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I

R.G. Manabat & Co.


The KPMG Center, 9/F
6787 Ayala Avenue
Makati City 1226, Merro Manita, philippines
Branches: Subic. Cebu. Bacolod.

Telephone
Fax

lnternBt
E-Mail

+63 (2, 885 7000


+63 (2) 894 1985
www.kpmg.com_ph
ph-inquiry@kpmg.com

loilo

REPORT OF' INDEPENDENT ATIDITORS

The Board of Directors and Stockholders


Vega Telecom, Inc.
No. 40 San MiguelAvenue

Mandaluyong Cify

Report on the Separate Financial StatemenB


we have audited the accompalying separate financial
statements of vega Telecom, Inc.
(a wholly-owned subsidiaryorban luriguel
c_orporatiorl, *r,r"r,
the separate statements
of financial position as at December 3 20rs
""mprise
and zotq,'anitir"p*rur"
statements
of
comprehensive income, separate statements of
changes i"
separate statements of cash
flows for the years then ended, and notes, comprisirig
"qr,ty
,orrnury'oisignificant
accounting policies
and other explanatory information.

Management's Respons

ib irity

for

ia

the separate Ftnanc iar statements

Management is responsible.f-olihgreparation
and fair presentation of the separate financial
statements in accordance with Philippine Iiinancial
R.p;;;; s;dards, and for such intemal
control as management determin.. is n..essury
to enabte tnJprefaration of the separate financial
statements that are free from materiat misstatement,
whetier due to fraud or error.
Audi tors' Respons

ibility

our responsibility is to express an opinion on these separate


financial stat'ments based on our
audits' we conducted our audits in iccordance with
riilippin" iiandards on Auditing. Those
standards require that we comply with ethical
r"quir"*"ntil;l;, and perform

the audit to
obtain reasonable assurance a6out whether the separate
financiaistatements are free from
material misstatement.

An audit involves performing procedures to obtain audit


evidence about the amounts and
disclosurss in-the separate financial statements. The
procedures selected depend on the auditors,
judgment, including the assessment of
the risks of material misstatement of the separate
financial
statements, whether due to fraud or error. In making
those risk assessments, the auditors consider
internal control relevant to the entity's preparation u]la
ai, p."r"nrution of the separate financial
statements in order to design audit procedures that are
upp.op.i"t" in the circum.i"n""r, uu, no,
fbr.the-purpose of expressing an opinion on the effectiveness
ofthe entitlz,s internalcontrol. An
audit also includes evaluating the appropriateness ofaccounting policies
used and the
reasonableness of accounting estimates made by management,is
well as .uutuuiirt ii,e overall
presentation of the separate financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a
basis for our audit opinion.

R.G. M.nrbtt & Co.. a Pirippino pcnnorship snd r rurtor lhm o{ tha KPMG
n8twork ol indopoodont li{mi rflihltod with KPMG lnbrn.tion.t CmpoGtvo
r(PMG lntomltjonrl'|, ! Swiss ontity. KpMG trbrnstio.lprwides no qli6.t
soryrcr. No mdmbor lirm h!3 any autiori, 10 obtigrt or bind l(pMG
,nlomsionsl o( sny olhsr rumblr lirmvis-!-vis third psilrca. no. dss (pMG
lnlornStionsl ha6 any such ovtiority tq obhgrla o. bind any mmb6,lirm. Ail

rqllis rsNad.

PFC-BOA Ro0ist6ion No. 0003, v.lid untit O6c6mbr 31, Z01C


Accrediution No. C0O4-FR-4, Group A. vatid untit Nowmbsr tO,
Ae.od$rton No. t-2014101,i-8. vatid unr,t Augusr 26. 2Ol 7
,,C
S,EC

201 ?

M
Opinion
In our opinion' the separate financial statemerts
present fairly, in all material
respects, the
unconsolidated financial position
of vega ielecom, hr..
3
2a$ andz0t4, and
its unconsolidated financiat perrormanc!
uii irr urcoosoriaai"a r^ri flows for the years
ended in accordance with philippine
then

;; ii;;ber l,

finun.iuf R.p",ti;;

S;;l;;J;

Report on the

supprementary rnformation Required


under Revenue Regurations
No. 15-2010 of the bureau ollnternal
Revenue
The supplementary information required
for purposes_ of filing with the Bureau
of Intemal
Revenue is presented by the.manager"ri"iir4a
ret."om,
separate schedure. such
supplementary information is not
a'required parrof the
financial statements. our
opinion on the separate financiar rt"t.rr"rrc
i'r.not affected by the presentation
of tre
supplementary information in a separato,"fr.irf

ti".;;;
br;il6;;

".
R"G. IT{ANABAT & CO.

DARWINP. YIROCEL
Parkrer
CPA License No. 0094495
SEC Accreditation No:.lj16^1,.lroup

- -' valid
'-- until February
r A,
Tax Identification No. 912_535-g64
BIR Accreditation No. 0g-0019 g7_31-2A13
_HTg De_cember 2,2013;vatiO until O"J.*t., t,201,6

PTRNo.53215lSMD
Issued January 4,2016

at Makati

S,ZOtl

City

March 17,zArc
Makati City, Metro Manila

lrrll ;r^lrt :ii \/!-r!t;i


I)'!lf ji. a:,i.,i;lr'ti,Il

nFr

APil :; $

lu,i
:'',lSf

VEGA TELECOM,INC.
ofSan
SEPARA TE STA TEMENTS
or'

3l
ASSETS

2414

Curreat Assets
Cash in banks
Receivables
Other current assets

5,7,

t2

P11,6753,42

12

4,67tJlgg,El6

Total Current Assets


Noncurrent Asset

PI,g0g,g79
1,267,2AI,270
14

4,695,647,00g

and advances

1,27A,679,663

726
I
181 62
P37,119,692,734 P20,096,g60,025

LTABILmmSAND EQtrITy
Currert Liabilities
Accounts payable and other
current
for future stock

liabilities

g, 12

9l

Total Uabitities

P235J,17,701

P220,5AA,027

730
15,060J79,431

220,500,027

Equity
Capital stock

t0
ru
t0

Additional paid-in capital

Deposit for future stock subscription

Deficit

Total Equiry

14,950,0001000

2i7,500,000
21,393,926,79g

3t

(2,1 70,3 16, 790)

22,058303J03

19,976,3 5g,ggg

P37,t19,692,734
See Notes to the Separate

435,250,000

71424,975,000

P20,096,g60,a25

Fironcial Stalemenrs,

Clf! l!:^.5:. ;-':


ii.

ilrr

AFii

,:

l.I,

i'ii, '

:t iJ ;,;,;j
,

'i.iS:

VEGA TELECOM,INC.
(A
ofSan
SEPARATE STAITMENTS oF'
r\rE INCO ME
FOR TEE YEARS ENDED D ECEMBER
31, 2015
AI''{D 2014

Note

2015

EXPENSES
Professional fees
Taxes and licenses
Repairs aud Maintenance
Others

2014

P122,497,g73

P47,500

95,102,141
1,940,904

55,647,339

t4,s41

217,092,996

55,709,3g0

OTHER INCOME
Reversal of impairment losses on i:rvestment
Iaterest income

Unrealized foreign

2,1701795,029

39,226

gam

8,696,95g

1,559

2,170,93s,912

rNcoME (LOSS) BEFORE rNcoME TAX


INCOME TAX

8,696,95g

1,953,752,926

(47,012,422)

II

174,886

PI,953,745,093

(P47,191 ,309)

See Notes to the Separate Finoncial


Slatementr.

0f tl
/Ui APR

i',,-llI.:r

i".,:*r^
;-.,:"1tr!

VEGA TELECOM,INC.
(A
ofSan &Iiguel
SEFARATE STATEMENTS OT' CIIANGES u.[ EQ UITY
r,OR TIIE YEARS ENDED D ECEMBER 31,2015 AND
2014

Note

2015

2014

CAPITAL STOCK
Common Stock - Pl00 par value
Authorized - 30,000,000 shares i12015;
6,550,000 shares in 2014
13,500,000 shares issued and outstaading in
2015; 4,352,500 shares in ZOl4

P1,350,000,000

Preferred Stock - p1,000 par value

P435,250,000

Authorized - 22,000,000 shares in 2015


13,500,000 shares issued and outstanding in
2015

10

14,950,000,000

435,250,000

674,975,000

217,500,000

7,424,975,000

217,500,000

ADDMONAT ?AID-IN CAPITAL


Commsa s1661
Preferred stock

la
DEPOSIT TOR FUTURE STOCK

la

2l

788

DET'ICTT
Balance at beginniag of year
Net income (loss)/total comprehensive income

(2,170,316,790) (2,123,t29,4g2)
),87

Balance at end of year

Q16,571,697) (2,170,376,790)
P22,059,303,303 Plg,g 76,359,999

See Notes to lhe Separate

Financial

Statemenls.

