COVER SHEET for AUDITED FINANCIAL STATEMENTS SEC Registration Number c[s|2]o]1]3[2]o|7[ 7/8 Company Name cle|ni[riulriy| [elalciijefijc] jFjojojp],| |rjnicl. alnjo] |sfulels{rfojifalriilels Principal Office (No,/Street/Barangay/City/Town)Province} Form Type Department requiring the report Secondary Ucense Type, I Applicable COMPANY INFORMATION Company's Emall Adress Company's Telaphone Number/s Mobile Number 633-8555 No.of Stockholders ‘Annual Meeting Fiscal Year Month/Day Month/Day. 30th day of June B1-Dec CONTACT PERSON INFORMATION ‘The designated contact person MUST be an Oficer ofthe Corporation, ame of contac Person mall Adress ‘Telephone Number/s _ Mile Humber Marcelino Mijares ery (633-8555, contact Person's Arse Suite 505, Centerpoint Bldg Vi as St, Ortigas Center, Pasig Cty, Metro Manila tech cae ot eth esipatin or cess offs fhe eke dese contac peor uh es be eps Commision wi 0 ae ay (rm the xeorene thre vomaton adcamolecorn tas oe am cota pron deedCenterpoint Building, Julia Vargas Ave., Ortigas Center, Pasig City, Philippines @ century PACIFIC FOOD, INC. wer sctennnnsenecaman STATEMENT OF MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTS, ‘The Management of Century Pacific Food, Inc. and Subsidiaries is responsible for the preparation and fair presentation of the financial statements, including the additional components attached therein, for the year ended December 31, 2014 and the two months ended December 31, 2013, in accordance with Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud ot exror, selecting and applying appropriate accounting policies, and making accounting cstimates that are reasonable in the circumstances. ‘The Board of Directors reviews and approves the financial statements including the additional components attached therein and submits the same to the shatcholders. Navarro Ampet & Co,, the independent aucitors appointed by the shareholders, has examined the financial statements of the Group in accordance with Philippine Standards on Auditing, and in its report to the shareholders, has expressed its opinion on the fairness of presenfation upon completion of such examination. ZL CHRISTOPHER T. PO Chairman of the Board ‘CHRISTOPHER T. Chief Executive Officer OSCAR. POBRE, Chief Fintancial Officer Signed this 24” day of Apail, 2015 SUBSCRIBED AND SWORN to before me thistPR ? k 2015 in Pasig City, affiants exhibiting, tome their Tax Identification No, 119-779-659 and 138-775-570. Doc. No. HP; Page No. Book No. Ej Series of 2015, “To nourish & delight everyone, ever puuiy)s BWelry Where” Suite 240iNavarroAmper&Co. repay 19" Floor Met Lima Plaza 5 avenue comer 26"Street Bonifacio Globa ity, Taguig 1634 Philippines Tek: +632 581 9000 Fox: 463 2869 3676 vrvidelotecomph ‘BOAPRC Reg. No. coo SEC Accreditation No. 0001-3 INDEPENDENT AUDITORS’ REPORT ‘The Board of Directors and Shareholders CENTURY PACIFIC FOOD, INC. AND SUBSIDIARIES (A Subsidiary of Century Pacific Group, Inc) Suite 505, Centerpoint Building, Julia Vargas St, Ortigas Center Pasig City, Metro Manila Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Century Pacific Food, Inc. and subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2014 and 2013, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the year ended December 31, 2014 and the two months ended December 31, 2013, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control, as Management determines is necessary to enable the preparation of consolidated financial statements, that are free from material misstatement, whether due to fraud or exror. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our andits, We conducted our andits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and pecform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. ‘An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the ciscurnstances, but not for the purpose of expressing zn opinion on the effectiveness of the entity's 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Deloitte EEE Member Odie Touche Tohmet Unkedpinion In our opinion, the consolidated financial statements present fairy, in all material respects, the financial position of Century Pacific Food, Inc. and subsidiaries as at December 31, 2014 and 2013, and of their financial performance and their cash flows for the petiods then ended in accordance with Philippine Financial Reporting Standards. ‘Navatro Amper & Co. BOA Registration No. 0004, valid from October 22, 2012 to December 31, 2015 ‘SEC Accreditation No. 0001-FR-3, issued on January 4, 2013; effective until January 3, 2016, Group A TEN 005299331 By: Fifacis B. Albalate P CPA License No. 0088499 SEC AN, 0104-AR-3, issued on June 28, 2012; effective until June 27, 2015, Group A TIN 120319015 BIR AN. 08-002552-32-2014, issued on October 3, 2014; effective until October 3, 2017 PTR No. A-2368199, issued on January 6, 2015, Taguig City Taguig City, Philippines April 22, 2015 ALNCENTURY PACIFIC FOOD, INC. AND SUBSIDIARIES G Sobsidingy of Centary Pacific Group, ‘CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31 ‘Notes 2014 2013 ASSETS ‘Current Assets (Cash and cash equivalents 8 P1,264,209,896 —P 437,964,907 ‘Trade and other receivables -net 9 2,561,731 649 4,034,062,591 ‘Doe from celated pastes 2» 212,656,754 218,008,202 eld-to-maruiy investments ~cuerent 10 152,435,803 i Inventories - net n 5,194205,392 1,602,019,351 Biological assets 4 37478 189 ~ eepayments another curcent assets «net 2 18, 611442 120,151,134 “Total Cucreat Assets 9,541,329,125 3.412,201,185, Non-cusrent Assets “eld-to-maruity investments -noa current 10 28,230,588 z Propesty, plant and equipment -net 15 14421,369,020 1.036.419 999 “Teademasks 8 49,000,000, 40,900,000 ‘Rescement benef asset 1” - 23643 Defesed tx assets 8 36,683,629 18,726,312 (Other non custent assets 16 103,12,707, 17,491,128 “Total Non-curreat Assets 1,647, 395,988 ,112,661082 P11188,725,069 4,524, 862,267 LIABILITIES AND EQUITY Curent Li Loans payable 7 P 7 2214,600,002 ‘Trade and other payables 18 4,099,492,499 524,689,523 ‘income tax payable 128,489,582, 735,451 Dueto elated parties 2» 286,074,805. 240,632,032, “Total Cusrent Lsbilites 4,514 056,886 2,980,656 808 ‘Non-Cusrent Liabilities Rotiement benefit obligation » 93,870,878 : Defeered tax inbilty 28 460,022 Z ‘Total Non-Cusrent Liabilities 94,330,900 i 4,608,367,786 2,980,656 808, Equity Share capita 2 2,231,021,604 1,500,000,000 ‘Shacepremiom 2,769,337,80 - ‘Share-based compensation reserve 30 3,376 984 : Other ceserves 5 30,628,942, 30,628,942 ‘Casrencytansation adjustment 19,477,591 14308241 Retained earings Deficit) 14526 494,752 731,724) ‘Total Equity 6,580,357.283 1,544,205,459 “Total Lisbilites and Equity 188,725,069 ___P4,524,862257 “See Notes to Consolidated Financial Satements‘CENTURY PACIFIC FOOD, INC, AND SUBSIDIARIES (A Subsiciay of Century Pace Group, inc) ‘CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, For the Year Ended December 31,2014 and the Two Months Ended December 34, 2013, 2014 2013 Notes __(One Yeas) _(Two Monthy" Net Revenues ‘21 P20,438,555,008—PI,421,621,604 Cost of Goods Sold 2 15,063,993,046 __1.311.220577 Gross Profit 5,374,561,962, 110,401,027 Other Income 23 190,857,007 29,417,788 5,565,418,969 139,818,815 Operating Expenses 2 3,272,303,354 131,961,307 Other Expenses 3 39,579,720 2,189,805 Finance Coste 17 15,287,944 11,332,127 3,327,171, 028, 145,483,259 ‘Profit (Loss) Before Tax 2,938,247, 941 6,664,444) Income Tax Benefit Expense) 2 (646,657,589) 451,204, ‘Profit (Loss) forthe Period 159,590,352 147240) Other Comprehensive Income (Loss) Tem that will be reclassified subsequently to profit or loss ‘Cartency translation adjustments 5 5,169,350 14,308,241 Item that will not be reclassified subsequently to profit or loss fect of emeagurement of retirement benefit obligation, not of tax 19 (64,363,876) 415,516 69,194,520) 14,723,757 ‘TOTAL, COMPREHENSIVE INCOME P 1532,39 P 13976517, Basic and Diluted Earnings Per Share 3 P0760 __(@__0.0008) “See Notes o Conslideid Finance Satemen. * The Perent Company was cepatored withthe Securities and Exchange Commission on October 25,2013(CENTURY PACIFIC FOOD INC. AND SUBSIDIARIES (A Subsidiary =f Century Pacific Group, Ine) ‘CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY or the Year Ended December 31, 2014 and the Two Months Ended December 31, 2013, ‘Share-based. Currency Retained Share Share Compensation Other Translation Earnings Notes Capitat Premium Reserve Reserves Adjustment _ Deficit) Towal Teowance of share capital 20 Pi,s00g00000 Pe Po P= Pt,590,000,000 Los forthe period - 147240) (147240) (Other comprehensive income (Currency trandlation adjustment 7 : - Z 14308241 : 14308241 Remezsurement of otisement benefit obligation 19 - - - 7 15516 ‘Total other comprehensive income ‘ 14308281 15516 Other reserves 5 7 3628,942 - Balance, December 31,2013 +,500,000,000 : - 30628942 14,308,241 3172) 1,544,205,459 ‘ 2 - - ~ 1591590352 1591,590,352 5,169,350 _ 5,169,350 Remessucerent of retiement benefit obligation 19 - (AS63870) _ (64,363,876) “Total other comprehensive income - : i = 5.169.350 (6436387) ___69.194,520) Transaction with owners: Issuance of share capital 2» Tn9,654408 2,751,905,610 7 7 : - 3,481,560,014 Subscription of eapitl stock 30 1,367,200 - : _ 18,799,000 eguity-setiod chace-based compensation 30 : 3376984 - : : 3376984 Balance, December 31, 2014 2,231,021 604 37, ‘The Parent Company was registered with the Secuzties and Exchange Commission on October 25, 2013.‘CENTURY PACIFIC FOOD, ING. AND SUBSIDIARIES (A Subsiiay of Contry Pace Geoup, Ine) ‘CONSOLIDATRD STATEMENT OF CASITFLOWS For the Year Ended December 32014 andthe Two Months Ended December 34,2013, Eo mis Notes (One Yeas) (vo Mone Cath Flows fom Operating Activities (@o) Lose before tax PR2sB2I70M (PS 664.440) Adjustments for Depreciation 8 152,709,308 api7n Finance cost 7 15,207,946 nigsqz7 Doubts acount expense ° 20,307,633 - Revel of impament ° (0,242,810) Loss on inventory obsolescence a 13,392,497 4862318 “Lott (pin) on ispoa f oper, plant and equipment 5 609,968) 14816,123 ‘Resisemon: benef expense 9 19000,852 2094,690 _Loesontranaferofrsiement benefit obligtion 1» 15,995,809 - ‘hace bated compenscion expense 2” 3,576 904 Unrealized foreign exchange gain (653.052) : Amorization of promises Feo HTM investments 0 2,266,266 7 aterestincome 2 (13,009,065) (495,100) ‘Operating eth flows before working epi changes 2532480,942 21763, 486 Decresse(neceas) in: ‘Trade and other seeivables 04ss8,919260) 392563 ‘Dae fom elated pais (903,510,358) © @13678,17) Inventories 9.663,378540) 787,768,399 Biological aes @7478,189) Prepayments nd other catent assets net 24,566,061 5313.90 (Other non-curent atsts (8,790,545) 1,838,164 Incease (Dees int “Trade sd othe pases 408,753,976, 645,900,228) Due wsehtet pass 00 522728 - Buchange differences on tanshatiog epeating assets and nites 4,531,380 815.425) ‘Cath generated fom operations 525,759,589 39526200 ‘Contebasion coche eizemeat fund » ($0,334,603) (475350) Income tx paid 634,697,785) 22.08.96), [Nec eash fom operating active 260,507,373 1516375, ‘Cath Flows from Investing Activities ‘Acausions of propery, plant and equipment 5 Oe aaa Ee eta Proceeds fom sl of prepedy, plant and eqipment 4.386 300 79701919 Acaustion of HTM investments 0 (282,901.28) 7 ‘Acquistion of absiciacies oct of ath aequited) : crasosi.sn) Incest income ecived 2.948252 495,102 [Net cash ued in inventing actin 704733.250) (99,731,781) (Cath Flows from Pinancing Actives Proceeds fom isanee of shae capital 2 3500,389,01% _1,500,000000 Netseccips from relted pais - 129265038, Net repayments of loans 7 @.214600,002) 195,999,998) inane cot paid 17 (05,287 945) (1438, Net cash from financing aves sz704n.968 1400532913 [Not increase in Cash and Cash Equivalenss 926,244,989 437,964,907 Cash and Cash Equivalents, Beginning 8 $37,964907 Gash and Cash En 5 95457964997 “Ke Neer 10 Conalded Fach Semen ‘The Puen Company ws agit with the Seca nd techange Comeiion on Octobe 25,20,‘CENTURY PACIFIC FOOD, INC. AND SUBSIDIARIES (A Subsidiary of Century Pacific Group, In ‘NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2014 AND 2013 AND THE YEAR ENDED DECEMBER 31, 2014 AND THE TWO MONTHS ENDED DECEMBER 31, 2013 1 CORPORATE INFORMATION Century Pacific Food, Inc. (the “Parent Company” or “CPFP”) was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on October 25, 2013. ‘The Parent Company is primasly engaged in the business of buying and selling, processing, canning and packaging and manufactuting all kinds of food and food products, such as but not limited to fish, seafood and other marine products, cattle, hog and other animals and animal products, fruits, vegetables and other agricultural crops and produce of land, including by-products thereof, ‘The Parent Company's shares of stocks were listed in the Philippine Stock Exchange (PSE) ‘on May 6, 2014 through initial public offering (IPO) and listing of 229.65 million shares in the PSE at a total value of P3.3 billion, as discussed in