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goFLUENT Philippines, Inc.

Financial Statements
December 31, 2015 and 2014
and
Independent Auditors Report

COVER SHEET
for
AUDITED FINANCIAL STATEMENTS
SEC Registration Number

C S 2 0 0 4 1 2 6 6 4
Company Name
G O F L U E N T

P H I L I P P I N E S ,

I N C .

Principal Office (No./Street/Barangay/City/Town/Province)


1 0 T H

F L O O R

E A S T W O O D

I B M

C I T Y

B A G U M B A Y A N ,

Form Type

P L A Z A

B U I L D I N G ,

C Y P E R P A R K ,

L I B I S ,

Q U E Z O N

Department requiring the report

C I T Y

Secondary License Type, If Applicable

COMPANY INFORMATION
Companys Email Address

Companys Telephone Number/s

Mobile Number

www.gofluent.com

437-01-01

0917-867-3509

No. of Stockholders

Annual Meeting
Month/Day

Fiscal Year
Month/Day

2nd week of August

December 31

CONTACT PERSON INFORMATION


The designated contact person MUST be an Officer of the Corporation
Name of Contact Person

Email Address

Telephone Number/s

Mobile Number

ERIC SAVINA

esavina@gofluent.com

437-01-01

0917-557-7190

Contact Persons Address

120 Willow Street, Valley Vista Village, Better Living Subdivision, Paraaque, Metro Manila
Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission
within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

GOFLUENT PHILIPPINES, INC.


STATEMENTS OF FINANCIAL POSITION

December 31
2014
2013
ASSETS
Current Assets
Cash (Notes 17 and 18)
Accounts receivables (Notes 5, 15, 17 and 18)
Prepayments
Total Current Assets
Noncurrent Assets
Property and equipment (Notes 6 and 19)
Software (Note 7)
Deferred income tax asset - net (Note 14)
Refundable deposits (Notes 17, 18 and 19)
Total Noncurrent Assets
TOTAL ASSETS

P5,257,857
29,485,608
850,736
35,594,201

P5,252,774
30,245,414
804,424
36,302,612

4,132,904
87,117
115,006
2,897,457
7,232,484

3,284,667
95,562
45,368
2,726,025
6,151,622

P42,826,685

P42,454,234

P12,825,972
13,498,200

230,773

P11,750,689

1,000,000
574,261

681,455
27,236,400

258,935
13,583,885

2,495,241

2,002,469

1,398,086
3,893,327

26,864
2,029,333

31,129,727

15,613,218

5,000,000

5,000,000

LIABILITIES AND EQUITY


Current Liabilities
Accounts payable and other liabilities (Notes 9, 17 and 18)
Dividends payable (Notes 13 and 15)
Loan payable (Note 8)
Income tax payable
Obligations under finance lease - current (Notes 6, 17, 18
and 19)
Total Current Liabilities
Noncurrent Liabilities
Accrued retirement benefits (Note 16)
Obligations under finance lease - net of current portion
(Notes 6, 17, 18 and 19)
Total Noncurrent Liabilities
Total Liabilities
Equity
Capital stock (Note 13)
Remeasurement losses on retirement benefits - net
of deferred income tax (Notes 3 and 16)
Retained earnings (Note 13)
Appropriated
Unappropriated
Total Equity
TOTAL LIABILITIES AND EQUITY
See accompanying Notes to Financial Statements.

(243,397)

(263,122)

1,940,355
5,000,000
11,696,958

2,104,138
20,000,000
26,841,016

P42,826,685

P42,454,234

GOFLUENT PHILIPPINES, INC.


STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31


2014
2013
REVENUE (Notes 10 and 15)
COST OF SERVICES (Note 11)
GROSS PROFIT
Expenses (Note 12)
Foreign exchange gain (loss) - net (Note 17)
Finance costs (Notes 8 and 19)
Interest income
Other expenses - net
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX (Notes 2 and 14)
Current
Deferred
NET INCOME (LOSS)
OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) not to be reclassified to profit
or loss in subsequent periods
Remeasurement gain (loss) on retirement
benefits (Note 16)
Income tax effect
TOTAL COMPREHENSIVE INCOME (LOSS)

P158,298,403

P159,014,703

129,424,323

130,939,785

28,874,080

28,074,918

(25,792,591)
(2,098,866)
(115,011)
87,378
(7,653)

(25,890,725)
2,181,046
(209,435)
122,761
(121,918)

947,337

4,156,647

1,181,710
(70,590)
1,111,120

934,050
13,772
947,822

(163,783)

3,208,825

20,677
(952)
19,725
(P144,058)

(54,811)
2,534
(52,277)
P3,156,548

See accompanying Notes to Financial Statements.

GOFLUENT PHILIPPINES, INC.


STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2014 and 2013

Remeasurement
on Retirement
Benefits - Net of Retained Earni
Deferred Income Tax
Appropria
Capital Stock
(Note 3)
(Not
BALANCES AT DECEMBER 31, 2012
Net income for the year
Remeasurement loss on retirement benefits - net of deferred
income tax

P250,000

(P210,845)

(52,277)

P23,600

Total comprehensive income for the year


Issuance of stock dividends (Note 13)
Release of appropriation of retained earnings (Note 13)

4,750,000

(52,277)

BALANCES AT DECEMBER 31, 2013


Net loss for the year
Remeasurement income on retirement benefits - net of deferred
income tax
Total comprehensive income for the year
Release of appropriation of retained earnings (Note 13)
Appropriation of retained earnings (Note 13)
Cash dividend (Note 13)

5,000,000

(263,122)

BALANCES AT DECEMBER 31, 2014

P5,000,000

19,725
19,725

(P243,397)

See accompanying Notes to Financial Statements.

