AXELUM RESOURCES CORP.

AND SUBSIDIARIES
Unaudited Condensed Consolidated Interim Financial Statements
As of September 30, 2023 and December 31, 2022 and
For the Nine-Month Period Ended September 30, 2023 and 2022
 AXELUM RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In Thousands)

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents 5, 21, 22 P1,216,805 P1,292,323
Trade and other receivables - net 6, 21, 22 809,435 799,859
Inventories 7 2,237,832 2,563,828
Prepaid expenses and other current assets 8 533,150 482,584
Total Current Assets 4,797,222 5,138,594
Noncurrent Assets
Property, plant and equipment - net 10 4,172,702 4,183,818
Goodwill and other intangible assets 11 1,711,702 1,707,103
Retirement plan assets - net - 25,146
Other noncurrent assets 9, 21, 22 393,645 390,965
Total Noncurrent Assets 6,278,049 6,307,032
P11,075,271 P11,445,626

LIABILITIES AND EQUITY

Current Liabilities
Loans payable - current portion 12, 21, 22 P836,684 P557,297
Accounts payable and accrued expenses 13, 21, 22 304,567 442,787
Income tax payable 2,884 79,759
Other current liabilities 21, 22 9,263 16,865
Total Current Liabilities 1,153,398 1,096,708
Noncurrent Liabilities
Deferred tax liability -net 52,005 53,642
Loans payable - net of current portion 12, 21, 22 3,112 3,067
Retirement benefit obligation - net 59 -
Other noncurrent liability 21, 22 1,000 1,000
Total Noncurrent Liabilities 56,176 57,709
Total Liabilities 1,209,574 1,154,417
Equity 15
Common stock 4,000,000 4,000,000
Additional paid-in capital 2,938,825 2,938,825
Treasury stock (583,731) (583,731)
Equity reserves 204,226 201,743
Retained earnings 3,306,377 3,734,372
Total Equity 9,865,697 10,291,209
P11,075,271 P11,445,626

See Notes to the Consolidated Financial Statements.

 AXELUM RESOURCES CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED INTERIM
STATEMENTS OF COMPREHENSIVE INCOME
For The Periods Ended September 30, 2023 and 2022
(In Thousands)

For the Nine-Month Period For the Three-Month Period

Ended September 30 Ended September 30
2023 2022 2023 2022
Note Unaudited Unaudited Unaudited Unaudited
SALES - Net 6 P4,276,851 P5,312,471 P1,458,165 P1,937,098
COST OF SALES 16 3,538,942 3,881,448 1,210,631 1,367,964

GROSS PROFIT 737,909 1,431,023 247,534 569,134

SELLING EXPENSES 17 506,852 464,521 168,881 177,870

GENERAL AND ADMINISTRATIVE

EXPENSES 18 362,605 296,806 127,282 84,180
INCOME (LOSS) FROM OPERATIONS (131,548) 669,696 (48,629) 307,084
INTEREST INCOME 5, 9 22,092 5,440 6,057 2,229
INTEREST EXPENSE AND OTHER
FINANCING CHARGES 12 (45,559) (24,125) (15,244) (10,763)
OTHER INCOME - Net 19 (276,932) 266,736 (249,622) 111,722
INCOME (LOSS) BEFORE INCOME TAXES (431,947) 917,747 (307,438) 410,272
INCOME TAX BENEFIT (EXPENSE) - Net 3,952 (200,469) 5,411 (113,840)
NET INCOME (LOSS) (427,995) 717,278 (302,027) 296,432
OTHER COMPREHENSIVE INCOME

Item that may be reclassified to profit or

loss
Gain on exchange differences on translation of
foreign operations 3,311 185,951 5,172 88,655
Income tax expense (828) (46,488) (1,293) (22,164)
2,483 139,463 3,879 66,491

TOTAL COMPREHENSIVE INCOME (LOSS) (P425,512) P856,741 (P298,148) P362,923

Basic and Diluted Earnings (Loss) Per

24 (P0.11) P0.19 (P0.08) P0.08
Common Share

See Selected Notes to Unaudited Condensed Consolidated Interim Financial Statements.

 AXELUM RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands)

Nine Months Ended September 30

Equity Attributable to Equity Holders of the Parent Company
Equity Reserves
Additional Reserve for
Common Paid-in Treasury Translation Retirement Total Equity Retained
Note Stock Capital Stock Reserve Plan Reserve Earnings Total Equity
As at January 1, 2023 P4,000,000 P2,938,825 (P583,731) P135,824 P65,919 P201,743 P3,734,372 P10,291,209
Net loss - - - - - - (427,995) (427,995)
Other comprehensive income - - - 2,483 - 2,483 - 2,483
Total comprehensive loss - - - 2,483 - 2,483 (427,995) (425,512)
As at September 30, 2023 P4,000,000 P2,938,825 (P583,731) P138,307 P65,919 P204,226 P3,306,377 P9,865,697

As at January 1, 2022 P4,000,000 P2,938,825 (P542,977) P49,606 (P2,460) P47,146 P2,750,855 P9,193,849
Net income - - - - - - 717,278 717,278
Other comprehensive income: - - - 139,463 - 139,463 - 139,463
Total comprehensive income - - - 139,463 - 139,463 717,278 856,741

Transaction with owners: 15

Purchase of treasury stock - at cost - - (40,754) - - - - (40,754)
As at September 30, 2022 P4,000,000 P2,938,825 (P583,731) P189,069 (P2,460) P186,609 P3,468,133 P10,009,836
Forward
 AXELUM RESOURCES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

Nine Months Ended September 30

Note 2023 2022
CASH FLOWS FROM
OPERATING ACTIVITIES
Income (loss) before
income tax (P431,947) P917,747
Adjustments for:
Loss on inventory write-
down 19 309,877 -
Depreciation and
amortization 10, 16, 18 202,329 175,708
Interest expense and
other financing charges 12 45,559 24,125
Retirement benefits
expense 16, 18 25,655 21,193
Foreign exchange gains -
net 19 (25,884) (259,249)
Interest income 5, 9 (22,092) (5,440)
Operating income before
working capital changes 103,497 874,084
Changes in operating
assets and liabilities:
Increase in:
Trade and other
receivables 16,364 (121,545)
Inventories 16,119 (686,112)
Prepaid expenses and
other current assets (50,566) (138,141)
Decrease in:
Accounts payable and
accrued expenses (147,240) 86,436
Other current liabilities (7,602) -
Cash used in from operations (69,428) 14,722
Interest received 13,661 10,291
Interest paid (45,063) (25,062)
Income tax paid (72,923) (82,067)
Net cash flows used in operating activities (173,753) (82,116)
 Note 2023 2022
CASH FLOWS FROM
INVESTING ACTIVITIES
Additions to property, plant and equipment 10 (P186,442) (P149,550)
Decrease (increase) in other noncurrent
assets (774) 29,458
Net cash flows used in
investing activities (187,216) (120,092)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from availment of loans 12, 23 2,509,632 2,458,166
Payment of:
Loans payable 23 (2,230,200) (2,003,973)
Contribution to the retirement
fund (450) (869)
Repurchase of own shares 15 - (40,754)
Net cash flows provided by financing
activities 278,982 412,570
EFFECT OF FOREIGN EXCHANGE
RATE CHANGES ON CASH
AND CASH EQUIVALENTS 6,469 120,778
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (75,518) 331,140
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 5 1,292,323 1,155,276
CASH AND CASH EQUIVALENTS AT
PERIOD END 5 P1,216,805 P1,486,416

See Notes to the Consolidated Financial Statements.

