Professional Documents
Culture Documents
These Illustrative FS are based on PFRS that are effective as of December 31, 2009 and include
disclosures on new and amended standards and Philippine Interpretations which are adopted by the
FRSC and are effective for annual periods beginning on or after January 1, 2009. The following are the
standards not illustrated or considered in the preparation of the sample FS of PNA or of Granthor and
subsidiaries unless indicated:
PAS 11
PAS 20
:
:
PAS 26
PAS 27
PAS 29
PAS 31
PAS 33
PAS 34
PAS 41
PFRS 2
PFRS 3
PFRS 4
PFRS 6
PFRS 8
Phil. Int. IFRIC 5
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
Construction Contracts
Accounting for Government Grants and Disclosure of
Government Assistance
Accounting and Reporting by Retirement Benefit Plans
Consolidated and Separate Financial Statements1
Financial Reporting in Hyperinflationary Economies
Interests in Joint Ventures
Earnings per Share1
Interim Financial Reporting
Agriculture
Share-based Payment
Business Combinations1
Insurance Contracts Operations
Exploration for and Evaluation of Mineral Resources
Operating Segments1
Rights to Interest from Decommissioning,
Restoration and Environmental Rehabilitation Funds
Liabilities Arising from Participating in a Specific Market Waste
Electrical and Electronic Equipment
Applying the Restatement Approach under PAS 29, Financial
Reports in Hyperinflationary Economies
Scope of PFRS 2
Reassessment of Embedded Derivatives
Interim Financial Reporting and Impairment
PFRS 2 Group and Treasury Share Transactions
Service Concession Arrangements
Customer Loyalty Programmes
PAS 19 The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
Hedges of a Net Investment in a Foreign Operation
The manner of accounting, presentation and disclosure in the Illustrative FS should not be considered the
only acceptable result of the application of PFRS. A companys management is responsible for the form
and content of the financial statements as required by PFRS and, therefore, may find other approaches to
compliance that are preferable over those used in the Illustrative FS. For example, allocating line items of
profit and loss to operating activities depends on what activities would normally be considered to be
operating for a company. Therefore, this illustrative FS should be considered as an example of one of
the possible acceptable ways to achieve compliance with PFRS.
This is considered in preparation of the basic FS and selected note disclosures of Granthor and subsidiaries.
2
Certified Public Accountants
Punongbayan & Araullo is a member firm of Grant Thornton International Ltd
III.A.1
III.A.2
III.B.1
III.B.2
III.B.3
III.B.4
III.B.5
3
Certified Public Accountants
Punongbayan & Araullo is a member firm of Grant Thornton International Ltd
III.C.1
III.C.2
III.C.3
III.C.4
III.C.5
III.C.6
III.C.7
III.D.1
III.D.2
III.D.3
III. E
Additional Guidance
As mentioned earlier, the Illustrative FS are intended as a mere guide in the preparation of an entitys
financial statements. Hence, all accounts or disclosures that are not applicable to the entity should be
deleted or reworded and accounts and disclosures not presented in the Illustrative FS that may be
required considering the particular circumstances of the entity should be added.
Additional guidance on the FS presentation and required disclosures will be provided by the Technical
Group through other Accounting Alerts and audit memos when deemed necessary.
Please be guided accordingly.
This Accounting Alert is not a comprehensive analysis of the subject matters covered and is not
intended to provide accounting or other advice to specific entity. All relevant facts and
circumstances, including the full text of the pertinent standards, need to be considered to arrive
at decisions that relate to matters addressed in this Accounting Alert.
4
Certified Public Accountants
Punongbayan & Araullo is a member firm of Grant Thornton International Ltd
Ref. No.
I. Auditors' Report
Report of Independent Auditors
Report of Independent Certified Public Accountants to Accompany
Income Tax Return
Supplemental Statement of Independent Auditors
I.B
I.C
II.A
II.B
II.C
II.D
II.E
III. Appendices
A. Alternative Presentation Methods
1. Statements of Comprehensive Income - showing
expenses by nature
2. Statements of Comprehensive Income - when two
statements are used
I.A
III.A.1
III.A.2
III.B.2
III.B.3
III.B.4
III.B.5
III.C.1
III.C.2
III.C.3
III.C.4
III.C.5
III.C.6
III.C.7
III.B.1
III.D.1
III.D.2
III.D.3
III.E
-2 -
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
auditors judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation
and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the
financial position of PNA Manufacturing Corporation as of December 31, 2009 and
2008, and of its financial performance and its cash flows for the years then ended in
accordance with Philippine Financial Reporting Standards.
PUNONGBAYAN & ARAULLO2
Report of Independent
Certified Public Accountants
to Accompany Income Tax Return
The taxes paid and accrued by the above Company for the year ended
December 31, 2009 are shown in the Schedule of Taxes and Licenses.
2.
Supplemental Statement of
Independent Auditors
Notes 2
PAS 1.55
A S S E T S
PAS 1.55
PAS 1.60, 66
PAS 1.54(i)
PAS 1.54(h)
PAS 1.54(d)
PAS 1.54(g)
PAS 1.54(n)
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables - net
Financial assets at fair value through profit or loss
Inventories - net
Prepayments
NON-CURRENT ASSETS
Trade and other receivables - net
Financial assets - net
Investments in subsidiaries and associates - net
Property, plant and equipment - net
Investment property
Intangible assets - net
PAS 1.54(o), 56
Deferred tax assets - net
PAS 1.60, 66
PAS 1.54(h)
PAS 1.54(d)
PAS 1.54(e)
PAS 1.54(a)
PAS 1.54(b)
PAS 1.54(c)
5
9
10
11
12
13
23
PAS 1.55
PFRS 5.38
NON-CURRENT ASSETS
CLASSIFIED AS HELD FOR SALE
PAS 1.55
TOTAL ASSETS
PAS 1.54(j)
4
5
6
7
8
PAS 1.55
2008
2009
16,642,248
25,653,977
32,210,910
51,450,848
14,659,138
162,457,141
21,890,783
33,422,701
154,572,386
108,085,488
19,516,594
10,202,000
7,263,948
23,234,052
34,931,355
152,247,636
100,293,414
16,756,936
2,050,000
12,725,709
354,953,900
342,239,102
3,550,000
21,012,102
21,789,826
48,344,082
60,150,316
11,160,815
140,617,121
14
499,121,021
A third statement of financial position is required when the Company applies an accounting policy
restrospectively, or makes a retrospective retatement of items in its financial statements, or when it reclassifies
items in its financial statements (PAS 1.10).
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
The preferred format is to show the liabilities and equity section after the assets section; however, if the accounts
are many, the liabilities and equity section may be presented on another page.
504,696,243
-2-
Notes
PAS 1.55
PAS 1.55
PAS 1.60, 69
PAS 1.54(m)
PAS 1.54(k)
PAS 1.55
PAS 1.54(n)
PAS 1.54(l)
CURRENT LIABILITIES
Interest-bearing loans and borrowings
Trade and other payables
Due to related parties
Income tax payable
Provisions
PAS 1.55
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
Retirement benefit obligation
Provisions
Other non-current liabilities
PAS 1.55
PAS 1.54(r)
PAS 1.55
PAS 1.55
PAS 1.54(r)
PAS 1.54(r)
EQUITY 4
Capital stock
Additional paid-in capital
Treasury shares, at cost
Revaluation reserves
Retained earnings
17
15
22
17
25
(
25
25
14,290,000
49,719,900
17,977,826
2,314,212
4,829,437
120,188,620
54,820,000
16,607,013
5,681,513
2,853,276
57,700,000
16,495,073
6,206,683
3,766,067
79,961,802
84,167,823
169,093,177
204,356,443
150,000,000
7,005,000
1,000,000 )
8,896,344
165,126,500
125,250,000
7,005,000
1,000,000 )
8,985,276
160,099,524
300,339,800
499,121,021
16,652,700
61,448,625
29,364,993
4,210,321
8,511,981
89,131,375
330,027,844
Total Equity
PAS 1.55
PAS 1.55
Total Liabilities
PAS 1.55
PAS 1.55
15
16
24
PAS 1.55
PAS 1.60, 69
PAS 1.54(m)
PAS 1.55
PAS 1.54(l)
2008
2009
Major line items of equity (i.e., issued capital, reserves and retained earnings) should be presented on the face of the
statements of financial position. The various classes of this information, such as major items, the changes during the year and
information on each class of share capital may be presented on the face of the statements of financial position, or statement
of changes in equity, or in the notes.
504,696,243
PAS 1.49
PAS 1.51 (c)
PAS 1.51 (d)
Notes
PAS 1.85
REVENUES
Sale of goods
Rendering of services
24
PAS 1.85, 99
PAS 2.36 (d)
18
PAS 1.85
GROSS PROFIT
PAS 1.85
PAS 1.85, 99
PAS 1.85
OPERATING PROFIT
PAS 1.85
PAS 1.82 (b)
PAS 1.85, 99
PAS 1.85, 99
PAS 1.85, 99
20
20
19
19
181,171,539
19,900,506
201,072,045
156,982,596
13,334,605
170,317,201
100,110,007
10,230,354
110,340,361
68,331,945
9,274,715
77,606,660
90,731,684
92,710,541
23,829,851
19,375,487
9,105,553 )
5,064,715
39,164,500
20,545,136
14,745,974
7,925,217 )
8,792,767
36,158,660
56,551,881
51,567,184
21
(
17,966,867 )
8,605,041
9,361,826 )
(
PAS 1.85
TAX EXPENSE
NET PROFIT
PAS 1.85
2008
2009
23
23
13,165,972 )
7,265,263
5,900,709 )
42,205,358
50,651,172
16,028,423
16,318,782
26,176,935
34,332,390
1,055,376
314,267
741,109
7,404,430
2,591,551
4,812,879
26,918,044
39,145,269
This format illustrates a single statement of comprehensive income and the "function of expense" or "cost of sales"
method. See Appendix III.A.1 for the format illustrating the "nature of expense" method and see Appendix III.A.3 for
the separate presentation of "Statements of Comprehensive Income" if the Company opted to use two separate statements.
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
Use "Tax on other comprehensive income" if there are several items under Other Comprehensive Income.
PAS 1.51(c)
PAS 1.51(d)
PAS 1.51(a)
PAS 1.51(a)
PAS 1.49
PAS 1.78(d)
Capital
Stock 3
Additional
Paid-in Capital
125,250,000
24,750,000
-
150,000,000
PAS 1.51(d-e)
Note 2
PAS 1.106(b)(d)
PAS 1.106(d)
PAS 1.106(d)
PAS 1.106(d)
25
25
25
PAS 1.106(d)
25
25
25
Treasury
Shares
Revaluation
Reserves
Retained
Earnings
7,005,000
-
(P
7,005,000
(P
1,000,000 )
8,896,344
125,250,000
-
7,005,000
-
(P
1,000,000 )
-
4,943,149
770,752 )
4,812,879
125,250,000
7,005,000
(P
1,000,000 )
-
8,985,276
830,041 )
741,109
P
(
160,099,524
21,980,000 )
830,041
26,176,935
Total
P
300,339,800
24,750,000
21,980,000 )
26,918,044
165,126,500
330,027,844
138,550,982
13,554,600 )
770,752
34,332,390
274,749,131
13,554,600 )
39,145,269
300,339,800
1,000,000 )
8,985,276
Refer to Appendix III.A.3 for proposed format when there are several equity items to be presented in the Statement of Changes in Equity.
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
If there are only few details, show on the face of the statement the number of authorized, issued, and subscribed shares and par value.
160,099,524
Notes
PAS 7.35
P
11
21
21
21
19
13
19
21
21
21
(
(
(
(
(
(
(
(
(
(
PAS 7.39
PAS 7.31
PAS 7.31
42,205,358
15,648,286
11,110,130
6,856,737
5,537,873 )
4,500,500
2,528,000
2,456,432 )
2,412,922 )
1,740,342 )
1,450,000 )
69,251,442
3,411,614 )
8,699,468
3,498,321 )
12,419,901 )
4,677,406 )
111,940
912,791 )
53,142,817
12,089,215 )
(
(
(
(
(
(
(
(
11
13
10
11
12
(
(
(
(
21
(
50,651,172
13,523,806
10,929,530
2,236,442
4,545,194 )
8,228,146
1,850,000
2,562,874 )
1,320,436 )
1,450,000 )
77,540,592
5,828,950 )
12,175,195
3,377,270
9,229,807 )
2,332,862 )
3,037,179
561,827 )
78,176,790
17,680,950 )
60,495,840
41,053,602
2008
2009
27,521,420 )
18,546,094
10,680,000 )
5,625,250 )
5,337,492
4,569,316 )
3,164,421
2,540,972 )
1,515,800
1,450,000
(
(
18,537,820 )
13,102,776 )
1,120,381
717,113
6,375,232
1,450,000
20,923,151 )
21,977,870 )
-2-
2008
2009
PAS 7.10
PAS 7.31
29,076,116 )
24,750,000
30,538,892 )
-
21,980,000 )
13,554,600 )
25
PAS 7.31
PAS 7.45
Interest paid
Borrowing repayments
Proceeds from additional borrowings
(
(
10,640,438 )
5,242,700 )
-
(
(
10,513,874 )
28,137,566 )
7,569,812
24,500,305 )
36,728,132 )
4,369,854 )
1,789,838
19,222,264
21,012,102
PAS 7.43
38,446,988
17,688,949
16,642,248
21,012,102
1.
PAS 1.51 (a)
PAS 1.138 (b)
PAS 27.41 (b)
CORPORATE INFORMATION
PNA Manufacturing Corporation (the Company2) was incorporated in the Philippines
on June 29, 1976. The Company is presently engaged in the manufacture, distribution
and installation of integrated circuits, conventional and surface mount printed circuit
boards and other similar products. The Company holds investments in certain
subsidiaries and associates that are all incorporated in the Philippines and are engaged
in business related to the main business of the Company.
The Company is a wholly owned subsidiary of Granthor Holdings Philippines, Inc.
(Granthor), 3 a company incorporated and domiciled in the Philippines. Granthor is
presently engaged in the manufacture and distribution of electronic components, the
manufacture and installation of insulation products, and the manufacture and sale of
ready-to-wear clothes.
The Companys registered office, 4 which is also its principal place of business, is
located at 123 Maganda Street, Future Village, Makati City. The registered office of
Granthor5 is located at 90 Amihan Street, Somewhere There Ave., Pasay City.
The financial statements of the Company for the year ended December 31, 2009
(including the comparatives for the year ended December 31, 2008) were authorized
for issue by the Board of Directors (BOD) on January 29, 2010.6
Include information about the level of rounding used in presenting amounts in the financial statements, if any
(PAS 1.51 (e).
Or PNA, however, the term chosen should be used consistently within the notes to financial statements.
The name of the parent company and the ultimate parent company (if any) of the group should be disclosed.
Disclosure of the registered office of the parent company and the ultimate parent (if any) is only required if the
Company does not present consolidated financial statements.
Refer to AAR 04-03 for discussion on the relationship of the date of clients authorization for the issuance of
the financial statements and the date of the auditors report thereon. In addition, if the owners or others have
the power to amend the financial statements after issue, such matter should also be disclosed.
2.
The financial statements of the Company have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS). PFRS are adopted by the
Financial Reporting Standards Council (FRSC) from the pronouncements issued by
the International Accounting Standards Board (IASB).
PAS 1.117(a)
The financial statements have been prepared on the historical cost basis, except for
the revaluation of certain financial assets, property, plant and equipment and
investment property. The measurement bases are more fully described in the
accounting policies that follow.
(b) Presentation of Financial Statements
The financial statements are presented in accordance with PAS 1 (Revised 2007),
Presentation of Financial Statements. The Company presents all items of income and
expenses in a single statement of comprehensive income.7 Two comparative periods
are presented for the statement of financial position when the Company applies an
accounting policy retrospectively, makes a retrospective restatement of items in its
financial statements, or reclassifies items in the financial statements8.
PAS 1.81
PAS 12.51
If the entity has elected to present two separate statements use The Company presents the 'Statement of
comprehensive income' in two statements: a 'Statement of Income and a 'Statement of Comprehensive
Income'.
An entity may elect to include a third statement of financial position even if any of the three instances indicated
in PAS 1 (Revised 2007) are not present (i.e., there have been no retrospective changes or reclassifications of
items in the financial statements, PAS 1.39). This approach allows entities to maintain a more consistent format
and layout from one year to the next and may therefore save on design and printing costs.
-3-
PAS 8.28
In 2009, the Company adopted the following new revisions and amendments to
PFRS that are relevant to the Company and effective for financial statements for the
annual period beginning on or after January 1, 2009:
PAS 1 (Revised 2007)
PAS 23 (Revised 2007)
PFRS 7 (Amendment)
Various Standards
:
:
:
:
Discussed below are the effects on the financial statements of the new and amended
standards.
(i)
Preparer of financial statements is required to disclose all the relevant new Philippine interpretations, revisions
and amendments to PFRS. The complete list of new PFRS is shown in Appendix III.E.
10
The preparer may opt to present impact of new standards, amendments and interpretations to existing standards
effective in 2008 for comparative purposes. However, PAS 8 paragraph 28 does not require the Company to
repeat prior year disclosures relevant to change in accounting principles.
11
Or elected to present the statement of comprehensive income in two statements: statement of income and
statement of comprehensive income.
-4-
(ii) PAS 23 (Revised 2007), Borrowing Costs. Under the revised PAS 23, all
borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset shall be capitalized as part of the cost of that
asset. 12 The option of immediately expensing borrowing costs that qualify for
asset recognition has been removed. The adoption of this new standard did
have any significant effect on the 2009 financial statements, as well as for prior
periods, as the Companys existing accounting policy is to capitalize all interest
directly related to qualifying assets.
(iii) PFRS 7 (Amendment), Financial Statements Disclosures. The amendments require
additional disclosures for financial instruments that are measured at fair value in
the statement of financial position. These fair value measurements are
categorized into a three-level fair value hierarchy, which reflects the extent to
which they are based on observable market data. A separate quantitative
maturity analysis must be presented for derivative financial liabilities that shows
the remaining contractual maturities, where these are essential for an
understanding of the timing of cash flows. The change in accounting policy
only results in additional disclosures (see Note 29.2).
(iv) 2008 Annual Improvements to PFRS. The FRSC has adopted the Improvements
to Philippine Financial Reporting Standards 2008 which became effective for the
annual periods beginning on or after January 1, 2009. Among those
improvements, the following are the amendments relevant to the Company:
PAS 1 (Amendment), Presentation of Financial Statements. The amendment
clarifies that financial instruments classified as held for trading in accordance
with PAS 39 are not necessarily required to be presented as current assets or
current liabilities. Instead, normal classification principles under PAS 1
should be applied. Presently, all held for trading financial assets of the
Company are classified as current assets under PAS 1, hence, this
amendment had no impact on the Companys 2009 financial statements.
