SEAFRONTRESOURCESCORPORATION
NOTESTOFINANCIALSTATEMENTS
1. CorporateInformation
Seafront Resources Corporation (the Company or SRC) was registered with the Securities and Exchange Commission (SEC) on April 16, 1970 as an oil exploration and production company. On October 18, 1996,theCompanyamendeditsArticlesofIncorporationwhichprovidesfortherevision of its primary purpose from engaging in the business of oilexploration and production into a holding companyandtoincludeoilexplorationandproductionbusinessasoneofitssecondarypurposes.The Company’ssharesofstockwerelistedonMay7,1974andarecurrentlytradedatthePhilippineStock Exchange.
The registered office address of the Company is 7th Floor, JMT Building, ADB Avenue, OrtigasCenter,PasigCity.
The accompanying financial statements were approved and authorized for issue by the Board of Directors(BOD).
2. BasisofPreparation
BasisofPreparation
The accompanyingfinancial statements of the Company have been prepared under the historical cost basis,exceptforthefinancialassetsatfairvaluethroughprofitorloss(FVTPL)andfinancialassetsat fairvaluethroughothercomprehensiveincome(FVOCI),whichhavebeenmeasuredatfairvalue. The Company’s financial statements are presented in Philippine Peso (P=), which is also the Company’s functionalandpresentationcurrency.
The Company has investment in trust funds. The transactions and balances of the Company’s trust funds(seeNote7)areconsolidatedonalinebylinebasiswiththeCompany.Thetrustfundreportsare prepared for the same reporting year as the Company, using consistent accounting policies in accordancewithPhilippineFinancialReportingStandards(PFRSs).
StatementofCompliance
The financial statements of the Company have been prepared in accordance with PFRSs. The term PFRSs, in general, include all applicable PFRSs, Philippine Accounting Standards (PASs) and Interpretations issued by the Standing Interpretations Committee, the Philippine Interpretations Committee(PIC)andtheInternationalFinancialReportingInterpretationsCommittee(IFRIC),which have beenapprovedbythe Philippine Financial Reporting StandardsCouncil (FRSC) andadopted by thePhilippineSEC.
3. ChangesinAccountingPoliciesandDisclosures
Theaccountingpoliciesadoptedareconsistentwiththoseofthepreviousfinancialyear,exceptthatthe Companyadoptedthefollowingnewstandardseffectivein2022. Theadoptionofthesenewstandards didnothaveanimpactonthe financialstatementsoftheCompany.
AmendmentstoPFRS3, Reference to the Conceptual Framework
AmendmentstoPAS16, Property, Plant and Equipment: Proceeds before Intended Use
AmendmentstoPAS37, Onerous Contracts – Costs of Fulfilling a Contract
Annual Improvements to PFRSs 2018-2020Cycle
AmendmentstoPFRS9, Financial Instruments, Fees in the ’10 per cent’ test for derecognition of financial liabilities
AmendmentstoPAS41, Agriculture, Taxation in fair value measurements
StandardsIssuedbutnotyetEffective
Pronouncements issued but not yet effective are listed below. The Company does not expect that the future adoption of the said pronouncements will have a significant impact onits financial statements. TheCompanyintendstoadoptthefollowingpronouncementswhentheybecomeeffective.
Effective beginning on or after January 1, 2023
AmendmentstoPAS1andPFRSPracticeStatement2, Disclosure of Accounting Policies
AmendmentstoPAS8, Definition of Accounting Estimates
AmendmentstoPAS12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Effective beginning on or after January 1, 2024
AmendmentstoPAS1, Classification of Liabilities as Current or Non-current
AmendmentstoPFRS16, Lease Liability in a Sale and Leaseback
Effective beginning on or after January 1, 2025
PFRS17, Insurance Contracts
Deferred effectivity
AmendmentstoPFRS10, Consolidated Financial Statements,andPAS28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
4. SummaryofSignificantAccountingPolicies
CashandCashEquivalents
Cash includes cashon hand and in banks. Cash equivalents are short-term, highly liquidinvestments that are readily convertible to known amounts of cash with original maturities of three (3) months or lessandthataresubjecttoaninsignificantriskofchangesinvalue.
FinancialInstruments
Initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liabilityor equityinstrumentofanotherentity.
Financial assets - Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost; FVOCI;andFVTPL.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. The Company initiallymeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatfairvalue throughprofitorloss,transactioncosts.
InorderforafinancialassettobeclassifiedandmeasuredatamortizedcostorfairvaluethroughOCI, it needs to give rise to cash flow that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrumentlevel.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whethercash flows will result fromcollectingcontractualcashflows,sellingthefinancialassets,orboth.
Subsequent measurement
Forpurposesofsubsequentmeasurement,financialassetsareclassifiedinfourcategories:
Financialassetsatamortizedcost(debtinstruments)
FinancialassetsatFVOCIwithrecyclingofcumulativegainsandlosses(debtinstruments)
Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon derecognition(equityinstruments)
FinancialassetsatFVTPL
Financial assets at amortized cost (debt instruments)
TheCompanymeasuresfinancialassetsatamortizedcostifbothofthefollowingconditionsaremet:
The financial asset is held within a business model with the objective to hold financial assets in ordertocollectcontractualcashflows;and
Thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolely paymentsofprincipalandinterestontheprincipalamountoutstanding.
Financialassetsatamortizedcostaresubsequentlymeasuredusingtheeffectiveinterest(EIR)method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized,modifiedorimpaired.
TheCompany’sfinancialassetsat amortizedcostincludescashandcashequivalentsandreceivables.
Financial assets at FVTPL
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required tobe measured atfair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effectivehedginginstruments.Financialassetswithcashflowsthatarenotsolelypaymentsofprincipal andinterestareclassifiedandmeasuredatfairvaluethroughprofitorloss,irrespectiveofthebusiness model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as described above, debt instruments may be designated as at FVTPL on initial recognitionifdoingsoeliminates,orsignificantlyreduces,anaccountingmismatch.
