SECURITIESANDEXCHANGECOMMISSION

SECFORM17Q
QUARTERLYREPORTPURSUANTTOSECTION17OFTHESECURITIES
REGULATIONCODEANDSRCRULE17(2)(b)THEREUNDER

1.Forthequarterlyperiodended

30September2014

2.Commissionidentificationnumber44852
3.BIRTaxIdentificationNo.000421957

4.D&LINDUSTRIES,INC.
Exactnameofissuerasspecifiedinitscharter

5.MetroManila,Philippines
Province,countryorotherjurisdictionofincorporationororganization

6.IndustryClassificationCode:

(SECUseOnly)

1110
7.65IndustriaSt.,Bagumbayan,Q.C.
Addressofissuer'sprincipalofficePostalCode

8.(02)6350680
Issuer'stelephonenumber,includingareacode

9.Notapplicable
Formername,formeraddressandformerfiscalyear,ifchangedsincelastreport

10.SecuritiesregisteredpursuanttoSections8and12oftheCode,orSections4and8ofthe
RSA

TitleofEachClass

CommonStock,P1parvalue

No.ofSharesofCommonStockIssued&Outstanding3,571,428,995shares

asof30September2014

AmountofDebtOutstanding

P1,142,784,549

asof30September2014

11.AreanyorallofthesecuritieslistedonaStockExchange?

Yes[9]No[]

Ifyes,statethenameofsuchStockExchangeandtheclass/esofsecuritieslistedtherein:

PhilippineStockExchange;Atotalof3,571,428,995sharesofcommonstockwithpar
valueofP1.00each.

12.Indicatebycheckmarkwhethertheregistrant:
(a) hasfiledallreportsrequiredtobefiledbySection17oftheCodeandSRCRule17
thereunderorSections11oftheRSAandRSARule11(a)1thereunder,andSections
26and141oftheCorporationCodeofthePhilippines,duringtheprecedingtwelve
(12) months (or for such shorter period the registrant was required to file such
reports)

Yes[9]No[]

(b)hasbeensubjecttosuchfilingrequirementsforthepastninety(90)days.

Yes[9]No[]

PARTIFINANCIALINFORMATION

Item1.FinancialStatements

TheunauditedinterimconsolidatedfinancialstatementsofD&L Industries,Inc.andits
whollyowned subsidiaries OleoFats, Inc. First in Colours, Inc., D&L Polymer and Colours, Inc.,
and AeroPack, Inc. (collectively, the Company) for the nine months ended30 September
2014 and the comparative period in 2013 is attached to this 17Q report, comprising of the
following:

1.1
Consolidated Balance Sheets asof 30 September 2014 and 31 December 2013
(AnnexA)
1.2
ConsolidatedStatementsofIncomeforperiodsended30September2014and
30September2013(AnnexB)
1.3
Consolidated Statements of Cash Flows for periods ended 30 September 2014
and30September2013(AnnexC)
1.4
ConsolidatedStatementsofChangesinShareholdersEquityfor periodsended
30September2014and30September2013(AnnexD)
1.5
ScheduleofAgingofTradeReceivablesasof30September2014(AnnexE)
1.6
ScheduleofAgingofTop5CustomerTradeReceivables(AnnexF)

Item2. Management's Discussion and Analysis of Financial Condition and Results of

Operations(BasedontheUnauditedConsolidatedResultsforthePeriodEnded
30September2014)

BusinessOverview

D&L Industries, Inc. (the Company or D&L), registered with the Securities and Exchange
Commission (SEC) on 27 July 1971, is the holding company for a group of companies with
interests in the customization, development,andmanufacturing offoodingredients(OleoFats,
Incorporated), colorants, additives, and engineered polymers for plastics (D&L Polymers and
Colours,, Inc. and First in Colours, Incorporated), aerosol products (AeroPack, Inc.), as well as
manufacturing of oleochemicals, resins, and powder coating (Chemrez Technologies). It also
renders management and administrative services to subsidiaries and affiliate companies. The
Companys registered office address and principal place of business is 65 Industries St.,
Bagumbayan,QuezonCity.

The Company is a publicly listed company, which was officially listed in the Philippine Stock
Exchange(PSE)on12December2012.Asof30September2014,theCompanyis57.5%owned
byJadelHoldingsCo.,Inc.(JHI)and11.0%ownedbytheLaofamily.Theremaining31.5%ofthe
sharesoutstandingareheldbythepublic.