VEGA TELECOM,INC.
(A Wholly-owned
ofSan Miguel
SEPARATE S TATEIVIENTS OT CASH FLOWS
FOR THE YEARS ENDED DECEMBER
3I, 2015 AND 2014

Note

2015

2014

CASU FLOWS T'ROM OPERATING

ACTIVITIES

Gain (loss) before income tax


Adjustments for:
Impairment loss on investrnent in an associate

P1,953,752,926 (P47,A12,422)

Interest income

Unrealized
cain
Operating Ioss before working capital changes
lncrease in:

(2,170,795,029)

Q9,225)

(8,696,959)

,559)

Receivables
Other current assets

Accounts
and other current liabilities
Net cash absorbed by operations
Income tax paid

(21 7,092,996)

(55,709,390)

(862,190,064)
(1,003,536)

(13,560,020)

(1,379,639)

,717

(1,065,558,81,

(70,749,$gt
6,357

Net cash flows used in operating activities

(1,065,566,645)

(17,106,492)

12,283,153,249

3,460,13"1,393

CASH FLOWS FROM FINANCING


ACTTVTTIES
Additional deposit from future stock
subscription
Issuance

9,

of shares

Net cash flows provided by financing activities

t0

98,212
12,511351,46A

t+,.

3,464,631,29g

CASII FLOWS FROM INVESTING


ACTIVTTTES
lnterest received

39,226

Additional investment in subsidiary and in


associate

Net cash flows used in investing activities

g,696,95g

g1

(3,3 96,439

(11,436,020,110)

(3,397,741,914)

EFFECTS OF FOREIGN EXCHANGE


RATE CHANGES ON CASII

1,559

NET INCREASE (DECREASE) IN CASH


IN BANKS

9,766,263

CASH IN BANKS AT

(21 7,

BEGINNING OF YEAR
CASH IN

See Notes to the Separate

AT END OF'YEAR
Financial

Statements,

PI

PI

i 1 g)

VEGA TELECOM,INC.
(A
of San
NOTES TO THE SEPARATE FINANCIAL STATEMENTS

1.

Reporting Entity

vega Telecom, Inc. (the company), a whoily-owned subsidiary


of san Miguer
corporation (sMC or_?arent company), was incorporated l,
phirippin;;;;;
trr"
'isBcl
registered with the philippine securities and Exchange
Commission
o"

November 4,2A03.

The ultimate parent company is Top Frontier lnvestment Holdings,


Inc. and
intermediate parent company is San Miguel Corporation

the

on February 4, z00B; the sEC approved the change in the corporate name
of the
Company from SM View Realty Corp. to Vega Telecom, Inc.
andthe amendment of its
primary business purpose.
The company's amended primarytusiness purpose.is to engage
in and render any and a1
types of domestic and intemational telecommunications r

".ii.""r.

The company's registered office address is No. 40 san Miguel


Avenue, Mandaluyong
City.
The pri.ncipal place of business of the company is
Gen. Lim St., Brgy. San Antonio, pasig City.

2.

5ir

g0g BIdg., Meralco


Avenue cor.

Basis of Preparation
Statement of Compliance

lh3.acgomrynying separate financial statemeats have been prepared in compliance with


Philippine Financial Reporring standards (PFRS). pFRS'are ua="a
on Intemationar
Financial Reporting standards (IFRS) issued by the Internationaieccounting
standards
Board (IASB). PFRS consist of pFRS, philippine a"counting
stanaurds (pAS) and
Philippine Interpretations issued by the Financiil Reporting staniards
counrif

iin(ci'-

The Company elected not to present consolidated financial statements


and instead
it meets
all the conditions set out in paragraph 4(a) of pFRS r0, cansotidqted Financiar
Statements. SMC produces consolidated financial statements in accordance
with PFRS,
which are available for public use, SMC shares are listed in the philippi;
St""i
Exchange' Its consolidated financial statements are available at the philippin"
s""rriii",
prepared separate financial statements as its primary financial
statements since

and Exchange Commission.

The separate financial statements were authorized for issue by the Board of Directors
(BOD) on March 17,20t6.
Bqsis of Measurement
The separate financial statements have been prepared
accounting.

on a historical cost basis of

The separate financial statements-are presented in phirippine


peso, which is the
Company's functional currency. All financial information
,.ilo*a"a
offto the nearest
peso, except when otherwise indicated.

3.

Significant Accounting Policies

The accounting policies set out below have been applied


consistently to all years
for the changes in accounting

presented in the separate financial statements,


e*cepf
policies as explained below.

Adoption of Amended

Standards.

The company has adopted

following relevant and applicable amendments


to
standards starting January r, zals and aioroTq,r,
poricies.
Except as otherwise indicated, the adoption or tr,"se"h*g#il'accounting
u*Jrar.nt,
did not have any
-significant impact on the company's separate financiar
statements.

'

the-

Annual Improvemenx to PFRS cycles 2010-2012 and


contain I I changes
'otll.,
to nine standards with consequentiar amendment,201- iot-2013
standards and
.
interpretations, ofrviich only the folrowing *"
uppii""utJ to",t" company. This
amendment to PFRS has no significant effect
on me nn*"lal
statements

Company.

of the

scope of portfolio exception (Amendment to pFRS


13, Fair value Measurement),
The scope of the pFRS 13 portforio exceprion:
yh;;; entities are exempted
from measuring the fair value of a group of financial
assets and finaacial
liabilities with ofilsetting risk positions on a net basis
if certain conditions are
met - has been aligned with the scope of PAs 39,
Financial Instruments:
Recognition and Measurement andpFRi g, Ftnanciat

In,tlu*nntr.

PFRS 13 has been amended to clarify-th-ar the portfolio


exception potentially
applies to contacts-in the scope of pAS 39 and ppns g
regardress of whether
they meet the definition of a dnancial asset or financial
liability under pAS 32,
Financial Instruments: Disclosure and Presentattoi
contracts to
buy or sell non-financial items that can be settled net -'".i.- "ertain
in caitr or another
financial

instrument.

Definition of 'related party' (Amendment to pas 24, Retated party


Dtsclosures).
The definition of a ' related parry, is extended to include
a management entity
that provides key management personner (KMp) ,"*i"rr1o
either directry or.through a group entity. For reiated pu.ty
tr*ru"tions that arise
when KMp services are providid to a reporting
reporting entity is
required to separately disclose the amounts that It "niity,'tt"
rru, ir"ogrir"a u, i .;#;;
for those services.that are provided by a management entity; however,
it is not
required to ' Iook through'the management entit! and disclos'e
compensation paid
by thg management entity to the indiviauab pioviding tfre rrvp
services. The
reporting entity will also need to discloie othei transactions
with the
management entity under the existing disclosure requirements
of pAS z+ _ ef.

ttff;i;;ffii

loans.

-2-

New or Revised s*tandards. and Amendments to standards Not yet Adopted


A number of new or revised standards and amendments to standards are effective for
annual periods beginning after January l,2o1s, and have not been applied in preparing

the separate financial statements. Unless otherwise indicated, none of thesr is


have a significant effect on the separate financial statements.

.*p".t"a

tI

The Company will adopt the following new and amended standards and interpretation
on
the respective effective datcs:

'

Equity Method in Separate Financial Statements (Amendments to pAS 27, Separate


Financial Statements). Thp amendments allow tle use of the equity methoa in
separate financial statements, and appty to the accounting not only for associates
anj
joint ventures, but also for subsidiaries. The amendments apply retrospectively
foi
annual periods beginning on or after January 1,2016. Early adoption is permittej.

'

Disclosure Initiative (Amendments to PAS l, Presentation af Financial Statements)


addresses some concerns expressed about existing presentation and disclosure
requirements and to ensure that entities are able to use judgment when applying
PAS l. The amendments clariff that:

Information should not be obscured by aggregating or by providing immaterial


information.

Materiality considerations apply to all parts of the financial statements, even

when a standard rcquires a specific disclosure.

of line items to be presented in the statement of financial position and


statement of profit or loss and other comprehensive income can be disaggregated
The list

and aggregated as relevant and additional guidance on subtotals


statements.

*i-n

ih.r.

An entity's

share of OCI of equity-accounted associates and joint ventures


should be presented in aggregate as single line items based on whether or
not it
will subsequently be reclassified to profit or loss.

The amendments are to be applied retospectively for annual periods beginning


on or
after January 1,2016. Early adoption is permitted.

' fll! 9 Q0l4), replaces PAS 39 and supersedes Sre previously


PFRS 9 that

published versions

of

inkoduced new classifications and measur"*.nir"quirements (in ZOOq


and 2010) and a new hedge accounting model (in 2013). PFR$9 includesrevised
guidance on the classification and measurement of financial assets, including
a new
expected credit loss model for calculating impairmen! guidance on own crJdit risk
on financial liabilities measured at fair value and supplements the new general hedge

accounting requirements published

in

2013, pFRs

incorporates new hedle

accounting requirements that represent a major overhaul of hedge accounting aid


intoduce significant improvements by aligning the accounting more closely wiih risk
management.

The new standard is to be applied retrospectively for annual periods beginning on or


after January 1, 2018 with early adoption permitted.

