POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

NOTE 1 CORPORATE INFORMATION

POWER VENTURE ENTERPRISE .(the “Company”), a corporation duly organized and existing under the laws of the
Republic of the Philippines, with principal office located at 1158 Cristobal St. Paco, Manila ,Metro Manila. The
Company was incorporated on June 14, 2013 to engage in Trading activities in wholesale and retail of petroleum
products.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation of these financial statements are
summarized below. The policies have been consistently applied to all years presented, unless otherwise stated.

a) Basis of preparation

1. Statement of Compliance

The financial statement of the Company have been prepared on a historical cost basis, as modified by the
revaluation of any investment property, biological assets and derivative financial statement at fair value, and
are presented in Philippine Peso, which is the Company's functional currency under Philippine Financial
Reporting Standards (PFRS) for Small and Medium-sized Entities (SMEs). PFRS for SMEs are adopted by the
Financial Reporting Standards Council (FRSC) on October 13, 2009 and consequently by the Securities and
Exchange Commission (SEC) on December 3, 2009 from the pronouncement issued by the International
Accounting Standards Board (IASB). All values represent absolute amount, except when otherwise specified.

The preparation of financial statement in conformity with the PFRS for SMEs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying
the required accounting policies. Areas involving a higher degree of judgment or complexity, or area where
assumptions and estimates are significant to the financial statement are disclosed in Note 3.

Section 1, Small and Medium-sized Entities, describes SMEs as entities that:

I. Do not have public accountability; and

II. Publish general purpose financial statement for external users. Examples of external
users include owners who are not involved in managing the business, existing and
potential creditors, and credit rating agencies. General purpose financial statements
are those that present fairly financial position, operating results and cash flows for
external capital providers and others.

An entity has public accountability if:

I. Its debt or equity instruments are traded in a public market or it is in the process of
issuing such instruments for trading in a public market (a domestic or foreign stock
exchange or an over-the-counter market, including local and regional markets), or

II. It holds assets in a fiduciary capacity for a broad group of outsiders as one of its
primary businesses. This is typically the case for banks, credit unions, insurance
companies, securities brokers/dealers, mutual funds and investment banks. If an entity
holds assets in a fiduciary capacity as an incidental part of its business, that does not
make it publicly accountable. Entities that fall into this category may include public
utilities, travel and real estate agents, schools and charities.

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POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

The above definition of SMEs does not include size criteria. However, the SEC, in its notice on December
11, 2009, adopted the following definition of small and medium-sized entities that includes size criteria, as
such:

I. The entity has total assets of between P 3 Million and P 350 Million or total liabilities of
between P 3 Million and P 250 Million, and consolidated figures for parent company;

II. It is not required to file financial statement under SRC Rule 68.1, such as listed
companies, issuers of securities to the public, mutual fund;

III. It is not in the process of filing its financial statement for the purpose of issuing any
class of instruments in a public market;

IV. It is not a holder of a secondary license issued by a regulatory agency such as bank (all
types of banks), an investments house, a finance company, an insurance company, a
security broker dealer, mutual fund and a pre-need company; and

V. It is not a public utility.

2. Adoption of PFRS for SMEs

PFRS for SMEs was developed to meet the needs of user while balancing the costs and benefits from a
preparer’s perspective. PFRS for SMEs have essentially been designed to work as a stand-alone document. It
includes sections that underlie the preparation of the general purpose financial statements of, other financial
reporting by entities. Such sections address simplified version and reduced number of options available for
recognition, measurement and disclosure requirements.

The following numbered sections of the PFRS for SMEs are adopted by the Company in the preparation of the
financial statements.

