Directors to continue to be deeply involved in all undertakings of the Federation--and for our individual selves to endeavor to upgrade our cooperative leadership knowledge and skills, all for the purpose of ably managing the risks and facing head-on the challenges associated with being at the forefront of development. Our recently completed strategic plans, which were laid down in full consideration of our members’ needs, are a concrete manifestation of this commitment. Looking forward to a stronger Federation capable of remaining at the forefront of socio-economic development, we target to continue expanding our businesses to be economically successful and socially advantageous. In addition, we are keen on helping the Cooperative Movement increase the Sector’s visibility in the mainstream via excellent and relevant programs and services for the cooperative members and the larger community as well. A monumental task ahead? No doubt. Yet, with dedication of every leader and staff to create an effective and efficient MASS-SPECC Team, we firmly believe that achieving MORE is not an impossible dream. On behalf of all members of our Board, I am extending our heartfelt gratitude to our cooperative members and partners who unselfishly support and cooperate with MASS-SPECC through the years. These partnerships have created a strong bond, which in turn, have allowed us to make a difference in the lives of our fellow Filipino people. The Board is also appreciative of the relentless efforts of our Management Team. With you on board, MASS-SPECC has upheld its vision and mission, has reached out to people throughout Mindanao, and has played a positive role beyond what is expected from us. We are all looking forward to the realization of our strategic plans. We are confident that the continued trust and confidence of our stakeholders will keep Cooperativism alive and strong in Mindanao. God bless us all. Mabuhay ang Kooperatiba!

gadwin e. handumon Chairperson 2

MASS-SPECC 2011 Annual Report


ASSOCIATION OF ASIAN CONFEDERATION OF CREDIT UNIONS

Best Wishes to MASS-SPECC Cooperative Development Center It is our pleasure to send greetings and best wishes to the leaders and members of MASS-SPECC Cooperative Development Center on its 38th Annual General Meeting on May 5-6, 2012. As we know, MASS-SPECC Cooperative Development Center demonstrated power, strength and cooperative values by being the largest regional federation, which consists of more than 300 primary cooperatives in Mindanao. We very much appreciate the leadership and management of MASS-SPECC for its dedication in creating difference in its services to members and living the true mission of credit unions founded by F.W. Raiffeisen. As Supporter member of ACCU, we are very grateful of your commitment not only to help your members but as well as to help credit unions in Asia. Your experience is a great example and inspiration to us and other credit unions in Asia. We wish you more success in the years to come!

Ranjith Hettiarachchi Chief Executive Officer

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What better opportunity than the International Yearo f Co-operatives to express our compliments and appreciation for the important work MASS-SPECC and its member cooperatives are doing to serve the poor. While as an international development organization CORDAID has the ambition to eradicate poverty in countries that are less developed than the Netherlands, we are very much aware we will only be able to do so if we can cooperative with organizations that work closely with the poor and understand their needs. What better organization to do this than the cooperative: the very same organization they themselves have created and own. We are proud to say that with the CORDAID - MASS-SPECC partnership: “Triple 10 for the Cooperative Micro-Enterprise in Mindanao� we have been a dedicated supporter of the work MASS-SPECC and its member cooperatives are doing and we sincerely hope we can continue our cooperation for many years to come. May we all live to see the day when all people are able to live in prosperity! Thank you.

Gauke andriesse Investment officer Indonesia, Philippines and India Team Asia Sector Entrepreneurship

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COOPERATIVE DEVELOPMENT AUTHORITY

Congratulations to MASS-SPECC Cooperative Development Center on its 43rd Coop Leaders’ Forum and 38th General Assembly on May 05 – 06, 2012. The conjoining impact of federations plays a vital role in amplifying, solidifying, and bolstering the inherent strength of the cooperative sector. MASS-SPECC can be likened to a strong anchor that kept the balance of the member coops in Mindanao. Keep up the good work! I have introduced the 3-Point Agenda as the main thrust of CDA endeavors up to 2013, anchored on the Philippine Medium-Term Plan 2011-2016 pursuant to President Benigno C. Aquino Administration’s framework for translating his Social Contract with the Filipino People. The agency intensified its campaign on mainstreaming 20 million Filipinos to be members of the cooperatives by the end of the year 2013. CDA had already conducted the consultations and convergences of federations, unions, coop councils, LGU coop offices and partner-agencies in recognition of their roles in advancing cooperativism in their respective jurisdiction. The leader-representatives signified their strong conviction, cohesion and forged partnership for the implementation of the cooperative programs in pursuit of development and people empowerment as an instrument of peace, unity and ecological integrity. They pledged and committed their unwavering faith to a common vision towards promoting economic growth, poverty eradication and social justice. We are celebrating the International Year of Cooperatives with the international theme “Cooperative Enterprise Build a Better World”. During our IYC Show of Force, participated by different coops and partner agencies from different parts of the country, we demonstrated that the cooperative movement is alive, strong, dynamic, progressive, and pro-active as we bannered our Philippine IYC theme “Transformative Cooperative for People, Planet, Prosperity and Peace”! CDA urged MASS-SPECC to be steadfast in pursuing excellence by working relentlessly towards the realization of its mission and vision, and epitomizing its core values. Continue to innovate programs to reinforce, energize and maximize the potential of all member coops. May it implement programs especially for the marginalized sector and the less privileged members of the community so that they will also be empowered and encouraged to embrace the cooperative principles through the sheer force of cooperativism. Mabuhay ang MASS-SPECC Cooperative Development Center! Mabuhay ang Kilusang Kooperatiba sa Pilipinas! EMMANUEL M. SANTIAGUEL, Ph. D. Chairman MASS-SPECC 2011 Annual Report

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HOUSE OF REPRESENTATIVES

Warm greetings to the members, officers and staff of the MASS-SPECC Cooperative Development Center (MASS-SPECC) on the occasion of the federation’s 38th Annual General Assembly and 43rd Coop Leaders’ Forum. Federations are important structures by which cooperatives are able to collaborate and work together to strengthen and make their individual organizations better. As one of the largest and strongest coop federations in the country, MASS-SPECC has certainly provided its members with many opportunities for growth and advancement. I wish MASS-SPECC more power and ever-growing success. The United Nations declared the year 2012 as International Year of Cooperatives with the theme “Cooperative Enterprises Build a Better World” to bring world focus to the cooperative model and the contributions cooperatives have made to socio-economic development. Every cooperative is called to participate and be involved in the celebration of the IYC. I hope that MASS-SPECC has come up with a program of activities that will help its members meaningfully celebrate the IYC and contribute to the achievement of its goals. Let us work together to ensure the success of the IYC. This humble Representation was a member of the Congressional Panel that approved the Implementing Rules and Regulations of R. A. 9520. Presently, I serve as the Chairperson of the Committee on Cooperative Development of the House of Representatives and Co-Chairperson of the Joint Congressional Oversight Committee on Cooperatives (JCOCC), which monitors the implementation of R. A. 9520. These are opportunities that provide our sector added leverage to influence public policy and decision-making and promote a more favorable environment for cooperative growth and development in the country. With your continued and unwavering support, the Coop-NATCCO Party-List and this humble Representation will continue to work for a stronger cooperative sector and exert best efforts to ensure the promotion and growth of cooperatives in the country. I trust that our partnership will go a long way for the sake of our general membership, the cooperative sector and country, as a whole. COOP-NATCCO Partylist will always be your strong partner in all your cooperative endeavors, today and in the future. Mabuhay ang MASS-SPECC Cooperative Development Center! Mabuhay ang COOP-NATCCO Partylist! Mabuhay ang Kooperatiba!

HON. JOSE R. PINGAY Representative, Coop-NATCCO Party-list

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HOUSE OF REPRESENTATIVES

Greetings of solidarity to all the member cooperatives, officers and staff of MASS-SPECC Cooperative Development Center on your 43rd Coop Leaders Forum and 38th General Assembly! I congratulate you for another year of meaningful cooperative venture. We at Coop-NATCCO Party-list highly value our strong partnership. MASS-SPECC, the largest regional coop federation in the country, has been very helpful in inspiring and assisting the primary cooperatives in Mindanao propel into greater heights. For 38 years now, I believe your federation never ceased on serving as catalyst for development in the region. It is with fervent hope that you will continue to operate with fervor as one of the pillars of cooperativism. The Coop-NATCCO Party-list is proud of your significant contributions to the flourishing of the cooperative movement in the country. As your voice in Congress, I am happy to share some of the outcomes of our legislative activities. Last year, we knocked on the doors of BSP to rehabilitate ailing cooperative banks in order to save the deposits of primary cooperatives and to strengthen the coop banks. The BSP granted a strengthening program that will benefit not just the weak coop banks but the whole cooperative banking industry. Many cooperatives also complained of the stern requirements of BIR in CTE application. We lobbied to the BIR and fortunately, the agency removed the TIN requirement. Before 2011 ended, our bill on extending the corporate life of Landbank for another 50 years was approved in third and final reading in the House of Representatives. We draw our strength from you. As we express our sincerest gratitude to all your support, we assure you that your Coop-NATCCO Party will remain a potent partner of the cooperatives in the legislative arena. Mabuhay ang kooperatiba!

HON. CRESENTE C. PAEZ Representative, Coop-NATCCO Party-list

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“Co-operative Enterprises C

ooperatives, as economic enterprises and as self-help organizations, play a meaningful role in uplifting the socio-economic conditions of their members and their local communities. Over the years, cooperative enterprises have successfully operated locally-owned people-centred businesses while also serving as catalysts for social organization and cohesion. With their concern for their members and communities, they represent a model of economic enterprise that places high regard for democratic and human values and respect for the environment. As the world today faces unstable financial systems, increased insecurity of food supply, growing inequality worldwide, rapid climate change and increased environmental degradation, it is increasingly compelling to consider the model of economic enterprise that cooperatives offer. The cooperative sector, especially in developing countries, also presents itself as an important element that can contribute to the realization of the Millennium Development Goals (MDGs) by 2015.

Quoted texts above are the first paragraph of the “Background Paper on Cooperatives” prepared by the United Nations (UN) when it declared 2012 as the International Year of Co-operatives (IYC) on 18 December 2009. These are bold statements supported by facts and figures from co-operatives and co-operative movements around the world. These are also an acknowledgement by the international community of the important role co-operatives have played in the socio-economic development of countries, both developing and developed. In the Philippines, co-operatives have joined the IYC celebration. Yearlong activities have started, and many activities are set to be implemented all throughout the country for the rest of the year. The IYC celebration, however, goes beyond the content and form of planned IYC activities. As the theme “co-operative enterprises build a better world” suggests, IYC has to do with the reality that underlies these activities. It focuses on real lives of individual members being transformed as a result of them joining co-operatives. It also showcases co-operatives concretely contributing to the solution of socio-economic problems in the communities in which they operate. More importantly, it places recognition on the Philippine co-operatives--as a Sector--as an important player in the development of the country. As co-ops then celebrate IYC, it is best to reflect on two important aspects about co-operatives. FIRST, there are the individual members who are not merely users of the services of the co-operative but are also its owners. It is commonly said that majority of the members of co-operatives belong to the lower-income sector of the population. There is plenty of anecdotal evidence pointing to this fact although real numbers are still needed to support this claim. Beyond these numbers, however, what really matters is whether these owner-members can truly say that their lives have improved because of the co-operatives.

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Build a Better World” MASS SPECC has given attention to this important measure of co-operative success by undertaking a yearly search for outstanding members since 2008. The Mindanao Cooperative Microenterprise Award (MICMA) recognizes at least three (3) such members from the ranks of its affiliates. MICMA has proven that there are indeed members whose lives have been transformed by the co-operative. The stories of these members testify to the role that cooperatives can play in providing individuals with the opportunity as well as the means to help themselves. These stories also show that individual transformation takes place when members in the first place have the real desire to help themselves, and the co-operative can then provide the necessary support that allows these members to grow and realize their potential. There is no question that every co-operative has individual success stories like this. The question worth asking is how many of its members, particularly those belonging to the lower income sectors and who need the co-operative the most, have really improved their lives because of the co-operative. If these members are the exception rather than the rule, then it’s time co-operatives seriously reflect on the IYC theme. Second, there are the co-operatives themselves, which have to be viable both as social organizations and economic enterprises. According to the CDA, there were over 18,000 co-operatives re-registered at the end of 2010. Since the Philippines have 1,512 municipalities and 122 cities, this means that on the average there are more than 11 co-operatives registered in every town and city in the country. At face value, this number is big and significant enough to make their presence felt in the national economy. In reality, however, over 92% of these co-operatives are considered micro and small even after many years of existence, and there is very little chance they can create any meaningful impact in society and the economy. It is time to take a close and hard look at these numbers, if co-operatives are to help build a better Philippines. Ever since the first co-operative law in the country was passed in 1915, co-operative development has gone through a “boom and bust” cycle. Emphasis has been more on number of co-operatives rather than on real growth. According to CDA, there are more than 20,000 co-operatives as of today as it continues to register new ones, suggesting that this tendency to favor numbers over growth continues to characterize co-operative development in the country. The UN report cited above includes impressive statistics of co-operatives achieving big market share in different industries, making significant contributions to GNP, and making great strides in the social sector, in both the developing and developed world. The keys to their success are well known and documented – among them: consolidation among co-operatives to achieve economies of scale, close cooperation among them at all levels to obtain and sustain market presence, and adherence to the Co-operative Values and Principles to differentiate themselves from competition. These are lessons that co-operatives in the Philippines cannot ignore. As we celebrate the Year of Co-operatives, it is well for co-operatives individually and for the co-operative movement as a whole to think through these lessons and learn from them. It is a shame (or sayang as we say in our dialect) if we continue to acquiesce to the status quo and miss this chance to start the process of real change.

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Central Fund Upholding Coops’ Trust and Confidence Central Fund as the dependable depository and credit source of MASS-SPECC’s membercooperatives. For 34 years, it has been consistently funded and sustained by the coops because of their patronage to its products and services. The liquidity of the Central Fund means higher loan releases and more competitive investment earnings for the primary cooperatives, which in turn translates to more financing opportunities for the individual coop members. Indeed, the Central Fund is a support facility made by the members and for the members. Consistently growing the trust and confidence of members through increasing deposits and Share Capital generation. The building trust of the cooperatives in MASS-SPECC has evidently shown in the significant increases in deposits and share capital. Coop deposits have a 29% increase from 2010, from P243 Million to P313 Million. The 26% growth in share capital also reveals the unswerving support and confidence of the member coops, which leaped from P97 Million in 2010 to P138 Million in 2011. This is also a good indicator of the stability of the member cooperatives, because they are able to manage their funds well and see their direction on a long-term basis.

Deposit Liabilities (2005-2011)

Maintaining portfolio quality. In 2011, it has

Share Capital (2005-2011)

Loan Releases (2005-2011)

released a total of P407.5 Million worth of loans - 91% were regular loans and the remaining 9% was composed of bridge finance and restructured loans. The very high percentage of regular loans is a gauge of the Central Fund’s efficiency and trust of the cooperatives. Overall, there were 62 borrowers that were given credit access.

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Continuously adhering to the Financial standards.PAR and compliance to loan losses. The Central Fund aimed to get a delinquency of less 5%, based on the Portfolio at Risk (PAR). Actual performance as of 2011 has shown 7.77% delinquency at PAR. It may not have achieved the targeted delinquency rate due to financial challenges in the cooperatives, but it has made 100% provisioning for delinquent loans that are over 1 year. Moreover, 35% provisioning was set for delinquent loans that are still less than a year old.

Coop site visitation of two agri-based cooperatives in Bukidnon.

Funding the Central fund operations through external sources. In order to build up more financing opportunities for the member-cooperatives, the Central Fund also availed loans from major funders who have been long-time partners of MASS-SPECC. As of 2011, a total of P154 Million has been granted by the funders and in turn, accessed by the cooperatives for their members. MASSSPECC is indeed privileged to have the trust and confidence of these funders who can readily assist the Central Fund in its endeavors.

Indeed, there is nothing like a cooperative federation that’s reliably managing the precious resources of the primary cooperatives. MASS-SPECC’s Central Fund truly services and cares for its members unlike any other partner in the industry. It is a trusted support system that helps the coops in fulfilling their short-term and long-term goals. Collectively, MASS-SPECC as a federation and the primaries are able to help the community by providing sufficient resources that will advance the lives of the individual members.

10% Interest on Share Capital and Patronage Refund

MASS-SPECC always rewards the cooperatives with competitive rates for the interest on share capital and patronage refund. The members are never disappointed because the returns on investment given by the Central Fund are always higher than the rates of any other federation in the country. For 2011, interests on share capital and patronage refund are at 10% each. These are the best rates that the cooperatives can get on their investments and MASS-SPECC’s Central Fund will continue to find ways to make these rates more than the market rates.

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Information and Communication Technology Converging Technological Innovations for Co-op Advancement Over the years, MASS-SPECC ICT Unit, through the various programs it offers to co-ops, has gradually changed the way transactions in the co-ops are handled. Automated banking systems, complete with appropriate software and hardware, have been installed in many co-ops, thereby facilitating a smooth flow of co-op transactions. With the addition of the Pinoy Coop ATM, the co-operatives’ chance to be at par with the banks is even brought to a higher level. Computer technology is a fast-changing field of study. The advancement in ICT is just way too fast for most co-ops to keep up with. Amidst this, and other technological challenges that MASS-SPECC and the co-operatives had to face, 2011 nevertheless turned out to be another giant leap for the Federation. 50 MSRTE sites were installed. As of 2011, there are a total of 381 sites for MSRTE, 247 of which were installed with MBDOS while 134 are already running on Micro-Banker Windows (MBWIN). 15 ATM sites were deployed. The ATM coverage got bigger with 33 sites deployed by year end, with a total of 23 participating co-ops.

Implementation of the MBWIN Consolidation Report, a Management Information System (MIS) or a tool that enables the head office of a co-operative to merge data of all its MBWIN-installed branches, in real time. Also known as MBMIS, the program is a consolidation system that generates all branch level data and merges them to produce a consolidated report. An individual branch report is also generated by the system, either on a weekly or monthly basis, depending on the specifications of the co-operative. Moreover, the merged or consolidated report is imported to the head office of the co-operative, which allows the top management to easily monitor, examine, and interpret the operations of each branch and of the co-operative as a whole. Financial reports--trial balances, income statements, and balance sheets-- are available for the head office.

MBMIS is running in Paglaum Multi-purpose Cooperative

On-going installations in the following cooperatives; • Integrated Cooperative Towards Service (ICTUS) • Socorro Empowered Peoples’ Cooperative (SOEMCO) • Toril Community Cooperative (TCC) • Lorenzo Tan Multi-Purpose Cooperative (LTMPC) • Sta. Catalina Credit Cooperative (SCMPC) • Micro-Entrepreneurs’ Multi-Purpose Cooperative (MEMPCO)

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Connection of the MBWIN to the ATM Depository System: A co-operative which uses the MBWIN Windows version can now be connected to the Pinoy Coop ATM. Previously; only co-operatives that use the DOS version of the MicroBanker system (MBDOS) can offer ATM services to their members. But with the joint efforts of MASS-SPECC, MB FAO (Food and Agriculture Organization of the United Nations based in Thailand), and MegaLink, co-operatives are given more flexibility and options as far as their banking system is concerned. Be it MBDOS or MBWIN, the ATM service can be enjoyed by a larger number of co-op members.

MEGALINK Internet Banking System (MIBS) The MIBS is an additional ATM service that allows Pinoy Coop ATM cardholders to make online transactions with their ATM account, such as balance inquiries and balance transfers. With the MegaLink Internet Banking System, members with their co-op savings account can transact anywhere and anytime as long as an internet connection is available. To enjoy the perks of internet banking, members have to enroll their Pinoy Coop ATM cards in Mega Link’s website at https://mibs.megalink.com.ph/iBank/index.html. All they need is to register as a new user and enter all the required information to access the facility. Computer/laptop or mobile phone. The convenience that internet banking offers will certainly allow Pinoy Coop ATM cardholders to have extra time for the more important things in life. Launching of MIBS with Megalink President Mr. Benjamin Castillo.