 AXELUM RESOURCES CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data, Number of Shares and
Exchange Rates)

1. Reporting Entity

Axelum Resources Corp. (the “Parent Company”) was incorporated and registered
with the Philippines Securities and Exchange Commission (SEC) on August 19,
2010. The Parent Company was established primarily to enter into direct
manufacturing and or toll manufacturing of coconut water and other coconut products
for domestic and international market.

The Parent Company, which started its commercial operations in March 2011, has
corporate life of 50 years pursuant to its articles of incorporation. However, under the
Revised Corporation Code of the Philippines which took effect on February 23, 2019,
the Parent Company shall have a perpetual corporate life.

The Parent Company is a public company under Section 17.2 of the Securities
Regulation Code (SRC) and its shares of stock were officially listed for trading in the
PSE on October 7, 2019. The Parent Company’s IPO consisted of 800 million
common shares comprising of 700 million primary shares (300 million shares out of
unissued capital stock and 400 million shares out of treasury stock) and 100 million
secondary shares, both at an offer price of P5.00 per share (Note 15).

As at September 30, 2023 and December 31, 2022, public float stood at 31.70%.
Shares are held by 29 and 35 stockholders as at September 30, 2023 and December
31, 2022, respectively.

The accompanying consolidated financial statements comprise the financial

statements of the Parent Company and its Subsidiaries collectively referred to as
(“the Group”).

The Parent Company’s principal place of business is located at ICS Building,

Tiano-Montalvan Streets, Cagayan de Oro City.

2. Basis of Preparation

The Group prepared its unaudited condensed consolidated interim financial

statements following the new presentation rules under Philippine Accounting
Standard (PAS) No. 34, Interim Financial Reporting. The unaudited condensed
consolidated interim financial statements of the Group have been prepared in
compliance with Philippine Financial Reporting Standards (PFRS). Accordingly, the
unaudited condensed consolidated interim financial statements do not include all the
information and disclosures required in the annual audited financial statements and
should be read in conjunction with the Group’s annual audited financial statements
as of and for the year ended December 31, 2022, which have been prepared in
accordance with PFRS.

The principal accounting policies and methods adopted in preparing the unaudited
condensed consolidated interim financial statements of the Group are the same as
those followed in the most recent annual audited consolidated financial statements,
except for the changes in accounting policies as explained below.
The unaudited condensed consolidated interim financial statements of the Group
have been prepared on a historical cost basis except for the following items which
are measured on an alternative basis on each reporting date:

Items Measurement Basis

Investment in bonds Fair value
Defined benefit retirement asset (liability) Fair value of the plan assets less
the present value of the defined
benefit retirement obligation

Functional and Presentation Currency

The unaudited condensed consolidated interim financial statements are presented in
Philippine peso, which is the functional currency of the Parent Company. All
financial information is rounded to the nearest thousands, except when otherwise
indicated.

Basis of Consolidation
The unaudited condensed consolidated interim financial statements include the
financial statements of the Parent Company and its subsidiaries. The major
subsidiaries include the following:
Percentage of Ownership
September December Country of
30, 2023 31, 2022 Incorporation
Always Progressive Holdings Pte. Ltd. (APH1) 100 100 Singapore
and its Subsidiary, Red V Foods Corp. (RVF)
Apo Peak Holdings Pte. Ltd. (APH2) 100 100 Singapore
and its Subsidiary, Fiesta Ingredients Australia Pty.
Ltd. (FIA)

A subsidiary is an entity controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity
and has ability to affect those returns through its power over the entity. The Group
reassesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control.

When the Group has less than majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has
power over an investee, including the contractual arrangement with the other vote
holders of the investee, rights arising from other contractual arrangements and the
Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are included in the unaudited condensed
consolidated interim financial statements from the date when the Group obtains
control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting
period as the Parent Company, using uniform accounting policies for like
transactions and other events in similar circumstances. Intergroup balances and
transactions, including intergroup unrealized profits and losses, are eliminated in
preparing the unaudited condensed consolidated interim financial statements.

Creation of Limited Liability Company

On May 6, 2022, RVF formed Lux Domino, LLC (Lux), a foreign limited liability
company registered under the laws of Delaware. Lux is engaged in, but not limited
to, manufacturing of coconut snack products and other related products. As of
September 30, 2023 and December 31, 2022, Lux is currently on a pre-operating
stage of the business and is not material to the unaudited condensed consolidated
interim financial statements of AXLM.

-2-
 The Audit Committee endorsed to the Board of Directors the release of the
accompanying unaudited condensed consolidated interim financial statements of
Axelum Resources Corp. and Subsidiaries and the same was approved by the Board
of Directors on November 10, 2023.

3. Significant Accounting Policies

The unaudited condensed consolidated interim financial statements have been

prepared in accordance with Philippine Accounting Standard (PAS) 34, Interim
Financial Reporting. These condensed consolidated interim financial statements do
not include all the information required for annual consolidated financial statements,
and should be read in conjunction with the annual consolidated financial statements
of the Group as of and for the year ended December 31, 2022, which have been
prepared in accordance with Philippine Financial Reporting Standards (PFRS).
PFRS are adopted by the Financial Reporting Standards Council from the
pronouncements issued by the International Accounting Standards Board, and
approved by the Philippine Board of Accountancy.

These unaudited condensed consolidated interim financial statements are presented

in Philippine pesos, the Group’s functional and presentation currency.

The Group’s accounting policies adopted in the preparation of these condensed

consolidated interim financial statements are consistent with those applied in the
preparation of the Group’s annual consolidated financial statements as of and for the
year ended December 31, 2022 and the corresponding interim reporting period,
except for the adoption of the new accounting pronouncements starting
January 1, 2023.