 Section 1, Small and Medium-sized Entities

 Section 2, Concepts and Pervasive Principles
 Section 3, Financial Statements Presentation
 Section 4, Statement of Financial Position
 Section 5, Statement of Comprehensive Income and Income Statement
 Section 6, Statement of Changes in Equity and Statement of Income and Retained Earnings
 Section 7, Statement of Cash Flows
 Section 8, Notes to Financial Statements
 Section 10, Accounting Policies, Estimates and Errors
 Section 11, Basic Financial Instruments
 Section 13, Inventories
 Section 17, Property, Plant and Equipment
 Section 21, Provisions and Contingencies
 Section 22, Liability and Equity
 Section 23, Revenue
 Section 27, Impairment of Assets
 Section 28, Employee Benefits
 Section 29, Income Tax
 Section 32, Events after the End of the Reporting Period
 Section 33, Related Party Disclosures

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POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

The Company only adopts the applicable sections of the standards for the current financial year. The detailed
explanations of which are presented in the succeeding discussions of each related accounts.

b) Basic financial instruments

The Company recognizes basic financial asset or financial liability in the statement of financial position when it
becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that
require delivery of assets within the time frame established by regulation or convention in marketplace are
recognized on the settlement date.

When a basic financial asset or financial liability is recognized initially, the Company measures it at the transaction
price (including transaction costs except in the initial measurement of basic financial assets and liabilities that are
measured at fair value through profit or loss, if any).

After initial recognition, the Company's basic financial assets and financial liabilities are subsequently measured at
amortized cost using the effective interest method unless otherwise stated. At the end of each reporting date, the
Company assesses whether there is objective evidence of impairment. Impairment of Company's financial
instruments is recognized immediately in the profit or loss. Reversal of Company's financial instruments
impairment loss shall be recognized immediately in profit or loss if in subsequent period, the amount of
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognized. The reversal shall not, at any time, results in a carrying amount of the financial
instruments (net of any allowance account) exceeds what the carrying amount would have been had the
impairment not previously been recognized.

The Company's financial asset is derecognized when: (1) the contractual rights to the cash flows from the financial
asset expire or are settled; (2) the entity transfers to another party substantially all of the risks and rewards of
ownership of the financial asset; or (3) the Company, despite having retained some significant risks and rewards
of ownership, has transferred control of the asset to another party and the other party has the practical ability to
sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without
needing to impose additional restrictions on the transfer. In this case, the entity shall: (a) derecognize the asset,
and (b) recognize separately any right and obligation retained or created in the transfer.

The Company’s financial liability is derecognized when the obligation under the liability is discharged, cancelled or
expired.

c) Cash and cash equivalents

Cash are defined as cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments readily convertible to known amounts of cash and which are subject to insignificant risk of changes in
value.

d) Trade and other receivables

Receivables are recognized initially at the transaction price. They are subsequently measured at amortized cost
using the effective interest method, less provision for impairment. A provision for impairment of trade
receivables is established when there is objective evidence that the Company will not be able to collect all
amounts due according to the original terms of the receivables.

Other receivables represent utilities receivable, advances to officers, employees and contractors. Other
receivables are carried at face value less allowance for any uncollectible amount.

e) Inventories

3
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

Inventories are valued at the lower of cost and estimated selling price less costs to sell. Cost of inventories
includes all costs of purchase and other costs incurred in bringing the inventories into their present location and
condition.

f) Property and equipment

Property and equipment are stated at cost less accumulated depreciation, amortization, and any accumulated
impairment losses. The initial cost of property and equipment comprise its purchase price and other directly
attributable cost of bringing the assets to its working condition and location for its intended use. Such cost
includes the cost of replacing part of such property and equipment when the cost is incurred if the recognition
criteria are met. It excludes the costs of day-to-day servicing.

Depreciation is computed on the straight-line method, net of any estimated residual value, over the estimated
useful lives of the assets as follows:

Office Equipment 3-5years

Gas Station Equipment 2-20 years
Gas Station furniture’s & fixtures 1-3 years
Computer Software 3-5 years

Depreciating an item begins when property and equipment is available for use and to continue depreciating until
it is derecognized, even if in that period those items are idle.

If there is an indication that there has been a significant change in depreciation rate, useful life or residual value
of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations (see Note 3).

An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profits or loss
in the year the asset is derecognized.

g) Asset impairment

At each reporting date, non-financial assets are reviewed to determine whether there is any indication that assets
have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any
affected asset or group of related assets is estimated and compared with its carrying amount. If the estimated
recoverable amount is lower, the carrying amount is reduced to its recoverable amount, and an impairment loss
is recognized immediately in profit or loss.