GOFLUENT PHILIPPINES, INC.


STATEMENTS OF CASH FLOWS

Years Ended December 31


2014
2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization (Notes 6, 7, 11 and 12)
Interest expense
Unrealized foreign exchange loss (gain) net
Retirement benefit costs (Note 16)
Amortization of deferred lease expense
Interest income
Operating income before working capital changes
Decrease (increase) in:
Accounts receivable
Prepayments
Increase in accounts payable and other liabilities
Cash generated from operations
Income taxes paid, including final taxes
Interest received
Interest paid
Net cash from operating activities

P947,337

P4,156,647

3,108,650
61,129
1,719,378
513,449
80,004
(87,378)
6,342,569

5,130,307
152,202
(948,226)
457,550
105,279
(122,761)
8,930,998

(957,534)
(46,312)
14,573,483
19,912,206
(1,525,198)
8,542
(61,129)
18,334,421

(7,621,881)
(98,096)
59,681
1,270,702
(493,220)
8,953
(152,202)
634,233

CASH FLOWS FROM INVESTING ACTIVITIES


Purchases of property and equipment (Note 6)
Purchases of computer software (Note 7)
Refund of security deposit
Additions to refundable deposits
Net cash used in investing activities

(1,184,219)
(133,880)
120,000
(292,600)
(1,490,699)

(743,078)
(57,294)
195,846

(604,526)

CASH FLOWS FROM FINANCING ACTIVITIES


Dividends paid
Payment of loans
Proceeds from availment of loans (Note 8)
Payments of obligations under finance lease

(15,000,000)
(1,000,000)

(836,601)

(1,000,000)
2,000,000
(1,567,369)

(4,750
(16,746

2,104

(2,104
1,940

P1,940

Net cash used in financing activities

(16,836,601)

EFFECT OF FOREIGN EXCHANGE RATE


CHANGES ON CASH
NET INCREASE (DECREASE) IN CASH
CASH AT BEGINNING OF YEAR
CASH AT END OF YEAR

(2,038)
5,083

(567,369)
1,378
(536,284)

5,252,774

5,789,058

P5,257,857

P5,252,774

See accompanying Notes to Financial Statements.

GOFLUENT PHILIPPINES, INC.


NOTES TO FINANCIAL STATEMENTS

1. Corporate Information
goFLUENT Philippines, Inc., (the Company) was registered with the Philippine Securities and
Exchange Commission (SEC) on August 16, 2004. Its primary purpose is to provide Information
Technology-based distance learning services and lessons and developing, producing and offering
the distance learning training and language modules, software and materials.
The Company is a subsidiary of goFLUENT Group SA, a Swiss company. The Companys
ultimate parent is Dream Team Co. Investments (formerly Palawan Investments), another Swiss
company.
The Companys principal place of business is 10th Floor IBM Plaza Building, Eastwood City
Cyberpark, Bagumbayan, Libis, Quezon City.
The financial statements were approved for issue by the Companys Board of Directors (BOD) on
February 10, 2015.
2. Registration with the Philippine Economic Zone Authority (PEZA)
The Company is registered with PEZA as an Ecozone IT Enterprise, engaged in the provision of
Specialized English Lessons over the telephone (distance learning) and other IT-enabled services
and quality assurance services in relation to distance-learning and the importation of machinery,
equipment, tools, goods, wares, articles or merchandise directly used in its registered operations.
The Company is also entitled to incentives granted to non-pioneer projects under Republic Act No.
(RA) 7916, as amended, and the PEZA IT Guidelines to wit:
a. Incentives under Book VI of Executive Order 226 which include the following:
1) Corporate income tax holiday (ITH) for four years for original project effective on the
committed date of start of commercial operations, or the actual date of start of commercial
operations, whichever is earlier; ITH entitlement for the original project can also be
extended for another three years provided specific criteria are met for each additional year
and prior PEZA approval is obtained; duly approved and registered Expansion and
New projects are entitled to a three-year and four-year ITH, respectively;

2) Tax and duty free importation of merchandise which include raw materials, capital
equipment, machineries, and spare parts;
3) Exemption from wharfage dues and export tax, impost or fees;
4) Value Added Tax (VAT) zero-rating of local purchases subject to compliance with
Philippine Bureau of Internal Revenue (BIR) and PEZA requirements; and
5) Exemption from payment of any and all local government imposts, fees, licenses or taxes
except real estate tax; however, machineries installed and operated in the ecozone for
manufacturing, processing or for industrial purposes shall not be subject to payment of
real estate taxes for the first three years of operation of such machineries; production
equipment not attached to real estate shall be exempt from real property taxes.

b. After the lapse of ITH, the following incentives shall apply:


1) Exemption from national and local taxes, in lieu thereof, payment of 5% final tax on gross
taxable income as provided in Section 24 of RA 7916 and Rule XX of the Rules and
Regulations to Implement RA 7916; and
2) Additional deduction for training expenses (1/2 of value) against the 5% tax on gross
income earned, but not to exceed 3%, subject to guidelines to be formulated by PEZA in
coordination with the Department of Labor and Employment and the Department of
Finance (Section 42 of RA 7916).
c. Pursuant to BIRs Revenue Regulations No. (RR) 14-2002, income payments to PEZA
registered enterprises under the ITH and 5% gross income tax incentives are exempt from
expanded withholding tax.
d. Non-fiscal incentives shall include the following:
1) Permanent resident status within the ecozone for foreign investors with initial investment
of at least US$150,000;
2) Employment of foreign nationals; and
3) Simplified import and export procedures.
The original four-year ITH incentive for Eastwood ended in October 2008. The Company was
able to apply for and was granted an extension of its ITH until August 31, 2010. For the Alabang
branch, the Companys four-year ITH incentive ended in May 2011 but was able to apply for and
was granted an extension of its ITH until May 31, 2013.
In 2014, both branches were already subject to 5% final tax on gross taxable income. The tax
benefits from the ITH amounted P347,388 in 2013 (see Note 14).

3. Summary of Significant Accounting and Financial Reporting Policies


Basis of Preparation
The financial statements have been prepared on the historical cost basis and are presented in
Philippine Peso (Peso), which is the Companys functional currency.
Statement of Compliance
The financial statements have been prepared in compliance with Philippine Financial Reporting
Standards (PFRS).
The PFRS for Small and Medium-sized Entities (PFRS for SMEs) has been approved for adoption
by the Philippine Financial Reporting Standards Council on October 13, 2009 and by the SEC on
December 3, 2009. The PFRS for SMEs is effective for annual periods beginning on or after
January 1, 2010, and is required to be used by entities that meet the definition of an SME, which
include, among others, an entity with total assets of between P3 million and P350 million or total
liabilities of between P3 million and P250 million.
The Company qualifies for reporting under the PFRS for SMEs. However, as a subsidiary of a
foreign parent company reporting under International Financial Reporting Standards, the
Company availed of the exemption from the mandatory adoption of the PFRS for SMEs and
prepared its financial statements in compliance with full PFRS.

Changes in Accounting Policies


The accounting policies adopted are consistent with those of the previous financial year except for
the adoption of the following amendments and Philippine Interpretations based on the
interpretations of the International Financial Reporting Standards Interpretations Committee
(IFRIC) effective beginning January 1, 2015.

Amendments to PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions
PAS 19 requires an entity to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are linked to service, they
should be attributed to periods of service as a negative benefit. These amendments clarify that,
if the amount of the contributions is independent of the number of years of service, an entity is
permitted to recognize such contributions as a reduction in the service cost in the period in
which the service is rendered, instead of allocating the contributions to the periods of service.
This amendment is effective for annual periods beginning on or after January 1, 2015. The
amendment is not relevant to the Company, since the Companys retirement plan is
noncontributory.

Annual Improvements to PFRS (2010 to 2012 cycle)


The Annual Improvements to PFRSs (2010 to 2012 cycle) contain non-urgent but necessary
amendments to the following standards. These are effective for annual periods beginning on or
after January 1, 2015. Except as otherwise stated, the amendments do not have a significant
impact on the financial statements.

PFRS 2, Share-based Payment - Definition of Vesting Condition


This improvement is applied prospectively and clarifies various issues relating to the
definitions of performance and service conditions which are vesting conditions, including:

A performance condition must contain a service condition


A performance target must be met while the counterparty is rendering service
A performance target may relate to the operations or activities of an entity, or to those
of another entity in the same group
A performance condition may be a market or non-market condition
If the counterparty, regardless of the reason, ceases to provide service during the
vesting period, the service condition is not satisfied.

PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business


Combination
The amendment is applied prospectively for business combinations for which the
acquisition date is on or after July 1, 2014. It clarifies that a contingent consideration that
is not classified as equity is subsequently measured at fair value through profit or loss
whether or not it falls within the scope of PAS 39. This amendment is not relevant to the
Company.

PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of


the Total of the Reportable Segments Assets to the Entitys Assets
The amendments are applied retrospectively and clarify that:

An entity must disclose the judgments made by management in applying the


aggregation criteria in the standard, including a brief description of operating
segments that have been aggregated and the economic characteristics (e.g., sales and
gross margins) used to assess whether the segments are similar.
The reconciliation of segment assets to total assets is only required to be disclosed if
the reconciliation is reported to the chief operating decision maker, similar to the
required disclosure for segment liabilities.

PAS 16, Property, Plant and Equipment: Revaluation Method - Proportionate


Restatement of Accumulated Depreciation, and PAS 38, Intangible Assets: Revaluation
Method - Proportionate Restatement of Accumulated Amortization
The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the
asset may be revalued by reference to the observable data on either the gross or the net
carrying amount. In addition, the accumulated depreciation or amortization is the
difference between the gross and carrying amounts of the asset.

PAS 24, Related Party Disclosures - Key Management Personnel


The amendment is applied retrospectively and clarifies that a management entity, which is
an entity that provides key management personnel services, is a related party subject to
the related party disclosures. In addition, an entity that uses a management entity is
required to disclose the expenses incurred for management services. The amendments
affect disclosures only and have no impact on the Companys financial position or
performance.