4. Use of Judgments, Estimates and Assumptions

The preparation of the Group’s condensed consolidated interim financial statements

in accordance with PAS 34 requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the amounts of
assets, liabilities, income and expenses reported in the condensed consolidated
interim financial statements. Actual results may vary from these estimates.

In preparing these condensed consolidated interim financial statements, the

significant judgments made by management in applying the Group’s accounting
policies and key sources of estimation uncertainty were the same as those applied in
the Group’s last annual consolidated financial statements as of and for the year
ended December 31, 2022.

5. Cash and Cash Equivalents

This account consists of:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Cash on hand P997 P1,452
Cash in banks 572,029 617,622
Cash equivalents 643,779 673,249
21, 22 P1,216,805 P1,292,323

-3-
 Cash in banks earns interest at the respective bank deposit rates. The Group’s cash
in banks earned interest income amounting to P2,980 and P988 in September 30,
2023 and 2022, respectively.

Cash equivalents are interest-bearing time deposits with banks, with original
maturities not exceeding three months and with interest rates of 3.25% to 6.10% in
2023 and 1.00% to 4.125% in 2022 and are carried at cost which approximates fair
value. The Group’s cash equivalents earned interest income amounting to P15,277
and P496 in September 30, 2023 and 2022, respectively.

6. Trade and Other Receivables

This account consists of:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Trade P660,467 P693,500
Others 149,655 107,036
810,122 800,536
Less: allowance for ECL on trade
receivables 687 677
21, 22 P809,435 P799,859

Trade receivables are non-interest bearing and are generally on a 30 to 60-day term.

The Company is subject to the excise tax payments due on every removal of
products from the place of production. After the payment of the tax, the Company at
its option may file a claim for excise tax credit/refund or may avail of a claim for
product replenishment in accordance with the relevant sections of the National
Internal Revenue Code and other relevant implementing rules and regulation. As at
September 30, 2023 and December 31, 2022, the Company has receivables from
government arising from excess payments of excise tax that are included under
other receivables, amounting to P62,018 and P58,852, respectively.

Other receivables also include advances to employees for medical insurance which
are collected through salary deductions, and other advances for official business
use.

The movements in the allowance for ECL on trade receivables are as follows:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Balance at beginning of year P677 P1,482
Cumulative translation adjustments 10 (529)
Collection during the year - (863)
Impairment during the year 18 - 587
P687 P677

The Group recognized provision for ECL of trade receivables included as part of
“Others” under general and administrative expenses in the consolidated statement of
comprehensive income (Note 18).

-4-
 No receivables are directly written-off as at September 30, 2023 and December 31,
2022.

Certain receivables were assigned with recourse to secure the bank loans amounting
to P111,037 and P190,116 as at September 30, 2023 and December 31, 2022,
respectively (Note 12).

The Group recognized sales from the following geographical locations:

September 30, September 30,

2023 2022
(Unaudited) (Unaudited)
Philippines P2,374,669 P2,703,789
USA 1,619,225 2,327,735
Australia 282,957 280,947
P4,276,851 P5,312,471

7. Inventories

This account consists of:

September 30, December 31,

2023 2022
(Unaudited) (Audited)
At cost:
Finished goods P1,582,224 P1,953,012
Packing materials and supplies 493,976 363,231
Inventories in-transit 95,534 192,553
Raw materials 66,080 54,918
By-product 18 114
P2,237,832 P2,563,828

For the period ended September 30, 2023, the Group recognized a loss on inventory
write-down to net realizable value amounting to P309,877 (Note 19).

Inventories charged to cost of sales amounted to P3,106,858 and P3,311,200 for the
nine-month period ended September 30, 2023 and 2022, respectively (Note 16).

8. Prepaid Expenses and Other Current Assets

This account consists of:

September 30, December 31,

2023 2022
(Unaudited) (Audited)
Net input VAT - current P355,719 P375,284
Advances to suppliers 80,368 80,354
Prepaid expenses 97,063 26,946
P533,150 P482,584

-5-
 Input VAT, which is net of related output VAT, represents taxes paid on purchases of
goods and services. Input VAT that are expected to be realized after more than
one (1) year was presented under “Other noncurrent assets” in the statements of
financial position (Note 9).

Prepaid expenses consist of dues and subscriptions, insurance, rent, taxes and other
prepayments.

Advances to suppliers pertain to advances for purchased tools, spare parts and
packaging materials.

9. Other Noncurrent Assets

This account consists of:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Input VAT- noncurrent P144,667 P144,667
Construction in progress 138,551 138,551
Investment in bonds 113,193 111,287
Others 9,234 8,460
405,645 402,965
Less: provision for impairment of input
VAT 12,000 12,000
21, 22 P393,645 P390,965

As part of the Company’s corporate social responsibility initiatives, the Company has
ongoing project for the construction of a hospital a few kilometers away from where
its manufacturing plant is located.

Investment in bonds mainly represents United States dollar denominated Republic of

the Philippine (ROP) bonds with annual interest rates ranging from 5% to 7.75%,
with various maturities from 2031 to 2037 for 2023 and 2022.

The movements in investment in bonds are as follows:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Balance at beginning of year P111,287 P101,869
Foreign exchange gains on revaluation 1,906 9,418
21, 22 P113,193 P111,287

Interest income on investment in bonds, included as part of “Interest income”

account in the consolidated statements of comprehensive income amounted to
P3,835 and P3,956 in September 30, 2023 and 2022, respectively.

-6-
10. Property, Plant and Equipment - net

Property, plant and equipment consist of:

Office
Delivery and Furniture Tools and
Site Transportation and Water Construction ROU
Land Improvements Buildings Machinery Equipment Equipment System in-Progress Asset Total
Cost
January 1, 2022 P43,859 P135,032 P925,413 P3,071,376 P136,881 P117,477 P34,404 P511,903 P - P4,976,345
Additions - 474 4,650 64,410 36,398 33,299 23,472 516,941 - 679,644
Reclassifications - 4,343 114,933 144,063 224 538 - (264,101) - -
Disposals - - (2,570) - (958) (5) - - - (3,533)
Cumulative translation adjustments 4,090 5,068 16,435 24,806 - 643 - - - 51,042
December 31, 2022 47,949 144,917 1,058,861 3,304,655 172,545 151,952 57,876 764,743 - 5,703,498
Additions - 124 1,758 77,637 7,230 13,605 16,002 70,086 - 186,442
Cumulative translation adjustments 706 4,212 (1,981) (2,907) - (73) - - - (43)
September 30, 2023 48,655 149,253 1,058,638 3,379,385 179,775 165,484 73,878 834,829 - 5,889,897
Accumulated Depreciation and
Amortization
January 1, 2022 P - P15,887 P120,139 P906,743 P90,464 P96,959 P20,469 P - P - P1,250,661
Depreciation and amortization - 3,864 25,468 165,686 18,082 14,852 11,630 - - 239,582
Disposals - - (486) - (958) (5) - - - (1,449)
Cumulative translation adjustments - - 11,255 19,373 - 258 - - - 30,886
December 31, 2022 - 19,751 156,376 1,091,802 107,588 112,064 32,099 - - 1,519,680
Depreciation and amortization - 2,290 21,311 131,435 19,542 12,934 14,817 - - 202,329
Cumulative translation adjustments - 1,038 7,154 (31,748) (19) 18,761 - - - (4,814)
September 30, 2023 - 23,079 184,841 1,191,489 127,111 143,759 46,916 - - 1,717,195
Carrying Amount
December 31, 2022 P47,949 P125,166 P902,485 P2,212,853 P64,957 P39,888 P25,777 P764,743 P - P4,183,818