If an impairment loss subsequently reverses the carrying amount of the asset or group of related assets is
increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have
been determined had no impairment loss been recognized for the asset or group of related assets in prior years A
reversal of impairment loss is recognized immediately in profit or loss.

h) Payables

Payables are recognized when the Company has a present legal or constructive obligation as a result of past
events, it is probable that a transfer of economic benefits will be required to settle the obligation and the amount
can be reliably estimated. Liabilities are measured at the present value of the amount expected to be required to
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POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

settle the obligation using a pre-tax rate reflects current market assessments of the time value of money and the
risks specific to the obligation.

i) Customers’ advance deposits

Customers’ advances and deposits represent payment from the buyers which have not yet reached the minimum
required percentage for recording real estate transaction. When the level of required payment is reached, sales
are recognized and these deposits and down payments will be applied against the related receivable.

j) Provisions

Provisions are recognized only when the company has: (a) a present obligation (legal or constructive) as a result
of a past event; (b) it is probable that an outflow or resources embodying economic benefits will be required to
settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If the effect of the
time value of money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risk
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as an interest expense. Provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate.

k) Related party relationships and transactions

Related party relationships exist when one party has the ability to control, directly or, indirectly through one or
more intermediaries, the other party or exercise significant influence over the other party in making financial and
operating decisions or the party has an interest in the entity that gives it significant influence over the entity. Such
relationships also exist between and/or among entities, which are under common control with the reporting
enterprise, or between, and/or among the reporting enterprise and its key management personnel, directors, or
its shareholders or the party is a close member of the family of any individual.

Transactions between related parties are accounted for at arm’s length price or on terms similar to those non-
related entities in an economically comparable market except for the non-interest bearing advances that do not
have fixed re-payment terms to a related party.

l) Equity (Capital Deficiency)

Ordinary shares are classified as equity.

Equity instruments are measured at the fair value of cash or other resources received or receivable, net of the
direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the
initial measurement is on a present value basis.

Accumulated losses include all current and prior period results of operation as disclosed in the statements of
comprehensive income.

m) Revenue and expense recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured.

Revenue from sale is generally recognized upon passage of title, physical delivery and acceptance by customer.
5
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

Other income is recognized when earned.

Cost and expenses are recognized in profit or loss upon utilization of the good and/or service or at the date they
are incurred.

n) Contingencies

Contingent liabilities are not recognized in the financial statement but are disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote. Contingent assets are not recognized but are
disclosed in the financial statement when the flow of economic benefits is probable

0) Employee benefit

The Company has yet to adopt a formal retirement plan for the benefit of its qualified employees.

The Company, however, is subject to the provision of the Republic Act No. 7641 (known as Retirement Law). This
law requires that in the absence of a retirement plan or agreement providing for retirement benefits of
employees in the private sector, an employee upon reaching the age of 60 years or more, but not beyond 65
years, who has served at least 5 years in private company, may retire and shall be entitled to retirement pay
equivalent to at least ½ month salary for every year of service, a fraction at least 6 months being considered as 1
whole year. The Company recognized retirement benefit obligation computed under a defined benefit pension
plan based on the minimum requirements of the law. A defined benefit plan is a pension plan that defines an
amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of
serviced or compensation.

p) Income tax

The provision for income tax for the period comprises current and deferred tax. Tax is recognized in profit or loss,
except that a change attributable to an item of income or expense recognized as other comprehensive income is
also recognized directly in other comprehensive income.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authority.

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial
statement and their corresponding tax base (known as temporary differences). Deferred tax liabilities are
recognized for all temporary differences that are expected to increase taxable profit in the future. Deferred tax
assets are recognized for all temporary differences that are expected to reduce taxable profit in the future.
Deferred tax assets are measured at the highest amount that, on the basis of current or estimated future taxable
profits, is more likely than not to be recovered.

The net carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the
current assessment of future taxable profits. Any adjustment is recognized in profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (loss) of the periods in
which it expects the deferred tax asset to be realized or deferred tax liability to be settled, on the basis of tax
rates that have been enacted or substantively enacted by the end of the reporting period. A valuation allowance
is provided on the basis of past years and future expectations, when it is not probable that taxable profits will be
available against which the future income tax deductions can be utilized.

