SEC Form 17-A: Annual Report - the solid group inc website

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7. TRADE AND OTHER RECEIVABLES
This account is composed of the following:
Notes 2012 2011
Current:
Trade receivables 27.2 P 980,564,213 P 759,929,905
Advances to suppliers 26.6 223,559,332 277,211,254
Loans receivables 26.4, 26.7 45,836,453 64,831,149
Due from related parties 26.1, 26.6 2,734,223 75,770,473
Other receivables 66,287,945 76,425,196
1,318,982,166 1,254,167,977
Allowance for impairment ( 31,512,861) ( 117,015,673 )
1,287,469,305 1,137,152,304
Non-current:
Trade receivables
Loans receivables 26.4, 26.7
26,168,353
145,381,293
47,852,284
151,801,578
Cash surrender value of
investment in
life insurance 14 458,908,456
630,458,102
470,231,669
669,885,531
P1,917,927,407 P 1,807,037,835
Trade receivables include amounts due from the Group’s real estate buyers arising from
the sale of industrial lots and condominium units. The title to the real estate properties
remain with the Group until such time that the Group fully collects its receivables from
the real estate buyers. Trade receivables from sale of condominium units are measured
at amortized cost and bear effective interests ranging from 9.8% to 18.0% depending on
the terms of payment.
Advances to suppliers mainly pertain to the advance payments received by Solid Trading
Limited (STL) for My Solid’s future purchase of inventories (see Note 26.6), various
contractors for the construction of ZTC’s Tri Towers (see Note 11) and various suppliers
for CBHI’s acquisition of supplies.
Interest rates on loans receivables range from 5.0% to 30.0% in 2012 and 2011. Certain
finance receivables are secured by real estate properties and shares of stock of the
borrowing companies which are owned by a related party (see Note 26.4).
Cash surrender value of investment in life insurance pertains to insurance policies
purchased by BRL for certain directors of the Parent Company. The investment in life
insurance is accounted for under the cash surrender value method. Under this method,
the initial cash surrender value of the insurance policies is recognized immediately in the
consolidated statements of income (see Note 19.1). The difference between the initial
cash surrender value and the premiums paid amounting to P1.2 million in 2012 and
P5.3 million in 2011 represents insurance service fees which are recorded as Prepaid
insurance under the Other Non-current Assets account and is amortized over a period
of ten years (see Note 14).
The cash surrender value of the investment in life insurance is used as collateral for
interest-bearing loans obtained by BRL (see Note 15).