PAS 23 (Amendment), Borrowing Costs. The amendment clarifies the
definition of borrowing costs to include interest expense determined using
the effective interest method under PAS 39. This amendment had no
significant effect on the 2009 financial statements.
PAS 36 (Amendment), Impairment of Assets. Where fair value less cost to sell
is calculated on the basis of discounted cash flows, disclosures equivalent to
those for value-in-use calculation should be made. Appropriate disclosures
were made in the Companys 2009 financial statements.
12
13
14
If the Companys current policy is to expense all interest at the time of incurrence, the rest of the sentences
should be revised accordingly, for example:
The option of immediately expensing those borrowing costs previously being used by the Company has
been removed. In accordance with the transitional provisions of the revised standard, the Company
capitalized borrowing costs relating to qualifying assets for which commencement date is on or after the
effective date, January 1, 2009. No retrospective restatement has been made for borrowing costs that have
been expensed before the effective date. The revised standard decreased the Companys reported interest
expense and increased the capitalized cost of qualifying assets under construction in current period.
Borrowing costs of Pxxx have been capitalised. The capitalization is related to some of the Companys
internal software development projects. Current tax expense has increased by Pxxx.
-5-
:
:
:
:
:
_____________________________
111333
If certain amendments and interpretations are applicable to the Company, include them under (a) Effective in
2009 that are Relevant to the Company. Refer to Appendix III.B.5 for the sample discussions of these amendments
and interpretations.
-6-
PAS 8.30
the entity measures the equity instruments issued at fair value, unless this
cannot be reliably measured;
if the fair value of the equity instruments cannot be reliably measured, then
the fair value of the financial liability extinguished is used; and,
_____________________________
111444
Refer to Appendix III.B.5 for sample discussions of amendments and interpretations effective subsequent to
2009 that are applicable to the Company.
-7-
Management has determined that the adoption of the interpretation will not
have a material effect on it financial statements as it does not normally
extinguish financial liabilities through equity swap.
(iv) 2009 Annual Improvements to PFRS. The FRSC has adopted the Improvements to
Philippine Financial Reporting Standards 2009. Most of these amendments became
effective for annual periods beginning on or after July 1, 2009, or January 1,
2010. Among those improvements, only the following amendments were
identified to be relevant to the Companys financial statements:
PAS 27.4,
41 (a)
15
See Appendix for sample disclosures on certain items if the FS presented are not separate FS (i.e., consolidated
or investors financial statements are presented).
16
PAS 27.10 provides the exemption criteria when a parent need not present consolidated financial statements.
-8PAS 27.4, 13
Subsidiaries are entities over which the Company has the power to govern the financial
reporting policies generally accompanying a shareholding of more than one half of the
voting rights. The Company obtains and exercises control through voting rights. The
existence and effect of potential voting rights that are currently exercisable and
convertible are considered when assessing whether the Company controls another
entity.
PAS 28.23
Associates are those entities over which the Company is able to exert significant
influence but which are neither subsidiaries nor interests in a joint venture.
The Companys investments in subsidiaries and associates are accounted for in these
separate financial statements at cost,17 less any impairment loss. Impairment loss is
provided when there is objective evidence that the investments in subsidiaries and
associates will not be recovered. The impairment loss is measured as the difference
between the carrying amount of the investment and the present value of the estimated
cash flows discounted at the current market rate of return for similar financial asset.
Impairment loss is recognized in profit or loss in the statement of comprehensive
income.
PAS 28.23
Any goodwill arising from the acquisition of investments in subsidiaries and associates,
representing the excess of the acquisition costs over the fair value of the Companys
share in the identifiable net assets of the acquired subsidiaries or associates at the date of
acquisition, is included in the amount recognized as investment in subsidiaries and
associates.
PFRS 7.21
PFRS 7.8
Regular purchases and sales of financial assets are recognized on their trade date18. All
financial assets that are not classified as at fair value through profit or loss are initially
recognized at fair value plus any directly attributable transaction costs. Financial assets
carried at fair value through profit or loss are initially recorded at fair value and
transaction costs related to it are recognized in profit or loss.
PAS 39.43
17
18
Alternatively, regular purchase and sale of financial assets may be accounted for at settlement date
(see PAS 39.38).
-9-
This category include financial assets that are either classified as held for trading or
are designated by the entity to be carried at fair value through profit or loss upon
initial recognition.19 All derivatives fall into this category, except for those
designated and effective as hedging instruments. Assets in this category are
classified as current if they are either held for trading or are expected to be realized
within 12 months from the end of the reporting period.
Financial assets at fair value through profit or loss are measured at fair value, and
changes therein are recognized in profit or loss. Financial assets (except derivatives
and financial instruments originally designated as financial assets at fair value
through profit or loss) may be reclassified out of fair value through profit or loss
category if they are no longer held for the purpose of being sold or repurchased in
the near term.
PAS 39.50
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They arise when the Company
provides money, goods or services directly to a debtor with no intention of trading
the receivables. They are included in current assets, except for maturities greater
than 12 months after the reporting period which are classified as non-current assets.
Loans and receivables are subsequently measured at amortized cost using the
effective interest method, less impairment loss, if any. Any change in their value is
recognized in profit or loss. Impairment loss is provided when there is objective
evidence that the Company will not be able to collect all amounts due to it in
accordance with the original terms of the receivables. The amount of the
impairment loss is determined as the difference between the assets carrying amount
and the present value of estimated cash flows.
The Companys financial assets categorized as loans and receivables are presented as
Cash and Cash Equivalents and Trade and Other Receivables in the statement of
financial position. Cash and cash equivalents are defined as cash on hand, demand
deposits and short-term, highly liquid investments readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in value.
(c) Held-to-maturity Investments
This category includes non-derivative financial assets with fixed or determinable
payments and a fixed date of maturity that the Company has the positive intention
and ability to hold to maturity. Investments intended to be held for an undefined
period are not included in this classification. Held-to-maturity investments are
included in non-current assets under Financial Assets account in the statement of
financial position, except those maturing within 12 months from the reporting
period, which are presented as part of current assets.
PAS 39.9
19
In addition, if an entity has derivative financial instruments that do not qualify for hedge accounting, these
derivative financial instruments are classified as held for trading and additional disclosures as required by PFRS 7
for derivatives should be included in the notes to financial statements.
- 10 -
This category includes non-derivative financial assets that are either designated to
this category or do not qualify for inclusion in any of the other categories of
financial assets. They are included in non-current assets under the Financial Assets
account in the statement of financial position unless management intends to dispose
of the investment within 12 months from the reporting period.
All available-for-sale financial assets are measured at fair value, unless otherwise
disclosed, with changes in value recognized in other comprehensive income, net of
any effects arising from income taxes. When the asset is disposed of or is
determined to be impaired the cumulative gain or loss recognized in other
comprehensive income is reclassified from revaluation reserve to profit or loss and
presented as a reclassification adjustment within other comprehensive income.
Reversal of impairment loss is recognized in other comprehensive income, except
for financial assets that are debt securities which are recognized in profit or loss only
if the reversal can be objectively related to an event occurring after the impairment
loss was recognized.
All income and expenses, including impairment losses, relating to financial assets that
are recognized in profit or loss are presented as part of Finance Costs or Finance
Income in the statement of comprehensive income.
PFRS 7.27(a)
PAS 39AG 72
to 74
For investments that are actively traded in organized financial markets, fair value is
determined by reference to stock exchange-quoted market bid prices at the close of
business on the reporting period. For investments where there is no quoted market
price, fair value is determined by reference to the current market value of another
instrument which is substantially the same or is calculated based on the expected cash
flows of the underlying net asset base of the investment.20
Non-compounding interest, dividend income and other cash flows resulting from
holding financial assets are recognized in profit or loss when earned, regardless of how
the related carrying amount of financial assets is measured.
Derecognition of financial assets occurs when the rights to receive cash flows from the
financial instruments expire or are transferred and substantially all of the risks and
rewards of ownership have been transferred.
PAS 39.17
20
If the fair value is determined through a specific valuation technique, disclose that fact. Refer to PFRS7.27-28
for guidance.
- 11 -
2.5 Inventories
PAS 2.36 (a)
PAS 1.117 (a)
Inventories are valued at the lower of cost and net realizable value. Cost is determined
using the first-in, first-out method. Finished goods and work-in-process include the
cost of raw materials, direct labor and a proportion of manufacturing overheads based
on normal operating capacity. The cost of raw materials include all costs directly
attributable to acquisitions, such as the purchase price, import duties and other taxes
that are not subsequently recoverable from taxing authorities.
Net realizable value is the estimated selling price in the ordinary course of business, less
the estimated costs of completion and the estimated costs necessary to make the sale.
Net realizable value of raw materials is the current replacement cost.
Land and building and improvements are measured at fair value less depreciation for
buildings and improvements. As no finite useful life for land can be determined, related
carrying amount are not depreciated. All other property, plant and equipment are stated
at cost less accumulated depreciation and any impairment in value.
PAS 16.16
The cost of an asset comprises its purchase price and directly attributable costs of
bringing the asset to working condition for its intended use. Expenditures for additions,
major improvements and renewals are capitalized; expenditures for repairs and
maintenance are charged to expense as incurred. When assets are sold, retired or
otherwise disposed of, their cost and related accumulated depreciation and impairment
losses are removed from the accounts and any resulting gain or loss is reflected in
income for the period.
PAS 16.31
Following initial recognition at cost, land and buildings and improvements are carried at
revalued amounts which are the fair values at the date of the revaluation, as determined
by independent appraisers, less subsequent accumulated depreciation (on buildings and
improvements) and any accumulated impairment losses. Revalued amounts are fair
market values determined in appraisals by external professional valuers unless marketbased factors indicate immediate impairment risk. Fair value is determined by reference
to market-based evidence, which is the amount for which the assets could be exchanged
between a knowledgeable willing buyer and a knowledgeable willing seller in an arms
length transaction as at the valuation date. Any revaluation surplus is recognized in
other comprehensive income and credited to the Revaluation Reserves account in the
Equity section of the statement of changes in equity. Any revaluation deficit directly
offsetting a previous surplus in the same asset is charged to other comprehensive
income to the extent of any revaluation surplus in equity relating to this asset and the
remaining deficit, if any, is recognized in profit or loss. Annually, an amount from the
Revaluation Reserves is transferred to Retained Earnings for the depreciation relating to
the revaluation surplus. Upon disposal of revalued assets, amounts included in
Revaluation Reserve relating to them are transferred to Retained Earnings. Revaluations
are performed every three years22 unless circumstances require annual revaluation.
PAS 16.32
PAS 16.39, 41
PAS 1.96
PAS 16.41
PAS 16.34
21
See Appendix III.B.3 for the sample disclosure on PPE measured using cost model.
22
Frequency of revaluation depends upon the changes in fair values of the items of property, plant and equipment
being revalued. The standard does not specify any number of years within which revaluation should be
performed. However, it indicated that frequent revaluations are unnecessary for items of property, plant and
equipment with only insignificant changes in fair value. It such cases, it may be necessary to revalue the item
only every three or five years.
Depreciation is computed on the straight-line basis over the estimated useful lives of the
assets as follows:
Building and improvements
Machinery and equipment
Office furniture and equipment
Transportation equipment
10-20 years
5-12 years
5-10 years
3-5 years
Transportation equipment held under finance lease agreements [see Note 2.13(a)] are
depreciated over their expected useful lives (determined by reference to comparable
owned assets) or over the term of lease, if shorter.
Construction in progress represents properties under construction and is stated at cost.
This includes cost of construction, applicable borrowing cost and other direct costs
(see Note 2.17). The account is not depreciated until such time that the assets are
completed and available for use.
PAS 36.59
An assets carrying amount is written down immediately to its recoverable amount if the
assets carrying amount is greater than its estimated recoverable amount (see Note 2.15).
PAS 16.51
The residual values and estimated useful lives of property, plant and equipment are
reviewed, and adjusted if appropriate, at the end of each reporting period.
PAS 16.67-68,
71
Investment property, accounted for under the fair value model, 23 is property held either
to earn rental income or for capital appreciation or for both, but not for sale in the
ordinary course of business, use in the production or supply of goods or services or for
administrative purposes.
Any gain or loss resulting from either a change in the fair value or the sale or retirement
of an investment property is immediately recognized in profit or loss as Fair Value
Gains from Investment Property under the Other Gains (Losses) in the statement of
comprehensive income.
PAS 40.66
PAS 40.69
23
Investment property may be measured using the cost model (PAS 40.75).
- 13 -
Intangible assets include acquired licenses, franchises and internally developed software
used in production and administration which are accounted for under the cost model.
The cost of the asset is the amount of cash or cash equivalents paid or the fair value of
the other considerations given up to acquire an asset at the time of its acquisition or
production. Capitalized costs are amortized on a straight-line basis over the estimated
useful lives (ranging from 3 to 10 years) as the lives of these intangible assets are
considered limited. In addition, intangible assets are subject to impairment testing as
described in Note 2.15.
Acquired computer software licenses are capitalized on the basis of the costs incurred to
acquire and install the specific software. Costs associated with maintaining computer
software and those costs associated with research activities are recognized as expense in
profit or loss as incurred. Costs that are directly attributable to the development phase of
new customized software for information technology and telecommunications systems
are recognized as intangible assets if the Company can demonstrate all of the following
recognition requirements:
PAS 38.54
PAS 38.57
(i)
technical feasibility of completing the prospective product for internal use or sale;
(ii) the intangible asset will generate probable economic benefits through internal use or
sale;
(iii) intention and ability to complete, i.e. availability of sufficient technical, financial and
other resources necessary for completion, and use or sell the asset; and,
(iv) ability to measure reliably the expenditure attributable to the intangible asset during
development.
PAS 38.66
PFRS 5.25
24
Include non-current intangible assets in the disclosure if there are and if such qualify as assets held-for-sale in
accordance with PFRS 5, Non-current Assets Held-for-sale and Discontinued Operations.
- 14 -
Financial liabilities include interest-bearing loans and borrowing, trade and other
payables and finance lease liabilities, due to related parties and other non-current
liabilities, which are measured at amortized cost using the effective interest rate method.
PAS 39.14
Financial liabilities are recognized when the Company becomes a party to the
contractual terms of the instrument. All interest-related charges are recognized as an
expense in profit or loss under the caption Finance Costs in the statement of
comprehensive income.
Interest-bearing loans and borrowings are raised for support of long-term funding of
operations. They are recognized at proceeds received, net of direct issue costs.
Finance lease liabilities are measured at initial value less the capital element of lease
repayments (see Note 27.2).
Trade payables are initially recognized at their fair value and subsequently measured at
amortized cost.
PAS 10.12
PAS 39.39
Financial liabilities are derecognized from the statement of financial position only when
the obligations are extinguished either through discharge, cancellation or expiration.
2.11 Provisions
PAS 37.14
Provisions are recognized when present obligations will probably lead to an outflow of
economic resources and they can be estimated reliably even if the timing or amount of
the outflow may still be uncertain. A present obligation arises from the presence of a
legal or constructive commitment that has resulted from past events.
Provisions are measured at the estimated expenditure required to settle the present
obligation, based on the most reliable evidence available at the end of the reporting
period, including the risks and uncertainties associated with the present obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be
required in settlement is determined by considering the class of obligations as a whole.
When time value of money is material, long-term provisions are discounted to their
present values using a pretax rate that reflects market assessments and the risks specific
to the obligation. Provisions are reviewed at the end of each reporting period and
adjusted to reflect the current best estimate.
PAS 37.33
In those cases where the possible outflow of economic resource as a result of present
obligations is considered improbable or remote, or the amount to be provided for
cannot be measured reliably, no liability is recognized in the financial statements.
Similarly, possible inflows of economic benefits to the Company that do not yet meet
the recognition criteria of an asset are considered contingent assets, hence, are not
recognized in the financial statements. On the other hand, any reimbursement that the
Company can be virtually certain to collect from a third party with respect to the
obligation is recognized as a separate asset not exceeding the amount of the related
provision.
Interest income Recognized as the interest accrues taking into account the effective
yield on the asset.
(d) Dividends Revenue is recognized when the Companys right to receive payment is
established.
Cost and expenses are recognized in profit or loss upon utilization of goods or services or at the
date they are incurred. Expenditure for warranties is recognized and charged against the
associated provision when the related revenue is recognized. All finance costs are reported in
profit or loss, except capitalized borrowing costs which are included as part of the cost of the
related qualifying asset (see Note 2.17), on an accrual basis.
25
If the Company provides after-sales support (either for sale of goods or rendering of services), the following
disclosure should be added:
The Company commits to extensive after-sales support in its service segment. The consideration received is
allocated between the goods sold and the after-sales support based on the relative fair values of these
separately identifiable components. The amount of the selling price associated with the subsequent servicing
agreement is deferred and recognized as revenue over the period which the service is performed. This
deferred income is included in Other Liabilities (or other appropriate account in the statement of financial
position).
- 16 -
2.13 Leases 26
The Company accounts for its leases as follows:
PAS 1.123 (b)
Philippine
Interpretation
IFRIC 4
26
The Company determines whether an arrangement is, or contains a lease based on the
substance of the arrangement. It makes an assessment of whether the fulfillment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
PAS 17.23, Leases, requires a general description of significant leasing arrangements including, but not limited to,
(a) the basis on which contingent rent payments are determined; (b) the existence and terms of renewal or
purchase options and escalation clauses; and (c) restrictions imposed by the lease arrangements.
If the Company has an arrangement, comprising a transaction or a series of related transactions, that does not
take the legal form of a lease but conveys a right to use an asset in return for a payment or series of payments as
interpreted under Philippine Interpretation IFRIC 4, Determining whether an Arrangement Contains a Lease, consider
using the example below.
The Company determines whether an arrangement is, or contains a lease based on the substance of the
arrangement. It makes an assessment of whether the fulfillment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
- 17 -
The accounting records of the Company are maintained in Philippine pesos. Foreign
currency transactions during the year are translated into the functional currency at
exchange rates which approximate those prevailing on transaction dates.
Foreign currency gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the statement of comprehensive
income as part of income or loss from operations27.
27
If applicable add, except for differences arising on the retranslation of available-for-sale equity instruments, a
financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash flow
hedges, which are recognized in other comprehensive income.
28
If the Company is identified as a single unit, i.e., it has no individually identifiable cash generating units, remove
the whole paragraph and all subsequent phrase or sentence pertaining to it such as or cash-generating units.
29
If the entity does not have any of the employee benefit plans discussed in this note, do not include them in the
disclosure. On the other hand, if there are share-based compensation and other post-employment obligations,
disclose the entitys policies here.
- 18 PAS 19.48-125
A defined benefit plan is a post-employment plan that defines an amount of postemployment benefit that an employee will receive on retirement, usually dependent
on one or more factors such as age, years of service and salary. The legal obligation
for any benefits from this kind of post-employment plan remains with the
Company, even if plan assets for funding the defined benefit plan have been
acquired. Plan assets may include assets specifically designated to a long-term
benefit fund, as well as qualifying insurance policies. The Companys postemployment defined benefit pension plan covers all regular full-time employees.