Note 20, ‘The Parent Company is 89.7% owned subsidiary of Century Canning Corporation (the “Ultimate Parent Company” or “CCG”), a corporation registered with the SEC and domiciled in the Philippines. On December 20, 2013, the CCC’s Board of Directors (BOD) approved the changes in the Ultimate Parent Company's corporate name and business purpose, as a result of the disposal of its operating businesses as discussed below. ‘The Ultimate Parent Company was re-named Century Pacific Group, Inc. (CPGI) and its primary purpose became that of a holding company. ‘The changes were approved by the ‘SEC on March 10, 2015. ‘The Parent Company has the following subsidiaties as at December 31, 2014 and 201 Ownership Interest 2014 2013 General Tuna Corporation (GTC) 100% 100% Snow Mountain Development Corporation (SMDC) 100% 100% Allforward Warehousing, Inc. (AW) 100% : GTC was incorporated in the Philippines and registered with the SEC on March 10, 1997. It is presently engaged in manufacturing and exporting private label canned, pouched and feozen tuna products. Its processing plant is located at National Highway, Brgy. Tambler, General Santos City. SMDC was incorporated in the Philippines and registered with the SEC on February 14, 2001. SMDC is engaged in producing, canning, freezing, preserving, refining, packing, buying and selling at wholesale and retail, food products including all kinds of milk and dairy products, fruits and vegetable juices and other milk or dairy preparations and by-products. On January 7, 2014, the Board of Directors (BOD) resolved to amend the Company's articles of incorporation duc to the change in the address of its registered office, which is also its principal place of business, from No.48 Amang Rodriguez, Avenue, Ignacio Complex, Manggahan, Pasig City to 32 Arturo Drive, Bagumbayan, Taguig City, Metro Manila. The amendment was accordingly approved by the Bureau of Internal Revenue (BIR) con January 10, 2014 and by the SEC on February 26, 2014. OUROANI was incorporated in the Philippines and registered with the SEC on October 3, 2014. ‘ANZT’s primary business purpose is to engage in the business of operating cold stomge facilities, handling, lensing, maintaining, buying, selling, warehouse and storage facilities, including its equipment, forklift, conveyors, pallet towers and other telated machineries, tools and equipment necessary in warehousing, and storage operation. Tts principal place of ‘business is located at Units 701 - 706, 7th Floor, Centerpoint Building, Julia Vargas St. comer Gamet Road, Oxtiges, Pasig City.” As of December 31, 2014, AWI has not started ‘commercial operations. ‘The Parent Company's registered office, which is also its principal place of business, is located at Suite 505, Centerpoint Building, Julia Vargas St, Ortigas Center, Pasig City, Metro Manila, Status of Opstations On October 31, 2013, the Board of Directors (BOD) approved and authorized the Parent Company to acquire from CPGI, any and all rights, tle and interest of CPGI in GTC ‘and SMDC. On October 31, 2013, the BOD likewise approved and authorized the Parent Company to purchase all rights, title and interest in and to the assets used in the canned tuna business of PGI, the canned meat business of ‘The Pacific Meat Company, Inc., (PMCI) and the canned sardines business of Columbus Seafoods Corporation (CSC) consisting of office fumitute, ‘machinery, equipment and software and transportation and delivery equipment, as disclosed in Note 15, with the purpose of eventually assuming those business operations of CPGI, PMCI and CSC. CPGI is into canned tuna while CSC is into canned sardines. PMCI and CSC are subsidiaties of CPGI. On Janvary 1, 2014, the Parent Company acquired the inventories of CPGI and CSC, and the ‘canned meat business of PMCI. FINANCIAL REPORTING FRAMEWORK AND BASIS OF PREPARATION AND PRESENTATION Statement of Compliance ‘The consolidated financial statements of the Parent Company and its subsidiaries (the “Group”) have been prepared in accordance with Philippine Financial Reporting Standards (PFRS), which includes all applicable PFRS, Philippine Accounting Standatds (PAS), and interpretations issued by the International Financial Reporting Interpretations Committee (FRIC), Philippine Interpretations Committee (PIC) and Standing Interpretations Committee (SIC) as approved by the Financial Reporting Standards Council (FRSC) and the Board of Accountancy (BOA), and adopted by the SEC. Basis of Preparation and Presentation Basis of Preparation ‘The consolidated financial statements have been prepared on the histotical cost basis, except for + certain financial insteuments carried at amortized cost; ‘+ inventosies carried at the lower of cost and net realizable value; and + defined benefit asset of obligation recognized as the net total of the present value of the obligation less fair value of plan assets. Historical cost is generally based on the fair value of the consideration given in exchange for OACFair value is the price that would be received to sell an asset of paid to transfer a liability in an orderly transaction between market participants at the measurement date, xegardless of whether that price is directly observable or estimuated using another valuation technique. In estimating the fair value of an asset or a linbility, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date, Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of PFRS 2, leasing transactions that ate within the scope of PAS 17, and measurements that have some similarities to fair value but ate not fair value, such as net realizable value in PAS 2 of value in use in PAS 36. In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2.08 3 based on the degree to which the inpnts to the fair vahie measurements are ‘observable and the significance of the inputs to the fair value measurement in its entirety, ‘which are described as follows: + Level 1 inputs are quoted prices (anadjusted) in active markets for identical assets ox liabilities that the entity can access at the measurement date; + Level 2 inputs ate inputs, other than quoted prices included within Level 1, that are observable for the asset of lability either directly or indirectly; and + Level 3 inputs are unobservable inputs for the asset or liability. The financial statements of the Company have been prepared on the historical cost basis, except for certain financial instruments cartied at amortized cost. Functional and Presentation Currency “These financial statements are presented in Philippine Peso, the currency of the primary economic environment in which the Group operates. All amounts are presented in the nearest peso unless otherwise indicated, ‘The separate financial statements of GTC ate presented in United States (US) Dollars, the cutzency of the primary economic environment in which it operates. GTC’s financial statements are presented in Philippine Peso as its presentation currency. GTC translated its financial position and results of operations from US Dollars to Philippine Peso using the following procedures: *+ assets and liabilities for each statement of financial position presented, are presented at the closing rate at the date of that statement of financial position; + for each petiod presented, income and expenses recognized in the period are translated using the average exchange rate at that period; and + all resulting exchange differences are recognized in other comprehensive income as currency translation adjustment.BASIS OF CONSOLIDATION AND COMPOSITION OF THE GROUP Basis of consolidation und non-comttolling interest ‘The consolidated financial statements incorporate the financial statements of the Parent Company and sll subsidiaries it controls. Control is achieved when the Parent Company has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. ‘The Parent Company reassesses whether ot not it contro en investee if facts and circumstances indicate that there are changes to one or mote of these three elements of control. When the Parent Company has less than a majority of the voting tights of an investee, it has power over the investee when the voting sights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Patent Company considers all relevant facts and circumstances in essessing whether or not the Parent Company's voting tights in an investee are sufficient to give it power, including: + the size of the Parent Company's holding of voting tights relative to the size and dispersion of holdings of the other vote holders; + potential voting rights held by the Parent Company, other vote holders or othet parties; + tights arising from other contractual arcangements; and + any additional facts and circumstances that indicate that the Parent Company has, oF does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting pattems at previous sharcholders’ meetings, Composition of the Group Details of the Parent Company's subsidiaries as at December 31, 2014 and 2013 are as follows: Ownership Interest 2014 2013 General Tuna Corporation (GTC) 100% 100% Snow Mountain Development Corporation (SMDC) 100% 100% Allforward Warehousing, Inc. (AWD, 100% i ‘The significant financial information on the financial statements of wholly owned subsidiaries of the Parent Company as at and for the years ended December 31, 2014 and 2013 are shown below. The summarized financial information below represents amounts before intragroup eliminations. {OA ASMDC 20148 2013 Catrent assets P 837,049,853 P679,327,354 Non-cusrent assets 251,060,281 210,393,858 Total assets 1,088,110,134 889,721,212 ‘Current liabilities 418,238,460 382,700,569 Non-curtent liabilities - = Total liabilities 418,238,460 382,700,569 Fauity P_669,871,674 _P507,020,643, Results of operations: Revenue P1,991,523,532 P1,556,358,881 Costs and expenses 1,828,329,252 _1,514,587,292 Profit for the Petiod P_163,194,280_P_ 41,771,589 GTC ‘On September 25, 2012, the BOD approved GTC’s registration as a new expanding expost producer of frozen tuna Joins on a non-pioneer status. GTC is entitled to income tax holiday (ITH) for a period of three years beginning February 1, 2013 because of the project’ ability to contribute to the economy's development pursuant to Article 7 of Executive Order No. 226, based on the following parameters in this otder: (1) project’s net value added; (2) job generation; (3) multiple effect; and (4) measured capacity. ‘The significant information on the audited financial statements of GTC as translated to its presentation currency as at and for the periods ended December 31, 2014 and 2013 are as follows: 2014 2013 Financial position: Current assets ‘P3,214,412,312 P2,667,452,209 Non-cuzrent assets 747,268,895, 674,620,902 Total assets 3,961,681,207 __3,342,073,111 Current liabilities 3,053,369,615 2,597,767,176 Non-cuzrent liabilities 3,785,440 598,656 Total liabilities 3,057,155,055__2,598,365,832. Equity, P 904,526,152 P_743,707,279- Results of operations: Revenue P5,384,279,468 P5,989,543,572 Cost and expenses 5,225,446,450 _5,852,025,893 Profit for the period P_158,833,018_P_ 137,517,6794. AWI 2018 Einan¢ Current assets 18,751,667 Non-current assets 328,345 Total assets 19,080,012 Current liabilities 1,094,067 Non-current liabilities - Total liabilities 1,094,067 Equity 17,985,945 Revenue P 7 Cost and expenses 764,055 Loss for the period P__ 764,055 ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS Adoption of New and Revised Accounting Standards Effective in 2014 ‘The following new and revised accounting standards and interpretations that have been published by the International Accounting Standards Board (IASB) and issued by the FRSC in the Philippines were adopted by the Group effective on January 1, 2014. Amendments to PERS 10, PFRS 12 and PAS 27, Consolidated Financial Statements, Ditebsare of Interests in Otber Entities: Transition Guidance and Investuent Entities and Separate Financial Saervents ‘The amendments to PERS 10 introduce an exception from the requirement to consolidate subsidiacies for an investment entity. In terms of the exception, an investment entity is required to measure its interests in subsidiaries at fair value through profit or loss. ‘The exception does not apply to subsidiaries of investment entities that provide services thet selate to the investment entity’s investment activities. ‘To qualify as an investment entity, certain criteria have to be met. Specifically, an entity is an investment entity when it * Obtains funds from one of more investors for the purpose of providing them with professional investment management services + Commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, of both. + Measures and evaluates performance of substantially all of its investments on a fair value basis. Consequential amendments to PFRS 12 and PAS 27 have been made to introduce new disclosure requirements for investment entities. In general, the amendments require sctrospective application, with specific transitional provisions, ‘The amendments