Annual Improvements to PFRS (2011 to 2013 cycle)


The Annual Improvements to PFRSs (2011 to 2013 cycle) contain non-urgent but necessary
amendments to the following standards. These are effective for annual periods beginning on
or after January 1, 2015. Except as otherwise stated, the amendments have no significant
impact on the financial statements.

PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements


The amendment is applied prospectively and clarifies the following regarding the scope
exceptions within PFRS 3:

Joint arrangements, not just joint ventures, are outside the scope of PFRS 3.
This scope exception applies only to the accounting in the financial statements of the
joint arrangement itself.

PFRS 13, Fair Value Measurement - Portfolio Exception


The amendment is applied prospectively and clarifies that the portfolio exception in
PFRS 13 can be applied not only to financial assets and financial liabilities, but also to
other contracts within the scope of PAS 39.

PAS 40, Investment Property


The amendment is applied prospectively and clarifies that PFRS 3, and not the description
of ancillary services in PAS 40, is used to determine if the transaction is the purchase of an

asset or business combination. The description of ancillary services in PAS 40 only


differentiates between investment property and owner-occupied property (i.e., property,
plant and equipment).
Accounting Standards, Amendments to Existing Standards and Interpretations Effective
Subsequent to December 31, 2015
The standards, amendments and interpretations which have been issued but not yet effective as at
December 31, 2015 are disclosed below. Except as otherwise indicated, the Company does not
expect the adoption of the applicable new and amended PFRS to have a significant impact on the
financial position or performance.
Deferred

PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint
Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
These amendments address an acknowledged inconsistency between the requirements in
PFRS 10 and those in PAS 28 in dealing with the sale or contribution of assets between an
investor and its associate or joint venture. The amendments require that a full gain or loss is
recognized when a transaction involves a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involves assets that do not
constitute a business, even if these assets are housed in a subsidiary. These amendments are
effective from annual periods beginning on or after January 1, 2016. This mandatory adoption
date was deferred indefinitely.

The following new standards and amendments were already adopted by the FRSC but are still for
approval by BOA.
Effective in 2016

Amendments to PAS 1, Presentation of Financial Statements Disclosure Initiative


The amendments include narrow-focus improvements in five areas; namely, materiality,
disaggregation and subtotals, notes structure, disclosure of accounting policies and
presentation of items of other comprehensive income arising from equity accounted
investments. The amendments are effective on or after January 1, 2016. These
amendments will not have any impact on the Companys financial
statements.

Amendments to PAS 16, Property, Plant and Equipment, and PAS 38, Intangible
Assets - Clarification of Acceptable Methods of Depreciation and
Amortization
The amendments clarify the principle in PAS 16 and PAS 38 that revenue
reflects a pattern of economic benefits that are generated from operating a
business (of which the asset is part) rather than the economic benefits that
are consumed through use of the asset. As a result, a revenue-based
method cannot be used to depreciate property, plant and equipment and
may only be used in very limited circumstances to amortize intangible
assets. The amendments are effective prospectively for annual periods
beginning on or after January 1, 2016, with early adoption permitted.
These amendments are not expected to have any impact to the Company
given that the Company is not using a revenue-based method to
depreciate its non-current assets.

Amendments to PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer
Plants
The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition
of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply.
After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost
(before maturity) and using either the cost model or revaluation model (after maturity). The
amendments also require that produce that grows on bearer plants will remain in the scope of
PAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance,
will apply. The amendments are retrospectively effective for annual periods beginning on or
after January 1, 2016, with early adoption permitted. These amendments are not expected to
have any impact to the Company as the Company does not have any bearer plants.

Amendments to PAS 27, Separate Financial Statements - Equity Method in Separate


Financial Statements
The amendments will allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities
already applying PFRS and electing to change to the equity method in its separate financial
statements will have to apply that change retrospectively. For first-time adopters of PFRS
electing to use the equity method in its separate financial statements, they will be required to
apply this method from the date of transition to PFRS. The amendments are effective for
annual periods beginning on or after January 1, 2016, with early adoption permitted. These
amendments will not have any impact on the Companys financial statements.

Amendments to PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of


Interests in Other Entities, and PAS 28, Investments in Associates and Joint Ventures Investment Entities: Applying the Consolidation Exception. The
amendments address certain issues that have arisen in applying the
investment entities exception under PFRS 10. The amendments are
effective for annual periods beginning on or after January 1, 2016, with
early adoption permitted. These amendments will not have any impact on
the Companys financial statements.

Amendments to PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in


Joint Operations
The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an
interest in a joint operation, in which the activity of the joint operation constitutes a business
must apply the relevant PFRS 3 principles for business combinations accounting. The
amendments also clarify that a previously held interest in a joint operation is not remeasured
on the acquisition of an additional interest in the same joint operation while joint control is
retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the
amendments do not apply when the parties sharing joint control, including the reporting entity,
are under common control of the same ultimate controlling party.
The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation and are prospectively
effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted.

PFRS 14, Regulatory Deferral Accounts


PFRS 14 is an optional standard that allows an entity, whose activities are subject to rateregulation, to continue applying most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of PFRS. PFRS 14 is effective for annual periods

beginning on or after January 1, 2016. Since the Company is an existing PFRS preparer, this
standard would not apply.