MASS-SPECC On-line Transaction thru Point of Sales (POS). Through the Pinoy Coop ATM Switch, savings transaction on any MSRTE site can now be accessed anywhere with a POS terminal. Another convenient way to make use of the Pinoy Coop ATM card is when shopping in a store that has Mega Link’s POS facility. Members need not withdraw money because cashless payment with ATM card is allowed. When paying, members will present their ATM card, and will be asked to key in their Personal Identification Number (PIN). Purchase amount will be deducted from member's co-op savings account through the POS facility. A stable ICT Unit is crucial for MASS-SPECC and its member co-operatives to survive the extreme competition in businesses today. The MASS-SPECC ICT team aims to constantly serve as a fundamental source of information, technology, and innovation for the Cooperative Movement. The greatest business significance of MASS-SPECC’s ICT endeavor is all about convergence; it is about combining the best resources and innovations to achieve better efficiency and increase capacity for the co-operatives. Baug CARP Beneficiaries MPC ATM launching, Cabadbaran Branch

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FICSICS (Financial Intermediation Consultancy Services - Institute of Co-operative Studies) Co-op Education and Efficiency The continued growth of the Federation depends on its ability to support the institutional growth of its affiliate co-operatives. MASS-SPECC believes that in doing so, developing and conducting training programs for, and providing consultancy services to, members-- which must be backed up by research, are very important. Hence, the creation of the FiCSICS.

1st batch of Managers attending the two weeks Branch Managers Development Course (BMDP) Professionalization of the savings and credit operation of 57 affiliate--cooperatives from the different regions of Mindanao, broken down as follows: 9 from Region 9; 15, Region 10; 13, Region 11; 7, Region 12; 8, CARAGA; and 5, ARMM. Conduct of 68 training programs for the following types; Course, 5 programs; Thematic, 10; Cluster, 23; On-Site, 25; and Project, 5.

National Tour: A Co-op Tour was one of the major activities of the 4th Annual Joint Chairpersons’ and CEOs’ Summit held on 30 September 30 to 3 October 2011. For this tour, two co-ops in Luzon were visited: St. Martin of Tours Credit and Development Cooperative in Bulacan which is one of the three ACCESS branded co-operatives in the Philippines, and San Dionisio Credit Cooperative in Paranaque which is known for being able to balance its financial and social capital. The said tour had the following objectives: (a) To expose partner co-operatives to ACCESS branded co-operatives, and better understand the processes involving qualifications, requirements and preparation for ACCESS Branding; and (b) To learn the best practices of the identified co-operatives. The Summit was participated by 14 co-operatives, with a total of 38 participants.

These training programs were attended by 1,249 females and 1,220 male cooperators or a total of 2,469 participants from 332 co-operatives. Development of Manuals 1. Updated co-operative manual for savings and credit co-operatives: a) Credit Manual b) Internal Control Manual c) Human Resource Manual 2. FiCS tools and approaches, to be used as a guide for technology innovation for the Advisors. Development of MASS-SPECC Financial System for Co-operatives: With this system, it is hoped that financial management in co-operatives would be greatly enhanced, making it at par with the best and latest banking and finance practices. For this system, the following were developed: a) A Management Handbook for MASS-SPECC; b) A Training Workbook, a guide for MASS-SPECC in training the cooperatives on the said system; and c) Cases/caselets and exercises for the Training Workbook.

Regional Tour: Lakbay-Aral of the partner and prospective partner coops in Zamboanga and ARMM areas to six successful credit co-operatives in Mindanao that accessed MASS-SPECC consultancy services. The LakbayAral is being held: (a) To expose both the partner and prospective partner co-ops to those co-ops who had undergone professionalization guidance under FiCSICS, and find out for themselves how the consultancy services had or have created an impact on the operation and growth of those coops, and (b) To learn the best practices of these co-ops. Eleven coops joined the Lakbay-Aral with a total of 37 participants.

Conduct of Study Tours International Tour: MASS-SPECC, in partnership with the National Confederation of Cooperatives (NATCCO) and the Association of Asian Confederation of Credit Unions (ACCU), organized the 2nd Thailand Co-op Study Tour & Cultural Immersion on 26-30 October 2011. The objectives of the study tour were: (a) To expose the participants to the best governance practices of successful savings and credit co-operatives in Thailand; (b) To learn the uniqueness of these co-operatives and the products and services they offer to their members; and (c) To experience Thai hospitality, culture and traditions, and Thai mouth-watering cuisines. Nine delegates from MASS-SPECC from six primary cooperatives were part of this tour.

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Module Development, with the primary purpose of reviving the spirit of cooperativism among co-op members, officers, and staff.

CONSULTANCY PARTNER COOPS Region 9 1) 2) 3) 4) 5) 6) 7) 8) 9)

Batu Farmers MPC Buug Integrated Cooperative Micro-Entrepreneurs’ MPC Midsalip Farmers MPC People’s Microfinance MPC Recodo Zamboanga MPC Timbermines MPC Zamboanga Sur Agri College Integrated MPC ZAMSURGEA Community MPC

Region 10 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15)

Bangko sa Balay Foundation, Inc. Bukidnon Government Employees MPC Coops for Christ Del Monte Employees Credit Cooperative IDEAL MPC Iligan Cement MPC Iligan City Government Employees MPC Lorenzo Tan MPC Mambajao Credit Cooperative Mindanao Savings Cooperative MSU-IIT MPC Oro Court Employees Cooperative Oro Integrated Cooperative Oro Savings & Sharing Cooperative Paglaum Multi-Purpose Cooperative

Region 11

These modules were developed as part of a resolution made during the 45th SPECC Anniversary held on 9 August 2011. Such resolution was focused on during bringing back the true essence of cooperation by shifting the direction of the co-ops’ education and training program thru reintegrating the philosophy, values, and principles of co-operatives. This oneday SPECC conference was attended by former graduates of SPECC as well as by current leaders of various co-operatives.

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13)

Agdao MPC Bansalan Cooperative Society Bansalan Farmers Vendors Traders MPC Digos Market Vendors MPC Hijo Madaum MPC Kooperatiba ng Kiblawan Maco Development Cooperative Mawab MPC Pangi Land Owners MPC Sta. Ana Multi-Purpose Cooperative St. Michael’s MPC Tagum Cooperative Toril Community Cooperative

Region 12 1) 2) 3) 4) 5) 6) 7)

Alamada MPC Greater Midsayap Area MPC Integrated Cooperative Towards Unified Service (ICTUS) Makilala MPC Malapatan MPC Mediatrix MPC Notre Dame MPC

ARMM 1) 2) 3) 4) 5)

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ARCO Farmers MPC DENRACEAE MPC Jolo Integrated Cooperative MSU Sulu Employees MPC MSU Tawi-Tawi MPC


Hostel and Properties Big Steps Toward Sustainability Through the years, MASS-SPECC Hostel has served not just as a home of the cooperators but also has become a symbol of unity among thousands of co-operatives in the country. For cooperators hailed from regions far from Mindanao, the Hostel is their “home away from home” every time they attend training programs and meetings in the beautiful cities of Cagayan de Oro and Davao. And its service is not limited to the Movement. The MASS-SPECC Hostel is always ready to extend its homey assistance to non-members of co-operatives, or to traveling non-cooperators. Thriving amidst competition. The competition in the hospitality industry has always been tough and 2011 was no exception. However, the Hostel proved to be stronger and more determined in achieving a productive operation in 2011. The Hostel staff worked harder and put in that extra effort to go beyond what was expected; thereby ending 2011 with remarkable achievements, as follows: • Increase in occupancy rate of 40%, from 37% in 2010

Newly renovated Function Room A and B to host trainings and seminars

• Renovation of the 6th floor (where 2 of the biggest function rooms are located) • Net surplus of P132,180 from P21,198 in 2010

The MASS-SPECC Hostel, no matter how challenging the times are, will never stop to find ways to strengthen its operation and meet head-on all the obstacles that come its way. Improved products and services to delight customers and owners alike.

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MASS-SPECC 2011 Annual Report


Gender and Development Attaining Equality and Shared Participation In advancing the Gender and Development Program of MASS-SPECC the GAD committee has conducted three committee meetings in 2011 and crafted 2012 Action Plans on 22 November 2011. The committee has also generated a report showing the women and men representation in the leadership and management groups in MASS-SPECC. Statistics generated had shown 46% women and 54% men are in Board of Directors while 44% women and 56% men. This is a concrete manifestation that the Federation is truly advancing the basic co-operative principles of equity and shared leadership.

GAD Committee Meeting in MASS-SPECC

2011 Congress Resolution Approved by the General Assembly and Updates

Resolution No.014, 2011 General Assembly. Adopting the resolutions passed during the Gender Congress.

1. Through the conduct of the Search for “Most Outstanding Primary Co-op GAD FEP Program Implementor” in 2012, advocacy programs of the Pilot Primary Co-ops implementing GAD FEP Programs will be monitored and strengthened. UPDATES: The search for

the “Most Outstanding Primary Co-op GAD FEP Program Implementor” was started. Two primary co-operatives, the Tagum Cooperative and MSUIIT MPC, joined the search. The awarding will be held during the 2012 MASS-SPECC General Assembly.

2. Increase the awareness level of the primary co-ops on gender mainstreaming by increasing the number of co-ops implementing gender advocacy programs. UPDATES: The Gender Training was conducted for

three times in 2011, participated by 70 individuals, 67% of which are female and 23%, male. These figures show a growing number of women participants who

MASS-SPECC 2011 Annual Report

17

wish to reinforce their participation in the undertakings of the Co-operative Movement. Twenty-five primary co-ops have already committed to implement a gender Role-playing during the Gender Equality Training program in their respective organizations. MASS-SPECC will conduct a regular monitoring of these co-ops to ensure the realization of the GAD Program in their respective cooperatives.

3. Hold the Gender Congress for one day to give more time for the participants to share and discuss present gender issues, allowing them to deliberate more and come up with well-thought plans and resolutions for the next year.

The 1-day Gender Congress shall be implemented starting the 2012 General Assembly UPDATES:


Co-op Youth Parliament (CYP) The future of the Co-operative Enterprise Addressing the challenge of reviving cooperativism in Mindanao, the young co-operators are already in its crusade to make it happen. 2011 for the youth sector of MASS-SPECC was a combination of fulfilment and additional track to fulfil and to work more. Having the philosophy of cooperative helping one-self thru the cooperatives and eventually helping others, CYP is its way to make it more visible and realistic. The following were the accomplishments: •

Youth Entreprenuership Program. In training the young co-operators to be enterprenuers, the Youth Bazaar was set up during Leaders Congress and General Assembly of MASS-SPECC in Cagayan de Oro City last April 30, May 1 and 2, 2011. This was participated by various cooperatives with their youth representatives bringing the delicacies of their region.

Participation in the ACCU workshop and Forum in Kuala Lumpur, Malaysia. The CYP Chairperson Ms. Anna Marie Labininay was chosen to attend this event. The experience allows our young co-op leaders to have an opportunity to learn more about the wider co-op movement and to connect, share experiences and ideas to young cooperators in other countries.

CYP BOD Meeting in Paglaum MPC, Oroquieta City. Attended by all the directors of CYP, the discussion was focused on the revision of the 2010-2012 Strategic Plan incorporating the Co-op Youth Leadership Program which aims empower young co-operators to engage in the cooperative movement and ensure that the youth perspective is considered in the wider discussions. This is also about preparing the young co-operators in their future leadership in the coop sector. Upcoming activities were also tacked during the meeting. Invitation to the 1st Tagum Cooperative Youth Laboratory General Assembly. This is one of the 1st in Mindanao, the historical Youth

Laboratory General Assembly of Tagum Coop last November 5, 2011 participated by about 1,208 young co-operators. The CYP Chairperson was invited as the Keynote Speaker in the presence of the dignitaries in Tagum City and COOPNATCCO Party-list, Honorable Cresente Paez. The overwhelming number of young co-operators in attendance affirms the power of the youth as the sector that will build the future of the co-operative movement. •

Registration to the National Youth Commission (NYC). October 20, 2010, CYP received the Certificate of Registration from the National Youth Commission (NYC). By partnering with this agency, CYP will have access of information and opportunities to avail the programs and services for the youth.

More work still needs to be done but the young co-operators believe in the saying that the journey starts with a single step. CYP is on its way to take extra mile for the betterment of the cooperative movement.

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MASS-SPECC 2011 Annual Report


Environment

Confronting climate change the co-operative way Believing in the importance of cooperation in tackling global warming and coops vital role in addressing the issue. MASS-SPECC launched the Nurture a Tree, Save Planet Earth campaign to showcase that coordinated or synchronized effort, no matter how small, can contribute to and form a larger, more powerful response.

Objective

To create awareness among Cooperative members and communities of the Coops contribution to the attainment of the Millennium Development Goals (MDG) of ensuring environment sustainability. 2,500 trees were planted by 10 co-ops Co-operators in Mindanao participated in the synchronized tree planting activity last October 29, 2011.

TAGUM COOPERATIVE

MIDSALIP FARMERS MPC

PANABO MPC

ILIGAN CEMENT MPC

MEDIATRIX MPC

SAN FRANCISCO GROWTH ENHANCEMENT MPC

BUKIDNON COMMUNITY COOPERATIVE

PAGLAUM MPC

ALAMADA MPC

In keeping with this focus, co-operatives are continuously expanding and redouble its efforts to find new points in cooperation to address the daunting change of climate change and its impacts. MASS-SPECC 2011 Annual Report

19

STA. CATALINA MPC


HIGHLIGHTS OF THE 2011-2012 BOD RESOLUTIONS MEMBERSHIP • Acceptance of the 34 new members and withdrawal of 2 coops from membership. • Approve the proposed membership classification. • Setting up MASS-SPECC satellite offices in strategic areas in Mindanao. CENTRAL FUND OPERATIONS • Renewal of the P75M rediscounting line with Lank Bank of the Philippines (LBP) • Accessing of P50M Loan Rediscounting Line with BPI Globe Banko, Inc. ADVANCING ICT INITIATIVES • Implementation of the On-line Gateway Connectivity for coops. • Participation in the Megalink Mobile Banking Services • Issuance of authority to enroll coops with Pinoy Coop ATMs as third Party of the “We Access” Internet Facility of Land Bank of the Philippines (LBP) IMPROVING HOSTEL OPERATIONS • Pursuing further study in the most viable options for MASS-SPECC Hostel • Membership of MASS-SPECC Hostel to the Tourism Congress. • Renewal of Department of Tourism (DOT) accreditation CREATION OF NEW COMMITTEES • Appointment Oro Integrated Cooperative, MSU-IIT MPC, and Tagum Cooperative as members of the Investment Committee. • Appointment of Toril Community Cooperative as member of the Mediation and Conciliation Committee. • Appointment MSU-IIT MPC as Credit Committee Member TRANSFORMATION JOURNEY NATCCO • Re-appointment of the 3, and replacement of 2, members of the committee on MASS-SPECC and NATCCO unification; PFCCO Mindanao League • Exploring discussion with PFCCO Mindanao League on possible complementation of services to coops. AFFILIATIONS, LINKAGES AND PARTNERSHIPS Department of Social Welfare and Development (DSWD) • Granting of authority to management to apply for accreditation with DSWD to enable MASS-SPECC to participate in the Pantawid Pamilya Pilipino Program (4Ps)/Conditional Cash Transfer (CCT) Program, a poverty reduction program of the government. • Issuance of an authority to participate in the CCT Program, designating the Chairperson and the CEO to enter into Memorandum of Agreement (MOA) with LBP. • Issuance of authority to establish a CORRBANK Line with Land Bank of the Philippines for the CCT program.

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MASS-SPECC 2011 Annual Report


Mindanao Coalition of Development NGO Networks, Inc. (MINCODE) • Granting the P10,000 request to help defray some of its General Assembly expenses for 2011. Cooperative Development Authority (CDA) • Formally acknowledging Cooperative Development Agency (CDA) for its financial assistance to MASSSPECC. • Granting P 20,000 financial support for the Peace Summit in CDO. Mindanao Micro-Finance Council (MMC) • Membership in the Mindanao Micro-finance Council (MMC) National Anti-Poverty Commission (NAPC) • Endorsement of Mr. Deal Noel Benegrado as Sectoral Representative for the Cooperative Sector under the National Anti-Poverty Commission (NAPC) 1-KOOP Mindanao • Contributing P200,000 to 1-KOOP Mindanao. COMMITTEE REPORTS • Acceptance and approval of the Audit Committee Reports • Acceptance and approval of the Election Committee Reports • Adoption and approval of the Credit Committee Reports • Adoption and approval of the Unification Committee Reports • Adoption and approval of the Investment Committee Reports MINDANAO MICRO-ENTREPRENEUR AWARD (MICMA) • Nominating all participants from 2011 Mindanao Micro-Entrepreneur Awards (MICMA) to the 2011 CitiBank Microentrepreneur of the Year (MOTY) Awards initiated by Microfinance Council of the Philippines (MCPI), CITIBANK, Citi Foundation and Bangko Sentral Ng Pilipinas. • Approval of the revised selection guidelines for the 2012 MICMA CARING FOR MASS-SPECC HUMAN RESOURCES • Approval of the Acquisition, Assignment and Employee Use of the Laptop Policy • Approval of the 5-day employee work week • Approval of the Staff Rest and Recreation (RnR) policy. • Approval of the P 20,000 Cash Gift for officers and staff • Approval of a request from MASS-SPECC Employees Savings Club to make investments to various financial institutions under the name of MASS-SPECC. • Approval of the policy on Employee Productivity Incentive Bonus (PIB and the Officers Incentives for the Directors and Committee Officers • Approval of the monthly communication allowance for the Board Secretary. OPERATIONS • Approval of the management and treasurer’s report during regular BOD meetings • Approval of the release of the 2011 MASS-SPECC Audited Financial Statement • Approval of the proposed allocation of the net surplus for 2011 • Approval of the 2012-2016 MASS-SPECC Golden Strategic Plan • Approval of the 2012 Action Plan and Budget • Approval of the allocation of MASS-SPECC local CETF: 25%, Members; 35%, Officers and 40%, Staff • Approval of the proposed MASS-SPECC Investment Guidelines and Policies. • Approval of the updated Cash Handling Policies and Procedures • Approval of the updated Capital Asset Policies • Abolishing the Professional fee Policy for the Internal Resource Person. • Acquisition of 1 unit vehicle for Davao area.

MASS-SPECC 2011 Annual Report

21


Strategic Plan (2012-2016) In bringing MASS-SPECC to the next level, strategic plan was crafted harnessing the gains and capturing the opportunities to position MASS-SPECC to be in the forefront in the socio-economic development of the tri-people in Mindanao. In keeping with this mandate, below would be the BHAGs for the period 2012-2016; We shall adopt, practice, and live by these cardinal principles in conducting our business: We shall be relevant to the changing times and stay one step ahead of primary coops. As big-brother federation, we shall help primary coops on what they cannot do by themselves. As an organization, we shall survive (and thrive) financially. We shall do whatever it takes to maneuver into the future we have declared.

We shall be in 7 businesses expressing our commitment to service the growing and changing needs of coops. There shall be 5 reconfigured businesses and 2 new fields. Reconfigured businesses comprise: Financial Intermediation: continue sourcing funds for relending to support coops’ activities; Information and Communication Technology: now geared towards providing decision-making-friendly products; Trainings and Consultancies: shall also address issues and concerns of the big coops; Research and Development: to provide decision-makingoriented research for anticipating future needs; Properties: focus on optimizing current property portfolio and assist in primary coops’ foreclosed properties.

The 2 new fields we shall enter are: Financial Packaging: helping coops in worthwhile proj-ect investments, deal making, loan syndications; Reviving Cooperativism: “evangelizing” to the general public, re-education of primaries. To strengthen each business, we shall be open to the “outside world” on matters which we cannot handle ourselves.