The pension plan is tax-qualified, noncontributory and administered by a trustee.
PAS 19.49-62
PAS 19.120A
(a)
Actuarial gains and losses are not recognized as an income or expense unless the
total unrecognized gain or loss exceeds 10% of the greater of the obligation and
related plan assets. The amount exceeding this 10% corridor is charged or credited
to profit or loss over the employees expected average remaining working lives.
Actuarial gains and losses within the 10% corridor are disclosed separately. Past
service costs are recognized immediately in profit or loss, unless the changes to the
post-employment plan are conditional on the employees remaining in service for a
specified period of time (the vesting period). In this case, the past service costs are
amortized on a straight-line basis over the vesting period.
PAS 19.43-47
PAS 19.133
PAS 19.134
PAS 19.139
- 19 -
PAS 19.17
The Company recognizes a liability and an expense for bonuses and profit-sharing,
based on a formula that takes into consideration the profit attributable to the
Companys shareholders after certain adjustments. The Company recognizes a
provision where it is contractually obliged to pay the benefits, or where there is a
past practice that has created a constructive obligation.
(d) Compensated Absences
PAS 19.11
PAS 23.9
Compensated absences are recognized for the number of paid leave days (including
holiday entitlement) remaining at the end of the reporting period. They are
included in Trade and Other Payables account in the statement of financial position
at the undiscounted amount that the Company expects to pay as a result of the
unused entitlement.
Tax expense recognized in profit or loss comprises the sum of deferred tax and current
tax not recognized in other comprehensive income or directly in equity, if any.
PAS 1.108
(a, b)
PAS 12.46
Current tax assets or liabilities comprise those claims from, or obligations to, fiscal
authorities relating to the current or prior reporting period, that are uncollected or
unpaid at the reporting period. They are calculated using the tax rates and tax laws
applicable to the fiscal periods to which they relate, based on the taxable profit for the
year. All changes to current tax assets or liabilities are recognized as a component of tax
expense in profit or loss.
PAS 12.51
Deferred tax is provided, using the liability method on temporary differences at the end
of the reporting period between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes. Under the liability method, with certain
exceptions, deferred tax liabilities are recognized for all taxable temporary differences
and deferred tax assets are recognized for all deductible temporary differences and the
carryforward of unused tax losses and unused tax credits to the extent that it is probable
that taxable profit will be available against which the deferred income tax asset can be
utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilized.
- 20 -
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
to the period when the asset is realized or the liability is settled provided such tax rates
have been enacted or substantively enacted at the end of the reporting period
PAS 12.47
Most changes in deferred tax assets or liabilities are recognized as a component of tax
expense in profit or loss. Only changes in deferred tax assets or liabilities that relate to
items recognized in other comprehensive income or directly in equity are recognized in
other comprehensive income or directly in equity.
2.19 Equity
Capital stock represents the nominal value of shares that have been issued.
Additional paid-in capital includes any premium received on the initial issuance of capital
stock. Any transaction costs associated with the issuance of shares are deducted from
additional paid-in capital, net of any related income tax benefits.
Treasury shares are stated at the cost of reacquiring such shares.
Revaluation reserves comprise gains and losses due to the revaluation of property, plant
and equipment and certain financial assets.
Retained earnings include all current and prior period results of operations as disclosed in
the statement of comprehensive income.
3.
30
These are examples of the types of disclosures that might be required in this area depending whether they are
applicable or not to the Company; they should be included only if relevant and significant to the financial
statements. The matters disclosed will be dictated by the circumstances of the individual entity and by the
significance of judgments and estimates made to the results of operations and financial position of the entity.
Instead of disclosing this information in a separate note, it may be more appropriate to include such disclosures
in the relevant asset and liability notes, or as part of the relevant accounting policy disclosures.
- 21 -
maturity other than for specific circumstances as allowed under the standards, it will
be required to reclassify the whole class as available-for-sale financial assets. In such
a case, the investments would therefore be measured at fair value, not amortized
cost.
(b) Impairment of Available-for-sale Financial Assets
The determination when an investment is other-than-temporarily impaired requires
significant judgment. In making this judgment, the Company evaluates, among
other factors, the duration and extent to which the fair value of an investment is less
than its cost, and the financial health of and near-term business outlook for the
investee, including factors such as industry and sector performance, changes in
technology and operational and financing cash flows. Based on the recent
evaluation of information and circumstances affecting the Companys available-forsale financial assets, management concluded that no the assets are not impaired as of
December 31, 2009 and 2008. Future changes in those information and
circumstance might significantly affect the carrying amount of the assets.
(c) Distinction Between Investment Properties and Owner-managed Properties
The Company determines whether a property qualifies as investment property. In
making its judgment, the Company considers whether the property generates cash
flows largely independent of the other assets held by an entity. Owner-occupied
properties generate cash flows that are attributable not only to the property but also
to other assets used in the production or supply process.
Some properties comprise a portion that is held to earn rental or for capital
appreciation and another portion that is held for use in the production and supply of
goods and services or for administrative purposes. If these portion can be sold
separately (or leased out separately under finance lease), the Company accounts for
the portions separately. If the portion cannot be sold separately, the property is
accounted for as investment property only if an insignificant portion is held for use
in the production or supply of goods or services or for administrative purposes.
Judgment is applied in determining whether ancillary services are so significant that a
property does not qualify as investment property. The Company considers each
property separately in making its judgment.
(d) Operating and Finance Leases
The Company has entered into various lease agreements. Critical judgment was
exercised by management to distinguish each lease agreement as either an operating
or finance lease by looking at the transfer or retention of significant risk and rewards
of ownership of the properties covered by the agreements. Failure to make the right
judgment will result in either overstatement or understatement of assets and
liabilities.
(e) Provisions and Contingencies
Judgment is exercised by management to distinguish between provisions and
contingencies. Policies on recognition and disclosure of provision and disclosure of
contingencies are discussed in Note 2.11 and relevant disclosures are presented in
Notes 17 and 27.
- 22 -
- 23 -
methods and assumptions. Any change in fair value of these financial assets and
liabilities would affect profit or loss and other comprehensive income.
Fair value gains in financial assets at fair value through profit or loss of P2.4 million
in 2009 and P2.6 million in 2008 were recognized in profit or loss (see Note 6) while
fair value loss on available-for-sale financial assets of P3.5 million in 2009 (none in
2008) was reported in the other comprehensive income (see Note 9). The carrying
values of the assets are disclosed in Notes 6 and 9, respectively.
(e) Realizable Amount of Deferred Tax Assets
The Company reviews its deferred tax assets at the end of each reporting period and
reduces the carrying amount to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be
utilized. The carrying value of deferred tax assets, which management assessed to be
fully utilized within the next two to three years, as of December 31, 2009 and 2008 is
disclosed in Note 23.
(f) Impairment of Non-financial Assets
The Companys policy on estimating the impairment of non-financial assets is
discussed in Note 2.15. Though management believes that the assumptions used in
the estimation of fair values reflected in the financial statements are appropriate and
reasonable, significant changes in these assumptions may materially affect the
assessment of recoverable values and any resulting impairment loss could have a
material adverse effect on the results of operations.
Impairment losses recognized on non-financial assets, totaled P4.5 million in 2009
and P8.2 million in 2008 arising from Investments in Subsidiaries and Associates
(see Note 10) and Property, Plant and Equipment (see Note 11).
(g) Retirement and Other Benefits
The determination of the Companys obligation and cost of pension and other
retirement benefits is dependent on the selection of certain assumptions used by
actuaries in calculating such amounts. Those assumptions are described in Note 22
and include, among others, discount rates, expected return on plan assets and salary
increase rate. In accordance with PFRS, actual results that differ from the
assumptions are accumulated and amortized over future periods and therefore,
generally affect the recognized expense and recorded obligation in such future
periods.
The estimated retirement benefit obligation amounted to P16.6 million and
P16.5 million as of December 31, 2009 and 2008, respectively, while fair value of
plan assets as of those dates amounted to P51.3 million and P44.0 million,
respectively (see Note 22).
(h) Provision for Restoration of Leased Property
Determining provision for leased property restoration requires estimation of the cost
of dismantling and restoring the leased properties to their original condition. The
Company estimated that the total cost to be incurred at the end of the lease term to
be P8.5 million (see Note 17.2). A significant change in the credit-adjusted risk-free
rate used in discounting the estimated cost would result in a significant change in the
amount of provision recognized with a corresponding effect on profit or loss.
- 24 -
4.
PAS 7.45
PAS 1.77
2009
Cash on hand and in banks
Short-term placements
2008
2,885,116
13,757,132
3,445,563
17,566,539
16,642,248
21,012,102
Cash in banks generally earn interest at rates based on daily bank deposit rates.
Short-term placements are made for varying periods of between 15 to 30 days and earn
effective interest ranging from 4.5% to 7.1% in 2009 and 4.2% to 6.5% in 2008.
The balances of the cash on hand and in banks as of December 31, 2009 and 2008 did
not include an amount of P2.5 million31 which is shown as part of the non-current Trade
and Other Receivables account (see Note 5). Such amount is not available for the
general use of the Company in accordance with a restriction under a loan covenant
(see Note 15.1).
PAS 7.48
5.
PAS 1.77
PAS 1.78 (b)
Non-current:
Loans to employees
Loan to an associate
Receivable under
finance lease
Others
Allowance for impairment
PFRS 7.8
24
2009
P
(
24
27.3
2008
20,696,078 P
4,892,010) (
15,804,068
6,080,000
2,905,008
756,901
108,000
19,251,912
4,385,726 )
14,866,186
1,945,985
3,935,322
934,333
108,000
25,653,977
21,789,826
9,070,636
8,552,568
10,552,881
7,437,015
24.4
27.3
4
(
3,740,090
2,527,489
23,890,783
2,000,000) (
21,890,783
4,725,667
2,518,489
25,234,052
2,000,000 )
P
23,234,052
31
This could also be presented in the statement of financial position as restricted cash immediately after the Cash
and Cash Equivalent account if the restriction is not exceeding 12 months from the statement of financial
position date. However, materiality should also be considered.
32
This can also be presented by showing all items making up the total trade and other receivables together and
deducting the amount representing the non-current portion of the receivables to arrive at the current portion.
If this presentation is followed, the reconciliation of the allowance should also be presented in the same manner.
All of the Companys trade and other receivables have been reviewed for indicators of
impairment. Certain trade receivables and other receivables, which are mostly due from
the small business customers, were found to be impaired, hence, adequate amount of
allowance for impairment have been recorded.
PFRS 7.16
A reconciliation33 of the allowance for impairment at the beginning and end of 2009 and
2008 is shown below.
Note
Current:
Balance at beginning
of year
Impairment loss
during the year
Write-off of receivables
P
21.1
(
2009
4,385,726
2008
2,006,284
1,500,000)
2,449,284
1,936,442
-
4,892,010
4,385,726
2,000,000
1,700,000
21.1
300,000
2,000,000
2,000,000
The loans to employees34 are interest-bearing and payable through salary deduction
within three years from the grant date. The effective interest rate on loans to employees
is 6.5% in both years.
Loan to an associate represents non-interest unsecured bearing loan amounting to
P20 million was made in 2007 to finance an associates business expansion and is
repayable in February 2017. The loan is carried at amortized cost using the effective
interest rate of 15.0% at the inception of the loan agreement. Interest income
recognized in 2009 and 2008 is presented under Finance Income in the statements of
comprehensive income (see Note 21.2). The fair values of the loan to an associate in
2009 and 2008 amounted to P8.6 million and P7.4 million, respectively. These are
determined by calculating the present value of the cash flows anticipated until the end of
the lease term using interest rates of 12.7% in 2009 and 13.5% in 2008. As the loan
does not have an active market, the underlying interest rates were determined by
reference to the market interest rate of a comparable financial instrument.
The net carrying value of trade and other receivables is considered a reasonable
approximation of fair value (see Note 29).35
PFRS 7.25
PFRS 7.29
33
Similar to the requirements of PFRS 7.16, SEC Rule 68.1 also requires a disclosure of the changes in the
account, i.e., amount of allowance for impairment recognized and reversed or written off during the year.
34
As deemed necessary, provide additional information (similar to this) to comply with the SEC requirements on
disclosure of material items, i.e., 5% of related total for listed/other publicly accountable entities and 10% of all
other companies (refer to SEC Memorandum Circular No. 8 series of 2009 for details).
35
Disclosure of fair value is not required when the carrying amount is a reasonable approximation of fair value.
- 26 -
6.
PAS 1.77
2009
Philippines
Hong Kong
Unites States (U.S.)
PFRS 7.8
2008
16,105,455
9,663,273
6,442,182
21,751,837
16,923,429
9,668,816
32,210,910
48,344,082
The carrying amounts of the above financial assets are classified as follows:
2008
2009
Held-for-trading
Designated as at fair value through
profit or loss on initial recognition
16,105,455
16,105,455
P
32,210,910
21,754,837
26,589,245
48,344,082
All amounts presented have been determined directly by reference to published prices
quoted in an active market.
The Company recognized the increase in value of financial assets designated as at fair
value through profit or loss of P2.4 million in 2009 and P2.6 million in 2008 as part of
Finance Income in the statements of comprehensive income (see Note 21.2).
7.
INVENTORIES
Except for the portion of finished goods stated at net realizable value, inventories at the
end of 2009 and 2008 were stated at cost.36 The details of inventories are shown below.
PAS 1.77
PAS 1.78 (c)
2009
PAS 2.36 (b)
PAS 2.36 (c)
Finished goods:
At cost
At net realizable value
13,761,853
12,432,280
26,194,133
21,456,010
3,300,505
500,200
17,667,984
15,469,089
33,137,073
24,456,155
2,100,029
457,059
51,450,848
60,150,316
Work-in-progress
Raw materials
Supplies
36
2008
An analysis of the cost of inventories included in the cost of sales for the year is
presented in Notes 18.1 and 20.
It was assumed in this presentation that the rest of the inventory items are stated as cost. If all or more than one
of the inventory items consist of items that are stated at cost and at net realizable value (NRV), present separate
rows of items at cost and at NRV. Disclosure should also include reversal of write-down that is recognized as
income in the period, if any, and the circumstances or events that led to the reversal of a write-down of
inventories.
In 2009, the Company reversed a P2.8 million inventory write-down in 2007 following
the sale of those finished goods. In 2008, the inventory write-down amounted to
P2.2 million while no reversal of previous write-downs was made. The inventory writedown and reversal are included as part of Cost of Sales37 in the statements of
comprehensive income (see Note 18.1).
Raw materials amounting to P3.2 million and P1.8 million in 2009 and 2008,
respectively, have been released under trust receipt agreements (see Note 15.1).
8.
PAS 1.77
PREPAYMENTS
The composition of this account is shown below.
2009
Prepaid rent
Prepaid insurance
Input VAT
Others
9.
PAS 1.77
PFRS 7.8
2008
6,358,031
3,789,000
2,000,138
2,511,969
6,015,190
2,400,125
1,440,283
1,305,217
14,659,138
11,160,815
Note
Held-to-maturity financial assets:
Government bonds
Corporate bonds
Allowance for impairment
P
21.1
15,000,000
5,360,400
20,360,400
1,350,453)
19,009,947
2008
P
7,562,354
3,850,400
3,000,000
14,412,754
P
33,422,701
15,000,000
5,618,300
20,618,300
20,618,300
5,562,845
4,250,210
4,500,000
14,313,055
34,931,355
Interest income recognized in 2009 and 2008 are presented as part of Finance Income in
the statements of comprehensive income (see Note 21.2).
37
PAS 2, paragraph 36 (d) requires disclosure of the amount of inventories recognized as an expense during the
period.
- 28 -
2008
16,945,382
3,564,565
18,346,432
6,271,868
20,509,947
24,618,300
The fair values of these bonds are based on published price quotations in active markets.
2009
2008
14,313,055 P
2,540,972
(
3,500,000)
1,068,097
9,370) (
14,505,938
717,113 )
619,605
95,375 )
14,412,754
14,313,055
P
21.1
PAS 39.67
38
If previously, there was an accumulated fair value losses recognized directly in equity through other
comprehensive income, such should be presented in the statement of comprehensive income as a reclassification
adjustment.
- 29 -
Golf club shares are proprietary membership club shares. In 2009 and 2008, the fair
value of these shares declined by P1.5 million and P0.8 million, respectively. The
Companys management has determined in 2008 that there is objective evidence that the
decline in the value of these shares is permanent. Accordingly, impairment loss
amounting to P3.5 million (nil has been previously accumulated in equity) 38 is
recognized in profit or loss as part Finance Costs in the statements of comprehensive
income (see Note 21.1).
PAS 39.67
The fair values of available-for-sale financial assets have been determined directly by
reference to published prices in active markets.
10.
PAS 1.77
% Interest
Held
Subsidiaries:
D Company
S Company
Associates:
TXT Co.
KOL, Inc.
Allowance for impairment
2009
100%
80%
40%
30% in 2009
20% in 2008
88,299,200
47,993,960
20,354,376
16,875,750
173,523,286
18,950,900) (
P 154,572,386
2008
P
88,299,200
47,993,960
20,354,376
11,250,500
167,898,036
15,650,400)
P 152,247,636
In June 2009, the Company made an additional investment in the shares of KOL, Inc.
amounting to P5.6 million which increased the Companys ownership interest in the
investee from 20% to 30%.
The Companys management has assessed that the investment in TXT Co. may not be
fully recoverable due to the downturn in the business prospects of this associate.
Accordingly, an impairment loss was recognized based on the present value of the
estimated cash flows discounted at the current market rate of return for similar financial
asset. The impairment loss charged to profit or loss amounted to P3.3 million in 2009
and P7.1 million in 2008. These amounts are presented as part of Other Gains (Losses)
in the statements of comprehensive income (see Note 21.3).
39
See Appendix for sample disclosure if the FS presented are not separate FS (i.e., consolidated or investors
financial statements are presented).
- 30 -
11.