Annual Improvements to PFRSs (2012-2014 cycle)


The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods
beginning on or after January 1, 2016 and are not expected to have a material impact on the
Company. They include:

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in
Methods of Disposal
The amendment is applied prospectively and clarifies that changing from a disposal
through sale to a disposal through distribution to owners and vice-versa should not be
considered to be a new plan of disposal, rather it is a continuation of the original plan.
There is, therefore, no interruption of the application of the requirements in PFRS 5. The
amendment also clarifies that changing the disposal method does not change the date of
classification.

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts


PFRS 7 requires an entity to provide disclosures for any continuing involvement in a
transferred asset that is derecognized in its entirety. The amendment clarifies that a
servicing contract that includes a fee can constitute continuing involvement in a financial
asset. An entity must assess the nature of the fee and arrangement against the guidance in
PFRS 7 in order to assess whether the disclosures are required. The amendment is to be
applied such that the assessment of which servicing contracts constitute continuing
involvement will need to be done retrospectively. However, comparative disclosures are
not required to be provided for any period beginning before the annual period in which the
entity first applies the amendments.

PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed Interim Financial


Statements
This amendment is applied retrospectively and clarifies that the disclosures on offsetting
of financial assets and financial liabilities are not required in the condensed interim
financial report unless they provide a significant update to the information reported in the
most recent annual report.

PAS 19, Employee Benefits - Regional Market Issue Regarding Discount Rate
This amendment is applied prospectively and clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the obligation is denominated,
rather than the country where the obligation is located. When there is no deep market for
high quality corporate bonds in that currency, government bond rates must be used.

PAS 34, Interim Financial Reporting - Disclosure of Information Elsewhere in the


Interim Financial Report
The amendment is applied retrospectively and clarifies that the required interim
disclosures must either be in the interim financial statements or incorporated by crossreference between the interim financial statements and wherever they are included within
the greater interim financial report (e.g., in the management commentary or risk report).

Effective in 2018

PFRS 9, Financial Instruments - Hedge Accounting and Amendments to PFRS 9, PFRS 7 and
PAS 39
PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which
pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge
accounting model of PAS 39 with a more principles-based approach. Changes include
replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on
the economic relationship between the hedged item and the hedging instrument, and the effect
of credit risk on that economic relationship; allowing risk components to be designated as the
hedged item, not only for financial items but also for non-financial items, provided that the
risk component is separately identifiable and reliably measurable; and allowing the time value
of an option, the forward element of a forward contract and any foreign currency basis spread
to be excluded from the designation of a derivative instrument as the hedging instrument and
accounted for as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge
accounting.
PFRS 9 (2013 version) has no mandatory effective date. The mandatory effective date of
January 1, 2018 was eventually set when the final version of PFRS 9 was adopted by the
FRSC. The adoption of the final version of PFRS 9, however, is still for approval by BOA.
The Company is currently assessing the impact of adopting this standard.
The adoption of the third phase of the project is not expected to have any significant impact on
the Companys financial statements.

PFRS 9, Financial Instruments


In July 2014, the final version of PFRS 9 was issued. PFRS 9 reflects all phases of the
financial instruments project and replaces PAS 39 and all previous versions of PFRS 9. The
standard introduces new requirements for classification and measurement, impairment, and

hedge accounting. PFRS 9 is effective for annual periods beginning on or after January 1,
2018, with early application permitted. Retrospective application is required, but comparative
information is not compulsory. Early application of previous versions of PFRS 9 is permitted
if the date of initial application is before February 1, 2015.
The Company is currently assessing the impact of adopting this standard.
The adoption of the other phases of the project is not expected to have any significant impact
on the Companys financial statements.
The following new standard issued by the IASB has not yet been adopted by the FRSC.

International Financial Reporting Standards (IFRS) 15, Revenue from Contracts with
Customers
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to
revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an
amount that reflects the consideration to which an entity expects to be entitled to in exchange
for transferring goods or services to a customer. The principles in IFRS 15 provide a more
structured approach to measuring and recognizing revenue. The new revenue standard is
applicable to all entities and will supersede all current revenue recognition requirements under
IFRS. Either a full or modified retrospective application is required for annual periods
beginning on or after January 1, 2017, with early adoption permitted. This mandatory adoption
date was moved to January 1, 2018.

The Company is currently assessing the impact of IFRS 15 and plans to adopt the new standard on
the required effective date once adopted locally.
Cash
Cash includes cash on hand and in banks. Cash in banks earn interest at bank deposit rates.
Financial Assets and Financial Liabilities
Financial assets within the scope of PAS 39 are classified as either financial assets at FVPL, loans
and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate.
Financial liabilities, on the other hand, are classified as either financial liabilities at FVPL or other
financial liabilities, as appropriate. The Company determines the classification of its financial
assets and financial liabilities at initial recognition and, where allowed and appropriate,
reevaluates this designation at each reporting period.