6
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

q) Events after the end of the reporting period

Events after the end of the reporting period are those events, favorable and unfavorable, that occur between the
end of the reporting period and the date when the financial statement are authorized for issue.

Post year-end event, if any, that provides additional information and evidence of condition about the Company’s
position at the reporting date (adjusting event) is reflected in the financial statement. Post year-end event, if any,
that is not an adjusting event is disclosed in the notes to financial statement when material.

NOTE 3 SIGNIFICANT JUDGMENTS AND ACCOUNTING ESTIMATES

The preparation of financial statement in conformity with PFRS for SMEs requires management to make judgments,
estimates and assumptions that affect the amounts reported in the financial statement and the accompanying notes
to financial statement. The estimates and assumptions used in the accompanying financial statement are based upon
management’s evaluation of relevant facts and circumstances as of the date of the financial statement. Actual results
could differ from such estimates.

3.1 Critical Management Judgments in Applying Accounting Policies

In the process of applying the Company’s accounting policies, management has made the following judgments,
apart from those involving estimation, which have most significant effect on the amounts recognized in the
financial assets.

3.2 Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next year.

a. Estimated useful lives

The useful life of each of the Company’s property or equipment is estimated based on the period over which the
asset is expected to be available for use. Such estimation is based on a collective assessment of industry practice,
internal technical evaluation and experience with similar assets. The estimated useful life of each asset is
reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear,
technical or commercial obsolescence and legal or other limits on the use of the asset. It is possible, however,
that future results of operations could be materially affected by changes in the amounts and timing of recorded
expenses brought about by changes in the factors mentioned above.

b. Asset impairment

An impairment review is required to be performed when certain impairment indicators are present. Internal and
external sources of information are reviewed at each reporting date to identify indications on impairment.

If any such indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its estimated recoverable amount.
7
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

The Company assesses the impairment of assets whatever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The factors that the Company considers important which
could trigger impairment include the following:

 significant underperformance relative to expected historical or projected future operating results; and

 Significant negative industry or economic trends.

c. Recognition of deferred tax asset

The carrying amount of deferred tax assets is reviewed at each financial reporting date and reduced to the extent
that it is no longer probable that sufficient taxable benefits will be available to allow all or part of the deferred tax
assets to be utilized.

NOTE 4 CASH AND CASH EQUIVALENTS

This account consists of:

2014

Cash in banks ₱ 16,677,151

Cash in Hand 15,000
₱ 16,692,151

NOTE 5 TRADE AND RECEIVABLES

This account consists of:

2014
Accounts Receivables – Trade ₱ 3,860,841

₱ 3,860,841

NOTE 6 INVENTORIES

This account consists of:

2014
Inventories (Gas ending Inventory) 1,150,000.00
Inventories (Diesel ending Inventory) 375,000.00
₱ 1,525,000.00

8
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

NOTE 7 PLANT & EQUIPMENT – NET

The roll forward analysis of this account follows:

2014
Cost Balance at Addition/ Disposal/ Balance at End
Beginning Depreciation Retirement
Gas Station Equipment 10,877,000 10,877,000
10,877,000 10,877,000
Accumulated Depreciation:
Gas Station Equipment 605,757 4477,655 1,083,412
1,083,412
Net Book Value 10,271,243 9,793,588

NOTE 8 TRADE AND OTHER PAYABLES

This account consists of:

2015

Accounts payable - trade 6,807,477

₱ 6,835,706

NOTE 10 OTHER CURRENT LIABILITIES

This account consists of:

2016 2015
Withholding tax payable - C P 105,109 P 83,467
Withholding tax payable - E 508 560,804
SSS loans payable 1,477 1,477
HDMF loans payable 1,324 1,324
Vat payable 16,872 15,731
HDMF Contribution Payable 2,300 2,100
PHIC Contribution Payable 3,000 2,650
SSS Contribution Payable 10,745 10,085
Corporate Income Tax Payable 92,052
Advances from Affiliates 4,164,666

₱ 7,228,115 ₱ 7,513,344

NOTE 11 RELATED PARTY TRANSACTIONS

Transactions with related parties include payments made by the Company on behalf of affiliated companies and
officers, charges on various activities and others. These advances are non-interest bearing and have no fixed re-
payment terms.

