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LANDBANK COUNTRYSIDE DEVELOPMENT FOUNDATION, INC.NOTES TO FINANCIAL STATEMENTS

(All amounts in Philippine Peso unless otherwise stated)

1. CORPORATE INFORMATION

The LandBank Countryside Development Foundation, Inc. (LCDFI), formerly Land Bankof the Philippines (LBP) Educational Foundation, Inc. is a non-stock, non-profitfoundation that was incorporated in 1983 under the provisions of the Corporation Code.The amended Articles of Incorporation was registered with the Securities and ExchangeCommission on January 5, 1993 under Registration No. 110790, embodying Land Bankof the Philippines commitment to spur development in the countryside particularlyamong its priority sectors such as the small farmers and fisherfolks, agrarian reformbeneficiaries (ARBs), Countryside Financial Institutions, small and medium enterprises

and Overseas Filipino Workers (OFWs).

The Foundation is duly accredited with the Philippine Council for NGO Certification(PCNC) and is registered with the Bureau of Internal Revenue as a donee institution inaccordance with the provisions of Revenue Regulations No. 013-98 dated January 1,1999 and donation/s received shall entitle the donor/s to limited or full deductionpursuant to Section 34(H)(1) and (2), and exemption from Donors Tax pursuant toSection 101(A)(3) of the National Internal Revenue Code of 1997.

The initial seed money of the Foundation came from the donation of the LBP in theamount of five million pesos (P5,000,000) which must be kept intact and invested in safeand high yield securities and only the earnings thereof shall be used for the purpose of

which the Foundation was created. Substantial donations came from the BangkoSentral ng Pilipinas.

The affairs and business of the Foundation are directed by the Board of Trustees, whichas at October 31, 2013 is composed of the Chairman and nine trustees as members.

The corporate officers of the Foundation are composed of an Executive Director, aCorporate Secretary and a Corporate Treasurer.

As at October 31, 2013, three (3) out of eight (8)members of the Board of Trustees andone out of three corporate officers were officers of LBP.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements have been prepared in conformity with the Philippine FinancialReporting Standards (PFRS)/Philippine Accounting Standards (PAS) which theFoundation applied for the annual period beginning on January 1, 2005. The financialstatements are presented in Philippine peso and all values are rounded to the nearestpeso except when otherwise indicated.

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2.2 Adoption of the Philippine Financial Reporting Standards (PFRS)/PhilippineAccounting Standards (PAS)

The accounting policies adopted are consistent with those of the previous financial yearand LCDFI has adopted those new/revised standards mandatory for financial yearsbeginning on or after January 1, 2005. The Foundation has adopted the followingstandards during the year:

PAS 1 - Presentation of Financial Statements, provides a framework within an entity,assesses how to present fairly the transactions and other events, provides the basecriteria for classifying assets and liabilities as current or non-current; prohibits thepresentation of income from operating activities and extraordinary items as separate lineitems in statements of income; and specifies the disclosures about key sources ofestimation, uncertainty and judgments that management has made in the process ofapplying the Foundations accounting policies.

PAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, removesthe concept of fundamental error and the allowed alternative to retrospective applicationof voluntary changes in accounting policies and retrospective restatement to correct priorperiod errors. It defines material omissions or misstatements and describes how toapply the concepts of materiality when applying accounting policies and correctingerrors.

PAS 10 - Events after the Balance Sheet Date, prescribes the accounting policies anddisclosures related to adjusting and non-adjusting subsequent events. Additionaldisclosures required by the standards were included in the financial statements,principally the date of authorization for release of the financial statements.

PAS 16 - Property, Plant and Equipment, provides additional guidelines andclarification on recognition and measurement of items of property, plant and equipment.It also provides that each part of an item, property, plant and equipment with a cost thatis significant in relation to the total cost of the item shall be depreciated separately.

PAS 19 - Employee Benefits, provides that the cost of providing employee benefitsshould be recognized in the period in which the benefit is earned by the employee,rather than when it is paid or payable. This standard applies to wages and salaries,compensated absences (paid vacation and sick leave), bonuses, medical and lifeinsurance benefits during employment, separation and retirement benefits.