D&Lsmajorsubsidiariesandaffiliateasfollows:

Food ingredients The Company, operating through its subsidiary OleoFats, Inc. (OFI),
manufacturesalineofindustrialfatsandoils,specialtyfatsandoils,andculinaryandother
specialty food ingredients. It serves customers across the food and beverage industry,
including the noodles and snack food, dairy and culinary, food service, biscuits and
confectionery and bakery segments, as well as domestic and international quickservice
restaurant chains. More than 50% of its food ingredients revenue is derived from the
manufactureandsaleofcustomizedspecialtyproducts,whichgenerallyprovidehigherprofit
marginsthanbulkitemssuchasrefinedvegetableoils;

Colorants and plastics additives The Company, operating through its subsidiaries First in
Colours,Incorporated(FIC)andD&LPolymersandColour,Inc.(DLPC),manufacturesaline
of pigment blends, color and additive masterbatches and engineered polymers for a wide
range of applications, introducing a number of products into the Philippine market and
expanding into the export of certain products overseas. The Companys products add

propertiessuchasprecisecoloring,reducedfriction,increasedresistancetodegradation,as
well as biodegradability for plastics used in consumer goods, appliances and outdoor
furniture.FICfocusesonthePhilippinedomesticmarketwhileDLPCfocusesprimarilyonthe
exportmarket;

AerosolsTheCompany,operatingthroughitssubsidiaryAeroPack,Inc.(API)manufactures
threepiece aerosol cans and components and provides aerosol contract filling and
compounding services. The Company also toll manufactures a range of related products,
including insect control, industrial maintenance chemicals, and home and personal care
products,amongothers.

Oleochemicals, resins and other products The Company, operating through its affiliate
Chemrez Technologies, Inc. and its subsidiary Chemrez, Inc., (collectively, Chemrez)
manufacture CME, also known as cocobiodiesel, using the Philippines first continuous
process methyl ester plant. Chemrez also manufactures other oleochemicals or chemicals
derivedfromvegetableoils,resinssuchaspolystyrene,acrylicemulsionsandpolyester,anda
line of powder coatings. The Company owns 34.7% of Chemrez, with an additional 29.8%
ownedbyindividualfamilymembersandbycompaniesheldbytheLaoFamily.Inaddition,
membersoftheLaoFamilyholdfourofthesevenseatsonChemrezsboard.

ResultsofOperations

NineMonthsEnded30September2014versus30September2013

Netincomeavailabletocommonshareholdersincreased24.0%toP1.29billionin2014
fromP1.04billionin2013.EarningspersharewasP0.36,upby24%from2013sP0.29.

Food ingredients (OFI), specialty plastics (FIC & DLPC), and affiliate, Chemrez
Technologies,reporteddoubledigitnetincomegrowth.

ConsolidatedrevenuesofP10.62billionin2014increasedby38.2%fromP7.68billion
in 2013, driven by sustained volume growth in food ingredients and specialty plastics
businesses.

Grossprofitfortheyearincreasedby23.4%toP1.77billionfromP1.43billiononhigher
salesrevenues.

Equitysharefromnetincomeofassociate,ChemrezTechnologies,increasedby65.4%to
P131millionin2014fromP79millionin2013.Theincreasewasduetothehighernet
incomeofChemrezduringtheperiod.

Sellingandmarketingexpensesincreasedby19.1%toP256millionfromP215million
onincreaseddeliverychargesasOleoFatssoldhighervolumeduringtheperiod,aswell
ashigherfreightcharges.Employeecostswerealsohigherduetoincreasedsalaries.

Administrativeexpensesincreasedby8.9%toP96millionin2014fromP88millionthe
prioryearduetohigherbusinesstaxesandlicensescosts.

Overall, other income was down 51.2% to P30 million from P62 million. This resulted
from interest income declining 70.1% to P14 million on lower cash levels and lower
interestratesduringcomparableperiods.

Finance costs decreased 33.0% to P21 million from P32 million resulting from
terminationofborrowings.

Income tax expense increased 34.0% to P260 million from P194 million because of
highertaxableincomeofitsbusinessesduringtheperiod.

SegmentOperations

Food ingredients business, OleoFats, recorded sales of P8.08 billion in 2014, 48.0%
higher than P5.45 billion in 2013. The strong yearonyear growth continues to be
driven by higher sales volume as well as higher prices of raw materials, in particular
coconutoil.

Overall,marginswerelowerasmorecommodities(refinedvegetableoils)weresold
duringtheperiod.Thiswasoffsetbydoubledigitvolumegrowthinthehighmargin
specialtybusinesses,whichincludespecialtyfatsandoilsandspecialtyingredients.Asa
result,netincomewasup31%toP551millionfromP421million.

Group sales of the specialty plastics business, through FIC and DLPC, were higher by
15.7%toP2.11billionin2014fromP1.82billionin2013duetoincreasedsalesvolume.
Marginsweresteadyduringtheperiod,resultingto12.6%growthinnetincometoP453
millionfromP402millionin2013.

Sales of the aerosols business, API, were down by 1.4% at P318 million from P322
million. Volume gains were offset by softer margins, resulting to net income lower by
5.9%in2014toP63millionfromP67millionin2013.

EquityinnetincomeofChemrezwas65.4%higherin2014atP131million.Chemrezs
net income grew 65.4% in 2014 to P382 million versus P231 million in 2013, mainly
drivenbystrongvolumegrowthandmarginexpansioninoleochemicals.SalesofP4.49
billionwere42%higherthantheP3.2billionin2013.