9
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

NOTE 12SHARE CAPITAL

Shares Amount
2016 2015
Authorized Share Capital
Common shares at P100 par value per share ₱ 5,000,000 ₱ 5,000,000
50,000

Issued and Fully Paid

Common shares at P100.00 par value per share 5,000,000 5,000,000
Total issued and fully paid 5,000,000 5,000,000

Balance at the end of the year ₱ 5,000,000 ₱ 5,000,000

As of December 31, 2016, the Company has five (5) shareholders owning one hundred (100) or more shares of the
Company’s share capital.

NOTE 13 REVENUE

The revenue of the Company is comes from the sales of services:

2016 2015
Sale of Diesoline ₱ 7,017,465 ₱ 449,766,834
Sale of Premium 4,469,821
Sale of Unleaded Gas 12,240,710 31,637,466
Sale of Oil & Lubricants 31,877 18,9713
₱ 19,290,052 ₱ 485,892,834

NOTE 14COST OF SALES

This account consists of: 2016 2015

Cost Of Sales P 14,462,335 483,419,258

Depreciation/Amortization 299,369 302,748
Rental 40,179 40,179
Security Service 63,393 68,676
COST OF SALES P 14,865,275 483,830,860
NOTE 15 OPERATING EXPENSES

This account is composed of:

2016 2015
Administrative Charges 109,091 109,091
Advertising Expense 3,000
Company Affairs Expense 17,775 17,639
Documentation & Processing Fees 400 300
Employee Benefits-13th Month 284,707 241,637

10
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

Employee Benefits- Maxicare 19,250 17,343

Facilitation Fee 300
Gas and Oil Expense 43,701 55,735
Gift, Donation and Contribution 19,639 24,505
HDMF Contribution Co share 10,550 9,850
Interest and Bank Charges 10,485 5,800
Insurance expenses 29,020 45,677
Light and Power Expense 78,881 85,278
Meal allowance 12,217 9,479
Miscellaneous Expense 7,877 3,308
Notarial fee 2,170 2,470
Office Supplies 18,633 85,005
Pantry Expense 3,805 6,804
PHIC Cont Co Share 18,200 16,625
Postage, Telephone and Other Comm. 23,144 37,546
Professional fees 65,556 122,549
Repair & Maintenance Service Vehicle 30,553 33,570
Repair & Maintenance Comp Software 14,700 3,500
Repair & Maintenance Equipment 1,347 2,300
Repair & Maintenance- Office/GS 11,450 37,180
Representation And Entertainment 1,100 10,349
Salaries and Wages 3,561,018 3,093,067
Seminar and Training Expense 1,050
SSS Contribution Co. Share 87,218 83,990
Taxes and Licenses 28,475 93,597
Toll and Parking fee 5,361 1,977
Transportation Expense 10,980 7,736
Water Expense 18,686 11,832
Printing And Xerox 312
Total Operating Expense P 4,547,339 4,279,051

NOTE 16 INCOME TAX EXPENSE

Tax Rate The higher of 30% & 2%

At 30% Regular tax rate 92,052
At 2% MCIT 5,600
Income tax expense 92,052

NOTE 17` RISK MANAGEMENT OBJECTIVE AND POLICIES

The Company’s capital management is generally focused on maintaining substantial working capital in proportion to
the Company’s overall capital structure. The Company is exposed to a variety of financial risks as well. The Company
11
POWER VENTURE ENTERPRISE

NOTES TO FINANCIAL STATEMENTS

As of and for the years ended December 31, 2014
(In Philippine Peso)

does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most
significant financial risk to which the Company is exposed to is credit risk. Generally, the maximum credit risk
exposure of financial assets is the carrying amount of the financial assets as shown on the face of the statement of
financial position. The Company’s installment receivables are collateralized by the related residential unit. Credit risk,
therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial
asset's carrying amount.

12