PAS 24 - Related Party Disclosures, provides additional guidance and clarification inthe scope of the standard, the definitions and disclosures for related parties. It alsorequires disclosures for related parties. It also requires disclosures of the totalcompensation of key management personnel and benefits types.

PAS 32 - Financial Instruments: Disclosure and Presentation set out the requireddisclosures and presentation of financial instruments to enhance financial statementusers understanding of the significance of financial instruments to an entitys overallfinancial position, performance, and cash flows. Financial instruments should beclassified as equity or debt instruments based on the substance of the transaction. PAS32 includes disclosures about the accounting policy adopted, methods used to applythose policies, the nature of financial instruments held for each class of financial asset,

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financial liability and equity instruments including significant terms and conditions thatmay affect the amount, timing and certainty of future cash flows. Fair value information isalso required for each class of financial assets and financial liabilities. PAS 32 requires

strict offsetting criteria for financial assets and liabilities.

PAS 39 - Financial Instruments: Recognition and Measurement, establishes specificcategories into which all financial assets and liabilities must be classified. All financialassets must be classified into loans and receivables, held-to-maturity, fair valuethrough profit or loss or available-for-sale categories. Held-to-maturity financial assetsare measured at amortized cost.

2.3 Recognition of revenue and expenses

Revenue and expenses are recorded based on the accrual method of accounting.Interest income was reported net of final withholding tax of 20 per cent.

2.4 Inventories

Inventories are valued at cost. The first-in, first-out method was used in thedetermination of the cost.

2.5 Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturityare classified as held-to-maturity. These investments are recorded at cost adjusted fordiscount and premium amortization.

2.6 Property and equipment

These are stated at cost, less accumulated depreciation.

2.7 Fund Balances

Interest income is allocated to different fund balances such as Program DevelopmentFund (PDF), General and Administrative Fund (GAF), and Reserve Fund (RF) in theratio of 60:30:10, respectively. Donations to a specific program are earmarked to theprogram and not distributed among the PDF, GAF and RF.

3. CASH AND CASH EQUIVALENTS

This account consists of the following:

October2013

October2012

Cash in bank 12,621,227 11,601,020Petty cash fund 20,000 20,000

12,641,227 11,621,020

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4. ACCOUNTS RECEIVABLE


October2013

October2012

Accounts receivable - donations 17,068,857 6,484,500Accounts Receivable-BOT & Corporate Officers 457,250 457,252Accounts receivable Others 24,127 44,807

17,550,234 6,986,559

5. INVENTORIES

This account represents costs of manuals which are composed of the following:

2013 2012

Marketing Guidebook in Cebuano 19,508 19,508Marketing Guidebook in Ilocano 12,840 12,840Election Committee Manuals for Cooperatives 4,905 4,905Education and Training Committee Manual 1,348 1,348

Accounting Manual 262 262

Audit Manual 136 136Marketing Guidebook in Pilipino 126 126Gender Sensitivity Manual 67 67Marketing Guidebook Volume II 32 32Pamphlets (Getting to Know the Cooperatives) 7 7

39,231 39,231

6. PREPAID EXPENSES

This pertains to the payment of tax in advance for the investment and payment oftraining expenses amounting to P 194,102 and P194, 786 for October 2013 and October

2012, respectively.

7. HELD-TO-MATURITY INVESTMENTS (HTMI)


2013 2012

HTM Treasury 35,705,531 49,494,911HTM Trust 35,833,260 25,212,160

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10-Year LBP Agrarian Reform bonds 609,620 915,245

72,148,411 75,622,315

8. PROPERTY AND EQUIPMENT


Furnitureand

Fixtures

OfficeEquipment Vehicle

LeaseholdImprovement

Semi-expenda-ble items

Total

CostOctober 1, 2013 771,670 803,915 901,700 2,861,966 56,252 5,395,502

AcquisitionsAdjustments

October 31,2013 771,670 803,915 901,700 2,861,966 56,252 5,395,502

AccumulateddepreciationOctober 1, 2013 689,073 449,448 404,191 2,525,647 20,007 4,088,365Depreciation/