KeyPerformanceIndicators

Fortheperiod
Fortheperiod

end30September2014
end30September2013
16.6%
18.6%
Grossprofitmargina
Netprofitmarginb

12.2%
13.6%
Interestcoverc

74.5x
40.2x
ReturnonEquityd

13.7%
12.2%

Asofend
Asofend

30September2014
December31,2013
Netdebttoequityratioe
0.12x
0.58x
AssettoEquityratiof
1.19x
1.29x
Currentratiog
4.40x
3.13x
BookValuepershareh
P2.65
P2.48

aGrossProfit/Revenues
bNetProfitavailabletoownersoftheParentcompany/Revenues
cEarningsbeforeinterestandtaxes/Financecosts
dNetIncomeavailabletoownersoftheParentCompany/Shareholders'Equity
e(BorrowingsCash)/Shareholders'Equity
fTotalAssets/Totalequity
gCurrentAssets/CurrentLiabilities
hShareholders'Equity(availabletoownersoftheParent)/outstandingnumberofcommonshares


FinancialCondition

Periodend30September2014versusPeriodend31December2013

TheCompanysfinancialpositionimprovedascurrentratioincreasedto4.40x
in 2014 from 3.14x in end 31 December 2013 as P519 million of shortterm
borrowingsweresettledduringtheperiod.

Averagedaysreceivablesimprovedto53daysin2014versus55dayssalesin
2013.Theimprovementwasduetoimprovedcollectionefforts.

Average days inventory was 64 days in 2014 from 79 days in 2013. The
improvement was due to accelerated increase in volume sold in the third
quarterof2014.

CashdecreasedbyP1.18billionfromP3.44billioninend31December2013to
P2.26 billion in end 30 September 2014 as the company paid dividends and
settledborrowingsduringtheperiod.

TradeandotherreceivableswerehigherbyP518milliontoP2.49billiondueto
increasedsalesvolume.

Inventories decreased by P180 million from P2.15 billion in 2013 to P1.97

billion.Thedecreasestemsfromthestrongmomentuminsalesvolumegrowth,
inparticularofOleoFats.

Prepaymentsandothercurrentassetsincreasedby143.8%fromP432million
toP1.05billionin2014.Thisismostlyinformofcreditable withholdingtaxes
andinputvalueaddedtax(VAT)andadvancepaymentstosuppliers.

Financial debt to equity ratio of 0.12x is down from 0.19x previously as the
Companysettledfinancialobligations.BorrowingsdecreasedbyP519millionto
P1.14billionatend30September2014.

TotalequitygrewbyP587milliontoP9.45billionfromP8.86billion,asretained
earningsincreasedbyP579milliontoP2.65billionduringtheperiod,reflecting
netincomegeneratedanddividendspaidduringtheperiod.

In the first nine months of the 2014, the Companys cash generally went to
dividendpaymentsandworkingcapitalrequirements.

NetCashgeneratedfromoperatingactivitieswasP209million.
Net cash used in investing activities amounted to P126 million. This was
spentonacquisitionofnewpropertyandequipment.
NetcashusedinfinancingactivitiesamountedtoP1.25billion,P714million
ofwhichwereusedtopaydividends.

D&LsPlanofOperationfor2014

Consistent with the strategy the Company has previously communicated, D&L Industries will
keep growing its customized specialty segment, namely the higher margin food ingredients,
includingspecialtyfatsandoils,aswellasspecialtyplasticsandaerosols.

Theexpansioninthecustomerbaseshouldcontinuesteadily,withbenefitsexpectedtokickin
notinstantly,butgraduallyoverthelongterm.Thiswillbecomplementedbyeffortstoextend

theCompanysdepthintocustomersproducts,withemphasisonhighmarginandhighgrowth
productcategories.

Inparticular,progressisexpectedinbiopolymersandspecialtyfoodingredients.Withreturnon
equityandreturnoninvestedcapitalalreadyatrelativelyhighlevels,theCompanycontinuesto
seepotentialforfurtherimprovementinthemediumtermfromtheseemergingproducts.

Since2009,theCompanyhasbuiltthreenewplants,withthelatest,theMRIplantinPunta,Sta.
Ana,becomingfullyoperationalinJanuary2014.Thishasbroughtdowncompanywidecapacity
utilizationrateto40%inthebeginningoftheyear.

Consequently, most of the Companys expansionary capital expenditure had already been
finished prior to the initial public offering. The plants have been built for future growth, with
enough free space where additional production lines could be added at minimal cost. As such,
capitalspendingisseensteadyinthemediumterm,withexpensesmostlygoingtorepairsand
maintenanceandpurchasesofnewequipment.

On 01 September 2014 D&L Industries announced its intention to acquire all the outstanding
sharesofChemrezTechnologiesthatitdoesnotownforP6.00persharethroughapublictender
offer. The tender offer period commenced on 04 September 2014 and ended on 03 October
2014.Thetransactionwascompletedon10October2014.

