COMPANY PROFILE

South China Resources, Inc. (South China) was incorporated and registered with the SEC on September 25, 1992 primarily to undertake oil and gas exploration, development and production and became one of the leading exploration companies upon its listing in 1994. Starting in 1995, South China opted to strengthen its core business by diversifying then into other investments that. After two decades the company has now turned out to be one of the strongest holding companies in the market having had investments in real estate, steel fabrication, banking, telecommunications and energy exploration. The company is debt free and has a robust balance sheet after the recent conclusion of the sale of one of its major assets.

The diversification process, brought on by the financial crisis of the 90’s, was honed through the years and allowed South China to invest in technology based and as well as other long-term ventures. This gave the company new legs to stand on needed to weather the lows of the period. One of the first and significant investments was the acquisition and sale of Bell Telecommunications Philippines, Inc., the acquisition and sale of Filipinas Plaza along EDSA corner Chino Roces Avenue and the minority ownership of Premiere Development Bank.

The Securities and Exchange Commission, on October 30, 2003, approved the amendment of the Company’s Articles of Incorporation to change the primary purpose thereof to that of a holding company and to include its then primary purpose of oil exploration as among the secondary purposes of the Company. The Company continued to maintain its exploration activities.

Belltel (Bell Telecommunications Philippines, Inc.) was a pioneering telco that has the second of only two nationwide telecommunications franchises in the country. It delivered state-of-the-art converged communications solutions to leading educational institutions, corporate clients, government agencies and high-end residential buildings. With its broad wireless network, it became an attractive asset that was pursued by a much larger corporation for acquisition and integration into their telecommunications business. South China sold this company in 2009.

The Filipinas Plaza building was a prime investment situated along the major gateway road to Makati. An MRT station was located in front of the property enabling direct access to pedestrian traffic to the building complex. This development enhanced the attractiveness of the investment that allowed for its sale in 2008.

The sale of Filipinas Plaza and BellTel gave the company the influx of funds for re-investment and following the proven model of acquisition and sale of significant assets, South China acquired position in AGP International Inc which in turn gained control of AG&P Manila. AG&P Manila is one of the oldest and largest steel fabrication companies in the country with the unchallenged capability in modular fabrication. Its recent achievement was a first time ever in the world, the construction of a modularized coker plant for an oil refinery, fabricated and shipped from its shipyard in Bauan, Batangas. These colossal structures towered as much as 10 stories high and weighed 1500 to 2500 tons each, were shipped on special large-hold ships that traversed the Panama Canal on its way to Lake Erie. AG&P was supposedly a long term investment however management was able to identify an opportunity which allowed for a shorter turn-around time in recouping this investment. This allowed for recoup of the investment and make a good return in what would have taken the company more than several years at the very least following the usual course of investment and dividend sharing. On January 31 of this year, after holding the AGP investment for 13 months, the company sold its AGP shares at a good profit.

Premier Bank on the other hand expanded to almost 40 branches after the company acquired its shares. It became one of the most stable small banks that it became an attractive target for acquisition by a much larger bank. The sale of this asset was recently concluded this year with the approval of the sale by the Monetary Board.

Following the successful sale of the Filipinas Plaza and in response to the growing need for affordable housing for Filipinos, South China has followed on through the real estate business by acquiring a 2.4 hectare plot in Buli, Muntinlupa strategically located along the South Luzon Expressway. 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 Development Corporation (SOC Land), its wholly owned subsidiary, that is to put up quality homes at affordable prices. SOC Land’s maiden venture will be the P2.5 Billion Anuva MRB (mid-rise residential building) project in the Buli Property. The medium rise complex offers amenities usually found only in high-end residential like a resort themed community including spacious clubhouse, a resort-type lazy river feature, jogging paths, bike trails, playgrounds in every corner, including a yoga deck, and a tree house. The property will house only 8 towers thereby preserving 80% of its open space for the general benefit of future residents. The company broke ground on July 12, 2011 for the construction of the first of four 20- and 14-storey tandem buildings inside the complex. Construction of the first tandem building is expected to be completed in December 2013.

It can be seen that in the two decades that passed, South China transformed from a purely exploration play to an investment company. Even with varied interests, its exploration business was kept on by partnering with the biggest and the best in the oil exploration business, the likes of Occidental Petroleum, ARCO, UNOCAL, Murphy Oil, Philippine National Oil Company, Tap Oil, Shell and KUFPEC resulting in participation in close to $200 million worth of work program and saw the acquisition of thousands of kilometers of new seismic and the drilling of 8 wells. In its latest exploration foray however, South China together with Shell Philippines Exploration B.V. and Kuwait Foreign Petroleum Co. deemed it prudent to relinquish Service Contract-60 in light of the dismal results of the wildcat well drilled and CSEM (Controlled Source Electro-Magnetics) survey. Setting aside this development, South China will continue to search for energy through other avenues.

South China has identified two new areas for potential investment which it is investigating. To address a growing population, now pegged at 92 million Filipinos and increasing every year, it looks at food production. The Company believes that a rising population coupled with rising incomes will drive greater protein consumption. Opportunities have been identified to get in this value chain to grow a long term business that will allow expansion laterally and vertically. The Company is currently identifying large tracts of land suitable for agro-industrial development.

The country needs both conventional and renewable energy resources to address its power requirements. South China made a slight shift in focus towards renewables while keeping in line with its energy thrust. Renewables do tackle the issue of climate change, a stark fact that affects all in the world and every little help contributes to the overall effort to stave off this phenomenon. Some renewables however are still in their infancy and therefore cannot provide for the efficiencies and reliability needed for sustainable energy. South China is investigating renewable energy resources, hydropower and geothermal, that can provide for base load power that is sustainable for the long term and therefore provide for a steady income stream for the company.

Other Investments

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, PSPuyat Steel Corporation (PSC)C 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 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.

International Pipe Industries Corp. (IPIC)

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 Company is in a favorable situation where its current cash position allows it to review other businesses wherein it may invest, including but not exclusive to opportunities in mining, energy projects and acquisition of petroleum areas either by farm-in or direct investment.