PAS 1.77
PAS 16.73 (d)
43,460,039 ) (
4,400,000 )
14,329,488 )
18,312,474
75,390,471
29,441,962
3,200,000 )
9,628,688 )
34,658,378
19,813,274
66,089,971
22,320,892
33,959,687 ) (
2,080,000 )
P
30,050,284
5,977,888 )
P
(
P
(
19,833,503
6,852,143
17,183,503
9,881,010 )
14,971,143
(
19,290,800
17,542,708
19,290,800
P 10,915,320
14,971,143
19,290,800
P 10,915,320
15,682,118
16,860,800
4,400,000 )
P 172,414,764
8,763,499
87,450,696 )
P 108,085,488
8,779,209 )
P 199,936,184
7,302,493
Total
7,928,846
16,343,004
19,290,800
Construction
in
Progress
8,351,793
12,981,360 )
20,408,305
Land
12,479,459 )
Transportation
Equipment
25,533,503
17,181,710 )
P
(
39,230,432
37,532,093 ) (
Office Furniture
and
Equipment
32,641,962
87,090,471
Building
and
Improvements
68,921,350 )
3,200,000 )
P 100,293,414
8,859,460
P 146,996,744
5,578,959 )
55,397,544 )
2,080,000 )
10,103,159
18,860,800
8,859,460
89,519,200
Machinery
and
Equipment
Balance at January 1, 2009,
net of accumulated
depreciation
and impairment
P
Additions
Disposals
Depreciation charges
for the year
(
Impairment loss
(
Balance at December 31,
2009, net of accumulated
depreciation and
impairment
P
Balance at January 1, 2008,
net of accumulated
depreciation
and impairment
P
Additions
Revaluations
Depreciation charges
for the year
(
Impairment loss
(
Balance at December 31,
2008, net of accumulated
depreciation and
impairment
P
40
34,658,378
11,700,000
-
Building
and
Improvements
5,927,946 ) (
1,200,000 )
19,813,274
3,200,000
4,700,800 )
-
Office Furniture
and
Equipment
P
(
(
6,852,143
5,700,000
1,450,100 )
2,750,250 )
-
Transportation
Equipment
P
(
(
8,763,499
2,865,597
1,430,960 )
Land
2,269,290 )
-
19,290,800
-
Construction
in
Progress
Total
P 10,915,320
4,055,823
-
P 100,293,414
27,521,420
2,881,060 )
(
(
15,648,286 )
1,200,000 )
39,230,432
18,312,474
8,351,793
7,928,846
19,290,800
14,971,143
P 108,085,488
30,050,284
9,300,500
-
16,343,004
2,670,870
4,450,200
7,302,493
2,650,000
-
10,103,159
1,860,590
-
16,860,800
2,430,000
8,859,460
2,055,860
-
3,572,406 ) (
1,120,000 )
34,658,378
3,650,800 )
-
19,813,274
3,100,350 )
-
6,852,143
3,200,250 )
-
8,763,499
19,290,800
P 10,915,320
PAS 16.73(e), requires the disclosure, for each class of property, plant and equipment, of a reconciliation
showing the gross carrying amounts and accumulated depreciation (and impairment, if any) of property, plant
and equipment at the beginning and at the end of the year and the changes during the year.
(
(
89,519,200
18,537,820
6,880,200
13,523,806 )
1,120,000 )
P 100,293,414
The Companys land and building and improvements were last revalued on
December 15, 2009 by independent appraisers. Fair value is determined by reference to
market-based evidence, which is the amount for which the assets could be exchanged
between a knowledgeable willing buyer and a knowledgeable willing seller in an arms
length transaction as at the valuation date. The revaluation surplus, net of applicable
deferred income taxes, is presented as part of the Revaluation Reserves account in the
equity section of the statements of financial position.
If land and building and improvements were carried at the cost model, the carrying
amounts would be as follows:41
Cost
Accumulated depreciation
Net carrying amount
Building and
Improvements
2009
2008
2009
2008
P 22,691,462 P 19,491,462
6,242,795 )
9,757,822) (
P 11,160,800
-
P 11,160,800
-
P 12,933,640
P 11,160,800
P 11,160,800
Land
P 13,248,667
In 2009 and 2008, the Company recognized impairment losses of P1.2 million and
P1.1 million, respectively (see Notes 19.2 and 20), to write-down to recoverable amount
certain assets following the reorganization within the electronics segment. The
recoverable amount was based on value in use using discounted cash flows discounted
at a nominal rate of 12.1% in 2009 and 2008 on a pre-tax basis. The impairment loss
was charged to Administrative Expenses in the statements of comprehensive income.
The Company recognized gain on disposal of Office Furniture and Equipment and
Transportation Equipment totaling P2.5 million in 2009 (see Note 19.1).
The amount of depreciation is allocated as follows (see Note 20):
2009
Note
Cost of sales
Cost of services
Selling and distribution costs
Administrative expenses
18.1
18.2
2008
9,985,496
452,575
3,126,129
2,084,086
9,017,385
305,120
2,520,781
1,680,520
15,648,286
13,523,806
Land and building and improvements with a total carrying value of P20.0 million are
used as collaterals for certain interest-bearing loans and borrowings (see Note 15).
41
Present this analysis only for PPE items stated at revalued amount (fair value).
42
PAS 17 requires, among others, the disclosure of the net carrying amount for each class of asset under a finance
lease as at the statement of financial position date.
- 32 PAS 17.35 (c )
As of December 31, 2009 and 2008, the carrying amount of transportation equipment
held under finance leases amount to P1.4 million and P1.6 million, respectively
(see Note 15).42
12.
INVESTMENT PROPERTY43
PAS 40.5
PAS 40.75 (f)
The Companys investment property includes several parcels of land which are owned
for investment purposes only. No income or loss (other than fair value gains)44 or direct
operating expenses were recognized during the reporting periods presented. Real estate
tax amounting to P185,000 for each year was recognized as a related expense in 2009
and 2008.
PAS 40.76
The changes in the carrying amounts presented in the statement of financial position can
be summarized as follows as of December 31:
Notes
Balance at beginning of year
Additions
Transfer to assets-heldfor-sale
Fair value gains
P
14
21.3
2009
(
P
2008
16,756,936
4,569,316
15,436,500
-
3,550,000)
1,740,342
19,516,594
1,320,436
P
16,756,936
INTANGIBLE ASSETS
The gross carrying amounts and accumulated depreciation and impairment at the
beginning and end of 2009 and 2008 are shown below.
PAS 38.118
Licenses and
Franchises
Deferred
Development
Costs
Total
P 13,780,000
(
8,828,000)
P
(
9,150,000
3,900,000)
P 22,930,000
( 12,728,000)
4,952,000
5,250,000
P 10,202,000
P
(
8,500,000
7,200,000)
P
(
3,750,000
3,000,000)
P 12,250,000
( 10,200,000)
1,300,000
750,000
2,050,000
43
If cost model is used, disclose the fair value of the investment property (PAS 40.79(e). In exceptional cases
described in PAS 40.53, when an entity cannot determine the fair value of the investment property reliably, it
shall disclose: (1) a description of the investment property; (2) an explanation of why fair value cannot be
determined reliably; and (3) if possible, the range of estimates within fair value is highly likely to lie.
44
- 33 Licenses and
Franchises
Total
January 1, 2008
Cost
Accumulated amortization
P
(
8,500,000
6,100,000)
P
(
3,750,000
2,250,000)
P 12,250,000
(
8,350,000)
2,400,000
1,500,000
3,900,000
A reconciliation of the carrying amounts at the beginning and end of 2009 and 2008 is
shown below.
PAS 38.126
Deferred
Development
Costs
Licenses and
Franchises
Deferred
Development
Costs
1,300,000
5,280,000
1,628,000)
Total
750,000
5,400,000
900,000)
2,050,000
10,680,000
2,528,000)
4,952,000
5,250,000
P 10,202,000
P
(
2,400,000
1,100,000)
P
(
1,500,000
750,000)
P
(
3,900,000
1,850,000)
1,300,000
750,000
2,050,000
2008
1,516,800
1,011,200
1,110,000
740,000
2,528,000
1,850,000
- 34 PFRS 5.41
14.
15.
PAS 1.77
PFRS 7.7
2009
Notes
Current:
Bank loans
Acceptances payable
and liabilities under
trust receipts
Obligations under
finance leases
Others
Non-current:
Bank loans
Obligations under
finance leases
10,000,000
2008
P
10,000,000
3,000,000
4,000,000
27.2
180,000
1,110,000
180,000
2,472,700
14,290,000
16,652,700
53,600,000
56,300,000
11, 27.2
1,220,000
P
54,820,000
1,400,000
P
57,700,000
The bank loans represent secured and unsecured loans from a local commercial bank.
The loans bear annual interest rates ranging from 10.75% to 16.5% in both years,
subject to monthly repricing.
The long-term debt represents the $760,000 loan obtained by the Company in
December 2006 from a local bank. The debt is payable up to 2011 and bears interest
at an annual average rate of 9% in 2009 and 8% in 2008. On December 29, 2007,
the Company obtained an additional loan from the same bank amounting to
US$240 million. The new loan, which is payable up to 2013, bears a fixed interest of
10% per annum.
The finance lease liability has an effective interest rate of 8.75%, which is equal to the
rate in the lease contract. Lease payments are made on a monthly basis (see Note 27.2).
PAS 17.20
45
Separately disclose/indicate if interest-bearing loans and borrowings include items denominated in foreign
currency.
- 35 -
PFRS 7.25
2008
2009
Bank loans
Obligations under finance leases
56,420,540
1,110,100
58,120,031
1,382,700
57,530,640
59,502,731
The fair values of long-term financial liabilities have been determined by calculating their
present values at the end of the reporting period using effective market interest rates
available to the Company. No fair value changes have been included in profit or loss for
the period as loans and borrowings are carried at amortized cost in the statement of
financial position.
PFRS 7.27
Certain Company assets are used as collaterals for the secured short-term bank loans
and the long-term debt (see Notes 4, 7 and 11). In addition, the long-term bank loans
require the Company to maintain a debt-to-equity ratio of at least 1:1, which is
monitored on a quarterly basis (see Note 29).
PFRS 7.14
16.
PAS 1.77
2009
Note
Trade payables
Accrued expenses
Others
24.2
2008
38,657,586
9,242,886
1,819,428
40,661,477
15,542,050
5,245,098
49,719,900
61,448,625
Accrued expenses include the current portion of the Companys obligations to its
current and former employees that are expected to be settled within 12 months from the
reporting period. These liabilities arise mainly from accrued holiday entitlement at the
end of the reporting period and pension payments (see also Note 22).
PAS 1.60
The carrying amount of trade and other payables, which are expected to be settled
within the next 12 months from reporting period, is a reasonable approximation of fair
value (see Note 29).47
46
The fair value of short-term financial liabilities need not be determined individually if the carrying amount is a
reasonable approximation of the fair values.
47
- 36 -
17.
PROVISIONS
The changes in each class of provisions during the year are as follows48:
Product
Warranty
PAS 1.77
PAS 37.84 (a)
PAS 37.84 (b)
PAS 37.84 (c)
PAS 37.84 (d)
Leased Property
Restoration
Total
11,105,649
6,130,500
9,057,252 )
1,750,654 )
6,428,243
4,082,707
4,829,437
1,598,806
4,082,707
4,829,437
5,681,513
6,428,243
4,082,707
10,510,950
13,438,511
4,379,620
5,456,030 )
1,256,452 )
3,197,359
415,656
-
P
(
(
16,635,870
4,795,276
5,456,030 )
1,256,452 )
(
(
(
(
3,613,015
469,692
-
P
(
(
P
14,718,664
6,600,192
9,057,252 )
1,750,654 )
10,510,950
11,105,649
3,613,015
14,718,664
8,511,981
2,593,668
3,613,015
8,511,981
6,206,683
11,105,649
3,613,015
14,718,664
A provision is recognized for expected warranty claims on products sold during the last
three years, based on the Companys past experience of the level of repairs and returns. It
is expected that a significant portion of the provision will be incurred in 2010.
The Company leases warehouses from a third party. The lease agreement requires the
Company to restore the warehouse to its original state at the end of the lease term in
2015. A provision was recognized for the present value of the costs to be incurred for
the restoration of the leased warehouses. The total estimated cost to be incurred at the
end of lease term is P8.5 million. Finance costs related to the unwinding of discount
amounted to P0.5 million in 2009 and P0.4 million in 2008 and are shown as part of
Finance Costs in the statements of comprehensive income (see Note 21.1).
48
PAS 37 requires disclosure, for each class of provisions, of the carrying amount at the beginning and end of year
and the changes during the year. Comparative information is not required but prepare may opt to include it in
the disclosure.
- 37 -
18.
Notes
Finished goods at
beginning of year
33,137,073
2008
P
40,079,614
3,300,505) (
2,100,029)
21,456,010) (
93,167,067
24,456,155)
61,389,404
26,194,133) (
33,137,073)
2,100,029
4,559,225
24,456,155
37,363,584
34,385,100
19,618,714
27,686,672
14,020,077
20,438,854
21,240,760
P 100,110,007
68,331,945
Notes
Salaries and employee benefits
Materials, supplies and facilities
Outside services
Depreciation
Rental
Miscellaneous
49
22
2008
6,952,007
1,771,025
800,100
452,575
200,378
54,269
6,512,500
1,447,125
754,125
305,120
180,120
75,725
10,230,354
9,274,715
11
BIR requires disclosure of the breakdown of cost of sales and services in the notes to FS.
- 38 -
19.
2009
2008
11
12
2,456,432
1,740,978
1,740,342
1,450,000
1,717,912
1,818,855
1,320,436
1,450,000
3,335,926
9,105,553
7,925,217
3,300,500
7,108,146
10
11
1,200,000
564,215
P
PAS 1.104
20.
5,064,715
1,120,000
564,621
P
8,792,767
50
2009
2008
P 56,868,438
P 40,745,265
38,189,134
18,176,286
12,133,696
29,544,476
15,373,806
7,171,333
9,943,085
7,000,800
3,771,709
1,990,780
1,709,151
6,001,702
4,975,811
3,335,610
1,956,788
1,609,154
1,200,000
804,142
3,522,693
1,120,000
1,554,976
1,193,470
P 155,309,914
P 114,582,391
In addition to the requirements by regulators for sufficient details in the financial statements, adding these
information especially when involving material amounts aids in the understandability of the financial
information.
- 39 -
Cost of sales
Cost of services
Selling and distribution costs
Administrative expenses
Other operating expenses
21.
Notes
2009
18.1
18.2
P 100,110,007
10,230,354
23,829,851
19,375,487
1,764,215
P 155,309,914
P 114,582,391
2009
2008
19.2
2008
68,331,945
9,274,715
20,545,136
14,745,974
1,684,621
15
17.2
10,204,530
469,692
10,057,718
415,656
15
435,908
11,110,130
456,156
10,929,530
9
5
9.1
3,500,000
2,006,284
1,350,453
6,856,737
2,236,442
2,236,442
17,966,867
13,165,972
51
52
Finance cost includes all interest expenses, other expenses and losses related to financial instruments (including
foreign exchange losses).
- 40 -
2009
2,562,874
9
4
5
1,257,900
2,277,345
1,115,552
2,454,768
469,995
970,045
9
4
652,879
234,197
654,246
548,231
102,155
157,195
P
22.
2,412,922
2008
8,605,041
7,265,263
EMPLOYEE BENEFITS
2008
48,102,333
8,766,105
30,977,563
9,767,702
56,868,438
40,745,265
The Company maintains a wholly funded54, tax-qualified, noncontributory postemployment benefit plan that is being administered by a trustee covering all regular fulltime employees. Actuarial valuations are made annually to update the retirement
benefit costs and the amount of contributions.
The amounts of retirement benefit obligation recognized in the statements of financial
position are determined as follows:
2009
Present value of the obligation
Fair value of plan assets
Excess of plan assets
Unrecognized actuarial gains
P
(
(
P
2008
50,584,956 P
51,276,260) (
691,304) (
17,298,317
16,607,013
40,953,099
43,956,344 )
3,003,245 )
19,498,318
16,495,073
53
Finance income includes all interest income and gains related to financial instruments including dividends
received from financial assets.
54
PAS 19.120A(d) requires the disclosure of an analysis of defined benefit obligation into amounts arising from
plans that are wholly unfunded and amounts arising from plans that are wholly or partly unfunded. Since the
above entity maintains only a wholly funded plan, an analysis is not presented but disclosure of the fact that it
maintains a wholly funded plan is made.
- 41 -
The movements in the present value of the retirement benefit obligation55 recognized in
the books are as follows:
PAS 19.120A
(c)
2008
2009
PAS 19.120A
(c)
40,953,099 P
13,619,396
2,000,000)
1,987,539) (
50,584,956
(
(
28,177,359
12,871,757
1,100,000
1,196,017)
40,953,099
PAS 19.120A
(e)
2009
Balance at beginning of year
Contributions paid into the plan
Benefits paid by the plan
Actuarial gains
Expected return on plan assets
Balance at end of year
2008
43,956,344 P
1,654,164
1,987,539) (
3,257,657
4,395,634
51,276,260
31,044,246
9,758,705
1,196,017 )
1,245,355
3,104,055
43,956,344
PAS 19.120A
(k)
2009
Equity securities
Government bonds
Property occupied by an associate
2008
20,869,370
20,156,890
10,250,000
18,450,220
15,256,124
10,250,000
51,276,260
43,956,344
PAS 19.120A
(m)
Actual returns on plan assets were P2.4 million in 2009 and P3.2 million in 2008.
P
(
(
P
2009
2008
7,885,962 P
5,733,434
4,395,634) (
7,168,561
5,703,196
3,104,055 )
-
457,657)
8,766,105
9,767,702
55
If applicable, include in the disclosure the benefits paid by the plan (settlements). It was assumed in the above
example that there were no settlements made from the plan in both years.
56
This is used for purposes of illustration only. The entity should use what is specific to the entity, usually
indicated in its actuarial valuation report.
57
- 42 -
PAS 19.120A
(p)(ii)
2009
18.1
18.2
2008
5,383,053
1,353,221
2,029,831
4,883,852
1,953,540
2,930,310
8,766,105
9,767,702
Presented below are the historical information related to the present value of the
retirement benefit obligation, fair value of plan assets and excess or deficit in the plan
(in thousand Philippine pesos) as well as experienced adjustments arising on plan assets
and liabilities.
2009
2008
(P
691) (P
112 (P
Experience adjustments
arising on plan liabilities
Experience adjustments
arising on plan assets
50,585
51,276
20
2007
40,953
43,956
2006
28,177
31,044
2005
32,025
28,395
24,018
22,716
3,003) (P
2,867) P
3,630
1,302
13) P
85 (P
32) P
34
54
27 (
24
2)
PAS 19.120A
(q)
The Company expects to pay P3.5 million in contributions to retirement benefit plans
in 2010.
PAS 19.120A
(n)
For the determination of the retirement benefit obligation, the following actuarial
assumptions were used:
Discount rates
Expected rate of return on plan assets
Expected rate of salary increases
2009
2008
8%
10%
8%
12%
10%
8%
Assumptions regarding future mortality are based on published statistics and mortality
tables. The average life expectancy of an individual retiring at the age of 65 is 18 for
males and 20 for females.56
The overall expected long-term rate of return on assets is 10%. The expected longterm rate of return is based on the portfolio as a whole and not on the sum of the
returns on individual asset categories. The return is based exclusively on historical
returns, without adjustments.57
- 43 -
23.