-3

Einansial Assets and Financial Liabiiities

Date of Recognition' rne

cimflr,y tecognizes a financial asset or a financial


liability in
the separate statements of financial posiion
when it u""o.", u party to t1,e contractual
provisions of the instrument. In the case.of
a regularwayfur"t*"
or sare of financial
.-'assets, recognition is done using settlement
date
uJ"orntirfi.

I:r:r:!

Recognition of Financiat Instruments. Financial


instr
initially at fa'lr value. The initiar measurement
of financial ilrr.r"I"t
desigaated as at fair varue tfuough profit
or loss crvpil, rnciul", our,.uorion

rfl:rff.T:::
costs.

The company classifies its financial assets


in the following categories: held-to-maturity
(HTM) investrnents,availabre-for-sare (AFS)
!rq?"r ;;;1i., Hr-"o"iur assets as at FVpi
and loans

and receivablelJh* company classifies


its nr"rr"iur liabilities as either
financial liabilities as at FWL or other financiat
liabilitier. iii"
depends on
the purpose for which the invesfments are
"r"rrification
acquired and *t
they
are
quoted
in an
active market' Management determines the
"tr,., financial
assets
and
financial liabilities at initial recognition and, "t"ssin"ation;l;r
where uro*rorii

such designation at every

appropriate, re-evaluates

,rportiig drt..

The company has *=-{}'t investnents,


AFS financial assets and financial
assets
financial liabilities at FVpL.

and

'Day 1' Profit' Where the. bansaction price


in a non-active market is different from
the
fair value of other observable current market &ansactions
in tho same instrument or based
on a valuation technique whose variables include
only da-ta fr#an observable marke!
the company recogniies the difference bet',rieen
the transaction prrce and the fair value
(a'Day 1' profit) in profit or loss unless it qualifies
for recognition as some other asset
fype' In cases where data used is not observubl",
the diff.*;;l;rween rhe transaction
price and model varue is onry recognized
in profit or io;;-;;r, the inputs become
observable or when the instrument is derecogniied.
For .."h t *ru"tion, the company
determines the appropriate methods of recognlzing
trr. ;p"y i'; i.ri,t amount.

Financial Assets
Loans and Receiva&/es' Loans and receivables
are non-derivative financial assets with
fixed or determinable payments and maturitiSg
that are not quoted in an active market.
They are not entered into with the intention
of immediat. o, .iort-*rm

designated as AFS financiar assets or financiar

;;;i-vp;.'"'""

resale and are not

subsequent to initial measuremen! loans and receivables


are canied at amortized cost
using the effective interest.method, Iess any impairment
in value. Any interest earned on
loans and receivables-shall be recognizej as part
of .,Interest income,, account in trre
separate statements of comprehensive income
on an accrual basis. Amortized cost is
calculated by taking into account any discount or premium
on ac[uisition and fees that
1". ry integral part of the effective interest rate. The periodic amortization

is also
"rnterest income,, account in itre ,*p".ur, statements
of
comprehensive income. Gains or losses are recognized
in pronioi loss when Ioans and
included as part

of

receivables are derecognized or impaired.

The company's cash in banks and receivabres are included in this


category Q.{otes
and 12).
Cash in banks are stated at face value.

-4-

Financial Liabilities
other Financiat Liabilitles. This_category pertains
to financial liabilities that are not
designated or classified as at FVPL. a}"r
initiut .n"urur"**1,1ther financial
liabilities
are carried at amortized cost using the efitective
intererl metoi. a*onired cost
is
calculated by taking into account ariy p."mium
or discount and any directly athibutable
tansaction costs that are considered-an integr.r
pJ;i;i; ;+;j""i:lnr"rest
interest rate of the
liability. The effective interest ,ut" u^iiiixron
is inctuaJ-i,
expense and
other financing charges" ac:ou.nl in the
separate statements of comprehensive
income.
Gains and losses are reco8nized in profit
o.-loru when the ri"uliiti-, are derecognized

well

as

as through ttre amortization process.

The company's accounts payable and other


curent liabilities are included in

category [Notes 7 and g).

this

Dgrecogqition of Financial Assets and Liabilities


Financiar assers. A financtc;G;*G;;ricabre,
apart of a financiar asset or paxr
of a group of simirar financiar assetsy is pri**;ty
a"."rogolJ;;rr"n,

'

the rights to receive cash flows from


the asset have expired; or

'

n|^-qirt,red its rights to receive cash flows from


the asset or has
assumed an obligation to pay theri in
full without
delay
to a third parrv
under a "pass through" arrangement; and
either: c)
;;bd;r"rrr""li
the risks and rewards of ttr-e
o, (b) has n"itri", t.*sferred nor retained
substantially all the risks and rewards of
the'asset,
transfened
the company

,il;;i
h;;;;;f.;;i
tri;;;

^r"i

control of the

when the company

has tansferred its rights to receive cash


flows from an asset or has
entered into a pass-through arrangemen!
It
evaluates
ir
and
to
what extent it has retained
'wt

the risks and rewards or o*rr"r.t ip.

rn it

trlrr.o.d nor retained


substantially all the risks and rewards'of
the asset nor kansferred contror
of the asse! the
company continues to recognize the transferred
asset t" irr,-.""ognlzes
,,.,.rt
of
the
company,s
continuing invorvement'
In that

has neith",

.*", th" company ut.o


;;;i""a ii"uiiirv;"" #;;rr"d

Iiabiritv. The transfened asset *d th;

reflects the rights and obrigations that


tt-,r corpuny has retained.

the

associated

on the basis that

Financial Liabilities' A financial liability


is derecognized when the obligation
under the
Iiability is discharged or cancelled or has expirer.
frh"n ;;;;rrirg financial

replaced by another from dre same lender


on substantiany

an existing liability are substantially modified,


such
treated as a derecognjtion of the originar
ri"blii.;;;

The difference in the respective carry'ing


amounts

diff.;;terms,

liabiliry

is

or the terms

of

;, .;;-*g" or modification is
il" .;;;;trion of a new liabiliw.

rs

,ecognizeJ?, p.rn, or

Ioss"

tn]ealnnent of Flnano
The company assesses,

rengrting date, wleth9r there is objective


evidence that
financial asset or group of1_the
financiat assis is impaired.

A financiar asset or a group of financial assets is d.:l"g


to be impaired if, and onry i{
there is objective evidence of impairment as
a result of one or more events that
have
occurred after the initial recog:rition of the
asset (an incurred loss eventl and
that
loss
event has an impact on the estimated future
cash flows of the fin:anci.r
of financial assets that can be reliably estimated.

;;;;i;;;;

-5-

Assets carried at Amortbed cosr' For


assets carried at amortized cost
such as loans and
receivables, the company first assesses
whether ot;""tiue evi]-.n", of impairment
exists
individually for financial assets that are, ind.ividurily
.iCn"ant, or coltectively

for
financial assets that are not individually significant.
if';; objective evidence of
impairment has been identified for a particuia,
finun"iui
,t u, was individually
assessed, the company includes the
"rr",of financiar
asset as. plt of a g.oup
assets with
similar credit risk characteristics una *tt""tiu"ry
urr"ri_-, it" group for impairment.
Assets that are individually assessed for
impairm"rt *a ro, *tl.n an impairment
loss is,
or continues to be, recognized are not included
in the colleciive'impai.*ent assessment.
Evidence of impairment for^specific impairment.purposes
may include indications that
the borrower or a group of booo*"., -is
exprri.o"ing nr*}ar difficurty, default
or
delinquency in principal tr interest payments.,
or may enier into bankruptcy or other
form
of financial reorganization intended to alteviate
ure financiai-iJnoruon of the
borrower,
For collective impairment purposes, evidence
or irpairm"ni ml!'in"tua, observable
data
on existing economic conditions or industry-wide,developmenfiinaicating
that
there
is a
measurabre decrease in the estimated
future cash flows ortr,..rtut o assets.

If tiere is objective evidence of impairment, the amount


of loss is measured as the
difference between the asset's
iil:-lt
and the pr.r.nt vatu" or"stimated
future
"arryin!
cash flows (excluding future credit
lIsr"rl discounted? ti" nn*"i"l asset,s original
effective interest rat'e (i,e., the effective
interest rate computeJ at initial
recognition).
Time value is generally not considered wt
en the effect or &rrnunting the
cash
flows is
not material' If a loan or receivable has
a variable rate, G. air**, rate
for measurins
any impairment loss is the current effective
interest r*,
for the original credii
risk premium' For collective impairment purposes,
"J:rJ"iioss
impainienf
is computed based
on their respecfive default and hisiorical
loss experience.
The carrying amount of the asset shalt
be reduced either directly or through
the use of an
allowance account. The impairment Ioss
ro. tt," period ,iruti"i"l".o gnizedin profit
or
Ioss' If, in a subsequent period, the amount
of the impairme,t los, de"rea.es and
the
decrease can be related ob.lectivety
to an event occurring after the impairment
was
recognized, the previousry recognized
impairment ross ii *rrrr"a, Any
subsequent
reversar of an impairment ross is ,e"ognizea
in proirt oi-ro.r,"io trre extent that the
carrying amount of the asset does not
r*Jr"J its am;ilized

.".i

From the perspective of tni


if it provides for a contactual obligation to:

"itrr"

reversal date.

sified

as debt

instument

deliver cash or another financial asset to another


entity;

'

exchange financial assets or financial liabilities


with another entity under conditions
that are potentially unfavorable to the Company;
or

'

satis$'the obligation other than by the exchange ofa


fixed arnount ofcash or another
financial asset for a fixed number of own equi[, shares.