Amortization4,889 7,445 6,763

194,038844 19,940

194,038Adjustments

October 31,2013 693,962 456,893 410,953 2,719,685 20,850 4,302,343

Net book value,October 31,2013 77,708 347,022 490,747 142,282 35,401 1,093,159

Net book value,December 31, 2012 126,597 407,260 538,143 1,529,531 45,036 2,646,568

9. ACCOUNTS PAYABLE

This represents various accounts due to the following:

October2013

October2012

Bureau of Internal Revenue - withholding taxes 105,370 108,500Social Security System - contributions 27,544 24,583

Home Development Mutual Fund - multi-purpose loan 11,158 10,331Social Security System - salary loan 8,526 9,999Home Development Mutual Fund - contributions 2,899 2,699

Advances from customers/AP Others 1,945 1,945Miscellaneous liability 1,184,598 -

1,342,039 158,057

10. ACCRUED EXPENSES

This represents accrual of various expenses as follows:

October2013

October2012

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Program development expenses 309,950 360,000

Audit fee 400,000 -

Fringe benefits-employees -Retirement benefit -Representation and transportation allowance -Rent - 112,000

709,950 472,000

11. FUND BALANCES


October2013 October2012

Restricted fund 15,000,000 15,000,000Program fund 6,898,356 25,676,412Reserve fund 23,875,964 23,532,180General and administrative fund 21,038,030 21,775,244Program development fund 36,156,913 11,112,035

102,969,263 97,095,871

11.1 Restricted fund seed fund donated by the Land Bank of the Philippines.

11.2 Program fund the fund intended for the implementation of a specific program.These programs include the following: Cooperative Manualization Revolving Fund(CMRF), Scholarship Program, Countryside Financial Institutions ManagementDevelopment Program (CFIMDP), Cooperative Business Integration and Development(COOP-BIND) and Program for Overseas Filipino Workers (OFWs).

11.3 Reserve fund 10 per cent of the earnings on investment set aside as reserve.

11.4 General and administrative fund 30 per cent of the earnings in the form ofinterest income from investments allocated to manpower cost and other operatingexpenses.

11.5 Program development fund funds received by the Foundation in the form ofdonations, contributions, etc. from different agencies including private individuals. Also,60 per cent is allocated to this fund from the earnings on investments.

12. DONATIONS

This represents donations extended by the following:

October2013

October2012

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Land Bank of the Philippines (LBP) 16,186,000 11,484,500LBP Insurance Brokerage, Inc. (LIBI) 1,987,500

LBP Leasing Corporation (LLC) 882,857 600,000LBP (Scholarship Program) 1,469,198 969,200Global Filipino Cooperative 10,000

18,538,055 15,051,200

13. PROGRAM DEVELOPMENT EXPENSES

This represents various expenses of the program as follows:

October2013

October2012

Integrated Community Development Program 2,162,567 1,856,378

Integrated Rural Financing 1,900,776 3,194,249Capability Building Program for Cooperatives 5,011,550 4,100,634Capability Building for CFIs and MFIs 2,976,937 1,766,435Food Supply Chain Program/Bank Assisted Coop 4,178,173 3,484,119Special Projects and Program Development and

Management 1,733,203 1,503,125

Indigenous Peoples Organization Eco-BiodiversityPreservation

1,352,430 972,249

GABAY ng LANDBANK (OFW ReintegrationProgram) 931,619 690,013

20,247,254 17,567,202

14. GENERAL AND ADMINISTRATIVE EXPENSES

October2013

October2012

Salaries and wages 250,852 254,046Fringe benefits 216,968 180,292Rent 112,000 156,800Office supplies 251,763 116,982

Audit fee/trustee fee 1,945Power, light and water 68,622 68,897Postage and telephone 49,889 49,042Retirement benefits 18,745 47,270Depreciation expense 46,039 37,310Representation and business development 11,213 22,271

