2011 Annual Report - the solid group inc website

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68 28.7 Transactions with Solid Company Limited (Hong Kong) Mytel, My Solid and SBC purchases mobile phones from Solid Company Limited (Hong Kong), a related party owned by the Parent Company’s majority stockholders in 2011 and 2010. Total purchases amounted to P2.5 billion in 2011, P898.3 million in 2010 and P547.6 million in 2009 and are presented as part of Cost of Sales in the consolidated statements of income (see Note 19.1). Outstanding liabilities relating to these purchases amounted to P372.3 million as of December 31, 2011 and P1.0 million as of December 31, 2010. In 2011, My Solid made advances to Solid Company Limited (Hong Kong) for its future purchase of mobile phones. The advances were later assigned to Mytel after it was issued by the Bureau of Customs (BOC) with a Certificate of Accreditation as Importer in July 2011. The outstanding advances amount to P219.4 million as of December 31, 2011 and is presented as part of Advances to supplier under Trade and Other Receivables account in the 2011 consolidated statement of financial position. In 2008, BRL granted an unsecured, interest-bearing loan denominated in Chinese yuan renminbi to Solid Company Limited (Hong Kong) amounting to P120.8 million which matures on March 1, 2011. The loan bears an annual interest rate of 6% payable annually with any unpaid interest compounded annually at the same rate of the principal amount. In 2009, the parties agreed to amend the loan agreement reducing the annual interest rate to 4% and making the loan payable in U.S. dollar. In 2011, the parties agreed to increase the annual interest rate to 5% and extend the loan for another year. The amount of loan amounting to P111.3 million as of December 31, 2011 and 2010 is presented as part of Finance Receivables under the Trade and Other Receivables account in the consolidated statements of financial position (see Note 7). 28.8 Loan Availments In 2011, Fil-Dragon obtained loans from companies that are owned by Solid Company Limited (Hong Kong) amounting to RMB58.1 million (P404.1 million). These bear interest at prevailing market rates per annum ranging from and 6.0% to 10.0% in 2011. The liabilities are unsecured and payable on demand. The amount of loan is presented as part of Interest-bearing loans in the 2011 consolidated statement of financial position. Borrowing cost incurred in 2011 relating to these loans amounted to RMB1.5 million (P9.7 million) and are capitalized as part of Real Estate Inventories (see Note 16). 28.9 Financial Guarantees Fil-Dragon obtained a secured interest-bearing loan amounting to RMB92.9 million (P615.7 million) as of 2010 from a local bank in the PRC to support the construction of the Golden Hill Project. In relation to this, Solid Industrial (Shenzhen) Co. Ltd., a related party owned by SGI’s majority stockholders and an individual who holds 30% ownership interest in Fil-Dragon entered into a guarantee contract with the local bank whereby it guarantees that the principal amount and related interests will be paid as the payments fall due. The guarantee contract was terminated during the year as Fil-Dragon fully paid the related obligation, which is two years subsequent to the effectivity of the loan agreement obtained by Fil-Dragon (see Note 16).
69 28.10 Key Management Personnel Compensation Salaries and other benefits given to key management personnel for 2011, 2010 and 2009 are as follows (see Note 23.1): 2011 2010 2009 Short-term benefits P 33,992,630 P 34,456,347 P 23,959,255 Post-employment benefit - 884,848 1,447,878 P 33,992,630 P 35,341,195 P 25,407,133 29. SIGNIFICANT CONTRACTS AND AGREEMENTS 29.1 Memorandum of Understanding with SPI On July 1, 2003, SE Corp. entered into a Memorandum of Understanding (MOU) with SPI for network support for SPI and Aiwa products. Under the MOU, SPI authorized the SE Corp. to perform in-warranty and out-of-warranty services to customers in the Philippines for a fee equivalent to a certain percentage of SPI’s annual sales. In-warranty services shall be rendered free of charge to customers. The actual cost of replacement parts related to in-warranty services shall be shouldered by SPI. Also, SPI agrees to pay the SE Corp. network support fees equal to 1% of net sales for SPI products and 1% or P50,000 per month whichever is higher for Aiwa products. In the first quarter of 2009, SE Corp. and SPI agreed to lower the network support fees to 0.45% of SPI’s net sales. Subsequently, SE Corp. and SPI agreed that network support fees shall be fixed at P1.25 million per month effective April 2009. Management believes that the MOU continues to be effective unless revoked by any of the parties. The breakdown of network support fees and in-warranty service fees are shown below. Amounts of Transactions Outstanding Balances 2011 2010 2009 2011 2010 SPI Products P 56,652,858 P 43,665,418 P 37,536,329 P 3,027,479 P 3,196,959 AIWA Products - - 601,080 - - P 56,652,858 P 43,665,418 P 38,137,409 P 3,027,479 P 3,196,959 Network support fees and in-warranty services recognized are presented as part of Rendering of Services in the consolidated statements of income. The outstanding receivables arising from these transactions are included as part of Trade and Other Receivables in the consolidated statements of financial position (see Note 7).
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Table of Contents Message to Stockh
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Operations Review and Prospects 201
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Real Estate IMPROVING VALUATIONS Ou
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Board of Directors Susan L. Tan Cha
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10 SOLID GROUP INC. ANNUAL REPORT 2
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- 2 - Notes: (a) (b) (c) (d) (e) (f
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- 4 - (b) Presentation of Consolida
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- 6 - (iv) 2010 Annual Improvements
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- 8 - (c) Effective Subsequent to 2
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- 10 - (vii) Consolidation Standard
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- 14 - The Group’s financial asse
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- 16 - Land and land development co
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Page 42 and 43: - 24 - Actuarial gains and losses a
Page 44 and 45: - 26 - 2.22 Earnings per Share Basi
Page 46 and 47: - 28 - (f) Provisions and Contingen
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Page 50 and 51: - 32 - 4.3 Intersegment Transaction
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Page 54 and 55: - 36 - The net cash flows attributa
Page 56 and 57: - 38 - A reconciliation of the allo
Page 58 and 59: - 40 - A reconciliation of the allo
Page 60 and 61: - 42 - 12. REAL ESTATE INVENTORIES
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Page 66 and 67: 48 Notes 2011 2010 Non-current: Ref
Page 68 and 69: 50 The changes in the Reserve for W
Page 70 and 71: 52 19.2 Cost of Services The follow
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Page 74 and 75: 56 23.2 Post-employment Benefit The
Page 76 and 77: 58 The amount of post-employment be
Page 78 and 79: 60 The reconciliation of tax on pre
Page 80 and 81: 62 The components of net deferred t
Page 82 and 83: 64 25.2 Revaluation Reserves The co
Page 84 and 85: 66 In 2011 and 2010, Mytel sold mob
Page 88 and 89: 70 29.2 Distributorship Agreement w
Page 90 and 91: 72 30.7 Others There are other comm
Page 92 and 93: 74 (b) Trade and Other Receivables
Page 94 and 95: 76 32.2 Fair Value Hierarchy The ta
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