22

MASS-SPECC 2011 Annual Report


Audit Committee Report Greetings to our Valued Cooperators! In its 38th year of meaningful existence, MASS-SPECC solidly stands as the most successful, dependable and trustworthy Cooperative Federation in Mindanao as it was envisioned by the founders. Seeking to fulfill our mandate and more than ever, it is very important to be vigilant in the exercise of our oversight function with the fiduciary duty to monitor MASS-SPECC’s operational activities and other business affairs that can have significant impact on the entire business operations of the federation. Effective and efficient governance requires not only a functional and dedicated Board of Directors’ functions but also their committees to be proactive, informed, investigative and accountable. Management, the board, and the audit committee all play critical roles in an organization’s tone at the top. It is the Audit Committee’s responsibility, though, to monitor that tone as well as oversee the organization’s ethical environment and compliance with laws and regulations. With this, the Audit Committee’s commitment to contribute to the continual growth of MASS-SPECC and to add value to every audit conducted is also a big challenge for the committee as our responsibility. Hence, the following are the summary of our audit activities: • Conducted an inspection and validation of various financial transactions to have an intensive audit and evaluation of business projects/programs of the Federation and have recommendations to the Board and Management to further strengthen its internal control and financial position. • Provided technical advisory services that would aid MASS-SPECC Management in sound decision making concerning various business ventures. Discussion of these with the BOD and Management entailed skills and expertise on the financial aspects of the programs under those business ventures. Financial Position TheThe totaltotal resources, as of December 31,31, 2011, amounted resources, as of December 2011, amountedtotoP768 P768Million MillionororP173 P173Million Millionhigher higher(29% increase) to December 31, 2010. 31, The2010. increase resources distributed in the following (29% compared increase) compared to December Theinincrease in is resources is distributed in the Asset captions: following Asset captions: 2011

2010

Variance

% of Increase

Current Assets

P 393,967,013

P 320,803,998

P 73,163,015

23%

Non-Current Assets

374,998,370 P 374,998,383

274,570,684 P 274,570,864

100,427,686 P 100,427,519

37% 36%

% of Increase 29%

The strengthening in our assets was complemented by the following: MASS-SPECC 2011 Annual Report

23

Deposit Liabilities (Short and

2011

2010

Variance

P 313,850,775

P 243,337,790

P 70,512,985


Non-Current Assets

P 374,998,383

P 274,570,864

P 100,427,519

36%

strengthening in our assets complemented following: TheThe strengthening in our assets waswas complemented byby thethe following:

Deposit Liabilities (Short and Long Term) Loans Payable (Short and Long Term) Interest on Share Capital and Patronage Refund Accounts Payable and Other Liabilities Members Equity

2011

2010

Variance

P 313,850,775

P 243,337,790

P 70,512,985

% of Increase 29%

P 225,633,781

P 156,257,622

P 69,376,159

44%

P 16,480,894

P 11,723,765

P

4,757,129

41%

P 17,978,118

P 12,899,669

P

5,078,449

39%

P 177,823,639

P 151,559,927

P 26,263,712

17%

Financial Performance Financial Performance The Net Surplus realized for the year reached to P25M or P7M higher (45% increase) from that of last year. ThebeNet Surplus for the or P7M (45% increase)on from thatCapital It can noted that realized the increase onyear this reached account to hasP25M brought to anhigher increase in Interest Share of last year. It can be noted that the increase on this account has brought to an increase in and Patronage Refund account by P5M or 45% compared to 2010. Due to the increase in Net Surplus, the Interest on Share Capital and Patronage Refund account by P5M or 45% compared to 2010. Due Federation’s General Reserve Fund reached to P22M which is higher by P9M or 33% compared to 2010. to the increase in Net Surplus, the Federation’s General Reserve Fund reached to P22M which is higher by P9M or 33% compared to 2010. Cash Flow The Cash and Cash Equivalents of the year amounted P165M or an increase of P35M (27%) as compared Cash Flow to 2010. This liquidity position is sufficient to meet the operational needs of MASS-SPECC in both loan releases and deposits servicing. The Cash and Cash Equivalents of the year amounted P165M or an increase of P35M (27%) as compared to 2010. This liquidity position is sufficient to meet the operational needs of MASSRecommendations SPECC in both loan releases and deposits servicing.  Management to manualize the Internal Control policies.  MASS-SPECC must provide training and seminars to all officers as mandated by RA 9520. Recommendations We  wish, therefore, to ourthe sincerest and thanks to all primary cooperative members Management to express manualize Internalappreciation Control policies. andall individuals who, in one way or the other, have made for MASS-SPECC, a very challenging MASS-SPECC must provide training and seminars tothe all2011 officers as mandated by RA 9520. and exciting, yet fulfilling year for all of us. Happy 38th Annual General Assembly! God Bless us all!

NENITA R. MALBAS, CPA, MBA Chairperson

MERLYN I. GOMEZ, CPA Vice-Chairperson

GILBERT B. GAANANAN, PhD Secretary

24

MASS-SPECC 2011 Annual Report


2011

NEW COOP MEMBERS OF MASS-SPECC

REGION 9

REGION 12

Poblacion , Leon B. Postigo, Zamboanga del Norte

Municipal Site. Sto. Nino, South Cotabato

Bay Side Multi-Purpose Cooperative (BMPC)

Sto. Nino Municipal Economic Cooperative (SANMECO)

Alicia Neighborhood and Municipal Employees Livelihood MPC (ANMELCO)

Glan Local Officials Employees Movement MPC (GLOEM MPC)

Kumalarang Employees MPC (KEMPCO)

Sumbakil Multi-Purpose Cooperative (SMPC)

Danlugan Farmers Multi-Purpose Cooperative (DFMC)

Unified Engineering Workers Multi-Purpose Cooperative (UEWMPC)

Pagtinabangay Multi Purpose Cooperative (PMPC)

Adventurer's Multi-Purpose Cooperative (AMCOOP)

Dinas Community Integrated Cooperative (DCICO)

Fonus Cotabato Federation of Cooperatives (FCFC)

Maranding Women Investors Multi-Purpose Cooperative (MWIMPC)

Kidapawan Cotabato Division Office Teachers Retirees and Employees MPC

St. Cruz Labangan, Integrated Development MPC

Tacurong City Employees Multi-Purpose Cooperative (TACEMPCO)

Aloran Trade High School Multi-Purpose Cooperative (ALTRADE MPC)

Sta. Catalina Credit Cooperative (SCC)

ANMELCO Building., Poblacion ,Alicia, Zamboanga LGU Compound, Kumalarang, Zamboanga del Sur Purok Pechay, Danlugan, Pagadian City

Purok Roxas, Sto. Nino District,Pagadian City

Purok Camia, Poblacion, Dinas, Zamboanga del Sur Maranding,Lala, Lanao del Norte

Sta. Cruz Labangan, Zamboanga del Sur Aloran, Misamis Occidental

Poblacion, Glan, Sarangani

Brgy. Sumbakil Polomolok, South Cotabato

Purok San Miguel, Polomolok, South Cotabato Munez Subd., Cannery Road, South Cotabato

Naval Subdivision, Lanao Kidapawan City, North Cot. J.P. Laurel Sts. Kidapawan City

Corner Ledesma St., Poblacion, Tacurong City Poblacion, Pres. Roxas, Cotabato

Lake Sebu Countryside Development MPC (LSCDMPC)

REGION 10

Oro Court Employees Cooperative (OCECO) Hall of Justice, Cagayan de Oro City

Jobnet Service Cooperative (JSC)

P.9 Mahayahay, Cabug, Medina, Misamis Oriental

Misamis Oriental PNP Employees MPC (MOPEMCO) VNC Hall, San Martin, Villanueva, Misamis Oriental

Buklod Multi-Purpose Cooperative (Buklod MPC) Cor. Summit Inn, MSU Campus, Marawi City

National Highway, Brgy. Poblacion, Lake Sebu, South Cotabato

Southern Philippines Millennium MPC (SPMMPC) Poblacion, Pigkawayan, North Cotabato

Kapamilya Savings and Credit Cooperative (KSCC) Burgos St. Almendras Dist. Padada, Davao del Sur

REGION 13

Farmers Alternative for Self-Reliance Multi Purpose Cooperative (FASRMCO) San Vicente, Properidad, Agusan del Sur

Malaybalay City Employees Multi -Purpose Cooperative (MACEMPC)

San Pablo Multi Purpose Cooperative

Bukidnon Transport Multi- Purpose Cooperative (BUKTRAMCO)

Surigao del Norte Alliance of Cooperative (SUDENACO)

Cooperative Union of Iligan City (CUIC)

Placer Government Employees Cooperative (PLAGECO)

City Agriculture Office Compound, Casisang, Malaybalay City Sayre Highway, Poblacion, Quezon, Bukidnon RCTMC Building, IISHAI, Suarez, Iligan City

National High-way, San Pablo, Tubod, Surigao del Norte 2F del Castillo Bldg., Rizal Sts., Surigao City LGU-Placer, Surigao del Norte

Tanariz Fishermen Multi-Purpose Cooperative (TAFIMCO)

REGION 11

Philippine Diesel Calibration Cooperative (PHILDCCO) 300 BA Building R. Castillo Agdao Davao City

Navarro, Socorro, Surigao del Norte

DENR CARAGA Employees Development Cooperative (DCEDCO) DENR Regional Office, Ambago, Butuan City

ARMM

Lamitan Agrarian Reform Beneficiaries Cooperative (LARBECO) Limook, Lamitan City, Basilan

MASS-SPECC 2011 Annual Report

25


Tiano-Pacana Streets 9000 Cagayan de Oro City, Philippines (08822) 725762 / 726516 / 728145 Telefax No. (088) 856-2339 Dinavill Road, Anahaw Village Ma-a, Davao City Telefax No. (082) 244-1096

STATEMENT OF MANAGEMENT‘S RESPONSIBILITY FOR FINANCIAL STATEMENT

The Management of MASS-SPECC COOPERATIVE DEVELOPMENT CENTER is responsible for all information and representation contained in the financial statement for the years ended December 31, 2011 and 2010. The financial statements have been prepared in conformity with Philippines Financial Reporting Standards and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration of materiality. In this regard, management maintains system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized. The Board of Directors reviews the financial statement before such statement are approved and submitted to the members of the cooperative. Punongbayan & Araullo, the independent auditors appointed by the Board of Directors, has examined the financial statements of the Cooperative for the year ended December 31, 2011 and 2010 in accordance with Philippines Standards on Auditing and has expressed their opinion on the fairness of presentation upon completion of such examination, in this report to the Members and Board of Directors.

MR. GADWIN E. HANDUMON Chairperson of the Board

MS. BERNADETTE O. TOLEDO, CPA Chief Executive Officer

MS. NENITA R. MALBAS, CPA, MBA Chairperson, Audit Committee

ENGR. DENNIS Z. SANTANDER Deputy Chief Executive Officer

MS. ALETA A. GICOLE Treasurer

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MASS-SPECC 2011 Annual Report


Report of Independent Auditors

20th Floor, Tower 1 The Enterprise Center 6766 Ayala Avenue 1200 Makati City Philippines T +63 2 886-5511 F +63 2 886-5506; +63 2 886-5507 www.punongbayan-araullo.com

Report of Independent Auditors The Board of Directors MASS-SPECC Cooperative Development Center Tiano-Yacapin Streets Cagayan de Oro City The Board of Directors MASS-SPECC Cooperative Development Center Tiano-Yacapin Streets Report on the Financial Statements Cagayan de Oro City We have audited the accompanying financial statements of MASS-SPECC Cooperative Development Center (the Cooperative), which comprise the statements of financial Report on the Financial Statements position as at December 31, 2011 and 2010, and the statements of comprehensive income and distribution of net surplus, statements of changes in members’ equity and We have audited the accompanying financial statements of MASS-SPECC Cooperative statements of cash flows for the years then ended, and a summary of significant Development Center (the Cooperative), which comprise the statements of financial accounting policies and other explanatory information. position as at December 31, 2011 and 2010, and the statements of comprehensive income and distribution of net surplus, statements of changes in members’ equity and Management’s Responsibility for the Financial Statements statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Financial Reporting Standards in the Philippines Management’s Responsibility for the Financial Statements applicable to cooperatives (as described in Note 2 to the financial statements), and for such internal control as management determines is necessary to enable the preparation Management is responsible for the preparation and fair presentation of these financial of financial statements that are free from material misstatement, whether due to fraud or statements in accordance with the Financial Reporting Standards in the Philippines error. applicable to cooperatives (as described in Note 2 to the financial statements), and for such internal control as management determines is necessary to enable the preparation Auditors’ Responsibility of financial statements that are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Auditors’ Responsibility Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free Our responsibility is to express an opinion on these financial statements based on our from material misstatement. audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform Certified Public Accountants P&A is a member firm within Grant Thomton International Ltd the audit to obtain reasonable assurance about whether the financial statements are free Offices in Cebu, Davao, Cavite from material misstatement. BOA/PRC Cert. of Reg. No. 0002 SEC Accreditation No. 0002-FR-2

MASS-SPECC 2011 Annual Report

27


-2-

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of MASS-SPECC Cooperative Development Center as at December 31, 2011 and 2010, and its financial performance and its cash flows for the years then ended in accordance with the Financial Reporting Standards in the Philippines applicable to cooperatives.

Certified Public Accountants P&A is a member firm within Grant Thomton International Ltd

28

MASS-SPECC 2011 Annual Report


-3-

Report on Other Legal and Regulatory Requirements Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information for the year ended December 31, 2011 required by the Bureau of Internal Revenue as disclosed in Note 26 to the financial statements is presented for purposes of additional analysis and is not a required part of the basic financial statements prepared in accordance with the Financial Reporting Standards in the Philippines applicable to cooperatives. Such supplementary information is the responsibility of the management. The supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. PUNONGBAYAN & ARAULLO

By: Christopher M. Ferareza Partner CPA Reg. No. 0097462 TIN 184-595-975 PTR No. 3174792, January 2, 2012, Makati City SEC Group A Accreditation Partner – No. 1185-A (until Jan. 18, 2015) Firm – No. 0002-FR-3 (until Jan. 18, 2015) BIR AN 08-002511-34-2011 (until Sept. 21, 2014) Firm’s BOA/PRC Cert. of Reg. No. 0002 (until Dec. 31, 2012) Firm’s CDA CEA Accreditation No. 0021-AF (until Dec. 14, 2013)

February 17, 2012

Certified Public Accountants P&A is a member firm within Grant Thomton International Ltd

MASS-SPECC 2011 Annual Report

29


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

Notes

2011

2010

6 7 9

P 165,876,518 1,428,952 225,521,439 1,140,104

P 131,431,548 187,293,229 2,079,221

393,967,013

320,803,998

8,748,059 277,079,873 33,587,777 47,816,870 1,043,092 6,722,699

8,628,568 200,806,493 57,246,754 1,038,092 6,850,777

374,998,370

274,570,684

P 768,965,383

P 595,374,682

P

201,197,214 17,978,118 122,588,985 16,480,894

P 111,284,910 12,899,669 87,929,622 11,723,765

358,245,211

223,837,966

24,436,567 191,261,790 7,267,651 9,930,525

44,972,712 155,408,168 6,302,136 13,293,773

232,896,533

219,976,789

591,141,744

443,814,755

177,823,639

151,559,927

P 768,965,383

P 595,374,682

ASSETS CURRENT ASSETS Cash and cash equivalents Financial assets at fair value through profit or loss Loans and other receivables - net Other current assets

13

Total Current Assets NON-CURRENT ASSETS Investment in non-marketable equity securities - net Loans and other receivables - net Available-for-sale securities Property and equipment - net Investment property Other non-current assets

10 9 8 11 12 13

Total Non-current Assets

TOTAL ASSETS

LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES Interest-bearing loans and borrowings Accounts payable and accrued expenses Short-term members' deposits Interest on share capital and patronage refund payable

14 15 16

Total Current Liabilities NON-CURRENT LIABILITIES Interest-bearing loans and borrowings Long-term members' deposits Retirement benefit obligation Other non-current liabilities

14 16 22 17

Total Non-current Liabilities Total Liabilities MEMBERS' EQUITY

18

TOTAL LIABILITIES AND MEMBERS' EQUITY

See Notes to Financial Statements.

30

MASS-SPECC 2011 Annual Report


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER STATEMENTS OF INCOME AND DISTRIBUTION OF NET SURPLUS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

2011

Notes REVENUES Interest income on loans and receivables Consulting and service fees Donation Hostel fees - net Interest from bank deposits and investments Education and training Other income

COSTS AND EXPENSES Interest on members' deposits Impairment losses Employee benefits Depreciation and amortization Interest on borrrowed funds Other operating expenses

9 19

P

18 20 6, 8

16 9, 11 22 11, 13 14 21

NET SURPLUS BEFORE TAX TAX EXPENSE

57,162,039 40,886,410 8,771,350 8,765,086 6,741,955 4,373,396 3,981,955

DISTRIBUTION OF NET SURPLUS General reserve fund Cooperative development fund Education and training fund Community development fund Interest on share capital and patronage refund

31

49,541,048 25,839,508 323,889 7,478,710 6,549,041 3,465,701 880,571 94,078,468

23,059,298 17,896,681 17,609,188 10,804,673 10,578,314 25,328,554

18,790,590 3,135,553 18,098,966 6,596,080 10,747,046 18,673,672

105,276,708

76,041,907

25,405,483

18,036,561

50,261

-

P

25,355,222

P

18,036,561

P

5,071,044 1,774,866 1,267,761 760,657 16,480,894

P

3,607,312 1,262,559 901,828 541,097 11,723,765

P

25,355,222

P

18,036,561

18

See Notes to Financial Statements. MASS-SPECC 2011 Annual Report

P

130,682,191

24

NET SURPLUS

2010


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

2011

Note NET SURPLUS

P

OTHER COMPREHENSIVE INCOME Fair value gains on available-for-sale securities TOTAL COMPREHENSIVE INCOME

25,355,222

2010 P

1,043,019

8

P

26,398,241

18,036,561

P

18,036,561

See Notes to Financial Statements.

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MASS-SPECC 2011 Annual Report


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER STATEMENTS OF CHANGES IN MEMBERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

2011

Notes SHARE CAPITAL Common Balance at beginning of year Additional members' contributions

18

P

Balance at end of year Preferred Total Share Capital

DONATED CAPITAL Balance at beginning of year Additional donations Amortization of reserves

(

Balance at end of year Cooperative stabilization fund Balance at beginning of year Provision for stabilization fund Transfer to members' benefit and other fund payable Balance at end of year Forward

MASS-SPECC 2011 Annual Report

33

P

69,518,000 21,628,000

116,674,849

91,146,000

5,425,000

5,425,000

122,099,849

96,571,000

23,164,233 8,771,351 )

1,164,233 22,000,000 -

14,392,882

23,164,233

7,681,205 1,043,019

7,681,205 -

8,724,224

7,681,205

13,604,854 5,071,044 3,401,036

9,997,542 3,607,312 -

22,076,934

13,604,854

8

Balance at end of year

STATUTORY FUNDS General reserve fund Balance at beginning of year Allocation from net savings Adjustments

91,146,000 25,528,849

11, 18

Balance at end of year

REVALUATION RESERVES Balance at beginning of year Fair value gains on available-for-sale securities

2010

18

-

(

940,785

940,785 ) -


-2-

2011 Cooperative education and training Balance at beginning of year Reclassification of contribution Allocation from net savings Transfer to liability Disbursements

P ( (

935,946 1,267,761 633,881 ) 552,552 )

2010

P ( (

783,152 256,607 901,828 450,914 ) 554,727 )

1,017,274

Balance at end of year Cooperative development fund Balance at beginning of year Contributions to partylist Allocation from net savings Adjustments

(

9,061,592 1,774,866 2,084,639 )

935,946

(

8,751,819

Balance at end of year Community development fund Balance at beginning of year Allocation from net savings Adjustments

(

Balance at end of year Interest on share capital and patronage refund Balance at beginning of year Allocation from net savings Transfer to interest on share capital and patronage refund payable

(

9,061,592

541,097 760,657 541,097 )

541,097 -

760,657

541,097

16,480,894

11,723,765

16,480,894 )

(

-

Balance at end of year Total Statutory Funds

TOTAL MEMBERS' EQUITY

7,404,931 300,000 ) 1,262,559 694,102

11,723,765 ) -

32,606,684

24,143,489

P 177,823,639

P 151,559,927

See Notes to Financial Statements.

34

MASS-SPECC 2011 Annual Report


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

2011

Notes CASH FLOWS FROM OPERATING ACTIVITIES Net surplus Adjustments for: Depreciation and amortization - net of amortization of donation reserves Unrealized fair value gains on financial assets at fair value through profit or loss Interest expense on available-for-sale debt securities Operating income before working capital changes Increase in loans and other receivables Decrease (increase) in other current assets Increase in other non-current assets Increase in members' deposits Increase (decrease) in accounts payable and accrued expenses Increase in retirement benefit obligation Increase (decrease) in other non-current liabilities

P 11, 13 7 8

( (

Net Cash From (Used in) Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Increase in investment in non-marketable equity securities Acquisitions of: Available-for-sale securities Property and equipment Financial assets at fair value through profit or loss

(

8 11

7

Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of interest-bearing loans and borrowings Repayment of interest-bearing loans and borrowings Proceeds from issuance of share capital Increase in statutory fund

2010

25,405,483

P

18,036,561

9,634,292

6,596,080

181,889 ) 55,005 34,912,891 114,501,590 ) 1,352,727 4,049,137 ) 70,512,985

24,632,641 52,995,336 ) 1,213,939 ) 1,916,933 ) 57,061,005

( ( (

(

4,439,568 965,515 3,363,248 )

(

9,730,289 )

(

353,242 )

(

460,844 )

( ( (

32,599,763 ) 5,262,415 ) 1,247,063 )

(

3,078,019 ) -

(

39,462,483 )

(

3,538,863 )

(

204,458,000 135,081,841 ) 13,805,084 456,499

(

2,092,498 ) 372,225 979,722 24,826,887

(

101,912,750 95,856,049 ) 11,255,309 1,036,767

83,637,742

18,348,777

NET INCREASE IN CASH AND CASH EQUIVALENTS

34,444,970

39,636,801

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

131,431,548

91,794,747

P 165,876,518

P 131,431,548

Net Cash From Financing Activities

CASH AND CASH EQUIVALENTS AT END OF YEAR

6

Supplemental Information of Noncash Operating Activity In 2010, Rabobank Foundation donated to the Cooperative 44 units of Automated Teller Machines valued at P22.0 million and recorded as part of Property and Equipment (see Notes 11 and 18).

