Looking Ahead.

1
TABLE OF CONTENTS
HIGHLIGHTS
3 Financial Highlights
3 Vision, Mission
3 Brand Core Values
MESSAGES
7 From the Chairman
9 From the President and Chief Executive Ofcer
11 From the Chief Finance Ofcer
2G0 GROUP, INC.
13 2GO Travel
17 2GO Freight
18 2GO Express
18 2GO Distribution
19 2GO Logistics
21 Information Technology
22 Corporate Social Responsibility
24 Corporate Governance
29 Risk Management
30 Audit Committee Report
32 Shareholders Information
THE TEAM
34 Board of Directors
38 Executive Ofcers
2011 CONSOLIDATED FINANCIAL INFORMATION
42 Statements of Managements Responsibility for Financial Statements
43 Independent Auditors Report
44 Consolidated Balance Sheets
46 Consolidated Statements of Income
48 Consolidated Statements of Comprehensive Income
49 Consolidated Statements of Changes in Equity
50 Consolidated Statements of Cash Flows
52 Notes to Consolidated Financial Statements
107 2GO Group, Inc. Facts
THE COVER
Looking ahead is getting ahead.
2GO Group Inc. braved the shipping industrys rough
sailing in 2011. We are thankful to have endured;
otherwise, we would not have nurtured the spirit of
resilience and resolve.
As we continue our voyage, we train our sights on
wider vistas of opportunity, condent that the nets we
cast will yield bountiful returns.
3
Annual Report 2011
3
Income Statement
Revenue
EBITDA
Net Income (Loss) Attributable to Equity Holders
Balance Sheet
Total Assets
Total Interest Bearing Debt
Total Stockholders Equity
Cash Flow
Net Cash Flow from Operating Activities
Net Cash Provided by (Used in) Investing Activities
Net Cash Provided by (Used in) Financing Activities
Cash and Cash Equivalents
Stock Information
Market Capitalization - Year End
Stock Price - Year End
Earnings (Loss) Per Common Share
12,971
1,027
(634)
12,132
1,343
3,306
(463)
225
340
906
3,253
1.33
(0.26)
11,611
709
(809)
12,575
2,043
3,956
619
(3,410)
2,500
805
4,476
1.83
(0.33)
10,510
1,621
546
10,622
1,444
5,160
1,034
(1,409)
378
1,096
2,886
1.18
0.22
FINANCIAL HIGHLIGHTS
2011 2010 2009
BRAND CORE VALUES
Corporate Governance
Commits to corporate values and accepted ethical and
moral rules and norms that apply inside and outside the
organization.
Integrity and Transparency
Doing the right things for the right reasons. Treating
people fairly and with respect.
Teamwork
The ability to work in unison to achieve a common goal.
Our People
Our people are the central movers of the organization.
Innovation
Process by which new ideas for continuous improvement
and breakthroughs toward organizational effectiveness
and efciency are promoted and institutionalized.
Excellence
A talent or quality which is unusually good and
surpasses ordinary standards. It is also aimed for standard
of performance.
VISION 2020
MISSION
To be the best and biggest company in the transport
and supply chain industry
providing memorable travel experiences, moving
products and catalyzing business growth in domestic
and international markets.
Our business is to create memorable, fun-lled and safe travel
for passengers and provide total supply chain solutions
and excellent services to clients building on our
180 years of existence.
We delight our customers with innovative and technology
driven services while customizing to their needs and ensuring
seamless operations.
We connect the Philippines 7,107 islands to Asia and the
world, catalyzing business growth, promoting tourism and
partnering in nation building.
We offer employees a rewarding working environment while
delivering value to our shareholders.
Looking Ahead.
4
Outlook Outlook
5
Annual Report 2011
5
momentum.
Our new business identity integrates all of 2GO. We are no longer
just a shipping company, but one that provides solutions for the
movement of people and cargo, both for domestic and international.
2GO Group Inc. is the new name of ATS Consolidated Inc.
2GO Travel combines our Passage brands Negros Navigation,
SuperFerry, SuperCat and Cebu Ferries. We shall re-dene sea travel
by providing memorable experiences that bring people and places
together.
2GO Supply Chain service scope includes Freight, Express, and
Logistics. 2GO Freight is the traditional movement of containerized
cargo. It is the bridge to the Visayas and Mindanao. 2GO Express is
the movement of all non-containerized cargo. Under 2GO Express
we move anything from courier, to less cargo loads for domestic and
international distribution. 2GO Logistics completes 2GOs already
extensive range of services by offering Warehouse Management,
Order Entry & Releasing, and In-store Merchandising, to name a few.
2GO Distribution represents ScanAsia Overseas, Inc. one of the
leading importers and distributors of well renowned products in the
Philippine market.
2GO is a brand that would best describe our business. It is unique to
the industry and depicts a fresh, dynamic, and safe image.
momentum.
Our new business identity integrates all of 2GO. We are no longer
just a shipping company, but one that provides solutions for the
movement of people and cargo, both for domestic and international.
2GO Group Inc. is the new name of ATS Consolidated Inc.
2GO Travel combines our Passage brands Negros Navigation,
SuperFerry, SuperCat and Cebu Ferries. We shall re-dene sea travel
by providing memorable experiences that bring people and places
together.
2GO Supply Chain service scope includes Freight, Express, and
Logistics. 2GO Freight is the traditional movement of containerized
cargo. It is the bridge to the Visayas and Mindanao. 2GO Express
is the movement of all non-containerized cargo. Under express we
move anything from courier, to less cargo loads for domestic and
international distribution. 2GO Logistics completes 2GOs already
extensive range of services by offering Warehouse Management,
Order Entry & Releasing, and In-store Merchandising, to name a few.
2GO Distribution represents ScanAsia Overseas, Inc. one of the
leading importers and distributors of well renowned products in the
Philippine market.
2GO is a brand that would best describe our business. It is unique to
the industry and depicts a fresh, dynamic, and safe image.
Looking Ahead.
6
FRANCIS C. CHUA
Chairman of the Board
W
e know that the
success of the
country is our own
success as well.
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Annual Report 2011
7
FRANCIS C. CHUA
Chairman of the Board
Message from the Chairman
DEAR SHAREHOLDERS
2011 has indeed been a challenging year for the entire global economy. The Arab Spring, which led to the
replacement of regimes in the Middle East had, for a time, resulted to higher than normal fuel prices, eroding what
was already a fragile recovery by the world economies from a crisis that is continues to be categorized as worse
than the Great Depression of 1929. The Tsohoku Tsunami in Japan, as well as the ooding in Thailand greatly
disrupted supply chains and exacerbated the overall weakness of the global economy.
As a result of all of these external factors, the recovery of the European and US economies, which are our major
trade partners, have been stalled and have wobbled the local economy. GDP grew by a feeble 3.7% in 2011
compared to the robust 7.6% growth in 2010. Agriculture, Industry and the Service Sectors were key factors in
driving the GDP number forward, but the anemic performances in Public Consumption, Government Spending
and Exports, neutralized any headway that could have been achieved.
Against this backdrop, 2GO Group met the year full of challenges and your company came out better than ever.
Primordial among the objectives for the year was the integration of the operations of Negros Navigation, Co., Inc.
(NENACO) and 2GO Group, Inc., paving the way for the combined NENACO-2GO entity to become a complete
logistic solutions company from what was largely a passage and freight company in the past.
We have studied the strengths of the two companies and have created a union of these strengths resulting in what
we believe is a company that is poised to take advantage of a resilient Philippine Economy that has weathered
the storms of the global economic downturn and is primed to expand once the global economies restart their
recovery.
We remain true to our objectives of maximizing shareholder wealth. With this in mind, we continue on towards
the path of sustainability. Our successful integration of the two entities will result in better passenger volumes,
more cargo business and greater market coverage. We continue to enhance our reliability, ensuring that we will
remain the top choice among our customers. Our enhanced approach of viewing customer needs from a total
logistics solutions standpoint has started to pay dividends. We will continue to build on the solid foundation we
have laid out in 2011 as we look forward to a brighter future in 2012 and beyond.
Our objectives though go beyond maximizing shareholders wealth. We recognize that, as the biggest and most
dominant player in the industry, we are a key part of the economic development of the Philippines. We shall
continue to play our role to help uplift the lives of our countrymen through the delivery of key services, as we
know that the success of the country is our own success as well.
Looking Ahead.
8
SULFICIO O. TAGUD, JR.
President and
Chief Executive Offcer
W
e have determined
the right size for
the company and have
taken steps to reach that
optimal point.
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Annual Report 2011
9
SULFICIO O. TAGUD, JR.
President and Chief Executive Offcer
Message from the President &
Chief Executive Ofcer
The combined NN-ATS will remember 2011 as a year full of change. While the global economies reeled from rising fuel prices brought about
by the Arab Spring, and the disruption in supply chain brought about by twin natural disasters in Japan and Thailand, your company had
been taking this time to introspect and to nd the best in it and standardize practices in both companies.
The vision behind the acquisition of ATS by NN has always been that the combination of the top two players in the industry will result in a
stronger and more responsive entity which will deliver the best service for its customers in passage and cargo. We have concretized this vision
and redened our business model into that of a complete supply chain provider, combining the best of shipping business with the sunrise
industry of the logistics and supply chain management. 2011 will be remembered as the year that the groundwork for the metamorphoses
of these two businesses was actualized into the new 2GO Group Inc., which appropriately became the new corporate brand reecting this
new vision.
Right at the start of the year, a route rationalization program was put in place, ensuring that the right vessel and the right route are properly
matched. This has been executed but is continuously being evaluated to ensure that we are well-positioned to take advantage of new
opportunities in routes that we both service, and routes that we would like to service. This rationalization program has resulted in the disposal
of four aging and less efcient vessels.
As with all business combinations, excesses had to be trimmed in order to realize operational efciencies. To this end, we have consolidated
most of our container yard services, especially for ports and branches actively being serviced by both NN and ATS when they were still
separate entities. At the start of the 4th quarter, we managed to gain control over the (ship) management of our vessel eet, allowing us to
have an even greater opportunity to optimize our cost position.
A single ticketing system has been employed ensuring that standard pricing is put in place and that passage customers can purchase a ticket
for any available destination, regardless of whether it is an NN vessel or an ATS vessel servicing this route.
Back ofce services have been consolidated and centralized, ensuring that servicing of the needs of our service providers and suppliers are
done in a standardized and orderly manner.
We have determined the right size for the company and have taken steps to reach that point, further reducing costs while retaining the
best talent in order that we may continually operate at our peak. We have acquired seasoned talents and continue to be on the lookout
for complementing talent to add to our pool to ensure that new and innovative ideas are always put on the table, with the aim of further
enhancing the services that we provide to our customers.
And, in line with the vision of transforming the company into a complete supply chain solution provider, we have streamlined processes
wherein customers can now fully avail of all services without having to speak to several representatives of different subsidiaries within the
group.
We initiated nancial restructuring at the start of the year, culminating in the consolidation and terming out of our short term supplier
nancing into a medium term loan with Banco de Oro. We are thankful with the condence shown by the Philippines largest lender and
continue to enhance our relationship with them and our other partner nancial institutions.
We note with delight the change that has been seen in the industry. Today, the spirit of cooperation pervades among the players in the
industry. Gone are the days of cut-throat competition and industry players have banded together, realizing that the shipping industry is a vital
cog in the economic development of the country and seeing that only through this new found spirit will the industry be able to best serve
the needs of individuals and industries alike.
We are condent that the groundwork we have laid out in 2011 will reap handsome dividends for us in the years to come. We are by no
means nished with our task of continuously seeking improvement, as should be the case in a dynamic market such as ours. But we are
condent that we are way past the difcult part of the integration process and, armed with our unwavering and passionate commitment to
serve our customers, we look forward to 2012 with renewed optimism and condence.
We sincerely thank our customers, business partners, suppliers, bankers, and the communities where we operate for the strong partnership
and support.
Finally, it is our commitment to work towards a sustainable growth and long-term value creation for our stakeholders.
DEAR SHAREHOLDERS
Looking Ahead.
10
JEREMIAS E. CRUZABRA
Chief Finance Offcer
T
he cost of integration...
Taking a bitter pill to swallow
to usher in a better tomorrow.
11
Annual Report 2011
11
Message from the
Chief Finance Ofcer
2011 shall best be remembered as the integration year for Negros Navigation Corporation and ATS Consolidated, Inc.
During the year, Management undertook certain signicant steps to consolidate operations and improve operational
efciencies. The realization of most synergies became more pronounced towards the last quarter of the year when the
integration has reached its stabilized state providing signicant cost improvements across the entire Group.
A look at 2GO Groups 2011 performance would not be complete if it were not seen through the perspective of Negros
Navigation (NN).
NEGROS NAVIGATION CO., INC. AND
SUBSIDIARIES
Total revenues increased by 2% to P15.3 billion
this year from P15.0 billion of last year. This
resulted in an operating loss of P129.0 million
which is an improvement of P480 million
compared to the P608 million operating loss
last year. Net loss after tax reached P1.39
billion largely due to the recognition of P1.2
billion exceptional items. Net loss after tax last
year stood at P1.18 billion. Normalized EBITDA
jumped by 51% to P1,521 million versus P1,009
million last year. Consolidated assets decreased
to P14.8 billion from P16.6 billion largely due to
decrease in current assets of P1,055 million, asset
disposals of P283 million and vessel impairment
loss of P554 million. Total liabilities plummeted
4% to P10.9 billion from 11.36 billion in 2010.
2GO GROUP, INC. CONSOLIDATED
Consolidated revenues are up 12% for this year, to P12.97 billion. This is expected to be further increased in the following
years as the full effect of integration is not yet reected in our 2011 nancials. Freight and Passage Businesses posted 7%
and 9% growth in revenues respectively.
Supply Chain posted a revenue increase of 7% and International Logistics increased its consolidated revenues by 23%.
Expenses were kept in check for 2011 and only partially reected the cost savings from integration. Shipping expense grew
by only 1%. Supply Chain posted a modest 12% expense growth owing largely to the recognition of inventory losses.
The Group also obtained key support from Banco De Oro in the form of a Medium Term Loan Facility in the amount of P4
billion to replace the P2 billion corporate notes that were issued in 2010 as well as to term out certain supplier nance.
These supplier nancings were mismatched in terms of their duration (short term) versus the assets they nanced (long
term).
The Group incurred extra ordinary items amounting to about P642 million as a result of integration. These came chiey
from recognition of vessel impairment, integration, redundancy and inventory clean up. This depressed income and EBITDA
levels resulting in a NIBT of negative P821 million and consolidated EBITDA of P1,027 million. Had this extra-ordinary items
(amounting to P642 million) not been incurred, NIBT and EBITDA levels would have stood at negative P179 million and
positive P1,668 million, respectively.
Absorbing the extra-ordinary integration/clean-up cost into our nancial performance today, is like a bitter pill we need to
swallow, to usher in a better tomorrow.
Income and Loss Statement
Shipping business. Consolidated Revenues were up 12% to P12.97 billion brought about by strong performances
from all business units. Shipping, on a consolidated basis, posted a healthy 14% growth in total revenues for this year. This
was led by Freight, posting a 7% growth in revenues to end the period at P5.7 billion. Passage posted almost 9% growth
in revenues to increase revenues to P2.4 billion on the back of a 5% increase in passage volumes. Shipping expenses were
impacted by the 18% rise in fuel prices due to the advent of what the world now knows as the Arab Spring. Also, ship
management was only fully integrated into the company in the latter part of the year, reducing the benet that could
have been derived in terms of cost efciencies had this been integrated at the earlier part of the year. Despite this, a 30%
drop in overhead expenses resulted in the muting of the fuel price increase and the delayed benet from the folding of
ship management into ATSCs operations. Due to this, overall cost and expenses rose by only 9% for the full year 2011.
Supply chain business. The Group contributed P4.8 billion to the consolidated revenues, an increase of 7% from
previous year. ScanAsia Overseas Inc. was again the biggest contributor to this, with a revenue performance of P3.1 billion
in 2011, on the back of stronger sales revenues contributed by a greater focus on sales of new principals such as P&G. ATS
DEAR SHAREHOLDERS
NEGROS NAVIGATION CO., INC. AND SUBSIDIARIES
COMPARATIVE P&L - 2011 AND 2010
In Millions Pesos
2011 2010
(Audited) (Pro Forma)
Revenues 15,258 14,967
Costs and expenses 15,387 15,575
OPERATING GAIN (LOSS) (129) (608)
Interest and fnancing charges (537) (346)
Loss before other income (charges) (665) (954)
Other income (charges) (762) (317)
Loss before transacton and integraton costs (1,427) (1,271)
Transacton and integraton costs (213) (341)
Net loss before tax (1,640) (1,612)
Beneft from income tax 249 433
NET GAIN (LOSS) (1,391) (1,179)
Looking Ahead.
12
JEREMIAS E. CRUZABRA
Group Chief Financial Offcer
Director
Express posted a 27% decrease in revenues. The decrease is due to transfer of some accounts to other subsidiaries for rationalization
(e.g. P&G moved to ATSC; Globe warehousing moved to ATS Distribution). ATS Distribution, on the other hand, posted an impressive
42% revenue growth, brought about by double digit growths in both Offsite warehouse and transport revenues plus new revenue
coming from cross dock activities. Supply chain expenses, as a whole grew by 12%. This was led by a 19% increase in cost of sales.
International logistics. The Group posted a 23% growth in consolidated revenues to P891 million from 2010. Hansa-Meyer
continued to be the biggest contributor to the pie, accounting for over 53% of total revenues. Hapag-Lloyd is the largest contributor
to the Net Income pie for international logistics, posting a P21 million and cornering over 38% of the total Net Income of International
Logistics.
Overall, 2GO Group, Inc. posted a P821million loss brought about by about P642 billion in extra-ordinary integration/clean-up costs.
These non-recurring items included the recognition of impairment losses on vessels which have been identied by the board as for
sale, process integration, redundancy and retirement, and inventory clean up in the supply chain group. Please note that these items
are no longer expected to recur for the 2012, and some of them were even conservative loss appropriation, which are expected to
turn into other income for the following year.
Consolidated EBITDA of the group stood at P1,027 million, for the full year 2011, compared to P709 million for 2010.
Balance Sheet
Consolidated assets as of December 31, 2011 amounted to P12.13 billion, posting a 4% decrease against last year. Property, plant
and equipment registered 25% decreased from P6.2 billion in 2010 to P4.65 billion in 2011. The Company sold one (1) Ropax vessel
for a net cash proceeds of P104 million that resulted to a gain from sale amounting to P5 million. The Group also disposed some
of its property and equipment which include vessel parts, containers, freight equipment, transportation equipment and handling
equipment, for net proceeds of P58 million, resulting to a gain from asset sale worth P7 million.
Total current assets increased by 22% from P4.84 billion in 2010 to P5.90 billion in 2011. This was mainly attributable to the
classication of ve (5) of the Groups existing vessels as assets held for sale with total carrying values of P693 million, net of
impairment losses. The criteria for the assets held for sale was assessed by management for the ve (5) vessels due to the following
reasons: (1) they are available for immediate sale; (2) preliminary negotiations were executed for those buyers that are willing to buy;
and (3) that the sale is expected to be completed within 12 months from the end of the reporting period.
There was a 2% increase in total liabilities (or P207 million) from P8.62 billion in 2010 to P8.83 billion in 2011. The Company paid
its P2 billion short-term debt by obtaining a P4 billion Facility, the balance of which were used to pay off other critical obligations.
The Stockholders equity decreased by 16% (or P650 million) to P3.3 billion from P3.9 billion as of 2010 due to net loss incurred for
the year.
Cashow Statement
Cash used in Capital Expenditure for the year decreased markedly to P398 million in 2011 from P3.6 billion in 2010. Asset disposals
contributed to a swing in Cash from Investing Activities from a net use of P3.41 billion in 2010 to a net inow of P225 million in 2011.
The Companys year-end 2011 cash balance amounted to P906 million, 13% (or P102 million) higher, compared to 2010. Net
cash generated from operating activities was negative P463 million, which was a P1,082 million reversal, from prior years positive
P619 million cash generated from operations. This was the result of the Groups initiative to update payment of its trade and other
payables, including income tax and all other creditable withholding taxes, totaling 795.3 million.
Net cash from investing activities amounted to P225 million which was due to the sale of investments in subsidiary and property
& equipment, offset by the capital expenditure of P398 million spent for vessel drydocking and major repairs. During the year, the
company secured a 4 billion Loan Facility from BDO that was used as follows: (1) to renance its P2 billion (in-default) corporate loan;
(2) pay-off due portion of the P1.7 billion worth of payables; (3) settle P363.3 million worth of interest; (4) settle debt transaction
costs and nance lease obligations of P48.9 million and P100.6 million respectively.
OUTLOOK
Having successfully hurdled most of the major integration targets for 2011 and having completed a major clean-up of the company,
we are condent that 2012 will be the year when we realize fully the fruits of the integration and renewed focus we have done in
the past year. We approach the year with a renewed vigour and focus and we are certain that 2012 will be the year that 2GO Group
Inc., will take its place as the leading Supply Chain and Logistics Solutions provider for our current and future customers.
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Annual Report 2011
13
In 2011, 2GO improved its course not only as a low-cost
operator with unbundled price structure through its former
SuperFerry, Cebu Ferries and SuperCat brands, but also as a
leisure travel option as it is now jointly operated with Negros
Navigation (the parent companys passage brand). It is also
the year where the integration of all passage brands, namely:
Negros Navigation, SuperFerry, CebuFerries and SuperCat,
was completed. During the year, all policies, procedures and
systems were enhanced and aligned. Streamlining efforts
included route rationalization (geared towards elimination of
duplicates) and work force right-sizing covering NENACO,
ATS and all other subsidiaries within the Group.
Annual Report 2011 13
Looking Ahead.
14
In December 2011, the Company operated additional 3
RoRo/Pax vessels under time charter from NENACO. Thus,
towards the end of the year, all passage brands of the
Company were fully integrated and now took on a new
passage brand, 2GO Travel starting 2012. The new brand
aims to provide exciting tour packages and activities as
well as more affordable, comfortable, safe and reliable
travel experience.
To drive passenger volume and sales, the Company
offered various signature price promotions such as the
Crazy Tawad Fares, the year-round low price regular
fare offering and Todo Todo Sale Sail, a special promo
with dened selling and sailing dates. Special price
promotions are also offered coinciding with festivities in
the ports the company serves.
Ticketing systems were further developed to accept credit
and ATM (automated teller machine) cards through the
Internet as modes of payment. Ticket delivery service,
through our in-house call center, was offered as another
ticket access option for customers. Ticket delivery is offered
in partnership with its subsidiary, 2GO Express. During
the last quarter of 2011, more than eighty percent (80%)
of ticketing outlets were converted into the web-based
ticketing system that allows for ticketless transactions.
This innovation will bring signicant savings in terms of
printing and administrative costs for these outlets.
15
Annual Report 2011
15
To drive early build-up of volumes, larger discounts are offered to customers who
buy their tickets in advance. A ticket to the Visayas region can be bought for as
low as P450, while a ticket to Mindanao can be bought for as low as P750. The
ticketing system is linked to pricing software or a revenue management system that
automatically adjusts prices based on demand. The pricing software is similar to
those employed by hotels and airlines. The best practices of 2GO and its parent
company, NENACO, on revenue management are being integrated into this pricing
software.
2GO Travel sells tickets using four distribution channels: (1) the over 1,200 online
outlets nationwide composed of corporate outlets, third party outlets and network
agencies; (2) an in-house call center; (3) the 2GO Travel website; and (4) on-line third
party-operated marketing websites (i.e. ensogo.com).
As of March 1, 2012, 2GO Travel calls 18 ports, namely: Manila, Bacolod, Cagayan
de Oro, Cebu, Tagbilaran, Batangas, Caticlan, Dumaguete, Puerto Princessa, General
Santos, Iligan, Iloilo, Ormoc, Butuan, Ozamis, Dipolog, Surigao, and Zamboanga,
Looking Ahead.
16
with varying frequencies depending on destination. Customers have six (6) types of accommodations
to choose from: stateroom, cabin, tourist, mega value, super value and airline seat.
With the introduction of the new Batangas-Caticlan route, 2GO Travel has set in motion to establish
itself as the premiere Domestic Cruise Line. The vessels servicing the new route have undergone
renovation on their interior designs, modernization of furniture, amenities and suites to entice large
segment of the Boracay-bound tourist market. 2GO Travel is now available as one of the transportation
options to foreign travel websites as the company marked the beginning of its partnerships with
international travel websites such as myboracayguide.com, myboholguide.com and mycebuguide.
com.
2GO Travel has also opened the 2GO TraveLink service for customers who opt to purchase bus or
boat transfers with their ferry tickets issued in one e-ticket. This provides a hassle-free, seamless
transportation service that the Company is well-known for. 2GO TravelLink service is preliminarily
offered to its Boracay package and will eventually be replicated to the rest of its ports of call. The 2GO
TravelLink service also enables 2GO Travel to offer more travel frequencies to its customers while it
only have once a week call on Dumaguete, it can actually serve customers in Dumaguete daily through
the 2GO TravelLink service via Bacolod or Cebu where 2GO Travel offers ve to six times weekly service.

2GO Travel also has numerous hotel partners who offer customers with attractive hotel accommodations
packaged with the purchase of transportation tickets. Shuttle services are also offered as a premium to
serve selected routes, depending on market demand.
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Annual Report 2011
17
With the coming together of 2GO and its parent companys freight
business, now called 2GO Freight, routes served by the Companys vessels
were rationalized. Port links previously served by both 2GO and NENACO
on the same departure dates were eliminated. This allowed the Company
and NENACO to retire four vessels (2 RoRo/Pax and 2 freighters) resulting
in substantial savings in fuel and other vessel operating costs. While the
number of vessels has been reduced, the scope of ports served has increased.
Freight Revenue grew by P352.3 million or 7% year-on-year despite a
reduction in the number of trips by 242 trips or a reduction of 13%. This
is attributed to a 5% increase in rates and a 1% increase in volume or an
increase of 1,503 TEUs.
While revenue increased, costs were reduced substantially with the integration
of container yards in almost all major ports. These include Bacolod, Iloilo,
Cebu, Palawan, Cagayan de Oro, Ozamis, Iligan, Zamboanga, Davao, and
General Santos.

