INVESTMENTS


AGP International Holdings Ltd.

On December 21, 2010, South China subscribed to, and subsequently fully paid for, 26,086,957 Series A Preferred shares of AGP International at a purchase price of US$0.23 per share or a total amount of USD$6,000,000.00.

AGP International is a British Virgin Islands business company formed in November 2010 by Icaza, Gonzalez-Ruiz & Aleman (BVI) Trust Limited with registered office at the Vanterpool Plaza, 2nd Floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. AGP International’s authorized securities, as of 21 December 2010, consist of 1,400,000,000 no par value shares divided into 1,000,000,000 Common Shares and 400,000,000 Series A Preferred Shares. As to the ownership structure, SOC has yet to receive information regarding the other investors and their respective investments.

AGP International invested in 40% of the outstanding capital stock of AGP Philippines Holdings I, Inc. (“AGP Philippines”). On 22 December 2010, AGP Philippines finalized the acquisition of all of the shares of DMCI Holdings, Inc. (“DMCI-HI”) in Atlantic Gulf & Pacific Company of Manila, Inc. (“AG&P”). The shares comprise of 973,089,025 shares directly owned, and 17 shares beneficially owned, by DMCI-HI representing 98.19% of the outstanding capital stock of AG&P.

SOC’s subscription of AGP International’s Series A Preferred Shares is purely for investment purposes. By investing in AGP International, SOC believes that it will be benefited by a return of the investment of AGP Philippines from AG&P. AG & P, one of the country’s oldest construction and engineering firms, is involved in steel fabrication, preassembly works, engineering design and manpower deployment.

On January 31, 2012, the Company, together with the other legal owners of AGP International preferred shares, entered into a Share Purchase Agreement with AGP International to sell its shares to the latter for $0.40 cents per share. On the same date, AGP International and AG&P executed a waiver and release form in favor of each seller, relieving them from any claims related to the shares.

Premiere Development Bank (Premiere Bank)

On June 1, 2011, the Parent Company, together with other shareholders, entered into a Share Purchase Agreement (the Agreement) with Security Bank Corporation for the sale of its 351,454 common shares in PDB. The sellers are the legal owners of an aggregate of 7,071,263 common shares in PDB, representing 96.42% of the issued and outstanding capital stock of PDB.

Under the Agreement, the price per share amounted to P=181.7 which resulted to a total share consideration of P1.3 billion. The obligations of the parties to complete the sale and purchase of the shares under the Agreement are subject to the approval of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP). The approval from BSP has yet to be granted as of December 31, 2011.

As of December 31, 2011, the Group reclassified its investment in PDB amounting to ?31.7 million as held for sale and presented it under “Noncurrent asset held for sale” account in the consolidated statement of financial position. On January 20, 2012, the Monetary Board of the BSP approved the transaction contemplated in the Agreement.

Puyat Steel Corporation (PSC)

Puyat Steel Corporation (PSC) is a world- class manufacturer of galvanized and pre-painted steel sheets and coils used in roofing and walling profiles and bended accessorial products. It was established in 1956 as a division of Gonzalo Puyat and Sons Inc. PSC set up the first galvanizing plant in the Philippines in answer to the need of the country for galvanized iron sheets to be used in construction, building and roofing materials. In 1998, PSC inaugurated in Rosario, Batangas, the Philippines’ first ever state-of-the-art continuous galvanizing line utilizing the modern non-oxidizing furnace (NOF) technology putting the mill in a globally competitive stature. By the year 2000, PSC became the first NOF continuous galvanizing plant to be ISO 9002 certified.

The BOD through Board Resolution dated January 15, 2008 authorized the Company to enter into a related party agreement with PSC to invest an amount of up to P130 million for the acquisition of raw materials to be processed into finished steel products. The funding facility extended to PSC is secured by way of assignment to the Company of finished goods inventories and all receivables and proceeds of postdated checks issued arising from the sale of the finished goods. The funding facility is renewable on a yearly basis. Under this arrangement, the Company receives a guaranteed return on investment (ROI) of at least 8% per annum.

International Pipe Industries Corp. (IPIC) is the pioneer manufacturer of large-diameter spiral welded pipes and machinery fabrication in the Philippines and Southeast Asia. It has developed a "strong solid experience" in providing quality steel pipe products of various requirements in the industry, servicing clienteles all over the Philippines, ASEAN countries and U.S. territories. IPI was also the first company in the Southeast Asia to pioneer in the design and exportation of high-tension transmission poles, weight coating of submarine line pipe and non-tension and pre-tension concrete pressure pipes. In 2007, IPIC set up another manufacturing facility in Sta. Cruz, Davao del Sur selected to cater to the pipe requirements of customers in the Visayas and Mindanao area.

The Board of Directors has authorized the Company to enter into a related party agreement with International Pipe Industries Corporation to advance the amount of P10 Million for the acquisition of raw materials to be processed into finished steel products. The Company will receive a guaranteed return on investment of at least eight percent per annum.

SOC Land Development Corporation

On November 25, 2010 South China Resources, Inc, registered with the Securities and Exchange Commission(SEC) SOC Land Development Corporation (SOC Land) as a wholly-owned subsidiary with an authorized capital stock of One Hundred Sixty Million Pesos (PHP 160,000,000.00), a subscribed capital stock of Forty Million Pesos (PHP 40,000,000.00) and a paid-up capital of Ten Million Pesos (PHP 10,000,000.00).

On March 24, 2011, the Board of Directors approved the transfer of the Company’s property situated in Barangay Buli, Muntinlupa City (the “Buli Property”) to its wholly-owned subsidiary, SOC Land, in exchange for the latter’s shares of stock valued at PHP312,298,000.00. The registrant’s investment into property development through SOC Land is seen as an important aspect in enhancing its shareholder value.

The government estimates the country’s housing backlog at almost 4 million. There lies the opportunity for South China to serve a basic need of Filipinos through SOC Land that is to put up quality homes at affordable prices. Soc Land’s maiden venture will develop a 2.4-hectare community, called Anuva Residences, situated near Sucat Interchange and will have four (4) tandem buildings, with the first building targeted to be completed by 2013. The total estimated cost of the Project is P=2.0 billion and is targeted for completion within five (5) years from the start of its construction. On July 12, 2011, the groundbreaking ceremony for Anuva was held and construction for the Project’s Tandem Building 1 commenced thereafter.

As of December 31, 2011, structural works has an accomplishment rate of 11.4%.

Previous Investments

The Company’s Board of Directors approved the sale of its investment in the property situated in Makati City known as Pilipinas Plaza Building on September 13, 2007. The sale was consummated in January 23, 2008 for a gross selling price of P600Million.

On December 18, 2009, the Company sold its 3,240,000 shares of capital stock of Bell Telecommunications Philippines, Inc. to Two Cassandra-CCI Conglomerates, Inc. at a selling price of P1,227,825,489.00.