FinancialassetsatFVTPLarecarriedinthestatementoffinancialpositionatfairvaluewithnetchanges infairvaluerecognizedinprofitorloss.
This category includes derivative instruments andquoted equity investments which the Companyhad not irrevocably elected to classify at fair value through OCI. Dividends on quoted equityinvestments arealsorecognizedasotherincomeinprofitorlosswhenthe rightofpaymenthasbeenestablished.
The Company’s financial assets atFVTPL consists of investmentsinquotedequity securitiesheldfor trading.
Financial
assets designated at FVOCI (equity instruments)
Uponinitialrecognition,theCompanycanelecttoclassifyirrevocablyitsequityinvestmentsasequity instruments designated at FVOCI when they meet the definition of equity under PAS 32 and are not heldfortrading. Theclassificationisdeterminedonaninstrument-by-instrumentbasis.
Gainsandlossesonthesefinancialassetsareneverrecycledtoprofitorloss.Dividendsarerecognized as other income in profit or loss when the right of payment has been established, except when the Companybenefitsfromsuchproceedsasarecovery ofpartofthecostof thefinancialasset,inwhich case, such gains are recorded in OCI. Equity instruments designated at FVOCI are not subject to impairmentassessment.
The Company’s financial assets at FVOCI include quoted and unquoted equity securities and quoted governmentsecurities.
Impairment of financial assets
The Company recognizes an allowance for ECLs for all debt instruments not held at FVTPL. ECLs arebasedonthedifferencebetweenthecontractualcashflowsdueinaccordancewiththecontractand allthecashflowsthattheCompanyexpectstoreceive,discountedatanapproximationofthe original effectiveinterestrate. Theexpectedcashflowswillincludecashflowsfromthesaleofcollateralheld orothercreditenhancementsthatareintegraltothecontractualterms.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for whichthere has been a significant increase in credit risk since initial recognition, aloss allowanceisrequiredforcreditlossesexpectedovertheremaininglifeoftheexposure,irrespectiveof thetimingofthedefault(alifetimeECL).
The Company may consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before takingintoaccountanycreditenhancementsheldbytheCompany.Afinancialassetiswrittenoffwhen thereisnoreasonableexpectationofrecoveringthecontractualcashflows.
Financial liabilities - Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings andpayables,netofdirectlyattributabletransactioncosts.
Subsequent measurement
Themeasurementoffinancialliabilitiesdependsontheirclassification,asdescribedbelow:
FinancialliabilitiesatFVTPL
Loansandborrowings
Loans and borrowings
Afterinitialrecognition,interest-bearingloansandborrowingsaresubsequentlymeasuredatamortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognizedaswellasthroughtheEIRamortizationprocess.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statementofcomprehensiveincome.
The Company’s loans and borrowings include accounts payable and accrued expenses, excluding statutoryliabilities.
Derecognition of financial assets and financial liabilities
Financial assets
Afinancialasset(orwhereapplicable,a partofafinancial asset orpart of agroupof similarfinancial assets)isderecognizedwhen:
therightstoreceivecashflowsfromtheassethaveexpired;
theCompanyretainstherightstoreceivecashflowsfromtheasset,buthasassumedanobligation topaytheminfullwithoutmaterialdelaytoathirdpartyundera“pass-through”arrangement;or
the Company has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retainedsubstantiallyalltherisksandrewardsoftheasset,buthastransferredcontroloftheasset.
When the Company has transferred its rights to receive cash flows from an asset and has neither transferrednorretainedsubstantiallyalltherisksandrewardsoftheassetnortransferredcontrolofthe asset, the asset is recognized to the extent of the Company’s continuing involvement in the asset. Continuinginvolvementthattakestheformofaguaranteeoverthetransferredassetismeasuredatthe lower of the original carrying amount of the asset andthe maximum amount of consideration that the Companycouldberequiredtorepay.
Financial liabilities
Afinancialliabilityisderecognized whenthe obligationunderthe liabilityisdischarged,cancelled or hasexpired.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modificationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability, andthedifferenceintherespectivecarryingamountsisrecognizedinprofitorloss.
Offsetting of Financial Instruments
Financial assets and financial liabilities are set off and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and thereisanintentiontosettleonanetbasis,ortorealizetheassetandsettletheliabilitysimultaneously.
FairValueMeasurement
Fairvalueisthepricethatwouldbe receivedtosellanassetorpaidtotransferaliabilityinanorderly transactionbetweenmarketparticipantsatthemeasurementdate. Thefairvaluemeasurementisbased onthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither:
Intheprincipalmarketfortheassetorliability,or
Intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetor liability.
The principalorthemostadvantageousmarketmust be accessibletobytheCompany. Thefairvalue of an asset or a liability is measured using the assumptions that market participants would use when pricingtheassetorliability,assumingthatmarketparticipantsactintheireconomicbestinterest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs andminimizingtheuseofunobservableinputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorizedwithinthefairvaluehierarchy,describedasfollows,basedonthelowestlevelinputthatis significanttothefair valuemeasurementasawhole:
Level1-Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsor liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair valuemeasurementisdirectlyorindirectlyobservable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair valuemeasurementisunobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the CompanydetermineswhethertransfershaveoccurredbetweenLevelsinthe hierarchybyre-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole)attheendofeachreportingperiod.
CapitalStock
Capital stock is measured at par value for all shares issued. Incremental costs incurred directly attributabletotheissuanceofnewsharesareshowninequityasadeductionfromproceeds,netoftax. WhentheCompanypurchasesitsowncapitalstock(treasuryshares),theconsiderationpaid,including any attributable incremental costs, is deducted from equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of anydirectlyattributableincrementaltransactioncostsandtherelatedtaxeffectsisincludedinequity.
RetainedEarnings
Retained earnings represent accumulated earnings of the Company less dividends declared and with consideration of any changes in accounting policies and other adjustments applied retroactively. The retainedearningsoftheCompanyareavailablefordividendsonlyuponapprovalanddeclarationofthe BOD.