Looking Ahead.
18
Looking Ahead.
18
Further, under the 2GO Express unit of the
registrant, 2GO introduced new products
and services that helped boost revenues in
its domestic and international courier, such
as the Budget Box and International Budget
Box, US Visa delivery, and expanded offerings
under its partnership with international
logistics provider United Parcel Service (UPS).
2GO has been bundling more value-added
services and offering more exible solutions
for our customers that would further
strengthen our position as the countrys only
integrated chain solutions provider.
ScanAsia
ScanAsia Overseas, Inc. continues to expand its portfolio, representing over 80 renowned international and
domestic-based multinational brands, for both food and non-food lines.
ScanAsia reformulated its strategies by applying category management principles and better brand management
across all its principals. Identifying the right product mix per channel, providing better assortment to the
consumer, boosting brand awareness, and right-sizing distribution range were among the activities the team
was busy in 2011.
New international and local brands were added to our portfolio.
In the same year, ScanAsia aligned its Information Technology, Finance, Human Resources processes with 2GO
Group, eliminating non-value adding practices. Performance management system was also pushed to increase
accountability and commitment of its members.
Systems were established to increase margins and manage both revenue and cost drivers through the
implementation of proper demand planning.
Working with market leaders as their preferred trading and distribution solutions provider will continue to be
our direction. And raising levels of team competence and ability to innovate is still our top priority.
Distribution
19
Annual Report 2011
19
Annual Report 2011
19
Warehousing
Third party logistics remained robust with an increase in warehouse capacity to nearly 39,000 pallets.
In 2011, the warehouse capacity increased by 56,000 pallets with the completion of its 3rd warehouse.
Project Logistics
The ever reliable formula of combining international and
local expertise in the partnership of Hansa Meyer Global
Transport and 2Go Group, Inc. has resulted in the successes
experienced by Hansa Meyer ATS Project, Inc. (HATS) in its
15 years of existence. The company engages in specialized
transport services such as movement of oversized and heavy
lift cargoes and consultancy in various industries like Mining,
Power Generation, Renewable Energy, Telecommunication,
Transmission & Distribution and Infrastructure. With the
continued growth of Projects in these sectors and a truly
capable and focused management team with Project
Managers for each sector, we expect that 2012 will be
another successful year. Projects that are currently secured
include the Petron Power Plant Expansion Project (Boiler 3 &
4) and Masbate Gold Supply Logistics Services. Various other
Projects are being developed and bided for as well.
Looking Ahead.
20
Hapag-Lloyd Philippines, Inc.
As the local unit of leading international container shipping liner Hapag-Lloyd AG, we experienced
a remarkable turnaround through a renewed commitment on strengthening our vision of achieving
results through a can do and must do attitude. Hapag-Lloyd Philippines exceeded its targets despite
a reduction of our agency remuneration to support the cost cutting initiatives of the principal units.
The global business strategy remains committed to creating better value for our customers by staying
competitive in terms of pricing, technology, and processes. Hapag-Lloyd Philippines aligns its vision
with its mother company while its commitment is sealed with the same burning passion of achieving,
if not exceeding its targets.
Our extensive business plan which is based on substantial business drivers, extensive market research,
and viable strategies, provides a clear foundation for the realization of this vision.
International logistics
The partnership between Kerry ATS Logistics, Inc. (KALI) and international logistics company, Kerry
Logistics Network Limited of Hong Kong allowed both companies to benet from the hefty growth in
total imports and exports following the global economic recovery in 2010.
Kerry-ATS Logistics offers our customers dedicated international freight forwarding solutions across
the globe. Based in Hong kong, Kerry operates in 24 countries with a strong focus on China.
KALI aims to deliver more results as it continues to move along with the growth of global economic
activity. It focuses on expanding its customer base, improving yield and cost management, making
processes more efcient to meet the rising expectations of customers, and leveraging further on the
global inuence of KLN.
Our KerrierVIsion system creates greater visibility throughout the supply chain by providing end-to-
end transparency and real-time information about each shipment, product and item. It incorporates
multiple currencies, multiple languages and can be multimodal to better meet the needs of our
customers in the world market.
20
21
Annual Report 2011
21
INFORMATION TECHNOLOGY
The year 2011 can be summarized as a transition year for the entire organization. With Information
Technology (IT) already playing an important and strategic role for both NENACO and 2GO, the
integration of the different IT applications, infrastructure and IT organization was seen as a critical
success factor of the Business Integration, and Information Technology was a primodial priority at the
highest level of management.
Since both NENACO and 2GO had their own passage and freight systems, a formal selection process
consisting of internal evaluation and a third party (i.e., SGV & Co.) assessment were conducted to
identify the best system to be adopted by the integrated company. And at the end of the day, the
Freight Division easily selected the eFOS system from 2GO, while the Passage Division after taking
some time eventually selected the Nexus system from 2GO.
Part of the agreement, however, are the enhancements on both eFOS and Nexus systems to
accommodate other key functionalities from the NENACO systems that were deemed better and more
appropriate for the integrated Freight and Passage processes. By December 2011, the Freight and
Passage divisions were already using similar systems for Freight (eFOS) and Passage (Nexus) business.
For the Supply Chain systems, Quikair (for 2GO Express) and SAP (for 2GO Distribution), were expectedly
retained. Today, an integrated Financial and HR systems using the Oracle EBS R12 platform is being
developed and will reach Go Live status by end of July 2012.
The NENACO and IT teams also underwent its own integration program. After physically putting
together both NENACO IT and 2GO IT teams in one ofce, the two groups joined hands to provide
more focus on Applications Development as well as End-User Support activities two critical areas
needed for the ongoing business units integration programs. A job-and-task analysis project was
also initiated to further review the current IT structure and its complements. The increase in attrition
affecting mostly the rank & le IT employees was addressed by an aggressive retention program, in
tandem with an increased effort to hire replacements.
Looking Ahead.
22
On the infrastructure front, pro-active maintenance activities have become a way-of-life to ensure
the security and integrity of the Groups extensive data centre and network infrastructure. With
the integration of systems, some of the NENACO hardware infrastructure have already been made
redundant and are being slowly decommissioned to reduce the IT operations cost.
With IT outsourcing as a major direction for cost reduction objectives, the email service was one of
the rst items to be outsourced to a third party email provider by the end of 2011. Future areas for
outsourcing include Backup and Recovery services, Collaboration and Workow.
CORPORATE SOCIAL RESPONSIBILITY
In the companys pursuit of its mission to become more responsible corporate citizens of the nation, efforts of 2GO
on corporate social responsibility programs for 2011 were all geared toward three (3) main facets : education,
social advocacy and environmental protection and rehabilitation.
NENACO-2GO SCHOLARSHIP GRANT AND CAREER ASSISTANCE PROGRAM
Since the birth of 2GOs Scholarship Program in 2008 for students who wanted to pursue a course in Supply
Chain, a total of twenty-three (23) students have beneted from the Program. Out of 23 students, eight (8)
joined the roster of graduates in March of this year of which ve (5) students were pinned cum laude. Further, six
(6) of those graduates are now employed with 2GO under the Logistics Team. The year 2011 was a meaningful
partnership with Jose Rizal University and Technological Institute of the Philippines.
The development of said curriculum is in collaboration with the Philippine Institute of Supply Management and its
foundation, the Society of Fellows in Supply Chain Management, aimed at addressing the need for well-trained
supply chain practitioners in the country.
On the other hand, while more and more Filipino seafarers have tried their luck overseas, NENACO-2GO saw the
need for the organization to also develop its own resource which will complement its future deck and engine
ofcers. Last year, the Company employed top four (4) of the graduating class of the Technological Institute of the
Philippines of Marine Engineering and Marine Transportation courses. Those students who also belonged to the
Companys Scholarship Program are now assigned in various 2GO vessels as full-time employees of the Company
as a testament of the companys goal to assist its scholars operating under the education-to-employment
philosophy. To further build its vessel workforce, the Company has also launched its Career Assistance Program
(CARP) which purports to provide supportive assistance to existing vessel crew and ofcers who desire to further
develop their career but are impeded by lack of nancial means to pursue their dreams. The CARP allows
employees to go on leave while on training and/or while taking their licensure examinations, get compensated
and get rewarded in their respective job assignments. Two years ago, the rst two top ofcers, a Captain and a
Chief Mate, and the youngest in their line, and some other vessel ofcers were produced by this Program.
ANTI-HUMAN TRAFFICKING
During the year, the Group afrms its commitment in anti-human trafcking efforts. 2GO Group together with the
various international organizations participated in the Commitment Week Against Trafcking of Persons to show
their commitment to ght human trafcking in the Philippines represented by its passage business unit SuperFerry,
now known as 2GO Travel.
Organized by the non-government organization Visayan Forum Foundation (VFF) with the support from United
States Agency for International Development, the week long celebration involved series of events which gave the
different organizations the opportunity to afrm their support in the war to end the said crime.
At least more than 20 members from the 2GO Group joined the RAT Race (Run Against Trafcking) held last March
13, 2011 at Taguig. Further, the Group through its participants declared its commitment to the cause during the
Commitment Day Against Trafcking in Persons held last March 15, 2011 at Ortigas, Pasig City. The said event
23
Annual Report 2011
23
was also attended by some government ofcials such as Vice-President Jejomar Binay and US Ambassador Harry
Thomas who both pledged their support to the program as well.
FREE TRANSPORT OF RESCUE EQUIPMENT AND RELIEF GOODS
Immediately after Typhoon Sendong struck Cagayan de Oro, Iligan and
Dumaguete in December 2012, Mr. Sulcio O. Tagud, Jr., President and
CEO of 2Go Group, Inc. came out with an announcement to the public that
2GO Freight will provide free freight services for relief goods for Sendong
victims. 2Go/ SuperFerry/ Negros Navigation ticket and LCL consolidation
outlets in Metro Manila, Cebu, Bacolod and Iloilo were designated as drop-
off centers for free shipment of such items. The response was overwhelming
not only from civic and religious organizations and companies but also from
individuals.
In a span of 2 weeks after the typhoon, 2Go was able to transport for
free approximately 700 tons of relief goods to Cagayan de Oro, Iligan and
Dumaguete. The Company provided transport for relief goods coming
from various groups including: Philippine Red Cross, American Chamber
Foundation, World Food Program, St. James COPA Parish Foundation,
Rotary Club of San Francisco del Monte, Sen. Koko Pimentel, Sen. Ping Lacson, Ms. Risa Hontiveros, Cebu
Provincial Government, ABS-CBN, GMA, Bombo Radyo, and many others.
2GO Travel also transported rescue volunteers and equipment of MMDA, La Salle-Bacolod as well as water
purication equipment for the Oro Chamber of Commerce care of Ambassador Raul Rabe.
SUSTAINABILITY PROGRAMS
We subscribe to the triple bottomline approach in business which states that a business will thrive not just by
achieving nancial prots and looking after the welfare of its people but also by ensuring the sustainability of the
planet.
In fulllment of this goal, 2GO pledged its support to different causes such as the Earth Day movement by
conducting a clean-up drive in parks and ports, as supported by our branches nationwide.
In its continuous support to the campaign for the rehabilitation of the Pasig River, 2GO participated and joined the
record-breaking 11.20.2011 Run for Pasig River.
Further, as part of the Earth Day celebration, Supercat together with other transport companies under NENACO-
2GO Group and its alliances, renewed its commitment for protecting Mother Earth as they organized Bakawan
Para Sa Karagatan. The annual tree planting and coastal clean-up activities in the coastal areas of Tungkil,
Minglanilla, Cebu was held last April 30, 2011.
Looking Ahead.
24
There have been studies relating managerial behaviour and organizational performance to good
corporate governance. While academic research and institutional studies have very limited explanatory
power to draw substantive conclusions about the impact of corporate governance on corporate
performance, there are plenty of hard evidence to show that investors pay more for well-governed
companies. There is also widespread recognition on the importance of transparency and accountability
both in government and in the business community.
As businesses continue to open up to the global market and liberalization happens, the decision-
making process becomes more diffused. This brings up the level of accountability of corporate leaders
to all their stakeholders, including employees, customers and in particular, their shareholders.
In 2GO, no less than its Board of Directors, at the top of the Companys corporate governance
structure, who takes the lead. It is the Board who is tasked to strike a balance between conformance
and performance; long-term strategy and day-to-day operations; form and substance.
The Board is the key to the success of any corporate governance directive.
BOARD STRUCTURE
Compliance to the principles of good governance starts at the top. The directors position is one built
on trust and integrity. The Board has the duciary responsibility to ensure the companys prosperity by
collectively directing the companys affairs, while meeting the appropriate interests of all its stakeholders.
The 2GO Board is a team of nine (9) highly respectable individualsseven (7) non-executive directors
which includes the Chairman and only two (2) executive directors. Of the nine (9), there are three (3)
independent directors, including the Chairman, who are experts in their respective elds.
Chairman : Francis C. Chua, Independent Director
Members : Sulcio O. Tagud, Jr.
Jeremias E. Cruzabra
Raul Ch. Rabe, Independent Director
Monico V. Jacob, Independent Director
Nelson T. Yap
Mark E. Williams
Geoffrey M. Seeto
Patrick Ip
Separating the role of the Chairman and the Chief Executive Ofcer (CEO) was brought into focus
when improved corporate governance were observed in companies where the two roles were split.
Thus, to foster an appropriate balance of power, increased transparency, accountability and control
over company operations, the elected Chairman of the Board, a non-executive director, has been made
separate and distinct from the appointed CEO of 2GO.
CORPORATE GOVERNANCE
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Annual Report 2011
25
BOARD MEETINGS
In the January 16, 2012 report to the SEC, the 2GO Corporate Secretarys Certication on Directors
Attendance in Board Meetings summarized the attendance record of the members of the Board of
Directors of the corporation for the period January 1, 2011 to December 29, 2011.
P = Present
X = Absent
M = Maximum Number of Meetings that the relevant Board Member could have attended during the period January 1 to
December 29, 2011
NA = Not Applicable because the Board Member was not a member of the Board during the relevant meeting date.
BOARD COMMITTEES
The Board has three (3) committeesthe Compensation, Remuneration and Nomination Committee,
the Audit and Corporate Governance Committee, and the Risk Management Committee. The Board
and its committees oversee and advise management in developing the companys nancial and business
goals, oversee its public disclosures and the processes behind them, and evaluate managements
performance in pursuing and achieving those goals.
COMPENSATION, REMUNERATION AND NOMINATION COMMITTEE
The Nomination and Compensation Committee is mainly responsible for
Establishing the criteria for the selection of directors and senior management and recommend
Board nominees and committee membership.
Establishing the overall compensation philosophy of the company including directors and employee
compensation, benets and incentive plans.
Director Jan 21 Mar2 Apr 28 Jun 1 Jun 15 Jul 6 Jul 19 Oct 13 Dec 5 Dec 29 P/M
Francis C. Chua P P P P P P P P P P 10/10
Sulcio O. Tagud, Jr. P P P P P P P P P P 10/10
Jeremias E. Cruzabra P P P P P P P P P P 10/10
Nelson T. Yap NA NA NA NA NA NA NA NA P P 2/2
Mark E. Williams P P P P P P P P P P 10/10
Geoffrey K. Seeto NA NA NA NA NA NA NA P P P 3/3
Raul Ch. Rabe P P P P P P P P P P 10/10
Patrick Ip NA NA NA NA NA NA NA P P P 3/3
Monico V. Jacob NA NA NA NA NA NA NA NA P P 2/2
Ramon G. Villordon, Jr. NA NA NA P P P P P NA NA 5/5
Michelle Lu P P P P P P P X NA NA 7/8
Jon Ramon M. Aboitiz P P P P X NA NA NA NA NA 4/5
Enrique M. Aboitiz, Jr. P P P P X NA NA NA NA NA 4/5
Bob D. Gothong P P X P NA NA NA NA NA NA 3/4
Meetings Held in 2011
Looking Ahead.
26
This committee is likewise is responsible in reviewing the management development and succession
policies.
In 2011, the committee membership was as follows:
Chairman : Mr. Sulcio O. Tagud, Jr.
Members : Mr. Mark E. Williams
Mr. Geoffrey M. Seeto
Mr. Geoffrey M. Seeto was appointed by the Board as a member of the Committee in October 2011,
replacing Ms. Michelle X. Lu upon her resignation.

AUDIT AND CORPORATE GOVERNANCE COMMITTEE
The Board Audit and Corporate Governance Committee has oversight function over the audit activities
performed by the companys internal auditors and the nominated external auditor for the year. The
committee oversees internal and disclosure controls and procedures.
The committee also takes the lead in promulgating and overseeing the principles of corporate
governance by reviewing committee charters, directors independence as well as code of ethics for
executives, employees and directors.
Composition
The Board Audit and Corporate Governance Committee is composed of four (4) board members, one
(1) of which is an independent director and one (1) ex-ofcio member.
Chairman : Mr. Francis C. Chua, Independent Director
Members : Mr. Patrick Ip
Mr. Mark E. Williams
Mr. Geoffrey M. Seeto
Mr. Evan C. Mcbride, Ex-Ofcio member
Mr. Patrick Ip was appointed by the Board as a member of the Committee in October 2011, replacing
Ms. Michelle X. Lu upon her resignation. Mr. Evan C. Mcbride, on the other hand, is a Director of
NENACO.
Committee Meetings
The Audit and Corporate Governance Committee met three (3) times in 2011. All three meetings were
duly attended by the committee members.
In its meetings, the committee tables for discussion the audit master plan for the year; the highlights
of internal audit results and the corresponding action plans; the performance of the internal audit
team; the selection and approval of the external auditor for the year and their audit timetable; and
the presentation and endorsement for Board approval of the prior years audited nancial statements.
27
Annual Report 2011
27
In the presentation of the audit master plan for the year, the committee reviews and assesses the
robustness of the audit risk assessment methodology used by internal audit as this becomes the basis
in allocating its limited manpower resources to auditable units that are rated to be comparatively riskier
than others.
A detailed Audit Committee Report for 2011 is presented in a subsequent section.
RISK MANAGEMENT COMMITTEE
The ultimate accountability over risk oversight and risk management in the organization rests with the
Board. However, the Risk Management Committee, as a Board subcommittee, is responsible in leading
the organizations strategic direction in the management of material business risks such that leaders
are able to make informed decisions. The committee also provides oversight for the establishment,
implementation, and effectiveness review and assessment of the companys risk management
framework.
The 2GO Risk Management Committee in 2011 was composed of the following:
Chairman : Amb. Raul C. Rabe
Members : Mr. Mark E. Williams
Mr. Geoffrey M. Seeto
Mr. Evan C. Mcbride, Ex-Ofcio Member
Mr. Patrick Ip

Mr. Patrick Ip was appointed by the Board as a member of the Committee in October 2011, replacing
Ms. Michelle Lu upon her resignation. Mr. Enrique M. Aboitiz, Jr. was also appointed by the Board as
a member of the Risk Management Committee from March until his resignation on June 15, 2011.
EXECUTIVE COMPENSATION POLICY
Meritocracy based. This is the corporate compensation philosophy for executive remuneration in 2GO.
Commensurate compensation is given based on the annual performance evaluation of its executives.
Any change in compensation is subject to full discussion and concurrence by the Board upon the
review and recommendation of its Board Nomination and Compensation Committee.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
The table of the monthly xed allowance and per diem per meeting attendance of the 2GO Board of
Directors in 2011 is shown below.
Compensation Director Chairman of the Board
Monthly Fixed Allowance P80,000 P120,000
Board Meeting Per Diem P30,000 P45,000
Committee Meeting Per Diem P30,000
Looking Ahead.
28
SOCIAL RESPONSIBILITY
As a responsible corporate citizen, the 2GO Group Inc. has embarked on social responsibility program
for 2011 focused on three (3) main areas: Education, Social Advocacy, and Environmental Protection
and Rehabilitation.
CODE OF BUSINESS CONDUCT
The 2GO Code of Business Conduct serves to guide employees actions aligned with the companys
corporate values. The Code consists of policies relating to ethical and legal standards of behaviour that
2GO expects of its employees. Its applicability extends to all the business units in the organization. The
Code explicitly states the corresponding disciplinary actions that include suspension and termination
for violations committed against company policies and the Code.
CORPORATE GOVERNANCE SCORECARD
While companies are not expressly mandated to comply with recommended best practices on corporate
governance, the comply-or-explain approach employed by the SEC and PSE through its Corporate
Governance scorecard and disclosures denitely exerted pressure for companies to comply.
For the past 4 years, 2GO has participated in the assessment of corporate governance standards
and practices of publicly listed companies. This is an annual appraisal conducted by the Institute of
Corporate Directors in partnership with the Securities and Exchange Commission.
2GO corporate governance scorecard has improved from its 70% rating in 2007 to 90.3% in 2009 or
from a second quartile ranking up to the Silver Category.
The improvement is a testimony of the companys unwavering pursuit of systemic corporate governance
reforms within the organization.
OUTLOOK
For any company, more so for publicly listed companies such as 2GO, the practice of good corporate
governance is believed to bring about added shareholder value. Thus, there is a willingness to pay a
premium for well-governed companies.
Under the new management, there is assurance to uphold the same level of commitment to the
standards and principles of good corporate governance. The direction is to lead the business to a
healthy and robust future as businesses become more complex and as markets become more open
and global.
FURTHER INFORMATION
The following are available on www.atsc.com.ph/IR/governance
2GO Corporate Governance
2GO Articles of Incorporation
2GO Code of Business Conduct
2GO By-Laws
2GO Anti-Money Laundering Statement of Policies & Procedures
29
Annual Report 2011
29
RISK MANAGEMENT
In 2011, initiatives were focused on the integration of NENACO and 2GO. Policies and procedures were integrated
in order to support the merging of processes of two separate companies.
Risk Management team focused on integrating the insurance requirements for both NENACO and 2GO. Insurance
policies were reviewed and correspondingly, adopt an insurance program that best t the requirements of NENACO
and 2GO under a cost-effective package.
The management of both NENACO and 2GO considers Risk Management as an integral part of business operations,
maintaining its direction that ERM is a shared responsibility, company-wide, and ensure that risk exposures are
identied and proactively manage in order to create value-adding service to the organization and consistently
achieve stakeholders expectation.
Risk Management team has developed a road map for re-launching of ERM program to the newly-integrated
NENACO and 2GO. The road map will run its full course within 2012 with the following phases:
The end goal is that by the end of 2012, ERM philosophy and framework is already re-established within the 2GO
Group, Inc and its allied companies.
Concurrently, Risk Management team will embark on re-assessing the Strategic Risks which were previously
identied. There is a need to validate if risk exposures are still applicable after the change in management and
integration of NENACO and 2GO.
The following has to be validated:
What are the new Strategic Risks that the company considers?
Are previously identied strategic risks still applicable?
Are there new Strategic Risks identied based on the current company strategies and objectives?
What strategic risks need to be address immediately?
What are the new Strategic Risks that the company considers?
Are the identied risk treatment implemented? If not, how we effectively address the risks?
What are the current controls in order to minimize the impact of the identied risks?
Within the rst half of 2012, it is expected the new top risks are already identied and the risk owner will treat
their risks and corresponding programs and projects will be instituted as risk response to effectively manage its
risk exposures.
We saw in previous years the importance of implementing Risk Management framework as a tool in handling
difcult times. Hence, re-establishing ERM to the newly-integrated NENACO and 2GO will be of utmost value-
adding initiative for the whole organization.
Focus and attention on raising risk awareness and re-embedding risk management culture within the policies
and processes throughout the organization will provide more condence in achieving corporate goals, thereby
delighting those we serve and delivering our vision as face the future of NENACO and 2GO.
POLICY CREATION
Revisit current ERM philosophy and framework
Validating if philosophy and frame will still be applicable
Establishing Risk Management Council who will drive
ERM initiatives
CONCEPT LOADING
Re-launching ERM philosophy and framework to all
business units
Cascading ERM concepts to all team members
PLANNING AND MANAGEMENT
Creating Risk Register on a per business unit level
Validating if current identied risk and its treatment are
still applicable
Identifying, assessing and treating new risks inherent to
integration of NENACO and 2GO
ESTABLISH BUSINESS CONTINUITY
MANAGEMENT
Assessing the need for Business Continuity
Program
Establishing business continuity plan for the
top identied risk exposure
VALIDATION AND REVIEW
Validating if risk treatment are being
implemented
Reviewing if the risk treatment strategies are
effective and efcient
Assessing the maturity of Risk Awareness
within the group
Looking Ahead.
30
The Board Audit Committee (AudCom) is an independent operating body directly reporting to the Board of Directors. It
assists the Board in the carrying out its functions by providing an oversight role in ensuring the integrity of the companys
nancial reports, its compliance with regulatory requirements, and the performance of the companys internal audit
function.
The AudCom maintains an effective working relationship with the Board by providing them information necessary in
making good governance and audit-related decisions.

MEMBERSHIP
The Board Audit Committee is composed of four (4) Directors and one (1) Ex-Ofcio member:
Francis C. Chua, Chairman, Independent Director
Michelle X. Lu, Director
Mark E. Williams, Director
Geoffrey M. Seeto
Evan C. McBride, Ex-Ofcio

MEETINGS
The Board AudCom held three (3) meetings in 2011. All meetings were attended by the AudCom members.

Committee Member Feb 25 Apr 28 July 20

Francis C. Chua
Mark E. Williams
Geoffrey M. Seeto
Evan C. McBride
Michelle X. Lu (attendance via phone patch)

In the February 25 meeting, the AudCom reviewed, discussed and endorsed for Board approval 2010 Audited Financial
Statements of 2GO presented by SGV & Co., the Companys external auditing rm. The general assessment of the
companys internal control system and the internal audit plans and programs for 2011 were likewise presented to during
this meeting.
In the subsequent meetings, internal audit reports were presented and discussed extensively. For 2011, discussion
highlights were focused in the areas of vessel and passenger safety and security, physical and environmental data security
and access as well as process controls in its supply chain and freight businesses.

The selection and approval of the external auditor for the year 2011SGV & Co. -- was agreed upon and endorsed to
the Board during the AudComs midyear meeting in July.

SYSTEM OF INTERNAL CONTROLS
The framework of control, risk management and governance processes are existing within the 2GO group of
companies. The integration and streamlining efforts of management as a result of the buyout caused some of these
processes to be combined and/or reduced to provide the basic elements of control and good governance needed to
sustain operations. There is continuous effort to further enhance and align processes to meet organizational goals.
The culture of accountability is apparent with the general adherence of employees to management policies and directives
in order to achieve company objectives.
The internal control system is effectively designed to safeguard assets; to secure the relevance, reliability and integrity of
information and as far as possible the completeness and accuracy of records; and to ensure compliance with statutory
requirements.
For 2011, most business units posted increases in their audit ratings compared to the previous year. The less-than-
satisfactory results of the supply chain operations and systems audits caused management to focus its efforts in improving
this segment of the business.
Various measures are being undertaken by management including organization restructuring across all business units to
allow streamlining of functions for the effective execution of responsibilities.
Continuous enhancement of performance metrics and speedy resolution of audit issues raised are likewise given focus
to assure company objectives are met.
AUDIT COMMITTEE REPORT
31
Annual Report 2011
31
Moving forward, 2GO management is responsible in maintaining the internal control system and ensuring that resources
are properly applied in the manner and to the activities intended.
The AudCom is pleased to note that the business units have been proactive in addressing recommendations with regards
to the enhancement of the internal control environment.
INTERNAL AUDIT
In accordance with established Standards and Code of Ethics of the profession, the Internal Audit Department (IAD)
continually strives to improve the prociency, effectiveness and quality of the internal audit activities.
The IAD reports to the Board AudCom the highlights on the validation of the operational effectiveness of key activities
and controls. The assessment focused on policies and procedures relating to processes in nance, operations, and IT
systems.
The accomplishments realized by IAD in 2011 were not without difculties. There were a number of constraints and
limiting factors such as unlled manpower plantilla in Audit and changes in the organizational processes that warranted
a shift in the audit focus and strategies more relevant to the situation.
Despite above operational challenges and with limited resources at hand, IAD continued to deliver its value-adding
services to help improve operations; to serve the shareholders and management of 2GO; to partner with the business
units in enhancing current performance and future competitiveness; to supply a source of future management talent;
and to be an active participant in the improvement of 2GO.
RISK MANAGEMENT
Risk management is fast becoming an ingrained concept and way-of-life in the organization. However, the establishment
of a comprehensive Business Continuity Plan remains a major area that needs top management support and directive to
see it to completion.
CORPORATE GOVERNANCE
Good corporate governance is practiced not because it is required by law but because it promotes 2GO core values of
transparency, openness, and accountability. For 2GO, corporate governance and a value-oriented management are
pillars of business resilience.
EXTERNAL AUDIT
SGV & Co. was appointed external auditor of 2GO for 2011. In compliance with corporate governance policy, SGV & Co.
reported during the November 2010 meeting, that it will be replacing its Lead Financial Audit Partner, Ladislao Z. Avila
in 2011 as it is his fth year as SGV partner assigned to 2GO. Josephine H. Estomo is serving her rst year term as the
signing partner designated by SGV & Co.
SGV & Co audit work focused mainly on audits of internal controls and how these safeguard the nancial reporting
including the nancial statements of the Company.
2011 FINANCIAL RESULTS
During the period covered by this report, the new Board AudCom concurred with the opinions expressed by SGV & Co.,
on the overall presentation of the nancial statements of the Company.
The audit also included an evaluation of the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management.
The audit concluded that the balance sheets and the related statement of income and expenses, cash ows, changes in
capital and reserves present fairly, in all material aspects, the nancial position of 2GO.
Based on the judgment about quality of accounting principles, SGV & Co. disclosed that the accounting principles
used by 2GO are in compliance with the Philippine Financial Reporting Standards. Signicant accounting principles are
disclosed in the notes to the nancial statements, as required by the standards.
APPROVAL
Approved by the 2GO Board of Directors, upon the favorable recommendation of the Board Audit Committee, and
signed on its behalf by:
Mr. Francis C. Chua
Chairman, 2GO Board Audit Committee

Looking Ahead.
32
STOCK EXCHANGE INFORMATION
2GO common shares and redeemable preferred shares are listed and traded on the Philippine
Stock Exchange under the ticker 2GO and 2GOP, respectively.
In 2011, 2GO common shares traded a low of P1.20 per share and a high of P1.95 per share.
SHAREHOLDERS ON RECORD
As of March 31, 2012, there were about 1,976 common shareholders on record.
ANNUAL REPORT IN SEC FORM 17-A
The nancial information included in this report conforms to the information required in the SEC
Form 17-A submitted to the SEC. Hard copies may be obtained free of charge upon written
request to Investor Relations. Soft copies can also be viewed at our website under the Investor
Relations section.
ANNUAL MEETING
2GOs 2011 Annual Meeting of Shareholders was held last June 22, 2011 at the Midas Hotel,
Manila.
INVESTOR RELATIONS
Inquiries from institutional and retail shareholders may be directed to:
Mr. Rommel H. Aniag
Vice President/Head - Corporate Finance and Investor Relations
2GO Group Inc.
12th oor Times Plaza Building,
United Nations Avenue corner Taft Avenue,
Manila, 1000 Philippines
Phone: (+63 2) 528-7586
Email: investor_relations@2go.com.ph
rommel_aniag@2go.com.ph

EXTERNAL AUDITOR
Sycip Gorres Velayo & Co., CPAs
6790 Ayala Avenue, Makati City 1226
Philippines
Phone (+63 2) 891-0307
Fax: (+63 2) 819-0872
Website: www.sgv.com.ph
STOCK TRANSFER AGENT REGISTRAR
For inquiries regarding dividend payments, change of address or account status of lost or damaged
stock certicates, please write or call:
Mr. Ricardo B. Yatco
General Manager
Securities Transfer Services, Inc.
Ground Floor Benpres Building,
Exchange Road corner Meralco Avenue,
Ortigas Center, Pasig City, Philippines
P.O. Box No. 13951 OCPO, Pasig City
Phone: (+63 2) 490-0060 local 112
Fax: (+63 2) 631-7148
E-mail: stsi@stsi.ph
SHAREHOLDERS INFORMATION
33
Annual Report 2011
33
Looking Ahead.
34
BOARD OF DIRECTORS
MR. FRANCIS C. CHUA, 61 years old, Filipino, has
served as Chairman of the Board since July 2011 and as
an Independent Director of 2GO since January 2011. He
is also the Chairman of the Board Audit and Corporate
Governance Committees. Mr. Chua also sits as the
Chairman of the Board of NENACO since July 2011.
His other current positions include Honorary Consulate
General of the Republic of Peru in Manila; President and
Eminent Adviser of the Philippine Chamber of Commerce
and Industry; Chairman of the Philippine Chamber of
Commerce and Industry Foundation, CLMC Group
of Companies, and Green Army Philippines Network
Foundation; President of DongFeng Automotive, Inc. and
Philippine Satellite Corporation; Director of Philippine Stock
Exchange, National Grid Corporation of the Philippines,
Bank of Commerce, Basic Energy, and Overseas Chinese
University; and Trustee of Xavier School Educational Trust
Fund, and Adamson University. He graduated with a
Bachelor of Science degree in Industrial Engineering from
the University of the Philippines.
MR. SULFICIO O. TAGUD, JR., 61 years old, Filipino,
has served as the President and Chief Executive Ofcer
and a Director of 2GO since December 2010. Mr. Tagud
is also the Chairman of the Compensation, Remuneration
and Nomination Committee of the Company. He has also
served as the Chairman and President of KGLI-NM Holdings,
Inc. since July 2008; Chairman and Chief Executive Ofcer
of NENACO since August 2004; and Chairman and CEO
of Negros Holdings & Management Corporation since
December 2006. He graduated Class Valedictorian with
a Bachelor of Science degree in Business Administration,
major in Economics (Magna Cum Laude) at Xavier
University, Cagayan De Oro City. He also completed his
Masters in Industrial Economics at the Center for Research
and Communication in Manila, and Masters in Business
Administration at the Ateneo de Manila University. He also
completed Real Estate Development Program at the Urban
Land Institute at Washington, D.C., U.S.A.
FRANCIS C. CHUA
Chairman of the Board and
Independent Director
SULFICIO O. TAGUD, JR.
President and
Chief Executive Ofcer
35
Annual Report 2011
35
BOARD OF DIRECTORS BOARD OF DIRECTORS
MR. JEREMIAS E. CRUZABRA, 45 years old, Filipino, has served as
Director since December 2010, Treasurer and Group Chief Finance Ofcer
since June 2011, and Corporate Information Ofcer since December 2011.
He has also served as the Group Chief Finance Ofcer of Negros Navigation
Co. (NN) and its subsidiaries since April 2004. He was appointed as President
& Chief Operating Ofcer of NN from March 2009 up to March 2010. Mr.
Cruzabra is also the Chief Finance Ofcer and Board Director of KGLI-
NM Holdings, Inc. since July 2008; Vice-President & Chief Finance Ofcer/
Treasurer of Negros Holdings & Management Corporation since December
2006; Chief Finance Ofcer (and later Trustee) of Sapphire Securities, Inc.
(defunct) from 1997 to 1999. In 1999, he co-founded Business Sense, Inc.
(BSI), a business-consulting rm that specializes in strategy formulation and
productivity improvement. He started his career with SGV & Co. (a member
company of Ernst & Young) from 1988 to 1992. After his stint with SGV,
Mr. Cruzabra joined Metro Pacic Corporation Group (now Metro Pacic
Investment Corporation) where he was posted as nance executive in various
companies. Mr. Cruzabra, who is a Certied Public Accountant, graduated
with a Bachelor of Science degree in Commerce, major in Accounting
(Magna Cum Laude). He completed his Masters in Business Administration
at Murdoch University in Perth, Western Australia.
AMB. RAUL CH. RABE, 71 years old, Filipino,
has been an Independent Director of 2GO since
December 2010. He is also the Chairman of the
Risk Management Committee. He has also served
as a member of the Board of Directors of KGLI-
NM Holdings, Inc. since July 2008; Bancommerce
Investment Corporation since 2007; PET Plans,
Inc. since 2007; Vivant Corporation since 2002;
Bank of Commerce since 2001; Corporate
Secretary of Manila Economic and Cultural
Ofce since 2001, and of Counsel for Rodrigo,
Berenguer and Guno since 1999. He graduated
with a Bachelor of Arts degree at the University
of Santo Tomas, and Bachelor of Laws degree
from the Ateneo de Manila Law School. He also
completed the Colombo Plan Scholarship on
Diplomacy at the Australian Institute of Foreign
Service in Canberra, Australia.
JEREMIAS E. CRUZABRA
Director and
Chief Finance Ofcer
AMB. RAUL CH. RABE
Independent Director
Looking Ahead.
36
ATTY. MONICO V. JACOB
Independent Director
GEOFFREY M. SEETO
Director
PATRICK IP
Director
NELSON T. YAP
Director
MARK E. WILLIAMS
Director
BOARD OF DIRECTORS
37
Annual Report 2011
37
ATTY. MONICO V. JACOB, 66 years old, Filipino,
has served as an Independent Director of 2GO since
December 2011. He also sits on the Board of NENACO
as an Independent Member since December 2010.
As a partner of the Jacob & Jacob Law Firm, he has
been involved in corporate recovery work including
rehabilitation receiverships and restructuring advisory in
the following rms: The Uniwide Group of Companies,
ASB Holdings, Inc., RAMCAR Group of Companies,
Atlantic Gulf and Pacic Company of Manila, Inc.,
Petrochemicals Corporation of Asia-Pacic, All Asia Capital
and Trust Corporation (now know as Advent Capital and
Finance Corporation), Nasipit Lumber Company, Inc. and
NENACO. His current positions include: President and CEO
of Systems Technology Institute, Inc. (STI), Information and
Communications Technology Academy, Inc., PhilPlans First,
Inc., Philhealthcare, Inc., Banclife Insurance Co. Inc., and
JTH Davies Holdings, Inc.; Member of the Boards of Jollibee
Foods, Inc., Advent Capital and Finance Corp., Asian Life
Financial Assurance, Asian Terminals, Inc., Mindanao
Energy, Inc., Phoenix Petroleum Philippines, Inc., De los
Santos STI College, De los Santos STI Medical Center,
Philippine Health Educators, Inc., and Anvaya Cove Beach
and Nature Club; and Chairman of the Boards of Total
Consolidated Asset Mgmt, Inc., and Global Resource for
Outsourced Workers, Inc. He received his Bachelor of Arts
in Liberal Arts from Ateneo de Naga and Bachelor of Laws
from the Ateneo de Manila University.