If

the company does not have an unconditional right to


avoid delivering cash or another
financial asset to settle its contrachral obligation, tlhe obligation
*""t. the definition of a
financial liability.

-6-

Offsetti-q g Financial lnstruments


Financial assets and financial liabilities are offset and the net amount
is reported in the
separate statements of financial position id and only if, there
is a currently enforceable
legal right to offset the recognized amounts and thire is an intention
to seuie on . n"i
basis, or to realize dre asset and settle the liability.simultaneously.
This i, not g*"rufrv
the case with master netting agreements, and the related asiots and
liabilities are
presented gross in tl.re separate statements of financial position.

in sh*"r of sto"k of sub.idiuri.r und an A..o"i*t" *nd Adu*.pr


The Company's investments in shares of stock of ;kidi".i;and
an associate are
accounted for under the co-st method as provided for under PAS
27. The investments anj
advances are carried in the separate siatements. of financial position
at cosi h;;;
impairment in value. The. cornpany recognizes dividend from a
subsidiary *a u.*"iui!
in profit or loss when its right to receive the dividend is established.

Ilu"rt*"rts

subsidiary is an entity controlled by the cglnnanr Th-e company


controls an entity
it is exposed to, or has rights to, variable rcio.ns from its involvement with
the
entity and has the ability to affect those retums through its power
over the entity.

when

An associate is an entity in which the company has significant influence.


Significant
influence. is the power to participate in the financial-ana op"iutiog
policief
A;
investee, but is not control orjoint control over those policies.
"a
Advanoes includes advances to a telecommunication cgmqany
over which the company
has positive intention ofsubscribing to shares ofstocks i, it
i,rtur"

"

The investments are as follows:


Place of
Nore Incorporation

Subsidia ries

AG.N.

Philippines
Philippines

BVI

100.00%
100.00%
100.00%

I00.00%

Philippines
Philippines

r00.00%
100.00%

Philippincs
Philippincs

00.00%
I00.00%

100.00%
100.00%

Philippines
Philippines

I00.00%

Philippines

Inc. (MTHI)
(TDE)

Co., Inc,

@rcryl

a. Includes 50.A09/6 dbect intercst and 50.00% indirect ownership


through

PHC,

PSCL,

97.46%

100.00%
I 00.00%
r

45.s8%

88.17%

andNCI in20l5: and 4s.68%

direct interest and 54.32% ittdirect ownership through PHC, PSCL, and
TCCI in 2011

b. Investment in LTHI is accounted as itwest nenl in an atsociats


in 2014 represenling 45,58a/o ownership
c. Includes 9,7294 direct interest and 78.4Soti

in 2015

Impairment of Non-financial Assets

The carrying amounts of investments and advances are reviewed for


impairment when
svents or changes in circumstanoes indicate that the carrying amount
may not be
recoverable. If any such indioation exists, and if the canyi;g amount
exceeds the
estimated recoverable amount, the assets or cash-generating unif, are written
down to
their recoverable amounts. The recoverable amount of thJasset is the greater
of fair
value less costs of disposal and value in use. The fair value is the price
ihat would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between
market participants at the measurement date. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate
that
reflects current market assessments of the time value of ,on.y and the risks specific
to

-7

the asset' For an asset that. does not generate largely


independent cash inflows, the
recoverable amounr is determined

for the cash-genera:tini .,riii" irri"r, ,il;;;;;;";;.


Impairment losses are recognized in profit o, 6r,
i, t#;;;1n."
consistent
with the function of the impaired asset.
"utrgories

An assessment is made. at each reporting date as to whether


there is any indication that
previously recogaized impairmeni losse-s may
no longer
o, may have decreased.
If such indication exists, the recoverable amount is esiimated.
"*iri A previously
recognized
impairment loss is reversed onry if rhere has
b.., ; ;i;;;; io ,t. estimates used to
determine the asset's
recoverable amount since the. rast impaTrment

loss was recognized.


If that is the case, the carrying amount of the asset is increased
io it, ,..orr.rable amount,
That in*eased amount cannot exceed the carrying
amount that wourd have been
determined had no impairment loss been recogniiedlo.
the asret in prior years. such

reversal is recognized in profit or loss.

Fair Value Measurement


The company measures a number of financial and
non-financial assets and liabilities at
fair value.
Fair value is the price that would be received to
sell an ass-et or paid to transfer a liability
in an orderly hansaction between market participants
ut tt *Ju*rrement date. The fair
value is based on the
that
the
kansaction
to "sell tt
-presumption
or transfer the
liability takes place eiiher
in'the,principal market for the urr.i-o,
" "rr",
liability
or in the
absence of a principal markeg in the mosi
advantageour ;;rk"t i;. t1,e asset or
liability.
The principal or most advantageous market must
be-accessibre to &e company.

The fair value of an asset.or liability is measured using


the assumptions that market
participants would use when. pricing ths asset
or
liabirity, assuming that market
participants
act in their economic best iiterest.

The company uses valuation.techniques that are


appropriate in the circumstances and
for
are available to measure raiivarue, **irnirirrg
the use of relevant
observable inputs and minimizing the use of
unobservabr; ilil.'""

which sufficient data

AII

assets and liabilities for which fair value


is measured or disclosed in the separate
financial statements are categorized within the fair
value. hierarJy]arr.riued as follows,
based on the lowest level input that is significant
to the fair viiu" ,.urur.ment as a
whole:

Level

I:

quoted prices (unadj usted)


liabilities;

LevelZ:
E

Level

3:

in active markets for

identical assets or

inputs

other than quoted prices included within Level 1 that


-' are observable
for the asset or riability, either directry or indirectty;
ana

inputs for the asset or liability that are not based on observable
market

data.

For assets and liabilities that are recognized in the separate financial
statements on a
recurring basis, the Company determines whether transfers have
occurred between
Levels in the hierarchy by re-assessing the categorization at the end
of each .rponing

period.

Deposit for Future Stock Subscriptions

A deposit for future subscription is not


the following elements are present:

"
'

considered as an equity iastrument unless


all

there is a Iack of insufiiciency of authorized unissued


shares of stock to cover

deposit;

of

tie

the Company's BoD and stockholders have approved


an increase in capital stock to
cover the shares corresponding to the amount of the

depositr;d

all application for the approval of the increase in capital


stock has been filed with the
SEC.

If any or all of the foregoing elements are notpresent, the tansaction


is recognized as a
liability.
Share Caoital

Common Shares
common shares are classified as equity. Incremental costs
directly athibutable
issue of shares are recognized as adeduciion from
equity, ,"t or*y tax effects.

to

the

Prefeted Shares
Preferred shares are classified as equity if they are non-redeemable,
or redeemable only
at the Company's option, and any diviiends tlrereon
*e air"r"tiorrury. Dividends thereon
are recognized as distibutions within equity upon
approval by the non
C";;;;;:.

"rtl"

Preferred shares are classified as a.liability if they are


redeemable on a specific date or at
the option of the shareholders, or if dividend payments
*. ooi-air".etionary. Dividends
thereon
are recognized as interest expense in

piofit or ross

"r """r*a.

Additional Paid-in Capital

fifl:i:lJ,frt;il"fon,

represents the excess

of consideration received over the

par

Interest Income

Interest income is recognized as the interest accrues,


taking into account the effective
yield on the asset.
Expense Recoenition

P,nffi"f:recognized

upon receipt of goods, utilization of services


or at the date they

Expenses are also recognized when decrease in future economic


benefit related to a
decrease in an asset or an increase in a liability that can u"
m"asur"a reliably has arisen.
Expenses are-recognized on the basis ofa direct association
between costs incurred and
the earning of specific items of income; on the basis of systematic
and rational allocation
procedures when economic benefits are expected to arise
over several u""o*tirg priiol,
and the association can only be broadly or indirectly determined;
oiimmediately;t";;
expenditure produces no future economic benefits or when,
to the extent that future
economic benefits do not qualifu, or cease to quaiift, for recognition
as an asset.

*j

Taxgs

Current lax. Current tax is the expected tax payable or receivable on the taxable
income
or loss for the year, using tax rates enacted or substantively enacted at the reporting
date,
and any adjustrnent to tax payable in respect ofprevious years.