EarningsPerShare(EPS)
Basic earnings per share are computed on the basis of the weighted average number of shares outstandingduringtheyearaftergivingretroactiveeffectforanystockdividendsdeclaredinthecurrent year.
Diluted earningspershare,if applicable, iscomputedonthebasis of the weighted average number of sharesoutstandingduringtheyearplustheweightedaveragenumberofordinarysharesthatwouldbe issuedontheconversionofallthedilutivepotentialordinarysharesintoordinaryshares.Thereareno dilutive potential commonshares that would require disclosure of diluted earnings per common share inthefinancialstatements.
RevenueRecognition
Interest income
Interestincomeisrecognizedastheinterestaccruestakingintoaccounttheeffectiveyieldontheasset.
Dividend income
DividendincomeisrecognizedwhentheCompany’srighttoreceivethepaymentisestablished,which isgenerallywhentheBODapprovesthedividenddeclaration.
Rental income
Rentalincome under non-cancellableleases is recognizedintheona straight-linebasis over the lease terms,asprovidedunderthetermsoftheleasecontract.
Management income
Management income from contacts with customers is recognized when control of the services is transferredtothecustomeratanamountthatreflectstheconsiderationtowhichtheCompanyexpects to be entitled in exchange for those goods. The Company has concluded that it is the principal in its revenue arrangement since it is the primary obligor in all revenue arrangements, has pricing latitude andisalsoexposedtocreditrisk. Managementincomeisrecognizedovertime,usinganinputmethod tomeasureprogresstowardscompletesatisfactionoftheservice,becausethecustomersimultaneously receivesandconsumesthebenefitsprovidedbytheCompany.
GeneralandAdministrativeExpenses
Expenses are recorded when incurred. General and administrative expenses constitute costs of administeringthebusiness.
IncomeTax
Current tax
Currenttaxassetsandliabilitiesforthecurrent andpriorperiodsaremeasuredatthe amountexpected toberecoveredfromorpaidtothetaxationauthorities. Thetaxratesandtaxlawsusedtocomputethe amountarethosethatareenactedorsubstantiallyenactedbythereportingdate.
Deferred tax
Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits from excess minimum corporate income tax (MCIT) over regular corporate income tax and unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits from excess MCITandunexpiredNOLCOcanbeutilized.
Thecarryingamountofdeferredtaxassetsisreviewedateachreportingdateandreducedtotheextent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferredtaxassettobeutilized. Unrecognizeddeferredtaxassetsarereassessedateachreportingdate and are recognized to the extent that it has become probable that future taxable profit will allow the deferredtaxassettoberecovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enactedorsubstantiallyenactedatthereportingdate.
ProvisionsandContingencies
ProvisionsarerecognizedwhentheCompanyhasapresentobligation(legalorconstructive)asaresult ofapastevent,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequired tosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation. Provisions arereviewedateachreportingdate andadjustedtoreflectthecurrentbestestimate.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefitswillarise,theassetandthe relatedincomearerecognizedinthefinancialstatements.
EventsAfterthe ReportingDate
Post year-end events up to the date of auditors’ report that provide additional information about the Company’ssituationatthereportingdate(adjustingevents)arereflectedinthefinancialstatements,if any. Postyear-endeventsthatarenotadjustingeventsaredisclosedinthenoteswhenmaterial.
5. SignificantAccountingJudgments,EstimatesandAssumptions
The preparation of the accompanying financial statements requires management to make judgments, estimates and assumptions that affect amounts reported in the financial statements and related notes. The judgments, estimates and assumptions used in the financial statements are based upon management’sevaluationofrelevantfactsandcircumstancesasofthedateoftheCompany’sfinancial statements. Actualresultscoulddifferfromsuchestimates.
Judgments andestimates are contractually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Judgments
In the process of applying the Company’s accounting policies, management has made the following judgments,apartfromthoseinvolvingestimations,whichhasthemostsignificanteffectontheamounts recognizedinthefinancialstatements:
Recognition of deferred tax assets
The Company’s deferred tax assets pertain to the carryforward benefits of NOLCO and excess MCIT overRCIT.Judgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
The Company did not recognize deferred tax assets amounting to P =3.22 million as of December 31, 2022 and March 31, 2023. Management believes that it may not be probable that sufficient taxable incomewillbeavailableagainstwhichtheincometaxbenefitscanberealizedpriortotheirexpiration.
EstimatesandAssumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the statementsoffinancialpositiondate,thathaveasignificantriskofcausingamaterialadjustmenttothe carryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.
Estimation of fair value of unquoted equity securities classified as financial assets at FVOCI The Company uses its judgment to select the most appropriate valuation methodology to value its unquotedequityinvestmentsandmakeassumptionsthataremainlybasedonmarketconditionsexisting at each reporting period. As of March 31, 2023 and December 31, 2022, the Company valued the unquoted equity securities classifiedas financial assets at FVOCI using the adjusted net asset method which is a combination of the market and income approaches. It involves directly measuring the fair value of the assets and liabilities of the investee company. Assets of the investee company consist mainlyofparcelsoflandforsalewhichisadjustedtoitsfairvalue. Thefairvalueadjustmentsarising fromchangesinfairvalueofunquotedequitysecuritiesarefullydisclosedinNote8.
6. CashandCashEquivalents
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are short-term investmentsthataremadefor varying periodsofuptothree monthsdependingontheimmediatecash requirementsoftheCompanyandearninterestattheprevailingshort-termplacementrates.
InterestincomeearnedoncashinbanksandcashequivalentsamountedtoP =0.96million,P =0.15million andP =1.68millionforthe1stquarter,andfullyear2022,respectively.