MR. NELSON T. YAP, 53 years old, Filipino, has served as
Director of 2GO since December 2011. Mr. Yap has over
30 years of professional experience in public accounting,
nancial management, treasury, analysis, controls,
accounting, budgeting, tax planning and management
reporting with a multinational insurance company, a
Hong Kong regional headquarter overseeing operations in
Netherlands Antilles, U.K., France, Australia, and the U.S.,
and with a listed BPO company. During the past 5 years,
He has served as a Director of NENACO since December
2011; Group Comptroller of Paxys, Inc., a publicly-listed
BPO company, from 2006 to September 2011; and as
Treasurer/Comptroller of NGL Pacic Limited from 2005 to
June 2006. Mr. Yap, a Certied Public Accountant (15th
Board placer), graduated with a Bachelor of Science degree
in Commerce, major in Accounting (Cum Laude) from
the Xavier University, Cagayan De Oro City. He took his
Masters in Business Administration from Ateneo Graduate
School of Business (no thesis) and further completed the
same from Murdoch University in Perth, Western Australia.
MR. MARK E. WILLIAMS, 38 years old, American, has
served as Director of 2GO since December 2010. He is also
a member of the Board Compensation, Remuneration and
Nomination, and Board Audit and Corporate Governance
Committees. He currently sits as a Director of NENACO and has
also served as Investment Director of KGLI-KSCC since 2008.
He obtained his Bachelor of Science degrees in Accounting,
Business Administration, and Finance at the University of Akron
in Akron, Ohio, U.S.A. He completed his Juris Doctorate degree
at Case Western Reserve University, Cleveland, Ohio, U.S.A.,
and also obtained a Masters degree in Business Administration,
concentration in Finance, from Weatherhead School of
Management of the same university.
MR. GEOFFREY M. SEETO, 42 years old, Australian, has been
appointed as a Director of 2GO since October 2011. Mr. Seeto
is also a Member of the following Company Board Committees:
(i) Compensation, Remuneration and Nomination; (ii) Audit and
Corporate Governance; and (iii) Risk Management. He is also
a member of the Board of NENACO since December 2010.
He is the Head of Asia Infrastructure, Singapore with Babcock
and Brown. He led infrastructure investments including PPP
transactions throughout Singapore, Thailand and other ASEAN
countries. Prior to Babcock and Brown, he spent 10 years with
ABN Amro Bank in Singapore, the Netherlands and Canada,
also specializing in infrastructure investments, mergers and
acquisitions. He received his Bachelor of Economics Degree
and Masters of Law from the University of Sydney, Australia.

MR. PATRICK IP, 42 years old, Chinese, was appointed as
Director of 2GO since October 2011. He currently sits as a
Member of the Board Risk Management and Board Audit and
Corporate Governance Committees of 2GO. Mr. Ip is also a
Director of NENACO, a Member of the Hong Kong Institute of
Directors and is the Head of Portfolio Supervision Management
for China-ASEAN Capital Advisory Company, the advisor to the
China-ASEAN Investment Cooperation Fund. Prior to this he
was the Chief Financial Ofcer of the private equity arm of the
French bank, Natixis. There he was responsible for all private
equity activities in Asia (e.g. India). Throughout his career
he gained substantial experience in auditing and nancial
transaction advisory, legal and compliance, litigation and
arbitration as well as hedge fund and alternative investment.
Mr. Ip is a Chartered Financial Analyst, a Certied Public
Accountant (Hong Kong) and a Chartered Certied Accountant
with PwC in London. He took his Bachelor of Laws degree
from the London University Law Schools and his Bachelor of
Arts degree major in Accounting and Finance from the Leeds
University, UK.
BOARD OF DIRECTORS
Looking Ahead.
38
EXECUTIVE OFFICERS EXECUTIVE OFFICERS
FRED S. PAJO
ALEJANDRO M. DIAZ DE RIVERA NORISSA L. RIDGWELL
JOSE MANUEL L. MAPA KLAUS SCHROEDER
39
Annual Report 2011
39
EXECUTIVE OFFICERS EXECUTIVE OFFICERS
WILMER A. ALFONSO
ATTY. AMADO R. SANTIAGO III ATTY. MANUEL EDUARDO C. CARLOS
ZENAIDA R. CABRAL STEPHEN REY R. TAGUD
Looking Ahead.
40
MR. FRED S. PAJO, 57 years old, Filipino, is the
Executive Vice-President and Chief Operating Ofcer
of NENACO. He concurrently handles the same
function in 2GO Group, Inc. Further, Mr. Pajo has
been with NENACO for more than 30 years, holding
various signicant positions such as Branch Manager,
Ofcer-in-Charge, Deputy Area Head, Assistant Vice
President for Freight Business and Vice President for
Operations. He has served as VP Head of Freight
Business Division and President for Brisk Nautilus Dock
Integrated Services, Inc., a wholly owned subsidiary
of the NENACO since 2005. Mr. Pajo also became
the President of the NENACO in January 2007 and
2010. Further, he currently serves as Director of Hansa
Meyer-ATS Projects, Inc., Hapag-Lloyd Philippines, Inc.
Mr. Pajo earned his degree in Bachelor of Science in
Business Administration from the Ateneo de Cagayan
Xavier University.
MR. JOSE MANUEL L. MAPA, 45 years old,
Filipino, is the Executive Vice-President Freight Sales
of NENACO and 2GO Group. Mr. Mapa has been
with NENACO for more than fourteen (14) years and
his career progression has indicated that he has made
major contributions in the companys operations.
He started as an Executive Assistant for Marketing
and Special Projects, gradually moving up to be the
AVP/Deputy Area Head-Negros Occidental Area for
NENACO, taking charge of the freight and passage
business of the area and on to Vice President / Head
National Freight Business, later on to Executive Vice
President/Head Passage Business. He obtained his
Masters degree in Business Administration at the
University of St. La Salle Graduate School, Bacolod
City. He also completed his Bachelor of Science
degree in Agribusiness Management at the University
of the Philippines in Los Banos, Laguna where he
received several awards including the University of
the Philippines Presidents Award (National Award)
for Outstanding Student, the UPLB University Council
Award for Outstanding Student, UPLB Outstanding
Student Leader Award.
MR. KLAUS SCHROEDER, 64 years old, German,
President and Chief Executive Ofcer of Hapag Lloyd
Philippines, Inc., Kerry-ATS Logistics, Inc. and Hansa
Meyer ATS Projects, Inc since1992. He is also a
Senior Vice President of 2GO Group. Mr. Schroeder is
a graduate of Gorchfock from Germany. He further
completed his Masters in Business Administration
focusing on Transportation Management from Asian
Institute of Management.
MR. ALEJANDRO M. DIAZ DE RIVERA, 46
years old, Filipino, President of 2GO Logistics, Inc.
and Scanasia Overseas, Inc. Prior to this, he was the
Senior Vice President for Business Development of
both companies. Mr. Diaz de Rivera, prior to joining
the group, has had extensive experience in the Logistics
industry. He has worked with reputable logistics,
shipping, forwarding and transport rms growing into
senior positions in both local and Asia regional roles.
He has also been engaged as a Logistics and Supply
Chain Consultant for a number of companies primarily
in the areas of 3PL outsourcing, network consolidation,
and transport design. He is a graduate of the University
of the Philippines with degrees in Business and Fisheries.
He has completed Craneld Universitys program on
Logistics Solutions Design.
MS. NORISSA EILEEN L. RIDGWELL, 57 years old,
Filipino, has served as COO for Kerry ATS Logistics Inc.
and as Senior Vice President for Human Resources of
2GO Groups International Logistics and Supply Chain
division since March 2012. Prior to this, she was the
Senior Vice President for Operations of 2GO from June
2005 to April 2009 and then as Chief Operating Ofcer
of 2GO Freight from 2009 to 2010. She has been with
2GO Group since 1994. She graduated with a Bachelor
of Science degree in Commerce, major in Management
from Silliman University.
MR. WILMER A. ALFONSO, 58 years old, Filipino,
Vice President for Ports Services since 2006. He has
been with 2GO Group since January 1971. He holds
the following positions: Chairman of Attina Security
PROFILES PROFILES
41
Annual Report 2011
41
Services Inc., and Vestina Security Services Inc., President
of North Harbor Tugs Corp., United South Dockhandlers,
Inc., Supersail Services Inc., Astir Engineering Works,
Inc., J&A Services Corporation, Red.Dot Corporation,
Sun-Gold Forwarding Corporation and NN-ATS Logistics
Management & Holdings Co., Inc. Mr. Alfonso is a Certied
Public Accountant. He graduated with a Bachelor of Science
degree in Accounting from the University of San Carlos.
MS. ZENAIDA R CABRAL, 51 years old, Filipino, is the
Executive Vice-President and Chief Corporate Services Ofcer
of the NENACO and 2GO Groups. She joined NENACO in
2008, and has worked in all facets of Human Resources and
Organization Development eld for over 20 years largely
in a managerial/executive role with varied experiences
in different industries such as service, pharmaceutical,
electronics, manufacturing, consultancy services, manning
and executive search, allowing her to distinctly excel in her
career. One of her most remarkable work stints was with
Solid Electronics Corporation of the Solid Group which
handles all the branches that carries the Sony brand
in the Philippines. Her remarkable contribution to the
company for 10 years was signicantly acknowledged by
Sony, Thailand when she was ofcially invited to share her
HR expertise before the 50-member management team of
the region. Ms. Cabral graduated with a Bachelor of Arts
degree major in Psychology. She earned her masters degree
units in Labor Management Relations from the University of
the Philippines, School of Labor and Industrial Relations and
completed her Organization Development course from the
Ateneo de Manila University.
MR. STEPHEN REY R. TAGUD, 32 years old, Filipino, is
the Vice-President Passage of NENACO and 2GO Group.
He has over nine (9) solid years of professional experience
in sales, marketing, business operations, international
hospitality operations management, hotel sales, operations
and destination management from Europe and the USA
and has handled several clients such as Hewlett Packard,
LG, Unilever, Wells Fargo, Ford, and Carlson Marketing
Group. Mr. Tagud introduced signicant innovations to
the company such as the Revenue Management concept
where he spearheaded aggressive revenue management
strategies that signicantly increased both passenger
revenue and volume in a highly competitive transportation
market. He also launched the NN Freight brand to
further bring the Freight business to the next level of
service and efciency. He further launched other revenue-
generating programs such as the Suite Sweet Sale
and creative in-house merchandising to boost sales of
food & beverage items on-board the passenger vessels.
He completed his undergraduate studies from University
of Nevada Las Vegas, USA where he graduated Cum
Laude. He also earned his post-graduate studies from
the Swiss Hotel Management School Les Roches of
Bulche, Switzerland and from the Universidad Europa de
Madrid with a degree of Master in Business Administration
major in International Hospitality Management, Finance &
Marketing.
ATTY. AMADO R. SANTIAGO III, 45 years old,
Filipino, has served as the Corporate Secretary of 2GO
since December 2010. He is the Managing Partner of the
Santiago & Santiago Law Ofces and is engaged in the
general practice of law. He specializes in corporate litigation,
which includes corporate rehabilitation proceedings
under the Securities and Exchange Commission Rules
on Corporate Recovery, Interim Rules of Procedure on
Corporate Rehabilitation and the Rules of Procedure on
Corporate Rehabilitation. He is also engaged in the practice
of taxation law. He received his Bachelor of Science degree
in Management, major in Legal Management (1988) from
the Ateneo de Manila University. He graduated from the
Ateneo de Manila School of Law in 1992 and is a member
of the Philippine Bar.

ATTY. MANUEL EDUARDO C. CARLOS, 36 years old,
Filipino, has served as the Assistant Corporate Secretary
since December 2010. He is the Associate Lawyer of the
Santiago & Santiago Law Ofces. Under this law rm,
he specializes in corporate mergers and acquisitions
and corporate housekeeping. He is also engaged in the
practice of taxation law. He acts as corporate counsel,
director and/or corporate secretary/assistant corporate
secretary of various corporate clients. He received his
Bachelor of Science degree in Management, major in Legal
Management (1997) from the Ateneo de Manila University.
He graduated from the Ateneo de Manila School of Law in
2002 and is a member of the Philippine Bar.
PROFILES PROFILES
Looking Ahead.
42
Annual Report 2011
43
INDEPENDENT AUDITORS REPORT
The Stockholders and the Board of Directors
ATS Consolidated (ATSC), Inc.
We have audited the accompanying consolidated nancial statements of ATS Consolidated (ATSC), Inc. and its subsidiaries,
which comprise the consolidated balance sheets as at December 31, 2011 and 2010, and the consolidated statements of income,
statements of comprehensive income, statements of changes in equity and statements of cash ows for each of the three years in the
period ended December 31, 2011 and a summary of signicant accounting policies and other explanatory information.
Managements Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated nancial statements in accordance
with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of consolidated nancial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated nancial statements based on our audits. We conducted our audits
in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the consolidated nancial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated nancial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the consolidated nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the consolidated nancial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated nancial statements present fairly, in all material respects, the nancial position of ATS Consolidated
(ATSC), Inc. and its subsidiaries as at December 31, 2011 and 2010, and their nancial performance and their cash ows for each of
the three years in the period ended December 31, 2011, in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Josephine H. Estomo
Partner
CPA Certicate No. 46349
SEC Accreditation No. 0078-AR-2 (Group A),
February 11, 2010, valid until February 10, 2013
Tax Identication No. 102-086-208
BIR Accreditation No. 08-001998-18-2009,
June 1, 2009, valid until May 31, 2012
PTR No. 3174595, January 2, 2012, Makati City
April 12, 2012

Looking Ahead.
44
December 31
2010
2011 (As restated)
ASSETS
Current Assets
Cash and cash equivalents (Note 6) P906,263 P804,668
Trade and other receivables (Note 7) 2,898,193 2,523,415
Inventories (Note 8) 407,441 564,159
Other current assets (Note 9) 996,229 951,652
5,208,126 4,843,894
Assets held for sale (Note 10) 692,617
Total Current Assets 5,900,743 4,843,894
Noncurrent Assets
Property and equipment (Notes 14 and 21) 4,651,107 6,196,093
Available-for-sale investments (Note 11) 9,377 9,904
Investments in associates (Note 12) 99,777 114,949
Investment property (Note 15) 9,763 9,763
Software development costs (Note 16) 13,826 45,223
Deferred tax assets - net (Note 29) 964,101 718,973
Goodwill (Note 5) 250,450 250,450
Other noncurrent assets (Note 17) 232,940 386,118
Total Noncurrent Assets 6,231,341 7,731,473
TOTAL ASSETS P12,132,084 P12,575,367

LIABILITIES AND EQUITY
Current Liabilities
Loans payable (Note 18) P1,215,440 P1,992,900
Trade and other payables (Note 19) 3,432,208 4,542,546
Income tax payable 5,501
Redeemable preferred shares (Notes 22 and 23) 25,938
Current portions of:
Long-term debt (Note 20) 785,716 196,542
Obligations under nance lease (Notes 14 and 21) 30,174 8,229
Noncurrent portion of long-term debt presented as current (Note 20) 1,782,565
Total Current Liabilities 5,494,977 8,522,782
Noncurrent Liabilities
Long-term debt - net of current portion (Note 20) 3,178,027
Obligations under nance lease - net of current portion (Notes 14 and 21) 91,936 37,457
Accrued retirement benets (Note 28) 52,182 19,715
Deferred tax liabilities - net (Note 29) 269 4,348
Redeemable preferred shares (Notes 22 and 23) 22,882
Other noncurrent liabilities 8,409 12,073
Total Noncurrent Liabilities 3,330,823 96,475
Total Liabilities 8,825,800 8,619,257
(Forward)
ATS CONSOLIDATED (ATSC), INC.
[formerly Aboitiz Transport System (ATSC) Corporation]
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
Annual Report 2011
45
December 31
2010
2011 (As restated)
Equity
Attributable to the equity holders of the Parent Company:
Share capital (Note 23) P2,484,653 P2,484,653
Additional paid-in capital 910,901 910,901
Acquisitions of non-controlling interests (Note 23) 5,940 5,940
Excess of cost over net asset value of investments (Note 23) (10,906) (8,866)
Unrealized gain on available-for-sale investments (Note 11) 279 15,248
Share in cumulative translation adjustments of associates (Note 12) 5,294 5,941
Retained earnings (decit) (Note 23) (49,698) 584,569
Treasury shares (Note 23) (58,715) (58,715)
3,287,748 3,939,671
Non-controlling interests 18,536 16,439
Total Equity 3,306,284 3,956,110
TOTAL LIABILITIES AND EQUITY P12,132,084 P12,575,367

See accompanying Notes to Consolidated Financial Statements.

Looking Ahead.
46
Years Ended December 31
2011 2010 2009
CONTINUING OPERATIONS
REVENUES
Freight (Note 24) P5,678,386 P5,326,108 P5,255,586
Passage 2,383,978 2,179,066 2,237,812
Sale of goods 3,028,658 2,565,741 1,735,155
Service fees (Note 34) 1,251,132 1,063,616 812,616
Food and beverage 260,009 160,596
Others 368,650 315,765 468,927
12,970,813 11,610,892 10,510,096
COSTS AND EXPENSES (Note 25)
Operating 8,192,290 7,093,436 5,832,066
Terminal 1,495,409 1,473,979 1,380,746
Cost of goods sold (Note 8) 2,601,539 2,206,641 1,461,117
Overhead 1,033,605 1,476,029 1,449,496
13,322,843 12,250,085 10,123,425
OTHER INCOME (CHARGES)
Impairment loss on goodwill, property and
equipment and assets held for sale (Notes 10 and 14) (223,644) (778,830)
Equity in net earnings (losses) of associates (Note 12) (14,525) 40,207 57,128
Interest and nancing charges (Notes 26 and 35) (407,548) (228,781) (73,865)
Others - net (Note 26) 299,868 70,706 309,044
(345,849) (896,698) 292,307
INCOME (LOSS) BEFORE INTEGRATION COSTS (697,879) (1,535,891) 678,978
INTEGRATION COSTS (Note 27) (123,025)
INCOME (LOSS) BEFORE INCOME TAX FROM
CONTINUING OPERATIONS (820,904) (1,535,891) 678,978
PROVISION FOR (BENEFIT FROM)
INCOME TAX (Note 29) (195,300) (421,467) 167,337
NET INCOME (LOSS) FROM CONTINUING OPERATIONS (625,604) (1,114,424) 511,641
NET INCOME FROM DISCONTINUED OPERATIONS (Note 30) 359,049 111,076
NET INCOME (LOSS) (P625,604) (P755,375) P622,717
(Forward)
ATS CONSOLIDATED (ATSC), INC.
[formerly Aboitiz Transport System (ATSC) Corporation]
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Earnings (Loss) Per Share Amounts)
Annual Report 2011
47
Years Ended December 31
2011 2010 2009
ATTRIBUTABLE TO:
Equity holders of the Parent Company:
Net income (loss) from continuing operations (P634,267) (P1,114,113) P510,807
Net income from discontinued operations 305,433 35,335
(634,267) (808,680) 546,142
Non-controlling interests:
Net income (loss) from continuing operations 8,663 (311) 834
Net income from discontinued operations 53,616 75,741
8,663 53,305 76,575
(P625,604) (P755,375) P622,717
EARNINGS (LOSS) PER COMMON SHARE (Note 36)
Basic/diluted, for earnings (loss) attributable
to equity holders of the Parent Company (P0.26) (P0.33) P0.22
Basic/diluted, for earnings (loss) from continuing operations
attributable to equity holders of the Parent Company (P0.26) (P0.46) P0.21
Basic/diluted, for earnings (loss) from discontinued
operations attributable to equity holders of the
Parent Company (P0.13) (P0.01)

See accompanying Notes to Consolidated Financial Statements.

Looking Ahead.
48
Years Ended December 31
2011 2010 2009
NET INCOME (LOSS) (P625,604) (P755,375) P622,717
OTHER COMPREHENSIVE INCOME (LOSS)
Net change in unrealized gains (losses) on
available-for-sale investments - net (Note 11) (17,325) 12,286 11,219
Changes in cumulative translation adjustment
(Note 12) (647) (2,217) (7,943)
(17,972) 10,069 3,276
TOTAL COMPREHENSIVE INCOME
(LOSS) FOR THE YEAR (P643,576) (P745,306) P625,993
ATTRIBUTABLE TO:
Equity holders of the Parent Company
Total comprehensive income (loss) from
continuing operations (P649,883) (P1,104,582) P517,115
Total comprehensive income from discontinued operations 305,433 35,335
(649,883) (799,149) 552,450
Non-controlling interest
Total comprehensive income (loss) from
continuing operations 6,307 227 (2,198)
Total comprehensive income from discontinued operations 53,616 75,741
6,307 53,843 73,543
(P643,576) (P745,306) P625,993

See accompanying Notes to Consolidated Financial Statements.