Atotalof846,408,196sharesweretendered,representingapproximately65%oftheissuedand
outstandingsharesofChemrezTechnologies.AportionoftheapproximatelyP5.10billioncostof
the acquisition will be funded by proceeds from the initial public offering in 2012, which had
been earmarked for potential acquisitions and/or investment. Shortterm borrowings will
financethebulkofthetransaction.

Following the completion of the tender offer, D&L Industries now owns 1,297,916,600 million
common shares or 99.7% of the shares in Chemrez Technologies. The Company will start to
partially consolidate the financial results of Chemrez beginning fourth quarter of 2014 and is
expected to be accretive to earnings in the same period. Full year consolidation will begin in
2015.

D&LsUseofProceedsfromInitialPublicOffering(IPO)

Natureofdisbursement
(allamountsinPhpmillions)
Acquisitionsandinvestments:
Improvementofproductivity
andqualityassurance
systems
Purchaseofadditional
productionandtechnical
equipment
ITsystemsupgradesand
investments
Paymentoffinancialobligations
Settlementoffinancial
obligationontheshare
transfer
Settlementofoutstandingbank
loans
Generalcorporatepurposes
Total

Net
proceeds
fromIPO

1,700.0

ForYear
Ended
31December
2012

300.0

200.0

991.7

(991.7)

507.0
743.8
4,442.5

(450.0)

(1,441.7)

ForYear
Ended
31December
2013

ForPeriod
Ended
30September
2014

Net
balance

1,700.0

(94.4)

(29.0)

(110.8)

(13.6)

94.8

157.4

(57.0)
(743.8)
(924.2)

(124.4)

1,952.2

AllamountsinPhpmillions
Grossproceeds
Less:offerrelatedfeesandexpenses
Netproceeds

Perfinalprospectus
4,607.1
(209.3)
4,397.8

Actual
4,607.1
(164.6)
4,442.5

Basisofpreparation

The consolidated financial statements of the Group have been prepared in accordance with
Philippine Accounting Standards (PAS 34) Interim Financial Reporting. These financial
statementsshouldbereadconjunctionwithannualconsolidated financialstatementsasatand
for year ended 31 December 2013, which have been prepared in accordance with Philippine
FinancialReportingStandards(PFRS).
Theconsolidatedfinancialstatementshavebeenpreparedunder thehistoricalcostconvention,
asmodifiedbyrevaluationofavailableforsalefinancialassets.

Changesinaccountingpolicyanddisclosures

The accounting policies in preparation of the unaudited interim condensed consolidated

financialstatementsareconsistentwiththosefollowedinthepreparationoftheauditedannual
consolidatedfinancialstatementsasofandfortheyearended31December2013exceptforthe
followingnewandamendedPFRSandPhilippineInterpretationswhichwereeffectiveJanuary1,
2014onwards.

2.1.1NewandamendedstandardsadoptedbytheGroup

ThefollowingstandardshavebeenadoptedbytheGroupeffective01January2013:

PAS1(Amendment),FinancialStatementPresentationOtherComprehensiveIncome(effective
01July2012).Themainchangeresultingfromtheseamendmentsisarequirementforentities
to group items presented in other comprehensive income on the basis of whether they are
potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The
required change in presentation has been effected in the consolidated statement of total
comprehensiveincome.

PAS 19 (Amendment), Employee Benefits (effective 01 January 2013). These amendments

eliminatethecorridorapproachandcalculatefinancecostson anetfundingbasis.Theywould
alsorequirerecognitionofallactuarialgainsandlossesinothercomprehensiveincomeasthey
occur and of all past service costs in profit or loss. The amendments replace interest cost and
expectedreturnon(9)planassetswithanetinterestamountthatiscalculatedbyapplyingthe
discountratetothenetdefinedbenefitliability(asset).TheGrouphasadoptedtheamendment
beginningJanuary1,2013.

2.1.2Newstandards,amendmentsandinterpretationsnotearlyadoptedbytheGroup

PFRS9,FinancialInstruments(effective01January2015).Thisnewstandardaddressesthe
classification,measurementandrecognitionoffinancialassetsandfinancialliabilities.Itreplaces
thepartsofPAS39,FinancialInstruments:RecognitionandMeasurement,thatrelatetothe
classificationandmeasurementoffinancialinstruments,andhedgeaccounting.PFRS9requires
financialassetstobeclassifiedintotwomeasurementcategories:thosemeasuredasatfairvalue
andthosemeasuredatamortizedcost.Thedeterminationismadeatinitialrecognition.The
classificationdependsontheentitysbusinessmodelformanagingitsfinancialinstrumentsand
thecontractualcashflowcharacteristicsoftheinstrument.Forfinancialliabilities,thestandard
retainsmostofthePAS39requirements.Themainchangeisthat,incaseswherethefairvalue
optionistakenforfinancialliabilities,partofthefairvaluechangeduetoanentitysowncredit
riskisrecordedinothercomprehensiveincomeratherthanprofitorloss,unlessthiscreatesan
accounting mismatch. PFRS also details the changes in requirements to hedge accounting that
willallow entitiesto betterreflecttheirriskmanagementactivitiesinthefinancialstatements.
ThemandatoryeffectivedateofPFRS9whichisforannualperiodsbeginning01January2015