See Notes to Financial Statements. MASS-SPECC 2011 Annual Report

35


MASS-SPECC COOPERATIVE DEVELOPMENT CENTER NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010

(Amounts in Philippine Pesos)

1.

COOPERATIVE MATTERS

1.1 Cooperative Information MASS-SPECC Cooperative Development Center (the Cooperative) is a federation of cooperatives organized on September 9, 1971 and duly registered with the Cooperative Development Authority (CDA) pursuant to Republic Act (R.A.) No. 6938 on December 27, 1990. Pursuant to R.A. No. 9520 “Philippine Cooperative Code of 2008”, the Cooperative was re-registered with the CDA on September 25, 2009. As contained in its amended Articles of Cooperation, the Cooperative is presently engaged in providing loans, receiving deposits and providing other financial services to member-cooperatives. It also serves as a training and resource center, databank, program coordinator and service bureau of its member-cooperatives in Mindanao and the islands of Visayas and Luzon. In accordance with R.A. No. 9520, otherwise known as “the Cooperative Code of the Philippines”, the Cooperative is exempted from the payment of all national (including income tax), city, provincial, municipal or barangay taxes of whatever name and nature, including exemption from custom duties, advance sales of compensating taxes on its importation of machinery, equipment and spare parts which are not available locally as certified by the Department of Trade and Industry. It enjoys tax exemptions from government taxes or fees imposed under internal revenue laws provided it does not transact with non-members or the general public. The Cooperative, if transacting business with non-members or the general public, may be exempted from tax if its accumulated reserves and undivided net surplus does not exceed P10 million, or up to 10 years from the date of registration if its accumulated reserves already exceeds P10 million. It has obtained a tax exemption certificate from the Bureau of Internal Revenue (BIR) in 2011. The Cooperative’s registered office address is Tiano-Yacapin Streets, Cagayan de Oro City.

1.2 Amendment of the Cooperative Code of the Philippines On February 17, 2009, the President of the Philippines signed into law R.A. No. 9520, otherwise known as the Philippine Cooperative Code of 2008 (the Code), amending the Cooperative Code of the Philippines. On February 5, 2010, the Department of Finance issued the Joint Rules and Regulations implementing Articles 60, 61 and 144 of the Code in relation to R.A. No. 8424 or the National Internal Revenue Code, as amended (the Joint Rules and Regulations). Likewise, on February 11, 2010, the Bureau of Internal Revenue issued Revenue Memorandum Circular No. 12-2010 circularizing the full text of the Joint Rules and Regulations. The Cooperative has re-registered with the CDA, as required under the Code, and has complied with the requirements and procedures of the Joint Rules and Regulations.

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MASS-SPECC 2011 Annual Report


-2-

1.3 Approval of the Financial Statements The financial statements of the Cooperative for the year ended December 31, 2011 (including the comparatives for the year ended December 31, 2010) were authorized for issue by the Board of Directors (BOD) on February 17, 2012. 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies that have been used in the preparation of these financial statements are summarized below and in the succeeding pages. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of Preparation of Financial Statements (a)

Statement of Compliance with Financial Reporting Standards in the Philippines Applicable to Cooperatives The financial statements of the Cooperative have been prepared in accordance with the Financial Reporting Standards in the Philippines applicable to cooperatives (FRSPC). FRSPC is the accounting standard prescribed by the CDA to be used by cooperatives in their preparation of their financial statements. It comprises the Standard Chart of accounts for Cooperatives (SCA) and all Philippine Financial Reporting Standards (PFRS) that are not inconsistent with the SCA. Earlier, pursuant to Section 3 of Republic Act (RA) No. 6939, the CDA issued Memorandum Circular No. 2009-04 prescribing the use of the SCA. Whenever PFRS treatment differs from SCA, the CDA requires that the SCA be used as basis of accounting for the related accounts or transactions. The following are the specific accounts or group of accounts or transactions relevant to the Cooperative that differs from PFRS and should use the SCA in accounting for transactions that relate to them: (i) (ii) (iii) (iv) (v)

Revenue from credit operations (e.g. interest income, fines, service fees) – use the cash basis of accounting; Classification of share capital – treated as part of equity regardless of its features; Recognition of stabilization fund – a fund to guarantee financial assistance to member-cooperatives which can be classified as part of equity or liability; Prior period adjustments/correction of errors – are not applied retrospectively but rather prospectively through profit or loss; and, Classification of donated capital – classified as part of equity.

The financial statements have been prepared using the measurement bases specified by FRSPC for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies in the succeeding page.

MASS-SPECC 2011 Annual Report

37


-3(b)

Presentation of Financial Statements The financial statements are presented in accordance with Philippine Accounting Standard (PAS) 1, Presentation of Financial Statements, and the SCA. The Cooperative presents items of income and expenses in two statements: a statement of income and distribution of net surplus and a statement of comprehensive income.

(c) Functional and Presentation Currency These financial statements are presented in Philippine pesos, the Cooperative’s functional and presentation currency, and all values represent absolute amounts except when otherwise indicated. Items included in the financial statements of the Cooperative are measured using its functional currency. Functional currency is the currency of the primary economic environment in which the Cooperative operates.

2.2 Adoption of New and Amended PFRS (a)

Effective in 2011 that are Relevant to the Cooperative In 2011, the Cooperative adopted the following amendments, interpretation and annual improvements to PFRS that are relevant to the Cooperative and effective for financial statements for the annual period beginning on or after January 1, 2011: PAS 24 (Amendment) Philippine Interpretations International Financial Reporting Interpretations Committee (IFRIC) 14 (Amendment)

:

Related Party Disclosures

:

Prepayment of a Minimum Funding Requirement Extinguishing Financial Liabilities with Equity Instruments 2010 Annual Improvements to PFRS

IFRIC 19

:

Various Standards

:

Discussed below are the relevant information about these new and amended standards. (i)

PAS 24 (Amendment), Related Party Disclosures (effective from January 1, 2011). The amendment simplifies and clarifies the definition of a related party by eliminating inconsistencies in determining related party relationships. The amendment also provides partial exemption from the disclosure requirements for government-related entities to disclose details of all transactions with the government and other government-related entities. The adoption of this amendment did not result in any significant changes on the Cooperative’s disclosures of related parties in its financial statements.

38

MASS-SPECC 2011 Annual Report


-4(ii)

Philippine Interpretation IFRIC 14 (Amendment), Prepayments of a Minimum Funding Requirement (effective from January 1, 2011). This interpretation addresses unintended consequences that can arise from the previous requirements when an entity prepays future contributions into a defined benefit pension plan. It sets out guidance on when an entity recognizes an asset in relation to a surplus for defined benefit plans based on PAS 19, Employee Benefits, that are subject to a minimum funding requirement. The Cooperative is not subject to minimum funding requirements and it does not usually make substantial advance contributions to its retirement fund, hence, the adoption of the revised standard has no material effect on its financial statements.

(iii)

2010 Annual Improvements to PFRS. Most of these amendments became effective for annual periods beginning on or after July 1, 2010 or January 1, 2011. Among those improvements, only the following amendments which are effective from January 1, 2011 were identified to be relevant to the Cooperative’s financial statements but which did not have any material impact on its financial statements: 

PAS 1 (Amendment), Presentation of Financial Statements: Clarification of Statement of Changes in Equity (effective from July 1, 2010). The amendment clarifies that, for each component of equity, an entity may present an analysis of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. As the Cooperative’s other comprehensive income only includes fair value changes on available-for-sale (AFS) financial assets, the Cooperative has elected to continue presenting each item of other comprehensive income in the statement of changes in equity.

PFRS 7 (Amendment), Financial Instruments: Clarification of Disclosures (effective from January 1, 2011). The amendment clarifies the disclosure requirements which emphasize the interaction between quantitative and qualitative disclosures about the nature and extent of risks arising from financial instruments. It also amends the required disclosure of financial assets including the financial effect of collateral held as security. This amendment has no significant effect on the financial statements since the Cooperative already provides adequate information in its financial statements in compliance with the disclosure requirements.

MASS-SPECC 2011 Annual Report

39


-5(b)

Effective in 2011 that are not Relevant to the Cooperative The following amendments and improvements to PFRS are mandatory for accounting periods beginning on or after January 1, 2011 but are not relevant to the Cooperative’s financial statements:

(c)

PAS 32 (Amendment)

:

PFRS 1 (Amendments)

:

2010 Annual Improvements PAS 21 (Amendment)

:

PAS 28 (Amendment) PAS 31 (Amendment) PAS 34 (Amendment) PFRS 1 (Amendments) PFRS 3 (Amendments) IFRIC 13 (Amendment)

: : : : : :

IFRIC 19 (Amendment)

:

Financial Instruments: Presentation Classification of Rights Issues First-Time Adoption of PFRS – Limited Exemption from PFRS 7 Comparative Disclosures The Effect of Changes in Foreign Exchange Rates Investment in Associates Investments in Joint Venture Interim Financial Reporting First-Time Adoption of PFRS Business Combination Customer Loyalty Programmes – Fair Value Awards Credits Extinguishing Financial Liabilities with Equity Instruments

Effective Subsequent to 2011 but not Adopted Early There are new PFRS and amendments, annual improvements and interpretations to existing standards that are effective for periods subsequent to 2011. Management has initially determined the following pronouncements, which the Cooperative will apply in accordance with their transitional provisions, to be relevant to its financial statements: (i)

PFRS 7 (Amendment), Financial Instruments: Disclosures – Transfers of Financial Assets (effective from July 1, 2011). The amendment requires additional disclosures that will allow users of financial statements to understand the relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities; and, to evaluate the nature of, and risk associated with any continuing involvement of the reporting entity in financial assets that are derecognized in their entirety. The Cooperative does not usually enter into this type of arrangement with regard to transfer of financial asset, hence, the amendment may not significantly change the Cooperative’s disclosures in its financial statements.

(ii)

PAS 1 (Amendment), Financial Statements Presentation – Presentation of Items of Other Comprehensive Income (effective from July 1, 2012). The amendment requires an entity to group items presented in Other Comprehensive Income into those that, in accordance with other PFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. The Cooperative’s management expects that this will not affect the presentation of items in other comprehensive income, since all of the Cooperative’s other comprehensive income, which includes revaluation reserve on property and equipment, and unrealized fair value gains and losses on AFS financial assets, can be reclassified to profit or loss when specified conditions are met.

40

MASS-SPECC 2011 Annual Report


-6(iii)

PAS 19 (Amendment), Employee Benefits (effective from January 1, 2013). The amendment made a number of changes as part of the improvements throughout the standard. The main changes relate to defined benefit plans as follows:  eliminates the corridor approach under the existing guidance of PAS 19 and requires an entity to recognize all gains and losses arising in the reporting period;  streamlines the presentation of changes in plan assets and liabilities resulting in the disaggregation of changes into three main components of service costs, net interest on net defined benefit obligation or asset, and remeasurement; and,  enhances disclosure requirements, including information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in them. Currently, the Cooperative is using the corridor approach and its unrecognized actuarial gains as of December 31, 2011 amounted to P2.1 million which will be retrospectively recognized as gains in other comprehensive income in 2013.

(iv)

PFRS 9, Financial Instruments: Classification and Measurement (effective from January 1, 2015). This is the first part of a new standard on classification and measurement of financial assets and financial liabilities that will replace PAS 39 in its entirety. This chapter deals with two measurement categories for financial assets: amortized cost and fair value. All equity instruments will be measured at fair value while debt instruments will be measured at amortized cost only if the entity is holding it to collect contractual cash flows which represent payment of principal and interest. The accounting for embedded derivatives in host contracts that are financial assets is simplified by removing the requirement to consider whether or not they are closely related, and, in most arrangement, does not require separation from the host contract. For liabilities, the standard retains most of the PAS 39 requirements which include amortized-cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in case where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than in profit or loss, unless this creates an accounting mismatch. To date, other chapters of PFRS 9 dealing with impairment methodology and hedge accounting are still being completed. The Cooperative does not expect to implement and adopt PFRS 9 until its effective date or until all chapters of this new standard have been published. In addition, management is currently assessing the impact of PFRS 9 on the financial statements of the Cooperative and is committed to conduct a comprehensive study of the potential impact of this standard to assess the impact of all changes.

MASS-SPECC 2011 Annual Report

41


-7(v)

PFRS 13, Fair Value Measurement (effective from January 1, 2013). This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across PFRS. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The Cooperative is yet to assess the impact of this new standard.

2.3 Financial Assets Financial assets are recognized when the Cooperative becomes a party to the contractual terms of the financial instrument. Financial assets other than those designated and effective as hedging instruments are classified into the following categories: financial assets at fair value through profit or loss (FVTPL), loans and receivables, held-tomaturity investments and AFS financial assets. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the investments were acquired. Regular purchases and sales of financial assets are recognized on their trade date. All financial assets that are not classified as at fair value through profit or loss are initially recognized at fair value plus any directly attributable transaction costs. Financial assets carried at fair value through profit or loss are initially recorded at fair value and transaction costs related to it are recognized in profit or loss. The categories of financial instruments relevant to the Cooperative are more fully described below. (a) Financial Assets at FVTPL This category includes financial assets that are either classified as held for trading or that meets certain conditions and are designated by the entity to be carried at fair value through profit or loss upon initial recognition. All derivatives fall into this category, except for those designated and effective as hedging instruments. Assets in this category are classified as current if they are either held for trading or are expected to be realized within 12 months from the end of the reporting period. Financial assets at FVTPL are measured at fair value, and changes therein are recognized in profit or loss. Financial assets (except derivatives and financial instruments originally designated as financial assets at fair value through profit or loss) may be reclassified out of fair value through profit or loss category if they are no longer held for the purpose of being sold or repurchased in the near term. (b) Loans and Other Receivables Loans and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Cooperative provides money, goods or services directly to a debtor with no intention of trading the receivables. They are included in current asserts, except for maturities greater than 12 months after the end of the reporting period which are classified as non-current assets.

42

MASS-SPECC 2011 Annual Report


-8Loans and receivables are subsequently measured at amortized cost using the effective interest method, less any impairment loss, if any. Any change in their value is recognized in profit or loss. Impairment loss is provided when there is objective evidence that the Cooperative will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the impairment loss is determined as the difference between the assets’ carrying amount and the present value of estimated cash flows. The Cooperative’s financial assets categorized as loans and receivables are presented as Cash and Cash Equivalents, Loans and Other Receivables, and as part of Other Non-current Assets (with respect to certain cash bond, provisional deposits and refundable deposits) in the statement of financial position. Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. (c) Available for sale Financial Assets This include non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. They are included in non-current assets in the statement of financial position unless management intends to dispose of the investment within 12 months from the end of the reporting period. This includes listed entity securities, corporate bonds, government bonds that are subsequently measured at fair value, and investments in shares of stock of other cooperatives and organizations that are not quoted in active market and their fair value cannot be readily measured. Accordingly, these unquoted financial assets are carried at cost, less impairment losses and presented as Investment in Non-marketable Equity Securities in the statement of financial position. Gains and losses from changes in fair value are recognized in other comprehensive income, net of any income tax effects, and are reported as part of the Revaluation Reserve account in members’ equity. When the financial asset is disposed of or is determined to be impaired, the cumulative fair value gains or losses recognized in other comprehensive income is reclassified from equity to profit or loss and is presented as reclassification adjustment within other comprehensive income. Reversal of impairment losses are recognized in other comprehensive income, except for financial assets that are debt securities which are recognized in profit or loss only if the reversal can be objectively related to an event occurring after the impairment loss was recognized. For investments that are actively traded in organized financial markets, fair value is determined by reference to exchange-quoted market bid prices at the close of business on the reporting period. For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment. Non-compounding interest, dividend income and other cash flows resulting from holding financial assets are recognized in profit or loss when earned, regardless of how the related carrying amount of financial assets is measured.

MASS-SPECC 2011 Annual Report

43


-9The financial assets are derecognized when the rights to receive cash flows from the financial instruments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.

2.4 Property and Equipment Land is measured at fair value. As no finite useful life for land can be determined, related carrying amount are not depreciated. All other property and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost of an asset comprises its purchase price and directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, major improvements and renewals are capitalized; expenditures for repairs and maintenance are charged to expense as incurred. Following initial recognition at cost, land is carried at a revalued amount which is the fair value at the date of the revaluation, as determined by independent appraisers. Revalued amounts are fair market values determined in appraisals by external professional valuers unless market-based factors indicate immediate impairment risk. Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Any revaluation surplus is recognized in other comprehensive income and credited to the Revaluation Reserves account in the statement of changes in members’ equity. Any revaluation deficit directly offsetting a previous surplus in the same asset is charged to other comprehensive income to the extent of any revaluation surplus in members’ equity relating to this asset and the remaining deficit, if any, is recognized in profit or loss. Upon disposal of revalued assets, amounts included in Revaluation Reserves relating to them are transferred to General Reserve Fund account under Members’ Equity. Revaluations are performed every two years unless circumstances require annual revaluations. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets as follows: Furniture, fixtures and equipment Building and improvements Transportation equipment Kitchen, dinnerware and others

2-8 years 5-25 years 8 years 2-5 years

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.11). The residual values and estimated useful lives of property and equipment are reviewed, and adjusted if appropriate, at each reporting date. An item of property and equipment, including the related accumulated depreciation and impairment losses, is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the year the item is derecognized.

44

MASS-SPECC 2011 Annual Report


- 10 -

2.5 Investment Property Investment property pertains to parcels of land acquired by the Cooperative in settlement of loans from defaulting borrowers through foreclosure or dacion in payment, and is property held either to earn rental or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the supply of services or for administrative purpose. These properties are initially recognized at cost, which includes acquisition price plus directly attributable cost incurred such as legal fees, transfer taxes and other transaction costs. Subsequent to initial recognition, the investment property is stated at cost less any impairment losses, if any. The Cooperative adopted the cost model in measuring the asset, hence, it is carried at cost less any impairment in value. The carrying value of the asset if reviewed for impairment when changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the asset is written down to its recoverable amount and impairment losses are recognized in the statement of income and distribution of net surplus. The investment property is derecognized upon disposal or when permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of the asset is recognized in the statement of income and distribution of net surplus in the year of retirement or disposal.

2.6 Financial Liabilities Financial liabilities of the Cooperative, which include interest-bearing loans and borrowings, accounts payable and accrued expenses, short and long-term members’ deposits, interest on share capital and patronage refund payable and other funds (presented as Others under the Non-current Liabilities account), are recognized when the Cooperative becomes a party to the contractual terms of the instrument which are measured at amortized cost using the effective interest method. All interest related charges are recognized as an expense in profit or loss under the caption Interest on Borrowed Funds and Interest on Members’ Deposits in the statement of income and distribution of net surplus. Interest-bearing loans and borrowings and members’ deposits are raised for support of short and long-term funding of operations. They are recognized at proceeds received, net of direct issue costs. Finance charges are charged to profit or loss on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent that these are not settled in the period in which they arise. Accounts payable and accrued expenses, interest on share capital and patronage refund payable and other funds are initially recognized at fair value and subsequently measured at amortized cost, using effective interest method for maturities beyond one year, less settlement payments. Interest on share capital and patronage refund (or dividend payable) for distributions to members is recognized as financial liability upon declaration by the BOD subject to the concurrence of the general assembly.

MASS-SPECC 2011 Annual Report

45


- 11 Financial liabilities are classified as current liabilities if payment is due to be settled within one year or less after the end of the reporting period, or the Cooperative does not have an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period. Otherwise, these are presented as non-current liabilities. Financial liabilities are derecognized from the statement of financial position only when the obligations are extinguished either through discharge, cancellation or expiration.