ATS CONSOLIDATED (ATSC), INC.
[formerly Aboitiz Transport System (ATSC) Corporation]
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
Annual Report 2011
49
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Looking Ahead.
50
Years Ended December 31
2011 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations before income tax (P820,904) (P1,535,891) P678,978
Income from discontinued operations before income tax (Note 30) 386,282 144,795
Income (loss) before income tax (820,904) (1,149,609) 823,773
Adjustments for:
Depreciation and amortization (Notes 14, 16 and 25) 1,083,871 1,348,873 1,033,545
Interest expense (Note 26) 407,548 256,121 99,110
Interest income (61,108) (18,850) (28,530)
Income from reversal of liabilities (Note 26) (127,020)
Dividend income (281) (1,313) (6,743)
Equity in net loss (earnings) of associates (Note 12) 14,525 (40,207) (53,434)
Unrealized foreign exchange loss (gain) (10,320) 4,260
Provisions for:
Impairment loss on vessels in operation (Note 14) 223,644 778,830
Impairment loss on goodwill (Note 5) 6,013
Loss (gain) on disposals of:
Property and equipment (11,447) 28,263 (26,807)
Asset swap (5,896)
AFS investments (17,662) (57,895)
Investments in subsidiaries (Notes 5 and 30) (300,904) (52,500)
Gain on insurance claims (Note 26) (34,568) (18,528) (79,484)
Retirement expense - net (Note 28) 86,390 21,780 (42,530)
Operating cash ows before working capital changes 742,938 836,358 1,670,660
Decrease (increase) in:
Trade and other receivables (824,959) (571,158) (308,065)
Inventories 156,718 (54,040) (210,907)
Other current assets 142,969 (315,132) (155,839)
Increase (decrease) in trade and other payables (642,423) 781,260 98,996
Impairment loss on receivables - net (Note 7) 38,594 20,850 30,129
Recovery of impairment of receivable (Note 7) (4,013) (12,527) (60,884)
Provision for cargo losses and damages 19,098 16,064
Net cash generated from (used in) operations (370,749) 685,611 1,080,154
Interest received 61,108 19,047 39,836
Income taxes paid, including creditable withholding taxes (152,918) (85,337) (86,138)
Net cash ows from (used in) operating activities (462,559) 619,321 1,033,852
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of:
A subsidiary, net of cash acquired (Note 5) (4,800)
An associate (3,600)
Additions to:
Property and equipment (Note 14) (397,992) (3,666,121) (1,940,756)
Software development costs (Note 16) (6,333) (4,399) (6,264)
(Forward)
ATS CONSOLIDATED (ATSC), INC.
[formerly Aboitiz Transport System (ATSC) Corporation]
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Annual Report 2011
51
Years Ended December 31
2011 2010 2009
Proceeds from:
Disposal of property and equipment (Note 14) P161,374 P229,900 P180,534
Insurance claims 50,260 147,711 300,452
Sale of available-for-sale investments 20,378 64,907 1,200
Disposal of investments in a subsidiary (Note 7) 399,908 57,300
Dividends received 281 1,313 6,743
Payments for various deposits (3,246) (2,153)
Disposal cost of investment in subsidiary (Note 30) (32,041)
Cash from acquired subsidiaries (Note 23) 40,485
Cash attributable to discontinued operations (Note 30) (189,845)
Net cash ows from (used in) investing activities 224,630 (3,410,243) (1,409,191)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Availments of loans payable (Note 18) 930,440 808,750 1,042,720
Long-term debt (Note 20) 4,000,000 1,975,000
Payments of:
Interest (Notes 18, 20 and 21) (363,282) (230,335) (99,270)
Obligations under nance lease (100,633) (6,866) (57,659)
Loans payable (Note 18) (1,707,900) (480,209)
Long-term debt (Note 20) (2,000,000)
Debt transaction costs (Note 20) (48,915)
Dividends paid (Note 23) (365,976) (46,670) (27,375)
Dividends paid to non-controlling interests (4,210)
Net cash ows from nancing activities 339,524 2,499,879 378,207
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 101,595 (291,043) 2,868
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 804,668 1,095,711 1,092,843
CASH AND CASH EQUIVALENTS AT
END OF YEAR (Note 6) P906,263 P804,668 P1,095,711
See accompanying Notes to Consolidated Financial Statements.
Looking Ahead.
52
ATS CONSOLIDATED (ATSC), INC.
[formerly Aboitiz Transport System (ATSC) Corporation]
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Number of Shares, Earnings per Common Share
Exchange Rate Data and When Otherwise Indicated)
1. Corporate Information and Approval of Consolidated Financial Statements
Corporate Information
ATS Consolidated (ATSC), Inc. [formerly Aboitiz Transport System (ATSC) Corporation, the Parent Company] was incorporated
in the Philippines on May 26, 1949. Its corporate life was renewed on May 12, 1995 and will expire on May 25, 2045. The
Parent Companys shares of stocks are listed in the Philippine Stock Exchange (PSE). The Parent Company and its Subsidiaries
(collectively referred to as the Group) are primarily engaged in the business of operating vessels, motorboats and other
kinds of watercrafts; aircrafts and trucks; and acting as agent for domestic and foreign shipping companies for purposes of
transportation of cargoes and passengers by air, land and sea within the waters and territorial jurisdiction of the Philippines.
The Parent Companys registered ofce address is 12th Floor, Times Plaza Building, United Nations Avenue corner Taft Avenue,
Ermita, Manila.
On December 1, 2010, the Board of Directors (BOD) of Aboitiz Equity Ventures, Inc. (AEV) and Aboitiz & Company, Inc. (ACO)
approved the sale of their shareholdings in the Parent Company to Negros Navigation Co., Inc. (NENACO). On December 28,
2010, the sale was nalized at P1.8813 per share. AEV sold its entire shareholdings in the Parent Company comprising of
1,889,489,607 common shares for P3.6 billion. ACO, on the other hand, sold its entire shareholdings in the Parent Company
comprising of 390,322,384 common shares for P734.0 million. This resulted to 93.2% NENACO ownership of the outstanding
common shares of the Parent Company, along with all the Parent Companys non-controlling shares that may be tendered to
NENACO subsequent to December 31, 2010.
As a result of the sale, NENACO whose ultimate parent is Negros Holdings & Management Corporation (NHMC), becomes the
new immediate parent. NENACO and the ultimate parent are both incorporated and domiciled in the Philippines.
As at December 31, 2009, AEV and ACO own 77.2% and 15.6%, respectively, of the outstanding common shares of the Parent
Company.
On February 22, 2011, in relation to the tender offer issued by NENACO for the outstanding common shares held by public
shareholders of the Parent Company, NENACO acquired 120,330,004 common shares representing 4.9% for a total purchase
price of P226.4 million pertaining to the Parent Companys noncontrolling interest. As a result, NENACOs ownership interest in
the Parent Company increased to 98.10%.
Pursuant to the securities and purchase agreements, the Parent Company and its subsidiaries applied for the change in corporate
names, which was approved by the Philippine Securities and Exchange Commission (SEC) on various dates in 2011. On
December 29, 2011, the BOD approved the change in corporate branding of the Group to 2GO Logistics Group or variants
thereto, resulting to another revision in the corporate names of the Parent Company and its subsidiaries upon approval by the
Philippine SEC (see Note 37).
On August 24, 2011, the Philippine SEC also approved the amendment to the Parent Companys secondary purpose to include
rendering technical services requirement to customers for refrigerated marine container vans and related equipments or
accessories. This amendment was previously adopted by the BOD on April 28, 2011 and the stockholders on June 22, 2011.
Approval of Consolidated Financial Statements
The consolidated nancial statements of the Group as at December 31, 2011 and 2010 and for each of the three years in the
period ended December 31, 2011 were authorized for issue by the BOD on April 12, 2012.
Annual Report 2011
53
2. Summary of Signicant Accounting and Financial Reporting Policies
Basis of Preparation
The consolidated nancial statements are prepared on a historical cost basis, except for quoted available-for-sale (AFS)
investments which are measured at fair value and assets held for sale carried at fair value less cost to sell. The consolidated
nancial statements are presented in Philippine peso, and all values are rounded to the nearest thousand, except when otherwise
indicated.
Statement of Compliance
The consolidated nancial statements are prepared in compliance with Philippine Financial Reporting Standards (PFRS).
Changes in Accounting Policies and Disclosures
The accounting policies adopted are consistent with those of the previous nancial year except for the following new and
amended PFRSs and Philippine Interpretations which were adopted as of January 1, 2011.
Standards or interpretations that have been adopted and that are deemed to have an impact on the Groups consolidated
nancial statement disclosures are described below:
PAS 24, Related Party Transactions (Amendment), claries the denitions of a related party. The new denitions emphasize a
symmetrical view of related party relationships and clarify the circumstances in which persons and key management personnel
affect related party relationships of an entity. In addition, the amendment introduces an exemption from the general
related party disclosure requirements for transactions with government and entities that are controlled, jointly controlled or
signicantly inuenced by the same government as the reporting entity.
PAS 32, Financial Instruments: Presentation (Amendment), alters the denition of a nancial liability in PAS 32 to enable
entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the
rights are given pro rata to all of the existing owners of the same class of an entitys non-derivative equity instruments, to
acquire a xed number of the entitys own equity instruments for a xed amount in any currency.
Improvements to PFRSs issued in 2010
Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to removing inconsistencies and
clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments
resulted in changes to accounting policies but did not have any impact on the nancial position or performance of the Group.
PFRS 3, Business Combinations [Measurement options available for non-controlling interest (NCI) were amended]. The
measurement options available for NCI were amended. Only components of NCI that constitute a present ownership interest
that entitles their holder to a proportionate share of the entitys net assets in the event of liquidation should be measured at
either fair value or at the present ownership instruments proportionate share of the acquirees identiable net assets. All
other components are to be measured at their acquisition date fair value.
PFRS 7, Financial Instruments - Disclosures, intends to simplify the disclosures provided by reducing the volume of disclosures
around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in
context.
PAS 1, Presentation of Financial Statements, claries that an entity may present an analysis of each component of other
comprehensive income either in the statement of changes in equity or in the notes to the nancial statements. The Group
opted to present each component of other comprehensive income in the consolidated statements of changes in equity.
Other amendments resulting from the 2010 Improvements to PFRSs to the following standards did not have any impact on the
accounting policies, nancial position or performance of the Group:
PFRS 3, Business Combinations [Contingent consideration arising from business combination prior to adoption of PFRS 3 (as
revised in 2008)]
PFRS 3, Business Combinations (Un-replaced and voluntarily replaced share-based payment awards)
PAS 27, Consolidated and Separate Financial Statements
PAS 34, Interim Financial Statements
Looking Ahead.
54
The following interpretations and amendment to interpretations did not have any impact on the accounting policies, nancial
position or performance of the Group:
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes (determining the fair value of award credits)
Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding Requirement (Amendment)
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
New Accounting Standards, Amendments and Interpretations
Effective Subsequent to 2011
The Group will adopt the following standards and interpretations enumerated below when these become effective. Except as
otherwise indicated, the Group does not expect the adoption of these new and amended PFRSs and Philippine Interpretations
to have signicant impact on its nancial statements. The relevant disclosures will be included in the notes to the consolidated
nancial statements when these become effective.
Effective 2012
PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements, requires additional disclosure
about nancial assets that have been transferred but not derecognized to enable the user of the Groups nancial statements
to understand the relationship with those assets that have not been derecognized and their associated liabilities. In addition,
the amendment requires disclosures about continuing involvement in derecognized assets to enable the user to evaluate the
nature of, and risks associated with, the entitys continuing involvement in those derecognized assets. The amendment affects
disclosures only and has no impact on the Groups nancial position or performance.
Amendment to PAS 12, Income Taxes - Recovery of Underlying Assets, claries the determination of deferred tax on
investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on
investment property measured using the fair value model in PAS 40, Investment Property, should be determined on the basis
that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on
non-depreciable assets that are measured using the revaluation model in PAS 16, Property, Plant and Equipment, always be
measured on a sale basis of the asset.
Effective 2013
Amendments to PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income, change the
grouping of items presented in Other Comprehensive Income (OCI). Items that could be reclassied (or recycled) to prot
or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items
that will never be reclassied. The amendment affects presentation only and has therefore no impact on the Groups nancial
position or performance.
Amendments to PAS 19, Employee Benets, range from fundamental changes such as removing the corridor mechanism and
the concept of expected returns on plan assets to simple clarications and re-wording. The Group is currently assessing the
impact of these amendments.
PFRS 10, Consolidated Financial Statements, replaces the portion of PAS 27, Consolidated and Separate Financial Statements
that addresses the accounting for consolidated nancial statements. It also includes the issues raised in SIC-12, Consolidation
- Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose
entities. The changes introduced by PFRS 10 will require management to exercise signicant judgment to determine which
entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were
in PAS 27.
PAS 27, Separate Financial Statements (as revised in 2011), as a consequence of the new PFRS 10, Consolidated Financial
Statements, and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for
subsidiaries, jointly controlled entities, and associates in separate nancial statements.
PFRS 11, Joint Arrangements, replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-
monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly-controlled entities (JCEs) using
proportionate consolidation. Instead, JCEs that meet the denition of a joint venture must be accounted for using the equity
method. ATSEI accounts for its joint venture under proportionate consolidation and is currently assessing the impact of this
standard.
PAS 28, Investments in Associates and Joint Ventures (as revised in 2011), as a consequence of the new PFRS 11, Joint
Arrangements, and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes
the application of the equity method to investments in joint ventures in addition to associates.
Annual Report 2011
55
PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, amendments require an entity
to disclose information about rights of set-off and related arrangements (such as collateral agreements). The new disclosures
are required for all recognized nancial instruments that are set off in accordance with PAS 32. These disclosures also apply
to recognized nancial instruments that are subject to an enforceable master netting arrangement or similar agreement,
irrespective of whether they are set-off in accordance with PAS 32. The amendments require entities to disclose, in a tabular
format unless another format is more appropriate, the following minimum quantitative information. This is presented
separately for nancial assets and nancial liabilities recognized at the end of the reporting period:
a) The gross amounts of those recognized nancial assets and recognized nancial liabilities;
b) The amounts that are set off in accordance with the criteria in PAS 32 when determining the net amounts presented in
the balance sheet;
c) The net amounts presented in the balance sheet;
d) The amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included
in (b) above, including:
i. Amounts related to recognized nancial instruments that do not meet some or all of the offsetting criteria in PAS 32;
and
ii. Amounts related to nancial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
The amendments to PFRS 7 are to be retrospectively applied for annual periods beginning on or after January 1, 2013. The
amendment affects disclosures only and has no impact on the Groups nancial position or performance.
PFRS 12, Disclosure of Interests in Other Entities, includes all of the disclosures that were previously in PAS 27 related to
consolidated nancial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These
disclosures relate to an entitys interests in subsidiaries, joint arrangements, associates and structured entities. A number of
new disclosures are also required.
PFRS 13, Fair Value Measurement, establishes a single source of guidance under PFRS for all fair value measurements. PFRS
13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value
under PFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have
on the Groups nancial position and performance.
Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, applies to waste removal costs
that are incurred in surface mining activity during the production phase of the mine (production stripping costs) and
provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity
asset.
Effective 2014
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities, claries the meaning of
currently has a legally enforceable right to set-off and also clarify the application of the PAS 32 offsetting criteria to settlement
systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. While
the amendment is expected not to have any impact on the net assets of the Group, any changes in offsetting is expected to
impact leverage ratios and regulatory capital requirements. The Group is currently assessing impact of the amendments to
PAS 32.
Effective 2015
PFRS 9, Financial Instruments: Classication and Measurement, reects the rst phase on the replacement of PAS 39 and
applies to classication and measurement of nancial assets and nancial liabilities as dened in PAS 39. The standard is
effective for annual periods beginning on or after January 1, 2015. In subsequent phases, hedge accounting and impairment
of nancial assets will be addressed with the completion of this project expected on the rst half of 2012. The adoption of
the rst phase of PFRS 9 will have an effect on the classication and measurement of the Groups nancial assets, but will
potentially have no impact on classication and measurements of nancial liabilities. The Group will quantify the effect in
conjunction with the other phases, when issued, to present a comprehensive picture.
The Groups receivables, due to and from related parties, other receivables, accounts payable and accrued expenses, dividends
payable, loans payable and long-term debt may be affected by the adoption of this standard.
Effectivity date to be determined
Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate, covers accounting for revenue and
associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The
Looking Ahead.
56
interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such
contract qualies as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of
services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the
construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will
also be accounted for based on stage of completion. The Philippine SEC and the Financial Reporting Standards Council have
deferred the effectivity of this interpretation until the nal revenue standard is issued by International Accounting Standards
Board and an evaluation of the requirements of the nal revenue standard against the practices of the Philippine real estate
industry is completed.
Basis of Consolidation
The consolidated nancial statements comprise the nancial statements of the Parent Company and the following wholly-
owned and majority-owned subsidiaries as at December 31 of each year.
Percentage of Ownership
2011 2010 2009
Subsidiaries Nature of Business Direct Indirect Direct Indirect Direct Indirect
ATS Express, Inc. (ATSEI, formerly Transportation/
Aboitiz One, Inc.)1 and Subsidiaries: Logistics 100.0 100.0 100.0
ATS Distribution, Inc.(ATSDI, formerly
Aboitiz One Distribution, Inc.)
1
Distribution 100.0 100.0 100.0
Scanasia Overseas, Inc. (SOI) Distribution 100.0 100.0 100.0
Hapag-Lloyd Philippines, Inc.(HLP) Transportation/
Logistics 85.0 85.0 94.0
Reefer Van Specialist, Inc. (RVSI)
2
Transportation 100.0
WRR Trucking Corporation (WTC)
3
Transportation 100.0
Supercat Fast Ferry Corp. (SFFC) Transporting passenger 100.0 100.0 100.0
Zoom In Packages, Inc. (ZIP)
4
Transportation/
Logistics 100.0
NN-NN-ATS Logistics Management &
Holdings Co., Inc.(NALMHCI)
5
Holding Company 100.0
J&A Services Corporation (JASC)
6
Vessel support services 20.0 80.0
Red Dot Corporation (RDC)
6
Manpower services 20.0 80.0
North Harbor Tugs Corporation (NHTC)
6
Tug assistance 59.0
Super Terminal Inc. (STI)
6 and 7
Passenger terminal
operator 50.0
Sungold Forwarding Corporation (SFC)
6
Transportation/logistics 51.1
Supersail Services Inc. (SSI)
6
Manpower provider 100.0
W G & A Supercommerce, Inc. (WSI)
8
Vessels hotel
management 100.0 100.0 100.0
Aboitiz Jebsen Bulk Transport Corporation
(AJBTC) and Subsidiaries:
9
Ship management 62.5
Filscan Shipping, Inc.
9
Manning and crew
management services 62.5
General Charterer, Inc.
9
Manning and crew
management services 62.5
NOR-PHIL Ocean Shipping, Inc.
9
Manning and crew
management services 62.5
Overseas Bulk Transport, Inc.
9
Manning and crew
management services 62.5
Viking International Carriers, Inc.
9
Manning and crew
management services 62.5
Joss Asian Feeders, Inc.
9
Shipping 62.5
Harbor Training Center, Inc.
9
Training 62.5
EMS Crew Management Philippines, Inc.
9
Manning and crew
management services 46.9
Aboitiz Jebsen Manpower Solutions, Inc.
(AJMSI)
9
Manpower services 62.5
Jebsen Maritime, Inc. (JMI)
9
Manpower services 62.5
Jebsen Management (JMBVI) Limited
10
and Subsidiaries Shipping 50.0
Jebsens International (Australia) Pty. Ltd.
9
Chartering and Shipping 50.0
(Forward)
Annual Report 2011
57
Percentage of Ownership
2011 2010 2009
Subsidiaries Nature of Business Direct Indirect Direct Indirect Direct Indirect
Jebsen Orient Shipping Services AS
9
Chartering and Shipping 50.0
Jebsens International (Singapore)
Pte. Ltd.
9
Chartering and Shipping 50.0
Jebsens Logistics Services
9
Fertilizer Bagging 50.0
1 In various dates in 2011, the Philippine SEC approved the 8 Ceased operations in February 2006
amendments in ATSEIs and ATSDIs Articles of Incorporation 9 Sold on December 28, 2010 (see Note 30)
2 Merged with the Parent Company effective September 1, 2010 10 Incorporated in the British Virgin Islands. Functional currency is
3 Acquired in August 2011by ATSEI from NENACO United States (US) dollars. The Parent Company exercises power
4 Merged with the Parent Company effective July 1, 2010 to govern the nancial and operating policies
5 Incorporated in November 2011
6 Acquired by NALMHCI on December 1, 2011 from NENACO
7 NALMHCI has control over STI since it has the power to cast the
majority of votes at the BODs meeting and the power to govern the
nancial and reporting policies of STI.
Except for JMBVI, all the subsidiaries were incorporated in the Philippines.
The nancial statements of the subsidiaries are prepared for the same reporting year as the Parent Company using consistent
accounting policies.
Subsidiaries are all entities over which the Group has the power to govern the nancial and operating policies so as to obtain
benets from its activities and generally accompanying a shareholding of more than one half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiaries are consolidated from the date of acquisition, being the date on which control is
transferred to the Group and continue to be consolidated until the date that such control ceases.
Non-controlling interest represents a portion of the prot or loss and net assets of subsidiaries not held by the Group, directly
or indirectly, and are presented separately in prot or loss and within the equity section of the consolidated balance sheet
and consolidated statement of changes in equity, separately from parents equity. However, the Group must recognize in the
consolidated balance sheet a nancial liability (rather than equity) when it has an obligation to pay cash in the future (e.g.,
acquisition of non-controlling interest is required in the contract or regulation) to purchase the non-controllings shares, even
if the payment of that cash is conditional on the option being exercised by the holder. The Group will reclassify the liability to
equity if a put option expires unexercised.
Non-controlling interest shares in losses, even if the losses exceed the non-controlling equity interest in the subsidiary. Changes
in the controlling ownership interest, i.e., acquisition of non-controlling interest or partial disposal of interest over a subsidiary
that do not result in a loss of control, are accounted for as equity transactions.
Consolidated nancial statements are prepared using uniform accounting policies for like transactions and other events in similar
circumstances. All intra-group balances, transactions, income and expenses and prots and losses resulting from intra-group
transactions that are recognized in assets, liabilities and equities, are eliminated in full.
If the Group loses control over a subsidiary, it:
Derecognizes the assets (including goodwill) and liabilities of the subsidiary
Derecognizes the carrying amount of any non-controlling interest
Derecognizes the related other comprehensive income like cumulative translation differences, recorded in equity
Recognizes the fair value of the consideration received
Recognizes the fair value of any investment retained
Recognizes any surplus or defcit in proft or loss
Reclassifes the parents share of components previously recognized in other comprehensive income to proft or loss or
retained earnings, as appropriate.
Business Combinations and Goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the
acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value
or at the proportionate share of the acquirees identiable net assets. Acquisition costs incurred are expensed and included in
administrative expenses.
Looking Ahead.
58
When the Group acquires a business, it assesses the nancial assets and nancial liabilities assumed for appropriate classication
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously held equity interest
in the acquiree is remeasured to fair value at the acquisition date through prot or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in
accordance with PAS 39 either in prot or loss or as a change to other comprehensive income. If the contingent consideration
is classied as equity, it should not be remeasured until it is nally settled within equity.
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination
over the Groups interest in the net fair value of the acquirees identiable assets, liabilities and contingent liabilities. Following
initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Where goodwill forms part of a cash-generating unit or a group of cash-generating units and part of the operation within that
unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
When subsidiaries are sold, the difference between the selling price and the net assets plus any other comprehensive income,
and fair value of retained interest is recognized in prot or loss.
Where there are business combinations in which all the combining entities within the Group are ultimately controlled by the
same ultimate parties before and after the business combination and that the control is not transitory (business combinations
under common control), the Group accounts such business combinations under the purchase method of accounting, if the
transaction was deemed to have substance from the perspective of the reporting entity. In determining whether the business
combination has substance, factors such as the underlying purpose of the business combination and the involvement of parties
other than the combining entities such as the non-controlling interest, shall be considered.
In cases where the business combination has no substance, the Group accounts for the transaction similar to a pooling of
interests. The assets and liabilities of the acquired entities and that of the Parent Company are reected at their carrying values.
Comparatives shall be restated to include balances and transactions as if the entities had been acquired at the beginning of the
earliest period presented as if the companies had always been combined.
Investments in Associates
The following are the associates of the Group as at December 31, 2011 and 2010:
Percentage of Ownership
Nature of Business Direct Indirect
MCCP Philippines (MCCP) Container transportation 33
Hansa-Meyer ATS Projects, Inc. (HATS)
(formerly Aboitiz Project T.S. Corporation) Project logistics and consultancy 50
The Groups investments in associates are accounted for under the equity method. An associate is an entity in which the Group
has signicant inuence and which is neither a subsidiary nor a joint venture.
Under the equity method, the investments in associates are carried in the consolidated balance sheet at cost plus post acquisition
changes in the Groups share in the net assets of associates. Goodwill relating to an associate is included in the carrying amount
of the investment and is not amortized or separately tested for impairment.
The prot or loss reects the share in the results of operations of the associates. Where there has been a change recognized
directly in the consolidated statement of changes in equity of the associate, the Group recognizes its share of any changes and
discloses it, when applicable, in the consolidated statement of changes in equity. Unrealized gains and losses resulting from
transactions between the Group and the associates are eliminated to the extent of the interest in the associate.
The share of prot of associates is recognized in prot or loss. This is the prot attributable to equity holders of the associate
and therefore is prot after tax and non-controlling interest in the subsidiaries of the associates.
Annual Report 2011
59
The nancial statements of the associate are prepared for the same reporting period as the Parent Company and the associates
accounting policies conform to those used by the Group for like transactions and events in similar circumstances.
After the application of the equity method, the Group determines whether it is necessary to recognize an additional impairment
loss on the Groups investments in associates. The Group determines at the end of each reporting period whether there is
any objective evidence that the investment in the associate is impaired. If this is the case the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount
in prot or loss.
Interest in a Joint Venture
The Group has an interest in a joint venture which is a jointly controlled entity, whereby the joint venture partners have a
contractual arrangement that establishes joint control over the economic activities of the entity. The Group recognizes its
interest in the joint venture using the proportionate consolidation method. The Group combines its proportionate share of each
of the assets, liabilities, income and expenses of the joint venture with similar items, line by line, in its consolidated nancial
statements. The nancial statements of the joint venture are prepared for the same reporting period as the Parent Company.
Adjustments are made where necessary to bring the accounting policies in line with those of the Group.
Adjustments are made in the Groups consolidated nancial statements to eliminate the Groups share of intragroup balances,
income and expenses and unrealized gains and losses on transactions between the Group and its jointly controlled entity. Losses
on transactions are recognized immediately if the loss provides evidence of a reduction in the net realizable value of current
assets or an impairment loss. The joint venture is proportionately consolidated until the date on which the Group ceases to have
joint control over the joint venture.
Upon loss of joint control and provided the former jointly controlled entity does not become a subsidiary or associate, the Group
measures and recognizes its remaining investment at its fair value. Any difference between the carrying amount of the former
jointly controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is
recognized in prot or loss. When the remaining investment constitutes signicant inuence, it is accounted for as investment
in an associate.
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible
to known amounts of cash, with original maturities of three months or less, and are subject to an insignicant risk of change in
value.
Financial Instruments
Initial recognition
Financial assets and nancial liabilities are recognized in the consolidated balance sheet when the Group becomes a party to the
contractual provisions of the instrument. Purchases or sales of nancial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way purchases) are recognized on the trade date i.e., the
date that the Group commits to purchase or sell the asset.
Financial instruments are recognized initially at fair value plus transaction costs except for those designated at fair value through
prot and loss (FVPL).
Classication of nancial instruments
The Group further classies its nancial assets in the following categories: held-to-maturity (HTM) investments, AFS investments,
nancial assets at FVPL, and loans and receivables. Financial liabilities are classied as nancial liabilities at FVPL and other
nancial liabilities. The classication depends on the purpose for which the investments are acquired and whether they are
quoted in an active market. Management determines the classication of its nancial assets and liabilities at initial recognition
and, where allowed and appropriate, re-evaluates such designation at every reporting date.
Determination of fair value
The fair value for nancial instruments traded in active markets at the end of reporting period is based on their quoted market
price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for
transaction costs. When current bid and asking prices are not available, the price of the most recent transaction provides
evidence of the current fair value as long as there has not been a signicant change in economic circumstances since the time
of the transaction.
If the nancial instruments are not listed in an active market, the fair value is determined using appropriate valuation techniques
which include recent arms length market transactions, net present value techniques, comparison to similar instruments for
which market observable prices exist, options pricing models, and other relevant valuation models.
Looking Ahead.
60
Fair value measurement hierarchy
The Group categorizes its nancial asset and nancial liability based on the lowest level input that is signicant to the fair value
measurement. The fair value hierarchy has the following levels: (a) Level 1 - unadjusted quoted prices in active markets for
identical assets or liabilities accessible by the Group; (b) Level 2 - inputs that are observable in the marketplace other than those
classied as Level 1; and (c) Level 3 - inputs that are unobservable in the marketplace and signicant to the valuation.
Subsequent measurement
The subsequent measurement of nancial assets and nancial liabilities depends on their classication as follows:
a. Financial assets and nancial liabilities at FVPL
Financial assets or nancial liabilities classied in this category are nancial assets or nancial liabilities that are held for
trading or nancial assets and nancial liabilities that are designated by management as at FVPL on initial recognition
when any of the following criteria are met:
the designation eliminates or signifcantly reduces the inconsistent treatment that would otherwise arise from
measuring the assets or liabilities or recognizing gains or losses on them on a different basis; or
the assets and liabilities are part of a group of fnancial assets and fnancial liabilities, respectively, or both fnancial
assets and nancial liabilities, which are managed and their performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy; or
the fnancial instrument contains an embedded derivative, unless the embedded derivative does not signifcantly
modify the cash ows or it is clear, with little or no analysis, that it would not be separately recorded.
Financial assets are classied as held for trading if these are acquired for the purpose of selling in the near term. Derivatives
are also classied as held for trading unless they are designated as effective hedging instruments.
Financial assets and nancial liabilities at FVPL are recorded in the consolidated balance sheet at fair value. Changes in
fair value are recorded in prot or loss. Interest earned is recorded as interest income, while dividend income is recorded
in other income according to the terms of the contract, or when the right of the payment has been established. Interest
incurred is recorded as interest expense.
As at December 31, 2011 and 2010, the Group has not designated any nancial asset or nancial liability as at FVPL.
Embedded derivatives
An embedded derivative is separated from the host nancial or nonnancial contract and accounted for as derivative if all
the following conditions are met:
the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristic
of the host contract;
a separate instrument with the same terms as the embedded derivative would meet the defnition of a derivative; and
the hybrid or combined instrument is not recognized at FVPL.
The Group assesses whether embedded derivatives are required to be separated from host contract when the Group rst
becomes a party to the contract. Reassessment only occurs if there is change in the terms of the contract that signicantly
modies the cash ows that would otherwise be required.
Embedded derivatives that are bifurcated from the host contracts are accounted for as nancial asset at FVPL. Changes
in the fair values are included in prot or loss.
As at December 31, 2011, the Group has embedded derivatives on its long-term debt, the value of which is insignicant.
As at December 31, 2010, the Group has no embedded derivative.
b. Loans and receivables
Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an
active market, they are not entered into with the intention of immediate or short-term resale and are not designated as
AFS nancial assets or nancial assets at FVPL. Loans and receivables are carried at amortized cost using the effective
interest rate method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees that are integral part of the effective interest rate. Gains and losses are recognized in
prot or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.
Loans and receivables are included in current assets if maturity is within 12 months from the end of reporting period.