have no impact on the Group's consolidated financial statements since the Parent Company is not an investment entiAmendments to PAS 32, Financial Instruments: Presentation ‘The amendments provide clatfications on the application of the offsetting rules of financial assets and financial liabilities. ‘The amendments did not have a significant impact on the Group’s consolidated financial statements, Amendments to PAS 36, Impairment of Asets ‘The amendments to PAS 36, Impairment of Assets, eeduce the circumstances in which the secoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosuces required, end introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fait value less costs of disposal) is determined using a present value technique. ‘The amendments did not have an impact on the Group’s consolidated financial statements. Amendments to PAS 39, Financial Instrument: Recognition and Measurement ‘The amendments state that there would be no need to discontinue hedge accounting if « hedging derivative was novated, provided the following criteria are met: + the novation is required by laws ot regulations; + the novation results in a central counterpatty becoming the new counterpatty to each of the parties to the novated derivatives and + the changes in terms of the novated derivative ate limited to those necessaty to effect the terms of the novated derivative. ‘The amendments did not have an impact on the Group’s consolidated financial statements as itdoes not have any derivative and hedging instrument. IFRIC Interpretation 21, Lenies ‘This Interpretation provides guidance on how to account a lability to pay a levy that is within the scope of PAS 37, Provisions, Contingent Liabilities and Contingent Assets. ‘The Interpretation clasifies that the obligating event that gives rise to a linbilty to pay a levy is the activity described in the selevant legislation that triggers the payment of the levy. ‘The interpretation provides the following guidance on recognition of a liability to pay levies: + The liability is recognized progressively if the obligating event occuss over a period of time. ‘+ Ifan obligation is triggered on reaching a minimum threshold, the Liability is recognized ‘when that minimum threshold is reached. ‘The interpretation has no impact on the Group's consolidated financial statementsNew Accounting Standards Effective after the Reporting Period Ended December 31, 2014 ‘Whe Group will adopt PERS 9, Financial Instrumens, when it becomes effective: PERS 9, Phase 1: Classification and Measurement ‘The standard requites all recognized financial assets that ate within the scope of PAS 39, Financial Instrumente: Recanition and Measurement, to be subsequently measured at amortized cost or at fair value. Specifically, debt investments that are held within 2 business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely for payments of principal and interest on the outstanding balance are generally measured at amortized cost at the end of subsequent reporting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting petiods, For financial liabilities that are designated as at fair value through profit o: loss, the amount Of change in the fair value of the financial liability that is attributable to changes in the credit risk of that lability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’ credit risk in other comprehensive income would create o: increase an accounting mismatch in profit or loss. Changes in fair value attributable to 2 financial lability’s credit sisk are not subsequently reclassified to profit of: loss. ‘The standard is to be effective no earlier than the annual periods beginning January 1, 2017, with eatlier application permitted, ‘The Group conducted an initial study on the impact of an eatly adoption of PERS 9, Financial Insraments, on the consolidated financial statements using the audited financial data as at December 31, 2014. Based on Management's assessment, the recognition ‘and measurement of the Group's loans and receivables and financial liabilities would be the same under both PAS 39 and PERS 9, Held-to-matusity investments, however, will have to be measured either at amortized cost or a fair value through profit or loss depending on the business model and cash flow characteristics of the investments, PERS 9, Phase 2: Impairment of Financial Assets ‘The standatd cequites entities to account for expected credit losses fom when financial instruments ate first recognized and it lowers the threshold for recognition of fall lifetime expected losses. The standatd is to be effective no earlier than the annual periods beginning Jamuary 1, 2018, with eatlir application permitted. ‘The adoption of the standard will result in initial measurement of financial assets carried at amortized cost at fair value net of transaction costs and expected credit losses. New Accounting Standards Effective after the Reporting Period Ended December 31, 2014 but Pending Approval for Adoption in the Philippines ‘The Group will dopt the following IFRS when these become effective. Annual Improvements to IFRSs 2010-2012 Gyele ‘The annual improvements address the following: Amendment to IFRS 2, Shan-based Payonent ‘The amendment provides new definitions of ‘vesting condition’ and ‘market condition” and adds definitions for ‘performance condition’ and ‘service condition’ (which were previously part of the definition of ‘vesting condition’). ‘The Management is still evalsating the impact of the above improvements on the Group’s consolidated financial statements. MONAAmendment to IFRS 3, Business Combinations (with consequential acendrients to tber standards) This amendment clarifies that contingent consideration that is classified 2s an asset or a liability shall be measured at fair value at each reporting date. ‘The future adoption of the amendment will have no impact on the Group’s consolidated financial statements. Amendments to TERS 8, Operating Segroenis ‘The amendments require an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments. These also clatfy that an entity shall only provide reconciliations of the total of the reportable segments’ assets to the ‘entity's ansets ifthe segment assets ate reported regularly. ‘The Management io still evaluating the impact of the above improvements om the Group’s consolidated financial statements. Amendment to IFRS 13, Fair Valve Measurement (atendmoent fo the basis of conclusions only, ‘with consequential amendments tothe bares of conclusions ofotber standards) ‘This amendment states that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure short-term receivables and payables with no stated interest sate at their invoice amounts without discounting if the effect of not discounting is immaterial ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements. Amendment to IAS 16, Property, Plant and Equipment ‘The amendment requires that when an item of property, plant and equipment is evalued, the gross cazrying amount shall be adjusted in a manner that is consistent with the revaluation of the carrying amount. ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements, Amendment to TAS 24, Related Party Disdoures ‘The amendment states that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the seporting entity. ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements. Amendment to IAS 38, Intangible Assets ‘The amendment requires that when an intangible asset is revalued, the gross canying amount shall be adjusted in a manner that is consistent with the revaluation of the carrying amount, ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements. ‘The above improvements are effective for annual periods beginning on or after July 1, 2014 and shall be applied retrospectively. However, early application of these improvements is permitted.Annual Improvements to TFRSs 2011-2013 Gee ‘These annual improvements address the following: Amendment to JERS 1, Fisttine Adoption of International Financial Reporting Standards (changes tothe Basis for Conchesons only) ‘The amendment states that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS or applying early 2 new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits easly application. An entity is required to apply the same version of the IFRS ‘throughout the periods covered by those first IFRS financial statements, ‘The ftture adoption of the amendment will have no impact on the Group's consolidated financial statements as the Group is no longer a first time adopter of IFRS when the amendment becomes effective, Amendment to IFRS 3, Business Combinations ‘The amendment clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself. ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements. Amendment to IFRS 13, Fair Value Measurement ‘The amendment stresses that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39, Financial Instruments: Recognition and Measurement, ot IERS 9, Financial Instruments, regardless of whether they meet the definition of financial assets ot Ginancial liabilities as defined in IAS 32, Financial Instruments: Precentation. ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements, Amendment to TAS 40, Investment Property ‘The amendment clarifies that determining whether 2 specific transaction meets the definition of both a business combination as defined in IFRS 3, Business Combinations, and investment property as defined in IAS 40, Investment Proper, requires the separate application of both standards independently of each other. ‘The future adoption of the amendment will have no impact on the Group's consolidated financial statements ‘The above improvements are effective for annual petiods beginning on ot after July 1, 2014 and shall be applied retrospectively. However, early application of these improvements is permitted, Amendments to IAS 19, Employee Benefits ‘The amendments clatify the requirements that relate to how contributions from employees or thied parties that are linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in those contributions, can, but are not required, to be recognized as a reduction in the service cost in the period in which the related service is rendered. ‘The amendments are applicable to annual periods beginning on or after July 1, 2014, ‘The amendments will not have an impact on the Group’s consolidated financial statements RAOAmendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations ‘The amendments clarify the accounting for acquisitions of an interest in a joint operation ‘when the operation constitutes a business such that the acquirer is required to apply ll of the paiaciples on business combinations in IFRS 3 and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11, Accordingly, a joint operator thet is an acquirer of such an intetest has to: + measure most identifiable assets and liabilities at fair value; + expense acquisition-related costs (other than debt or equity issuance costs); + recognize deferred taxes; + recognize any goodwill or bargain purchase gain; + perform impairment tests for the cash genciating units to which goodwill hss beon allocated; and ‘+ disclose information required relevant for business combinations. ‘The amendments apply to the acquisition of an interest in an existing joint operation and also to the acquisition of an interest in a joint operation on its formation, unless the formation of the joint operation coincides with the formation of the business. ‘The amendments are effective for annual periods beginning on or after January 1, 2016, Eaulier application is permitted but corresponding disclosures are requited. The amendments apply prospectively. ‘The amendments will not have an impact on the Group’s consolidated financial statements as the Group does not have interests in joint operations, IRS 14, Regulatory Deferal Accounts ‘The standard permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for ‘regulatory deferral account balances’ in accordance with its previous GAAP, both on initial adoption of PERS and in subsequent financial statements. Regulatory deferral account balances, and movements in them, are presented separately in the statement of financial position and statement of profit or loss snd other comprehensive income, and specific disclosures are required. ‘The standard is effective for annual reporting periods beginning on or after Janvaty 1, 2016. Eaulier application is permitted. The standard will not have an impact on the Group's consolidated financial statements since the Group is no longer a first-time adopter of PFRS on its mandatory effective date. Hence, this standaed is no longer applicable to the Group. Amendments to IAS 16, Property, Plant and Equipment ‘These amendments clarify that a depreciation method that is based on revenue generated by an activity that includes the use of an asset is not appropriate. This is because such methods reflects @ pattern of generation of economic benefits that atise from the operation of the business of which an asset is part, rather