TAXES
23.1 Current and Deferred Tax
PAS 12.80
The components of tax expense as reported in profit or loss and other comprehensive
income:
2009
Reported in profit or loss
Current tax expense:
Regular corporate income tax
(RCIT) at 30% in 2009 and
35% in 2008
Final tax at 20% and 7.5%
PAS 12.84
10,301,323
579,606
10,880,929
5,147,494
5,147,494
P
16,028,423
314,267
-
2008
4,670,017)
2,770,481
1,899536)
(
P
16,318,782
3,276,372
684,821)
2,591,551
314,267
17,756,653
461,665
18,218,318
P
(
12,661,607
2008
P
17,727,910
1,912,782) (
682,382)
4,208,108
173,920
1,155,175
789,678) (
705,993
16,028,423
2,487,851
6,726,746)
567,748
2,770,481
P
16,318,782
- 44 PAS 12.84
The net deferred tax assets relate to the following as of December 31:
Statements of Other Comprehensive Income
Other Comprehensive
Profit or Loss
Income
2008
2007
2008
2007
4,982,104
3,153,285
2,067,603
5,773,276
5,818,444
2,235,004
1,320,000
1,120,000
669,660
1,617,091
405,136
4,052,650 )
5,143,112 )
492,905 )
30,365 )
450,720 )
560,896 )
281,278 )
1,591,380
56,287 )
304,887
7,263,948
P
(
435,024 P
79,944 )
167,401
715,661 )
200,000) (
358,400 )
947,431
714,304 )
405,136)
415,021) (
415,021 )
462,540
422,540
110,176) (
1,244,124
791,172
2,665,159
5,147,494
(P
80,128 )
684,821 )
393,642 )
314,267
3,276,372
314,267
P 2,591,551
1,899,536 )
12,725,709
The Company is subject to the minimum corporate income tax (MCIT) which is
computed at 2% of gross income, as defined under the tax regulations. No MCIT was
reported in 2009 and 2008 as the RCIT was higher than MCIT in both years.58
58
If the entity has MCIT/NOLCO, present breakdown per layer (see AAR 2005-3 for details on presentation and
disclosure in accordance with PAS 12).
- 45 -
24.
PAS 24.17, 18
Sale of goods:
Subsidiaries
Associates
Rendering of services:
Subsidiaries lease of equipment
Associate administrative services
Amount of
Transactions
2009
2008
Outstanding
Balances
2009
2008
P23,024,416 P15,171,911
9,524,623
5,698,125
P 3,852,505 P 5,291,293
1,235,841
500,365
12,568,247
3,251,789
9,125,456
2,548,698
P48,369,075 P32,544,190
2,587,213
923,546
1,987,456
523,874
P 8,599,105 P 8,302,988
Goods are sold on the basis of the price lists in force with non-related parties. 60
Services rendered are usually on a cost-plus basis, allowing a margin ranging from 20%
to 30%.
PAS 24.21
The outstanding receivables from sales of goods and services are presented as part of
Trade Receivables under the current Trade and Other Receivables account in the
statements of financial position (see Note 5).
24.2 Purchases of Goods and Services
Amount of
Transactions
2009
2008
Purchases of goods:
Subsidiary
Associates
Purchases of services:
Parent management services
Key management personnel services
P33,424,213 P25,571,932
7,514,223
6,993,126
4,200,480
2,800,320
Outstanding
Balances
2009
2008
P 4,852,565 P
235,841
3,585,487
2,390,324
P47,939,236 P38,540,869
1,754,126
1,169,417
P
2,291,243
1,543,334
914,324
609,550
8,011,949 P 5,358,451
Goods are purchased on the basis of the price lists in force with non-related parties.
The related outstanding payables for goods purchased in 2009 and 2008 are presented
as part of Trade and Other Payables account in the statements of financial position
(see Note 16).
PAS 24.21
Services rendered are usually on a cost-plus basis, allowing a margin ranging from 20%
to 30%. The related outstanding payables for services obtained in 2009 and 2008 are
presented in the Due to Related Parties account in the statements of financial position.
59 Based
on the SEC guidelines on disclosures for related party transactions, all related party transactions should be
disclosed regardless of the amount (no materiality considerations).
60
Management should disclose that related party transactions were made on an arms length basis only when such
terms can be substantiated (PAS 24.21)
The Company obtains advances from its parent company and its subsidiaries for
working capital purposes. The advances are non-interest bearing, unsecured and
repayable within 12 months.
The breakdown of advances are as follows:
PAS 24.22
P
(
P
P
(
P
P
(
P
2009
2008
15,495,316
P
10,119,451
13,897,456) (
11,642,351
26,750,090
22,897,125)
5,167,311
15,495,316
13,869,677 P
7,569,498
15,178,660) (
9,814,546
11,696,898
7,641,767)
6,260,515
13,869,677
29,364,993 P
17,688,949
29,076,116) (
21,456,897
38,446,988
30,538,892)
29,364,993
17,977,826
In 2007, the Company granted a P20 million loan to an associate to finance the
associates business expansion. The loan is non-interest bearing, unsecured and payable
in full after 10 years (see Note 5).
24.5 Key Management Personnel Compensations62
PAS 24.16
2009
Short-term benefits
Post-employment benefits
Termination benefits
Other long-term benefits
10,365,041
3,861,758
833,622
781,759
9,901,621
2,451,029
559,321
451,029
15,842,180
13,363,000
61
Information already provided in other notes need not be repeated, a simple reference to the related note would
suffice. This principle is also applicable to all other note disclosures.
62
If the Company provides share-based payment compensations to employee, disclose relevant expenses for the
periods presented.
PAS 37.86
The Company has guaranteed the loan obtained by its subsidiary from a local bank
amounting to P28 million in 2009, repayable in 2010, and P35 million in 2008,
repayable in 2009. The Company has not recorded the fair value of the guarantee
liability of P528,000 in 2008 and P485,345 in 2007 because of the short duration of the
contracts and the low probability of the subsidiarys default in paying its borrowings.
25.
EQUITY
25.1 Capital Stock
PAS 1.79
Shares
Preferred 10% cumulative,
non-participating, convertible into
common shares P100 par value
Authorized, issued and
outstanding
Common shares P10 par value
Authorized 35,000,000 shares
Issued:
Balance at beginning of year
Issued during the year
Balance at end of year
Subscribed:
Balance at beginning of year
Issued during the year
Balance at end of year
Subscriptions receivable:
Balance at beginning of year
Collections during the year
Balance at end of year
Amount
2009
2008
100,000
100,000
10,000,000
4,000,000
14,000,000
10,000,000
10,000,000
1,900,000
( 1,900,000)
-
1,900,000
1,900,000
2009
2008
P 10,000,000 P 10,000,000
100,000,000
40,000,000
140,000,000
19,000,000
19,000,000)
-
3,750,000) (
3,750,000
(
-
100,000,000
100,000,000
19,000,000
19,000,000
3,750,000 )
3,750,000 )
P150,000,000 P125,250,000
63
This is required under SEC rules on capital stock of corporations filing under SRC Rule 68; not required for
listed and public companies.
P 14,694,607 ( P
(
1,185,773 )
Related
Deferred
Tax
Total
871,105 ) ( P 4,838,226 )
1,058,727 (
-
317,618 )
355,732
741,109
(
830,041 )
P 13,508,834 P
( P 4,800,112)
P 8,896,344
P 4,943,149
6,880,200
(
1,185,773 )
P 14,694,607 ( P
187,622
P 8,985,276
524,230 (
-
2,591,551 )
415,021
871,105 ) ( P 4,838,226 )
4,812,879
(
770,752 )
P 8,985,276
The BOD approved the declaration of cash dividends of P1.57 per common share (or a
total of P22.0 million) on June 30, 2009 and P1.14 per common share (or a total of
P13.6 million) on June 30, 2008, payable to stockholders of record as of July 15, 2009
and 2008, respectively. The dividends were paid within their respective year of
declaration and approval.
The aggregate amount of cumulative preferred dividends in arrears as of December 31,
2009 and 2008 amount to P5.0 million and P4.0 million, respectively, or P5 per share
and P4 per share, respectively.
PAS 10.21
26.
64
PAS 10 requires that when non-adjusting events after the statement of financial position date are of such
importance that non-disclosure would affect the ability of the users of the financial statements to make proper
evaluations and decisions, an enterprise should disclose the following information for each significant category
of non-adjusting event after the statement of financial position date: (a) the nature of the event; and (b) an
estimate of its financial effect, or a statement that such an estimate cannot be made.
- 49 -
27.
PFRS 7.39
PAS 17.35 (a)
PAS 17.35 (b)
2008
1,815,000
1,815,000
4,362,171
4,635,254
P
10,812,425
6,177,171
6,450,254
P
14,442,425
Total rentals from these operating leases amounted to P2.0 million in 2009 and 2008, of
which the major portion was charged to Cost of Sales (see Note 18.1).
27.2 Finance Lease Commitments Company as Lessee 67
PFRS 7.39
PAS 17.31(a)
(b)
The Company has finance leases covering certain transportation equipment with terms
ranging from three to six years. The leases provide options to purchase the
transportation equipment at the end of the lease terms. Future minimum lease
payments (MLP) under the finance leases together with the present value (PV) of the
net minimum lease payments (NMLP) are as follows:
2009
Future
MLP
2008
PV of
NMLP
Future
MLP
PV
of NMLP
210,000 P 180,000
1,034,000
900,000
700,000
500,000
1,944,000
1,580,000
(
364,000)
P 1,580,000 P 1,580,000
The liabilities relating to the finance leases are shown as part of Interest-bearing Loans
and Borrowings (see Note 15).
65
PAS 37, Provisions Contingent Liabilities and Contingent Assets, requires the disclosure for each class of contingent
liability to include a brief description of the nature of the contingent liability and, where applicable: (a) an
estimate of its financial effect; (b) an indication of the uncertainties relating to the amount or timing of any
outflow; and (c) the possibility of reimbursement.
66
PAS 17, Leases, requires the disclosure of information on future minimum rental payable for more than five
years.
67
PAS 17, Leases, requires reconciliation between the total of minimum lease payments at the statement of
financial position date, and their present value. In addition, an enterprise should disclose the total of the
minimum lease payments at the statement of financial position date, their present value, for each of the periods
disclosed above.
PFRS 7.39
PAS 17.47 (a)
PAS 17.47 (f)
On December 29, 2007, the Company entered into a finance lease covering certain
specialized equipment with a lease term of six years. Future minimum lease payments
receivable (MLPR) under this finance lease together with the PV of net minimum lease
payments receivable (NMLPR) are as follows:
2009
Future
MLPR
PV of
NMLPR
2008
Future
MLPR
PV
of NMLPR
P 1,108,901 P 943,333
3,990,091
3,773,332
1,209,019
943,335
6,308,011
5,660,000
(
648,011)
-
P 4,496,991 P 4,496,991
P 5,660,000 P 5,660,000
The net investment relating to this finance lease is presented as Receivable under
Finance Lease (current and non-current, see Note 5).
27.4 Legal Claims68
Ongoing litigation against the Company relates to a dispute with a competitor who
alleges that the Company has infringed patents and seeks damages amounting to
P50.0 million. The Companys legal counsel has advised that it is probable that the
Company will not be found liable. Hence, no provision for the claim has been made in
the financial statements as of December 31, 2009 and 2008.
PAS 37.86
Various warranty and legal claims were brought against the Company during the year.
Management considers these claims to be unjustified and the probability that they will
require settlement at the Companys expense to be remote. This evaluation has been
backed up by external independent legal advice.
PAS 37.92
None of these contingencies are discussed here in detail so as not to seriously prejudice
the Companys position in the related disputes.
27.5 Capital Commitments
As of December 31, 2009 and 2008, the Company has commitments of about
P8.0 million and P10.5 million, respectively, for the acquisition of new plant and
machinery.
27.6 Others
As of December 31, 2009 and 2008, the Company has unused letters of credit
amounting to P30.0 million and P35.0 million, respectively.
68
As indicated in PAS 37, paragraph 92, in extremely rare cases, disclosure of some or all of the information
required by paragraphs 84-89 of PAS 37 can be expected to prejudice seriously the position of the entity in a
dispute with other parties on the subject matter of the provision, contingent liability or contingent asset. In such
cases, an entity need not disclose the information, but shall disclose the general nature of the dispute, together
with the fact that, and reason why, the information has not been disclosed.
- 51 -
28.
PAS 1.114
(d)(ii)
PFRS 7.33
PFRS 7.34
PFRS 7.36
The Companys risk management is coordinated with its parent company, in close
cooperation with the BOD, and focuses on actively securing the Companys short- to
medium-term cash flows by minimizing the exposure to financial markets. Long-term
financial investments are managed to generate lasting returns.
The Company does not actively engage in the trading of financial assets for speculative
purposes nor does it write options. The most significant financial risks to which the
Company is exposed to are described below.
28.1 Market Risk
PFRS 7.40
The Company is exposed to market risk through its use of financial instruments and
specifically to currency risk, interest rate risk and certain other price risks which result
from both its operating and investing activities.
(a) Foreign Currency Sensitivity
Most of the Companys transactions are carried out in Philippine pesos, its functional
currency. Exposures to currency exchange rates arise from the Companys overseas
sales and purchases, which are primarily denominated in U.S. dollars and Hongkong
dollars. The Company also holds U.S. dollar-denominated cash and cash equivalents.
Further, the Company has a U.S. dollar loan from a local bank which has been used to
fund the purchase of certain fixed assets (see Note 15).
To mitigate the Companys exposure to foreign currency risk, non-Philippine peso cash
flows are monitored.
Foreign currency denominated financial assets and liabilities, translated into Philippine
pesos at the closing rate are as follows:
U.S.
Dollar
69
2009
Hongkong
Dollar
2008
U.S.
Dollar
Hongkong
Dollar
Financial assets
Financial liabilities
P 9,876,543 P 4,564,332
( 41,765,432 )
-
P 14,654,321 P 9,876,543
( 48,765,432 )
-
( P 31,888,889 ) P 4,564,332
( P 34,111,111 ) P 9,876,543
Financial assets
Financial liabilities
P 8,650,957 P 5,098,941
( 21,498,965 )
-
P 10,995,546 P 7,046,886
( 17,699,937 )
-
Long-term exposure
( P 12,848,008 ) P 5,098,941
( P 6,704,391 ) P 7,046,886
The sample disclosures presented in this note are for the guidance of the preparer only. The actual disclosures
should consider the particular circumstances of the Company.
- 52 -
The following table illustrates the sensitivity of the Companys profit before tax with
respect to changes in Philippine peso against foreign currencies exchange rates. The
percentage changes in rates have been determined based on the average market
volatility in exchange rates, using standard deviation, in the previous 12 months at a
99% confidence level.
2009
Reasonably
2008
Effect in
Effect in
equity before
tax
in rate
tax
PhP - USD
16.7%
8,113,544 (P
PhP - HKD
18.0%
1,739,389)
6,374,155 (P
Total
642,974)
-
Reasonably
Effect in
Effect in
possible change
profit before
equity before
rate
tax
tax
18.0%
8,111,332 (P
765,038)
20.0%
3,384,686)
4,726,646 (P
642,974)
765,0380)
Exposures to foreign exchange rates vary during the year depending on the volume of
overseas transactions. Nonetheless, the analysis above is considered to be
representative of the Companys currency risk.
(b) Interest Rate Sensitivity
The Companys policy is to minimize interest rate cash flow risk exposures on longterm financing. Longer-term borrowings are therefore usually at fixed rates. At
December 31, 2009 and 2008, the Company is exposed to changes in market interest
rates through its bank borrowings and cash and cash equivalents, which are subject to
variable interest rates (see Notes 4 and 15). All other financial assets and liabilities have
fixed rates.
The following table illustrates the sensitivity of the Companys profit before tax and
equity to a reasonably possible change in interest rates of +/- 1.82% and 1.9% for
Philippine Peso and +/- 0.88% and 0.9% for U.S. dollar in 2009 and 2008, respectively.
These changes are considered to be reasonably possible based on observation of
current market conditions. The calculations are based on a change in the average
market interest rate for each period, and the financial instruments held at the end of
each reporting period that are sensitive to changes in interest rates. All other variables
are held constant.
2009
+ 182/ 88 - 182/ 88
Profit before tax
Equity
(P 401,212) P 401,212
33,884 (
33,884)
2008
+190/ 90
(P
363,960) P
38,252 (
-190/ 90
363,960
38,252)
- 53 -
For equity securities listed in the Philippines and golf club shares an average volatility of
23% and 25% has been observed during 2009 and 2008. If quoted price for these
securities increased or decreased by that amount, profit before tax would have changed
by P3,704,255 in 2009 and P5,437,959 in 2008, respectively. While equity would have
change by P690,000 and P1,125,000 in 2009 and 2008, respectively.
The investments in listed equity securities are considered long-term strategic
investments. In accordance with the Companys policies, no specific hedging activities
are undertaken in relation to these investments. The investments are continuously
monitored and voting rights arising from these equity instruments are utilized in the
Companys favor.
28.2 Credit Risk
PFRS 7.36
Credit risk is the risk that a counterparty fails to discharge an obligation to the
Company. The Company is exposed to this risk for various financial instruments, for
example by granting loans and receivables to customers, placing deposits and
investment in bonds.
The Company continuously monitors defaults of customers and other counterparties,
identified either individually or by group, and incorporate this information into its
credit risk controls. The Companys policy is to deal only with creditworthy
counterparties. In addition, for a significant proportion of sales, advance payments are
received to mitigate 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 (or in
the detailed analysis provided in the notes to the financial statements), as summarized
below.
2009
Notes
Cash and cash equivalents
Trade and other
receivables net
Held-to-maturity
financial assets
Available-for-sale
financial assets70
Financial guarantee
16,642,248
2008
P
21,012,102
47,544,760
45,023,878
19,009,947
20,618,300
9
24.5
3,850,400
528,000
4,250,210
485,345
87,575,355
91,389,835
None of Companys the financial assets are secured by collateral or other credit
enhancements.
The Companys management considers that all the above financial assets that are not
impaired or past due for each reporting dates are of good credit quality.
(a) Cash and cash equivalents
The credit risk for cash and cash equivalents is considered negligible, since the
counterparties are reputable banks with high quality external credit ratings.
70
- 54 -
14,245,094
2008
P
13,998,478
1,345,876
2,193,490
1,520,024
1,456,245
262,000
-
18,567,239
16,453,968
The carrying amount of financial assets whose terms have been renegotiated, that
would otherwise be past due or impaired is P3.0 million in 2009 and P2.4 million in
2008.
(c) Held-to-maturity investments
No impairment loss has been recorded in relation to the bonds (held to maturity
investments, (see Note 9.1) which have been graded AA by Standard & Poors. No
amounts in relation to the bonds are past due. The carrying amounts disclosed above
are the Companys maximum possible credit risk exposure in relation to these
instruments.
PFRS 7.39
PFRS 7.B11
The Company manages its liquidity needs by carefully monitoring scheduled debt
servicing payments for long-term financial liabilities as well as cash outflows due in a
day-to-day business. Liquidity needs are monitored in various time bands, on a day-today and week-to-week basis, as well as on the basis of a rolling 30-day projection.
Long-term liquidity needs for a 6-month and one-year period are identified monthly.