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61
As at December 31, 2011 and 2010, nancial assets included under this classication are the Groups cash in banks,
cash equivalents, trade and other receivables, and refundable deposits (presented as part of Other noncurrent assets
in the consolidated balance sheet).
c. HTM investments
HTM investments are quoted non-derivative nancial assets which carry xed or determinable payments and xed
maturities and which the Group has the positive intention and ability to hold to maturity. After initial measurement,
HTM investments are measured at amortized cost using the effective interest rate method. This method uses an
effective interest rate that exactly discounts estimated future cash receipts through the expected life of the nancial
asset to the net carrying amount of the nancial asset. Where the Group sells other than an insignicant amount
of HTM investments, the entire category would be tainted and reclassied as AFS investments. Gains and losses are
recognized in prot or loss when the investments are derecognized or impaired, as well as through the amortization
process.
As at December 31, 2011 and 2010, the Group has no HTM investments.
d. AFS investments
AFS investments are those non-derivative nancial assets which are designated as such or do not qualify to be
classied as nancial assets designated at FVPL, HTM investments or loans and receivables. They are purchased
and held indenitely, and may be sold in response to liquidity requirements or changes in market conditions. After
initial measurement, AFS investments are measured at fair value with unrealized gains or losses recognized in the
consolidated statement of comprehensive income and consolidated statement of changes in equity in the Unrealized
gain on AFS investments until the AFS investments is derecognized, at which time the cumulative gain or loss
recorded in equity is recognized in prot or loss. Assets under this category are classied as current assets if expected
to be realized within 12 months from the end of reporting period and as noncurrent assets if maturity date is more
than a year from the end of reporting period.
As at December 31, 2011 and 2010, nancial assets included as part of the Groups AFS investments are investment
in quoted and unquoted shares of stock and club shares.
e. Other nancial liabilities
This classication pertains to nancial liabilities that are not designated as at FVPL upon the inception of the liability.
Included in this category are liabilities arising from operations or borrowings.
The nancial liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking
into account the impact of applying the effective interest rate method of amortization (or accretion) for any related
premium (discount) and any directly attributable transaction costs.
As at December 31, 2011 and 2010, nancial liabilities included under this classication are the Groups loans payable,
trade and other payables, long-term debt, obligations under nance lease, redeemable preferred shares, and other
noncurrent liabilities.
Classication of Financial Instruments between Debt and Equity
Financial instruments are classied as liabilities or equity in accordance with the substance of the contractual arrangement.
Interest relating to a nancial instrument or a component that is a nancial liability is reported as expenses.
A nancial instrument is classied as debt if it provides for a contractual obligation to:
deliver cash or another fnancial asset to another entity; or
exchange fnancial assets or fnancial liabilities with another entity under conditions that are potentially unfavorable
to the Group; or
satisfy the obligation other than by the exchange of a fxed amount of cash or another fnancial asset for a fxed
number of own equity shares.
If the Group does not have an unconditional right to avoid delivering cash or another nancial asset to settle its contractual
obligation, the obligation meets the denition of a nancial liability.
The components of issued nancial instruments that contain both liability and equity elements are accounted for
separately, with the equity component being assigned the residual amount after deducting from the instrument as a
whole the amount separately determined as the fair value of the liability component on the date of issue.
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62
Redeemable preferred shares (RPS)
The component of the RPS that exhibits characteristics of a liability is recognized as a liability in the consolidated balance
sheet, net of transaction costs. The corresponding dividends on those shares are charged as interest expense in prot or
loss. On issuance of the RPS, the fair value of the liability component is determined using a market rate for an equivalent
non-convertible bond; and this amount is carried as a long term liability on the amortized cost basis until extinguished on
conversion or redemption.
Day 1 Difference
Where the transaction price in a non-active market is different from the fair value of other observable current market
transactions in the same instrument or based on a valuation technique whose variables include only data from observable
market, the Group recognizes the difference between the transaction price and fair value (a Day 1 prot and loss) in
prot or loss unless it qualies for recognition as some other type of asset. In cases where use is made of data which is
not observable, the difference between the transaction price and model value is only recognized in prot or loss when
the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the
appropriate method of recognizing the Day 1 prot or loss amount.
Offsetting of Financial Instruments
Financial assets and nancial liabilities are offset and the net amount reported in the consolidated balance sheet if, and
only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a
net basis, or to realize the assets and settle the liabilities simultaneously. This is not generally the case with master netting
agreements, and the related assets and liabilities are presented at gross amounts in the consolidated balance sheet.
Derecognition of Financial Assets and Liabilities
Financial asset
A nancial asset (or, where applicable a part of a nancial asset or part of a group of similar nancial assets) is derecognized
when:
the rights to receive cash fows from the asset have expired;
the Group retains the right to receive cash fows from the asset, but has assumed an obligation to pay them in full
without material delay to a third party under a pass-through arrangement; or
the Group has transferred its rights to receive cash fows from the asset and either (a) has transferred substantially all
the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash ows from an asset or has entered into a pass-through
agreement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred
control of the asset, the asset is recognized to the extent of the Groups continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could be required to repay.
In such case, the Group also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reects the rights and obligations that the Group has retained.
Financial liability
A nancial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired.
When an existing nancial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modied, such an exchange or modication is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in prot or loss.
Impairment of Financial Assets
The Group assesses at the end of each reporting period whether a nancial asset or group of nancial assets is impaired.
Loans and receivables
For loans and receivables carried at amortized cost, the Group rst assesses individually whether objective evidence
of impairment exists for nancial assets that are individually signicant, or collectively for nancial assets that are not
individually signicant. If the Group determines that no objective evidence of impairment exists for an individually
assessed nancial asset, whether signicant or not, the asset is included in a group of nancial assets with similar credit
risk characteristics and that group of nancial assets is collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment.
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63
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the
difference between the assets carrying amount and the present value of estimated future cash ows (excluding future
expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of
an allowance account and the amount of the loss is recognized in prot or loss. Interest income continues to be accrued
on the reduced carrying amount based on the original effective interest rate of the nancial asset. Loans together with
the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been
realized or has been transferred to the Group. If, in a subsequent period, the amount of the impairment loss increases or
decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss
increased or decreased by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognized
in prot or loss, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.
Assets carried at cost
If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value
because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery
of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash ows discounted at the current market rate of
return for a similar nancial asset.
AFS investments
For AFS investments, the Group assesses at the end of each reporting period whether there is objective evidence that an
investment or group of investment is impaired.
In the case of equity investments classied as AFS investments, objective evidence of impairment would include a signicant
or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the
cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that nancial asset previously recognized in prot or loss) is removed from equity and recognized in prot or loss.
Impairment losses on equity investments are not reversed through prot or loss. Increases in fair value after impairment
are recognized in other comprehensive income.
In the case of debt instruments classied as AFS investments, impairment is assessed based on the same criteria as nancial
assets carried at amortized cost. Future interest income is based on the reduced carrying amount and is accrued based
on the rate of interest used to discount future cash ows for the purpose of measuring impairment loss. Such accrual
is recorded as part of Interest income in prot or loss. If, in subsequent period, the fair value of a debt instrument
increased and the increase can be objectively related to an event occurring after the impairment loss was recognized in
prot or loss, the impairment loss is reversed through prot or loss.
Inventories
Inventories are valued at the lower of cost or net realizable value (NRV). Cost comprises all cost of purchase and other
costs incurred in bringing the inventories to their present location or condition. Cost is determined using the moving
average method for materials, parts and supplies, ight equipment expendable parts and supplies, the weighted average
method for trading goods, and the rst-in, rst-out method for truck and trailer expendable parts, fuel, lubricants and
spare parts. NRV is the estimated selling price in the ordinary course of business, less estimated costs necessary to make
the sale.
Asset Held for Sale and Discontinued Operation
Assets and disposal groups classied as held for sale are measured at the lower of carrying amount and fair value less
costs to sell. Noncurrent assets and disposal groups are classied as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management
must be committed to the sale which should be expected to qualify for recognition as a completed sale within 12 months
from the date of classication.
Property and equipment once classied as held for sale are not depreciated or amortized.
If there are changes to a plan of sale, and the criteria for the asset or disposal group to be classied as held for sale are no
longer met, the Group ceases to classify the asset or disposal group as held for sale and it shall be measured at the lower
of: (a) its carrying amount before the asset was classied as held for sale adjusted for any depreciation, amortization or
revaluations that would have been recognized had the asset not been classied as held for sale, and (b) its recoverable
amount at the date of the subsequent decision not to sell.
The Group includes any required adjustment to the carrying amount of a noncurrent asset or disposal group that ceases
to be classied as held for sale in prot or loss from continuing operations in the period in which the criteria for the asset
Looking Ahead.
64
or disposal group to be classied as held for sale are no longer met. The Group presents that adjustment in the same
caption in prot or loss used to present a gain or loss recognized, if any.
In the consolidated statement of income of the reporting period, and of the comparable period of the previous year,
income and expenses from discontinued operations are reported separately from normal income and expenses down
to the level of prot after taxes, even when the Group retains a non-controlling interest in the asset after the sale. The
resulting prot or loss (after taxes) is reported separately in prot or loss.
Property and Equipment
Property and equipment, other than land, are carried at cost, less accumulated depreciation, amortization and impairment
losses, if any. The initial cost of property and equipment consists of its purchase price and costs directly attributable to
bringing the asset to its working condition for its intended use. When signicant parts of property and equipment are
required to be replaced in intervals, the Group recognizes such parts as individual assets with specic useful lives and
depreciation, respectively. Land is carried at cost less accumulated impairment losses.
Subsequent expenditures relating to an item of property and equipment that have already been recognized are added to
the carrying amount of the asset when the expenditure have resulted in an increase in future economic benets, in excess
of the originally assessed standard of performance of the existing asset, will ow to the Group. Expenditures for repairs
and maintenance are charged to the operations during the year in which they are incurred.
Drydocking costs, consisting mainly of engine overhaul, replacement of steel plate of the vessels hull and related
expenditures, are capitalized as a separate component of Vessels in operations. When signicant drydocking costs are
incurred prior to the end of the amortization period, the remaining unamortized balance of the previous drydocking cost
is charged against prot or loss.
Vessels under refurbishment, if any, include the acquisition cost of the vessels, the cost of ongoing refurbishments and
other direct costs. Construction in progress represents structures under construction and is stated at cost. This includes
cost of construction and other direct costs. Borrowing costs that are directly attributable to the refurbishment of vessels
and construction of property and equipment are capitalized during the refurbishment and construction period. Vessels
under refurbishment and construction in progress are not depreciated until such time the relevant assets are complete
and available for use. Refurbishments of existing vessels are capitalized as part of vessel improvements and depreciated
at the time the vessels are put back into operation.
Vessel on lay-over, if any, represents vessel for which drydocking has not been done pending availability of the necessary
spare parts. Such vessels, included under the Property and equipment account in the consolidated balance sheet is
stated at cost less accumulated depreciation and any impairment in value.
Depreciation and amortization are computed using the straight-line method over the following estimated useful lives of
the property and equipment as follows:
Number of Years
Vessels in operation, excluding drydocking costs and
vessel equipment and improvements 15-30
Drydocking costs 2-2
Vessel equipment and improvements 3-5
Containers and reefer vans 5-10
Terminal and handling equipment 5-7
Furniture and other equipment 3-5
Land improvements 5-10
Buildings and warehouses 5-20
Transportation equipment 5-10
Leasehold improvements are amortized over their estimated useful lives of 5-20 years or the term of the lease, whichever
is shorter. Flight equipment is depreciated based on the estimated number of ying hours.
Depreciation commences when an asset is in its location or condition capable of being operated in the manner intended
by management. Depreciation ceases at the earlier of the date that the item is classied as held for sale in accordance
with PFRS 5 and the date the asset is derecognized.
An item of property and equipment is derecognized upon disposal or when no future economic benets are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the item) is included in prot or loss in the year the item is derecognized.
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65
The assets residual values, useful lives and depreciation methods are reviewed at each reporting period, and adjusted
prospectively if appropriate. Fully depreciated assets are retained in the accounts until these are no longer in use. When
property and equipment are sold or retired, their cost and accumulated depreciation and any allowance for impairment in
value are eliminated from the accounts and any gain or loss resulting from their disposal is included in prot or loss.
Investment Property
Investment property, consisting of a parcel of land of ATSEI, is measured at cost less any impairment in value.
Subsequent costs are included in the assets carrying amount only when it is probable that future economic benets
associated with the asset will ow to the Group and the cost of the item can be measured reliably.

Derecognition of an investment property will be triggered by a change in use or by sale or disposal. Gain or loss arising
on disposal is calculated as the difference between any disposal proceeds and the carrying amount of the related asset,
and is recognized in the parent company statement of income. Transfers are made to investment property when, and
only when, there is change in use, evidenced by cessation of owner-occupation, commencement of an operating lease
to another party or completion of construction or development, transfers are made from investment property when,
and only when, there is a change in used, evidenced by commencement of owner-occupation or commencement of
development with a view to sale.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in
a business combination is fair value as at the date of the acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalized development costs, are not capitalized and expenditure is reected in prot or loss in the year
in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either nite or indenite.
Software development costs
Software development costs are initially recognized at cost. Following initial recognition, the software development costs
are carried at cost less accumulated amortization and any accumulated impairment in value.
The software development costs is amortized on a straight-line basis over its estimated useful economic life of three to
ve years and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The
amortization commences when the software development costs is available for use. The amortization period and the
amortization method for the software development costs are reviewed at each reporting period. Changes in the estimated
useful life is accounted for by changing the amortization period or method, as appropriate, and treated as changes in
accounting estimates. The amortization expense is recognized in prot or loss in the expense category consistent with the
function of the software development costs.
Intangible assets with indenite useful lives are not amortized, but are tested for impairment annually either individually or
at the cash generating unit level. The assessment of indenite life is reviewed annually to determine whether the indenite
life continues to be supportable. If not, the change in useful life from indenite to nite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized in prot or loss when the asset is derecognized.
Impairment of Nonnancial Assets
The Group assesses at the end of each reporting period whether there is an indication that nonnancial asset may be
impaired. If any such indication exists, or when annual impairment testing for nonnancial asset is required, the Group
makes an estimate of the assets recoverable amount.
An assets recoverable amount is the higher of an assets or cash-generating units (CGU) fair value less costs to sell and its
value in use (VIU) and is determined for an individual asset, unless the asset does not generate cash inows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing VIU, the
estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market
assessments of the time value of money and the risks specic to the asset. In determining fair value less costs to sell, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded subsidiaries or other available fair value indicators.
Looking Ahead.
66
Impairment losses of continuing operations are recognized in prot or loss in those expense categories consistent with the
function of the impaired asset.
For nonnancial assets excluding goodwill, an assessment is made at the end of each reporting period as to whether
there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such
indication exists, the Group makes an estimate of the assets or CGUs recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable
amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to
its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined,
net of depreciation or amortization, had no impairment loss been recognized for the asset in prior years. Such reversal
is recognized in prot or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a
revaluation increase. After such a reversal, the depreciation expense or amortization is adjusted in future periods to
allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
The Groups nonnancial assets consist of creditable withholding taxes, input VAT, prepaid expense, other current assets,
assets held for sale, property and equipment, investment property, investments in associates, software development cost,
deferred input VAT and pension asset.
Goodwill
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGU) to which
the goodwill relates. Where the recoverable amount of CGU (or group of CGUs) is less than their carrying amount, an
impairment loss is recognized immediately in prot or loss of the CGU (or the group of CGUs) to which goodwill has been
allocated. Impairment losses relating to goodwill cannot be reversed in future periods.
Provisions and Contingencies
Provisions are recognized when: (a) the Group has a present obligation (legal or constructive) as a result of a past event;
(b) it is probable that an outow of resources embodying economic benets will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation.
Contingent liabilities are not recognized in the consolidated nancial statements. They are disclosed unless the possibility
of an outow of resources embodying economic benets is remote. Contingent assets are not recognized in the
consolidated nancial statements but disclosed in the notes to consolidated nancial statements when an inow of
economic benets is probable.
Equity
Share capital is measured at par value for all shares issued. When the Company issues more than one class of stock,
a separate account is maintained for each class of stock and the number of shares issued. Incremental costs incurred
directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax.
Additional paid-in capital (APIC) is the difference between the proceeds and the par value when the shares are sold at a
premium. Contributions received from shareholders are recorded at the fair value of the items received with the credit
going to share capital and any excess to APIC.
Retained earnings (decit) represent the cumulative balance of net income or loss, net of any dividend declaration and
other capital adjustments.
Treasury shares are owned equity instruments that are reacquired. Treasury shares are recognized at cost and deducted
from equity. No gain or loss is recognized in prot or loss on the purchase, sale, issue or cancellation of the Groups own
equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized as APIC.
Voting rights related to treasury shares are nullied for the Group and no dividends are allocated to them.
Other comprehensive income comprises items of income and expenses that are not recognized in prot or loss for the year
in accordance with PFRS.
Revenue
Revenue is recognized to the extent that it is probable that the economic benets will ow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts,
rebates, value-added taxes or duty.
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67
The Group assesses its revenue arrangement against specic criteria in order to determine if it is acting as principal or
agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The specic recognition
criteria for each type of revenue are as follows:
Freight and passage revenue are recognized when the related services are rendered. Customer payments for services
which have not yet been rendered are classied as unearned revenue under Trade and other payables in the consolidated
balance sheet.
Service fees are recognized when the related services have been rendered. Service revenue are also recognized when
cargos are received by either shippers or consignee for export and import transactions. These amounts are presented, net
of certain costs which are reimbursed by customers.
Revenue from sale of goods is recognized when the signicant risks and rewards of ownership of the goods have passed
to the buyer, usually on delivery of the goods.
Revenue from sale of food and beverage is recognized upon delivery and acceptance by customers.
Charter revenues from short-term chartering arrangements are recognized in accordance with the terms of the charter
agreements.
Manning and crewing services revenue is recognized upon embarkation of qualied ship crew based on agreed rates and
when the corresponding training courses have been conducted.
Management fee is recognized when the related services are rendered.
Commissions are recognized as revenue in accordance with the terms of the agreement with the principal and when the
related services have been rendered.
Rental income arising from operating leases is recognized on a straight-line basis over the lease term.
Interest income. For all nancial instruments measured at amortized cost and interest bearing nancial assets classied
as AFS, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the
estimated future cash payments or receipts through the expected life of the nancial instrument or a shorter period,
where appropriate, to the net carrying amount of the nancial asset or liability.
Dividend income is recognized when the shareholders right to receive the payment is established.
Costs and Expenses
Costs and expenses are recognized in prot or loss when decrease in future economic benets related to a decrease in an
asset or an increase of a liability has arisen that can be measured reliably.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date of whether the fulllment of the arrangement is dependent on the use of a specic asset or assets or the
arrangement conveys a right to use the asset. A reassessment is made after the inception of the lease only if any of the
following applies:
a. there is a change in contractual terms, other than a renewal or extension of the arrangement;
b. a renewal option is exercised and extension granted, unless the term of the renewal or extension was initially included
in the lease term;
c. there is a change in the determination of whether fulllment is dependent on a specied asset; or
d. there is a substantial change to the asset.
When a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances
give rise to the reassessment for scenarios (a), (c) or (d) and at the date of renewal or extension period for scenario (b).
The Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benets incidental to ownership of the leased
item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value
of the minimum lease payments. Lease payments are apportioned between the nance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized
directly in prot or loss.
Looking Ahead.
68
Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is
no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Leases where the lessor retains substantially all the risks and benets of ownership of the asset are classied as operating leases.
Operating lease payments are recognized as expense in prot or loss on a straight-line basis over the lease term.
The Group as a lessor
Leases where the Group does not transfer substantially all the risks and benets of ownership of the asset are classied as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same bases as rental income. Contingent rents are recognized as revenue in
the period in which they are earned.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed as incurred.
Pension Benets
The Group has dened benet pension plans, which require contributions to be made to separately administered funds.
The cost of providing benets under the dened benet plan is determined using the projected unit credit method. Actuarial
gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for each
individual plan at the end of the previous reporting year exceeded 10% of the higher of the dened benet obligation and the
fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of
the employees participating in the plans.
The past service cost is recognized as an expense on a straight-line basis over the average period until the benets become
vested. If the benets are already vested immediately following the introduction of, or changes to, a pension plan, past service
cost is recognized immediately.
The dened benet asset or liability comprises the present value of the dened benet obligation, less past service costs
and actuarial gains and losses not yet recognized and less the fair value of plan assets out of which the obligations are to be
settled. Plan assets are assets that are held by a long-term employee benet fund or qualifying insurance policies. Plan assets
are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value is based on market price
information and in the case of quoted securities it is the published bid price. The value of any dened benet asset recognized
is restricted to the sum of any past service costs and actuarial gains and losses not yet recognized and the present value of any
economic benets available in the form of refunds from the plan or reductions in the future contributions to the plan.
Taxes
Current tax
Current tax assets and liabilities for the current periods are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted at the end of each
reporting period, in the countries where the Group operates and generates taxable income.
Current tax relating to items recognized directly in equity is recognized in equity and not in prot or loss. Management
periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject
to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at the nancial reporting date
between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible
temporary differences relating to carryforward benets of the minimum corporate income tax (MCIT) and the net operating
loss carry over (NOLCO) to the extent that it is probable that sufcient future taxable income will be available against which the
deductible temporary differences, carryforward benets of the excess of the MCIT and NOLCO can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufcient future taxable income will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has
become probable that sufcient future taxable prot will allow the deferred tax asset to be recovered.
Annual Report 2011
69
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled, based on tax rate and tax laws that have been enacted or substantively enacted at the end of the
reporting period.
Deferred tax relating to items recognized in other comprehensive income or directly in equity is recognized in the consolidated
statement of comprehensive income and consolidated statement of changes in equity and not in prot or loss.
Deferred tax assets and liabilities are offset, if there is a legally enforceable right to offset current income tax assets against
current income tax liabilities and they relate to income taxes levied by the same taxing authority and the Group intends to settle
its current income tax assets and liabilities on a net basis.
Value-added tax (VAT)
Revenue, expenses, assets and liabilities are recognized net of the amount of VAT, except where the VAT incurred as a purchase
of assets or service is not recoverable from the taxation authority, in which are the VAT is recognized as part of the cost of
acquisition of the asset or as part of the expense item as applicable.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the consolidated balance sheet.
Creditable withholding taxes
Creditable withholding taxes (CWT), included in Other current assets account in the consolidated balance sheet, are amounts
withheld from income subject to expanded withholding taxes (EWT). CWTs can be utilized as payment for income taxes provided
that these are properly supported by certicates of creditable tax withheld at source subject to the rule on Philippine income
taxation. CWTs which are expected to be utilized as payment for income taxes within 12 months are classied as current asset.
Foreign Currency-denominated Transactions and Translations
The Groups consolidated nancial statements are presented in Philippine Peso, which is the Parent Companys functional and
presentation currency. Each entity in the Group determines its own functional currency and items included in the nancial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange
ruling at the end of the reporting period. All differences are taken to the prot or loss except for the exchange differences arising
from translation of the balance sheets of subsidiaries and associates which are considered foreign entities into the presentation
currency of the Parent Company (Peso) at the closing exchange rate at the end of the reporting period and their statements of
income translated using the weighted average exchange rate for the year. These are recognized in other comprehensive income
until the disposal of the net investment, at which time they are recognized in prot or loss. Tax charges and credits attributable
to exchange differences on those monetary items are also recorded in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as
at the dates of the initial transactions and are not retranslated. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was determined.
Related Party Relationships and Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise
signicant inuence over the other party in making nancial and operating decisions. Parties are also considered to be related
if they are subject to common control or common signicant inuence. Related parties may be individuals or corporate entities.
The key management personnel of the Group and post-employment benet plans for the benet of the Groups employees are
also considered to be related parties. In considering each related party relationships, attention is directed to the substance of
the transaction and not merely its legal form.
Earnings Per Common Share
Basic earnings per common share are determined by dividing net income by the weighted average number of common shares
outstanding, after retroactive adjustment for any stock dividends and stock splits declared during the year.
Diluted earnings per common share amounts are calculated by dividing the net income for the year attributable to the ordinary
equity holders of the parent by the weighted average number of common shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued for any outstanding common share equivalents. The Group has no
potential dilutive common shares.
Looking Ahead.
70
Dividends on Common Shares
Dividends on common shares are recognized as a liability and deducted from retained earnings when approved by the respective
shareholders of the Company and subsidiaries. Dividends for the year that are approved after the balance sheet date are dealt
with as an event after the balance sheet date.
Segment Reporting
The Companys operating businesses are organized and managed separately according to the nature of the products and
services provided, with each segment representing a strategic business unit that offers different products and serves different
markets. Financial information on business segments is presented in Note 5.
Events After the Reporting Period
Post year events that provide evidence of conditions that existed on the balance sheet date are reected in the consolidated
nancial statements. Subsequent events that are indicative of conditions that arose after balance sheet date are disclosed in the
notes to consolidated nancial statements when material.
3. Signicant Judgments, Accounting Estimates and Assumptions
The preparation of the consolidated nancial statements in compliance with PFRS requires management to make judgments,
accounting estimates and assumptions that affect the amounts reported in the consolidated nancial statements and
accompanying notes. The judgments, estimates and assumptions are based on managements evaluation of relevant facts
and circumstances as of the date of the consolidated nancial statements. Actual results could differ from these estimates and
assumptions used.
Judgments
In the process of applying the Groups accounting policies, management has made the following judgments, apart from those
involving estimations, which have the most signicant effect on the amounts recognized in the nancial statements:
Determination of functional currency
Based on the economic substance of the underlying circumstances relevant to the Group, the functional currency is determined
to be the Philippine Peso. It is the currency that mainly inuences the sale of services and the cost of rendering the services.
Determination if control exists in an investee company
Control is presumed to exist when the parent company owns, directly or indirectly through subsidiaries, more than half of the
voting power of an entity unless, in exceptional circumstances, it can be clearly demonstrated that such ownership does not
constitute control. Management has determined that despite only having 50% ownership in STI, it has control by virtue of its
power to cast the majority votes at meetings of the BOD and control of the entity is by that BOD.
Classication of nancial instruments
The Group classies a nancial instrument, or its component parts, on initial recognition as a nancial asset, a nancial liability
or an equity instrument in accordance with the substance of the contractual agreement and the denitions of a nancial asset,
a nancial liability or an equity instrument. The substance of a nancial instrument, rather than its legal form, governs its
classication in the consolidated balance sheet. The Groups classication of nancial instruments is presented in Note 35.
Classication of leases - the Group as lessee
The Group has entered into commercial property leases on its distribution warehouses, sales outlets, trucking facilities and
administrative ofce locations. Based on an evaluation of the terms and conditions of the arrangements, management assessed
that there is no transfer of ownership of the properties by the end of the lease term and the lease term is not a major part of
the economic life of the properties. Thus, the Group does not acquire all the signicant risks and rewards of ownership of these
properties and so account for it as an operating lease.
The Group has also entered into a nance lease agreement covering certain property and equipment. The Group has determined
that it bears substantially all the risks and benets incidental to ownership of said properties based on the terms of the contracts
(such as existence of bargain purchase option, present value of minimum lease payments amount to at least substantially all
of the fair value of the leased asset). As at December 31, 2011 and 2010, the carrying amount of the property and equipment
under nance lease amounted to P143.0 million and P54.3 million, respectively (see Note 21).
Classication of leases - the Group as lessor
The Group has entered into short-term leases or chartering arrangements, which provide no transfer of ownership to the lessee.
The Group has determined that it retains all the signicant risks and rewards of ownership of these equipment and so accounts
for it as an operating lease.
Annual Report 2011
71
Classication of assets held for sale
In 2011, management assessed that some of the existing vessels met the criteria as assets held for the following reasons: (1) the
related assets are available for immediate sale; (2) preliminary negotiations with willing buyers were executed; and (3) the sale
is expected to be completed within 12 months from the end of reporting period.
The Group classied as assets held for sale ve of its existing vessels as at December 31, 2011 with total carrying values of
P692.6 million, net of impairment losses (see Note 10).
Classication of redeemable preferred shares (RPS)
The Group has RPS which is redeemable at any time, in whole or in part, within a period not exceeding 10 years from the date
of issuance. If not redeemed, the RPS may be converted to a bond over prevailing treasury bill rate to be issued by the Parent
Company. As at December 31, 2011 and 2010, the Group classied this RPS amounting to P25.9 million and P22.9 million as
liability.
Evaluation of legal contingencies
The Group is a party to certain lawsuits or claims arising from the ordinary course of business. The Groups management
and legal counsel believe that the eventual liabilities under these lawsuits or claims, if any, will not have material effect on the
consolidated nancial statements. Accordingly, no provision for probable losses arising from legal contingencies was recognized
in 2011 and 2010 (see Note 31).
Evaluation of events after the reporting period
Management exercises judgment in determining whether an event, favorable or unfavorable occurring between the end of the
reporting period and the date when the nancial statements are authorized for issue, is an adjusting event or non-adjusting
event. Adjusting events provide evidence of conditions that existed at the end of the reporting period whereas non-adjusting
events are events that are indicative of conditions that arose after the reporting period. Non-adjusting events that would require
additional disclosure in the consolidated nancial statements are disclosed in Note 37.
Estimates and Assumptions
The following are the key assumptions concerning the future and other key sources of estimation uncertainty, at the end of
reporting period that have a signicant risk of causing a material adjustment to the carrying amount of assets and liabilities
within the next nancial year.
Determination of fair value of nancial instruments
Where the fair value of nancial assets and liabilities recorded in the consolidated balance sheet cannot be derived from
active markets, they are determined using valuation techniques including the discounted cash ows model. The inputs to the
models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in
establishing the fair values. The judgments include considerations of inputs such as liquidity risk and credit risk. Changes in
assumptions about these factors could affect the reported fair value of nancial instruments.
The carrying values and corresponding fair values of nancial assets and nancial liabilities and the manner in which fair values
were determined are described in Note 36.
Estimation of allowance for doubtful receivables
The Group maintains an allowance for impairment losses on trade and other receivables at a level considered adequate to
provide for potential uncollectible receivables. The level of this allowance is evaluated by the Group on the basis of factors that
affect the collectibility of the accounts. These factors include, but are not limited to, the length of the Groups relationship with
debtors, their payment behavior and other known market factors. The Group reviews the age and status of the receivables, and
identies accounts that are to be provided with allowance on a continuous basis. The amount and timing of recorded expenses
for any period would differ if the Group made different judgment or utilized different estimates. An increase in the Groups
allowance for impairment losses would increase the Groups recorded expenses and decrease current assets.
The main considerations for impairment assessment include whether any payments are overdue or if there are any known
difculties in the cash ows of the counterparties. The Group assesses impairment in two levels: individually assessed allowances
and collectively assessed allowances.
The Group determines allowance for each signicant receivable on an individual basis. Among the items that the Group considers
in assessing impairment is the inability to collect from the counterparty based on the contractual terms of the receivables.
Receivables included in the specic assessment are the accounts that have been endorsed to the legal department, non-moving
account receivables, accounts of defaulted agents and accounts from closed stations.
Looking Ahead.
72
For collective assessment, allowances are assessed for receivables that are not individually signicant and for individually
signicant receivables where there is no objective evidence of individual impairment. Impairment losses are estimated by taking
into consideration the age of the receivables, past collection experience and other factors that may affect collectibility.
As at December 31, 2011 and 2010, trade and other receivables amounted to P2,898.2 million and P2,523.4 million, respectively,
net of allowance for doubtful receivables of P309.1 million and P283.1 million, respectively (see Note 7). Provision for doubtful
accounts recognized in 2011 and 2010 amounted to P38.7 million and P20.9 million, respectively (see Note 7).
Determination of net realizable value of inventories
The Group provides an allowance for inventories whenever the value of inventories becomes lower than its cost due to damage,
physical deterioration, obsolescence, changes in price levels or other causes. The allowance account is reviewed on an annual
basis. Inventory items identied to be obsolete and unusable are written off and charged as expense for the period.
As at December 31, 2011 and 2010, the carrying values of inventories amounted to P407.4 million and P564.2 million, net of
allowance for inventory obsolescence amounting to P70.7 million and P73.7 million, respectively (see Note 8).
Estimation of useful lives of property and equipment
The useful life of each of the Groups item of property and equipment is estimated based on the period over which the asset is
expected to be available for use until it is derecognized. Such estimation is based on a collective assessment of similar businesses,
internal technical evaluation and experience with similar assets. The estimated useful life of each asset is reviewed periodically
and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence
and legal or other limits on the use of the asset. It is possible, however, that future results of operations could be materially
affected by changes in the amounts and timing of recorded expenses brought about by changes in the factors mentioned
above. A reduction in the estimated useful life of any item of property and equipment would increase the recorded depreciation
expenses and decrease the carrying value of property and equipment.
As at December 31, 2011 and 2010, property and equipment amounted to P4,651.1 million and P6,196.0 million, net of
accumulated depreciation, amortization and impairment loss of P5,527.9 million and P7,354.8 million, respectively (see
Note 14).
Estimation of residual value of property and equipment
The residual value of the Groups property and equipment is estimated based on the amount that would be obtained from
disposal of the asset, after deducting estimated costs of disposal, if the assets are already of the age and in the condition
expected at the end of its useful life. Such estimation is based on the prevailing price of scrap steel. The estimated residual value
of each asset is reviewed periodically and updated if expectations differ from previous estimates due to changes in the prevailing
price of scrap steel.
There is no change in the estimated residual value of property and equipment in 2011 and 2010.
Estimation of useful life of software development costs
The estimated useful life used as a basis for amortizing software development costs was determined on the basis of managements
assessment of the period within which the benets of these costs are expected to be realized by the Group.
As at December 31, 2011 and 2010, the carrying value of software development costs amounted to P13.8 million and
P45.2 million, respectively (see Note 16).
Impairment of AFS investments
The Group considers AFS nancial assets as impaired when there has been a signicant or prolonged decline in the fair value
of such investments below their cost or where other objective evidence of impairment exists. The determination of what is
signicant or prolonged requires judgment. The Group treats signicant generally as 20% or more and prolonged
as greater than 12 months. In addition, the Group evaluates other factors, including normal volatility in share price for quoted
equities and future cash ows and discount factors for unquoted equities in determining the amount to be impaired.
At December 31, 2011 and 2010, the carrying value of AFS investments amounted to P9.8 million and P29.8 million, respectively
(see Note 11). No impairment loss was recognized in 2011, 2010 and 2009.
Assessment of impairment of nonnancial assets and estimation of recoverable amount
The Group assesses at the end of each reporting period whether there is any indication that the nonnancial assets listed below
may be impaired. If such indication exists, the entity shall estimate the recoverable amount of the asset, which is the higher of
an assets fair value less costs to sell and its value-in-use. In determining fair value less costs to sell, an appropriate valuation
Annual Report 2011
73
model is used, which can be based on quoted prices or other available fair value indicators. In estimating the value-in-use, the
Group is required to make an estimate of the expected future cash ows from the cash generating unit and also to choose an
appropriate discount rate in order to calculate the present value of those cash ows.
Determining the recoverable amounts of the nonnancial assets listed below, which involves the determination of future cash
ows expected to be generated from the continued use and ultimate disposition of such assets, requires the use of estimates
and assumptions that can materially affect the consolidated nancial statements. Future events could indicate that these
nonnancial assets are impaired. Any resulting impairment loss could have a material adverse impact on the nancial condition
and results of operations of the Group.
The preparation of estimated future cash ows involves signicant judgment and estimations. While the Group believes that its
assumptions are appropriate and reasonable, signicant changes in these assumptions may materially affect its assessment of
recoverable values and may lead to future additional impairment changes under PFRS.
Assets that are subject to impairment testing when impairment indicators are present (such as obsolescence, physical damage,
signicant changes to the manner in which the asset is used, worse than expected economic performance, a drop in revenues
or other external indicators) are as follows:
2010
2011 (As restated)
(In Thousands)
Property and equipment - net (Note 14) P4,651,107 P6,196,093
Investment property (Note 15) 9,763 9,763
Investments in associates (Notes 12) 99,777 114,949
Software development cost (Note 16) 13,826 45,223
The Group recognized impairment loss on assets held for sale amounting to P223.6 million in 2011 and on property and
equipment amounting to P778.8 million in 2010 (see Notes 10 and 14). The signicant assumptions used in the estimation of
the value in use are disclosed in Note 14.
As of December 31, 2011 and 2010, no impairment loss was recognized on the investment property as its carrying value is
higher than its fair value, which was determined based on the valuation performed by a qualied and independent appraiser.
The valuation undertaken considered the sale of similar property and related market data.
As of December 31, 2011 and 2010, no impairment loss was recognized on other nonnancial assets.
Estimation of probable losses
The Group makes an estimate of the provision for probable losses on its creditable withholding tax (CWT) and input VAT.
Managements assessment is based on historical experience and other developments that indicate that the carrying value
may no longer be recoverable. The aggregate carrying values of CWT, input VAT and deferred input VAT amounting to
P1,013.6 million and P1,079.6 million as of December 31, 2011 and 2010, respectively, is fully recoverable (see Notes 9 and 17).
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of
the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate
of the expected future cash ows from the cash-generating unit and also to choose a suitable discount rate in order to calculate
the present value of those cash ows. The signicant assumptions used in the estimation of the recoverable amount of goodwill
are described in Note 5.
As at December 31, 2011 and 2010, the carrying amount of goodwill amounted to P250.5 million net of impairment loss of
P6.0 million on goodwill in 2010 (see Note 5).
Estimation of retirement benet
The determination of the obligation and cost for pension and other retirement benets is dependent on the selection of certain
assumptions used by actuaries in calculating such amounts. Those assumptions were described in Note 32 and include among
others, discount rate, expected return on plan assets and rate of compensation increase. In accordance with PFRS, actual results
that differ from the Groups assumptions are accumulated and amortized over future periods and therefore, generally affect
the recognized expense and recorded obligation in such future periods. While it is believed that the Groups assumptions are
reasonable and appropriate, signicant differences in actual experience or signicant changes in assumptions may materially
affect the Groups pension and other retirement obligations.
Looking Ahead.
74
The discount rate and the expected rate of return on plan assets are determined based on the market prices prevailing on that
date, applicable to the period over which the obligation is to be settled.
As at December 31, 2011 and 2010, the Groups pension asset amounted to P7.1 million and P61.0 million while the Groups
accrued retirement benets amounted to P52.2 million and P19.7 million, respectively (see Notes 17 and 28).
Recognition of deferred tax assets
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it
is no longer probable that sufcient future taxable income will be available to allow all or part of the deferred tax assets to be
utilized. There is no assurance that sufcient taxable income will be generated to allow all or part of the deferred tax assets to
be utilized.
As at December 31, 2011 and 2010, the Group has recognized deferred tax assets on its temporary differences, carryforward
benets of NOLCO and excess MCIT amounting to P976.6 million and P733.6 million, respectively (see Note 29). Tax effect
of the temporary differences and carryforward benets of unused NOLCO and MCIT for which no deferred tax assets were
recognized amounted to P67.7 million and P111.7 million as at December 31, 2011 and 2010, respectively (see Note 29).
4. Operating Segment Information
Operating segments are components of the Group: (a) that engage in business activities from which they may earn revenue
and incur expenses (including revenues and expenses relating to transactions with other components of the Group); (b) whose
operating results are regularly reviewed by the Groups BOD to make decisions about resources to be allocated to the segment
and assess its performance; and (c) for which discrete nancial information is available. The Groups Chief Operation Decision
Maker is the Parent Companys BOD.
For purposes of management reporting, the Group is organized into business units based on their products and services. The
Group has the following segments:
The shipping segment renders passage transportation and cargo freight services.
The supply chain segment provides logistics services and supply chain management.
The manpower services segment renders manning and personnel, particularly crew management services.
The segment results for the year ended December 31, 2011 pertain to the shipping and supply chain segments. Segment results
of the manpower services segment were included until the date of its disposal in 2010 and presented as discontinued operations
in the 2010 and 2009 segment information (see Note 30).
The Parent Companys BOD regularly review the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating prot
or loss and is measured consistently with operating prot or loss in the consolidated nancial statements. The Group nancing
(including nance costs and nance income) and income taxes are managed on a group basis and are not allocated to operating
segments.
The Group has only one geographical segment as all its assets are located in the Philippines. The Group operates and devices
principally all its revenue from domestic operations. Thus, geographical business information is not required.
Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with third parties.
Segment revenue includes transfer of goods and services between operating segments. Such transfers are eliminated in the
consolidation. Further, there were no revenue transactions with single customer accounts to 10% of total revenue.
Further, the measurement of the segments is the same as those described in the summary of signicant accounting and nancial
reporting policies, except for NENACO retirement benets where the related actuarial gains or losses are recognized in the
parent company nancial statements.
Annual Report 2011
75
Financial information about business segments follow:
2011
Eliminations/ Consolidated
Shipping Supply chain adjustments balances
(In Thousands)
Revenue P10,911,133 P5,182,198 (P3,122,518) P12,970,813
Fuel, oil and lubricants 4,461,454 18,255 (986,481) 3,493,228
Terminal expenses 2,192,360 (696,951) 1,495,409
Cost of goods sold 2,601,539 2,601,539
Overhead 1,295,827 449,798 (712,020) 1,033,605
Depreciation and amortization
Operating expenses 1,090,687 21,336 (250,942) 861,081
Terminal expenses 156,534 (67,627) 88,907
Overhead 101,535 36,409 (3,524) 134,420
Interest and nancing charges 560,535 51,356 (204,343) 407,548
Share in equity earnings (losses) of
associates (2,073) 9,292 (21,744) (14,525)
Provision for (benet from) income tax (288,944) 31,550 62,094 (195,300)
Segment assets 18,671,045 2,386,537 (8,925,498) 12,132,084
Segment liabilities 10,721,855 1,900,190 (3,796,245) 8,825,800
Other information:
Vessel impairment 435,304 (211,660) 223,644
Capital expenditures 1,347,161 32,680 (812,451) 567,390
Investment in associates 33,929 41,328 24,520 99,777
2010 (As restated)
Manpower
services
(discontinued Eliminations/ Consolidated
Shipping Supply chain operations) adjustments balances
(In Thousands)
Revenue P7,267,362 P4,770,589 P1,826,129 (P2,253,188) P11,610,892
Fuel, oil and lubricants 2,859,684 3,041 (6,245) 2,856,480
Terminal expenses 1,443,499 30,480 1,473,979
Cost of goods sold 2,255,457 (145,279) 96,463 2,206,641
Overhead 1,100,930 428,272 (577,775) 524,602 1,476,029
Depreciation and amortization
Operating 1,019,241 21,935 14,126 1,055,302
Terminal 118,549 118,549
Overhead 367,619 36,546 (18,910) (210,233) 175,022
Interest and nancing charges 244,249 69,830 (85,298) 228,781
Share in equity earnings of
associates 7,596 812 31,799 40,207
Provision for (benet from)
income tax (461,644) 40,177 (24,110) 24,110 (421,467)
Segment assets 10,928,263 2,541,777 1,123,735 (2,018,408) 12,575,367
Segment liabilities 7,931,782 1,954,593 (985,385) (281,733) 8,619,257
Other information:
Vessel impairment 778,830 778,830
Capital expenditures 3,594,789 57,471 14,282 28,789 3,695,331
Investment in associates 16,500 32,037 66,412 114,949
Looking Ahead.
76
2009 (As restated)
Manpower
services
(discontinued Eliminations/ Consolidated
Shipping Supply chain operations) adjustments balances
(In Thousands)
Revenue P7,209,997 P4,043,566 P1,368,092 (P2,111,559) P10,510,096
Fuel, oil and lubricants 2,196,767 4,191 (8,489) 2,192,469
Terminal expenses 1,364,106 16,640 1,380,746
Cost of goods sold 1,490,485 (628,252) 598,884 1,461,117
Overhead 1,141,074 599,544 (28,008) (263,114) 1,449,496
Depreciation and amortization
Operating expenses 662,265 22,724 11,852 696,841
Terminal expenses 138,454 3,710 142,164
Overhead 131,175 47,722 (21,513) 19,168 176,552
Interest and nancing charges 27,116 70,446 (25,245) 1,548 73,865
Share in equity earnings of
associates 48,554 (3,694) 12,268 57,128
Provision for (benet from)
income tax 138,928 44,068 (14,845) (814) 167,337
Segment assets 8,014,853 39,565 1,480,254 1,087,324 10,621,996
Segment liabilities 3,520,949 2,430,755 (1,217,632) 728,352 5,462,424
Other information:
Vessel impairment 42,369 (42,369)
Capital expenditures 1,859,668 56,212 4,894 20,682 1,941,456
Investment in joint venture
and associates 16,500 24,440 33,268 74,208
5. Business Combinations
Acquisition of SOI
On June 3, 2008, ATSEI acquired 100% ownership in SOI in line with the Groups business strategy to provide total supply chain
solutions to clients and to further improve the effectiveness and efciency of its delivery services. Goodwill resulting from this
acquisition amounted to P250.5 million.
Impairment testing of goodwill
The amount of goodwill acquired from the acquisition of SOI has been attributed to each cash-generating unit. The recoverable
amount of goodwill has been determined based on a VIU calculation using cash ow projections based on nancial budgets
approved by senior management covering a ve-year period. The discount rate applied to cash ow projections is 15.20% in
2011 and 2010. Cash ows beyond the ve-year period are extrapolated using a zero percent growth rate.
Key assumptions used in value in use calculations
The following describes each key assumption on which management has based its cash ow projections to undertake impairment
testing of goodwill.
a. Budgeted EBITDA has been based on past experience adjusted for the following:
Revenue growth rate. Management expects a 7% decline in revenue in 2012 and a 5% constant growth in subsequent
years. The decline in revenue is in line with the ongoing integration of the Groups supply chain segment and the
expected growth from the second year is based on managements strategic plan to expand its supply chain operation.
Variable expenses. Management expects variable expenses to decrease by 9% in 2012 due to the decline in revenue.
Budgeted increase in variable expenses in 2013 is 10% and 5% in subsequent years.
Fixed operating expenses. Management expects an increase in xed operating expenses of 17% in 2012 and 4% to 5%
increase in subsequent years.
Foreign exchange rates. The assumption used to determine foreign exchange rate is a uctuating Philippine peso
exchange rate of P43 to a dollar starting 2012 until the fth year.
Materials price ination. The assumption used to determine the value assigned to the materials price ination is 4.45%,
which then increased by 0.20% on the second year, another increase of 0.40% on the third year and remains steady
until the fth year. The starting point of 2011 is consistent with external information sources.
b. Budgeted capital expenditure is based on managements plan to expand the Groups supply chain segment.
Annual Report 2011
77
c. Sensitivity to changes in assumptions
Other than as disclosed above, management believes that any reasonably possible change in any of the above key assumptions
would not cause the carrying value of any cash generating unit to exceed its recoverable amount.
As at December 31, 2011 and 2010, the Group has not recognized any impairment in goodwill on SOI.
Mergers of ZIP, RVSI and the Parent Company
On July 7, 2010, the SEC approved the merger of ZIP and the Parent Company, with the latter as the surviving entity, effective
July 7, 2010. ZIP is a wholly owned subsidiary of the Parent Company. Consequently, by operation of law, the separate
corporate existence of ZIP ceased as provided under the Corporation Code. Thus, upon the implementation of the merger, all
outstanding shares of capital stocks of ZIP were cancelled.
On August 16, 2010, the SEC approved the merger of RVSI and the Parent Company, with the latter as the surviving entity,
effective September 1, 2010. RVSI is a wholly owned subsidiary of the ATSC. Consequently, by operation of law, the separate
corporate existence of RVSI ceased as provided under the Corporation Code. Thus, upon the implementation of the merger,
all outstanding shares of capital stocks of RVSI were cancelled. Goodwill arising from the acquisition of RVSI amounting to
P6.0 million fully was impaired in 2010.
The mergers of ZIP and RVSI with the Parent Company are part of the integration of the 2GO business to further improve the
effectiveness and efciency of the delivery of the Groups services to their customers.
Sale of KLN Investment Holdings Philippines, Inc.
On January 22, 2009, ATSEI entered into an Investors Agreement (the Agreement) with Kerry Logistics Network Limited (KLN),
a Hong-Kong based logistics company. In accordance with the Agreement, ATSEI invested P4.8 million in a wholly-owned
subsidiary, KLN Investment Holdings Philippines, Inc. (KLN Investment) on February 26, 2009.
On August 1, 2009, ATSEI subsequently sold its investment in KLN Investment to Kerry Freight Services (Far East) Pte. Ltd (Kerry
freight), a subsidiary of KLN, which resulted in a gain of P52.5 million.
6. Cash and Cash Equivalents
2010
2011 (As restated)
(In Thousands)
Cash on hand and in banks P775,542 P608,012
Cash equivalents 130,721 196,656
P906,263 P804,668
Cash in banks earns interest at the respective bank deposit rates. Cash equivalents are made for varying periods of up to three
months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term investment
rates.
Total interest income earned by the Group from cash in banks and cash equivalents amounted to P6.7 million, P18.8 million and
P25.0 million in 2011, 2010 and 2009, respectively.
7. Trade and Other Receivables
2010
2011 (As restated)
(In Thousands)
Trade (Note 24):
Freight P1,228,008 P1,247,866
Service fees 131,161 62,265
Passage 87,988 26,138
Distribution 390,329 433,997
Others 271,009 209,994
Nontrade 178,045 662,514
Due from related parties (Note 24) 797,730 14,118
Insurance and other claims 104,817 120,509
Advances to ofcers and employees 18,171 29,085
3,207,258 2,806,486
Less allowance for doubtful receivables 309,065 283,071
P2,898,193 P2,523,415
Looking Ahead.
78
Trade receivables are non-interest bearing and are generally on 30 days terms. Insurance and other claims pertain to the
Groups claims for reimbursement of losses against insurance coverages for hull and machinery, cargo and personal accidents.
Nontrade receivables are non-interest bearing and include advances to afliates and suppliers. Receivable from the sale of Jebsen
Group amounting to P379.9 million outstanding as at December 31, 2010, included as part of nontrade receivables, were
collected in 2011.
The following table sets out the rollforward of the allowance for doubtful receivables.
As at December 31, 2011

