EXECUTIVE SUMMARY

INTRODUCTION

The Anglo Ventures Corporation (the Company) is one of the 14 Coconut Industry
Investment Fund (CIIF) Holding Companies. It was incorporated and registered with the
Philippine Securities and Exchange Commission (SEC) on August 12, 1983, primarily to
serve as a holding company for the shares of stocks of the CIIF in San Miguel Corporation
(SMC), referred to as the CIIF Block of SMC shares.

The Company’s stockholders include the following corporations: Granexport

Manufacturing Corporation (GMC); San Pablo Manufacturing Corporation (SPMC);
Legaspi Oil Company, Inc. (LegOil); Iligan Coconut Oil Industries, Inc. (ILICOCO);
Southern Luzon Coconut Oil Mill, Inc. (SOLCOM); and Cagayan de Oro Oil Company, Inc.
(CagOil), collectively referred to as the CIIF Oil Mills Group (OMG). The Company is a
Government-Owned and Controlled Corporation (GOCC).

On January 24, 2012, the Supreme Court (SC) in the cases entitled: Philippine Coconut
Producers Federation, Inc. (COCOFED), et al., vs. Republic of the Philippines (ROP),
G.R. Nos. 177857-58 and Danilo S. Ursua vs. ROP, G.R. No. 178193, ruled that the CIIF
OMG, the 14 CIIF Holding Companies, and the CIIF Block of SMC shares are owned by
the Philippine Government to be used only for the benefit of all the coconut farmers and
for the development of the coconut industry. This ruling was later reaffirmed by the SC on
September 4, 2012, when it denied with finality the Motion for Reconsideration filed by
the COCOFED.

By virtue of Executive Order (EO) Nos. 179 and 180, both dated March 18, 2015, the
Company’s primary purpose which is to serve as a holding company of the CIIF Block of
SMC shares ceased together with its operation, as the Company was dissolved and
proceeds from the redemption of the CIIF Block of SMC shares, and income, interest, or
profits derived thereto were transferred to the Coco Levy Special Account in the General
Fund (SAGF) with the Bureau of the Treasury (BTr).

On February 26, 2021, Republic Act (RA) No. 11524, or an “Act creating the coconut
farmers and industry trust fund, providing for its management and utilization, reconstituting
for the purpose the Philippine Coconut Authority (PCA) Board and for other purposes”,
was signed into a law.

RA No. 11524 provides, among others, that: (a) within one year upon the effectivity of the
Act, all government agencies, except the BTr, and any person having any coconut levy
asset and/or CIIF in its administration, authority, custody or control which have been finally
declared by the SC as belonging to the government, shall reconvey the title to the ROP,
deliver the stock certificates and other evidence of ownership to the BTr for safekeeping
and transfer all cash and coconut levy assets to the Trust Fund; and (b) all non-cash
coconut levy assets defined in Section 3 of the Act, which are assigned by the Trust Fund
Management Committee (TFMC) to the Designated Disposition Entities (DDEs), shall be
privatized or disposed of subject to the regulatory approvals as required by law within the
period of five years after the effectivity of the Act.

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The accounting and administrative functions of the 14 CIIF Holding Companies are
undertaken by the CIIF OMG under a common management.

FINANCIAL HIGHLIGHTS (In Philippine Pesos)

I. Comparative Financial Position

2020 2019 Decrease

Total assets 49,414,698 49,732,964 (318,266)
Total liabilities 5,126,338 5,427,604 (301,266)
Equity 44,288,360 44,305,360 (17,000)

II. Comparative Financial Performance

2020 2019 Decrease

Total revenue - - -
Total expenses 17,000 21,430 (4,430)
Total comprehensive loss (17,000) (21,430) (4,430)

SCOPE OF AUDIT

The audit covered the examination, on a test basis, of the accounts and financial
transactions of the Company for the period January 1 to December 31, 2020, in
accordance with the International Standards of Supreme Audit Institutions (ISSAIs) to
enable us to express an opinion on the fairness of presentation of the financial statements
for the years ended December 31, 2020 and 2019. Also, the audit was conducted to
assess compliance by the Company with pertinent laws, rules and regulations, as well as
adherence to the prescribed policies and procedures.

AUDITOR’S OPINION

We rendered an adverse opinion on the fairness of the presentation of the financial

statements of the Company because despite it is one of the 14 CIIF Holding Companies
whose primary purpose to serve as a holding company of the CIIF Block of SMC shares
had ceased together with its operation in view of the transfer of the proceeds from the
redemption of the CIIF Block of SMC shares and the income, interest or profits derived
thereto to the Coco Levy SAGF with the BTr, and the 14 CIIF Holding Companies were
dissolved by virtue of EO Nos. 179 and 180, both dated March 18, 2015, the Company’s
financial statements as at and for the years ended December 31, 2020 and 2019 were still
prepared on a going concern basis, instead of on a liquidation basis, as the asset (Due
from Related Parties) of P48.380 million and the liability (Due to Related Parties) of P2.709
million were not yet presented at their realizable/recoverable value and settlement
amount, respectively, and the appropriate disclosures were not yet provided in the notes
to financial statements, contrary to the Philippine Interpretations Committee (PIC)
Question and Answer (Q&A) No. 2009-01 on the interpretations of Paragraph 4.1 of the
Conceptual Framework for Financial Reporting (CFFR) and Paragraph 25 of the Philippine
Accounting Standard (PAS) 1.

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For the foregoing observation which caused the issuance of an adverse opinion, we
recommended that Management instruct the Accountant to:

1.1. Prepare the financial statements using liquidation basis of accounting where the
assets are presented at their realizable values and the liabilities at their settlement
amounts, and provide complete appropriate disclosures in the notes to financial
statements as required in PIC Q&A No. 2009-01 on the interpretations of
Paragraph 25 of PAS 1 and Paragraph 4.1 of the CFFR; and

1.2. Coordinate with the COA Government Accountancy Sector in the preparation of
the financial statements using liquidation basis of accounting, for proper guidance.

OTHER SIGNIFICANT AUDIT OBSERVATION AND RECOMMENDATIONS

2. The full liquidation of the affairs of the Company and the closing of its books of
accounts have not been carried out yet despite its primary purpose as a holding
company of CIIF Block of SMC shares had ceased and the dissolution of the
14 CIIF Holding Companies pursuant to EO Nos. 179 and 180, both dated March
18, 2015. Consequently, the Company even zero income continued to incur
expenses on taxes, licenses, and professional fees, depleting the remaining cash
that should have been reconveyed to the ROP for the benefit of the coconut
farmers and the development of the coconut industry.

2.1. We reiterated our prior year’s recommendation that Management instruct the
Accountant to fast track the preparation of the financial reports and documents
necessary for the closing of the books of accounts of the Company as required
under COA Circular No. 92-375 dated March 9, 1992, using as guide Annex A of
this Report.

2.2. We further recommended that Management coordinate with proper authorities for
the immediate liquidation of the affairs of the Company to prevent incurrence of
additional expenses.

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the five audit recommendations embodied in prior year’s Annual Audit Report, two were
partially implemented and three were not implemented. Details are presented in Part III
of this Report.

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