has deferred and left open pending the finalization of the impairment classification and
measurementrequirements.TheGrouphasyettoassessthefullimpactofPFRS9andintendsto
adoptPFRS9uponcompletionoftheIASBproject.TheGroupwillalsoconsidertheimpactofthe
remainingphasesofPFRS9whenissued.
There are no other applicable and relevant standards, amendments and interpretations, which
areeffectivebeginning01January2014andadoptedbytheGroup,andthoseissuedbutarenot
yeteffectiveasat30September2014thathaveorexpectedto haveasignificantimpactonthe
Groupsfinancialstatementsduringandattheendofreportingperiod.

SelectedNotestotheInterimConsolidatedFinancialStatements
IncompliancewiththerequirementsoftheSecuritiesRegulationsCode

1. Thesameaccountingpoliciesandmethodsofcomputationwerefollowedintheinterim
consolidated financial statements consistent with those adopted for the Companys
annualconsolidatedfinancialstatementsfortheyearended31December2013.

2. Interim operations do not follow any particular seasonal or cyclical pattern. Except as
discussed in the foregoing, demand for the Companys products have been historically
fairlyconstantthroughoutthepreviousyears.

3. There were no items not in the ordinary course of business that affected assets,
liabilities,equity,netincome,orcashflowsthatareunusualbecauseoftheirnature,size,
orincidence.

4. There were no changes in estimates of amounts reported in prior interim periods of

financialyearspriortothecommencementofresultsreportingonaconsolidatedbasis.

5. Reporting of segment revenue and segment results for business segments or

geographicalsegmentsarenotrequiredonaninterimbasis.

6. There were no material offbalance sheet transactions, arrangements, obligations

(including contingent obligations), and other relationships of the Company with
unconsolidated entities or other persons created subsequent to the end of the interim
periodthathasnotbeenreflectedinthefinancialstatementsfortheperiod.

7. Therewerenochangesincontingentliabilitiesorcontingentassetssincethelastannual
balancesheetdate.

8. Other than what has been disclosed in the foregoing report, there are no existing
materialcontingencies,eventsortransactionsthatarematerialtoanunderstandingof
thecurrentinterimperiod.

9. There are no events other than those already disclosed that will trigger direct or
contingentfinancialobligationsthatarematerialtotheCompany,includinganydefault
oraccelerationofanobligation.

10. There are no trends, demands, commitments, events or uncertainties known to

managementthatwillhaveamaterialadverseimpactontheCompanysliquidity.

11. Therearecurrentlynomaterialcommitmentsforcapitalexpendituresexceptasalready
disclosed.

12. TheCompanyisnotawareofanytrend,eventortransactionthatwouldhaveamaterial
impact on its results of operations or on its financial condition except as already
disclosed.

13. AsidefrominterestearningsfromtheCompanyscashdeposits,therearenosignificant
elementsofincomeorlossthatdidnotarisefromtheissuerscontinuingoperations.

14. AnymaterialchangesfromperiodtoperiodinanylineitemsoftheCompanysfinancial
statements that have not been explained in the Management's Discussion and
Analysissectionofthisreportweretheresultsofnormalfluctuationsinoperations.
15. The interim consolidated financial statements have been prepared in conformity with
PhilippineFinancialReportingStandardsandreflectamountsthatarebasedonthebest
estimatesandinformedjudgmentofmanagementwithanappropriateconsiderationto
materiality.

AdditionalDisclosuresonRiskManagementandFinancialInstruments

1. The Companys principal financial instruments as at 30 September 2014 comprise of

cashandcashequivalents.Itsotherfinancialassetsaretradeandotherreceivables,due
from related parties, available for sale financial assets, and refundable deposits and
other financial liabilities are trade payables, due to related parties and borrowings
arisingdirectlyfromitsoperations.

2. The main financial risks arising from the Companys financial instruments are market
risk,creditriskandliquidityrisk.

3. TheCompanysriskmanagementpoliciesaresummarizedbelow:

(a)Marketrisksonforeigncurrencyandpricing

Exposuretocurrencyrisksarisesfromsalesandpurchasesincurrenciesotherthanthe
Companysfunctionalcurrencyinthenormalcourseofbusiness.Ascertainincomeand
expenses are billed in foreign currency, the Company is subject to transaction and
translationexposuresresultingfromcurrencyexchangeratefluctuations.TheCompany
mayfromtimetotimepurchasecurrencyforwardoroptioncontractstohedgeagainst
thesecurrencyrisks.