7. InvestmentinTrustFunds
The Company established trust funds (the Trust) which are being administered by a local bank under two trust agreements. The details of the trust funds based on the financial statements issued by the trusteebankareasfollows:
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
The assets, liabilities and performance of the fund are consolidated in the applicable accounts of the Companyforfinancialstatementpresentationpurposes.
8. FinancialAssets
TheCompany’sfinancialassetsaresummarizedbymeasurementcategoriesasfollows: 31-Mar-23 31-Dec-22 (Unaudited) (Audited)
FinancialAssetsatFVTPL
DetailsoffinancialassetsatFVTPLconsistingofquotedequitysecuritiesareasfollows:
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
The net loss onfair value changesonfinancial assetsatFVTPLamounted toP =1.33 millionforthe 1st quarter2023,whilethenetgainonfairvaluechangesonfinancialassetsatFVTPLamountedtoP =3.26 millionandP =0.72millionforthe1stquarter2022andyearendedDecember31,2022,respectively.
ThemovementsinfinancialassetsatFVTPLforthe1stquarterendedMarch31,2023andyearended December31,2022areasfollows:
31-Mar-23 31-Dec-22 (Unaudited) (Audited) Balanceatbeginningofyear P=36,828,021 P =36,112,297
value gain(loss)recognizedduringtheyear (1,333,586) 715,724
atendofyear P=35,494,435 P =36,828,021
FinancialAssetsatFVOCI
FinancialassetsatFVOCIconsistofquotedandunquotedsharesofstockheldforlong-terminvestment purposesandarecarriedatfairvalue. Thecarryingvaluesoftheseinvestmentsareasfollows:
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
Quotedequitysecurities: PetroEnergyResourcesCorporation(PERC) P=17,445,774 P =18,485,589 BenguetCorporation 12,212,031 10,281,176 29,657,805 28,766,765
Unquotedequitysecurity: HermosaEcozone DevelopmentCorporation(HEDC) 507,957,260 507,957,260 Investmentsingovernmentsecurities 3,940,723 3,885,443 P =541,555,788 P =540,609,468
ThemovementsinfinancialassetsatFVOCIforthe1stquarterendedMarch31,2023andyearended December31,2022follow:
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
MovementsinthenetunrealizedgainsonfinancialassetsatFVOCIinequityareasfollows:
31-Mar-23 31-Dec-22 (Unaudited) (Audited)
Dividendincomeearnedonitsinvestmentsamountedtonilforboth1st quarterof2023and1st quarter of2022,whileP =0.42millionfortheyearended2022.
Investment in HEDC
On January 31, 1997, the Company entered into a Project Shareholders’ Agreement with five other companies led by Investment and Capital Corporation of the Philippines (ICCP) and Penta Capital Investment Corporation(PCIC) to develop500to600hectaresofrawlandin Hermosa,Bataanintoa new township consisting of industrial estates, residential communities, a golf and country club and a commercialcenter.
The fair valueofinvestmentinHEDCisdeterminedusingtheadjustednetassetvaluemethod wherein the assets of HEDC consisting mainly of parcels of land are adjusted from cost to its fair value. The valuation of the parcels of land was performed by a SEC-accredited independent appraiser as at December31,2022. ThismeasurementfallsunderLevel3inthefairvaluehierarchy.
Fairvaluemeasurementdisclosuresforthedeterminationoffairvalueofunquotedequitysecuritiesare providedinNote14.
9. Receivables
31-Mar-23 31-Dec-22 (Unaudited) (Audited) Dividendsreceivable P=477,387 P =477,387
10. OtherIncome
31-Mar-23 31-Dec-22 31-Dec-21 (Unaudited) (Audited) (Audited)
Management income pertains to accounting, legal and administrative services rendered by the CompanytoHEDC.
Rentalincomepertainstorentalsearnedfromthetwo(2)parkingslotsownedbytheCompanywhich are classified as investment property. As of March 31, 2023 and December 31, 2022, the cost of the fullydepreciatedparkingslotsamountedtoP =207,598.
The fair value of the investment property ranges from P =800,000 to P =1,000,000 per slot as of March31,2023andDecember31,2021,respectively. Thishasbeendeterminedonthebasisofrecent sales of similar properties in the same area as the investment property and taking into account the economicconditionsprevailingatthetimethevaluationwasmade.Thesignificantunobservableinputs used in determining the fair value include the location, size, shape, and highest and best use (Level 3 - Significant unobservable inputs). There are no related costs for the operation of the investment property.
11. RelatedPartyTransactions
Relatedpartyrelationshipexistswhenonepartyhastheabilitytocontrol,directly,orindirectlythrough one or more intermediaries, the other party or exercise significant influence over the other party in makingfinancialandoperatingdecisions. Suchrelationshipalsoexistsbetweenand/oramongentities, which are under common control with the reporting enterprises and its key management personnel, directors,oritsshareholders. Inconsideringeachrelatedpartyrelationship,attentionisdirectedtothe substanceoftherelationship,andnotmerelythelegalform.
TheCompanyinitsregularconductofbusinesshasenteredintothefollowingtransactionswithrelated partiesconsistingofreimbursementofexpensesandmanagementandaccountingservicesagreements.
The Company’s financial statements include the following amounts resulting from transactions with relatedparties:
31-Mar-23 (Unaudited)
* included as part of accounts
31-Dec-22 (Unaudited)
Affiliate:
and10)
* included as part of accounts payable and accrued expenses
TheCompanyhasnoemployeesandPERCprovidesadministrativesupporttotheCompany.
On April 1, 2022, the Company entered into a management agreement with PERC. Under the said agreement, PERC provides the Company management and technical services including compliance, administration and supervision of operations, finance, accounting, and treasury, and general services. The agreement took effect on the date of execution of the management agreement and may be terminatedbyeither partyupon 30 daysofprior written notice.The Companypays amonthly service fee amounting to P =35,000, exclusive of VAT. Furthermore, PERC also charges direct costs as an incidence of the performance of services such as rent of office space and other office-related costs. Therefore, no compensation and short-term benefits for key management personnel were charged in profitorlossforthequarterendedMarch31,2023and2022andyear endedDecember31,2022.