September 30, 2023 P48,655 P126,174 P873,797 P2,187,896 P52,664 P21,725 P26,962 P834,829 P - P4,172,702

-7-
 Construction in progress are ongoing projects for site improvements, machinery, and
tools and water system.

Depreciation and amortization are distributed as follows:

September September
30, 30,
2023 2022
Note (Unaudited) (Unaudited)
Cost of sales 16 P182,486 P155,621
General and
administrative expenses 18 19,843 20,087
P202,329 P175,708

No impairment loss was required to be recognized in 2023 and 2022 based on

management’s assessment of impairment indicators.

11. Goodwill and Other Intangible Assets

This account consists of:

September 30, December 31,

2023 2022
(Unaudited) (Audited)
Goodwill
Balance at beginning of year P1,259,759 P1,209,547
Cumulative translation adjustment 4,599 50,212
1,264,358 1,259,759
Other intangible assets 447,344 447,344
P1,711,702 P1,707,103

12. Borrowings

This account consists of:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Current:
a) Interest from 5.20% to 6.00% in 2023
and 2.00% to 4. 50% in 2022 P360,800 P262,900
b) Interest based on prime rate minus
0.75% in 2023 and one-month
LIBOR rate plus 2.75% in 2022 475,884 294,397
836,684 557,297
Noncurrent:
c) Interest at 2.5% payable every
quarter 3,112 3,067
21, 22 P839,796 P560,364

-8-
 a) The Parent Company availed loans from various banks to finance its working
capital requirements. These loans with a one to six-month term bear interest
rates ranging 5.20% to 6.00% and 4.25% to 5.25% in September 30, 2023 and
December 31, 2022, respectively. Certain receivables were assigned with
recourse to secure the bank loans (Note 6).

b) RVF’s revolving line of credit with a maximum borrowing limit of P496,800

($9 million) in 2023 and P501,840 ($9 million) in 2022. Interest is payable
monthly at a variable rate equal to the prime rate minus 0.75% in 2023 and one-
month LIBOR rate plus 2.75% in 2022. Prime rate is equal to the greater of
(a) 3.5% and (b) the U.S. prime rate as shown in The Wall Street Journal on
business day. The loan is secured by all assets of RVF and is subject to a
subordination agreement.

RVF’s capital expenditure line of credit has a maximum borrowing limit of

P16,974 ($300) in 2023 and P16,728 ($300) in 2022. Interest is payable monthly
at a prime rate minus 0.75 in 2023 and one-month LIBOR rate plus 2.75% in
2022.

c) Other loans of RVF amounted to P3,112 and P3,067 as at September 30, 2023
and December 31, 2022, respectively, were obtained from third party creditors
which bear an annual interest rate of 2.5% payable every quarter.

Interest expense on loans payable, included as part of “Interest expense and other
financing charges” account in the consolidated statements of comprehensive income
amounted to P39,836 and P11,892 in September 30, 2023 and 2022, respectively.

13. Accounts Payable and Accrued Expenses

This account consists of:

September 30, December 31,

2023 2022
Note (Unaudited) (Audited)
Trade P13,630 P198,956
Nontrade 690 10,096
Accrued expenses:
Salaries, wages and employee benefits 102,656 93,509
Freight charges 34,866 30,798
Marketing and promotion 26,478 27,798
Utilities 24,685 33,461
Toll 15,064 16,585
Others 47,481 5,733
Customer deposits 29,422 13,479
Government payables 2,867 10,591
Interest payable 12 1,354 858
Others 5,374 923
21, 22 P304,567 P442,787

Trade payables are generally on a 30 to 60-day term.

Nontrade payables consist of payables for broker fees, utilities and contracted jobs.

Customer deposits represent advances made by customers on its purchases which

are expected to be applied within a year.

-9-
14. Income Taxes

The Parent Company was registered with the Board of Investments (BOI) on
March 26, 2021 as new export producer of agglomerated coconut milk powder and
other plant-based infused coconut milk powder products line under Export Activities
of the 2020 Investment Priorities Plan on a non-pioneer status, and is entitled to an
Income Tax Holiday (ITH) for a period of four years from April 2021, its actual start of
commercial operations (Note 25).

On July 9, 2021, BOI also granted the Parent Company an ITH of six years from July
2021 for its organic/non-organic plant-based infused coconut drinks and juices
products (Note 25).

The income tax benefit (expense) amounted to P3,952 and (P200,469) for the nine-
month period September 30, 2023 and 2022, respectively.

15. Equity

a. Authorized Capital Stock

The Parent Company’s authorized capital stock amounting to P5 billion is divided

into 4 billion common shares with a par value of P1.00 per share and P1 billion
redeemable preferred shares with a par value of P1.00 per share.

b. Common Stock

The movements in the number of issued and outstanding shares of common

stock are as follows:

September
30, December 31,
2023 2022
Note (Unaudited) (Audited)
Issued shares at end of year 4,000,000,000 4,000,000,000
Less: treasury shares 15c 201,594,500 201,594,500
Outstanding shares at end of year 3,798,405,500 3,798,405,500

c. Treasury Stock

In 2020, the Parent Company’s BOD approved the authorization of the buy-back
program of the Parent Company’s common shares up to P500 million worth of
common shares to enhance shareholder value. The said program was further
extended until December 31, 2021.

On December 23, 2021, the Parent Company’s BOD approved another

extension of the Parent Company’s share buy-back program until June 30, 2022
and increased the amount of buy-back of up to P800 million worth of common
shares. Such amount may be increased from time to time by the BOD as the
circumstances may warrant and subject to the availability of unrestricted retained
earnings.

On June 29, 2022, the Parent Company’s BOD approved the extension of share
buy-back program until December 31, 2022.