Financial assets and financial liabilities are recognized initially at fair value. Directly attributable
transaction costs, if any, are included in the initial measurement of financial assets and financial
liabilities, except for any financial instruments measured at FVPL. The Company recognizes a
financial asset or financial liability in the statement of financial position when it becomes a party
to the contractual provisions of the instrument.
All regular way purchases and sales of financial assets are recognized on the trade date, i.e., the
date that the Company commits to purchase the financial asset. Regular way purchases or sales
are purchases or sales of financial assets that require delivery of assets within the period generally
established by regulation or convention in the marketplace.
As of December 31, 2015 and 2014, the Companys financial instruments consist of loans and
receivables and other financial liabilities.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are carried at amortized cost using the effective
interest rate method. Gains and losses are recognized in profit or loss when the loans and
receivables are derecognized or impaired, as well as through the amortization process. Loans and
receivables are included as current assets if maturity is within 12 months from the end of reporting
period; otherwise, these are classified as noncurrent assets.
As of December 31, 2015 and 2014, the Companys loans and receivables consist of cash in banks,
accounts receivables and refundable deposits.
Other financial liabilities
Other financial liabilities are non-derivative financial liabilities with fixed or determinable
payments that are not quoted in an active market. They arise when the Company owes money,
goods or services directly to a creditor with no intention of trading the payables. Other financial
liabilities are carried at amortized cost in the statement of financial position. Amortization is
determined using the effective interest rate method. Other liabilities are included in current
liabilities if maturity is within 12 months from the end of reporting period; otherwise, these are
classified as noncurrent liabilities.
As of December 31, 2015 and 2014, the Companys other financial liabilities consist of accounts
payable and other liabilities, dividends payable, loans payable and obligations under finance lease.
Derecognition of Financial Assets and Liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when:

the rights to receive cash flows from the asset have expired;
the Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a pass-through
arrangement; or
the Company has transferred its rights to receive cash flows from the asset and either (a)
has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred
nor retained substantially all risks and rewards of the asset, but has transferred control of the
asset.

When the Company has transferred its rights to receive cash flows from a financial asset and has
neither transferred nor retained substantially all the risks and rewards of the asset nor transferred
control of the asset, the financial asset is recognized to the extent of the Companys continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount of the asset and the
maximum amount of consideration that the Company could be required to repay.
Financial liabilities
A financial liability is derecognized when the obligation under the financial liability is discharged
or cancelled or has expired.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification will result into the removal of the original liability and the recognition of a new
liability and any resulting difference in the respective carrying value is recognized in profit or loss.
Impairment of Financial Assets
The Company assesses at each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired.
Assets carried at amortized cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the financial
assets carrying amount and the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the financial assets original effective
interest rate (i.e., the effective interest rate computed at initial recognition). Objective evidence of
impairment includes, but are not limited to, bankruptcy or insolvency on the part of the customer
and adverse changes in the economy. The carrying amount of the asset is reduced directly when
collectibility of the account is remote, for example, due to bankruptcy on the part of the customer.
The Company provides an allowance when it is probable that the receivable will not be collected
in the future. The amount of loss shall be recognized in profit or loss.
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the
financial asset is included in a group of financial assets with similar credit risk characteristics and
that group of financial assets is collectively assessed for impairment. Financial assets that are
individually assessed for impairment and for which an impairment loss is or continues to be
recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in profit or loss, to the extent that the carrying value of the asset does not exceed its
amortized cost at the reversal date.
Day 1 Difference
Where the transaction price in a non-active market is different from the fair value from other
observable current market transactions in the same instrument or based on a valuation technique
whose variables include only data from observable market, the Company recognizes the difference
between the transaction price and fair value (a Day 1 profit or loss) in profit or loss unless it
qualifies for recognition as some other type of asset. In cases where not observable data is used,

the difference between the transaction price and model value is recognized in profit or loss only
when the inputs become observable or when the instrument is derecognized.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of
financial position if, and only if, there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, or to realize the asset and settle the
liability simultaneously. This is not generally the case with master netting agreements, and the
related assets and liabilities are presented gross in the statement of financial position.
Determination of Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:

in the principal market for the asset or liability, or


in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the
Company determines whether transfers have occurred between Levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

Prepayments
Prepayments are amounts paid in advance for goods and services that are yet to be delivered and
from which future economic benefits are expected to flow to the Company within its normal
operating cycle or within 12 months from the end of reporting period.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation, amortization and any
impairment in value. The initial cost of the property and equipment consists of its purchase price,
including import duties, taxes and any directly attributable cost of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the property and
equipment have been put into operation, such as repairs and maintenance are normally charged to
profit or loss in the period in which the costs are incurred. In situations where it can be clearly
demonstrated that the expenditures have resulted in an increase in the future economic benefits
expected to be obtained from the use of an item of property and equipment beyond its originally
assessed standard or performance, the expenditures are capitalized as an additional cost of the
property and equipment.
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets as follows:
Furniture and fixtures
Computer equipment
Office equipment
Vehicles

25 years
23 years
23 years
5 years

Leasehold improvements are amortized over the estimated useful life of the improvements of two
to three years or the lease term, whichever is shorter.
The useful lives, depreciation and amortization method are reviewed periodically to ensure that
the periods, method of depreciation and amortization are consistent with the expected pattern of
economic benefits from items of property and equipment.
When assets are retired or otherwise disposed of, the cost and the related accumulated
depreciation, amortization and impairment in value are removed from the accounts, and any
resulting gain or loss is recognized in profit or loss.
Intangible Assets
Intangible assets, consisting of software, acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost less any accumulated
amortization and any accumulated impairment losses. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and expenditure is recognized in
profit or loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Amortization of intangible assets with finite useful lives is computed using the straight-line
method over the estimated useful life of three years. The amortization period and the amortization
method for intangible assets with finite useful lives are reviewed at least at each end of reporting
period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted for by changing the amortization period or
method, as appropriate, and treated as changes in accounting estimates. The amortization expense
of intangible assets with finite lives is recognized in profit or loss.