Terms and conditions of transactions with related parties
Outstandingbalancesatyear-endaretobesettledincash. Therehavebeennoguaranteesprovidedor receivedforanyrelatedpartyreceivablesorpayables.
12. FinancialInstruments
CategoriesandFairValuesofFinancialInstruments
The methods and assumptions used by the Company in estimating the fair values of the financial instrumentsare:
Cash and cash equivalents and receivables
Due to the short-term nature of the instruments, carrying amounts approximate fair values as of the reportingdate.
Government securities
Fairvaluesaregenerallybasedonquotedmarketpricesatreportingdate. ThisisunderLevel1category ofthefairvaluehierarchy.
Equity securities
For quoted equity securities, fair values are based on published quoted prices. This is under Level1categoryofthe fairvaluehierarchy.
For unquoted equity securities, fair values are determined using the adjusted net asset value method which involves directly measuring the fair value of the assets and liabilities of the investee company. ThismeasurementfallsunderLevel3inthefairvaluehierarchy.
Accounts payable and accrued expenses
Carryingvaluesapproximatefairvaluesduetotheirshort-termnature.
Descriptionofsignificantunobservableinputstovaluation:
The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at March 31, 2023 and December31,2022areshownbelow:
Valuation technique Significant unobservableinputs Range
Unquotedequity sharesat FVOCI
Adjustednetasset valuemethod Pricepersquaremeter
The appraised value of the land was determined using the market approach which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets. Net adjustment factors arising from external and internal factors (i.e. location, size/shape/terrain, and development) affecting the subject properties as compared to the marketlistingofcomparablepropertiesrangesfrom-20%to-10%.Significantfavorable(unfavorable) adjustments to the aforementioned factors based on the professional judgment of the independent appraisers would increase (decrease) the fair value of land, in return the fair value of the unquoted financialasset.
FinancialRiskManagementObjectivesandPolicies
TheCompany’sfinancialinstrumentscomprisecashandcashequivalents,receivables,financialassets andaccountspayableandaccruedexpenses. Themainpurposeofthesefinancialinstrumentsistofund its own operations and capital expenditures. The BOD reviews and approves policies for managing these risks. Also, the Audit Committee of the BOD meets regularly and exercises oversight role in managingtheserisks.
Financial Risks
The main financial risks arising from the Company’s financial instruments are liquidity risk, market riskandcreditrisk.
Thetablesbelowsummarize thematurityprofileoftheCompany’sfinancialassetsandliabilitiesas ofMarch31,2023andDecember31,2022basedoncontractualundiscountedpayments. 31-Mar-23 (Unaudited)
31-Mar-23 (Unaudited)
31-Dec-22 (Audited)
Market risk
Marketriskistheriskoflossonfutureearnings,onfairvaluesoronfuture cashflowsthatmayresult fromchangesinmarketprices. The valueof afinancialinstrumentmaychangeasa resultofchanges in interest rates, foreign currency exchanges rates, commodity prices, equity prices and other market changes. TheCompany’smarketriskemanatesfromitsholdingsindebtandequitysecurities.
The Company closely monitors the prices of its debt and equity securities as well as macroeconomic and entity-specific factorswhichcould directly or indirectly affectthe prices of theseinstruments. In case of an expected declineinits portfolio of equitysecurities,theCompanyreadilydisposesortrades thesecuritiesforreplacementwithmoreviableandlessriskyinvestments.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. With respect to credit risk arising from cash and cash equivalents, receivables, financial assets at FVTPL and financial assets at FVOCI, the Company’s exposure to credit risk is equal to the carrying amount of these instruments. The Company limits its creditriskontheseassetsbydealingonlywithreputablecounterparties.
For cash and cash equivalents and quoted government securities, the Company applies the low credit risksimplificationwheretheCompanymeasurestheECLsona12-monthbasisbasedontheprobability of default and loss given default which are publicly available. The Company also evaluates the credit rating of the bank and other financial institutions to determine whether the debt instrument has significantlyincreasedincredit riskandtoestimateECLs.
The Companyconsidersitscashand cashequivalentsandquotedgovernment securitiesas high grade since these are placed in financial institutions of high credit standing. Accordingly, ECLs relating to thesedebtinstrumentsroundstonil.
The Company’s receivables are aged current as of March 31, 2023 and December 31, 2022. No receivablesareconsideredcredit-impaired.
As of March 31, 2023 and December 31, 2022, the carrying values of the Company’s financial instrumentsrepresentmaximumexposure asofreportingdate.
Thetablebelowshowsthecomparativesummaryofmaximumcreditriskexposuresonfinancial instrumentsasofMarch31,2023andDecember31,2022:
assetsatFVTPL:
assetsatamortizedcost:
atFVOCI:
The following tables show financial instruments recognized at fair value as of March 31, 2023 and December31,2022,analyzedbetweenthose whosefairvaluesare basedon:
1. quotedpricesinactivemarketsforidenticalassetsorliabilities(Level1);
2. thoseinvolvinginputsotherthanquotedpricesincludedinLevel1thatareobservablefortheasset orliability,eitherdirectlyorindirectly(Level2);and
3. those with inputs for the asset or liability that are not based on observable market data (unobservable inputs)(Level3).
31-Mar-23 (Unaudited)
31-Dec-22 (Audited)
TherewerenotransfersbetweenLevel1andLevel2fairvaluemeasurementsandnotransfersintoand outofLevel3fairvaluemeasurementsinMarch31,2023andDecember31,2022.
13. CapitalManagement
The primary objective of the Company’s capital management is to ensure that it maintains a strong creditratingandhealthycapitalratiosinordertosupportitsbusinessandmaximizeshareholders’value.
TheCompanymanagesitscapitalstructureandmakesadjustmentstoit,inlightofchangesineconomic conditions. Tomaintainoradjustthecapitalstructure,theCompanymayadjustthedividendpayment toshareholdersorissuenewshares.