- 10 -
 As at December 31, 2022 and September 30, 2023, the Parent Company
acquired 201,594,500 of its own common shares or a total cost of P584.0 million.

d. Material Information/Transactions as at September 30, 2023

On February 6, 2023, the Parent Company’s BOD approved the following:

i. The issuance of Two Hundred Million (200,000,000) redeemable preferred

shares (RPS) in favor of Metro Pacific Agro Ventures, Inc. (“MPAV”) for a
total consideration of Php500 million, subject to conditions, including certain
amendments to the Parent Company’s Articles of Incorporation; and,

ii. The execution of the Agreement to Subscribe between the Parent Company
and MPAV, including the execution and delivery of the Subscription
Agreement and all other transaction documents upon fulfilment of the closing
conditions.

The RPS to be issued shall be voting, participating, redeemable at the option

of the Parent Company, convertible at the option of the holder, can be
reissued, and shall have preference in the event of any liquidation or
dissolution.

On the same day, certain shareholders of the Parent Company representing

approximately 31.33% of the outstanding shares (collectively referred to as
the “AXLM Shareholders”) confirmed that they entered into a Sale and
Purchase Agreement with MPAV for the sale of their respective shares
totaling to 1,190,000,000 common shares of stock in the Parent Company at
an aggregate consideration of P4,819.5 million. The Parent Company was
also advised by the AXLM Shareholders that the closing and completion of
the Sale and Purchase Agreement is subject to the fulfilment of certain
conditions.

On February 15, 2023, the Parent Company’s BOD approved the following
amendments to the Articles of Incorporation:

i. Increase in directors from seven (7) to nine (9);

ii. Amendment and reclassification of the authorized capital stock into P5 billion
divided into (i) P4.8 billion common shares with a par value of P1.00 per
share and (ii) P200 million RPS with a par value of P1.00 per share; and

iii. Change in the features of RPS including, among others, the exercise date of
the holder’s right to convert and the removal of the option to receive
dividends and any distribution in US dollar.

As of April 17, 2023, The Parent Company obtained stockholders’ approval by

way of written assent of the foregoing proposed amendments and was approved
by the SEC on May 16, 2023.

Upon fulfillment and completion of the closing conditions and other deliverables
as defined in the Subscription Agreement and the Sale and Purchase
Agreement, MPAV will hold an aggregate of 34.76% effective equity interest in
the Parent Company.

- 11 -
16. Cost of Sales

This account consists of:

September September
30, 30,
2023 2023
Note (Unaudited) (Unaudited)
Inventories 7 P3,106,858 P3,311,200
Depreciation and amortization 10 182,486 155,621
Salaries, wages and employee benefits 136,138 141,275
Freight 41,683 242,568
Rent 4,018 4,018
Retirement benefit expense 3,155 3,193
Others 64,604 23,573
P3,538,942 P3,881,448

17. Selling Expenses

This account consists of:

September September
30, 30,
2023 2022
(Unaudited) (Unaudited)
Freight P199,083 P203,615
Marketing and promotion 117,423 113,186
Rent 51,129 30,456
Warehouse and storage 43,859 32,231
Brokerage 37,700 47,175
Advertising 25,800 8,081
Pallets and packaging 11,749 13,205
Others 20,109 16,572
P506,852 P464,521

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18. General and Administrative Expenses

This account consists of:

September September
30, 30,
2023 2022
Note (Unaudited) (Unaudited)
Salaries, wages and employee benefits P191,452 P158,349
Professional fees 30,782 31,721
Retirement benefit expense 22,500 18,000
Depreciation and amortization 10 19,843 20,087
Insurance 15,652 13,557
Utilities 13,737 14,676
Travel and transportation 13,624 8,725
Rent 13,009 5,239
Representation 10,167 11,191
Taxes and licenses 1,196 2,004
Others 6 30,643 13,257
P362,605 P296,806

Others include socials and athletics, books and periodical, office supplies, dues and
subscription, memberships and certifications, donation, and other miscellaneous
expenses.

19. Other Income (Loss) - net

This account consists of:

September September
30, 30,
2023 2022
Note (Unaudited) (Unaudited)
Loss on inventory write-down 6 (P309,877) P -
Foreign exchange gain - net 23 25,884 259,249
Rent income 21 6,737 6,735
Others 8, 9 324 752
(P276,932) P266,736

20. Related Party Transactions

The Parent Company and its related parties, in the normal course of business,
purchase products and services from one another. Amounts owed by/owed to related
parties are collectible/ to be settled in cash. An assessment is undertaken at each
financial year by examining the financial position of the related party and the market
in which the related party operates. There are no balances and transactions with
related parties outside the Group other than key management personnel, as at
September 30, 2023 and December 31, 2022 and for the nine-month period ended
September 30, 2023 and 2022.

Key management compensation refers to the salary of key management amounted

to P38,358 and P32,787 for the nine-month period ended September 30, 2023 and
2022, respectively.

- 13 -
21. Financial Risk and Capital Management Objectives and Policies

Objectives and Policies

The Group has significant exposure to the following financial risks primarily from its
use of financial instruments:

 Liquidity Risk
 Credit Risk
 Foreign Currency Risk
 Interest Rate Risk

This note presents information about the exposure to each of the foregoing risks, the
objectives, policies and processes for measuring and managing these risks, and for
management of capital.

The main purpose of the Group’s financial instruments is to fund the Group’s
operations and to acquire and improve its property, plant and equipment. The main
risks arising from the use of financial instruments are liquidity risk, credit risk, foreign
currency risk and interest rate risk. The Group’s BOD reviews and monitors the
policies for managing each of these risks.

Liquidity Risk. Liquidity risk pertains to the risk that the Group will encounter difficulty
to meet payment obligations when they fall due under normal and stress
circumstances.

The Group seeks to manage its liquidity profile to be able to finance its capital
expenditures and cover its operating costs. The Group’s objective is to maintain a
balance between continuity of funding and flexibility through valuation of projected
and actual cash flow information. Additional short-term funding is obtained from
related party advances when necessary.

The table below summarizes the maturity profile of the Group’s financial assets and
financial liabilities based on contractual undiscounted receipts and payments used
for liquidity management.

More than
1 Year but
Carrying Contractual 1 Year or Less than More than
September 30, 2023 Amount Cash Flow Less 5 Years 5 Years
Financial Assets
Cash and cash equivalents 1,216,805 1,216,805 1,216,805 P - P -
Trade and other receivables* 729,943 729,943 729,943 - -
Other noncurrent assets** 122,427 122,427 9,234 - 113,193
Financial Liabilities
Loans payable 839,796 839,796 836,684 - 3,112
Accounts payable and accrued
expenses*** 272,278 272,278 272,278 - -
Other current liabilities 9,263 9,263 9,263 - -
Other noncurrent liability 1,000 1,000 - 1,000 -
* Excluding advances to employees and government receivables amounting to P17,474 and P62,018,
respectively.
** Excluding input VAT - noncurrent and construction in progress amounting to P144,667 and P138,551,
respectively.
*** Excluding customer deposits and government payables amounting to P29,422 and P2,867, respectively.