The Company maintains cash to meet its liquidity requirements for up to 60-day
periods. Excess cash are invested in time deposits, mutual funds or short-term
marketable securities. Funding for long-term liquidity needs is additionally secured by
an adequate amount of committed credit facilities and the ability to sell long-term
financial assets.
- 55 -
As at December 31, 2009, the Companys financial liabilities have contractual maturities
which are presented below.
Current
Within
6 to 12
Months
6 Months
Interest-bearing loans and borrowings
Trade and other payables
Due to related parties
Other non-current liability
Loan commitments
Non-current
1 to 5
Later
Years
5 Years
P 10,218,200
26,260,958
-
P 15,451,400
23,458,942
17,977,826
-
P 29,692,800 P 21,726,600
2,853,276
8,000,000
-
P 36,479,158
P 56,888,168
P 40,546,076 P 21,726,600
Non-current
1 to 5
Later
Years
5 Years
P 11,520,600
31,987,277
-
P 17,418,900
29,461,348
29,364,993
-
P 30,902,400 P 22,633,800
2,853,276
10,500,000
-
P 43,507,877
P 76,245,241
P 44,255,676 P 22,633,800
The above contractual maturities reflect the gross cash flows, which may differ from
the carrying values of the liabilities at the end of the reporting periods.
PFRS 7.8
PFRS 7.25
29.
The carrying amounts and fair values of the categories of assets and liabilities presented
in the statements of financial position are shown below.
Notes
2009
Carrying Values
2008
Fair Values
Carrying Values
Fair Values
Financial assets
Loans and receivables:
Cash and cash equivalents
16,642,248 P
16,642,248 P
21,012,102 P
21,012,102
47,544,760
47,544,760
21,789,826
21,789,826
64,187,008 P
64,187,008 P
42,801,928 P
42,801,928
32,210,910 P
32,210,910 P
48,344,082 P 48,344,082
Debt securities
Equity securities
3,850,400 P
3,850,400 P
4,250,210 P
4,250,210
10,562,354
10,562,354
10,062,845
10,062,845
14,412,754 P
14,412,754 P
14,313,055 P
14,313,055
- 56 Notes
2009
2008
Fair Values
Carrying Values
Carrying Values
Fair Values
Held-to-maturity investments
Debt securities
15
19,009,947 P
20,509,947 P
20,618,300 P
24,618,300
Financial Liabilities
Financial liabilities at amortized cost:
Interest-bearing loans
69,110,000 P
71,820,640 P
74,352,700 P
76,155,431
and borrowings
16
49,719,900
49,719,900
61,448,625
61,448,625
24
17,977,826
17,977,826
29,364,993
29,364,993
2,853,276
3,235,677
3,766,067
4,245,455
See Notes 2.4 and 2.10 for a description of the accounting policies for each category of
financial instrument. A description of the Companys risk management objectives and
policies for financial instruments is provided in Note 28.
29.2 Fair Value Hierarchy
PFRS 7.27A
The table below presents the hierarchy of fair value measurements used by the
Company.
(In thousands)
December 31, 2009
Financial assets at fair value
through profitor loss
Available-for-sale financial
assets
Level 1
32,211
Level 2
13,303
P
45,514
48,344
61,669
Total
32,211
1,100
10
14,413
1,100 P
10 P
46,624
48,344
13,325
Level 3
900
88
14,313
900 P
88 P
62,657
In the first year of application of the amendments to PFRS 7, Financial Instruments: Disclosures, an entity need not
provide comparative information for the disclosures required by the amendments.
- 57 PAS 1.134
PAS 1.135 (a-e)
30.
Total liabilities
Total equity
Debt-to-equity ratio
2009
2008
P 169,093,177
330,027,844
P 204,356,442
300,339,801
1 : 1.51
1 : 1.68
The Company sets the amount of capital in proportion to its overall financing structure,
i.e., equity and financial liabilities. The Company manages the capital structure and
makes adjustments to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital
structure, the Company may adjust the amount of dividends paid to shareholders, issue
new shares or sell assets to reduce debt.
The Company has complied with its covenant obligations, including maintaining the
required debt-to-equity ratio for both years. The ratio-reduction in 2009 is the result of
the net liability repayment in 2009 and the increase in equity due to additional stock
issuance and 2009 net profit.73
72
The sample disclosures presented in this note are only for the guidance of the preparer of the financial
statements. The actual disclosures should consider the particular circumstances of the Company.
73
In case there has been a covenant violation (even if during the interim period), such violation should be
disclosed and the result of such violation.
III.A.1 - Appendix
1 of 1
PAS 1.51(a)
PAS 1.51(a)
PAS 1.49
PAS 1.51(c)
PAS 1.51(d)
Notes
PAS 1.82 (a)
PAS 1.85, 99
REVENUES
Sale of goods
Rendering of services
Others
PAS 1.85
OPERATING PROFIT
PAS 1.85
PAS 1.82 (b)
PAS 1.85
PAS 1.85
TAX EXPENSE
NET PROFIT
PAS 1.85
P
18
22
24
27
5, 9, 11
21
21
(
(
(
181,171,539
19,900,506
5,636,837
156,982,596
13,334,605
4,262,264
206,708,882
174,579,465
56,868,438
38,189,134
18,176,286
9,943,085
8,369,481
7,000,800
3,771,709
3,206,284
1,990,780
1,709,151
804,142
1,832,844
151,862,134
40,745,265
29,544,476
15,373,806
6,001,702
4,486,712
4,975,811
3,335,610
3,356,442
1,956,788
1,609,154
1,554,976
1,436,932
114,377,674
54,846,748
60,201,791
11,110,130 )
1,531,260 )
12,641,390 )
23
10,929,530 )
1,378,911
9,550,619 )
42,205,358
50,651,172
16,028,423
16,318,782
26,176,935
34,332,390
1,055,376
314,267
741,109
7,404,430
2,591,551
4,812,879
23
26,918,044
2007
2008
These statements of income format illustrates an example of the "nature of expense" method (PAS 1.91).
39,145,269
III.A.2 - Appendix
1 of 2
PAS 1.51(a)
PAS 1.51(a)
PAS 1.49
PAS 1.51(c)
PAS 1.51(d)
Notes
PAS 1.82 (a)
PAS 1.85, 99
REVENUES
Sale of goods
Rendering of services
Others
PAS 1.85
OPERATING PROFIT
PAS 1.85
PAS 1.82 (b)
PAS 1.85
P
18
PAS 1.85
TAX EXPENSE
NET PROFIT
22
24
27
5, 9, 11
21
21
(
(
(
181,171,539
19,900,506
5,636,837
156,982,596
13,334,605
4,262,264
206,708,882
174,579,465
56,868,438
38,189,134
18,176,286
9,943,085
8,369,481
7,000,800
3,771,709
3,206,284
1,990,780
1,709,151
804,142
1,832,844
151,862,134
40,745,265
29,544,476
15,373,806
6,001,702
4,486,712
4,975,811
3,335,610
3,356,442
1,956,788
1,609,154
1,554,976
1,436,932
114,377,674
54,846,748
60,201,791
11,110,130 )
1,531,260 )
12,641,390 )
23
2007
2008
10,929,530 )
1,378,911
9,550,619 )
42,205,358
50,651,172
16,028,423
16,318,782
26,176,935
34,332,390
III.A.2 - Appendix
3 of 3
PAS 1.51(a)
PAS 1.51(a)
PAS 1.49
PAS 1.51(c)
PAS 1.51(d)
Notes 1
PAS 1.82 (f)
NET PROFIT
2008
2009
P
26,176,935
34,332,390
PAS 1.99
22
5,257,657
145,355
1,058,727
524,230
Exchange differences on
translating foreign operations
PAS 16.77
PAS 1.99
664,000 )
11
23
341,000 )
6,880,200
5,652,384
7,208,785
1,695,715 )
2,523,075 )
4,685,710
3,956,669
PAS 1.85
PAS 1.85
30,133,604
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
39,018,100
III.B.1 - Appendix
1 of 4
ADDITIONAL DISCLOSURES FOR COMPANIES THAT DERIVE INCOME
FROM CONSTRUCTION CONTRACTS1
2009
2008
PAS 1.51
PAS 1.68(h)
CURRENT ASSETS
Trade and other receivables
31,552,647
31,762,516
PAS 1.51
CURRENT LIABILITIES
Trade and other payables
12
16,994,219
20,214,043
PAS 1.68(j)
CONTRACT REVENUE
15
PAS
11.40(A)
CONTRACT COSTS
16
PAS 1.83
GROSS PROFIT
PAS 1.92
OPERATING EXPENSES
Selling and marketing costs
Administrative expenses
Other operating expenses
17
17
17
2009
2008
P386,068,474 P366,028,504
368,129,489
323,264,548
17,938,985
42,763,956
1,467,335
398,112
34,215
1,235,158
598,112
58,215
A construction contract is defined in PAS 11.13 as a contract specifically negotiated for the construction of an
asset.
III.B.1 - Appendix
2 of 4
Notes SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PAS 11.31
III.B.1 - Appendix
3 of 4
Note 5 TRADE AND OTHER RECEIVABLES
This account consists of the
following:
___ 2009___
Construction contract receivables:
Billed
Retention
Unbilled
Allowance for impairment
Advances to:
Suppliers and subcontractors
Officers and employees
Others
Other receivables
_____2008____
15,480,504 P
2,405,000
224,000
18,109,504
1,245,648) (
16,863,856
6,423,567
2,467,312
43,567
5,754,345
19,393,434
6,254,000
134,030
25,781,464
1,000,000)
24,781,464
4,325,321
1,567,432
544,325
543,674
31,552,647 P
31,762,516
PAS 11.40(b)
PAS 11.42(b)
Trade payables
Accrued expenses
Advances received for contract work
Amounts due to related parties
Amounts due to customers for
contract work:
Progress billings in excess of
recognized revenues
Provision for estimated contract
Losses
10,980,004 P
2,000,000
214,000
220,000
3,580,215
______-______
P
16,994,219
9,390,456
8,200,000
131,000
119,000
2,373,587
P
20,214,043
III.B.1 - Appendix
4 of 4
Revenues from:
Completed contracts
Contracts-in-progress
P 335,262,614
P 269,436,175
96,592,329
50,805,860
P 386,068,474
PAS 11.40
P 366,028,504
PAS 11.40(a)
PAS 11.40(b)
PAS 11.40(c)
P
12
5
50,805,860
214,000
5,503,854
94,218,742
131,000
8,905,392
These disclosures are required for all contract-in-progress (i.e., excluding finished or completed contracts).
Hence, retention receivables and advances from customers, as presented here, may not be the same as the
amounts those under Trade and Other Receivables. Please refer to PAS 11 for computations of the amounts
disclosed.
III.B.2 - Appendix
1 of 2
ADDITIONAL DISCLOSURES FOR COMPANIES THAT DERIVE INCOME
FROM SALE OF AGRICULTURE PRODUCTS1
2009
2008
PAS 1.51
PAS 1.68(g)
CURRENT ASSETS
Inventories
22,605,865 26,899,398
PAS 1.51
NON-CURRENT ASSETS
Property and equipment
Biological assets
11
12
18,698,154 19,845,632
12,569,123 9,587,456
PAS 1.68(a)
PAS 41.41
2008
32,698,123 28,698,154
8,389,756
5,389,784
Agriculture activity is defined under PAS 41.5 as the management by an enterprise of the biological
transformation of biological assets for sale into agricultural produce or into additional biological assets.
PAS 41 (Amendment) requires the use of market-based discount rate where fair value calculations are based
on discounted cash flows and the removal of the prohibition on taking into account biological
transformation when calculating fair value.
III.B.2 - Appendix
2 of 2
Note 1 COMPANY INFORMATION
D&M Company is engaged in milk production for supply to various
customers. As of December 31, 2009, the Company held 419 cows able to
produce milk (mature assets) and 137 heifers that are being raised to produce
milk in the future (immature assets). The Company produced 157,584 kg of
milk with a fair value, net of estimated point-of-sale costs, of P518,240 (that
is determined at the time of milking) in the year ended December 31, 2009.
Notes 2 ACCOUNTING POLICIES
Livestock are measured at their fair value less estimated point-of-sale costs.
The fair value of livestock is determined based on market prices of livestock
of similar age, breed and generic merit. Milk is initially measured at its fair
value less estimated point-of-sale costs at the time of milking. The fair value
of milk is determined based on market prices in the local area.
2007
P2,960,000 P3,457,000
2,625,000 1,535,000
153,000
144,000
240,000
258,000
(1,318,000) (2,434,000)
P 4,660,000
P 2,960,000
Separating the increase in fair value less estimated point-of-sale costs between the portion attributable to
physical changes and the portion attributable to price changes is encouraged but not required by PAS 41.
III.B.3 - Appendix
1 of 2
ADDITIONAL DISCLOSURES FOR COMPANIES THAT CARRY
PROPERTY, PLANT AND EQUIPMENT AT COST
PAS 16.67-68,
71
Property, plant and equipment, except land, are carried at acquisition cost
or construction cost less subsequent depreciation and any impairment
losses. Land held for use in production or administration is stated at cost
less any impairment losses.
The cost of an asset comprises its purchase price and directly attributable
costs of bringing the asset to working condition for its intended use.
Expenditures for additions, major improvements and renewals are
capitalized; expenditures for repairs and maintenance are charged to
expense as incurred. When assets are sold, retired or otherwise disposed
of, their cost and related accumulated depreciation and impairment losses
are removed from the accounts and any resulting gain or loss is reflected in
income for the period.
III.B.3 - Appendix
2 of 2
PAS 16.73 (b)
PAS 16.73 (c)
10-20 years
5-12 years
5-10 years
3-5 years
PAS 16.51
PAS 16.68, 71
III.B.4 - Appendix
1 of 5
ADDITIONAL DISCLOSURES FOR INVESTMENTS IN JOINT VENTURES
AND ASSOCIATES - AT EQUITY1
NON-CURRENT ASSETS
Long-term financial assets
Investments in associates
9
10
2009
2008
33,422,701 34,931,355
37,230,120 31,604,876
2009
2008
60,201,791
PAS 1.85
OPERATING PROFIT
54,846,748
(11,110,130) (10,929,530)
18,865,644 (12,654,456)
10
See PAS 28.13 for guidance on when to account for Investments in Associates at equity.
III.B.4 - Appendix
2 of 5
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PAS 1.117
PAS 28.13
Associates are those entities over which the Company is able to exert
significant influence but which are neither subsidiaries nor interests in a
joint venture. Investments in associates are initially recognized at cost
and subsequently accounted for using the equity method.
Acquired investments in associates are also subject to purchase
accounting. However, any goodwill or fair value adjustment attributable
to the share in the associate is included in the amount recognized as
investments in associates. Goodwill is the excess of the acquisition cost
over the fair value of the Companys chare of the identifiable net assets
of the investee at the date of acquisition.
All subsequent changes to the ownership interest in the equity of the
associates are recognized in the Companys carrying amount of the
investments. Changes resulting from the profit or loss generated by the
associates are credited or charged against the Equity in Net Earnings
(Losses) of Associates account in the Companys income statement.
Items that have been directly recognized in the associates equity are
recognized in equity of the Company. Distributions received from the
associates are accounted for as a reduction of the carrying value of the
investment.
Changes resulting from other comprehensive income of the associate or
items recognized directly in the associates equity are recognized in
other comprehensive income or equity of the Company, as applicable.
However, when the Companys share of losses in an associate equals or
exceeds its interest in the associate, including any other unsecured
receivables, the Company does not recognize further losses, unless it
has incurred obligations or made payments on behalf of the associate.
If the associate subsequently reports profits, the investor resumes
recognizing its share of those profits only after its share of the profits
exceeds the accumulated share of losses that has previously not been
recognized.
The investor shall apply the requirements of PAS 39 to determine whether any impairment loss should be
recognized on its investments. If there is an indication of impairment, the entities carrying amount of the
investment (including goodwill) shall be tested for impairment under PAS 36.
III.B.4 - Appendix
3 of 5
PAS 28.22
PAS 28.26
2008
P13,456,543 P 10,335,245
34,453,658
33,245,098
P 47,910,201 P 43,580,343
Current liabilities
Non-current liabilities
P 5,346,409 P 5,439,650
5,235,308
4,678,498
P 10,581,717 P 10,118,148
Income
Expenses
P25,987,489 P 23,548,098
20,545,908
19,543,598
P
5,41,581 P 4,005,500
As of the end of 2009 and 2008, the Companys capital commitment with respect
to its interest in the joint venture amounted to P3,417,892 and P2,111,982,
respectively. There are no other contingent liabilities that the Company has
incurred in relation to the joint venture.
III.B.4 - Appendix
4 of 5
40%
30%
25%
2009 __
2008___
P23,500,000 P 23,500,000
15,000,000
11,250,000
5,000,00
5,000,000
43,500,000
39,750,000
2009
2008
P 4,755,720 P 12,156,220
6,870,950 ( 5,900,500)
( 1,500,000) ( 1,500,000)
10,126,670
4,755,720
P48,626,670 P 39,505,720
All of the above associates are incorporated in the Philippines whose shares of
stock are not listed in the stock exchange and; hence, the fair value of its shares
cannot be determined reliably.
In June 2009, the Company made an additional investment in shares of Zire, Inc.
amounting to P3,750,000 which increased the Companys ownership interest in
the investee from 25% to 30%.
The balance of the equity in net earnings of P10.1 million and P4.8 million as of
December 31, 2009 and 2008, respectively, which is lodged in the Companys
retained earnings as of those dates is not available for declaration as dividends by
the Company.3
Consolidated subsidiaries income included in consolidated retained earnings is also not available for dividend
declaration.
III.B.4 - Appendix
5 of 5
PAS
28.37(b)
The Companys share4 in the results of operations of associates and in their assets
and liabilities (including goodwill) are as follows:
Income
Assets
Liabilities
Revenues
(Loss)
2009:
Trio Company
P 40,654,154 P 24,587,963 P 30,548,123 P 6,354,124
10,569,456
8,546,789
(1,356,897)
Zire, Inc.
33,564,981
Tungs Ltd.
25,549,781
15,894,827
14,598,789
1,873,723
P 99,768,916 P 51,052,246 P 53,693,701 P 6,870,950
2008:
Trio Company
Zire, Inc.
Tungs Ltd.
P60,268,007
P34,649,265
(P5,900,500)
The carrying amount of goodwill as of December 31, 2009 and 2008 included in
the carrying value of Investments in Associates amounted to P3.5 million in both
years.
Alternatively, the Company may present the gross amount of the assets and liabilities (excluding goodwill) of
associates.
III.B.5 Appendix
1 of 7
OTHER NEW STANDARDS AND INTERPRETATIONS
Effective in 2009
(i)
(ii)
(iii) PFRS 8, Operating Segments, (effective from January 1, 2009). Under this new
standard, a reportable operating segment is identified based on the information
about the components of the entity that management uses to make decisions
about operating matters. In addition, segment assets, liabilities and
performance, as well as certain disclosures, are to be measured and presented
based on the internal reports prepared for and reviewed by the chief decision
makers. The Company identifies operating segments and reports on segment
assets, liabilities and performance based on internal management reports
therefore, adoption of this new standard did not have a material impact on the
Companys financial statements as it merely improved the disclosure of
operating segment.