TheCompanyscostsareaffectedbyinflationanditseffectsmaycontinuetobefeltin
future periods. To lessen the impact of cost increases, the Company has introduced
productivity enhancing measures in procurement and supply chain management and
hasundertakenaninventoryrationalizationprogramtoreducecarryingcosts.

(b)Creditrisks

TheagingoftheCompanysfinancialassetsasat30September2014isasfollows:

30September2014
Cashinbank
Tradeandother
receivables
Duefromrelatedparties
Refundabledeposits

Overdueand
impaired

Pastduebutnotimpaired

Carryingamount

Neitherpastdue
norimpaired

2,260,160,806

2,260,160,806

2,486,791,237

1,576,121,244

713,877,153

146,737,971

50,054,869

90,031,311

90,031,311

8,466,857

8,466,857

4,845,450,211

3,934,780,218

713,877,153

146,737,971

50,054,869

3160days

6190days

Over90days

Neitherpastdue
norimpaired

Overdueand
impaired

31December2013

Carryingamount

Pastduebutnotimpaired

3160days
Cashinbank
Tradeandother
receivables

6190days

Over90days

3,436,190,506

3,436,190,506

1,874,199,563

1,000,190,755

667,793,127

180,432,805

25,704,540

78,336

Duefromrelatedparties

27,251,296

27,251,296

Loansreceivable

11,000,000

11,000,000

Refundabledeposits

8,448,798

8,448,798

5,357,090,163

4,483,081,355

667,793,127

180,432,805

25,704,540

78,336

Noneofthefinancialassetsthatarefullyperforminghasbeenrenegotiatedduringthe
period. The maximum exposure to credit risk at the reporting date is the fair value of
financialassetspresentedabove.TheCompanydoesnotholdanycollateralassecurity.
(i)Cashandcashequivalents
The Companys cash balances are placed with reputable major global and Philippine
banks.Itmanagesitsinterestincomebyplacingcashbalances withvaryingmaturities
and interest rate terms. From time to time, this includes investing the Companys
temporaryexcessliquidityinshorttermgovernmentsecurities.AstheCompanyhasno
significant interest bearing financial instruments, changes in market interest rateswill
notsignificantlyimpacttheCompanysincome,operatingandinvestingcashflows.The
Companyhaspoliciesthatlimittheamountofcreditexposurewithfinancialinstitutions.
As at 30 September 2014, all ofitscashinbankbalancesaredepositedwithuniversal
banks.
(ii)Tradeandotherreceivables
TheCompanyhasprudentcreditpoliciestoensurethatsalesofitsproductsaremadeto
customers with good credit history. The Company monitors its outstanding trade
receivables on an ongoing basis with the management team performing monthly
reviews as part of their regular performance assessment process. All significant
receivables from key customers are monitored for credit quality and actualsettlement
performancetoensuretimelyexecutionofnecessaryinterventionefforts.
Tradereceivablesfromitsfivemajorcustomersasat30September2014areasfollows:

30September2014
Total

Carryingamount
1,238,220,684

December31,2013

Carryingamount

Total

1,079,261,924

Neitherpast
duenor
impaired
758,234,070
Neitherpast
duenor
impaired
538,186,141

Pastduebutnotimpaired
3160days

6190days

392,630,906

71,119,449

Over90days
16,236,259

Pastduebutnotimpaired
3160days

6190days

Over90days

423,664,005

104,639,833

12,771,945

(c)Liquidityrisk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents, the availability of funding through an adequate amount of credit facilities
andtheabilitytocloseoutmarketpositions.Duetothedynamicnatureofitsbusinesses,
theCompanymaintainsalevelofcashandcashequivalentdeemedsufficienttofinance
operations and ensures flexibility by keeping credit lines available. Also, the Company
regularlyevaluatesitsprojectedandactualcashflows.
(d)Capitalriskmanagement

Overdue
and
impaired

Overdue
and
impaired

The Companys objective when managing capital is to generate the maximum possible
returnsforitsshareholderswhiletakingonamanageabledegreeofriskensuringthat
theCompanywillcontinuetooperateasagoingconcernintotheforeseeablefuture.
In order to maintain or adjust the capital structure, the Company reviews its capital
structure from time to time to assess the proper financing mix necessary to grow and
sustain its operations. As a matter of policy, capital expenditures have been financed
frominternallygeneratedcashflow,wherepossible,andissuanceofnewshares,while
investmentsinworkingcapitalwillbeaugmentedbyshorttermbankborrowingsfrom
time to time. The Company has been engaged in a conscious effort to keep its overall
gearingratioaslowaspossiblethroughpropermanagementofitsworkingcapitalcycle.
Earnings in excess of dividend distributions in cash to shareholders have been
continuouslyredeployedandreinvestedinthegrowthoftheCompanysbusiness.Each
instance of expansion of manufacturing capacity and entry into new products and
marketsundergoesathoroughevaluationprocesstoensurethatsuchinvestmentsand
marketing programs are in consonance with the Company's core competencies and
wouldbeenhancing,ratherthandiminishing,shareholdervalueinthelongrun.