Insurance
Trade and other
Service fees Freight Distribution Others Nontrade claims Total
(In Thousands)
Beginning P14,723 P209,567 P14,634 P947 P6,550 P36,650 P283,071
Provisions (Note 25) 27,214 18 11,362 38,594
Reversals (Note 26) (4,013) (4,013)
Accounts written off/reclassications (6,923) (983) 80 (761) (8,587)
Ending P35,014 P204,571 P14,634 P947 P6,648 P47,251 P309,065
As at December 31, 2011 (As restated)

Insurance
Trade and other
Service fees Freight Distribution Others Nontrade claims Total
(In Thousands)
Beginning P65,910 P160,345 P5,152 P2,701 P4,627 P20,624 P259,359
Provisions (Note 25) 468 7,650 9,482 2,595 655 20,850
Reversals (Note 26) (12,527) (12,527)
Accounts written off/
reclassications (51,655) 54,099 (2,701) (672) 15,371 14,442
Allowance from acquired
subsidiaries 947 947
Ending P14,723 P209,567 P14,634 P947 P6,550 P36,650 P283,071
The following table sets out the analysis of collective and individual impairment of trade and other receivables:
2011
Collectively Individually
Impaired Impaired Total
(In Thousands)
Trade P76,687 P178,479 P255,166
Nontrade 6,648 6,648
Insurance and other claims 47,251 47,251
P76,687 P232,378 P309,065

2010
Collectively Individually
Impaired Impaired Total
(In Thousands)
Trade P41,339 P198,532 P239,871
Nontrade 6,550 6,550
Insurance and other claims 36,650 36,650
P41,339 P241,732 P283,071
Trade and other receivables that are individually determined to be impaired at the end of reporting period relate to debtors
that are in signicant nancial difculties and have defaulted on payments and whose accounts are under dispute and legal
proceedings. These receivables are not secured by any collateral or credit enhancements.
Freight and passage receivables amounting to P1,116.2 million were assigned to secure long-term debt obtained by the Company
under the omnibus loan and securities agreement (see Note 20).
Annual Report 2011
79
8. Inventories
2010
2011 (As restated)
(In Thousands)
At NRV:
Trading goods P151,726 P307,022
Materials, parts and supplies 147,593 143,310
At cost - Fuel, oil and lubricants 108,122 113,827
P407,441 P564,159
The allowance for inventory obsolescence as at December 31, 2011 and 2010 amounted to P70.7 million and P73.7 million,
respectively.
The cost of inventories recognized as Cost of goods sold in the consolidated statements of income amounted to
P2,601.5 million, P2,206.6 million and P1,461.1 million in 2011, 2010 and 2009, respectively.
9. Other Current Assets
2010
2011 (As restated)
(In Thousands)
Creditable withholding tax (CWT) P748,264 P648,774
Input VAT 130,594 208,667
Prepaid expenses 103,736 68,410
AFS investments (Note 11) 420 19,934
Others 13,215 5,867
P996,229 P951,652
Outstanding CWT pertains mainly to the amounts withheld from income derived from freight, sale of goods and service fees for
logistics and other services.
10. Assets Held for Sale
On December 5, 2011, as a result of the Groups integration and vessels route rationalization, the Groups BOD approved
the sale of certain vessels within the next 12 months, namely SuperFerry 1, SuperFerry 5, 2GO1, 2GO2 and SuperCat 23.
Accordingly, the net carrying values of these vessels amounting to P916.2 million were reclassied from property and equipment
(see Note 14). The recoverable values of these vessels based on quotations obtained from prospective buyers, net of estimated
costs to sell, amounted to P692.6 million as at December 31, 2011. As a result, the Group recognized impairment losses
amounting to P223.6 million for 2GO1 and 2GO2, representing the excess of carrying value over the fair value less cost to sell
of the vessels.
As of April 12, 2012, the Group is still in the process of negotiating with prospective buyers. Management expects that the
timing of disposal will happen during the second half of 2012 at a price that is reasonable in relation to its current recoverable
value.
11. AFS Investments
2011 2010
(In Thousands)
Quoted equity investments - listed shares of stocks P486 P20,005
Unquoted equity investments - at cost 9,311 9,833
9,797 29,838
Classied as part of Other current assets (Note 9) 420 19,934
P9,377 P9,904
Listed shares of stocks are carried at market value. Unrealized gains or losses on AFS investments are recognized in the
consolidated statement of comprehensive income and included in the Equity section of the consolidated balance sheet.
Looking Ahead.
80
Unquoted shares of stocks pertain to xed number of shares that are subject to mandatory redemption every year.
In 2010, AFS investments amounting to P19.9 million were reclassied to Other current assets as management intends to sell
the securities within 12 months. In 2011, the Group recognized realized gain on sale of these AFS investments amounting to
P17.7 million (see Note 26).
The following table shows the movement of Unrealized gain on AFS investments account:
2011 2010
(In Thousands)
At beginning of year P17,947 P23,244
Net change in unrealized gains (losses):
Net fair value changes of AFS investments 337 12,286
Realized gain on sale of AFS investments (17,662)
Discontinued operations (Note 30) (17,583)
At end of year 622 17,947
Attributable to non-controlling interest 343 2,699
P279 P15,248
12. Investments in Associates
The Group has the following investments in associates which are accounted for under equity method:
2011 2010
(In Thousands)
MCCP P41,328 P32,037
HATS 58,449 82,912
P99,777 P114,949
In 2010, the Parent Company sold its 50% ownership in Jebsen People Solutions AS (JPS) and this formed part of discontinued
operations (see Note 30). MCCP and HATS are both incorporated in the Philippines while JPS is incorporated in Norway.
2011 2010
(In Thousands)
Acquisition cost:
Balances at beginning of year P20,649 P22,449
Discontinued operations (Note 30) (1,800)
Balances at end of year 20,649 20,649
Accumulated equity in net earnings:
Balances at beginning of year 88,359 51,246
Equity in net earnings (losses) during the year (14,525) 40,207
Discontinued operations (Note 30) (3,094)
Balances at end of year 73,834 88,359
Share in cumulative translation adjustment of associates 5,294 5,941
P99,777 P114,949
Changes in cumulative translation adjustment (P647) (P2,217)
Summarized nancial information of the associates are as follows:
As at December 31, 2011
HATS MCCP Total
(In Thousands)
Current assets P176,204 P271,225 P447,429
Noncurrent assets 6,751 607,967 614,718
Current liabilities 112,243 251,559 363,802
Noncurrent liabilities 513,507 513,507
Revenue 77,764 949,520 1,027,284
Net income (loss) 18,584 (63,264) (44,680)
Annual Report 2011
81
As at December 31, 2010

HATS MCCP Total
(In Thousands)
Current assets P126,082 P579,521 P705,603
Noncurrent assets 9,981 9,981
Current liabilities 83,708 398,233 481,941
Noncurrent liabilities 229 229
Revenue 67,047 1,050,188 1,117,235
Net income (loss) 15,192 98,821 114,013

As at December 31, 2009
HATS MCCP JPS Total
(In Thousands)
Current assets P195,716 P437,425 P7,245 P640,386
Noncurrent assets 4,758 436,983 441,741
Current liabilities 163,505 372,118 16,933 552,556
Noncurrent liabilities 35 6,480 6,515
Revenue 67,138 965,976 266 1,033,380
Net income (loss) 24,165 136,501 (17,016) 143,650
13. Interests in Joint Ventures
On March 18, 2009, ATSEI and KLN Investments formed KLN Holdings, a jointly controlled entity. In accordance with the
Agreement, ATSEI and KLN Investments (the venturers) will hold ownership interests of 78.4% and 21.6%, respectively, in KLN
Holdings. However, the venturers have the power to govern the nancial and operating policies of KLN Holdings unanimously.
As at December 31, 2011 and 2010, ATSEIs investment in KLN Holdings amounted to P7.5 million.
On March 30, 2009, KLN Holdings and KLN Investments formed another jointly controlled entity, Kerry-ATS Logistics, Inc. (KALI,
formerly Kerry-Aboitiz Logistics, Inc.), to engage in the business of international freight and cargo forwarding. In accordance
with the Agreement, KLN Holdings and KLN Investments will hold 62.5% and 37.5% interest in KALI, respectively. However, the
Agreement also requires unanimous consent over decisions concerning nancial and operating policies of KALI. As at December
31, 2011 and 2010, KLN Holdings investment in KALI amounted to P9.6 million.
On August 1, 2009, ATSEI sold all of its investments in KLN Investments to Kerry Freight (see Note 5).
In accordance with the Agreement, ATSEI indirectly holds a 49% interest in KALI. To account for this, KALI is proportionately
consolidated by KLN Holdings using the latters 62.5% share. The consolidated balances of KLN Holdings are then proportionately
consolidated by ATSEI using the latters 78.4% share.
The Groups share of the assets and liabilities of KALI and KLN Holdings as at December 31, 2011 and 2010 and the income
and expenses in the jointly controlled entities for the years ended December 31, 2011 and 2010, which are proportionately
consolidated in the consolidated nancial statements, are as follows:
Amounts consolidated in the consolidated balance sheets:
2011 2010
(In Thousands)
Assets
Cash and cash equivalents P12,741 P2,667
Trade and other receivables 45,532 42,485
Other current assets 2,203 2,738
Property and equipment 1,489 896
Deferred tax assets - net 770 640
Total Assets P62,735 P49,426
Looking Ahead.
82
2011 2010
(In Thousands)
Liabilities and Equity
Trade and other payables P41,284 P36,596
Retirement benet liability 1,022 315
42,306 36,911
Share capital 7,557 7,557
Retained earnings 12,872 4,958
20,429 12,515
Total Liabilities and Equity P62,735 P49,426

Amounts consolidated in the consolidated statements of income:
2011 2010 2009
(In Thousands)
Service fees P183,053 P132,941 P45,488
Cost and Expenses
Operating 146,322 103,554 36,704
Overhead 24,954 22,806 8,086
Other income (charges) 449 321 (170)
171,725 126,681 44,620
Income before income tax 11,328 6,260 868
Provision for income tax 3,394 3,394 1,878
Net income (loss) P7,934 P2,866 (P1,010)
Annual Report 2011
83
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Looking Ahead.
84
Noncash additions - property and equipment under nance lease
Vessels in operations and containers include units acquired under nance lease arrangements (see Note 21). In 2011, noncash
additions include costs of those leased assets amounting to P169.4 million. The related depreciation of the leased containers
amounting to P16.3 million in 2011, P5.4 million in 2010 and P24.4 million in 2009 were computed on the basis of the Groups
depreciation policy for owned assets.
Disposal and retirement of property and equipment
In 2011, the Parent Company sold passenger/cargo vessels for a net cash proceeds of P103.7 million, resulting to a gain from
sale amounting to P4.6 million. The Group also disposed certain property and equipment which includes vessel parts, containers,
freight equipment, and transportation and handling equipment for net proceeds of P58.2 million, resulting to gain from sales of
P6.8 million (see Note 26).
In 2010, the Parent Companys disposal of Our Lady of Good Voyage, Our Lady of Rule and Our Lady of Mt. Carmel resulted to
a net loss of P39.1 million (see Note 26).
In 2009, the Parent Companys disposal of Our Lady of Medjugorje and containers resulted in a net gain of P19.7 million. The
retirement of SuperFerry 9 due to the incident that happened in September 2009 resulted in a net gain from insurance proceeds
on marine hull of P79.5 million which was presented as Other income in prot or loss (see Note 26). The net book value of
SuperFerry 9 that was retired amounted to P255.5 million.
Capitalization of drydocking costs
Vessels in operation include capitalized dry docking costs in 2010 amounting to P1,033.9 million. No drydrocking cost was
incurred and capitalized in 2011.
Impairment of property and equipment
In 2010, based on internal reporting indications on the economic performance of certain vessels and their ultimate disposal
proceeds, the Parent Company recorded impairment loss on vessels in operations amounting to P778.8 million with corresponding
deferred income tax effect of P233.6 million (see Note 29). The estimated recoverable amounts were based on fair value less
cost to sell on the basis of a third party offer to buy, as well as the value in use. Signicant assumptions used in estimating value
in use includes discount rate of 10.64%, passage and cargo volume of 3% to 5%, freight rate increase of 12%, and fuel price
increase of 5% each year.
Depreciation and amortization
Depreciation and amortization were recognized and presented in the following accounts in the consolidated statements of
income (see Note 25):
2011 2010 2009
(In Thousands)
Operating expenses P861,081 P1,055,302 P696,841
Terminal expenses 88,907 118,549 142,164
Overhead expenses 96,737 107,902 94,217
P1,046,725 P1,281,753 P933,222
Property and equipment as collateral
As of December 31, 2011, the Groups vessels in operations and assets held for sale with total carrying value of P4,327.2 million
are mortgaged to secure certain obligations (see Note 20). As of December 31, 2011 and 2010, containers held as collateral for
nance lease amounted to P91.9 million and P54.3 million, respectively (see Note 21).
Fair value of vessels in operation
The Groups vessels in operation, except SuperFerry 19, were appraised for the purpose of determining their market values.
Based on the latest appraisal with various dates from December 2010 to January 2011 made by Eagle Marine Consultants Inc.,
the related vessels in operation have an aggregate market value of P5,785.0 million against net book value of P5,116.8 million.
15. Investment Property
The Groups investment property amounting to P9.8 million pertains to a parcel of land not currently being used in operations.
As of December 31, 2011, the fair value of the investment property amounted to P66.9 million. This was determined based
on valuation performed by a qualied and independent appraiser. The valuation undertaken considered the sale of similar
properties and related market data.
Annual Report 2011
85
16. Software Development Costs
2010
2011 (As restated)
(In Thousands)
Cost
Beginning P569,041 P578,556
Additions 6,333 4,399
Disposals/reclassications (26) (14,079)
Cost from acquired subsidiaries 165
Ending 575,348 569,041
Accumulated Amortization
Beginning 523,818 466,429
Amortization (Note 25) 37,683 67,120
Disposals/reclassications 21 (9,773)
Accumulated amortization from
acquired subsidiaries 42
Ending 561,522 523,818
Net Book Values P13,826 P45,223
17. Other Noncurrent Assets
2010
2011 (As restated)
(In Thousands)
Deferred input VAT P134,708 P222,177
Refundable deposits 77,105 73,859
Pension assets (Note 28) 7,082 61,005
Others 14,045 29,077
P232,940 P386,118
Deferred input VAT relates mainly to the acquisition of vessels and related parts.
18. Loans Payable
As at December 31, 2011 and 2010, the peso loans amounting to P1,215.4 million and P1,992.9 million, respectively, pertain
to unsecured short-term notes payable obtained by the Group from local banks with annual interest rates ranging from 5.0%
to 7.0% in 2011 and 4.50% to 7.92% in 2010.
On March 15, 2011, the Group paid the principal plus interest of the outstanding short-term notes as of December 31, 2010
(see Note 20). Loans payable outstanding as of December 31, 2011 will mature on various dates in 2012. Total interest expense
incurred by the Group for the loans amounted to P85.0 million, P89.8 million and P63.7 million in 2011, 2010 and 2009,
respectively (see Note 26).
19. Trade and Other Payables
2010
2011 (As restated)
(In Thousands)
Trade (Note 24) P1,307,798 P1,609,969
Accrued expenses (Note 24) 1,226,541 1,767,849
Nontrade (Note 24) 741,994 697,176
Provision for cargo losses and damages 37,522 18,424
Due to afliates (Note 24) 35,857 10,451
Dividends payable (Note 23) 2,040 368,016
Unearned revenue - net of deferred discounts 80,456 70,661
P3,432,208 P4,542,546
Looking Ahead.
86
Trade and other payables are non-interest bearing and are normally on 30 days term.
Accrued expenses include accrual for fuel and lube, drydocking costs and freight expenses.
20. Long-term Debt