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Condo dues expense 24,891 17,324Amortization of leasehold rights and improvements 273,586 23,196Sports, planning and wellness 9,336 13,858

Repairs and maintenance 35,926 20,021SSS, PhilHealth and EC contributions 19,046 18,188Representation and transportation allowances 14,148 18,000Security services 15,577 13,684Insurance expense 4,875 11,816Gasoline expense 5,513 5,413Taxes and licenses 10,474 5,459Membership dues 5,000 5,000Dues and subscriptions 2,276 2,210Staff development 3,920 2,160Business development expenses 9,547HDMF contributions 1,560 1,515

Traveling expenses 1,753 1,104Miscellaneous expenses 8,385 1,144

1,462,356 1,104,493

15. COMPLIANCE WITH TAX LAWS

In compliance with the requirements set forth by Revenue Regulation No. 15-2010hereunder are the information on taxes, licenses and fees paid or accrued during thetaxable year:

A. Local

2013 2012

Mayors permit 13,277 13,277

Barangay clearance 1,400 1,400

14,677 14,677

B. National

2013 2012

BIR registration 500 500

C. Withholding taxes paid/accrued for the year:

2013 2012

Taxes on compensation and benefits 178,938 129,744

Creditable withholding tax/es 435,246 334,493

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614,184 464,237

16. PENSIONS AND OTHER RETIREMENT BENEFIT COSTS

LCDFI has established a retirement and separation benefit plan pursuant to BoardResolution No. 10-011 dated July 09, 2010. The Retirement fund was set up foremployees who have rendered at least five years of service.17. RELATED PARTY DISCLOSURES

The LCDFI is a corporate foundation whose parent bank is the Land Bank of thePhilippines (LBP). The following table provides the total amount of transactions whichhave been entered into with related parties for the month ended October 31,2013

Related Party Transactions Amount

LBP-Treasury Operations Dept. (TOD) Investments in governmentsecurities 35,705,531

LBP-Trust Banking Group (TBG) Investments in governmentsecurities 35,833,260

LBP- Landowners Assistanceand Policy Department (LAPD)

Investment in 10-year AgrarianReform bonds 609,620

LBP Insurance Brokerage, Inc. (LIBI) Lessor of office space 822,916

Masaganang Sakahan, Inc. (MSI) Supplier of rice for employees 232,320

Al lowances and o ther benefi ts of Key Management Personnel

2013 2012

Board of Trustees (BOTs)RATA and Business Development Expense (BDE)

6,000

Corporate OfficersRATA, BDE and anniversary bonus

26,000 23,000

26,000 29,000

During the audit conducted by the Commission on Audit for the year 2004, allowancesand other benefits of the BOTs and corporate officers holding permanent positions atLBP amounting to P457,250 was disallowed and recorded as Accounts Receivable.

As at October 31, 2013, three out of eightmembers of the Board of Trustees and oneout of three corporate officers are officers of LBP.

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18. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements of LCDFI for October 2013 have been approved and

authorized for issuance by the Board of Trustees on ____________.

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LANDBANK COUNTRYSIDE DEVELOPMENT FOUNDATION, IN

STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE

As of OCTOBER 31,2013 with comparative figur es for 2012

For the Year Ended

Unaudited AUDITED

10/31/2013 10/31/12 31-Dec-12 Amount %

ASSETS

Current Assets

Cash on hand and in bank (No te 12,641,227 11,621,020 10,158,833 1,020,207 9%

Prepayments (Note 6) 194,102 194,786 192,824 -684 0%

Account s Receivable ( No te 4) 17,550,234 6,986,559 6,867,246 10,563,675 151%

Adv ances to Off icers & Employee 70,371 54,120 16,251 30%

Accrued In terest Receiv able (No t 639,247 639,247 639,247

Office Supplies 366,362 217,277 36,009 149,085 69%

Manuals (Note 5) 39,231 39,231 39,231 0%

Retirement Fund

Total Current Assets 31,500,774 19,112,993 17,933,390 12,387,781 65%

Non-Current Assets

Held-to-maturit y Investments (Note 7)