TheCompanymonitorscapitalusingadebt-to-equityratio,whichistotaldebtdividedbytotalequity. TheCompanyincludeswithintotaldebtthefollowing:accountspayable andaccruedexpenses. Total equityincludescapitalstock,netunrealizedgainsonfinancialassetsatFVOCIandretainedearnings.
TheCompanyhasnoexternallyimposedcapitalrequirementsasofMarch31,2023andDecember31, 2022.
The table below demonstrates the debt-to-equity ratios of the Company as of March 31, 2023 and December31,2022:
There were no changesinthe objectives, policies or processesfor the 1st quarter 2023 and yearended December31,2022.
TheCompanyhasretainedearningsavailablefordividenddeclarationamountingtoP =92.26millionas ofMarch31,2023.
TheCompany’strackrecordofcapitalstockisasfollows:
Listingdate-May7,1974
September28,1992 1:2.125stockrightsoffering
20,
Changeinparvaluefrom P =0.01/sharetoP =1.00/share (56,925,000,000) August14,1997 Quasi-reorganization (412,000,000) 1/share October5,1998
14. BasicandDilutedEarningsPerShare
ThecomputationsoftheCompany’sbasic earningspershareareasfollows: 31-Mar-23 (Unaudited) 31-Mar-22 (Unaudited) 31-Dec-22 (Audited)
The Company has no potentially dilutive common stock as of March 31, 2023, March 31, 2022, and December31,2022.
15. Others
a) The Interim Financial Report as of March 31, 2023 is in compliance with generally accepted accountingprinciples(alleffectivestandardsandinterpretationsunderPFRS).
b) The same policies and methods of computation were followed in the preparation of the interim financialreportcomparedtotheDecember31,2022AuditedFinancialStatements.
c) Therearenounusualitemoritemsthataffectedtheassets,liabilities,equityandcashflowsofthe March31,2023FinancialStatements.
d) Thereare no material events happened subsequent tothe endof March 31, 2023 that might affect theresultofsaidfinancialstatements.
e) Earnings per share is presented in the face of the unaudited statements of income for the period endedMarch31,2023andMarch31,2022.
f) No significant events happened during the quarter that will affect the March 31, 2023 Unaudited FinancialStatements.
g) There are no seasonal aspects that had a material effect on the financial condition or results of operationof theCompany.
h) There is no foreseeable event that will trigger direct or contingent financial obligation that is materialtotheCompany,includinganydefaultofacceleratedobligation.
i) There are no material off-balance sheet transactions, arrangements, obligations and other relationshipoftheCompanywithotherentitiesorpersonsthatwerecreatedduringtheperiod.
j) Therearenochangesinestimatesofamountsreportedinpriorperiodsofthecurrentfinancialyear orchangesinestimatesofamountsreportedinpriorfinancialyearsthatcouldhavematerialeffect inthecurrentperiod.
k) Therearenoissuances,repurchases,repayments,repaymentsofdebtandequitysecurities.
l) We are not required to disclose segment information in our financial statements because we only haveonesourceofrevenue.
m) Therearenochangesinthecompositionoftheissuerduringtheinterimperiod,includingbusiness combinations, acquisitionor disposal ofsubsidiariesand long term investments, restructuringand discountingoperationsduringtheperiod.
MANAGEMENTDISCUSSIONANDANALYSISOFFINANCIALCONDITIONAND
1.FinancialCondition(AsofMarch31,2023andMarch31,2022)
LIABILITIESANDEQUITY
TotalassetsamountedtoP=679.343millionandP=582.163millionasofMarch31,2023andMarch31,2022, respectively.
TheCompany’scashandcashequivalentsamountedtoP =99.500millionasofMarch31,2023andP =99.783 millionasofMarch31,2022.The0.28%netdecreasewasduetopaymentforworkingcapitalrequirements duringtheperiod.
FinancialassetsatfairvaluethroughprofitorlossamountedtoP=35.494millionandP =39.371millionasof March31,2023andasofMarch31,2022,respectively.The9.85%decreaseisduetodownwardmovement ofmarketvaluesofinvestmentsinstockstradedatPSE.
Receivables account as of March 31, 2023 amounted to P =1.275 million compared toP =0.370 million as of March 31, 2022. The 244.26% net increase mainly refers to interest receivable from money market placementsanddividendreceivablefromvariousstockinvestmentsduringtheperiod.
Other current assets consist of prepayments, prepaid taxes and input tax carry-overs. This amounted to P =1.519 million and P =1.339 million as of March 31, 2023 and March 31, 2022, respectively. The 13.40% netincreasemainlyrepresentsadditionalinputtaxesrecordedduringtheperiod.
FinancialassetsatFVOCIasofMarch31,2023amountedtoP =541.556millionandP =441.299millionasof March 31, 2022. The 22.72% net increase is due to the revaluation of the investment in HEDC at fair marketvalueasofDecember2022.
Accounts payable and accrued expenses amounted to P =1.048 million and P=0.388 million as of March 31, 2023 and March31, 2022,respectively. The 170.15% increase is due is attributable to additional accruals duringtheperiod.
TotalStockholders’EquityasofasofMarch31,2023amountedtoP =617.109millionorP =3.786bookvalue pershareandP =536.125millionorP =3.289bookvaluepershareasofMarch31,2022.
2.ResultsofOperations(FortheQuarterendedMarch31,2023andMarch31,2022)
TheCompanypostedanetlossofP =0.850millionor(0.005)losspershareasofMarch31,2023compared tonetincomeofP =3.097millionasofMarch31,2022.
TheCompany’snetlossonfairvaluechangesonfinancialassetsatFVTPLamountedtoP =1.334millionas ofMarch31,2023,whilenetgainonfairvaluechangesonfinancialassetsatFVTPLamountedtoP =3.259 million as of March 31, 2022, respectively. The net decrease pertains to the downward movement of investmentsinstocksduringtheperiod.