2011 2010
(In Thousands)
Omnibus Loan and Security Agreement (OLSA)
Banco de Oro Unibank, Inc. (BDO) P4,000,000 P
Notes Facility Agreement 2,000,000
4,000,000 2,000,000
Unamortized debt arrangement fees (36,257) (20,892)
3,963,743 1,979,108
Current portion (785,716) (196,542)
Noncurrent portion presented as current (1,782,566)
P3,178,027 P
Notes Facility Agreement
On May 6, 2010, the Parent Company signed a Notes Facility Agreement with SB Capital Investment (SBCI) and BPI Capital
Corporation (BCC) as Joint Lead Managers for the issuance of ve-year peso-denominated corporate xed rate notes (Notes)
in the aggregate amount of P2.0 billion.
The Notes were issued through a private placement to several nancial institutions. The proceeds of the notes issuance were
used to nance vessel acquisitions as well as for working capital purposes.
The loan agreement with SBCI and BCC requires the Parent Company among others, to seek prior approval for any merger,
consolidation, change in ownership, suspension of business operations, disposal of assets, and maintenance of nancial ratios.
They also prohibit the Parent Company to purchase, redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding (other than as a result of the conversion of any share of capital stock into any other class of capital stock),
return any capital to the stockholders (other than distributions payable in shares of its capital stock), declare or pay dividends to
its stockholders if payment of any sum due to SBCI and BCC is in arrears.
Parent Company breached the negative covenant on Ownership with the sale of ACOs and Aboitiz Equity Ventures
equity ownership in Parent Company on December 28, 2010. Thus, the noncurrent portion of long-term debt amounting to
P1,782.6 million was presented as current liabilities since the Note Holders have the right to call the Notes as at
December 31, 2010 and thereafter.
Omnibus Loan and Security Agreement
On February 24, 2011, the Parent Company, NENACO, SFFC, and HLP entered into an Omnibus Loan and Security Agreement
(OLSA) with BDO, which consists of term loans of P4.0 billion and omnibus line of P400.0 million. In March 2011, Parent
Company availed the P4.0 billion term loans, which was used for the renancing of its short-term loans payable (see Note 18)
and the early redemption of its long-term debt on March 15, 2011 in accordance with the provision of the OLSA. The omnibus
line, on the other hand, amounting to P400.0 million shall be used by Parent Company and HLP for working capital requirements
and to secure their obligations with BDO.
The P4.0 billion term loans consist of Series A and Series B Term Loans amounting to P2.0 billion each. The interest on each of
the Series A and Series B Term Loans is a combination of xed and oating rates. Fifty percent (50%) of the principal amount of
each of the Series A Term Loan and Series B Term Loan, respectively, have a xed interest rate, and the remaining fty percent
(50%) have a quarterly oating annual interest rate, provided, such oating interest rate shall have a minimum of 5.0% per
annum. The principal of the loans is subject to 26 quarterly amortizations which commenced at the end of the third quarter
from the drawdown date until March 2016.
Suretyship agreement, mortgage trust indenture and assignment of receivables
In accordance with the OLSA dated February 24, 2011, the Parent Company and NENACO executed a Continuing Suretyship
in favor of BDO. As a result, upon the happening of an event of default, the creditor shall have the right to set-off or apply to
payment of the credit facility any and all moneys of the sureties which may be in possession or control of the creditor bank.
Further, the creditor bank shall likewise have the full power against all the sureties properties upon which the creditor bank has
a lien. The Continuing Suretyship also applies with respect to the Facility Agreement entered by NENACO and the creditor bank
on January 26, 2011.
Annual Report 2011
87
The Parent Company, NENACO and SFFC also executed a Mortgage Trust Indenture (MTI) under the OLSA whereby the Group
creates and constitutes a rst ranking mortgage on the collaterals for the benet of BDO. The Group shall at all times maintain
the required collateral value, which is equivalent to 200% of the obligations.
Further, as required by the OLSA, the Parent Company, NENACO and SFFC shall assigned customer receivables sufcient to
cover the availed credit facility in excess of P3.66 billion. Notwithstanding such assignment, the Parent Company, NENACO and
SFFC shall have the right to collect the assigned customer receivables and appropriate the proceeds therefrom for their benet,
provided that the assignors shall replace the collected receivables in accordance with the required terms and condition and there
is no happening of an event of default under the OLSA. The customer receivables shall refer to all outstanding receivables of
the assignors as of the date of the execution of the OLSA, and the future customer receivables of the assignors, which shall be
valued at 50% of their face value expressed in Philippine Peso.
As of December 31, 2011, the total carrying values of the vessels under MTI and outstanding customer receivables of the Parent
Company, NENACO and SFFC, held as collateral amounted to P4,826.7 million and P1,302.5 million, respectively (see Notes 7
and 14).
Loan covenants
The OLSA are subject to certain covenants such as but not limited to:
Maintenance of the following required fnancial ratios of the Parent Company: minimum quarterly current ratio of 1:1;
maximum quarterly debt-to-equity ratio of 2.5:1 for the rst year and 2:1 for the succeeding years; and, minimum yearly debt
service coverage ratio (DSCR) of 1.2:1 for rst and second years and 1.5:1 for the succeeding years, provided, however, that
the consolidated yearly DSCR of ATSC and NENACO shall not fall below 1.5:1 for the rst and second years, and 1.75:1 for
the succeeding years;
Prohibition on any change in control in the Parent Company or its business or majority ownership of its capital stock (except
with respect to the majority investors in the case of NENACO) or a change in the Chief Executive Ofcer;
Prohibition to declare or pay any dividends to its common and preferred stockholder or make any other capital or asset
distribution to its stockholders, unless the nancial ratios above are fully satised;
Prohibition to sell, lease, transfer or otherwise dispose of its properties and assets, divest any of its existing investments
therein, or acquire all or substantially all of the properties or assets of any other third party, except those in the ordinary
course of business.
As of December 31, 2011, the Parent Company did not meet the maximum debt-to-equity ratio required under OLSA. This
constitutes an event of default on the long-term debt in accordance with the loan facilities.
The Parent Company obtained a letter from BDO dated December 28, 2011 which states that the Parent Company shall not
be declared in default by BDO should there be breach in maximum debt to equity ratio of 2.5 and that the Parent Company is
given 12 months from December 31, 2012 to remedy the default. In view of this, the noncurrent portion of the loans remains
as noncurrent liability in the consolidated balance sheet as of December 31, 2011.
Borrowing costs and debt transaction costs
Interests from long-term borrowings of the Parent Company recognized as expense amounted to P266.2 million in 2011
(see Note 26).
As of December 31, 2010, unamortized transaction cost relating to the Parent Companys long-term debt amounted to
P20.9 million, which was recognized as a reduction in the value of long-term debt. In 2011, ATSC incurred additional debt
transaction costs amounting to P48.9 million in 2011. Amortization of these debt transaction costs included under interest and
nancing charges amounted to P33.6 million in 2011 (see Note 26).
21. Obligations under Finance Lease
The Group has various nance lease arrangements with third parties for the lease of a vessels, containers and reefer vans
denominated in US dollars. The lease agreements provide for the transfer of ownership to the Group at the end of the lease
term, which among other considerations met the criteria for a nance lease. Therefore, the leased assets were capitalized.
Looking Ahead.
88
The future minimum lease payments under nance lease, together with the present value of minimum lease payments as at
December 31, are as follows:
2011 2010
Minimum lease payments due within one year P36,407 P12,511
Beyond one year but not later than ve years 95,374 39,823
More than ve years 2,492 6,778
Total minimum lease obligation 134,273 59,112
Less amount representing interest 12,163 13,426
Present value of minimum lease payment 122,110 45,686
Less current portion 30,174 8,229
P91,936 P37,457
The outstanding balance of the US dollar-denominated nance lease obligation of P108.1 million (US$2.5 million) and
P45.7 million (US$1.0 million) as at December 31, 2011 and 2010, respectively, have been restated at the rate prevailing as of
those dates of P43.84 to US$1.
The net carrying values of property and equipment held by the Group under nance lease are summarized as follows (see
Note 14).
2011 2010
(In Thousands)
Cost P169,398 P65,513
Less accumulated depreciation 26,385 11,206
Net book value P143,013 P54,307
22. Redeemable Preferred Shares (RPS)
On January 7, 2003, the Parent Company issued 374,520,487 RPS in the form of stock dividends out of capital in excess of par
value at the rate of one share for every four common shares held by the shareholders.
The RPS has the following features:
non-voting;
preference on dividends at the same rate as common share;
redeemable at any time, in whole or in part, as may be determined by the BOD within a period not exceeding 10 years
from the date of issuance at a price of not lower than P6 per share as may be determined by the BOD. The shares must be
redeemed in the amount of at least may be determined by the BOD. The shares must be redeemed in the amount of at least
P250,000 per calendar year;
if not redeemed in accordance with the foregoing, the RPS may be converted to a bond bearing interest at 4% over prevailing
treasury bill rate to be issued by the Parent Company; and
preference over assets in the event of liquidation.
On June 15, 2006, the SEC approved the ATSCs application for the amendment of its Articles of Incorporation to add a
convertibility feature to the RPS so as to allow holders of RPS, at their option, to convert every RPS into two (2) common shares
of the ATSC. During the Conversion Period from September 1 to October 13, 2006, a total of 70,343,670 preferred shares or
93.91% were converted to common shares.
As at December 31, 2011 and 2010, 4,560,417 outstanding RPS with remaining carrying value of P25.9 million and
P22.9 million, respectively are shown under Current liabilities and Noncurrent liabilities section of the consolidated balance
sheets, respectively, which are carried at amortized cost.
Annual Report 2011
89
23. Equity
a. Capital stock
Authorized capital stocks
Number of shares
Common Preferred shares
Date Activity shares (Note 22) Total
May 26, 1949 Authorized capital stocks as of
incorporation date 5,000 5,000
December 10, 1971 Increase in authorized capital stocks 5,000 5,000
October 21, 1975 Increase in authorized capital stocks 4,990,000 4,990,000
September 3, 1982 Increase in authorized capital stocks 5,000,000 5,000,000
August 18, 1989 Increase in authorized capital stocks 10,000,000 10,000,000
December 29, 1993 Increase in authorized capital stocks 20,000,000 20,000,000
September 8, 1994 Increase in authorized capital stocks 60,000,000 60,000,000
November 21, 1994 Increase in authorized capital stocks 900,000,000 900,000,000
October 26, 1998 Increase in authorized capital stocks 1,000,000,000 1,000,000,000
December 6, 2002 Reclassication of common shares to
preferred shares (375,000,000) 375,000,000
November 18, 2003 Redemption of preferred shares (224,712,374) (224,712,374)
September 6, 2004 Increase in authorized capital stocks 750,000,000 750,000,000
November 22, 2004 Redemption of preferred shares (74,904,026) (74,904,026)
October 24, 2005 Increase in authorized capital stocks 1,624,524,400 1,624,524,400
October 24, 2005 Reclassication of preferred shares to
common shares 475,600 (475,600)
August 7, 2008 Reclassication of preferred shares to
common shares 70,343,670 (70,343,670)
4,070,343,670 4,564,330 4,074,908,000
Issued and outstanding capital stocks
Number of shares
Issue Common Preferred shares
Date Activity Price shares (Note 22) Total
May 26, 1949 Issued capital stocks as of
incorporation date P1,000.00 1,002 1,002
December 10, 1971 to
October 26, 1998 Increase in issued capital stocks 1,000.00 1,496,597,636 1,496,597,636
December 6, 2002 Reclassication of common
shares to preferred shares 1.00 40,000,000 374,520,535 414,520,535
February 10, 2003 Issuance of preferred shares
before redemption 1.00 (48) (48)
November 18, 2003 Redemption of preferred shares 6.67 (224,712,374) (224,712,374)
September 6, 2004 Issuance of common shares
by way of stock dividends 1.00 393,246,555 393,246,555
November 22, 2004 Redemption of preferred shares 6.67 (74,904,026) (74,904,026)
December 31, 2004 Issuance of common shares
prior to reorganization 1.00 (756) (756)
October 24, 2005 Issuance of common shares
through share swap transactions 1.76 414,121,123 414,121,123
August 22 to Conversion of redeemable preferred
October 13, 2006 shares to common shares 3.20 140,687,340 (70,343,670) 70,343,670
2,484,652,900 4,560,417 2,489,213,317
December 31, 2001 Treasury shares* 1.50 (38,516,500) (38,516,500)
2,446,136,400 4,560,417 2,450,696,817
* The carrying value of treasury shares is inclusive of P0.9 million transaction cost.
Issued and outstanding common shares are held by 1,976 and 2,112 equity holders as of December 31, 2011 and 2010,
respectively.
Looking Ahead.
90
b. Retained earnings (decit)
Retained earnings include undistributed earnings amounting to P508.1 million in 2011 and P427.7 million in 2010 representing
accumulated equity in net earnings of subsidiaries and associates, which are not available for dividend declaration until received
in the form of dividends from such subsidiaries and associates. Retained earnings are further restricted for the payment of
dividends to the extent of the cost of the shares held in treasury and deferred tax asset recognized as of December 31, 2011 and
2010.
On December 1, 2010, the Parent Companys BOD approved the declaration of a cash dividend amounting to fteen centavos
(P0.15) for every common and preferred share outstanding as of December 15, 2010 or a total dividend declaration of
P367.6 million. The dividends were fully paid on January 12, 2011.
c. Excess of cost over net asset value of investments - net
The pooling of interest method was applied to account for the following acquisition since these involves entities under common
control:
On August 30, 2007, the Parent Company acquired SFFC from its affliate, Accuria, Inc. for a total consideration of
P13.7 million. The excess of cost over SFFCs net assets during the time of acquisition, amounting to P11.7 million is recorded
in equity as Excess of cost over net asset value of investments - net.
On December 1, 2011, NALHMCI acquired from NENACO, six of its subsidiaries for a total consideration of P29.4 million.
These subsidiaries are JASC, RDC, NHTC, STI, SGF and SSI. The excess of the combined net assets of NENACOs subsidiaries
at the time of acquisition over the total cost of the investment amounted to P0.8 million and is presented under equity as
Excess of cost over net assets value of investments - net. Accordingly, the 2010 consolidated balance sheet was restated
to reect the balances of these entities as if they had always been consolidated. The excess of the combined net assets of
NENACOs subsidiaries as of December 31, 2011 is net of dividend declaration of P2.0 million by SGF to NENACO in 2011.
24. Related Party Disclosures
In the normal course of business, the Group has transacted with the following related party:
Related Party Relationship
NENACO
1
Immediate parent
Negrense Marine Integrated Services, Inc. (Negrense)
1
Under common control
Brisk Nautilus Dock Integrated Services, Inc. (Brisk)
1
Under common control
Sea Merchants Inc. (SMI) Under common control
Bluemarine Inc. (BMI) Under common control
Astir Engineering Works Inc. (AEWI) Associate of NENACO
KALI Joint venture of ATSEI
HATS Associate
MCCP Associate
AEV
2
Ultimate parent
ACO
2
Immediate parent
Pilmico Foods Corporation (PFC)
2
Under common control
Reefer Truck Specialist Inc (RTSI)
2
Under common control
Aboitiz Construction Group, Inc. (ACGI)
2
Under common control
Pilmico Animal Nutrition Corporation (PANC)
2
Under common control
Total Distribution Logistics Systems, Inc. (TDLSI)
2
Under common control

1
related parties from December 28, 2010 onwards

2
related parties prior to December 28, 2010
Transactions with NENACO
Transactions with NENACO in 2011 include joint services and co-loading arrangements whereby the Parent Company and
NENACO share vessel space for the shipment of customer cargoes. Each of the parties, whoever is the actual vessel-operating
carrier, charged the other party for the shared space on a per container basis. As of December 31, 2011, total co-loading revenue
and expense recognized by the Parent Company amounted to P200.1 million and P201.4 million, respectively.
Effective December 1, 2011, the Parent Company entered into time charter arrangements with NENACO involving fve of
NENACOs vessels at a xed daily rate for a period of one year.
In 2011, the Parent Company recognized charter hire expense amounting to P57.5 million (see Note 25).
Annual Report 2011
91
In 2011, the Parent Company has granted NENACO an interest-bearing loan amounting to P657.5 million. In 2011, total
interest income charged by the Parent Company to NENACO amounted to P49.9 million, of which P44.6 million is still
outstanding as of December 31, 2011.
Transactions with associates and other related parties
Negrense charge agency fee to the Parent Company based on an agreed rate for its manpower services and for its management
of the Parent Companys food and beverage business effective August 2011. Negrense also provides housekeeping and
manpower pooling services to the Parent Company and SFFC. In 2011, total fees charged by Negrense to the Parent
Company and SFFC amounted to P67.4 million.
Brisk provides container repairs, cargo handling and trucking services to the Parent Company. Total fees charged by Brisk
amounted to P11.6 million in 2011.
Transactions with other associates and related companies consist of shipping services, charter hire, management services,
ship management services, purchases of steward supplies, availment of stevedoring, arrastre, trucking, and repair services
and rental. The amounts included in the consolidated nancial statements with respect to these transactions are as follows:
2011 2010 2009
Costs and Costs and Costs and
Related Parties Revenue Expenses Revenue Expenses Revenue Expenses
(In Thousands)
ACO P P P P484 P P1,024
AEV 592 25,478
HATS 6,820 776 6,561 3,920
KALI 17,704 8,736 914 11,335
PFC 90,145 96,473
RTSI 4,497 1,412
ACGI 101 8,490 286
TDLSI 58,658 49,774
CTC 8,953
Others 7 441 523
P24,524 P9,512 P101,304 P70,557 P112,455 P85,752
The consolidated balance sheets include the following amounts with respect to the transactions with the above related
parties:
2011 2010
Due from Due to Due from Due to
related parties related parties related parties related parties
Related Parties (Note 7) (Note 19) (Note 7) (Note 19)
NENACO P757,654 P32,167 P P
KALI 45,493 3,690 5,120 3,817
HATS 24,741 14,738 6,634
P827,888 P35,857 P19,858 P10,451
Transactions and balances with related parties eliminated during consolidation
a. The Parent Companys transactions with ATSEI Group include shipping and forwarding services, commission and trucking
services. Total freight and service revenue charged by ATSEI Group amounted to P98.2 million and P130.1 million in 2011
and 2010, respectively.
b. The Parent Company provided management services to SFFC, ATSEI, ATSDI, HLP, KALI and SOI at fees based on agreed
rates. Management and other services provided by the Parent Company amounted to P71.1 million, P55.8 million and
P40.6 million in 2011, 2010 and 2009, respectively.
c. ATSEI provides management services to the Parent Companys loose cargo business at fees based on an agreed rate.
Management service fees provided by ATSEI to the Parent Company amounted to P7.6 million, P10.9 million and
P11.5 million in 2011, 2010 and 2009, respectively.
d. AJBTC provided ship management services to the Parent Company that amounted to P53.0 million and P48.2 million in
2010 and 2009, respectively. Service agreement with AJBTC was terminated on October 15, 2011.
e. ATSEI, ATSDI, and AJBTC placed temporary cash advances to Parent Company totaling to P10.0 million and P139.5 million
as at December 31, 2011 and 2010, respectively. The advances are non-interest bearing and payable on demand.
f. SFFC obtained long-term cash advances from the Parent Company for working capital requirements. The advances are
interest bearing at an average rate of 9% per annum. As at December 31, 2011 and 2010, the outstanding balance of
long term cash advances amounted to P423.9 million and P431.2 million, respectively. Total interest income earned by the
Looking Ahead.
92
Parent Company from these advances amounted to P34.8 million, P40.1 million and P27.1 million in 2011, 2010 and 2009,
respectively.
g. As at December 31, 2011, the Parent Company has provided guarantees on the bank loans of ATSEI and ATSDI amounting
to P183.3 million and P38.4 million respectively.
Compensation of the Groups key management personnel
2011 2010 2009
(In Thousands)
Short term employee benets P86,050 P93,331 P 104,990
Post-employment benets 2,924 4,873 6,219
P88,974 P98,204 P 111,209
25. Costs and Expenses
2011 2010 2009
(In Thousands)
Operating Expenses
Fuel, oil and lubricants P3,493,228 P2,856,480 P2,192,469
Outside services 1,666,090 1,134,751 973,492
Depreciation and amortization (Note 14) 861,081 1,055,302 696,841
Personnel costs (Note 27) 556,978 425,344 376,968
Repairs and maintenance 381,221 483,898 491,866
Rent (Note 34d) 247,868 216,964 194,642
Insurance 187,920 194,384 127,373
Food and subsistence 103,878 138,331 147,973
Communication, light and water 85,227 70,813 71,584
Charter hire (Notes 34e and 24) 57,452 92,808 151,603
Material and supplies used 46,186 58,301 73,852
Sales concessions 40,039 46,957 46,960
Commissions 34,600 33,819 30,045
Others 430,522 285,284 256,398
8,192,290 7,093,436 5,832,066
Terminal Expenses
Transportation and delivery 540,518 592,981 587,137
Outside services 354,685 334,072 254,107
Personnel costs (Note 27) 168,754 151,765 134,249
Repairs and maintenance 102,418 90,081 88,281
Rent (Note 34d) 98,291 62,868 50,324
Depreciation and amortization (Note 14) 88,907 118,549 142,164
Fuel, oil and lubricants 46,560 37,308 30,788
Others 95,276 86,355 93,696
1,495,409 1,473,979 1,380,746
Overhead Expenses
Personnel costs (Note 27) 500,283 673,525 642,683
Depreciation and amortization (Notes 14 and 16) 134,420 175,022 176,552
Advertising 72,946 81,266 83,754
Communication, light and water 56,573 79,663 72,813
Provision for doubtful accounts on receivables (Note 7) 38,594 20,850 30,129
Outside services 33,420 168,963 165,067
Rent (Note 34d) 23,563 36,479 40,358
Taxes and licenses 22,755 36,509 29,997
Computer charges 18,352 24,493 19,053
Transportation and travel 11,802 22,151 26,436
Repairs and maintenance 11,381 18,780 21,230
Entertainment, amusement and recreation 8,818 15,197 23,513
Ofce supplies 7,566 11,495 14,850
Others 93,132 111,636 103,061
1,033,605 1,476,029 1,449,496
Cost of goods sold (Note 8) 2,601,539 2,206,641 1,461,117
P13,322,843 P12,250,085 P10,123,425
Annual Report 2011
93
26. Other Income (Charges)
Interest and Financing Charges
2011 2010 2009
(In Thousands)
Interest expense on:
Loans payable (Note 18) P85,004 P89,843 P63,705
Long-term debt (Note 20) 266,212 108,334
Amortization of debt transaction cost (Note 20) 33,550 4,481
Obligation under nance lease (Note 21) 7,306 7,281 7,774
Accretion of RPS 3,055 2,706 2,386
Others 12,421 16,136
P407,548 P228,781 P73,865
Others - net
2011 2010 2009
(In Thousands)
Gain (loss) on disposal of:
AFS investments (Note 11) P17,662 P57,895 P
Investment in a subsidiary (Note 13) 52,500
Property and equipment (Note 14) 11,447 (28,263) 29,292
Income from reversal of liabilities 127,070
Condonation of debt 34,364
Gain on insurance claims (Note 14) 34,568 18,528 79,484
Reversal of impairment on receivables (Note 7) 4,013 12,527 60,884
Recovery of inventory obsolescence 1,400 2,783
Interest income (Note 6) 61,108 5,210 12,842
Foreign exchange gains (losses) - net 5,337 (12,923) (9,142)
Others P299,868 P70,706 P309,044
27. Personnel Costs
2011 2010 2009
(In Thousands)
Salaries and wages P746,046 P793,462 P780,206
Crewing cost 229,206 248,031 213,838
Retirement costs (Note 28) 120,450 63,543 26,123
Other employee benets 130,313 145,598 133,733
P1,226,015 P1,250,634 P1,153,900
In 2011, redundancy and retirement benet cost included as part of integration cost amounted to P97.2 million. The remaining
P25.8 million pertains to the professional fees incurred relating to the integration of the Group.
28. Retirement Benets
The Group has funded dened benet pension plans covering all regular and permanent employees. The benets are based on
employees projected salaries and number of years of service.
The following tables summarize the funded (unfunded) status and amounts as included in the consolidated balance sheet and
the components of retirement benet costs recognized by the Group as included in prot and loss in 2011, 2010 and 2009,
respectively.
The funded status and amounts recognized in the consolidated balance sheets include the retirement benets of ATSDI, HLP and
SGF as at December 31, 2011 and of the Parent Company, ATSDI and SOI as at December 31, 2010.
Looking Ahead.
94
2010
2011 (As restated)
(In Thousands)
Accrued retirement benets (P52,182) (P19,715)
Pension asset 7,082 61,005
(P45,100) P41,290
Retirement Plan Asset (Liability) - net
2010
2011 (As restated)
(In Thousands)
Beginning P70,145 P224,602
Dened benet obligation (224,121) (285,954)
Unfunded obligation (153,976) (61,352)
Unrecognized net actuarial gains 108,876 119,992
(45,100) 58,640
Attributable to discontinued operations (Note 30) (17,350)
(P45,100) P41,290
Movement in the present value of the dened benet obligation is as follows:
2010
2011 (As restated)
(In Thousands)
Beginning P285,954 P412,204
Interest cost 25,562 41,954
Current service cost 30,034 40,963
Separation cost 16,995
Transfers (4,396) 198
Actuarial loss (gain) 28,689 (50,001)
Curtailment gain (102,106) (4,051)
Benets paid (39,616) (37,889)
Balance from acquired subsidiaries 991
224,121 421,364
Attributable to discontinued operations (Note 30) (135,410)
P224,121 P285,954
Movement in the fair value of plan assets is as follows:
2010
2011 (As restated)
(In Thousands)
Fair value of plan assets at January 1 P224,602 P224,299
Actuarial gain (loss) on plan assets (16,970) 69,147
Actual contributions 22,735 68,142
Expected return 15,354 23,068
Transfers (4,623) 198
Benets paid (170,953) (37,359)
Balance from acquired subsidiaries 886
70,145 348,381
Attributable to discontinued operations (Note 30) 123,779
P70,145 P224,602
Annual Report 2011
95
The major categories of plan assets are as follows:
2010
2011 (As restated)
(In Thousands)
Investments in:
Shares of stocks P38,860 P44,920
Cash and cash equivalents 30,602
Common trust fund 128,023
Government securities and other debt securities 51,659
Others 683
P70,145 P224,602
The principal assumptions as of January 1 used in determining pension benet obligations for the Groups plans are shown
below:
2011 2010 2009
Discount rate 8.29% to 10.53% 9.00% to 10.55% 8.25% to 11.0%
Expected rate of return on assets 7.00% 7.00% to 10.00% 8.53% to 11.0%
Future salary increases 6.00% to 8.00% 6.00% to 8.00% 6.00% to 9.00%
As of December 31, 2011, the discount rate, expected rate of return on assets and future salary increases are 7.9% to 8.19%,
4.0% to 7.0% and 6.0% to 8.0%, respectively.
Retirement Benet Costs
2011 2010 2009
(In Thousands)
Current service cost P30,034 P40,963 P34,021
Interest cost on benet obligation 25,562 41,954 37,399
Expected return on plan assets (15,354) (22,530) (19,084)
Net actuarial loss recognized 4,391 8,700 2,456
Curtailment loss (gain) (Note 27) 75,817 (4,766)
Separation cost 16,995
Income recognized due to asset limit (5,856)
Past service cost - nonvested benets 2,001
Total net benet expense 120,450 81,316 50,937
Net benet expense attributable
to discontinued operations (Note 30) (17,773) (24,814)
P120,450 P63,543 P26,123
Actual return on plan assets (P1,616) P91,458 (P11,603)
Amounts for the current and prior periods are as follows:
2010
2011 (As restated) 2009 2008 2007
(In Millions)
Dened benet obligation P224.1 P285.0 P412.2 P242.5 P220.9
Fair value of plan assets 70.1 223.7 224.3 194.2 216.8
Decit 154.0 61.3 187.9 48.3 4.1
Experience adjustments
on plan liabilities (29.6) (9.7) 18.3 (69.8) (64.1)
Experience adjustments on plan assets (17.0) 68.9 (30.1) (0.5) 12.7
The Group expects to contribute approximately P87.9 million to the dened benet pension plan in 2011.
Looking Ahead.
96
29. Income Tax
a. The components of provisions for (benet from) income tax are as follows:
2011 2010 2009
(In Thousands)
Current
RCIT P42,221 P49,624 P43,085
MCIT 11,687 1,606 24,679
Deferred (249,208) (472,697) 99,573
(P195,300) (P421,467) P167,337
b. The components of the Groups recognized net deferred tax assets and liabilities are as follows:
2011 2010
Net Deferred Net Deferred Net Deferred Net Deferred
Tax Tax Tax Assets Tax Liabilities
Assets Liabilities (As restated) (As restated)
(In Thousands)
Deferred income tax assets on:
Allowances for:
Fixed assets writedown P91,045 P P233,649 P
Impairment of receivables 82,377 47 73,353 44
Inventory obsolescence 21,210 21,979
Provision for integration cost 10,500
Investment in stock 75 75
NOLCO 732,308 351,069
MCIT 624 624
Accrued retirement costs and others 27,792 863 276 978
Unrealized foreign exchange loss 145 1,471
Others 19,877 262 39,440 124
975,453 1,172 732,436 1,146
Deferred income tax liabilities:
Pension asset (11,352) (1,437) (10,633) (1,716)
Others (4) (2,830) (3,778)
(11,352) (1,441) (13,463) (5,494)
P964,101 (P269) P718,973 (P4,348)
c. Details of the Groups NOLCO and MCIT which can be carried forward and claimed as tax credit against regular taxable
income and regular income tax due, respectively, are as follows:
NOLCO
Balances as of
Available December 31,
Incurred in Until Amount Applied Expired 2011 Tax Effect
(In Thousands)
2011 2014 P1,378,454 P P P1,378,454 P413,536
2010 2013 1,168,925 1,168,925 350,678
2008 2011 245,916 (245,916)
P2,793,295 P (P245,916) P2,547,379 P764,214
MCIT
Balances as of
Available December 31,
Incurred in Until Amount Applied Expired 2011
(In Thousands)
2011 2014 P11,740 P P P11,740
2010 2013 1,606 1,606
2009 2012 23,073 23,073
2008 2011 11,594 (11,594)
P48,013 P (P11,594) P36,419
Annual Report 2011
97
In 2009, the Parent Company derecognized deferred tax assets on NOLCO and MCIT amounting to P73.8 million and
P22.4 million, respectively. The management believes that these deferred tax assets will not be realizable in the future.
d. The following are the Groups NOLCO and MCIT for which no deferred income tax assets have been recognized because
management believes that it is not probable that sufcient future taxable income will be available against which the deferred
tax assets can be utilized:

2011 2010
(In Thousands)
NOLCO P106,351 P247,003
MCIT 35,795 37,620
e. Reconciliation between the income tax expense computed at statutory income tax rates of 30.0% in 2011, 2010 and 2009
and the provision for income tax expense as shown in prot or loss is as follows:
2011 2010 2009
(In Thousands)
Provision for (benet from) income tax at statutory tax rate (P246,271) (P460,767) P203,693
Income tax effects of:
Changes in unrecognized DTA 46,571 3,187
Income tax holiday (ITH)
incentive on registered activities (Note 33) 7,093 (32,318) (25,125)
Gain on sale of investment already subjected to nal tax (5,299) (22,807)
Equity in net (earnings) losses of associates 4,358 (12,062) (17,138)
Interest income already subjected to a lower nal tax (1,944) (1,360) (18,473)
Dividend income (84) (398) (1,984)
Changes in enacted tax rates 2,025
NOLCO derecognized 73,775 16,730
MCIT derecognized 59,093 9,161
Others 276 (24,623) (4,739)
(P195,300) (P421,467) P167,337
In computing deferred income tax assets and liabilities as at December 31, 2011 and 2010, the rate used was 30% which is
the rate expected to apply to taxable income in the years in which the deferred tax assets and liabilities are expected to be
recovered or settled.
30. Discontinued Operations
On December 28, 2010, the Parent Company and AEV closed the sale of the Parent Companys 62.5% equity in each of AJBTC,
AJMSI and JMI to AEV for a total price of P355.9 million.
On the same day, the Parent Company and ACO closed the sale of the Parent Companys 50% equity in JMBVI to ACO for
P44.0 million.
AEV and ACO paid the full price on January 12, 2011. The Group recognized net gain of P300.9 million, net of transaction costs
of P32.0 million, in the consolidated statements of income from this sale. The gain is included as part of 2010 net income from
discontinued operations.
The results of operation of Abojeb Group presented under discontinued operations in the consolidated statements of income
are as follows:
2010 2009
Revenue P1,766,979 P1,314,334
Cost and expenses (1,743,029) (1,203,625)
Gross prot 23,950 110,709
Other income 61,428 34,086
Gain from sale of discontinued operations 300,904
Income before income tax from discontinued operations 386,282 144,795
Provision for income tax:
Current 24,112 14,845
Deferred 3,121 18,874
27,233 33,719
Net income from discontinued operations P359,049 P111,076
Looking Ahead.
98
The net cash ows from the Abojeb Group are as follows:
2010 2009
Operating P29,086 P143,663
Investing (29,977) (17,831)
Financing 19,878 (199,577)
Net cash inow P18,987 (P73,745)
Earnings per share:
Basic and diluted earnings from discontinued operation (P0.1468) (P0.0454)
31. Provisions and Contingencies

There are certain legal cases led against the Group in the normal course of business. Management and its legal counsel believe
that the Group has substantial legal and factual bases for its position and are of the opinion that losses arising from these cases,
if any, will not have a material adverse impact on the consolidated nancial statements.
Also, the Parent Company has pending insurance claims (presented as part of Insurance and other claims) amounting to
P150.6 million as at December 31, 2009. The collection of which is virtually certain. As of December 31, 2011, proceeds from
this claim amounted to P33.6 million and P117.0 million.
As at December 31, 2011 and 2010, the Parent Company has provided guarantees on the bank loans of AOI, AODI, RVSI and
ZIP amounting to P183.3 million and P38.4 million, respectively.
32. Earnings Per Common Share
Basic and diluted earnings per common share were computed as follows:
2011 2010 2009
(In Thousands)
Net income (loss) attributable to equity holders of the parent (a) (P634,267) (P808,680) P546,142
Weighted average number of common shares outstanding for
the year (b) 2,446,136,400 2,446,136,400 2,446,136,400
Earnings (loss) per common share (a/b) (P0.26) (P0.33) P0.22
There are no potentially dilutive common shares as at December 31, 2011, 2010 and 2009.
33. Registration with the Board of Investments (BOI)
a. With the effectivity of the merger of the Parent Company and ZIP, the Parent Company assumed ZIPs outstanding BOI
registration as an expanding operator of logistics service facility on a non-pioneer status under Certicate of Registration No.
2008-179. The ITH incentive for a period of three years, which expired in July 2011, provided that for purpose of availment,
a base gure of P924.1 million will be used in the computation of the ITH for the said expansion.
b. On January 27, 2011, BOI approved the Parent Companys application for registration of the modernization of two (2)
second-hand RORO vessels, SuperFerry 20 and SuperFerry 21. The Parent Company was granted ITH incentive for a period
of three years from March 2011 or actual start of operations. The ITH incentive shall be limited only to the sales/revenues
generated by the registered project.
c. SFFC is registered with BOI as a New Operator of Domestic Shipping (Passenger Vessel) on a Non-Pioneer status. The
Company is entitled to four years ITH from date of registration until February 2012.
34. Commitments and Other Matters
a. The Parent Company has a Memorandum of Agreement (Agreement) with Asian Terminals, Inc. (ATI) for the use of ATIs
facilities and services at the South Harbor for the embarkation and disembarkation of the Parent Companys domestic
passengers, as well as loading, unloading and storage of cargoes. The Agreement shall be for a period of ve years, which
Annual Report 2011
99
shall commence from the rst scheduled service of the Parent Company at the South Harbor. The Agreement is renewable
for another ve years under such terms as may be agreed by the parties in writing. If the total term of the Agreement is
less than ten years, then the Parent Company shall pay the penalty equivalent to the unamortized reimbursement of capital
expenditures and other related costs incurred by ATI in the development of South Harbor. The Agreement became effective
on January 14, 2003.
Under the terms and conditions of the Agreement, the Parent Company shall avail of the terminal services of ATI, which
include, among others, stevedoring, arrastre, storage, warehousing and passenger terminal. Domestic tariff for such services
(at various rates per type of service as enumerated in the Agreement) shall be subject to an escalation of 5% every year.
Total service fees charged to operations amounted to P197.5 million, P196.3 million and P128.8 million in 2011, 2010 and
2009, respectively (see Note 25).
b. AJBTC, JMI and AJMSI (Agents) have outstanding agreements with foreign shipping principals, wherein the Agents render
manning and crew management services consisting primarily of the employment of crew for the principals vessels. As such,
the principals have authorized the Agents to act on their behalf with respect to all matters relating to the manning of the
vessels. Total service fees revenues recognized in the consolidated statements of income from these agreements amounted
to P437.4 million in 2010 and P400.0 million in 2009.
c. JMBVI and Subsidiaries have outstanding Charter Party Agreements with vessels owners for the use of the vessels or for
sublease to third parties within the specied periods of one (1) to three (3) years under the terms and conditions covered
in the agreements. In consideration thereof, JMBVI recognized charter hire expense amounting to P1,001.1 million and
P529.4 million in 2010 and 2009, respectively.
d. The Group has entered into various operating lease agreements for its ofce spaces. The future minimum rentals payable
under the noncancellable operating leases are as follows:
2011 2010
Within one year P172,682 P79,804
After one year but not more than ve years 320,857 171,877
More than ve years 1,366 5,947
P494,905 P257,628
e. The Parent Company entered into several vessel chartering agreements for a period ranging from three to 15 months.
Charter fees are based on an agreed daily rate of $3,125 to $9,400.
35. Financial Risk Management Objectives and Policies
Risk Management Structure
The Groups overall risk management program focuses on the unpredictability of nancial markets and seeks to minimize
potential adverse effects on the Groups nancial performance. It is, and has been throughout the year under review, the
Groups policy that no trading in nancial instruments shall be undertaken.
Financial Risk Management
The Groups principal nancial instruments comprise of cash and cash equivalents, loans payable, long-term debt, obligations
under nance lease, restructured debts and redeemable preferred shares. The main purpose of these nancial instruments is to
raise nancing for the Groups operations. The Group has other various nancial assets and liabilities such as trade and other
receivables and trade and other payables, which arise directly from operations.
The main risks arising from the Groups nancial instruments are credit risk involving possible exposure to counter-party default,
primarily, on its short-term investments and trade and other receivables; liquidity risk in terms of the proper matching of the
type of nancing required for specic investments and maturing obligations; foreign exchange risk in terms of foreign exchange
uctuations that may signicantly affect its foreign currency denominated placements and borrowings; and interest rate risk
resulting from movements in interest rates that may have an impact on interest bearing nancial instruments.
Credit risk
To manage credit risk, the Group has policies in place to ensure that all customers that wish to trade on credit terms are subject
to credit verication procedures and approval of the Credit Committee. In addition, receivable balances are monitored on an
ongoing basis to reduce the Groups exposure to bad debts. The Group has policies that limit the amount of credit exposure to
any particular customer.
Looking Ahead.
100
The Group does not have any signicant credit risk exposure to any single counterparty. The Groups exposures to credit risks
are primarily attributable to cash and collection of trade and other receivables with a maximum exposure equal to the carrying
amount of these nancial instruments.
The credit quality per class of nancial assets that are neither past due nor impaired is as follows:
As at December 31, 2011
Past due or
Neither past due nor impaired individually
High Medium Low impaired Total
(In Thousands)
Loans and receivables
Cash in banks P754,151 P P P P754,151
Cash equivalents 130,721 130,721
Trade and other receivables:
Freight 372,778 855,230 1,228,008
Service fees 45,144 18,250 2,751 65,016 131,161
Passage 87,988 87,988
Distribution 238,793 151,536 390,329
Others 186,396 84,613 271,009
Nontrade receivables 178,045 178,045
Due from related parties 92,437 705,293 797,730
Insurance and other claims 35,468 69,349 104,817
Advances to ofcers and Employees 17,925 246 18,171
AFS investments 9,797 9,797
Total P2,149,643 P18,250 P2,751 P1,931,283 P4,101,927
As at December 31, 2010
Past due or
Neither past due nor impaired individually
High Medium Low impaired Total
(In Thousands)
Loans and receivables
Cash in banks P566,564 P P P P566,564
Cash equivalents 196,656 196,656
Trade receivables:
Freight 176,464 155,210 427,725 488,467 1,247,866
Service fees 10,908 697 11,042 39,618 62,265
Passage 25,826 312 26,138
Distribution 285,921 148,076 433,997
Others 157,466 52,528 209,994
Nontrade receivables 646,695 2,508 481 12,830 662,514
Due from related parties 14,118 14,118
Insurance and other claims 9,819 1,050 109,640 120,509
Advances to ofcers and Employees 24,335 4,750 29,085
AFS investments 29,838 29,838
Total P2,144,610 P159,465 P439,248 P856,221 P3,599,544
High quality receivables pertain to receivables from related parties and customers with good favorable credit standing. Medium
quality receivables pertain to receivables from customers that slide beyond the credit terms but pay a week after being past
due are classied under medium quality. Low quality receivables are accounts from new customers and forwarders. For new
customers, the Group has no basis yet as far payment habit is concerned. With regards to the forwarders, most of them are
either under legal or suspended. In addition, their payment habits extend beyond the approved credit terms because their funds
are not sufcient to conduct their operations.
The Group evaluated its cash in bank and cash equivalents as high quality nancial assets since these are placed in nancial
institutions of high credit standing. It also evaluated its advances to ofcers and employees as high grade since these are
deductible from their salaries.
Annual Report 2011
101
The aging per class of nancial assets that were past due but not impaired is as follows:
As at December 31, 2011
Neither
past Past due but not impaired Impaired
due nor Less than 30 31 to 60 61 to 90 Over 90 nancial
impaired days days days days assets Total
(In Thousands)
Loans and receivables:
Cash in banks P754,151 P P P P P P754,151
Cash equivalents 130,721 130,721
Loans and receivables:
Trade receivables:
Freight 372,778 147,777 33,426 26,770 440,882 206,375 1,228,008
Passage 87,988 87,988
Service fees 66,145 25,682 8,630 6,251 3,102 21,351 131,161
Distribution 238,793 118,471 4,562 5,151 6,663 16,689 390,329
Others 186,396 25,742 20,860 25,190 12,821 271,009
Nontrade receivables 178,045 178,045
Due from related parties 92,437 2,242 2,484 99,071 596,263 5,233 797,730
Insurance and other claims 35,468 22,753 46,596 104,817
Advances to ofcers and
employees 17,925 45 201 18,171
AFS investments 9,797 9,797
Total P2,170,644 P319,914 P70,007 P185,387 P1,046,910 P309,065 P4,101,927
As at December 31, 2010
Neither
past Past due but not impaired Impaired
due nor Less than 30 31 to 60 61 to 90 Over 90 nancial
impaired days days days days assets Total
(In Thousands)
Loans and receivables:
Cash in banks P566,564 P P P P P P566,564
Cash equivalents 196,656 196,656
Trade receivables:
Freight 759,399 133,736 65,917 34,858 44,389 209,567 1,247,866
Service fees 22,647 12,162 6,191 2,078 4,464 14,723 62,265
Passage 25,826 162 46 104 26,138
Distribution 285,921 98,207 20,504 6,908 7,823 14,634 433,997
Others 157,466 35,475 7,250 4,132 4,724 947 209,994
Nontrade receivables 649,684 571 153 243 5,313 6,550 662,514
Due from related parties 14,118 14,118
Insurance and other claims 10,869 72,990 36,650 120,509
Advances to ofcers and employees 24,335 501 317 3,360 572 29,085
AFS investments 29,838 29,838
Total P2,743,323 P280,652 P100,494 P124,615 P67,389 P283,071 P3,599,544
Liquidity risk
The Group manages its liquidity prole to be able to nance its capital expenditures and service its maturing debt by maintaining
sufcient cash during the peak season of the passage business. The Group regularly evaluates its projected and actual cash ow
generated from operations.
The Groups existing credit facilities with various banks are covered by the Continuing Suretyship for the accounts of the Group.
The liability of the Surety is primary and solidary and is not contingent upon the pursuit by the bank of whatever remedies it
may have against the debtor or collaterals/liens it may possess. If any of the secured obligations is not paid or performed on due
date (at stated maturity or by acceleration), the Surety shall, without need for any notice, demand or any other account or deed,
immediately be liable therefore and the Surety shall pay and perform the same.
Looking Ahead.
102
The following table summarizes the maturity prole of the Groups nancial assets and nancial liabilities based on contractual
repayment obligations and the Groups cash to be generated from operations and the Groups nancial assets as at
December 31:
2011 2010
Less than More than Less than More than
1 year 1 to 5 years 5 years Total 1 year 1 to 5 years 5 years Total
(In Thousands)
Financial assets
Cash and cash equivalents P884,872 P P P884,872 P763,220 P P P763,220
Trade and other receivables 2,898,193 2,898,193 2,523,415 2,523,415
Total undiscounted
nancial assets 3,783,065 3,783,065 3,286,635 3,286,635
Financial liabilities
Trade and other payables* 2,971,510 2,971,510 4,471,976 4,471,976
Loans payable 1,220,454 1,220,454 2,011,594 2,011,594
Redeemable preferred shares 27,363 27,363 27,363 27,363
Long-term debt 1,185,628 3,639,897 4,825,525 2,414,767 2,414,767
Obligation under nance lease 36,407 95,374 2,492 134,273 12,511 39,823 6,778 59,112
Other noncurrent liabilities 8,409 8,409 6,041 6,041
Total undiscounted
nancial liabilities 5,441,362 3,743,680 2,492 9,187,534 8,910,848 73,227 6,778 8,990,853

Total net undiscounted
nancial liabilities (P1,658,297) (P3,743,680) (P2,492) (P5,404,469) (P5,624,213) (P73,227) (P6,778) (P5,704,218)
*Excludes nonnancial liabilities amounting to P 460,698 and P 70,570 as of December 31, 2011 and 2010.
Foreign exchange risk
Foreign currency risk arises when the Group enters into transactions denominated in currencies other than their functional
currency. Management closely monitors the uctuations in exchange rates so as to anticipate the impact of foreign currency
risks associated with the nancial instruments. To mitigate the risk of incurring foreign exchange losses, the Group maintains
cash in banks in foreign currency to match its nancial liabilities.

The Groups signicant foreign currency-denominated nancial assets and nancial liabilities as of December 31 are as follows:
2011
Total Peso
AUD
1
DKK
2
EUR
3
NZD
4
USD
5
Equivalent
Financial Asset
Cash in bank $2 Kr1 2 $1 $434 P19,270
Trade receivables 251 11,004
2 1 2 1 685 30,274
Financial Liabilities
Trade payables 372 1,757 313 83 83 (54,158)
Obligations under nance lease 882 (38,667)
372 1,757 313 83 965 (92,825)
Net foreign currency denominated
assets (liabilities) ($372) (Kr1,757) (311) ($82) ($280) (P62,551)
1
$1 = P44.3234
4
1 = P33.7752
2
Kr = P7.6471
5
$1 = P43.84
3
$1 = P56.8428
Annual Report 2011
103
2010
Total Peso
AUD
1
EUR
2
NZD
3
USD
4
Equivalent
Financial Assets
Cash $ 2 $2 1,034 P45,523
Trade receivables 2,193 96,126
Total Financial Assets 2 2 3,227 141,649
Financial Liabilities
Trade payables 374 347 27 1,211 90,873
Obligations under nance lease 1,042 45,686
Total Financial Liabilities 374 347 27 2,253 136,559
Net foreign currency
denominated assets (liabilities) ($374) (345) ($25) $974 P5,090
1
$1 = P44.6398
3
$1 = P33.5281
2
1 = P58.0335
4
$1 = P43.8400
The Group has recognized in its other income, foreign exchange revaluation gain amounting to P5.3 million in 2011 and losses
of P12.9 million and P9.1 million in 2010 and 2009, respectively.
The following table demonstrates the sensitivity to a reasonably possible change in the foreign currency exchange rates, with all
other variables held constant, of the Groups prot before tax as at December 31, 2011 and 2010.
Appreciation/
(Depreciation) of
Foreign Effect on Income Before Tax
Currency 2011 2010
(In Thousands)
Australian Dollar (AUD) +5% (P823) (P835)
-5% 823 835
Euro (EUR) +5% (886) (1,001)
-5% 886 1,001
New Zealand Dollar (NZD) +5% (140) (42)
-5% 140 42
US Dollar (USD) +5% (613) 2,133
-5% 613 (2,133)
Danish Kroner (DKK) +5% (672)
-5% 672
There is no other impact on the Groups equity other than those already affecting prot or loss.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash ows of the Groups nancial instruments will uctuate because of
changes in market interest rates.
The Group has no borrowings issued at variable rates, thus, the Group is not subject to cash ow interest rate risk. However,
borrowings issued at xed rates exposes the Group to fair value interest rate risk. The Groups borrowings are subject to xed
interest rates ranging from 2.5% to 10.25% for 10 years in 2011 and 2.5% to 10.0% for 10 years in 2010.
In March 2011, as a result of the availments of the P4.0 billion loan under the OLSA, P2.0 billion of the outstanding loans of the
Group which carries variable interest rates are exposed to cash ow interest rate risk.
The sensitivity of the consolidated statement of income is the effect of the assumed changes in interest rates on the consolidated
income before income tax for one year, based on the oating rate non-trading nancial liabilities held at December 31, 2011
with other variables held constant:
Changes in Effect on income
interest rates before tax
(In Thousands)
For more than one year +80 basis points (P15,710)
-80 basis points 15,710
Looking Ahead.
104
As at December 31, 2010, the Group has no borrowings issued at variable rates, thus, the Group is not subject to cash ow
interest rate risk.
Shown below are the carrying amounts, by maturity, of the Groups interest bearing nancial instruments:
2011
Within
one year 1 to 5 years Over 5 years Total
(In Thousands)
Financial Assets
Cash in banks and cash equivalents P884,872 P P P884,872
AFS investments 9,797 9,797
P884,872 P9,797 P P894,669
Financial Liabilities
Loans payable P1,215,440 P P P1,215,440
Long-term debt 785,716 3,178,027 3,963,743
Obligation under nance lease 30,174 89,444 2,492 122,110
Redeemable preferred shares 25,938 25,938
P2,057,268 P3,267,471 P2,492 P5,327,231
2010
Within
one year 1 to 5 years Over 5 years Total
(In Thousands)
Financial Assets
Cash in banks and cash equivalents P763,220 P P P763,220
AFS investments 29,838 29,838
P763,220 P29,838 P P793,058

Financial Liabilities
Loans payable P1,992,900 P P P1,992,900
Long-term debt 1,979,107 1,979,107
Obligation under nance lease 8,229 30,679 6,778 45,686
Redeemable preferred shares 22,882 22,882
P3,980,236 P53,561 P6,778 P4,040,575
Equity price risk
Equity price risk is the risk that the fair value of traded equity instruments decreases as the result of the changes in the levels of
equity indices and the value of the individual stocks.
As at December 31, 2011 and 2010, the Groups exposure to equity price risk is minimal.
The effect on equity (as a result of a change in fair value of equity instruments held as AFS investments as of December 31, 2011
and 2010) due to reasonably possible change in equity indices, with all other variables held constant, follows:
The impact on the Groups equity excludes the impact of transactions affecting the consolidated statements of comprehensive
income.
Increase (decrease) Effect on equity
in PSE index 2011 2010
AFS investments 32% P156 P1,018
(32%) (156) (1,018)
The impact on the Groups equity excludes the impact of transactions affecting the consolidated statements of comprehensive
income.
Capital Risk Management Objectives and Procedures
The Groups capital management objectives are to ensure the Groups ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benets for others stakeholders and produce adequate and continuous
opportunities to its employees; and to provide an adequate return to shareholders by pricing products/services commensurately
with the level of risk.
Annual Report 2011
105
The Group sets the amount of capital in proportion to risk. It manages the capital structure and makes adjustments in the light
of changes in economic conditions and the risk characteristics of the underlying assets, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The Group monitors capital on the basis of the carrying amount of equity as presented on the face of the balance sheet. The
capital ratios are as follows:
2011 2010
Assets nanced by:
Creditors 73% 69%
Stockholders 27% 31%
36. Fair Value of Financial Instruments
The table below presents a comparison by category of the carrying amounts and fair values of the Groups nancial instruments
as at December 31, 2011 and 2010. Financial instruments with carrying amounts reasonably approximating their fair values are
no longer included in the comparison.
2011 2010
Carrying Carrying
Amount Fair Value Amount Fair Value
(In Thousands)
Financial Liabilities
Other nancial liabilities:
Long-term debt P3,963,743 P3,590,354 P1,979,107 P1,979,107
Obligations under nance lease 122,110 117,427 45,686 51,400
Redeemable preferred shares 25,938 25,938 22,882 26,190
P4,111,791 P3,733,719 P2,047,675 P2,056,697
Fair value is dened as the amount at which the nancial instrument could be exchanged in a current transaction between
knowledgeable willing parties in an arms-length transaction, other than in a forced liquidation or sale. Fair values are obtained
from quoted market prices, discounted cash ow models and option pricing models, as appropriate.
The following methods and assumptions are used to estimate the fair value of each class of nancial instruments:
Cash and cash equivalents and trade and other receivable and trade and other payables
The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables approximate fair
value due to the relatively short-term maturity of these nancial instruments.
Loans payable
Loans payable that reprice every three (3) months, the carrying value approximates the fair value on current market rate. For
xed rate loans, the carrying value approximates fair value due to its short term maturities, ranging from three months to twelve
months.
Redeemable preferred shares
As of December 31, 2011, the carrying value of the RPS approximates its fair value since the entire balance is due for redemption
within one year. As of December 31, 2010, the fair values of the redeemable preferred shares are based on the discounted
value of future cash ows using the applicable market interest rates. Discount rates ranging from 4.8% to 5.6% were used in
calculating the fair value of the Group in 2010.
Refundable deposits
As of December 31, 2011, the carrying value of refundable deposits approximates fair value due to the relatively short-term
maturity of this nancial instruments.
AFS investments
The fair values of AFS investments are based on quoted market prices, except for unquoted equity shares which are carried at
cost since fair values are not readily determinable.
Looking Ahead.
106
Long term debt
As of December 31, 2011, discount rate of 4.7% was used in calculating the FV of the long-term debt. As of December 31,
2010, the carrying amounts of long-term debt approximate fair value as the debt is already due and demandable due to breach
of loan covenants.
Obligations under nance lease
The fair values of obligation under nance lease are based on the discounted net present value of cash ows using discount rates
of 1.75% to 5.27% as at December 31, 2011 and 6.79% to 9.03% as at December 31, 2010.
Fair Value Hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of nancial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a signicant effect on the recorded fair value are observable, either
directly or indirectly.
Level 3: techniques which use inputs which have a signicant effect on the recorded fair value that are not based on observable
market data.
Only the Groups AFS investments, which are classied under Level 1, are measured at fair value. During the reporting period
ending December 31, 2011 and 2010, there were no transfers between Level 1 and Level 2 fair value measurements, and no
transfers into and out of Level 3 fair value measurements.
37. Events After the Reporting Period
a. In February and March 2012, the Philippine SEC approved the application of the Parent Company and its subsidiaries to
change their Articles of Incorporation and By-laws, which include, among others, the change in their corporate names to
2GO (formerly ATSC), 2GO Express, Inc. (formerly ATSEI), and 2GO Logistics, Inc. (formerly ATSDI).
b. On March 9, 2012, the Philippine SEC approved the registration of Special Container and Value Added Services, Inc., a newly
formed company under the Parent Company, which has a primary purpose of engaging in domestic and/or international
business of transporting any and all kinds of goods and cargoes, by sea, air and land, functioning as non-vessel operating
common carrier, engaging in cargo forwarding including acting as cargo consolidator and breakbulk agent, and courier for
mails, letters, pouches, other cargoes and personal effects of any and all kinds, types and nature.
Looking Ahead.
107
SUPPLEMENTARY INFORMATION
FINANCIAL INSTITUTIONS
Allied Banking Corporation
Asia United Bank
Banco de Oro Universal Bank
Bank of the Philippine Islands
China Banking Corporation
Citibank N.A.
Development Bank of the Philippines
Land Bank of the Philippines
Maybank Philippines, Inc.
Metropolitan Bank and Trust Company
Philippine National Bank
Philippine Savings Bank
Planters Development Bank
Rizal Commercial Banking Corporation
Robinsons Bank
Security Bank Corporation
Union Bank of the Philippines
United Coconut Planters Bank
Philippine Veterans Bank
Wealth Bank
INSURANCE COMPANIES
BPI/MS Insurance Corporation
The Shipowners Mutual Protection and
Indemnity Association (Luxembourg)
Chartis (Philippines) Insurance
Philippine Charter Insurance Corp.
Mapfre Insular Insurance Corporation
Pioneer Insurance & Surety Corporation
PNB General Insurers Company
QBE Insurance (Philippines), Inc.
The Solid Guaranty
Oriental Assurance Corp.
SSM
NEW INDIA
UCPB General Insurance Co., Inc.
ASIA INSURANCE
PHIL BRITISH ASSURANCE
CORPORATE DIRECTORY
2GO Group, Inc.
12th Floor, Times Plaza Building
United Nations Avenue corner Taft Avenue
Ermita, Manila 1000, Philippines
Phone: (+63 2) 528-7171
Website: www. atsc.com.ph
2GO Freight Hotline: (+63 2) 528-7400
(+63 32) 233-7400
2GO Express Hotline: (+63 2) 528-7136
2GO Logistics Hotline: (+63 2) 854-7777
2GO Travel: (+63 2) 528-7000
(+63 32) 233-7000
Website: www.2go.com.ph
Negros Navigation Co., Inc.
15th Times Plaza Building
United Nations Avenue corner Taft Avenue
Ermita, Manila 1000, Philippines
Phone: (+63 2) 554-8777
Supercat Fast Ferry Corporation
Pier 4, North Reclamation Area
Cebu City, Philippines
Phone: (+63 32) 233-7000
Website: www.supercat.com.ph
2GO Express, Inc.
General Aviation Area Manila Domestic Airport
Pasay City, Philippines
Phone: (+63 2) 855-1776
ScanAsia Overseas, Inc.
2nd Floor Priscilla 100 Building
2297 Don Chino Roces Avenue 1231
Makati City, Philippines
Phone: (+63 2) 815-0123
Fax No.: (+63 2) 818-1467
Website: www.scanasia.ph
MCC Transport Philippines, Inc.
9th Floor One E-com Center
Harbor Drive corner Sun SM Bay City
1300 Pasay City, Metro Manila Philippines
Phone: (+63 2) 859-3401
Prepared by Investor Relations and Government Relations Departments
Printed by CMG Print and Design Corporation
Concept and Design by Kairos Solutions, Inc. and Philippine Integrated Advertising Agency
This annual report was printed on 100% Recycled Paper.
2011 2GO Group Facts
No. of Employees: 1,005
No. of Vessels: 23
Total passenger capacity of vessels: 20,360
Total twenty equivalent unit freight capacity of vessels: 6,059
No. of ports served: 22
No. of pallet positions available: 92,648
Annual Report 2011
108
12th Floor, Times Plaza Building
United Nations Avenue corner
Taft Avenue, Ermita Manila 1000
Philippines
(+63 2) 528-7171