-9

Deferred Tac' Defened tax is recognized. in respect


of temporary differences between
the carrying amounts of assets and-liabilities roi
nnanciui i"iortirg purposes and the
amounts used for taxation purposes.
Deferred tax liabilities are recognized for

'

a[ taxabre temporary differences,

exeept:

where the defened tax liability arises from the


initial recognition of goodwill or of
an
liability in a tansaction that is not a business comf,ination
*a,
*r"ii*"
the transactioq affects neither the accounting profit
no, i*uut* profit or "t
loss; and "r
asset or

'

with respect to taxable temporary differences associated


with investments in
subsidiaries, associates and interests in joint
,";;;;;;ere
the timing of the
reversal of the temporary differences carbe controlled'anJ
it is probable that tJre

temporary differences will not reverse in tre


foreseeabre future.

Defened tax assets are recognized for all deductible


temporary differences, carryforward
benefits of unused tax credits - Minimum corporate
in"o*"}*
(MCIT) and unused tax
Iosses - Net operating L?:s.carry over (Noi,co),
to tr,.
that it is probabre that
taxable profit will be available against *i,i"!
th. d"aurtilr""xt"nt
rr*porury differences, and
the carryforward benefits of MCrr and NoLCo;

;;;il;;i]o""or,

'

where the defened tax.asset relating to the


deductible temporary difference arises
from the initial recognition of * u-rr"t or liability
in a iansaction that is not a
business combination and, at the time of

accounting profitnortaxable profrt or loss; and

'

the

t*.ution,

alfects neither the

with respect to deductible


differences associated with investments
-temporary
in
subsidiaries, associates and
inierest, in ;oint
tax
assets
are
recognized only to the extent that it is proLable ""r*r;;l;ferred
a"t flrr-L*porary differences will
reverse in the foreseeable future and tax;ble profit
will be avaiiable aeri"ri;iirir'ii;

temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed


at each reporting date and reduced

to the extent that it is no longer probable that suffrcient


allow all or part of the deferred iax asset to be utilized.

,*"uir pl"nt will be available

to

t;;;;;ilred defe,ed tax assets


are reassessed at each reporting date and are recognized
to theixlent that it has become
probable that future taxable profit will allow
the aJfened ,* urriiio be recovered.
The measurement of defened tax reflects the tax consequences
that would follow the
manner in which the company expects, ut tl"._9nd of the
ieporting

settle the carrying amount of its assets and

liabilities. '

--o

perioa, to recover or

Deferred tax assets and liabilities are measured at the tax


rates that are expected to apply
in the year

when the asset is realized or the liability


(and tax laws) that have been enacted or substantively
enacted ui tt

i, ,;;i;,

based on tax rares

,rporting date.

"
In determining the amount of current and deGrred tax, the company
takes into account
the impact of uncertain tax positions and whether additional t
i".
ura interest may be
due' The company believes that its accruals for tax liabilities *" uarqu"r.
ro, uiiiprn
tax years based on its assessment of many factors, including interpretation
of tax laws
and prior experience' This assessment relies on estimates*and
assumptiors *a ,uy
involve a
of judgments about future events. New information may ,"";;;
.series
available that causes the.co_mpany to change- its jud.gment regarJing
th" ;;q;;;';;
existing tax liabilities; such changes to tax liaLilitiei *itt impact"tax
expense in the period

that such a determination is made.

-10-

current tax and defened t5 *! recognized in profit or loss except


to the extent that ir
relates to a business combination, oi ite*s retognized
oirectiy

in equity o. in o,r,",

comprehensive income.

Defened tax assets and deferred tax Iiabilities are offset, if a


legally enforceable right
exists to set off current tax assets against current tax liabilities
and the deferred taxes
relate to the same taxable entity and the same taxation authority.
Yalue-added

ru ffAT).

amount of VAT, except;

Revenues, expenses and assets are recognized


net

the

where the tax incurred on a purchase ofassets or services


is not recoverable from the

taxation authority,

in which

case

tie tax is

recogrized as part

acquisition ofthe asset or as part ofthe expense item

'

of

of the cost of

is applicaule; and

receivables and payables that are stated with the amount


of tax included.

Related Parties
Parties are considered to be related

if one party has the ability, directly or indirectly, to


control the other party
exercise sigrrificant lnfluence over'iire otr,", p".ry
l; ;;'kt;;
financial and operating T
decisions. Parties are also considered to be related
if
they are
subject to common control. Related parties may be individuals
o,
"orpo.","

entities,

Provisions

Provisions are recognized when: (a) the coSRany has a present


obligation (legar or
constructive) as a resurt of past gvents; (b) it is'probabre (i.e.,
moie riker"y ,il ;;0 ;;;
an ouflow of resources.embodying economic benefits wili
be required to settle the
obligation; and (c) a reliable estirnate can be made of the
a:nount of the obligation.
If the effect of ttre time^varue of money is material, pioriri"r, are determined
bv
discounting the expected future cash flows at a pre-tax rate
that
ffi-"J
assessment of the time.value of money and the risks
specific to the liability. wh;;;
discounting is used, the increase in the provision due.to tt p**g.
of time is recognized
as interest expense. Where some or all of tne expenditure
r.qr-i-r"?1o settle a provision is
expected to be reimburyd b.y another parry, the i"i*burr"rn"J
,irri u" ."""giir"j *rr"r,
and only when, it is virrually certain that reimbursement wiil
be received if the entity
settles the obligation' The reimbursement shall be teated
as s"p"r"te asset. The
amount recognized for tire reimbursement shall not exceed
" of the provision.
the amoun[
Provisions are reviewed at each reporting date and adjusted
to i"a."t the current best

r;;;; il;

estimate.

Contingencies

Contingent liabilities are not recognized in the separate financial


statements, They are
disclosed in the notes to the separate financial statements unl"rr
tf,, porriUif;ry Jf un
outflow of resources embodying economic benefits is remote. cortingent
assets"are not
recognized in the separate financial statements but are disclosed
in- the notes ," ifr"
separate financialstatements when an inflow of economic benefits
is probable.
EvEnts After the Reporting Date
Post year-end events that provide additional information about the company,s
financial
position at the reporting date (adjusting events) are reflected in the separate
financial
statements. Post year-end events that are not adjusting events are disclosed in
the notes
to the separate financial statements when material,

- 11-

4.

Significant Accounting Judgments, Estimates


and Assumptions
The preparation

of the separate financial statements in accordance


with pFRS requires
management to make judgments, estimates
and assumptions
accounting policies and the amounts of
assets, liabilities,
and expenses reported
in the separate financial statements at the reporting
date. Ho*"r"r, uncertainty about
these judgments, estimates and assumptions
could re.-sult in an outcome that
could require
adjustnent to the carrying amount of the
affected asset or Iiability in
the

,##";ffi"^"rri#Hr",
i;;;.

il#rtt'

Judgments and estimates are continually


evaluated and are based. on historical
experience

and other factors, including expectaiions


of future

are betieved to be
reasonable under the circumstancis,
"u*rr-in*
Revisions
.""os,r;"i
in trr" period in which the
judgments and estimates are
-u."
revised and in any future
period affected.
Bsttmates anO assum

The key estimates and assumptions used


in the separate financial statements
are based
upon management's evaluation of relevant
facts ant rir"u.rt*."s as of the
date of the
separate financial statements. Actualresurts
courd differ no,n ,u.t estimates.

Fair

yalue Measuremenrs,

j:::[ffi:,fiffi:r'

number

measurement

gf t{e

company,s accounting poricies


and
n,i"n"iur and non-financiar

oir.i. varues r"''uoir

The company has an established contol


framework with respect to the measurement
of
values, This includes a varuatio;;.*
that has tt"'orlru responsibirity
for
overseeing all significant fair vatue meas
lrements, including Level 3 fair
values, The
valuation team regularly. reviews significant
inputs
and
valuation
adjustments' If third parfy information
"nour"*uliJ
is"used to measure
ruir'rutr"r,
then
the
valuation
team assesses the evidence obtained to
support the conclusi;; ih"t such valuations
meet
the requirements of pFRs,_incrudiog thel;er
in the rui, ,urr.lierarchy in which
such
valuations should be classified.

fair

The company uses market

observable data when measuring the


fair value of an asset or
liability' Fair values are categorized into difflerent
levers in"Jrui. uuru, hierarchy
based
on tle inputs used in the valuition techniques.

If the inputs used

to measure the fair value of al as:el or


a riability can be categorized
in
different levels of the fair value t itr.."try,
tuen the fair varue ,n-e-aJrrement is
categorized
in its entirety in the same level of the fair'vatu"
hier-cr,/basrJr, rrr.lowest

level inpur

that is significant to the entire measurement.

The company recognizes transfers between


levels of the fair value hierarchy at
the end
the reporting period during which the change
has occurred.
Allowance

fot Impairment

of

Losses on Receivables. Provisions are


made for specific and
accounts, where objective evidence of irnpairm.ri-r*irt..
Th;6;;;;
evaiuates these accounts on the basis of
factors thai affect the collectability of
the
accounts. These factors include, but are not limited.
to, the l*gd, .f th;-a;;;;_;;;
relationship with the customers and counterparties,
the .rrtorn"rii current credit status
based on third party credit reports and known
market forces, ur"rug" age of accounts,
collection experience, and historical loss experience. The
u*ount una riring of recorded
expenses for any period would differ if the company
,rua. aina*rt iiag",.rtr-"i
utilized different methodologies, An increase in allowance for
imfairment losses would
increase

groups

of

the recorded costs and expenses and decrease

-12-

.rr."n,

*r"[.

