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Enterprise Risk Management

Through prudent management and cautious investment decisions, ACR constantly strives to minimize risk that can weaken its financial position. However, certain risk are inherent to specific industries and are not within the direct control of the Company

Some of the risks that the company and subsidiaries may be exposed to are the following.

1. Foreign Exchange Rate Fluctuations

The Company's exposure is primarily associated with fluctuations in the value of the peso against the U.S. Dollar and other foreign currencies. The spare parts and insurance of SPPC and WMPC are denominated in US Dollars. The Company keeps a portion of its short-term investment in foreign currency to serve as a hedge in foreign exchange fluctuations.

2. Interest Rate Risks

The Company's interest rate risk management policy centers on reducing overall interest expenses and on minimizing other costs of borrowing. Changes in market interest rates would have material impact on the Company's interest-bearing obligation, specifically on those with floating interest rates.

ACR and its subsidiaries manage their interest rate risk by leveraging its debt portfolio and by optimizing a mix of fixed and variable interest rates. Other measures, are employed to avert risk include pre-payment of debts and re-financing of loans. Moreover, utilization of existing credit facilities has been kept to minimum.

3. Liquidity Risk

The Company and its subsidiaries carefully manage their liquidity position to be able to finance their working capital, debt service, and capital expenditure requirements. Sufficient levels of cash and short-term money market placements are maintained to meet maturing obligations. Management regularly monitors and forecast its cash commitments, matches debt payments with cash generated from the assets being financed and negotiates with creditors on possible restricting or re-financing of existing loans to avail of better terms and conditions.

4. Credit Risks

ACR and subsidiaries transact only with companies and institutions that are in a second financial position and have demonstrated good credit standing. The power companies receivables are largely from the National Power Corporation (“NPC”) and the collection of which has been current and up to-date except for SPPC’s account receivable from NPC consisting of US$7,336,536.91 and P96,255,433.46 plus interest from April 25, 2005 to April 25, 2010 to April 25, 2010 which NPC has appealed to the Supreme Court. On the other hand, receivables of the property companies come from instalment sales of industrial/residential lots and housing units. Receivable balances are monitored regularly and allowance provisions are reviewed to ensure limited exposure to bad debts.