Treasury 35,705,531 49,494,911 49,617,843 -13,789,380 -28%

Trust 35,833,260 25,212,160 35,703,427 10,621,100 42%

Agrar ian Refor m Bo nds (c/o lc 609,620 915,245 585,333 -305,624 -33%High Yield Savings Account

Total Investment 72,148,411 75,622,315 85,906,603 -3,473,904 -5%

Property, plant and equipment (Net)( Note 8)

Furniture & Fixture 77,708 136,393 126,597 -58,685 -43%

Office Equipment 347,022 430,072 407,260 -83,050 -19%

Vehicle/ Accessories 490,747 551,376 538,143 -60,629 -11%

Leasehold Improvement 142,282 1,548,853 1,529,531 -1,406,571 -91%

Semi-Expendable Items 35,401 45,037 45,036 -9,635 -21%

Total 1,093,159 2,711,731 2,646,567 -1,618,571 -60%

Other Assets 278,907 278,889 278,907 18 0%

Total Non - Current Assets 73,520,478 78,612,935 88,832,077 -5,092,457 -6%

Total Assets 105,021,252 97,725,928 106,765,467 7,295,324 7%

LIABILITIES

Current Liabilities

Account s payable (Note 9) 1,342,039 158,057 1,378,843 1,183,982 749%

Accrued Expenses ( Note 10) 709,950 472,000 1,407,813 237,950 50%

Total 2,051,989 630,057 2,786,656 1,421,932 226%

FUND BALANCES ( Note 11)

Program Development Fund 87,969,263 82,095,871 88,978,811 5,873,392 7%

Restricted Fund 15,000,000 15,000,000 15,000,000 0%

Total 102,969,263 97,095,871 103,978,811 5,873,392 6%

TOTAL LIABILITIES AND FUND B 105,021,252 97,725,928 106,765,467 7,295,324 7%

Prepared by: Checked/Reviewed by:

NORA C. BOLAGOT DIVINIA L. ADOR DIONISIO PETER ANDREW S. GUTIERREZ

Acc ountant /Financ e & Ad min Offi cer Corp orate Treasurer Execu tiv e Direc tor

October 2013 vs October 2012

Increase/(Decrease)

For the Month Ended

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For the year Ended Increase/(Decrease)AUDITED Oct. 2013 vs. Oct. 2012

October 31,2013 October 31,2012 31-Dec-12 Amount %

Donation ( Note 12) 18,538,055 15,051,200 24,979,200 3,486,855 23%

Interest Income 2,271,740 3,177,506 4,579,081 -905,766 -29%

Training Fee 5,990 28,720 19,530 -22,730 -79%

Other Income 2,715 86 186 2,629 3066%

Total Revenue 20,818,500 18,257,512 29,577,997 2,560,988 14%

Program Development Expense

General and Admin Expenses(Note1 1,462,356 1,104,493 1,413,520 357,862 32%

Program Fund Expenses ( Note 13) 20,247,254 17,567,202 22,890,187 2,680,053 15%

Total Expenses 21,709,610 18,671,695 24,303,707 3,037,915 16%

Excess of Revenues over Expense -891,110 -414,183 5,274,290 -476,927 -115%Other Expenses Premium on Investments 118,438 182,967 -64,529 -35%

Net Revenue (Defici t) -1,009,548 -597,150 5,274,290 -412,398 -69%

Fund Balance beg.of the year 103,978,811 97,693,022 98,704,521 6,285,789 6%

Fund Balance, End 102,969,263 97,095,871 103,978,811 5,873,391 6%

Prepared By: Checked/Reviewed by:

NORA C. BOLAGOT DIVINIA L. ADOR DIONISIO PETER ANDREW S. GUTIERREZ

Accountant/Finance & Admin Officer Corporate Treasurer Executive Director

LANDBANK COUNTRYSIDE DEVELOPMENT FOUNDATION, INC. STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES

(With comparative figu res for 2012)

For the Month Ended

Documents

FS_2013