The company has no allowance for impairment


losses on receivables
vrer as
4r 4r
at ucutrrtroer
December J3ll,
2015 and 2014 (Note 5).

Realizability o/ De/erred Tax Assets. The company


reviews its deferred tax assets
at
each reporting date and reduces the carrying
u*ourit to th;;;;"rt that it is no longer
probable that sufticient taxable profit willie
available to ailo* air or part of the
deferred
tax asset to be utilized. The company's assessment
on the recognition of deferred tax

assets on deductible temporary difference,


carryforward uenents
based on the projected taxabli income in

ihe foilowing

p.;oJr,-

orNoLCo
"

and MCIT is

Deferred tax assets have not


recoglized because
-been
taxable income will be available
againiwhich

it is not probable that future


the Comi*y"iun utilize the benefits

therefrom (Note I I).

Irnpairment of Non-financtal Assets. PFRS requires


that an impairment review
performed on inves&nents and advances

when event,

oi .r,*g"s

be

in circumstances
indicate that the carrying value may not be
recoverable. Determining the recoverable
amount of assets requires the estimation of cash
flo*s
a u. generated from the
continued use and ultimate disposition of
"xpect"J
such ass"ts lvalire-i"
estimation of the
fair value Iess costs of disposar.of such *r"rr ur
"*l and
oi::lp"i,"g
whle
it is berieved
that the assumptions oted in the estimaiion
of fair'ualu"i reflectea in the separate
financial statements are appropriate and reasonabre,
significant changes in these
assumptions may materially affect the
assessment of reJoverable amounts
and any
resulting

ffi.

impairment loss could have

performance.

a material uau..r,

,nil*,

on the

financia.r

In 2015 andzal4, no impairment loss was recognized


resuiting from a comparison of the
carrying amount of the inveshnent witrr the
reco-veraur, umoun?6N-ot.

q.

Accumulated impairment losses on investrnent


and advances as at Decem ber 31,
2014
amounted to p2,17 0,795,02g
erlote 6).
Provis ions and Contingencies

The Company, in the ordinary course of bus.


present tegai or constuctive oblieutions,
provisions and contingencies, In .-.cognizing
takes risk and uncertainties into account]

-#Ti'fr '
#;H"JJ$if'ilT:ii:,3J
-prori.ions,
::
*i *"*rring
management

No provisions for probabre rosses we{e recogn,::d


statements for the years ended December

5.

il

the company,s
separate financiar
--r

: t, )O t S and 20 14. 'I

Receivables
This account consists of,
Note
Amounts owed by related parties

7, 12

Others

2015

zAt4

P4,671,399,916 P1,253,544,250
13,657 ,020
P

4,67

l,3gg,g76

1,267,2A1,2,/ 0

other receivables pertains to advances to third parties subject


for liquidation

-13-

6,

Investrnents and Advances

20Is

Investments in shares ofstock of


subsidiaries
Investments in shares of stock of
an associate
Advances for investment in shares of
stock

P9,264,194,029
5,7',14,720,790
5,95 8,061,59 i

5,569

32,433,035,726

Allowance for

20,996,976,390

loss

(2, 170,795
P32,433,0351726

PIg,g26, tgl,362

Note

20ts

2014

P3,697,300,000

P2,g49,lg4,029

1,650,000,000

1,650,000,000

925,000,000

925,000,000
825,000,000
1,415,000,000
1,600,000,000

Bell Telecommunication Philippines,


krc.
Power Smart Capital Limited

Two Cassandra-CCl Conglomerates,


Inc.:

Comrnon Shares
Preferred Shares
Perchpoint Holdings Corp.

b
b
b

A.G.N. Philippines, Inc.


Liber{y Telecoms Holdings, Inc.

825,000,000
1,415,000,000
1,600,000,000

Common Shares

3327,939,253

Preferred Shares

Miguel Equity Securities, lnc.


Multi-Technolory Investment Holdings,
San-

ulc.

Trans Digital Excel Inc.


CobaltPoint Telecom, Inc. (formerly,
Express
Co.,

!rp)

9,319,660,949
25,000,000

g"f

10,000,000
3,490n000,000

00,000

P26,964,A00,202

a.

2014

P26,864,000a,02

P9,264,194,029

Bell Telecommwication philippines, Inc.


@TpI)

In December 2014, the c-ompany subscribed g,40g,000


shares out of the remaining
unissued capital stock

ofBTiI

ui

r:ot,liler

interest. As at Decemyr.]l]: 291a,


the

;f,or:r,,"t

share which represents 45,6g%


direct

Cffiany.ha; r.*"i"ir;;;lscription payabre


to pl51, 087,811. The unpaia sutscripti",
*;ilfi;r"nr"O in February

In Decembe r 2015,the company subscribed


to r,592,000 remaining unissued capital
stock of BTpI at p368.73

;r;i;;;.""i'irllr"r,

plr. .hurr, thereby


to 50%. The
company also subscribed to 14,g14,503 common
shares-out oiin"r"ur. in authorized
capital stock, at P368.73 per share, which
was filed uefo.ripc- on December
23,
2015. Said application was subsequently
approved on January l,iOiA.
The registered office address."of the*company is
at g0g Buirding, Merarco Ave., cor.
Gen. Lim St,, San Antonio Village, pasig City.

-14-

b y;

fffiT'x:3:;;;fi?#:;ri;;;;)occ''

f#l1o,the

Perchpoint Hotdtngs

corp

(PHC)

company compreted the acquisition


of r00% interest in TCCI, pHc
and

The registered office address and principal


place of business of rccl
is 5/F g0g
Btdg', Merarco Avenue cor. Gen. r.iir.,"
st, g.s^ s*
pasig ciry.

a;;;il

The registered office address an_d prinSip3r


prace of business of pHc
g0g
is
Bldg', Merarco Avenue cor' Gen. tim.,
sL
s;;rt"Jo, p*ig ciry. 4rF

'.il.

Power Smart Capital Limited is a


BW registered company.

c.

A.G.N. philippines,Inc. (AGN|)

on December 30,
.2910, the company executed a Share purchase Agreement
(the Agreement) with
ISM communi.utiorr co.poration roitir"
pur.i,use of r00% of
the outstanding and issued shares or
smct of AcNp. irr"
authorized by the BOD of the Comp*V
"iriririon of AGNp was
oo

;;;;;;

iffi;;:

upon signing of the Agreement, the


company paid_p320,000,000 as
initiar payment.
under the Agreemen! the outstanai"g
L"i*g.'rf plpsdr';;,"ooo i, payabre
in two
instaltments. on December 29t, iol?,

,r,"

c;G;;;,;"s"ogr, orthe outstandins


r 2g, z0lz.

balance while the remaining balance


was settlea on Decembe

The registered office address of AGNp


is 5rF g0g Brdg., Merarco Avenue
-'
cor. Gen.
Lim., St, Brry. San Antonio, pasig iiry.

d. Liberty Telecoms Holdings, Inc. (LTHI)


Common Shares

on Jury g,2o0g, the company acquired


57g,r11,66g common
stockholders-* ui
u.qrisition r",

i;ilil_fr:,,|l:

;;;;r

shares of

"i"iJ

LTHI from
consideration or

on october 5, 2010, the company arso acquired


64,589,000 common shares ,r'iim'rrounting from the public
to pzzt,4i2.39g

a totar of

of which,
P217,902,600 was unpaia ana preseniro
of accounts payabre in ,,Accounts
payable and other current liabiliiies"
in the separate statements or'financial
position.

i'p.rt

on July 2r,

2015, the company made

offer to LTHI,s
shareholders. At crose of tender
o#.;;;lug-ust 20, 2015, the iompany common
acquired
57,27r,369 common shares
pJii.. bn septemb ),-26\s,the company
!o11tre
completed the acquisition of 426,g00,168
", from LTHI,s
common shares
existing
shareholders, thereby
interest percentage

u*.irtii

tender

i1:.."*,rg
shares to totar of 97.11%.
ritut
amounted to p1,064,957,3 g l.
"onrialration

on LHTI,s common
for the acquired common shares

Preferred Shares

on July 2r, zo0g, the company entered into a


subscription agreement with LTHI
for
the subscription of sg7,g.s.r,7i7 voting,
o*r"d."*uble ard participating preferred
shares out of the proposed increase i,
tfe uuth_orized capital ,r,,i[ ,f r-rHi at
an issue
price of p3'00 per rBlgl-ryqroximatery pr,763,8i5,2ri,--a.
2009, the Company paid p735,000,000
as aeposit

- 15 -

"r
f", tfr" ,-**ri;;;";,

December 31,

on January 5, 20r0,.the crompany paid p5gg,000,000


as additionar deposit for the
subscription of LTHI,s preferred ,[rur"..
on Aprir g, 20r0, the company paid the.r..rtling
subscription payabie on LTHI,s
-pq+o,ass,zt1.
preferred shares amounting to
The i"nru"tiJn'*as compreted
stock cerrifi""t" y"lilg the said prefened
,h".;.-;r;;;'in ,n. name with a

of

Company on May 26,2010.

the

on April 29,2014, san Miguel corporation gave


written notice tlat it is assigning
to
the company the former'r udr*"", to LTlifin
ti," umouit liiss+,ss+,r30. on the
same date, the company converted its
advances r; LtHr, ;ruding the
assigned
receivables, to investment in LTHI's preferred
shares *r"*ii"g ," pr,3
r6,6g3,697.