2.7 Provisions and Contingencies Provisions are recognized when present obligations will probably lead to an outflow of economic resources and they can be estimated reliably even if the timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the end of the reporting period, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. When time value of money is material, long-term provisions are discounted to their present values using a pretax rate that reflects market assessments and the risks specific to the obligation. The increase in the provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Provisions due to passage of time are recognized as expense. In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognized in the financial statements. Similarly, possible inflows of economic benefits to the Cooperative that do not yet meet the recognition criteria of an asset are considered contingent assets, hence, are not recognized in the financial statements. On the other hand, any reimbursement that the Cooperative can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset not exceeding the amount of the related provision.

2.8 Revenue and Expense Recognition Revenue is recognized to the extent that the revenue can be reliably measured; it is probable that the economic benefits will flow to the Cooperative except with respect to interest income on loan receivables; and the costs incurred or to be incurred can be measured reliably. In addition, the following specific recognition criteria must also be met before revenue is recognized: (a) Interest income and service fees on loan receivables – This is recognized using the cash basis of accounting and therefore, as the interest is earned and collected. (b) Interest income on investments, bank deposits, other receivables and investments – This is recognized as the interest has already been provided. (c) Consulting and service fees, and education and training – Revenue is recognized when the service has already been provided.

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MASS-SPECC 2011 Annual Report


- 12 (d) Sale of goods – Revenue is recognized when the risks and rewards of ownership of the goods have passed to the buyer, i.e. generally when the customer has acknowledged delivery of goods. (e) Donation – This is recognized on the basis of how the asset received is utilized by the Cooperative or on how they flow through the profit or loss. The following assets received as donation from another entity are recognized in profit or loss as follow: (i) Asset used in operations – Revenue is recognized as the asset’s depreciation is recognized in profit or loss. The revenue is recognized to match the amount of depreciation recognized. (ii) Asset intended for sale – Revenue is recognized upon sale based on the fair value of consideration received or receivable from the buyer and the cost actually spent on the asset is recognized as cost of the sale. Meanwhile, a corollary recognition of the donation as revenue and expense equal to the amount at which it was originally valued upon receipt is also made. (iii) Cash – Revenue is recognized immediately in profit or loss. Donation other than cash, are initially recognized as asset with a corresponding credit to Donated Capital under Members’ Equity and classified based on its nature and intended purpose using its estimated fair value upon receipt. Cost incurred in bringing it to its present location is also capitalized as part of the cost of donated asset. Upon recognition of the donated asset, a corresponding credit to Donated Capital is made. Cost and expenses, other than those specifically mentioned in the preceding paragraphs, are recognized in profit or loss upon utilization of goods or services or at the date they are incurred. All finance costs are reported in profit or loss on an accrual basis.

2.9 Leases The Cooperative accounts for its leases as follows: (a)

Cooperative as Lessee Leases which do not transfer to the Cooperative substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

(b)

Cooperative as Lessor Leases wherein the Cooperative substantially transfers to the lessee all risks and benefits incidental to ownership of the lease item are classified as finance leases and are presented as receivable at an amount equal to the Cooperative’s net investment in the lease. Finance income is recognized based on the pattern reflecting a constant periodic rate of return on the Cooperative’s net investment outstanding in respect of the finance lease.

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47


- 13 Leases which do not transfer to the lessee substantially all the risks and benefits of the ownership of the asset are classified as operating leases. Lease income from the operating leases is recognized in profit or loss on a straight-line basis over the lease term. The Cooperative determines whether an arrangement is, or contains a lease based on the substance of the arrangement. It makes an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

2.10 Functional Currency The accounting records of the Cooperative are maintained in Philippine pesos. Foreign currency transactions during the year are translated into the functional currency at exchange rates which approximate those prevailing on transaction dates. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income and distribution of net surplus as part of income or loss from operations.

2.11 Impairment of Non-financial Assets The Cooperative’s property and equipment, investment in non-marketable equity securities, and investment property are subject to impairment testing. Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. An impairment loss is recognized for the amount by which the asset or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. Impairment loss is charged pro-rata to the other assets in the cash generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist and the carrying amount of the asset is adjusted to the recoverable amount resulting in the reversal of the impairment loss.

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MASS-SPECC 2011 Annual Report


- 14 -

2.12 Employee Benefits Pension benefits are provided to employees through a defined benefit plan, as well as a defined contribution plan. (a)

Post-employment Defined Benefit Plan A defined benefit plan is a post-employment plan that defines an amount of postemployment benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. The legal obligation for any benefits from this kind of pension plan remains with the Cooperative, even if plan assets for funding the defined benefit plan have been acquired. Plan assets may include assets specifically designated to a long-term benefit fund, as well as qualifying insurance policies. The Cooperative’s defined benefit pension plan covers all regular full-time employees. The pension plan is tax-qualified, noncontributory and administered by a trustee. The liability recognized in the statement of financial position for defined benefit pension plans is the present value of the defined benefit obligation (DBO) at the end of each reporting period less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs amortized over five years. The DBO is calculated annually by independent actuaries using the projected unit credit method. The present value of the DBO is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses are not recognized as an expense unless the total unrecognized gain or loss exceeds 10% of the greater of the obligation and related plan assets. The amount exceeding this 10% corridor is charged or credited to profit or loss over the employees’ expected average remaining working lives. Actuarial gains and losses within the 10% corridor are disclosed separately. Past service costs are recognized immediately in profit or loss, unless the changes to the post-employment plan are conditional on the employees remaining ins service for a specified period of time (the vesting period). In this case, the past service costs are amortized on a straight-line basis over the vesting period.

(b)

Defined Benefit Contribution Plans A defined contribution plan is a post-employment plan under which the cooperative pays fixed contributions into an independent entity. The Cooperative has no legal or constructive obligations to pay further contributions after payment of the fixed contribution. The contributions recognized in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognized if underpayment or prepayment has occurred and are included in current liabilities of current asset as they are normally of a short term nature.

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- 15 (c)

Bonus Plans The Cooperative recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the Cooperative’s employees after certain adjustments. The Cooperative recognizes a provision where it is contractually obliged to pay the benefits, or where there is a past practice that has created a constructive obligation.

2.13 Related Party Transactions Related party transactions are transfer of resources, services or obligations between the Company and its related parties, regardless whether a price is charged. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. These include: (a) individuals owning, directly or indirectly through one or more intermediaries, control or are controlled by, or under common control with the Cooperative; (b) associates; and, (c) individuals owning, directly or indirectly, an interest in the voting power of the Cooperative that gives them significant influence over the Cooperative and close members of the family of any such individual. In considering each possible related party relationship, attention is directed to the substance of the relationship and not merely on the legal form.

2.14 Members’ Equity Share capital is determined using the nominal value of shares that have been issued. Statutory funds include all current and prior period results, net of interest on share capital and patronage refunds, as reported in the statement of income and distribution of net surplus. Revaluation reserves comprise gains and losses due to the revaluation of property and equipment and certain financial assets. Donated capital pertains to the value of assets received from not-for-profit organizations.

2.15 Events After the Reporting Period Any post-year-end event that provides additional information about the Cooperative’s financial position at the end of the reporting period (adjusting event) is reflected in the financial statements. Post-year-end events that are not adjusting events, if any, are disclosed when material to the financial statements.

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MASS-SPECC 2011 Annual Report


- 16 3.

SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES The Cooperative’s financial statements prepared in accordance with Financial Reporting Standards in the Philippines applicable to cooperatives (as described in Note 2) require management to make judgments and estimates that affect amounts reported in the financial statements and related notes. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may ultimately differ from these estimates.

3.1 Critical Management Judgments in Applying Accounting Policies In the process of applying the Cooperative’s accounting policies, management has made the judgments presented below, apart from those involving estimation, which have the most significant effect on the amounts recognized in the financial statements: (a)

Impairment of AFS Financial Assets The determination when an investment is other-than-temporarily impaired requires significant judgment. In making this judgment, the Cooperative evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flows. Based on the recent evaluation of information and circumstances affecting the Cooperative’s AFS financial assets, management concluded that the assets are not impaired as of December 31, 2011. Future changes in those information and circumstance might significantly affect the carrying amount of the assets.

(b)

Distinction Between Investment Properties and Owner-managed Properties The Cooperative determines whether a property qualifies as investment property. In making its judgment, the Cooperative considers whether the property generates cash flows largely independent of the other assets held by an entity. Owner-occupied properties generate cash flows that are attributable not only to the property but also to other assets used in the production or supply process.

(c)

Operating and Finance Leases The Cooperative has entered into various lease agreements. Critical judgment was exercised by management to distinguish each lease agreement as either an operating or finance lease by looking at the transfer or retention of significant risk and rewards of ownership of the properties covered by the agreements. Failure to make the right judgment will revert in either overstatement or understatement of assets and liabilities.

(d)

Provisions and Contingencies Judgment is exercised by management to distinguish between provisions and contingencies. Policies on recognition and disclosure of provision and disclosure of contingencies are discussed in Note 2.7 and relevant disclosures are presented in Note 25.

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- 17 -

3.2 Key Sources of Estimation Uncertainty Presented below and in the succeeding page are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: (a)

Allowance for Impairment of Loans and Other Receivables Allowance is made for specific and groups of accounts, where objective evidence of impairment exists. The Cooperative evaluates these accounts based on available facts and circumstances, including, but not limited to, the length of the Cooperative’s relationship with the members, the members’ current credit status, average age of accounts, collection experience and historical loss experience. The carrying value of loans and other receivables and the analysis of allowance for impairment on such financial assets are shown in Note 9. The Cooperative recognized impairment loss of P10.3 million in 2011 and P2.2 million in 2010.

(b)

Useful Lives of Property and Equipment The Cooperative estimates the useful lives of property and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets. The carrying amounts of property and equipment are analyzed in Note 11. Based on management’s assessment as at December 31, 2011, there is no change in estimated useful lives of property and equipment during the year. Actual results, however, may vary due to changes in estimates brought about by changes in factors mentioned above.

(c)

Fair Value of Land The Cooperative’s land, classified as property and equipment, is carried at revalued amount at the end of the reporting period. In determining the fair value of the asset, the Cooperative engages the services of professional and independent appraisers. The fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and seller in an arm’s length transaction as at the valuation date. Such amount is influenced by different factors including the location and specific characteristics of the property (e.g., size, features, and capacity), quantity of comparable properties available in the market, and economic condition and behaviour of the buying parties. A significant change in these elements may affect prices and the value of the assets. The amounts of revaluation and fair value gains recognized are disclosed in Note 11.

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- 18 (d)

Impairment of Non-financial Assets The Cooperative’s policy on estimating the impairment of non-financial assets is discussed in detail in Note 2.11. Though management believes that the assumptions used in the estimation of fair values reflected in the financial statements are appropriate and reasonable, significant changes in these assumptions may materially affect the assessment of recoverable values and any resulting impairment loss could have a material adverse effect on the results of operations. There are no impairment losses provided for the Cooperative’s non-financial assets in 2011 and 2010.

(e)

Post-employment Defined Benefit The determination of the Cooperative’s obligation and cost of post-employment defined benefit is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 22 and include, among others, discount rates, expected return on plan assets and salary increase rate. Actual results that differ from the assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation in such future periods. The amounts of retirement benefit obligation and expense and analysis of the movements in the estimated present value of retirement benefit obligation are presented in Note 22.2.

4.

RISK MANAGEMENT OBJECTIVES AND POLICIES The Cooperative is exposed to certain financial risks in relation to financial instruments. The Cooperative’s financial assets and liabilities by category are summarized in Note 5. The main types of risks are market risk, credit risk and liquidity risk. The management takes charge of the Cooperative’s overall risk management strategies which is focused on actively monitoring and securing the Cooperative’s short to medium-term cash flows by minimizing the exposure to financial markets. The Cooperative does not engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Cooperative is exposed to are described below and in the succeeding pages.

4.1 Market Risk The Cooperative is exposed to market risk through its use of financial instruments. (a) Interest Rate Sensitivity The Cooperative’s policy is to minimize interest rate cash flow risk exposures on longterm financing. At December 31, 2011, the Cooperative is exposed to changes in market interest rates through its cash and cash equivalents, which are subject to variable interest rates (see Note 6). All other financial assets and liabilities such as loans and other receivables, members’ deposits, and interest-bearing loans and borrowings have fixed interest rates. MASS-SPECC 2011 Annual Report

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- 19 The following paragraph presents the sensitivity of the net result for the year and equity to a reasonably possible change in interest rate of +/- 2.32% and +/- 1.19% for cash and cash equivalents in 2011 and 2010, respectively. These changes are considered to be reasonably possibly based on observation of current market conditions. The calculation is based on changes in the average market interest rates for the period, and the financial instruments held at the end of each reporting period that are sensitive to changes in interest rates. All other variables are held constant. If the interest rates were to increase, net surplus before tax for the year and equity as of December 31, 2011 and 2010 would decrease by P1,946,030 and P960,155, respectively, and if interest rates were to decrease, net surplus before tax for the year and equity as of December 31, 2011 and 2010 would increase by the same amount.

4.2 Credit risk Credit risk is the risk that a counterparty fails to discharge an obligation to the Cooperative. The Cooperative is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers and by placing deposits. Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the statements of financial position as summarized below as of December 31, 2011 and 2010: 2011

Notes Cash and cash equivalents Loans and other receivables - net AFS debt securities Financial assets at FVTPL Other assets

P

6 9 8 7 13

2010

165,876,518 P 131,431,548 502,601,312 388,099,722 22,610,975 1,428,952 1,144,547 3,910,208

P 693,662,304 P 523,441,478 The aging analysis of loans and receivables, financial assets at FVTPL and AFS securities as of December 31, 2011 and 2010 are as follows:

Total

Loans and other receivables Financial assets at FVTPL AFS securities

2011

Less than 30 days

Past due but not impaired 30-60 61-90 days days

More than 90 days

Impaired

P 531,296,770 P 426,012,472 P 1,428,952 1,428,952 22,610,975 22,610,975

-

P

-

P

-

P

P 555,336,697 P 450,052,399 P

-

P

-

P

-

P 9,524,894 P 28,369,313

Total

Loans and other receivables

Neither past due nor impaired

Neither past due nor impaired

9,524,894 P 28,369,313 -

2010

Less than 30 days

P 411,818,736 P 361,231,182 P

-

Past due but not impaired 30-60 61-90 days days

More than 90 days

Impaired

P

P 1,801,044

P 18,073,600

-

P

33,333

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MASS-SPECC 2011 Annual Report


- 20 a) Cash The credit risk for cash is considered negligible, since the counterparties are reputable banks with high quality eternal credit ratings. Cash in banks, which are insured by the Philippine Deposit Insurance Corporation up to maximum coverage of P0.5 million per depositor per banking institution, as provided for under RA No. 9302, Charter of Philippine Deposit Insurance Corporation, are still subject to credit risk. b) Loans and Other Receivables - net The Cooperative’s loans and receivables are actively monitored to avoid significant concentration of credit risk. The Cooperative continuously monitors defaults of borrowers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. The Cooperative’s policy is to deal only with creditworthy counterparties. The Cooperative’s management considers that all of the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due (see Note 9). In respect of loans and receivables, the Cooperative is not exposed to any significant credit risk exposure to any single counterparty. There is, however, a concentration risk on loans, accounts and finance lease receivables because the counterparties are all cooperatives.

4.3 Liquidity Risk The Cooperative seeks to manage its liquidity profile to be able to service its maturing debts, and to finance operating and capital requirements. The Cooperative maintains a level of cash on hand and in banks to cover liquidity needs. As part of its liquidity risk management, the Cooperative regularly evaluates its projected and actual cash flow. The analyses of the maturity grouping of resources and liabilities items as of December 31, 2011 and 2010, are presented below. One year and below Financial resources Financial liabilities Positive gap

MASS-SPECC 2011 Annual Report

55

(

P P

2011 Over one year to five years

Total

426,414,686 P 286,972,478 P 713,387,164 362,855,040) ( 228,336,725) ( 591,191,765) 63,559,646 P

58,635,753 P 122,195,398


- 21 -

One year and below Financial resources Financial liabilities Positive gap

(

P P

2010 Over one year to five years

Total

318,724,777 P 210,480,300 P 529,205,077 228,839,897) ( 217,886,818)( 446,726,715) 89,884,880 (P

7,406,518) P

82,478,362

As of December 31, 2011, the Cooperative’s liabilities have contractual maturities which are presented below. One year and below Accounts payable and accrued expenses Members’ deposits Interest-bearing loans and borrowings Interest on share capital and patronage refund

P

Over one year to five years

17,978,118 P 125,959,901 191,261,790 202,436,127 37,074,935 16,480,894 -

P 362,855,040 P 228,336,725 This compares to the maturity of the Cooperative’s financial liabilities as of December 31, 2010 as presented below. One year and below Accounts payable and accrued expenses Members’ deposits Interest-bearing loans and borrowings Interest on share capital and patronage refund

Over one year to five years

P

12,899,669 P 90,980,333 155,408,168 113,236,130 62,478,650 11,723,765 -

P

228,839,897 P 217,886,818

Interest-bearing loans and borrowing as presented above is inclusive of interest. The above contractual maturities reflect the gross cash flows, which may differ with the carrying values of the liabilities at the reporting date.

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MASS-SPECC 2011 Annual Report


- 22 5.

CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

5.1 Comparison of Carrying Amounts and Fair Values The carrying amounts and fair values of the categories of financial assets and liabilities presented in the statements of financial position are shown below. Notes

Financial Assets

Loans and receivables: Cash and cash equivalents Loans and other receivables - net Other non-current assets Fair value through profit or loss Available-for-sale securities Debt Equity Investment in non-marketable equity securities

6 9 13 7 8

10

2011

Carrying Values

Fair Values

P 165,876,518 P 165,876,518 502,601,312 502,601,312 1,144,546 1,144,546 1,428,952 1,428,952 22,610,975 10,976,802

22,610,975 10,976,802

8,748,059

8,748,059

2010

Carrying Values

P

Fair Values

131,431,548 P 131,431,548 388,099,722 388,099,722 1,045,239 1,045,239 8,628,568

8,628,568

P 713,387,164 P 713,387,164

P

529,205,077 P 529,205,077

P 225,663,781 P 225,663,781

P

156,257,622 P 156,257,622

Financial Liabilities

Financial liabilities at amortized costs: Interest- bearing loans and and borrowings Accounts payable and accrued expenses Members’ deposits Interest on share capital and patronage refund

14 15 16

17,978,118 313,850,775

17,978,118 313,850,775

12,899,669 243,337,790

12,899,669 243,337,790

16,480,894

16,480,894

11,723,765

11,723,765

P 573,973,568 P 573,943,5698

P 424,218,846 P 424,218,846

See Notes 2.3 and 2.6 for a description of the accounting policies for each category of financial instrument. A description of the Cooperative’s risk management objectives and policies for financial instruments is provided in Note 4.

5.2 Fair Value Hierarchy Financial assets and liabilities measured at fair value are categorized in accordance with fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair values of the financial assets and liabilities. The hierarchy has the following levels: a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the resource or liability, either directly (as prices) or indirectly (derived from prices); and, c) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

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- 23 The breakdown of the Cooperative’s financial assets measured at fair value in the statements of financial position as of December 31, 2011, which are all categorized under Level 1, is as follows: Financial asset at fair value through profit or loss Available-for-sale securities

P

1,428,952 33,587,777

P

35,016,729

Certain investments classified as Investment in Non-marketable Equity Securities amounting to P8.74 million in 2011 and P8.63 million in 2010 (see Note 10) are stated at cost since they have no available market price references and their fair values cannot be determined using valuation techniques. There were no financial assets and liabilities measured at fair value as of December 31, 2010. 6.

CASH AND CASH EQUIVALENTS This account is composed of the following: 2011 Short term placements Cash in bank and on hand Revolving fund

P

P

2010

73,234,028 P 92,354,990 287,500

68,071,715 63,070,340 289,493

165,876,518 P 131,431,548

Cash in banks generally earn interest at rates based on daily bank rates. Short-term placements are made for varying periods from 36 to 90 days and earn effective interest ranging from 1.2% to 12.0% for both 2011 and 2010. 7.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS This account primarily consists of investment in Unit Investment Trust Fund, which is designated as at FVTPL on initial recognition, acquired by the Cooperative in 2011. The reconciliation of the carrying amounts of financial assets at fair value through profit or loss as of December 31, 2011 is as follows: Additions during the year Fair value gains

P

1,247,063 181,889

Balance at end of year

P

1,428,952

All amounts have been determined directly by reference to published prices quoted in an active market.