- 14 -
 More than
1 Year but
Carrying Contractual 1 Year or Less than More than
December 31, 2022 Amount Cash Flow Less 5 Years 5 Years
Financial Assets
Cash and cash equivalents P1,292,323 P1,292,323 P1,292,323 P - P -
Trade and other receivables* 716,895 716,895 716,895 - -
Other noncurrent assets** 119,747 188,512 7,403 38,071 151,498
Financial Liabilities
Loans payable 560,364 560,364 557,297 - 3,067
Accounts payable and accrued
expenses*** 418,717 418,717 418,717 - -
Other current liabilities 16,865 16,865 16,865 - -
Other noncurrent liability 1,000 1,000 - 1,000 -
* Excluding advances to employees and government receivables amounting to P24,112 and P58,852,
respectively.
** Excluding input VAT - noncurrent and construction in progress amounting to P144,667 and P138,551,
respectively.
*** Excluding customer deposits and government payables amounting to P13,479 and P10,591, respectively.

Credit Risk. Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual obligations, and
arises principally from trade and other receivables.

The Group controls this risk through monitoring procedures and regular coordination
with the customers. Receivable balances are monitored on an ongoing basis with
the risks of exposure to bad debts are not significant.

The carrying amount of financial assets which represents the Group’s maximum
exposure to credit risk without the effects of collaterals and other risk mitigation
techniques is presented below:

September
30, December 31,
2023 2022
Note (Unaudited) (Audited)
Cash and cash equivalents* 5 P1,215,808 P1,290,871
Trade and other receivables** 6 729,943 716,895
Other noncurrent assets*** 9 122,427 119,747
P2,068,178 P2,127,513
*Excluding cash on hand amounting to P997 and P1,452 as at September 30, 2023 and December 31, 2022,
respectively.
**Excluding advances to employees amounting to P17,474 and P24,112 and receivable from government
amounting to P62,018 and P58,852 as at September 30, 2023 and December 31, 2022, respectively.
*** Excluding input VAT - noncurrent and construction in progress and amounting to P144,667 and P138,551,
respectively, as at September 30, 2023 and December 31, 2022.

The table below presents the Group’s exposure to credit risk and shows the credit
quality of the financial assets by indicating whether the financial assets are subjected
to 12-month ECLs or lifetime ECLs. Assets that are credit-impaired are separately
presented.

September 30, 2023

Financial Assets at Amortized Cost
Lifetime ECLs Financial
12-month not Credit Lifetime ECLs Assets at
ECLs Impaired Credit Impaired FVPL Total
Cash and cash equivalents P1,215,808 P - P - P - P1,215,808
Trade receivables - 659,780 687 - 660,467
Other receivables as part of
“Trade and other - 70,163 - - 70,163
receivables” account*
Other noncurrent assets - 122,427 - - 122,427
P1,215,808 P852,370 P687 - P2,068,865

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December 31,2022
Financial Assets at Amortized Cost
Lifetime ECLs Financial
12-month not Credit Lifetime ECLs Assets at
ECLs Impaired Credit Impaired FVPL Total
Cash and cash equivalents P1,290,871 P - P - P - P1,290,871
Trade receivables - 692,823 677 - 693,500
Other receivables as part of
“Trade and other - 24,072 - - 24,072
receivables” account*
Other noncurrent assets - 119,747 - - 119,747
P1,290,871 P836,642 P677 - P2,128,190

The aging of trade and other receivables is as follows:

September 30, 2023 Trade Others* Total
Current P599,501 P70,163 P669,664
Past due:
Less than 30 days 44,354 - 44,354
31 - 60 days 9,992 - 9,992
61 - 90 days 6,620 - 6,620
Over 90 days - - -
P660,467 P70,163 P730,630
* Excluding advances to employees amounting to P17,474 and receivable from government of P62,018.

December 31, 2022 Trade Others* Total

Current P583,158 P20,674 P603,832
Past due:
Less than 30 days 53,875 327 54,202
31 - 60 days 20,326 214 20,540
61 - 90 days 2,595 149 2,744
Over 90 days 33,546 2,708 36,254
P693,500 P24,072 P717,572
* Excluding advances to employees amounting to P24,112 and receivable from government of P58,852

The Group believes that neither past due nor impaired and unimpaired amounts that
area past due by more than 30 days are still collectible based on historical payment
behavior and analyses of the underlying customer credit ratings. There are no
significant changes in their credit quality.

Credit Quality Per Class of Financial Assets

The credit quality of financial assets is managed by the Group using internal audit
ratings.

High grade cash are working cash fund in local banks belonging to the top 10 banks
in the Philippines in terms of resources and profitability.

High grade accounts, other than cash, are accounts considered to be of high value.
The counterparties have a very remote likelihood of default and have consistently
exhibited good paying habits. High grade financial assets include cash in banks,
cash equivalents and investment in bonds amounting P1,329,001 and P1,402,158 as
at September 30, 2023 and December 31, 2022, respectively.

Standard grade accounts are active accounts with propensity of deteriorating to

mid-range age brackets. These accounts are typically not impaired as the
counterparties generally respond to credit actions and update their payments
accordingly. Standard grade financial assets include trade and other receivables and
other noncurrent assets amounting to P678,898 and P612,292 as at September 30,
2023 and December 31, 2022, respectively.

- 16 -
Substandard grade accounts are which have probability of impairment based on
historical trend. These accounts show propensity to default in payments despite
regular follow-up actions and extended payments terms. Substandard grade
accounts include past due accounts but not impaired amounting to P60,966 and
P113,740 as at September 30, 2023 and December 31, 2022, respectively.

Foreign Currency Risk. The Group’s exposure to foreign currency risk results from
significant movements in foreign exchange rates that adversely affect the foreign
currency denominated transactions of the Group.

The Group closely monitors the movements in the exchange rate and makes a
regular assessment of future foreign exchange movements. The Group then
manages the balance of its foreign currency denominated assets and liabilities based
on this assessment.