On December 15,
made additional investment
#11^tr:i:mpany
amounting to p431,200,000.
LTHI issued
a totar ;a

Company at an issue price of p I .00 per


share.

to LTHI

i;;,8"i,697 ,h*",

ro the

On September 02,2015, the Company pur:tu:"_a


2,907,76g,114 from LTHI,s
existing sharehorder at an acquisition pri"e
pq,iaiiiz,6+il

ownership interest percentage

io

of

ti,rrruy increasing

100% on preferred sharls

The preferred shares issued had the folrowing


features: [a] voting;
[b] participating
[c] nonredeemabre; :"d tlr_tith prefeience over oommon
snares
rn case of
liquidation or dissolution oi iffU.

with additionar

;ril:

shares acquired in september 2.0 15, vega


gained contror in LTHL IT
accounted from invesknent in associ ate in
20r4ti
in subsidiary in

iir"rt *t

The company owns 97,46% and 45.5g% interest


in LTHI as at December 31,20r5
and 20 I 4, respectively.
Imoairment

In 2013, the recoverable amount of the company,s


capitar stock investment in LTHI
was determined to be the fair varue less. cost
of
disposar which amounted to
P1,856,042,055. Accordingrv, impairment
iz,*0,tg5,028 has
.ross,";"il;;'i
been recognized as at December 3r, 2013,
Fair value rlr, ,ort of disposar was
arrived with reference ro published. market price pe*h*"
;ili;L in the phirippine
Stock Exchange with respect to listed .orn*onshares ana tlru Ievel 3 valuation
technique with respect to prefened shares.
The fair
;i
shares is
deterrnined based on compalabre market dak and
".1"; lreferred
upp.ou"i
Ir
Lrm,,
properry
and equipment as its cash generaring unit. An"out
i"dd;;;;;
firm
or
appraisers
conducted aetual inspection of the
lroperty and equipment and included the
following studies and analyses in aniving at the estimatea
rair varue: (a) cost of
reproduction of each replaceable asset in aicordance
with the
market price of
materials, Iabor, etc,;
"ui"ntby the observed
accrued depreciation
,uia.n."a
Td..!b)
condition, character and utility of property.
"s
rn 2014, the recoverable amount of the company,s investment
in LTHI is based on a
valuation using cash flow projections covering u fior-yru, p";iod
iong range prans
approved by management. The growth rates used is lN
for zots to 2019. The
djscount rale applied is I l% as at becember 3 l, 2a:tr,. Malag"rn;t
assessed that the
allowance for impairment loss of p2,l7O,7gS,OZg is adequatef

16 -

In 2015, the allowance for impairment was reversed due


to the following reasons:
(a)there was a signific-ant reeovery on the ,urt"t-pii""
or mru ]isted common
shares' Furthermore,LSYo liquidity discount was
used to obtain the fair value of the
unlisted preferred shares to account for share **t*uuiiny. preferred
shares are
similar to common share and has the same rights (voting,
non-redeemabre and
participating) with common shares exgept 6. pier.r.nc.
upon liquidation;
(b) significant deveropment on telecommunications
business in 20r5.

e.

San Miguel Equity Securities, Inc. (SMESI)

on December 2,2015, the c_ompany acquired 25,000,000


shares from sMc at p1.00
per share. As a resurr,
bicame a whory-ow*J."uriJiC;iil;

C"*p;;:"'

'MESI
The registered office address of the sMEsI is No.
40 san Miguer Avenue,
Mandaluyong City.

"f.

Multi-Technologt Investment Holdings, Inc. (MTHI)

On December

!r,.l0lS, the pCompany acquired

fj:::.#f,,:Hf:,,ij::'st

at

.0o pei share.

The registered office address of the MTHI is


Ortigas Jr. Road, Ortigas Center, pasig City..

g.

Trans Digital Excel,Inc.

unit 40r

of MTHI

il-Fil;;;;

Emerard Building, No. 24 F,

(fDE)

on

December

for

a total acquisition cost of

4,zar',

10,000,000 shares

MrHr'*r," u,-"*,1

the company acquired 1,000,000 shares at p3,490


per share
p:,i90p00.

The registered office address of the TDE is 8e


Floor Builders center, I70 salcedo
st.
Legaspi Village, Makati City.

h'

cobaltpoint Terecom, Inc. (formerry Express Terecommunications


co., Inc.)

on

December 4, 2015, the^ company acguired 27,as6,36s


crass A shares and
iapitar v"otu.Lr-corp., both with a par
value Pl'80 p"r-:1q", at a price of pts,zgT p"r.ti*.
io, u tot"t amount of
P1,690,100,000. This increasedthe company,s effLctive
o*n"rrt ip over cobaltpoint
to BB-r7% (9.72%
80,000,000 crass B shares from premier

direct interestanala.4soiindirect

o*n;;;lp

through TDE).

The registered office address of cobaltpoint is 3/F 808


BIdg.,
---o'' Meralco Avenue cor.
Gen. Lim., St, Brgy, San Antonio,

pasigCity.

Aclyatrces for Investments in Shares of Stock

In May 2011, the company made deposit to a terecommunication


company, a future
investee, amounting to p5,958,06r,5g1 as at December
3r, z0t4. Said cornpany was
acquired by vega in December 2015. A. ur-?:llTb1
31, zols, tr," cornpany made
additional advances to BTpl.amounting to p5,569,03 s,524.
nfni
for an increase
in authorized capitar stock which *as approved on January l,zit-s-.'
"ppri"d

-t7-

Parfy Disclosures
The Company, in the normal course of business, obtains and provides
ad.vances to and
from its related parties. The summary of related party transactions
and balances is set out
below.

Amount of
Trrnsrctiong

Year

Amounts Owed Amounts Owed


Relatcd Psrti$ to r Related

Intermedtate

Pdrul
Conpony
SMC
' Deposit for
future stock

o ?,0l5

P7,9I?,S00,0I5

P7,917,500,01S On dcrand

Subscription

Advanocs

Unsecurcd

noa-bearing

subsription
20r5
20t4

payablc

717,902,600
217,902,600

?0r5

zJlE,28s

2J38,285

On dcmud
non-bearing
On dcmud

Unsecured
Uosecurcd

non-bcaring
Subsidiqries

TCCI

PHC

PSCL

20ts

643,21 t,645

z0t,4

643,211,64s

tron-interrst
On demad;

Unsecurad;

notr-intcrst

no impairment

AGNP

TDE

bm'ng

20t5

221,914,t36
2'21,934,136

20ts

163,250,448
263,135,659

non-i[lcrcst

2015

l l{420,369

2014

bearing
On demandl

114,422,581

Unsecued;

non-intaest

no impairment

bcaring
On dcrnand;

20t5

1t3,Z0o

24t,496

2014

91,656

On demand;

130,296

non-intcrast

793,060,137

2015

bearing
On doand;

793,060,137

SMESI

norl-inlrcst

20t5
2Al4

lrt 16,79t,961

1,127,50I,893

t1,107,\6

10,709,933

20ls
20t4

1,501,11f,692

Unsccured;
no impairmcnt

bcuing

zAt4

LTHI

Unsecwod;
no impairmcnt

2014

2014

BTPI

On dcmand;

bcaring
On demmd;
interest bcaring
On demmd;
non-itrtcrEst
bcarina

1$07,771992

2015

?4,671,399,816

2014

pt,2s1,su,250

Unsecured;
no impairment
Unsecurcd;
no imprirmcrt
Unsccured;
no impairment
Unsecurcd;
no impaiment

Pt,1J7,740,900
r{n7,902,600

The following are the significant related pafiy transactions entered


into by the Company:

a'

The cornpany r.":iy.-d-111T.:: a1 deposit for future stock


subscription from sMC
amounting to P7,915,161,73^0. sMC signified that it will subscribe
on a later d;;;
vega's unissued shares of stock. Noninterest bearing advances
owed to sMC
amounted to P2,33 8,285 as at December 3 1 2015 (Note g).
,

b.

Advances to TDE amounted to p793,060,137 as atDecember 31, 2015.

c.

The Company provided cash advances to LTIII subject to 6.75% annual


interest rate
and have no definite payment terms thus consideied payable on demand.
lnterest
income from outstanding cash advances amounted to pg,691,700 in 2014.
L
20ii;
white Dawn solution Holdings, Inc. assigned p36,a97,141 of its receivable, d;;
LTHI; Qtel West Bay Hoiding SPC assigned P413,364,140 of its receivable from
LTHI and Wi-Tribe Asia Limited assigned P584,656,309 of its receivable from LTHi
to the Company. In addition, the Company provided additional non-intersst bearing
cash advances amounting to P82,67 4,37 L

d. In 2015, the company


amounting

received an assigned receivable from sMC

1,5A7,7'l'1,692.