(Thisspacedeliberatelyleftblank)

ANNEX A

D&L INDUSTRIES & SUBSIDIARIES, INC.

Unaudited Consolidated and Proforma Consolidated
Statements of Financial Position
As of 30 September 2014 and 31 December 2013
(All amounts in Philippine Peso)
2014

2013

2,260,160,806
2,486,791,237
90,031,311
1,969,761,606
1,053,030,521
7,859,775,482

3,438,432,258
1,968,751,677
27,251,296
2,149,465,236
431,937,580
8,015,838,047

1,570,791,390
19,466,858
96,758,203
1,732,279,792
3,419,296,243
11,279,071,724

1,619,387,988
11,000,000
3,522,779
9,582,298
87,447,662
1,655,850,772
3,386,791,499
11,402,629,546

ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Due to related parties
Inventories
Prepayments and other current assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment, net
Loans Receivable
Deferred tax assets
Other non-current assets
Available-for-sale financial assets
Investments in subsidiary
Total non-current assets
Total Assets

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses
Due to related parties
Borrowings
Income tax payable
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liability
Retirement liability
Total non-current liabilities
Total Liabilities
STOCKHOLDERS EQUITY
Capital stock
Additional paid-in capital
Fair value gains
Other charges
Remeasurement gains / losses on retirement
obligation
Retained earnings
Total stockholders equity
Total liabilities and stockholder's equity

603,341,424
5,955,147
1,142,784,549
34,970,853
1,787,051,973

797,050,765
19,482,511
1,662,008,817
22,565,149
2,501,107,242

2,920,830
42,163,478
45,084,308
1,832,136,280

41,764,997
41,764,997
2,542,872,239

3,571,428,995
3,255,166,445
24,666,537
(76,454,430)

3,571,428,995
3,255,166,445
16,287,052
(76,454,429)

20,616,746
2,651,511,151
9,446,935,444
11,279,071,724

20,616,746
2,072,712,498
8,859,757,307
11,402,629,546

ANNEX B

D&L Industries, Inc. and Subsidiaries

Unaudited Consolidated and Pro-forma Consolidated
Statements of Total Comprehensive Income
(All amounts in Philippine Peso)
For the nine months ended
September 30
2014
2013
Revenues
Sales
Management service fee
Cost
Cost of goods sold
Cost of services
Gross profit
Selling and marketing expenses
Administrative expenses
Other income, net
Operating profit
Finance costs
Profit before share in net income
of associates and income tax
Share in net income of associates
Profit before income tax
Income tax expense
Current
Deferred
Profit for the year
Fair value adjustment on
available-for-sale financial
assets, net of tax
Total comprehensive income
for the year
Earnings per share
Basic and diluted

For the three months ended

September 30
2014
2013

10,485,861,761
138,057,575
10,623,919,335

7,589,504,038
95,105,772
7,684,609,810

4,346,972,297
51,681,010
4,398,653,307

2,713,208,535
32,768,445
2,745,976,981

(8,660,356,562)
(198,176,371)
1,765,386,402

(6,069,419,836)
(185,056,005)
1,430,133,969

(3,656,932,858)
(66,877,836)
674,842,613

(2,186,344,895)
(53,282,241)
506,349,844

(256,229,865)

(215,164,429)

(97,396,835)

(76,433,228)

(95,776,117)

(87,937,988)

(30,293,322)

(40,123,122)

30,495,608
1,443,876,028

62,488,811
1,189,520,363

(5,654,891)
541,497,565

38,747,859
428,541,353

(21,137,915)

(31,557,439)

(5,737,414)

(5,434,066)

1,422,738,114

1,157,962,925

535,760,152

423,107,287

130,550,264
1,553,288,378

78,925,666
1,236,888,590

59,692,636
595,452,787

29,574,136
452,681,423

(254,328,677)
(5,875,250)
(260,203,927)
1,293,084,451

(194,220,273)
(22,651)
(194,242,924)
1,042,645,666

(101,690,504)
(55,045)
(101,745,550)
493,707,238

(65,794,562)
(1,778)
(65,796,340)
386,885,083

1,293,084,451

1,042,645,666

493,707,238

386,885,083

0.36

0.29

0.14

0.11

ANNEX C
D&L Industries, Inc. and Subsidiaries
Unaudited Consolidated and Pro-forma Statements of Cash Flows
(All amounts in Philippine Peso)
For the nine months ended
September 30
2014
2013
Cash flows from operating activities
Profit before income tax
Adjustments for:
Share in net income of associates
Loss on write-off of receivables
Depreciation
Loss (gain) on sale of fixed assets
Unrealized foreign exchange loss (gains)
Retirement benefit expense
Dividend income
Interest income
Interest expense
Operating profit before working capital changes
(Increase) decrease in:
Receivables
Due from related parties
Inventories
Prepayments and other current assets
Other non-current assets
Increase (decrease) in:
Trade payables and other liabilities
Due to related parties
Cash (used in) from operations
Income taxes paid or withheld
Retirement contribution
Interest received from banks
Net cash from (used in) operating activities
Cash flows from investing activities
Dividend received
(Increase) decrease in investments in subsidiary
(Increase) decrease in available for sale financial assets
Disposal of property and equipment
Acquisition of property and equipment
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings, net of payments
Dividends paid
Payment of stock issuance costs
Interest paid
Net cash (used in) financing activities
Effect of foreign exchange rate changes on cash
Net increase in cash
Cash and cash equivalent, 01 January
Cash and cash equivalent, 30 September