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MASS-SPECC 2011 Annual Report


- 24 8.

AVAILABLE-FOR-SALE SECURITIES The carrying amounts of the AFS securities as of December 31, 2011, which are all traded and quoted in an active market, are classified as follows: Equity securities Debt securities

P

10,976,802 22,610,975

P

33,587,777

Investment in AFS debt securities of the Cooperative at December 31, 2011 earn interest at the following annual rates: Peso bonds Government securities

1.0% - 1.4% 5.7% - 12.4%

The reconciliation of the carrying amounts of the AFS securities which were only acquired in 2011 follow: Balance at beginning of year Additions during the year Fair value gains Amortization of premium

P (

32,599,763 1,043,019 55,005)

Balance at end of year

P

33,587,777

In 2011, the fair value gain of P1.04 million is presented as other comprehensive income in the statement of comprehensive income. The fair value of AFS securities have been determined directly by reference to published prices in active markets. On September 26, 2011, the Cooperative established an Investment Management Account and appointed Banco de Oro Unibank, Inc. – Trust and Investment Group, a banking corporation authorized to perform trust and other fiduciary businesses, as its Investment Manager. These investments were presented as part of their respective statement of financial position accounts as of December 31, 2011 as follows: Cash and cash equivalents AFS securities Loans and other receivables

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59

P

4,352,414 26,444,278 305,144

P

31,101,836


- 25 9.

LOANS AND OTHER RECEIVABLES The breakdown of this account follows: 2011 Loan receivables: Regular loan Catholic Organization for Relief and Development Aid (CORDAid) Allowance for impairment Unearned interest income

P 447,637,537 P 361,787,933

(

Other receivables: Accounts receivable Finance lease receivable Receivable from officers and employees Employee retirement loan Long-term receivables Others Allowance for impairment Unearned interest income

2010

( (

16,269,232 463,906,769 26,016,521)( ( 437,890,248

19,351,226 381,139,159 15,853,153) 4,348,458) 360,937,548

58,948,627 3,344,002

24,398,148 2,304,605

1,877,673 316,207 290,916 2,612,576 67,390,001 2,352,792) ( 326,145) ( 64,711,064

739,071 283,577 417,900 2,536,276 30,679,577 2,220,447) 1,296,956) 27,162,174

P 502,601,312 P 388,099,722 Loans and other receivables are further classified into the following: 2011 Current Non-current

2010

P 225,521,439 P 187,293,229 277,079,873 200,806,493 P 502,601,312 P 388,099,722

Regular loans pertain to loans provided to its members to finance their working capital requirements. These loans have a term ranging from six months to five years and earn interest at various rates up to a maximum rate of 16.0% per annum. In the event of default, these loans are offset against the member-borrowers’ contributions to the Cooperative. The CORDAid loan represents loan releases to ten new branches of existing member cooperatives in Zamboanga, CARAGA and Cotabato which were funded from the proceeds of the Cooperative’s loan availments from CORDAid (see Note 14). These funds can only be used for income generating activities through the micro-enterprises of the members of these branches.

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MASS-SPECC 2011 Annual Report


- 26 Accounts receivable pertains to various receivables from member-cooperatives for services rendered such as software and Automated Teller Machines (ATMs) installations, interest and penalties arising from restructured loans, project support fees, and ATM settlement activities. Finance lease receivable arise out of the sale of ATMs to member-cooperatives under a finance lease agreement. Receivable from officers and employees pertains to various cash advances made to cash generating units for the expenses incurred related to operations of the Cooperative and are subject to liquidation. Long outstanding receivables from officers and employees that are not liquidated within 3 days from the date of the cash advance are subject to payroll deduction. Long-term receivables pertains to the Cooperative’s receivable from Pangilinan, Molo and Company, former Audit Unit of the Cooperative, that arose when it spun off from the Cooperative in July 2004. The Cooperative had collected a total of P332,160 as part of the introductory payments stated in the Deed of Undertakings signed by both parties on January 11, 2005. Employee retirement loan represents long-term loan availments of regular employees secured with assignment of future retirement benefits. The loan bears interest of 14% diminishing per annum for both 2011 and 2010. The net carrying value of loans and other receivables is considered a reasonable approximation of fair value (see Note 5). All of the Cooperative’s loans and other receivables have been reviewed for indicators of impairment. A reconciliation of the allowance for impairment loss on loans and other receivables at beginning and end of 2011 and 2010 is shown below (see also Note 10). 2011

2010

Balance at beginning of year Impairment loss during the year

P

18,073,600 P 10,295,713

15,878,831 2,194,769

Balance at end of year

P

28,369,313 P

18,073,600

Certain past due loans and other receivables have been provided with allowance for impairment using Portfolio at risk (PAR) based on the rates prescribed by the CDA. Certain loan receivables are assigned to creditor banks of the Cooperative as collateral for its borrowings (see Note 14).

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- 27 10. INVESTMENT IN NON-MARKETABLE EQUITY SECURITIES The breakdown of this account is presented below. 2011 Coop Life Insurance & Mutual Benefit Services Mindanao Savings Cooperative (MINSAVE) Federation of People’s Sustainable Development Cooperative (FPSDC) National Confederation of Cooperatives (NATCCO) Philippine Cooperative Center (PCC) Others Allowance for impairment

P

2010

2,560,157 P

2,362,158

2,500,000

2,500,000

2,140,008

2,140,008

(

520,812 198,112 1,601,680 9,520,769 772,710) (

420,812 198,112 1,697,931 9,319,021 690,453)

P

8,748,059 P

8,628,568

The Cooperative carries its investment in shares of stock (unquoted equity securities) under the cost method. Under this method, dividends are recognized as income when received. When there is a significant and apparently permanent decline in value of the investment, as indicated by a series of operating losses of an investee or other factors, the carrying amount of the investment is written down to fair value. The investment with MINSAVE originated from the approved tripartite agreement with NATCCO and MINSAVE for the rehabilitation of the latter, wherein the Cooperative shall allocate the amount of P2.5 million from the stabilization fund for its share in the rehabilitation. The agreement was approved by the BOD in its meeting on February 3, 2007. The Cooperative has P7.0 million loan exposure with MINSAVE. As of December 31, 2011, outstanding loan receivable from MINSAVE are considered past due, hence, fully provided with allowance for impairment (see Note 9).

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- 28 11. PROPERTY AND EQUIPMENT The gross carrying amounts and accumulated depreciation and amortization at the beginning and end of 2011 and 2010 are shown below. Furniture, Fixtures and Equipment

Land December 31, 2011 Cost P Accumulated depreciation and amortization Accumulated impairment loss Net carrying amount

P

December 31, 2010 Cost P Accumulated depreciation and amortization Net carrying amount

P

January 1, 2010 Cost P Accumulated depreciation and amortization Net carrying amount

P

9,982,100

P

47,010,125

Building and Improvements

P

-

(

18,912,157) (

-

(

7,600,968)

33,885,077

Kitchenware, Dinnerware and Others

Transportation Equipment

P

17,488,698) (

1,957,185

P

692,034

1,024,866) (

-

Total

-

P

93,526,521

682,962) (

38,108,683)

(

7,600,968)

-

9,982,100

P

20,497,000

P

16,396,379

P

932,319

P

9,072

P

47,816,870

9,982,100

P

43,212,570

P

32,434,333

P

1,957,185

P

731,138

P

88,317,326

-

(

14,070,180) (

15,443,096) (

874,050) (

683,246) (

31,070,572)

9,982,100

P

29,142,390

P

16,991,237

P

1,083,135

P

47,892

P

57,246,754

9,982,100

P

17,773,054

P

32,277,498

P

1,990,972

P

689,713

P

62,713,337

-

(

9,982,100

10,641,999) (

P

7,131,055

13,968,124) (

P

18,309,374

725,347) (

P

1,265,625

619,940) (

P

69,773

25,955,410)

P

36,757,927

A reconciliation of the carrying amounts at the beginning and end of 2011 and 2010 of property and equipment is shown below. Furniture, Fixtures and Equipment

Land Balance at January 1, 2011, net of accumulated depreciation and amortization P Additions Impairment loss Depreciation and amortization charges for the year Balance at December 31, 2011, net of accumulated depreciation and amortization P

MASS-SPECC 2011 Annual Report

63

9,982,100 P (

-

9,982,100

(

Building and Improvements

29,142,390 P 3,797,555 7,600,968)

4,841,977) (

P

20,497,000

P

16,991,237 1,450,744 -

P

2,045,602) (

16,396,379

Kitchenware, Dinnerware and Others

Transportation Equipment

1,083,135 -

P

P

932,319

47,892 14,116 (

57,246,754 5,262,415 7,600,968)

52,936) (

7,091,331)

-

150,816) (

P

Total

9,072

P

P

47,816,870


- 29 Furniture, Fixtures and Equipment

Land Balance at January 1, 2010, net of accumulated depreciation and amortization P Additions Reclassification Disposal Depreciation and amortization charges for the year Balance at December 31, 2010, net of accumulated depreciation and amortization P

9,982,100 -

-

9,982,100

P

(

7,131,055 24,913,545 525,970 -

Building and Improvements

P

3,428,180) (

P

29,142,390

P

Kitchenware, Dinnerware and Others

Transportation Equipment

18,309,374 P 156,834 (

1,265,625 P 33,786)

1,474,971) (

148,704) (

16,991,237

P

1,083,135

-

P

Total

69,773 41,426 (

36,757,927 25,111,805 525,970 33,786)

63,307) (

5,115,162)

47,892

P

P

57,246,754

Land, which is recognized at its fair value amounting to P10.0 million as of December 31, 2011 and 2010, was last revalued on October 31, 2009 by independent appraisers. The revaluation surplus is presented as part of the Revaluation Reserve account in the members’ equity section of the statements of financial position. Management believes that the fair value of the Land did not materially change from the last date of its appraisal (see Note 3.2) If the land was carried using the cost model, the carrying amount of the asset is P2.3 million as of December 31, 2011 and 2010. In 2010, Rabobank Foundation (Rabobank) donated 44 units of used ATMs which were valued at P22.0 million based on the underlying market price of refurbished ATMs (see Note 18.2). As of December 31, 2011 and 2010, these properties are presented as part of the Furniture, Fixtures and Equipment under the Property and Equipment account in the statements of financial position. Demurrage fees and refurbishing costs amounting to P0.8 million and P0.7 million, respectively, were capitalized as additional costs of the donated ATM units in 2011. In 2011, depreciation expense related to the ATM units amounted to P1.2 million, and is presented as part of the Depreciation and Amortization in the statements of income and distribution of net surplus. In 2011, management determined that 6 of the ATM units are impaired with a net book value of P3.1 million while the remaining 38 ATM units are partially impaired. The impairment loss for the 38 ATM units amounted to P4.5 million. The total impairment loss of P7.6 million is presented as part of the Impairment Losses in the 2011 statement of income and distribution of net surplus. Accordingly, the Cooperative also recognized donation revenue of P8.8 million representing the total of these charges to expenses.

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MASS-SPECC 2011 Annual Report


- 30 12. INVESTMENT PROPERTY Investment property pertains to parcels land acquired by the Cooperative in settlement of loans through foreclosure or dation in payment. The gross carrying amounts at the beginning and end of 2011 and 2010 are shown below. 2011

2010

Balance at beginning of year Additions

P

1,038,092 P 5,000

941,674 96,418

Balance at the end of year

P

1,043,092 P

1,038,092

The fair market value of investment property acquired as of December 31, 2011 and 2010, based on the available appraisal values dated May 2007, amounted to P1,884,108. 13. OTHER ASSETS Other assets consist of: 2011 Current: Inventory supplies Unused supplies Prepaid expenses Others

P

Non-current: Licenses and fees - net Cash bond Provisional deposit Refundable deposits Restricted funds Other

P

914,054 P 136,859 89,191 -

2010 1,736,193 137,899 87,616 117,513

1,140,104

2,079,221

2,311,148 544,727 500,000 99,820 3,267,004

2,095,056 535,419 500,000 9,820 2,864,969 845,513

6,722,699

6,850,777

7,862,803 P

8,929,998

The amortization expenses of the licenses and fees related to the Cooperative’s Microbanking and Megalink connectivity systems amounted to P3.7 million and P1.5 million as of December 31, 2011 and 2010, respectively, and are presented as part of Depreciation and Amortization in the statements of income and distribution of net surplus.

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- 31 14. INTEREST-BEARING LOANS AND BORROWINGS This account consists of loan availments from: 2011 Current: Development Bank of the Philippines (DBP) The Foundation for Sustainable Society, Inc. (FSSI) BPI Globe Banko (BPI) Philippine Business for Social Progress, Inc. (PBSP) CORDAid Cooperative Development Authority

Non-current: CORDAid FSSI Cooperative Development Authority

2010

P 125,409,250 P

86,746,083

29,902,778 22,916,667

14,000,000 -

21,750,000 779,984 438,535

3,724,405 6,000,000 814,422

201,197,214

111,284,910

24,436,567 -

24,000,000 20,596,825 375,887

24,436,567

44,972,712

P 225,633,781 P 156,257,622 The outstanding loans from DBP as of December 31, 2011 were obtained on various dates in 2011 and will mature in 2012. These are collaterized by the deeds of assignment of loan receivables with the total value of P156 million as of December 31, 2011. The outstanding loan as of December 31, 2010 was fully paid in 2011. The Cooperative obtained various unsecured loans from FSSI totaling P13.5 million in 2011 and P16.0 million in 2010, which will mature on various dates in 2012. These loans bear interest of 7.36% in 2011 and 8.14% in 2010. The loan from BPI Globe Banko represents an approved rediscounting loan of P25.0 million which bears interest of 8% per annum payable one year from the date of availment. The proceeds from which were loaned to the members of the Cooperative. On November 28, the Cooperative fully availed of the P25 million worth of loan facility, which will mature on November 22, 2012. This is secured by deeds of assignment of loan receivables with the total value of P36 million as of December 31, 2011. The Cooperative obtained a loan from PBSP amounting to P29.0 million in 2011, which bears interest at 7% per annum. The outstanding loan as of December 31, 2010 pertains to the loan availed in 2009 amounting toP15 million, which was fully paid in 2011. These interest-bearing loans have a term of two years with a repayment term of eight equal quarterly installments. This is secured by deeds of assignment of loan receivables with the total value of P36 million as of December 31, 2011.

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MASS-SPECC 2011 Annual Report


- 32 In 2009, a loan agreement was entered into by the Cooperative and CORDAid. The unsecured loan in the amount of P30.0 million, which is repayable in 5 years, was granted to the Cooperative in relation to its project “Triple 10 for Cooperative Enterprises in Mindanao”. The exclusive purpose of this loan, which bears a fixed interest rate of 10% per annum, is to provide funding for the build-up of the loan portfolio of ten new branches of existing cooperatives in the underserved areas of Zamboanga, CARAGA and Cotabato, coupled with capacity building programs for the cooperatives in these regions, primarily but not limited to those accessing the loan fund (see Note 9). As of December 31, 2011, the total loan proceeds released to the subject Mindanao cooperatives amounts to P24.3 million. 15. ACCOUNTS PAYABLE AND ACCRUED EXPENSES This account is comprised of: 2011 Accounts payable Accrued expenses Accrued interest payable

P

7,904,978 P 4,869,741 4,609,829 593,570

Others P

17,978,118 P

2010 698,468 6,564,556 5,001,932 634,713 12,899,669

The carrying amounts of these financial liabilities are reasonable approximation of their fair values. 16. MEMBERS’ DEPOSITS This account is composed of the following: 2011 Time deposits ATM settlement deposits Long-term members’ deposits Short-term members’ deposits

2010

P 302,545,816 P 239,662,180 11,304,959 3,675,610 313,850,775 243,337,790 ( 191,261,790) ( 155,408,168) P 122,588,985 P

87,929,622

ATM settlement deposits represent cash received from members as security bond upon subscriptions of the ATM facilities. The non-interest bearing deposits shall be returned to the depositor upon termination of the contract. The time deposits have interest rates ranging from 6% to 10% both in 2011 and 2010.

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- 33 The breakdown of time deposits as to their maturities follows: 2011 P

Below one year One to two years Over one year to two years

2010

111,025,395 P 89,893,041 101,368,749

87,929,622 71,421,079 80,268,869

P 302,287,185 P 239,619,570 17. OTHER NON-CURRENT LIABILITIES This account consists of the following: 2011

Note Members’ benefit and other fund payable Deferred donations and grants Others

18.2

2010

P

7,268,005 P 2,400,000 262,520

7,268,005 2,666,667 3,359,101

P

9,930,525 P

13,293,773

Members’ benefit and other fund payable pertains to the fund set aside to constitute the Cooperative Stabilization Fund which shall be a fund to guarantee that membercooperatives with difficulties are provided with technical and financial support. This is computed at 1% of the gross income of the Cooperative. As of December 31, 2011, the management is of the position to defer the provision of the stabilization fund since the reserve is still enough to cover the need of the current circumstances. 18. MEMBERS’ EQUITY

18.1 Share Capital The details of the common shares and preferred shares are presented below. 2011 Common shares – P1,000 par value Authorized – 150,000 shares Issued: Balance at beginning of year Issuances during the year Balance at the end of year Preferred shares – P1,000 par value

Shares

2010

2011

Amount

2010

91,146 25,529

69,518 21,628

P 91,146,000 25,528,849

P 69,518,000 21,628,000

116,675

91,146

116,674,849

91,146,000

5,425

5,425

5,425,000

5,425,000

P122,099,849

P 96,571,000

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MASS-SPECC 2011 Annual Report


- 34 Preferred shares are non-voting and shall enjoy preference over common shares in the dividend or asset distribution in the event of liquidation and shall receive higher interest than the common share.

18.2 Donated Capital This pertains to donations made by Rabobank to the Cooperative in 2010. Rabobank donated and transferred ownership of movable goods comprising of 44 units of used ATMs and 40 units of used personal computers to the Cooperative. As stated in the contract, the Cooperative shall not transfer ownership of the received goods to any third party or to lease or rent the goods to any third party within the period of five years from the date of receipt. The 44 units of used ATMs were valued based on the fair market value of refurbished ATMs (see Note 11). As of December 31, 2010, the 44 units of used ATMs were valued at P22.0 million and recorded as part of the furniture, fixtures and equipment under the Property and Equipment account in the statements of financial position (see Note 11). In 2011, 6 units were fully impaired and the remaining 38 units were partially impaired resulting in the recognition of the related donation capital as donation revenue amounting to P3 million and P4.5 million, respectively, included as part of Donation in the statements of income and distribution to net surplus (see also Note 11). Moreover, the depreciation expense of the donated ATM units amounting to P1.2 million in 2011 (nil in 2010) resulted in the recognition of the related donation revenue of the same amount. Previously, the Cooperative classified donations received as part of liabilities, hence, these were presented as part of Deferred Donations and Grants under Other Noncurrent Liabilities in prior year financial statements (see Note 17). In 2011, the Cooperative reclassified the account to Donated Capital in the statements of changes in equity to comply with the CDA rules.

18.3 Statutory Funds The details of this account as of December 31, 2011 and 2010 follow: 2011 General reserve fund Cooperative development fund Cooperative education and training Community development fund

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69

2010

P

22,076,934 P 8,751,820 1,017,274 760,657

13,604,854 9,061,592 935,946 541,097

P

32,606,685 P

24,143,489


- 35 -

18.4 Distribution of Net Surplus The Cooperative’s Articles of Cooperation and By-Laws, together with a BOD Resolution, explicitly provides that its net surplus at the end of the year shall be distributed in the following manner: (a)

At least 10% shall be set aside as General Reserve Fund. This general fund shall be used for the stability of the Cooperative and to absorb net losses, if any, in its business operations.

(b)

At least 5% shall be set aside for Cooperative Education and Training Fund. One half of the fund shall provide for the training, development, and such other cooperative activities geared towards the growth of the cooperative movement; while the other half shall be credited to the cooperative education and training fund of any international and national federation, and other chosen organizations of which the Cooperative is a member, and is presented as cooperative education and training fund payable under the Accounts Payable and Accrued Expenses in the statement of financial position.

(c)

At most 10% shall be set aside for Cooperative Development Fund. This shall be used for projects or activities that will benefit the community where the cooperative operates.

(d)

An optional fund, a land and building, community development, and any other necessary fund, the total of which shall not exceed 7%.