than the pattern of consumption of an asset’s expected future economic benefits. ‘The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted, ‘The amendments will not have an impact on the Group's consolidated financial staternents as the Group’s depreciation methods are not based on revenue. vaAmendments to IAS 16, Property, Plant and Equipment, and Amendments to IAS 41, Agriculture ‘The amendments include ‘bearer plants’ within the scope of IAS 16 rather than IAS 41, allowing such assets to be accounted for as property, plant and equipment and measured after initial cecognition on a cost or revaluation basis in accordance with IAS 16 and introduce 2 definition of ‘bearer plants’ 2s a living plant that is used in the production of supply of agricultural produce, is expected to bear produce for more than one period and has 1 remote likelihood of being sold as agricultural produce, except for incidental scrap sales. However, the amendments clarify that produce growing on beater plants remains within the scope of IAS 41. ‘The amendments are effective for annual periods beginning on or after Janvary 1, 2016, ‘with earlier application being permitted. ‘The amendments will not have an impact on the Group’s consolidated financial statements as the Group has no bearer plants. Amendments to IAS 27, Separate Financial Statements ‘The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements. ‘The amendments are effective for annual periods beginning on or after January 1, 2016, with ceatliee application being permitted. ‘The amendments will have no impact on the Group's consolidated financial statements. Amendments to IAS 38, Intangible Asses ‘These amendments introduce scbuttable presumption that a revenue-based amortization method for intangible sssets is inappropriate for the same reasons as in TAS 16, However, the IASB states that there are limited ciscumstances when the presumption can be overcome: + the intangible asset is expressed as a measure of revenue (the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold); and + ittcan be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated (the consumption of the intangible asset is directly linked to the revenue generated from using the asset). ‘The amendments are effective for annual periods beginning on or after January 1, 2016. Eatlier application is permitted, ‘The amendments will not have an impact on the Group's consolidated financial statements. TERS 15, Revenue from Contracts with Customers “The stondaed specifies how and when an IFRS reporter will recognize revenue as well as requiring such entities t0 provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts with customers. ‘The standard is effective for annual reporting periods beginning on ot after January 1, 2017. Eazlier application is permitted. ‘The Management does not anticipate that the application of the new accounting standard will have a significant impact on the Group's consolidated financial statements as the Group docs not have complex revenue transactions. TE5 TERS 9, Financial Tnsinoments (Hedge Accounting), and amendments to IFRS 9, IFRS 7 and TAS 39 (2013) ‘A revised version of IFRS 9 introduces a new chapter to IFRS 9 on hedge accounting, patting in place a new hedge accounting mode! that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and ‘non-financial risk exposures. It permits an entity to apply only the requirements introduced in IFRS 9 (2010) for the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss without applying the other requirements of IFRS 9, ‘meaning the portion of the change in fair value related to changes in the entity's own credit ssk can be presented in other comprehensive income rather than within profit or loss. It also removes the mandatory effective date of IFRS 9 (2013), IFRS 9 (2010) and IFRS 9 (2009), leaving the effective date open pending the finalization of the impairment and classification and measuroment requirements. Nobwithstanding the removal of an effective date, each standard remains available for application. ‘The fature adoption of the amendments will have no impact on the Group's consolidated financial statements. SIGNIFICANT ACCOUNTING POLICIES Business Combination under Common Control ‘The Group adopted pooling of interests method for acquisitions of business under common control on October 31, 2013. Under the pooling of interests methods, the assets and liabilities of the combining entities ate reflected in the financial statements at their carrying amounts. No adjustments are made to reflect fair values, or recognize any new assets of liabilities, at the date of the combination that otherwise would have been done under the ‘acquisition method. The only adjustments that are made are those adjustments to harmonize accounting policies. The financial information of the Company are not restated, the combination give rise to an initial recognition of net assets at the previous carrying values of assets and liabilities of the acquired business. No goodwill is recognized as a result of the combination. Any difference between the consideration paid or transferred and the equity ‘acquired? is reflected within equity. Financial Assets Initial recognition Financial assets ate recognized in the Group's consolidated financial statements when the Group becomes a party to the contractual provisions of the instrument. Financial assets are secognized initially at fair value. Transaction costs are included in the initial measurement of the Group’s financial assets, except for investments classified at fair value through profit or loss (FVTPL). Classification and Subsequent Measurement Financial assets are classified into the following specified categories: financial assets at FVTPL, held-to-maturity investments (HTM), available-for-sale (AFS) financial assets and loans and receivables. ‘The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales Of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that requite delivery of assets ‘within the time frame established by regulation or convention in the matkeiplace. Carrently, the Group's financial assets consist of HTM and loans and receivable, NNHIM investments HIM investments ate non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial recognition, HTM investments are measured at amortized cost using the effective interest method less any impairment, with revenue 1 on an effective yield basis. Loans and reccoables: Loans and receivables sre non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables, ‘After initial recognition, loans and receivables are subsequently measured at amortized cost using the effective interest method, less any impairment and are included in cusrent assets, ‘except for maturities greater than 12 months after the end of the reporting petiod. ‘The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. ‘The effective interest zate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument of, when appropriate, a shotter petiod, to the net carrying amount on inital recognition. Interest income is recognized by applying the effective interest rate, except for short-term. receivables when the recognition of interest would be immaterial ‘The Group’s financial assets classified under this category include cash and cash equivalents, trade and other receivables, due from related parties and refundable security deposits. Impairment of financial assets Financial assets, other than those at FVIPL, are assessed for indicators of impaitment at the end of each reporting period. Financial assets are considered to be impeired when there is objective evidence that, as a xesult of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. wvidence of img For all financial assets cartied at amortized cost, objective evidence of impairment could include: + significant financial difficulty of the issuer of counter partys or + breach of contract, such as default or delinquency in interest or principal payments; or + it has become probable that the borrower will enter bankruptcy or financial re-organization; or + the disappearance of an active mariet for that financial asset because of financial difficulties; o + the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; or + observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. ADIN ET IFor certain categories of financial asset, such as trade receivables, assets that ate assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's ‘past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period as well as observable changes in national ot local ‘economic conditions that correlate with default on receivables. mortized If there is objective evidence that an impairment loss on loans and receivables carried at ‘amortized cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, excluding fature credit losses that have not heen incurred, discounted at the financial asset's original effective interest rate, ic, the effective interest rate computed at initial recognition, ‘The carrying amount of financial assets carried at amortized cost is reduced directly by the impairment loss with the exception of tde receivables, wherein the carrying amount is reduced through the use of an allowance account. When trade receivables are considered uncollectible, these are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit ot loss. IE, in a subsequent period, the amount of the impairment loss decreases and the decrease can be sclated objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be teversed. ‘The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been. had the impairment not been recognized at the date the impairment is reversed. The amount of the reversal shall be recognized in profit or loss, ffsetting of financial instruments Financial assets and liabilities are offset and the net amount reported in the statements of financial position when there is a legally enforceable sight to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. D tion off ‘The Group derecognizes financial assets when the contractual rights to the cash flows from the asset expire, of when it transfers the financial asset and substantially all the risk and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risk and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received. (On derecognition of financial asset in its entirety, the difference between the asset's casrying amount and the sum of the consideration received and receivable is recognized in profit ot loss,Inventories Inventories are initially measured at cost. Subsequently, inventories ate stated at the lower of cost and net realizable value. The costs of inventories ate calculated using the weighted average method. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sae. When the net realizable value of the inventories is lower than the cost, the Group provides an allowance for the decline in the value of the inventory and recognizes the write-down as an expense in profit of loss, The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the petiod in which the reversal occurs. Provision for inventory losses is ‘established for slow moving, obsolete, defective and damaged inventories based on physical inspection and management evaluation.’ Inventories and its related provision for impairment are written off when the Group has determined that the related inventory is already obsolete and damaged. Write offs represent the release of previously recorded provision from the allowance account and credited to the related inventory account following the disposal of the inventoties. Destruction of the obsolete and damaged inventories is made in the presence of regulatory agencies. Reversals of previously recorded impairment provisions are credited in the statement of comprehensive income based on the result of management's cutrent assessment, considering, available facts and circumstances, incloding but not limited to net realizable value at the time of disposal. When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. Prepayments Prepayments tepresent expenses not yet incutted but already paid in cash. Prepayments are initially recorded as assets and measured at the amount of cash paid. Subsequently, these are charged to profit or loss as they are consumed in operations or expize with the passage of time. Prepayments are classified in the consolidated statement of financial position as cutsent assets when the cost of goods or services related to the prepayments are expected 10 be incurzed within one year or the Group's normal operating cycle, whichever is longer Otherwise, prepayments are classified as non-current assets. Property, Plant and Equipment Property, plant and equipment are initially measured at cost. ‘The cost of an item of property, plant and equipment comprises + its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; + any costs diteetly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; and + the initial estimate of the future costs of dismantling and removing the item and restoring the site on which itis located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during particular peciod for purposes other than to produce inventories during that petiod. ‘The cost of self-constructed assets includes the cost of materials and direct labor, any other costs ditectly attributable to beinging the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they ate located, and borrowing costs on qualifying assets. CTA‘Major spare patts and stand-by equipment qualify as property, plant and equipment when the Group expects to use them during more than one period. Similarly, if the spare parts and setvicing equipment can be used only in connection with an item of propesty, plant and equipment, they are accounted for as property, plant and equipment. ‘At the end of each reporting petiod, item of property, plant and equipment measured are cartied at cost less any subsequent accumulated depreciation and impairment losses, ‘Subsequent expenditures relating to an item of property, plant and equipment that have alceady been recognized are added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Group. All other subsequent expenditures are recognized ‘as expenses in the period in which those are incurred. ‘Depreciation ic computed on the straight-line method based on the estimated useful lives of the assets as follows: Buildings 15 years Building improvements 5 to 15 years Plant, machinery and equipment 2 to 15 years ‘Teansportation and delivery equipment 5 years Office farniture and fixture 5 yeats Laboratory tools nd equipment 310 5 years ‘Properties in the course of construction for production, rental or administrative purposes, oF for purposes not yet determined, are carried at cost, less any tecognized impaicment loss. Cost includes professional fees and for qualifying assets, borrowing costs capitalized in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences at the time the assets are ready for their intended use. ‘An item of property, plant and equipment is derecognized upon disposal or when no future ‘economic benefits are expected to arise from the continued use of the asset, Gain or loss arising on the disposal or retirement of an asset is detesmined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Biological Assets Biological assets or agricultural produce are recognized only when the Group controls the assets as a result of past events, itis probable that future economic benefits associated with the assets will flow to the Group and the fair value ot cost of the assets can be measured reliably. ‘The Group measures biological assets at the end of each tepotting period at its cost less any accumulated impairment losses. Biological assets are recognized as expense when consumed. ‘Trademarks Intangible assets are initially measured at cost. Subsequent to initial recognition, intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accurmolated impairment losses. Amortization is recognized on a straight-line basis over the estimated useful lives. The estimated useful life and the amortization method are reviewed at the end of each reporting petiod, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are catried at cost less accumulated impairment losses.‘An intangible asset is derecognized on disposal, ot when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss when the asset is detecognized. Impairment of Tangible and Intangible Assets [At the end of each reporting period, the Group assesses whether there is any indication that, any of its tangible and intangible assets may have suffered an impaitment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, assets are. also allocated to individual cash-generating units, ot otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite usefal lives and intangible assets not yet available for use are tested for impairment snaually and whenever theze is an indication that the asset may be impaired. Recovetable ammount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated fature cash flows are discounted to their present value using a pre-tax discount rate that selects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows heve not been adjusted. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized as an expense. Impairment losses recognized in respect of CGUs are allocated to the assets in the unit on a pro rata basis. Impairment losses recognized in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation of amostization, if no impaitment loss had been recognized. A reversal of an impairment loss is recognized 2s income. Financial Liabilities and Equity Instruments Classifica ; Debt and equity instruments are classified as either financial abilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and equity instrument. Financial liabilities Financial liabilities are recognized in the Group's consolidated financial statements when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities are initially zecognized at fair value. Transaction costs are included in the initial measurement of the Group's financial liabilities except for debt instruments classified at FVIPL. Financial liabilities are classified as either financial lisbilities at FVIPL or other financial liabilities. OTE 18,Since the Group does not have financial liabilities classified at FVTPL, all financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. nts ies are offtet and the net amount reported in the consolidated statement of financial position when there is a legally enforceable sight to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the Hability simultaneously. Derecognition Financial liabilities are derecognized by the Group when the obligation under the lability is discharged, cancelled or expired. The difference between the caning amount of the financial ability derecognized and the consideration paid and payable is recognized in profit orloss. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by Group ate sccognized at the proceeds received, net of direct issue costs Common shares Common shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds, net of tax. ‘Share premium When the shares are sold at a premium, the difference between the proceeds and the par value is credited to the share premium. Direct costs incurred related to equity issuance are chargeable to share premium account. ‘Iadditional paid-in capital is not sufficient, the excess is charged against retained earnings. a Jation adjustment Currency translation adjustment represents the exchange differences resulting from translating the financial position and results of operations of GTC whose functional currency Aiffers from the presentation currency. ; ; 7 Retained earnings or deficit represent accumulated profit or loss attributable to equity holders of the Parent Company after deducting dividends declared. Retained earnings may also include the effect of changes in accounting policy as may be required by the standard’s ‘tansitional provisions. Other income Other income is income generated outside the normal course of business and is recognized ‘when it is probable that the economic bencfits will low to the Group and it can be measured reliablyProvisions, Contingent Liabilities and Contingent Assets Provisions Provisions ate recognized when the Group has a present obligation, either legal or constructive, as a zesult of a past event, itis probable that the Group will be required to settle the obligation through an outflow of resources embodying economic benefits, and the amount of the obligation can be estimated reliably. ‘The amount of the provision recognized is the best estimate of the consideration cequited to settle the present obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation. A provision is measuted using the cash flows estimated to settle the present obligation; its carrying amount is the present value of those cash flows. When some or all of the economic benefits requited to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if itis virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate, Ift is no longer probable that a transfer of economic benefits will be required to settle the obligation, the provision should be reversed. Employee Benefits Short-term benefits ‘The Group recognizes a lability net of amounts already paid and an expense for services rendered by employees during the accounting period that ate expected to be settled wholly before twelve months after the end of the reporting period. A liability is also recognized for the amount expected to be paid under short-term cash bonus ot profit shating plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Short-term employee benefit obligations ate measuted on an undiscounted basis and are expensed as the related service is provided. Post-employment benefits For defined benefit setirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being catried out at the end of each annval reporting period. Remeasarement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (fF applicable) and the return on plan assets (excluding interest), is zeflected immediately in the statements of financial position with a charge or credit recognized in other comprehensive income in the period in which they ‘occur, Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the petiod of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit lability ot asset. ‘Defined benefit costs are categorized as follows: + Service cost (including current service cost, past service cost, as well as gains and losses ‘on curtailments and settlements). + Netinterest expense or income. + Remeasurement.‘The Group presents the first two components of defined benefit costs in profit or loss in the line item retirement benefits expense. ‘Vhe retirement benefit obligation recognized in the consolidated statement of financial position represents the actual deficit in the Group’s defined benefit plans. Profit-sharing and bonus plans ‘The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Group's sharcholders after certain adjustments. ‘The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation. Share-based Payments ‘Equity-settled share-based payments Equity-setled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. “The fair value determined at the grant date of the equity-settled share-based payments to employees is recognized as expense on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At end of each ceporting petiod, the Group revises its estimate of the umber of equity instruments expected to vest. ‘The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the sevised estimate, with 2 comesponding adjustment to the equity-settled employee benefits Equity-settled share-based payment transactions with other parties are measured at the fait value of the goods or services seceived, except when the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, ‘measured at the date the entity obtains the goods or the counterparty renders the service. Revenue Recognition Revenue is recognized to the extent that itis probable that the economic benefits will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business Sale of goods Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, tade discounts and volume rebates. Revenue from sale of goods is recognized when all the following conditions are satisfied: + the Group has transfersed to the buyer the significant sisks and rewards of ownership of the goods; + the Group retains neither continuing managerial involvement to the degtce usually associated with ownership not effective control over the goods sold; + the amount of revenue can be measured reliably; + itis probable that the economic benefits associated with the transaction will flow to the Group; and + the costs incurred or to be incurred in respect of the transaction can be measured reliably. ATEIf itis probable that discounts will be granted and the amount can be measured reliably, then the discounts recognized as a reduction of revenue as the sales are recognized, Rendering of services, Revenue from a contract to provide services is recognized by reference to the stage of ‘completion of the contract. Under this method, revenue is recognized in the accounting. periods in which the services are rendered. Revenue from a contract to provide services is recognized when all of the following conditions are satisfied: + the amount of revenue can be measured reliably; + itis probable that the economic benefits associated with the transaction will flow to the Group; ‘+ the stage of completion of the transaction can be measured eliably; andl + the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. Tnterestincome Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Tinterest income is accrued on 2 time proportion basis, by reference to the ptincipal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount. ther ‘Other income is income generated outside the normal course of business and is recognized ‘when it is probable that the economic benefits will flow to the Group and it can be measured reliably. ‘Expense Recognition Expenses are recognized in profit ot loss when decrease in future economic benefit zelated to a decrease in an asset or an increase in a lability has arisen that can be measured reliably. Expenses are recognized in profit or loss: on the basis of a ditect association between the costs incurred and the caring of specific items of income; on the basis of systematic and rational allocation procedures when economic benefits ate expected to atise ‘over several accounting periods and the association with income can only be broadly or indirectly determined; or immediately when an expenditure produces no future economic benefits or when, and to the extent that, Future economic benefits do not qualify, ot cease to ‘qualify, for recognition in the statements of financial position as an asset. Expenses in the statement of comprehensive income are presented using the function of expense method. Costs of sales are expenses incurred that are associated with the goods sold. Operating expenses are costs attributable to administrative, marketing, selling and other business activities of the Group. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. NAC‘The Group as lessor Rental income from operating leases is recognized as income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as att incentive to enter into an operating lease are also spread on a straight-line basis over the lease tetm, Initial direct costs incurred by the Group in negotiating and arranging an operating lease is added to the catrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. ‘The Group as lessee Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except when another systematic basis is more representative of the time pattern in ‘which economic benefits ftom the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The agaregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except when another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Foreign Currency ‘Transactions and balances ‘Transactions in currencies other than the functional currency of the Group are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reposting period, monetary assets and liabilities that arc denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. “Teanslation to presentation currency ‘The separate financial statements of GTC whose functional currency is the US dollar ate translated to Philippine Peso, as its presentation currency, using the prevailing current exchange rate for the statements of financial position accounts and average rate during the period for statements of comprehensive income accounts. Any resulting difference from the translation is charged to currency translation adjustments in other comprehensive income. Borrowing Costs Borrowing costs ditectly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get seady for their intended use o sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Tavestment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit of loss in the period in which they are incuered. Borrowing costs are expensed in full when the amounts are aot material,Related Party Transactions |A related party transaction is a transfer of resources, services or obligations between the Group and a related patty, regardless of whether a price is charged. Parties are considered related if one patty has control, joint control, or significant influence over the other party in making financial and operating decisions. An entity that is a post-employment benefit plan for the employees of the Group and the key management personnel of the Group ate also considered to be related patties. Upon consolidation, significant intra-group balances are eliminated to reflect the Group's consolidated financial position and performance as a single entity. Taxation Tucoine tax expense represents the sum of current tax expense and deferred tax. Current tax ‘The current tax expense is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statements of comprehensive income because it excludes items of income ox expense that ate taxable or deductible in other years and it fusther excludes items that are never taxable or deductible. The Group's custent tax expense is calculated using 30% regular corporate income tax (RCIT) rate or 2% minimum corporate income tax sate (MCIT), whichever is higher. As disclosed in Note 3, GTC’s frozen tuna loins operation ‘was granted an ITH for a period of three years beginning Februaty 1, 2013. Deferred tax Deferred tax is tecognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax libilities are generally recognized for all taxable temporary differences, Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that itis probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future, ‘The carrying amount of deferred tax assets is reviewed at the end of each reposting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or patt of the asset to be recovered Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the lability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reposting petiod. Current and defesred tax for the year Current and deferred tax are recognized in profit or loss, except when they zelate to items that ate recognized in other comprehensive income os directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. nL 24 viEarnings or Loss Per Share ‘The Group computes its basic earnings or loss per share by dividing profit ot loss for the period attributable to common equity holders of the Parent Company by the weighted average number of common shates outstanding during the petiod. For the purpose of calculating diluted earnings of loss per shate, profit ot loss for the petiod attributable to common equity holders of the Parent Company and the weighted average number of shares outstanding arc adjusted for the effects of dilutive potential common shares. Events After the Reporting Period ‘The Group identifies events after the end of each reporting period as those events, both favorable and unfavorable, that occur between the end of the reporting perind and the date when the consolidated financial statements are authorized for issue. The consolidated financial statements of the Group are adjusted to reflect those events that provide evidence of conditions that existed at the end of the reporting petiod, Non-adjusting events after the end of the reporting period are disclosed in the notes to the consolidated financial statements ‘when matesial. Segment Reporting ‘An operating segment is a component of the Group that engages in business activities from which it may carn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group's Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. ‘The Group reports separately, information about an operating segment that meets any of the following quantitative thresholds: + its reported revenue, including both sales to extemal customers and inter-segment sales or transfers, is 10% or more of the combined revenue, intemal and external, of all ‘operating segments, provided that; + the absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of the combined reported profit of all operating segments that did not report a loss and the combined reported loss of all operating segments that reported a toss; and ‘+ Its assets are 10% or more of the combined assets of all operating segments. Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if Management believes that information about the segment would be useful to users of the consolidated financial statements. For Management purposes, the Group is currently organized into four business segments which are Canned and Processed fish, Canned Meat, Milk, Tuna Export and Corporate. ‘These divisions are the basis on which the Group reports its primaty segment information. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment.6 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group's accounting policies, Management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on the historical experience and other factots that are considered to be relevant. ‘Actual results may differ from these estimates, “The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that petiod or in the period of the revision and future periods if the revision affects hoth current and future petiods, Critical Judgments in Applying Accounting Policies ‘The following axe the critical judgments, apart from those involving estimations, thet Management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements, Determination of functional currency ‘The Group’s consolidated financial statements are presented in Philippine Peso, which is also the Company's functional currency. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that fanctional currency. ‘The results of operations and financial position of GTC, which are measured using US Dollars, were translated into Philippine Peso using the accounting policies in Note 5. ‘HIM investments Management reviewed the Group's held-to-maturity investments in the light of its capital maintenance and liquidity requirements and confirmed its positive intention and ability to hold those assets to maturity. The carrying amount of held-to-matutity investments as at December 31, 2014 and 2013 amounted to P180,666,391 and nil, respectively, as shown in Note 10. Leases ‘The evaluation of whether an arrangement contains a lease is based on its substance. “Lesses ate clasified as finance leases whenever the terms of the lease transfer substantially all the sisk and rewards of the ownership to the lessee, otherwise, leases are classified as operating leases. Judgment is used in determining whether the significant risk and rewards of ownership are transferred to the lessee. In making such judgment, the Group evaluates the tecms and conditions of the lease arrangement. Failure to make the right judgment would dicectly affect the Group’s assets and liabilities. Based on management evaluation, the lease arrangements entered into by the Group as @ lessor and as a lessee are accounted for as operating leases because the Group has determined that the lease arrangement will not transfer the ownership of the leased assets upon termination of the lease and it does not provide an option to purchase the asset at a price that is sufficiently lower than the fair value at the date of the option.Determination of useful lives of trademarks Under the Intellectual Property Code of the Philippines, the legal life of trademark is 10 years ‘and may be perpetually renewed thereafter for another 10 yeats. However, considering that the Management does not expect any circumstances or events which will cause it to decide not to renew its trademarks every 10 years, Management has taken the position that the useful lives of its trademarks are indefinite, hence, the related costs are not amortized but subjected to annual impairment testing, Changes in the assumption and circumstances in the fatare will substantially affect the consolidated financial statements of the Group, particularly the carrying values of such asset, “The cateying value of the Group’s trademarks as at December 31, 2014 and 2013 is disclosed in Note 13. Biolegialasets Biological assets ate required to be measured on initial xecognition and at the end of each reporting period at fair value less costs to sell, unless fair value cannot be measured reliably. ‘Accordingly, the Management shall exercise its judgment in determining the best estimate of fai value, After exerting its best effort in determining the fair value of the Group's biological assets, the ‘Management believes that the fair value of its biological assets cannot be measured reliably since the market determined prices or values are not available and other methods of reasonably estimating fair value arc determined to be cleatly unreliable. Accordingly, the Group's biological assets are measured at cost Jess accumulated depreciation and any accumulated impairment loss. Key Sources of Estimation Uncertainty The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period chat have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilites within the next financial year. Estimating use les of property, plant and equiproent ‘The useful lives of the Group’s assets with definite lives are estimated based on the petiod over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment ate reviewed periodically and sre updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the Group’s assets. In addition, the estimation of the useful lives is based on the Group’s collective assessment of industry practice, internal technical evaluation and experience with similar assets. It is possible, however, that fature results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of property, plant and equipment ‘would increase the recognized operating expenses and decrease non-current assets. As at December 31, 2014 and 2013, the carrying amounts and accumulated depreciation and amortization of the Group's property, plant