InterestincomeamountedtoP =0.958millionandP =0.154millionasofMarch31,2023andMarch31,2022, respectively.Theincreaseisattributableto higherinterestratesfromMoneyMarketPlacementduringthe period.
Other income amounted to P =0.080 million and P =0.085 as of March 31, 2023 and March 31, 2022 respectively.ThispertainstotherentalincomefromtheCompany’sownedparkingspaceinTektiteTowers andmanagementservicesrenderedtoHEDC.
GeneralandadministrativeexpensesamountedtoP =0.553millionandP =0.400millionasofMarch31,2023 andMarch31,2022,respectively.The38.17%increaseaccountsforhigherexpenseduringtheperiod.
Provisionforincometax asof March 31, 2023 and 2022 pertains to the Minimum Corporate Income Tax (MCIT) of 1% set-up. The Company set-up MCIT rather than the 25% regular tax because most of its incomearefromunrealizedmarketchangesofinvestmentsandpassiveincomesubjecttofinaltax.
3.FinancialConditions(AsofMarch31,2023andDecember31,2022)
LIABILITIESANDEQUITY
Total assets amounted to P =679.343 million as of March 31, 2023 compared to P =679.336 million as of December31,2022.
TheCompany’scashandcashequivalentsamountedtoP =99.500millionasofMarch31,2023comparedto P =99.386millionasofDecember31,2022.The0.11%slightincreasepertainscollectionofreceivablefrom HEDCforthemanagementfee,netofpaymentofworkingcapitalrequirements.
FinancialassetsatFVTPLaccountasofMarch31,2023amountedtoP=35.494millioncomparedtoP=36.828 millionas of December31,2022. The3.62% decreasepertainsto downwardmovement ofmarketvalues ofinvestmentsinstockstradedatPSEduringtheperiod.
Receivables account as of March 31, 2023 amounted to P =1.275 million compared toP =1,066 million as of December 31, 2022. The 19.60% increase pertains to interest receivable from money market placements duringtheperiod.
Other current assets as of March 31, 2023 amounted to P =1.519 million compared to P =1.446 million as of December 31, 2022. The increase is due to additional input taxes and other assets recorded during the period.
Increaseof0.18%infinancialassetatFVOCIpertainstotheincreaseinmarketvalueofBenguetCorp.
Accounts payable and accrued expenses amounted to P =1.048 million and P=1.138 million as of March 31, 2023andDecember31,2022,respectively.The7.87%netdecreaseaccountsforthesettlementofpayables andaccrualsduringtheperiod.
TotalStockholders’ EquityasofMarch31,2023amountedtoP =617.109millionorP3.786bookvalueper sharecomparedtoP =617.013millionor P3.785bookvalueasofDecember31,2022.
Exceptforitemsdiscussedabove,there arenomorechangesinthefinancialstatementsthatwillreachthe materialitythresholdof5%.
KEYPERFORMANCEINDICATORS(KPI):
The following liquidity and profitability ratios indicate acceptable levels of financial condition and performanceofthecompany:
Liabilities Debt-equityratio0.0017:10.0007:10.0018:1Liabilities/TotalStockholders'Equity
N/A88.54%37.61%NetIncome/TotalRevenue Assetturnover 0.0015:10.006:10.0047:1Revenue/TotalAssets
Earnings/(loss)pershare(0.005)0.0190.007NetIncome(Loss)/Issued&Outstanding Shares
There is a decrease in the Company’s current ratio as of March 31, 2023 as compared to March 31, 2022 mainlyduetothedecreaseincurrentassetsandincreaseincurrentliabilities.
ThereisanincreaseintheCompany’sdebt-equityratioasofMarch31,2023comparedtoMarch31,2022 duetoincreaseinstockholders’equityduringtheperiod.
Assetturnoverforthe1st quarter2023ishighercomparedtothe1st quarter2022duetodecreaseinrevenues duringtheperiod.
Please refer to Financial Soundness Indicators for additional KPIs
DiscussionofindicatorsoftheCompany’slevelofperformance
ReceivableManagement
TheCompany’sreceivablesreportedintheStatementsofFinancialPositionincludethefollowing:
1. CashDividendsfromvariousstockinvestments.
2. Accrued Interest Receivable fromtheCompany’sshortterminvestmentsasofMarch31,2023of whichtheCompanywillreceiveuponmaturity.
Furthermore, the Company manages its receivables by monitoring on a regular basis to ensure timely executionofnecessaryinterventionsefforts.
LiquidityManagement
The Company has substantial investments in shares of stock which are not listed in the Philippine Stock Exchange and may not be readily convertible to liquid assets necessary to meet any potential additional liquidity requirements of the Company. Investment in unquoted securities included in financial assets at FVOCIamountedtoP =507.957millionasofMarch31,2023andDecember31,2022.
Managementof liquidity requires aflow andstockperspective. Constraint such as political environment, taxation,foreignexchange,interestratesandotherenvironmentalfactorscanimposesignificantrestrictions onfirmsinmanagementoftheirfinancialliquidity.
Seafront has considered the above factors and paid special attention to its cash flow management. The Companyidentifiesallitscashrequirementsforacertainperiodandinvestsunrestrictedfundstomaximize interestearnings,i.e.moneymarketplacements.
RateofReturnofEachStockholder
The Companyhasnoexistingdividend policy. However,theCompanyintendstodeclaredividendsinthe futureoutofitsunrestrictedretainedearningsinaccordancewiththeCorporationCodeofthePhilippines.
CostReductionEffort
In order to minimize expenses, the Company has engaged the services of PetroEnergy Resources Corporationtohandleitslegal,administrative,accountingandtreasuryfunctions.
Financialdisclosuresinviewofthecurrentfinancialcondition
The Company is still on wait-and-see attitude with respect to investing in other businesses. It has no intentionofincreasingitscapitalstock. Thecurrentmarketdoesnotwarrantanaggressivestancetowards investments. The Company is generating its funds from interest earnings on money market placements.