(e)

At least 3% of the net surplus shall be set aside for the community development fund which shall be used for projects or activities that will benefit the community where the Cooperative operates. The amendment in the statutory fund distribution for community development fund was approved during the 2010 general assembly.

(f)

The remaining net savings shall be made available to the members in the form of interest not to exceed the normal rate of return on investments and patronage refunds.

18.5 Capital Management Policies and Procedures The Cooperative’s capital management objectives are to ensure the Cooperative’s ability to continue as a going concern and to provide an adequate return to members by pricing products commensurately with the level of risk. The Cooperative sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities. The Cooperative manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Cooperative may adjust the amount of dividends paid to members or increase allocation of net surplus to reserve funds. 2011 Total liabilities Total member’s equity Debt-to-equity ratio

2010

P 591,141,745 P 443,814,755 177,823,639 151,559,927 3.32

2.93

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MASS-SPECC 2011 Annual Report


- 36 -

18.6 Prior Period Adjustment Under the SCA, revenues resulting from the Cooperative’s lending activities (i.e. interest income and service fees) shall be recorded when earned and collected. Consequently, the Cooperative’s surplus in prior year would have been higher as illustrated below had the Cooperative applied the cash basis in recognizing such income. As reported, as at December 31, 2010 Reversal of accrued interest receivable Reversal of unearned service fees

P (

24,143,489 1,961,995) 5,384,724

As adjusted

P

27,566,218

Since the SCA states that transactions affecting income and expenses incurred in the previous year(s) should be taken up in the current year [see Note 2.1 (a)]; accordingly, the Cooperative recorded the aforementioned adjustments in the current year, i.e. adjustment to current year revenues. 19. CONSULTING AND SERVICE FEES This is comprised of:

ATM/MASS-SPECC Standard Run-time Edition installation Service fees Training fees Others

2011

2010

P

31,650,114 P 6,443,685 2,791,853 758

18,573,969 1,448,720 2,146,912 3,669,907

P

40,886,410 P

25,839,508

Service fees include the support fund received by the Cooperative from Rabobank Foundation amounting to P1.57 million for the period ended December 31, 2011 to strengthen the Cooperative’s capacity to provide consultancy services to the primary cooperatives.

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- 37 20. HOSTEL FEES The breakdown of this account follows:

Revenues: Lodge Meals Fast food

P

Direct costs: Costs of sales Board and lodging Laundry expenses P

2011

2010

6,370,311 P 4,253,175 1,994,372 12,617,858

6,653,114 3,458,408 1,866,121 11,977,643

2,232,459 1,317,647 302,666 3,852,772

1,288,653 2,911,942 298,338 4,498,933

8,765,086 P

7,478,710

21. OTHER OPERATING EXPENSES The account consists of: 2011

Note Travel and transportation Professional fee Meeting and conferences Trainings and seminars Power, light and water Communication License fees Borrowing charges Security services Materials and supplies Staff development Maintenance and repairs Taxes and licenses Marketing and promotion Rental Insurance Collection and litigation Loss on decline in value of investment Miscellaneous

P

26.1

P

2010

5,233,607 P 2,660,328 2,605,021 2,348,644 2,187,769 1,473,613 1,306,976 1,105,243 713,731 406,819 401,244 391,124 386,852 353,271 141,571 134,909 108,419

4,234,941 1,614,336 2,490,900 1,232,431 2,356,968 1,210,216 252,740 726,755 284,000 185,517 916,946 430,839 399,477 374,184 84,700 130,506 30,475

82,257 3,287,156

1,717,741

25,328,554 P

72

18,673,672

MASS-SPECC 2011 Annual Report


- 38 22. EMPLOYEE BENEFITS

22.1 Salaries, Wages and Benefits Expense Expenses recognized for salaries, wages and benefits are presented below. 2011 Short term employee benefits Post-employment defined benefit

2010

P

16,643,673 P 965,515

16,739,778 1,359,188

P

17,609,188 P

18,098,966

22.2 Employee Retirement Benefit Obligations The Cooperative maintains a tax-qualified, noncontributory retirement plan that is being administered by a trustee covering all regular full-time employees. The amount of retirement benefit obligation recognized in the statement of financial position is determined as follows:

Present value of the obligation Fair value of plan assets Deficiency of plan assets Unrecognized actuarial gain

2011

2010

P

7,398,922 P 2,255,186 5,143,736 2,123,915

4,661,994 2,218,697 2,443,297 3,858,839

P

7,267,651 P

6,302,136

The movements in the present value of the retirement benefit obligation recognized in the books are as follows: 2011

2010

Balance at the beginning of year Current service cost and interest cost Benefits paid Actuarial loss

P

4,661,994 P 1,251,310 ( 1,485,618

3,987,344 1,661,613 986,963) -

Balance at the end of the year

P

7,398,922 P

4,661,994

The movements in the fair value of plan assets are as follows: 2011 Balance at the beginning of year Expected return on plan assets Actuarial loss Balance at the end of the year

MASS-SPECC 2011 Annual Report

73

2010

P

2,218,697 P 155,309 118,820)

2,073,549 145,148 -

P

2,255,186 P

2,218,697

(


- 39 Actual return on plan assets amounted to P36,489 and P145,148 as of December 31, 2011 and 2010, respectively. The amounts of retirement benefits recognized in profit or loss are shown below. 2011 Current service costs Interest costs Expected return on plan assets Net actuarial gain recognized during the year

P

2010

(

845,717 P 405,593 155,309)(

(

130,486)(

P

965,515 P

1,291,587 370,026 145,148) 157,277) 1,359,188

The movements in the retirement benefit obligation recognized in the books are as follows: 2011

2010

Balance at beginning of year Expense recognized Benefits paid

P

6,302,136 P 965,515 (

5,929,911 1,359,188 986,963)

Balance at end of year

P

7,267,651 P

6,302,136

For determination of the retirement benefit obligation, the following actuarial assumptions were used:

Discount rates used Expected rate of return on plan assets Expected rate of salary increases

2011

2010

6.3% 7.0% 7.0%

8.7% 7.0% 7.0%

Assumptions regarding future mortality and disability are based on the 2001 CSO table-generational and the disability study, respectively. The overall expected long-term rate of return on assets is 7%. The expected long-term rate of return is based on the yield rate for a risk portfolio similar to that of the fund with consideration to the fund’s past performance.

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MASS-SPECC 2011 Annual Report


- 40 23. RELATED PARTY TRANSACTIONS The Cooperative’s related parties include its directors, officers, employees, organizations under common control and key management as described below. None of the transactions incorporate special terms and conditions and no guarantee was given or received. Outstanding balances are usually settled in cash.

23.1 Advances to Officers and Employees The Cooperative provides cash advances for liquidation to certain employees, officers and directors, the outstanding balance of which, amounting to P1.2 million and P0.3 million as of December 31, 2011 and 2010, respectively, is presented as part of Loans and Other Receivables (see Note 9).

23.2 Key Management Compensations The compensation of the Cooperative’s key management personnel as of December 31, are as follows. 2011

2010

Short-term benefits Post-employment defined benefits

P

2,762,262 P 2,806,851

2,665,934 2,479,100

Balance at end of year

P

5,569,113 P

5,145,034

24. TAXES The Cooperative is exempt from taxes, including income tax, under the Philippine Cooperative Code of 2008, except for its transactions with non-members (see Note 1). The Cooperative’s tax expense as reported in profit or loss pertains to regular corporate income tax (RCIT) amounting to P50,261 for the year ended December 31, 2011 (nil in 2010). A reconciliation of tax on pretax profit computed at the applicable statutory rates to tax expense reported in the statement of income for the period ended December 31, 2011. Tax on pretax profit at 30% Tax Effect Non-taxable income Non-deductible expense Balance at end of year

P ( P

7,621,644 38,672,868) 31,101,484 50,261

The Cooperative is subject to the minimum corporate income tax (MCIT), which is computed at 2% of gross income, as defined under the tax regulations, on its non-exempt in come. No MCIT was reported in 2011 as the RCIT was higher than MCIT.

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75


- 41 25. COMMITMENTS AND CONTINGENCIES

25.1 Donation Arrangement In 2010, Rabobank donated and transferred ownership of movable goods comprising of 44 units of used ATMs and 40 units of used personal computers to the Cooperative. As specified in the contract, the Cooperative shall not transfer ownership of the received goods to any third party or to lease or rent the goods to any third party within the period of five years from the date of receipt. As of December 31, 2011, the Cooperative has been compliant with the provisions of the contract.

25.2 Others There are contingent liabilities such as litigations and claims that arise in the normal course of the Cooperative’s operations which are not reflected in the accompanying financial statements. As of December 31, 2011, the Cooperative’s management is of the opinion that losses, if any, from these claims will not have any material effect on the Cooperative’s financial statements. 26. SUPPLEMENTARY INFORMATION REQUIRED BY THE BUREAU OF INTERNAL REVENUE Presented below is the supplementary information which is required by the Bureau of Internal Revenue (BIR) under its existing revenue regulation to be disclosed as part of the notes to financial statements. This supplementary information is not a required disclosure under FRSPC.

26.1 Requirements under Revenue Regulations (RR) 15-2010 The information on taxes, duties and license fees paid and accrued during the taxable year required under RR 15-2010 issued on November 25, 2010 are as follows: (a)

Output VAT

In accordance with RA No. 9520, Cooperatives are exempt from the payment of all national taxes. In addition, pursuant to Section 109 of the 1997 Tax Code, as amended, Exempt Transactions, Cooperatives duly registered with the CDA are exempt from VAT. However, under Revenue Memorandum Order (RMO) 76-2010, Section 8- Taxability/ Exemption of Duly Registered Cooperatives which Transact Business with Members and Non-members, Cooperatives with accumulated reserves and undivided net savings of more than P10 million shall be subject to value added tax on transactions with non-members. Relative to the foregoing, the Cooperative declared output VAT on its transactions with non-members as follows: Output VAT

Tax Base Meals and lodging Fastfood sale

P

3,876,188 144,335

P

465,143 17,320

P

4,020,523

P

482,463

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- 42 The tax base are included as part of Hostel Fees – Net in the 2011 statement of income and distribution of net surplus. The tax bases are based on the Cooperative’s gross receipts for the year, hence, may not be the same as the amounts accrued in the 2011 statement of income and distribution surplus. The outstanding output VAT payable amounting to P28,204 as of December 31, 2011 is shown as part of Accounts Payable under the Accounts Payable and Accrued Expenses account in the 2011 statement of financial position (see Note 15). The Cooperative’s revenues in 2011 which are VAT-exempted amounted to P128.9 million. (b)

Input VAT

Input VAT arising from various purchases related to transactions with members were directly charged by the Cooperative as cost and expense pursuant to Republic Act No. 9337 and as a non-VAT registered taxpayer. Total input VAT charged to costs and expenses in 2011 amounted to P68,342. However, related to the abovementioned RMO 76-2010, purchases related to transactions with non-members are subject to input vat as summarized below. Balance at beginning of year Goods for resale or further processing Goods other than for resale Applied against output VAT Balance at end of year (c)

P

-

P

-

(

11,068 270,585 281,653)

Taxes on Importation

The Cooperative did not have any importation of goods in 2011. Under the Code, cooperatives are exempted from the payment of all national taxes of whatever name and nature, including import taxes. (d)

Excise Tax

The Cooperative did not have any transactions in 2011 which are subject to excise tax. Under the Code, cooperatives are exempted from the payment of all national taxes of whatever name and nature, including excise taxes. (e)

Documentary Stamp Tax

The Cooperative did not incur any documentary stamp tax in 2011. Under the Code, Cooperatives are exempt from the payment of documentary stamp tax. The other party to the taxable document who is not exempt shall be the one directly liable to the tax.

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- 43 (f)

Taxes and Licenses

The details of taxes and licenses are as follows: Compromise payment Business tax Annual registration fee Community tax Others

P

373,592 9,308 500 500 2,952

P

386,852

The amounts of taxes and licenses are included in Other Operating Expenses presented under Cost and Expenses in the statement of income and distribution of net surplus (see Note 21). (g)

Withholding Taxes

The withholding taxes pertaining solely to compensation and benefit amounted to P708,251 for the year ended December 31, 2011. (h)

Deficiency Tax Assessment and Tax Cases

The Cooperative has deficiency tax assessment amounting to P3.1 million inclusive of surcharges, relative to the investigation and assessment of its 2005 tax liabilities per Assessment No. RR 16-098-175-08. Pursuant to Article 144 (2) of R.A. No. 9520, all cooperatives previously registered under RA 6938 with unpaid/ unsettled assessments as of the effectivity of RA No. 9520 shall be qualified to avail of the compromise settlement with BIR at a compromise rate equivalent to twenty percent (20%) of the basic tax assessed. As such, on December 20, 2010, the Cooperative settled its tax deficiencies amounting to P0.6 million, P0.3 million or 50% of which was already recorded in the books of the Cooperative in 2010, while the remaining amount was fully settled in 2011. The Cooperative has no other deficiency tax assessments with the BIR or tax cases outstanding or pending in courts or bodies outside of the BIR.

26.2 Requirements under RR 19-2011 On December 9. 2011, the BIR issued RR 19-2011 which prescribes the new form that will be used for income tax filing covering and starting with periods ending December 31, 2011 and onwards. This recent RR requires schedules of taxable revenues and other non-operating income, costs of sales and services, and itemized deductions, to be disclosed in the notes to financial statements.

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- 44 The amounts of taxable revenues and income, and deductible costs and expenses presented below are based on relevant tax regulations issued by the BIR, hence, may not be the same as the amounts reflected in the 2011 statement of income and distribution of net surplus. (a)

Taxable Revenues Regular Tax Rate

Exempt Sale of goods Rendering of services

(b)

P

6,247,547 109,908,708

P

144,335 3,875,876

P 116,156,255

P

4,020,211

Deductible Cost of Sales and Services

Deductible costs of sales and services for the year ended December 31, 2011 comprises the following: Regular Tax Rate

Exempt Salaries, wages and benefits Outside services Others

(c)

P

13,146,993 34,567,218

P

1,050,341 192,671 1,004,880

P

47,714,211

P

2,247,892

Taxable Non-operating and Other Income

The non-operating and taxable other income in 2011 comprises the following: Regular Tax Rate

Exempt Donation Others

P P

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8,771,350 3,981,954

P

12,753,304

P

-

312 312


- 45 (d)

Itemized Deductions

The amounts of itemized deductions for the year ended December 31, 2011 are as follows: Regular Tax Rate

Exempt Impairment loss Depreciation Transportation and travel Salaries and employee benefits Communication, light and water Representation and entertainment Professional fees Taxes and licenses Janitorial and messengerial services Office supplies Repairs and maintenance – labor Rentals Interest Miscellaneous

P

17,896,681 10,487,205 5,131,732 4,454,998 3,052,033 2,728,737 2,598,095 1,604,057 713,730 380,799 312,194 141,571 6,455,569

P

317,468 101,875 609,350 28,346 62,234 89,771 18,631 78,930 175,637 122,853

P

55,957,401

P

1,605,095

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2012 Mindanaw Cooperative Micro-entrepreneur Award (MICMA) Microfinance has emerged as a growing industry in Mindanao to provide financial services to the poor people. Co-operatives have joined the band by financing individual members’ need for credit, savings, insurance, and transfer payments for their enterprises and households. Microfinance is defined as a small business with little capital, owned and operated by a poor or low income household, and may employ few workers. In Mindanao--where poverty is prevalent and where many poor people are engaged in micro-enterprises, co-operative micro-financing scheme has been sought by many to be the solution to their problems. Microfinance programs have provided co-operative members the means to create more products, improve services, expand markets, and ultimately gain and increase income and economic activities. There are interesting experiences to show that the low-income people are able to save money regularly, repay loans promptly, use credit productively because of microfinance . In other words, microfinance programs have proved to greatly help co-operatives in empowering individuals and communities by giving them the opportunities to engage in, and earn from economic activities that allow them to save, invest on, and insure their microenterprises. By invigorating micro-enterprises, the co-operatives have become instrumental in guiding the households, communities and local economies toward progress. Recognizing the outstanding contributions of co-operative affiliates in helping members help themselves out of poverty trough microfinance programs is one of the core objectives of MASSSPECC’s annual Search for the Mindanaw Cooperative Micro-entrepreneur Award (MICMA). Launched in 2008, MICMA showcases the best practices of micro-entrepreneurships by successful micro-entrepreneurs who availed capital from the co-operatives. The MICMA acknowledges the greatest contribution of cooperatives in alleviating poverty through its support for microenterprises, and showcased the best practices of micro-entrepreneurships for the successful micro-entrepreneurs who availed capital from the cooperatives. In this, we aim to create public awareness, gain strong and create massive impact in microenterprise sector in local economy. It i s also aimed at creating public awareness; thereby, creating massive impact in microenterprise sector in the local economy. For 2012, the following are criteria for the search: 1. Awardee must have 100% repayment rate of the loan/s secured from the primary co-op. 2. Awardee must be able to demonstrate measurable results in terms of employment generation out of the micro-entrepreneurship activities. 3. Awardee must show quantifiable outcomes in sales turnover, growth in enterprise profits, and rate of re-investment of enterprise profits. 4. Awardee must be a model resident in his/her local community. He/She must have demonstrated ethically sound behavior, with high integrity and moral standards, and is socially responsible.

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Mauswagon Award Category

Edna J. Ranggan GRAND PRIZE WINNER

Edna J. Ranggan, 48 years old, married to Joselito Ranggan, 48, and residing in Luna Ext. Zone 3, Digos City, Davao del Sur for 28 years now. She has three sons, two graduated in four-year courses: a Nurse and a Hotel Restaurant Management, and the youngest, a second year high school student. In 1985, Edna started the first store with the “PUTO MAYA” and an initial capital of P80,000 taken from her savings in the sidewalk vending. In August 1985, Edna joined DIMAVENCI at the time of her sidewalk vending. “I heard from many people that Digos Market Vendors MPC (DIMAVENCI) was a good cooperative. It had helped many businessmen. So, I attended the four nightly sessions of the membership seminar,” Edna said. “I saved P5.00 a day until it had reached P100.00 as required minimum fixed deposit to become member of DIMAVENCI. Then, I waited three months to get my first loan of P100.00 for additional capital to my Puto Maya business”. Edna’s loans had gradually become big. As she increased her fixed deposit, her loans doubled. “So, I didn’t stop contributing for fixed deposit and paid loans promptly. I had done it regularly until I became one of the good members who could avail loan three times of the fixed deposit”, Edna said. At loan sizes from P100,000 to P150,000, she had

bought rights of the stalls inside Digos Public Market. Her first stall was bought at P70,000. She paid the loan; then, requested for another loan. “While still young, I am thinking what to buy, and how to use the loan wisely,” Edna said. Edna has now owned three more stores inside Digos Public Market. The Edna Bakery, the second store was opened year 2000 with an capital of P100,000. It is supplying bread to all Edna’s stores; The Criston Marc Snack Inn, the third store was opened 1998 with a capital of P50,000; and, the Ranggan Snack Haus, the fourth store was opened in 2006 with a capital of P100,000. “I used P50,000 for the weekly revolving fund to all the stores, and collects sales at P12,000 a day from these stores. Every week, I earned a net income of P20,000, or a monthly net income of P80,000, more or less,” Edna said. With DIMAVENCI’s financial support, I had sent two sons in college and finished their courses; expanded my business enterprises; acquired seven parcels (4,300) sqm. of lots in Digos City, and 1.8 has. farm in Tagaytay, Saranggani Province; procured vehicles and equipments; and constructed our house in year 2002.