Information on the Group’s foreign currency-denominated monetary assets and

monetary liabilities and their Philippine peso equivalents are as follows:

Peso
September 30, 2023 SGD AUD USD Equivalent
Assets
Cash and cash equivalents 98 780 7,118 435,340
Trade and other receivables - 1,127 5,908 375,519
Investment in bonds - - 1,997 113,193
Liabilities
Accounts payable and accrued
expenses - (84) (900) (53,992)
Loans payable - - (8,467) (479,021)

Peso
December 31, 2022 SGD AUD USD Equivalent
Assets
Cash and cash equivalents 98 1,144 13,890 821,759
Trade and other receivables - 1,561 11,623 707,054
Investment in bonds - - 1,997 111,287
Liabilities
Accounts payable and accrued
expenses - (1,642) (1,040) (120,057)
Loans payable - - (5,335) (297,453)

The following table demonstrates the sensitivity to a reasonably possible change in

foreign currency exchange rates with all other variables held constant of the Group’s
profit before tax due to changes in the fair value of monetary assets and monetary
liabilities:

2023 2022
Effect on Income Effect on Income
before Income Tax before Income Tax
Increase by 5% Decrease by 5% Increase by 5% Decrease by 5%
USD P19,552 (P19,552) P61,130 (P61,130)

- 17 -
The Group reported foreign exchange gain - net amounting to P25,884 and
P259,249 for the nine-month period ended September 30, 2023 and 2022,
respectively (Note 19), arising from the translation of its foreign-currency
denominated financial instruments. These mainly resulted from the movements of
the Philippine peso against the USD as shown in the following table:

September
30, December 31,
2023 2022
USD to Philippine Peso 56.58 55.76
AUD to Philippine Peso 36.60 37.80
SGD to Philippine Peso 41.71 41.58

Interest Rate Risk. Interest rate risk is the risk that future cash flows from a financial
instrument (cash flow interest rate risk) or its fair value (fair value interest rate risk)
will fluctuate because of changes in market interest rates. The Group’s exposure to
changes in interest rates relates primarily to its loan payable, long-term debt, lease
liabilities and other noncurrent liability. Borrowings issued at fixed rates expose the
Group to fair value interest rate risk. On the other hand, borrowings issued at
variable rates expose the Group to cash flow interest rate risk.

The Group manages its interest cost by using an optimal combination of fixed and
variable rate debt instruments. Management is responsible for monitoring the
prevailing market-based interest rate and ensures that the mark-up rates charged on
its borrowings are optimal and benchmarked against the rates charged by other
creditor banks.

In managing interest rate risk, the Group aims to reduce the impact of short-term
fluctuations on the earnings. Over the longer term, however, permanent changes in
interest rates would have an impact on profit or loss.

The management of interest rate risk is also supplemented by monitoring the

sensitivity of the Group’s financial instruments to various standard and non-standard
interest rate scenarios.

The sensitivity to a reasonably possible 5% increase in the interest rates, with all
other variables held constant, would have increased the Group’s profit before tax by
(P4,141) and (P24,862) in September 30, 2023 and 2022, respectively. A 5%
decrease in the interest rate would have had the equal but opposite effect. These
changes are considered to be reasonably possible given the observation of
prevailing market conditions in those periods. There is no impact on the Group’s
OCI.

- 18 -
Interest Rate Risk Table
The terms and maturity profile of the interest-bearing financial instruments, together
with its gross amounts, are shown in the following tables:

September 30, 2023

More than
Less than 1 Year but Less More than
1 Year than 5 Years 5 Years Total
Foreign Currency-denominated
(expressed in Philippine Peso)
Investment in bonds P - P - P113,193 P113,193
Interest rate - - 5% -7.75% -
Cash equivalents 4,204 - - 4,204
Interest rate 0.09% - 6.00% - - -
Loans payable (28,234) - (3,112) (31,346)
LIBOR rate
Interest rate plus 2.25% - 2.5% -
Loans payable (447,650) - - (447,650)
prime rate
Interest rate minus 0.75% - - -
Philippine Peso-denominated
Cash equivalents 639,575 - - 639,575
Interest rate 3.25% - 6.10% - - -
Loans payable (360,800) - - (360,800)
Interest rate 5.20% to 6.00% - - -
(P192,905) P - P110,081 (P82,824)

December 31, 2022

More than
Less than 1 Year but Less More than
1 Year than 5 Years 5 Years Total
Foreign Currency-denominated
(expressed in Philippine Peso)
Investment in bonds P - P - P111,287 P111,287
Interest rate - - 5% -7.75% -
Cash equivalents 412,454 - - 412,454
Interest rate 0.09% - 5.25% - - -
Loans payable - - (3,067) (3,067)
Interest rate - - 2.5% -
Loans payable (294,397) - - (294,397)
prime rate
Interest rate minus 0.75% - - -
Philippine Peso-denominated
Cash equivalents 260,795 - - 260,795
Interest rate 0.09% - 5.25% - - -
Loans payable (262,900) - (262,900)
Interest rate 4.25% to 5.25% - - -
P115,952 P - P108,220 P224,172

Capital Management
The Group maintains a sound capital base to ensure its ability to continue as a going
concern, thereby continue to provide returns to stockholders and benefits to other
stakeholders and to maintain an optimal capital structure to reduce cost of capital.

The Group manages its capital structure and makes adjustments in the light of
changes in economic conditions. To maintain or adjust the capital structure, the
Group may adjust the dividend payment to shareholders, pay-off existing debts,
return capital to shareholders or issue new shares.

The Group monitors capital on the basis of debt-to-equity ratio, which is calculated
as total debt divided by total equity. Total debt is defined as total current liabilities
and total noncurrent liabilities, while equity is total equity as shown in the
consolidated statements of financial position.

- 19 -
 The Group’s capital for the reporting periods is summarized in the table below:

September
30, December 31,
2023 2022
(Unaudited) (Audited)
Total liabilities P1,209,574 P1,154,417
Total equity 9,865,697 10,291,209
Debt to equity ratio 0.12:1 0.11:1

RVF is required to comply with the following debt covenants in relation to its loan
payable and long-term debt from a local bank: (1) maintain a tangible net worth of
not less than $5,000 ; (2) maintain a fixed charge coverage ratio, as of the last day of
each month for the period of twelve months then ended, of not less than 1.2 to 1.0;
and (3) maintain, as of the last day of each month a ratio of total debt to tangible net
worth of not greater than 3.25 to 1.0. RVF complied with the above requirements as
at September 30, 2023 and December 31, 2022.

There were no changes in the Group’s approach to capital management during the
year.