If the Company provides share-based payments but still not affected by the amendments, please replace this
phrase with As none of the Companys current share-based payment schemes is affected by the
amendments
III.B.5 Appendix
2 of 7
(iv) Philippine Interpretation IFRIC 13, Customer Loyalty Programmes, (effective from
July 1, 2008). This new Philippine Interpretation clarifies that when goods or
services are sold together with a customer loyalty incentive (for example loyalty
points or free products), the arrangement is a multiple-element arrangement
and the consideration receivable from the customer is allocated between the
components of the arrangement using fair values. The Companys current
accounting policy is to allocate the consideration received between the
components of the arrangement using fair values. Hence, adoption of this
interpretation did not result in material impact on the Companys financial
statements.
(v)
(vi) Annual Improvements to PFRS 2008. The FRSC has adopted the Improvements
to Philippine Financial Reporting Standards 2008. These amendments become
effective in the Philippines in annual periods beginning on or after January 1,
2009.
III.B.5 Appendix
3 of 7
III.B.5 Appendix
4 of 7
PAS 24 (Revised), Related Party Disclosures (effective from January 1, 2011). The
revised standard introduces an exemption from the disclosure requirements of
PAS 24 for transactions with: (a) a government that has control, joint control
or significant influence over the reporting entity; and (b) government-related
entities (entities controlled, jointly controlled or significantly influenced by the
same government. Management assessed that the adoption of the revised
PAS 24 will not have significant effect on the Companys financial statements.
(ii)
(iii) PFRS 3 (Revised), Business Combinations (effective from July 1, 2009). The
revised standard continues to apply the acquisition method to business
combinations, with some significant changes. For example, all payments to
purchase a business are to be recorded at fair value at the acquisition date, with
contingent payments classified as debt subsequently re-measured through the
income statement. There is a choice on an acquisition-by-acquisition basis to
measure the non-controlling interest in the acquiree either at fair value or at the
non-controlling interests proportionate share of the acquirees net assets. All
acquisition-related costs should be expensed. The Company will apply PFRS 3
(Revised) prospectively to all business combinations from January 1, 2010.
(iv) Philippine Interpretation IFRIC 17, Distribution of Non-cash Assets to Owners
(effective from July 1, 2009). IFRIC 17 clarifies that a dividend payable should
be recognized when the dividend is appropriately authorized and is no longer
at the discretion of the entity. Also, an entity should measure the dividend
payable at the fair value of the net assets to be distributed and the difference
between the dividend paid and the carrying amount of the net assets
distributed in profit or loss. The Company will apply the standard
prospectively starting January 1, 2010.
III.B.5 Appendix
5 of 7
(v)
If the Company provides share-based payments but still not affected by the amendments, replace this phrase
with As none of the Companys current share-based payment schemes is affected by the amendments
III.B.5 Appendix
6 of 7
III.B.5 Appendix
7 of 7
Please refer to Appendix III.E for a complete list of standards effective in 2009 and
subsequently.
As of the date these illustrative FS are released, the FRSC has not yet adopted IFRS 9. Discussion on
PFRS 9 as presented above shall be included only when the FRSC has adopted it before the date of the
auditors report on the December 31, 2009 FS.
III.C.1
1 of 3
Refer to PSA 700 (Revised) or AA2006-04 (released December 14, 2006) for guidance on the new wording for
independent auditors report. As a Firm policy, the old report titles will be retained.
Added when the financial statements is for submission to the SEC and BIR.
Include this heading only if the audit report also includes Report on Other Legal and Regulatory
Requirements
III.C.1
2 of 2
-2-
Auditors 5Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Granthor Holdings Philippines, Inc. and subsidiaries as of
December 31, 2009 and 2008, and of their consolidated financial performance and their cash
flows for each of the three years in the period ended December 31, 2009 in accordance with
Philippine Financial Reporting Standards.
III.C.1
2 of 2
-3-
III.C.2 - Appendix
1 of 2
Notes2
PAS 1.55
A S S E T S
PAS 1.55
PAS 1.60, 66
PAS 1.54(i)
PAS 1.54(h)
PAS 1.54(d)
PAS 1.54(g)
PAS 1.54(n)
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables - net
Financial assets at fair value through profit or loss
Inventories - net
Prepayments
PAS 1.54(c)
4
5
6
7
PAS 1.55
PAS 1.60, 66
PAS 1.54(h)
PAS 1.54(d)
PAS 1.54(e)
PAS 1.54(a)
PAS 1.54(b)
2008
2009
NON-CURRENT ASSETS
Trade and other receivables - net
Financial assets - net
Property, plant and equipment - net
Investment property
Intangible assets - net
Deferred tax assets - net
5
9
11
12
13
23
18,763,552
23,889,859
33,322,021
52,561,959
14,880,039
16,642,248
37,843,152
32,210,910
51,450,848
13,768,928
143,417,430
151,916,086
41,991,701
94,533,812
169,196,599
45,200,091
11,313,111
1,571,830
31,890,783
93,422,701
168,085,488
44,088,980
10,202,000
9,349,608
363,807,144
357,039,560
3,550,000
3,550,000
PAS 1.54(o), 56
PAS 1.55
PFRS 5.38
NON-CURRENT ASSETS
CLASSIFIED AS HELD FOR SALE
PAS 1.55
TOTAL ASSETS
PAS 1.54(j)
14
510,774,574
For banks, the BSP requires the side-by-side presentation of consolidated FS and separate FS of the parent company.
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
512,505,646
III.C.2 - Appendix
2 of 2
-2-
Notes
PAS 1.55
PAS 1.55
PAS 1.60, 69
PAS 1.54(m)
PAS 1.54(k)
PAS 1.55
PAS 1.54(n)
PAS 1.54(l)
CURRENT LIABILITIES
Interest-bearing loans and borrowings
Trade and other payables
Due to related parties
Income tax payable
Provisions
PAS 1.55
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
Retirement benefit obligation
Provisions
Other non-current liabilities
PAS 1.55
PAS 1.55
PAS 1.54(l)
PAS 1.105(a)
PAS 1.54(r)
PAS 1.55
PAS 1.55
PAS 1.54(r)
PAS 1.54(r)
15
22
17
15,401,111
47,295,133
19,088,937
3,425,323
5,940,548
14,290,000
49,462,230
17,977,826
2,314,212
4,829,437
91,151,052
88,873,705
55,931,111
17,718,124
6,792,624
3,964,388
54,820,000
16,607,013
5,681,513
2,853,277
84,406,247
79,961,803
175,557,299
168,835,508
150,000,000
7,005,000
1,000,000 )
27,080,705
652,735 )
136,258,659
150,000,000
7,005,000
1,000,000 )
23,631,393
187,935 )
148,657,048
EQUITY
Equity attributable to parent
Capital stock
Additional paid-in capital
Treasury shares, at cost
Revaluation reserves
Translation reserve
Retained earnings
25
(
2, 25
(
2, 25
PAS 1.105(a)
Non-controlling interest
PAS 1.105(a)
Total Equity
PAS 1.55
PAS 1.55
17
Total Liabilities
PAS 1.55
PAS 1.55
15
16
24
PAS 1.55
PAS 1.60, 69
PAS 1.54(m)
2008
2009
(
(
318,691,629
328,105,506
16,525,646
15,564,631
335,217,275
343,670,138
510,774,574
Major line items of equity (i.e., issued capital, reserves and retained earnings) should be presented on the face of the
balance sheet. The various classes of this information, such as major items, the changes during the year and information
on each class of share capital can be presented on the face of the statements of financial position,
statements of changes inequity or in the notes.
512,505,646
Notes2
PAS 1.85
PAS 1.85, 99
PAS 2.36 (d)
18
18
PAS 1.85
GROSS PROFIT
PAS 1.85
PAS 1.85, 99
PAS 1.85, 99
PAS 1.85, 99
PAS 1.85, 99
PAS 1.85
OPERATING PROFIT
PAS 1.85
PAS 1.82 (b)
PAS 1.85
20
20
19, 20
19
2008
2009
REVENUES
Sale of goods
Rendering of services
183,282,650
22,011,617
(
(
PAS 1.85
TAX EXPENSE
23
NET PROFIT
Attributable to:
Parent company's shareholders
181,171,539
19,900,506
156,982,596
13,334,605
201,072,045
170,317,201
102,221,118
12,341,465
100,110,007
10,230,354
68,331,945
9,274,715
114,562,583
110,340,361
77,606,660
90,731,684
90,731,684
92,710,541
25,940,962
17,197,678
4,716,466
3,525,726 )
44,329,380
23,829,851
15,086,567
2,605,355
5,636,837 )
35,884,936
20,545,136
13,367,132
2,858,746
4,262,264 )
32,508,750
8,999,019 )
579,851
8,419,168 )
21
2007
205,294,267
54,846,748
46,402,304
21
III.C.3 - Appendix
1 of 1
(
(
(
11,110,130 )
1,531,260 )
12,641,390 )
60,201,791
10,929,530 )
1,378,911
9,550,619 )
37,983,136
42,205,358
50,651,172
17,914,441
13,257,942
16,318,782
20,068,695
28,947,416
34,332,390
19,107,680
961,015
27,310,270
1,637,146
32,941,449
1,390,941
20,068,695
28,947,416
34,332,390
13
20
26
Non-controlling interest
PAS 33.67A
25
This format for statements of income illustrates an example of the "function of expense" or "cost of sales" method.
See Appendix III.A.1 for the format illustrating the "nature of expense" method.
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
III.C.4 - Appendix
4 of 7
GRANTHOR HOLDINGS PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
Notes 1
PAS 1.85
NET PROFIT
PFRS 7.20(a)(ii)
PAS 1.92
Exchange differences on
translating foreign operations
22
11
PAS 1.99
23
664,000 )
1,695,715 )
3,956,669
5,652,384
1,414,440
-
34,332,390
789,765
-
145,355
341,000 )
876,543
987,654 )
5,099,780
2,059,961
2007
28,947,416
203,023
20,068,695
6,183,312
2,129,912 )
PAS 16.77
2008
2009
2,523,075 )
3,795,500
6,318,575
237,529 )
441,125
678,654
PAS 1.82(i)
24,025,364
32,742,916
34,773,515
PAS 1.83(b)(i)
Attributable to:
Parent company's shareholders
Non-controlling interest
23,064,349
961,015
31,105,770
1,637,146
33,382,574
1,390,941
24,025,364
32,742,916
34,773,515
PAS 1.83(b)(ii)
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
III.C.5 - Appendix
5 of 7
PAS 1.51(c)
PAS 1.51(d)
PAS 1.51(a)
PAS 1.49
PAS 1.78(d)
PAS 1.51(d-e)
Note 2
PAS 1.106(b)(d)
PAS 1.106(d)
PAS 1.107
PAS 1.96
PAS 1.106(a)
Capital
Stock 3
150,000,000
Additional
Paid-in Capital
P
7,005,000
Treasury
Shares
(P
Revaluation
Reserves
1,000,000 )
23,631,393
25
25
Translation
Reserve
(P
830,041
23,064,349
15
10
6,183,312
2,129,912 )
36,434,895 )
Total
15,564,631
36,434,895 )
23,064,349
343,670,138
961,015
24,025,364
203,023
203,023
664,000 )
(664,000)
2,059,961
1,695,715 )
27,021,018
652,735 )
136,258,659
318,691,629
16,525,646
335,217,275
16,900
158,866,634
310,686,947
13,927,486
324,614,433
PAS 1.106(d)
125,250,000
7,005,000
(P
1,000,000 )
20,548,413
PAS 1.106(d)
6,183,312
2,129,912 )
199,200
464,800 )
(P
25
27,080,705
24,750,000
24,750,000
6,183,312
2,129,912 )
2,059,961
60,907 )
23,206,466
830,041 )
830,041
31,105,770
42,232,711 )
42,232,711 )
(
(
1,695,715 )
27,982,033
961,015
24,750,000
42,232,711 )
17,482,711 )
(
(
2,059,961
(
24,750,000
42,232,711 )
17,482,711 )
(
(
31,105,770
1,637,146
32,742,916
15
10
1,414,440
15,564,631
343,670,138
658,875
138,515,409
290,417,848
12,536,545
302,954,393
125,250,000
7,005,000
(P
1,000,000 )
19,988,564
PAS 1.107
2,523,075 )
36,538,416
5,099,780
328,105,506
PAS 1.106(d)
2,523,075 )
34,901,270
341,000 )
(P
145,355
(
148,657,048
23,631,393
341,000 )
187,935 )
1,000,000 )
(P
1,414,440
136,165
204,835 )
7,005,000
145,355
5,099,780
150,000,000
2,601,198 )
3,913,022
25
1,414,440
145,355
341,000 )
25
PAS 1.106(d)
328,105,506
1,834,008 )
4,279,353
1,000,000 )
PAS 1.106(d)
Non-controlling
Interest
203,023
664,000 )
(P
25
25
7,005,000
Total
PAS 1.96
36,434,895 )
150,000,000
148,657,048
830,041 )
PAS 1.106(a)
PAS 1.96
187,935 )
PAS 1.106(d)
PAS 1.107
Retained
Earnings
58,042 )
31,193,083
830,041 )
830,041
33,382,574
13,554,600 )
1,637,146
13,554,600 )
5,099,780
13,554,600 )
33,382,574
1,390,941
34,773,515
15
789,765
876,543
-
987,654 )
345,679
641,975 )
789,765
789,765
876,543
987,654 )
987,654 )
237,529 )
33,823,699
1,390,941
237,529 )
35,214,640
876,543
10
125,250,000
7,005,000
(P
1,000,000 )
276,418 )
1,389,890
20,548,413
Refer to Appendix III.A.3 for proposed format when there are several equity items to be presented in the Statement of Changes in Equity.
Indicate only the main note. Reference to other accounts or disclosures should be done within the notes to FS.
If there are only few details, show on the face of the statement the number of authorized, issued, and subscribed shares and par value.
16,900
306,790 )
33,075,784
158,866,634
310,686,947
13,927,486
324,614,433
III.C.6 - Appendix
1 of 1
GRANTHOR HOLDINGS PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
Notes
PAS 7.31
PAS 7.35
P
11
21
21
21
19
13
21
21
21
(
(
(
(
(
PAS 7.31
PAS 7.31
PAS 7.31
37,983,136
17,759,397
13,518,501
13,221,241
6,264,375
6,127,049
4,639,111
4,514,397
3,426,762 )
661,111
101,261,556
2,520,882 )
10,810,579
497,002 )
10,249,501 )
3,198,322
2,223,051
449,712
104,675,835
3,411,861 )
13,371,957 )
(
(
(
(
(
(
(
(
11
13
11
42,205,358
15,648,286
11,407,390
11,110,130
4,153,264
206,284 )
2,528,000
2,403,286
5,537,873 )
1,450,000 )
82,261,557
2,520,882 )
8,699,468
2,608,113 )
12,360,612 )
1,087,211
111,940
1,661,399 )
73,009,170
1,300,750 )
15,483,068 )
(
(
(
(
(
(
(
(
(
41,251,737
4,356,098 )
572,150
1,450,000
1,500,689
-
19,371,079 )
(
(
10,224,073 )
22,890,739 )
13,523,806
7,856,842
10,929,530
3,883,310
1,850,000
1,230,125
4,545,194 )
1,450,000 )
83,929,591
6,069,149 )
7,020,652 )
211,596
2,085,833 )
3,875,290 )
8,996
1,917,206 )
63,182,053
3,930,013 )
18,000,303 )
18,537,820 )
(
(
50,651,172
15,376,172
10,680,000 )
3,087,344
1,454,117
1,450,000
1,200,645 )
1,163,009
1,019,316 )
5,000,000 )
27,521,420 )
17,487,283
8,568,889 )
5,198,455
3,565,228
3,561,111
3,311,756 )
3,274,120
3,130,427 )
2,888,889 )
21
12
10
25,410,309 )
2007
56,225,352
87,892,017
2008
2009
III.C.6 - Appendix
1 of 1
-2Notes
PAS 7.10
PAS 7.31
PAS 7.45
(
(
(
25
52,517,717 )
27,855,215 )
24,694,504
19,868,212 )
-
(
(
75,546,640 )
2,121,304
18,763,552
(
(
37,704,467 )
4,369,854 )
16,533,025 )
30,538,892 )
25,265,885
13,554,600 )
14,569,812
20,790,820 )
1,089,838
21,012,102
16,642,248
2006
24,647,090 )
29,966,326 )
14,138,949
21,980,000 )
24,750,000
-
16,642,248
PAS 7.43
2007
2008
19,922,264
21,012,102
III.C.7 - Appendix
1 of 9
OTHER RELEVANT NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS1
2.
These are the notes, apart from those presented in the separate financial statements, which are applicable
only to consolidated financial statements.
2 This should be presented immediately after basis for preparation of financial statements. In cases where
the Group has interest in joint ventures, the relevant notes relating to Interest in Joint Ventures should be
included.
3
This should be consistent with the name that is used to refer to Granthor Holdings Philippines, Inc. and
subsidiaries in Note 1, Corporate Information in a complete set of notes to financial statements.
III.C.7 - Appendix
2 of 9
Subsidiaries are consolidated from the date the Company obtains control
until such time that such control ceases..4
Acquired subsidiaries are subject to the application of the purchase
method for acquisitions. This involves the revaluation at fair value of all
identifiable assets and liabilities, including contingent liabilities of the
subsidiary, at the acquisition date, regardless of whether or not they were
recorded in the financial statements of the subsidiary prior to acquisition.
On initial recognition, the assets and liabilities of the subsidiary are
included in the consolidated statements of financial position at their
revalued amounts, which are also used as the bases for subsequent
measurement in accordance with the Group accounting policies.
Goodwill5 (positive) represents the excess of acquisition cost over the
Groups share in the fair value of the identifiable net assets of the
acquired subsidiary at the date of acquisition. Negative goodwill
represents the excess of Companys share in the fair value of identifiable
net assets of the subsidiary at date of acquisition over acquisition cost (see
also Note 2.11).
(b) Transactions with Non-controlling Interests
The Group applies a policy of treating transactions with non-controlling
interests as transactions with parties external to the Group. Disposals of
equity investments to non-controlling interests result in gains and losses
for the Group that are recorded in the statement of income. Purchases
of equity shares from non-controlling interests result in goodwill, being
the difference between any consideration paid and the relevant share
acquired in the carrying value of the net assets of the subsidiary.
Preferably, disclosure should be made as to the date of organization and start of operations of the
subsidiaries if their financial statements do not cover the full periods covered by the consolidated
financial statements.