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Mauswagon Award Category

Romeo V. Recto FIRST RUNNER UP WINNER

Romeo V. Recto, 46 years old, married to Zoe Labastilla-Recto and blessed with three children. For five years now, they are residing in a rented apartment in Canaway, Tibanga, Iligan City. On May 9, 2006, Romeo joined Iligan Dealers MPC (IDEAL). “I borrowed P10,000 to finance my business, but it failed due to irregular meat supply. I missed to pay IDEAL Coop. So, I went back to Mrs. Florida Chang, the coop manager to request for another loan. She gave me a chance. IDEAL granted me P10,000 to open my business in the Children’s Park in Iligan City. Once again, my business didn’t prosper for one year,” Romeo said. “And yet the IDEAL Coop had supported me by another loan of P25,000 to open the “Meong’s Bulalo & Kambingan” in Tambo, Iligan City on August 10, 2010. The food store is selling viands with goat’s meat and beef. Luckily, many customers are patronizing our business. I am very happy that everything has worked out well in the end,” Romeo added. “When I started the main branch in Tambo, I had no workers. My family and I had helped together in the food store. I bought the ingredients and cooked the dishes while they helped in cleaning the surroundings, washing the utensils, and serving the customers,” Romeo said. “In October 14, 2011, I opened two more branches in Iligan Citythe Tibanga Branch and the Kamagi Branch. Then, I requested a loan from IDEAL and they granted me P150,000 to finance my initiative. For a years’ time, these stores showed up and gave me profits. Then, I bought second hand pickup NISSAN Pathfinder for family service

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and used to purchase cows and goats in Iligan City and other places nearby,” Romeo said. Presently, they have forty workers with various functions: livestock purchasing, food handling, cooking, slaughtering, and cooking. Our stores are opened day and night to serve the customers. “When I saw Mrs. Virgenita Balisco posted in the turf inside coop office as the 2011 MICMA Winner, I am also dreaming to be one of the winners someday. I am proud that I was nominated as contestant of MICMA. It gives a good example to my children that one day they will follow the footsteps of their parents,” Romeo said.


Mauswagon Award Category

Marites E. Aguanta SECOND RUNNER UP WINNER

Marites E. Aguanta, 36 years old, married to Elmer Aguanta, 38. They have two children - a boy and girl and residing in Purok Pioneer, Brgy Visayas, Tagum City. “During elementary school days, my mother taught me to do business. During no classes and vacation time, I helped her to sell vegetable in the market, and barbecues and charcoal in our home,” Marites said. For 12 years, she had worked in Jolly Pharmacy in Tagum City. “Every Wednesday day-off, I used to go around government and private offices, like LTO, Hall of Justice, and hospitals in Tagum to sell sandals,” Marites said. I opened Tagum Electrical Supplies and Hardware in year 2004 with my brother who first managed the store. I started it with a little capital of P80,000 from my saved money. “The stocks displayed out of the P80,000 capital were very few in this kind of business. It requires a lot of capital. At this point, I realized the need to be a coop member of Tagum Cooperative,” Marites commented. When

she

became member, Tagum Cooperative had assisted her. “Big thanks to the coop for they had granted me the first loan of P278,000. I was also grateful to my parentsin-law to allow their six hectares agricultural land to comply with the collateral of the loan,” Marites said. “My loan proceed was allocated as revolving fund to purchase supplies from suppliers until they trusted us. But it took us ten months to get stocks from them on term payments,” Marites added. “In this business, I employed five workers with the reasonable benefits, such as salaries, SSS, Philhealth, Pagibig, free snacks, and daily commission. It also gives my family a comfortable house, vehicles, parcels of lots, and children’s education,” Marites said. Kudos to Tagum Cooperative! Tagum Cooperative is, indeed, an excellent business partner. With their support, these blessings have come.

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MASS-SPECC 2011 Annual Report


Nanlimbasog Award Category

Mercedes S. Pataganao

FIRST PRIZE WINNER

Mercedes S. Pataganao, 32 years old, married to Librado Pataganao, 38 and blessed with two healthy female children- the eldest is 3rd year high school and the 2nd child is 7 yrs old. In 30 years now, they are living in Purok 3, Malamodao-a place along a riverside, surrounded with mountains and trees, and located at 46 kms from MADECO-Main Office in Poblacion, Maco, Compostela Valley. “I am always thinking that the use our efforts and abilities is a good behavior in order to solve our problems and improve ourselves, rather than relying on someone else’s help. To start this idea, I had sold ‘tuba’. I bought the store from my brother-in-law to own it. When time comes, nobody would say that I have deeply indebted of their help,” Mercedes said. “I had learned that there was profit from it”. In week’s time, I saved P300 to P500. I was delighted with the first trial of my business. The situation had aroused my interest and enthusiasm to continue the enterprise”, Mercedes said. In 1994, the couple started their lives together outside marriage arrangement. Librado had worked manual labor to feed his family for a living. “I worked much of my time in weeding, mango wrapping, wood sawing and loading, and anything to make a living. I studied up to Grade 3 and my wife, Grade 6 in the elementary school. So, we could only undertake handiwork to earn money,” Librado said. “At that time of our hardship and discomfort, we didn’t have children yet”. “For more than a decade, we had no house of our own; hence, we lived in a separate room in my father’s house”, Librado said. “The house was quite closed, dark and unpainted; made of wood in which many parts were deteriorating and rotting,” he added. “In 2001, I started a very small sari-sari store with little capital of P6,000, amassed from my small, but regular savings deposits. I initially sold goods that were needed by my neighbors’ kitchen, such as coffee, sugar, salt and rice. With the little capital being rolled over and over again, the stocks for sale have also increased gradually. “In the room of my father’s house, we stayed there with the little store, dining table, kitchen and sleeping area. In that little space, it gave the birth of our own enterprise to earn the income needed by the business and my family,” Librado said. “In 2003, we started another enterprise, the butchering of pigs. In the beginning, we butchered one pig a week, and now at least three pigs a week. As incentive, pig heads were given to the volunteers, Mercedes said. “If one live pig weighs 80 kgs, and pay for P7,500. Then, I take home P1,500 from it,” she added.

Neighbor volunteers butchered the pigs at 4:00 in the morning of every Saturday

daughter met a motorcycle accident with her leg broken and spent a lot of no less than P50,000,” Mercedes narrated. “It had drained my savings and the capital of the store. So, I resorted to borrow to a moneylender to get financial support of my business,” she added. “In that event, I realized to be a cooperative member. On October 20, 2007, I became a member of Maco Development Cooperative (MADECO), Elizalde, Maco, Compostela Valley, about 3 kms from my residence,” Mercedes said. “When my business becomes big, I would have someone to lean on to help finance my need; help to develop the cooperative. And, that was I imagined,” Mercedes said. On June 6, 2008, Mercedes was granted the first loan of P5,000 to buy more stocks of the store. After the loan was paid, she was granted 21 subsequent loans totaling to P434,000 from July 2008 to October 2009 to purchase live pigs and inventories of the store. Loan sizes granted ranges from P5,000 to P80,000 which were gradually increased after each loan. In March 5, 2010, Mercedes was granted the biggest loan amounting to P250,000 to acquire the multi-cab vehicle and use it to purchase live pigs and deliver pork to regular customers. “Presently, the store have now reached P50,000 worth of goods, almost everything needed by the customers. I am purchasing stocks P25,000 weekly and has already a net earning moderately at P2,000 a week. I am grateful to MADECO to all its support to my family and business,” Librado explained.

Mercedes lived together with her Family in their own house

“When the customers bought the pork in cash, then it’s good; but I used to sell the pork on credit and collect payments every Saturday,” Mercedes said. “After some time from the opening of the store, Librado and I decided to marry legally. And then, I gave birth to our first daughter. Unfortunately, my MASS-SPECC 2011 Annual Report

85

Librado did the slicing the pork; Mercedes and the volunteer weighing, packing and selling to customers

Mercedes owned 3 motorcycles to deliver orders to regular customers


Nanlimbasog Award Category

Rodney S. Celestial SECOND PRIZE WINNER

Rodney Celestial, 29 years old of Sta. Cruz, Jimenez, Misamis Occidental. He is married to Riche Nacion-Celestial and they have two male kids. The eldest is 1st year high school; the youngest is kinder 2. “After got married, I went to Bacolod, Negros Occidental and helped my parent’s sugarcane farm. I also worked with our neighbor’s farm. I did planting and weeding in cane farms. While weeding, the sun was too long to wait to set. I felt bored and tired; thus, I was only paid P50 a day with no free food. Every day, I walked home for a distance,” Rodney narrated. “I can’t live with this. It can’t raise my family,” he added. In 1999, Rodney decided to go to Manila and worked in a barber shop. He was also employed as a security guard without a license. In December 2003, he went to Cebu and worked as a security guard in Atlas Mining Company for three years. “I handled a gun, but I didn’t have a license. Those who were licensed guard had been put to jail, how about me handling gun without a license? After a time, I realized that our lives would never change; only my employers become richer,” Rodney said. It was the situations why Rodney had decided to make his own business. “I want to be my own boss,” Rodney said. So, he came back to Jimenez in her wife’s hometown to make a shop for furniture, bamboo crafts and men’s haircut in January 2006. “I had earned from it, but the incomes never came easy. No enough money to spend my son’s schooling and the caesarian operation for my youngest child. I wearied myself of that work for I had unstable income,” Rodney added. Then, he started the vulcanizing shop in September 18, 2009. He also accepts spoke repair and replacement, tire rim realignment, small and big wheel replacement, bicycle assembly, motor tuneup, change oil, accessories installation, motorcycle wiring, except for overhauling jobs. “There’s no vulcanizing shop in Jimenez that are catering the same services than ours. Others repaired engine only and no other services done”, Rodney said.

“Ours is a one-stop shop. It creates a difference. Customers may come to a shop for repairs for more than one of its motor parts. At least we have the services to offer them. We want to serve the customers as much as we can,” he added. Finally, the time came that I was invited to join Gata Daku MPC. Rodney’s first loan was P10,000 to procure materials for interior tubes, two motorcycle tires, motor engine oil,” Riche said. “the second loan was P75,000 to procure six tires per size, spark plugs, motor oil, and bearings. “I borrowed repeatedly four times with a total of P131,000 from October 2009 to November 2010 to purchase for more stocks in the store, such as motor parts and accessories, rims, sprockets, brakes and oils; and to acquire more tools and equipments, such as post drill, hand drill, electric drill, socket wrenches, electric grinding, and hydraulic jacks,” Rodney said. He added, “On May 3, 2011, Rodney was granted P150,000 to procure more motorcycle spare parts, welding machine, and a big air compressor to augment our facilities and supplies. “Today, our income is never less than P2,000 a day. Sometimes, it can reach up to P 6,000 with a net income of P1,500 to P 2,000 per day, less expenses for the day,” Riche said. Rodney said, “Before, I only had bike; Now, I already have four motorcycles. Before, I only had a few stocks; Now, I already have a lot of stocks. Before, my air compressor is just small; And now, thanks God, it’s already big”. “Before, our lives were unstable. My husband went around anywhere to look for money. I also had tried a little business in my province- the buy and sell of coconut. When the vulcanizing shop and store business had finally been established, we were not separating our ways; we’re working together,” Riche added. Gata Daku MPC has become their best business partner. They are very grateful to Gata Daku MPC to help improved their lives. “As long as the cooperative will continue trusting me, there would be more success to come in my life,” Rodney added.

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MINDANAO COOP LEADERSHIP AWARD

MOST OUTSTANDING GAD-FEP IMPLEMENTOR

Gadwin E. Handumon

Tagum Cooperative

TOP COOP PATRONIZING ALL MASS-SPECC SERVICES

FULL CETF REMITTANCE

Alamada Multi-Purpose Cooperative Integrated Cooperative Towards Unified Service Mediatrix Multi-Purpose Cooperative

Alamada Multi-Purpose Cooperative Ampayon Multi-Purpose Cooperative Bukidnon Government Employees Multi-Purpose Cooperative (BUGEMCO) TOP 5 OUTSTANDING COOP TIME DEPOSITORS Buug Integrated Cooperative (BICO) MSU IIT Multi-Purpose Cooperative DENRACEAE Multi-Purpose Cooperative Oro Integrated Cooperative Greater Midsayap Area Multi-Purpose Cooperative Tagum Cooperative Human Resource Employees Sta. Ana Multi-Purpose Cooperative Multi-Purpose Cooperative (HUREMCO) Agdao Multi-Purpose Cooperative Iligan Cement Multi-Purpose Cooperative Iligan City Government Employees Multi-Purpose Cooperative HIGHEST NUMBER OF PINOY ATM CARDS JCA Agrarian Reform Beneficiaries Multi-Purpose Cooperative Tagum Cooperative Kooperatiba ng Kiblawan Makilala Multi-Purpose Cooperative HIGHEST ON-US TRANSACTIONS Malapatan Multi-Purpose Cooperative Sta. Catalina Multi-Purpose Cooperative Mambajao Credit Cooperative BEST PERFORMING PINOY COOP ATM (Switch Transactions) Mediatrix Multi-Purpose Cooperative MSU-IIT Multi-Purpose Cooperative Paglaum Multi-Purpose Cooperative NDMU Development Cooperative Oro Integrated Cooperative BEST PERFORMING PINOY COOP ATM CENTER SRT Digos Cooperative of Davao del Sur Sta. Catalina Multi-Purpose Cooperative Sta. Catalina Multi-Purpose Cooperative CENTURY COOPS’ CIRCLE AWARD Sto Nino Makilala Multi-Purpose Cooperative Alamada Multi-Purpose Cooperative ZAMSURGEA Community Multi-Purpose Cooperative Makilala Multi-Purpose Cooperative Zillovia Womens Multi-Purpose Cooperative MSU SULU Multi-Purpose Cooperative LONGEVITY AWARD FOR OFFICERS Micro-Entrepreneurs’ Multi-Purpose Cooperative Norma R. Pereyras SCI Development Cooperative MAASDANGON EMPLOYEE AWARD

PLAQUE OF RECOGNITION

Bernadette O. Toledo Glenn A. Tubilag

Tagum Cooperative AIM Cooperative

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2012 Action Plans and Targets Savings and Loans        

P550M loan released to 102 qualified borrowers <=5% based on Portfolio at Risk (PAR) 100% compliance to loan loss provision P382.5M loan fund from funding institutions P400M outstanding deposits reached P180M cumulative share capital 1 new Loan Product implemented Risk Management System Implemented

Investment  P50M total project investment size generated  1-2 high-impact projects for member-coops’ communities, costing P30M-P50M each implemented

Information and Communication Technology 45 new, and 50 migrated sites, MSRTE Installations 55 ATM Terminals 50 POS Terminals Mobile Banking implemented Online branch connectivity implemented 3 Module Development (on MIS and other apps) implemented  other ATM services implemented • Load Fulfillment • Internet Payment Gateway • Cross Border Services (MCBS), an International Card Acquiring (Master Card /VISA Card/JCB) • Local and International Remittance      

Consultancy

Governance Conducted the following activities/events  2 BOD & 2 Joint Officers Meeting s 3 Executive Committee meetings  2 Audit Committee activities  2 Election Committee meetings  2 Investment Committee meetings  1 Mediation and Conciliation meeting  3 meetings for Managers Club  2 Chairperson’s Summit  3 Co-op Youth Parliament (CYP) meetings  2 Gender Committee meetings

Research and Development       

MASS-SPECC members’ data bank established Social Performance Management (SPM) approaches and tools developed Ethical Standards on Branching completed Product innovation carried out 2 enhanced products 1 new product developed Bi-Annual “Koop Diaryo” published in June and December 2012 Mindanao Co-op Micro-Entreprenuer Award (MICMA) held within May

Admin and Support Group     

Complied with various government agencies’ regulations Accounting System reviewed and improved 5 year HR planning conducted Talent and Career Management established Implemented and improved the following; • Fund management • Settlement facility • Security and Maintenance of Properties • Disaster Risk Management System (DRR)

 50 coops served  10 co-op leaders recruited as advisors  At least 5 coops volunteered to extend advisory support to growing coops  15 co-ops trained and ready for Branding  1 high-impact marketing program for partners implemented  2 Manuals focused on Co-ops Operations developed  (2 new consultancy products developed  Quality Assurance System developed  Partnerships with 4 consulting individual professionals or institutions

Institute of Co-operative Studies

Networking and Marketing

Hostel and Properties

 Recruited 20% of the potential member-co-ops in each clusters, with minimum 10 new members per cluster  Collected from 36 new members at least 50% of their subscribed capital  Bi-annual Ownership Meetings per cluster  125 member-co-ops present in General Assembly  P7.5M CETF collection  Cluster Core Group/Steering Committee organized  Satellite offices set-up in all clusters  2 Mindanao-wide forum conducted  Mindanao-Wide synchronized Social Services  Networking and linkages with GOs and NGOs  Marketing programs and activities implemented

    

The following modules developed • Co-operators’ Course • Managers’ Course • All modules for CDA-required training programs 48 Training Facilitators accredited by MASS-SPECC E-Learning programs implemented At least 1 training partner established per cluster or region 90% of officers and staff from MASS-SPECC co-op members graduated from Modular Courses  Evaluation rating of MASS-SPECC Training Services established    

Hostel and properties converted as full-fledged subsidiary of MASS-SPECC 60%-70% Occupancy rate achieved 30% of the catch-up capital expenditures acquired P 2.5 M for funding raised hostel staff attended trainings as requirement to professionalize hostel services  Above market rate Return on Assets (ROA) from Hostel operations achieved

Overall Financial Targets  Total Assets of at least P950M generated  Net Surplus of P27M realized  Dividends and patronage refund above Market rate

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MASS-SPECC 2011 Annual Report


2011-2012 MASS-SPECC Officers Gadwin E. Handumon

Chairperson Representing Region X Paglaum Multi-Purpose Cooperative

Norma R. Pereyras Vice-Chairperson Representing Region XI Tagum Cooperative Directors:

BOD Secretary Bukidnon Government Employees Multi-Purpose Cooperative

Aleta A. Gicole

Treasurer Oro Integrated Cooperative

Bernadette O. Toledo – Ex-Officio Chief Executive Officer MASS-SPECC Cooperative Development Center

Hasan J. Eting

Representing ARMM DENRACEAE Multi-Purpose Cooperative

Edelito C. Sangco

Representing CARAGA Region Socorro Empowered People’s Cooperative

Renato P. Lopez

Representing Region IX ZAMSURGEA Community Multi-Purpose Cooperative

Edgar G. Amoronio

Representing Region XII Sta. Catalina Multi-Purpose Cooperative

Gloria P. Dagatan

Women Sector Sta. Ana Multi-Purpose Cooperative

Nora A. Clar

Women Sector MSU-IIT Multi-Purpose Cooperative

Anamarie N. Labininay Youth Sector Oro Integrated Cooperative

Maricelle M. Nueva

Elected at Large Lorenzo Tan Multi-Purpose Cooperative

Efren M. Bravo

Elected at Large Panabo Multi-Purpose Cooperative MASS-SPECC 2011 Annual Report

Ruth I. Jacutin

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Audit Committee Nenita R. Malbas - Chairperson Tagum Cooperative Merlyn I. Gomez - Vice-Chairperson Mediatrix Multi-Purpose Cooperative Gilbert B. Cagaanan - Secretary MSU-IIT Multi-Purpose Cooperative

Election Committee Atty. Rolando C. Casaway - Chairperson Tagum Cooperative Jerry L. Cabonegro - Vice-Chairperson Malapatan Multi-Purpose Cooperative Mansueto V. Dela Peña - Secretary Oro Integrated Cooperative Credit Committee Emma A. Nieva MSU-IIT Multi-Purpose Cooperative Investment Committee Raul M. Pregon - Chairperson Oro Integrated Cooperative Rodolfo B. Trinidad - Secretary MSU-IIT Multi-Purpose Cooperative Rosalina S. Argent - Member Tagum Cooperative Mediation and Conciliation Committee Romeo R. Busalla Toril Community Cooperative


MASS-SPECC Cooperative Development Center

MASS-SPECC Cooperative Development Center 2012 BUDGET

2012 BUDGET

REVENUES Interest on loans extended Consulting and service fees Hostel fees (net) Income from ATM operations Education and training Interest from bank deposits and investments Miscellaneous EXPENSES Personnel Cost Salaries and wages Employees benefits SSS/Philhealth contribution CERP contribution HDMF contribution Interest expense on deposits Depreciation and amortization Interest on borrowed funds and other charges Provision for doubtful accounts Meetings and conferences Trainings and seminars Travel and transportation Staff development Light and power Rental Communication Security and janitorial Provision for retirement benefits License fees Professional fees Taxes and licenses Provision for stabilization fund Marketing expenses Repair and maintenance Materials and supplies Insurance Collection and litigation expense Miscellaneous NET SURPLUS

64,232,302 31,727,591 9,754,533 16,190,677 10,860,783 5,503,000 81,763 138,350,649 17,755,719 5,649,685 1,108,096 398,500 104,800 25,016,800 24,125,000 10,226,697 9,445,297 8,500,000 4,718,482 4,250,975 3,877,256 2,599,869 1,877,034 1,810,200 1,530,843 1,413,597 1,326,427 1,306,976 1,279,745 1,220,000 1,000,000 812,969 503,232 479,243 136,000 110,000 3,784,007 111,350,649 27,000,000

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MASS-SPECC 2011 Annual Report

Annual Report 2012  

MASS-SPECC's Annual Report 2012