and equipment as disclosed in Note 15 amounted to P1,421,369,020 and P1,036,419,999, and P1,123,004,813 and P970,413,813, respectively.Asset impairment ‘The Group performs an impairment seview when certain indicatots are present. Determining the recoverable amounts of property, plant and equipment and tradematks requires the Group to make estimates and assumptions thet can materially affect the consolidated financial statements. Any resulting impairment loss could have 2 material adverse impact on the Group’s financial position and result of operations. While the Group believes that its assumptions are appropsiate and reasonable, significant changes in the assumptions may materially affect the assessment of recoverable values and may lead to future additional impairment charges. Total carrying amounts of property, plant and equipment and trademarks as at December 31, 2014 and 2013 ate disclosed in Notes 15 and 13, respectively. ‘As at December 31, 2014 and 2013, Management believes that the recoverable amounts of the Group’s property, plant and equipment and trademarks exceed their carrying amounts, accordingly, no impairment loss was recognized in 2014 and 2013. Deferred tae assets ‘The Group reviews the carrying amounts at the end of each reporting period and reduces deferred tax assets to the extent that itis no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. However, there is no assurance that the Group will generate sufficient taxable profit to allow all or patt of its deferred tax assets to be utilized. ‘Total deferred tax assets recognized in the consolidated statements of financial position as at December 31, 2014 and 2013 amounted to P56,683,629 and P18,726,312, respectively, as disclosed in Note 28. Estimating allovances fr donbsfil acount ‘The Group estimates the allowance for doubtful accounts related to its receivables based on assessment of specific accounts when the Group has information that certain counterparties fare unable to meet their financial obligations. In these cases, judgment used was based on the best available facts and circumstances including but not limited to, the length of zclationship with the counterparty and the counterparty’s current credit status based on credit reports and known market factors. The Group used judgment to record specific reserves for counterparties agtinst amounts due to reduce the expected collectible amounts. ‘These specific reserves are re-evaluated and adjusted as additional information received impacts the amounts estimated. The amounts and timing of recorded expenses for any period would differ if different judgments were made or different estimates were utilized. ‘An increase in the allowance for doubtful accounts would increase the recognized operating expenses and decrease current assets. Total wade and other receivables recognized in the Group’s consolidated statements of financial position amounted to P2,561,731,649 and P1,034,062,591 as at December 31, 2014 and 2013, respectively, which is net of the related allowance for doubtful accounts amounting to P36,958,537 and P7,839,257 as at those dates, as shown in Note 9.Estimating net realigabe naue of inventories ‘The net realizable value of inventories represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The Group determines the estimated selling price based on the recent sale transactions of similar goods ‘with adjustments to reflect any changes in economic conditions since the date the ‘transactions occurred, The Group tecords provision for excess of cost over net realizable value of inventories. While the Group believes that the estimates are reasonable and appropriate, significant differences in the actual experience or significant changes in estimates may materially affect the profit of loss and equity. Total inventories recognized in the Group's consolidated statements of financial position amounted to P5,194,205,392 and P1,602,019,351 as at December 31, 2014 and 2013, sespectively, 2s shown in Note 11. Post-employment and other employee benefits The determination of the retirement obligation cost and other retirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. ‘Those assumptions include among others, discount rates, expected returns on plan assets and rates of compensation increase, Actual results thet differ from the assumptions are immediately recognized. While the Group believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the pension and other retirement obligations. ‘The total retirement benefit expense recognized in 2014 and 2013 amounted to P18,082,852 and P2,094,690, respectively, and retirement benefit obligation as at December 31, 2014 amounted to P93,870,878 and retirement benefit asset as at December 31, 2013 amounted to P23,643, as shown in Note 19. SEGMENT INFORMATION Business segment For Management purposes, the Group is organized into five major business segments: Canned and Processed fish, Canned Meat, Milk, ‘Tuna Export and Corporate. ‘These divisions are the basis on which the Group reports its primary segment information to the CODM for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The principal products and services of each of these divisions are as follows: Canned and Processed Fish Tuna Sardines Other seafood-based products Canned Meat Corned Beef Meatloaf Other meat-based products Milk Canned Milk Powdered Milk Other dairy products ‘Tuna Export Private label canned, pouched and frozen tuna Other Corporate ‘Management Services HENNA A‘The segments’ results of operations of the reportable segments for the periods ended December 31, 2014 and 2013 ate as follows: ame 2013, Segment Profit Segment (Loss) Before Segment’ _ Segment Profit Revenue Tax Revenue (Los) Betore Tat ‘Canned and Proceed Fah —-P 8,8827214,782 _P1,195,712,966._P Seer Canned Meat Gooo37asi9 834,302 455 : 7 ik 2A72A917S —«703,320383 ITT BAB 2549681 ‘Tana Export 5,386279,468 184 49,605 1.044241,156 9,006 991 Comporte 3354917 70,319,478) -_aaaiitg Segment ttl 2255276467 _-2238,247941 1471,021,504 664,444) Eliminations (G04 164459) : - Pa 438,555,008 247961 _PI421 821,604 (P5564, ‘The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 5. Segment profit tepresents the profit before tax by each segment without allocation of central administration costs and directors’ salates, investment income, other gains and losses, as well as finance costs. This is the measure reported to the CODM for the purposes of resource allocation and assessment of segment performance. ‘The segment assets and liabilities as at December 31, 2014 and 2013 are as follows: 2014 2013 ‘Assets Liabilities ‘Assets Lisbilies Canned and Processed Fish P15,213,299,673 | PL4,379,488,348— P > P y Canned Meat 9,417,028,827 —8,857,478,950 7 z Milk 2,645,908,407 1,997,958,349 89,701,211 362,700,566, “Tuna export 3,570,184,965 2,665,658,853 3,342,073,110 _2,598,365,832 Corporate 13,108,459,263__9,494,958,952__1,488,156,269 189,062 Segment tol '43,954)880,735 _37,374543,452 _5,719,950590 _2,981,255,460 iminations (32,766,185,566) _ 32,766,155,566) (195,088,325) (698.552) 11,188,725,069 _P 4,608,387,786 __P4.524,862,267 _ 72,980,656 808 For the purposes of monitoring segment performance and allocating resources between segments: + All assets are allocated to reportable segments other than other financial assets, and current and deferred tax assets. Assets used jointly by reportable segments are allocated oon the basis of the revenues earned by individual reportable segments. + All Labilities are allocated to reportable segments other than loans, other financial liabilities, current and deferred tax libilties. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets Other segment information as at and for the year ended December 31, 2014 are as follows: ‘Addltéons to Deprediation property and and Impsicnent Finance Finance ‘equipment amortization oss income ___ costs Canned and Processed Fish P273 837,617 P 13873001 P P poe Canned Meat 44,390,397 977,730 : 7 i Dae 56,041,767 aid : 7 ‘Tusa Export 116334969 86814059, a a - Comporate 49351510 49.163,054 : 9.165276 15,287,948 539,736,160 P152,749,348 pe P9165.276_P15,287 9448 (Other segment information as at and for the year ended December 31, 2013 are as follows: ‘Additions w —Depzecation property and aad Impairment Finance ‘Finance ‘equipment __ amortization oss income costs ie P151,805272 iP GO1686 po. pe ‘Tuna Export 193,071,909, 7,615,598 : 495,102 11,352,127 bsqggr7si P8207,174 Pp 4p5,102_P 11,532,127 $a rig P0502 P3927 Revenues and non-current assets are mainly based in the Philippines, which is the country of domicile of the Company. CASH AND CASH EQUIVALENTS Cash and cash equivalents at the end of the reporting period, as shown in the consolidated statement of cash flows, can be reconciled to the related items in the consolidated statements of financial position as follows: 2014 2013 Cash on hand P 285,648 P 6,307,154 Cash in banks 660,662,945 256,397,755 Cash equivalents 603,261,303 175,259,998 P1,264,209,896__P4: 54,907 Cash on hand includes petty cash fund. Cash in banks earn interest ranging from 1% to 0.5% and 0.25 to 0.37% per annum in 2014 and 2013, respectively, and are unrestricted and immediately available for use in the current operations of the Group. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash which sxe subject to an insignificant tisk of changes in value. ‘The Group classifies an investment as cash equivalent if that investment has a maturity of three months or less from the date of acquisition. Cash equivalents represent short-term fund placements with local banks maturing on various dates with annual interest rates ranging from 0.7% to 1.83% and 1.63 to 225% in 2014 and 2013, respectively. ‘These placements ate from excess cash and can be withdrawn anytime for operations. Intesest income earned from bank deposits and placements amounted to P7,547,753 and P495,102.in 2014 and 2013, respectively, as disclosed in Note 23. ‘TRADE AND OTHER RECEIVABLES - net ‘The Group's trade and other receivables consist of: 2014 2013 Trade receivables 1P2,302,244,515 P 939,690,320 Less: Allowance for doubtful accounts 36,958,537 7,839,257 2,265,285,978 931,851,063 Advances to suppliers 21,905,227 80,652,946 “Advances to officers and employees 14,815,425 1,692,795 Others 59,725,019 __ 19,865,787 P2,561,731,649_P1,034,062,591 AT10. i. ‘Trade receivables represent short-term, non-interest bearing receivables from various ‘customers and generally have 30 days term or less. Other receivables, which consist mainly of receivables from various parties for transactions other than sale of goods, ate noninterest-beating and generally have terms of 30 to 45 days. ‘Movements in the allowance for doubtful accounts as at December 31 are as follows: Notes 2014 2013 “Acquisition through business combination P= P7839,257 Balance, January 1 7,839,257 7 Reversal of impaitment 2B (1,242,810) 4 Provisi 24 30,307,633 fi Translation adjusunent 54487 Balance, December 31 36,958,537 _P 7,839,257 In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. ‘The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Management believes that there is no further allowance for doubtful accounts required in excess of those that were already provided HELD-TO-MATURITY INVESTMENTS Held-to-matusity investments pertain to treasury bonds which bear effective interest rates ranging from 1.94% to 2.60% per annum in 2014 and with maturities ranging from 5 to 30 months. The HTM investments were acquired at a premium of P4,321,824. ‘The details of the Group's held-to-maturity investments are as follows: 2014 2013, Current 152,435,803 P- Non-custent 28,230,588 : P 180,666,391 Tterest earned from held-to-matutity investments in 2014 smounted to P1,617,523 which is ret of premium amortization amounting to P2,266,266 as disclosed in Note 23. INVENTORIES - net Details of the Group’s inventories are as follows: Note 2014 2013, Finished goods 22 P2,859,748,609 P 879,270,427 ‘Wotk in process 2 79,506,827 13,280,824 Rew materials 22 ——-2,452,922,572 668,633,654 Spare parts and supplies 173,219,881 45,287,764 5,265,397,889 1,606,481,669 Allowance for inventory obsolescence (71,192,497) (4,462,318) P5,194,205,392_P1,602,019,351 Cost of inventories recognized as expense in 2014 and 2013 amounted to P15,063,993,046 and P1,311,220,577, respectively, as disclosed in Note 22.On Janvary 1, 2014, the Parent Company acquired the inventoties of CPGI and CSC and the canned meat business of PMCI as discussed in Note 1 totaling to P1,646,287,012. ‘The Group provided inventory obsolescence amounting to P71,192,497 and P4,462,318 in 2014 and 2013, shown as part of cost of goods sold in Note 22. Movement in the allowance for decline value of inventories follows: Note 2014 2013 Balance, January 1 P 4,462,318 PO Provision during the period 2 71,192,497 4,462,318 Written-off (4,462,318) - Balance, December 31 P71,192,497__ 4,462,318 PREPAYMENTS AND OTHER CURRENT ASSETS - net ‘The details of the Group's prepayments and other