5 When the policy for goodwill is presented as part of the basis for consolidation, the other policy
pertaining to intangibles other than goodwill should be changed. For instance, Note 2.8 in PNA notes to
FS should be entitled Other Intangibles as goodwill itself is an intangible.
4
III.C.7 - Appendix
3 of 9
The subsidiaries of the Company in 2009, 2008 and 20076 are as follows:
Percentage
of Ownership
Electronic Components Business:
JCC Electronics, Inc. and subsidiaries
PNA Manufacturing Corporation
ECM Electronics, Ltd.
100.0%
100.0%
89.5%
Insulator Business:
MEC Insulation, Inc. and subsidiaries
JFR & PH Technologies, Inc.
Tin&Tin Poly Tech Philippines, Inc.
100.0%
67.8%
50%
Apparel Business:
DBC House Corporation
WTEE, Inc. and subsidiaries
NJD Pogy Style, Inc.
100%
95%
58.3%
Non-controlling interests in 2009, 2008 and 2007 represent the interests not
held by the Group in ECM Electronics, Ltd., JFR & PH Technologies, Inc.,
Tin&Tin Poly Tech Philippines, Inc., WTEE, Inc. and subsidiaries and NJD
Pogy Style, Inc.
Assuming no new acquisition or disposal of interest in subsidiaries during the three consecutive years,
otherwise, should be modified to include any acquisition or disposal of interest in subsidiaries.
Preferably after policy on financial liabilities. See Note 2.10 in illustrative PNA FS.
If there is no business combination but the Company acquired goodwill through other means (e.g.,
purchase of a business segment), a separate accounting policy on goodwill should be included in the
disclosures on accounting policies.
Cross-reference to the note pertaining to Impairment of Non-financial Assets. See Note 2.15 in
illustrative PNA FS which should be modified to replace intangible assets with goodwill and other
intangible assets.
III.C.7 - Appendix
4 of 9
Negative goodwill which is the excess of the Groups interest in the net fair
value of acquired identifiable assets, liabilities and contingent liabilities over
cost is charged directly to income.
Transfers of assets between commonly controlled entities are accounted for
under historical cost accounting.10
11
The translation of statement of income accounts should depend on the practice of the Company (e.g.,
translated at monthly or annual average rate) but should be in accordance with PAS 21.
III.C.7 - Appendix
5 of 9
On consolidation, exchange differences arising from the translation of the
net investment in Forex Company is taken to equity under Revaluation
Reserves. When a foreign operation is sold, such exchange differences
are recognized in the consolidated statements of income as part of the
gain or loss on sale.
The translation of the financial statements into Philippine peso should
not be construed as a representation that the U.S. dollar amounts could
be converted into Philippine peso amounts at the translation rates or at
any other rates of exchange.
4.
SEGMENT REPORTING12
12
Include geographical segments if applicable. Geographical segments are basically segments of the entity
presented by geographical location such as Philippines, Australia, and China and the relevant categories
are sales, segment assets and capital expenditures/investments. Under PFRS 8, a reportable operating
segment is identified based on the information about the components of the entity that management uses
to make decisions about operating matters. In addition, segment assets, liabilities, and performance, as
well as certain disclosures, are to be measured and presented based on the internal reports prepared and
reviewed by the chief decision makers.
III.C.7 - Appendix
6 of 9
III.C.7 - Appendix
7 of 9
The following tables present revenue and profit information regarding business segments of the Group for the years ended December 31, 2009,
2008 and 2007 and certain asset and liability information regarding industry segments at December 31, 2009 and 2008 (in thousands).
2009
2008
Clothing,
Corporate and Other
Insulation Products
Electronic Components
2007
2008
2009
2007
2008
2009
Eliminations
2007
Consolidated
2008
2009
2007
2008
2009
2007
TOTAL REVENUES
Sales to external customers
Intersegment sales
Total revenues
P 96,000
P 88,500
P 74,690
P 9,144
P 12,417
35
P 96,005
P 88,505
P 74,692
P 9,145
P 12,418
P 65,106
P 34,974
P 25,708
P 20,234
P -
P -
57
77
P 10,500
P -
1 (
P -
P -
P205,294 P201,072
-
P170,317
63) (
83) (
38)
P 10,501 (P
63) (P
83) (P
P170,317
P -
63) (P
83) (P
38) P 90,731
P 92,711
RESULTS
Segment results
P 55,820
P 72,515
Unallocated expenses
(P
46,402
(P 8,999) (P 11,110) (P 10,930)
580
1,531
1,379
P 90,731
580 (
37,983
54,846
60,202
1,379
42,205
50,651
Attributable to:
Parent companys shareholders
Non-controlling interest
Net profit
1,391
P 20,069 P 28,947
P 34,332
961
III.C.7 - Appendix
8 of 9
Electronic Components
2009
2008
2007
Clothing,
Corporate and Others
Insulation Products
2009
2008
2007
2009
2008
2007
Eliminations
2009
2008
Consolidated
2007
2009
2008
2007
P 53,344
P -
P -
P -
P -
Intangible assets
Segment assets
P355,761 P340,500 P -
11,313
10,202
1,572
9,350
Total assets
P511,665 P513,396
P178,445 P168,425
Segment liabilities
Total liabilities
P178,461 P168,461
P 25,410 P 27,521
P 18,538
90,995
76,725
P498,780 P493,844
Unallocated liabilities
87,450
91,700
P120,000 P100,000 P -
16
36
15,410
13,000
7,466
6,000
2,550
13,518
11,407
7,857
3,000
1,500
6,500
5,000
7,260
7,466
7,000
10,000
3,500
-
5,000
7,260
2,038
7,466
5,176
9,324
22,398
18,176
15,374
13,518
11,407
7,857
1,556
1,113
10,778
6,556
2,000
2,500
4,778
5,113
III.C.7 - Appendix
9 of 9
25.
2009
Net income attributable to parent
company's shareholders
Divided by weighted average number
of outstanding common shares
Basic and diluted earnings per share
2007
13 P
1,376,250
1,252,500
20 P
26
The Company has no dilutive potential common shares as of December 31, 2009
and 2008.
13
III.D.1 - Appendix
1 of 2
We have audited the accompanying financial statements of Small Business, Inc., which
comprise the balance sheets as at December 31, 2009 and 2008, and the statements of
income, income statements, statements of changes in equity and cash flow statements for
the years then ended, and notes to financial statements comprising of a summary of
significant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with the financial reporting standards in the Philippines for nonpublicly accountable entities as described in Note 2 to the financial statements. This
responsibility includes: designing, implementing and maintaining internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditors 4Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audits. We conducted our audits in accordance with Philippine Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from
material misstatement.
Refer to PSA 700 or AA2006-04 (released December 14, 2006) for guidance on the new wording for
independent auditors report. As a Firm policy, the old report titles will be retained.
Note that there is no difference between an auditors report on financial statements where PFRSs have
been fully adopted and on financial statements prepared following the provisions of PAS 101 which is for
NPAEs except for the description of the financial reporting framework, see footnote 5.
Added when the financial statements is for submission to the SEC and BIR.
III.D.1 - Appendix
2 of 2
-2An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial
position of Small Business, Inc. as of December 31, 2009 and 2008, and of its financial
performance and its cash flows for the years then ended in accordance with the financial
reporting standards in the Philippines for non-publicly accountable entities described in
Note 2 to the financial statements.5
In this case, the phrase financial reporting standards in the Philippines for non-publicly accountable
entities is used instead of Philippine Financial Reporting Standards as the Company has not fully
complied with PFRS.
6 Refer to AM 2006-001 and AM 2006-002 for guidance.
5
III.D.2 - Appendix
1 of 3
APPLICABLE DISCLOSURES FOR NPAEs
WHICH HAVE ADOPTED SOME OF THE PFRSs1
Under PAS 101, an entity that qualifies as an NPAE has an option to (a) apply only the GAAP effective
as of December 31, 2004, (b) to apply all the PFRS that are effective as of January 1, 2005, or (c) to apply
the 2004 GAAP plus some of the new PFRS.
If the entity does not apply any of the accounting standards that became effective after 2004, this
paragraph may be reworded as follows:
The Company has qualified as an NPAE under PAS 101 and it has opted not to apply any PFRSs
that became effective subsequent to 2004. Accordingly, the applicable financial reporting standards
effective as of December 31, 2004 were applied in the preparation of the financial statements for the
years ended December 31, 2009 and 2008.
III.D.2 - Appendix
2 of 3
The following standards which became effective on January 1, 2005 were
adopted by the Company:
PAS 1
PAS 8
:
:
PAS 10
PAS 16
PAS 17
PAS 18
PAS 24
PAS 36
PAS 37
:
:
:
:
:
:
:
As allowed under PAS 101, the Company opted not to adopt any of the
other new standards, amendments and interpretations effective
subsequent to 2005.3
The financial statements have been prepared on the historical cost basis.
The measurement bases are more fully described in the accounting
policies below.
The financial statements are presented in Philippine pesos, the Companys
functional currency, and all values represent absolute amounts except
when otherwise indicated.
Management is required to make judgments, estimates and assumptions in
the preparation of financial statements. Although these estimates and
assumptions are based on management's best knowledge of current events
and actions, actual results may differ from those estimates. Estimates and
underlying assumptions are reviewed on a continuing basis and any
revisions to accounting estimates are recognized prospectively. 4
XXX
If the entity applies any of the accounting standards that became effective subsequent to 2005, the
paragraph should be reworded and disclosed the standards and interpretations adopted.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the financial statements should be disclosed, hence, the above paragraph
should be modified accordingly. See Note 3 to the financial statements of PNA Manufacturing
Corporation for sample disclosures.
III.D.2 - Appendix
3 of 3
[Note: Accounting policies and related disclosures of the PFRSs adopted should be
revised based on the requirement of specific PFRS (refer to 2006 llustrative FS of PNA
Manufacturing Corporation for sample disclosures). GAAP applied based on standards
effective as of December 31, 2004 should be retained (refer to the 2004 Illustrative FS for
PNA for sample disclosures).
III.D.3 Appendix
1 of 3
Summary of Important Provisions of PFRS for Small and
Medium-Sized Entities
The Philippine Financial Reporting Standard for Small and Medium-sized Entities
(PFRS for SMEs) is a simplified version of full PFRS aimed at the needs of private
companies.
Small and Medium-sized Entities are instead defined as entities that publish general
purpose financial statements for external users and do not have public accountability.
An entity is publicly accountable if it:
have a total assets of between P3 million and P350 million or total liabilities
of between P3 million and P250 million;
are not required to file financial statements under Securities Regulation Code
Rule 68.1;
are not in the process of filing their financial statements for the purpose of
issuing any class of instruments in a public market;
are not holders of secondary licenses by a regulatory agency, such as banks,
investment houses, finance companies, insurance companies, securities
broker/dealers, mutual funds and pre-need companies; and
are not public utilities.
The PFRS for SMEs is effective in the Philippines on annual periods beginning
January 1, 2010.
The PFRS for SMEs is separate from the full PFRS. Compared to full PFRS, the
PFRS for SMEs contains a number of simplifications.
III.D.3 Appendix
2 of 3
The PFRS for SMEs also omits a number of topics found in full PFRS that are not
considered to be relevant to the needs of SMEs as indicated below.
Segment reporting
Interim reporting
Earnings per share
Insurance
Assets held for sale
It is further simplified by including only the simpler options in many of the areas
where full PFRS has a choice of alternative accounting treatments.
Options in full PFRS not included in the PFRS for SMEs
Joint ventures
No proportionate consolidation
Option to account for all joint ventures either at
cost; under the equity method; or at fair value
through profit or loss (compulsory where a quoted
price is available)
Property, plant and
No revaluation option
equipment
Investment property
Measurement at cost or fair value is driven by
circumstances rather than by choice
Must be accounted for at fair value if such a value is
available without undue cost or effort. Otherwise,
the cost method should be used.
Post-employment defined
The corridor approach for recognizing actuarial gains
benefit plans
and losses is not permitted
Intangible assets
No revaluation option
Recognition and measurement simplifications
Subject
Full PFRS
Goodwill
Goodwill not amortized but
annual impairment testing
required
Research and
development
Financial
instruments
Development costs
capitalized where 6 specific
criteria are met
4 categories of financial
instruments
Hedge accounting only
possible where strict
documentation and
effectiveness requirements
are met
III.D.3 Appendix
3 of 3
Borrowing
costs
III.E Appendix
1 of 6
SUMMARY OF PFRS, AMENDMENTS AND PHILIPPINE
INTERPRETATIONS
The following table summarizes all the standards and interpretations issued by the
IASB and its committees and that are approved by the FRSC. The company and the
audit team should identify which of these standards, amendments and interpretations
have an impact on the company and prepare the corresponding disclosures.
No.
PAS 1
PAS 2
PAS 7
PAS 8
PAS 10
PAS 11
PAS 12
PAS 14
PAS 16
PAS 17
PAS 18
PAS 19
PAS 20
PAS 21
PAS 23
PAS 24
PAS 26
PAS 27
PAS 28
PAS 29
PAS 30
PAS 31
PAS 32
PAS 33
PAS 34
PAS 36
PAS 37
PAS 38
Title
Presentation of Financial Statements
Inventories
Cash Flow Statements
Accounting Policies, Changes in
Accounting Estimates and Errors
Events After the Balance Sheet Date
Construction Contracts
Income Taxes
Segment Reporting
Property, Plant and Equipment
Leases
Revenue
Employee Benefits
Accounting for Government Grants and
Disclosure of Government Assistance
The Effects of Changes in Foreign
Exchange Rates
Borrowing Costs
Related Party Disclosures
Accounting and Reporting by Retirement
Benefit Plans
Consolidated and Separate Financial
Statements
Investments in Associates
Financial Reporting in Hyperinflationary
Economies
Disclosures in the Financial Statements of
Banks and Similar Institutions
Interest in Joint Ventures
Financial Instruments: Disclosure and
Presentation
Earnings per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent Liabilities and
Contingent Assets
Intangible Assets
Effective as of
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
III.E Appendix
2 of 6
No.
PAS 39
PAS 40
PAS 41
PAS 101
PFRS 1
PFRS 2
PFRS 3
PFRS 4
PFRS 5
Interpretation
SIC 7
Interpretation
SIC 10
Interpretation
SIC 12
Interpretation
SIC 13
Interpretation
SIC 15
Interpretation
SIC 21
Interpretation
SIC 25
Interpretation
SIC 27
Interpretation
SIC 29
Interpretation
SIC 31
Interpretation
SIC 32
Interpretation
IFRIC 1
Interpretation
IFRIC 2
Interpretation
IFRIC 6
PAS 19
(Amendment)
Title
Effective as of
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
January 1, 2005
December 1, 2005
January 1, 2006
III.E Appendix
3 of 6
No.
PAS 39
(Amendment)
PAS 39
(Amendment)
PAS 39
(Amendment)
PFRS 1
(Amendment)
PFRS 4
(Amendment)
PFRS 6
Interpretation
IFRIC 4
Interpretation
IFRIC 5
Interpretation
IFRIC 7
Interpretation
IFRIC 8
Interpretation
IFRIC 9
Interpretation
IFRIC 10
PAS 1
(Amendment)
PFRS 7
Interpretation
IFRIC 11
Interpretation
IFRIC 12
Interpretation
IFRIC 14
PAS 39 and
PFRS 7
(Amendments)
Title
Effective as of
January 1, 2006
January 1, 2006
January 1, 2006
January 1, 2006 +
January 1, 2006
January 1, 2006
January 1, 2006
January 1, 2006
March 1, 2006
May 1, 2006
June 1, 2006
November 1,
2006
January 1, 2007
January 1, 2007
March 1, 2007
January 1, 2008
January 1, 2008
July 1, 2008
III.E Appendix
4 of 6
No.
PAS 1
(Revised 2007)
PAS 23
(Revised 2007)
PAS 32 and
PAS 1
(Amendments)
PFRS 1
(Amendment)
PFRS 2
(Amendment)
PFRS 8
Philippine
IFRIC 13
Philippine
Interpretation
IFRIC 18
Philippine
IFRIC 16
Annual
Improvements
Part 1:
PAS 1
(Amendment)
PAS 16
(Amendment)
PAS 19
(Amendment)
PAS 20
(Amendment)
PAS 23
(Amendment)
PAS 27
(Amendment)
PAS 28
(Amendment)
PAS 29
(Amendment)
PAS 31
(Amendment)
PAS 36
(Amendment)
PAS 38
(Amendment)
PAS 39
(Amendment)
Title
Effective as of
January 1, 2009
Borrowing Costs
January 1, 2009
January 1, 2009
Operating Segments
Customer Loyalty Programmes
Transfers of Assets from Customers
Hedges of a Net Investment in a Foreign
Operation
January 1, 2009
January 1, 2009
January 1, 2009
July 1, 2008
Transfers of assets
on or after July 1,
2009
October 1, 2008
January 1, 2009
January 1, 2009
Employee Benefits
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
Impairment of Assets
January 1, 2009
Intangible Assets
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
III.E Appendix
5 of 6
No.
PAS 40
(Amendment)
PAS 41
(Amendment)
PFRS 2
(Amendment)
PFRS 5
(Amendment)
PFRS 7
Annual
Improvements
Part 2:
PAS 8
PAS 10
PAS 18
PAS 20
PAS 29
PAS 34
PAS 40
PAS 41
Title
Investment Property
January 1, 2009
Agriculture
January 1, 2009
Share-based Payment
January 1, 2009
January 1, 2009
January 1, 2009
Effective as of
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
January 1, 2009
July 1, 2009
July 1, 2009
July 1, 2009
July 1, 2009
July 1, 2009
Annual periods
ending on or after
June 30, 2009*
January 1, 2010*
January 1, 2010*
January 1, 2010*
III.E Appendix
6 of 6
No.
PAS 1
(Amendment)
PAS 7
(Amendment)
PAS 17
(Amendment)
PAS 18
(Amendment)
PAS 36
(Amendment)
PAS 38
(Amendment)
PAS 39
(Amendment)
PAS 24
(Amendment)
PAS 32
(Amendment)
PFRS 1
(Amendment)
PFRS 2
(Amendment)
Philippine
Interpretation
IFRIC 14
Philippine
Interpretation
IFRIC 19
Title
Effective as of
January 1, 2010*
January 1, 2010*
Leases
January 1, 2010*
Revenue
January 1, 2010*
Impairment of Assets
January 1, 2010*
Intangible Assets
January 1, 2010*
January 1, 2010*
January 1, 2011
February 1, 2010
January 1, 2010
Philippine
IFRIC 15
PFRS 9
January 1, 2010
January 1, 2010*
July 1, 2010
January 1, 2012
January 1, 2013**
These standards, amendments and interpretations are still for approval of the Board of
Accountancy and Professional Regulations Commission.
** The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety by
the end of 2010, with the replacement standard to be effective for annual periods beginning
January 1, 2013. This consists of three main phases enumerated below.
Phase 1 :
Classification and Measurement
Phase 2 :
Impairment methodology
Phase 3 :
Hedge accounting