Therearenoknowntrends,demands,commitments,eventsoruncertaintiesthatwillhave materialimpact ontheCompany’sliquidity.
ThePhilippineeconomyisstillaffectedbyeconomiccrisis,resultinginfluctuatingforeignexchangerates and increase stock market uncertainties. Uncertainties including the impact of the COVID 19 pandemic remainastowhetherthecountrywillcontinuetobeaffectedbyregionaltrendsinthecomingmonths. The financial statements do not include any adjustments that might result from these uncertainties. Related effectswillbereportedinthefinancialstatements,astheybecomeknownandestimable.
Assess the financial risks exposures of the Company particularly on currency, interest credit, and market and liquidity risks. If any change thereof would materially affect the financial condition and results of operation of the Company, provide a discussion in the report on quantitative impact or such risks and includeadescriptionof enhancement inthecompany’sriskmanagementpoliciestoaddressthesame.
The Company’s principalfinancialinstrumentsinclude cashandcash equivalents,tradingandinvestment securities (financial assets at FVTPL) andreceivables.The main purpose of these financial instruments is tofundtheCompany’sworkingcapitalrequirements.
FinancialRiskManagementObjectivesandPolicies
Please refertoNote12
PlanofOperations
A. InvestmentinFinancialassetsatFVOCInottradedinthemarket(InvestmentinHEDC)
AsofMarch31,2023andMarch31,2022,theCompanyholds11.33%interestinitsinvestmentinHermosa DevelopmentCorporation(HEDC).
TheManagementofHEDCistakingalleffortstosellitssaleableproperty,proceedsofwhichwillbeused to finance the development of the undeveloped portions of the property. It is also planning to expand the Hermosa Ecozone Industrial Park (HEIP) site of 229 hectares to be arrived out of what was previously earmarkedforleisureandresidentialarea.
B. InvestmentinFinancialAssetsatFVTPLandFVOCItradedinthemarket
The Company will continue to closelymonitor the prices of its securities as well as those specific factors which could directly or indirectly affect the prices of these instruments. Because such investments are subject to price risk due tochanges in marketvalues, an expected decline in the portfolio will prompt the Companytodispose ortrade thesecurities for replacementwithmore viableandlessriskyinvestmentsin thefuture.
WiththeCompany’scurrentcashposition,itcansustainitsneedsforoperatingexpenses.Theonlypossible materialcommitmentisacashcallfromHEDC,ofwhichisnotexpectedtocallinthenexttwelvemonths. Thus,itdoesnotintendtoraiseadditionalfunds.
Aside from the Company’s investments stated above, there are noother researches or development plans, andpurchaseorsaleofsignificantequipmentthattheCompanyexpectsperform.
PARTII-OtherInformation
The Company has no other information that need to be disclosed other than disclosures made under SEC Form17-C(ifany).
SEAFRONTRESOURCESCORPORATION
SUPPLEMENTARYINFORMATIONANDDISCLOSURESREQUIREDONSRC RULE68ASAMENDED MARCH31,2023
Philippine Securities and Exchange Commission (SEC) issued the amended Securities Regulation Code RuleSRCRule68whichconsolidatesthetwoseparate rulesandlabeledintheamendmentas“PartI”and “Part II”,respectively. Italsoprescribedthe additionalinformationand schedulerequirements forissuers ofsecuritiestothepublic.
BelowaretheadditionalinformationandschedulesrequiredbyRevisedSRCRuleNo.68,thatarerelevant totheCompany. ThisinformationispresentedforpurposesoffilingwiththeSECandisnotrequiredpart ofthebasicfinancialstatements.
ScheduleA.FinancialAssets
BelowisthedetailedscheduleoftheCompany’sfinancialassetsasofMarch31,2023:
NameofIssuingEntityandAssociationof EachIssue
FVPL
Numberof Sharesor Principal Amountof BondsandNotes
AmountShown inthe Statementof
NameofIssuingEntityandAssociationof EachIssue
FVOCI
Numberof Sharesor Principal Amountof Bondsand Notes AmountShown inthe Statementof
Unquoted: HermosaEcozoneDevelopment Corporation
Thefairvalueforfinancialinstrumentstradedinactivemarketsatthereportingdateisbasedontheirquoted market price without any deduction for transaction costs. For securities in which current bid and asking
pricesarenotavailable,thepriceofthemostrecenttransactionprovidesevidenceofthecurrentfair value as long as there has not been a significant change in economic circumstances since the time of the transaction.
For unquotedfinancial securities, the Company uses its judgment to select the most appropriate valuation methodology to value its unquoted equity investments and make assumptions that are mainly based on market conditions existing at each reporting period. It involves directly measuring the fair value of the assets andliabilitiesofthe investee company,asmainly determinedbythe Company’s external appraiser. Assetsoftheinvesteecompanyconsistmainlyofparcelsoflandforsalewhichisadjustedtoitsfairvalue.
Schedule B. Amounts Receivable from Directors, Officers, Employees and Principal Stockholders (Other thanRelatedParties)
The Company has no outstanding receivables from its directors, officers, employees and principal stockholdersasofMarch31,2023andDecember31,2022.
Schedule C. Amounts Receivable from/Payable to Related Parties which are Eliminated during the ConsolidationofFinancialStatements
Notapplicable.
Schedule D.Long-termDebt
TheCompanyhasnooutstandinglong-termdebtasofMarch31,2023andDecember31,2022.
Schedule E.IndebtednesstoRelatedParties(LongTermLoansfromRelatedCompanies)
The Company has no long-term indebtedness to related parties as of March 31, 2023 and December 31, 2022.
Schedule F.GuaranteesofSecuritiesofOtherIssuers
The Company doesnothaveguaranteesofsecuritiesofotherissuers as of March31, 2023and December 31,2022.
ScheduleH.CapitalStock