For the three months ended

September 30
2014
2013

1,553,288,378

1,236,161,714

595,452,787

452,681,423

(130,550,264)
13,057
174,877,914
212,698
6,680,466
398,481
(452,667)
(14,152,293)
21,137,915
1,611,453,684

(78,396,238)
375,661
152,718,767
358,890
(149,533)
(47,469,657)
31,557,439
1,295,157,043

(59,692,636)
7,297
61,806,945
17,201,336
398,480
(141,588)
(4,707,641)
5,737,414
616,062,395

(29,574,136)
230,935
47,915,883
(22,759,281)
(8,507,493)
5,434,066
445,421,397

(507,052,617)
(8,658,772)
179,703,630
(621,092,941)
(9,884,559)

(222,959,178)
(937,850)
(398,520,405)
(36,790,125)
(25,298,295)

(309,460,998)
(10,240,226)
243,762,201
(319,609,981)
66,305,122

(131,640,665)
(1,190,522)
(199,557,492)
62,295,888
(32,621,753)

(194,072,038)
(13,527,364)
436,869,022
(241,922,973)
14,152,293
209,098,343

218,161,009
(451,809,532)
377,002,666
(181,040,784)
48,789,657
244,751,539

83,309,153
(281,919,852)
88,207,812
(90,099,828)
(6,292,359)
(8,184,375)

(187,554,539)
(31,086,235)
(75,933,921)
(61,065,305)
9,827,493
(127,171,733)

452,667
212,698
(126,281,316)
(126,041,347)

149,533
(128,678,659)
(128,529,126)

141,588
(85,922,652)
(85,781,064)

149,533
(43,188,847)
(43,039,314)

(519,224,268)
(714,285,799)
(21,137,915)
(1,254,647,981)
(6,680,466)
(1,178,271,452)

(1,097,985,276)
(535,714,349)
24,999
(31,557,439)
(1,665,232,065)
(358,890)
1,549,368,542

(238,172,931)
(714,285,799)
(5,737,414)
(958,196,143)
(17,201,336)
(1,069,362,918)

1,207,979,448
(535,714,349)
(5,434,066)
666,831,033
22,759,281
519,379,267

3,438,432,258
2,260,160,806

5,070,562,441
3,521,193,899

3,329,523,725
2,260,160,806

3,001,814,633
3,521,193,899

ANNEX D
D&L Industries, Inc. and Subsidiaries
Unaudited Consolidated and Pro-forma Consolidated Statements of Changes in Equity
For periods ended 30 September 2014 and 30 September 2013
(All amounts in Philippine Peso)

Fair value
reserve
37,852,394

Other charges
to equity

Unappropriated
retained earnings

Total equity

3,571,428,995

Share
premium
3,255,166,445

(76,454,430)

1,204,918,754

7,992,912,158

1,041,918,789

1,041,918,789

1,041,918,789

1,041,918,789

37,852,394

(76,454,430)

(535,714,349)
(535,714,349)
1,726,027,977

(535,714,349)
25,000
(535,689,349)
8,514,046,381

Share capital
Balances at 01 January 2013
Comprehensive income
Profit for the period
Other comprehensive income
Fair value gains on available-for-sale
financial assets, net of tax
Total comprehensive income for the year
Transactions with owners
Declaration of cash dividends
Issuance of stocks
Total transactions with owners
Balances at 30 September 2013

3,571,428,995

3,571,428,995

3,255,191,445

16,287,053

Remeasurement
gains (losses)
from retirement
obligation
20,616,746

Share capital
Balances at 01 January 2014
Comprehensive income
Profit for the period
Other comprehensive income
Fair value gains on
available-for-sale
financial assets, net of
tax
Total comprehensive income
for the year
Transactions with owners
Declaration of stock dividends
Balances at 30 September
2014

25,000
25,000
3,255,191,445

Share
premium

Fair value
reserve

Other
charges to
equity

Unappropriated
retained
earnings

(76,454,430)

2,072,712,499

1,293,084,451

1,293,084,451

8,379,484

799,377,213

807,756,697

(714,285.799)

(714,285.799)

2,651,511,151

9,446,935,444

Total equity
8,859,757,308

8,379,484
-

8,379,484

3,571,428,995

3,255,191,445

24,666,537

20,616,746

(76,454,430)