current assets are shown below. Note 2014 2013, Tax credits 38,622,973 P 61,529,654 Input value added tax (VAT) - net 48,956,339 55,855,449 Prepaid insurance 10,204,647 425,442, Prepaid rent 2,650,547 14,968 Other prepayments 18,176,936 __2,325,621 PU8,611,442 120,151,134 Input value-added tax (VAT) in 2014 and 2013 axe presented net of output vat of 892,793,501 and P1,573,480, respectively. ‘Tax exedits include creditable withholding taxes withheld by the Group’s customers and tax credit certificates (TCC) issued by the Bureau of Customs (BOC) to GTC. TCCs from BOC aze granted to Board of Investment (BON) registered companies and ate given for taxes and duties paid on raw materials used for the manufacture of their export products. GTC can apply its TCC against tax liabilities other than withholding tax or can be refunded as cash. TRADEMARKS This amount represents Kafe de Oro and Home Pride trademarks xegistered with the Intellectual Property Office under the name of General Milling Corporation (GMC) that ‘were acquired in 2008, The Group’s trademarks are subject to annual impairment testing. No impaitment loss was tecognized in 2014 and 2013 as Management believes that the recoverable amounts of the trademarks are higher than their carrying amounts.14. BIOLOGICAL ASSETS Biological assets of the Group comprised of fingerlings and mature milk fish with the following costs: 2014 2013 ‘Purchased fingerlings 19,295,960 P- Consumed feeds 94,673,838 Direct labor 4,049,752 Overhead 3,343,118 Total cost 121,362,668 Transferred to inventories 83,884,479 P37,A78,189 P-se sh I THOTT Ved Or OSoced bLTT ——swveOeTIa SORT oO HTTE THE I TET EO ‘suneusy BuiGue a weoTsoTeE LVS - Foe Te See ST : TOR wogtpaidag cue Ie RG SUL HERES DORROOT a Tanager soz'stzz01 zor oseLy TAL BSLOF suru Pov Lsee6 & waa evoray 7 2 Tevsce%s1a esoett a sor ebc9ca Oss E10 soe 91 wogenquos sousg {iBoong uoaisnboy 3800) a a a a. eT find smds wononnivey —hourag oy ‘howinqe] | paveoming Goer tong Suppo purr smorjoy se are zuawdmba puv aueyd ‘Gsradord s.dnorp ay yo stunoure BuyGzreo axp uF NUDKDRO WY seu - INS WdIND ONY LNVTd ‘ALYEIOUd — “SL(On October 31, 2013, the Group purchased sll tights, title and interest in and to the assets used in the ordinary course of business of CPGI, the canned meat business of PMCI and CSC such as office furniture, machinery, equipment and softwate, and transportation and delivery equipment, as disclosed in Note 1. Acquisitions in 2013 include property, plant and equipment acquired from related parties as follows: ‘Office Furniture, Laboratog, Transportation Land Building Plant Machinay Fistures and” Tools end’ and Delivery Constrection Improvements Improvements and Equipment Equipment __Eauipmest Equipment __ia Progress__Toual Gr =P - P= 4660288 75,405,006 | PGOOTSS Pads P= P 80,521,529 esc 2ist6 —18232,305 44,152,342 ‘raasiz—1299,792 81250 1SATIAM2 73,894,637 PNCI 2 7385485 63,9895362 fiovigs 374276 3.948 = 15,648296 P23 164 17,790 48,240,463 _P10,475,399 _P2A534,012 __PISATI42_ 230,060,462 ‘These assets are the subject of lease arrangements in 2013 between the Group and CPGI, CSC and PMCI, as disclosed in Notes 29 and 32. Details of depreciation and amortization charged to profit or loss are disclosed below. Notes 2014 2013 Cost of goods sold 22 121,679,500 1,574,137 Operating expenses 24 31,069,848 6,643,037 152,749,348 P8,217,174 Construction in progress pertains to accumulated costs incurted on the ongoing construction of the Group’s new production plant and administration building as part of the Group's expansion program. ‘The cost of fully depreciated property, plant and equipment as at December 31, 2014 and 2013 which are stil being used in operations amounts to P388,369,392 and 82,828,129, respectively. ‘The Group did not capitalize any borcowing cost related to their general borrowings in 2014 and 2013 since Management has determined that the effect is not material to the consolidated financial statements. Loss recognized from the disposal of land in 2013 amounted to P1,816,723, as disclosed in Note 25. In 2014, gain on sale of certain equipment amounting to P309,965 were recognized as disclosed in Note 23. Management believes that there is no indication that an impaitment loss has occurred on its property, plant and equipment. 16, | OTHERNON-CURRENT ASSETS ‘The Group’s other non-current assets consist of, Note 2014 2013 Secutity deposits 32 P 81,936,265 P 1,780,295 Input VAT - non current 13,809,408 14,735,854 Returnable containers '526,000 974,979 Others 4,841,034 - Pi01112,707__P17,491,1281. Security deposits pertain to deposits required under the terms of the lease agreements of the Group with certain lessors. Input VAT represents the unamortized amount relating to purchases of capital goods which is applied over five years against output VAT. Returnable containers are assets used in the delivery of the Group's products. Products for delivery do not include the value of these containers, Others represent deposits to public utility companies. LOANS PAYABLE ‘The breakdown of loans for working capital requirement were obtained by the following: 2016 2013 GTC P - —_ P1,999,600,002 SMDC : 215,000,000 P2,214,600,002, GIc GTC has the following banks borrowings: ‘a. Short term loans which consist of several unsecured borrowings from local banks with ‘maturities ranging from 14 to 30 days and bear annual interest rates ranging from 2.36% and 2.60% to 2.85% in 2014 and 2013, respectively. The balance of the loans amounted to nil and P1,984,600,017 as at December 31, 2014 and 2013, zespectively. b, Five year loan from & local bank with principal amount of P300,000,000 obtained on February 27, 2009. This loan is unsecured but covered by cross corporate guarantee. It is payable quarterly and bears an annual interest of 7.51%. The loan is subject to a condition that requires mecting certain financial ratios such as debt-to-equity ratio (not to exceed 2.5:1) and current ratio (at least 1.0:1), In the event of default or non- compliance with any of the provisions of the loan agreement, the bank-creditor may (by written notice) either declare the Joan terminated or declase the entire unpaid principal amount and interest of the loan due and demandable, The loan covenant has ‘been consistently complied with by GTC but not as of December 31, 2013. However, on February 27, 2014, complying with the long-term loan’s prescribed bank-scheduled amortization, GTC has fully paid the remaining principal amount, denominated in Philippine Peso, amounting to P15,000,000 without additional burden of penalties that the local bank could have imposed had the loan covenant conditions were applied, ‘As such, the Company had foregone obtaining a bank loan waiver effective December 31, 2013. The Company's management assessed that obtaining such waiver is academic, in the absence of a written notice issued by the bank, as full payment and non-imposition of any bank penalties has cured any breach of the loan covenant. In 2014, GTC filly settied its outstanding loan obligations from local banks by applying the advances obtained from CPFI daring the year. ‘The outstanding balance of this loan as at December 31, 2014 and 2013 amounted to nil and P14,999,985, respectively. ABNOVA A vm 3719. SMDC On October 30, 2013, SMDC obtained two unsecured interest-bearing loans fom a local bank for its working capital and capital expenditure requirements totaling to 540,000,000. ‘These loans both bear fixed interest rate of 2.5% per annum. In November and December 2013, SMDC paid a portion of these loans amounting to P325,000,000. The outstanding balance of these loans as at December 31, 2013 amounted to P215,000,000. In May 2014, the loan was fully settled by the Company. In February 2014, the Company obtained additional two unsecured, interest-bearing loans from a local bank amounting to P30.0 million and P22.0 million. The P30.0 million loan was paid in March 2014 and the remaining outstanding loan was fully paid in May 2014. Interest expense charged to operations amounted to P15,287,944 and P11,332,127 in 2014 and 2013, respectively, and presenteci as Finance Costs in the statements of comprehensive income, ‘TRADE AND OTHER PAYABLES ‘The Group’s trade and other payables consist of: 2018 2013 ‘Trade payables P2,396,694,53L P356,160,232 Accrued expenses 1,196,337,134 73,227,048 on-trade payables 202,640,092 17,539,308 Withholding taxes payable 84,314,296 4,168,520 Output VAT 47,031,421 - Others 172,475,025 73,594,125 P4,099,492,499_P524,689,323 Trade payables are generslly on a 30 to 60 days term. No interest is charged on the trade payables. Accrued expenses are non-interest beating and are normally settled within one yeat. ‘The Group has financial risk management policies in place to ensure that all payables are paid within the credit period, Breakdown for accrued expenses is as follows: 2014 2013 ‘Accrued trade payables P 825,354,222 P25,517,442 ‘Accrued product related cost 158,772,902 17,096,814 ‘Accrued personnel cost 40,552,972 11,365,320 ‘Accrued others 171,657,038__ 19,247,472 P4196,337,134 _P 73,227,048 RETIREMENT BENEFIT OBLIGATION: ‘The Group has set up the Century Pacific Group of Companies Multiemployer Retirement Fund, a funded defined benefit plan for qualified employees. Under the plan, the employees arc entitled to retirement benefits of 22.5 days pet year of service on attainment of retirement age of 60. No other post-retizement benefits ate provided, ‘The plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. ANNONAInvestnent rick ‘The present value of the defined benefit plan linbility is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on plan asset is below this rate, it will create a plan deficit, Currently the plan’s investments are in the form of debt instruments of govemment secutity bonds, equity instruments and fixed income fnsteuments. Due to the long-term nature of the plan liabilities, the board of the pension fand considers it appropriate that a reasonable postion of the plan assets should be invested in government security bonds. Interest risk A decrease in the government secusity bond interest rate will increase the retirement benefit plan obligation. Longe risk, ‘The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both duting and after their employment, ‘An increase in the life expectancy of the plan participants wil increase the retirement benefit, obligation. Salary risk “The present value of the defined benefit plan obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants ‘ill increase the retirement benefit obligation. ‘The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were cattied out by an independent actuary for the year ended December 31, 2014, The present value of the defined benefit obligation and the related current service cost was measured using the Projected Unit Credit Method. “The principal ascurnptions used for the purpose of the actuarial valuation were as follows: ‘Valuation at 2014 ‘Valuation at 2013 Expected rate of Expected rate of Discount rate salary increase Discount rate__salary increase CPFI 457% 4.00% - : crc 479% 4.00% 437% 3.00% sMDC 4.66% 4.00% 4.63%. 3.00%Amounts zecognized in the consolidated statement of comprehensive income in respect of this defined benefit plan is as follows: 2014 2013 Service costs Catrent service cost P 20,179,530 2,108,361 Net interest income (2,096,678) (13,671) Components of defined benefit costs recognized in profit or loss 18,082,852 2,094,690 Remeasurement on the net defined benefit asset: (Return) Loss on plan assets (excluding amounts included in net interest expense) 1,886,849 778,560 Effect of asset ceiling 16,648 58,845 ‘Actuarial (gains) losses: from changes in financial assumptions 5,763,174 1,756,844 from experience adjustments 2,463,583 (3,007,708) from changes in demographics 80,243,059 - Deferred Tax asset S (2,05: ‘Components of defined benefit costs recognized in other comprehensive income 90,373,313 (415,516) P108,456,165___P1,679,174 ‘The amount included in the consolidated statements of financial position arising from the Group's defined benefit setitement plan is as follows: 2014 2013 Present value of defined benefit obligation 195,721,431 P21,001,085 Fair value of plan assets (101,898,436) (21,054,582) 93,822,995, (63,497) fect of asset ceiling 47,883 29,854 Retirement benefit obligation P.93,870,878 __(P23,643) ‘Movements in the present value of defined benefit obligations are as follows: 2014 2013 Balance, January 1 P2100085 =P - Balance acquired from business combination - 19,730,172 Current service cost 20,179,530 2,108,361 Interest cost 904,347 1,196,158 Benefits paid (12,916,842) (1,226,623) Remeasurement (gain) loss: from changes in financial assumption 5,763,174 1,756,844 from changes in experience adjustment 82,706,642 (3,007,708) ‘Transfers 78,544,562 - Effect of forcign curzency exchange rate changes 556,849 (870,962) ‘Translation adjustments (4,017,916) 1,514,843 Balance, December 31 P195,721,431__P21,001,085