- 18-

to

SMESI

8.

Accounts P ayable and Other Current Liobilities


This account consists of:
Note

Accourts payable

12
7, 12

Amounts owed to a rel ated party

201s
P14,976,816

0r40,88s

P23s?17,701

9,

2014
P2,591,42'1

217,902,600
p220,soo,o27

Deposit for Future Stock Subscription

In 2015, sMC aad a new investo,r signified their intention


to subscribe to additional
shares of stock of rhe Comoanv. tn z-015, ttre
C;p*y;;";il; pt4,825,161,730
as

deposit for funre sock subscription.

10. Equity
Increase in Canitalization

On January 2, 2013, the BOD and stockholders approved


and authorized, subject to the
necessary approvals of the SEC,-thr h.:r."."r:.h tte
Corpury,, urthrdr"d
from one miltion pesos @r,000.000) divided irro
r0p00's;;; il six
million.pesos (p6s5,000,000) diviied into 6,ss0Ji06-.1;;J,O hundred fifty five
pu. value of one
hundred pesos

di;;toJ

(p100) per share.

Also, on january 2, 2013, ahe parent Company agreed to


subscribe to the aforesaid
i, capital stock of the. Company. ffr"""g.".a ,iii.iption
ll"j:ry:
amounted to
P652,500,000 which represents subscripiion to 4,350,'000;or;;n.rh"*.;;i;;p;;

subscriprions received in ZOB t"ln ti" par"ri'io*pro,


amounted ro
represents initial sr:b.scription a q,lj,poJ ihrv..
out of the total
shares, The increase in capitalization
L;
togelher with the increase in cao,al stock on Janr.ry
"pp.;;J
24, ,0
Company
then
issued
additionat 4,350,000 shares to tie parent co*punj it

^T94 :*\
which
ry18jqEIq5
4,350,000

:lT:

** ."[*qr"rif,
i;]il;
f isO ;;; ,#".

i;;

On Deccmber l, 2014. the Comoany,s Board of Directors


approved the increase in the
authorized capital srock of the'Com_pany from p655,000,066

*i.i.,irg

of 6,550,000
common shares with a par value of pi0d to pZS,OOO,bOO,bOO
:O,OOO]OOO
comrnon shore^s.with a par value of pl00 per shari
"r^i.tirg
"f shares with
and ZZ,OOO,OOO
prefened
a par value ofP 1,000 per share.

ti

{s.O.ge-a-9f

Sulscription dated December 1,2014, common shares


and preferred

shares
of 9,14'1,500 and t3,500,000, resoectively, fr* U""n ,ut.*ri:fJto*and
paid for by SMC
through the combination of cash and conversion
til;;; o-f tne Co,,puny ln tte

amounts of P3,222,358,979 and pl7,07.9,234,565, respectively.


"f
In December 2014, SMC
-U.ri
made.additional payment for preferred- shares it previousty
J"Cr.Ama into tl,rougt
combination of cash and assignment of receivabris i" *r" imouiis
orp 237,778,414

afi

P854,554,830, respectively.

- 19-

This subscription is presented as an item of equity


in the statements of financial position
because it has met ail the requirements for presentation
as
as at December 3 r,
2014. The increase in capitarization was upir"a
"quity
on

o"""rrll r'ig, zotq,In Februarv


,r pig,igi',2i". in"'^pp,,"ffii
forthe increase in capitatizati:.1.*t
y69rqr^liry upp.;;;, stc on April 6,2015.
The company then issued additional 9,147,'50a
sta.Js u, prso per share and
13,500,000 preferred shares at p1,500 pe, strare. "o*.on
2015, sMC settred its remaining subscription payabre

11. Income Taxes


The components of the company's income
tax expense are as forows:
2015

Current
Final

2014

P-

Pt73,834

P7,933

P174,g96

Current income tzx in 201 4represents MCIT.


The reconciliation of the income tax expense
computed at the statutory income tax
rate to
the income tax expense as shown in profit
or loss is as follows:

Income tax computed at the statutory tax rate


Income tax effects of:
Changes in unrecognized deferred tax assets
Interest lncome suLbjected to final tax
Reversal of
Ioss

2015

2014

30.a00/o

3A.00%

3.33%

(30.37%)

4.00o/o

4.00%

(ss.33%)
0.Atys

(0.37%)

Net defened tax assets r /ere not recognized fgr-tle


lolrowing temporary differences and
carryforward benefit of unused Nolto *a

vrcri,i;;;'",#;"ment believes there


gr*ul"d to realize the tax

may not be enough future taxable income that


may ur

benefits therefrom.

As of December 31,2015, the company's


taxable income are as follows:

Nolco

which may be appried against future

Year Incurred

Expiry Date

2014
2015

December 31,2017
December 31 ,2019

Amount
P47,017,690

217,

P264,020,556

The details of the company's MCIT at December 31 are as


fo[ows:
Year Incurred

2AB
2014

Date
December 31,2016
December 31 ,2017

Amount
P7,5gg, I gg

173,934
P7,762,033

20

12. Financial Risk Management Objectives and policies


Objectives and Policies
The Company has significant exposure to the following financial risks primarily from its
use of financial instruments:

,
n

Liquidity Risk
Credit Risk

This note presents information about the Company's exposure to each of the foregoing
r]sks, th9 company's objectives, policies and processes for measuring ana manlgin[

these risks, and the Company's managemont of capital.

The BOD has the overall responsibitity for the establishment and oversight of the
Company's risk management framework.

t-lyiaiu

Liquidity risk pertains to the risk that the Company will encounter
in
meeting
obligations associated with financial liabilities that are settled by
{ifficulty
Rrs&.

delivering cash or another financial assel

The Company's objectives to manage its liquidity risk are as follows: (a) to ensure
that
adequate funding is available at all times; (b) to meet commitnents as they arise
without
incuning unnecessary costs; (c) to be able to access funding when needed at the least
possible cost; and (d) to maintain an adequate time spread of rifinancing maturities.
The table below summarizes the maturity profile of the Company's financial assets
and
financial liabilities based on contractual undiscounted puy*"ot" used for liquidity

mar&gement as at December 31, 2015

Amo

nt

Cssh

and}ll4.

llow

Withitr I Yeor

Anoust

Crsh Flow

Finrrclrl AsctJ
Csh is bmkr

Pll$75,2,47

P11,675,X47

4,67t,399,E15

4,671,J99,6r6

Amounts owcd by rclsted

prties
Finenciel Lirbllitlct
49qoryB piyrblc

L35Jt1,10t

Ptr$7s112
4,67r,399,8t6

Pt,90t,979

Pt,90t,979

1,U3,s41,250

t.?J3,544,250

235J

n0,500,o27

Within

Ycar

Pr,908,979
1,253.544,250

x20,500,027

It is not expected that the cash flows included in the maturity analysis could occur
significantly earlier, or at significantly different amounts.
Credit Ris,t. Credit risk is the risk of financial loss to the Company if a counterpaffy
to
financial instrument fails to meet its contactual obligations.

The Company has established controls and procedures in its credit policy to determine
and monitor the credit worthiness of its counterparties. Generally, tle maximum credit
risk exposure of a financial asset is the total carrying amount
r-ho*n in the face of the

"r
separate statements of financial position. The Company believes
signifi cant credit risk.

it is not exposed to any

As at December 31,2015 and 2014, the maximum exposure of the Company to credit
risk is its cash in banks and amounts owed by related parties amounted to p4,6i3,075,05g
and

P 1,25 5,4

53,229, respectively.

-21 -

Fair Values

Due to the short term nature of the Company's financial assets and financial
liabilities
such as cash in banks, receivables and accounts payable and other current
liabilities, their
carrying amounts approximate fair values as at Decemb er 31,2015 and 2014.
Capital ManagemerlL

The primary objective of the company,s capital management is to ensure


that it
maintains a stong credit rating and healthy capital raiios in order to
,uppo.t it,
businesses and maximize shareholder value.

Management monitors capital on the basis of debt-to-equity ratio, which


is calculated as

total debt divided by total equity. Total debt is definedas total llability,
j,
*rrir"
total equity as shown in the separate statements of financial position, M*ug"*rnt
"+,ry
ur".
debt-to-equity ratio to monitor and review, on a regular basis, the company:s
;dili;;
defined as total equity as shown in the separate statements of financial porition.
There were no changes in the company's approach to capital management
during the
year.
The company is not subject to externally-imposed capital requirements.

13. Supplementary fnformation Required under Reveuue Regulations (RR)


No. 15-2010
The Bureau of Internal Revenue has issued RR No. 15-20 i 0 which require
certain tax
information to be disclosed in the notes to the separate Iinancial itatements.
The
Company presented the required supplementary tax information as a separate
schedule

atlached to its annual income tax return.

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