22. Financial Assets and Financial Liabilities

The table presents comparison by category of the carrying amounts and fair values
of the Group’s financial instruments:

September 30, 2023 December 31, 2022

Carrying Carrying Carrying
Amount Amount Amount Fair Value
Financial Assets
Cash and cash equivalents 1,216,805 1,216,805 P1,292,323 P1,155,276
Trade and other receivables* 729,943 729,943 716,895 708,342
Other noncurrent assets** 122,427 122,427 119,747 110,103
Financial Liabilities
Loans payable 839,796 839,796 560,364 255,829
Accounts payable and
accrued expenses*** 272,278 272,278 418,717 468,003
Other current liabilities 9,263 9,263 16,865 16,865
Other noncurrent liability 1,000 1,000 1,000 1,000
*Excluding advances to employees amounting to P17,474 and P24,112 and government receivables amounting
to P62,018 and P58,852 as at September 30, 2023 and December 31, 2022, respectively.
**Excluding input VAT-noncurrent and construction in progress amounting to P144,667 and P138,551 as at
September 30, 2023 and December 31, 2022
***Excluding customer deposits totaling to P32,289 and P13,479 and government payables amounting to
P24,070 and P10,591 as at September 30, 2023 and December 31, 2022, respectively.

Cash and Cash Equivalents, Trade and Other Receivables (excluding advances to
employees and receivables from government, Accounts Payable and Accrued
Expenses (excluding customer deposits and government payables) and Other
Current Liabilities
The carrying amounts of cash, trade and other receivables, accounts payable and
accrued expenses and other current liabilities approximate their fair values due to
relatively short-term maturities of these financial instruments.

Investment in Bonds
The fair value of interest-bearing investment in bonds is based on the discounted
value of expected future cashflows using the applicable market rates for similar types
of instruments as at reporting date.

- 20 -
 Other Noncurrent Assets (excluding advances to suppliers, CIP and net input VAT -
noncurrent portion), Lease Liabilities, Loans payable, Long-term Debt and Other
Noncurrent Liability

The fair value of other noncurrent assets, obligation under lease, loans, long-term
debt and other noncurrent liability is estimated as the present value of all future cash
flows discounted using the prevailing market rate of interest for a similar instrument
as at the end of the reporting period.

23. Supplemental Cash Flows Information

Supplemental information with respect to the consolidated statements of cash flows

is presented below:

Changes in liabilities arising from financing activities are shown below:

Other
Noncurrent
Note Loans Payable Liability
Balance as at January 1, 2023 P560,364 P1,000
Changes from financing cash flows:
Proceeds from availment 2,509,632 -
Principal payment (2,230,200) -
Total changes from financing cash flows 279,432 -
Effects of change in foreign exchange rates - -
Balance as at September 30, 2023 12, 13 P839,796 P1,000

Other Noncurrent
Note Loans Payable Liability
Balance as at January 1, 2022 P255,829 P1,000
Changes from financing cash flows:
Proceeds from availment 2,458,166 -
Principal payment (2,003,973) -
Total changes from financing cash flows 454,193 -
Effects of change in foreign exchange rates 3,734 -
Balance as at September 30, 2022 12, 13 P713,756 P1,000

- 21 -
24. Basic and Diluted Earnings (Loss) Per Share

Basic and diluted EPS is computed as follows:

September
30, September
2023 30, 2022
(Unaudited) (Unaudited)
Net income (loss) available to
common shares (a) (P427,995) P717,278
Weighted average number of
common shares outstanding
(in thousands) (b) 3,798,406 3,778,091
Basic/diluted earnings (loss) per share
(a/b) (P0.11) P0.19
*Earnings (loss) per share are computed based on amounts in thousands.

25. Other Matters

Registration with the BOI

The Parent Company’s registrations with BOI (Note 14) also entitled it, apart from
ITH incentives, to the following major or key incentives:

 Importation of capital equipment, spare parts and accessories at zero duty from
date of effectivity of Executive Order (EO) No. 85 and its Implementing Rules
and Regulations.

 Additional deduction for labor expense for a period of five (5) years from
registration an amount equivalent to fifty percent (50%) of the wages
corresponding to the increment in number of direct labor for skilled and unskilled
workers in the year of availment as against the previous year if the project meets
the prescribed ratio of capital equipment to the number of workers set by the
Board. This may be availed of for the first (5) years from date of registration but
not simultaneously with the ITH.

 Importation of consigned equipment for a period of ten (10) years from date of
registration, subject to posting of re-export bond.

 Employment of foreign nationals. This may be allowed in supervisory, technical

or advisory positions for five (5) years from the date of registration. The
president, general manager, and treasurer of foreign-owned enterprises or their
equivalent shall not be subject to the foregoing limitations.

 Simplification of customs procedures for the importation of equipment, spare

parts, raw materials and supplies.

 Exemption from wharfage dues and any export tax, duty, impost and fee for a
period of ten (10) years from date of registration.

 Exemption from local business tax for a period of four (4) years from the date of
registration, pursuant to Section 133(g) of R.A. No. 7160, otherwise known as
Local Government Code.

- 22 -
Effect of COVID-19
The COVID-19 pandemic that started in 2020 have caused economic impact
particularly to supply chains worldwide. In 2022, the business environment has
improved and many businesses have been able to adapt into the pandemic. On
May 5, 2023, the World Health Organization determined that COVID 19 is now an
established and ongoing health issue which no longer constitutes a public health
emergency of international concern and advised the transition to long-term
management of the COVID 19 pandemic. Therefore, on July 21, 2023, the Public
Health Emergency throughout the Philippines due to COVID 19 was lifted. With this
development, the Company believes that COVID 19 pandemic will not have
significant impact to the Company’s operations.

Effect of Ukraine-Russia and Israel-Hamas War

The ongoing conflict between Russia and Ukraine and Israel and militant group
Hamas has no direct effect on the Company. has no direct effect on the Company.
However, based on recent events and market sentiments, oil prices are high as a
result of tight oil supply. The increase in the cost of raw materials, which was
triggered by the rise in global demand vs supply on certain items, as well as supply
chain constraints, were caused by the uncertainties brought about by the crisis.

- 23 -
 C O V E R S H E E T
for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number

C S 2 0 1 0 1 3 2 8 2

COMPANY NAME

A X E L U M R E S O U R C E S C O R P . A N D

S U B S I D I A R I E S

PRINCIPAL OFFICE (No. / Street / Barangay / City / Town / Province)

I C S B u i l d i n g T i a n o - M o n t a l v a n

S t r e e t s , C a g a y a n d E O r o C i t y

Form Type Department requiring the report Secondary License Type, If Applicable

Q A F S

COMPANY INFORMATION
Company's email Address Company's Telephone Number/s Mobile Number

axlmcompliance@axelum.com.ph (02) 8851 -0731 +639053125732

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)

29 2nd MONDAY OF MAY December 31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation

Name of Contact Person Email Address Telephone Number/s Mobile Number

Novemay V. Nanlabes novemay.nanlabes@axelum.com.ph (02) 8851 - 0731 +639053125732

CONTACT PERSON's ADDRESS

1052 EDSA Magallanes Village, Makati City

Note 1: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within
thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.
2: All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the
Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its
deficiencies.