Impairment of Property and Equipment and Software


The carrying values of property and equipment and software are reviewed for impairment when
events or changes in circumstances indicate that the carrying value may not be recoverable. If any
such indication exists, or when an annual impairment testing for an asset is required, and where
the carrying value exceeds the estimated recoverable amount, the assets or cash generating units
are written down to their recoverable amount. The recoverable amount of property and equipment
and software is the greater of fair value less costs to sell and value-in-use. In assessing value-inuse, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessment of the time value of money and the risks specific to the
asset. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which the asset belongs. Impairment loss, if
any, is recognized in profit or loss.
Retained Earnings
Retained earnings represent the cumulative balance of net income or loss net of any dividend
declaration. Unappropriated retained earnings represent the portion that is free and can be
declared as dividends to stockholders while appropriated retained earnings represent portion that
has been restricted and therefore not available for any dividend declaration.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the income can be reliably measured. Revenue is measured at the fair value of the
consideration received. The following specific recognition criteria must also be met before
income is recognized:
Revenue from rendering of lessons, quality assurance and resources development and IT
development are recognized when the services are rendered.
Interest income is recognized as the interest accrues, taking into account the effective interest
yield on the asset.
Foreign Currency-denominated Transactions
Transactions denominated in foreign currency are recorded using the exchange rate prevailing at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
revalued using the closing exchange rate at the end of reporting period. Foreign exchange gains or
losses are credited to or charged against current operations.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at inception date, of whether the fulfillment of the arrangement is dependent on
the use of a specific asset or assets and the arrangement conveys a right to use the asset. A
reassessment is made after inception of the lease only if one of the following applies:
(a)
(b)
(c)
(d)

there is a change in contractual terms, other than a renewal or extension of the arrangement;
a renewal option is exercised or extension granted, unless the term of the renewal or extension
was initially included in the lease term;
there is a change in the determination of whether fulfillment is dependent on a specified asset;
or
there is a substantial change to the asset.

Where reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of
renewal or extension period for scenario (b).

Finance leases, which transfer to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are reflected in
the statement of comprehensive income. Capitalized leased assets are depreciated over the shorter
of the estimated useful life of the asset or the lease term.
Operating lease payments are recognized as an expense in the statement of comprehensive income
on a straight-line basis over the lease term.
A sale and leaseback transaction involves the sale of an asset and the leasing back of the same
asset. The lease payment and the sale price are usually interdependent because they are negotiated
as a package. If the leaseback is a finance lease, the excess of sales proceeds over the carrying
amount of the assets is deferred and amortized over the lease term. If the leaseback is an operating
lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized
immediately. If the sale price is below fair value, any profit or loss is recognized immediately
except that, if the loss is compensated for by future lease payments at below market price, it shall
be deferred and amortized in proportion to the lease payments over the period for which the asset
is expected to be used. If the sale price is above fair value, the excess over fair value is deferred
and amortized over the period for which the asset is expected to be used.
Short-term Employee Benefits
Salaries and wages are recognized in profit or loss when the employees services have been
rendered to the Company.
Retirement Benefits
The Company provides for estimated retirement benefits to be paid under RA7641 to all its regular
employees.
The accrued retirement liability represents the present value of the defined benefit obligation at the
end of the reporting period. The cost of providing benefits is actuarially determined using the
projected unit credit method.
Defined benefit costs include service cost, interest on the net accrued benefit liability and
remeasurements of net accrued benefit liability.
Service costs which include current service costs, past service costs and gains or losses on nonroutine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs. These amounts are calculated annually by
independent qualified actuaries.
Net interest on the net defined benefit liability or asset is the change during the period in the net
defined benefit liability or asset that arises from the passage of time which is determined by
applying the discount rate based on government bonds to the net defined benefit liability or asset.
Net interest on the net defined benefit liability or asset is recognized as expense or income in
profit or loss.
Remeasurements comprising actuarial gains and losses are recognized immediately in OCI in the
period in which they arise. Remeasurements are not reclassified to profit or loss in subsequent
periods.

Other Employee Benefits


Other employee benefits include Social Security System, Philhealth and other contributions,
13th month pay and other incentives provided to employees. These are recognized in profit or loss
when the employees services have been rendered to the Company.
Employee settlements and accrued leave are recognized as a liability when they are accumulating
and paid to the employees. The undiscounted liabilities for leave expected to be settled wholly
before twelve months after the end of the reporting period is recognized for services rendered by
employees up to the end of the reporting period.
Other Expenses
Other expenses are recognized when incurred. These are measured at the fair value of the
consideration paid or payable.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amounts expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that have been enacted or substantively enacted at the
end of the reporting period.
Deferred income tax
Deferred income tax is provided, using the balance sheet liability method, on all temporary
differences at the financial reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences to the extent that it is
probable that sufficient future taxable profits will be available against which the deductible
temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each end of the reporting period
and reduced to the extent that it is no longer probable that sufficient future taxable profits will be
available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply
to the period when the asset is realized or the liability is settled, based on tax rates and tax laws
that have been enacted or substantively enacted at the end of the reporting period.
Deferred income tax assets and liabilities are offset if a legally enforceable right exists to offset
current income tax assets against current income tax liabilities and the deferred income taxes
relate to the same taxable entity and the same taxation authority.
Provisions and Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed in the
notes to the financial statements unless the possibility of an outflow of resources embodying
economic benefits is remote. A contingent asset is not recognized in the financial statements but is
disclosed in the notes to the financial statements when an inflow of economic benefits is probable.

Events After the End of the Reporting Period


Post year-end events that provide additional information about the Companys position at the
reporting date (adjusting events) are reflected in the financial statements. Post year-end events
that are not adjusting events are disclosed in the notes to the financial statements when material.

4. Significant Accounting Judgments and Estimates


The preparation of the financial statements in conformity with PFRS requires management to
make judgments and estimates that affect the amounts reported in the financial statements. The
judgments and estimates used in the financial statements are based upon managements evaluation
of relevant facts and circumstances as of the date of the financial statements. Actual results could
differ from such estimates. Future events may occur which will cause the judgments and
estimates used in arriving at the estimates to change. The effects of any change in judgments and
estimates are reflected in the financial statements as they become reasonably determinable.
Judgments
In the process of applying the Companys accounting policies, management has made the
following judgments, apart from those involving estimations, which has the most significant effect
on the amounts recognized in the financial statements:
Determination of the Companys functional currency
Based on the economic substance of the underlying circumstances relevant to the Company, the
functional currency is determined to be the Peso. It is the currency that mainly influences the
revenue, cost of services, and operating expenses.
Classification of financial instruments
The Company classifies a financial instrument, or its component parts, on initial recognition, as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the statement of financial position.
Financial assets amounted to P37,640,922 and P37,640,922 as of December 31, 2015 and 2014,
respectively (see Note 18). Financial liabilities amounted to P22,980,780 and P22,980,780 as of
December 31, 2015 and 2014, respectively (see Note 18).
Operating Lease - Company as Lessee
The Company has operating lease agreements for its office spaces. The Company has determined
that the risks and rewards of ownership of the underlying properties have been retained by the
lessors. Accordingly, the leases are accounted for as operating leases (see Note 19).
Finance Lease - Company as Lessee
The Company has lease and sale and leaseback agreements covering its computer equipment and
vehicle. The Company has determined that the risks and rewards of ownership of the vehicle and
computer equipment have been transferred to the Company since the lease terms of the assets are
for the major part of the economic life of the assets and the present value of their minimum lease
payments at inception date is equal to the fair value of the leased assets. Accordingly, these lease
agreements are accounted for as finance leases. The carrying value of the assets under finance
leases amounted to P2,559,301 and P2,559,301 as of December 31, 2015 and 2014, respectively
(see Note 6). Outstanding obligations under finance leases amounted to P2,079,541 and
P2,079,541 as of December 31, 2015 and 2014, respectively (see Note 19).

Asset impairment
The Company reviews its financial assets at each financial reporting date to assess whether an
allowance for impairment should be recognized in its statement of comprehensive income. In
particular, judgment by management is required in the estimation of the amount and timing of
future cash flows when determining the level of allowance required. Such estimates are based on
assumptions about a number of factors and actual results may differ, resulting in future changes to
the allowance.
The Company also assesses the impairment of nonfinancial assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable.
Management believes that there was no indication of impairment on the Companys financial and
nonfinancial assets in 2015 and 2014. Accordingly, no impairment loss was recognized.
Estimates
The key assumptions concerning the future and other key sources of estimation and uncertainty at
the end of the reporting period that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
Estimation of useful lives of property and equipment and software
The Company estimated the useful lives of its property and equipment and software based on the
period over which the assets are expected to be available for use. The carrying value of property
and equipment, net of accumulated depreciation and amortization, amounted to P4,132,904 and
P4,132,904 as of December 31, 2015 and 2014, respectively (see Note 6). The carrying value
of software, net of accumulated amortization, amounted to P87,117 and P87,117 as of
December 31, 2015 and 2014, respectively (see Note 7).
Estimation of retirement benefits costs
The determination of the obligation and cost of retirement benefits is dependent on the
assumptions used by the actuary in calculating such amounts. Those assumptions are described in
Note 16 and include among others, discount rates and salary increase rates. In accordance with
PFRS, actual results that differ from the Companys assumptions are accumulated and amortized
over future periods and, therefore, generally affect the recognized expense and recorded obligation
in such future periods.
Accrued retirement benefits amounted to P2,495,241 and P2,495,241 as of December 31, 2015
and 2014, respectively (see Note 16).
Recognition of deferred income tax asset
Managements assessment on the recognition of deferred income tax assets is based on the
projected taxable income in the following periods. As of December 31, 2015 and 2014, the
Company recognized deferred income tax assets on retirement benefits amounting to P115,470
and P115,470, respectively, as management believes that sufficient future taxable income will be
available against which the deferred income tax assets can utilized (see Note 14).

5. Accounts Receivable

The normal credit term for trade receivables is 30 days.


6. Property and Equipment

The carrying value of the assets under finance leases amounted to P2,559,301 and P2,559,301 as
of December 31, 2015 and 2014, respectively.

7. Software